OFG - OFG Bancorp: Taking The More Cautious Route

2024-06-28 18:12:11 ET

Summary

• OFG Bancorp is a 'digital first' bank with high digital transaction rates and enrollment growth.
• Despite solid financial performance, a decline in deposits and securities value is concerning.
• High net interest margin, low valuation multiples, and strong asset quality make the bank interesting, but not interesting enough to pull the trigger on.

One of the more interesting banks that I have come across over the past year or so has been OFG Bancorp ( OFG ). For those not familiar with the company, it is a bank holding company that provides banking, wealth management, and treasury services to its clients. While most banks by this point in time have adopted some digital offerings, management boasts that this particular business is truly ‘digital first’. As a testament to this, management has provided investors with some interesting data points. For instance, 94% of all routine transactions, 96% of all deposit transactions, and 64% of all loan payments on the retail side are conducted through digital/self-service channels. In the most recent quarter, the company boasted digital enrollment figures that were 12% higher than they were the same time one year earlier. And in fact, digital loan payments were up 68%, while virtual teller utilization had grown by 32%....

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