OFG Bancorp (NYSE:OFG) Q2 2016 Earnings Conference Call - Final Transcript

Jul 22, 2016 • 10:00 am ET


OFG Bancorp (NYSE:OFG) Q2 2016 Earnings Conference Call - Final Transcript


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Good morning. My name is Paula and I'll be your conference operator today. Thank you for joining us for this conference call for OFG Bancorp. Our speakers are Jose Rafael Fernandez, President, Chief Executive Officer and Vice Chairman; and Ganesh Kumar, Executive Vice President and Chief Financial Officer.

There is a presentation that accompanies today's remarks. It can be found in the Investor Relations website on the homepage in the What's New Box or on the webcast, presentations and other files page. (Forward-Looking Cautionary Statements) All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

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

Jose Rafael Fernandez

Good morning. Thank you for joining us this morning. If you please turn to Slide 3, we had another strong quarterly performance as we continued to focus on building our franchise and constantly adapting to our economic environment. We generated net income available to shareholders of $10.7 million. Earnings per share were $0.25 fully diluted. Our results were comparable to the first quarter as we had expected.

Turning to Puerto Rico, the economy continues to fare reasonably well despite some headlines to the country. PROMESA, as you know, was enacted into law. In addition, PREPA continue to make progress toward final implementation of its restructuring support agreement by the end of 2016. We view both of these developments as very encouraging.

Please turn to Slide 4. Here is our dashboard of key business strengths. New loan generation remain robust, up more than 5% from the first quarter underscoring our growing retail franchise. Originated loan balances continue to grow up 2.7% from March 31st and average originated loan yield increased 9 basis points.

Deposits, excluding broker CDs[ph], were up about 2%. Banking and wealth management fee revenue increased close to 7%, with increases in all major operations, but primarily in Wealth Management. And expenses are being well contained, with the efficiency ratio improving to the best level in the last five quarters.

Now here is Ganesh to review the quarter in a little more detail after which I will make some closing remarks.

Ganesh Kumar

Thank you, Jose. Good morning, everyone. I'll start from slide 5. This quarter, we closed $238 million in new loans. While higher than the first quarter, production was generally in the range of the last five quarters. Retail business teams had a stellar performance with commercial doing well too. In terms of fee revenues, mortgage banking activities saw higher volumes, corresponding to the loan generation levels in the prior quarters. Wealth Management also benefited from higher annuity sales and from cyclical insurance revenues.

Moving on to slide 6, this quarter's results were very similar to last quarter's, as we had mentioned it would be so in our last call. Interest income from loans declined $1.5 million from the last quarter. This was due to lower balances from acquired loans as they continue to run off and there were less cost