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INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2023

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 June 30, 2023 and December 31, 2022, money market instruments included as part of cash and cash equivalents amounted to $3.4 million and $4.2 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 June 30, 2023 and December 31, 2022 were as follows:

			June 30, 2023
			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 less than 1 year			$	—					$	—					$	—					$	—					—		%
Due from 1 to 5 years			$	8,463					$	—					$	485					$	7,978					1.76		%
Due from 5 to 10 years			52,433						—						3,803						48,630						2.00		%
Due after 10 years			786,949						125						64,832						722,242						3.00		%
Total FNMA and FHLMC certificates			847,845						125						69,120						778,850						2.93		%
GNMA Securities
Due less than 1 year			—						—						—						—						—		%
Due from 1 to 5 years			10,633						—						558						10,075						1.69		%
Due from 5 to 10 years			20,551						7						1,450						19,108						2.16		%
Due after 10 years			353,716						1,548						35,213						320,051						3.16		%
Total GNMA certificates			384,900						1,555						37,221						349,234						3.07		%
CMOs issued by US government-sponsored agencies
Due from 1 to 5 years			11,425						—						659						10,766						1.78		%
Due from 5 to 10 years			265						—						4						261						2.14		%
Due after 10 years			905						—						20						885						5.07		%
Total CMOs issued by US government-sponsored agencies			12,595						—						683						11,912						2.02		%
Total mortgage-backed securities			1,245,340						1,680						107,024						1,139,996						2.96		%
Investment securities
US Treasury securities
Due less than 1 year			748						—						—						748						4.77		%
Total US Treasury Securities			748						—						—						748						4.77		%
Other debt securities
Due less than 1 year			376						44						—						420						7.00		%
Due from 1 to 5 years			685						—						4						681						3.18		%
Total other debt securities			1,061						44						4						1,101						4.53		%
Total investment securities			1,809						44						4						1,849						4.63		%
Total securities available for sale			$	1,247,149					$	1,724					$	107,028					$	1,141,845					2.97		%
			June 30, 2023
			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			$	326,935					$	—					$	60,338					$	266,597					1.72		%
Investment securities
US Treasury securities
Due less than 1 year			$	198,478					$	—					$	3,697					$	194,781					3.34		%
Total securities held to maturity			$	525,413					$	—					$	64,035					$	461,378					2.34		%

			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		%

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 June 30, 2023 and December 31, 2022, 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 June 30, 2023 include $378.6 million pledged to secure government deposits, derivatives, and regulatory collateral that the secured parties are not permitted to sell or repledge, of which $328.2 million serve as collateral for public funds. Investment securities as of 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.

At both June 30, 2023 and December 31, 2022, the Bank’s international banking entities held short-term US Treasury securities in the amount of $325 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 (the “OCFI”).

During the six month periods ended June 30, 2023 and 2022, OFG retained securitized GNMA pools totaling $41.1 million and $53.5 million amortized cost, respectively, at a yield of 5.16% and 3.11%, respectively, from its own originations. Also, during the six month period ended June 30, 2023, OFG retained FNMA pools totaling $12.6 million, at a yield of 5.31%, from its own originations. OFG did not retain FNMA pools during the six month period ended June 30, 2022.

During the six month periods ended June 30, 2023 and 2022, OFG purchased $755 thousand and $735 thousand, respectively, of available for sale US Treasury securities.

During the six month period ended June 30, 2023, OFG sold $203.3 million of available for sale US Treasury securities and recognized a $1.1 million loss in the sale. These losses are included in the consolidated statements of operations.

						Six Month Period Ended June 30, 2023
Description						Sale Price						Book Value at Sale						Gross Gains						Gross Losses
						(In thousands)
Sale of securities available-for-sale
Investment securities
US Treasury securities						$	202,133					$	203,282					$	—					$	1,149

There were no sales of securities during the six month period ended June 30, 2022.

The following table shows OFG’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity at June 30, 2023 and December 31, 2022, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:

			June 30, 2023
			12 months or more
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
FNMA and FHLMC certificates			$	493,276					$	53,454					$	439,822
GNMA certificates			258,449						35,154						223,295
CMOs issued by US Government-sponsored agencies			12,595						683						11,912
			$	764,320					$	89,291					$	675,029
Held-to-maturity
FNMA and FHLMC certificates			$	326,935					$	60,338					$	266,597
			June 30, 2023
			Less than 12 months
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
FNMA and FHLMC certificates			345,324						15,666						329,658
GNMA certificates			76,664						2,068						74,596
Other debt securities			184						4						180
			$	422,172					$	17,738					$	404,434
Held-to-maturity
US Treasury securities			198,478						3,697						194,781
			June 30, 2023
			Total
			Amortized Cost						Unrealized Loss						Fair Value
			(In thousands)
Securities available-for-sale
FNMA and FHLMC certificates			$	838,600					$	69,120					$	769,480
GNMA certificates			335,113						37,221						297,892
CMOs issued by US Government-sponsored agencies			12,595						683						11,912
Other debt securities			184						4						180
			$	1,186,492					$	107,028					$	1,079,464
Held-to-maturity
FNMA and FHLMC certificates			$	326,935					$	60,338					$	266,597
US Treasury securities			198,478						3,697						194,781
			$	525,413					$	64,035					$	461,378

			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
US Treasury securities			$	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

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

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