OFG Bancorp (OFG) Tops Q2 EPS by 3c

OFG Bancorp (NYSE: OFG) reported Q2 EPS of $0.30, $0.03 better than the analyst estimate of $0.27.

2Q17 Highlights

• Net income available to shareholders increased. OFG reported $13.6 million, or $0.30 per share fully diluted, compared to $11.7 million, or $0.26 per share fully diluted, in 1Q17 and $10.9 million, or $0.25 per share fully diluted, in the year ago 2Q16.
• Puerto Rico municipality exposure reduced. OFG opportunistically sold a $38.0 million performing term loan with a municipality, resulting in a $4.3 million pre-tax loss. The sale reduced OFG’s exposure to this sector by approximately 27% from March 31, 2017, to $140.8 million after July payments.
• Balance sheet de-levered further. OFG unwound a 1.48% $100.0 million repurchase agreement, in line with its strategy to reduce borrowings. Related to this, OFG sold $166.0 million of mortgage backed securities (MBS). These transactions resulted in a tax-advantaged gain of $6.9 million.
• Effective tax rate optimized. OFG now forecasts its 2017 effective tax rate (ETR) to be 29.15% as compared to its previously stated 38% estimate. The new rate is similar to its 2016 rate and resulted in a $2.1 million beneficial adjustment to estimated income tax in 2Q17.
• Net interest margin (NIM) improved. Due to a significant reduction in the cost of borrowings and higher yields on variable rate commercial loans and on cash, NIM increased 8 basis points from 1Q17 to 5.18%.
• Credit quality and major performance ratios remained solid. The non-performing loan and total delinquency rates fell to the lowest levels in the last five quarters. Return on average assets was 1.09%, return on average tangible common stockholders’ equity was 8.01%, and the efficiency ratio was 56.49%.
• Capital buildup continued. All major capital metrics advanced compared to the preceding and year ago quarters. Tangible book value per common share at $15.51 was up 1.2% and 3.7%, respectively, while tangible common equity ratio at 11.09% was up 43 and 117 basis points, respectively.

For earnings history and earnings-related data on OFG Bancorp (OFG) click here.

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