OFG Bancorp(US:OFG)2023-02-24 21:08Financial Performance - In the fourth quarter of 2022, total core revenue grew by 7.3% compared to the third quarter of 2022, reaching $168.3 million[220]. - Earnings per share (EPS) diluted increased to $0.97 in the fourth quarter of 2022, up from $0.87 in the third quarter of 2022 and $0.66 in the fourth quarter of 2021[220]. - Net interest income for the fourth quarter of 2022 was $135.3 million, compared to $126.5 million in the third quarter of 2022 and $104.2 million in the fourth quarter of 2021[221]. - The net interest margin expanded to 5.69% in the fourth quarter of 2022, up from 5.23% in the third quarter of 2022, reflecting Federal Reserve interest rate increases[221]. - Diluted EPS for 2022 was $3.44, up from $2.81 in 2021, with total core revenues increasing to $607.8 million from $536.6 million[234]. - Non-interest income totaled $131.7 million, a slight decrease of 1.1% from $133.2 million in 2021[249]. - Total assets increased to $10.8 billion in 2022 from $9.9 billion in 2021, reflecting growth in the company's balance sheet[258]. Credit and Loan Performance - Provision for credit losses in the fourth quarter of 2022 was $8.8 million, compared to $7.1 million in the third quarter of 2022 and $7.2 million in the fourth quarter of 2021[226]. - Net charge-offs for Q4 2022 were $11.2 million, a slight decrease from $11.3 million in Q3 2022 and a significant drop from $32.5 million in Q4 2021[227]. - Total loans outstanding under the payment accommodations program amounted to $33.1 million as of December 31, 2022[200]. - The total loan portfolio stood at $6.835 billion as of December 31, 2022, with various categories including mortgage, commercial, consumer, and auto loans[278]. - Total charge-offs for 2022 amounted to $63.8 million, a decrease of 26.3% compared to $86.5 million in 2021[304]. - Non-performing assets decreased by 10.3% to $115.7 million in 2022 from $129.0 million in 2021[311]. Expenses and Efficiency - Non-interest expenses increased to $91.6 million in Q4 2022, up from $87.5 million in Q3 2022 and $86.5 million in Q4 2021, primarily due to higher compensation expenses and technology staffing[228]. - The efficiency ratio improved to 56.85% in 2022 from 60.70% in 2021, indicating better cost management[237]. - Non-interest expenses increased by 6.1% to $345.5 million in 2022 from $325.8 million in 2021, driven by a $9.5 million increase in compensation and employee benefits[253]. Capital and Dividends - The Board of Directors approved an increase in the regular quarterly cash dividend to $0.20 per common share starting from the quarter ended September 30, 2022[201]. - Stockholders' equity was $1.042 billion at December 31, 2022, a 3% decrease from $1.069 billion in 2021[318]. - Cash dividends declared increased by 63.8% from $20,505 thousand in 2021 to $33,593 thousand in 2022, with a payout ratio of 20.35%[326]. Risk Management - The company’s risk management program is overseen by the Chief Risk and Compliance Officer and includes a comprehensive credit policy to monitor loan portfolio quality[6]. - OFG's interest rate risk management strategy incorporates the use of derivative instruments to minimize fluctuations in earnings caused by interest rate volatility[7]. - The Board of Directors has established policies to manage liquidity risk, ensuring sufficient cash generation to meet obligations[10]. Market and Economic Conditions - The Puerto Rico Economic Activity Index has been increasing for over a year, indicating a stable upward trend in the local economy despite the impacts of Hurricane Fiona[205]. - The Federal Reserve increased the federal funds rate seven times during fiscal year 2022, with the last increase of 50 basis points on December 14, 2022[204]. Shareholder Actions - The company repurchased 2.4 million shares of common stock for $64.1 million by December 31, 2022, under a $100 million stock repurchase program[202]. - As of December 31, 2022, OFG has $35.9 million remaining under the $100 million stock buyback program, allowing for the purchase of approximately 1,302,242 shares at a closing price of $27.56[2].