OFG Bancorp(US:OFG)2025-10-22 15:02Financial Data and Key Metrics Changes - The company reported diluted EPS of $1.16, a 16% increase year-over-year, with total core revenue rising by 5.6% [3] - Core revenues totaled $184 million, with total interest income at $200 million, reflecting a $6 million increase [7] - Net interest expenses were $96.5 million, up $1.7 million, while the efficiency ratio was 52% [8][9] - Return on average assets was 1.69%, and return on tangible common equity was 16.39% [9][14] Business Line Data and Key Metrics Changes - Loans and core deposit balances increased year-over-year, particularly in commercial loans, while auto loans moderated [3][10] - Average loan balances were $8 billion, up nearly 2% from the second quarter, with year-over-year loans increasing by 5% [9][10] - Core deposits were up $287 million or 3% year-over-year, with average core deposits at $9.9 billion [10][11] Market Data and Key Metrics Changes - The Puerto Rico economy is performing well, with high levels of wages and employment, and a boost from tourism [16] - The company is seeing strong business activity in Puerto Rico, with a solid commercial pipeline and credit trends [16] Company Strategy and Development Direction - The company is focusing on a digital-first strategy, enhancing customer engagement through innovative product offerings and AI-driven insights [4][5] - The Libre and Elite accounts are designed to attract mass affluent clients, contributing to growth in core deposits and loans [16] - The company is actively pursuing share buybacks and anticipates continued growth in both retail and commercial accounts [15][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Puerto Rican economy and its impact on business growth, while remaining cautious about global macroeconomic uncertainties [16][17] - The company anticipates annual loan growth in the range of 5%-6% and expects to maintain a net interest margin within the target range [14][15] Other Important Information - The company repurchased $20.4 million of common shares during the quarter [3] - Credit quality remains stable, with a non-performing loan rate of 1.22% and a CET1 ratio of 14.13% [12][14] Q&A Session Summary Question: Dynamics impacting deposit costs - Management indicated that higher deposit costs are driven by a strategic focus on attracting mass affluent clients through the Libre and Elite accounts [20][21] Question: Outlook for commercial loan growth - Management noted a solid pipeline for commercial loans and confidence in business activity in Puerto Rico [22][23] Question: Competitive landscape for savings account deposits - The average cost for the Elite account is around 1%+, targeting mass affluent clients while focusing on deepening customer relationships [30] Question: Credit quality and charge-offs - Management discussed idiosyncratic issues in the commercial loan portfolio but expressed overall confidence in credit quality [31][32] Question: Guidance on net interest margin - Management provided guidance for Q4 net interest margin at 5.10%-5.20%, influenced by recent Fed rate cuts [41][44] Question: Investments in AI and operational efficiencies - Management highlighted ongoing investments in AI to enhance customer service and operational efficiencies [46][47] Question: Capital management priorities - The company prioritizes loan growth, share buybacks, and dividends, supported by a strong capital position [50]