OFG
#Correct.
So for the 4.9% ---+ and then we layered in future loan origination profiles, and yield rates, and securities income.
Things like that.
And that's what bumps it up to 5%.
<UNK>, very good point.
I think you are doing the job that I should have been doing in the first place to explain this.
This is not a stress test.
This is a credit shock, one-time, very conservative treatment.
That's why we put ---+ it's an immediate impact of the projected two-year cumulative losses: one-time, with no consideration to future earnings, and a static balance sheet.
So exactly ---+ it is not DFAST, exactly.
It's a little bit more severe, just to illustrate what impact it would have on our tangible book value at the end of the day, even after considering the acute scenario, and give you an idea what it would be.
Yes.
We are ---+ as you know that we don't ---+ we haven't disclosed the DFAST, because we are not required to.
But I think if you layer in these provisions and things like that, all I can tell you at this point in time is: by doing that exercise, we are not even planning internally to release the allowances and boost our earnings.
So we are, in fact, increasing the allowances in the context of economy.
So I would ask you to look at it from that perspective and verify your numbers.
But at this point in time, I think what we are disclosing is purely an analysis of what the shock results would be.
I also think, <UNK>, that the analysis reflects also the effect of us having 33% of our portfolio under purchase accounting and the benefit of that.
So we are trying to make sure that everybody understands that we have a good excess capital cushion, given our credit risk profile and given the dynamics here in the Puerto Rico economy.
Yes.
And as I mentioned earlier, we feel the municipal exposure ---+ we feel very comfortable with that exposure.
We know the loans, and we manage them as we have done in the past.
So we just don't feel that that should be commingled with the rest of the central government and public corporation exposures.
So if you exclude that, really, the Puerto Rico government exposures relative to ---+ for OFG is predicated basically on PREPA.
I will say a couple of things, and then I will let <UNK> add.
But from our perspective, we look at repurchase as part of a capital management strategy.
We also recognize that things here in Puerto Rico ---+ in the market we participate in, things have become a lot more uncertain.
And so we are cautious at looking at all the repurchase.
Certainly, the pricing also is very attractive.
So we are just, from that perspective, continuing to look at repurchase as part of a capital return to shareholders and capital management and would like to evaluate them as the opportunities occur.
Not to our knowledge.
It is complete separate jurisdiction.
They are called autonomous.
So it's municipal autonomous.
And they are separate.
The loans that we have, they are secured.
They are secured with a lien on property taxes, and they are secured with escrow monies that are escrowed out for those loans that are outside of the reach of the central government and the municipalities both.
So they can't go after that money.
When the stock is trading so deep below book value, there is really no currency to do anything strategic.
So certainly that's not out of the table, but it's certainly a ---+ moved into the more longer-term scenario.
So that's how we view it.
Well, yes.
At the beginning, back in 2014, when lower prices came down, it did have an impact.
And we saw it late in the year and maybe early part of this year.
But remember, also, that there have been two gas tax increases in the last 12 months.
So some of that reduction in oil prices has been absorbed by increases in the gas tax to be able to ---+ the government was trying to get a bond issue out that never occurred.
So that's ---+ I think that the reduction in oil prices has taken its effect in the Puerto Rico economy.
And I'm not sure there's going to be any additional benefit from that.
<UNK>.
No, <UNK>.
I think we would stick to the 32%, with the low side of the range as 29% to 34%.
Well, thank you all for being in the call today.
We will be in New York next week on the KBW community conference.
And looking forward to continuing the discussions and the dialogue regarding Oriental's results and our outlook.
In mid-September we are scheduled to be at a Credit Suisse conference, also in New York City.
And our preliminary date for reporting third-quarter results is Friday, October 23.
So thank you again, and have a great day and a great weekend.
