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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): January 22, 2019

 

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 January 22, 2019, OFG Bancorp (the “Company”) announced the results for the quarter ended December 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 January 22, 2019.

 

 

 

 

  

 


 

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: January 22, 2019

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 4Q18 & 2018 Results

SAN JUAN, Puerto Rico, January 22, 2019 – OFG Bancorp (NYSE: OFG) reported results for the fourth quarter and year ended December 31, 2018.

4Q18 Summary

·        Net income available to shareholders of $23.1 million or $0.45 per fully diluted share compared to 3Q18’s $19.6 million or $0.42 per share and 4Q17’s $13.6 million or $0.30 per share.

·        Originated loan growth of 3.0% from the preceding quarter to $3.66 billion, with new loan production of $323.0 million, continuing to exceed $300 million for the fourth consecutive quarter.

·        Strong performance metrics, with net interest margin of 5.26%, return on average assets of 1.50%, return on average tangible common stockholders’ equity of 11.67%, and efficiency ratio of 51.06%.

·        Record total stockholders’ equity of approximately $1 billion, with book value per common share of $17.90, tangible book value per common share of $16.15, and capital metrics at multi-year highs.

·        Common equity increased $84.0 million and preferred dividend payments dropped 53.0% from the preceding quarter with the conversion into common stock of the Series C 8.750% Non-Cumulative Convertible Perpetual Preferred Stock.

·        16.7% increase in the regular quarterly cash dividend per common share to $0.07, resulting in an annualized rate of $0.28 per share.

2018 Summary

Net income available to shareholders of $72.4 million or $1.52 per fully diluted share compared to 2017’s $38.8 million or $0.88 per share. 2017 included a $32.4 million pre-tax loan loss provision related to the hurricanes.

CEO Comment

“OFG achieved strong core growth in 4Q18 and 2018 based on the continued success of our strategy of differentiation – providing superior customer service, convenience and technology – coupled with Puerto Rico’s emerging economic rebound,” said José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board.

“Our plan is working. For the year as a whole, we generated impressive results across the board, with originated loans up 17.3%, average deposits up 6.4%, customer count up 4.6%, and stockholders’

 


 

equity up 5.8%, as well as achieving improved credit quality, converting our Series C preferred, and increasing our quarterly dividend.

“Thanks go to our entire OFG team for their commitment and dedication and to all our retail and commercial customers for their support and loyalty. We plan to continue to focus on our growth strategies in 2019, capitalizing on our momentum, continuing to make our services better – fácil, rápido, hecho (easy, fast, done) – and developing fresh ways to employ digital technology to the benefit of customers.”

Conference Call

A conference call to discuss OFG’s 4Q18 results, outlook and related matters will be held today at 10:00 AM Eastern Time. The call can be accessed live by dialing (888) 562-3356 or (973) 582-2700. Use conference ID 378-7416. 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 webcast replay will be available shortly thereafter.

Income Statement

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

      Interest Income: Increased 1.0% or $1.0 million to $95.1 million. Originated Loans increased $2.4 million due to higher average balances and a 7 basis point yield increase. Acquired Loans declined $2.1 million due to pay downs and $1.2 million in lower cost recoveries. Investment Securities increased $0.7 million due to higher average balances and yields on cash and cash equivalents.

      Interest Expense: Increased 10.2% or $1.2 million to $13.1 million, reflecting higher average deposit and borrowing balances and rates. The rate on customer deposits increased only 4 basis points.

      Total Provision for Loan and Lease Losses: Decreased 22.6% or $3.3 million to $11.3 million. Provision for originated loans declined $2.6 million. This reflected $1.8 million cash recovery on the sale of previously charged-off loans and reduced need for provisioning on the existing portfolio. Provision for acquired loans declined $0.7 million due to improved performance in the former BBVA PR portfolio.

      Net Interest Margin: Excluding cost recoveries, core NIM was 5.21% compared to 5.25%. OFG’s continued high NIM reflected higher yield on originated commercial loans and cash balances due to the effect of the September Federal Reserve Board rate hike. It also reflected higher proportion of higher yielding commercial and auto loans in the originated portfolio.

      Total Banking and Wealth Management Revenues: Increased 4.4% or $0.8 million to $19.3 million. Banking service revenues increased $0.4 million due to higher transaction volume from continued strength of the local economy and year-end holiday shopping. Wealth Management increased $0.8 million due to $1.3 million from the receipt of seasonal insurance commissions, partially offset by lower broker-dealer commissions. Mortgage banking declined $0.4 million due to lower MSR valuation.

      Other Non-Interest Income: Totaled $5.0 million due to a cash payment from OFG’s insurance company covering Hurricane Maria’s impact on operations.

 


 

      Total Non-Interest Expenses: Increased 1.5% or $0.8 million to $51.7 million. This reflected a variety of items, such as one additional payroll date and year-end accrual for performance related compensation, lower appraisal of foreclosed real estate, lower rent and occupancy costs, and the absence of municipal tax payments made in 3Q18.

      Effective Tax Rate: 4Q18 included a non-cash expense of $4.1 million reflecting the net impact of changes required as a consequence of the new Puerto Rico tax reform legislation. The tax reform reduces the corporate tax rate by 1.5% in 2019 which necessitated a Deferred Tax Asset write-down. Due to other provisions in the tax reform OFG does not expect significant changes on its 2019 ETR. The 2018 ETR was 33.6%.

Balance Sheet

Unless otherwise noted, the following compares data at December 31, 2018 to September 30, 2018.

      Total Loans Net: Increased 1.8% or $78.6 million to $4.43 billion. Originated loans increased 3.0% or $107.7 million. Acquired loans declined $30.5 million. New loan production totaled $323.0 million, with auto lending at $123.8 million, commercial lending at $92.1 million, consumer lending at $42.1 million, residential mortgage lending at $33.4 million, and OFG USA loan participations at $31.7 million.

      Total Investments: Declined 2.0% or $26.5 million to $1.28 billion due to repayments of mortgage backed securities.

      Cash and Cash Equivalents: Average balances increased 33.7% or $109.6 million to $434.7 million, while quarter-end cash declined 17.7% or $96.7 million to $450.1 million.

      Customer Deposits (excluding brokered): Average balances increased 1.0% or $45.8 million to $4.46 billion, while quarter-end deposits decreased 3.8% or $175.1 million to $4.38 billion, mainly related to fluctuations in insurance companies’ deposits.

      Total Borrowings: Average balances increased 8.1% or $40.7 million to $543.9 million, while quarter-end borrowings increased 16.9% or $82.4 million to $570.4 million.

      Total Stockholders’ Equity: Increased $30.0 million or 3.1% to $999.9 million, reflecting increased retained earnings and legal surplus and reduced accumulated other comprehensive loss.

 

 

 


 

Credit Quality

Unless otherwise noted, the following compares data on the originated loan portfolio at December 31, 2018 to September 30, 2018.

      Credit quality: Remained strong with minor variations in key metrics. Non-performing loan rate, at 3.28%, was down 17 basis points. Allowance for loan losses remained level at $95.2 million. As a percentage of loans, the allowance, at 2.54%, was down 8 basis points. Early and total delinquency rates, at 3.34% and 6.36%, respectively, were up 2 and 17 basis points.

      Net Charge-Offs: The rate fell 20 basis points to 1.19% and actual net charge-offs dropped 12.2% or $1.5 million. Both metrics reflected the $1.8 million recovery on the sale of previously charged-off loans.

Capital Position

Unless otherwise noted, the following compares data at December 31, 2018 to September 30, 2018.

      Capital continued to be significantly above regulatory requirements for a well-capitalized institution: This reflected earnings growth as well as the conversion of Series C into common stock.

      Capital Ratios: Metrics improved across the board, with Leverage at 14.22%, Common Equity Tier 1 at 16.78%, Tier 1 Risk-based at 19.20%, and Total Risk-based Capital at 20.48%, and Tangible Common Equity at 12.76%.

Financial Supplement

OFG’s Financial Supplement, with full financial tables for the quarter and year ended December 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) changes to the financial condition of 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 55th 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 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 December 31, 2018 Annual Report on Form 10-K 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

 

2018

 

2017

 

2018

 

2017

 

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

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

YTD

 

YTD

 

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

82,035

 

$

82,277

 

$

77,588

 

$

73,994

 

$

73,513

 

$

315,894

 

$

304,172

 

Non-interest income, net (core)

(2)

 

 

19,260

 

 

18,446

 

 

18,394

 

 

18,239

 

 

16,734

 

 

74,339

 

 

69,308

 

Non-interest expense

 

 

 

51,719

 

 

50,941

 

 

52,300

 

 

52,121

 

 

46,662

 

 

207,081

 

 

201,631

 

Pre-provision net revenues

(21)

 

 

54,574

 

 

49,956

 

 

43,991

 

 

40,387

 

 

43,666

 

 

188,908

 

 

181,228

 

Provision for loan and lease losses

 

 

 

11,300

(c)

 

14,601

 

 

14,747

 

 

15,460

 

 

24,907

(d)

 

56,108

 

 

113,139

(d)(e)

Net income before income taxes

 

 

 

43,274

 

 

35,355

 

 

29,244

 

 

24,927

 

 

18,759

 

 

132,800

 

 

68,089

 

Income tax expense

 

 

 

18,530

 

 

12,255

 

 

9,595

 

 

8,010

 

 

1,686

 

 

48,390

 

 

15,443

 

Net income

 

 

$

24,744

 

$

23,100

 

$

19,649

 

$

16,917

 

$

17,073

 (d)  

$

84,410

 

$

52,646

 

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

(3)

 

$

0.47

 

$

0.45

 

$

0.37

 

$

0.31

 

$

0.31

 (d)  

$

1.59

 

$

0.88

 

Earnings per common share - diluted

(4)

 

$

0.45

 

$

0.42

 

$

0.35

 

$

0.30

 

$

0.30

(d)

$

1.52

 

$

0.88

 

Average common shares outstanding

 

 

 

49,628

 (a)  

 

43,996

 

 

43,975

 

 

43,955

 

 

43,947

 

 

45,400

 (a)  

 

43,939

 

Average common shares outstanding and equivalents

 

 

 

51,602

 

 

51,464

 

 

51,226

 

 

51,121

 

 

51,104

 

 

51,349

 

 

51,096

 

Cash dividends per common share

 

 

$

0.07

 (b)  

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.25

 (b)  

$

0.24

 

Book value per common share (period end)

 

 

$

17.90

(a)

$

18.27

 

$

18.01

 

$

17.76

 

$

17.73

 

$

17.90

(a)

$

17.73

 

Tangible book value per common share (period end)

(5)

 

$

16.15

 (a)  

$

16.23

 

$

15.96

 

$

15.71

 

$

15.67

 

$

16.15

 (a)  

$

15.67

 

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(6)

 

$

4,473,114

 

$

4,414,583

 

$

4,310,206

 

$

4,183,775

 

$

4,081,427

 

$

4,348,135

 

$

4,125,804

 

Interest-earning assets

 

 

 

6,183,567

 

 

6,066,821

 

 

5,933,775

 

 

5,751,783

 

 

5,735,593

 

 

5,985,524

 

 

5,818,598

 

Total assets

 

 

 

6,619,026

 

 

6,514,532

 

 

6,374,240

 

 

6,189,752

 

 

6,191,737

 

 

6,425,811

 

 

6,256,827

 

Total deposits

 

 

 

4,987,275

 

 

4,934,175

 

 

4,848,456

 

 

4,775,396

 

 

4,772,685

 

 

4,889,584

 

 

4,686,287

 

Interest-bearing deposits

 

 

 

3,866,676

 

 

3,854,342

 

 

3,766,311

 

 

3,756,607

 

 

3,835,357

 

 

3,811,406

 

 

3,826,000

 

Borrowings

 

 

 

543,920

 

 

503,268

 

 

462,614

 

 

351,793

 

 

374,059

 

 

466,051

 

 

540,367

 

Stockholders' equity

 

 

 

983,015

 

 

973,838

 

 

959,777

 

 

952,151

 

 

943,823

 

 

967,437

 

 

944,492

 

Common stockholders' equity

 

 

 

881,971

 

 

807,968

 

 

793,907

 

 

786,281

 

 

777,953

 

 

817,907

 

 

778,622

 

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(7)

 

 

5.26%

 

 

5.38%

 

 

5.24%

 

 

5.22%

 

 

5.08%

 

 

5.28%

 

 

5.23%

 

Return on average assets

(8)

 

 

1.50%

 

 

1.42%

 

 

1.23%

 

 

1.09%

 

 

1.10%

 (d)  

 

1.31%

 

 

0.84%

 

Return on average tangible common stockholders' equity

(9)

 

 

11.67%

(a)

 

10.94%

 

 

9.20%

 

 

7.73%

 

 

7.92%

 

 

9.95%

(a)

 

5.64%

 

Efficiency ratio

(10)

 

 

51.06%

 

 

50.58%

 

 

54.49%

 

 

56.51%

 

 

51.70%

 

 

53.07%

 

 

53.99%

 

Full-time equivalent employees, period end

 

 

 

1,392

 

 

1,365

 

 

1,354

 

 

1,367

 

 

1,421

 

 

1,392

 

 

1,421

 

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

 

 

$

95,193

 

$

95,236

 

$

94,218

 

$

96,832

 

 $  

92,718

 (d)  

$

95,193

 

$

92,718

 (d)(e)  

    Allowance as a % of loans held for investment

 

 

 

2.54%

 

 

2.62%

 

 

2.66%

 

 

2.92%

 

 

2.89%

(d)

 

2.54%

 

 

2.89%

 

    Net charge-offs

 

 

$

10,885

 (c)  

$

12,402

 

$

15,449

 

$

10,844

 

$

10,466

 

$

49,580

 

$

46,468

 (e)  

    Net charge-off rate

(11)

 

 

1.19%

 

 

1.39%

 

 

1.81%

 

 

1.34%

 

 

1.35%

 

 

1.14%

 

 

1.52%

(e)

    Early delinquency rate (30 - 89 days past due)

 

 

 

3.34%

 

 

3.32%

 

 

3.07%

 

 

3.20%

 

 

1.82%

 (f)  

 

3.34%

 

 

1.82%

 

    Total delinquency rate (30 days and over)

 

 

 

6.36%

 

 

6.19%

 

 

5.95%

 

 

6.25%

 

 

4.61%

(f)

 

6.36%

 

 

4.61%

 

Capital Ratios (Non-GAAP)

(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

14.22%

(a)

 

13.93%

 

 

13.92%

 

 

14.07%

 

 

13.92%

 

 

14.22%

(a)

 

13.92%

 

Common equity Tier 1 capital ratio

 

 

 

16.78%

 (a)  

 

14.38%

 

 

14.14%

 

 

14.52%

 

 

14.59%

 

 

16.78%

 (a)  

 

14.59%

 

Tier 1 risk-based capital ratio

 

 

 

19.20%

(a)

 

18.55%

 

 

18.38%

 

 

19.00%

 

 

19.05%

 

 

19.20%

(a)

 

19.05%

 

Total risk-based capital ratio

 

 

 

20.48%

 (a)  

 

19.84%

 

 

19.67%

 

 

20.29%

 

 

20.34%

 

 

20.48%

 (a)  

 

20.34%

 

Tangible common equity ("TCE") ratio

 

 

 

12.76%

(a)

 

10.88%

 

 

10.95%

 

 

11.22%

 

 

11.29%

 

 

12.76%

(a)

 

11.29%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the Q4 2018, the Company converted all of its outstanding 8.750% non-cumulative convertible perpetual preferred stock, series C into OFG Bancorp common stock. Each share of the 84,000 series C preferred stock was converted into 86.4225 shares of common stock.

(b) During the Q4 2018, the Company increased the regular cash dividend per common share to $0.07 from $0.06.

(c) During the Q4 2018, the Company received $1.8 million proceeds from the sale of fully charged-off originated auto and consumer loans.

(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 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) 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.

(f) 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

 

Year Ended

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

December 31,

 

December 31,

 

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

 

 

2018

 

2018

 

2018

 

2018

 

2017

 

2018

 

2017

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

69,240

 

 $  

66,843

 

$

61,183

 

$

56,781

 

 $  

56,183

 

$

254,047

 

 $  

220,591

(i)

    Acquired BBVAPR loans

 

 

 

12,442

 

 

13,688

 

 

13,880

 

 

14,490

 

 

15,310

 

 

54,500

 

 

71,271

(h)

    Acquired Eurobank loans

 

 

 

2,642

 

 

3,485

 

 

3,366

 

 

3,341

 

 

3,573

 

 

12,834

 

 

20,559

 

          Total interest income from loans

 

 

 

84,324

 

 

84,016

 

 

78,429

 

 

74,612

 

 

75,066

 

 

321,381

 

 

312,421

 

Investment securities

 

 

 

10,782

 

 

10,121

 

 

9,577

 

 

8,558

 

 

8,108

 

 

39,038

 

 

33,226

 

          Total interest income

 

 

 

95,106

 

 

94,137

 

 

88,006

 

 

83,170

 

 

83,174

 

 

360,419

 

 

345,647

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

6,396

 

 

5,877

 

 

5,517

 

 

5,412

 

 

5,613

 

 

23,202

 

 

22,087

 

    Brokered deposits

 

 

 

3,003

 

 

2,728

 

 

2,134

 

 

1,886

 

 

2,079

 

 

9,751

 

 

8,211

 

           Total deposits

 

 

 

9,399

 

 

8,605

 

 

7,651

 

 

7,298

 

 

7,692

 

 

32,953

 

 

30,298

 

Borrowings

 

 

 

3,672

 

 

3,255

 

 

2,767

 

 

1,878

 

 

1,969

 

 

11,572

 

 

11,177

 

           Total interest expense

 

 

 

13,071

 

 

11,860

 

 

10,418

 

 

9,176

 

 

9,661

 

 

44,525

 

 

41,475

 

Net interest income

 

 

 

82,035

 

 

82,277

 

 

77,588

 

 

73,994

 

 

73,513

 

 

315,894

 

 

304,172

 

    Provision for loan and lease losses, excluding acquired loans

 (1)  

 

 

10,842

 

 

13,420

 

 

12,835

 

 

14,958

 

 

15,643

 (g)  

 

52,055

 

 

79,886

 (g)  

    Provision (recapture) for acquired BBVAPR loan and lease losses

(1)

 

 

(998)

(a)

 

875

 

 

1,247

 

 

363

 

 

7,112

(g)

 

1,487

 

 

26,528

(g)

    Provision for acquired Eurobank loan and lease losses

 (1)  

 

 

1,456

 

 

306

 

 

665

 

 

139

 

 

2,152

 (g)  

 

2,566

 

 

6,725

 (g)  

          Total provision for loan and lease losses, net

 

 

 

11,300

 

 

14,601

 

 

14,747

 

 

15,460

 

 

24,907

(g)

 

56,108

 

 

113,139

(g)

           Net interest income after provision for loan and lease losses

 

 

 

70,735

 

 

67,676

 

 

62,841

 

 

58,534

 

 

48,606

 

 

259,786

 

 

191,033

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

11,234

 

 

10,797

 

 

11,144

 

 

10,463

 

 

8,461

 (e)  

 

43,638

 

 

39,468

 

Wealth management revenues

 

 

 

7,246

 

 

6,407

 

 

6,262

 

 

6,019

 

 

7,043

 

 

25,934

 

 

25,790

 

Mortgage banking activities

 

 

 

780

 

 

1,242

 

 

988

 

 

1,757

 

 

1,230

 

 

4,767

 

 

4,050

 

          Total banking and financial service revenues

 

 

 

19,260

 

 

18,446

 

 

18,394

 

 

18,239

 

 

16,734

 

 

74,339

 

 

69,308

 

FDIC shared-loss benefit, net

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1,403

 (k)  

Other income, net

 

 

 

4,998

(b)

 

174

 

 

309

 

 

275

 

 

81

 

 

5,756

(b)

 

7,976

(j)

           Total non-interest income, net

 

 

 

24,258

 

 

18,620

 

 

18,703

 

 

18,514

 

 

16,815

 

 

80,095

 

 

78,687

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

19,322

 

 

18,495

 

 

18,099

 

 

20,608

 

 

20,205

 

 

76,524

 

 

79,751

 

Rent and occupancy costs

 

 

 

7,762

 

 

8,388

 

 

9,166

 

 

7,768

 

 

8,546

 

 

33,084

 

 

32,557

 

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

 

 

 

1,834

 

 

1,210

 

 

392

 

 

1,226

 

 

126

 

 

4,662

 

 

4,634

 

General and administrative expenses

 

 

 

20,963

 

 

20,112

 

 

22,746

 

 

20,100

 

 

16,350

(e)(f)

 

83,921

 

 

76,697

 

           Total operating expenses

 

 

 

49,881

 

 

48,205

 

 

50,403

 

 

49,702

 

 

45,227

 

 

198,191

 

 

193,639

 

Credit related expenses

 

 

 

1,838

 

 

2,736

 

 

1,897

 

 

2,419

 

 

1,435

 

 

8,890

 

 

7,992

 

           Total non-interest expense

 

 

 

51,719

 

 

50,941

 

 

52,300

 

 

52,121

 

 

46,662

 

 

207,081

 

 

201,631

 

Income before income taxes

 

 

 

43,274

 

 

35,355

 

 

29,244

 

 

24,927

 

 

18,759

 

 

132,800

 

 

68,089

 

Income tax expense

 

 

 

18,530

(c)

 

12,255

 

 

9,595

 

 

8,010

 

 

1,686

 

 

48,390

(c)

 

15,443

 

Net income

 

 

 

24,744

 

 

23,100

 

 

19,649

 

 

16,917

 

 

17,073

(g)

 

84,410

 

 

52,646

(g)

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

-

(d)

 

(1,838)

 

 

(1,837)

 

 

(1,838)

 

 

(1,838)

 

 

(5,513)

(d)

 

(7,352)

 

    Other preferred stock

 

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(1,627)

 

 

(1,627)

 

 

(6,511)

 

 

(6,510)

 

Net income available to common shareholders

 

 

$

23,116

 

$

19,634

 

$

16,184

 

$

13,452

 

$

13,608

(g)

$

72,386

 

$

38,784

(g)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the 4Q 2018, the provision for acquired BBVAPR loans reflected better cashflows than expected.

 

(b) During the 4Q 2018, the Company received a $5.0 million payment from the insurance company for Hurricane María impact on the Bank's operations.

 

(c) During the 4Q 2018, the Company recognized an aggregate amount of $4.1 million income tax expense as a result of the Changes in Puerto Rico Tax Legislation, mainly driven by a reduction of the DTA since Regular Corporate Tax Rate changes from 39% to 37.5%.

 

(d) During the Q4 2018, the Company converted of all of its outstanding 8.750% non-cumulative convertible perpetual preferred stock, series C into OFG Bancorp common stock. Each share of the 84,000 series C preferred stock was converted into 86.4225 shares of common stock.

 

(e) 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.

 

(f) 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.

 

(g) 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.

+

(h) 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.

 

(i) 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.

 

(j) 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.

 

(k) 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

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

(Dollars in thousands) (unaudited)

 

 

2018

 

2018

 

2018

 

2018

 

2017

 

Cash and cash equivalents

 

 

$

450,063

 

$

546,780

 

$

378,365

 

$

365,388

 

$

488,233

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

360

 

 

405

 

 

418

 

 

293

 

 

191

 

Investment securities available-for-sale, at fair value, with amortized cost of $854,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (September 30, 2018 - $872,895; June 30, 2018 - $890,308; March 31, 2018 - $815,970;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     December 31, 2017 - $648,799)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

827,564

 

 

834,538

 

 

855,686

 

 

784,972

 

 

629,124

 

    Other investment securities

 

 

 

14,293

 

 

14,014

 

 

16,655

 

 

16,669

 

 

16,673

 

          Total investment securities available-for-sale

 

 

 

841,857

 

 

848,552

 

 

872,341

 

 

801,641

 

 

645,797

 

Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $410,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (September 30, 2018 - $425,066; June 30, 2018 - $447,947; March 31, 2018 - $467,980;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     December 31, 2017 - $497,681)

 

 

 

424,740

 

 

444,679

 

 

465,427

 

 

485,143

 

 

506,064

 

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

12,644

 

 

12,461

 

 

14,919

 

 

11,499

 

 

13,995

 

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

3

 

 

3

 

          Total investments

 

 

 

1,279,604

 

 

1,306,100

 

 

1,353,108

 

 

1,298,579

 

 

1,166,050

 

Loans, net

 

 

 

4,431,594

 

 

4,352,980

 

 

4,315,866

 

 

4,133,429

 

 

4,056,329

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets

 

 

 

347

 

 

1,265

 

 

1,100

 

 

898

 

 

771

 

Prepaid expenses

 

 

 

10,283

 

 

13,461

 

 

11,127

 

 

7,625

 

 

9,734

 

Deferred tax asset, net

 

 

 

113,763

 

 

122,934