Lidio Soriano: I mean there was some balanced distortion of an account that — larger high-cost account that left but that wasn’t in this particular quarter. This quarter, what you just had — you just saw costs being relatively flat and then therefore, the kind of the last bump in rates that we saw was not kind of pass-through, so you got a little inching down and cumulative beta due to that.
Broderick Preston: Got it. So do you think that the commercial beta — do you think that it can continue to kind of level off? Or do you think that, that can — whatever happens with rates going forward, do you think you’ve kind of peaks on the rate offering there and that beta can continue to add lower?
Lidio Soriano: Yes. I mean I think what we call is more of a stabilization. I think that intense pressure that was in deposit costs, especially following kind of the many banking crisis that we saw at the beginning of the year, some of those pressures have leveled off and the fact that the rate of increase in Fed funds rates again has slowed down. So I think all of these things help reduce the pressure on that and specifically on the commercial. The area where it continues to be a bit more sensitive is kind of like the higher cost retail deposits. There’s still a fair amount of competition both in our branches and our national online gathering platform.
Broderick Preston: Got it. Okay. I also wanted to ask on the nonowner-occupied CRE growth that you had this quarter. Was that a result of prior commitments kind of funding up? Or was that kind of new originations? And if so, can you kind of speak to the geographic location of it? Was it on the island? Was it on the mainland? I just wanted some more color there.
Lidio Soriano: I would say it’s a combination of both. I mean, we had some growth in terms of our construction portfolio in New York. And we also have growth, non-occupied growth both in Puerto Rico and the U.S. Puerto Rico, more in the retail space and the U.S., more in the shelter, health care sectors.
Broderick Preston: Got it. Okay. And then just my last one. So I guess I understand that you guys are being cautious around uses of capital. But when I step back and kind of do the math on securities restructures, you guys, in particular, it’s pretty attractive. And it’s a pretty — you kind of quickly accrete CET1 on the back end of it. And so within a couple of years, you’re kind of back to an extremely robust CET1 ratio. But you’ve reduced earnings meaningfully, which could be beneficial to the stock price. How do you kind of think about securities restructuring and using capital at this point?
Carlos Vazquez: We are aware. We’ve done the numbers. We — it’s something that we review periodically one of the non-immaterial considerations when we’re thinking of these things is the fact that if nothing changes and we do nothing we get roughly a third of AOCI by the end of next year. So that starts — when you start comparing, not taking execution risk, not taking market rate, not taking a number of other things, and having that outcome, it gets difficult to sometimes do alternative things. But we have looked at it. We continue to look at it. We have not decided that it makes sense for us for the moment.
Broderick Preston: Thank you very much for taking my questions. I appreciate it.
Ignacio Alvarez: Thank you.
Operator: Our next question comes from Kelly Motta of KBW. Kelly the line is yours.
Kelly Motta: Carlos, to your last point, I want to make sure I got that right. So one-third of AOCI comes back by the end of next year, if no change in rates?
Carlos Vazquez: Yes. That’s what — that’s our best estimate, yes. That number is consistent with what we’ve been discussing for the last quarter or so when we did the calculation. It’s roughly — probably what I think it’s going to be.
Kelly Motta: Pretty fast tangible book value accretion. Can you remind us what the cash flows are of the securities portfolio? And where you’re prioritizing that money, whether it’s just sticky and in cash yielding higher rates versus loan growth versus paying down some of the higher cost borrowings that you have?
Carlos Vazquez: Yes. It’s about $1 billion a quarter still that matures in the bond portfolio. And I think, this quarter is a nice example where we did everything you mentioned essentially because we mostly funded loan growth, which is our preference. And then some of the cash also went to repayment of the senior notes. Now we don’t have an immense amount of high-cost debt in our balance sheet. So that option is not huge. But the preference would be to fund client activity to the extent we can, and hopefully, the demand will be there for that to occur.
Lidio Soriano: No, in addition to that, this is [indiscernible]. And you could see it on the presentation on Page 8. We have around $1 billion worth of like treasury notes and MBS that prepay any given quarter, that’s being then reinvested at market rates in T-bills. So you kind of see about $1 billion going off of term portfolio and going into short-term T-bills, which currently have very attractive yields and especially that are exempt for Puerto Rico tax purposes as well. So you get that incremental push every quarter.
Kelly Motta: Got it. That’s super helpful. I was hoping I know portfolio — loan portfolio purchases or something you’ve got in the past as things that you’re looking at. Just wondering if there’s any update there, any appetite or potentially — potential changes in what you’re seeing in opportunities to add through some of those strategic purchases?
Ignacio Alvarez: There’s nothing to update. I mean our appetite remains the same. If we get shown portfolios of assets that are within our wheelhouse, in other geographies and segments that we like. And we think the opportunity will take a very close look at them. But we do have anything to report. We are looking and people bring us opportunities all the time. Sometimes they’re outside our credit box or outside our geographies. But yes, we’re open and we will continue to be opportunistic if the right opportunity comes our way.
