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Share Name | Share Symbol | Market | Type |
---|---|---|---|
OFG Bancorp | NYSE:OFG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 37.34 | 0 | 13:02:30 |
OFG Bancorp (NYSE:OFG) today reported results for the fourth quarter and the year ended December 31, 2015.
4Q15 Results
4Q15 Highlights
2015 Summary
CEO Comment
José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board, commented:
“Our core business performed well this past quarter and year, given the challenging economy and Puerto Rico’s fiscal situation. We maintained good levels of interest and non-interest revenues and loan production, while retaining a solid capital position. This enabled us to take decisive de-risking actions to further strengthen our balance sheet. Non-interest expenses declined, most credit metrics improved, and we continued to expand the Oriental franchise.
“Clearly, market valuations and sentiment regarding OFG outside of Puerto Rico appear to be incongruent to our core performance and asset quality trends and positions.
“We are cognizant of the high level of uncertainty regarding Puerto Rico’s future. While lower fuel prices have significantly enhanced personal disposable income and reduced operating costs for businesses, the Government lost an opportunity to take a major step in solving the fiscal situation when the Legislature, for a second time, delayed voting on the PREPA Revitalization Act.
“Despite the difficult environment in which we operate, we remain steadfast in our long standing management strategies: maintaining discipline in underwriting, pricing, operations and expenses. Furthermore, we have shifted our capital management strategy toward preserving and continuing to build excess capital. We believe this is the prudent thing to do until we can get a better read on the future.
“Looking forward to 2016 and beyond, we expect to continue to perform well, although somewhat affected by lower interest income from a smaller balance of acquired loans. Ultimately, we look forward to putting our PREPA exposure behind us, to better highlight our solid core business performance.
“As for Puerto Rico itself, a comprehensive solution is needed to overcome the fiscal challenges and to improve the island’s competitiveness. We are encouraged by the attention Puerto Rico has received in Washington, but the time for talk is over. Leadership needs to take tangible actions.”
4Q15 Income Statement Highlights
The following compares GAAP and Non-GAAP Adjusted Results for the fourth quarter 2015 to the third quarter 2015.
Quarter ended September 30, 2015 Quarter ended December 31, 2015 Loss on Bulk Sale Actual Resultsof Non-Performing
Quarter Specific Adjusted Results Actual Results Quarter Specific Adjusted Results (Dollars in thousands) (unaudited) (US GAAP) Loans and OREOs(1) Items(2) (Non-GAAP) (US GAAP) Items(3) (Non-GAAP) Interest income $ 107,247 7,058 3,180 97,009 $ 92,907 - 92,907 Interest expense (17,423) - - (17,423) (17,285) - (17,285) Net interest income 89,824 7,058 3,180 79,586 75,622 - 75,622 Provision for loan and lease losses, excluding acquired loans (10,459) - - (10,459) (45,012) (30,345) (14,667) Provision for acquired BBVAPR loan and lease losses (7,630) (5,175) - (2,455) (7,332) (4,900) (2,432)(Recapture) provision for acquired Eurobank loan and lease losses
(33,490) (32,855) (635) 154 - 154 Total provision for loan and lease losses, net (51,579) (38,030) - (13,549) (52,190) (35,245) (16,945)Net interest income after provision for loan and lease losses
38,245 (30,972) 3,180 66,037 23,432 (35,245) 58,677 Banking and wealth management revenues 18,703 - 778 17,925 19,349 - 19,349 Other-than-temporary impairment losses on investment securities (246) - (246) - (1,244) (1,244) - FDIC shared-loss expense, net (2,079) - - (2,079) (4,400) (1,589) (2,811) Gain on FDIC shared-loss coverage in sale of loans 20,000 20,000 - - - - - Other (losses) gains, net (401) - - (401) 565 - 565 Total non-interest income 35,977 20,000 532 15,445 14,270 (2,833) 17,103 Compensation and employee benefits (21,015) - (917) (20,098) (18,717) - (18,717) Rent and occupancy costs (8,556) - - (8,556) (8,111) - (8,111) General and administrative expenses (39,519) (9,260) 180 (30,439) (31,714) (1,462) (30,252) Total non-interest expense (69,090) (9,260) (737) (59,093) (58,542) (1,462) (57,080) Income before taxes 5,132 (20,232) 2,975 22,389 (20,840) (39,540) 18,700 Income tax expense (benefit) 562 7,388 (19,863) 6,171 Net income 4,570 15,001 (977) 12,529 Preferred stock dividends (3,465) (3,465) (3,466) (3,466) Net income (loss) available to common shareholders $ 1,105 $ 11,535 $ (4,443) $ 9,063 Earnings (loss) per common share - basic $ 0.03 $ 0.26 $ (0.10) $ 0.21 Earnings (loss) per common share - diluted $ 0.03 $ 0.26 $ (0.10) $ 0.21 Performance Metrics Net interest margin 5.29% 4.68% 4.55% 4.55% Return on average assets 0.25% 0.82% -0.05% 0.70% Return on average tangible common stockholders' equity 0.68% 7.08% -2.75% 5.62% Efficiency ratio 63.66% 60.60% 61.64% 60.10% (1) 3Q15 results included ($20.2) million pre-tax impact from the bulk sale of acquired NPAs, reflecting: (i) $7.0 million cost recoveries, (ii) ($38.0) million impairment provisions, (iii) $20.0 million FDIC receivable for its share of the loss, and (iv) ($9.3) million loss on other real estate owned. (2) 3Q15 results also included other quarter specific items, consisting of: (i) $3.2 million cost recovery in interest income due to a prepayment, (ii) $778,000 fee revenue from a prepayment penalty, (iii) ($246,000) in an OTTI charge, (iv) ($917,000) additional severance accrual, and (v) $180,000 from a onetime vendor credit. (3) 4Q15 results included the following quarter specific items, as previously mentioned: ($30.4) million provision related to the PREPA line, ($4.9) million impairment during the annual recasting of a BBVA PR loan pool, ($1.5) million in legal fees related to PREPA’s restructuring, ($1.6) million in a final settlement with the FDIC related to the expiration of the commercial loss sharing agreement, ($1.2) million in OTTI, and a $19.9 million tax benefit.Adjusted for the above listed factors:
December 31, 2015 Balance Sheet Highlights
The following compares data as of December 31, 2015 to September 30, 2015 unless otherwise noted.
Credit Quality Highlights
The following compares data for the fourth quarter 2015 to the third quarter 2015 unless otherwise noted.
Capital Position
The following compares data for the fourth quarter 2015 to the third quarter 2015.
Regulatory capital ratios continued to be significantly above requirements for a well-capitalized institution.
Conference Call
A conference call to discuss OFG’s results for the fourth quarter 2015, outlook and related matters will be held today, Monday, February 1, 2016 at 10:00 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 fourth quarter ended December 31, 2015, can be found on the Webcasts, Presentations & Other Files 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 the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future.
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 52nd 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 48 financial centers. Investor information can be found at www.ofgbancorp.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160201005577/en/
OFG BancorpPuerto Rico:Alexandra López, 787-522-6970allopez@orientalbank.comorUS:Steven Anredersanreder@ofgbancorp.comorGary Fishman, 212-532-3232gfishman@ofgbancorp.com
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