OFG Bancorp reports Q3 results, expands mortgage servicing portfolio
The bank’s net income available to common stockholders was $47 million.
OFG Bancorp (NYSE: OFG), the parent company of Oriental Bank, reported strong financial results for the third quarter of 2024, showing continued growth in key performance metrics. The company achieved gains in net income, driven by expanding lending operations and strategic acquisitions in its mortgage servicing portfolio.
OFG reported a net interest income of nearly $147.9 million for the third quarter (Q3), slightly up from slightly more than $147.3 million in Q2 2024. Noninterest income, which includes core revenues from banking services and financial products, totaled $26.2 million, contributing to total core revenues of $174.1 million.
“The third quarter was another solid quarter of performance with [earnings per share (EPS)]-diluted up 5.3% year-over-year on a 1.1% increase in total core revenues,” said OFG CEO José Rafael Fernández.
“We continued to produce consistent core operating results, and digital adoption of our new and upgraded products, services and self-service tools keeps steadily growing,” he added.
The bank’s net income available to common stockholders was $47 million, down from the previous quarter’s $51.1 million. EPS for the quarter were $1.01, a slight decrease from Q2’s $1.09.
During the third quarter, OFG Bancorp said it crossed a “significant milestone” by expanding its mortgage servicing operations. The company acquired the servicing rights for a $1.7 billion mortgage loan portfolio.
This move added $21.5 million in servicing assets to its balance sheet, positioning OFG to increase its fee income through servicing revenues.
“I think it was just complementary to what we have been doing. It was part of our operating model already, except that now we own it versus subservicing it. And we’re going to be generating approximately $900,000 … a quarter in terms of mortgage banking fees, and we felt that it was the right thing to do,” said Fernández during a call with analysts to discuss the results.
OFG’s loan portfolio continued its growth trajectory, with total loans averaging $7.63 billion for the quarter, slightly up from $7.6 billion in Q2. The company’s loan growth was underpinned by increases in both commercial and auto lending in Puerto Rico and the U.S., with auto loans alone contributing $2.4 billion.
“In Puerto Rico, we continue to have a strong commercial pipeline. And as we have said, we had anticipated auto lending will moderate at some point from record levels. Now that interest rates are falling and inflation has come down in the U.S., we expect our U.S. lending pipeline to strengthen,” said Maritza Arizmendi, OFG’s chief financial officer, during the call.
Credit quality metrics also showed some challenges. OFG’s total delinquency rate for loans 30 days or more past due rose to 4.1%, up from 3.71% in the previous quarter. However, the bank’s allowance for credit losses increased to $161.5 million.
One significant regulatory development was the impact of the Durbin Amendment, which became applicable to OFG Bancorp after it crossed the $10 billion asset threshold in December 2023. This regulation reduced the company’s debit card interchange fees by $2.7 million during the quarter, affecting noninterest income.
“Puerto Rico’s economy continues to do well, with high levels of business activity and employment. In addition, today marks our 60th anniversary in business,” Fernández said. “While that is cause for celebration, it is a time to renew our commitment to bring progress to our customers, employees, shareholders and the communities we serve. Thanks to all our team members for always being more than ready to help our clients and customers today and tomorrow.”
