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Exhibit 99
OFG Bancorp Reports 1Q21 Results
OFG Bancorp Reports 1Q21 Results
SAN JUAN, Puerto Rico, April 21, 2021 – OFG Bancorp (NYSE: OFG), the financial holding company for Oriental Bank, reported
results for the first quarter ended March 31, 2021.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “First quarter results reflected strong core performance based on the
continued success of our strategies focusing on agility and service. Our results also reflected the federal stimulus, increased
liquidity, and an improving Puerto Rico economy as more people get vaccinated.
“We benefitted from strong new loan generation and deposit growth, significantly reduced cost of funds, a more efficient
operating structure, and the release of some COVID-related loan reserves.
“We followed up last year’s efforts to help small businesses and their employees with another $126 million in Paycheck
Protection Program loans. Our proprietary PPP portal enables clients to apply for funds, receive them, and then apply for
forgiveness, quickly and easily, and all online.
“Performance metrics improved with a loan yield of 6.61%, return on average assets of 1.21%, return on average tangible
common stockholders’ equity of 13.11%, and an efficiency ratio of 60.84%. Credit metrics also improved as net charge -offs,
delinquency rates, and loan deferrals all fell.
“Our capital strategies are working well. In January, we increased the regular quarterly cash dividend 14%. In March, we
announced the redemption of all three outstanding series of preferred stock, which will improve our capital structure, enable
us to effectively deploy excess liquidity, and increase net income available to shareholders. As of 1Q21, we more than earned
back all the tangible book value per common share dilution involved in the Scotiabank acquisition significantly ahead of
schedule.
“As Puerto Rico and USVI continue experiencing stronger signs of economic revival, at OFG we are strategically well-
positioned to benefit from and play a major part in this long-awaited development. Thanks to all our team members who are
más que listo
beyond.”
1Q21 Highlights
Earnings:
EPS diluted was $0.56 compared to $0.42 in 4Q20 and $0.00 in 1Q20, which was the first quarter to be impacted by
the pandemic.
Revenues:
Total core revenues were $127.7 million compared to $132.8 million in 4Q20. 4Q20 benefited from $3.9 million in
seasonal annual insurance commissions, $2.0 million in mortgage sales held back from 3Q20, and $3.1 million interest
income from acquired loan pre-payments. 1Q21 included $1.6 million in interest income from unamortized yield from
approximately $92 million of forgiven PPP loans and benefitted from $1.4 million lower cost of deposits.
Expenses:
included $10.1 million in merger and restructuring expenses. 1Q21 reflected previously -announced cost savings as well as
$1.8 million primarily in gains on sales as well as improved valuations of foreclosed properties. The efficiency ratio improved
to 60.84% from 67.06% in 4Q20 and 66.49% in 1Q20.
Pre-Provision Net Revenues:
Provision:
included a $3.7 million release of last year’s COVID-19 related loan reserves and $3.5 million for a commercial loan in
workout prior to the pandemic. 1Q20 included $34.1 million related to the pandemic.
Loan Generation and Balances:
$485.3 million in 4Q20 and $280.8 million in 1Q20. In addition to PPP loans, 1Q21 was driven year -over-year by increases in
mortgage, auto, and commercial lending. Net loans were $6.43 billion at 3/31/21 compared to $6.50 billion at 12/31/20 and
$6.54 billion at 3/31/20. Net interest margin was 4.26% compared to 4.24% in 4Q20 and 4.94% in 1Q20.
Deposit Balances and Cost of Funds:
and $7.56 billion at 3/31/20. Cost of funds was 48 bps compared to 53 bps in 4Q20 and 69 bps in 1Q20. Total interest
expense was $12.8 million compared to $14.3 million in 4Q20 and $18.6 million in 1Q20.
Asset Quality:
Net charge-offs were $9.1 million compared to $44.8 million in 4Q20 and $24.0 million in 1Q20. The
nonperforming loan rate was 2.22% compared to 2.35% in 4Q20 and 2.07% in 1Q20. Total delinquency rate was 2.15%
compared to 2.68% in 4Q20 and 3.16% in 1Q20.
Capital:
13.56% compared to 13.08% in 4Q20 and 11.69% in 1Q20.
Conference Call, Financial Supplement & Presentation
A conference call to discuss 1Q21 results, outlook and related matters will be held today at 10:00 AM ET. Phone (888) 562-
3356 or (973) 582-2700. Conference ID: 319-4111. The call can also be accessed live on
www.ofgbancorp.com.
replay will be available shortly thereafter.
OFG’s Financial Supplement, with full financial tables for the quarter ended March 31, 2021, and the 1Q21 Conference Call
Presentation, can be found on the Quarterly Results 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 SEC Regulation G, to clarify and enhance understanding of past performance and prospects
for the future. Please refer to Tables 8-1 and 8-2 in OFG’s above-mentioned Financial Supplement for a reconciliation of
GAAP to non-GAAP measures and calculations.
Forward Looking Statements
The information included in this document contains certain forward -looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve
certain risks and uncertainties that may cause actual results to differ materially from those expressed in the forward -looking
statements.
Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and
employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the
magnitude of such changes; (iii) changes to the financial condition of the government of Puerto Rico; (iv) the potential impact
of damages from future hurricanes, earthquakes and other natural disasters in Puerto Rico; (v) the fiscal and monetary
policies of the federal government and its agencies; (vi) the performance of the stock and bond markets; (vii) competition in
the financial services industry; (viii) possible legislative, tax or regulatory changes; and (ix) the severity, magnitude and
duration of the COVID -19 pandemic, including impacts of the pandemic and of responses of federal, state and local
governments on our branches, operations and personnel, and on our customers and their businesses.
For a discussion of such factors and certain risks and uncertainties to which OFG is subject, please refer to OFG’s annual
report on Form 10 -K for the year ended December 31, 2020, 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 57
th
and U.S. Virgin Islands 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 and U.S. Virgin Islands. Visit us at
www.ofgbancorp.com.
# # #
Contacts
Puerto Rico & USVI:
idalis.montalvo@orientalbank.com
) at (787) 777-2847
US:
gfishman@ofgbancorp.com
) and Steven Anreder (
sanreder@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 March 31, 2021 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange
Commission.
Table of Contents
Pages
OFG Bancorp (Consolidated Financial Information)
Table 1:
Financial and Statistical Summary - Consolidated
2
Table 2:
Consolidated Statements of Operations
3
Table 3:
Consolidated Statements of Financial Condition
4
Table 4:
Information on Loan Portfolio and Production
5-6
Table 5:
Average Balances, Net Interest Income and Net Interest Margin
7
Table 6:
Loan Information and Performance Statistics
8-10
Table 7:
Allowance for Credit Losses
11
Table 8:
Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital
12-13
Table 9:
Notes to Financial Summary, Selected Metrics, Loans, and Consolidated
14
OFG Bancorp (NYSE: OFG)
Table 1: Financial and Statistical Summary - Consolidated
2021
2020
2020
2020
2020
(Dollars in thousands, except per share data) (unaudited)
Q1
Q4
Q3
Q2
Q1
Statement of Operations
Net interest income
$
98,204
98,738
99,533
$
105,060
$
105,101
Non-interest income, net (core)
(2)
29,452
34,047
27,486
23,106
26,233
Total core revenues
127,656
132,785
127,019
128,166
131,334
Non-interest expense
77,666
89,039
83,444
85,481
87,322
Pre-provision net revenues
(22)
50,945
44,123
47,415
46,731
49,229
Total provision for credit losses
6,324
14,176
13,669
17,696
(e)
47,131
Net income before income taxes
44,621
29,947
33,746
29,035
2,098
Income tax expense
14,248
6,646
6,308
7,248
297
Net income available to common stockholders
$
29,118
21,673
25,810
20,159
173
Common Share Statistics
Earnings (loss) per common share - basic
(3)
$
0.57
0.42
0.50
0.39
-
Earnings (loss) per common share - diluted
(4)
$
0.56
0.42
0.50
0.39
-
Average common shares outstanding
51,397
51,350
51,342
51,336
51,404
Average common shares outstanding and equivalents
51,616
51,618
51,527
51,470
51,713
Cash dividends per common share
$
0.08
$
0.07
$
0.07
$
0.07
$
0.07
Book value per common share (period end)
$
19.90
$
19.54
$
19.13
$
18.69
$
18.33
Tangible book value per common share (period end)
(5)
$
17.39
$
16.97
$
16.51
$
16.01
$
15.60
Balance Sheet (Average Balances)
Loans
(6)
$
6,635,908
(b)
$
6,708,284
$
6,787,022
(b)
$
6,840,650
(b)
$
6,687,875
Interest-earning assets
9,358,377
9,270,739
9,218,717
8,845,744
8,556,421
Total assets
10,004,323
9,921,254
9,918,381
9,512,129
9,326,627
Core deposits
8,535,678
8,451,308
8,376,623
7,852,495
7,516,438
Total deposits
8,581,633
8,515,646
8,517,039
8,088,106
7,752,446
Interest-bearing deposits
6,223,419
6,199,929
6,240,639
6,105,014
6,053,482
Borrowings
100,951
101,930
102,916
157,669
271,800
Stockholders' equity
1,101,046
1,083,423
1,062,460
1,037,195
1,043,481
Common stockholders' equity
1,019,176
1,001,553
980,590
955,325
961,611
Performance Metrics
Net interest margin
(7)
4.26%
4.24%
4.30%
4.78%
4.94%
Return on average assets
(8)
1.21%
0.94%
1.11%
0.92%
0.08%
Return on average tangible common stockholders' equity
(9)
13.11%
9.99%
12.23%
9.88%
0.08%
Efficiency ratio
(10)
60.84%
67.06%
65.69%
66.70%
66.49%
Full-time equivalent employees, period end
2,238
2,275
2,332
2,373
2,449
Credit Quality Metrics
(1)(21)
Allowance for loan and lease losses
$
201,973
$
204,809
$
235,313
$
232,701
$
230,755
Allowance as a % of loans held for investment
3.06%
3.07%
3.48%
(b)
3.35%
(b)
3.41%
Net charge-offs
$
9,105
$
44,814
$
10,570
$
15,750
$
24,034
Net charge-off rate
(11)
0.55%
2.67%
0.62%
0.92%
1.44%
Early delinquency rate (30 - 89 days past due)
2.15%
2.68%
2.50%
2.64%
3.16%
Total delinquency rate (30 days and over)
4.65%
5.74%
5.67%
5.56%
6.38%
Capital Ratios (Non-GAAP)
(12)(20)
Leverage ratio
10.48%
10.30%
10.00%
10.16%
10.14%
Common equity Tier 1 capital ratio
13.56%
13.08%
12.55%
12.03%
11.69%
Tier 1 risk-based capital ratio
15.28%
14.78%
14.25%
13.71%
13.36%
Total risk-based capital ratio
16.54%
16.04%
15.50%
14.96%
14.62%
Tangible common equity ("TCE") ratio
8.95%
9.00%
8.58%
8.39%
8.80%
(a) During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.
(b) At June 30, 2020, September 30, 2020, December 31, 2020 and March 31, 2021, the Company had PPP loans amounting to $278.1 million, $289.2 million, $282.7 million and
$336.7 million, respectively. These loans are fully guaranteed by the SBA and risk-weighted at 0%.
(c) During 1Q 2020, the Company early implemented Simplifications to the Capital Rule, which increased common equity tier 1 (CET1) capital threshold deductions from 10 percent
to 25 percent and removed the aggregate 15 percent CET1 threshold deduction.
(d) On January 1, 2020, the Company implemented ASU No. 2016 -13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective approach. As
a result, a $39.2 million allowance for credit losses was recorded for Non-PCD loans and $0.2 million for unused commitments with the corresponding adjustment reducing retained
earnings, net of a $13.9 million deferred tax effect. For PCD loans, the adjustment amounting to $50.5 million was made through the allowance and loan balances with no impact in
capital. The Company elected to phase-in the January 1, 2020 (“day 1”) impact to retained earnings to regulatory capital over the five -year transition period beginning in 2020.
(e) During 1Q 2020 and 2Q2020, the Company increased its provision for credit losses by $34.1 million and $5 million, respectively, as a result of the Covid-19 pandemic.
2
OFG Bancorp (NYSE: OFG)
Table 2: Consolidated Statements of Operations
Quarter Ended
March 31,
December 31,
September 30,
June 30,
March 31,
(Dollars in thousands, except per share data) (unaudited)
2021
2020
2020
2020
2020
Interest income:
Loans
(1)
$
82,936
$
81,171
$
83,029
$
83,832
$
87,482
25,275
29,250
29,018
(b)
34,700
(b)
28,953
108,211
110,421
112,047
118,532
116,435
Investment securities
2,771
2,600
2,890
3,160
7,262
110,982
113,021
114,937
121,692
123,697
Interest expense:
Deposits
11,861
13,225
13,808
13,999
15,034
163
288
812
1,446
1,586
12,024
13,513
14,620
15,445
16,620
Borrowings
754
770
784
1,187
1,976
12,778
14,283
15,404
16,632
18,596
Net interest income
98,204
98,738
99,533
105,060
105,101
Provision for credit losses, excluding PCD loans
(1)
2,998
15,464
13,845
15,227
40,951
Provision (recapture) for credit losses on PCD loans
3,326
(1,288)
(176)
2,469
6,180
6,324
14,176
13,669
17,696
(d)
47,131
(d)
91,880
84,562
85,864
87,364
57,970
Non-interest income:
Banking service revenues
16,493
16,901
16,297
13,668
15,713
Wealth management revenues
7,388
10,865
(a)
7,272
6,366
7,286
Mortgage banking activities
5,571
6,281
3,917
3,072
3,234
29,452
34,047
27,486
23,106
26,233
Bargain purchase from Scotiabank PR & USVI acquisition
-
-
3,465
3,462
409
Other income, net
955
377
375
584
4,808
30,407
34,424
31,326
27,152
31,450
Non-interest expense:
Compensation and employee benefits
32,618
30,921
31,955
34,506
35,544
Occupancy, equipment and infrastructure costs
13,128
12,064
11,943
11,837
11,439
General and administrative expenses
30,201
33,454
33,452
31,181
37,345
Net (gain) loss on sale of foreclosed real estate and other repossessed assets
(1,770)
(300)
(866)
316
(193)
Credit related expenses
1,720
1,304
2,189
2,602
2,715
Merger and restructuring charges
-
10,092
2,681
3,006
304
COVID 19 expenses
1,769
1,504
2,090
2,033
168
77,666
89,039
83,444
85,481
87,322
Income before income taxes
44,621
29,947
33,746
29,035
2,098
Income tax expense
14,248
6,646
6,308
7,248
297
Net income
30,373
23,301
27,438
21,787
1,801
Less: dividends on preferred stock
(1,255)
(1,628)
(1,628)
(1,628)
(1,628)
Net income available to common shareholders
$
29,118
$
21,673
$
25,810
$
20,159
$
173
(a) During 4Q 2020, the Company recognized annual insurance contingent commissions amounting to $4.0 million.
(b) During 2Q 2020 and 3Q 2020, the Company recognized interest recoveries on SOP loans acquired in the Scotiabank PR & USVI acquisition collected subsequently to the acquisition
date amounting to $6.0 million and $469 thousand, respectively.
(c) During 1Q 2020, 2Q 2020 and 3Q2020, the Company increased the Bargain purchase from Scotiabank PR & USVI acquisition by $ 0.4 million, $3.5 million and $3.5 million,
respectively, as part of remeasurement period adjustments.
(d) During 1Q 2020 and 2Q2020, the Company increased its provision for credit losses by $34.1 million and $5 million, respectively, as a result of the Covid-19 pandemic.
(e) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, incurring in merger and restructuring charges of $3.0 million during 2Q 2020, $2.7
million during 3Q 2020, and $10.1 million during 4Q 2020.
(f) During 1Q 2020, the Company sold $316 million available -for-sale mortgage -backed securities and recognized a gain in the sale of $4.7 million.
3
OFG Bancorp (NYSE: OFG)
Table 3: Consolidated Statements of Financial Condition
March 31,
December 31,
September 30,
June 30,
March 31,
(Dollars in thousands) (unaudited)
2021
2020
2020
2020
2020
Cash and cash equivalents
$
2,409,416
$
2,155,577
$
2,283,050
$
1,900,037
$
1,325,941
Investments:
Trading securities
23
22
22
22
29
Investment securities available-for-sale, at fair value,
457,673
432,935
329,719
340,192
355,637
10,946
10,983
91,531
197,340
298,986
2,390
2,520
2,565
2,707
2,837
471,009
446,438
423,815
540,239
657,460
Mortgage-backed securities held-to-maturity, at amortized cost,
no allowance for credit losses
126,767
-
-
-
-
Federal Home Loan Bank (FHLB) stock, at cost
8,233
8,278
8,322
8,366
10,301
Other investments
5,557
3,962
2,205
1,076
973
611,589
458,700
434,364
549,703
668,763
Loans, net
6,432,079
6,501,259
6,579,140
6,739,243
6,541,174
Other assets:
Prepaid expenses
58,348
61,416
54,583
40,119
44,633
Deferred tax asset, net
154,540
162,478
178,957
186,730
196,129
Foreclosed real estate and repossessed properties
18,366
13,412
21,374
26,152
30,388
Premises and equipment, net
83,756
83,786
83,270
82,234
81,834
Goodwill
86,069
86,069
86,069
86,069
86,069
Right of use assets
32,714
31,383
35,900
34,692
36,844
Core deposit, customer relationship intangible and other intangibles
43,445
45,896
48,650
51,406
54,174
Servicing asset
47,911
47,295
47,242
47,926
49,287
Accounts receivable and other assets
175,109
178,740
166,392
188,408
123,335
Total assets
$
10,153,342
$
9,826,011
$
10,018,991
$
9,932,719
$
9,238,571
Deposits:
Demand deposits
$
4,885,311
$
4,613,309
$
4,682,991
$
4,370,419
$
3,711,492
Savings accounts
2,142,573
1,920,325
1,919,859
1,978,118
1,829,054
Time deposits
1,693,924
1,832,891
1,933,517
1,975,223
2,023,211
Brokered deposits
34,954
49,115
96,090
218,166
255,514
8,756,762
8,415,640
8,632,457
8,541,926
7,819,271
Borrowings:
Securities sold under agreements to repurchase
-
-
-
-
50,103
Advances from FHLB and other borrowings
65,013
66,268
66,781
68,340
77,601
Subordinated capital notes
36,083
36,083
36,083
36,083
36,083
101,096
102,351
102,864
104,423
163,787
Other liabilities:
Derivative liabilities
1,465
1,712
1,895
2,078
2,059
Acceptances outstanding
24,389
33,349
18,291
20,034
11,763
Lease liability
34,017
32,566
37,029
35,694
37,702
Accrued expenses and other liabilities
127,190
154,418
162,133
187,280
181,395
9,044,919
8,740,036
8,954,669
8,891,435
8,215,977
Stockholders' equity:
Preferred stock
92,000
92,000
92,000
92,000
92,000
Common stock
59,885
59,885
59,885
59,885
59,885
Additional paid-in capital
622,935
622,652
621,978
621,860
621,206
Legal surplus
106,165
103,269
101,233
98,347
95,945
Retained earnings
322,202
300,096
284,053
264,725
250,557
Treasury stock, at cost
(100,994)
(102,949)
(103,095)
(103,121)
(103,289)
Accumulated other comprehensive (loss) income, net
6,230
11,022
8,268
7,588
6,290
1,108,423
1,085,975
1,064,322
1,041,284
1,022,594
$
10,153,342
$
9,826,011
$
10,018,991
$
9,932,719
$
9,238,571
(a) During 2Q 2020, the Company offered several deferral programs to clients impacted by the Covid-19, which contributed to the increase of accrued interest receivable by
approximately $40 million.
4
OFG Bancorp (NYSE: OFG)
Table 4-1: Information on Loan Portfolio and
Production
March 31,
December 31,
September 30,
June 30,
March 31,
(Dollars in thousands) (unaudited)
2021
2020
2020
2020
2020
Non-PCD:
(1)
$
791,062
$
823,443
$
847,671
$
874,286
$
887,950
1,827,102
1,836,137
1,785,022
1,918,424
1,910,192
311,823
282,713
289,218
278,059
-
395,073
413,552
434,546
458,714
481,710
1,565,473
1,534,269
1,511,829
1,454,987
1,487,701
4,890,533
4,890,114
4,868,286
4,984,470
4,767,553
(156,978)
(161,015)
(156,409)
(151,507)
(149,961)
4,733,555
4,729,099
4,711,877
4,832,963
4,617,592
PCD:
(1)
1,406,044
1,459,932
1,504,914
1,541,637
1,561,557
272,793
283,160
(a)
352,555
386,046
391,158
1,120
1,394
2,336
2,950
3,350
23,036
27,533
31,836
37,409
42,466
1,702,993
1,772,019
1,891,641
1,968,042
1,998,531
(1)
(44,995)
(43,794)
(a)
(78,904)
(81,194)
(80,794)
1,657,998
1,728,225
1,812,737
1,886,848
1,917,737
Total loans held for investment
6,391,553
6,457,324
6,524,614
6,719,811
6,535,329
Mortgage loans held for sale
38,220
41,654
54,526
19,432
5,845
Other loans held for sale
2,306
2,281
-
-
-
Total loans, net
$
6,432,079
$
6,501,259
$
6,579,140
$
6,739,243
$
6,541,174
Loan Portfolio Summary:
$
2,197,106
$
2,283,375
$
2,352,585
$
2,415,923
$
2,449,507
2,411,718
2,402,010
2,426,795
2,582,529
2,301,350
396,193
414,946
436,882
461,664
485,060
1,588,509
1,561,802
1,543,665
1,492,396
1,530,167
6,593,526
6,662,133
6,759,927
6,952,512
6,766,084
(201,973)
(204,809)
(235,313)
(232,701)
(230,755)
6,391,553
6,457,324
6,524,614
6,719,811
6,535,329
38,220
41,654
54,526
19,432
5,845
2,306
2,281
-
-
-
Total loans, net
$
6,432,079
$
6,501,259
$
6,579,140
$
6,739,243
$
6,541,174
(a) During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.
5
OFG Bancorp (NYSE: OFG)
Table 4-2: Information on Loan Portfolio and
Production
Quarter Ended
March 31,
December 31,
September 30,
June 30,
March 31,
(Dollars in thousands) (unaudited)
2021
2020
2020
2020
2020
Loan production
(13)
$
95,851
$
97,656
$
93,650
$
23,744
$
30,988
83,820
174,894
83,488
98,558
54,113
126,266
-
10,318
286,420
-
44,841
49,221
90,878
35,711
47,125
27,492
25,984
23,540
14,231
39,199
149,357
137,545
155,880
47,374
109,344
$
527,627
$
485,300
$
457,754
$
506,038
$
280,769
6
OFG Bancorp (NYSE: OFG)
Table 5: Average Balances, Net Interest Income and Net Interest Margin
2021 Q1
2020 Q4
2020 Q3
2020 Q2
2020 Q1
Interest
Interest
Interest
Interest
Interest
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
(Dollars in thousands) (unaudited)
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Interest earning assets:
$
2,204,431
$
595
0.11
%
$
2,091,458
$
613
0.12
%
$
1,929,024
$
613
0.13
%
$
1,393,187
$
359
0.10
%
$
943,581
$
2,788
1.19
%
518,038
2,176
1.68
%
470,997
1,986
1.69
%
502,671
2,278
1.81
%
611,907
2,801
1.83
%
924,965
4,474
1.93
%
(1)
4,893,874
82,936
6.87
%
4,863,902
81,171
6.64
%
4,870,753
83,029
6.78
%
4,857,281
83,832
6.94
%
4,613,878
87,482
7.63
%
1,742,034
25,275
5.80
%
1,844,382
29,250
6.34
%
1,916,269
29,018
6.06
%
1,983,369
34,700
7.00
%
2,073,997
28,953
5.58
%
6,635,908
108,211
6.61
%
6,708,284
110,421
6.55
%
6,787,022
112,047
6.57
%
6,840,650
118,532
6.97
%
6,687,875
116,435
7.00
%
Total interest -earning assets
$
9,358,377
$
110,982
4.81
%
$
9,270,739
$
113,020
4.85
%
$
9,218,717
$
114,938
4.96
%
$
8,845,744
$
121,692
5.53
%
$
8,556,421
$
123,697
5.81
%
Interest bearing liabilities:
$
2,397,673
$
2,393
0.40
%
$
2,344,903
$
2,258
0.38
%
$
2,227,687
$
2,247
0.40
%
$
2,069,247
$
2,138
0.42
%
$
1,980,505
$
2,389
0.48
%
2,003,963
2,124
0.43
%
1,897,618
1,954
0.41
%
1,927,680
2,010
0.41
%
1,809,517
1,976
0.44
%
1,797,658
2,440
0.55
%
1,775,828
5,507
1.26
%
1,893,070
6,975
1.47
%
1,944,856
7,512
1.54
%
1,990,639
7,835
1.58
%
2,039,311
8,131
1.60
%
45,955
163
1.44
%
64,338
289
1.78
%
140,416
812
2.30
%
235,611
1,446
2.47
%
236,008
1,586
2.70
%
6,223,419
10,187
0.66
%
6,199,929
11,476
0.74
%
6,240,639
12,581
0.80
%
6,105,014
13,395
0.88
%
6,053,482
14,546
0.97
%
2,358,214
-
-
2,315,717
-
-
2,276,400
-
-
1,983,092
-
-
1,698,964
-
-
core deposit intangible amortization
-
1,837
-
-
2,037
-
-
2,039
-
-
2,051
-
-
2,074
-
8,581,633
12,024
0.57
%
8,515,646
13,513
0.63
%
8,517,039
14,620
0.68
%
8,088,106
15,446
0.77
%
7,752,446
16,620
0.86
%
repurchase
-
-
-
%
-
-
-
%
-
-
-
%
46,154
334
2.91
%
158,462
1,002
2.54
%
borrowings
64,868
459
2.87
%
65,847
468
2.83
%
66,833
476
2.83
%
75,432
505
2.69
%
77,255
539
2.81
%
36,083
295
3.31
%
36,083
301
3.34
%
36,083
308
3.39
%
36,083
347
3.87
%
36,083
435
4.85
%
100,951
754
3.03
%
101,930
769
3.01
%
102,916
784
3.03
%
157,669
1,186
3.03
%
271,800
1,976
2.92
%
Total interest -bearing liabilities
$
8,682,584
$
12,778
0.60
%
$
8,617,576
$
14,282
0.66
%
$
8,619,955
$
15,404
0.71
%
$
8,245,775
$
16,632
0.81
%
$
8,024,246
$
18,596
0.93
%
Interest rate spread
$
98,204
4.21
%
$
98,738
4.19
%
$
99,534
4.25
%
$
105,060
4.72
%
$
105,101
4.88
%
Net interest margin
4.26
%
4.24
%
4.30
%
4.78
%
4.94
%
Core deposits: (Non-GAAP)
$
2,397,673
$
2,393
0.40
%
$
2,344,903
$
2,258
0.38
%
$
2,227,687
$
2,247
0.40
%
$
2,069,247
$
2,138
0.42
%
$
1,980,505
$
2,389
0.48
%
2,003,963
2,124
0.43
%
1,897,618
1,954
0.41
%
1,927,680
2,010
0.41
%
1,809,517
1,976
0.44
%
1,797,658
2,440
0.55
%
1,775,828
5,507
1.26
%
1,893,070
6,975
1.47
%
1,944,856
7,512
1.54
%
1,990,639
7,835
1.58
%
2,039,311
8,131
1.60
%
6,177,464
10,024
0.66
%
6,135,591
11,187
0.73
%
6,100,223
11,769
0.77
%
5,869,403
11,949
0.82
%
5,817,474
12,960
0.91
%
2,358,214
-
-
2,315,717
-
-
2,276,400
-
-
1,983,092
-
-
1,698,964
-
-
$
8,535,678
$
10,024
0.48
%
$
8,451,308
$
11,187
0.53
%
$
8,376,623
$
11,769
0.56
%
$
7,852,495
$
11,949
0.61
%
$
7,516,438
$
12,960
0.69
%
7
OFG Bancorp (NYSE: OFG)
Table 6-1: Loan Information and Performance Statistics (1)
2021
2020
2020
2020
2020
(Dollars in thousands) (unaudited)
Q1
Q4
Q3
Q2
Q1
Net Charge-offs
(21)
Non-PCD
Mortgage:
$
787
$
225
$
56
$
185
$
418
(615)
(79)
(269)
(9)
(249)
173
146
(213)
176
169
Commercial:
68
413
298
497
3,771
(430)
(334)
(253)
(631)
(1,522)
(363)
79
45
(134)
2,249
Consumer:
4,469
6,456
5,114
4,187
6,015
(565)
(1,832)
(663)
(443)
(644)
3,903
4,624
4,451
3,744
5,371
Auto:
9,083
12,071
10,123
13,300
13,053
(5,817)
(5,928)
(5,950)
(3,405)
(4,211)
3,266
6,143
4,173
9,895
8,842
$
6,980
$
10,992
$
8,456
$
13,681
$
16,631
PCD
Mortgage:
$
2,590
$
1,344
$
1,677
$
2,178
$
5,143
(146)
(63)
(89)
(580)
(122)
2,444
1,281
1,588
1,598
5,021
Commercial:
43
33,061
(a)
293
386
2,357
(436)
(234)
(91)
(286)
(375)
(393)
32,827
202
100
1,982
Consumer:
22
21
60
30
431
(21)
(200)
1
(30)
(63)
1
(179)
61
-
368
Auto:
456
574
474
600
375
(383)
(681)
(211)
(229)
(343)
73
(107)
263
371
32
$
2,125
$
33,822
2,114
2,069
7,403
Total Net Charge-offs
$
9,105
$
44,814
$
10,570
$
15,750
$
24,034
Net Charge-off Rates
(21)
Mortgage
0.47%
0.25%
0.24%
0.30%
0.86%
Commercial
-0.13%
5.45%
(a)
0.04%
-0.01%
0.76%
Consumer
3.78%
4.09%
3.94%
3.12%
4.63%
Auto
0.85%
1.56%
1.17%
2.72%
2.31%
0.55%
2.67%
(a)
0.62%
0.92%
1.44%
Average Loans Held For Investment
(21)
Mortgage
$
2,243,303
$
2,305,495
$
2,325,756
$
2,366,600
$
2,414,685
Commercial
2,405,419
2,416,703
2,484,977
2,484,573
2,239,684
Consumer
413,191
434,565
457,620
479,957
496,313
Auto
1,573,995
1,551,521
1,518,669
1,509,521
1,537,193
$
6,635,908
$
6,708,284
$
6,787,022
$
6,840,651
$
6,687,875
(a) During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.
8
Table 6-2: Loan Information and Performance Statistics (Excludes PCD Loans) (1)
OFG Bancorp (NYSE: OFG)
2021
2020
2020
2020
2020
(Dollars in thousands) (unaudited)
Q1
Q4
Q3
Q2
Q1
Early Delinquency (30 - 89 days past due)
Mortgage
$
17,350
$
22,339
$
16,783
$
15,665
$
20,518
Commercial
3,911
8,043
5,151
7,704
6,074
Consumer
8,250
12,230
12,032
18,254
13,127
Auto
75,449
88,357
87,912
89,825
110,959
$
104,960
$
130,969
$
121,878
$
131,448
$
150,678
Early Delinquency Rates (30 - 89 days past due)
Mortgage
2.19%
2.71%
1.98%
1.79%
2.31%
Commercial
0.21%
0.44%
0.29%
0.40%
0.32%
Consumer
2.09%
2.96%
2.77%
3.98%
2.73%
Auto
4.82%
5.76%
5.81%
6.17%
7.46%
2.15%
2.68%
2.50%
2.64%
3.16%
Total Delinquency (30 days and over past due)
Mortgage:
$
62,827
$
67,671
$
51,123
$
40,719
$
46,768
40,777
56,193
62,651
75,091
75,314
103,604
123,864
113,774
115,810
122,082
Commercial
26,065
30,604
35,596
38,258
33,746
Consumer
11,042
17,147
17,080
22,796
16,808
Auto
86,918
108,842
109,735
100,027
131,715
$
227,629
$
280,457
$
276,185
$
276,891
$
304,351
Total Delinquency Rates (30 days and over past due)
Mortgage:
7.94%
8.22%
6.03%
4.66%
5.27%
5.15%
6.82%
7.39%
8.59%
8.48%
13.10%
15.04%
13.42%
13.25%
13.75%
Commercial
1.43%
1.67%
1.99%
1.99%
1.77%
Consumer
2.79%
4.15%
3.93%
4.97%
3.49%
Auto
5.55%
7.09%
7.26%
6.87%
8.85%
4.65%
5.74%
5.67%
5.56%
6.38%
Nonperforming Assets
(14)
Mortgage
$
50,933
$
46,967
$
40,477
$
30,491
$
31,073
Commercial
42,778
41,999
44,941
44,187
42,668
Consumer
2,900
4,987
5,206
4,933
3,690
Auto
11,842
20,766
22,583
10,539
21,147
108,453
114,719
113,207
90,150
98,578
Foreclosed real estate
15,598
11,596
19,456
24,792
27,292
Other repossessed assets
2,768
1,816
1,918
1,360
3,096
$
126,819
$
128,131
$
134,581
$
116,302
$
128,966
Nonperforming Loan Rates
Mortgage
6.44%
5.70%
4.78%
3.49%
3.50%
Commercial
2.34%
2.29%
2.52%
2.30%
2.23%
Consumer
0.73%
1.21%
1.20%
1.08%
0.77%
Auto
0.76%
1.35%
1.49%
0.72%
1.42%
2.22%
2.35%
2.33%
1.81%
2.07%
9
OFG Bancorp (NYSE: OFG)
Table 6-3: Loan Information and Performance Statistics (1)
2021
2020
2020
2020
2020
(Dollars in thousands) (unaudited)
Q1
Q4
Q3
Q2
Q1
Nonperforming PCD Loans
(14)
Mortgage
$
958
$
1,003
$
1,003
$
1,373
$
1,341
Commercial
34,906
36,470
(a)
79,631
81,064
82,411
Consumer
-
1
4
12
10
$
35,864
$
37,474
(a)
$
80,638
$
82,449
$
83,762
Nonperforming PCD Loan Rates
Mortgage
0.07%
0.07%
0.07%
0.09%
0.09%
Commercial
12.80%
12.88%
(a)
22.59%
21.00%
21.07%
Consumer
0.00%
0.07%
0.17%
0.41%
0.30%
2.11%
2.11%
(a)
4.26%
4.19%
4.19%
Total PCD Loans Held for Investment
(21)
Mortgage
$
1,406,044
$
1,459,932
$
1,504,914
$
1,541,637
$
1,561,557
Commercial
272,793
283,160
352,555
386,046
391,158
Consumer
1,120
1,394
2,336
2,950
3,350
$
1,679,957
$
1,744,486
$
1,859,805
$
1,930,633
$
1,956,065
2021
2020
2020
2020
2020
(Dollars in thousands) (unaudited)
Q1
Q4
Q3
Q2
Q1
Total Nonperforming Loans
(14)
Mortgage
$
51,891
$
47,970
$
41,480
$
31,864
$
32,414
Commercial
77,684
78,469
(a)
124,572
125,251
125,079
Consumer
2,900
4,988
5,210
4,945
3,700
Auto
11,842
20,766
22,583
10,539
21,147
$
144,317
$
152,193
(a)
$
193,845
$
172,599
$
182,340
Total Nonperforming Loan Rates
Mortgage
2.36%
2.10%
1.76%
1.32%
1.32%
Commercial
3.22%
3.27%
(a)
5.13%
4.85%
5.44%
Consumer
0.73%
1.20%
1.19%
1.07%
0.76%
Auto
0.75%
1.33%
1.46%
0.71%
1.38%
2.19%
2.28%
(a)
2.87%
2.48%
2.69%
Total Loans Held for Investment
(21)
Mortgage
$
2,197,106
$
2,283,375
$
2,352,585
$
2,415,923
$
2,449,507
Commercial
2,411,718
2,402,010
2,426,795
2,582,529
2,301,350
Consumer
396,193
414,946
436,882
461,664
485,060
Auto
1,588,509
1,561,802
1,543,665
1,492,396
1,530,167
$
6,593,526
$
6,662,133
$
6,759,927
$
6,952,512
$
6,766,084
(a) During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.
10
OFG Bancorp (NYSE: OFG)
Table 7: Allowance for Credit Losses (1)
Quarter Ended March 31, 2021
(Dollars in thousands) (unaudited)
Mortgage
Commercial
Consumer
Auto
Total
Allowance for credit losses Non-PCD:
$
19,687
$
45,779
$
25,253
$
70,296
$
161,015
(2,480)
1,542
(158)
4,039
2,943
(787)
(68)
(4,469)
(9,083)
(14,407)
615
430
565
5,817
7,427
$
17,035
$
47,683
$
21,191
$
71,069
$
156,978
Allowance for credit losses PCD:
$
26,388
$
16,406
$
57
$
943
$
43,794
5,994
(2,492)
(4)
(172)
3,326
(2,590)
(43)
(22)
(456)
(3,111)
146
436
21
383
986
$
29,938
$
14,307
$
52
$
698
$
44,995
Allowance for credit losses summary:
$
46,075
$
62,185
$
25,310
$
71,239
$
204,809
3,514
(950)
(162)
3,867
6,269
(3,377)
(111)
(4,491)
(9,539)
(17,518)
761
866
586
6,200
8,413
$
46,973
$
61,990
$
21,243
$
71,767
$
201,973
Allowance coverage ratio
2.14%
2.57%
5.36%
4.52%
3.06%
Allowance coverage ratio excluding PPP loans (Non-GAAP)
2.14%
2.95%
5.36%
4.52%
3.22%
11
OFG Bancorp (NYSE: OFG)
Table 8-1: 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.
2021
2020
2020
2020
2020
(Dollars in thousands) (unaudited)
Q1
Q4
Q3
Q2
Q1
Stockholders' Equity to Non -GAAP Tangible Common Equity
Total stockholders' equity
$
1,108,423
$
1,085,975
$
1,064,322
$
1,041,284
$
1,022,594
Less: Intangible assets
(129,514)
(131,965)
(134,719)
(137,475)
(140,243)
(92,000)
(92,000)
(92,000)
(92,000)
(92,000)
10,130
10,130
10,130
10,130
10,130
Tangible common equity
$
897,039
$
872,140
$
847,733
$
821,939
$
800,481
Common shares outstanding at end of period
51,579
51,387
51,345
51,342
51,327
Tangible book value per common share (Non-GAAP)
$
17.39
$
16.97
$
16.51
$
16.01
$
15.60
Total Assets to Tangible Assets
Total assets
$
10,153,342
$
9,826,011
$
10,018,991
$
9,932,719
$
9,238,571
Less: Intangible assets
(129,514)
(131,965)
(134,719)
(137,475)
(140,243)
Tangible assets (Non-GAAP)
$
10,023,828
$
9,694,046
$
9,884,272
$
9,795,244
$
9,098,328
Non-GAAP TCE Ratio
Tangible common equity
$
897,039
$
872,140
$
847,733
$
821,939
$
800,481
Tangible assets
10,023,828
9,694,046
9,884,272
9,795,244
9,098,328
TCE ratio
8.95%
9.00%
8.58%
8.39%
8.80%
Average Equity to Non-GAAP Average Tangible Common Equity
Average total stockholders' equity
$
1,101,046
$
1,083,423
$
1,062,460
$
1,037,195
$
1,043,481
Less: Average noncumulative perpetual preferred stock
(92,000)
(92,000)
(92,000)
(92,000)
(92,000)
10,130
10,130
10,130
10,130
10,130
Average total common stockholders' equity
$
1,019,176
$
1,001,553
$
980,590
$
955,325
$
961,611
Less: Average intangible assets
(130,767)
(133,542)
(136,138)
(139,094)
(141,875)
Average tangible common equity
$
888,409
$
868,011
$
844,452
$
816,231
$
819,736
12
OFG Bancorp (NYSE: OFG)
Table 8-2: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued)
BASEL III
Standardized
2021
2020
2020
2020
2020
(Dollars in thousands) (unaudited)
Q1
Q4
Q3
Q2
Q1
Regulatory Capital Metrics
Common equity Tier 1 capital
$
919,856
$
894,074
$
862,636
$
836,899
$
816,356
Tier 1 capital
1,036,726
1,010,944
979,506
953,769
933,226
Total risk-based capital
(15)
1,121,832
1,096,764
1,065,744
1,040,987
1,020,748
Risk-weighted assets
6,782,921
6,837,846
6,875,108
6,957,906
6,983,626
(a)
Regulatory Capital Ratios
Common equity Tier 1 capital ratio
(16)
13.56%
13.08%
12.55%
12.03%
11.69%
Tier 1 risk-based capital ratio
(17)
15.28%
14.78%
14.25%
13.71%
13.36%
Total risk-based capital ratio
(18)
16.54%
16.04%
15.50%
14.96%
14.62%
Leverage ratio
(19)
10.48%
10.30%
10.00%
10.16%
10.14%
Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach
Total stockholders' equity
(1)
$
1,108,423
$
1,085,975
$
1,064,322
$
1,041,284
$
1,022,594
Plus: CECL transition adjustment
(20)
33,637
34,646
33,494
32,269
31,882
Less: Noncumulative perpetual preferred stock
(92,000)
(92,000)
(92,000)
(92,000)
(92,000)
10,130
10,130
10,130
10,130
10,130
(7,146)
(12,091)
(9,453)
(8,885)
(7,576)
916
1,069
1,185
1,297
1,286
1,053,960
1,027,729
1,007,678
984,095
966,316
Less: Disallowed goodwill
(86,069)
(86,069)
(86,069)
(86,069)
(86,069)
(30,172)
(32,073)
(33,810)
(35,563)
(37,241)
(17,863)
(15,513)
(25,163)
(25,564)
(26,650)
(a)
Common equity Tier 1 capital
919,856
894,074
862,636
836,899
816,356
Plus: Qualifying noncumulative perpetual preferred stock
92,000
92,000
92,000
92,000
92,000
(10,130)
(10,130)
(10,130)
(10,130)
(10,130)
35,000
35,000
35,000
35,000
35,000
Tier 1 capital
1,036,726
1,010,944
979,506
953,769
933,226
Plus tier 2 capital: Qualifying allowance for loan and lease losses
85,106
85,820
86,238
87,218
87,522
Total risk-based capital
$
1,121,832
$
1,096,764
$
1,065,744
$
1,040,987
$
1,020,748
(a) During 1Q 2020, the Company early implemented Simplifications to the Capital Rule, which increased common equity tier 1 (CET1) capital threshold deductions from 10 percent
to 25 percent and removed the aggregate 15 percent CET1 threshold deduction.
13
OFG Bancorp (NYSE: OFG)
Table 9: Notes to Financial Summary, Selected Metrics, Loans, and Consolidated Financial Statements (Tables 1 - 8)
(1)
We used the terms "PCI" and "SOP" to refer to loans acquired with credit deterioration from the Scotiabank acquisition (December 31, 2019), the BBVAPR acquisition
(December 18, 2012) and the Eurobank FDIC-Assisted acquisition (April 30, 2010), recorded at fair value at acquisition. On January 1, 2020, the Company implemented
ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective approach. CECL replaces the concept of purchased
credit impaired loans (PCI) with the concept of purchased financial assets with credit deterioration (PCD). PCD accounting is called ‘gross-up accounting’ because, at
acquisition, an entity grosses up the amortized cost basis of the PCD asset for the initial estimate of credit losses. This Day 1 allowance for credit losses is established
without an income statement effect. The Company elected to maintain previously existing pools on adoption, therefore the pool continues to be the unit of account,
and the allowance and non-credit discount or premium is not allocated to the individual assets. 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 lo ans.
(2)
Total banking and financial service revenues.
(3)
Calculated based on net income available to common shareholders divided by average common shares outstanding for the period.
(4)
Calculated based on net income available to common shareholders plus the preferred dividends on the convertible preferred stock, divided by total average common
shares outstanding and equivalents for the period as if converted.
(5)
Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 9:
Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.
(6)
Information includes all loans held for investment, including PCD loans.
(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)
Most PCD 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. PCD loan pools that are not accreting interest income
are deemed to be non-performing loans and presented separately.
(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)
In March 2020, in light of recent strains on the U.S. economy as a result of the coronavirus disease 2019 (COVID-19), the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued an interim final rule that provided the option to
temporarily delay the effects of CECL on regulatory capital for two years, followed by a three -year transition period. In addition, for the first two years, a uniform 25%
“scaling factor” is introduced to approximate the portion of the post day -one allowance attributable to CECL relative to the incurred loss methodology. The 25% scaling
factor is calibrated to approximate an overall after -tax impact of differences in allowances under CECL vs the incurred loss methodology.
(21)
CECL replaces the concept of purchased credit impaired loans (PCI assets) with the concept of purchased financial assets with credit deterioration (PCD assets). An
entity records a PCD asset at the purchase price plus the allowance for credit losses expected at the time of acquisition. Under this method, there is no credit loss
expense affecting net income on acquisition. Changes in estimates of expected credit losses after acquisition are recognized as credit loss expense (or reversal of credit
loss expense) in subsequent periods as they arise.
(22)
Pre-provision net revenues is a non-GAAP measure calculated based on net interest income plus total non-interest income, net, less total non-interest expenses for the
period.
14