Earnings Call Transcript - FBP Q3 2025

Operator, Operator

Hello, and welcome to the First BanCorp Third Quarter 2025 Financial Results. My name is Carla, and I will be coordinating your call today. I would now like to hand you over to the Investor Relations Officer, Ramon Rodriguez to begin. Please go ahead, when you're ready.

Ramon Rodriguez, Investor Relations Officer

Thank you, Carla. Good morning, everyone, and thank you for joining First BanCorp's conference call and webcast to discuss the company's financial results for the third quarter of 2025. Joining you today from First BanCorp are Aurelio Aleman, 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 website at fbpinvestor.com. At this time, I'd like to turn the call over to our CEO, Aurelio Aleman.

Aurelio Aleman, President and CEO

Thank you, Ramon, and good morning to everyone. I appreciate you joining our call today. I will start by briefly discussing our financial performance for the third quarter and then move on to our outlook for the franchise. We are very pleased with our progress this quarter; we achieved exceptional financial results that highlight our ability to deliver consistent returns to our shareholders and improve our franchise metrics. We earned $100 million in net income this quarter, which includes the benefit of certain nonrecurring special items that Orlando will explain later. Adjusting for these items, normalized earnings per share increased by 13% compared to the previous year, primarily driven by record net interest income, effective expense management, and disciplined loan production. Regarding our balance sheet, our strong capital position has allowed us to continue supporting our clients in loan production. We increased total loans by $181 million, a 5.6% annualized growth from the linked quarter, surpassing $13 billion in total loans for the first time since 2010. However, since the beginning of the second quarter, we have noticed a slowdown in consumer credit demand, particularly in the auto sector, which has not met our original expectations for the year. Following the sector-specific tariffs announced in April, industry-wide sales declined, adversely affecting overall loan origination in this area. Total retail sales in our industry are down 7% year-to-date as of September. Furthermore, third-quarter sales are down 17% compared to the third quarter of the previous year. Fortunately, we've managed to mitigate this slowdown by implementing our growth plan in commercial and construction lending, along with steady loan production in the residential mortgage sector, benefiting from business and regional diversification. In terms of deposits, we had a successful quarter, growing core franchise deposits by $140 million, with favorable trends in market flows. Although competition for these flows has increased, particularly among affluent customers and government relations, we believe this could be temporary. We remain focused on our core deposit franchise, taking a careful approach to retain valuable customer relationships. Asset quality is holding steady, with credit performance aligning with expectations. Consumer charge-offs have stabilized, commercial credit trends are healthy, and we've seen a 7% reduction in nonperforming assets. Our earnings performance has also led to growth across all capital ratios, allowing us to expand our loan portfolio organically and repurchase an additional $50 million in common stock. In line with our strategy to return 100% of annual earnings to shareholders, our Board has approved an additional $200 million share buyback program, expected to be executed through 2026. On the macroeconomic front, the operating environment remains stable, although uncertain factors are at play. We are closely monitoring the potential impacts of evolving trade dynamics and any repercussions of a federal government shutdown, as well as tariff-related inflation on businesses and consumers in our regions. Despite these challenges, we are encouraged by the resilience of the labor markets in Puerto Rico, the improving tourism activity, and recent investments from manufacturing companies expanding production capacity or establishing new facilities there. The ongoing expansion of the manufacturing sector, combined with the steady flow of federal disaster funds for infrastructure, will likely continue to support the local economy in the coming years. Our franchise is well-positioned to take advantage of these favorable conditions, and we plan to strategically deploy our excess capital to drive organic growth in our regions. Year-to-date, total originations, excluding credit card activities, are up by 7% compared to the previous year, backed by our sales discipline, client outreach, and effective regional and business line diversification, which is a key strength of our franchise. Based on our current commercial lending pipelines, development rate environments, and the normalization of industry-wide auto sales, we anticipate our loan growth for the year will be around the 3% to 4% range, influenced by commercial credit line usage and unexpected payments. We will provide an updated forecast for 2026 following our fourth-quarter report in January, along with the full-year outlook for next year. Thank you for your interest in First Bank. I am very proud of our team's accomplishments from 2023 to 2025, and I look forward to a strong finish to the year. Now, I will turn the call over to Orlando to discuss our financial results in more detail before we open the floor for questions.

Orlando Berges, Executive Vice President and CFO

Good morning, everyone. As Aurelio mentioned, we had a strong quarter with net income reaching $100 million or $0.63 a share, compared to $80 million or $0.50 a share in the second quarter. The return on average assets for the quarter was 2.1%, significantly higher than last quarter. This quarter included several items that I will discuss. We had a $16.6 million reversal of valuation allowance on deferred tax assets related to net operating losses at the holding company. New legislation enacted in Puerto Rico allows limited liability companies to be treated as disregarded entities. Based on this change, we now expect that net operating losses at the holding company will primarily be utilized against revenues from one of its subsidiaries, leading to the reversal. Additionally, we collected $2.3 million in payroll taxes related to the employee retention credit, which has been outstanding for some time, resulting in a reduction of payroll costs. We also recorded a $2.8 million valuation allowance for commercial real estate in the Virgin Islands due to ongoing litigation concerning potential loss of title of the property. Excluding the deferred tax asset valuation allowance and employee retention credit components, non-GAAP adjusted earnings per share were $0.51 and return on average assets was 1.7%. The quarter saw a $3 million reduction in provision compared to last quarter, with provision totaling $17.6 million, mainly due to a $2.2 million benefit in the allowance for residential mortgages. Improved loss experiences in this portfolio and improved projected macroeconomic conditions for unemployment contributed to this. Our net interest income reached $217.9 million for the quarter, which is $2 million higher than last quarter, including a $1.3 million improvement from an extra day in the quarter. Compared to the third quarter of 2024, net interest income is 8% higher. The net interest margin for the quarter was 4.57%, an increase of 1 basis point from last quarter, and it has grown 32 basis points over the past four quarters. As mentioned in previous calls, reinvesting cash flows from the investment portfolio resulted in a 16 basis point expansion in investment yields. However, the margin grew less than the 5 to 7 basis point guidance we provided. Aurelio noted a slowdown in consumer lending originations this quarter, which was lower than expected, reducing the average balance in the portfolio by $12 million. These high-yielding portfolios are more beneficial to net interest income. We also faced increased competitive pricing pressures, leading to a 15 basis point rise in the cost of government deposits and a 2 basis point rise in the cost of time deposits. The average cost of all other retail and commercial deposits remained flat at 72 basis points compared to the prior quarter. Additionally, the mix of deposits showed a shift, with time deposits growing by $166 million by the end of the quarter, while lower-cost interest-bearing non-maturity deposits decreased by $45 million. Regarding other loan portfolios, we observed improvements in the quarter, with net interest income on commercial loans increasing by $3.8 million due to a $126 million rise in average balances and a 3 basis point increase in yields. The average balance on the residential portfolio grew by $19 million this quarter. In the fourth quarter, we will continue to benefit from yield improvements from the reinvestment of cash flows from the investment portfolio, but this will be partially offset by two projected Federal Reserve rate cuts that would reduce yields on the floating commercial loan portfolio and on our cash balance at the Fed. We have a floating commercial portfolio, with about half priced today either with prime or SOFR, putting us in an asset-sensitive position, meaning repricing will occur quicker on the asset side than on the liability side. We expect the margin in the fourth quarter to remain flat, with increases in net interest income coming from loan portfolio growth. Other income for the quarter remained relatively flat, with a slight decrease in card processing income due to lower transaction volumes. Expenses for the quarter were $124.9 million, up $1.6 million from last quarter, primarily due to net losses on the OREO operation associated with that $2.8 million valuation adjustment. Payroll expenses decreased by $300,000 due to the $2.3 million employee retention credit, which effectively offset a $1.8 million increase from annual marine compensation and an extra payroll day in the quarter. Excluding OREOs and the employee retention credit, expenses were $126.2 million, compared to $124 million in the second quarter, slightly above our guidance but in line with the provided range of $125 million to $126 million. The efficiency ratio for the quarter was 50%, essentially unchanged from the second quarter. The projected expense trend for technology projects and business promotion efforts will continue into the fourth quarter, so we affirm our guidance for an expense base of $125 million to $126 million for the next couple of quarters. We still believe our efficiency ratio will range from 50% to 52% in light of expenses and income components. In terms of credit quality, it remained quite stable in the quarter. Non-performing assets decreased by $8.6 million, mainly due to a $3.8 million drop in non-accrual loans, primarily in residential mortgages and commercial real estate loans, alongside a $5 million drop in OREO balances due to that $2.8 million adjustment. Inflows to non-accrual loans were $32.2 million, which was $2.2 million lower than last quarter, chiefly from $6.7 million in residential and commercial inflows offset by reductions in others, alongside a $4.5 million climb in consumer inflows. Early delinquency loans, defined as 30 to 89 days overdue, increased by $8.9 million due in large part to a single $6 million commercial case in Florida, where payment was not made until later in October. For consumer loans, early delinquency remained relatively stable since the second quarter, rising by only $300,000. Moving on to the allowance, it decreased by $1.6 million to $247 million, primarily in the residential mortgage portfolio as loss severities have continued to improve. Conversely, the allowance for commercial loans increased due to portfolio growth and projected deterioration in the CRE price index as part of macroeconomic trends. The ratio of the allowance for credit losses to loans fell by 4 basis points to 1.89%, mainly reflecting a 9 basis point drop in the residential mortgage portfolio. Net charge-offs for the quarter amounted to $19.9 million or 62 basis points of average loans, up about $800,000 from the previous quarter or 2 basis points. Last quarter's figures included an $800,000 recovery from a commercial loan, which did not occur this quarter to offset some of the charge-offs. As Aurelio highlighted, consumer charge-off levels are normalizing while commercial charge-offs remain quite low. On the capital front, our robust capital base continues to support share repurchases and dividends. We declared $29 million in dividends and repurchased $50 million in common stock during the quarter. Regulatory capital ratios remain low, but these capital actions were offset by earnings generated this quarter. Additionally, we registered a 6% increase in tangible book value per share to $11.79, and the tangible common equity ratio rose to 9.7%. Furthermore, due to a $49 million rise in the fair value of available-for-sale securities, the remaining accumulated other comprehensive loss still represents $2.42 in intangible book value per share and contributes over 177 basis points to the tangible common equity ratio. As we announced yesterday, our Board has approved an additional $200 million in share repurchases; we aim to continue opportunistically executing our capital actions based on market conditions, targeting approximately $50 million in repurchases per quarter through the end of 2026. However, we will persist in deploying our excess capital thoughtfully, always prioritizing the long-term interests of our franchise and shareholders. Now, operator, I'd like to open the call for questions.

Operator, Operator

And our first question comes from Brett Rabatin with Hovde Group.

Brett Rabatin, Analyst

I wanted to start off. I just want to make sure on the tax situation, that's one time, right? That doesn't continue from here in terms of any benefit?

Orlando Berges, Executive Vice President and CFO

There will be a benefit in that we won't have reversals of deferred tax assets at these levels. There is also a benefit from the normal operating losses or expenses at the holding company. These are annual expenses that currently do not yield any tax benefit, and they will be offset against revenues from this stock. While this isn't a significant amount, the effective tax rate has slightly decreased, reflecting some of that benefit. So, it’s not at the level of the DTA reversal, but there is a small benefit on the effective tax rate moving forward.

Brett Rabatin, Analyst

Okay. That's helpful. I wanted to discuss the auto lending, which has finally met expectations after some time. What are your thoughts on the health of consumers in Puerto Rico? Your credit trends appear stable from a consumer perspective, but I would like to hear your observations on consumer activity on the ground.

Aurelio Aleman, President and CEO

I believe auto sales are normalizing. We initially anticipated a 5% decrease for the year, but it's actually down 7% year-to-date. However, there were increased sales in the second quarter due to tariffs, leading to a temporary spike. We need to analyze this quarter to better understand the true stable volume of auto sales, which has fluctuated between 100 to 120 units or 20,000 units annually for several years. We expect the latter half of the year will help us project for 2026. On the credit demand front, it's been lower overall and unsecured credit demand has also seen a decline. Reflecting back on two to three years ago, we have implemented adjusted policies and observed solid portfolio performance across the board. Additionally, the higher losses we previously faced in credit cards and unsecured loans are stabilizing. We anticipate consumer stability, but we're not expecting the same growth in portfolios as we’ve experienced in the past. Instead, portfolio growth will stem from residential lending, which is doing very well, alongside our growing commercial portfolio across various sectors. Overall, we aim for consumer stability and are diligently working to prevent any contraction in the portfolio as we expand our products and services in that area.

Brett Rabatin, Analyst

Okay. And then one last question, if I may. Regarding the margin guidance, which appears to be flat in the fourth quarter, does that take into account, in light of the rate cuts, that you will be able to reduce funding costs for deposits, despite the fact that the beta in Puerto Rico increased at a much slower rate previously? Are you anticipating that the beta on deposits will improve on the way down?

Aurelio Aleman, President and CEO

I believe one aspect that will definitely decrease is our index deposits for the government, as they fluctuate with the rates, and some of that will reduce. However, we do not anticipate the other core retail products to decrease just yet.

Orlando Berges, Executive Vice President and CFO

Other than time deposits that we do see some reduction.

Aurelio Aleman, President and CEO

They move with the market, so there will be some reduction in the cost of deposits expected to occur during the quarter. The extent to which this can offset the mix of the portfolio is still uncertain. The margins remain very strong, so having fewer consumer loans at high yield directly impacts the margin, as well as which segments of the deposits are growing. This quarter, we have seen growth in the CD book at market rates, but not necessarily above market. It all depends on the overall mix of the balance sheet, which is substantial.

Operator, Operator

And the next question comes from Timur Braziler with Wells Fargo.

Timur Braziler, Analyst

Back on the deposits, can you just elaborate a little bit more on the competitive pressures that you're seeing on the government side? I guess, how much economics are you having to give up? How much of that is going to potentially lower some of the benefits of being able to reprice those with some of these rate cuts? And then just lastly, you said that you are optimistic that some of these competitive pressures might abate here. Maybe just give us some color as to what gives you that confidence?

Aurelio Aleman, President and CEO

I believe the cycle is important. Some of the deposits are contracted and indexed, meaning they are already set and not available for bidding. They will adjust with rate changes, either monthly or quarterly. In our situation, about 40% of the government deposits fall into this category. Other certificate of deposit rates will decline when they mature as rates decrease. We are mainly facing competitive pressures from smaller institutions rather than larger ones. To address this, we focus on operational accounts and the additional services needed by government entities. Our pricing strategy must align with the value added through our relationships, meaning acquiring a CD must also involve other products and franchise services. Municipalities and government entities require various payment services and deposits, so we need to be competitive on CDs when they become available in the market.

Timur Braziler, Analyst

Okay. And I guess maybe tying that into kind of 4Q, 1Q is the expectation that deposit costs drop with the subsequent rate cuts? Or do some of these, I guess, how much of an offset could some of these competitive pressures be to the planned drop in deposit costs?

Aurelio Aleman, President and CEO

We do anticipate a reduction in deposit costs due to the decrease in rates. Typically, we have observed that the betas on some deposit products adjust more slowly compared to certain floating asset products. This creates a timing difference regarding when changes are reflected on the asset side versus the deposit side. Nevertheless, we do expect reductions; it's just a matter of the pace at which they will occur.

Timur Braziler, Analyst

Okay. And then just on credit, credit results at First Bank in 3Q are really strong. There were a couple, let's say, in-migration inbound on the NPL side for your competitor banks on the island, including some degradation maybe on Puerto Rico itself. I guess to what extent does credit at the other banks influence your own level of reserving in the way that you're thinking about your own portfolio, if at all?

Aurelio Aleman, President and CEO

We have consistently communicated that we maintain a strong risk appetite and adhere to specific policies and deal size limits. Our approach revolves around our methodology and the overall performance of our portfolio. While we consider factors that might affect an industry, our current observations do not indicate any systemic or widespread impacts.

Orlando Berges, Executive Vice President and CFO

Yes. Other than we tend to look at each of our cases individually. And again, as Aurelio mentioned, unless we see something in the industry, it would be more of what we are seeing on our own customer base and what are the results and the lines of business they have.

Timur Braziler, Analyst

Okay. Great. And then just last for me. I think more recently, First Bank has been open to doing maybe M&A on the Mainland. Can you just remind us what you would be considering in terms of size, location, assets, deposits and kind of just your updated view on capital deployment here?

Aurelio Aleman, President and CEO

Our top priority for capital deployment is clearly organic growth. In the Florida market, we see potential for a franchise that could enhance our existing operations. Origination of loans in Florida is straightforward if we have the right teams in place, as talent tends to move between banks. With a strong focus on credit discipline, we expect good performance. Historically, we have demonstrated this capability. Any new venture would need to complement our deposit franchise, which is the goal. We have the necessary capital, so the scale will vary accordingly.

Operator, Operator

And our next question comes from Kelly Motta with KBW.

Kelly Motta, Analyst

Wanted to circle back to the competitive landscape in Puerto Rico. I appreciate the color on the government deposits. Wondering if there's been any competitor competition from outside the Puerto Rico banks and if you've seen any new entrants into the market, and just opine on the competitive landscape?

Aurelio Aleman, President and CEO

None of the deposits. It's really more aggressive now with the smaller players, as I mentioned. Obviously, in the credit card business, there have always been many entrants, and U.S. banks continue to dominate card issuance, including the larger banks, so there's nothing new on that front.

Orlando Berges, Executive Vice President and CFO

And it's also the credit unions that play in the market, but not coming from the outside. It's entities that have operations in Puerto Rico.

Kelly Motta, Analyst

Okay. Got it. That's helpful. There's been a lot of news onshoring early glimmers of that picking up and helping Puerto Rico. Have you seen any notable impacts? And how should we be thinking about that like more from a high level in terms of the potential?

Aurelio Aleman, President and CEO

Yes, in the short term, they have announced several deals, and we aim to provide more details in our investor deck, offering you finer insights into what has been approved or negotiated. We are working to gather more data on that. However, we don't anticipate significant impacts in the short term. We expect to continue supporting and enhancing the construction sector along with its related materials and labor benefits. Yet, we don’t foresee anything that significantly flows through the economy apart from this short-term impact. As this expansion becomes operational, we will likely see more employment, improved compensation, and growth in the workforce. However, we don't expect these changes until at least the second half of 2026. The positive aspect is that this commitment will provide long-term benefits to sustain the economy of the island, rather than posing a long-term risk by not having it.

Kelly Motta, Analyst

Got it. That's really helpful. Circling back to the margin, I know you've seen a nice uplift from the securities book. Can you remind us about the cash flows on that? Also, what do the new loan yield originations look like? This will help us understand the potential offset to some of the floating rate dynamics you've already mentioned.

Orlando Berges, Executive Vice President and CFO

We expect to receive about $600 million in cash flows during the fourth quarter, with an average yield of around 1.5%. This represents some of the cash flows that we have already repriced. Additionally, we anticipate around $1 billion more in the first half of 2026, also yielding an average of 1.5%. With interest rates declining, the reinvestment returns are slightly lower, with current rates being 50 to 100 basis points less for some reinvestment options according to our policy guidance. Part of this could be allocated to lending, but as Aurelio mentioned, it would likely focus more on commercial and residential lending.

Kelly Motta, Analyst

Okay. And if your loan book right now is 77%, what the new loan origination yields look like, I guess, in Q3?

Orlando Berges, Executive Vice President and CFO

You're discussing the overall picture or just the average yield, which includes consumer rates. On the commercial side, mortgage rates are around 6% to 6.25%. The current average yield for overall commercial portfolios is approximately 6.7%. We're not experiencing significant changes in spreads, as it's influenced by the base rate, specifically SOFR or Prime, which are the primary benchmarks. Adjustments will occur, but not necessarily in spreads. Consumer yields are expected to remain similar to current levels, primarily dependent on volume. On average, consumer yields are about 10.5% within the blended consumer portfolio, and this is expected to stay around those levels.

Operator, Operator

The next question comes from Erin Signavi with Truist Securities.

Unknown Analyst, Analyst

I'm sorry, if you mentioned this, but what's your outlook for loan growth into the fourth quarter? I think you said that NII is expected to be higher despite the kind of flattish NIM just thinking about what you're thinking there on loan growth?

Aurelio Aleman, President and CEO

Yes, I mentioned that our guidance for the full year is between 3% and 4%. The original guidance was 5%, reflecting a mid-single digit. This adjustment takes into account the events in the auto lending sector during the third quarter and part of the second quarter, which is the main factor. There has been some offset from the mortgage sector, and we maintain a strong pipeline in the commercial area. Of course, there are always timing issues associated with those, but the pipelines continue to provide support.

Unknown Analyst, Analyst

Okay. And you announced a new share repurchase program, and there's still some remaining authorization from the prior plan. Can you talk about the cadence you're expecting in terms of share repurchases over the next several quarters?

Aurelio Aleman, President and CEO

We have always taken advantage of market opportunities, and we still have $38 million from this year’s authorization. We can adjust our spending as we see fit. Our strategy focuses on the open market, and there are no accelerated share repurchases planned. We will keep monitoring the situation.

Orlando Berges, Executive Vice President and CFO

Yes. As I mentioned, our base assumption continues to be around $50 million a quarter. Obviously, with the flexibility or the optionality of saying a little bit more or a little bit less depending on what are the circumstances on the market.

Unknown Analyst, Analyst

Perfect. All right. And then lastly, just a follow-up on the Mainland M&A question. I mean, it seems like a lot of other Mainland banks are also looking to expand in that geography. Would you say that the environment currently would be somewhat challenging to get a deal done around that area?

Aurelio Aleman, President and CEO

Opportunities come and go, and we are continuing to monitor the situation to see what might develop. There are signs that the credit situation in the U.S. could present new opportunities as reflected in some bank reports.

Operator, Operator

The next question comes from Steve Moss with Raymond James.

Stephen Moss, Analyst

Orlando, I wanted to follow up on the timing of the cash flows from the securities portfolio in relation to the margin. Is this spread throughout the quarter, or does it occur later in the quarter, impacting the margin?

Orlando Berges, Executive Vice President and CFO

Well, it's not really equally spread, but on average, November and December tend to have the highest cash flow. Last quarter, we had a 16 basis points pickup, resulting in about $500 million for the third quarter, reflecting the cash flows impacted by repricing. Not all of this benefited the third quarter; some will carry over into the fourth quarter, so it averages out somewhat. We should see a pickup, but the difference is that the rates we are seeing with our options are between 50 to 100 basis points lower based on our policy guidelines for the portfolio. As you know, we don't include much credit risk; it's primarily focused on interest rates.

Stephen Moss, Analyst

I appreciate the additional information. Regarding the loan loss reserve, you have made several qualitative adjustments over the past 12 to 18 months. Given that credit has performed well on the island for a significant period and that your consumer credit charge-offs have decreased year-over-year, I am curious about your thoughts on how the reserve ratio might evolve over the next 6 to 12 months.

Orlando Berges, Executive Vice President and CFO

We don't provide specific guidance, but I can share that on the mortgage side, we have observed trends with lower charge-offs. Our methodology relies on historical loss information that is constantly updated. As we gather more historical data with improved loss figures, the ratio tends to improve, so we expect residential reserves to decrease. There is always some uncertainty in our forecasts, particularly with macroeconomic projections. Stability in unemployment rates, like those in Puerto Rico, influences the expected trends across certain portfolios, especially in downside scenarios, which we factor into our reserve calculations. For mortgages, I anticipate a gradual decrease in credit expectations. Regarding consumer credit, we've noted stability with charge-offs after seeing increases in the older vintages from '22 and '23. For now, I expect that to remain stable. The commercial sector has performed well, and I don't foresee any major changes there.

Operator, Operator

We have a follow-up from Kelly with KBW.

Kelly Motta, Analyst

Thank you for letting me jump back on. I just wanted to close the loop on the tax rate just given it looks like the FTE adjustment is up a bit and there was some noise in the quarter. Do you have a good approximation of what the go-forward tax rate looks like here? Is it any materially different after adjusting for some of these onetime time things you had in the quarter? Any help would be appreciated.

Orlando Berges, Executive Vice President and CFO

The number that we put on the press of effective tax rate of about 22.2%, which is estimated for the full 2025, already reflects some of this expected improvement. So I would say that's a good number to use as guidance, remember that with a few things here and there. As we reinvest in the investment portfolio, a large chunk of that would have tax benefits. Since we have reinvested our better yields, that reflects on the rates, then you have other components of the operations on some of the growth on the commercial lending side that's on a taxable side. So the 22.2%, I think, reflects a fairly good number that we should be between the 22% to 22.5% range, which is what I'm expecting now.

Kelly Motta, Analyst

I apologize. I think it's said in the release. Thank you.

Operator, Operator

And as we have no further questions in the queue, I will hand back over to Ramon Rodriguez for any final comments.

Ramon Rodriguez, Investor Relations Officer

Thanks to everyone for participating in today's call. We will be attending Hovde's Financial Services Conference in Naples on November 4. We look forward to seeing a number of you at this event, and we greatly appreciate your continued support. Have a great day. Thank you.

Operator, Operator

Thank you, everyone, for joining today's call. This concludes the call, please. You may now disconnect. Have a great day.