Executive Summary

Q3 2025 delivered steady operating performance: diluted EPS of $1.16 (up 16% y/y; +$0.01 q/q), total core revenues of $184.0M (+5.6% y/y; +$1.8M q/q), and PPNR of $89.6M (+$2.1M q/q) .
Net interest margin compressed 7 bps q/q to 5.24% on slightly higher deposit and borrowing costs despite higher interest income; management guided Q4 NIM to 5.10%–5.20% given Fed cuts and funding mix .
Credit remained generally stable but provision rose to $28.3M on loan growth, specific reserves for two commercial credits, model/assumption updates and macro factors; net charge-offs increased to 1.00% (from 0.64%) .
Capital and capital return strengthened: CET1 14.13%, TCE ratio 10.55%, TBVPS $28.92, and $20.4M in share repurchases (477,600 shares) in Q3; $0.30 dividend declared for Q4 2025 payable Jan 15, 2026 .
Versus S&P Global consensus, EPS was in line-to-slight miss ($1.16 vs $1.17*), while SPGI “Revenue” showed a miss vs estimate ($157.9M* actual vs $187.0M* est.); note SPGI’s revenue definition differs from the company’s “total core revenues” ($184.0M) . Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well
- EPS grew 16% y/y on 5.6% y/y core revenue growth; PPNR improved to $89.6M (+$2.1M q/q) .
- Commercial loan growth remained a strategic driver y/y, while digital adoption and AI-driven insights deepened customer engagement; management highlighted average “nine insights per month per account” with 93% positive feedback .
- Capital build and shareholder returns: CET1 rose to 14.13% (+14 bps q/q), TCE ratio to 10.55% (+35 bps q/q), TBVPS to $28.92 (+$1.25 q/q), $20.4M in buybacks .
What Went Wrong
- NIM contracted to 5.24% (–7 bps q/q) on slightly higher deposit costs and greater variable-rate borrowings, partially offsetting higher asset yields .
- Provision increased to $28.3M (from $21.7M) driven by loan volume, specific reserves on two commercial loans, model/assumption changes (prepayment) and macro; NCOs rose to 1.00% .
- Deposit costs ticked higher as OFG strategically priced to win mass-affluent savings (Elite) balances; management acknowledged paying “around 1% plus, let’s say, 1.5% on average” on this product .

Financial Results

Headline P&L vs Prior Periods

Metric	Q3 2024	Q2 2025	Q3 2025
Diluted EPS ($)	$1.00	$1.15	$1.16
Total Core Revenues ($M)	$174.1	$182.2	$184.0
Net Interest Income ($M)	$147.9	$151.9	$154.7
Non-Interest Income – Core ($M)	$26.3	$30.2	$29.3
Pre-Provision Net Revenues ($M)	$83.1	$87.6	$89.6
Provision for Credit Losses ($M)	$21.4	$21.7	$28.3
Net Income to Common ($M)	$47.0	$51.8	$51.8

Profitability & Efficiency

Metric	Q3 2024	Q2 2025	Q3 2025
Net Interest Margin (%)	5.43%	5.31%	5.24%
ROAA (%)	1.66%	1.73%	1.69%
ROTCE (%)	15.94%	16.96%	16.39%
Efficiency Ratio (%)	52.60%	52.04%	52.48%

Credit Quality

Metric	Q3 2024	Q2 2025	Q3 2025
Net Charge-Offs ($M)	$17.1	$12.8	$20.2
Net Charge-Off Rate (%)	0.90%	0.64%	1.00%
NPL Rate (%)	1.03%	1.19%	1.22%
ACL ($M)	$161.5	$189.9	$197.8
ACL / Loans HFI (%)	2.08%	2.32%	2.44%

Balance Sheet & Capital

Metric	Q3 2024	Q2 2025	Q3 2025
Loans HFI (EOP, $B)	$7.75	$8.18	$8.12
New Loan Production ($M)	$572.2	$783.7	$623.9
Customer Deposits (EOP, $B)	$9.53	$9.90	$9.82
Investments (EOP, $B)	$2.61	$2.78	$2.94
CET1 (%)	14.37%	13.99%	14.13%
TCE Ratio (%)	10.72%	10.20%	10.55%
TBVPS ($)	$26.15	$27.67	$28.92

Estimates vs Actuals (S&P Global)

Metric	Q3 2025 Estimate	Q3 2025 Actual	Surprise
EPS (Primary)	$1.17*	$1.16	−$0.01 (−0.9%)*
Revenue (SPGI definition)	$187.0M*	$157.9M*	−$29.1M (−15.6%)*

Note: SPGI’s revenue definition for banks can differ from company-reported “total core revenues” ($184.0M in Q3 2025) and may not be directly comparable . Values retrieved from S&P Global.*

Loan Production by Type

Type ($M)	Q1 2025	Q2 2025	Q3 2025
Mortgage	$37.0	$55.6	$42.4
Commercial PR	$163.2	$253.9	$216.6
Commercial US	$57.9	$147.2	$116.4
Consumer	$67.9	$76.8	$76.0
Auto	$232.9	$250.3	$172.6
Total	$558.9	$783.7	$623.9

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin	Q4 2025	Not previously quantified for Q4; FY 2025 targeted 5.30%–5.40%	5.10%–5.20%	Lowered (Q4)
Non-Interest Expense	Quarterly run-rate	Mid-$90Ms prior commentary	$95–$96M per quarter	Maintained
Effective Tax Rate	FY 2025	~24.9%	23.06%	Lowered
Loan Growth	FY 2025	~5%–6%	5%–6% reiterated	Maintained
Capital Return	Near-term	Opportunistic buybacks	“More active” buybacks in Q4 and into 2026	Increased activity
Dividend	Q4 2025	$0.30 prior quarter	$0.30 declared; payable Jan 15, 2026	Maintained

Assumptions for NIM guidance incorporate 25 bps cut realized late September and modeling a 50 bps total reduction in Fed funds during Q4 (timing-weighted) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
AI/Digital & Customer Insights	Launched omnichannel app, Smart Banking insights, Apple Pay (Q1) ; introduced Oriental Marketplace, DGI Money Market fund (Q2)	“Digital-First” progress; AI-driven personalized insights (avg 9/month) with 93% positive feedback; internal AI for ops efficiency	Expanding features; efficiency focus
Deposits & Pricing	Steady core deposits; product launches to deepen relationships (Q1–Q2)	Mix shift toward savings; strategic pricing to attract mass-affluent via Elite (~1–1.5% avg rate)	Slightly higher costs to win share
Auto Loans	Elevated origination and balances into H1	Moderation in auto originations; seeing bottoming; NCOs seasonally higher	Normalizing volumes and credit
Commercial Lending	Strategic growth driver; strong pipeline (Q2)	Solid y/y growth; Q3 sequential decline from line repayments; pipeline remains strong	Healthy demand; timing effects
Credit Quality	Stable with higher ACL in H1	Provision up on two commercial loans, prepayment/macro updates; NPL 1.22%	Stable headline metrics; idiosyncratic items
Macro Puerto Rico	Stable; investment activity supportive (Q1–Q2)	Tourism surge; onshoring investments in med devices/pharma; supportive backdrop	Improving tailwinds
Capital & Buybacks	Buybacks ongoing; TBVPS rising (H1)	Increased buybacks in Q3; plan to be “more active” ahead	Accelerating returns

Management Commentary

“Third quarter EPS grew 16% year-over-year on a 5.6% increase in total core revenues… Performance and credit metrics remained strong, and we repurchased $20.4 million of common shares.” – José Rafael Fernández, CEO .
“Our Digital First strategy is making significant strides… We are enhancing our efforts with AI-driven predictive customer insights… We have also launched internal initiatives to apply AI to boost efficiency across all banking operations.” .
“Net interest margin was 5.32% for the nine months… During the fourth quarter, we anticipate a range of 5.10% to 5.20%.” – CFO Maritza Arizmendi .
“We continue to anticipate annual loan growth in the range of 5% to 6%… Non-interest expense… between $95 million to $96 million a quarter… [FY] effective tax rate… 23.06%.” – CFO .
“We’re going to be a lot more active on the buyback in the fourth quarter and into 2026.” – CEO .

Q&A Highlights

Deposit costs: Higher savings costs are strategic to win mass-affluent Elite customers (~1–1.5% avg rate), aiming to deepen relationships across products .
Commercial credit: Two idiosyncratic problem loans (one U.S. loan sold with charge; one PR loan with proactive provisioning post acquisition-driven weakness); mainland CRE exposures viewed as manageable and opportunistic via participations .
NIM outlook: Q4 NIM guided to 5.10%–5.20%; modeling total 50 bps Fed cuts with most impact from late-September cut; funding mix influences quarterly volatility .
Auto: Originations moderated as expected; signs of bottoming into Q4; retail credit shows seasonal pattern with better y/y trends .
Capital return: Expect increased buyback pace given strong earnings power and macro backdrop; capital deployment priority is loan growth, then buybacks and dividends .

Estimates Context

EPS: $1.16 actual vs $1.17* consensus; near in-line/slight miss, driven by NIM compression and higher provision despite solid PPNR . Values retrieved from S&P Global.*
Revenue (SPGI definition): $157.9M* actual vs $187.0M* consensus; SPGI’s bank “revenue” is not directly comparable to company “total core revenues” ($184.0M), complicating the read-through; company-reported total core revenues rose q/q and y/y . Values retrieved from S&P Global.*
Estimate revisions: Q4 NIM guide lower (5.10%–5.20%) and tax rate lower (23.06% vs prior ~24.9%) may pull down NII/NIM assumptions but slightly improve EPS via tax; expense run-rate stable at $95–$96M .

Key Takeaways for Investors

PPNR momentum intact; core revenues and net interest income increased q/q and y/y, supporting stable EPS despite higher provisioning .
Near-term headwind is NIM compression from rate cuts and funding costs; management’s Q4 NIM guide embeds cumulative 50 bps cuts and funding mix considerations .
Credit remains broadly stable with idiosyncratic commercial items; ACL and NCO metrics are well-managed within historical ranges .
Strategic deposit pricing (Elite) is lifting savings balances at modestly higher costs to gain share and deepen relationships—a long-term positive despite near-term NIM drag .
Auto origination moderation appears to be normalizing after H1 strength; management sees bottoming and stable retail credit seasonality .
Capital strength enables more aggressive buybacks into Q4/2026 while supporting loan growth; TBVPS compounding remains a key pillar .
PR macro tailwinds (tourism, onshoring in med devices/pharma) provide a supportive backdrop for growth and asset quality .

Values retrieved from S&P Global.*

OFG BANCORP (OFG)·Q3 2025 Earnings Summary