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INVESTMENT SECURITIES

12 Months Ended

Dec. 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 December 31, 2022 and 2021, money market instruments included as part of cash and cash equivalents amounted to $4.2 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 December 31, 2022 and 2021 were as follows:

			December 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			$	10,155					$	—					$	550					$	9,605					1.76		%
Due from 5 to 10 years			59,167						—						3,764						55,403						2.00		%
Due after 10 years			768,381						59						65,332						703,108						2.87		%
Total FNMA and FHLMC certificates			837,703						59						69,646						768,116						2.79		%
GNMA Securities
Due from 1 to 5 years			12,505						—						632						11,873						1.66		%
Due from 5 to 10 years			24,575						14						1,585						23,004						2.13		%
Due after 10 years			320,417						892						36,652						284,657						2.90		%
Total GNMA certificates			357,497						906						38,869						319,534						2.80		%
CMOs issued by US government-sponsored agencies
Due from 1 to 5 years			14,190						—						755						13,435						1.78		%
Due from 5 to 10 years			485						—						10						475						2.14		%
Due after 10 years			959						—						18						941						5.06		%
Total CMOs issued by US government-sponsored agencies			15,634						—						783						14,851						1.99		%
Total mortgage-backed securities			1,210,834						965						109,298						1,102,501						2.79		%
Investment securities
US Treasury securities
Due less than 1 year			310,862						—						1,729						309,133						3.34		%
Other debt securities
Due from 1 to 5 years			1,116						30						4						1,142						4.45		%
Total investment securities			311,978						30						1,733						310,275						3.35		%
Total securities available for sale			$	1,522,812					$	995					$	111,031					$	1,412,776					2.90		%
			December 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			$	337,435					$	—					$	62,358					$	275,077					1.71		%
Investment securities
US Treasury securities
Due from 1 to 5 years			197,635						—						3,526						194,109						3.36		%
Total securities held-to-maturity			$	535,070					$	—					$	65,884					$	469,186					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		%

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.

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.

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

Investment securities at December 31, 2022 include $294.2 million pledged to secure government deposits, derivatives, and regulatory collateral that the secured parties are not permitted to sell or repledge, of which $293.7 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, of which $143.8 million serve as collateral for public funds.

At both December 31, 2022 and 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 2022, 2021 and 2020, OFG retained securitized GNMA pools totaling $112.4 million, $149.1 million, and $90.1 million amortized cost, respectively, at a yield of 3.90%, 2.45%, and 2.48%, respectively, from its own originations. Also, during 2022, OFG retained FNMA pools totaling $13.7 million, at a yield of 4.97%, from its own originations. OFG did not retain FNMA pools during 2021 and 2020.

During 2022, OFG purchased $550 million of available for sale US Treasury securities and $200 million of held to maturity US Treasury securities. During 2021, OFG did not purchase US Treasury securities. During 2020, OFG purchased $75 million of available for sale short-term US Treasury securities that matured before year end. US Treasury securities are exempt of income taxes.

During 2022, OFG sold $242.4 million of available for sale US Treasury securities and recognized a $247 thousand loss in the sale. During 2021 and 2020, OFG sold $2.2 million and $316.3 million, respectively, of available-for-sale mortgage-backed securities and recognized gains of $19 thousand and $4.7 million, respectively. These losses and gains are included in the consolidated statements of operations.

						Year Ended December 31, 2022
Description						Sale Price						Book Value at Sale						Gross Gains						Gross Losses
						(In thousands)
Sale of securities available-for-sale
Investment securities
US Treasury securities						$	242,126					$	242,373					$	—					$	247

						Year Ended December 31, 2021
Description						Sale Price						Book Value at Sale						Gross Gains						Gross Losses
						(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
GNMA certificates						$	2,175					$	2,156					$	19					$	—

						Year Ended December 31, 2020
Description						Sale Price						Book Value at Sale						Gross Gains						Gross Losses
						(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates						$	229,571					$	227,213					$	2,358					$	—
GNMA certificates						91,413						89,043						2,370						—
Total mortgage-backed securities						$	320,984					$	316,256					$	4,728					$	—

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

			December 31, 2022
			12 months or more
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies			337						7						330
FNMA and FHLMC certificates			$	88,600					$	18,989					$	69,611
GNMA certificates			82,074						14,031						68,043
			$	171,011					$	33,027					$	137,984
Held-to-maturity
FNMA and FHLMC certificates			$	337,435					$	62,358					$	275,077
			December 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			$	15,297					$	776					$	14,521
FNMA and FHLMC certificates			745,566						50,657						694,909
GNMA certificates			251,835						24,838						226,997
US Treasury securities			310,862						1,729						309,133
Other debt securities			240						4						236
			$	1,323,800					$	78,004					$	1,245,796
Held-to-maturity
FNMA and FHLMC certificates			$	—					$	—					$	—
US Treasury securities			197,635						3,526						194,109
			$	197,635					$	3,526					$	194,109
			December 31, 2022
			Total
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies			$	15,634					$	783					$	14,851
FNMA and FHLMC certificates			834,166						69,646						764,520
GNMA certificates			333,909						38,869						295,040
US Treasury securities			310,862						1,729						309,133
Other debt securities			240						4						236
			$	1,494,811					$	111,031					$	1,383,780
Held-to-maturity
FNMA and FHLMC certificates			$	337,435					$	62,358					$	275,077
US Treasury securities			197,635						3,526						194,109
			$	535,070					$	65,884					$	469,186

			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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