ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2025

OFG measures its ACL based on management’s best estimate of lifetime expected credit losses inherent in OFG’s relevant financial assets. The ACL is estimated using quantitative methods that consider a variety of factors such as historical loss experience, the current credit quality of the portfolio, and an economic outlook over the life of the loan. Also included in the ACL are qualitative reserves to cover losses that are expected but, in OFG’s assessment, may not be adequately represented in the quantitative methods or the economic assumptions. In its loss forecasting framework, OFG incorporates forward-looking information through the use of macroeconomic scenarios applied over the forecasted life of the assets. The scenarios that are chosen each quarter and the amount of weight given to each scenario depend on a variety of factors, including recent economic events, leading economic indicators, views of internal as well as third-party economists and industry trends. For more information on OFG’s credit loss accounting policies, including the ACL, see Note 1 – Summary of Significant Accounting Policies included in the 2024 Form 10-K.

At September 30, 2025, OFG used an economic probability-weighted scenario approach consisting of the baseline and moderate recession scenarios, giving more weight to the baseline scenario, except for the commercial US loan segment that uses a higher probability level in the moderate recessionary scenario. In addition, the ACL at September 30, 2025 continues to include qualitative reserves for certain segments that OFG views as higher risk that may not be fully recognized through its quantitative models, such as auto loan portfolio credit trends and the evolution of risk ratings applied to the commercial loans and collateral changes in real estate portfolios. There are still many unknown variables, including the results of the local and U.S. mainland governments’ fiscal and monetary actions resulting from the effect of inflation, geopolitical tension, and new trade and tax policies.

As of September 30, 2025, the ACL increased by $21.9 million compared to December 31, 2024. The provision for credit losses for the nine-month period ended September 30, 2025, reflected adjustments of $48.1 million related to loan volume, $14.2 million in specific reserves and $13.6 million due to alignment of economic and loss rate model assumptions.

The net charge-offs for the nine-month period ended September 30, 2025, amounted to $53.4 million, an increase of $1.4 million when compared to the same period of 2024. The increase corresponds to $1.2 million from commercial loans and $2.5 million from auto loans, mainly as a result of higher loan volume, partially offset by a decrease of $2.2 million from consumer loans. Net charge-offs for the nine-month period ended September 30, 2025, include $6.5 million from commercial US loans. Net charge-offs for the nine-month period ended September 30, 2024, include $3.3 million from previously and fully-reserved nonperforming paycheck protection program (“PPP”) loans.

The following tables present the activity in OFG’s ACL by segment for the quarters and nine-month periods ended September 30, 2025 and 2024:


	Quarter Ended September 30, 2025
	Commercial		Mortgage		Consumer		Auto		Total
	(In thousands)
Non-PCD:
Balance at beginning of period	$	51,586	$	5,684	$	32,822	$	92,673	$	182,765
Provision for credit losses	12,181		638		7,757		6,803		27,379
Charge-offs	(5,093)		—		(7,704)		(16,743)		(29,540)
Recoveries	922		171		896		7,108		9,097
Balance at end of period	$	59,596	$	6,493	$	33,771	$	89,841	$	189,701
PCD:
Balance at beginning of period	$	3,482	$	3,683	$	10	$	4	$	7,179
Provision for (recapture of) credit losses	259		453		(11)		(34)		667
Charge-offs	(205)		—		—		(2)		(207)
Recoveries	118		281		10		33		442
Balance at end of period	$	3,654	$	4,417	$	9	$	1	$	8,081
Total allowance for credit losses at end of period	$	63,250	$	10,910	$	33,780	$	89,842	$	197,782


	Nine-Month Period Ended September 30, 2025
	Commercial		Mortgage		Consumer		Auto		Total
	(In thousands)
Non-PCD:
Balance at beginning of period	$	44,814	$	6,395	$	31,818	$	87,682	$	170,709
Provision for (recapture of) credit losses	22,016		(970)		22,410		29,612		73,068
Charge-offs	(8,396)		(34)		(22,926)		(49,805)		(81,161)
Recoveries	1,162		1,102		2,469		22,352		27,085
Balance at end of period	$	59,596	$	6,493	$	33,771	$	89,841	$	189,701
PCD:
Balance at beginning of period	$	622	$	4,514	$	11	$	7	$	5,154
Provision for (recapture of) credit losses	3,062		(751)		(28)		(70)		2,213
Charge-offs	(236)		(59)		(1)		(16)		(312)
Recoveries	206		713		27		80		1,026
Balance at end of period	$	3,654	$	4,417	$	9	$	1	$	8,081
Total allowance for credit losses at end of period	$	63,250	$	10,910	$	33,780	$	89,842	$	197,782


	Quarter Ended September 30, 2024
	Commercial		Mortgage		Consumer		Auto		Total
	(In thousands)
Non-PCD:
Balance at beginning of period	$	33,809	$	6,886	$	29,432	$	80,722	$	150,849
Provision for (recapture of) credit losses	928		(31)		9,904		10,212		21,013
Charge-offs	(139)		(37)		(8,863)		(16,371)		(25,410)
Recoveries	1,479		72		830		6,300		8,681
Balance at end of period	$	36,077	$	6,890	$	31,303	$	80,863	$	155,133
PCD:
Balance at beginning of period	$	789	$	5,642	$	8	$	13	$	6,452
Provision for (recapture of) credit losses	751		(424)		(16)		(22)		289
Charge-offs	(663)		(66)		—		(9)		(738)
Recoveries	70		250		19		25		364
Balance at end of period	$	947	$	5,402	$	11	$	7	$	6,367
Total allowance for credit losses at end of period	$	37,024	$	12,292	$	31,314	$	80,870	$	161,500

	Nine-Month Period Ended September 30, 2024
	Commercial		Mortgage		Consumer		Auto		Total
	(In thousands)
Non-PCD:
Balance at beginning of period	$	44,041	$	7,998	$	27,086	$	73,485	$	152,610

Recapture of (provision for) credit losses	(2,462)		(1,885)		26,867		32,329		54,849
Charge-offs	(7,189)		(102)		(25,024)		(43,148)		(75,463)
Recoveries	1,687		879		2,374		18,197		23,137
Balance at end of period	$	36,077	$	6,890	$	31,303	$	80,863	$	155,133
PCD:
Balance at beginning of period	$	1,113	$	7,351	$	7	$	25	$	8,496

Provision for (recapture of) credit losses	377		(2,752)		(45)		(107)		(2,527)
Charge-offs	(928)		(178)		—		(24)		(1,130)
Recoveries	385		981		49		113		1,528
Balance at end of period	$	947	$	5,402	$	11	$	7	$	6,367
Total allowance for credit losses at end of period	$	37,024	$	12,292	$	31,314	$	80,870	$	161,500