EX-99 2 ofg8kexhibit994q20.htm EXHIBIT 99 ofg8kexhibit994q20
ofg8kexhibit994q20p1i0.jpg
Exhibit 99
 
 
OFG Bancorp Reports 4Q20 & 2020 Results
SAN JUAN,
 
Puerto Rico,
 
January 25,
 
2021 –
 
OFG Bancorp
 
(NYSE: OFG),
 
the financial
 
holding company
 
for Oriental
 
Bank,
reported results for the fourth
 
quarter and year ended December 31, 2020.
CEO Comment
José Rafael
 
Fernández, President,
 
Chief Executive
 
Officer, and
 
Vice Chairman
 
of the
 
Board, said:
 
“We had
 
another quarter
 
of strong
performance in
 
our core
 
businesses, reflecting
 
our larger
 
scale, solid
 
levels of
 
new loan
 
production, lower
 
cost of
 
funds, higher
 
non-
interest income, and reduced expenses.
 
“On a
 
macro-basis, we
 
are benefitting
 
from the
 
improved economic
 
environment in
 
Puerto Rico
 
and the U.S.
 
Virgin Islands
 
due to
 
the
continuing nascent rebound from the easing of COVID-19 restrictions and from pandemic-related stimulus.
“Within this environment,
 
Oriental’s success
 
continues to
 
be driven by
 
resiliency, agility,
 
and being more
 
than ready to
 
help customers
and communities
 
with their
 
changing product
 
and service needs.
 
During the
 
fourth quarter,
 
we also
 
completed the
 
integration of
 
the
Scotiabank acquisition and related cost-savings.
“We look
 
forward to
 
realizing the
 
full benefits of
 
our larger
 
scale over
 
the course
 
of 2021. The
 
vaccine inoculations should
 
reduce the
threat of COVID-19, and the economies of Puerto Rico and USVI should expand from all the pending federal reconstruction and stimulus.
“2020 was another challenging
 
year for Puerto
 
Rico, USVI and
 
Oriental. As in
 
years past, we
 
successfully worked our
 
way through it.
 
Our
heartfelt thanks go
 
to our team members
 
who helped customers
 
by swiftly processing
 
loan deferrals; implementing
 
an easy-to-use, fully
online Paycheck Protection
 
Program; managing the
 
rapid influx of
 
deposits; and providing contactless
 
and in-person services in
 
a COVID-
safe manner.
 
Thanks also
 
to the
 
many team
 
members who
 
had to
 
successfully adapt
 
to working
 
from home
 
and implement
 
the
Scotiabank integration in the middle of a pandemic.”
4Q20 Highlights
Increased Earnings
 
& Revenues:
EPS diluted
 
of $0.42
 
compared to
 
a loss
 
of $0.05
 
in 4Q19.
 
Results reflected
 
pre-tax merger
 
and
restructuring charges of $10.1 million
 
compared to $21.5 million in 4Q19.
 
Total core
 
revenues were $132.8 million versus
 
$98.4 million in
4Q19. Net interest
 
income of $98.7
 
million increased 24.7%.
 
Non-interest income
 
of $34.0 million
 
increased 77.4%. Net
 
interest margin
was 4.24% compared to 5.34% in 4Q19.
 
Solid Production:
 
New loan
 
originations totaled
 
$485.4 million
 
compared to
 
$404.9 million
 
in 4Q19.
 
Compared to
 
3Q20, production
(excluding Paycheck
 
Protection Program loans)
 
increased $38.0 million, driven
 
by commercial and mortgage
 
with continued strong
 
levels
of auto and consumer lending. Net loans declined $77.9 million from 9/30/20 to $6.5 billion at 12/31/20.
Lower Provision:
 
Provision for credit
 
losses was $14.2
 
million compared to
 
$23.1 million in
 
4Q19. 4Q20 net
 
charge-offs of
 
$44.8 million
included $31.2 million for two
 
acquired commercial loans that
 
were substantially reserved.
 
4Q20 loan deferrals
 
fell to 1.4% of
 
total loans
from 2.0% in 3Q20.
Core Expenses:
 
Non-interest expenses
 
were $89.0
 
million compared
 
to $78.9
 
million in 4Q19.
 
Excluding merger
 
and COVID
 
-19 related
costs, 4Q20 non-interest
 
expenses of $77.4
 
million fell $9.4
 
million from 1Q20,
 
amounting to approximately
 
$38.0 million in
 
annualized
reductions from the Scotiabank acquisition, exceeding original expectations by about 9%.
Lower Cost
 
of Funds:
 
Cost of
 
funds was
 
66 bps
 
compared to
 
92 bps
 
in 4Q19.
 
Compared to
 
3Q20, cost
 
of funds
 
fell 5
 
bps. Customer
deposits declined $169.8 million from 9/30/20 to $8.4 billion at 12/31/20.
Capital Building:
 
Tangible book value per
 
share increased $1.01 to $16.97 compared to 4Q19
 
and CET1 capital increased $158.6 million to
$894.1 million. The CET1 ratio was 13.08% versus 12.55% on 9/30/20 and 10.91% on 12/31/19, when the Scotiabank acquisition closed.
 
 
2020 Highlights
Increased Earnings & Revenues:
EPS diluted of $1.32
 
compared to $0.92 in
 
2019. Total
 
core revenues were
 
$519.3 million versus $396.2
million in 2019,
 
with increases of
 
26.5% and 51.1%
 
in net interest
 
and non-interest income,
 
respectively. New
 
loan production was
 
$1.7
billion compared to $1.3 billion. Net interest margin was 4.55% compared to 5.37%. The effective
 
tax rate was 21.6% compared to 28.5%.
 
Results Included
 
(all amounts pre
 
-tax):
 
Merger and
 
restructuring charges
 
mostly related
 
to the
 
Scotiabank acquisition of
 
$16.1 million
compared to $24.1 million in 2019, and
 
bargain purchase gain from
 
the acquisition of $7.3 million compared to $0.3
 
million in 2019. 2020
also included $39.9 million in COVID-19 related provision for credit losses and $5.8 million in COVID-19 related expenses.
Conference Call
A conference call
 
to discuss 4Q20 results,
 
outlook and related matters
 
will be held today
 
at 10:00 AM ET.
 
Phone (888) 562-3356 or
 
(973)
582-2700. Conference ID:
 
864-1568. The call can
 
also be accessed live
 
on
www.ofgbancorp.com.
 
Webcast replay
 
will be available shortly
thereafter.
 
Financial Supplement & Conference Call Presentation
OFG’s Financial
 
Supplement, with
 
full financial
 
tables for
 
the quarter
 
and year
 
ended December
 
31, 2020,
 
and the
 
4Q20
Conference Call
 
Presentation, can
 
be found
 
on the
 
Quarterly Results
 
page on
 
OFG’s Investor
 
Relations website
 
at
www.ofgbancorp.com
.
 
Non-GAAP Financial Measures
 
In addition to
 
our financial information
 
presented in
 
accordance with
 
GAAP,
 
management uses
 
certain “non-GAAP financial
measures” within the meaning of
 
SEC Regulation G, to
 
clarify and enhance understanding
 
of past performance and
 
prospects
for the
 
future. Please
 
refer to
 
Tables 8-1
 
and 8-2
 
in OFG’s
 
above-mentioned Financial
 
Supplement for
 
a reconciliation
 
of
GAAP to non-GAAP measures and calculations.
Forward Looking Statements
The information
 
included in
 
this document
 
contains certain
 
forward-looking statements
 
within the
 
meaning of
 
the Private
Securities Litigation
 
Reform Act
 
of 1995.
 
These statements
 
are based
 
on management’s
 
current expectations
 
and involve
certain risks and
 
uncertainties that may
 
cause actual results
 
to differ
 
materially from those
 
expressed in the
 
forward-looking
statements.
 
Factors that
 
might cause
 
such a
 
difference include,
 
but are
 
not limited
 
to (i)
 
the rate
 
of growth
 
in the
 
economy and
employment levels,
 
as well
 
as general
 
business and
 
economic conditions;
 
(ii) changes in
 
interest rates,
 
as well
 
as the
magnitude of such changes; (iii) changes to
 
the financial condition of the government
 
of Puerto Rico; (iv) the potential
 
impact
of damages
 
from future
 
hurricanes, earthquakes
 
and other
 
natural disasters
 
in Puerto
 
Rico; (v)
 
the fiscal
 
and monetary
policies of the federal
 
government and its
 
agencies; (vi) the
 
performance of the
 
stock and bond
 
markets; (vii) competition
 
in
the financial
 
services industry;
 
(viii) possible
 
legislative, tax
 
or regulatory
 
changes; and
 
(ix) the
 
severity,
 
magnitude and
duration of the
 
COVID-19 pandemic, including
 
impacts of the pandemic
 
and of responses of
 
federal, state
 
and local
governments on our branches, operations
 
and personnel, and on our customers and their businesses.
For a
 
discussion of
 
such factors
 
and certain
 
risks and
 
uncertainties to
 
which OFG
 
is subject,
 
please refer
 
to OFG’s
 
annual
report on Form
 
10-K for the
 
year ended December
 
31, 2019, as well
 
as its other filings
 
with the U.S.
 
Securities and Exchange
Commission. Other
 
than to
 
the extent
 
required by
 
applicable law,
 
including the
 
requirements of
 
applicable securities
 
laws,
OFG assumes
 
no obligation
 
to update
 
any forward
 
-looking statements
 
to reflect
 
occurrences or
 
unanticipated events
 
or
circumstances after the date of
 
such statements.
About OFG Bancorp
Now in its
 
57
th
 
year in business,
 
OFG Bancorp is
 
a diversified
 
financial holding company
 
that operates
 
under U.S.,
 
Puerto Rico
 
and U.S.
Virgin Islands banking laws and regulations. Its three principal subsidiaries, Oriental Bank, Oriental
 
Financial Services and Oriental
 
 
 
 
Insurance, provide a
 
wide range
 
of retail and
 
commercial banking, lending
 
and wealth management
 
products, services, and
 
technology,
primarily in Puerto Rico and U.S. Virgin Islands. Visit us at
Error! Hyperlink reference not valid.
www.ofgbancorp.com
.
 
# # #
Contacts
Puerto Rico & USVI:
 
Idalis Montalvo (
idalis.montalvo@orientalbank.com
) at (787) 777-2847
 
US:
 
Gary Fishman (
gfishman@ofgbancorp.com
) and Steven Anreder (
sanreder@ofgbancorp.com
) at (212) 532-3232
 
 
 
OFG Bancorp
Financial Supplement
The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation,
and investors should refer to
 
our December 31, 2020 Annual Report on Form 10-K once it is filed with the Securities and Exchange
Commission.
Table
 
of Contents
Pages
OFG Bancorp (Consolidated Financial Information)
Table
 
1:
Financial and Statistical Summary - Consolidated
2-3
Table
 
2:
Consolidated Statements of Operations
4-5
Table
 
3:
Consolidated Statements of Financial Condition
6
Table
 
4:
Information on Loan Portfolio and Production
7-8
Table
 
5:
Average Balances, Net Interest Income and Net Interest
 
Margin
9-10
Table
 
6:
Loan Information and Performance Statistics
11-13
Table
 
7:
Allowance for Credit Losses
14
Table
 
8:
Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital
15-16
Table
 
9:
Notes to Financial Summary, Selected Metrics, Loans, and Consolidated
 
Financial Statements (Tables 1-8)
17
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 1-2: Financial and Statistical Summary - Consolidated
2020
2020
2020
2020
2019
(Dollars in thousands, except per share data)
 
(unaudited)
Q4
Q3
Q2
Q1
Q4
Statement of Operations
Net interest income
$
98,738
 
$
 
99,533
 
$
 
105,060
$
 
105,101
 
(g)
 
$
 
79,209
Non-interest income, net (core)
(2)
34,047
(a)
27,486
23,106
26,233
(g)
19,196
Total core revenues
132,785
 
(a)
 
127,019
128,166
131,334
 
(g)
 
98,405
Non-interest expense
89,039
(g)
83,444
85,481
87,322
(g)
78,913
(g)
Pre-provision net revenues
(22)
44,123
47,415
46,731
49,229
20,007
Total provision
 
for credit losses
14,176
13,669
(f)
17,696
(f)
47,131
(e)(f)
23,068
Net income (loss) before income taxes
29,947
 
(a)(g)
 
33,746
29,035
2,098
(3,061)
Income tax expense (benefit)
6,646
6,308
7,248
297
(2,070)
Net income (loss) available to common stockholders
$
21,673
 
(a)(g)
 
25,810
20,159
173
(2,619)
Common Share Statistics
Earnings (loss) per common share - basic
(3)
$
0.42
 
(a)(g)
 
0.50
0.39
-
(0.05)
Earnings (loss) per common share - diluted
(4)
$
0.42
(a)(g)
0.50
0.39
-
(0.05)
Average common shares outstanding
51,350
51,342
51,336
51,404
51,360
Average common shares outstanding
 
and equivalents
51,618
51,527
51,470
51,713
51,791
Cash dividends per common share
$
0.07
$
0.07
$
0.07
$
0.07
$
0.07
Book value per common share (period end)
$
19.54
$
19.13
$
18.69
$
18.33
(e)
$
18.75
Tangible book value per common
 
share (period end)
(5)
$
16.97
$
16.51
$
16.01
$
15.60
 
(e)
 
$
15.96
Balance Sheet (Average Balances)
Loans
(6)
$
6,708,284
 
(c)
 
$
6,787,022
 
(c)
 
$
6,840,650
 
(c)
 
$
6,687,875
$
4,500,071
Interest-earning assets
9,270,739
(c)
9,218,717
(c)
8,845,744
(c)
8,556,421
5,886,379
Total assets
9,921,254
 
(c)
 
9,918,381
 
(c)
 
9,512,129
 
(c)
 
9,326,627
6,325,334
Core deposits
8,451,308
8,376,623
7,852,495
7,516,438
4,582,872
Total deposits
8,515,646
8,517,039
8,088,106
7,752,446
4,850,980
Interest-bearing deposits
6,199,929
6,240,639
6,105,014
6,053,482
3,740,133
Borrowings
101,930
102,916
157,669
271,800
304,365
Stockholders' equity
1,083,423
1,062,460
1,037,195
1,043,481
(e)
1,062,720
Common stockholders' equity
1,001,553
980,590
955,325
961,611
 
(e)
 
980,850
Performance Metrics
Net interest margin
(7)
4.24%
4.30%
4.78%
4.94%
5.34%
Return on average assets
(8)
0.94%
1.11%
0.92%
0.08%
-0.06%
Return on average tangible common stockholders'
 
equity
(9)
9.99%
12.23%
9.88%
0.08%
-1.17%
Efficiency ratio
(10)
67.06%
(g)
65.69%
66.70%
66.49%
80.19%
Full-time equivalent employees, period end
2,275
2,332
2,373
2,449
2,455
Credit Quality Metrics
(1)(21)
Allowance for loan and lease losses
$
204,809
 
(b)
 
$
235,313
$
232,701
$
230,755
 
(e)(f)
 
$
 
116,539
Allowance as a % of loans held for investment
3.07%
(b)
3.48%
(c)
3.35%
(c)
3.41%
1.73%
Net charge-offs
$
44,814
 
(b)
 
$
10,570
$
15,750
$
24,034
$
14,395
Net charge-off rate
(11)
2.67%
(b)
0.62%
0.92%
1.44%
1.28%
Early delinquency rate (30 - 89 days past
 
due)
 
2.68%
2.50%
2.64%
3.16%
3.07%
Total delinquency rate
 
(30 days and over)
5.74%
5.67%
5.56%
6.38%
5.85%
Capital Ratios (Non-GAAP)
(12)(20)
Leverage ratio
10.30%
10.00%
10.16%
10.14%
(d)(e)
9.24%
Common equity Tier 1 capital ratio
13.08%
12.55%
12.03%
 
(c)
 
11.69%
 
(d)(e)
 
10.91%
Tier 1 risk-based capital ratio
14.78%
14.25%
13.71%
(c)
13.36%
(d)(e)
12.64%
Total risk-based
 
capital ratio
16.04%
15.50%
14.96%
 
(c)
 
14.62%
 
(d)(e)
 
13.91%
Tangible common equity ("TCE")
 
ratio
9.00%
8.58%
8.39%
8.80%
8.96%
(a) During 4Q 2020, the Company recognized annual insurance
 
contingent commissions amounting to $4.0 million.
 
In addition, mortgage banking activities reflected higher gains
 
on
sale of loans and securitizations, and higher servicing fees compared
 
to 3Q 2020.
(b) During 4Q 2020, commercial charge-offs reflected
 
$31.2 million from two commercial non-performing PCD
 
loans from the government and hospital sectors,
 
reducing loan
balance and their corresponding allowance for credit
 
losses by that amount.
 
 
(c) In response to the Coronavirus (COVID-19) pandemic,
 
CARES Act created funding for the Small Business Administration
 
(SBA) Paycheck Protection Program
 
(PPP), which provides
loans to small businesses to keep their employees on payroll
 
and make other eligible payments. The original funding for
 
the PPP was fully allocated by mid-April 2020, with additional
funding made available on April 24, 2020 under the Paycheck
 
Protection Program and Health Care Enhancement
 
Act. During 2Q 2020 and 3Q 2020, the Company participated in this
program originating 4,342 and 732 PPP loans, respectively.
 
On June 30, 2020, September 30, 2020 and December 31, 2020, Oriental had PPP loans amounting
 
to $278.1 million,
$289.2 million and $282.7 million, respectively.
 
These loans are fully guaranteed by the SBA and risk-weighted
 
at 0%.
(d) During 1Q 2020, the Company decided to early implement Simplifications to
 
the Capital Rule, which simplified the regulatory capital treatment
 
for mortgage servicing assets
(MSA) and certain deferred tax assets
 
arising from temporary differences
 
(temporary difference DTAs).
 
It Increased common equity tier 1 (CET1) capital threshold deductions
 
from
10 percent to 25 percent and removes the aggregate
 
15 percent CET1 threshold deduction. However,
 
it retains the 250 percent risk weight applicable
 
to non-deducted amounts of
MSAs and temporary difference DTAs.
(e) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement
 
of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective
 
approach. As
a result, a $39.2 million allowance for credit losses was recorded
 
for Non-PCD loans and $0.2 million for unused commitments with
 
the corresponding adjustment reducing retained
earnings, net of a $13.9 million deferred tax effect.
 
For PCD loans, including BBVA and Eurobank
 
acquired book plus the recently acquired Scotiabank, the adjustment
 
amounting to
$50.5 million was made through the allowance and loan balances with no impact in
 
capital. As disclosed in the Company’s 2019 Form
 
10-K, the Company had initially elected to
phase-in the January 1, 2020 (“day 1”) impact to retained
 
earnings to regulatory capital, over a three-year
 
transition period beginning in 2020. As part of its response to the impact of
COVID-19, in March 2020, the Federal Reserve,
 
Federal Deposit Insurance Corporation and Office
 
of the Comptroller of the Currency issued an interim final rule that
 
provided the
option to temporarily delay the effects
 
of CECL on regulatory capital for two year
 
s, followed by a three-year transition
 
period. In addition, for the first two years, a uniform
 
25%
“scaling factor” is introduced to approximate
 
the portion of the post day-one allowance attributable
 
to CECL relative to the incurred loss methodology.
 
The 25% scaling factor is
calibrated to approximate
 
an overall after-tax impact of differences
 
in allowances under CECL vs the incurred loss methodology.
(f) In March 2020, a global pandemic was declared by the World
 
Health Organization related to
 
the rapidly growing outbreak of a novel strain
 
of coronavirus (COVID-19). The
pandemic significantly impacted the economic conditions in P.R.
 
and the U.S., creating significant uncertainties. In
 
response, we increased our provision for credit
 
losses on loans in
1Q 2020 and 2Q 2020 by $34.1 million and $5.0 million, respectively,
 
and established a provision for credit losses on
 
accrued interest receivables under deferral
 
plans in 3Q 2020 of
$826 thousand.
(g) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and
 
USVI operations, incurring in merger and restructuring
 
charges of $21.5 million during 4Q 2019, $3.0
million during 2Q 2020, $2.7 million during 3Q 2020, and $10.1 million during 4Q 2020. At December
 
31, 2019, the consolidated statement of financial
 
condition contemplated the
effects of the Scotiabank PR & USVI acquisition. Nevertheless,
 
the consolidated statement of
 
operations did not contemplate the effects
 
of the Scotiabank PR & USVI acquisition until
January 1, 2020.
2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 1-2: Financial and Statistical Summary - Consolidated (Continued)
2020
2019
(Dollars in thousands, except per share data)
 
(unaudited)
YTD
YTD
Statement of Operations
Net interest income
 
$
 
408,432
 
(e)
 
 
$
 
322,793
Non-interest income, net (core)
(2)
110,872
(e)
73,365
Total core revenues
519,304
 
(e)
 
396,158
Non-interest expense
345,286
(e)
233,244
(e)
Pre-provision net revenues
(22)
187,498
172,042
Total provision
 
for credit losses
92,672
(c)(d)
96,792
(g)
Net income before income taxes
94,826
75,250
Income tax expense
20,499
21,409
Net income available to common stockholders
67,815
47,329
Common Share Statistics
Earnings per common share - basic
(3)
1.32
0.92
Earnings
 
per common share - diluted
(4)
1.32
0.92
Average common shares outstanding
51,358
51,335
Average common shares outstanding
 
and equivalents
51,555
51,719
Cash dividends per common share
$
0.28
$
0.28
Book value per common share (period end)
$
19.54
(c)
$
18.75
Tangible book value per common
 
share (period end)
(5)
$
16.97
 
(c)
 
$
15.96
Balance Sheet (Average Balances)
Loans
(6)
$
6,748,510
 
(a)
 
$
4,514,522
Interest-earning assets
8,966,989
(a)
6,012,853
Total assets
9,670,969
 
(a)
 
6,464,330
Core deposits
8,051,208
4,502,265
Total deposits
8,219,936
4,885,748
Interest-bearing deposits
6,150,150
3,785,149
Borrowings
158,271
415,712
Stockholders' equity
1,056,729
(c)
1,044,881
Common stockholders' equity
974,859
 
(c)
 
963,011
Performance Metrics
Net interest margin
(7)
4.55%
5.37%
Return on average assets
(8)
0.77%
0.83%
Return on average tangible common stockholders'
 
equity
(9)
8.10%
5.42%
Efficiency ratio
(10)
66.49%
58.88%
Full-time equivalent employees, period end
2,275
2,455
Credit Quality Metrics
(1)(21)
Allowance for loan and lease losses
$
204,809
 
(c)(d)
 
$
116,539
Allowance as a % of loans held for investment
3.07%
(a)
1.73%
Net charge-offs
$
95,168
$
74,741
 
(f)(g)
 
Net charge-off rate
(11)
1.41%
1.66%
(f)(g)
Early delinquency rate (30 - 89 days past
 
due)
 
2.68%
3.07%
Total delinquency rate
 
(30 days and over)
5.74%
5.85%
Capital Ratios (Non-GAAP)
(12)(20)
Leverage ratio
10.30%
(b)(c)
9.24%
Common equity Tier 1 capital ratio
13.08%
 
(a)(b)(c)
 
10.91%
Tier 1 risk-based capital ratio
14.78%
(a)(b)(c)
12.64%
Total risk-based
 
capital ratio
16.04%
 
(a)(b)(c)
 
13.91%
Tangible common equity ("TCE")
 
ratio
9.00%
8.96%
(a) In response to the Coronavirus (COVID-19) pandemic,
 
CARES Act created funding for the Small Business Administration
 
(SBA) Paycheck Protection Program
 
(PPP),
which provides loans to small businesses to keep their
 
employees on payroll and make other
 
eligible payments. The original funding for the PPP was fully allocated
 
by
mid-April 2020, with additional funding made available on April 24, 2020 under the Paycheck
 
Protection Program and Health Care Enhancement
 
Act. During 2Q 2020 and
3Q 2020, the Company participated in this program originating
 
4,342 and 732 PPP loans, respectively. On June 30,
 
2020, September 30, 2020 and December 31, 2020,
Oriental had PPP loans amounting to $278.1 million, $289.2 million and $282.7 million,
 
respectively. These loans are fully
 
guaranteed by the SBA and risk-weighted
 
at 0%.
(b) During 1Q 2020, the Company decided to early implement Simplifications to
 
the Capital Rule, which simplified the regulatory capital treatment
 
for mortgage servicing
assets (MSA) and certain deferred tax
 
assets arising from temporary differences
 
(temporary difference DTAs).
 
It Increased common equity tier 1 (CET1) capital threshold
deductions from 10 percent to 25 percent and removes
 
the aggregate 15 percent CET1 threshold deduction.
 
However, it
 
retains the 250 percent risk weight applicable
 
to
non-deducted amounts of MSAs and temporary difference
 
DTAs.
 
 
(c) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement
 
of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective
approach. As a result, a $39.2 million allowance for credit
 
losses was recorded for Non-PCD loans and $0.2 million for
 
unused commitments with the corresponding
adjustment reducing retained earnings, net of a $13.9 million
 
deferred tax effect.
 
For PCD loans, including BBVA and Eurobank
 
acquired book plus the recently acquired
Scotiabank, the adjustment amounting to $50.5 million was made through
 
the allowance and loan balances with no impact in capital. As disclosed in the Company’s
 
2019
Form 10-K, the Company had initially elected to phase-in the January 1, 2020 (“day
 
1”) impact to retained earnings to regulatory capital,
 
over a three-year transition
period beginning in 2020. As part of its response to the impact of COVID-19, in March
 
2020, the Federal Reserve, Federal
 
Deposit Insurance Corporation and Office of the
Comptroller of the Currency issued an interim final rule that
 
provided the option to temporarily delay the effects
 
of CECL on regulatory capital for two years,
 
followed by
a three-year transition period. In addition, for the
 
first two years, a uniform 25% “scaling
 
factor” is introduced to approximate the portion of the post
 
day-one allowance
attributable to CECL relative to the
 
incurred loss methodology. The 25% scaling
 
factor is calibrated to approximate
 
an overall
 
after-tax impact of differences in allowances
under CECL vs the incurred loss methodology.
(d) In March 2020, a global pandemic was declared by the World
 
Health Organization related to
 
the rapidly growing outbreak of a novel strain
 
of coronavirus (COVID-19).
The pandemic significantly impacted the economic conditions in P.R.
 
and the U.S., creating significant uncertainties. In
 
response, we increased our provision for credit
losses on loans in 1Q 2020 and 2Q 2020 by $34.1 million and $5.0 million, respectively,
 
and established a provision for credit
 
losses on accrued interest receivables under
deferral plans in 3Q 2020 of $826 thousand.
(e) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI
 
operations, incurring in merger and restructuring
 
charges of $21.5 million during 4Q
2019, $3.0 million during 2Q 2020, $2.7 million during 3Q 2020, and $10.1 million during 4Q 2020. At December
 
31, 2019, the consolidated statement of financial
condition contemplated the effects
 
of the Scotiabank PR & USVI acquisition. Nevertheless, the consolidate statement
 
of operations did not contemplated the effects
 
of
the Scotiabank PR & USVI acquisition until January 1, 2020.
(f) During 3Q 2019, the Company received $2.4 million proceeds from the
 
sale of fully charged-off originated auto and consumer loans.
(g) During 3Q 2019, the Company decided to sell mostly non-performing
 
loans, increasing the provision by $37.2 million. Originated loans
 
that were transferred to
 
held-
for-sale amounted to $25.3 million at September 30, 2019,
 
the remaining were purchased credit impaired loans.
 
Loans were sold during 4Q 2019, with an additional
increase in the provision of $6.6 million.
3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 2-1: Consolidated Statements
 
of Operations
Quarter Ended
December 31,
September 30,
June 30,
March 31,
December 31,
(Dollars in thousands, except per share data)
 
(unaudited)
2020
2020
2020
2020
2019
Interest income:
Loans
 
(1)
 
Non-PCD loans
$
81,171
$
83,029
$
83,832
$
87,482
$
74,142
 
PCD loans
29,250
29,018
(c)
34,700
(c)
28,953
10,762
 
Total interest
 
income from loans
 
110,421
112,047
118,532
116,435
84,904
Investment securities
2,600
2,890
3,160
7,262
6,271
 
Total interest
 
income
 
113,021
114,937
121,692
123,697
(g)
91,175
Interest expense:
Deposits
 
Core deposits
13,225
13,808
13,999
15,034
7,957
 
Brokered deposits
288
812
1,446
1,586
1,804
 
Total deposits
13,513
14,620
15,445
16,620
(g)
9,761
Borrowings
770
784
1,187
1,976
2,205
 
Total interest
 
expense
14,283
15,404
16,632
18,596
11,966
Net interest income
98,738
99,533
105,060
105,101
79,209
Provision for credit losses, excluding PCD
 
loans
(1)
15,464
13,845
15,227
40,951
18,859
(Recapture) provision for credit losses
 
on PCD loans
 
(1)
 
(1,288)
(176)
2,469
6,180
4,209
 
Total provision
 
for credit losses
14,176
13,669
(e)
17,696
(e)
47,131
(e)(g)
23,068
 
Net interest income after provision
 
for loan and lease losses
 
84,562
85,864
87,364
57,970
56,141
Non-interest income:
Banking service revenues
16,901
16,297
13,668
15,713
10,812
Wealth management revenues
10,865
(a)
7,272
6,366
7,286
7,062
Mortgage banking activities
6,281
(b)
3,917
3,072
3,234
1,322
 
Total banking
 
and financial service revenues
34,047
27,486
23,106
26,233
(g)
19,196
Bargain purchase from Scotiabank PR & USVI acquisition
-
3,465
 
(d)
 
3,462
 
(d)
 
409
315
Other income, net
377
375
584
4,808
(h)
200
 
Total non-interest
 
income, net
 
34,424
31,326
27,152
31,450
19,711
Non-interest expense:
Compensation and employee benefits
30,921
31,955
34,506
35,544
21,817
Occupancy, equipment and infrastructure
 
costs
12,064
11,943
11,837
11,439
7,488
General and administrative expenses
33,454
33,452
31,181
37,345
25,451
Net (gain) loss on sale of foreclosed real estate
 
and other repossessed assets
(300)
(866)
316
(193)
541
Credit related expenses
1,304
2,189
2,602
2,715
2,118
Merger and restructuring charges
10,092
(g)
2,681
(g)
3,006
(g)
304
21,498
(g)
COVID 19 expenses
1,504
(f)
2,090
(f)
2,033
(f)
168
-
 
Total non-interest
 
expense
89,039
83,444
85,481
87,322
(g)
78,913
Income (loss) before income taxes
29,947
33,746
29,035
2,098
(3,061)
Income tax expense (benefit)
6,646
6,308
7,248
297
(2,070)
Net income (loss)
23,301
27,438
21,787
1,801
(991)
Less:
 
dividends on preferred stock
(1,628)
(1,628)
(1,628)
(1,628)
(1,628)
Net income (loss) available to common shareholders
$
21,673
$
25,810
$
20,159
$
173
$
(2,619)
(a) During 4Q 2020, the Company recognized annual insurance
 
contingent commissions amounting to $4.0 million.
(b) During 4Q 2020, mortgage banking activities reflected higher gains
 
on sale of loans and securitizations, and higher servicing fees compared to
 
3Q 2020.
(c) During 2Q 2020 and 3Q 2020, the Company recognized interest
 
recoveries on SOP loans acquired in the Scotiabank PR & USVI
 
acquisition collected subsequently to the acquisition
date amounting to $6.0 million and $469 thousand, respectively.
(d) During 2Q 2020, the Company increased the Bargain purchase
 
from Scotiabank PR & USVI acquisition by $3.5 million to adjust
 
the fair value of accrued interest receivable
 
in Day
1, net of taxes. During 3Q 2020, the Company increased
 
the Bargain purchase from Scotiabank PR & USVI
 
acquisition by $3.5 million to adjust the deferred tax
 
asset in Day 1.
(e) In March 2020, a global pandemic was declared by the World
 
Health Organization related to
 
the rapidly growing outbreak of a novel strain
 
of coronavirus (COVID-19). The
pandemic significantly impacted the economic conditions in P.R.
 
and the U.S., creating significant uncertainties. In
 
response, we increased our provision for credit
 
losses on loans in
1Q 2020 and 2Q 2020 by $34.1 million and $5.0 million, respectively,
 
and established a provision for credit losses on
 
accrued interest receivables under deferral
 
plans in 3Q 2020 of
$826 thousand.
(f) During 2Q 2020, 3Q 2020 and 4Q 2020, the Company recorded $2.0 million,
 
$2.1 million and $1.5 million expenses, respectively,
 
in relation to the global pandemic from the
coronavirus COVID-19. Covid-19 expenses
 
represented expenses incurred within our premises,
 
as acrylic shields, face shields and masks, and cleaning and disinfecting
 
costs, in order
to control pandemic spread and keep
 
customers and employees safe. It also
 
includes employees COVID testing.
 
 
(g) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and
 
USVI operations, incurring in merger and restructuring
 
charges of $21.5 million during 4Q 2019, $3.0
million during 2Q 2020, $2.7 million during 3Q 2020, and $10.1 million during 4Q 2020. At December
 
31, 2019, the consolidated statement of financial
 
condition contemplated the
effects of the Scotiabank PR & USVI acquisition. Nevertheless,
 
the consolidated statement of
 
operations did not contemplate the effects
 
of the Scotiabank PR & USVI acquisition until
January 1, 2020.
(h) During 1Q 2020, 2Q 2019 and 3Q 2019, the Company sold $316 million, $350 million and $322 million available
 
-for-sale mortgage-backed securities, respectively,
 
and recognized a
gain in the sale of $4.7 million, $4.8 million and $3.5 million.
4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 2-2: Consolidated Statements
 
of Operations (Continued)
Year Ended
December 31,
December 31,
(Dollars in thousands, except per share data)
 
(unaudited)
2020
2019
Interest income:
Loans
 
(1)
 
Non-PCD loans
$
335,514
$
294,726
 
PCD loans
121,921
(a)
45,149
 
Total interest
 
income from loans
 
457,435
339,875
Investment securities
15,912
33,920
 
Total interest
 
income
 
473,347
(e)
373,795
Interest expense:
Deposits
 
Core deposits
56,066
29,892
 
Brokered deposits
4,132
9,463
 
Total deposits
60,198
(e)
39,355
Borrowings
4,717
11,647
 
Total interest
 
expense
64,915
51,002
Net interest income
408,432
322,793
Provision for credit losses, excluding PCD
 
loans
(1)
85,487
62,533
(Recapture) provision for credit losses
 
on PCD loans
 
(1)
 
7,185
34,259
 
Total provision
 
for credit losses
92,672
(c)(e)
96,792
(g)(h)(i)
 
Net interest income after provision
 
for loan and lease losses
 
315,760
226,001
Non-interest income:
Banking service revenues
62,579
42,866
Wealth management revenues
31,789
26,224
Mortgage banking activities
16,504
4,275
 
Total banking
 
and financial service revenues
110,872
(e)
73,365
Bargain purchase from Scotiabank PR & USVI acquisition
7,336
 
(b)
 
315
Other income, net
6,144
(f)
8,813
(f)
 
Total non-interest
 
income, net
 
124,352
82,493
Non-interest expense:
Compensation and employee benefits
132,926
82,533
Occupancy, equipment and infrastructure
 
costs
47,283
30,052
General and administrative expenses
135,432
85,107
Net (gain) loss on sale of foreclosed real estate
 
and other repossessed assets
(1,043)
2,426
Credit related expenses
8,810
9,072
Merger and restructuring charges
16,083
(e)
24,054
COVID 19 expenses
5,795
(d)
-
 
Total non-interest
 
expense
345,286
(e)
233,244
Income before income taxes
94,826
75,250
Income tax expense
20,499
21,409
Net income
74,327
53,841
Less:
 
dividends on preferred stock
(6,512)
(6,512)
Net income available to common shareholders
$
67,815
$
47,329
(a) During 2Q 2020 and 3Q 2020, the Company recognized interest
 
recoveries on SOP loans acquired in the Scotiabank PR & USVI
 
acquisition collected subsequently to the acquisition
date amounting to $6.0 million and $469 thousand, respectively.
(b) During 2Q 2020, the Company increased the Bargain purchase
 
from Scotiabank PR & USVI acquisition by $3.5 million to adjust
 
the fair value of accrued interest receivable
 
in Day 1,
net of taxes. During 3Q 2020, the Company increased
 
the Bargain purchase from Scotiabank PR & USVI
 
acquisition by $3.5 million to adjust the deferred tax
 
asset in Day 1.
(c) In March 2020, a global pandemic was declared by the World
 
Health Organization related to
 
the rapidly growing outbreak of a novel strain
 
of coronavirus (COVID-19). The
pandemic significantly impacted the economic conditions in P.R.
 
and the U.S., creating significant uncertainties. In
 
response, we increased our provision for credit
 
losses on loans in
1Q 2020 and 2Q 2020 by $34.1 million and $5.0 million, respectively,
 
and established a provision for credit losses on
 
accrued interest receivables under deferral
 
plans in 3Q 2020 of
$826 thousand.
(d) During 2Q 2020, 3Q 2020 and 4Q 2020, the Company recorded $2.0 million,
 
$2.1 million and $1.5 million expenses, respectively,
 
in relation to the global pandemic from the
coronavirus COVID-19. Covid-19 expenses
 
represented expenses incurred within our premises,
 
as acrylic shields, face shields and masks, and cleaning and disinfecting
 
costs, in order
to control pandemic spread and keep
 
customers and employees safe. It also
 
includes employees COVID testing.
(e) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI
 
operations, incurring in merger and restructuring
 
charges of $21.5 million during 4Q 2019, $3.0
million during 2Q 2020, $2.7 million during 3Q 2020, and $10.1 million during 4Q 2020. At December
 
31, 2019, the consolidated statement of financial
 
condition contemplated the
effects of the Scotiabank PR & USVI acquisition. Nevertheless,
 
the consolidated statement of
 
operations did not contemplate the effects
 
of the Scotiabank PR & USVI acquisition until
January 1, 2020.
 
 
(f) During 1Q 2020, 2Q 2019 and 3Q 2019, the Company sold $316 million, $350 million and $322 million available
 
-for-sale mortgage-backed securities, respectively,
 
and recognized a
gain in the sale of $4.7 million, $4.8 million and $3.5 million.
(g) During 3Q 2019, the Company received $2.4 million proceeds from
 
the sale of fully charged-off originated auto and consumer
 
loans.
(h) During 3Q 2019, the Company decided to sell mostly non-performing
 
loans, increasing the provision by $37.2 million. Originated loans
 
that were transferred to
 
held-for-sale
amounted to $25.3 million at September 30, 2019, the remaining were
 
purchased credit impaired loans. Loans were sold during 4Q 2019, with
 
an additional increase in the provision
of $6.6 million.
(i) During 2Q 2019, the Company decided to sell mostly non-performing
 
mortgage loans increasing the provision by $8.8 million.
 
Most of these loans were sold in 3Q 2019, increasing
the provision by an additional $1.8 million.
5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 3: Consolidated Statements
 
of Financial Condition
December 31,
September 30,
June 30,
March 31,
December 31,
(Dollars in thousands) (unaudited)
2020
2020
2020
2020
2019
Cash and cash equivalents
$
2,155,577
$
2,283,050
(b)
$
1,900,037
(b)
$
1,325,941
$
852,757
Investments:
Trading securities
22
22
22
29
37
Investment securities available-for
 
-sale, at fair value,
 
 
with amortized cost of $432,175 ( September 30, 2020 - $412,899;
 
 
June 30, 2020 - $529,985; March 31, 2020 - $648,565;
 
 
December 31, 2019 - $1,074,474; no allowance for credit
 
losses for any period)
 
Mortgage-backed securities
432,935
329,719
340,192
355,637
673,886
 
US treasury notes
10,983
91,531
197,340
298,986
397,183
 
Other investment securities
2,520
2,565
2,707
2,837
3,100
 
Total investment
 
securities available-for-sale
446,438
423,815
540,239
657,460
(d)
 
1,074,169
Federal Home Loan Bank (FHLB) stock, at cost
8,278
8,322
8,366
10,301
13,048
Other investments
3,962
2,205
1,076
973
560
 
Total investments
 
458,700
434,364
549,703
668,763
1,087,814
Loans, net
6,501,259
(b)
 
6,579,140
(b)
 
6,739,243
(b)
 
6,541,174
 
(c)
 
6,641,847
Other assets:
Prepaid expenses
61,416
54,583
40,119
44,633
52,648
Deferred tax asset, net
162,478
178,957
186,730
196,129
(c)
176,740
Foreclosed real estate and repossessed
 
properties
13,412
21,374
26,152
30,388
33,236
Premises and equipment, net
83,786
83,270
82,234
81,834
81,105
Goodwill
86,069
86,069
86,069
86,069
86,069
Right of use assets
31,383
35,900
34,692
36,844
39,112
Core deposit, customer relationship intangible
 
and other intangibles
45,896
48,650
51,406
54,174
56,965
Servicing asset
47,295
47,242
47,926
49,287
50,779
Accounts receivable and other assets
178,740
166,392
188,408
 
(a)
 
123,335
138,589
Total assets
$
9,826,011
$
10,018,991
$
9,932,719
$
9,238,571
$
9,297,661
Deposits:
Demand deposits
$
4,613,309
$
4,682,991
(b)
 
$
4,370,419
(b)
 
$
3,711,492
$
3,579,115
Savings accounts
1,920,325
1,919,859
1,978,118
1,829,054
1,815,044
Time deposits
1,832,891
1,933,517
1,975,223
2,023,211
2,060,953
Brokered deposits
49,115
96,090
218,166
255,514
243,498
 
Total deposits
8,415,640
8,632,457
8,541,926
7,819,271
7,698,610
Borrowings:
Securities sold under agreements to repurchase
-
-
-
50,103
190,274
Advances from FHLB and other borrowings
66,268
66,781
68,340
77,601
79,204
Subordinated capital notes
36,083
36,083
36,083
36,083
36,083
 
Total borrowings
102,351
102,864
104,423
163,787
305,561
Other liabilities:
Derivative liabilities
1,712
1,895
2,078
2,059
913
Acceptances outstanding
33,349
18,291
20,034
11,763
21,599
Lease liability
32,566
37,029
35,694
37,702
39,840
Accrued expenses and other liabilities
154,418
162,133
187,280
181,395
185,660
 
Total liabilities
8,740,036
8,954,669
8,891,435
8,215,977
8,252,183
Stockholders' equity:
Preferred stock
92,000
92,000
92,000
92,000
92,000
Common stock
59,885
59,885
59,885
59,885
59,885
Additional paid-in capital
622,652
621,978
621,860
621,206
621,515
Legal surplus
 
103,269
101,233
98,347
95,945
95,779
Retained earnings
 
300,096
284,053
264,725
250,557
(c)
279,646
Treasury stock, at cost
(102,949)
(103,095)
(103,121)
(103,289)
(102,339)
Accumulated other comprehensive (loss) income, net
11,022
8,268
7,588
6,290
(1,008)
 
Total stockholders'
 
equity
1,085,975
1,064,322
1,041,284
1,022,594
1,045,478
 
Total liabilities and stockholders'
 
equity
 
$
9,826,011
$
10,018,991
$
9,932,719
$
9,238,571
$
9,297,661
 
 
 
 
 
 
 
 
 
 
 
 
(a) In March 2020, a global pandemic was declared by the World
 
Health Organization related to
 
the rapidly growing outbreak of a novel strain
 
of coronavirus (COVID-19). The
pandemic significantly impacted the economic conditions in P.R.
 
and the U.S., creating significant uncertainties. After
 
recent disruptions in economic conditions caused by
COVID-19, the Company has offered
 
several deferral programs
 
for the payment of principal and interest
 
for auto, personal, credit cards
 
and mortgage, and commercial loans, for
customers whose payments were not over
 
89 days past due at March 12, 2020 and requested
 
to be included in these programs, which contributed to
 
the increase of accrued
interest receivable from 1Q 2020 to
 
2Q 2020 of approximately $40 million.
 
(b) In response to the Coronavirus (COVID-19) pandemic,
 
CARES Act created funding for the Small Business Administration
 
(SBA) Paycheck Protection Program
 
(PPP), which
provides loans to small businesses to keep their employees
 
on payroll and make other eligible payments.
 
The original funding for the PPP was fully allocated by mid-April
 
2020,
with additional funding made available on April 24, 2020 under the Paycheck
 
Protection Program and Health Care Enhancement
 
Act. During 2Q 2020 and 3Q 2020, the Company
participated in this program originating 4,342 and 732 PPP
 
loans, respectively. On June 30, 2020, September
 
30, 2020 and December 31, 2020, Oriental had PPP loans amounting
to $278.1 million, $289.2 million and $282.7 million, respectively.
 
These loans are fully guaranteed
 
by the SBA and risk-weighted at
 
0%. These funds have been disbursed into the
customers' deposit accounts and, along with other government
 
stimulus and relief during the pandemic, they have increased
 
the Company's cash and core deposits.
(c) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement
 
of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective
approach. As a result, a $39.2 million allowance for credit
 
losses was recorded for Non-PCD loans and $0.2 million for
 
unused commitments with the corresponding adjustment
reducing retained earnings, net of a $13.9 million deferred
 
tax effect. For PCD loans, including
 
BBVA and Eurobank acquired book plus the recently
 
acquired Scotiabank, the
adjustment amounting to $50.5 million was made through the allowance
 
and loan balances with no impact in capital.
 
(d) During 1Q 2020, the Company sold $316 million available-for
 
-sale mortgage-backed securities and recognized
 
a gain in the sale of $4.7 million.
6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 4-1: Information on Loan Portfolio
 
and
Production
December 31,
September 30,
June 30,
March 31,
December 31,
(Dollars in thousands) (unaudited)
2020
2020
2020
2020
2019
Non-PCD:
(1)
 
Mortgage
$
823,443
$
847,671
$
874,286
$
887,950
$
898,118
 
Commercial
1,836,137
1,785,022
1,918,424
1,910,192
1,862,484
 
Commercial Paycheck Protection Program
 
(PPP Loans)
282,713
(b)
289,218
(b)
278,059
(b)
-
-
 
Consumer
413,552
434,546
458,714
481,710
495,244
 
Auto
1,534,269
1,511,829
1,454,987
1,487,701
1,479,612
4,890,114
4,868,286
4,984,470
4,767,553
4,735,458
 
Less:
 
Allowance for credit losses
(161,015)
(156,409)
(151,507)
(149,961)
(c)
(85,044)
 
Total non- PCD loans
 
held for investment, net
4,729,099
4,711,877
4,832,963
4,617,592
4,650,414
PCD:
(1)
 
Mortgage
1,459,932
1,504,914
1,541,637
1,561,557
1,591,112
 
Commercial
283,160
(a)
352,555
386,046
391,158
359,601
 
Consumer
1,394
2,336
2,950
3,350
9,263
 
Auto
27,533
31,836
37,409
42,466
43,361
1,772,019
1,891,641
1,968,042
1,998,531
2,003,337
 
Less:
 
Allowance for credit losses
(1)
(43,794)
(a)
(78,904)
(81,194)
(80,794)
(c)
(31,495)
 
Total PCD loans
 
held for investment, net
1,728,225
1,812,737
1,886,848
1,917,737
1,971,842
Total loans held for
 
investment
6,457,324
6,524,614
6,719,811
6,535,329
6,622,256
Mortgage loans held for sale
41,654
54,526
19,432
5,845
19,591
Other loans held for sale
2,281
-
-
-
-
Total loans, net
$
6,501,259
$
6,579,140
$
6,739,243
$
6,541,174
$
6,641,847
Loan Portfolio Summary:
 
Loans held for investment:
 
Mortgage
$
2,283,375
$
2,352,585
$
2,415,923
$
2,449,507
$
2,489,230
 
Commercial
2,402,010
2,426,795
2,582,529
2,301,350
2,222,085
 
Consumer
414,946
436,882
461,664
485,060
504,507
 
Auto
1,561,802
1,543,665
1,492,396
1,530,167
1,522,973
6,662,133
6,759,927
6,952,512
6,766,084
6,738,795
 
Less:
 
Allowance for credit losses
(204,809)
(235,313)
(232,701)
(230,755)
(c)
(116,539)
 
Total loans held
 
for investment, net
6,457,324
6,524,614
6,719,811
6,535,329
6,622,256
 
Mortgage loans held for sale
41,654
54,526
19,432
5,845
19,591
 
Other loans held for sale
2,281
-
-
-
-
Total loans, net
$
6,501,259
$
6,579,140
$
6,739,243
$
6,541,174
$
6,641,847
(a) During 4Q 2020, commercial
 
charge-offs reflected $31.2 million from two
 
commercial non-performing PCD loans from the government
 
and hospital sectors, reducing loan balance
and their corresponding allowance for credit losses by
 
that amount.
(b) In response to the Coronavirus (COVID-19) pandemic,
 
CARES Act created funding for the Small Business Administration
 
(SBA) Paycheck Protection Program
 
(PPP), which provides
loans to small businesses to keep their employees on payroll
 
and make other eligible payments. The original funding for
 
the PPP was fully allocated by mid-April 2020, with additional
funding made available on April 24, 2020 under the Paycheck
 
Protection Program and Health Care Enhancement
 
Act. During 2Q 2020 and 3Q 2020, the Company participated in this
program originating 4,342 and 732 PPP loans, respectively.
 
On June 30, 2020, September 30, 2020 and December 31, 2020, Oriental had PPP loans amounting
 
to $278.1 million,
$289.2 million and $282.7 million, respectively.
 
These loans are fully guaranteed by the SBA and risk-wei
 
ghted at 0%.
(c) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement
 
of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective
 
approach. As
a result, a $39.2 million allowance for credit losses was recorded
 
for Non-PCD loans and $0.2 million for unused commitments with
 
the corresponding adjustment reducing retained
earnings, net of a $13.9 million deferred tax effect.
 
For PCD loans, including BBVA and Eurobank
 
acquired book plus the recently acquired Scotiabank, the adjustment
 
amounting to
$50.5 million was made through the allowance and loan balances with no impact in
 
capital.
 
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 4-2: Information on Loan
Portfolio and Production
Quarter Ended
Year Ended
December 31,
September 30,
June 30,
March 31,
December 31,
December 31,
December 31,
(Dollars in thousands) (unaudited)
2020
2020
2020
2020
2019
2020
2019
Loan production
(13)
 
Mortgage
$
97,656
$
93,650
$
23,744
$
30,988
$
23,680
$
246,038
$
92,779
 
Commercial
 
174,994
83,488
98,558
54,113
216,610
411,153
406,809
 
Commercial PPP Loans
-
10,318
286,420
-
-
296,738
-
 
US Loan Programs
49,221
90,878
35,711
47,125
12,482
222,935
112,786
 
Consumer
25,984
23,540
14,231
39,199
41,947
102,954
178,723
 
Auto
137,545
155,880
47,374
109,344
110,184
450,143
508,152
 
Total
$
485,400
$
457,754
$
506,038
$
280,769
$
404,903
$
1,729,961
$
1,299,248
8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 5-1: Average
 
Balances, Net Interest Income and Net Interest Margin
2020 Q4
2020 Q3
2020 Q2
2020 Q1
2019 Q4
Interest
 
Interest
 
Interest
 
Interest
 
Interest
 
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
(Dollars in thousands) (unaudited)
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Interest earning assets:
 
Cash equivalents
$
2,091,458
$
613
0.12
%
$
1,929,024
$
613
0.13
%
$
1,393,187
$
359
0.10
%
$
943,581
$
2,788
1.19
%
$
863,497
$
3,684
1.69
%
 
Investment securities
470,997
1,986
1.69
%
502,671
2,278
1.81
%
611,907
2,801
1.83
%
924,965
4,474
1.93
%
522,811
2,587
1.98
%
 
Loans held for investment
(1)
 
Non-PCD loans
4,863,902
81,171
6.64
%
4,870,753
83,029
6.78
%
4,857,281
83,832
6.94
%
4,613,878
87,482
7.63
%
3,888,442
74,142
7.56
%
 
PCD loans
1,844,382
29,250
6.34
%
1,916,269
29,018
6.06
%
1,983,369
34,700
7.00
%
2,073,997
28,953
5.58
%
611,629
10,762
7.04
%
 
Total loans
6,708,284
110,421
6.55
%
6,787,022
112,047
6.57
%
6,840,650
118,532
6.97
%
6,687,875
116,435
7.00
%
4,500,071
84,904
7.49
%
Total interest
 
-earning assets
$
9,270,739
$
113,020
4.85
%
$
9,218,717
$
114,938
4.96
%
$
8,845,744
$
121,692
5.53
%
$
8,556,421
$
123,697
5.81
%
$
5,886,379
$
91,175
6.15
%
Interest bearing liabilities:
 
Deposits
 
NOW accounts
$
2,344,903
$
2,258
0.38
%
$
2,227,687
$
2,247
0.40
%
$
2,069,247
$
2,138
0.42
%
$
1,980,505
$
2,389
0.48
%
$
1,119,371
$
1,471
0.52
%
 
Savings accounts
1,897,618
1,954
0.41
%
1,927,680
2,010
0.41
%
1,809,517
1,976
0.44
%
1,797,658
2,440
0.55
%
1,195,689
1,843
0.61
%
 
Time deposits
1,893,070
6,975
1.47
%
1,944,856
7,512
1.54
%
1,990,639
7,835
1.58
%
2,039,311
8,131
1.60
%
1,156,965
4,442
1.52
%
 
Brokered deposits
64,338
289
1.78
%
140,416
812
2.30
%
235,611
1,446
2.47
%
236,008
1,586
2.70
%
268,108
1,804
2.67
%
6,199,929
11,476
0.74
%
6,240,639
12,581
0.80
%
6,105,014
13,395
0.88
%
6,053,482
14,546
0.97
%
3,740,133
9,560
1.01
%
 
Non-interest bearing deposit accounts
2,315,717
-
-
2,276,400
-
-
1,983,092
-
-
1,698,964
-
-
1,110,847
-
-
 
Fair value premium amortization and
core deposit intangible amortization
-
2,037
-
-
2,039
-
-
2,051
-
-
2,074
-
-
201
-
 
Total deposits
8,515,646
13,513
0.63
%
8,517,039
14,620
0.68
%
8,088,106
15,446
0.77
%
7,752,446
16,620
0.86
%
4,850,980
9,761
0.80
%
 
Borrowings
 
Securities sold under agreements to
repurchase
-
-
-
%
-
-
-
%
46,154
334
2.91
%
158,462
1,002
2.54
%
190,000
1,189
2.48
%
 
Advances from FHLB and other
borrowings
65,847
468
2.83
%
66,833
476
2.83
%
75,432
505
2.69
%
77,255
539
2.81
%
78,282
541
2.74
%
 
Subordinated capital notes
36,083
301
3.34
%
36,083
308
3.39
%
36,083
347
3.87
%
36,083
435
4.85
%
36,083
475
5.22
%
 
Total borrowings
101,930
769
3.01
%
102,916
784
3.03
%
157,669
1,186
3.03
%
271,800
1,976
2.92
%
304,365
2,205
2.87
%
Total interest
 
-bearing liabilities
$
8,617,576
$
14,282
0.66
%
$
8,619,955
$
15,404
0.71
%
$
8,245,775
$
16,632
0.81
%
$
8,024,246
$
18,596
0.93
%
$
5,155,345
$
11,966
0.92
%
Interest rate spread
$
98,738
4.19
%
$
99,534
4.25
%
$
105,060
4.72
%
$
105,101
4.88
%
$
79,209
5.23
%
Net interest margin
4.24
%
4.30
%
4.78
%
4.94
%
5.34
%
SOP loan cost recoveries (interest recoveries
in 2Q, 3Q and 4Q 2020)
$
17
$
469
$
5,982
$
-
$
1,033
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted excluding cost/interests
 
recoveries
(Non-GAAP):
Total interest
 
-earning assets
$
9,270,739
$
113,003
4.85
%
$
9,218,717
$
114,469
4.94
%
$
8,845,744
$
115,710
5.26
%
$
8,556,421
$
123,697
5.81
%
$
5,886,379
$
90,142
6.08
%
Interest rate spread
$
 
98,721
4.19
%
$
 
99,065
4.23
%
$
 
99,078
4.45
%
$
 
105,101
4.88
%
$
 
78,176
5.16
%
Net interest margin
4.24
%
4.28
%
4.50
%
4.94
%
5.27
%
Core deposits: (Non-GAAP)
 
Deposits
 
NOW accounts
$
2,344,903
$
2,258
0.38
%
$
2,227,687
$
2,247
0.40
%
$
2,069,247
$
2,138
0.42
%
$
1,980,505
$
2,389
0.48
%
$
1,119,371
$
1,471
0.52
%
 
Savings accounts
1,897,618
1,954
0.41
%
1,927,680
2,010
0.41
%
1,809,517
1,976
0.44
%
1,797,658
2,440
0.55
%
1,195,689
1,843
0.61
%
 
Time deposits
1,893,070
6,975
1.47
%
1,944,856
7,512
1.54
%
1,990,639
7,835
1.58
%
2,039,311
8,131
1.60
%
1,156,965
4,442
1.52
%
6,135,591
11,187
0.73
%
6,100,223
11,769
0.77
%
5,869,403
11,949
0.82
%
5,817,474
12,960
0.91
%
3,472,025
7,756
0.89
%
 
Non-interest bearing deposit accounts
2,315,717
-
-
2,276,400
-
-
1,983,092
-
-
1,698,964
-
-
1,110,847
-
-
 
Total core
 
deposits
$
8,451,308
$
11,187
0.53
%
$
8,376,623
$
11,769
0.56
%
$
7,852,495
$
11,949
0.61
%
$
7,516,438
$
12,960
0.69
%
$
4,582,872
$
7,756
0.67
%
9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 5-2: Average
 
Balances, Net Interest Income and Net Interest Margin (Continued)
2020 YTD
2019 YTD
Interest
 
Interest
 
Average
Income/
Yield/
Average
Income/
Yield/
(Dollars in thousands) (unaudited)
Balance
Expense
Rate
Balance
Expense
Rate
Interest earning assets:
 
Cash equivalents
$
1,591,613
$
4,373
0.27
%
$
618,446
$
13,041
2.11
%
 
Investment securities
626,866
11,539
1.84
%
879,885
20,879
2.37
%
 
Loans held for investment
 
Non-PCD loans
4,801,813
335,514
6.99
%
3,838,980
294,726
7.68
%
 
PCD loans
1,946,697
121,921
6.26
%
675,542
45,149
6.68
%
 
Total loans
6,748,510
457,435
6.78
%
4,514,522
339,875
7.53
%
Total interest
 
-earning assets
$
8,966,989
$
473,347
5.28
%
$
6,012,853
$
373,795
6.22
%
Interest bearing liabilities:
 
Deposits
 
NOW accounts
$
2,156,300
$
9,029
0.42
%
$
1,120,459
$
6,271
0.56
%
 
Savings accounts
1,858,416
8,380
0.45
%
1,189,205
7,351
0.62
%
 
Time deposits
1,966,706
30,455
1.55
%
1,092,002
15,468
1.42
%
 
Brokered deposits
168,728
4,132
2.45
%
383,483
9,463
2.47
%
6,150,150
51,996
0.85
%
3,785,149
38,553
1.02
%
 
Non-interest bearing deposit accounts
2,069,786
-
-
1,100,599
-
-
%
 
Fair value premium amortization and
 
core deposit intangible amortization
-
8,202
-
-
802
-
 
Total deposits
8,219,936
60,198
0.73
%
4,885,748
39,355
0.81
%
Borrowings
 
Securities sold under agreements to repurchase
50,874
1,335
2.63
%
299,842
7,423
2.48
%
 
Advances from FHLB and other borrowings
71,314
1,988
2.79
%
79,787
2,212
2.77
%
 
Subordinated capital notes
36,083
1,394
3.86
%
36,083
2,012
5.58
%
 
Total borrowings
158,271
4,717
2.98
%
415,712
11,647
2.80
%
Total interest
 
-bearing liabilities
$
8,378,207
$
64,915
0.77
%
$
5,301,460
$
51,002
0.96
%
Interest rate spread
$
408,432
4.51
%
$
322,793
5.26
%
Net interest margin
4.55
%
5.37
%
SOP loan cost recoveries (interest recoveries
 
in 2020)
$
6,468
$
2,372
Adjusted excluding cost/interests
 
recoveries (Non-GAAP):
Total interest
 
-earning assets
$
8,966,989
$
466,879
5.21
%
$
6,012,853
$
371,423
6.18
%
Interest rate spread
$
401,964
4.44
%
$
320,421
5.22
%
Net interest margin
4.48
%
5.33
%
Core deposits: (Non-GAAP)
 
Deposits
 
NOW accounts
$
2,156,300
$
9,029
0.42
%
$
1,120,459
$
6,271
0.56
%
 
Savings accounts
1,858,416
8,380
0.45
%
1,189,205
7,351
0.62
%
 
Time deposits
1,966,706
30,455
1.55
%
1,092,002
15,468
1.42
%
5,981,422
47,864
0.80
%
3,401,666
29,090
0.86
%
 
Non-interest bearing deposit accounts
2,069,786
-
-
%
1,100,599
-
-
%
 
Total core
 
deposits
$
8,051,208
$
47,864
0.59
%
$
4,502,265
$
29,090
0.65
%
10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 6-1: Loan Information and Performance
 
Statistics (1)
2020
2020
2020
2020
2019
(Dollars in thousands) (unaudited)
Q4
Q3
Q2
Q1
Q4
Net Charge-offs
(21)
Non-PCD
Mortgage:
 
Charge-offs
$
225
$
56
$
185
$
418
$
1,075
 
Recoveries
(79)
(269)
(9)
(249)
(437)
 
Total mortgage
146
(213)
176
169
638
Commercial:
 
Charge-offs
413
298
497
3,771
463
 
Recoveries
(334)
(253)
(631)
(1,522)
(606)
 
Total commercial
79
45
(134)
2,249
(143)
Consumer:
 
Charge-offs
6,456
5,114
4,187
6,015
5,289
 
Recoveries
(1,832)
(663)
(443)
(644)
(196)
 
Total consumer
4,624
4,451
3,744
5,371
5,093
Auto:
 
Charge-offs
12,071
10,123
13,300
13,053
12,930
 
Recoveries
(5,928)
(5,950)
(3,405)
(4,211)
(4,123)
 
Total auto
6,143
4,173
9,895
8,842
8,807
 
Total
$
10,992
$
8,456
$
13,681
$
16,631
$
14,395
PCD
Mortgage:
 
Charge-offs
$
1,344
$
1,677
$
2,178
$
5,143
$
-
 
Recoveries
(63)
(89)
(580)
(122)
-
 
Total mortgage
1,281
1,588
1,598
5,021
-
Commercial:
 
Charge-offs
33,061
(a)
293
386
2,357
-
 
Recoveries
(234)
(91)
(286)
(375)
-
 
Total commercial
32,827
202
100
1,982
-
Consumer:
 
Charge-offs
21
60
30
431
-
 
Recoveries
(200)
1
(30)
(63)
-
 
Total consumer
(179)
61
-
368
-
Auto:
 
Charge-offs
574
474
600
375
-
 
Recoveries
(681)
(211)
(229)
(343)
-
 
Total auto
(107)
263
371
32
-
 
Total
$
33,822
(a)
$
2,114
 
$
 
2,069
 
$
 
7,403
 
$
 
-
Total Net Charge
 
-offs
$
44,814
$
10,570
$
15,750
$
24,034
$
14,395
Net Charge-off Rates
(21)
Mortgage
0.25%
0.24%
0.30%
0.86%
0.24%
Commercial
 
5.45%
(a)
0.04%
-0.01%
0.76%
-0.03%
Consumer
4.09%
3.94%
3.12%
4.63%
5.15%
Auto
1.56%
1.17%
2.72%
2.31%
2.73%
 
Total
2.67%
(a)
0.62%
0.92%
1.44%
1.28%
Average Loans Held For Investment
(21)
Mortgage
$
2,305,495
$
2,325,756
$
2,366,600
$
2,414,685
$
1,062,845
Commercial
 
2,416,703
2,484,977
2,484,573
2,239,684
1,753,069
Consumer
434,565
457,620
479,957
496,313
395,611
Auto
1,551,521
1,518,669
1,509,521
1,537,194
1,288,546
 
Total
$
6,708,284
$
6,787,022
$
6,840,650
$
6,687,875
$
4,500,071
 
 
(a) During 4Q 2020, commercial charge-offs reflected
 
$31.2 million from two commercial non-performing PCD
 
loans from the government and hospital sectors,
 
reducing loan balance
and their corresponding allowance for credit losses by
 
that amount.
11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 6-2: Loan Information and Performance
 
Statistics (Excludes PCD Loans) (1)
OFG Bancorp (NYSE: OFG)
2020
2020
2020
2020
2019
(Dollars in thousands) (unaudited)
Q4
Q3
Q2
Q1
Q4
Early Delinquency (30 - 89 days past due)
Mortgage
$
22,339
$
16,783
$
15,665
$
20,518
$
22,389
Commercial
 
8,043
5,151
7,704
6,074
9,895
Consumer
12,230
12,032
18,254
13,127
9,560
Auto
88,357
87,912
89,825
110,959
103,749
 
Total
$
130,969
$
121,878
$
131,448
$
150,678
(a)
$
145,593
Early Delinquency Rates (30 - 89 days past due)
Mortgage
2.71%
1.98%
1.79%
2.31%
2.49%
Commercial
 
0.44%
0.29%
0.40%
0.32%
0.53%
Consumer
2.96%
2.77%
3.98%
2.73%
1.93%
Auto
5.76%
5.81%
6.17%
7.46%
7.01%
 
Total
2.68%
2.50%
2.64%
3.16%
3.07%
Total Delinquency (30 days
 
and over past due)
Mortgage:
 
Traditional, Non traditional,
 
and Loans under Loss Mitigation
$
67,671
$
51,123
$
40,719
$
46,768
$
41,314
 
GNMA's buy-back option program
56,193
62,651
75,091
75,314
75,181
 
Total mortgage
123,864
113,774
115,810
122,082
116,495
Commercial
 
30,604
35,596
38,258
33,746
30,111
Consumer
17,147
17,080
22,796
16,808
12,258
Auto
108,842
109,735
100,027
131,715
118,020
 
Total
$
280,457
$
276,185
$
276,891
$
304,351
(a)
$
276,884
Total Delinquency Rates
 
(30 days and over past due)
Mortgage:
 
Traditional, Non traditional,
 
and Loans under Loss Mitigation
8.22%
6.03%
4.66%
5.27%
4.60%
 
GNMA's buy-back option program
6.82%
7.39%
8.59%
8.48%
8.37%
 
Total mortgage
15.04%
13.42%
13.25%
13.75%
12.97%
Commercial
 
1.67%
1.99%
1.99%
1.77%
1.62%
Consumer
4.15%
3.93%
4.97%
3.49%
2.48%
Auto
7.09%
7.26%
6.87%
8.85%
7.98%
 
Total
5.74%
5.67%
5.56%
6.38%
5.85%
Nonperforming Assets
(14)
Mortgage
$
46,967
$
40,477
$
30,491
$
31,073
$
22,552
Commercial
 
41,999
44,941
44,187
42,668
42,606
Consumer
4,987
5,206
4,933
3,690
5,287
Auto
20,766
22,583
10,539
21,147
14,295
 
Total nonperforming
 
loans
114,719
113,207
90,150
98,578
(a)
84,740
Foreclosed real estate
11,596
19,456
24,792
27,292
29,909
Other repossessed assets
1,816
1,918
1,360
3,096
3,327
 
Total nonperforming
 
assets
$
128,131
$
134,581
$
116,302
$
128,966
$
117,976
Nonperforming Loan Rates
Mortgage
5.70%
4.78%
3.49%
3.50%
2.51%
Commercial
 
2.29%
2.52%
2.30%
2.23%
2.29%
Consumer
1.21%
1.20%
1.08%
0.77%
1.07%
Auto
1.35%
1.49%
0.72%
1.42%
0.97%
 
Total loans
2.35%
2.33%
1.81%
2.07%
1.79%
(a) During March 2020, a global pandemic was declared by the World
 
Health Organization related
 
to the rapidly growing outbreak
 
of a novel strain of coronavirus (COVID
 
-19).
The pandemic has significantly impacted the economic conditions in P.R.
 
and the U.S., creating significant uncertainties.
 
After recent disruptions in economic conditions caused
by COVID-19, the Company has offered
 
several deferral programs
 
for the payment of principal and interest
 
for auto, personal, credit cards
 
and mortgage, and commercial loans,
for customers whose payments were
 
not over 89 days past due at March 12, 2020 and
 
requested to be included in these programs.
 
These loans may have been classified as
delinquent loans in 1Q 2020, due to the short proximity to quarter
 
end, and subsequently adjusted when the deferral
 
program was granted. Deferrals
 
dropped to 2% of loans in
3Q 2020 from 30% in 2Q 2020 and further to 1.4% in 4Q 2020. Most of that relates
 
to about $76 million commercial loans, and most of that represents
 
well-capitalized customers
in the hospitality industry.
 
12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 6-3: Loan Information and Performance
 
Statistics (1)
2020
2020
2020
2020
2019
(Dollars in thousands) (unaudited)
Q4
Q3
Q2
Q1
Q4
Nonperforming PCD Loans
(14)
Mortgage
$
1,003
$
1,003
$
1,373
$
1,341
$
-
Commercial
 
36,470
(a)
79,631
81,064
82,411
225
Consumer
1
4
12
10
499
 
Total nonperforming
 
loans
$
37,474
(a)
$
80,638
$
82,449
$
83,762
$
724
Nonperforming PCD Loan Rates
Mortgage
0.07%
0.07%
0.09%
0.09%
0.00%
Commercial
 
12.88%
(a)
22.59%
21.00%
21.07%
0.06%
Consumer
0.07%
0.17%
0.41%
0.30%
5.39%
 
Total
2.11%
(a)
4.26%
4.19%
4.19%
0.04%
Total PCD Loans Held for
 
Investment
(21)
Mortgage
$
1,459,932
$
1,504,914
$
1,541,637
$
1,561,557
$
1,591,112
Commercial
 
283,160
352,555
386,046
391,158
359,601
Consumer
1,394
2,336
2,950
3,350
9,263
 
Total loans
$
1,744,486
$
1,859,805
$
1,930,633
$
1,956,065
$
1,959,976
2020
2020
2020
2020
2019
(Dollars in thousands) (unaudited)
Q4
Q3
Q2
Q1
Q4
Total Nonperforming
 
Loans
(14)
Mortgage
$
47,970
$
41,480
$
31,864
$
32,414
$
22,552
Commercial
 
78,469
(a)
124,572
125,251
125,079
42,831
Consumer
4,988
5,210
4,945
3,700
5,786
Auto
20,766
22,583
10,539
21,147
14,295
 
Total nonperforming
 
loans
$
152,193
(a)
$
193,845
$
172,599
$
182,340
$
85,464
Total Nonperforming
 
Loan Rates
Mortgage
2.10%
1.76%
1.32%
1.32%
0.91%
Commercial
 
3.27%
(a)
5.13%
4.85%
5.44%
1.93%
Consumer
1.20%
1.19%
1.07%
0.76%
1.15%
Auto
1.33%
1.46%
0.71%
1.38%
0.94%
 
Total
2.28%
(a)
2.87%
2.48%
2.69%
1.27%
Total Loans Held for
 
Investment
(21)
Mortgage
$
2,283,375
$
2,352,585
$
2,415,923
$
2,449,507
$
2,489,230
Commercial
 
2,402,010
2,426,795
2,582,529
2,301,350
2,222,085
Consumer
414,946
436,882
461,664
485,060
504,507
Auto
1,561,802
1,543,665
1,492,396
1,530,167
1,522,973
 
Total loans
$
6,662,133
$
6,759,927
$
6,952,512
$
6,766,084
$
6,738,795
(a) During 4Q 2020, commercial charge-offs reflected
 
$31.2 million from two commercial non-performing PCD
 
loans from the government and hospital sectors,
 
reducing loan
balance and their corresponding allowance for credit
 
losses by that amount.
 
13
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 7: Allowance for Credit Losses (1)
Quarter Ended December 31, 2020
(Dollars in thousands) (unaudited)
Mortgage
Commercial
Consumer
Auto
Total
Allowance for credit losses Non-PCD:
 
Balance at beginning of period
$
19,622
$
41,195
$
27,125
$
68,467
$
156,409
 
(Recapture) provision for credit
 
losses
211
4,663
2,752
7,972
15,598
 
Charge-offs
(225)
(413)
(6,456)
(12,071)
(19,165)
 
Recoveries
79
334
1,832
5,928
8,173
 
Balance at end of period
$
19,687
$
45,779
$
25,253
$
70,296
$
161,015
Allowance for credit losses PCD:
 
Balance at beginning of period
$
30,408
$
47,450
$
108
$
938
$
78,904
 
Provision (recapture) for credit
 
losses
(2,739)
1,783
(230)
(102)
(1,288)
 
Charge-offs
(1,344)
(33,061)
(21)
(574)
(35,000)
 
Recoveries
63
234
200
681
1,178
 
Balance at end of period
$
26,388
$
16,406
$
57
$
943
$
43,794
Allowance for credit losses summary:
 
Balance at beginning of period
$
50,030
$
88,645
$
27,233
$
69,405
$
235,313
 
Provision (recapture) for credit
 
losses
(2,528)
6,446
2,522
7,870
14,310
 
Charge-offs
(1,569)
(33,474)
(6,477)
(12,645)
(54,165)
 
Recoveries
142
568
2,032
6,609
9,351
 
Balance at end of period
$
46,075
$
62,185
$
25,310
$
71,239
$
204,809
Allowance coverage ratio
2.02%
2.59%
6.10%
4.56%
3.07%
Allowance coverage ratio excluding
 
PPP loans (Non-GAAP)
2.02%
2.93%
6.10%
4.56%
3.21%
14
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 8-1: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital
In addition to disclosing required regulatory capital
 
measures, we also report certain non-GAAP capital measures that
 
management uses in assessing its capital adequacy.
 
These
non-GAAP measures include tangible common equity ("TCE") and TCE
 
ratio. The table below provides the details
 
of the calculation of our regulatory capital and non-GAAP capital
measures. While our non-GAAP capital measures are widely used by investors,
 
analysts and bank regulatory agencies to assess the capital
 
position of financial services companies,
they may not be comparable to similarly titled measures
 
reported by other companies.
2020
2020
2020
2020
2019
(Dollars in thousands) (unaudited)
Q4
Q3
Q2
Q1
Q4
Stockholders' Equity to Non-GAAP Tangible
 
Common Equity
Total stockholders'
 
equity
$
1,085,975
$
1,064,322
$
1,041,284
$
1,022,594
(a)
$
1,045,478
Less:
 
Intangible assets
(131,965)
(134,719)
(137,475)
(140,243)
(143,034)
 
Noncumulative perpetual preferred stock
(92,000)
(92,000)
(92,000)
(92,000)
(92,000)
 
Noncumulative perpetual preferred stock
 
issuance costs
10,130
10,130
10,130
10,130
10,130
Tangible common equity
$
872,140
$
847,733
$
821,939
$
800,481
$
820,574
Common shares outstanding at end of period
51,387
51,345
51,342
51,327
51,399
Tangible book value per common
 
share (Non-GAAP)
$
16.97
$
16.51
$
16.01
$
15.60
$
15.96
Total Assets to Tangible
 
Assets
Total assets
 
$
9,826,011
$
10,018,991
$
9,932,719
$
9,238,571
$
9,297,661
Less:
 
Intangible assets
(131,965)
(134,719)
(137,475)
(140,243)
(143,034)
Tangible assets (Non-GAAP)
$
9,694,046
$
9,884,272
$
9,795,244
$
9,098,328
$
9,154,627
Non-GAAP TCE Ratio
Tangible common equity
$
872,140
$
847,733
$
821,939
$
800,481
$
820,574
Tangible assets
9,694,046
9,884,272
9,795,244
9,098,328
9,154,627
TCE ratio
9.00%
8.58%
8.39%
8.80%
8.96%
Average Equity to Non-GAAP Average
 
Tangible Common Equity
Average total stockholders'
 
equity
$
1,083,423
$
1,062,460
$
1,037,195
$
1,043,481
$
1,062,720
Less:
 
Average noncumulative perpetual preferred
 
stock
(92,000)
(92,000)
(92,000)
(92,000)
(92,000)
 
Average noncumulative perpetual preferred
 
stock issuance costs
10,130
10,130
10,130
10,130
10,130
Average total common stockholders'
 
equity
$
1,001,553
$
980,590
$
955,325
$
961,611
$
980,850
Less:
 
Average intangible assets
(133,542)
(136,138)
(139,094)
(141,875)
(89,005)
Average tangible common equity
$
868,011
$
844,452
$
816,231
$
819,736
$
891,845
(a) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement
 
of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective
 
approach. As
a result, a $39.2 million allowance for credit losses was recorded
 
for Non-PCD loans and $0.2 million for unused commitments with
 
the corresponding adjustment reducing retained
earnings, net of a $13.9 million deferred tax effect.
 
For PCD loans, including BBVA and Eurobank
 
acquired book plus the recently acquired Scotiabank, the adjustment
 
amounting to
$50.5 million was made through the allowance and loan balances with no impact in
 
capital.
 
15
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 8-2: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital
 
Measures (Continued)
BASEL III
 
Standardized
2020
2020
2020
2020
2019
(Dollars in thousands) (unaudited)
Q4
Q3
Q2
Q1
Q4
Regulatory Capital Metrics
Common equity Tier 1 capital
$
894,074
$
862,636
$
836,899
$
816,356
$
735,442
Tier 1 capital
1,010,944
979,506
953,769
933,226
852,312
Total risk-based
 
capital
(15)
1,096,764
1,065,744
1,040,987
1,020,748
937,963
Risk-weighted assets
6,837,846
6,875,108
6,957,906
6,983,626
(a)
6,740,846
Regulatory Capital Ratios
Common equity Tier 1 capital ratio
(16)
13.08%
12.55%
12.03%
11.69%
10.91%
Tier 1 risk-based capital ratio
(17)
14.78%
14.25%
13.71%
13.36%
12.64%
Total risk-based
 
capital ratio
(18)
16.04%
15.50%
14.96%
14.62%
13.91%
Leverage ratio
(19)
10.30%
10.00%
10.16%
10.14%
9.24%
Common Equity Tier 1 Capital Ratio Under Basel III Standardized
 
Approach
Total stockholders'
 
equity
(1)
$
1,085,975
$
1,064,322
$
1,041,284
$
1,022,594
$
1,045,478
Plus: CECL transition adjustment
(20)
34,646
33,494
32,269
31,882
-
Less:
 
Noncumulative perpetual preferred stock
(92,000)
(92,000)
(92,000)
(92,000)
(92,000)
 
Noncumulative perpetual preferred stock
 
issuance costs
10,130
10,130
10,130
10,130
10,130
 
Unrealized gains on available-for
 
-sale securities, net of income tax
(12,091)
(9,453)
(8,885)
(7,576)
441
 
Unrealized losses on cash flow hedges, net of income tax
1,069
1,185
1,297
1,286
567
1,027,729
1,007,678
984,095
966,316
964,616
Less:
 
Disallowed goodwill
(86,069)
(86,069)
(86,069)
(86,069)
(86,069)
 
Disallowed other intangible assets, net
(32,073)
(33,810)
(35,563)
(37,241)
(39,127)
 
Disallowed deferred tax assets, net
(15,513)
(25,163)
(25,564)
(26,650)
(a)
(95,879)
 
Threshold 15%
-
-
-
-
(a)
(8,099)
Common equity Tier 1 capital
894,074
862,636
836,899
816,356
735,442
Plus:
 
Qualifying noncumulative perpetual preferred stock
92,000
92,000
92,000
92,000
92,000
 
Qualifying noncumulative perpetual preferred
 
stock issuance costs
(10,130)
(10,130)
(10,130)
(10,130)
(10,130)
 
Subordinated capital notes
35,000
35,000
35,000
35,000
35,000
Tier 1 capital
1,010,944
979,506
953,769
933,226
852,312
Plus tier 2 capital:
 
Qualifying allowance for loan and lease losses
85,820
86,238
87,218
87,522
85,651
Total risk-based
 
capital
$
1,096,764
$
1,065,744
$
1,040,987
$
1,020,748
$
937,963
(a) During 1Q 2020, the Company decided to early implement Simplifications to
 
the Capital Rule, which simplified the regulatory capital treatment
 
for mortgage servicing assets
(MSA) and certain deferred tax assets
 
arising from temporary differences
 
(temporary difference DTAs).
 
It Increased common equity tier 1 (CET1) capital threshold deductions
 
from
10 percent to 25 percent and removes the aggregate
 
15 percent CET1 threshold deduction. However,
 
it retains the 250 percent risk weight applicable
 
to non-deducted amounts of
MSAs and temporary difference DTAs.
16
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OFG Bancorp (NYSE: OFG)
Table 9: Notes to Financial Summary,
 
Selected Metrics, Loans, and Consolidated Financial Statements (Tables
 
1 - 8)
(1)
We used the terms "PCI" and "SOP" to refer
 
to loans acquired with credit deterioration
 
from the Scotiabank acquisition (December 31, 2019), the BBVAPR
 
acquisition
(December 18, 2012) and the Eurobank FDIC-Assisted acquisition (April 30, 2010), recorded
 
at fair value at acquisition. On January 1, 2020, the Company implemented
ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments
 
"(CECL)" using the modified retrospective approach. CECL
 
replaces the concept of purchased
credit impaired loans (PCI) with the concept of purchased financial assets
 
with credit deterioration (PCD). PCD accounting is
 
called ‘gross-up accounting’ because, at
acquisition, an entity grosses up the amortized cost basis
 
of the PCD asset for the initial estimate of credit losses.
 
This Day 1 allowance for credit losses is established
without an income statement effect.
 
The Company elected to maintain previously existing
 
pools on adoption, therefore the pool continues to
 
be the unit of account,
and the allowance and non-credit discount or premium is not allocated
 
to the individual assets. These loans are not classified as delinquent or nonperforming
 
even
though the customer may be contractually
 
past due because we expect that we will fully collect the carrying
 
value of these loans.
(2)
Total banking and financial
 
service revenues.
(3)
Calculated based on net income available to common
 
shareholders divided by average
 
common shares outstanding for the period.
(4)
Calculated based on net income available to common
 
shareholders plus the preferred dividends
 
on the convertible preferred stock,
 
divided by total average common
shares outstanding and equivalents for the period
 
as if converted.
(5)
Tangible book value per common
 
share is a non-GAAP measure calculated based on tangible
 
common equity divided by common shares outstanding.
 
See "Table 9:
Reconciliation of GAAP to Non-GAAP Measures and Calculation
 
of Regulatory Capital Measures" for additional information.
(6)
Information includes all loans held for investment,
 
including PCD loans.
(7)
Calculated based on annualized net interest
 
income for the period divided by average
 
interest-earning assets for the period.
(8)
Calculated based on annualized income, net of tax,
 
for the period divided by average total
 
assets for the period.
(9)
Calculated based on annualized income available
 
to common shareholders for the period divided by average
 
tangible common equity for the period.
(10)
Calculated based on non-interest expense for
 
the period divided by total net interest income
 
and total banking and financial services revenues for the
 
period.
(11)
Calculated based on annualized net charge-offs
 
for the period divided by average loans held
 
for investment for the period.
(12)
Non-GAAP ratios. See "Table
 
9: Reconciliation of GAAP to Non-GAAP Measures and Calculation
 
of Regulatory Capital Measures" for information
 
on the calculation of
each of these ratios.
(13)
Production of new loans (excluding renewals).
(14)
Most PCD loans are considered to be performing due to
 
the application of the accretion method, in which these loans will accrete
 
interest income over the remaining
life of the loans using estimated cash flow analyses.
 
Therefore, they are not included as non-performing
 
loans. PCD loan pools that are not accreting interest
 
income
are deemed to be non-performing loans and presented
 
separately.
(15)
Total risk-based
 
capital equals the sum of Tier 1 capital and Tier 2 capital.
(16)
Common equity Tier 1 capital ratio is a regulatory capital
 
measure calculated based on Common equity Tier 1 capital divided
 
by risk-weighted assets.
(17)
Tier 1 risk-based capital ratio is a regulatory
 
capital measure calculated based on Tier 1 capital
 
divided by risk-weighted assets.
(18)
Total risk-based
 
capital ratio is a regulatory capital
 
measure calculated based on Total
 
risk-based capital divided by risk-weighted
 
assets.
(19)
Leverage capital ratio is a regulatory
 
capital measure calculated based on Tier 1 capital
 
divided by average assets, after certain
 
adjustments.
(20)
In March 2020, in light of recent strains on the U.S.
 
economy as a result of the coronavirus disease 2019 (COVID
 
-19), the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance
 
Corporation, and the Office of the Comptroller of the Currency
 
issued an interim final rule that provided the option to
temporarily delay the effects of CECL
 
on regulatory capital for two years,
 
followed by a three-year transition
 
period. In addition, for the first two years,
 
a uniform 25%
“scaling factor” is introduced to approximate
 
the portion of the post day-one allowance attributable
 
to CECL relative to the incurred loss methodology.
 
The 25% scaling
factor is calibrated to approximate
 
an overall after-tax impact of differences
 
in allowances under CECL vs the incurred loss methodology.
(21)
CECL replaces the concept of purchased credit impaired
 
loans (PCI assets) with the concept of purchased financial assets with credit
 
deterioration (PCD assets). An
entity records a PCD asset at the purchase price plus the
 
allowance for credit losses expected at the time
 
of acquisition. Under this method, there is no credit loss
expense affecting net income on acquisition. Changes
 
in estimates of expected credit losses after acquisition
 
are recognized as credit loss expense (or reversal
 
of credit
loss expense) in subsequent periods as they arise.
(22)
Pre-provision net revenues is a non-GAAP measure calculated
 
based on net interest income plus total non-interest
 
income, net, less total non-interest expenses
 
for the
period.
17