Basel 3 Impacts
Joe Gladue – B. Riley: Richard, let me just follow-up on one of your last comments about Basel III. Just wondering, if you could touch on what you think some of the major impacts of that will be on your business and if it caused you to change any of your business practices, types of loans or securities?
Richard L. Carrion – President, Chairman and CEO: So, far I think the major impact will be felt in our mortgage business we’re looking at – waiting through these rules. It looks like the major impact would be on the mortgage side. Again, we’re not crazy about it, but we don’t see anything in there that we can’t live with. It will obviously request some adjustments, but we haven’t seen anything in that that we can’t live with. I don’t know Jorge, if you want to add.
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Jorge A. Junquera – CFO: No. That’s correct. Given that this is a process, but it will be phased in through a period of time and given that it will be an increasing capital organically throughout this period – throughout this time. We conclude that there is no reason to conclude that, we will have to raise capital because of Basel III. We feel comfortable.
Joe Gladue – B. Riley: Let me ask a question or two about, I guess, asset quality just I guess some numbers. Could you tell us where I guess recurring TDRs and early stage delinquencies stood at quarter end?
Richard L. Carrion – President, Chairman and CEO: I don’t have the numbers in front of me. We’ll provide that information after the call, Joe, because it’s something that we include in our regular package is part of – would be part of the 10-Q, but we’ll provide you that after the call.
Joe Gladue – B. Riley: I guess lastly I’ll just ask in regards to the loan purchases, just wondering when in the quarter they were – when you made them and how much impact they might have still to come?
Richard L. Carrion – President, Chairman and CEO: The Puerto Rico actually closed on June 28. The U.S. was in it throughout the quarter. There were a number of purchases. Carlos, you have different dates on it, but they were throughout the quarter.
Carlos J. Vazquez – SVP, President of Banco Popular North America: The biggest part of the U.S. was in during the month of May.
Revised Guidance Expectation
Robert Greene – Sterne, Agee: Just a couple of quick questions. I think first I just wanted to revisit your revised guidance expectation. I know there’s obviously a lot of moving parts with the quarter and sort of going forward, but with the $10 million reduction I guess in assets to help with the guidance, I was wondering what was specifically attributable to that, whether it’s slowing top line, higher than expected expenses or I guess higher than expected provision?
Richard L. Carrion – President, Chairman and CEO: Well, it’s a combination of things. One is, we’re seeing very weak loan demand and we’re depending on loan purchases to meet better. As you know, these things sometimes come up or sometimes they don’t come up. So there’s some uncertainty to the downside there. Additionally, we’re finding, as we go through the cost reductions, we’re finding a lot of cost that are associated with NPLs and it’s very difficult to bring those down until we bring all the NPLs down. Then we have in this quarter that negative amortization of the FDIC asset we tried to explain so masterfully that $8 million in core, so that was in levels a little bit that we weren’t counting.
Robert Greene – Sterne, Agee: Then, I guess going over to credit quality, on the commercial inflows, a big improvement in Puerto Rico, looked a little bit more flat in the U.S. I understand it’s lumpy but do you expect sort of that $45 million run rate to improve or is that kind of status quo for the foreseeable future?
Lidio V. Soriano – EVP, Corporate Risk Management: I will say in the U.S. business, we are further along in terms of improving the credit quality. So I think some of the dynamics of improvement in Puerto Rico versus improvement in U.S. are different, and in that regard, I think you’ll continue to see improvement in Puerto Rico and improvement in the U.S. will be more leveled.
Robert Greene – Sterne, Agee: Then just one last follow-up on credit quality. It looks like there was a modest reserve release in your non-covered portfolio, but overall – sorry, reserve coverage in mortgage went up. I’m just wondering how much of that is attributable to the change in charge-off policy versus the portfolio of purchases or any other sort of reevaluation of the portfolio loss content.
Lidio V. Soriano – EVP, Corporate Risk Management: I think the increases in the allowance for the mortgage portfolio are driven by two factors. As you mentioned, we changed the charge-off policy and that has implemented – that has an impact in the methodology and cumulative (procedure) that we use in order to estimate losses. But in addition to that we have had significant activity in terms of our loss mitigation programs and we drove up that restructuring and that activity has also increased the level of research for our portfolio.