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OFG Bancorp (OFG)
NYSE:OFG
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OFG Bancorp
(NYSE:OFG)
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Rating:73Outperform
Price Target:
$43.00
â–²(4.88% Upside)
Overall score is driven by strong underlying financial performance and attractive valuation (low P/E with a ~3.1% yield). The earnings outlook is constructive with capital return and business momentum, but tempered by guided NIM compression and some credit/funding headwinds. Technicals are the main near-term drag as the stock trades below major moving averages with weak momentum.
Positive Factors
Strong profit margins
Consistently high net and EBIT margins indicate durable operating profitability that supports internal capital generation. Persistently strong margins give the bank flexibility to fund growth, dividends and buybacks while absorbing cyclical revenue or credit shocks over the next several quarters.
Robust cash generation
Very strong free cash flow growth and high conversion of earnings to cash underpin sustainable capital return and reinvestment capacity. Reliable cash generation reduces reliance on volatile wholesale funding and supports continued buybacks, dividend increases and digital investment.
Deposit and loan franchise growth
Record asset expansion, rising loans and core deposits reflect strengthening market share in Puerto Rico and improved customer acquisition. A growing, sticky deposit base paired with expanding commercial lending supports sustainable NII generation and a durable origination pipeline over the medium term.
Negative Factors
Guided NIM compression
Management's guidance for lower NIM driven by rate cuts and deposit shifts signals a structural margin headwind. Replacement of large, low-cost government deposits with higher-cost wholesale funding will compress net interest income and constrain margin-led earnings growth for multiple quarters.
Elevated credit costs and idiosyncratic NPL
Rising provisions, higher net charge-offs and a specific nonperforming commercial loan highlight asset quality risk concentrated in the local market. Persistent elevated credit costs would erode earnings and require higher reserve levels, pressuring capital and return metrics over the medium term.
Rising non-interest expense and tech amortization
Quarterly increases in operating expenses and accelerated technology amortization weaken operating leverage and widen the efficiency ratio. Until planned workforce and tech efficiencies materialize, elevated OPEX will limit margin expansion and slow conversion of revenue growth into sustainable earnings gains.
OFG Bancorp (OFG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.80B
Dividend Yield2.73%
Average Volume (3M)270.28K
Price to Earnings (P/E)9.0
Beta (1Y)0.80
Revenue Growth3.98%
EPS Growth6.75%
CountryUS
Employees2,223
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)1.27
Shares Outstanding43,955,220
10 Day Avg. Volume346,024
30 Day Avg. Volume270,280
Financial Highlights & Ratios
PEG Ratio0.96
Price to Book (P/B)1.57
Price to Sales (P/S)2.40
P/FCF Ratio9.36
Enterprise Value/Market Cap0.75
Enterprise Value/Revenue1.60
Enterprise Value/Gross Profit2.37
Enterprise Value/Ebitda5.09
Forecast
1Y Price Target
$43.33Price Target Upside5.68% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
OFG Bancorp Business Overview & Revenue Model
Company DescriptionOFG Bancorp, a financial holding company, provides a range of banking and financial services. It operates through three segments: Banking, Wealth Management, and Treasury. The company offers checking and savings accounts, as well as time deposit products; commercial, consumer, auto, and mortgage lending services; financial planning and insurance services; and corporate and individual trust, and retirement services. It also provides securities brokerage and investment advisory services, including various investment alternatives, such as tax-advantaged fixed income securities, mutual funds, stocks, and bonds to retail and institutional clients; and separately-managed accounts and mutual fund asset allocation programs. In addition, the company engages in the insurance agency and reinsurance businesses; administration and servicing of retirement plans; various treasury-related functions with an investment portfolio consisting of mortgage-backed securities, obligations of U.S. government sponsored agencies, and U.S. Treasury securities and money market instruments; and management and participation in public offerings and private placements of debt and equity securities. Further, it offers money management and investment banking services; and engages in the asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings. The company operates through a network of 50 branches in Puerto Rico and 2 branches in USVI. OFG Bancorp was founded in 1964 and is headquartered in San Juan, Puerto Rico.
How the Company Makes MoneyOFG Bancorp generates revenue through multiple key streams, primarily interest income from loans and investments, as well as non-interest income from fees and services. The company earns interest income by providing various types of loans, including personal, mortgage, and commercial loans, and by investing in securities. Non-interest income is derived from service fees, asset management fees, and other financial services, including transaction-based fees. Additionally, partnerships with local businesses and government entities enhance OFG's revenue potential by expanding its customer base and offering tailored financial solutions. Economic conditions in Puerto Rico and the broader U.S. market also play a significant role in influencing OFG's financial performance.
OFG Bancorp Earnings Call Summary
Earnings Call Date:Jan 22, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 16, 2026
Earnings Call Sentiment Positive
The call presented multiple strong positives: solid EPS growth, record assets, loan and deposit growth, commercial book expansion, successful digital deposit product rollouts, improving customer acquisition (notably with younger customers), and continued capital returns via buybacks and dividends. Offsetting these positives were pressure points: loan yields and NIM are under compression due to rate cuts and a partial exit of a large government deposit (to be replaced with higher-cost wholesale funding), elevated quarterly provisions and net charge-offs driven in part by an idiosyncratic Puerto Rico telecommunications loan, discrete technology amortization charges, and a quarterly rise in non-interest expenses. Overall, the positive operating performance, strategic digital traction and capital generation materially outweigh the transitory and idiosyncratic credit and margin headwinds noted for 2026.Q4-2025 Updates
Positive Updates
Strong EPS and Revenue Growth
Diluted EPS rose 17% year-over-year in the fourth quarter and increased 8.3% for fiscal 2025, supported by 2% linked-quarter growth in total core revenues and a 2.8% increase in total core revenues for the year.
Balance Sheet Expansion to Record Levels
Total assets grew 8.4% to a record $12.5 billion; loans grew 5.3% to $8.2 billion and core deposits increased 5% to $9.9 billion.
Commercial Loan Growth and Mix Shift
Commercial loans increased to $3.5 billion and now represent 43% of the loan book; new loan production rose 11.5% to $2.6 billion for the year.
Capital Return and Share Repurchases
Repurchased approximately $92 million of shares during 2025, including $40 million in the fourth quarter, and increased the dividend by 20%, reflecting continued capital generation.
Digital-First Strategy Driving Customer Growth
Successful rollout of Libre (mass market) and Elite (mass-affluent) accounts, omnichannel platform and treasury enhancements drove a 4% growth in retail customers and a 5% increase in commercial customers; 75% of Libre accounts were new customers with 40% of new Libre customers age 29 or younger.
Profitability and Capital Metrics
Tangible book value $29.96 per share; efficiency ratio 56.7%; return on average assets 1.81%; return on average tangible common equity 17.2%; CET1 ratio 13.97% and stockholders' equity $1.4 billion.
Net Interest Margin and Liquidity Position
Net interest margin for full-year 2025 was 5.27% (Q4 NIM 5.12%), within expectations; end-of-period cash increased 41% to $1.0 billion and borrowings used tactically for liquidity management.
Operational Efficiency Focus and Workforce Optimization
Management expects 2026 non-interest expense of $380–$385 million and highlighted workforce optimization (reduced FTEs) plus technology investments designed to produce growing efficiencies in 2027–2028.
Negative Updates
Compression in Loan Yields and NIM Pressure
Loan yield declined to 7.73%, down 70 basis points (impact of Fed cuts and repricing), and NIM guidance for 2026 is lower (expected 4.95%–5.05%) reflecting rate cuts and partial exit of a $500 million government deposit.
Higher Provision and Net Charge-Offs
Provision for credit losses was $31.9 million in Q4, up $4 million quarter-over-quarter; net charge-offs totaled $27 million, up $6.7 million versus prior quarter.
Idiosyncratic Nonperforming Loan Impact
Nonperforming loan rate increased to 1.59% in Q4 due to moving a Puerto Rico telecommunications commercial loan to nonaccrual and a $5.1 million specific reserve related to that borrower.
Other Income and Technology Amortization Hit
Other income turned to a loss of $1.11 million in Q4 versus a $2.2 million profit in the prior quarter, reflecting $6.1 million of accelerated amortization of technology-related assets (and related $1.0 million non-interest expense impact).
Quarterly Increase in Non-Interest Expenses
Non-interest expenses rose to $105 million in Q4, up $8.5 million quarter-over-quarter driven by $3.3 million in professional services (performance-based advisory), $2.5 million business rightsizing, acceleration of tech amortization, higher bonuses and marketing.
Investment Portfolio Contraction
Investment balances decreased by $96 million (to $2.8 billion) driven by principal paydowns and maturities, partially offset by modest purchases of mortgage-backed securities and residential mortgage securitizations.
Funding Mix Headwinds from Government Deposit Movement
Approximately $500 million of large Puerto Rico government deposits moved to an advisory account (wealth management) and the remaining $600 million remains variable; replacing the $500 million with wholesale funding will carry an incremental funding cost (estimated ~25–40 basis points depending on term), pressuring NIM.
Seasonal and Year-End Asset Quality Volatility
Total delinquency rose to 4.18% quarter-over-quarter (though down year-over-year) and management noted typical year-end seasonality in higher delinquencies and nonperforming levels that may normalize in subsequent quarters.
Company Guidance
Guidance for 2026: management expects loans to grow low single digits (commercial +5–6%, auto balances down ~2–3%), net interest margin of 4.95%–5.05% (versus 5.27% for 2025 and 5.12% in Q4) assuming two additional 25‑bp cuts and the partial exit of a $500M Puerto Rico government deposit (with $600M remaining variable and replacement wholesale funding carrying ~25–40 bps higher cost); noninterest expense is guided to $380M–$385M (roughly flat year‑over‑year), the effective tax rate about 23% ex‑discrete items, and credit should remain steady (Q4 PCL $31.9M, net charge‑offs $27M, early delinquency 2.8%, total delinquency 4.18%, NPLs 1.59%); capital is expected to continue building (CET1 13.97%, tangible book $29.96/share, tangible common equity ratio 10.47%) while returning capital to shareholders via regular dividends and buybacks (repurchases ~ $92M in 2025, $40M in Q4; dividend +20% in 2025); other 2025 operating metrics included total assets $12.5B, loans $8.2B (commercial $3.5B, 43% of loan book), core deposits $9.9B, new loan production $2.6B, NIM 5.27% for the year, efficiency ratio 56.7%, ROA 1.81%, and ROTCE 17.2%.OFG Bancorp Financial Statement Overview
Summary
Strong profitability (net margin 23.65%, EBIT margin 28.38%) and solid cash generation (TTM free cash flow growth 51.7%, FCF to net income 0.90). Balance sheet is healthy with moderate leverage (debt-to-equity 0.42) and solid ROE (15.18%), though rising debt and some efficiency/operating cash flow conversion items warrant monitoring.Income Statement
OFG Bancorp demonstrates strong revenue growth with a TTM revenue growth rate of 1.42% and consistent profitability, evidenced by a net profit margin of 23.65% and an EBIT margin of 28.38%. However, there is a slight decline in gross profit margin over the periods, indicating potential cost pressures.85
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with a manageable debt-to-equity ratio of 0.42 and a solid return on equity of 15.18%. The equity ratio remains stable, reflecting a strong capital position. However, the increase in total debt over the periods suggests a need for careful leverage management.78
Positive
Cash Flow
OFG Bancorp shows robust cash flow management with a significant free cash flow growth rate of 51.7% in the TTM period. The free cash flow to net income ratio of 0.90 indicates efficient cash conversion. However, the operating cash flow to net income ratio is relatively low, suggesting room for improvement in operational efficiency.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 843.88M | 822.77M | 728.15M | 598.51M | 539.08M | 541.21M |
| Gross Profit | 569.05M | 578.69M | 579.50M | 540.89M | 497.03M | 383.62M |
| EBITDA | 264.95M | 280.54M | 291.82M | 268.53M | 238.53M | 118.58M |
| Net Income | 199.56M | 198.17M | 181.87M | 166.24M | 146.15M | 74.33M |
Balance Sheet | ||||||
| Total Assets | 12.23B | 11.50B | 11.34B | 9.82B | 9.90B | 9.83B |
| Cash, Cash Equivalents and Short-Term Investments | 2.83B | 2.93B | 2.85B | 1.96B | 2.53B | 2.60B |
| Total Debt | 582.00M | 422.56M | 224.80M | 54.40M | 95.07M | 134.92M |
| Total Liabilities | 10.85B | 10.25B | 10.15B | 8.78B | 8.83B | 8.74B |
| Stockholders Equity | 1.38B | 1.25B | 1.19B | 1.04B | 1.07B | 1.09B |
Cash Flow | ||||||
| Free Cash Flow | 177.03M | 210.79M | 277.80M | 133.46M | 76.99M | 19.70M |
| Operating Cash Flow | 196.78M | 252.50M | 295.66M | 164.46M | 100.04M | 34.96M |
| Investing Cash Flow | -673.06M | -335.98M | -1.40B | -1.51B | -182.93M | 757.50M |
| Financing Cash Flow | 536.03M | -73.56M | 1.31B | -124.70M | -49.04M | 510.36M |
OFG Bancorp Technical Analysis
Positive
41.00
Price Trends
40.86
Positive
41.21
Negative
41.63
Negative
Market Momentum
-0.24
Negative
53.18
Neutral
79.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OFG, the sentiment is Positive. The current price of 41 is above the 20-day moving average (MA) of 40.35, above the 50-day MA of 40.86, and below the 200-day MA of 41.63, indicating a neutral trend. The MACD of -0.24 indicates Negative momentum. The RSI at 53.18 is Neutral, neither overbought nor oversold. The STOCH value of 79.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OFG.
OFG Bancorp Risk Analysis
OFG Bancorp disclosed 26 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $2.21B | 15.30 | 12.25% | 0.99% | 6.21% | 19.23% | |
77 Outperform | $1.83B | 14.06 | 16.42% | 2.65% | 6.09% | 11.49% | |
76 Outperform | $1.96B | 12.64 | 9.71% | 3.11% | 3.80% | -6.23% | |
73 Outperform | $1.80B | 9.05 | 14.82% | 2.73% | 3.98% | 6.75% | |
71 Outperform | $1.96B | 14.37 | 7.22% | 6.48% | 15.86% | 16.50% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
OFG
OFG Bancorp
41.00
-2.03
-4.72%
CHCO
City Holding Company
127.07
10.04
8.58%
FCF
First Commonwealth
18.89
2.32
13.99%
NWBI
Northwest Bancshares
13.44
0.71
5.54%
NIC
Nicolet Bankshares
149.17
32.15
27.47%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.