SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- OFG Bancorp (NYSE:OFG) today issued the following statement regarding Standard & Poor’s action involving its credit rating:

OFG has just reported a stellar year in terms of our financial results. We anticipate that 2014 and 2015 will show similar continued operating performances. S&P’s action relates chiefly to the possible impact of the Puerto Rico economy and the Commonwealth’s fiscal deficit. These challenges are not new to us. We have been operating in mostly recessionary conditions since 2006 in a very prudent and disciplined manner.

As a result, we have clearly differentiated ourselves through impressive growth in tangible book value compared to the most profitable small-mid cap publicly traded banks during and after the financial crisis; avoided the need for TARP assistance and/or any recapitalizations; and gained regulatory approval for two acquisitions that have transformed our Company.

We did this by being mindful of current and likely economic conditions, and we will continue to adhere to the same high standards that have characterized our activities and served us well. With this disciplined approach, we have built a strong franchise. To illustrate:

• Our capital levels are strong at close to $900 million and we have considerable liquidity with more than $760 million of cash on hand.
• More than half of our loans have been acquired in recent acquisitions and are covered by loss share agreements and/or carry credit marks.
• Our Puerto Rico government related loans and securities are short term with well-defined specific payment sources, or well-collateralized, and have a total valuation allowance of approximately 3.21%.
• We have significant opportunities through internal levers to reduce our costs of funds and operating expenses, while increasing non-interest fee revenue through cross selling.
• A rising rate scenario would improve our net interest income by 2.5-3.5%, depending on the magnitude.
• We have $680.5 million in accretable yield from covered and non-covered acquired loans to bring into the income statement over the next several years. Moreover, the performance of acquired loans has been improving.
• In 2013, we had $69.3 million in non-cash expense from FDIC indemnification asset amortization. This ends in the second quarter of 2015 and will result in a significant increase in GAAP earnings.

Forward Looking Statements

The information included in this document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements.

Factors that might cause such a difference include, but are not limited to (i) difficulties in integrating BBVA PR into OFG’s operations; (ii) the amounts by which our assumptions related to the acquisition fail to approximate actual results; (iii) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (iv) changes in interest rates, as well as the magnitude of such changes; (v) the fiscal and monetary policies of the federal government and its agencies; (vi) changes in federal bank regulatory and supervisory policies, including required levels of capital; (vii) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate market in Puerto Rico; (viii) the performance of the stock and bond markets; (ix) competition in the financial services industry; (x) possible legislative, tax or regulatory changes; and (xi) difficulties in combining the operations of any other acquired entity.

For a discussion of such factors and certain risks and uncertainties to which OFG is subject, see OFG’s annual report on Form 10-K, as well as its other filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, OFG assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

About OFG Bancorp

Now in its 50th year in business, OFG Bancorp is a diversified financial holding company that operates under U.S. and Puerto Rico banking laws and regulations. Its three principal subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a full range of commercial, consumer and mortgage banking services, as well as financial planning, trust, insurance, investment brokerage and investment banking services, primarily in Puerto Rico, through 55 financial centers. Investor information can be found at www.ofgbancorp.com.

Puerto Rico:
OFG Bancorp
Alexandra López
787-522-6970
allopez@orientalbank.com
US:
Anreder& Company
Steven Anreder and Gary Fishman
212-532-3232
steven.anreder@anreder.com
gary.fishman@anreder.com

Source: OFG Bancorp