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OFG Bancorp (OFG)
NYSE:OFG
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OFG Bancorp
(NYSE:OFG)
78Outperform
Positive Factors
Balance Sheet Trends
Balance sheet trends were highlighted by continued loan growth, increased MBS holdings, and deposit mix shift.
Negative Factors
Credit Trends
Credit trends deteriorated more than anticipated, with NCOs increasing 11bps Q/Q to 90bps of avg. loans, mainly driven by higher auto NCOs.
Fee Income
Fees declined $5.6MM Q/Q hit by lower interchange fees, impacted by Durbin amendment, and lower MSR valuation.
OFG Bancorp (OFG) vs. S&P 500 (SPY)
Market Cap
$1.78B
Dividend Yield2.55%
Average Volume (3M)362.33K
Price to Earnings (P/E)9.6
Beta (1Y)1.00
Revenue Growth12.13%
EPS Growth10.42%
CountryUS
Employees2,248
SectorFinancial
Sector Strength77
IndustryBanking
Share Statistics
EPS (TTM)4.23
Shares Outstanding45,393,948
10 Day Avg. Volume356,547
30 Day Avg. Volume362,331
Financial Highlights & Ratios
PEG Ratio0.93
Price to Book (P/B)N/A
Price to Sales (P/S)2.83
Price to Cash Flow (P/CF)11.60
P/FCF Ratio6.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$50.00Price Target Upside27.58% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
OFG Bancorp Business Overview & Revenue Model
Company DescriptionOFG Bancorp (OFG) is a financial holding company based in San Juan, Puerto Rico. The company operates primarily through its subsidiaries, providing a wide array of banking and financial services. These services include consumer and commercial banking, lending, wealth management, and insurance. OFG Bancorp focuses on serving the needs of both individual and corporate clients, enhancing its offerings with digital banking solutions to improve customer experience and accessibility.
How the Company Makes MoneyOFG Bancorp generates revenue primarily through interest and non-interest income. Interest income is derived from its lending activities, including consumer loans, commercial loans, and mortgages. The company earns interest on the loans it extends to its clients, which constitutes a significant portion of its income. Non-interest income is generated through various fees and service charges related to its banking and financial services, such as wealth management, insurance services, and transaction fees from its digital banking platform. Additionally, OFG Bancorp benefits from strategic partnerships and collaborations that enhance its service offerings and expand its market reach. The company also invests in securities, which contributes to its earnings through interest and dividends.
OFG Bancorp Financial Statement Overview
Summary
OFG Bancorp shows strong financial performance with notable revenue growth and solid profitability. The balance sheet is robust, with minimal debt and high equity ratios, providing financial stability. Cash flow generation is positive but shows some variability in financing and investing activities. The potential reporting anomaly in 2024 requires clarification.Income Statement
OFG Bancorp's income statement demonstrates robust revenue growth over the years, with a noticeable increase in total revenue from $393 million in 2019 to $629 million in 2023. The company has maintained strong profitability, evidenced by consistent gross and net profit margins. Net income has grown steadily, reflecting efficient cost management and operational performance. However, the flat gross profit in 2024 is a concern, as the data suggests zero revenue, which may indicate a reporting error or a significant issue that needs addressing.85
Very Positive
Balance Sheet
The balance sheet of OFG Bancorp is exceptionally strong, with a high equity ratio and no total debt in 2024, indicating a solid financial position and low leverage risk. The substantial stockholders' equity compared to liabilities underlines financial stability. The debt-to-equity ratio has been consistently low, enhancing the company's financial resilience. The equity ratio shows a healthy proportion of equity financing, supporting long-term sustainability.90
Very Positive
Cash Flow
OFG Bancorp's cash flow statement reflects a positive trend in free cash flow, with significant growth from negative figures in 2020 to a positive $278 million in 2023, suggesting improved cash management. The operating cash flow to net income ratio is robust, indicating strong cash flow generation from operations. However, the variability in financing and investing cash flows points to potential volatility in capital expenditures and financing activities.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 660.94M | 628.61M | 613.77M | 540.58M | 476.29M | Gross Profit |
| 660.94M | 628.61M | 613.77M | 540.58M | 476.29M | EBIT |
| -442.37M | 264.53M | 277.60M | 214.60M | 94.83M | EBITDA |
| 0.00 | 291.82M | 268.53M | 242.96M | 116.39M | Net Income Common Stockholders |
| 198.17M | 181.87M | 166.24M | 146.15M | 74.33M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 40.57M | 748.17M | 1.96B | 2.53B | 2.60B | Total Assets |
| 1.27B | 11.34B | 9.82B | 9.90B | 9.83B | Total Debt |
| 347.34M | 224.80M | 54.40M | 95.07M | 134.92M | Net Debt |
| -40.57M | -523.37M | -496.06M | -1.93B | -2.02B | Total Liabilities |
| 10.25B | 10.15B | 8.78B | 95.07M | 134.92M | Stockholders Equity |
| 1.25B | 1.19B | 1.04B | 1.07B | 1.09B |
| Cash Flow | Free Cash Flow | |||
| 91.80M | 277.80M | 133.46M | 76.99M | -103.88M | Operating Cash Flow |
| 91.80M | 295.66M | 164.46M | 100.04M | -88.62M | Investing Cash Flow |
| -4.01M | -1.40B | -1.51B | -182.93M | 881.08M | Financing Cash Flow |
| -120.34M | 1.31B | -124.70M | -49.04M | 510.36M |
OFG Bancorp Technical Analysis
Negative
39.19
Price Trends
42.45
Negative
42.67
Negative
41.72
Negative
Market Momentum
-0.67
Positive
29.73
Positive
10.27
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OFG, the sentiment is Negative. The current price of 39.19 is below the 20-day moving average (MA) of 41.84, below the 50-day MA of 42.45, and below the 200-day MA of 41.72, indicating a bearish trend. The MACD of -0.67 indicates Positive momentum. The RSI at 29.73 is Positive, neither overbought nor oversold. The STOCH value of 10.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OFG.
OFG Bancorp Risk Analysis
OFG Bancorp disclosed 25 risk factors in its most recent earnings report. OFG Bancorp reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
OFG Bancorp Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $1.78B | 9.65 | 16.19% | 2.55% | 12.13% | 10.42% | |
74 Outperform | $4.71B | 10.38 | 7.53% | 3.65% | 15.34% | -3.89% | |
74 Outperform | $3.27B | 55.69 | 2.36% | ― | 8.15% | -64.06% | |
72 Outperform | $649.82M | 10.95 | 8.60% | 4.54% | 8.33% | -21.76% | |
72 Outperform | $1.51B | 9.45 | 10.44% | ― | -3.61% | -29.58% | |
65 Neutral | $6.07B | 10.91 | 11.42% | 2.74% | 13.68% | 13.73% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% |
* Financial Sector Average
Performance Comparison
OFG
OFG Bancorp
38.85
3.75
10.68%
FNB
F.N.B.
13.08
0.02
0.15%
HAFC
Hanmi Financial
21.77
7.39
51.39%
BPOP
Popular
87.42
5.33
6.49%
TCBI
Texas Capital Bancshares
70.86
11.53
19.43%
CUBI
Customers Bancorp
48.20
-4.05
-7.75%
OFG Bancorp Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: -12.41% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Neutral
The earnings call presented a strong performance for OFG Bancorp with significant growth in earnings, digital adoption, and customer base. However, the increase in provision for credit losses and higher noninterest expenses posed challenges.Highlights
Earnings Growth and Share Buyback
Earnings per share were up 11.2% year-over-year with a total of $46 million in common shares repurchased in Q4 2024.
Strong Digital Adoption
Digital adoption saw a 12% increase in enrollment, 54% in digital loan payments, and 34% in virtual teller utilization.
Capital Management and Dividend Increase
Acquired servicing rights to a $1.7 billion mortgage loan portfolio and increased the quarterly dividend by 14%.
Loan Production and Customer Growth
New loan production totaled $609 million with a customer growth rate of 5% year-over-year.
Lowlights
Increase in Provision for Credit Losses
Provision for credit losses increased by $8.8 million from the third quarter, partly due to increased loan volume and specific issues with U.S. commercial loans.
Higher Noninterest Expenses
Noninterest expenses were up $8.1 million from the third quarter due to early retirement, business rightsizing, and performance incentives.
Reduction in Core Deposits
Average core deposits were slightly down from the third quarter, with a decrease of $84 million or 0.9%.
Company Guidance
In the fourth quarter of 2024, OFG Bancorp reported a strong performance with earnings per share of $1.09, marking an 11.2% increase year-over-year, supported by a 3.6% rise in total core revenues to $182 million. The net interest margin stood at 5.4%, while the provision for credit losses increased to $30.2 million. Noninterest expenses were recorded at $99.7 million, impacting pretax income, yet offset by lower taxes. The company ended the year with total assets of $11.5 billion, up 1.4% from the previous year, and customer deposits of $9.4 billion. Loan production was robust at $609 million, contributing to loans held for investment totaling $7.8 billion. The capital position remained strong with a CET1 ratio of 14.26%, despite $46 million in stock buybacks, leaving $29.7 million on the buyback authorization. For the full year, OFG achieved earnings per share of $4.23, a 10.4% increase, with total core revenues reaching $710 million and a net interest margin of 5.43%. The company also navigated market changes, acquiring a $1.7 billion mortgage servicing portfolio and increasing its dividend by 14%. Digital initiatives played a significant role, with digital transactions comprising 96% of routine retail activities, underlining OFG's strategic focus on digital adoption and operational efficiency.OFG Bancorp Corporate Events
Executive/Board Changes
OFG Bancorp Announces Retirement of Key Executive
Neutral
Oct 22, 2024
Mr. Ganesh Kumar is set to retire from OFG Bancorp after 20 years, having significantly contributed to the firm’s growth through strategic initiatives and digital transformation. As part of his separation agreement, Kumar will receive a substantial severance package and continued healthcare coverage, along with amendments to his equity awards, ensuring a smooth financial transition. This milestone reflects on Kumar’s pivotal role in shaping the company’s success in the financial markets.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.