OFG BANCORP
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
OFG$50.82+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001030469-25-000019
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies and EstimatesCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001030469-25-000044
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies and EstimatesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 165 previous paragraphs and 205 current paragraphs.
73 unchanged; 69 reworded; 54 added; 21 removed; 2 previous and 9 current paragraphs rearranged.
Tables are not compared: 27 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (54)
Current report
We believe that Puerto Rico’s economy continues to have a positive outlook. The Puerto Rico Economic Activity Index, published by the Economic Development Bank for Puerto Rico, stood at 127.6 points in March 2025, reflecting a 0.2% increase on a month-to-month basis and a 1.0% decrease compared to the same period in the prior year. However, we believe that the recovery in economic activity has demonstrated a consistent upward trend over recent fiscal and calendar years. Data from the Economic Development Bank for Puerto Rico indicates that both wages and labor participation rates are rising. Total non-farm payroll employment averaged 963,200 jobs in February 2025, representing a month-over-month increase of 0.2% and an annual growth of 1.2%. The local business environment remains positive, with ongoing progress in public and private sector investments. Nonetheless, OFG remains vigilant to increased global economic and geopolitical volatility and its potential effects on Puerto Rico’s economy, which could affect our business and operational results.
Current report
We believe that the quarter ended June 30, 2025 reflected strong operating performance at all levels. Earnings per share diluted increased 6.5% year-over-year on a 1.5% increase in total core revenues. Highlights included steady core deposit flows and strong loan origination, as well as solid overall financial metrics, driven by return on average assets and equity. We believe that credit reflected Puerto Rico’s stable economy, with both individuals and businesses holding high levels of liquidity.
Current report
We believe that the growth of OFG’s omnichannel digital strategy demonstrates strong momentum, and we continue to invest in and deploy new tools to improve our customer experience to deepen relationships and drive efficiencies. In the quarter ended June 30, 2025, we launched Oriental Marketplace, a branded digital platform accessible via the Bank’s self-service portal, offering curated discounts and benefits on shopping, travel, entertainment , and more. We also introduced the DGI money market fund. Separately, we repurchased 186,024 shares through our share repurchase programs.
Current report
OFG ended the quarter ended June 30, 2025 with record assets of $12.2 billion, core deposits of $9.9 billion, and loans held for investment of $8.2 billion.
Current report
Total Interest Income of $194.3 million compared to $189.2 million in the first quarter of 2025 and $187.7 million in the second quarter of 2024. Compared to the first quarter of 2025, total interest income in the second quarter of 2025 increased $5.1 million, reflecting higher average balances of loans and cash and $1.5 million from one additional business day.
Current report
Total Interest Expense of $42.4 million compared to $40.2 million in the first quarter of 2025 and $40.3 million in the second quarter of 2024. Compared to the first quarter of 2025, the total interest expense in the second quarter of 2025 increased by $2.3 million, reflecting higher average balances of wholesale funding and deposits and $0.4 million from one additional business day.
Current report
Total Provision for Credit Losses of $21.7 million compared to $25.7 million in the first quarter of 2025 and $15.6 million in the second quarter of 2024. The total provision for credit losses in the second quarter of 2025 primarily reflected $17.2 million for increased loan volume, $3.7 million in specific reserves on four commercial loans, and $0.7 million due to alignment of model assumptions and risk weighting factors mainly in Puerto Rico.
Current report
Loans Held for Investmentof $8.18 billion compared to $7.85 billion in the first quarter of 2025 and $7.64 billion in the second quarter of 2024. Loans held for investment in the second quarter of 2025 increased by 4.2% sequentially and by 7.08% year-over-year, primarily reflecting OFG’s strategy to increase commercial lending.
Current report
New Loan Productionof $783.7 million compared to $558.9 million in the first quarter of 2025 and $589.0 million in the second quarter of 2024. Compared to the first quarter of 2025, new loan production in the second quarter of 2025 reflected production increases in all lending channels in both Puerto Rico and the U.S.
Current report
Customer Depositsof $9.90 billion increased $138.7 million from $9.76 billion in the first quarter of 2025 and $291.0 million from $9.60 billion in the second quarter of 2024. Compared to the first quarter of 2025, the second quarter of 2025 reflected higher time and savings deposit balances, partially offset by lower demand deposit balances. Deposits also reflected higher commercial and government balances, partially offset by lower retail balances.
Current report
Total Borrowings and Brokered Deposits of $732.3 million compared to $421.5 million in the first quarter of 2025 and $201.2 million in the second quarter of 2024. Total borrowings and brokered deposits in the second quarter of 2025 primarily reflected $200 million in a new two-year FHLB advance at 4.13% and $82.5 million in additional brokered deposits to increase liquidity and fund strategic growth in commercial loans.
Current report
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2025 AND 2024
Current report
Net interest income of $301.0 million increased by $9.6 million from $291.4 million. Tax equivalent basis net interest income of $308.4 million increased by $9.2 million, or 3.1%, from $299.2 million.
Current report
Interest rate spread decreased by 9 basis points to 5.22% from 5.31% and net interest margin decreased by 8 basis points to 5.37% from 5.45%. This reflects a decrease of 10 basis points in the total average yield of interest-earning assets.
Current report
•A $8.3 million increase in interest income from investment securities, primarily due to the acquisition of higher-yield investment securities in 2024 and 2025. Purchases contributed to higher average volume of $221.7 million, which resulted in an increase in interest income of $4.5 million, and higher yield by 28 basis points, which contributed to the increase in net interest income of $3.8 million; and
Current report
•A $6.5 million increase in interest income from loans driven by higher interest income from: (i) auto loans of $11.1 million reflecting higher originations in 2025; and (ii) consumer loans of $2.3 million mainly due to an increase of $38.0 million in the average balance of this portfolio. These increases were partially offset by lower interest income of: (i) $3.5 million from mortgage loans due to a reduction of $103.0 million in the average balance of this portfolio, mainly from the securitization and sale of conforming loans and regular paydowns; and (ii) commercial loans of $3.4 million, reflecting the repricing of variable rate loans at lower market rates.
Current report
These increases were partially offset by higher interest expense of $2.9 million from interest paid on borrowings of $3.3 million from FHLB advances and securities under agreements to repurchase in 2024 and 2025, and lower interest income on interest bearing cash and money market investments of $2.3 million, reflecting the impact of lower market rates.
Current report
This decrease was partially offset by:
Current report
•A $483 thousand increase in mortgage banking activities, mainly due to higher: (i) servicing fees of $1.1 million driven by the purchase of a servicing portfolio in late 2024; (ii) gain on sale of loans and securitizations of $256 thousand, and (iii) higher gain in repurchased loans of $170 thousand, mainly related to FNMA. These increases were partially offset by a $1.0 million unfavorable variance in the valuation of mortgage servicing rights.
Current report
OFG’s non-interest income of $59.9 million decreased by $2.9 million from $62.8 million. The decrease in non-interest income was mainly due to a $4.1 million decrease in banking service revenues as a result of: (i) reduced interchange fees of $4.9 million reflecting the implementation of Durbin Amendment; and (ii) lower prepayment fees of $715 thousand, mainly from commercial loans, partially offset by an increase of $965 thousand in higher merchant business activity.
Current report
•An $826 thousand increase in wealth management revenue primarily reflecting higher revenues from: (i) broker-dealer fees of $594 thousand related to investment advisory service fees and mutual funds retailer fees, and (ii) insurance income by $337 thousand, reflecting increases in annuities and insurance policies.
Current report
•Increase of $1.1 million in compensation and employee benefits, as a result of higher salaries and benefits, including payroll taxes;
Current report
•Increase of $1.0 million in foreclosed real estate and other repossessed assets expenses (income), net, due to lower gains on sale of foreclosed real estate of $1.8 million from lower volume of properties sold, partially offset by a $1.0 million increase in gains from the sale of other repossessed assets;
Current report
•Increase of $589 thousand in electronic banking charges, mainly due to increased transaction volumes; and
Current report
The increase in non-interest expense was partially offset by a $1.8 million reduction in other expenses, mainly due to lower: (i) accrual recorded for potential losses, operational errors, loss on theft not covered by insurance premiums, uncollectible receivables, among other transactions of $596 thousand; (ii) charitable contributions by $557 thousand; and (iii) travel, meals and trainings expenses of $303 thousand.
Current report
Non-interest expense was $188.3 million, representing an increase of 2.1% or $3.9 million, compared to $184.4 million. The increase in non-interest expense was mainly due to:
Current report
•Increase in compensation and employee benefits of $1.2 million as a result of higher salaries and benefits, including payroll taxes;
Current report
The increase in non-interest expense was partially offset by a $2.0 million reduction in other expenses, mainly due to lower: (i) accrual recorded for potential losses, operational errors, loss on theft not covered by insurance premiums, uncollectible receivables, among other transactions of $1.4 million, and (ii) charitable contributions of $615 thousand.
Current report
Provision for credit losses increased by $6.1 million to $21.7 million from $15.6 million. The provision for credit losses for the second quarter of 2025, reflected adjustments of $17.2 million for increased loan volume, $3.7 million in specific reserves, and $0.7 million due to alignment of model assumptions and risk weighting factors mainly in Puerto Rico.
Current report
The provision for credit losses for the second quarter of 2024 reflected a provision of $11.3 million related to the growth in loan balances, $2.8 million related to commercial-specific loan reserves, mainly in the US commercial loan portfolio, $2.1 million associated with qualitative adjustment, mainly in auto loans, and $1.5 million in loss rate models. These increases were partially offset by $2.0 million in changes the economic model.
Current report
Provision for credit losses increased $16.7 million to $47.4 million from $30.7 million. The provision for credit losses for the six-month period ended June 30, 2025, reflected adjustments of $34.6 million related to loan volume, $8.5 million in specific reserves and $6.0 million due to alignment of model assumptions and risk weighting factors mainly in Puerto Rico.
Current report
The provision for credit losses for the six-month period ended June 30, 2024, reflected adjustments of $26.4 million related to the growth in loan balances, $4.5 million from loss rate model and $2.9 million related to commercial-specific loan reserves, mainly in the US commercial loan portfolio, offset by a $4.9 million release from economic model.
Current report
Income tax expense decreased by $10.4 million to $28.0 million from $38.4 million. OFG’s ETR was 22.3% in 2025 compared to 27.6% in 2024. The decrease was mainly related to investment subject to preferential tax treatment under the PR Code, a discrete tax windfall on stock options, release of unrecognized tax benefits recognized during the first quarter of 2025 and discrete benefit related to the purchase of tax credits at discount.
Current report
•Increase of $2.0 million in non-interest expenses, mainly due to: (i) a $1.1 million increase in compensation and employee benefits due to higher salaries and benefits, including payroll taxes; and (ii) a $1.0 million increase in foreclosed real estate and other repossessed assets expenses, net, due to lower gains on sale of foreclosed real estate of $1.8 million from lower volume of properties sold, partially offset by a $1.0 million increase in gains from the sale of other repossessed assets.
Current report
•Increase of $3.1 million in interest income from loans, driven by higher balances; and
Current report
Comparison of six-month periods ended June 30, 2025 and 2024
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Removed paragraphs (21)
Previous report
We believe that Puerto Rico's economy continues to show resilience. Wages, employment, and business environment remains positive. Although the inflow of federal stimulus and reconstruction funds for infrastructure rebuilding has stimulated the local economy, it may decline as a result of proposed significant reductions in federal spending. Therefore, OFG is closely monitoring the increasing global economic and geopolitical uncertainties, including the potential impact of cuts to federal funds for Puerto Rico, which could impact local economic conditions and our business and operational results.
Previous report
We believe that the quarter ended March 31, 2025, reflected a strong start to the year with solid overall performance, consistent financial results, and excellent operating execution. Highlights included customer and deposit growth, and improved consumer credit. As part of OFG's Digital First strategy, OFG is the first among Puerto Rico banks to launch an Omnichannel online and mobile app for a truly seamless experience, Smart Banking insights to help customers better manage their finances, and Apple Pay for fast and easy credit and debit transactions. While OFG's strategic investment in technology is driving innovation, its investment in people is building strong customer relationships through OFG's island-wide network.
Previous report
During the quarter ended March 31, 2025, OFG also repurchased $23.4 million of common shares and increased the dividend on its common stock by 20%. The increase in capital return was supported by its earnings and elevated capital levels, with a CET1 ratio at 14.3%. We believe that at this time, Puerto Rico’s economy continues to be stable, benefiting from public and private investment, but we are closely monitoring increased global economic and geopolitical uncertainties. OFG's balance sheet provides us with a strong foundation during volatile or challenging times.
Previous report
Total Interest Income of $189.2 million compared to $190.2 million in the fourth quarter of 2024 and $183.4 million in the first quarter of 2024. Compared to the fourth quarter of 2024, the first quarter of 2025 decreased $0.9 million, reflecting two fewer business days, which negatively affected interest income by approximately $3.0 million, partially offset by higher balances and yields on investment securities and higher loan balances.
Previous report
Total Interest Expense of $40.2 million compared to $41.0 million in the fourth quarter of 2024 and $39.3 million in the first quarter of 2024. Compared to the fourth quarter of 2024, the first quarter of 2025 decreased $0.9 million, primarily reflecting two fewer business days. Higher average balances of core deposits at a lower rate were partially offset by higher average balances of borrowings and brokered deposits.
Previous report
Total Provision for Credit Losses of $25.7 million compared to $30.2 million in the fourth quarter of 2024 and $15.1 million in the first quarter of 2024. The first quarter of 2025 primarily reflected $17.4 million for increased loan volume, $4.8 million for a specific reserve for three commercial loans, and $3.5 million to reflect auto current loss given default trends post pandemic.
Previous report
Loans Held for Investmentof $7.85 billion compared to $7.79 billion in the fourth quarter of 2024 and $7.54 billion in the first quarter of 2024. Compared to the fourth quarter of 2024, the first quarter of 2025 loans increased 0.8%, reflecting growth in auto, commercial US, commercial PR, and consumer loans, partially offset by a decline in residential mortgage loans. Loans increased 4.15% year-over-year.
Previous report
New Loan Productionof $558.9 million compared to $609.0 million in the fourth quarter of 2024 and $536.6 million in the first quarter of 2024. Compared to the fourth quarter of 2024, the first quarter of 2025 reflected seasonal declines in Puerto Rico lending, partially offset by increases in U.S. commercial lending.
Previous report
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 report
Total Borrowings and Brokered Deposits of $421.5 million compared to $557.2 million in the fourth quarter of 2024 and $203.3 million in the first quarter of 2024. The first quarter of 2025 reflected the maturity of $145 million in repurchase agreement funding and Federal Home Loan Bank advances. Separately, a two-year $200 million FHLB advance was renewed at 4.14% compared to the previous rate of 4.52%.
Previous report
•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 report
•Increase of $498 thousand in occupancy, equipment and infrastructure costs, mainly due to higher infrastructure costs of $994 thousand, offset by lower lease expense of $413 thousand;
Previous report
These increases were partially offset by a decrease of $696 thousand in electronic banking charges, reflecting a $3.1 million volume incentive payment from a business partner, partially offset by $1.2 million for increased electronic banking fee volume and other related costs.
Previous report
Provision for credit losses increased by $10.6 million to $25.7 million from $15.1 million. The provision for credit losses for the quarter ended March 31, 2025, reflected adjustments of $17.4 million related to loan volume, $4.8 million in specific reserves and $3.5 million to reflect auto current loss given default trends post pandemic. The provision for credit losses for the quarter ended March 31, 2024, reflected adjustments of $15.1 million related to loan volume and $1.7 million as a result of the strategic sale of a performing U.S. commercial loan, partially offset by $1.7 million related to a reduction in specific reserves for payments received on substantially reserved U.S. commercial loans.
Previous report
•Increase of$4.0 million in interest income from loans, driven by increased yields on higher balances; and
Previous report
Cash and due from banks increased by $119.0 million to $703.5 million, reflecting higher deposit balances.
Previous report
Mortgage loan production totaled $37.0 million in the quarter ended March 31, 2025, which represents an increase of 15.0% from $32.2 million in the prior year quarter.
Previous report
Net charge-offs for the quarter ended March 31, 2025 amounted to $20.4 million (1.05% of average loans), increasing by $558 thousand, when compared to $19.8 million (1.05% of average loans) in prior year quarter.
Previous report
•Auto loans net charge-offs in the first quarter of 2025 amounted to $10.5 million, increasing by $2.3 million, when compared to $8.2 million in the first quarter of 2024, reflecting post-pandemic credit normalization. The increase in net charge-offs in the first quarter of 2025 was also impacted by an increase in business volume.
Previous report
As of March 31, 2025, borrowings consist of long term FHLB advances amounting to $255.6 million. Borrowings decreased by $145.5 million or 36.3% from December 31, 2024, reflecting the maturity in FHLB advances and securities sold under agreements to repurchase during the quarter as part of OFG’s asset liability management strategies.
Reworded paragraphs (69)
Previous wording
Furthermore, during the quarter ended March 31, 2025, OFG repurchased 582,399 shares for a total of $23.4 million at an average price of $40.17 per share of its current open-ended $50.0 million stock repurchase program. At March 31, 2025, the estimated remaining number of shares that may be purchased under the $50.0 million programs is 157,017 and was calculated by dividing the remaining balance of $6.3 million by $40.02 (closing price of OFG’s common stock at March 31, 2025).
Current wording
During the six-month period ended June 30, 2025, OFG repurchased 768,423 shares for a total of $31.1 million at an average price of $40.46 per share under its current open-ended stock repurchase programs. At June 30, 2025, the estimated remaining number of shares that may be purchased under the new $100.0 million repurchase program is 2,303,476 and was calculated by dividing the remaining balance of $98.6 million by $42.80 (closing price of OFG’s common stock at June 30, 2025).
Previous wording
The preparation of financial statements in accordance with GAAP requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in the consolidated financial statements. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We provide a summary of our significant accounting policies in “Note 1—Summary of Significant Accounting Policies” of our 2024 Form 10-K.
Current wording
The preparation of financial statements in accordance with GAAP requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in the consolidated financial statements. Understanding our accounting policies and the extent to which we use judgment and estimates in applying these policies is integral to understanding our financial statements. We provide a summary of our significant accounting policies in “Note 1—Summary of Significant Accounting Policies” of our 2024 Form 10-K.
Previous 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.
Current 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 six-month period ended June 30, 2025, an assessment of the weight of probability scenarios for the Puerto Rico 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 the provisions of ASC 250-10, 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 2024 Form 10-K.
Previous wording
Earnings per share diluted was $1.00 compared to $1.09 in the fourth quarter of 2024 and $1.05 in the first quarter of 2024. Net income of $45.6 million compared to $50.3 million in the fourth quarter of 2025 and $49.7 million in the first quarter of 2024.
Current wording
Earnings per share diluted was $1.15 compared to $1.00 in the first quarter of 2025 and $1.08 in the second quarter of 2024. Net income of $51.8 million compared to $45.6 million in the first quarter of 2025 and $51.1 million in the second quarter of 2024.
Previous 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%.
Current wording
Performance metrics: Net interest margin of 5.31%, return on average assets of 1.73%, return on average tangible common stockholders’ equity of 16.96%, and efficiency ratio of 52.04%.
Previous wording
Total Banking and Financial Service Revenuesof $29.2 million compared to $32.8 million in the fourth quarter of 2024 and $30.1 million in the first quarter of 2024. The fourth quarter of 2024 included $4.8 million combined in annual insurance fees and favorable MSR valuation. Excluding those items, the first quarter of 2025 total banking and financial services revenues increased.
Current wording
Total Banking and Financial Service Revenuesof $30.2 million compared to $29.2 million in the first quarter of 2025 and $32.1 million in the second quarter of 2024. Compared to the first quarter of 2025, the total banking and financial service revenue in the second quarter of 2025 primarily reflected increases in mortgage banking activities and wealth management.
Previous wording
Pre-Provision Net Revenuesof $85.1 million compared to $83.0 million in the fourth quarter of 2024 and $83.0 million in the first quarter of 2024.
Current wording
Pre-Provision Net Revenuesof $87.6 million compared to $85.1 million in the first quarter of 2025 and $86.8 million in the second quarter of 2024.
Previous wording
Credit Quality: Net charge-offs (“NCOs”) of $20.4 million (1.05% of average loans) compared to $15.9 million (0.82%) in the fourth quarter of 2024 and $19.8 million (1.05%) in the first quarter of 2024. The first quarter of 2025 included a $2.9 million partial charge-off of a previously reserved commercial US loan, while the fourth quarter of 2024 included $2.6 million in recoveries from the sale of previously fully charged-off auto and consumer loans. The early and total delinquency rates in the first quarter of 2025 improved to 2.19% and 3.49%, respectively, reflecting seasonal trends. The nonperforming loan rate was 1.11%.
Current wording
Credit Quality: Net charge-offs (“NCOs”) of $12.8 million (0.64% of average loans) compared to $20.4 million (1.05%) in the first quarter of 2025 and $15.0 million (0.79%) in the second quarter of 2024. The early and total delinquency rates in the second quarter of 2025 were 2.46% and 3.59%, respectively, and the nonperforming loan rate was 1.19%.
Previous wording
Total Non-Interest Expense of $93.5 million compared to $99.7 million in the fourth quarter of 2024 and $91.4 million in the first quarter of 2024. Compared to the fourth quarter of 2024, the first quarter of 2025 compensation reflected $1.6 million in seasonal FICA expenses and merit raises, while general and administrative declined $2.0 million, reflecting a $3.1 million volume incentive payment from a business partner, partially offset by $1.2 million for increased electronic banking fee volume and other related costs. The fourth quarter of 2024 included $4.8 million in early retirement, rightsizing and performance incentives.
Current wording
Total Non-Interest Expense of $94.8 million compared to $93.5 million in the first quarter of 2025 and $93.0 million in the second quarter of 2024. Compared to the first quarter of 2025, the total non-interest expense in the second quarter of 2025 reflected $1.4 million lower payroll taxes and foreclosed real estate costs compared to the first quarter of 2025, which also benefited from a $3.1 million volume incentive payment from a business partner.
Previous wording
Income Tax Expense of $13.9 million compared to $2.4 million in the fourth quarter of 2024 and $18.2 million in the first quarter of 2024. The effective tax rate in the first quarter of 2025 was 23.34%, reflecting an anticipated rate of 26.14% for the year and the benefit of $1.7 million in discrete items.
Current wording
Income Tax Expense of $14.1 million compared to $13.9 million in the first quarter of 2025 and $20.1 million in the second quarter of 2024. The effective tax rate in the second quarter of 2025 was 21.37%, reflecting an anticipated rate of 24.90% for the year, and the benefit of $1.7 million in discrete items.
Previous wording
Total Investments of $2.79 billion compared to $2.72 billion in the fourth quarter of 2024 and $2.48 billion in the first quarter of 2024. The first quarter of 2025 reflected purchases of $100 million of mortgage-backed securities yielding 5.40%, partially offset by MBS repayments.
Current wording
Total Investments of $2.78 billion compared to $2.79 billion in the first quarter of 2025 and $2.48 billion in the second quarter of 2024. The total investments in the second quarter of 2025 reflected repayments mostly offset by purchases of $50 million of mortgage-backed securities yielding 5.55% and the securitization of our conforming mortgage lending production.
Previous 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.
Current wording
Cash and Cash Equivalentsof $851.8 million compared to $710.6 million in the first quarter of 2025 and $740.4 million in the second quarter of 2024. Cash and cash equivalents in the second quarter of 2025 include cash from the above-mentioned wholesale funding source.
Previous 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.
Current wording
Capital: CET1 ratio was 13.99% compared to 14.27% in the first quarter of 2025 and 14.29% in the second quarter of 2024. Tangible Common Equity ratio was 10.20% compared to 10.30% in the first quarter of 2025 and 10.09% in the second quarter of 2024. Tangible Book Value per share was $27.67 compared to $26.66 in the first quarter of 2025 and $24.18 in the second 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 ended March 31, 2025 and 2024.
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 and six-month periods ended June 30, 2025 and 2024.
Previous 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.
Current wording
Net interest income of $151.9 million increased $4.6 million from $147.3 million. Tax equivalent basis net interest income of $155.7 million increased $4.8 million, or 3.2%, from $150.9 million.
Previous 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.
Current wording
Interest rate spread decreased 19 basis points to 5.17% from 5.36% and net interest margin decreased 20 basis points to 5.31% from 5.51%. This reflects a decrease of 22 basis point in the total average yield of interest-earning assets.
Previous 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.
Current wording
•A $4.6 million increase in interest income from investments securities, primarily due to the acquisition of higher-yield investment securities. It reflects higher yield by 29 basis points, which contributed to an increase in interest income of approximately $1.8 million and higher average volume of $266.9 million, resulting in an increase in interest income of approximately $2.8 million; and
Previous 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
Current wording
•A $2.7 million increase in interest income from loans, primarily driven by: (i) higher interest income of $5.5 million from auto loans, mainly due to an increase in the average balance of this portfolio by $246.1 million from newly originated loans; and (ii) higher interest income of $1.1 million from consumer loans, mainly due to an increase in the average balance of this portfolio by $35.3 million. These increases were partially offset by lower interest income of: (i) $2.0 million from commercial loans, reflecting the repricing of variable rate loans at lower market rates; and (ii) $1.9 million from residential mortgage loans, reflecting a decrease in the average balance of this portfolio by $99.6 million, mainly from the securitization and sale of conforming loans and regular paydowns.
Previous wording
These increases were offset by lower interest income on interest bearing cash and money market investments of $1.7 million, reflecting lower market rates, and higher interest expense of $900 thousand from interest paid on borrowings of $1.3 million reflecting FHLB advances and securities under agreements to repurchase taken during 2024, offset by lower interest on deposits of $0.5 million due to lower average cost of total deposits of 4 basis point.
Current wording
These increases were offset by higher interest expense of $2.1 million from interest paid on borrowings of $2.0 million reflecting FHLB advances and securities under agreements to repurchase taken during 2025 and 2024, and lower interest income on interest bearing cash and money market investments of $0.7 million, reflecting the impact of lower market rates.
Previous 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:
Current wording
OFG recorded non-interest income in the amount of $30.4 million, compared to $32.5 million, a decrease of 6.3% or $2.0 million. The decrease in non-interest income was mainly due to a $2.8 million decrease in banking service revenues as a result of reduced interchange fees from the implementation of Durbin Amendment which took effect for the Bank on July 1, 2024.
Previous wording
•A $348 thousand increase in wealth management revenues, mainly due to: (i) higher revenues from investment advisory services of $191 thousand, and (ii) higher insurance income by $133 thousand, reflecting increases in annuities and insurance policies; and
Current wording
•A $478 thousand increase in wealth management revenues, mainly due to higher revenues from: (i) insurance income by $203 thousand, reflecting increases in annuities and insurance policies, and (ii) higher broker-dealer fees by $297 thousand from investment advisory service fees and mutual funds retailer fees; and
Previous wording
•A $83 thousand increase in mortgage banking activities, as a result of: (i) $1.1 million higher servicing fees driven by the purchase of a servicing portfolio in late 2024, (ii) $339 thousand favorable valuation of held-for-sale mortgage portfolio, and (iii) $78 thousand higher gain on securitization and sales of mortgage loans; partially offset by (i) a $1.2 million decrease in MSR valuation, and (ii) $160 thousand higher losses in repurchased loans.
Current wording
•An $566 thousand increase in mortgage banking activities, mainly due to higher: (i) servicing fees of $2.1 million driven by the purchase of a servicing portfolio in late 2024, and (ii) gain on sale of loans and securitization of $674 thousand, which includes $368 thousand favorable market valuation for held-for-sale loans and $306 thousand higher gain on securitization and sales. These increases were partially offset by a $2.2 million unfavorable variance in the valuation of mortgage servicing rights.
Previous 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:
Current wording
Non-interest expense was $94.8 million, representing an increase of 2.0% or $1.8 million, compared to $93.0 million. The increase in non-interest expense was mainly due to:
Previous wording
•Increase of $483 thousand in taxes, other than payroll and income taxes, mainly related to higher municipal taxes; and
Current wording
•Increase of $519 thousand in taxes, other than payroll and income taxes, mainly related to higher municipal taxes recorded during the quarter.
Previous 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.
Current wording
The efficiency ratio was 52.04% compared to 51.81%. 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 June 30, 2025 and 2024 amounted to $184 thousand and $391 thousand, respectively.
Previous 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.
Current wording
•Increase in foreclosed real estate and other repossessed assets expenses, net of income, of $1.4 million primarily reflecting $2.2 million in lower gains on sale of foreclosed real estate due to lower volume of properties sold, partially offset by a $938 thousand increase in gains from the sale of other repossessed assets.
Previous wording
•Increase of $1.1 million in professional and service fees reflecting higher compliance-related expenses;
Current wording
•Increase in professional and service fees of $810 thousand mainly due to higher compliance-related expenses.
Previous 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.
Current wording
Income tax expense for the quarter ended June 30, 2025 decreased by $6.1 million to $14.1 million from $20.1 million. OFG maintained an effective tax rate lower than the statutory rate for the quarters ended June 30, 2025 and 2024 of 21.4% and 28.2%, respectively. The decrease was mainly related to investment subject to preferential tax treatment under the PR Code, a discrete tax windfall on stock options, and discrete benefit related to the purchase of tax credits at discount. The expected ETR for 2025, excluding discrete items, is 24.90%.
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 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.
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 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, and dedicated services or time, among others. Following are the results of operations and the selected financial information by operating segment for the quarters and six-month periods ended June 30, 2025 and 2024.
Previous 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.
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 $281.0 million and $302.4 million at June 30, 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 periods was mainly as a result of higher interest rate.
Previous 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:
Current wording
OFG’s banking segment net income before taxes decreased by $6.2 million from $40.1 million to $33.9 million, mainly due to:
Previous wording
•Increase of $10.5 million in provision for credit losses, mainly due to growth in loan balances; and
Current wording
•Increase of $6.1 million in provision for credit losses, mainly due to a $4.9 million allowance release driven by improved economic model in the prior year quarter and growth in loan balances;
Previous 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.
Current wording
•Decrease of $3.4 million in non-interest income primarily related to reduced interchange fees due to the implementation of Durbin Amendment which took effect for the Bank on July 1, 2024; and
Previous wording
•Decrease of$1.3 million in interest expense primarily related to a decrease of 4 basis points in the average cost of deposits.
Current wording
•Decrease of $2.2 million in interest expense primarily related to a decrease of 12 basis points in the average cost of core deposits.
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 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.
Current wording
Wealth management segment revenue consists of commissions and fees from fiduciary activities, securities brokerage and investment advisory services, and insurance and reinsurance activities. Net income before taxes from this segment increased from $2.8 million to $4.4 million, mainly from higher non-interest income of $1.5 million, mainly related to higher broker-dealer fees from investment advisory service fees and mutual funds retailer fees and higher insurance income from annuities.
Previous wording
Treasury segment net income before taxes decreased by $182 thousand. This reduction is mainly due to higher interest expense of $2.3 million, which includes $1.3 million from interest paid on borrowings and $844 thousand from brokered deposits. These expenses reflect FHLB advances, securities under agreements to repurchase and brokered deposits taken during 2024. This was partially offset by an increase in interest income of $1.9 million from the purchases of higher-yield investment securities.
Current wording
Treasury segment net income before taxes decreased by $844 thousand. This reduction is mainly due to higher interest expense of $4.8 million, which includes $2.0 million from interest paid on borrowings and $2.3 million from brokered deposits, primarily reflecting $200 million in a new two-year FHLB advance and $247.9 million in additional brokered deposits to increase liquidity and fund strategic growth in commercial loans. This reduction was partially offset by an increase in interest income of $4.0 million from the purchases of higher-yield investment securities.
Previous 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.
Current wording
At June 30, 2025, OFG’s total assets amounted to $12.232 billion, an increase of $730.8 million, when compared to $11.501 billion at December 31, 2024.
Previous 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.
Current wording
The investment portfolio increased by $64.4 million or 2.4% primarily driven by $150 million new available-for-sale mortgage-backed securities, $40.8 million in mortgage loan securitization and $49.1 million in favorable market value adjustments. 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 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.
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 June 30, 2025, OFG’s net loan portfolio increased by $375.8 million or 4.9% reflecting increases in US and Puerto Rico commercial, auto and consumer loans, partially offset by portfolio run-off.
Previous 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.
Current wording
At June 30, 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 June 30, 2025 and December 31, 2024, the total assets managed by OFG’s trust division amounted to $2.371 billion and $2.262 billion, respectively. The increase of $125.2 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 June 30, 2025, total assets managed by the securities broker-dealer and insurance agency subsidiaries from their customers’ investment accounts amounted to $2.454 billion, compared to $2.247 billion at December 31, 2024. The increase of $118.9 million in broker-dealer related assets is mainly due to new customers accounts opened during the period.
Showing the first 40 of 69 pairs. Open the source sections for the rest.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
TABLE 1A - ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
Current report — wording carried from elsewhere
C - CHANGES IN NET INTEREST INCOME DUE TO:
Current report — wording carried from elsewhere
Net interest income was positively impacted by:
Current report — wording carried from elsewhere
•Increase in taxes, other than payroll and income taxes, of $1.0 million related to higher municipal taxes recorded during the period;
Current report — wording carried from elsewhere
The efficiency ratio was 52.23%, an increase from 52.15%. Amounts presented as part of non-interest income that were excluded from the efficiency ratio computation for six-month periods ended June 30, 2025 and 2024 amounted to $489 thousand and $680 thousand, respectively.
Current report — wording carried from elsewhere
•Decrease of $5.8 million in non-interest income, related to reduced interchange fees due to the implementation of Durbin Amendment that took effect for the Bank in July 1, 2024; and
Current report — wording carried from elsewhere
The decrease in the banking segment’s net income was partially offset by:
Current report — wording carried from elsewhere
•Decrease of $3.5 million in interest expense primarily related to a decrease of 8 basis points in the average cost of core deposits.
Current report — wording carried from elsewhere
Net income before taxes from this segment increased from $5.4 million to $8.0 million, mainly from higher non interest income of $2.9 million, mostly related to higher broker-dealer fees from investment advisory service fees and mutual funds retailer fees, higher insurance income from annuities, and an increase in trustee-only fees, partially offset by higher salaries and employee benefits of $0.6 million.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
OFG has two mortgage loan modification programs. These are the Loss Mitigation Program and the Non-Conforming Mortgage Loan Program. Both programs are intended to help responsible homeowners to remain in their homes and avoid foreclosure, while also reducing OFG’s losses on non-performing mortgage loans.
Previous report — wording carried elsewhere
In order to apply for any of our loan modification programs, if the borrower is active in Chapter 13 bankruptcy, it must request an authorization from the bankruptcy trustee to allow the loan modification. Borrowers with discharged Chapter 7 bankruptcies may also apply. Loans in these programs are evaluated by designated credit underwriters for financial difficulty modification if OFG grants a concession for legal or economic reasons due to the debtor’s financial difficulties.