OFG Bancorp(US:OFG)2019-05-03 21:39Financial Performance - Interest income increased by 13.9% to $94.71 million compared to $83.17 million in the same quarter last year [294]. - Net income available to common shareholders rose by 62.4% to $21.84 million from $13.45 million [297]. - Income before taxes increased by 40.6% to $35.04 million from $24.93 million [294]. - Net interest income for the quarter ended March 31, 2019, was $81.8 million, an increase of $7.8 million from $74.0 million in the same quarter of 2018 [302]. - Non-interest income for the quarter was $17.656 million, a decrease of 4.6% from $18.514 million in the previous year [306]. - Net income for the banking segment increased by $11.3 million from $17.1 million to $28.4 million for the quarter ended March 31, 2019 [325]. Loans and Deposits - Loans increased by 6.5% to $4.40 billion, while deposits grew by 1.3% to $4.90 billion [297]. - New loan origination reached $276.4 million, with a 41.4% increase in commercial loans targeting small business customers [297]. - Loan production for the first quarter of 2019 reached $276.4 million, a 10.7% decrease compared to $309.4 million in the same quarter of the previous year [335]. - The non-acquired loan portfolio decreased by $6.1 million to $3.739 billion at March 31, 2019 [335]. - The mortgage loan portfolio decreased by 2.6% to $651.4 million, representing 17.4% of the gross originated loan portfolio [346]. - The commercial loan portfolio decreased by 1.8% to $1.570 billion, accounting for 42.0% of the gross originated loan portfolio [346]. Asset Management - Total assets as of March 31, 2019, amounted to $6.603 billion, reflecting a 0.3% increase from $6.583 billion at December 31, 2018 [333]. - Investment securities available for sale increased by 47.23% to $1.239 billion, attributed to the reclassification of held-to-maturity securities [336]. - Total other assets increased by 8.8% to $949.1 million from $872.2 million at the end of 2018 [343]. - Cash and cash equivalents increased by 13.2% to $506.0 million, primarily due to higher core demand and savings deposits [334]. Equity and Capital Ratios - Total stockholders' equity increased by 2.13% to $1.021 billion from $999.9 million at December 31, 2018 [383]. - Common equity tier 1 capital ratio improved from 16.78% to 17.09% during the same period [384]. - The tangible common equity to tangible assets ratio increased to 13.05% as of March 31, 2019, compared to 12.76% at the end of 2018, marking a 2.3% improvement [389]. - The market capitalization at the end of the period reached $1,015,790 thousand, a significant increase of 20.3% from $844,298 thousand [388]. Risk Management - The company has implemented a comprehensive credit policy to manage credit risk, particularly in the challenging economic conditions of Puerto Rico [413]. - Oriental's credit risk is heightened by economic challenges in Puerto Rico, including a shrinking population and a prolonged recession [412]. - The Board of Directors oversees Oriental's risk management policies, which are continuously refined to enhance effectiveness [397]. - Oriental's liquidity risk management includes $431.0 million in repurchase agreements and $451.2 million in brokered deposits as of March 31, 2019 [418]. Operational Efficiency - Non-interest expenses slightly increased to $52.2 million, representing a 0.1% increase from $52.1 million in the previous year [311]. - The efficiency ratio improved from 56.51% in 2018 to 52.50% in 2019, indicating better operational efficiency [311]. - The company has developed specific internal controls and policies to manage operational risk, which includes risks from inadequate internal processes and external events [423]. Non-Performing Assets - Oriental's non-performing assets increased by 0.5% to $162.1 million, representing 2.50% of total assets, excluding acquired loans with deteriorated credit quality [361]. - The originated non-performing mortgage loans totaled $59.7 million, a 6.4% decrease from $63.7 million at December 31, 2018 [363]. - Oriental's originated non-performing commercial loans amounted to $50.4 million, an 18.7% increase from $42.5 million at December 31, 2018 [364]. Interest Rate Management - Oriental's interest rate risk management strategy includes the use of derivative instruments such as interest rate swaps to minimize fluctuations in earnings due to interest rate volatility [406]. - Oriental's net interest income simulation analysis indicates that a 200 basis points increase in interest rates could lead to a $11.451 million (3.63%) increase in net interest income under a static balance sheet scenario [405].