Why Are These Insiders Ignoring Stock Market Doomsayers?

OFG Bancorp (NYSE:OFG) had three different insiders purchase shares over the past two weeks or so. To begin with, Chief Financial Officer and Executive Vice President Ganesh Kumar reported purchasing 3,734 shares last Tuesday at a price of $6.04 per share, which are held by his Defined Contribution Plan (401K). After the recent purchase, the CFO holds an ownership stake of 18,730 shares through his 401K Plan. Chairman Julian S. Inclan snapped up 5,000 shares last Monday at a weighted average price of $6.20, increasing his overall stake to 109,109 shares. Last but not least, President and Chief Executive Officer Jose R. Fernandez bought 3,000 shares on January 7 at a weighted average price of $6.82 and currently holds a 233,285-share position.

The publicly-owned financial holding company has 52 branches in Puerto Rico and a subsidiary in Boca Raton, Florida. Hence, the Commonwealth of Puerto Rico, whose economic conditions have been worsening in the past several years due to decreasing population, sustained economic recession, a struggling housing sector, and the Puerto Rican government’s indebtedness and structural deficit, serves as OFG’s main market. This explains why the shares of OFG have declined by 60% over the past year. The company’s net interest income for the nine months that ended September 30 totaled $261.8 million, marking a decrease of 15.9% year-over-year. The decrease reflects a decrease of 13.6% in interest income from loans and a decrease of 27.4% in interest income from investments. Meanwhile, the company’s interest rate spread decreased by 74 basis points to 5.11%, thanks to a decrease in the average yield of interest-earning assets. Tom Brown’s Second Curve Capital upped its stake in OFG Bancorp (NYSE:OFG) by 23% during the September quarter to 936,600 shares.