Exhibit 99
OFG Bancorp Reports 3Q16 Results
SAN JUAN, Puerto Rico, October 21, 2016 – OFG Bancorp (NYSE: OFG) today reported results for the third quarter ended September 30, 2016.
3Q16 Highlights
• Net income available to shareholders totaled $11.7 million, or $0.26 per share fully diluted, compared to $10.9 million, or $0.25 per share fully diluted, in 2Q16. In the year ago quarter, OFG reported $1.1 million, or $0.03 per share fully diluted.
• Oriental Bank’s overall business performance continued strong. New loan generation totaled $226.8 million. Banking and wealth management fee revenues remained level versus 2Q16. Retail and commercial deposits grew 2.2%. Net new customer accounts continued to increase at a 4% annualized rate.
• Major credit exposure eliminated. As previously announced, Oriental Bank sold its participation in a Puerto Rico Electric Power Authority (PREPA) fuel line of credit, with the transaction settling after the quarter end. The sale eliminated $183.0 million of non-performing assets. As a result of the sale, a number of metrics used in this release reflect the exclusion of the PREPA credit facility.
• Credit quality remained stable, with a meaningful improvement in net charge offs (NCOs), excluding PREPA. NCOs declined to 1.15% from 1.21% in 2Q16 while non-performing loan rates at 3.68% remained nearly level with 2Q16. Separately, early and total delinquencies were below year-ago levels.
• Capital continued to build. Tangible book value per common share increased to $15.18 from $14.96 in 2Q16. Tangible common equity ratio increased to 10.25% from 9.92%.
• Net Interest Margin (NIM) expanded to 4.95% from 4.69% in 2Q16. Excluding cost recoveries, NIM rose to 4.70% from 4.64%.
• Costs remained under control. The operating efficiency ratio improved to 57.69%, the best level in the last five quarters, as a result of continued focus on optimizing the expense base.
CEO Comment
José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, commented: “OFG delivered another strong quarter. Diluted EPS of $0.26 was slightly better than the two prior quarters, and our Return on Average Assets at 0.91% and Return on Average Tangible Common Stockholders' Equity at 7.06% were the highest they’ve been in the last five quarters.
“We continue to deliver consistent earnings while being proactive in our business development strategies and prudently managing balance sheet risk. We are particularly pleased to have found an optimal exit point for the PREPA credit facility. This eliminated our single largest credit exposure and significantly reduced our Puerto Rico government related exposures. It also meaningfully increased our capital ratios and contributed to improved credit quality through a major reduction in non-performing loans.
“Oriental Bank’s franchise growth confirms the successful customer differentiation achieved in our business delivery model, emphasizing higher levels of advisory relationships and superior levels of service.
“New loan generation was good, with solid yield expansion. Retail and commercial deposits rose across all categories, due in part to continued growth in net new customers. We have been able to reduce borrowings, with an important reduction in interest expense and positive contribution to NIM. Non-interest revenues and expenses continue to be well managed, while Oriental seamlessly assumed the servicing of its originated residential mortgage loans portfolio.”
3Q16 Income Statement Highlights
The following compares data for the third quarter 2016 to the second quarter 2016, unless otherwise noted.
• Interest Income from Loans rose $2.9 million to $82.6 million. A large portion of the increase came from a $2.2 million recovery from former Eurobank loans. While the non-acquired portfolio grew, acquired loan portfolios continued to run off.
• Interest Income from Securities declined $0.3 million to $8.0 million, mainly due to lower balances in the mortgage-backed securities (MBS) portfolio.
• Interest Expense declined $0.9 million to $13.7 million due to lower borrowings.
• Total Provision for Loan and Lease Losses increased $9.0 million to $23.5 million. Provision for non-acquired loans included $2.9 million towards the sale of the PREPA credit and another $2.9 million for a single commercial loan. Provision for BBVA PR acquired loans included $4.4 million for a Puerto Rico Housing Finance Authority (PRHFA) loan, which now has a carrying amount of $3.5 million or 31% of the unpaid principal balance.
• Total Banking and Wealth Management Revenues remained level at $18.3 million. Banking service fees increased due to higher transaction volume. Mortgage banking revenues grew, reflecting better mark to market on sales. Wealth management remained level, excluding certain annual broker dealer and insurance fees received in 2Q16.
• Other Gains reflected a $5.0 million recovery from a Bear Stearns claim of loss in 2009 from the BALTA private label collateralized mortgage obligation.
• Total Non-Interest Expenses increased $1.1 million to $54.9 million. Total operating expenses were $0.4 million lower despite higher compensation expenses due to the number of business days in the quarter as well as general and administrative expenses for the servicing conversion initiative. OREO related expenses increased $1.2 million as part of normal activities.
• Income Tax Expense benefited from a $0.3 million resolution of a contingent tax position as well as from a reduction of the effective income tax rate, now estimated at 26.0%.
September 30, 2016 Balance Sheet Highlights
The following compares data as of September 30, 2016 to June 30, 2016, unless otherwise noted.
• Total Loans Net Held for Investment at $4.30 billion remained level.
• Total Investments declined $22.2 million to $1.30 billion, mainly due to prepayments in the MBS portfolio.
• Total Puerto Rico Government Related Exposure fell 50.0% to $202.4 million, when taking the sale of PREPA into account. Balances now primarily consist of loans to the five largest municipalities.
• Total Deposits increased $110.7 million to $4.75 billion across all categories, reflecting deposits from new and existing clients. Excluding brokered deposits, deposits increased $91.2 million.
• Total Borrowings declined $237.0 million to $800.3 million primarily due to net pay down of $200.5 million in FHLB advances and the maturity of a subordinated capital note of $67.0 million.
• Total Stockholders’ Equity was up $9.0 million to $924.9 million due to the increase in retained earnings.
Credit Quality Highlights
The following compares data as of September 30, 2016 to June 30, 2016, unless otherwise noted.
• Net Charge-Off Rate (ex-PREPA) at 1.15% fell 6 basis points due to declines in the auto and commercial lending categories.
• Early Delinquency Rate was 3.70% and total delinquency 6.92%, down 7 and 14 basis points, respectively, from year ago levels due to proactive measures implemented to deal with the economic environment.
• Non-Performing Loan Rate at 3.68% declined 541 basis points reflecting the sale of PREPA, but was up only 12 basis points from the prior quarter ex-PREPA.
• Allowance for Loan and Lease Losses fell $50.6 million to $62.2 million, also reflecting the sale of PREPA. As a result, the loan loss reserve ratio to total loans (excluding acquired loans) decreased to 2.06% from 3.53%.
Capital Position
The following compares data as of September 30, 2016 to June 30, 2016, unless otherwise noted.
Regulatory capital ratios continued to be significantly above requirements for a well-capitalized institution.
• Tangible Common Equity to Total Tangible Assets at 10.25% increased 33 basis points to the highest level in five quarters.
• Common Equity Tier 1 Capital Ratio (using Basel III methodology) increased to 13.34% from 12.64%.
• Total Risk-Based Capital Ratio increased to 18.73% from 18.00%.
Conference Call
A conference call to discuss OFG’s results for the third quarter 2016, outlook and related matters will be held today, Friday, October 21, 2016 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 third quarter ended September 30, 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. See Tables 9-1 and 9-2 in OFG’s above-mentioned 3Q16 Financial Supplement for reconciliation of GAAP to non-GAAP Measures and Calculations.
Forward Looking Statements
The information included in this document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) 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.
# # #
Contacts
Puerto Rico: Idalis Montalvo (idalis.montalvo@orientalbank.com) at (787) 777-2847
US: Steven Anreder (sanreder@ofgbancorp.com) and Gary Fishman (gfishman@ofgbancorp.com) at (212) 532-3232
| | | | | | |
OFG Bancorp | |
Financial Supplement | |
| | | | | | |
| | | | | | |
The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our September 30, 2016 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission. | |
| |
| | | | | | |
Table of Contents | |
| | | | Pages | |
| | | | | | |
| OFG Bancorp (Consolidated Financial Information) | | | |
| Table 1: | | Financial and Statistical Summary - Consolidated | | 2 | |
| Table 2: | | Consolidated Statements of Operations | | 3 | |
| Table 3: | | Consolidated Statements of Financial Condition | | 4 | |
| Table 4: | | Information on Loan Portfolio and Production | | 5 | |
| Table 5: | | Average Balances, Net Interest Income and Net Interest Margin | | 6-7 | |
| Table 6: | | Loan Information and Performance Statistics (Excluding Acquired Loans) | | 8-9 | |
| Table 7: | | Allowance for Loan and Lease Losses | | 10 | |
| Table 8: | | Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired | | | |
| | | with Deteriorated Credit Quality, Including those by Analogy) | | 11 | |
| Table 9: | | Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory | | | |
| | | Capital | | 12-13 | |
| Table 10: | | Notes to Financial Summary, Selected Metrics, Loans, and Consolidated | | | |
| | | Financial Statements (Tables 1-9) | | 14 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | | | |
Table 1: Financial and Statistical Summary - Consolidated | | |
| | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 | | 2016 | | 2015 | | |
(Dollars in thousands, except per share data) (unaudited) | | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | | YTD | | YTD | | |
Earnings | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | $ | 76,927 | | $ | 73,312 | | $ | 74,975 | | $ | 75,622 | | $ | 89,823 | | $ | 225,214 | | $ | 261,750 | | |
Non-interest income, net (core) | (2) | | | 18,277 | | | 18,284 | | | 17,125 | | | 19,349 | | | 18,703 | | | 53,686 | | | 57,285 | | |
Non-interest expense | | | | 54,926 | | | 53,825 | | | 54,857 | | | 58,542 | | | 69,090 | | | 163,608 | | | 189,859 | | |
Pre-provision net revenues | | | | 40,278 | | | 37,771 | | | 37,243 | | | 36,429 | | | 39,436 | | | 115,292 | | | 129,176 | | |
Provision for loan and lease losses | (3) | | | 23,469 | | | 14,445 | | | 13,789 | | | 52,190 | (a) | | 51,579 | (b) | | 51,703 | | | 109,311 | (a)(b) | |
FDIC shared-loss expense, net | | | | 3,296 | | | 3,420 | | | 4,029 | | | 4,400 | | | 2,079 | | | 10,745 | | | 38,408 | (c) | |
Net income (loss) before income taxes | | | | 18,747 | | | 20,197 | | | 19,832 | | | (20,840) | | | 5,131 | | | 58,776 | | | 782 | | |
Income tax expense (benefit) | | | | 3,627 | | | 5,858 | | | 5,661 | | | (19,864) | | | 562 | | | 15,146 | | | 2,310 | | |
Net income (loss) | | | $ | 15,120 | | $ | 14,339 | | $ | 14,171 | | $ | (976) | | $ | 4,569 | | $ | 43,630 | | $ | (1,528) | | |
Common Share Statistics | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings (loss) per common share - basic | (4) | | $ | 0.27 | | $ | 0.25 | | $ | 0.24 | | $ | (0.10) | | $ | 0.03 | | $ | 0.76 | | $ | (0.27) | | |
Earnings (loss) per common share - diluted | (5) | | $ | 0.26 | | $ | 0.25 | | $ | 0.24 | | $ | (0.10) | | $ | 0.03 | | $ | 0.76 | | $ | (0.27) | | |
Average common shares outstanding | | | | 43,926 | | | 43,914 | | | 43,898 | | | 43,868 | | | 43,929 | | | 43,913 | | | 44,353 | | |
Average common shares outstanding and equivalents | | | | 51,111 | | | 51,095 | | | 51,064 | | | 51,069 | | | 51,146 | | | 51,091 | | | 51,609 | | |
Cash dividends per common share | | | $ | 0.06 | | $ | 0.06 | | $ | 0.06 | | $ | 0.06 | | $ | 0.10 | (d) | $ | 0.18 | | $ | 0.30 | (d) | |
Book value per common share (period end) | | | $ | 17.29 | | $ | 17.08 | | $ | 16.80 | | $ | 16.67 | | $ | 16.91 | | $ | 17.29 | | $ | 16.91 | | |
Tangible book value per common share (period end) | (6) | | $ | 15.18 | | $ | 14.96 | | $ | 14.68 | | $ | 14.53 | | $ | 14.76 | | $ | 15.18 | | $ | 14.76 | | |
Balance Sheet (Average Balances) | | | | | | | | | | | | | | | | | | | | | | | | |
Loans | (7) | | $ | 4,398,032 | | $ | 4,445,658 | | $ | 4,484,410 | | $ | 4,552,234 | | $ | 4,654,135 | | $ | 4,441,665 | | $ | 4,755,861 | | |
Interest-earning assets | | | | 6,169,251 | | | 6,270,042 | | | 6,437,255 | | | 6,600,614 | | | 6,740,932 | | | 6,290,862 | | | 6,740,516 | | |
Total assets | | | | 6,653,414 | | | 6,778,211 | | | 6,990,212 | | | 7,160,328 | | | 7,326,901 | | | 6,806,718 | | | 7,344,330 | | |
Interest-bearing deposits | | | | 3,920,565 | | | 3,929,280 | | | 3,956,790 | | | 3,931,009 | | | 3,932,734 | | | 3,935,216 | | | 4,027,869 | | |
Borrowings | | | | 917,212 | | | 1,047,753 | | | 1,239,672 | | | 1,394,171 | | | 1,572,400 | | | 1,067,662 | | | 1,472,993 | | |
Stockholders' equity | | | | 919,171 | | | 908,394 | | | 899,858 | | | 905,646 | | | 912,598 | | | 909,175 | | | 930,146 | | |
Common stockholders' equity | | | | 753,301 | | | 742,524 | | | 733,988 | | | 739,776 | | | 746,728 | | | 743,305 | | | 764,276 | | |
Performance Metrics | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | (8) | | | 4.95% | | | 4.69% | | | 4.67% | | | 4.55% | | | 5.29% | | | 4.77% | | | 5.19% | | |
Return on average assets | (9) | | | 0.91% | | | 0.85% | | | 0.81% | | | -0.05% | | | 0.25% | | | 0.85% | | | -0.03% | | |
Return on average tangible common stockholders' equity | (10) | | | 7.06% | | | 6.70% | | | 6.69% | | | -2.75% | | | 0.68% | | | 6.82% | | | -2.38% | | |
Efficiency ratio | (11) | | | 57.69% | | | 58.76% | | | 59.56% | | | 61.64% | | | 63.66% | | | 58.66% | | | 59.51% | | |
Full-time equivalent employees, period end | | | | 1,439 | | | 1,451 | | | 1,467 | | | 1,466 | | | 1,491 | | | 1,439 | | | 1,491 | | |
Credit Quality Metrics | | | | | | | | | | | | | | | | | | | | | | | | |
Excluding acquired loans: | (1) | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | (3) | | $ | 62,168 | | $ | 112,812 | | $ | 113,238 | | $ | 112,626 | (a) | $ | 80,351 | | $ | 62,168 | | $ | 80,351 | | |
Allowance as a % of loans held for investment | | | | 2.06% | | | 3.53% | | | 3.63% | | | 3.62% | | | 2.65% | | | 2.06% | | | 2.65% | | |
Net charge-offs | (3) | | $ | 65,352 | | $ | 9,478 | | $ | 10,048 | | $ | 12,737 | | $ | 9,097 | | $ | 84,878 | | $ | 25,410 | | |
Net charge-off rate | (3)(12) | | | 8.27% | | | 1.21% | | | 1.30% | | | 1.67% | | | 1.23% | | | 3.62% | | | 1.17% | | |
Early delinquency rate (30 - 89 days past due) | | | | 3.70% | | | 3.31% | | | 3.51% | | | 3.70% | | | 3.77% | | | 3.70% | | | 3.77% | | |
Total delinquency rate (30 days and over) | | | | 6.92% | | | 6.28% | | | 6.72% | | | 6.94% | | | 7.06% | | | 6.92% | | | 7.06% | | |
Capital Ratios (Non-GAAP) | (13) | | | | | | | | | | | | | | | | | | | | | | | |
Leverage ratio | | | | 12.35% | | | 11.92% | | | 11.38% | | | 11.18% | | | 10.93% | | | 12.35% | | | 10.93% | | |
Common equity Tier 1 capital ratio | | | | 13.34% | | | 12.64% | | | 12.33% | | | 12.14% | | | 12.03% | | | 13.34% | | | 12.03% | | |
Tier 1 risk-based capital ratio | | | | 17.46% | | | 16.71% | | | 16.36% | | | 15.99% | | | 15.64% | | | 17.46% | | | 15.64% | | |
Total risk-based capital ratio | | | | 18.73% | | | 18.00% | | | 17.67% | | | 17.29% | | | 16.93% | | | 18.73% | | | 16.93% | | |
Tangible common equity ("TCE") ratio | | | | 10.25% | | | 9.92% | | | 9.50% | | | 9.10% | | | 9.11% | | | 10.25% | | | 9.11% | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(a) 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. During Q4 2015, the Company recorded an additional $29.3 million provision for loan and lease losses related to PREPA. Both were part of the overall quarterly provision for loan and lease losses. | |
(b) During Q3 2015, the Company sold a portion of covered non-performing commercial loans amounting to $197.1 million unpaid principal balance ($100.0 million carrying amount). The sales price was 18.44% of UPB, or $36.3 million. The FDIC agreed to cover $20.0 million of losses as part of its loss-share agreement with the Company. As a result, a $20.0 million reimbursement was recorded in the statement of operations. The Company also recorded a $32.9 million provision for loan and lease losses for acquired Eurobank loans, which was partially offset by $4.6 million in cost recoveries. Also, as part of this transaction, the Company sold certain non-performing commercial loans and real estate owned from the BBVAPR acquisition amounting to $38.1 million unpaid principal balance ($9.9 million carrying amount). The sales price was $5.2 million. As a result, a $5.2 million provision for loan and lease losses was recorded for BBVAPR acquired loans, which was partially offset by $2.4 million in cost recoveries. In addition, certain real estate owned with a carrying amount of $11.0 million was sold for $1.7 million. At September 30 , 2015, the Company had a $13.0 million receivable related to this sale and a $20.0 million receivable from the FDIC for the shared-loss portion, both balances were received in December 2015. | |
(c) The FDIC loss share coverage for the commercial loans and other non-single family loans was in effect until June 30, 2015. The FDIC granted an extension of 120 days for the sale of part of this portfolio and agreed to cover up to $20 million with respect to the aggregate loss resulting from this sale. | |
(d) The Board of directors decreased OFG's regular quarterly dividend per common share to $0.06 per share during Q4 2015 from $0.10 per share. | |
| | | | | | | | | | | | | | | | | | | | | | | | |
2 | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | | | |
Table 2: Consolidated Statements of Operations | | | | | | | | | |
| | Quarter Ended | | Nine-Months Ended | | |
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | September 30, | | September 30, | | |
(Dollars in thousands, except per share data) (unaudited) | | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 | | 2016 | | 2015 | | |
Interest income: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans | (1)(14) | | | | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | $ | 50,818 | | $ | 49,108 | | $ | 47,915 | | $ | 47,261 | | $ | 46,036 | | $ | 147,841 | | $ | 136,532 | | |
Acquired BBVAPR loans | | | | 22,446 | | | 23,670 | | | 25,676 | | | 26,976 | | | 35,214 | | | 71,792 | | | 104,444 | | |
Acquired Eurobank loans | | | | 9,340 | | | 6,897 | | | 7,561 | | | 8,134 | | | 16,014 | | | 23,798 | | | 44,275 | | |
Total interest income from loans | | | | 82,604 | | | 79,675 | | | 81,152 | | | 82,371 | | | 97,264 | | | 243,431 | | | 285,251 | | |
Investment securities | | | | 7,980 | | | 8,233 | | | 10,154 | | | 10,536 | | | 9,983 | | | 26,367 | | | 28,410 | | |
Total interest income | | | | 90,584 | | | 87,908 | | | 91,306 | | | 92,907 | | | 107,247 | | | 269,798 | | | 313,661 | | |
Interest expense: | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | |
Core deposits | | | | 5,580 | | | 5,551 | | | 5,136 | | | 5,237 | | | 5,440 | | | 16,267 | | | 16,897 | | |
Brokered deposits | | | | 1,751 | | | 1,816 | | | 1,988 | | | 1,438 | | | 1,211 | | | 5,555 | | | 3,462 | | |
Total deposits | | | | 7,331 | | | 7,367 | | | 7,124 | | | 6,675 | | | 6,651 | | | 21,822 | | | 20,359 | | |
Borrowings | | | | 6,326 | | | 7,229 | | | 9,207 | | | 10,610 | | | 10,773 | | | 22,762 | | | 31,552 | | |
Total interest expense | | | | 13,657 | | | 14,596 | | | 16,331 | | | 17,285 | | | 17,424 | | | 44,584 | | | 51,911 | | |
Net interest income | | | | 76,927 | | | 73,312 | | | 74,975 | | | 75,622 | | | 89,823 | | | 225,214 | | | 261,750 | | |
Provision for loan and lease losses, excluding acquired loans | (1)(3) | | | 14,708 | | | 9,052 | | | 10,660 | | | 45,012 | (a) | | 10,459 | | | 34,420 | | | 54,322 | (a) | |
Provision for acquired BBVAPR loan and lease losses | (1) | | | 7,942 | | | 4,362 | | | 2,324 | | | 7,332 | | | 7,630 | | | 14,628 | | | 16,795 | | |
Provision (recapture) for acquired Eurobank loan and lease losses | (1) | | | 819 | | | 1,031 | | | 805 | | | (154) | | | 33,490 | (b) | | 2,655 | | | 38,194 | (b) | |
Total provision for loan and lease losses, net | | | | 23,469 | | | 14,445 | | | 13,789 | | | 52,190 | | | 51,579 | | | 51,703 | | | 109,311 | | |
Net interest income after provision for loan and lease losses | | | | 53,458 | | | 58,867 | | | 61,186 | | | 23,432 | | | 38,244 | | | 173,511 | | | 152,439 | | |
Non-interest income: | | | | | | | | | | | | | | | | | | | | | | | | |
Banking service revenues | | | | 10,330 | | | 10,219 | | | 10,118 | | | 10,223 | | | 10,826 | | | 30,667 | | | 31,243 | | |
Wealth management revenues | | | | 6,526 | | | 7,041 | | | 6,152 | | | 7,715 | | | 6,885 | | | 19,719 | | | 21,325 | | |
Mortgage banking activities | | | | 1,421 | | | 1,024 | | | 855 | | | 1,411 | | | 992 | | | 3,300 | | | 4,717 | | |
Total banking and wealth management revenues | | | | 18,277 | | | 18,284 | | | 17,125 | | | 19,349 | | | 18,703 | | | 53,686 | | | 57,285 | | |
FDIC shared-loss expense, net | | | | (3,296) | | | (3,420) | | | (4,029) | | | (4,400) | | | (2,079) | | | (10,745) | | | (38,408) | (c) | |
Other-than-temporary impairment losses on investment securities | | | | - | | | - | | | - | | | (1,244) | | | (246) | | | - | | | (246) | | |
Reimbursement from FDIC shared-loss coverage in sale of loans | | | | - | | | - | | | - | | | - | | | 20,000 | (b) | | - | | | 20,000 | (b) | |
Other gains (losses), net | (15) | | | 5,234 | | | 291 | | | 407 | (d) | | 565 | | | (401) | | | 5,932 | (d) | | (429) | | |
Total non-interest income (loss), net | | | | 20,215 | | | 15,155 | | | 13,503 | | | 14,270 | | | 35,977 | | | 48,873 | | | 38,202 | | |
Non-interest expense: | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and employee benefits | | | | 19,191 | | | 18,531 | | | 20,284 | | | 18,716 | | | 20,098 | | | 58,006 | | | 59,538 | | |
Rent and occupancy costs | | | | 7,484 | | | 8,107 | | | 7,822 | | | 8,111 | | | 8,556 | | | 23,413 | | | 26,075 | | |
Net loss on sale of foreclosed real estate and other repossessed assets | | | | 2,970 | | | 4,163 | | | 1,930 | | | 4,197 | | | 14,172 | (b) | | 9,063 | | | 26,349 | (b) | |
General and administrative expenses | | | | 21,562 | | | 20,821 | | | 22,566 | | | 25,512 | | | 21,537 | | | 64,949 | | | 67,895 | | |
Total operating expenses | | | | 51,207 | | | 51,622 | | | 52,602 | | | 56,536 | | | 64,363 | | | 155,431 | | | 179,857 | | |
Credit related expenses | | | | 3,719 | | | 2,203 | | | 2,255 | | | 2,006 | | | 3,810 | | | 8,177 | | | 9,085 | | |
Other non-recurring expenses | | | | - | | | - | | | - | | | - | | | 917 | (e) | | - | | | 917 | (e) | |
Total non-interest expense | | | | 54,926 | | | 53,825 | | | 54,857 | | | 58,542 | | | 69,090 | | | 163,608 | | | 189,859 | | |
Income (loss) before income taxes | | | | 18,747 | | | 20,197 | | | 19,832 | | | (20,840) | | | 5,131 | | | 58,776 | | | 782 | | |
Income tax expense (benefit) | | | | 3,627 | | | 5,858 | | | 5,661 | | | (19,864) | | | 562 | | | 15,146 | | | 2,310 | | |
Net income (loss) | | | | 15,120 | | | 14,339 | | | 14,171 | | | (976) | | | 4,569 | | | 43,630 | | | (1,528) | | |
Less: dividends on preferred stock | | | | | | | | | | | | | | | | | | | | | | | | |
Convertible preferred stock | | | | (1,838) | | | (1,837) | | | (1,838) | | | (1,837) | | | (1,838) | | | (5,513) | | | (5,513) | | |
Other preferred stock | | | | (1,627) | | | (1,629) | | | (1,627) | | | (1,629) | | | (1,627) | | | (4,883) | | | (4,883) | | |
Net income (loss) available to common shareholders | | | $ | 11,655 | | $ | 10,873 | | $ | 10,706 | | $ | (4,442) | | $ | 1,104 | | $ | 33,234 | | $ | (11,924) | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(a) 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. During Q4 2015, the Company recorded an additional $29.3 million provision for loan and lease losses related to PREPA. Both were part of the overall quarterly provision for loan and lease losses. | |
(b) During Q3 2015, the Company sold a portion of covered non-performing commercial loans amounting to $197.1 million unpaid principal balance ($100.0 million carrying amount). The sales price was 18.44% of UPB, or $36.3 million. The FDIC agreed to cover $20.0 million of losses as part of its loss-share agreement with the Company. As a result, a $20.0 million reimbursement was recorded in the statement of operations. The Company also recorded a $32.9 million provision for loan and lease losses for acquired Eurobank loans, which was partially offset by $4.6 million in cost recoveries. Also, as part of this transaction, the Company sold certain non-performing commercial loans and real estate owned from the BBVAPR acquisition amounting to $38.1 million unpaid principal balance ($9.9 million carrying amount). The sales price was $5.2 million. As a result, a $5.2 million provision for loan and lease losses was recorded for BBVAPR acquired loans, which was partially offset by $2.4 million in cost recoveries. In addition, certain real estate owned with a carrying amount of $11.0 million was sold for $1.7 million. At September 30 , 2015, the Company had a $13.0 million receivable related to this sale and a $20.0 million receivable from the FDIC for the shared-loss portion, both balances were received in December 2015. | |
(c) The FDIC loss share coverage for the commercial loans and other non-single family loans was in effect until June 30, 2015. The FDIC granted an extension of 120 days for the sale of part of this portfolio and agreed to cover up to $20 million with respect to the aggregate loss resulting from this sale. | |
(d) During Q1 2016, the Company sold mortgage backed securities amounting to $263.3 million with a gain of $16.1 million and obligations of Puerto Rico government and political subdivisions of $12.8 million with a loss of $4.1 million. In addition, the Company partially unwound repurchase agreements in the amount of $268 million at a cost of $12 million. | |
(e) During Q3 2015, the Company offered a voluntary early retirement program for qualified employees and incurred additional compensation expenses of $917 thousand related to this program. | |
| | | | | | | | | | | | | | | | | | | | | | | | |
3 | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | |
Table 3: Consolidated Statements of Financial Condition | | | | | | | | | |
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | |
(Dollars in thousands) (unaudited) | | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 | |
Cash and cash equivalents | | | $ | 512,295 | | $ | 520,078 | | $ | 681,198 | | $ | 540,058 | | $ | 530,545 | |
Investments: | | | | | | | | | | | | | | | | | |
Trading securities | | | | 380 | | | 348 | | | 314 | | | 288 | | | 583 | |
Investment securities available-for-sale, at fair value, with amortized cost of $623,994 | | | | | | | | | | | | | | | | | |
(June 30, 2016 - $645,298; March 31, 2016 - $653,673; December 31, 2015 - $955,646; | | | | | | | | | | | | | | | | | |
September 30, 2015 - $982,754) | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | | | 632,429 | | | 651,724 | | | 656,137 | (a) | | 953,213 | | | 985,554 | |
Other investment securities | | | | 10,254 | | | 12,578 | | | 13,148 | (a) | | 21,396 | | | 22,151 | |
Total investment securities available-for-sale | | | | 642,683 | | | 664,302 | | | 669,285 | | | 974,609 | | | 1,007,705 | |
Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $650,023 | | | | | | | | | | | | | | | | | |
(June 30, 2016 - $643,530; March 31, 2016 - $641,346; December 31, 2015 - $614,679; | | | | | | | | | | | | | | | | | |
September 30, 2015 - $595,148) | | | | 641,890 | | | 635,399 | | | 637,036 | | | 620,189 | | | 594,639 | |
Federal Home Loan Bank (FHLB) stock, at cost | | | | 12,712 | | | 19,838 | | | 20,761 | | | 20,783 | | | 20,804 | |
Other investments | | | | 3 | | | 3 | | | 3 | | | 3 | | | 3 | |
Total investments | | | | 1,297,668 | | | 1,319,890 | | | 1,327,399 | | | 1,615,872 | | | 1,623,734 | |
Loans, net | (3)(14) | | | 4,298,965 | | | 4,373,617 | | | 4,360,129 | | | 4,434,213 | | | 4,468,676 | |
Other assets: | | | | | | | | | | | | | | | | | |
FDIC shared-loss indemnification asset | | | | 16,670 | | | 18,426 | | | 20,923 | | | 22,599 | | | 22,895 | |
Derivative assets | | | | 1,503 | | | 1,926 | | | 2,662 | | | 3,025 | | | 3,290 | |
Prepaid expenses | | | | 19,514 | | | 16,332 | | | 10,363 | | | 11,762 | | | 14,151 | |
Deferred tax asset, net | | | | 131,061 | | | 143,048 | | | 145,518 | | | 145,901 | | | 143,935 | |
Foreclosed real estate and repossessed properties | | | | 49,188 | | | 55,086 | | | 61,145 | | | 64,088 | | | 73,063 | |
Premises and equipment, net | | | | 71,105 | | | 72,585 | | | 73,975 | | | 74,590 | | | 75,346 | |
Goodwill | | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 | |
Accounts receivable and other assets | | | | 108,075 | | | 105,539 | | | 105,191 | | | 100,972 | | | 162,118 | (b) |
Total assets | | | $ | 6,592,113 | | $ | 6,712,596 | | $ | 6,874,572 | | $ | 7,099,149 | | $ | 7,203,822 | |
| | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | |
Demand deposits | | | $ | 2,012,255 | | | 1,972,743 | | | 2,018,346 | | | 1,862,572 | | | 1,906,658 | |
Savings accounts | | | | 1,118,783 | | | 1,110,423 | | | 1,110,469 | | | 1,107,618 | | | 1,217,098 | |
Time deposits | | | | 1,042,572 | | | 999,243 | | | 962,773 | | | 964,588 | | | 941,821 | |
Brokered deposits | | | | 581,161 | | | 561,645 | | | 688,105 | | | 782,973 | | | 653,126 | |
Total deposits | | | | 4,754,771 | | | 4,644,054 | | | 4,779,693 | | | 4,717,751 | | | 4,718,703 | |
Borrowings: | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 658,232 | | | 626,109 | | | 636,172 | (a) | | 934,691 | | | 1,000,664 | |
Advances from FHLB and other borrowings | (16) | | | 105,984 | | | 308,233 | | | 333,736 | | | 334,210 | | | 334,670 | |
Subordinated capital notes | (16) | | | 36,083 | | | 102,983 | | | 102,808 | | | 102,633 | | | 102,371 | |
Total borrowings | | | | 800,299 | | | 1,037,325 | | | 1,072,716 | | | 1,371,534 | | | 1,437,705 | |
Other liabilities: | | | | | | | | | | | | | | | | | |
Derivative liabilities | | | | 4,306 | | | 5,413 | | | 6,220 | | | 6,162 | | | 8,622 | |
Acceptances outstanding | | | | 18,043 | | | 20,984 | | | 19,381 | | | 14,582 | | | 19,083 | |
Accrued expenses and other liabilities | | | | 89,760 | | | 88,930 | | | 92,761 | | | 92,043 | | | 111,821 | |
Total liabilities | | | | 5,667,179 | | | 5,796,706 | | | 5,970,771 | | | 6,202,072 | | | 6,295,934 | |
Stockholders' equity: | | | | | | | | | | | | | | | | | |
Preferred stock | | | | 176,000 | | | 176,000 | | | 176,000 | | | 176,000 | | | 176,000 | |
Common stock | | | | 52,626 | | | 52,626 | | | 52,626 | | | 52,626 | | | 52,626 | |
Additional paid-in capital | | | | 540,692 | | | 540,705 | | | 540,371 | | | 540,512 | | | 540,088 | |
Legal surplus | | | | 74,788 | | | 73,265 | | | 71,865 | | | 70,435 | | | 70,423 | |
Retained earnings | | | | 169,858 | | | 162,363 | | | 155,529 | | | 148,886 | | | 155,974 | |
Treasury stock, at cost | | | | (104,874) | | | (104,874) | | | (104,874) | | | (105,379) | | | (105,379) | |
Accumulated other comprehensive income, net | | | | 15,844 | | | 15,805 | | | 12,284 | | | 13,997 | | | 18,156 | |
Total stockholders' equity | | | | 924,934 | | | 915,890 | | | 903,801 | | | 897,077 | | | 907,888 | |
Total liabilities and stockholders' equity | | | $ | 6,592,113 | | $ | 6,712,596 | | $ | 6,874,572 | | $ | 7,099,149 | | $ | 7,203,822 | |
| | | | | | | | | | | | | | | | | |
(a) During Q1 2016, the Company sold mortgage backed securities amounting to $263.3 million with a gain of $16.1 million and obligations of Puerto Rico government and political subdivisions of $12.8 million with a loss of $4.1 million. In addition, the Company partially unwound repurchase agreements in the amount of $268 million at a cost of $12 million. |
(b) At September 30, 2015, amount includes a $25 million receivable from Q2 2015 loss-share certifications for non-single family residential mortgage loans and a $20 million receivable from the sale of non-performing covered loans during Q3 2015, which were paid by the FDIC in December 2015. In addition, it includes a $13 million receivable related to the sale of non-performing loans received in December 2015. |
| | | | | | | | | | | | | | | | | |
4 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 4: Information on Loan Portfolio and Production | (14) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | |
(Dollars in thousands) (unaudited) | | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 | |
Non-acquired loans held for investment: | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 735,367 | | $ | 741,917 | | $ | 751,819 | | $ | 757,828 | | $ | 762,636 | |
Commercial | (3) | | | 1,267,177 | | | 1,476,613 | | | 1,425,385 | | | 1,441,649 | | | 1,389,353 | |
Consumer | | | | 278,666 | | | 265,269 | | | 252,327 | | | 242,950 | | | 227,756 | |
Auto | | | | 730,589 | | | 712,268 | | | 687,159 | | | 669,163 | | | 647,544 | |
| | | | 3,011,799 | | | 3,196,067 | | | 3,116,690 | | | 3,111,590 | | | 3,027,289 | |
Less: Allowance for loan and lease losses | (3) | | | (62,168) | | | (112,812) | | | (113,238) | | | (112,626) | | | (80,351) | |
| | | | 2,949,631 | | | 3,083,255 | | | 3,003,452 | | | 2,998,964 | | | 2,946,938 | |
Deferred loan costs, net | | | | 5,421 | | | 4,619 | | | 4,350 | | | 4,203 | | | 4,571 | |
Total non-acquired loans held for investment, net | | | | 2,955,052 | | | 3,087,874 | | | 3,007,802 | | | 3,003,167 | | | 2,951,509 | |
| | | | | | | | | | | | | | | | | |
Acquired loans: | (1) | | | | | | | | | | | | | | | | |
BBVAPR | | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-20 | | | | | | | | | | | | | | | | | |
Commercial | | | | 5,755 | | | 4,559 | | | 6,558 | | | 7,457 | | | 7,736 | |
Consumer | | | | 34,215 | | | 35,194 | | | 36,346 | | | 38,385 | | | 39,774 | |
Auto | | | | 64,393 | | | 77,118 | | | 91,406 | | | 106,911 | | | 124,120 | |
| | | | 104,363 | | | 116,871 | | | 134,310 | | | 152,753 | | | 171,630 | |
Less: Allowance for loan and lease losses | | | | (4,213) | | | (4,487) | | | (4,993) | | | (5,542) | | | (5,473) | |
| | | | 100,150 | | | 112,384 | | | 129,317 | | | 147,211 | | | 166,157 | |
| | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | |
Mortgage | | | | 579,769 | | | 591,029 | | | 600,901 | | | 608,294 | | | 617,268 | |
Commercial | | | | 301,599 | | | 323,105 | | | 345,789 | | | 375,491 | | | 395,637 | |
Consumer | | | | 5,768 | | | 7,331 | | | 9,345 | | | 11,843 | | | 15,072 | |
Auto | | | | 100,475 | | | 117,038 | | | 134,669 | | | 153,592 | | | 173,979 | |
| | | | 987,611 | | | 1,038,503 | (a) | | 1,090,704 | | | 1,149,220 | | | 1,201,956 | |
Less: Allowance for loan and lease losses | | | | (29,819) | | | (22,801) | (a) | | (27,747) | | | (25,785) | | | (19,986) | |
| | | | 957,792 | | | 1,015,702 | | | 1,062,957 | | | 1,123,435 | | | 1,181,970 | |
Total Acquired BBVAPR loans, net | | | | 1,057,942 | | | 1,128,086 | | | 1,192,274 | | | 1,270,646 | | | 1,348,127 | |
| | | | | | | | | | | | | | | | | |
Eurobank | | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | |
Mortgage | | | | 75,043 | | | 76,777 | | | 91,113 | | | 92,273 | | | 92,757 | |
Commercial | | | | 82,753 | | | 83,377 | | | 142,298 | | | 142,377 | | | 144,704 | |
Consumer | | | | 1,488 | | | 1,410 | | | 1,770 | | | 2,314 | | | 2,708 | |
| | | | 159,284 | | | 161,564 | (a) | | 235,181 | | | 236,964 | | | 240,169 | |
Less: Allowance for loan and lease losses | | | | (22,812) | | | (22,116) | (a) | | (92,293) | | | (90,178) | | | (90,332) | |
Total Acquired Eurobank loans, net | | | | 136,472 | | | 139,448 | | | 142,888 | | | 146,786 | | | 149,837 | |
Total acquired loans, net | | | | 1,194,414 | | | 1,267,534 | | | 1,335,162 | | | 1,417,432 | | | 1,497,964 | |
Total loans held for investment | | | | 4,149,466 | | | 4,355,408 | | | 4,342,964 | | | 4,420,599 | | | 4,449,473 | |
Mortgage loans held for sale | | | | 26,362 | | | 18,209 | | | 17,165 | | | 13,614 | | | 19,203 | |
Other loans held for sale | (3) | | | 123,137 | | | - | | | - | | | - | | | - | |
Total loans, net | | | $ | 4,298,965 | | $ | 4,373,617 | | $ | 4,360,129 | | $ | 4,434,213 | | $ | 4,468,676 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 | |
(Dollars in thousands) (unaudited) | | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | |
Quarterly loan production | (17) | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 51,022 | | $ | 57,636 | | $ | 48,321 | | $ | 55,450 | | $ | 65,248 | |
Commercial | | | | 62,628 | | | 66,316 | | | 79,272 | | | 75,775 | | | 83,243 | |
Consumer | | | | 43,636 | | | 39,550 | | | 34,275 | | | 37,919 | | | 36,756 | |
Auto and Leasing | | | | 69,523 | | | 74,383 | | | 63,285 | | | 67,633 | | | 65,743 | |
Total | | | $ | 226,809 | | $ | 237,885 | | $ | 225,153 | | $ | 236,777 | | $ | 250,990 | |
| | | | | | | | | | | | | | | | | |
(a) During Q2 2016, the Company changed the purchase credit impaired policy for all loans accounted for under ASC 310-30. Under the revised policy, the Company writes-off a loans' recorded investment and derecognizes the associated allowance for loan and lease losses for loans that exit the pools. The revised policy implementation is performed prospectively due to the immaterial impact for retrospective adoption. The transition to this revised policy resulted in a $8.5 million and $72.2 million initial de-recognition of loans recorded investment balance and associated allowance for loan and lease losses for acquired BBVAPR loans and acquired Eurobank loans, respectively, with no impact to provision for loan and lease losses. |
| | | | | | | | | | | | | | | | | |
5 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Table 5: Average Balances, Net Interest Income and Net Interest Margin | |
| | | 2016 Q3 | | 2016 Q2 | | 2016 Q1 | | 2015 Q4 | | 2014 Q3 |
| | | | | 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 | | | $ | 477,968 | | $ | 661 | | 0.55 | % | | $ | 512,916 | | $ | 612 | | 0.48 | % | | $ | 502,718 | | $ | 646 | | 0.52 | % | | $ | 438,981 | | $ | 327 | | 0.30 | % | | $ | 482,959 | | $ | 308 | | 0.25 | % |
Investment securities | | | | 1,293,251 | | | 7,319 | | 2.25 | % | | | 1,311,468 | | | 7,621 | | 2.33 | % | | | 1,450,127 | | | 9,508 | | 2.63 | % | | | 1,609,399 | | | 10,209 | | 2.52 | % | | | 1,603,838 | | | 9,674 | | 2.39 | % |
Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | 3,160,091 | | | 50,569 | | 6.35 | % | | | 3,129,570 | | | 49,108 | | 6.29 | % | | | 3,100,157 | | | 47,915 | | 6.20 | % | | | 3,043,109 | | | 47,261 | | 6.16 | % | | | 2,959,961 | | | 46,036 | | 6.17 | % |
Acquired BBVAPR loans | | | | 1,100,336 | | | 22,723 | | 8.19 | % | | | 1,172,087 | | | 23,670 | | 8.10 | % | | | 1,240,252 | | | 25,676 | | 8.30 | % | | | 1,361,173 | | | 26,976 | | 7.86 | % | | | 1,499,399 | | | 35,215 | | 9.32 | % |
Acquired Eurobank loans | | | | 137,605 | | | 9,313 | | 26.85 | % | | | 144,001 | | | 6,897 | | 19.21 | % | | | 144,001 | | | 7,561 | | 21.06 | % | | | 147,952 | | | 8,134 | | 21.81 | % | | | 194,775 | | | 16,014 | | 32.62 | % |
Total loans | | | | 4,398,032 | | | 82,605 | | 7.45 | % | | | 4,445,658 | | | 79,675 | | 7.19 | % | | | 4,484,410 | | | 81,152 | | 7.26 | % | | | 4,552,234 | | | 82,371 | | 7.18 | % | | | 4,654,135 | | | 97,265 | | 8.29 | % |
Total interest-earning assets | | | $ | 6,169,251 | | $ | 90,585 | | 5.83 | % | | $ | 6,270,042 | | $ | 87,908 | | 5.62 | % | | $ | 6,437,255 | | $ | 91,306 | | 5.69 | % | | $ | 6,600,614 | | $ | 92,907 | | 5.58 | % | | $ | 6,740,932 | | $ | 107,247 | | 6.31 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | $ | 1,243,640 | | $ | 1,314 | | 0.42 | % | | $ | 1,231,576 | | $ | 1,518 | | 0.49 | % | | $ | 1,152,055 | | $ | 1,081 | | 0.38 | % | | $ | 1,138,928 | | $ | 1,063 | | 0.37 | % | | $ | 1,110,804 | | $ | 1,034 | | 0.37 | % |
Savings accounts | | | | 1,113,649 | | | 1,351 | | 0.48 | % | | | 1,103,808 | | | 1,308 | | 0.48 | % | | | 1,115,552 | | | 1,398 | | 0.50 | % | | | 1,180,220 | | | 1,516 | | 0.51 | % | | | 1,234,772 | | | 1,592 | | 0.51 | % |
Time deposits | | | | 1,013,905 | | | 2,735 | | 1.07 | % | | | 981,759 | | | 2,558 | | 1.05 | % | | | 954,857 | | | 2,495 | | 1.05 | % | | | 938,291 | | | 2,456 | | 1.04 | % | | | 939,075 | | | 2,613 | | 1.10 | % |
Brokered deposits | | | | 549,371 | | | 1,751 | | 1.26 | % | | | 612,137 | | | 1,816 | | 1.19 | % | | | 734,326 | | | 1,988 | | 1.09 | % | | | 673,570 | | | 1,438 | | 0.85 | % | | | 648,083 | | | 1,211 | | 0.74 | % |
| | | | 3,920,565 | | | 7,151 | | 0.72 | % | | | 3,929,280 | | | 7,200 | | 0.73 | % | | | 3,956,790 | | | 6,962 | | 0.71 | % | | | 3,931,009 | | | 6,473 | | 0.65 | % | | | 3,932,734 | | | 6,450 | | 0.65 | % |
Non-interest bearing deposit accounts | | | | 801,833 | | | - | | - | | | | 774,496 | | | - | | - | | | | 774,950 | | | - | | - | | | | 781,064 | | | - | | - | | | | 772,545 | | | - | | - | % |
Fair value premium amortization and core deposit intangible amortization | | | | - | | | 180 | | - | | | | - | | | 167 | | - | | | | - | | | 162 | | - | | | | - | | | 202 | | - | | | | - | | | 201 | | - | |
Total deposits | | | | 4,722,398 | | | 7,331 | | 0.62 | % | | | 4,703,776 | | | 7,367 | | 0.63 | % | | | 4,731,740 | | | 7,124 | | 0.60 | % | | | 4,712,073 | | | 6,675 | | 0.56 | % | | | 4,705,279 | | | 6,651 | | 0.56 | % |
Borrowings | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 620,353 | | | 4,272 | | 2.73 | % | | | 627,693 | | | 4,258 | | 2.72 | % | | | 799,613 | | | 6,099 | | 3.06 | % | | | 957,680 | | | 7,404 | | 3.07 | % | | | 1,132,373 | | | 7,605 | | 2.66 | % |
Advances from FHLB and other borrowings | | | | 195,278 | | | 1,237 | | 2.51 | % | | | 317,191 | | | 2,098 | | 2.65 | % | | | 337,364 | | | 2,240 | | 2.66 | % | | | 334,029 | | | 2,306 | | 2.74 | % | | | 337,829 | | | 2,283 | | 2.68 | % |
Subordinated capital notes | | | | 101,581 | | | 818 | | 3.19 | % | | | 102,869 | | | 873 | | 3.40 | % | | | 102,695 | | | 868 | | 3.39 | % | | | 102,462 | | | 900 | | 3.48 | % | | | 102,198 | | | 885 | | 3.44 | % |
Total borrowings | | | | 917,212 | | | 6,327 | | 2.74 | % | | | 1,047,753 | | | 7,229 | | 2.77 | % | | | 1,239,672 | | | 9,207 | | 2.98 | % | | | 1,394,171 | | | 10,610 | | 3.02 | % | | | 1,572,400 | | | 10,773 | | 2.72 | % |
Total interest-bearing liabilities | | | $ | 5,639,610 | | $ | 13,658 | | 0.96 | % | | $ | 5,751,529 | | $ | 14,596 | | 1.02 | % | | $ | 5,971,412 | | $ | 16,331 | | 1.10 | % | | $ | 6,106,244 | | $ | 17,285 | | 1.12 | % | | $ | 6,277,679 | | $ | 17,424 | | 1.10 | % |
Interest rate spread | | | | | | $ | 76,927 | | 4.87 | % | | | | | $ | 73,312 | | 4.60 | % | | | | | $ | 74,975 | | 4.59 | % | | | | | $ | 75,622 | | 4.46 | % | | | | | $ | 89,823 | | 5.21 | % |
Net interest margin | | | | | | | | | 4.95 | % | | | | | | | | 4.69 | % | | | | | | | | 4.67 | % | | | | | | | | 4.55 | % | | | | | | | | 5.29 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ASC 310-30 loan cost recoveries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans | | | | | | $ | 810 | | | | | | | | $ | 293 | | | | | | | | $ | 683 | | | | | | | | $ | 354 | | | | | | | | $ | 6,106 | | | |
Acquired Eurobank loans | | | | | | | 3,012 | | | | | | | | | 539 | | | | | | | | | 1,326 | | | | | | | | | 2,397 | | | | | | | | | 6,991 | | | |
| | | | | | $ | 3,822 | | | | | | | | $ | 832 | | | | | | | | $ | 2,009 | | | | | | | | $ | 2,751 | | | | | | | | $ | 13,097 | | | |
Adjusted excluding cost recoveries (Non-GAAP): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | $ | 6,169,251 | | $ | 86,763 | | 5.58 | % | | $ | 6,270,042 | | $ | 87,076 | | 5.57 | % | | $ | 6,437,255 | | $ | 89,297 | | 5.56 | % | | $ | 6,600,614 | | $ | 90,156 | | 5.42 | % | | $ | 6,740,932 | | $ | 94,150 | | 5.54 | % |
Interest rate spread | | | | | | $ | 73,105 | | 4.62 | % | | | | | $ | 72,480 | | 4.55 | % | | | | | $ | 72,966 | | 4.46 | % | | | | | $ | 72,871 | | 4.30 | % | | | | | $ | 76,726 | | 4.44 | % |
Net interest margin | | | | | | | | | 4.70 | % | | | | | | | | 4.64 | % | | | | | | | | 4.55 | % | | | | | | | | 4.38 | % | | | | | | | | 4.52 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
6 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 5: Average Balances, Net Interest Income and Net Interest Margin (Continued) | |
| | | 2016 YTD | | 2015 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 | | | $ | 497,795 | | $ | 1,919 | | 0.51 | % | | $ | 508,598 | | $ | 953 | | 0.25 | % | |
Investment securities | | | | 1,351,402 | | | 24,448 | | 2.41 | % | | | 1,476,057 | | | 27,457 | | 2.49 | % | |
Loans | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | 3,129,851 | | | 147,592 | | 6.28 | % | | | 2,907,121 | | | 136,559 | | 6.28 | % | |
Acquired BBVAPR loans | | | | 1,170,893 | | | 72,042 | | 8.20 | % | | | 1,613,780 | | | 104,417 | | 8.65 | % | |
Acquired Eurobank loans | | | | 140,921 | | | 23,798 | | 22.50 | % | | | 234,960 | | | 44,275 | | 25.19 | % | |
Total loans | | | | 4,441,665 | | | 243,432 | | 7.30 | % | | | 4,755,861 | | | 285,251 | | 8.02 | % | |
Total interest-earning assets | | | $ | 6,290,862 | | $ | 269,799 | | 5.71 | % | | $ | 6,740,516 | | $ | 313,661 | | 6.22 | % | |
| | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | $ | 1,208,943 | | $ | 3,914 | | 0.43 | % | | $ | 1,171,679 | | $ | 3,388 | | 0.39 | % | |
Savings accounts | | | | 1,111,012 | | | 4,057 | | 0.49 | % | | | 1,282,753 | | | 4,988 | | 0.52 | % | |
Time deposits | | | | 983,618 | | | 7,789 | | 1.05 | % | | | 965,862 | | | 8,213 | | 1.14 | % | |
Brokered deposits | | | | 631,643 | | | 5,555 | | 1.17 | % | | | 607,575 | | | 3,462 | | 0.76 | % | |
| | | | 3,935,216 | | | 21,315 | | 0.72 | % | | | 4,027,869 | | | 20,051 | | 0.67 | % | |
Non-interest bearing deposit accounts | | | | 784,099 | | | - | | - | | | | 765,863 | | | - | | - | % | |
Fair value premium amortization and core deposit intangible amortization | | | | - | | | 507 | | - | | | | - | | | 308 | | - | | |
Total deposits | | | | 4,719,315 | | | 21,822 | | 0.62 | % | | | 4,793,732 | | | 20,359 | | 0.57 | % | |
Borrowings | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 682,326 | | | 14,629 | | 2.86 | % | | | 1,031,316 | | | 22,163 | | 2.87 | % | |
Advances from FHLB and other borrowings | | | | 282,957 | | | 5,574 | | 2.62 | % | | | 339,738 | | | 6,766 | | 2.66 | % | |
Subordinated capital notes | | | | 102,379 | | | 2,560 | | 3.33 | % | | | 101,939 | | | 2,623 | | 3.44 | % | |
Total borrowings | | | | 1,067,662 | | | 22,763 | | 2.84 | % | | | 1,472,993 | | | 31,552 | | 2.86 | % | |
Total interest-bearing liabilities | | | $ | 5,786,977 | | $ | 44,585 | | 1.03 | % | | $ | 6,266,725 | | $ | 51,911 | | 1.11 | % | |
Interest rate spread | | | | | | $ | 225,214 | | 4.68 | % | | | | | $ | 261,750 | | 5.11 | % | |
Net interest margin | | | | | | | | | 4.77 | % | | | | | | | | 5.19 | % | |
| | | | | | | | | | | | | | | | | | | | |
ASC 310-30 loan cost recoveries: | | | | | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans | | | | | | $ | 1,786 | | | | | | | | | 8,411 | | | | |
Acquired Eurobank loans | | | | | | | 4,877 | | | | | | | | | 11,668 | | | | |
| | | | | | $ | 6,663 | | | | | | | | $ | 20,079 | | | | |
Adjusted excluding cost recoveries (Non-GAAP): | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | $ | 6,290,862 | | $ | 263,136 | | 5.57 | % | | $ | 6,740,516 | | $ | 293,582 | | 5.82 | % | |
Interest rate spread | | | | | | $ | 218,551 | | 4.54 | % | | | | | $ | 241,671 | | 4.71 | % | |
Net interest margin | | | | | | | | | 4.63 | % | | | | | | | | 4.79 | % | |
| | | | | | | | | | | | | | | | | | | | |
7 | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (1) | | | |
| | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 |
(Dollars in thousands) (unaudited) | | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 |
Net Charge-offs | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | |
Charge-offs | | | $ | 1,656 | | $ | 1,374 | | $ | 1,662 | | $ | 1,568 | | $ | 1,058 |
Recoveries | | | | (21) | | | (36) | | | (145) | | | (53) | | | (270) |
Total mortgage | | | | 1,635 | | | 1,338 | | | 1,517 | | | 1,515 | | | 788 |
Commercial: | | | | | | | | | | | | | | | | |
Charge-offs | (3) | | | 56,700 | | | 833 | | | 1,011 | | | 3,229 | | | 828 |
Recoveries | | | | (93) | | | (228) | | | (88) | | | (60) | | | (63) |
Total commercial | (3) | | | 56,607 | | | 605 | | | 923 | | | 3,169 | | | 765 |
Consumer: | | | | | | | | | | | | | | | | |
Charge-offs | | | | 3,173 | | | 2,811 | | | 2,327 | | | 2,227 | | | 2,471 |
Recoveries | | | | (120) | | | (133) | | | (102) | | | (142) | | | (186) |
Total consumer | | | | 3,053 | | | 2,678 | | | 2,225 | | | 2,085 | | | 2,285 |
Auto and Leasing: | | | | | | | | | | | | | | | | |
Charge-offs | | | | 7,804 | | | 8,100 | | | 8,362 | | | 9,068 | | | 8,510 |
Recoveries | | | | (3,747) | | | (3,243) | | | (2,979) | | | (3,100) | | | (3,251) |
Total auto and leasing | | | | 4,057 | | | 4,857 | | | 5,383 | | | 5,968 | | | 5,259 |
Total | | | $ | 65,352 | | $ | 9,478 | | $ | 10,048 | | $ | 12,737 | | $ | 9,097 |
Net Charge-off Rates | | | | | | | | | | | | | | | | |
Mortgage | | | | 0.88% | | | 0.72% | | | 0.80% | | | 0.80% | | | 0.42% |
Commercial | (3) | | | 15.88% | | | 0.17% | | | 0.26% | | | 0.91% | | | 0.23% |
Consumer | | | | 4.71% | | | 4.35% | | | 3.80% | | | 3.68% | | | 4.33% |
Auto and Leasing | | | | 2.23% | | | 2.75% | | | 3.15% | | | 3.59% | | | 3.28% |
Total | (3) | | | 8.27% | | | 1.21% | | | 1.30% | | | 1.67% | | | 1.23% |
Average Loans Held For Investment | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 746,613 | | $ | 743,516 | | $ | 756,291 | | $ | 756,530 | | $ | 758,689 |
Commercial | | | | 1,426,216 | | | 1,433,944 | | | 1,425,332 | | | 1,394,597 | | | 1,349,511 |
Consumer | | | | 259,535 | | | 246,003 | | | 234,499 | | | 226,783 | | | 210,933 |
Auto and Leasing | | | | 727,727 | | | 706,107 | | | 684,035 | | | 665,199 | | | 640,828 |
Total | | | $ | 3,160,091 | | $ | 3,129,570 | | $ | 3,100,157 | | $ | 3,043,109 | | $ | 2,959,961 |
| | | | | | | | | | | | | | | | |
8 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (Continued) (1) | |
| | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 | |
(Dollars in thousands) (unaudited) | | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | |
Early Delinquency (30 - 89 days past due) | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 37,015 | | $ | 33,099 | | $ | 31,627 | | $ | 36,092 | | $ | 37,377 | (a) |
Commercial | | | | 4,177 | | | 4,923 | | | 2,353 | | | 4,461 | | | 1,678 | |
Consumer | | | | 4,796 | | | 3,765 | (a) | | 4,341 | | | 4,128 | | | 3,585 | |
Auto and Leasing | | | | 65,302 | | | 63,871 | (a) | | 71,004 | | | 70,464 | | | 71,627 | |
Total | | | $ | 111,290 | | $ | 105,658 | | $ | 109,325 | | $ | 115,145 | | $ | 114,267 | |
Early Delinquency Rates (30 - 89 days past due) | | | | | | | | | | | | | | | | | |
Mortgage | | | | 5.03% | | | 4.46% | | | 4.21% | | | 4.76% | | | 4.90% | |
Commercial | | | | 0.33% | | | 0.33% | | | 0.17% | | | 0.31% | | | 0.12% | |
Consumer | | | | 1.72% | | | 1.42% | (a) | | 1.72% | | | 1.70% | | | 1.57% | |
Auto and Leasing | | | | 8.94% | | | 8.97% | (a) | | 10.33% | | | 10.53% | | | 11.06% | |
Total | | | | 3.70% | | | 3.31% | | | 3.51% | | | 3.70% | | | 3.77% | |
Total Delinquency (30 days and over past due) | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | $ | 103,770 | | $ | 95,909 | | $ | 97,424 | | $ | 102,988 | | $ | 104,355 | |
GNMA's buy-back option program | | | | 9,598 | | | 8,369 | | | 7,684 | | | 7,945 | | | 6,993 | |
Total mortgage | | | | 113,368 | | | 104,278 | | | 105,108 | | | 110,933 | | | 111,348 | |
Commercial | | | | 14,947 | | | 20,005 | | | 19,686 | | | 21,138 | | | 17,014 | |
Consumer | | | | 6,302 | | | 5,190 | (a) | | 5,934 | | | 5,171 | | | 4,832 | |
Auto and Leasing | | | | 73,708 | | | 71,193 | (a) | | 78,746 | | | 78,757 | | | 80,613 | |
Total | | | $ | 208,325 | | $ | 200,666 | | $ | 209,474 | | $ | 215,999 | | $ | 213,807 | |
Total Delinquency Rates (30 days and over past due) | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | | 14.11% | | | 12.93% | | | 12.96% | | | 13.59% | | | 13.68% | |
GNMA's buy-back option program | | | | 1.31% | | | 1.13% | | | 1.02% | | | 1.05% | | | 0.92% | |
Total mortgage | | | | 15.42% | | | 14.06% | | | 13.98% | | | 14.64% | | | 14.60% | |
Commercial | | | | 1.18% | | | 1.35% | | | 1.38% | | | 1.47% | | | 1.22% | |
Consumer | | | | 2.26% | | | 1.96% | (a) | | 2.35% | | | 2.13% | | | 2.12% | |
Auto and Leasing | | | | 10.09% | | | 10.00% | (a) | | 11.46% | | | 11.77% | | | 12.45% | |
Total | | | | 6.92% | | | 6.28% | | | 6.72% | | | 6.94% | | | 7.06% | |
Nonperforming Assets | (18) | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 75,592 | | $ | 72,947 | | $ | 76,218 | | $ | 77,875 | | $ | 78,148 | |
Commercial | (3) | | | 23,347 | | | 207,768 | | | 212,345 | | | 215,281 | | | 222,072 | |
Consumer | | | | 2,470 | | | 2,339 | | | 2,039 | | | 1,631 | | | 2,004 | |
Auto and Leasing | | | | 9,477 | | | 7,337 | | | 7,873 | | | 8,418 | | | 10,076 | |
Total nonperforming loans | | | | 110,886 | | | 290,391 | | | 298,475 | | | 303,205 | | | 312,300 | |
Foreclosed real estate | | | | 9,819 | | | 10,463 | | | 10,502 | | | 9,772 | | | 10,517 | |
Other repossessed assets | | | | 2,462 | | | 2,979 | | | 2,796 | | | 3,845 | | | 5,134 | |
Total nonperforming assets | | | $ | 123,167 | | $ | 303,833 | | $ | 311,773 | | $ | 316,822 | | $ | 327,951 | |
Nonperforming Loan Rates | | | | | | | | | | | | | | | | | |
Mortgage | | | | 10.28% | | | 9.83% | | | 10.14% | | | 10.28% | | | 10.25% | |
Commercial | (3) | | | 1.84% | | | 14.07% | | | 14.90% | | | 14.93% | | | 15.98% | |
Consumer | | | | 0.89% | | | 0.88% | | | 0.81% | | | 0.67% | | | 0.88% | |
Auto and Leasing | | | | 1.30% | | | 1.03% | | | 1.15% | | | 1.26% | | | 1.56% | |
Total loans | | | | 3.68% | | | 9.09% | | | 9.58% | | | 9.74% | | | 10.32% | |
| | | | | | | | | | | | | | | | | |
(a) During Q3 2015, the Company changed its early delinquency reporting on mortgage loans from one scheduled payment due to two scheduled payments due in order to comply with regulatory reporting instructions and be comparable with local peers. Troubled debt restructured loans remain using one scheduled payment due. During Q2 2016, the Company changed its early delinquency reporting on consumer and auto loans from one scheduled payment due to two scheduled payments due. This change resulted in a $19 thousand and $5.9 million reduction in early and total delinquency for consumer loans and auto loans, respectively. | |
| | | | | | | | | | | | | | | | | |
9 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | |
Table 7: Allowance for Loan and Lease Losses | | | | | | | | | | | | |
| | | Quarter Ended September 30, 2016 |
| | | | | | | | | Auto and | | | | |
(Dollars in thousands) (unaudited) | | | Mortgage | | Commercial | | Consumer | | Leasing | | Unallocated | | Total |
Non-acquired loans | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 18,537 | | $ | 63,144 | | $ | 11,771 | | $ | 19,259 | | $ | 101 | | $ | 112,812 |
Provision (recapture) for loan and lease losses | | | | 1,625 | | | 5,770 | | | 3,571 | | | 3,800 | | | (58) | | | 14,708 |
Charge-offs | (3) | | | (1,656) | | | (56,700) | | | (3,173) | | | (7,804) | | | - | | | (69,333) |
Recoveries | | | | 21 | | | 93 | | | 120 | | | 3,747 | | | - | | | 3,981 |
Balance at end of period | | | $ | 18,527 | | $ | 12,307 | | $ | 12,289 | | $ | 19,002 | | $ | 43 | | $ | 62,168 |
Allowance coverage ratio | | | | 2.52% | | | 0.97% | | | 4.41% | | | 2.60% | | | 0.00% | | | 2.06% |
| | | | | | | | | | | | | | | | | | | |
Acquired loans | | | | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans: | | | | | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-20 | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | | $ | 21 | | $ | 3,002 | | $ | 1,464 | | $ | - | | $ | 4,487 |
Provision (recapture) for loan and lease losses | | | | | | | (17) | | | 766 | | | (201) | | | - | | | 548 |
Charge-offs | | | | | | | (2) | | | (889) | | | (475) | | | - | | | (1,366) |
Recoveries | | | | | | | 16 | | | 67 | | | 461 | | | - | | | 544 |
Balance at end of period | | | | | | $ | 18 | | $ | 2,946 | | $ | 1,249 | | $ | - | | $ | 4,213 |
| | | | | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 1,585 | | $ | 15,863 | | $ | - | | $ | 5,353 | | $ | - | | $ | 22,801 |
(Recapture) provision for loan and lease losses, net | | | | 1,070 | | | 6,324 | | | - | | | - | | | - | | | 7,394 |
Allowance de-recognition | | | | 9 | | | (189) | | | - | | | (196) | | | - | | | (376) |
Balance at end of period | | | $ | 2,664 | | $ | 21,998 | | $ | - | | $ | 5,157 | | $ | - | | $ | 29,819 |
| | | | | | | | | | | | | | | | | | | |
Acquired Eurobank loans: | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 11,016 | | | 11,096 | | | 4 | | | - | | | - | | $ | 22,116 |
Provision (recapture) for loan and lease losses, net | | | | 893 | | | (74) | | | - | | | - | | | - | | | 819 |
FDIC shared-loss portion of provision for covered loan and lease losses, net | | | | 818 | | | - | | | - | | | - | | | - | | | 818 |
Allowance de-recognition | | | | (459) | | | (478) | | | (4) | | | - | | | - | | | (941) |
Balance at end of period | | | $ | 12,268 | | $ | 10,544 | | $ | - | | $ | - | | $ | - | | $ | 22,812 |
| | | | | | | | | | | | | | | | | | | |
Total acquired loans | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 12,601 | | | 26,980 | | | 3,006 | | | 6,817 | | | - | | | 49,404 |
Provision (recapture) for loan and lease losses | | | | 1,963 | | | 6,233 | | | 766 | | | (201) | | | - | | | 8,761 |
Charge-offs | | | | - | | | (2) | | | (889) | | | (475) | | | - | | | (1,366) |
Recoveries | | | | - | | | 16 | | | 67 | | | 461 | | | - | | | 544 |
FDIC shared-loss portion of provision for covered loan and lease losses, net | | | | 818 | | | - | | | - | | | - | | | - | | | 818 |
Allowance de-recognition | | | | (450) | | | (667) | | | (4) | | | (196) | | | - | | | (1,317) |
Balance at end of period | | | $ | 14,932 | | $ | 32,560 | | $ | 2,946 | | $ | 6,406 | | $ | - | | $ | 56,844 |
| | | | | | | | | | | | | | | | | | | |
10 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | |
Table 8: Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired with Deteriorated Credit Quality, including those by Analogy) |
| | | Quarter Ended September 30, 2016 |
(Dollars in thousands) (unaudited) | | | Mortgage | | Commercial | | Construction | | Auto | | Consumer | | Total |
Accretable Yield and Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans: | | | | | | | | | | | | | | | | | | | |
Accretable Yield | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 283,823 | | $ | 37,059 | | $ | 15,248 | | $ | 14,103 | | $ | 4,885 | | $ | 355,118 |
Accretion | | | | (8,197) | | $ | (5,201) | | $ | (1,485) | | $ | (3,107) | | $ | (662) | | $ | (18,652) |
Change in expected cash flows | | | | (1) | | | 1,764 | | | (1) | | | 618 | | | (241) | | | 2,139 |
Transfers from (to) non-accretable discount | | | | 24,056 | | | (1,296) | | | 283 | | | (525) | | | 233 | | | 22,751 |
Balance at end of period | | | $ | 299,681 | | $ | 32,326 | | $ | 14,045 | | $ | 11,089 | | $ | 4,215 | | $ | 361,356 |
| | | | | | | | | | | | | | | | | | | |
Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 336,153 | | $ | 10,582 | | $ | 7,419 | | $ | 22,121 | | $ | 18,225 | | $ | 394,500 |
Change in actual and expected cash flows | | | | (2,591) | | | (1,215) | | | (1) | | | (309) | | | 121 | | | (3,995) |
Transfers (to) from accretable yield | | | | (24,056) | | | 1,296 | | | (283) | | | 525 | | | (233) | | | (22,751) |
Balance at end of period | | | $ | 309,506 | | $ | 10,663 | | $ | 7,135 | | $ | 22,337 | | $ | 18,113 | | $ | 367,754 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | Construction & | | | | | | | | | |
| | | | | | | | | Development | | | | | | | | | |
| | | Loans Secured | | | | | Secured by | | | | | | | | | |
| | | by 1-4 Family | | Commercial | | 1-4 Family | | | | | | | | | |
| | | Residential | | and Other | | Residential | | | | | | | | | |
| | | Properties | | Construction | | Properties | | Leasing | | Consumer | | Total |
Acquired Eurobank loans: | | | | | | | | | | | | | | | | | | | |
Accretable Yield | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 48,336 | | $ | 29,142 | | $ | 2,204 | | $ | - | | $ | - | | $ | 79,682 |
Accretion | | | | (2,217) | | | (6,571) | | | - | | | (62) | | | (490) | | | (9,340) |
Change in expected cash flows | | | | 646 | | | 1,720 | | | (8) | | | 62 | | | 490 | | | 2,910 |
Transfers from (to) non-accretable discount | | | | 3,737 | | | (188) | | | (146) | | | - | | | - | | | 3,403 |
Balance at end of period | | | $ | 50,502 | | $ | 24,103 | | $ | 2,050 | | $ | - | | $ | - | | $ | 76,655 |
| | | | | | | | | | | | | | | | | | | |
Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 11,555 | | $ | - | | $ | - | | $ | - | | $ | - | | $ | 11,555 |
Change in actual and expected cash flows | | | | (845) | | | 617 | | | 10 | | | - | | | - | | | (218) |
Transfers (to) from accretable yield | | | | (3,737) | | | 188 | | | 146 | | | - | | | - | | | (3,403) |
Balance at end of period | | | $ | 6,973 | | $ | 805 | | $ | 156 | | $ | - | | $ | - | | $ | 7,934 |
| | | | | | | | | | | | | | | | | | | |
11 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital |
|
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 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. |
| | | | | | | | | | | | | | | | |
| | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 |
(Dollars in thousands) (unaudited) | | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 |
Stockholders' Equity to Non-GAAP Tangible Common Equity | | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 924,934 | | $ | 915,890 | | $ | 903,801 | | $ | 897,077 | | $ | 907,888 |
Less: Intangible assets | | | | (92,648) | | $ | (93,068) | | $ | (93,487) | | $ | (93,907) | | $ | (94,383) |
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 | | | $ | 666,416 | | $ | 656,952 | | $ | 644,444 | | $ | 637,300 | | $ | 647,635 |
| | | | | | | | | | | | | | | | |
Common stock outstanding at end of period | | | | 43,914 | | $ | 43,914 | | $ | 43,914 | | $ | 43,868 | | $ | 43,868 |
Tangible book value (Non-GAAP) | | | $ | 15.18 | | $ | 14.96 | | $ | 14.68 | | $ | 14.53 | | $ | 14.76 |
Total Assets to Tangible Assets | | | | | | | | | | | | | | | | |
Total assets | | | $ | 6,592,113 | | $ | 6,712,596 | | $ | 6,874,572 | | $ | 7,099,149 | | $ | 7,203,822 |
Less: Intangible assets | | | | (92,648) | | $ | (93,068) | | $ | (93,487) | | $ | (93,907) | | $ | (94,383) |
Tangible assets (Non-GAAP) | | | $ | 6,499,465 | | $ | 6,619,528 | | $ | 6,781,085 | | $ | 7,005,242 | | $ | 7,109,439 |
Non-GAAP TCE Ratio | | | | | | | | | | | | | | | | |
Tangible common equity | | | $ | 666,416 | | $ | 656,952 | | $ | 644,444 | | $ | 637,300 | | $ | 647,635 |
Tangible assets | | | | 6,499,465 | | $ | 6,619,528 | | $ | 6,781,085 | | $ | 7,005,242 | | $ | 7,109,439 |
TCE ratio | | | | 10.25% | | $ | 9.92% | | $ | 9.50% | | $ | 9.10% | | $ | 9.11% |
Average Equity to Non-GAAP Average Tangible Common Equity | | | | | | | | | | | | | | | | |
Average total stockholders' equity | | | $ | 919,171 | | $ | 908,394 | | $ | 899,858 | | $ | 905,646 | | $ | 912,598 |
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 | | | $ | 753,301 | | $ | 742,524 | | $ | 733,988 | | $ | 739,776 | | $ | 746,728 |
Less: Average intangible assets | | | | (92,922) | | $ | (93,341) | | $ | (93,759) | | $ | (94,217) | | $ | (94,697) |
Average tangible common equity | | | $ | 660,379 | | $ | 649,183 | | $ | 640,229 | | $ | 645,559 | | $ | 652,031 |
Credit Quality Metrics to Non-GAAP Credit Quality Metrics excluding PREPA (Held-for-sale as of Q3 2016) | | | | | | | | | | | | | | | | |
Net Charge-offs | | | $ | 65,352 | | $ | 9,478 | | $ | 10,048 | | $ | 12,737 | | $ | 9,097 |
Less: PREPA charge-off | | | | (56,229) | | | - | | | - | | | - | | | - |
Net Charge-offs, excluding PREPA (Non-GAAP) | | | $ | 9,123 | | $ | 9,478 | | $ | 10,048 | | $ | 12,737 | | $ | 9,097 |
| | | | | | | | | | | | | | | | |
Average Loans Held For Investment | | | $ | 3,160,091 | | $ | 3,129,570 | | $ | 3,100,157 | | $ | 3,043,109 | | $ | 2,959,961 |
| | | | | | | | | | | | | | | | |
Charge-off rate, excluding PREPA (Non-GAAP) | | | | 1.15% | | | 1.21% | | | 1.30% | | | 1.67% | | | 1.23% |
| | | | | | | | | | | | | | | | |
Nonperforming Loans | | | $ | 110,886 | | $ | 290,391 | | $ | 298,475 | | $ | 303,205 | | $ | 312,300 |
Less: PREPA | | | | - | | | (183,020) | | | (186,675) | | | (190,290) | | | (193,904) |
Nonperforming Loans, excluding PREPA (Non-GAAP) | | | $ | 110,886 | | $ | 107,371 | | $ | 111,800 | | $ | 112,915 | | $ | 118,396 |
| | | | | | | | | | | | | | | | |
Non-acquired loans held for investment, gross | | | $ | 3,011,799 | | $ | 3,196,067 | | $ | 3,116,690 | | $ | 3,111,590 | | $ | 3,027,289 |
Less: PREPA | | | | - | | | (183,020) | | | (186,675) | | | (190,290) | | | (193,904) |
Non-acquired loans held for investment, excluding PREPA (Non-GAAP) | | | $ | 3,011,799 | | $ | 3,013,047 | | $ | 2,930,015 | | $ | 2,921,300 | | $ | 2,833,385 |
| | | | | | | | | | | | | | | | |
Nonperforming loan rate, excluding PREPA (Non-GAAP) | | | | 3.68% | | | 3.56% | | | 3.82% | | | 3.87% | | | 4.18% |
| | | | | | | | | | | | | | | | |
12 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued) | |
| |
| | | BASEL III | |
| | | Standardized | |
| | | 2016 | | 2016 | | 2016 | | 2015 | | 2015 | |
(Dollars in thousands) (unaudited) | | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | |
Regulatory Capital Metrics | | | | | | | | | | | | | | | | | |
Common equity Tier 1 capital | | | $ | 612,792 | | | 596,080 | | | 585,144 | | | 594,482 | | | 601,789 | |
Tier 1 capital | | | | 801,882 | | | 788,349 | | | 776,180 | | | 782,912 | | | 782,561 | |
Total risk-based capital | (19) | | | 860,513 | | | 849,147 | | | 838,283 | | | 846,747 | | | 847,267 | |
Risk-weighted assets | | | | 4,593,340 | | | 4,716,534 | | | 4,744,449 | | | 4,896,539 | | | 5,003,285 | |
Regulatory Capital Ratios | | | | | | | | | | | | | | | | | |
Common equity Tier 1 capital ratio | (20) | | | 13.34% | | | 12.64% | | | 12.33% | | | 12.14% | | | 12.03% | |
Tier 1 risk-based capital ratio | (21) | | | 17.46% | | | 16.71% | | | 16.36% | | | 15.99% | | | 15.64% | |
Total risk-based capital ratio | (22) | | | 18.73% | | | 18.00% | | | 17.67% | | | 17.29% | | | 16.93% | |
Leverage ratio | (23) | | | 12.35% | | | 11.92% | | | 11.38% | | | 11.18% | | | 10.93% | |
| | | | | | | | | | | | | | | | | |
Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach | | | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 924,934 | | | 915,890 | | | 903,801 | | | 897,077 | | | 907,888 | |
Less: 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 | |
Unrealized gains on available-for-sale securities, net of income tax | (24) | | | (17,554) | | | (18,085) | | | (15,089) | | | (16,925) | | | (22,486) | |
Unrealized losses on cash flow hedges, net of income tax | (24) | | | 1,710 | | | 2,281 | | | 2,805 | | | 2,927 | | | 4,330 | |
| | | | 743,220 | | | 734,216 | | | 725,647 | | | 717,209 | | | 723,862 | |
Less: Disallowed goodwill | | | | (86,069) | | | (86,069) | | | (86,069) | | | (86,069) | | | (86,069) | |
Disallowed other intangible assets, net | (25) | | | (2,408) | | | (2,561) | | | (2,715) | | | (1,912) | | | (2,028) | |
Disallowed deferred tax assets, net | (25) | | | (41,951) | | | (49,506) | | | (51,719) | | | (34,746) | | | (33,976) | |
Common equity Tier 1 capital | | | | 612,792 | | | 596,080 | | | 585,144 | | | 594,482 | | | 601,789 | |
Plus: Qualifying noncumulative perpetual preferred stock | | | | 176,000 | | | 176,000 | | | 176,000 | | | 176,000 | | | 176,000 | |
Qualifying noncumulative perpetual preferred stock issuance costs | | | | (10,130) | | | (10,130) | | | (10,130) | | | (10,130) | | | (10,130) | |
Subordinated capital notes | | | | 35,000 | | | 35,000 | | | 35,000 | | | 35,000 | | | 35,000 | |
Less: Disallowed deferred tax assets, net | | | | (11,780) | | | (8,601) | | | (9,834) | | | (12,440) | | | (20,098) | |
Tier 1 capital | | | | 801,882 | | | 788,349 | | | 776,180 | | | 782,912 | | | 782,561 | |
Plus tier 2 capital: Qualifying allowance for loan and lease losses | | | | 58,631 | | | 60,798 | | | 62,103 | | | 63,835 | | | 64,706 | |
Total risk-based capital | | | $ | 860,513 | | $ | 849,147 | | $ | 838,283 | | $ | 846,747 | | $ | 847,267 | |
| | | | | | | | | | | | | | | | | |
13 | |
OFG Bancorp (NYSE: OFG) | | | |
Table 10: Notes to Financial Summary, Selected Metrics, Loans, and Consolidated Financial Statements (Tables 1 - 9) |
| | | | | | | | | | | | |
(1) | We use the term "acquired loans" to refer to loans acquired from the BBVAPR acquisition (December 18, 2012) and 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 Q3 2016, the Company entered into an agreement to sell its outstanding participation in the PREPA line of credit for $124 million, slightly lower than the adjusted book balance, net of reserves. At September 30, 2016, this line of credit was reported as other loans held for sale, at fair value. Proceeds were received in October 7, 2016. As a result of this transaction, the Company recognized a $56.2 million charge-off and a $2.9 provision for loan and lease losses during the quarter ended September 30, 2016. |
(4) | Calculated based on net income (loss) available to common shareholders divided by average common shares outstanding for the period. |
(5) | Calculated based on net income (loss) 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) | 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 GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
(7) | 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. |
(8) | Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period. |
(9) | Calculated based on annualized income, net of tax, for the period divided by average total assets for the period. |
(10) | Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period. |
(11) | 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. |
(12) | Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. |
(13) | Non-GAAP ratios. See "Table 9: Reconciliation of GAAP to Non_GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios. |
(14) | Covered loans are no longer a material amount. Therefore, during Q3 2015, the Company changed its presentation of loans to include the following loan segments: "Non-acquired" loans, "Acquired BBVAPR" loans and "Acquired Eurobank" loans. |
(15) | During Q3 2016, the Company received $5 million from a claim of loss in 2009 from a BALTA private label collaterized obligation. |
(16) | During Q3 2016, the Company paid down at maturity $205.0 million in FHLB advances and a former BBVA subordinated capital note of $67.0 million, assumed as part of the 2012 acquisition of its PR operations. |
(17) | Production of new loans (excluding renewals). |
(18) | Loans accounted for under ASC 310-30 (loans acquired with deteriorated credit quality, including those by analogy), including Eurobank acquired 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. |
(19) | Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital. |
(20) | Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets. |
(21) | Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. |
(22) | Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighted assets. |
(23) | Leverage capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments. |
(24) | During Q1 2015, the Company decided to elect the opt-out option to continue to exclude AOCI items from regulatory capital calculation. |
(25) | Amounts based on transition provisions for regulatory capital deductions and adjustments of 60% for 2016 and 40% for 2015. |
| | | | | | | | | | | | |
14 |
