OFG Bancorp (NYSE:OFG) Reports Mixed Q2 2025 Earnings Amid Investor Concerns

By Mill Chart - reviewed by Kristoff De Turck

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OFG Bancorp (NYSE:OFG) reported second-quarter earnings for 2025, delivering mixed results that prompted a sharp post-market reaction. The company posted earnings per share (EPS) of $1.15, beating analyst estimates of $1.06, while revenue came in at $182.36 million, surpassing expectations of $163.41 million. Despite the beat on both top and bottom lines, shares fell nearly 8.6% in after-hours trading, suggesting investor concerns beyond the headline numbers.

Key Financial Highlights vs. Estimates

EPS: $1.15 (reported) vs. $1.06 (estimated) – +8.5% beat
Revenue: $182.36M (reported) vs. $163.41M (estimated) – +11.6% beat
Net Interest Margin: 5.31%, reflecting strong lending profitability
Loan Growth: Total loans held for investment rose 4.2% sequentially and 7.08% year-over-year

Market Reaction & Potential Concerns

Despite the earnings beat, the stock’s sharp decline in after-hours trading may reflect:

Higher Provisions for Credit Losses: $21.7M in Q2, up from $15.6M in Q2 2024, signaling potential caution on loan quality.
Increased Borrowing Costs: Total interest expense rose to $42.4M from $40.3M a year ago, reflecting higher funding costs.
Outlook Uncertainty: While management highlighted strong loan origination and digital growth, investors may be weighing macroeconomic risks in Puerto Rico and rising deposit competition.

Press Release Summary

CEO José Rafael Fernández emphasized:

Strong Operational Performance: EPS grew 6.5% year-over-year, supported by core deposit growth and commercial lending.
Digital Expansion: Launched Oriental Marketplace and a new money market fund to enhance customer engagement.
Capital Management: Repurchased 186,024 shares, with tangible book value per share rising to $27.67.

Looking Ahead

Analysts expect Q3 2025 revenue of $164.29M and EPS of $1.06. While OFG Bancorp’s Q2 results exceeded expectations, the market’s reaction suggests concerns over credit risk and funding costs may be tempering optimism.

Disclaimer: This article is not investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.