OFG Bancorp (NYSE: OFG), the financial holding company for
Oriental Bank, today reported results for the fourth quarter and
year ended December 31, 2023.
4Q23: EPS diluted of $0.98 compared to $0.95 in 3Q23 and
$0.97 in 4Q22. Total core revenues of $175.6 million compared to
$172.2 million in 3Q23 and $168.3 million in 4Q22.
Full Year 2023: EPS diluted of $3.83 compared to $3.44 in
2022. Total core revenues of $682.7 million compared to $607.8
million.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “2023 was
an outstanding year. We are proud of our accomplishments and thank
the entire team for making it possible. We ended 2023 with record
levels of loans, customer deposits, assets, and stockholders’
equity. Year-end commercial loan balances exceeded $3 billion and
tangible common equity was more than $1 billion, both for the first
time. Our ‘Digital First Strategy’ continues to empower our retail
customers to complete 93% of routine transactions through
self-service channels. While consumer credit has begun to normalize
post-pandemic, consumer liquidity and employment as well as
commercial clients and the economy continue to be strong in Puerto
Rico.”
4Q23 Results Included:
Gain on Sale of Non-Performing Puerto Rico Small Business
Loans: Resulted in a $6.3 million pre-tax gain in other
non-interest income.
Workforce Early Retirement & Rightsizing: Resulted in
$3.2 million in severance and lease cancellation costs in
non-interest compensation and infrastructure expenses.
Large Public Funds Deposit: $1.2 billion deposited
mid-December.
4Q23 Highlights
Performance Metrics: Net interest margin of 5.62%, return
on average assets of 1.76%, return on average tangible common
stockholders’ equity of 18.22%, and efficiency ratio of 53.59%.
Total Interest Income of $176.2 million compared to
$165.7 million in 3Q23 and $145.7 million in 4Q22. Compared to
3Q23, 4Q23 primarily reflected higher average balances and yields
on loans and investment securities.
Total Interest Expense of $32.7 million compared to $23.9
million in 3Q23 and $10.4 million in 4Q22. Compared to 3Q23, 4Q23
reflected increases of $4.0 million in the cost of average core
deposits and $4.8 million in the cost of average wholesale funding,
primarily due to temporarily higher balances of borrowings and
brokered deposits during the quarter.
Total Banking & Financial Service Revenues of $32.1
million compared to $30.4 million in 3Q23 and $33.0 million in
4Q22. Compared to 3Q23, 4Q23 reflected annual insurance commission
recognition of $2.5 million in wealth management revenues and lower
mortgage servicing revenues.
Pre-Provision Net Revenues of $88.2 million compared to
$82.3 million in 3Q23 and $76.9 million in 4Q22.
Total Provision for Credit Losses of $19.7 million
compared to $16.4 million in 3Q23 and $8.8 million in 4Q22. 4Q23
provision primarily reflected increased loan volume.
Credit Quality: Net charge-offs of $16.3 million compared
to $18.8 million in 3Q23 and $11.2 million in 4Q22. 4Q23 early and
total delinquency rates were 2.76% and 3.76%, respectively, in line
with 3Q23. The nonperforming loan rate of 1.22% was the lowest over
the last five quarters.
Total Non-Interest Expense of $94.1 million compared to
$90.2 million in 3Q23 and $91.6 million in 4Q22.
Loans Held for Investment (EOP) of $7.53 billion compared
to $7.26 billion in 3Q23 and $6.84 billion in 4Q22. Loans increased
3.8% from 3Q23 and 10.2% year-over-year, reflecting increases in
commercial loans, and retail auto and consumer loans. This was
partially offset by regular paydowns of residential mortgages and
securitization and sale of conforming loans.
New Loan Production of $663.9 million compared to $567.5
million in 3Q23 and $616.4 million in 4Q22. 4Q23 primarily
reflected increased Puerto Rico commercial lending.
Total Investments (EOP) of $2.69 billion compared to
$2.07 billion in 3Q23 and $1.97 billion in 4Q22. 4Q23 investments
reflected purchases of $300 million of short-term US Treasury bills
and $250 million of long-term government insured, mortgage-backed
securities.
Customer Deposits (EOP) of $9.60 billion compared to
$8.54 billion in 3Q23 and $8.56 billion in 4Q22.
Total Borrowings & Brokered Deposits (EOP) of $363.0
million compared to $454.4 million in 3Q23 and $38.4 million in
4Q22. The average balance of such wholesale funding was $602.0
million in 4Q23 compared to $266.4 million in 3Q23. The 12/31/23
balance reflected repayment of $250 million of borrowings and the
addition of $160 million of brokered deposits, most of which will
mature in early 1Q24.
Cash & Cash Equivalents (EOP) of $748.2 million
compared to $532.7 million in 3Q23 and $550.5 million in 4Q22.
Total Assets (EOP) of $11.34 billion compared to $10.26
billion in 3Q23 and $9.82 billion in 4Q22.
Capital: CET1 ratio was 14.12% compared to 14.06% in 3Q23
and 13.64% in 4Q22. The Tangible Common Equity ratio was 9.68%
compared to 9.74% in 3Q23 and 9.59% in 4Q22. Tangible Book Value
(TBV) of $23.13 per share compared to $21.01 in 3Q23 and $19.56 in
4Q22. 4Q23 TBV reflected increased retained earnings and
Accumulated Other Comprehensive Income.
Conference Call, Financial Supplement &
Presentation
A conference call to discuss 4Q23 results, outlook and related
matters will be held today at 10:00 AM ET. Phone (800) 267-6316 or
(203) 518-9783. Conference ID: OFGQ423. 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 and year ended December 31, 2023, and the 4Q23 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 60th 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/20240123214026/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
OFG Bancorp (NYSE:OFG)
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