Hello, everybody, and welcome to the Popular, Inc. Third Quarter 2025 Earnings Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions] I'd now like to hand over to Paul Cardillo, Senior Vice President, Investor Relations Officer. Please go ahead. Paul Car

Good morning, and thank you for joining us. With us on the call today is our President and CEO, Javier Ferrer; our CFO, Jorge García; and our CRO, Lidio Soriano. They will review our results for the third quarter and then answer your questions. Other members of our management team will also be available during the Q&A session. Before we begin, I would like to remind you that during today's call, we may make forward-looking statements regarding Popular, such as projections of revenue, earnings, credit quality, expenses, taxes and capital structure as well as statements regarding Popular's plans and objectives. These statements are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today's earnings release and our SEC filings. You may find today's press release and our SEC filings on our web page at popular.com. I now turn the call over to our President and CEO, Javier Ferrer.

Thank you, Paul, and good morning, everyone. Starting on Slide 3, we share a few highlights that reflect our strong operating performance in the third quarter. We reported net income of $211 million and EPS of $3.15, an increase of $1 million and $0.06 per share, respectively. Our results were driven by higher revenues and expanding net interest margin, strong loan growth and importantly, stable customer deposit balances. Our credit metrics were impacted by 2 large commercial loans, which were related to isolated circumstances that do not reflect broader credit quality concerns. As Lidio will discuss in more detail in his remarks, I'd note that excluding these 2 relationships, credit metrics remained stable. For the second quarter in a row, we have demonstrated progress from our efforts to achieve sustainable returns above 12% this year and towards our longer-term 14% objective. Please turn to Slide 4. As of the end of the third quarter, business activity in Puerto Rico continued to be solid as reflected by favorable trends in total employment, consumer spending, tourism and other key economic data. The unemployment rate of 5.6% continues to hover around all-time lows. Consumer spending has been resilient and remains healthy. Combined credit and debit card sales for Banco Popular customers increased by approximately 5% compared to the third quarter of 2024. Home purchase activity continues to be strong as demonstrated by the $129 million increase in mortgage balances at Banco Popular during the quarter. Momentum in the construction sector has been solid with both public and private investment fueling higher employment levels and cement sales. We are optimistic that these trends will persist given the backlog of obligated federal disaster recovery funds, announced real estate and tourism development projects as well as the renewed focus on reshoring by global manufacturing companies. One example of this is Amgen's recently announced $650 million manufacturing network expansion, which is expected to create roughly 750 direct new jobs in Puerto Rico. Puerto Rico is also well positioned given its strategic geographic location considering current geopolitical focus in the Caribbean region. The tourism and hospitality sector continues to be a source of strength for the local economy. This summer, the sector benefited from Bad Bunny's 31-night concert residency at the Coliseum in San Juan, right next to our Popular center complex. This was more than just a series of concerts. The event also featured Puerto Rico as a destination, highlighting our music, natural beauties and culinary offerings. The celebration of our culture generated significant media exposure for the island globally and led to a substantial increase in tourism activity during what is normally a seasonally slow period of the year. Please turn to Slide 5. I would like to comment on our new strategic framework and transformation progress. Our strategy centers on 3 objectives: First, Be The #1 Bank For Our Customers by deepening relationships, earning trust, delivering value across all channels and providing exceptional service. Leveraging our very strong primacy and satisfaction scores in Puerto Rico, we are focused on advancing digital and payment solutions to further grow engagement. Second, Be Simple and Efficient by working collaboratively, streamlining operations and reducing costs. We are committed to making our processes simpler and more effective to deliver superior solutions for our customers. And finally, Be a Top Performing Bank by attracting and retaining top talent and converting customer and operational success into shareholder value with a commitment to generating a sustainable 14% ROTCE over the long term. This framework, simple, yet powerful, guides our transformation, which continues to show steady and notable progress. We are investing in seamless, secure banking solutions, expanding service channels and modernizing branches and digital platforms to provide our customers with the flexibility to connect with Popular through the channel that best fits their needs. We plan to extend these digital capabilities to more products to further improve online and mobile experiences and support future growth. Recent initiatives include the launch of a fully online personal and credit card loan origination process in Puerto Rico and the Virgin Islands and the expansion of digital deposit products in the U.S. Mainland. On the commercial side, we are improving cash management and credit delivery for small and midsized businesses. We are pleased with the progress we have made so far in our transformation and are convinced that these efforts will continue to unlock growth opportunities and efficiencies to drive sustained financial performance. I will now turn the call over to Jorge for more details on our financial results. Jorge?

Thank you, Javier. Good morning, and thank you all for joining the call today. As Javier mentioned, our quarterly net income increased by $1 million to $211 million. Our EPS improved by $0.06 to $3.15 per share. These results were driven by better NII and noninterest income and a lower effective tax rate, offset somewhat by a higher provision for credit losses. As we have mentioned before, our objective is to deliver sustainable financial performance. While there is some noise in the current quarter's results, we're very pleased to have once again exceeded a 13% ROTCE for the period. We continue to expect to achieve at least a 12% ROTCE in Q4 as well as for the full year. Longer term, we remain focused on achieving a sustainable 14% return on tangible common equity. Please turn to Slide 7. Our net interest income of $647 million increased by $15 million and was driven by higher average deposit balances, fixed rate asset repricing in our investment portfolio and deposit pricing discipline in both of our banks. Our net interest margin expanded by 2 basis points on a GAAP basis and by 5 basis points on a tax equivalent basis, driven by a larger balance of loans and tax-exempt investment securities. Loan growth of $502 million in the quarter was strong with both banks contributing to the increase. At BPPR, we saw loan growth of $357 million reflected across most portfolios, but driven primarily by commercial and construction lending. At Popular Bank, we saw loan growth of $145 million, also driven by the commercial and construction lending segments. Given that the underlying economic activity and demand for credit in both of our markets remain solid, we now expect consolidated loan growth in 2025 to be between 4% and 5% as compared to the original 3% to 5% guidance for the year despite the expected headwinds in our U.S. construction balances due to paydowns expected during the fourth quarter. In our investment portfolio, we continue to reinvest proceeds from bond maturities into U.S. treasury notes and bills. During the quarter, we purchased approximately $2.5 billion of treasury notes with a duration of 1.4 years and an average yield of around 3.65%. We funded the purchases by reinvesting roughly $1 billion of bond maturities, along with redeploying $1.5 billion of cash reserves. We expect to continue to invest in treasury notes to lessen our NII sensitivity to lower rates while maintaining an overall duration of 2 to 3 years in the investment portfolio. Ending deposit balances decreased by $704 million, while average balances grew by $793 million. Puerto Rico public deposits ended the quarter at $20.1 billion, a decrease of $842 million when compared to Q2. We continue to expect public deposits to be in the range of $18 billion to $20 billion. At BPPR, excluding Puerto Rico public deposits, ending deposit balances decreased by $162 million and on an average deposits decreased by $44 million, demonstrating the impact of our continued focus on deposit retention strategies. At Popular Bank, ending deposit balances increased by approximately $216 million, net of intercompany deposits. Total deposit costs increased by 1 basis point at both banks. At BPPR, the increase was mostly due to a higher average balance of public deposits. Given the results year-to-date, along with the anticipated NIM expansion in Q4 from repricing of our fixed rate earning assets, we continue to expect to see NII growth of 10% to 11% in 2025. Please turn to Slide 8. Noninterest income was $171 million, an increase of $3 million compared to Q2 and above the high end of our 2025 quarterly guidance. We continue to see solid performance across most of our fee-generating segments, including robust customer transaction activity. This quarter, we also benefited from a $5 million retroactive payment from a tenant related to an amended lease contract. Given the trends year-to-date and particularly the stability in customer transaction activity, we now expect Q4 noninterest income to be in the range of $160 million to $165 million. This will result in total noninterest income between $650 million and $655 million for the year. Please turn to Slide 9. Total operating expenses were $495 million, an increase of $3 million when compared to last quarter. The largest variance was related to a $13 million noncash goodwill impairment in our U.S.-based equipment leasing subsidiary due to lower projected earnings. Offsetting this was a $13.5 million quarter-over-quarter reduction in other operating expenses, driven by the effect of a reversal this quarter of a $5 million claims accrual recorded in Q2 and a similar reduction in operational reserves. We also saw a $3.6 million increase in personnel costs, mainly due to annual salary and merit increases effective in July, along with the impact of employee termination benefits related to cost efficiency initiatives at Popular Bank. Specifically, as part of our ongoing efforts to improve profitability, we decided to exit the U.S. residential mortgage origination business and to close 4 underperforming branches in the New York Metro area. We will remain focused on areas where we feel we can invest to achieve improved operating leverage. We continue to expect the increase in 2025 expenses to be between 4% and 5% when compared to last year. Our effective tax rate in the third quarter was 14.5% compared to 18.5% in Q2, driven by a higher proportion of exempt income. This higher exempt income, along with the impact of changes to Puerto Rico's tax code, will result in an effective tax rate for Q4 in the range of 14% to 16%, and for the year, we now expect the effective tax rate to be between 16% and 18%. Please turn to Slide 10. Regulatory capital levels remain strong. Our CET1 ratio of 15.8% decreased by 12 basis points, mainly due to loan growth and the effect of capital actions, net of our quarterly net income. Tangible book value per share at the end of the quarter was $79.12, an increase of $3.71 per share, driven by our net income and lower unrealized losses in our MBS portfolio, offset in part by our capital return activity in the quarter. During the third quarter, we declared a quarterly common stock dividend of $0.75 per share, an increase of $0.05 from Q2. Finally, we repurchased approximately $119 million in shares during Q3. And as of September 30, still have $429 million remaining on our active share repurchase authorization. With that, I turn the call over to Lidio.

Thank you, Jorge. Good morning, and thank you for joining the call. Turning to Slide #11. The ratio of NPLs to total loans held in portfolio increased to 1.3% compared to 82 basis points in the prior quarter. Credit quality metrics were impacted by 2 unrelated commercial exposures in BPPR, resulting in an increase in NPLs and net charge-offs. This impact relate to borrower-specific circumstances and do not reflect broader credit quality concerns. The first loan is a commercial and industrial facility extended to a telecommunication company in Puerto Rico, experiencing reduced revenue due to operational challenges and client attrition following the business acquisition. As of September 30, we classified this loan as nonaccrual with a carrying value of approximately $158 million and drove the increase in provision expenses in the quarter. The second loan is a commercial real estate facility secured by hotel property in Florida. This loan has also been placed on nonaccrual status and carries a value of $30 million as of September 30, which includes a $14 million charge-off recognized during the quarter. Excluding these 2 cases, credit quality metrics were stable. We continue to closely monitor the economic environment and borrower performance as economic uncertainty remains a key consideration. We are confident that the risk profile of our loan portfolios positions Popular to operate successfully under the current environment. Turning to Slide #12. Net charge-off amounted to $58 million or annualized 60 basis points compared to $42 million or 45 basis points in the prior quarter. Net charge-off in BPPR increased by $16 million, mostly due to the $4 million charge-off related to the $30 million commercial NPL inflow mentioned earlier. Consumer net charge-off increased by $4 million, mostly due to higher auto loans net charge-off by $6 million, partially offset by a $2 million reduction in credit card net charge-offs. Given our credit performance year-to-date and NPL inflows this quarter, we expect net charge-offs to be between 50 to 65 basis points for the full year. The allowance for credit losses increased by $17 million to $786 million, while the provision for credit losses increased by $29 million to $75 million. Both increases were driven by the impact of the 2 commercial exposures, offset in part by improvements in the credit quality of the consumer portfolio. The Corporation's ratio of ACL to loans held in portfolio remained stable at 2.03%, while the ratio of ACL to NPLs was 157% compared to 247% in the previous quarter. With that, I would like to turn the call over to Mr. Ferrer for his concluding remarks. [Foreign Language]

Well, thank you, Lidio, and Jorge for your updates. We are very pleased with our financial performance in the third quarter. We increased revenues, maintain expense discipline, generated strong loan growth and benefited from stable customer deposit trends. We are determined to close out 2025 on a high note as we continue to execute on our strategy, and I am urging our teams to remain focused on deposit retention, loan generation and particularly on our expense discipline. We will continue to generate value for our shareholders and deliver our ROTCE objectives. We will achieve this by concentrating on our strategic framework, Be The #1 Bank For Our Customers, Be Simple and Efficient, and Be a Top Performing Bank. I want to give a shout out to our colleagues and recognize their hard work. I see what they do every day in our branches, call centers and centralized offices. We are pushing ourselves to deliver more for our clients every day, and I am incredibly grateful for their commitment. We are now ready to answer your questions.

[Operator Instructions] First question comes from Jared Shaw with Barclays.

Maybe starting just on the margin and on asset yields. With the securities yields -- I'm sorry, with the securities purchases this quarter, should we assume that, that trend continues? And I guess, where are the new purchase yields? It looks like maybe we won't be able to see net yield expansion much more from here if we see the rate cuts?

No. I mean let me first answer the yield expansion. We do believe that we still have strong tailwinds. You can see in our appendix we provide to you kind of the upcoming maturities in the investment portfolio, those are still coming off at 1 and change, and we expect to be able to continue to get a significant spread pickup on those maturities. So while they may be priced lower as rates are coming down, remember that a large portion of our portfolio is also being financed, let's call it, money fungible, but still being financed by public deposits. And we would expect those public deposits to also benefit from the lower rate environment, giving us the opportunity to create that spread. So we do continue to expect our NIM to expand in the fourth quarter and beyond.

Okay. And then on the loan side, what about new loan yields this quarter -- sorry, go ahead.

Yes. On the -- okay, on new loan yields during the quarter, we still saw kind of the condition that we have been seeing for the last year where particularly in personal loans and auto lending, we still see some yield pickup quarter-over-quarter. I would expect, Jared, that maybe that would slow down a little bit, particularly in the auto volumes or new car sales activity is slowing down, and it's possible that it wouldn't be unreasonable to believe that, that will result in more competitive pricing to maintain demand for auto sales. But as we said in the past, there's a lot of front and back book in that auto loan portfolio in particular. And when you look back, given the average life of those loans, assuming the same type of risk profile, we still see opportunities of repricing given the current rate environment.

All right. And then maybe just shifting on the credit side, especially on the auto. There was an increase in delinquency, but it's still lower, I guess, year-over-year. How are you looking at the credit trends over the next few quarters within auto and consumer, I guess, more broadly?

I mean I would say the variation that you saw this quarter is within the seasonality of the portfolio. We continue to be very optimistic about the consumer, given the trends in Puerto Rico, given the trends in employment, liquidity of our client base. We see losses are about -- in the auto portfolio about 45 basis points below last year. So we're comfortable with our position and the outlook for the portfolio.

We now turn to Timur Braziler with Wells Fargo.

Sticking with the credit commentary, the large C&I loan, I guess, what are the specific reserves that you set aside for that, the timing of resolution as you see it? And I'm just wondering why it moved into nonperformers right away instead of kind of up the risk migration chain. Did they stop making payments? Or is that still accruing at this point? Maybe start there.

Okay. I mean thank you for the question. They continue to make payments. So the loans are current from a payment standpoint. So that's that. In terms of our decision to -- I mean, it has -- actually situation has been deteriorated over time, and we have been downgrading the loan over time. For us, it is a business that carries a significant amount of debt and management has indicated their intent to rightsize its capital structure, including liability management, liability structure. So that drove our decision to place it in nonaccrual status.

Okay. And then I guess, in terms of specific reserve and any kind of time line around planned resolution?

I think planned resolution most likely is next year. In terms of specific reserves, we are not -- we have not provided that information at this time. So...

Yes, Timur, you can assume that the driver of the variance in the quarter in provision was related to these loans.

Okay. And I mean this is a little bit of a larger credit, just maybe stack ranking the loan book. Is this one of the larger credits that you guys carry? Is this kind of typical size just given your place in the Puerto Rico economy? And maybe just talk a little bit more broadly as to the health of the economy from a business standpoint versus a consumer standpoint? And if there are any kind of signs that might be flashing yellow or any other kind of degradation?

If you look at our portfolio over the years, we shifted our portfolio from being more of an SME portfolio to a corporate credit type of portfolio. And we have seen strong trends over the last few years. And we -- actually, if you look, I think the last time we had one issue with a large bank -- a large group was in 2019. I think we will continue to focus in that segment. We think there are significant opportunities in Puerto Rico. They have done -- performed very well over the years. And that is the nature of our portfolio. Every now and then, you might see a situation. I think the important is we stick to our underwriting discipline. The performance of the portfolio has been very strong, and we feel comfortable with the exposures that we have today.

Yes. And if I may add to that, I mean, to your question about the macro, I think in our commentary, we are clear that we are not seeing any sort of yellows or red or any insects in Puerto Rico referencing something that somebody said in the United States. It's -- we are seeing a strong economy. But as Lidio just said, it so happens that we continue to focus on large commercial opportunities. And from time to time, as happened this quarter and it hasn't happened in a long time, there may be an isolated credit event that occurs due to idiosyncratic by specific issues that are unrelated to the underlying economic backdrop. And that's exactly how we feel. So I can't really point to anything in the Puerto Rico economy that gives us any pause or worry, or contrary, as they say, across the ocean. We feel that the economy is performing well and our big customers are investing and continue to move on with their projects.

That's great color. And then just lastly for me, encouraging to hear that margin expansion is going to continue here. I'm just wondering from an NII standpoint, you guys reiterated the guidance. It is a little bit wide in terms of the range just as it implies to 4Q. Should we assume that margin expansion portends to NII kind of flat to up here as we go through these rate cuts? Or just given some of the lags, maybe NII growth stalls here over the next couple of quarters?

Yes. I think first, I want to reiterate that we continue to see the benefits of fixed asset repricing, loan growth, all those things should continue to contribute to improving NII and the expansion of the margin. As you mentioned, the guidance for NII, we left it where it was. Part of that has to do with our perspective on public deposit balances in the fourth quarter. We still expect to be within the range, but maybe not at the high end of the range where we are at when we closed out Q3. We also mentioned the lag in pricing of these deposits. We continue to be slightly asset sensitive, particularly in the early stages of moves of Fed funds rate. But as we stated before, the cost of public deposits are linked to short-term market rates. And in general, they reprice on a quarterly lag. Because the -- we've never given the index, but we're going to do call a favor, and it's tied to 3-month treasuries, obviously minus a spread. And so they are in a lag. So over time, we would expect to see the effects of changes in rates be reflected in the cost of public deposits with a beta of near 1, and that pricing structure will continue to support our fixed asset repricing and the investment portfolio, making sure that we generate that improving spread on that investment. But any time there's movement in the Fed, maybe there is a little bit of a lag, not always, right? We talked about that in the past that if the market and treasuries get ahead in anticipation of Fed moves, we might be able to benefit a little quicker. But we've kind of incorporated all that into our NII guidance for the fourth quarter, but we have a high level of confidence that as that stabilizes and the passage of time into 2026 and beyond will continue our previous growth trends.

Our next question comes from Ben Gerlinger with Citi.

Not to belabor the point on credit because it's pretty clear that you guys are -- you're doing phenomenal relative to like the last 10 years. But I found it interesting that your guide, you kind of fine-tuned a lot, whereas the charge-off outlook, you just brought up the low end. So when you think about the 65 bps on the high end on a full year basis, that would imply something pretty draconian for the fourth quarter. I mean, is that a possibility? Or how should we think about that considering the other guidance portions were fine-tuned?

I will say as we mentioned in the remarks, we took a reserve and a provision for some of the exposure. We charge off 1 of the 2 related exposure. There is a possibility that we may have to take charge-offs in the exposure that we reserve this quarter, which did not charge off, and that is driving the results. Overall, I mean, if you exclude that, we continue to expect a very solid performance out of the rest of our book. So that's the only thing that we are caveat in terms of the range that we provided to you.

Yes. Ben, in similar word, we talked about this in the past where when we provide that spread in the guidance of net charge-off, we are trying to put in for idiosyncratic events that could happen in our portfolio at any given time. Certainly, the activity that we have seen year-to-date, as you say, don't reflect necessarily a lot of opportunities to get to the high end without it being a commercial loan.

Got it. Okay. That's helpful. And I know you guys have gone through quite a bit of initiatives on the expense front. Is there anything -- I know you're not going to give me a '26 guide, but is there anything in '26 that we could potentially prepare for outside of just kind of normal cost inflation?

Yes, you're right. We're not going to give you anything '26...

Good try, good try, good try...

We're very happy with the cost discipline and a lot of initiatives that are ongoing. We talked about it last -- in the last quarter's call. There's a lot of efforts around really just focusing on execution and really what Javier says, focus on excellence. And there's a lot of efforts that are ongoing that are maybe a lot of singles and bunts, but they add up. They add up. And this quarter, we saw some of those. We saw some of the actions, we talked about the activity in the U.S. It's not easy impacting our colleagues, but we did make a decision to terminate our mortgage origination business in the U.S. We don't believe, given our funding profile and deposit franchise in the U.S., that's a business that we really want to be in at this time. And there are other things across the organization. I would say the important part is that those efforts are sustainable. They're not one-offs. And we do expect to see those benefits that would allow us to reinvest in other things. We talked to you in the past about slowing down our expense growth rate. These are all the things that allow us to do that while continuing to invest in areas that we think will add value and get us closer to that 14% ROTCE.

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We now turn to Kelly Motta with KBW.

I will pick up on that 14% ROTCE you mentioned. You've been above 13% in the next 2 quarters -- the last 2 quarters. It seems like we have 14% in sight. I appreciate the guidance around at least 12% for the year, which seems very doable. Wondering if you have any update on the timing of the 14%, one? And then two, given what you've laid out with your NII trajectory, has there been any discussion in terms of whether 14% is the right place to stop as a sustainable ROTCE or should we see that a bit higher.

I would say that of course -- yes, Kelly, for certain, we're not going to stop at 14%. It is a guiding principle, and we want to get there, but we're not going to stop there. And having said that, what we want to make sure is that sustainable performance, we said that in the past. I agree with you, we're a lot closer today than we were a year ago when we pulled back that guide for this year. A lot of effort from a lot of people, a lot of things going right, and we just want to make sure that we continue to execute, and more to come in terms of guidance and when and how we get there. But the important part is we continue to believe strongly that we get there through improving our net income performance and our operating leverage. And whatever we do on the capital side just adds to the opportunity to get there and surpass it.

Okay. Got it. That's really helpful. And then on the tax rate, the reduction in guide, you called out a higher proportion of tax-exempt income as well as some changes in the tax rate. And there is some noise and appreciating you're not giving 2026 guidance. I'm just hoping if you could kind of help us out with what -- is this full year 2025 a good core run rate ahead? Or can you expand upon the Puerto Rico tax rate change and how that kind of impacts the go forward? Just any kind of color on that would be helpful given that there is a lot of moving parts here.

Yes. So I would ground on 2 things. One, this quarter, there were not any like real discrete events that impacted the effective tax rate this quarter. It was lower given the mix of taxable income and tax-exempt income. We did benefit the $5 million other operating income number, does have a tax -- preferred tax treatment. So that helped. But I say that it is a good basis to start off. And then when you look at the guidance for the fourth quarter, what we're talking about is saying we're reversing this change in the tax law in Puerto Rico will allow us to reverse the related tax expense during the year. I tell you this whole long story to say that the guide for 2025 of 16% to 18% really ends up being a fairly clean number for us for this year. That guide does not really have a lot of noise of discrete events that are not part of our normal tax strategy. You can infer from that whatever you'd like, we can confirm it in January when we give you the '26 guidance.

Fair enough. Last question if I can sneak it in. Some of your competitors have noted increased competition on the deposit side. One was on government deposits. The other was some of the initiatives they're doing. Wondering if you could just expand upon the market competition you're seeing in Puerto Rico, one? And two, like has there been any news of any new entrants to the island, specifically on the depository side?

Well, I'll take that. I'll start by saying not that we're aware of no new entrants on the depository side, Puerto Rico. Competition, yes, I mean, it's a vibrant market, and there is competition every day. We compete every day for our piece of the business and for customers. So -- but we're going to be rational while we're doing that. Yet, we won't lose any good clients on pricing and on terms. So we're seeing competition. It's normal. We have -- now you see how some of our esteemed bank competitors in Puerto Rico are sort of positioning themselves as challenger banks or whatever banks. But frankly, we like where we're at, and we like the fact that the franchise has -- it's certainly being reenergized. And we're not behaving like 132-year bank and more to come on that, quite frankly. So we -- I don't know what else to say other than we like where we're at.

Our next question comes from Gerard Cassidy with RBC.

This is Thomas Leddy standing in for Gerard. Loan growth in the quarter was strong, as you mentioned. And just on the back of the increased competition on the deposit side. I'm curious, in booking new C&I and CRE loans, have you seen a similar increase in competition, maybe resulting in less rigorous underwriting standards? In other words, anything you can tell us about changes in underwriting standards on loans you're originating now versus, say, a year ago?

I mean, I guess each one of us can answer that. But no, the answer is no. And we have a very strong credit underwriting process and Lidio leads the risk side and then our business side as well, we are not going to do anything that doesn't make any sense, frankly. We tend to be a bit conservative by nature, quite frankly. But I'm not seeing anything in originations that points to that concern.

Yes. From talking to our bankers and listening to the teams, the pushback we gather in competition is more pricing. And we're seeing maybe particularly you're hearing in some entrants in the New York market and maybe South Florida, where people being a little more aggressive in pricing. And frankly, we -- if those loans are not true relationships and they're not coming with deposits, we're not going to pursue that, particularly in the U.S. In Puerto Rico, we might have a different strategy, echoing what Javier previously said in his comments.

We now turn to Arren Cyganovich with Truist Securities.

Javier, you.

Thank you for picking up Puerto Rico Bank.

Good to be back. Maybe we could just talk a little bit about, Javier, your commentary around investment initiatives that you have in your transformation plan or the second leg of your transformation plan. How are you thinking about all of the items that you kind of mentioned in your prepared remarks with regard to the cost in -- and would that be a step-up in cost? Or do you see some efficiencies that you'll be gaining that will help offset some of the further investment as you continue down that path?

Great. Arren, I mean, the one thing I'll reiterate, our goal here is to be able to continue to invest and generating opportunities and efficiencies to be able to then continue to reinvest at a level slowing down the overall level of expense growth.

Yes. So there's going to be at the beginning and in certain periods, right, a disconnect, right, between initial investments and then results from those investments, which is what Jorge is referring to. And we think that's okay as long as the actual investment makes sense to us. We're not going to do something dramatic or irrational. But we have to invest in our technology to continue to compete, not only in Puerto Rico, but we compete with folks that come from the United States, you may imagine, the big players are already here, and they have the best technology. So we -- our program is rational in that way, and I think our expense base shows it. I don't perceive that we're going to go above and beyond a particular sort of threshold.

Yes. And what happens is right now, we've got over 80 projects that are ongoing. Some of them have higher levels of current investments, some are in capitalizing mode, but a lot of them are in dual expense mode. As you're developing, particularly with SaaS licensing agreements, you're paying for your new system and you're paying for your old system. So over time, as you start generating the cost avoidances and turning off old system, that allows us buffers to continue to reinvest following a business case and value-add analysis. But when we talk about being able to slow down the rate of growth, that's the kind of thing that we're talking about is how do we shift and reallocate expenses and savings to continue to improve the business and add value to our shareholders.

So -- and then I say this and show up, that's a very important point that Jorge just made. We're not looking at this on a siloed view, right? So we're saying -- so if we are going -- if we are investing in the transformation, we want to make sure that if we can generate some savings in other parts of the bank, which will, of course, kind of fund that transformation. That's the mindset. And in many cases, we've been able to do that. And that minimizes the impact of the actual investment. So again, I mean, it's a broad-based program. We're very excited about it, and we're starting to see results. And we'll continue because, as I said, it's -- we're also creating a transformation mindset in our teams, right? It's -- we need to continue moving forward. So...

This concludes our Q&A. I'll now hand back to Javier Ferrer, CEO, for any final remarks.

Well, thank you. Thanks again, everybody, for joining us and for your questions. Really appreciate that. We look forward to updating you on our fourth quarter results in January. Thank you.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.