OFG Bancorp (NYSE: OFG), the financial holding company for Oriental Bank, reported results for the second quarter ended June 30, 2021.
“We generated outstanding second quarter results. This reflects our larger scale and our focus on digital utilization and differentiation, combined with Puerto Rico’s early economic and post-pandemic recovery," said José Rafael Fernández, the company's CEO.
“The economy is clearly benefitting from a massive amount of federal reconstruction and COVID stimulus, which are more meaningful here compared to mainland states given the size of our economy as it relates to reconstruction funds and the size of stimulus payments compared to average income levels.
“We saw the effects of all this across all our businesses. New loan origination increased 27.7% from 1Q21 with gains in all major categories, led by commercial and auto lending. Interest income grew 2.2% from 1Q21 as average loan balances expanded 1.3%, excluding residential mortgage. Banking and financial services revenues rose 5.4%," he added.
Summary: Earnings per share diluted was $0.78 compared to $0.56 in 1Q21 and $0.39 in 2Q20. Total core revenues were $133.3 million compared to $127.7 million in 1Q21 and $128.2 million in 2Q20. Net interest margin was 4.22% compared to 4.26% in 1Q21 and 4.78% in 2Q20.
Total interest income of $113.5 million increased 2.2% from 1Q21 primarily due to higher income from increased average balances of commercial and auto loans and investment securities. Average loan balances were $6.60 billion compared to $6.64 billion in 1Q21 and $6.84 billion in 2Q20.
New Loan Origination totaled $673.6 million compared to $527.6 million in 1Q21 and $506.0 million in 2Q20. 2Q21 increased 27.7% from 1Q21 due to gains in all major categories, led by commercial and auto lending.
Total Interest Expense was $11.2 million compared to $12.8 million in 1Q21 and $16.6 million in 2Q20. 2Q21 declined 12.3% from 1Q21 primarily due to lower cost of core deposits, which was 38 bps compared to 47 bps in 1Q21 and 61 bps in 2Q20. Average customer deposit balances were $8.96 billion compared to $8.54 billion in 1Q21 and $7.85 billion in 2Q20.
Asset Quality and Provision for Credit Losses: 2Q21 reflected continued improvement in asset quality trends with the rates for net charge offs (0.13%) and early (1.86%) and total (3.90%) delinquency at their lowest levels in five quarters. Provision for credit losses was a net benefit of $8.3 million, resulting from $2.1 million net charge-offs and $10.4 million net reserve releases, compared to a provision expense of $6.3 million in 1Q21 and $17.7 million in 2Q20.