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Section 1: 8-K (FORM 8-K)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________________

 

FORM 8-K

_________________________

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 20, 2018

 

OFG Bancorp

 

(Exact Name of Registrant as Specified in its Charter)

 

 

 

 

 

 

Commonwealth of Puerto Rico

 

001-12647

 

66-0538893

 

 

 

 

 

(State or other Jurisdiction of Incorporation)  

 

(Commission File No.)  

 

(I.R.S. Employer
Identification No.)

 

 

 

Oriental Center, 15th Floor

 

 

254 Muñoz Rivera Avenue

 

 

San Juan, Puerto Rico

 

00918

 

 

 

(Address of Principal Executive Offices)  

 

(Zip Code)

             

 

 

Registrant’s telephone number, including area code: (787) 771-6800

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

 

     ☐   

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

     ☐   

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

 

 

     ☐   

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

     ☐   

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 

Item 2.02. Results of Operations and Financial Condition.

  

     On April 20, 2018, OFG Bancorp (the “Company”) announced the results for the quarter ended March 31, 2018. A copy of the Company’s press release is attached as an exhibit to this report.

 

Item 9.01. Financial Statements and Exhibits.  

 

     (d) Exhibits   

 

 

 

 

 

 

 

 

 

Exhibit No.

 

Description of Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99

 

 

Press release by the Company dated April 20, 2018.

 

 

 

 

  

 


 

SIGNATURES  

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

OFG BANCORP

 

Date: April 20, 2018

By:  

/s/ Maritza Arizmendi

 

 

Maritza Arizmendi

 

 

Executive Vice President and Chief Financial Officer 

         

 

 


(Back To Top)

Section 2: EX-99 (EXHIBIT 99)

 

 

 

Exhibit 99

 

OFG Bancorp Reports 1Q18 Results

SAN JUAN, Puerto Rico, April 20, 2018 – OFG Bancorp (NYSE: OFG) today reported results for the first quarter ended March 31, 2018, reflecting continued strong recovery following hurricanes Irma and Maria, which struck the island in September 2017.

1Q18 Summary

·        Net income available to shareholders was $13.5 million, or $0.29 per fully diluted share. This was in line with 4Q17’s $13.6 million, or $0.30 per share, and exceeded the year ago quarter’s $11.7 million, or $0.26 per share.

·        Return on average assets and average tangible common equity was 1.09% and 7.73%, respectively.

·        Tangible book value per common share was $15.71, and tangible common equity ratio was 11.22%.

·        Loan production of $309.4 million increased 22.0% from 4Q17 and 41.4% from the year ago quarter.

·        Total provision for loan and lease losses, net, declined 37.9% from 4Q17, which included $5.4 million in additional hurricanes-related provision.

·        Core non-interest income of $18.2 million increased 9.0% from 4Q17 and 4.7% from the year ago quarter as banking service fees and mortgage banking revenues rebounded.

CEO Comment

José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, commented:

“Our first quarter results reflect the success of our strategies and Puerto Rico’s emerging recovery. We earned $0.29 per share fully diluted, 12% higher than a year ago. Our strong capital position continued to build.

“The island benefited from loan payment moratoriums by Oriental and other banks, an increased availability of electric power, improvement in communications, and the return of day to day stability, as well as rebuild spending by FEMA, the start of payments of insurance claims, and the prospect of growing assignments of federal funds.

 


 

“Nearly every metric in 1Q18 confirmed this progress. For the second quarter in a row, our originated loan growth outpaced the pay down of acquired loans, resulting in a net increase of $77.1 million from December 31, 2017—close to 8% on an annualized basis.

“Auto, consumer and mortgage lending at $192.3 million increased 52% from 4Q17 and more than 11% from 1Q17.  In particular, auto lending was at a record level, up more than 46% from the preceding and year ago quarters.

“Commercial loan production in Puerto Rico, while lower than 4Q17, rose more than 13% year over year. Meanwhile, our U.S. commercial and industrial loan program added $74 million in participations.

“With nearly all of our loan moratoriums expiring, 1Q18 credit quality remained stable. Most metrics were better than, or returned to, pre-hurricanes levels.

“Fee revenues rebounded with a 24% sequential increase in Banking Services and a 43% increase in Mortgage Banking. Core Wealth Management held steady at pre-hurricanes levels.

“Customer deposits (excluding brokered) increased 2% from the end of 2017 and 5% from a year ago. Our Net Interest Margin expanded to 5.22%, and net new customer accounts grew at an annualized rate of 8%, significantly exceeding 2017’s hurricanes affected 2% rise.

“Our effort to differentiate Oriental through superior service and digital banking technology is proving effective. Our team of dedicated bankers continually reaching out to our customers and clients is clearly working. And during 1Q18, we introduced another new technology-based service—My Payments (Mis Pagos), which enables loan-only customers to pay online  instead of standing in line

“While we remain cautious due to the uncertain economic environment on the island, we are confident positive momentum will prevail for both OFG and Puerto Rico. We will continue to sharpen our focus on our retail and commercial clients, improve our service levels, and provide faster and more agile ways to do banking.”

Income Statement Highlights

Unless otherwise noted, the following compares data for the first quarter 2018 to the fourth quarter 2017.

      Interest Income

      Originated Loans: Increased $0.6 million to $56.8 million, primarily due to higher balances.

      Acquired Loans: Declined $1.1 million to $17.8 million, reflecting continued pay downs.

 


 

      Investment Securities: Increased $0.5 million to $8.6 million, the result of higher balances and higher yield.

      Interest Expense: Declined $0.5 million to $9.2 million, primarily due to reduced cost of deposits.

 

 


 

      Total Provision for Loan and Lease Losses: Declined $9.4 million to $15.5 million. 1Q18 provision included $8.6 million to replenish the allowance for retail loan charge-offs of $8.2 million related to the hurricanes. 1Q18 provision also included an increase in the allowance related to auto loan portfolio growth and one commercial loan placed in non-accrual.

      Net Interest Margin: Increased 14 basis points to 5.22% mainly due to higher yield in the investment portfolio and cash balances.

      Total Banking and Wealth Management Revenues: Increased $1.5 million to $18.2 million.

      Banking Service Revenues rose $2.0 million, largely the result of increased electronic banking activity with more power coming back on the island.

      Mortgage Banking Activities were up $0.5 million, primarily due to increased business.

      Wealth Management Revenues fell $1.0 million, reflecting the absence of annual insurance fees recognized in 4Q17.

      Total Non-Interest Expenses: Increased $5.5 million to $52.1 million. 4Q17 included $3.8 million in items that temporarily lowered costs, including reduced expenses related to electronic banking activity. 1Q18 reflected higher seasonal compensation expenses and expenses related to the sale of foreclosed assets returning to pre-hurricanes levels.

      Effective Tax Rate (ETR): Approximately 32%, the rate the Company is currently estimating for the full year.

Balance Sheet Highlights

Unless otherwise noted, the following compares data at March 31, 2018 to December 31, 2017.

      Total Loans Net: Increased $77.1 million to $4.13 billion with originated loan growth more than offsetting normal pay downs of acquired loans. Production highlights include:

      Auto lending at a record $128.1 million was up 46.3% from 4Q17 and 47.6% year over year, reflecting replacement of damaged vehicles, pent up demand, and the market’s effort to adjust to one less auto lending competitor.

      Consumer lending increased 62.6% to $37.5 million, exceeding pre-hurricanes levels, as retail customers moved to replace needed items and repair homes.

 


 

      Mortgage lending rebounded 67.7% to $26.6 million from 4Q17’s low, post-hurricanes level, but was down 38.7% from the year ago quarter.

      Commercial lending at $42.8 million declined from 4Q17’s robust levels, but was up 13.5% from 1Q17. The Company’s bankers continue building relationships with businesses participating in Puerto Rico’s recovery.

      The recently established OFG USA program added $74.4 million in commercial and industrial related loan participations across an array of industries and geographies in the continental U.S.

      Cash and cash equivalents: Declined $122.8 million to $365.4 million as cash was used to fund new loan growth and reduce higher cost borrowings.

      Total Investments: Increased $132.5 million to $1.30 billion with the purchase of new mortgage backed securities to take advantage of favorable market opportunities.

      Customer Deposits (excluding brokered deposits): Increased $77.9 million to $4.36 billion, up 1.8% and 5.2% from December 31, 2017 and March 31, 2017, respectively. Growth in demand and savings accounts more than offset a decline in time deposits.

      Total Borrowings: Increased $25.6 million to $354.3 million as OFG used repurchase agreement funding to acquire investment securities. The Company also paid down higher cost FHLB advances.

      Total Stockholders’ Equity: Increased $1.7 million to $946.8 million, with increases in retained earnings and legal surplus more than offsetting the increase of accumulated other comprehensive loss due to the effect of higher prevailing market interest rates.

Credit Quality Highlights

Unless otherwise noted, the following compares data on the originated loan portfolio at March 31, 2018 to December 31, 2017.

Following hurricanes Irma and Maria, Oriental offered automatic payment deferrals and 90-day extensions for most loan categories. Most of these payment moratoriums ended in 1Q18 with most credit metrics better than, or returned to, pre-hurricanes levels.

      Net Charge-Off Rate: Remained virtually level at 1.34%. Consumer loan charge-offs returned to pre-hurricanes levels, while other loan categories remained flat or declined.

 


 

      Early Delinquency Rate: Increased 138 basis points to 3.20% and Total Delinquency Rate rose 164 basis points to 6.25% as both metrics returned to pre-hurricanes levels.

      Non-Performing Loan Rate: Increased 51 basis points to 3.82%. The commercial loan rate increased 79 bps due to a $10.5 million loan that is current in its monthly payments, but was placed in non-accrual due to credit deterioration. The auto loan rate increased 94 bps due to 1Q18 moratorium expirations.

      Allowance for Loan and Lease Losses: Increased $4.1 million to $96.8 million, due to higher loan balances, particularly in auto lending, and the above mentioned commercial loan placed in non-accrual status.

 

 

 


 

Capital Position

Unless otherwise noted, the following compares data at March 31, 2018 to December 31, 2017.

Capital continued to grow and remains significantly above regulatory requirements for a well-capitalized institution.

Metric

1Q18

QoQ Change

YoY Change

Tangible Common Equity Ratio

11.22%

-7 bps

+56 bps

Tangible Book Value per Common Share

$15.71

+0.3%

+2.5%

Common Equity Tier 1 Capital Ratio (using Basel III methodology)

14.62%

+3 bps

+32 bps

Total Risk-Based Capital Ratio

20.31%

-3 bps

+26 bps

Conference Call

A conference call to discuss OFG’s results for 1Q18, outlook and related matters will be held today, Friday, April 20, 2018, at 10:00 AM Eastern Time. The call will be accessible live via a webcast on OFG’s Investor Relations website at www.ofgbancorp.com A webcast replay will be available shortly thereafter. Access the webcast link in advance to download any necessary software.

Financial Supplement

OFG’s Financial Supplement, with full financial tables for the quarter ended March 31, 2018, can be found on the Webcasts, Presentations & Other Files 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 the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. See Tables 9-1 and 9-2 in OFG’s above-mentioned Financial Supplement for 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) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) the credit default by the government of Puerto Rico; (iv) amendments to the fiscal plan approved by the Financial Oversight and Management Board of Puerto Rico; (v) determinations in the court-supervised debt-restructuring process under Title III of PROMESA for the Puerto Rico government and all of its agencies, including some of its public corporations; (vi) the impact of property, credit and other losses in Puerto Rico as a result of hurricanes Irma and Maria; (vii) the amount of government, private and philanthropic financial assistance for the reconstruction of Puerto Rico’s critical infrastructure, which suffered catastrophic damages caused by hurricane Maria; (viii) the pace and magnitude of Puerto Rico’s economic recovery; (ix) the potential impact of damages from future hurricanes and natural disasters in Puerto Rico; (x) the fiscal and monetary policies of the federal government and its agencies; (xi) changes in federal bank regulatory and supervisory policies, including required levels of capital; (xii) the relative strength or weakness of the commercial and consumer credit sectors and the real estate market in Puerto Rico; (xiii) the performance of the stock and bond markets; (xiv) competition in the financial services industry; and (xv) possible legislative, tax or regulatory changes.

For a discussion of such factors and certain risks and uncertainties to which OFG is subject, see OFG’s annual report on Form 10-K for the year ended December 31, 2017, 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 54th year in business, OFG Bancorp is a diversified financial holding company that operates under U.S. and Puerto Rico 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. Investor information can be found at Error! Hyperlink reference not valid.www.ofgbancorp.com.

# # #

Contacts

Puerto Rico: Idalis Montalvo (idalis.montalvo@orientalbank.com) at (787) 777-2847

US: Steven Anreder (sanreder@ofgbancorp.com) and Gary Fishman (gfishman@ofgbancorp.com) at (212) 532-3232

  

 


 

 

 

 

 

 

 

 

OFG Bancorp

 

Financial Supplement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our March 31, 2018 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission.

 
 

 

 

 

 

 

 

 

Table of Contents

 

 

 

 

 

Pages

 

 

 

 

 

 

 

 

 

OFG Bancorp (Consolidated Financial Information)

 

 

 

 

Table  1:

 

Financial and Statistical Summary - Consolidated

 

2

 

 

Table  2:

 

Consolidated Statements of Operations

 

3

 

 

Table  3:

 

Consolidated Statements of Financial Condition

 

4

 

 

Table  4:

 

Information on Loan Portfolio and Production

 

5

 

 

Table  5:

 

Average Balances, Net Interest Income and Net Interest Margin

 

6

 

 

Table  6:

 

Loan Information and Performance Statistics (Excluding Acquired Loans)

 

7-8

 

 

Table  7:

 

Allowance for Loan and Lease Losses

 

9

 

 

Table  8:

 

Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired

 

 

 

 

 

 

   with Deteriorated Credit Quality, Including those by Analogy)

 

10

 

 

Table  9:

 

Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory

 

 

 

 

 

 

   Capital

 

11-12

 

 

Table  10:

 

Notes to Financial Summary, Selected Metrics, Loans, and Consolidated

 

 

 

 

 

 

  Financial Statements (Tables 1-9)

 

13

 

 


 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Financial and Statistical Summary - Consolidated

 

 

 

2018

 

2017

 

2017

 

2017

 

2017

(Dollars in thousands, except per share data) (unaudited)

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

73,994

 

$

73,513

 

$

80,478

 

$

75,563

 

$

74,618

Non-interest income, net (core)

(2)

 

 

18,239

 

 

16,734

 

 

17,213

 

 

17,933

 

 

17,428

Non-interest expense

 

 

 

52,121

 

 

46,662

 

 

50,469

 

 

52,816

 

 

51,684

Pre-provision net revenues

 

 

 

40,387

 

 

43,666

 

 

47,921

 

 

47,633

 

 

42,008

Provision for loan and lease losses

 

 

 

15,460

 

 

24,907

(a)

 

44,042

(a)

 

26,536

(b)

 

17,654

Net income before income taxes

 

 

 

24,927

 

 

18,759

 

 

3,879

 

 

21,097

 

 

24,354

Income tax expense

 

 

 

8,010

 

 

1,686

 

 

560

 

 

3,993

 

 

9,204

Net income

 

 

$

16,917

 

$

17,073

 (a)  

$

3,319

 (a)  

$

17,104

 

$

15,150

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

(3)

 

$

0.31

 

$

0.31

 (a)  

$

-

 (a)  

$

0.30

 

$

0.27

Earnings per common share - diluted

(4)

 

$

0.29

 

$

0.30

(a)

$

-

(a)

$

0.30

 

$

0.26

Average common shares outstanding

 

 

 

43,955

 

 

43,947

 

 

43,947

 

 

43,947

 

 

43,915

Average common shares outstanding and equivalents

 

 

 

51,121

 

 

51,104

 

 

51,102

 

 

51,100

 

 

51,131

Cash dividends per common share

 

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

Book value per common share (period end)

 

 

$

17.76

 

$

17.73

 

$

17.56

 

$

17.59

 

$

17.42

Tangible book value per common share (period end)

(5)

 

$

15.71

 

$

15.67

 

$

15.49

 

$

15.51

 

$

15.33

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(6)

 

$

4,183,775

 

$

4,081,427

 

$

4,062,042

 

$

4,129,550

 

$

4,141,628

Interest-earning assets

 

 

 

5,751,783

 

 

5,735,593

 

 

5,658,953

 

 

5,848,525

 

 

5,932,924

Total assets

 

 

 

6,189,752

 

 

6,191,737

 

 

6,046,139

 

 

6,278,464

 

 

6,374,177

Interest-bearing deposits

 

 

 

3,756,607

 

 

3,835,357

 

 

3,774,378

 

 

3,844,490

 

 

3,850,506

Borrowings

 

 

 

351,793

 

 

374,059

 

 

462,035

 

 

614,332

 

 

715,951

Stockholders' equity

 

 

 

952,151

 

 

943,823

 

 

947,404

 

 

938,707

 

 

926,011

Common stockholders' equity

 

 

 

786,281

 

 

777,953

 

 

781,534

 

 

772,837

 

 

760,141

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(7)

 

 

5.22%

 

 

5.08%

 

 

5.64%

 

 

5.18%

 

 

5.10%

Return on average assets

(8)

 

 

1.09%

 

 

1.10%

 

 

0.22%

(a)

 

1.09%

 

 

0.95%

Return on average tangible common stockholders' equity

(9)

 

 

7.73%

 

 

7.92%

 

 

-0.08%

 

 

8.01%

 

 

7.00%

Efficiency ratio

(10)

 

 

56.51%

 

 

51.70%

 

 

51.66%

 

 

56.49%

 

 

56.15%

Full-time equivalent employees, period end

 

 

 

1,367

 

 

1,421

 

 

1,464

 

 

1,472

 

 

1,446

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

 

 

$

96,832

 

$

92,718

(a)

$

87,541

(a)

$

69,666

(b)

$

60,483

    Allowance as a % of loans held for investment

 

 

 

2.92%

 

 

2.89%

 (a)  

 

2.83%

 (a)  

 

2.25%

 

 

1.98%

    Net charge-offs

 

 

$

10,844

 

$

10,466

 

$

11,815

 

$

13,635

(b)(c)

$

10,552

    Net charge-off rate

(11)

 

 

1.34%

 

 

1.35%

 

 

1.54%

 

 

1.79%

 (b)(c)  

 

1.40%

    Early delinquency rate (30 - 89 days past due)

 

 

 

3.20%

 

 

1.82%

(d)

 

3.79%

 

 

3.52%

 

 

3.42%

    Total delinquency rate (30 days and over)

 

 

 

6.25%

 

 

4.61%

 (d)  

 

6.84%

 

 

6.31%

 

 

6.34%

Capital Ratios (Non-GAAP)

(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

14.09%

 

 

13.92%

 

 

14.07%

 

 

13.69%

 

 

13.20%

Common equity Tier 1 capital ratio

 

 

 

14.62%

 

 

14.59%

 

 

14.89%

 

 

14.66%

 

 

14.30%

Tier 1 risk-based capital ratio

 

 

 

19.01%

 

 

19.05%

 

 

19.53%

 

 

19.14%

 

 

18.77%

Total risk-based capital ratio

 

 

 

20.31%

 

 

20.34%

 

 

20.82%

 

 

20.42%

 

 

20.05%

Tangible common equity ("TCE") ratio

 

 

 

11.22%

 

 

11.29%

 

 

10.98%

 

 

11.09%

 

 

10.66%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes.

(b) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value.  As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans.

(c) During Q2 2017 , the Company had additional recoveries in auto and consumer loans of $1.1 million and $612 thousand, respectively.

(d) After Hurricane Irma and Maria on September 7, 2017 and September 20, 2017, respectively, the Company offered an automatic three-month moratorium for the payment of principal and interest for certain loans. During Q4 2017, the Company received payments on loans in moratorium, causing a decrease in delinquency.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 


 

 


 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2: Consolidated Statements of Operations

 

 

 

 

Quarter Ended

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

(Dollars in thousands, except per share data) (unaudited)

 

 

2018

 

2017

 

2017

 

2017

 

2017

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

56,781

 

 $  

56,183

 

$

58,939

(f)

$

53,449

 

 $  

51,955

 

    Acquired BBVAPR loans

 

 

 

14,490

 

 

15,310

 

 

19,189

(e)

 

17,752

 

 

19,085

 

    Acquired Eurobank loans

 

 

 

3,341

 

 

3,573

 

 

4,339

 

 

6,037

 

 

6,610

 

          Total interest income from loans

 

 

 

74,612

 

 

75,066

 

 

82,467

 

 

77,238

 

 

77,650

 

Investment securities

 

 

 

8,558

 

 

8,108

 

 

7,888

 

 

8,702

 

 

8,528

 

          Total interest income

 

 

 

83,170

 

 

83,174

 

 

90,355

 

 

85,940

 

 

86,178

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

5,412

 

 

5,613

 

 

5,438

 

 

5,568

 

 

5,468

 

    Brokered deposits

 

 

 

1,886

 

 

2,079

 

 

2,163

 

 

2,084

 

 

1,885

 

           Total deposits

 

 

 

7,298

 

 

7,692

 

 

7,601

 

 

7,652

 

 

7,353

 

Borrowings

 

 

 

1,878

 

 

1,969

 

 

2,276

 

 

2,725

(h)

 

4,207

 

           Total interest expense

 

 

 

9,176

 

 

9,661

 

 

9,877

 

 

10,377

 

 

11,560

 

Net interest income

 

 

 

73,994

 

 

73,513

 

 

80,478

 

 

75,563

 

 

74,618

 

    Provision for loan and lease losses, excluding acquired loans

 (1)  

 

 

14,958

 

 

15,643

 (d)  

 

29,690

 (d)  

 

22,818

 (g)  

 

11,735

 

    Provision for acquired BBVAPR loan and lease losses

(1)

 

 

363

 

 

7,112

(d)

 

11,811

(d)

 

3,306

 

 

4,299

 

    Provision (recapture) for acquired Eurobank loan and lease losses

 (1)  

 

 

139

 

 

2,152

 (d)  

 

2,541

 (d)  

 

412

 

 

1,620

 

          Total provision for loan and lease losses, net

 

 

 

15,460

 

 

24,907

(d)

 

44,042

(d)

 

26,536

 

 

17,654

 

           Net interest income after provision for loan and lease losses

 

 

 

58,534

 

 

48,606

 

 

36,436

 

 

49,027

 

 

56,964

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

10,463

 

 

8,461

(a)

 

9,923

(f)

 

10,458

 

 

10,626

 

Wealth management revenues

 

 

 

6,019

 

 

7,043

 

 

6,016

 

 

6,516

 

 

6,215

 

Mortgage banking activities

 

 

 

1,757

 

 

1,230

 

 

1,274

 

 

959

 

 

587

 

          Total banking and financial service revenues

 

 

 

18,239

 

 

16,734

 

 

17,213

 

 

17,933

 

 

17,428

 

FDIC shared-loss benefit (expense), net

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1,403

 (j)  

Other gains, net

 

 

 

275

 

 

81

 

 

699

(k)

 

6,953

(h)

 

243

 

           Total non-interest income, net

 

 

 

18,514

 

 

16,815

 

 

17,912

 

 

24,886

 

 

19,074

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

20,608

 

 

20,205

 

 

19,882

 

 

19,317

 

 

20,347

 

Rent and occupancy costs

 

 

 

7,768

 

 

8,546

 

 

8,276

 

 

8,537

 

 

7,198

 

Net loss on sale of foreclosed real estate and other repossessed assets

 

 

 

1,226

 

 

126

 (b)  

 

1,395

 

 

1,787

 

 

1,326

 

General and administrative expenses

 

 

 

20,100

 

 

16,350

(a)(c)

 

19,202

 

 

20,958

 

 

20,187

 

           Total operating expenses

 

 

 

49,702

 

 

45,227

 

 

48,755

 

 

50,599

 

 

49,058

 

Credit related expenses

 

 

 

2,419

 

 

1,435

 

 

1,714

 

 

2,217

 

 

2,626

 

           Total non-interest expense

 

 

 

52,121

 

 

46,662

 

 

50,469

 

 

52,816

 

 

51,684

 

Income before income taxes

 

 

 

24,927

 

 

18,759

 

 

3,879

 

 

21,097

 

 

24,354

 

Income tax expense

 

 

 

8,010

 

 

1,686

 

 

560

 

 

3,993

 (i)  

 

9,204

 

Net income

 

 

 

16,917

 

 

17,073

 

 

3,319

(d)

 

17,104

 

 

15,150

 

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

(1,838)

 

 

(1,838)

 

 

(1,838)

 

 

(1,837)

 

 

(1,838)

 

    Other preferred stock

 

 

 

(1,627)

 

 

(1,627)

 

 

(1,627)

 

 

(1,629)

 

 

(1,627)

 

Net income (loss) available to common shareholders

 

 

$

13,452

 

$

13,608

 

$

(146)

 

$

13,638

 

$

11,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the 4Q 2017, electronic banking fee income and  electronic banking expenses decreased $0.9 million and $1.0 million, respectively, from the prior quarter as a result of lower point of sale (POS) activity from our customers. The decrease is directly related to business interruption in several of our commercial clients from the lack of electricity.

(b) During the 4Q 2017, the Company generated higher gains in sale of foreclosed real estate by approximately $0.7 million and had lower write downs by approximately $0.6 million.

(c) During the 4Q 2017, the Company reversed $1.4 million expenses as a result of the settlement of regulatory and legal contingencies at a lower amount than estimated.

(d) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes.

(e) During Q3 2017, the Company recognized $3.1 million in cost recoveries from the Puerto Rico Housing Finance Authority ("PRHFA") loan with an outstanding principal balance of $10.9 million.

(f) During Q3 2017, the Company received $22.4 million from the pay-off before maturity of a loan previously classified as non-accrual. As a result, the Company recorded $4.1 million in interest income and $439 thousand in prepayment penalty income, included in banking service revenues.

(g) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value.  As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans.

(h) During Q2 2017, the Company sold $166.0 million of mortgage-backed securities and recorded a net gain on sale of securities of $6.8 million. Also, it sold $39.2 million Treasury Notes and recorded a net gain of $112 thousand. In addition, the Company unwound repurchase agreements in the amount of $100 million at a cost of $80 thousand.

(i) During Q2 2017, the effective income tax rate decreased as a result of higher proportion of exempt income and income subject to preferential rates mainly due to the gain in sale of investment portfolio.

(j) During Q1 2017, the Bank and the FDIC agreed to terminate the single family and commercial shared-loss agreements related to the FDIC assisted acquisition of Eurobank on April 30, 2010, resulting in a benefit of $1.4 million.

(k) During Q3 2017, the Company received $571 thousand, as final settlement from a 2009 claim of loss related to a private label collateralized obligation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 


 

 


 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3: Consolidated Statements of Financial Condition

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

(Dollars in thousands) (unaudited)

 

 

2018

 

2017

 

2017

 

2017

 

2017

 

Cash and cash equivalents

 

 

$

365,388

 

$

488,233

 

$

723,756

(c)

$

480,338

 

$

483,301

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

293

 

 

191

 

 

284

 

 

294

 

 

314

 

Investment securities available-for-sale, at fair value, with amortized cost of $815,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (December 31, 2017 - $648,799; September 30, 2017 - $611,936; June 30, 2017 - $649,280;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    March 31, 2017 - $796,558)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

784,972

 

 

629,124

 

 

596,222

 

 

584,930

(f)

 

741,405

 

    Other investment securities

 

 

 

16,669

 

 

16,673

 

 

17,201

 (d)  

 

64,397

 

 

58,637

 

          Total investment securities available-for-sale

 

 

 

801,641

 

 

645,797

 

 

613,423

 

 

649,327

 

 

800,042

 

Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $467,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (December 31, 2017 - $497,681; September 30, 2017 - $525,830; June 30, 2017 - $549,595;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     March 31, 2017 - $570,963)

 

 

 

485,143

 

 

506,064

 

 

530,178

 

 

555,407

 

 

577,997

 

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

11,499

 

 

13,995

 

 

14,016

 

 

16,616

 

 

17,161

 

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

3

 

 

3

 

          Total investments

 

 

 

1,298,579

 

 

1,166,050

 

 

1,157,904

 

 

1,221,647

 

 

1,395,517

 

Loans, net

 

 

 

4,133,429

 

 

4,056,329

 

 

3,964,572

 

 

4,091,866

 

 

4,089,708

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets

 

 

 

898

 

 

771

 

 

809

 

 

957

 

 

1,123

 

Prepaid expenses

 

 

 

7,625

 

 

9,734

 

 

13,070

 

 

17,117

 

 

15,496

 

Deferred tax asset, net

 

 

 

128,270

 

 

127,421

 

 

126,041

 

 

116,199

 

 

121,442

 

Foreclosed real estate and repossessed properties

 

 

 

45,396

 

 

47,721

 

 

51,104

 

 

53,448

 

 

50,820

 

Premises and equipment, net

 

 

 

67,163

 

 

67,860

 

 

67,994

 

 

69,836

 

 

69,786

 

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

Accounts receivable and other assets

 

 

 

114,304

 

 

138,865

(b)

 

96,898

 

 

98,349

 

 

101,345

 

Total assets

 

 

 $  

6,247,121

 

 $  

6,189,053

 

 $  

6,288,217

 

 $  

6,235,826

 

 $  

6,414,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

$

2,117,857

 

$

2,039,126

 

$

1,925,721

 

$

1,844,996

 

$

1,944,921

 

Savings accounts

 

 

 

1,228,646

 

 

1,204,514

 

 

1,311,515

 

 

1,115,669

 

 

1,174,581

 

Time deposits

 

 

 

1,012,329

 

 

1,037,310

 

 

1,053,568

 

 

1,053,110

 

 

1,022,447

 

Brokered deposits

 

 

 

474,596

 

 

518,532

 

 

535,600

 

 

568,911

 

 

575,879

 

          Total deposits

 

 

 

4,833,428

 

 

4,799,482

 

 

4,826,404

 

 

4,582,686

 

 

4,717,828

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

 

273,926

 

 

192,869

(a)

 

283,080

(e)

 

453,492

 

 

531,179

 

Advances from FHLB and other borrowings

 

 

 

44,328

 

 

99,796

 

 

100,091

 

 

137,717

 

 

105,133

 

Subordinated capital notes

 

 

 

36,083

 

 

36,083

 

 

36,083

 

 

36,083

 

 

36,083

 

          Total borrowings

 

 

 

354,337

 

 

328,748

 

 

419,254

 

 

627,292

 

 

672,395

 

Other liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

 

752

 

 

1,281

 

 

1,677

 

 

1,881

 

 

1,967

 

Acceptances outstanding

 

 

 

25,869

 

 

27,644

 

 

16,486

 

 

22,739

 

 

24,288

 

Accrued expenses and other liabilities

 

 

 

85,886

 

 

86,791

 

 

86,766

 

 

62,259

 

 

66,700

 

          Total liabilities

 

 

 

5,300,272

 

 

5,243,946

 

 

5,350,587

 

 

5,296,857

 

 

5,483,178

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

Common stock

 

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

 

Additional paid-in capital

 

 

 

541,404

 

 

541,600

 

 

541,302

 

 

541,005

 

 

540,808

 

Legal surplus

 

 

 

83,138

 

 

81,454

 

 

79,795

 

 

79,460

 

 

77,772

 

Retained earnings 

 

 

 

210,008

 

 

200,878

 

 

191,567

 

 

194,687

 

 

185,377

 

Treasury stock, at cost

 

 

 

(104,142)

 

 

(104,502)

 

 

(104,502)

 

 

(104,502)

 

 

(104,502)

 

Accumulated other comprehensive income (loss), net

 

 

 

(12,185)

 

 

(2,949)

 

 

842

 

 

(307)

 

 

3,348

 

          Total stockholders' equity

 

 

 

946,849

 

 

945,107

 

 

937,630

 

 

938,969

 

 

931,429

 

          Total liabilities and stockholders' equity

 

 

$

6,247,121

 

$

6,189,053

 

$

6,288,217

 

$

6,235,826

 

$

6,414,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the Q4 2017, the Company made an unwinding of $80 million repurchase agreements at no cost.

 

(b) At December 31, 2017, the Company had higher balances in accounts receivable and other assets mainly from accrued interest receivable of loans included in hurricane Maria moratorium program.

 

(c) At September 30, 2017, the Company had higher balances in cash and cash equivalents due to increased deposits and lower transaction outflows toward the end of the quarter from commercial customers.

 

(d) During Q3 2017, the Company sold $45.0 million US Treasury securities available for sale and recorded a gain of $4 thousand.

 

(e) During Q3 2017, $160.4 million in short-term repurchase agreements matured and were not renewed.

 

(f) During Q2 2017, the Company sold $166.0 million of mortgage-backed securities and recorded a net gain on sale of securities of $6.8 million. Also, it sold $39.2 million Treasury Notes and recorded a net gain of $112 thousand. In addition, the Company unwound repurchase agreements in the amount of $100 million at a cost of $80 thousand.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 


 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4: Information on Loan Portfolio and Production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

(Dollars in thousands) (unaudited)

 

 

2018

 

2017

 

2017

 

2017

 

2017

 

Non-acquired loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

$

 682,564  

 

$

  683,607

 

$

  694,476

 

$

  699,290

 

$

  709,863

 

      Commercial

 

 

 

 1,346,404  

 

 

 1,307,261  

 

 

 1,245,711  

 

 

 1,270,844  

(b)

 

 1,253,712  

 

      Consumer

 

 

 

 334,865  

 

 

  330,039

 

 

  316,357

 

 

  314,267

 

 

  300,412

 

      Auto

 

 

 

 957,197  

 

 

 883,985  

 

 

 831,437  

 

 

 807,204  

 

 

 786,606  

 

 

 

 

 

 3,321,030  

 

 

 3,204,892  

 

 

 3,087,981  

 

 

 3,091,605  

 

 

 3,050,593  

 

      Less:  Allowance for loan and lease losses

 

 

 

 (96,832) 

 

 

 (92,718) 

(a)

 

 (87,541) 

(a)

 

 (69,666) 

(b)

 

 (60,483) 

 

 

 

 

 

 3,224,198  

 

 

 3,112,174  

 

 

 3,000,440  

 

 

 3,021,939  

 

 

 2,990,110  

 

      Deferred loan costs, net

 

 

 

 7,125  

 

 

 6,695  

 

 

 6,592  

 

 

 6,574  

 

 

 6,464  

 

          Total non-acquired loans held for investment, net

 

 

 

 3,231,323  

 

 

 3,118,869  

 

 

 3,007,032  

 

 

 3,028,513  

 

 

 2,996,574  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BBVAPR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial

 

 

 

 4,222  

 

 

 4,380  

 

 

 4,612  

 

 

 5,350  

 

 

 5,436  

 

      Consumer

 

 

 

   27,235

 

 

    28,915

 

 

    29,464

 

 

    30,233

 

 

    31,001

 

      Auto

 

 

 

 16,171  

 

 

 21,969  

 

 

 26,562  

 

 

 33,661  

 

 

 42,523  

 

 

 

 

 

   47,628

 

 

    55,264

 

 

    60,638

 

 

    69,244

 

 

    78,960

 

      Less:  Allowance for loan and lease losses

 

 

 

 (3,184) 

 

 

 (3,862) 

(a)

 

 (3,363) 

(a)

 

 (3,348) 

 

 

 (3,615) 

 

 

 

 

 

   44,444

 

 

    51,402

 

 

    57,275

 

 

    65,896

 

 

    75,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

 

 526,089  

 

 

 532,053  

 

 

 532,948  

 

 

 544,325  

 

 

 558,112  

 

      Commercial

 

 

 

 230,988  

 

 

  243,092

 

 

  244,359

 

 

  266,002

 

 

  278,665

 

      Consumer

 

 

 

 932  

 

 

 1,431  

 

 

 1,598  

 

 

 2,163  

 

 

 3,201  

 

      Auto

 

 

 

   35,006

 

 

    43,696

 

 

    49,258

 

 

    58,078

 

 

    71,495

 

 

 

 

 

 793,015  

 

 

 820,272  

 

 

 828,163  

 

 

 870,568  

 

 

 911,473  

 

      Less:  Allowance for loan and lease losses

 

 

 

 (43,166) 

 

 

   (45,755)

(a)

 

   (40,110)

(a)

 

   (37,494)

 

 

   (34,930)

 

 

 

 

 

 749,849  

 

 

 774,517  

 

 

 788,053  

 

 

 833,074  

 

 

 876,543  

 

   Total Acquired BBVAPR loans, net

 

 

 

 794,293  

 

 

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