OFG Bancorp (OFG) Q1 2025 earnings summary

Executive summary

• First quarter 2025 delivered EPS of $1.00, with net income to common shareholders of $45.6M, supported by strong operating execution, customer and deposit growth, and digital innovation initiatives.

• The company increased its quarterly dividend by 20% to $0.30 per share and repurchased $23.4M in common stock, supported by robust capital generation.

• Digital First strategy drove significant increases in digital channel usage, including 12% growth in digital enrollment and new digital banking features such as an omnichannel app and Apple Pay.

• OFG remains well-capitalized, with a CET1 ratio of 14.27% and tangible common equity ratio of 10.30%.

• Puerto Rico's economy remains stable, but management is monitoring global and local uncertainties, including potential federal spending cuts and geopolitical risks.

Financial highlights

• Core revenues were $178.3M; net interest income rose 3.4% year-over-year to $149.1M, with a net interest margin of 5.42%.

• Total interest income was $189.2M, while interest expense was $40.2M, both slightly down sequentially but up year-over-year.

• Provision for credit losses was $25.7M, up from $15.1M in 1Q24, reflecting higher loan volume and specific reserves.

• Non-interest expense was $93.5M, in line with guidance and up year-over-year due to higher technology and administrative costs.

• Efficiency ratio was 52.42%, ROAA 1.56%, and ROATCE 15.28%.

Outlook and guidance

• Margin guidance for the year is 5.3%-5.4%, with the upper end likely if government deposits remain.

• Tax rate expected at 26% for the full year, with 1Q25 benefiting from discrete items.

• Continued investment in digital innovation and customer experience is planned.

• Deposit growth expected to continue, though some seasonality is anticipated.

• Management is closely monitoring global economic and geopolitical uncertainties, including U.S. policy changes.