OFG Bancorp (NYSE:OFG) Q2 2020 Earnings Conference Call - Final Transcript

Jul 24, 2020 • 10:00 am ET


OFG Bancorp (NYSE:OFG) Q2 2020 Earnings Conference Call - Final Transcript


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Jose Rafael Fernandez

deferral tool and call centers processed relief for more than 44,000 retail customers. We reduced higher-cost wholesale funding, maintained a strong level of net interest margin and continued to build liquidity and capital. And we secured $100,000 in Federal Home Loan Bank of New York grants to support local non-profit and small businesses in Puerto Rico and the US Virgin Islands.

Please turn to Page 4. We have continued to see strong technology utilization trends among both our retail and business customers since the beginning of the year and, in particular, since March. Online bill enrollment -- bill pay enrollments were up 12% as of March and 24% as of June. Mobile banking users jumped 17% by the end of the second quarter from the beginning of the first. The number of remote deposit capture users are up 68% from the end of March.

In another area of success for us, during the second quarter, we scheduled more than 18,000 COVID safe appointments with our customers through our online and mobile tool. We are very pleased with this -- to see these trends. Technology is a core part of our overall corporate strategy. We continue to look into new ways and innovative ways to use it to help our customers.

Please turn to Page 5. Looking at our SBA PPP program, we continue to exceed our market share in Puerto Rico. We generated a total of $286 million in new loans. This enabled us to help more than 4,000 small businesses save more than 50,000 jobs. It also enabled us to attract new accounts in this strategically important customer base. And we were able to distribute these funds electronically within five days of application approval. This is a great example of our ability to act quickly in response to changing conditions to the benefit of both existing and new customers and the communities we serve.

Let's talk about our results on Page 6. We reported EPS of $0.39, and $0.37 on a non-GAAP basis. Total core revenues were $128 million. Most of that was due to a large increase in interest earning assets, chiefly loans and cash. This was partially offset by a decline in yield due to significantly lower rates on cash and lower yields on variable rate commercial loans. In addition, we have lower investment security balances. As a result, we generated net interest income of $105 million with a net interest margin of 4.78%. Banking and wealth management revenues totaled $23 million. Non-interest expenses were $86 million, primarily due to the addition of the Scotiabank acquisition.

Second quarter results included several items. $9.5 million in revenues from Scotia Bank interest recoveries and bargain purchase gain. We added $5 million in provision for the pandemic. And within non-interest expenses, we had a $5 million in merger and restructuring charges and COVID-related operating costs.

Please turn to Page 7. The effects of these results is that we're building tangible book value, and our return on asset and return on