OFG Bancorp (Holding Company Only) Financial Information

12 Months Ended

Dec. 31, 2018

OFG Bancorp (Holding Company Only) Financial Information [Abstract]

OFG Bancorp (Holding Company Only) Financial Information

NOTE 30 – OFG BANCORP (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

As a bank holding company subject to the regulations and supervisory guidance of the Federal Reserve Board, Oriental generally should inform the Federal Reserve Board and eliminate, defer or significantly reduce its dividends if: (i) its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or (iii) it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The payment of dividends by the Bank to Oriental may also be affected by other regulatory requirements and policies, such as the maintenance of certain regulatory capital levels. During 2018, 2017 and 2016, Oriental Insurance paid $4.0 million, $4.0 million and $5.0 million, respectively, in dividends to Oriental. Oriental Financial Services paid $1.0 million in dividends to Oriental during 2016 but did not pay any dividends during 2017 and 2018.

The following condensed financial information presents the financial position of the holding company only as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years ended December 31, 2018, 2017 and 2016:

OFG BANCORP

CONDENSED STATEMENTS OF FINANCIAL POSITION INFORMATION

(Holding Company Only)


	December 31,
	2018		2017
	(In thousands)
ASSETS
Cash and cash equivalents	$	39,207	$	24,430
Investment in bank subsidiary, equity method		983,718		941,198
Investment in nonbank subsidiaries, equity method		19,341		20,231
Due from bank subsidiary,net		40		22
Deferred tax asset, net		-		2,230
Other assets		1,122		1,616
Total assets	$	1,043,428	$	989,727
LIABILITIES AND STOCKHOLDERS’ EQUITY
Dividend payable		5,219		6,504
Due to affiliates		14		-
Accrued expenses and other liabilities		2,235		2,033
Subordinated capital notes		36,083		36,083
Total liabilities		43,551		44,620
Stockholders’ equity		999,877		945,107
Total liabilities and stockholders’ equity	$	1,043,428	$	989,727

OFG BANCORP

CONDENSED STATEMENTS OF OPERATIONS INFORMATION

(Holding Company Only)

	Year Ended December 31,
	2018		2017			2016
	(In thousands)
Income:
Interest income	$	477	$	188	$	174
Gain on sale of securities		-		-		211
Investment trading activities, net and other		6,003		4,511		4,066
Total income		6,480		4,699		4,451
Expenses:
Interest expense		1,905		1,556		1,370
Operating expenses		7,980		6,700		7,179
Total expenses		9,885		8,256		8,549
Loss before income taxes		(3,405)		(3,557)		(4,098)
Income tax expense		2,400		403		518
Loss before changes in undistributed earnings of subsidiaries		(5,805)		(3,960)		(4,616)
Equity in undistributed earnings from:
Bank subsidiary		87,128		51,612		58,580
Nonbank subsidiaries		3,087		4,994		5,222
Net income	$	84,410	$	52,646	$	59,186

OFG BANCORP

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME INFORMATION

(Holding Company Only)


	Year ended December 31,
	2018		2017		2016
	(In thousands)
Net income	$	84,410	$	52,646	$	59,186
Other comprehensive loss before tax:
Unrealized loss on securities available-for-sale		-		-		(204)
Other comprehensive income from bank subsidiary		(8,014)		(4,545)		(12,238)
Other comprehensive loss before taxes		(8,014)		(4,545)		(12,442)
Income tax effect		-		-		41
Other comprehensive loss after taxes		(8,014)		(4,545)		(12,401)
Comprehensive income	$	76,396	$	48,101	$	46,785

OFG BANCORP

CONDENSED STATEMENTS OF CASH FLOWS INFORMATION

(Holding Company Only)


	Year Ended December 31,
	2018		2017		2016
	(In thousands)
Cash flows from operating activities:
Net income	$	84,410	$	52,646	$	59,186
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings from banking subsidiary		(87,128)		(51,612)		(58,580)
Equity in undistributed earnings from nonbanking subsidiaries		(3,087)		(4,994)		(5,222)
Amortization of investment securities premiums, net of accretion of discounts		-		-		12
Realized gain on sale of securities		-		-		211
Stock-based compensation		1,401		1,109		1,270
Employee benefit adjustment		-		(99)		-
Deferred income tax, net		2,230		414		444
Net decrease (increase) in other assets		372		(205)		42
Net (decrease) increase in accrued expenses and other liabilities		203		(1,185)		800
Dividends from banking subsidiary		37,700		26,743		17,600
Dividends from non-banking subsidiary		4,000		4,002		6,000
Net cash provided by operating activities		40,101		26,819		21,763
Cash flows from investing activities:
Maturities and redemptions of investment securities available-for-sale		-		-		702
Proceeds from sales of investment securities available-for-sale		-		-		4,888
Net decrease in due from bank subsidiary, net		-		307		317
Net decrease in due to non-bank subsidiary, net		14		-		-
Proceeds from sales of premises and equipment		200		-		324
Capital contribution to banking subsidiary		(1,105)		(788)		(894)
Capital contribution to non-banking subsidiary		(24)		(50)		(68)
Additions to premises and equipment		(97)		(19)		(381)
Net cash (used in) provided by investing activities		(1,012)		(550)		4,888
Cash flows from financing activities:
Proceeds from (payments to) exercise of stock options and lapsed restricted units, net		508		-		(315)
Dividends paid		(24,820)		(24,412)		(24,003)
Net cash used in financing activities		(24,312)		(24,412)		(24,318)
Net change in cash and cash equivalents		14,777		1,857		2,333
Cash and cash equivalents at beginning of year		24,430		22,573		20,240
Cash and cash equivalents at end of year	$	39,207	$	24,430	$	22,573