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INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

INVESTMENT SECURITIES

Money Market Investments

OFG considers as cash equivalents all money market instruments that are not pledged and that have maturities of three months or less at the date of acquisition. At March 31, 2022 and December 31, 2021, money market instruments included as part of cash and cash equivalents amounted to $5.6 million and $9.0 million, respectively.

Investment Securities

The amortized cost, gross unrealized gains and losses, fair value, weighted average yield and contractual maturities of the securities owned by OFG at March 31, 2022 and December 31, 2021 were as follows:

			March 31, 2022
			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Weighted Average Yield
			(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates
Due from 1 to 5 years			2,020						—						5						$	2,015					2.13		%
Due from 5 to 10 years			$	82,101					$	2					$	1,168					$	80,935					1.94		%
Due after 10 years			490,169						—						14,229						$	475,940					2.25		%
Total FNMA and FHLMC certificates			574,290						2						15,402						558,890						2.21		%
GNMA Securities
Due from 1 to 5 years			16,836						—						146						16,690						1.63		%
Due from 5 to 10 years			16,470						—						327						16,143						1.88		%
Due after 10 years			261,712						872						8,221						254,363						2.40		%
Total GNMA certificates			295,018						872						8,694						287,196						2.32		%
CMOs issued by US government-sponsored agencies
Due from 1 to 5 years			1,523						—						24						1,499						1.70		%
Due from 5 to 10 years			18,584						—						300						18,284						1.80		%
Due after 10 years			1,325						1						4						1,322						4.53		%
Total CMOs issued by US government-sponsored agencies			21,432						1						328						21,105						1.96		%
Total mortgage-backed securities			890,740						875						24,424						867,191						2.24		%
Investment securities
US Treasury securities
Due less than 1 year			10,735						28						—						10,763						1.49		%
Total US Treasury Securities			10,735						28						—						10,763						1.49		%
Other debt securities
Due less than 1 year			500						—						—						500						0.57		%
Due from 1 to 5 years			1,823						61						—						1,884						5.46		%
Total Other debt securities			2,323						61						—						2,384						4.41		%
Total investment securities			13,058						89						—						13,147						2.01		%
Total securities available for sale			$	903,798					$	964					$	24,424					$	880,338					2.24		%
			March 31, 2022
			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Weighted Average Yield
			(In thousands)
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates
Due after 10 years			$	359,806					$	—					$	29,837					$	329,969					1.71		%

			December 31, 2021
			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Weighted Average Yield
			(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates
Due from 5 to 10 years			90,560						2,502						—						93,062						1.94		%
Due after 10 years			93,440						—						3,200						90,240						1.37		%
Total FNMA and FHLMC certificates			184,000						2,502						3,200						183,302						1.65		%
GNMA Securities
Due from 1 to 5 years			10,536						233						1						10,768						1.66		%
Due from 5 to 10 years			26,419						556						—						26,975						1.80		%
Due after 10 years			244,106						6,927						198						250,835						2.40		%
Total GNMA certificates			281,061						7,716						199						288,578						2.32		%
CMOs issued by US government-sponsored agencies
Due from 1 to 5 years			1,788						22						—						1,810						1.70		%
Due from 5 to 10 years			20,705						299						—						21,004						1.81		%
Due after 10 years			1,601						16						1						1,616						4.24		%
Total CMOs issued by US government-sponsored agencies			24,094						337						1						24,430						1.96		%
Total mortgage-backed securities			489,155						10,555						3,400						496,310						2.05		%
Investment securities
US Treasury securities
Due less than 1 year			10,737						88						—						10,825						1.48		%
Total US Treasury Securities			10,737						88						—						10,825						1.48		%
Obligations of US government-sponsored agencies
Due less than 1 year			1,182						1						—						1,183						1.40		%
Total Obligations of US government-sponsored agencies			1,182						1						—						1,183						1.40		%
Other debt securities
Due less than 1 year			500						—						—						500						0.57		%
Due from 1 to 5 years			1,847						48						—						1,895						5.43		%
Total Other debt securities			2,347						48						—						2,395						4.39		%
Total investment securities			14,266						137						—						14,403						1.95		%
Total securities available for sale			$	503,421					$	10,692					$	3,400					$	510,713					2.05		%
			December 31, 2021
			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Weighted Average Yield
			(In thousands)
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates
Due after 10 years			367,507						—						3,854						363,653						1.71		%

Investment securities as of March 31, 2022 include $200.4 million pledged to secure government deposits, derivatives and regulatory collateral that the secured parties are not permitted to sell or repledge the collateral, of which $199.7 million serve as collateral for public funds. Investment securities as of December 31, 2021 include $145.6 million pledged to secure government deposits, derivatives and regulatory collateral that the secured parties are not permitted to sell or repledge the collateral, of which $143.8 million serve as collateral for public funds.

The weighted average yield on debt securities available-for-sale is based on amortized cost and does not give effect to changes in fair value. Weighted average yields on tax-exempt obligations have been computed on a fully taxable equivalent basis.

Securities not due on a single contractual maturity date, such as collateralized mortgage obligations, are classified in the period of final contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

At March 31, 2022 and December 31, 2021, most securities held by OFG are issued by U.S. government entities and agencies that have a zero-credit loss assumption.

At both March 31, 2022 and December 31, 2021, the Bank’s international banking entities held short-term US Treasury securities in the amount of $305 thousand and $325 thousand, respectively, as the legal reserve required for international banking entities under Puerto Rico law. These instruments cannot be withdrawn or transferred without the prior written approval of the Office of the Commissioner of Financial Institutions of Puerto Rico (“OCFI”).

During the quarters ended March 31, 2022 and 2021, OFG retained securitized GNMA pools totaling $24.0 million and $30.0 million amortized cost, respectively, at a yield of 2.37% and 2.22%, from its own originations.

There were no sales of securities during the quarters ended March 31, 2022 and 2021.

The following table show OFG’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity at March 31, 2022 and December 31, 2021, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:

			March 31, 2022
			12 months or more
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
FNMA and FHLMC certificates			91,258						9,884						81,374
GNMA certificates			4,237						256						3,981
			$	95,495					$	10,140					$	85,355
			March 31, 2022
			Less than 12 months
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies			20,744						328						20,416
FNMA and FHLMC certificates			481,614						5,518						476,096
GNMA certificates			273,405						8,438						264,967
			$	775,763					$	14,284					$	761,479
Held-to-maturity
FNMA and FHLMC certificates			$	359,806					$	29,837					$	329,969
			March 31, 2022
			Total
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies			20,744						328						20,416
FNMA and FHLMC certificates			572,872						15,402						557,470
GNMA certificates			277,642						8,694						268,948
			$	871,258					$	24,424					$	846,834
Held-to-maturity
FNMA and FHLMC certificates			$	359,806					$	29,837					$	329,969

			December 31, 2021
			Less than 12 months
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies			500						1						499
FNMA and FHLMC certificates			93,440						3,200						90,240
GNMA certificates			5,022						199						4,823
			$	98,962					$	3,400					$	95,562
Held-to-maturity
FNMA and FHLMC certificates			$	367,507					$	3,854					$	363,653

OFG had no investment securities in a continuous loss position for 12 months or more at December 31, 2021.

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- References

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- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 320
-URI http://asc.fasb.org/subtopic&trid=2209399

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 946
-SubTopic 320
-URI http://asc.fasb.org/subtopic&trid=2324412

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-URI http://asc.fasb.org/topic&trid=2196928

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 940
-SubTopic 320
-URI http://asc.fasb.org/subtopic&trid=2176304

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1403
-Paragraph (b)

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