Good morning. Thank you for joining OFG Bancorp's Conference Call. My name is Margo, and I'll be your operator today. Our speakers are Jose Rafael Fernandez, Chief Executive Officer and Chairman of the Board of Directors; Maritza Arizmendi, Chief Financial Officer; and Cesar Ortiz, Chief Risk Officer. A presentation accompanies today's remarks and can be found on the homepage of the OFG website under the Second Quarter 2025 section. This call may include forward-looking statements regarding management's goals, plans, and expectations, which are subject to the risks and uncertainties detailed in the Risk Factors section of OFG's SEC filings. Actual results may differ materially from those anticipated. We do not have an obligation to update any information disclosed in this call due to subsequent developments. I would now like to turn the call over to Mr. Fernández. Please go ahead.

Good morning, and thank you for joining us. We are pleased to report our second quarter results. To start, let's go to Page 3 of the presentation. It was another strong quarter, ending with record assets of more than $12 billion and record loans of more than $8 billion. We had excellent financial results, generating earnings per share diluted of $1.15 for a 6.5% increase year-over-year on a 1.5% increase in total core revenue with a high return on average assets and equity. Operating execution was highlighted by strong loan origination and core deposit flows. Credit reflected a stable economy in Puerto Rico and high levels of liquidity held by individuals and businesses. We announced a new $100 million stock buyback authorization and bought back more shares supported by our strong capital generation and balance sheet. Please turn to Page 4. We continue to see strong momentum with our omnichannel digital platform. Our strategic investments in technology and innovation through our digital-first strategy are paying off. We're growing accounts and building deeper customer relationships during the second quarter. Nearly all of our routine teller retail customer transactions and deposits as well as 70% of retail loan payments were made through our digital and self-service channels. This was driven by continued year-over-year growth in digital enrollment, digital loan payments, virtual teller utilization, and a 4% new net customer growth. In the second quarter, we introduced 2 new products and services. We launched Oriental Marketplace, an online feature that gives our customers exclusive discounts on travel, restaurants, and retail products. We also introduced a U.S. government money market fund, a new addition to our DGI family of funds, to provide customers with another convenient investment option. Now here is Maritza to go over the financials in more detail.

Thank you, José. Please turn to Page 5 to review our financial highlights. All comparisons are to the first quarter unless otherwise noted. Core revenues totaled $182 million. Looking at the key components, total interest income was $194 million, an increase of $5 million. This mainly reflects higher average balances of loans and cash and $1.5 million from 1 additional business day. Total interest expense was $42 million, an increase of $2 million. This mainly reflects higher average balances of core deposits and higher average balances of borrowings, broker deposits, and $0.4 million from 1 additional business day. Total banking and financial service revenues were $30 million, an increase of $1 million. This mainly reflects increases in mortgage banking activities and wealth management. Looking at noninterest expenses, they totaled $94.8 million, up $1.4 million. This is in line with our continued outlook of $95 million to $96 million in quarterly noninterest expenses in 2025. Compared to the first quarter, the second quarter reflected $1.4 million less in seasonal payroll taxes and foreclosed real estate costs. Keep in mind, in the first quarter included a $3.1 million incentive payment from a business partner. Income tax expense was $14.1 million with a tax rate of 21.37%. That reflects an anticipated rate of 24.90% for the year and the benefit in the second quarter of $1.7 million in discrete items. Looking at some other metrics, tangible book value was $27.67 per share. During the quarter, we bought back 186,000 shares. The efficiency ratio was 52%. Return on average asset was 1.73% and return on average tangible common equity was 17%. Now please turn to Page 6 to review our operational highlights. Total assets were $12.2 billion, up 9% from a year ago and 4% from the first quarter. Average loan balances were $8 billion, up close to 2% from the first quarter. End of period loans held for investment totaled $8.2 billion, up 7% from a year ago and up $328 million from the last quarter. The sequential increase mainly reflects our strategy to grow commercial lending in the U.S. and Puerto Rico. Loan yields were 7.91%, down 8 basis points. New loan origination of $784 million was up 38% from the first quarter and 33% from a year ago. Second quarter originations reflect increases in all lending channels in both Puerto Rico and the U.S. The commercial pipeline continues to look strong. Average core deposits were $9.7 billion, up close to 1%. End-of-period balances of $9.9 billion increased by $139 million or 1.4% quarter-over-quarter and $291 million or 3% year-over-year. The sequential growth reflects increased commercial and government deposits and reduced retail balances. In addition, it reflects increased time and saving deposits and reduced demand deposits. Core deposit cost was even with the first quarter at 1.42%. Excluding public funds, the cost of deposit was 0.9% compared to 1% last quarter. Average borrowings and broker deposits were $672 million compared to $570 million. The aggregate rate paid was 4.11%, down 21 basis points. End-of-period balances were $732 million compared to $421 million. The second quarter reflected $200 million in a new 2-year Federal Home Loan Bank advance at 0.13% and $82.5 million in additional broker deposits. We used these funds to increase liquidity in addition to higher deposits as part of our strategy to grow commercial loans. Cash at $852 million was up 20%, reflecting some of the new wholesale funding pending continued loan growth. Investments totaled $2.8 billion, remaining relatively unchanged. This reflected repayments, mostly offset by purchases of $50 million of mortgage-backed securities yielding 5.55%, and Ginnie Mae securitization of our own mortgage lending. The net interest margin was 5.31% compared to 5.42%. Excluding the new Federal Home Loan Bank, NIM would have been around the higher end of our 5.30% to 5.40% range. All this being equal, as loan growth continues, we should see NIM expand from the second quarter levels. Please turn to Page 7 to review our credit quality and capital strength. Credit quality continues to be stable. Net charge-offs totaled $13 million, down $7.6 million from the first quarter. The net charge-off rate was 0.64%, down 41 basis points sequentially. Year-over-year, the net charge-off rate was down 15 basis points. Provision for credit losses was $21.7 million, down $4 million. The second quarter included $70.2 million for increased volume, $3.7 million for a specific reserve for commercial loans and $0.7 million due to the alignment of model assumptions and risk-weighted factors mainly in Puerto Rico. Looking at other credit metrics, the early and total delinquency rates were 2.46% and 3.59%, respectively, and the nonperforming loan rate was 1.19%. Looking at other capital metrics, our CET ratio was 13.99%, stockholders' equity totaled $1.3 billion, up $39 million, and the tangible common equity ratio decreased 10 basis points to 10.20%. To summarize the quarter, net interest income increased due to loan growth, particularly our strategy to grow commercial loans. We saw continued deposit growth driven by commercial and government balances. Net interest margin was towards the lower end of our expected range, reflecting our decision to put more liquidity in place to fund future strategic growth in commercial loans. Credit quality continues to reflect the solid economic environment in Puerto Rico for both consumers and businesses. Noninterest expenses were in line with our expected range and should continue to do so. With a strong CET1 ratio and earnings power, we put a new $100 million share buyback in place to return capital to stockholders, and we continue to acquire shares in the open market. Now here's José.

Thank you, Maritza. Please turn to Page 8. The Puerto Rico economy continues to show stable growth despite concerns about global macroeconomic and geopolitical events. The situation remains the same. Wages and unemployment are at historically high levels. The business environment is constructively positive. The economy continues to grow and the outlook is positive. Turning to OFG, our continuous improvement culture and our digital-first strategy is proving to be highly effective. New services are providing customers with better insights to manage their finances. New tools are giving us the ability to further streamline processes and become more efficient. The end result is continued value creation and differentiation in the marketplace. Loan growth and credit trends are solid, and our risk management capabilities are strong. We continue to execute our plan strategically and thoughtfully, growing market share by creating value and helping our customers achieve progress. All this is supported by a very strong capital position. As always, we could not have achieved these results without the hard work of all our team members. We are very thankful to them and optimistic for the future. With this, we end the formal presentation. Operator, let's start the Q&A.

We'll take our first question from Timur Braziler.

Maybe starting off on the margin. That's good commentary that you think margin starts to expand off of these levels. I'm just wondering, maybe from a deposit standpoint, those costs seem to tick higher a little bit in the second quarter. I guess as you look out into the back end of the year, is it just the better loan growth trajectory that drives margin higher? I guess, can you just talk to the interplay between those expected loan growth and maybe what the deposit competition is doing on the island?

Yes. So thank you for your question, Timur. I'll take a stab at it first, and then I'll let Maritza give you additional color. So on the point about deposit costs ticking higher, remember that the government deposits are tied to a variable rate treasury bill kind of formula and during the quarter, you have those fluctuations kind of trend up and down. So this quarter, we had a little bit of that noise there. That's why you're seeing a little bit of that uptick on the cost of deposits. But let me just also step back and give you a little bit of our thoughts on deposits and how we see customer deposits moving forward. Because what you have seen throughout the last 1.5 years is that our net new account growth in retail customers has continued to grow, particularly in checking during, as I said, the past 1.5 years. So that's one of the key drivers for us. Also, you have to look at the changes that we have implemented within our value proposition and our differentiation for retail customers. We have added a couple of new targeted deposit products and services. We have expanded, as you know, the self-service capabilities and also the digital capabilities. We have provided additional insights for our customers to help them manage their finances. So we are adding additional tools for them to help them achieve financial health. And we're starting to see, we're in the early innings, but we're starting to see some of the loan-only clients starting to add relationships and deepen their relationship with us by opening checking and savings accounts. I'm speaking particularly from auto and mortgage, as well as small and midsized commercial clients, owners, and employees. So that's a little bit of context on why we are seeing good momentum across the board on the deposits, particularly on the retail side. So when you put all this together, the overall retail customer deposits will continue to grow in the second half. We expect that to continue and also into 2026. Then I'd like to add also the commercial side. It's a little trickier, right? Because as I said, we have government deposits that are variable rate and tied to treasury bills, but we also have some larger clients that have ins and outs during the quarter that might kind of give us a little bit volatility on the commercial side. But all in all, we're really happy with the path that we're taking on our deposit growth as well as the cost of deposits. From a competition standpoint, we're seeing a little bit more competition from a small commercial bank that has operations in Florida and they are positioning themselves as higher yielding, higher paying CDs. We're also seeing some competition from U.S. credit unions that have been doing the same for the last couple of years. But all in all, I would say that the competition is pretty rational on the deposit side. Anything you want to add on the margin?

I'm not sure if Timur, did that clear up your question, or do you need more information on other aspects of the NIM?

No, I think that's helpful. Maybe switching to loan growth, pretty impressive here. It seems like both in Puerto Rico and on the Mainland. I'm just wondering the cadence there. Did you see a real pickup early in the quarter? And then maybe that tapered off towards the back end of the quarter? Was that growth consistent throughout the quarter? And just maybe give us a lay of the land for borrower appetite both in Puerto Rico and then maybe on your Mainland operations as well.

For sure. Yes. So yes, we had a really strong quarter on loan growth this second quarter. What drove it primarily was a very strong pipeline coming into the second quarter in both Puerto Rico and the U.S. We mentioned in our last earnings call that we felt that we had a very strong pipeline and some credits were kind of pushing to the second quarter. So that's number one. In addition to that, this quarter, we also saw an increase in commercial line utilization from some larger commercial clients. Third, Puerto Rico's economy continues to be doing well and is in solid shape. Clearly, the Puerto Rico paradigm shift continues to play out and businesses are building up their capabilities and infrastructure. Some industries are consolidating. Puerto Rico is investing in its infrastructure, et cetera. You've heard me talk about it in the last 1.5 years or so or 2 years. So we continue to see a solid pipeline for commercial loans. Consumers are in good shape. So we expect loan balances to grow for the full year 2025, now closer to 5% to 6% versus the 3% to 4% that we previously guided. So things continue to be moving in the right direction. And in spite of all the global geopolitical and all the uncertainty created by all the things that you guys know better than I do, I think Puerto Rico remains resilient, building a big hole in the economy created after 10 years of kind of a 20% economic contraction. Sometimes the economic numbers, which are correct, show a very slow-moving economy, but if you put it in the context of building up a hole or filling up a hole that was created after 10 years of aggregate 20% contraction, really, the economy is doing pretty strong from the consumer and the commercial sides. So being a bank and having a strong capital base with a very prudent risk culture, this is what we got, and we're really excited to be able to continue to grow and deploy our capital for our customers.

We'll take our next question from Kelly Motta with KBW.

I would like to revisit the topic of margin. According to your balance sheet, it appears that liquidity was somewhat elevated during the quarter, especially considering the FHLB and wholesale funding you mentioned. I'm curious about your expectations for margin and how you plan to manage funding and advance the balance sheet from this point. Could you elaborate on the dynamics involved, particularly regarding the timing of wholesale funding, and how this relates to liquidity and loan growth moving forward?

So as you saw during the quarter, Kelly, the driver was a volume factor for the NII to continue expanding. That's something that we have consistently shared with the market; that NIM probably will range between 5.30% to 5.40% and compared to prior year's NIM, there is a contraction, but volume will be the driver on the NII, and that's what happened this quarter. And as we continue to see loan growth as a good dynamic here that José was mentioning, we decided to accelerate and put funding to the books with a good rate because at the end, it's 4.13%. We have margin if we put it in cash, but we wanted to anticipate that liquidity at that moment. We were opportunistic, and now we have flexibility to continue investing going forward with the opportunities. As I mentioned before, we have a great pipeline, good potential. We wanted to have that flexibility, and that's why we decided to put that to work, okay?

Got it.

And specifically to your very specific question about the timing of those, it was halfway through the quarter that we made that call. We saw the pipeline. We're seeing the loan originations. We see the line utilization levels inching up, and that's when we decided because we also saw the good rate, as Maritza mentioned, from our perspective.

Got it. That's helpful. The story of the quarter is that you experienced strong loan growth. I'm curious about how the spreads are holding up and if there are any competitive dynamics at play, especially since you mentioned expecting higher loan growth for the year. I understand some of the factors influencing this and the shift into the second quarter, but it was truly remarkable. I'm hoping you can provide insights into the pricing dynamics and the sources of this business.

Pricing dynamics differ from deposits, as the lending market is significantly more competitive. On the commercial side, we're experiencing increased pricing pressure, which is contributing to the current situation. For loan growth, the auto sector benefitted slightly this quarter due to tariffs, prompting some customers to purchase vehicles before these fees take effect. Despite some stabilization in auto sales in Puerto Rico, we maintain a steady loan origination pipeline from car dealers. Additionally, the Puerto Rico commercial sector shows a strong and well-diversified pipeline across industries and loan types, with some looking to consolidate strategically and others focusing on infrastructure development. On the mortgage front, we've seen an uptick over the last few quarters. This quarter, our results exceeded the first half of this year by $22 million and also surpassed the same period last year by $22 million. This growth is primarily driven by stabilization in real estate prices, which have improved and remained steady. We are also exploring the nonconforming market to provide more competitive options than in the past. Regarding our U.S. loan business, we have a well-developed pipeline from the first quarter, with a diverse portfolio in commercial and industrial loans. This sector targets small to mid-sized markets across the country, and the U.S. economy continues to show resilience despite external challenges. Overall, we maintain a positive economic outlook and remain vigilant in seeking growth opportunities while ensuring we stay cautious and aware of risks. That summarizes my perspective on the loan sector, Kelly.

We'll take our next question from Brett Rabatin with Hovde Group.

I wanted to start by discussing the recent developments in the power grid and the new Fortress contracts. Can you provide us with your perspective on the current energy situation in Puerto Rico and any updates you might have?

Sure, sure. So what's going on right now is they're trying to bring in natural gas to fill in some generators that would potentially cover the grid in case of higher demands during the summer, which will happen, and that way minimize or mitigate some of the potential shutdowns that the system is having or the kind of turndowns that the system is having. So that's the objective of the well-documented contract that the fiscal board has canceled. But Brett, I look at this, as I've said in the past, this is a long journey for energy in Puerto Rico. This is year 5 or so. They're still in bankruptcy. They're too private to source. The government is in the middle. They're in the ring, and they're throwing punches at each other, and sometimes they pat themselves on the back, depending on the perspective. So it's going to be noisy. Ultimately, it's not making any impact on the economy. It is having an effect on the economy, but if we wouldn't have this issue, the economy would be doing a lot better because it would reduce a lot of uncertainty from the business side and the consumer side. But the economy is in such strong base right now that even with all this noise, it is precluding businesses and consumers from holding back. It's becoming a little bit of a part of doing business until things just get resolved, and it's going to take a while.

Okay. That's helpful. And then from a credit quality perspective, the delinquencies in the early-stage auto ticked back up from being really low last quarter. But charge-offs were really low this quarter. I know the U.S.A. portfolio didn't have any charge-offs. I wanted to get your thoughts on the charge-off levels in 2Q and if that was an anomaly or if this is kind of a new level to think about for credit for you guys.

Yes. I'll let Cesar give you the specifics on that.

To clarify, the first quarter always benefits in delinquencies and nonperforming loan statistics because it's a seasonal positive quarter because of tax refunds, the end of the holiday season, et cetera. We always expect a pickup in the second quarter and third quarter from the first quarter because of that seasonality, but when we compare it to last year's same quarter, it's much better. So it's a new vintage coming in, better vintages coming in that we adjusted back in 2022. So those new vintages with better credit performance are going to continue coming into the statistics. We hope to continue improving charge-off rates compared to nonperforming loans and delinquency rates from previous vintages. So that's basically the outcome.

Okay. So if I heard that correctly, it sounds like the outlook from here is net debt improved just kind of given the vintages in the recent performance?

Correct. Correct.

And we'll go next again to Kelly Motta with KBW.

I apologize if you answered this more directly, if so, I may have missed it. But on the government deposits, I think last quarter, you talked about $1 billion left that had signed on a couple of months to stay, and that was kind of the determining factor for kind of where you would end up in the margin range. Just wondering if you have an update as to your expectations for the potential of those deposits to remain with OFG at least for here now.

Yes. So the expectation is relatively the same as in past quarters. It's an ongoing kind of every 3 to 4 months, and we feel that we are going to see this deposit kind of roll over in several more quarters.

Okay. That's helpful. And then maybe if we could touch on expenses. I don't think we addressed that yet. You guys did an excellent job controlling expenses, and you mentioned you've been investing a lot in the tech and certain efficiencies to drive customer experience. Just wondering if you could provide a high-level update as to what other sort of investments are in the works? And how you think about balancing your investment in the business and your ability to serve the customers ahead with capital return to investors given your strong capital position?

Yes. Well, that's a great question, Kelly. How do we do it? Every day, we push for efficiencies. Technology is certainly helping out. We look at efficiencies from the back office, and we see processes that can be simplified. We see areas where technology, after the process has been simplified, can come in and be a lot more efficient for us. We have not yet seen some of those efficiencies, but we expect to see them in the years to come, in the next year or so. That's part of the push that we're constantly addressing internally. We have to continue to invest in technology; we need to continue to invest for the improvement of the customer experience; we need to continue to create value for our customers, both on the retail side and on the commercial side. Look, we have formidable competitors that are really aggressive in their investments. They have deeper pockets. We need to play it both ways. We need to invest, but we need to be very intentional in eking out efficiencies constantly on all our processes. That's why what we're asking internally is to continue to transform our culture into one where we have to be a lot more focused on change management and challenging each other to do better. That's the best I can share with you because otherwise, I would have said it's just an art, and it's sometimes a beautiful picture, and sometimes it's an awful picture, but it takes a team to work and a team to buy into what we need to achieve. We are very happy to have that team in Oriental right now and excited to continue to grow and show value to our customers and shareholders as well.

Got it. Last very little ticky tacky question from me for Maritza is the tax rate guidance that you provided in the earnings release; you did have the tax benefit in 1Q. I was wondering if that was including or excluding that? I just wanted to get clarification, so I can model the second half of the year ahead.

The expectation that we shared with you is 24.9% for the year, and it doesn't have any discrete items included within that. I'm not sure if that's your question, but it's a flat rate for the year without any benefits.

So excluding that $1.7 million benefit you had in...

Yes.

Perfect. I will step back. Great quarter.

At this time, there are no further questions. I will now turn the call back over to José Rafael Fernández for closing remarks.

Thank you, operator. Thanks again to all our team members and thanks to all our stakeholders who have listened in. Looking forward to seeing you next quarter. Have a great day.

Thank you. And ladies and gentlemen, that does conclude today's conference. We appreciate your participation. You may now disconnect.