OFG Bancorp, which until earlier this week was known as Oriental Financial Group Inc., revealed its first quarter results Thursday, which reflected income of $17.7 million for the three-month period, up from the $9.5 million reported for the same year-ago quarter, and a loss of $23.3 million, or ($0.53) per share, in the fourth quarter of 20112.
The results are directly related to several factors: the acquisition of Banco Bilbao Vizcaya Argentaria, S.A.’s Puerto Rico operations on Dec. 18, 2012; the deleveraging of the investment securities portfolio; and continued organic growth that “transformed OFG’s profitability in line with its strategic direction.”
“We are off to an excellent start for the year,” said OFG Bancorp President José Rafael Fernández. “Our first quarter 2013 results demonstrate OFG’s much improved earnings capability and quality. By the end of last year, we had transformed our balance sheet.”
“In the first quarter we transformed our income statement. We expect results to continue to benefit from our more diversified business portfolios as well as increased scale and leadership in our market,” he said.
Return on assets for the quarter stood at 0.95 percent, return on equity was 10.14 percent, while the efficiency ratio was 56.1 percent – all of which represent improvements from both the year ago and preceding quarters, the bank’s report shows.
“ROA, ROE and the efficiency ratio were on, or moving toward, our targets of more than 1.00 percent and 12.00 percent, and the low 50 percent range, respectively. Capital is growing, and we are realizing the anticipated benefits of the acquisition,” Fernández said.
OFG Bancorp’s, interest income from loans totaled $100.5 million, up 153.4 percent from the year-ago quarter and 109.8 percent from the preceding quarter, while interest income from investments of $13.1 million declined 56.6 percent from the same quarter in 2012 and 20.3 percent from the fourth quarter of last year.
The changes primarily reflect OFG’s significantly larger and higher yielding loan assets, along with the sharply reduced size of the investment securities portfolio, the bank said.
“With 1Q13 earnings meeting expectations, we are on track to achieve our initial guidance of $1.40 GAAP EPS for 2013. Operations are moving in line with our plan. The loan portfolio is performing well,” he said.
The bank’s total net loans of $5.2 billion were up 215.3 percent from a year ago and up slightly from Dec. 31, 2012. The non-covered loan portfolio of $4.8 billion was up 305.6 percent year over year and 1.0 percent from the end of 2012.
Net loans covered by the FDIC loss-share — certain former Eurobank loans taken over after Oriental purchased the troubled bank in 2010 — continued to pay down, declining to $379.7 million, a decrease of 17.8 percent from a year ago and 3.9 percent from the end of last year.
“Credit quality remains strong. The pipeline for loan generation is building as expected, and integration is moving ahead smoothly,” Fernández noted.
Total bank and wealth management revenues of $23.2 million were up 102.2 percent from the year ago quarter and 58.1 percent from the preceding quarter. The increase reflects a full quarter of OFG’s larger fee generating businesses, particularly as related to banking service fees and mortgage banking activities, as well as overall organic growth.