AI Stock Memo: OFG - OFG Bancorp - RankAlpha

OFG

AI Memo

OFG Bancorp

As of 2026-04-21/Confidence medium

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Data freshness

AI Memo

As of 2026-04-21 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

—

Confidence

medium

Horizon

—

Key catalyst

1Q26 earnings reset confirms resilient profitability but much of the headline beat is already digested • 2026-04-21

Expected move: -10%

Biggest risk

The bear case is that the quarter still depended on careful balance-sheet management, credit costs remain elevated in absolute dollars, and Puerto Rico concentration plus deposit mix changes could pressure earnings if funding or credit trends slip.

Invalidation

Break below $36 or thesis failure.

What would change my mind?

The bull case is that 1Q26 showed OFG can absorb the government deposit shift, keep NIM and profitability strong, and continue meaningful buybacks and dividend growth while credit metrics improve [#8-K-2026-04-21].

Research note

Recommendation

—

Confidence

medium

As of

2026-04-21

Base target

$41

p=50%

Bull target

$47

p=25%

Bear target

$36

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Funding mix improvement after the government deposit transfer is the key operating watch item
Credit normalization remains constructive but not fully de-risked
The bull case is that 1Q26 showed OFG can absorb the government deposit shift, keep NIM and profitability strong, and continue meaningful buybacks and dividend growth while credit metrics improve [#8-K-2026-04-21].

BearKey bullets

Capital return remains supportive, but heavy buybacks can lose signaling power if earnings growth stalls near current levels.
Credit costs re-accelerate, especially in commercial or U.S.
loan books, after the 1Q26 reserve actions.

WatchKey bullets

1Q26 earnings reset confirms resilient profitability but much of the headline beat is already digested

Summary

High-level snapshot

Recommendation

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $41 (p=50%)

Bull/Bear spread: +3% / -21%

Vs latest close: Bull +3% · Base -10% · Bear -21%

Scenario probabilities

Bull Target: $47 (p=25%)Base Target: $41 (p=50%)Bear Target: $36 (p=25%)

Commentary

Primary-source evidence is solid because OFG furnished a detailed 1Q26 earnings release through its April 21, 2026 8-K [#8-K-2026-04-21], but the setup still looks more like a cautious monitoring story than a fresh bullish re-rating. The quarter was good enough to stabilize sentiment, especially around funding and capital return, yet the deterministic prior remains negative and the remaining upside versus the reference analyst target is narrow. Net: constructive operating print, limited valuation room, and unresolved dependence on continued deposit and credit discipline.

As of 2026-04-21 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Funding mix improvement after the government deposit transfer is the key operating watch item
Credit normalization remains constructive but not fully de-risked

Scenarios

Bull Target (Scenario probability)

$47 / p=25% prob

Base Target (Scenario probability)

$41 / p=50% prob

Bear Target (Scenario probability)

$36 / p=25% prob

Price $46 as of 2026-06-02

Nearest Scenario: Bull (∆ 3%)

Targets vs latest close: Bull +3% · Base -10% · Bear -21%

Sentiment & Exposure

Sentiment unavailable: insufficient coverage

Events

Other notable items detected

EVENT2026-04-21
1Q26 earnings reset confirms resilient profitability but much of the headline beat is already digested
OFG reported 1Q26 diluted EPS of $1.26, core revenues of $185.8 million, NIM of 5.36%, and lower provision expense versus 4Q25; the same release also highlighted a 17% dividend increase and $44.5 million of buybacks during the quarter [#8-K-2026-04-21]. The update is supportive, but because the release arrived on April 21, 2026 and the stock was already near the median analyst target, the near-term upside from the print alone looks limited.
Prob 90.00% • Move 3.00% • Priced-in 80.00%

Short-term Catalysts

Next few weeks

No short-term catalysts

Long-term Catalysts

Months to a year

Funding mix improvement after the government deposit transfer is the key operating watch item
2026-07-21
The 1Q26 release said customer deposits fell sequentially because of a previously announced $500 million government demand deposit transfer into wealth management, but retail and commercial deposit growth partially offset the move, while borrowings and brokered deposits fell by $150.7 million [#8-K-2026-04-21]. If OFG keeps replacing runoff with core deposits and lower-cost funding, earnings quality should hold up better than the current cautious prior implies.
Prob 58% • Move 5% • Priced-in 45%
Credit normalization remains constructive but not fully de-risked
2026-07-21
1Q26 net charge-offs improved sequentially to $21.4 million from $26.9 million in 4Q25 and delinquency and nonperforming loan metrics declined, yet provision expense still reflected reserve build on a previously reserved commercial loan and newly classified small commercial loans [#8-K-2026-04-21]. That leaves the thesis dependent on continued benign credit outcomes rather than a clean all-clear.
Prob 60% • Move -6% • Priced-in 35%

Risks

Capital return remains supportive, but heavy buybacks can lose signaling power if earnings growth stalls near current levels.
Credit costs re-accelerate, especially in commercial or U.S. loan books, after the 1Q26 reserve actions.
Deposit mix and funding costs worsen if government-related balances or other large accounts move further.
Puerto Rico and USVI geographic concentration increases sensitivity to local economic, regulatory, and weather shocks.

Peers

Symbol	Summary
NIC	Nicolet Bankshares is a closer size peer in banks and offers a cleaner read on community-bank deposit and credit execution, but OFG’s Puerto Rico and USVI exposure makes the comparison imperfect.
CHCO	City Holding is another similar-size bank peer with a more traditional mainland footprint; it is useful for capital and credit-discipline comparison, though its growth drivers are less tied to Puerto Rico conditions.
CCB	Coastal Financial is near OFG in market cap, but its partner-banking and fintech exposure make it a looser comp; it is more useful as a growth/funding contrast than as a strict operating peer.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-04-21