To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh. ...

OFG Bancorp (NYSE:OFG) Q4 2025 Earnings call January 22, 2026 10:00 AM ET Company ParticipantsJosé Rafael Fernández - CEO and Chairman of the Board of DirectorsBrett Rabatin - Director of ResearchKelly Motta - Director of Equity ResearchCésar Ortiz - Chief Risk OfficerTimur Braziler - Director of Mid-Cap Bank Equity ResearchMaritza Arizmendi - CFOConference Call ParticipantsManuel Navas - Managing Director and Senior Research AnalystArren Cyganovich - Senior AnalystOperatorGood morning. Thank you for joinin ...

OFG Bancorp (NYSE:OFG) Q4 2025 Earnings call January 22, 2026 10:00 AM ET Company ParticipantsJosé Rafael Fernández - CEO and Chairman of the Board of DirectorsBrett Rabatin - Director of ResearchKelly Motta - Director of Equity ResearchCésar Ortiz - Chief Risk OfficerTimur Braziler - Director of Mid-Cap Bank Equity ResearchMaritza Arizmendi - CFOConference Call ParticipantsManuel Navas - Managing Director and Senior Research AnalystArren Cyganovich - Senior AnalystOperatorGood morning. Thank you for joinin ...

Financial Data and Key Metrics Changes - Earnings per share diluted increased by 17% year-over-year, driven by a 2% growth in total core revenues [3] - Total assets grew by 8.4% to a record $12.5 billion, with core deposits increasing by 5% to $9.9 billion [4] - Loans grew by 5.3% to $8.2 billion, with commercial loans now representing 43% of the loan book [4] - The efficiency ratio was reported at 56.7%, with a return on average assets of 1.81% and return on tangible common equity at 17.2% [10] Business Line Data and Key Metrics Changes - Core revenues totaled $185 million, reflecting a slight increase of $1.4 million [7] - Total interest income decreased by $3 million to $197 million, influenced by higher average balances of loans and cash at lower average yields [8] - Non-interest expenses totaled $105 million, up $8.5 million from the previous quarter, primarily due to increased professional services fees and business sizing costs [9] Market Data and Key Metrics Changes - The Puerto Rico economy remains steady with a positive outlook for economic growth, supported by public reconstruction funds and private investments [17] - The company reported a 4% growth in retail customers, attributed to the success of its digital-first strategy [6] Company Strategy and Development Direction - The company is focusing on enhancing customer experience through its digital-first strategy, which includes the introduction of the Libre and Elite accounts [5] - There is a strategic emphasis on commercial loan growth, with expectations of a 5%-6% increase in commercial loans during the year [26] - The company aims to continue investing in technology and improving operational efficiencies to support long-term growth [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustainable long-term growth, citing sound credit quality and asset management [18] - The company anticipates a net interest margin range of 4.95%-5.05% for 2026, considering potential rate cuts and changes in deposit funding [16] - The management highlighted the importance of monitoring global macroeconomic and political uncertainties that could impact Puerto Rico [17] Other Important Information - The company repurchased $40 million of common shares in the fourth quarter and increased its dividend by 20% [4] - The effective tax rate for 2026 is expected to be around 23%, excluding any discrete items [16] Q&A Session Summary Question: Can you provide additional color into the larger Puerto Rico charge-offs this quarter? - The charge-offs were a result of a sale that released $17 million in non-performing loans, which triggered charge-offs but resulted in a gain of $3.9 million [21][24] Question: What is the outlook for loan growth? - The company expects low single-digit loan growth, with auto balances projected to decrease by 2%-3% and commercial loans to increase by 5%-6% [26] Question: Can you provide confidence in the expense guidance for 2026? - The expense range reflects continuous investment in technology and talent, with expectations for efficiencies to materialize in 2027 and 2028 [27][31] Question: What are the strategic initiatives for 2026? - The focus will be on enhancing retail efforts and investing in commercial growth, particularly targeting small and mid-sized clients [36][37] Question: What is the expectation for capital return in 2026? - The company plans to continue share buybacks as a primary method of returning capital to shareholders, alongside potential dividend considerations [38] Question: Has there been any price response from other players regarding new products? - There has been no significant price response from competitors, as the Libre account is non-interest-bearing and the Elite account offers competitive rates without aggressive pricing [87][88]

Financial Performance (4Q25) - EPS reached $1.27[7] - Total core revenues amounted to $185.4 million[7] - Net Interest Margin (NIM) stood at 5.12%[7] - Provision for credit losses was $31.9 million[7] - Non-interest expense totaled $105.0 million[7] - Pre-Provision Net Revenue (PPNR) was $79.3 million[7] Financial Position (EOP 4Q25) - Total assets reached $12.5 billion[7] - Customer deposits totaled $9.9 billion[7] - Loans held for investment were $8.2 billion[7] - Investments amounted to $2.8 billion[7] - Cash holdings were $1.0 billion[7] Capital Adequacy (4Q25) - CET1 ratio was 13.97%[7] - Tier 1 Risk-Based Capital Ratio was 13.97%[7] - Total Risk-Based Capital Ratio was 15.24%[7] - Leverage Ratio was 10.71%[7] Digital Adoption (4Q25) - 96% of all routine transactions were conducted through digital channels[17] - 98% of all deposit transactions were conducted through digital channels[17] - 71% of all loan payments were made digitally[17]

Financial Performance - 4Q25 diluted EPS was $1.27, up 16.4% year-over-year from $1.09 in 4Q24, with total core revenues of $185.4 million, a 1.9% increase from $181.9 million in 4Q24[1][3] - Full year 2025 diluted EPS increased to $4.58, an 8.3% growth from $4.23 in 2024, with total core revenues reaching $729.8 million, up 2.8% from $709.6 million in 2024[2][3] - Net income available to common stockholders for 2025 was $205,103 thousand, compared to $198,170 thousand in 2024, representing a year-over-year increase of 3.9%[31] - Net income available to common shareholders for Q4 2025 was $55,893,000, an increase from $51,838,000 in Q3 2025[33] - Income before income taxes was $234.117 million, down from $253.748 million in the previous year, representing a decrease of 7.8%[34] Revenue and Income - Net interest income for Q4 2025 was $152,744 thousand, an increase from $149,138 thousand in Q4 2024, reflecting a growth of 2.2% year-over-year[29] - Total core revenues for the year ended 2025 reached $729,808 thousand, up from $709,621 thousand in 2024, indicating a growth of 2.8%[31] - Non-interest income totaled $122.976 million, a decrease from $123.249 million in 2024, indicating a slight decline of 0.2%[34] - Non-interest income for Q4 2025 was $31,576,000, slightly up from $31,453,000 in Q3 2025[33] Loans and Credit Quality - Total loans held for investment at the end of 4Q25 were $8.20 billion, a 1.0% sequential increase and a 5.25% year-over-year increase from $7.79 billion in 4Q24[14] - New loan production for 4Q25 was $605.6 million, a decrease from $623.9 million in 3Q25, but an 11.5% increase year-over-year, totaling $2.57 billion for the year[15] - The net charge-off rate for 2025 was 1.00%, up from 0.89% in 2024, indicating a deterioration in credit quality[31] - Total delinquency for loans (30 days and over past due) increased to $308,570 thousand in Q4 2025, up from $294,871 thousand in Q3 2025, representing a 0.24% increase[43] - Total nonperforming loans reached $130,063 thousand in Q4 2025, compared to $99,043 thousand in Q3 2025, indicating a significant increase of 31.4%[44] Deposits and Funding - Customer deposits at the end of 4Q25 were $9.92 billion, reflecting a 1.1% sequential increase and a 5.0% year-over-year increase from $9.45 billion in 4Q24[17] - Total deposits for 2025 were $9,999,885 thousand, an increase from $9,613,722 thousand in 2024, representing a growth of 4.0%[31] - Total deposits increased to $152.747 million from $150.280 million, showing a growth of 1.5%[34] Expenses and Provisions - Total provision for credit losses in 4Q25 was $31.9 million, up from $30.2 million in 4Q24, primarily due to increased loan volume[10] - Non-interest expense for 4Q25 was $105.0 million, an increase from $99.7 million in 4Q24, driven by various operational costs[12] - The provision for credit losses for 2025 totaled $107,513 thousand, significantly higher than $82,251 thousand in 2024, marking a 30.8% increase[31] Capital and Ratios - The CET1 ratio at the end of 4Q25 was 13.97%, down from 14.26% in 4Q24, while tangible book value per share increased to $29.96 from $25.43 in 4Q24[19] - Tangible common equity (Non-GAAP) reached $1,295,909,000, reflecting a tangible book value per common share of $29.96[49] - Common equity Tier 1 capital was reported at $1,318,632,000, with a common equity Tier 1 capital ratio of 13.97%[50] Asset Management - Total assets increased to $12,465.7 million as of December 31, 2025, up from $11,500.7 million a year earlier, representing a growth of 8.4%[35] - The company’s retained earnings increased to $904.6 million, up from $772.0 million, representing a growth of 17.1% year-over-year[35] - Total stockholders' equity rose to $1,390.0 million, compared to $1,254.4 million a year ago, indicating an increase of 10.8%[35] Interest Rates and Margins - The net interest margin for 2025 was 5.27%, down from 5.43% in 2024, suggesting a tightening in interest income[31] - Total interest income for 2025 was $780.936 million, an increase from $750.277 million in 2024, representing a growth of 4.4%[34] - Total interest-earning assets increased to $11,542,913 thousand in 2025, with a net interest income of $780,936 thousand and a net interest margin of 5.27%[39]

Wall Street analysts forecast that OFG Bancorp (OFG) will report quarterly earnings of $1.16 per share in its upcoming release, pointing to a year-over-year increase of 6.4%. It is anticipated that revenues will amount to $184.17 million, exhibiting an increase of 0.8% compared to the year-ago quarter.The current level reflects an upward revision of 7.5% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised th ...

Now in its 61 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, e ...

Earnings Performance - Earnings per share for the third quarter of 2025 was $1.16, a 16.0% increase year-over-year, with net income of $51.8 million, unchanged from the previous quarter [242][245]. - Net income available to common shareholders increased by 10.3% to $51,838 from $47,000 in Q3 2024 [262]. - Basic EPS for Q3 2025 was $1.17, a 15.8% increase from $1.01 in Q3 2024 [262]. - Net income for the quarter was $51,838 thousand, compared to $47,000 thousand for the same quarter in 2024, representing an increase of 10.0% [300]. Interest Income and Net Interest Income - Total interest income reached $200.1 million, up 5.8% from the second quarter of 2025 and 5.9% year-over-year [246]. - Interest income for Q3 2025 was $200,145, a 5.9% increase from $189,030 in Q3 2024 [262]. - Net interest income after provision for credit losses was $126,466, remaining stable compared to $126,516 in Q3 2024 [262]. - Net interest income for the quarter ended September 30, 2025, was $154.7 million, an increase of $6.8 million from $147.9 million, driven by higher loans and investment securities income [274]. - Tax equivalent basis net interest income increased by $5.6 million, or 3.7%, to $158.8 million from $153.2 million [274]. Credit Losses and Provisions - Total provision for credit losses was $28.3 million, an increase from $21.7 million in the second quarter of 2025, primarily due to increased loan volume and specific reserves [250]. - Provision for credit losses increased by 32.3% to $28,258 from $21,359 in Q3 2024 [262]. - The provision for credit losses for the nine-month period increased by $23.5 million to $75.6 million, primarily due to adjustments related to loan volume [294]. - Provision for credit losses for the quarter ended September 30, 2025, was $28.0 million, a 31.7% increase from $21.3 million in the same quarter of 2024 [340]. Loans and Deposits - Loans held for investment decreased 0.8% sequentially to $8.12 billion but increased 4.73% year-over-year, driven by growth in commercial and consumer loans [254]. - Customer deposits totaled $9.82 billion, a decrease of $76.2 million from the previous quarter but an increase of $286.5 million year-over-year [257]. - New loan production was $623.9 million, down from $783.7 million in the second quarter of 2025 but up 9.0% year-over-year [255]. - Total deposits increased to $10,008,633 from $9,604,786 in the previous year [263]. Non-Interest Income and Expenses - Non-interest income rose 17.1% to $31,453 from $26,868 in Q3 2024 [262]. - Non-interest income for the quarter was $31.5 million, an increase of 17.1% or $4.6 million from $26.9 million, attributed to higher mortgage banking activities and other non-interest income [283]. - Total non-interest expenses for the quarter were $96,548 thousand, compared to $91,600 thousand in the same quarter of 2024, representing an increase of 5.9% [300][303]. - Non-interest expense for the quarter ended September 30, 2025, was $96.5 million, an increase of 5.4% or $4.9 million compared to $91.6 million in 2024 [286]. Capital and Ratios - The CET1 ratio improved to 14.13% from 13.99% in the second quarter of 2025, while the tangible common equity ratio rose to 10.55% [260]. - Total stockholders' equity was $1.375 billion, marking a 9.6% increase compared to $1.254 billion at the end of 2024 [355]. - Common equity tier 1 capital ratio decreased to 14.13%, down 0.9% from 14.26% [360]. - Total risk-based capital increased to $1.431 billion, reflecting a 4.6% growth from $1.368 billion [360]. Asset Management - Total assets as of September 30, 2025, amounted to $12,229,812 thousand, up from $11,461,382 thousand a year earlier, indicating a growth of 6.7% [300][303]. - Total investments and loans reached $10,874,425, up from $10,354,108 in the previous year [263]. - The investment portfolio grew by $218.7 million or 8.0%, primarily due to new mortgage-backed securities and favorable market value adjustments [313]. - Total assets managed by OFG's trust division increased to $2.475 billion from $2.262 billion, reflecting a $103.7 million rise due to market conditions [315]. Non-Performing Loans and Credit Quality - Non-performing assets increased by 14.4% to $107.1 million, representing 0.88% of total assets as of September 30, 2025 [330]. - The total allowance for credit losses (ACL) increased by 11.1% to $189.7 million from $170.7 million at December 31, 2024 [338]. - Non-performing loans reached $99.0 million, reflecting a 19.4% increase from $83.0 million at the end of 2024 [347]. - The allowance coverage ratio to non-performing loans was 199.7% as of September 30, 2025 [331]. Strategic Initiatives - The Digital First strategy is enhancing customer acquisition and retention, with AI-driven insights being introduced to improve customer financial management [243]. - The company has implemented two mortgage loan modification programs aimed at reducing losses on non-performing loans [337].

Core Insights - OFG Bancorp is considered one of the most undervalued small-cap stocks currently available for investment [1] - Wells Fargo analyst Timur Braziler reduced the price target for OFG Bancorp from $48 to $43 while maintaining an Equal Weight rating [1][2] - The company is expected to face challenges ahead, including increased deposit competition and potential rate cuts impacting net interest income through most of the first half of 2026 [2] Financial Performance - OFG Bancorp reported a diluted EPS of $1.16 for fiscal Q3 2025, an increase from $1.15 in fiscal Q2 2025 and $1.00 in fiscal Q3 2024 [3] - Total core revenue for fiscal Q3 2025 was $184.0 million, compared to $174.1 million in the same period last year, reflecting a 5.6% growth [3][4] - The CEO, José Rafael Fernández, noted a 16% year-over-year increase in Q3 EPS and highlighted strong performance and credit metrics for the quarter [4] Shareholder Actions - The company repurchased $20.4 million of common shares during the quarter, indicating a commitment to returning value to shareholders [4] Business Segments - OFG Bancorp operates through three main segments: Banking, Wealth Management, and Treasury [4]