SAN JUAN, Puerto Rico--(BUSINESS WIRE)--OFG Bancorp (NYSE: OFG), the financial holding company for Oriental Bank, today reported results for the second quarter ended June 30, 2024. EPS diluted of $1.08 compared to $1.05 in 1Q24 and $0.93 in 2Q23. Total core revenues of $179.4 million compared to $174.2 million in 1Q24 and $170.5 million in 2Q23.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: "The second quarter continued to demonstrate the strength of our strategies and franchise. EPS-diluted increased 16.1% year-over-year on a 5.2% increase in total core revenues. We generated strong performance metrics through consistent growth; increased loans, deposits, and non-interest income; and stable credit quality. Our 'Digital First' strategy continues to help us expand our retail and business relationships through new and upgraded products, services, and self-service tools. In addition, we implemented close to half of our $50 million share buyback program, purchasing $24.3 million of OFG shares in the open market. At the same time, Puerto Rico's economy continued to grow and steadily decouple from mainland economic uncertainties. Thanks to our team members for their commitment to making progress possible for our customers, employees, shareholders, and the communities we serve."
2Q24 Highlights
Performance Metrics: Net interest margin of 5.51%, return on average assets of 1.82%, return on average tangible common stockholders' equity of 18.24%, and efficiency ratio of 51.81%.
Total Interest Income of $187.7 million compared to $183.4 million in 1Q24 and $158.0 million in 2Q23. Compared to 1Q24, 2Q24 primarily reflected higher average balances and yields on loans. 2Q24 included $2.1 million from the recovery of a non-accrual U.S. commercial loan paid in full.
Total Interest Expense of $40.3 million compared to $39.3 million in 1Q24 and $18.3 million in 2Q23. Compared to 1Q24, 2Q24 reflected higher average core deposits and a 7 basis point increase in rates, partially offset by lower average wholesale funding and rate.
Total Banking & Financial Service Revenues of $32.1 million compared to $30.1 million in 1Q24 and $30.9 million in 2Q23. Compared to 1Q24, 2Q24 reflected higher banking service, wealth management and mortgage banking revenues. Banking service revenues included $0.6 million prepayment fees on U.S. loans, while wealth management included $0.5 million in annual recognition of certain commercial insurance commissions.
Pre-Provision Net Revenues of $86.8 million compared to $83.0 million in 1Q24 and $80.8 million in 2Q23.
Total Provision for Credit Losses of $15.6 million compared to $15.1 million in 1Q24 and $15.0 million in 2Q23. 2Q24 provision primarily reflected increased loan volume.
Credit Quality: Net charge-offs of $15.0 million compared to $19.8 million in 1Q24 and $6.6 million in 2Q23. 2Q24 early and total delinquency rates were 2.81% and 3.71%, respectively. The nonperforming loan rate of 1.08% was the lowest over the last five quarters.
Total Non-Interest Expense of $93.0 million compared to $91.4 million in 1Q24 and $88.9 million in 2Q23. Compared to 1Q24, 2Q24 included increases of $1.3 million in electronic banking expenses, $1.1 million in professional services fees, and $0.4 million for increased FDIC insurance now that Oriental exceeds $10 billion in assets. This was partially offset by reductions of $1.4 million in foreclosed real estate costs and in FICA payroll related expenses relative to the prior quarter.
Effective Tax Rate of 28.2% compared to 26.8% in 1Q24 and 32.9% in 2Q23. 2Q24 reflected an expected 2024 ETR of 29.0% due to higher forecasted business activities with preferential tax treatment under the Puerto Rico tax code, coupled with a $0.8 million tax benefit credit in 2Q24 compared to $1.1 million discrete benefit for stock vested in 1Q24.
Loans Held for Investment (EOP) of $7.64 billion compared to $7.54 billion in 1Q24 and $7.12 billion in 2Q23. Compared to 1Q24, 2Q24 increased 1.3%, reflecting growth in Puerto Rico commercial, auto and consumer loans, partially offset by regular paydowns of residential mortgages and prepayment of U.S. commercial loans. Compared to 2Q23, 2Q24 loans increased 7.3%.
New Loan Production of $589.0 million compared to $536.6 million in 1Q24 and $681.8 million in 2Q23. Compared to 1Q24, 2Q24 loan production, led by auto, reflected increases in all categories.
Total Investments (EOP) of $2.48 billion compared to $2.48 billion in 1Q24 and $1.70 billion in 2Q23.
Customer Deposits (EOP) of $9.60 billion compared to $9.55 billion in 1Q24 and $8.54 billion in 2Q23. Compared to 1Q24, 2Q24 reflected an increase in commercial deposits partially offset by a decline in retail deposits.
Total Borrowings & Brokered Deposits (EOP) of $201.2 million compared to $203.3 million in 1Q24 and $226.5 million in 2Q23.
Cash & Cash Equivalents (EOP) of $740.4 million compared to $754.4 million in 1Q24 and $799.0 million in 2Q23.
Capital: CET1 ratio was 14.29% compared to 14.45% in 1Q24 and 14.03% in 2Q23. The Tangible Common Equity ratio was 10.09% compared to 10.06% in 1Q24 and 9.99% in 2Q23. Tangible Book Value of $24.18 per share compared to $23.55 in 1Q24 and $21.06 in 2Q23.
Conference Call, Financial Supplement & Presentation
A conference call to discuss 2Q24 results, outlook and related matters will be held today at 10:00 AM ET. Phone (800) 245-3047 or (203) 518-9708. Conference ID: OFGQ224. The call can also be accessed live on www.ofgbancorp.com with webcast replay shortly thereafter.
OFG's Financial Supplement, with full financial tables for the quarter ended June 30, 2024, and the 2Q24 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) general business and economic conditions, including changes in interest rates; (ii) cybersecurity breaches; (iii) hurricanes, earthquakes, pandemics, and other natural disasters; and (iv) competition in the financial services industry.
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, 2023, 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 60th year in business, OFG Bancorp is a diversified financial holding company that operates under U.S., Puerto Rico 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. Our mission is to make progress possible for our customers, employees, shareholders, and the communities we serve. Visit us at www.ofgbancorp.com.
Contacts
Puerto Rico & USVI: Idalis Montalvo (idalis.montalvo@orientalbank.com) at (787) 777-2847
US: Gary Fishman (gfishman@ofgbancorp.com) and Steven Anreder (sanreder@ofgbancorp.com) at (212) 532-3232
