Exhibit 99
OFG Bancorp Reports 4Q18 & 2018 Results
SAN JUAN, Puerto Rico, January 22, 2019 – OFG Bancorp (NYSE: OFG) reported results for the fourth quarter and year ended December 31, 2018.
4Q18 Summary
· Net income available to shareholders of $23.1 million or $0.45 per fully diluted share compared to 3Q18’s $19.6 million or $0.42 per share and 4Q17’s $13.6 million or $0.30 per share.
· Originated loan growth of 3.0% from the preceding quarter to $3.66 billion, with new loan production of $323.0 million, continuing to exceed $300 million for the fourth consecutive quarter.
· Strong performance metrics, with net interest margin of 5.26%, return on average assets of 1.50%, return on average tangible common stockholders’ equity of 11.67%, and efficiency ratio of 51.06%.
· Record total stockholders’ equity of approximately $1 billion, with book value per common share of $17.90, tangible book value per common share of $16.15, and capital metrics at multi-year highs.
· Common equity increased $84.0 million and preferred dividend payments dropped 53.0% from the preceding quarter with the conversion into common stock of the Series C 8.750% Non-Cumulative Convertible Perpetual Preferred Stock.
· 16.7% increase in the regular quarterly cash dividend per common share to $0.07, resulting in an annualized rate of $0.28 per share.
2018 Summary
Net income available to shareholders of $72.4 million or $1.52 per fully diluted share compared to 2017’s $38.8 million or $0.88 per share. 2017 included a $32.4 million pre-tax loan loss provision related to the hurricanes.
CEO Comment
“OFG achieved strong core growth in 4Q18 and 2018 based on the continued success of our strategy of differentiation – providing superior customer service, convenience and technology – coupled with Puerto Rico’s emerging economic rebound,” said José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board.
“Our plan is working. For the year as a whole, we generated impressive results across the board, with originated loans up 17.3%, average deposits up 6.4%, customer count up 4.6%, and stockholders’
equity up 5.8%, as well as achieving improved credit quality, converting our Series C preferred, and increasing our quarterly dividend.
“Thanks go to our entire OFG team for their commitment and dedication and to all our retail and commercial customers for their support and loyalty. We plan to continue to focus on our growth strategies in 2019, capitalizing on our momentum, continuing to make our services better – fácil, rápido, hecho (easy, fast, done) – and developing fresh ways to employ digital technology to the benefit of customers.”
Conference Call
A conference call to discuss OFG’s 4Q18 results, outlook and related matters will be held today at 10:00 AM Eastern Time. The call can be accessed live by dialing (888) 562-3356 or (973) 582-2700. Use conference ID 378-7416. The call can also be accessed live on OFG’s website at www.ofgbancorp.com. Access the webcast link in advance to download any necessary software. A webcast replay will be available shortly thereafter.
Income Statement
Unless otherwise noted, the following compares data for the fourth quarter 2018 to the third quarter 2018.
• Interest Income: Increased 1.0% or $1.0 million to $95.1 million. Originated Loans increased $2.4 million due to higher average balances and a 7 basis point yield increase. Acquired Loans declined $2.1 million due to pay downs and $1.2 million in lower cost recoveries. Investment Securities increased $0.7 million due to higher average balances and yields on cash and cash equivalents.
• Interest Expense: Increased 10.2% or $1.2 million to $13.1 million, reflecting higher average deposit and borrowing balances and rates. The rate on customer deposits increased only 4 basis points.
• Total Provision for Loan and Lease Losses: Decreased 22.6% or $3.3 million to $11.3 million. Provision for originated loans declined $2.6 million. This reflected $1.8 million cash recovery on the sale of previously charged-off loans and reduced need for provisioning on the existing portfolio. Provision for acquired loans declined $0.7 million due to improved performance in the former BBVA PR portfolio.
• Net Interest Margin: Excluding cost recoveries, core NIM was 5.21% compared to 5.25%. OFG’s continued high NIM reflected higher yield on originated commercial loans and cash balances due to the effect of the September Federal Reserve Board rate hike. It also reflected higher proportion of higher yielding commercial and auto loans in the originated portfolio.
• Total Banking and Wealth Management Revenues: Increased 4.4% or $0.8 million to $19.3 million. Banking service revenues increased $0.4 million due to higher transaction volume from continued strength of the local economy and year-end holiday shopping. Wealth Management increased $0.8 million due to $1.3 million from the receipt of seasonal insurance commissions, partially offset by lower broker-dealer commissions. Mortgage banking declined $0.4 million due to lower MSR valuation.
• Other Non-Interest Income: Totaled $5.0 million due to a cash payment from OFG’s insurance company covering Hurricane Maria’s impact on operations.
• Total Non-Interest Expenses: Increased 1.5% or $0.8 million to $51.7 million. This reflected a variety of items, such as one additional payroll date and year-end accrual for performance related compensation, lower appraisal of foreclosed real estate, lower rent and occupancy costs, and the absence of municipal tax payments made in 3Q18.
• Effective Tax Rate: 4Q18 included a non-cash expense of $4.1 million reflecting the net impact of changes required as a consequence of the new Puerto Rico tax reform legislation. The tax reform reduces the corporate tax rate by 1.5% in 2019 which necessitated a Deferred Tax Asset write-down. Due to other provisions in the tax reform OFG does not expect significant changes on its 2019 ETR. The 2018 ETR was 33.6%.
Balance Sheet
Unless otherwise noted, the following compares data at December 31, 2018 to September 30, 2018.
• Total Loans Net: Increased 1.8% or $78.6 million to $4.43 billion. Originated loans increased 3.0% or $107.7 million. Acquired loans declined $30.5 million. New loan production totaled $323.0 million, with auto lending at $123.8 million, commercial lending at $92.1 million, consumer lending at $42.1 million, residential mortgage lending at $33.4 million, and OFG USA loan participations at $31.7 million.
• Total Investments: Declined 2.0% or $26.5 million to $1.28 billion due to repayments of mortgage backed securities.
• Cash and Cash Equivalents: Average balances increased 33.7% or $109.6 million to $434.7 million, while quarter-end cash declined 17.7% or $96.7 million to $450.1 million.
• Customer Deposits (excluding brokered): Average balances increased 1.0% or $45.8 million to $4.46 billion, while quarter-end deposits decreased 3.8% or $175.1 million to $4.38 billion, mainly related to fluctuations in insurance companies’ deposits.
• Total Borrowings: Average balances increased 8.1% or $40.7 million to $543.9 million, while quarter-end borrowings increased 16.9% or $82.4 million to $570.4 million.
• Total Stockholders’ Equity: Increased $30.0 million or 3.1% to $999.9 million, reflecting increased retained earnings and legal surplus and reduced accumulated other comprehensive loss.
Credit Quality
Unless otherwise noted, the following compares data on the originated loan portfolio at December 31, 2018 to September 30, 2018.
• Credit quality: Remained strong with minor variations in key metrics. Non-performing loan rate, at 3.28%, was down 17 basis points. Allowance for loan losses remained level at $95.2 million. As a percentage of loans, the allowance, at 2.54%, was down 8 basis points. Early and total delinquency rates, at 3.34% and 6.36%, respectively, were up 2 and 17 basis points.
• Net Charge-Offs: The rate fell 20 basis points to 1.19% and actual net charge-offs dropped 12.2% or $1.5 million. Both metrics reflected the $1.8 million recovery on the sale of previously charged-off loans.
Capital Position
Unless otherwise noted, the following compares data at December 31, 2018 to September 30, 2018.
• Capital continued to be significantly above regulatory requirements for a well-capitalized institution: This reflected earnings growth as well as the conversion of Series C into common stock.
• Capital Ratios: Metrics improved across the board, with Leverage at 14.22%, Common Equity Tier 1 at 16.78%, Tier 1 Risk-based at 19.20%, and Total Risk-based Capital at 20.48%, and Tangible Common Equity at 12.76%.
Financial Supplement
OFG’s Financial Supplement, with full financial tables for the quarter and year ended December 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) changes to the financial condition of 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 55th 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 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 December 31, 2018 Annual Report on Form 10-K 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 | |
| | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | | 2018 | | 2017 | |
(Dollars in thousands, except per share data) (unaudited) | | | Q4 | | Q3 | | Q2 | | Q1 | | Q4 | | YTD | | YTD | |
Earnings | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | $ | 82,035 | | $ | 82,277 | | $ | 77,588 | | $ | 73,994 | | $ | 73,513 | | $ | 315,894 | | $ | 304,172 | |
Non-interest income, net (core) | (2) | | | 19,260 | | | 18,446 | | | 18,394 | | | 18,239 | | | 16,734 | | | 74,339 | | | 69,308 | |
Non-interest expense | | | | 51,719 | | | 50,941 | | | 52,300 | | | 52,121 | | | 46,662 | | | 207,081 | | | 201,631 | |
Pre-provision net revenues | (21) | | | 54,574 | | | 49,956 | | | 43,991 | | | 40,387 | | | 43,666 | | | 188,908 | | | 181,228 | |
Provision for loan and lease losses | | | | 11,300 | (c) | | 14,601 | | | 14,747 | | | 15,460 | | | 24,907 | (d) | | 56,108 | | | 113,139 | (d)(e) |
Net income before income taxes | | | | 43,274 | | | 35,355 | | | 29,244 | | | 24,927 | | | 18,759 | | | 132,800 | | | 68,089 | |
Income tax expense | | | | 18,530 | | | 12,255 | | | 9,595 | | | 8,010 | | | 1,686 | | | 48,390 | | | 15,443 | |
Net income | | | $ | 24,744 | | $ | 23,100 | | $ | 19,649 | | $ | 16,917 | | $ | 17,073 | (d) | $ | 84,410 | | $ | 52,646 | |
Common Share Statistics | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per common share - basic | (3) | | $ | 0.47 | | $ | 0.45 | | $ | 0.37 | | $ | 0.31 | | $ | 0.31 | (d) | $ | 1.59 | | $ | 0.88 | |
Earnings per common share - diluted | (4) | | $ | 0.45 | | $ | 0.42 | | $ | 0.35 | | $ | 0.30 | | $ | 0.30 | (d) | $ | 1.52 | | $ | 0.88 | |
Average common shares outstanding | | | | 49,628 | (a) | | 43,996 | | | 43,975 | | | 43,955 | | | 43,947 | | | 45,400 | (a) | | 43,939 | |
Average common shares outstanding and equivalents | | | | 51,602 | | | 51,464 | | | 51,226 | | | 51,121 | | | 51,104 | | | 51,349 | | | 51,096 | |
Cash dividends per common share | | | $ | 0.07 | (b) | $ | 0.06 | | $ | 0.06 | | $ | 0.06 | | $ | 0.06 | | $ | 0.25 | (b) | $ | 0.24 | |
Book value per common share (period end) | | | $ | 17.90 | (a) | $ | 18.27 | | $ | 18.01 | | $ | 17.76 | | $ | 17.73 | | $ | 17.90 | (a) | $ | 17.73 | |
Tangible book value per common share (period end) | (5) | | $ | 16.15 | (a) | $ | 16.23 | | $ | 15.96 | | $ | 15.71 | | $ | 15.67 | | $ | 16.15 | (a) | $ | 15.67 | |
Balance Sheet (Average Balances) | | | | | | | | | | | | | | | | | | | | | | | |
Loans | (6) | | $ | 4,473,114 | | $ | 4,414,583 | | $ | 4,310,206 | | $ | 4,183,775 | | $ | 4,081,427 | | $ | 4,348,135 | | $ | 4,125,804 | |
Interest-earning assets | | | | 6,183,567 | | | 6,066,821 | | | 5,933,775 | | | 5,751,783 | | | 5,735,593 | | | 5,985,524 | | | 5,818,598 | |
Total assets | | | | 6,619,026 | | | 6,514,532 | | | 6,374,240 | | | 6,189,752 | | | 6,191,737 | | | 6,425,811 | | | 6,256,827 | |
Total deposits | | | | 4,987,275 | | | 4,934,175 | | | 4,848,456 | | | 4,775,396 | | | 4,772,685 | | | 4,889,584 | | | 4,686,287 | |
Interest-bearing deposits | | | | 3,866,676 | | | 3,854,342 | | | 3,766,311 | | | 3,756,607 | | | 3,835,357 | | | 3,811,406 | | | 3,826,000 | |
Borrowings | | | | 543,920 | | | 503,268 | | | 462,614 | | | 351,793 | | | 374,059 | | | 466,051 | | | 540,367 | |
Stockholders' equity | | | | 983,015 | | | 973,838 | | | 959,777 | | | 952,151 | | | 943,823 | | | 967,437 | | | 944,492 | |
Common stockholders' equity | | | | 881,971 | | | 807,968 | | | 793,907 | | | 786,281 | | | 777,953 | | | 817,907 | | | 778,622 | |
Performance Metrics | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | (7) | | | 5.26% | | | 5.38% | | | 5.24% | | | 5.22% | | | 5.08% | | | 5.28% | | | 5.23% | |
Return on average assets | (8) | | | 1.50% | | | 1.42% | | | 1.23% | | | 1.09% | | | 1.10% | (d) | | 1.31% | | | 0.84% | |
Return on average tangible common stockholders' equity | (9) | | | 11.67% | (a) | | 10.94% | | | 9.20% | | | 7.73% | | | 7.92% | | | 9.95% | (a) | | 5.64% | |
Efficiency ratio | (10) | | | 51.06% | | | 50.58% | | | 54.49% | | | 56.51% | | | 51.70% | | | 53.07% | | | 53.99% | |
Full-time equivalent employees, period end | | | | 1,392 | | | 1,365 | | | 1,354 | | | 1,367 | | | 1,421 | | | 1,392 | | | 1,421 | |
Credit Quality Metrics | | | | | | | | | | | | | | | | | | | | | | | |
Excluding acquired loans: | (1) | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | | | $ | 95,193 | | $ | 95,236 | | $ | 94,218 | | $ | 96,832 | | $ | 92,718 | (d) | $ | 95,193 | | $ | 92,718 | (d)(e) |
Allowance as a % of loans held for investment | | | | 2.54% | | | 2.62% | | | 2.66% | | | 2.92% | | | 2.89% | (d) | | 2.54% | | | 2.89% | |
Net charge-offs | | | $ | 10,885 | (c) | $ | 12,402 | | $ | 15,449 | | $ | 10,844 | | $ | 10,466 | | $ | 49,580 | | $ | 46,468 | (e) |
Net charge-off rate | (11) | | | 1.19% | | | 1.39% | | | 1.81% | | | 1.34% | | | 1.35% | | | 1.14% | | | 1.52% | (e) |
Early delinquency rate (30 - 89 days past due) | | | | 3.34% | | | 3.32% | | | 3.07% | | | 3.20% | | | 1.82% | (f) | | 3.34% | | | 1.82% | |
Total delinquency rate (30 days and over) | | | | 6.36% | | | 6.19% | | | 5.95% | | | 6.25% | | | 4.61% | (f) | | 6.36% | | | 4.61% | |
Capital Ratios (Non-GAAP) | (12) | | | | | | | | | | | | | | | | | | | | | | |
Leverage ratio | | | | 14.22% | (a) | | 13.93% | | | 13.92% | | | 14.07% | | | 13.92% | | | 14.22% | (a) | | 13.92% | |
Common equity Tier 1 capital ratio | | | | 16.78% | (a) | | 14.38% | | | 14.14% | | | 14.52% | | | 14.59% | | | 16.78% | (a) | | 14.59% | |
Tier 1 risk-based capital ratio | | | | 19.20% | (a) | | 18.55% | | | 18.38% | | | 19.00% | | | 19.05% | | | 19.20% | (a) | | 19.05% | |
Total risk-based capital ratio | | | | 20.48% | (a) | | 19.84% | | | 19.67% | | | 20.29% | | | 20.34% | | | 20.48% | (a) | | 20.34% | |
Tangible common equity ("TCE") ratio | | | | 12.76% | (a) | | 10.88% | | | 10.95% | | | 11.22% | | | 11.29% | | | 12.76% | (a) | | 11.29% | |
| | | | | | | | | | | | | | | | | | | | | | | |
(a) During the Q4 2018, the Company converted all of its outstanding 8.750% non-cumulative convertible perpetual preferred stock, series C into OFG Bancorp common stock. Each share of the 84,000 series C preferred stock was converted into 86.4225 shares of common stock. |
(b) During the Q4 2018, the Company increased the regular cash dividend per common share to $0.07 from $0.06. |
(c) During the Q4 2018, the Company received $1.8 million proceeds from the sale of fully charged-off originated auto and consumer loans. |
(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 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) 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. |
(f) 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. |
| | | | | | | | | | | | | | | | | | | | | | | |
2 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | | |
Table 2: Consolidated Statements of Operations | | | | | | | | |
| | Quarter Ended | | Year Ended | |
| | | December 31, | | September 30, | | June 30, | | March 31, | | December 31, | | December 31, | | December 31, | |
(Dollars in thousands, except per share data) (unaudited) | | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | | 2018 | | 2017 | |
Interest income: | | | | | | | | | | | | | | | | | | | | | | | |
Loans | (1) | | | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | $ | 69,240 | | $ | 66,843 | | $ | 61,183 | | $ | 56,781 | | $ | 56,183 | | $ | 254,047 | | $ | 220,591 | (i) |
Acquired BBVAPR loans | | | | 12,442 | | | 13,688 | | | 13,880 | | | 14,490 | | | 15,310 | | | 54,500 | | | 71,271 | (h) |
Acquired Eurobank loans | | | | 2,642 | | | 3,485 | | | 3,366 | | | 3,341 | | | 3,573 | | | 12,834 | | | 20,559 | |
Total interest income from loans | | | | 84,324 | | | 84,016 | | | 78,429 | | | 74,612 | | | 75,066 | | | 321,381 | | | 312,421 | |
Investment securities | | | | 10,782 | | | 10,121 | | | 9,577 | | | 8,558 | | | 8,108 | | | 39,038 | | | 33,226 | |
Total interest income | | | | 95,106 | | | 94,137 | | | 88,006 | | | 83,170 | | | 83,174 | | | 360,419 | | | 345,647 | |
Interest expense: | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | |
Core deposits | | | | 6,396 | | | 5,877 | | | 5,517 | | | 5,412 | | | 5,613 | | | 23,202 | | | 22,087 | |
Brokered deposits | | | | 3,003 | | | 2,728 | | | 2,134 | | | 1,886 | | | 2,079 | | | 9,751 | | | 8,211 | |
Total deposits | | | | 9,399 | | | 8,605 | | | 7,651 | | | 7,298 | | | 7,692 | | | 32,953 | | | 30,298 | |
Borrowings | | | | 3,672 | | | 3,255 | | | 2,767 | | | 1,878 | | | 1,969 | | | 11,572 | | | 11,177 | |
Total interest expense | | | | 13,071 | | | 11,860 | | | 10,418 | | | 9,176 | | | 9,661 | | | 44,525 | | | 41,475 | |
Net interest income | | | | 82,035 | | | 82,277 | | | 77,588 | | | 73,994 | | | 73,513 | | | 315,894 | | | 304,172 | |
Provision for loan and lease losses, excluding acquired loans | (1) | | | 10,842 | | | 13,420 | | | 12,835 | | | 14,958 | | | 15,643 | (g) | | 52,055 | | | 79,886 | (g) |
Provision (recapture) for acquired BBVAPR loan and lease losses | (1) | | | (998) | (a) | | 875 | | | 1,247 | | | 363 | | | 7,112 | (g) | | 1,487 | | | 26,528 | (g) |
Provision for acquired Eurobank loan and lease losses | (1) | | | 1,456 | | | 306 | | | 665 | | | 139 | | | 2,152 | (g) | | 2,566 | | | 6,725 | (g) |
Total provision for loan and lease losses, net | | | | 11,300 | | | 14,601 | | | 14,747 | | | 15,460 | | | 24,907 | (g) | | 56,108 | | | 113,139 | (g) |
Net interest income after provision for loan and lease losses | | | | 70,735 | | | 67,676 | | | 62,841 | | | 58,534 | | | 48,606 | | | 259,786 | | | 191,033 | |
Non-interest income: | | | | | | | | | | | | | | | | | | | | | | | |
Banking service revenues | | | | 11,234 | | | 10,797 | | | 11,144 | | | 10,463 | | | 8,461 | (e) | | 43,638 | | | 39,468 | |
Wealth management revenues | | | | 7,246 | | | 6,407 | | | 6,262 | | | 6,019 | | | 7,043 | | | 25,934 | | | 25,790 | |
Mortgage banking activities | | | | 780 | | | 1,242 | | | 988 | | | 1,757 | | | 1,230 | | | 4,767 | | | 4,050 | |
Total banking and financial service revenues | | | | 19,260 | | | 18,446 | | | 18,394 | | | 18,239 | | | 16,734 | | | 74,339 | | | 69,308 | |
FDIC shared-loss benefit, net | | | | - | | | - | | | - | | | - | | | - | | | - | | | 1,403 | (k) |
Other income, net | | | | 4,998 | (b) | | 174 | | | 309 | | | 275 | | | 81 | | | 5,756 | (b) | | 7,976 | (j) |
Total non-interest income, net | | | | 24,258 | | | 18,620 | | | 18,703 | | | 18,514 | | | 16,815 | | | 80,095 | | | 78,687 | |
Non-interest expense: | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and employee benefits | | | | 19,322 | | | 18,495 | | | 18,099 | | | 20,608 | | | 20,205 | | | 76,524 | | | 79,751 | |
Rent and occupancy costs | | | | 7,762 | | | 8,388 | | | 9,166 | | | 7,768 | | | 8,546 | | | 33,084 | | | 32,557 | |
Net loss on sale of foreclosed real estate and other repossessed assets | | | | 1,834 | | | 1,210 | | | 392 | | | 1,226 | | | 126 | | | 4,662 | | | 4,634 | |
General and administrative expenses | | | | 20,963 | | | 20,112 | | | 22,746 | | | 20,100 | | | 16,350 | (e)(f) | | 83,921 | | | 76,697 | |
Total operating expenses | | | | 49,881 | | | 48,205 | | | 50,403 | | | 49,702 | | | 45,227 | | | 198,191 | | | 193,639 | |
Credit related expenses | | | | 1,838 | | | 2,736 | | | 1,897 | | | 2,419 | | | 1,435 | | | 8,890 | | | 7,992 | |
Total non-interest expense | | | | 51,719 | | | 50,941 | | | 52,300 | | | 52,121 | | | 46,662 | | | 207,081 | | | 201,631 | |
Income before income taxes | | | | 43,274 | | | 35,355 | | | 29,244 | | | 24,927 | | | 18,759 | | | 132,800 | | | 68,089 | |
Income tax expense | | | | 18,530 | (c) | | 12,255 | | | 9,595 | | | 8,010 | | | 1,686 | | | 48,390 | (c) | | 15,443 | |
Net income | | | | 24,744 | | | 23,100 | | | 19,649 | | | 16,917 | | | 17,073 | (g) | | 84,410 | | | 52,646 | (g) |
Less: dividends on preferred stock | | | | | | | | | | | | | | | | | | | | | | | |
Convertible preferred stock | | | | - | (d) | | (1,838) | | | (1,837) | | | (1,838) | | | (1,838) | | | (5,513) | (d) | | (7,352) | |
Other preferred stock | | | | (1,628) | | | (1,628) | | | (1,628) | | | (1,627) | | | (1,627) | | | (6,511) | | | (6,510) | |
Net income available to common shareholders | | | $ | 23,116 | | $ | 19,634 | | $ | 16,184 | | $ | 13,452 | | $ | 13,608 | (g) | $ | 72,386 | | $ | 38,784 | (g) |
| | | | | | | | | | | | | | | | | | | | | | | |
(a) During the 4Q 2018, the provision for acquired BBVAPR loans reflected better cashflows than expected. | |
(b) During the 4Q 2018, the Company received a $5.0 million payment from the insurance company for Hurricane María impact on the Bank's operations. | |
(c) During the 4Q 2018, the Company recognized an aggregate amount of $4.1 million income tax expense as a result of the Changes in Puerto Rico Tax Legislation, mainly driven by a reduction of the DTA since Regular Corporate Tax Rate changes from 39% to 37.5%. | |
(d) During the Q4 2018, the Company converted of all of its outstanding 8.750% non-cumulative convertible perpetual preferred stock, series C into OFG Bancorp common stock. Each share of the 84,000 series C preferred stock was converted into 86.4225 shares of common stock. | |
(e) 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. | |
(f) 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 estimated. | |
(g) 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 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. | + |
(h) 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. | |
(i) 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. | |
(j) 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. | |
(k) 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. | |
| | | | | | | | | | | | | | | | | | | | | | | |
3 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | |
Table 3: Consolidated Statements of Financial Condition | | | | | | | | | |
| | | December 31, | | September 30, | | June 30, | | March 31, | | December 31, | |
(Dollars in thousands) (unaudited) | | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | |
Cash and cash equivalents | | | $ | 450,063 | | $ | 546,780 | | $ | 378,365 | | $ | 365,388 | | $ | 488,233 | |
Investments: | | | | | | | | | | | | | | | | | |
Trading securities | | | | 360 | | | 405 | | | 418 | | | 293 | | | 191 | |
Investment securities available-for-sale, at fair value, with amortized cost of $854,511 | | | | | | | | | | | | | | | | | |
(September 30, 2018 - $872,895; June 30, 2018 - $890,308; March 31, 2018 - $815,970; | | | | | | | | | | | | | | | | | |
December 31, 2017 - $648,799) | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | | | 827,564 | | | 834,538 | | | 855,686 | | | 784,972 | | | 629,124 | |
Other investment securities | | | | 14,293 | | | 14,014 | | | 16,655 | | | 16,669 | | | 16,673 | |
Total investment securities available-for-sale | | | | 841,857 | | | 848,552 | | | 872,341 | | | 801,641 | | | 645,797 | |
Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $410,353 | | | | | | | | | | | | | | | | | |
(September 30, 2018 - $425,066; June 30, 2018 - $447,947; March 31, 2018 - $467,980; | | | | | | | | | | | | | | | | | |
December 31, 2017 - $497,681) | | | | 424,740 | | | 444,679 | | | 465,427 | | | 485,143 | | | 506,064 | |
Federal Home Loan Bank (FHLB) stock, at cost | | | | 12,644 | | | 12,461 | | | 14,919 | | | 11,499 | | | 13,995 | |
Other investments | | | | 3 | | | 3 | | | 3 | | | 3 | | | 3 | |
Total investments | | | | 1,279,604 | | | 1,306,100 | | | 1,353,108 | | | 1,298,579 | | | 1,166,050 | |
Loans, net | | | | 4,431,594 | | | 4,352,980 | | | 4,315,866 | | | 4,133,429 | | | 4,056,329 | |
Other assets: | | | | | | | | | | | | | | | | | |
Derivative assets | | | | 347 | | | 1,265 | | | 1,100 | | | 898 | | | 771 | |
Prepaid expenses | | | | 10,283 | | | 13,461 | | | 11,127 | | | 7,625 | | | 9,734 | |
Deferred tax asset, net | | | | 113,763 | | | 122,934 | | | 125,141 | | | 128,270 | | | 127,421 | |
Foreclosed real estate and repossessed properties | | | | 36,754 | | | 42,014 | | | 46,035 | | | 45,396 | | | 47,721 | |
Premises and equipment, net | | | | 68,892 | | | 67,762 | | | 66,174 | | | 67,163 | | | 67,860 | |
Goodwill | | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 | | | 86,069 | |
Accounts receivable and other assets | | | | 105,983 | | | 117,309 | | | 118,577 | | | 114,304 | | | 138,865 | (b) |
Total assets | | | $ | 6,583,352 | | $ | 6,656,674 | | $ | 6,501,562 | | $ | 6,247,121 | | $ | 6,189,053 | |
| | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | |
Demand deposits | | | $ | 2,191,802 | | $ | 2,304,067 | | $ | 2,176,935 | | $ | 2,117,857 | | $ | 2,039,126 | |
Savings accounts | | | | 1,187,945 | | | 1,216,190 | | | 1,219,159 | | | 1,228,646 | | | 1,204,514 | |
Time deposits | | | | 1,003,271 | | | 1,037,858 | | | 1,022,682 | | | 1,012,329 | | | 1,037,310 | |
Brokered deposits | | | | 525,097 | | | 530,878 | | | 461,425 | | | 474,596 | | | 518,532 | |
Total deposits | | | | 4,908,115 | | | 5,088,993 | | | 4,880,201 | | | 4,833,428 | | | 4,799,482 | |
Borrowings: | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 455,508 | | | 378,237 | | | 387,770 | | | 273,926 | | | 192,869 | |
Advances from FHLB and other borrowings | | | | 78,834 | | | 73,723 | | | 128,413 | | | 44,328 | | | 99,796 | |
Subordinated capital notes | | | | 36,083 | | | 36,083 | | | 36,083 | | | 36,083 | | | 36,083 | |
Total borrowings | | | | 570,425 | | | 488,043 | | | 552,266 | | | 354,337 | | | 328,748 | |
Other liabilities: | | | | | | | | | | | | | | | | | |
Derivative liabilities | | | | 333 | | | 622 | | | 679 | | | 752 | | | 1,281 | |
Acceptances outstanding | | | | 16,937 | | | 28,682 | | | 30,578 | | | 25,869 | | | 27,644 | |
Accrued expenses and other liabilities | | | | 87,665 | | | 80,448 | | | 80,019 | | | 85,886 | | | 86,791 | |
Total liabilities | | | | 5,583,475 | | | 5,686,788 | | | 5,543,743 | | | 5,300,272 | | | 5,243,946 | |
Stockholders' equity: | | | | | | | | | | | | | | | | | |
Preferred stock | | | | 92,000 | (a) | | 176,000 | | | 176,000 | | | 176,000 | | | 176,000 | |
Common stock | | | | 59,885 | (a) | | 52,626 | | | 52,626 | | | 52,626 | | | 52,626 | |
Additional paid-in capital | | | | 619,381 | (a) | | 542,078 | | | 541,734 | | | 541,404 | | | 541,600 | |
Legal surplus | | | | 90,167 | | | 87,563 | | | 85,249 | | | 83,138 | | | 81,454 | |
Retained earnings | | | | 253,040 | | | 236,120 | | | 221,441 | | | 210,008 | | | 200,878 | |
Treasury stock, at cost | | | | (103,633) | | | (103,706) | | | (103,969) | | | (104,142) | | | (104,502) | |
Accumulated other comprehensive (loss) income, net | | | | (10,963) | | | (20,795) | | | (15,262) | | | (12,185) | | | (2,949) | |
Total stockholders' equity | | | | 999,877 | | | 969,886 | | | 957,819 | | | 946,849 | | | 945,107 | |
Total liabilities and stockholders' equity | | | $ | 6,583,352 | | $ | 6,656,674 | | $ | 6,501,562 | | $ | 6,247,121 | | $ | 6,189,053 | |
| | | | | | | | | | | | | | | | | |
(a) During Q4 2018, the Company converted of all of its outstanding 8.750% non-cumulative convertible perpetual preferred stock, series C into OFG Bancorp common stock. Each share of the 84,000 series C preferred stock was converted into 86.4225 shares of common stock. | |
(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. | |
| | | | | | | | | | | | | | | | | |
4 | |
| | | | | | | | | | | | | | | | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 4: Information on Loan Portfolio and Production | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | December 31, | | September 30, | | June 30, | | March 31, | | December 31, | |
(Dollars in thousands) (unaudited) | | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | |
Non-acquired loans held for investment: | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 668,808 | | $ | 667,224 | | $ | 678,259 | | $ | 682,564 | | $ | 683,607 | |
Commercial | | | | 1,597,590 | | | 1,540,027 | | | 1,507,368 | | | 1,346,404 | | | 1,307,261 | |
Consumer | | | | 348,980 | | | 345,399 | | | 339,341 | | | 334,865 | | | 330,039 | |
Auto | | | | 1,129,697 | | | 1,084,912 | | | 1,014,664 | | | 957,197 | | | 883,985 | |
| | | | 3,745,075 | | | 3,637,562 | | | 3,539,632 | | | 3,321,030 | | | 3,204,892 | |
Less: Allowance for loan and lease losses | | | | (95,193) | | | (95,236) | | | (94,218) | | | (96,832) | | | (92,718) | |
| | | | 3,649,882 | | | 3,542,326 | | | 3,445,414 | | | 3,224,198 | | | 3,112,174 | |
Deferred loan costs, net | | | | 7,742 | | | 7,556 | | | 7,028 | | | 7,125 | | | 6,695 | |
Total non-acquired loans held for investment, net | | | | 3,657,624 | | | 3,549,882 | | | 3,452,442 | | | 3,231,323 | | | 3,118,869 | |
| | | | | | | | | | | | | | | | | |
Acquired loans: | (1) | | | | | | | | | | | | | | | | |
BBVAPR | | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-20 | | | | | | | | | | | | | | | | | |
Commercial | | | | 2,546 | | | 2,778 | | | 2,909 | | | 4,222 | | | 4,380 | |
Consumer | | | | 23,988 | | | 24,914 | | | 25,736 | | | 27,235 | | | 28,915 | |
Auto | | | | 4,435 | | | 7,494 | | | 11,283 | | | 16,171 | | | 21,969 | |
| | | | 30,969 | | | 35,186 | | | 39,928 | | | 47,628 | | | 55,264 | |
Less: Allowance for loan and lease losses | | | | (2,062) | | | (2,350) | | | (2,726) | | | (3,184) | | | (3,862) | |
| | | | 28,907 | | | 32,836 | | | 37,202 | | | 44,444 | | | 51,402 | |
| | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | |
Mortgage | | | | 492,890 | | | 503,861 | | | 516,934 | | | 526,089 | | | 532,053 | |
Commercial | | | | 182,319 | | | 190,178 | | | 223,853 | | | 230,988 | | | 243,092 | |
Consumer | | | | - | | | 95 | | | 495 | | | 932 | | | 1,431 | |
Auto | | | | 14,403 | | | 20,363 | | | 26,937 | | | 35,006 | | | 43,696 | |
| | | | 689,612 | | | 714,497 | | | 768,219 | | | 793,015 | | | 820,272 | |
Less: Allowance for loan and lease losses | | | | (42,010) | | | (43,875) | | | (44,176) | | | (43,166) | | | (45,755) | |
| | | | 647,602 | | | 670,622 | | | 724,043 | | | 749,849 | | | 774,517 | |
Total Acquired BBVAPR loans, net | | | | 676,509 | | | 703,458 | | | 761,245 | | | 794,293 | | | 825,919 | |
| | | | | | | | | | | | | | | | | |
Eurobank | | | | | | | | | | | | | | | | | |
Accounted for under ASC 310-30 | | | | | | | | | | | | | | | | | |
Mortgage | | | | 63,392 | | | 64,785 | | | 65,637 | | | 69,328 | | | 69,538 | |
Commercial | | | | 47,826 | | | 49,262 | | | 49,706 | | | 52,418 | | | 53,793 | |
Consumer | | | | 846 | | | 895 | | | 935 | | | 972 | | | 1,112 | |
| | | | 112,064 | | | 114,942 | | | 116,278 | | | 122,718 | | | 124,443 | |
Less: Allowance for loan and lease losses | | | | (24,971) | | | (24,281) | | | (24,314) | | | (25,410) | | | (25,174) | |
Total Acquired Eurobank loans, net | | | | 87,093 | | | 90,661 | | | 91,964 | | | 97,308 | | | 99,269 | |
Total acquired loans, net | | | | 763,602 | | | 794,119 | | | 853,209 | | | 891,601 | | | 925,188 | |
Total loans held for investment | | | | 4,421,226 | | | 4,344,001 | | | 4,305,651 | | | 4,122,924 | | | 4,044,057 | |
Mortgage loans held for sale | | | | 10,368 | | | 8,979 | | | 10,215 | | | 10,505 | | | 12,272 | |
Total loans, net | | | $ | 4,431,594 | | $ | 4,352,980 | | $ | 4,315,866 | | $ | 4,133,429 | | $ | 4,056,329 | |
| | | | | | | | | | | | | | | | | |
Loan Portfolio Summary: | | | | | | | | | | | | | | | | | |
Loans held for investment: | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 1,225,090 | | $ | 1,235,870 | | $ | 1,260,830 | | $ | 1,277,981 | | $ | 1,285,198 | |
Commercial | | | | 1,830,281 | | | 1,782,245 | | | 1,783,836 | | | 1,634,032 | | | 1,608,526 | |
Consumer | | | | 373,814 | | | 371,303 | | | 366,507 | | | 364,004 | | | 361,497 | |
Auto | | | | 1,148,535 | | | 1,112,769 | | | 1,052,884 | | | 1,008,374 | | | 949,650 | |
| | | | 4,577,720 | | | 4,502,187 | | | 4,464,057 | | | 4,284,391 | | | 4,204,871 | |
Less: Allowance for loan and lease losses | | | | (164,236) | | | (165,742) | | | (165,434) | | | (168,592) | | | (167,509) | |
| | | | 4,413,484 | | | 4,336,445 | | | 4,298,623 | | | 4,115,799 | | | 4,037,362 | |
Deferred loan costs, net | | | | 7,742 | | | 7,556 | | | 7,028 | | | 7,125 | | | 6,695 | |
Total loans held for investment, net | | | | 4,421,226 | | | 4,344,001 | | | 4,305,651 | | | 4,122,924 | | | 4,044,057 | |
Mortgage loans held for sale | | | | 10,368 | | | 8,979 | | | 10,215 | | | 10,505 | | | 12,272 | |
Total loans, net | | | $ | 4,431,594 | | $ | 4,352,980 | | $ | 4,315,866 | | $ | 4,133,429 | | $ | 4,056,329 | |
| | | | | | | | | | | | | | | | | |
| | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q4 | | Q3 | | Q2 | | Q1 | | Q4 | |
Quarterly loan production | (13) | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 33,373 | | $ | 27,869 | | $ | 31,808 | | $ | 26,645 | | $ | 15,892 | |
Commercial | | | | 92,088 | | | 105,346 | | | 127,200 | | | 42,783 | | | 102,083 | |
US Loan Program | | | | 31,667 | | | 30,357 | | | 99,666 | | | 74,361 | | | 25,070 | |
Consumer | | | | 42,055 | | | 42,995 | | | 42,317 | | | 37,502 | | | 23,059 | |
Auto and Leasing | | | | 123,770 | | | 140,390 | | | 131,103 | | | 128,130 | | | 87,551 | |
Total | | | $ | 322,953 | | $ | 346,957 | | $ | 432,094 | | $ | 309,421 | | $ | 253,655 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
5 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Table 5: Average Balances, Net Interest Income and Net Interest Margin | |
| | | 2018 Q4 | | 2018 Q3 | | 2018 Q2 | | 2018 Q1 | | 2017 Q4 |
| | | | | 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 | | | $ | 434,701 | | $ | 2,572 | | 2.35 | % | | $ | 325,058 | | $ | 1,676 | | 2.05 | % | | $ | 293,431 | | $ | 1,242 | | 1.70 | % | | $ | 328,214 | | $ | 1,207 | | 1.49 | % | | $ | 493,354 | | $ | 1,516 | | 1.22 | % |
Investment securities | | | | 1,275,752 | | | 8,210 | | 2.55 | % | | | 1,327,180 | | | 8,445 | | 2.52 | % | | | 1,330,138 | | | 8,335 | | 2.51 | % | | | 1,239,794 | | | 7,350 | | 2.40 | % | | | 1,160,812 | | | 6,593 | | 2.25 | % |
Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | 3,649,423 | | | 69,240 | | 7.53 | % | | | 3,557,252 | | | 66,843 | | 7.45 | % | | | 3,410,044 | | | 61,183 | | 7.20 | % | | | 3,244,593 | | | 56,782 | | 7.10 | % | | | 3,111,849 | | | 56,183 | | 7.16 | % |
Acquired BBVAPR loans | | | | 734,600 | | | 12,442 | | 6.72 | % | | | 765,705 | | | 13,688 | | 7.09 | % | | | 806,830 | | | 13,880 | | 6.90 | % | | | 841,638 | | | 14,490 | | 6.98 | % | | | 869,269 | | | 15,310 | | 6.99 | % |
Acquired Eurobank loans | | | | 89,091 | | | 2,642 | | 11.77 | % | | | 91,626 | | | 3,485 | | 15.09 | % | | | 93,332 | | | 3,366 | | 14.47 | % | | | 97,544 | | | 3,341 | | 13.89 | % | | | 100,310 | | | 3,573 | | 14.13 | % |
Total loans | | | | 4,473,114 | | | 84,324 | | 7.48 | % | | | 4,414,583 | | | 84,016 | | 7.55 | % | | | 4,310,206 | | | 78,429 | | 7.30 | % | | | 4,183,775 | | | 74,613 | | 7.23 | % | | | 4,081,427 | | | 75,066 | | 7.30 | % |
Total interest-earning assets | | | $ | 6,183,567 | | $ | 95,106 | | 6.10 | % | | $ | 6,066,821 | | $ | 94,137 | | 6.16 | % | | $ | 5,933,775 | | $ | 88,006 | | 5.95 | % | | $ | 5,751,783 | | $ | 83,170 | | 5.86 | % | | $ | 5,735,593 | | $ | 83,175 | | 5.75 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | $ | 1,109,795 | | $ | 1,432 | | 0.51 | % | | $ | 1,096,023 | | $ | 1,196 | | 0.43 | % | | $ | 1,052,465 | | $ | 966 | | 0.37 | % | | $ | 1,059,129 | | $ | 898 | | 0.34 | % | | $ | 1,040,153 | | $ | 922 | | 0.35 | % |
Savings accounts | | | | 1,217,931 | | | 1,741 | | 0.57 | % | | | 1,211,693 | | | 1,571 | | 0.51 | % | | | 1,230,741 | | | 1,555 | | 0.51 | % | | | 1,206,100 | | | 1,497 | | 0.50 | % | | | 1,224,815 | | | 1,530 | | 0.50 | % |
Time deposits | | | | 1,012,101 | | | 3,008 | | 1.18 | % | | | 1,027,124 | | | 2,896 | | 1.12 | % | | | 1,012,330 | | | 2,781 | | 1.10 | % | | | 1,024,740 | | | 2,802 | | 1.11 | % | | | 1,046,191 | | | 2,932 | | 1.11 | % |
Brokered deposits | | | | 526,849 | | | 3,003 | | 2.26 | % | | | 519,502 | | | 2,727 | | 2.08 | % | | | 470,775 | | | 2,134 | | 1.82 | % | | | 466,638 | | | 1,886 | | 1.64 | % | | | 524,198 | | | 2,079 | | 1.57 | % |
| | | | 3,866,676 | | | 9,184 | | 0.94 | % | | | 3,854,342 | | | 8,390 | | 0.86 | % | | | 3,766,311 | | | 7,436 | | 0.79 | % | | | 3,756,607 | | | 7,083 | | 0.76 | % | | | 3,835,357 | | | 7,463 | | 0.77 | % |
Non-interest bearing deposit accounts | | | | 1,120,599 | | | - | | - | | | | 1,079,833 | | | - | | - | | | | 1,082,145 | | | - | | - | | | | 1,018,789 | | | - | | - | | | | 937,328 | | | - | | - | % |
Fair value premium amortization and core deposit intangible amortization | | | | - | | | 215 | | - | | | | - | | | 215 | | - | | | | - | | | 215 | | - | | | | - | | | 215 | | - | | | | - | | | 230 | | - | |
Total deposits | | | | 4,987,275 | | | 9,399 | | 0.75 | % | | | 4,934,175 | | | 8,605 | | 0.69 | % | | | 4,848,456 | | | 7,651 | | 0.63 | % | | | 4,775,396 | | | 7,298 | | 0.62 | % | | | 4,772,685 | | | 7,693 | | 0.64 | % |
Borrowings | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 430,889 | | | 2,633 | | 2.42 | % | | | 390,225 | | | 2,242 | | 2.28 | % | | | 353,313 | | | 1,843 | | 2.09 | % | | | 251,582 | | | 1,076 | | 1.73 | % | | | 236,522 | | | 963 | | 1.62 | % |
Advances from FHLB and other borrowings | | | | 76,948 | | | 536 | | 2.76 | % | | | 76,960 | | | 517 | | 2.67 | % | | | 73,218 | | | 448 | | 2.45 | % | | | 64,128 | | | 374 | | 2.37 | 2 | | | 101,454 | | | 600 | | 2.35 | % |
Subordinated capital notes | | | | 36,083 | | | 503 | | 5.53 | % | | | 36,083 | | | 496 | | 5.45 | % | | | 36,083 | | | 476 | | 5.29 | % | | | 36,083 | | | 428 | | 4.81 | % | | | 36,083 | | | 406 | | 4.46 | % |
Total borrowings | | | | 543,920 | | | 3,672 | | 2.68 | % | | | 503,268 | | | 3,255 | | 2.57 | % | | | 462,614 | | | 2,767 | | 2.40 | % | | | 351,793 | | | 1,878 | | 2.17 | % | | | 374,059 | | | 1,969 | | 2.09 | % |
Total interest-bearing liabilities | | | $ | 5,531,195 | | $ | 13,071 | | 0.94 | % | | $ | 5,437,443 | | $ | 11,860 | | 0.87 | % | | $ | 5,311,070 | | $ | 10,418 | | 0.79 | % | | $ | 5,127,189 | | $ | 9,176 | | 0.73 | % | | $ | 5,146,744 | | $ | 9,662 | | 0.74 | % |
Interest rate spread | | | | | | $ | 82,035 | | 5.16 | % | | | | | $ | 82,277 | | 5.29 | % | | | | | $ | 77,588 | | 5.16 | % | | | | | $ | 73,994 | | 5.13 | % | | | | | $ | 73,513 | | 5.01 | % |
Net interest margin | | | | | | | | | 5.26 | % | | | | | | | | 5.38 | % | | | | | | | | 5.24 | % | | | | | | | | 5.22 | % | | | | | | | | 5.08 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ASC 310-30 loan cost recoveries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans | | | | | | $ | 653 | | | | | | | | $ | 1,143 | | | | | | | | $ | 291 | | | | | | | | $ | 119 | | | | | | | | $ | 199 | | | |
Acquired Eurobank loans | | | | | | | 123 | | | | | | | | | 829 | | | | | | | | | 533 | | | | | | | | | 389 | | | | | | | | | 526 | | | |
| | | | | | $ | 776 | | | | | | | | $ | 1,972 | | | | | | | | $ | 824 | | | | | | | | $ | 508 | | | | | | | | $ | 725 | | | |
Adjusted excluding cost recoveries (Non-GAAP): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | $ | 6,183,567 | | $ | 94,330 | | 6.05 | % | | $ | 6,066,821 | | $ | 92,165 | | 6.03 | % | | $ | 5,933,775 | | $ | 87,182 | | 5.89 | % | | $ | 5,751,783 | | $ | 82,662 | | 5.83 | % | | $ | 5,735,593 | | $ | 82,450 | | 5.70 | % |
Interest rate spread | | | | | | $ | 81,259 | | 5.11 | % | | | | | $ | 80,305 | | 5.16 | % | | | | | $ | 76,764 | | 5.10 | % | | | | | $ | 73,486 | | 5.10 | % | | | | | $ | 72,788 | | 4.96 | % |
Net interest margin | | | | | | | | | 5.21 | % | | | | | | | | 5.25 | % | | | | | | | | 5.19 | % | | | | | | | | 5.18 | % | | | | | | | | 5.03 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
6 |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 5: Average Balances, Net Interest Income and Net Interest Margin (Continued) | |
| | | 2018 YTD | | 2017 YTD | |
| | | | | Interest | | | | | | | Interest | | | | |
| | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | |
(Dollars in thousands) (unaudited) | | | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | |
| | | | | | | | | | | | | | | | | | | | |
Interest earning assets: | | | | | | | | | | | | | | | | | | | | |
Cash equivalents | | | $ | 343,982 | | $ | 6,698 | | 1.95 | % | | $ | 436,913 | | $ | 4,619 | | 1.06 | % | |
Investment securities | | | | 1,293,407 | | | 32,340 | | 2.50 | % | | | 1,255,881 | | | 28,607 | | 2.28 | % | |
Loans | | | | | | | | | | | | | | | | | | | | |
Non-acquired loans | | | | 3,460,583 | | | 254,047 | | 7.34 | % | | | 3,061,651 | | | 220,591 | | 7.20 | % | |
Acquired BBVAPR loans | | | | 794,092 | | | 54,500 | | 6.86 | % | | | 927,497 | | | 71,271 | | 7.68 | % | |
Acquired Eurobank loans | | | | 93,460 | | | 12,834 | | 13.73 | % | | | 136,655 | | | 20,559 | | 15.04 | % | |
Total loans | | | | 4,348,135 | | | 321,381 | | 7.39 | % | | | 4,125,804 | | | 312,421 | | 7.57 | % | |
Total interest-earning assets | | | $ | 5,985,524 | | $ | 360,419 | | 6.02 | % | | $ | 5,818,598 | | $ | 345,647 | | 5.94 | % | |
| | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | $ | 1,079,538 | | $ | 4,492 | | 0.42 | % | | $ | 1,059,051 | | $ | 3,893 | | 0.37 | % | |
Savings accounts | | | | 1,216,635 | | | 6,364 | | 0.52 | % | | | 1,170,800 | | | 5,922 | | 0.51 | % | |
Time deposits | | | | 1,019,061 | | | 11,487 | | 1.13 | % | | | 1,039,033 | | | 11,352 | | 1.09 | % | |
Brokered deposits | | | | 496,171 | | | 9,751 | | 1.97 | % | | | 557,115 | | | 8,211 | | 1.47 | % | |
| | | | 3,811,406 | | | 32,093 | | 0.84 | % | | | 3,826,000 | | | 29,378 | | 0.77 | % | |
Non-interest bearing deposit accounts | | | | 1,078,178 | | | - | | - | | | | 860,287 | | | - | | - | % | |
Fair value premium amortization and core deposit intangible amortization | | | | - | | | 860 | | - | | | | - | | | 920 | | - | | |
Total deposits | | | | 4,889,584 | | | 32,953 | | 0.67 | % | | | 4,686,287 | | | 30,298 | | 0.65 | % | |
Borrowings | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | | 357,086 | | | 7,794 | | 2.18 | % | | | 401,070 | | | 7,223 | | 1.80 | % | |
Advances from FHLB and other borrowings | | | | 72,882 | | | 1,875 | | 2.57 | % | | | 103,214 | | | 2,398 | | 2.32 | % | |
Subordinated capital notes | | | | 36,083 | | | 1,903 | | 5.27 | % | | | 36,083 | | | 1,556 | | 4.31 | % | |
Total borrowings | | | | 466,051 | | | 11,572 | | 2.48 | % | | | 540,367 | | | 11,177 | | 2.07 | % | |
Total interest-bearing liabilities | | | $ | 5,355,635 | | $ | 44,525 | | 0.83 | % | | $ | 5,226,654 | | $ | 41,475 | | 0.79 | % | |
Interest rate spread | | | | | | $ | 315,894 | | 5.19 | % | | | | | $ | 304,172 | | 5.15 | % | |
Net interest margin | | | | | | | | | 5.28 | % | | | | | | | | 5.23 | % | |
| | | | | | | | | | | | | | | | | | | | |
ASC 310-30 loan cost recoveries: | | | | | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans | | | | | | $ | 2,206 | | | | | | | | | 3,964 | | | | |
Acquired Eurobank loans | | | | | | | 1,875 | | | | | | | | | 2,719 | | | | |
| | | | | | $ | 4,081 | | | | | | | | $ | 6,683 | | | | |
Adjusted excluding cost recoveries (Non-GAAP): | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | $ | 5,985,524 | | $ | 356,338 | | 5.95 | % | | $ | 5,818,598 | | $ | 338,964 | | 5.83 | % | |
Interest rate spread | | | | | | $ | 311,813 | | 5.12 | % | | | | | $ | 297,489 | | 5.04 | % | |
Net interest margin | | | | | | | | | 5.21 | % | | | | | | | | 5.11 | % | |
| | | | | | | | | | | | | | | | | | | | |
7 | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (1) | | | | |
| | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q4 | | Q3 | | Q2 | | Q1 | | Q4 | |
Net Charge-offs | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Charge-offs | | | $ | 1,570 | | $ | 1,429 | | $ | 1,328 | | $ | 968 | | $ | 1,248 | |
Recoveries | | | | (128) | | | (139) | | | (466) | | | (314) | | | (126) | |
Total mortgage | | | | 1,442 | | | 1,290 | | | 862 | | | 654 | | | 1,122 | |
Commercial: | | | | | | | | | | | | | | | | | |
Charge-offs | | | | 386 | | | 3,249 | | | 1,998 | | | 1,149 | | | 1,260 | |
Recoveries | | | | (126) | | | (119) | | | (227) | | | (182) | | | (401) | |
Total commercial | | | | 260 | | | 3,130 | | | 1,771 | | | 967 | | | 859 | |
Consumer: | | | | | | | | | | | | | | | | | |
Charge-offs | | | | 4,191 | | | 4,591 | | | 4,588 | | | 4,258 | | | 1,849 | |
Recoveries | | | | (1,000) | | | (278) | | | (240) | | | (240) | | | (96) | |
Total consumer | | | | 3,191 | | | 4,313 | | | 4,348 | | | 4,018 | | | 1,753 | |
Auto and Leasing: | | | | | | | | | | | | | | | | | |
Charge-offs | | | | 10,843 | | | 9,111 | | | 13,748 | | | 8,982 | | | 9,182 | |
Recoveries | | | | (4,851) | | | (5,442) | | | (5,280) | | | (3,777) | | | (2,450) | |
Total auto and leasing | | | | 5,992 | | | 3,669 | | | 8,468 | | | 5,205 | | | 6,732 | |
Total | | | $ | 10,885 | | $ | 12,402 | | $ | 15,449 | | $ | 10,844 | | $ | 10,466 | |
Net Charge-off Rates | | | | | | | | | | | | | | | | | |
Mortgage | | | | 0.87% | | | 0.77% | | | 0.51% | | | 0.38% | | | 0.65% | |
Commercial | | | | 0.07% | | | 0.83% | | | 0.50% | | | 0.30% | | | 0.27% | |
Consumer | | | | 3.89% | | | 5.35% | | | 5.42% | | | 5.07% | | | 2.30% | |
Auto and Leasing | | | | 2.16% | | | 1.40% | | | 3.39% | | | 2.23% | | | 3.13% | |
Total | | | | 1.19% | | | 1.39% | | | 1.81% | | | 1.34% | | | 1.35% | |
Average Loans Held For Investment | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 663,208 | | $ | 672,526 | | $ | 679,133 | | $ | 683,398 | | $ | 688,312 | |
Commercial | | | | 1,546,870 | | | 1,513,556 | | | 1,411,177 | | | 1,310,444 | | | 1,257,619 | |
Consumer | | | | 328,162 | | | 322,553 | | | 320,687 | | | 317,295 | | | 304,760 | |
Auto and Leasing | | | | 1,111,183 | | | 1,048,617 | | | 999,047 | | | 933,456 | | | 861,158 | |
Total | | | $ | 3,649,423 | | $ | 3,557,252 | | $ | 3,410,044 | | $ | 3,244,593 | | $ | 3,111,849 | |
| | | | | | | | | | | | | | | | | |
| |
8 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (Continued) (1) | |
| | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q4 | | Q3 | | Q2 | | Q1 | | Q4 | |
Early Delinquency (30 - 89 days past due) | | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 26,150 | | $ | 25,285 | | $ | 26,132 | | $ | 29,190 | | $ | 17,315 | |
Commercial | | | | 5,568 | | | 6,871 | | | 9,699 | | | 8,126 | | | 2,620 | |
Consumer | | | | 7,285 | | | 6,661 | | | 7,063 | | | 7,478 | | | 6,149 | |
Auto and Leasing | | | | 86,039 | | | 81,828 | | | 65,823 | | | 61,558 | | | 32,159 | |
Total | | | $ | 125,042 | | $ | 120,645 | | $ | 108,717 | | $ | 106,352 | | $ | 58,243 | (a) |
Early Delinquency Rates (30 - 89 days past due) | | | | | | | | | | | | | | | | | |
Mortgage | | | | 3.91% | | | 3.79% | | | 3.85% | | | 4.28% | | | 2.53% | |
Commercial | | | | 0.35% | | | 0.45% | | | 0.64% | | | 0.60% | | | 0.20% | |
Consumer | | | | 2.09% | | | 1.93% | | | 2.08% | | | 2.23% | | | 1.86% | |
Auto and Leasing | | | | 7.62% | | | 7.54% | | | 6.49% | | | 6.43% | | | 3.64% | |
Total | | | | 3.34% | | | 3.32% | | | 3.07% | | | 3.20% | | | 1.82% | (a) |
Total Delinquency (30 days and over past due) | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | $ | 82,404 | | $ | 83,966 | | $ | 83,707 | | $ | 89,252 | | $ | 76,542 | |
GNMA's buy-back option program | | | | 19,721 | | | 13,325 | | | 14,521 | | | 12,515 | | | 8,268 | |
Total mortgage | | | | 102,125 | | | 97,291 | | | 98,228 | | | 101,767 | | | 84,810 | |
Commercial | | | | 27,423 | | | 25,191 | | | 26,269 | | | 21,544 | | | 18,509 | |
Consumer | | | | 8,983 | | | 8,530 | | | 9,095 | | | 9,129 | | | 8,028 | |
Auto and Leasing | | | | 99,533 | | | 93,976 | | | 76,924 | | | 75,152 | | | 36,391 | |
Total | | | $ | 238,064 | | $ | 224,988 | | $ | 210,516 | | $ | 207,592 | | $ | 147,738 | (a) |
Total Delinquency Rates (30 days and over past due) | | | | | | | | | | | | | | | | | |
Mortgage: | | | | | | | | | | | | | | | | | |
Traditional, Non traditional, and Loans under Loss Mitigation | | | | 12.32% | | | 12.58% | | | 12.34% | | | 13.08% | | | 11.20% | |
GNMA's buy-back option program | | | | 2.95% | | | 2.00% | | | 2.14% | | | 1.83% | | | 1.21% | |
Total mortgage | | | | 15.27% | | | 14.58% | | | 14.48% | | | 14.91% | | | 12.41% | |
Commercial | | | | 1.72% | | | 1.64% | | | 1.74% | | | 1.60% | | | 1.42% | |
Consumer | | | | 2.57% | | | 2.47% | | | 2.68% | | | 2.73% | | | 2.43% | |
Auto and Leasing | | | | 8.81% | | | 8.66% | | | 7.58% | | | 7.85% | | | 4.12% | |
Total | | | | 6.36% | | | 6.19% | | | 5.95% | | | 6.25% | | | 4.61% | (a) |
Nonperforming Assets | (14) | | | | | | | | | | | | | | | | |
Mortgage | | | $ | 63,717 | | $ | 67,236 | | $ | 67,002 | | $ | 63,866 | | $ | 64,085 | |
Commercial | | | | 42,456 | | | 42,807 | | | 47,451 | | | 47,044 | | | 35,253 | |
Consumer | | | | 3,354 | | | 3,116 | | | 2,826 | | | 2,263 | | | 2,572 | |
Auto and Leasing | | | | 13,494 | | | 12,185 | | | 11,141 | | | 13,594 | | | 4,232 | |
Total nonperforming loans | | | | 123,021 | | | 125,344 | | | 128,420 | | | 126,767 | | | 106,142 | |
Foreclosed real estate | | | | 9,571 | | | 10,295 | | | 12,186 | | | 13,365 | | | 14,282 | |
Other repossessed assets | | | | 2,986 | | | 4,146 | | | 5,483 | | | 5,082 | | | 3,172 | |
Total nonperforming assets | | | $ | 135,578 | | $ | 139,785 | | $ | 146,089 | | $ | 145,214 | | $ | 123,596 | |
Nonperforming Loan Rates | | | | | | | | | | | | | | | | | |
Mortgage | | | | 9.53% | | | 10.08% | | | 9.88% | | | 9.36% | | | 9.37% | |
Commercial | | | | 2.66% | | | 2.78% | | | 3.15% | | | 3.49% | | | 2.70% | |
Consumer | | | | 0.96% | | | 0.90% | | | 0.83% | | | 0.68% | | | 0.78% | |
Auto and Leasing | | | | 1.19% | | | 1.12% | | | 1.10% | | | 1.42% | | | 0.48% | |
Total loans | | | | 3.28% | | | 3.45% | | | 3.63% | | | 3.82% | | | 3.31% | |
| | | | | | | | | | | | | | | | | |
(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. | |
| |
9 | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | |
Table 7: Allowance for Loan and Lease Losses | | | | | | | | | |
| | | Quarter Ended December 31, 2018 |
(Dollars in thousands) (unaudited) | | | Mortgage | | Commercial | | Consumer | | Auto | | Total |
Non-acquired loans | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 19,545 | | $ | 32,491 | | $ | 15,715 | | $ | 27,485 | | $ | 95,236 |
(Recapture) provision for loan and lease losses, net | | | | 1,680 | | | (1,905) | | | 3,047 | | | 8,020 | | | 10,842 |
Charge-offs | | | | (1,570) | | | (386) | | | (4,191) | | | (10,843) | | | (16,990) |
Recoveries | | | | 128 | | | 126 | | | 1,000 | | | 4,851 | | | 6,105 |
Balance at end of period | | | $ | 19,783 | | $ | 30,326 | | $ | 15,571 | | $ | 29,513 | | $ | 95,193 |
Allowance coverage ratio | | | | 2.96% | | | 1.90% | | | 4.46% | | | 2.61% | | | 2.54% |
| | | | | | | | | | | | | | | | |
Acquired loans | | | | | | | | | | | | | | | | |
Acquired BBVAPR loans: | | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-20 | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | | $ | 17 | | $ | 2,140 | | $ | 193 | | $ | 2,350 |
(Recapture) provision for loan and lease losses, net | | | | | | | - | | | (93) | | | (161) | | | (254) |
Charge-offs | | | | | | | - | | | (379) | | | (87) | | | (466) |
Recoveries | | | | | | | 5 | | | 237 | | | 190 | | | 432 |
Balance at end of period | | | | | | $ | 22 | | $ | 1,905 | | $ | 135 | | $ | 2,062 |
| | | | | | | | | | | | | | | | |
Acquired loans accounted for under ASC 310-30 | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 15,258 | | $ | 22,256 | | $ | 18 | | $ | 6,343 | | $ | 43,875 |
Provision (recapture) for loan and lease losses, net | | | | 35 | | | (761) | | | (18) | | | - | | | (744) |
Allowance de-recognition | | | | (68) | | | (854) | | | - | | | (199) | | | (1,121) |
Balance at end of period | | | $ | 15,225 | | $ | 20,641 | | $ | - | | $ | 6,144 | | $ | 42,010 |
| | | | | | | | | | | | | | | | |
Acquired Eurobank loans: | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 15,155 | | $ | 9,122 | | $ | 4 | | $ | - | | $ | 24,281 |
Provision (recapture) for loan and lease losses, net | | | | 791 | | | 665 | | | - | | | - | | | 1,456 |
Allowance de-recognition | | | | (564) | | | (202) | | | - | | | - | | | (766) |
Balance at end of period | | | $ | 15,382 | | $ | 9,585 | | $ | 4 | | $ | - | | $ | 24,971 |
| | | | | | | | | | | | | | | | |
Total acquired loans | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 30,413 | | $ | 31,395 | | $ | 2,162 | | $ | 6,536 | | $ | 70,506 |
Provision (recapture) for loan and lease losses, net | | | | 826 | | | (96) | | | (111) | | | (161) | | | 458 |
Charge-offs | | | | - | | | - | | | (379) | | | (87) | | | (466) |
Recoveries | | | | - | | | 5 | | | 237 | | | 190 | | | 432 |
Allowance de-recognition | | | | (632) | | | (1,056) | | | - | | | (199) | | | (1,887) |
Balance at end of period | | | $ | 30,607 | | $ | 30,248 | | $ | 1,909 | | $ | 6,279 | | $ | 69,043 |
| | | | | | | | | | | | | | | | |
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 December 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 | | | $ | 238,637 | | $ | 35,275 | | $ | 3,463 | | $ | 611 | | $ | 408 | | $ | 278,394 |
Accretion | | | | (6,538) | | | (2,138) | | | (763) | | | (369) | | | (333) | | | (10,141) |
Change in expected cash flows | | | | - | | | 623 | | | 7 | | | 61 | | | 328 | | | 1,019 |
Transfers (to) from non-accretable discount | | | | 100 | | | (215) | | | 256 | | | (60) | | | 157 | | | 238 |
Balance at end of period | | | $ | 232,199 | | $ | 33,545 | | $ | 2,963 | | $ | 243 | | $ | 560 | | $ | 269,510 |
| | | | | | | | | | | | | | | | | | | |
Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 292,821 | | $ | 2,623 | | $ | 8,535 | | $ | 23,823 | | $ | 19,371 | | $ | 347,173 |
Change in actual and expected cash flows | | | | (834) | | | (764) | | | (7) | | | 362 | | | (269) | | | (1,512) |
Transfers from (to) accretable yield | | | | (100) | | | 215 | | | (256) | | | 60 | | | (157) | | | (238) |
Balance at end of period | | | $ | 291,887 | | $ | 2,074 | | $ | 8,272 | | $ | 24,245 | | $ | 18,945 | | $ | 345,423 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | 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 | | | $ | 38,023 | | $ | 4,353 | | $ | 699 | | $ | - | | $ | - | | $ | 43,075 |
Accretion | | | | (1,381) | | | (1,235) | | | - | | | (7) | | | (20) | | | (2,643) |
Change in expected cash flows | | | | (155) | | | 230 | | | - | | | (12) | | | 3 | | | 66 |
Transfers (to) from non-accretable discount | | | | 1,247 | | | (38) | | | (44) | | | 19 | | | 17 | | | 1,201 |
Balance at end of period | | | $ | 37,734 | | $ | 3,310 | | $ | 655 | | $ | - | | $ | - | | $ | 41,699 |
| | | | | | | | | | | | | | | | | | | |
Non-Accretable Discount | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | $ | 2,513 | | $ | - | | $ | 1,506 | | $ | - | | $ | 168 | | $ | 4,187 |
Change in actual and expected cash flows | | | | 10 | | | (38) | | | - | | | 19 | | | (18) | | | (27) |
Transfers from (to) accretable yield | | | | (1,247) | | | 38 | | | 44 | | | (19) | | | (17) | | | (1,201) |
Balance at end of period | | | $ | 1,276 | | $ | - | | $ | 1,550 | | $ | - | | $ | 133 | | $ | 2,959 |
| | | | | | | | | | | | | | | | | | | |
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. |
| | | | | | | | | | | | | | | | | | | |
| | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | | | 2017 |
(Dollars in thousands) (unaudited) | | | Q4 | | Q3 | | Q2 | | Q1 | | Q4 | | | YTD |
Stockholders' Equity to Non-GAAP Tangible Common Equity | | | | | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 999,877 | | $ | 969,886 | | $ | 957,819 | | $ | 946,849 | | $ | 945,107 | | $ | 945,107 |
Less: Intangible assets | | | | (89,437) | | | (89,767) | | | (90,097) | | | (90,426) | | | (90,756) | | | (90,756) |
Noncumulative perpetual preferred stock | | | | (92,000) | | | (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 | | | 10,130 |
Tangible common equity | | | $ | 828,570 | | $ | 714,249 | | $ | 701,852 | | $ | 690,553 | | $ | 688,481 | | $ | 688,481 |
| | | | | | | | | | | | | | | | | | | |
Common stock outstanding at end of period | | | | 51,294 | | | 44,006 | | | 43,983 | | | 43,968 | | | 43,947 | | | 43,947 |
Tangible book value (Non-GAAP) | | | $ | 16.15 | | $ | 16.23 | | $ | 15.96 | | $ | 15.71 | | $ | 15.67 | | $ | 15.67 |
Total Assets to Tangible Assets | | | | | | | | | | | | | | | | | | | |
Total assets | | | $ | 6,583,352 | | $ | 6,656,674 | | $ | 6,501,562 | | $ | 6,247,121 | | $ | 6,189,053 | | $ | 6,189,053 |
Less: Intangible assets | | | | (89,437) | | | (89,767) | | | (90,097) | | | (90,426) | | | (90,756) | | | (90,756) |
Tangible assets (Non-GAAP) | | | $ | 6,493,915 | | $ | 6,566,907 | | $ | 6,411,465 | | $ | 6,156,695 | | $ | 6,098,297 | | $ | 6,098,297 |
Non-GAAP TCE Ratio | | | | | | | | | | | | | | | | | | | |
Tangible common equity | | | $ | 828,570 | | $ | 714,249 | | $ | 701,852 | | $ | 690,553 | | $ | 688,481 | | $ | 688,481 |
Tangible assets | | | | 6,493,915 | | | 6,566,907 | | | 6,411,465 | | | 6,156,695 | | | 6,098,297 | | | 6,098,297 |
TCE ratio | | | | 12.76% | | | 10.88% | | | 10.95% | | | 11.22% | | | 11.29% | | | 11.29% |
Average Equity to Non-GAAP Average Tangible Common Equity | | | | | | | | | | | | | | | | | | | |
Average total stockholders' equity | | | $ | 983,015 | | $ | 973,838 | | $ | 959,777 | | $ | 952,151 | | $ | 943,823 | | $ | 943,823 |
Less: Average noncumulative perpetual preferred stock | | | | (111,174) | | | (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 | | | 10,130 |
Average total common stockholders' equity | | | $ | 881,971 | | $ | 807,968 | | $ | 793,907 | | $ | 786,281 | | $ | 777,953 | | $ | 777,953 |
Less: Average intangible assets | | | | (89,580) | | | (89,933) | | | (90,272) | | | (90,624) | | | (90,951) | | | (90,951) |
Average tangible common equity | | | $ | 792,391 | | $ | 718,035 | | $ | 703,635 | | $ | 695,657 | | $ | 687,002 | | $ | 687,002 |
| | | | | | | | | | | | | | | | | | | |
Adjusted Metrics for Hurricanes Irma and Maria - Reconciliation to GAAP Financial Measures | | | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | | | | | $ | 17,073 | | $ | 52,646 |
Plus: Additional loan loss provision from Hurricanes Irma and Maria | | | | | | | | | | | | | | | | 27,000 | | | 32,406 |
Less: Income tax effect | | | | | | | | | | | | | | | | (8,038) | | | (10,146) |
Adjusted net income | | | | | | | | | | | | | | | | 36,035 | | | 74,906 |
Less: dividends on preferred stock | | | | | | | | | | | | | | | | (3,465) | | | (13,862) |
Adjusted net income available to common shareholders | | | | | | | | | | | | | | | | 32,570 | | | 61,044 |
Plus: Effect of assumed conversion of the convertible preferred stock | | | | | | | | | | | | | | | | 1,838 | | | 7,350 |
| | | | | | | | | | | | | | | $ | 34,408 | | $ | 68,394 |
Average common shares outstanding and equivalents | | | | | | | | | | | | | | | | 51,104 | | | 51,096 |
Adjusted earnings per common share - diluted | | | | | | | | | | | | | | | $ | 0.67 | | $ | 1.34 |
| | | | | | | | | | | | | | | | | | | |
Adjusted net income | | | | | | | | | | | | | | | $ | 36,035 | | $ | 74,906 |
Adjusted average assets | | | | | | | | | | | | | | | | 6,193,619 | | | 6,263,647 |
Adjusted return on average assets | | | | | | | | | | | | | | | | 2.33% | | | 1.20% |
| | | | | | | | | | | | | | | | | | | |
Adjusted net income available to common shareholders | | | | | | | | | | | | | | | $ | 32,570 | | $ | 61,044 |
Adjusted average tangible common stockholders' equity | | | | | | | | | | | | | | | | 687,221 | | | 687,712 |
Adjusted return on average tangible common stockholders' equity | | | | | | | | | | | | | | | | 18.96% | | | 8.88% |
| | | | | | | | | | | | | | | | | | | |
12 | | | |
OFG Bancorp (NYSE: OFG) | | | | | | | | | | | | | | | | | |
Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued) | |
| |
| | | BASEL III | |
| | | Standardized | |
| | | 2018 | | 2018 | | 2018 | | 2018 | | 2017 | |
(Dollars in thousands) (unaudited) | | | Q4 | | Q3 | | Q2 | | Q1 | | Q4 | |
Regulatory Capital Metrics | | | | | | | | | | | | | | | | | |
Common equity Tier 1 capital | | | $ | 811,708 | | $ | 690,937 | | $ | 669,922 | | $ | 652,013 | | $ | 644,804 | |
Tier 1 capital | | | | 928,578 | | | 891,807 | | | 870,792 | | | 852,883 | | | 842,133 | |
Total risk-based capital | (15) | | | 990,500 | | | 953,543 | | | 931,606 | | | 910,828 | | | 899,258 | |
Risk-weighted assets | | | | 4,837,214 | | | 4,806,348 | | | 4,737,529 | | | 4,489,130 | | | 4,420,667 | |
Regulatory Capital Ratios | | | | | | | | | | | | | | | | | |
Common equity Tier 1 capital ratio | (16) | | | 16.78% | | | 14.38% | | | 14.14% | | | 14.52% | | | 14.59% | |
Tier 1 risk-based capital ratio | (17) | | | 19.20% | | | 18.55% | | | 18.38% | | | 19.00% | | | 19.05% | |
Total risk-based capital ratio | (18) | | | 20.48% | | | 19.84% | | | 19.67% | | | 20.29% | | | 20.34% | |
Leverage ratio | (19) | | | 14.22% | | | 13.93% | | | 13.92% | | | 14.07% | | | 13.92% | |
| | | | | | | | | | | | | | | | | |
Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach | | | | | | | | | | | | | | | | | |
Total stockholders' equity | | | $ | 999,877 | | $ | 969,886 | | $ | 957,819 | | $ | 946,849 | | $ | 945,107 | |
Less: Noncumulative perpetual preferred stock | | | | (92,000) | | | (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 | | | | 10,972 | | | 21,187 | | | 15,518 | | | 12,274 | | | 2,638 | |
Unrealized losses on cash flow hedges, net of income tax | | | | (9) | | | (392) | | | (256) | | | (89) | | | 311 | |
| | | | 928,970 | | | 824,811 | | | 807,211 | | | 793,164 | | | 782,186 | |
Less: Disallowed goodwill | | | | (86,069) | | | (86,069) | | | (86,069) | | | (86,069) | | | (86,069) | |
Disallowed other intangible assets, net | (20) | | | (2,105) | | | (2,256) | | | (2,457) | | | (2,657) | | | (2,287) | |
Disallowed deferred tax assets, net | (20) | | | (29,088) | | | (45,549) | | | (48,763) | | | (52,425) | | | (49,026) | |
Common equity Tier 1 capital | | | | 811,708 | | | 690,937 | | | 669,922 | | | 652,013 | | | 644,804 | |
Plus: Qualifying noncumulative perpetual preferred stock | | | | 92,000 | | | 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 | | | | - | | | - | | | - | | | - | | | (3,541) | |
Tier 1 capital | | | | 928,578 | | | 891,807 | | | 870,792 | | | 852,883 | | | 842,133 | |
Plus tier 2 capital: Qualifying allowance for loan and lease losses | | | | 61,922 | | | 61,736 | | | 60,814 | | | 57,945 | | | 57,125 | |
Total risk-based capital | | | $ | 990,500 | | $ | 953,543 | | $ | 931,606 | | $ | 910,828 | | $ | 899,258 | |
| | | | | | | | | | | | | | | | | |
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 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. |
(21) | Pre-provision net revenues is a non-GAAP measure calculated based on net interest income plus total non-interest income, net, less total non-interest expenses for the period. |
14 |
| | | | | | | | | | | | | |
