OFG Bancorp(OFG) - 2019 Q3 - Quarterly Report

Financial Performance - Interest income for Q3 2019 was $93,655,000, a decrease of 0.5% from $94,137,000 in Q3 2018, while net interest income decreased by 1.9% to $80,710,000[365]. - Provision for loan and lease losses increased significantly by 199.8% to $43,770,000 in Q3 2019 compared to $14,601,000 in Q3 2018, impacting net interest income after provision which fell by 45.4%[365]. - Net income for Q3 2019 was $7,383,000, down 68.0% from $23,100,000 in Q3 2018, with income available to common shareholders decreasing by 70.7%[365]. - The company achieved a 14% year-over-year increase in adjusted earnings per share, reflecting effective strategies in capturing economic shifts in Puerto Rico[369]. - Net income available to shareholders was $5.8 million, or $0.11 per share fully diluted, down from $19.6 million, or $0.43 per share fully diluted[97]. - Adjusted net income available to shareholders was $26.5 million, or $0.48 per share fully diluted, compared to $27.4 million, or $0.50 per share in the previous quarter[376]. Loan and Asset Management - Non-performing loans (NPL) were reduced by 40% year-over-year to 2% of originated loans, enhancing liquidity and operational flexibility[369]. - Total investments and loans decreased by 13.6% to $4,936,908,000 as of September 30, 2019, compared to $5,711,198,000 at the end of 2018[367]. - Loans increased by 1.2% to $4.41 billion, while average core deposits rose 3.4% to $4.56 billion[97]. - New loan origination amounted to $291.4 million, reflecting success in targeting small business customers and growing consumer banking[97]. - Total loans for the nine-month period were $4,519,393,000, up from $4,294,178,000, reflecting a growth of 5.25%[390]. - The non-acquired loan portfolio increased by $46.4 million to $3.791 billion at September 30, 2019, compared to December 31, 2018[436]. Capital and Liquidity - The company has approximately $1 billion in cash available to fund growth plans, including the acquisition of Scotiabank's operations in Puerto Rico and the U.S. Virgin Islands[369]. - The leverage capital ratio improved to 15.41% from 14.22% year-over-year, indicating a stronger capital position[367]. - Cash increased by 115.2% to $961.8 million as a result of selling $672.2 million of available-for-sale mortgage-backed securities during the nine-month period ended September 30, 2019[435]. - Stockholders' equity increased by 4.9% to $1.049 billion from $999.9 million at December 31, 2018[503]. - The common equity tier 1 capital ratio improved to 17.98% from 16.78% at the end of 2018[504]. Interest Income and Expenses - Interest income for the nine-month period ended September 30, 2019, was $282,620,000, an increase from $265,314,000 in 2018, reflecting a growth rate of 0.49%[390]. - The average interest rate on interest-earning assets rose to 6.24% in 2019 from 6.01% in 2018, marking an increase of 0.23 percentage points[390]. - The total interest expense for the quarter was $12,945,000, compared to $11,860,000 in the previous year, reflecting an increase of 9.11%[388]. - Interest income from originated loans increased by $29.0 million, reflecting higher balances in commercial, consumer, and auto loan portfolios[397]. - The average yield of total interest-earning assets increased by 23 basis points, while the average cost of interest-bearing liabilities rose by 19 basis points[396]. Non-Interest Income and Expenses - Non-interest income rose by 19.1% to $22,178,000 in Q3 2019, contributing to a total of $62,782,000 for the nine-month period, a 12.4% increase year-over-year[365]. - Total non-interest income for the quarter ended September 30, 2019, was $22.2 million, a 19.1% increase from $18.6 million in the same quarter of 2018[401]. - Total non-interest expense was $50.7 million, with a reduction of $1 million attributed to various credits and acquisition-related expenses[378]. - Non-interest expenses for the quarter ended September 30, 2019, were $50.7 million, a decrease of 0.4% compared to $50.9 million in the same quarter of 2018[407]. Risk Management and Credit Quality - The provision for loan and lease losses increased by $32 million, primarily due to the decision to sell $95 million in non-performing loans[384]. - Oriental's credit risk is heightened due to challenging economic conditions in Puerto Rico, including a shrinking population and a prolonged economic recession[540]. - The allowance coverage ratio for originated loan and lease losses to non-performing loans was 104.39% at September 30, 2019, compared to 77.38% at December 31, 2018[469]. - Non-performing assets decreased by 33.5% to $107.3 million, representing 1.93% of total assets, down from $161.3 million (2.76% of total assets) at December 31, 2018[469]. - Total net credit losses increased by 177.6% year-over-year to $34,427 thousand for the quarter ended September 30, 2019, compared to $12,402 thousand in 2018[489]. Market Performance - Market capitalization at the end of the period reached $1,124,501 thousand, a significant increase of 33.2% from $844,298 thousand[520]. - The market price per share at the end of the period was $21.90, reflecting a 33.0% increase from $16.46[520]. - Oriental is authorized to repurchase up to $7.7 million of its outstanding shares, with an estimated 353,007 shares available for purchase at the closing price[521].