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INVESTMENT SECURITIES | 6 Months Ended
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Jun. 30, 2024
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, 2024 and December 31, 2023, money market instruments included as part of cash and cash equivalents amounted to $5.1 million and $4.6 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, 2024 and December 31, 2023 were as follows:
| June 30, 2024
| 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 | $ | 8,933 |  |  | $ | — |  |  | $ | 421 |  |  | $ | 8,512 |  |  | 1.98 | %
Due from 5 to 10 years | 36,742 |  |  | — |  |  | 2,517 |  |  | 34,225 |  |  | 1.97 | %
Due after 10 years | 1,512,171 |  |  | 5,261 |  |  | 69,008 |  |  | 1,448,424 |  |  | 4.28 | %
Total FNMA and FHLMC certificates | 1,557,846 |  |  | 5,261 |  |  | 71,946 |  |  | 1,491,161 |  |  | 4.21 | %
GNMA certificates |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | 7,965 |  |  | — |  |  | 319 |  |  | 7,646 |  |  | 1.72 | %
Due from 5 to 10 years | 13,552 |  |  | 7 |  |  | 883 |  |  | 12,676 |  |  | 2.23 | %
Due after 10 years | 409,828 |  |  | 5,017 |  |  | 38,662 |  |  | 376,183 |  |  | 3.54 | %
Total GNMA certificates | 431,345 |  |  | 5,024 |  |  | 39,864 |  |  | 396,505 |  |  | 3.47 | %
CMOs issued by US government-sponsored agencies |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | 6,896 |  |  | — |  |  | 274 |  |  | 6,622 |  |  | 1.78 | %
Due after 10 years | 790 |  |  | — |  |  | 11 |  |  | 779 |  |  | 5.06 | %
Total CMOs issued by US government-sponsored agencies | 7,686 |  |  | — |  |  | 285 |  |  | 7,401 |  |  | 2.11 | %
Total mortgage-backed securities | 1,996,877 |  |  | 10,285 |  |  | 112,095 |  |  | 1,895,067 |  |  | 4.04 | %
Investment securities |  |  |  |  |  |  |  |  |
US Treasury securities |  |  |  |  |  |  |  |  |
Due less than 1 year | 200,656 |  |  | 2 |  |  | — |  |  | 200,658 |  |  | 5.41 | %
Other debt securities |  |  |  |  |  |  |  |  |
Due less than 1 year | 500 |  |  | — |  |  | — |  |  | 500 |  |  | 3.25 | %
Due from 1 to 5 years | 83 |  |  | — |  |  | 2 |  |  | 81 |  |  | 2.97 | %
Total other debt securities | 583 |  |  | — |  |  | 2 |  |  | 581 |  |  | 3.21 | %
Total investment securities | 201,239 |  |  | 2 |  |  | 2 |  |  | 201,239 |  |  | 5.41 | %
Total securities available for sale | $ | 2,198,116 |  |  | $ | 10,287 |  |  | $ | 112,097 |  |  | $ | 2,096,306 |  |  | 4.17 | %
| June 30, 2024
| 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 | $ | 303,621 |  |  | $ | — |  |  | $ | 59,256 |  |  | $ | 244,365 |  |  | 1.72 | %
Investment securities |  |  |  |  |  |  |  |  |
Other debt securities |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | 35,000 |  |  | 72 |  |  | — |  |  | 35,072 |  |  | 6.33 | %
Total securities held to maturity | $ | 338,621 |  |  | $ | 72 |  |  | $ | 59,256 |  |  | $ | 279,437 |  |  | 2.20 | %
| December 31, 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 | $ | 6,972 |  |  | — |  |  | $ | 311 |  |  | $ | 6,661 |  |  | 1.76 | %
Due from 5 to 10 years | 45,835 |  |  | — |  |  | 2,767 |  |  | 43,068 |  |  | 2.00 | %
Due after 10 years | 1,411,327 |  |  | 8,989 |  |  | 54,100 |  |  | 1,366,216 |  |  | 4.11 | %
Total FNMA and FHLMC certificates | 1,464,134 |  |  | 8,989 |  |  | 57,178 |  |  | 1,415,945 |  |  | 4.03 | %
GNMA certificates |  |  |  |  |  |  |  |  |
Due less than 1 year | 5 |  |  | — |  |  | — |  |  | 5 |  |  | 1.31 | %
Due from 1 to 5 years | 8,851 |  |  | — |  |  | 351 |  |  | 8,500 |  |  | 1.71 | %
Due from 5 to 10 years | 17,113 |  |  | 16 |  |  | 955 |  |  | 16,174 |  |  | 2.19 | %
Due after 10 years | 380,306 |  |  | 4,419 |  |  | 33,110 |  |  | 351,615 |  |  | 3.38 | %
Total GNMA certificates | 406,275 |  |  | 4,435 |  |  | 34,416 |  |  | 376,294 |  |  | 3.30 | %
CMOs issued by US government-sponsored agencies |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | 9,071 |  |  | — |  |  | 364 |  |  | 8,707 |  |  | 1.78 | %
Due from 5 to 10 years | 54 |  |  | — |  |  | — |  |  | 54 |  |  | 2.14 | %
Due after 10 years | 861 |  |  | — |  |  | 12 |  |  | 849 |  |  | 5.07 | %
Total CMOs issued by US government-sponsored agencies | 9,986 |  |  | — |  |  | 376 |  |  | 9,610 |  |  | 2.06 | %
Total mortgage-backed securities | 1,880,395 |  |  | 13,424 |  |  | 91,970 |  |  | 1,801,849 |  |  | 3.86 | %
Investment securities |  |  |  |  |  |  |  |  |
US Treasury securities |  |  |  |  |  |  |  |  |
Due less than 1 year | 296,747 |  |  | 52 |  |  | — |  |  | 296,799 |  |  | 5.40 | %
Other debt securities |  |  |  |  |  |  |  |  |
Due less than 1 year | 500 |  |  | — |  |  | — |  |  | 500 |  |  | 3.25 | %
Due from 1 to 5 years | 119 |  |  | — |  |  | 3 |  |  | 116 |  |  | 2.97 | %
Total other debt securities | 619 |  |  | — |  |  | 3 |  |  | 616 |  |  | 3.20 | %
Total investment securities | 297,366 |  |  | 52 |  |  | 3 |  |  | 297,415 |  |  | 5.39 | %
Total securities available for sale | $ | 2,177,761 |  |  | $ | 13,476 |  |  | $ | 91,973 |  |  | $ | 2,099,264 |  |  | 4.07 | %
| December 31, 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 | $ | 314,710 |  |  | $ | — |  |  | $ | 56,767 |  |  | $ | 257,943 |  |  | 1.72 | %
Investment securities |  |  |  |  |  |  |  |  |
US Treasury securities |  |  |  |  |  |  |  |  |
Due less than 1 year | 199,314 |  |  | — |  |  | 1,548 |  |  | 197,766 |  |  | 3.33 | %
Other debt securities |  |  |  |  |  |  |  |  |
Due from 1 to 5 years | 35,000 |  |  | 55 |  |  | — |  |  | 35,055 |  |  | 6.36 | %
Total securities held to maturity | $ | 549,024 |  |  | $ | 55 |  |  | $ | 58,315 |  |  | $ | 490,764 |  |  | 2.60 | %
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, 2024 and December 31, 2023, most securities held by OFG are issued by U.S. government entities and government-sponsored agencies that have a zero-credit loss assumption and, therefore, have no allowance for credit losses. Investment securities at June 30, 2024 include $1.648 billion pledged to secure government deposits and regulatory collateral, of which $1.602 billion serve as collateral for public funds. For regulatory collateral, the secured parties are not permitted to sell or repledge them. Investment securities as of December 31, 2023 include $1.624 billion pledged to secure government deposits, derivatives, and regulatory collateral that the secured parties are not permitted to sell or repledge, of which $1.575 billion serve as collateral for public funds. At June 30, 2024 and December 31, 2023, the Bank’s international banking entity, OIB, held short-term US Treasury securities in the amount of $525 thousand and $325 thousand, respectively, as the legal reserve required for international banking entities under Puerto Rico law. At both June 30, 2024 and December 31, 2023, the Bank’s international banking entity, Oriental Overseas, held short-term US Treasury securities in the amount of $325 thousand 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. During the six-month periods ended June 30, 2024 and 2023, OFG retained securitized GNMA pools totaling $38.1 million and $41.1 million, respectively, at a yield of 5.09% and 5.16%, respectively, from its own originations. During the six-month periods 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 periods ended June 30, 2024. During the six-month periods ended June 30, 2024 and 2023, OFG sold $149.4 million and $203.3 million, respectively, of available for sale US Treasury securities and recognized a $7 thousand and $1.1 million, respectively, in losses on the sale. These losses are included in the consolidated statements of operations.
|  | Six-Month Period Ended June 30, 2024 |
Description |  | Sale Price |  | Book Value at Sale |  | Gross Gains |  | Gross Losses |
|  | (In thousands) |
Sale of investment securities available-for-sale |  |  |  |  |  |  |  |  |
Investment securities |  |  |  |  |  |  |  |  |
US Treasury securities |  | $ | 149,406 |  |  | $ | 149,413 |  |  | $ | — |  |  | $ | 7 |  |
|  | Six-Month Period Ended June 30, 2023
Description |  | Sale Price |  | Book Value at Sale |  | Gross Gains |  | Gross Losses
|  | (In thousands)
Sale of investment securities available-for-sale |  |  |  |  |  |  |  |
Investment securities |  |  |  |  |  |  |  |
US Treasury securities |  | $ | 202,133 |  |  | $ | 203,282 |  |  | $ | — |  |  | $ | 1,149 |
The following table shows OFG’s gross unrealized losses and fair value of investment securities available-for-sale at June 30, 2024 and December 31, 2023, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
| June 30, 2024
| 12 months or more
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 737,230 |  |  | $ | 67,814 |  |  | $ | 669,416 |
GNMA certificates | 267,882 |  |  | 39,458 |  |  | 228,424 |
CMOs issued by US Government-sponsored agencies | 7,686 |  |  | 285 |  |  | 7,401 |
Other debt securities | 83 |  |  | 2 |  |  | 81 |
| $ | 1,012,881 |  |  | $ | 107,559 |  |  | $ | 905,322 |
| June 30, 2024
| Less than 12 months
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 197,672 |  |  | $ | 4,132 |  |  | $ | 193,540 |
GNMA certificates | 37,603 |  |  | 406 |  |  | 37,197 |
| $ | 235,275 |  |  | $ | 4,538 |  |  | $ | 230,737 |
| June 30, 2024
| Total
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 934,902 |  |  | $ | 71,946 |  |  | $ | 862,956 |
GNMA certificates | 305,485 |  |  | 39,864 |  |  | 265,621 |
CMOs issued by US Government-sponsored agencies | 7,686 |  |  | 285 |  |  | 7,401 |
Other debt securities | 83 |  |  | 2 |  |  | 81 |
| $ | 1,248,156 |  |  | $ | 112,097 |  |  | $ | 1,136,059 |
The unrealized losses on OFG’s investment in federal agency mortgage-backed securities were caused by market volatility related to interest rate increases. OFG purchased those investments at a discount relative to their face amount, and the contractual cash flows of those investments are guaranteed by an agency of the U.S. government or by a government-sponsored enterprise. Accordingly, it is expected that the securities would not be settled at a price that is less than the amortized cost basis of OFG’s investments. OFG does not intend to sell the investments, and it is not more likely than not that OFG will be required to sell the investments before recovery of their amortized cost basis.
| December 31, 2023
| 12 months or more
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 731,334 |  |  | $ | 56,847 |  |  | $ | 674,487 |
GNMA certificates | 275,669 |  |  | 34,364 |  |  | 241,305 |
CMOs issued by US Government-sponsored agencies | 9,986 |  |  | 376 |  |  | 9,610 |
Other debt securities | 119 |  |  | 3 |  |  | 116 |
| $ | 1,017,108 |  |  | $ | 91,590 |  |  | $ | 925,518 |
| December 31, 2023
| Less than 12 months
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 106,235 |  |  | $ | 331 |  |  | $ | 105,904 |
GNMA certificates | 7,864 |  |  | 52 |  |  | 7,812 |
| $ | 114,099 |  |  | $ | 383 |  |  | $ | 113,716 |
| December 31, 2023
| Total
| Amortized Cost |  | Unrealized Loss |  | Fair Value
| (In thousands)
Securities available-for-sale |  |  |  |  |
FNMA and FHLMC certificates | $ | 837,569 |  |  | $ | 57,178 |  |  | $ | 780,391 |
GNMA certificates | 283,533 |  |  | 34,416 |  |  | 249,117 |
CMOs issued by US Government-sponsored agencies | 9,986 |  |  | 376 |  |  | 9,610 |
Other debt securities | 119 |  |  | 3 |  |  | 116 |
| $ | 1,131,207 |  |  | $ | 91,973 |  |  | $ | 1,039,234 |

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