Download PDF

1. Company Snapshot

1.a. Company Description

OFG Bancorp, a financial holding company, provides a range of banking and financial services.It operates through three segments: Banking, Wealth Management, and Treasury.The company offers checking and savings accounts, as well as time deposit products; commercial, consumer, auto, and mortgage lending services; financial planning and insurance services; and corporate and individual trust, and retirement services.


It also provides securities brokerage and investment advisory services, including various investment alternatives, such as tax-advantaged fixed income securities, mutual funds, stocks, and bonds to retail and institutional clients; and separately-managed accounts and mutual fund asset allocation programs.In addition, the company engages in the insurance agency and reinsurance businesses; administration and servicing of retirement plans; various treasury-related functions with an investment portfolio consisting of mortgage-backed securities, obligations of U.S. government sponsored agencies, and U.S. Treasury securities and money market instruments; and management and participation in public offerings and private placements of debt and equity securities.Further, it offers money management and investment banking services; and engages in the asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings.


The company operates through a network of 50 branches in Puerto Rico and 2 branches in USVI.OFG Bancorp was founded in 1964 and is headquartered in San Juan, Puerto Rico.

Show Full description

1.b. Last Insights on OFG

OFG Bancorp's recent performance faced challenges due to margin pressure concerns. The company's Q3 2025 earnings call highlighted the impact of "sticky deposit costs" and "relatively rate-sensitive loan yields" on margins in a declining interest rate environment. Additionally, risks to loan growth include worsening economic activity and sharply rising home prices. Despite a 5.6% increase in total core revenues, EPS growth was modest at 16% year-over-year. The company's dividend stock status was also questioned by investors.

1.c. Company Highlights

2. OFG Bancorp's Q4 2025 Earnings: A Strong Performance

OFG Bancorp reported a robust Q4 2025, with diluted earnings per share (EPS) rising 17% year-over-year to $1.27, surpassing analyst estimates of $1.16. Total core revenues grew 2% during the quarter, driven by a 5.3% increase in loans to $8.2 billion and a 5% growth in core deposits to $9.9 billion. For the full year 2025, EPS increased 8.3% on a 2.8% rise in total core revenues. The company's net interest margin is expected to range between 4.95% to 5.05% in 2026, reflecting its asset sensitivity and rate cuts.

Publication Date: Jan -23

📋 Highlights
  • EPS Growth:: Q4 2025 diluted EPS rose 17% YoY, with full-year 2025 EPS up 8.3%, driven by 2.8% core revenue growth.
  • Asset Expansion:: Total assets hit $12.5 billion (8.4% YoY), core deposits grew 5% to $9.9 billion, and loans increased 5.3% to $8.2 billion.
  • Capital Returns:: $40 million in share repurchases in Q4 and a 20% dividend hike, supported by a 13.97% CET1 ratio.
  • Digital Growth:: 75% of new Libre accounts are first-time customers (40% under 29), with Elite deposits at 1.28% average cost, boosting retail relationships.
  • Margin & Expense Guidance:: 2026 net interest margin projected at 4.95%-5.05%, with non-interest expenses capped at $380-$385 million and tax rate at ~23%.

Asset Quality and Credit Metrics

Asset quality and credit metrics remained sound, with a provision for credit losses of $31.9 million in Q4. The allowance for loan losses was built to 2.46% of loans, and the bank expects a 1% net charge-off rate to be a good run rate. The auto portfolio's net charge-off rate was 1.81% in the fourth quarter, indicating a positive trend. The bank's commercial originations are 50% fixed and 50% variable, with rates ranging from 275 to 350 basis points above the lending term.

Digital-First Strategy and Deposit Products

The company's digital-first strategy continues to gain traction, with the Libre and Elite deposit products being successful in attracting new customers. 75% of Libre account openings are new customers, with 40% under 29 years old, indicating a strong potential for building long-term relationships. The Elite account pays an average cost of funds of 1.28%, and the bank hasn't seen a significant price response from competitors.

Outlook and Valuation

OFG Bancorp expects loans to continue growing in low single digits in 2026, driven by its digital offerings and commercial business. The effective tax rate for 2026 is expected to be around 23%. With a current Price-to-Tangible Book Value (P/TBV) of approximately 1.25, and a Dividend Yield of 3.08%, the stock appears to be reasonably valued. Analysts estimate revenue growth at 3.5% for next year, indicating a stable outlook for the company.

Capital Return Strategy

The bank's capital return strategy includes buying back shares, given their valuation, and will also consider the dividend. In Q4, the company repurchased $40 million of common shares, and may deploy more capital for buybacks throughout the year, given expected low single-digit loan growth. The CET1 ratio was 13.97%, and the tangible common equity ratio decreased eight basis points to 10.47%.

3. NewsRoom

Card image cap

5 Bank Stocks With Recent Dividend Hikes to Keep on Your Radar

Feb -02

Source: zacks.com

Card image cap

American Bank (OTCMKTS:AMBK) vs. OFG Bancorp (NYSE:OFG) Head-To-Head Survey

Feb -01

Source: defenseworld.net

Card image cap

OFG Bancorp (NYSE:OFG) Board Authorizes Stock Buyback Program

Jan -29

Source: defenseworld.net

Card image cap

OFG Bancorp Increases Regular Quarterly Common Stock Cash Dividend to $0.35

Jan -28

Source: businesswire.com

Card image cap

OFG Bancorp Announces New $200 Million Share Repurchase Plan

Jan -28

Source: businesswire.com

Card image cap

OFG Bancorp (OFG) Q4 2025 Earnings Call Transcript

Jan -22

Source: seekingalpha.com

Card image cap

OFG (OFG) Q4 Earnings: How Key Metrics Compare to Wall Street Estimates

Jan -22

Source: zacks.com

Card image cap

OFG Bancorp Reports 4Q25 & 2025 Results

Jan -22

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.56%)

6. Segments

Banking

Expected Growth: 6.5%

OFG Bancorp's 6.5% growth is driven by strong loan growth, fueled by a robust Puerto Rico economy, and strategic expansion into the US mainland. Additionally, the bank's focus on digital transformation, cost savings initiatives, and a solid capital position have contributed to its growth momentum.

Treasury

Expected Growth: 6.8%

Treasury growth of 6.8% at OFG Bancorp is driven by increasing deposit base, effective asset liability management, and strategic investments in digital banking platforms, resulting in higher fee income and improved operating leverage.

Wealth Management

Expected Growth: 7.2%

Wealth Management growth of 7.2% at OFG Bancorp is driven by increasing demand for investment services, strategic partnerships, and expansion into new markets. Additionally, the segment benefits from a strong brand reputation, experienced financial advisors, and a diversified product portfolio, including brokerage, insurance, and retirement planning services.

7. Detailed Products

Mortgage Loans

OFG Bancorp offers a range of mortgage loan options for individuals and families, including fixed-rate and adjustable-rate loans, government-backed loans, and jumbo loans.

Consumer Loans

OFG Bancorp provides personal loans, auto loans, and credit cards for individuals, as well as lines of credit for small businesses.

Commercial Loans

OFG Bancorp offers commercial loans and lines of credit for businesses, including term loans, construction loans, and asset-based lending.

Deposit Accounts

OFG Bancorp offers a range of deposit accounts, including checking and savings accounts, certificates of deposit (CDs), and individual retirement accounts (IRAs).

Investment Services

OFG Bancorp provides investment services, including brokerage services, investment advice, and wealth management.

Insurance Services

OFG Bancorp offers insurance services, including life insurance, disability insurance, and long-term care insurance.

8. OFG Bancorp's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for OFG Bancorp is medium due to the presence of alternative financial institutions and digital payment platforms.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration of buyers and the presence of multiple banking options.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the presence of multiple suppliers and the lack of concentration of suppliers.

Threat Of New Entrants

The threat of new entrants is medium due to the presence of regulatory barriers and the need for significant capital investment to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of multiple competitors and the need to differentiate products and services to attract customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 14.91%
Debt Cost 5.67%
Equity Weight 85.09%
Equity Cost 9.40%
WACC 8.85%
Leverage 17.52%

11. Quality Control: OFG Bancorp passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
First Financial

A-Score: 6.9/10

Value: 7.0

Growth: 5.4

Quality: 6.2

Yield: 6.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Independent Bank

A-Score: 6.6/10

Value: 7.0

Growth: 6.9

Quality: 7.8

Yield: 7.0

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Oriental

A-Score: 6.4/10

Value: 7.0

Growth: 7.2

Quality: 7.1

Yield: 5.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
Peoples Bancorp of North Carolina

A-Score: 6.1/10

Value: 6.7

Growth: 6.4

Quality: 6.6

Yield: 6.0

Momentum: 4.5

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Orrstown Financial Services

A-Score: 6.0/10

Value: 6.4

Growth: 5.0

Quality: 6.9

Yield: 6.0

Momentum: 3.5

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Chemung Financial

A-Score: 5.7/10

Value: 5.5

Growth: 5.6

Quality: 5.2

Yield: 5.0

Momentum: 5.5

Volatility: 7.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

41.44$

Current Price

41.44$

Potential

-0.00%

Expected Cash-Flows