OFG BANCORP - FORM 8-K - EX-99 - EARNINGS RELEASE - July 22, 2016

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8-K - FORM 8-K - OFG BANCORPofg8K20160722.htm

 

 

Exhibit 99

 

OFG Bancorp Reports 2Q16 Results

SAN JUAN, Puerto Rico, July 22, 2016 – OFG Bancorp (NYSE: OFG) today reported results for the second quarter ended June 30, 2016.

2Q16 Highlights

•      Net income available to shareholders was in line with the preceding quarter and surpassed the year ago quarter. OFG generated $10.9 million, or $0.25 per share fully diluted, in 2Q16 compared to $10.7 million, or $0.24, in 1Q16. In the year ago quarter, OFG reported a net loss of $6.6 million, or ($0.15) per share, primarily due to non-recurring charges.

•      Oriental Bank’s overall performance continued strong. New loan generation at $237.8 million grew 5.1% from the preceding quarter, with increased activity in auto, mortgage, and consumer loans. Banking and wealth management fee revenues increased 6.8% from 1Q16.

•      Credit quality continued its positive trajectory. Net charge-offs (excluding acquired loans) declined to 1.21% from 1.30% in 1Q16. Early and total delinquency rates dropped from the previous and year-ago quarters. Non-performing loan rates fell to the lowest level in the last five quarters.

•      Costs remained under control. The efficiency ratio improved to 58.76%, the best level in last five quarters.

•      Total Puerto Rico government related exposure continued to decline. Balances fell approximately 1.0%, to $405.3 million from the end of 1Q16. In addition, Puerto Rico Electric Power Authority (PREPA) continued to make progress toward final implementation of its Restructuring Support Agreement by the end of 2016.

•      Net Interest Margin (NIM) remained relatively level, at 4.65% compared to 4.67% in 1Q16.

•      Capital continued to build. Tangible book value per common share increased to $14.96 from $14.68 in 1Q16. Tangible common equity (TCE) ratio increased to 9.92% from 9.50%.

 

 

 

CEO Comment

José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, commented:

“OFG delivered another good quarter, demonstrating strong consistency in our financial results. Diluted EPS of $0.25 was slightly better than 1Q16 as we continued to focus on building our franchise while continuously adapting to our environment.

“New loan generation remained robust, underscoring our growing retail franchise. NIM remained in line. Credit quality continued to be solid as a result of maintaining our prudent lending standards and proactive collection program. Our Puerto Rico government related loan exposure continued to decrease. Expenses are being well contained, with the efficiency ratio the best it has been in more than a year. As a result, tangible book value has increased.

“We are continuing to build franchise value by differentiating Oriental from others with technology that makes banking easier and more accessible, with superior levels of service. During 2Q16, we introduced the Oriental Biz mobile app, adding mobile check capture for small business customers. We were the first to introduce this feature for retail customers in Puerto Rico in 2013, and now we are the first to introduce this feature to small commercial clients on the island. During 2Q16, we also introduced Cardless Cash, another first for Puerto Rico, for making ATM withdrawals quickly without using an ATM/debit card. All of these are attracting a steady influx of new customers.

“Enactment of the Puerto Rico Oversight, Management and Economic Stability Act, or PROMESA, provides a clearer path to address Puerto Rico’s fiscal challenges and more importantly creates a congressional committee to focus on Puerto Rico’s economic development. As it is, the economy continues to fare reasonably well, despite some headlines to the contrary. We are also pleased the PREPA restructuring continues to move ahead for the benefit of its customers, Puerto Rico, and creditors alike.”

2Q16 Income Statement Highlights

The following compares data for the second quarter 2016 to the first quarter 2016 unless otherwise noted.

•      Interest Income from Loans declined $1.5 million to $79.7 million. This was due to lower balances, yields and cost recoveries from acquired loans as they continue to run off, partially offset by portfolio growth in originated loans.

•      Interest Income from Securities declined $1.9 million to $8.2 million. This was primarily due to the previously disclosed 1Q16 sale of mortgage backed securities, which was done in conjunction with the partial unwinding of a high-rate repurchase funding agreement.

•      Interest Expense declined $1.7 million to $14.6 million. This was due to lower balances and costs after the above mentioned 1Q16 transaction.

 

 

•      Total Provision for Loan and Lease Losses increased $0.7 million to $14.4 million. Provision for originated loans fell $1.6 million primarily due to lower net charge-offs and delinquency ratios. Provision for acquired loans increased $2.3 million primarily due to one former BBVA institutional commercial loan.

•      Net Interest Margin was 4.65% compared to 4.67%, reflecting the reasons mentioned above. Excluding cost recoveries, NIM was 4.59% compared to 4.55%.

•      Total Banking and Wealth Management Revenues increased $1.2 million to $18.3 million due to increases in all major operations, but primarily in wealth management. This was due to seasonal commercial insurance fees, higher volume in the sale of annuities, and higher commissions from broker dealer operations. Mortgage banking revenues increased 19.8% due to higher volumes of originated and sold loans.

•      FDIC Shared-Loss Expense, Net decreased $0.6 million to $3.4 million due to lower valuation changes in the covered mortgage portfolio.

•      Total Non-Interest Expenses declined $1.0 million to $53.8 million. Compensation decreased $1.8 million primarily due to reaching maximum Federal Insurance Contributions Act (FICA) contributions. General and administrative expenses declined $1.7 million due to lower professional and other service fees, reflecting continuing expense management. Net losses on the sale of foreclosed assets increased $2.2 million compared to 1Q16, which saw net gains on sales.

•      Effective Income Tax Rate was estimated at approximately 29% for the near-term, including this quarter.

June 30, 2016 Balance Sheet Highlights

The following compares data as of June 30, 2016 to March 31, 2016 unless otherwise noted.

•      Total Loans increased to $4.37 billion from $4.36 billion, as inflows of originated loans outpaced outflows in acquired loans.

•      Total Investments declined to $1.32 billion from $1.33 billion, mainly due to prepayments of mortgage-backed securities.

•      Puerto Rico Central Government and Public Corporation Loan Balances fell 1.9% to $194.4 million. Loans to Puerto Rico municipalities and Puerto Rico investment securities balances remained approximately level at $204.3 million and $6.7 million, respectively.

•      Total Deposits declined to $4.64 billion from $4.78 billion primarily due to a reduction of brokered deposit balances.

 

 

•      Total Borrowings declined to $1.04 billion from $1.07 billion primarily due to lower balances from FHLB advances and other borrowings.

•      Total Stockholders’ Equity increased $12.1 million to $915.9 million, reflecting an increase in retained earnings and in accumulated other comprehensive income, net.

Credit Quality Highlights

The following compares data for the second quarter 2016 to the first quarter 2016 unless otherwise noted.

•      Net Charge-Off (NCO) Rate at 1.21% fell 9 basis points, due to declines in the auto, commercial, and mortgage lending categories, partially offset by an increase in consumer lending charge-offs.

•      Early Delinquency Rate was at 1.86% and total delinquency 4.83%. Starting 2Q16 auto and consumer early delinquencies are being tracked to be consistent across all retail loan categories. Regardless of the change, early and total delinquency has been falling due to proactive measures to manage the effects of the economic environment.

•      Non-Performing Loan Rate at 9.08% declined 50 basis points with favorable experiences in commercial, auto and mortgage lending, partially offset by a small increase from consumer lending.

•      Allowance for Loan and Lease Losses fell $0.4 million to $112.8 million due to generally improved credit metrics. Loan loss reserve ratio to total loans (excluding acquired loans) decreased to 3.53% from 3.63%.

Capital Position

The following compares data for the second quarter 2016 to the first quarter 2016.

Regulatory capital ratios continued to be significantly above requirements for a well-capitalized institution.

•      Tangible Common Equity to Total Tangible Assets at 9.92% increased 42 basis points to the highest level in five quarters.

•      Common Equity Tier 1 Capital Ratio (using Basel III methodology) increased to 12.64% from 12.33%

•      Total Risk-Based Capital Ratio increased to 18.00% from 17.67%.

Conference Call

 

 

A conference call to discuss OFG’s results for the second quarter 2016, outlook and related matters will be held today, Friday, July 22, 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 second quarter ended June 30, 2016, can be found on the Webcasts, Presentations & Other Files page, on OFG’s Investor Relations website at www.ofgbancorp.com. 

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, management uses certain “non-GAAP financial measures” within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future.

Forward Looking Statements

The information included in this document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements.

Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) a credit default by the government of Puerto Rico; (iv) the fiscal and monetary policies of the federal government and its agencies; (v) changes in federal bank regulatory and supervisory policies, including required levels of capital; (vi) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate market in Puerto Rico; (vii) the performance of the stock and bond markets; (viii) competition in the financial services industry; and (ix) possible legislative, tax or regulatory changes.

For a discussion of such factors and certain risks and uncertainties to which OFG is subject, see OFG’s annual report on Form 10-K for the year ended December 31, 2015, as well as its other filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, OFG assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

About OFG Bancorp

Now in its 52nd year in business, OFG Bancorp is a diversified financial holding company that operates under U.S. and Puerto Rico banking laws and regulations.  Its three principal

 

 

subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a full range of commercial, consumer and mortgage banking services, as well as financial planning, trust, insurance, investment brokerage and investment banking services, primarily in Puerto Rico, through 48 financial centers. Investor information can be found at www.ofgbancorp.com.  

# # #

Contacts

Puerto Rico: Alexandra López (allopez@orientalbank.com) at (787) 522-6970

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 June 30, 2016 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission.

  
 

 

 

 

 

 

 

  

Table of Contents

  

 

 

 

 

Pages

  

 

 

 

 

 

 

  

 

OFG Bancorp (Consolidated Financial Information)

 

 

  

 

Table  1:

 

Financial and Statistical Summary - Consolidated

 

2

  

 

Table  2:

 

Consolidated Statements of Operations

 

3

  

 

Table  3:

 

Consolidated Statements of Financial Condition

 

4

  

 

Table  4:

 

Information on Loan Portfolio and Production

 

5

  

 

Table  5:

 

Average Balances, Net Interest Income and Net Interest Margin

 

6-7

  

 

Table  6:

 

Loan Information and Performance Statistics (Excluding Acquired Loans)

 

8-9

  

 

Table  7:

 

Allowance for Loan and Lease Losses

 

10

  

 

Table  8:

 

Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired

 

 

  

 

 

 

   with Deteriorated Credit Quality, Including those by Analogy)

 

11

  

 

Table  9:

 

Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory

 

 

  

 

 

 

   Capital Measures

 

12-13

  

 

Table  10:

 

Notes to Financial Summary, Selected Metrics, Loans, and Consolidated

 

 

  

 

 

 

  Financial Statements (Tables 1-9)

 

14

  

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Financial and Statistical Summary - Consolidated

 

 

 

2016

 

2016

 

2015

 

2015

 

2015

 

2016

 

2015

(Dollars in thousands, except per share data) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

YTD

 

YTD

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

73,312

 

$

74,975

 

$

75,622

 

$

89,823

 

$

82,292

 

$

148,287

 

$

171,927

Non-interest income, net (core)

(2)

 

 

18,284

 

 

17,125

 

 

19,349

 

 

18,703

 

 

19,359

 

 

35,409

 

 

38,582

Non-interest expense

 

 

 

53,825

 

 

54,857

 

 

58,542

 

 

69,090

 

 

64,437

 

 

108,682

 

 

120,769

Pre-provision net revenues

 

 

 

37,771

 

 

37,243

 

 

36,429

 

 

39,436

 

 

37,214

 

 

75,014

 

 

89,740

Provision for loan and lease losses

(3)(32)

 

 

14,445

 

 

13,789

 

 

52,190

 

 

51,579

 

 

15,539

 

 

28,234

 

 

57,732

FDIC shared-loss expense, net

(31)

 

 

3,420

 

 

4,029

 

 

4,400

 

 

2,079

 

 

23,245

 

 

7,449

 

 

36,329

Net income (loss) before income taxes

 

 

 

20,197

 

 

19,832

 

 

(20,840)

 

 

5,131

 

 

(2,340)

 

 

40,029

 

 

(4,349)

Income tax expense (benefit)

 

 

 

5,858

 

 

5,661

 

 

(19,864)

 

 

562

 

 

769

 

 

11,519

 

 

1,748

Net income (loss)

 

 

$

14,339

 

$

14,171

 

$

(976)

 

$

4,569

 

$

(3,109)

 

$

28,510

 

$

(6,097)

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share - basic

(4)

 

$

0.25

 

$

0.24

 

$

(0.10)

 

$

0.03

 

$

(0.15)

 

$

0.49

 

$

(0.29)

Earnings (loss) per common share - diluted

(5)

 

$

0.25

 

$

0.24

 

$

(0.10)

 

$

0.03

 

$

(0.15)

 

$

0.49

 

$

(0.29)

Average common shares outstanding

 

 

 

43,914

 

 

43,898

 

 

43,868

 

 

43,929

 

 

44,505

 

 

43,906

 

 

44,569

Average common shares outstanding and equivalents

 

 

 

51,095

 

 

51,064

 

 

51,069

 

 

51,146

 

 

51,774

 

 

51,081

 

 

51,876

Cash dividends per common share

(6)

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.10

 

$

0.10

 

$

0.12

 

$

0.20

Book value per common share (period end)

 

 

$

17.08

 

$

16.80

 

$

16.67

 

$

16.91

 

$

16.81

 

$

17.08

 

$

16.81

Tangible book value per common share (period end)

(7)

 

$

14.96

 

$

14.68

 

$

14.53

 

$

14.76

 

$

14.67

 

$

14.96

 

$

14.67

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(8)

 

$

4,503,777

 

$

4,484,410

 

$

4,552,234

 

$

4,654,135

 

$

4,748,145

 

$

4,463,613

 

$

4,806,489

Interest-earning assets

 

 

 

6,328,161

 

 

6,437,255

 

 

6,600,614

 

 

6,740,932

 

 

6,708,519

 

 

6,352,227

 

 

6,741,245

Total assets

 

 

 

6,778,209

 

 

6,990,212

 

 

7,160,328

 

 

7,326,901

 

 

7,329,899

 

 

6,884,210

 

 

7,353,189

Interest-bearing deposits

 

 

 

3,893,599

 

 

3,956,790

 

 

3,931,009

 

 

3,932,735

 

 

3,986,700

 

 

4,717,758

 

 

4,837,896

Borrowings

 

 

 

1,047,753

 

 

1,239,672

 

 

1,394,171

 

 

1,572,400

 

 

1,466,103

 

 

1,143,713

 

 

1,422,467

Stockholders' equity

 

 

 

908,350

 

 

899,858

 

 

905,646

 

 

912,598

 

 

929,867

 

 

904,103

 

 

939,043

Common stockholders' equity

 

 

 

742,480

 

 

733,988

 

 

739,776

 

 

746,728

 

 

763,997

 

 

738,233

 

 

773,173

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(9)

 

 

4.65%

 

 

4.67%

 

 

4.55%

 

 

5.29%

 

 

4.92%

 

 

4.68%

 

 

5.14%

Return on average assets

(10)

 

 

0.85%

 

 

0.81%

 

 

-0.05%

 

 

0.25%

 

 

-0.17%

 

 

0.83%

 

 

-0.17%

Return on average tangible common stockholders' equity

(11)

 

 

6.70%

 

 

6.69%

 

 

-2.75%

 

 

0.68%

 

 

-3.93%

 

 

6.69%

 

 

-3.84%

Efficiency ratio

(12)

 

 

58.76%

 

 

59.56%

 

 

61.64%

 

 

63.66%

 

 

63.39%

 

 

59.16%

 

 

57.37%

Full-time equivalent employees, period end

 

 

 

1,451

 

 

1,467

 

 

1,466

 

 

1,491

 

 

1,507

 

 

1,451

 

 

1,507

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

(3)

 

$

112,812

 

$

113,238

 

$

112,626

 

$

80,351

 

$

78,989

 

$

112,812

 

$

78,989

    Allowance as a % of loans held for investment

 

 

 

3.53%

 

 

3.63%

 

 

3.62%

 

 

2.65%

 

 

2.67%

 

 

3.53%

 

 

2.67%

    Net charge-offs

 

 

$

9,478

 

$

10,048

 

$

12,737

 

$

9,097

 

$

7,723

 

$

19,526

 

$

16,315

    Net charge-off rate

(13)

 

 

1.21%

 

 

1.30%

 

 

1.67%

 

 

1.23%

 

 

1.06%

 

 

1.25%

 

 

1.13%

    Early delinquency rate (30 - 89 days past due)

 

 

 

1.86%

 

 

3.51%

 

 

3.70%

 

 

3.77%

 

 

4.84%

 

 

1.86%

 

 

4.84%

    Total delinquency rate (30 days and over)

 

 

 

4.83%

 

 

6.72%

 

 

6.94%

 

 

7.06%

 

 

7.72%

 

 

4.83%

 

 

7.72%

Capital Ratios

(14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

11.92%

 

 

11.38%

 

 

11.18%

 

 

10.93%

 

 

11.05%

 

 

11.92%

 

 

11.05%

Common equity Tier 1 capital ratio

 

 

 

12.64%

 

 

12.33%

 

 

12.14%

 

 

12.03%

 

 

12.26%

 

 

12.64%

 

 

12.26%

Tier 1 risk-based capital ratio

 

 

 

16.71%

 

 

16.36%

 

 

15.99%

 

 

15.64%

 

 

15.85%

 

 

16.71%

 

 

15.85%

Total risk-based capital ratio

 

 

 

18.00%

 

 

17.67%

 

 

17.29%

 

 

16.93%

 

 

17.41%

 

 

18.00%

 

 

17.41%

Tangible common equity ("TCE") ratio

 

 

 

9.92%

 

 

9.50%

 

 

9.10%

 

 

9.11%

 

 

8.91%

 

 

9.92%

 

 

8.91%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2: Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six-Months Ended

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

June 30,

 

June 30,

(Dollars in thousands, except per share data) (unaudited)

 

 

2016

 

2016

 

2015

 

2015

 

2015

 

2016

 

2015

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)(17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

49,108

 

$

47,915

 

$

47,261

 

$

46,036

 

$

44,238

 

$

97,023

 

$

106,231

    Acquired BBVAPR loans

 

 

 

23,670

 

 

25,676

 

 

26,976

 

 

35,214

 

 

33,508

 

 

49,346

 

 

53,494

    Acquired Eurobank loans

 

 

 

6,897

 

 

7,561

 

 

8,134

 

 

16,014

 

 

12,758

 

 

14,458

 

 

28,262

          Total interest income from loans

 

 

 

79,675

 

 

81,152

 

 

82,371

 

 

97,264

 

 

90,504

 

 

160,827

 

 

187,987

Investment securities

 

 

 

8,233

 

 

10,154

 

 

10,536

 

 

9,983

 

 

8,909

 

 

18,387

 

 

18,427

          Total interest income

 

 

 

87,908

 

 

91,306

 

 

92,907

 

 

107,247

 

 

99,413

 

 

179,214

 

 

206,414

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

5,551

 

 

5,136

 

 

5,237

 

 

5,440

 

 

5,519

 

 

10,687

 

 

11,457

    Brokered deposits

 

 

 

1,816

 

 

1,988

 

 

1,438

 

 

1,211

 

 

1,085

 

 

3,804

 

 

2,251

          Total deposits

 

 

 

7,367

 

 

7,124

 

 

6,675

 

 

6,651

 

 

6,604

 

 

14,491

 

 

13,708

Borrowings

 

 

 

7,229

 

 

9,207

 

 

10,610

 

 

10,773

 

 

10,517

 

 

16,436

 

 

20,779

          Total interest expense

 

 

 

14,596

 

 

16,331

 

 

17,285

 

 

17,424

 

 

17,121

 

 

30,927

 

 

34,487

Net interest income

 

 

 

73,312

 

 

74,975

 

 

75,622

 

 

89,823

 

 

82,292

 

 

148,287

 

 

171,927

    Provision for loan and lease losses, excluding acquired loans

(1)(3)

 

 

9,052

 

 

10,660

 

 

45,012

 

 

10,459

 

 

9,953

 

 

19,712

 

 

43,864

    Provision for acquired BBVAPR loan and lease losses

(1)

 

 

4,362

 

 

2,324

 

 

7,332

 

 

7,630

 

 

5,691

 

 

6,686

 

 

9,163

    Provision (recapture) for acquired Eurobank loan and lease losses

(1)(32)

 

 

1,031

 

 

805

 

 

(154)

 

 

33,490

 

 

(105)

 

 

1,836

 

 

4,705

          Total provision for loan and lease losses, net

 

 

 

14,445

 

 

13,789

 

 

52,190

 

 

51,579

 

 

15,539

 

 

28,234

 

 

57,732

          Net interest income after provision for loan and lease losses

 

 

 

58,867

 

 

61,186

 

 

23,432

 

 

38,244

 

 

66,753

 

 

120,053

 

 

114,195

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

10,219

 

 

10,118

 

 

10,223

 

 

10,826

 

 

10,212

 

 

20,337

 

 

20,417

Wealth management revenues

 

 

 

7,041

 

 

6,152

 

 

7,715

 

 

6,885

 

 

7,285

 

 

13,193

 

 

14,440

Mortgage banking activities

 

 

 

1,024

 

 

855

 

 

1,411

 

 

992

 

 

1,862

 

 

1,879

 

 

3,725

          Total banking and wealth management revenues

 

 

 

18,284

 

 

17,125

 

 

19,349

 

 

18,703

 

 

19,359

 

 

35,409

 

 

38,582

FDIC shared-loss expense, net

(18)(31)

 

 

(3,420)

 

 

(4,029)

 

 

(4,400)

 

 

(2,079)

 

 

(23,245)

 

 

(7,449)

 

 

(36,329)

Other-than-temporary impairment losses on investment securities

 

 

 

-

 

 

-

 

 

(1,244)

 

 

(246)

 

 

-

 

 

-

 

 

-

Reimbursement from FDIC shared-loss coverage in sale of loans

(32)

 

 

-

 

 

-

 

 

-

 

 

20,000

 

 

-

 

 

-

 

 

-

Other gains (losses), net

(22)

 

 

291

 

 

407

 

 

565

 

 

(401)

 

 

(770)

 

 

698

 

 

(28)

          Total non-interest income (loss), net

 

 

 

15,155

 

 

13,503

 

 

14,270

 

 

35,977

 

 

(4,656)

 

 

28,658

 

 

2,225

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

18,531

 

 

20,284

 

 

18,716

 

 

20,098

 

 

19,260

 

 

38,815

 

 

39,440

Rent and occupancy costs

 

 

 

8,107

 

 

7,822

 

 

8,111

 

 

8,556

 

 

8,883

 

 

15,929

 

 

17,519

Net loss on sale of foreclosed real estate and other repossessed assets

(32)

 

 

4,163

 

 

1,930

 

 

4,197

 

 

14,172

 

 

8,339

 

 

6,093

 

 

12,177

General and administrative expenses

 

 

 

20,821

 

 

22,566

 

 

25,512

 

 

21,537

 

 

24,904

 

 

43,387

 

 

46,358

          Total operating expenses

 

 

 

51,622

 

 

52,602

 

 

56,536

 

 

64,363

 

 

61,386

 

 

104,224

 

 

115,494

Credit related expenses

 

 

 

2,203

 

 

2,255

 

 

2,006

 

 

3,810

 

 

3,051

 

 

4,458

 

 

5,275

Other non-recurring expenses

(15)

 

 

-

 

 

-

 

 

-

 

 

917

 

 

-

 

 

-

 

 

-

          Total non-interest expense

 

 

 

53,825

 

 

54,857

 

 

58,542

 

 

69,090

 

 

64,437

 

 

108,682

 

 

120,769

Income (loss) before income taxes

 

 

 

20,197

 

 

19,832

 

 

(20,840)

 

 

5,131

 

 

(2,340)

 

 

40,029

 

 

(4,349)

Income tax expense (benefit)

(33)

 

 

5,858

 

 

5,661

 

 

(19,864)

 

 

562

 

 

769

 

 

11,519

 

 

1,748

Net income (loss)

 

 

 

14,339

 

 

14,171

 

 

(976)

 

 

4,569

 

 

(3,109)

 

 

28,510

 

 

(6,097)

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

(1,837)

 

 

(1,838)

 

 

(1,837)

 

 

(1,838)

 

 

(1,837)

 

 

(3,675)

 

 

(3,675)

    Other preferred stock

 

 

 

(1,629)

 

 

(1,627)

 

 

(1,629)

 

 

(1,627)

 

 

(1,629)

 

 

(3,256)

 

 

(3,256)

Net income (loss) available to common shareholders

 

 

$

10,873

 

$

10,706

 

$

(4,442)

 

$

1,104

 

$

(6,575)

 

$

21,579

 

$

(13,028)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

Table 3: Consolidated Statements of Financial Condition

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands) (unaudited)

 

 

2016

 

2016

 

2015

 

2015

 

2015

Cash and cash equivalents

 

 

$

520,078

 

$

681,198

 

$

540,058

 

$

530,545

 

$

559,621

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

348

 

 

314

 

 

288

 

 

583

 

 

786

Investment securities available-for-sale, at fair value, with amortized cost of $645,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (March 31, 2016 - $653,673; December 31, 2015 - $955,646; September 30, 2015 - $982,754;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    June 30, 2015 - $1,023,573)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

(22)

 

 

651,724

 

 

656,137

 

 

953,213

 

 

985,554

 

 

1,020,493

    Other investment securities

(22)

 

 

12,578

 

 

13,148

 

 

21,396

 

 

22,151

 

 

23,826

          Total investment securities available-for-sale

 

 

 

664,302

 

 

669,285

 

 

974,609

 

 

1,007,705

 

 

1,044,319

Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $643,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (March 31, 2016 - $641,346; December 31, 2015 - $614,679; September 30, 2015 - $595,148;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    June 30, 2015 - $547,776)

 

 

 

635,399

 

 

637,036

 

 

620,189

 

 

594,639

 

 

550,553

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

19,838

 

 

20,761

 

 

20,783

 

 

20,804

 

 

20,826

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

3

 

 

3

          Total investments

 

 

 

1,319,890

 

 

1,327,399

 

 

1,615,872

 

 

1,623,734

 

 

1,616,487

Loans, net

(17)(32)

 

 

4,373,617

 

 

4,360,129

 

 

4,434,213

 

 

4,468,676

 

 

4,639,467

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FDIC shared-loss indemnification asset

(31)

 

 

18,426

 

 

20,923

 

 

22,599

 

 

22,895

 

 

22,704

Derivative assets

 

 

 

1,926

 

 

2,662

 

 

3,025

 

 

3,290

 

 

4,376

Prepaid expenses

 

 

 

16,332

 

 

10,363

 

 

11,762

 

 

14,151

 

 

16,492

Deferred tax asset, net

 

 

 

143,048

 

 

145,518

 

 

145,901

 

 

143,935

 

 

138,406

Foreclosed real estate and repossessed properties

(32)

 

 

55,086

 

 

61,145

 

 

64,088

 

 

73,063

 

 

95,994

Premises and equipment, net

 

 

 

72,585

 

 

73,975

 

 

74,590

 

 

75,346

 

 

76,486

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

Accounts receivable and other assets

(16)(32)

 

 

105,539

 

 

105,191

 

 

100,972

 

 

162,118

 

 

142,223

Total assets

 

 

$

6,712,596

 

$

6,874,572

 

$

7,099,149

 

$

7,203,822

 

$

7,398,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

$

1,972,743

 

 

2,018,346

 

 

1,862,572

 

 

1,906,658

 

 

1,938,772

Savings accounts

 

 

 

1,110,423

 

 

1,110,469

 

 

1,107,618

 

 

1,217,098

 

 

1,250,460

Time deposits

 

 

 

999,243

 

 

962,773

 

 

964,588

 

 

941,821

 

 

956,829

Brokered deposits

 

 

 

561,645

 

 

688,105

 

 

782,973

 

 

653,126

 

 

605,361

          Total deposits

 

 

 

4,644,054

 

 

4,779,693

 

 

4,717,751

 

 

4,718,703

 

 

4,751,422

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

(22)

 

 

626,109

 

 

636,172

 

 

934,691

 

 

1,000,664

 

 

1,161,136

Advances from FHLB and other borrowings

 

 

 

308,233

 

 

333,736

 

 

334,210

 

 

334,670

 

 

335,481

Subordinated capital notes

 

 

 

102,983

 

 

102,808

 

 

102,633

 

 

102,371

 

 

102,109

          Total borrowings

 

 

 

1,037,325

 

 

1,072,716

 

 

1,371,534

 

 

1,437,705

 

 

1,598,726

Other liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

 

5,413

 

 

6,220

 

 

6,162

 

 

8,622

 

 

8,739

Acceptances outstanding

 

 

 

20,984

 

 

19,381

 

 

14,582

 

 

19,083

 

 

16,040

Accrued expenses and other liabilities

 

 

 

88,930

 

 

92,761

 

 

92,043

 

 

111,821

 

 

111,799

          Total liabilities

 

 

 

5,796,706

 

 

5,970,771

 

 

6,202,072

 

 

6,295,934

 

 

6,486,726

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

Common stock

 

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

Additional paid-in capital

 

 

 

540,705

 

 

540,371

 

 

540,512

 

 

540,088

 

 

539,669

Legal surplus

 

 

 

73,265

 

 

71,865

 

 

70,435

 

 

70,423

 

 

69,934

Retained earnings 

 

 

 

162,363

 

 

155,529

 

 

148,886

 

 

155,974

 

 

159,737

Treasury stock, at cost

(19)

 

 

(104,874)

 

 

(104,874)

 

 

(105,379)

 

 

(105,379)

 

 

(100,668)

Accumulated other comprehensive income, net

 

 

 

15,805

 

 

12,284

 

 

13,997

 

 

18,156

 

 

14,301

          Total stockholders' equity

 

 

 

915,890

 

 

903,801

 

 

897,077

 

 

907,888

 

 

911,599

          Total liabilities and stockholders' equity

 

 

$

6,712,596

 

$

6,874,572

 

$

7,099,149

 

$

7,203,822

 

$

7,398,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4: Information on Loan Portfolio and Production

(17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands) (unaudited)

 

 

2016

 

2016

 

2015

 

2015

 

2015

Non-acquired loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

$

 743,267  

 

$

 751,819  

 

$

 757,828  

 

$

 762,636  

 

$

 757,187  

      Commercial

 

 

 

 1,476,613  

 

 

 1,425,385  

 

 

 1,441,649  

 

 

 1,389,353  

 

 

 1,363,851  

      Consumer

 

 

 

 265,269  

 

 

 252,327  

 

 

 242,950  

 

 

 227,756  

 

 

 212,629  

      Auto

 

 

 

 712,268  

 

 

 687,159  

 

 

 669,163  

 

 

 647,544  

 

 

 623,198  

 

 

 

 

 3,197,417  

 

 

 3,116,690  

 

 

 3,111,590  

 

 

 3,027,289  

 

 

 2,956,865  

      Less:  Allowance for loan and lease losses

 

 

 

 (112,812) 

 

 

 (113,238) 

 

 

 (112,626) 

 

 

 (80,351) 

 

 

 (78,989) 

 

 

 

 

 3,084,605  

 

 

 3,003,452  

 

 

 2,998,964  

 

 

 2,946,938  

 

 

 2,877,876  

      Deferred loan costs, net

 

 

 

 4,624  

 

 

 4,350  

 

 

 4,203  

 

 

 4,571  

 

 

 3,877  

          Total non-acquired loans held for investment, net

 

 

 

 3,089,229  

 

 

 3,007,802  

 

 

 3,003,167  

 

 

 2,951,509  

 

 

 2,881,753  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BBVAPR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial

 

 

 

 4,559  

 

 

 6,558  

 

 

 7,457  

 

 

 7,736  

 

 

 8,448  

      Consumer

 

 

 

 33,839  

 

 

 36,346  

 

 

 38,385  

 

 

 39,774  

 

 

 41,505  

      Auto

 

 

 

 77,118  

 

 

 91,406  

 

 

 106,911  

 

 

 124,120  

 

 

 142,570  

 

 

 

 

 115,516  

 

 

 134,310  

 

 

 152,753  

 

 

 171,630  

 

 

 192,523  

      Less:  Allowance for loan and lease losses

 

 

 

 (4,487) 

 

 

 (4,993) 

 

 

 (5,542) 

 

 

 (5,473) 

 

 

 (5,529) 

 

 

 

 

 111,029  

 

 

 129,317  

 

 

 147,211  

 

 

 166,157  

 

 

 186,994  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

 

 591,029  

 

 

 600,901  

 

 

 608,294  

 

 

 617,268  

 

 

 631,807  

      Commercial

 

 

 

 323,105  

 

 

 345,789  

 

 

 375,491  

 

 

 395,637  

 

 

 499,710  

      Consumer

 

 

 

 7,331  

 

 

 9,345  

 

 

 11,843  

 

 

 15,072  

 

 

 18,869  

      Auto

 

 

 

 117,038  

 

 

 134,669  

 

 

 153,592  

 

 

 173,979  

 

 

 195,891  

 

(34)

 

 

 1,038,503  

 

 

 1,090,704  

 

 

 1,149,220  

 

 

 1,201,956  

 

 

 1,346,277  

      Less:  Allowance for loan and lease losses

(34)

 

 

 (22,801) 

 

 

 (27,747) 

 

 

 (25,785) 

 

 

 (19,986) 

 

 

 (18,359) 

 

 

 

 

 1,015,702  

 

 

 1,062,957  

 

 

 1,123,435  

 

 

 1,181,970  

 

 

 1,327,918  

   Total Acquired BBVAPR loans, net

 

 

 

 1,126,731  

 

 

 1,192,274  

 

 

 1,270,646  

 

 

 1,348,127  

 

 

 1,514,912  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eurobank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

 

 89,558  

 

 

 91,113  

 

 

 92,273  

 

 

 92,757  

 

 

 102,499  

      Commercial

 

 

 

 70,596  

 

 

 142,298  

 

 

 142,377  

 

 

 144,704  

 

 

 187,692  

      Consumer

 

 

 

 1,410  

 

 

 1,770  

 

 

 2,314  

 

 

 2,708  

 

 

 3,295  

 

(34)

 

 

 161,564  

 

 

 235,181  

 

 

 236,964  

 

 

 240,169  

 

 

 293,486  

      Less:  Allowance for loan and lease losses

(34)

 

 

 (22,116) 

 

 

 (92,293) 

 

 

 (90,178) 

 

 

 (90,332) 

 

 

 (71,452) 

   Total Acquired Eurobank loans, net

 

 

 

 139,448  

 

 

 142,888  

 

 

 146,786  

 

 

 149,837  

 

 

 222,034  

          Total acquired loans, net

(32)

 

 

 1,266,179  

 

 

 1,335,162  

 

 

 1,417,432  

 

 

 1,497,964  

 

 

 1,736,946  

Total loans held for investment

 

 

 

 4,355,408  

 

 

 4,342,964  

 

 

 4,420,599  

 

 

 4,449,473  

 

 

 4,618,699  

Mortgage loans held for sale

 

 

 

 18,209  

 

 

 17,165  

 

 

 13,614  

 

 

 19,203  

 

 

 20,768  

Total loans, net

 

 

$

 4,373,617  

 

$

 4,360,129  

 

$

 4,434,213  

 

$

 4,468,676  

 

$

 4,639,467  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

2016

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Quarterly loan production

(20)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage

 

 

$

 57,636  

 

$

 48,321  

 

$

 55,450  

 

$

 65,248  

 

$

 64,826  

    Commercial

 

 

 

 66,258  

 

 

 79,272  

 

 

 75,775  

 

 

 83,243  

 

 

 120,500  

    Consumer

 

 

 

 39,550  

 

 

 34,275  

 

 

 37,919  

 

 

 36,756  

 

 

 39,837  

    Auto and Leasing

 

 

 

 74,383  

 

 

 64,285  

 

 

 67,633  

 

 

 65,743  

 

 

 61,545  

        Total

 

 

$

 237,827  

 

$

 226,153  

 

$

 236,777  

 

$

 250,990  

 

$

 286,708  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 5: Average Balances, Net Interest Income and Net Interest Margin

 

 

 

 

 

2016 Q2

 

2016 Q1

 

2015 Q4

 

2015 Q3

 

2015 Q2

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

(Dollars in thousands) (unaudited)

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash equivalents and securities purchased under agreements to resell

 

 

$

512,916

 

$

612

 

0.48

%

 

$

502,718

 

$

646

 

0.52

%

 

$

438,981

 

$

327

 

0.30

%

 

$

482,959

 

$

308

 

0.25

%

 

$

483,507

 

$

322

 

0.27

%

 

    Investment securities

 

 

 

1,311,468

 

 

7,621

 

2.33

%

 

 

1,450,127

 

 

9,508

 

2.63

%

 

 

1,609,399

 

 

10,209

 

2.52

%

 

 

1,603,838

 

 

9,674

 

2.39

%

 

 

1,476,867

 

 

8,587

 

2.33

%

 

    Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Non-acquired loans

 

 

 

3,129,570

 

 

49,108

 

6.29

%

 

 

3,100,157

 

 

47,915

 

6.20

%

 

 

3,043,109

 

 

47,261

 

6.16

%

 

 

2,959,961

 

 

46,036

 

6.17

%

 

 

2,927,347

 

 

44,239

 

6.06

%

 

          Acquired BBVAPR loans

 

 

 

1,230,206

 

 

23,670

 

7.72

%

 

 

1,240,252

 

 

25,676

 

8.30

%

 

 

1,361,173

 

 

26,976

 

7.86

%

 

 

1,499,399

 

 

35,215

 

9.32

%

 

 

1,585,422

 

 

33,507

 

8.48

%

 

          Acquired Eurobank loans

 

 

 

144,001

 

 

6,897

 

19.21

%

 

 

144,001

 

 

7,561

 

21.06

%

 

 

147,952

 

 

8,134

 

21.81

%

 

 

194,775

 

 

16,014

 

32.62

%

 

 

235,376

 

 

12,758

 

21.74

%

 

            Total loans

 

 

 

4,503,777

 

 

79,675

 

7.10

%

 

 

4,484,410

 

 

81,152

 

7.26

%

 

 

4,552,234

 

 

82,371

 

7.18

%

 

 

4,654,135

 

 

97,265

 

8.29

%

 

 

4,748,145

 

 

90,504

 

7.65

%

 

Total interest-earning assets

 

 

$

6,328,161

 

$

87,908

 

5.57

%

 

$

6,437,255

 

$

91,306

 

5.69

%

 

$

6,600,614

 

$

92,907

 

5.58

%

 

$

6,740,932

 

$

107,247

 

6.31

%

 

$

6,708,519

 

$

99,413

 

5.94

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        NOW accounts

 

 

$

1,195,895

 

$

1,518

 

0.51

%

 

$

1,152,055

 

$

1,081

 

0.38

%

 

$

1,138,928

 

$

1,063

 

0.37

%

 

$

1,110,804

 

$

1,034

 

0.37

%

 

$

1,144,931

 

$

1,073

 

0.38

%

 

        Savings accounts

 

 

 

1,103,808

 

 

1,308

 

0.48

%

 

 

1,115,552

 

 

1,398

 

0.50

%

 

 

1,180,220

 

 

1,516

 

0.51

%

 

 

1,234,772

 

 

1,592

 

0.51

%

 

 

1,300,001

 

 

1,662

 

0.51

%

 

        Time deposits

 

 

 

981,759

 

 

2,558

 

1.05

%

 

 

954,857

 

 

2,495

 

1.05

%

 

 

938,291

 

 

2,456

 

1.04

%

 

 

939,076

 

 

2,613

 

1.10

%

 

 

969,818

 

 

2,624

 

1.09

%

 

        Brokered deposits

 

 

 

612,137

 

 

1,816

 

1.19

%

 

 

734,326

 

 

1,988

 

1.09

%

 

 

673,570

 

 

1,438

 

0.85

%

 

 

648,083

 

 

1,211

 

0.74

%

 

 

571,950

 

 

1,085

 

0.76

%

 

 

 

 

 

3,893,599

 

 

7,200

 

0.74

%

 

 

3,956,790

 

 

6,962

 

0.71

%

 

 

3,931,009

 

 

6,473

 

0.65

%

 

 

3,932,735

 

 

6,450

 

0.65

%

 

 

3,986,700

 

 

6,444

 

0.65

%

 

        Non-interest bearing deposit accounts

 

 

 

810,177

 

 

-

 

-

 

 

 

774,950

 

 

-

 

-

 

 

 

781,064

 

 

-

 

-

 

 

 

772,064

 

 

-

 

-

 

 

 

773,479

 

 

-

 

-

%

 

        Fair value premium amortization and core deposit intangible amortization

 

 

 

-

 

 

167

 

-

 

 

 

-

 

 

162

 

-

 

 

 

-

 

 

202

 

-

 

 

 

-

 

 

201

 

-

 

 

 

-

 

 

160

 

-

 

 

            Total deposits

 

 

 

4,703,776

 

 

7,367

 

0.63

%

 

 

4,731,740

 

 

7,124

 

0.60

%

 

 

4,712,073

 

 

6,675

 

0.56

%

 

 

4,704,799

 

 

6,651

 

0.56

%

 

 

4,760,179

 

 

6,604

 

0.56

%

 

    Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Securities sold under agreements to repurchase

 

 

 

627,693

 

 

4,258

 

2.72

%

 

 

799,613

 

 

6,099

 

3.06

%

 

 

957,680

 

 

7,404

 

3.07

%

 

 

1,132,373

 

 

7,605

 

2.66

%

 

 

1,020,077

 

 

7,394

 

2.91

%

 

        Advances from FHLB and other borrowings

 

 

 

317,191

 

 

2,098

 

2.65

%

 

 

337,364

 

 

2,240

 

2.66

%

 

 

334,029

 

 

2,306

 

2.74

%

 

 

337,829

 

 

2,283

 

2.68

%

 

 

344,088

 

 

2,248

 

2.62

%

 

        Subordinated capital notes

 

 

 

102,869

 

 

873

 

3.40

%

 

 

102,695

 

 

868

 

3.39

%

 

 

102,462

 

 

900

 

3.48

%

 

 

102,198

 

 

885

 

3.44

%

 

 

101,938

 

 

875

 

3.44

%

 

            Total borrowings

 

 

 

1,047,753

 

 

7,229

 

2.77

%

 

 

1,239,672

 

 

9,207

 

2.98

%

 

 

1,394,171

 

 

10,610

 

3.02

%

 

 

1,572,400

 

 

10,773

 

2.72

%

 

 

1,466,103

 

 

10,517

 

2.88

%

 

Total interest-bearing liabilities

 

 

$

5,751,529

 

$

14,596

 

1.02

%

 

$

5,971,412

 

$

16,331

 

1.10

%

 

$

6,106,244

 

$

17,285

 

1.12

%

 

$

6,277,199

 

$

17,424

 

1.10

%

 

$

6,226,282

 

$

17,121

 

1.10

%

 

Interest rate spread

 

 

 

 

 

$

73,312

 

4.55

%

 

 

 

 

$

74,975

 

4.59

%

 

 

 

 

$

75,622

 

4.46

%

 

 

 

 

$

89,823

 

5.21

%

 

 

 

 

$

82,292

 

4.84

%

 

Net interest margin

 

 

 

 

 

 

 

 

4.65

%

 

 

 

 

 

 

 

4.67

%

 

 

 

 

 

 

 

4.55

%

 

 

 

 

 

 

 

5.29

%

 

 

 

 

 

 

 

4.92

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 310-30 loan cost recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Acquired BBVAPR loans

 

 

 

 

 

$

293

 

 

 

 

 

 

 

$

683

 

 

 

 

 

 

 

$

354

 

 

 

 

 

 

 

$

6,106

 

 

 

 

 

 

 

$

941

 

 

 

 

          Acquired Eurobank loans

 

 

 

 

 

 

539

 

 

 

 

 

 

 

 

1,326

 

 

 

 

 

 

 

 

2,397

 

 

 

 

 

 

 

 

6,991

 

 

 

 

 

 

 

 

2,635

 

 

 

 

 

 

 

 

 

 

$

832

 

 

 

 

 

 

 

$

2,009

 

 

 

 

 

 

 

$

2,751

 

 

 

 

 

 

 

$

13,097

 

 

 

 

 

 

 

$

3,576

 

 

 

 

Adjusted excluding cost recoveries (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets

 

 

$

6,328,161

 

$

87,076

 

5.52

%

 

$

6,437,255

 

$

89,297

 

5.56

%

 

$

6,600,614

 

$

90,156

 

5.42

%

 

$

6,740,932

 

$

94,150

 

5.54

%

 

$

6,708,519

 

$

95,837

 

5.73

%

 

Interest rate spread

 

 

 

 

 

$

72,480

 

4.50

%

 

 

 

 

$

72,966

 

4.46

%

 

 

 

 

$

72,871

 

4.30

%

 

 

 

 

$

76,726

 

4.44

%

 

 

 

 

$

78,716

 

4.63

%

 

Net interest margin

 

 

 

 

 

 

 

 

4.59

%

 

 

 

 

 

 

 

4.55

%

 

 

 

 

 

 

 

4.38

%

 

 

 

 

 

 

 

4.52

%

 

 

 

 

 

 

 

4.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 5: Average Balances, Net Interest Income and Net Interest Margin (Continued)

 

 

 

 

2016 YTD

 

2015 YTD

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

(Dollars in thousands) (unaudited)

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash equivalents and securities purchased under agreements to resell

 

 

$

507,817

 

$

1,258

 

0.50

%

 

$

523,649

 

$

645

 

0.25

%

 

    Investment securities

 

 

 

1,380,797

 

 

17,129

 

2.49

%

 

 

1,411,107

 

 

17,782

 

2.54

%

 

    Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Non-acquired loans

 

 

 

3,114,864

 

 

97,023

 

6.25

%

 

 

2,880,264

 

 

90,522

 

6.34

%

 

          Acquired BBVAPR loans

 

 

 

1,206,171

 

 

49,346

 

8.20

%

 

 

1,671,173

 

 

69,202

 

8.35

%

 

          Acquired Eurobank loans

 

 

 

142,578

 

 

14,458

 

20.34

%

 

 

255,052

 

 

28,262

 

22.35

%

 

            Total loans

 

 

 

4,463,613

 

 

160,827

 

7.23

%

 

 

4,806,489

 

 

187,986

 

7.89

%

 

Total interest-earning assets

 

 

$

6,352,227

 

$

179,214

 

5.66

%

 

$

6,741,245

 

$

206,413

 

6.17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        NOW accounts

 

 

$

1,173,975

 

$

2,600

 

0.44

%

 

$

1,202,621

 

$

2,354

 

0.39

%

 

        Savings accounts

 

 

 

1,109,680

 

 

2,706

 

0.49

%

 

 

1,307,141

 

 

3,396

 

0.52

%

 

        Time deposits

 

 

 

968,308

 

 

5,053

 

1.05

%

 

 

979,477

 

 

5,601

 

1.15

%

 

        Brokered deposits

 

 

 

673,231

 

 

3,804

 

1.13

%

 

 

586,986

 

 

2,251

 

0.77

%

 

 

 

 

 

3,925,194

 

 

14,163

 

0.72

%

 

 

4,076,225

 

 

13,602

 

0.67

%

 

        Non-interest bearing deposit accounts

 

 

 

792,564

 

 

-

 

-

 

 

 

761,671

 

 

-

 

-

%

 

        Fair value premium amortization and core deposit intangible amortization

 

 

 

-

 

 

328

 

-

 

 

 

-

 

 

106

 

-

 

 

            Total deposits

 

 

 

4,717,758

 

 

14,491

 

0.62

%

 

 

4,837,896

 

 

13,708

 

0.57

%

 

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Securities sold under agreements to repurchase

 

 

 

713,653

 

 

10,357

 

2.91

%

 

 

979,950

 

 

14,559

 

3.00

%

 

        Advances from FHLB and other borrowings

 

 

 

327,278

 

 

4,337

 

2.66

%

 

 

340,709

 

 

4,484

 

2.65

%

 

        Subordinated capital notes

 

 

 

102,782

 

 

1,742

 

3.40

%

 

 

101,808

 

 

1,735

 

3.44

%

 

            Total borrowings

 

 

 

1,143,713

 

 

16,436

 

2.88

%

 

 

1,422,467

 

 

20,778

 

2.95

%

 

Total interest-bearing liabilities

 

 

$

5,861,471

 

$

30,927

 

1.06

%

 

$

6,260,363

 

$

34,486

 

1.11

%

 

Interest rate spread

 

 

 

 

 

$

148,287

 

4.60

%

 

 

 

 

$

171,927

 

5.06

%

 

Net interest margin

 

 

 

 

 

 

 

 

4.68

%

 

 

 

 

 

 

 

5.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 310-30 loan cost recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Acquired BBVAPR loans

 

 

 

 

 

$

976

 

 

 

 

 

 

 

 

2,304

 

 

 

 

       Acquired Eurobank loans

 

 

 

 

 

 

1,865

 

 

 

 

 

 

 

 

4,677

 

 

 

 

 

 

 

 

 

 

$

2,841

 

 

 

 

 

 

 

$

6,981

 

 

 

 

Adjusted excluding cost recoveries (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets

 

 

$

6,352,227

 

$

176,373

 

5.57

%

 

$

6,741,245

 

$

199,432

 

5.97

%

 

Interest rate spread

 

 

 

 

 

$

145,446

 

4.51

%

 

 

 

 

$

164,946

 

4.86

%

 

Net interest margin

 

 

 

 

 

 

 

 

4.59

%

 

 

 

 

 

 

 

4.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (1)

 

 

 

 

 

 

2016

 

2016

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Net Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

$

1,374

 

$

1,662

 

$

1,568

 

$

1,058

 

$

1,356

  Recoveries

 

 

 

(36)

 

 

(145)

 

 

(53)

 

 

(270)

 

 

(67)

      Total mortgage

 

 

 

1,338

 

 

1,517

 

 

1,515

 

 

788

 

 

1,289

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

833

 

 

1,011

 

 

3,229

 

 

828

 

 

497

  Recoveries

 

 

 

(228)

 

 

(88)

 

 

(60)

 

 

(63)

 

 

(219)

      Total commercial

 

 

 

605

 

 

923

 

 

3,169

 

 

765

 

 

278

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

2,811

 

 

2,327

 

 

2,227

 

 

2,471

 

 

2,309

  Recoveries

 

 

 

(133)

 

 

(102)

 

 

(142)

 

 

(186)

 

 

(390)

      Total consumer

 

 

 

2,678

 

 

2,225

 

 

2,085

 

 

2,285

 

 

1,919

Auto and Leasing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

8,100

 

 

8,362

 

 

9,068

 

 

8,510

 

 

7,662

  Recoveries

 

 

 

(3,243)

 

 

(2,979)

 

 

(3,100)

 

 

(3,251)

 

 

(3,425)

      Total auto and leasing

 

 

 

4,857

 

 

5,383

 

 

5,968

 

 

5,259

 

 

4,237

          Total

 

 

$

9,478

 

$

10,048

 

$

12,737

 

$

9,097

 

$

7,723

Net Charge-off Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

0.72%

 

 

0.80%

 

 

0.80%

 

 

0.42%

 

 

0.66%

Commercial

 

 

 

0.17%

 

 

0.26%

 

 

0.91%

 

 

0.23%

 

 

0.08%

Consumer

 

 

 

4.35%

 

 

3.80%

 

 

3.68%

 

 

4.33%

 

 

3.99%

Auto and Leasing

 

 

 

2.75%

 

 

3.15%

 

 

3.59%

 

 

3.28%

 

 

2.74%

          Total

 

 

 

1.21%

 

 

1.30%

 

 

1.67%

 

 

1.23%

 

 

1.06%

Average Loans Held For Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

743,516

 

$

756,291

 

$

756,530

 

$

758,689

 

$

782,753

Commercial

 

 

 

1,433,944

 

 

1,425,332

 

 

1,394,597

 

 

1,349,511

 

 

1,333,276

Consumer

 

 

 

246,003

 

 

234,499

 

 

226,783

 

 

210,933

 

 

192,572

Auto and Leasing

 

 

 

706,107

 

 

684,035

 

 

665,199

 

 

640,828

 

 

618,746

        Total

 

 

$

3,129,570

 

$

3,100,157

 

$

3,043,109

 

$

2,959,961

 

$

2,927,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (Continued) (1)

 

 

 

2016

 

2016

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Early Delinquency (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

33,101

 

$

31,627

 

$

36,092

 

$

37,377

*

$

68,515

Commercial

 

 

 

4,923

 

 

2,353

 

 

4,461

 

 

1,678

 

 

5,532

Consumer

 

 

 

1,933

*

 

4,341

 

 

4,128

 

 

3,585

 

 

3,089

Auto and Leasing

 

 

 

19,438

*

 

71,004

 

 

70,464

 

 

71,627

 

 

66,044

        Total

 

 

$

59,395

 

$

109,325

 

$

115,145

 

$

114,267

 

$

143,180

Early Delinquency Rates (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

4.45%

 

 

4.21%

 

 

4.76%

 

 

4.90%

 

 

9.05%

Commercial

 

 

 

0.33%

 

 

0.17%

 

 

0.31%

 

 

0.12%

 

 

0.41%

Consumer

 

 

 

0.73%

*

 

1.72%

 

 

1.70%

 

 

1.57%

 

 

1.45%

Auto and Leasing

 

 

 

2.73%

*

 

10.33%

 

 

10.53%

 

 

11.06%

 

 

10.60%

        Total

 

 

 

1.86%

 

 

3.51%

 

 

3.70%

 

 

3.77%

 

 

4.84%

Total Delinquency (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

$

95,911

 

$

97,424

 

$

102,988

 

$

104,355

 

$

127,609

    GNMA's buy-back option program

(30)

 

 

8,369

 

 

7,684

 

 

7,945

 

 

6,993

 

 

6,961

        Total mortgage

 

 

 

104,280

 

 

105,108

 

 

110,933

 

 

111,348

 

 

134,570

Commercial

 

 

 

20,005

 

 

19,686

 

 

21,138

 

 

17,014

 

 

16,062

Consumer

 

 

 

3,358

 

 

5,934

 

 

5,171

 

 

4,832

 

 

4,244

Auto and Leasing

 

 

 

26,760

 

 

78,746

 

 

78,757

 

 

80,613

 

 

73,464

        Total

 

 

$

154,403

 

$

209,474

 

$

215,999

 

$

213,807

 

$

228,340

Total Delinquency Rates (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

 

12.90%

 

 

12.96%

 

 

13.59%

 

 

13.68%

 

 

16.85%

    GNMA's buy-back option program

(30)

 

 

1.13%

 

 

1.02%

 

 

1.05%

 

 

0.92%

 

 

0.92%

        Total mortgage

 

 

 

14.03%

 

 

13.98%

 

 

14.64%

 

 

14.60%

 

 

17.77%

Commercial

 

 

 

1.35%

 

 

1.38%

 

 

1.47%

 

 

1.22%

 

 

1.18%

Consumer

 

 

 

1.27%

*

 

2.35%

 

 

2.13%

 

 

2.12%

 

 

2.00%

Auto and Leasing

 

 

 

3.76%

*

 

11.46%

 

 

11.77%

 

 

12.45%

 

 

11.79%

        Total

 

 

 

4.83%

 

 

6.72%

 

 

6.94%

 

 

7.06%

 

 

7.72%

Nonperforming Assets

(21)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

72,947

 

$

76,218

 

$

77,875

 

$

78,148

 

$

74,528

Commercial

 

 

 

207,768

 

 

212,345

 

 

215,281

 

 

222,072

 

 

224,014

Consumer

 

 

 

2,339

 

 

2,039

 

 

1,631

 

 

2,004

 

 

1,512

Auto and Leasing

 

 

 

7,337

 

 

7,873

 

 

8,418

 

 

10,076

 

 

8,587

        Total nonperforming loans

 

 

 

290,391

 

 

298,475

 

 

303,205

 

 

312,300

 

 

308,641

Foreclosed real estate

 

 

 

10,463

 

 

10,502

 

 

9,772

 

 

10,517

 

 

9,956

Other repossessed assets

 

 

 

2,979

 

 

2,796

 

 

3,845

 

 

5,134

 

 

8,624

        Total nonperforming assets

 

 

$

303,833

 

$

311,773

 

$

316,822

 

$

327,951

 

$

327,221

Nonperforming Loan Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

9.81%

 

 

10.14%

 

 

10.28%

 

 

10.25%

 

 

9.84%

Commercial

 

 

 

14.07%

 

 

14.90%

 

 

14.93%

 

 

15.98%

 

 

16.43%

Consumer

 

 

 

0.88%

 

 

0.81%

 

 

0.67%

 

 

0.88%

 

 

0.71%

Auto and Leasing

 

 

 

1.03%

 

 

1.15%

 

 

1.26%

 

 

1.56%

 

 

1.38%

        Total loans

 

 

 

9.08%

 

 

9.58%

 

 

9.74%

 

 

10.32%

 

 

10.44%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* During Q3 2015, the Company changed its early delinquency reporting on mortgage loans from one scheduled payment due to two scheduled payments due in order to comply with regulatory reporting instructions and be comparable with local peers. Troubled debt restructured loans remain using one scheduled payment due.  During Q2 2016, the Company changed its early delinquency reporting on consumer and auto loans from one scheduled payment due to two scheduled payments due. This change resulted in a $1.9 million and $50.3 million reduction in early and total delinquency for consumer loans and auto loans, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7: Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30, 2016

 

 

 

 

 

 

 

 

 

Auto and

 

 

 

 

(Dollars in thousands) (unaudited)

 

 

Mortgage

 

Commercial

 

Consumer

 

Leasing

 

Unallocated

 

Total

Non-acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

18,784

 

$

64,206

 

$

11,414

 

$

18,716

 

$

118

 

$

113,238

Provision (recapture) for loan and lease losses

 

 

 

1,091

 

 

(457)

 

 

3,035

 

 

5,400

 

 

(17)

 

 

9,052

Charge-offs

 

 

 

(1,374)

 

 

(833)

 

 

(2,811)

 

 

(8,100)

 

 

-

 

 

(13,118)

Recoveries

 

 

 

36

 

 

228

 

 

133

 

 

3,243

 

 

-

 

 

3,640

    Balance at end of period

 

 

$

18,537

 

$

63,144

 

$

11,771

 

$

19,259

 

$

101

 

$

112,812

Allowance coverage ratio

 

 

 

2.49%

 

 

4.28%

 

 

4.44%

 

 

2.70%

 

 

0.00%

 

 

3.53%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired BBVAPR loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

 

 

 

$

23

 

$

3,243

 

$

1,727

 

$

-

 

$

4,993

Provision (recapture) for loan and lease losses

 

 

 

 

 

 

2

 

 

684

 

 

(138)

 

 

-

 

 

548

Charge-offs

 

 

 

 

 

 

(12)

 

 

(1,013)

 

 

(571)

 

 

-

 

 

(1,596)

Recoveries

 

 

 

 

 

 

8

 

 

88

 

 

446

 

 

-

 

 

542

    Balance at end of period

 

 

 

 

 

$

21

 

$

3,002

 

$

1,464

 

$

-

 

$

4,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

1,762

 

$

20,430

 

$

-

 

$

5,555

 

$

-

 

$

27,747

(Recapture) provision for loan and lease losses, net

 

 

 

(163)

 

 

3,977

 

 

-

 

 

-

 

 

-

 

 

3,814

Loans pools fully charged-off

 

 

 

(14)

 

 

-

 

 

-

 

 

(202)

 

 

-

 

 

(216)

Allowance de-recognition from new policy

(34)

 

 

-

 

 

(8,544)

 

 

-

 

 

-

 

 

-

 

 

(8,544)

    Balance at end of period

 

 

$

1,585

 

$

15,863

 

$

-

 

$

5,353

 

$

-

 

$

22,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired Eurobank loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

23,961

 

 

68,089

 

 

243

 

 

-

 

 

-

 

$

92,293

Provision (recapture) for loan and lease losses, net

 

 

 

237

 

 

801

 

 

(7)

 

 

-

 

 

-

 

 

1,031

FDIC shared-loss portion of provision for covered loan and lease losses, net

 

 

 

951

 

 

-

 

 

-

 

 

-

 

 

-

 

 

951

Allowance de-recognition from new policy

(34)

 

 

(14,133)

 

 

(57,794)

 

 

(232)

 

 

-

 

 

-

 

 

(72,159)

    Balance at end of period

 

 

$

11,016

 

$

11,096

 

$

4

 

$

-

 

$

-

 

$

22,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

25,723

 

 

88,542

 

 

3,486

 

 

7,282

 

 

-

 

 

125,033

Provision (recapture) for loan and lease losses

 

 

 

74

 

 

4,780

 

 

677

 

 

(138)

 

 

-

 

 

5,393

Charge-offs

 

 

 

-

 

 

(12)

 

 

(1,013)

 

 

(571)

 

 

-

 

 

(1,596)

Recoveries

 

 

 

-

 

 

8

 

 

88

 

 

446

 

 

-

 

 

542

FDIC shared-loss portion of provision for covered loan and lease losses, net

 

 

 

951

 

 

-

 

 

-

 

 

-

 

 

-

 

 

951

Loans pools fully charged-off

 

 

 

(14)

 

 

-

 

 

-

 

 

(202)

 

 

-

 

 

(216)

Allowance de-recognition from new policy

(34)

 

 

(14,133)

 

 

(66,338)

 

 

(232)

 

 

-

 

 

-

 

 

(80,703)

    Balance at end of period

 

 

$

12,601

 

$

26,980

 

$

3,006

 

$

6,817

 

$

-

 

$

49,404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 June 30, 2016

(Dollars in thousands) (unaudited)

 

 

Mortgage

 

Commercial

 

Construction

 

Auto

 

Consumer

 

Total

Accretable Yield and Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired BBVAPR loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretable Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

260,557

 

$

40,102

 

$

17,156

 

$

17,587

 

$

5,261

 

$

340,663

Change in expected cash flows

 

 

 

-

 

$

3,062

 

$

(408)

 

$

630

 

$

(1)

 

$

3,283

Accretion

 

 

 

(8,294)

 

 

(5,272)

 

 

(1,307)

 

 

(3,616)

 

 

(870)

 

 

(19,359)

Transfers from (to) non-accretable discount

 

 

 

31,560

 

 

(833)

 

 

(193)

 

 

(498)

 

 

495

 

 

30,531

    Balance at end of period

 

 

$

283,823

 

$

37,059

 

$

15,248

 

$

14,103

 

$

4,885

 

$

355,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

370,155

 

$

10,716

 

$

7,432

 

$

21,938

 

$

18,735

 

$

428,976

Change in actual and expected cash flows

 

 

 

(2,442)

 

 

(967)

 

 

(206)

 

 

(315)

 

 

(15)

 

 

(3,945)

Transfers (to) from accretable yield

 

 

 

(31,560)

 

 

833

 

 

193

 

 

498

 

 

(495)

 

 

(30,531)

    Balance at end of period

 

 

$

336,153

 

$

10,582

 

$

7,419

 

$

22,121

 

$

18,225

 

$

394,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

50,787

 

$

33,202

 

$

2,237

 

$

-

 

$

-

 

$

86,226

Change in expected cash flows

 

 

 

(198)

 

 

1,619

 

 

-

 

 

(77)

 

 

81

 

 

1,425

Accretion

 

 

 

(2,263)

 

 

(4,527)

 

 

(33)

 

 

2

 

 

(76)

 

 

(6,897)

Transfers from (to) non-accretable discount

 

 

 

10

 

 

(1,152)

 

 

-

 

 

75

 

 

(5)

 

 

(1,072)

    Balance at end of period

 

 

$

48,336

 

$

29,142

 

$

2,204

 

$

-

 

$

-

 

$

79,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

12,703

 

$

-

 

$

-

 

$

-

 

$

-

 

$

12,703

Change in actual and expected cash flows

 

 

 

(1,138)

 

 

(1,152)

 

 

-

 

 

75

 

 

(5)

 

 

(2,220)

Transfers (to) from accretable yield

 

 

 

(10)

 

 

1,152

 

 

1

 

 

(75)

 

 

5

 

 

1,073

    Balance at end of period

 

 

$

11,555

 

$

-

 

$

1

 

$

-

 

$

-

 

$

11,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures

 

In addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our regulatory capital and non-GAAP capital measures. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

2016

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Stockholders' Equity to Non-GAAP Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

915,890

 

$

903,801

 

$

897,077

 

$

907,888

 

$

911,599

Less:  Intangible assets

 

 

 

(93,068)

 

 

(93,487)

 

 

(93,907)

 

 

(94,383)

 

 

(94,859)

           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

 

 

$

656,952

 

$

644,444

 

$

637,300

 

$

647,635

 

$

650,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock outstanding at end of period

 

 

 

43,914

 

 

43,914

 

 

43,868

 

 

43,868

 

 

44,368

Tangible book value

 

 

$

14.96

 

$

14.68

 

$

14.53

 

$

14.76

 

$

14.67

Total Assets to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets  

 

 

$

6,712,596

 

$

6,874,571

 

$

7,099,149

 

$

7,203,822

 

$

7,398,325

Less:  Intangible assets

 

 

 

(93,068)

 

 

(93,487)

 

 

(93,907)

 

 

(94,383)

 

 

(94,859)

Tangible assets

 

 

$

6,619,528

 

$

6,781,084

 

$

7,005,242

 

$

7,109,439

 

$

7,303,466

Non-GAAP TCE Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity

 

 

$

656,952

 

$

644,444

 

$

637,300

 

$

647,635

 

$

650,870

Tangible assets

 

 

 

6,619,528

 

 

6,781,084

 

 

7,005,242

 

 

7,109,439

 

 

7,303,466

TCE ratio

 

 

 

9.92%

 

 

9.50%

 

 

9.10%

 

 

9.11%

 

 

8.91%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued)

 

 

 

 

BASEL III

 

 

 

Standardized

 

 

 

2016

 

2016

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Regulatory Capital Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

 

$

596,080

 

 

585,144

 

 

594,482

 

 

 601,789  

 

 

 611,542  

Tier 1 capital

 

 

 

788,349

 

 

776,180

 

 

782,912

 

 

782,561

 

 

790,937

Total risk-based capital

(23)

 

 

849,147

 

 

838,283

 

 

846,747

 

 

847,267

 

 

868,569

Risk-weighted assets

 

 

 

4,716,534

 

 

4,744,449

 

 

4,896,539

 

 

5,003,285

 

 

4,988,754

Regulatory Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

(24)

 

 

12.64%

 

 

12.33%

 

 

12.14%

 

 

12.03%

 

 

12.26%

Tier 1 risk-based capital ratio

(25)

 

 

16.71%

 

 

16.36%

 

 

15.99%

 

 

15.64%

 

 

15.85%

Total risk-based capital ratio

(26)

 

 

18.00%

 

 

17.67%

 

 

17.29%

 

 

16.93%

 

 

17.41%

Leverage ratio

(27)

 

 

11.92%

 

 

11.38%

 

 

11.18%

 

 

10.93%

 

 

11.05%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

915,890

 

$

903,801

 

$

897,077

 

$

907,888

 

$

911,599

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

(28)

 

 

(18,085)

 

 

(15,089)

 

 

(16,925)

 

 

(22,486)

 

 

(18,833)

          Unrealized losses on cash flow hedges, net of income tax

(28)

 

 

2,281

 

 

2,805

 

 

2,927

 

 

4,330

 

 

4,532

 

 

 

 

734,216

 

 

725,647

 

 

717,209

 

 

723,862

 

 

731,428

Less:    Disallowed goodwill

 

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

            Disallowed other intangible assets, net

(29)

 

 

(2,561)

 

 

(2,715)

 

 

(1,912)

 

 

(2,028)

 

 

(2,145)

            Disallowed deferred tax assets, net

(29)

 

 

(49,506)

 

 

(51,719)

 

 

(34,746)

 

 

(33,976)

 

 

(31,672)

Common equity Tier 1 capital

 

 

 

596,080

 

 

585,144

 

 

594,482

 

 

601,789

 

 

611,542

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

 

 

 

(8,601)

 

 

(9,834)

 

 

(12,440)

 

 

(20,098)

 

 

(21,475)

Tier 1 capital

 

 

 

788,349

 

 

776,180

 

 

782,912

 

 

782,561

 

 

790,937

Plus:  Long-term debt qualifying as Tier 2 capital

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

13,400

            Qualifying allowance for loan and lease losses

 

 

 

60,798

 

 

62,103

 

 

63,835

 

 

64,706

 

 

64,232

Tier 2 capital

 

 

 

60,798

 

 

62,103

 

 

63,835

 

 

64,706

 

 

77,632

Total risk-based capital

 

 

$

849,147

 

$

838,283

 

$

846,747

 

$

847,267

 

$

868,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

OFG Bancorp (NYSE: OFG)

 

 

 

Table 10: Notes to Financial Summary, Selected Metrics, Loans, and Consolidated Financial Statements (Tables 1 - 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

We use the term "acquired loans" to refer to loans acquired from the BBVAPR acquisition (December 18, 2012) and loans acquired in the Eurobank FDIC-Assisted acquisition (April 30, 2010), recorded at fair value at acquisition. The majority of these loans acquired are subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard known as ASC 310-30). Because the guidance takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with this loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. Acquired loans also include loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which at the end of the reporting period still have unamortized premium or discount. The fair value of these loans already include a credit mark for losses estimated on these loans.  The allowance for loan and lease losses for these loans consider such marks applied. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans. Loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which had fully amortized their premium or discount recorded at the date of acquisition at the end of the reporting period, are removed from the acquired loans category.

(2)

Total banking and wealth management revenues.

(3)

During Q1 2015, the Company placed its $200 million participation in a fuel purchase line of credit with the Puerto Rico Electric Power Authority (PREPA) on non-accrual status and recorded a $24.0 million provision for loan and lease losses. During Q4 2015, the Company recorded an additional $29.3 million provision for loan and lease losses related to PREPA. Both were part of the overall quarterly provision for loan and lease losses.

(4)

Calculated based on net income (loss) available to common shareholders divided by average common shares outstanding for the period.

(5)

Calculated based on net income (loss) available to common shareholders plus the preferred dividends on the convertible preferred stock, divided by total average common shares outstanding and equivalents for the period as if converted.

(6)

The Board of directors decreased OFG's regular quarterly dividend per common share to $0.06 per share during Q4 2015.The Board of directors had previously increased OFG's regular quarterly dividend per common share to $0.10 per share during Q4 2014.

(7)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

(8)

Information includes all loans held for investment, including all acquired loans. Acquired loans, including those accounted for under ASC 310-30, are disclosed at carrying amount.

(9)

Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(10)

Calculated based on annualized income, net of tax, for the period divided by average total assets for the period.

(11)

Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period.  See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

(12)

Calculated based on non-interest expense for the period divided by total net interest income and total banking and financial services revenues for the period.

(13)

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

(14)

Non-GAAP ratios. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios.

(15)

During Q3 2015, the Company offered a voluntary early retirement program for qualified employees and accumulated additional compensation expenses of $917 thousand related to this program.

(16)

At September 30, 2015, amount includes a $25 million receivable from Q2 2015 loss-share certifications for non-single family residential mortgage loans and a $20 million receivable from the sale of non-performing covered loans during Q3 2015, which were paid by the FDIC in December 2015.

(17)

Covered loans are no longer a material amount. Therefore, during Q3 2015, the Company changed its presentation of loans to include the following loan segments:  "Non-acquired" loans, "Acquired BBVAPR" loans and "Acquired Eurobank" loans.

(18)

During Q4 2015, the FDIC expense includes a charge of $2.2 million for reimbursements to the FDIC for recoveries of loans that were previously covered by the shared-loss agreement.

(19)

During Q2 2015, the Company purchased 303,985 shares under the current stock repurchase program for a total of $4.2 million, at an average price of $13.91 per share. In addition, during Q3 2015, the Company purchased 500,000 shares under the current stock repurchase program for a total of $4.7 million, at an average price of $9.39 per share.

(20)

Production of new loans (excluding renewals).

(21)

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.

(22)

During Q1 2016, the Company sold mortgage backed securities amounting to $263.3 million with a gain of $16.1 million and obligations of Puerto Rico government and political subdivisions of $12.8 million with a loss of $4.1 million.  In addition, the Company partially unwound repurchase agreements in the amount of $268 million at a cost of $12 million.

(23)

Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.

(24)

Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets.

(25)

Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.

(26)

Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighted assets.

(27)

Leverage capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments.

(28)

During Q1 2015, the Company decided to elect the opt-out option to continue to exclude AOCI items from regulatory capital calculation.

(29)

Amounts based on transition provisions for regulatory capital deductions and adjustments of 60% for 2016 and 40% for 2015.

(30)

During Q2 2015, the Company sold mortgage servicing rights on $653.5 million of mortgage loans to Scotiabank PR.

(31)

The FDIC loss share coverage for the commercial loans and other non-single family loans was in effect until June 30, 2015. The FDIC granted an extension of 120 days for the sale of part of this portfolio and agreed to cover up to $20 million with respect to the aggregate loss resulting from this sale. Therefore, the FDIC Indemnification Asset for projected claimable losses on non-single family residential loans loss-share period expired at June 30, 2015.

(32)

On September 28, 2015, the Company sold a portion of covered non-performing commercial loans amounting to $197.1 million unpaid principal balance ($100.0 million carrying amount). The sales price was 18.44% of UPB, or $36.3 million. The FDIC agreed to cover $20.0 million of losses as part of its loss-share agreement with the Company. As a result, a $20.0 million reimbursement was recorded in the statement of operations. The Company also recorded a $32.9 million provision for loan and lease losses for acquired Eurobank loans, which was partially offset by $4.6 million in cost recoveries. Also, as part of this transaction, the Company sold certain non-performing commercial loans and real estate owned from the BBVAPR acquisition amounting to $38.1 million unpaid principal balance ($9.9 million carrying amount). The sales price was $5.2 million. As a result, a $5.2 million provision for loan and lease losses was recorded for BBVAPR acquired loans, which was partially offset by $2.4 million in cost recoveries. In addition, certain real estate owned with a carrying amount of $11.0 million was sold for $1.7 million. At September 30 , 2015, the Company had a $13.0 million receivable related to this sale and a $20.0 million receivable from the FDIC for the shared-loss portion, both balances were received in December 2015.

(33)

During Q4 2015, the Company released $3.1 million of the Company's valuation allowance, increasing the deferred tax benefit for the period. This was the result of a change in entity type of its insurance subsidiary, Oriental Insurance Inc. to a limited liability corporation, now Oriental Insurance LLC. In addition, the deferred tax tax benefit increased $9.0 million as a result of an increase in the allowance for loan and lease losses.

(34)

During Q2 2016, the Company changed the purchase credit impaired policy for all loans accounted for under ASC 310-30. Under the revised policy, the Company writes-off a loans' recorded investment and derecognizes the associated allowance for loan and lease losses for loans that exit the pools. The revised policy implementation is performed prospectively due to the immaterial impact for retrospective adoption. The transition to this revised policy resulted in a $8.5 million and $72.2 million initial de-recognition of loans recorded investment balance and associated allowance for loan and lease losses for acquired BBVAPR loans and acquired Eurobank loans, respectively, with no impact to provision for loan and lease losses.

 

 

 

 

 

 

 

 

 

 

 

 

 

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