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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): October 19, 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 October 19, 2018, OFG Bancorp (the “Company”) announced the results for the quarter ended September 30, 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 October 19, 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: October 19, 2018

By:  

/s/ Maritza Arizmendi

 

 

Maritza Arizmendi

 

 

Executive Vice President and Chief Financial Officer 

         

 

 


(Back To Top)

Section 2: EX-99 (PRESS RELEASE)

 

 

 

Exhibit 99

 

OFG Bancorp Reports 3Q18 Results

SAN JUAN, Puerto Rico, October 19, 2018 – OFG Bancorp (NYSE: OFG) reported results for the third quarter ended September 30, 2018.

Net income available to shareholders was $19.6 million or $0.42 per fully diluted share, compared to 2Q18’s $16.2 million or $0.35 per fully diluted share and breakeven results in the year ago third quarter due to a special hurricanes related loan loss provision.

“EPS growth reflects another quarter of strong, consistent core growth based on the success of our strategy of differentiation – providing superior customer service, convenience and technology – coupled with Puerto Rico’s continued rebound following hurricanes that struck in September 2017,” said José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board.

Highlights

·        All key performance metrics improved, including net interest margin at 5.38%, return on average assets at 1.42%, return on average tangible common stockholders’ equity at 10.94%, and efficiency ratio at 50.58%.

·        Increased profitability was driven by new loan production of $354 million, higher average loan yields of 7.55%, annualized increase in average loan balances of 9.7%; and lower non-interest expenses.

·        Core deposit balances of $4.56 billion rose 3.2% from 2Q18 as customer count grew 1.2% sequentially and 4.0% year over year.

·        Tangible book value per common share of $16.23 at September 30, 2018 increased 6.8% annualized from June 30, 2018.

·        Regulatory capital is expected to benefit by $84.0 million as a result of the announcement in 3Q18 of the mandatory conversion effective Monday, October 22nd, of the Series C 8.750% Non-Cumulative Convertible Perpetual Preferred Stock.

Conference Call

A conference call to discuss OFG’s 3Q18 results, outlook and related matters will be held today at 10:00 AM Eastern Time. The call can be accessed live by dialing (888) 459-5609 or (973) 321-1024. Use conference ID 758-9354. The call can also be accessed live on OFG’s

 


 

website at www.ofgbancorp.com. Access the webcast link in advance to download any necessary software. A replay of the webcast will be available shortly thereafter.

CEO Comments

Mr. Fernández stated: “On behalf of OFG’s entire team, we are extremely proud to report another quarter of superior core growth across all facets of our business.

“3Q18 EPS is up more than 20% sequentially and significantly better year over year. All financial metrics continued to build strong momentum going forward.

“Key to our success has been the effectiveness of strategies we have been working on for years. This has enabled us to get closer to our commercial and retail customers through value-added service, increased convenience and highly efficient technology.

“With customer count up 4% year over year in the third quarter, we are achieving growth in part through increased customer adoption of automated and interactive teller machines, and online and mobile channels.

“Until now, economic activity has been driven primarily by businesses and consumers rebuilding. We believe businesses are starting to gain new confidence to invest and expand going forward. We are excited about our prospects for continued growth.”

Income Statement

Unless otherwise noted, the following compares data for the third quarter 2018 to the second quarter 2018.

      Interest Income: Increased 7.0% to $94.1 million, reflecting the following:

      From Originated Loans: Increased $5.7 million to $66.8 million, primarily due to higher average balances and higher yields.

      From Acquired Loans: Declined $0.1 million to $17.2 million, resulting from continued pay downs, mostly offset by cost recoveries.

      From Investment Securities: Increased $0.5 million to $10.1 million, primarily due to higher average cash balances and higher yields.

      Interest Expense: Increased 13.8% or $1.4 million to $11.9 million, due to higher average balances of deposits and borrowings, and higher rates.

      Total Provision for Loan and Lease Losses: Decreased 1.0% or $0.1 million to $14.6 million. Provision for originated loans increased $0.6 million due to growth of the portfolio while provision for acquired loans declined.

 


 

      Net Interest Margin: Increased 14 basis points to 5.38%. Excluding cost recoveries, NIM increased 6 basis points mainly due to higher yield on originated commercial loans, cash balances and investment securities, reflecting the general effect of Federal Reserve Board rate hikes and higher proportion of high yield commercial and auto portfolios.

      Total Banking and Wealth Management Revenues: Remained at a high level of $18.4 million as increases in Mortgage Banking and Wealth Management more than offset a slight decline in Banking Services.

      Total Non-Interest Expenses: Declined $1.4 million to $50.9 million primarily reflecting the absence of lease cancellation expenses in 2Q18 as part of an effort to bring more of our offices into Oriental Center and reduce occupancy costs next year.

      Effective Tax Rate: With its 3Q18 results, OFG now expects its estimated annual effective tax rate to be about 33.7% due to the higher proportion of profit generated by taxable loans.

Balance Sheet

Unless otherwise noted, the following compares data at September 30, 2018 to June 30, 2018.

      Total Loans Net: Increased 0.9% or $37.1 million to $4.35 billion as originated loans increased $97.4 million and acquired loans declined $59.1 million.

      New Loan Production: While lower than the recent high of $432.1 million in 2Q18, production remained strong at $354.0 million due to:

      Record auto lending of $140.4 million, up 7.1% from 2Q18, reflecting continued pent up demand and the market’s adjustment to one less competitor in auto lending.

      High levels of commercial lending at $105.3 million, consumer lending at $43.0 million, and residential mortgage lending at $27.9 million as businesses and retail customers began to embrace market opportunities in the aftermath of the reconstruction and recovery from last year’s hurricane.

      The recently established OFG USA program added $37.4 million, reflecting seasonally lower deal flow compared to 2Q18.

      Cash and Cash Equivalents: Increased 44.5% or $168.4 million to $546.8 million, reflecting the increase in deposits.

 


 

      Total Investments: Declined 3.5% or $47.0 million to $1.31 billion. OFG retained a lower amount of originated mortgages as Mortgage Backed Securities.

      Customer Deposits (excluding brokered): Increased $139.3 million to $4.56 billion, up 3.2% and 6.2% from June 30, 2018 and September 30, 2017, respectively. Average non-interest bearing accounts remained approximately level at $1.08 billion compared to June 30, 2018.

      Total Borrowings: Declined $64.2 million to $488.0 million as OFG paid down FHLB advances.

      Total Stockholders’ Equity: Increased $12.1 million to a recent high of $969.9 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

Unless otherwise noted, the following compares data on the originated loan portfolio at September 30, 2018 to June 30, 2018.

      Delinquency Rates: The early delinquency rate increased 25 basis points to 3.32% and the total delinquency rate increased 24 basis points to 6.19% in line with pre-hurricanes levels.

      Non-Performing Loan Rate: Declined 18 basis points to 3.45%, primarily reflecting a decline in the commercial rate.

      Allowance for Loan and Lease Losses: Increased 1.1% or $1.0 million to $95.2 million, primarily reflecting the growth of originated loans.

      Net Charge-Off Rate: Decreased 42 basis points to 1.39% primarily due to a 199 basis points decline in auto lending compared to 2Q18 when most of the remaining hurricane related charge-offs were taken.

Capital Position

Capital for the quarter ended September 30, 2018 continued to be significantly above regulatory requirements for a well-capitalized institution, with Tangible Common Equity Ratio at 10.88%, Tangible Book Value per common share at $16.23, Common Equity Tier 1 Capital Ratio at 14.38%, and Total Risk-Based Capital Ratio at 19.84%.

Financial Supplement

 


 

OFG’s Financial Supplement, with full financial tables for the quarter ended September 30, 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 September 30, 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

 

6-7

 

 

Table  6:

 

Loan Information and Performance Statistics (Excluding Acquired Loans)

 

8-9

 

 

Table  7:

 

Allowance for Loan and Lease Losses

 

10

 

 

Table  8:

 

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

 

 

 

 

 

 

   with Deteriorated Credit Quality, Including those by Analogy)

 

11

 

 

Table  9:

 

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

 

 

 

 

 

 

   Capital

 

12-13

 

 

Table  10:

 

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

 

 

 

 

 

 

  Financial Statements (Tables 1-9)

 

14

 

 


 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Financial and Statistical Summary - Consolidated

 

 

 

 

2018

 

2018

 

2018

 

2017

 

2017

 

2018

 

2017

 

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

 

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

YTD

 

YTD

 

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

82,277

 

$

77,588

 

$

73,994

 

$

73,513

 

$

80,478

 

$

233,859

 

$

230,659

 

Non-interest income, net (core)

(2)

 

 

18,446

 

 

18,394

 

 

18,239

 

 

16,734

 

 

17,213

 

 

55,079

 

 

52,574

 

Non-interest expense

 

 

 

50,941

 

 

52,300

 

 

52,121

 

 

46,662

 

 

50,469

 

 

155,362

 

 

154,969

 

Pre-provision net revenues

(21)

 

 

49,956

 

 

43,991

 

 

40,387

 

 

43,666

 

 

47,921

 

 

134,334

 

 

137,562

 

Provision for loan and lease losses

 

 

 

14,601

 

 

14,747

 

 

15,460

 

 

24,907

(a)

 

44,042

(a)

 

44,808

(b)

 

88,232

(a)(b)

Net income before income taxes

 

 

 

35,355

 

 

29,244

 

 

24,927

 

 

18,759

 

 

3,879

 

 

89,526

 

 

49,330

 

Income tax expense

 

 

 

12,255

 

 

9,595

 

 

8,010

 

 

1,686

 

 

560

 

 

29,860

 

 

13,757

 

Net income

 

 

$

23,100

 

$

19,649

 

$

16,917

 

$

17,073

 (a)  

$

3,319

 (a)  

$

59,666

 

$

35,573

 

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

(3)

 

$

0.45

 

$

0.36

 

$

0.31

 

$

0.31

 (a)  

$

-

 (a)  

$

1.12

 

$

0.57

 

Earnings per common share - diluted

(4)

 

$

0.42

 

$

0.35

 

$

0.30

 

$

0.30

(a)

$

-

(a)

$

1.07

 

$

0.56

 

Average common shares outstanding

 

 

 

43,996

 

 

43,975

 

 

43,955

 

 

43,947

 

 

43,947

 

 

43,975

 

 

43,937

 

Average common shares outstanding and equivalents

 

 

 

51,464

 

 

51,226

 

 

51,121

 

 

51,104

 

 

51,102

 

 

51,344

 

 

51,095

 

Cash dividends per common share

 

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.18

 

$

0.18

 

Book value per common share (period end)

 

 

$

18.27

 

$

18.01

 

$

17.76

 

$

17.73

 

$

17.56

 

$

18.27

 

$

17.56

 

Tangible book value per common share (period end)

(5)

 

$

16.23

 

$

15.96

 

$

15.71

 

$

15.67

 

$

15.49

 

$

16.23

 

$

15.49

 

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(6)

 

$

4,414,583

 

$

4,310,206

 

$

4,183,775

 

$

4,081,427

 

$

4,062,042

 

$

4,306,019

 

$

4,170,048

 

Interest-earning assets

 

 

 

6,066,821

 

 

5,933,775

 

 

5,751,783

 

 

5,735,593

 

 

5,658,953

 

 

5,918,041

 

 

5,875,859

 

Total assets

 

 

 

6,514,532

 

 

6,374,240

 

 

6,189,752

 

 

6,191,737

 

 

6,046,139

 

 

6,360,715

 

 

6,231,725

 

Total deposits

 

 

 

4,934,175

 

 

4,848,456

 

 

4,775,396

 

 

4,772,685

 

 

4,609,633

 

 

4,855,360

 

 

4,657,171

 

Interest-bearing deposits

 

 

 

3,854,342

 

 

3,766,311

 

 

3,756,607

 

 

3,835,357

 

 

3,774,378

 

 

3,792,778

 

 

3,822,846

 

Borrowings

 

 

 

503,268

 

 

462,614

 

 

351,793

 

 

374,059

 

 

462,035

 

 

439,810

 

 

596,413

 

Stockholders' equity

 

 

 

973,838

 

 

959,777

 

 

952,151

 

 

943,823

 

 

947,404

 

 

962,187

 

 

937,456

 

Common stockholders' equity

 

 

 

807,968

 

 

793,907

 

 

786,281

 

 

777,953

 

 

781,534

 

 

796,317

 

 

771,586

 

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(7)

 

 

5.38%

 

 

5.24%

 

 

5.22%

 

 

5.08%

 

 

5.64%

 

 

5.28%

 

 

5.25%

 

Return on average assets

(8)

 

 

1.42%

 

 

1.23%

 

 

1.09%

 

 

1.10%

 (a)  

 

0.22%

 (a)  

 

1.25%

 

 

0.76%

 

Return on average tangible common stockholders' equity

(9)

 

 

10.94%

 

 

9.20%

 

 

7.73%

 

 

7.92%

 

 

-0.08%

 

 

9.30%

 

 

4.94%

 

Efficiency ratio

(10)

 

 

50.58%

 

 

54.49%

 

 

56.51%

 

 

51.70%

 

 

51.66%

 

 

53.77%

 

 

54.71%

 

Full-time equivalent employees, period end

 

 

 

1,365

 

 

1,354

 

 

1,367

 

 

1,421

 

 

1,464

 

 

1,365

 

 

1,464

 

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

 

 

$

95,236

 

$

94,218

 

$

96,832

 

$

92,718

 (a)  

 $  

87,541

(a)

$

95,236

 

$

87,541

 (a)(b)  

    Allowance as a % of loans held for investment

 

 

 

2.62%

 

 

2.66%

 

 

2.92%

 

 

2.89%

(a)

 

2.83%

(a)

 

2.62%

 

 

2.83%

 

    Net charge-offs

 

 

$

12,402

 

$

15,449

 

$

10,844

 

$

10,466

 

$

11,815

 

$

38,695

 

$

36,002

 (b)  

    Net charge-off rate

(11)

 

 

1.39%

 

 

1.81%

 

 

1.34%

 

 

1.35%

 

 

1.54%

 

 

1.20%

 

 

1.15%

(b)

    Early delinquency rate (30 - 89 days past due)

 

 

 

3.32%

 

 

3.07%

 

 

3.20%

 

 

1.82%

 (c)  

 

3.79%

 

 

3.32%

 

 

3.79%

 

    Total delinquency rate (30 days and over)

 

 

 

6.19%

 

 

5.95%

 

 

6.25%

 

 

4.61%

(c)

 

6.84%

 

 

6.19%

 

 

6.84%

 

Capital Ratios (Non-GAAP)

(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

13.93%

 

 

13.92%

 

 

14.07%

 

 

13.92%

 

 

14.07%

 

 

13.93%

 

 

14.07%

 

Common equity Tier 1 capital ratio

 

 

 

14.38%

 

 

14.14%

 

 

14.52%

 

 

14.59%

 

 

14.89%

 

 

14.38%

 

 

14.89%

 

Tier 1 risk-based capital ratio

 

 

 

18.55%

 

 

18.38%

 

 

19.00%

 

 

19.05%

 

 

19.53%

 

 

18.55%

 

 

19.53%

 

Total risk-based capital ratio

 

 

 

19.84%

 

 

19.67%

 

 

20.29%

 

 

20.34%

 

 

20.82%

 

 

19.84%

 

 

20.82%

 

Tangible common equity ("TCE") ratio

 

 

 

10.88%

 

 

10.95%

 

 

11.22%

 

 

11.29%

 

 

10.98%

 

 

10.88%

 

 

10.98%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 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) 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

 

Nine-Months Ended

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

September 30,

 

September 30,

 

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

 

 

2018

 

2018

 

2018

 

2017

 

2017

 

2018

 

2017

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

66,843

 

 $  

61,183

 

$

56,781

 

$

56,183

 

 $  

58,939

(e)

$

184,807

 

 $  

164,343

 

    Acquired BBVAPR loans

 

 

 

13,688

 

 

13,880

 

 

14,490

 

 

15,310

 

 

19,189

(d)

 

42,058

 

 

56,026

 

    Acquired Eurobank loans

 

 

 

3,485

 

 

3,366

 

 

3,341

 

 

3,573

 

 

4,339

 

 

10,192

 

 

16,986

 

          Total interest income from loans

 

 

 

84,016

 

 

78,429

 

 

74,612

 

 

75,066

 

 

82,467

 

 

237,057

 

 

237,355

 

Investment securities

 

 

 

10,121

 

 

9,577

 

 

8,558

 

 

8,108

 

 

7,888

 

 

28,256

 

 

25,118

 

          Total interest income

 

 

 

94,137

 

 

88,006

 

 

83,170

 

 

83,174

 

 

90,355

 

 

265,313

 

 

262,473

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

5,877

 

 

5,517

 

 

5,412

 

 

5,613

 

 

5,438

 

 

16,806

 

 

16,474

 

    Brokered deposits

 

 

 

2,728

 

 

2,134

 

 

1,886

 

 

2,079

 

 

2,163

 

 

6,748

 

 

6,132

 

           Total deposits

 

 

 

8,605

 

 

7,651

 

 

7,298

 

 

7,692

 

 

7,601

 

 

23,554

 

 

22,606

 

Borrowings

 

 

 

3,255

 

 

2,767

 

 

1,878

 

 

1,969

 

 

2,276

 

 

7,900

 

 

9,208

 

           Total interest expense

 

 

 

11,860

 

 

10,418

 

 

9,176

 

 

9,661

 

 

9,877

 

 

31,454

 

 

31,814

 

Net interest income

 

 

 

82,277

 

 

77,588

 

 

73,994

 

 

73,513

 

 

80,478

 

 

233,859

 

 

230,659

 

    Provision for loan and lease losses, excluding acquired loans

 (1)  

 

 

13,420

 

 

12,835

 

 

14,958

 

 

15,643

 (c)  

 

29,690

 (c)  

 

41,213

 

 

64,926

 (c)  

    Provision for acquired BBVAPR loan and lease losses

(1)

 

 

875

 

 

1,247

 

 

363

 

 

7,112

(c)

 

11,811

(c)

 

2,485

 

 

18,772

(c)

    Provision (recapture) for acquired Eurobank loan and lease losses

 (1)  

 

 

306

 

 

665

 

 

139

 

 

2,152

 (c)  

 

2,541

 (c)  

 

1,110

 

 

4,534

 (c)  

          Total provision for loan and lease losses, net

 

 

 

14,601

 

 

14,747

 

 

15,460

 

 

24,907

(c)

 

44,042

(c)

 

44,808

 

 

88,232

(c)

           Net interest income after provision for loan and lease losses

 

 

 

67,676

 

 

62,841

 

 

58,534

 

 

48,606

 

 

36,436

 

 

189,051

 

 

142,427

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

10,797

 

 

11,144

 

 

10,463

 

 

8,461

(a)

 

9,923

(e)

 

32,404

 

 

31,007

 

Wealth management revenues

 

 

 

6,407

 

 

6,262

 

 

6,019

 

 

7,043

 

 

6,016

 

 

18,688

 

 

18,747

 

Mortgage banking activities

 

 

 

1,242

 

 

988

 

 

1,757

 

 

1,230

 

 

1,274

 

 

3,987

 

 

2,820

 

          Total banking and financial service revenues

 

 

 

18,446

 

 

18,394

 

 

18,239

 

 

16,734

 

 

17,213

 

 

55,079

 

 

52,574

 

FDIC shared-loss benefit (expense), net

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1,403

 (g)

Other gains, net

 

 

 

174

 

 

309

 

 

275

 

 

81

 

 

699

(j)

 

758

 

 

7,895

(f)

           Total non-interest income, net

 

 

 

18,620

 

 

18,703

 

 

18,514

 

 

16,815

 

 

17,912

 

 

55,837

 

 

61,872

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

18,495

 

 

18,099

 

 

20,608

 

 

20,205

 

 

19,882

 

 

57,202

 

 

59,546

 

Rent and occupancy costs

 

 

 

8,388

 

 

9,166

 

 

7,768

 

 

8,546

 

 

8,276

 

 

25,322

 

 

24,011

 

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

 

 

 

1,210

 

 

392

 

 

1,226

 

 

126

 

 

1,395

 

 

2,828

 

 

4,508

 

General and administrative expenses

 

 

 

20,112

 

 

22,746

 

 

20,100

 

 

16,350

(a)(b)

 

19,202

 

 

62,958

 

 

60,347

 

           Total operating expenses

 

 

 

48,205

 

 

50,403

 

 

49,702

 

 

45,227

 

 

48,755

 

 

148,310

 

 

148,412

 

Credit related expenses

 

 

 

2,736

 

 

1,897

 

 

2,419

 

 

1,435

 

 

1,714

 

 

7,052

 

 

6,557

 

           Total non-interest expense

 

 

 

50,941

 

 

52,300

 

 

52,121

 

 

46,662

 

 

50,469

 

 

155,362

 

 

154,969

 

Income before income taxes

 

 

 

35,355

 

 

29,244

 

 

24,927

 

 

18,759

 

 

3,879

 

 

89,526

 

 

49,330

 

Income tax expense

 

 

 

12,255

 

 

9,595

 

 

8,010

 

 

1,686

 

 

560

 

 

29,860

 

 

13,757

 

Net income

 

 

 

23,100

 

 

19,649

 

 

16,917

 

 

17,073

 

 

3,319

(c)

 

59,666

 

 

35,573

(c)

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

(1,838)

 

 

(1,837)

 

 

(1,838)

 

 

(1,838)

 

 

(1,838)

 

 

(5,513)

 

 

(5,513)

 

    Other preferred stock

 

 

 

(1,628)

 

 

(1,628)

 

 

(1,627)

 

 

(1,627)

 

 

(1,627)

 

 

(4,883)

 

 

(4,883)

 

Net income (loss) available to common shareholders

 

 

$

19,634

 

$

16,184

 

$

13,452

 

$

13,608

 

$

(146)

(c)

$

49,270

 

$

25,177

(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 reversed $1.4 million expenses as a result of the settlement of regulatory and legal contingencies at a lower amount estimated.

 

(c) 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 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.

+

(d) 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.

 

(e) 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.

 

(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.

 

(g) 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 


 

 


 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3: Consolidated Statements of Financial Condition

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

(Dollars in thousands) (unaudited)

 

 

2018

 

2018

 

2018

 

2017

 

2017

 

Cash and cash equivalents

 

 

$

546,780

 

$

378,365

 

$

365,388

 

$

488,233

 

$

723,756

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

405

 

 

418

 

 

293

 

 

191

 

 

284

 

Investment securities available-for-sale, at fair value, with amortized cost of $872,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (June 30, 2018 - $890,308; March 31, 2018 - $815,970; December 31, 2017 - $648,799;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     September 30, 2017 - $611,936)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

834,538

 

 

855,686

 

 

784,972

 

 

629,124

 

 

596,222

 

    Other investment securities

 

 

 

14,014

 

 

16,655

 

 

16,669

 

 

16,673

 

 

17,201

 

          Total investment securities available-for-sale

 

 

 

848,552

 

 

872,341

 

 

801,641

 

 

645,797

 

 

613,423

 

Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $425,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (June 30, 2018 - $447,947; March 31, 2018 - $467,980; December 31, 2017 - $497,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     September 30, 2017 - $525,830)

 

 

 

444,679

 

 

465,427

 

 

485,143

 

 

506,064

 

 

530,178

 

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

12,461

 

 

14,919

 

 

11,499

 

 

13,995

 

 

14,016

 

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

3

 

 

3

 

          Total investments

 

 

 

1,306,100

 

 

1,353,108

 

 

1,298,579

 

 

1,166,050

 

 

1,157,904

 

Loans, net

 

 

 

4,352,980

 

 

4,315,866

 

 

4,133,429

 

 

4,056,329

 

 

3,964,572

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets

 

 

 

1,265

 

 

1,100

 

 

898

 

 

771

 

 

809

 

Prepaid expenses

 

 

 

13,461

 

 

11,127

 

 

7,625

 

 

9,734

 

 

13,070

 

Deferred tax asset, net

 

 

 

122,934

 

 

125,141

 

 

128,270

 

 

127,421

 

 

126,041

 

Foreclosed real estate and repossessed properties

 

 

 

42,014

 

 

46,035

 

 

45,396

 

 

47,721

 

 

51,104

 

Premises and equipment, net

 

 

 

67,762

 

 

66,174

 

 

67,163

 

 

67,860

 

 

67,994

 

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

Accounts receivable and other assets

 

 

 

117,309

 

 

118,577

 

 

114,304

 

 

138,865

(d)

 

96,898

 

Total assets

 

 

 $  

6,656,674

 

 $  

6,501,562

 

 $  

6,247,121

 

 $  

6,189,053

 

 $  

6,288,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

$

2,304,067

 

$

2,176,935

 

$

2,117,857

 

$

2,039,126

 

$

1,925,721

 

Savings accounts

 

 

 

1,216,190

 

 

1,219,159

 

 

1,228,646

 

 

1,204,514

 

 

1,311,515

 

Time deposits

 

 

 

1,037,858

 

 

1,022,682

 

 

1,012,329

 

 

1,037,310

 

 

1,053,568

 

Brokered deposits

 

 

 

530,878

 

 

461,425

 

 

474,596

 

 

518,532

 

 

535,600

 

          Total deposits

 

 

 

5,088,993

 

 

4,880,201

 

 

4,833,428

 

 

4,799,482

 

 

4,826,404

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

 

378,237

 

 

387,770

(b)

 

273,926

(b)

 

192,869

(c)

 

283,080

 

Advances from FHLB and other borrowings

 

 

 

73,723

 

 

128,413

 (a)  

 

44,328

 

 

99,796

 

 

100,091

 

Subordinated capital notes

 

 

 

36,083

 

 

36,083

 

 

36,083

 

 

36,083

 

 

36,083

 

          Total borrowings

 

 

 

488,043

 

 

552,266

 

 

354,337

 

 

328,748

 

 

419,254

 

Other liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

 

622

 

 

679

 

 

752

 

 

1,281

 

 

1,677

 

Acceptances outstanding

 

 

 

28,682

 

 

30,578

 

 

25,869

 

 

27,644

 

 

16,486

 

Accrued expenses and other liabilities

 

 

 

80,448

 

 

80,019

 

 

85,886

 

 

86,791

 

 

86,766

 

          Total liabilities

 

 

 

5,686,788

 

 

5,543,743

 

 

5,300,272

 

 

5,243,946

 

 

5,350,587

 

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

 

 

 

542,078

 

 

541,734

 

 

541,404

 

 

541,600

 

 

541,302

 

Legal surplus

 

 

 

87,563

 

 

85,249

 

 

83,138

 

 

81,454

 

 

79,795

 

Retained earnings 

 

 

 

236,120

 

 

221,441

 

 

210,008

 

 

200,878

 

 

191,567

 

Treasury stock, at cost

 

 

 

(103,706)

 

 

(103,969)

 

 

(104,142)

 

 

(104,502)

 

 

(104,502)

 

Accumulated other comprehensive (loss) income, net

 

 

 

(20,795)

 

 

(15,262)

 

 

(12,185)

 

 

(2,949)

 

 

842

 

          Total stockholders' equity

 

 

 

969,886

 

 

957,819

 

 

946,849

 

 

945,107

 

 

937,630

 

          Total liabilities and stockholders' equity

 

 

$

6,656,674

 

$

6,501,562

 

$

6,247,121

 

$

6,189,053

 

$

6,288,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During Q2 2018, the Company received from the Federal Home Loan Bank of New York $70 million of advances.

 

(b) During Q2 2018 and Q1 2018, the Company bought $197 million and $91 million, respectively,  of repurchase agreements to finance the investment securities purchases.

 

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

 

(d) 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4