OFG BANCORP
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
OFG$50.82+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001030469-24-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies and EstimatesCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001030469-24-000042
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies and EstimatesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 199 previous paragraphs and 202 current paragraphs.
78 unchanged; 101 reworded; 18 added; 17 removed; 3 previous and 5 current paragraphs rearranged.
Tables are not compared: 30 previous and 30 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
We believe that the third quarter was another solid quarter of performance for OFG, with EPS-diluted up 5.3% year-over-year on a 1.1% increase in total core revenues. OFG continued to produce consistent, core operating results, and digital adoption of our new and upgraded products, services, and self-service tools keeps steadily growing. We celebrate our 60th anniversary by renewing our commitment to bring progress to our customers, employees, shareholders, and the communities we serve.
Current report
Total Interest Expense of $41.2 million compared to $40.3 million in the second quarter of 2024 and $23.9 million in the third quarter of 2023. Compared to the second quarter of 2024, the third quarter of 2024 increased $0.8 million, reflecting higher average balances of higher-cost borrowings and brokered deposits and slightly reduced average core deposit balances and cost.
Current report
Total Banking and Financial Service Revenuesof $26.3 million compared to $32.1 million in the second quarter of 2024 and $30.4 million in the third quarter of 2023. The third quarter of 2024 primarily reflected $2.7 million in reduced interchange fees due to the implementation of the Durbin Amendment during the third quarter of 2024, $2.1 million reduced mortgage servicing rights valuation due to lower long-term rates, and $0.3 million revenue from the acquisition in late August 2024 of a $1.7 billion Puerto Rico residential mortgage servicing portfolio.
Current report
Total Provision for Credit Losses of $21.4 million compared to $15.6 million in the second quarter of 2024 and $16.4 million in the third quarter of 2023. The third quarter of 2024 primarily reflected $18.7 million for increased loan volume; $5.2 million related to the annual update of auto risk drivers and consumer loan loss factors, and the extension of cash flows in a PR commercial loan up for renewal; and a $2.7 million reserve release mainly due to an improved U.S. macroeconomic perspective.
Current report
Total Non-Interest Expense of $91.6 million compared to $93.0 million in the second quarter of 2024 and $90.2 million in the third quarter of 2023. The third quarter of 2024 included a $2.3 million credit and debit card processing business contract renewal rebate and $1.3 million in expenses related to sales of repossessed assets.
Current report
New Loan Productionof $572.2 million compared to $589.0 million in the second quarter of 2024 and $567.5 million in the third quarter of 2023. Compared to the second quarter of 2024, the third quarter of 2024 production reflected increases in U.S. commercial and Puerto Rico consumer lending originations, and decreases in Puerto Rico commercial and auto lending originations.
Current report
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2024 AND 2023
Current report
•A $3.1 million decrease in mortgage banking activities mainly from: (i) $2.1 million unfavorable impact in mortgage servicing rights valuation due to lower long-term rates and (ii) lower gains of $390 thousand on repurchased loan sales in the current quarter, offset by higher servicing fees of $467 thousand, mainly from the acquisition in late August 2024 of a $1.7 billion Puerto Rico residential mortgage servicing portfolio; and
Current report
OFG's non-interest income remained constant at $89.7 million.
Current report
Non-interest income was mainly impacted by the following increases:
Current report
These increases were offset by:
Current report
•Increase of$335 thousand in taxes, other than payroll and income taxes related to higher municipal taxes recorded during the quarter.
Current report
•Increase in advertising, business promotion, and strategic initiatives of $989 thousand due to higher expenses related to digital adoption strategy;
Current report
Provision for credit losses increased by $4.9 million to $21.4 million from $16.4 million. The provision for credit losses for the quarter ended September 30, 2024, reflected a provision of $18.7 million related to the growth in loan balances, $5.2 million related to the annual update of auto risk drivers and consumer loan loss factors, and the extension of cash flows in a Puerto Rico commercial loan up for renewal and a $2.7 million reserve release mainly due to an improved U.S. macroeconomic perspective. The provision for credit losses for the for the quarter ended September 30, 2023 reflected a provision of $11.4 million related to the growth in loan balances, $4.1 million associated with qualitative adjustments, mostly to the auto portfolio, and $702 thousand related to a specific reserve for the sale of a small portfolio of non-performing Puerto Rico small business commercial loans transferred to held for sale at the end of the quarter.
Current report
•Decrease of $4.1 million in non-interest income primarily related to lower interchange fees of $2.7 million due to the implementation of Durbin Amendment and $2.1 million in unfavorable mortgage servicing rights valuation; and
Current report
Comparison of nine-month periods ended September 30, 2024 and 2023
Current report
Net charge-offs for the third quarter of 2024 amounted to $17.1 million (0.90% of average loans), decreasing by $1.7 million, when compared to $18.8 million (1.05% of average loans) in the prior year quarter. Net charge-offs for the nine-month period ended September 30, 2024 amounted to $51.9 million (0.91% of average loans), increasing by $16.4 million, when compared to $35.6 million (0.68% of average loans) in the prior year period.
Current report
As of September 30, 2024, borrowings consist of short and long term FHLB advances amounting to $270.8 million. Borrowings increased by $70.1 million or 34.9% from December 31, 2023 reflecting new FHLB advances taken during the third quarter of 2024 as part of OFG’s asset liability management strategies.
Removed paragraphs (17)
Previous report
We believe that the second quarter of 2024 continued to demonstrate the strength of OFG’s strategies and franchise. EPS-diluted increased 16.1% year-over-year on a 5.2% increase in total core revenues. OFG generated strong performance metrics through consistent growth; increased loans, deposits, and non-interest income; and stable credit quality. Further, we believe that our ‘Digital First’ strategy continues to help expand retail and business relationships through new and upgraded products, services, and self-service tools. In addition, we implemented close to half of our $50 million share buyback program, purchasing $24.3 million of OFG’s shares in the open market. At the same time, Puerto Rico’s economy continued to grow and steadily decouple from mainland economic uncertainties.
Previous report
Total Interest Expense of $40.3 million compared to $39.3 million in the first quarter of 2024 and $18.3 million in the second quarter of 2023. Compared to the first quarter of 2024, the second quarter of 2024 reflected higher average core deposits and a 7 basis point increase in rates, partially offset by lower average wholesale funding and rate.
Previous report
Total Banking and Financial Service Revenuesof $32.1 million compared to $30.1 million in the first quarter of 2024 and $30.9 million in the second quarter of 2023. Compared to the first quarter of 2024, the second quarter of 2024 reflected higher banking service, wealth management and mortgage banking revenues. Banking service revenues included $0.6 million prepayment fees on U.S. loans, while wealth management included $0.5 million in annual recognition of certain commercial insurance commissions.
Previous report
Total Provision for Credit Losses of $15.6 million compared to $15.1 million in the first quarter of 2024 and $15.0 million in the second quarter of 2023. The second quarter of 2024 provision primarily reflected increased loan volume.
Previous report
Total Non-Interest Expense of $93.0 million compared to $91.4 million in the first quarter of 2024 and $88.9 million in the second quarter of 2023. Compared to the first quarter of 2024, the second quarter of 2024 included increases of $1.3 million in electronic banking expenses, $1.1 million in professional services fees, and $0.4 million for increased FDIC deposit insurance assessments now that Oriental exceeds $10 billion in assets. This was partially offset by reductions of $1.4 million in foreclosed real estate costs and in FICA payroll-related expenses relative to the prior quarter.
Previous report
New Loan Productionof $589.0 million compared to $536.6 million in the first quarter of 2024 and $681.8 million in the second quarter of 2023. Compared to the first quarter of 2024, the second quarter of 2024 loan production, led by auto, reflected increases in all categories.
Previous report
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2024 AND 2023
Previous report
•A $1.3 million increase in interest income from higher yield in lower balances of interest-bearing cash and money market related to higher interest rates.
Previous report
OFG recorded non-interest income in the amount of $62.8 million, compared to $59.0 million, an increase of 6.5%, or $3.9 million. The increase in non-interest income was mainly due to:
Previous report
•A $1.1 million increase in banking service revenues mainly due to: (i) higher debit card income of $675 thousand and merchant income of $411 thousand resulting from higher volume and migration of USVI merchants, and (ii) $623 thousand prepayment fees, mainly from US commercial loans; offset by lower fees on deposits of $389 thousand from lower maintenance and overdrawn fees and higher waived fees.
Previous report
•Increase of $1.5 million in electronic banking charges mainly due to increases of $2.1 million in point-of-sale and merchant-related fees from higher volume, partially offset by a $400 thousand annual transaction processing incentive; and
Previous report
Provision for credit losses increased by $537 thousand to $15.6 million from $15.0 million. The provision for credit losses for the second quarter of 2024, reflected a provision of $11.3 million related to the growth in loan balances, $2.8 million related to commercial-specific loan reserves, mainly in the US commercial loan portfolio, $2.1 million associated with qualitative adjustment, mainly in auto loans, and $1.5 million in loss rate models. These increases were partially offset by $2.0 million in changes in the economic model.
Previous report
The provision for credit losses for the second quarter of 2023 reflected a provision of $6.3 million related to the growth in loan balances and a provision of $9.4 million related to commercial-specific loan reserves, mainly in the US commercial loan portfolio, and $1.6 million associated with qualitative adjustment, partially offset by $2.8 million for changes in the economic and loss rate models.
Previous report
Comparison of six-month periods ended June 30, 2024 and 2023
Previous report
•Increase of $2.8 million in non-interest income. The current period includes: (i) $1.1 million in prepayment fees, mainly from commercial US loans, (ii) higher debit card and merchant income due to higher volume and migration of USVI merchants, partially offset by lower period maintenance and overdrawn fees and higher waived fees.
Previous report
Net charge-offs for the second quarter of 2024 amounted to $15.0 million increasing by $8.4 million, when compared to $6.6 million in prior year quarter. Net charge-offs for the six-month period ended June 30, 2024 amounted to $34.8 million, increasing by $18.1 million, when compared to $16.7 million in the prior year period.
Previous report
As of June 30, 2024, borrowings consist of a two-year FHLB advance amounting to $200.7 million taken in 2023 as part of OFG’s asset liability management strategies.
Reworded paragraphs (101)
Previous wording
OFG’s mission is to make possible the progress of our customers, employees, shareholders, and the communities we serve. OFG has been deploying its Digital First strategy to achieve this mission. Our strategy highly differentiates OFG through a sales and service business model and culture that emphasizes convenience and accessibility through digital channels while creating a simple, self-service and enjoyable customer experience. OFG strives to proactively identify the customer’s objectives and needs to offer value-added services that help them achieve financial progress and well-being.
Current wording
OFG’s mission is to make possible the progress of our customers, employees, shareholders, and the communities we serve. OFG has been deploying its Digital First strategy to achieve this mission. Our strategy highly differentiates OFG through a sales and service business model and culture that emphasizes convenience and accessibility through digital channels while creating a simple, self-service and enjoyable customer experience. OFG strives to proactively identify customer objectives and needs to offer value-added services that help them achieve financial progress and well-being.
Previous wording
In January 2024, OFG announced that its Board of Directors approved the increase of its regular quarterly cash dividend to $0.25 per common share from $0.22 per share, beginning in the quarter ended March 31, 2024. The Board of Directors also approved a new $50.0 million stock repurchase program. The new stock repurchase program, which is open-ended, replaces the prior stock repurchase program approved by the Board of Directors in January 2022, which had $17.2 million remaining of its $100.0 million repurchase parameters. During the six-month period ended June 30, 2024, OFG repurchased 669,200 shares for a total of $24.3 million at an average price of $36.28 per share.
Current wording
In October 2024, OFG announced that its Board of Directors approved a new $50.0 million stock repurchase program, in addition to the stock repurchase program approved in January 2024. The October stock repurchase program is open-ended. In January 2024, the Board of Directors approved the increase of its regular quarterly cash dividend to $0.25 per common share from $0.22 per share, beginning in the quarter ended March 31, 2024, and a $50.0 million stock repurchase program. The January stock repurchase program, which is open-ended, replaced the prior stock repurchase approved by the Board of Directors in January 2022, which had $17.2 million remaining of its $100.0 million repurchase parameters. During the nine-month period ended September 30, 2024, OFG repurchased 671,800 shares for a total of $24.4 million at an average price of $36.30 per share.
Previous wording
We believe that Puerto Rico’s economy continues to demonstrate resiliency and growth and its private sector, including business investments, is expanding. The Puerto Rico Economic Activity Index, as published by the Economic Development Bank for Puerto Rico, slightly decreased 2.0% year-over-year as of April 2024. According to the data published by Economic Development Bank for Puerto Rico, wages are rising, and labor participation is increasing. Total non-farm payroll employment averaged 960,300 jobs in April, equivalent to an increase of 0.8% for that month, in a month-over-month basis, and an annual increase of 2.4%. The inflow of federal stimulus and reconstruction funds for rebuilding infrastructure has continued, and we believe this inflow will stimulate the local economy. Nevertheless, OFG continues to pay attention to the potential impact of interest rate changes, inflation, and other economic factors, and global conflicts, all of which could impact our business and results of operations.
Current wording
We believe that Puerto Rico’s economy continues to demonstrate resiliency and growth and its private sector, including business investments, is expanding. The Puerto Rico Economic Activity Index, as published by the Economic Development Bank for Puerto Rico, registered 126.9 points in August 2024, which represents a decrease of 0.8% when compared to the same period of the previous year. However, according to the data published by the Economic Development Bank for Puerto Rico, wages are rising, and labor participation is increasing. Total non-farm payroll employment averaged 963,900 jobs in August 2024, equivalent to an increase of 0.2% on a month-over-month basis, and an annual increase of 1.9%. The inflow of federal stimulus and reconstruction funds for rebuilding infrastructure has continued, and we believe this inflow will stimulate the local economy. Nevertheless, OFG continues to pay attention to the potential impact of interest rate changes, inflation, other economic factors, and global conflicts, all of which could impact our business and results of operations.
Previous wording
We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary based on changing conditions. As part of OFG’s continuous enhancement to the allowance for credit losses methodology, during the six-month period ended June 30, 2024, an assessment of the weight of probability scenarios for the US loan segment was performed and updated to use a higher probability level in the moderate recessionary scenario. This change in the allowance for credit losses is considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively. Apart from the foregoing change, there have been no material changes in the methods that we used to formulate these critical accounting estimates from those discussed in our 2023 Form 10-K.
Current wording
We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary based on changing conditions. As part of OFG’s continuous enhancement to the allowance for credit losses methodology, during the nine-month period ended September 30, 2024, an assessment of the weight of probability scenarios for the US loan segment was performed and updated to use a higher probability level in the moderate recessionary scenario. This change in the allowance for credit losses is considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively. Apart from the foregoing change, there have been no material changes in the methods that we used to formulate these critical accounting estimates from those discussed in our 2023 Form 10-K.
Previous wording
Earnings per share dilutedof $1.08 compared to $1.05 in the first quarter of 2024 and $0.93 in the second quarter of 2023. Total core revenues of $179.4 million compared to $174.2 million in the first quarter of 2024 and $170.5 million in the second quarter of 2023.
Current wording
Earnings per share diluted of $1.00 comparedto $1.08 in the second quarter of 2024 and $0.95 in the third quarter of 2023. Total core revenues of $174.1 million compared to $179.4 million in the second quarter of 2024 and $172.2 million in the third quarter of 2023.
Previous wording
Performance metrics: Net interest margin of 5.51%, return on average assets of 1.82%, return on average tangible common stockholders’ equity of 18.24%, and efficiency ratio of 51.81%.
Current wording
Performance metrics: Net interest margin of 5.43%, return on average assets of 1.66%, return on average tangible common stockholders’ equity of 15.94%, and efficiency ratio of 52.60%.
Previous wording
Total Interest Income of $187.7 million compared to $183.4 million in the first quarter of 2024 and $158.0 million in the second quarter of 2023. Compared to the first quarter of 2024, the second quarter of 2024 primarily reflected higher average balances and yields on loans. The second quarter of 2024 also included $2.1 million from the recovery of a non-accrual U.S. commercial loan paid in full.
Current wording
Total Interest Income of $189.0 million compared to $187.7 million in the second quarter of 2024 and $165.7 million in the third quarter of 2023. Compared to the second quarter of 2024, the third quarter of 2024 increased $1.4 million, primarily reflecting higher principal balances and yields of investment securities, higher balances of loans, and the absence of a $2.1 million loan recovery on a non-accrual U.S. commercial loan paid in full during the second quarter of 2024.
Previous wording
Pre-Provision Net Revenues of $86.8 million compared to $83.0 million in the first quarter of 2024 and $80.8 million in the second quarter of 2023.
Current wording
Pre-Provision Net Revenues of $83.1 million compared to $86.8 million in the second quarter of 2024 and $82.3 million in the third quarter of 2023.
Previous wording
Credit Quality: Net charge-offs of $15.0 million compared to $19.8 million in the first quarter of 2024 and $6.6 million in the second quarter of 2023. The second quarter of 2024 early and total delinquency rates were 2.81% and 3.71%, respectively. The nonperforming loan rate of 1.08% was the lowest in the last five quarters.
Current wording
Credit Quality: Net charge-offs of $17.1 million (0.90% of average loans) compared to $15.0 million (0.79%) in the second quarter of 2024 and $18.8 million (1.05%) in the third quarter of 2023. During the third quarter of 2024 early and total delinquency rates were 2.78% and 4.10%, respectively. The nonperforming loan rate was 1.11%. The third quarter of 2024 total delinquency rate increased sequentially due to booking of the GNMA buy-back option program related to the previously mentioned mortgage servicing portfolio acquisition.
Previous wording
Effective Tax Rate (“ETR”) of 28.2% compared to 26.8% in the first quarter of 2024 and 32.9% in the second quarter of 2023. The second quarter of 2024 reflected an expected 2024 ETR of 29.0% due to higher forecasted business activities with preferential tax treatment under the Puerto Rico tax code, coupled with a $0.8 million tax benefit credit in the second quarter of 2024 compared to $1.1 million discrete benefit for stock vested in in the first quarter of 2024.
Current wording
Effective Tax Rate (“ETR”) of 23.9% compared to 28.2% in the second quarter of 2024 and 31.9% in the third quarter of 2023. Lower third quarter of 2024 ETR reflected an estimated 2024 ETR of 26.8% due to higher forecasted business activities with preferential tax treatment under the Puerto Rico tax code, coupled with discrete benefits of $3.1 million mainly related to stock vested in the first quarter of 2024 and tax credit purchases.
Previous wording
Loans Held for Investmentof $7.64 billion compared to $7.54 billion in the first quarter of 2024 and $7.12 billion in the second quarter of 2023. Compared to the first quarter of 2024, the second quarter of 2024 increased 1.3%, reflecting growth in Puerto Rico commercial, auto and consumer loans, partially offset by regular paydowns of residential mortgages and prepayment of U.S. commercial loans. Compared to the second quarter of 2023, the first quarter of 2024 loans increased 7.3%.
Current wording
Loans Held for Investmentof $7.75 billion compared to $7.64 billion in the second quarter of 2024 and $7.26 billion in the third quarter of 2023. Compared to the second quarter of 2024, the third quarter of 2024 increased 1.5%, reflecting growth in Puerto Rico and U.S. commercial loans and Puerto Rico auto and consumer loans, and regular paydowns and securitization of residential mortgages. Compared to the third quarter of 2023, the third quarter of 2024 increased 6.7%.
Previous wording
Total Investmentsof $2.48 billion compared to $2.48 billion in the first quarter of 2024 and $1.70 billion in the second quarter of 2023.
Current wording
Total Investments of $2.61 billion compared to $2.48 billion in the second quarter of 2024 and $2.07 billion in the third quarter of 2023.
Previous wording
Customer Depositsof $9.60 billion compared to $9.55 billion in the first quarter of 2024 and $8.54 billion in the second quarter of 2023. Compared to the first quarter of 2024, the second quarter of 2024 reflected an increase in commercial deposits partially offset by a decline in retail deposits.
Current wording
Customer Depositsof $9.53 billion compared to $9.60 billion in the second quarter of 2024 and $8.54 billion in the third quarter of 2023. Compared to the second quarter of 2024, the third quarter of 2024 reflected increases in savings and time deposits, and lower demand deposits.
Previous wording
Total Borrowings and Brokered Deposits of $201.2 million compared to $203.3 million in the first quarter of 2024 and $226.5 million in the second quarter of 2023.
Current wording
Total Borrowings and Brokered Deposits of $346.5 million compared to $201.2 million in the second quarter of 2024 and $454.4 million in the third quarter of 2023.
Previous wording
Cash and Cash Equivalentsof$740.4 million compared to$754.4 million in the first quarter of 2024 and$799.0 million in the second quarter of 2023.
Current wording
Cash and Cash Equivalentsof $680.6 million compared to $740.4 million in the second quarter of 2024 and $532.7 million in the third quarter of 2023.
Previous wording
Capital: CET1 ratio was 14.29% compared to 14.45% in the first quarter of 2024 and 14.03% in the second quarter of 2023. The Tangible Common Equity ratio was 10.09% compared to 10.06% in the first quarter of 2024 and 9.99% in the second quarter of 2023. Tangible Book Value of $24.18 per share compared to $23.55 in the first quarter of 2024 and $21.06 in the second quarter of 2023.
Current wording
Capital: CET1 ratio was 14.37% compared to 14.29% in the second quarter of 2024 and 14.06% in the third quarter of 2023. The Tangible Common Equity ratio was 10.72% compared to 10.09% in the second quarter of 2024 and 9.74% in the third quarter of 2023. Tangible Book Value of $26.15 per share compared to $24.18 in the second quarter of 2024 and $21.01 in the third quarter of 2023.
Previous wording
The following tables show major categories of interest-earning assets and interest-bearing liabilities, their respective interest income, expenses, yields and costs, and their impact on net interest income due to changes in volume and rates for the quarters and six-month periods ended June 30, 2024 and 2023.
Current wording
The following tables show major categories of interest-earning assets and interest-bearing liabilities, their respective interest income, expenses, yields and costs, and their impact on net interest income due to changes in volume and rates for the quarters and nine-month periods ended September 30, 2024 and 2023.
Previous wording
Net interest income of $147.3 million increased $7.7 million from $139.6 million. Tax equivalent basis net interest income of $150.9 million increased $7.3 million, or 5.1%, from $143.6 million.
Current wording
Net interest income of $147.9 million increased $6.1 million from $141.8 million. Tax equivalent basis net interest income of $153.2 million increased $7.9 million, or 5.5%, from $145.2 million.
Previous wording
Interest rate spread decreased 48 basis points to 5.36% from 5.84% and net interest margin decreased 39 basis points to 5.51% from 5.90%.
Current wording
Interest rate spread decreased 43 basis points to 5.28% from 5.71% and net interest margin decreased 37 basis points to 5.43% from 5.80%.
Previous wording
•A $18.7 million increase in interest income from loans, primarily driven by: (i) higher interest income from commercial loans by $11.3 million, reflecting the upward repricing of variable rate loans, increased yields on new loans originated during 2024 and a $2.1 million recovery of a non-accrual commercial US loan paid in full; (ii) higher interest income from auto loans by $7.8 million, mainly due to an increase in the average balance of this portfolio by $308.3 million; and (iii) higher interest income from consumer loans by $1.8 million, mainly due to an increase in the average balance of this portfolio by $56.5 million. These increases were partially offset by lower interest income from residential mortgage loans by $2.1 million, reflecting a decrease in the average balance of this portfolio by $137.3 million, mainly from regular paydowns and the securitization and sale of conforming loans; and
Current wording
•A $12.3 million increase in interest income from loans, primarily driven by: (i) higher interest income of $7.0 million from auto loans, mainly due to an increase in the average balance of this portfolio by $281.6 million from new loans originated; (ii) higher interest income of $5.1 million from commercial loans, reflecting the upward repricing of variable rate loans and increased yields on new loans originated during 2024; and (iii) higher interest income of $1.6 million from consumer loans, mainly due to an increase in the average balance of this portfolio by $50.9 million. These increases were partially offset by lower interest income of $1.4 million from residential mortgage loans, reflecting a decrease in the average balance of this portfolio by $129.8 million, mainly from regular paydowns and the securitization and sale of conforming loans; and
Previous wording
•A $11.2 million increase in interest income from investments securities, primarily related to higher yield by 97 basis points, which contributed to an increase in interest income of approximately $5.5 million and higher average volume of $693.0 million, resulting in an increase in interest income of approximately $5.7 million.
Current wording
•A $11.7 million increase in interest income from investments securities, primarily due to the acquisition of higher-yield investment securities during 2024 and late 2023. It reflects higher yield by 90 basis points, which contributed to an increase in interest income of approximately $5.3 million and higher average volume of $742.0 million, resulting in an increase in interest income of approximately $6.4 million.
Previous wording
These increases were offset by higher interest expense of $22.0 million, $21.9 million from deposits due to higher average cost of 83 basis points, reflecting a$1.2 billion deposit from an existing long-standing Puerto Rico government client received during the fourth quarter of 2023 with variable interest rate.
Current wording
These increases were offset by higher interest expense of $17.2 million, $17.5 million from deposits due to higher average cost of 63 basis points, reflecting a $1.2 billion deposit from an existing long-standing Puerto Rico government client received in December 2023 with a variable interest rate.
Previous wording
Net interest income of $291.4 million increased by $15.9 million from $275.5 million. Tax equivalent basis net interest income of $299.2 million increased $15.1 million, or 5.3%, from $284.1 million.
Current wording
Net interest income of $439.3 million increased by $22.0 million from $417.3 million. Tax equivalent basis net interest income of $452.3 million increased $23.0 million, or 5.4%, from $429.3 million.
Previous wording
Interest rate spread decreased by 53 basis points to 5.31% from 5.84% and net interest margin decreased 44 basis points to 5.45% from 5.89%. This decrease reflects an increase of 37 and 90 basis points, respectively, in the total average yield of interest-earning assets and the average cost of interest-bearing liabilities.
Current wording
Interest rate spread decreased by 48 basis points to 5.30% from 5.78% and net interest margin decreased 41 basis points to 5.44% from 5.85%. This reflects a an increase of 32 and 80 basis points, respectively, in the total average yield of interest-earning assets and the average cost of interest-bearing liabilities.
Previous wording
•A $40.0 million increase in interest income from loans driven by higher interest income from: (i) commercial loans of $23.2 million, primarily related to the upward repricing of variable rate commercial loans, increased yields on new loans originated during 2024, and higher average balance; (ii) consumer loans of $4.2 million mainly due to an increase of $64.9 million in the average balance of this portfolio; and (iii) auto loans of $16.4 million reflecting higher originations during 2024. These increases were partially offset by a decrease of $3.8 million in interest income from mortgage loans due to a reduction of $139.6 million in the average balance of this portfolio, mainly from regular paydowns and the securitization and sale of conforming loans;
Current wording
•A $52.3 million increase in interest income from loans driven by higher interest income from: (i) commercial loans of $28.4 million, primarily related to the upward repricing of variable rate commercial loans, increased yields on new loans originated during 2024, and higher average balance; (ii) auto loans of $23.3 million reflecting higher originations during 2024; and (iii) consumer loans of $5.8 million mainly due to an increase of $60.1 million in the average balance of this portfolio. These increases were partially offset by a decrease of $5.2 million in interest income from mortgage loans due to a reduction of $136.2 million in the average balance of this portfolio, mainly from regular paydowns and the securitization and sale of conforming loans; and
Previous wording
•A $22.8 million increase in interest income from investment securities, primarily related to a higher average volume of $675.7 million, which resulted in an increase in interest income of $11.1 million, and higher yield by 101 basis points, which contributed to the increase in net interest income of $11.8 million; and
Current wording
•A $34.5 million increase in interest income from investment securities, primarily due to the acquisition of higher-yield investment securities during 2024 and late 2023. Purchases contributed to higher average volume of $698.0 million, which resulted in an increase in interest income of $17.5 million, and higher yield by 98 basis points, which contributed to the increase in net interest income of $17.1 million.
Previous wording
These increases were partially offset by higher interest expense of $48.2 million from (i) interest paid on deposits of $46.2 million due to higher average cost of total deposits of 89 basis points, reflecting a$1.2 billion deposit from an existing long-standing Puerto Rico government client received during the fourth quarter of 2023 with a variable interest rate, and (ii) $2.0 million interest expense on the $200.0 million two-year FHLB advance taken in late 2023.
Current wording
These increases were partially offset by higher interest expense of $65.5 million from interest paid on: (i) deposits of $63.7 million due to higher average cost of total deposits of 80 basis points, reflecting a $1.2 billion deposit from an existing long-standing Puerto Rico government client received in December 2023 with a variable interest rate, and (ii) borrowings of $1.7 million reflecting FHLB advances taken in late 2023 and in the third quarter of 2024.
Previous wording
OFG recorded non-interest income, net, in the amount of $32.5 million, compared to $30.1 million, an increase of 8.0%, or $2.4 million. The increase in non-interest income was mainly due to the net effect of:
Current wording
OFG recorded non-interest income, net, in the amount of $26.9 million, compared to $30.7 million, a decrease of 12.5%, or $3.8 million. The decrease in non-interest income was mainly due to the net effect of:
Previous wording
•A $1.3 million increase in banking service revenues mainly due to: (i) higher debit card income of $639 thousand and merchant income of $300 thousand resulting from higher transactionality and migration of USVI merchant activity,
Current wording
•A $1.7 million decrease in banking service revenues related to: (i) $2.7 million in reduced interchange fees mainly due to the implementation of Durbin Amendment that took effect during the current quarter, offset by higher merchant income of $417 thousand resulting from higher transactionality and migration of USVI merchant activity.
Previous wording
•A $246 thousand increase in wealth management revenue primarily reflecting: (i) $212 thousand increase in broker-dealer fees related to higher market asset values and investment advisory services fees and (ii) $137 thousand increase in insurance income related to $123 thousand from reinsurance income, partially offset by lower annuities income of $92 thousand.
Current wording
These decreases were offset by a $758 thousand increase in wealth management revenue primarily reflecting: (i) $304 thousand increase in broker-dealer fees related to higher market asset values and investment advisory service fees and (ii) $372 thousand increase in insurance income related to annuities and reinsurance income of $235 thousand and $121 thousand, respectively.
Previous wording
•A $1.2 million increase in wealth management revenue primarily reflecting: (i) $519 thousand increase in broker-dealer fees related to higher market values of assets and investments advisory services fees, (ii) $449 thousand increase in insurance income related to $298 thousand from reinsurance income and $120 thousand in annuities income;
Current wording
•A $2.0 million increase in wealth management revenue primarily reflecting: (i) $863 thousand increase in broker-dealer fees related to higher market values of assets and investments advisory services fees, (ii) $821 thousand increase in insurance income related to $422 thousand from reinsurance income and $355 thousand in annuities income and (iii) an increase in trust fees of $342 thousand due to higher trustee-only fees.
Previous wording
•A $1.1 million loss associated with the sale of a $149.4 million short-term US treasury note available for sale during 2023; and
Current wording
•A $1.1 million loss associated with the sale of a $149.4 million short-term US treasury note available for sale during the prior period.
Previous wording
These increases were partially offset by a $361 thousand decrease in mortgage banking activities mainly from unfavorable impact in mortgage servicing rights valuation and lower servicing fees, partially offset by gains on repurchased loan sales in the current quarter.
Current wording
•A $2.7 million decrease in mortgage banking activities mainly from: (i) unfavorable impact in mortgage servicing rights valuation due to lower long-term rates of $1.9 million, (ii) lower gains on repurchased loan sales in the current quarter of $321 thousand and (iii) lower servicing fees of $121 thousand due to less cash collections.
Previous wording
(ii) $623 thousand prepayment fees, mainly from US commercial loans; offset by lower fees on deposits of $311 thousand from lower maintenance and overdrawn fees and higher waived fees.
Current wording
•A $662 thousand decrease in banking service revenues mainly due to lower fees on deposits of $656 thousand from lower maintenance and overdrawn fees and higher waived fees.
Previous wording
Non-interest expense was $93.0 million, representing an increase of 4.6% or $4.1 million, compared to $88.9 million. The increase in non-interest expense was mainly due to:
Current wording
Non-interest expense was $91.6 million, representing an increase of 1.6% or $1.4 million, compared to $90.2 million. The increase in non-interest expense was mainly due to:
Previous wording
•Decrease of $1.6 million in foreclosed real estate and other repossessed assets income, net of expenses due to lower valuation adjustments andlower gain on sale of foreclosed real estate due to lower volume of properties sold.
Current wording
•Increase of $1.3 million in foreclosed real estate and other repossessed assets expenses, net of income, due to unfavorable valuation adjustments andlower gain on sale of foreclosed real estate due to lower volume of properties sold;
Previous wording
•Increase of $428 thousand in insurance expenses related to higher FDIC deposit insurance assessment expense as a result of the Bank exceeding $10 billion in assets.
Current wording
•Increase of $388 thousand in insurance expenses related to higher FDIC deposit insurance assessment expense as a result of the Bank exceeding $10 billion in assets;
Previous wording
•Increase of $626 thousand in compensation and employee benefits, as a result of higher salaries and benefits, including payroll taxes; and
Current wording
•Increase of$373 thousand in compensation and employee benefits, as a result of higher salaries and benefits, including payroll taxes; and
Previous wording
•Increase of $1.4 million in electronic banking charges mainly due to increases of $1.2 million in point-of-sale and merchant-related fees due to increased transaction volumes.
Current wording
• Decrease of $1.4 million in electronic banking charges mainly due to the recognition of a $2.3 million rebate received during the quarter, offset by increases of $964 thousand in point-of-sale and merchant-related fees due to increased transaction volumes.
Previous wording
The efficiency ratio was 51.81%, an improvement from 52.13%. The efficiency ratio measures how much of OFG’s revenues is used to pay operating expenses. OFG computes its efficiency ratio by dividing non-interest expenses by the sum of its net interest income and non-interest income, but excluding gains on the sale of investment securities, other gains and losses, and other income that may be considered volatile in nature. Management believes that the exclusion of those items permits consistent comparability. Amounts presented as part of non-interest income that were excluded from the adjusted efficiency ratio computation for the quarters ended June 30, 2024 and 2023 amounted to $391 thousand and $786 thousand, respectively.
Current wording
The efficiency ratio was 52.60% compared to 52.36%. The efficiency ratio measures how much of OFG’s revenues is used to pay operating expenses. OFG computes its efficiency ratio by dividing non-interest expenses by the sum of its net interest income and non-interest income, but excluding gains on the sale of investment securities, other gains and losses, and other income that may be considered volatile in nature. Management believes that the exclusion of those items permits consistent comparability. Amounts presented as part of non-interest income that were excluded from the adjusted efficiency ratio computation for the quarters ended September 30, 2024 and 2023 amounted to$597 thousand and $295 thousand, respectively.
Showing the first 40 of 101 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
These increases were partially offset by:
Current report — wording carried from elsewhere
•Increase of $576 thousand in insurance expenses related to higher FDIC deposit insurance assessment expense as a result of the Bank exceeding $10 billion in assets.
Current report — wording carried from elsewhere
•Increase of $11.4 million in provision for credit losses, mainly due to growth in loan balances;
Current report — wording carried from elsewhere
•Commercial loan portfolio amounted to $3.118 billion (40.2% of the gross loan portfolio) compared to $3.077 billion (40.8% of the gross loan portfolio) at December 31, 2023, a 1.3% increase as a result of originations and credit lines usage during 2024. Commercial loans secured by non-owner occupied commercial real estate amounted to $800.9 million and $744.6 million at September 30, 2024 and December 31, 2023, respectively, which represented 10.3% and 9.9% of our total gross loan portfolio held for investment. Commercial US loans amounted to $680.4 million and $755.2 million at September 30, 2024 and December 31, 2023, respectively, which represented 8.8% and 10.0% of our total gross loan portfolio held for investment.
Current report — wording carried from elsewhere
Mortgage loan production totaled $37.1 million and $107.8 million in the quarter and nine-month period ended September 30, 2024, respectively, which represents an increase of 11% and 8.2%, respectively, from $33.3 million and $99.6 million for the same periods in 2023.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
•A $1.1 million loss associated with the sale of a $203.3 million short-term US treasury note available for sale during 2023, there were no sales of investments during the second quarter of 2024; and
Previous report — wording carried elsewhere
The provision for credit losses for 2023 reflected a provision of $12.5 million related to the growth in loan balances, a provision of $13.5 million related to commercial specific loan reserves, mainly in the US commercial loan portfolio, and $1.0 million associated with qualitative adjustment, partially offset by releases of $3.1 million for changes in the economic and loss rate models.
Previous report — wording carried elsewhere
The Loss Mitigation Program helps mortgage borrowers who are or will become financially unable to meet the current or scheduled mortgage payments. Loans that qualify under this program are those guaranteed by FHA, VA, USDA Rural Development (RURAL), Puerto Rico Housing Finance Authority (PRHFA), conventional loans guaranteed by Mortgage Guaranty Insurance Corporation (MGIC), conventional loans sold to FNMA and FHLMC, and conventional loans retained by OFG. The program offers diversified alternatives such as regular or reduced payment plans, payment moratorium, mortgage loan modification, partial claims (only FHA), short sale, and deed in lieu of foreclosure.