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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 29, 2020

 

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 29, 2020, OFG Bancorp (the “Company”) announced the results for the quarter ended December 31, 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 January 29, 2020.

 

 

 

 

  

 


 

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 29, 2020

By:  

/s/ Maritza Arizmendi

 

 

Maritza Arizmendi

 

 

Executive Vice President and Chief Financial Officer 

         

 

 


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Section 2: EX-99 (EXHIBIT 99)

 

 

 

Exhibit 99

 

 

OFG Bancorp Reports 4Q19 & 2019 Results;
Updates on Scotia PR & USVI Acquisition

SAN JUAN, Puerto Rico, January 29, 2020 – OFG Bancorp (NYSE: OFG) today reported results for 4Q19 and 2019, reflecting the previously announced acquisition of the Puerto Rico and U.S. Virgin Islands operations of The Bank of Nova Scotia (Scotiabank).

Due to the acquisition closing occurring at year-end, OFG’s 4Q19 and 2019 income statements and credit quality metrics reflect pre-acquisition operations as well as acquisition related expenses, while the December 31, 2019 balance sheet and capital metrics reflect the newly acquired assets and liabilities.

4Q19

·      OFG reported a net loss to shareholders of $2.3 million, or ($0.04) per share, which included $21.5 million in acquisition related merger and restructuring charges and $6.6 million in additional provision for non-performing loans the Company decided to sell in 3Q19.

·      4Q19 compares to 3Q19 net income available to shareholders of $5.8 million, or $0.11 per share fully diluted, and 4Q18 net income of $23.1 million, or $0.45 per share.

·      4Q19 core operations were strong, with net interest margin of 5.35% and loan production of $404.9 million. Most credit quality metrics improved.

·      During the quarter, OFG obtained all regulatory approvals, developed an integration plan, and closed on the $560.0 million cash acquisition (excluding settlement amounts), adding $2.2 billion in net loans and $3.0 billion in low cost, core deposits.

·      Acquisition related merger and restructuring charges, core deposit intangible of $41.5 million, no goodwill, and tangible book value dilution of 6% were all lower than originally assumed. Loan marks were in line at an average of 6.44%.

2019

·      OFG for the year ended 2019 reported net income available to shareholders of $47.7 million, or $0.92 per share fully diluted, which included acquisition related merger and restructuring charges and increased provision from the sale of non-performing loans (NPLs).

·      On a non-GAAP basis*, adjusted net income available to shareholders was $83.8 million or $1.62 per share, which compares favorably to 2018 net income of $72.4 million, or $1.52 per share.

 


 

·      OFG ended the year with book value of $18.75 per common share, up 4.8% from a year ago; tangible book value of $15.97 per common share, down 1.1% as a result of the acquisition; total stockholders’ equity of $1.05 billion, up 4.6%; and record total assets of $9.3 billion, up 40.9%.

Conference Call

A conference call to discuss 4Q19 results, outlook and related matters will be held today at 10:00 AM Eastern Time. Phone (888) 562-3356 or (973) 582-2700. Use conference ID 827-3089. The call can also be accessed live on www.ofgbancorp.com Webcast replay will be available shortly thereafter.

CEO Comment

José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, said: “We ended 2019 on a high note, closing the Scotiabank acquisition at year-end as originally anticipated. We welcome our new team members and clients in Puerto Rico and U.S. Virgin Islands. We are committed to providing excellent career opportunities to our new employees and excellent service, products, and technology to our new clients. We’re excited about the prospects for future growth.

“I also want to thank all our staff for their exceptional work, some despite their own difficult personal circumstances, in assisting earthquake evacuees. As early responders on the ground in affected areas, Oriental teams helped organized shelters and relief centers. In coordination and collaboration with several of our clients, we provided more than 4,000 meals, bottled water, batteries, electric fans and other essentials. We also arranged access to teams of doctors and structural engineers. The quick response would not have been possible without our compassionate staff and clients. We are extremely proud of our commitment to the communities we serve.

“Turning back to business, 4Q19 was a very busy quarter, closing on the acquisition while continuing to build our existing business. Operationally, we had a strong quarter. We effectively managed the transition to slightly lower yields in the commercial loan portfolio, reflecting FRB rate cuts, with our pro-active effort to reduce high cost wholesale funding. Going forward, our funding mix will improve even further with our larger core deposit base.

“We are well positioned for 2020. The acquisition enabled us to more effectively use our excess capital and end 2019 with a record $6.6 billion in loans and a record $7.7 billion in deposits, which increases our ability to generate future growth. We are moving fast, starting the year focused on integration and loan production, and look forward to reporting our progress in the quarters ahead.”

Current Expected Credit Losses (CECL)

The following updates the model development process for CECL Day 1 implementation.

·      For the originated book (58% of total gross loans): We are estimating an increase in the current allowance of approximately $21 million to $25 million or 25% to 30%.

·      For the Scotiabank non-PCD acquired book (12% of total gross loans): Based on the fair market value of the portfolio, we are estimating the non-PCD allowance will be approximately $16 million to $22 million.

·      For PCD loans, including BBVA and Eurobank acquired book plus the recently acquired Scotiabank (30% of total gross loans): The adjustment will be made through the allowance and loan balances with no impact in capital.

 


 

The final impact of CECL will depend on the circumstances at the date of adoption such as asset quality, macro-economic conditions and economic perspective, and continued refinement in 1Q20.

Income Statement

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

·      Total interest Income fell $3.9 million, to $91.2 million, primarily due to sales of mortgage backed securities totaling $350 million in 2Q19 and $322 million in 3Q19 to free up liquidity to fund the Scotiabank acquisition. Interest income from originated loans increased $2.9 million, reflecting loan growth (+4.8%) and lower yield (-6 basis points). Interest income from acquired loans declined $2.3 million due to continued pay downs of loans. Interest income from investment securities declined $5.6 million, while interest income increased $1.1 million from higher cash balances.

·      Total interest expense fell $1.1 million, to $12.0 million, primarily reflecting a more favorable change in the funding mix. Core deposit costs increased $1.6 million due to higher rate (+12 basis points) from a shift to longer-term time deposits. Brokered deposit costs fell $1.2 million primarily due to lower average balances (-49.1%). Borrowing costs fell $1.5 million due to lower average balances (-44.0%) and lower rate (-19 basis points).

·      Net Interest Margin, excluding cost recoveries, decreased 6 basis points to 5.28%, reflecting effective management of the interest yield and expense mix.

·      Total provision for Loan and Lease Losses increased $11.8 million, to $23.1 million, which includes the previously mentioned $6.6 million for additional provision for NPLs sold. 4Q19 provision also included $3.6 million allowance for the remaining balance of an originated commercial loan, pending insurance recoveries, on a property destroyed in a fire.

·      Total Banking and Wealth Management Revenues were level at $19.2 million. Higher mortgage banking revenues offset lower wealth management and banking service revenues.

·      Total Non-Interest Expenses increased $26.6 million to $78.4 million, which includes the previously mentioned $21.5 million merger and restructuring charges. 4Q19 expenses also included $2.8 million in contingent legal reserves and operational losses, and $1.5 million in incremental health insurance expenses and technology development expenses.

·      Effective Tax Rate was 28.5% in 2019 compared to 36.4% in 2018. The decline was primarily due a higher proportion of exempt income and capital gains at lower rates in 2019.

Balance Sheet

Unless otherwise noted, the following compares data at December 31, 2019 to December 31, 2018.

 


 

·      Total Loans increased 49.9% or $2.2 billion to $6.6 billion. Originated loans increased 4.2%, or $152.2 million. Acquired BBVA and Eurobank loans declined 21.7%, or $171.6 million. Acquired Scotiabank loans totaled $2.2 billion. Compared to September 30, 2019, originated loans increased 2.4%, or $87.8 million, and acquired BBVA and Eurobank loans declined 7.7%, or $50.3 million. Acquired BBVA and Eurobank loans declined year over year and on a sequential quarter basis due to sales of non-performing loans in 3Q19 and 4Q19 and continued pay downs.

·      Loan Production totaled $404.9 million compared to $323.0 million in the year-ago quarter. 4Q19 production was the highest since the post-hurricane comeback quarter in 2Q18. Auto and consumer lending remained strong at $110.2 million and $41.9 million, respectively, while residential mortgage lending totaled $23.7 million. Commercial lending at $229.1 million primarily reflected the closing of large and middle market corporate loans as well as continued growth of small business customers.

·      Cash and Cash Equivalents increased 89.5%, or $402.7 million, to $852.8 million, which included $626.9 million from the Scotiabank acquisition. Compared to September 30, 2019, cash declined 11.4%, or $110.1 million.

·      Total Investments declined 15.0%, or $191.8 million, to $1.1 billion, which included $576.2 million from the Scotiabank acquisition. Compared to September 30, 2019, investments increased 105.4%, or $558.1 million.

·      Customer Deposits (excluding brokered) increased 70.1% or $3.1 billion to $7.5 billion, which included $3.0 billion from the Scotiabank acquisition. Compared to September 30, 2019, deposits increased 62.4% or $2.9 billion.

·      Brokered deposits declined 53.6%, or $281.6 million, to $243.5 million. Compared to September 30, 2019, brokered deposits declined 15.6%, or $44.9 million. The declines reflect the maturity of brokered CDs. The acquisition did not add any brokered CDs.

·      Borrowings declined 46.4%, or $264.9 million, to $305.6 million. Compared to September 30, 2019, borrowings declined $0.4 million. The declines reflect the repayment of repurchase agreement funding. The acquisition did not add any borrowings.

·      Total stockholders’ equity increased 4.6% or $45.9 million to $1.05 billion. Compared to September 30, 2019, stockholders’ equity declined 0.3%. The year over year increase reflects earnings growth and reduced other comprehensive loss.

Credit Quality

Unless otherwise noted, the following compares data on the originated loan portfolio at December 31, 2019 to December 31, 2018.

·      Non-performing loan rate at 2.07% fell 121 basis points. Allowance for loan and lease losses declined 12.3%, to $83.5 million. As a percentage of loans, ALLL at 2.15% fell 39 basis points. The decrease in the NPL rate and ALLL reflects the previously mentioned sales of NPLs.

·      Early and total delinquency rates, at 3.69% and 5.31%, were up 35 and down 105 basis points, respectively.

·      Net Charge-Offs increased $3.1 million to $14.0 million. As a percentage of loans, the NCOs increased 27 basis points to 1.45%. NCOs reflect increases from auto and consumer loans, partially offset by declines in mortgage and commercial loans.

 

 


 

Capital Position

·      Because of the effective use of excess capital in the Scotiabank acquisition, OFG’s capital ratios have now become more comparable to similar sized peers while continuing to be significantly above regulatory requirements for a well-capitalized institution.

·      At December 31, 2019, the Leverage ratio was 13.99%, Common Equity Tier 1 capital ratio was 10.78%, Tier 1 Risk-Based Capital ratio was 12.50%, and Total Risk-Based Capital ratio was 13.77%. Tangible Common Equity ratio was 8.97%.

Financial Supplement & Conference Call Presentation

OFG’s Financial Supplement, with full financial tables for the quarter ended December 31, 2019, and 4Q19 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, 9-2 and 10 in OFG’s above-mentioned Financial Supplement for reconciliation of GAAP to non-GAAP Measures and Calculations. OFG has attached to this news release Table 10: “Reconciliation of GAAP to Non-GAAP with adjustments to exclude the impact of significant events” for the year ended December 31, 2019.

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 56th year in business, OFG Bancorp is a diversified financial holding company that operates under U.S., Puerto Rico and U.S. Virgin Islands banking laws and regulations. Its three principal subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a wide range of retail and commercial banking, lending and wealth management products, services and technology, primarily in Puerto Rico and U.S. Virgin Islands. Visit us at Error! Hyperlink reference not valid.www.ofgbancorp.com.

# # #

Contacts

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

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

 

 


 

 


 

a)    During 2Q 2019 and 3Q 2019, the Company sold $350 million and $322 million available-for-sale mortgage-backed securities, respectively, and recognized a gain in the sale of $4.8 million and $3.5 million, respectively.

b)    During 2019, the Company sold mostly non-performing loans, increasing the provision by $8.8 million in 2Q2019, $38.9 million in 3Q2019, and $6.6 million in 4Q2019.

c)     During 3Q 2019, the Company received $2.4 million proceeds from the sale of fully charged-off originated auto and consumer loans.

d)    During 2Q 2019, the Company entered into an agreement with Scotiabank to acquire its Puerto Rico and US Virgin Islands operations, subject to customary closing conditions. On December 31, 2019, the Company completed the acquisition. During 2Q2019, 3Q2019 and 4Q2019, $1.0 million, $1.6 million and $27.2 million, respectively, were incurred in related merger and restructuring charges.

e)    During 3Q 2019, the Company recognized an FDIC insurance assessment credit received amounting to $1.5 million.

f)      During 3Q 2019, the Company received an additional $1 million credit from Puerto Rico Treasury on employee retention during hurricane Maria.

g)    During 3Q 2019, the Company had a reduction in provision for loan losses of $4.5 million as a result of the adjustment to the qualitative factor related to sustained favorable macroeconomic conditions in Puerto Rico.

h)    On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations for $560 million (excluding settlement amounts), which approximated the fair value of net assets acquired. The determination of fair value may necessitate the use of one year measurement period to adequately analyze all the factors used as of the acquisition date.

 


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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 December 31, 2019 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:

 

Reconciliation of GAAP to Non-GAAP with adjustments to exclude the impact

 

 

 

 

 

 

  of quarter-specific items

 

14

 

 

Table  11:

 

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

 

 

 

 

 

 

  Financial Statements (Tables 1-10)

 

15

 

 


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OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Financial and Statistical Summary - Consolidated

 

 

 

2019

 

2019

 

2019

 

2019

 

2018

 

2019

 

2018

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

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

YTD

 

YTD

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

79,209

 

$

80,710

 

$

81,085

 

$

81,789

 

$

82,035

 

$

322,793

 

$

315,894

Non-interest income, net (core)

(2)

 

 

19,196

 

 

18,542

 

 

18,074

 

 

17,553

 

 

19,260

 

 

73,365

 

 

74,339

Non-interest expense

 

 

 

78,356

(a)

 

50,727

 

 

51,452

 

 

52,152

 

 

51,719

 

 

232,687

(a)

 

207,081

Pre-provision net revenues

(21)

 

 

20,564

 

 

52,161

 

 

52,581

 

 

47,293

 

 

54,574

 

 

172,599

 

 

188,908

Provision for loan and lease losses

 

 

 

23,068

(c)

 

43,770

(b)(c)(d)

 

17,705

(d)

 

12,249

 

 

11,300

 

 

96,792

(b)(c)(d)

 

56,108

Net (loss) income before income taxes

 

 

 

(2,504)

 

 

8,391

 

 

34,876

 

 

35,044

 

 

43,274

 

 

75,807

 

 

132,800

Income tax (benefit) expense

 

 

 

(1,861)

 

 

1,008

 

 

10,897

 

 

11,574

 

 

18,530

 

 

21,618

 

 

48,390

Net (loss) income

 

 

$

(643)

 (a)  

$

7,383

 

$

23,979

 

$

23,470

 

$

24,744

 

$

54,189

 (a)  

$

84,410

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per common share - basic

(3)

 

$

(0.04)

 (a)  

$

0.11

 

$

0.44

 

$

0.43

 

$

0.47

 

$

0.93

(a)

$

1.59

(Loss) earnings per common share - diluted

(4)

 

$

(0.04)

(a)

$

0.11

 

$

0.43

 

$

0.42

 

$

0.45

 

$

0.92

(a)

$

1.52

Average common shares outstanding

 

 

 

51,360

 

 

51,345

 

 

51,330

 

 

51,305

 

 

49,628

 

 

51,335

 

 

45,400

Average common shares outstanding and equivalents

 

 

 

51,791

 

 

51,772

 

 

51,680

 

 

51,626

 

 

51,602

 

 

51,719

 

 

51,349

Cash dividends per common share

 

 

$

0.07

 

$

0.07

 

$

0.07

 

$

0.07

 

$

0.07

 

$

0.28

 

$

0.25

Book value per common share (period end)

 

 

$

18.75

 

$

18.84

 

$

18.76

 

$

18.30

 

$

17.90

 

$

18.75

 

$

17.90

Tangible book value per common share (period end)

(5)

 

$

15.97

 

$

17.11

 

$

17.03

 

$

16.56

 

$

16.15

 

$

15.97

 

$

16.15

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(6)

 

$

4,486,851

 

$

4,539,046

 

$

4,514,030

 

$

4,504,725

 

$

4,460,002

 

$

4,511,190

 

$

4,348,135

Interest-earning assets

 

 

 

5,873,159

 

 

5,981,757

 

 

6,034,338

 

 

6,152,202

 

 

6,170,455

 

 

6,009,521

 

 

5,985,524

Total assets

 

 

 

6,325,334

 

 

6,433,658

 

 

6,496,423

 

 

6,605,328

 

 

6,619,026

 

 

6,464,329

 

 

6,425,811

Total deposits

 

 

 

4,834,597

 

 

4,921,259

 

 

4,880,114

 

 

4,890,630

 

 

4,987,446

 

 

4,881,605

 

 

4,889,584

Interest-bearing deposits

 

 

 

3,723,751

 

 

3,827,212

 

 

3,782,211

 

 

3,791,083

 

 

3,866,842

 

 

3,781,006

 

 

3,811,406

Borrowings

 

 

 

304,365

 

 

340,194

 

 

459,802

 

 

562,152

 

 

543,920

 

 

415,712

 

 

466,051

Stockholders' equity

 

 

 

1,062,724

 

 

1,061,541

 

 

1,037,057

 

 

1,017,546

 

 

983,015

 

 

1,044,882

 

 

967,437

Common stockholders' equity

 

 

 

980,854

 

 

979,671

 

 

955,187

 

 

935,676

 

 

881,971

 

 

963,012

 

 

817,907

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(7)

 

 

5.35%

 

 

5.35%

 

 

5.39%

 

 

5.39%

 

 

5.27%

 

 

5.37%

 

 

5.28%

Return on average assets

(8)

 

 

-0.04%

 

 

0.46%

 

 

1.48%

 

 

1.42%

 

 

1.50%

 

 

0.84%

 

 

1.31%

Return on average tangible common stockholders' equity

(9)

 

 

-1.02%

 

 

2.58%

 

 

10.32%

 

 

10.32%

 

 

11.67%

 

 

5.45%

 

 

9.95%

Efficiency ratio

(10)

 

 

79.63%

 

 

51.11%

 

 

51.89%

 

 

52.50%

 

 

51.06%

 

 

58.74%

 

 

53.07%

Full-time equivalent employees, period end

 

 

 

2,431

 

 

1,436

 

 

1,417

 

 

1,394

 

 

1,392

 

 

2,431

 

 

1,392

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

 

 

$

83,470

 

$

79,089

 

$

89,952

 

$

94,035

 

 $  

95,188

 

$

83,470

 

$

95,188

    Allowance as a % of loans held for investment

 

 

 

2.15%

 

 

2.09%

 

 

2.35%

 

 

2.51%

 

 

2.54%

 

 

2.15%

 

 

2.54%

    Net charge-offs

 

 

$

14,006

 

$

34,427

 (b)(c)(d)  

$

12,564

 

$

12,486

 

$

10,885

 

$

73,483

 (b)(c)(d)  

$

49,580

    Net charge-off rate

(11)

 

 

1.45%

 

 

3.57%

(b)(c)(d)

 

1.32%

 

 

1.33%

 

 

1.18%

 

 

1.63%

(b)(c)(d)

 

1.14%

    Early delinquency rate (30 - 89 days past due)

 

 

 

3.69%

 

 

3.64%

 

 

3.51%

 

 

3.61%

 

 

3.34%

 

 

3.69%

 

 

3.34%

    Total delinquency rate (30 days and over)

 

 

 

5.31%

 

 

5.39%

 

 

6.07%

 

 

6.33%

 

 

6.36%

 

 

5.31%

 

 

6.36%

Capital Ratios (Non-GAAP)

(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

13.99%

 

 

15.41%

 

 

15.20%

 

 

14.64%

 

 

14.22%

 

 

13.99%

 

 

14.22%

Common equity Tier 1 capital ratio

 

 

 

10.78%

 

 

17.98%

 

 

17.48%

 

 

17.09%

 

 

16.78%

 

 

10.78%

 

 

16.78%

Tier 1 risk-based capital ratio

 

 

 

12.50%

 

 

20.43%

 

 

19.87%

 

 

19.49%

 

 

19.20%

 

 

12.50%

 

 

19.20%

Total risk-based capital ratio

 

 

 

13.77%

 

 

21.71%

 

 

21.14%

 

 

20.77%

 

 

20.48%

 

 

13.77%

 

 

20.48%

Tangible common equity ("TCE") ratio

 

 

 

8.97%

 

 

14.07%

 

 

13.71%

 

 

13.05%

 

 

12.76%

 

 

8.97%

 

 

12.76%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, incurring in merger and restructuring charges of $21.5 million during 4Q 2019.

(b) During 3Q 2019, the Company received $2.4 million proceeds from the sale of fully charged-off originated auto and consumer loans.

(c) During 3Q 2019, the Company decided to sell mostly non-performing loans, increasing the provision by $37.2 million. Originated loans that were transferred to held-for-sale amounted to $25.3 million at September 30, 2019, the remaining were purchased credit impaired loans. Loans were sold during 4Q 2019, with an additional increase in the provision of $6.6 million.

(d) During 2Q 2019, the Company decided to sell mostly non-performing mortgage loans increasing the provision by $8.8 million. Most of these loans were sold in 3Q 2019, increasing the provision by an additional $1.8 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 


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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)

 

 

2019

 

2019

 

2019

 

2019

 

2018

 

2019

 

2018

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

73,600

 

 $  

74,303

 

$

72,978

 

$

71,298

 

 $  

70,747

 

$

292,179

 

 $  

254,047

    Acquired BBVAPR loans

 

 

 

8,969

 

 

9,090

 

 

9,603

 

 

10,247

 

 

10,935

 

 

37,909

 

 

54,500

    Acquired Eurobank loans

 

 

 

2,335

 

 

2,379

 

 

2,499

 

 

2,574

 

 

2,642

 

 

9,787

 

 

12,834

          Total interest income from loans

 

 

 

84,904

 

 

85,772

 

 

85,080

 

 

84,119

 

 

84,324

 

 

339,875

 

 

321,381

Investment securities

 

 

 

6,271

 

 

7,883

 

 

9,175

 

 

10,591

 

 

10,782

 

 

33,920

 

 

39,038

          Total interest income

 

 

 

91,175

 

 

93,655

 

 

94,255

 

 

94,710

 

 

95,106

 

 

373,795

 

 

360,419

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

7,957

 

 

8,256

 

 

7,465

 

 

6,214

 

 

6,396

 

 

29,892

 

 

23,202

    Brokered deposits

 

 

 

1,804

 

 

2,298

 

 

2,526

 

 

2,835

 

 

3,003

 

 

9,463

 

 

9,751

           Total deposits

 

 

 

9,761

 

 

10,554

 

 

9,991

 

 

9,049

 

 

9,399

 

 

39,355

 

 

32,953

Borrowings

 

 

 

2,205

 

 

2,391

 

 

3,179

 

 

3,872

 

 

3,672

 

 

11,647

 

 

11,572

           Total interest expense

 

 

 

11,966

 

 

12,945

 

 

13,170

 

 

12,921

 

 

13,071

 

 

51,002

 

 

44,525

Net interest income

 

 

 

79,209

 

 

80,710

 

 

81,085

 

 

81,789

 

 

82,035

 

 

322,793

 

 

315,894

    Provision for loan and lease losses, excluding acquired loans

 (1)  

 

 

18,387

 

 

23,564

 (c)(d)(e)  

 

8,481

 

 

11,333

 

 

10,842

 

 

61,765

 

 

52,055

    Provision (recapture) for acquired BBVAPR loan and lease losses

(1)

 

 

4,526

 

 

19,135

(c)(d)(e)

 

7,446

(e)

 

1,567

 

 

(998)

 

 

32,674

 

 

1,487

    Provision for acquired Eurobank loan and lease losses

 (1)  

 

 

155

 

 

1,071

 (d)(e)  

 

1,778

 (e)  

 

(651)

 (f)  

 

1,456

 

 

2,353

 

 

2,566

          Total provision for loan and lease losses, net

 

 

 

23,068

 

 

43,770

 

 

17,705

 

 

12,249

 

 

11,300

 

 

96,792

 

 

56,108

           Net interest income after provision for loan and lease losses

 

 

 

56,141

 

 

36,940

 

 

63,380

 

 

69,540

 

 

70,735

 

 

226,001

 

 

259,786

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

10,812

 

 

10,813

 

 

10,776

 

 

10,465

 

 

11,234

 

 

42,866

 

 

43,638

Wealth management revenues

 

 

 

7,062

 

 

6,611

 

 

6,669

 

 

5,882

 

 

7,246

 

 

26,224

 

 

25,934

Mortgage banking activities

 

 

 

1,322

 

 

1,118

 

 

629

 

 

1,206

 

 

780

 

 

4,275

 

 

4,767

          Total banking and financial service revenues

 

 

 

19,196

 

 

18,542

 

 

18,074

 

 

17,553

 

 

19,260

 

 

73,365

 

 

74,339

Bargain purchase from Scotiabank PR & USVI acquisition

 

 

 

315

 

 

-

 

 

-

 

 

-

 

 

-

 

 

315

 

 

-

Other income, net

 

 

 

200

 

 

3,636

 (b)  

 

4,874

(b)

 

103

 

 

4,998

 

 

8,813

 (b)  

 

5,756

          Total non-interest income, net

 

 

 

19,711

 

 

22,178

 

 

22,948

 

 

17,656

 

 

24,258

 

 

82,493

 

 

80,095

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

21,817

 

 

20,500

 

 

19,875

 

 

20,341

 

 

19,322

 

 

82,533

 

 

76,524

Occupancy, equipment and infrastructure costs

 

 

 

7,488

 

 

7,307

 

 

7,511

 

 

7,746

 

 

7,762

 

 

30,052

 

 

33,084

Merger and restructuring charges

 

 

 

21,498

(a)

 

1,556

 

 

1,000

 

 

-

 

 

-

 

 

24,054

(a)

 

-

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

 

 

 

541

 

 

794

 

 

21

 

 

1,070

 

 

1,834

 

 

2,426

 

 

4,662

General and administrative expenses

 

 

 

24,894

 

 

18,475

 

 

20,482

 

 

20,699

 

 

20,963

 

 

84,550

 

 

83,921

           Total operating expenses

 

 

 

76,238

 

 

48,632

 

 

48,889

 

 

49,856

 

 

49,881

 

 

223,615

 

 

198,191

Credit related expenses

 

 

 

2,118

 

 

2,095

 

 

2,563

 

 

2,296

 

 

1,838

 

 

9,072

 

 

8,890

           Total non-interest expense

 

 

 

78,356

 

 

50,727

 

 

51,452

 

 

52,152

 

 

51,719

 

 

232,687

 

 

207,081

(Loss) income before income taxes

 

 

 

(2,504)

 

 

8,391

 

 

34,876

 

 

35,044

 

 

43,274

 

 

75,807

 

 

132,800

Income tax (benefit) expense

 

 

 

(1,861)

 

 

1,008

 

 

10,897

 

 

11,574

 

 

18,530

 

 

21,618

 

 

48,390

Net (loss) income

 

 

 

(643)

(a)

 

7,383

 

 

23,979

 

 

23,470

 

 

24,744

 

 

54,189

(a)

 

84,410

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(5,513)

    Other preferred stock

 

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(6,512)

 

 

(6,511)

Net (loss) income available to common shareholders

 

 

$

(2,271)

 

$

5,755

 

$

22,351

 

$

21,842

 

$

23,116

 

$

47,677

 

$

72,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, incurring in merger and restructuring charges of $21.5 million during 4Q 2019.

(b) During 2Q 2019 and 3Q 2019, the Company sold $350 million and $322 million available-for-sale mortgage-backed securities, respectively, and recognized a gain in the sale of $4.8 million and $3.5 million.

(c) During 3Q 2019, the Company received $2.4 million proceeds from the sale of fully charged-off originated auto and consumer loans.

(d) During 3Q 2019, the Company decided to sell mostly non-performing loans, increasing the provision by $37.2 million. Originated loans that were transferred to held-for-sale amounted to $25.3 million at September 30, 2019, the remaining were purchased credit impaired loans. Loans were sold during 4Q 2019, with an additional increase in the provision of $6.6 million.

(e) During 2Q 2019, the Company decided to sell mostly non-performing mortgage loans increasing the provision by $8.8 million. Most of these loans were sold in 3Q 2019, increasing the provision by an additional $1.8 million.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 


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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)

 

 

2019

 

2019

 

2019

 

2019

 

2018

Cash and cash equivalents

 

 

$

852,757

 

$

962,887

 

$

677,430

 

$

509,023

 

$

450,063

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

37

 

 

41

 

 

412

 

 

381

 

 

360

Investment securities available-for-sale, at fair value, with amortized cost of $1,074,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (September 30, 2019 - $520,960; June 30, 2019 - $860,911; March 31, 2019 - $1,248,750;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     December 31, 2018 - $854,511)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

673,886

 

 

505,102

 

 

843,333

 

 

1,225,225

 

 

827,564

    US treasury notes

 

 

 

397,183

 

 

10,938

 

 

10,907

 

 

10,859

 

 

10,807

    Other investment securities

 

 

 

3,100

 

 

3,055

 

 

3,193

 

 

3,385

 

 

3,486

          Total investment securities available-for-sale

 

 

 

1,074,169

 

 

519,095

 (b)  

 

857,433

 (b)  

 

1,239,469

 (d)  

 

841,857

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (fair value at December 31, 2018 - $410,353;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      September 30, 2018 - $425,066)

 

 

 

-

 

 

-

 

 

-

 

 

-

(d)

 

424,740

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

13,048

 

 

10,525

 

 

12,821

 

 

12,800

 

 

12,644

Other investments

 

 

 

560

 

 

57

 

 

3

 

 

3

 

 

3

          Total investments

 

 

 

1,087,814

 

 

529,718

 

 

870,669

 

 

1,252,653

 

 

1,279,604

Securities sold but not yet delivered

 

 

$

339

 

$

-

 

$

-

 

$

-

 

$

-

Loans, net

 

 

 

6,641,847

 (a)  

 

4,407,190

 (c)  

 

4,474,497

 

 

4,401,401

 

 

4,431,594

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets

 

 

 

6

 

 

13

 

 

26

 

 

110

 

 

347

Prepaid expenses

 

 

 

52,648

 

 

14,244

 

 

11,903

 

 

7,830

 

 

10,283

Deferred tax asset, net

 

 

 

176,531

 

 

112,602

 

 

111,147

 

 

112,744

 

 

113,763

Foreclosed real estate and repossessed properties

 

 

 

33,236

 

 

30,488

 

 

32,016

 

 

34,439

 

 

36,754

Premises and equipment, net

 

 

 

81,105

 

 

69,754

 

 

71,001

 

 

69,017

 

 

68,892

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

Right of use assets

 

 

 

39,112

 

 

19,318

 

 

20,419

 

 

20,860

(e)

 

-

Core deposit, customer relationship intangible and other intangibles

 

 

 

56,965

 

 

2,491

 

 

2,783

 

 

3,076

 

 

3,368

Servicing asset

 

 

 

50,779

 

 

10,125

 

 

10,134

 

 

10,623

 

 

10,716

Accounts receivable and other assets

 

 

 

138,244

 

 

88,606

 

 

96,033

 

 

95,346

 

 

91,899

Total assets

 

 

$

9,297,452

(a)

$

6,333,505

 

$

6,464,127

 

$

6,603,191

 

$

6,583,352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

$

3,579,115

 

$

2,228,256

 

$

2,219,911

 

$

2,218,186

 

$

2,191,802

Savings accounts

 

 

 

1,815,044

 

 

1,206,569

 

 

1,200,408

 

 

1,231,170

 

&nb