UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________________

FORM 8-K

_________________________

CURRENT REPORTPursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 23, 2020

OFG Bancorp

(Exact Name of Registrant as Specified in its Charter)

Commonwealth of Puerto Rico	001-12647		66-0538893
(State or other Jurisdiction of Incorporation)	(Commission File No.)		(I.R.S. Employer<br>Identification No.)
Oriental Center, 15th Floor
254 Muñoz Rivera Avenue
San Juan, Puerto Rico		00918
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (787) 771-6800

(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 (see General Instruction A.2. below):

☐	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))

Item 2.02. Results of Operations and Financial Condition.

On October 23, 2020, OFG Bancorp (the “Company”) announced the results for the quarter ended September 30, 2020. 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
	99	Press release by the Company dated October 23, 2020.

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: October 23, 2020	By:	/s/ Maritza Arizmendi
		Maritza Arizmendi
		Executive Vice President and Chief Financial Officer

ofg8kexhibit9923q2020

Exhibit 99

OFG Bancorp Reports 3Q20 Results

SAN JUAN,

Puerto Rico,

October 23,

2020 –

OFG Bancorp

(NYSE: OFG),

the financial

holding company

for

Oriental Bank, reported results for the third quarter ended September 30, 2020.

CEO Comment

José Rafael Fernández, President, Chief Executive Officer,

and Vice Chairman of the Board, stated:

“We had a

strong third quarter performance

in our core business.

This was due to

an improved macro

-economic environment

in Puerto Rico and

the U.S. Virgin Islands

coupled with our being resilient,

agile, and more than

ready to service the

changing

needs of our customers and communities.

“The macro-

economic environment

benefited from

reduced Covid

-19 related

government restrictions

on economic

activity,

combined with growing

liquidity from the federal

stimulus programs Puerto Rico

is receiving following 2017’s

Hurricane Maria,

the early 2020 earthquakes, and now the Covid-19 pandemic.

“Our success

was driven

by staying close

to our

customers and

the communities

we serve, providing

the financial

solutions

they need as we enter what appears to be a nascent and potentially expanding recovery.

“Customer accounts

grew, and

digital migration expanded.

Deposit gathering and

loan production were

robust. Credit quality

continued to be under control. Operating efficiency improved, and the Scotiabank integration is proceeding on schedule.

“Return on average assets increased

to 1.11%, return

on average tangible common stockholders'

equity expanded to 12.23%,

and tangible book value, at $16.51 per share, continued to grow.

“Tremendous thanks

go to

our hardworking

team who

continues to

put Oriental

and its

customers first

throughout these

challenging times.”

3Q20 Highlights

●

Increased Earnings:

EPS diluted of

$0.50 increased 28%

compared to $0.39

in 2Q20 and

355% compared to

$0.11

in 3Q19.

Total

core revenues

were $127.0

million versus

$128.2 million

in 2Q20

and $99.3

million in

3Q19. Net interest margin was 4.30% compared to 4.78% in 2Q20. The effective

tax rate was 18.7% based on a

higher than originally anticipated proportion of exempt income.

Unless otherwise specified, comparisons noted in the bullet points are for 3Q20 versus 2Q20 or September 30, 2020 versus June 30, 2020 quarter, and

balances shown are end of period.

●

Lower Provision:

Provision for credit losses

fell 23% to $13.7

million from $17.7 million in

2Q20 and 69%

from

$43.8 million

in 3Q19.

Credit quality

also reflected reduced

deferrals (2.0% of

total loans

compared to 30.0%),

$5.2 million in lower

net charge offs, and

increases in the total

delinquency and non-performing

loan rates of 11

bps and 52 bps, respectively, for non

-PCD loans, from 2Q20.

●

Expense Reduction:

Non-interest expenses

of $83.4

million fell

more than

2% or

$2.0 million

compared to

$85.5 million

in 2Q20,

with the

efficiency ratio

improving 101

bps to

65.7%. Excluding

merger and

Covid-19

related costs,

the adjusted

efficiency ratio

improved 369

bps to

62.2% from

2Q20, as

increased operating

leverage from the Scotiabank acquisition began to kick in.

●

Deposit and Cash Growth:

Customer deposits grew $212.6

million to $8.5 billion on

September 30, 2020 from

June 30,

to the

increased deposits

as well

as repayments

of loans

and securities,

cash increased

$383.0 million, to

$2.3 billion. As

a result, total

assets grew

$83.6 million to

$10.0 billion, which

OFG does

not

anticipate exceeding on December 31, 2020.

●

Strong Production:

Loan production

totaled $457.8

million compared

to $506.0

million in

2Q20. Excluding

Paycheck Protection Program loans, production

increased $227.8 million, driven by commercial,

auto, mortgage

and consumer lending. Net loans

were $6.6 billion on September

30, 2020 compared to $6.7

billion on June

30,

2020.

●

Capital Building:

Tangible

book value

per share

expanded 3%

or $0.50

to $16.51

compared to

2Q20. All

regulatory capital

ratios continued

to be

significantly above

requirements for

a well-capitalized

institution. The

CET1 ratio

was 12.55%

on September

30, 2020

compared to

12.03% on

June 30,

2020 and

17.98% on

September 30, 2019, the quarter before the Scotiabank acquisition.

Conference Call

A conference call

to discuss 3Q20

results, outlook and

related matters will

be held today

at 1

0:00 AM ET.

Phone (888) 562-

3356 or

(973) 582

-2700. Conference

ID: 899-3880.

The call

can also

be accessed

live on

www.ofgbancorp.com.

Webcast

replay will be available shortly thereafter.

Financial Supplement & Conference Call Presentation

OFG’s Financial

Supplement, with

full financial

tables for

the quarter

ended September

30, 2020,

and the

3Q20

Conference Call Presentation, can

be found on the

Quarterly Results page on

OFG’s Investor Relations website

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

8-1, 8-2

and 8-3

in OFG’s

above-mentioned

Financial Supplement for a reconciliation of 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

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)

the rate of

growth in the

economy and

employment levels, as

well as general

business and economic

conditions; (ii) changes

in interest rates,

as well as

the magnitude

of such

changes; (iii) changes

to the

financial condition

of the

government of

Puerto Rico;

(iv) the

potential impact of damages

from future hurricanes, earthquakes and other

natural disasters in Puerto Rico;

(v) the

fiscal and monetary policies of the federal government

and its agencies; (vi) the performance of

the stock and bond

markets; (vii) competition in

the financial services industry; (viii)

possible legislative, tax or

regulatory changes; and

(ix) the

severity, magnitude

and duration

of the

Covid-19 pandemic,

including impacts

of the

pandemic and

responses of

federal, state and

local governments on our branches, operations and personnel, and on our

customers and their businesses.

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, 2019, 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 56

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

Error! Hyperlink

reference not

valid.

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 September 30, 2020 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

Table

Consolidated Statements of Operations

Table

Consolidated Statements of Financial Condition

Table

Information on Loan Portfolio and Production

5-6

Table

Average Balances, Net Interest Income and Net Interest Margin

7-8

Table

Loan Information and Performance Statistics

9-11

Table

Allowance for Credit Losses

Table

Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital

13-15

Table

Notes to Financial Summary, Selected Metrics, Loans, and Consolidated

Financial Statements (Tables

1-8)

OFG Bancorp (NYSE: OFG)

Table 1: Financial and Statistical Summary - Consolidated

2020

2019

2020

2019

(Dollars in thousands, except per

share data) (unaudited)

YTD

Statement of Operations

Net interest income

99,533

105,060

105,101

(e)

79,209

80,710

309,694

(e)

243,584

Non-interest income, net (core)

(2)

27,486

23,106

26,233

(e)

19,196

18,542

76,825

(e)

54,169

Total core revenues

127,019

128,166

131,334

(e)

98,405

99,252

386,519

(e)

297,753

Non-interest expense

83,444

85,481

87,322

(e)

78,913

(e)

50,727

256,247

(e)

154,331

(e)

Pre-provision net revenues

(22)

47,415

46,731

49,229

20,007

52,161

143,375

152,035

Total provision for credit losses

13,669

(d)

17,696

(d)

47,131

(c)(d)

23,068

(g)

43,770

(g)

78,496

(c)(d)

73,724

(g)

Net income (loss) before income taxes

33,746

29,035

2,098

(3,061)

8,391

64,879

78,311

Income tax expense (benefit)

6,308

7,248

297

(2,070)

1,008

13,853

23,479

Net income (loss) available to common

stockholders

25,810

20,159

173

(2,619)

5,755

46,142

49,948

Common Share Statistics

Earnings (loss) per common share -

basic

(3)

0.50

0.39

(0.05)

0.11

0.90

0.97

Earnings (loss) per common share -

diluted

(4)

0.50

0.39

(0.05)

0.11

0.89

0.97

Average common shares outstanding

51,342

51,336

51,404

51,360

51,345

51,361

51,327

Average common shares outstanding

and equivalents

51,527

51,470

51,713

51,791

51,772

51,563

51,695

Cash dividends per common share

0.07

0.21

Book value per common share (period

end)

19.13

18.69

18.33

(c)

18.75

18.84

19.13

(c)

18.84

Tangible book value per common share

(period end)

(5)

16.51

16.01

15.60

(c)

15.96

17.11

16.51

(c)

17.11

Balance Sheet (Average

Balances)

Loans

(6)

6,787,022

(a)

6,840,650

(a)

6,687,875

4,500,071

4,539,045

6,771,904

(a)

4,519,393

Interest-earning assets

9,218,717

(a)

8,845,744

(a)

8,556,421

5,886,379

5,981,756

8,874,886

(a)

6,055,475

Total assets

9,918,381

(a)

9,512,129

(a)

9,326,627

6,325,334

6,433,658

9,586,921

(a)

6,511,171

Core deposits

8,376,623

7,852,495

7,516,438

4,582,872

4,563,187

7,916,869

4,475,101

Total deposits

8,517,039

8,088,106

7,752,446

4,850,979

4,921,317

8,120,648

4,897,465

Borrowings

102,916

157,669

271,800

304,365

340,194

177,189

453,236

Stockholders' equity

1,062,460

1,037,195

1,043,481

(c)

1,062,720

1,061,541

1,047,766

(c)

1,038,869

Common stockholders' equity

980,590

955,325

961,611

(c)

980,850

979,671

965,896

(c)

956,999

Performance Metrics

Net interest margin

(7)

4.30%

4.78%

4.94%

5.34%

5.35%

4.65%

5.38%

Return on average assets

(8)

1.11%

0.92%

0.08%

-0.06%

0.46%

0.71%

1.12%

Return on average tangible common

stockholders' equity

(9)

12.23%

9.88%

0.08%

-1.17%

2.58%

7.44%

7.67%

Efficiency ratio

(10)

65.69%

66.70%

66.49%

80.19%

51.11%

66.30%

51.83%

Full-time equivalent employees, period

end

2,334

2,373

2,449

2,455

1,436

2,334

1,436

Credit Quality Metrics

(1)(21)

Allowance for loan and lease losses

235,313

232,701

230,755

(c)(d)

116,539

154,343

235,313

(c)(d)

154,343

Allowance as a % of loans held for

investment

3.48%

(a)

3.35%

(a)

3.41%

1.73%

3.41%

3.48%

(a)

3.41%

Net charge-offs

10,570

15,750

24,034

14,395

34,486

(f)(g)

50,354

59,477

Net charge-off rate

(11)

0.62%

0.92%

1.44%

1.28%

3.04%

(f)(g)

0.99%

1.75%

(f)(g)

Early delinquency rate (30 - 89 days

past due)

2.50%

2.64%

3.16%

3.07%

3.63%

2.50%

3.63%

Total delinquency rate (30 days and

over)

5.67%

5.56%

6.38%

5.85%

5.40%

5.67%

5.40%

Capital Ratios (Non-GAAP)

(12)(20)

Leverage ratio

10.00%

10.16%

10.14%

(b)(c)

9.24%

15.41%

10.00%

(b)(c)

15.41%

Common equity Tier 1 capital ratio

12.55%

12.03%

(a)

11.69%

(b)(c)

10.91%

17.98%

12.55%

(a)(b)(c)

17.98%

Tier 1 risk-based capital ratio

14.25%

13.71%

(a)

13.36%

(b)(c)

12.64%

20.43%

14.25%

(a)(b)(c)

20.43%

Total risk-based capital ratio

15.50%

14.96%

(a)

14.62%

(b)(c)

13.91%

21.71%

15.50%

(a)(b)(c)

21.71%

Tangible common equity ("TCE") ratio

8.58%

8.39%

8.80%

8.96%

14.07%

8.58%

14.07%

(a) In response to the Coronavirus (COVID-19) pandemic, CARES Act created funding for the Small Business Administration (SBA) Paycheck Protection Program (PPP), which provides

loans to small businesses to keep their employees on payroll and make other eligible payments. The original funding for the PPP was fully allocated by mid-April 2020, with additional

funding made available on April 24, 2020 under the Paycheck Protection Program and Health Care Enhancement Act. During 2Q 2020 and 3Q 2020, the Company participated in this

program originating 4,342 and 732 PPP loans, respectively. Òn June 30, 2020 and September 30, 2020, Oriental had PPP loans amounting to $278.1 million and $289.2 million,

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

(b) During 1Q 2020, the Company decided to early implement Simplifications to the Capital Rule, which simplified the regulatory capital treatment for mortgage servicing assets (MSA)

and certain deferred tax assets arising from temporary differences (temporary difference DTAs). It Increased common equity tier

1 (CET1) capital threshold deductions from 10 percent to

25 percent and removes the aggregate 15 percent CET1 threshold deduction. However, it retains the 250 percent risk weight applicable to non-deducted amounts of MSAs and

temporary difference DTAs.

(c) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective approach. As a

result, a $39.2 million allowance for credit losses was recorded for Non-PCD loans and $0.2 million for unused commitments with the corresponding adjustment reducing retained

earnings, net of a $13.9 million deferred tax effect. For PCD loans, including BBVA and Eurobank acquired book plus the recently acquired Scotiabank, the adjustment amounting to

$50.5 million was made through the allowance and loan balances with no impact in capital. As disclosed in the Company’s 2019 Form 10-K, the Company had initially elected to phase-in

the January 1, 2020 (“day 1”) impact to retained earnings to regulatory capital, over a three-year transition period beginning in 2020. As part of its response to the impact of COVID-19, in

March 2020, the Federal Reserve, Federal Deposit Insurance Corporation and 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.

(d) In March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic

significantly impacted the economic conditions in P.R. and the

U.S., creating significant uncertainties. In response, we increased our provision for credit losses on loans in 1Q 2020 and

2Q 2020 by $34.1 million and $5.0 million, respectively, and established a provision for credit losses on accrued interest receivables under deferral plans in 3Q 2020 of $826 thousand.

(e) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, incurring in merger and restructuring charges of $21.5 million during 4Q 2019, $3.0

million during 2Q 2020, and $2.7 million during 3Q 2020. At December 31, 2019, the consolidated statement of financial condition contemplated the effects of the Scotiabank PR & USVI

acquisition. Nevertheless, the consolidated statement of operations did not contemplate the effects of the Scotiabank PR & USVI acquisition until January 1, 2020.

(f) During 3Q 2019, the Company received $2.4 million proceeds from the sale of fully charged-off originated auto and consumer loans.

(g) During 3Q 2019, the Company decided to sell mostly non-performing loans, increasing the provision by $37.2 million. Originated loans that were transferred to held-for-sale amounted

to $25.3 million at September 30, 2019, the remaining were purchased credit impaired loans. Loans were sold during 4Q 2019, with an additional increase in the provision of $6.6 million.

OFG Bancorp (NYSE: OFG)

Table 2: Consolidated Statements of Operations

Quarter Ended

Nine-Months Ended

September

30,

June 30,

March 31,

December

31,

September

30,

September

30,

September

30,

(Dollars in thousands, except per

share data) (unaudited)

2020

2019

2020

2019

Interest income:

Loans

(1)

Non-PCD loans

83,029

83,832

87,482

74,142

74,910

254,343

220,583

PCD loans

29,018

(a)

34,700

(a)

28,953

10,762

10,862

92,671

(a)

34,388

Total interest income from loans

112,047

118,532

116,435

84,904

85,772

347,014

254,971

Investment securities

2,890

3,160

7,262

6,271

7,883

13,312

27,649

Total interest income

114,937

121,692

123,697

(d)

91,175

93,655

360,326

(d)

282,620

Interest expense:

Deposits

Core deposits

13,808

13,999

15,034

7,957

8,256

42,841

21,934

Brokered deposits

812

1,446

1,586

1,804

2,298

3,844

7,660

Total deposits

14,620

15,445

16,620

(d)

9,761

10,554

46,685

(d)

29,594

Borrowings

784

1,187

1,976

2,205

2,391

3,947

9,442

Total interest expense

15,404

16,632

18,596

11,966

12,945

50,632

39,036

Net interest income

99,533

105,060

105,101

79,209

80,710

309,694

243,584

Provision for credit losses, excluding

PCD loans

(1)

13,845

15,227

40,951

18,859

23,427

70,023

43,675

(Recapture) provision for credit losses

on PCD loans

(1)

(176)

2,469

6,180

4,209

20,343

8,473

30,049

Total provision for credit losses

13,669

(c)

17,696

(c)

47,131

(c)(d)

23,068

43,770

(f)(g)(h)

78,496

(c)(d)

73,724

(f)(g)(h)

Net interest income after

provision for loan and lease losses

85,864

87,364

57,970

56,141

36,940

231,198

169,860

Non-interest income:

Banking service revenues

16,297

13,668

15,713

10,812

10,813

45,678

32,054

Wealth management revenues

7,272

6,366

7,286

7,062

6,611

20,924

19,162

Mortgage banking activities

3,917

3,072

3,234

1,322

1,118

10,223

2,953

Total banking and financial

service revenues

27,486

23,106

26,233

(d)

19,196

18,542

76,825

(d)

54,169

Bargain purchase from Scotiabank PR &

USVI acquisition

3,465

(b)

3,462

(b)

409

315

7,336

(b)

Other income, net

375

584

4,808

(e)

200

3,636

(e)

5,767

(e)

8,613

(e)

Total non-interest income, net

31,326

27,152

31,450

19,711

22,178

89,928

62,782

Non-interest expense:

Compensation and employee benefits

31,955

34,506

35,544

21,817

20,500

102,005

60,716

Occupancy, equipment and

infrastructure costs

11,943

11,837

11,439

7,488

7,307

35,219

22,564

General and administrative expenses

33,452

31,206

37,345

25,451

18,475

102,003

59,656

Net (gain) loss on sale of foreclosed real

estate and other repossessed assets

(866)

316

(193)

541

794

(743)

1,885

Credit related expenses

2,189

2,602

2,715

2,118

2,095

7,506

6,954

Merger and restructuring charges

2,681

(d)

3,006

(d)

304

21,498

(d)

1,556

5,991

(d)

2,556

COVID 19 expenses

2,090

2,008

168

4,266

Total non-interest expense

83,444

85,481

87,322

(d)

78,913

50,727

256,247

(d)

154,331

Income (loss) before income taxes

33,746

29,035

2,098

(3,061)

8,391

64,879

78,311

Income tax expense (benefit)

6,308

7,248

297

(2,070)

1,008

13,853

23,479

Net income (loss)

27,438

21,787

1,801

(991)

7,383

51,026

54,832

Less:

dividends on preferred stock

(1,628)

(4,884)

Net income (loss) available to

common shareholders

25,810

20,159

173

(2,619)

5,755

46,142

49,948

(a) During 2Q 2020 and 3Q 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 and $469 thousand, respectively.

(b) During 2Q 2020, the Company increased the Bargain purchase from Scotiabank PR & USVI acquisition by $3.5 million to adjust the fair value of accrued interest receivable in Day

1, net of taxes. During 3Q 2020, the Company increased the Bargain purchase from Scotiabank PR & USVI acquisition by $3.5 million to adjust the deferred tax asset in Day 1.

(c) In March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic

significantly impacted the economic conditions in P.R.

and the U.S., creating significant uncertainties. In response, we increased our provision for credit losses on loans in 1Q 2020 and

2Q 2020 by $34.1 million and $5.0 million, respectively, and established a provision for credit losses on accrued interest receivables under deferral plans in 3Q 2020 of $826 thousand.

(d) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, incurring in merger and restructuring charges of $21.5 million during 4Q 2019, $3.0

million during 2Q 2020, and $2.7 million during 3Q 2020. On December 31, 2019, the consolidated statement of financial condition contemplated the effects of the Scotiabank PR &

USVI acquisition. Nevertheless, the consolidated statement of operations did not contemplate the effects of the Scotiabank PR & USVI acquisition until January 1, 2020.

(e) During 1Q 2020, 2Q 2019 and 3Q 2019, the Company sold $316 million, $350 million and $322 million available-for-sale mortgage-backed securities, respectively, and recognized a

gain in the sale of $4.7 million, $4.8 million and $3.5 million.

(f) During 3Q 2019, the Company received $2.4 million proceeds from the sale of fully charged-off originated auto and consumer loans.

(g) During 3Q 2019, the Company decided to sell mostly non-performing loans, increasing the provision by $37.2 million. Originated loans that were transferred to held-for-sale

amounted to $25.3 million at September 30, 2019, the remaining were purchased credit impaired loans. Loans were sold during 4Q 2019, with an additional increase in the provision of

$6.6 million.

(h) During 2Q 2019, the Company decided to sell mostly non-performing mortgage loans increasing the provision by $8.8 million. Most of these loans were sold in 3Q 2019, increasing

the provision by an additional $1.8 million.

OFG Bancorp (NYSE: OFG)

Table 3: Consolidated Statements of Financial Condition

September 30,

June 30,

March 31,

December 31,

September 30,

(Dollars in thousands) (unaudited)

2020

2019

Cash and cash equivalents

2,283,050

(b)

1,900,037

(b)

1,325,941

852,757

962,887

Investments:

Trading securities

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

with amortized cost of $412,899 (June 30, 2020 - $529,985;

March 31, 2020 - $648,565; December 31, 2019 - $1,074,474;

September 30, 2019 - $520,960; no allowance for credit

losses for any period)

Mortgage-backed securities

329,719

340,192

355,637

673,886

505,102

US treasury notes

91,531

197,340

298,986

397,183

10,938

Other investment securities

2,565

2,707

2,837

3,100

3,055

Total investment securities available-for-sale

423,815

540,239

657,460

(e)

1,074,169

(d)

519,095

Federal Home Loan Bank (FHLB) stock, at cost

8,322

8,366

10,301

13,048

10,525

Other investments

2,205

1,076

973

560

Total investments

434,364

549,703

668,763

1,087,814

529,718

Loans, net

6,579,140

(b)

6,739,243

(b)

6,541,174

(c)

6,641,847

(d)

4,407,190

Other assets:

Prepaid expenses

51,915

40,119

44,633

52,648

14,244

Deferred tax asset, net

178,957

186,730

196,129

(c)

176,740

112,602

Foreclosed real estate and repossessed properties

21,374

26,152

30,388

33,236

30,488

Premises and equipment, net

83,270

82,234

81,834

81,105

69,754

Goodwill

86,069

Right of use assets

35,900

34,692

36,844

39,112

19,318

Core deposit, customer relationship intangible and other intangibles

48,650

51,406

54,174

56,965

2,491

Servicing asset

47,242

47,926

49,287

50,779

10,125

Accounts receivable and other assets

166,392

188,408

(a)

123,335

138,589

88,619

Total assets

10,016,323

9,932,719

9,238,571

9,297,661

6,333,505

Deposits:

Demand deposits

4,682,991

(b)

4,370,419

(b)

3,711,492

3,579,115

2,228,256

Savings accounts

1,919,859

1,978,118

1,829,054

1,815,044

1,206,569

Time deposits

1,933,517

1,975,223

2,023,211

2,060,953

1,154,871

Brokered deposits

96,090

218,166

255,514

243,498

288,362

Total deposits

8,632,457

8,541,926

7,819,271

7,698,610

(d)

4,878,058

Borrowings:

Securities sold under agreements to repurchase

50,103

190,274

190,261

Advances from FHLB and other borrowings

66,781

68,340

77,601

79,204

79,603

Subordinated capital notes

36,083

Total borrowings

102,864

104,423

163,787

305,561

305,947

Other liabilities:

Derivative liabilities

1,895

2,078

2,059

913

1,159

Acceptances outstanding

18,291

20,034

11,763

21,599

21,796

Lease liability

37,029

35,694

37,702

39,840

21,081

Accrued expenses and other liabilities

159,465

187,280

181,395

185,660

56,388

Total liabilities

8,952,001

8,891,435

8,215,977

8,252,183

5,284,429

Stockholders' equity:

Preferred stock

92,000

Common stock

59,885

Additional paid-in capital

621,978

621,860

621,206

621,515

620,948

Legal surplus

101,233

98,347

95,945

95,779

95,783

Retained earnings

284,053

264,725

250,557

(c)

279,646

285,854

Treasury stock, at cost

(103,095)

(103,121)

(103,289)

(102,339)

(102,936)

Accumulated other comprehensive (loss) income, net

8,268

7,588

6,290

(1,008)

(2,458)

Total stockholders' equity

1,064,322

1,041,284

1,022,594

1,045,478

1,049,076

Total liabilities and stockholders' equity

10,016,323

9,932,719

9,238,571

9,297,661

6,333,505

(a) In March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic

significantly impacted the economic conditions in P.R. and the

U.S., creating significant uncertainties. After recent disruptions in economic conditions caused by COVID-19, the Company

has offered several deferral programs for the payment of principal and interest for auto, personal, credit cards and mortgage,

and commercial loans, for customers whose payments were

not over 89 days past due at March 12, 2020 and requested to be included in these programs, which contributed to the increase of accrued interest receivable from 1Q 2020 to 2Q 2020 of

approximately $40 million.

(b) In response to the Coronavirus (COVID-19) pandemic, CARES Act created funding for the Small Business Administration (SBA) Paycheck Protection Program (PPP), which provides

loans to small businesses to keep their employees on payroll and make other eligible payments. The original funding for the PPP was fully allocated by mid-April 2020, with additional

funding made available on April 24, 2020 under the Paycheck Protection Program and Health Care Enhancement Act. During 2Q 2020 and 3Q 2020, the Company participated in this

program originating 4,342 and 732 PPP loans, respectively. On June 30, 2020 and September 30, 2020, Oriental had PPP loans amounting to $278.1 million and $289.2 million,

respectively. These loans are fully guaranteed by the SBA and risk-weighted at 0%. These funds have been disbursed into the customers' deposit accounts and, along with other

government stimulus and relief during the pandemic, they have increased the Company's cash and core deposits.

(c) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective approach. As a

result, a $39.2 million allowance for credit losses was recorded for Non-PCD loans and $0.2 million for unused commitments with the corresponding adjustment reducing retained earnings,

net of a $13.9 million deferred tax effect. For PCD loans, including BBVA and Eurobank acquired book plus the recently acquired Scotiabank, the adjustment amounting to $50.5 million was

made through the allowance and loan balances with no impact in capital.

(d) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, increasing investments by $576.2 million, loans by $2.2 billion and deposits by $3.0

billion.

(e) During 1Q 2020, the Company sold $316 million available-for-sale mortgage-backed securities and recognized a gain in the sale of $4.7 million.

OFG Bancorp (NYSE: OFG)

Table 4-1: Information on Loan Portfolio and

Production

September 30,

June 30,

March 31,

December 31,

September 30,

(Dollars in thousands) (unaudited)

2020

2019

Non-PCD:

(1)

Mortgage

847,588

874,286

887,950

898,118

588,535

Commercial

1,785,022

1,918,424

1,910,192

1,862,484

1,575,491

Commercial Paycheck Protection Program (PPP Loans)

289,218

(a)

278,059

(a)

Consumer

434,546

458,714

481,710

495,244

383,819

Auto

1,511,829

1,454,987

1,487,701

1,479,612

1,277,114

4,868,203

4,984,470

4,767,553

4,735,458

(c)

3,824,959

Less:

Allowance for credit losses

(156,409)

(151,507)

(149,961)

(b)

(85,044)

(80,579)

Total non- PCD loans held for investment, net

4,711,794

4,832,963

4,617,592

4,650,414

3,744,380

PCD:

(1)

Mortgage

1,504,914

1,541,637

1,561,557

1,591,112

494,278

Commercial

352,555

386,046

391,158

359,601

202,065

Consumer

2,336

2,950

3,350

9,263

802

Auto

31,836

37,409

42,466

43,361

3,883

1,891,641

1,968,042

1,998,531

2,003,337

(c)

701,028

Less:

Allowance for credit losses

(1)

(78,904)

(81,194)

(80,794)

(b)

(31,495)

(73,764)

Total PCD loans held for investment, net

1,812,737

1,886,848

1,917,737

1,971,842

627,264

Total loans held for investment

6,524,531

6,719,811

6,535,329

6,622,256

4,371,644

Mortgage loans held for sale

54,609

19,432

5,845

19,591

23,504

Other loans held for sale

12,042

Total loans, net

6,579,140

6,739,243

6,541,174

6,641,847

4,407,190

Loan Portfolio Summary:

Loans held for investment:

Mortgage

2,352,502

2,415,923

2,449,507

2,489,230

1,082,813

Commercial

2,426,795

2,582,529

2,301,350

2,222,085

1,777,556

Consumer

436,882

461,664

485,060

504,507

384,621

Auto

1,543,665

1,492,396

1,530,167

1,522,973

1,280,997

6,759,844

6,952,512

6,766,084

6,738,795

(c)

4,525,987

Less:

Allowance for credit losses

(235,313)

(232,701)

(230,755)

(b)

(116,539)

(154,343)

Total loans held for investment, net

6,524,531

6,719,811

6,535,329

6,622,256

4,371,644

Mortgage loans held for sale

54,609

19,432

5,845

19,591

23,504

Other loans held for sale

12,042

Total loans, net

6,579,140

6,739,243

6,541,174

6,641,847

4,407,190

(a) In response to the Coronavirus (COVID-19) pandemic, CARES Act created funding for the Small Business Administration (SBA) Paycheck Protection Program (PPP), which provides

loans to small businesses to keep their employees on payroll and make other eligible payments. The original funding for the PPP was fully allocated by mid-April 2020, with additional

funding made available on April 24, 2020 under the Paycheck Protection Program and Health Care Enhancement Act. During 2Q 2020 and 3Q 2020, the Company participated in this

program originating 4,342 and 732 PPP loans, respectively. On June 30, 2020 and September 30, 2020, Oriental had PPP loans amounting to $278.1 million and $289.2 million,

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

(b) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective approach. As a

result, a $39.2 million allowance for credit losses was recorded for Non-PCD loans and $0.2 million for unused commitments with the corresponding adjustment reducing retained earnings,

net of a $13.9 million deferred tax effect. For PCD loans, including BBVA and Eurobank acquired book plus the recently acquired Scotiabank, the adjustment amounting to $50.5 million

was made through the allowance and loan balances with no impact in capital.

(c) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations, increasing investments by $576.2 million, loans by $2.2 billion and deposits by $3.0

billion.

OFG Bancorp (NYSE: OFG)

Table 4-2: Information on Loan

Portfolio and Production

Quarter Ended

Nine-Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

(Dollars in thousands) (unaudited)

2020

2019

2020

2019

Loan production

(13)

Mortgage

93,650

23,744

30,988

23,680

23,805

148,382

69,098

Commercial

83,488

98,558

54,113

216,610

65,635

236,159

190,199

Commercial PPP Loans

10,318

286,420

296,738

US Loan Programs

90,878

35,711

47,125

12,482

12,225

173,714

100,304

Consumer

23,540

14,231

39,199

41,947

48,257

76,970

136,776

Auto

155,880

47,374

109,344

110,184

141,506

312,598

397,968

Total

457,754

506,038

280,769

404,903

291,428

1,244,561

894,346

OFG Bancorp (NYSE: OFG)

Table 5-1: Average

Balances, Net Interest Income and Net Interest Margin

2020 Q3

2020 Q2

2020 Q1

2019 Q4

2019 Q3

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

1,929,024

613

0.13

1,393,187

359

0.10

943,581

2,788

1.19

863,497

3,684

1.69

734,105

4,086

2.21

Investment securities

502,671

2,278

1.81

611,907

2,801

1.83

924,965

4,474

1.93

522,811

2,587

1.98

708,606

3,797

2.14

Loans held for investment

(1)

Non-PCD loans

4,870,753

83,028

6.78

4,857,281

83,832

6.94

4,613,878

87,482

7.63

3,888,442

74,142

7.56

3,873,743

74,910

7.67

PCD loans

1,916,269

29,018

6.06

1,983,369

34,700

7.00

2,073,997

28,953

5.58

611,629

10,762

7.04

665,302

10,862

6.53

Total loans

6,787,022

112,046

6.57

6,840,650

118,532

6.97

6,687,875

116,435

7.00

4,500,071

84,904

7.49

4,539,045

85,772

7.50

Total interest-earning assets

9,218,717

114,937

4.96

8,845,744

121,692

5.53

8,556,421

123,697

5.81

5,886,379

91,175

6.15

5,981,756

93,655

6.21

Interest bearing liabilities:

Deposits

NOW accounts

2,227,687

2,247

0.40

2,069,247

2,138

0.42

1,980,505

2,389

0.48

1,119,371

1,471

0.52

1,118,214

1,616

0.57

Savings accounts

1,927,680

2,010

0.41

1,809,517

1,976

0.44

1,797,658

2,440

0.55

1,195,689

1,843

0.61

1,199,678

2,012

0.67

Time deposits

1,944,856

7,512

1.54

1,990,639

7,835

1.58

2,039,311

8,131

1.60

1,156,965

4,442

1.52

1,151,248

4,427

1.53

Brokered deposits

140,416

812

2.30

235,611

1,446

2.47

236,008

1,586

2.70

268,108

1,804

2.67

358,130

2,298

2.55

6,240,639

12,581

0.80

6,105,014

13,395

0.88

6,053,482

14,546

0.97

3,740,133

9,560

1.01

3,827,270

10,353

1.07

Non-interest bearing deposit

accounts

2,276,400

1,983,092

1,698,964

1,110,847

1,094,047

Fair value premium amortization

and core deposit intangible

amortization

2,039

2,051

2,074

201

Total deposits

8,517,039

14,620

0.68

8,088,106

15,446

0.77

7,752,446

16,620

0.86

4,850,980

9,761

0.80

4,921,317

10,554

0.85

Borrowings

Securities sold under agreements

to repurchase

46,154

334

2.91

158,462

1,002

2.54

190,000

1,189

2.48

224,783

1,342

2.37

Advances from FHLB and other

borrowings

66,833

476

2.83

75,432

505

2.69

77,255

539

2.81

78,282

541

2.74

79,328

550

2.75

Subordinated capital notes

36,083

308

3.39

36,083

347

3.87

36,083

435

4.85

36,083

475

5.22

36,083

499

5.49

Total borrowings

102,916

784

3.03

157,669

1,186

3.03

271,800

1,976

2.92

304,365

2,205

2.87

340,194

2,391

2.79

Total interest-bearing liabilities

8,619,955

15,404

0.71

8,245,775

16,632

0.81

8,024,246

18,596

0.93

5,155,345

11,966

0.92

5,261,511

12,945

0.98

Interest rate spread

99,533

4.25

105,060

4.72

105,101

4.88

79,209

5.23

80,710

5.23

Net interest margin

4.30

4.78

4.94

5.34

5.35

SOP loan cost recoveries (interest

recoveries in 2Q and 3Q 2020)

469

5,982

1,033

371

Adjusted excluding cost/interests

recoveries (Non-GAAP):

Total interest-earning assets

9,218,717

114,468

4.94

8,845,744

115,710

5.26

8,556,421

123,697

5.81

5,886,379

90,142

6.08

5,981,756

93,284

6.19

Interest rate spread

99,064

4.23

99,078

4.45

105,101

4.88

78,176

5.16

80,339

5.21

Net interest margin

4.28

4.50

4.94

5.27

5.33

Core deposits: (Non-GAAP)

Deposits

NOW accounts

2,227,687

2,247

0.40

2,069,247

2,138

0.42

1,980,505

2,389

0.48

1,119,371

1,471

0.52

1,118,214

1,616

0.57

Savings accounts

1,927,680

2,010

0.41

1,809,517

1,976

0.44

1,797,658

2,440

0.55

1,195,689

1,843

0.61

1,199,678

2,012

0.67

Time deposits

1,944,856

7,512

1.54

1,990,639

7,835

1.58

2,039,311

8,131

1.60

1,156,965

4,442

1.52

1,151,248

4,427

1.53

6,100,223

11,769

0.77

5,869,403

11,949

0.82

5,817,474

12,960

0.90

3,472,025

7,756

0.89

3,469,140

8,055

0.92

Non-interest bearing deposit

accounts

2,276,400

1,983,092

1,698,964

1,110,847

1,094,047

Total core deposits

8,376,623

11,769

0.56

7,852,495

11,949

0.61

7,516,438

12,960

0.69

4,582,872

7,756

0.67

4,563,187

8,055

0.70

OFG Bancorp (NYSE: OFG)

Table 5-2: Average

Balances, Net Interest Income and Net Interest Margin (Continued)

2020 YTD

2019 YTD

Interest

Average

Income/

Yield/

Average

Income/

Yield/

(Dollars in thousands) (unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Interest earning assets:

Cash equivalents

1,423,781

3,760

0.35

535,865

9,357

2.33

Investment securities

679,201

9,552

1.88

1,000,217

18,292

2.44

Loans held for investment

Non-PCD loans

4,780,966

254,343

7.09

3,822,312

220,583

7.72

PCD loans

1,990,938

92,671

6.21

697,081

34,388

6.58

Total loans

6,771,904

347,014

6.83

4,519,393

254,971

7.54

Total interest-earning assets

8,874,886

360,326

5.41

6,055,475

282,620

6.24

Interest bearing liabilities:

Deposits

NOW accounts

2,092,973

6,772

0.43

1,120,825

4,800

0.57

Savings accounts

1,845,253

6,426

0.46

1,187,020

5,508

0.62

Time deposits

1,991,432

23,480

1.57

1,070,111

11,024

1.38

Brokered deposits

203,779

3,844

2.51

422,364

7,660

2.42

6,133,437

40,522

0.88

3,800,320

28,992

1.02

Non-interest bearing deposit accounts

1,987,211

1,097,145

Fair value premium amortization and core deposit intangible amortization

6,163

602

Total deposits

8,120,648

46,685

0.77

4,897,465

29,594

0.81

Borrowings

Securities sold under agreements to repurchase

67,956

1,335

2.62

336,859

6,235

2.47

Advances from FHLB and other borrowings

73,150

1,521

2.77

80,294

1,671

2.78

Subordinated capital notes

36,083

1,091

4.02

36,083

1,536

5.69

Total borrowings

177,189

3,947

2.97

453,236

9,442

2.79

Total interest-bearing liabilities

8,297,837

50,632

0.81

5,350,701

39,036

0.98

Interest rate spread

309,694

4.60

243,584

5.26

Net interest margin

4.65

5.38

SOP loan cost recoveries (interest recoveries in 2020)

6,451

1,338

Adjusted excluding cost/interests recoveries (Non-GAAP):

Total interest-earning assets

8,874,886

353,875

5.31

6,055,475

281,282

6.21

Interest rate spread

303,243

4.50

242,246

5.23

Net interest margin

4.55

5.35

Core deposits: (Non-GAAP)

Deposits

NOW accounts

2,092,973

6,772

0.43

1,120,825

4,800

0.57

Savings accounts

1,845,253

6,426

0.46

1,187,020

5,508

0.62

Time deposits

1,991,432

23,480

1.57

1,070,111

11,024

1.38

5,929,658

36,678

0.83

3,377,956

21,332

0.84

Non-interest bearing deposit accounts

1,987,211

1,097,145

Total core deposits

7,916,869

36,678

0.62

4,475,101

21,332

0.64

OFG Bancorp (NYSE: OFG)

Table 6-1: Loan

Information and Performance Statistics (1)

2020

2019

(Dollars in thousands) (unaudited)

Net Charge-offs

(21)

Non-PCD

Mortgage:

Charge-offs

185

418

1,075

16,299

(b)

Recoveries

(269)

(9)

(249)

(437)

(493)

Total mortgage

(213)

176

169

638

15,806

Commercial:

Charge-offs

298

497

3,771

463

8,421

(b)

Recoveries

(253)

(631)

(1,522)

(606)

(176)

Total commercial

(134)

2,249

(143)

8,245

Consumer:

Charge-offs

5,114

4,187

6,015

5,289

5,317

Recoveries

(663)

(443)

(644)

(196)

(1,463)

(a)

Total consumer

4,451

3,744

5,371

5,093

3,854

Auto:

Charge-offs

10,123

13,300

13,053

12,930

12,383

Recoveries

(5,950)

(3,405)

(4,211)

(4,123)

(5,802)

(a)

Total auto

4,173

9,895

8,842

8,807

6,581

Total

8,456

13,681

16,631

14,395

34,486

PCD

Mortgage:

Charge-offs

1,677

2,178

5,143

Recoveries

(89)

(580)

(122)

Total mortgage

1,588

1,598

5,021

Commercial:

Charge-offs

293

386

2,357

Recoveries

(91)

(286)

(375)

Total commercial

202

100

1,982

Consumer:

Charge-offs

431

Recoveries

(30)

(63)

Total consumer

368

Auto:

Charge-offs

474

600

375

Recoveries

(211)

(229)

(343)

Total auto

263

371

Total

2,114

2,069

7,403

Total Net Charge-offs

10,570

15,750

24,034

14,395

34,486

Net Charge-off Rates

(21)

Mortgage

0.24%

0.30%

0.86%

0.24%

5.68%

Commercial

0.04%

-0.01%

0.76%

-0.03%

1.86%

Consumer

3.94%

3.12%

4.63%

5.15%

3.93%

Auto

1.17%

2.72%

2.31%

2.73%

2.09%

Total

0.62%

0.92%

1.44%

1.28%

3.04%

(b)

Average Loans Held For Investment

(21)

Mortgage

2,325,756

2,366,600

2,414,685

1,062,845

1,112,488

Commercial

2,484,977

2,484,573

2,239,684

1,753,069

1,772,332

Consumer

457,620

479,957

496,313

395,611

392,725

Auto

1,518,669

1,509,521

1,537,194

1,288,546

1,261,501

Total

6,787,022

6,840,650

6,687,875

4,500,071

4,539,045

(a) During 3Q 2019, the Company received $2.4 million proceeds from the sale of fully charged-off originated auto and consumer loans.

(b) During 3Q 2019, the Company decided to sell several non-performing originated loans, which were sold during 4Q 2019, increasing charge-offs by $15.9 million, $4.4 million in

commercial loans and $11.5 million in residential mortgages.

Table 6-2: Loan

Information and Performance Statistics (Excludes PCD Loans) (1)

OFG Bancorp (NYSE: OFG)

2020

2019

(Dollars in thousands) (unaudited)

Early Delinquency (30 - 89 days past due)

Mortgage

16,783

15,665

20,518

22,389

21,631

Commercial

5,151

7,704

6,074

9,895

4,467

Consumer

12,032

18,254

13,127

9,560

9,360

Auto

87,912

89,825

110,959

103,749

103,452

Total

121,878

131,448

150,678

(a)

145,593

138,910

Early Delinquency Rates (30 - 89 days past due)

Mortgage

1.98%

1.79%

2.31%

2.49%

3.68%

Commercial

0.29%

0.40%

0.32%

0.53%

0.28%

Consumer

2.77%

3.98%

2.73%

1.93%

2.44%

Auto

5.81%

6.17%

7.46%

7.01%

8.10%

Total

2.50%

2.64%

3.16%

3.07%

3.63%

Total Delinquency (30 days and over past due)

Mortgage:

Traditional, Non traditional, and Loans under Loss Mitigation

51,123

40,719

46,768

41,314

40,194

GNMA's buy-back option program

62,651

75,091

75,314

75,181

11,403

Total mortgage

113,774

115,810

122,082

116,495

51,597

Commercial

35,596

38,258

33,746

30,111

25,271

Consumer

17,080

22,796

16,808

12,258

11,927

Auto

109,735

100,027

131,715

118,020

117,716

Total

276,185

276,891

304,351

(a)

276,884

206,511

Total Delinquency Rates (30 days and over past due)

Mortgage:

Traditional, Non traditional, and Loans under Loss Mitigation

6.03%

4.66%

5.27%

4.60%

6.83%

GNMA's buy-back option program

7.39%

8.59%

8.48%

8.37%

1.94%

Total mortgage

13.42%

13.25%

13.75%

12.97%

8.77%

Commercial

1.99%

1.77%

1.62%

1.60%

Consumer

3.93%

4.97%

3.49%

2.48%

3.11%

Auto

7.26%

6.87%

8.85%

7.98%

9.22%

Total

5.67%

5.56%

6.38%

5.85%

5.40%

Nonperforming Assets

(14)

Mortgage

40,477

30,491

31,073

22,552

21,138

Commercial

44,941

44,187

42,668

42,606

36,409

Consumer

5,206

4,933

3,690

5,287

4,213

Auto

22,583

10,539

21,147

14,295

15,063

Total nonperforming loans

113,207

90,150

98,578

(a)

84,740

76,823

Foreclosed real estate

21,374

24,792

27,292

29,909

26,952

Other repossessed assets

1,918

1,360

3,096

3,327

3,537

Total nonperforming assets

136,499

116,302

128,966

117,976

107,312

Nonperforming Loan Rates

Mortgage

4.78%

3.49%

3.50%

2.51%

3.59%

Commercial

2.52%

2.30%

2.23%

2.29%

2.31%

Consumer

1.20%

1.08%

0.77%

1.07%

1.10%

Auto

1.49%

0.72%

1.42%

0.97%

1.18%

Total loans

2.33%

1.81%

2.07%

1.79%

2.01%

(a) During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak

of a novel strain of coronavirus (COVID-19). The

pandemic has significantly impacted the economic conditions in P.R.

and the U.S., creating significant uncertainties. After recent disruptions in economic conditions caused by COVID-19,

the Company has offered several deferral programs for the payment of principal and interest for auto, personal, credit cards and mortgage, and commercial loans, for customers whose

payments were not over 89 days past due at March 12, 2020 and requested to be included in these programs. These loans may have been classified as delinquent loans in 1Q 2020, due

to the short proximity to quarter end, and subsequently adjusted when the deferral program was granted. Deferrals dropped to 2% of loans in 3Q 2020 from 30% in 2Q 2020. Most of that

relates to about $112 million commercial loans, and most of that represents well-capitalized customers in the hospitality industry.

OFG Bancorp (NYSE: OFG)

Table 6-3: Loan

Information and Performance Statistics (1)

2020

2019

(Dollars in thousands) (unaudited)

Nonperforming PCD Loans

(14)

Mortgage

1,003

1,373

1,341

Commercial

79,631

81,064

82,411

225

242

Consumer

499

560

Total nonperforming loans

80,638

82,449

83,762

724

802

Nonperforming PCD Loan Rates

Mortgage

0.07%

0.09%

0.00%

Commercial

22.59%

21.00%

21.07%

0.06%

0.12%

Consumer

0.17%

0.41%

0.30%

5.39%

69.83%

Total

4.26%

4.19%

0.04%

0.11%

Total PCD Loans Held for Investment

(21)

Mortgage

1,504,914

1,541,637

1,561,557

1,591,112

494,278

Commercial

352,555

386,046

391,158

359,601

202,065

Consumer

2,336

2,950

3,350

9,263

802

Total loans

1,859,805

1,930,633

1,956,065

1,959,976

697,145

OFG Bancorp (NYSE: OFG)

Table 7: Allowance for Credit Losses (1)

Quarter Ended September 30, 2020

(Dollars in thousands) (unaudited)

Mortgage

Commercial

Consumer

Auto

Total

Allowance for credit losses Non-PCD:

Balance at beginning of period

19,973

43,011

31,954

56,569

151,507

(Recapture) provision for credit losses

(564)

(1,771)

(378)

16,071

13,358

Charge-offs

(56)

(298)

(5,114)

(10,123)

(15,591)

Recoveries

269

253

663

5,950

7,135

Balance at end of period

19,622

41,195

27,125

68,467

156,409

Allowance for credit losses PCD:

Balance at beginning of period

30,919

48,914

169

1,192

81,194

Provision (recapture) for credit losses

1,077

(1,262)

(176)

Charge-offs

(1,677)

(293)

(60)

(474)

(2,504)

Recoveries

(1)

211

390

Balance at end of period

30,408

47,450

108

938

78,904

Allowance for credit losses summary:

Balance at beginning of period

50,892

91,925

32,123

57,761

232,701

Provision (recapture) for credit losses

513

(3,033)

(378)

16,080

13,182

Charge-offs

(1,733)

(591)

(5,174)

(10,597)

(18,095)

Recoveries

358

344

662

6,161

7,525

Balance at end of period

50,030

88,645

27,233

69,405

235,313

Allowance coverage ratio

2.13%

3.65%

6.23%

4.50%

3.48%

Allowance coverage ratio excluding PPP loans (Non-GAAP)

2.13%

4.15%

6.23%

4.50%

3.64%

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.

2020

2019

(Dollars in thousands) (unaudited)

Stockholders' Equity to Non-GAAP Tangible Common Equity

Total stockholders' equity

1,064,322

1,041,284

1,022,594

(a)

1,045,478

1,049,076

Less:

Intangible assets

(134,719)

(137,475)

(140,243)

(143,034)

(88,560)

Noncumulative perpetual preferred stock

(92,000)

Noncumulative perpetual preferred stock issuance costs

10,130

Tangible common equity

847,733

821,939

800,481

820,574

878,646

Common stock outstanding at end of period

51,345

51,342

51,327

51,399

51,347

Tangible book value (Non-GAAP)

16.51

16.01

15.60

15.96

17.11

Total Assets to Tangible Assets

Total assets

10,016,323

9,932,719

9,238,571

9,297,661

6,333,505

Less:

Intangible assets

(134,719)

(137,475)

(140,243)

(143,034)

(88,560)

Tangible assets (Non-GAAP)

9,881,604

9,795,244

9,098,328

9,154,627

6,244,945

Non-GAAP TCE Ratio

Tangible common equity

847,733

821,939

800,481

820,574

878,646

Tangible assets

9,881,604

9,795,244

9,098,328

9,154,627

6,244,945

TCE ratio

8.58%

8.39%

8.80%

8.96%

14.07%

Average Equity to Non-GAAP Average Tangible Common

Equity

Average total stockholders' equity

1,062,460

1,037,195

1,043,481

1,062,720

1,061,541

Less:

Average noncumulative perpetual preferred stock

(92,000)

Average noncumulative perpetual preferred stock issuance costs

10,130

Average total common stockholders' equity

980,590

955,325

961,611

980,850

979,671

Less:

Average intangible assets

(136,138)

(139,094)

(141,875)

(89,005)

(88,701)

Average tangible common equity

844,452

816,231

819,736

891,845

890,970

(a) On January 1, 2020, the Company implemented ASU No. 2016-13: Measurement of Credit Losses on Financial Instruments "(CECL)" using the modified retrospective approach. As a

result, a $39.2 million allowance for credit losses was recorded for Non-PCD loans and $0.2 million for unused commitments with the corresponding adjustment reducing retained earnings,

net of a $13.9 million deferred tax effect. For PCD loans, including BBVA and Eurobank acquired book plus the recently acquired Scotiabank, the adjustment amounting to $50.5 million was

made through the allowance and loan balances with no impact in capital.

OFG Bancorp (NYSE: OFG)

Table 8-2: Reconciliation of GAAP to Non-GAAP Measures and Calculation of Regulatory Capital Measures

(Continued)

BASEL III

Standardized

2020

2019

(Dollars in thousands) (unaudited)

Regulatory Capital Metrics

Common equity Tier 1 capital

862,636

836,899

816,356

735,442

858,092

Tier 1 capital

979,506

953,769

933,226

852,312

974,962

Total risk-based capital

(15)

1,065,711

1,040,987

1,020,748

937,963

1,035,910

Risk-weighted assets

6,873,472

6,957,906

6,983,626

(a)

6,740,846

4,771,165

Regulatory Capital Ratios

Common equity Tier 1 capital ratio

(16)

12.55%

12.03%

11.69%

10.91%

17.98%

Tier 1 risk-based capital ratio

(17)

14.25%

13.71%

13.36%

12.64%

20.43%

Total risk-based capital ratio

(18)

15.50%

14.96%

14.62%

13.91%

21.71%

Leverage ratio

(19)

10.00%

10.16%

10.14%

9.24%

15.41%

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach

Total stockholders' equity

(1)

1,064,322

1,041,284

1,022,594

1,045,478

1,049,076

CECL transition adjustment

(20)

33,494

32,269

31,882

Less:

Noncumulative perpetual preferred stock

(92,000)

Noncumulative perpetual preferred stock issuance costs

10,130

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

(9,453)

(8,885)

(7,576)

441

1,742

Unrealized losses on cash flow hedges, net of income tax

1,185

1,297

1,286

567

716

1,007,678

984,095

966,316

964,616

969,664

Less:

Disallowed goodwill

(86,069)

Disallowed other intangible assets, net

(33,810)

(35,563)

(37,241)

(39,127)

(1,557)

Disallowed deferred tax assets, net

(25,163)

(25,564)

(26,650)

(a)

(95,879)

(23,946)

Threshold 15%

(a)

(8,099)

Common equity Tier 1 capital

862,636

836,899

816,356

735,442

858,092

Plus:

Qualifying noncumulative perpetual preferred stock

92,000

Qualifying noncumulative perpetual preferred stock issuance costs

(10,130)

Subordinated capital notes

35,000

Tier 1 capital

979,506

953,769

933,226

852,312

974,962

Plus tier 2 capital:

Qualifying allowance for loan and lease losses

86,205

87,218

87,522

85,651

60,948

Total risk-based capital

1,065,711

1,040,987

1,020,748

937,963

1,035,910

(a) During 1Q 2020, the Company decided to early implement Simplifications to the Capital Rule, which simplified the regulatory capital treatment for mortgage servicing assets (MSA) and

certain deferred tax assets arising from temporary differences (temporary difference DTAs). It Increased

common equity tier 1 (CET1) capital threshold deductions from 10 percent to 25

percent and removes the aggregate 15 percent CET1 threshold deduction. However, it retains the 250 percent risk weight applicable to non-deducted amounts of MSAs and temporary

difference DTAs.

OFG Bancorp (NYSE: OFG)

Table 8-3: Reconciliation of GAAP to Non-GAAP with adjustments to exclude the impact of significant events.

The Company prepared its Consolidated Financial Statement using accounting principles generally accepted in the U.S. (“U.S. GAAP” or the “reported basis”). In addition to analyzing the

Company’s results on the reported basis, management monitors the “Adjusted net income” of the Company and excludes the impact of certain transactions on the results of its operations.

Management believes that “Adjusted net income” provides meaningful information to investors about the underlying performance of the Company’s ongoing operations. “Adjusted net income”

is a non-GAAP financial measure.

The table below describes adjustments to net income for the quarters ended September 30, 2020, June 30, 2020 and March 31, 2020.

Quarter ended September 30, 2020

Quarter ended June 30, 2020

Quarter ended March 31, 2020

Income Tax

Impact on

Income Tax

Impact on

Income Tax

Impact on

(Dollars in thousands) (unaudited)

Pre-tax

Effect

Net Income

Pre-tax

Effect

Net Income

Pre-tax

Effect

Net Income

U.S. GAAP net income

27,438

21,787

1,801

Non-GAAP adjustments:

Sale of mortgage-backed securities

available-for-sale

(4,728)

1,324

(3,404)

(a)

Merger expenses

2,681

(1,005)

1,676

(b)

3,006

(1,127)

1,879

(b)

304

(114)

190

(b)

Bargain purchase from Scotiabank PR &

USVI

(3,465)

(c)

(3,462)

(c)

(409)

(c)

Interest recoveries on PCI loans acquired

in the Scotiabank PR & USVI acquisition

(469)

176

(293)

(d)

(5,982)

2,243

(3,739)

(d)

COVID 19 additional provision for credit

losses

826

(310)

516

(e)

5,000

(1,875)

3,125

(e)

34,083

(12,781)

21,302

(e)

COVID 19 expenses

2,090

(784)

1,306

(f)

2,008

(753)

1,255

(f)

168

(63)

105

(f)

Adjusted net income (Non-GAAP)

27,178

20,845

19,585

Less:

dividends on preferred stock

(1,628)

Adjusted net income available to

common shareholders (Non-GAAP)

25,550

19,217

17,957

Adjusted earnings per common share -

diluted (Non-GAAP)

0.50

0.37

0.35

Adjusted Performance Metrics -

Reconciliation to GAAP Financial

Measures:

Net income

27,438

21,787

1,801

Non-GAAP adjustments

(260)

(942)

17,784

Adjusted net income (Non-GAAP)

27,178

20,845

19,585

Average assets

9,918,381

9,512,129

9,326,627

Return on average assets

1.11%

0.92%

0.08%

Adjusted return on average assets (Non-

GAAP)

1.10%

0.88%

0.84%

Net income available to common

shareholders

25,810

20,159

173

Non-GAAP adjustments

(260)

(942)

17,784

Adjusted net income available to common

shareholders (Non-GAAP)

25,550

19,217

17,957

Average tangible common equity

844,452

816,231

819,736

Return on average tangible common

stockholders' equity

12.23%

9.88%

0.08%

Adjusted return on average tangible

common stockholders' equity (Non-

GAAP)

12.10%

9.42%

8.76%

Total non-interest expense

83,444

85,481

87,322

Non-GAAP adjustments, pre-tax

(4,771)

(5,014)

(472)

Adjusted total non-interest expense (Non-

GAAP)

78,673

80,467

86,850

Net interest income

99,533

105,060

105,101

Total banking and financial service

revenues

27,486

23,106

26,233

Non-GAAP adjustments

(469)

(5,982)

126,550

122,184

131,334

Efficiency ratio

65.69%

66.70%

66.49%

Adjusted efficiency ratio (Non-GAAP)

62.17%

65.86%

66.13%

(a) During 1Q 2020, the Company sold $316 million available-for-sale mortgage-backed securities and recognized a gain in the sale of $4.7 million.

(b) On December 31, 2019, the Company acquired Scotiabank's Puerto Rico and USVI operations ("the SBPR & USVI Acquisition"). During 1Q 2020, 2Q 2020 and 3Q 2020, $0.3 million, $3.0

million, and $2.7 million, respectively, were incurred in related expenses.

(c) In 2019, the Company recognized a bargain purchase gain of $5.7 million from the SBPR & USVI Acquisition. During 1Q 2020, 2Q 2020 and 3Q 2020, the Company increased the bargain

purchase gain from Scotiabank PR & USVI acquisition by $0.4 million, $3.5 million and $3.5 million, respectively, as remeasurement period adjustments.

(d) During 2Q 2020 and 3Q 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 and $0.5 million, respectively.

(e) In March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic

significantly impacted the economic conditions in P.R.

and the U.S., creating significant uncertainties. In response, we increased our provision for credit losses on loans in 1Q 2020 and 2Q

2020 by $34.1 million and $5.0 million, respectively, and established a provision for credit losses on accrued interest receivables under deferral

plans in 3Q 2020 of $826 thousand.

(f) During 1Q 2020, 2Q 2020 and 3Q 2020, the Company recorded $0.2 million, $2.0 million and $2.1 million expenses, respectively, in relation to the global pandemic from the coronavirus

COVID-19.

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.