OFG Bancorp (OFG) AI Stock Analysis

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OFG Bancorp

(NYSE:OFG)

Rating:79Outperform

Price Target:―

OFG Bancorp's strong financial performance, robust balance sheet, and strategic digital initiatives drive a positive outlook. The low P/E ratio and reasonable dividend yield enhance its attractiveness. However, technical indicators suggest caution, and challenges highlighted during the earnings call could impact future performance.

Positive Factors

Balance Sheet

Balance sheet trends were highlighted by continued loan growth, increased MBS holdings, and deposit mix shift.

Operating Trends

Stock reaction seems over-blown, as operating trends were roughly in line, with much of the miss tied to rate related MSR volatility.

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.

Fees

Fees declined $5.6MM Q/Q hit by lower interchange fees, impacted by Durbin amendment, and lower MSR valuation.

OFG Bancorp (OFG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.91B

Dividend Yield2.51%

Average Volume (3M)321.37K

Price to Earnings (P/E)10.2

Beta (1Y)1.02

Revenue Growth7.84%

EPS Growth6.82%

CountryUS

Employees2,223

SectorFinancial

Sector Strength81

IndustryBanks - Regional

Share Statistics

EPS (TTM)1.00

Shares Outstanding44,913,113

10 Day Avg. Volume227,547

30 Day Avg. Volume321,371

Financial Highlights & Ratios

PEG Ratio-8.17

Price to Book (P/B)1.44

Price to Sales (P/S)0.00

P/FCF Ratio8.89

Enterprise Value/Market Cap1.13

Enterprise Value/Revenue0.68

Enterprise Value/Gross Profit2.48

Enterprise Value/Ebitda2.34

Forecast

1Y Price Target

$44.00

Price Target Upside6.46% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

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 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 demonstrates strong financial performance with robust revenue growth and profitability. The balance sheet shows minimal debt and substantial equity, enhancing financial stability. However, the potential data anomaly in 2024 and variability in cash flow activities pose minor risks.

Income Statement

Very Positive

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.

Balance Sheet

Very Positive

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.

Cash Flow

Positive

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
575.57M	660.94M	628.61M	613.77M	540.58M	476.29M
	Gross Profit
575.57M	660.94M	628.61M	613.77M	540.58M	476.29M
	EBIT
249.93M	254.43M	264.53M	277.60M	214.60M	94.83M
	EBITDA
237.78M	0.00	291.82M	268.53M	242.96M	116.39M
	Net Income Common Stockholders
153.15M	198.17M	181.87M	166.24M	146.15M	74.33M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.93B	591.14M	748.17M	1.96B	2.53B	2.60B
	Total Assets
11.50B	11.65B	11.34B	9.82B	9.90B	9.83B
	Total Debt
347.34M	347.34M	224.80M	54.40M	95.07M	134.92M
	Net Debt
-243.80M	-243.80M	-523.37M	-496.06M	-1.93B	-2.02B
	Total Liabilities
10.25B	10.25B	10.15B	8.78B	95.07M	134.92M
	Stockholders Equity
1.25B	1.25B	1.19B	1.04B	1.07B	1.09B
Cash Flow		Free Cash Flow
89.74M	210.79M	277.80M	133.46M	76.99M	-103.88M
	Operating Cash Flow
123.47M	252.50M	295.66M	164.46M	100.04M	-88.62M
	Investing Cash Flow
-1.55B	-335.98M	-1.40B	-1.51B	-182.93M	881.08M
	Financing Cash Flow
-513.59M	-73.56M	1.31B	-124.70M	-49.04M	510.36M

OFG Bancorp Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price41.33

Price Trends

50DMA

39.31

Positive

100DMA

40.65

Positive

200DMA

41.67

Negative

Market Momentum

MACD

0.98

Positive

RSI

54.99

Neutral

STOCH

34.43

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OFG, the sentiment is Neutral. The current price of 41.33 is above the 20-day moving average (MA) of 41.27, above the 50-day MA of 39.31, and below the 200-day MA of 41.67, indicating a neutral trend. The MACD of 0.98 indicates Positive momentum. The RSI at 54.99 is Neutral, neither overbought nor oversold. The STOCH value of 34.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 2 New Risks

Puerto Rico depends on federal disaster relief funds and any prolonged delay in disbursements of such funds could adversely affect the local economy. Q4, 2024

Potential adverse effects of political changes may disrupt the economic recovery process in Puerto Rico. Q4, 2024

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
OFG	79 Outperform	$1.91B	10.17	15.46%	2.51%	7.84%	6.82%
NIC	78 Outperform	$1.86B	14.89	11.47%	0.91%	10.78%	28.31%
CASH	75 Outperform	$1.92B	10.90	22.88%	0.26%	3.25%	11.22%
MBIN	70 Outperform	$1.51B	6.04	14.81%	1.16%	9.73%	-14.72%
CHCO	70 Outperform	$1.72B	14.90	16.25%	2.58%	8.80%	0.22%
FBNC	69 Neutral	$1.71B	19.50	6.03%	2.13%	-2.00%	-23.84%
Sector *	64 Neutral	$12.66B	9.79	7.67%	17015.07%	12.23%	-6.06%

* Financial Sector Average

Performance Comparison

OFG

OFG Bancorp

41.33

5.68

15.93%

CHCO

City Holding Company

118.81

20.06

20.31%

FBNC

First Bancorp

41.20

10.50

34.20%

CASH

Meta Financial Group

77.59

22.75

41.48%

NIC

Nicolet Bankshares

122.91

43.19

54.18%

MBIN

Merchants Bancorp

31.66

-8.52

-21.20%

OFG Bancorp Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 13.70%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a balanced outlook. While strong financial performance and digital innovation were highlighted, challenges such as declined interest income, decreased service revenues, and significant power outages in Puerto Rico also presented concerns.

Q1-2025 Updates

Positive Updates

Strong Start with Consistent Financial Results

First quarter earnings per share diluted at $1, driven by excellent operating execution and loan and deposit growth. Share buybacks and a 20% dividend increase supported by strong capital generation and balance sheet.

Digital Channel Expansion

96% of retail customer transactions, 97% of retail deposits, and 68% of retail loan payments processed through digital and self-service channels. Year-over-year growth: 12% in digital enrollment, 21% in digital loan payments, 40% in virtual teller utilization, and nearly 5% customer growth.

Technological Innovations

Launched an omni-channel online mobile app, smart banking insights, and Apple Pay for debit and credit cards, all firsts in the Puerto Rican market.

Stable Credit Quality

Credit quality remained stable, with net charge-off rate unchanged year-over-year at 1.05%, and delinquency rates decreased.

Negative Updates

Decline in Total Interest Income

Total interest income declined by $941,000, mainly due to two fewer business days affecting interest income by $3 million.

Decrease in Banking and Financial Service Revenues

Total banking and financial service revenues decreased by $3.6 million, with first quarter including $4.8 million combined in annual insurance fees and favorable MSR valuation change.

Increase in Net Charge-Offs

Net charge-offs rose by $4.5 million, primarily due to a $2.9 million partial charge-off of a previously reserved commercial loan.

Impact of Power Outages in Puerto Rico

A significant power outage impacted the Puerto Rican economy by approximately $100 million, highlighting ongoing infrastructure challenges.

Company Guidance

During the first quarter of fiscal year 2025, OFG Bancorp reported solid financial performance with an earnings per share diluted of $1, driven by effective operating execution and growth in loans and deposits. The strategic investment in digital technology has been fruitful, with 96% of retail customer transactions and 97% of retail deposit transactions conducted through digital channels, reflecting a 12% year-over-year increase in digital enrollment and a 21% rise in digital loan payments. The company reported core revenues of $178 million, with total interest income of $189 million and interest expense at $40 million. Notably, the efficiency ratio stood at 52.2%, return on average assets at 1.56%, and return on tangible common equity at 15.28%. The net interest margin was slightly higher at 5.42%, benefiting from higher-yielding investment securities. Despite seasonal and macroeconomic challenges, OFG's focus on digital innovation and customer engagement has supported its strong capital generation and balance sheet resilience.

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.