OFG Bancorp (NYSE: OFG), the financial holding company for
Oriental Bank, today reported results for the second quarter ended
June 30, 2024. EPS diluted of $1.08 compared to $1.05 in 1Q24 and
$0.93 in 2Q23. Total core revenues of $179.4 million compared to
$174.2 million in 1Q24 and $170.5 million in 2Q23.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “The
second quarter continued to demonstrate the strength of our
strategies and franchise. EPS-diluted increased 16.1%
year-over-year on a 5.2% increase in total core revenues. We
generated strong performance metrics through consistent growth;
increased loans, deposits, and non-interest income; and stable
credit quality. Our ‘Digital First’ strategy continues to help us
expand our retail and business relationships through new and
upgraded products, services, and self-service tools. In addition,
we implemented close to half of our $50 million share buyback
program, purchasing $24.3 million of OFG shares in the open market.
At the same time, Puerto Rico’s economy continued to grow and
steadily decouple from mainland economic uncertainties. Thanks to
our team members for their commitment to making progress possible
for our customers, employees, shareholders, and the communities we
serve.”
2Q24 Highlights
Performance Metrics: Net interest margin of 5.51%, return
on average assets of 1.82%, return on average tangible common
stockholders’ equity of 18.24%, and efficiency ratio of 51.81%.
Total Interest Income of $187.7 million compared to
$183.4 million in 1Q24 and $158.0 million in 2Q23. Compared to
1Q24, 2Q24 primarily reflected higher average balances and yields
on loans. 2Q24 included $2.1 million from the recovery of a
non-accrual U.S. commercial loan paid in full.
Total Interest Expense of $40.3 million compared to $39.3
million in 1Q24 and $18.3 million in 2Q23. Compared to 1Q24, 2Q24
reflected higher average core deposits and a 7 basis point increase
in rates, partially offset by lower average wholesale funding and
rate.
Total Banking & Financial Service Revenues of $32.1
million compared to $30.1 million in 1Q24 and $30.9 million in
2Q23. Compared to 1Q24, 2Q24 reflected higher banking service,
wealth management and mortgage banking revenues. Banking service
revenues included $0.6 million prepayment fees on U.S. loans, while
wealth management included $0.5 million in annual recognition of
certain commercial insurance commissions.
Pre-Provision Net Revenues of $86.8 million compared to
$83.0 million in 1Q24 and $80.8 million in 2Q23.
Total Provision for Credit Losses of $15.6 million
compared to $15.1 million in 1Q24 and $15.0 million in 2Q23. 2Q24
provision primarily reflected increased loan volume.
Credit Quality: Net charge-offs of $15.0 million compared
to $19.8 million in 1Q24 and $6.6 million in 2Q23. 2Q24 early and
total delinquency rates were 2.81% and 3.71%, respectively. The
nonperforming loan rate of 1.08% was the lowest over the last five
quarters.
Total Non-Interest Expense of $93.0 million compared to
$91.4 million in 1Q24 and $88.9 million in 2Q23. Compared to 1Q24,
2Q24 included increases of $1.3 million in electronic banking
expenses, $1.1 million in professional services fees, and $0.4
million for increased FDIC insurance now that Oriental exceeds $10
billion in assets. This was partially offset by reductions of $1.4
million in foreclosed real estate costs and in FICA payroll related
expenses relative to the prior quarter.
Effective Tax Rate of 28.2% compared to 26.8% in 1Q24 and
32.9% in 2Q23. 2Q24 reflected an expected 2024 ETR of 29.0% due to
higher forecasted business activities with preferential tax
treatment under the Puerto Rico tax code, coupled with a $0.8
million tax benefit credit in 2Q24 compared to $1.1 million
discrete benefit for stock vested in 1Q24.
Loans Held for Investment (EOP) of $7.64 billion compared
to $7.54 billion in 1Q24 and $7.12 billion in 2Q23. Compared to
1Q24, 2Q24 increased 1.3%, reflecting growth in Puerto Rico
commercial, auto and consumer loans, partially offset by regular
paydowns of residential mortgages and prepayment of U.S. commercial
loans. Compared to 2Q23, 2Q24 loans increased 7.3%.
New Loan Production of $589.0 million compared to $536.6
million in 1Q24 and $681.8 million in 2Q23. Compared to 1Q24, 2Q24
loan production, led by auto, reflected increases in all
categories.
Total Investments (EOP) of $2.48 billion compared to
$2.48 billion in 1Q24 and $1.70 billion in 2Q23.
Customer Deposits (EOP) of $9.60 billion compared to
$9.55 billion in 1Q24 and $8.54 billion in 2Q23. Compared to 1Q24,
2Q24 reflected an increase in commercial deposits partially offset
by a decline in retail deposits.
Total Borrowings & Brokered Deposits (EOP) of $201.2
million compared to $203.3 million in 1Q24 and $226.5 million in
2Q23.
Cash & Cash Equivalents (EOP) of $740.4 million
compared to $754.4 million in 1Q24 and $799.0 million in 2Q23.
Capital: CET1 ratio was 14.29% compared to 14.45% in 1Q24
and 14.03% in 2Q23. The Tangible Common Equity ratio was 10.09%
compared to 10.06% in 1Q24 and 9.99% in 2Q23. Tangible Book Value
of $24.18 per share compared to $23.55 in 1Q24 and $21.06 in
2Q23.
Conference Call, Financial Supplement &
Presentation
A conference call to discuss 2Q24 results, outlook and related
matters will be held today at 10:00 AM ET. Phone (800) 245-3047 or
(203) 518-9708. Conference ID: OFGQ224. 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 June 30, 2024, and the 2Q24 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, 2023, 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. Our mission is to make progress possible for our
customers, employees, shareholders, and the communities we serve.
Visit us at www.ofgbancorp.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240717503966/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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