UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

July 21, 2021

OFG BANCORP

(Exact Name of Registrant as Specified in Its Charter)

Commonwealth of

Puerto Rico

(State or Other Jurisdiction of Incorporation)

001-12647

66-0538893

(Commission File Number)

(IRS Employer Identification No.)

Oriental Center, 15

Floor

254 Munoz Rivera Avenue

San Juan

Puerto Rico

00918

(Address of Principal Executive Offices)

(Zip Code)

(

787

)

771-6800

(Registrant’s Telephone Number,

Including Area Code)

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended

to simultaneously satisfy the filing obligation of

the registrant under any of the following provisions:

☐

Written communications pursuant

to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange

Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d

-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e

-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the

Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which

registered

Common shares, par value $1.00 per share

OFG

New York

Stock Exchange

Indicate by check mark whether the registrant is an emerging

growth company as defined in Rule 405 of the

Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of

the Securities Exchange Act of 1934 (17 CFR

§240.12b-2).

Emerging growth company

☐

If an emerging growth company,

indicate by check mark if the registrant has elected not to use the

extended

transition period for complying with any new or revised financial

accounting standards provided pursuant to Section

13(a) of the Exchange Act.

☐

Item 2.02. Results of Operations and Financial Condition.

On July 21, 2021,

OFG Bancorp (the “Company”) announced the results for the quarter

ended June 30, 2021. A

copy of the Company’s

press release is attached as an exhibit to this report.

Item 9.01. Financial Statements and Exhibits.

(d)

Exhibits

Exhibit No.

Description of Document

Press release by the Company dated J

uly

21, 2021.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,

the Company has duly caused this report to

be signed on its behalf by the undersigned hereunto

duly authorized.

OFG BANCORP

Date: July 21, 2021

By:

/s/ Maritza Arizmendi

Maritza Arizmendi

Chief Financial Officer

ofg8kexhibit992q21

Exhibit 99

OFG Bancorp Reports 2Q21 Results

SAN JUAN, Puerto Rico,

July 21, 2021 – OFG

Bancorp (NYSE: OFG), the financial

holding company for

Oriental Bank, reported

results for the second quarter ended June 30, 2021.

CEO Comment

José Rafael

Fernández, Chief

Executive Officer,

said: “We

generated outstanding

second quarter

results. This

reflects our

larger scale

and our

focus on

digital utilization

and differentiation,

combined with

Puerto Rico’s

early economic

and post-

pandemic recovery.

“The economy is

clearly benefitting from

a massive amount

of federal

reconstruction and COVID

stimulus, which are

meaningful here compared to mainland states given the size

of our economy as it relates to reconstruction funds and the size

of stimulus payments compared to average income levels.

“We saw

the effects

of all this

across all our

businesses. New loan

origination increased 27.7%

from 1Q21 with

gains in

all

major categories,

led by

commercial and

auto lending.

Interest income

grew 2.2%

from 1Q21

as average

loan balances

expanded 1.3%, excluding residential mortgage. Banking and financial services revenues rose 5.4%.

“Asset quality

trends continued to

improve as reconstruction

and stimulus funds

provided significant liquidity

to businesses

and individuals. As result of this, provision for credit losses was a net benefit of $8.3 million.

“Results were enhanced by a

12.3% reduction in cost of

funds compared to 1Q21 and the

previously announced deployment

of excess

capital to

redeem all

three of

our outstanding

series of

preferred stock,

eliminating $1.6

million in

quarterly

dividends.

“Return on

average assets

and on

average tangible

equity expanded

to 1.58%

and 17.78%,

respectively, compared

to the

previous and year ago quarters.

“As Puerto

Rico continues experiencing stronger signs of

economic revival, OFG is strategically

well-positioned to continue to

benefit from and play

a major role in

this long-awaited development.

Thanks to all our

team members who have

been more

than ready to help our customers achieve their goals.”

2Q21 Highlights

Summary:

Earnings per

share diluted

was $0.78

compared to

$0.56 in 1Q21

and $0.39 in

2Q20. Total

core revenues

were

$133.3 million compared to

$127.7 million in 1Q21

and $128.2 million in

2Q20. Net interest

margin was 4.22%

compared to

4.26% in 1Q21 and 4.78% in 2Q20.

Total

interest income

of $113.5 million

increased 2.2% from

1Q21 primarily due

to higher

income from

increased average

balances of

commercial and

auto loans

and investment

securities. Average

loan balances

were $6.60

billion compared

$6.64 billion in 1Q21 and $6.84 billion in 2Q20.

New Loan Origination

totaled $673.6 million compared to $527.6 million in 1Q21 and $506.0 million in 2Q20. 2Q21 increased

27.7% from 1Q21 due to gains in all major categories, led by commercial and auto lending.

Total

Interest Expense

was $11.2 million compared to $12.8

million in 1Q21 and $16.6 million in 2Q20.

2Q21 declined 12.3%

from 1Q21 primarily due

to lower cost

of core deposits,

which was 38 bps

compared to 47

bps in 1Q21 and

61 bps in

2Q20.

Average customer deposit balances were $8.96 billion compared to $8.54 billion in 1Q21 and $7.85 billion in 2Q20.

Asset Quality and Provision

for Credit Losses:

2Q21 reflected continued

improvement in asset

quality trends with the

rates

for net

charge offs

(0.13%) and early

(1.86%) and total

(3.90%) delinquency at

their lowest levels

in five quarters.

Provision

for credit

losses was a

net benefit of

$8.3 million, resulting

from $2.1

million net charge

-offs and $10.4

million net reserve

releases, compared to a provision expense of $6.3 million in 1Q21 and $17.7 million in 2Q20.

Banking and Financial

Services Revenues

were $31.0 million

compared to $29.5

million in 1Q21

and $23.1 million

in 2Q20.

2Q21 increased

5.4% from

1Q21 and

34.4% from

2Q20 primarily

due to

increased activity

as pandemic

related economic

restrictions have subsided.

Non-Interest Expenses

were $82.7

million compared

to $77.7

million in

1Q21 and

$85.5 million

in 2Q20.

2Q21 reflected

previously announced

cost savings,

a $2.2

million technology

project write

down, and higher

variable expenses

related to

higher revenues.

Pre-Provision Net Revenues

were $51.8 million, which includes the above non-cash write down, compared to $50.9 million in

1Q21 and $46.7 million in 2Q20.

Capital:

Tangible book

value per share

was $18.13 compared

to $17.39 in 1Q21

and $16.01 in 2Q20.

CET1 ratio was

13.95%

compared to 13.56% in 1Q21 and 12.03% in 2Q21.

Conference Call, Financial Supplement & Presentation

A conference

call to discuss

2Q21 results, outlook

and related matters

will be held

today at 10:00

AM ET.

Phone (888) 562-

3356 or

(973) 582-

Conference

ID: 573-9736.

The call

can also

be accessed

live on

www.ofgbancorp.com.

Webcast

replay will be available shortly thereafter.

OFG’s Financial

Supplement, with

full financial

tables for

the quarter

ended June 30,

2021, and

the 2Q21

Conference Call

Presentation, can be found on the Quarterly Results page on OFG’s

Investor Relations website at

www.ofgbancorp.com.

Non-GAAP Financial Measures

In addition to

our financial information

presented in accordance

with GAAP,

management uses certain

“non-GAAP financial

measures” within the meaning of SEC Regulation G,

to clarify and enhance understanding of past

performance and prospects

for the

future. Please

refer to

Tables 8-

and 8-

in OFG’s

above-mentioned Financial

Supplement for

a reconciliation

GAAP to non-GAAP measures and calculations.

Forward Looking Statements

The information

included in this

document contains

certain forward

-looking statements

within the meaning

of the

Private

Securities Litigation

Reform Act

of 1995.

These statements

are based

on management’s

current expectations

and involve

certain risks and uncertainties

that may cause

actual results to differ

materially from those expressed

in the forward

-looking

statements.

Factors that

might cause

such a

difference include,

but are

not limited

to (i)

general business

and economic

conditions,

including changes

in interest

rates; (ii)

cybersecurity breaches;

(iii) hurricanes,

earthquakes and

other natural

disasters in

Puerto Rico; (iv) competition

in the financial services industry;

and (v) the severity,

magnitude and duration of

the COVID-19

pandemic, and its impact on our operations, personnel, and customers.

For a

discussion of

such factors

and certain

risks and

uncertainties to

which OFG

is subject,

please refer

to OFG’s

annual

report on Form 10

-K

for the year

ended December 31, 2020, as

well as its other

filings with the U.S.

Securities and Exchange

Commission. Other than

to the extent

required by

applicable law,

including the requirements

of applicable securities

laws,

OFG assumes

no obligation

to update

any forward

-looking statements

to reflect

occurrences or

unanticipated events

circumstances after the date of such statements.

About OFG Bancorp

Now in its 57th year in business, OFG Bancorp is a diversified financial holding company that operates

under U.S., Puerto Rico

and U.S. Virgin Islands banking laws

and regulations. Its three principal subsidiaries, Oriental

Bank, Oriental Financial Services

and Oriental Insurance,

provide a wide

range of

retail and commercial

banking, lending and

wealth management products,

services, and technology, primarily in Puerto Rico and U.S. Virgin Islands. Visit us at

www.ofgbancorp.com.

#

Contacts

Puerto Rico & USVI:

Idalis Montalvo (

idalis.montalvo@orientalbank.com

) at (787) 777-2847

US:

Gary Fishman (

gfishman@ofgbancorp.com

) and Steven Anreder (

sanreder@ofgbancorp.com

) at (212) 532-3232

OFG Bancorp

Financial Supplement

The information contained

in this Financial Supplement is preliminary and based

on data available at the time of the

earnings presentation,

and investors should

refer to our June 30, 2021 Quarterly

Report on Form 10-Q once it is filed with the Securities

and Exchange Commission.

Table

of Contents

Pages

OFG Bancorp (Consolidated Financial Information)

Table

Financial and Statistical Summary - Consolidated

2-3

Table

Consolidated Statements of Operations

4-5

Table

Consolidated Statements of Financial

Condition

Table

Information on Loan Portfolio

and Production

7-8

Table

Average Balances, Net Interest

Income and Net Interest Margin

9-10

Table

Loan Information and Performance

Statistics

11-13

Table

Allowance for Credit Losses

Table

Reconciliation of GAAP to Non-GAAP Measures

and Calculation of Regulatory Capital

15-16

Table

Notes to Financial Summary,

Selected Metrics, Loans, and Consolidated

Financial Statements (Tables

1-8)

OFG Bancorp (NYSE: OFG)

Table 1-1: Financial and

Statistical Summary - Consolidated

2021

2020

(Dollars in thousands, except per share data) (unaudited)

Statement of Operations

Net interest income

102,257

98,204

98,738

99,533

105,060

Non-interest income, net (core)

(2)

31,048

29,452

34,047

27,486

23,106

(d)

Total core revenues

133,305

127,656

132,785

127,019

128,166

Non-interest expense

82,676

77,666

89,039

83,444

85,481

Pre-provision net revenues

(22)

51,772

50,945

44,123

47,415

46,731

Total provision for credit losses

(8,305)

(a)

6,324

14,176

13,669

17,696

(d)

Net income before income taxes

60,077

44,621

29,947

33,746

29,035

Income tax expense

19,250

14,248

6,646

6,308

7,248

Net income available to common stockholders

40,827

29,118

21,673

25,810

20,159

Common Share Statistics

Earnings (loss) per common share - basic

(3)

0.79

0.57

0.42

0.50

0.39

Earnings (loss) per common share - diluted

(4)

0.78

0.56

0.42

0.50

0.39

Average common shares outstanding

51,636

51,397

51,350

51,342

51,336

Average common shares outstanding and equivalents

52,048

51,752

51,618

51,527

51,470

Cash dividends per common share

0.08

0.07

Book value per common share (period end)

20.59

19.90

19.54

19.13

18.69

Tangible book value per common share (period end)

(5)

18.13

17.39

16.97

16.51

16.01

Balance Sheet (Average Balances)

Loans

(6)

6,598,569

6,635,908

6,708,284

6,787,022

6,840,650

Interest-earning assets

9,726,905

9,358,377

9,270,739

9,218,717

8,845,744

Total assets

10,356,879

10,004,047

9,921,254

9,918,381

9,512,129

Core deposits

8,963,336

8,535,678

8,451,308

8,376,623

7,852,495

Total deposits

8,997,842

8,581,633

8,515,646

8,517,039

8,088,106

Interest-bearing deposits

6,392,219

6,223,419

6,199,929

6,240,639

6,105,014

Borrowings

99,950

100,951

101,930

102,916

157,669

Stockholders' equity

1,083,452

1,101,046

1,083,423

1,062,460

1,037,195

Common stockholders' equity

1,046,835

1,019,176

1,001,553

980,590

955,325

Performance Metrics

Net interest margin

(7)

4.22%

4.26%

4.24%

4.30%

4.78%

Return on average assets

(8)

1.58%

1.21%

0.94%

1.11%

0.92%

Return on average tangible common stockholders' equity

(9)

17.78%

13.11%

9.99%

12.23%

9.88%

Efficiency ratio

(10)

62.02%

60.84%

67.06%

65.69%

66.70%

Full-time equivalent employees, period end

2,231

2,238

2,275

2,332

2,373

Credit Quality Metrics

(1)(21)

Allowance for credit losses

191,717

(a)

201,973

204,809

(c)

235,313

232,701

Allowance as a % of loans held for investment

2.95%

(a)

3.06%

3.07%

(c)

3.48%

3.35%

Net charge-offs

2,118

(a)

9,105

44,814

(c)

10,570

15,750

Net charge-off rate

(11)

0.13%

(a)

0.55%

2.67%

(c)

0.62%

0.92%

Early delinquency rate (30 - 89 days past due)

1.86%

(a)

2.15%

2.68%

2.50%

2.64%

Total delinquency rate (30 days and over)

3.90%

(a)

4.65%

5.74%

5.67%

5.56%

Capital Ratios (Non-GAAP)

(12)(20)

Leverage ratio

9.84%

(b)

10.48%

10.30%

10.00%

10.16%

Common equity Tier 1 capital ratio

13.95%

13.56%

13.08%

12.55%

12.03%

Tier 1 risk-based capital ratio

14.70%

(b)

15.28%

14.78%

14.25%

13.71%

Total risk-based capital ratio

15.95%

(b)

16.54%

16.04%

15.50%

14.96%

Tangible common equity ("TCE") ratio

9.06%

8.95%

9.00%

8.58%

8.39%

(a) During 2Q 2021 asset quality trends continued to improve.

(b) During 2Q 2021, the Company redeemed Series A and B Preferred Stock.

(d) During 2Q 2020, the Company increased its provision for credit losses by $5 million as a result of the Covid-19 pandemic.

Core revenues were also negatively impacted by the

pandemic during this quarter as a result of lockdown measures by the local Government.

OFG Bancorp (NYSE: OFG)

Table 1-2: Financial and

Statistical Summary - Consolidated

(Continued)

2021

2020

(Dollars in thousands, except per share data) (unaudited)

YTD

Statement of Operations

Net interest income

200,461

210,161

Non-interest income, net (core)

(2)

60,500

49,339

(b)

Total core revenues

260,961

259,500

Non-interest expense

160,342

172,803

Pre-provision net revenues

(22)

102,717

95,960

Total provision for credit losses

(1,981)

(a)

64,827

(b)

Net income before income taxes

104,698

31,133

(b)

Income tax expense

33,498

7,545

Net income available to common stockholders

69,945

20,332

(b)

Common Share Statistics

Earnings (loss) per common share - basic

(3)

1.36

0.40

(b)

Earnings (loss) per common share - diluted

(4)

1.35

0.39

(b)

Average common shares outstanding

51,517

51,370

Average common shares outstanding and equivalents

51,885

51,584

Cash dividends per common share

0.16

0.14

Book value per common share (period end)

20.59

18.69

Tangible book value per common share (period end)

(5)

18.13

16.01

Balance Sheet (Average Balances)

Loans

(6)

6,617,002

6,764,263

Interest-earning assets

9,543,525

8,701,083

Total assets

10,181,437

9,419,378

Core deposits

8,750,551

7,684,466

Total deposits

8,790,750

7,920,275

Interest-bearing deposits

6,308,286

6,079,247

Borrowings

100,448

214,735

Stockholders' equity

1,092,201

1,040,338

Common stockholders' equity

1,033,083

958,468

Performance Metrics

Net interest margin

(7)

4.24%

4.84%

Return on average assets

(8)

1.40%

0.50%

(b)

Return on average tangible common stockholders' equity

(9)

15.48%

4.97%

(b)

Efficiency ratio

(10)

61.44%

66.59%

Full-time equivalent employees, period end

2,231

2,373

Credit Quality Metrics

(1)(21)

Allowance for loan and lease losses

191,717

(a)

232,701

Allowance as a % of loans held for investment

2.95%

(a)

3.35%

Net charge-offs

11,223

(a)

39,784

Net charge-off rate

(11)

0.34%

(a)

1.18%

Early delinquency rate (30 - 89 days past due)

1.86%

(a)

2.64%

Total delinquency rate (30 days and over)

3.90%

(a)

5.56%

(a) During 2Q 2021 asset quality trends continued to improve.

(b) During 1Q 2020 and 2Q2020, the Company increased its provision for credit losses by $34.1 million and

$5 million, respectively, as a result of the Covid-19 pandemic. Core

revenues were also negatively impacted by the pandemic during these quarters as a result of lockdown measures by the local Government.

OFG Bancorp (NYSE: OFG)

Table 2-1: Consolidated

Statements of Operations

Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands, except per share data) (unaudited)

2021

2020

Interest income:

Loans

(1)

Non-PCD loans

85,181

82,936

81,171

83,029

83,832

PCD loans

24,880

25,275

29,250

29,018

34,700

(d)

Total interest income from

loans

110,061

108,211

110,421

112,047

118,532

Investment securities

3,402

2,771

2,600

2,890

3,160

Total interest income

113,463

110,982

113,021

114,937

121,692

Interest expense:

Deposits

Core deposits

10,436

11,861

13,225

13,808

13,999

Brokered deposits

163

288

812

1,446

Total deposits

10,460

12,024

13,513

14,620

15,445

Borrowings

746

754

770

784

1,187

Total interest expense

11,206

12,778

14,283

15,404

16,632

Net interest income

102,257

98,204

98,738

99,533

105,060

(Recapture) provision for credit losses, excluding PCD loans

(1)

(7,726)

2,998

15,464

13,845

15,227

(Recapture) provision for credit losses on PCD loans

(1)

(579)

3,326

(1,288)

(176)

2,469

Total provision for credit losses

(8,305)

(a)

6,324

14,176

13,669

17,696

(f)

Net interest income after provision for loan and lease losses

110,562

91,880

84,562

85,864

87,364

Non-interest income:

Banking service revenues

18,248

16,493

16,901

16,297

13,668

Wealth management revenues

8,263

7,388

10,865

(c)

7,272

6,366

Mortgage banking activities

4,537

5,571

6,281

3,917

3,072

Total banking and financial service revenues

31,048

29,452

34,047

27,486

23,106

(f)

Bargain purchase from Scotiabank PR & USVI acquisition

3,465

(e)

3,462

(e)

Other income, net

1,143

955

377

375

584

Total non-interest income, net

32,191

30,407

34,424

31,326

27,152

Non-interest expense:

Compensation and employee benefits

32,919

32,618

30,921

31,955

34,506

Occupancy, equipment and infrastructure costs

12,528

13,128

12,064

11,943

11,837

General and administrative expenses

35,370

(b)

30,201

33,454

33,452

31,181

Credit related expenses

328

(50)

1,004

1,323

2,918

Merger and restructuring charges

10,092

(g)

2,681

(g)

3,006

(g)

COVID 19 expenses

1,531

1,769

1,504

2,090

2,033

Total non-interest expense

82,676

77,666

89,039

83,444

85,481

Income before income taxes

60,077

44,621

29,947

33,746

29,035

Income tax expense

19,250

14,248

6,646

6,308

7,248

Net income

40,827

30,373

23,301

27,438

21,787

Less:

dividends on preferred stock

(1,255)

(1,628)

Net income available to common shareholders

40,827

29,118

21,673

25,810

20,159

(a) During 2Q 2021, asset quality trends continued to improve.

(b) During 2Q 2021, includes a technology project write-down amounting to $2.2 million.

(d) During 2Q 2020, the Company recognized interest recoveries on SOP loans acquired in the Scotiabank PR & USVI acquisition collected subsequently to the acquisition

date

amounting to $6.0 million.

(e) During 2Q 2020 and 3Q2020, the Company increased the Bargain purchase from Scotiabank PR & USVI acquisition by

$3.5 million and $3.5 million, respectively, as part of

remeasurement period adjustments.

(f) During 2Q2020, the Company increased its provision for credit losses by $5 million as a result of the Covid-19 pandemic.

Core revenues were also negatively impacted by the

pandemic during these quarters as a result of lockdown measures by the local Government.

(g) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, incurring

in merger and restructuring charges of $3.0 million during 2Q 2020, $2.7

million during 3Q 2020, and $10.1 million during 4Q 2020.

OFG Bancorp (NYSE: OFG)

Table 2-2: Consolidated

Statements of Operations

(Continued)

Six-Months Ended

June 30,

(Dollars in thousands, except per share data) (unaudited)

2021

2020

Interest income:

Loans

(1)

Non-PCD loans

168,117

171,315

PCD loans

50,155

63,652

(b)

Total interest income from

loans

218,272

234,967

Investment securities

6,173

10,422

Total interest income

224,445

245,389

Interest expense:

Deposits

Core deposits

22,297

29,033

Brokered deposits

187

3,032

Total deposits

22,484

32,065

Borrowings

1,500

3,163

Total interest expense

23,984

35,228

Net interest income

200,461

210,161

(Recapture) provision for credit losses, excluding PCD loans

(1)

(4,728)

56,178

Provision for credit losses on PCD loans

(1)

2,747

8,649

Total provision for credit losses

(1,981)

(a)

64,827

(c)

Net interest income after provision for loan and lease losses

202,442

145,334

Non-interest income:

Banking service revenues

34,741

29,381

Wealth management revenues

15,651

13,652

Mortgage banking activities

10,108

6,306

Total banking and financial service revenues

60,500

49,339

(c)

Bargain purchase from Scotiabank PR & USVI acquisition

3,872

(d)

Other income, net

2,098

5,391

Total non-interest income, net

62,598

58,602

Non-interest expense:

Compensation and employee benefits

65,537

70,050

Occupancy, equipment and infrastructure costs

25,656

23,276

General and administrative expenses

65,571

68,526

Foreclosed real estate and other repossessed assets expenses

278

5,440

Merger and restructuring charges

3,310

(e)

COVID 19 expenses

3,300

2,201

Total non-interest expense

160,342

172,803

Income before income taxes

104,698

31,133

Income tax expense

33,498

7,545

Net income

71,200

23,588

Less:

dividends on preferred stock

(1,255)

(3,256)

Net income available to common shareholders

69,945

20,332

(a) During 2Q 2021 asset quality trends continued to improve.

(b) During 2Q 2020, the Company recognized interest recoveries on SOP loans acquired in the Scotiabank PR & USVI acquisition collected subsequently to the acquisition

date

amounting to $6.0 million.

$5 million, respectively, as a result of the Covid-19 pandemic. Core

revenues were also negatively impacted by the pandemic during these quarters as a result of lockdown measures by the local Government.

(d) During 2Q 2020, the Company increased the Bargain purchase from Scotiabank PR & USVI acquisition by $3.5 million

as part of remeasurement period adjustments.

(e) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, incurring in

merger and restructuring charges of $3.0 million during 2Q 2020.

OFG Bancorp (NYSE: OFG)

Table 3: Consolidated

Statements of Financial Condition

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands) (unaudited)

2021

2020

Cash and cash equivalents

2,767,693

2,409,416

2,155,577

2,283,050

1,900,037

Investments:

Trading securities

Investment securities available-for-sale, at fair value,

with amortized cost of $491,320 (March 31, 2021 - $462,115;

December 31, 2020 - $432,175; September 30, 2020 - $412,899;

June 30, 2020 - $529,985;

no allowance for credit

losses for any period)

Mortgage-backed securities

487,014

457,673

432,935

329,719

340,192

US treasury notes

10,910

10,946

10,983

91,531

197,340

Other investment securities

3,695

2,390

2,520

2,565

2,707

Total investment securities available-for-sale

501,619

471,009

446,438

423,815

540,239

Mortgage-backed securities held-to-maturity, at amortized cost,

no allowance for credit losses for any period

125,138

126,767

Federal Home Loan Bank (FHLB) stock, at cost

7,541

8,233

8,278

8,322

8,366

Other investments

9,168

5,557

3,962

2,205

1,076

Total investments

643,495

611,589

458,700

434,364

549,703

Loans, net

6,354,040

6,432,079

6,501,259

6,579,140

6,739,243

Other assets:

Prepaid expenses

61,678

58,348

61,416

54,583

40,119

Deferred tax asset, net

144,799

154,540

162,478

178,957

186,730

Foreclosed real estate and repossessed properties

16,818

18,366

13,412

21,374

26,152

Premises and equipment, net

85,993

83,756

83,786

83,270

82,234

Goodwill

86,069

Right of use assets

32,621

32,714

31,383

35,900

34,692

Core deposit, customer relationship intangible and other intangibles

40,995

43,445

45,896

48,650

51,406

Servicing asset

47,712

47,911

47,295

47,242

47,926

Accounts receivable and other assets

179,900

175,109

178,740

166,392

188,408

Total assets

10,461,813

10,153,342

9,826,011

10,018,991

9,932,719

Deposits:

Demand deposits

5,329,429

4,885,311

4,613,309

4,682,991

4,370,419

Savings accounts

2,285,558

(a)

2,142,573

1,920,325

1,919,859

1,978,118

Time deposits

1,464,134

1,693,924

1,832,891

1,933,517

1,975,223

Brokered deposits

11,371

(a)

34,954

49,115

96,090

218,166

Total deposits

9,090,492

8,756,762

8,415,640

8,632,457

8,541,926

Borrowings:

Advances from FHLB and other borrowings

63,867

65,013

66,268

66,781

68,340

Subordinated capital notes

36,083

Total borrowings

99,950

101,096

102,351

102,864

104,423

Other liabilities:

Derivative liabilities

1,293

1,465

1,712

1,895

2,078

Acceptances outstanding

27,703

24,389

33,349

18,291

20,034

Lease liability

34,052

34,017

32,566

37,029

35,694

Accrued expenses and other liabilities

128,326

127,190

154,418

162,133

187,280

Total liabilities

9,381,816

9,044,919

8,740,036

8,954,669

8,891,435

Stockholders' equity:

Preferred stock

24,000

(b)

92,000

Common stock

59,885

Additional paid-in capital

626,995

622,935

622,652

621,978

621,860

Legal surplus

110,235

106,165

103,269

101,233

98,347

Retained earnings

352,001

322,202

300,096

284,053

264,725

Treasury stock, at cost

(100,719)

(100,994)

(102,949)

(103,095)

(103,121)

Accumulated other comprehensive income, net

7,600

6,230

11,022

8,268

7,588

Total stockholders' equity

1,079,997

1,108,423

1,085,975

1,064,322

1,041,284

Total liabilities and stockholders' equity

10,461,813

10,153,342

9,826,011

10,018,991

9,932,719

(a) During 2Q 2021, money market deposit accounts amounting to $23.8 million were reclassified from brokered deposits to savings account, as a result of an FDIC exemption from

the brokered deposit definition.

(b) During 2Q 2021, the Company redeemed Series A and B Preferred Stock.

OFG Bancorp (NYSE: OFG)

Table 4-1: Information

on Loan Portfolio and

Production

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands) (unaudited)

2021

2020

Non-PCD:

(1)

Mortgage

760,168

791,062

823,443

847,671

874,286

Commercial

1,903,866

1,827,102

1,836,137

1,785,022

1,918,424

Commercial Paycheck Protection Program (PPP Loans)

(23)

228,677

311,823

282,713

289,218

278,059

Consumer

381,475

395,073

413,552

434,546

458,714

Auto

1,618,788

1,565,473

1,534,269

1,511,829

1,454,987

4,892,974

4,890,533

4,890,114

4,868,286

4,984,470

Less:

Allowance for credit losses

(148,314)

(156,978)

(161,015)

(156,409)

(151,507)

Total non- PCD loans held for investment, net

4,744,660

4,733,555

4,729,099

4,711,877

4,832,963

PCD:

(1)

Mortgage

1,324,274

1,406,044

1,459,932

1,504,914

1,541,637

Commercial

260,627

272,793

283,160

(a)

352,555

386,046

Consumer

981

1,120

1,394

2,336

2,950

Auto

19,236

23,036

27,533

31,836

37,409

1,605,118

1,702,993

1,772,019

1,891,641

1,968,042

Less:

Allowance for credit losses

(1)

(43,403)

(44,995)

(43,794)

(a)

(78,904)

(81,194)

Total PCD loans held for investment, net

1,561,715

1,657,998

1,728,225

1,812,737

1,886,848

Total loans held for investment

6,306,375

6,391,553

6,457,324

6,524,614

6,719,811

Mortgage loans held for sale

37,885

38,220

41,654

54,526

19,432

Other loans held for sale

9,780

2,306

2,281

Total loans, net

6,354,040

6,432,079

6,501,259

6,579,140

6,739,243

Loan Portfolio Summary:

Loans held for investment:

Mortgage

2,084,442

2,197,106

2,283,375

2,352,585

2,415,923

Commercial

2,164,493

2,099,895

2,119,297

(a)

2,137,577

2,304,470

Commercial Paycheck Protection Program (PPP Loans)

(23)

228,677

311,823

282,713

289,218

278,059

Consumer

382,456

396,193

414,946

436,882

461,664

Auto

1,638,024

1,588,509

1,561,802

1,543,665

1,492,396

6,498,092

6,593,526

6,662,133

6,759,927

6,952,512

Less:

Allowance for credit losses

(191,717)

(201,973)

(204,809)

(a)

(235,313)

(232,701)

Total loans held for investment, net

6,306,375

6,391,553

6,457,324

6,524,614

6,719,811

Mortgage loans held for sale

37,885

38,220

41,654

54,526

19,432

Other loans held for sale

9,780

2,306

2,281

Total loans, net

6,354,040

6,432,079

6,501,259

6,579,140

6,739,243

(a) During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.

OFG Bancorp (NYSE: OFG)

Table 4-2: Information

Loan Portfolio and

Production

Quarter Ended

Six-Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands) (unaudited)

2021

2020

2021

2020

Loan production

(13)

Mortgage

103,837

95,851

97,656

93,650

23,744

199,688

54,731

Commercial

218,425

83,820

174,894

83,488

98,558

302,245

152,671

Commercial PPP Loans

32,712

126,266

10,318

286,420

158,978

286,420

US Loan Programs

109,522

44,841

49,221

90,878

35,711

154,363

82,836

Consumer

38,038

27,492

25,984

23,540

14,231

65,530

53,431

Auto

171,104

149,357

137,545

155,880

47,374

320,461

156,718

Total

673,638

527,627

485,300

457,754

506,038

1,201,265

786,807

OFG Bancorp (NYSE: OFG)

Table 5-1: Average

Balances, Net Interest

Income and Net Interest Margin

2021 Q2

2021 Q1

2020 Q4

2020 Q3

2020 Q2

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

(Dollars in thousands) (unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Interest earning assets:

Cash equivalents

2,519,406

706

0.11

2,204,431

595

0.11

2,091,458

613

0.12

1,929,024

613

0.13

1,393,187

359

0.10

Investment securities

608,930

2,696

1.77

518,038

2,176

1.68

470,997

1,986

1.69

502,671

2,278

1.81

611,907

2,801

1.83

Loans held for investment

(1)

Non-PCD loans

4,937,602

85,181

6.92

4,893,874

82,936

6.87

4,863,902

81,171

6.64

4,870,753

83,029

6.78

4,857,281

83,832

6.94

PCD loans

1,660,967

24,880

5.99

1,742,034

25,275

5.80

1,844,382

29,250

6.34

1,916,269

29,018

6.06

1,983,369

34,700

7.00

Total loans

6,598,569

110,061

6.69

6,635,908

108,211

6.61

6,708,284

110,421

6.55

6,787,022

112,047

6.57

6,840,650

118,532

6.97

Total interest-earning assets

9,726,905

113,463

4.68

9,358,377

110,982

4.81

9,270,739

113,020

4.85

9,218,717

114,938

4.96

8,845,744

121,692

5.53

Interest bearing liabilities:

Deposits

NOW accounts

2,542,018

2,259

0.36

2,397,673

2,393

0.40

2,344,903

2,258

0.38

2,227,687

2,247

0.40

2,069,247

2,138

0.42

Savings accounts

2,236,281

2,097

0.38

2,003,963

2,124

0.43

1,897,618

1,954

0.41

1,927,680

2,010

0.41

1,809,517

1,976

0.44

Time deposits

1,579,414

4,243

1.08

1,775,828

5,507

1.24

1,893,070

6,975

1.47

1,944,856

7,512

1.54

1,990,639

7,835

1.58

Brokered deposits

34,506

0.28

45,955

163

1.44

64,338

289

1.78

140,416

812

2.30

235,611

1,446

2.47

6,392,219

8,623

0.54

6,223,419

10,187

0.66

6,199,929

11,476

0.74

6,240,639

12,581

0.80

6,105,014

13,395

0.88

Non-interest bearing deposit accounts

2,605,623

2,358,214

2,315,717

2,276,400

1,983,092

Fair value premium amortization and

core deposit intangible amortization

1,837

2,037

2,039

2,050

Total deposits

8,997,842

10,460

0.47

8,581,633

12,024

0.56

8,515,646

13,513

0.63

8,517,039

14,620

0.68

8,088,106

15,445

0.77

Borrowings

Securities sold under agreements to

repurchase

46,154

335

2.91

Advances from FHLB and other

borrowings

63,867

452

2.84

64,868

459

2.87

65,847

468

2.83

66,833

476

2.83

75,432

505

2.69

Subordinated capital notes

36,083

294

3.27

36,083

295

3.31

36,083

301

3.34

36,083

308

3.39

36,083

347

3.87

Total borrowings

99,950

746

2.99

100,951

754

3.03

101,930

769

3.01

102,916

784

3.03

157,669

1,187

3.03

Total interest-bearing liabilities

9,097,792

11,206

0.49

8,682,584

12,778

0.60

8,617,576

14,282

0.66

8,619,955

15,404

0.71

8,245,775

16,632

0.81

Interest rate spread

102,257

4.19

98,204

4.21

98,738

4.19

99,534

4.25

105,060

4.72

Net interest margin

4.22

4.26

4.24

4.30

4.78

Core deposits: (Non-GAAP)

Deposits

NOW accounts

2,542,018

2,259

0.36

2,397,673

2,393

0.40

2,344,903

2,258

0.38

2,227,687

2,247

0.40

2,069,247

2,138

0.42

Savings accounts

2,236,281

2,097

0.38

2,003,963

2,124

0.43

1,897,618

1,954

0.41

1,927,680

2,010

0.41

1,809,517

1,976

0.44

Time deposits

1,579,414

4,243

1.08

1,775,828

5,507

1.24

1,893,070

6,975

1.47

1,944,856

7,512

1.54

1,990,639

7,835

1.58

6,357,713

8,599

0.54

6,177,464

10,024

0.66

6,135,591

11,187

0.73

6,100,223

11,769

0.77

5,869,403

11,949

0.82

Non-interest bearing deposit accounts

2,605,623

2,358,214

2,315,717

2,276,400

1,983,092

Total core deposits

8,963,336

8,599

0.38

8,535,678

10,024

0.47

8,451,308

11,187

0.53

8,376,623

11,769

0.56

7,852,495

11,949

0.61

OFG Bancorp (NYSE: OFG)

Table 5-2: Average

Balances, Net Interest

Income and Net Interest Margin

(Continued)

2021 YTD

2020 YTD

Interest

Average

Income/

Yield/

Average

Income/

Yield/

(Dollars in thousands) (unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Interest earning assets:

Cash equivalents

2,362,788

1,301

0.11

1,168,384

3,147

0.54

Investment securities

563,735

4,872

1.73

768,436

7,275

1.89

Loans held for investment

Non-PCD loans

4,915,722

168,117

6.90

4,735,580

171,315

7.26

PCD loans

1,701,280

50,155

5.90

2,028,683

63,652

6.28

Total loans

6,617,002

218,272

6.65

6,764,263

234,967

6.97

Total interest-earning assets

9,543,525

224,445

4.74

8,701,083

245,389

5.66

Interest bearing liabilities:

Deposits

NOW accounts

2,470,244

4,652

0.38

2,024,876

4,525

0.45

Savings accounts

2,120,764

4,220

0.40

1,803,587

4,416

0.49

Time deposits

1,677,079

9,748

1.17

2,014,975

15,967

1.59

Brokered deposits

40,199

187

0.94

235,809

3,032

2.58

6,308,286

18,807

0.60

6,079,247

27,940

0.92

Non-interest bearing deposit accounts

2,482,464

1,841,028

Fair value premium amortization and core deposit intangible amortization

3,677

4,125

Total deposits

8,790,750

22,484

0.52

7,920,275

32,065

0.81

Borrowings

Securities sold under agreements to repurchase

102,308

1,335

2.62

Advances from FHLB and other borrowings

64,365

912

2.86

76,344

1,045

2.74

Subordinated capital notes

36,083

588

3.29

36,083

783

4.35

Total borrowings

100,448

1,500

3.01

214,735

3,163

2.95

Total interest-bearing liabilities

8,891,198

23,984

0.54

8,135,010

35,228

0.87

Interest rate spread

200,461

4.20

210,161

4.79

Net interest margin

4.24

4.84

Core deposits: (Non-GAAP)

Deposits

NOW accounts

2,470,244

4,652

0.38

2,024,876

4,525

0.45

Savings accounts

2,120,764

4,220

0.40

1,803,587

4,416

0.49

Time deposits

1,677,079

9,748

1.17

2,014,975

15,967

1.59

6,268,087

18,620

0.60

5,843,438

24,908

0.85

Non-interest bearing deposit accounts

2,482,464

1,841,028

Total core deposits

8,750,551

18,620

0.43

7,684,466

24,908

0.65

OFG Bancorp (NYSE: OFG)

Table 6-1: Loan Information

and Performance Statistics

(1)

2021

2020

(Dollars in thousands) (unaudited)

Net Charge-offs

(21)

Non-PCD

Mortgage:

Charge-offs

268

787

225

185

Recoveries

(193)

(615)

(79)

(269)

(9)

Total mortgage

173

146

(213)

176

Commercial:

Charge-offs

653

413

298

497

Recoveries

(996)

(430)

(334)

(253)

(631)

Total commercial

(343)

(363)

(134)

Consumer:

Charge-offs

2,897

4,469

6,456

5,114

4,187

Recoveries

(697)

(565)

(1,832)

(663)

(443)

Total consumer

2,200

3,903

4,624

4,451

3,744

Auto:

Charge-offs

5,170

9,083

12,071

10,123

13,300

Recoveries

(5,997)

(5,817)

(5,928)

(5,950)

(3,405)

Total auto

(827)

3,266

6,143

4,173

9,895

Total

1,105

6,980

10,992

8,456

13,681

PCD

Mortgage:

Charge-offs

1,742

2,590

1,344

1,677

2,178

Recoveries

(184)

(146)

(63)

(89)

(580)

Total mortgage

1,558

2,444

1,281

1,588

1,598

Commercial:

Charge-offs

33,061

(a)

293

386

Recoveries

(430)

(436)

(234)

(91)

(286)

Total commercial

(424)

(393)

32,827

202

100

Consumer:

Charge-offs

Recoveries

(33)

(21)

(200)

(30)

Total consumer

(33)

(179)

Auto:

Charge-offs

226

456

574

474

600

Recoveries

(314)

(383)

(681)

(211)

(229)

Total auto

(88)

(107)

263

371

Total

1,013

2,125

33,822

2,114

2,069

Total Net Charge-offs

2,118

9,105

44,814

10,570

15,750

Net Charge-off Rates

(21)

Mortgage

0.30%

0.47%

0.25%

0.24%

0.30%

Commercial

-0.13%

5.45%

(a)

0.04%

-0.01%

Consumer

2.17%

3.78%

4.09%

3.94%

3.12%

Auto

-0.23%

0.85%

1.56%

1.17%

2.72%

Total

0.13%

0.55%

2.67%

(a)

0.62%

0.92%

Average Loans Held For Investment

(21)

Mortgage

2,147,927

2,243,303

2,305,495

2,325,756

2,366,600

Commercial

2,443,407

2,405,419

2,416,703

2,484,977

2,484,573

Consumer

400,365

413,191

434,565

457,620

479,957

Auto

1,606,870

1,573,995

1,551,521

1,518,669

1,509,521

Total

6,598,569

6,635,908

6,708,284

6,787,022

6,840,651

(a) During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.

OFG Bancorp (NYSE: OFG)

Table 6-2: Loan Information

and Performance Statistics

(Excludes PCD Loans) (1)

2021

2020

(Dollars in thousands) (unaudited)

Early Delinquency (30 - 89 days past due)

Mortgage

15,512

17,350

22,339

16,783

15,665

Commercial

3,715

3,911

8,043

5,151

7,704

Consumer

5,929

8,250

12,230

12,032

18,254

Auto

66,068

75,449

88,357

87,912

89,825

Total

91,224

104,960

130,969

121,878

131,448

Early Delinquency Rates (30 - 89 days past due)

Mortgage

2.04%

2.19%

2.71%

1.98%

1.79%

Commercial

0.20%

0.21%

0.44%

0.29%

0.40%

Consumer

1.55%

2.09%

2.96%

2.77%

3.98%

Auto

4.08%

4.82%

5.76%

5.81%

6.17%

Total

1.86%

2.15%

2.68%

2.50%

2.64%

Total Delinquency (30 days and over past due)

Mortgage:

Traditional, Non traditional, and Loans under Loss Mitigation

59,848

62,827

67,671

51,123

40,719

GNMA's buy-back option program

28,118

40,777

56,193

62,651

75,091

Total mortgage

87,966

103,604

123,864

113,774

115,810

Commercial

21,549

26,065

30,604

35,596

38,258

Consumer

8,244

11,042

17,147

17,080

22,796

Auto

73,259

86,918

108,842

109,735

100,027

Total

191,018

227,629

280,457

276,185

276,891

Total Delinquency Rates (30 days and over past due)

Mortgage:

Traditional, Non traditional, and Loans under Loss Mitigation

7.87%

7.94%

8.22%

6.03%

4.66%

GNMA's buy-back option program

3.70%

5.15%

6.82%

7.39%

8.59%

Total mortgage

11.57%

13.10%

15.04%

13.42%

13.25%

Commercial

1.13%

1.43%

1.67%

1.99%

Consumer

2.16%

2.79%

4.15%

3.93%

4.97%

Auto

4.53%

5.55%

7.09%

7.26%

6.87%

Total

3.90%

4.65%

5.74%

5.67%

5.56%

Nonperforming Assets

(14)

Mortgage

52,773

50,933

46,967

40,477

30,491

Commercial

37,858

42,778

41,999

44,941

44,187

Consumer

2,466

2,900

4,987

5,206

4,933

Auto

7,606

11,842

20,766

22,583

10,539

Total nonperforming loans

100,703

108,453

114,719

113,207

90,150

Foreclosed real estate

15,093

15,598

11,596

19,456

24,792

Other repossessed assets

1,725

2,768

1,816

1,918

1,360

Total nonperforming assets

117,521

126,819

128,131

134,581

116,302

Nonperforming Loan Rates

Mortgage

6.94%

6.44%

5.70%

4.78%

3.49%

Commercial

1.99%

2.34%

2.29%

2.52%

2.30%

Consumer

0.65%

0.73%

1.21%

1.20%

1.08%

Auto

0.47%

0.76%

1.35%

1.49%

0.72%

Total loans

2.06%

2.22%

2.35%

2.33%

1.81%

OFG Bancorp (NYSE: OFG)

Table 6-3: Loan Information

and Performance Statistics

(1)

2021

2020

(Dollars in thousands) (unaudited)

Nonperforming PCD Loans

(14)

Mortgage

2,067

958

1,003

1,373

Commercial

34,502

34,906

36,470

(a)

79,631

81,064

Consumer

Total nonperforming loans

36,569

35,864

37,474

80,638

82,449

Nonperforming PCD Loan Rates

Mortgage

0.16%

0.07%

0.09%

Commercial

13.24%

12.80%

12.88%

(a)

22.59%

21.00%

Consumer

0.00%

0.07%

0.17%

0.41%

Total

2.28%

2.11%

(a)

4.26%

4.19%

Total PCD Loans Held for Investment

(21)

Mortgage

1,324,274

1,406,044

1,459,932

1,504,914

1,541,637

Commercial

260,627

272,793

283,160

352,555

386,046

Consumer

981

1,120

1,394

2,336

2,950

Total loans

1,585,882

1,679,957

1,744,486

1,859,805

1,930,633

2021

2020

(Dollars in thousands) (unaudited)

Total Nonperforming Loans

(14)

Mortgage

54,840

51,891

47,970

41,480

31,864

Commercial

72,360

77,684

78,469

(a)

124,572

125,251

Consumer

2,466

2,900

4,988

5,210

4,945

Auto

7,606

11,842

20,766

22,583

10,539

Total nonperforming loans

137,272

144,317

152,193

193,845

172,599

Total Nonperforming Loan Rates

Mortgage

2.63%

2.36%

2.10%

1.76%

1.32%

Commercial

3.02%

3.22%

3.27%

(a)

5.13%

4.85%

Consumer

0.64%

0.73%

1.20%

1.19%

1.07%

Auto

0.46%

0.75%

1.33%

1.46%

0.71%

Total

2.11%

2.19%

2.28%

(a)

2.87%

2.48%

Total Loans Held for Investment

(21)

Mortgage

2,084,442

2,197,106

2,283,375

2,352,585

2,415,923

Commercial

2,393,170

2,411,718

2,402,010

2,426,795

2,582,529

Consumer

382,456

396,193

414,946

436,882

461,664

Auto

1,638,024

1,588,509

1,561,802

1,543,665

1,492,396

Total loans

6,498,092

6,593,526

6,662,133

6,759,927

6,952,512

(a) During 4Q 2020, the Company charged-off $31.2 million for two commercial PCD loans.

OFG Bancorp (NYSE: OFG)

Table 7: Allowance

for Credit Losses (1)

Quarter Ended June 30, 2021

(Dollars in thousands) (unaudited)

Mortgage

Commercial

Consumer

Auto

Total

Allowance for credit losses Non-PCD:

Balance at beginning of period

17,035

47,683

21,191

71,069

156,978

(Recapture) provision for credit losses

(592)

(4,503)

(2,538)

(7,559)

Charge-offs

(268)

(653)

(2,897)

(5,170)

(8,988)

Recoveries

193

996

697

5,997

7,883

Balance at end of period

16,368

43,523

19,065

69,358

148,314

Allowance for credit losses PCD:

Balance at beginning of period

29,938

14,307

698

44,995

Provision (recapture) for credit losses

1,727

(1,974)

(47)

(285)

(579)

Charge-offs

(1,742)

(6)

(226)

(1,974)

Recoveries

184

430

314

961

Balance at end of period

30,107

12,757

501

43,403

Allowance for credit losses summary:

Balance at beginning of period

46,973

61,990

21,243

71,767

201,973

Provision (recapture) for credit losses

1,135

(6,477)

(2,823)

(8,138)

Charge-offs

(2,010)

(659)

(2,897)

(5,396)

(10,962)

Recoveries

377

1,426

730

6,311

8,844

Balance at end of period

46,475

56,280

19,103

69,859

191,717

Allowance coverage ratio

2.23%

2.35%

4.99%

4.26%

2.95%

Allowance coverage ratio excluding PPP loans (Non-GAAP)

2.23%

2.60%

4.99%

4.26%

3.06%

OFG Bancorp (NYSE: OFG)

Table 8-1: Reconciliation

of GAAP to Non-GAAP Measures and

Calculation of Regulatory Capital

In addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-

GAAP measures include tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of

our regulatory capital and non-GAAP capital

measures. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services

companies,

they may not be comparable to similarly titled measures reported by other companies.

2021

2020

(Dollars in thousands) (unaudited)

Stockholders' Equity to Non-GAAP Tangible Common Equity

Total stockholders' equity

1,079,997

(a)

1,108,423

1,085,975

1,064,322

1,041,284

Less:

Intangible assets

(127,064)

(129,514)

(131,965)

(134,719)

(137,475)

Noncumulative perpetual preferred stock

(24,000)

(a)

(92,000)

Noncumulative perpetual preferred stock issuance costs

7,453

(a)

10,130

Tangible common equity

936,386

897,039

872,140

847,733

821,939

Common shares outstanding at end of period

51,661

51,579

51,387

51,345

51,342

Tangible book value per common share (Non-GAAP)

18.13

17.39

16.97

16.51

16.01

Total Assets to Tangible

Assets

Total assets

10,461,813

10,153,342

9,826,011

10,018,991

9,932,719

Less:

Intangible assets

(127,064)

(129,514)

(131,965)

(134,719)

(137,475)

Tangible assets (Non-GAAP)

10,334,749

10,023,828

9,694,046

9,884,272

9,795,244

Non-GAAP TCE Ratio

Tangible common equity

936,386

897,039

872,140

847,733

821,939

Tangible assets

10,334,749

10,023,828

9,694,046

9,884,272

9,795,244

TCE ratio

9.06%

8.95%

9.00%

8.58%

8.39%

Average Equity to Non-GAAP Average Tangible

Common Equity

Average total stockholders' equity

1,083,452

(a)

1,101,046

1,083,423

1,062,460

1,037,195

Less:

Average noncumulative perpetual preferred stock

(44,923)

(a)

(92,000)

Average noncumulative perpetual preferred stock issuance costs

8,306

(a)

10,130

Average total common stockholders' equity

1,046,835

1,019,176

1,001,553

980,590

955,325

Less:

Average intangible assets

(128,311)

(130,767)

(133,542)

(136,138)

(139,094)

Average tangible common equity

918,524

888,409

868,011

844,452

816,231

(a) During 2Q 2021, the Company redeemed Series A and B Preferred Stock.

OFG Bancorp (NYSE: OFG)

Table 8-2: Reconciliation

of GAAP to Non-GAAP Measures and

Calculation of Regulatory Capital Measures

(Continued)

BASEL III

Standardized

2021

2020

(Dollars in thousands) (unaudited)

Regulatory Capital Metrics

Common equity Tier 1 capital

957,238

919,856

894,074

862,636

836,899

Tier 1 capital

1,008,785

(a)

1,036,726

1,010,944

979,506

953,769

Total risk-based capital

(15)

1,094,786

(a)

1,121,830

1,096,764

1,065,744

1,040,987

Risk-weighted assets

6,861,890

6,782,685

6,837,846

6,875,108

6,957,906

Regulatory Capital Ratios

Common equity Tier 1 capital ratio

(16)

13.95%

13.56%

13.08%

12.55%

12.03%

Tier 1 risk-based capital ratio

(17)

14.70%

15.28%

14.78%

14.25%

13.71%

Total risk-based capital ratio

(18)

15.95%

16.54%

16.04%

15.50%

14.96%

Leverage ratio

(19)

9.84%

10.48%

10.30%

10.00%

10.16%

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach

Total stockholders' equity

(1)

1,079,997

(a)

1,108,423

1,085,975

1,064,322

1,041,284

Plus: CECL transition adjustment

(20)

31,471

33,637

34,646

33,494

32,269

Less:

Noncumulative perpetual preferred stock

(24,000)

(a)

(92,000)

Noncumulative perpetual preferred stock issuance costs

7,453

(a)

10,130

Unrealized gains on available-for-sale securities, net of income tax

(8,408)

(7,146)

(12,091)

(9,453)

(8,885)

Unrealized losses on cash flow hedges, net of income tax

808

916

1,069

1,185

1,297

1,087,321

1,053,960

1,027,729

1,007,678

984,095

Less:

Disallowed goodwill

(86,069)

Disallowed other intangible assets, net

(28,555)

(30,172)

(32,073)

(33,810)

(35,563)

Disallowed deferred tax assets, net

(15,459)

(17,863)

(15,513)

(25,163)

(25,564)

Common equity Tier 1 capital

957,238

919,856

894,074

862,636

836,899

Plus:

Qualifying noncumulative perpetual preferred stock

24,000

(a)

92,000

Qualifying noncumulative perpetual preferred stock issuance costs

(7,453)

(a)

(10,130)

Subordinated capital notes

35,000

Tier 1 capital

1,008,785

1,036,726

1,010,944

979,506

953,769

Plus tier 2 capital:

Qualifying allowance for loan and lease losses

86,001

85,104

85,820

86,238

87,218

Total risk-based capital

1,094,786

1,121,830

1,096,764

1,065,744

1,040,987

(a) During 2Q 2021, the Company redeemed Series A and B Preferred Stock.

OFG Bancorp (NYSE: OFG)

Table 9: Notes

to Financial Summary,

Selected Metrics, Loans, and Consolidated

Financial Statements (Tables

1 - 8)

(1)

We used the terms "PCI" and "SOP" to refer to loans acquired with credit deterioration from the Scotiabank acquisition (December 31, 2019), the BBVAPR acquisition

(December 18, 2012) and the Eurobank FDIC-Assisted acquisition (April 30, 2010), recorded at fair value at acquisition.

On January 1, 2020, the Company implemented

ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified

retrospective approach. CECL replaces the concept of purchased

credit impaired loans (PCI) with the concept of purchased financial assets with credit deterioration (PCD). PCD accounting is called ‘gross-up accounting’ because, at

acquisition, an entity grosses up the amortized cost basis of the PCD asset for the initial estimate of credit losses. This Day 1 allowance for credit losses is established

without an income statement effect. The Company elected to maintain previously existing pools on adoption, therefore the pool continues to be the unit of account,

and the allowance and non-credit discount or premium is not allocated to the individual assets. These loans are not classified

as delinquent or nonperforming even

though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans.

(2)

Total banking and financial service revenues.

(3)

Calculated based on net income available to common shareholders divided by average common shares outstanding for the period.

(4)

Calculated based on net income available to common shareholders plus the preferred dividends on the convertible preferred stock, divided by total average common

shares outstanding and equivalents for the period as if converted.

(5)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 9:

Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

(6)

Information includes all loans held for investment, including PCD loans.

(7)

Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(8)

Calculated based on annualized income, net of tax, for the period divided by average total assets for the period.

(9)

Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period.

(10)

Calculated based on non-interest expense for the period divided by total net interest income and total banking and financial services revenues for the period.

(11)

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

(12)

Non-GAAP ratios. See "Table 9: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of

each of these ratios.

(13)

Production of new loans (excluding renewals).

(14)

Most PCD loans are considered to be performing due to the application of the accretion method, in which these loans will

accrete interest income over the remaining

life of the loans using estimated cash flow analyses. Therefore, they are not included as non-performing loans. PCD loan pools that are not accreting interest income

are deemed to be non-performing loans and presented separately.

(15)

Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.

(16)

Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets.

(17)

Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.

(18)

Total risk-based capital ratio is a regulatory capital measure calculated based on Total

risk-based capital divided by risk-weighted assets.

(19)

Leverage capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments.

(20)

In March 2020, in light of recent strains on the U.S. economy as a result of the coronavirus disease 2019 (COVID-19), the Board of Governors of the Federal Reserve

System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued an interim final rule that provided the option to

temporarily delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period. In addition, for the first two years, a uniform 25%

“scaling factor” is introduced to approximate the portion of the post day-one allowance attributable to CECL relative to the incurred loss methodology. The 25% scaling

factor is calibrated to approximate an overall after-tax impact of differences in allowances under CECL vs the incurred loss methodology.

(21)

CECL replaces the concept of purchased credit impaired loans (PCI assets) with the concept of purchased financial assets with

credit deterioration (PCD assets). An

entity records a PCD asset at the purchase price plus the allowance for credit losses expected at the time of acquisition. Under this method, there is no credit loss

expense affecting net income on acquisition. Changes in estimates of expected credit losses after acquisition are recognized as credit loss expense (or reversal of credit

loss expense) in subsequent periods as they arise.

(22)

Pre-provision net revenues is a non-GAAP measure calculated based on net interest income plus total non-interest income, net, less total non-interest expenses for the

period.

(23)

PPP loans are fully guaranteed by the SBA and risk-weighted at 0%.