OFG Bancorp (NYSE: OFG), the financial holding company for
Oriental Bank, reported results for the first quarter ended March
31, 2023. EPS diluted of $0.96 compared to $0.97 in 4Q22 and $0.76
in 1Q22. Total core revenues of $164.4 million compared to $168.3
million in 4Q22 and $136.4 million in 1Q22.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “The first
quarter continued to reflect high levels of liquidity and capital,
putting OFG in a strong position in today’s banking environment.
Our financial results also demonstrated solid core revenues, net
interest margin, credit quality, operating leverage, and customer
acquisition trends. Deposit balances were stable with a cumulative
beta of approximately 10%. In addition, we continued to execute our
‘digital first’ strategy, placing more banking kiosks and
interactive teller machines in the field, and client digital
adoption increased 10% year-over-year. With Puerto Rico businesses
and consumers remaining in good financial health, we look forward
to ongoing progress in 2023. Thanks to our team for their excellent
execution, dedication, and drive in helping customers and the
communities we serve to achieve their financial goals.”
1Q23 Highlights
Performance Metrics: Net interest margin of 5.89%, return
on average assets of 1.87%, return on average tangible common
stockholders’ equity of 19.13%, and efficiency ratio of 54.87%.
Net Interest Income of $135.9 million compared to $135.3
million in 4Q22 and $105.2 million in 1Q22. 1Q23 reflected the full
effect of 4Q22’s 50 basis point increase in the federal funds rate
and the partial effect of 1Q23’s 50 bps increase. Two fewer days
compared to 4Q22 reduced Net Interest Income by $2.2 million.
Total Interest Income of $149.0 million compared to
$145.7 million in 4Q22 and $112.9 million in 1Q22. Compared to
4Q22, 1Q23 reflected higher yields on increased average loans, in
particular auto, commercial, and consumer.
Total Interest Expense of $13.1 million compared to $10.4
million in 4Q22 and $7.8 million in 1Q22. Compared to 4Q22, 1Q23
reflected a 14 basis point cost increase and a 1.5% decline in
average interest bearing liabilities.
Total Banking & Financial Service Revenues of $28.5
million compared to $33.0 million in 4Q22 and $31.2 million in
1Q22. Compared to 4Q22, 1Q23 reflected a reduction of $2.0 million
in mortgage servicing rights valuation, $1.0 million in annual
insurance fees, and $0.5 million from the sale of the retirement
plan administration business at the end of 2022.
Pre-Provision Net Revenues of $74.6 million compared to
$76.9 million in 4Q22 and $55.6 million in 1Q22. The sequential
quarterly decline was mostly due to the change in banking and
financial service revenues.
Total Provision for Credit Losses of $9.4 million
compared to $8.8 million in 4Q22 and $1.6 million in 1Q22. 1Q23
included $6.2 million due to increased loan volume, $2.1 million
for a commercial loan held for sale, and $1.1 million increase in
the qualitative adjustment due to the reduced macroeconomic
environment outlook in the US.
Credit Quality: Net charge-offs of $10.1 million compared
to $11.2 million in 4Q22 and $0.6 million in 1Q22. 1Q23 primarily
reflected a reduction of auto loan NCOs compared to 4Q22. 1Q23
delinquency and non-performing loan rates fell across the board
compared to 4Q22.
Total Non-Interest Expense of $90.2 million compared to
$91.6 million in 4Q22 and $81.2 million in 1Q22. Compared to 4Q22,
1Q23 general and administrative costs were lower, including a $0.5
million reduction from the above-mentioned sale of the retirement
plan administration business.
Loans Held for Investment (EOP) of $6.85 billion compared
to $6.84 billion in 4Q22 and $6.55 billion in 1Q22. Loans increased
1.1% annualized from the previous quarter and 4.7% year-over-year.
Compared to 4Q22, 1Q23 reflected increases in auto and consumer
loans and paydowns of residential mortgages and commercial lines of
credit.
New Loan Production of $561.3 million compared to $616.4
million in 4Q22 and $623.2 million in 1Q22. Compared to 4Q22, 1Q23
reflected continued high levels of auto lending, increased
commercial-US and consumer lending, and reduced commercial-PR
lending.
Total Investments (EOP) of $1.92 billion compared to
$1.97 billion in 4Q22 and $1.26 billion in 1Q22. 1Q23 investments
declined $54.3 million from 4Q22 due to the maturity of Treasury
Bills and paydowns of mortgage-backed securities.
Customer Deposits (EOP) of $8.57 billion compared to
$8.56 billion in 4Q22 and $8.97 billion in 1Q22.
Total Borrowings (EOP) of $226.8 million compared to
$27.0 million in 4Q22 and $28.0 million in 1Q22. 1Q23 included a
$200.0 million, 2-year advance from the Federal Home Loan Bank.
Cash & Cash Equivalents (EOP) of $847.5 million
compared to $550.5 million in 4Q22 and $1.9 billion in 1Q22. 1Q23
cash increased $297.0 million compared to the previous quarter.
Total Assets (EOP) of $10.06 billion compared to $9.82
billion in 4Q22 and $10.19 billion in 1Q22.
Capital: CET1 ratio of 14.07% compared to 13.64% in 4Q22
and 13.24% in 1Q22. Compared to 4Q22, 1Q23 reflected increased
retained earnings and lower risked weighted assets. The Tangible
Common Equity ratio was 9.85% compared to 9.59% in 4Q22 and 9.14%
in 1Q22. Compared to 4Q22, 1Q23 reflected increased retained
earnings and a lower other comprehensive loss. Tangible Book Value
per share of $20.57 compared to $19.56 in 4Q22 and $18.90 in
1Q22.
Conference Call, Financial Supplement &
Presentation
A conference call to discuss 1Q23 results, outlook and related
matters will be held today at 10:00 AM ET. Phone (800) 225-9448 or
(203) 518-9708. Conference ID: OFGQ123. The call can also be
accessed live on www.ofgbancorp.com with webcast replay shortly
thereafter.
OFG’s Financial Supplement, with full financial tables for the
quarter ended March 31, 2023, and the 1Q23 Conference Call
Presentation, can be found on the Quarterly Results 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 SEC Regulation G, to clarify and enhance
understanding of past performance and prospects for the future.
Please refer to Tables 8-1 and 8-2 in OFG’s above-mentioned
Financial Supplement for a 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) general business and economic conditions, including
changes in interest rates; (ii) cybersecurity breaches; (iii)
hurricanes, earthquakes, and other natural disasters; (iv)
competition in the financial services industry; and (v) the
severity, magnitude and duration of the COVID-19 pandemic, and its
impact on our operations, personnel, and customers.
For a discussion of such factors and certain risks and
uncertainties to which OFG is subject, please refer to OFG’s annual
report on Form 10-K for the year ended December 31, 2022, 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 59th 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 www.ofgbancorp.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20230419005902/en/
Puerto Rico & USVI: Idalis Montalvo
(idalis.montalvo@orientalbank.com) at (787) 777-2847
US: Gary Fishman (gfishman@ofgbancorp.com) and Steven
Anreder (sanreder@ofgbancorp.com) at (212) 532-3232
OFG Bancorp (NYSE:OFG)
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