OFG Bancorp (NYSE:OFG) Q3 2019 Earnings Conference Call - Final Transcript
Oct 21, 2019 • 10:00 am ET
Thank you. [Operator Instructions] Our first question comes from the line of Brett Rabatin of Piper Jaffray.
Hey, good morning everyone.
Jose Rafael Fernandez
Good morning, Brett.
I wanted to first ask Jose Rafael, can you just talk about for a second, when you look at the macro picture in Puerto Rico, the stats tend to be flattish, the GII Index has been pumping along at 120, cruise ship visitors have been down a little bit, auto sales are okay. There was a report last week on Bloomberg that referenced a few other things, talking about the potential for Puerto Rico to only get $39 billion of the $69 billion of funds from FEMA and HUD. Was just curious if you could give us some color on what you're seeing economically in Puerto Rico and then what you heard about the potential decline of the funds coming to Puerto Rico?
Jose Rafael Fernandez
Sure. So what I think we're living right now here in the island is transitioning, an economy transitioning from not only the aftermath of Maria reconstruction and -- but also for the last 12, 13 years of economic contraction. So federal funds are coming in. They're coming in slower than anticipated. There is still a little bit there of uncertainty regarding the magnitude of how many funds are going to come and flow [Phonetic] down to the island. But the truth is that there is very little knowledge in the ground in terms of the specifics, Brett, in terms of the dollars and on when are those funds coming in. They are certainly trickling primarily for the roads and there is a lot of rebuilding on the roads and the bridges. There is still work in progress in terms of the electric power authority and its restructure. There is still a lot of expectations on the housing funds coming in for rebuilding and actually building new homes. But we are seeing some of our larger construction services clients being awarded projects to build and rebuild homes and those sort of funds have already been allocated, they've been awarded and they have yet to be disbursed because there is still some hoops to go through.
So my expectation would be that we will continue the end of the year as we have seen so far this year with lots of noise on when the monies will come in and how much will come in and how the fiscal board portrays in Washington, how much is the fiscal plan including in terms of Federal funds. But I do believe that there are lots of moving parts and there is lots of listeners out there that have a vested interest on -- particularly bondholders on how these things come out. So I think we'll continue to have quite a bit of noise and create somewhat the uncertainty that is keeping the economy relatively flat. My expectation would be that next year funds will start flowing in a more consistent basis and the impact on the economy as