CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “The third quarter was another solid quarter of performance with EPS-diluted up 5.3% year-over-year on a 1.1% increase in total core revenues. We continued to produce consistent, core operating results, and digital adoption of our new and upgraded products, services, and self-service tools keeps steadily growing. Today we celebrate our 60th anniversary in business by renewing our commitment to bring progress to our customers, employees, shareholders, and the communities we serve. Thanks to all our team members for always being more than ready to help our customers today and tomorrow.”
2024 Highlights
Performance Metrics: Net interest margin of 5.43%, return on average assets of 1.66%, return on average tangible common stockholders’ equity of 15.94%, and efficiency ratio of 52.60%.
Total Interest Income of $189.0 million compared to $187.7 million in 2Q24 and $165.7 million in 3Q23. Compared to 2Q24, 3Q24 increased $1.4 million, primarily reflecting higher balances of investment securities and yields, higher balances of loans, and the absence of a $2.1 million loan recovery in 2Q24.
Total Interest Expense of $41.2 million compared to $40.3 million in 2Q24 and $23.9 million in 3Q23. Compared to 2Q24, 3Q24 increased $0.8 million, reflecting higher average balances of higher-cost borrowings and brokered deposits and slightly reduced average core deposit balances and cost.
Total Banking & Financial Service Revenues of $26.3 million compared to $32.1 million in 2Q24 and $30.4 million in 3Q23. 3Q24 primarily reflected $2.7 million in reduced interchange fees due to the Durbin Amendment, $2.1 million reduced MSR valuation due to lower long-term rates, and $0.3 million revenue from the acquisition in late August of a $1.7 billion Puerto Rico residential mortgage servicing portfolio.
Pre-Provision Net Revenues of $83.1 million compared to $86.8 million in 2Q24 and $82.3 million in 3Q23.
Total Provision for Credit Losses of $21.4 million compared to $15.6 million in 2Q24 and $16.4 million in 3Q23. 3Q24 primarily reflected $18.7 million for increased loan volume; $5.2 million related to the annual update of auto risk drivers and consumer loan loss factors, and the extension of cash flows in a PR commercial loan up for renewal; and a $2.7 million reserve release mainly due to an improved U.S. macroeconomic perspective.
Credit Quality: Net charge-offs of $17.1 million (0.90% of average loans) compared to $15.0 million (0.79%) in 2Q24 and $18.8 million (1.05%) in 3Q23. 3Q24 early and total delinquency rates were 2.78% and 4.10%, respectively. The nonperforming loan rate was 1.11%. The 3Q24 total delinquency rate increased sequentially due to booking of the GNMA buy-back option program related to the previously mentioned mortgage servicing portfolio acquisition.
Total Non-Interest Expense of $91.6 million compared to $93.0 million in 2Q24 and $90.2 million in 3Q23. 3Q24 included a $2.3 million credit and debit card processing business contract renewal rebate and $1.3 million in expenses related to sales of repossessed assets.
Effective Tax Rate of 23.9% compared to 28.2% in 2Q24 and 31.9% in 3Q23. Lower 3Q24 ETR reflected an estimated 2024 ETR of 26.8% due to higher forecasted business activities with preferential tax treatment under the Puerto Rico tax code, coupled with discrete benefits of $3.1 million mainly related to stock vested in 1Q24 and tax credit purchases.
Loans Held for Investment (EOP) of $7.75 billion compared to $7.64 billion in 2Q24 and $7.26 billion in 3Q23. Compared to 2Q24, 3Q24 increased 1.5%, reflecting growth in Puerto Rico and U.S. commercial loans and Puerto Rico auto and consumer loans, and regular paydowns and securitization of residential mortgages. Year over year, 3Q24 loans increased 6.7%.
New Loan Production million compared to $589.0 million in 2Q24 and $567.5 million in 3Q23. Compared to 2Q24, 3Q24 production reflected increases in U.S. commercial and Puerto Rico consumer lending, and decreases in Puerto Rico commercial and auto lending.
Total Investments (EOP) of $2.61 billion compared to $2.48 billion in 2Q24 and $2.07 billion in 3Q23.
Customer Deposits (EOP) of $9.53 billion compared to $9.60 billion in 2Q24 and $8.54 billion in 3Q23. Compared to 2Q24, 3Q24 reflected increases in savings and time deposits, and lower demand deposits.
Total Borrowings & Brokered Deposits (EOP) of $346.5 million compared to $201.2 million in 2Q24 and $454.4 million in 3Q23.
Cash & Cash Equivalents (EOP) of $680.6 million compared to $740.4 million in 2Q24 and $532.7 million in 3Q23.
Capital: CET1 ratio was 14.37% compared to 14.29% in 2Q24 and 14.06% in 3Q23. The Tangible Common Equity ratio was 10.72% compared to 10.09% in 2Q24 and 9.74% in 3Q23. Tangible Book Value per share increased to $26.15 compared to $24.18 in 2Q24 and $21.01 in 3Q23.
Conference Call, Financial Supplement & PresentationA conference call to discuss 3Q24 results, outlook and related matters will be held today at 10:00 AM ET. Phone (800) 225-9448 or (203) 518-9708. Conference ID: OFGQ324. 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 September 30, 2024, and the 3Q24 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. Visit us at www.ofgbancorp.com.
