OFG Bancorp(OFG) - 2025 Q2 - Quarterly Results

OFG Bancorp 2Q25 Earnings Release CEO Commentary and 2Q25 Highlights The CEO highlighted strong Q2 performance with record assets, deposits, and loans, driven by digital strategy and robust loan origination Q2 2025 Key Results vs. Prior Periods | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | EPS Diluted | $1.15 | $1.00 | $1.08 | | Total Core Revenues | $182.2M | $178.3M | $179.4M | - Strategic initiatives in Q2 included the launch of the Oriental Marketplace and a DGI Money Market fund to enhance customer experience and drive efficiencies[2] - The company executed a share buyback, repurchasing 186,024 shares during the second quarter[2] - Achieved record end-of-quarter balances for total assets ($12.2 billion), core deposits ($9.9 billion), and loans held for investment ($8.2 billion)[2] Key Financial and Operational Metrics The company reported solid performance with a 5.31% net interest margin, higher interest income, and a lower provision for credit losses Q2 2025 Performance Metrics | Metric | Value | | :--- | :--- | | Net Interest Margin | 5.31% | | Return on Average Assets | 1.73% | | Return on Average Tangible Common Equity | 16.96% | | Efficiency Ratio | 52.04% | Income and Provision Analysis (vs. 1Q25) | Item | 2Q25 | 1Q25 | Change | | :--- | :--- | :--- | :--- | | Total Interest Income | $194.3M | $189.2M | +$5.1M | | Total Interest Expense | $42.4M | $40.2M | +$2.3M | | Pre-Provision Net Revenues | $87.6M | $85.1M | +$2.5M | | Provision for Credit Losses | $21.7M | $25.7M | -$4.0M | - Credit quality remained stable, with net charge-offs decreasing to $12.8 million (0.64% of average loans) from $20.4 million (1.05%) in 1Q25, and the nonperforming loan rate was 1.19%[6] Balance Sheet and Capital Highlights The balance sheet expanded with loan and deposit growth, while capital ratios remained strong with a 13.99% CET1 ratio End of Period Balance Sheet Highlights (vs. 1Q25) | Balance Sheet Item | 2Q25 | 1Q25 | | :--- | :--- | :--- | | Loans Held for Investment | $8.18B | $7.85B | | Customer Deposits | $9.90B | $9.76B | | Total Borrowings & Brokered Deposits | $732.3M | $421.5M | | Cash & Cash Equivalents | $851.8M | $710.6M | - New loan production significantly increased to $783.7 million, compared to $558.9 million in 1Q25, with growth across all lending channels[9] Capital Position (vs. 1Q25) | Capital Metric | 2Q25 | 1Q25 | | :--- | :--- | :--- | | CET1 Ratio | 13.99% | 14.27% | | Tangible Common Equity Ratio | 10.20% | 10.30% | | Tangible Book Value per Share | $27.67 | $26.66 | Corporate Information This section provides conference call details, non-GAAP disclosures, and an overview of the company's operations - A conference call to discuss Q2 2025 results was scheduled for July 17, 2025, at 10:00 AM ET[14] - The company uses non-GAAP financial measures to enhance understanding of performance, with reconciliations available in the Financial Supplement[16] - OFG Bancorp is a diversified financial holding company operating for 61 years, primarily providing banking, lending, and wealth management services in Puerto Rico and the U.S. Virgin Islands through its subsidiaries Oriental Bank, Oriental Financial Services, and Oriental Insurance[18] Consolidated Financial Information Table 1: Financial and Statistical Summary - Consolidated This table presents a consolidated financial summary, with Q2 2025 net income of $51.8 million and an ROA of 1.73% Quarterly Performance Summary | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income (Common) | $51,801K | $45,572K | $51,131K | | EPS - Diluted | $1.15 | $1.00 | $1.08 | | Return on Average Assets | 1.73% | 1.56% | 1.82% | | Efficiency Ratio | 52.04% | 52.42% | 51.81% | Year-to-Date Performance Summary | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net Income (Common) | $97,373K | $100,823K | | EPS - Diluted | $2.15 | $2.13 | Table 2: Consolidated Statements of Operations The consolidated income statement shows Q2 2025 net interest income of $151.9 million and net income of $51.8 million Q2 2025 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $151,928 | $149,071 | $147,325 | | Total Provision for Credit Losses | $21,678 | $25,688 | $15,581 | | Total Non-Interest Expense | $94,802 | $93,452 | $92,960 | | Net Income (Common) | $51,801 | $45,572 | $51,131 | Table 3: Consolidated Statements of Financial Condition The consolidated balance sheet shows total assets grew to $12.23 billion, with net loans at $8.01 billion Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $12,231,510 | $11,729,257 | $11,259,085 | | Loans, net | $8,009,599 | $7,688,271 | $7,503,142 | | Total Deposits | $10,144,165 | $9,922,969 | $9,605,250 | | Total Stockholders' Equity | $1,334,453 | $1,295,361 | $1,227,702 | Table 4: Information on Loan Portfolio and Production The loan portfolio reached $8.18 billion, with quarterly loan production surging to $783.7 million Loan Portfolio Composition (in thousands) | Loan Category | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Commercial PR | $2,598,180 | $2,425,651 | | Commercial US | $825,254 | $727,409 | | Auto | $2,661,955 | $2,593,203 | | Total Loans Held for Investment | $8,180,591 | $7,852,644 | Quarterly Loan Production (in thousands) | Loan Category | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Commercial PR | $253,874 | $163,232 | $192,122 | | Commercial US | $147,193 | $57,939 | $27,402 | | Auto | $250,269 | $232,897 | $250,638 | | Total Production | $783,668 | $558,941 | $589,011 | Table 5: Average Balances, Net Interest Income and Net Interest Margin This table details the net interest margin, which was 5.31% for Q2 2025, based on average asset and liability balances Net Interest Margin Analysis | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Interest Rate Spread | 5.17% | 5.27% | 5.36% | | Net Interest Margin | 5.31% | 5.42% | 5.51% | - Average interest-earning assets increased to $11.47 billion in Q2 2025 from $11.15 billion in Q1 2025, while average interest-bearing liabilities grew to $10.41 billion from $10.14 billion[33] Table 6: Loan Information and Performance Statistics Credit quality metrics show an improved net charge-off rate of 0.64% and a nonperforming loan rate of 1.19% Key Credit Quality Rates | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Charge-off Rate | 0.64% | 1.05% | 0.79% | | Early Delinquency Rate (30-89 days) | 2.46% | 2.19% | 2.81% | | Total Delinquency Rate (30+ days) | 3.59% | 3.49% | 3.71% | | Total Nonperforming Loan Rate | 1.19% | 1.11% | 1.01% | - Total nonperforming loans increased to $97.4 million at the end of Q2 2025 from $87.5 million at the end of Q1 2025, primarily driven by an increase in nonperforming commercial loans[39] Table 7: Allowance for Credit Losses The allowance for credit losses increased to $189.9 million, representing a coverage ratio of 2.32% of total loans Q2 2025 Allowance for Credit Losses Roll-Forward (in thousands) | Description | Amount | | :--- | :--- | | Balance at beginning of period | $181,174 | | Provision for credit losses | $21,554 | | Charge-offs | ($22,228) | | Recoveries | $9,444 | | Balance at end of period | $189,944 | - The allowance for credit losses as a percentage of total loans held for investment was 2.32% at the end of Q2 2025[41] Table 8: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital This section reconciles capital measures, showing a CET1 ratio of 13.99% and tangible book value per share of $27.67 Key Capital Ratios | Ratio | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Tangible Book Value per Share (Non-GAAP) | $27.67 | $26.66 | $24.18 | | TCE Ratio (Non-GAAP) | 10.20% | 10.30% | 10.09% | | Common Equity Tier 1 (CET1) Ratio | 13.99% | 14.27% | 14.29% | | Total Risk-Based Capital Ratio | 15.25% | 15.53% | 15.54% | Table 9: Notes to Financial Statements This section provides definitions for financial terms, non-GAAP measures, and specific accounting treatments - Defines Pre-provision net revenues (PPNR) as a non-GAAP measure calculated as net interest income plus core non-interest income, less non-interest expenses[48] - Explains that under the GNMA program, the company has the option, but not the obligation, to repurchase loans 90+ days delinquent, which are then rebooked on the balance sheet[48] - Clarifies that most Purchased Credit Deteriorated (PCD) loans are considered performing and not included in non-performing loan statistics due to the application of the accretion method[47]