OFG Bancorp (NYSE:OFG), the parent company of Oriental Bank, has reported financial results for the fourth quarter and full year of 2025 that surpassed analyst expectations, leading to a positive reaction in its share price during pre-market trading.
Earnings and Revenue Versus Estimates
The company's performance in the fourth quarter notably exceeded the consensus forecasts held by Wall Street analysts. The key figures are as follows:
- Earnings Per Share (EPS): OFG reported diluted EPS of $1.27 for Q4 2025. This result solidly beat the analyst estimate of $1.16, representing an earnings surprise of approximately 9.3%.
- Total Core Revenues: The company posted total core revenues of $185.4 million for the quarter. This also came in significantly higher than the estimated $155.3 million, marking a revenue surprise of over 19%.
The market's immediate reaction to this outperformance was positive. In pre-market trading following the earnings release, OFG's stock price was up approximately 1.64%, indicating investor approval of the quarterly results.
Dissecting the Quarterly Performance
The earnings beat was driven by a combination of operational discipline and notable one-time benefits. While total core revenue saw a modest sequential increase, net interest income slightly declined due to shifting asset yields. However, this was offset by strong performance in banking and financial service revenues, particularly within wealth management.
A significant factor in the bottom-line strength was a substantial income tax benefit of $8.5 million, which included $16.8 million in discrete tax benefits. Excluding these discrete items, management noted the company's estimated tax rate for the year would have been 21.8%. The quarter also included several one-time expenses and gains, such as accelerated technology amortization and gains on asset sales, which complicated the core operational picture.
Credit Quality and Capital Management
The quarter presented a mixed view on credit. While the early delinquency rate improved, net charge-offs and the nonperforming loan rate increased compared to both the previous quarter and the year-ago period. Management attributed part of the increase to a specific reserve on a commercial loan and the sale of non-performing assets. On capital allocation, the company remained active, repurchasing $40.1 million of its own common stock in the quarter, bringing the full-year total to $91.6 million.
Balance Sheet and CEO Commentary
The balance sheet showed continued growth and strength:
- Loans held for investment grew to $8.20 billion, up 1.0% from the prior quarter.
- Customer deposits increased to $9.92 billion.
- Tangible book value per share rose to $29.96, up from $28.92 in Q3.
CEO José Rafael Fernández highlighted the year-over-year EPS growth of 16.4% for the quarter, crediting disciplined operations and the favorable tax benefit. He pointed to growth in commercial loans and the bank's digital deposit accounts as strategic successes. Fernández also expressed optimism about the Puerto Rican economy, citing ongoing infrastructure investment and the island's position as a hub for manufacturing, which he believes supports long-term growth for the bank's core businesses.
Looking Ahead
While the press release did not provide specific quantitative financial guidance for 2026, the CEO's positive tone on the economic backdrop and business momentum offers qualitative context. Analysts, based on the provided estimates, are currently modeling for continued growth. The consensus forecast for Q1 2026 is for EPS of approximately $1.07 on sales of $151.8 million. For the full year 2026, the street is looking for EPS of $4.57 on sales of $621.8 million. Investors will likely monitor OFG's ability to maintain its net interest margin and manage credit costs to meet these expectations.
For a detailed look at OFG Bancorp's historical earnings, future estimates, and analyst projections, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any securities. Investing involves risk, including the potential loss of principal.
