UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________________

 

FORM 8-K

_________________________

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 24, 2015

 

OFG Bancorp

 

(Exact Name of Registrant as Specified in its Charter)

 

 

 

 

 

 

Commonwealth of Puerto Rico

 

001-12647

 

66-0538893

 

 

 

 

 

(State or other Jurisdiction of Incorporation)  

 

(Commission File No.)  

 

(I.R.S. Employer
Identification No.)

 

 

 

Oriental Center, 15th Floor

 

 

254 Muñoz Rivera Avenue

 

 

San Juan, Puerto Rico

 

00918

 

 

 

(Address of Principal Executive Offices)  

 

(Zip Code)
             

 

 

Registrant’s telephone number, including area code: (787) 771-6800

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

 

     ☐   

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

     ☐   

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

 

 

     ☐   

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

     ☐   

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

  

 

 

Item 2.02. Results of Operations and Financial Condition.

  

     On July 24, 2015, OFG Bancorp (the “Company”) announced the results for the quarter ended June 30, 2015. A copy of the Company’s press release is attached as an exhibit to this report.

 

Item 9.01. Financial Statements and Exhibits.  

 

     (d) Exhibits   

 

 

 

 

 

 

 

 

 

Exhibit No.

 

Description of Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99

 

 

Press release by the Company dated July 24, 2015.

 

 

 

 

  

 

 

SIGNATURES  

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

OFG BANCORP

 

Date: July 24, 2015

By:  

/s/ Ganesh Kumar

 

 

Ganesh Kumar

 

 

Executive Vice President and Chief Financial Officer 
         

 

 



 

 

Exhibit 99

 

OFG Bancorp Reports 2Q15 Results

SAN JUAN, Puerto Rico, July 24, 2015 – OFG Bancorp (NYSE: OFG) today reported results for the second quarter ended June 30, 2015.

José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, commented, “While a few quarter specific items caused us to post a loss in 2Q15, our core business performed well and capital continues to be strong.”

2Q15 Highlights

·         Loss of $6.6 million, or ($0.15) per share, compared to a loss of $6.5 million, or ($0.14) per share, in the preceding quarter, and a profit of $17.8 million, or $0.38 per share diluted, in the year ago quarter.

·         Compared to 1Q15, 2Q15 results were adversely impacted by:

o   Absence of $4.2 million in tax free interest income from loans to the Puerto Rico Electric Power Authority (PREPA) and the Puerto Rico Aqueduct and Sewer Authority (PRASA).

1.    PREPA: Interest payments on the $200 million loan, which is on non-accrual status, are being applied to the principal.

2.    PRASA: The $75 million remaining balance was paid-off on June 1, 2015.

o   $10.2 million increase in FDIC commercial loss share amortization (from $13.1 million to $23.2 million) related to the scheduled expiration of the Eurobank commercial loss sharing agreement with the FDIC. Going forward, the loss share amortization for remaining residential mortgages should be significantly lower.

o   $4.5 million of additional loss in Other Real Estate Owned (OREO) due to revised collateral values as part of ongoing and proactive de-risking efforts.

·         Partially offsetting the above was:

o   $26.7 million decline in the total provision for loan and lease losses. This reflects no additional PREPA provision ($24.0 million in 1Q15) because the government utility and its creditors are actively working on a repayment agreement. Additionally, no provision was required on FDIC covered commercial loans ($4.8 million in 1Q15).

o   Continued growth of the Oriental Bank franchise through the opening of new retail deposit accounts, reduced cost of total deposits, and strong levels of core non-interest fee revenues and loan production.

 

 

o   Improved credit, with declines in net charge-offs, total delinquencies and non-performing loans.

·         Puerto Rico central government and public corporation balances declined 20.7% to $301.3 million at June 30, 2015 from $380.1 million at March 31, 2015. This excludes $214.0 million in term loans to five municipal governments that are completely separate entities with their own sources of tax revenues.

·         Tangible book value and book value per common share declined to $14.67 and $16.81 from $15.12 and $17.25, respectively, at March 31, 2015. Regulatory capital ratios continued to be significantly above requirements for a well-capitalized institution.

CEO Comment

In commenting on 2Q15 results, Mr. Fernández stated, “This quarter demonstrates our discipline in navigating one of the most difficult operating environments in banking today.

“Our core business performed well as we continued to grow Oriental Bank’s franchise serving the commercial and consumer sectors. We experienced strong generation of quality loans with good pricing discipline, strong fee revenue levels, and good core expense management. Oriental’s retail deposit base and mortgage and consumer loan businesses continued to benefit from successful marketing attracting new customers. In addition, credit continued to improve as evidenced, among other things, by lower provisions and net charge-offs while we maintained provisions at 1.20-1.25% of net charge-offs, increasing the allowance levels.

“However, the absence of tax-free interest income from the PREPA and PRASA loans was a drag on NIM and earnings in general. With the scheduled expiration of our commercial loss share agreement with the FDIC, we incurred a final write down of the remaining amortization asset for covered commercial loans. In addition, we de-risked our non-covered portfolio by updating valuations of certain underlying collaterals and adopted a restitution program in our broker-dealer subsidiary.

“Looking ahead, prevailing economic conditions in Puerto Rico are challenging and uncertain. Our strategy is to be vigilant in managing our risk exposure and the factors under our control. We urge the Central Government to act quickly and in cooperation with the investment community to restart the Puerto Rico economy, which has now been stalled for nearly a decade.

“Our ultimate goals remain the same: build the Oriental franchise, further affirming our reputation as the best bank in Puerto Rico; maximize our profitability and capital; preserve our flexibility to pursue strategic alternatives; and deploy our strong capital base to increase shareholder return in a sustainable manner.”

2Q15 Income Statement Highlights

The following compares data for the second quarter 2015 to the first quarter 2015 unless otherwise noted.

 

 

·         Total interest income declined $7.6 million to $99.4 million. This reflected:

o   Lower loan income from PREPA ($3.6 million) and PRASA ($0.6 million), as noted above, and from covered loans ($2.8 million) as balances continued to pay down.

o   Growth in loan income from all other originated loans offsetting declines in all other acquired non-covered loans.

o   $0.6 million in higher premium amortization on investment securities.

·         Total interest expense fell slightly to $17.1 million as we continued to improve the deposit funding profile with decreases in rates.

·         Net Interest Margin declined to 4.92% from 5.42%, primarily reflecting the loss of income from the PREPA and PRASA loans.

·         Provision for loan and lease losses fell $26.7 million to $15.5 million. This reflected no additional PREPA and covered loan provisioning, as previously mentioned, and $1.3 million decline in provision on other originated and acquired loans.

·         Total core non-interest income increased slightly to $19.4 million. This reflected increased or sustained levels of revenue across the board in wealth management, banking services and mortgage banking activity.

·         FDIC indemnification asset amortization increased $10.2 million, as mentioned above, to $23.2 million. The indemnification asset was $22.7 million at June 30, 2015 versus $75.2 million at March 31, 2015.

·         Non-interest expenses increased $8.1 million, to $64.4 million. This primarily reflected the following non-recurring expenses:

1.    The aforementioned $4.5 million increased OREO loss and $1.8 million restitution program by our broker-dealer subsidiary.

2.    $1.1 million to close a branch and other quarter specific expenses.

2Q15 Business Activity Highlights

The following compares data for the second quarter 2015 to the first quarter 2015 unless otherwise noted.

·         Total new loan production (excluding renewals) increased 19.7% to $286.7 million.

·         Commercial loan production increased 40.7% to $120.5 million, reflecting the pipeline that was starting to build in 1Q15.

·         Residential mortgage loan production, most of which is sold into the secondary market, increased 5.0% to $64.8 million as Oriental continued to expand its market share.

·         Consumer loan production increased 52.3% to $39.8 million due to improved marketing and a larger client base.

·         Auto loan production declined 6.6% to $61.5 million. This reflects increased competition from the captive finance arms of manufacturers, and our own initiative to increase FICO score requirements to improve credit.

 

 

·         Cost of deposits declined 5 basis points to 0.65% from 1Q15 and 22 basis points from 0.87% in 2Q14, as a result of reductions in demand, savings, time and brokered deposit rates.

June 30, 2015 Balance Sheet Highlights

The following compares data as of June 30, 2015 to March 31, 2015 or for the second quarter 2015 to the first quarter 2015 unless otherwise noted.

·         Average interest earning assets increased slightly to $6.71 billion. This reflected an increase in total investments as OFG reinvested excess cash from repayments of loans and investment securities, and increased originated loans, all of which more than offset declines in acquired and covered loans due to normal pay downs.

·         Total stockholders’ equity declined $24.8 million to $911.6 million. This primarily reflected a $10.9 million decrease in retained earnings and a $10.0 million decrease in other comprehensive income.

Credit Quality Highlights

The following compares data for the second quarter 2015 to the first quarter 2015 unless otherwise noted.

·         Net charge-offs declined 10.1% to $7.7 million as we continued to fine tune our collection efforts to evolving credit trends. Net charge-offs have declined three quarters in a row.

·         Total delinquency rate  declined 88 basis points to 7.72% primarily due to improvements in the mortgage, consumer and auto loan portfolios. The total delinquency rate has declined three quarters in a row.

·         Non-performing loan rate declined 20 basis points to 10.44%.

·         Allowance for loan and lease losses increased $2.2 million to $79.0 million. This resulted in coverage of 2.67% of loans held for investment compared to 2.64%.

Capital Position

The following compares data for the second quarter 2015 to the first quarter 2015.

·         Tangible common equity to total tangible assets declined to 8.91% from 9.29% based on a 3.6% decrease in tangible common equity to $650.9 million and a 0.5% increase in tangible assets to $7.3 billion.

·         Common Equity Tier 1 Capital Ratio (using Basel III methodology) was 12.25% compared to 12.63%.

·         Total risk-based capital ratio declined to 17.40% from 17.69% based on a 2.1% decline in total risk-based capital to $868.6 million and a 0.4% decline in total risk weighted assets to $5.0 billion.

 

 

Conference Call

A conference call to discuss OFG’s results for the second quarter 2015, outlook and related matters will be held today, Friday, July 24, 2015 at 11:15 AM Eastern Time. The call will be accessible live via a webcast on OFG’s Investor Relations website at www.ofgbancorp.com. A webcast replay will be available shortly thereafter. Access the webcast link in advance to download any necessary software.

Financial Supplement

OFG’s Financial Supplement, with full financial tables for the second quarter ended June 30, 2015, can be found on the Webcasts, Presentations & Other Files page, on OFG’s Investor Relations website at www.ofgbancorp.com.

 

 

 

Forward Looking Statements

The information included in this document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements.

Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) a credit default by the government of Puerto Rico; (iv) the fiscal and monetary policies of the federal government and its agencies; (v) changes in federal bank regulatory and supervisory policies, including required levels of capital; (vi) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate market in Puerto Rico; (vii) the performance of the stock and bond markets; (viii) competition in the financial services industry; and (ix) possible legislative, tax or regulatory changes.

For a discussion of such factors and certain risks and uncertainties to which OFG is subject, see OFG’s annual report on Form 10-K for the year ended December 31, 2014, as well as its other filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, OFG assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

About OFG Bancorp

Now in its 51st year in business, OFG Bancorp is a diversified financial holding company that operates under U.S. and Puerto Rico banking laws and regulations.  Its three principal subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a full range of commercial, consumer and mortgage banking services, as well as financial planning, trust, insurance, investment brokerage and investment banking services, primarily in Puerto Rico, through 52 financial centers and 332 ATMs. Investor information can be found at www.ofgbancorp.com.  

# # #

Contacts

Puerto Rico: Alexandra López (allopez@orientalbank.com), OFG Bancorp, (787) 522-6970

US: Steven Anreder (sanreder@ofgbancorp.com) and Gary Fishman (gfishman@ofgbancorp.com) at (212) 532-3232

  

 

 

 

 

 

 

 

 

  

OFG Bancorp

  

Financial Supplement

  

 

 

 

 

 

 

  

 

 

 

 

 

 

  

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our June 30, 2015 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission.

  
 

 

 

 

 

 

 

  

Table of Contents

  

 

 

 

 

Pages

  

 

 

 

 

 

 

  

 

OFG Bancorp (Consolidated Financial Information)

 

 

  

 

Table  1:

 

Financial and Statistical Summary - Consolidated

 

2

  

 

Table  2:

 

Consolidated Statements of Operations

 

3

  

 

Table  3:

 

Consolidated Statements of Financial Condition

 

4-5

  

 

Table  4:

 

Information on Loan Portfolio and Production

 

6

  

 

Table  5:

 

Average Balances, Net Interest Income and Net Interest Margin

 

7-8

  

 

Table  6:

 

Loan Information and Performance Statistics (Excluding Acquired Loans)

 

9-10

  

 

Table  7:

 

Allowance for Loan and Lease Losses

 

11

  

 

Table  8:

 

Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired

 

 

  

 

 

 

   with Deteriorated Credit Quality, Including those by Analogy)

 

12

  

 

Table  9:

 

Reconciliation of Non-GAAP Measures and Calculation of Regulatory

 

 

  

 

 

 

   Capital Measures

 

13-14

  

 

Table  10:

 

Notes to Financial Summary, Selected Metrics, Loans, and Consolidated

 

 

  

 

 

 

  Financial Statements

 

15

  

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Financial and Statistical Summary - Consolidated

 

 

 

2015

 

2015

 

2014

 

2014

 

2014

 

2015

 

2014

(Dollars in thousands, except per share data) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

YTD

 

YTD

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

82,292

 

$

89,635

 

$

97,128

 

$

101,871

 

$

106,078

 

$

171,927

 

$

209,476

Non-interest income, net (core)

(2)

 

 

19,359

 

 

19,223

 

 

20,981

 

 

18,963

 

 

18,885

 

 

38,582

 

 

38,004

Non-interest expense

 

 

 

64,437

 

 

56,332

 

 

61,898

 

 

59,575

 

 

59,848

 

 

120,769

 

 

121,252

Pre-provision net revenues

 

 

 

37,214

 

 

52,526

 

 

56,211

 

 

61,259

 

 

65,115

 

 

89,740

 

 

126,228

Provision for loan and lease losses

(3)

 

 

15,539

 

 

42,193

 

 

16,877

 

 

17,257

 

 

14,815

 

 

57,732

 

 

26,506

FDIC shared-loss expense, net

 

 

 

23,245

 

 

13,084

 

 

11,980

 

 

16,934

 

 

18,355

 

 

36,329

 

 

36,842

Net (loss) income before income taxes

 

 

 

(2,340)

 

 

(2,009)

 

 

27,449

 

 

27,530

 

 

31,922

 

 

(4,349)

 

 

67,454

Net (loss) income

 

 

 

(3,109)

 

 

(2,988)

 

 

20,593

 

 

19,532

 

 

21,309

 

 

(6,097)

 

 

45,056

Net (loss) income available to common stockholders

 

 

$

(6,575)

 

$

(6,453)

 

$

17,127

 

$

16,067

 

$

17,843

 

$

(13,028)

 

$

38,125

Common Share Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per common share - basic

(4)

 

$

(0.15)

 

$

(0.14)

 

$

0.38

 

$

0.36

 

$

0.40

 

$

(0.29)

 

$

0.84

(Loss) earnings per common share - diluted

(5)

 

$

(0.15)

 

$

(0.14)

 

$

0.36

 

$

0.34

 

$

0.38

 

$

(0.29)

 

$

0.80

Average common shares outstanding

 

 

 

44,505

 

 

44,634

 

 

44,705

 

 

45,054

 

 

45,014

 

 

44,569

 

 

45,170

Average common shares outstanding and equivalents

 

 

 

51,774

 

 

51,977

 

 

52,000

 

 

52,362

 

 

52,352

 

 

51,876

 

 

52,476

Cash dividends per common share

(6)

 

$

0.10

 

$

0.10

 

$

0.10

 

$

0.08

 

$

0.08

 

$

0.20

 

$

0.16

Book value per common share (period end)

 

 

$

16.81

 

$

17.25

 

$

17.40

 

$

16.96

 

$

16.87

 

$

16.81

 

$

16.87

Tangible book value per common share (period end)

(7)

 

$

14.67

 

$

15.12

 

$

15.25

 

$

14.82

 

$

14.71

 

$

14.67

 

$

14.71

Balance Sheet (Average Balances)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

(8)

 

$

4,748,145

 

$

4,794,432

 

$

4,856,143

 

$

4,939,895

 

$

5,019,381

 

$

4,806,490

 

$

5,013,404

Interest-earning assets

 

 

 

6,708,519

 

 

6,703,286

 

 

6,817,770

 

 

6,923,410

 

 

6,972,134

 

 

6,741,247

 

 

7,093,562

Total assets

 

 

 

7,329,277

 

 

7,375,974

 

 

7,528,917

 

 

7,646,430

 

 

7,736,711

 

 

7,352,496

 

 

7,888,094

Interest-bearing deposits

 

 

 

3,986,700

 

 

4,167,592

 

 

4,261,729

 

 

4,397,077

 

 

4,514,556

 

 

4,076,646

 

 

4,573,431

Borrowings

 

 

 

1,466,103

 

 

1,378,344

 

 

1,431,076

 

 

1,457,908

 

 

1,470,669

 

 

1,422,467

 

 

1,551,278

Stockholders' equity

 

 

 

929,867

 

 

948,302

 

 

936,218

 

 

919,804

 

 

914,395

 

 

939,043

 

 

904,556

Common stockholders' equity

 

 

 

763,997

 

 

782,432

 

 

770,348

 

 

753,934

 

 

748,525

 

 

773,173

 

 

738,686

Performance Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

(9)

 

 

4.92%

 

 

5.42%

 

 

5.65%

 

 

5.84%

 

 

6.10%

 

 

5.14%

 

 

5.96%

Return on average assets

(10)

 

 

-0.17%

 

 

-0.16%

 

 

1.09%

 

 

1.02%

 

 

1.10%

 

 

-0.17%

 

 

1.14%

Return on average tangible common stockholders' equity

(11)

 

 

-3.93%

 

 

-3.76%

 

 

10.16%

 

 

9.78%

 

 

10.96%

 

 

-3.84%

 

 

11.89%

Efficiency ratio

(12)

 

 

63.39%

 

 

51.75%

 

 

52.41%

 

 

49.30%

 

 

47.89%

 

 

57.37%

 

 

48.99%

Full-time equivalent employees, period end

 

 

 

1,507

 

 

1,510

 

 

1,567

 

 

1,570

 

 

1,575

 

 

1,507

 

 

1,575

Credit Quality Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for loan and lease losses

(3)

 

$

78,989

 

$

76,759

 

$

51,441

 

$

50,279

 

$

50,638

 

$

78,989

 

$

50,638

    Allowance as a % of loans held for investment

 

 

 

2.67%

 

 

2.64%

 

 

1.81%

 

 

1.84%

 

 

1.92%

 

 

2.67%

 

 

1.92%

    Net charge-offs

 

 

$

7,723

 

$

8,592

 

$

8,640

 

$

8,928

 

$

6,300

 

$

16,315

 

$

11,499

    Net charge-off rate

(13)

 

 

1.06%

 

 

1.21%

 

 

1.25%

 

 

1.34%

 

 

0.96%

 

 

1.13%

 

 

0.91%

    Early delinquency rate (30 - 89 days past due)

 

 

 

4.84%

 

 

4.67%

 

 

4.91%

 

 

5.20%

 

 

4.85%

 

 

4.84%

 

 

4.85%

    Total delinquency rate (30 days and over)

 

 

 

7.72%

 

 

8.60%

 

 

8.99%

 

 

9.27%

 

 

8.61%

 

 

7.72%

 

 

8.61%

Capital Ratios

(14)(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

 

11.05%

 

 

11.23%

 

 

10.61%

 

 

10.51%

 

 

10.26%

 

 

11.05%

 

 

10.26%

Common equity Tier 1 capital ratio

 

 

 

12.25%

 

 

12.63%

 

 

N/A

 

 

N/A

 

 

N/A

 

 

12.25%

 

 

N/A

Tier 1 common equity ratio

 

 

 

N/A

 

 

N/A

 

 

11.88%

 

 

11.86%

 

 

11.47%

 

 

N/A

 

 

11.47%

Tier 1 risk-based capital ratio

 

 

 

15.84%

 

 

16.14%

 

 

16.02%

 

 

15.96%

 

 

15.49%

 

 

15.84%

 

 

15.49%

Total risk-based capital ratio

 

 

 

17.40%

 

 

17.69%

 

 

17.57%

 

 

17.50%

 

 

17.30%

 

 

17.40%

 

 

17.30%

Tangible common equity ("TCE") ratio

 

 

 

8.91%

 

 

9.29%

 

 

9.25%

 

 

8.81%

 

 

8.70%

 

 

8.91%

 

 

8.70%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2: Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six-Months Ended

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

June 30,

 

June 30,

(Dollars in thousands, except per share data) (unaudited)

 

 

2015

 

2015

 

2014

 

2014

 

2014

 

2015

 

2014

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Loans not covered under shared-loss agreements with the FDIC

 

 

$

77,746

 

$

81,979

 

$

85,615

 

$

87,662

 

$

88,064

 

$

159,725

 

$

173,307

    Loans covered under shared-loss agreements with the FDIC

 

 

 

12,758

 

 

15,504

 

 

19,816

 

 

20,886

 

 

24,879

 

 

28,262

 

 

48,267

          Total interest income from loans

 

 

 

90,504

 

 

97,483

 

 

105,431

 

 

108,548

 

 

112,943

 

 

187,987

 

 

221,574

Investment securities

 

 

 

8,909

 

 

9,518

 

 

10,551

 

 

11,753

 

 

12,957

 

 

18,427

 

 

27,400

          Total interest income

 

 

 

99,413

 

 

107,001

 

 

115,982

 

 

120,301

 

 

125,900

 

 

206,414

 

 

248,974

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Core deposits

 

 

 

5,519

 

 

5,938

 

 

6,887

 

 

6,410

 

 

7,875

 

 

11,457

 

 

15,537

    Brokered deposits

 

 

 

1,085

 

 

1,166

 

 

1,263

 

 

1,251

 

 

1,290

 

 

2,251

 

 

2,606

          Total deposits

 

 

 

6,604

 

 

7,104

 

 

8,150

 

 

7,661

 

 

9,165

 

 

13,708

 

 

18,143

Borrowings

 

 

 

10,517

 

 

10,262

 

 

10,704

 

 

10,769

 

 

10,657

 

 

20,779

 

 

21,355

          Total interest expense

 

 

 

17,121

 

 

17,366

 

 

18,854

 

 

18,430

 

 

19,822

 

 

34,487

 

 

39,498

Net interest income

 

 

 

82,292

 

 

89,635

 

 

97,128

 

 

101,871

 

 

106,078

 

 

171,927

 

 

209,476

    Provision for loan and lease losses, excluding acquired loans

(3)

 

 

9,953

 

 

33,912

 

 

9,802

 

 

8,569

 

 

7,431

 

 

43,865

 

 

13,056

    Provision for acquired loan and lease losses

(1)

 

 

5,586

 

 

8,281

 

 

7,075

 

 

8,688

 

 

7,384

 

 

13,867

 

 

13,450

          Total provision for loan and lease losses, net

 

 

 

15,539

 

 

42,193

 

 

16,877

 

 

17,257

 

 

14,815

 

 

57,732

 

 

26,506

          Net interest income after provision for loan and lease losses

 

 

 

66,753

 

 

47,442

 

 

80,251

 

 

84,614

 

 

91,263

 

 

114,195

 

 

182,970

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking service revenues

 

 

 

10,212

 

 

10,205

 

 

10,407

 

 

9,753

 

 

9,995

 

 

20,417

 

 

20,552

Wealth management revenues

 

 

 

7,285

 

 

7,155

 

 

8,539

 

 

7,113

 

 

7,336

 

 

14,440

 

 

14,203

Mortgage banking activities

 

 

 

1,862

 

 

1,863

 

 

2,035

 

 

2,097

 

 

1,554

 

 

3,725

 

 

3,249

          Total banking and wealth management revenues

 

 

 

19,359

 

 

19,223

 

 

20,981

 

 

18,963

 

 

18,885

 

 

38,582

 

 

38,004

FDIC shared-loss expense, net

(15)

 

 

(23,245)

 

 

(13,084)

 

 

(11,980)

 

 

(16,934)

 

 

(18,355)

 

 

(36,329)

 

 

(36,842)

Other gains (losses), net

 

 

 

(770)

 

 

742

 

 

95

 

 

462

 

 

(23)

 

 

(28)

 

 

4,574

          Total non-interest (loss) income, net

 

 

 

(4,656)

 

 

6,881

 

 

9,096

 

 

2,491

 

 

507

 

 

2,225

 

 

5,736

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

 

19,260

 

 

20,180

 

 

20,396

 

 

18,592

 

 

20,707

 

 

39,440

 

 

42,494

Rent and occupancy costs

 

 

 

8,883

 

 

8,636

 

 

9,026

 

 

8,770

 

 

8,605

 

 

17,519

 

 

16,914

Other non-recurring expenses

(16)

 

 

-

 

 

-

 

 

3,800

 

 

-

 

 

-

 

 

-

 

 

-

General and administrative expenses

 

 

 

36,294

 

 

27,516

 

 

28,676

 

 

32,213

 

 

30,536

 

 

63,810

 

 

61,844

          Total non-interest expense

 

 

 

64,437

 

 

56,332

 

 

61,898

 

 

59,575

 

 

59,848

 

 

120,769

 

 

121,252

(Loss) income before income taxes

 

 

 

(2,340)

 

 

(2,009)

 

 

27,449

 

 

27,530

 

 

31,922

 

 

(4,349)

 

 

67,454

Income tax expense

 

 

 

769

 

 

979

 

 

6,856

 

 

7,998

 

 

10,613

 

 

1,748

 

 

22,398

Net (loss) income

 

 

 

(3,109)

 

 

(2,988)

 

 

20,593

 

 

19,532

 

 

21,309

 

 

(6,097)

 

 

45,056

Less:  dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Convertible preferred stock

 

 

 

(1,837)

 

 

(1,838)

 

 

(1,838)

 

 

(1,837)

 

 

(1,838)

 

 

(3,675)

 

 

(3,675)

    Other preferred stock

 

 

 

(1,629)

 

 

(1,627)

 

 

(1,628)

 

 

(1,628)

 

 

(1,628)

 

 

(3,256)

 

 

(3,256)

Net (loss) income available to common shareholders

 

 

$

(6,575)

 

$

(6,453)

 

$

17,127

 

$

16,067

 

$

17,843

 

$

(13,028)

 

$

38,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

Table 3: Consolidated Statements of Financial Condition

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands) (unaudited)

 

 

2015

 

2015

 

2014

 

2014

 

2014

Cash and cash equivalents

 

 

$

559,621

 

$

694,308

 

$

581,834

 

$

704,146

 

$

611,655

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading securities

 

 

 

786

 

 

964

 

 

1,594

 

 

1,687

 

 

1,613

Investment securities available-for-sale, at fair value, with amortized cost of $1,023,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (March 31, 2015 - $1,092,040; December 31, 2014 - $1,187,679; September 30, 2014 - $1,249,769;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    June 30, 2014 - $1,385,438)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

1,020,493

 

 

1,099,814

 

 

1,190,391

 

 

1,247,161

 

 

1,314,677

    Other investment securities

 

 

 

23,826

 

 

25,888

 

 

26,147

 

 

26,718

 

 

104,281

          Total investment securities available-for-sale

 

 

 

1,044,319

 

 

1,125,702

 

 

1,216,538

 

 

1,273,879

 

 

1,418,958

Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $547,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (March 31, 2015 - $175, 856; December 31, 2014 - $164,154; September 30, 2014 - $144,217;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    June 30, 2014 - $26,844)

 

 

 

550,553

 

 

172,847

 

 

162,752

 

 

144,305

 

 

26,706

Federal Home Loan Bank (FHLB) stock, at cost

 

 

 

20,826

 

 

21,148

 

 

21,169

 

 

21,189

 

 

24,381

Other investments

 

 

 

3

 

 

3

 

 

3

 

 

65

 

 

65

          Total investments

 

 

 

1,616,487

 

 

1,320,664

 

 

1,402,056

 

 

1,441,125

 

 

1,471,723

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans not covered under shared-loss agreements with the FDIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Puerto Rico Government and its dependencies

 

 

 

515,274

 

 

593,281

 

 

618,998

 

 

626,831

 

 

655,429

        Other Commercial Loans

 

 

 

1,356,735

 

 

1,260,938

 

 

1,241,971

 

 

1,211,526

 

 

1,198,618

 

 

 

 

1,872,009

 

 

1,854,219

 

 

1,860,969

 

 

1,838,357

 

 

1,854,047

    Mortgage

(32)

 

 

1,388,994

 

 

1,435,463

 

 

1,447,873

 

 

1,461,294

 

 

1,480,070

    Consumer

 

 

 

273,003

 

 

260,421

 

 

261,992

 

 

259,636

 

 

254,966

    Auto and Leasing

 

 

 

961,659

 

 

985,147

 

 

1,007,597

 

 

1,030,449

 

 

1,054,945

          Total loans receivable not covered under shared-loss agreements with the FDIC, gross

 

 

 

4,495,665

 

 

4,535,250

 

 

4,578,431

 

 

4,589,736

 

 

4,644,028

Less: Deferred loan costs, net

 

 

 

3,877

 

 

4,433

 

 

4,282

 

 

3,575

 

 

3,236

          Total loans receivable not covered under shared-loss agreements with the FDIC

 

 

 

4,499,542

 

 

4,539,683

 

 

4,582,713

 

 

4,593,311

 

 

4,647,264

Allowance for loan and lease losses on non-covered loans

 

 

 

(102,877)

 

 

(96,375)

 

 

(69,517)

 

 

(64,859)

 

 

(60,360)

Loans receivable held for investment, net

 

 

 

4,396,665

 

 

4,443,308

 

 

4,513,196

 

 

4,528,452

 

 

4,586,904

Mortgage loans held for sale

 

 

 

20,768

 

 

23,464

 

 

14,539

 

 

16,757

 

 

14,792

          Total loans not covered under shared-loss agreements with the FDIC, net

 

 

 

4,417,433

 

 

4,466,772

 

 

4,527,735

 

 

4,545,209

 

 

4,601,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans covered under shared-loss agreements with the FDIC

 

 

 

293,486

 

 

328,458

 

 

363,156

 

 

373,920

 

 

393,859

Allowance for loan and lease losses on covered loans

 

 

 

(71,452)

 

 

(70,651)

 

 

(64,245)

 

 

(62,227)

 

 

(59,515)

Loans covered under shared-loss agreements with the FDIC, net

 

 

 

222,034

 

 

257,807

 

 

298,911

 

 

311,693

 

 

334,344

          Total loans, net

 

 

 

4,639,467

 

 

4,724,579

 

 

4,826,646

 

 

4,856,902

 

 

4,936,040

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FDIC shared-loss indemnification asset

(33)

 

 

22,704

 

 

75,221

 

 

97,378

 

 

120,619

 

 

143,660

Derivative assets

 

 

 

4,376

 

 

6,211

 

 

8,107

 

 

8,445

 

 

9,558

Prepaid expenses

 

 

 

16,492

 

 

11,264

 

 

16,018

 

 

18,375

 

 

17,422

Deferred tax asset, net

 

 

 

138,406

 

 

121,930

 

 

108,708

 

 

121,217

 

 

123,298

Foreclosed real estate and repossessed properties

(34)

 

 

95,994

 

 

113,863

 

 

117,461

 

 

122,297

 

 

119,110

Premises and equipment, net

 

 

 

76,486

 

 

78,745

 

 

80,599

 

 

82,099

 

 

82,167

Goodwill

 

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

 

 

86,069

Accounts receivable and other assets

(17)(18)(19)

 

 

142,223

 

 

131,302

 

 

124,233

 

 

112,045

 

 

109,443

Total assets

 

 

$

7,398,325

 

$

7,364,156

 

$

7,449,109

 

$

7,673,339

 

$

7,710,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

Table 3: Consolidated Statements of Financial Condition (Continued)

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands) (unaudited)

 

 

2015

 

2015

 

2014

 

2014

 

2014

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

(20)

 

$

1,936,617

 

$

2,025,291

 

$

1,997,108

 

$

2,132,073

 

$

2,135,369

Savings accounts

(20)

 

 

1,250,460

 

 

1,336,209

 

 

1,292,698

 

 

1,169,330

 

 

1,136,155

Time deposits

 

 

 

957,246

 

 

965,611

 

 

1,015,290

 

 

1,098,128

 

 

1,151,234

Brokered deposits

 

 

 

605,361

 

 

567,122

 

 

619,310

 

 

669,644

 

 

718,475

          Total deposits

 

 

 

4,749,684

 

 

4,894,233

 

 

4,924,406

 

 

5,069,175

 

 

5,141,233

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

 

1,161,136

 

 

927,168

 

 

980,087

 

 

1,012,228

 

 

1,012,233

Advances from FHLB and other borrowings

 

 

 

335,481

 

 

335,597

 

 

338,334

 

 

338,659

 

 

364,077

Subordinated capital notes

 

 

 

102,109

 

 

101,846

 

 

101,584

 

 

101,190

 

 

100,797

          Total borrowings

 

 

 

1,598,726

 

 

1,364,611

 

 

1,420,005

 

 

1,452,077

 

 

1,477,107

Other liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities purchased but not yet received

 

 

 

-

 

 

-

 

 

-

 

 

30,057

 

 

-

Derivative liabilities

 

 

 

8,739

 

 

11,113

 

 

11,221

 

 

11,414

 

 

13,617

Acceptances outstanding

 

 

 

16,040

 

 

21,848

 

 

17,989

 

 

21,077

 

 

17,581

Accrued expenses and other liabilities

(32)

 

 

113,537

 

 

135,972

 

 

133,291

 

 

159,541

 

 

135,405

          Total liabilities

 

 

 

6,486,726

 

 

6,427,777

 

 

6,506,912

 

 

6,743,341

 

 

6,784,943

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

 

 

176,000

Common stock

 

 

 

52,626

 

 

52,626

 

 

52,626

 

 

52,761

 

 

52,730

Additional paid-in capital

 

 

 

539,669

 

 

539,222

 

 

539,311

 

 

539,522

 

 

538,936

Legal surplus

 

 

 

69,934

 

 

70,097

 

 

70,467

 

 

68,437

 

 

66,438

Retained earnings 

 

 

 

159,737

 

 

170,605

 

 

181,152

 

 

170,519

 

 

160,055

Treasury stock, at cost

(21)

 

 

(100,668)

 

 

(96,495)

 

 

(97,070)

 

 

(90,652)

 

 

(90,712)

Accumulated other comprehensive income, net

 

 

 

14,301

 

 

24,324

 

 

19,711

 

 

13,411

 

 

21,755

          Total stockholders' equity

 

 

 

911,599

 

 

936,379

 

 

942,197

 

 

929,998

 

 

925,202

          Total liabilities and stockholders' equity

 

 

$

7,398,325

 

$

7,364,156

 

$

7,449,109

 

$

7,673,339

 

$

7,710,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4: Information on Loan Portfolio and Production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands) (unaudited)

 

 

2015

 

2015

 

2014

 

2014

 

2014

Acquired loans:

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-covered loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Period-end unpaid principal balance

 

 

$

 1,382,742  

 

$

 1,457,656  

 

$

 1,553,988  

 

$

 1,660,521  

 

$

 1,804,645  

      Period-end carrying amount, gross

 

 

 

 1,346,277  

 

 

 1,410,558  

 

 

 1,491,806  

 

 

 1,577,545  

 

 

 1,676,677  

      Average carrying amount

 

 

 

 1,353,690  

 

 

 1,444,936  

 

 

 1,516,571  

 

 

 1,636,983  

 

 

 1,720,553  

   Accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Period-end unpaid principal balance

 

 

 

 193,630  

 

 

 215,173  

 

 

 241,569  

 

 

 280,389  

 

 

 318,970  

      Period-end carrying amount

 

 

 

 192,524  

 

 

 214,622  

 

 

 242,801  

 

 

 285,076  

 

 

 326,602  

      Average carrying amount

 

 

 

 231,732  

 

 

 242,108  

 

 

 271,029  

 

 

 298,262  

 

 

 340,940  

Covered loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Period-end unpaid principal balance

 

 

 

 469,077  

 

 

 540,717  

 

 

 607,893  

 

 

 648,995  

 

 

 707,120  

      Period-end carrying amount, net

 

 

 

 222,034  

 

 

 257,807  

 

 

 298,911  

 

 

 311,693  

 

 

 334,344  

      Average carrying amount

 

 

 

 235,376  

 

 

 274,731  

 

 

 303,012  

 

 

 331,778  

 

 

 343,351  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Period-end unpaid principal balance

 

 

 

 2,045,449  

 

 

 2,213,546  

 

 

 2,403,450  

 

 

 2,589,905  

 

 

 2,830,735  

      Period-end  carrying amount

 

 

 

 1,760,835  

 

 

 1,882,987  

 

 

 2,033,518  

 

 

 2,174,314  

 

 

 2,337,623  

      Average carrying amount

 

 

 

 1,820,798  

 

 

 1,961,774  

 

 

 2,090,612  

 

 

 2,267,023  

 

 

 2,404,844  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-acquired loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Period-end unpaid principal balance

 

 

 

 2,989,789  

 

 

 2,937,819  

 

 

 2,863,277  

 

 

 2,749,421  

 

 

 2,659,198  

      Period-end  carrying amount

 

 

 

 2,956,864  

 

 

 2,910,070  

 

 

 2,843,824  

 

 

 2,727,115  

 

 

 2,640,749  

      Average carrying amount

 

 

 

 2,927,347  

 

 

 2,832,658  

 

 

 2,765,531  

 

 

 2,672,872  

 

 

 2,614,537  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Period-end unpaid principal balance

 

 

$

 5,035,238  

 

$

 5,151,365  

 

$

 5,266,727  

 

$

 5,339,326  

 

$

 5,489,933  

      Period-end carrying amount

 

 

 

 4,717,699  

 

 

 4,793,057  

 

 

 4,877,342  

 

 

 4,901,429  

 

 

 4,978,372  

      Average carrying amount

 

 

 

 4,748,145  

 

 

 4,794,432  

 

 

 4,856,143  

 

 

 4,939,895  

 

 

 5,019,381  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

2015

 

2014

 

2014

 

2014

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Quarterly loan production

(22)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage

 

 

$

 64,826  

 

$

 61,717  

 

$

 57,226  

 

$

 55,299  

 

$

 51,999  

    Commercial

 

 

 

 120,500  

 

 

 85,664  

 

 

 83,430  

 

 

 90,067  

 

 

 45,432  

    Consumer

 

 

 

 39,837  

 

 

 26,161  

 

 

 28,902  

 

 

 28,689  

 

 

 34,530  

    Auto and Leasing

 

 

 

 61,545  

 

 

 65,907  

 

 

 69,335  

 

 

 68,519  

 

 

 89,630  

        Total

 

 

$

 286,708  

 

$

 239,449  

 

$

 238,893  

 

$

 242,574  

 

$

 221,591  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 5: Average Balances, Net Interest Income and Net Interest Margin

 

 

 

 

 

2015 Q2

 

2015 Q1

 

2014 Q4

 

2014 Q3

 

2014 Q2

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

(Dollars in thousands) (unaudited)

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash equivalents and securities purchased under agreements to resell

 

 

$

483,507

 

$

322

 

0.27

%

 

$

564,237

 

$

323

 

0.23

%

 

$

551,238

 

$

360

 

0.26

%

 

$

593,391

 

$

316

 

0.21

%

 

$

559,230

 

$

351

 

0.25

%

 

    Investment securities

 

 

 

1,476,867

 

 

8,587

 

2.33

%

 

 

1,344,617

 

 

9,195

 

2.77

%

 

 

1,410,389

 

 

10,191

 

2.87

%

 

 

1,390,124

 

 

11,437

 

3.26

%

 

 

1,393,523

 

 

12,606

 

3.63

%

 

    Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Non-acquired loans

 

 

 

2,927,347

 

 

44,239

 

6.06

%

 

 

2,832,658

 

 

46,284

 

6.63

%

 

 

2,765,531

 

 

45,925

 

6.59

%

 

 

2,672,872

 

 

44,706

 

6.64

%

 

 

2,614,537

 

 

43,083

 

6.61

%

 

          Acquired loans accounted for under ASC 310-30

 

 

 

1,353,690

 

 

28,003

 

8.30

%

 

 

1,444,936

 

 

31,470

 

8.83

%

 

 

1,516,571

 

 

35,213

 

9.21

%

 

 

1,636,983

 

 

38,340

 

9.29

%

 

 

1,720,553

 

 

39,714

 

9.26

%

 

          Acquired loans accounted for under ASC 310-20

 

 

 

231,732

 

 

5,504

 

9.53

%

 

 

242,108

 

 

4,225

 

7.08

%

 

 

271,029

 

 

4,477

 

6.55

%

 

 

298,262

 

 

4,616

 

6.14

%

 

 

340,940

 

 

5,267

 

6.20

%

 

       Loans not covered under shared-loss agreements with the FDIC

 

 

 

4,512,769

 

 

77,746

 

6.91

%

 

 

4,519,702

 

 

81,979

 

7.36

%

 

 

4,553,131

 

 

85,615

 

7.46

%

 

 

4,608,117

 

 

87,662

 

7.55

%

 

 

4,676,030

 

 

88,064

 

7.55

%

 

       Loans covered under shared-loss agreements with the FDIC

 

 

 

235,376

 

 

12,758

 

21.74

%

 

 

274,731

 

 

15,504

 

22.89

%

 

 

303,012

 

 

19,816

 

25.95

%

 

 

331,778

 

 

20,886

 

24.98

%

 

 

343,351

 

 

24,879

 

29.06

%

 

            Total loans

 

 

 

4,748,145

 

 

90,504

 

7.65

%

 

 

4,794,432

 

 

97,483

 

8.25

%

 

 

4,856,143

 

 

105,431

 

8.61

%

 

 

4,939,895

 

 

108,548

 

8.72

%

 

 

5,019,381

 

 

112,943

 

9.03

%

 

Total interest-earning assets

 

 

$

6,708,519

 

$

99,413

 

5.94

%

 

$

6,703,286

 

$

107,001

 

6.47

%

 

$

6,817,770

 

$

115,982

 

6.75

%

 

$

6,923,410

 

$

120,301

 

6.89

%

 

$

6,972,134

 

$

125,900

 

7.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        NOW accounts

 

 

$

1,144,931

 

$

1,073

 

0.38

%

 

$

1,260,952

 

$

1,281

 

0.41

%

 

$

1,353,334

 

$

1,652

 

0.48

%

 

$

1,413,776

 

$

1,817

 

0.51

%

 

$

1,443,824

 

$

2,208

 

0.61

%

 

        Savings accounts

 

 

 

1,300,001

 

 

1,662

 

0.51

%

 

 

1,314,360

 

 

1,734

 

0.54

%

 

 

1,224,708

 

 

1,829

 

0.59

%

 

 

1,154,712

 

 

1,780

 

0.61

%

 

 

1,168,911

 

 

2,192

 

0.75

%

 

        Time deposits

 

 

 

969,818

 

 

2,624

 

1.09

%

 

 

990,091

 

 

2,976

 

1.22

%

 

 

1,052,552

 

 

3,426

 

1.29

%

 

 

1,128,333

 

 

3,769

 

1.33

%

 

 

1,192,447

 

 

3,972

 

1.34

%

 

        Brokered deposits

 

 

 

571,950

 

 

1,085

 

0.76

%

 

 

602,189

 

 

1,166

 

0.79

%

 

 

631,135

 

 

1,331

 

0.84

%

 

 

700,256

 

 

1,400

 

0.79

%

 

 

709,374

 

 

1,468

 

0.83

%

 

 

 

 

 

3,986,700

 

 

6,444

 

0.65

%

 

 

4,167,592

 

 

7,157

 

0.70

%

 

 

4,261,729

 

 

8,238

 

0.77

%

 

 

4,397,077

 

 

8,766

 

0.79

%

 

 

4,514,556

 

 

9,840

 

0.87

%

 

        Fair value premium amortization and core deposit intangible amortization

 

 

 

-

 

 

160

 

-

 

 

 

-

 

 

(53)

 

-

 

 

 

-

 

 

(88)

 

-

 

 

 

-

 

 

(1,105)

 

-

 

 

 

-

 

 

(675)

 

-

 

 

            Total deposits

 

 

 

3,986,700

 

 

6,604

 

0.66

%

 

 

4,167,592

 

 

7,104

 

0.69

%

 

 

4,261,729

 

 

8,150

 

0.76

%

 

 

4,397,077

 

 

7,661

 

0.69

%

 

 

4,514,556

 

 

9,165

 

0.81

%

 

    Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Securities sold under agreements to repurchase

 

 

 

1,020,077

 

 

7,394

 

2.91

%

 

 

939,377

 

 

7,164

 

3.09

%

 

 

990,932

 

 

7,415

 

2.97

%

 

 

1,010,000

 

 

7,453

 

2.93

%

 

 

1,010,000

 

 

7,372

 

2.93

%

 

        Advances from FHLB and other borrowings

 

 

 

344,088

 

 

2,248

 

2.62

%

 

 

337,292

 

 

2,235

 

2.69

%

 

 

338,815

 

 

2,287

 

2.68

%

 

 

346,977

 

 

2,314

 

2.65

%

 

 

360,130

 

 

2,289

 

2.55

%

 

        Subordinated capital notes

 

 

 

101,938

 

 

875

 

3.44

%

 

 

101,675

 

 

863

 

3.44

%

 

 

101,329

 

 

1,002

 

3.92

%

 

 

100,931

 

 

1,002

 

3.94

%

 

 

100,539

 

 

996

 

3.97

%

 

            Total borrowings

 

 

 

1,466,103

 

 

10,517

 

2.88

%

 

 

1,378,344

 

 

10,262

 

3.02

%

 

 

1,431,076

 

 

10,704

 

2.97

%

 

 

1,457,908

 

 

10,769

 

2.93

%

 

 

1,470,669

 

 

10,657

 

2.91

%

 

Total interest-bearing liabilities

 

 

$

5,452,803

 

$

17,121

 

1.26

%

 

$

5,545,936

 

$

17,366

 

1.27

%

 

$

5,692,805

 

$

18,854

 

1.31

%

 

$

5,854,985

 

$

18,430

 

1.25

%

 

$

5,985,225

 

$

19,822

 

1.33

%

 

Interest rate spread

 

 

 

 

 

$

82,292

 

4.68

%

 

 

 

 

$

89,635

 

5.20

%

 

 

 

 

$

97,128

 

5.44

%

 

 

 

 

$

101,871

 

5.64

%

 

 

 

 

$

106,078

 

5.91

%

 

Net interest margin

 

 

 

 

 

 

 

 

4.92

%

 

 

 

 

 

 

 

5.42

%

 

 

 

 

 

 

 

5.65

%

 

 

 

 

 

 

 

5.84

%

 

 

 

 

 

 

 

6.10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 5: Average Balances, Net Interest Income and Net Interest Margin (Continued)

 

 

 

 

2015 YTD

 

2014 YTD

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

(Dollars in thousands) (unaudited)

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash equivalents and securities purchased under agreements to resell

 

 

$

523,649

 

$

645

 

0.25

%

 

$

574,509

 

$

635

 

0.22

%

 

    Investment securities

 

 

 

1,411,108

 

 

17,783

 

2.54

%

 

 

1,505,649

 

 

26,766

 

3.58

%

 

    Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Non-acquired loans

 

 

 

2,880,264

 

 

90,522

 

6.34

%

 

 

2,518,566

 

 

82,015

 

6.57

%

 

          Acquired loans accounted for under ASC 310-30

 

 

 

1,392,255

 

 

59,473

 

8.61

%

 

 

1,762,810

 

 

79,984

 

9.15

%

 

          Acquired loans accounted for under ASC 310-20

 

 

 

278,918

 

 

9,729

 

7.03

%

 

 

382,621

 

 

11,308

 

5.96

%

 

        Loans not covered under shared-loss agreements with the FDIC

 

 

 

4,551,437

 

 

159,724

 

7.08

%

 

 

4,663,997

 

 

173,307

 

7.49

%

 

        Loans covered under shared-loss agreements with the FDIC

 

 

 

255,053

 

 

28,262

 

22.35

%

 

 

349,407

 

 

48,267

 

27.86

%

 

            Total loans

 

 

 

4,806,490

 

 

187,986

 

7.89

%

 

 

5,013,404

 

 

221,574

 

8.91

%

 

Total interest-earning assets

 

 

$

6,741,247

 

$

206,414

 

6.17

%

 

$

7,093,562

 

$

248,975

 

7.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        NOW accounts

 

 

$

1,202,621

 

$

2,354

 

0.39

%

 

$

1,451,547

 

$

4,531

 

0.63

%

 

        Savings accounts

 

 

 

1,307,141

 

 

3,396

 

0.52

%

 

 

1,148,918

 

 

4,488

 

0.79

%

 

        Time deposits

 

 

 

979,898

 

 

5,600

 

1.15

%

 

 

1,242,617

 

 

8,378

 

1.36

%

 

        Brokered deposits

 

 

 

586,986

 

 

2,251

 

0.77

%

 

 

730,349

 

 

2,984

 

0.82

%

 

 

 

 

 

4,076,646

 

 

13,601

 

0.67

%

 

 

4,573,431

 

 

20,381

 

0.90

%

 

        Fair value premium amortization and core deposit intangible amortization

 

 

 

-

 

 

107

 

-

 

 

 

-

 

 

(2,238)

 

-

 

 

            Total deposits

 

 

 

4,076,646

 

 

13,708

 

0.68

%

 

 

4,573,431

 

 

18,143

 

0.80

%

 

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        Securities sold under agreements to repurchase

 

 

 

979,950

 

 

14,558

 

3.00

%

 

 

1,082,968

 

 

14,784

 

2.75

%

 

        Advances from FHLB and other borrowings

 

 

 

340,709

 

 

4,483

 

2.65

%

 

 

367,953

 

 

4,583

 

2.51

%

 

        Subordinated capital notes

 

 

 

101,808

 

 

1,738

 

3.44

%

 

 

100,357

 

 

1,988

 

3.99

%

 

            Total borrowings

 

 

 

1,422,467

 

 

20,779

 

2.95

%

 

 

1,551,278

 

 

21,355

 

2.78

%

 

Total interest-bearing liabilities

 

 

$

5,499,113

 

$

34,487

 

1.26

%

 

$

6,124,709

 

$

39,498

 

1.30

%

 

Interest rate spread

 

 

 

 

 

$

171,927

 

4.91

%

 

 

 

 

$

209,477

 

5.78

%

 

Net interest margin

 

 

 

 

 

 

 

 

5.14

%

 

 

 

 

 

 

 

5.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (1)

 

 

 

 

 

 

2015

 

2015

 

2014

 

2014

 

2014

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Net Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

$

1,356

 

$

1,414

 

$

1,245

 

$

1,563

 

$

987

  Recoveries

 

 

 

(67)

 

 

-

 

 

(54)

 

 

(138)

 

 

(88)

      Total mortgage

 

 

 

1,289

 

 

1,414

 

 

1,191

 

 

1,425

 

 

899

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

497

 

 

992

 

 

381

 

 

1,081

 

 

543

  Recoveries

 

 

 

(219)

 

 

(89)

 

 

(64)

 

 

(56)

 

 

(115)

      Total commercial

 

 

 

278

 

 

903

 

 

317

 

 

1,025

 

 

428

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

2,309

 

 

1,676

 

 

1,962

 

 

1,585

 

 

1,397

  Recoveries

 

 

 

(390)

 

 

(153)

 

 

(113)

 

 

(66)

 

 

(244)

      Total consumer

 

 

 

1,919

 

 

1,523

 

 

1,849

 

 

1,519

 

 

1,153

Auto and Leasing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Charge-offs

 

 

 

7,662

 

 

8,136

 

 

8,047

 

 

7,393

 

 

5,956

  Recoveries

 

 

 

(3,425)

 

 

(3,384)

 

 

(2,764)

 

 

(2,434)

 

 

(2,136)

      Total auto and leasing

 

 

 

4,237

 

 

4,752

 

 

5,283

 

 

4,959

 

 

3,820

          Total

 

 

$

7,723

 

$

8,592

 

$

8,640

 

$

8,928

 

$

6,300

Net Charge-off Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

0.66%

 

 

0.72%

 

 

0.61%

 

 

0.72%

 

 

0.46%

Commercial

 

 

 

0.08%

 

 

0.28%

 

 

0.10%

 

 

0.34%

 

 

0.14%

Consumer

 

 

 

3.99%

 

 

3.36%

 

 

4.23%

 

 

3.77%

 

 

3.13%

Auto and Leasing

 

 

 

2.74%

 

 

3.20%

 

 

3.73%

 

 

3.73%

 

 

3.15%

          Total

 

 

 

1.06%

 

 

1.21%

 

 

1.25%

 

 

1.34%

 

 

0.96%

Period-end Loans Held For Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

$

750,226

 

$

752,087

 

$

749,511

 

$

751,040

 

$

749,676

    GNMA's buy-back option program

(32)

 

 

6,961

 

 

37,458

 

 

42,243

 

 

40,066

 

 

38,329

        Total mortgage

 

 

 

757,187

 

 

789,545

 

 

791,754

 

 

791,106

 

 

788,005

Commercial

 

 

 

1,363,851

 

 

1,324,904

 

 

1,289,730

 

 

1,217,235

 

 

1,183,172

Consumer

 

 

 

212,628

 

 

193,658

 

 

186,759

 

 

175,882

 

 

161,538

Auto and Leasing

 

 

 

623,198

 

 

601,963

 

 

575,581

 

 

542,892

 

 

508,034

        Total

 

 

$

2,956,864

 

$

2,910,070

 

$

2,843,824

 

$

2,727,115

 

$

2,640,749

Average Loans Held For Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

782,753

 

$

787,330

 

$

787,121

 

$

789,204

 

$

773,425

Commercial

 

 

 

1,333,276

 

 

1,269,104

 

 

1,236,976

 

 

1,190,607

 

 

1,209,346

Consumer

 

 

 

192,572

 

 

181,464

 

 

175,049

 

 

161,147

 

 

147,230

Auto and Leasing

 

 

 

618,746

 

 

594,760

 

 

566,385

 

 

531,914

 

 

484,536

        Total

 

 

$

2,927,347

 

$

2,832,658

 

$

2,765,531

 

$

2,672,872

 

$

2,614,537

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (Continued) (1)

 

 

 

2015

 

2015

 

2014

 

2014

 

2014

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Early Delinquency (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

68,515

 

$

63,060

 

$

68,671

 

$

76,236

 

$

70,453

Commercial

 

 

 

5,532

 

 

4,453

 

 

2,814

 

 

2,776

 

 

4,258

Consumer

 

 

 

3,089

 

 

3,957

 

 

3,525

 

 

3,287

 

 

2,797

Auto and Leasing

 

 

 

66,044

 

 

64,287

 

 

64,574

 

 

59,493

 

 

50,667

        Total

 

 

$

143,180

 

$

135,757

 

$

139,584

 

$

141,792

 

$

128,175

Early Delinquency Rates (30 - 89 days past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

9.05%

 

 

7.99%

 

 

8.67%

 

 

9.64%

 

 

8.94%

Commercial

 

 

 

0.41%

 

 

0.34%

 

 

0.22%

 

 

0.23%

 

 

0.36%

Consumer

 

 

 

1.45%

 

 

2.04%

 

 

1.89%

 

 

1.87%

 

 

1.73%

Auto and Leasing

 

 

 

10.60%

 

 

10.68%

 

 

11.22%

 

 

10.96%

 

 

9.97%

        Total

 

 

 

4.84%

 

 

4.67%

 

 

4.91%

 

 

5.20%

 

 

4.85%

Total Delinquency (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

$

127,609

 

$

122,597

 

$

124,559

 

$

128,556

 

$

115,180

    GNMA's buy-back option program

(32)

 

 

6,961

 

 

37,458

 

 

42,243

 

 

40,066

 

 

38,329

        Total mortgage

 

 

 

134,570

 

 

160,055

 

 

166,802

 

 

168,622

 

 

153,509

Commercial

 

 

 

16,062

 

 

13,518

 

 

12,164

 

 

12,109

 

 

12,437

Consumer

 

 

 

4,244

 

 

5,207

 

 

4,689

 

 

4,365

 

 

3,923

Auto and Leasing

 

 

 

73,464

 

 

71,482

 

 

71,994

 

 

67,772

 

 

57,620

        Total

 

 

$

228,340

 

$

250,262

 

$

255,649

 

$

252,868

 

$

227,489

Total Delinquency Rates (30 days and over past due)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Traditional, Non traditional, and Loans under Loss Mitigation

 

 

 

16.85%

 

 

15.53%

 

 

15.73%

 

 

16.25%

 

 

14.62%

    GNMA's buy-back option program

(32)

 

 

0.92%

 

 

4.74%

 

 

5.34%

 

 

5.06%

 

 

4.86%

        Total mortgage

 

 

 

17.77%

 

 

20.27%

 

 

21.07%

 

 

21.31%

 

 

19.48%

Commercial

 

 

 

1.18%

 

 

1.02%

 

 

0.94%

 

 

0.99%

 

 

1.05%

Consumer

 

 

 

2.00%

 

 

2.69%

 

 

2.51%

 

 

2.48%

 

 

2.43%

Auto and Leasing

 

 

 

11.79%

 

 

11.87%

 

 

12.51%

 

 

12.48%

 

 

11.34%

        Total

 

 

 

7.72%

 

 

8.60%

 

 

8.99%

 

 

9.27%

 

 

8.61%

Nonperforming Assets

(23)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

$

74,528

 

$

76,662

 

$

72,815

 

$

67,028

 

$

57,314

Commercial

 

 

 

224,014

 

 

222,820

 

 

21,679

 

 

22,290

 

 

23,506

Consumer

 

 

 

1,512

 

 

1,605

 

 

1,590

 

 

1,241

 

 

1,454

Auto and Leasing

 

 

 

8,587

 

 

8,482

 

 

8,668

 

 

9,008

 

 

7,300

        Total nonperforming loans

 

 

 

308,641

 

 

309,569

 

 

104,752

 

 

99,567

 

 

89,574

Foreclosed real estate

 

 

 

9,956

 

 

10,697

 

 

12,343

 

 

13,608

 

 

13,920

Other repossessed assets

 

 

 

8,624

 

 

10,332

 

 

11,107

 

 

9,914

 

 

7,317

        Total nonperforming assets

 

 

$

327,221

 

$

330,598

 

$

128,202

 

$

123,089

 

$

110,811

Nonperforming Loan Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage

 

 

 

9.84%

 

 

9.71%

 

 

9.20%

 

 

8.47%

 

 

7.27%

Commercial

 

 

 

16.43%

 

 

16.82%

 

 

1.68%

 

 

1.83%

 

 

1.99%

Consumer

 

 

 

0.71%

 

 

0.83%

 

 

0.85%

 

 

0.71%

 

 

0.90%

Auto and Leasing

 

 

 

1.38%

 

 

1.41%

 

 

1.51%

 

 

1.66%

 

 

1.44%

        Total loans

 

 

 

10.44%

 

 

10.64%

 

 

3.68%

 

 

3.65%

 

 

3.39%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7: Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30, 2015

 

 

 

 

 

 

 

 

 

Auto and

 

 

 

 

(Dollars in thousands) (unaudited)

 

 

Mortgage

 

Commercial

 

Consumer

 

Leasing

 

Unallocated

 

Total

Non-covered loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

18,086

 

$

33,123

 

$

9,405

 

$

15,762

 

$

383

 

$

76,759

(Recapture) provision for loan and lease losses

 

 

 

1,279

 

 

1,934

 

 

2,978

 

 

3,539

 

 

223

 

 

9,953

Charge-offs

 

 

 

(1,356)

 

 

(497)

 

 

(2,309)

 

 

(7,662)

 

 

-

 

 

(11,824)

Recoveries

 

 

 

67

 

 

219

 

 

390

 

 

3,425

 

 

-

 

 

4,101

    Balance at end of period

 

 

$

18,076

 

$

34,779

 

$

10,464

 

$

15,064

 

$

606

 

$

78,989

Allowance coverage ratio

 

 

 

2.39%

 

$

2.55%

 

$

4.92%

 

$

2.42%

 

$

0.02%

 

$

2.67%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

473

 

$

13,687

 

$

6

 

$

-

 

$

-

 

$

14,166

Provision for loan and lease losses, net

 

 

 

-

 

 

1,253

 

 

78

 

 

2,862

 

 

-

 

 

4,193

    Balance at end of period

 

 

 

473

 

$

14,940

 

$

84

 

$

2,862

 

$

-

 

$

18,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans accounted for under ASC 310-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

 

 

 

$

49

 

$

1,885

 

$

3,516

 

$

-

 

$

5,450

(Recapture) provision for loan and lease losses

 

 

 

 

 

 

14

 

 

1,605

 

 

(121)

 

 

-

 

 

1,498

Charge-offs

 

 

 

 

 

 

(16)

 

 

(1,303)

 

 

(1,038)

 

 

-

 

 

(2,357)

Recoveries

 

 

 

 

 

 

7

 

 

429

 

 

502

 

 

-

 

 

938

    Balance at end of period

 

 

 

 

 

$

54

 

$

2,616

 

$

2,859

 

$

-

 

$

5,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-covered loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

18,559

 

$

46,859

 

$

11,296

 

$

19,278

 

$

383

 

$

96,375

(Recapture) provision for loan and lease losses

 

 

 

1,279

 

 

3,201

 

 

4,661

 

 

6,280

 

 

223

 

 

15,644

Charge-offs

 

 

 

(1,356)

 

 

(513)

 

 

(3,612)

 

 

(8,700)

 

 

-

 

 

(14,181)

Recoveries

 

 

 

67

 

 

226

 

 

819

 

 

3,927

 

 

-

 

 

5,039

    Balance at end of period

 

 

$

18,549

 

$

49,773

 

$

13,164

 

$

20,785

 

$

606

 

$

102,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covered loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

17,340

 

$

52,922

 

$

389

 

$

-

 

$

-

 

$

70,651

Provision for loan and lease losses, net

 

 

 

148

 

 

(253)

 

 

-

 

 

-

 

 

-

 

 

(105)

FDIC shared-loss portion of provision for covered loan and lease losses, net

 

 

 

105

 

 

801

 

 

-

 

 

-

 

 

-

 

 

906

    Balance at end of period

 

 

$

17,593

 

$

53,470

 

$

389

 

$

-

 

$

-

 

$

71,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8: Accretable Yield on Loans Accounted for Under ASC 310-30

 

 

 

Quarter Ended June 30, 2015

(Dollars in thousands) (unaudited)

 

 

Mortgage

 

Commercial

 

Construction

 

Auto

 

Consumer

 

Total

Accretable Yield and Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Covered Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretable Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

284,612

 

$

57,330

 

$

19,390

 

$

47,097

 

$

5,601

 

$

414,030

Accretion

 

 

 

(8,813)

 

 

(9,597)

 

 

(2,143)

 

 

(6,163)

 

 

(1,287)

 

 

(28,003)

Transfers (to) from non-accretable discount

 

 

 

81

 

 

23,830

 

 

7,366

 

 

(9,403)

 

 

4,147

 

 

26,021

    Balance at end of period

 

 

$

275,880

 

$

71,563

 

$

24,613

 

$

31,531

 

$

8,461

 

$

412,048

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

392,609

 

$

15,826

 

$

3,957

 

$

14,543

 

$

23,576

 

$

450,511

Change in actual and expected losses

 

 

 

(3,421)

 

 

18,774

 

 

10,403

 

 

(256)

 

 

(73)

 

 

25,427

Transfers from (to) accretable yield

 

 

 

(81)

 

 

(23,830)

 

 

(7,366)

 

 

9,403

 

 

(4,147)

 

 

(26,021)

    Balance at end of period

 

 

$

389,107

 

$

10,770

 

$

6,994

 

$

23,690

 

$

19,356

 

$

449,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction &

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Development

 

 

 

 

 

 

 

 

 

 

 

 

Loans Secured

 

 

 

 

Secured by

 

 

 

 

 

 

 

 

 

 

 

 

by 1-4 Family

 

Commercial

 

1-4 Family

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

and Other

 

Residential

 

 

 

 

 

 

 

 

 

 

 

 

Properties

 

Construction

 

Properties

 

Leasing

 

Consumer

 

Total

Covered Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretable Yield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

58,332

 

$

33,481

 

$

20,806

 

$

1,665

 

$

2,004

 

$

116,288

Accretion

 

 

 

(3,276)

 

 

(8,047)

 

 

(405)

 

 

(937)

 

 

(93)

 

 

(12,758)

Transfers from (to) non-accretable discount

 

 

 

750

 

 

2,039

 

 

(2,052)

 

 

375

 

 

(1)

 

 

1,111

    Balance at end of period

 

 

$

55,806

 

$

27,473

 

$

18,349

 

$

1,103

 

$

1,910

 

$

104,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accretable Discount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

12,557

 

$

10,493

 

$

-

 

$

-

 

$

9,662

 

$

62,410

Change in actual and expected losses

 

 

 

(405)

 

 

(8,454)

 

 

(2,052)

 

 

375

 

 

67

 

 

(10,469)

Transfers (to) from accretable yield

 

 

 

(750)

 

 

(2,039)

 

 

2,052

 

 

(375)

 

 

1

 

 

(1,111)

    Balance at end of period

 

 

$

11,402

 

$

-

 

$

-

 

$

-

 

$

9,730

 

$

50,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures

 

In addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible common equity, tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our regulatory capital and non-GAAP capital measures. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

2015

 

2014

 

2014

 

2014

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Average Equity to Non-GAAP Average Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

 

 

$

929,867

 

$

948,302

 

$

936,218

 

$

919,804

 

$

914,395

Less:  Average noncumulative perpetual preferred stock

 

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

           Average noncumulative perpetual preferred stock issuance costs

 

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

Average total common stockholders' equity

 

 

$

763,997

 

$

782,432

 

$

770,348

 

$

753,934

 

$

748,525

Less:  Average intangible assets

 

 

 

(95,168)

 

 

(95,616)

 

 

(96,164)

 

 

(96,712)

 

 

(97,252)

Average tangible common equity

 

 

$

668,829

 

$

686,816

 

$

674,184

 

$

657,222

 

$

651,273

Stockholders' Equity to Non-GAAP Tangible Common Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

911,599

 

$

936,379

 

$

942,197

 

$

929,998

 

$

925,202

Less:  Intangible assets

 

 

 

(94,859)

 

 

(95,336)

 

 

(95,812)

 

 

(96,354)

 

 

(96,896)

           Noncumulative perpetual preferred stock

 

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

 

 

(176,000)

           Noncumulative perpetual preferred stock issuance costs

 

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

 

 

10,130

Tangible common equity

 

 

$

650,870

 

$

675,173

 

$

680,515

 

$

667,774

 

$

662,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock outstanding at end of period

 

 

 

44,368

 

 

44,665

 

 

44,614

 

 

45,060

 

 

45,023

Tangible book value

 

 

$

14.67

 

$

15.12

 

$

15.25

 

$

14.82

 

$

14.71

Total Assets to Tangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets  

 

 

$

7,398,325

 

$

7,364,156

 

$

7,449,109

 

$

7,673,339

 

$

7,710,145

Less:  Intangible assets

 

 

 

(94,859)

 

 

(95,336)

 

 

(95,812)

 

 

(96,354)

 

 

(96,896)

Tangible assets

 

 

$

7,303,466

 

$

7,268,820

 

$

7,353,297

 

$

7,576,985

 

$

7,613,249

Non-GAAP TCE Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity

 

 

$

650,870

 

$

675,173

 

$

680,515

 

$

667,774

 

$

662,436

Tangible assets

 

 

 

7,303,466

 

 

7,268,820

 

 

7,353,297

 

 

7,576,985

 

 

7,613,249

TCE ratio

 

 

 

8.91%

 

 

9.29%

 

 

9.25%

 

 

8.81%

 

 

8.70%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

OFG Bancorp (NYSE: OFG)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued)

 

 

 

 

BASEL III

 

 

 

 

 

 

 

 

 

 

 

 

Standardized

 

BASEL I

 

 

 

2015

 

2015

 

2014

 

2014

 

2014

(Dollars in thousands) (unaudited)

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

Regulatory Capital Metrics

(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

 

$

611,541

 

 

 633,297  

 

 

N/A

 

 

N/A

 

 

N/A

Tier 1 common equity capital

 

 

 

N/A

 

$

N/A

 

$

 575,655  

 

$

 581,927  

 

$

 572,954  

Tier 1 capital

 

 

 

790,936

 

 

809,652

 

 

776,525

 

 

782,797

 

 

773,824

Total risk-based capital

(25)

 

 

868,622

 

 

887,042

 

 

851,410

 

 

858,356

 

 

863,791

Risk-weighted assets

 

 

 

4,993,044

 

 

5,015,090

 

 

4,847,150

 

 

4,905,814

 

 

4,994,378

Regulatory Capital Ratios

(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

(26)

 

 

12.25%

 

 

12.63%

 

 

N/A

 

 

N/A

 

 

N/A

Tier 1 common equity ratio

 

 

 

N/A

 

 

N/A

 

 

11.88%

 

 

11.86%

 

 

11.47%

Tier 1 risk-based capital ratio

(27)

 

 

15.84%

 

 

16.14%

 

 

16.02%

 

 

15.96%

 

 

15.49%

Total risk-based capital ratio

(28)

 

 

17.40%

 

 

17.69%

 

 

17.57%

 

 

17.50%

 

 

17.30%

Leverage ratio

(29)

 

 

11.05%

 

 

11.23%

 

 

10.61%

 

 

10.51%

 

 

10.26%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach

(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

$

911,599

 

$

936,379

 

 

 

 

 

 

 

 

 

Less:  Noncumulative perpetual preferred stock

 

 

 

(176,000)

 

 

(176,000)

 

 

 

 

 

 

 

 

 

          Noncumulative perpetual preferred stock issuance costs

 

 

 

10,130

 

 

10,130

 

 

 

 

 

 

 

 

 

          Unrealized gains on available-for-sale securities, net of income tax

(30)

 

 

(18,833)

 

 

(30,215)

 

 

 

 

 

 

 

 

 

          Unrealized losses on cash flow hedges, net of income tax

(30)

 

 

4,532

 

 

5,891

 

 

 

 

 

 

 

 

 

 

 

 

 

731,428

 

 

746,185

 

 

 

 

 

 

 

 

 

Less:    Disallowed goodwill

 

 

 

(86,069)

 

 

(86,069)

 

 

 

 

 

 

 

 

 

            Disallowed other intangible assets, net

(31)

 

 

(2,145)

 

 

(2,261)

 

 

 

 

 

 

 

 

 

            Disallowed deferred tax assets, net

(31)

 

 

(31,673)

 

 

(24,558)

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

 

 

611,541

 

 

633,297

 

 

 

 

 

 

 

 

 

Plus:  Qualifying noncumulative perpetual preferred stock

 

 

 

176,000

 

 

176,000

 

 

 

 

 

 

 

 

 

            Qualifying noncumulative perpetual preferred stock issuance costs

 

 

 

(10,130)

 

 

(10,130)

 

 

 

 

 

 

 

 

 

            Subordinated capital notes

 

 

 

35,000

 

 

35,000

 

 

 

 

 

 

 

 

 

Less:  Disallowed deferred tax assets, net

 

 

 

(21,475)

 

 

(24,515)

 

 

 

 

 

 

 

 

 

Tier 1 capital

 

 

 

790,936

 

 

809,652

 

 

 

 

 

 

 

 

 

Plus:  Long-term debt qualifying as Tier 2 capital

 

 

 

13,400

 

 

13,400

 

 

 

 

 

 

 

 

 

            Qualifying allowance for loan and lease losses

 

 

 

64,286

 

 

63,990

 

 

 

 

 

 

 

 

 

Tier 2 capital

 

 

 

77,686

 

 

77,390

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

 

$

868,622

 

$

887,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

OFG Bancorp (NYSE: OFG)

 

 

 

Table 10: Notes to Financial Summary, Selected Metrics, Loans, and Consolidated Financial Statements (Tables 1 - 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

We use the term "acquired loans" to refer to loans acquired from the BBVAPR acquisition (December 18, 2012) and covered loans acquired in the Eurobank FDIC-Assisted acquisition (April 30, 2010), recorded at fair value at acquisition. The majority of these loans acquired are subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard known as ASC 310-30). Because the guidance takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with this loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. Acquired loans also include loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which at the end of the reporting period still have unamortized premium or discount. The fair value of these loans already include a credit mark for losses estimated on these loans.  The allowance for loan and lease losses for these loans consider such marks applied. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans. Loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which had fully amortized their premium or discount recorded at the date of acquisition at the end of the reporting period, are removed from the acquired loans category.

(2)

Total banking and wealth management revenues.

(3)

During Q1 2015, the Company placed its $200 million participation in a fuel purchase line of credit with the Puerto Rico Electric Power Authority (PREPA) on non-accrual status and recorded a $24.0 million provision for loan and lease losses, which is part of the overall quarterly provision for loan and lease losses.

(4)

Calculated based on net (loss) income available to common shareholders divided by average common shares outstanding for the period.

(5)

Calculated based on net (loss) income available to common shareholders plus the preferred dividends on the convertible preferred stock, divided by total average common shares outstanding and equivalents for the period as if converted.

(6)

The Board of directors increased OFG's regular quarterly dividend per common share to $0.10 per share during Q4 2014.

(7)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

(8)

Information includes all loans held for investment, including all acquired loans. Acquired loans, including those accounted for under ASC 310-30, are disclosed at carrying amount.

(9)

Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(10)

Calculated based on annualized income, net of tax, for the period divided by average total assets for the period.

(11)

Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period.  See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

(12)

Calculated based on non-interest expense for the period divided by total net interest income and total banking and financial services revenues for the period.

(13)

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

(14)

Non-GAAP ratios. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios.

(15)

During Q4 2014, the FDIC and the Company agreed to a change in the methodology for the determination of the fair value of covered assets.  The change resulted in higher claims to the FDIC and a lower amortization of the indemnification asset was required during the quarter.

(16)

During Q4 2014, the Company offered a voluntary early retirement program for qualified employees and accumulated additional compensation expenses of $3.8 million related to this program.

(17)

At June 30, 2015, amount includes a $26 million receivable from the FDIC corresponding to the Q1 2015 loss-share certification amounting to $13 million that was received during July 2015 and Q2 2015 loss-share certifications for non-single family residential mortgage loans.

(18)

At March 31, 2015, amount includes a $17 million receivable from the FDIC corresponding to the Q4 2014 loss-share certification that was received during April 2015.

(19)

At December 31, 2014, amount includes a $15 million receivable from the FDIC corresponding to the Q3 2014 loss-share certification that was received during January 2015.

(20)

During Q4 2014, the Company transferred 3,731 accounts with balances of approximately $100 million from demand deposit accounts to savings accounts.

(21)

During Q4 2014, the Company purchased 446,498 shares under the current stock repurchase program for a total of $6.5 million, at an average price of $14.65 per share. In addition, during Q2 2015, the Company purchased 303,985 shares under the current stock repurchase program for a total of $4.2 million, at an average price of $13.91 per share.

(22)

Production of new loans (excluding renewals).

(23)

Loans accounted for under ASC 310-30 (Loans acquired with deteriorated credit quality, including those by analogy), including covered loans, are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses. Therefore, they are not included as non-performing loans.

(24)

During Q1 2015, the Company implemented the New Capital Rules, which incorporates Basel III Capital Requirements. The New Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The New Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach with a more risk-sensitive approach. The New Capital Rules are effective for OFG Bancorp and Oriental Bank on January 1, 2015, subject to phase-in periods for certain of their components and other provisions. Among other matters, the New Capital Rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations.

(25)

Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.

(26)

Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets.

(27)

Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.

(28)

Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighted assets.

(29)

Leverage capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments.

(30)

The Company decided to elect the opt-out option to continue to exclude AOCI items from regulatory capital calculation.

(31)

Amounts based on transition provisions for regulatory capital deductions and adjustments of 40% for 2015.

(32)

During Q2 2015, the Company sold mortgage servicing rights on $653.5 million mortgage loans to Scotiabank PR. As a result, the delinquent GNMA's buy-back option program loans and corresponding liability decreased $30.5 million from Q1 2015.

(33)

The FDIC Indemnification Asset for projected claimable losses on non-single family residential loans loss-share period ended in June 30, 2015.

(34)

During Q2 2015, the Company had 54 more net exits from foreclosed real estate amounting to approximately $10 million than in Q1 2015. In addition, the Company had 174 less net entries in repossessed auto amounting to approximately $1.3 million compared to Q1 2015. The remaining decrease is due to a decline in value of foreclosed real estate and other repossessed properties.

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

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