Timur Braziler: Great. Thanks. So then just lastly from me. Just looking at the Florida component of the story, it seems like that’s a little bit more under pressure than maybe the Puerto Rico component we saw a charge-off there. We see incremental deposit pressure, the loan origination activity is slowing down. Can you just maybe talk about Florida? In the longer term, is this kind of the cost of doing business and getting more geographic diversity, you have to kind of take the good times with the bad? Or is this enough to kind of make you tap the brakes maybe a little bit more on what you’re doing on the mainland?
Aurelio Aleman-Bermudez: Well, I think, first of all, our concentration in Florida is really Miami-Dade County. And if you see the economic trends are very, very positives in terms of inflow of residents and demographics are just positive trends. When you look at the behavior of the customers, it’s different. And I think you can see that in some of the neighbor banks that operate with us, I have to say that we’re doing similar — we say similar trends across what we consider our peers there. It’s a market situation where some of the monies moving out to treasuries to really non-bank competitors. We do have an — we had an niche business with commercial clients primarily. Some of this money was sitting there for a long time, started to move last year and it’s moving — it move.
I have to say, the impact actually was prior to the March event, which we saw and it was really yield driven. And actually some of that money was used to — there’s a lot more sensitivity in the market to pay what we consider our current market rates for loans, especially, on some of the CRE and the facilities. Some customers are just paying down with their own liquidity. There was significant excess liquidity accumulated over this year. So, I think, we monitor ourselves. It’s a cycle. We’re moving with it. We’re committed to the market. As you say, you have really good times there. Good as a quality. We feel we have a solid book, and obviously, margin is compressing differently to what we see in our main market. So it’s part of the — regional diversification is important and we expect to sustain at our franchise at the current levels.
Yeah.
Timur Braziler: Great. Thanks for all the questions and nice quarter.
Orlando Berges-Gonzalez: Thank you.
Operator: Thank you. Our next question today is from Kelly Motta from KBW. Kelly, please go ahead. Your line is open.
Kelly Motta: Hi. Good morning. Thanks for the question. I think maybe I’ll go back to the funding side of things. In your release, you mentioned that new account openings were actually higher in March and they had been in the prior 12 months. I’m just wondering if you could take us back to the month of March, if what you saw there was maybe some proactive, kind of defensive move on your part in the — well, like market uncertainty was going on, or if there was any sort of specials that was irrespective to the March volatility? Just very interested in what drove that?
Orlando Berges-Gonzalez: Okay. When the events happen over that weekend, we prepare ourselves with communication and scripts to answer client questions and we do have a high end portfolio, a high balances portfolio, that obviously we expected some contraction and concerns. Some of that happened, but very limited number of clients move out to other sources because specifically concerns very limited numbers. On the other hand, we’ve been building capacity to grow the deposit franchise. Remember, we were very busy last year, Kelly, doing consolidation of branches and things that distract, managing the attrition, managing the vacancies. So, that is in the past. So, we have built a capacity to increase, to our targeted levels of new accounts, new customers coming into the bank.
So, actually, March was a month that we achieved the highest number of accounts open, very close to our goal that were based on our capacity plan and the network that we have. So, noise, I think we all have to do the proper education, explain why the franchise is different to the banks that fail in the U.S. during those — during that event. It’s a very different profile. We have the ground variety, the excess liquidity, the protection of an insured deposit. So, I think, we were proactive in managing it and these are the results.
Kelly Motta: Thanks. And then, on the other side of the balance sheet, I think in your prepared remarks, you reiterated kind of mid single digit loan growth as the outlook. And I believe on last quarter’s call, you talked about the potential of public/private partnerships being additive towards that. Just wondering if you had an update on how potential projects like that were trending and if that’s contemplated in your loan growth outlook ahead that you updated?
Aurelio Aleman-Bermudez: Yeah. That continues to be on top of that. They are — those trans — there’s a couple of transactions in the market today that I will say most banks in Puerto Rico are looking at them. We believe those are — some of that will be second half of the year, even though they’re taking traction, they’re in the process of obtaining bids and RSPs and being working the financial markets, fairly large deals I have to say. So, moving — they continue to progress and yes, I heard — as I mentioned before, that will be on top of our mid digit target.
Kelly Motta: Got it. Appreciate that. And maybe last question for me. On the capital front, I appreciate the commentary that you’d revisit the buyback in the second half of the year. Obviously, with what’s going on in the banking industry, people are looking closer at, capital fully baked for unrealized losses. Just wondering if any of these events is changing the way you view optimized capital levels, and how you’re managing capital in the balance sheet ahead?
Aurelio Aleman-Bermudez: Well, definitely, we decided to pause in this quarter to reassess what are the newer risk that are in environment — what could be potential changes to regulatory ratios, we don’t know that and the people are talking about. So, we are reassessing all the potential new risk. On the other hand, we do have a lot of capital, and obviously, remain — our goals is to distribute a 100% will be basically stay at the same capital level that you are today, as we move on through the year. So, there’s — when events like this happen, it is the most — actually is to pause, understand the items. We do stress testing considering new potential scenarios. We feel if we are where we are today and these trends continue on a flat scenario or we are today, things will continue to perform well. So, we believe that we will conclude on that and we’ll form the market in July unless new things come, that should be the outcome.
Kelly Motta: Great. Thank you so much for all the color and congrats on a great quarter.
Aurelio Aleman-Bermudez: Thank you.
Orlando Berges-Gonzalez: Thank Kelly.
Operator: Thank you. Our next question is from Alex Twerdahl from Piper Sandler. Alex, please go ahead. Your line is open.
Unidentified Analyst: Good morning, guys. This is Beter . I’m just filling in for Alex Twerdahl today. I just wanted to touch on loan growth. I know you’ve mentioned previously. We’ve seen commercial and construction growth in Puerto Rico, and as you mentioned, unexpected paydowns in Florida. Could you give us more color, maybe by geography or by segment, if we should expect to see more of that in the coming quarters where we see growth in Puerto Rico more in some declines in Florida, or any color on that would be helpful? Thanks.
Aurelio Aleman-Bermudez: First of all, pipelines continue to look healthy and — in both regions and actually in the ACR region also. So, we — obviously, our guidance on long growths have been single digit. It varies by sector and by region. We calculate the guidance based on the overall portfolio. And when we say consumer 10%, we talk about the overall franchise, independent of regions. When we talk about 5% means based in commercial, is across the region. So — and then, the mortgage, we guided flat obviously where market — where rates were during the quarter, that was a challenge, but we still believe that some of that can be recovered. By region, I think, Florida is being more sensitive to rates, so it’s going to be more difficult to grow in Florida.
But on the other hand, when we look at the pipeline, the portfolio should be sustained and we don’t expect it will surprisingly high the number of payments. So, hopefully that doesn’t happen going forward, because of rate. And we do expect more stability. In Puerto Rico, we do — we have more certainty on the growth because of less volatility on the paydown side. So, I think, we look at it overall by portfolio, by asset class. We don’t necessarily look at individually by region in terms of how we provide the detail, but that’s what I can share with you.
Unidentified Analyst: Got it. And then one more question. I know you guys said that you expect more pressure on the deposit side. Do you have any update? I know you guys said that you expect cycle to date betas, or expected betas to be 18% to 22% in that range. Does that still stand? Or do you have a expectation for what you think betas could peak at this cycle?
Orlando Berges-Gonzalez: Well, what — on the 18% to 22% was the average on all the other deposits excluding public funds that — during the last quarter. We split it in this quarter in three components. Basically because of what we have seen in terms of shift to time deposit, that change a bit the mix of how deposit portfolio — its behavior has been happening lately. The non-interest-bearing accounts, excluding the time deposits and the government, was only 11% beta this quarter, and that should be more or less like that. The only thing that’s been difficult to predict, it’s the fact that we saw that large movement into time deposits. In reality, the time deposit levels came down dramatically from 2019 to 2022, 2021, with rates being so low, we saw people as time deposits mature, just keeping the money on their regular transaction accounts.
And many of those peoples are starting to go back with higher rates and putting deposits on time deposits. So, that — the acceleration of betas on the time deposit side has been more difficult to anticipate because of the shift in mix on terms and the kind of funding invoice it coming from. Some of it’s coming from non-interest-bearing, which obviously has a bigger impact. Some from other lower yielding non-interest-bearing accounts. So, again, the government side, should be in that 90% to 95% range. Time deposits is a different story, and all the accounts should be in that 11% to 12% range that I mentioned.
