OFG Bancorp (NYSE:OFG) today reported results for the first
quarter ended March 31, 2016.
1Q16 Highlights
- Net income available to shareholders
amounted to $10.7 million, or $0.24 per share fully diluted. This
compares to a loss of $4.4 million, or ($0.10) per share, in the
preceding quarter, and a loss of $6.5 million, or ($0.14) per
share, in the same quarter a year ago.
- Oriental Bank’s retail franchise
continued to grow. New loan generation at $226 million, with
commercial lending leading the way, remained at high levels. Total
customers increased in excess of a 4.0% annualized rate from
December 31, 2015.
- Credit quality continued to improve.
Net charge-offs of loans (excluding acquired loans) declined to
1.30% from 1.67% in 4Q15. The provision for loan losses fell 18.6%
from 4Q15’s adjusted amount (see Table 1). Early and total
delinquency rates declined below both the previous and year-ago
quarters.
- Puerto Rico investment securities
balance fell 62.2% to $6.7 million, reflecting the sale of $12.8
million (average yield of 6.60%) in securities of the Puerto Rico
Industrial Development Company (PRIDCO) and the Puerto Rico Public
Buildings Authority (PBA).
- Net Interest Margin (NIM) expanded to
4.67%, reflecting better yields on interest earning assets.
- Tangible book value per common share
increased to $14.68 from $14.53, and tangible common equity (TCE)
ratio increased to 9.50% from 9.10%.
CEO Comment
José Rafael Fernández, President, Chief Executive Officer, and
Vice Chairman of the Board, commented:
“We are pleased with our first quarter results. This is
particularly so after a tough 2015 in which we had to deal with the
termination of our commercial share loss agreement with the FDIC
and other de-risking actions.
“During the quarter, Oriental Bank originated $226 million in
new loans, while maintaining our traditional discipline in credit
and pricing standards. In addition, we continued to introduce
innovative features for our retail clients, such as Cardless Cash
mobile phone ATM access—another first for Oriental Bank in Puerto
Rico.
“The bank capitalized on market conditions to partially unwind a
high-rate repurchase agreement, and to sell our PRIDCO and PBA
securities and certain of our mortgage-backed securities (MBS). The
aggregate gains and losses had no impact on the 1Q16 income
statement, but will help to improve NIM going forward.
“Of note was our reduced credit costs and operating expenses.
The active management of retail credit has improved results with
lower charge-off levels and provisions, and steady enhancement in
our credit metrics. We continue to closely monitor these trends
given the uncertainty regarding Puerto Rico’s fiscal situation.
“Last year’s rightsizing efforts are evident in our reported
non-interest expenses. The efficiency ratio improved from the
previous quarter to 59.56%, the lowest since 1Q15, and is
approaching our high 50s% target.”
1Q16 Income Statement Highlights
The following compares GAAP Results for the first quarter 2016
to GAAP and Non-GAAP Adjusted Results the fourth quarter 2015.
There are no Non-GAAP Adjustments in 1Q16.
Table 1
Quarter ended
December 31, 2015 March 31, 2016 Actual
Results Quarter Specific Adjusted Results
Actual Results
(Dollars in thousands, except per share
data) (unaudited)
(US GAAP) Items(1) (Non-GAAP)
(US GAAP)(2)
Interest income
$ 92,907 - 92,907
$
91,306 Interest expense
(17,285) -
(17,285)
(16,331) Net interest income
75,622 - 75,622
74,975 Provision for loan and lease
losses, excluding acquired loans
(45,012) (30,345) (14,667)
(10,660) Provision for acquired BBVAPR loan and lease losses
(7,332) (4,900) (2,432)
(2,324) (Recapture) provision
for acquired Eurobank loan and lease losses
154
- 154
(805) Total provision for loan
and lease losses, net (52,190) (35,245)
(16,945)
(13,789)
Net interest income after provision for
loan and lease losses
23,432 (35,245) 58,677
61,186 Banking and wealth
management revenues
19,349 - 19,349
17,125
Other-than-temporary impairment losses on investment securities
(1,244) (1,244) -
- FDIC shared-loss expense, net
(4,400) (1,589) (2,811)
(4,029) Gain on FDIC
shared-loss coverage in sale of loans
- - -
- Other
(losses) gains, net
565 - 565
407 Total non-interest income
14,270 (2,833) 17,103
13,503 Compensation and
employee benefits
(18,717) - (18,717)
(20,284) Rent
and occupancy costs
(8,111) - (8,111)
(7,822) General
and administrative expenses
(31,714) (1,462)
(30,252)
(26,751) Total non-interest
expense (58,542) (1,462) (57,080)
(54,857) Income before taxes (20,840)
(39,540) 18,700
19,832 Income tax expense (benefit)
(19,863) 6,171
5,661 Net income
(977) 12,529
14,171 Preferred stock dividends
(3,466) (3,466)
(3,465) Net income
(loss) available to common shareholders $ (4,443)
$ 9,064
$ 10,706 Earnings (loss) per common
share - basic $ (0.10) $
0.21 $
0.24 Earnings (loss) per common share - diluted
$ (0.10) $
0.21 $ 0.24
(1) 4Q15 results included the following quarter specific items:
($30.4) million provision related to the PREPA line, ($4.9) million
impairment during the annual recasting of a BBVA PR loan pool,
($1.5) million in legal fees related to PREPA’s restructuring,
($1.6) million in a final settlement with the FDIC related to the
expiration of the commercial loss sharing agreement, ($1.2) million
in OTTI, and a $19.9 million tax benefit.
(2) 1Q16 Other Gains (Losses) included the effect of the
following transactions: (i) $16.1 million gain on the sale of
$272.1 million (average yield of 3.00%) of MBS; (ii) $12.0 million
cost of unwinding $268.0 million (average rate of 4.78%) in
repurchase agreements; and (iii) loss of $4.1 million on the sale
of $12.8 million (average yield of 6.60%) of PRIDCO and PBA
securities. The aggregate gains and losses had no impact on the
1Q16 income statement.
Adjusted for the above-listed factors:
- Interest Income declined $1.6
million to $91.3 million. This was due to lower balances in BBVA PR
acquired loans and in the investment securities portfolio,
partially offset by higher interest income from a greater volume of
originated loans, higher yields on cash equivalents due to higher
market rates, and higher yields on some BBVA PR loans due to better
cash flows experienced in recent quarters.
- Interest Expense declined $1.0
million to $16.3 million. This reflected the previously mentioned
unwinding of repurchase agreements, partially offset by higher
balances and costs for brokered CDs.
- Total Provision for Loan and Lease
Losses declined $3.2 million on an adjusted basis to $13.8
million. This was primarily due to lower net charge-off
levels.
- Net Interest Margin increased to
4.67% from 4.55% reflecting the reasons mentioned above.
- Total Banking and Wealth Management
Revenues declined $2.2 million on an adjusted basis to $17.1
million. Client trading volumes in our broker-dealer continued to
fall due to the uncertainty in the Puerto Rico market.
- FDIC Shared-Loss Expense,
Net increase of $1.2 million on an adjusted basis to reflect
prior valuation changes in the covered mortgage portfolio.
- Total Non-Interest Expenses
declined $2.2 million on an adjusted basis to $54.9 million. This
was primarily due to lower general and administrative expenses,
partially offset by investments in customer technology.
- Effective Income Tax Rate was
forecasted at approximately 29% for the near-term, including this
quarter.
March 31, 2016 Balance Sheet Highlights
The following compares data as of March 31, 2016 to December 31,
2015 unless otherwise noted.
- Total loans declined to $4.36
billion from $4.43 billion, as originated loans partially offset
outflows in acquired loans.
- Total investments declined to
$1.33 billion from $1.62 billion due to the previously mentioned
sale of MBS and prepayments of mortgage-backed securities.
- Puerto Rico central government and
public corporation loan balances fell 6.5% to $198.2 million.
Loans to Puerto Rico municipalities remained nearly level at $203.6
million. As previously mentioned, Puerto Rico investment securities
balances came down 62.2% to $6.7 million.
- Total deposits increased to
$4.78 billion from $4.72 billion due to higher demand deposits
partially offset by lower short-term brokered balances.
- Total borrowings declined to
$1.1 billion from $1.37 billion due to the previously mentioned
unwinding of a repurchase agreement.
- Total stockholders’ equity
increased to $903.8 million from $897.1 million, reflecting an
increase in retained earnings, partially offset by a decline in
accumulated other comprehensive income, net.
Credit Quality Highlights
The following compares data for the first quarter 2016 to the
fourth quarter 2015 unless otherwise noted.
- Net charge-off (NCO) rate at
1.30% fell 37 basis points, chiefly due to a large decline in the
commercial lending category as compared to 4Q15 when commercial
lending NCOs increased due to one loan.
- Early delinquency rate continued
to fall to 3.51%, its lowest level in the last five quarters, due
to measures taken to proactively manage the effects of the economic
environment.
- Non-performing loan rate at
9.58% declined 16 basis points with our favorable experience in
commercial, auto and mortgage lending offsetting a small increase
from consumer lending.
- Allowance for loan and lease
losses increased $0.6 million to $113.2 million. Coverage of
loans (excluding acquired loans) increased to 3.63% from
3.62%.
Capital Position
The following compares data for the first quarter 2016 to the
fourth quarter 2015.
Regulatory capital ratios continued to be significantly above
requirements for a well-capitalized institution.
- Tangible common equity to total
tangible assets at 9.50% increased 40 basis points.
- Common Equity Tier 1 Capital Ratio
(using Basel III methodology) increased to 12.33% from
12.15%.
- Total risk-based capital ratio
increased to 17.67% from 17.30%.
Conference Call
A conference call to discuss OFG’s results for the first quarter
2016, outlook and related matters will be held today, Friday, April
22, at 10:00 AM Eastern Time. The call will be accessible live via
a webcast on OFG’s Investor Relations website at
www.ofgbancorp.com. A webcast replay will be available shortly
thereafter. Access the webcast link in advance to download any
necessary software.
Financial Supplement
OFG’s Financial Supplement, with full financial tables for the
first quarter ended March 31, 2016, 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.
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) a credit default by the government of Puerto Rico;
(iv) the fiscal and monetary policies of the federal government and
its agencies; (v) changes in federal bank regulatory and
supervisory policies, including required levels of capital; (vi)
the relative strength or weakness of the consumer and commercial
credit sectors and of the real estate market in Puerto Rico; (vii)
the performance of the stock and bond markets; (viii) competition
in the financial services industry; and (ix) 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, 2015, 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 52nd 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 full range of commercial, consumer and mortgage banking
services, as well as financial planning, trust, insurance,
investment brokerage and investment banking services, primarily in
Puerto Rico, through 48 financial centers. Investor information can
be found at www.ofgbancorp.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160422005484/en/
Puerto Rico:Alexandra López,
787-522-6970allopez@orientalbank.comorUS:Steven Anreder and
Gary Fishman,
212-532-3232sanreder@ofgbancorp.comorgfishman@ofgbancorp.com
OFG Bancorp (NYSE:OFG)
Historical Stock Chart
From Apr 2024 to May 2024
OFG Bancorp (NYSE:OFG)
Historical Stock Chart
From May 2023 to May 2024