OFG Bancorp Reports 4Q23 & 2023 Results
- None.
- None.
Insights
The earnings report from OFG Bancorp indicates a consistent upward trajectory in key financial metrics, such as EPS (Earnings Per Share) and total core revenues. The reported EPS growth from $0.95 in the previous quarter to $0.98 in 4Q23 and from $3.44 to $3.83 on a full-year basis, reflects a positive earnings momentum, which is a vital indicator of the company's profitability. Similarly, the increase in total core revenues from $607.8 million in the previous year to $682.7 million in 2023 demonstrates robust revenue generation capabilities.
From an investor's perspective, the enhanced tangible book value (TBV) from $19.56 to $23.13 per share year-over-year is significant as it represents the per-share value of a company's equity, excluding intangible assets - a key metric for assessing a bank's potential investment value. Moreover, the net interest margin (NIM) of 5.62% is particularly strong, suggesting efficient management of interest-earning assets and liabilities in a potentially rising interest rate environment.
The substantial increase in provision for credit losses from $8.8 million in 4Q22 to $19.7 million in 4Q23, while indicative of prudent risk management given the increased loan volume, also suggests a cautious outlook on potential future credit losses, which investors should monitor closely.
OFG Bancorp's strategic focus on digitalization, as evidenced by their 'Digital First Strategy', aligns with broader industry trends towards online banking and self-service. This strategy has enabled 93% of routine transactions to be completed through self-service channels, enhancing customer experience and potentially reducing operational costs. The significant growth in loans held for investment and new loan production, particularly in the commercial sector, indicates aggressive market capture and could signal confidence in Puerto Rico's economic climate.
However, the increased reliance on wholesale funding, as seen in the higher average balances during the quarter, can expose the bank to market liquidity risks. The early repayment of borrowings and the addition of brokered deposits, with most maturing in early 1Q24, will be key factors to watch for their impact on the bank's liquidity and interest expense.
The report hints at broader economic implications, particularly within Puerto Rico's financial landscape. The large public funds deposit of $1.2 billion mid-December suggests strong public sector liquidity and may indicate governmental confidence in OFG Bancorp's stability. The reference to strong consumer liquidity and employment in Puerto Rico by the CEO supports the notion of a resilient local economy post-pandemic.
On a macroeconomic level, the bank's increased interest expenses reflect the rising interest rate environment, which is a trend across the banking sector as central banks globally have been tightening monetary policy to combat inflation. This trend can affect net interest income and thus profitability, although OFG Bancorp's net interest margin remains high.
Furthermore, the low nonperforming loan rate of 1.22%, the lowest over the last five quarters, could be interpreted as a positive indicator of credit quality within the bank's portfolio, which is reassuring in the context of economic uncertainty and potential future volatility.
4Q23: EPS diluted of
Full Year 2023: EPS diluted of
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: “2023 was an outstanding year. We are proud of our accomplishments and thank the entire team for making it possible. We ended 2023 with record levels of loans, customer deposits, assets, and stockholders’ equity. Year-end commercial loan balances exceeded
4Q23 Results Included:
Gain on Sale of Non-Performing Puerto Rico Small Business Loans: Resulted in a
Workforce Early Retirement & Rightsizing: Resulted in
Large Public Funds Deposit:
4Q23 Highlights
Performance Metrics: Net interest margin of
Total Interest Income of
Total Interest Expense of
Total Banking & Financial Service Revenues of
Pre-Provision Net Revenues of
Total Provision for Credit Losses of
Credit Quality: Net charge-offs of
Total Non-Interest Expense of
Loans Held for Investment (EOP) of
New Loan Production of
Total Investments (EOP) of
Customer Deposits (EOP) of
Total Borrowings & Brokered Deposits (EOP) of
Cash & Cash Equivalents (EOP) of
Total Assets (EOP) of
Capital: CET1 ratio was
Conference Call, Financial Supplement & Presentation
A conference call to discuss 4Q23 results, outlook and related matters will be held today at 10:00 AM ET. Phone (800) 267-6316 or (203) 518-9783. Conference ID: OFGQ423. 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 and year ended December 31, 2023, and the 4Q23 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, 2022, as well as its other filings with the
About OFG Bancorp
Now in its 60th year in business, OFG Bancorp is a diversified financial holding company that operates under
View source version on businesswire.com: https://www.businesswire.com/news/home/20240123214026/en/
US: Gary Fishman (gfishman@ofgbancorp.com) and Steven Anreder (sanreder@ofgbancorp.com) at (212) 532-3232
Source: OFG Bancorp
FAQ
What is the diluted EPS for OFG Bancorp in 4Q23?
What were the total core revenues for OFG Bancorp in 2023?
What was the net interest margin for OFG Bancorp in 4Q23?
What was the nonperforming loan rate for OFG Bancorp in 4Q23?
What was the total assets for OFG Bancorp at the end of 2023?
