Our speakers today are José Rafael Fernández, Chief Executive Officer and Chairman of the Board of Directors Maritza Arizmendi, chief financial officer and Cesar A. Ortiz-Marcano, Chief Risk Officer.

Good morning, and thank you for joining us. We are pleased to report our second quarter results.

Had another all around outstanding quarter, with good momentum in all areas. Let's go to page 3 of our presentation.

We continue to show strong financial performance Earnings per share increased 21% year over year on 4% growth in total core revenues. This was driven by consistent loan growth, core deposit strength, stable credit quality, effective balance sheet management.

We saw continued solid and steady momentum across all our businesses, supported by disciplined execution, excellent customer engagement, and our differentiated operating model. During the quarter, we launched a new branding campaign highlighting our strategic and financial evolution into a digital bank with a human touch.

1 that combines innovative technology and our customer-focused culture. With healthy consumer and business liquidity, wage growth, and historically low unemployment, Puerto Rico's economy continues to be resilient.

Please turn to page 4. Our core digital strategy is focused on 3 key areas of execution.

The first area is offering value to customers through innovative account products that meet their specific needs. Libre for the mass market Elite for the mass affluent, and My Biz for small businesses.

The second focus is technology. Our omnichannel platform allows customers to interact with us seamlessly across all our digital channels.

This is driving digital adoption, generating efficiencies, and savings. In turn, this enables us to reinvest in new ways to serve our customers and transform our branches into places for relationship building as opposed to transaction processing.

The third focus is intelligent banking. Leveraging data to provide real time personalized insights with unique value.

Helping customers better manage their finances. Overall, this approach differentiates OFG in the marketplace, drives higher digital adoption levels, and most importantly, deepens customer relationships.

All this translates into consistent steady growth of the business. Please turn to Page 5.

The results continue to show up in our key performance indicators. Most retail customers are doing almost all routine and deposit transactions and loan payments through our digital and self-service channels.

During the second quarter, we saw year over year growth of 4% in net new retail and commercial customers. 11% in active digital users.

6% in digital loan payments, and 3% in virtual teller use. Combined with our increased level of service, our products and people are delivering added value to our customers every day.

Year to date as of June, 28% of Libre accounts were opened digitally. We are the only bank in Puerto Rico with this full digital capability.

More than 1.1 million personalized smart banking insights have been delivered monthly with more than 90% positive feedback from customers. And more than 68 thousand customers have accessed our live remote tellers during times when the rest of the banks in Puerto Rico are closed.

Now I would like to pass the call to Maritza Arizmendi to go over the financials in more detail.

Thank you, José. All comparisons are to the first quarter unless otherwise noted.

Now let's turn to Page 6. Our financial performance was very strong this quarter.

EPS climbed to $1.39. The efficiency ratio was 54%.

The return on average assets rose to 1.93%. And the return on average tangible common equity increased to almost 18%.

The loans-to-deposit ratio was 85%,, and the payout ratio was 25% which reflects the higher income in this quarter versus the first quarter. Let's turn to page 7.

Review our income statement highlights. Core revenues increased $4.5 million to $190 million Total interest income was $197 million an increase of $3 million This reflected higher average balances of loans at higher average rates.

Which more than offset slightly lower income from cash and securities. The quarter included $4.1 million from 3 prepaid-in-full commercial loans.

This compares to $3.3 million from a similar loan paid in full in the first quarter. There was 1 additional day in the quarter.

This increased interest income by about $1.6 million Total interest expense was $40 million. A decrease of $500 thousand.

This reflected lower average balances of brokered CDs and borrowings, which more than offset the cost of higher average balances of core deposits. The added date increased interest expense by about $400 thousand.

Total banking service Total banking and financial service revenues increased $1 million to $33 million, reflecting higher banking and wealth management revenues. Which included $1 million in annual insurance and annuity fees.

Noninterest expense increased $8.1 million to $103 million This included $5.8 million in business operational charges while the first quarter included $1 million in capital markets readiness and registration costs and the benefit of $3.6 million in our business related volume incentive. Income tax was $15.7 million.

Reflecting an anticipated ETR of 22.64% for the year, and the benefit of some discrete items. Now let's turn to Page 8 to review our balance sheet highlights.

Average loan balances grew $78 million. To $8.2 billion.

And end of period balances grew $62 million or 0.8% due to increases in Puerto Rico commercial and consumer loans. New loan production was $750 million.

An increase of $146 million or almost 24%. Reflected increases in Puerto Rico commercial residential mortgage, and consumer lending.

Production in the year ago period was slightly higher due to a spike in auto sales from the threat of tariffs in the second quarter of 2025. Average core deposit balances grew $145 million to $9.7 billion with end of period balances grew $85 million or 0.9%.

Reflecting government, commercial, and retail deposit growth. Regarding our large government deposits, $400 million into 3- and 6-month time deposits, with approximately $175 million remaining in the demand deposit category.

Average cash balances fell $45 million but increased $109 million at end of period. As a result of deposit growth and repayment from the investment portfolio.

Average investments fell $84 million and $92 million at end of period Due to principal pay downs in the mortgage backed securities. And our borrowings and brokered deposits fell $133 million and increased $49 million at end of period, reflecting our liquidity management.

Now let's turn to page 9 to review net interest margin. Loan yield increased 3 basis points to 7.90% Excluding the 3 loan repayments in the second quarter, and the 1 in the first quarter, loan yield was 7.70% compared to 7.71%.

Core deposit cost was level at 1.29%, reflecting growth of $92 million in noninterest bearing deposits to $2.7 billion Excluding public funds, cost of deposits was 98 basis points compared to 1%. Net interest margin increased 9 basis points to 5.45%.

Now let's turn to Page 10 Capital continued to build. CET1 ratio increased to 14.07%.

Total stockholders' equity rose to $1.4 billion TCE ratio continued to climb to 10.90% and tangible book value continued to expand to $31.12 per share. Looking at share buyback, if you recall, we bought a large number of shares in the first quarter.

Cesar will provide more detail about credit in a moment, but let me summarize a little bit where we are at midpoint this year. We continue to expect low-single-digit loan growth for the year.

With commercial more than offsetting the unanticipated decline in auto, Though, auto has been slightly stronger than expected. We continue to anticipate deposit growth, excluding the large government deposits.

Benefiting from our 5.10% to 5.20%. This year.

Now, we expect NIM to range from 5.25% to 5.35% in the second half of 2026. This is in line with the 5.30% NIM we had in the second quarter and 5.35% in the first quarter, excluding the loan pay down.

Our second half outlook incorporates deposit growth and the relocation of the large government deposits. We continue to anticipate no rate cuts this year with the Fed cutting rates once next year.

We remain on track to keep expenses in a range of $380 million to $385 million this year. Our estimated tax rate for the year cost continues to be 22.6%.

Not including discrete items. And while we are not active buying back shares in the second quarter, our strategy has not changed.

We have $194 million in remaining authorization, and we will continue to be selective and opportunistic with disciplined growth and focus on shareholder features. Now, here's Cesar.

Thank you, Maritza.

Please turn to page 11. All comparisons are to the first quarter unless otherwise noted.

Credit reflected disciplined execution proactive risk management, and continued improvement in overall portfolio quality. Net charge offs increased $7.4 million and were 1.0% of average loans.

At the same time, nonperforming loans fell $53.6 million to 0.81% of average loans. This reflected the successful sale of the standalone telecom exposure discussed in previous quarters and of another nonperforming commercial relationship.

These actions reduce concentration and tail risk and improve the commercial portfolio's overall risk profile. and long-term credit quality.

Retail net charge off rates improved in auto and consumer and remained stable in mortgage. Auto decreased to 1.11% an improvement of 41 basis points.

Consumer improved to 3.78% down 62 basis points. Provision for credit losses fell $9.5 million to $13 million.

This primarily reflected $14.7 million for increased loan volume and $1.9 million in commercial loan recoveries. This compares to the first quarter which included $17.5 million for increased loan volume $3.7 million for increased allowance for the telecom loan, and $1 million for newly classified small commercial loans.

Looking at other credit metrics, early and total delinquency rates were 2.5% and 3.7%, respectively, reflecting typical seasonality with continued normalization across consumer portfolios. This mix of modest early stage delinquency and stable back end losses continues to demonstrate the resiliency of underlying portfolio quality.

Despite some movement in early stage delinquencies, the stability in net charge-offs reinforces the strength of recent vintages and the quality of new originations. Credit should remain stable in the second half in line with seasonal trends which show declines in the first half and increases in the second half and then declines again in the first half of the next year.

Here's José Rafael Fernández to wrap it up.

Thank you, Cesar. Please turn to page 12.

The Puerto Rico economy remains resilient. In addition to what I said earlier, federal reconstruction funding, infrastructure projects and private investment continue to support economic activity, manufacturing expansion and new onshoring initiatives reinforce the long-term growth outlook.

Having said that, we remain very attentive to evolving macroeconomic conditions including in particular interest rate outlook and geopolitical developments. Within this environment, OFG is well positioned to grow.

Our digital-at-the-core strategy continues to create more personalized customer experience simplify how we operate, and support sustainable market share growth. We continue to invest in people, technology and AI to enhance capability and drive long-term operating efficiencies.

We see a healthy commercial pipeline and stable credit trends supported by strong risk management and balance sheet discipline. Together with Puerto Rico's favorable operating environment, our agile and disciplined execution, positions us well to continue to navigate evolving market conditions, and pursue attractive growth opportunities.

With this, we end our formal presentation. Operator, let's start the Q and A.

Hi, good morning. Thanks for the question and congrats to the team on a great quarter.

Thank you, Kelly.

Maybe taking it off on the margin, you materially raised your NIM outlook for the second quarter in a row. I think I caught that maybe 500 million of the government deposits moved into CDs.

Just wondering what your new 5.25% to 5.35% outlook assumes in terms of the longevity of these deposits sticking around on balance sheet and ex that, some of the underlying dynamics you are seeing in terms of new loan originations and incremental cost of core funding? Thank you.

Kelly, before I let Maritza give you the details, you hit it on the nail. When talking about margin, the government deposit is the 1 that is kind of the variable that we kind of do not control much But the good news is that this is a long term relationship that we have at the bank for many years.

And we have been able to methodically diversify the deposit into wealth management as we saw last year, and now we are terming out a little bit on the CDs so we can help the client optimize its liquidity as well as the yields as they take a little bit longer look at the deposits. So we feel much more confident about our margin guidance, and that is why you are seeing us resetting it in this call.

So I will let Maritza go into the details. But you hit it on the nail when you address the government deposit.

Yeah. And thank you, Kelly, for the question.

And the reality is that we completed that relocation at the end of June. So we were able to assess for the next half of the year.

And now we I will not need to go to the market to replace that funding and provide us with some additional spread. So that is why we are increasing the guidance.

We continue to be at sensitive, slightly asset sensitive. And since we are not expecting changes in the market rate at least in this year, we are expecting a more stable type of NIM that resemble what we saw during the first 2 quarters, 5.25%, the first quarter without the recoveries and 5.30% the second quarter without the recoveries that are nonrecurring.

So that is why our guidance is has been increased.

Another point that I would like to add, too, is that we are also seeing higher loan balances. And particularly from the commercial side.

And that is something that we are very happy with, and we continue to see a very strong pipeline that should support the single digit low loan growth that Maritza mentioned in her prepared remarks.

Got it. that is helpful.

I guess maybe I will switch to loan growth, just to keep the thread here. at a-- clearly, Puerto Rico is still operating at nice level here.

Wondering if this increase in commercial that you are starting to see tailwinds from I know it is really early, but from onshoring or any other color as to what seems like a better operating environment overall that you are seeing here. Thank you.

Yep. Kelly, good point also.

We have been talking about the Puerto Rico economy for several-- I would say 2 or 3 or even more years now since the economy is doing a lot better than in my, let's say, my first 17 years as CEO. So when we look at it, it certainly provides a lot of confidence to operate a bank when you have a stable steady consistent economy.

And the metrics that we are seeing continue to reflect the same, low unemployment, high liquidity levels on the consumer side. We are seeing great interest on businesses to expand because there is demand out there for them to do so.

We are not yet seeing the benefits of the on shoring as you alluded to. Yet, but there is there is still there a pipe pipeline of $3 or so billion of projects coming through in the next several years.

Federal funds continue to flow in. So we are we are I think we are benefiting from that environment, economic environment.

That I can understand what why there is some let's say, trepidation about Puerto Rico's economy given our history. but as we keep on passing quarter after quarter, what we are seeing, and you saw it this quarter on the consumer credits, we are seeing a different type of economy, a different type of environment.

That is supported by real, investments. And I think, then you add to that-- there is a 3-bank market here.

Where we kind of run the financial market in the island. And then you look at the third pillar that I look at, and that is who we are.

And OFG has a unique strategy. OFG has positioned itself in a very different way, investing in technology, leveraging the digital early on, and deploying it very effectively, thanks to a great team that we have, and that is showing the results.

So what we are seeing is all the wheels running at a 150 miles per hour in the right direction, and we are executing. And so we feel extremely happy and confident that what we are bringing to the market is differentiating, and we are seeing it in growth.

So that is kind of how overall I see from 36 thousand feet what is going on for us here at OFG.

Got it. Last 1, then I will step back.

It looks like credit was a highlight. It did look like, though, some early DQs picked up.

Wondering if maybe, you can provide some color as to what you are seeing there. Thank you.

Yep. I will let Cesar give you the details I will tell you, we sold the credit that was nonperforming or nonaccrual, that definitely sends a message to investors that we are really when we need to act, we act.

And that is what we did. We worked on it for the last 3 or 4 months, and we successfully sold that credit.

So that is the main kind of large ticket item. But in general, what we are seeing, and as I mentioned earlier, the credit on the consumer side, it is pretty steady.

And I will let Cesar give you some details there on the on the consumer.

The consumer, you see nonperforming level similar or better than last year for both our auto and consumer lending. We are seeing vintages that are already better vintages than when we adjusted the underwriting standard back in 2022.

So the vintages are taking over now with better vintages in terms of grades. grades on the underwriting standards.

So that is starting to equate into the formula. So we are positive in terms of the outlook for these portfolios even though, as you know, the second half of the year seasonality start kicking up those delinquency trends.

And we are seeing also the gas prices even though they improve, significantly from prior quarter. We are still seeing them above the $1 per liter, which is the equivalent of your $4 to the gallon in the States.

So seeing the portfolios, we are positive in terms of what we are seeing in their behavior, and the customers continue to pay very well during this quarter. But we expect that seasonality to start seeing or reflecting in the numbers for the next half of the year.

Great. Thank you.

I will step back.

Thank you, Kelly.

Hey. Just to stay on credit for a moment.

Does that mean that loan loss reserve ticked down on the payoff? Or the sale of the telecom loans and the other U.S.

exposure. Should it kind of tick up a little bit as across the back half of the year and then improve again in the first half of next year.

Is that the general direction you expect for seasonality?

You should see that seasonality, yes, in the reserves too. Definitely.

Okay. I appreciate that.

1 quick modeling question. Maybe there is a lot of noise but what was the June NIM I know that there were some movements in the public funds.

Maybe it is not all represented there. But what was kind of June NIM entering the back half of the year?

Yeah. that is that is it.

Thanks for the question because at the end, that is I mentioned before, we did the relocation in mid-June. So the month of June reflects that, and it was around 5.26.

June NIM.

Okay. I appreciate that.

And then just kind of can you level set on the buyback? You know, you had pretty aggressive in the first quarter.

You took a step back this quarter. Just kind of the thought process on near term expectations on the buyback from here.

Yep. Nothing has changed.

We did have a higher than higher purchases in the first half in the first quarter, as we pointed out. This quarter, we saw a lot of activity in the market in terms of our loan origination, etcetera.

So we are just being patient also. But that when we look forward, we have a $194 million of the approved buyback, and we are planning on executing it as we see our stock undervalued versus our peers.

So we will continue to be out there and be methodical about our acquisition of our of our stock or purchase of our stock. I appreciate that.

I will step back into the queue. Yep.

Thank you, Manuel.

Sorry. Sorry.

I was muted. Thanks.

The brand marketing campaign that you launched in Q2, any kind of early feedback on that? Seems like you are really trying to push the digital focus and let folks know that you are leaning into that from your side.

Yeah. it is a brand evolution.

We felt that this is the right time for us to tell the market in a more direct way the capabilities that we have for them to benefit from. And it launched early in mid-, you know, early June, so it is too early to share any specifics.

But early indicators show that it is been well received. So but in the end, it is for us to make sure that we start evolving our brand to communicate who we really are aligned with the capabilities that we have built throughout the last couple of years.

And so that is kind of, the motivation behind it. Really excited for the rest of the year and next year's results.

Got it. And the $5.8 million of charges that were referenced, that related to the to this branding, or was it due to something else?

No. The $5.8 million is an-- it is basically operational charges.

So they were due to operational errors and we took the charge. The problem has been corrected, and the charge is nonrecurring.

So, really, it is passing the page.

Okay. And then lastly, the you know, net charge offs were elevated in the quarter related to the loan sales.

If you were to exclude those previously reserved loans from that number, what would the net charge off rate look like?

The consolidated net charge-off would be 0.72% without the Liberty charge offs. The telecom charge off.

Okay. Thank you.

Thanks, everyone. Appreciate it.

[Inaudible]

Hi. This is Kyle Geerman on for Bete Rabatin.

Congrats on the quarter.

Thank you.

So I just wanted to touch on credit really quick. On the U.S.

commercial side, that charge-off rate has bounced around quite a bit. I was wondering how you would characterize the health of the U.S.

commercial portfolio.

Back 2 years ago, we derisked a lot of that portfolio. We released around the $30 million of loans that we saw at higher rates when we saw the economy of The United States potentially coming to recession back in summer of 2 years ago.

So right now, that portfolio is behaving much better than previous years, and we are seeing that stabilization on the portfolio. We are measuring risk rating internally, measuring risk rating on that portfolio.

So and those risk rating are very stable. So I would say that portfolio right now is healthy.

Yep. We are very happy with the performance, and as you know, it serves as a somewhat of a geographic diversification for us outside of Puerto Rico.

So playing its role.

Thank you. Thank you.

Moving on to loan yields. Saw they were up a few basis points to 7.9%.

I was wondering how much fixed rate repricing tailwind is still ahead of you, and what are the new commercial loans coming in on? Today relative to the back book?

Yep. So 7.9% was including the recovery, but if we exclude the recoveries on both quarters, the net yield on loans was 7.70% this quarter versus 7.71.

So it is pretty stable. The yields on the commercial book, it would be different because the U.S.

has a different price than Puerto Rico. But if we blend it all together, they are around 7.25%.

Including small business within that. that is the new originations.

And then variable versus fixed, it is a little bit like, I would say, 60% variable, 40% fixed, give or take, So on the commercial side. Remember, we also have the auto book which is fixed rate and it yields around 8.5 or so.

So that is a different bucket.

Thank you for taking my questions. I will step back.

Yep. Thank you.

Thank you, Kyle.

I was. Thank you.

Sorry. Sorry to jump back on.

I want to follow-up a little bit on some of the deposit trends. It seems like you speak to your 3 accounts doing quite well.

Could you just kind of add some color on those? And maybe it is also on the commercial side.

So just kind of add color on your the strength in your deposit growth.

Yes. So on the retail side, the deposit accounts are driven by a higher net customer growth.

I mean, we are seeing not only the existing clients where we are starting to see deepening of that relationship, But more importantly, we are growing customers at a 4% a year and that is adding to our growth on the deposit side on the retail side. We are also seeing a bit on the retail side on CDs So we are starting to see clients kind of trying to move into CDs in some cases.

The and I am I am referring here to more to the mass market Libri account. On the on the elite account, which is more the mass affluent, there, what we are seeing is a pretty steady consistent flow of deposits coming in.

It not necessarily has a significant customer growth level. But it is a steady inflow of deposits, which we feel very happy with as it kinda helps to target both markets, the mass market as well as the mass affluent with the with the elite.

And then on the commercial side, similar on the small business, similar to what I mentioned on the retail, it is mostly driven by new customers, new account openings, driving the commercial small business growth. And I think the team is doing a great job, but bringing those customers in with the deposits and then working on deepening the relationships towards, you know, cash management and potentially lending in some cases.

So that is kind of how high level we see the 3 the 3 accounts that we are focusing on, and it makes our life extremely focused. We do not get distracted with several other accounts that we need to deal with.

On the corporate side, what we call it corporate, which is a larger commercial, that is relationship driven. And it is an area where our team goes out and establishes very good relationships and starts bringing the loans many times.

And then the deposits flow with it. So we are seeing all those efforts working in tandem, and the results show for it.

I appreciate that.

With some of the movements you have had, where do you expect kind of deposit costs to go? I mean, on a core basis, it was down 2 basis points this quarter.

there is some movements with the public funds. Where can kind of deposit cost go from here?

Yeah. Well, given what we said about the large deposit where we are kind of fixing it, and we are kind of taking it out of the, let's say, hopefully, of the potential conversation going forward because it does not complicate our margin guidance.

We are we are seeing deposit cost going forward in the next 2 quarters relatively at the same level that we have in the first half of the year. Again, given the expectation of rates remaining on the short end where they are.

So that is kind of our outlook for the second half on those. I appreciate that.

Thank you so much. Yep.

You are welcome.

Hi. My question got answered in that.

So I am going to step back. Thank you.

Thank you.

Thank you, operator. Thanks again to all our team members for an outstanding quarter, and thanks to all our shareholders who have listened in.

Looking forward to our next call. Have a great day.

Thank you.