OFG Bancorp Q4 2023 Earnings Call Transcript

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January 24, 2024

There are 7 speakers on the call.

Operator

Good morning. Thank you for joining OFG Bancorp's Conference Call. My name is Todd, and I will be your operator today. Our speakers are Jose Rafael Fernandez, Chief Executive Officer and Vice Chair of the Board of Directors and Maritza Arizmendi, Chief Financial Officer. A presentation accompanies today's remarks.

Operator

It can be found on the homepage of the OFG website under the Q4 2023 section. This call may feature certain forward looking statements about management's goals, plans and expectations. These statements are subject to risks and uncertainties outlined in the Risk Factors section of OFG's SEC filings. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments that occur afterwards.

Operator

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Instructions will be given at that time. I would now like to turn the call over to Mr. Fernandez.

Operator

Please go ahead.

Speaker 1

Good morning and thank you for joining us. We are pleased to report our 4th quarter and year end results. 2023 was an outstanding year with record levels of loans, customer deposits, assets and stockholders' equity. For the first time, commercial loan balances exceeded $3,000,000,000 and tangible common equity was more than $1,000,000,000 Our digital first strategy continues to empower existing customers and attract new ones. 93% of all routine retail transactions and more for deposits now take place through self-service channels, enabling our teams to focus more on business development opportunities.

Speaker 1

While consumer credit has begun to normalize post pandemic, consumer liquidity and employment levels continue to be solid. Our commercial clients are doing very well in a strong economy. We are very proud of our accomplishments and thank the entire Oriental team for making this record year possible. Please turn to Page 3 for a summary of our 4th quarter results. Looking at the income statement, Earnings per share diluted was $0.98 Total core revenues were $175,600,000 and net interest margin was 5.62%.

Speaker 1

Provision was $19,700,000 primarily due to increased loan volume. Non interest expenses were $94,100,000 and pre provision net revenues totaled $88,200,000 Quarterly performance included 2 items of note. 1st was closing on the sale of nonperforming Puerto Rico small business loans. We mentioned the planned sale last quarter. This resulted in a $6,300,000 pretax gain.

Speaker 1

2nd was workforce early retirement and rightsizing. This resulted in a $3,200,000 non interest expense for severance and lease cancellations. This stemmed from increased productivity in certain areas in part as a result of our technology investments. Turning to the balance sheet. Total assets increased to $11,300,000,000 from $10,300,000,000 last quarter.

Speaker 1

Customer deposits increased to $9,600,000,000 from $8,500,000,000 This was due primarily to a $1,200,000,000 deposit of public funds in mid December, giving us a total of $1,600,000,000 of government deposits. Loans held for investment totaled $7,500,000,000 up 4% from the 3rd quarter, with new loan production or loan origination of $664,000,000 up 17% from the 3rd quarter. Investments increased to $2,700,000,000 from $2,100,000,000 in the 3rd quarter. This was due to purchases of short term treasury bills and long term government mortgage backed securities. Cash increased to $748,000,000 from $533,000,000 During the second half of twenty twenty three, we redeployed our higher than normal cash levels and maturing treasury positions into longer term mortgage backed securities.

Speaker 1

These moves position OFG balance sheet well for the expected lower interest rate environment in the second half of twenty twenty four. Looking at capital, the CET1 ratio was 14.12%, up from 14.06% in the 3rd quarter. Please turn to Page 4 for a summary of our 2023 results. Earnings per share diluted for the year was $3.83 up 11% year over year. Total core revenues were $683,000,000 up 12% year over year.

Speaker 1

Net interest margin was 5.8 percent, provision was $60,000,000 non interest expense was $363,000,000 and pre provision net revenues totaled $326,000,000 Our capital actions in 2023 included increasing the quarterly dividend by 10% to $0.22 and completing $18,700,000 of share buyback. We have approximately $17,000,000 of remaining As of December, 93% of all retail customer transactions and 96% of retail deposit transactions are now being made through digital and self-service channels. That is being driven by year over year growth in December of 11% in digital enrollment, 54% in digital loan payments and 21% in virtual teller utilization as well as the continued success of our Oriental Servicing Portal, which was introduced mid-twenty 23. For new listeners, the portal is a partner store of our self-service strategy. Customers can manage all loans and deposit accounts.

Speaker 1

It enables them to originate an open checking, savings and CD, applying for and accessing loans, managing automatic loan payments and downloading bank letters and tax documents. We will continue to add new features on a regular basis. Our 2023 performance continued to validate our strategy and investments in technology. As I mentioned, they help us provide more value added service, increase our efficiency and assign more staff for new business development activities. Now I'd like to welcome Maritza to the call to go over the financials in more detail.

Speaker 2

Thank you, Jose. Please turn to page 6 to review our financial highlights. Starting with revenues, total interest income was $176,000,000 up $10,000,000 from the 3rd quarter. Key factors were a $7,000,000 increase from loans, a $6,000,000 increase from investment securities and a $2,000,000 decline from cash. Loans benefited from a higher average volumes and yields.

Speaker 2

The same factors affected investment securities, mainly due to fixed rate higher yielding securities purchased late in both the 3rd and 4th quarters. Average cash balances declined as we put more funds to work in loans and investment securities. Total interest expense was $33,000,000 an increase of $9,000,000 from the 3rd quarter. Key drivers were a $5,000,000 increase due to a higher level of short term wholesale funding and a $4,000,000 increase due to higher average balances of core deposits at a higher rate. Total Banking and Financial Service revenues were $32,000,000 up $2,000,000 from the 3rd quarter.

Speaker 2

Wealth management revenues reflected annual insurance commission recognition of $2,500,000 Bank service revenues increased due to higher levels of economic activity and mortgage banking revenues declined due to lower MSR valuation, reflecting the fall in the long term interest rate during the quarter. As a result of all these factors, total core revenues were $176,000,000 up $3,000,000 from the 3rd quarter. Other non interest income totaled $7,000,000 up $6,000,000 from the 3rd quarter. This was due to the gain from the sale of non performing Puerto Rico small business loans. Looking at non interest expenses, they totaled $94,000,000 up $4,000,000 from the 3rd quarter.

Speaker 2

The efficiency ratio was 53.59%, up slightly from the Q3. Most of the difference between the 3rd and the 4th quarter was the cost of workforce early retirement and facilities rightsizing. We plan to use the resultant savings to continue to invest in technology. This should enable us to continue to average about $90,000,000 to $92,000,000 of non interest expense per quarter in 2024 with efficiency ratios continuing in the low to mid 50 percentage range. Other commodities remain high.

Speaker 2

Return on average asset was 1 point 7 6%, the same as in the 3rd quarter. Return on average tangible common equity was 18.22%, a nice increase from the Q3. Tangible book value per share was $23.13 up more than $2 from the 3rd quarter. Tangible equity benefited from the increase in both retail ending and AOCI. Please turn to page 7 to review our operational highlights.

Speaker 2

Average loan balances were $7,400,000,000 an increase of 3% from the 3rd quarter. End of period balances were about the same. December 31 balances reflected sequential growth of 9% in Puerto Rico commercial loans, 7% in U. S. Commercial loans, 3% in auto loans and 1% in consumer loans.

Speaker 2

Residential mortgage loans declined 3%, reflected continued regular pay downs and the securitization and sale of conforming loans. Loan yield was 7.96%, up 12 basis points from the 3rd quarter. This reflected increases from variable rate commercial loans, higher entry deals on new loans and a smaller proportion of residential mortgages in the loan book. Average core deposits were $8,700,000,000 an increase of 1% from the 3rd quarter. End of period balances were $9,600,000,000 an increase of 12% from September 30.

Speaker 2

This reflected the $1,200,000,000 deposit of public funds in mid December. Core deposit cost was 107 basis points compared to 90 basis points in the 3rd quarter. This increase mainly relates to 30 basis points due to higher rates on government deposits and 20 basis points in time deposits. As of the Q4, our cumulative beta was 27% for interest bearing deposits and only 19% for total deposits. Excluding government deposits, it was 15%.

Speaker 2

Average borrowing and brokerage deposits were $602,000,000 compared to 2.66 $1,000,000 in the 3rd quarter. The December 31 balance fell to $363,000,000 the rate paid on this wholesale funding increased 54 basis points to 5.21 percent in the 4th quarter. The interim quarterly increase in wholesale funding balances reflected assets and liability management strategies that involve a short term need for increased liquidity. Most of the December 31 broker deposit balance $162,000,000 will mature early in the current Q1. We expect to use excess deposits to reduce wholesale funding.

Speaker 2

Net interest margin was 5.62%. That compares to 5.80% in the 3rd quarter. Assuming some catch up in the deposit cost as well as a potential rate cost, we believe NIMPU is about 20 basis points over the course of 2024. Please turn to Page 8 to review our credit quality and capital strength. Net charge offs totaled $16,000,000 down $3,000,000 from the 3rd quarter.

Speaker 2

The net charge off rate was 88 basis points, down 70 basis points from the 3rd quarter. The 4th quarter reflected net charge off rate declines in residential mortgages due to recovery and an improvement in commercial loans due to the absence of a $7,000,000 charge off in the 3rd quarter related to 2 U. S. Loans. Included in the 4th quarter net charge off rates were increases in auto and consumer loans, mainly due to the higher level of delinquencies.

Speaker 2

Looking at other metrics, provision for credit losses totaled $20,000,000 most of which relate to increased volume. 4th quarter early and total delinquency rates were in line with the 3rd quarter at 2.76% and 3.76%, respectively. The non performing loan rate of 1.22% was the lowest of the last 5 quarters. Overall, credit continues to be good. With COVID cash stimulus fading away, we expect increased net charge offs in auto and consumer.

Speaker 2

But with increased employment and a growing Puerto Rico economy, net charge offs and delinquency should be lower than pre pandemic levels. Looking at some of other capital metrics, total stockholders' equity was $1,200,000,000 and tangible common equity ratio was 9.68%. To sum up, during the Q4, we saw revenue growth continue to benefit from higher yields and higher balances of both loans and securities. Good loan origination driven by commercial, retail, auto and consumer lending. Increased core deposit costs mainly higher, but bigger continue to remain well below peers.

Speaker 2

Significantly higher end of period core deposits, higher short term cultural funding, credit condition normalization and core non interest expense in line with our expected range that includes continuing investment in our digital first strategy. Now here's Jose.

Speaker 1

Thank you, Maritza. Please turn to Page 9. Our outlook remains positive for both Puerto Rico and OFG. The flow of federal funds to rebuild the island's infrastructure continues. Local businesses are expanding.

Speaker 1

The consumer is doing well. Private capital continues to make investments in the island. We still have to watch out for all the big uncertainties, interest rate changes, inflation, possible mainland recession as well as the ongoing global conflicts. But we remain optimistic about Puerto Rico and look forward to continued economic and business growth as well as strong levels of employment. Turning to OFG.

Speaker 1

2023 results were driven by loan growth, good credit quality, a higher interest rate environment and low deposit beta. We saw strong traction with digital adoption and client acquisition as Oriental self-service portal and other innovations are helping to build our businesses. As a result, we had a record year in earnings. As I mentioned earlier, assets, loans, customer deposits and stockholders' equity ended the year at new highs. Overall, our strategies have proven highly effective.

Speaker 1

Looking ahead, we're starting 2024 with strong momentum, excellent strategic positioning and a significantly larger balance sheet for both loans and investments. With this as a starting point, we anticipate continued loan and client growth. This will be partially offset by net interest margin easing over the course of the year due to expected lower interest rates by the Fed and by higher provision as consumer credit continues to normalize. As Maritza mentioned, we plan to continue to invest in and deploy more customer friendly technology. All in all, we look forward to a strong year in 2024.

Speaker 1

In closing, I want to emphasize that our results could not have been achieved without the hard work and dedication of all our team members. We are thankful to them and we're excited for what's to come in 2024 as we mark our 60th year in business and our 30th year trading on the nearest stock exchange. With this, we end our formal presentation. Operator, please open up the call for the Q and A.

Operator

Thank Our first question will come from Alex Twerdahl with Piper Sandler. Please go ahead.

Speaker 3

Good morning.

Speaker 1

Good morning, Alex. First off, Jose, I was hoping you could give us a

Speaker 3

little bit more color on the $1,200,000,000 government deposit, where it came from and whether or not it's something that's going to stick around on your balance sheet for a long period of time?

Speaker 1

Yes. So it's a long standing client of ours, and they had a onetime inflow of liquidity. And certainly, we're honored to be their bank. So again, at this point, we don't have full visibility on the uses of the funds. So for now, we're modeling it within our balance sheet as a short term deposit.

Speaker 1

But in the meantime, we are, again, servicing a long standing customer that we have full banking relationship with them. We will definitely update you guys as we get more color from the customer, but it's going to take a couple of more weeks for us to figure it out.

Speaker 3

Okay. So I mean, I guess, when you're thinking about the NIM guidance, I think the 20 basis points of NIM compression throughout the year, should we just assume that on the balance sheet excluding that $1,200,000,000

Speaker 2

Well, it's just on the basis scenario that Jose was mentioning that it will be in for a short term period, yes.

Speaker 1

Yes. So it excludes that one time that deposit. Our modeling excludes that deposit for the better part of 2024.

Speaker 3

Okay. And is that government deposit just sitting in non interest bearing now or is it something that's going to impact interest expenses in the Q1?

Speaker 1

So it's a government deposit that is index based as all government deposits are these days. So it's earning interest right now on based on the formula that the government has established.

Speaker 3

Understood. And then I guess as I think about the size of the balance sheet, you guys are obviously over $10,000,000,000 now. It's something you projected, something we expected. And your capital levels are building to a level where it suggests that you could have a much larger balance sheet than where you are today. How are you thinking about just overall managing the balance sheet over the next, I guess, year or coming years?

Speaker 3

And does the strategy shift at all now that you're firmly above the 10,000,000,000 mark?

Speaker 1

So our game plan remains pretty much the same. We see great opportunities for us to continue to grow our loan book here in Puerto Rico and somewhat in the States too, but mostly here in Puerto Rico. We are seeing a good economic environment that supports us in that effort. And that's the game plan that we have. We're basically now with good liquidity levels, excess deposits, and we want to deploy them 1st and foremost into the jurisdictions, in the locations that we operate primarily here in Puerto Rico.

Speaker 1

So that's kind of how we're seeing it, Alex. We're not really planning or having any extraordinary event on the agenda for us. We just simply need to keep on going forward. And just to go back to the question on the deposit, on the government deposit, I just want to mention to you that really it's providing us gives us flexibility on our balance sheet. As Maritza mentioned in her remarks, she will we have kind of canceled or let mature some of the wholesale funding that we took in the November, December months.

Speaker 1

So the cost of that, there's a differential that also benefits us slight differential, but it benefits us. So it's also short term, something that is going to help us to be more flexible and nimble with our balance sheet.

Speaker 3

Got it. And then just final question for me, just on the workforce rightsizing and some of the actions.

Speaker 1

Could you just tell us

Speaker 3

what you did and I guess what the impact is?

Speaker 1

Yes. So first, it starts with we've been investing in our digital first strategy for several years. You've seen the investments. And part of the thesis and hypothesis for us is that we're investing in technology to improve the customer experience and also to generate and incrementally start generating some efficiency. So some of what you're seeing in the Q4 is our pointed effort towards starting to extract some efficiencies with the intention of using those efficiencies as the way we invest forward in technology and on our digital first strategy as we've talked about.

Speaker 1

So we've seen some workforce reduction in some of the areas that have been invested mostly, and some of it is on branches but mostly on the operational side. And we're also seeing how we can be more nimble in terms of our facilities, and we were able to cancel and terminate one of the leases that we had. So again, it's all about how do we take advantage of the investments that we made to get the second part of the thesis that we presented to you guys several years ago, which is starting to get some efficiencies out of the investments too. So we're being very intentional with that. And that's why we can keep the expenses at the 90%, 92% kind of quarterly level, as Maritza mentioned.

Speaker 3

I mean, is the presumption then going forward that as the digital strategy continues to play out through the next year that maybe there'd be further rightsizing or further efficiencies found, I guess, towards the end of next year?

Speaker 1

It's for me too early to tell, Alex. This is something really that we look very closely and we look at it on a quarter to quarter basis to see what opportunities surface. But we are certainly looking at it. Can't promise anything though.

Operator

Our next question comes from Brett Rabatin with Hovde Group. Please go ahead.

Speaker 4

Hey, good morning.

Speaker 1

Good morning.

Speaker 4

I wanted to start with credit and we've seen obviously credit continues to be pretty good, but we are seeing this as I guess everyone kind of expected a normalization on consumer and auto. And I missed Marissa's comment on the 4Q trend versus going forward and that normalization. Was the comment that net charge offs would be lower going forward relative to 4Q? Or can you maybe just give us some color on your expectations for charge offs in the consumer and auto book?

Speaker 1

So when you're referring to the charges, you're obviously alluding to the consumer and auto charge offs that Maritza mentioned in her remarks. And this is the way I look at it from a macro perspective, Brett. The economy in Puerto Rico is solid. It's doing well. The consumer has much more liquidity than they had pre pandemic.

Speaker 1

The economy is much better than it was pre pandemic also. So that's kind of the underlying environment that we're operating in. To give you a little bit more color on specifically on the auto loan book, I'll ask our Chief Risk Officer, Cesar Ortiz, to give you a little bit of color on the auto book so you guys understand how we see this.

Speaker 5

Thank you, Jose. One of the things that I want to highlight in terms of context, taking the opportunity during 2022 and 2023 of the increased demand in loans, in auto loans, we took the opportunity to improve and tighten our underwriting standards. So if you look at the portfolio composition in terms of prime composition as of December 2023, we have an 82% prime composition compared to 64% prime composition during back in Q4 of 2019. So that basically

Speaker 1

is giving us comfort that our levels of return into normalcy will be better than pre pandemic levels. And Brett, to your point about the charges, we expect them to increase slightly or level off around sometime midyear as we continue to see the tighter credit standards that we put in, in 20222023, potentially generating lower levels of charges. But for the next several quarters, we expect charges on the order book similar to the Q4 as we start to normalize, but still better than pre pandemic levels.

Speaker 4

Okay. That's helpful. And then on loan growth, obviously strong production on the commercial side. Can you talk maybe a little bit about how you expect loan growth to play out this year? It was obviously I don't expect double digit growth in Puerto Rico every year, but obviously hit that 10% mark in 'twenty three.

Speaker 4

What do you think about the commercial production going forward, Jose? And then maybe just loan growth for the year?

Speaker 1

First, thank you for highlighting the fact that it's hard to replicate 10 percent loan growth every year. So I appreciate that bone that you're throwing at us. But the way we see this is we see auto loan originations normalizing and trending slightly lower consumer probably relatively flat in terms of loan originations And we see a good opportunity on the commercial side, small, midsize and a little bit larger type of loan opportunities here in Puerto Rico. We see good strong pipelines. We still see strong good demand.

Speaker 1

We see private capital being deployed in the economy in Puerto Rico. And that's kind of an area of opportunity for us as it was in 2023. So that's kind of how we're looking at this in terms of loan growth. If the economy grows 2%, 2.5%, as it's been predicted, We expect to grow between 3% 4%, our loan book. Note that we expect residential mortgage book to go down still during the year as we're seeing less and less demand for us in that line of business.

Speaker 4

Okay. And if I could sneak in one

Speaker 1

Yes, and as we sell some of those conforming loans, I'm sorry.

Speaker 4

Okay. Sorry.

Speaker 1

If I

Speaker 4

could sneak in one last one just around fee income. Obviously, the wealth managementinsurance bucket benefited from, I guess you call it unusual numbers in 4Q. Is it fair to assume the fellas line items go back a little lower, maybe any outlook on fee income relative to the Q4?

Speaker 1

Yes. Remember, Q4 is impacted by the insurance contingent commissions that we get every year. So yes, I think it will trend back down to the more normal levels. $30,000,000 Around $30,000,000 as Marissa mentioned, yes, a quarter.

Speaker 4

Okay, great. Thanks for all the color.

Speaker 1

Yes. Thank you, Brett. Have a great day.

Operator

Our next question comes from Kelly Motta with KBW. Please go ahead.

Speaker 6

Great. Hi, good morning. Thanks so much for the question.

Speaker 1

Hi. I

Speaker 2

was hoping

Speaker 6

maybe piggybacking off the loan growth question high up Q4, I know the MetroPCS deal closed. I was hoping you could share about how much that contributed to your loan growth this quarter as well as if you could offer any additional color on how the pricing of that compares to normal commercial origination, perhaps lower?

Speaker 1

So thank you for your question, Kelly. So we grew from the Q3 to the Q4, we grew commercial Puerto Rico commercial loans by around $196,000,000 We did participate on the Metro Pista's privatization, the highway privatization with a $75,000,000 participation. So excluding that, we grew our commercial book by approximately $121,000,000 So ex Metropistas, you still are seeing a 5.6% growth from 3rd to 4th quarter. So again, most of that origination ex MetroPistas is coming from construction services, it's coming from hospitality, it's coming from small and midsized manufacturing companies that we do business with. And I think we also are looking into the small business side of the business is doing a great job at generating good professional kind of offices, medical and D like type of office financing and equipment.

Speaker 1

So we are doing a pretty good job on the Puerto Rico commercial book, and we think that the pipelines that we have and the approach that we have is paying off. In terms of the Metropistas loan rate and how does it compare to other larger loans is pretty similar, maybe slightly lower by 25, 30 basis points, but it's nothing too dissimilar from other large loans. But that again, as we've said in the past, we do not rely on those type of transactions. We really are focused on the our bread and butter, which is small and midsized commercial loans. And both teams, the small business team and the large commercial are doing a great job.

Speaker 6

That's really, really helpful. Thank you for that. And maybe just getting some clarification around the margin guidance, I appreciate the outlook for about 20 basis compression. Just wondering what your assumptions embedded in there are for rates this year? And can you just remind us any indexed or floating rate on either side of the balance sheet?

Speaker 6

How we should be kind of thinking about that when the Fed starts to cut?

Speaker 5

So I'll give you my high level and

Speaker 1

I'll let Maritza give you more of the specifics. But the way we look at the interest rate environment, Kelly, for 2024 is for the second half of the year, where we will start seeing some Fed start seeing the Fed taking some action and reducing rates, 3 to 4, 25 basis point cuts. So that's how we're modeling our net interest margin from a macro interest rate perspective. I'll let Marissa talk to you about the underpinnings of the margin.

Speaker 2

Thank you, Kelly, for your question. The balance sheet composition right now in the asset side, and this is something we have shared with you before, is the fact that in the commercial book we have about half of our commercial loan book is at by our rate. So we have exposure when rates start to go down. And the other variability that we have is the maturity of the short term pressure that we took in the Q4, about $300,000,000 in short term pressure is and a longer position that we had than we mature in May 2024 is $200,000,000 in $200,000,000 in treasury notes. So that will reprice at current level.

Speaker 2

So that's the viability on the asset side. But what we have been doing during the last two quarters is adding extension in the asset side at higher yielding with the acquisition of $700,000,000 in MBS. And the idea is to continue finance that at variable rate deposits and the structure of the government deposit that we recently add into the balance sheet have that structure. So we are adding variability into the liability side to position ourselves to a lower rate environment when it starts coming.

Speaker 6

Awesome. Thanks so much for the help. Maybe kind of a last multipart question for me is on just the $10,000,000,000 in asset size. Can you one remind us the timing and impact of the Durbin? I know you've covered it on previous calls, just wanted to confirm and get an update, Maybe a little

Speaker 1

bit of clarification. It should be in July that we start triggering the Durbin effect. So it's going to have a half a year impact and the full impact will be seen on 2025.

Speaker 6

I think I recall it's maybe roughly about

Speaker 1

Yes, dollars 5,000,000.

Speaker 6

Dollars annually?

Speaker 4

Yes, dollars

Speaker 5

10,000,000 annually, dollars 5,000,000

Speaker 1

in 20.24 and then the $10,000,000 in 2025.

Speaker 6

Got it. Got it. And then I believe in prior year end, you've talked about maybe strategically managing under that $10,000,000,000 in assets, maybe customers took excess funds and put it elsewhere. Just, it seems like the large government deposit is idiosyncratic to that customer and not have anything to do with kind of previous managing under $10,000,000,000 Just wanted to confirm that and also wondering if there's potential inflows of deposits just related to customers who have OSG as their lead bank who may be you may recruit to bring more of that excess funds back now that you're clearly crossed over that?

Speaker 1

Yes. So the first part of your question, no, we are we did not try to manage below BRL10 1,000,000,000 ex the government deposits and did not engage this year as we had kind of commented in, I think, on this Q3 of the call. So we were managing and we were managing conscientiously towards breaking the $10,000,000,000 mark because it really made total sense for us as we can reinvest those deposits into a higher yield than in previous years. So that's the first part. On the second part, yes, we are very active and we are actually working very diligently in customer deposit strategies that will be deployed during the year.

Speaker 1

And that should play for us as we continue to grow our customer base. And again take advantage of our good strategic positioning that we have in the Puerto Rico market.

Speaker 6

Got it. Appreciate the color. Thanks so much.

Speaker 1

You're welcome. Thank you for your call. Thanks for your questions.

Operator

And we have no further questions at this time. I'll now turn the call back to Mr. Fernandez for closing remarks.

Speaker 1

Thank you, operator. Thank you again to all our team members and thanks to all our stakeholders who have listened in. Have a great day.

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Earnings Conference Call
OFG Bancorp Q4 2023
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