OFG earnings rose 14.7% year over year to $1.33 per diluted share in the third quarter of 2026, as lending growth and lower credit-loss provisions supported profit. But the October 21 results also showed sequential pressure: earnings declined from $1.39 per share in the second quarter, while higher funding costs and the absence of earlier loan-payoff income reduced revenue.
Key Takeaways
- Diluted EPS increased from $1.16 a year earlier but fell from $1.39 in the second quarter.
- Loans grew 1.8% sequentially, while customer deposits declined 0.8%.
- Management expects net interest margin near 5.25% and plans to update its 2027 outlook at year-end.
Table of Contents
- OFG earnings improve annually but soften sequentially
- Loan growth meets a more expensive funding mix
- Credit indicators improve despite seasonal delinquencies
- Buybacks resume as digital relationships expand
- Conclusion
OFG earnings improve annually but soften sequentially
OFG Bancorp's third-quarter results show net income available to common shareholders of $56.6 million for the period ended September 30, 2026, compared with $51.8 million a year earlier and $58.8 million in the preceding quarter. OFG is the financial holding company for Oriental Bank.
Core revenue totaled $185.7 million, up 1.0% year over year but down from $190.3 million in the second quarter. The sequential decline partly reflected the absence of $4.1 million of income from three commercial loans paid in full during the previous quarter, alongside lower mortgage banking revenue.
Noninterest expense fell to $96.3 million from $102.8 million sequentially, largely because the second quarter included $5.8 million in business-related operational charges. The lower expense base cushioned, but did not fully offset, weaker revenue and a higher quarterly credit-loss provision.
| Item | Details |
|---|---|
| Common equity Tier 1 ratio | 14.10%, compared with 14.07% in Q2 2026 |
| Tangible book value per share | $29.66, compared with $31.12 in Q2 2026 |
| Return on average assets | 1.86%, compared with 1.93% in Q2 2026 |
| Cash dividend per common share | $0.35, unchanged from Q2 2026 |
Loan growth meets a more expensive funding mix
Loans held for investment reached $8.45 billion, increasing $150.9 million from the second quarter and 4.1% from a year earlier. Puerto Rico commercial and consumer lending more than offset declines in other categories.
Customer deposits moved in the opposite direction, declining $79.9 million to $9.66 billion as demand and savings balances fell and time deposits increased. Borrowings and brokered deposits rose $131.1 million for liquidity management.
Net interest margin narrowed to 5.23% from 5.45% in the second quarter. CFO Maritza Erizmendi said approximately $400 million of government deposits moved into time deposits at the end of the second quarter, producing a full-quarter funding-cost impact in the third. Migration by other customers seeking higher yields also exceeded expectations.
Management expects margin to remain near 5.25%. CEO José Rafael Fernández expressed confidence in low-single-digit full-year loan growth, with the commercial pipeline offering a possibility of exceeding that outlook rather than a firm commitment to do so.
Credit indicators improve despite seasonal delinquencies
The provision for credit losses rose to $18.1 million from $13.0 million in the second quarter, reflecting increased loan volume and a seasonal adjustment for auto delinquencies. It remained below the $28.3 million provision recorded a year earlier.
The net charge-off rate fell to 0.70% from 1.40% sequentially, and the nonperforming loan rate declined to 0.74%. Both measures also improved year over year.
Early and total delinquency rates increased from the second quarter but remained below year-earlier levels. Chief Risk Officer Cesar Ortiz described the auto-loan pattern as seasonal, while management said it continued to monitor inflation, interest rates and energy costs.
Buybacks resume as digital relationships expand
OFG repurchased $13.5 million of common shares during the quarter. Fernández said funding loan and balance-sheet growth remains the first capital priority, with excess capital returned through dividends and repurchases. Approximately $180 million remained under the buyback authorization.
Management also reported 5% year-over-year growth in retail and commercial customers, 24% growth in active digital users and 11% growth in virtual teller use. Fernández said personalized account insights and alerts were helping deepen customer relationships.
Conclusion
OFG's annual earnings improvement came alongside a sequential squeeze on revenue and margin. Management's planned year-end update to 2027 guidance will provide the next stated outlook on how commercial lending opportunities balance against deposit competition and funding costs.
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