On July 18, 2024, OFG Bancorp (OFG, Financial) released its 8-K filing reporting results for the second quarter ended June 30, 2024. The financial holding company, which operates through its subsidiaries to provide banking and financial services primarily in Puerto Rico, posted earnings per share (EPS) of $1.08, surpassing the analyst estimate of $0.96. Total core revenues reached $179.4 million, exceeding the estimated $152.56 million.
Company Overview
OFG Bancorp is a diversified financial holding company that operates through three segments: Banking, Wealth Management, and Treasury. The company offers a wide range of services including commercial, consumer, auto, and mortgage lending, checking and savings accounts, financial planning, insurance, investment brokerage, and corporate and individual trust and retirement services.
Performance Highlights
OFG Bancorp's Q2 2024 performance demonstrated significant growth and resilience. The company reported EPS of $1.08, up from $0.93 in Q2 2023, reflecting a 16.1% year-over-year increase. Total core revenues rose by 5.2% year-over-year to $179.4 million, driven by higher average balances and yields on loans.
“The second quarter continued to demonstrate the strength of our strategies and franchise. EPS-diluted increased 16.1% year-over-year on a 5.2% increase in total core revenues,” said José Rafael Fernández, Chief Executive Officer.
Key Financial Metrics
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Interest Income | $147.3 million | $144.1 million | $139.6 million |
| Total Interest Income | $187.7 million | $183.4 million | $158.0 million |
| Total Interest Expense | $40.3 million | $39.3 million | $18.3 million |
| Net Income Available to Common Stockholders | $51.1 million | $49.7 million | $44.2 million |
| Return on Average Assets | 1.82% | 1.77% | 1.76% |
| Return on Average Tangible Common Stockholders’ Equity | 18.24% | 17.92% | 17.67% |
Financial Achievements and Strategic Initiatives
OFG Bancorp's strategic initiatives, including its 'Digital First' strategy, have played a crucial role in expanding retail and business relationships. The company reported a net interest margin of 5.51%, reflecting higher average balances and yields on loans. Additionally, the company implemented nearly half of its $50 million share buyback program, purchasing $24.3 million of OFG shares in the open market.
Income Statement and Balance Sheet Highlights
OFG Bancorp reported total interest income of $187.7 million, up from $158.0 million in Q2 2023. The increase was primarily due to higher average balances and yields on loans. Total interest expense rose to $40.3 million from $18.3 million in Q2 2023, reflecting higher average core deposits and increased rates.
On the balance sheet, loans held for investment stood at $7.64 billion, up from $7.12 billion in Q2 2023. Customer deposits increased to $9.60 billion from $8.54 billion in Q2 2023, driven by growth in commercial deposits.
Challenges and Outlook
Despite the strong performance, OFG Bancorp faces challenges such as increased non-interest expenses, which rose to $93.0 million in Q2 2024 from $88.9 million in Q2 2023. The increase was attributed to higher electronic banking expenses, professional services fees, and FDIC insurance costs.
Overall, OFG Bancorp's Q2 2024 results reflect robust growth and strategic execution, positioning the company well for future opportunities in the banking and financial services industry.
Explore the complete 8-K earnings release (here) from OFG Bancorp for further details.
