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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): July 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 July 22, 2019, OFG Bancorp (the “Company”) announced the results for the quarter ended June 30, 2019. 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 July 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: July 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 2Q19 Results

Highlights 2Q19 vs. 2Q18

   Net revenues increased 3.3% to $99.2 million from $96.0 million. Increased interest income from Originated Loans and Cash more than offset pay downs of Acquired Loans and lower Investment Securities balances.

   Earnings per diluted share of $0.43 compared to $0.35, a 22.9% increase. Book value per common share grew 4.2% to $18.76. Tangible Book Value per common share expanded 6.7% to $17.03.

   Loans increased 3.7% to $4.47 billion, while core deposits rose 3.1% to $4.56 billion. New loan origination of $326.6 million included the continued success of our Oriental Bank’s strategic targeting of small business customers.

   Net Interest Margin increased 14 basis points to 5.37%. Credit quality and the efficiency ratio improved. Return on Average Assets increased 25 basis points to 1.48%. Return on Average Tangible Common Equity expanded 112 basis points to 10.32%. Capital metrics continued at new multi-year highs.

Other 2Q19 Items

   OFG sold $350 million in low-yielding mortgage backed securities (MBS) in May and reduced related high cost non-core funding. The sale resulted in a $4.8 million gain and the reduction of $191 million of repurchase agreements and $63 million of brokered CDs.

   OFG decided to sell $54 million unpaid principal balance of mostly distressed acquired residential mortgages. The sale is expected to close in 3Q19 as we take advantage of improving market conditions in Puerto Rico.  This decision resulted in an $8.8 million net increase in provision.

   Oriental Bank entered into an agreement with Scotiabank to acquire its Puerto Rico and US Virgin Islands operations, subject to usual closing conditions. During the quarter, $1.0 million in related expenses were incurred.

Conference Call

A conference call to discuss OFG’s 2Q19 results, outlook and related matters will be held today at 11:00 AM Eastern Time. Phone (888) 562-3356 or (973) 582-2700. Use conference ID 409-9685. The call can also be accessed live on OFG’s website at www.ofgbancorp.com. A webcast replay will be available shortly thereafter.

CEO Comment

 


 

“We are extremely pleased with our second quarter results as OFG continues to deliver on all fronts,” said José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board.

“Our strategies are proving highly effective in capturing the positive economic shift taking place in Puerto Rico as OFG builds excellent momentum for growth now and into the future.

“Our levels of small business, auto and consumer loan production; core deposit growth, credit quality, and capital; and number of customers confirm the success of our Vive la Diferencia (Live the Difference) strategy.

“As a result, we generated a 23% increase in earnings per share on a more than 3% increase in net revenue, with return on assets, net interest margin, and efficiency ratios all at levels similar to top performing peer mainland banks.

“Looking ahead, Oriental will further consolidate its position as the premier retail bank on the island when the recently announced Scotiabank Puerto Rico and US Virgin Island acquisition is closed as we become the second largest in core deposits, branches, automated and interactive teller machines, and mortgage servicing in Puerto Rico, and the third largest bank in US Virgin Islands.

“Thanks to our entire team for their commitment and dedication, and to all our retail and commercial customers for their support and loyalty.”

Income Statement

Unless otherwise noted, the following compares data for the second quarter 2019 to the second quarter 2018.

   Interest Income increased 7.1% or $6.2 million to $94.3 million as continued originated loan growth (+10.2%) and higher yield (+41 basis points) more than offset continued pay downs of acquired loans and the MBS sale. Interest income from originated loans increased $10.3 million, more than offsetting declines of $3.6 million from acquired loans and $0.4 million from investment securities.

   Interest expense increased 26.4% or $2.8 million to $13.2 million. Core deposit costs increased $2.0 million due to higher average balances excluding non-interest bearing deposits (+2.2%) and rate (21 basis points). Brokered deposit costs increased $0.4 million due to lower average balances (-12.4%) and higher rate (+64 basis points). Borrowing costs increased $0.4 million due to higher rate (+37 basis points) on slightly lower average balances.

   Net Interest Margin, excluding cost recoveries, increased 17 basis points to 5.34% from 5.17%. The increase reflected higher yield on originated loans (+41 basis points) and cash balances (+70 basis points), plus a higher proportion of originated loans and cash in interest-earning assets (70.6% compared to 62.8%), partially offset by higher cost brokered CDs and borrowings.

   Total provision for Loan and Lease Losses increased 20.1% or $3.0 million to $17.7 million. Excluding the previously mentioned $8.8 million provision primarily related to the transfer to held for sale of distressed acquired mortgages, 2Q19 provision declined $5.8 million reflecting improved asset quality.

 


 

   Total Banking and Wealth Management Revenues declined 1.7% or $0.3 million to $18.1 million due to slightly lower banking service and mortgage banking revenues, partly offset by higher wealth management revenues.

   Total Non-Interest Expenses declined 1.6% or $0.9 million to $51.5 million, resulting in a 260 basis point improvement in the Efficiency Ratio to 51.89%. In addition to $1.0 million in expenses related to the Scotiabank PR and USVI acquisition, 2Q19 included $0.4 million in lower losses on sale of foreclosed real estate as general real estate market conditions in Puerto Rico continue to improve.

   Due to higher proportion of exempt income, the Effective Tax Rate was 32.1% compared to 32.4%.

   Dividends on Preferred Stock declined 53.0% to $1.6 million from $3.5 million due to the 4Q18 conversion of Series C Preferred to common.

Balance Sheet

Unless otherwise noted, the following compares data at June 30, 2019 to June 30, 2018.

  Total Loans increased 3.7% or $158.6 million to $4.47 billion as originated loans increased 8.5% or $293.6 million and acquired loans declined 16.3% or $139.5 million. Compared to March 31, 2019, total loans increased 1.7% or $73.1 million with originated loans up 2.5% or $92.9 million and acquired loans down 3.6% or $26.7 million.

  2Q19 Loan Production totaled $326.6 million compared to $432.1 million in the year-ago quarter and $276.4 million in the previous quarter. Auto and consumer lending remained high at $136.3 million and $47.7 million, respectively, while residential mortgage lending totaled $22.2 million. Commercial lending at $64.1 million reflected continued growth of small business customers, while OFG USA added another $56.4 million in commercial lending.

  Cash and Cash Equivalents increased 79.0% or $299.1 million to $677.4 million. Compared to March 31, 2019, cash increased 33.1% or $168.4 million. Total Investments declined 35.7% or $482.4 million to $870.7 million. Compared to March 31, 2019, investments declined 30.5% or $382.0 million. The increase in cash and decrease in investments reflect the MBS sale.

  Customer Deposits (excluding brokered) increased 3.1% or $138.0 million to $4.56 million. Compared to March 31, 2019, deposits increased 2.5% or $110.9 million. The increases reflect stepped up efforts to build a larger retail funding base.

  Borrowings declined 35.4% or $195.4 million to $356.8 million. Compared to March 31, 2019, borrowings declined 35.0% or $192.2 million. Brokered deposits declined 15.8% or $73.0 million to $388.4 million. Compared to March 31, 2019, brokered deposits declined 13.9% or $62.8 million. The declines reflect the cancellation of brokered CDs and repayment of repurchase agreements.

  Total stockholders’ equity increased 9.1% or $87.1 million to $1.04 billion. Compared to March 31, 2019, equity increased 2.3% or $23.7 million. The increases reflect growth of retained earnings and legal surplus and reduced other comprehensive loss.

Credit Quality

Unless otherwise noted, the following compares data on the originated loan portfolio at June 30, 2019 to June 30, 2018.

 


 

Credit quality improved. Non-performing loan rate at 2.94% fell 69 basis points. Allowance for loan losses declined 4.5% to $89.9 million. As a percentage of loans, the allowance at 2.35% fell 31 basis points. Early and total delinquency rates, at 3.51% and 6.07% were up 44 and 12 basis points, respectively. Net Charge-Offs declined 18.7% to $12.6 million. As a percentage of loans, the net charge off rate at 1.32% fell 47 basis points.

Capital Position

Capital continued to be significantly above regulatory requirements for a well-capitalized institution. June 30, 2019 ratios improved across the board. Leverage at 15.20% increased 128 basis points year over year and 56 basis points from March 31, 2019, Common Equity Tier 1 at 17.48% increased 334 and 39 bps, Tier 1 Risk-based at 19.87% increased 149 and 38 bps, Total Risk-based Capital at 21.14% increased 147 and 37 bps, and Tangible Common Equity at 13.71% increased 276 and 66 bps.

Financial Supplement & Conference Call Presentation

OFG’s Financial Supplement, with full financial tables for the quarter ended June 30, 2019, and its 2Q19 Conference Call Presentation, 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 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; (vii) the pace and magnitude of Puerto Rico’s economic recovery; (viii) the potential impact of damages from future hurricanes and natural disasters in Puerto Rico; (ix) the fiscal and monetary policies of the federal government and its agencies; (x) changes in federal bank regulatory and supervisory policies, including required levels of capital; (xi) the relative strength or weakness of the commercial and consumer credit sectors and the real estate market in Puerto Rico; (xii) the performance of the stock and bond markets; (xiii) competition in the financial services industry; and (xiv) 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, 2018, 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. Visit us at Error! Hyperlink reference not valid.www.ofgbancorp.com.

# # #

Contacts

Puerto Rico: Idalis Montalvo ([email protected]) at (787) 777-2847

US: Steven Anreder ([email protected]) and Gary Fishman ([email protected]) at (212) 532-3232

 


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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 June 30, 2019 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

 

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OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Financial and Statistical Summary - Consolidated

 

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

2019

 

2018

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

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

YTD

 

YTD

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

81,085

 

$

81,789

 

$

82,035

 

$

82,277

 

$

77,588

 

$

162,874

 

$

151,582

Non-interest income, net (core)

(2)

 

 

18,074

 

 

17,553

 

 

19,260

 

 

18,446

 

 

18,394

 

 

35,627

 

 

36,633

Non-interest expense

 

 

 

51,452

 

 

52,152

 

 

51,719

 

 

50,941

 

 

52,300

 

 

103,604

 

 

104,421

Pre-provision net revenues

(21)

 

 

52,581

 

 

47,293

 

 

54,574

 

 

49,956

 

 

43,991

 

 

99,874

 

 

84,378

Provision for loan and lease losses

 

 

 

17,705

 

 

12,249

 

 

11,300

(c)

 

14,601

 

 

14,747

 

 

29,954

 

 

30,207

Net income before income taxes

 

 

 

34,876

 

 

35,044

 

 

43,274

 

 

35,355

 

 

29,244

 

 

69,920

 

 

54,171

Income tax expense

 

 

 

10,897

 

 

11,574

 

 

18,530

 

 

12,255

 

 

9,595

 

 

22,471

 

 

17,605

Net income

 

 

$

23,979

 

$

23,470

 

$

24,744

 

$

23,100

 

$

19,649

 

$

47,449

 

$

36,566

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

(3)

 

$

0.44

 

$

0.43

 

$

0.47

 

$

0.45

 

$

0.36

 

$

0.86

 

$

0.67

Earnings per common share - diluted

(4)

 

$

0.43

 

$

0.42

 

$

0.45

 

$

0.42

 

$

0.35

 

$

0.86

 

$

0.65

Average common shares outstanding

 

 

 

51,330

 

 

51,305

 

 

49,628

 (a)  

 

43,996

 

 

43,975

 

 

51,317

 

 

43,965

Average common shares outstanding and equivalents

 

 

 

51,680

 

 

51,626

 

 

51,602

 

 

51,464

 

 

51,226

 

 

51,652

 

 

51,157

Cash dividends per common share

 

 

$

0.07

 

$

0.07

 

$

0.07

 (b)  

$

0.06

 

$

0.06

 

$

0.14

 

$

0.12

Book value per common share (period end)

 

 

$

18.76

 

$

18.30

 

$

17.90

(a)

$

18.27

 

$

18.01

 

$

18.76

 

$

18.01

Tangible book value per common share (period end)

(5)

 

$

17.03

 

$

16.56

 

$

16.15

 (a)  

$

16.23

 

$

15.96

 

$

17.03

 

$

15.96

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(6)

 

$

4,528,965

 

$

4,504,725

 

$

4,491,224

 

$

4,432,703

 

$

4,317,762

 

$

4,516,947

 

$

4,248,534

Interest-earning assets

 

 

 

6,060,819

 

 

6,152,202

 

 

6,230,027

 

 

6,116,644

 

 

5,951,906

 

 

6,106,868

 

 

5,847,255

Total assets

 

 

 

6,496,423

 

 

6,605,328

 

 

6,619,026

 

 

6,514,532

 

 

6,374,240

 

 

6,550,575

 

 

6,282,505

Total deposits

 

 

 

4,880,114

 

 

4,890,630

 

 

4,987,446

 

 

4,934,468

 

 

4,848,901

 

 

4,885,344

 

 

4,812,516

Interest-bearing deposits

 

 

 

3,782,211

 

 

3,791,083

 

 

3,866,842

 

 

3,854,642

 

 

3,766,611

 

 

3,786,624

 

 

3,761,786

Borrowings

 

 

 

459,802

 

 

562,152

 

 

543,920

 

 

503,268

 

 

462,646

 

 

510,694

 

 

407,554

Stockholders' equity

 

 

 

1,037,057

 

 

1,017,546

 

 

983,015

 

 

973,838

 

 

959,777

 

 

1,027,356

 

 

956,264

Common stockholders' equity

 

 

 

955,187

 

 

935,676

 

 

881,971

 

 

807,968

 

 

793,907

 

 

945,486

 

 

790,394

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(7)

 

 

5.37%

 

 

5.39%

 

 

5.22%

 

 

5.34%

 

 

5.23%

 

 

5.38%

 

 

5.23%

Return on average assets

(8)

 

 

1.48%

 

 

1.42%

 

 

1.50%

 

 

1.42%

 

 

1.23%

 

 

1.45%

 

 

1.16%

Return on average tangible common stockholders' equity

(9)

 

 

10.32%

 

 

10.32%

 

 

11.67%

(a)

 

10.94%

 

 

9.20%

 

 

10.32%

 

 

8.47%

Efficiency ratio

(10)

 

 

51.89%

 

 

52.50%

 

 

51.06%

 

 

50.58%

 

 

54.49%

 

 

52.19%

 

 

55.48%

Full-time equivalent employees, period end

 

 

 

1,417

 

 

1,394

 

 

1,392

 

 

1,365

 

 

1,354

 

 

1,417

 

 

1,354

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

 

 

$

89,952

 

$

94,035

 

$

95,188

 

$

95,236

 

 $  

94,218

 

$

89,952

 

$

94,218

    Allowance as a % of loans held for investment

 

 

 

2.35%

 

 

2.51%

 

 

2.54%

 

 

2.62%

 

 

2.66%

 

 

2.35%

 

 

2.66%

    Net charge-offs

 

 

$

12,564

 

$

12,486

 

$

10,885

 (c)  

$

12,402

 

$

15,449

 

$

25,050

 

$

26,293

    Net charge-off rate

(11)

 

 

1.32%

 

 

1.33%

 

 

1.17%

 

 

1.37%

 

 

1.79%

 

 

1.11%

 

 

1.24%

    Early delinquency rate (30 - 89 days past due)

 

 

 

3.51%

 

 

3.61%

 

 

3.34%

 

 

3.32%

 

 

3.07%

 

 

3.51%

 

 

3.07%

    Total delinquency rate (30 days and over)

 

 

 

6.07%

 

 

6.33%

 

 

6.36%

 

 

6.19%

 

 

5.95%

 

 

6.07%

 

 

5.95%

Capital Ratios (Non-GAAP)

(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

15.20%

 

 

14.64%

 

 

14.22%

(a)

 

13.93%

 

 

13.92%

 

 

15.20%

 

 

13.92%

Common equity Tier 1 capital ratio

 

 

 

17.48%

 

 

17.09%

 

 

16.78%

 (a)  

 

14.38%

 

 

14.14%

 

 

17.48%

 

 

14.14%

Tier 1 risk-based capital ratio

 

 

 

19.87%

 

 

19.49%

 

 

19.20%

(a)

 

18.55%

 

 

18.38%

 

 

19.87%

 

 

18.38%

Total risk-based capital ratio

 

 

 

21.14%

 

 

20.77%

 

 

20.48%

 (a)  

 

19.84%

 

 

19.67%

 

 

21.14%

 

 

19.67%

Tangible common equity ("TCE") ratio

 

 

 

13.71%

 

 

13.05%

 

 

12.76%

(a)

 

10.88%

 

 

10.95%

 

 

13.71%

 

 

10.95%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 


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OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2: Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six-Months Ended

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

June 30,

 

June 30,

 

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

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

2019

 

2018

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

72,978

 

 $  

71,298

 

$

70,747

 

$

68,387

 

 $  

62,710

 

$

144,276

 

 $  

121,014

 

    Acquired BBVAPR loans

 

 

 

9,603

 

 

10,247

 

 

10,935

 

 

12,144

 

 

12,353

 

 

19,850

 

 

25,320

 

    Acquired Eurobank loans

 

 

 

2,499

 

 

2,574

 

 

2,642

 

 

3,485

 

 

3,366

 

 

5,073

 

 

6,707

 

          Total interest income from loans

 

 

 

85,080

 

 

84,119

 

 

84,324

 

 

84,016

 

 

78,429

 

 

169,199

 

 

153,041

 

Investment securities

 

 

 

9,175

 

 

10,591

 

 

10,782

 

 

10,121

 

 

9,577

 

 

19,766

 

 

18,135

 

          Total interest income

 

 

 

94,255

 

 

94,710

 

 

95,106

 

 

94,137

 

 

88,006

 

 

188,965

 

 

171,176

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

7,465

 

 

6,214

 

 

6,396

 

 

5,877

 

 

5,517

 

 

13,679

 

 

10,929

 

    Brokered deposits

 

 

 

2,526

 

 

2,835

 

 

3,003

 

 

2,728

 

 

2,134

 

 

5,361

 

 

4,020

 

           Total deposits

 

 

 

9,991

 

 

9,049

 

 

9,399

 

 

8,605

 

 

7,651

 

 

19,040

 

 

14,949

 

Borrowings

 

 

 

3,179

 

 

3,872

 

 

3,672

 

 

3,255

 

 

2,767

 

 

7,051

 

 

4,645

 

           Total interest expense

 

 

 

13,170

 

 

12,921

 

 

13,071

 

 

11,860

 

 

10,418

 

 

26,091

 

 

19,594

 

Net interest income

 

 

 

81,085

 

 

81,789

 

 

82,035

 

 

82,277

 

 

77,588

 

 

162,874

 

 

151,582

 

    Provision for loan and lease losses, excluding acquired loans

 (1)  

 

 

8,481

 

 

11,333

 

 

10,842

 

 

13,420

 

 

12,835

 

 

19,814

 

 

27,793

 

    Provision (recapture) for acquired BBVAPR loan and lease losses

(1)

 

 

7,446

(g)

 

1,567

 

 

(998)

(b)

 

875

 

 

1,247

 

 

9,013

 

 

1,610

 

    Provision for acquired Eurobank loan and lease losses

 (1)  

 

 

1,778

 (g)  

 

(651)

 (a)  

 

1,456

 

 

306

 

 

665

 

 

1,127

 

 

804

 

          Total provision for loan and lease losses, net

 

 

 

17,705

 

 

12,249

 

 

11,300

 

 

14,601

 

 

14,747

 

 

29,954

 

 

30,207

 

           Net interest income after provision for loan and lease losses

 

 

 

63,380

 

 

69,540

 

 

70,735

 

 

67,676

 

 

62,841

 

 

132,920

 

 

121,375

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

10,776

 

 

10,465

 

 

11,234

 

 

10,797

 

 

11,144

 

 

21,241

 

 

21,607

 

Wealth management revenues

 

 

 

6,669

 

 

5,882

 

 

7,246

 

 

6,407

 

 

6,262

 

 

12,551

 

 

12,281

 

Mortgage banking activities

 

 

 

629

 

 

1,206

 

 

780

 

 

1,242

 

 

988

 

 

1,835

 

 

2,745

 

          Total banking and financial service revenues

 

 

 

18,074

 

 

17,553

 

 

19,260

 

 

18,446

 

 

18,394

 

 

35,627

 

 

36,633

 

Other income, net

 

 

 

4,874

(f)

 

103

 

 

4,998

(c)

 

174

 

 

309

 

 

4,977

 

 

584

 

           Total non-interest income, net

 

 

 

22,948

 

 

17,656

 

 

24,258

 

 

18,620

 

 

18,703

 

 

40,604

 

 

37,217

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

19,875

 

 

20,341

 

 

19,322

 

 

18,495

 

 

18,099

 

 

40,216

 

 

38,707

 

Occupancy, equipment and infrastructure costs

 

 

 

7,511

 

 

7,746

 

 

7,762

 

 

8,388

 

 

9,166

 

 

15,257

 

 

16,934

 

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

 

 

 

21

 

 

1,070

 

 

1,834

 

 

1,210

 

 

392

 

 

1,091

 

 

1,618

 

General and administrative expenses

 

 

 

21,482

 

 

20,699

 

 

20,963

 

 

20,112

 

 

22,746

 

 

42,181

 

 

42,846

 

           Total operating expenses

 

 

 

48,889

 

 

49,856

 

 

49,881

 

 

48,205

 

 

50,403

 

 

98,745

 

 

100,105

 

Credit related expenses

 

 

 

2,563

 

 

2,296

 

 

1,838

 

 

2,736

 

 

1,897

 

 

4,859

 

 

4,316

 

           Total non-interest expense

 

 

 

51,452

 

 

52,152

 

 

51,719

 

 

50,941

 

 

52,300

 

 

103,604

 

 

104,421

 

Income before income taxes

 

 

 

34,876

 

 

35,044

 

 

43,274

 

 

35,355

 

 

29,244

 

 

69,920

 

 

54,171

 

Income tax expense

 

 

 

10,897

 

 

11,574

 

 

18,530

 (d)  

 

12,255

 

 

9,595

 

 

22,471

 

 

17,605

 

Net income

 

 

 

23,979

 

 

23,470

 

 

24,744

 

 

23,100

 

 

19,649

 

 

47,449

 

 

36,566

 

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

-

 

 

-

 

 

-

(e)

 

(1,838)

 

 

(1,837)

 

 

-

 

 

(3,675)

 

    Other preferred stock

 

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(3,256)

 

 

(3,255)

 

Net income available to common shareholders

 

 

$

22,351

 

$

21,842

 

$

23,116

 

$

19,634

 

$

16,184

 

$

44,193

 

$

29,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the 1Q 2019, the provision for acquired Eurobank loans and leases reflected better cashflows than expected.

 

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

 

(c) 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.

 

(d) 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%.

 

(e) 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.

 

(f) During Q2 2019, the Company sold $350 million available-for-sale mortgage-backed securities and recognized a gain in the sale of $4.8 million.

 

(g) During Q2 2019, the Company adjusted to fair value several mortgage loans accounted under ASC 310-30, which are expected to be sold during 2019, increasing the provision by $8.8 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 


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OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3: Consolidated Statements of Financial Condition

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

(Dollars in thousands) (unaudited)

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

Cash and cash equivalents

 

 

$

677,430

 

$

509,023

 

$

450,063

 

$

546,780

 

$

378,365

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

412

 

 

381

 

 

360

 

 

405

 

 

418

 

Investment securities available-for-sale, at fair value, with amortized cost of $860,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (March 31, 2019 - $1,248,750; December 31, 2018 - $854,511; September 30, 2018 - $872,895;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     June 30, 2018 - $890,308)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

843,333

(d)

 

1,225,225

(a)

 

827,564

 

 

834,538

 

 

855,686

 

    Other investment securities

 

 

 

14,100

 

 

14,244

 

 

14,293

 

 

14,014

 

 

16,655

 

          Total investment securities available-for-sale

 

 

 

857,433

 

 

1,239,469

 

 

841,857

 

 

848,552

 

 

872,341

 

Mortgage-backed securities held-to-maturity, at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (fair value at December 31, 2018 - $410,353; September 30, 2018 - $425,066; June 30, 2018 - $447,947;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      March 31, 2018 - $467,980)

 

 

 

-

 

 

-

 (a)  

 

424,740

 

 

444,679

 

 

465,427

 

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

12,821

 

 

12,800

 

 

12,644

 

 

12,461

 

 

14,919

 

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

3

 

 

3

 

          Total investments

 

 

 

870,669

 

 

1,252,653

 

 

1,279,604

 

 

1,306,100

 

 

1,353,108

 

Loans, net

 

 

 

4,474,497

 

 

4,401,401

 

 

4,431,594

 

 

4,352,980

 

 

4,315,866

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets

 

 

 

26

 

 

110

 

 

347

 

 

1,265

 

 

1,100

 

Prepaid expenses

 

 

 

11,903

 

 

7,830

 

 

10,283

 

 

13,461

 

 

11,127

 

Deferred tax asset, net

 

 

 

111,147

 

 

112,744

 

 

113,763

 

 

122,934

 

 

125,141

 

Foreclosed real estate and repossessed properties

 

 

 

32,016

 

 

34,439

 

 

36,754

 

 

42,014

 

 

46,035

 

Premises and equipment, net

 

 

 

71,001

 

 

69,017

 

 

68,892

 

 

67,762

 

 

66,174

 

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

Right of use assets

 

 

 

20,419

 

 

20,860

(b)

 

-

 

 

-

 

 

-

 

Accounts receivable and other assets

 

 

 

108,950

 

 

109,045

 

 

105,983

 

 

117,309

 

 

118,577

 

Total assets