OFG Bancorp(US:OFG)2024-07-19 00:30Financial Data and Key Metrics Changes - Total assets increased to $11.3 billion, up 12% year-over-year and down 1% from the previous quarter [8] - Earnings per share diluted rose more than 16% year-over-year to $1.08, with total core revenues increasing over 5% to $179.4 million [15] - Net interest margin was reported at 5.51%, with a provision for credit losses totaling $15.6 million [15][23] - Return on average assets was 1.82% and return on average tangible common equity was 18.24% [96] Business Line Data and Key Metrics Changes - Loans held for investment totaled $7.6 billion, with new loan production at $589 million, reflecting strong growth in auto and commercial loans [8][46] - Total interest income was $188 million, up more than 2% from the first quarter, driven by higher loan balances and yields [18] - Non-interest expenses were $93 million, with an efficiency ratio of 61.81%, showing improvement from the previous quarter [11][45] Market Data and Key Metrics Changes - The company continues to see good opportunities in the Puerto Rico market, benefiting from macroeconomic conditions [1] - Commercial deposit growth was strong, contributing to an increase in average core deposits to $9.6 billion, up $67 million from the first quarter [20] - The net charge-off rate was 79 basis points, down 26 basis points, indicating stable credit quality [21] Company Strategy and Development Direction - The company aims to leverage its unique position in the Puerto Rico market by investing in technology and maintaining a client-centric approach [10] - A digital-first strategy is being implemented, with significant growth in digital transactions, including 94% of routine retail customer transactions conducted digitally [42] - The company plans to continue investing in technology to enhance its competitive edge and customer relationships [39][84] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Puerto Rico economy, noting ongoing infrastructure projects and strong employment levels [51] - The outlook for loan growth is positive, with expectations of 3% to 4% growth for the full year, driven by a strong commercial pipeline [110] - Management remains cautious regarding macroeconomic uncertainties, including interest rate changes and inflation [51] Other Important Information - The company executed 50% of its $50 million share buyback program, purchasing $24.3 million of shares in the open market [41] - The effective tax rate for the second quarter was 28.2%, with expectations of a full-year effective tax rate of 29% for 2024 [22] Q&A Session Summary Question: Thoughts on the buyback and capital levels - Management indicated that capital levels are robust and will continue to be managed carefully in Puerto Rico [2] Question: Update on Puerto Rico consumer credit - Management noted that COVID-related cash incentives have mostly flushed through, and consumers are benefiting from higher wages, leading to stable credit quality [31] Question: Loan growth outlook for the second half of the year - Management expects commercial activity to drive loan growth, with a strong pipeline and a slight tapering in auto loan production [36] Question: Expense guidance for the second half of the year - Management confirmed expectations of $90 million to $92 million in non-interest expenses per quarter for the remainder of the year [111] Question: Opportunities for inorganic growth - Management stated there are currently no plans for inorganic growth, focusing instead on deepening existing customer relationships [72]