OFG Bancorp(US:OFG)2023-10-20 16:47Financial Data and Key Metrics Changes - Earnings per share diluted was $0.95, an increase of 9% year-over-year [37] - Total core revenues were $172.2 million, up 10% compared to last year [37] - Net interest margin was 5.8%, down from 5.9% in the second quarter [44] - Total assets increased to $10.3 billion from last quarter [38] - Customer deposits were stable at approximately $8.5 billion [38] - Net charge-offs totaled $18.8 million, compared to $6.6 million in the second quarter [48] Business Line Data and Key Metrics Changes - Average loan balances increased by $188 million from the second quarter, with end-of-period balance up $144 million [7] - Loan yield was 7.84%, up 8 basis points from the second quarter [43] - Banking and wealth management revenues were $30.4 million, approximately level with the second and year-ago quarters [42] - New loan production was approximately $563 million, in line with the last five quarters [38] Market Data and Key Metrics Changes - The cumulative deposit beta was 19%, with an expectation of about 25% by year-end [8][55] - The economy in Puerto Rico is described as sound, with consumer liquidity being strong [3][11] - Early and total delinquency rates were 2.75% and 3.78%, respectively [49] Company Strategy and Development Direction - The company continues to focus on a digital-first strategy to enhance customer engagement and operational efficiency [3][39] - There is a strong commercial lending pipeline expected to continue into the fourth quarter and 2024 [11] - The company plans to maintain a balance sheet above $10 billion, leveraging loan growth opportunities [20][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Puerto Rico's economic strength despite potential global economic uncertainties [10][50] - The company is monitoring the impact of interest rate changes and inflation on its operations [10] - Credit conditions are expected to remain benign, with a focus on maintaining strong credit quality [49] Other Important Information - The efficiency ratio was 52.36%, reflecting continuous growth and strong operating leverage [42] - The company opened a new branch in Dorado, indicating a commitment to physical presence alongside digital strategies [41] Q&A Session Summary Question: What is the balance of government deposits at quarter end? - The balance of government deposits is in the $350 million range [15] Question: How does the company plan to manage deposit costs and loan growth? - The company expects to mitigate potential higher deposit costs with loan growth, maintaining a focus on net interest income [16] Question: What is the outlook for net charge-offs and the allowance ratio? - The company anticipates a more normalized level of charge-offs and believes credit conditions will remain strong [18] Question: How does the company view its participation in financing opportunities like the Metropistas deal? - The company sees itself as a solid participant in such financing opportunities, contributing to infrastructure improvement in Puerto Rico [61] Question: What is the strategy regarding capital management and buybacks? - The company plans to focus on loan growth while also considering dividend growth and buybacks in its capital management strategy [64]