OFG BANCORP

Previous wording

Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Item I, “Financial Statements” of this quarterly report on Form 10-Q. This discussion and analysis section contains forward-looking statements. Please see “Forward-Looking Statements,” “Risk Factors,” and “Quantitative and Qualitative Disclosures about Market Risk” in this quarterly report on Form 10-Q for the quarter ended September 30, 2024 and set forth in our annual report for the year ended December 31, 2023 (the “2023 Form 10-K”), as supplemented and amended by any subsequent quarterly reports on Form 10-Q, for a discussion of the uncertainties, risks and assumptions associated with these statements.

Current wording

Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Item I, “Financial Statements” of this quarterly report on Form 10-Q. This discussion and analysis section contains forward-looking statements. Please see “Forward-Looking Statements,” “Risk Factors,” and “Quantitative and Qualitative Disclosures about Market Risk” in this quarterly report on Form 10-Q for the quarter ended March 31, 2025 and set forth in OFG’s annual report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Form 10-K”), as supplemented and amended by any subsequent quarterly reports on Form 10-Q, for a discussion of the uncertainties, risks and assumptions associated with these statements.

Previous wording

OFG is a publicly-owned financial holding company that provides wide range of banking and financial services such as commercial, consumer, auto, and mortgage lending, financial planning, insurance sales, investment advisory and securities brokerage services, as well as corporate and individual trust services. It operates through three business segments: Banking, Wealth Management, and Treasury, and distinguishes itself based on quality service. OFG conducts its business through its main office in San Juan, Puerto Rico, forty-two branches in Puerto Rico and two branches in the U.S. Virgin Islands (the “USVI”). It has five subsidiaries with operations in Puerto Rico: the Bank, Oriental Financial Services, Oriental Insurance, OIB and OBPEF; two subsidiaries in the United States, OFG USA and OFG Ventures; and one subsidiary in the Cayman Islands, OFG Reinsurance. OFG’s long-term goal is to strengthen its banking and financial services franchise by expanding its lending businesses, increasing the level of integration in the marketing and delivery of banking and financial services, continuously improving our already effective asset-liability management, growing non-interest revenue from banking and financial services, as well as achieving greater operating efficiencies.

Current wording

OFG is a publicly-owned financial holding company that provides a wide range of banking and financial services such as commercial, consumer, auto, and mortgage lending, financial planning, insurance sales, investment advisory and securities brokerage services, as well as corporate trust services. It operates through three business segments: Banking, Wealth Management, and Treasury, and distinguishes itself based on quality service. OFG conducts its business through its main office in San Juan, Puerto Rico, forty-two branches in Puerto Rico and two branches in the U.S. Virgin Islands (the “USVI”). It has five subsidiaries with operations in Puerto Rico: the Bank, Oriental Financial Services, Oriental Insurance, OIB and OBPEF; two subsidiaries in the United States, OFG USA and OFG Ventures; and one subsidiary in the Cayman Islands, OFG Reinsurance. OFG’s long-term goal is to strengthen its banking and financial services franchise by expanding its lending businesses, increasing the level of integration in the marketing and delivery of banking and financial services, continuously improving our already effective asset-liability management, growing non-interest revenue from banking and financial services, as well as achieving greater operating efficiencies.

Previous wording

In October 2024, OFG announced that its Board of Directors approved a new $50.0 million stock repurchase program, in addition to the stock repurchase program approved in January 2024. The October stock repurchase program is open-ended. In January 2024, the 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 ended March 31, 2024, and a $50.0 million stock repurchase program. The January stock repurchase program, which is open-ended, replaced the prior stock repurchase approved by the Board of Directors in January 2022, which had $17.2 million remaining of its $100.0 million repurchase parameters. During the nine-month period ended September 30, 2024, OFG repurchased 671,800 shares for a total of $24.4 million at an average price of $36.30 per share.

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 ended March 31, 2025.

Previous wording

We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary based on changing conditions. As part of OFG’s continuous enhancement to the allowance for credit losses methodology, during the nine-month period ended September 30, 2024, an assessment of the weight of probability scenarios for the US loan segment was performed and updated to use a higher probability level in the moderate recessionary scenario. This change in the allowance for credit losses is considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively. Apart from the foregoing change, there have been no material changes in the methods that we used to formulate these critical accounting estimates from those discussed in our 2023 Form 10-K.

Current wording

We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary based on changing conditions. There have been no material changes in the methods that we used to formulate these critical accounting estimates from those discussed in our 2024 Form 10-K.

Previous wording

Performance metrics: Net interest margin of 5.43%, return on average assets of 1.66%, return on average tangible common stockholders’ equity of 15.94%, and efficiency ratio of 52.60%.

Current wording

Performance metrics: Net interest margin of 5.42%, return on average assets of 1.56%, return on average tangible common stockholders’ equity of 15.28%, and efficiency ratio of 52.42%.

Previous wording

Customer Depositsof $9.53 billion compared to $9.60 billion in the second quarter of 2024 and $8.54 billion in the third quarter of 2023. Compared to the second quarter of 2024, the third quarter of 2024 reflected increases in savings and time deposits, and lower demand deposits.

Current wording

Customer Depositsof $9.76 billion increased $308.4 million from $9.45 billion in the fourth quarter of 2024 and $211.5 million from $9.55 billion in the first quarter of 2024. Compared to the fourth quarter of 2024, the first quarter of 2025 reflected increases in demand, savings and time deposits, from commercial, government, and retail accounts.

Previous wording

Cash and Cash Equivalentsof $680.6 million compared to $740.4 million in the second quarter of 2024 and $532.7 million in the third quarter of 2023.

Current wording

Cash and Cash Equivalentsof $710.6 million compared to $591.1 million in the fourth quarter of 2024 and $754.4 million in the first quarter of 2024.

Previous wording

Capital: CET1 ratio was 14.37% compared to 14.29% in the second quarter of 2024 and 14.06% in the third quarter of 2023. The Tangible Common Equity ratio was 10.72% compared to 10.09% in the second quarter of 2024 and 9.74% in the third quarter of 2023. Tangible Book Value of $26.15 per share compared to $24.18 in the second quarter of 2024 and $21.01 in the third quarter of 2023.

Current wording

Capital: CET1 ratio was 14.27% compared to 14.26% in the fourth quarter of 2024 and 14.45% in the first quarter of 2024. Tangible Common Equity ratio was 10.30% compared to 10.13% in the fourth quarter of 2024 and 10.06% in the first quarter of 2024. Tangible Book Value per share was $26.66 compared to $25.43 in the fourth quarter of 2024 and $23.55 in the first quarter of 2024.

Previous wording

The following tables show major categories of interest-earning assets and interest-bearing liabilities, their respective interest income, expenses, yields and costs, and their impact on net interest income due to changes in volume and rates for the quarters and nine-month periods ended September 30, 2024 and 2023.

Current wording

The following tables show major categories of interest-earning assets and interest-bearing liabilities, their respective interest income, expenses, yields and costs, and their impact on net interest income due to changes in volume and rates for the quarters ended March 31, 2025 and 2024.

Previous wording

Net interest income of $147.9 million increased $6.1 million from $141.8 million. Tax equivalent basis net interest income of $153.2 million increased $7.9 million, or 5.5%, from $145.2 million.

Current wording

Net interest income of $149.1 million increased $5.0 million from $144.1 million. Tax equivalent basis net interest income of $152.7 million increased $4.5 million, or 3.0%, from $148.2 million.

Previous wording

Interest rate spread decreased by 48 basis points to 5.30% from 5.78% and net interest margin decreased 41 basis points to 5.44% from 5.85%. This reflects a an increase of 32 and 80 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 increased 1 basis points to 5.27% from 5.26% and net interest margin increased 2 basis points to 5.42% from 5.40%. This reflects an increase of 1 basis point in the total average yield of interest-earning assets.

Previous wording

•A $12.3 million increase in interest income from loans, primarily driven by: (i) higher interest income of $7.0 million from auto loans, mainly due to an increase in the average balance of this portfolio by $281.6 million from new loans originated; (ii) higher interest income of $5.1 million from commercial loans, reflecting the upward repricing of variable rate loans and increased yields on new loans originated during 2024; and (iii) higher interest income of $1.6 million from consumer loans, mainly due to an increase in the average balance of this portfolio by $50.9 million. These increases were partially offset by lower interest income of $1.4 million from residential mortgage loans, reflecting a decrease in the average balance of this portfolio by $129.8 million, mainly from regular paydowns and the securitization and sale of conforming loans; and

Current wording

•A $3.8 million increase in interest income from loans, primarily driven by: (i) higher interest income of $5.6 million from auto loans, mainly due to an increase in the average balance of this portfolio by $265.7 million from new loans originated; and (ii) higher interest income of $1.2 million from consumer loans, mainly due to an increase in the average balance of this portfolio by $40.7 million. These increases were partially offset by lower interest income of: (i) $1.4 million from commercial loans, reflecting the repricing of variable rate loans at lower market rates; and (ii) $1.6 million from residential mortgage loans, reflecting a decrease in the average balance of this portfolio by $106.3 million, mainly from regular paydowns and the securitization and sale of conforming loans; and

Previous wording

•A $11.7 million increase in interest income from investments securities, primarily due to the acquisition of higher-yield investment securities during 2024 and late 2023. It reflects higher yield by 90 basis points, which contributed to an increase in interest income of approximately $5.3 million and higher average volume of $742.0 million, resulting in an increase in interest income of approximately $6.4 million.

Current wording

•A $3.7 million increase in interest income from investments securities, primarily due to the acquisition of higher-yield investment securities. It reflects higher yield by 27 basis points, which contributed to an increase in interest income of approximately $2.0 million and higher average volume of $176.6 million, resulting in an increase in interest income of approximately $1.6 million.

Previous wording

OFG recorded non-interest income, net, in the amount of $26.9 million, compared to $30.7 million, a decrease of 12.5%, or $3.8 million. The decrease in non-interest income was mainly due to the net effect of:

Current wording

OFG recorded non-interest income, net, in the amount of $29.5 million, compared to $30.3 million, a decrease of 2.7%, or $831 thousand. The decrease in non-interest income was mainly due to the net effect of:

Previous wording

•A $1.7 million decrease in banking service revenues related to: (i) $2.7 million in reduced interchange fees mainly due to the implementation of Durbin Amendment that took effect during the current quarter, offset by higher merchant income of $417 thousand resulting from higher transactionality and migration of USVI merchant activity.

Current wording

•A $1.3 million decrease in banking service revenues mainly driven by reduced interchange fees due to the implementation of Durbin Amendment that took effect in July 1, 2024, partially offset by an increase in: (i) merchant income of $431 thousand from higher volume of transactions, and (ii) a merchant business sponsorship commissions payment of $188 thousand received during the current quarter;

Previous wording

Non-interest expense was $91.6 million, representing an increase of 1.6% or $1.4 million, compared to $90.2 million. The increase in non-interest expense was mainly due to:

Current wording

Non-interest expense was $93.5 million, representing an increase of 2.2% or $2.0 million, compared to $91.4 million. The increase in non-interest expense was mainly due to:

Previous wording

The increase in non-interest expense was partially offset by, a decrease in professional and service fees of $1.1 million, reflecting lower balances in compliance-related expenses.

Current wording

•Increase of $1.1 million in professional and service fees reflecting higher compliance-related expenses;

Previous wording

•Increase of$335 thousand in taxes, other than payroll and income taxes related to higher municipal taxes recorded during the quarter.

Current wording

•Increase of $483 thousand in taxes, other than payroll and income taxes, mainly related to higher municipal taxes; and

Previous wording

•Increase of $2.8 million in foreclosed real estate and other repossessed assets expenses, net of income, due to unfavorable valuation adjustments and lower gain on sale of foreclosed real estate due to lower volume of properties sold;

Current wording

•Increase of $360 thousand in foreclosed real estate and other repossessed assets expenses, net of income, due to lower gain on sale of foreclosed real estate from lower volume of properties sold.

Previous wording

The efficiency ratio was 52.60% compared to 52.36%. 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 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 adjusted efficiency ratio computation for the quarters ended September 30, 2024 and 2023 amounted to$597 thousand and $295 thousand, respectively.

Current wording

The efficiency ratio was 52.42% compared to 52.49%. 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 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 adjusted efficiency ratio computation for the quarters ended March 31, 2025 and 2024 amounted to $305 thousand and $289 thousand, respectively.

Previous wording

Income tax expense for the quarter ended September 30, 2024 decreased by $6.2 million to $14.8 million from $21.0 million. OFG maintained an effective tax rate (“ETR”) lower than the statutory rate for the quarters ended September 30, 2024 and 2023 of 23.9% and 31.9%, respectively. The current quarter reflected expected 2024 ETR of 26.8% due to higher forecasted business activities with preferential tax treatment under the Puerto Rico tax code, coupled with discrete benefits of $3.1 million mainly related to stock vested during the first quarter of 2024 and tax credit purchases.

Current wording

Income tax expense for the quarter ended March 31, 2025 decreased by $4.3 million to $13.9 million from $18.2 million. OFG maintained an effective tax rate lower than the statutory rate for the quarters ended March 31, 2025 and 2024 of 23.3% and 26.8%, respectively. The decrease is mainly related to investment subject to preferential tax treatment under the PR Code, a discrete tax windfall on stock options, and release of unrecognized tax benefits during the current period.

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 the quarters and nine-month periods ended September 30, 2024 and 2023.

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 the quarters ended March 31, 2025 and 2024.

Previous wording

Eliminations include interest income and expense for a time deposit opened by the Bank in Oriental Overseas, an international banking entity organized and licensed under Puerto Rico law, which operates as a unit within the Bank. The time deposit with a balance of $277.4 million and $308.9 million at September 30, 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.

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 $279.6 million and $301.4 million at March 31, 2025 and 2024, 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 increase in interest income and interest expense from the prior year period was mainly as a result of higher interest rate.

Previous wording

OFG’s banking segment net income before taxes decreased by $17.5 million from $46.8 million to $29.3 million, mainly due to:

Current wording

OFG’s banking segment net income before taxes decreased by $9.3 million from $37.4 million to $28.1 million, mainly due to:

Previous wording

•Increase of $5.1 million in provision for credit losses, mainly due to growth in loan balances;

Current wording

•Increase of $10.5 million in provision for credit losses, mainly due to growth in loan balances; and

Previous wording

•Decrease of $4.1 million in non-interest income primarily related to lower interchange fees of $2.7 million due to the implementation of Durbin Amendment and $2.1 million in unfavorable mortgage servicing rights valuation; and

Current wording

•Decrease of $2.4 million in non-interest income primarily related to reduced interchange fees due to the implementation of Durbin Amendment which took effect for the Bank in July 1, 2024.

Previous wording

•Increase of$10.3 million in interest income from loans, driven by increased yields on higher balances.

Current wording

•Increase of$4.0 million in interest income from loans, driven by increased yields on higher balances; and

Previous wording

Wealth management segment revenue consists of commissions and fees from fiduciary activities, securities brokerage, and insurance and reinsurance activities. Net income before taxes from this segment decreased from $9.7 million to $8.9 million, mainly from higher salaries and employee benefits of $758 thousand.

Current wording

Wealth management segment revenue consists of commissions and fees from fiduciary activities, securities brokerage, and insurance and reinsurance activities. Net income before taxes from this segment increased from $2.6 million to $3.6 million, mainly from higher non interest income of $1.4 million, mainly related to higher broker-dealer fees from investment advisory service fees and mutual funds retailer fees, higher insurance income from annuities, partially offset by higher salaries and employee benefits of $601 thousand.

Previous wording

At September 30, 2024, OFG’s total assets amounted to $11.461 billion, a increase of $116.9 million, when compared to $11.344 billion at December 31, 2023.

Current wording

At March 31, 2025, OFG’s total assets amounted to $11.729 billion, an increase of $228.6 million, when compared to $11.501 billion at December 31, 2024.

Previous wording

Cash and due from banks decreased by $68.8 million to $674.7 million, reflecting the effect of loan funding and lower deposit balances.

Current wording

Cash and due from banks increased by $119.0 million to $703.5 million, reflecting higher deposit balances.

Previous wording

The investment portfolio decreased by $78.2 million or 2.9% primarily driven by the maturity of $901.7 million in US Treasury securities, principal paydowns of $208.1 million, mainly on mortgage-backed securities, and the sale of $149.4 million of US Treasury securities available-for-sale. These decreases were offset by $1.070 billion new available-for-sale US Treasury and mortgage-backed securities, and $55.7 million in mortgage loan securitization. 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 $65.7 million or 2.4% primarily driven by $100 million new available-for-sale mortgage-backed securities yielding 5.40%, and $19.2 million in mortgage loan securitization. These increases were offset by principal paydowns. 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, commercial US loans, residential mortgage loans, consumer loans, and auto loans. At September 30, 2024, OFG’s net loan portfolio increased by $203.1 million or 2.7% reflecting increases in commercial, retail auto and consumer loans, partially offset by regular paydowns and securitization of 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 March 31, 2025, OFG’s net loan portfolio increased by $54.4 million or 0.7% reflecting increases in US and Puerto Rico commercial, auto and consumer loans, partially offset by portfolio run-off.

Previous wording

At September 30, 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 Keogh retirement plans and custodian and corporate trust accounts. At September 30, 2024 and December 31, 2023, the total assets managed by OFG’s trust division amounted to $2.300 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 September 30, 2024, total assets managed by the securities broker-dealer and insurance agency subsidiaries from their customers’ investment accounts amounted to $2.254 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 the second quarter of 2024.

Current wording

At March 31, 2025, 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 and manages retirement plans and custodian and corporate trust accounts. At March 31, 2025 and December 31, 2024, the total assets managed by OFG’s trust division amounted to $2.246 billion and $2.262 billion, respectively. The decrease of $16.3 million reflects changes in current market conditions. 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 March 31, 2025, total assets managed by the securities broker-dealer and insurance agency subsidiaries from their customers’ investment accounts amounted to $2.335 billion, compared to $2.247 billion at December 31, 2024. The increase of $88.4 million in broker-dealer related assets is mainly due to new customers accounts opened during the current quarter.

Previous wording

OFG’s goodwill is not amortized to expense but is tested at least annually for impairment. A quantitative annual impairment test is not required if, based on a qualitative analysis, OFG determines that the existence of events and circumstances indicate that it is more likely than not that goodwill is not impaired. OFG completes its annual goodwill impairment test as of October 31 of each year. OFG tests for impairment by first allocating its goodwill and other assets and liabilities, as necessary, to defined reporting units. A fair value is then determined for each reporting unit. If the fair values of the reporting units exceed their book values, no write-down of the recorded goodwill is necessary. If the fair values are less than the book values, an additional valuation procedure is necessary to assess the proper carrying value of the goodwill.

Current wording

OFG’s goodwill is not amortized to expense but is tested at least annually for impairment. A quantitative annual impairment test is not required if, based on a qualitative analysis, OFG determines that the existence of events and circumstances indicate that it is more likely than not that goodwill is not impaired. OFG completes its annual goodwill impairment test as of October 31 of each year. OFG tests for impairment by first allocating its goodwill and other assets and liabilities, as necessary, to defined reporting units. A fair value is then determined for each reporting unit. If the fair values of the reporting units exceed their book values, no write-down of the recorded goodwill is necessary. If the fair values are less than the book values, an additional valuation procedure is necessary to assess the proper carrying value of the goodwill. During the quarter ended March 31, 2025, OFG performed an assessment of events or circumstances that could trigger reductions in the book value of the goodwill. Based on this assessment, no impairments were identified at March 31, 2025.

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 $7.605 billion at September 30, 2024, a 2.7% 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:

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 $7.688 billion at March 31, 2025, a 0.7% increase when compared to $7.634 billion at December 31, 2024. The composition and trends of OFG’s loans held-for-investment portfolio were as follows:

Previous wording

•Commercial loan portfolio amounted to $3.118 billion (40.2% of the gross loan portfolio) compared to $3.077 billion (40.8% of the gross loan portfolio) at December 31, 2023, a 1.3% increase as a result of originations and credit lines usage during 2024. Commercial loans secured by non-owner occupied commercial real estate amounted to $800.9 million and $744.6 million at September 30, 2024 and December 31, 2023, respectively, which represented 10.3% and 9.9% of our total gross loan portfolio held for investment. Commercial US loans amounted to $680.4 million and $755.2 million at September 30, 2024 and December 31, 2023, respectively, which represented 8.8% and 10.0% of our total gross loan portfolio held for investment.

Current wording

•Commercial loan portfolio amounted to $3.153 billion (40.2% of the gross loan portfolio) compared to $3.103 billion (39.8% of the gross loan portfolio) at December 31, 2024, a 1.6% increase as a result of originations and credit lines usage during the first quarter of 2025. Commercial loans secured by non-owner occupied commercial real estate amounted to $807.3 million and $796.9 million at March 31, 2025 and December 31, 2024, respectively, which represented 10.3% and 10.2% of our total gross loan portfolio held for investment. Commercial US loans amounted to $727.4 million and $704.1 million at March 31, 2025 and December 31, 2024, respectively, which represented 9.3% and 9.0% of our total gross loan portfolio held for investment.

Previous wording

Commercial loan production decreased by 2% or $3.4 million to $217.0 million in the third quarter of 2024 from $220.4 million in the prior year quarter, and decreased 17% or $130.3 million to $640.0 million in the nine-month period ended September 30, 2024 from $770.4 million for the same period of 2023, mainly in the commercial US loan portfolio. Commercial US loans activities include the purchase of middle market senior secured cash flow loan participations and the purchase of participations of loans to small and medium sized businesses. Excluding commercial US loans activities, commercial PR loan production slightly decreased 0.2% to $149.9 million in the third quarter of 2024 from $150.1 million in the prior year quarter, and increased 13.8% to $528.4 million in the nine-month period ended September 30, 2024 from $464.2 million for the same period in of 2023.

Current wording

Commercial loan production increased 8.7% or $17.7 million to $221.2 million in the quarter ended March 31, 2025 from $203.5 million in the prior year quarter, mainly in the commercial US loan portfolio. Commercial US loans activities include the purchase of middle market senior secured cash flow loan participations and the purchase of participations of loans to small and medium sized businesses. Excluding commercial US loans activities, commercial PR loan production decreased 12.4% to $163.2 million in the quarter ended March 31, 2025 from $186.4 million in the prior year quarter.

Previous wording

•Mortgage loan portfolio amounted to $1.484 billion (19.1% of the gross loan portfolio) compared to $1.563 billion (20.7% of the gross originated loan portfolio) at December 31, 2023, a 5.1% 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 $41.8 million and $19.4 million at September 30, 2024 and December 31, 2023, respectively. During the quarter ended September 30, 2024, OFG acquired the servicing rights of a $1.7 billion mortgage loan portfolio that was being subserviced by the Bank. Defaulted loans under the GNMA buy-back option program corresponding to this servicing portfolio amounted to $24.2 million at September 30, 2024. 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.

Current wording

•Mortgage loan portfolio amounted to $1.436 billion (18.3% of the gross loan portfolio) compared to $1.471 billion (18.9% of the gross originated loan portfolio) at December 31, 2024, a 2.4% 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 $44.7 million and $48.6 million at March 31, 2025 and December 31, 2024, 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.

Previous wording

•Consumer loan portfolio amounted to $664.3 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 increased by 13% to $86.6 million in the third quarter of 2024 from $76.5 million in the prior year quarter, and decreased by 6%, or $14.3 million to $235.5 million in the nine-month period ended September 30, 2024 from $249.8 million in the same period in 2023.

Current wording

•Consumer loan portfolio amounted to $670.8 million (8.5% of the gross loan portfolio) compared to $668.6 million (8.6% of the gross loan portfolio) at December 31, 2024. Consumer loan production decreased by 1.1% or $732 thousand to $67.9 million in the quarter ended March 31, 2025 from $68.6 million in the prior year quarter.

Previous wording

•Auto loans portfolio amounted to $2.484 billion (32.1% 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 decreased by 2% to $231.6 million in the third quarter of 2024 compared to $237.3 million in the prior year quarter, and increased by 3% or $18.6 million to $714.5 million in the nine-month period ended September 30, 2024 from $695.9 million in the same period of 2023.

Current wording

•Auto loans portfolio amounted to $2.593 billion (33.0% of the gross loan portfolio) compared to $2.549 billion (32.7% of the gross originated loan portfolio) at December 31, 2024. Auto loans production increased by 0.3% or $583 thousand to $232.9 million in the quarter ended March 31, 2025 from $232.3 million in the prior year quarter.