Oriental’s Holding Company Reports 1Q Profit
SAN JUAN – OFG Bancorp (OFG) on Friday reported a profit available to common shareholders of $10.7 million in its first quarter.
Among the company report highlights are that 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% annualized rate from December 31, 2015.
Its 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 Co. (PRIDCO) and the Puerto Rico Public Buildings Authority (PBA).
Its net interest margin (NIM) expanded to 4.67%, reflecting better yields on interest earning assets.
And finally, its 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%.
OFG shares have increased 7 percent since the beginning of the year. The stock has declined 50 percent in the last 12 months.
In a statement, José Rafael Fernández, president, CEO and vice chairman of the board, said, “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.”
A conference call to discuss OFG’s results for the first quarter 2016, outlook and related matters will be held at 10 a.m. Eastern Time Friday. 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.
OFG’s financial supplement, with 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.