Good morning. Thank you for joining OFG Bancorp's conference call. My name is Chloe, and I will be your operator today. Our speakers are José Rafael Fernández, 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. It can be found on the home page of the OFG website under the third quarter 2026 section. This call may feature certain forward-looking statements about management's goals, plans, and expectations. These statements are subject to risks and uncertainties outlined in the risk factors section of OFG's SEC filings. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments that occur afterwards. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Instructions will be given at that time. I would now like to turn the call over to Mr. Fernández.

Good morning and thank you for joining us. We are very pleased to report our results today. We had an outstanding third quarter with excellent performance across the board. Let's turn to page three of our presentation. Earnings per share increased 15% year over year and on 1% growth in total core revenues. This was driven by strong commercial loan growth, stable credit and core deposit balances, disciplined expense management, and strong profitability metrics. We continue advancing our digital bank with a human touch strategy. Customers are embracing Oriental's digital tools and value-added services. Our Libre, Elite, and MyBase accounts are attracting new clients and helping our bankers deepen existing relationships. We resumed stock repurchases, buying back $13.5 million of common shares, reflecting our continued focus on creating long-term shareholder value. As to Puerto Rico's economy, it remains stable. Thank you to all our team members for their hard work and continued focus on making progress possible for our customers, employees, shareholders, and the communities we serve. Please turn to page four Our core digital strategy is focused on three main areas. The first area centers on delivering value through innovative account products tailored to the needs of our customers. Libre for the mass market, Elite for the mass affluent, and MyBiz for small businesses. The second area of focus is technology. Our omni-channel platform enables customers to engage with us seamlessly across our digital channels. This creates a convenient and efficient banking experience helps drive digital adoption, generating efficiencies and savings. As a result, we continue to invest in the customer experience and shift branch interactions away from routine transactions and toward meaningful relationship building. The third area of focus is AI-powered intelligent banking. Our data-driven, real-time, personalized insights provide compelling value. giving customers the ability to manage their finances in an easy and intuitive way. Together these capabilities distinguish us from competitors and accelerate digital adoption. They also expand our client base, create more opportunities to deepen customer relationship and engagement, and ultimately support growth in core deposits.

Please turn to page five.

Our key digital performance indicators continue to show our strategy is delivering results. During the third quarter, we saw year-over-year growth of 5% in new retail customers and commercial customers, 24% in active digital users, 2% in digital loan payments, and 11% in virtual teller use. Year-to-date as of September, more than 1.5 million customized AI-enabled smart banking insights have been delivered monthly to customers with more than 90% positive feedback. Libre accounts increased 7%, while digitally open Libre accounts grew 18%. We're the only bank in Puerto Rico that provides customers the convenience and speed of digital account opening. MyBiz commercial accounts grew 6%, while accounts open either digitally or by phone grew 16%. Now I'd like to turn the call to Maritza to go over the financials in more detail.

Thank you, José. All comparisons are to the second quarter, unless otherwise noted. Now let's turn to page six. Our financial performance was strong this quarter. EPS was $1.33. Efficiency ratio was 52%. Return on average asset was 1.86%. Return on average tangible common equity was 17%, loans to deposit ratio was 85%, and the payout ratio was 26%. Let's turn to page 7 to review our income statement highlights. Core revenues decreased $4.5 million to $186 million. Total interest income was $196 million, a decrease of $1 million. This reflected the absence of $4.1 million for prepaid and full commercial loans in the second quarter. This was partially offset by higher average balances of loans and cash and higher yields in cash and investment portfolios. There was one additional day in the quarter, which increased interest income by $1.6 million. Total interest expense was $42 million, an increase of $2.3 million. This reflected higher average balances of deposits at a higher cost. The debt factor increased interest expense by about $400,000. Total banking and financial service revenues decreased $1 million to $32 million. This reflected the absence of $1.1 million in annual insurance Annuity fees in the second quarter and lower mortgage banking revenues. This was partially offset by higher banking service revenues. Not interest expenses decreased $6.6 million to $96 million. This reflected the absence of $5.8 million in business operational charges from the second quarter. Income tax was $15.2 million, reflecting an anticipated EDR of 22.5% for the year. Now, let's turn to page 8 to review our balance sheet highlights. Average loan balances grew $37 million to $8.3 billion, while end of period balances grew $151 million to 1.8%. End of period balances reflected an increase in Puerto Rico commercial and consumer loans, which more than offset a decline in auto, residential mortgage, and US commercial. Most of the commercial loan growth came in towards the end of the quarter. Year over year, loans are up 4.1%. New loan production was $694 million, a decrease of $60 million. This reflected decreases in auto, Puerto Rico commercial, and residential mortgage lending, partially upset by increases in U.S. commercial and Puerto Rico consumer loans. Average core deposit balances grew $15 million to $9.7 billion. End of period balances declined $80 million, or 0.8%. This reflected decreases in demand and savings deposits, partially upset by increases in time deposits. Excluding the 500 million government deposits that moved to wealth management in the first quarter, deposits are up 3.5% year over year. Average cash balances $29 million and fell $179 million end of period. End of period balances reflected the funding of loan growth as previously mentioned. Average investments were flat and increased $20 million end of period. End of period balances increased due to purchases of $260 million of mortgage-backed securities and $20 million in securitizations. This was partially offset by market value adjustment and MBS principal payments. Average borrowings and broker deposits increased $45 million. $131 million end of period, reflecting liquidity management. Now, let's turn to page 9 to review our net interest margin. The Fed's 25 basis point rate increase in September had a limited impact on this quarter's results. Loan yield declined 22 basis points to 7.68%. As a reminder, second quarter loan yield benefited from $4.1 million related to commercial loans that were paid in full. September's rate increase had only a small impact on variable rate commercial loans. About $550 million of the total $1.7 billion of variable rate commercial portfolio repriced late in the quarter. Core deposit costs increased five basis points to 1.34%. This reflected higher demand for time deposits and higher cost of government deposits tied to three-month T-bill rate. Net interest margin was 5.23%. Now, let's turn to page 10. Capital remained strong despite an increase in market-to-market adjustment in our securities portfolio. CET-1 ratio was 14.10%, total stockholders' equity was $1.3 billion, CET ratio was 10.34%, tangible book value was $29.66, As for share buyback, as also mentioned, we bought back $18.5 billion in the third quarter. We have $180 million remaining in our authorization. Cesar will provide more details about credit in a moment. Let me summarize where we are heading into the final quarter of 2026. We continue to have a strong commercial pipeline and expect low single-digit loan growth for the year, with commercial more than offsetting an anticipated declining order. We expect deposit growth, excluding government deposits driven by our Libre, Elite, and MyBiz accounts. While our variable rate loans and cash positions make us asset sensitive, higher asset yields should largely be offset by the increase in liability costs. We expect net interest margin to remain near 5.25% for the balance of the year. Our NIEM outlook assumes that there will be one additional 25 basis points hike in December. Provision should move into $18 to $20 million range. This reflects increased loan volume and seasonally higher auto and consumer credit metrics. We remain on track. to maintain non-interest expenses at about $385 million for the year, excluding the $5.8 million business operational charge in the second quarter. Our estimated tax rate for the year continues to be 22.5%, not including discrete items. We will deploy capital currently across organic growth, dividends, and share repurchases. Balancing attractive opportunities with long-term shareholder returns. Now, here's Cesar.

CESAR ORTIZ- Thank you, Maritza. Please turn to page 11. All comparisons are to the second quarter, unless otherwise noted. Credit reflected disciplined execution, proactive risk management, and typical seasonal trends. Provision for credit losses was $18.1 million, up 5.1 million dollars from the second quarter. This reflected 17.5 million dollars for increased loan volume and 1.3 million dollars due to seasonal adjustments for the auto delinquency. This compares to the second quarter which included 14.7 million dollars for increased loan volume partially offset by 1.9 million dollars in commercial loan recovery. Early and total delinquency rates of 2.65% and 3.91% increased from the second quarter due to seasonal trends, but declined year over year. At the same time, nature jobs and non-performing loan rates of 0.70% and 0.74% declined compared to second quarter 2026 and third quarter 2025. As a result, Third quarter provision was slightly lower than originally anticipated due to better auto and consumer credit metrics. On the retail side, consumer and residential mortgage portfolios continue to perform well, with both reporting lower early and 90-plus day delinquency levels compared to a year ago. The auto portfolio experienced modest increases in both early and non-performing delinquency compared to the same period last year. Natural jobs for auto improved year over year and recovery performance remains strong. Collateral liquidation values have remained stable, resulting in consistent loss severity despite the modest increase in delinquency. This provides additional confidence that the observed seasonal increase in delinquency does not necessarily translate into increased loss content. We continue to closely monitor this trend. Mortgage performance remains particularly strong. We continue improvements across delinquency measures and recoveries continue to exceed charge-offs. As we discussed in prior quarters, first half retail credit performance typically benefits from seasonal factors, including tax reforms and other liquidity events. Then we see a seasonal increase in the credit risk in the second half. Accordingly, part of the third-quarter increase in auto delinquency metrics reflects seasonal normalization rather than alteration in the underlying credit profile of the portfolio. Our retail portfolio continues to benefit from disciplined underwriting and a significantly improved credit profile. As we have previously reported, this reflects tighter underwriting standards, improved portfolio mix, and stronger vintage performance. TURNING TO COMMERCIAL, OUR ASSET QUALITY REPRESENTS ONE OF THE STRONGEST GRADE STORIES WITHIN THE QUARTER. COMMERCIAL NON-PERFORMING LOAN RATES WERE 0.68% COMPARED TO 0.90% IN THE SECOND QUARTER. DELINQUENCIES AND NON-PERFORMING LEVELS ARE DOWN. CRITICIZED EXPOSURES HAVE DECLINED AND OVERALL ASSET QUALITY HAS IMPROVED MATERIALLY. Looking ahead, we remain watchful of inflationary pressures, higher operating costs, elevated energy expenses, and the continued impact of higher borrowing costs on both commercial and consumer borrowers. The credit portfolio continues to demonstrate resilience. We believe we are well positioned to navigate the current environment and any potential microeconomic headwinds that may emerge. Now, here's José to wrap up.

Thank you, Cesar. Let's turn to page 12. The Puerto Rico economy remains resilient. It is supported by healthy consumer and business liquidity, higher wages, and historically low unemployment. Infrastructure projects and private investment continue to support economic activity. Manufacturing expansion and new insuring initiatives reinforce the long-term economic outlook. And as Cesar mentioned, we remain attentive to evolving macroeconomic conditions, including higher energy costs, Thank you very much. Thank you very much. Thank you. Methodical execution and differentiated franchise positions as well to navigate evolving market conditions. With this, we end our formal presentation. Operator, please open the call for questions.

Certainly. If you have a question at any time, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, press the star 2 key. We will take our first question from Brett Rabaton with Stonex Group. Your line is open.

Hey, good morning, everybody. Thanks for the questions. Wanted to start off, José Rafael, you know, I've seen some of the data here in the past few months that's been modestly positive for some continued Puerto Rico growth, but if you Look at the newspaper articles in Puerto Rico that they seem to be somewhat more dour and talking about downside risks and the cost of diesel, etc. Can you maybe just start off with just what you're seeing on the ground and what positives and negatives you would kind of point to as it relates to the economy?

Sure. Thank you for your question, Brent. We need to separate a little bit the noise from the facts here in the sense that we're not seeing any deterioration on the economy to speak of. We continue to see unemployment on the 5% handle. We see wages at a higher kind of historically highest levels. We're seeing the unshoring coming in and we see actual private investment flowing through the economy. So the data does not support the noise that we might be reading or listening to locally. And again, it's all driven by, most of it driven by political kind of discussions and one side kind of challenging the other. But from our perspective, and as Cesar mentioned on the credit side, we continue to see a pretty steady Thank you very much. That's helpful.

And then, it seems like all the Puerto Rico banks have been lamenting that auto has been softer. But when I look at the auto trends, the origination levels haven't fallen off that much. And it seems like auto is still there relative to what I've seen to hear. Any thoughts on auto from here? and then just the commercial pipeline you know I heard the guidance around you know the low single-digit growth but you know just any thoughts as you think about 27 you know any early reads that growth might be better or worse than what you're seeing this year yep so to your first point we are equally happily surprised with the levels of auto lending originations during this year

We expected a softer market and we're still there seeing, yes, lower originations but better than what we expected. We really are not ready to give you formal 2027 guidance, but I can give you a little bit of color on how we see the auto business into 2027. I think you'll see the steady, maybe slightly lower, New car sales and therefore you'll see also some trends across the market where you will see a lower auto originations. We're actually into those analysis right now, but we feel that given what we saw in 2026, we do not expect auto originations to decline and many more. Additionally, at a faster pace than 2026, we see it pretty stable. That's on the auto side. On the commercial side, on the other hand, we are seeing very good growth opportunities. We are seeing good opportunities for us to establish new commercial relationships through the lending side as well as on the funding side. Maritza mentioned in her remarks the pipeline that we We're having a banner year on the commercial side in Puerto Rico, and a lot of our work has been put into this year's work, and the team has done a great job on the commercial, middle market, and small business. So we do feel that we're going to end the year with strong numbers, strong originations, and this quarter is another example of what we have been able to achieve.

Okay, great. Appreciate the caller. Thanks, José Rafael.

Yeah, thank you, Brent. Thank you for your questions.

We'll take our next question from Aaron Sedanovich with Truist Securities. Your line is open.

Thanks. Good morning. On the deposit side, you know, are you seeing competition increase? You know, demand deposits were down, savings deposits were down quarter over quarter. You know, anything in particular driving that? I'm sorry if I missed something in the prepared remarks.

Yeah. I think Maritza covered it pretty well. I think, you know, big picture, the seasonality that we see in the first half of the year with funds coming in reflects also on the deposit side. And you'll see a little bit of a softer second half of the year on the funding side just simply because liquidity is put to work. on the commercial side, as well as on the individual side, on the retail side. From a competition perspective, look, we're in a competitive market, and we compete, and our competitors compete against us. So this is not a cakewalk, trying to gain market share on all the business units, as well as growing the bank. So yes, for sure there's deposit competition. We're also seeing a little bit more sensitivity with higher rates on some higher balance individual clients. They are more sensitive and they're looking for alternatives. We have the wealth management business that benefits from that, so it's fine with us. But at the end, we're just trying to make sure that we service and cater to our customers on a relationship basis. We feel pretty confident on how we're growing our deposit balances and the deposit relationship with our commercial and retail customers, Aaron.

Great. Thanks. And as a follow-up in the slide deck discussing the AI insights that are personalized for your customers, maybe you could talk a little bit about how that So it's personalized, it's on the mobile, it's on online.

You get your phone or your online and the first thing you see is this is the expected expenses based on your several months before experience. These are your expected expenses that you're going to This is your expected income coming in. These are insights that are really unique for the Puerto Rico market. No ever has a bank provided those type of insights on such a simple and accessible way. So that's an example. There's another insight that you get, and these are personalized. This is not based on collective data. This is on specific, personalized data. Thank you very much. Thank you very much. and the same thing goes for the commercial side and it's something that we have been working on and building on throughout several years and it's starting to show the results. We're also seeing the opportunity for us to deepen those relationships so it's not only about bringing in new customers and clients to Oriental It is also about our opportunity to deepen those relationships and be able to make them primary customers for us. So it's exciting times for us. We're really happy with the way our strategy is progressing and how we are unique in the market and being a different bank than the market is accustomed to see.

Thanks José.

And we'll take our next question from Kelly Mata with KBW. Your line is open.

Hi, good morning. Thanks for the question. I think I'd like to start off on the margin. You guys undoubtedly have one of the best margins here of the group, but it seems like your expectations near term are a bit more tempered than where you were in July. I'm wondering kind of in terms of both loan pricing as well as the deposit competition, you've noted you're in a competitive environment where the incremental headwinds have been coming from relative to those July expectations. Thanks.

Thank you for your question, Kelly. And I appreciate you recognizing the margin levels that we have and how we have managed them pretty consistently Kudos to the team and Maritza overlooking and overseeing all that effort. So I'll let her give you the more details about it.

Thank you, Kelly. I think when you look at the range that we share with you, we were near the lower end of that range because we were money in several other scenarios at the moment, particularly in the funding side, how we will behave in the second part of the year, given the liquidity that is moving and everything. So when you look at what happened during the quarter, we did have some repricing in the government side that we were expecting, because we repriced about $400 million of the government deposits at the end of second quarter that were moved into time deposits. So we had the pooling back during this third quarter. But secondly, the mix in the now savings and time deposits, we saw more than expected movement to the time-deposit side of the funding mix. And that's what happened with the initial estimate that we have. So it's particularly driven by the funding mix. I think that the level of market rates right now, we were expecting no rate hike during the second part of the year. So now we have one. Secondly, we have the Treasury notes at its highest level. So we're starting to see more clients looking for high yielding type of products. So we are there for our customers. So that's why time deposits were higher than expected during this third quarter.

Great. Thanks so much for the color. That kind of ties into my next question, which is mostly a point of clarification. as well as now look ahead um the government deposits you had you had some go to wealth at the beginning of the year and then you had the what you had already um disclosed is moving to being turned out to CDs in June um that's created some variability in those demand deposits just wanted to confirm that that those balances are now one out of demand deposits and then as we kind of look ahead it seems like you know Clients are being driven by more rate-sensitive accounts. Do you think this is kind of a place where we can stabilize, or would you anticipate some additional migration of excess funds to time here? Thanks.

Yeah, let me make sure. You're asking about the government deposit? Yes. Okay. So that's a particular deposit that we have been managing for a long period. It was at $1.2 billion. About $500 million moves to the broker at the beginning of the year. Then end of second quarter, we made two time deposits. One actually matures end of third quarter. We repriced it. That will impact this fourth quarter coming. So the answer is that we will see some repricing there because of the market conditions. You know, all these deposits are tied to three-month treasury bills, so they will have some reflection of what the market is experiencing.

And it's a good point that Maritza makes because that's very much separate to the actual core client deposit funding that we have on the retail and commercial. The dynamics are completely different.

And not necessarily tied to market rates.

Correct, correct. So it's good that you asked that question, Kelly, because it might be some confusion among the market.

Got it. Okay, that's helpful. Maybe last question for me, and then I'll step back. I appreciate you guys reiterated the low single-digit growth outlook for the year. You're kind of already there in 3Q. Obviously, commercial growth was super strong. Wondering about, you know, the pipeline ahead and, you know, what could potentially push you slightly above that if you're successful in withdrawing loans again in Q4? Thank you.

Yep. So, to answer your question, Kelly, is, yes, we're very confident that we're going to have low single-digit loan growth for the full year, and we work hard to Thank you. And we'll take our next question from Manuel Navas with Piper Sandler. Your line is open. Hey, good morning.

I appreciate the commentary. Just kind of following up on the NIN here, how should we think about the December hike post you kind of get past some of these seems more like unique public fund repricing moments that might be impacting the near-term NIM in the fourth quarter? How should we think about future hikes impact on NIN into early next year?

Yeah. Yeah, we will update at the end of the year with how we see 2027. But I can answer on the matter of the December hike. It will be something similar to this quarter that it happened at the end of September. And as I shared with you in my prepared remarks, the more elastic The fourth quarter interest rate hike. Interest rate hike, yeah.

I guess also, separately, you had a lot of loan growth come in at the end of the quarter. Do you have a sense for new loan yields for that, especially for that piece, maybe like September new loan yields?

Yeah, similar to the portfolio yields. It's a market that at those levels that were originated on the commercial Puerto Rico side.

that you should use that as a as a guidance okay and then um uh i like that that the buyback restarted this quarter just kind of thoughts on its pace um i know you're doing shareholder capital return but just kind of a current update on capital deployment and the pace of the buyback

Yeah, so we look at loan growth and balance sheet growth first. We certainly are very proactive on the capital management, and we'll continue to do so. We'll mix it between dividend and the buyback. So you'll see us being pretty steady on the buyback and probably more More active as their fluctuations in the market. But overall, the capital management strategy remains the same. We've deployed our capital for growth in the balance sheet, and the excess capital that we have, we deploy it through dividends and buyback. We still have $180 million on the buyback, so that is ample.

I appreciate that. My last question is a little bit digging in deep on credit. Credit trends are really strong. The commercial trends are excellent. Just want to cover all my bases. Delinquencies ticked higher in auto and a little bit higher, I think, year over year as well as link quarter. Any extra color there? Is this still well within the normal seasonal increases? And you kind of expect a seasonal increase in the fourth quarter and then an improvement in the first quarter of next year as well. Is that the right trajectory to think about?

Yeah, that's exactly right. You have it right. The seasonality works from first quarter improving and then peaking up to the fourth quarter. So we still expect that trend to happen this year too.

Anything specific in auto this year versus last year?

No, we continue seeing the resiliency of the customers as you see in the credit performance of the customers. So far, the portfolio is behaving very well. The economy is well, too. So those two together give us comfort on the credit performance of our portfolios.

And as Cesar mentioned, we're very cognizant about what's going on with higher interest rates and inflation and energy and all that stuff. All those things are happening when Puerto Rico's economy is sitting in a much different position than in years past, and it makes a different behavior for consumers. Simply, that's what's going on. So the performance that you're seeing on the consumer side, on the credit consumer side, it's a reflection of the economy and all the things that we talked about earlier in the call.

Thank you, I appreciate the comments.

Yeah, thank you.

Again, if you would like to ask a question, press star then the number one on your telephone keypad. At this time, there are no further questions. I will now turn the call back over to management for closing remarks.

Thank you, operator. Thanks again to all our team members for a great job in the quarter. And thanks to all our stakeholders who are visiting. Looking forward to see you next time.

Thank you. This does conclude today's program. We thank you for your participation. You may now disconnect.