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First Bancorp (NYSE:FBP)
Q3 2020 Earnings Call
Oct 30, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the First BanCorp Third Quarter Earnings Conference Call and webcast. [Operator Instruction]

I would now like to turn the conference over to John Pelling, IRO. Please go ahead.

John B Pelling -- Investor Relations and Capital Planning Officer

Thank you, Debbie. Good morning, everyone, and thank you for joining First Bancorp's conference call and webcast to discuss the company's financial results for the third quarter of 2020. Joining you today from First Bancorp are Aurelio Alemain, President and Chief Executive Officer; and Orlando Berges, Executive Vice President and Chief Financial Officer. Before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements such as projections of revenue, earnings and capital structure as well as statements on the plans and objectives of the company's business. The company's actual results could differ materially from the forward-looking statements made due to important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the call. And if anyone does not already have a copy of the webcast presentation or press release, you can access them at our website, 1firstbank.com.

At this time, I'd like to turn the call over to our CEO, Aurelio AlemAin. Aurelio?

Aurelio Aleman -- President and Chief Executive Officer

Thank you, John. Good morning, everyone, and thanks for joining our earnings call today. Please, let's move to Slide four of the presentation. It was a very important quarter for our corporation and I would like to go over some key highlights and then expand in certain matters. First of all, we're extremely pleased with -- that we completed our strategic acquisition by closing the Santander transaction on September 1. This transaction not only solidifies our position in the island, but strengthens our competitiveness in commercial, retail as well as residential. I'm very pleased to welcome our 150,000 new customers and we look forward to support them, to support their plans with an expanded branch network, expanded service channels and enhanced technological offerings. On the economic front, definitely the relief fund from the pandemic combined with 2017 hurricane funds being deployed have bolstered liquidity in our market and will continue to drive economic activity. We'll touch on that. On the balance sheet side, even following the completion of the acquisition we truly sustain a fortress balance sheet, our liquidity reserve capital levels are among the highest in the banking sector. Core performance was strong for the quarter. We generated $28.6 million of net income. Pretax pre-provision was $77 million with only one month of earnings from the acquired operations and loan originations were strong at $971 million for the quarter. We basically increased originations in all categories through the quarter. Total deposits, excluding brokered and government, increased to $12.5 million.

And finally, our capital ratios remain among the highest in the banking sectors and capital actions remain a priority as we see the economic environment stabilizing. Now let's cover more closely a few of these items on Slide 6, starting with Slide 6. Let's talk about the transaction. Definitely, it was a long time in the making. And as you see, we really improved our market position in all key areas. As you recall, the transaction was announced back in October 2019, and closing and completing was impacted by the COVID pandemic, definitely. But since then, some of the deal metrics have improved from announcement. We still expect 35% EPS accretion to consensus estimates. The revised TBB at closing is estimated at 4%, lower than our original estimate. And we expect less than two years of earnback now. This improvement is driven by slightly smaller loan portfolio, additional reserve delivered at closing and the rate marks due to the rate environment. While cost savings are estimated at $48 million, we definitely work harder to see the areas that we can achieve more. But we're also focused on growing the franchise. So it's a balancing act as we move forward and achieve our goals of being more efficient and increased market share. I think together, we have an excellent team and we're working diligently to integrate and to turn on the growth engines as opportunities comes in the economy. I want to touch on the integration. We made a lot of progress on the first 45 days. Integration is under way. In those 45 days, we completed the conversion and integration of the mortgage business, the insurance agency and several administrative functions.

The plan is to complete the integration process by the end of the second quarter 2021. And these do consider -- remember that we continue to operate under COVID limitation and distancing, and obviously a process of this magnitude takes time. We also announced this month as part of the program -- as part of the synergies and integration, we announced a voluntary separation program that provides an opportunity for early retirement to approximately 160 employees of the combined institutions. This program will be executed over the next three quarters, starting in the fourth quarter. Other potential synergies identified include the opportunity of consolidating eight to 10 branches. Definitely, the incremental utilization of digital channels could drive other efficiencies. But again, we don't want to hamper our potential to grow our market share with the now expanded market distribution that we have. So we'll continue to move and report on this effort. Now let's move to Slide 7. The new combined balance sheet is solid and well diversified. The $2.6 billion acquired loan portfolio definitely complements ours nicely and the deposit books improves our funding. Now the loan-to-deposit ratio stands at 78%. And obviously, we have an expanded customer base to cross-sell and move to other products. Let's move to Slide eight to talk about the economy. I think in the quarter, we clearly saw the correlation of the reopening in our markets and the trends of economic recovery was clearly reflected in the third quarter. Remember that in the case of Puerto Rico, we had some severe tightening in the second quarter, and some of those rules were relaxed later. We're still operating under certain lockdowns. But the -- I think the market has reacted very well to the situation and getting used to operate under that scenario. Importantly, to support this economy, there is still over $60 billion of pandemic and hurricane relief.

So those are numbers that are big for this economy and there's a lot of going on regarding reconstruction. Those funds are being deployed and they're definitely showing the liquidity and activity. Employment figures continue to turn positive. Recent numbers as of August are 92% of August 2019. So definitely, there's a recovery on the employment side. From the perspective of our client base, 100% of our corporate clients are operating and close to 99% of the business banking clients have reopened well. There are sectors that are more sensitive. The hospitality industry continued to reflect lower occupancy, but got improving trends. Our hotel portfolio, it's below typical occupancy level and San Juan airport traffic is low, closer to 50%. And as we are all aware, these are the segments that are more sensitive and will require longer recovery period. So we continue to closely monitor. On the other hand, from the business activity perspective, lending activity for the quarter was near pre-pandemic levels and digital activity is up significantly. Retail lending for the quarter was very strong for both auto and mortgage lending and actually it came above pre-pandemic levels. So we are optimistic with the recovery and the possibilities of additional stimulus, but we are also vigilant to the fact that potential economic hurdles could come if there is a need to implement additional restrictions for COVID in the future. So we have to be watchful. Please now let's move to Slide 9. We wanted to give you an update on the relief programs trend. The relief trends are actually positive. The graph show the peaks and lows over the last six months, actually since March, of the different regions and products. I think we see a positive trend during the quarter -- or actually, after the quarter closes. Our active moratoriums were reduced to only 0.8% of the portfolio, less than 1%. This is as of October 21. I think so far the post-moratorium payment performance is positive with 98% of commercial clients current and 94% of retail as of October 21. It's important to note that this data reflects only the due dates prior to October 21 regarding the payment patterns.

So we have to wait until the end of the month to see the final trend. We do have a segment of the commercial portfolio that belongs to the industries that I mentioned, the more sensitive ones, such as hospitality, retail and entertainment that could need additional support through a longer stabilization period. Those are being evaluated under the potential modification of terms provided by the Section 14 of the CARES Act. So please let's go to Slide 8. Here we have how -- the trend of the balance sheet, where we -- how we compare to peers and definitely post acquisition, our liquidity level, reserve coverage and capital position. They really give us opportunity with the -- we're positioned well to take advantage of any growth opportunity. We definitely will be good stewards of our capital position, and again, capital deployment opportunities remain a priority once our economic environment stabilizes. Let's move to Slide nine for a moment. I wanted to talk about and show you the trends of core metrics. Obviously, this graph shows the trends and the positive impact of the acquired operation. We generate the incremental PPNR and net income with only one month of earnings contribution for the core operations. And again, the enhanced funding profile should help us driving additional revenues. Loan origination, as I mentioned, were solid for the quarter, you look at the level. And digital adoption rates continued to improve during this pandemic. We will continue to work harder now with more clients and more distribution points to improve our level of service to all our customers. I have to say that I'm really proud of my team and what we have been able to accomplish so far, managing the pandemic challenges, and we're definitely excited for the future growth prospects of our institution. And we're also excited to show our patient investors what we are able to accomplish.

With that, I will turn the call to Orlando to cover the details of some of the financial metrics. Thanks to all.

Orlando Berges -- Executive Vice President and Chief Financial Officer

Good morning, everyone. As Aurelio made reference to, net income for the quarter was $28.6 million or $0.13 a share compared to $21 million last quarter. If we break down the components, you can see that corporation's legacy core business achieved a net income of $44.3 million, which mostly it's a result of reductions in the required provision for credit losses. Last quarter, we had a provision of $39 million as compared to $8 million this quarter. During the quarter, the improvements on macroeconomic projected variables in most portfolios, except for the commercial real estate, as well as some changes in portfolio balances led to this reduction. The acquired Santander operation contributed $3.5 million of after-tax net income. That excludes the one CECL adjustments, which I'll touch upon. These results include the impact of the amortization of the fair value marks on all the assets and liabilities and the amortization of the resulting intangibles. For example, one of -- few other things that had impact -- if we look at the investment portfolio, Santander had a U.S. treasuries -- a large U.S. treasuries portfolio that after March resulted in a portfolio of yields only 15 basis points. Since then, we decided that to improve margin to sell this portfolio and reinvest it in other securities according to our policies, which yield around 94 basis points, which will improve going forward some of the yield.

On the other hand, amortization of some of the other discounts and intangibles resulted in about $1 million improvement in net interest income from the combination of loan and deposit, preliminary fair value adjustments that have been booked. If we look at other -- at the other components of transactions, some large ones that were in the quarter, the first one would be the CECL I made reference to. CECL requires that in the case of a business combination, we set up an allowance for credit losses on top -- on non-purchased credit deteriorated loans on top of or in addition to any kind of fair value measurement. This resulted in a recognition of an allowance of almost $39 million for the quarter in addition to those fair value marks. The non-purchased credit deteriorated portfolio, it's about $1.7 billion after marks. During the quarter, we also decided to sell around $160 million of MBS that were experiencing significant prepayments, and that resulted in a gain of about $5.1 million from the transaction and it's being reinvested again in other instruments. Merger and restructuring costs, Aurelio mentioned some of it. During the quarter, we had $10.4 million, which compares to $2.9 million in the last quarter, which was mostly legal and financial consulting piece as well as some conversion-related cost as we prepare for the conversion. So far, we have incurred about $25 million in expenses related to the transaction over the last few quarters. And during the fourth quarter, we expect to have some amounts associated with the voluntary separation program that Aurelio mentioned as well as costs associated with branch and other consolidations as we finalize decisions on those processes. Finally, the other large item. We did have an analysis -- completed an analysis of the DTA now including the Santander operation, and that resulted in the reversal of approximately $8 million of deferred tax asset valuation allowance we had on the books.

Net interest income for the quarter was $148.7 million, which is $13.5 million higher than last quarter. $14 million of that was the Santander operation. On the other hand, the legacy FirstBank operation had a reduction of $500,000 in interest income as compared to last quarter. And here, reduction in rates, obviously, accelerated. Prepayments on the investment portfolio has been large. Higher proportion of cash and investment securities to total earning assets have resulted in a reduction in the NIM on FirstBank. Last quarter, we had 4.22% of NIM that you saw in our prior release. That number is down to about 3.94% this quarter. Breaking down some of the components. Commercial loan repricing was about four basis points of the reduction, but the much higher proportion of cash and investment securities as well as the large prepayments and the alternative for reinvestment affected by 18 basis points more that margin. Santander on a stand-alone was about -- the margin was about 3.89% considering the purchase accounting adjustments, and that combined with FirstBank ended up with a 3.93% margin that you see on the release. Noninterest income improved to $29.9 million. The $9 million -- this $9 million increase includes $5 million in the gains on sales that I made reference to before, of securities that I made reference to. We had $3.4 million increase in revenue from mortgage banking activities. Mostly or all of it, it's related to sales of residential mortgage. This quarter, we had a much active -- much more active quarter on originations than what we had in the second quarter and ended up selling $98 million more in conforming paper than we did last quarter resulting in that revenue increase. Also, the reopening of businesses, as we have seen on the quarter, seen a much higher level of credit and debit card activity, which improved -- that includes ATM, merchant fees and some of the other components, that improved fee income by about $2.8 million in the quarter.

And then the improvement we had in deposit service fees associated with the Santander transaction that brought in $1.1 million of additional deposit fees to the operation. On the expense side, expenses were $107 million. That includes $10.7 million in expenses for the acquired Santander operation and a $96.8 million for the FirstBank legacy operation. This $96 million is $7 million higher than the 89 -- almost $90 million we had last quarter. As I mentioned, the merger and restructuring costs for the quarter were $10.4 million, which is $7.5 million higher than last quarter, basically created most of the increase. But in the quarter, we -- if we exclude this, FirstBank was $86.4 million of expenses. COVID-related expenses were about $1 million this quarter, which is down about $2 million from last quarter. But other expenses -- obviously, as we saw improvements in volume of transactions and improvement in fee, we also have some higher expenses associated with that volume of business in those debit and credit card transactions. The allowance for credit losses has increased significantly. As of September 30, the allowance for loans and leases only was up $65 million to $385 million as compared to June. Mostly it's due to the initial allowance for credit losses required to the Santander operation. If we look at total allowance for credit losses including unfunded commitments and debt securities, that's up to $403 million. This quarter, as I mentioned before, we recorded about $38 million in allowance for credit losses in total. $37.5 million of that is related to loans. That build up -- that allowance associated with the portfolio.

And in addition, for PCD loans or purchased credit deteriorated specifically, we established a 20 -- almost $29 million allowance, which represents the fair value marks on this loan, which CECL requires that -- what is commonly referred to as a gross up, that the loans represented gross and the discount represented in the allowance. Those two combined were about $65 million. The ratio of the allowance for credit losses on loans -- to total loans was 3.25% at September, slightly down from 3.40% we had at June, but a very significant coverage if we consider that we added a large amount of portfolios, that a large part of it is also mark-to-market and fair value mark-to-market and has been discounted. On a non-GAAP basis, if we exclude the PPP loans, which don't carry much reserve, the ratio of the allowance to total loans was 3.38% as compared to 3.55% last quarter. Asset quality remained good in the quarter. Non-performance are down $10.5 million, $293 million. Most of the reduction happened on the OREO portfolio, which decreased $7.3 million. Mostly sales were completed in the quarter. Migrations to nonperforming were higher this quarter. As moratoriums expire, we start getting back to levels of more -- to the normal levels that we were seeing before. And we are in a position to continue to pursue some of the foreclosure processes that were put on hold for a couple of quarters as we provided those moratoriums to customers. The inflows were $18.4 million this quarter, which is $10 million higher than last quarter. Capital ratios remained really strong. As you can see, even with the impact of the acquisition, we still have Tier one ratios of 17%. The leverage ratio, I think that's important to mention. You see it's about 13% for the quarter. But we only had Santander operation for one month in the quarter, so average assets were less. If we were to normalize and assume the full quarter of average assets, that ratio will be closer to 11%, just over that. And that was -- we expect that it's still very significant with the acquisition of $5-plus million in assets in the quarter.

With that, I will open the call for questions.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from Ebrahim Poonawala with Bank of America. Please go ahead.

Ebrahim Poonawala -- Bank of America -- Analyst

Good morning, guys.

Aurelio Aleman -- President and Chief Executive Officer

Good morning, Ebrahim.

Ebrahim Poonawala -- Bank of America -- Analyst

So in your prepared remarks, Aurelio, you mentioned a bunch of times around the focus on capital return and optimism about things getting better barring any sort of negative developments on COVID. Like by my math -- like when you look at your largest competitor, their Tier one leverage ratio is about 8%. You're at 11%. There's about 300 basis points of excess capital, very conservatively. As a shareholder, you would want the bank to act now given where the stock is. Just talk to us around level of urgency. With the deal being done, do you think regulators are on board to the -- I know you can't talk about your regulatory discussions. But there should be a sense of urgency, I would imagine, in executing this given where the stock is. So just if you could talk about that.

Aurelio Aleman -- President and Chief Executive Officer

Yes. I think, Ebrahim. Thank you for the question. Yes, we have a sense of urgency. We understand the importance of [more]. On the other hand, it's really about the environment. You have to see what's happening around the world and we have to see what's happening in the U.S. and we have the elections. Commenting on that, I think Puerto Rico is also positioned with Congress to benefit either case, so things will continue independently of who wins we believe. But the COVID risk is still out there. Hopefully, we don't have to go back to more lockdowns or closing. We have seen the impact. Yes, there's another stimulus that -- there's a high probability that will come. But I think we have a lot more visibility first quarter on this, OK? There's also some regulatory guidelines regarding these matters that are being issued through the end of the year.

So it is a priority for the management team. Yes, we recognize the excess capital. We -- I think we need to get through the end of the year, close of the year, see where the economic trends are in the next round. We have a couple of quarters that -- we increased -- we provisioned incrementally in a material amount. We are well covered. But all that depends on the economic forecast. So I think that's the -- we need an additional step of time in this matter to be prudent and make sure that, yes, the economy is stabilizing. And as we are learning to work on the COVID environment, we know that you can operate, you know that you can be -- we're going to achieve your business. You have to spend some money for that to happen. But in some environments, we're watchful of additional restrictions. So that is a caveat here, OK?

Ebrahim Poonawala -- Bank of America -- Analyst

No, understood. Thanks for that. And I guess just moving on, Orlando, on Slide 11, looking at pre-provision earnings, if you give the full quarter impact of Santander, implies about $87 million in quarterly pre-provision earnings. Outside of the $48 million in cost saves that you expect, talk to us in terms of your outlook on PPNR or revenue relative to third quarter levels as it pertains to fee income and the margin outlook?

Aurelio Aleman -- President and Chief Executive Officer

Yes, I think the -- obviously, what are the levers here? Obviously, loan growth. We will look to achieve some loan growth. But again, it's driven by the economy and the opportunities. We have seen good numbers in the mortgage business. I think commercial is solid. Auto, it continues to sustain. On the other hand, you have still some margin compression risk that is still out there. We're still repricing. We have excess liquidity. Liquidity continues to grow. And we have other components in the investment portfolio. I think Orlando covered some levers that we're pulling there. But on the other hand, you continue -- we continue to have higher prepayments. So -- and then obviously the expense -- their synergies and expense will move to a positive. But those levers regarding PPNR, without getting into the provision, there's all -- we have a lot more levers than we had before closing the deal and we're very focused on how we pull these levers. Some of them we control, some of them we don't control like the rate environment. But that's really the -- it now is about execution and achieving what we have in the plan on integration. The estimates that we provided to you on how long it takes and how much it will cost to get those synergies is sustained. So that is our plan. We continue to execute, recognizing that, yes, the rate environment is still a challenge.

Orlando Berges -- Executive Vice President and Chief Financial Officer

Keep in mind that the savings, it's in part related also to the integration process. So they don't happen immediately. It's going to take two or three quarters before we achieved full benefit of all savings that we could get. We're still running systems independently. We're still covering costs related to running the Santander systems. So there is a number of things that will happen as we go through the integration over the next three quarters, as Aurelio mentioned. And that's going to push it. The margin, it's a challenge and -- at this point, the expectation, it's not necessarily interest rate reduction, but it's more of a mix and the impact that this has. We don't mind having a lot of deposits and we don't having a lot of liquidity, but it does have an impact. And the prepayment that we are seeing in the portfolio, it's pretty large, much higher than we have anticipated a couple of quarters ago.

Ebrahim Poonawala -- Bank of America -- Analyst

And appreciate the challenge with the margin, Orlando. Do you think NII, which was about 1.77% on a full quarter basis for the combined bank, can at least hang in flat to higher from here? Or do you feel there's pressure on NII as well?

Orlando Berges -- Executive Vice President and Chief Financial Officer

We're hoping that it's going to stay flat to higher. A little bit based on also what Aurelio said that now as we integrate, we can pursue additional business. We do see some things that have to be taken into account like mortgage originations are good, but we're doing a lot of conforming paper. So that's been sold. We're generating fee income, but it's resulting in some reductions on the portfolio side on one hand. So the mix, it's going to be the pressure component here more than the rates going forward. We still have a little bit on the repricing side of the liabilities. As time deposits come due, the renewal rates are lower on some of these CDs that were issued a couple of years ago. So there is a little bit in there. But it's going to be more of a mix kind of thing.

Ebrahim Poonawala -- Bank of America -- Analyst

Great. Thank you for taking all the questions.

Orlando Berges -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

[Operator Instructions] Our next question comes from Alex Twerdahl with Piper Sandler. Please go ahead.

Alex Twerdahl -- Piper Sandler -- Analyst

Good morning, guys. First off, just wanted to circle back to what you're talking about, capital return. And obviously, I understand that there's a lot of moving parts in the economy and we're not out of the woods yet on COVID, etc. But when we are out of the woods, is there a formal process that you guys need to go through in order to turn on a buyback at some point in time? And then you can sort of elaborate on what that might look like.

Aurelio Aleman -- President and Chief Executive Officer

All capital actions have a formal process that is delineated either by regulation or by our capital plans. So after you complete your analysis and your recommendation, you have to go to a process and engage in the different flavors so we can execute it. If it's a buyback, obviously -- I think it's a common process that people know. Obviously -- I think the -- I don't think it's a process what is holding us today. I think if -- we have to make sure that we do it at the right time as things move forward. We have priorities that are the integration and we have priorities that are sustaining our asset quality. And again, those are challenged by the current COVID situation. I think we have to take that in mind. So that's really -- we need to see more evidence of stabilization before concluding on that decision, Alex.

Alex Twerdahl -- Piper Sandler -- Analyst

Okay. Understood. And then just as I look at the pro forma balance sheet, it seems like you guys do have a lot of liquidity and then you have some higher costing brokered CDs and you got some FHLB advances that are a little bit higher costing today. I mean, are there some opportunities to do some deleveraging to get out some inefficient leverage out there?

Orlando Berges -- Executive Vice President and Chief Financial Officer

Clearly, when -- and you can see that the level of brokered deposits has been coming down. In reality, we have not been renewing any of the brokered deposits. We do have some -- they are not as expensive, but we do have some brokered money market accounts in here that move a little bit up and down every quarter. But on the brokered CD side, we're not renewing it and letting it go. It's much cheaper using the cash that you have on hand, even with the lower cost brokered deposits out there. But obviously, you have to go through the process of the maturity of those. But we have not been renewing any brokered deposits or FHLB advances that mature. So those are some of the opportunities as well as what I mentioned on the repricing of the time deposits that come due that were priced at a much higher rates a couple of -- one or two years ago when they were issued.

Alex Twerdahl -- Piper Sandler -- Analyst

Are there big tranches of either brokered CDs or advances that will be coming or maturing in the near term?

Orlando Berges -- Executive Vice President and Chief Financial Officer

The way we structure the brokered CDs that we were issuing was fairly spread to try to not have precisely that, a big chunk coming in and facing a point in time in the market. That was -- at some point, the market becomes complex for some of these issuance. So it's not a bunch. It's a bit every quarter. That's what we have, a bit every quarter.

Alex Twerdahl -- Piper Sandler -- Analyst

Okay. And then can you help us sort of figure out the loan mark inclusive of the credit adjustment that would be coming back through NII over the life of the loan and sort of how to project that purchase accounting accretion over the next couple of quarters?

Orlando Berges -- Executive Vice President and Chief Financial Officer

Obviously, the marks on the PCD portfolio are part of the reserve and those marks don't accrete back. It's a matter of just up or down. Depends on the CECL analysis that you do going forward. In the case of the non-PCD portfolios, there is about $35 million, $36 million of marks that would be both credit and rates that would come back through the life of the loans. And obviously, the mortgage ones will take longer. The commercial ones are typically happening faster because of the maturity terms. So more or less, that's -- those are the components. We'll see a chunk between three months and two years which is related to commercial and the consumer portfolios. And then the mortgage ones will be more in the five to seven year term.

Alex Twerdahl -- Piper Sandler -- Analyst

Great. And then just a final question for me is, just as I think about expenses and sort of the phase-in on cost saves, can you kind of help us get a sense for sort of the cadence of the cost saves coming in over 2021? I know you got the guidance in the slide deck. And then also the voluntary retirement program, is that part of the $48 million of cost saves or is that additional to that?

Orlando Berges -- Executive Vice President and Chief Financial Officer

That's part -- the cost saves will come from rationalizing operations. Technology side, the Santander cost, whereas compared to adding that size of operation to our technology structure, it's higher. So we -- the voluntary separation has an immediate cost, but then you start saving from that point on. Those are positions that -- in general, if not all, basically all would not be replaced. So those are immediate savings. And that was part of the assumptions we did from the start that we would do something like this. So a chunk will start with those voluntary separation in January. Technology ones, which is another large one, will start happening the end of the year, but most of it in the first half of 2021. And then the other one would be facilities. That's going to take a little bit of time because we -- again, Aurelio mentioned that is related to branch consolidations. When we decide to do that, we don't want to [afraid] customer. But that's why I mentioned that we'll see the full benefit starting really in the second half of 2021.

Aurelio Aleman -- President and Chief Executive Officer

Yes. Some of them have been achieved already and you're going to see some of them through this quarter as we integrate operations and systems. We completed two significant businesses this quarter, early in October. So some of the benefit comes into the quarter. So obviously, that's our focus, our priority. It's a lot of little things also when you add marketing costs, legal and the different consultants and professional services. And that's why we come up with the potential save, yes.

Alex Twerdahl -- Piper Sandler -- Analyst

Perfect. Thank you for taking my questions.

Aurelio Aleman -- President and Chief Executive Officer

Thank you, Alex.

Operator

[Operator Instructions] At this time, there are no further questions. So this concludes our question-and-answer session. I would like to turn the conference back over to John Pelling for any closing remarks.

John B Pelling -- Investor Relations and Capital Planning Officer

Thank you, Debbie. On the IR front, we have a couple of virtual conferences coming up here in November. November 9, the Piper Sandler Conference and on the 10th, the BAML Conference. So we look forward to chatting with you then. We appreciate your continued support. And this will conclude the conference call. Thank you.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

John B Pelling -- Investor Relations and Capital Planning Officer

Aurelio Aleman -- President and Chief Executive Officer

Orlando Berges -- Executive Vice President and Chief Financial Officer

Ebrahim Poonawala -- Bank of America -- Analyst

Alex Twerdahl -- Piper Sandler -- Analyst

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