OFG BANCORP

Previous wording

In January 2024, OFG announced that its Board of Directors approved the increase of its regular quarterly cash dividend to $0.25 per common share from $0.22 per share, beginning in the quarter ending March 31, 2024. The Board of Directors also approved a new $50.0 million stock repurchase program. The new stock repurchase program, which is open-ended, replaces the prior stock repurchase program, which had had been approved by the Board of Directors in January 2022 and had $17.2 million remaining of its $100 million repurchase parameters.

Current wording

In January 2024, OFG announced that its Board of Directors approved the increase of its regular quarterly cash dividend to $0.25 per common share from $0.22 per share, beginning in the quarter ending March 31, 2024. The Board of Directors

Previous wording

In January 2023, OFG announced that its Board of Directors approved the increase of its regular quarterly cash dividend to $0.22 per common share from $0.20 per share, beginning in the quarter ended March 31, 2023.

Current wording

In January 2025, OFG announced that its Board of Directors approved the increase of its regular quarterly cash dividend to $0.30 per common share from $0.25 per share, beginning in the quarter ending March 31, 2025.

Previous wording

We believe that Puerto Rico’s economy continues to demonstrate resiliency and growth and its private sector is expanding. The Puerto Rico Economic Activity Index, as published by the Economic Development Bank for Puerto Rico, in November 2023 increased 5.9% year-over-year and retail sales in November increased 7.4% year-over-year and, according to the data published by Economic Development Bank for Puerto Rico, wages are also rising and labor participation is increasing. Total non-farm payroll employment in November 2023 improved 2.6% year-over-year and total employment rose 2.5% from July 2022 to December 2023. The inflow of federal stimulus and reconstruction funds for rebuilding infrastructure has continued. Nevertheless, OFG continues to pay attention to the potential impact of interest rate changes, inflation, and a possible U.S. mainland recession, all of which could impact our business and results of operations.

Current wording

We believe that Puerto Rico’s economy continues to demonstrate resiliency and growth and its private sector, including business investments and infrastructure projects, is expanding. The Puerto Rico Economic Activity Index, as published by the Economic Development Bank for Puerto Rico, registered 126.4 points in November 2024, which represents a decrease of 1.1% when compared to the same period of the previous year. However, according to the data published by the Economic Development Bank for Puerto Rico, wages are rising, and labor participation is increasing. Total non-farm payroll employment averaged 967 thousand jobs in November 2024, equivalent to an increase of 0.4% on a month-over-month basis, and an annual increase of 1.7%. The inflow of federal stimulus and reconstruction funds for rebuilding infrastructure has continued, and we believe this inflow will stimulate the local economy. Nevertheless, OFG continues to pay attention to the potential impact of prolonged high market interest rates, inflation trends, new mainland economic policies, delays in disaster relief funding disbursements and other economic factors, and global conflicts, all of which could impact our business and results of operations.

Previous wording

OFG applied a discounted cash flow (“DCF”) method for non-purchased credit deteriorated loans (non-PCD) and an undiscounted cash flow (“UDCF”) method for purchased credit deteriorated (PCD) loans to determine the ACL for loans collectively measured for impairment, except for credit cards and overdrafts which utilize a remaining life methodology. For non-PCD, the expected cash flows are calculated for each loan and discounted using the effective yield. The discounted amount of expected cash flows is compared to the amortized cost, and any shortfall is recorded as a reserve. For PCD loans, the expected cash flows are calculated for each loan pool, pool reserve is calculated by aggregating total loss from the UDCF. Expected cash flows are resulted from applying the contractual payment term, probability of defaults, loss given defaults, and prepayment assumptions.

Current wording

OFG applied a discounted cash flow (“DCF”) method for non-purchased credit deteriorated loans (“non-PCD”) and an undiscounted cash flow (“UDCF”) method for purchased credit deteriorated (“PCD”) loans to determine the ACL for loans collectively measured for impairment, except for credit cards and overdrafts which utilize a remaining life methodology. For non-PCD, the expected cash flows are calculated for each loan and discounted using the effective yield. The discounted amount of expected cash flows is compared to the amortized cost, and any shortfall is recorded as a reserve. For PCD loans, the expected cash flows are calculated for each loan pool, pool reserve is calculated by aggregating total loss from the UDCF. Expected cash flows are resulted from applying the probability of default (“PD”), loss given default (“LGD”), and exposure at default (“EAD”). For the EAD, OFG uses a prepayment model that projects prepayments over the life of the loans.

Previous wording

OFG’s sensitivity analysis does not represent management’s view of expected credit losses at December 31, 2023. OFG evaluated sensitivities by applying 100% weight to baseline and moderate recession scenarios. The impact of assigning a 100% weight to the baseline scenario was a hypothetical decrease of 4% to the collective ACL, and the impact of assigning a 100% weight to the moderate recession scenario was a hypothetical increase of 6% to the collective ACL. These hypothetical sensitivities do not incorporate the impact of management’s judgment for qualitative factors applied in the current ACL for loans. It is possible that others performing similar sensitivity analyses could reach different conclusions or results. The sensitivity analysis excludes the ACL for off-balance sheet credit exposures.

Current wording

OFG’s sensitivity analysis does not represent management’s view of expected credit losses at December 31, 2024. OFG evaluated sensitivities by applying 100% weight to baseline and moderate recession scenarios. The impact of assigning a 100% weight to the baseline scenario was a hypothetical decrease of 2% to the collective ACL, and the impact of assigning a 100% weight to the moderate recession scenario was a hypothetical increase of 3% to the collective ACL. These hypothetical sensitivities do not incorporate the impact of management’s judgment for qualitative factors applied in the current ACL for loans. It is possible that others performing similar sensitivity analyses could reach different conclusions or results. The sensitivity analysis excludes the ACL for off-balance sheet credit exposures.

Previous wording

Earnings per share diluted was $3.83 in 2023 compared to $3.44 in 2022. Total core revenues of $682.7 million in 2023 compared to $607.8 million in 2022.

Current wording

Earnings per share diluted was $4.23 compared to $3.83 in 2023. Total net income of $198.2 million compared to $181.9 million in 2023.

Previous wording

Performance metrics: Net interest margin of 5.62%, return on average assets of 1.76%, return on average tangible common stockholders’ equity of 18.22%, and efficiency ratio of 53.59%.

Current wording

Performance metrics: Net interest margin of 5.40%, return on average assets of 1.75%, return on average stockholders’ equity of 15.43%, and efficiency ratio of 54.82%.

Previous wording

Total interest expense of $32.7 million compared to $23.9 million in the third quarter of 2023 and $10.4 million in the fourth quarter of 2022. Compared to the third quarter of 2023, the fourth quarter of 2023 reflected increases of $4.0 million in the cost of average core deposits and $4.8 million in the cost of average wholesale funding, primarily due to temporarily higher balances of borrowings and brokered deposits during the quarter.

Current wording

Total Interest Expense of $41.0 million compared to $41.2 million in the third quarter of 2024 and $32.7 million in the fourth quarter of 2023. Compared to the third quarter of 2024, the fourth quarter of 2024 decreased $0.1 million, primarily reflecting slightly lower average balances and costs of core deposits and higher average balances of borrowings and brokered deposits.

Previous wording

Credit quality: Net charge-offs of $16.3 million compared to $18.8 million in the third quarter of 2023 and $11.2 million in the fourth quarter of 2022. The fourth quarter of 2023 early and total delinquency rates were 2.76% and 3.76%, respectively, in line with the third quarter of 2023. The non-performing loan rate of 1.22% was the lowest over the last five quarters.

Current wording

Credit Quality: Net charge-offs (“NCOs”) of $15.9 million (0.82% of average loans) compared to $17.1 million (0.90%) in the third quarter of 2024 and $16.3 million (0.88%) in the fourth quarter of 2023. NCOs benefited from the above-mentioned sale of auto and consumer loans. The fourth quarter of 2024 early and total delinquency rates were 2.95% and 4.38%, respectively. The nonperforming loan rate was 1.06%.

Previous wording

Cash and cash equivalentsof $748.2 million compared to $532.7 million in the third quarter of 2023 and $550.5 million in the fourth quarter of 2022.

Current wording

Cash and Cash Equivalentsof $591.1 million compared to $680.6 million in the third quarter of 2024 and $748.2 million in the fourth quarter of 2023.

Previous wording

Capital: CET1 ratio of 14.12% compared to 14.06% in the third quarter of 2023 and 13.64% in the fourth quarter of 2022. The Tangible Common Equity ratio was 9.68% compared to 9.74% in the third quarter of 2023 and 9.59% in the fourth quarter of 2022. Tangible Book Value per share of $23.13 compared to $21.01 in the third quarter of 2023 and $19.56 in the fourth quarter of 2022. The fourth quarter of 2023 Tangible Book Value reflected increased retained earnings and accumulated other comprehensive income.

Current wording

Capital: CET1 ratio was 14.26% compared to 14.37% in the third quarter of 2024 and 14.12% in the fourth quarter of 2023. The Tangible Common Equity ratio was 10.13% compared to 10.72% in the third quarter of 2024 and 9.68% in the fourth quarter of 2023. Tangible Book Value per share was $25.43 compared to $26.15 in the third quarter of 2024 and $23.13 in the fourth quarter of 2023. Tangible Book Value per share reflected the above-mentioned share buybacks and lower other comprehensive income.

Previous wording

Net interest income of $560.9 million increased by $78.8 million from $482.1 million. Tax equivalent basis net interest income of $576.9 million increased $80.2 million, or 16.1%, from $496.8 million.

Current wording

Net interest income of $588.4 million increased by $27.5 million from $560.9 million. Tax equivalent basis net interest income of $605.2 million increased $28.3 million, or 4.9%, from $576.9 million.

Previous wording

Interest rate spread increased by 69 basis points to 5.71% from 5.02% and net interest margin increased 74 basis points to 5.79% from 5.05%. This increase reflects an increase of 130 and 61 basis points, respectively, in the total average yield of interest-earning assets and the average cost of interest-bearing liabilities.

Current wording

Interest rate spread decreased by 42 basis points to 5.29% from 5.71% and net interest margin decreased 36 basis points to 5.43% from 5.79%. This reflects an increase of 23 and 65 basis points, respectively, in the total average yield of interest-earning assets and the average cost of interest-bearing liabilities.

Previous wording

•A $94.6 million increase in interest income from loans driven by higher interest income from: (i) commercial loans of $63.2 million, primarily related to the upward repricing of variable rate commercial loans, increased yields on new loans originated during 2023, and higher average balance; (ii) consumer loans of $12.0 million mainly due to an increase of $98.7 million in the average balance of this portfolio; and (iii) auto loans of $28.0 million reflecting higher originations during 2023, partially offset by a decrease of $8.6 million in interest income from mortgage loans due to a reduction of $185.5 million in the average balance of this portfolio;

Current wording

•A $58.9 million increase in interest income from loans driven by higher interest income from: (i) commercial loans of $28.3 million, primarily related to the upward repricing of variable rate commercial loans, increased yields on new loans originated during 2024, and higher average balance; (ii) auto loans of $29.9 million reflecting higher originations during 2024; and (iii) consumer loans of $7.3 million mainly due to an increase of $56.9 million in the average balance of this portfolio. These increases were partially offset by a decrease of $6.7 million in interest income from mortgage loans due to a reduction of $135.4 million in the average balance of this portfolio, mainly from regular paydowns and the securitization and sale of conforming loans; and

Previous wording

•A $22.0 million increase in interest income from investment securities, primarily related to a higher average volume of $346.1 million, which resulted in an increase in interest income of approximately $10.0 million, and higher yield by 68 basis points, which contributed to the increase in net interest income by approximately $12.0 million; and

Current wording

•A $42.4 million increase in interest income from investment securities, primarily due to the acquisition of higher-yield investment securities in 2023 and 2024. Purchases contributed to higher average volume of $650.3 million, which resulted in an increase in interest income of $22.9 million, and higher yield by 83 basis points, which contributed to the increase in net interest income of $19.4 million.

Previous wording

These increases in non-interest income were partially offset by, an increase of $1.5 million in other non-interest income. During 2023, OFG recorded a $6.3 million gain on the sale of commercial non-performing loans held-for-sale with a reporting balance of $4.3 million and unpaid principal balance of $25.3 million. Results for 2022 also included a $4.7 million gain recognized on the sale of a branch building.

Current wording

•A $6.3 million gain on the sale of commercial non-performing loans HFS in 2023.

Previous wording

•A $1.1 million loss associated with the sale of a $203.3 million short-term US treasury note available for sale during 2023; and

Current wording

•A $1.1 million loss associated with the sale of a $149.4 million short-term US treasury note AFS in 2023.

Previous wording

Non-interest expense was $363.4 million, representing an increase of 5.2%, or $17.8 million, compared to $345.5 million. The increase in non-interest expense was mainly due to:

Current wording

Non-interest expense was $375.7 million, representing an increase of 3.4%, or $12.3 million, compared to $363.4 million. The increase in non-interest expense was mainly due to:

Previous wording

The efficiency ratio was 53.22%, an improvement from 56.85%. Amounts presented as part of non-interest income that were excluded from the efficiency ratio computation for years ended December 31, 2023 and 2022 amounted to $6.5 million and $6.0 million, respectively.

Current wording

The efficiency ratio was 52.94%, an improvement from 53.22%. The efficiency ratio measures how much of OFG’s revenues is used to pay operating expenses. OFG computes its efficiency ratio by dividing non-interest expenses by the sum of its net interest income and non-interest income, but excluding gains (losses) on the sale of investment securities, other gains and losses, and other income that may be considered volatile in nature. Management believes that the exclusion of those items permits consistent comparability. Amounts presented as part of non-interest income that were excluded from the efficiency ratio computation for years ended December 31, 2024 and 2023 amounted to $2.1 million and $6.5 million, respectively.

Previous wording

Provision for credit losses increased $36.5 million to $60.6 million from $24.1 million. The provision for credit losses for 2023 reflected a provision of $42.6 million related to the growth in loan balances, a provision of $13.1 million related to commercial-specific loan reserves, mainly in the US commercial loan portfolio, and $4.8 million associated with qualitative adjustments mostly to the auto loan and US commercial loan portfolios.

Current wording

The provision for credit losses for 2023 reflected a provision of $42.6 million related to the growth in loan balances, a provision of $13.1 million related to commercial-specific loan reserves, mainly in the US commercial loan portfolio, and $4.8 million associated with qualitative adjustments mostly to the auto loan and US commercial loan portfolios.

Previous wording

OFG segregates its businesses into the following segments: Banking, Wealth Management, and Treasury. Management established the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors such as OFG’s organization, nature of its products, distribution channels and economic characteristics of its services were also considered in the determination of the reportable segments. OFG measures the performance of these reportable segments based on pre-established goals of different financial parameters such as net income, net interest income, loan production, and fees generated. OFG’s methodology for allocating non-interest expenses among segments is based on several factors such as revenue, employee headcount, occupied space, dedicated services or time, among others. Following are the results of operations and the selected financial information by operating segment for 2023 and 2022.

Current wording

OFG segregates its businesses into the following segments: Banking, Wealth Management, and Treasury. Management established the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors such as OFG’s organization, nature of its products, distribution channels and economic characteristics of its services were also considered in the determination of the reportable segments. OFG measures the performance of these reportable segments based on net income. OFG’s methodology for allocating expenses for corporate services among segments is based on several factors such as revenue, employee headcount, occupied space, dedicated services or time, among others. Following are the results of operations and the selected financial information by operating segment for 2024 and 2023.

Previous wording

Eliminations include interest income and expense for a time deposit opened by the Bank in Oriental Overseas, an international banking entity organized pursuant to the Puerto Rico International Banking Center Regulatory Act, as amended, which operates as a unit within the Bank. The time deposit with a balance of $300.3 million and $470.2 million at December 31, 2023 and 2022, respectively, is included in the Treasury Segment with its corresponding interest expense, to fund Oriental Overseas operations, which is included in the Banking Segment with its corresponding interest income, and are eliminated in the consolidation. Interest income is accrued on the unpaid principal balance. The increase in interest income and interest expense from the prior year was mainly as a result of the FRB federal funds rate increases and higher average balance.

Current wording

Eliminations include interest income and expense for a time deposit opened by the Bank in Oriental Overseas, the IBEunit, which operates within the Bank. The time deposit with a balance of $278.4 million and $300.3 million at December 31, 2024 and 2023, respectively, to fund Oriental Overseas operations is included in the Treasury Segment with its corresponding interest expense, and the related interest income is included in the Banking Segment, and are eliminated in the consolidation. Interest income is accrued on the unpaid principal balance. The decrease in interest income and interest expense from the prior year period was mainly as a result of lower interest rate and average balance.

Previous wording

OFG’s banking segment net income before taxes increased by $1.7 million from $186.6 million to $188.3 million, mainly reflecting:

Current wording

OFG’s banking segment net income before taxes decreased by $65.8 million from $188.3 million to $122.6 million, mainly due to:

Previous wording

•Increase of $7.9 million in interest income related to Oriental Overseas’ time deposit from the Bank to fund its operations, which is eliminated in the consolidation, mainly as a result of higher average unpaid principal balance and interest rates in the current period.

Current wording

•Decrease of $10.4 million in interest income related to Oriental Overseas’ time deposit from the Bank to fund its operations, which is eliminated in the consolidation, mainly as a result of lower interest rates and average balance in the current period; and

Previous wording

The increase in the banking segment’s net income was partially offset by:

Current wording

The decrease in the banking segment’s net income was partially offset by:

Previous wording

•Increase of $94.6 million in interest income from loans, driven by increased yields on higher loan balances; and

Current wording

•Increase of $58.9 million in interest income from loans, driven by increased yields on higher loan balances.

Previous wording

Treasury segment net income before taxes increased by $16.2 million, mainly reflecting:

Current wording

Treasury segment net income before taxes increased by $52.4 million, mainly reflecting:

Previous wording

•Increase of $38.5 million in interest income, reflecting the purchase of agency mortgage-backed securities and US Treasury securities during such period and higher yield in lower balances of interest-bearing cash and money market investments related to higher FRB federal funds rate than in the previous year;

Current wording

•Increase of $39.5 million in interest income, reflecting the purchase of agency mortgage-backed securities and US Treasury securities with higher yields during 2024 and 2023; and

Previous wording

At December 31, 2023, OFG’s total assets amounted to $11.344 billion, an increase of $1.526 billion, when compared to $9.819 billion at December 31, 2022.

Current wording

At December 31, 2024, OFG’s total assets amounted to $11.501 billion, an increase of $156.2 million, when compared to $11.344 billion at December 31, 2023.

Previous wording

The investment portfolio increased by $715.2 million or 36.3% primarily driven by the purchase of$1.035 billion of mortgage-backed securities, $93.6 million in mortgage loan securitization, the purchase of a $35 million two-year privately placed hospital revenue bond issued by the Puerto Rico, Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority (“AFICA”, by its Spanish acronym) during the fourth quarter of 2023, and favorable market value adjustments of $31.5 million, partially offset by the sale of a $203.3 million US Treasury securities available for sale, the maturity and repayment of $111.5 million U.S. Treasury notes and principal paydowns on mortgage-backed securities totaling $162.0 million. OFG’s investment strategy focuses on liquidity and highly liquid securities, considering their investment and the current market environment.

Current wording

The investment portfolio increased by $33.5 million or 1.2% primarily driven by $1.326 billion new available-for-sale US Treasury and mortgage-backed securities, and $74.7 million in mortgage loan securitization. These increases were offset by the maturity of $901.7 million in US Treasury securities, principal paydowns of $310.8 million, mainly on mortgage-backed securities, and the sale of $149.4 million of US Treasury securities available-for-sale. OFG’s investment strategy focuses on liquidity and highly liquid securities, considering their investment and the current market environment.

Previous wording

OFG’s loan portfolio is comprised of commercial loans secured by real estate, other commercial and industrial loans, US commercial loans, residential mortgage loans, consumer loans, and auto loans. At December 31, 2023, OFG’s net loan portfolio increased by $678.4 million or 10.1% reflecting increases in commercial, auto and consumer loans, partially offset by a decrease in residential mortgage loans.

Current wording

OFG’s loan portfolio is comprised of Puerto Rico residential mortgage loans, consumer loans, auto loans, commercial loans secured by real estate, other commercial and industrial loans, and commercial US loans. At December 31, 2024, OFG’s net loan portfolio increased by $232.2 million or 3.1% reflecting increases in commercial, retail auto and consumer loans, partially offset by regular paydowns and securitization of residential mortgage loans.

Previous wording

At December 31, 2023, OFG’s financial assets include those managed by OFG’s trust division and its securities broker-dealer and insurance agency subsidiaries. OFG’s trust division offers various types of individual retirement accounts (“IRAs”) and manages Keogh retirement plans and custodian and corporate trust accounts. At December 31, 2023 and 2022, the total assets managed by OFG’s trust division amounted to $2.512 billion and $2.335 billion, respectively. OFG’s broker-dealer subsidiary offers a wide array of investment alternatives to its client base, such as tax-advantaged fixed income securities, mutual funds, stocks, bonds and money management wrap-fee programs. At December 31, 2023, total assets managed by the securities broker-dealer and insurance agency subsidiaries from their customers’ investment accounts amounted to $2.446 billion, compared to $2.172 billion at December 31, 2022. Changes in trust and broker-dealer related assets also reflect changes in portfolio balances and differences in market value resulting from the increase in interest rates.

Current wording

At December 31, 2024, OFG’s financial assets include those managed by OFG’s trust division and its securities broker-dealer and insurance agency subsidiaries. OFG’s trust division offers various types of individual retirement accounts (“IRAs”) and manages retirement plans and custodian and corporate trust accounts. At December 31, 2024 and 2023, the total assets managed by OFG’s trust division amounted to $2.262 billion and $2.512 billion, respectively. OFG’s broker-dealer subsidiary offers a wide array of investment alternatives to its client base, such as tax-advantaged fixed income securities, mutual funds, stocks, bonds and money management wrap-fee programs. At December 31, 2024, total assets managed by the securities broker-dealer and insurance agency subsidiaries from their customers’ investment accounts amounted to $2.247 billion, compared to $2.446 billion at December 31, 2023. The decrease in trust and broker-dealer related assets reflects the termination of services by a retirement plan customer during 2024.

Previous wording

OFG’s loan portfolio is composed of commercial, mortgage, consumer, and auto loans. As shown in Table 6 above, total loans, net, amounted to $7.402 billion at December 31, 2023, a 10.1% increase when compared to $6.723 billion at December 31, 2022. The composition and trends of OFG’s loans held-for-investment portfolio were as follows:

Current wording

OFG’s loan portfolio is composed of commercial, mortgage, consumer, and auto loans. As shown in Table 6 above, total loans, net, amounted to $7.634 billion at December 31, 2024, a 3.1% increase when compared to $7.402 billion at December 31, 2023. The composition and trends of OFG’s loans held-for-investment portfolio were as follows:

Previous wording

•Commercial loan portfolio amounted to $3.077 billion (40.8% of the gross loan portfolio) compared to $2.630 billion (38.5% of the gross loan portfolio) at December 31, 2022. Commercial loans secured by non-owner occupied commercial real estate amounted to $744.6 million and $605.5 million at December 31, 2023 and December 31, 2022, respectively, which represented 9.9% and 8.9% of our total loan portfolio held for investment. US commercial loans amounted to $755.2 million and $642.1 million at December 31, 2023 and 2022, respectively, which represented 10.0% and 9.4% of our total loan portfolio held for investment. Commercial loan production increased 12%, or $118.0 million, to $1,108.3 million in 2023 from $990.3 million in 2022.

Current wording

•Commercial loan portfolio amounted to $3.103 billion (39.8% of the gross loan portfolio) compared to $3.077 billion (40.8% of the gross loan portfolio) at December 31, 2023, a 0.9% increase as a result of originations and credit lines usage during 2024. Commercial loans secured by non-owner occupied commercial real estate amounted to $796.9 million and $744.6 million at December 31, 2024 and 2023, respectively, which represented 10.2% and 9.9% of our total gross loan portfolio held for investment. Commercial US loans amounted to $704.1 million and $755.2 million at December 31, 2024 and 2023, respectively, which represented 9.0% and 10.0% of our total gross loan portfolio held for investment.

Previous wording

•Mortgage loan portfolio amounted to $1.563 billion (20.7% of the gross loan portfolio) compared to $1.704 billion (24.9% of the gross originated loan portfolio) at December 31, 2022. Mortgage loans included delinquent loans in the GNMA buy-back option program amounting to $19.4 million and $32.6 million at December 31, 2023 and 2022, respectively. Under the GNMA program, issuers such as OFG have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase option are required to be reflected (rebooked) on our financial statements with an offsetting liability. Mortgage loan production totaled $133.0 million in 2023 which represents a decrease of 34% from $200.9 million in 2022.

Current wording

•Mortgage loan portfolio amounted to $1.471 billion (18.9% of the gross loan portfolio) compared to $1.563 billion (20.7% of the gross originated loan portfolio) at December 31, 2023, a 5.9% decrease resulting from regular paydowns of residential mortgages and securitization of conforming loans into mortgage-backed securities. Mortgage loans included delinquent loans in the GNMA buy-back option program amounting to $48.6 million and $19.4 million at December 31, 2024 and December 31, 2023, respectively. In 2024, OFG acquired the servicing rights to a $1.7 billion mortgage loan portfolio that was being subserviced by the Bank. At the time of acquisition, defaulted loans under the GNMA buy-back option program corresponding to this servicing portfolio amounted to $24.2 million. Under the GNMA program, issuers such as OFG have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase option are required to be reflected (rebooked) on our financial statements with an offsetting liability.

Previous wording

This decrease reflects the negative impact of the FRB federal funds rate increases during 2022 and 2023 in the Puerto Rico housing market. OFG follows a conservative residential mortgage lending policy with more than 90% of its residential mortgage portfolio consisting of fixed-rate, fully amortizing, fully documented loans that do not have the level of risk associated with subprime loans offered by certain major US mortgage loan originators. Furthermore, OFG has never been active in negative amortization loans or offered adjustable-rate mortgage loans with teaser rates.

Current wording

OFG follows a conservative residential mortgage lending policy with more than 90% of its residential mortgage portfolio consisting of fixed-rate, fully amortizing, fully documented loans that do not have the level of risk associated with subprime loans offered by certain major US mortgage loan originators. Furthermore, OFG has never been active in negative amortization loans or offered adjustable-rate mortgage loans with teaser rates.

Previous wording

•Consumer loan portfolio amounted to $620.4 million (8.2% of the gross loan portfolio) compared to $537.3 million (7.9% of the gross loan portfolio) at December 31, 2022. Consumer loan production decreased 6% to $313.6 million in 2023 from $334.2 million in 2022.

Current wording

•Consumer loan portfolio amounted to $668.6 million (8.6% of the gross loan portfolio) compared to $620.4 million (8.2% of the gross loan portfolio) at December 31, 2023. Consumer loan production decreased by 3% or $9.1 million to $304.5 million in 2024 from $313.6 million in 2023.

Previous wording

•Auto loans portfolio amounted to $2.274 billion (30.3% of the gross loan portfolio) compared to $1.964 billion (28.7% of the gross originated loan portfolio) at December 31, 2022. Auto loans production increased by 13%, or $107.1 million to $919.7 million in 2023 from $812.6 million in 2022.

Current wording

•Auto loans portfolio amounted to $2.549 billion (32.7% of the gross loan portfolio) compared to $2.274 billion (30.3% of the gross originated loan portfolio) at December 31, 2023. Auto loans production increased by 4% or $37.1 million to $956.8 million in 2024 from $919.7 million in 2023.

Previous wording

The following table includes the maturities of OFG’s lending exposure to the Puerto Rico government amounting to $68.6 million, which is limited solely to loans to municipalities secured by ad valorem property taxes, without limitation as to rate or amount, on all taxable property within the issuing municipalities. The good faith, credit and unlimited taxing power of each issuing municipality are pledged for the payment of its general obligations. Deposits from the Puerto Rico government totaled $1,616.3 million at December 31, 2023.

Current wording

The following table includes the maturities of OFG’s lending exposure to the Puerto Rico government amounting to $66.4 million, which is limited solely to loans to municipalities secured by ad valorem property taxes, without limitation as to rate or amount, on all taxable property within the issuing municipalities. The good faith, credit and unlimited taxing power of each issuing municipality are pledged for the payment of its general obligations. Deposits from the Puerto Rico government totaled $1.445 billion at December 31, 2024.

Previous wording

At December 31, 2023, OFG has $68.6 million of direct credit exposure to the Puerto Rico government, a $5.1 million decrease from $73.7 million in December 31, 2022.

Current wording

At December 31, 2024, OFG has $66.4 million of direct credit exposure to the Puerto Rico government, a $2.1 million decrease from $68.6 million at December 31, 2023.