OFG Bancorp (NYSE: NYSE:OFG) reported positive results for the third quarter, driven by increased loan balances, stable core deposits, and strong credit metrics. The bank's digital-first strategy has been successful, with most routine retail customer transactions now being carried out through digital and self-service channels. The company's total assets reached $10.3 billion, with customer deposits remaining stable at around $8.5 billion.
Key takeaways from the earnings call:
- Total core revenues increased by 10% compared to last year, and earnings per share diluted rose by 9%.
- The bank's CET1 ratio was 14.03%, and the company bought back 74,000 OFG shares in the third quarter.
- The balance of government deposits at quarter-end was around $350 million.
- The bank confirmed its commitment to crossing the $10 billion mark in assets and discussed its strategy for managing the balance sheet and funding loan growth.
- The bank expressed its comfort and appetite for buybacks but prioritizes deploying capital for loan growth.
Jose Rafael Fernandez, a representative from OFG Bancorp, highlighted the positive economic environment in Puerto Rico, which has resulted in a strong commercial lending pipeline for the company. He expressed confidence in offsetting any potential net interest margin (NIM) compression with loan growth, which is expected to continue next year.
Fernandez also mentioned the bank's successful digital-first strategy and the efficiencies gained from their technology investments. "We are excited about the innovations we are bringing and how customers are adopting them," Fernandez said. He added that the company plans to use capital for loan growth and will consider dividend growth and buybacks. The company expects NIM to trend slightly lower in the short term due to additional loan growth but anticipates being in good shape with regards to NIM in 2024.
Fernandez also discussed the plateauing growth of auto loans due to competitive forces and the bank's continued investment in technology to increase adoption levels and consolidate the portal for retail customers. He stated that the company plans to extract efficiencies from these investments and maintain expenses at the same level.
The company confirmed its commitment to contributing to the reconstruction and improvement of Puerto Rico's infrastructure, including its participation in the financing of the Metropistas deal. OFG Bancorp plans to continue growing its businesses through digital and physical channels, including the opening of a new branch in Dorado, Puerto Rico. The company will provide further updates in the fourth quarter call in January.
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