OFG Bancorp Reports 4Q24 & 2024 Results

Rhea-AI Summary

OFG Bancorp reported strong financial results for Q4 and full-year 2024. Q4 2024 earnings per share reached $1.09, up from $1.00 in Q3 2024 and $0.98 in Q4 2023. Total core revenues were $181.9 million in Q4 2024, compared to $174.1 million in Q3 2024.

For the full year 2024, diluted EPS was $4.23, a 10.4% increase from $3.83 in 2023. Annual core revenues grew 3.9% to $709.6 million. The bank demonstrated strong operational execution with its Digital First strategy, growing its banking franchise and market share.

Key Q4 metrics included a net interest margin of 5.40%, return on average assets of 1.75%, and an efficiency ratio of 54.82%. Total loans held for investment reached $7.79 billion, a 3.4% year-over-year increase. The company continued its share buyback program, acquiring $45.9 million of common shares in Q4 2024.

Positive

• EPS growth of 11.2% YoY in Q4 2024 ($1.09 vs $0.98)
• Full-year 2024 EPS increased 10.4% to $4.23
• Core revenues up 3.9% to $709.6 million in 2024
• Loan portfolio grew 3.4% YoY to $7.79 billion
• Strong capital position with 14.26% CET1 ratio
• Reduced effective tax rate to 24.03% from 32.08% in 2023

Negative

• Increased provision for credit losses to $30.2 million in Q4 (vs $21.4M in Q3)
• Rising auto delinquency trends requiring $5.7M qualitative adjustment
• Customer deposits declined to $9.45B from $9.53B in Q3
• Tangible Book Value per share decreased to $25.43 from $26.15 in Q3

Insights

Financial Analyst

OFG Bancorp delivered a robust performance in Q4 2024, with several key metrics showcasing operational excellence and strategic execution. The 11.2% year-over-year EPS growth to $1.09 was driven by multiple factors worth examining.

Revenue quality shows impressive resilience. The net interest margin of 5.40% remains exceptionally strong compared to industry averages, indicating effective interest rate management and asset pricing power. Core revenue growth was supported by diversified income streams, including a notable $4.8M favorable MSR valuation and $2.1M in annual insurance commissions.

Credit quality metrics warrant attention. While the NPL rate of 1.06% is manageable, the $30.2M provision for credit losses, including a $7.6M specific reserve for U.S. commercial loans and additional qualitative adjustments for auto delinquencies, suggests some caution in certain portfolio segments. However, the proactive risk management through loan sales and reserve building demonstrates prudent oversight.

The deposit franchise shows stability amid competitive pressures. While total deposits slightly declined to $9.45B, the mix improved with increases in commercial and retail deposits offsetting government deposit outflows. The bank's Digital First strategy appears to be supporting customer acquisition and retention effectively.

Capital management remains shareholder-friendly, with $45.9M in share buybacks during Q4 while maintaining a strong CET1 ratio of 14.26%. The significant reduction in effective tax rate to 24.03% from 32.08% provides additional earnings support going forward.

Risk Management Specialist

The risk landscape at OFG presents a nuanced picture requiring careful analysis. The increased provision expense of $30.2M in Q4 reflects both growth-related reserves ($18.1M) and emerging credit concerns, particularly in specific commercial relationships and auto lending.

The strategic decision to sell certain auto and consumer loans demonstrates active portfolio management, resulting in a $2.6M recovery and helping optimize risk-weighted assets. However, the qualitative adjustment of $5.7M for auto delinquencies signals potential headwinds in this segment.

Liquidity positioning remains conservative with $591.1M in cash and equivalents, though down from previous quarters. The increase in borrowings and brokered deposits to $557.2M suggests a tactical approach to funding optimization rather than liquidity pressure.

Capital buffers provide substantial protection against potential stress scenarios. The CET1 ratio of 14.26% and tangible common equity ratio of 10.13% offer significant cushion above regulatory requirements, even while supporting shareholder returns through buybacks.

SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- OFG Bancorp (NYSE: OFG), the financial holding company for Oriental Bank, today reported results for the fourth quarter and year ended December 31, 2024.

4Q24: EPS diluted of $1.09 compared to $1.00 in 3Q24 and $0.98 in 4Q23. Total core revenues of $181.9 million compared to $174.1 million in 3Q24 and $175.6 million in 4Q23.

Full Year 2024: EPS diluted of $4.23 compared to $3.83 in 2023. Total core revenues of $709.6 million compared to $682.7 million in 2023.

CEO Comment

José Rafael Fernández, Chief Executive Officer, said: “The fourth quarter and last year reflected solid performance with strong financial results. 4Q24 EPS-diluted increased 11.2% year-over-year on a 3.6% increase in total core revenues. 2024 EPS increased 10.4% year-over-year on a 3.9% increase in total core revenues. We demonstrated consistent and excellent operational execution on our plans, with our Digital First strategy helping to grow our banking franchise and market share. Results also benefited from lower taxes, and we bought back 1.8 million shares in 2024. Thanks to our team members for their hard work and dedication. This is a great way to conclude the celebration of our 60th year in business bringing progress to all our stakeholders.”

4Q24 Highlights

Performance Metrics: Net interest margin of 5.40%, return on average assets of 1.75%, return on average tangible common stockholders’ equity of 16.71%, and efficiency ratio of 54.82%.

Total Interest Income of $190.2 million compared to $189.0 million in 3Q24 and $176.2 million in 4Q23. Compared to 3Q24, 4Q24 increased $1.1 million, primarily reflecting higher balances and higher yields on investment securities, higher loan balances, $0.7 million accretion for commercial loan prepayments, and reduced interest income from cash.

Total Interest Expense of $41.0 million compared to $41.2 million in 3Q24 and $32.7 million in 4Q23. Compared to 3Q24, 4Q24 decreased $0.1 million, primarily reflecting slightly lower average balances and cost of core deposits and higher average balances of borrowings and brokered deposits.

Total Banking & Financial Service Revenues of $32.8 million compared to $26.3 million in 3Q24 and $32.1 million in 4Q23. Compared to 3Q24, 4Q24 included $2.1 million annual insurance commission recognition, $4.8 million favorable MSR valuation, and $0.8 million from the August 2024 acquisition of a Puerto Rico residential mortgage servicing portfolio.

Pre-Provision Net Revenues of $83.0 million compared to $83.1 million in 3Q24 and $88.2 million in 4Q23.

Total Provision for Credit Losses of $30.2 million compared to $21.4 million in 3Q24 and $19.7 million in 4Q23. 4Q24 primarily reflected $18.1 million for increased loan volume, $7.6 million for a specific reserve related to four U.S. commercial loans, and $2.6 million recovery from the sale of auto and consumer loans. 4Q24 also included $5.7 million qualitative adjustment to account for uncertainty of recent increasing auto delinquency trends the model does not fully capture.

Credit Quality: Net charge-offs of $15.9 million (0.82% of average loans) compared to $17.1 million (0.90%) in 3Q24 and $16.3 million (0.88%) in 4Q23. NCOs benefited from the above-mentioned sale of auto and consumer loans. 4Q24 early and total delinquency rates were 2.95% and 4.38%, respectively. The nonperforming loan rate was 1.06%.

Total Non-Interest Expense of $99.7 million compared to $91.6 million in 3Q24 and $94.1 million in 4Q23. Compared to 3Q24, 4Q24 included $3.4 million in early retirement and business rightsizing, $1.4 million in annual performance incentives assessment, and the absence of 3Q24’s $2.3 million credit and debit card processing contract renewal rebate.

Income Tax Expense of $2.4 million compared to $14.8 million in 3Q24 and $21.8 million in 4Q23. 4Q24 decreased due to a reduction in the 2024 ETR for higher than previously forecasted business activities with preferential tax treatment and $2.3 million of discrete benefit. Excluding discrete items, ETR was 24.03% for 2024 compared to 32.08% for 2023.

Loans Held for Investment (EOP) of $7.79 billion compared to $7.75 billion in 3Q24 and $7.53 billion in 4Q23. Compared to 3Q24, 4Q24 loans increased 0.5%, reflecting growth in auto, U.S. commercial, and consumer loans, and repayments of P.R. commercial and residential mortgage loans. Year over year, loans increased 3.4%.

New Loan Production of $609.0 million compared to $572.2 million in 3Q24 and $663.9 million in 4Q23. Compared to 3Q24, 4Q24 reflected increases in P.R. commercial, auto, and residential mortgage lending, partially offset by a decrease in U.S. commercial and P.R. consumer lending.

Total Investments (EOP) of $2.72 billion compared to $2.61 billion in 3Q24 and $2.69 billion in 4Q23. 4Q24 primarily reflected purchases of $264 million of mortgage-backed securities yielding 5.3%, partially offset by MBS repayments of $103 million.

Customer Deposits (EOP) of $9.45 billion compared to $9.53 billion in 3Q24 and $9.60 billion in 4Q23. Compared to 3Q24, 4Q24 reflected a decline in government deposits and increases in commercial and retail deposits.

Total Borrowings & Brokered Deposits (EOP) of $557.2 million compared to $346.5 million in 3Q24 and $363.0 million in 4Q23.

Cash & Cash Equivalents (EOP) of $591.1 million compared to $680.6 million in 3Q24 and $748.2 million in 4Q23.

Share Buybacks: $45.9 million of common shares were acquired in 4Q24, leaving $29.7 million in remaining repurchase authorization as of December 31, 2024.

Capital: CET1 ratio was 14.26% compared to 14.37% in 3Q24 and 14.12% in 4Q23. The Tangible Common Equity ratio was 10.13% compared to 10.72% in 3Q24 and 9.68% in 4Q23. Tangible Book Value per share was $25.43 compared to $26.15 in 3Q24 and $23.13 in 4Q23. 4Q24 TBVPS reflected the above mentioned share buybacks and lower Other Comprehensive Income.

Conference Call, Financial Supplement & Presentation

A conference call to discuss 4Q24 results, outlook and related matters will be held today at 10:00 AM ET. Phone (800) 225-9448 or (203) 518-9708. Conference ID: OFGQ424. 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, 2024, and the 4Q24 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 61st 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250121134215/en/

Puerto Rico & USVI: Lumarie Vega López (lumarie.vega@orientalbank.com) and Victoria Maldonado Rodríguez (victoria.maldonado@orientalbank.com) at (787) 771-6800

US: Gary Fishman (gfishman@ofgbancorp.com) and Steven Anreder (sanreder@ofgbancorp.com) at (212) 532-3232

Source: OFG Bancorp

FAQ

What was OFG Bancorp's earnings per share (EPS) in Q4 2024?

OFG Bancorp reported diluted EPS of $1.09 in Q4 2024, up from $1.00 in Q3 2024 and $0.98 in Q4 2023.

How much did OFG's loan portfolio grow in 2024?

OFG's loans held for investment grew by 3.4% year-over-year, reaching $7.79 billion by the end of 2024.

What was OFG's share buyback activity in Q4 2024?

OFG acquired $45.9 million worth of common shares in Q4 2024, with $29.7 million remaining in repurchase authorization as of December 31, 2024.

How did OFG's credit quality metrics perform in Q4 2024?

In Q4 2024, net charge-offs were $15.9 million (0.82% of average loans), early delinquency rate was 2.95%, and the nonperforming loan rate was 1.06%.

What was OFG's total core revenue for full-year 2024?

OFG's total core revenue for 2024 was $709.6 million, representing a 3.9% increase from $682.7 million in 2023.