OFG Bancorp (NYSE: OFG), the financial holding company for
Oriental Bank, reported results for the third quarter ended
September 30, 2023. EPS diluted of $0.95 compared to $0.93 in 2Q23
and $0.87 in 3Q22. Total core revenues of $172.2 million compared
to $170.5 million in 2Q23 and $156.8 million in 3Q22.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “Third
quarter results reflected year-over-year increases of 10% in core
revenues and 9% in EPS. Highlights include continued loan growth,
stable core deposits, low cumulative deposit beta of 19%, increased
operating leverage, and strong performance metrics. We also
benefited from overall higher interest rates and benign credit
conditions as economic activity in Puerto Rico continues to do
well.”
“Oriental’s self-service portal, launched earlier this year as
part of our ‘Digital First’ strategy, has been expanded to include
more features and is rapidly being adopted by our customers. This
is resulting in a growing number of digital transactions, enabling
us to better meet the needs of the customers and communities we
serve.”
“Our results could not have been possible without the hard work
and commitment of all our team members. We are thankful to them for
executing our corporate vision.”
3Q23 Highlights
Performance Metrics: Net interest margin of 5.80%, return
on average assets of 1.76%, return on average tangible common
stockholders’ equity of 17.59%, and efficiency ratio of 52.36%.
Net Interest Income of $141.8 million compared to $139.6
million in 2Q23 and $126.5 million in 3Q22. 3Q23 reflected the full
effect of 2Q23’s 25 basis point increase in the Federal Reserve
Board’s funds rate and a partial effect of 3Q23’s 25 bps
increase.
Total Interest Income of $165.7 million compared to
$158.0 million in 2Q23 and $134.7 million in 3Q22. Compared to
2Q23, 3Q23 primarily reflected higher yields (7.84% vs. 7.76%) on
increased average balances of loans and higher yields on variable
rate loans.
Total Interest Expense of $23.9 million compared to $18.3
million in 2Q23 and $8.2 million in 3Q22. Compared to 2Q23, 3Q23
reflected higher cost of funds (1.07% vs. 0.84%) on increased
average balances of deposits and borrowings.
Total Banking & Financial Service Revenues of $30.4
million compared to $30.9 million in 2Q23 and $30.3 million in
3Q22.
Pre-Provision Net Revenues of $82.3 million compared to
$80.8 million in 2Q23 and $69.6 million in 3Q22.
Total Provision for Credit Losses of $16.4 million
compared to $15.0 million in 2Q23 and $7.1 million in 3Q22. 3Q23
included $11.4 million due to increased loan volume, $4.1 million
in qualitative adjustment, and $0.7 million for a specific reserve
for the sale of a small portfolio of non-performing Puerto Rico
small business commercial loans.
Credit Quality: Net Charge-offs of $18.8 million compared
to $6.6 million in 2Q23 and $11.3 million in 3Q22. 3Q23 included
$6.9 million for two loans previously and substantially reserved.
2Q23 included a recovery of $3.7 million from the sale of older,
fully charged off auto and consumer loans. Early and total
delinquency rates were 2.75% and 3.78%, respectively, and the
nonperforming loan rate of 1.33% was in the lower ranges seen over
the last five quarters.
Total Non-Interest Expense of $90.2 million compared to
$88.9 million in 2Q23 and $87.5 million in 3Q22. Compared to 2Q23,
3Q23 operating expense decreased $1.3 million, due to a lower gain
on sale of foreclosed real estate partially offset by lower general
and administrative expenses.
Loans Held for Investment (EOP) of $7.26 billion compared
to $7.12 billion in 2Q23 and $6.68 billion in 3Q22. Loans increased
2.0% from 2Q23 and 8.6% year-over-year, reflecting increases in
Puerto Rico and US commercial loans and retail auto and consumer
loans. This was partially offset by regular paydowns of residential
mortgages.
New Loan Production of $562.5 million compared to $691.8
million in 2Q23 and $511.3 million in 3Q22. 3Q23 reflected
continued high levels of auto, commercial and consumer lending.
Total Investments (EOP) of $2.07 billion compared to
$1.70 billion in 2Q23 and $2.04 billion in 3Q22. 3Q23 investments
increased from 2Q23 reflecting the purchase of $450 million
fixed-rate mortgage-backed securities partly offset by regular
repayments.
Customer Deposits (EOP) of $8.54 billion compared to
$8.54 billion in 2Q23 and $8.84 billion in 3Q22.
Total Borrowings (EOP) of $451.5 million compared to
$226.5 million in 2Q23 and $27.3 million in 3Q22.
Cash & Cash Equivalents (EOP) of $532.7 million
compared to $799.0 million in 2Q23 and $815.4 million in 3Q22.
Compared to 2Q23, 3Q23 cash reflected new purchases of MBS.
Total Assets (EOP) of $10.26 billion compared to $10.03
billion in 2Q23 and $10.06 billion in 3Q22.
Capital: CET1 ratio of 14.03% level with 2Q23 and 13.38%
in 3Q22. The Tangible Common Equity ratio was 9.74% compared to
9.99% in 2Q23 and 8.83% in 3Q22. Tangible Book Value per share of
$21.01 compared to $21.06 in 2Q23 and $18.46 in 3Q22.
Conference Call, Financial Supplement &
Presentation
A conference call to discuss 3Q23 results, outlook and related
matters will be held today at 10:00 AM ET. Phone (800) 579-2543 or
(785) 424-1789. Conference ID: OFGQ323. 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 September 30, 2023, and the 3Q23 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, pandemics and other natural disasters; and
(iv) competition in the financial services industry.
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, 2022, 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 59th 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/20231019492008/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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