Exhibit 99
OFG Bancorp Reports 1Q18 Results
SAN JUAN, Puerto Rico, April 20, 2018 – OFG Bancorp (NYSE: OFG) today reported results for the first quarter ended March 31, 2018, reflecting continued strong recovery following hurricanes Irma and Maria, which struck the island in September 2017.
1Q18 Summary
· Net income available to shareholders was $13.5 million, or $0.29 per fully diluted share. This was in line with 4Q17’s $13.6 million, or $0.30 per share, and exceeded the year ago quarter’s $11.7 million, or $0.26 per share.
· Return on average assets and average tangible common equity was 1.09% and 7.73%, respectively.
· Tangible book value per common share was $15.71, and tangible common equity ratio was 11.22%.
· Loan production of $309.4 million increased 22.0% from 4Q17 and 41.4% from the year ago quarter.
· Total provision for loan and lease losses, net, declined 37.9% from 4Q17, which included $5.4 million in additional hurricanes-related provision.
· Core non-interest income of $18.2 million increased 9.0% from 4Q17 and 4.7% from the year ago quarter as banking service fees and mortgage banking revenues rebounded.
CEO Comment
José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, commented:
“Our first quarter results reflect the success of our strategies and Puerto Rico’s emerging recovery. We earned $0.29 per share fully diluted, 12% higher than a year ago. Our strong capital position continued to build.
“The island benefited from loan payment moratoriums by Oriental and other banks, an increased availability of electric power, improvement in communications, and the return of day to day stability, as well as rebuild spending by FEMA, the start of payments of insurance claims, and the prospect of growing assignments of federal funds.
“Nearly every metric in 1Q18 confirmed this progress. For the second quarter in a row, our originated loan growth outpaced the pay down of acquired loans, resulting in a net increase of $77.1 million from December 31, 2017—close to 8% on an annualized basis.
“Auto, consumer and mortgage lending at $192.3 million increased 52% from 4Q17 and more than 11% from 1Q17. In particular, auto lending was at a record level, up more than 46% from the preceding and year ago quarters.
“Commercial loan production in Puerto Rico, while lower than 4Q17, rose more than 13% year over year. Meanwhile, our U.S. commercial and industrial loan program added $74 million in participations.
“With nearly all of our loan moratoriums expiring, 1Q18 credit quality remained stable. Most metrics were better than, or returned to, pre-hurricanes levels.
“Fee revenues rebounded with a 24% sequential increase in Banking Services and a 43% increase in Mortgage Banking. Core Wealth Management held steady at pre-hurricanes levels.
“Customer deposits (excluding brokered) increased 2% from the end of 2017 and 5% from a year ago. Our Net Interest Margin expanded to 5.22%, and net new customer accounts grew at an annualized rate of 8%, significantly exceeding 2017’s hurricanes affected 2% rise.
“Our effort to differentiate Oriental through superior service and digital banking technology is proving effective. Our team of dedicated bankers continually reaching out to our customers and clients is clearly working. And during 1Q18, we introduced another new technology-based service—My Payments (Mis Pagos), which enables loan-only customers to pay online instead of standing in line.
“While we remain cautious due to the uncertain economic environment on the island, we are confident positive momentum will prevail for both OFG and Puerto Rico. We will continue to sharpen our focus on our retail and commercial clients, improve our service levels, and provide faster and more agile ways to do banking.”
Income Statement Highlights
Unless otherwise noted, the following compares data for the first quarter 2018 to the fourth quarter 2017.
• Interest Income
• Originated Loans: Increased $0.6 million to $56.8 million, primarily due to higher balances.
• Acquired Loans: Declined $1.1 million to $17.8 million, reflecting continued pay downs.
• Investment Securities: Increased $0.5 million to $8.6 million, the result of higher balances and higher yield.
• Interest Expense: Declined $0.5 million to $9.2 million, primarily due to reduced cost of deposits.
• Total Provision for Loan and Lease Losses: Declined $9.4 million to $15.5 million. 1Q18 provision included $8.6 million to replenish the allowance for retail loan charge-offs of $8.2 million related to the hurricanes. 1Q18 provision also included an increase in the allowance related to auto loan portfolio growth and one commercial loan placed in non-accrual.
• Net Interest Margin: Increased 14 basis points to 5.22% mainly due to higher yield in the investment portfolio and cash balances.
• Total Banking and Wealth Management Revenues: Increased $1.5 million to $18.2 million.
• Banking Service Revenues rose $2.0 million, largely the result of increased electronic banking activity with more power coming back on the island.
• Mortgage Banking Activities were up $0.5 million, primarily due to increased business.
• Wealth Management Revenues fell $1.0 million, reflecting the absence of annual insurance fees recognized in 4Q17.
• Total Non-Interest Expenses: Increased $5.5 million to $52.1 million. 4Q17 included $3.8 million in items that temporarily lowered costs, including reduced expenses related to electronic banking activity. 1Q18 reflected higher seasonal compensation expenses and expenses related to the sale of foreclosed assets returning to pre-hurricanes levels.
• Effective Tax Rate (ETR): Approximately 32%, the rate the Company is currently estimating for the full year.
Balance Sheet Highlights
Unless otherwise noted, the following compares data at March 31, 2018 to December 31, 2017.
• Total Loans Net: Increased $77.1 million to $4.13 billion with originated loan growth more than offsetting normal pay downs of acquired loans. Production highlights include:
• Auto lending at a record $128.1 million was up 46.3% from 4Q17 and 47.6% year over year, reflecting replacement of damaged vehicles, pent up demand, and the market’s effort to adjust to one less auto lending competitor.
• Consumer lending increased 62.6% to $37.5 million, exceeding pre-hurricanes levels, as retail customers moved to replace needed items and repair homes.
• Mortgage lending rebounded 67.7% to $26.6 million from 4Q17’s low, post-hurricanes level, but was down 38.7% from the year ago quarter.
• Commercial lending at $42.8 million declined from 4Q17’s robust levels, but was up 13.5% from 1Q17. The Company’s bankers continue building relationships with businesses participating in Puerto Rico’s recovery.
• The recently established OFG USA program added $74.4 million in commercial and industrial related loan participations across an array of industries and geographies in the continental U.S.
• Cash and cash equivalents: Declined $122.8 million to $365.4 million as cash was used to fund new loan growth and reduce higher cost borrowings.
• Total Investments: Increased $132.5 million to $1.30 billion with the purchase of new mortgage backed securities to take advantage of favorable market opportunities.
• Customer Deposits (excluding brokered deposits): Increased $77.9 million to $4.36 billion, up 1.8% and 5.2% from December 31, 2017 and March 31, 2017, respectively. Growth in demand and savings accounts more than offset a decline in time deposits.
• Total Borrowings: Increased $25.6 million to $354.3 million as OFG used repurchase agreement funding to acquire investment securities. The Company also paid down higher cost FHLB advances.
• Total Stockholders’ Equity: Increased $1.7 million to $946.8 million, with increases in retained earnings and legal surplus more than offsetting the increase of accumulated other comprehensive loss due to the effect of higher prevailing market interest rates.
Credit Quality Highlights
Unless otherwise noted, the following compares data on the originated loan portfolio at March 31, 2018 to December 31, 2017.
Following hurricanes Irma and Maria, Oriental offered automatic payment deferrals and 90-day extensions for most loan categories. Most of these payment moratoriums ended in 1Q18 with most credit metrics better than, or returned to, pre-hurricanes levels.
• Net Charge-Off Rate: Remained virtually level at 1.34%. Consumer loan charge-offs returned to pre-hurricanes levels, while other loan categories remained flat or declined.
• Early Delinquency Rate: Increased 138 basis points to 3.20% and Total Delinquency Rate rose 164 basis points to 6.25% as both metrics returned to pre-hurricanes levels.
• Non-Performing Loan Rate: Increased 51 basis points to 3.82%. The commercial loan rate increased 79 bps due to a $10.5 million loan that is current in its monthly payments, but was placed in non-accrual due to credit deterioration. The auto loan rate increased 94 bps due to 1Q18 moratorium expirations.
• Allowance for Loan and Lease Losses: Increased $4.1 million to $96.8 million, due to higher loan balances, particularly in auto lending, and the above mentioned commercial loan placed in non-accrual status.
Capital Position
Unless otherwise noted, the following compares data at March 31, 2018 to December 31, 2017.
Capital continued to grow and remains significantly above regulatory requirements for a well-capitalized institution.
Metric | 1Q18 | QoQ Change | YoY Change |
Tangible Common Equity Ratio | 11.22% | -7 bps | +56 bps |
Tangible Book Value per Common Share | $15.71 | +0.3% | +2.5% |
Common Equity Tier 1 Capital Ratio (using Basel III methodology) | 14.62% | +3 bps | +32 bps |
Total Risk-Based Capital Ratio | 20.31% | -3 bps | +26 bps |
Conference Call
A conference call to discuss OFG’s results for 1Q18, outlook and related matters will be held today, Friday, April 20, 2018, 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 quarter ended March 31, 2018, 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 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) the credit default by the government of Puerto Rico; (iv) amendments to the fiscal plan approved by the Financial Oversight and Management Board of Puerto Rico; (v) determinations in the court-supervised debt-restructuring process under Title III of PROMESA for the Puerto Rico government and all of its agencies, including some of its public corporations; (vi) the impact of property, credit and other losses in Puerto Rico as a result of hurricanes Irma and Maria; (vii) the amount of government, private and philanthropic financial assistance for the reconstruction of Puerto Rico’s critical infrastructure, which suffered catastrophic damages caused by hurricane Maria; (viii) the pace and magnitude of Puerto Rico’s economic recovery; (ix) the potential impact of damages from future hurricanes and natural disasters in Puerto Rico; (x) the fiscal and monetary policies of the federal government and its agencies; (xi) changes in federal bank regulatory and supervisory policies, including required levels of capital; (xii) the relative strength or weakness of the commercial and consumer credit sectors and the real estate market in Puerto Rico; (xiii) the performance of the stock and bond markets; (xiv) competition in the financial services industry; and (xv) 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, 2017, 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 54th 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 wide range of retail and commercial banking, lending and wealth management products, services and technology, primarily in Puerto Rico. Investor information can be found at Error! Hyperlink reference not valid.www.ofgbancorp.com.
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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
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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 March 31, 2018 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 | |
| Table 4: | | Information on Loan Portfolio and Production | | 5 | |
| Table 5: | | Average Balances, Net Interest Income and Net Interest Margin | | 6 | |
| Table 6: | | Loan Information and Performance Statistics (Excluding Acquired Loans) | | 7-8 | |
| Table 7: | | Allowance for Loan and Lease Losses | | 9 | |
| Table 8: | | Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired | | | |
| | | with Deteriorated Credit Quality, Including those by Analogy) | | 10 | |
| Table 9: | | Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory | | | |
| | | Capital | | 11-12 | |
| Table 10: | | Notes to Financial Summary, Selected Metrics, Loans, and Consolidated | | | |
| | | Financial Statements (Tables 1-9) | | 13 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 1: Financial and Statistical Summary - Consolidated |
| | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 |
(Dollars in thousands, except per share data) (unaudited) | | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 |
Earnings | | | | | | | | | | | | | | | | |
Net interest income | | | $ | 73,994 | | $ | 73,513 | | $ | 80,478 | | $ | 75,563 | | $ | 74,618 |
Non-interest income, net (core) | (2) | | | 18,239 | | | 16,734 | | | 17,213 | | | 17,933 | | | 17,428 |
Non-interest expense | | | | 52,121 | | | 46,662 | | | 50,469 | | | 52,816 | | | 51,684 |
Pre-provision net revenues | | | | 40,387 | | | 43,666 | | | 47,921 | | | 47,633 | | | 42,008 |
Provision for loan and lease losses | | | | 15,460 | | | 24,907 | (a) | | 44,042 | (a) | | 26,536 | (b) | | 17,654 |
Net income before income taxes | | | | 24,927 | | | 18,759 | | | 3,879 | | | 21,097 | | | 24,354 |
Income tax expense | | | | 8,010 | | | 1,686 | | | 560 | | | 3,993 | | | 9,204 |
Net income | | | $ | 16,917 | | $ | 17,073 | (a) | $ | 3,319 | (a) | $ | 17,104 | | $ | 15,150 |
Common Share Statistics | | | | | | | | | | | | | | | | |
Earnings per common share - basic | (3) | | $ | 0.31 | | $ | 0.31 | (a) | $ | - | (a) | $ | 0.30 | | $ | 0.27 |
Earnings per common share - diluted | (4) | | $ | 0.29 | | $ | 0.30 | (a) | $ | - | (a) | $ | 0.30 | | $ | 0.26 |
Average common shares outstanding | | | | 43,955 | | | 43,947 | | | 43,947 | | | 43,947 | | | 43,915 |
Average common shares outstanding and equivalents | | | | 51,121 | | | 51,104 | | | 51,102 | | | 51,100 | | | 51,131 |
Cash dividends per common share | | | $ | 0.06 | | $ | 0.06 | | $ | 0.06 | | $ | 0.06 | | $ | 0.06 |
Book value per common share (period end) | | | $ | 17.76 | | $ | 17.73 | | $ | 17.56 | | $ | 17.59 | | $ | 17.42 |
Tangible book value per common share (period end) | (5) | | $ | 15.71 | | $ | 15.67 | | $ | 15.49 | | $ | 15.51 | | $ | 15.33 |
Balance Sheet (Average Balances) | | | | | | | | | | | | | | | | |
Loans | (6) | | $ | 4,183,775 | | $ | 4,081,427 | | $ | 4,062,042 | | $ | 4,129,550 | | $ | 4,141,628 |
Interest-earning assets | | | | 5,751,783 | | | 5,735,593 | | | 5,658,953 | | | 5,848,525 | | | 5,932,924 |
Total assets | | | | 6,189,752 | | | 6,191,737 | | | 6,046,139 | | | 6,278,464 | | | 6,374,177 |
Interest-bearing deposits | | | | 3,756,607 | | | 3,835,357 | | | 3,774,378 | | | 3,844,490 | | | 3,850,506 |
Borrowings | | | | 351,793 | | | 374,059 | | | 462,035 | | | 614,332 | | | 715,951 |
Stockholders' equity | | | | 952,151 | | | 943,823 | | | 947,404 | | | 938,707 | | | 926,011 |
Common stockholders' equity | | | | 786,281 | | | 777,953 | | | 781,534 | | | 772,837 | | | 760,141 |
Performance Metrics | | | | | | | | | | | | | | | | |
Net interest margin | (7) | | | 5.22% | | | 5.08% | | | 5.64% | | | 5.18% | | | 5.10% |
Return on average assets | (8) | | | 1.09% | | | 1.10% | | | 0.22% | (a) | | 1.09% | | | 0.95% |
Return on average tangible common stockholders' equity | (9) | | | 7.73% | | | 7.92% | | | -0.08% | | | 8.01% | | | 7.00% |
Efficiency ratio | (10) | | | 56.51% | | | 51.70% | | | 51.66% | | | 56.49% | | | 56.15% |
Full-time equivalent employees, period end | | | | 1,367 | | | 1,421 | | | 1,464 | | | 1,472 | | | 1,446 |
Credit Quality Metrics | | | | | | | | | | | | | | | | |
Excluding acquired loans: | (1) | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | | | $ | 96,832 | | $ | 92,718 | (a) | $ | 87,541 | (a) | $ | 69,666 | (b) | $ | 60,483 |
Allowance as a % of loans held for investment | | | | 2.92% | | | 2.89% | (a) | | 2.83% | (a) | | 2.25% | | | 1.98% |
Net charge-offs | | | $ | 10,844 | | $ | 10,466 | | $ | 11,815 | | $ | 13,635 | (b)(c) | $ | 10,552 |
Net charge-off rate | (11) | | | 1.34% | | | 1.35% | | | 1.54% | | | 1.79% | (b)(c) | | 1.40% |
Early delinquency rate (30 - 89 days past due) | | | | 3.20% | | | 1.82% | (d) | | 3.79% | | | 3.52% | | | 3.42% |
Total delinquency rate (30 days and over) | | | | 6.25% | | | 4.61% | (d) | | 6.84% | | | 6.31% | | | 6.34% |
Capital Ratios (Non-GAAP) | (12) | | | | | | | | | | | | | | | |
Leverage ratio | | | | 14.09% | | | 13.92% | | | 14.07% | | | 13.69% | | | 13.20% |
Common equity Tier 1 capital ratio | | | | 14.62% | | | 14.59% | | | 14.89% | | | 14.66% | | | 14.30% |
Tier 1 risk-based capital ratio | | | | 19.01% | | | 19.05% | | | 19.53% | | | 19.14% | | | 18.77% |
Total risk-based capital ratio | | | | 20.31% | | | 20.34% | | | 20.82% | | | 20.42% | | | 20.05% |
Tangible common equity ("TCE") ratio | | | | 11.22% | | | 11.29% | | | 10.98% | | | 11.09% | | | 10.66% |
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(a) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes. |
(b) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value. As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans. |
(c) During Q2 2017 , the Company had additional recoveries in auto and consumer loans of $1.1 million and $612 thousand, respectively. |
(d) After Hurricane Irma and Maria on September 7, 2017 and September 20, 2017, respectively, the Company offered an automatic three-month moratorium for the payment of principal and interest for certain loans. During Q4 2017, the Company received payments on loans in moratorium, causing a decrease in delinquency. |
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OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 2: Consolidated Statements of Operations | | |
| | Quarter Ended | |
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, | |
(Dollars in thousands, except per share data) (unaudited) | | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
Interest income: | | | | | | | | | | | | | | | | | |
Loans | (1) | | | | | | | | | | | | | | | | |
Non-acquired loans | | | $ | 56,781 | | $ | 56,183 | | $ | 58,939 | (f) | $ | 53,449 | | $ | 51,955 | |
Acquired BBVAPR loans | | | | 14,490 | | | 15,310 | | | 19,189 | (e) | | 17,752 | | | 19,085 | |
Acquired Eurobank loans | | | | 3,341 | | | 3,573 | | | 4,339 | | | 6,037 | | | 6,610 | |
Total interest income from loans | | | | 74,612 | | | 75,066 | | | 82,467 | | | 77,238 | | | 77,650 | |
Investment securities | | | | 8,558 | | | 8,108 | | | 7,888 | | | 8,702 | | | 8,528 | |
Total interest income | | | | 83,170 | | | 83,174 | | | 90,355 | | | 85,940 | | | 86,178 | |
Interest expense: | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | |
Core deposits | | | | 5,412 | | | 5,613 | | | 5,438 | | | 5,568 | | | 5,468 | |
Brokered deposits | | | | 1,886 | | | 2,079 | | | 2,163 | | | 2,084 | | | 1,885 | |
Total deposits | | | | 7,298 | | | 7,692 | | | 7,601 | | | 7,652 | | | 7,353 | |
Borrowings | | | | 1,878 | | | 1,969 | | | 2,276 | | | 2,725 | (h) | | 4,207 | |
Total interest expense | | | | 9,176 | | | 9,661 | | | 9,877 | | | 10,377 | | | 11,560 | |
Net interest income | | | | 73,994 | | | 73,513 | | | 80,478 | | | 75,563 | | | 74,618 | |
Provision for loan and lease losses, excluding acquired loans | (1) | | | 14,958 | | | 15,643 | (d) | | 29,690 | (d) | | 22,818 | (g) | | 11,735 | |
Provision for acquired BBVAPR loan and lease losses | (1) | | | 363 | | | 7,112 | (d) | | 11,811 | (d) | | 3,306 | | | 4,299 | |
Provision (recapture) for acquired Eurobank loan and lease losses | (1) | | | 139 | | | 2,152 | (d) | | 2,541 | (d) | | 412 | | | 1,620 | |
Total provision for loan and lease losses, net | | | | 15,460 | | | 24,907 | (d) | | 44,042 | (d) | | 26,536 | | | 17,654 | |
Net interest income after provision for loan and lease losses | | | | 58,534 | | | 48,606 | | | 36,436 | | | 49,027 | | | 56,964 | |
Non-interest income: | | | | | | | | | | | | | | | | | |
Banking service revenues | | | | 10,463 | | | 8,461 | (a) | | 9,923 | (f) | | 10,458 | | | 10,626 | |
Wealth management revenues | | | | 6,019 | | | 7,043 | | | 6,016 | | | 6,516 | | | 6,215 | |
Mortgage banking activities | | | | 1,757 | | | 1,230 | | | 1,274 | | | 959 | | | 587 | |
Total banking and financial service revenues | | | | 18,239 | | | 16,734 | | | 17,213 | | | 17,933 | | | 17,428 | |
FDIC shared-loss benefit (expense), net | | | | - | | | - | | | - | | | - | | | 1,403 | (j) |
Other gains, net | | | | 275 | | | 81 | | | 699 | (k) | | 6,953 | (h) | | 243 | |
Total non-interest income, net | | | | 18,514 | | | 16,815 | | | 17,912 | | | 24,886 | | | 19,074 | |
Non-interest expense: | | | | | | | | | | | | | | | | | |
Compensation and employee benefits | | | | 20,608 | | | 20,205 | | | 19,882 | | | 19,317 | | | 20,347 | |
Rent and occupancy costs | | | | 7,768 | | | 8,546 | | | 8,276 | | | 8,537 | | | 7,198 | |
Net loss on sale of foreclosed real estate and other repossessed assets | | | | 1,226 | | | 126 | (b) | | 1,395 | | | 1,787 | | | 1,326 | |
General and administrative expenses | | | | 20,100 | | | 16,350 | (a)(c) | | 19,202 | | | 20,958 | | | 20,187 | |
Total operating expenses | | | | 49,702 | | | 45,227 | | | 48,755 | | | 50,599 | | | 49,058 | |
Credit related expenses | | | | 2,419 | | | 1,435 | | | 1,714 | | | 2,217 | | | 2,626 | |
Total non-interest expense | | | | 52,121 | | | 46,662 | | | 50,469 | | | 52,816 | | | 51,684 | |
Income before income taxes | | | | 24,927 | | | 18,759 | | | 3,879 | | | 21,097 | | | 24,354 | |
Income tax expense | | | | 8,010 | | | 1,686 | | | 560 | | | 3,993 | (i) | | 9,204 | |
Net income | | | | 16,917 | | | 17,073 | | | 3,319 | (d) | | 17,104 | | | 15,150 | |
Less: dividends on preferred stock | | | | | | | | | | | | | | | | | |
Convertible preferred stock | | | | (1,838) | | | (1,838) | | | (1,838) | | | (1,837) | | | (1,838) | |
Other preferred stock | | | | (1,627) | | | (1,627) | | | (1,627) | | | (1,629) | | | (1,627) | |
Net income (loss) available to common shareholders | | | $ | 13,452 | | $ | 13,608 | | $ | (146) | | $ | 13,638 | | $ | 11,685 | |
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(a) During the 4Q 2017, electronic banking fee income and electronic banking expenses decreased $0.9 million and $1.0 million, respectively, from the prior quarter as a result of lower point of sale (POS) activity from our customers. The decrease is directly related to business interruption in several of our commercial clients from the lack of electricity. |
(b) During the 4Q 2017, the Company generated higher gains in sale of foreclosed real estate by approximately $0.7 million and had lower write downs by approximately $0.6 million. |
(c) During the 4Q 2017, the Company reversed $1.4 million expenses as a result of the settlement of regulatory and legal contingencies at a lower amount than estimated. |
(d) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes. |
(e) During Q3 2017, the Company recognized $3.1 million in cost recoveries from the Puerto Rico Housing Finance Authority ("PRHFA") loan with an outstanding principal balance of $10.9 million. |
(f) During Q3 2017, the Company received $22.4 million from the pay-off before maturity of a loan previously classified as non-accrual. As a result, the Company recorded $4.1 million in interest income and $439 thousand in prepayment penalty income, included in banking service revenues. |
(g) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value. As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans. |
(h) During Q2 2017, the Company sold $166.0 million of mortgage-backed securities and recorded a net gain on sale of securities of $6.8 million. Also, it sold $39.2 million Treasury Notes and recorded a net gain of $112 thousand. In addition, the Company unwound repurchase agreements in the amount of $100 million at a cost of $80 thousand. |
(i) During Q2 2017, the effective income tax rate decreased as a result of higher proportion of exempt income and income subject to preferential rates mainly due to the gain in sale of investment portfolio. |
(j) During Q1 2017, the Bank and the FDIC agreed to terminate the single family and commercial shared-loss agreements related to the FDIC assisted acquisition of Eurobank on April 30, 2010, resulting in a benefit of $1.4 million. |
(k) During Q3 2017, the Company received $571 thousand, as final settlement from a 2009 claim of loss related to a private label collateralized obligation. |
| | | | | | | | | | | | | | | | | |
3 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | |
Table 3: Consolidated Statements of Financial Condition | | | | | | | | | |
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, | |
(Dollars in thousands) (unaudited) | | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
Cash and cash equivalents | | | $ | 365,388 | | $ | 488,233 | | $ | 723,756 | (c) | $ | 480,338 | | $ | 483,301 | |
Investments: | | | | | | | | | | | | | | | | | |
Trading securities | | | | 293 | | | 191 | | | 284 | | | 294 | | | 314 | |
Investment securities available-for-sale, at fair value, with amortized cost of $815,970 | | | | | | | | | | | | | | | | | |
(December 31, 2017 - $648,799; September 30, 2017 - $611,936; June 30, 2017 - $649,280; | | | | | | | | | | | | | | | | | |
March 31, 2017 - $796,558) | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | | | 784,972 | | | 629,124 | | | 596,222 | | | 584,930 | (f) | | 741,405 | |
Other investment securities | | | | 16,669 | | | 16,673 | | | 17,201 | (d) | | 64,397 | | | 58,637 | |
Total investment securities available-for-sale | | | | 801,641 | | | 645,797 | | | 613,423 | | | 649,327 | | | 800,042 | |
Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $467,980 | | | | | | | | | | | | | | | | | |
(December 31, 2017 - $497,681; September 30, 2017 - $525,830; June 30, 2017 - $549,595; | | | | | | | | | | | | | | | | | |
March 31, 2017 - $570,963) | | | | 485,143 | | | 506,064 | | | 530,178 | | | 555,407 | | | 577,997 | |
Federal Home Loan Bank (FHLB) stock, at cost | | | | 11,499 | | | 13,995 | | | 14,016 | | | 16,616 | | | 17,161 | |
Other investments | | | | 3 | | | 3 | | | 3 | | | 3 | | | 3 | |
Total investments | | | | 1,298,579 | | | 1,166,050 | | | 1,157,904 | | | 1,221,647 | | | 1,395,517 | |
Loans, net | | | | 4,133,429 | | | 4,056,329 | | | 3,964,572 | | | 4,091,866 | | | 4,089,708 | |
Other assets: | | | | | | | | | | | | | | | | | |
Derivative assets | | | | 898 | | | 771 | | | 809 | | | 957 | | | 1,123 | |
Prepaid expenses | | | | 7,625 | | | 9,734 | | | 13,070 | | | 17,117 | | | 15,496 | |
Deferred tax asset, net | | | | 128,270 | | | 127,421 | | | 126,041 | | | 116,199 | | | 121,442 | |
Foreclosed real estate and repossessed properties | | | | 45,396 | | | 47,721 | | | 51,104 | | | 53,448 | | | 50,820 | |
Premises and equipment, net | | | | 67,163 | | | 67,860 | | | 67,994 | | | 69,836 | | | 69,786 | |
Goodwill | | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 | |
Accounts receivable and other assets | | | | 114,304 | | | 138,865 | (b) | | 96,898 | | | 98,349 | | | 101,345 | |
Total assets | | | $ | 6,247,121 | | $ | 6,189,053 | | $ | 6,288,217 | | $ | 6,235,826 | | $ | 6,414,607 | |
| | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | |
Demand deposits | | | $ | 2,117,857 | | $ | 2,039,126 | | $ | 1,925,721 | | $ | 1,844,996 | | $ | 1,944,921 | |
Savings accounts | | | | 1,228,646 | | | 1,204,514 | | | 1,311,515 | | | 1,115,669 | | | 1,174,581 | |
Time deposits | | | | 1,012,329 | | | 1,037,310 | | | 1,053,568 | | | 1,053,110 | | | 1,022,447 | |
Brokered deposits | | | | 474,596 | | | 518,532 | | | 535,600 | | | 568,911 | | | 575,879 | |
Total deposits | | | | 4,833,428 | | | 4,799,482 | | | 4,826,404 | | | 4,582,686 | | | 4,717,828 | |
Borrowings: | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 273,926 | | | 192,869 | (a) | | 283,080 | (e) | | 453,492 | | | 531,179 | |
Advances from FHLB and other borrowings | | | | 44,328 | | | 99,796 | | | 100,091 | | | 137,717 | | | 105,133 | |
Subordinated capital notes | | | | 36,083 | | | 36,083 | | | 36,083 | | | 36,083 | | | 36,083 | |
Total borrowings | | | | 354,337 | | | 328,748 | | | 419,254 | | | 627,292 | | | 672,395 | |
Other liabilities: | | | | | | | | | | | | | | | | | |
Derivative liabilities | | | | 752 | | | 1,281 | | | 1,677 | | | 1,881 | | | 1,967 | |
Acceptances outstanding | | | | 25,869 | | | 27,644 | | | 16,486 | | | 22,739 | | | 24,288 | |
Accrued expenses and other liabilities | | | | 85,886 | | | 86,791 | | | 86,766 | | | 62,259 | | | 66,700 | |
Total liabilities | | | | 5,300,272 | | | 5,243,946 | | | 5,350,587 | | | 5,296,857 | | | 5,483,178 | |
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 | | | | 541,404 | | | 541,600 | | | 541,302 | | | 541,005 | | | 540,808 | |
Legal surplus | | | | 83,138 | | | 81,454 | | | 79,795 | | | 79,460 | | | 77,772 | |
Retained earnings | | | | 210,008 | | | 200,878 | | | 191,567 | | | 194,687 | | | 185,377 | |
Treasury stock, at cost | | | | (104,142) | | | (104,502) | | | (104,502) | | | (104,502) | | | (104,502) | |
Accumulated other comprehensive income (loss), net | | | | (12,185) | | | (2,949) | | | 842 | | | (307) | | | 3,348 | |
Total stockholders' equity | | | | 946,849 | | | 945,107 | | | 937,630 | | | 938,969 | | | 931,429 | |
Total liabilities and stockholders' equity | | | $ | 6,247,121 | | $ | 6,189,053 | | $ | 6,288,217 | | $ | 6,235,826 | | $ | 6,414,607 | |
| | | | | | | | | | | | | | | | | |
(a) During the Q4 2017, the Company made an unwinding of $80 million repurchase agreements at no cost. | |
(b) At December 31, 2017, the Company had higher balances in accounts receivable and other assets mainly from accrued interest receivable of loans included in hurricane Maria moratorium program. | |
(c) At September 30, 2017, the Company had higher balances in cash and cash equivalents due to increased deposits and lower transaction outflows toward the end of the quarter from commercial customers. | |
(d) During Q3 2017, the Company sold $45.0 million US Treasury securities available for sale and recorded a gain of $4 thousand. | |
(e) During Q3 2017, $160.4 million in short-term repurchase agreements matured and were not renewed. | |
(f) During Q2 2017, the Company sold $166.0 million of mortgage-backed securities and recorded a net gain on sale of securities of $6.8 million. Also, it sold $39.2 million Treasury Notes and recorded a net gain of $112 thousand. In addition, the Company unwound repurchase agreements in the amount of $100 million at a cost of $80 thousand. | |
| | | | | | | | | | | | | | | | | |
4 | |
| | | | | | | | | | | | | | | | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 4: Information on Loan Portfolio and Production | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, | |
(Dollars in thousands) (unaudited) | | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
Non-acquired loans held for investment: | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 682,564 | | $ | 683,607 | | $ | 694,476 | | $ | 699,290 | | $ | 709,863 | |
Commercial | | | | 1,346,404 | | | 1,307,261 | | | 1,245,711 | | | 1,270,844 | (b) | | 1,253,712 | |
Consumer | | | | 334,865 | | | 330,039 | | | 316,357 | | | 314,267 | | | 300,412 | |
Auto | | | | 957,197 | | | 883,985 | | | 831,437 | | | 807,204 | | | 786,606 | |
| | | | 3,321,030 | | | 3,204,892 | | | 3,087,981 | | | 3,091,605 | | | 3,050,593 | |
Less: Allowance for loan and lease losses | | | | (96,832) | | | (92,718) | (a) | | (87,541) | (a) | | (69,666) | (b) | | (60,483) | |
| | | | 3,224,198 | | | 3,112,174 | | | 3,000,440 | | | 3,021,939 | | | 2,990,110 | |
Deferred loan costs, net | | | | 7,125 | | | 6,695 | | | 6,592 | | | 6,574 | | | 6,464 | |
Total non-acquired loans held for investment, net | | | | 3,231,323 | | | 3,118,869 | | | 3,007,032 | | | 3,028,513 | | | 2,996,574 | |
| | | | | | | | | | | | | | | | | |
Acquired loans: | (1) | | | | | | | | | | | | | | | | |
BBVAPR | | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-20 | | | | | | | | | | | | | | | | | |
Commercial | | | | 4,222 | | | 4,380 | | | 4,612 | | | 5,350 | | | 5,436 | |
Consumer | | | | 27,235 | | | 28,915 | | | 29,464 | | | 30,233 | | | 31,001 | |
Auto | | | | 16,171 | | | 21,969 | | | 26,562 | | | 33,661 | | | 42,523 | |
| | | | 47,628 | | | 55,264 | | | 60,638 | | | 69,244 | | | 78,960 | |
Less: Allowance for loan and lease losses | | | | (3,184) | | | (3,862) | (a) | | (3,363) | (a) | | (3,348) | | | (3,615) | |
| | | | 44,444 | | | 51,402 | | | 57,275 | | | 65,896 | | | 75,345 | |
| | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | |
Mortgage | | | | 526,089 | | | 532,053 | | | 532,948 | | | 544,325 | | | 558,112 | |
Commercial | | | | 230,988 | | | 243,092 | | | 244,359 | | | 266,002 | | | 278,665 | |
Consumer | | | | 932 | | | 1,431 | | | 1,598 | | | 2,163 | | | 3,201 | |
Auto | | | | 35,006 | | | 43,696 | | | 49,258 | | | 58,078 | | | 71,495 | |
| | | | 793,015 | | | 820,272 | | | 828,163 | | | 870,568 | | | 911,473 | |
Less: Allowance for loan and lease losses | | | | (43,166) | | | (45,755) | (a) | | (40,110) | (a) | | (37,494) | | | (34,930) | |
| | | | 749,849 | | | 774,517 | | | 788,053 | | | 833,074 | | | 876,543 | |
Total Acquired BBVAPR loans, net | | | | 794,293 | | | 825,919 | | | 845,328 | | | 898,970 | | | 951,888 | |
| | | | | | | | | | | | | | | | | |
Eurobank | | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | |
Mortgage | | | | 69,328 | | | 69,538 | | | 68,996 | | | 70,329 | | | 72,966 | |
Commercial | | | | 52,418 | | | 53,793 | | | 53,028 | | | 66,894 | | | 73,181 | |
Consumer | | | | 972 | | | 1,112 | | | 1,220 | | | 1,256 | | | 1,268 | |
| | | | 122,718 | | | 124,443 | | | 123,244 | | | 138,479 | | | 147,415 | |
Less: Allowance for loan and lease losses | | | | (25,410) | | | (25,174) | (a) | | (23,146) | (a) | | (21,787) | | | (22,006) | |
Total Acquired Eurobank loans, net | | | | 97,308 | | | 99,269 | | | 100,098 | | | 116,692 | | | 125,409 | |
Total acquired loans, net | | | | 891,601 | | | 925,188 | | | 945,426 | | | 1,015,662 | | | 1,077,297 | |
Total loans held for investment | | | | 4,122,924 | | | 4,044,057 | | | 3,952,458 | | | 4,044,175 | | | 4,073,871 | |
Mortgage loans held for sale | | | | 10,505 | | | 12,272 | | | 12,114 | | | 14,044 | | | 15,837 | |
Other loans held for sale | | | | - | | | - | | | - | | | 33,647 | (b) | | - | |
Total loans, net | | | $ | 4,133,429 | | $ | 4,056,329 | | $ | 3,964,572 | | $ | 4,091,866 | | $ | 4,089,708 | |
| | | | | | | | | | | | | | | | | |
Loan Portfolio Summary: | | | | | | | | | | | | | | | | | |
Loans held for investment: | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 1,277,981 | | $ | 1,285,198 | | $ | 1,296,420 | | $ | 1,313,944 | | $ | 1,340,941 | |
Commercial | | | | 1,634,032 | | | 1,608,526 | | | 1,547,710 | | | 1,609,090 | (b) | | 1,610,994 | |
Consumer | | | | 364,004 | | | 361,497 | | | 348,639 | | | 347,919 | | | 335,882 | |
Auto | | | | 1,008,374 | | | 949,650 | | | 907,257 | | | 898,943 | | | 900,624 | |
| | | | 4,284,391 | | | 4,204,871 | | | 4,100,026 | | | 4,169,896 | | | 4,188,441 | |
Less: Allowance for loan and lease losses | | | | (168,592) | | | (167,509) | (a) | | (154,160) | (a) | | (132,295) | (b) | | (121,034) | |
| | | | 4,115,799 | | | 4,037,362 | | | 3,945,866 | | | 4,037,601 | | | 4,067,407 | |
Deferred loan costs, net | | | | 7,125 | | | 6,695 | | | 6,592 | | | 6,574 | | | 6,464 | |
Total loans held for investment, net | | | | 4,122,924 | | | 4,044,057 | | | 3,952,458 | | | 4,044,175 | | | 4,073,871 | |
Mortgage loans held for sale | | | | 10,505 | | | 12,272 | | | 12,114 | | | 14,044 | | | 15,837 | |
Other loans held for sale | | | | - | | | - | | | - | | | 33,647 | (b) | | - | |
Total loans, net | | | $ | 4,133,429 | | $ | 4,056,329 | | $ | 3,964,572 | | $ | 4,091,866 | | $ | 4,089,708 | |
| | | | | | | | | | | | | | | | | |
| | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
Quarterly loan production | (13) | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 26,645 | | $ | 15,892 | | $ | 32,559 | | $ | 45,877 | | $ | 43,474 | |
Commercial | | | | 42,783 | | | 102,083 | | | 46,180 | | | 74,807 | | | 37,691 | |
Commercial US Loan Programs | | | | 74,361 | | | 25,070 | | | - | | | 5,560 | | | 8,760 | |
Consumer | | | | 37,502 | | | 23,059 | | | 33,741 | | | 49,652 | | | 42,149 | |
Auto | | | | 128,130 | | | 87,551 | | | 78,313 | | | 78,584 | | | 86,784 | |
Total | | | $ | 309,421 | | $ | 253,655 | | $ | 190,793 | | $ | 254,480 | | $ | 218,858 | |
| | | | | | | | | | | | | | | | | |
(a) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes. |
(b) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value. As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans. |
| | | | | | | | | | | | | | | | | |
5 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Table 5: Average Balances, Net Interest Income and Net Interest Margin | |
| | | 2018 Q1 | | 2017 Q4 | | 2017 Q3 | | 2017 Q2 | | 2017 Q1 |
| | | | | 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 | | | $ | 328,214 | | $ | 1,207 | | 1.49 | % | | $ | 493,354 | | $ | 1,516 | | 1.22 | % | | $ | 426,197 | | $ | 1,304 | | 1.21 | % | | $ | 384,037 | | $ | 956 | | 1.00 | % | | $ | 431,110 | | $ | 845 | | 0.79 | % |
Investment securities | | | | 1,239,794 | | | 7,350 | | 2.40 | % | | | 1,160,812 | | | 6,593 | | 2.25 | % | | | 1,170,714 | | | 6,584 | | 2.23 | % | | | 1,334,938 | | | 7,747 | | 2.33 | % | | | 1,360,186 | | | 7,683 | | 2.29 | % |
Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | 3,244,593 | | | 56,782 | | 7.10 | % | | | 3,111,849 | | | 56,183 | | 7.16 | % | | | 3,062,739 | | | 58,939 | | 7.63 | % | | | 3,051,549 | | | 53,448 | | 7.03 | % | | | 3,015,456 | | | 51,955 | | 6.99 | % |
Acquired BBVAPR loans | | | | 841,638 | | | 14,490 | | 6.98 | % | | | 869,269 | | | 15,310 | | 6.99 | % | | | 893,596 | | | 19,189 | | 8.52 | % | | | 949,479 | | | 17,752 | | 7.50 | % | | | 997,649 | | | 19,085 | | 7.76 | % |
Acquired Eurobank loans | | | | 97,544 | | | 3,341 | | 13.89 | % | | | 100,310 | | | 3,573 | | 14.13 | % | | | 105,707 | | | 4,339 | | 16.29 | % | | | 128,522 | | | 6,037 | | 18.84 | % | | | 128,522 | | | 6,610 | | 20.86 | % |
Total loans | | | | 4,183,775 | | | 74,613 | | 7.23 | % | | | 4,081,427 | | | 75,066 | | 7.30 | % | | | 4,062,042 | | | 82,467 | | 8.05 | % | | | 4,129,550 | | | 77,237 | | 7.50 | % | | | 4,141,627 | | | 77,650 | | 7.60 | % |
Total interest-earning assets | | | $ | 5,751,783 | | $ | 83,170 | | 5.86 | % | | $ | 5,735,593 | | $ | 83,175 | | 5.75 | % | | $ | 5,658,953 | | $ | 90,355 | | 6.33 | % | | $ | 5,848,525 | | $ | 85,940 | | 5.89 | % | | $ | 5,932,923 | | $ | 86,178 | | 5.89 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | $ | 1,059,129 | | $ | 898 | | 0.34 | % | | $ | 1,040,153 | | $ | 922 | | 0.35 | % | | $ | 1,024,480 | | $ | 880 | | 0.34 | % | | $ | 1,080,135 | | $ | 1,051 | | 0.39 | % | | $ | 1,092,389 | | $ | 1,041 | | 0.39 | % |
Savings accounts | | | | 1,206,100 | | | 1,497 | | 0.50 | % | | | 1,224,815 | | | 1,530 | | 0.50 | % | | | 1,142,338 | | | 1,426 | | 0.50 | % | | | 1,151,650 | | | 1,485 | | 0.52 | % | | | 1,164,040 | | | 1,481 | | 0.52 | % |
Time deposits | | | | 1,024,740 | | | 2,802 | | 1.11 | % | | | 1,046,191 | | | 2,932 | | 1.11 | % | | | 1,052,910 | | | 2,902 | | 1.09 | % | | | 1,037,063 | | | 2,802 | | 1.08 | % | | | 1,019,528 | | | 2,715 | | 1.08 | % |
Brokered deposits | | | | 466,638 | | | 1,886 | | 1.64 | % | | | 524,198 | | | 2,079 | | 1.57 | % | | | 554,650 | | | 2,163 | | 1.55 | % | | | 575,642 | | | 2,084 | | 1.45 | % | | | 574,549 | | | 1,885 | | 1.33 | % |
| | | | 3,756,607 | | | 7,083 | | 0.76 | % | | | 3,835,357 | | | 7,463 | | 0.77 | % | | | 3,774,378 | | | 7,371 | | 0.77 | % | | | 3,844,490 | | | 7,422 | | 0.77 | % | | | 3,850,506 | | | 7,122 | | 0.75 | % |
Non-interest bearing deposit accounts | | | | 1,018,789 | | | - | | - | | | | 937,328 | | | - | | - | | | | 835,255 | | | - | | - | | | | 835,026 | | | - | | - | | | | 832,659 | | | - | | - | % |
Fair value premium amortization and core deposit intangible amortization | | | | - | | | 215 | | - | | | | - | | | 230 | | - | | | | - | | | 231 | | - | | | | - | | | 231 | | - | | | | - | | | 231 | | - | |
Total deposits | | | | 4,775,396 | | | 7,298 | | 0.62 | % | | | 4,772,685 | | | 7,693 | | 0.64 | % | | | 4,609,633 | | | 7,602 | | 0.65 | % | | | 4,679,516 | | | 7,653 | | 0.66 | % | | | 4,683,165 | | | 7,353 | | 0.64 | % |
Borrowings | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 251,582 | | | 1,076 | | 1.73 | % | | | 236,522 | | | 963 | | 1.62 | % | | | 325,201 | | | 1,281 | | 1.56 | % | | | 472,338 | | | 1,733 | | 1.47 | % | | | 574,771 | | | 3,244 | | 2.29 | % |
Advances from FHLB and other borrowings | | | | 64,128 | | | 374 | | 2.37 | % | | | 101,454 | | | 600 | | 2.35 | % | | | 100,751 | | | 596 | | 2.35 | % | | | 105,911 | | | 607 | | 2.30 | 2 | | | 105,097 | | | 596 | | 2.30 | % |
Subordinated capital notes | | | | 36,083 | | | 428 | | 4.81 | % | | | 36,083 | | | 406 | | 4.46 | % | | | 36,083 | | | 398 | | 4.38 | % | | | 36,083 | | | 384 | | 4.27 | % | | | 36,083 | | | 367 | | 4.12 | % |
Total borrowings | | | | 351,793 | | | 1,878 | | 2.17 | % | | | 374,059 | | | 1,969 | | 2.09 | % | | | 462,035 | | | 2,275 | | 1.95 | % | | | 614,332 | | | 2,724 | | 1.78 | % | | | 715,951 | | | 4,207 | | 2.38 | % |
Total interest-bearing liabilities | | | $ | 5,127,189 | | $ | 9,176 | | 0.73 | % | | $ | 5,146,744 | | $ | 9,662 | | 0.74 | % | | $ | 5,071,668 | | $ | 9,877 | | 0.77 | % | | $ | 5,293,848 | | $ | 10,377 | | 0.79 | % | | $ | 5,399,116 | | $ | 11,560 | | 0.87 | % |
Interest rate spread | | | | | | $ | 73,994 | | 5.13 | % | | | | | $ | 73,513 | | 5.01 | % | | | | | $ | 80,478 | | 5.56 | % | | | | | $ | 75,563 | | 5.10 | % | | | | | $ | 74,618 | | 5.02 | % |
Net interest margin | | | | | | | | | 5.22 | % | | | | | | | | 5.08 | % | | | | | | | | 5.64 | % | | | | | | | | 5.18 | % | | | | | | | | 5.10 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ASC 310-30 loan cost recoveries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans | | | | | | $ | 119 | | | | | | | | $ | 199 | | | | | | | | $ | 3,220 | | | | | | | | $ | 300 | | | | | | | | $ | 245 | | | |
Acquired Eurobank loans | | | | | | | 389 | | | | | | | | | 526 | | | | | | | | | 523 | | | | | | | | | 615 | | | | | | | | | 1,055 | | | |
| | | | | | $ | 508 | | | | | | | | $ | 725 | | | | | | | | $ | 3,743 | | | | | | | | $ | 915 | | | | | | | | $ | 1,300 | | | |
Adjusted excluding cost recoveries (Non-GAAP): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | $ | 5,751,783 | | $ | 82,662 | | 5.83 | % | | $ | 5,735,593 | | $ | 82,450 | | 5.70 | % | | $ | 5,658,953 | | $ | 86,612 | | 6.07 | % | | $ | 5,848,525 | | $ | 85,025 | | 5.83 | % | | $ | 5,932,923 | | $ | 84,878 | | 5.80 | % |
Interest rate spread | | | | | | $ | 73,486 | | 5.10 | % | | | | | $ | 72,788 | | 4.96 | % | | | | | $ | 76,735 | | 5.30 | % | | | | | $ | 74,648 | | 5.04 | % | | | | | $ | 73,318 | | 4.93 | % |
Net interest margin | | | | | | | | | 5.18 | % | | | | | | | | 5.03 | % | | | | | | | | 5.38 | % | | | | | | | | 5.12 | % | | | | | | | | 5.01 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
6 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (1) | | | | |
| | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
Net Charge-offs | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Charge-offs | | | $ | 968 | | $ | 1,248 | | $ | 834 | | $ | 2,162 | | $ | 2,379 | |
Recoveries | | | | (314) | | | (126) | | | (341) | | | (63) | | | (56) | |
Total mortgage | | | | 654 | | | 1,122 | | | 493 | | | 2,099 | | | 2,323 | |
Commercial: | | | | | | | | | | | | | | | | | |
Charge-offs | | | | 1,149 | | | 1,260 | | | 727 | | | 4,841 | (a) | | 856 | |
Recoveries | | | | (182) | | | (401) | | | (654) | | | (136) | | | (89) | |
Total commercial | | | | 967 | | | 859 | | | 73 | | | 4,705 | | | 767 | |
Consumer: | | | | | | | | | | | | | | | | | |
Charge-offs | | | | 4,258 | | | 1,849 | | | 4,424 | | | 4,012 | | | 3,358 | |
Recoveries | | | | (240) | | | (96) | | | (168) | | | (780) | (b) | | (165) | |
Total consumer | | | | 4,018 | | | 1,753 | | | 4,256 | | | 3,232 | | | 3,193 | |
Auto and Leasing: | | | | | | | | | | | | | | | | | |
Charge-offs | | | | 8,982 | | | 9,182 | | | 9,387 | | | 7,775 | | | 7,563 | |
Recoveries | | | | (3,777) | | | (2,450) | | | (2,394) | | | (4,176) | (b) | | (3,294) | |
Total auto and leasing | | | | 5,205 | | | 6,732 | | | 6,993 | | | 3,599 | | | 4,269 | |
Total | | | $ | 10,844 | | $ | 10,466 | | $ | 11,815 | | $ | 13,635 | | $ | 10,552 | |
Net Charge-off Rates | | | | | | | | | | | | | | | | | |
Mortgage | | | | 0.38% | | | 0.65% | | | 0.28% | | | 1.20% | | | 1.31% | |
Commercial | | | | 0.30% | | | 0.27% | | | 0.02% | | | 1.50% | (a) | | 0.25% | |
Consumer | | | | 5.07% | | | 2.30% | | | 5.65% | | | 4.42% | (b) | | 4.57% | |
Auto and Leasing | | | | 2.23% | | | 3.13% | | | 3.37% | | | 1.79% | (b) | | 2.19% | |
Total | | | | 1.34% | | | 1.35% | | | 1.54% | | | 1.79% | | | 1.40% | |
Average Loans Held For Investment | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 683,398 | | $ | 688,312 | | $ | 692,782 | | $ | 698,782 | | $ | 711,553 | |
Commercial | | | | 1,310,444 | | | 1,257,619 | | | 1,239,390 | | | 1,256,827 | | | 1,245,530 | |
Consumer | | | | 317,295 | | | 304,760 | | | 301,121 | | | 292,739 | | | 279,558 | |
Auto and Leasing | | | | 933,456 | | | 861,158 | | | 829,446 | | | 803,201 | | | 778,815 | |
Total | | | $ | 3,244,593 | | $ | 3,111,849 | | $ | 3,062,739 | | $ | 3,051,549 | | $ | 3,015,456 | |
| | | | | | | | | | | | | | | | | |
(a) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value. As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans. | |
(b) During Q2 2017 , the Company had additional recoveries in auto and consumer loans of $1.1 million and $612 thousand, respectively. | |
| |
7 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (Continued) (1) | |
| | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
Early Delinquency (30 - 89 days past due) | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 29,190 | | $ | 17,315 | | $ | 35,273 | | $ | 32,292 | | $ | 30,827 | |
Commercial | | | | 8,126 | | | 2,620 | | | 2,727 | | | 4,648 | | | 5,708 | |
Consumer | | | | 7,478 | | | 6,149 | | | 7,504 | | | 5,495 | | | 6,024 | |
Auto and Leasing | | | | 61,558 | | | 32,159 | | | 71,606 | | | 66,372 | | | 61,912 | |
Total | | | $ | 106,352 | (a) | $ | 58,243 | (a) | $ | 117,110 | (a) | $ | 108,807 | | $ | 104,471 | |
Early Delinquency Rates (30 - 89 days past due) | | | | | | | | | | | | | | | | | |
Mortgage | | | | 4.28% | | | 2.53% | | | 5.08% | | | 4.62% | | | 4.34% | |
Commercial | | | | 0.60% | | | 0.20% | | | 0.22% | | | 0.37% | | | 0.46% | |
Consumer | | | | 2.23% | | | 1.86% | | | 2.37% | | | 1.75% | | | 2.01% | |
Auto and Leasing | | | | 6.43% | | | 3.64% | | | 8.61% | | | 8.22% | | | 7.87% | |
Total | | | | 3.20% | | | 1.82% | (a) | | 3.79% | (a) | | 3.52% | | | 3.42% | |
Total Delinquency (30 days and over past due) | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | $ | 89,252 | | $ | 76,542 | | $ | 88,936 | | $ | 85,908 | | $ | 90,849 | |
GNMA's buy-back option program | | | | 12,515 | | | 8,268 | | | 12,999 | | | 9,229 | | | 9,973 | |
Total mortgage | | | | 101,767 | | | 84,810 | | | 101,935 | | | 95,137 | | | 100,822 | |
Commercial | | | | 21,544 | | | 18,509 | | | 18,149 | | | 18,154 | | | 15,711 | |
Consumer | | | | 9,129 | | | 8,028 | | | 8,847 | | | 7,275 | | | 7,383 | |
Auto and Leasing | | | | 75,152 | | | 36,391 | | | 82,437 | | | 74,577 | | | 69,622 | |
Total | | | $ | 207,592 | | $ | 147,738 | (a) | $ | 211,368 | (a) | $ | 195,143 | | $ | 193,538 | |
Total Delinquency Rates (30 days and over past due) | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | | 13.08% | | | 11.20% | | | 12.81% | | | 12.29% | | | 12.80% | |
GNMA's buy-back option program | | | | 1.83% | | | 1.21% | | | 1.87% | | | 1.32% | | | 1.40% | |
Total mortgage | | | | 14.91% | | | 12.41% | | | 14.68% | | | 13.60% | | | 14.20% | |
Commercial | | | | 1.60% | | | 1.42% | | | 1.46% | | | 1.43% | | | 1.25% | |
Consumer | | | | 2.73% | | | 2.43% | | | 2.80% | | | 2.31% | | | 2.46% | |
Auto and Leasing | | | | 7.85% | | | 4.12% | | | 9.92% | | | 9.24% | | | 8.85% | |
Total | | | | 6.25% | | | 4.61% | (a) | | 6.84% | (a) | | 6.31% | | | 6.34% | |
Nonperforming Assets | (14) | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 63,866 | | $ | 64,085 | | $ | 59,667 | | $ | 63,071 | | $ | 66,781 | |
Commercial | | | | 47,044 | | | 35,253 | | | 21,701 | | | 23,519 | | | 19,387 | |
Consumer | | | | 2,263 | | | 2,572 | | | 2,445 | | | 2,687 | | | 1,948 | |
Auto and Leasing | | | | 13,594 | | | 4,232 | | | 11,811 | | | 8,295 | | | 8,709 | |
Total nonperforming loans | | | | 126,767 | | | 106,142 | | | 95,624 | (a) | | 97,572 | | | 96,825 | |
Foreclosed real estate | | | | 13,365 | | | 14,282 | | | 14,677 | | | 15,320 | | | 12,946 | |
Other repossessed assets | | | | 5,082 | | | 3,172 | | | 3,635 | | | 2,921 | | | 2,600 | |
Total nonperforming assets | | | $ | 145,214 | | $ | 123,596 | | $ | 113,936 | | $ | 115,813 | | $ | 112,371 | |
Nonperforming Loan Rates | | | | | | | | | | | | | | | | | |
Mortgage | | | | 9.36% | | | 9.37% | | | 8.59% | | | 9.02% | | | 9.41% | |
Commercial | | | | 3.49% | | | 2.70% | | | 1.74% | | | 1.85% | | | 1.55% | |
Consumer | | | | 0.68% | | | 0.78% | | | 0.77% | | | 0.86% | | | 0.65% | |
Auto and Leasing | | | | 1.42% | | | 0.48% | | | 1.42% | | | 1.03% | | | 1.11% | |
Total loans | | | | 3.82% | | | 3.31% | | | 3.10% | (a) | | 3.16% | | | 3.17% | |
| | | | | | | | | | | | | | | | | |
(a) After Hurricane Irma and Maria on September 7, 2017 and September 20, 2017, respectively, the Company offered an automatic three-month moratorium for the payment of principal and interest for certain loans. During Q4 2017, the Company received payments on loans in moratorium, causing a decrease in delinquency. | |
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8 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 7: Allowance for Loan and Lease Losses | | | | | | | | | |
| | | Quarter Ended March 31, 2018 |
(Dollars in thousands) (unaudited) | | | Mortgage | | Commercial | | Consumer | | Auto | | Total |
Non-acquired loans | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 20,439 | | $ | 30,258 | | $ | 16,454 | | $ | 25,567 | | $ | 92,718 |
(Recapture) provision for loan and lease losses, net | | | | (802) | | | 3,883 | | | 5,587 | | | 6,290 | | | 14,958 |
Charge-offs | | | | (968) | | | (1,149) | | | (4,258) | | | (8,982) | | | (15,357) |
Recoveries | | | | 314 | | | 182 | | | 240 | | | 3,777 | | | 4,513 |
Balance at end of period | | | $ | 18,983 | | $ | 33,174 | | $ | 18,023 | | $ | 26,652 | | $ | 96,832 |
Allowance coverage ratio | | | | 2.78% | | | 2.46% | | | 5.38% | | | 2.78% | | | 2.92% |
| | | | | | | | | | | | | | | | |
Acquired loans | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans: | | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-20 | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | | $ | 42 | | $ | 3,225 | | $ | 595 | | $ | 3,862 |
(Recapture) provision for loan and lease losses, net | | | | | | | (8) | | | 402 | | | (210) | | | 184 |
Charge-offs | | | | | | | - | | | (1,022) | | | (125) | | | (1,147) |
Recoveries | | | | | | | 3 | | | 54 | | | 228 | | | 285 |
Balance at end of period | | | | | | $ | 37 | | $ | 2,659 | | $ | 488 | | $ | 3,184 |
| | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-30 | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 14,085 | | $ | 23,691 | | $ | 18 | | $ | 7,961 | | $ | 45,755 |
Provision (recapture) for loan and lease losses, net | | | | 314 | | | 752 | | | - | | | (887) | | | 179 |
Allowance de-recognition | | | | (68) | | | (2,396) | | | - | | | (304) | | | (2,768) |
Balance at end of period | | | $ | 14,331 | | $ | 22,047 | | $ | 18 | | $ | 6,770 | | $ | 43,166 |
| | | | | | | | | | | | | | | | |
Acquired Eurobank loans: | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 15,187 | | $ | 9,982 | | $ | 5 | | $ | - | | $ | 25,174 |
Provision (recapture) for loan and lease losses, net | | | | 179 | | | (40) | | | - | | | - | | | 139 |
Allowance de-recognition | | | | 48 | | | 49 | | | - | | | - | | | 97 |
Balance at end of period | | | $ | 15,414 | | $ | 9,991 | | $ | 5 | | $ | - | | $ | 25,410 |
| | | | | | | | | | | | | | | | |
Total acquired loans | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 29,272 | | $ | 33,715 | | $ | 3,248 | | $ | 8,556 | | $ | 74,791 |
Provision (recapture) for loan and lease losses, net | | | | 493 | | | 704 | | | 402 | | | (1,097) | | | 502 |
Charge-offs | | | | - | | | - | | | (1,022) | | | (125) | | | (1,147) |
Recoveries | | | | - | | | 3 | | | 54 | | | 228 | | | 285 |
Allowance de-recognition | | | | (20) | | | (2,347) | | | - | | | (304) | | | (2,671) |
Balance at end of period | | | $ | 29,745 | | $ | 32,075 | | $ | 2,682 | | $ | 7,258 | | $ | 71,760 |
| | | | | | | | | | | | | | | | |
9 |
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 March 31, 2018 |
(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 | | | $ | 258,498 | | $ | 38,057 | | $ | 8,707 | | $ | 2,766 | | $ | 885 | | $ | 308,913 |
Accretion | | | | (7,074) | | | (2,454) | | | (1,231) | | | (869) | | | (256) | | | (11,884) |
Change in expected cash flows | | | | - | | | 3,141 | | | 15 | | | 426 | | | 58 | | | 3,640 |
Transfers (to) from non-accretable discount | | | | (3,046) | | | (488) | | | (36) | | | (597) | | | (38) | | | (4,205) |
Balance at end of period | | | $ | 248,378 | | $ | 38,256 | | $ | 7,455 | | $ | 1,726 | | $ | 649 | | $ | 296,464 |
| | | | | | | | | | | | | | | | | | | |
Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 299,501 | | $ | 3,162 | | $ | 7,434 | | $ | 23,050 | | $ | 19,284 | | $ | 352,431 |
Change in actual and expected cash flows | | | | (1,440) | | | (373) | | | (16) | | | (204) | | | (13) | | | (2,046) |
Transfers from (to) accretable yield | | | | 3,046 | | | 488 | | | 36 | | | 597 | | | 38 | | | 4,205 |
Balance at end of period | | | $ | 301,107 | | $ | 3,277 | | $ | 7,454 | | $ | 23,443 | | $ | 19,309 | | $ | 354,590 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | 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 | | | $ | 41,474 | | $ | 6,751 | | $ | 1,447 | | $ | - | | $ | - | | $ | 49,672 |
Accretion | | | | (1,605) | | | (1,606) | | | - | | | (34) | | | (96) | | | (3,341) |
Change in expected cash flows | | | | (144) | | | 898 | | | - | | | (63) | | | 178 | | | 869 |
Transfers (to) from non-accretable discount | | | | (103) | | | (427) | | | (91) | | | 97 | | | (82) | | | (606) |
Balance at end of period | | | $ | 39,622 | | $ | 5,616 | | $ | 1,356 | | $ | - | | $ | - | | $ | 46,594 |
| | | | | | | | | | | | | | | | | | | |
Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 4,576 | | $ | 276 | | $ | 758 | | $ | - | | $ | 235 | | $ | 5,845 |
Change in actual and expected cash flows | | | | (200) | | | (703) | | | - | | | 97 | | | (98) | | | (904) |
Transfers from (to) accretable yield | | | | 103 | | | 427 | | | 91 | | | (97) | | | 82 | | | 606 |
Balance at end of period | | | $ | 4,479 | | $ | - | | $ | 849 | | $ | - | | $ | 219 | | $ | 5,547 |
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10 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital |
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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 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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| | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 |
(Dollars in thousands) (unaudited) | | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 |
Stockholders' Equity to Non-GAAP Tangible Common Equity | | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 946,849 | | $ | 945,107 | | $ | 937,630 | | $ | 938,969 | | $ | 931,429 |
Less: Intangible assets | | | | (90,426) | | | (90,756) | | | (91,124) | | | (91,493) | | | (91,861) |
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 | | | $ | 690,553 | | $ | 688,481 | | $ | 680,636 | | $ | 681,606 | | $ | 673,698 |
| | | | | | | | | | | | | | | | |
Common stock outstanding at end of period | | | | 43,968 | | | 43,947 | | | 43,947 | | | 43,947 | | | 43,947 |
Tangible book value (Non-GAAP) | | | $ | 15.71 | | $ | 15.67 | | $ | 15.49 | | $ | 15.51 | | $ | 15.33 |
Total Assets to Tangible Assets | | | | | | | | | | | | | | | | |
Total assets | | | $ | 6,247,121 | | $ | 6,189,053 | | $ | 6,288,217 | | $ | 6,235,826 | | $ | 6,414,607 |
Less: Intangible assets | | | | (90,426) | | | (90,756) | | | (91,124) | | | (91,493) | | | (91,861) |
Tangible assets (Non-GAAP) | | | $ | 6,156,695 | | $ | 6,098,297 | | $ | 6,197,093 | | $ | 6,144,333 | | $ | 6,322,746 |
Non-GAAP TCE Ratio | | | | | | | | | | | | | | | | |
Tangible common equity | | | $ | 690,553 | | $ | 688,481 | | $ | 680,636 | | $ | 681,606 | | $ | 673,698 |
Tangible assets | | | | 6,156,695 | | | 6,098,297 | | | 6,197,093 | | | 6,144,333 | | | 6,322,746 |
TCE ratio | | | | 11.22% | | | 11.29% | | | 10.98% | | | 11.09% | | | 10.66% |
Average Equity to Non-GAAP Average Tangible Common Equity | | | | | | | | | | | | | | | | |
Average total stockholders' equity | | | $ | 952,151 | | $ | 943,823 | | $ | 947,404 | | $ | 938,707 | | $ | 926,011 |
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 | | | $ | 786,281 | | $ | 777,953 | | $ | 781,534 | | $ | 772,837 | | $ | 760,141 |
Less: Average intangible assets | | | | (90,624) | | | (90,951) | | | (91,331) | | | (91,731) | | | (92,102) |
Average tangible common equity | | | $ | 695,657 | | $ | 687,002 | | $ | 690,203 | | $ | 681,106 | | $ | 668,039 |
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Adjusted Metrics for Hurricanes Irma and Maria - Reconciliation to GAAP Financial Measures | | | | | | | | | | | | | | | | |
Net income | | | | | | $ | 17,073 | | $ | 3,319 | | | | | | |
Plus: Additional loan loss provision from Hurricanes Irma and Maria | | | | | | | 5,406 | | | 27,000 | | | | | | |
Less: Income tax effect | | | | | | | (2,108) | | | (8,038) | | | | | | |
Adjusted net income | | | | | | $ | 20,371 | | $ | 22,281 | | | | | | |
Less: dividends on preferred stock | | | | | | | (3,465) | | | (3,465) | | | | | | |
Adjusted net income available to common shareholders | | | | | | $ | 16,906 | | $ | 18,816 | | | | | | |
Plus: Effect of assumed conversion of the convertible preferred stock | | | | | | | 1,838 | | | 1,838 | | | | | | |
| | | | | | $ | 18,744 | | $ | 20,654 | | | | | | |
Average common shares outstanding and equivalents | | | | | | | 51,104 | | | 51,102 | | | | | | |
Adjusted earnings per common share - diluted | | | | | | $ | 0.37 | | $ | 0.40 | | | | | | |
| | | | | | | | | | | | | | | | |
Adjusted net income | | | | | | $ | 20,371 | | $ | 22,281 | | | | | | |
Adjusted average assets | | | | | | $ | 6,191,737 | | $ | 6,048,021 | | | | | | |
Adjusted return on average assets | | | | | | | 1.32% | | | 1.47% | | | | | | |
| | | | | | | | | | | | | | | | |
Adjusted net income available to common shareholders | | | | | | $ | 16,906 | | $ | 18,816 | | | | | | |
Adjusted average tangible common stockholders' equity | | | | | | $ | 687,002 | | $ | 690,422 | | | | | | |
Adjusted return on average tangible common stockholders' equity | | | | | | | 9.84% | | | 10.90% | | | | | | |
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11 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued) | |
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| | | BASEL III | |
| | | Standardized | |
| | | 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
Regulatory Capital Metrics | | | | | | | | | | | | | | | | | |
Common equity Tier 1 capital | | | $ | 656,293 | | $ | 644,804 | | $ | 633,401 | | $ | 643,606 | | $ | 626,707 | |
Tier 1 capital | | | | 853,731 | | | 842,133 | | | 830,640 | | | 840,703 | | | 822,847 | |
Total risk-based capital | (15) | | | 911,726 | | | 899,258 | | | 885,523 | | | 896,926 | | | 878,867 | |
Risk-weighted assets | | | | 4,490,057 | | | 4,420,667 | | | 4,252,605 | | | 4,391,321 | | | 4,383,517 | |
Regulatory Capital Ratios | | | | | | | | | | | | | | | | | |
Common equity Tier 1 capital ratio | (16) | | | 14.62% | | | 14.59% | | | 14.89% | | | 14.66% | | | 14.30% | |
Tier 1 risk-based capital ratio | (17) | | | 19.01% | | | 19.05% | | | 19.53% | | | 19.14% | | | 18.77% | |
Total risk-based capital ratio | (18) | | | 20.31% | | | 20.34% | | | 20.82% | | | 20.42% | | | 20.05% | |
Leverage ratio | (19) | | | 14.09% | | | 13.92% | | | 14.07% | | | 13.69% | | | 13.20% | |
| | | | | | | | | | | | | | | | | |
Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach | | | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 946,849 | | $ | 945,107 | | $ | 937,630 | | $ | 938,969 | | $ | 931,429 | |
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 | | | | 12,274 | | | 2,638 | | | (1,371) | | | (256) | | | (3,849) | |
Unrealized losses on cash flow hedges, net of income tax | | | | (89) | | | 311 | | | 529 | | | 563 | | | 501 | |
| | | | 793,164 | | | 782,186 | | | 770,918 | | | 773,406 | | | 762,211 | |
Less: Disallowed goodwill | | | | (86,069) | | | (86,069) | | | (86,069) | | | (86,069) | | | (86,069) | |
Disallowed other intangible assets, net | (20) | | | (2,126) | | | (2,287) | | | (2,466) | | | (2,646) | | | (2,826) | |
Disallowed deferred tax assets, net | (20) | | | (48,676) | | | (49,026) | | | (48,982) | | | (41,085) | | | (46,609) | |
Common equity Tier 1 capital | | | | 656,293 | | | 644,804 | | | 633,401 | | | 643,606 | | | 626,707 | |
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 | | | | (3,432) | | | (3,541) | | | (3,631) | | | (3,773) | | | (4,730) | |
Tier 1 capital | | | | 853,731 | | | 842,133 | | | 830,640 | | | 840,703 | | | 822,847 | |
Plus tier 2 capital: Qualifying allowance for loan and lease losses | | | | 57,995 | | | 57,125 | | | 54,883 | | | 56,223 | | | 56,020 | |
Total risk-based capital | | | $ | 911,726 | | $ | 899,258 | | $ | 885,523 | | $ | 896,926 | | $ | 878,867 | |
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12 | |
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 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 considers 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. |
(2) | Total banking and financial service revenues. |
(3) | Calculated based on net income available to common shareholders divided by average common shares outstanding for the period. |
(4) | Calculated based on net 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. |
(5) | 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. |
(6) | 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. |
(7) | Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period. |
(8) | Calculated based on annualized income, net of tax, for the period divided by average total assets for the period. |
(9) | Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period. |
(10) | 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. |
(11) | Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. |
(12) | 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. |
(13) | Production of new loans (excluding renewals). |
(14) | 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. |
(15) | Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital. |
(16) | Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets. |
(17) | Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. |
(18) | Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighted assets. |
(19) | Leverage capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments. |
(20) | Amounts based on transition provisions for regulatory capital deductions and adjustments of 80% for 2018 and 2017. |
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13 |
