San Juan, Puerto Rico–(BUSINESS WIRE)–OFG Bancorp (NYSE: OFG), the financial holding company of Oriental Bank, reported results for the first quarter ended March 31, 2022. Diluted EPS was $0.76, compared to $0.66 at 4Q21 and $0.56 in 1Q21. Total base revenue was $136.4 million, compared to $141.0 million in 4Q21 and $127.7 million in 1Q21.
José Rafael Fernández, Chief Executive Officer, said: “We had an excellent start to 2022. During the first quarter, our core business showed strong momentum. We saw solid loan and deposit growth, NIM expansion and lower provisions. Total assets reached $10.2 billion, expenses remained stable and we repurchased $33.5 million of shares under our $100 million buyback program. Puerto Rico’s business environment continues to evolve positively as we continue to focus on improving the customer experience and growing with our customers and the communities we serve. In 1Q22, for example, we introduced fully proprietary digital processes for applying for consumer loans and for opening and contributing to our IRA fund.
Net interest income was $105.2 million, compared to $104.2 million in 4Q21 and $98.2 million in 1Q21. The NIM increased to 4.47% from 4.18% in 4Q21, mainly due to higher lending and investment volume.
interest income totaled $112.9 million, compared to $112.6 million in 4Q21 and $111.0 million in 1Q21. Compared to 4Q21, 1Q22 interest income benefited from higher yields on higher average balances of loans and investment securities, and higher average yields on cash, which were offset by two days of less which reduced interest income by $1.7 million.
Total interest expense $7.8 million versus $8.4 million in 4Q21 and $12.8 million in 1Q21. Compared to 4Q21, 1Q22 interest expense reflected lower average balances and deposit and borrowing costs, partially offset by $0.4 million for unamortized issue costs due to termination advance payment of $36.1 million of 3.23% floating rate subordinated notes.
Income from banking and financial services $31.2 million versus $29.5 million in 1Q21 and $36.8 million in 4Q21, including $4.3 million in annual insurance fees. 1Q22 reflected higher levels of banking, mortgage banking and wealth management revenue compared to 1Q21.
Net income before provision totaled $55.6 million, compared to $55.8 million in 4Q21 and $50.9 million in 1Q21.
Provision for credit losses $1.6 million versus $7.2 million in 4Q21 and $6.3 million in 1Q21. 1Q22 included a provision of $3.7 million related to growth in loan balances and an increase of $4.2 million for a commercial loan previously placed on non-recognition, partially offset by a reduction of 5.7 million of qualitative adjustment due to improved economic conditions. 4Q21 included a provision of $9.7 million related to the transfer of past due loans to held for sale.
Credit quality: The net charge rate and the anticipated and total delinquency rates fell to 0.04%, 1.97% and 3.17%, respectively, from the prior quarters and the prior year. 1Q22 NCOs included a recovery of $2.8 million on an acquired PCD loan and a recovery of $1.1 million in connection with the final settlement of the sale of non-performing mortgages incurred in 4Q21.
Non-interest expenses totaled $81.2 million, compared to $86.5 million in 4Q21 and $77.7 million in 1Q21. The reduction of $5.3 million from 4Q21 primarily reflects lower provisions for legal reserves ($2.4 million) and lower mix of other items (totaling $2.1 million), including operational losses, technology expenses and training costs.
Loans held for investment purposes (EOP) were $6.55 billion, compared to $6.40 billion in 4Q21 and $6.59 billion in 1Q21. Loans increased $145.4 million from 4Q21, reflecting increases in commercial loans (net of PPP forgiveness) as well as increases in consumer and automotive loans.
Creation of a new loan of $623.2 million compared to $632.7 million in 4Q21 and $527.6 million in 1Q21, including $126.3 million in PPP loans. 1Q22 reflected continued high levels of auto loans, commercial loans in Puerto Rico and the United States, and increased demand for consumer loans.
Customer deposits (EOP) totaled $8.97 billion, compared to $8.59 billion in 4Q21 and $8.72 billion in 1Q21. Core deposits increased by $375.1 million from 4Q21, reflecting the increase in commercial and retail accounts.
Capital: The CET1 ratio was 13.24% compared to 13.77% in 4Q21 and 13.56% in 1Q21. Tangible book value per share was $18.90, compared to $19.08 in 4Q21 and $17.39 in 1Q21. The decline in CET1 and TBVPS compared to 4Q21 reflects the repurchase of 1.2 million common shares and the reduction in other comprehensive income, partially offset by an increase in retained earnings.
Conference call, financial supplement and presentation
A conference call to discuss 1Q22 results, outlook and related matters will take place today at 10:00 a.m. ET. Phone (800) 459-5346 or (203) 518-9544. Conference ID: OFGQ122. The call can also be accessed live on www.ofgbancorp.com with rebroadcast on the Web shortly after.
OFG’s financial supplement, with full financial tables for the quarter ended March 31, 2022, and 1Q22 conference call presentation, can be viewed on the quarterly results page on the Investor Relations website. OFG at www.ofgbancorp.com.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, management uses certain “non-GAAP financial measures” as defined in SEC Regulation G, to clarify and enhance understanding of past performance and future prospects. Please refer to Tables 8-1 and 8-2 of OFG’s financial supplement referenced above for a reconciliation of GAAP and non-GAAP measures and calculations.
The information contained herein contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ. significantly from those expressed. in forward-looking statements.
Factors that could cause such a difference include, but are not limited to (i) general business and economic conditions, including changes in interest rates; (ii) cybersecurity breaches; (iii) hurricanes, earthquakes and other natural disasters; (iv) competition in the financial services sector; and (v) the severity, scale and duration of the COVID-19 pandemic, and its impact on our operations, staff and customers.
For a discussion of these factors and certain risks and uncertainties to which OFG is subject, please see OFG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and its other filings with of the United States Securities and Exchange Commission. . Except to the extent required by applicable law, including the requirements of applicable securities laws, OFG undertakes no obligation to update any forward-looking statements to reflect events or unanticipated events or circumstances after the date of such statements.
About OFG Bancorp
Now in his 58’sand year of operation, OFG Bancorp is a diversified financial holding company that operates in accordance with the banking laws and regulations of the United States, Puerto Rico and the US Virgin Islands. Its three main subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, offer a wide range of retail and commercial banking, lending and wealth management products, services and technologies, primarily in Puerto Rico and the US Virgin Islands. . Visit us at www.ofgbancorp.com.