OFG Bancorp Reports 2Q23 Results

OFG Bancorp (NYSE: OFG), the financial holding company for Oriental Bank, reported results for the second quarter ended June 30, 2023. EPS diluted of $0.93 compared to $0.96 in 1Q23 and $0.84 in 2Q22. Total core revenues of $170.5 million compared to $164.4 million in 1Q23 and $146.3 million in 2Q22.

CEO Comment

José Rafael Fernández, Chief Executive Officer, said: “The second quarter generated year-over-year increases of 16.5% in total core revenues and 10.7% in earnings per share. The period was highlighted by strong loan production, stable core deposits along with low cumulative deposit beta of 16% and increased operating leverage. Customer liquidity and the Puerto Rico economy continued at high levels. We also repurchased 565,299 shares of OFG stock as part of our buyback program.”

“Our ‘Digital First’ strategy continues to show excellent progress. We launched a first to market, self-service portal that enables customers to manage quickly and easily all their loan and deposit accounts in one place. Customers are increasingly adopting this and other self-service tools. Use of brick and mortar channels is down and digital is up, leading to an overall 5% increase in customer transaction activity in June year-over-year. This is freeing more Oriental team members to provide value-added service and develop new business. As always, thanks to our team for helping our customers and the communities we serve.”

2Q23 Highlights

Performance Metrics: Net interest margin of 5.90%, return on average assets of 1.76%, return on average tangible common stockholders’ equity of 17.67%, and efficiency ratio of 52.13%.

Net Interest Income of $139.6 million compared to $135.9 million in 1Q23 and $115.1 million in 2Q22. 2Q23 reflected the full effect of 1Q23’s 50 basis point increase in the Federal Reserve Board’s funds rate and a partial effect of 2Q23’s 25 bps increase.

Total Interest Income of $158.0 million compared to $149.0 million in 1Q23 and $122.2 million in 2Q22. Compared to 1Q23, 2Q23 primarily reflected higher yields on increased average balances of loans and cash.

Total Interest Expense of $18.3 million compared to $13.1 million in 1Q23 and $7.1 million in 2Q22. Compared to 1Q23, 2Q23 reflected higher cost of funds on increased average balances of interest bearing liabilities, including the full quarter effect of a $200 million mid-March Federal Home Loan Bank advance.

Total Banking & Financial Service Revenues of $30.9 million compared to $28.5 million in 1Q23 and $31.2 million in 2Q22. Compared to 1Q23, 2Q23 primarily reflected increased wealth management and mortgage servicing revenues. Non-interest income also included a loss of $0.8 million due primarily to the sale of a short-term Treasury note.