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OFG BANCORP (OFG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 EPS was $1.00, a slight beat vs S&P Global consensus of $0.97, while S&P “Revenue” printed $152.9M vs $175.2M consensus (note: company-reported Total Core Revenues were $178.3M, a different definition than S&P revenue). NIM held at 5.42% and efficiency improved to 52.42% . EPS beat: $1.00 vs $0.9675*; S&P Revenue miss: $152.9M* vs $175.2M*.
  • Deposits rose $308M q/q to $9.76B EOP on growth in demand, savings and time across commercial, government, and retail; loans grew to $7.85B EOP (+0.8% q/q). Capital remained strong: CET1 14.27%, TBVPS $26.66 .
  • Credit costs elevated: $25.7M provision (volume, $4.8M specific reserve on three commercial credits, and $3.5M auto LGD update); NCOs were 1.05% of average loans (vs 0.82% in Q4) .
  • Capital return is an increasing catalyst: dividend raised 20% to $0.30 (Jan 29), $23.4M buybacks in Q1, and a new $100M repurchase authorization announced Apr 30; management maintained NIM guidance of 5.3–5.4% for 2025, with opex run-rate $95–$96M/qtr and ETR ~26% .

S&P Global estimates disclaimer: Asterisked values (*) are from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Sustained core profitability and operating discipline: NIM 5.42%, efficiency 52.42%, ROAA 1.56%, ROATCE 15.28% .
    • Balance sheet growth and mix: customer deposits +$308M q/q with broad-based increases; loans +0.8% q/q with growth in auto, PR and U.S. commercial, and consumer .
    • Digital-First execution and product innovation: omnichannel app, Smart Banking insights, and Apple Pay launched; 96% of routine retail transactions and 97% of deposit transactions now digital/self-service; “close to 5%” customer growth y/y. “This is freeing up our people to build stronger customer relationships…” — CEO José R. Fernández .

  • What Went Wrong

    • Top-line optics versus Street: on an S&P revenue basis, Q1 revenue was below consensus (company-reported Total Core Revenues differ and were $178.3M). S&P Revenue actual $152.9M* vs $175.2M* consensus [GetEstimates].
    • Higher credit costs and charge-offs: provision $25.7M (volume, specific reserves, auto LGD), NCOs 1.05% vs 0.82% in Q4; consumer NCO ratio increased to 4.34% .
    • Ongoing external headwinds: seasonality in deposits and continued monitoring of government deposit renewal; Puerto Rico power grid fragility can sporadically disrupt activity (management expects long path to resilience) .

Financial Results

Headline metrics vs prior periods and consensus (company EPS vs S&P Revenue construct)

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus
Diluted EPS ($)$1.05 $1.09 $1.00 $0.9675*
Revenue ($M, S&P)$159.3*$152.5*$152.9*$175.2*

Company-reported revenue and margins

MetricQ1 2024Q4 2024Q1 2025
Total Core Revenues ($M)$174.161 $181.904 $178.283
Net Interest Margin %5.40% 5.40% 5.42%

Key profitability, balance sheet and credit KPIs

KPIQ1 2024Q4 2024Q1 2025
ROAA %1.77% 1.75% 1.56%
ROATCE %17.92% 16.71% 15.28%
Efficiency Ratio %52.49% 54.82% 52.42%
Loans HFI (EOP, $B)$7.54 $7.79 $7.85
Customer Deposits (EOP, $B)$9.55 $9.45 $9.76
Provision for Credit Losses ($M)$15.1 $30.2 $25.7
Net Charge-Off Rate %1.05% 0.82% 1.05%
NPL Rate %1.11% 1.06% 1.11%
ACL / Loans %2.08% 2.26% 2.31%
CET1 Ratio %14.45% 14.26% 14.27%
TBVPS ($)$23.55 $25.43 $26.66

Loan portfolio mix (EOP)

Category ($M)Q1 2024Q4 2024Q1 2025
PR Commercial$2,310.8 $2,399.0 $2,425.7
U.S. Commercial$740.7 $704.1 $727.4
Auto$2,341.2 $2,549.5 $2,593.2
Consumer$628.0 $668.6 $670.8
Mortgage (ex-GNMA)$1,500.5 $1,422.2 $1,390.9
GNMA Buy-back Program$18.5 $48.6 $44.7
Total Loans HFI$7,539.7 $7,792.0 $7,852.6

S&P Global estimates disclaimer: Asterisked values (*) are from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginFY 20255.3%–5.4% (Q4 call) 5.3%–5.4% (Q1 call) Maintained
Non-Interest Expense (run-rate)FY 2025$95–$96M per quarter In line; Q1 tracked to plan Maintained
Effective Tax RateFY 2025~26% ~26% (Q1) Maintained
Provision Run-rateFY 2025~$18–$20M/qtr (base volume) No specific update in Q1; implied unchanged Maintained
DividendOngoing$0.25/qtr (2024) $0.30/qtr (20% increase, Jan 29) Raised
Share RepurchasesOngoing$29.7M remaining as of 12/31/24 $23.4M repurchased in Q1; new $100M authorization on Apr 30 Increased capacity

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
Digital/Technology95% routine txns digital; portal adoption rising 96% routine, 97% deposits, 68% loan payments digital; pipeline of products Omnichannel app, Smart Insights, Apple Pay launched; 96/97/68 metrics; ~5% customer growth Improving
NIM OutlookGuided 5.3–5.4% (Fed cuts context) Maintained 5.3–5.4% for 2025 Maintained 5.3–5.4%; funding mix/government deposits are swing factors Stable
Deposits/Public FundsMix shift; gov’t deposit exit expected Nov’24 Ex-public funds growth; competitive but rational market Deposits up; $~1B gov’t deposits expected to renew “for several months” Improving but watch public funds
Fees/DurbinDurbin reduced interchange by ~$2.7M Mitigating Durbin via mortgage servicing, activity growth Fees $29–$30M quarterly run-rate expected Stabilizing
Credit QualityNCOs 0.90%; ACL refresh; auto factors updated NCOs 0.82% helped by recoveries NCOs 1.05%; $4.8M specific reserves; consumer NCOs seasonally higher; delinquency improved Mixed/Normalizing
Securities PortfolioExtending duration, asset sensitivity down Continued build supports NIM Duration ~5–6 years; $100M MBS at 5.40% added Constructive
PR Macro/GridPositive macro; reconstruction funds; outlook supportive Positive macro; vigilance on uncertainties Macro stable; grid remains fragile; long path to resilience Stable, grid risk persists
Capital AllocationAccumulating capital; more buyback considered $45.9M Q4 buybacks; dividend up; 2025 plan similar $23.4M Q1 buybacks; 20% dividend hike; new $100M buyback Increasing returns

Management Commentary

  • “The first quarter reflected a strong start to the year with solid overall performance… Highlights included customer and deposit growth, and improved consumer credit.” — CEO José R. Fernández .
  • “Net interest income remained stable… NIM was slightly higher than expected from higher yielding investment securities and lower cost of government deposits.” — CFO Maritza Arizmendi .
  • “Our Digital First strategy is proving to be highly effective… we will continue to invest in and deploy new customer innovations.” — CEO .
  • “We bought back $23.4 million of shares and raised our dividend 20%… CET1 ratio at 14.3%.” — CEO .

Q&A Highlights

  • Digital account opening: 25–26% of checking and CDs are opened through digital channels; trend increasing .
  • Government deposits: ~$1B expected to renew for several months; updated each quarter .
  • Credit outlook: Consumer credit seasonally improved in Q1; stabilization supported by stronger collateral recoveries and tighter underwriting vintages; expect slight seasonal uptick next quarter but overall stabilization .
  • Securities duration and NIM drivers: Bond book duration ~5–6 years; repayments ~$84M; 2025 NIM range 5.3–5.4% with funding mix (public funds) as key swing factor .
  • Specific reserves: Three commercial loans (one PR long-standing substandard moved to nonaccrual; two U.S. C&I loans) totaling ~$10M were placed in substandard, prompting reserve .

Estimates Context

  • EPS beat: $1.00 vs $0.9675 S&P consensus (+$0.03), aided by lower tax rate (23.34% for Q1; ~26% full-year) and share count reduction from buybacks . EPS actual/consensus: $1.00 vs $0.9675*.
  • Revenue: On an S&P revenue basis, $152.9M vs $175.2M consensus, while company “Total Core Revenues” were $178.3M due to differing definitions (NII + core non-interest income) . S&P Revenue actual/consensus: $152.9M* vs $175.2M*.
  • Street models may adjust: maintain NIM (5.3–5.4%), fees run-rate ($29–$30M), opex ($95–$96M/qtr), ETR (~26%), and provision baseline ($18–$20M) subject to credit trends; monitor public funds renewal and bond reinvestment yields .

S&P Global estimates disclaimer: Asterisked values (*) are from S&P Global.

Key Takeaways for Investors

  • Core profitability intact with robust NIM and efficiency; slight EPS beat despite elevated provision points to resilient pre-provision earnings power .
  • Balance sheet momentum continues (deposits +$308M q/q; loans +0.8% q/q) with healthy capital (CET1 14.27%); TBVPS compounding continues .
  • Credit remains manageable; higher Q1 provisioning driven by growth and discrete items; delinquency rates improved sequentially; watch consumer/auto and any migration in U.S. C&I .
  • 2025 NIM guide 5.3–5.4% maintained; funding mix—especially timing/cost of public funds—remains a key variable for spreads and NII trajectory .
  • Capital return is a key catalyst: 20% dividend hike and a fresh $100M buyback support TSR; opportunistic repurchases likely alongside organic growth .
  • Digital leadership differentiates franchise and supports deposit growth and operating leverage, with 96–97% retail activity in self-service channels .
  • Near-term trading: Watch updates on government deposits renewal, NCO/provision trajectory, and additional MBS reinvestment yields; medium-term thesis centers on stable margins, disciplined credit, and accelerated capital return.

Notes:

  • Company results and operational metrics are sourced from OFG’s Q1 2025 8-K, press release, and financial supplement -.
  • Prior-quarter context comes from Q4 2024 and Q3 2024 company materials - - and earnings calls - -.
  • S&P Global consensus and “Revenue” actuals are marked with an asterisk (*) and retrieved from S&P Global via GetEstimates.