EX-99 2 ofg8K20160422ex99.htm EARNINGS RELEASE  

 

 

Exhibit 99

 

OFG Bancorp Reports 1Q16 Results

SAN JUAN, Puerto Rico, April 22, 2016 – OFG Bancorp (NYSE: OFG) today reported results for the first quarter ended March 31, 2016.

1Q16 Highlights

•      Net income available to shareholders amounted to $10.7 million, or $0.24 per share fully diluted. This compares to a loss of $4.4 million, or ($0.10) per share, in the preceding quarter, and a loss of $6.5 million, or ($0.14) per share, in the same quarter a year ago.

•      Oriental Bank’s retail franchise continued to grow. New loan generation at $226 million, with commercial lending leading the way, remained at high levels. Total customers increased in excess of a 4.0% annualized rate from December 31, 2015.

•      Credit quality continued to improve. Net charge-offs of loans (excluding acquired loans) declined to 1.30% from 1.67% in 4Q15. The provision for loan losses fell 18.6% from 4Q15’s adjusted amount (see Table 1). Early and total delinquency rates declined below both the previous and year-ago quarters.

•      Puerto Rico investment securities balance fell 62.2% to $6.7 million, reflecting the sale of $12.8 million (average yield of 6.60%) in securities of the Puerto Rico Industrial Development Company (PRIDCO) and the Puerto Rico Public Buildings Authority (PBA).

•      Net Interest Margin (NIM) expanded to 4.67%, reflecting better yields on interest earning assets.

•      Tangible book value per common share increased to $14.68 from $14.53, and tangible common equity (TCE) ratio increased to 9.50% from 9.10%.

CEO Comment

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

 

 

“We are pleased with our first quarter results. This is particularly so after a tough 2015 in which we had to deal with the termination of our commercial share loss agreement with the FDIC and other de-risking actions.

“During the quarter, Oriental Bank originated $226 million in new loans, while maintaining our traditional discipline in credit and pricing standards. In addition, we continued to introduce innovative features for our retail clients, such as Cardless Cash mobile phone ATM access—another first for Oriental Bank in Puerto Rico.

“The bank capitalized on market conditions to partially unwind a high-rate repurchase agreement, and to sell our PRIDCO and PBA securities and certain of our mortgage-backed securities (MBS). The aggregate gains and losses had no impact on the 1Q16 income statement, but will help to improve NIM going forward.

“Of note was our reduced credit costs and operating expenses. The active management of retail credit has improved results with lower charge-off levels and provisions, and steady enhancement in our credit metrics. We continue to closely monitor these trends given the uncertainty regarding Puerto Rico’s fiscal situation.

“Last year’s rightsizing efforts are evident in our reported non-interest expenses. The efficiency ratio improved from the previous quarter to 59.56%, the lowest since 1Q15, and is approaching our high 50s% target.”

1Q16 Income Statement Highlights

The following compares GAAP Results for the first quarter 2016 to GAAP and Non-GAAP Adjusted Results the fourth quarter 2015. There are no Non-GAAP Adjustments in 1Q16.

 

 

Table 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

 

December 31, 2015

 

March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual Results

 

Quarter Specific

 

Adjusted Results

 

 

Actual Results

(Dollars in thousands) (unaudited)

 

 

(US GAAP)

 

Items(1)

 

(Non-GAAP)

 

 

(US GAAP)(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

92,907

 

$

-

 

$

92,907

 

 

$

91,306

Interest expense

 

 

 

(17,285)

 

 

-

 

 

(17,285)

 

 

 

(16,331)

    Net interest income

 

 

 

75,622

 

 

-

 

 

75,622

 

 

 

74,975

Provision for loan and lease losses, excluding acquired loans

 

 

 

(45,012)

 

 

(30,345)

 

 

(14,667)

 

 

 

(10,660)

Provision for acquired BBVAPR loan and lease losses

 

 

 

(7,332)

 

 

(4,900)

 

 

(2,432)

 

 

 

(2,324)

(Recapture) provision for acquired Eurobank loan and lease losses

 

 

 

154

 

 

-

 

 

154

 

 

 

(805)

    Total provision for loan and lease losses, net

 

 

 

(52,190)

 

 

(35,245)

 

 

(16,945)

 

 

 

(13,789)

        Net interest income after provision for loan and leases losess

 

 

 

 

23,432

 

 

(35,245)

 

 

58,677

 

 

 

61,186

Banking and wealth management revenues

 

 

 

19,349

 

 

-

 

 

19,349

 

 

 

17,125

Other-than-temporary impairment losses on investment securities

 

 

 

(1,244)

 

 

(1,244)

 

 

-

 

 

 

-

FDIC shared-loss expense, net

 

 

 

(4,400)

 

 

(1,589)

 

 

(2,811)

 

 

 

(4,029)

Other (losses) gains, net

 

 

 

565

 

 

-

 

 

565

 

 

 

407

    Total non-interest income

 

 

 

14,270

 

 

(2,833)

 

 

17,103

 

 

 

13,503

Compensation and employee benefits

 

 

 

(18,717)

 

 

-

 

 

(18,717)

 

 

 

(20,284)

Rent and occupancy costs

 

 

 

(8,111)

 

 

-

 

 

(8,111)

 

 

 

(7,822)

General and administrative expenses

 

 

 

(31,714)

 

 

(1,462)

 

 

(30,252)

 

 

 

(26,751)

    Total non-interest expense

 

 

 

(58,542)

 

 

(1,462)

 

 

(57,080)

 

 

 

(54,857)

    Income before taxes

 

 

 

(20,840)

 

 

(39,540)

 

 

18,700

 

 

 

19,832

Income tax expense (benefit)

 

 

 

(19,863)

 

 

 

 

 

6,171

 

 

 

5,661

    Net income

 

 

 

(977)

 

 

 

 

 

12,529

 

 

 

14,171

Preferred stock dividends

 

 

 

(3,466)

 

 

 

 

 

(3,466)

 

 

 

(3,465)

Net income (loss) available to common shareholders

 

 

 

(4,443)

 

 

 

 

$

9,064

 

 

 

10,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share - basic

 

 

$

(0.10)

 

 

 

 

$

0.21

 

 

$

0.24

Earnings (loss) per common share - diluted

 

 

$

(0.10)

 

 

 

 

$

0.21

 

 

$

0.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)      ($30.4) million provision related to the PREPA line, ($4.9) million impairment during the annual recasting of a BBVA PR loan pool, ($1.5) million in legal fees related to PREPA’s restructuring, ($1.6) million in a final settlement with the FDIC related to the expiration of the commercial loss sharing agreement, ($1.2) million in OTTI, and a $19.9 million tax benefit.

(2)    1Q16 Other Gains (Losses) included the effect of the following transactions: (i) $16.1 million gain on the sale of $272.1 million (average yield of 3.00%) of MBS; (ii) $12.0 million cost of unwinding $268.0 million (average rate of 4.78%) in repurchase agreements; and (iii) loss of $4.1 million on the sale of $12.8 million (average yield of 6.60%) of PRIDCO and PBA securities. The aggregate gains and losses had no impact on the 1Q16 income statement.

Adjusted for the above-listed factors:

 

 

•      Interest Income declined $1.6 million to $91.3 million. This was due to lower balances in BBVA PR acquired loans and in the investment securities portfolio, partially offset by higher interest income from a greater volume of originated loans, higher yields on cash equivalents due to higher market rates, and higher yields on some BBVA PR loans due to better cash flows experienced in recent quarters.

•      Interest Expense declined $1.0 million to $16.3 million. This reflected the previously mentioned unwinding of repurchase agreements, partially offset by higher balances and costs for brokered CDs.

•      Total Provision for Loan and Lease Losses declined $3.2 million on an adjusted basis to $13.8 million. This was primarily due to lower net charge-off levels.

•      Net Interest Margin increased to 4.67% from 4.55% reflecting the reasons mentioned above.

•      Total Banking and Wealth Management Revenues declined $2.2 million on an adjusted basis to $17.1 million. Client trading volumes in our broker-dealer continued to fall due to the uncertainty in the Puerto Rico market.

•      FDIC Shared-Loss Expense, Net increase of $1.2 million on an adjusted basis to reflect prior valuation changes in the covered mortgage portfolio.

•      Total Non-Interest Expenses declined $2.2 million on an adjusted basis to $54.9 million. This was primarily due to lower general and administrative expenses, partially offset by investments in customer technology.

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

March 31, 2016 Balance Sheet Highlights

The following compares data as of March 31, 2016 to December 31, 2015 unless otherwise noted.

•      Total loans declined to $4.36 billion from $4.43 billion, as originated loans partially offset outflows in acquired loans.

•      Total investments declined to $1.33 billion from $1.62 billion due to the previously mentioned sale of MBS and prepayments of mortgage-backed securities.

•      Puerto Rico central government and public corporation loan balances fell 6.5% to $198.2 million. Loans to Puerto Rico municipalities remained nearly level at $203.6 million. As previously mentioned, Puerto Rico investment securities balances came down 62.2% to $6.7 million.

 

 

•      Total deposits increased to $4.78 billion from $4.72 billion due to higher demand deposits partially offset by lower short-term brokered balances.

•      Total borrowings declined to $1.1 billion from $1.37 billion due to the previously mentioned unwinding of a repurchase agreement.

•      Total stockholders’ equity increased to $903.8 million from $897.1 million, reflecting an increase in retained earnings, partially offset by a decline in accumulated other comprehensive income, net.

Credit Quality Highlights

The following compares data for the first quarter 2016 to the fourth quarter 2015 unless otherwise noted.

•      Net charge-off (NCO) rate at 1.30% fell 37 basis points, chiefly due to a large decline in the commercial lending category as compared to 4Q15 when commercial lending NCOs increased due to one loan.

•      Early delinquency rate continued to fall to 3.51%, its lowest level in the last five quarters, due to measures taken to proactively manage the effects of the economic environment.

•      Non-performing loan rate at 9.58% declined 16 basis points with our favorable experience in commercial, auto and mortgage lending offsetting a small increase from consumer lending.

•      Allowance for loan and lease losses increased $0.6 million to $113.2 million. Coverage of loans (excluding acquired loans) increased to 3.63% from 3.62%.

Capital Position

The following compares data for the first quarter 2016 to the fourth quarter 2015.

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

•      Tangible common equity to total tangible assets at 9.50% increased 40 basis points.

•      Common Equity Tier 1 Capital Ratio (using Basel III methodology) increased to 12.33% from 12.15%.

•      Total risk-based capital ratio increased to 17.67% from 17.30%.

Conference Call

A conference call to discuss OFG’s results for the first quarter 2016, outlook and related matters will be held today, Friday, April 22, at 10:00 AM Eastern Time. The call will be

 

 

accessible live via a webcast on OFG’s Investor Relations website at www.ofgbancorp.com.  A webcast replay will be available shortly thereafter. Access the webcast link in advance to download any necessary software.

Financial Supplement

OFG’s Financial Supplement, with full financial tables for the first quarter ended March 31, 2016, can be found on the Webcasts, Presentations & Other Files page, on OFG’s Investor Relations website at www.ofgbancorp.com. 

Non-GAAP Financial Measures

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

Forward Looking Statements

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

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

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

About OFG Bancorp

Now in its 52nd year in business, OFG Bancorp is a diversified financial holding company that operates under U.S. and Puerto Rico banking laws and regulations.  Its three principal subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a full range of commercial, consumer and mortgage banking services, as well as financial

 

 

planning, trust, insurance, investment brokerage and investment banking services, primarily in Puerto Rico, through 48 financial centers. Investor information can be found at www.ofgbancorp.com.  

# # #

 

 

 

Contacts

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

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

  

 

 

 

 

 

 

 

 

  

OFG Bancorp

  

Financial Supplement

  

 

 

 

 

 

 

  

 

 

 

 

 

 

  

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our March 31, 2016 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission.

  
 

 

 

 

 

 

 

  

Table of Contents

  

 

 

 

 

Pages

  

 

 

 

 

 

 

  

 

OFG Bancorp (Consolidated Financial Information)

 

 

  

 

Table  1:

 

Financial and Statistical Summary - Consolidated

 

2

  

 

Table  2:

 

Consolidated Statements of Operations

 

3

  

 

Table  3:

 

Consolidated Statements of Financial Condition

 

4

  

 

Table  4:

 

Information on Loan Portfolio and Production

 

5

  

 

Table  5:

 

Average Balances, Net Interest Income and Net Interest Margin

 

6

  

 

Table  6:

 

Loan Information and Performance Statistics (Excluding Acquired Loans)

 

7-8

  

 

Table  7:

 

Allowance for Loan and Lease Losses

 

9

  

 

Table  8:

 

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

 

 

  

 

 

 

   with Deteriorated Credit Quality, Including those by Analogy)

 

10

  

 

Table  9:

 

Reconciliation of Non-GAAP Measures and Calculation of Regulatory

 

 

  

 

 

 

   Capital Measures

 

11-12

  

 

Table  10:

 

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

 

 

  

 

 

 

  Financial Statements (Tables 1-9)

 

13

  

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Financial and Statistical Summary - Consolidated

 

 

 

2016

 

2015

 

2015

 

2015

 

2015

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

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

74,975

 

$

75,622

 

$

89,823

 

$

82,292

 

$

89,635

Non-interest income, net (core)

(2)

 

 

17,125

 

 

19,349

 

 

18,703

 

 

19,359

 

 

19,223

Non-interest expense

 

 

 

54,857

 

 

58,542

 

 

69,090

 

 

64,437

 

 

56,332

Pre-provision net revenues

 

 

 

37,243

 

 

36,429

 

 

39,436

 

 

37,214

 

 

52,526

Provision for loan and lease losses

(3)(32)

 

 

13,789

 

 

52,190

 

 

51,579

 

 

15,539

 

 

42,193

FDIC shared-loss expense, net

(31)

 

 

4,029

 

 

4,400

 

 

2,079

 

 

23,245

 

 

13,084

Net income (loss) before income taxes

 

 

 

19,832

 

 

(20,840)

 

 

5,131

 

 

(2,340)

 

 

(2,009)

Income tax expense (benefit)

 

 

 

5,661

 

 

(19,863)

 

 

562

 

 

770

 

 

979

Net income (loss)

 

 

$

14,171

 

$

(976)

 

$

4,569

 

$

(3,109)

 

$

(2,988)

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share - basic

(4)

 

$

0.24

 

$

(0.10)

 

$

0.03

 

$

(0.15)

 

$

(0.14)

Earnings (loss) per common share - diluted

(5)

 

$

0.24

 

$

(0.10)

 

$

0.03

 

$

(0.15)

 

$

(0.14)

Average common shares outstanding

 

 

 

43,898

 

 

43,868

 

 

43,929

 

 

44,505

 

 

44,634

Average common shares outstanding and equivalents

 

 

 

51,064

 

 

51,069

 

 

51,146

 

 

51,774

 

 

51,977

Cash dividends per common share

(6)

 

$

0.06

 

$

0.06

 

$

0.10

 

$

0.10

 

$

0.10

Book value per common share (period end)

 

 

$

16.80

 

$

16.67

 

$

16.91

 

$

16.81

 

$

17.25

Tangible book value per common share (period end)

(7)

 

$

14.68

 

$

14.53

 

$

14.76

 

$

14.67

 

$

15.12

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(8)

 

$

4,484,410

 

$

4,552,234

 

$

4,654,135

 

$

4,748,145

 

$

4,794,433

Interest-earning assets

 

 

 

6,437,255

 

 

6,600,614

 

 

6,740,932

 

 

6,708,519

 

 

6,703,287

Total assets

 

 

 

6,990,150

 

 

7,160,328

 

 

7,326,901

 

 

7,329,899

 

 

7,376,738

Interest-bearing deposits

 

 

 

3,956,790

 

 

3,931,009

 

 

3,932,735

 

 

3,986,700

 

 

4,167,592

Borrowings

 

 

 

1,239,672

 

 

1,394,171

 

 

1,572,400

 

 

1,466,103

 

 

1,378,344

Stockholders' equity

 

 

 

899,858

 

 

905,646

 

 

912,598

 

 

929,867

 

 

948,302

Common stockholders' equity

 

 

 

733,988

 

 

739,776

 

 

746,728

 

 

763,997

 

 

782,432

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(9)

 

 

4.67%

 

 

4.55%

 

 

5.29%

 

 

4.92%

 

 

5.42%

Return on average assets

(10)

 

 

0.81%

 

 

-0.05%

 

 

0.25%

 

 

-0.17%

 

 

-0.16%

Return on average tangible common stockholders' equity

(11)

 

 

6.69%

 

 

-2.75%

 

 

0.68%

 

 

-3.93%

 

 

-3.76%

Efficiency ratio

(12)

 

 

59.56%

 

 

61.64%

 

 

63.66%

 

 

63.39%

 

 

51.75%

Full-time equivalent employees, period end

 

 

 

1,467

 

 

1,466

 

 

1,491

 

 

1,507

 

 

1,510

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

(3)

 

$

113,238

 

$

112,626

 

$

80,351

 

$

78,989

 

$

76,759

    Allowance as a % of loans held for investment

 

 

 

3.63%

 

 

3.62%

 

 

2.65%

 

 

2.67%

 

 

2.64%

    Net charge-offs

 

 

$

10,048

 

$

12,737

 

$

9,097

 

$

7,723

 

$

8,592

    Net charge-off rate

(13)

 

 

1.30%

 

 

1.67%

 

 

1.23%

 

 

1.06%

 

 

1.21%

    Early delinquency rate (30 - 89 days past due)

 

 

 

3.51%

 

 

3.70%

 

 

3.77%

 

 

4.84%

 

 

4.67%

    Total delinquency rate (30 days and over)

 

 

 

6.72%

 

 

6.94%

 

 

7.06%

 

 

7.72%

 

 

8.60%

Capital Ratios

(14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

11.38%

 

 

11.18%

 

 

10.93%

 

 

11.05%

 

 

11.23%

Common equity Tier 1 capital ratio

 

 

 

12.33%

 

 

12.14%

 

 

12.03%

 

 

12.26%

 

 

12.63%

Tier 1 risk-based capital ratio

 

 

 

16.36%

 

 

15.99%

 

 

15.64%

 

 

15.85%

 

 

16.14%

Total risk-based capital ratio

 

 

 

17.67%

 

 

17.29%

 

 

16.93%

 

 

17.41%

 

 

17.69%

Tangible common equity ("TCE") ratio

 

 

 

9.50%

 

 

9.10%

 

 

9.11%

 

 

8.91%

 

 

9.29%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

2016

 

2015

 

2015

 

2015

 

2015

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(1)(17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Non-acquired loans

 

 

$

47,915

 

$

47,261

 

$

46,036

 

$

44,238

 

$

46,285

    Acquired BBVAPR loans

 

 

 

25,676

 

 

26,976

 

 

35,214

 

 

33,508

 

 

35,694

    Acquired Eurobank loans

 

 

 

7,561

 

 

8,134

 

 

16,014

 

 

12,758

 

 

15,504

          Total interest income from loans

 

 

 

81,152

 

 

82,371

 

 

97,264

 

 

90,504

 

 

97,483

Investment securities

 

 

 

10,154

 

 

10,536

 

 

9,983

 

 

8,909

 

 

9,518

          Total interest income

 

 

 

91,306

 

 

92,907

 

 

107,247

 

 

99,413

 

 

107,001

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

5,136

 

 

5,237

 

 

5,440

 

 

5,519

 

 

5,938

    Brokered deposits

 

 

 

1,988

 

 

1,438

 

 

1,211

 

 

1,085

 

 

1,166

          Total deposits

 

 

 

7,124

 

 

6,675

 

 

6,651

 

 

6,604

 

 

7,104

Borrowings

 

 

 

9,207

 

 

10,610

 

 

10,773

 

 

10,517

 

 

10,262

          Total interest expense

 

 

 

16,331

 

 

17,285

 

 

17,424

 

 

17,121

 

 

17,366

Net interest income

 

 

 

74,975

 

 

75,622

 

 

89,823

 

 

82,292

 

 

89,635

    Provision for loan and lease losses, excluding acquired loans

(1)(3)

 

 

10,660

 

 

45,012

 

 

10,459

 

 

9,952

 

 

33,913

    Provision for acquired BBVAPR loan and lease losses

(1)

 

 

2,324

 

 

7,332

 

 

7,630

 

 

5,692

 

 

3,471

    Provision (recapture) for acquired Eurobank loan and lease losses

(1)(32)

 

 

805

 

 

(154)

 

 

33,490

 

 

(105)

 

 

4,809

          Total provision for loan and lease losses, net

 

 

 

13,789

 

 

52,190

 

 

51,579

 

 

15,539

 

 

42,193

          Net interest income after provision for loan and lease losses

 

 

 

61,186

 

 

23,432

 

 

38,244

 

 

66,753

 

 

47,442

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

10,118

 

 

10,223

 

 

10,826

 

 

10,212

 

 

10,205

Wealth management revenues

 

 

 

6,152

 

 

7,715

 

 

6,885

 

 

7,285

 

 

7,155

Mortgage banking activities

 

 

 

855

 

 

1,411

 

 

992

 

 

1,862

 

 

1,863

          Total banking and wealth management revenues

 

 

 

17,125

 

 

19,349

 

 

18,703

 

 

19,359

 

 

19,223

FDIC shared-loss expense, net

(18)(31)

 

 

(4,029)

 

 

(4,400)

 

 

(2,079)

 

 

(23,245)

 

 

(13,084)

Other-than-temporary impairment losses on investment securities

 

 

 

-

 

 

(1,244)

 

 

(246)

 

 

-

 

 

-

Reimbursement from FDIC shared-loss coverage in sale of loans

(32)

 

 

-

 

 

-

 

 

20,000

 

 

-

 

 

-

Other gains (losses), net

(22)

 

 

407

 

 

565

 

 

(401)

 

 

(770)

 

 

742

          Total non-interest income (loss), net

 

 

 

13,503

 

 

14,270

 

 

35,977

 

 

(4,656)

 

 

6,881

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

20,284

 

 

18,716

 

 

20,098

 

 

19,260

 

 

20,180

Rent and occupancy costs

 

 

 

7,822

 

 

8,111

 

 

8,556

 

 

8,883

 

 

8,636

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

(32)

 

 

1,930

 

 

4,197

 

 

14,172

 

 

8,339

 

 

3,838

General and administrative expenses

 

 

 

22,566

 

 

25,512

 

 

21,537

 

 

24,904

 

 

21,454

          Total operating expenses

 

 

 

52,602

 

 

56,536

 

 

64,363

 

 

61,386

 

 

54,108

Credit related expenses

 

 

 

2,255

 

 

2,006

 

 

3,810

 

 

3,051

 

 

2,224

Other non-recurring expenses

(15)

 

 

-

 

 

-

 

 

917

 

 

-

 

 

-

          Total non-interest expense

 

 

 

54,857

 

 

58,542

 

 

69,090

 

 

64,437

 

 

56,332

Income (loss) before income taxes

 

 

 

19,832

 

 

(20,840)

 

 

5,131

 

 

(2,340)

 

 

(2,009)

Income tax expense (benefit)

(33)

 

 

5,661

 

 

(19,864)

 

 

562

 

 

769

 

 

979

Net income (loss)

 

 

 

14,171

 

 

(976)

 

 

4,569

 

 

(3,109)

 

 

(2,988)

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

(1,838)

 

 

(1,837)

 

 

(1,838)

 

 

(1,837)

 

 

(1,838)

    Other preferred stock

 

 

 

(1,627)

 

 

(1,629)

 

 

(1,627)

 

 

(1,629)

 

 

(1,627)

Net income (loss) available to common shareholders

 

 

$

10,706

 

$

(4,442)

 

$

1,104

 

$

(6,575)

 

$

(6,453)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

2016

 

2015

 

2015

 

2015

 

2015

Cash and cash equivalents

 

 

$

681,198

 

$

540,058

 

$

530,545

 

$

559,621

 

$

694,308

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

314

 

 

288

 

 

583

 

 

786

 

 

964

Investment securities available-for-sale, at fair value, with amortized cost of $653,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (December 31, 2015 - $955,646; September 30, 2015 - $982,754; June 30, 2015 - $1,023,573;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    March 31, 2015 - $1,092,040)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

(22)

 

 

656,137

 

 

953,213

 

 

985,554

 

 

1,020,493

 

 

1,099,814

    Other investment securities

(22)

 

 

13,148

 

 

21,396

 

 

22,151

 

 

23,826

 

 

25,888

          Total investment securities available-for-sale

 

 

 

669,285

 

 

974,609

 

 

1,007,705

 

 

1,044,319

 

 

1,125,702

Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $641,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (December 31, 2015 - $614,679; September 30, 2015 - $595,148; June 30, 2015 - $547,776;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    March 31, 2015 - $175,856)

 

 

 

637,036

 

 

620,189

 

 

594,639

 

 

550,553

 

 

172,847

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

20,761

 

 

20,783

 

 

20,804

 

 

20,826

 

 

21,148

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

3

 

 

3

          Total investments

 

 

 

1,327,399

 

 

1,615,872

 

 

1,623,734

 

 

1,616,487

 

 

1,320,664

Loans, net

(17)(32)

 

 

4,360,129

 

 

4,434,213

 

 

4,468,676

 

 

4,639,467

 

 

4,724,579

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FDIC shared-loss indemnification asset

(31)

 

 

20,923

 

 

22,599

 

 

22,895

 

 

22,704

 

 

75,221

Derivative assets

 

 

 

2,662

 

 

3,025

 

 

3,290

 

 

4,376

 

 

6,211

Prepaid expenses

 

 

 

10,363

 

 

11,762

 

 

14,151

 

 

16,492

 

 

11,264

Deferred tax asset, net

 

 

 

145,518

 

 

145,901

 

 

143,935

 

 

138,406

 

 

121,930

Foreclosed real estate and repossessed properties

(32)

 

 

61,145

 

 

64,088

 

 

73,063

 

 

95,994

 

 

113,863

Premises and equipment, net

 

 

 

73,975

 

 

74,590

 

 

75,346

 

 

76,486

 

 

78,745

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

Accounts receivable and other assets

(16)(32)

 

 

105,191

 

 

100,972

 

 

162,118

 

 

142,223

 

 

131,302

Total assets

 

 

$

6,874,572

 

$

7,099,149

 

$

7,203,822

 

$

7,398,325

 

$

7,364,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

$

2,018,346

 

 

1,862,572

 

 

1,906,658

 

 

1,938,772

 

 

2,027,184

Savings accounts

 

 

 

1,110,469

 

 

1,107,618

 

 

1,217,098

 

 

1,250,460

 

 

1,336,209

Time deposits

 

 

 

962,773

 

 

964,588

 

 

941,821

 

 

956,829

 

 

965,196

Brokered deposits

 

 

 

688,105

 

 

782,973

 

 

653,126

 

 

605,361

 

 

567,122

          Total deposits

 

 

 

4,779,693

 

 

4,717,751

 

 

4,718,703

 

 

4,751,422

 

 

4,895,711

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

(22)

 

 

636,172

 

 

934,691

 

 

1,000,664

 

 

1,161,136

 

 

927,168

Advances from FHLB and other borrowings

 

 

 

333,736

 

 

334,210

 

 

334,670

 

 

335,481

 

 

335,597

Subordinated capital notes

 

 

 

102,808

 

 

102,633

 

 

102,371

 

 

102,109

 

 

101,846

          Total borrowings

 

 

 

1,072,716

 

 

1,371,534

 

 

1,437,705

 

 

1,598,726

 

 

1,364,611

Other liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

 

6,220

 

 

6,162

 

 

8,622

 

 

8,739

 

 

11,113

Acceptances outstanding

 

 

 

19,381

 

 

14,582

 

 

19,083

 

 

16,040

 

 

21,848

Accrued expenses and other liabilities

 

 

 

92,761

 

 

92,043

 

 

111,821

 

 

111,799

 

 

134,494

          Total liabilities

 

 

 

5,970,771

 

 

6,202,072

 

 

6,295,934

 

 

6,486,726

 

 

6,427,777

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

Common stock

 

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,626

Additional paid-in capital

 

 

 

540,371

 

 

540,512

 

 

540,088

 

 

539,669

 

 

539,222

Legal surplus

 

 

 

71,865

 

 

70,435

 

 

70,423

 

 

69,934

 

 

70,097

Retained earnings 

 

 

 

155,529

 

 

148,886

 

 

155,974

 

 

159,737

 

 

170,605

Treasury stock, at cost

(19)

 

 

(104,874)

 

 

(105,379)

 

 

(105,379)

 

 

(100,668)

 

 

(96,495)

Accumulated other comprehensive income, net

 

 

 

12,284

 

 

13,997

 

 

18,156

 

 

14,301

 

 

24,324

          Total stockholders' equity

 

 

 

903,801

 

 

897,077

 

 

907,888

 

 

911,599

 

 

936,379

          Total liabilities and stockholders' equity

 

 

$

6,874,572

 

$

7,099,149

 

$

7,203,822

 

$

7,398,325

 

$

7,364,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4: Information on Loan Portfolio and Production

(17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(Dollars in thousands) (unaudited)

 

 

2016

 

2015

 

2015

 

2015

 

2015

Non-acquired loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

$

 751,819  

 

$

 757,828  

 

$

 762,636  

 

$

 757,187  

 

$

 789,545  

      Commercial

 

 

 

 1,425,385  

 

 

 1,441,649  

 

 

 1,389,353  

 

 

 1,363,851  

 

 

 1,324,904  

      Consumer

 

 

 

 252,327  

 

 

 242,950  

 

 

 227,756  

 

 

 212,629  

 

 

 193,658  

      Auto

 

 

 

 687,159  

 

 

 669,163  

 

 

 647,544  

 

 

 623,198  

 

 

 601,963  

 

 

 

 

 3,116,690  

 

 

 3,111,590  

 

 

 3,027,289  

 

 

 2,956,865  

 

 

 2,910,070  

      Less:  Allowance for loan and lease losses

 

 

 

 (113,238) 

 

 

 (112,626) 

 

 

 (80,351) 

 

 

 (78,989) 

 

 

 (76,759) 

 

 

 

 

 3,003,452  

 

 

 2,998,964  

 

 

 2,946,938  

 

 

 2,877,876  

 

 

 2,833,311  

      Deferred loan costs, net

 

 

 

 4,350  

 

 

 4,203  

 

 

 4,571  

 

 

 3,877  

 

 

 4,433  

          Total non-acquired loans held for investment, net

 

 

 

 3,007,802  

 

 

 3,003,167  

 

 

 2,951,509  

 

 

 2,881,753  

 

 

 2,837,744  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BBVAPR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Commercial

 

 

 

 6,558  

 

 

 7,457  

 

 

 7,736  

 

 

 8,448  

 

 

 9,506  

      Consumer

 

 

 

 36,346  

 

 

 38,385  

 

 

 39,774  

 

 

 41,505  

 

 

 42,922  

      Auto

 

 

 

 91,406  

 

 

 106,911  

 

 

 124,120  

 

 

 142,570  

 

 

 162,194  

 

 

 

 

 134,310  

 

 

 152,753  

 

 

 171,630  

 

 

 192,523  

 

 

 214,622  

      Less:  Allowance for loan and lease losses

 

 

 

 (4,993) 

 

 

 (5,542) 

 

 

 (5,473) 

 

 

 (5,529) 

 

 

 (5,450) 

 

 

 

 

 129,317  

 

 

 147,211  

 

 

 166,157  

 

 

 186,994  

 

 

 209,172  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

 

 600,901  

 

 

 608,294  

 

 

 617,268  

 

 

 631,807  

 

 

 645,918  

      Commercial

 

 

 

 345,789  

 

 

 375,491  

 

 

 395,637  

 

 

 499,710  

 

 

 519,809  

      Consumer

 

 

 

 9,345  

 

 

 11,843  

 

 

 15,072  

 

 

 18,869  

 

 

 23,841  

      Auto

 

 

 

 134,669  

 

 

 153,592  

 

 

 173,979  

 

 

 195,891  

 

 

 220,990  

 

 

 

 

 1,090,704  

 

 

 1,149,220  

 

 

 1,201,956  

 

 

 1,346,277  

 

 

 1,410,558  

      Less:  Allowance for loan and lease losses

 

 

 

 (27,747) 

 

 

 (25,785) 

 

 

 (19,986) 

 

 

 (18,359) 

 

 

 (14,166) 

 

 

 

 

 1,062,957  

 

 

 1,123,435  

 

 

 1,181,970  

 

 

 1,327,918  

 

 

 1,396,392  

   Total Acquired BBVAPR loans, net

 

 

 

 1,192,274  

 

 

 1,270,646  

 

 

 1,348,127  

 

 

 1,514,912  

 

 

 1,605,564  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eurobank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Mortgage

 

 

 

 91,113  

 

 

 92,273  

 

 

 92,757  

 

 

 102,499  

 

 

 100,677  

      Commercial

 

 

 

 142,298  

 

 

 142,377  

 

 

 144,704  

 

 

 187,692  

 

 

 223,734  

      Consumer

 

 

 

 1,770  

 

 

 2,314  

 

 

 2,708  

 

 

 3,295  

 

 

 4,047  

 

 

 

 

 235,181  

 

 

 236,964  

 

 

 240,169  

 

 

 293,486  

 

 

 328,458  

      Less:  Allowance for loan and lease losses

 

 

 

 (92,293) 

 

 

 (90,178) 

 

 

 (90,332) 

 

 

 (71,452) 

 

 

 (70,651) 

   Total Acquired Eurobank loans, net

 

 

 

 142,888  

 

 

 146,786  

 

 

 149,837  

 

 

 222,034  

 

 

 257,807  

          Total acquired loans, net

(32)

 

 

 1,335,162  

 

 

 1,417,432  

 

 

 1,497,964  

 

 

 1,736,946  

 

 

 1,863,371  

Total loans held for investment

 

 

 

 4,342,964  

 

 

 4,420,599  

 

 

 4,449,473  

 

 

 4,618,699  

 

 

 4,701,115  

Mortgage loans held for sale

 

 

 

 17,165  

 

 

 13,614  

 

 

 19,203  

 

 

 20,768  

 

 

 23,464  

Total loans, net

 

 

$

 4,360,129  

 

$

 4,434,213  

 

$

 4,468,676  

 

$

 4,639,467  

 

$

 4,724,579  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

2015

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

Quarterly loan production

(20)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage

 

 

$

 48,321  

 

$

 55,450  

 

$

 65,248  

 

$

 64,826  

 

$

 61,717  

    Commercial

 

 

 

 79,272  

 

 

 75,775  

 

 

 83,243  

 

 

 120,500  

 

 

 85,664  

    Consumer

 

 

 

 34,275  

 

 

 37,919  

 

 

 36,756  

 

 

 39,837  

 

 

 26,161  

    Auto and Leasing

 

 

 

 64,285  

 

 

 67,633  

 

 

 65,743  

 

 

 61,545  

 

 

 65,907  

        Total 

 

 

$

 226,153  

 

$

 236,777  

 

$

 250,990  

 

$

 286,708  

 

$

 239,449  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

2016 Q1

 

2015 Q4

 

2015 Q3

 

2015 Q2

 

2015 Q1

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

(Dollars in thousands) (unaudited)

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash equivalents and securities purchased under agreements to resell

 

 

$

502,718

 

$

646

 

0.52

%

 

$

438,981

 

$

327

 

0.30

%

 

$

482,959

 

$

308

 

0.25

%

 

$

483,507

 

$

322

 

0.27

%

 

$

564,237

 

$

323

 

0.23

%

 

    Investment securities

 

 

 

1,450,127

 

 

9,508

 

2.63

%

 

 

1,609,399

 

 

10,209

 

2.52

%

 

 

1,603,838

 

 

9,674

 

2.39

%

 

 

1,476,867

 

 

8,587

 

2.33

%

 

 

1,344,617

 

 

9,195

 

2.77

%

 

    Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Non-acquired loans

 

 

 

3,100,157

 

 

47,915

 

6.20

%

 

 

3,043,109

 

 

47,261

 

6.16

%

 

 

2,959,961

 

 

46,036

 

6.17

%

 

 

2,927,347

 

 

44,239

 

6.06

%

 

 

2,832,658

 

 

46,284

 

6.63

%

 

          Acquired BBVAPR loans

 

 

 

1,240,252

 

 

25,676

 

8.30

%

 

 

1,361,173

 

 

26,976

 

7.86

%

 

 

1,499,399

 

 

35,215

 

9.32

%

 

 

1,585,422

 

 

33,507

 

8.48

%

 

 

1,687,044

 

 

35,695

 

8.58

%

 

       Acquired Eurobank loans

 

 

 

144,001

 

 

7,561

 

21.06

%

 

 

147,952

 

 

8,134

 

21.81

%

 

 

194,775

 

 

16,014

 

32.62

%

 

 

235,376

 

 

12,758

 

21.74

%

 

 

274,731

 

 

15,504

 

22.89

%

 

            Total loans

 

 

 

4,484,410

 

 

81,152

 

7.26

%

 

 

4,552,234

 

 

82,371

 

7.18

%

 

 

4,654,135

 

 

97,265

 

8.29

%

 

 

4,748,145

 

 

90,504

 

7.65

%

 

 

4,794,433

 

 

97,483

 

8.25

%

 

Total interest-earning assets

 

 

$

6,437,255

 

$

91,306

 

5.69

%

 

$

6,600,614

 

$

92,907

 

5.58

%

 

$

6,740,932

 

$

107,247

 

6.31

%

 

$

6,708,519

 

$

99,413

 

5.94

%

 

$

6,703,287

 

$

107,001

 

6.47

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        NOW accounts

 

 

$

1,152,055

 

$

1,081

 

0.38

%

 

$

1,138,928

 

$

1,063

 

0.37

%

 

$

1,110,804

 

$

1,034

 

0.37

%

 

$

1,144,931

 

$

1,073

 

0.38

%

 

$

1,260,952

 

$

1,281

 

0.41

%

 

        Savings accounts

 

 

 

1,115,552

 

 

1,398

 

0.50

%

 

 

1,180,220

 

 

1,516

 

0.51

%

 

 

1,234,772

 

 

1,592

 

0.51

%

 

 

1,300,001

 

 

1,662

 

0.51

%

 

 

1,314,360

 

 

1,734

 

0.54

%

 

        Time deposits

 

 

 

954,857

 

 

2,495

 

1.05

%

 

 

938,291

 

 

2,456

 

1.04

%

 

 

939,076

 

 

2,613

 

1.10

%

 

 

969,818

 

 

2,624

 

1.09

%

 

 

990,091

 

 

2,976

 

1.22

%

 

        Brokered deposits

 

 

 

734,326

 

 

1,988

 

1.09

%

 

 

673,570

 

 

1,438

 

0.85

%

 

 

648,083

 

 

1,211

 

0.74

%

 

 

571,950

 

 

1,085

 

0.76

%

 

 

602,189

 

 

1,166

 

0.79

%

 

 

 

 

 

3,956,790

 

 

6,962

 

0.71

%

 

 

3,931,009

 

 

6,473

 

0.65

%

 

 

3,932,735

 

 

6,450

 

0.65

%

 

 

3,986,700

 

 

6,444

 

0.65

%

 

 

4,167,592

 

 

7,157

 

0.70

%

 

        Non-interest bearing deposit accounts

 

 

 

774,950

 

 

-

 

-

 

 

 

781,064

 

 

-

 

-

 

 

 

772,064

 

 

-

 

-

 

 

 

773,479

 

 

-

 

-

 

 

 

750,640

 

 

-

 

-

%

 

        Fair value premium amortization and core deposit intangible amortization

 

 

 

-

 

 

162

 

-

 

 

 

-

 

 

202

 

-

 

 

 

-

 

 

201

 

-

 

 

 

-

 

 

160

 

-

 

 

 

-

 

 

(53)

 

-

 

 

            Total deposits

 

 

 

4,731,740

 

 

7,124

 

0.60

%

 

 

4,712,073

 

 

6,675

 

0.56

%

 

 

4,704,799

 

 

6,651

 

0.56

%

 

 

4,760,179

 

 

6,604

 

0.56

%

 

 

4,918,232

 

 

7,104

 

0.59

%

 

    Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Securities sold under agreements to repurchase

 

 

 

799,613

 

 

6,099

 

3.06

%

 

 

957,680

 

 

7,404

 

3.07

%

 

 

1,132,373

 

 

7,605

 

2.66

%

 

 

1,020,077

 

 

7,394

 

2.91

%

 

 

939,377

 

 

7,164

 

3.09

%

 

        Advances from FHLB and other borrowings

 

 

 

337,364

 

 

2,240

 

2.66

%

 

 

334,029

 

 

2,306

 

2.74

%

 

 

337,829

 

 

2,283

 

2.68

%

 

 

344,088

 

 

2,248

 

2.62

%

 

 

337,292

 

 

2,235

 

2.69

%

 

        Subordinated capital notes

 

 

 

102,695

 

 

868

 

3.39

%

 

 

102,462

 

 

900

 

3.48

%

 

 

102,198

 

 

885

 

3.44

%

 

 

101,938

 

 

875

 

3.44

%

 

 

101,675

 

 

863

 

3.44

%

 

            Total borrowings

 

 

 

1,239,672

 

 

9,207

 

2.98

%

 

 

1,394,171

 

 

10,610

 

3.02

%

 

 

1,572,400

 

 

10,773

 

2.72

%

 

 

1,466,103

 

 

10,517

 

2.88

%

 

 

1,378,344

 

 

10,262

 

3.02

%

 

Total interest-bearing liabilities

 

 

$

5,971,412

 

$

16,331

 

1.10

%

 

$

6,106,244

 

$

17,285

 

1.12

%

 

$

6,277,199

 

$

17,424

 

1.10

%

 

$

6,226,282

 

$

17,121

 

1.10

%

 

$

6,296,576

 

$

17,366

 

1.12

%

 

Interest rate spread

 

 

 

 

 

$

74,975

 

4.59

%

 

 

 

 

$

75,622

 

4.46

%

 

 

 

 

$

89,823

 

5.21

%

 

 

 

 

$

82,292

 

4.84

%

 

 

 

 

$

89,635

 

5.35

%

 

Net interest margin

 

 

 

 

 

 

 

 

4.67

%

 

 

 

 

 

 

 

4.55

%

 

 

 

 

 

 

 

5.29

%

 

 

 

 

 

 

 

4.92

%

 

 

 

 

 

 

 

5.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 310-30 loan cost recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Acquired BBVAPR loans

 

 

 

 

 

$

683

 

 

 

 

 

 

 

$

354

 

 

 

 

 

 

 

$

6,106

 

 

 

 

 

 

 

$

941

 

 

 

 

 

 

 

$

1,364

 

 

 

 

       Acquired Eurobank loans

 

 

 

 

 

 

1,326

 

 

 

 

 

 

 

 

2,397

 

 

 

 

 

 

 

 

6,991

 

 

 

 

 

 

 

 

2,635

 

 

 

 

 

 

 

 

2,042

 

 

 

 

 

 

 

 

 

 

$

2,009

 

 

 

 

 

 

 

$

2,751

 

 

 

 

 

 

 

$

13,097

 

 

 

 

 

 

 

$

3,576

 

 

 

 

 

 

 

$

3,406

 

 

 

 

Adjusted excluding cost recoveries (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets

 

 

$

6,437,255

 

$

89,297

 

5.56

%

 

$

6,600,614

 

$

90,156

 

5.42

%

 

$

6,740,932

 

$

94,150

 

5.54

%

 

$

6,708,519

 

$

95,837

 

5.73

%

 

$

6,703,287

 

$

103,595

 

6.27

%

 

Interest rate spread

 

 

 

 

 

$

72,966

 

4.46

%

 

 

 

 

$

72,871

 

4.30

%

 

 

 

 

$

76,726

 

4.44

%

 

 

 

 

$

78,716

 

4.63

%

 

 

 

 

$

86,229

 

5.15

%

 

Net interest margin

 

 

 

 

 

 

 

 

4.55

%

 

 

 

 

 

 

 

4.38

%

 

 

 

 

 

 

 

4.52

%

 

 

 

 

 

 

 

4.71

%

 

 

 

 

 

 

 

5.22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

2016

 

2015

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

Net Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

$

1,662

 

$

1,568

 

$

1,058

 

$

1,356

 

$

1,414

  Recoveries

 

 

 

(145)

 

 

(53)

 

 

(270)

 

 

(67)

 

 

-

      Total mortgage

 

 

 

1,517

 

 

1,515

 

 

788

 

 

1,289

 

 

1,414

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

1,011

 

 

3,229

 

 

828

 

 

497

 

 

992

  Recoveries

 

 

 

(88)

 

 

(60)

 

 

(63)

 

 

(219)

 

 

(89)

      Total commercial

 

 

 

923

 

 

3,169

 

 

765

 

 

278

 

 

903

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

2,327

 

 

2,227

 

 

2,471

 

 

2,309

 

 

1,676

  Recoveries

 

 

 

(102)

 

 

(142)

 

 

(186)

 

 

(390)

 

 

(153)

      Total consumer

 

 

 

2,225

 

 

2,085

 

 

2,285

 

 

1,919

 

 

1,523

Auto and Leasing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

8,362

 

 

9,068

 

 

8,510

 

 

7,662

 

 

8,136

  Recoveries

 

 

 

(2,979)

 

 

(3,100)

 

 

(3,251)

 

 

(3,425)

 

 

(3,384)

      Total auto and leasing

 

 

 

5,383

 

 

5,968

 

 

5,259

 

 

4,237

 

 

4,752

          Total

 

 

$

10,048

 

$

12,737

 

$

9,097

 

$

7,723

 

$

8,592

Net Charge-off Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

0.80%

 

 

0.80%

 

 

0.42%

 

 

0.66%

 

 

0.72%

Commercial

 

 

 

0.26%

 

 

0.91%

 

 

0.23%

 

 

0.08%

 

 

0.28%

Consumer

 

 

 

3.80%

 

 

3.68%

 

 

4.33%

 

 

3.99%

 

 

3.36%

Auto and Leasing

 

 

 

3.15%

 

 

3.59%

 

 

3.28%

 

 

2.74%

 

 

3.20%

          Total

 

 

 

1.30%

 

 

1.67%

 

 

1.23%

 

 

1.06%

 

 

1.21%

Average Loans Held For Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

756,291

 

$

756,530

 

$

758,689

 

$

782,753

 

$

787,330

Commercial

 

 

 

1,425,332

 

 

1,394,597

 

 

1,349,511

 

 

1,333,276

 

 

1,269,104

Consumer

 

 

 

234,499

 

 

226,783

 

 

210,933

 

 

192,572

 

 

181,464

Auto and Leasing

 

 

 

684,035

 

 

665,199

 

 

640,828

 

 

618,746

 

 

594,760

        Total

 

 

$

3,100,157

 

$

3,043,109

 

$

2,959,961

 

$

2,927,347

 

$

2,832,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

2016

 

2015

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

Early Delinquency (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

31,627

 

$

36,092

*

$

37,377

 

$

68,515

 

$

63,060

Commercial

 

 

 

2,353

 

 

4,461

 

 

1,678

 

 

5,532

 

 

4,453

Consumer

 

 

 

4,341

 

 

4,128

 

 

3,585

 

 

3,089

 

 

3,957

Auto and Leasing

 

 

 

71,004

 

 

70,464

 

 

71,627

 

 

66,044

 

 

64,287

        Total

 

 

$

109,325

 

$

115,145

 

$

114,267

 

$

143,180

 

$

135,757

Early Delinquency Rates (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

4.21%

 

 

4.76%

 

 

4.90%

 

 

9.05%

 

 

7.99%

Commercial

 

 

 

0.17%

 

 

0.31%

 

 

0.12%

 

 

0.41%

 

 

0.34%

Consumer

 

 

 

1.72%

 

 

1.70%

 

 

1.57%

 

 

1.45%

 

 

2.04%

Auto and Leasing

 

 

 

10.33%

 

 

10.53%

 

 

11.06%

 

 

10.60%

 

 

10.68%

        Total

 

 

 

3.51%

 

 

3.70%

 

 

3.77%

 

 

4.84%

 

 

4.67%

Total Delinquency (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

$

97,424

 

$

102,988

 

$

104,355

 

$

127,609

 

$

122,597

    GNMA's buy-back option program

(30)

 

 

7,684

 

 

7,945

 

 

6,993

 

 

6,961

 

 

37,458

        Total mortgage

 

 

 

105,108

 

 

110,933

 

 

111,348

 

 

134,570

 

 

160,055

Commercial

 

 

 

19,686

 

 

21,138

 

 

17,014

 

 

16,062

 

 

13,518

Consumer

 

 

 

5,934

 

 

5,171

 

 

4,832

 

 

4,244

 

 

5,207

Auto and Leasing

 

 

 

78,746

 

 

78,757

 

 

80,613

 

 

73,464

 

 

71,482

        Total

 

 

$

209,474

 

$

215,999

 

$

213,807

 

$

228,340

 

$

250,262

Total Delinquency Rates (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

 

12.96%

 

 

13.59%

 

 

13.68%

 

 

16.85%

 

 

15.53%

    GNMA's buy-back option program

(30)

 

 

1.02%

 

 

1.05%

 

 

0.92%

 

 

0.92%

 

 

4.74%

        Total mortgage

 

 

 

13.98%

 

 

14.64%

 

 

14.60%

 

 

17.77%

 

 

20.27%

Commercial

 

 

 

1.38%

 

 

1.47%

 

 

1.22%

 

 

1.18%

 

 

1.02%

Consumer

 

 

 

2.35%

 

 

2.13%

 

 

2.12%

 

 

2.00%

 

 

2.69%

Auto and Leasing

 

 

 

11.46%

 

 

11.77%

 

 

12.45%

 

 

11.79%

 

 

11.87%

        Total

 

 

 

6.72%

 

 

6.94%

 

 

7.06%

 

 

7.72%

 

 

8.60%

Nonperforming Assets

(21)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

76,218

 

$

77,875

 

$

78,148

 

$

74,528

 

$

76,662

Commercial

 

 

 

212,345

 

 

215,281

 

 

222,072

 

 

224,014

 

 

222,820

Consumer

 

 

 

2,039

 

 

1,631

 

 

2,004

 

 

1,512

 

 

1,605

Auto and Leasing

 

 

 

7,873

 

 

8,418

 

 

10,076

 

 

8,587

 

 

8,482

        Total nonperforming loans

 

 

 

298,475

 

 

303,205

 

 

312,300

 

 

308,641

 

 

309,569

Foreclosed real estate

 

 

 

10,502

 

 

9,772

 

 

10,517

 

 

9,956

 

 

10,697

Other repossessed assets

 

 

 

2,796

 

 

3,845

 

 

5,134

 

 

8,624

 

 

10,332

        Total nonperforming assets

 

 

$

311,773

 

$

316,822

 

$

327,951

 

$

327,221

 

$

330,598

Nonperforming Loan Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

10.14%

 

 

10.28%

 

 

10.25%

 

 

9.84%

 

 

9.71%

Commercial

 

 

 

14.90%

 

 

14.93%

 

 

15.98%

 

 

16.43%

 

 

16.82%

Consumer

 

 

 

0.81%

 

 

0.67%

 

 

0.88%

 

 

0.71%

 

 

0.83%

Auto and Leasing

 

 

 

1.15%

 

 

1.26%

 

 

1.56%

 

 

1.38%

 

 

1.41%

        Total loans

 

 

 

9.58%

 

 

9.74%

 

 

10.32%

 

 

10.44%

 

 

10.64%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* During Q3 2015, the Company changed its early delinquency reporting on mortgage loans from one scheduled payment due to two scheduled payments due in order to comply with regulatory reporting instructions and be comparable with local peers. Troubled debt restructured loans remain using one scheduled payment due.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7: Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended March 31, 2016

 

 

 

 

 

 

 

 

 

Auto and

 

 

 

 

(Dollars in thousands) (unaudited)

 

 

Mortgage

 

Commercial

 

Consumer

 

Leasing

 

Unallocated

 

Total

Non-acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

18,352

 

$

64,791

 

$

11,197

 

$

18,261

 

$

25

 

$

112,626

Provision for loan and lease losses

 

 

 

1,949

 

 

338

 

 

2,442

 

 

5,838

 

 

93

 

 

10,660

Charge-offs

 

 

 

(1,662)

 

 

(1,011)

 

 

(2,327)

 

 

(8,362)

 

 

-

 

 

(13,362)

Recoveries

 

 

 

145

 

 

88

 

 

102

 

 

2,979

 

 

-

 

 

3,314

    Balance at end of period

 

 

$

18,784

 

$

64,206

 

$

11,414

 

$

18,716

 

$

118

 

$

113,238

Allowance coverage ratio

 

 

 

2.50%

 

 

4.50%

 

 

4.52%

 

 

2.72%

 

 

0.00%

 

 

3.63%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired BBVAPR loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

 

 

 

$

26

 

$

3,429

 

$

2,087

 

$

-

 

$

5,542

(Recapture) provision for loan and lease losses

 

 

 

 

 

 

(28)

 

 

545

 

 

(221)

 

 

-

 

 

296

Charge-offs

 

 

 

 

 

 

(7)

 

 

(812)

 

 

(737)

 

 

-

 

 

(1,556)

Recoveries

 

 

 

 

 

 

32

 

 

81

 

 

598

 

 

-

 

 

711

    Balance at end of period

 

 

 

 

 

$

23

 

$

3,243

 

$

1,727

 

$

-

 

$

4,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

1,678

 

$

21,161

 

$

84

 

$

2,862

 

$

-

 

$

25,785

Provision (recapture) for loan and lease losses, net

 

 

 

84

 

 

(665)

 

 

(84)

 

 

2,693

 

 

-

 

 

2,028

Loan pools fully charged-off

 

 

 

-

 

 

(66)

 

 

-

 

 

-

 

 

-

 

 

(66)

    Balance at end of period

 

 

$

1,762

 

$

20,430

 

$

-

 

$

5,555

 

$

-

 

$

27,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired Eurobank loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

32,624

 

$

57,187

 

$

367

 

$

-

 

$

-

 

$

90,178

(Recapture) provision for loan and lease losses, net

 

 

 

(54)

 

 

859

 

 

-

 

 

-

 

 

-

 

 

805

Loan pools fully charged-off

 

 

 

-

 

 

(134)

 

 

-

 

 

-

 

 

-

 

 

(134)

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

 

 

 

1,444

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1,444

    Balance at end of period

 

 

$

34,014

 

$

57,912

 

$

367

 

$

-

 

$

-

 

$

92,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

34,302

 

$

78,374

 

$

3,880

 

$

4,949

 

$

-

 

$

121,505

Provision for loan and lease losses

 

 

 

30

 

 

166

 

 

461

 

 

2,472

 

 

-

 

 

3,129

Charge-offs

 

 

 

-

 

 

(7)

 

 

(812)

 

 

(737)

 

 

-

 

 

(1,556)

Recoveries

 

 

 

-

 

 

32

 

 

81

 

 

598

 

 

-

 

 

711

Loan pools fully charged-off

 

 

 

-

 

 

(200)

 

 

-

 

 

-

 

 

-

 

 

(200)

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

 

 

 

1,444

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1,444

    Balance at end of period

 

 

$

35,776

 

$

78,365

 

$

3,610

 

$

7,282

 

$

-

 

$

125,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8: Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired with Deteriorated Credit Quality, including those by Analogy)

 

 

 

Quarter Ended March 31, 2016

(Dollars in thousands) (unaudited)

 

 

Mortgage

 

Commercial

 

Construction

 

Auto

 

Consumer

 

Total

Accretable Yield and Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired BBVAPR loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretable Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

268,794

 

$

45,411

 

$

19,615

 

$

21,578

 

$

6,290

 

$

361,688

Change in expected cash flows

 

 

 

-

 

$

128

 

$

200

 

$

1

 

$

-

 

$

329

Accretion

 

 

 

(8,307)

 

 

(5,839)

 

 

(1,869)

 

 

(4,211)

 

 

(938)

 

 

(21,164)

Transfers from (to) non-accretable discount

 

 

 

70

 

 

402

 

 

(790)

 

 

219

 

 

(91)

 

 

(190)

    Balance at end of period

 

 

$

260,557

 

$

40,102

 

$

17,156

 

$

17,587

 

$

5,261

 

$

340,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

374,772

 

$

11,781

 

$

6,764

 

$

22,039

 

$

18,834

 

$

434,190

Change in actual and expected cash flows

 

 

 

(4,547)

 

 

(663)

 

 

(122)

 

 

118

 

 

(190)

 

 

(5,404)

Transfers (to) from accretable yield

 

 

 

(70)

 

 

(402)

 

 

790

 

 

(219)

 

 

91

 

 

190

    Balance at end of period

 

 

$

370,155

 

$

10,716

 

$

7,432

 

$

21,938

 

$

18,735

 

$

428,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

51,954

 

$

26,969

 

$

2,255

 

$

-

 

$

3,213

 

$

84,391

Change in expected cash flows

 

 

 

984

 

 

11,093

 

 

(23)

 

 

-

 

 

(2,028)

 

 

10,026

Accretion

 

 

 

(2,266)

 

 

(4,095)

 

 

(15)

 

 

-

 

 

(1,185)

 

 

(7,561)

Transfers from (to) non-accretable discount

 

 

 

115

 

 

(765)

 

 

20

 

 

-

 

 

-

 

 

(630)

    Balance at end of period

 

 

$

50,787

 

$

33,202

 

$

2,237

 

$

-

 

$

-

 

$

86,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

12,869

 

$

-

 

$

-

 

$

-

 

$

8,287

 

$

21,156

Change in actual and expected cash flows

 

 

 

(51)

 

 

(765)

 

 

19

 

 

-

 

 

(8,287)

 

 

(9,084)

Transfers (to) from accretable yield

 

 

 

(115)

 

 

765

 

 

(19)

 

 

-

 

 

-

 

 

631

    Balance at end of period

 

 

$

12,703

 

$

-

 

$

-

 

$

-

 

$

-

 

$

12,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

2015

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

Average Equity to Non-GAAP Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

 

 

$

899,858

 

$

905,646

 

$

912,598

 

$

929,867

 

$

948,302

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

 

 

$

733,988

 

$

739,776

 

$

746,728

 

$

763,997

 

$

782,432

Less:  Average intangible assets

 

 

 

(93,759)

 

 

(94,217)

 

 

(94,697)

 

 

(95,168)

 

 

(95,616)

Average tangible common equity

 

 

$

640,229

 

$

645,559

 

$

652,031

 

$

668,829

 

$

686,816

Stockholders' Equity to Non-GAAP Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

903,801

 

$

897,077

 

$

907,888

 

$

911,599

 

$

936,379

Less:  Intangible assets

 

 

 

(93,487)

 

 

(93,907)

 

 

(94,383)

 

 

(94,859)

 

 

(95,336)

           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

 

 

$

644,444

 

$

637,300

 

$

647,635

 

$

650,870

 

$

675,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock outstanding at end of period

 

 

 

43,914

 

 

43,868

 

 

43,868

 

 

44,368

 

 

44,665

Tangible book value

 

 

$

14.68

 

$

14.53

 

$

14.76

 

$

14.67

 

$

15.12

Total Assets to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets  

 

 

$

6,874,572

 

$

7,099,149

 

$

7,203,822

 

$

7,398,325

 

$

7,364,156

Less:  Intangible assets

 

 

 

(93,487)

 

 

(93,907)

 

 

(94,383)

 

 

(94,859)

 

 

(95,336)

Tangible assets

 

 

$

6,781,085

 

$

7,005,242

 

$

7,109,439

 

$

7,303,466

 

$

7,268,820

Non-GAAP TCE Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity

 

 

$

644,444

 

$

637,300

 

$

647,635

 

$

650,870

 

$

675,173

Tangible assets

 

 

 

6,781,085

 

 

7,005,242

 

 

7,109,439

 

 

7,303,466

 

 

7,268,820

TCE ratio

 

 

 

9.50%

 

 

9.10%

 

 

9.11%

 

 

8.91%

 

 

9.29%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

BASEL III

 

 

 

Standardized

 

 

 

2016

 

2015

 

2015

 

2015

 

2015

(Dollars in thousands) (unaudited)

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

Regulatory Capital Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

 

$

585,144

 

 

594,482

 

 

601,789

 

 

 611,542  

 

 

 633,297  

Tier 1 capital

 

 

 

776,180

 

 

782,912

 

 

782,561

 

 

790,937

 

 

809,652

Total risk-based capital

(23)

 

 

838,283

 

 

846,747

 

 

847,267

 

 

868,569

 

 

887,042

Risk-weighted assets

 

 

 

4,744,449

 

 

4,896,539

 

 

5,003,285

 

 

4,988,754

 

 

5,015,090

Regulatory Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

(24)

 

 

12.33%

 

 

12.14%

 

 

12.03%

 

 

12.26%

 

 

12.63%

Tier 1 risk-based capital ratio

(25)

 

 

16.36%

 

 

15.99%

 

 

15.64%

 

 

15.85%

 

 

16.14%

Total risk-based capital ratio

(26)

 

 

17.67%

 

 

17.29%

 

 

16.93%

 

 

17.41%

 

 

17.69%

Leverage ratio

(27)

 

 

11.38%

 

 

11.18%

 

 

10.93%

 

 

11.05%

 

 

11.23%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

903,801

 

$

897,077

 

$

907,888

 

$

911,599

 

$

936,379

Less:  Noncumulative perpetual preferred stock

 

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

          Noncumulative perpetual preferred stock issuance costs

 

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

          Unrealized gains on available-for-sale securities, net of income tax

(28)

 

 

(15,089)

 

 

(16,925)

 

 

(22,486)

 

 

(18,833)

 

 

(30,215)

          Unrealized losses on cash flow hedges, net of income tax

(28)

 

 

2,805

 

 

2,927

 

 

4,330

 

 

4,532

 

 

5,891

 

 

 

 

725,647

 

 

717,209

 

 

723,862

 

 

731,428

 

 

746,185

Less:    Disallowed goodwill

 

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

 

 

(86,069)

            Disallowed other intangible assets, net

(29)

 

 

(2,715)

 

 

(1,912)

 

 

(2,028)

 

 

(2,145)

 

 

(2,261)

            Disallowed deferred tax assets, net

(29)

 

 

(51,719)

 

 

(34,746)

 

 

(33,976)

 

 

(31,672)

 

 

(24,558)

Common equity Tier 1 capital

 

 

 

585,144

 

 

594,482

 

 

601,789

 

 

611,542

 

 

633,297

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

 

 

 

(9,834)

 

 

(12,440)

 

 

(20,098)

 

 

(21,475)

 

 

(24,515)

Tier 1 capital

 

 

 

776,180

 

 

782,912

 

 

782,561

 

 

790,937

 

 

809,652

Plus:  Long-term debt qualifying as Tier 2 capital

 

 

 

-

 

 

-

 

 

-

 

 

13,400

 

 

13,400

            Qualifying allowance for loan and lease losses

 

 

 

62,103

 

 

63,835

 

 

64,706

 

 

64,232

 

 

63,990

Tier 2 capital

 

 

 

62,103

 

 

63,835

 

 

64,706

 

 

77,632

 

 

77,390

Total risk-based capital

 

 

$

838,283

 

$

846,747

 

$

847,267

 

$

868,569

 

$

887,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

OFG Bancorp (NYSE: OFG)

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

Total banking and wealth management revenues.

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

(9)

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

(10)

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

(11)

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

(12)

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

(13)

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

(14)

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

(15)

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

(16)

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

(17)

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

(18)

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

(19)

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

(20)

Production of new loans (excluding renewals).

(21)

Loans accounted for under ASC 310-30 (Loans acquired with deteriorated credit quality, including those by analogy), including Eurobank acquired loans, are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses. Therefore, they are not included as non-performing loans.

(22)

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

(23)

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

(24)

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

(25)

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

(26)

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

(27)

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

(28)

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

(29)

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

(30)

During Q2 2015, the Company sold mortgage servicing rights on $653.5 million of mortgage loans to Scotiabank PR. As a result, the delinquent GNMA's buy-back option program loans and corresponding liability decreased $30.5 million from Q1 2015.

(31)

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

(32)

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

(33)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

13