OFG Bancorp (NYSE:OFG) Q4 2023 Earnings Call Transcript January 24, 2024 10:00 AM ET

Company Participants

Jose Rafael Fernandez - Chief Executive Officer and Vice Chairman

Maritza Arizmendi - Chief Financial Officer

Cesar Ortiz - Chief Risk Officer

Conference Call Participants

Alex Twerdahl - Piper Sandler

Brett Rabatin - Hovde Group

Kelly Motta - KBW

Operator

Good morning. Thank you for joining OFG Bancorp's Conference Call. My name is Todd, and I'll be your operator today. Our speakers are Jose Rafael Fernandez, Chief Executive Officer and Vice Chair of the Board of Directors, and Maritza Arizmendi, Chief Financial Officer. A presentation accompanies today's remarks. It can be found on the homepage of the OFG website under the fourth quarter 2023 section.

This call may feature certain forward-looking statements about management's goals, plans, and expectations. These statements are subject to risks and uncertainties outlined in the Risk Factors section of OFG's SEC filings. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments that occur afterwards.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions will be given at that time.

I would now like to turn the call over to Mr. Fernandez. Please go ahead.

Jose Rafael Fernandez

Good morning, and thank you for joining us. We are pleased to report our fourth quarter and year-end results. 2023 was an outstanding year with record levels of loans, customer deposits, assets, and stockholders’ equity. For the first time, commercial loan balances exceeded $3 billion and tangible common equity was more than $1 billion. Our Digital First strategy continues to empower existing customers and attract new ones. 93% of all routine retail transactions and more core deposits now take place through self-service channels, enabling our teams to focus more on business development opportunities. While consumer credit has begun to normalize post-pandemic, consumer liquidity and employment levels continue to be solid. Our commercial clients are doing very well in a strong economy. We are very proud of our accomplishments and thank the entire Oriental team for making this record year possible.

Please turn to Page 3 for a summary of our fourth quarter results. Looking at the income statement, earnings per share diluted was $0.98, total core revenues were $175.6 million, and net interest margin was 5.62%. Provision was $19.7 million, primarily due to increased loan volume, non-interest expenses were $94.1 million and pre-provision net revenues totaled $88.2 million. Quarterly performance included two items of note. First was closing on the sale of non-performing Puerto Rico small business loans. We mentioned the planned sale last quarter. This resulted in a $6.3 million pre-tax gain. Second was workforce early retirement and rightsizing. This resulted in a $3.2 million non-interest expense for severance and lease cancellations. This stemmed from increased productivity in certain areas, in part as a result of our technology investments.