OFG Bancorp (NYSE: OFG), the financial holding company for
Oriental Bank, reported results for the first quarter ended March
31, 2022. EPS diluted was $0.76 compared to $0.66 in 4Q21 and $0.56
in 1Q21. Total core revenues were $136.4 million compared to $141.0
million in 4Q21 and $127.7 million in 1Q21.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “We had a
great start to 2022. During the first quarter, our core business
demonstrated strong momentum. We experienced solid loan and deposit
growth, NIM expansion, and lower provision. Total assets reached
$10.2 billion, expenses remained in line, and we repurchased $33.5
million of shares as part of our $100 million buyback program. The
Puerto Rico economic environment continues to trend positively,
while we continue to focus on improving the customer experience and
growing together with our clients and the communities we serve.
During 1Q22, for example, we introduced fully proprietary digital
processes to apply for consumer loans and to open and contribute
into our IRA fund.”
1Q22 Highlights
Net Interest Income was $105.2 million compared to $104.2
million in 4Q21 and $98.2 million in 1Q21. NIM expanded to 4.47%
from 4.18% in 4Q21 primarily due to increased volume of loans and
investments.
Interest Income totaled $112.9 million compared to $112.6
million in 4Q21 and $111.0 million in 1Q21. Compared to 4Q21, 1Q22
interest income benefited from higher yields on higher average
balances of loans and investment securities, and higher average
yields on cash, which was offset by two fewer days that reduced
Interest Income by $1.7 million.
Total Interest Expense of $7.8 million compared to $8.4
million in 4Q21 and $12.8 million in 1Q21. Compared to 4Q21, 1Q22
interest expense reflected lower average balances and costs of
deposits and borrowings, partially offset by $0.4 million to
expense unamortized issuance costs as a result of the early
termination of $36.1 million in 3.23% variable rate subordinated
notes.
Banking and Financial Service Revenues of $31.2 million
compared to $29.5 million in 1Q21 and $36.8 million in 4Q21, which
included $4.3 million in annual insurance commissions. 1Q22
reflected higher levels of banking service, mortgage banking, and
wealth management revenues compared to 1Q21.
Pre-Provision Net Revenues totaled $55.6 million compared
to $55.8 million in 4Q21 and $50.9 million in 1Q21.
Provision for Credit Losses of $1.6 million compared to
$7.2 million in 4Q21 and $6.3 million in 1Q21. 1Q22 included a
provision of $3.7 million related to growth of loan balances and an
increase of $4.2 million for a commercial loan previously placed in
non-accrual, partially offset by a $5.7 million reduction in
qualitative adjustment due to improved economic conditions. 4Q21
included a provision of $9.7 million related to transferring past
due loans to held for sale.
Credit Quality: Net charge off rate and early and total
delinquency rates fell to 0.04%, 1.97% and 3.17%, respectively,
compared to the previous and year ago quarters. 1Q22 NCOs included
a $2.8 million recovery from an acquired PCD loan and a $1.1
million recovery as part of the final settlement of the
non-performing mortgage loans sale contracted for in 4Q21.
Non-Interest Expenses totaled $81.2 million compared to
$86.5 million in 4Q21 and $77.7 million in 1Q21. The $5.3 million
reduction from 4Q21 primarily reflected lower legal reserve
provisions ($2.4 million) and lower combination of other items
(totaling $2.1 million), including operational losses, technology
related expenses, and training costs.
Loans Held for Investment (EOP) were $6.55 billion
compared to $6.40 billion in 4Q21 and $6.59 billion in 1Q21. Loans
grew $145.4 million from 4Q21, reflecting increases in commercial
loans (net of PPP forgiveness) as well as increases in consumer and
auto loans.
New Loan Origination of $623.2 million compared to $632.7
million in 4Q21 and $527.6 million in 1Q21, which included $126.3
million of PPP loans. 1Q22 reflected continued, high levels of auto
lending, commercial lending in Puerto Rico and US, and increased
demand for consumer lending.
Customer Deposits (EOP) totaled $8.97 billion compared to
$8.59 billion in 4Q21 and $8.72 billion in 1Q21. Core deposits grew
$375.1 million from 4Q21, reflecting increases in commercial and
retail accounts.
Capital: CET1 ratio was 13.24% compared to 13.77% in 4Q21
and 13.56% in 1Q21. Tangible book value per share was $18.90
compared to $19.08 in 4Q21 and $17.39 in 1Q21. The decline in CET1
and TBVPS from 4Q21 reflected the repurchase of 1.2 million shares
of common stock and reduction in other comprehensive income,
partially offset by an increase in retained earnings.
Conference Call, Financial Supplement &
Presentation
A conference call to discuss 1Q22 results, outlook and related
matters will be held today at 10:00 AM ET. Phone (800) 459-5346 or
(203) 518-9544. Conference ID: OFGQ122. The call can also be
accessed live on www.ofgbancorp.com with webcast replay shortly
thereafter.
OFG’s Financial Supplement, with full financial tables for the
quarter ended March 31, 2022, and the 1Q22 Conference Call
Presentation, can be found on the Quarterly Results page on OFG’s
Investor Relations website at www.ofgbancorp.com.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance
with GAAP, management uses certain “non-GAAP financial measures”
within the meaning of SEC Regulation G, to clarify and enhance
understanding of past performance and prospects for the future.
Please refer to Tables 8-1 and 8-2 in OFG’s above-mentioned
Financial Supplement for a reconciliation of GAAP to non-GAAP
measures and calculations.
Forward Looking Statements
The information included in this document contains certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management’s current expectations and involve certain
risks and uncertainties that may cause actual results to differ
materially from those expressed in the forward-looking
statements.
Factors that might cause such a difference include but are not
limited to (i) general business and economic conditions, including
changes in interest rates; (ii) cybersecurity breaches; (iii)
hurricanes, earthquakes, and other natural disasters; (iv)
competition in the financial services industry; and (v) the
severity, magnitude and duration of the COVID-19 pandemic, and its
impact on our operations, personnel, and customers.
For a discussion of such factors and certain risks and
uncertainties to which OFG is subject, please refer to OFG’s annual
report on Form 10-K for the year ended December 31, 2021, as well
as its other filings with the U.S. Securities and Exchange
Commission. Other than to the extent required by applicable law,
including the requirements of applicable securities laws, OFG
assumes no obligation to update any forward-looking statements to
reflect occurrences or unanticipated events or circumstances after
the date of such statements.
About OFG Bancorp
Now in its 58th year in business, OFG Bancorp is a diversified
financial holding company that operates under U.S., Puerto Rico and
U.S. Virgin Islands banking laws and regulations. Its three
principal subsidiaries, Oriental Bank, Oriental Financial Services
and Oriental Insurance, provide a wide range of retail and
commercial banking, lending and wealth management products,
services, and technology, primarily in Puerto Rico and U.S. Virgin
Islands. Visit us at www.ofgbancorp.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20220420006166/en/
Puerto Rico & USVI: Idalis Montalvo
(idalis.montalvo@orientalbank.com) at (787) 777-2847 US:
Gary Fishman (gfishman@ofgbancorp.com) and Steven Anreder
(sanreder@ofgbancorp.com) at (212) 532-3232
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