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INVESTMENT SECURITIES | 9 Months Ended
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Sep. 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 September 30, 2023 and December 31, 2022, money market instruments included as part of cash and cash equivalents amounted to $4.1 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 September 30, 2023 and December 31, 2022 were as follows:
| September 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 from 1 to 5 years | $ | 7,717 |  |  | $ | — |  |  | $ | 430 |  |  | $ | 7,287 |  |  | 1.76 | %
Due from 5 to 10 years | 48,962 |  |  | — |  |  | 4,373 |  |  | 44,589 |  |  | 2.00 | %
Due after 10 years | 1,204,722 |  |  | — |  |  | 94,878 |  |  | 1,109,844 |  |  | 3.91 | %
Total FNMA and FHLMC certificates | 1,261,401 |  |  | — |  |  | 99,681 |  |  | 1,161,720 |  |  | 3.82 | %
GNMA Securities |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | $ | 10,143 |  |  | $ | — |  |  | $ | 585 |  |  | $ | 9,558 |  |  | 1.71 | %
Due from 5 to 10 years | 18,234 |  |  | 4 |  |  | 1,490 |  |  | 16,748 |  |  | 2.18 | %
Due after 10 years | 361,250 |  |  | 375 |  |  | 48,547 |  |  | 313,078 |  |  | 3.23 | %
Total GNMA certificates | 389,627 |  |  | 379 |  |  | 50,622 |  |  | 339,384 |  |  | 3.15 | %
CMOs issued by US government-sponsored agencies |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | 10,199 |  |  | — |  |  | 530 |  |  | 9,669 |  |  | 1.78 | %
Due from 5 to 10 years | 147 |  |  | — |  |  | 2 |  |  | 145 |  |  | 2.14 | %
Due after 10 years | 882 |  |  | — |  |  | 21 |  |  | 861 |  |  | 5.07 | %
Total CMOs issued by US government-sponsored agencies | 11,228 |  |  | — |  |  | 553 |  |  | 10,675 |  |  | 2.04 | %
Total mortgage-backed securities | 1,662,256 |  |  | 379 |  |  | 150,856 |  |  | 1,511,779 |  |  | 3.65 | %
Investment securities |  |  |  |  |  |  |  |  |
US Treasury securities |  |  |  |  |  |  |  |  |
Due less than 1 year | 739 |  |  | — |  |  | — |  |  | 739 |  |  | 5.45 | %
Other debt securities |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | 638 |  |  | — |  |  | 3 |  |  | 635 |  |  | 3.19 | %
Total investment securities | 1,377 |  |  | — |  |  | 3 |  |  | 1,374 |  |  | 4.40 | %
Total securities available for sale | $ | 1,663,633 |  |  | $ | 379 |  |  | $ | 150,859 |  |  | $ | 1,513,153 |  |  | 3.65 | %
| September 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 | $ | 320,249 |  |  | $ | — |  |  | $ | 74,607 |  |  | $ | 245,642 |  |  | 1.72 | %
Investment securities |  |  |  |  |  |  |  |  |
US Treasury securities |  |  |  |  |  |  |  |  |
Due less than 1 year | $ | 198,896 |  |  | $ | — |  |  | $ | 2,779 |  |  | $ | 196,117 |  |  | 3.34 | %
Total securities held to maturity | $ | 519,145 |  |  | $ | — |  |  | $ | 77,386 |  |  | $ | 441,759 |  |  | 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 September 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 September 30, 2023 include $671.8 million pledged to secure securities sold under agreements to repurchase, government deposits and regulatory collateral, of which $462.9 million serve as collateral for public funds. For regulatory collateral, the secured parties are not permitted to sell or repledge it. 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 September 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 nine-month periods ended September 30, 2023 and 2022, OFG retained securitized GNMA pools totaling $52.8 million and $80.4 million amortized cost, respectively, at a yield of 5.20% and 3.53%, respectively, from its own originations. Also, during the nine-month period ended September 30, 2023, OFG retained FNMA pools totaling $17.2 million, at a yield of 5.37%, from its own originations. OFG did not retain FNMA pools during the nine-month period ended September 30, 2022. During the nine-month periods ended September 30, 2023 and 2022, OFG purchased $1.5 million and $411.0 million, respectively, of available for sale US Treasury securities. During the nine-month period ended September 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.
|  | Nine-Month Period Ended September 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 nine-month period ended September 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 September 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:
| September 30, 2023
| 12 months or more
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 750,699 |  |  | $ | 91,423 |  |  | $ | 659,276 |
GNMA certificates | 292,915 |  |  | 48,099 |  |  | 244,816 |
CMOs issued by US Government-sponsored agencies | 11,228 |  |  | 553 |  |  | 10,675 |
Other debt securities | 139 |  |  | 3 |  |  | 136 |
| $ | 1,054,981 |  |  | $ | 140,078 |  |  | $ | 914,903 |
Held-to-maturity |  |  |  |  |
FNMA and FHLMC certificates | $ | 320,249 |  |  | $ | 74,607 |  |  | $ | 245,642 |
US Treasury securities | 198,896 |  |  | 2,779 |  |  | 196,117 |
| $ | 519,145 |  |  | $ | 77,386 |  |  | $ | 441,759 |
| September 30, 2023
| Less than 12 months
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 510,701 |  |  | $ | 8,257 |  |  | $ | 502,444 |
GNMA certificates | 84,757 |  |  | 2,523 |  |  | 82,234 |
| $ | 595,458 |  |  | $ | 10,780 |  |  | $ | 584,678 |
| September 30, 2023
| Total
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 1,261,401 |  |  | $ | 99,681 |  |  | $ | 1,161,720 |
GNMA certificates | 377,672 |  |  | 50,622 |  |  | 327,050 |
CMOs issued by US Government-sponsored agencies | 11,228 |  |  | 553 |  |  | 10,675 |
Other debt securities | 139 |  |  | 3 |  |  | 136 |
| $ | 1,650,440 |  |  | $ | 150,859 |  |  | $ | 1,499,581 |
Held-to-maturity |  |  |  |  |
FNMA and FHLMC certificates | $ | 320,249 |  |  | $ | 74,607 |  |  | $ | 245,642 |
US Treasury securities | 198,896 |  |  | 2,779 |  |  | 196,117 |
| $ | 519,145 |  |  | $ | 77,386 |  |  | $ | 441,759 |
| 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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