Popular, Inc. (NASDAQ:BPOP) Q2 2019 Earnings Conference Call Transcript

Jul 24, 2019 • 11:00 am ET

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Popular, Inc. (NASDAQ:BPOP) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session [Operator Instructions]. Today's first question comes from Brett Rabatin of Piper Jaffray. Please go ahead.

Analyst
Brett Rabatin

Hey, Good morning everyone.

Executive
Ignacio Alvarez

Good morning.

Analyst
Brett Rabatin

Wanted to first ask the narrative was kind of supposed to be that the commercial book was growing more in Puerto Rico versus maybe a pullback in the US, just given relative pricing and what you were seeing this quarter. The growth was actually in the US on the commercial side and I'm curious if that was in the condo health-care sectors that you mentioned, and then maybe just some color around the commercial book in Puerto Rico linked quarter -- what affected the linked-quarter change in the balances?

Executive
Ignacio Alvarez

Yes, the, narrative of as you described it of growth in Puerto Rico, we expect it to actually be in different sectors. But it's not going to be in every sector every quarter Brett. We've had very consistent contribution for the auto sector almost every quarter. Last quarter our commercial grew, this quarter was sort of flattish. That in a given quarter may be simply a reflection of prepayments and payments like clients than anything else, not necessarily a reflection of origination. But the important point is that we are seeing the portfolio, of Puerto Rico grow overall and the contributions will shift from quarter to quarter between different, different segments. In the US, we commented in the last quarter that commercial growth has been slower. There was a little bit of catch up in the second quarter. So it's a strong second quarter. But for the year in full, we are still running at a slightly slower pace than we were, if you look at the prior quarters last year on the average for the last couple of years. So that's what we're trying to say, when, we mentioned slightly lower growth in the, in the US. If you look at the pace we have been running '17 and '18 or 6%, 7% per quarter. We're are still growing healthily, but at a slower pace of that.

Analyst
Brett Rabatin

Okay. I appreciate the color there. And then just around the margin, Carlos, you gave the guidance $4 million to $5 million for 25 basis points. But you've also got continue to elevate government deposits, and you've obviously taken some action in the securities portfolio. One, can you walk through what you did in the securities book this quarter? And then just maybe give us some thoughts on the margin itself. Like, how are you going to try and manage that to flattish with balance sheet actions, are you more trying to grow NII what's, what's your thoughts on how you're going to manage the balance sheet, relative to what we're seeing with rates.

Executive
Carlos Vazquez

Yes, you can see this quarter, there was a shift from cash to investments that is in big part driven by the -- by our tax strategy. It is actually a lot more tax effective for us to hold treasury