First BanCorp FBP Q3 2025 Earnings Call Transcript

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DATE

Thursday, October 23, 2025 at 10 a.m. ET

CALL PARTICIPANTS

Executive Vice President and Chief Financial Officer — Orlando Berges-González

Chief Operating Officer — Ramon Rodriguez

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TAKEAWAYS

Net Interest Income -- Increased due to a $126 million rise in average loan balances and a 3 basis point yield improvement, aided by an extra day in the quarter.

Average Residential Portfolio -- Grew by $19 million, showing continued expansion in this segment.

Expenses -- Reached $124.9 million, up $1 million from the previous quarter, primarily from a $2.8 million valuation adjustment in OREO and offset by a $2.3 million employee retention credit.

Efficiency Ratio -- Held at 50%, unchanged from the previous quarter, with management reiterating guidance for a 50%-52% efficiency ratio range over the next couple of quarters.

Nonperforming Assets (NPAs) -- Decreased by $8.6 million, with non-accrual loans down $3.8 million and OREO balances reduced by $5 million, including the aforementioned adjustment.

Net Charge-Offs -- Totaled $19.9 million, or 62 basis points of average loans, Up $800,000 and 2 basis points from the prior quarter.

Allowance for Credit Losses (ACL) -- Declined by $1.6 million to $247 million, led by residential mortgage improvements and partially offset by a commercial loan allowance increase reflecting projected CRE price deterioration.

Allowance to Loans Ratio -- Fell four basis points to 1.89% (189 basis points), mainly due to a nine-basis-point drop in residential mortgage reserves.

Deposit Costs -- Management expects some reduction in deposit costs in Q4 2025, with government index deposits moving with rates and core retail deposit costs not expected to decline immediately.

Tax Rate Guidance -- Orlando Berges-González stated, The number that we put in the press is an effective tax rate of about 22.2%, which is the estimate for the full year.

Share Repurchases -- $50 million in common stock repurchased; the board approved an additional $100 million authorization with an assumption of $50 million per quarter through 2026.

Tangible Book Value per Share -- Rose to $11.79, aided by a $49 million fair value improvement in for-sale securities.

Tangible Common Equity Ratio -- Increased to 9.7%, impacted by securities portfolio fair value gains.

Loan Growth Guidance -- adjusting from the previous “mid-single digit” (originally 5%) target.

New Loan Originations -- Commercial originations yielding about 6.7% on average, mortgages in the 6%-6.4% range, consumer loans at 10.5%, with spreads unchanged but base rates declining on reinvestments.

Liquidity Reinvestment -- $600 million of investment cash flows to reprice in Q4 2025 at average yields of 1.5%, with reinvestment options currently 50 to 100 basis points lower than expiring yields.

Competitive Deposit Landscape -- Government deposit competition mainly comes from smaller banks and existing players, not new external entrants, with 40% of the government deposit book indexed to market rates as of Q3 2025.

Mainland M&A Strategy -- Management remains open to M&A in Florida for franchises that complement current operations, emphasizing organic growth as the capital deployment priority.

SUMMARY

Management affirmed a stable efficiency ratio and consistent expense guidance, reinforcing cost discipline despite higher OREO losses. While NPAs showed modest improvement and net charge-offs continued to normalize, declines in the allowance ratio reflected stronger residential mortgage performance and updated macro expectations. Shareholder returns intensified through new share buyback authorizations and sustained dividend payments, backed by improved tangible equity metrics. Loan growth targets were moderated in response to weaker auto and unsecured credit demand. Commercial and residential lending pipelines remain supportive. Deposit costs are expected to decline gradually as rates fall, with mix shifts and timing influencing near-term margin outlooks.

Orlando Berges-González clarified, "we still have $38 million from this year's authorization. We can move back and forth and increase or decrease as we believe is prudent. Again, open market is our approach. No ASR's are, you know, on schedule or as part of the strategy."

Investment securities cash flows will predominantly reprice in November and December, with reinvestment yields below expiring asset rates due to lower market rates.

Competitive deposit pressures are largely limited to local players, with U.S. Treasury options influencing only a segment of high-end customers.

Near-term onshoring announcements have not yet produced material economic impact on Puerto Rico, though longer-term benefits may bolster some sectors as projects become operational after mid-2026.

INDUSTRY GLOSSARY

OREO (Other Real Estate Owned): Real estate acquired through loan foreclosure, held temporarily until sale or resolution.

ALCL (Allowance for Credit Losses): Reserve set aside to cover estimated future loan losses across the portfolio.

Beta (Deposits): The degree to which deposit rates change relative to changes in benchmark interest rates.

CRE (Commercial Real Estate): Loans and assets secured by income-producing or development real estate, including office, retail, and industrial properties.

SOFR (Secured Overnight Financing Rate): A broad U.S. dollar measure of the cost of borrowing overnight collateralized by Treasury securities, used as a floating-rate loan benchmark.

Full Conference Call Transcript

Ramon Rodriguez: Loans increased by $3.8 million related to a $126 million increase in average balances, a 3 basis points increase in yield, and we had an extra day in the quarter, which also improved the net interest income. The average balance on the residential portfolio grew $19 million for the quarter. For the fourth quarter, we will continue to benefit from yield improvements from the reinvestment of the cash flows from the investment portfolio. But this will be partially offset by the two projected Federal Reserve rate cuts that would result in a reduction in yields on the floating commercial loan portfolio as well as the cash balances.

Remember, we have a floating commercial portfolio, about half of it is floating with either prime or SOFR mostly as it stands today. Knowing that we have an asset-sensitive position, repricing on the asset side will happen faster than on the liability side. We expect that margin for the fourth quarter to be sort of flat with increases in net interest income coming from loan portfolio growth. In terms of other income for the quarter, it was relatively flat. There was a slight reduction in card processing income due to lower transaction volumes.

Expenses for the quarter were $124.9 million, which is $1 million higher than last quarter, mostly due to the net loss on the OREO operation related to the $2.8 million valuation adjustment I just mentioned. Also, payroll expenses decreased by $300,000 due to the $2.3 million employee retention credit. That basically compensated for the $1.8 million increase we had from ordinary increases and from an additional payroll day in the quarter. If we were to exclude OREOs and the employee retention credit, expenses were $126.2 million, which compares to $124 million in the second quarter. This is slightly above our guidance but very much in line with the $125 million to $126 million we had provided.

The efficiency ratio for the quarter was 50%, pretty much unchanged when compared to the second quarter. The projected expense trend for technology projects and business promotion efforts we plan to do in the fourth quarter. And so we reiterate our guidance expense base of $125 million to $126 million for the next couple of quarters. We still believe our efficiency ratio will be in that range of 50% to 52% considering expenses and income components. In terms of credit quality, it remained fairly stable in the quarter.

NPAs decreased by $8.6 million, basically a $3.8 million decrease in non-accrual loans, mostly residential mortgages and CRE loans, and a $5 million reduction in OREO balances that includes the $2.8 million adjustment on the VI property I mentioned. Inflows to non-accrual were $32.2 million, which is $2.2 million lower than last quarter. Mostly commercial and residential mortgage inflows of $6.7 million, which are offset by a $4.5 million increase in consumer inflows. Loans in early delinquency, defined as thirty to eighty-nine days past due, increased by $8.9 million, mostly one case in the Florida region, a million-dollar commercial case that the payment was not received until later in October.

In terms of consumer loans, early delinquency remained relatively flat from the second quarter, increasing only $300,000. Moving on to the allowance, the allowance is down $1.6 million to $247 million. The decrease was mainly in the residential mortgage portfolio as loss severities have continued to improve. On the other hand, the allowance for commercial loans increased based on the portfolio growth and some deterioration that is projected on the CRE price index as part of the macroeconomic forward projections. The ratio of the allowance for credit losses to loans decreased four basis points to 189, and this was mostly a decrease of nine basis points in the allowance for credit losses on the residential mortgage portfolio.

Net charge-offs for the quarter were $19.9 million, sixty-two basis points of average loans, which is up $800,000 from the prior quarter or two basis points. Last quarter we had an $800,000 commercial loan recovery, and this quarter we did not have any of this size to offset some of the charge-offs. As Aurelio mentioned, consumer charge-off levels continue to be normalizing, and commercial charge-offs continue to be very low. On the capital front, again, our strong capital base continues to support the actions of share repurchases and dividends. During the quarter, we declared $29 million in dividends and repurchased the $50 million in common stock we had mentioned.

Regulatory capital ratios continue to be low, but these capital actions were offset by the earnings generated in the quarter. In addition to all this, we registered a percent increase in the tangible book value per share to $11.79, and the tangible common equity ratio expanded to 9.7% also due to the $49 million improvement in the fair value of our for-sale securities. The remaining ALCL still represents $2.42 in tangible book value per share and over 177 basis points in the tangible common equity ratio. As we announced yesterday, our Board approved an additional $100 million in share repurchase.

Our intention is to continue the approach of opportunistically executing on our capital actions based on market circumstances, with the base assumption of repurchasing approximately $50 million per quarter through 2026. But again, as we have done so far, we will continue to deploy our capital in a thoughtful manner looking for the long-term best interest of our franchise and our shareholders. With that, operator, I would like to open the call for questions.

Operator: Sure. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on the telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause here for the questions to be registered. And our first question comes from Brett Rabatin with Holt Group.

Brett Rabatin: Hey guys, good morning. Hey, Ben. Wanted to start off morning. I wanted to start off just wanna make sure on the tax situation, that's one time, right? That does not continue from here in terms of any benefit.

Orlando Berges-González: Well, there will be a benefit in the sense that we will not have reversals of deferred tax asset at these levels. But there is a benefit on the normal operating losses or expenses we have at the holding company. Those are annual expenses that now we are not yielding any tax benefit. And they will be offset also against revenues from this sub. So it is not that it is a huge amount, but you saw that the effective tax rate came down a bit, and that is reflecting some of that benefit. So not at the level of this reversal of DTA, but there is a little benefit on the effective tax rate going forward.

Brett Rabatin: Okay. That is helpful. Then wanted just to talk about I have seen the stats, I know that the auto lending has finally come in as expected for some time a bit. Any thoughts on the health of the consumer in Puerto Rico and your credit trends seem fairly stable from a consumer perspective. But just wanted to hear any thoughts on how you guys are seeing on the ground consumer activity.

Orlando Berges-González: Well, I think it is clearly auto sales we can call it normalizing. We were expecting for the year a 5% adjustment coming down. Actually 7% year to date, but obviously, it was disrupted by increased sales in the second quarter because of the tariff when they were coming. Now you see a reduction. Some sales were accelerated. So I think we need to see what happens this quarter to normalize those auto sales and see what is the real stable volume. They have fluctuated between 100 to 120 units, 20,000 units per year for some years. So we expect somewhere in that range probably the second half of the year will determine how we project 2026.

Yes, demand has been lower. It has been on the other hand unsecured credit demand is being a little bit lower. We remember three years ago, two years ago we have been doing adjusted policies. We have seen the good performance of the portfolios across the board. And some of the higher losses that we experienced in credit cards and unsecured are being leveling. So we expect stability on the consumer. But we do not expect portfolio growth that we achieved for some years. So that portfolio growth will come from resi which is performing excellent and from the commercial portfolios that we continue to gain some share across the different sectors.

So that I will say stability in the consumer obviously working hard to manage any contraction of the portfolio. As we continue to move on with products and services on that segment.

Brett Rabatin: Okay. And then one last one, if I can, just around the margin guidance, flattish in the fourth quarter. Does that assume in the face of the rate cuts, does that assume you are able to lower funding costs deposits even though the beta in Puerto Rico on the way up was obviously a lot slower than the main ones. Are you expecting the beta on deposits to be better on the way down?

Orlando Berges-González: I think one element that definitely will come down, we have some index deposits at the government. That are they move with the rates and some of that will come down. We do not see the other core retail products coming down yet. Other than time deposits, but we do see some other than time that they happen they move with the market. So there will be some reduction in the cost of deposits expected to happen during the quarter. Obviously, how much that kind of offset the mix of the portfolio. Obviously, the margin is very strong. So having less consumer loans at high yield impacts the margin directly.

As well as which segments of the deposits are growing which this quarter we have growth on the CD book at market not necessarily above market. So as an example, so it depends on the whole mix of the balance sheet which is big.

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

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

Timur Braziler: Hi. Good morning.

Orlando Berges-González: Good morning, Timur.

Timur Braziler: Back on the deposits, can you just elaborate a little bit more on the competitive pressures that you are 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 were optimistic that some of these competitive pressures might abate here. Maybe just give us some color as to what gives you that confidence.

Orlando Berges-González: Well, you know, I think the cycle matters. Some of these are contracted deposits that are indexed. So they are already contracted and they are not necessarily for bid. So they would by if the rates move they will move with them either monthly or quarterly. So some of them are in our case, probably 40% of the government book is on that bucket. I think the others, the city, whatever matures, obviously, move down with rates. I think competitive pressures are really coming from the smaller players, not from the large players. And the way we manage that is, we go after operational accounts plus what additional services the government entities need.

But we compete in pricing where we have other types of relationships. Not just to get a CV or, you know, it really has to add something else to the mix of the products that we sell on the franchise services. Municipalities have and other government is having a lot of payment services. Deposits, pay so obviously, to complement that, we compete on CDs. When they come to the market.

Timur Braziler: 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 land drop and deposit costs?

Orlando Berges-González: We do expect some reduction in deposit costs coming down as a result of the reduction in rates. The main point is that typically we have seen the betas on some of these deposit products move at a there is a lag as compared to some of the floating asset products. So there is a timing issue in terms of when we see that on the asset side versus the deposit side. But we do expect reductions, it is just the pace at which all of them will come down.

Timur Braziler: Okay. And then just on credit, credit results at FirstBank in 3Q were really strong. There was a couple let's say, in migration, inbounds 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 are thinking about your own portfolio, if at all?

Orlando Berges-González: Well, you know, we have been telling for some time that we have a firm risk appetite. And we have policies that we follow, and we have, you know, the ticket you know, the inside tickets that we tap. And so it is really our methodology. It is really the performance of our portfolio. Obviously, if there are things that could impact an industry, impactful. Yes. Other than we tend to look at each of our cases individually. And again, as Aurelio mentioned, unless we see something in industry, it would be more of what we are seeing on our own customer base. And what are the results that underlines of business they have.

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

Orlando Berges-González: Well, capital deployment priorities are obviously number one organic growth. A Fed in the Florida market could be an alternative. If it is for us. It is a franchise that enhances our current franchise. It is very easy to originate loans in Florida if you have the right teams. They move from one bank to the other and as long as we have a good discipline of credit, we will perform well. And I think we have a history of that. I think it will definitely have to be complementary to our deposit franchise. That will be the profile. We have the capital, size will depend.

Timur Braziler: Okay. Thank you for the color.

Operator: And our next question comes from Kelly Motta with KBW. Hey, good morning. Thanks for the question.

Kelly Ann Motta: Good morning, Kevin. Wanted just circle back to the competitive landscape in Puerto Rico. I appreciate the color around the government deposits. Wondering if there has been any competitor competition from outside the Puerto Rico banks. Any if you have seen any new entrants in the market and just opine on the competitive landscape? Thank you.

Orlando Berges-González: You know, not on the deposits, you know, it is really know, what we see, it is more aggressive now than the smaller players, as I mentioned. You know, obviously, in the credit card business, there has always been a lot of entrants. And they dominate US banks dominate the card issuance, including, you know, the larger brands. So the larger banks. So not nothing new on that front.

Ramon Rodriguez: And it is also the credit unions that play in the market, but not from not coming from the outside. It is entities that have operations in Puerto Rico.

Kelly Ann Motta: Okay. Got it. That is helpful. There is gonna be The only the only caveat.

Ramon Rodriguez: Kelly, I am sorry. The caveat is there is one player, big player, which is called the U. S. Treasury and it is only you faced that with some of the high-end customers that they could move monies into treasuries.

Orlando Berges-González: Yeah.

Kelly Ann Motta: Got it. That is helpful. There has been a lot of news on 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?

Orlando Berges-González: Yeah. I think, you know, in the short term, they have announced a few deals. And we will try to put some more detail on that in our investor deck. A more granular things that have been already approved or negotiated. We are trying to get more data on that. In addition, but we do not see that it is really in the short term. Probably we continue to sustain and improve the construction sector and whatever is related to materials and the labor-related benefit of that, but not necessarily we see anything that most flows through the economy other than that impact. In the short term.

As we see these expansions become operational, then we will probably see more employment, better compensation, and expansion of the workforce, yes. But we do not expect that until probably the second half of 2026 or further. But the good thing is it is a long-term benefit of sustaining the economy of the island. Rather than having a long-term risk not having this commitment. Yes.

Kelly Ann Motta: Got it. That is really helpful. And then I guess circling back to the margin, I know you guys have had we saw a nice uplift from on the securities book. Can you remind us about the cash flows on that, one? And then two, the new loan yield originations look like just so we can kind of get a sense of the potential offset to some of the floating rate dynamics that you already articulated?

Orlando Berges-González: So we have about $600 million of cash flows coming in this fourth quarter. The deals on that are around 1.5% on average. So that would be some of the cash flows that we immediately reprice. We also have about $1 billion more in 2026 that also on average are yielding that 1.5% that also come due. Obviously, with rates coming down, the reinvestment component, it is a bit lower than what we were seeing rates somewhere between 50 to 100 basis points lower already in some of the reinvestment options. Within our policy guide. And some of it obviously could go into lending. As Aurelio made reference to it would be more in the commercial and residential side.

Kelly Ann Motta: Okay. And if your loan book right now is $7.77, what do the new loan origination yields look like? I guess in Q3?

Orlando Berges-González: You are talking about the overall or you are talking about just the...

Timur Felixovich Braziler: That is the average yield.

Orlando Berges-González: Those are average yields including consumer. If you take a look at the commercial side, mortgages we are talking about sort of 6%, 6.4% kind of rates. Right? It is market as of whatever you see in the market. The commercial portfolio yields are right now overall commercial portfolios including everything it is about six seventy on average. So that is a combination of what goes into construction or CRE and C and I obviously. So that we are not seeing big changes on spreads. It is a function of the base. The base meaning the base rate which we either SOFR or prime, which are the main ones. That would be the ones the adjustments we will see.

But not necessarily on the spreads. It is a lot more.

Timur Felixovich Braziler: Consumer yields are going to be similar to what we have now. But it is only an issue of what is the level we Consumer on average are about 10.5% that what we have in the blended in the whole portfolio. Of consumer portfolio. And that should stay sort of around those levels, but it is a function of volume more than anything on the consumer.

Kelly Ann Motta: Okay. Thank you.

Operator: The next question comes from Erin Sigunovic with Truist Securities.

Erin Sigunovic: Thanks. I am sorry if you mentioned this, but what is 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 are thinking there on number.

Orlando Berges-González: Yes. We I did mention that we have the guidance that we have for the full year is between 34%. And I think the original guidance was 5% mid-single digit. This is actually considering what happened in the auto lending side. Over the third quarter and actually part of the second quarter. It is the primary driver. Okay. Some offset has been provided by mortgage and we do have a fairly strong pipeline in commercial. Obviously, there are always timing issues on those. But for the pilot to continue, I will.

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

Orlando Berges-González: Well, we have always been opportunistic in the market and we still have $38 million from this year's authorization. We can move back and forth and increase or decrease as we believe is prudent. Again, open market is our approach. No ASR's are, you know, on schedule or as part of the strategy. We will continue monitoring.

Timur Felixovich Braziler: 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, a little bit less depending on what are the circumstances on the market.

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

Orlando Berges-González: Again, opportunities come and go. So you know, we will see. We will continue to monitor and see what could happen. I think there is some you know, if you see some of the bank reports, obviously, there is a credit side that could be more reflected in the US, so that could bring opportunities.

Erin Sigunovic: Got it.

Orlando Berges-González: Okay. Yeah. Thank you. It is our walkway know, these are always the timing opportunity. Thank you.

Timur Felixovich Braziler: Right.

Operator: The next question comes from Steve Moss with Raymond James. Good morning.

Steve Moss: Morning, Orlando, just following up and maybe just following up, Orlando, on the margin here in terms of the timing of the cash flows from the securities portfolio. Is that just is that throughout the quarter? Is that kind of late in the quarter to impact the margin? Well, Elyse, you saw it is not really equally spread, but you can assume it is on average November and December tend to be the highest in terms of the cash flow coming in.

Orlando Berges-González: You saw that last quarter we had that 16 basis points pickup. We had about $500 million for the third quarter that those were the cash flows more or less that we are having big repricing impact. So we and all of it did not benefit the third quarter. Some of it we will see in the fourth quarter. So it averaged out a bit. So we should see a pickup obviously with the only difference, what I mentioned that we are seeing rates the options that we have in rates being between 50 basis to 100 basis points lower based on our policy guidelines of what we put in the portfolio.

As you know, do not put much of credit risk in the portfolio. It is more of an interest rate more than anything.

Steve Moss: Right. Okay. Just appreciate that color. And then on the loan loss reserve here, you guys have made a number of I guess, qualitative adjustments, if you will, over probably the last twelve or maybe eighteen months. Just kind of curious here, kind of as you think about credits performing quite well on the island for an extended period. Your consumer credit charge-offs are lower year over year. Just kind of curious as to where you think that reserve ratio could shake out over the next six to twelve months?

Orlando Berges-González: We do not talk about specific guidance like that specific but what I can tell you is that on the mortgage side, we have seen the trends with the lower charge-offs that our methodology uses historical loss information that it is updated all the time. And obviously, as you get more history with better numbers, in terms of losses that improves the ratio. So the residential reserves should come down. There is always an uncertainty on the forecast, the macroeconomic forecast projections.

We have seen the stability on the unemployment sector, the unemployment ratios in Puerto Rico reflect on the way the trends are expected on some of the portfolio especially in when you look at the downside scenarios we do include in our reserves calculations. So, mortgage I do expect with credit expectations we have that it would come down continue to come down a bit. Consumer, we are still seeing obviously we had as you mentioned the 2023 during twenty '23 twenty-four we saw increases related to those vintages of the older vintages of 2021, '23 vintage. We have seen more stability now on the charge-offs and that includes that affects calculations.

So that for now will be sort of stable I would say in the meantime. And commercial has been pretty good. So I do not see major changes in commercial.

Steve Moss: Okay. Great. Appreciate all the color.

Erin Sigunovic: Thank you. Thank you.

Orlando Berges-González: Thank you, Steve. Thanks, Steve.

Operator: We have a follow-up from Kelly with KBW.

Kelly Ann Motta: Hey. 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 like approximation of what the go forward tax rate looks like here? Does it is it any materially different after adjusting for some of these one-time things you had in the quarter? Any help would be appreciated.

Orlando Berges-González: The number that we put in the press of effective tax rate of about 22.2% which is the estimated for the full twenty-five. Already reflects some of this expected improvement. So I would say that is a good number to use as a guidance. Remember that with few things here and there as reinvest on the investment portfolio, a large chunk of that would have tax benefits and we are reinvested at 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 is on a taxable side.

So the 22.2% I think reflects fairly good a number that should be between that 20% to 25 I'm sorry, 22% to 22.5% range. It is what I am expecting.

Kelly Ann Motta: I apologize. I missed that in the release. Thank you.

Orlando Berges-González: Yep.

Operator: Thank you. So just as a final reminder, it is. And as we have no further questions in the queue, I will hand back over to Ramon Rodriguez for any final comments.

Ramon Rodriguez: Thanks to everyone for participating in today's call. We will be attending Houghty'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.

Orlando Berges-González: Thank you.

Operator: Thank you everyone for joining today's call. This concludes the call. Please you may now disconnect. Have a great day.

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