Oriental Financial Group Inc. released third quarter results Wednesday, reporting $14.7 million in profits — representing a 7 percent increase from the preceding quarter and a 5.5 percent drop from the same year-ago, three-month period.
The bank coupled its earnings release with an announcement of plans to launch an underwritten public offering of 4,390,243 shares of its common stock to fund a portion of the $500 million purchase price for its acquisition of Banco Bilbao Vizcaya Argentaria.
In its quarterly, OFG reported income per common share (diluted) of $0.35 increased 2.9 percent from $0.34 in the preceding 2012 quarter and was $0.35 in the year ago quarter.
The results included $1.8 million in dividends declared during third quarter 2012 on the $84 million convertible preferred stock issued earlier in the quarter, which will also go toward floating the BBVA deal that is expected to toward year’s end.
“During the quarter, we posted improvements in almost every key area, including higher interest income from loans and securities, increased loan production, lower cost of funds, and stronger credit quality,” said Oriental President José Rafael Fernández.
“At the same time, we continued to prepare for the BBVA PR acquisition, to create a market leading bank that is strongly capitalized, locally controlled and totally focused on Puerto Rico,” he said.
“In addition to raising capital through the issuance of preferred stock, we took advantage of market conditions later in the quarter to initiate our previously announced deleveraging plan ahead of schedule, by selling $532.4 million of our investment securities and cancelling $400 million of our repurchase agreement funding,” Fernández said.
“In addition, we have been working closely with BBVA PR’s highly experienced management and staff to ensure a smooth transition for both our teams,” he said.
OFG’s book value per common share was $15.40 at Sept. 30, 2012 compared to $15.39 at June 30, 2012 and $15.05 at Sept. 30, 2011. Cash dividend per common share of $0.06 was 20 percent greater than in the year ago quarter.
Net interest income (after provision for loan and lease losses) increased 30.8 percent to $36.4 million, when compared to the prior quarter, while interest income increased 8.1 percent, to $65.7 million. Loans generated 61 percent of total interest income, up from 49 percent in the year ago quarter, underscoring Oriental’s emphasis on increased banking activity.
“In sum, we are continuing to move in the right direction for achieving our goals for 2012 and beyond. With the local economy showing signs of stabilization, the investments made to expand our banking capabilities, our proactive risk management practices, and the changeover in our financial model, we have transformed Oriental into a growth-oriented franchise with a strong capital position,” Fernández said.
“Complementary to growing our banking business, our planned acquisition of BBVA PR continues to remain on target for closing before the year end, subject to customary regulatory approvals,” he added.
Jefferies & Company, Inc. will serve as the sole book-running manager for the stock offering. Keefe, Bruyette & Woods, Inc. will serve as lead manager and Oriental Financial Services Corp. will serve as co-manager, the bank confirmed.