Kelly Motta: Great. Hi, good morning. Thanks so much for the question. Maybe piggybacking off the loan growth question, Q4, I know the Metropistas 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 originations [Technical Difficulty]
Jose Rafael Fernandez: So, thank you for your question, Kelly. So we grew — from the third quarter to the fourth quarter, we moved commercial — Puerto Rico commercial loans by around $196 million. We did participate on the Metropistas privatization, the highway privatization with a $75 million participation. So excluding that, we grew our commercial book by approximately $121 million, so ex-Metropistas, we still are seeing a 5.6% growth from third to fourth 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 mid size 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, but generating good professional kind of offices, medical, and the like type of office financing and equipment.
So we are doing a pretty good job on the Puerto Rico commercial book. And we think that the pipeline 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, it’s pretty similar, maybe slightly lower by 25, 30 basis points, but it’s nothing too dissimilar from other large loans. But again, as we’ve said in the past, we do not rely on those type of transactions. We really are focused on our bread and butter, which is small and mid-sized commercial loans, and both teams, the small business team, and the large commercial team are doing a great job.
Kelly Motta: 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 rate this year? And can you just remind us any index or floating rate on either side of the balance sheet, how we should be kind of thinking about that, when the fed starts cuts?
Jose Rafael Fernandez: So I’ll give you my high level and I’ll let Maritza give you more of the specifics, but the way we look at the interest rate environment currently 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 three to four 25-basis-point cuts. So that’s how we’re modeling our net interest margin from a macro interest rate perspective. I’ll let Maritza talk to you about the underpinnings of the margin.
Maritza Arizmendi: 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, it is the fact that, in the commercial book, we have about half of our commercial loan book is at variable rates. So we have exposure when rates start to go down. And the other variability that we have is the maturity of the short-term treasuries that we took in the fourth quarter of $300 million in short-term treasuries. And a longer position that we have that will mature in May 2024 is $200 million in treasury notes. So that will reprice at current level. So that’s the variability on the asset side, but what we have been doing during the last two quarters is adding an extension in the asset side at higher dealing with the acquisition of $700 million AMBS.
And the idea is to continue to finance that at variable rate deposits and the structure of the government deposits 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.
Kelly Motta: Awesome. Thanks so much for the help. Maybe kind of a last multipart question for me is on just the $10 billion in asset size. Can you, one, remind us the timing and impact of the Durbin. I know you covered it on previous calls. Just wanted to confirm and get an update, maybe…
Jose Rafael Fernandez: It should be in July. We started triggering the Durbin effect. So it’s going to have a half year impact. And the full impact will be seen on 2025.
Kelly Motta: I think I recall it maybe roughly about…
Jose Rafael Fernandez: $5 million.
Kelly Motta: $10 million annually.
Jose Rafael Fernandez: Yeah, $10 million annually. $5 million 2024, and then the $10 million in 2025.
Kelly Motta: Got it. And then I believe in prior year-end, you talked about maybe strategically managing under that $10 billion in assets, maybe customers took excess funds and put it elsewhere. Just it seems like the large government deposit is idiosyncratic to that customer, not have anything to do with kind of previous managing under $10 billion. Just wanted to confirm that. And also, wondering if there’s potential, inflows of deposits just related to customers who have OFG as their lead bank who may be — you may recruit to bring more of that excess funds back now that you’re clearly crossed that path?
