Exhibit 99
OFG Bancorp Reports 2Q15 Results
SAN JUAN, Puerto Rico, July 24, 2015 – OFG Bancorp (NYSE: OFG) today reported results for the second quarter ended June 30, 2015.
José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, commented, “While a few quarter specific items caused us to post a loss in 2Q15, our core business performed well and capital continues to be strong.”
2Q15 Highlights
· Loss of $6.6 million, or ($0.15) per share, compared to a loss of $6.5 million, or ($0.14) per share, in the preceding quarter, and a profit of $17.8 million, or $0.38 per share diluted, in the year ago quarter.
· Compared to 1Q15, 2Q15 results were adversely impacted by:
o Absence of $4.2 million in tax free interest income from loans to the Puerto Rico Electric Power Authority (PREPA) and the Puerto Rico Aqueduct and Sewer Authority (PRASA).
1. PREPA: Interest payments on the $200 million loan, which is on non-accrual status, are being applied to the principal.
2. PRASA: The $75 million remaining balance was paid-off on June 1, 2015.
o $10.2 million increase in FDIC commercial loss share amortization (from $13.1 million to $23.2 million) related to the scheduled expiration of the Eurobank commercial loss sharing agreement with the FDIC. Going forward, the loss share amortization for remaining residential mortgages should be significantly lower.
o $4.5 million of additional loss in Other Real Estate Owned (OREO) due to revised collateral values as part of ongoing and proactive de-risking efforts.
· Partially offsetting the above was:
o $26.7 million decline in the total provision for loan and lease losses. This reflects no additional PREPA provision ($24.0 million in 1Q15) because the government utility and its creditors are actively working on a repayment agreement. Additionally, no provision was required on FDIC covered commercial loans ($4.8 million in 1Q15).
o Continued growth of the Oriental Bank franchise through the opening of new retail deposit accounts, reduced cost of total deposits, and strong levels of core non-interest fee revenues and loan production.
o Improved credit, with declines in net charge-offs, total delinquencies and non-performing loans.
· Puerto Rico central government and public corporation balances declined 20.7% to $301.3 million at June 30, 2015 from $380.1 million at March 31, 2015. This excludes $214.0 million in term loans to five municipal governments that are completely separate entities with their own sources of tax revenues.
· Tangible book value and book value per common share declined to $14.67 and $16.81 from $15.12 and $17.25, respectively, at March 31, 2015. Regulatory capital ratios continued to be significantly above requirements for a well-capitalized institution.
CEO Comment
In commenting on 2Q15 results, Mr. Fernández stated, “This quarter demonstrates our discipline in navigating one of the most difficult operating environments in banking today.
“Our core business performed well as we continued to grow Oriental Bank’s franchise serving the commercial and consumer sectors. We experienced strong generation of quality loans with good pricing discipline, strong fee revenue levels, and good core expense management. Oriental’s retail deposit base and mortgage and consumer loan businesses continued to benefit from successful marketing attracting new customers. In addition, credit continued to improve as evidenced, among other things, by lower provisions and net charge-offs while we maintained provisions at 1.20-1.25% of net charge-offs, increasing the allowance levels.
“However, the absence of tax-free interest income from the PREPA and PRASA loans was a drag on NIM and earnings in general. With the scheduled expiration of our commercial loss share agreement with the FDIC, we incurred a final write down of the remaining amortization asset for covered commercial loans. In addition, we de-risked our non-covered portfolio by updating valuations of certain underlying collaterals and adopted a restitution program in our broker-dealer subsidiary.
“Looking ahead, prevailing economic conditions in Puerto Rico are challenging and uncertain. Our strategy is to be vigilant in managing our risk exposure and the factors under our control. We urge the Central Government to act quickly and in cooperation with the investment community to restart the Puerto Rico economy, which has now been stalled for nearly a decade.
“Our ultimate goals remain the same: build the Oriental franchise, further affirming our reputation as the best bank in Puerto Rico; maximize our profitability and capital; preserve our flexibility to pursue strategic alternatives; and deploy our strong capital base to increase shareholder return in a sustainable manner.”
2Q15 Income Statement Highlights
The following compares data for the second quarter 2015 to the first quarter 2015 unless otherwise noted.
· Total interest income declined $7.6 million to $99.4 million. This reflected:
o Lower loan income from PREPA ($3.6 million) and PRASA ($0.6 million), as noted above, and from covered loans ($2.8 million) as balances continued to pay down.
o Growth in loan income from all other originated loans offsetting declines in all other acquired non-covered loans.
o $0.6 million in higher premium amortization on investment securities.
· Total interest expense fell slightly to $17.1 million as we continued to improve the deposit funding profile with decreases in rates.
· Net Interest Margin declined to 4.92% from 5.42%, primarily reflecting the loss of income from the PREPA and PRASA loans.
· Provision for loan and lease losses fell $26.7 million to $15.5 million. This reflected no additional PREPA and covered loan provisioning, as previously mentioned, and $1.3 million decline in provision on other originated and acquired loans.
· Total core non-interest income increased slightly to $19.4 million. This reflected increased or sustained levels of revenue across the board in wealth management, banking services and mortgage banking activity.
· FDIC indemnification asset amortization increased $10.2 million, as mentioned above, to $23.2 million. The indemnification asset was $22.7 million at June 30, 2015 versus $75.2 million at March 31, 2015.
· Non-interest expenses increased $8.1 million, to $64.4 million. This primarily reflected the following non-recurring expenses:
1. The aforementioned $4.5 million increased OREO loss and $1.8 million restitution program by our broker-dealer subsidiary.
2. $1.1 million to close a branch and other quarter specific expenses.
2Q15 Business Activity Highlights
The following compares data for the second quarter 2015 to the first quarter 2015 unless otherwise noted.
· Total new loan production (excluding renewals) increased 19.7% to $286.7 million.
· Commercial loan production increased 40.7% to $120.5 million, reflecting the pipeline that was starting to build in 1Q15.
· Residential mortgage loan production, most of which is sold into the secondary market, increased 5.0% to $64.8 million as Oriental continued to expand its market share.
· Consumer loan production increased 52.3% to $39.8 million due to improved marketing and a larger client base.
· Auto loan production declined 6.6% to $61.5 million. This reflects increased competition from the captive finance arms of manufacturers, and our own initiative to increase FICO score requirements to improve credit.
· Cost of deposits declined 5 basis points to 0.65% from 1Q15 and 22 basis points from 0.87% in 2Q14, as a result of reductions in demand, savings, time and brokered deposit rates.
June 30, 2015 Balance Sheet Highlights
The following compares data as of June 30, 2015 to March 31, 2015 or for the second quarter 2015 to the first quarter 2015 unless otherwise noted.
· Average interest earning assets increased slightly to $6.71 billion. This reflected an increase in total investments as OFG reinvested excess cash from repayments of loans and investment securities, and increased originated loans, all of which more than offset declines in acquired and covered loans due to normal pay downs.
· Total stockholders’ equity declined $24.8 million to $911.6 million. This primarily reflected a $10.9 million decrease in retained earnings and a $10.0 million decrease in other comprehensive income.
Credit Quality Highlights
The following compares data for the second quarter 2015 to the first quarter 2015 unless otherwise noted.
· Net charge-offs declined 10.1% to $7.7 million as we continued to fine tune our collection efforts to evolving credit trends. Net charge-offs have declined three quarters in a row.
· Total delinquency rate declined 88 basis points to 7.72% primarily due to improvements in the mortgage, consumer and auto loan portfolios. The total delinquency rate has declined three quarters in a row.
· Non-performing loan rate declined 20 basis points to 10.44%.
· Allowance for loan and lease losses increased $2.2 million to $79.0 million. This resulted in coverage of 2.67% of loans held for investment compared to 2.64%.
Capital Position
The following compares data for the second quarter 2015 to the first quarter 2015.
· Tangible common equity to total tangible assets declined to 8.91% from 9.29% based on a 3.6% decrease in tangible common equity to $650.9 million and a 0.5% increase in tangible assets to $7.3 billion.
· Common Equity Tier 1 Capital Ratio (using Basel III methodology) was 12.25% compared to 12.63%.
· Total risk-based capital ratio declined to 17.40% from 17.69% based on a 2.1% decline in total risk-based capital to $868.6 million and a 0.4% decline in total risk weighted assets to $5.0 billion.
Conference Call
A conference call to discuss OFG’s results for the second quarter 2015, outlook and related matters will be held today, Friday, July 24, 2015 at 11:15 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 second quarter ended June 30, 2015, can be found on the Webcasts, Presentations & Other Files page, on OFG’s Investor Relations website at www.ofgbancorp.com.
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, 2014, 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 51st 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 52 financial centers and 332 ATMs. Investor information can be found at www.ofgbancorp.com.
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Contacts
Puerto Rico: Alexandra López (allopez@orientalbank.com), OFG Bancorp, (787) 522-6970
US: Steven Anreder (sanreder@ofgbancorp.com) and Gary Fishman (gfishman@ofgbancorp.com) at (212) 532-3232
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OFG Bancorp | |
Financial Supplement | |
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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, 2015 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission. | |
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Table of Contents | |
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| 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 | | 4-5 | |
| Table 4: | | Information on Loan Portfolio and Production | | 6 | |
| Table 5: | | Average Balances, Net Interest Income and Net Interest Margin | | 7-8 | |
| Table 6: | | Loan Information and Performance Statistics (Excluding Acquired Loans) | | 9-10 | |
| Table 7: | | Allowance for Loan and Lease Losses | | 11 | |
| Table 8: | | Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired | | | |
| | | with Deteriorated Credit Quality, Including those by Analogy) | | 12 | |
| Table 9: | | Reconciliation of Non-GAAP Measures and Calculation of Regulatory | | | |
| | | Capital Measures | | 13-14 | |
| Table 10: | | Notes to Financial Summary, Selected Metrics, Loans, and Consolidated | | | |
| | | Financial Statements | | 15 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | |
Table 1: Financial and Statistical Summary - Consolidated |
| | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 | | 2015 | | 2014 |
(Dollars in thousands, except per share data) (unaudited) | | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 | | YTD | | YTD |
Earnings | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | $ | 82,292 | | $ | 89,635 | | $ | 97,128 | | $ | 101,871 | | $ | 106,078 | | $ | 171,927 | | $ | 209,476 |
Non-interest income, net (core) | (2) | | | 19,359 | | | 19,223 | | | 20,981 | | | 18,963 | | | 18,885 | | | 38,582 | | | 38,004 |
Non-interest expense | | | | 64,437 | | | 56,332 | | | 61,898 | | | 59,575 | | | 59,848 | | | 120,769 | | | 121,252 |
Pre-provision net revenues | | | | 37,214 | | | 52,526 | | | 56,211 | | | 61,259 | | | 65,115 | | | 89,740 | | | 126,228 |
Provision for loan and lease losses | (3) | | | 15,539 | | | 42,193 | | | 16,877 | | | 17,257 | | | 14,815 | | | 57,732 | | | 26,506 |
FDIC shared-loss expense, net | | | | 23,245 | | | 13,084 | | | 11,980 | | | 16,934 | | | 18,355 | | | 36,329 | | | 36,842 |
Net (loss) income before income taxes | | | | (2,340) | | | (2,009) | | | 27,449 | | | 27,530 | | | 31,922 | | | (4,349) | | | 67,454 |
Net (loss) income | | | | (3,109) | | | (2,988) | | | 20,593 | | | 19,532 | | | 21,309 | | | (6,097) | | | 45,056 |
Net (loss) income available to common stockholders | | | $ | (6,575) | | $ | (6,453) | | $ | 17,127 | | $ | 16,067 | | $ | 17,843 | | $ | (13,028) | | $ | 38,125 |
Common Share Statistics | | | | | | | | | | | | | | | | | | | | | | |
(Loss) earnings per common share - basic | (4) | | $ | (0.15) | | $ | (0.14) | | $ | 0.38 | | $ | 0.36 | | $ | 0.40 | | $ | (0.29) | | $ | 0.84 |
(Loss) earnings per common share - diluted | (5) | | $ | (0.15) | | $ | (0.14) | | $ | 0.36 | | $ | 0.34 | | $ | 0.38 | | $ | (0.29) | | $ | 0.80 |
Average common shares outstanding | | | | 44,505 | | | 44,634 | | | 44,705 | | | 45,054 | | | 45,014 | | | 44,569 | | | 45,170 |
Average common shares outstanding and equivalents | | | | 51,774 | | | 51,977 | | | 52,000 | | | 52,362 | | | 52,352 | | | 51,876 | | | 52,476 |
Cash dividends per common share | (6) | | $ | 0.10 | | $ | 0.10 | | $ | 0.10 | | $ | 0.08 | | $ | 0.08 | | $ | 0.20 | | $ | 0.16 |
Book value per common share (period end) | | | $ | 16.81 | | $ | 17.25 | | $ | 17.40 | | $ | 16.96 | | $ | 16.87 | | $ | 16.81 | | $ | 16.87 |
Tangible book value per common share (period end) | (7) | | $ | 14.67 | | $ | 15.12 | | $ | 15.25 | | $ | 14.82 | | $ | 14.71 | | $ | 14.67 | | $ | 14.71 |
Balance Sheet (Average Balances) | | | | | | | | | | | | | | | | | | | | | | |
Loans held for investment | (8) | | $ | 4,748,145 | | $ | 4,794,432 | | $ | 4,856,143 | | $ | 4,939,895 | | $ | 5,019,381 | | $ | 4,806,490 | | $ | 5,013,404 |
Interest-earning assets | | | | 6,708,519 | | | 6,703,286 | | | 6,817,770 | | | 6,923,410 | | | 6,972,134 | | | 6,741,247 | | | 7,093,562 |
Total assets | | | | 7,329,277 | | | 7,375,974 | | | 7,528,917 | | | 7,646,430 | | | 7,736,711 | | | 7,352,496 | | | 7,888,094 |
Interest-bearing deposits | | | | 3,986,700 | | | 4,167,592 | | | 4,261,729 | | | 4,397,077 | | | 4,514,556 | | | 4,076,646 | | | 4,573,431 |
Borrowings | | | | 1,466,103 | | | 1,378,344 | | | 1,431,076 | | | 1,457,908 | | | 1,470,669 | | | 1,422,467 | | | 1,551,278 |
Stockholders' equity | | | | 929,867 | | | 948,302 | | | 936,218 | | | 919,804 | | | 914,395 | | | 939,043 | | | 904,556 |
Common stockholders' equity | | | | 763,997 | | | 782,432 | | | 770,348 | | | 753,934 | | | 748,525 | | | 773,173 | | | 738,686 |
Performance Metrics | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | (9) | | | 4.92% | | | 5.42% | | | 5.65% | | | 5.84% | | | 6.10% | | | 5.14% | | | 5.96% |
Return on average assets | (10) | | | -0.17% | | | -0.16% | | | 1.09% | | | 1.02% | | | 1.10% | | | -0.17% | | | 1.14% |
Return on average tangible common stockholders' equity | (11) | | | -3.93% | | | -3.76% | | | 10.16% | | | 9.78% | | | 10.96% | | | -3.84% | | | 11.89% |
Efficiency ratio | (12) | | | 63.39% | | | 51.75% | | | 52.41% | | | 49.30% | | | 47.89% | | | 57.37% | | | 48.99% |
Full-time equivalent employees, period end | | | | 1,507 | | | 1,510 | | | 1,567 | | | 1,570 | | | 1,575 | | | 1,507 | | | 1,575 |
Credit Quality Metrics | | | | | | | | | | | | | | | | | | | | | | |
Excluding acquired loans: | (1) | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | (3) | | $ | 78,989 | | $ | 76,759 | | $ | 51,441 | | $ | 50,279 | | $ | 50,638 | | $ | 78,989 | | $ | 50,638 |
Allowance as a % of loans held for investment | | | | 2.67% | | | 2.64% | | | 1.81% | | | 1.84% | | | 1.92% | | | 2.67% | | | 1.92% |
Net charge-offs | | | $ | 7,723 | | $ | 8,592 | | $ | 8,640 | | $ | 8,928 | | $ | 6,300 | | $ | 16,315 | | $ | 11,499 |
Net charge-off rate | (13) | | | 1.06% | | | 1.21% | | | 1.25% | | | 1.34% | | | 0.96% | | | 1.13% | | | 0.91% |
Early delinquency rate (30 - 89 days past due) | | | | 4.84% | | | 4.67% | | | 4.91% | | | 5.20% | | | 4.85% | | | 4.84% | | | 4.85% |
Total delinquency rate (30 days and over) | | | | 7.72% | | | 8.60% | | | 8.99% | | | 9.27% | | | 8.61% | | | 7.72% | | | 8.61% |
Capital Ratios | (14)(24) | | | | | | | | | | | | | | | | | | | | | |
Leverage ratio | | | | 11.05% | | | 11.23% | | | 10.61% | | | 10.51% | | | 10.26% | | | 11.05% | | | 10.26% |
Common equity Tier 1 capital ratio | | | | 12.25% | | | 12.63% | | | N/A | | | N/A | | | N/A | | | 12.25% | | | N/A |
Tier 1 common equity ratio | | | | N/A | | | N/A | | | 11.88% | | | 11.86% | | | 11.47% | | | N/A | | | 11.47% |
Tier 1 risk-based capital ratio | | | | 15.84% | | | 16.14% | | | 16.02% | | | 15.96% | | | 15.49% | | | 15.84% | | | 15.49% |
Total risk-based capital ratio | | | | 17.40% | | | 17.69% | | | 17.57% | | | 17.50% | | | 17.30% | | | 17.40% | | | 17.30% |
Tangible common equity ("TCE") ratio | | | | 8.91% | | | 9.29% | | | 9.25% | | | 8.81% | | | 8.70% | | | 8.91% | | | 8.70% |
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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) | | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 | | 2015 | | 2014 |
Interest income: | | | | | | | | | | | | | | | | | | | | | | |
Loans | | | | | | | | | | | | | | | | | | | | | | |
Loans not covered under shared-loss agreements with the FDIC | | | $ | 77,746 | | $ | 81,979 | | $ | 85,615 | | $ | 87,662 | | $ | 88,064 | | $ | 159,725 | | $ | 173,307 |
Loans covered under shared-loss agreements with the FDIC | | | | 12,758 | | | 15,504 | | | 19,816 | | | 20,886 | | | 24,879 | | | 28,262 | | | 48,267 |
Total interest income from loans | | | | 90,504 | | | 97,483 | | | 105,431 | | | 108,548 | | | 112,943 | | | 187,987 | | | 221,574 |
Investment securities | | | | 8,909 | | | 9,518 | | | 10,551 | | | 11,753 | | | 12,957 | | | 18,427 | | | 27,400 |
Total interest income | | | | 99,413 | | | 107,001 | | | 115,982 | | | 120,301 | | | 125,900 | | | 206,414 | | | 248,974 |
Interest expense: | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | |
Core deposits | | | | 5,519 | | | 5,938 | | | 6,887 | | | 6,410 | | | 7,875 | | | 11,457 | | | 15,537 |
Brokered deposits | | | | 1,085 | | | 1,166 | | | 1,263 | | | 1,251 | | | 1,290 | | | 2,251 | | | 2,606 |
Total deposits | | | | 6,604 | | | 7,104 | | | 8,150 | | | 7,661 | | | 9,165 | | | 13,708 | | | 18,143 |
Borrowings | | | | 10,517 | | | 10,262 | | | 10,704 | | | 10,769 | | | 10,657 | | | 20,779 | | | 21,355 |
Total interest expense | | | | 17,121 | | | 17,366 | | | 18,854 | | | 18,430 | | | 19,822 | | | 34,487 | | | 39,498 |
Net interest income | | | | 82,292 | | | 89,635 | | | 97,128 | | | 101,871 | | | 106,078 | | | 171,927 | | | 209,476 |
Provision for loan and lease losses, excluding acquired loans | (3) | | | 9,953 | | | 33,912 | | | 9,802 | | | 8,569 | | | 7,431 | | | 43,865 | | | 13,056 |
Provision for acquired loan and lease losses | (1) | | | 5,586 | | | 8,281 | | | 7,075 | | | 8,688 | | | 7,384 | | | 13,867 | | | 13,450 |
Total provision for loan and lease losses, net | | | | 15,539 | | | 42,193 | | | 16,877 | | | 17,257 | | | 14,815 | | | 57,732 | | | 26,506 |
Net interest income after provision for loan and lease losses | | | | 66,753 | | | 47,442 | | | 80,251 | | | 84,614 | | | 91,263 | | | 114,195 | | | 182,970 |
Non-interest income: | | | | | | | | | | | | | | | | | | | | | | |
Banking service revenues | | | | 10,212 | | | 10,205 | | | 10,407 | | | 9,753 | | | 9,995 | | | 20,417 | | | 20,552 |
Wealth management revenues | | | | 7,285 | | | 7,155 | | | 8,539 | | | 7,113 | | | 7,336 | | | 14,440 | | | 14,203 |
Mortgage banking activities | | | | 1,862 | | | 1,863 | | | 2,035 | | | 2,097 | | | 1,554 | | | 3,725 | | | 3,249 |
Total banking and wealth management revenues | | | | 19,359 | | | 19,223 | | | 20,981 | | | 18,963 | | | 18,885 | | | 38,582 | | | 38,004 |
FDIC shared-loss expense, net | (15) | | | (23,245) | | | (13,084) | | | (11,980) | | | (16,934) | | | (18,355) | | | (36,329) | | | (36,842) |
Other gains (losses), net | | | | (770) | | | 742 | | | 95 | | | 462 | | | (23) | | | (28) | | | 4,574 |
Total non-interest (loss) income, net | | | | (4,656) | | | 6,881 | | | 9,096 | | | 2,491 | | | 507 | | | 2,225 | | | 5,736 |
Non-interest expense: | | | | | | | | | | | | | | | | | | | | | | |
Compensation and employee benefits | | | | 19,260 | | | 20,180 | | | 20,396 | | | 18,592 | | | 20,707 | | | 39,440 | | | 42,494 |
Rent and occupancy costs | | | | 8,883 | | | 8,636 | | | 9,026 | | | 8,770 | | | 8,605 | | | 17,519 | | | 16,914 |
Other non-recurring expenses | (16) | | | - | | | - | | | 3,800 | | | - | | | - | | | - | | | - |
General and administrative expenses | | | | 36,294 | | | 27,516 | | | 28,676 | | | 32,213 | | | 30,536 | | | 63,810 | | | 61,844 |
Total non-interest expense | | | | 64,437 | | | 56,332 | | | 61,898 | | | 59,575 | | | 59,848 | | | 120,769 | | | 121,252 |
(Loss) income before income taxes | | | | (2,340) | | | (2,009) | | | 27,449 | | | 27,530 | | | 31,922 | | | (4,349) | | | 67,454 |
Income tax expense | | | | 769 | | | 979 | | | 6,856 | | | 7,998 | | | 10,613 | | | 1,748 | | | 22,398 |
Net (loss) income | | | | (3,109) | | | (2,988) | | | 20,593 | | | 19,532 | | | 21,309 | | | (6,097) | | | 45,056 |
Less: dividends on preferred stock | | | | | | | | | | | | | | | | | | | | | | |
Convertible preferred stock | | | | (1,837) | | | (1,838) | | | (1,838) | | | (1,837) | | | (1,838) | | | (3,675) | | | (3,675) |
Other preferred stock | | | | (1,629) | | | (1,627) | | | (1,628) | | | (1,628) | | | (1,628) | | | (3,256) | | | (3,256) |
Net (loss) income available to common shareholders | | | $ | (6,575) | | $ | (6,453) | | $ | 17,127 | | $ | 16,067 | | $ | 17,843 | | $ | (13,028) | | $ | 38,125 |
| | | | | | | | | | | | | | | | | | | | | | |
3 | | | | | | |
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) | | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
Cash and cash equivalents | | | $ | 559,621 | | $ | 694,308 | | $ | 581,834 | | $ | 704,146 | | $ | 611,655 |
Investments: | | | | | | | | | | | | | | | | |
Trading securities | | | | 786 | | | 964 | | | 1,594 | | | 1,687 | | | 1,613 |
Investment securities available-for-sale, at fair value, with amortized cost of $1,023,573 | | | | | | | | | | | | | | | | |
(March 31, 2015 - $1,092,040; December 31, 2014 - $1,187,679; September 30, 2014 - $1,249,769; | | | | | | | | | | | | | | | | |
June 30, 2014 - $1,385,438) | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | | | 1,020,493 | | | 1,099,814 | | | 1,190,391 | | | 1,247,161 | | | 1,314,677 |
Other investment securities | | | | 23,826 | | | 25,888 | | | 26,147 | | | 26,718 | | | 104,281 |
Total investment securities available-for-sale | | | | 1,044,319 | | | 1,125,702 | | | 1,216,538 | | | 1,273,879 | | | 1,418,958 |
Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $547,776 | | | | | | | | | | | | | | | | |
(March 31, 2015 - $175, 856; December 31, 2014 - $164,154; September 30, 2014 - $144,217; | | | | | | | | | | | | | | | | |
June 30, 2014 - $26,844) | | | | 550,553 | | | 172,847 | | | 162,752 | | | 144,305 | | | 26,706 |
Federal Home Loan Bank (FHLB) stock, at cost | | | | 20,826 | | | 21,148 | | | 21,169 | | | 21,189 | | | 24,381 |
Other investments | | | | 3 | | | 3 | | | 3 | | | 65 | | | 65 |
Total investments | | | | 1,616,487 | | | 1,320,664 | | | 1,402,056 | | | 1,441,125 | | | 1,471,723 |
Loans: | | | | | | | | | | | | | | | | |
Loans not covered under shared-loss agreements with the FDIC: | | | | | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | |
Puerto Rico Government and its dependencies | | | | 515,274 | | | 593,281 | | | 618,998 | | | 626,831 | | | 655,429 |
Other Commercial Loans | | | | 1,356,735 | | | 1,260,938 | | | 1,241,971 | | | 1,211,526 | | | 1,198,618 |
| | | | 1,872,009 | | | 1,854,219 | | | 1,860,969 | | | 1,838,357 | | | 1,854,047 |
Mortgage | (32) | | | 1,388,994 | | | 1,435,463 | | | 1,447,873 | | | 1,461,294 | | | 1,480,070 |
Consumer | | | | 273,003 | | | 260,421 | | | 261,992 | | | 259,636 | | | 254,966 |
Auto and Leasing | | | | 961,659 | | | 985,147 | | | 1,007,597 | | | 1,030,449 | | | 1,054,945 |
Total loans receivable not covered under shared-loss agreements with the FDIC, gross | | | | 4,495,665 | | | 4,535,250 | | | 4,578,431 | | | 4,589,736 | | | 4,644,028 |
Less: Deferred loan costs, net | | | | 3,877 | | | 4,433 | | | 4,282 | | | 3,575 | | | 3,236 |
Total loans receivable not covered under shared-loss agreements with the FDIC | | | | 4,499,542 | | | 4,539,683 | | | 4,582,713 | | | 4,593,311 | | | 4,647,264 |
Allowance for loan and lease losses on non-covered loans | | | | (102,877) | | | (96,375) | | | (69,517) | | | (64,859) | | | (60,360) |
Loans receivable held for investment, net | | | | 4,396,665 | | | 4,443,308 | | | 4,513,196 | | | 4,528,452 | | | 4,586,904 |
Mortgage loans held for sale | | | | 20,768 | | | 23,464 | | | 14,539 | | | 16,757 | | | 14,792 |
Total loans not covered under shared-loss agreements with the FDIC, net | | | | 4,417,433 | | | 4,466,772 | | | 4,527,735 | | | 4,545,209 | | | 4,601,696 |
| | | | | | | | | | | | | | | | |
Loans covered under shared-loss agreements with the FDIC | | | | 293,486 | | | 328,458 | | | 363,156 | | | 373,920 | | | 393,859 |
Allowance for loan and lease losses on covered loans | | | | (71,452) | | | (70,651) | | | (64,245) | | | (62,227) | | | (59,515) |
Loans covered under shared-loss agreements with the FDIC, net | | | | 222,034 | | | 257,807 | | | 298,911 | | | 311,693 | | | 334,344 |
Total loans, net | | | | 4,639,467 | | | 4,724,579 | | | 4,826,646 | | | 4,856,902 | | | 4,936,040 |
Other assets: | | | | | | | | | | | | | | | | |
FDIC shared-loss indemnification asset | (33) | | | 22,704 | | | 75,221 | | | 97,378 | | | 120,619 | | | 143,660 |
Derivative assets | | | | 4,376 | | | 6,211 | | | 8,107 | | | 8,445 | | | 9,558 |
Prepaid expenses | | | | 16,492 | | | 11,264 | | | 16,018 | | | 18,375 | | | 17,422 |
Deferred tax asset, net | | | | 138,406 | | | 121,930 | | | 108,708 | | | 121,217 | | | 123,298 |
Foreclosed real estate and repossessed properties | (34) | | | 95,994 | | | 113,863 | | | 117,461 | | | 122,297 | | | 119,110 |
Premises and equipment, net | | | | 76,486 | | | 78,745 | | | 80,599 | | | 82,099 | | | 82,167 |
Goodwill | | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 |
Accounts receivable and other assets | (17)(18)(19) | | | 142,223 | | | 131,302 | | | 124,233 | | | 112,045 | | | 109,443 |
Total assets | | | $ | 7,398,325 | | $ | 7,364,156 | | $ | 7,449,109 | | $ | 7,673,339 | | $ | 7,710,145 |
| | | | | | | | | | | | | | | | |
4 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | |
Table 3: Consolidated Statements of Financial Condition (Continued) | | | | | | | | |
| | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
(Dollars in thousands) (unaudited) | | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
Deposits: | | | | | | | | | | | | | | | | |
Demand deposits | (20) | | $ | 1,936,617 | | $ | 2,025,291 | | $ | 1,997,108 | | $ | 2,132,073 | | $ | 2,135,369 |
Savings accounts | (20) | | | 1,250,460 | | | 1,336,209 | | | 1,292,698 | | | 1,169,330 | | | 1,136,155 |
Time deposits | | | | 957,246 | | | 965,611 | | | 1,015,290 | | | 1,098,128 | | | 1,151,234 |
Brokered deposits | | | | 605,361 | | | 567,122 | | | 619,310 | | | 669,644 | | | 718,475 |
Total deposits | | | | 4,749,684 | | | 4,894,233 | | | 4,924,406 | | | 5,069,175 | | | 5,141,233 |
Borrowings: | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 1,161,136 | | | 927,168 | | | 980,087 | | | 1,012,228 | | | 1,012,233 |
Advances from FHLB and other borrowings | | | | 335,481 | | | 335,597 | | | 338,334 | | | 338,659 | | | 364,077 |
Subordinated capital notes | | | | 102,109 | | | 101,846 | | | 101,584 | | | 101,190 | | | 100,797 |
Total borrowings | | | | 1,598,726 | | | 1,364,611 | | | 1,420,005 | | | 1,452,077 | | | 1,477,107 |
Other liabilities: | | | | | | | | | | | | | | | | |
Securities purchased but not yet received | | | | - | | | - | | | - | | | 30,057 | | | - |
Derivative liabilities | | | | 8,739 | | | 11,113 | | | 11,221 | | | 11,414 | | | 13,617 |
Acceptances outstanding | | | | 16,040 | | | 21,848 | | | 17,989 | | | 21,077 | | | 17,581 |
Accrued expenses and other liabilities | (32) | | | 113,537 | | | 135,972 | | | 133,291 | | | 159,541 | | | 135,405 |
Total liabilities | | | | 6,486,726 | | | 6,427,777 | | | 6,506,912 | | | 6,743,341 | | | 6,784,943 |
Stockholders' equity: | | | | | | | | | | | | | | | | |
Preferred stock | | | | 176,000 | | | 176,000 | | | 176,000 | | | 176,000 | | | 176,000 |
Common stock | | | | 52,626 | | | 52,626 | | | 52,626 | | | 52,761 | | | 52,730 |
Additional paid-in capital | | | | 539,669 | | | 539,222 | | | 539,311 | | | 539,522 | | | 538,936 |
Legal surplus | | | | 69,934 | | | 70,097 | | | 70,467 | | | 68,437 | | | 66,438 |
Retained earnings | | | | 159,737 | | | 170,605 | | | 181,152 | | | 170,519 | | | 160,055 |
Treasury stock, at cost | (21) | | | (100,668) | | | (96,495) | | | (97,070) | | | (90,652) | | | (90,712) |
Accumulated other comprehensive income, net | | | | 14,301 | | | 24,324 | | | 19,711 | | | 13,411 | | | 21,755 |
Total stockholders' equity | | | | 911,599 | | | 936,379 | | | 942,197 | | | 929,998 | | | 925,202 |
Total liabilities and stockholders' equity | | | $ | 7,398,325 | | $ | 7,364,156 | | $ | 7,449,109 | | $ | 7,673,339 | | $ | 7,710,145 |
| | | | | | | | | | | | | | | | |
5 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 4: Information on Loan Portfolio and Production | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
(Dollars in thousands) (unaudited) | | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
Acquired loans: | (1) | | | | | | | | | | | | | | | |
Non-covered loans | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | |
Period-end unpaid principal balance | | | $ | 1,382,742 | | $ | 1,457,656 | | $ | 1,553,988 | | $ | 1,660,521 | | $ | 1,804,645 |
Period-end carrying amount, gross | | | | 1,346,277 | | | 1,410,558 | | | 1,491,806 | | | 1,577,545 | | | 1,676,677 |
Average carrying amount | | | | 1,353,690 | | | 1,444,936 | | | 1,516,571 | | | 1,636,983 | | | 1,720,553 |
Accounted for under ASC 310-20 | | | | | | | | | | | | | | | | |
Period-end unpaid principal balance | | | | 193,630 | | | 215,173 | | | 241,569 | | | 280,389 | | | 318,970 |
Period-end carrying amount | | | | 192,524 | | | 214,622 | | | 242,801 | | | 285,076 | | | 326,602 |
Average carrying amount | | | | 231,732 | | | 242,108 | | | 271,029 | | | 298,262 | | | 340,940 |
Covered loans | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | |
Period-end unpaid principal balance | | | | 469,077 | | | 540,717 | | | 607,893 | | | 648,995 | | | 707,120 |
Period-end carrying amount, net | | | | 222,034 | | | 257,807 | | | 298,911 | | | 311,693 | | | 334,344 |
Average carrying amount | | | | 235,376 | | | 274,731 | | | 303,012 | | | 331,778 | | | 343,351 |
| | | | | | | | | | | | | | | | |
Total acquired loans | | | | | | | | | | | | | | | | |
Period-end unpaid principal balance | | | | 2,045,449 | | | 2,213,546 | | | 2,403,450 | | | 2,589,905 | | | 2,830,735 |
Period-end carrying amount | | | | 1,760,835 | | | 1,882,987 | | | 2,033,518 | | | 2,174,314 | | | 2,337,623 |
Average carrying amount | | | | 1,820,798 | | | 1,961,774 | | | 2,090,612 | | | 2,267,023 | | | 2,404,844 |
| | | | | | | | | | | | | | | | |
Non-acquired loans held for investment: | | | | | | | | | | | | | | | | |
Period-end unpaid principal balance | | | | 2,989,789 | | | 2,937,819 | | | 2,863,277 | | | 2,749,421 | | | 2,659,198 |
Period-end carrying amount | | | | 2,956,864 | | | 2,910,070 | | | 2,843,824 | | | 2,727,115 | | | 2,640,749 |
Average carrying amount | | | | 2,927,347 | | | 2,832,658 | | | 2,765,531 | | | 2,672,872 | | | 2,614,537 |
| | | | | | | | | | | | | | | | |
Total loans | | | | | | | | | | | | | | | | |
Period-end unpaid principal balance | | | $ | 5,035,238 | | $ | 5,151,365 | | $ | 5,266,727 | | $ | 5,339,326 | | $ | 5,489,933 |
Period-end carrying amount | | | | 4,717,699 | | | 4,793,057 | | | 4,877,342 | | | 4,901,429 | | | 4,978,372 |
Average carrying amount | | | | 4,748,145 | | | 4,794,432 | | | 4,856,143 | | | 4,939,895 | | | 5,019,381 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
(Dollars in thousands) (unaudited) | | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 |
Quarterly loan production | (22) | | | | | | | | | | | | | | | |
Mortgage | | | $ | 64,826 | | $ | 61,717 | | $ | 57,226 | | $ | 55,299 | | $ | 51,999 |
Commercial | | | | 120,500 | | | 85,664 | | | 83,430 | | | 90,067 | | | 45,432 |
Consumer | | | | 39,837 | | | 26,161 | | | 28,902 | | | 28,689 | | | 34,530 |
Auto and Leasing | | | | 61,545 | | | 65,907 | | | 69,335 | | | 68,519 | | | 89,630 |
Total | | | $ | 286,708 | | $ | 239,449 | | $ | 238,893 | | $ | 242,574 | | $ | 221,591 |
| | | | | | | | | | | | | | | | |
6 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Table 5: Average Balances, Net Interest Income and Net Interest Margin | | |
| | | 2015 Q2 | | 2015 Q1 | | 2014 Q4 | | 2014 Q3 | | 2014 Q2 | |
| | | | | Interest | | | | | | | Interest | | | | | | | Interest | | | | | | | Interest | | | | | | | Interest | | | | |
| | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | |
(Dollars in thousands) (unaudited) | | | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents and securities purchased under agreements to resell | | | $ | 483,507 | | $ | 322 | | 0.27 | % | | $ | 564,237 | | $ | 323 | | 0.23 | % | | $ | 551,238 | | $ | 360 | | 0.26 | % | | $ | 593,391 | | $ | 316 | | 0.21 | % | | $ | 559,230 | | $ | 351 | | 0.25 | % | |
Investment securities | | | | 1,476,867 | | | 8,587 | | 2.33 | % | | | 1,344,617 | | | 9,195 | | 2.77 | % | | | 1,410,389 | | | 10,191 | | 2.87 | % | | | 1,390,124 | | | 11,437 | | 3.26 | % | | | 1,393,523 | | | 12,606 | | 3.63 | % | |
Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | 2,927,347 | | | 44,239 | | 6.06 | % | | | 2,832,658 | | | 46,284 | | 6.63 | % | | | 2,765,531 | | | 45,925 | | 6.59 | % | | | 2,672,872 | | | 44,706 | | 6.64 | % | | | 2,614,537 | | | 43,083 | | 6.61 | % | |
Acquired loans accounted for under ASC 310-30 | | | | 1,353,690 | | | 28,003 | | 8.30 | % | | | 1,444,936 | | | 31,470 | | 8.83 | % | | | 1,516,571 | | | 35,213 | | 9.21 | % | | | 1,636,983 | | | 38,340 | | 9.29 | % | | | 1,720,553 | | | 39,714 | | 9.26 | % | |
Acquired loans accounted for under ASC 310-20 | | | | 231,732 | | | 5,504 | | 9.53 | % | | | 242,108 | | | 4,225 | | 7.08 | % | | | 271,029 | | | 4,477 | | 6.55 | % | | | 298,262 | | | 4,616 | | 6.14 | % | | | 340,940 | | | 5,267 | | 6.20 | % | |
Loans not covered under shared-loss agreements with the FDIC | | | | 4,512,769 | | | 77,746 | | 6.91 | % | | | 4,519,702 | | | 81,979 | | 7.36 | % | | | 4,553,131 | | | 85,615 | | 7.46 | % | | | 4,608,117 | | | 87,662 | | 7.55 | % | | | 4,676,030 | | | 88,064 | | 7.55 | % | |
Loans covered under shared-loss agreements with the FDIC | | | | 235,376 | | | 12,758 | | 21.74 | % | | | 274,731 | | | 15,504 | | 22.89 | % | | | 303,012 | | | 19,816 | | 25.95 | % | | | 331,778 | | | 20,886 | | 24.98 | % | | | 343,351 | | | 24,879 | | 29.06 | % | |
Total loans | | | | 4,748,145 | | | 90,504 | | 7.65 | % | | | 4,794,432 | | | 97,483 | | 8.25 | % | | | 4,856,143 | | | 105,431 | | 8.61 | % | | | 4,939,895 | | | 108,548 | | 8.72 | % | | | 5,019,381 | | | 112,943 | | 9.03 | % | |
Total interest-earning assets | | | $ | 6,708,519 | | $ | 99,413 | | 5.94 | % | | $ | 6,703,286 | | $ | 107,001 | | 6.47 | % | | $ | 6,817,770 | | $ | 115,982 | | 6.75 | % | | $ | 6,923,410 | | $ | 120,301 | | 6.89 | % | | $ | 6,972,134 | | $ | 125,900 | | 7.24 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | $ | 1,144,931 | | $ | 1,073 | | 0.38 | % | | $ | 1,260,952 | | $ | 1,281 | | 0.41 | % | | $ | 1,353,334 | | $ | 1,652 | | 0.48 | % | | $ | 1,413,776 | | $ | 1,817 | | 0.51 | % | | $ | 1,443,824 | | $ | 2,208 | | 0.61 | % | |
Savings accounts | | | | 1,300,001 | | | 1,662 | | 0.51 | % | | | 1,314,360 | | | 1,734 | | 0.54 | % | | | 1,224,708 | | | 1,829 | | 0.59 | % | | | 1,154,712 | | | 1,780 | | 0.61 | % | | | 1,168,911 | | | 2,192 | | 0.75 | % | |
Time deposits | | | | 969,818 | | | 2,624 | | 1.09 | % | | | 990,091 | | | 2,976 | | 1.22 | % | | | 1,052,552 | | | 3,426 | | 1.29 | % | | | 1,128,333 | | | 3,769 | | 1.33 | % | | | 1,192,447 | | | 3,972 | | 1.34 | % | |
Brokered deposits | | | | 571,950 | | | 1,085 | | 0.76 | % | | | 602,189 | | | 1,166 | | 0.79 | % | | | 631,135 | | | 1,331 | | 0.84 | % | | | 700,256 | | | 1,400 | | 0.79 | % | | | 709,374 | | | 1,468 | | 0.83 | % | |
| | | | 3,986,700 | | | 6,444 | | 0.65 | % | | | 4,167,592 | | | 7,157 | | 0.70 | % | | | 4,261,729 | | | 8,238 | | 0.77 | % | | | 4,397,077 | | | 8,766 | | 0.79 | % | | | 4,514,556 | | | 9,840 | | 0.87 | % | |
Fair value premium amortization and core deposit intangible amortization | | | | - | | | 160 | | - | | | | - | | | (53) | | - | | | | - | | | (88) | | - | | | | - | | | (1,105) | | - | | | | - | | | (675) | | - | | |
Total deposits | | | | 3,986,700 | | | 6,604 | | 0.66 | % | | | 4,167,592 | | | 7,104 | | 0.69 | % | | | 4,261,729 | | | 8,150 | | 0.76 | % | | | 4,397,077 | | | 7,661 | | 0.69 | % | | | 4,514,556 | | | 9,165 | | 0.81 | % | |
Borrowings | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 1,020,077 | | | 7,394 | | 2.91 | % | | | 939,377 | | | 7,164 | | 3.09 | % | | | 990,932 | | | 7,415 | | 2.97 | % | | | 1,010,000 | | | 7,453 | | 2.93 | % | | | 1,010,000 | | | 7,372 | | 2.93 | % | |
Advances from FHLB and other borrowings | | | | 344,088 | | | 2,248 | | 2.62 | % | | | 337,292 | | | 2,235 | | 2.69 | % | | | 338,815 | | | 2,287 | | 2.68 | % | | | 346,977 | | | 2,314 | | 2.65 | % | | | 360,130 | | | 2,289 | | 2.55 | % | |
Subordinated capital notes | | | | 101,938 | | | 875 | | 3.44 | % | | | 101,675 | | | 863 | | 3.44 | % | | | 101,329 | | | 1,002 | | 3.92 | % | | | 100,931 | | | 1,002 | | 3.94 | % | | | 100,539 | | | 996 | | 3.97 | % | |
Total borrowings | | | | 1,466,103 | | | 10,517 | | 2.88 | % | | | 1,378,344 | | | 10,262 | | 3.02 | % | | | 1,431,076 | | | 10,704 | | 2.97 | % | | | 1,457,908 | | | 10,769 | | 2.93 | % | | | 1,470,669 | | | 10,657 | | 2.91 | % | |
Total interest-bearing liabilities | | | $ | 5,452,803 | | $ | 17,121 | | 1.26 | % | | $ | 5,545,936 | | $ | 17,366 | | 1.27 | % | | $ | 5,692,805 | | $ | 18,854 | | 1.31 | % | | $ | 5,854,985 | | $ | 18,430 | | 1.25 | % | | $ | 5,985,225 | | $ | 19,822 | | 1.33 | % | |
Interest rate spread | | | | | | $ | 82,292 | | 4.68 | % | | | | | $ | 89,635 | | 5.20 | % | | | | | $ | 97,128 | | 5.44 | % | | | | | $ | 101,871 | | 5.64 | % | | | | | $ | 106,078 | | 5.91 | % | |
Net interest margin | | | | | | | | | 4.92 | % | | | | | | | | 5.42 | % | | | | | | | | 5.65 | % | | | | | | | | 5.84 | % | | | | | | | | 6.10 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
7 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 5: Average Balances, Net Interest Income and Net Interest Margin (Continued) | |
| | | 2015 YTD | | 2014 YTD | |
| | | | | Interest | | | | | | | Interest | | | | |
| | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | |
(Dollars in thousands) (unaudited) | | | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | |
| | | | | | | | | | | | | | | | | | | | |
Interest earning assets: | | | | | | | | | | | | | | | | | | | | |
Cash equivalents and securities purchased under agreements to resell | | | $ | 523,649 | | $ | 645 | | 0.25 | % | | $ | 574,509 | | $ | 635 | | 0.22 | % | |
Investment securities | | | | 1,411,108 | | | 17,783 | | 2.54 | % | | | 1,505,649 | | | 26,766 | | 3.58 | % | |
Loans | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | 2,880,264 | | | 90,522 | | 6.34 | % | | | 2,518,566 | | | 82,015 | | 6.57 | % | |
Acquired loans accounted for under ASC 310-30 | | | | 1,392,255 | | | 59,473 | | 8.61 | % | | | 1,762,810 | | | 79,984 | | 9.15 | % | |
Acquired loans accounted for under ASC 310-20 | | | | 278,918 | | | 9,729 | | 7.03 | % | | | 382,621 | | | 11,308 | | 5.96 | % | |
Loans not covered under shared-loss agreements with the FDIC | | | | 4,551,437 | | | 159,724 | | 7.08 | % | | | 4,663,997 | | | 173,307 | | 7.49 | % | |
Loans covered under shared-loss agreements with the FDIC | | | | 255,053 | | | 28,262 | | 22.35 | % | | | 349,407 | | | 48,267 | | 27.86 | % | |
Total loans | | | | 4,806,490 | | | 187,986 | | 7.89 | % | | | 5,013,404 | | | 221,574 | | 8.91 | % | |
Total interest-earning assets | | | $ | 6,741,247 | | $ | 206,414 | | 6.17 | % | | $ | 7,093,562 | | $ | 248,975 | | 7.08 | % | |
| | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | $ | 1,202,621 | | $ | 2,354 | | 0.39 | % | | $ | 1,451,547 | | $ | 4,531 | | 0.63 | % | |
Savings accounts | | | | 1,307,141 | | | 3,396 | | 0.52 | % | | | 1,148,918 | | | 4,488 | | 0.79 | % | |
Time deposits | | | | 979,898 | | | 5,600 | | 1.15 | % | | | 1,242,617 | | | 8,378 | | 1.36 | % | |
Brokered deposits | | | | 586,986 | | | 2,251 | | 0.77 | % | | | 730,349 | | | 2,984 | | 0.82 | % | |
| | | | 4,076,646 | | | 13,601 | | 0.67 | % | | | 4,573,431 | | | 20,381 | | 0.90 | % | |
Fair value premium amortization and core deposit intangible amortization | | | | - | | | 107 | | - | | | | - | | | (2,238) | | - | | |
Total deposits | | | | 4,076,646 | | | 13,708 | | 0.68 | % | | | 4,573,431 | | | 18,143 | | 0.80 | % | |
Borrowings | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 979,950 | | | 14,558 | | 3.00 | % | | | 1,082,968 | | | 14,784 | | 2.75 | % | |
Advances from FHLB and other borrowings | | | | 340,709 | | | 4,483 | | 2.65 | % | | | 367,953 | | | 4,583 | | 2.51 | % | |
Subordinated capital notes | | | | 101,808 | | | 1,738 | | 3.44 | % | | | 100,357 | | | 1,988 | | 3.99 | % | |
Total borrowings | | | | 1,422,467 | | | 20,779 | | 2.95 | % | | | 1,551,278 | | | 21,355 | | 2.78 | % | |
Total interest-bearing liabilities | | | $ | 5,499,113 | | $ | 34,487 | | 1.26 | % | | $ | 6,124,709 | | $ | 39,498 | | 1.30 | % | |
Interest rate spread | | | | | | $ | 171,927 | | 4.91 | % | | | | | $ | 209,477 | | 5.78 | % | |
Net interest margin | | | | | | | | | 5.14 | % | | | | | | | | 5.96 | % | |
| | | | | | | | | | | | | | | | | | | | |
8 | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (1) | | | |
| | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
(Dollars in thousands) (unaudited) | | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 |
Net Charge-offs | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | |
Charge-offs | | | $ | 1,356 | | $ | 1,414 | | $ | 1,245 | | $ | 1,563 | | $ | 987 |
Recoveries | | | | (67) | | | - | | | (54) | | | (138) | | | (88) |
Total mortgage | | | | 1,289 | | | 1,414 | | | 1,191 | | | 1,425 | | | 899 |
Commercial: | | | | | | | | | | | | | | | | |
Charge-offs | | | | 497 | | | 992 | | | 381 | | | 1,081 | | | 543 |
Recoveries | | | | (219) | | | (89) | | | (64) | | | (56) | | | (115) |
Total commercial | | | | 278 | | | 903 | | | 317 | | | 1,025 | | | 428 |
Consumer: | | | | | | | | | | | | | | | | |
Charge-offs | | | | 2,309 | | | 1,676 | | | 1,962 | | | 1,585 | | | 1,397 |
Recoveries | | | | (390) | | | (153) | | | (113) | | | (66) | | | (244) |
Total consumer | | | | 1,919 | | | 1,523 | | | 1,849 | | | 1,519 | | | 1,153 |
Auto and Leasing: | | | | | | | | | | | | | | | | |
Charge-offs | | | | 7,662 | | | 8,136 | | | 8,047 | | | 7,393 | | | 5,956 |
Recoveries | | | | (3,425) | | | (3,384) | | | (2,764) | | | (2,434) | | | (2,136) |
Total auto and leasing | | | | 4,237 | | | 4,752 | | | 5,283 | | | 4,959 | | | 3,820 |
Total | | | $ | 7,723 | | $ | 8,592 | | $ | 8,640 | | $ | 8,928 | | $ | 6,300 |
Net Charge-off Rates | | | | | | | | | | | | | | | | |
Mortgage | | | | 0.66% | | | 0.72% | | | 0.61% | | | 0.72% | | | 0.46% |
Commercial | | | | 0.08% | | | 0.28% | | | 0.10% | | | 0.34% | | | 0.14% |
Consumer | | | | 3.99% | | | 3.36% | | | 4.23% | | | 3.77% | | | 3.13% |
Auto and Leasing | | | | 2.74% | | | 3.20% | | | 3.73% | | | 3.73% | | | 3.15% |
Total | | | | 1.06% | | | 1.21% | | | 1.25% | | | 1.34% | | | 0.96% |
Period-end Loans Held For Investment | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | $ | 750,226 | | $ | 752,087 | | $ | 749,511 | | $ | 751,040 | | $ | 749,676 |
GNMA's buy-back option program | (32) | | | 6,961 | | | 37,458 | | | 42,243 | | | 40,066 | | | 38,329 |
Total mortgage | | | | 757,187 | | | 789,545 | | | 791,754 | | | 791,106 | | | 788,005 |
Commercial | | | | 1,363,851 | | | 1,324,904 | | | 1,289,730 | | | 1,217,235 | | | 1,183,172 |
Consumer | | | | 212,628 | | | 193,658 | | | 186,759 | | | 175,882 | | | 161,538 |
Auto and Leasing | | | | 623,198 | | | 601,963 | | | 575,581 | | | 542,892 | | | 508,034 |
Total | | | $ | 2,956,864 | | $ | 2,910,070 | | $ | 2,843,824 | | $ | 2,727,115 | | $ | 2,640,749 |
Average Loans Held For Investment | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 782,753 | | $ | 787,330 | | $ | 787,121 | | $ | 789,204 | | $ | 773,425 |
Commercial | | | | 1,333,276 | | | 1,269,104 | | | 1,236,976 | | | 1,190,607 | | | 1,209,346 |
Consumer | | | | 192,572 | | | 181,464 | | | 175,049 | | | 161,147 | | | 147,230 |
Auto and Leasing | | | | 618,746 | | | 594,760 | | | 566,385 | | | 531,914 | | | 484,536 |
Total | | | $ | 2,927,347 | | $ | 2,832,658 | | $ | 2,765,531 | | $ | 2,672,872 | | $ | 2,614,537 |
| | | | | | | | | | | | | | | | |
9 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (Continued) (1) |
| | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
(Dollars in thousands) (unaudited) | | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 |
Early Delinquency (30 - 89 days past due) | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 68,515 | | $ | 63,060 | | $ | 68,671 | | $ | 76,236 | | $ | 70,453 |
Commercial | | | | 5,532 | | | 4,453 | | | 2,814 | | | 2,776 | | | 4,258 |
Consumer | | | | 3,089 | | | 3,957 | | | 3,525 | | | 3,287 | | | 2,797 |
Auto and Leasing | | | | 66,044 | | | 64,287 | | | 64,574 | | | 59,493 | | | 50,667 |
Total | | | $ | 143,180 | | $ | 135,757 | | $ | 139,584 | | $ | 141,792 | | $ | 128,175 |
Early Delinquency Rates (30 - 89 days past due) | | | | | | | | | | | | | | | | |
Mortgage | | | | 9.05% | | | 7.99% | | | 8.67% | | | 9.64% | | | 8.94% |
Commercial | | | | 0.41% | | | 0.34% | | | 0.22% | | | 0.23% | | | 0.36% |
Consumer | | | | 1.45% | | | 2.04% | | | 1.89% | | | 1.87% | | | 1.73% |
Auto and Leasing | | | | 10.60% | | | 10.68% | | | 11.22% | | | 10.96% | | | 9.97% |
Total | | | | 4.84% | | | 4.67% | | | 4.91% | | | 5.20% | | | 4.85% |
Total Delinquency (30 days and over past due) | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | $ | 127,609 | | $ | 122,597 | | $ | 124,559 | | $ | 128,556 | | $ | 115,180 |
GNMA's buy-back option program | (32) | | | 6,961 | | | 37,458 | | | 42,243 | | | 40,066 | | | 38,329 |
Total mortgage | | | | 134,570 | | | 160,055 | | | 166,802 | | | 168,622 | | | 153,509 |
Commercial | | | | 16,062 | | | 13,518 | | | 12,164 | | | 12,109 | | | 12,437 |
Consumer | | | | 4,244 | | | 5,207 | | | 4,689 | | | 4,365 | | | 3,923 |
Auto and Leasing | | | | 73,464 | | | 71,482 | | | 71,994 | | | 67,772 | | | 57,620 |
Total | | | $ | 228,340 | | $ | 250,262 | | $ | 255,649 | | $ | 252,868 | | $ | 227,489 |
Total Delinquency Rates (30 days and over past due) | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | | 16.85% | | | 15.53% | | | 15.73% | | | 16.25% | | | 14.62% |
GNMA's buy-back option program | (32) | | | 0.92% | | | 4.74% | | | 5.34% | | | 5.06% | | | 4.86% |
Total mortgage | | | | 17.77% | | | 20.27% | | | 21.07% | | | 21.31% | | | 19.48% |
Commercial | | | | 1.18% | | | 1.02% | | | 0.94% | | | 0.99% | | | 1.05% |
Consumer | | | | 2.00% | | | 2.69% | | | 2.51% | | | 2.48% | | | 2.43% |
Auto and Leasing | | | | 11.79% | | | 11.87% | | | 12.51% | | | 12.48% | | | 11.34% |
Total | | | | 7.72% | | | 8.60% | | | 8.99% | | | 9.27% | | | 8.61% |
Nonperforming Assets | (23) | | | | | | | | | | | | | | | |
Mortgage | | | $ | 74,528 | | $ | 76,662 | | $ | 72,815 | | $ | 67,028 | | $ | 57,314 |
Commercial | | | | 224,014 | | | 222,820 | | | 21,679 | | | 22,290 | | | 23,506 |
Consumer | | | | 1,512 | | | 1,605 | | | 1,590 | | | 1,241 | | | 1,454 |
Auto and Leasing | | | | 8,587 | | | 8,482 | | | 8,668 | | | 9,008 | | | 7,300 |
Total nonperforming loans | | | | 308,641 | | | 309,569 | | | 104,752 | | | 99,567 | | | 89,574 |
Foreclosed real estate | | | | 9,956 | | | 10,697 | | | 12,343 | | | 13,608 | | | 13,920 |
Other repossessed assets | | | | 8,624 | | | 10,332 | | | 11,107 | | | 9,914 | | | 7,317 |
Total nonperforming assets | | | $ | 327,221 | | $ | 330,598 | | $ | 128,202 | | $ | 123,089 | | $ | 110,811 |
Nonperforming Loan Rates | | | | | | | | | | | | | | | | |
Mortgage | | | | 9.84% | | | 9.71% | | | 9.20% | | | 8.47% | | | 7.27% |
Commercial | | | | 16.43% | | | 16.82% | | | 1.68% | | | 1.83% | | | 1.99% |
Consumer | | | | 0.71% | | | 0.83% | | | 0.85% | | | 0.71% | | | 0.90% |
Auto and Leasing | | | | 1.38% | | | 1.41% | | | 1.51% | | | 1.66% | | | 1.44% |
Total loans | | | | 10.44% | | | 10.64% | | | 3.68% | | | 3.65% | | | 3.39% |
| | | | | | | | | | | | | | | | |
10 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | |
Table 7: Allowance for Loan and Lease Losses | | | | | | | | | | | | |
| | | Quarter Ended June 30, 2015 |
| | | | | | | | | Auto and | | | | |
(Dollars in thousands) (unaudited) | | | Mortgage | | Commercial | | Consumer | | Leasing | | Unallocated | | Total |
Non-covered loans | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 18,086 | | $ | 33,123 | | $ | 9,405 | | $ | 15,762 | | $ | 383 | | $ | 76,759 |
(Recapture) provision for loan and lease losses | | | | 1,279 | | | 1,934 | | | 2,978 | | | 3,539 | | | 223 | | | 9,953 |
Charge-offs | | | | (1,356) | | | (497) | | | (2,309) | | | (7,662) | | | - | | | (11,824) |
Recoveries | | | | 67 | | | 219 | | | 390 | | | 3,425 | | | - | | | 4,101 |
Balance at end of period | | | $ | 18,076 | | $ | 34,779 | | $ | 10,464 | | $ | 15,064 | | $ | 606 | | $ | 78,989 |
Allowance coverage ratio | | | | 2.39% | | $ | 2.55% | | $ | 4.92% | | $ | 2.42% | | $ | 0.02% | | $ | 2.67% |
| | | | | | | | | | | | | | | | | | | |
Acquired | | | | | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 473 | | $ | 13,687 | | $ | 6 | | $ | - | | $ | - | | $ | 14,166 |
Provision for loan and lease losses, net | | | | - | | | 1,253 | | | 78 | | | 2,862 | | | - | | | 4,193 |
Balance at end of period | | | | 473 | | $ | 14,940 | | $ | 84 | | $ | 2,862 | | $ | - | | $ | 18,359 |
| | | | | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-20 | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | | $ | 49 | | $ | 1,885 | | $ | 3,516 | | $ | - | | $ | 5,450 |
(Recapture) provision for loan and lease losses | | | | | | | 14 | | | 1,605 | | | (121) | | | - | | | 1,498 |
Charge-offs | | | | | | | (16) | | | (1,303) | | | (1,038) | | | - | | | (2,357) |
Recoveries | | | | | | | 7 | | | 429 | | | 502 | | | - | | | 938 |
Balance at end of period | | | | | | $ | 54 | | $ | 2,616 | | $ | 2,859 | | $ | - | | $ | 5,529 |
| | | | | | | | | | | | | | | | | | | |
Total non-covered loans | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 18,559 | | $ | 46,859 | | $ | 11,296 | | $ | 19,278 | | $ | 383 | | $ | 96,375 |
(Recapture) provision for loan and lease losses | | | | 1,279 | | | 3,201 | | | 4,661 | | | 6,280 | | | 223 | | | 15,644 |
Charge-offs | | | | (1,356) | | | (513) | | | (3,612) | | | (8,700) | | | - | | | (14,181) |
Recoveries | | | | 67 | | | 226 | | | 819 | | | 3,927 | | | - | | | 5,039 |
Balance at end of period | | | $ | 18,549 | | $ | 49,773 | | $ | 13,164 | | $ | 20,785 | | $ | 606 | | $ | 102,877 |
| | | | | | | | | | | | | | | | | | | |
Covered loans | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 17,340 | | $ | 52,922 | | $ | 389 | | $ | - | | $ | - | | $ | 70,651 |
Provision for loan and lease losses, net | | | | 148 | | | (253) | | | - | | | - | | | - | | | (105) |
FDIC shared-loss portion of provision for covered loan and lease losses, net | | | | 105 | | | 801 | | | - | | | - | | | - | | | 906 |
Balance at end of period | | | $ | 17,593 | | $ | 53,470 | | $ | 389 | | $ | - | | $ | - | | $ | 71,452 |
| | | | | | | | | | | | | | | | | | | |
11 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | |
Table 8: Accretable Yield on Loans Accounted for Under ASC 310-30 |
| | | Quarter Ended June 30, 2015 |
(Dollars in thousands) (unaudited) | | | Mortgage | | Commercial | | Construction | | Auto | | Consumer | | Total |
Accretable Yield and Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Non-Covered Loans: | | | | | | | | | | | | | | | | | | | |
Accretable Yield | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 284,612 | | $ | 57,330 | | $ | 19,390 | | $ | 47,097 | | $ | 5,601 | | $ | 414,030 |
Accretion | | | | (8,813) | | | (9,597) | | | (2,143) | | | (6,163) | | | (1,287) | | | (28,003) |
Transfers (to) from non-accretable discount | | | | 81 | | | 23,830 | | | 7,366 | | | (9,403) | | | 4,147 | | | 26,021 |
Balance at end of period | | | $ | 275,880 | | $ | 71,563 | | $ | 24,613 | | $ | 31,531 | | $ | 8,461 | | $ | 412,048 |
| | | | | | | | | | | | | | | | | | | |
Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 392,609 | | $ | 15,826 | | $ | 3,957 | | $ | 14,543 | | $ | 23,576 | | $ | 450,511 |
Change in actual and expected losses | | | | (3,421) | | | 18,774 | | | 10,403 | | | (256) | | | (73) | | | 25,427 |
Transfers from (to) accretable yield | | | | (81) | | | (23,830) | | | (7,366) | | | 9,403 | | | (4,147) | | | (26,021) |
Balance at end of period | | | $ | 389,107 | | $ | 10,770 | | $ | 6,994 | | $ | 23,690 | | $ | 19,356 | | $ | 449,917 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | Construction & | | | | | | | | | |
| | | | | | | | | Development | | | | | | | | | |
| | | Loans Secured | | | | | Secured by | | | | | | | | | |
| | | by 1-4 Family | | Commercial | | 1-4 Family | | | | | | | | | |
| | | Residential | | and Other | | Residential | | | | | | | | | |
| | | Properties | | Construction | | Properties | | Leasing | | Consumer | | Total |
Covered Loans: | | | | | | | | | | | | | | | | | | | |
Accretable Yield | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 58,332 | | $ | 33,481 | | $ | 20,806 | | $ | 1,665 | | $ | 2,004 | | $ | 116,288 |
Accretion | | | | (3,276) | | | (8,047) | | | (405) | | | (937) | | | (93) | | | (12,758) |
Transfers from (to) non-accretable discount | | | | 750 | | | 2,039 | | | (2,052) | | | 375 | | | (1) | | | 1,111 |
Balance at end of period | | | $ | 55,806 | | $ | 27,473 | | $ | 18,349 | | $ | 1,103 | | $ | 1,910 | | $ | 104,641 |
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Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 12,557 | | $ | 10,493 | | $ | - | | $ | - | | $ | 9,662 | | $ | 62,410 |
Change in actual and expected losses | | | | (405) | | | (8,454) | | | (2,052) | | | 375 | | | 67 | | | (10,469) |
Transfers (to) from accretable yield | | | | (750) | | | (2,039) | | | 2,052 | | | (375) | | | 1 | | | (1,111) |
Balance at end of period | | | $ | 11,402 | | $ | - | | $ | - | | $ | - | | $ | 9,730 | | $ | 50,830 |
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OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures |
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In addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible common equity, tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our regulatory capital and non-GAAP capital measures. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies. |
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| | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
(Dollars in thousands) (unaudited) | | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 |
Average Equity to Non-GAAP Average Tangible Common Equity | | | | | | | | | | | | | | | | |
Average total stockholders' equity | | | $ | 929,867 | | $ | 948,302 | | $ | 936,218 | | $ | 919,804 | | $ | 914,395 |
Less: Average noncumulative perpetual preferred stock | | | | (176,000) | | | (176,000) | | | (176,000) | | | (176,000) | | | (176,000) |
Average noncumulative perpetual preferred stock issuance costs | | | | 10,130 | | | 10,130 | | | 10,130 | | | 10,130 | | | 10,130 |
Average total common stockholders' equity | | | $ | 763,997 | | $ | 782,432 | | $ | 770,348 | | $ | 753,934 | | $ | 748,525 |
Less: Average intangible assets | | | | (95,168) | | | (95,616) | | | (96,164) | | | (96,712) | | | (97,252) |
Average tangible common equity | | | $ | 668,829 | | $ | 686,816 | | $ | 674,184 | | $ | 657,222 | | $ | 651,273 |
Stockholders' Equity to Non-GAAP Tangible Common Equity | | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 911,599 | | $ | 936,379 | | $ | 942,197 | | $ | 929,998 | | $ | 925,202 |
Less: Intangible assets | | | | (94,859) | | | (95,336) | | | (95,812) | | | (96,354) | | | (96,896) |
Noncumulative perpetual preferred stock | | | | (176,000) | | | (176,000) | | | (176,000) | | | (176,000) | | | (176,000) |
Noncumulative perpetual preferred stock issuance costs | | | | 10,130 | | | 10,130 | | | 10,130 | | | 10,130 | | | 10,130 |
Tangible common equity | | | $ | 650,870 | | $ | 675,173 | | $ | 680,515 | | $ | 667,774 | | $ | 662,436 |
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Common stock outstanding at end of period | | | | 44,368 | | | 44,665 | | | 44,614 | | | 45,060 | | | 45,023 |
Tangible book value | | | $ | 14.67 | | $ | 15.12 | | $ | 15.25 | | $ | 14.82 | | $ | 14.71 |
Total Assets to Tangible Assets | | | | | | | | | | | | | | | | |
Total assets | | | $ | 7,398,325 | | $ | 7,364,156 | | $ | 7,449,109 | | $ | 7,673,339 | | $ | 7,710,145 |
Less: Intangible assets | | | | (94,859) | | | (95,336) | | | (95,812) | | | (96,354) | | | (96,896) |
Tangible assets | | | $ | 7,303,466 | | $ | 7,268,820 | | $ | 7,353,297 | | $ | 7,576,985 | | $ | 7,613,249 |
Non-GAAP TCE Ratio | | | | | | | | | | | | | | | | |
Tangible common equity | | | $ | 650,870 | | $ | 675,173 | | $ | 680,515 | | $ | 667,774 | | $ | 662,436 |
Tangible assets | | | | 7,303,466 | | | 7,268,820 | | | 7,353,297 | | | 7,576,985 | | | 7,613,249 |
TCE ratio | | | | 8.91% | | | 9.29% | | | 9.25% | | | 8.81% | | | 8.70% |
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OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued) |
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| | | BASEL III | | | | | | | | | |
| | | Standardized | | BASEL I |
| | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
(Dollars in thousands) (unaudited) | | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 |
Regulatory Capital Metrics | (24) | | | | | | | | | | | | | | | |
Common equity Tier 1 capital | | | $ | 611,541 | | | 633,297 | | | N/A | | | N/A | | | N/A |
Tier 1 common equity capital | | | | N/A | | $ | N/A | | $ | 575,655 | | $ | 581,927 | | $ | 572,954 |
Tier 1 capital | | | | 790,936 | | | 809,652 | | | 776,525 | | | 782,797 | | | 773,824 |
Total risk-based capital | (25) | | | 868,622 | | | 887,042 | | | 851,410 | | | 858,356 | | | 863,791 |
Risk-weighted assets | | | | 4,993,044 | | | 5,015,090 | | | 4,847,150 | | | 4,905,814 | | | 4,994,378 |
Regulatory Capital Ratios | (24) | | | | | | | | | | | | | | | |
Common equity Tier 1 capital ratio | (26) | | | 12.25% | | | 12.63% | | | N/A | | | N/A | | | N/A |
Tier 1 common equity ratio | | | | N/A | | | N/A | | | 11.88% | | | 11.86% | | | 11.47% |
Tier 1 risk-based capital ratio | (27) | | | 15.84% | | | 16.14% | | | 16.02% | | | 15.96% | | | 15.49% |
Total risk-based capital ratio | (28) | | | 17.40% | | | 17.69% | | | 17.57% | | | 17.50% | | | 17.30% |
Leverage ratio | (29) | | | 11.05% | | | 11.23% | | | 10.61% | | | 10.51% | | | 10.26% |
| | | | | | | | | | | | | | | | |
Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach | (24) | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 911,599 | | $ | 936,379 | | | | | | | | | |
Less: Noncumulative perpetual preferred stock | | | | (176,000) | | | (176,000) | | | | | | | | | |
Noncumulative perpetual preferred stock issuance costs | | | | 10,130 | | | 10,130 | | | | | | | | | |
Unrealized gains on available-for-sale securities, net of income tax | (30) | | | (18,833) | | | (30,215) | | | | | | | | | |
Unrealized losses on cash flow hedges, net of income tax | (30) | | | 4,532 | | | 5,891 | | | | | | | | | |
| | | | 731,428 | | | 746,185 | | | | | | | | | |
Less: Disallowed goodwill | | | | (86,069) | | | (86,069) | | | | | | | | | |
Disallowed other intangible assets, net | (31) | | | (2,145) | | | (2,261) | | | | | | | | | |
Disallowed deferred tax assets, net | (31) | | | (31,673) | | | (24,558) | | | | | | | | | |
Common equity Tier 1 capital | | | | 611,541 | | | 633,297 | | | | | | | | | |
Plus: Qualifying noncumulative perpetual preferred stock | | | | 176,000 | | | 176,000 | | | | | | | | | |
Qualifying noncumulative perpetual preferred stock issuance costs | | | | (10,130) | | | (10,130) | | | | | | | | | |
Subordinated capital notes | | | | 35,000 | | | 35,000 | | | | | | | | | |
Less: Disallowed deferred tax assets, net | | | | (21,475) | | | (24,515) | | | | | | | | | |
Tier 1 capital | | | | 790,936 | | | 809,652 | | | | | | | | | |
Plus: Long-term debt qualifying as Tier 2 capital | | | | 13,400 | | | 13,400 | | | | | | | | | |
Qualifying allowance for loan and lease losses | | | | 64,286 | | | 63,990 | | | | | | | | | |
Tier 2 capital | | | | 77,686 | | | 77,390 | | | | | | | | | |
Total risk-based capital | | | $ | 868,622 | | $ | 887,042 | | | | | | | | | |
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OFG Bancorp (NYSE: OFG) | | | |
Table 10: Notes to Financial Summary, Selected Metrics, Loans, and Consolidated Financial Statements (Tables 1 - 9) |
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(1) | We use the term "acquired loans" to refer to loans acquired from the BBVAPR acquisition (December 18, 2012) and covered loans acquired in the Eurobank FDIC-Assisted acquisition (April 30, 2010), recorded at fair value at acquisition. The majority of these loans acquired are subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard known as ASC 310-30). Because the guidance takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with this loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. Acquired loans also include loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which at the end of the reporting period still have unamortized premium or discount. The fair value of these loans already include a credit mark for losses estimated on these loans. The allowance for loan and lease losses for these loans consider such marks applied. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans. Loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which had fully amortized their premium or discount recorded at the date of acquisition at the end of the reporting period, are removed from the acquired loans category. |
(2) | Total banking and wealth management revenues. |
(3) | During Q1 2015, the Company placed its $200 million participation in a fuel purchase line of credit with the Puerto Rico Electric Power Authority (PREPA) on non-accrual status and recorded a $24.0 million provision for loan and lease losses, which is part of the overall quarterly provision for loan and lease losses. |
(4) | Calculated based on net (loss) income available to common shareholders divided by average common shares outstanding for the period. |
(5) | Calculated based on net (loss) income available to common shareholders plus the preferred dividends on the convertible preferred stock, divided by total average common shares outstanding and equivalents for the period as if converted. |
(6) | The Board of directors increased OFG's regular quarterly dividend per common share to $0.10 per share during Q4 2014. |
(7) | Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
(8) | Information includes all loans held for investment, including all acquired loans. Acquired loans, including those accounted for under ASC 310-30, are disclosed at carrying amount. |
(9) | Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period. |
(10) | Calculated based on annualized income, net of tax, for the period divided by average total assets for the period. |
(11) | Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
(12) | Calculated based on non-interest expense for the period divided by total net interest income and total banking and financial services revenues for the period. |
(13) | Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. |
(14) | Non-GAAP ratios. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios. |
(15) | During Q4 2014, the FDIC and the Company agreed to a change in the methodology for the determination of the fair value of covered assets. The change resulted in higher claims to the FDIC and a lower amortization of the indemnification asset was required during the quarter. |
(16) | During Q4 2014, the Company offered a voluntary early retirement program for qualified employees and accumulated additional compensation expenses of $3.8 million related to this program. |
(17) | At June 30, 2015, amount includes a $26 million receivable from the FDIC corresponding to the Q1 2015 loss-share certification amounting to $13 million that was received during July 2015 and Q2 2015 loss-share certifications for non-single family residential mortgage loans. |
(18) | At March 31, 2015, amount includes a $17 million receivable from the FDIC corresponding to the Q4 2014 loss-share certification that was received during April 2015. |
(19) | At December 31, 2014, amount includes a $15 million receivable from the FDIC corresponding to the Q3 2014 loss-share certification that was received during January 2015. |
(20) | During Q4 2014, the Company transferred 3,731 accounts with balances of approximately $100 million from demand deposit accounts to savings accounts. |
(21) | During Q4 2014, the Company purchased 446,498 shares under the current stock repurchase program for a total of $6.5 million, at an average price of $14.65 per share. In addition, during Q2 2015, the Company purchased 303,985 shares under the current stock repurchase program for a total of $4.2 million, at an average price of $13.91 per share. |
(22) | Production of new loans (excluding renewals). |
(23) | Loans accounted for under ASC 310-30 (Loans acquired with deteriorated credit quality, including those by analogy), including covered loans, are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses. Therefore, they are not included as non-performing loans. |
(24) | During Q1 2015, the Company implemented the New Capital Rules, which incorporates Basel III Capital Requirements. The New Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The New Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach with a more risk-sensitive approach. The New Capital Rules are effective for OFG Bancorp and Oriental Bank on January 1, 2015, subject to phase-in periods for certain of their components and other provisions. Among other matters, the New Capital Rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. |
(25) | Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital. |
(26) | Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets. |
(27) | Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. |
(28) | Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighted assets. |
(29) | Leverage capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments. |
(30) | The Company decided to elect the opt-out option to continue to exclude AOCI items from regulatory capital calculation. |
(31) | Amounts based on transition provisions for regulatory capital deductions and adjustments of 40% for 2015. |
(32) | During Q2 2015, the Company sold mortgage servicing rights on $653.5 million mortgage loans to Scotiabank PR. As a result, the delinquent GNMA's buy-back option program loans and corresponding liability decreased $30.5 million from Q1 2015. |
(33) | The FDIC Indemnification Asset for projected claimable losses on non-single family residential loans loss-share period ended in June 30, 2015. |
(34) | During Q2 2015, the Company had 54 more net exits from foreclosed real estate amounting to approximately $10 million than in Q1 2015. In addition, the Company had 174 less net entries in repossessed auto amounting to approximately $1.3 million compared to Q1 2015. The remaining decrease is due to a decline in value of foreclosed real estate and other repossessed properties. |
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15 |
