OFG Bancorp

Second-quarter EPS was $1.39, up 21% year over year. Core revenues increased $4.5 million to $190 million; total interest income was $197 million, total interest expense was $40 million, and net interest margin increased 9 basis points to 5.45%. Total banking and financial service revenues rose to $33 million, while noninterest expense increased to $103 million. Credit metrics included net charge-offs of 1.0% of average loans, nonperforming loans at 0.81% of average loans, and provision for credit losses of $13 million. On the balance sheet, average loans were $8.2 billion, average core deposits were $9.7 billion, CET1 was 14.07%, tangible book value was $31.12 per share, and the loans-to-deposit ratio was 85%. Management expects low-single-digit loan growth for the year, second-half 2026 NIM of 5.25%-5.35%, expenses of $380 million-$385 million, and an estimated tax rate of 22.6% excluding discrete items.

José Rafael Fernández framed the quarter as an “all around outstanding” result with momentum across the franchise, emphasizing that OFG’s digital-at-the-core model is driving customer growth, efficiency, and stronger relationships. He highlighted the new branding campaign as a way to communicate the bank’s evolution into a “digital bank with a human touch,” and said the Puerto Rico economy remains resilient, supported by low unemployment, liquidity, federal reconstruction funding, and private investment. He also sounded confident on the commercial pipeline and reiterated that OFG is positioned to keep gaining share through disciplined execution.

Maritza Arizmendi said financial performance was very strong, citing EPS of $1.39, an efficiency ratio of 54%, ROAA of 1.93%, and ROTCE of almost 18%. She walked through core revenues of $190 million, NII tailwinds from higher loan balances and rates, and deposit and liquidity management that reduced borrowings and brokered deposits. She also raised guidance: low-single-digit loan growth for the year, deposit growth excluding large government deposits, second-half 2026 NIM of 5.25%-5.35%, expenses of $380 million-$385 million, and a 22.6% tax rate. On capital, she noted CET1 of 14.07%, TCE of 10.90%, tangible book value of $31.12, and $194 million of remaining buyback authorization.

Analysts focused mainly on the raised NIM outlook, asking how much depended on the large government deposit relationship. Management said the government deposit relocation was completed at the end of June, reducing funding uncertainty and allowing them to avoid replacing that money in the market, which should support spreads. Questions also centered on credit, including higher early delinquencies and the charge-off impact from the telecom loan sale; management said seasonality should lift delinquencies later in the year, but consumer portfolios are healthy and the telecom sale reduces tail risk. Analysts also asked about buybacks and deposit trends, and management said repurchases remain unchanged in strategy, with $194 million authorized, while deposit growth is being driven by customer growth across the retail and small-business franchises.