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DATE
Thursday, July 17, 2025 at 10 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Jose Rafael Fernandez
Chief Financial Officer — Maritza Arizmendi
Chief Credit Risk Officer — Cesar Ortiz
Operator
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TAKEAWAYS
Record Assets and Loans: Total assets reached $12.2 billion and End-of-period loans held for investment were $8.2 billion.
Diluted Earnings Per Share: EPS (diluted, GAAP) was $1.15.
Net Interest Income and Margin: Excluding the new FHLB advance, net interest margin would have been at the higher end of the 5.30%-5.40% guidance range.
Loan Origination: New loan origination was $784 million, with growth across all lending channels in Puerto Rico and the U.S.
Deposit Trends: Average core deposits increased to $9.7 billion, up 1.4% quarter over quarter and core deposit cost remained steady at 1.42%.
Efficiency and Cost Management: The efficiency ratio was 52%. Noninterest expenses were $94.8 million, aligning with the $95 million-$96 million quarterly noninterest expense outlook for 2025.
Credit Quality: Net charge-offs totaled $13 million, with a net charge-off rate of 0.64%; Early and total delinquency rates were 2.46% and 3.59%, respectively; nonperforming loan rate was 1.19%.
Capital and Shareholder Actions: Common equity tier 1 (CET1) ratio was 13.99%; a new $100 million share buyback was authorized, and 186,000 shares were repurchased.
Strategic Investments and Digital Initiatives: 70% of retail loan payments and nearly all routine teller retail transactions occurred via digital or self-service channels; Digital enrollment and new net customer growth of 4% were highlighted.
New Products Launched: The company introduced Oriental Marketplace and a U.S. government money market fund within its DGI family of funds.
Tax Rate Guidance: The expected full-year tax rate is 24.90%, excluding discrete items.
SUMMARY
OFG Bancorp(OFG -1.54%) management expects retail deposit growth to continue in the second half and into 2026, driven by digital account acquisition and deepening client relationships. Fernandez noted competitive pressure in commercial lending, particularly surrounding loan pricing, but described deposit competition as "pretty rational." Cash increased by 20% to $852 million as part of a strategy to pre-fund expected loan growth, enabled by opportunistic use of federal home loan bank advances and brokered deposits. Management reinforced a commitment to balance ongoing investment with capital return, supported by a strong capital base and a CET1 ratio of 13.99%.
Chief Credit Risk Officer Cesar Ortiz explained that improved delinquency and charge-off rates reflect better-performing vintages from 2022 and seasonality in Q1.
Fernandez stated, "overall retail customer deposits will continue to grow in the second half." emphasizing the ongoing shift to digital channels and expanded product offerings.
Arizmendi confirmed, "The expectation that we share with you is 24.9% for the year, and it doesn't have any discrete items included." clarifying the tax rate guidance methodology for modeling purposes.
Despite "noise" in Puerto Rico's energy sector discussed by Fernandez, management does not view the issues as currently impeding the bank's operational or credit outlook.
INDUSTRY GLOSSARY
FHLB (Federal Home Loan Bank) Advance: A loan or funding provided to member financial institutions by the Federal Home Loan Bank, typically used to enhance liquidity or fund asset growth.
Net Interest Margin (NIM): The difference between interest income generated and interest paid out, expressed as a percentage of average earning assets.
Nonperforming Loan Rate: The percentage of loans that are in default or close to being in default (typically 90+ days past due) relative to total loans.
CET1 (Common Equity Tier 1) Ratio: A standardized regulatory capital ratio that measures a bank's core capital relative to its risk-weighted assets.
DGI Family of Funds: OFG Bancorp's proprietary suite of investment funds, including options such as money market and other mutual funds.
Full Conference Call Transcript
Jose Rafael Fernandez: Good morning, and thank you for joining us. We are pleased to report our second quarter results. To start, let's go to Page three of the presentation. It was another strong quarter ending with record assets of more than $12 billion and record loans of more than $8 billion. We had excellent financial results, generating earnings per share diluted of $1.15 for a 6.5% increase year over year on a 1.5% increase in total core revenue with a high return on average assets and equity. Operating execution was highlighted by loan origination and core deposit flows. Credit reflected a stable economy in Puerto Rico, and high levels of liquidity held by individuals and businesses.
We announced a new $100 million stock buyback authorization and bought back more shares supported by our strong capital generation and balance sheet. Please turn to page four. We continue to see strong momentum with our omnichannel digital platform. Our strategic investments in technology and innovation through our digital-first strategy are paying off. We are growing accounts and building deeper customer relationships. During the second quarter, nearly all of our routine teller retail customer transactions and deposits, as well as 70% of retail loan payments, were made through our digital and self-service channels. This was driven by continued year-over-year growth in digital enrollment, digital loan payments, virtual teller utilization, and 4% new net customer growth.
In the second quarter, we introduced two new products and services. We launched Oriental Marketplace, an online feature that gives our customers exclusive discounts on travel, restaurants, and retail products. We also introduced a US government money market fund, a new addition to our DGI family of funds, to provide customers with another convenient investment option. Now here's Maritza to go over the financials in more detail.
Maritza Arizmendi: Thank you, Jose. Please turn to page five to review our financial highlights. All comparisons are to the first quarter unless otherwise noted. Core revenues totaled $102 million. Looking at the key components, total interest income was $1.194 billion, an increase of $5 million. This mainly reflects higher average balances of loans and cash and $1.5 million from one additional business day. Interest expense was $42 million, an increase of $2 million. This mainly reflects higher average balances of core deposits and higher average balances of borrowings and brokered deposits, and $400,000 from one additional business day. Noninterest expenses totaled $94.8 million, up $1.4 million.
This is in line with our continued outlook of $95 million to $96 million in quarterly noninterest expenses in 2025. Compared to the first quarter, the second quarter reflected $1.4 million less in seasonal payroll taxes and foreclosed real estate costs. Keep in mind, the first quarter included a $3.1 million incentive payment from a business partner. Income tax expense was $14.1 million with a tax rate of 21.37%. That reflects an anticipated rate of 24.90% for the year and the benefit in the second quarter of $1.7 million in discrete items. Looking at some other metrics, tangible book value was $27.67 per share. During the quarter, we bought back 186,000 shares. The efficiency ratio was 52%.
Return on average assets was 1.73%, and return on average tangible common equity was 17%. Now please turn to page six to review our operational highlights. Total assets were $12.2 billion, up 9.99% from a year ago and 4% from the first quarter. Average loan balances were $8 billion, up close to 2% from the first quarter. End of period loans held for investment totaled $8.2 billion, up 7% from a year ago and up $328 million from the last quarter. The sequential increase mainly reflects our strategy to grow lending in the U.S. and Puerto Rico. Loan yield was 7.91%, down eight basis points.
New loan origination of $784 million was up 38% from the first quarter and 33% from a year ago. Second quarter originations reflect increases in all lending channels in both Puerto Rico and the U.S. The commercial pipeline continues to look strong. Average core deposits were $9.7 billion, up close to 1%. End of period balances of $9.9 billion increased $139 million or 1.4% quarter over quarter and $291 million or 3% year over year. The sequential growth reflects increased commercial and government deposits and reduced retail balances. In addition, it reflects increased time and saving deposits and reduced demand deposits. Core deposit cost was even with the first quarter at 1.42%.
Excluding public funds, the cost of deposit was 0.99% compared to 1% last quarter. Average borrowings and brokered deposits were $672 million compared to $570 million. The aggregate rate paid was 4.11%, down 21 basis points. End of period balances were $732 million compared to $421 million. The second quarter reflected $200 million in a new two-year federal home loan bank advance at 4.13% and $82.5 million in additional brokered deposits. We use these funds to increase liquidity in addition to higher deposits as part of our strategy to grow commercial loans. Cash at $852 million was up 20%, reflecting some of the new wholesale funding pending continued loan growth. Investments totaled $2.8 billion, remaining relatively unchanged.
This reflects that the repayments were mostly offset by purchases of $50 million of mortgage-backed securities yielding 5.55% and Ginnie Mae securitization of our own mortgage lending. Net interest margin was 5.31%, compared to 5.42%. Excluding the new federal home loan bank advance, NIM would have been around the higher end of our 5.30% to 5.40% range. All this being equal, as long growth continues, we should see NIM expand from the second quarter level. Please turn to page seven to review our credit quality and capital strengths. Credit quality continues to be stable. Net charge-offs totaled $13 million, down $7.6 million from the first quarter. Net charge-off rate was 0.64%, down 41 basis points sequentially.
Year over year, the net charge-off rate was down 15 basis points. Provision for credit losses was $21.7 million, down $4 million. The second quarter included $70.2 million for increased volume, $3.7 million for specific reserves for commercial loans, and $700,000 due to the alignment of model adoption and risk-weighted factors mainly in Puerto Rico. Looking at other credit metrics, the early and total delinquency rate were 2.46% and 3.59%, respectively. The nonperforming loan rate was 1.19%. Looking at other capital metrics, our CET1 ratio was 13.99%. Stockholders' equity totaled $1.3 billion, up $39 million. The tangible common equity ratio decreased 10 basis points to 10.20%.
To summarize the quarter, net interest income increased due to loan growth, in particular, our strategy to grow commercial loans. We saw continued deposit growth driven by commercial and government balances. Net interest margin was towards the lower end of our expected range, reflecting our decision to put more liquidity in place to fund future strategic growth in commercial loans. Credit quality continued to reflect the solid economic environment in Puerto Rico for both consumers and businesses. Noninterest expenses were in line with our expected range and should continue to do so.
With a strong CET1 ratio and earnings power, we put a new $100 million share buyback in place to return capital to stockholders, and we continue to acquire shares in the open market. Now here's Jose.
Jose Rafael Fernandez: Thank you, Maritza. Please turn to page eight. The Puerto Rico economy continues to show stable growth despite concerns about global macroeconomic and geopolitical events. The situation remains the same. Wages and employment are at historically high levels. The business environment is constructively positive. The economy continues to grow, and the outlook is positive. Turning to OFG Bancorp, our continuous improvement culture and our digital-first strategy are proving to be highly effective. New services are providing customers with better insights to better manage their finances. New tools are giving us the ability to further streamline processes and become more efficient. The end result is continued value creation and differentiation in the marketplace. Loan growth and credit trends are solid.
Our risk management capabilities are strong. We continue to execute our plan strategically and thoughtfully, growing market share by creating value and helping our customers achieve progress. All this is supported by a very strong capital position. As always, we could not have achieved these results without the hard work of all our team members. We are very thankful to them and optimistic for the future. With this, we end the formal presentation. Operator, let's start the Q&A.
Operator: Thank you. Star one on your telephone keypad. If you wish to remove yourself from the queue, press. We'll take our first question from Timur Braziler. Please go ahead.
Timur Braziler: Hi, good morning. Good morning. Maybe starting off on the margin, that's good commentary that you think margin starts to expand off of these levels. I'm just wondering, maybe from a deposit standpoint, those costs seem to tick higher a little bit in the second quarter. I guess as you look out into the back end of the year, is it just the better loan growth trajectory that drives margin higher? I guess, you just talk to the interplay between those expected loan growth and maybe what the deposit comp is doing on the island?
Jose Rafael Fernandez: Yes. So thank you for your question, Timur. I'll take a stab at it first and then I'll let Maritza give you additional color. So on the point on deposit cost ticking higher, remember that the government deposits are tied to a variable rate treasury bill kind of formula. And during the quarter, you have those fluctuations kind of trend up and down. This quarter, we have a little bit of that noise there. That's why you're seeing a little bit of that uptick on the cost of deposits. But let me just also step back and give you a little bit of our thoughts on deposits and how we see customer deposits moving forward.
Because what you have seen throughout the last year and a half is that our net new account growth in retail customers has continued to grow, particularly in checking during, as I said, the past year and a half. So that's one of the key drivers for us. Also, you have to look at the changes that we have implemented within our value proposition and our differentiation for retail customers. We have added a couple of new targeted deposit products and services. We have expanded, as you know, the self-service capabilities and also the digital capabilities.
We have provided additional insights for our customers to help them manage their finances, so we're adding additional tools for them to help them achieve financial health. And we're starting to see, we're in the early innings, but we're starting to see some of the loan-only clients starting to add relationships and deepening their relationship with us by opening checking and savings accounts with us. So and I'm speaking particularly from auto and mortgage as well as small and midsized commercial clients, owners, and employees. So that's a little bit of context on why we are seeing good momentum across the board on the deposits, particularly on the retail side.
So when you put all this together, the overall retail customer deposits will continue to grow in the second half. We expect that to continue and also into 2026. Then I'll like to add also the commercial side. It's a little trickier. Right? Because as I said, we have government deposits that are variable rate and tied to treasury bills. But we also have some larger clients that have ins and outs during the quarter that might kind of give us a little bit of volatility on the commercial side. But all in all, we're really happy with the path that we're taking on our deposit growth as well as the cost of deposits.
From a competition, what we're seeing, you know, we're seeing a little bit more competition from a small commercial bank that has operations in Florida that they're kind of positioning themselves as higher yielding, higher kind of paying CDs. We're also seeing some competition from US credit unions that have been doing the same for the last couple of years. But, all in all, I would say that competition is pretty rational. Maritza, is there anything you want to add on the margin?
Maritza Arizmendi: I'm not sure you got it. Timur, does that clear up your question or do you need more color on other aspects of the NIM?
Timur Braziler: No. I think that's helpful. Thank you. Maybe switching to the loan growth. Pretty impressive here. It seems like both in Puerto Rico and on the Mainland. I'm just wondering the cadence there. Did you see a real pickup early in the quarter? Then maybe that tapered off towards the back end of the quarter? Was that growth consistent throughout the quarter? And just maybe give us a lay of the land for borrower appetite both in Puerto Rico and then maybe on your Mainland operations as well?
Jose Rafael Fernandez: For sure. Yep. So, yeah, we had a really strong quarter on loan growth this second quarter. So what drove it, it was primarily a very strong pipeline coming into the second quarter in both Puerto Rico and the U.S., and we mentioned in our last earnings call that we felt that we had a very strong pipeline, and some credits were kind of pushed into the second quarter. So that's number one. In addition to that, this quarter, we also saw an increase in commercial line utilization from some larger commercial clients. Third, Puerto Rico's economy continues to be doing well, and it's in solid shape.
Clearly, the Puerto Rico economy paradigm shift continues to play out, and businesses are building up their capabilities and infrastructure. Some industries are consolidating, Puerto Rico is investing in its infrastructure, etcetera, etcetera. You've heard me talk about it in the last year and a half or so or two years. We continue to see a solid pipeline for commercial loans. Consumers are in good shape, so we expect loan balances to grow for the full 2025, now closer to the 6% versus the 3-4% that we previously guided.
So, you know, things continue to be moving in the right direction, and in spite of all the global geopolitical and all the uncertainty created by all the things that you guys know better than I do, I think Puerto Rico remains resilient. And, I'm building a big hole in the economy that was created after ten years of a kind of a 20% economic contraction. So you know, sometimes the economy's numbers, which are correct, show a very slow-moving economy.
But if you put it in the context of building up a hole or filling up a hole that was created after ten years of aggregate 20% contraction, really, the economy is doing pretty strong from the consumer and the commercial side. So being a bank and having a strong capital base with a very prudent and a risk culture, this is what we got. And we're really excited to be able to continue to grow and deploy our capital for our customers.
Timur Braziler: Great. Thank you.
Jose Rafael Fernandez: I'll step back. Yep. Thank you for your questions, Timur.
Operator: We'll next go to Kelly Motta with KBW. Please go ahead.
Kelly Motta: Hey. Good morning. Thanks for the question. You know, I would love to circle back to this concept of margin. Looking at your balance sheet, it looks like and you called out the FHLB and wholesale funding. You put on it looks like liquidity was somewhat elevated during the quarter. Just thinking through the expectations of margin, how you're thinking about funding and moving the balance sheet ahead from here. Can you just help us with some of the dynamics of the moving parts of maybe the timing of the wholesale funding and how to think about threading that with liquidity and loan growth ahead? Given your expectations? Thank you.
Maritza Arizmendi: So as you saw it in the quarter, Kelly, the driver was a volume factor for the NII to continue expanding. That's something that we have consistently shared with the market that NIM probably will range between 5.3 to 5.4. And compared to prior year's NIM, there is a contraction, but volume will be the driver on the NII, and that's what happened this quarter. And as we continue to see loan growth as a good dynamic here that Jose was mentioning, we decided to accelerate and put funding to the post with a good rate because at the end, it's 4.13.
We have margin if we put it in cash, but we wanted to anticipate that liquidity at that moment. We were opportunistic. And now we have flexibility to continue investing going forward with the opportunities. As I mentioned before, we have a great pipeline, good potential. We wanted to have that flexibility, and that's why we decided to put that into work.
Jose Rafael Fernandez: Okay?
Maritza Arizmendi: Got it. Got it. And specifically to your very specific question about the timing of those, it was halfway through the quarter that we made that call. We saw the pipeline. We're seeing the loan originations. We see the line utilization levels inching up, and that's when we decided because we also saw the good rate, like Maritza mentioned, from our perspective.
Kelly Motta: Got it. So that's helpful. And then, I mean, the story of the quarter is that you guys just had such strong loan growth. I'm just wondering, how are spreads holding up? Any kind of, like, competitive dynamics there? Because, Jose Rafael, you said, you know, you now are expecting a bit higher loan growth for the year. Just wondering, I mean, I understand some of the dynamics and the push into 2Q, but it really was remarkable. So I'm hoping you can discuss some of the pricing dynamics there and kind of how Sure. Where that new business is coming from.
Jose Rafael Fernandez: Yep. So pricing dynamics, different than deposits. The market is much more competitive on the lending side. And we're seeing, particularly on the commercial side, we're seeing a little bit more pricing pressure and that's part of also what we're seeing. That's mostly on the pricing side. In terms of loan growth, well, auto had a little bit of a benefit this quarter because of the announcement of the tariffs and, like, happened in the States too. There was a little bit of a "me go out and buy the car before tariffs come in" type of thing.
But we're still seeing a pretty steady loan origination pipeline there from the car dealers in spite of some stabilization in the auto sales in Puerto Rico. On the, as I mentioned on the Puerto Rico commercial, we see still a good pipeline, and it's very well diversified from industries as well as from the type of loans that they're seeking. Some of them are part of a consolidation strategy in the industry. Some of it is building infrastructure, as I mentioned in my prepared remarks, etcetera. On the mortgage, we really have been stuck in the last several quarters.
And this quarter, we did $22 million more than in the first half of this year, we've done $22 million more than the first half of last year. And it's mostly driven by stabilization in the real estate prices where they've gone up and they remain relatively stable at those levels. And our ability also to look at the nonconforming market and be able to offer alternatives that are relatively more competitive than in the past. So that's also another area where we're looking to focus on. And then lastly, on the U.S. loan business that we have, again, we had a little bit of accumulated pipeline from the first quarter. But we are also seeing some good, well-diversified C&I.
It's also industry diversified. It's nationwide, and it's focusing on the small and mid-market segment in the U.S. And the economy in the U.S. remains resilient also. And in spite of all the things that are going out there. So, again, it's a pretty good economic picture that we're seeing in spite of all the clouds, and we're on the lookout. We're not going to be relentless in looking for opportunities to grow, but we're going to also be making sure that we don't become complacent. And that's why Cesar and his team on the risk side are keeping a close eye on all the risks to make sure that we keep the focus on both sides.
So that's my view on the loan side, Kelly.
Kelly Motta: Got it. I will step back. Thank you very much.
Jose Rafael Fernandez: Yep. You're welcome, Kelly. Thanks for your questions.
Operator: As a reminder, if you would like to ask a question, please press 1 on your telephone keypad. We'll take our very next question from Brett Rabatin with Hovde Group. Please go ahead.
Brett Rabatin: Hey, good morning, everyone.
Jose Rafael Fernandez: Hi, Brett. Good morning.
Brett Rabatin: I'm good. Jose, wanted to start with just talking about what's going on with the power grid here recently and the new Fortress contract. Can you give us any color on your vantage point? You know, what's going on with energy in Puerto Rico and just I know we've talked about this before, but, you know, I guess any update would be helpful.
Jose Rafael Fernandez: Sure. Sure. So what's going on right now is they're trying to bring in natural gas to fill in some generators that would potentially cover the grid in case of higher demands during the summer, which will happen. And that way minimize or mitigate some of the potential shutdowns that the system is having or the kind of turndowns that the system is having. So that's the objective of the, you know, well-documented contract that the fiscal board has canceled. But, you know, Brett, I look at this as I've said in the past. This is a long journey for energy in Puerto Rico. It is year five or so. They're still in bankruptcy. There are two private resorts.
The government is in the middle. So, you know, they're in the ring, and they are throwing punches at each other and sometimes they pat themselves on the back. Depends on the perspective. So it's going to be noisy. But at the end, it's not making any impact on the economy. It's having an effect on the economy. But it's not, you know, if we wouldn't have this issue, the economy would be doing a lot better. Because it would reduce a lot of uncertainty from the business side and the consumer side. But the economy is in such a strong base right now that even all this noise is precluding businesses and consumers from holding back.
It's becoming a little bit of a kind of part of doing business until things just get resolved, and it's going to take a while.
Brett Rabatin: Okay. That's helpful. And then from a credit perspective, you know, the delinquencies and the early stage auto ticked back up from being really low last quarter. But charge-offs were really low this quarter. And you know, I know the USA portfolio didn't have any charge-offs, but just wanted to get your thoughts on the charge-off levels in 2Q and if that was an anomaly or if this is kind of a new level of benchmark to think about for credit for you guys.
Jose Rafael Fernandez: Yeah. I'll let Cesar give you the specifics on that. Hey, Cesar.
Cesar Ortiz: By the first quarter, benefit from in delinquencies and nonperforming loan statistics because it's a seasonal positive quarter because of tax refunds, end of holiday season, etcetera. So we always expect, you know, a tick up in the second quarter and third quarter from the first quarter because of that seasonality. But when we compare it to last year's same quarter, it's much better. So it's a new vintage coming in, better vintages coming in that we adjusted back in 2022. So those new vintages with better credit performance are going to continue coming into the statistics. So that's going to continue stabilizing and repairing hopefully, better charge-off rates and number loan and delinquency rates than previous vintages.
So that's basically the...
Brett Rabatin: Yep.
Jose Rafael Fernandez: Thank you, Cesar.
Brett Rabatin: Okay. So if I heard that correctly, you know, it sounds like the outlook from here is net improved. Just kind of given the vintages, you know, in the recent performance.
Cesar Ortiz: Correct. Correct. Correct.
Brett Rabatin: Alright. Great. Appreciate the color.
Jose Rafael Fernandez: Thank you. Have a great day.
Operator: And we'll go next again to Kelly Motta with KBW. Please go ahead. Kelly, your line is open. Please go ahead.
Kelly Motta: Hi. Thanks for letting me jump back on. I apologize if you answered this more directly. If so, I may have missed it. But on the government deposits, I think last quarter, you talked about a billion left that had signed on a couple of months to stay, and that was kind of the determining factor for kind of where you would end up in the margin range. Just wondering if you have an update as to your expectations for the potential of those deposits to remain with OFG Bancorp at least for here now?
Jose Rafael Fernandez: Yep. So the expectation is relatively the same as in past quarters. It's an ongoing kind of every three, four months, and we feel that we don't see this deposit kind of roll over in several more quarters.
Kelly Motta: Okay. That's helpful. And then maybe if you could touch on expenses. I don't think we addressed that yet. You guys did an excellent job controlling expenses, and you mentioned, you know, you've been investing a lot in the tech and certain efficiencies to just drive experience. Just wondering, you know, if you could provide a high-level update as to, you know, what other sort of investments are in the works and how you think about balancing your investment in the business and your ability to serve your customers ahead with capital return to investors given your strong capital position.
Jose Rafael Fernandez: Yes. Well, that's a great question, Kelly. How do we do it? Every day, push for efficiencies. And certainly, technology is helping out. And I think look at efficiencies from the back office, and we see processes that can be simplified and we see areas where technology after the process has been simplified can come in and be a lot more efficient for us. We are not yet seeing some of those efficiencies. We are expecting to see them in the years to come in the next year or so. And that's part of the push that we're constantly addressing internally.
So because we have to continue to invest in technology, we need to continue to invest for the improvement of the customer experience. We need to continue to create value for our customers, not only on the retail side but also on the commercial side. You know, look. We have formidable competitors that are really, really aggressive in their investments. They have deeper pockets. So we need to play it both ways. We need to invest, but we need to be very much intentional in eking out efficiencies constantly on all our processes.
And that's why what we're asking internally is also to continue to transform our culture to one where we have to be a lot more focused on change management and challenging each other to do better. And that's the best I can share with you, Kelly, because otherwise, I would have said it's just an art and it's sometimes, like, a picture and sometimes it's an awful picture, but it's an art. It takes a team to work and a team to be buying into what we need to achieve. And we are very happy to have that team in Oriental right now. And excited to continue to grow and to show value to our customers and shareholders as well.
Kelly Motta: Got it. Last very little ticky-tacky question from me for Maritza is the tax rate guidance that you provided in the earnings release, you did have the tax benefit in 1Q. I was wondering if that was including or excluding that. I just wanted to get clarification so I can model the second half of the year ahead.
Maritza Arizmendi: The expectation that we share with you is 24.9 for the year, and it doesn't have any discrete items included within that. I'm not sure if that's your question, but it is the flat rate for the year without any benefits. So excluding that $1.7 million benefit you had in 1Q. Perfect. Alright. That's correct.
Kelly Motta: Okay. Thank you. I will step back. Thank you, guys. Great quarter.
Jose Rafael Fernandez: Yeah. Thank you. Thank you. Thank you for your questions, Kelly.
Operator: At this time, there are no further questions. I will now turn the call back over to Jose Rafael Fernandez for closing remarks.
Jose Rafael Fernandez: Thank you, operator. Thanks again to all our team members. And thanks to all our stakeholders who have listened in. Looking forward to seeing you next quarter. Have a great day.
Operator: Thank you. And ladies and gentlemen, that does conclude today's conference. We appreciate your participation. You may now disconnect.