OFG Bancorp’s fourth quarter results met Wall Street’s revenue expectations, but the market responded negatively, reflecting concerns around credit costs and margin compression. Management attributed the quarter’s performance to growth in commercial lending, robust acceptance of digital deposit products like Libre and Elite, and sound asset quality despite elevated provision for credit losses. CEO José Rafael Fernández highlighted, “Earnings per share diluted were up 17% year over year on 2% growth in total core revenues,” crediting disciplined operations and a favorable tax benefit. The company also noted continued share repurchases and capital growth, though the quarter included nonrecurring technology amortization costs and higher professional service expenses linked to efficiency initiatives.
Is now the time to buy OFG? Find out in our full research report (it’s free for active Edge members).
OFG Bancorp (OFG) Q4 CY2025 Highlights:
- Revenue: $185.4 million vs analyst estimates of $184.5 million (1.9% year-on-year growth, in line)
- Adjusted EPS: $1.27 vs analyst estimates of $1.15 (10.4% beat)
- Adjusted Operating Income: $47.42 million vs analyst estimates of $87.1 million (25.6% margin, 45.6% miss)
- Market Capitalization: $1.63 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From OFG Bancorp’s Q4 Earnings Call
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Kelly Ann Motta (KBW): Asked about elevated provisions for credit losses and specifics behind the Puerto Rico charge-offs. Chief Risk Officer Cesar Ortiz-Marcano explained the charge-offs resulted from a sale of nonperforming loans and a single telecommunications loan issue, both described as isolated events.
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Kelly Ann Motta (KBW): Inquired on what will drive low single-digit loan growth. CEO Fernández said auto lending is stabilizing, commercial loans should grow 5-6%, and consumer segments will see slight increases, while mortgage remains muted.
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Brett Rabatin (Hovde Group): Sought clarification on loan yield decreases and margin guidance. CFO Maritza Arizmendi attributed lower yields to Fed rate cuts, improved credit quality in auto originations, and anticipated funding mix changes due to shifts in government deposits.
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Timur Braziler (Wells Fargo): Asked about the competitive landscape for deposits and whether digital products have forced competitors to increase rates. CEO Fernández replied there has been no pricing response, as Libre is noninterest-bearing and Elite pays modest rates, with competition more focused on targeted CDs.
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Manuel Navas (Piper Sandler): Queried whether digital accounts are attracting younger clients. CEO Fernández confirmed 40% of Libre accounts are held by clients under age 29, supporting long-term franchise building.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of commercial loan and core deposit growth, especially as digital and omnichannel offerings mature; (2) expense trends, including whether technology investments translate into meaningful efficiency gains; and (3) changes in net interest margin as funding mix shifts and rate cuts play out. Additionally, credit quality trends and competitive dynamics in Puerto Rico’s banking sector will be closely watched for signs of sustained differentiation.
OFG Bancorp currently trades at $38.24, down from $42.58 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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