Prepared remarks
Good day, and thank you for standing by. Welcome to the Popular Inc. First Quarter 2026 Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to the Investor Relations Officer at Popular, Inc., Paul Cardillo. Please go ahead.
Good morning, and thank you for joining us. With me on the call today is our President and CEO, Javier Ferrer; our CFO, Jorge Garcia; and our CRO, Lidio Soriano. They will review our results for the first quarter and then answer your questions. Other members of our management team will also be available during the Q&A session. Before we begin, I would like to remind you that during today's call, we may make forward-looking statements regarding Popular, such as projections of revenue, earnings, credit quality, expenses, taxes and capital as well as statements regarding Popular's plans and objectives. These statements are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are discussed in today's earnings release and our SEC filings. You may find today's press release and our SEC filings on our web page at popular.com. I will now turn the call over to Javier.
Thank you, Paul, and good morning, everyone. Please turn to Slide 4, where we share highlights of our strong operating performance in the first quarter. We reported net income of $246 million and earnings per share of $3.78, up $12 million and $0.25 per share from the fourth quarter. The improvement was driven by higher net interest income, margin expansion and lower operating expenses. Net income and EPS improved by 38% and 48%, respectively, compared to the first quarter of 2025. We continue to invest in our businesses and expand our capabilities in support of our strategic objectives. When we deliver for our customers, our franchise strengthens and our shareholders benefit. Overall credit trends remained favorable with lower NPLs and improved NPL ratios. Quarterly net charge-offs increased primarily due to a single previously identified commercial relationship. We also demonstrated our commitment to returning capital to our shareholders by repurchasing $155 million in common stock and paying a quarterly common stock dividend of $0.75 per share. Our ROCE was 15.5%, up from 14.4% in the fourth quarter of 2025 and 11.4% a year ago. We are very pleased with these returns and remain focused on reaching our 14% through-the-cycle objective. Before turning the call over to Jorge, I will comment on the business environment in Puerto Rico. Business activity in Puerto Rico remained positive, supported by steady trends in employment and consumer activity with manufacturing, construction and tourism leading the way. We're closely monitoring ongoing geopolitical developments as sustained higher oil and commodity prices can impact our customer base. As of the end of the first quarter, we have not seen significant signs of economic stress. The labor market remains healthy with the unemployment rate at 5.6%, stable near historic lows. Three sectors have outperformed the broader labor market: construction, transportation and warehousing, and leisure and hospitality. Consumer spending remains healthy. Combined credit and debit card purchases by Banco Popular customers increased by approximately 5% compared to the first quarter of 2025. We continue to see healthy demand for homes in Puerto Rico. Mortgage balances at Banco Popular increased modestly during the quarter. Momentum in the construction sector continues to be solid with public and private investment fueling higher employment and strong liquidity. We're optimistic that these trends will persist given the backlog of obligated federal disaster recovery funds. On the private side, real estate and tourism development projects and the renewed focus on reshoring to Puerto Rico by global manufacturing companies should continue to support economic growth on the island. The tourism and hospitality sector continues to be an important contributor to the Puerto Rico economy. Year-to-date through February, hotel occupancy increased to 83%, up from 76% in the same period last year. Over the same period, RevPAR increased 6%. Hotel demand averaged roughly 400,000 room nights, representing 10% growth versus the same month in 2025. Passenger traffic at Luis Muñoz Marín International Airport was down 2% in the first quarter after a record year in 2025. JetBlue also announced an expansion of its San Juan hub with five new nonstop domestic routes beginning in the spring of 2026. Cruise activity has also been a meaningful tailwind after record cruise arrivals in 2025; arrivals accelerated sharply in the first two months of 2026 with year-to-date arrivals through February up 40% year-over-year. In addition, the Puerto Rico Tourism Company announced a strategic partnership with Royal Caribbean, beginning in July of this year, that would establish San Juan as the cruise line's home port. Moving to our strategic framework: we continue to advance our three objectives, and a growing number of initiatives are gaining traction simultaneously and the pace of execution is accelerating. One of our objectives is to be the number one bank for our customers by delivering exceptional service and products. A key part of that is making it easier for customers to engage with Popular through our digital channels. We recently launched an integrated marketplace within our digital app Mi Banco, one of Puerto Rico's most widely used mobile apps. The platform gives our retail customers access to exclusive offers, discounts and benefits from a wide variety of merchants while enabling businesses, many of them small and medium-sized, to reach a high volume of potential customers. This allows us to create meaningful connections between our retail and commercial customers and strengthens the value of banking with Popular. We also launched two new corporate credit cards designed to facilitate payments and optimize cash flow. Both have gained traction and driven purchase volume. In addition to our core retail and commercial efforts, we are advancing targeted segment strategies to improve service, enable more personal relationship-based engagement and position Popular as the primary bank earlier in our relationship with our customers. A recent example is our newly launched program designed to meet the unique financial needs of doctors, dentists and veterinarians. The momentum behind these initiatives reflects the energy and focus of our teams. We are encouraged to see that execution translating into stronger results, and we expect the benefits to become more visible over time. And with that, I turn the call over to Jorge for more details on our financial results.
Thank you, Javier. Good morning, and thank you all for joining the call today. As Javier mentioned, our quarterly net income increased by $12 million to $246 million, and our EPS improved by $0.25 to $3.78. Compared to adjusted net income in the fourth quarter, which excluded a partial reversal of the FDIC special assessment reserve, net income increased by $22 million. These results were driven by better net interest income, higher net interest margin and lower expenses, partly offset by a slightly higher provision for credit losses. Our objective is to deliver sustainable financial results, and we are pleased to have generated a roughly 15.5% return on common equity for the period. We will continue to use all levers to position the company as a top-performing bank when compared to our mainland peers. Please turn to Slide 7. Net interest income of $670 million increased by approximately $13 million, driven by fixed-rate asset repricing and a higher balance of investments due to higher deposit balances and lower deposit costs at both banks. Net interest margin expanded 5 basis points to 3.66% on a GAAP basis. On a taxable-equivalent basis, the margin improved by 11 basis points to 4.14%, driven primarily by lower interest expense, including a meaningful reduction in the cost of Puerto Rico public deposits. Ending loan balances were essentially flat at $39.3 billion, down about $38 million from the fourth quarter, driven primarily by lower balances at Popular Bank due to paydowns in the construction segment and runoff from the exited residential mortgage business. At Banco Popular de Puerto Rico, modest growth in the mortgage and commercial segments were somewhat offset by weaker trends in auto lending. Given the slower demand in the consumer and auto segments, we expect consolidated loan growth in 2026 to be at the low end of our original 3% to 4% range. In our investment portfolio, we have maintained our strategy of reinvesting proceeds from bond maturities into U.S. Treasury notes and bills. During the quarter, we purchased approximately $1.9 billion of Treasury notes with a duration of 2.6 years at an average yield of around 3.7%, taking advantage of a modestly steeper curve. Deposit balances ended the quarter at $67.6 billion, $1.4 billion higher than the fourth quarter. Retail and commercial deposits increased by $1.2 billion, driven by tax refund activity. On an average basis, total deposits increased by $1.1 billion, or by $384 million when excluding Puerto Rico public deposits. Puerto Rico public deposits increased by $250 million to end the quarter at $19.7 billion. We continue to expect public deposits to be in the range of $18 billion to $20 billion for the year. Total deposit costs decreased by 12 basis points quarter-over-quarter to 1.56%, with improvement in both of our banks. Excluding Puerto Rico public deposits, total deposit costs decreased by 5 basis points to 1.09%. At Banco Popular de Puerto Rico, deposit cost decreased by 11 basis points mostly as a result of Puerto Rico public deposits repricing lower by 31 basis points due to lower short-term rates. At Popular Bank, the 16 basis point reduction in deposit costs was primarily related to lower online savings deposit costs and repricing of time deposits. Given positive deposit trends in Puerto Rico, we now expect 2026 net interest income growth at the upper end of our 5% to 7% guidance range. Please turn to Slide 8. Noninterest income was $166 million, in line with Q4 and at the high end of our quarterly guidance, with solid performance across most of our fee-generating segments. Compared to the first quarter of 2025, noninterest income improved by 9%, driven by growth in debit and credit card fees of 14% and 6%, respectively, as well as a 13% increase in asset management and insurance fees, demonstrating our ability to benefit from our breadth of product offerings. We continue to expect quarterly noninterest income to be in the range of $160 million to $165 million. Please turn to Slide 9. Total operating expenses were $467 million, a decrease of $6 million when compared to Q4. Excluding the FDIC reversal in Q4, operating expenses decreased by $22 million. The decrease was primarily driven by lower personnel costs, as the fourth quarter included a profit-sharing accrual of approximately $13 million, along with the impact of fewer calendar days in the first quarter. This quarter also benefited from lower employee health care-related costs. We also saw lower seasonal business promotion expenses and lower professional fees, partly offset by higher technology and software expenses, reflecting our continued investment in technology and transformation initiatives. We expect full-year expenses to increase by 2% to 3% compared to our original guidance of 3%. We will continue to prioritize investments in our people and technology and continue to target expense efficiencies. Our effective tax rate in the first quarter was 16%, unchanged from the fourth quarter. We now expect the effective tax rate for the year to be at the low end of our original 15% to 17% guidance range due to higher projected excess income. Please turn to Slide 10. Tangible book value per share at the end of the quarter was $84.98, an increase of $2.33 per share driven by our net income and offset in part by our capital return activity. During the quarter, we repurchased approximately $155 million in common stock. We ended the quarter with $126 million remaining under our active repurchase authorization, which we expect to exhaust during the second quarter. As we have said in the past, we seek to maintain an active repurchase authorization in place and we are targeting an update on capital actions before the second quarter's earnings call. In addition to common stock repurchases, we also expect to continue evaluating capital optimization alternatives and pursue a dividend increase during the year. Of course, our plans are subject to market conditions, regulatory considerations and any required Board approvals. With that, I turn the call over to Lidio.
Thank you, Jorge, and good morning to all. Credit quality metrics remained stable during the first quarter with lower early delinquency, lower NPLs and lower inflows, and with higher net charge-offs. Despite the uncertain economic environment, our consumer businesses remain resilient. We continuously monitor our portfolios for signs of stress; our data remain consistent with normal seasonal behavior and show no deterioration. Turning to Slide 11. Nonperforming assets and loans decreased by $37 million and $40 million, respectively, mainly due to Banco Popular de Puerto Rico. NPLs in Banco Popular de Puerto Rico decreased by $39 million. This was driven by reductions in the commercial portfolio due to an $11 million charge-off related to a commercial real estate facility classified as NPL in the third quarter of 2025 and in consumer due to lower auto NPLs driven by increased payment activity. In the U.S., NPLs decreased by $2 million. Inflows of NPLs decreased by $7 million, with an improvement of $5 million in the U.S. and $2 million in Puerto Rico. The ratio of NPLs to total loans held in portfolio was 1.17% compared to 1.27% in the previous quarter. Turning to Slide 12. Net charge-offs amounted to $60 million or annualized 61 basis points compared to $50 million or 51 basis points in the prior quarter. Last quarter results included $5 million in recoveries from the sales of previously charged-off auto loans and credit cards. Excluding this, the net charge-off ratio for the fourth quarter was 57 basis points. Net charge-offs in Banco Popular de Puerto Rico increased by $10 million driven by the $11 million commercial net charge-off mentioned previously. Based on current trends and the macroeconomic outlook, we reiterate our 2026 annual net charge-off guidance of 55 to 70 basis points. The allowance for credit losses (ACL) increased by $16 million to $124 million. The change was mostly in Banco Popular de Puerto Rico which had higher reserves in the commercial portfolio due to loan modifications and an additional specific reserve for a single borrower in the telecommunications industry. Additionally, the ACL for the mortgage portfolio increased slightly due to changes in the macroeconomic scenarios. These increases were offset in part by a reduction in the ACL for consumer loans, mainly in the auto portfolio, reflecting improvements in credit quality. In the U.S., the ACL increased by $1.4 million from the previous quarter. The coverage ratio of the ACL to loans held in portfolio was 2.10% compared to 2.05% in the previous quarter, while the ratio of the ACL to NPLs held in portfolio increased to 180% from 162%. With that, I would like to turn the call over to Javier for his concluding remarks. Thank you.
Thank you, Lidio and Jorge, for your updates. We're happy with our strong first quarter results. We grew net interest income, expanded our margin and reduced operating expenses, all while continuing to invest in the franchise and advance our strategic priorities. While we are very pleased with the quarter, we remain focused on execution, growing deposits, regaining loans and maintaining strong expense discipline. We are confident that the sustained execution of our strategy will advance our ultimate goal to be a top-performing bank with excellent talent, delivering sustainable profitable growth and long-term value to our shareholders. On a more personal note, this past February marked a milestone for Popular. We brought together our 9,200 employees for the first time in over 20 years. And I have to say it was awesome. The event reminded each one of us what it means to be part of Popular and connected us with our history. The excitement was palpable, and it was simply an unforgettable day. On behalf of my colleagues, I thank our clients and shareholders for their continued trust and support. We are very proud to be the leader in the Puerto Rico market. We're ready to answer your questions.
Questions and answers
(Operator Instructions) And our first question comes from Jared Shaw of Barclays.
Maybe just starting with the great growth on the deposit side, how should we think about average and end-of-period deposits sort of over the next few quarters as some of the tax refunds maybe get spent?
Yes. Traditionally, we do see increases in ending deposits in the first quarter. This quarter, we also saw increases in average deposits compared with fourth quarter results. Historically, in the second quarter, we would expect ending balances to trend lower, but average balances higher as tax season overlaps March and April and people spend that money through the quarter. Then, as you know, the third quarter is where we actually see ending balances coming down and then in the fourth quarter, we tend to see ending balances come back up historically. So our guide increased toward the higher end because we are expecting more retention of those deposit balances. Our teams are very much focused not only on retention but also on deposit growth. While we would expect ending balances to perhaps come down from these levels, we do not expect to see a runoff like we saw in 2024, for example.
Okay. So overall, though, you're still feeling like average account size is stabilized at a higher level and sort of the magnitude of what, like you said in the past, may not be as severe?
We saw the peak in 2022; those averages were about 40% higher then. They've come down to the low 30s — around 30% to 32% — and have been stable for the last couple of years. We are bringing in new clients, which is resulting in higher balances. We're seeing strength across not only the retail but also commercial; we see strength in our small and middle market clients. Our corporate clients also have a lot of liquidity, but they tend to be managing their treasury excess cash a bit more actively. Overall, we've been very happy with the trends.
Okay. And then in the past, you've talked about looking for potential acquisitions in the mainlands that match up with your geographic focus. Any update on your thoughts there? And if you're not able to find something that fits, could we expect maybe more of an organic de novo expansion utilizing some of your capital?
No change in our outlook on M&A. Our primary focus continues to be our transformation efforts and growing profitability of the institution.
In terms of a de novo growth strategy, it's tough to compete in U.S. retail markets, which is where we'd normally see de novos. We have been successful in expanding some of our national businesses through either team acquisitions or team hires; that may be an opportunity. It's not unusual for banks our size to look at that, leveraging niche businesses. At this stage, we have opportunities to improve profitability in our U.S. operations organically, but not necessarily through a large branch de novo expansion. And in Puerto Rico, we are the strongest in the market given our branch footprint. It's a differentiating factor for us and continues to be. In the United States, as I said, our strategy is more commercial-led, so it will be difficult to expand our footprint in terms of branches in any major way.
Okay. And if I could just ask one final one. Have you been seeing any spread compression on the loan portfolio or on new loans and were you putting on new loans in the quarter?
If you look at the levels and yields, we continue to be successful in expanding and are keeping our loan yields fairly flat even with rates coming down. So we have not seen broad-based compression. As we discussed on the last call, competition, particularly in Puerto Rico and in auto, could pressure pricing. We've asked our teams to be disciplined, particularly in the U.S. business where we saw more competitive pricing earlier in the year. We are focused on providing profitable loan growth, not just loan growth, and on relationship banking to ensure loans come in with deposits. That approach helps us avoid chasing irrational pricing on loans.
And our next question comes from Brett Rabatin of StoneX Group.
Good morning, everyone. Wanted to start on the NII guide. It was great to see the first quarter higher NII than expected and lower expenses. Just thinking about the high end of the guide, with the slight growth in the balance sheet, that would imply the margin is fairly flat, but you still have securities that are maturing. Any thoughts on the margin? And maybe the opportunities relative to NII growth from here?
We do expect the margin to grow by the end of the year. We had a nice expansion in the first quarter, driven largely by the repricing of public deposits. We don't expect that level of repricing to recur; that will depend on what happens to short-term rates and, of course, deposit repricing comes with a lag. I would expect margin expansion to be slower in the second quarter, but to continue to expand as we drive to the higher NII guidance. We also have the tailwind of our fixed-rate investment portfolio continuing to reprice as securities mature. That hasn't changed.
If the Fed doesn't cut interest rates, would that put you above the higher end of the range on NII?
Our current guidance assumes no further cuts in 2026. For us, we'd like to see curve steepening, but margin really depends on the mix of deposits; we are heavier on public deposits, which will have an impact on that margin. Deposit balances and deposit costs are the primary drivers of spread and NII, so getting above our current guidance would depend on those dynamics.
That's helpful, Jorge. And then the other question I had was just around capital and the 15.9% CET1. It sounds like you're going to give a lot more color in 2Q. Any color you can give us around your thoughts on end-of-year capital ratios or targets as you're working through this?
We want capital ratios to be lower than they are now, unless we continue to make a lot of incremental earnings. We are committed to returning capital in a controlled manner over time. We're being more intentional in our language and how we communicate about this, and we are committed to executing our capital return plans.
And our next question comes from Timur Braziler of UBS.
Going back to the profitability comment: two straight quarters now above that 14% objective. Javier, I was a little surprised to hear you reiterate that comment on remaining focused on reaching that 14% through-the-cycle objective. Are we not there yet? And that phrase through-the-cycle — how far out are you looking in terms of that level of sustainability?
Thank you for the question. Two great quarters is encouraging, but a trend doesn't necessarily make sustainability. Through-the-cycle refers to a period including downturns when the bank faces stress and still achieves that return. We want to demonstrate sustainability across economic cycles. Our transformation program launched a bit over three years ago with the 14% target, so while we're pleased with progress and the mindset shift, we don't want to claim victory yet. We must continue to deliver and make our results durable.
Got it. Maybe on Basel III proposals, any color you can provide on what type of impact that might have on your capital day?
We are not subject to Category 4 with AOCI adjustments. We've done a preliminary review and our estimates are consistent with the Fed guidance for smaller banks: the expected impact is a reduction in risk-weighted assets. The end result will depend on our balance sheet when the final rule is implemented and whatever the final rule contains, but currently our estimate is consistent with the Fed's guidance.
Thanks. And on public funds, any reason why we shouldn't pencil in a historical-type run rate for planned increases in public funds in Q2?
I don't want to speculate. These balances are driven by over 200 different clients and thousands of accounts. We have visibility through relationship managers, but some of these are large numbers that move around. We'll stick to our guidance range of $18 billion to $20 billion.
And just to confirm on Basel III impact: the Fed guidance was around a 7% reduction in RWA — is that what you're alluding to?
That is correct.
And our next question comes from Arren Cyganovich of Truist.
Just want to hear your views on onshoring manufacturing in Puerto Rico. Last year there were a lot of large announced investments; I haven't really seen any new wins yet this year. Anything you are hearing in terms of new potential investments, and have you seen any actual benefits yet from the ones announced last year?
You're right that there haven't been new public announcements by the government that we can cite. They continue working through their pipeline and we've heard about two more entities. We expect continued momentum in reshoring to Puerto Rico given the global dynamics. We are expecting announcements from the Puerto Rico government but we don't want to get in front of rumors. Manufacturing represents approximately 44% of GDP in Puerto Rico, and it's an important contributor to the economy. The largest announcements are expansions of facilities and will require significant construction investment and time, so the initial impact will likely be seen on the construction side first.
Great. And then lastly, Lidio, you had mentioned some loan modifications in commercial. Are these anything atypical, any abnormal increases or decreases? Could you give a bit more color?
Nothing that I would characterize as affecting the broader portfolio — just one-offs. Some clients are having specific financial difficulties and we executed some loan modifications, but nothing that impacts the whole portfolio.
And our next question comes from Kelly Motta of KBW.
Maybe to kick off on expenses: I think you were very well controlled in the first quarter and the guidance range is brought down a bit. Can you comment on the drivers of that variance? I know transformation efforts are in play — wondering if some of those investments have been pushed out another year or two?
There are always projects that shift in timing. I wouldn't say anything has been canceled. We benefited from several items: better negotiations, adjustments to expected expenditures that were lower in Q1, and reduced accruals for incentive payouts and profit sharing from last year. Those items benefited Q1 and will sustain through the year. Some timing differences exist, for example: we went live on our ERP in January, and that shifts how costs translate between capital and expense. We will continue to invest in technology and people while pursuing efficiency efforts. Our expense targets for the year already included around $50 million of efficiency efforts, and we're continuing to improve upon those.
As a clarification: this guidance range doesn't include any incremental profit sharing. So if you were to beat your NII outlook, would profit sharing be the type of expense that would kick in? Is that the correct way to think about the cadence?
That is correct. Our current guidance does not include any profit sharing expense. We like to pay profit sharing when performance warrants it because these programs align with shareholders. Last year, even with about $40 million of profit sharing expense, we were able to deliver on our original expense guidance. We challenge our teams to absorb incremental expenses that were not part of the plan.
Maybe one last quick one: cash, money market and investments have come down year-over-year and have been relatively flat at roughly $4.8 billion to $4.9 billion the past two quarters. Is that a good level going forward or would you anticipate continued runoff from that level into securities and loans?
We've maintained that level for the last two to three quarters and are comfortable with it.
And our next question comes from Gerard Cassidy of RBC.
I recall that S&P and Moody's have you on a positive watch list and it looks like you're a notch below investment grade by those two agencies, while Fitch is investment grade. Can you share when you think they might determine whether they'll lift your rating? Also, remind us when the last time Popular was rated investment grade by Moody's or S&P?
We are focused on discussions with the rating agencies and have been actively engaging them to ensure they are up to date on everything that's going on with Popular and Puerto Rico. I can't predict timing. We believe our ratings should be better, but we won't speculate on the timing. As for the last time we were investment grade by Moody's or S&P, it likely goes back to the mid-2000s, around 2005 or 2006 before the financial crisis.
If you look at the numerical thresholds for investment grade, we would be there. There are other considerations the agencies may weigh given our franchise and Puerto Rico's profile, but from a pure metrics standpoint relative to peer banks, our performance would support investment grade ratings.
We'll take the positive outlook from the agencies as momentum and continue to engage with them.
Regarding oil prices: you haven't seen significant signs of economic stress at elevated price levels. Can you share what impact you saw in early 2022 when oil spiked after the invasion of Ukraine, and if oil stayed elevated at, say, $125 per barrel throughout the year, what could that do to credit quality? Also, can you update us on Puerto Rico's energy mix — is the island moving toward other sources such as natural gas or LNG?
The impact will depend on the duration of elevated oil prices. In 2022 the spike was relatively short-lived and had minimal impact on delinquencies and credit quality. For Puerto Rico, the key question is how long prices stay high. So far, we have seen no deterioration in credit quality; delinquencies are better quarter-over-quarter and materially better year-over-year. We're comfortable with portfolio performance at current levels, but if prices remain elevated for a long period, there could be pressure, and we'll continue to monitor closely. The second quarter will provide more information on the trajectory.
We are similar to other U.S. financial institutions: if high oil prices persist for a long time, it would likely weigh on the economy and our customers. Puerto Rico does use oil for electricity generation, and while there has been growth in other energy sources, the transition won't be fast enough to fully offset prolonged higher oil prices. So far, we haven't seen material effects, but we are watching closely.
Lidio, can I circle back on delinquencies — is the primary driver simply the strength of the labor market with unemployment near historic lows?
It's a combination of factors, but employment is a key driver for consumer loan performance. Additionally, tax refund activity helped consumer liquidity; based on local IRS data, refunds to customers were around $2.2 billion year-to-date, about $300 million ahead of last year's pace. That has supported consumer ability to pay and is a factor in the improved delinquencies.
And our next question comes from Manuel Navas at Piper Sandler.
This builds on the last commentary: you added reserves on a commercial NPL from Q3, but most other loan buckets had lower reserves, especially auto and consumer, with delinquencies down. Could there be upside in provisioning from here or reserves coming down? How do you see credit costs progressing?
We had very strong performance from our consumer books, which led to reserve releases, particularly in older portfolios. We've done much work over the last few years to improve performance. In the commercial book, we occasionally have single-name situations or one-off clients that require additional reserves. We addressed specific cases in the third quarter of last year and, to some extent, in the first quarter this year — one related to commercial real estate in the U.S. and one related to a telecommunications company in Puerto Rico. If the economy stays where it is, there could be opportunity for reserve reductions in the quarters ahead, but we'll continue to monitor the portfolio.
Would that opportunity show up in buybacks accelerating? I know there's been strong capital return interest from investors.
We will be consistent and deliberate. We plan to bring down capital levels over multiple quarters to target levels that make sense. I don't think a single quarter's provisions would dramatically change our repurchase strategy. We'll update you as we work through our capital plan.
Is the update you're expecting this quarter likely to include business line changes or anything beyond a reauthorization of shares?
We expect the update to be a traditional update on authorization from our Board and potentially dividend increases, etc.
I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating, and you may now disconnect.