Earnings Per Share (Diluted): $1 Core Revenues: $178 million Total Interest Income: $189 million Total Interest Expense: $40 million Total Banking and Financial Service Revenues: $29 million Noninterest Expense: $93.5 million Income Tax Expense: $13.9 million Tax Rate: 23.34% Tangible Book Value Per Share: $26.66 Efficiency Ratio: 52.2% Return on Average Assets: 1.56% Return on Annual Common Equity: 15.28% Total Assets: $11.7 billion Average Loan Balances: $7.8 billion Loan Yield: 7.99% New Loan Origination: $559 million Average Core Deposits: $9.6 billion Core Deposit Costs: 1.42% Average Borrowings and Brokerage Deposits: $517 million Cash: $710.6 million Investments: $2.8 billion Net Interest Margin: 5.42% Net Charge-Offs: $20 million Provision for Credit Losses: $25.7 million Nonperforming Loan Rate: 1.11% CET1 Ratio: 14.27% Stockholders' Equity: $1.3 billion Tangible Common Equity Ratio: 10.30%

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Release Date: April 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

OFG Bancorp (NYSE:OFG) reported a strong start to the year with solid overall performance, generating earnings per share diluted of $1. The company's Digital First strategy is driving innovation, with significant growth in digital enrollments and transactions. OFG Bancorp (NYSE:OFG) launched three new digital tools, including an omnichannel online mobile app and Apple Pay, enhancing customer experience. The company increased its dividend by 20% and bought back $23.4 million of shares, supported by strong capital generation. Credit quality remains stable with a well-managed portfolio, and the company maintains a strong capital position with a CET1 ratio of 14.27%.

Negative Points

Total interest income declined by $941,000 due to two fewer business days, negatively affecting interest income by $3 million. Total banking and financial service revenues decreased by $3.6 million, impacted by annual insurance fees and MSR valuation changes. Net charge-offs increased by $4.5 million, including a partial charge-off of a previously reserved commercial loan. The company faces higher levels of volatility due to macroeconomic and geopolitical events, which could impact economic conditions. The power grid in Puerto Rico remains fragile, with ongoing challenges in achieving sustainable and cheaper power solutions.

Q & A Highlights

Q: Are you able to see deposit account openings through the digital channel, and is this something that's ramping up? A: Yes, we do have online digital account opening through our self-service channel. Currently, around 25% to 26% of our checking accounts and certificates of deposits are opened digitally, with the rest opened at branches. We are seeing increasing trends in digital account openings. - Jose Fernandez, CEO

Story Continues

Q: Can you detail any seasonality in deposit growth for the first quarter and discuss the timing of public deposit outflows? A: The first quarter is somewhat seasonal due to tax refunds and child tax credits. We expect continued deposit growth, supported by our online and branch network. Regarding government deposits, we have about $1 billion expected to be renewed for several months. - Jose Fernandez, CEO

Q: Do you expect continued normalization in consumer charge-offs? A: We expect stabilization in both our auto and unsecured personal loan portfolios. The first quarter showed positive trends due to seasonal improvements and better credit underwriting. We anticipate a slight increase in charge-offs next quarter due to seasonality but overall stabilization. - Cesar Ortiz, Chief Risk Officer

Q: What is the current duration of the bond book, and what are the reinvestment rates? A: The duration of our mortgage-backed securities is around five to six years. This quarter, repayments were $84 million, and we are monitoring the market for opportunities. Currently, cash is yielding around 4.25%. - Maritza Arizmendi, CFO

Q: What is the trajectory for the net interest margin (NIM) given current conditions? A: We expect the NIM to range between 5.3% to 5.4% for the year. This range depends on the funding side, particularly if government deposits exit, which would require replacement with higher-cost wholesale funding. - Maritza Arizmendi, CFO

Q: Can you provide additional color on the specific reserve for commercial loans? A: We have three loans, one in Puerto Rico and two in the US, totaling around $10 million. These loans were placed in substandard, and we took provisions for them. - Jose Fernandez, CEO

Q: How is the competitive environment in Puerto Rico affecting deposit costs? A: The market remains competitive, but we are pleased with our core performance, particularly in deposit growth. We continue to see growth in demand, savings, and time deposits, driven by both existing and new customers. - Jose Fernandez, CEO

Q: What is the outlook for fee income, particularly in wealth management and mortgage banking? A: We expect fee income to range between $29 million to $30 million for the year. This quarter was active in debit card transactions and POS, and we anticipate improvement in mortgage banking from current levels. - Maritza Arizmendi, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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