Ofg Bancorp · NYSE:OFG
Ofg Bancorp — Oriental Financial Group — Investor Presentation (October 2008)
24 slides from Ofg Bancorp's investor presentation, Oct 24, 2008
Slide 1: Conference Call — September 2008
Conference Call — September 2008 José Rafael Fernández Vice Chairman, President and Chief Executive Officer Norberto González Executive Vice President and Chief Financial Officer Julio Micheo Senior Executive Vice President, Chief Investment Officer and Treasurer
Slide 2: Confidentiality and Recipient's Undertakings
By accepting delivery of this presentation, Confidentiality and Recipient’s Undertakings The information contained in this presentation is confidential and proprietary to OFG. the intended recipient is deemed to have acknowledged and agreed to the following: · of the merits all to and by the whether
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The future results of the Company could be affected by subsequent events and could differ materially from those expressed in forward-looki
Slide 4: Investment Thesis
Investment Thesis business model Focus on wealth management and small business banking Enables customer retention Drives revenue diversification Result of conservative lending practices Strong level of reserve coverage based on portfolio risk profile New management in Treasury function with long-ter
Slide 5: Background and Strategy
Background and Strategy · Rico on Puerto focused in bank business increasingly public in largest year branches, Juan 7th th · 23 San · Strategy Decided not to be an aggressive lender Restructured investment portfolio and related funding to improve net interest margin Strengthened management team — D
Slide 6: Seasoned Leadership Throughout Senior Ranks
Seasoned Leadership Throughout Senior Ranks 1991 2003 2006 2007 2004 Instrumental in building OFG’s financial services business Former EVP Risk Management of BBVA in PR Former EVP Treasurer of Doral Financial Corporation Former head of Citibank’s consumer mortgage operations in PR Former director of
Slide 7: Improved Operating Results
Improved Operating Results (1) Securities portfolio restructuring
Slide 8: Advisory-based, "Niche" Business Model
Advisory-based, “Niche” Business Model
Slide 9: Greater Revenue Diversification
Greater Revenue Diversification “Diversified Noninterest Revenue” (% of Total Revenue) * Excludes Deposit Fees, Servicing / Securitization Fees, and Gains on Sale Mainland U.S. peer criteria: Assets of $500mm — $12bn, Securities / Assets > 30%, ROA > 0.50%, ROE > 8.0% Financial information represent
Slide 10: Loan Portfolio Represents 20% of Total Assets
Loan Portfolio Represents 20% of Total Assets $1,033.5 million Loan Portfolio Mortgage Commercial Consumer $171.0 million $25.5 million
Slide 11: Lending Overview
Lending Overview · not estate have real by OFG historically for secured Rico losses are ratios mode” Puerto credit “run-off in commercial, loan-to-value in increased largely delinquencies including adequate is in significantly loans, have portfolio of increases into 90%-plus Mortgages Consumer Gener
Slide 12: Stable Credit Metrics
Stable Credit Metrics NCOs / Average Loans (%) Reserves / Loans (%) Oriental Financial Group Puerto Rico Peers SNL Financial Source:
Slide 13: Loan Delinquency Rate Holding Steady
Loan Delinquency Rate Holding Steady 30-Day Delinquency Rate
Slide 14: Strong Underwriting for Mortgage Credit
Strong Underwriting for Mortgage Credit Origination Quality Portfolio Quality
Slide 15: New Treasury / ALCO Strategy
New Treasury / ALCO Strategy Improved Investment Strategy FNMA, FHLMC, GNMA Certificates US Treasury Securities US & PR Government & Agency Obligations Senior Classes of CMOs In-sourced Treasury team Significant turnaround in Net Interest Margin Better matching of securities with fixed rate, longer-
Slide 16: Changeover in HTM / AFS Investment Portfolios
Changeover in HTM / AFS Investment Portfolios
Slide 17: Isolated and Discernable Pockets of Investment Risk
Isolated and Discernable Pockets of Investment Risk $4.6 billion Investment Portfolio 0 100 % 85.0 0.0 % 5.4% 13.9% 14.4% 6.2% 15.6% 16.1% 75 % 0 63 . 7 0.0 % 5.8% 14.8% 15.3% 6.5% 16.5% 16.9% 50 % 0 42.5 0.0 % 6.1% 15.6% 16.1% 6.8% 17.3% 17.8% 25 % 0 21.2 0.0 % 6.4% 16.4% 16.9% 7.2% 18.1% 18.6% % o
Slide 18: Platform for Capitalizing on Local Market Turmoil
Platform for Capitalizing on Local Market Turmoil capital Several banks under regulatory order Most banks are capital constrained Credit issues are the main focus, not growth The Puerto Rican financial market is in disarray — - — OFG is best positioned to benefit from the disarray upon raising Capit
Slide 19: Compelling Entry Valuation
Price / 2009E Earnings Compelling Entry Valuation Price / Tangible Book Value 1 Pro Forma 1.85x 2.02x OFG 2.63x 15.1x 8.1x OFG 2 2 Mainland U.S. Peers Mainland U.S. Peers 210.4% 2009E PEG Ratio 8.0% Long-Term EPS Growth Rate 16.0% 50.7% OFG 2 2 OFG Mainland U.S. Peers Mainland U.S. Peers 30%, ROA >
Slide 20: Strategic Goals and Accomplishments for 2008
Strategic Goals and Accomplishments for 2008 Investment · Remain attentive to market opportunities to further improve NIM Securities · Remove mark-to-market overhang Financial · Continued success in the delivery of integrated financial Services services · Expanded distribution of capabilities throug
Slide 21: Five-Year Financial Targets
Five-Year Financial Targets Goal Recent Performance • 2Q08 = 0.95% • 1Q08 = 1.06% ROA of 1% • 2007 = 0.76% • 2006 = (0.11%) • 2Q08 = 20.65% • 1Q08 = 20.63% ROE of 15% • 2007 = 13.52% • 2006 = (3.59%) • 2Q08 = 37% Non-Interest income cover 60% • 1Q08 = 50% of non-interest expenses • 2007 = 41% · 2006
Slide 22: Conclusion — Investment Thesis
Conclusion — Investment Thesis business model Advisory-based, “niche” Relatively strong credit outlook Cautious and calculated investment focus Optimal platform for capitalizing on Puerto Rican market turmoil Attractive entry valuation and strong growth trajectory Focus on wealth management and smal
Slide 23: Appendix — Key Metrics
Appendix — Key Metrics Net Interest Margin (%) Efficiency Ratio (%) Assets Under Management ($M)
Slide 24: Appendix — Regulatory Capital
Appendix — Regulatory Capital
Oriental Financial Group — Investor Presentation (October 2008) on 6ix