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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 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 September 30, 2022 and December 31, 2021, money market instruments included as part of cash and cash equivalents amounted to $5.0 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 September 30, 2022 and December 31, 2021 were as follows:

			September 30, 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			$	11,109					$	—					$	568					$	10,541					1.76		%
Due from 5 to 10 years			62,947						—						4,686						58,261						2.00		%
Due after 10 years			772,928						—						74,119						698,809						2.82		%
Total FNMA and FHLMC certificates			846,984						—						79,373						767,611						2.75		%
GNMA Securities
Due from 1 to 5 years			13,916						—						863						13,053						1.65		%
Due from 5 to 10 years			25,877						19						1,949						23,947						2.06		%
Due after 10 years			292,795						50						38,117						254,728						2.66		%
Total GNMA certificates			332,588						69						40,929						291,728						2.57		%
CMOs issued by US government-sponsored agencies
Due from 1 to 5 years			15,602						—						727						14,875						1.78		%
Due from 5 to 10 years			660						—						12						648						2.14		%
Due after 10 years			992						—						16						976						5.06		%
Total CMOs issued by US government-sponsored agencies			17,254						—						755						16,499						1.98		%
Total mortgage-backed securities			1,196,826						69						121,057						1,075,838						2.69		%
Investment securities
US Treasury securities
Due less than 1 year			402,678						—						1,264						401,414						3.15		%
Other debt securities
Due less than 1 year			500						—						—						500						0.57		%
Due from 1 to 5 years			647						23						13						657						5.31		%
Total other debt securities			1,147						23						13						1,157						3.24		%
Total investment securities			403,825						23						1,277						402,571						3.15		%
Total securities available for sale			$	1,600,651					$	92					$	122,334					$	1,478,409					2.80		%
			September 30, 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			$	343,549					$	—					$	66,089					$	277,460					1.70		%
Investment securities
US Treasury securities
Due from 1 to 5 years			197,225						—						2,967						194,258						3.36		%
Total securities held-to-maturity			$	540,774					$	—					$	69,056					$	471,718					2.30		%

			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		%
Obligations of US government-sponsored agencies
Due less than 1 year			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 September 30, 2022 include $286.4 million pledged to secure government deposits, derivatives, and regulatory collateral that the secured parties are not permitted to sell or repledge, of which $285.9 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, 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 September 30, 2022 and December 31, 2021, most securities held by OFG are issued by U.S. government entities and government-sponsored agencies that have a zero-credit loss assumption.

At both September 30, 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 nine-month periods ended September 30, 2022 and 2021, OFG retained securitized GNMA pools totaling $80.4 million and $117.1 million amortized cost, respectively, at a yield of 3.53% and 2.51%, respectively, from its own originations.

There were no sales of securities during the nine-month periods ended September 30, 2022 and 2021.

The following table shows OFG’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity at September 30, 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:

			September 30, 2022
			12 months or more
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
FNMA and FHLMC certificates			$	87,852					$	20,025					$	67,827
GNMA certificates			567						99						468
			$	88,419					$	20,124					$	68,295
Held-to-maturity
FNMA and FHLMC certificates			$	289,148					$	56,444					$	232,704
			September 30, 2022
			Less than 12 months
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies			$	17,254					$	755					$	16,499
FNMA and FHLMC certificates			759,122						59,348						699,774
GNMA certificates			330,091						40,830						289,261
US Treasury securities			402,678						1,264						401,414
Other debt securities			271						13						258
			$	1,509,416					$	102,210					$	1,407,206
Held-to-maturity
FNMA and FHLMC certificates			$	54,401					$	9,645					$	44,756
US Treasury securities			197,225						2,967						194,258
			$	251,626					$	12,612					$	239,014
			September 30, 2022
			Total
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies			$	17,254					$	755					$	16,499
FNMA and FHLMC certificates			846,974						79,373						767,601
GNMA certificates			330,658						40,929						289,729
US Treasury securities			402,678						1,264						401,414
Other debt securities			271						13						258
			$	1,597,835					$	122,334					$	1,475,501
Held-to-maturity
FNMA and FHLMC certificates			$	343,549					$	66,089					$	277,460
US Treasury securities			197,225						2,967						194,258
			$	540,774					$	69,056					$	471,718

			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

No definition available.

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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 https://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 https://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 https://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 https://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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