OFG

OFG is a high-quality, profitable bank trading at a discount to its own earnings power. Net income has risen every year from $146M (FY2021) to $205M (FY2025, +3.5% YoY), and diluted EPS grew faster (+8.3% to $4.58) because the share count fell 5.1% — management bought back 2,253,819 shares in 2025 at an average $40.64, well below today's $49.19. Return on equity is a healthy 14.8%, equity grew 10.8% to $1.39B, retained earnings jumped 17.2% to $905M, and the cash position surged 76% to $1.04B. A 7.97x liabilities/equity ratio is normal for a deposit-funded commercial bank, not a sign of stress. At a P/E of 10.7, the market is pricing little of this consistent, capital-light growth.

The capital-return story is the clearest near-term driver. Per the 10-K, the Board raised the quarterly dividend twice in succession — to $0.30 in 2025 and to $0.35 for 2026 (cash dividends paid up 13.6% to $51.9M) — and in January 2026 authorized a new $200M repurchase program on top of the existing programs ($38.1M still remaining at year-end). Against a market cap near $2.1B (43.1M shares x $49.19), $200M+ of buyback capacity is meaningful and, executed below intrinsic value, is directly accretive to the $4.58 EPS base. The MD&A also describes a supportive backdrop: Puerto Rico's Economic Activity Index hit 128.1 in November 2025 (+0.8% YoY) with non-farm payrolls up 0.9% YoY, aided by reconstruction funding and on-shoring.