OFG Bancorp(US:OFG)2022-11-04 13:20Financial Performance - For the quarter ended September 30, 2022, OFG reported total core revenue growth of 7.2% quarter-over-quarter, with total core revenues reaching $156.8 million compared to $146.3 million in the second quarter of 2022[231]. - Earnings per share diluted increased to $0.87 from $0.84 in the second quarter of 2022 and $0.81 in the third quarter of 2021[232]. - Net interest income was $126.5 million, up from $115.1 million in the second quarter of 2022, with a net interest margin expanding to 5.23% from 4.80%[233]. - Non-interest income was $30.6 million, down from $36.2 million in the second quarter of 2022, impacted by Hurricane Fiona's effect on economic activity[236]. - Total investments grew to $2.04 billion at September 30, 2022, compared to $1.73 billion at June 30, 2022, due to the purchase of $410.0 million in short-term US Treasury securities[244]. - The regular quarterly cash dividend was increased to $0.20 per common share in the third quarter of 2022, up from $0.15 in the second quarter of 2022[220]. - Return on average assets (ROA) improved to 1.65% for the quarter ended September 30, 2022, compared to 1.59% in the prior year[247]. - Total stockholders' equity decreased by 7.0% to $993,867,000 as of September 30, 2022, from $1,069,160,000 a year earlier[248]. Credit Quality - Provision for credit losses was $7.1 million, compared to $6.7 million in the second quarter of 2022, including $8.0 million for higher auto and consumer loan balances[238]. - Provision for credit losses showed a significant increase of 242.5%, amounting to $7,120,000 for the quarter, compared to a recapture of $(4,997,000) in the same quarter of 2021[247]. - Non-performing assets decreased by 6.0% to $121.3 million, representing 1.21% of total assets, down from 1.30% at December 31, 2021[308]. - The allowance coverage ratio to non-performing loans improved to 150.0% as of September 30, 2022, compared to 139.2% at December 31, 2021[309]. - Non-performing loans decreased to $103.438 million, down 7.7% from $112.008 million at December 31, 2021[335]. - The charge-off rate on non-performing loans decreased to 94.21%, down 44.7% from 170.31%[335]. Asset Management - Total assets as of September 30, 2022, amounted to $10.06 billion, reflecting stable asset management[280]. - Total assets increased by 1.6% to $10,058.2 million as of September 30, 2022, compared to $9,899.7 million at December 31, 2021[297]. - The investment portfolio increased by $1.147 billion, or 128.0%, primarily due to purchases of agency mortgage-backed securities and US Treasury securities[290]. - Cash and due from banks decreased by $1.204 billion, reflecting cash used for securities purchases and loan disbursements[292]. - Total assets managed by OFG's trust division and retirement plan administration subsidiary amounted to $3.091 billion, down from $3.759 billion at December 31, 2021[293]. Capital Position - CET1 ratio improved to 13.38% as of September 30, 2022, up from 12.80% at June 30, 2022[246]. - The common equity tier 1 capital ratio decreased to 13.38% from 13.77% year-over-year, while the actual common equity tier 1 capital increased by 3.2% to $995.3 million[345][349]. - The total risk-based capital ratio decreased to 14.63% from 15.52% year-over-year, with total risk-based capital slightly increasing by 0.2% to $1.088 billion[345][349]. - The leverage capital ratio increased to 9.82% from 9.69% year-over-year, exceeding the minimum requirement of 4%[346][349]. - The market capitalization at the end of the period decreased by 9.3% to $1.195 billion from $1.318 billion[345]. Operational Efficiency - Total non-interest expenses increased by 10.9% to $87.5 million from $78.9 million, driven by higher information technology and employee compensation expenses[268]. - The efficiency ratio improved to 55.80% from 58.59% year-over-year, indicating better cost management[268]. - Average loans per employee increased to $2,981, up from $2,872 in the previous year, reflecting growth in the loan portfolio[268]. - Compensation and employee benefits increased by $5.5 million, driven by higher minimum wages and annual salaries[273]. Market Conditions - The Federal Reserve increased the federal funds rate six times in 2022, with the current target rate range at 3.75% to 4.00%[222]. - The Puerto Rico Economic Activity Index has been increasing for over a year, indicating a stable upward trend in the economy[223].