OFG BANCORP - FORM 8-K - EX-99 - EXHIBIT 99 - January 30, 2018

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8-K - FORM 8-K - OFG BANCORPofg8K20171231.htm

 

 

Exhibit 99.1

 

OFG Bancorp Reports 4Q17 & 2017 Results

SAN JUAN, Puerto Rico, January 30, 2018 – OFG Bancorp (NYSE: OFG) today reported results for the fourth quarter and year ended December 31, 2017. 4Q17 results reflected a strong recovery following hurricanes Irma and Maria, which struck the island in September 2017.

4Q17 Summary

·         Net income available to shareholders increased to $13.6 million, or $0.30 per share fully diluted, from a net loss of $146 thousand, or $0.00 per share, in 3Q17. OFG reported net income of $12.1 million, or $0.27 per share fully diluted, in 4Q16.

·         Return on average assets and average tangible common equity was 1.10% and 7.92%, respectively. Tangible book value per common share was $15.67, and the tangible common equity ratio was 11.29%.

·         4Q17 results included $5.4 million in loan loss provision, pre-tax, based on new data available on the potential impact of the hurricanes. Excluding that additional provision, 4Q17 adjusted net income available to shareholders totaled $16.9 million, or $0.37 per share fully diluted.

2017 Summary

•      Net income available to shareholders was $38.8 million, or $0.86 per share fully diluted, compared to $45.3 million, or $1.03 per share, in 2016.

•      2017 results included a $32.4 million loan loss provision, pre-tax, related to the hurricanes. Excluding that special provision, full year adjusted net income available to shareholders totaled $61.0 million, or $1.34 per share fully diluted.

CEO Comment

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

“OFG’s fourth quarter results were strong considering the impact of the hurricanes, the slow restoration of electricity, and the resultant uncertainties. EPS before an additional $5.4 million provision for potential hurricane losses was $0.37.

 

 

“We are encouraged with how our commercial clients and retail customers have responded. Total net loans increased more than $90 million from 3Q17. December-ended loan payment moratoriums are showing encouraging trends in all portfolios.

“New loan generation increased more than 32% from 3Q17, rivaling our best quarter of the year. All our one-on-one outreach with commercial clients following the hurricanes is building a strong pipeline for new loan business.

“Auto loan production had one of its best quarters.  During December, consumer lending returned to approximately 70% of pre-hurricanes production. Mortgage loans demand, however, was understandably down as residential sales slowed.

“At December 31, customer deposits were up $267 million from June 30. Non-interest bearing deposits reached close to $1 billion. During December, average monthly net new customer acquisition returned to pre-hurricanes levels, and bank service revenues began to recover with more retail point of sale terminals back on line. Thus far, we haven’t seen any signs that outmigration is affecting our customer base.

“4Q17 results are a testament to our successful effort in restoring operations quickly after the hurricanes. Our clientele and the communities we serve clearly appreciated our efforts as we are starting to see momentum build despite a very challenging environment.

“Puerto Rico is not out of the woods yet, and the island has a long reconstruction road ahead. However, with the expected benefit from an influx of substantial funds from the federal government as well as from insurance recoveries over the next two years, the short-term outlook is hopeful.”

Income Statement Highlights

Unless otherwise noted, the following compares data for the fourth quarter 2017 to the third quarter 2017.

•      Interest Income

☐     Originated Loans: $56.2 million compared to $58.9 million. 3Q17 included $4.1 million from the pay-off before maturity of a commercial loan previously classified as non-accrual. Excluding that item, 4Q17 interest income from Originated Loans increased $1.3 million due to higher balances.

☐     Acquired Loans: $18.9 million compared to $23.5 million. 3Q17 included $3.1 million in cost recoveries from the Puerto Rico Housing Finance Authority (PRHFA) canceling a loan. Excluding that item, 4Q17 interest income from Acquired Loans declined $1.5 million, reflecting continued pay downs.

•      Interest Expense declined $0.2 million to $9.7 million due to reduced borrowings.

•      Total Provision for Loan and Lease Losses declined $19.1 million to $24.9 million. Provision, excluding additional hurricanes related provisions of $5.4

 

 

million and $27.0 million in 4Q17 and 3Q17, respectively, was $19.5 million compared to $17.0 million due to the increase in the Originated Loans portfolio.

•      Net Interest Margin was 5.08% compared to 5.64%. 3Q17 benefitted from the previously mentioned pay-off of an originated commercial loan as well as cost recoveries. Compared to the year ago quarter, 4Q17 NIM increased 14 basis points.

•      Total Banking and Wealth Management Revenues declined $0.5 million to $16.7 million.

☐     Banking service revenues declined $1.5 million. This reflected lower banking fee income from reduced activity related to business interruptions due to lack of electricity. 3Q17 benefitted from $0.4 million in prepayment penalties from the previously mentioned loan pay-off before maturity.

☐     Wealth Management revenues increased $1.0 million, primarily due to recognition of annual insurance fees.

☐     Mortgage banking revenues remained approximately level at $1.2 million.

•      Total Non-Interest Expenses declined $3.8 million to $46.7 million, reflecting: (1) settlement of outstanding claims at amounts below those previously reserved ($1.4 million); (2) lower expenses on foreclosed real estate ($1.3 million); and (3) lower electronic banking expenses due to reduced activity ($1.0 million).

•      Effective Tax Rate (ETR) was 8.99% due to final year-end tax accounting. For the year, the ETR was 23.73% due to (1) higher proportion than anticipated of exempt income and income subject to preferential rates; and (2) expiration of a $0.7 million tax contingency.

Balance Sheet Highlights

Unless otherwise noted, the following compares data at December 31, 2017 to September 30, 2017.

•      Total Loans Net increased $91.8 million to $4.06 billion with the rebound in production, partially offset by normal pay downs of Acquired Loans. New loan generation increased 32.9% to $253.7 million:

☐     Commercial lending increased 121.1% to $102.1 million as our bankers developed relationships with businesses participating in Puerto Rico’s recovery. The quarter also benefited from finalizing loans unable to close in 3Q17 due to the hurricanes.

 

 

☐     The new OFG USA program added $25.1 million in commercial and industrial related loan participations. The entity began operations in October 2017 with a capital contribution of $50.0 million.

☐     Auto lending increased 11.8% to $87.6 million, its best quarter in 2017, reflecting demand to replace damaged vehicles, pent up demand, and attractive retail pricing on new and used cars.

☐     While consumer lending declined 31.7% to $23.1 million, there was an increasing trend in the monthly production. Mortgage lending declined 51.2% to $15.9 million as housing sales had yet to recover.

•      Total Investments increased $8.1 million to $1.17 billion, reflecting purchases of new mortgage backed securities to replace pay downs of existing ones.

•      Cash and cash equivalents declined $235.5 million to $488.2 million, mainly due to the unwinding of an $80.0 million repurchase agreement and the increase in interest earning assets.

•      Customer Deposits (excluding brokered deposits) were approximately level at $4.28 billion as deposit growth offset almost all of the temporary influx of insurance company deposits at the end of 3Q17. Average non-interest bearing deposits increased $102.1 million, to $937.3 million.

•      Total Borrowings declined $90.5 million to $328.7 million, primarily due to the unwinding of an $80.0 million repurchase agreement. Due to deposit growth, higher cost borrowings have been reduced by 58.7% or $466.6 million year over year.

•      Total Stockholders’ Equity increased $7.5 million to $945.1 million, reflecting the increase in retained earnings.

Credit Quality Highlights

Unless otherwise noted, the following compares data on the originated loan portfolio at December 31, 2017 to September 30, 2017.

After Irma, Oriental was the only bank to offer fee waivers for late payments, recognizing the difficulties people faced in Puerto Rico. Following Maria, the bank continued to offer automatic payment deferrals and 90-day extensions for most loan categories.

•      Net Charge-Off Rate declined 19 basis points to 1.35% due to lower charge-offs in the consumer loan portfolio as a result of the loan payment moratorium.

•      Early Delinquency Rate declined 197 basis points to 1.82% and Total Delinquency Rate declined 223 basis points to 4.61% due to the automatic moratorium on most retail loans and some commercial loans.

 

 

•      Non-Performing Loan Rate increased 21 basis points to 3.31%. This primarily reflected commercial loans current in their monthly payments being placed in non-accrual due to deterioration of their financial statements.

•      Allowance for Loan and Lease Losses for the originated portfolio increased $5.2 million to $92.7 million, primarily due to higher loan balances.

Capital Position

Unless otherwise noted, the following compares data at December 31, 2017 to September 30, 2017.

Capital continued to grow and remains significantly above regulatory requirements for a well-capitalized institution.

Metric

4Q17

QoQ Change

YoY Change

Tangible Common Equity Ratio

11.29%

+31 bps

+96 bps

Tangible Book Value per Common Share

$15.67

+1.2%

+3.9%

Common Equity Tier 1 Capital Ratio (using Basel III methodology)

14.59%

-30 bps

+54 bps

Total Risk-Based Capital Ratio

20.34%

-48 bps

+72 bps

Conference Call

A conference call to discuss OFG’s results for 4Q17, outlook and related matters will be held today, Tuesday, January 30, 2018, at 10:00 AM Eastern Time. The call will be accessible live via a webcast on OFG’s Investor Relations website at www.ofgbancorp.com.  A webcast replay will be available shortly thereafter. Access the webcast link in advance to download any necessary software.

Financial Supplement

OFG’s Financial Supplement, with full financial tables for the quarter and year ended December 31, 2017, can be found on the Webcasts, Presentations & Other Files page, on OFG’s Investor Relations website at www.ofgbancorp.com. 

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, management uses certain “non-GAAP financial measures” within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. See Tables 9-1 and 9-2 in OFG’s above-mentioned Financial Supplement for reconciliation of GAAP to non-GAAP Measures and Calculations.

 

 

 

Forward Looking Statements

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

Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) the credit default by the government of Puerto Rico; (iv) amendments to the fiscal plan approved by the Financial Oversight and Management Board of Puerto Rico; (v) determinations in the court-supervised debt-restructuring process under Title III of PROMESA for the Puerto Rico government and all of its agencies, including some of its public corporations; (vi) the impact of property, credit and other losses in Puerto Rico as a result of hurricanes Irma and Maria; (vii) the amount of government, private and philanthropic financial assistance for the reconstruction of Puerto Rico’s critical infrastructure, which suffered catastrophic damages caused by hurricane Maria; (viii) the pace and magnitude of Puerto Rico’s economic recovery; (ix) the potential impact of damages from future hurricanes and natural disasters in Puerto Rico; (x) the fiscal and monetary policies of the federal government and its agencies; (xi) changes in federal bank regulatory and supervisory policies, including required levels of capital; (xii) the relative strength or weakness of the commercial and consumer credit sectors and the real estate market in Puerto Rico; (xiii) the performance of the stock and bond markets; (xiv) competition in the financial services industry; and (xv) possible legislative, tax or regulatory changes.

For a discussion of such factors and certain risks and uncertainties to which OFG is subject, see OFG’s annual report on Form 10-K for the year ended December 31, 2016, as well as its other filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, OFG assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

About OFG Bancorp

Now in its 54th year in business, OFG Bancorp is a diversified financial holding company that operates under U.S. and Puerto Rico banking laws and regulations. Its three principal subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a wide range of retail and commercial banking, lending and wealth management products, services and technology, primarily in Puerto Rico, through 48 financial centers. Investor information can be found at Error! Hyperlink reference not valid.www.ofgbancorp.com.

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Contacts

 

 

Puerto Rico: Idalis Montalvo (idalis.montalvo@orientalbank.com) at (787) 777-2847

US: Steven Anreder (sanreder@ofgbancorp.com) and Gary Fishman (gfishman@ofgbancorp.com) at (212) 532-3232

  

 

 

 

 

 

 

 

 

  

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, 2017 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

 

 

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

2017

 

2016

 

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

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

YTD

 

YTD

 

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

73,513

 

$

80,478

 

$

75,563

 

$

74,618

 

$

74,213

 

$

304,172

 

$

299,427

 

Non-interest income, net (core)

(2)

 

 

16,734

 

 

17,213

 

 

17,933

 

 

17,428

 

 

20,415

 

 

69,308

 

 

74,101

 

Non-interest expense

 

 

 

46,662

 

 

50,469

 

 

52,816

 

 

51,684

 

 

52,382

 

 

201,631

 

 

215,990

 

Pre-provision net revenues

 

 

 

43,666

 

 

47,921

 

 

47,633

 

 

42,008

 

 

39,777

 

 

181,228

 

 

150,256

 

Provision for loan and lease losses

 

 

 

24,907

(a)

 

44,042

(a)

 

26,536

(b)

 

17,654

 

 

13,373

 

 

113,139

(a)(b)

 

65,076

 

Net income before income taxes

 

 

 

18,759

 

 

3,879

 

 

21,097

 

 

24,354

 

 

26,404

 

 

68,089

 

 

85,180

 

Income tax expense

 

 

 

1,686

 

 

560

 

 

3,993

 

 

9,204

 

 

10,848

 

 

15,443

 

 

25,994

 

Net income

 

 

$

17,073

 (a)  

$

3,319

 (a)  

$

17,104

 

$

15,150

 

$

15,556

 

$

52,646

 

$

59,186

 

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

(3)

 

$

0.31

 (a)  

$

-

 (a)  

$

0.30

 

$

0.27

 

$

0.28

 

$

0.88

 

$

1.03

 

Earnings per common share - diluted

(4)

 

$

0.30

(a)

$

-

(a)

$

0.30

 

$

0.26

 

$

0.27

 

$

0.86

 

$

1.03

 

Average common shares outstanding

 

 

 

43,947

 

 

43,947

 

 

43,947

 

 

43,915

 

 

43,914

 

 

43,939

 

 

43,913

 

Average common shares outstanding and equivalents

 

 

 

51,104

 

 

51,102

 

 

51,100

 

 

51,131

 

 

51,098

 

 

51,096

 

 

51,088

 

Cash dividends per common share

 

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.24

 

$

0.24

 

Book value per common share (period end)

 

 

$

17.73

 

$

17.56

 

$

17.59

 

$

17.42

 

$

17.18

 

$

17.73

 

$

17.18

 

Tangible book value per common share (period end)

(5)

 

$

15.67

 

$

15.49

 

$

15.51

 

$

15.33

 

$

15.08

 

$

15.67

 

$

15.08

 

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(6)

 

$

4,081,427

 

$

4,062,042

 

$

4,129,550

 

$

4,141,628

 

$

4,195,966

 

$

4,125,804

 

$

4,379,156

 

Interest-earning assets

 

 

 

5,735,593

 

 

5,658,953

 

 

5,848,525

 

 

5,932,924

 

 

5,972,163

 

 

5,818,598

 

 

6,210,003

 

Total assets

 

 

 

6,191,737

 

 

6,046,139

 

 

6,278,464

 

 

6,374,177

 

 

6,455,023

 

 

6,256,827

 

 

6,718,292

 

Interest-bearing deposits

 

 

 

3,835,357

 

 

3,774,378

 

 

3,844,490

 

 

3,850,506

 

 

3,875,536

 

 

3,826,000

 

 

3,934,125

 

Borrowings

 

 

 

374,059

 

 

462,035

 

 

614,332

 

 

715,951

 

 

750,446

 

 

540,367

 

 

987,925

 

Stockholders' equity

 

 

 

943,823

 

 

947,404

 

 

938,707

 

 

926,011

 

 

919,697

 

 

944,492

 

 

911,832

 

Common stockholders' equity

 

 

 

777,953

 

 

781,534

 

 

772,837

 

 

760,141

 

 

753,827

 

 

778,622

 

 

745,962

 

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(7)

 

 

5.08%

 

 

5.64%

 

 

5.18%

 

 

5.10%

 

 

4.94%

 

 

5.23%

 

 

4.82%

 

Return on average assets

(8)

 

 

1.10%

 

 

0.22%

(a)

 

1.09%

 

 

0.95%

 

 

0.96%

 

 

0.84%

 

 

0.88%

 

Return on average tangible common stockholders' equity

(9)

 

 

7.92%

 

 

-0.08%

 

 

8.01%

 

 

7.00%

 

 

7.31%

 

 

5.64%

 

 

6.94%

 

Efficiency ratio

(10)

 

 

51.70%

 

 

51.66%

 

 

56.49%

 

 

56.15%

 

 

55.36%

 

 

53.99%

 

 

57.82%

 

Full-time equivalent employees, period end

 

 

 

1,421

 

 

1,464

 

 

1,472

 

 

1,446

 

 

1,437

 

 

1,421

 

 

1,437

 

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

 

 

$

92,718

(a)

$

87,541

(a)

$

69,666

(b)

$

60,483

 

$

59,301

 

$

92,718

(a)(b)

$

59,301

 

    Allowance as a % of loans held for investment

 

 

 

2.89%

 (a)  

 

2.83%

 (a)  

 

2.25%

 

 

1.98%

 

 

1.95%

 

 

2.89%

 

 

1.95%

 

    Net charge-offs

 

 

$

10,466

 

$

11,815

 

$

13,635

(b)(c)

$

10,552

 

$

13,506

 

$

46,468

(b)

$

88,336

(d)

    Net charge-off rate

(11)

 

 

1.35%

 

 

1.54%

 

 

1.79%

 (b)(c)  

 

1.40%

 

 

1.80%

 

 

1.52%

 (b)  

 

2.85%

 (d)  

    Early delinquency rate (30 - 89 days past due)

 

 

 

1.82%

 

 

3.79%

 

 

3.52%

 

 

3.42%

 

 

3.31%

 

 

1.82%

 

 

3.31%

 

    Total delinquency rate (30 days and over)

 

 

 

4.61%

 

 

6.84%

 

 

6.31%

 

 

6.34%

 

 

6.49%

 

 

4.61%

 

 

6.49%

 

Capital Ratios (Non-GAAP)

(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

13.92%

 

 

14.07%

 

 

13.69%

 

 

13.20%

 

 

12.99%

 

 

13.92%

 

 

12.99%

 

Common equity Tier 1 capital ratio

 

 

 

14.59%

 

 

14.89%

 

 

14.66%

 

 

14.30%

 

 

14.05%

 

 

14.59%

 

 

14.05%

 

Tier 1 risk-based capital ratio

 

 

 

19.05%

 

 

19.53%

 

 

19.14%

 

 

18.77%

 

 

18.35%

 

 

19.05%

 

 

18.35%

 

Total risk-based capital ratio

 

 

 

20.34%

 

 

20.82%

 

 

20.42%

 

 

20.05%

 

 

19.62%

 

 

20.34%

 

 

19.62%

 

Tangible common equity ("TCE") ratio

 

 

 

11.29%

 

 

10.98%

 

 

11.09%

 

 

10.66%

 

 

10.33%

 

 

11.29%

 

 

10.33%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes.

(b) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value.  As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans.

(c) During Q2 2017 , the Company had additional recoveries in auto and consumer loans of $1.1 million and $612 thousand, respectively.

 

(d) During Q3 2016, the Company entered into an agreement to sell its outstanding participation in the PREPA line of credit for $124 million. As a result of this transaction, the Company recognized a $56.2 million charge-off and a $2.9 million provision for loan and lease losses during the quarter ended September 30, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

2017

 

2016

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

56,183

 

 $  

58,939

(f)

$

53,449

 

$

51,955

 

 $  

51,581

 

$

220,526

 

 $  

199,172

 

    Acquired BBVAPR loans

 

 

 

15,310

 

 

19,189

(e)

 

17,752

 

 

19,085

 

 

20,232

 

 

71,336

 

 

92,301

 

    Acquired Eurobank loans

 

 

 

3,573

 

 

4,339

 

 

6,037

 

 

6,610

 

 

6,701

 

 

20,559

 

 

30,472

 

          Total interest income from loans

 

 

 

75,066

 

 

82,467

 

 

77,238

 

 

77,650

 

 

78,514

 

 

312,421

 

 

321,945

 

Investment securities

 

 

 

8,108

 

 

7,888

 

 

8,702

 

 

8,528

 

 

8,280

 

 

33,226

 

 

34,647

 

          Total interest income

 

 

 

83,174

 

 

90,355

 

 

85,940

 

 

86,178

 

 

86,794

 

 

345,647

 

 

356,592

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

5,613

 

 

5,438

 

 

5,568

 

 

5,468

 

 

5,536

 

 

22,087

 

 

21,803

 

    Brokered deposits

 

 

 

2,079

 

 

2,163

 

 

2,084

 

 

1,885

 

 

1,895

 

 

8,211

 

 

7,450

 

           Total deposits

 

 

 

7,692

 

 

7,601

 

 

7,652

 

 

7,353

 

 

7,431

 

 

30,298

 

 

29,253

 

Borrowings

 

 

 

1,969

 

 

2,276

 

 

2,725

(h)

 

4,207

(j)

 

5,150

 

 

11,177

 

 

27,912

 

           Total interest expense

 

 

 

9,661

 

 

9,877

 

 

10,377

 

 

11,560

 

 

12,581

 

 

41,475

 

 

57,165

 

Net interest income

 

 

 

73,513

 

 

80,478

 

 

75,563

 

 

74,618

 

 

74,213

 

 

304,172

 

 

299,427

 

    Provision for loan and lease losses, excluding acquired loans

 (1)  

 

 

15,643

 (d)  

 

29,690

 (d)  

 

22,818

 (g)  

 

11,735

 

 

10,638

 

 

79,886

 (d)(g)  

 

45,058

 

    Provision for acquired BBVAPR loan and lease losses

(1)

 

 

7,112

(d)

 

11,811

(d)

 

3,306

 

 

4,299

 

 

3,135

 

 

26,528

(d)

 

17,763

 

    Provision (recapture) for acquired Eurobank loan and lease losses

 (1)  

 

 

2,152

 (d)  

 

2,541

 (d)  

 

412

 

 

1,620

 

 

(400)

 

 

6,725

 (d)  

 

2,255

 

          Total provision for loan and lease losses, net

 

 

 

24,907

 

 

44,042

(d)

 

26,536

 

 

17,654

 

 

13,373

 

 

113,139

 

 

65,076

 

           Net interest income after provision for loan and lease losses

 

 

 

48,606

 

 

36,436

 

 

49,027

 

 

56,964

 

 

60,840

 

 

191,033

 

 

234,351

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

8,461

(a)

 

9,923

(f)

 

10,458

 

 

10,626

 

 

10,980

 

 

39,468

 

 

41,647

 

Wealth management revenues

 

 

 

7,043

 

 

6,016

 

 

6,516

 

 

6,215

 

 

7,714

 

 

25,790

 

 

27,433

 

Mortgage banking activities

 

 

 

1,230

 

 

1,274

 

 

959

 

 

587

 

 

1,721

 

 

4,050

 

 

5,021

 

          Total banking and wealth management revenues

 

 

 

16,734

 

 

17,213

 

 

17,933

 

 

17,428

 

 

20,415

 

 

69,308

 

 

74,101

 

FDIC shared-loss benefit (expense), net

 

 

 

-

 

 

-

 

 

-

 

 

1,403

 (k)  

 

(2,836)

 

 

1,403

 

 

(13,581)

 

Other gains, net

 

 

 

81

 

 

699

(l)

 

6,953

(h)

 

243

 

 

367

 

 

7,976

(h)

 

6,299

(l)

           Total non-interest income, net

 

 

 

16,815

 

 

17,912

 

 

24,886

 

 

19,074

 

 

17,946

 

 

78,687

 

 

66,819

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

20,205

 

 

19,882

 

 

19,317

 

 

20,347

 

 

18,898

 

 

79,751

 

 

76,761

 

Rent and occupancy costs

 

 

 

8,546

 

 

8,276

 

 

8,537

 

 

7,198

 

 

7,305

 

 

32,557

 

 

30,300

 

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

 

 

 

126

 (b)  

 

1,395

 

 

1,787

 

 

1,326

 

 

1,219

 

 

4,634

 

 

10,282

 

General and administrative expenses

 

 

 

16,350

(a)(c)

 

19,202

 

 

20,958

 

 

20,187

 

 

22,870

 

 

76,697

 

 

88,380

 

           Total operating expenses

 

 

 

45,227

 

 

48,755

 

 

50,599

 

 

49,058

 

 

50,292

 

 

193,639

 

 

205,723

 

Credit related expenses

 

 

 

1,435

 

 

1,714

 

 

2,217

 

 

2,626

 

 

2,090

 

 

7,992

 

 

10,267

 

           Total non-interest expense

 

 

 

46,662

 

 

50,469

 

 

52,816

 

 

51,684

 

 

52,382

 

 

201,631

 

 

215,990

 

Income before income taxes

 

 

 

18,759

 

 

3,879

 

 

21,097

 

 

24,354

 

 

26,404

 

 

68,089

 

 

85,180

 

Income tax expense

 

 

 

1,686

 

 

560

 

 

3,993

 (i)  

 

9,204

 

 

10,848

 

 

15,443

 

 

25,994

 

Net income

 

 

 

17,073

 

 

3,319

(d)

 

17,104

 

 

15,150

 

 

15,556

 

 

52,646

 

 

59,186

 

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

(1,838)

 

 

(1,838)

 

 

(1,837)

 

 

(1,838)

 

 

(1,837)

 

 

(7,352)

 

 

(7,350)

 

    Other preferred stock

 

 

 

(1,627)

 

 

(1,627)

 

 

(1,629)

 

 

(1,627)

 

 

(1,629)

 

 

(6,510)

 

 

(6,512)

 

Net income (loss) available to common shareholders

 

 

$

13,608

 

$

(146)

 

$

13,638

 

$

11,685

 

$

12,090

 

$

38,784

 

$

45,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the 4Q 2017, electronic banking fee income and  electronic banking expenses decreased $0.9 million and $1.0 million, respectively, from the prior quarter as a result of lower point of sale (POS) activity from our customers. The decrease is directly related to business interruption in several of our commercial clients from the lack of electricity.

 

(b) During the 4Q 2017, the Company generated higher gains in sale of foreclosed real estate by approximately $0.7 million and had lower write downs by approximately $0.6 million.

 

(c) During the 4Q 2017, the Company reversed $1.4 million expenses as a result of the settlement of regulatory and legal contingencies at a lower amount than estimated.

 

(d) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes.

 

(e) During Q3 2017, the Company recognized $3.1 million in cost recoveries from the Puerto Rico Housing Finance Authority ("PRHFA") loan with an outstanding principal balance of $10.9 million.

 

(f) During Q3 2017, the Company received $22.4 million from the pay-off before maturity of a loan previously classified as non-accrual. As a result, the Company recorded $4.1 million in interest income and $439 thousand in prepayment penalty income, included in banking service revenues.

 

(g) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value.  As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans.

 

(h) During Q2 2017, the Company sold $166.0 million of mortgage-backed securities and recorded a net gain on sale of securities of $6.8 million. Also, it sold $39.2 million Treasury Notes and recorded a net gain of $112 thousand. In addition, the Company unwound repurchase agreements in the amount of $100 million at a cost of $80 thousand.

 

(i) During Q2 2017, the effective income tax rate decreased as a result of higher proportion of exempt income and income subject to preferential rates mainly due to the gain in sale of investment portfolio.

 

(j) During Q1 2017, a $232.0 million repurchase agreement at 4.78% was repaid at maturity.

 

(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.

 

(l) During Q3 2016, the Company received $5 million from a 2009 claim of loss related to a private label collateralized obligation. During Q3 2017, the Company received $571 thousand, as final settlement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

Cash and cash equivalents

 

 

$

488,233

 

$

723,756

(c)

$

480,338

 

$

483,301

 

$

513,469

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

191

 

 

284

 

 

294

 

 

314

 

 

347

 

Investment securities available-for-sale, at fair value, with amortized cost of $648,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (September 30, 2017 - $611,936; June 30, 2017 - $649,280; March 31, 2017 - $796,558;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    December 31, 2016 - $749,867)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

629,124

 

 

596,222

 

 

584,930

(f)

 

741,405

 

 

692,552

 

    Other investment securities

 

 

 

16,673

 

 

17,201

 (d)  

 

64,397

 

 

58,637

 

 

58,932

 

          Total investment securities available-for-sale

 

 

 

645,797

 

 

613,423

 

 

649,327

 

 

800,042

 

 

751,484

 

Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $497,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (September 30, 2017 - $525,830; June 30, 2017 - $549,595; March 31, 2017 - $570,963;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     December 31, 2016 - $592,763)

 

 

 

506,064

 

 

530,178

 

 

555,407

 

 

577,997

 

 

599,884

 

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

13,995

 

 

14,016

 

 

16,616

 

 

17,161

 

 

10,793

 

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

3

 

 

3

 

          Total investments

 

 

 

1,166,050

 

 

1,157,904

 

 

1,221,647

 

 

1,395,517

 

 

1,362,511

 

Loans, net

 

 

 

4,056,329

 

 

3,964,572

 

 

4,091,866

 

 

4,089,708

 

 

4,147,692

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FDIC shared-loss indemnification asset

 

 

 

-

 

 

-

 

 

-

 

 

-

(g)

 

14,411

 

Derivative assets

 

 

 

771

 

 

809

 

 

957

 

 

1,123

 

 

1,330

 

Prepaid expenses

 

 

 

9,734

 

 

13,070

 

 

17,117

 

 

15,496

 

 

17,096

 

Deferred tax asset, net

 

 

 

127,421

 

 

126,041

 

 

116,199

 

 

121,442

 

 

124,200

 

Foreclosed real estate and repossessed properties

 

 

 

47,721

 

 

51,104

 

 

53,448

 

 

50,820

 

 

50,743

 

Premises and equipment, net

 

 

 

67,860

 

 

67,994

 

 

69,836

 

 

69,786

 

 

70,407

 

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

Accounts receivable and other assets

 

 

 

138,865

(b)

 

96,898

 

 

98,349

 

 

101,345

 

 

113,896

 

Total assets

 

 

 $  

6,189,053

 

 $  

6,288,217

 

 $  

6,235,826

 

 $  

6,414,607

 

 $  

6,501,824

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

$

2,039,126

 

$

1,925,721

 

$

1,844,996

 

$

1,944,921

 

$

1,939,764

 

Savings accounts

 

 

 

1,204,514

 

 

1,311,515

 

 

1,115,669

 

 

1,174,581

 

 

1,128,190

 

Time deposits

 

 

 

1,037,310

 

 

1,053,568

 

 

1,053,110

 

 

1,022,447

 

 

1,020,138

 

Brokered deposits

 

 

 

518,532

 

 

535,600

 

 

568,911

 

 

575,879

 

 

576,395

 

          Total deposits

 

 

 

4,799,482

 

 

4,826,404

 

 

4,582,686

 

 

4,717,828

 

 

4,664,487

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

 

192,869

(a)

 

283,080

(e)

 

453,492

 

 

531,179

(h)

 

653,756

 

Advances from FHLB and other borrowings

 

 

 

99,796

 

 

100,091

 

 

137,717

 

 

105,133

 

 

105,515

 

Subordinated capital notes

 

 

 

36,083

 

 

36,083

 

 

36,083

 

 

36,083

 

 

36,083

 

          Total borrowings

 

 

 

328,748

 

 

419,254

 

 

627,292

 

 

672,395

 

 

795,354

 

Other liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

 

1,281

 

 

1,677

 

 

1,881

 

 

1,967

 

 

2,437

 

Acceptances outstanding

 

 

 

27,644

 

 

16,486

 

 

22,739

 

 

24,288

 

 

23,765

 

Accrued expenses and other liabilities

 

 

 

86,791

 

 

86,766

 

 

62,259

 

 

66,700

 

 

95,370

 

          Total liabilities

 

 

 

5,243,946

 

 

5,350,587

 

 

5,296,857

 

 

5,483,178

 

 

5,581,413

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

Common stock

 

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

 

Additional paid-in capital

 

 

 

541,600

 

 

541,302

 

 

541,005

 

 

540,808

 

 

540,948

 

Legal surplus

 

 

 

81,454

 

 

79,795

 

 

79,460

 

 

77,772

 

 

76,293

 

Retained earnings 

 

 

 

200,878

 

 

191,567

 

 

194,687

 

 

185,377

 

 

177,808

 

Treasury stock, at cost

 

 

 

(104,502)

 

 

(104,502)

 

 

(104,502)

 

 

(104,502)

 

 

(104,860)

 

Accumulated other comprehensive income (loss), net

 

 

 

(2,949)

 

 

842

 

 

(307)

 

 

3,348

 

 

1,596

 

          Total stockholders' equity

 

 

 

945,107

 

 

937,630

 

 

938,969

 

 

931,429

 

 

920,411

 

          Total liabilities and stockholders' equity

 

 

$

6,189,053

 

$

6,288,217

 

$

6,235,826

 

$

6,414,607

 

$

6,501,824

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the Q4 2017, the Company made an unwinding of $80 million repurchase agreements at no cost.

 

(b) At December 31, 2017, the Company had higher balances in accounts receivable and other assets mainly from accrued interest receivable of loans included in hurricane Maria moratorium program.

 

(c) At September 30, 2017, the Company had higher balances in cash and cash equivalents due to increased deposits and lower transaction outflows toward the end of the quarter from commercial customers.

 

(d) During Q3 2017, the Company sold $45.0 million US Treasury securities available for sale and recorded a gain of $4 thousand.

 

(e) During Q3 2017, $160.4 million in short-term repurchase agreements matured and were not renewed.

 

(f) During Q2 2017, the Company sold $166.0 million of mortgage-backed securities and recorded a net gain on sale of securities of $6.8 million. Also, it sold $39.2 million Treasury Notes and recorded a net gain of $112 thousand. In addition, the Company unwound repurchase agreements in the amount of $100 million at a cost of $80 thousand.

 

(g) 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.

 

(h) During Q1 2017, a $232.0 million repurchase agreement at 4.78% was repaid at maturity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

Non-acquired loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

$

 683,607  

 

$

  694,476

 

$

  699,290

 

$

  709,863

 

$

  721,494

 

      Commercial

 

 

 

 1,307,261  

 

 

 1,245,711  

 

 

 1,270,844  

(b)

 

 1,253,712  

 

 

 1,277,866  

 

      Consumer

 

 

 

 330,039  

 

 

  316,357

 

 

  314,267

 

 

  300,412

 

 

  290,515

 

      Auto

 

 

 

 883,985  

 

 

 831,437  

 

 

 807,204  

 

 

 786,606  

 

 

 756,395  

 

 

 

 

 

 3,204,892  

 

 

 3,087,981  

 

 

 3,091,605  

 

 

 3,050,593  

 

 

 3,046,270  

 

      Less:  Allowance for loan and lease losses

 

 

 

 (92,718) 

(a)

 

 (87,541) 

(a)

 

 (69,666) 

(b)

 

 (60,483) 

 

 

 (59,301) 

 

 

 

 

 

 3,112,174  

 

 

 3,000,440  

 

 

 3,021,939  

 

 

 2,990,110  

 

 

 2,986,969  

 

      Deferred loan costs, net

 

 

 

 6,695  

 

 

 6,592  

 

 

 6,574  

 

 

 6,464  

 

 

 5,766  

 

          Total non-acquired loans held for investment, net

 

 

 

 3,118,869  

 

 

 3,007,032  

 

 

 3,028,513  

 

 

 2,996,574  

 

 

 2,992,735  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BBVAPR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial

 

 

 

 4,380  

 

 

 4,612  

 

 

 5,350  

 

 

 5,436  

 

 

 5,562  

 

      Consumer

 

 

 

   28,915

 

 

    29,464

 

 

    30,233

 

 

    31,001

 

 

    32,862

 

      Auto

 

 

 

 21,969  

 

 

 26,562  

 

 

 33,661  

 

 

 42,523  

 

 

 53,026  

 

 

 

 

 

   55,264

 

 

    60,638

 

 

    69,244

 

 

    78,960

 

 

    91,450

 

      Less:  Allowance for loan and lease losses

 

 

 

 (3,862) 

(a)

 

 (3,363) 

(a)

 

 (3,348) 

 

 

 (3,615) 

 

 

 (4,299) 

 

 

 

 

 

   51,402

 

 

    57,275

 

 

    65,896

 

 

    75,345

 

 

    87,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

 

 532,053  

 

 

 532,948  

 

 

 544,325  

 

 

 558,112  

 

 

 569,253  

 

      Commercial

 

 

 

 243,092  

 

 

  244,359

 

 

  266,002

 

 

  278,665

 

 

  292,564

 

      Consumer

 

 

 

 1,431  

 

 

 1,598  

 

 

 2,163  

 

 

 3,201  

 

 

 4,301  

 

      Auto

 

 

 

   43,696

 

 

    49,258

 

 

    58,078

 

 

    71,495

 

 

    85,676

 

 

 

 

 

 820,272  

 

 

 828,163  

 

 

 870,568  

 

 

 911,473  

 

 

 951,794  

 

      Less:  Allowance for loan and lease losses

 

 

 

 (45,755) 

(a)

 

   (40,110)

(a)

 

   (37,494)

 

 

   (34,930)

 

 

   (31,056)

 

 

 

 

 

 774,517  

 

 

 788,053  

 

 

 833,074  

 

 

 876,543  

 

 

 920,738  

 

   Total Acquired BBVAPR loans, net

 

 

 

 825,919  

 

 

  845,328

 

 

  898,970

 

 

  951,888

 

 

 1,007,889  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eurobank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

 

   69,538

 

 

    68,996

 

 

    70,329

 

 

    72,966

 

 

    73,018

 

      Commercial

 

 

 

 53,793  

 

 

 53,028  

 

 

 66,894  

 

 

 73,181  

 

 

 81,460  

 

      Consumer

 

 

 

     1,112

 

 

      1,220

 

 

      1,256

 

 

      1,268

 

 

      1,372

 

 

 

 

 

 124,443  

 

 

 123,244  

 

 

 138,479  

 

 

 147,415  

 

 

 155,850  

 

      Less:  Allowance for loan and lease losses

 

 

 

 (25,174) 

(a)

 

   (23,146)

(a)

 

   (21,787)

 

 

   (22,006)

 

 

   (21,281)

 

   Total Acquired Eurobank loans, net

 

 

 

 99,269  

 

 

 100,098  

 

 

 116,692  

 

 

 125,409  

 

 

 134,569  

 

          Total acquired loans, net

 

 

 

 925,188  

 

 

  945,426

 

 

 1,015,662  

 

 

 1,077,297  

 

 

 1,142,458  

 

Total loans held for investment

 

 

 

 4,044,057  

 

 

 3,952,458  

 

 

 4,044,175  

 

 

 4,073,871  

 

 

 4,135,193  

 

Mortgage loans held for sale

 

 

 

   12,272

 

 

    12,114

 

 

    14,044

 

 

    15,837

 

 

    12,499

 

Other loans held for sale

 

 

 

 -    

 

 

 -    

 

 

 33,647  

(b)

 

 -    

 

 

 -    

 

Total loans, net

 

 

$

 4,056,329  

 

$

 3,964,572  

 

$

 4,091,866  

 

$

 4,089,708  

 

$

 4,147,692  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan Portfolio Summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

$

 1,285,198  

 

$

 1,296,420  

 

$

 1,313,944  

 

$

 1,340,941  

 

$

 1,363,765  

 

      Commercial

 

 

 

 1,608,526  

 

 

 1,547,710  

 

 

 1,609,090  

(b)

 

 1,610,994  

 

 

 1,657,452  

 

      Consumer

 

 

 

 361,497  

 

 

  348,639

 

 

  347,919

 

 

  335,882

 

 

  329,050

 

      Auto and leasing

 

 

 

 949,650  

 

 

 907,257  

 

 

 898,943  

 

 

 900,624  

 

 

 895,097  

 

 

 

 

 

 4,204,871  

 

 

 4,100,026  

 

 

 4,169,896  

 

 

 4,188,441  

 

 

 4,245,364  

 

      Less:  Allowance for loan and lease losses

 

 

 

 (167,509) 

(a)

 

 (154,160) 

(a)

 

 (132,295) 

(b)

 

 (121,034) 

 

 

 (115,937) 

 

 

 

 

 

 4,037,362  

 

 

 3,945,866  

 

 

 4,037,601  

 

 

 4,067,407  

 

 

 4,129,427  

 

      Deferred loan costs, net

 

 

 

 6,695  

 

 

 6,592  

 

 

 6,574  

 

 

 6,464  

 

 

 5,766  

 

          Total loans held for investment, net

 

 

 

 4,044,057  

 

 

 3,952,458  

 

 

 4,044,175  

 

 

 4,073,871  

 

 

 4,135,193  

 

  Mortgage loans held for sale

 

 

 

 12,272  

 

 

 12,114  

 

 

 14,044  

 

 

 15,837  

 

 

 12,499  

 

  Other loans held for sale

 

 

 

         -  

 

 

          -  

 

 

    33,647

(b)

 

          -  

 

 

          -  

 

Total loans, net

 

 

$

 4,056,329

 

$

 3,964,572  

 

$

 4,091,866  

 

$

 4,089,708  

 

$

 4,147,692  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

(Dollars in thousands) (unaudited)

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

Quarterly loan production

(13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage 

 

 

$

   15,892

 

$

    32,559

 

$

    45,877

 

$

    43,474

 

$

    51,208

 

    Commercial

 

 

 

 102,083  

 

 

 46,180  

 

 

 74,807  

 

 

 37,691  

 

 

 86,832  

 

    Commercial US Loan Programs

 

 

 

   25,070

 

 

          -  

 

 

      5,560

 

 

      8,760

 

 

          -  

 

    Consumer

 

 

 

 23,059  

 

 

 33,741  

 

 

 49,652  

 

 

 42,149  

 

 

 42,295  

 

    Auto and Leasing

 

 

 

   87,551

 

 

    78,313

 

 

    78,584

 

 

    86,784

 

 

    77,602

 

        Total

 

 

$

 253,655  

 

$

 190,793  

 

$

 254,480  

 

$

 218,858  

 

$

 257,937  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) During the Q3 and Q4 2017, earnings were impacted by Hurricanes Irma and Maria, which struck the island on September 7, 2017 and September 20, 2017, respectively. Based on our assessment of the facts we have increased our provision for the allowance of loan losses in the 3Q 2017 and 4Q 2017 by $27 million and $5.4 million, respectively, related to these hurricanes.

(b) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value.  As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

2017 Q4

 

2017 Q3

 

2017 Q2

 

2017 Q1

 

2016 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

 

 

$

493,354

 

 $  

1,516

 

1.22

%

 

$

426,197

 

 $  

1,304

 

1.21

%

 

$

384,037

 

 $  

956

 

1.00

%

 

$

431,110

 

 $  

845

 

0.79

%

 

$

445,246

 

 $  

581

 

0.52

%

    Investment securities

 

 

 

1,160,812

 

 

6,593

 

2.25

%

 

 

1,170,714

 

 

6,584

 

2.23

%

 

 

1,334,938

 

 

7,747

 

2.33

%

 

 

1,360,186

 

 

7,683

 

2.29

%

 

 

1,330,951

 

 

7,699

 

2.30

%

    Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Non-acquired loans

 

 

 

3,111,849

 

 

56,183

 

7.16

%

 

 

3,062,739

 

 

58,939

 

7.63

%

 

 

3,051,549

 

 

53,448

 

7.03

%

 

 

3,015,456

 

 

51,955

 

6.99

%

 

 

3,009,579

 

 

51,581

 

6.82

%

          Acquired BBVAPR loans

 

 

 

869,269

 

 

15,310

 

6.99

%

 

 

893,596

 

 

19,189

 

8.52

%

 

 

949,479

 

 

17,752

 

7.50

%

 

 

997,649

 

 

19,085

 

7.76

%

 

 

1,050,468

 

 

20,232

 

7.66

%

          Acquired Eurobank loans

 

 

 

100,309

 

 

3,573

 

14.13

%

 

 

105,707

 

 

4,339

 

16.29

%

 

 

128,522

 

 

6,037

 

18.84

%

 

 

128,522

 

 

6,610

 

20.86

%

 

 

135,919

 

 

6,701

 

19.61

%

            Total loans

 

 

 

4,081,427

 

 

75,066

 

7.30

%

 

 

4,062,042

 

 

82,467

 

8.05

%

 

 

4,129,550

 

 

77,237

 

7.50

%

 

 

4,141,627

 

 

77,650

 

7.60

%

 

 

4,195,966

 

 

78,514

 

7.44

%

Total interest-earning assets

 

 

$

5,735,593

 

$

83,175

 

5.75

%

 

$

5,658,953

 

$

90,355

 

6.33

%

 

$

5,848,525

 

$

85,940

 

5.89

%

 

$

5,932,923

 

$

86,178

 

5.89

%

 

$

5,972,163

 

$

86,794

 

5.78

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        NOW accounts

 

 

$

1,040,153

 

$

922

 

0.35

%

 

$

1,024,480

 

$

880

 

0.34

%

 

$

1,080,135

 

$

1,051

 

0.39

%

 

$

1,092,389

 

$

1,041

 

0.39

%

 

$

1,119,597

 

$

1,172

 

0.42

%

        Savings accounts

 

 

 

1,224,815

 

 

1,530

 

0.50

%

 

 

1,142,338

 

 

1,426

 

0.50

%

 

 

1,151,650

 

 

1,485

 

0.52

%

 

 

1,164,040

 

 

1,481

 

0.52

%

 

 

1,126,600

 

 

1,384

 

0.49

%

        Time deposits

 

 

 

1,046,191

 

 

2,932

 

1.11

%

 

 

1,052,910

 

 

2,902

 

1.09

%

 

 

1,037,063

 

 

2,802

 

1.08

%

 

 

1,019,528

 

 

2,715

 

1.08

%

 

 

1,045,732

 

 

2,794

 

1.06

%

        Brokered deposits

 

 

 

524,198

 

 

2,079

 

1.57

%

 

 

554,650

 

 

2,163

 

1.55

%

 

 

575,642

 

 

2,084

 

1.45

%

 

 

574,549

 

 

1,885

 

1.33

%

 

 

583,607

 

 

1,895

 

1.29

%

 

 

 

 

3,835,357

 

 

7,463

 

0.77

%

 

 

3,774,378

 

 

7,371

 

0.77

%

 

 

3,844,490

 

 

7,422

 

0.77

%

 

 

3,850,506

 

 

7,122

 

0.75

%

 

 

3,875,536

 

 

7,245

 

0.74

%

        Non-interest bearing deposit accounts

 

 

 

937,328

 

 

-

 

-

 

 

 

835,255

 

 

-

 

-

 

 

 

835,026

 

 

-

 

-

 

 

 

832,659

 

 

-

 

-

 

 

 

832,332

 

 

-

 

-

%

        Fair value premium amortization and core deposit intangible amortization

 

 

 

-

 

 

230

 

-

 

 

 

-

 

 

231

 

-

 

 

 

-

 

 

231

 

-

 

 

 

-

 

 

231

 

-

 

 

 

-

 

 

186

 

-

 

            Total deposits

 

 

 

4,772,685

 

 

7,693

 

0.64

%

 

 

4,609,633

 

 

7,602

 

0.65

%

 

 

4,679,516

 

 

7,653

 

0.66

%

 

 

4,683,165

 

 

7,353

 

0.64

%

 

 

4,707,868

 

 

7,431

 

0.63

%

    Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Securities sold under agreements to repurchase

 

 

 

236,522

 

 

963

 

1.62

%

 

 

325,201

 

 

1,281

 

1.56

%

 

 

472,338

 

 

1,733

 

1.47

%

 

 

574,771

 

 

3,244

 

2.29

%

 

 

608,802

 

 

4,177

 

2.73

%

        Advances from FHLB and other borrowings

 

 

 

101,454

 

 

600

 

2.35

%

 

 

100,751

 

 

596

 

2.35

%

 

 

105,911

 

 

607

 

2.30

%

 

 

105,097

 

 

596

 

2.30

2

 

 

105,561

 

 

611

 

2.30

%

        Subordinated capital notes

 

 

 

36,083

 

 

406

 

4.46

%

 

 

36,083

 

 

398

 

4.38

%

 

 

36,083

 

 

384

 

4.27

%

 

 

36,083

 

 

367

 

4.12

%

 

 

36,083

 

 

362

 

3.99

%

            Total borrowings

 

 

 

374,059

 

 

1,969

 

2.09

%

 

 

462,035

 

 

2,275

 

1.95

%

 

 

614,332

 

 

2,724

 

1.78

%

 

 

715,951

 

 

4,207

 

2.38

%

 

 

750,446

 

 

5,150

 

2.73

%

Total interest-bearing liabilities

 

 

 $  

5,146,744

 

 $  

9,662

 

0.74

%

 

 $  

5,071,668

 

 $  

9,877

 

0.77

%

 

 $  

5,293,848

 

 $  

10,377

 

0.79

%

 

 $  

5,399,116

 

 $  

11,560

 

0.87

%

 

 $  

5,458,314

 

 $  

12,581

 

0.92

%

Interest rate spread

 

 

 

 

 

$

73,513

 

5.01

%

 

 

 

 

$

80,478

 

5.56

%

 

 

 

 

$

75,563

 

5.10

%

 

 

 

 

$

74,618

 

5.02

%

 

 

 

 

$

74,213

 

4.86

%

Net interest margin

 

 

 

 

 

 

 

 

5.08

%

 

 

 

 

 

 

 

5.64

%

 

 

 

 

 

 

 

5.18

%

 

 

 

 

 

 

 

5.10

%

 

 

 

 

 

 

 

4.94

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 310-30 loan cost recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Acquired BBVAPR loans

 

 

 

 

 

$

199

 

 

 

 

 

 

 

$

3,220

 

 

 

 

 

 

 

$

300

 

 

 

 

 

 

 

$

245

 

 

 

 

 

 

 

$

130

 

 

 

          Acquired Eurobank loans

 

 

 

 

 

 

526

 

 

 

 

 

 

 

 

523

 

 

 

 

 

 

 

 

615

 

 

 

 

 

 

 

 

1,055

 

 

 

 

 

 

 

 

729

 

 

 

 

 

 

 

 

 

$

725

 

 

 

 

 

 

 

$

3,743

 

 

 

 

 

 

 

$

915

 

 

 

 

 

 

 

$

1,300

 

 

 

 

 

 

 

$

859

 

 

 

Adjusted excluding cost recoveries (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets

 

 

$

5,735,593

 

$

82,450

 

5.70

%

 

$

5,658,953

 

$

86,612

 

6.07

%

 

$

5,848,525

 

$

85,025

 

5.83

%

 

$

5,932,923

 

$

84,878

 

5.80

%

 

$

5,972,163

 

$

85,935

 

5.72

%

Interest rate spread

 

 

 

 

 

 $  

72,788

 

4.96

%

 

 

 

 

 $  

76,735

 

5.30

%

 

 

 

 

 $  

74,648

 

5.04

%

 

 

 

 

 $  

73,318

 

4.93

%

 

 

 

 

 $  

73,354

 

4.80

%

Net interest margin

 

 

 

 

 

 

 

 

5.03

%

 

 

 

 

 

 

 

5.38

%

 

 

 

 

 

 

 

5.12

%

 

 

 

 

 

 

 

5.01

%

 

 

 

 

 

 

 

4.89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

2017 YTD

 

2016 YTD

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

(Dollars in thousands) (unaudited)

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash equivalents

 

 

$

436,913

 

 $  

4,620

 

1.06

%

 

$

484,586

 

 $  

2,501

 

0.52

%

 

    Investment securities

 

 

 

1,255,881

 

 

28,607

 

2.28

%

 

 

1,346,261

 

 

32,146

 

2.39

%

 

    Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Non-acquired loans

 

 

 

3,061,651

 

 

220,590

 

7.20

%

 

 

3,098,701

 

 

199,173

 

6.43

%

 

          Acquired BBVAPR loans

 

 

 

927,498

 

 

71,271

 

7.68

%

 

 

1,140,785

 

 

92,273

 

8.09

%

 

          Acquired Eurobank loans

 

 

 

136,655

 

 

20,559

 

15.04

%

 

 

139,670

 

 

30,499

 

21.84

%

 

            Total loans

 

 

 

4,125,804

 

 

312,420

 

7.57

%

 

 

4,379,156

 

 

321,945

 

7.35

%

 

Total interest-earning assets

 

 

$

5,818,598

 

$

345,647

 

5.94

%

 

$

6,210,003

 

$

356,592

 

5.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        NOW accounts

 

 

$

1,059,051

 

$

3,893

 

0.37

%

 

$

1,200,394

 

$

5,086

 

0.42

%

 

        Savings accounts

 

 

 

1,170,800

 

 

5,922

 

0.51

%

 

 

1,114,931

 

 

5,441

 

0.49

%

 

        Time deposits

 

 

 

1,039,034

 

 

11,352

 

1.09

%

 

 

999,231

 

 

10,582

 

1.06

%

 

        Brokered deposits

 

 

 

557,115

 

 

8,211

 

1.47

%

 

 

619,569

 

 

7,450

 

1.20

%

 

 

 

 

 

3,826,000

 

 

29,378

 

0.77

%

 

 

3,934,125

 

 

28,559

 

0.73

%

 

        Non-interest bearing deposit accounts

 

 

 

860,287

 

 

-

 

-

 

 

 

781,877

 

 

-

 

-

%

 

        Fair value premium amortization and core deposit intangible amortization

 

 

 

-

 

 

920

 

-

 

 

 

-

 

 

694

 

-

 

 

            Total deposits

 

 

 

4,686,287

 

 

30,298

 

0.65

%

 

 

4,716,002

 

 

29,253

 

0.62

%

 

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Securities sold under agreements to repurchase

 

 

 

401,070

 

 

7,223

 

1.80

%

 

 

663,845

 

 

18,805

 

2.83

%

 

        Advances from FHLB and other borrowings

 

 

 

103,214

 

 

2,398

 

2.32

%

 

 

238,366

 

 

6,186

 

2.60

%

 

        Subordinated capital notes

 

 

 

36,083

 

 

1,556

 

4.31

%

 

 

85,714

 

 

2,921

 

3.41

%

 

            Total borrowings

 

 

 

540,367

 

 

11,177

 

2.07

%

 

 

987,925

 

 

27,912

 

2.83

%

 

Total interest-bearing liabilities

 

 

 $  

5,226,654

 

 $  

41,475

 

0.79

%

 

 $  

5,703,927

 

 $  

57,165

 

1.00

%

 

Interest rate spread

 

 

 

 

 

$

304,172

 

5.15

%

 

 

 

 

$

299,427

 

4.74

%

 

Net interest margin

 

 

 

 

 

 

 

 

5.23

%

 

 

 

 

 

 

 

4.82

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 310-30 loan cost recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Acquired BBVAPR loans

 

 

 

 

 

$

3,964

 

 

 

 

 

 

 

 

1,915

 

 

 

 

          Acquired Eurobank loans

 

 

 

 

 

 

2,719

 

 

 

 

 

 

 

 

5,606

 

 

 

 

 

 

 

 

 

 

$

6,683

 

 

 

 

 

 

 

$

7,521

 

 

 

 

Adjusted excluding cost recoveries (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets

 

 

$

5,818,598

 

$

338,964

 

5.83

%

 

$

6,210,003

 

$

349,071

 

5.62

%

 

Interest rate spread

 

 

 

 

 

 $  

297,489

 

5.04

%

 

 

 

 

 $  

291,906

 

4.62

%

 

Net interest margin

 

 

 

 

 

 

 

 

5.11

%

 

 

 

 

 

 

 

4.70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

(Dollars in thousands) (unaudited)

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

Net Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

$

1,248

 

$

834

 

$

2,162

 

$

2,379

 

$

2,075

 

  Recoveries

 

 

 

(126)

 

 

(341)

 

 

(63)

 

 

(56)

 

 

(125)

 

      Total mortgage

 

 

 

1,122

 

 

493

 

 

2,099

 

 

2,323

 

 

1,950

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

1,260

 

 

727

 

 

4,841

(a)

 

856

 

 

3,901

 

  Recoveries

 

 

 

(401)

 

 

(654)

 

 

(136)

 

 

(89)

 

 

(53)

 

      Total commercial

 

 

 

859

 

 

73

 

 

4,705

 

 

767

 

 

3,848

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

1,849

 

 

4,424

 

 

4,012

 

 

3,358

 

 

3,243

 

  Recoveries

 

 

 

(96)

 

 

(168)

 

 

(780)

(b)

 

(165)

 

 

(97)

 

      Total consumer

 

 

 

1,753

 

 

4,256

 

 

3,232

 

 

3,193

 

 

3,146

 

Auto and Leasing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

9,182

 

 

9,387

 

 

7,775

 

 

7,563

 

 

7,464

 

  Recoveries

 

 

 

(2,450)

 

 

(2,394)

 

 

(4,176)

(b)

 

(3,294)

 

 

(2,902)

 

      Total auto and leasing

 

 

 

6,732

 

 

6,993

 

 

3,599

 

 

4,269

 

 

4,562

 

          Total

 

 

$

10,466

 

$

11,815

 

$

13,635

 

$

10,552

 

$

13,506

 

Net Charge-off Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

0.65%

 

 

0.28%

 

 

1.20%

 

 

1.31%

 

 

1.07%

 

Commercial

 

 

 

0.27%

 

 

0.02%

 

 

1.50%

(a)

 

0.25%

 

 

1.22%

 

Consumer

 

 

 

2.30%

 

 

5.65%

 

 

4.42%

(b)

 

4.57%

 

 

4.62%

 

Auto and Leasing

 

 

 

3.13%

 

 

3.37%

 

 

1.79%

(b)

 

2.19%

 

 

2.44%

 

          Total

 

 

 

1.35%

 

 

1.54%

 

 

1.79%

 

 

1.40%

 

 

1.80%

 

Average Loans Held For Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

688,312

 

$

692,782

 

$

698,782

 

$

711,553

 

$

730,707

 

Commercial

 

 

 

1,257,619

 

 

1,239,390

 

 

1,256,827

 

 

1,245,530

 

 

1,258,896

 

Consumer

 

 

 

304,760

 

 

301,121

 

 

292,739

 

 

279,558

 

 

272,353

 

Auto and Leasing

 

 

 

861,158

 

 

829,446

 

 

803,201

 

 

778,815

 

 

747,623

 

        Total

 

 

$

3,111,849

 

$

3,062,739

 

$

3,051,549

 

$

3,015,456

 

$

3,009,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) On June 30, 2017, the Company entered into an agreement for the sale of a municipality loan for $28.8 million. At June 30, 2017, this loan, which included a principal payment of $4.8 million received in July 1, 2017, was reported as other loans held for sale, at fair value.  As a result of this transaction, the Company recognized a $4.3 million charge-off during the second quarter. Proceeds were received on July 5, 2017. An allowance of $5.9 million was created during the second quarter for the remaining portfolio of municipal loans.

 

(b) During Q2 2017 , the Company had additional recoveries in auto and consumer loans of $1.1 million and $612 thousand, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

(Dollars in thousands) (unaudited)

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

Early Delinquency (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

17,315

 

$

35,273

 

$

32,292

 

$

30,827

 

$

32,516

 

Commercial

 

 

 

2,620

 

 

2,727

 

 

4,648

 

 

5,708

 

 

1,602

 

Consumer

 

 

 

6,149

 

 

7,504

 

 

5,495

 

 

6,024

 

 

5,106

 

Auto and Leasing

 

 

 

32,159

 

 

71,606

 

 

66,372

 

 

61,912

 

 

61,728

 

        Total

 

 

$

58,243

(b)

$

117,110

(a)

$

108,807

 

$

104,471

 

$

100,952

 

Early Delinquency Rates (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

2.53%

 

 

5.08%

 

 

4.62%

 

 

4.34%

 

 

4.51%

 

Commercial

 

 

 

0.20%

 

 

0.22%

 

 

0.37%

 

 

0.46%

 

 

0.13%

 

Consumer

 

 

 

1.86%

 

 

2.37%

 

 

1.75%

 

 

2.01%

 

 

1.76%

 

Auto and Leasing

 

 

 

3.64%

 

 

8.61%

 

 

8.22%

 

 

7.87%

 

 

8.16%

 

        Total

 

 

 

1.82%

(b)

 

3.79%

(a)

 

3.52%

 

 

3.42%

 

 

3.31%

 

Total Delinquency (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

$

76,542

 

$

88,936

 

$

85,908

 

$

90,849

 

$

98,506

 

    GNMA's buy-back option program

 

 

 

8,268

 

 

12,999

 

 

9,229

 

 

9,973

 

 

9,681

 

        Total mortgage

 

 

 

84,810

 

 

101,935

 

 

95,137

 

 

100,822

 

 

108,187

 

Commercial

 

 

 

18,509

 

 

18,149

 

 

18,154

 

 

15,711

 

 

12,798

 

Consumer

 

 

 

8,028

 

 

8,847

 

 

7,275

 

 

7,383

 

 

6,752

 

Auto and Leasing

 

 

 

36,391

 

 

82,437

 

 

74,577

 

 

69,622

 

 

69,901

 

        Total

 

 

$

147,738

(b)

$

211,368

(a)

$

195,143

 

$

193,538

 

$

197,638

 

Total Delinquency Rates (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

 

11.20%

 

 

12.81%

 

 

12.29%

 

 

12.80%

 

 

13.65%

 

    GNMA's buy-back option program

 

 

 

1.21%

 

 

1.87%

 

 

1.32%

 

 

1.40%

 

 

1.34%

 

        Total mortgage

 

 

 

12.41%

 

 

14.68%

 

 

13.60%

 

 

14.20%

 

 

14.99%

 

Commercial

 

 

 

1.42%

 

 

1.46%

 

 

1.43%

 

 

1.25%

 

 

1.00%

 

Consumer

 

 

 

2.43%

 

 

2.80%

 

 

2.31%

 

 

2.46%

 

 

2.32%

 

Auto and Leasing

 

 

 

4.12%

 

 

9.92%

 

 

9.24%

 

 

8.85%

 

 

9.24%

 

        Total

 

 

 

4.61%

(b)

 

6.84%

(a)

 

6.31%

 

 

6.34%

 

 

6.49%

 

Nonperforming Assets

(14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

64,085

 

$

59,667

 

$

63,071

 

$

66,781

 

$

74,503

 

Commercial

 

 

 

35,253

 

 

21,701

 

 

23,519

 

 

19,387

 

 

19,786

 

Consumer

 

 

 

2,572

 

 

2,445

 

 

2,687

 

 

1,948

 

 

1,986

 

Auto and Leasing

 

 

 

4,232

 

 

11,811

 

 

8,295

 

 

8,709

 

 

9,052

 

        Total nonperforming loans

 

 

 

106,142

 

 

95,624

(a)

 

97,572

 

 

96,825

 

 

105,327

 

Foreclosed real estate

 

 

 

14,282

 

 

14,677

 

 

15,320

 

 

12,946

 

 

11,867

 

Other repossessed assets

 

 

 

3,172

 

 

3,635

 

 

2,921

 

 

2,600

 

 

2,408

 

        Total nonperforming assets

 

 

$

123,596

 

$

113,936

 

$

115,813

 

$

112,371

 

$

119,602

 

Nonperforming Loan Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

9.37%

 

 

8.59%

 

 

9.02%

 

 

9.41%

 

 

10.33%

 

Commercial

 

 

 

2.70%

 

 

1.74%

 

 

1.85%

 

 

1.55%

 

 

1.55%

 

Consumer

 

 

 

0.78%

 

 

0.77%

 

 

0.86%

 

 

0.65%

 

 

0.68%

 

Auto and Leasing

 

 

 

0.48%

 

 

1.42%

 

 

1.03%

 

 

1.11%

 

 

1.20%

 

        Total loans

 

 

 

3.31%

 

 

3.10%

(a)

 

3.16%

 

 

3.17%

 

 

3.46%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 auto, personal, credit cards and non-conforming mortgage loans, for customers whose payments were not over 89 days past due at August 31, 2017. Both, interest and principal will be payable at the maturity of the loan. For conforming mortgage loans the same moratorium applies, but the interest and principal will be payable in aggregate with the next payment due after the moratorium period. The Company also offered an automatic one-month moratorium for the payment of principal and interest for commercial loans, for customers whose payments were not over 30 days past due at August 31, 2017 and the flexibility of extending it up to two additional months, if the customer needs it.

 

(b) 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, 2017

 

 

 

 

 

 

 

 

 

Auto and

 

 

(Dollars in thousands) (unaudited)

 

 

Mortgage

 

Commercial

 

Consumer

 

Leasing

 

Total

Non-acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

22,308

 

$

24,278

 

$

15,793

 

$

25,162

 

$

87,541

Provision (recapture) for loan and lease losses, net

 

 

 

(747)

 

 

6,839

 

 

2,414

 

 

7,137

 

 

15,643

Charge-offs

 

 

 

(1,248)

 

 

(1,260)

 

 

(1,849)

 

 

(9,182)

 

 

(13,539)

Recoveries

 

 

 

126

 

 

401

 

 

96

 

 

2,450

 

 

3,073

    Balance at end of period

 

 

$

20,439

 

$

30,258

 

$

16,454

 

$

25,567

 

$

92,718

Allowance coverage ratio

 

 

 

2.99%

 

 

2.31%

 

 

4.99%

 

 

2.89%

 

 

2.89%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired BBVAPR loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

 

 

 

$

41

 

$

2,591

 

$

731

 

$

3,363

Provision (recapture) for loan and lease losses, net

 

 

 

 

 

 

-

 

 

1,261

 

 

(34)

 

 

1,227

Charge-offs

 

 

 

 

 

 

-

 

 

(681)

 

 

(271)

 

 

(952)

Recoveries

 

 

 

 

 

 

1

 

 

54

 

 

169

 

 

224

    Balance at end of period

 

 

 

 

 

$

42

 

$

3,225

 

$

595

 

$

3,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

8,931

 

$

23,941

 

$

-

 

$

7,238

 

$

40,110

Provision for loan and lease losses, net

 

 

 

5,154

 

 

(10)

 

 

18

 

 

723

 

 

5,885

Allowance de-recognition

 

 

 

-

 

 

(240)

(a)

 

-

 

 

-

 

 

(240)

    Balance at end of period

 

 

$

14,085

 

$

23,691

 

$

18

 

$

7,961

 

$

45,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired Eurobank loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

14,219

 

$

8,922

 

$

5

 

$

-

 

$

23,146

Provision (recapture) for loan and lease losses, net

 

 

 

1,034

 

 

1,118

 

 

-

 

 

-

 

 

2,152

Allowance de-recognition

 

 

 

(66)

 

 

(58)

 

 

-

 

 

-

 

 

(124)

    Balance at end of period

 

 

$

15,187

 

$

9,982

 

$

5

 

$

-

 

$

25,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

23,150

 

$

32,904

 

$

2,596

 

$

7,969

 

$

66,619

Provision (recapture) for loan and lease losses, net

 

 

 

6,188

 

 

1,108

 

 

1,279

 

 

689

 

 

9,264

Charge-offs

 

 

 

-

 

 

-

 

 

(681)

 

 

(271)

 

 

(952)

Recoveries

 

 

 

-

 

 

1

 

 

54

 

 

169

 

 

224

Allowance de-recognition

 

 

 

(66)

 

 

(298)

 

 

-

 

 

-

 

 

(364)

    Balance at end of period

 

 

$

29,272

 

$

33,715

 

$

3,248

 

$

8,556

 

$

74,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2017

(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

 

 

$

256,556

 

$

39,621

 

$

10,069

 

$

3,508

 

$

1,165

 

$

310,919

Accretion

 

 

 

(7,187)

 

$

(2,743)

 

$

(1,221)

 

$

(1,066)

 

$

(299)

 

$

(12,516)

Change in expected cash flows

 

 

 

-

 

 

2,324

 

 

17

 

 

7

 

 

20

 

 

2,368

Transfers (to) from non-accretable discount

 

 

 

9,129

 

 

(1,145)

 

 

(158)

 

 

317

 

 

(1)

 

 

8,142

    Balance at end of period

 

 

$

258,498

 

$

38,057

 

$

8,707

 

$

2,766

 

$

885

 

$

308,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

310,352

 

$

3,850

 

$

7,288

 

$

23,777

 

$

19,281

 

$

364,548

Change in actual and expected cash flows

 

 

 

(1,722)

 

 

(1,833)

 

 

(12)

 

 

(410)

 

 

2

 

 

(3,975)

Transfers from (to) accretable yield

 

 

 

(9,129)

 

 

1,145

 

 

158

 

 

(317)

 

 

1

 

 

(8,142)

    Balance at end of period

 

 

$

299,501

 

$

3,162

 

$

7,434

 

$

23,050

 

$

19,284

 

$

352,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

42,388

 

$

8,231

 

$

1,764

 

$

-

 

$

-

 

$

52,383

Accretion

 

 

 

(1,616)

 

 

(1,934)

 

 

-

 

 

(8)

 

 

(15)

 

 

(3,573)

Change in expected cash flows

 

 

 

2

 

 

454

 

 

39

 

 

(3)

 

 

29

 

 

521

Transfers from (to) non-accretable discount

 

 

 

700

 

 

-

 

 

(356)

 

 

11

 

 

(14)

 

 

341

    Balance at end of period

 

 

$

41,474

 

$

6,751

 

$

1,447

 

$

-

 

$

-

 

$

49,672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

5,613

 

$

688

 

$

402

 

$

-

 

$

232

 

$

6,935

Change in actual and expected cash flows

 

 

 

(337)

 

 

(412)

 

 

-

 

 

11

 

 

(11)

 

 

(749)

Transfers (to) from accretable yield

 

 

 

(700)

 

 

-

 

 

356

 

 

(11)

 

 

14

 

 

(341)

    Balance at end of period

 

 

$

4,576

 

$

276

 

$

758

 

$

-

 

$

235

 

$

5,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

2017

 

2017

 

2017

 

2016

(Dollars in thousands) (unaudited)

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

Stockholders' Equity to Non-GAAP Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

945,107

 

$

937,630

 

$

938,969

 

$

931,429

 

$

920,411

Less:  Intangible assets

 

 

 

(90,756)

 

 

(91,124)

 

 

(91,493)

 

 

(91,861)

 

 

(92,229)

           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

 

 

$

688,481

 

$

680,636

 

$

681,606

 

$

673,698

 

$

662,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock outstanding at end of period

 

 

 

43,947

 

 

43,947

 

 

43,947

 

 

43,947

 

 

43,915

Tangible book value (Non-GAAP)

 

 

$

15.67

 

$

15.49

 

$

15.51

 

$

15.33

 

$

15.08

Total Assets to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets  

 

 

$

6,189,053

 

$

6,288,217

 

$

6,235,826

 

$

6,414,607

 

$

6,501,824

Less:  Intangible assets

 

 

 

(90,756)

 

 

(91,124)

 

 

(91,493)

 

 

(91,861)

 

 

(92,229)

Tangible assets (Non-GAAP)

 

 

$

6,098,297

 

$

6,197,093

 

$

6,144,333

 

$

6,322,746

 

$

6,409,595

Non-GAAP TCE Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity

 

 

$

688,481

 

$

680,636

 

$

681,606

 

$

673,698

 

$

662,312

Tangible assets

 

 

 

6,098,297

 

 

6,197,093

 

 

6,144,333

 

 

6,322,746

 

 

6,409,595

TCE ratio

 

 

 

11.29%

 

 

10.98%

 

 

11.09%

 

 

10.66%

 

 

10.33%

Average Equity to Non-GAAP Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

 

 

$

943,823

 

$

947,404

 

$

938,707

 

$

926,011

 

$

919,697

Less:  Average noncumulative perpetual preferred stock

 

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

           Average noncumulative perpetual preferred stock issuance costs

 

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

Average total common stockholders' equity

 

 

$

777,953

 

$

781,534

 

$

772,837

 

$

760,141

 

$

753,827

Less:  Average intangible assets

 

 

 

(90,951)

 

 

(91,331)

 

 

(91,731)

 

 

(92,102)

 

 

(92,502)

Average tangible common equity

 

 

$

687,002

 

$

690,203

 

$

681,106

 

$

668,039

 

$

661,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Metrics for Hurricanes Irma and Maria - Reconciliation to GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

17,073

 

$

3,319

 

$

17,104

 

$

15,150

 

$

15,556

Plus:  Additional loan loss provision from Hurricanes Irma and Maria

 

 

 

5,406

 

 

27,000

 

 

-

 

 

-

 

 

-

Less:  Income tax effect

 

 

 

(2,108)

 

 

(8,038)

 

 

-

 

 

-

 

 

-

Adjusted net income

 

 

$

20,371

 

$

22,281

 

$

17,104

 

$

15,150

 

$

15,556

Less:  dividends on preferred stock

 

 

 

(3,465)

 

 

(3,465)

 

 

(3,466)

 

 

(3,465)

 

 

(3,465)

Adjusted net income available to common shareholders

 

 

$

16,906

 

$

18,816

 

$

13,638

 

$

11,685

 

$

12,091

Plus:  Effect of assumed conversion of the convertible preferred stock

 

 

 

1,838

 

 

1,838

 

 

1,837

 

 

1,838

 

 

1,838

 

 

 

$

18,744

 

$

20,654

 

$

15,475

 

$

13,523

 

$

13,929

Average common shares outstanding and equivalents

 

 

 

51,104

 

 

51,102

 

 

51,100

 

 

51,131

 

 

51,098

Adjusted earnings per common share - diluted

 

 

$

0.37

 

$

0.40

 

$

0.30

 

$

0.26

 

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

 

$

20,371

 

$

22,281

 

$

17,104

 

$

15,150

 

$

15,556

Adjusted average assets

 

 

$

6,191,737

 

$

6,048,021

 

$

6,278,464

 

$

6,374,177

 

$

6,455,023

Adjusted return on average assets

 

 

 

1.32%

 

 

1.47%

 

 

1.09%

 

 

0.95%

 

 

0.96%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income available to common shareholders

 

 

$

16,906

 

$

18,816

 

$

13,638

 

$

11,685

 

$

12,091

Adjusted average tangible common stockholders' equity

 

 

$

687,002

 

$

690,422

 

$

681,106

 

$

668,039

 

$

661,325

Adjusted return on average tangible common stockholders' equity

 

 

 

9.84%

 

 

10.90%

 

 

8.01%

 

 

7.00%

 

 

7.31%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

BASEL III

 

 

 

 

Standardized

 

 

 

 

2017

 

2017

 

2017

 

2017

 

2016

 

(Dollars in thousands) (unaudited)

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

Regulatory Capital Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

 

$

644,804

 

$

633,401

 

$

643,606

 

$

626,707

 

$

627,732

 

Tier 1 capital

 

 

 

842,133

 

 

830,640

 

 

840,703

 

 

822,847

 

 

819,661

 

Total risk-based capital

(15)

 

 

899,258

 

 

885,523

 

 

896,926

 

 

878,867

 

 

876,656

 

Risk-weighted assets

 

 

 

4,420,667

 

 

4,252,605

 

 

4,391,321

 

 

4,383,517

 

 

4,467,556

 

Regulatory Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

(16)

 

 

14.59%

 

 

14.89%

 

 

14.66%

 

 

14.30%

 

 

14.05%

 

Tier 1 risk-based capital ratio

(17)

 

 

19.05%

 

 

19.53%

 

 

19.14%

 

 

18.77%

 

 

18.35%

 

Total risk-based capital ratio

(18)

 

 

20.34%

 

 

20.82%

 

 

20.42%

 

 

20.05%

 

 

19.62%

 

Leverage ratio

(19)

 

 

13.92%

 

 

14.07%

 

 

13.69%

 

 

13.20%

 

 

12.99%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

945,107

 

$

937,630

 

$

938,969

 

$

931,429

 

$

920,411

 

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

 

 

 

2,638

 

 

(1,371)

 

 

(256)

 

 

(3,849)

 

 

(2,209)

 

          Unrealized losses on cash flow hedges, net of income tax

 

 

 

311

 

 

529

 

 

563

 

 

501

 

 

612

 

 

 

 

 

782,186

 

 

770,918

 

 

773,406

 

 

762,211

 

 

752,944

 

Less:    Disallowed goodwill

 

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

 

            Disallowed other intangible assets, net

(20)

 

 

(2,287)

 

 

(2,466)

 

 

(2,646)

 

 

(2,826)

 

 

(2,255)

 

            Disallowed deferred tax assets, net

(20)

 

 

(49,026)

 

 

(48,982)

 

 

(41,085)

 

 

(46,609)

 

 

(36,888)

 

Common equity Tier 1 capital

 

 

 

644,804

 

 

633,401

 

 

643,606

 

 

626,707

 

 

627,732

 

Plus:  Qualifying noncumulative perpetual preferred stock

 

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

            Qualifying noncumulative perpetual preferred stock issuance costs

 

 

 

(10,130)

 

 

(10,130)

 

 

(10,130)

 

 

(10,130)

 

 

(10,130)

 

            Subordinated capital notes

 

 

 

35,000

 

 

35,000

 

 

35,000

 

 

35,000

 

 

35,000

 

Less:  Disallowed deferred tax assets, net

 

 

 

(3,541)

 

 

(3,631)

 

 

(3,773)

 

 

(4,730)

 

 

(8,941)

 

Tier 1 capital

 

 

 

842,133

 

 

830,640

 

 

840,703

 

 

822,847

 

 

819,661

 

Plus tier 2 capital:  Qualifying allowance for loan and lease losses

 

 

 

57,125

 

 

54,883

 

 

56,223

 

 

56,020

 

 

56,995

 

Total risk-based capital

 

 

$

899,258

 

$

885,523

 

$

896,926

 

$

878,867

 

$

876,656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 wealth management 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 2017 and 60% for 2016.

14
                         

 

 

 

 

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