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OFG Bancorp reports $131.3M in 1Q20 revenue, remains well-capitalized in pandemic

OFG Bancorp, parent of Oriental bank, reported $131.3 million in revenue for the first quarter ended Mar. 31, 2020, with a strong increase in due to its acquisition of the Puerto Rico and U.S. Virgin Islands operations of The Bank of Nova Scotia (Scotiabank), bank officials said.

Upon disclosing its latest results, the financial institution also anticipated changes in Puerto Rico and U.S. Virgin Island macroeconomic scenarios due to the effect of the coronavirus pandemic.

The bank reported core net revenues of $131.3 million, CECL “Day 1” allowance of $89.9 million, provision for credit losses of $48.5 million, $4.7 million gain on sale of investment securities, and $0.00 earnings per share. This compares in the year-ago quarter to net core revenues of $99.3 million, provision of $12.2 million, no gain, and $0.42 earnings per share fully diluted.

“Our priority going into the pandemic was to keep our employees safe while maintaining our nimble and proactive approach to business,” said OFG CEO José Rafael Fernández.

“OFG entered this crisis in a position of strength, and we remain well capitalized and highly liquid with a CET1 ratio of 11.67% and $1.6 billion in liquidity. Coming out of it, our goal is to maintain our strong capital and liquidity positions so we can continue to help customers now and throughout the inevitable recovery,” he said.

In the report, the financial institution confirmed that all March 31, 2020 regulatory capital ratios increased from Dec. 31, 2019 and continue to be “significantly above requirements for a well-capitalized institution.”

“Our core operations performed well in what became a challenging and unique operating environment. Net interest margin was 4.94%, loan production totaled $280 million, and there was a large reduction in wholesale funding due to the significant increase in client deposits from the acquisition,” he said.

Following the implementation of local stay-at-home restrictions mid-March, Oriental has “achieved uninterrupted and excellent levels of service through all channels while maintaining employee and customer safety and social distancing,” he said.

More than half of the institution’s employees are working from home; 47 branches are open for safe access to ATMs, interactive ATMs, drive through or appointments; more than 43% of retail customers requesting forbearance have done so digitally; and 100% of small business requesting U.S. Small Business Administration Paycheck Protection Program loans applied digitally, Fernández said.

In the first round of the PPP funding, Oriental helped 900 small businesses with more than 25,000 employees access more than $140 million in loans, he said.

During a conference call to discuss the results, Fernández said, “this is not the first time this management team has faced and successfully, dealt with externally created crisis situations. Coming out of this one as we have done in the past, our goal is to maintain strong capital and liquidity. So, we may continue to help customers now and throughout the inevitable recovery.” 

Fernández said OFG believes it is “in a strong position going forward. In addition to closing the Scotiabank acquisition last year, we significantly reduced higher-cost non-core funding and sold a large portion of non-performing loans. During the first quarter, we increased our allowance for loan losses by $114 million, to a total of $231 million, equal to 3.41% of loans.”

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This story was written by our staff based on a press release.

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