OFG Bancorp
01/19/2022 | Press release | Distributed by Public on 01/19/2022 06:59
OFG Bancorp Reports 4Q21 & 2021 Results - Form 8-K
OFG Bancorp Reports 4Q21 & 2021 Results
SAN JUAN, Puerto Rico, January 19, 2022 - OFG Bancorp (NYSE: OFG), the financial holding company for Oriental Bank, reported results for the fourth quarter and year ended Dec. 31, 2021.
Summary
4Q21: EPS diluted was $0.66 compared to $0.81 in 3Q21 and $0.42 in 4Q20. 4Q21 results were impacted by the strategic decision to sell $65.5 million of past due loans, which had been partially reserved, but required $9.7 million in additional provision. Total core revenues were $141.0 million compared to $134.7 million in 3Q21 and $132.8 million in 4Q20.
2021: EPS diluted was $2.81 compared to $1.32 in 2020. Total core revenues were $536.6 million compared to $519.3 million. OFG completed the $92.0 million redemption of its outstanding preferred stock and its $50.0 million common stock repurchase plan. Tangible Book Value per share of $19.08 grew 12.4% year over year.
CEO Comment
José Rafael Fernández, Chief Executive Officer, said: "Our core business demonstrated strong momentum as we ended 2021 and enter 2022. Results for the fourth quarter and year underscore our opportunities for the future. We are extremely proud of our accomplishments in 2021 and look forward to continuing to invest in improving the customer experience and growing together with our clients and the communities we serve."
4Q21 Highlights
Net Interest Income of $104.2 million compared to $102.7 million in 3Q21 and $98.7 million in 4Q20. Compared to 3Q21, 4Q21 NII reflected level interest income from loans and cash, increased income from investment securities, and lower cost of deposits and borrowings.
Loans Held for Investment totaled $6.40 billion at 12/31/21 compared to $6.41 billion at 9/30/21 and $6.66 billion at 12/31/20. The 4Q21 net decrease of $8.3 million included a reduction of $65.5 million from the previously mentioned decision to sell past due loans.
New Loan Origination totaled $632.7 million compared to $556.2 million in 3Q21 and $485.3 million in 4Q20. 4Q21 reflected continued high levels of auto, commercial, and mortgage lending, and increased demand for consumer loans.
Total Interest Expense was $8.4 million compared to $9.4 million in 3Q21 and $14.3 million in 4Q20. 4Q21 reflected lower cost of core deposits (26 bps vs. 30 bps in 3Q21 and 53 bps in 4Q20) due to generally lower rates and CD maturities. 4Q21 also reflected lower borrowings with the early termination of $33.3 million in 2.98% FHLB advances.
Customer Deposits totaled $8.59 billion at 12/31/21 compared to $9.23 billion at 9/30/21 and $8.37 billion at 12/31/20. The $641.3 million sequential decline from 3Q21 reflected withdrawals at year-end by government-related and institutional commercial clients, partially offset by increased retail deposits.
Provision for Credit Losses of $7.2 million included $9.7 million for the previously mentioned decision to sell past due loans and $2.7 million in net reserve releases. This compares to a net benefit of $5.0 million in 3Q21 and a net expense of $14.2 million in 4Q20. 4Q21's net charge-offs of $32.5 million primarily related to the decision to sell past due loans. Total non-performing loan rate fell to 1.75% from 2.08% in 3Q21 and 2.28% in 4Q20.
Banking and Financial Service Revenues were $36.7 million compared to $32.0 million in 3Q21 and $34.0 million in 4Q20. 4Q21 reflected higher levels of banking service, mortgage banking activity, and wealth management, which included $4.3 million in annual insurance commissions.
Non-Interest Expenses were $86.5 million compared to $78.9 million in 3Q21 and $89.0 million in 4Q20. 4Q21 included increased compensation related investment in people, $2.4 million for a legal reserve and to cover operational losses, $2.0 million in technology enhancements, $1.0 million lower gains on sales of real estate owned compared to 3Q21, and costs related to higher levels of business activity.
Pre-Provision Net Revenues were $55.8 million compared to $56.3 million in 3Q21 and $44.1 million in 4Q20.
Capital: CET1 ratio was 13.77% compared to 13.52% in 3Q21 and 13.08% in 4Q20.
Conference Call, Financial Supplement & Presentation
A conference call to discuss 4Q21 results, outlook and related matters will be held today at 10:00 AM ET. Phone (800) 459-5346 or (203) 518-9544. Conference ID: OFGQ421. The call can also be accessed live on www.ofgbancorp.com with webcast replay shortly thereafter.
OFG's Financial Supplement, with full financial tables for the quarter and year ended December 31, 2021, and the 4Q21 Conference Call Presentation, can be found on the Quarterly Results page on OFG's Investor Relations website at www.ofgbancorp.com.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, management uses certain "non-GAAP financial measures" within the meaning of SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Please refer to Tables 8-1 and 8-2 in OFG's above-mentioned Financial Supplement for a reconciliation of GAAP to non-GAAP measures and calculations.
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) general business and economic conditions, including changes in interest rates; (ii) cybersecurity breaches; (iii) hurricanes, earthquakes, and other natural disasters in Puerto Rico; (iv) competition in the financial services industry; and (v) the severity, magnitude and duration of the COVID-19 pandemic, and its impact on our operations, personnel, and customers.
For a discussion of such factors and certain risks and uncertainties to which OFG is subject, please refer to OFG's annual report on Form 10-K for the year ended December 31, 2020, 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 58th year in business, OFG Bancorp is a diversified financial holding company that operates under U.S., Puerto Rico and U.S. Virgin Islands banking laws and regulations. Its three principal subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a wide range of retail and commercial banking, lending and wealth management products, services, and technology, primarily in Puerto Rico and U.S. Virgin Islands. Visit us at www.ofgbancorp.com.
# # #
Contacts
Puerto Rico & USVI: Idalis Montalvo ([email protected]) at (787) 777-2847
US: Gary Fishman ([email protected]) and Steven Anreder ([email protected]) 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 December 31, 2021 Annual Report on Form 10-K once it is filed with the Securities and Exchange Commission.
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OFG Bancorp (NYSE: OFG)
Table 1-1: Financial and Statistical Summary - Consolidated
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2021
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2021
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2021
|
2021
|
2020
|
||||||||||
| (Dollars in thousands, except per share data) (unaudited) |
Q4
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Q3
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Q2
|
Q1
|
Q4
|
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| Statement of Operations | ||||||||||||||
| Net interest income | $ | 104,204 | $ | 102,705 | $ | 102,257 | $ | 98,204 | $ | 98,738 | ||||
| Non-interest income, net (core) | (2) | 36,746 | 32,012 | 31,048 | 29,452 | 34,047 | ||||||||
| Total core revenues | 140,950 | 134,717 | 133,305 | 127,656 | 132,785 | |||||||||
| Non-interest expense | 86,490 | 78,924 | (b) | 82,676 | 77,666 | 89,039 | ||||||||
| Pre-provision net revenues | (22) | 55,809 | 56,298 | 51,772 | 50,945 | 44,123 | ||||||||
| Total provision for (recapture of) credit losses | 7,199 | (a) | (4,997) | (8,305) | 6,324 | 14,176 | ||||||||
| Net income before income taxes | 48,610 | 61,295 | 60,077 | 44,621 | 29,947 | |||||||||
| Income tax expense | 15,330 | 19,624 | 19,250 | 14,248 | 6,646 | |||||||||
| Net income available to common stockholders | 33,280 | 41,671 | 40,827 | 29,118 | 21,673 | |||||||||
| Common Share Statistics | ||||||||||||||
| Earnings per common share - basic | (3) | $ | 0.67 | $ | 0.82 | $ | 0.79 | $ | 0.57 | $ | 0.42 | |||
| Earnings per common share - diluted | (4) | $ | 0.66 | $ | 0.81 | $ | 0.78 | $ | 0.56 | $ | 0.42 | |||
| Average common shares outstanding | 49,746 | 51,063 | (c) | 51,636 | 51,397 | 51,350 | ||||||||
| Average common shares outstanding and equivalents | 50,299 | 51,516 | (c) | 52,048 | 51,752 | 51,618 | ||||||||
| Cash dividends per common share | $ | 0.12 | $ | 0.12 | (c) | $ | 0.08 | $ | 0.08 | $ | 0.07 | |||
| Book value per common share (period end) | $ | 21.54 | $ | 21.08 | $ | 20.59 | $ | 19.90 | $ | 19.54 | ||||
| Tangible book value per common share (period end) | (5) | $ | 19.08 | $ | 18.59 | $ | 18.13 | $ | 17.39 | $ | 16.97 | |||
| Balance Sheet (Average Balances) | ||||||||||||||
| Loans | (6) | $ | 6,452,128 | $ | 6,465,874 | $ | 6,598,569 | $ | 6,635,908 | $ | 6,708,284 | |||
| Interest-earning assets | 9,897,073 | 9,879,687 | 9,726,905 | 9,358,377 | 9,270,739 | |||||||||
| Total assets | 10,484,125 | 10,492,502 | 10,356,879 | 10,004,047 | 9,921,254 | |||||||||
| Core deposits | 9,084,282 | 9,103,221 | 8,963,336 | 8,535,678 | 8,451,308 | |||||||||
| Total deposits | 9,095,648 | 9,114,587 | 8,997,842 | 8,581,633 | 8,515,646 | |||||||||
| Interest-bearing deposits | 6,435,246 | 6,474,977 | 6,392,219 | 6,223,419 | 6,199,929 | |||||||||
| Borrowings | 75,970 | 98,943 | 99,950 | 100,951 | 101,930 | |||||||||
| Stockholders' equity | 1,066,764 | 1,068,618 | (c)(d) | 1,083,452 | (d) | 1,101,046 | 1,083,423 | |||||||
| Common stockholders' equity | 1,066,764 | 1,066,361 | 1,046,835 | 1,019,176 | 1,001,553 | |||||||||
| Performance Metrics | ||||||||||||||
| Net interest margin | (7) | 4.18 | % | 4.12 | % | 4.22 | % | 4.26 | % | 4.24 | % | |||
| Return on average assets | (8) | 1.27 | % | 1.59 | % | 1.58 | % | 1.21 | % | 0.94 | % | |||
| Return on average tangible common stockholders' equity | (9) | 14.11 | % | 17.72 | % | 17.78 | % | 13.11 | % | 9.99 | % | |||
| Efficiency ratio | (10) | 61.36 | % | 58.59 | % | 62.02 | % | 60.84 | % | 67.06 | % | |||
| Full-time equivalent employees, period end | 2,269 | 2,274 | 2,231 | 2,238 | 2,275 | |||||||||
| Credit Quality Metrics | (1)(21) | |||||||||||||
| Allowance for credit losses | $ | 155,937 | (a) | $ | 180,872 | $ | 191,717 | $ | 201,973 | $ | 204,809 | |||
| Allowance as a % of loans held for investment | 2.44 | % | 2.82 | % | 2.95 | % | 3.06 | % | 3.07 | % | ||||
| Net charge-offs | $ | 32,482 | (a) | $ | 6,051 | (e) | $ | 2,118 | $ | 9,105 | $ | 44,814 | (e) | |
| Net charge-off rate | (11) | 2.01 | % | (a) | 0.37 | % | (e) | 0.13 | % | 0.55 | % | 2.67 | % | (e) |
| Early delinquency rate (30 - 89 days past due) | 2.34 | % | 2.06 | % | 1.86 | % | 2.15 | % | 2.68 | % | ||||
| Total delinquency rate (30 days and over) | 3.71 | % | 3.82 | % | 3.90 | % | 4.65 | % | 5.74 | % | ||||
| Capital Ratios (period end) (Non-GAAP) | (12)(20) | |||||||||||||
| Leverage ratio | 9.63 | % | 9.33 | % | (c)(d) | 9.84 | % | (d) | 10.48 | % | 10.30 | % | ||
| Common equity Tier 1 capital ratio | 13.77 | % | 13.52 | % | (c) | 13.95 | % | 13.56 | % | 13.08 | % | |||
| Tier 1 risk-based capital ratio | 14.27 | % | 14.03 | % | (c)(d) | 14.70 | % | (d) | 15.28 | % | 14.78 | % | ||
| Total risk-based capital ratio | 15.52 | % | 15.28 | % | (c)(d) | 15.95 | % | (d) | 16.54 | % | 16.04 | % | ||
| Tangible common equity ("TCE") ratio | 9.69 | % | 8.86 | % | (c) | 9.06 | % | 8.95 | % | 9.00 | % |
(a)During 4Q 2021, the Company decided to sell $65.5 million of past due loans. The Company transferred to held for sale past due residential mortgage loans with reporting balance of $39.8 million and a PCD commercial loan with reporting balance of $20.9 million. As a result of the decision to sell loans, the Company recognized $30.1 million in net charge-offs and an additional provision of $9.7 million, decreasing the allowance for credit losses by $20.4 million.
(b)During 3Q 2021, foreclosed real estate and other repossessed assets (income) expenses benefited from a gain in real estate owned sales.
(c)During 3Q 2021, the Company repurchased $40.2 million common stock from its $50.0 million share buyback program and increased its common stock dividend to $0.12 per share. During 4Q 2021, the Company repurchased $9.7 million common stock from its $50.0 million share buyback program.
(d)During 3Q 2021, the Company redeemed Series D Preferred Stock. During 2Q 2021, the Company redeemed Series A and B Preferred Stock.
(e)During 3Q 2021, the Company charged-off $6.5 million for a previously reserved amount on a commercial loan. During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.
2
OFG Bancorp (NYSE: OFG)
Table 1-2: Financial and Statistical Summary - Consolidated (Continued)
|
2021
|
2020
|
||||
| (Dollars in thousands, except per share data) (unaudited) | YTD | YTD | |||
| Statement of Operations | |||||
| Net interest income | $ | 407,370 | $ | 408,432 | |
| Non-interest income, net (core) | (2) | 129,258 | 110,872 | (e) | |
| Total core revenues | 536,628 | 519,304 | |||
| Non-interest expense | 325,756 | 345,286 | |||
| Pre-provision net revenues | (22) | 214,824 | 187,498 | ||
| Total (recapture of) provision for credit losses | 221 | (a) | 92,672 | (e) | |
| Net income before income taxes | 214,603 | 94,826 | |||
| Income tax expense | 68,452 | 20,499 | |||
| Net income available to common stockholders | 144,896 | 67,815 | |||
| Common Share Statistics | |||||
| Earnings per common share - basic | (3) | $ | 2.85 | $ | 1.32 |
| Earnings per common share - diluted | (4) | $ | 2.81 | $ | 1.32 |
| Average common shares outstanding | 50,956 | (b)(c) | 51,358 | ||
| Average common shares outstanding and equivalents | 51,370 | (b)(c) | 51,555 | ||
| Cash dividends per common share | $ | 0.40 | (d) | $ | 0.28 |
| Book value per common share (period end) | $ | 21.54 | $ | 19.54 | |
| Tangible book value per common share (period end) | (5) | $ | 19.08 | $ | 16.97 |
| Balance Sheet (Average Balances) | |||||
| Loans | (6) | $ | 6,537,488 | $ | 6,748,510 |
| Interest-earning assets | 9,717,506 | 8,966,989 | |||
| Total assets | 10,336,137 | 9,670,969 | |||
| Core deposits | 8,923,563 | 8,051,208 | |||
| Total deposits | 8,949,227 | 8,219,936 | |||
| Interest-bearing deposits | 6,382,303 | 6,150,150 | |||
| Borrowings | 93,899 | 158,271 | |||
| Stockholders' equity | 1,079,845 | 1,056,729 | |||
| Common stockholders' equity | 1,049,960 | 974,859 | |||
| Performance Metrics | |||||
| Net interest margin | (7) | 4.19 | % | 4.55 | % |
| Return on average assets | (8) | 1.41 | % | 0.77 | % |
| Return on average tangible common stockholders' equity | (9) | 15.70 | % | 8.10 | % |
| Efficiency ratio | (10) | 60.70 | % | 66.49 | % |
| Full-time equivalent employees, period end | 2,269 | 2,275 | |||
| Credit Quality Metrics | (1)(21) | ||||
| Allowance for credit losses | $ | 155,937 | $ | 204,809 | |
| Allowance as a % of loans held for investment | 2.44 | % | 3.07 | % | |
| Net charge-offs | $ | 49,756 | $ | 95,168 | |
| Net charge-off rate | (11) | 0.76 | % | 1.41 | % |
| Early delinquency rate (30 - 89 days past due) | 2.34 | % | 2.68 | % | |
| Total delinquency rate (30 days and over) | 3.71 | % | 5.74 | % |
(a)During 2021 asset quality trends improved consistently compared to prior year.
(b)During 2021, the Company repurchased $49.9 million common stock from of its $50.0 million share buyback program.
(c)During 2021, the Company redeemed all of its outstanding Series A, Series B and Series D Preferred Stock.
(d)During 3Q 2021, the Company increased its common stock quarterly dividend to $0.12 per share, from $0.08 in 2Q 2021 and 1Q 2021, and $0.07 in 2020.
(e)During 2020, the Company increased its provision for credit losses by $39.1 million, as a result of the Covid-19 pandemic. Core revenues were also negatively impacted by the pandemic as a result of lockdown measures by the local Government.
3
OFG Bancorp (NYSE: OFG)
Table 2-1: Consolidated Statements of Operations
| Quarter Ended | |||||||||||
| (Dollars in thousands, except per share data) (unaudited) | December 31, 2021 | September 30, 2021 |
June 30, 2021 |
March 31, 2021 |
December 31, 2020 |
||||||
| Interest income: | |||||||||||
| Loans | (1) | ||||||||||
| Non-PCD loans | $ | 84,919 | $ | 85,032 | $ | 85,181 | $ | 82,936 | $ | 81,171 | |
| PCD loans | 22,660 | 22,905 | 24,880 | 25,275 | 29,250 | ||||||
| Total interest income from loans | 107,579 | 107,937 | 110,061 | 108,211 | 110,421 | ||||||
| Investment securities | 5,036 | 4,202 | 3,402 | 2,771 | 2,600 | ||||||
| Total interest income | 112,615 | 112,139 | 113,463 | 110,982 | 113,021 | ||||||
| Interest expense: | |||||||||||
| Deposits | |||||||||||
| Core deposits | 7,830 | 8,681 | 10,436 | 11,861 | 13,225 | ||||||
| Brokered deposits | 9 | 10 | 24 | 163 | 288 | ||||||
| Total deposits | 7,839 | 8,691 | 10,460 | 12,024 | 13,513 | ||||||
| Borrowings | 572 | 743 | 746 | 754 | 770 | ||||||
| Total interest expense | 8,411 | 9,434 | 11,206 | 12,778 | 14,283 | ||||||
| Net interest income | 104,204 | 102,705 | 102,257 | 98,204 | 98,738 | ||||||
| (Recapture of) provision for credit losses, excluding PCD loans | (1) | (461) | (2,351) | (7,726) | 2,998 | 15,464 | |||||
| Provision for (recapture of) credit losses on PCD loans | (1) | 7,660 | (2,646) | (579) | 3,326 | (1,288) | |||||
| Total provision for (recapture of) credit losses | 7,199 | (a) | (4,997) | (8,305) | 6,324 | 14,176 | |||||
| Net interest income after provision for credit losses | 97,005 | 107,702 | 110,562 | 91,880 | 84,562 | ||||||
| Non-interest income: | |||||||||||
| Banking service revenues | 18,767 | 18,198 | 18,248 | 16,493 | 16,901 | ||||||
| Wealth management revenues | 11,774 | (b) | 7,619 | 8,263 | 7,388 | 10,865 | (b) | ||||
| Mortgage banking activities | 6,205 | 6,195 | 4,537 | 5,571 | 6,281 | ||||||
| Total banking and financial service revenues | 36,746 | 32,012 | 31,048 | 29,452 | 34,047 | ||||||
| Other income, net | 1,349 | (c) | 505 | 1,143 | 955 | 377 | |||||
| Total non-interest income, net | 38,095 | 32,517 | 32,191 | 30,407 | 34,424 | ||||||
| Non-interest expense: | |||||||||||
| Compensation and employee benefits | 34,160 | 33,745 | 32,919 | 32,618 | 30,921 | ||||||
| Occupancy, equipment and infrastructure costs | 12,424 | 12,078 | 12,528 | 13,128 | 12,064 | ||||||
| General and administrative expenses | 39,920 | (d) | 34,041 | 35,370 | (f) | 30,201 | 33,454 | ||||
| Foreclosed real estate and other repossessed assets (income) expenses | (1,122) | (e) | (2,163) | (e) | 328 | (50) | 1,004 | ||||
| Merger and restructuring charges | - | - | - | - | 10,092 | (g) | |||||
| COVID 19 expenses | 1,108 | 1,223 | 1,531 | 1,769 | 1,504 | ||||||
| Total non-interest expense | 86,490 | 78,924 | 82,676 | 77,666 | 89,039 | ||||||
| Income before income taxes | 48,610 | 61,295 | 60,077 | 44,621 | 29,947 | ||||||
| Income tax expense | 15,330 | 19,624 | 19,250 | 14,248 | 6,646 | ||||||
| Net income | 33,280 | 41,671 | 40,827 | 30,373 | 23,301 | ||||||
| Less: dividends on preferred stock | - | - | - | (1,255) | (1,628) | ||||||
| Net income available to common shareholders | $ | 33,280 | $ | 41,671 | $ | 40,827 | $ | 29,118 | $ | 21,673 |
(a)During 4Q 2021, the Company decided to sell $65.5 million of past due loans. As a result of the decision to sell loans, the Company recognized $30.1 million in net charge-offs and an additional provision of $9.7 million, decreasing the allowance for credit losses by $20.4 million.
(b)During 4Q 2020 and 4Q 2021, the Company recognized annual insurance contingent commissions amounting to $4.3 million and $4.0 million, respectively.
(c)During 4Q 2021, the Company recognized $2.3 million in other income from a warrant payment, partially offset by $1.5 million loss on early extinguishment of $33.3 million FHLB advances.
(d)During 4Q 2021, the Company recognized $2.4 million for a legal reserve and to cover operational losses, $2.0 million in technology enhancements, and costs related to higher levels of business activity.
(e)During 4Q2021 and 3Q 2021, foreclosed real estate and other repossessed assets (income) expenses benefited from gain in real estate owned sales.
(f)During 2Q 2021, includes a technology project write-down amounting $2.2 million.
(g)On December 31, 2019, the Company acquired Scotiabank's operations, incurring in merger and restructuring charges of $10.1 million during 4Q 2020.
4
OFG Bancorp (NYSE: OFG)
Table 2-2: Consolidated Statements of Operations (Continued)
| (Dollars in thousands, except per share data) (unaudited) |
Year Ended
|
|||
|
December 31, 2021
|
December 31, 2020
|
|||
| Interest income: | ||||
| Loans | (1) | |||
| Non-PCD loans | $ | 338,068 | $ | 335,514 |
| PCD loans | 95,720 | 121,921 | (e) | |
| Total interest income from loans | 433,788 | 457,435 | ||
| Investment securities | 15,411 | 15,912 | ||
| Total interest income | 449,199 | 473,347 | ||
| Interest expense: | ||||
| Deposits | ||||
| Core deposits | 38,808 | (a) | 56,066 | |
| Brokered deposits | 206 | 4,132 | ||
| Total deposits | 39,014 | 60,198 | ||
| Borrowings | 2,815 | 4,717 | ||
| Total interest expense | 41,829 | 64,915 | ||
| Net interest income | 407,370 | 408,432 | ||
| (Recapture of) provision for credit losses, excluding PCD loans | (1) | (7,540) | 85,487 | |
| Provision for credit losses on PCD loans | (1) | 7,761 | 7,185 | |
| Total provision for credit losses | 221 | (b) | 92,672 | (f) |
| Net interest income after provision for credit losses | 407,149 | 315,760 | ||
| Non-interest income: | ||||
| Banking service revenues | 71,706 | 62,579 | ||
| Wealth management revenues | 35,044 | 31,789 | ||
| Mortgage banking activities | 22,508 | 16,504 | ||
| Total banking and financial service revenues | 129,258 | 110,872 | (f) | |
| Bargain purchase from Scotiabank Acquisition | - | 7,336 | (g) | |
| Other income, net | 3,952 | 6,144 | (h) | |
| Total non-interest income, net | 133,210 | 124,352 | ||
| Non-interest expense: | ||||
| Compensation and employee benefits | 133,442 | 132,926 | ||
| Occupancy, equipment and infrastructure costs | 50,158 | 47,283 | ||
| General and administrative expenses | 139,532 | 135,432 | ||
| Foreclosed real estate and other repossessed assets (income) expenses | (3,007) | (c) | 7,767 | |
| Merger and restructuring charges | - | 16,083 | (i) | |
| COVID 19 expenses | 5,631 | 5,795 | ||
| Total non-interest expense | 325,756 | 345,286 | ||
| Income before income taxes | 214,603 | 94,826 | ||
| Income tax expense | 68,452 | 20,499 | ||
| Net income | 146,151 | 74,327 | ||
| Less: dividends on preferred stock | (1,255) | (d) | (6,512) | |
| Net income available to common shareholders | $ | 144,896 | $ | 67,815 |
(a)During 2021, the Company had lower cost of core deposits, mainly from lower interest rates and time deposit maturities.
(b)During 2021, asset quality trends improved consistently, compared to prior year.
(c)During 2021, foreclosed real estate and other repossessed assets (income) expenses benefited from gain in real estate owned sales.
(d)During 2021, the Company redeemed all of its outstanding Series A, Series B, and Series D Preferred Stock.
(e)During 2020, the Company recognized interest recoveries on SOP loans acquired in the Scotiabank Acquisition collected subsequently to the acquisition date amounting to $6.5 million.
(f)During 2020, the Company increased its provision for credit losses by $39.1 million, as a result of the Covid-19 pandemic. Core revenues were also negatively impacted by the pandemic as a result of lockdown measures by the local Government.
(g)During 2020, the Company increased the Bargain purchase from Scotiabank Acquisition by $7.3 million, as part of remeasurement period adjustments.
(h)During 2020, the Company sold $316 million available for sale mortgage-backed securities and recognized a gain in the sale of $4.7 million.
(i)On December 31, 2019, the Company acquired Scotiabank's operations, incurring in merger and restructuring charges of $16.1 million during 2020.
5
OFG Bancorp (NYSE: OFG)
Table 3: Consolidated Statements of Financial Condition
| (Dollars in thousands) (unaudited) |
December 31, 2021
|
September 30, 2021
|
June 30, 2021
|
March 31, 2021
|
December 31, 2020
|
||||||
| Cash and cash equivalents | $ | 2,023,650 | $ | 2,755,691 | $ | 2,767,693 | $ | 2,409,416 | $ | 2,155,577 | |
| Investments: | |||||||||||
| Trading securities | 20 | 22 | 29 | 23 | 22 | ||||||
| Investment securities available-for-sale, at fair value, no allowance for credit losses for any period) | |||||||||||
| Mortgage-backed securities | 496,310 | 494,727 | 487,014 | 457,673 | 432,935 | ||||||
| US treasury notes | 10,825 | 10,875 | 10,910 | 10,946 | 10,983 | ||||||
| Other investment securities | 3,578 | 3,505 | 3,695 | 2,390 | 2,520 | ||||||
| Total investment securities available-for-sale | 510,713 | 509,107 | 501,619 | 471,009 | 446,438 | ||||||
| Mortgage-backed securities held-to-maturity, at amortized cost, no allowance for credit losses for any period | 367,507 | 375,214 | 125,138 | 126,767 | - | ||||||
| Federal Home Loan Bank (FHLB) stock, at cost | 5,966 | 7,496 | 7,541 | 8,233 | 8,278 | ||||||
| Other investments | 11,612 | 10,434 | 9,168 | 5,557 | 3,962 | ||||||
| Total investments | 895,818 | 902,273 | 643,495 | 611,589 | 458,700 | ||||||
| Loans, net | 6,329,311 | 6,282,485 | 6,354,040 | 6,432,079 | 6,501,259 | ||||||
| Other assets: | |||||||||||
| Prepaid expenses | 60,856 | 65,003 | 61,678 | 58,348 | 61,416 | ||||||
| Deferred tax asset, net | 99,063 | 128,663 | 144,799 | 154,540 | 162,478 | ||||||
| Foreclosed real estate and repossessed properties | 16,984 | 15,433 | 16,818 | 18,366 | 13,412 | ||||||
| Premises and equipment, net | 92,124 | 86,981 | 85,993 | 83,756 | 83,786 | ||||||
| Goodwill | 86,069 | 86,069 | 86,069 | 86,069 | 86,069 | ||||||
| Right of use assets | 28,846 | 30,625 | 32,621 | 32,714 | 31,383 | ||||||
| Core deposit, customer relationship intangible and other intangibles | 36,093 | 38,545 | 40,995 | 43,445 | 45,896 | ||||||
| Servicing asset | 48,973 | 48,227 | 47,712 | 47,911 | 47,295 | ||||||
| Accounts receivable and other assets | 181,933 | (b) | 166,870 | 179,900 | 175,109 | 178,740 | |||||
| Total assets | $ | 9,899,720 | $ | 10,606,865 | $ | 10,461,813 | $ | 10,153,342 | $ | 9,826,011 | |
| Deposits: | |||||||||||
| Demand deposits | $ | 5,204,340 | $ | 5,531,124 | $ | 5,337,691 | $ | 4,889,759 | $ | 4,619,395 | |
| Savings accounts | 2,177,780 | 2,378,211 | 2,277,296 | 2,138,125 | 1,914,239 | ||||||
| Time deposits | 1,209,627 | 1,323,688 | 1,464,134 | 1,693,924 | 1,832,891 | ||||||
| Brokered deposits | 11,371 | 11,366 | 11,371 | 34,954 | 49,115 | ||||||
| Total deposits | 8,603,118 | 9,244,389 | 9,090,492 | 8,756,762 | 8,415,640 | ||||||
| Borrowings: | |||||||||||
| Advances from FHLB and other borrowings | 28,488 | (a) | 62,934 | 63,867 | 65,013 | 66,268 | |||||
| Subordinated capital notes | 36,083 | (b) | 36,083 | 36,083 | 36,083 | 36,083 | |||||
| Total borrowings | 64,571 | 99,017 | 99,950 | 101,096 | 102,351 | ||||||
| Other liabilities: | |||||||||||
| Securities purchased but not yet received | - | 31,565 | - | - | - | ||||||
| Derivative liabilities | 804 | 1,136 | 1,293 | 1,465 | 1,712 | ||||||
| Acceptances outstanding | 35,329 | 24,371 | 27,703 | 24,389 | 33,349 | ||||||
| Lease liability | 30,498 | 32,167 | 34,052 | 34,017 | 32,566 | ||||||
| Accrued expenses and other liabilities | 96,240 | 120,555 | 128,326 | 127,190 | 154,418 | ||||||
| Total liabilities | 8,830,560 | 9,553,200 | 9,381,816 | 9,044,919 | 8,740,036 | ||||||
| Stockholders' equity: | |||||||||||
| Preferred stock | - | - | (d) | 24,000 | (d) | 92,000 | 92,000 | ||||
| Common stock | 59,885 | 59,885 | 59,885 | 59,885 | 59,885 | ||||||
| Additional paid-in capital | 637,061 | 635,808 | 626,995 | 622,935 | 622,652 | ||||||
| Legal surplus | 117,677 | 114,485 | 110,235 | 106,165 | 103,269 | ||||||
| Retained earnings | 399,949 | 375,729 | 352,001 | 322,202 | 300,096 | ||||||
| Treasury stock, at cost | (150,572) | (c) | (140,862) | (c) | (100,719) | (100,994) | (102,949) | ||||
| Accumulated other comprehensive income, net | 5,160 | 8,620 | 7,600 | 6,230 | 11,022 | ||||||
| Total stockholders' equity | 1,069,160 | 1,053,665 | 1,079,997 | 1,108,423 | 1,085,975 | ||||||
| Total liabilities and stockholders' equity | $ | 9,899,720 | $ | 10,606,865 | $ | 10,461,813 | $ | 10,153,342 | $ | 9,826,011 |
(a)During 4Q2021, the Company early terminated $33.3 million FHLB advances.
(b)On January 3, 2022, the Company early terminated $17.3 million of its subordinated capital notes. At December 31, 2021, the payment was already in process and therefore included in other assets.
(c)During 3Q 2021 and 4Q 2021, the Company repurchased $40.2 million and $9.7 million common stock, respectively, from its $50.0 million share buyback program.
(d)During 2Q 2021 and 3Q 2021, the Company redeemed Series A and B Preferred Stock, and Series D Preferred Stock, respectively.
6
OFG Bancorp (NYSE: OFG)
Table 4-1: Information on Loan Portfolio and Production
| (Dollars in thousands) (unaudited) |
December 31, 2021
|
September 30, 2021
|
June 30, 2021
|
March 31, 2021
|
December 31, 2020
|
||||||
| Non-PCD: | (1) | ||||||||||
| Mortgage | $ | 718,848 | (a) | $ | 751,389 | $ | 775,606 | $ | 814,433 | $ | 847,101 |
| Commercial | 2,088,106 | 1,954,804 | 1,903,866 | 1,827,102 | 1,836,137 | ||||||
| Commercial Paycheck Protection Program (PPP Loans) | (23) | 86,889 | 136,698 | 228,677 | 311,823 | 282,713 | |||||
| Consumer | 408,759 | 373,672 | 366,037 | 371,702 | 389,894 | ||||||
| Auto | 1,693,029 | 1,667,113 | 1,618,788 | 1,565,473 | 1,534,269 | ||||||
| 4,995,631 | 4,883,676 | 4,892,974 | 4,890,533 | 4,890,114 | |||||||
| Less: Allowance for credit losses | (132,065) | (a) | (138,874) | (148,314) | (156,978) | (161,015) | |||||
| Total non- PCD loans held for investment, net | 4,863,566 | 4,744,802 | 4,744,660 | 4,733,555 | 4,729,099 | ||||||
| PCD: | (1) | ||||||||||
| Mortgage | 1,188,423 | (a) | 1,270,854 | 1,324,274 | 1,406,044 | 1,459,932 | |||||
| Commercial | 204,335 | (a) | 239,554 | 260,627 | 272,793 | 283,160 | |||||
| Consumer | 916 | 959 | 981 | 1,120 | 1,394 | ||||||
| Auto | 13,281 | 15,820 | 19,236 | 23,036 | 27,533 | ||||||
| 1,406,955 | 1,527,187 | 1,605,118 | 1,702,993 | 1,772,019 | |||||||
| Less: Allowance for credit losses | (1) | (23,872) | (a) | (41,998) | (43,403) | (44,995) | (43,794) | ||||
| Total PCD loans held for investment, net | 1,383,083 | 1,485,189 | 1,561,715 | 1,657,998 | 1,728,225 | ||||||
| Total loans held for investment | 6,246,649 | 6,229,991 | 6,306,375 | 6,391,553 | 6,457,324 | ||||||
| Mortgage loans held for sale | 51,096 | (b) | 35,031 | 37,885 | 38,220 | 41,654 | |||||
| Other loans held for sale | 31,566 | (b) | 17,463 | 9,780 | 2,306 | 2,281 | |||||
| Total loans, net | $ | 6,329,311 | $ | 6,282,485 | $ | 6,354,040 | $ | 6,432,079 | $ | 6,501,259 | |
| Loan Portfolio Summary: | |||||||||||
| Loans held for investment: | |||||||||||
| Mortgage | $ | 1,907,271 | $ | 2,022,243 | $ | 2,099,880 | $ | 2,220,477 | $ | 2,307,033 | |
| Commercial | 2,292,441 | 2,194,358 | 2,164,493 | 2,099,895 | 2,119,297 | ||||||
| Commercial Paycheck Protection Program (PPP Loans) | (23) | 86,889 | 136,698 | 228,677 | 311,823 | 282,713 | |||||
| Consumer | 409,675 | 374,631 | 367,018 | 372,822 | 391,288 | ||||||
| Auto | 1,706,310 | 1,682,933 | 1,638,024 | 1,588,509 | 1,561,802 | ||||||
| 6,402,586 | 6,410,863 | 6,498,092 | 6,593,526 | 6,662,133 | |||||||
| Less: Allowance for credit losses | (155,937) | (a) | (180,872) | (191,717) | (201,973) | (204,809) | |||||
| Total loans held for investment, net | 6,246,649 | 6,229,991 | 6,306,375 | 6,391,553 | 6,457,324 | ||||||
| Mortgage loans held for sale | 51,096 | (b) | 35,031 | 37,885 | 38,220 | 41,654 | |||||
| Other loans held for sale | 31,566 | (b) | 17,463 | 9,780 | 2,306 | 2,281 | |||||
| Total loans, net | $ | 6,329,311 | $ | 6,282,485 | $ | 6,354,040 | $ | 6,432,079 | $ | 6,501,259 |
(a)During 4Q 2021, the Company decided to sell $65.5 million of past due loans. The Company transferred to held for sale past due residential mortgage loans with reporting balance of $39.8 million and a PCD commercial loan with reporting balance of $20.9 million. As a result of the decision to sell loans, the Company recognized $30.1 million in net charge-offs and an additional provision of $9.7 million, decreasing the allowance for credit losses by $20.4 million.
(b)At December 31, 2021, the mortgage loans transferred to held for sale referred in (a) had a reporting balance of $22.3 million and the commercial loan had a reporting balance of $9.7 million.
7
OFG Bancorp (NYSE: OFG)
Table 4-2: Information on Loan Portfolio and Production
| Quarter Ended |
Year Ended
|
||||||||||||||
| (Dollars in thousands) (unaudited) |
December 31, 2021
|
September 30, 2021
|
June 30, 2021
|
March 31, 2021
|
December 31, 2020
|
December 31, 2021
|
December 31, 2020
|
||||||||
| Loan production | (13) | ||||||||||||||
| Mortgage | 78,991 | $ | 85,535 | $ | 103,837 | $ | 95,851 | $ | 97,656 | $ | 364,214 | $ | 246,038 | ||
| Commercial | 238,356 | 154,146 | 218,425 | 83,820 | 174,894 | 694,747 | 411,153 | ||||||||
| Commercial PPP Loans | - | 16 | 32,712 | 126,266 | - | 158,994 | 296,738 | ||||||||
| Commercial US Loans | 79,264 | 100,066 | 109,522 | 44,841 | 49,221 | 333,693 | 222,935 | ||||||||
| Consumer | 80,688 | 50,630 | 38,038 | 27,492 | 25,984 | 196,848 | 102,954 | ||||||||
| Auto | 155,390 | 165,854 | 171,104 | 149,357 | 137,545 | 641,705 | 450,143 | ||||||||
| Total | $ | 632,689 | $ | 556,247 | $ | 673,638 | $ | 527,627 | $ | 485,300 | $ | 2,390,201 | $ | 1,729,961 |
8
OFG Bancorp (NYSE: OFG)
Table 5-1: Average Balances, Net Interest Income and Net Interest Margin
|
2021 Q4
|
2021 Q3
|
2021 Q2
|
2021 Q1
|
2020 Q4
|
||||||||||||||||||||||||||
| (Dollars in thousands) (unaudited) |
Average Balance |
Interest Income/ Expense |
Yield/ Rate |
Average Balance |
Interest Income/ Expense |
Yield/ Rate |
Average Balance |
Interest Income/ Expense |
Yield/ Rate |
Average Balance |
Interest Income/ Expense |
Yield/ Rate |
Average Balance |
Interest Income/ Expense |
Yield/ Rate |
|||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||||||||
| Cash equivalents | $ | 2,553,118 | $ | 944 | 0.15 | % | $ | 2,699,144 | $ | 986 | 0.14 | % | $ | 2,519,406 | $ | 706 | 0.11 | % | $ | 2,204,431 | $ | 595 | 0.11 | % | $ | 2,091,458 | $ | 613 | 0.12 | % |
| Investment securities | 891,827 | 4,092 | 1.84 | % | 714,669 | 3,216 | 1.80 | % | 608,930 | 2,696 | 1.77 | % | 518,038 | 2,176 | 1.68 | % | 470,997 | 1,986 | 1.69 | % | ||||||||||
| Loans held for investment |
(1)
|
|||||||||||||||||||||||||||||
| Non-PCD loans | 4,953,279 | 84,919 | 6.80 | % | 4,899,312 | 85,032 | 6.89 | % | 4,937,602 | 85,181 | 6.92 | % | 4,893,874 | 82,936 | 6.87 | % | 4,863,902 | 81,171 | 6.64 | % | ||||||||||
| PCD loans | 1,498,849 | 22,660 | 6.05 | % | 1,566,562 | 22,905 | 5.85 | % | 1,660,967 | 24,880 | 5.99 | % | 1,742,034 | 25,275 | 5.80 | % | 1,844,382 | 29,250 | 6.34 | % | ||||||||||
| Total loans | 6,452,128 | 107,579 | 6.62 | % | 6,465,874 | 107,937 | 6.62 | % | 6,598,569 | 110,061 | 6.69 | % | 6,635,908 | 108,211 | 6.61 | % | 6,708,284 | 110,421 | 6.55 | % | ||||||||||
| Total interest-earning assets | $ | 9,897,073 | $ | 112,615 | 4.51 | % | $ | 9,879,687 | $ | 112,139 | 4.50 | % | $ | 9,726,905 | $ | 113,463 | 4.68 | % | $ | 9,358,377 | $ | 110,982 | 4.81 | % | $ | 9,270,739 | $ | 113,020 | 4.85 | % |
| Interest bearing liabilities: | ||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||
| NOW accounts | $ | 2,792,966 | $ | 2,239 | 0.32 | % | $ | 2,754,985 | $ | 2,288 | 0.33 | % | $ | 2,542,018 | $ | 2,259 | 0.36 | % | $ | 2,397,673 | $ | 2,393 | 0.40 | % | $ | 2,344,903 | $ | 2,258 | 0.38 | % |
| Savings accounts | 2,359,959 | 1,289 | 0.22 | % | 2,330,121 | 1,639 | 0.28 | % | 2,236,281 | 2,097 | 0.38 | % | 2,003,963 | 2,124 | 0.43 | % | 1,897,618 | 1,954 | 0.41 | % | ||||||||||
| Time deposits | 1,270,955 | 2,464 | 0.77 | % | 1,378,505 | 2,916 | 0.84 | % | 1,579,414 | 4,243 | 1.07 | % | 1,775,828 | 5,507 | 1.24 | % | 1,893,070 | 6,975 | 1.47 | % | ||||||||||
| Brokered deposits | 11,366 | 9 | 0.30 | % | 11,366 | 10 | 0.34 | % | 34,506 | 24 | 0.28 | % | 45,955 | 163 | 1.44 | % | 64,338 | 289 | 1.78 | % | ||||||||||
| 6,435,246 | 6,001 | 0.37 | % | 6,474,977 | 6,853 | 0.42 | % | 6,392,219 | 8,623 | 0.54 | % | 6,223,419 | 10,187 | 0.66 | % | 6,199,929 | 11,476 | 0.74 | % | |||||||||||
| Non-interest bearing deposit accounts | 2,660,402 | - | - | 2,639,610 | - | - | 2,605,623 | - | - | 2,358,214 | - | - | 2,315,717 | - | - | |||||||||||||||
| Fair value premium and core deposit intangible amortization | - | 1,838 | - | - | 1,838 | - | - | 1,837 | - | - | 1,837 | - | - | 2,037 | - | |||||||||||||||
| Total deposits | 9,095,648 | 7,839 | 0.34 | % | 9,114,587 | 8,691 | 0.38 | % | 8,997,842 | 10,460 | 4.46 | % | 8,581,633 | 12,024 | 0.56 | % | 8,515,646 | 13,513 | 0.63 | % | ||||||||||
| Borrowings | ||||||||||||||||||||||||||||||
| Advances from FHLB and other borrowings | 39,887 | 279 | 2.78 | % | 62,860 | 450 | 2.84 | % | 63,867 | 452 | 2.84 | % | 64,868 | 459 | 2.87 | % | 65,847 | 468 | 2.83 | % | ||||||||||
| Subordinated capital notes | 36,083 | 293 | 3.23 | % | 36,083 | 293 | 3.21 | % | 36,083 | 294 | 3.27 | % | 36,083 | 295 | 3.31 | % | 36,083 | 301 | 3.34 | % | ||||||||||
| Total borrowings | 75,970 | 572 | 2.99 | % | 98,943 | 743 | 2.98 | % | 99,950 | 746 | 2.99 | % | 100,951 | 754 | 3.03 | % | 101,930 | 769 | 3.01 | % | ||||||||||
| Total interest-bearing liabilities | $ | 9,171,618 | $ | 8,411 | 0.36 | % | $ | 9,213,530 | $ | 9,434 | 0.41 | % | $ | 9,097,792 | $ | 11,206 | 0.49 | % | $ | 8,682,584 | $ | 12,778 | 0.60 | % | $ | 8,617,576 | $ | 14,282 | 0.66 | % |
| Interest rate spread | $ | 104,204 | 4.15 | % | $ | 102,705 | 4.09 | % | $ | 102,257 | 4.19 | % | $ | 98,204 | 4.21 | % | $ | 98,738 | 4.19 | % | ||||||||||
| Net interest margin | 4.18 | % | 4.12 | % | 4.22 | % | 4.26 | % | 4.24 | % | ||||||||||||||||||||
| Core deposits: (Non-GAAP) | ||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||
| NOW accounts | $ | 2,792,966 | $ | 2,239 | 0.32 | % | $ | 2,754,985 | $ | 2,288 | 0.33 | % | $ | 2,542,018 | $ | 2,259 | 0.36 | % | $ | 2,397,673 | $ | 2,393 | 0.40 | % | $ | 2,344,903 | $ | 2,258 | 0.38 | % |
| Savings accounts | 2,359,959 | 1,289 | 0.22 | % | 2,330,121 | 1,639 | 0.28 | % | 2,236,281 | 2,097 | 0.38 | % | 2,003,963 | 2,124 | 0.43 | % | 1,897,618 | 1,954 | 0.41 | % | ||||||||||
| Time deposits | 1,270,955 | 2,464 | 0.77 | % | 1,378,505 | 2,916 | 0.84 | % | 1,579,414 | 4,243 | 1.07 | % | 1,775,828 | 5,507 | 1.24 | % | 1,893,070 | 6,975 | 1.47 | % | ||||||||||
| 6,423,880 | 5,992 | 0.37 | % | 6,463,611 | 6,843 | 0.42 | % | 6,357,713 | 8,599 | 0.54 | % | 6,177,464 | 10,024 | 0.66 | % | 6,135,591 | 11,187 | 0.73 | % | |||||||||||
| Non-interest bearing deposit accounts | 2,660,402 | - | - | 2,639,610 | - | - | 2,605,623 | - | - | 2,358,214 | - | - | 2,315,717 | - | - | |||||||||||||||
| Total core deposits | $ | 9,084,282 | $ | 5,992 | 0.26 | % | $ | 9,103,221 | $ | 6,843 | 0.30 | % | $ | 8,963,336 | $ | 8,599 | 0.38 | % | $ | 8,535,678 | $ | 10,024 | 0.47 | % | $ | 8,451,308 | $ | 11,187 | 0.53 | % |
9
OFG Bancorp (NYSE: OFG)
Table 5-2: Average Balances, Net Interest Income and Net Interest Margin (Continued)
| 2021 YTD | 2020 YTD | |||||||||||
| (Dollars in thousands) (unaudited) |
Average Balance |
Interest Income/ Expense |
Yield/ Rate |
Average Balance |
Interest Income/ Expense |
Yield/ Rate |
||||||
| Interest earning assets: | ||||||||||||
| Cash equivalents | $ | 2,495,542 | $ | 3,231 | 0.13 | % | $ | 1,591,613 | $ | 4,373 | 0.27 | % |
| Investment securities | 684,476 | 12,180 | 1.78 | % | 626,866 | 11,539 | 1.84 | % | ||||
| Loans held for investment | (1) | |||||||||||
| Non-PCD loans | 4,921,186 | 338,068 | 6.87 | % | 4,801,813 | 335,514 | 6.99 | % | ||||
| PCD loans | 1,616,302 | 95,720 | 5.92 | % | 1,946,697 | 121,921 | 6.26 | % | ||||
| Total loans | 6,537,488 | 433,788 | 6.64 | % | 6,748,510 | 457,435 | 6.78 | % | ||||
| Total interest-earning assets | $ | 9,717,506 | $ | 449,199 | 4.62 | % | $ | 8,966,989 | $ | 473,347 | 5.28 | % |
| Interest bearing liabilities: | ||||||||||||
| Deposits | ||||||||||||
| NOW accounts | $ | 2,623,358 | $ | 9,179 | 0.35 | % | $ | 2,156,300 | $ | 9,029 | 0.42 | % |
| Savings accounts | 2,233,824 | 7,149 | 0.32 | % | 1,858,416 | 8,380 | 0.45 | % | ||||
| Time deposits | 1,499,457 | 15,130 | 1.01 | % | 1,966,706 | 30,455 | 1.55 | % | ||||
| Brokered deposits | 25,664 | 206 | 0.80 | % | 168,728 | 4,132 | 2.45 | % | ||||
| 6,382,303 | 31,664 | 0.50 | % | 6,150,150 | 51,996 | 0.85 | % | |||||
| Non-interest bearing deposit accounts | 2,566,924 | - | - | 2,069,786 | - | - | % | |||||
| Fair value premium and core deposit intangible amortization | - | 7,350 | - | - | 8,202 | - | ||||||
| Total deposits | 8,949,227 | 39,014 | 0.44 | % | 8,219,936 | 60,198 | 0.73 | % | ||||
| Borrowings | ||||||||||||
| Securities sold under agreements to repurchase | - | - | - | % | 50,874 | 1,335 | 2.63 | % | ||||
| Advances from FHLB and other borrowings | 57,816 | 1,641 | 2.84 | % | 71,314 | 1,988 | 2.79 | % | ||||
| Subordinated capital notes | 36,083 | 1,174 | 3.25 | % | 36,083 | 1,394 | 3.86 | % | ||||
| Total borrowings | 93,899 | 2,815 | 3.00 | % | 158,271 | 4,717 | 2.98 | % | ||||
| Total interest-bearing liabilities | $ | 9,043,126 | $ | 41,829 | 0.46 | % | $ | 8,378,207 | $ | 64,915 | 0.77 | % |
| Interest rate spread | $ | 407,370 | 4.16 | % | $ | 408,432 | 4.51 | % | ||||
| Net interest margin | 4.19 | % | 4.55 | % | ||||||||
| Core deposits: (Non-GAAP) | ||||||||||||
| Deposits | ||||||||||||
| NOW accounts | $ | 2,623,358 | $ | 9,179 | 0.35 | % | $ | 2,156,300 | $ | 9,029 | 0.42 | % |
| Savings accounts | 2,233,824 | 7,149 | 0.32 | % | 1,858,416 | 8,380 | 0.45 | % | ||||
| Time deposits | 1,499,457 | 15,130 | 1.01 | % | 1,966,706 | 30,455 | 1.55 | % | ||||
| 6,356,639 | 31,458 | 0.49 | % | 5,981,422 | 47,864 | 0.80 | % | |||||
| Non-interest bearing deposit accounts | 2,566,924 | - | - | % | 2,069,786 | - | - | % | ||||
| Total core deposits | $ | 8,923,563 | $ | 31,458 | 0.35 | % | $ | 8,051,208 | $ | 47,864 | 0.59 | % |
10
OFG Bancorp (NYSE: OFG)
Table 6-1: Loan Information and Performance Statistics (1)
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||
| (Dollars in thousands) (unaudited) | Q4 | Q3 | Q2 | Q1 | Q4 | ||||||||
| Net Charge-offs | (21) | ||||||||||||
| Non-PCD | |||||||||||||
| Mortgage: | |||||||||||||
| Charge-offs | $ | 4,573 | (a) | $ | 160 | $ | 268 | $ | 787 | $ | 225 | ||
| Recoveries | (416) | (419) | (193) | (615) | (79) | ||||||||
| Total mortgage | 4,157 | (259) | 75 | 172 | 146 | ||||||||
| Commercial: | |||||||||||||
| Charge-offs | 550 | 7,518 | (b) | 653 | 68 | 413 | |||||||
| Recoveries | (418) | (558) | (996) | (430) | (334) | ||||||||
| Total commercial | 132 | 6,960 | (343) | (362) | 79 | ||||||||
| Consumer: | |||||||||||||
| Charge-offs | 2,144 | 2,370 | 2,897 | 4,469 | 6,456 | ||||||||
| Recoveries | (743) | (894) | (697) | (565) | (1,832) | ||||||||
| Total consumer | 1,401 | 1,476 | 2,200 | 3,904 | 4,624 | ||||||||
| Auto: | |||||||||||||
| Charge-offs | 7,288 | 4,989 | 5,170 | 9,083 | 12,071 | ||||||||
| Recoveries | (6,282) | (5,874) | (5,997) | (5,817) | (5,928) | ||||||||
| Total auto | 1,006 | (885) | (827) | 3,266 | 6,143 | ||||||||
| Total | $ | 6,696 | $ | 7,292 | $ | 1,105 | $ | 6,980 | $ | 10,992 | |||
| PCD | |||||||||||||
| Mortgage: | |||||||||||||
| Charge-offs | $ | 15,010 | (a) | $ | 1,008 | $ | 1,742 | $ | 2,590 | $ | 1,344 | ||
| Recoveries | (452) | (641) | (184) | (146) | (63) | ||||||||
| Total mortgage | 14,558 | 367 | 1,558 | 2,444 | 1,281 | ||||||||
| Commercial: | |||||||||||||
| Charge-offs | 12,123 | (a) | 68 | 6 | 43 | 33,061 | (b) | ||||||
| Recoveries | (746) | (1,316) | (430) | (436) | (234) | ||||||||
| Total commercial | 11,377 | (1,248) | (424) | (393) | 32,827 | ||||||||
| Consumer: | |||||||||||||
| Charge-offs | - | - | - | 22 | 21 | ||||||||
| Recoveries | (42) | (219) | (33) | (21) | (200) | ||||||||
| Total consumer | (42) | (219) | (33) | 1 | (179) | ||||||||
| Auto: | |||||||||||||
| Charge-offs | 140 | 124 | 226 | 456 | 574 | ||||||||
| Recoveries | (247) | (265) | (314) | (383) | (681) | ||||||||
| Total auto | (107) | (141) | (88) | 73 | (107) | ||||||||
| Total | $ | 25,786 | $ | (1,241) | $ | 1,013 | $ | 2,125 | $ | 33,822 | |||
| Total Net Charge-offs | $ | 32,482 | $ | 6,051 | $ | 2,118 | $ | 9,105 | $ | 44,814 | |||
| Net Charge-off Rates | (21) | ||||||||||||
| Mortgage | 3.79 | % | (a) | 0.02 | % | 0.30 | % | 0.47 | % | 0.25 | % | ||
| Commercial | 1.95 | % | (a) | 0.97 | % | (b) | -0.13 | % | -0.13 | % | 5.45 | % | (b) |
| Consumer | 1.29 | % | 1.26 | % | 2.17 | % | 3.78 | % | 4.09 | % | |||
| Auto | 0.21 | % | -0.25 | % | -0.23 | % | 0.85 | % | 1.56 | % | |||
| Total | 2.01 | % | (a) | 0.37 | % | (b) | 0.13 | % | 0.55 | % | 2.67 | % | (b) |
| Average Loans Held For Investment | (21) | ||||||||||||
| Mortgage | $ | 1,972,889 | $ | 2,047,272 | $ | 2,147,927 | $ | 2,243,303 | $ | 2,305,495 | |||
| Commercial | 2,362,120 | 2,360,642 | 2,443,407 | 2,405,419 | 2,416,703 | ||||||||
| Consumer | 421,824 | 400,582 | 400,365 | 413,191 | 434,565 | ||||||||
| Auto | 1,695,295 | 1,657,378 | 1,606,870 | 1,573,995 | 1,551,521 | ||||||||
| Total | $ | 6,452,128 | $ | 6,465,874 | $ | 6,598,569 | $ | 6,635,908 | $ | 6,708,284 |
(a)During 4Q 2021, the Company decided to sell $65.5 million of past due loans. As a result of the decision to sell loans, the Company recognized $30.1 million in net charge-offs and an additional provision of $9.7 million, decreasing the allowance for credit losses by $20.4 million.
(b)During 3Q 2021, the Company charged-off $6.5 million for a previously reserved amount on a commercial loan. During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.
11
OFG Bancorp (NYSE: OFG)
Table 6-2: Loan Information and Performance Statistics (Excludes PCD Loans) (1)
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||
| (Dollars in thousands) (unaudited) | Q4 | Q3 | Q2 | Q1 | Q4 | |||||
| Early Delinquency (30 - 89 days past due) | ||||||||||
| Mortgage | $ | 16,565 | $ | 15,233 | $ | 16,556 | $ | 17,541 | $ | 23,575 |
| Commercial | 4,736 | 4,150 | 3,715 | 3,911 | 8,043 | |||||
| Consumer | 5,273 | 4,985 | 4,885 | 8,059 | 10,994 | |||||
| Auto | 90,272 | 76,262 | 66,068 | 75,449 | 88,357 | |||||
| Total | $ | 116,846 | $ | 100,630 | $ | 91,224 | $ | 104,960 | $ | 130,969 |
| Early Delinquency Rates (30 - 89 days past due) | ||||||||||
| Mortgage | 2.30 | % | 2.03 | % | 2.13 | % | 2.15 | % | 2.78 | % |
| Commercial | 0.23 | % | 0.21 | % | 0.20 | % | 0.21 | % | 0.44 | % |
| Consumer | 1.29 | % | 1.33 | % | 1.33 | % | 2.17 | % | 2.82 | % |
| Auto | 5.33 | % | 4.57 | % | 4.08 | % | 4.82 | % | 5.76 | % |
| Total | 2.34 | % | 2.06 | % | 1.86 | % | 2.15 | % | 2.68 | % |
| Total Delinquency (30 days and over past due) | ||||||||||
| Mortgage: | ||||||||||
| Traditional, Non traditional, and Loans under Loss Mitigation | $ | 45,521 | $ | 58,146 | $ | 60,892 | $ | 63,057 | $ | 69,670 |
| GNMA's buy-back option program | 14,511 | 19,944 | 28,118 | 40,777 | 56,193 | |||||
| Total mortgage | 60,032 | 78,090 | 89,010 | 103,834 | 125,863 | |||||
| Commercial | 14,129 | 13,742 | 21,549 | 26,065 | 30,604 | |||||
| Consumer | 7,246 | 6,987 | 7,200 | 10,812 | 15,148 | |||||
| Auto | 103,733 | 87,672 | 73,259 | 86,918 | 108,842 | |||||
| Total | $ | 185,140 | $ | 186,491 | $ | 191,018 | $ | 227,629 | $ | 280,457 |
| Total Delinquency Rates (30 days and over past due) | ||||||||||
| Mortgage: | ||||||||||
| Traditional, Non traditional, and Loans under Loss Mitigation | 6.33 | % | 7.74 | % | 7.85 | % | 7.74 | % | 8.22 | % |
| GNMA's buy-back option program | 2.02 | % | 2.65 | % | 3.63 | % | 5.01 | % | 6.63 | % |
| Total mortgage | 8.35 | % | 10.39 | % | 11.48 | % | 12.75 | % | 14.86 | % |
| Commercial | 0.68 | % | 0.70 | % | 1.13 | % | 1.43 | % | 1.67 | % |
| Consumer | 1.77 | % | 1.87 | % | 1.97 | % | 2.91 | % | 3.89 | % |
| Auto | 6.13 | % | 5.26 | % | 4.53 | % | 5.55 | % | 7.09 | % |
| Total | 3.71 | % | 3.82 | % | 3.90 | % | 4.65 | % | 5.74 | % |
| Nonperforming Assets | (14) | |||||||||
| Mortgage | $ | 39,394 | $ | 51,612 | $ | 52,773 | $ | 50,998 | $ | 47,731 |
| Commercial | 37,603 | 28,472 | 37,858 | 42,778 | 41,999 | |||||
| Consumer | 2,303 | 2,203 | 2,466 | 2,835 | 4,223 | |||||
| Auto | 19,829 | 12,055 | 7,606 | 11,842 | 20,766 | |||||
| Total nonperforming loans | 99,129 | 94,342 | 100,703 | 108,453 | 114,719 | |||||
| Foreclosed real estate | 15,039 | 13,904 | 15,093 | 15,598 | 11,596 | |||||
| Other repossessed assets | 1,945 | 1,528 | 1,725 | 2,768 | 1,816 | |||||
| Total nonperforming assets | $ | 116,113 | $ | 109,774 | $ | 117,521 | $ | 126,819 | $ | 128,131 |
| Nonperforming Loan Rates | ||||||||||
| Mortgage | 5.48 | % | 6.87 | % | 6.80 | % | 6.26 | % | 5.63 | % |
| Commercial | 1.80 | % | 1.46 | % | 1.99 | % | 2.34 | % | 2.29 | % |
| Consumer | 0.56 | % | 0.59 | % | 0.67 | % | 0.76 | % | 1.08 | % |
| Auto | 1.17 | % | 0.72 | % | 0.47 | % | 0.76 | % | 1.35 | % |
| Total loans | 1.98 | % | 1.93 | % | 2.06 | % | 2.22 | % | 2.35 | % |
12
OFG Bancorp (NYSE: OFG)
Table 6-3: Loan Information and Performance Statistics (1)
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||
| (Dollars in thousands) (unaudited) | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||
| Nonperforming PCD Loans | (14) | |||||||||||
| Mortgage | $ | 334 | $ | 2,030 | $ | 2,067 | $ | 958 | $ | 1,003 | ||
| Commercial | 12,545 | (a) | 36,798 | 34,502 | 34,906 | 36,470 | ||||||
| Consumer | - | - | - | - | 1 | |||||||
| Total nonperforming loans | $ | 12,879 | $ | 38,828 | $ | 36,569 | $ | 35,864 | $ | 37,474 | ||
| Nonperforming PCD Loan Rates | ||||||||||||
| Mortgage | 0.03 | % | 0.16 | % | 0.16 | % | 0.07 | % | 0.07 | % | ||
| Commercial | 6.14 | % | (a) | 15.36 | % | 13.24 | % | 12.80 | % | 12.88 | % | |
| Consumer | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.07 | % | ||
| Total | 0.92 | % | (a) | 2.54 | % | 2.28 | % | 2.11 | % | 2.11 | % | |
| Total PCD Loans Held for Investment | (21) | |||||||||||
| Mortgage | $ | 1,188,423 | $ | 1,270,854 | $ | 1,324,274 | $ | 1,406,044 | $ | 1,459,932 | ||
| Commercial | 204,335 | 239,554 | 260,627 | 272,793 | 283,160 | |||||||
| Consumer | 916 | 959 | 981 | 1,120 | 1,394 | |||||||
| Total loans | $ | 1,393,674 | $ | 1,511,367 | $ | 1,585,882 | $ | 1,679,957 | $ | 1,744,486 |
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||
| (Dollars in thousands) (unaudited) | Q4 | Q3 | Q2 | Q1 | Q4 | ||||||||
| Total Nonperforming Loans | (14) | ||||||||||||
| Mortgage | $ | 39,728 | (b) | $ | 53,642 | $ | 54,840 | $ | 51,891 | $ | 47,970 | ||
| Commercial | 50,148 | (a) | 65,270 | (c) | 72,360 | 77,684 | 78,469 | ||||||
| Consumer | 2,303 | 2,203 | 2,466 | 2,900 | 4,988 | ||||||||
| Auto | 19,829 | 12,055 | 7,606 | 11,842 | 20,766 | ||||||||
| Total nonperforming loans | $ | 112,008 | $ | 133,170 | $ | 137,272 | $ | 144,317 | $ | 152,193 | |||
| Total Nonperforming Loan Rates | |||||||||||||
| Mortgage | 2.08 | % | (b) | 2.65 | % | 2.63 | % | 2.36 | % | 2.10 | % | ||
| Commercial | 2.11 | % | (a) | 2.80 | % | (c) | 3.02 | % | 3.22 | % | 3.27 | % | |
| Consumer | 0.56 | % | 0.59 | % | 0.64 | % | 0.73 | % | 1.20 | % | |||
| Auto | 1.16 | % | 0.72 | % | 0.46 | % | 0.75 | % | 1.33 | % | |||
| Total | 1.75 | % | 2.08 | % | 2.11 | % | 2.19 | % | 2.28 | % | |||
| Total Loans Held for Investment | (21) | ||||||||||||
| Mortgage | $ | 1,907,271 | $ | 2,022,243 | $ | 2,084,442 | $ | 2,197,106 | $ | 2,283,375 | |||
| Commercial | 2,379,330 | 2,331,056 | 2,393,170 | 2,411,718 | 2,402,010 | ||||||||
| Consumer | 409,675 | 374,631 | 382,456 | 396,193 | 414,946 | ||||||||
| Auto | 1,706,310 | 1,682,933 | 1,638,024 | 1,588,509 | 1,561,802 | ||||||||
| Total loans | $ | 6,402,586 | $ | 6,410,863 | $ | 6,498,092 | $ | 6,593,526 | $ | 6,662,133 |
(a)During 4Q 2021, the Company decided to sell $65.5 million of past due loans. The Company transferred to held for sale past due residential mortgage loans with reporting balance of $39.8 million and a PCD commercial loan with reporting balance of $20.9 million.
(b)During 3Q 2021, the Company charged-off $6.5 million for a previously reserved amount on a commercial loan. During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.
13
OFG Bancorp (NYSE: OFG)
Table 7: Allowance for Credit Losses (1)
|
Quarter Ended December 31, 2021
|
||||||||||
| (Dollars in thousands) (unaudited) | Mortgage | Commercial | Consumer | Auto | Total | |||||
| Allowance for credit losses Non-PCD: | ||||||||||
| Balance at beginning of period | $ | 16,867 | $ | 33,240 | $ | 17,848 | $ | 70,919 | $ | 138,874 |
| Provision for (recapture of) credit losses | 2,589 | (a) | (846) | 2,694 | (4,550) | (113) | ||||
| Charge-offs | (4,573) | (a) | (550) | (2,144) | (7,288) | (14,555) | ||||
| Recoveries | 416 | 418 | 743 | 6,282 | 7,859 | |||||
| Balance at end of period | $ | 15,299 | $ | 32,262 | $ | 19,141 | $ | 65,363 | $ | 132,065 |
| Allowance for credit losses PCD: | ||||||||||
| Balance at beginning of period | $ | 30,390 | $ | 11,166 | $ | 37 | $ | 405 | $ | 41,998 |
| Provision for (recapture of) credit losses | 3,186 | (a) | 4,719 | (a) | (45) | (200) | 7,660 | |||
| Charge-offs | (15,010) | (a) | (12,123) | (a) | - | (140) | (27,273) | |||
| Recoveries | 452 | 746 | 42 | 247 | 1,487 | |||||
| Balance at end of period | $ | 19,018 | $ | 4,508 | $ | 34 | $ | 312 | $ | 23,872 |
| Allowance for credit losses summary: | ||||||||||
| Balance at beginning of period | $ | 47,257 | $ | 44,406 | $ | 17,885 | $ | 71,324 | $ | 180,872 |
| Provision for (recapture of) credit losses | 5,775 | (a) | 3,873 | (a) | 2,649 | (4,750) | 7,547 | |||
| Charge-offs | (19,583) | (a) | (12,673) | (a) | (2,144) | (7,428) | (41,828) | |||
| Recoveries | 868 | 1,164 | 785 | 6,529 | 9,346 | |||||
| Balance at end of period | $ | 34,317 | $ | 36,770 | $ | 19,175 | $ | 65,675 | $ | 155,937 |
| Allowance coverage ratio | 1.80 | % | 1.55 | % | 4.68 | % | 3.85 | % | 2.44 | % |
| Allowance coverage ratio excluding PPP loans (Non-GAAP) | 1.80 | % | 1.60 | % | 4.68 | % | 3.85 | % | 2.47 | % |
(a)During 4Q 2021, the Company decided to sell $65.5 million of past due loans. As a result of the decision to sell loans, the Company recognized $30.1 million in net charge-offs and an additional provision of $9.7 million, decreasing the allowance for credit losses by $20.4 million.
14
OFG Bancorp (NYSE: OFG)
Table 8-1: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital
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 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.
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||
| (Dollars in thousands) (unaudited) | Q4 | Q3 | Q2 | Q1 | Q4 | ||||||||
| Stockholders' Equity to Non-GAAP Tangible Common Equity | |||||||||||||
| Total stockholders' equity | $ | 1,069,160 | (a) | $ | 1,053,665 | (a)(b) | $ | 1,079,997 | (b) | $ | 1,108,423 | $ | 1,085,975 |
| Less: Intangible assets | (122,162) | (124,614) | (127,064) | (129,514) | (131,965) | ||||||||
| Noncumulative perpetual preferred stock | - | - | (24,000) | (b) | (92,000) | (92,000) | |||||||
| Noncumulative perpetual preferred stock issuance costs | - | - | 7,453 | (b) | 10,130 | 10,130 | |||||||
| Tangible common equity | $ | 946,998 | $ | 929,051 | $ | 936,386 | $ | 897,039 | $ | 872,140 | |||
| Common shares outstanding at end of period | 49,636 | (a) | 49,977 | (a) | 51,661 | 51,579 | 51,387 | ||||||
| Tangible book value per common share (Non-GAAP) | $ | 19.08 | (a) | $ | 18.59 | (a) | $ | 18.13 | $ | 17.39 | $ | 16.97 | |
| Total Assets to Tangible Assets | |||||||||||||
| Total assets | $ | 9,899,720 | $ | 10,606,865 | $ | 10,461,813 | $ | 10,153,342 | $ | 9,826,011 | |||
| Less: Intangible assets | (122,162) | (124,614) | (127,064) | (129,514) | (131,965) | ||||||||
| Tangible assets (Non-GAAP) | $ | 9,777,558 | $ | 10,482,251 | $ | 10,334,749 | $ | 10,023,828 | $ | 9,694,046 | |||
| Non-GAAP TCE Ratio | |||||||||||||
| Tangible common equity | $ | 946,998 | (a) | $ | 929,051 | (a) | $ | 936,386 | $ | 897,039 | $ | 872,140 | |
| Tangible assets | 9,777,558 | 10,482,251 | 10,334,749 | 10,023,828 | 9,694,046 | ||||||||
| TCE ratio | 9.69 | % | 8.86 | % | 9.06 | % | 8.95 | % | 9.00 | % | |||
| Average Equity to Non-GAAP Average Tangible Common Equity | |||||||||||||
| Average total stockholders' equity | $ | 1,066,764 | (a) | $ | 1,068,618 | (a)(b) | $ | 1,083,452 | (b) | $ | 1,101,046 | $ | 1,083,423 |
| Less: Average noncumulative perpetual preferred stock | - | (3,391) | (b) | (44,923) | (b) | (92,000) | (92,000) | ||||||
| Average noncumulative perpetual preferred stock issuance costs | - | 1,134 | (b) | 8,306 | (b) | 10,130 | 10,130 | ||||||
| Average total common stockholders' equity | $ | 1,066,764 | $ | 1,066,361 | $ | 1,046,835 | $ | 1,019,176 | $ | 1,001,553 | |||
| Less: Average intangible assets | (123,201) | (125,723) | (128,311) | (130,767) | (133,542) | ||||||||
| Average tangible common equity | $ | 943,563 | $ | 940,638 | $ | 918,524 | $ | 888,409 | $ | 868,011 |
(a)During 3Q 2021 and 4Q 2021, the Company repurchased $40.2 million and $9.7 million common stock, respectively, from its $50.0 million share buyback program.
(b)During 2Q 2021 and 3Q 2021, the Company redeemed Series A and B Preferred Stock, and Series D Preferred Stock, respectively.
15
OFG Bancorp (NYSE: OFG)
Table 8-2: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued)
| BASEL III | ||||||||||||||
| Standardized | ||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||
| (Dollars in thousands) (unaudited) | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||
| Regulatory Capital Metrics | ||||||||||||||
| Common equity Tier 1 capital | $ | 964,286 | (a) | $ | 931,884 | (a) | $ | 957,238 | $ | 919,856 | $ | 894,074 | ||
| Tier 1 capital | 999,286 | (a) | 966,884 | (a)(b) | 1,008,785 | (b) | 1,036,726 | 1,010,944 | ||||||
| Total risk-based capital | (15) | 1,086,899 | (a) | 1,053,184 | (a)(b) | 1,094,786 | (b) | 1,121,830 | 1,096,764 | |||||
| Risk-weighted assets | 7,004,876 | 6,893,254 | 6,861,890 | 6,782,685 | 6,837,846 | |||||||||
| Regulatory Capital Ratios | ||||||||||||||
| Common equity Tier 1 capital ratio | (16) | 13.77 | % | 13.52 | % | 13.95 | % | 13.56 | % | 13.08 | % | |||
| Tier 1 risk-based capital ratio | (17) | 14.27 | % | 14.03 | % | 14.70 | % | 15.28 | % | 14.78 | % | |||
| Total risk-based capital ratio | (18) | 15.52 | % | 15.28 | % | 15.95 | % | 16.54 | % | 16.04 | % | |||
| Leverage ratio | (19) | 9.63 | % | 9.33 | % | 9.84 | % | 10.48 | % | 10.30 | % | |||
| Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach | ||||||||||||||
| Total stockholders' equity | (1) | $ | 1,069,160 | (a) | $ | 1,053,665 | (a)(b) | $ | 1,079,997 | (b) | $ | 1,108,423 | $ | 1,085,975 |
| Plus:CECL transition adjustment | (20) | 27,409 | 29,111 | 31,471 | 33,637 | 34,646 | ||||||||
| Less:Noncumulative perpetual preferred stock | - | - | (b) | (24,000) | (b) | (92,000) | (92,000) | |||||||
| Noncumulative perpetual preferred stock issuance costs | - | - | (b) | 7,453 | (b) | 10,130 | 10,130 | |||||||
| Unrealized gains on available-for-sale securities, net of income tax | (5,663) | (9,330) | (8,408) | (7,146) | (12,091) | |||||||||
| Unrealized losses on cash flow hedges, net of income tax | 503 | 710 | 808 | 916 | 1,069 | |||||||||
| 1,091,409 | 1,074,156 | 1,087,321 | 1,053,960 | 1,027,729 | ||||||||||
| Less:Disallowed goodwill | (86,069) | (86,069) | (86,069) | (86,069) | (86,069) | |||||||||
| Disallowed other intangible assets, net | (25,769) | (26,938) | (28,555) | (30,172) | (32,073) | |||||||||
| Disallowed deferred tax assets, net | (15,285) | (29,265) | (15,459) | (17,863) | (15,513) | |||||||||
| Common equity Tier 1 capital | 964,286 | 931,884 | 957,238 | 919,856 | 894,074 | |||||||||
| Plus:Qualifying noncumulative perpetual preferred stock | - | - | (b) | 24,000 | (b) | 92,000 | 92,000 | |||||||
| Qualifying noncumulative perpetual preferred stock issuance costs | - | - | (b) | (7,453) | (b) | (10,130) | (10,130) | |||||||
| Subordinated capital notes | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | |||||||||
| Tier 1 capital | 999,286 | 966,884 | 1,008,785 | 1,036,726 | 1,010,944 | |||||||||
| Plus tier 2 capital: Qualifying allowance for loan and lease losses | 87,613 | 86,300 | 86,001 | 85,104 | 85,820 | |||||||||
| Total risk-based capital | $ | 1,086,899 | $ | 1,053,184 | $ | 1,094,786 | $ | 1,121,830 | $ | 1,096,764 |
(a)During 3Q 2021 and 4Q 2021, the Company repurchased $40.2 million and $9.7 million common stock, respectively, from its $50.0 million share buyback program.
(b)During 2Q 2021 and 3Q 2021, the Company redeemed Series A and B Preferred Stock, and Series D Preferred Stock, respectively.
16
OFG Bancorp (NYSE: OFG)
Table 9: Notes to Financial Summary, Selected Metrics, Loans, and Consolidated Financial Statements (Tables 1 - 8)
| (1) | We used the term "PCI" to refer to loans acquired with credit deterioration from the Scotiabank Acquisition (December 31, 2019), the BBVAPR Acquisition (December 18, 2012) and the Eurobank FDIC-Assisted Acquisition (April 30, 2010), recorded at fair value at acquisition. On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective approach. CECL replaces the concept of purchased credit impaired loans (PCI) with the concept of purchased financial assets with credit deterioration (PCD). PCD accounting is called 'gross-up accounting' because, at acquisition, an entity grosses up the amortized cost basis of the PCD asset for the initial estimate of credit losses. This Day 1 allowance for credit losses is established without an income statement effect. The Company elected to maintain previously existing pools on adoption, therefore the pool continues to be the unit of account, and the allowance and non-credit discount or premium is not allocated to the individual assets. 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. |
| (2) | Total banking and financial service revenues. |
| (3) | Calculated based on net income available to common shareholders divided by average common shares outstanding for the period. |
| (4) | Calculated based on net income available to common shareholders divided by total average common shares outstanding and equivalents for the period as if converted. |
| (5) | 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 GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
| (6) | Information includes all loans held for investment, including PCD loans. |
| (7) | Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period. |
| (8) | Calculated based on annualized income, net of tax, for the period divided by average total assets for the period. |
| (9) | Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period. |
| (10) | 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. |
| (11) | Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. |
| (12) | Non-GAAP ratios. See "Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios. |
| (13) | Production of new loans (excluding renewals). |
| (14) | Most PCD 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. PCD loan pools that are not accreting interest income are deemed to be non-performing loans and presented separately. |
| (15) | Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital. |
| (16) | Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets. |
| (17) | Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. |
| (18) | Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighted assets. |
| (19) | Leverage capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments. |
| (20) | In March 2020, in light of recent strains on the U.S. economy as a result of the coronavirus disease 2019 (COVID-19), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued an interim final rule that provided the option to temporarily delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period. In addition, for the first two years, a uniform 25% "scaling factor" is introduced to approximate the portion of the post day-one allowance attributable to CECL relative to the incurred loss methodology. The 25% scaling factor is calibrated to approximate an overall after-tax impact of differences in allowances under CECL vs the incurred loss methodology. |
| (21) | CECL replaced the concept of purchased credit impaired loans (PCI assets) with the concept of purchased financial assets with credit deterioration (PCD assets). An entity records a PCD asset at the purchase price plus the allowance for credit losses expected at the time of acquisition. Under this method, there is no credit loss expense affecting net income on acquisition. Changes in estimates of expected credit losses after acquisition are recognized as credit loss expense (or reversal of credit loss expense) in subsequent periods as they arise. |
| (22) | Pre-provision net revenues is a non-GAAP measure calculated based on net interest income plus total non-interest income, net, less total non-interest expenses for the period. |
| (23) | PPP loans are fully guaranteed by the SBA and risk-weighted at 0%. |
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