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):

January 25, 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

7.125% Noncumulative Monthly Income Preferred

Stock, Series A ($25.00 liquidation preference

per share)

OFG.PRA

New York Stock Exchange

7.0% Noncumulative Monthly Income Preferred

Stock, Series B ($25.00 liquidation preference

per share)

OFG.PRB

New York Stock Exchange

7.125% Noncumulative Perpetual Preferred Stock,

Series D ($25.00 liquidation preference per

share)

OFG.PRD

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 January 25, 2021, OFG Bancorp (the “Company”) announced the results for the quarter ended December 31,

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 January 25, 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: January 25, 2021

By:

/s/ Maritza Arizmendi

Maritza Arizmendi

Executive Vice President and Chief Financial Officer

ofg8kexhibit994q20

Exhibit 99

OFG Bancorp Reports 4Q20 & 2020 Results

SAN JUAN,

Puerto Rico,

January 25,

2021 –

OFG Bancorp

(NYSE: OFG),

the financial

holding company

for Oriental

Bank,

reported results for the fourth

quarter and year ended December 31, 2020.

CEO Comment

José Rafael

Fernández, President,

Chief Executive

Officer, and

Vice Chairman

of the

Board, said:

“We had

another quarter

of strong

performance in

our core

businesses, reflecting

our larger

scale, solid

levels of

new loan

production, lower

cost of

funds, higher

non-

interest income, and reduced expenses.

“On a

macro-basis, we

are benefitting

from the

improved economic

environment in

Puerto Rico

and the U.S.

Virgin Islands

due to

the

continuing nascent rebound from the easing of COVID-19 restrictions and from pandemic-related stimulus.

“Within this environment,

Oriental’s success

continues to

be driven by

resiliency, agility,

and being more

than ready to

help customers

and communities

with their

changing product

and service needs.

During the

fourth quarter,

we also

completed the

integration of

the

Scotiabank acquisition and related cost-savings.

“We look

forward to

realizing the

full benefits of

our larger

scale over

the course

of 2021. The

vaccine inoculations should

reduce the

threat of COVID-19, and the economies of Puerto Rico and USVI should expand from all the pending federal reconstruction and stimulus.

“2020 was another challenging

year for Puerto

Rico, USVI and

Oriental. As in

years past, we

successfully worked our

way through it.

Our

heartfelt thanks go

to our team members

who helped customers

by swiftly processing

loan deferrals; implementing

an easy-to-use, fully

online Paycheck Protection

Program; managing the

rapid influx of

deposits; and providing contactless

and in-person services in

a COVID-

safe manner.

Thanks also

to the

many team

members who

had to

successfully adapt

to working

from home

and implement

the

Scotiabank integration in the middle of a pandemic.”

4Q20 Highlights

Increased Earnings

& Revenues:

EPS diluted

of $0.42

compared to

a loss

of $0.05

in 4Q19.

Results reflected

pre-tax merger

and

restructuring charges of $10.1 million

compared to $21.5 million in 4Q19.

Total core

revenues were $132.8 million versus

$98.4 million in

4Q19. Net interest

income of $98.7

million increased 24.7%.

Non-interest income

of $34.0 million

increased 77.4%. Net

interest margin

was 4.24% compared to 5.34% in 4Q19.

Solid Production:

New loan

originations totaled

$485.4 million

compared to

$404.9 million

in 4Q19.

Compared to

3Q20, production

(excluding Paycheck

Protection Program loans)

increased $38.0 million, driven

by commercial and mortgage

with continued strong

levels

of auto and consumer lending. Net loans declined $77.9 million from 9/30/20 to $6.5 billion at 12/31/20.

Lower Provision:

Provision for credit

losses was $14.2

million compared to

$23.1 million in

4Q19. 4Q20 net

charge-offs of

$44.8 million

included $31.2 million for two

acquired commercial loans that

were substantially reserved.

4Q20 loan deferrals

fell to 1.4% of

total loans

from 2.0% in 3Q20.

Core Expenses:

Non-interest expenses

were $89.0

million compared

to $78.9

million in 4Q19.

Excluding merger

and COVID

-19 related

costs, 4Q20 non-interest

expenses of $77.4

million fell $9.4

million from 1Q20,

amounting to approximately

$38.0 million in

annualized

reductions from the Scotiabank acquisition, exceeding original expectations by about 9%.

Lower Cost

of Funds:

Cost of

funds was

66 bps

compared to

92 bps

in 4Q19.

Compared to

3Q20, cost

of funds

fell 5

bps. Customer

deposits declined $169.8 million from 9/30/20 to $8.4 billion at 12/31/20.

Capital Building:

Tangible book value per

share increased $1.01 to $16.97 compared to 4Q19

and CET1 capital increased $158.6 million to

$894.1 million. The CET1 ratio was 13.08% versus 12.55% on 9/30/20 and 10.91% on 12/31/19, when the Scotiabank acquisition closed.

2020 Highlights

Increased Earnings & Revenues:

EPS diluted of $1.32

compared to $0.92 in

Total

core revenues were

$519.3 million versus $396.2

million in 2019,

with increases of

26.5% and 51.1%

in net interest

and non-interest income,

respectively. New

loan production was

$1.7

billion compared to $1.3 billion. Net interest margin was 4.55% compared to 5.37%. The effective

tax rate was 21.6% compared to 28.5%.

Results Included

(all amounts pre

-tax):

Merger and

restructuring charges

mostly related

to the

Scotiabank acquisition of

$16.1 million

compared to $24.1 million in 2019, and

bargain purchase gain from

the acquisition of $7.3 million compared to $0.3

million in 2019. 2020

also included $39.9 million in COVID-19 related provision for credit losses and $5.8 million in COVID-19 related expenses.

Conference Call

A conference call

to discuss 4Q20 results,

outlook and related matters

will be held today

at 10:00 AM ET.

Phone (888) 562-3356 or

(973)

582-2700. Conference ID:

864-1568. The call can

also be accessed live

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

and year

ended December

31, 2020,

and the

4Q20

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

and 8-2

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)

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

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 of 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

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 December 31, 2020 Annual Report on Form 10-K 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 1-2: Financial and Statistical Summary - Consolidated

2020

2019

(Dollars in thousands, except per share data)

(unaudited)

Statement of Operations

Net interest income

98,738

99,533

105,060

105,101

(g)

79,209

Non-interest income, net (core)

(2)

34,047

(a)

27,486

23,106

26,233

(g)

19,196

Total core revenues

132,785

(a)

127,019

128,166

131,334

(g)

98,405

Non-interest expense

89,039

(g)

83,444

85,481

87,322

(g)

78,913

(g)

Pre-provision net revenues

(22)

44,123

47,415

46,731

49,229

20,007

Total provision

for credit losses

14,176

13,669

(f)

17,696

(f)

47,131

(e)(f)

23,068

Net income (loss) before income taxes

29,947

(a)(g)

33,746

29,035

2,098

(3,061)

Income tax expense (benefit)

6,646

6,308

7,248

297

(2,070)

Net income (loss) available to common stockholders

21,673

(a)(g)

25,810

20,159

173

(2,619)

Common Share Statistics

Earnings (loss) per common share - basic

(3)

0.42

(a)(g)

0.50

0.39

(0.05)

Earnings (loss) per common share - diluted

(4)

0.42

(a)(g)

0.50

0.39

(0.05)

Average common shares outstanding

51,350

51,342

51,336

51,404

51,360

Average common shares outstanding

and equivalents

51,618

51,527

51,470

51,713

51,791

Cash dividends per common share

0.07

Book value per common share (period end)

19.54

19.13

18.69

18.33

(e)

18.75

Tangible book value per common

share (period end)

(5)

16.97

16.51

16.01

15.60

(e)

15.96

Balance Sheet (Average Balances)

Loans

(6)

6,708,284

(c)

6,787,022

(c)

6,840,650

(c)

6,687,875

4,500,071

Interest-earning assets

9,270,739

(c)

9,218,717

(c)

8,845,744

(c)

8,556,421

5,886,379

Total assets

9,921,254

(c)

9,918,381

(c)

9,512,129

(c)

9,326,627

6,325,334

Core deposits

8,451,308

8,376,623

7,852,495

7,516,438

4,582,872

Total deposits

8,515,646

8,517,039

8,088,106

7,752,446

4,850,980

Interest-bearing deposits

6,199,929

6,240,639

6,105,014

6,053,482

3,740,133

Borrowings

101,930

102,916

157,669

271,800

304,365

Stockholders' equity

1,083,423

1,062,460

1,037,195

1,043,481

(e)

1,062,720

Common stockholders' equity

1,001,553

980,590

955,325

961,611

(e)

980,850

Performance Metrics

Net interest margin

(7)

4.24%

4.30%

4.78%

4.94%

5.34%

Return on average assets

(8)

0.94%

1.11%

0.92%

0.08%

-0.06%

Return on average tangible common stockholders'

equity

(9)

9.99%

12.23%

9.88%

0.08%

-1.17%

Efficiency ratio

(10)

67.06%

(g)

65.69%

66.70%

66.49%

80.19%

Full-time equivalent employees, period end

2,275

2,332

2,373

2,449

2,455

Credit Quality Metrics

(1)(21)

Allowance for loan and lease losses

204,809

(b)

235,313

232,701

230,755

(e)(f)

116,539

Allowance as a % of loans held for investment

3.07%

(b)

3.48%

(c)

3.35%

(c)

3.41%

1.73%

Net charge-offs

44,814

(b)

10,570

15,750

24,034

14,395

Net charge-off rate

(11)

2.67%

(b)

0.62%

0.92%

1.44%

1.28%

Early delinquency rate (30 - 89 days past

due)

2.68%

2.50%

2.64%

3.16%

3.07%

Total delinquency rate

(30 days and over)

5.74%

5.67%

5.56%

6.38%

5.85%

Capital Ratios (Non-GAAP)

(12)(20)

Leverage ratio

10.30%

10.00%

10.16%

10.14%

(d)(e)

9.24%

Common equity Tier 1 capital ratio

13.08%

12.55%

12.03%

(c)

11.69%

(d)(e)

10.91%

Tier 1 risk-based capital ratio

14.78%

14.25%

13.71%

(c)

13.36%

(d)(e)

12.64%

Total risk-based

capital ratio

16.04%

15.50%

14.96%

(c)

14.62%

(d)(e)

13.91%

Tangible common equity ("TCE")

ratio

9.00%

8.58%

8.39%

8.80%

8.96%

(a) During 4Q 2020, the Company recognized annual insurance

contingent commissions amounting to $4.0 million.

In addition, mortgage banking activities reflected higher gains

sale of loans and securitizations, and higher servicing fees compared

to 3Q 2020.

(b) During 4Q 2020, commercial charge-offs reflected

$31.2 million from two commercial non-performing PCD

loans from the government and hospital sectors,

reducing loan

balance and their corresponding allowance for credit

losses by that amount.

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, September 30, 2020 and December 31, 2020, Oriental had PPP loans amounting

to $278.1 million,

$289.2 million and $282.7 million, respectively.

These loans are fully guaranteed by the SBA and risk-weighted

at 0%.

(d) 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.

(e) 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 year

s, 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.

(f) 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.

(g) 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, $2.7 million during 3Q 2020, and $10.1 million during 4Q 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.

OFG Bancorp (NYSE: OFG)

Table 1-2: Financial and Statistical Summary - Consolidated (Continued)

2020

2019

(Dollars in thousands, except per share data)

(unaudited)

YTD

Statement of Operations

Net interest income

408,432

(e)

322,793

Non-interest income, net (core)

(2)

110,872

(e)

73,365

Total core revenues

519,304

(e)

396,158

Non-interest expense

345,286

(e)

233,244

(e)

Pre-provision net revenues

(22)

187,498

172,042

Total provision

for credit losses

92,672

(c)(d)

96,792

(g)

Net income before income taxes

94,826

75,250

Income tax expense

20,499

21,409

Net income available to common stockholders

67,815

47,329

Common Share Statistics

Earnings per common share - basic

(3)

1.32

0.92

Earnings

per common share - diluted

(4)

1.32

0.92

Average common shares outstanding

51,358

51,335

Average common shares outstanding

and equivalents

51,555

51,719

Cash dividends per common share

0.28

Book value per common share (period end)

19.54

(c)

18.75

Tangible book value per common

share (period end)

(5)

16.97

(c)

15.96

Balance Sheet (Average Balances)

Loans

(6)

6,748,510

(a)

4,514,522

Interest-earning assets

8,966,989

(a)

6,012,853

Total assets

9,670,969

(a)

6,464,330

Core deposits

8,051,208

4,502,265

Total deposits

8,219,936

4,885,748

Interest-bearing deposits

6,150,150

3,785,149

Borrowings

158,271

415,712

Stockholders' equity

1,056,729

(c)

1,044,881

Common stockholders' equity

974,859

(c)

963,011

Performance Metrics

Net interest margin

(7)

4.55%

5.37%

Return on average assets

(8)

0.77%

0.83%

Return on average tangible common stockholders'

equity

(9)

8.10%

5.42%

Efficiency ratio

(10)

66.49%

58.88%

Full-time equivalent employees, period end

2,275

2,455

Credit Quality Metrics

(1)(21)

Allowance for loan and lease losses

204,809

(c)(d)

116,539

Allowance as a % of loans held for investment

3.07%

(a)

1.73%

Net charge-offs

95,168

74,741

(f)(g)

Net charge-off rate

(11)

1.41%

1.66%

(f)(g)

Early delinquency rate (30 - 89 days past

due)

2.68%

3.07%

Total delinquency rate

(30 days and over)

5.74%

5.85%

Capital Ratios (Non-GAAP)

(12)(20)

Leverage ratio

10.30%

(b)(c)

9.24%

Common equity Tier 1 capital ratio

13.08%

(a)(b)(c)

10.91%

Tier 1 risk-based capital ratio

14.78%

(a)(b)(c)

12.64%

Total risk-based

capital ratio

16.04%

(a)(b)(c)

13.91%

Tangible common equity ("TCE")

ratio

9.00%

8.96%

(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

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, September 30, 2020 and December 31, 2020,

Oriental had PPP loans amounting to $278.1 million, $289.2 million and $282.7 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

non-deducted amounts of MSAs and temporary difference

DTAs.

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, $2.7 million during 3Q 2020, and $10.1 million during 4Q 2020. At December

31, 2019, the consolidated statement of financial

condition contemplated the effects

of the Scotiabank PR & USVI acquisition. Nevertheless, the consolidate statement

of operations did not contemplated the effects

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 2-1: Consolidated Statements

of Operations

Quarter Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands, except per share data)

(unaudited)

2020

2019

Interest income:

Loans

(1)

Non-PCD loans

81,171

83,029

83,832

87,482

74,142

PCD loans

29,250

29,018

(c)

34,700

(c)

28,953

10,762

Total interest

income from loans

110,421

112,047

118,532

116,435

84,904

Investment securities

2,600

2,890

3,160

7,262

6,271

Total interest

income

113,021

114,937

121,692

123,697

(g)

91,175

Interest expense:

Deposits

Core deposits

13,225

13,808

13,999

15,034

7,957

Brokered deposits

288

812

1,446

1,586

1,804

Total deposits

13,513

14,620

15,445

16,620

(g)

9,761

Borrowings

770

784

1,187

1,976

2,205

Total interest

expense

14,283

15,404

16,632

18,596

11,966

Net interest income

98,738

99,533

105,060

105,101

79,209

Provision for credit losses, excluding PCD

loans

(1)

15,464

13,845

15,227

40,951

18,859

(Recapture) provision for credit losses

on PCD loans

(1)

(1,288)

(176)

2,469

6,180

4,209

Total provision

for credit losses

14,176

13,669

(e)

17,696

(e)

47,131

(e)(g)

23,068

Net interest income after provision

for loan and lease losses

84,562

85,864

87,364

57,970

56,141

Non-interest income:

Banking service revenues

16,901

16,297

13,668

15,713

10,812

Wealth management revenues

10,865

(a)

7,272

6,366

7,286

7,062

Mortgage banking activities

6,281

(b)

3,917

3,072

3,234

1,322

Total banking

and financial service revenues

34,047

27,486

23,106

26,233

(g)

19,196

Bargain purchase from Scotiabank PR & USVI acquisition

3,465

(d)

3,462

(d)

409

315

Other income, net

377

375

584

4,808

(h)

200

Total non-interest

income, net

34,424

31,326

27,152

31,450

19,711

Non-interest expense:

Compensation and employee benefits

30,921

31,955

34,506

35,544

21,817

Occupancy, equipment and infrastructure

costs

12,064

11,943

11,837

11,439

7,488

General and administrative expenses

33,454

33,452

31,181

37,345

25,451

Net (gain) loss on sale of foreclosed real estate

and other repossessed assets

(300)

(866)

316

(193)

541

Credit related expenses

1,304

2,189

2,602

2,715

2,118

Merger and restructuring charges

10,092

(g)

2,681

(g)

3,006

(g)

304

21,498

(g)

COVID 19 expenses

1,504

(f)

2,090

(f)

2,033

(f)

168

Total non-interest

expense

89,039

83,444

85,481

87,322

(g)

78,913

Income (loss) before income taxes

29,947

33,746

29,035

2,098

(3,061)

Income tax expense (benefit)

6,646

6,308

7,248

297

(2,070)

Net income (loss)

23,301

27,438

21,787

1,801

(991)

Less:

dividends on preferred stock

(1,628)

Net income (loss) available to common shareholders

21,673

25,810

20,159

173

(2,619)

(a) During 4Q 2020, the Company recognized annual insurance

contingent commissions amounting to $4.0 million.

(b) During 4Q 2020, mortgage banking activities reflected higher gains

on sale of loans and securitizations, and higher servicing fees compared to

3Q 2020.

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.

(d) 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.

(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 2Q 2020, 3Q 2020 and 4Q 2020, the Company recorded $2.0 million,

$2.1 million and $1.5 million expenses, respectively,

in relation to the global pandemic from the

coronavirus COVID-19. Covid-19 expenses

represented expenses incurred within our premises,

as acrylic shields, face shields and masks, and cleaning and disinfecting

costs, in order

to control pandemic spread and keep

customers and employees safe. It also

includes employees COVID testing.

(g) 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, $2.7 million during 3Q 2020, and $10.1 million during 4Q 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.

(h) 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.

OFG Bancorp (NYSE: OFG)

Table 2-2: Consolidated Statements

of Operations (Continued)

Year Ended

December 31,

(Dollars in thousands, except per share data)

(unaudited)

2020

2019

Interest income:

Loans

(1)

Non-PCD loans

335,514

294,726

PCD loans

121,921

(a)

45,149

Total interest

income from loans

457,435

339,875

Investment securities

15,912

33,920

Total interest

income

473,347

(e)

373,795

Interest expense:

Deposits

Core deposits

56,066

29,892

Brokered deposits

4,132

9,463

Total deposits

60,198

(e)

39,355

Borrowings

4,717

11,647

Total interest

expense

64,915

51,002

Net interest income

408,432

322,793

Provision for credit losses, excluding PCD

loans

(1)

85,487

62,533

(Recapture) provision for credit losses

on PCD loans

(1)

7,185

34,259

Total provision

for credit losses

92,672

(c)(e)

96,792

(g)(h)(i)

Net interest income after provision

for loan and lease losses

315,760

226,001

Non-interest income:

Banking service revenues

62,579

42,866

Wealth management revenues

31,789

26,224

Mortgage banking activities

16,504

4,275

Total banking

and financial service revenues

110,872

(e)

73,365

Bargain purchase from Scotiabank PR & USVI acquisition

7,336

(b)

315

Other income, net

6,144

(f)

8,813

(f)

Total non-interest

income, net

124,352

82,493

Non-interest expense:

Compensation and employee benefits

132,926

82,533

Occupancy, equipment and infrastructure

costs

47,283

30,052

General and administrative expenses

135,432

85,107

Net (gain) loss on sale of foreclosed real estate

and other repossessed assets

(1,043)

2,426

Credit related expenses

8,810

9,072

Merger and restructuring charges

16,083

(e)

24,054

COVID 19 expenses

5,795

(d)

Total non-interest

expense

345,286

(e)

233,244

Income before income taxes

94,826

75,250

Income tax expense

20,499

21,409

Net income

74,327

53,841

Less:

dividends on preferred stock

(6,512)

Net income available to common shareholders

67,815

47,329

(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.

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) During 2Q 2020, 3Q 2020 and 4Q 2020, the Company recorded $2.0 million,

$2.1 million and $1.5 million expenses, respectively,

in relation to the global pandemic from the

coronavirus COVID-19. Covid-19 expenses

represented expenses incurred within our premises,

as acrylic shields, face shields and masks, and cleaning and disinfecting

costs, in order

to control pandemic spread and keep

customers and employees safe. It also

includes employees COVID testing.

(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, $2.7 million during 3Q 2020, and $10.1 million during 4Q 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 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.

(g) During 3Q 2019, the Company received $2.4 million proceeds from

the sale of fully charged-off originated auto and consumer

loans.

(h) 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.

(i) 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

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands) (unaudited)

2020

2019

Cash and cash equivalents

2,155,577

2,283,050

(b)

1,900,037

(b)

1,325,941

852,757

Investments:

Trading securities

Investment securities available-for

-sale, at fair value,

with amortized cost of $432,175 ( September 30, 2020 - $412,899;

June 30, 2020 - $529,985; March 31, 2020 - $648,565;

December 31, 2019 - $1,074,474; no allowance for credit

losses for any period)

Mortgage-backed securities

432,935

329,719

340,192

355,637

673,886

US treasury notes

10,983

91,531

197,340

298,986

397,183

Other investment securities

2,520

2,565

2,707

2,837

3,100

Total investment

securities available-for-sale

446,438

423,815

540,239

657,460

(d)

1,074,169

Federal Home Loan Bank (FHLB) stock, at cost

8,278

8,322

8,366

10,301

13,048

Other investments

3,962

2,205

1,076

973

560

Total investments

458,700

434,364

549,703

668,763

1,087,814

Loans, net

6,501,259

(b)

6,579,140

(b)

6,739,243

(b)

6,541,174

(c)

6,641,847

Other assets:

Prepaid expenses

61,416

54,583

40,119

44,633

52,648

Deferred tax asset, net

162,478

178,957

186,730

196,129

(c)

176,740

Foreclosed real estate and repossessed

properties

13,412

21,374

26,152

30,388

33,236

Premises and equipment, net

83,786

83,270

82,234

81,834

81,105

Goodwill

86,069

Right of use assets

31,383

35,900

34,692

36,844

39,112

Core deposit, customer relationship intangible

and other intangibles

45,896

48,650

51,406

54,174

56,965

Servicing asset

47,295

47,242

47,926

49,287

50,779

Accounts receivable and other assets

178,740

166,392

188,408

(a)

123,335

138,589

Total assets

9,826,011

10,018,991

9,932,719

9,238,571

9,297,661

Deposits:

Demand deposits

4,613,309

4,682,991

(b)

4,370,419

(b)

3,711,492

3,579,115

Savings accounts

1,920,325

1,919,859

1,978,118

1,829,054

1,815,044

Time deposits

1,832,891

1,933,517

1,975,223

2,023,211

2,060,953

Brokered deposits

49,115

96,090

218,166

255,514

243,498

Total deposits

8,415,640

8,632,457

8,541,926

7,819,271

7,698,610

Borrowings:

Securities sold under agreements to repurchase

50,103

190,274

Advances from FHLB and other borrowings

66,268

66,781

68,340

77,601

79,204

Subordinated capital notes

36,083

Total borrowings

102,351

102,864

104,423

163,787

305,561

Other liabilities:

Derivative liabilities

1,712

1,895

2,078

2,059

913

Acceptances outstanding

33,349

18,291

20,034

11,763

21,599

Lease liability

32,566

37,029

35,694

37,702

39,840

Accrued expenses and other liabilities

154,418

162,133

187,280

181,395

185,660

Total liabilities

8,740,036

8,954,669

8,891,435

8,215,977

8,252,183

Stockholders' equity:

Preferred stock

92,000

Common stock

59,885

Additional paid-in capital

622,652

621,978

621,860

621,206

621,515

Legal surplus

103,269

101,233

98,347

95,945

95,779

Retained earnings

300,096

284,053

264,725

250,557

(c)

279,646

Treasury stock, at cost

(102,949)

(103,095)

(103,121)

(103,289)

(102,339)

Accumulated other comprehensive (loss) income, net

11,022

8,268

7,588

6,290

(1,008)

Total stockholders'

equity

1,085,975

1,064,322

1,041,284

1,022,594

1,045,478

Total liabilities and stockholders'

equity

9,826,011

10,018,991

9,932,719

9,238,571

9,297,661

(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, September

30, 2020 and December 31, 2020, Oriental had PPP loans amounting

to $278.1 million, $289.2 million and $282.7 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.

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) 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

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands) (unaudited)

2020

2019

Non-PCD:

(1)

Mortgage

823,443

847,671

874,286

887,950

898,118

Commercial

1,836,137

1,785,022

1,918,424

1,910,192

1,862,484

Commercial Paycheck Protection Program

(PPP Loans)

282,713

(b)

289,218

(b)

278,059

(b)

Consumer

413,552

434,546

458,714

481,710

495,244

Auto

1,534,269

1,511,829

1,454,987

1,487,701

1,479,612

4,890,114

4,868,286

4,984,470

4,767,553

4,735,458

Less:

Allowance for credit losses

(161,015)

(156,409)

(151,507)

(149,961)

(c)

(85,044)

Total non- PCD loans

held for investment, net

4,729,099

4,711,877

4,832,963

4,617,592

4,650,414

PCD:

(1)

Mortgage

1,459,932

1,504,914

1,541,637

1,561,557

1,591,112

Commercial

283,160

(a)

352,555

386,046

391,158

359,601

Consumer

1,394

2,336

2,950

3,350

9,263

Auto

27,533

31,836

37,409

42,466

43,361

1,772,019

1,891,641

1,968,042

1,998,531

2,003,337

Less:

Allowance for credit losses

(1)

(43,794)

(a)

(78,904)

(81,194)

(80,794)

(c)

(31,495)

Total PCD loans

held for investment, net

1,728,225

1,812,737

1,886,848

1,917,737

1,971,842

Total loans held for

investment

6,457,324

6,524,614

6,719,811

6,535,329

6,622,256

Mortgage loans held for sale

41,654

54,526

19,432

5,845

19,591

Other loans held for sale

2,281

Total loans, net

6,501,259

6,579,140

6,739,243

6,541,174

6,641,847

Loan Portfolio Summary:

Loans held for investment:

Mortgage

2,283,375

2,352,585

2,415,923

2,449,507

2,489,230

Commercial

2,402,010

2,426,795

2,582,529

2,301,350

2,222,085

Consumer

414,946

436,882

461,664

485,060

504,507

Auto

1,561,802

1,543,665

1,492,396

1,530,167

1,522,973

6,662,133

6,759,927

6,952,512

6,766,084

6,738,795

Less:

Allowance for credit losses

(204,809)

(235,313)

(232,701)

(230,755)

(c)

(116,539)

Total loans held

for investment, net

6,457,324

6,524,614

6,719,811

6,535,329

6,622,256

Mortgage loans held for sale

41,654

54,526

19,432

5,845

19,591

Other loans held for sale

2,281

Total loans, net

6,501,259

6,579,140

6,739,243

6,541,174

6,641,847

(a) During 4Q 2020, commercial

charge-offs reflected $31.2 million from two

commercial non-performing PCD loans from the government

and hospital sectors, reducing loan balance

and their corresponding allowance for credit losses by

that amount.

(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, September 30, 2020 and December 31, 2020, Oriental had PPP loans amounting

to $278.1 million,

$289.2 million and $282.7 million, respectively.

These loans are fully guaranteed by the SBA and risk-wei

ghted at 0%.

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 4-2: Information on Loan

Portfolio and Production

Quarter Ended

Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands) (unaudited)

2020

2019

2020

2019

Loan production

(13)

Mortgage

97,656

93,650

23,744

30,988

23,680

246,038

92,779

Commercial

174,994

83,488

98,558

54,113

216,610

411,153

406,809

Commercial PPP Loans

10,318

286,420

296,738

US Loan Programs

49,221

90,878

35,711

47,125

12,482

222,935

112,786

Consumer

25,984

23,540

14,231

39,199

41,947

102,954

178,723

Auto

137,545

155,880

47,374

109,344

110,184

450,143

508,152

Total

485,400

457,754

506,038

280,769

404,903

1,729,961

1,299,248

OFG Bancorp (NYSE: OFG)

Table 5-1: Average

Balances, Net Interest Income and Net Interest Margin

2020 Q4

2020 Q3

2020 Q2

2020 Q1

2019 Q4

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

2,091,458

613

0.12

1,929,024

613

0.13

1,393,187

359

0.10

943,581

2,788

1.19

863,497

3,684

1.69

Investment securities

470,997

1,986

1.69

502,671

2,278

1.81

611,907

2,801

1.83

924,965

4,474

1.93

522,811

2,587

1.98

Loans held for investment

(1)

Non-PCD loans

4,863,902

81,171

6.64

4,870,753

83,029

6.78

4,857,281

83,832

6.94

4,613,878

87,482

7.63

3,888,442

74,142

7.56

PCD loans

1,844,382

29,250

6.34

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

Total loans

6,708,284

110,421

6.55

6,787,022

112,047

6.57

6,840,650

118,532

6.97

6,687,875

116,435

7.00

4,500,071

84,904

7.49

Total interest

-earning assets

9,270,739

113,020

4.85

9,218,717

114,938

4.96

8,845,744

121,692

5.53

8,556,421

123,697

5.81

5,886,379

91,175

6.15

Interest bearing liabilities:

Deposits

NOW accounts

2,344,903

2,258

0.38

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

Savings accounts

1,897,618

1,954

0.41

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

Time deposits

1,893,070

6,975

1.47

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

Brokered deposits

64,338

289

1.78

140,416

812

2.30

235,611

1,446

2.47

236,008

1,586

2.70

268,108

1,804

2.67

6,199,929

11,476

0.74

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

Non-interest bearing deposit accounts

2,315,717

2,276,400

1,983,092

1,698,964

1,110,847

Fair value premium amortization and

core deposit intangible amortization

2,037

2,039

2,051

2,074

201

Total deposits

8,515,646

13,513

0.63

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

Borrowings

Securities sold under agreements to

repurchase

46,154

334

2.91

158,462

1,002

2.54

190,000

1,189

2.48

Advances from FHLB and other

borrowings

65,847

468

2.83

66,833

476

2.83

75,432

505

2.69

77,255

539

2.81

78,282

541

2.74

Subordinated capital notes

36,083

301

3.34

36,083

308

3.39

36,083

347

3.87

36,083

435

4.85

36,083

475

5.22

Total borrowings

101,930

769

3.01

102,916

784

3.03

157,669

1,186

3.03

271,800

1,976

2.92

304,365

2,205

2.87

Total interest

-bearing liabilities

8,617,576

14,282

0.66

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

Interest rate spread

98,738

4.19

99,534

4.25

105,060

4.72

105,101

4.88

79,209

5.23

Net interest margin

4.24

4.30

4.78

4.94

5.34

SOP loan cost recoveries (interest recoveries

in 2Q, 3Q and 4Q 2020)

469

5,982

1,033

Adjusted excluding cost/interests

recoveries

(Non-GAAP):

Total interest

-earning assets

9,270,739

113,003

4.85

9,218,717

114,469

4.94

8,845,744

115,710

5.26

8,556,421

123,697

5.81

5,886,379

90,142

6.08

Interest rate spread

98,721

4.19

99,065

4.23

99,078

4.45

105,101

4.88

78,176

5.16

Net interest margin

4.24

4.28

4.50

4.94

5.27

Core deposits: (Non-GAAP)

Deposits

NOW accounts

2,344,903

2,258

0.38

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

Savings accounts

1,897,618

1,954

0.41

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

Time deposits

1,893,070

6,975

1.47

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

6,135,591

11,187

0.73

6,100,223

11,769

0.77

5,869,403

11,949

0.82

5,817,474

12,960

0.91

3,472,025

7,756

0.89

Non-interest bearing deposit accounts

2,315,717

2,276,400

1,983,092

1,698,964

1,110,847

Total core

deposits

8,451,308

11,187

0.53

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

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

1,591,613

4,373

0.27

618,446

13,041

2.11

Investment securities

626,866

11,539

1.84

879,885

20,879

2.37

Loans held for investment

Non-PCD loans

4,801,813

335,514

6.99

3,838,980

294,726

7.68

PCD loans

1,946,697

121,921

6.26

675,542

45,149

6.68

Total loans

6,748,510

457,435

6.78

4,514,522

339,875

7.53

Total interest

-earning assets

8,966,989

473,347

5.28

6,012,853

373,795

6.22

Interest bearing liabilities:

Deposits

NOW accounts

2,156,300

9,029

0.42

1,120,459

6,271

0.56

Savings accounts

1,858,416

8,380

0.45

1,189,205

7,351

0.62

Time deposits

1,966,706

30,455

1.55

1,092,002

15,468

1.42

Brokered deposits

168,728

4,132

2.45

383,483

9,463

2.47

6,150,150

51,996

0.85

3,785,149

38,553

1.02

Non-interest bearing deposit accounts

2,069,786

1,100,599

Fair value premium amortization and

core deposit intangible amortization

8,202

802

Total deposits

8,219,936

60,198

0.73

4,885,748

39,355

0.81

Borrowings

Securities sold under agreements to repurchase

50,874

1,335

2.63

299,842

7,423

2.48

Advances from FHLB and other borrowings

71,314

1,988

2.79

79,787

2,212

2.77

Subordinated capital notes

36,083

1,394

3.86

36,083

2,012

5.58

Total borrowings

158,271

4,717

2.98

415,712

11,647

2.80

Total interest

-bearing liabilities

8,378,207

64,915

0.77

5,301,460

51,002

0.96

Interest rate spread

408,432

4.51

322,793

5.26

Net interest margin

4.55

5.37

SOP loan cost recoveries (interest recoveries

in 2020)

6,468

2,372

Adjusted excluding cost/interests

recoveries (Non-GAAP):

Total interest

-earning assets

8,966,989

466,879

5.21

6,012,853

371,423

6.18

Interest rate spread

401,964

4.44

320,421

5.22

Net interest margin

4.48

5.33

Core deposits: (Non-GAAP)

Deposits

NOW accounts

2,156,300

9,029

0.42

1,120,459

6,271

0.56

Savings accounts

1,858,416

8,380

0.45

1,189,205

7,351

0.62

Time deposits

1,966,706

30,455

1.55

1,092,002

15,468

1.42

5,981,422

47,864

0.80

3,401,666

29,090

0.86

Non-interest bearing deposit accounts

2,069,786

1,100,599

Total core

deposits

8,051,208

47,864

0.59

4,502,265

29,090

0.65

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

225

185

418

1,075

Recoveries

(79)

(269)

(9)

(249)

(437)

Total mortgage

146

(213)

176

169

638

Commercial:

Charge-offs

413

298

497

3,771

463

Recoveries

(334)

(253)

(631)

(1,522)

(606)

Total commercial

(134)

2,249

(143)

Consumer:

Charge-offs

6,456

5,114

4,187

6,015

5,289

Recoveries

(1,832)

(663)

(443)

(644)

(196)

Total consumer

4,624

4,451

3,744

5,371

5,093

Auto:

Charge-offs

12,071

10,123

13,300

13,053

12,930

Recoveries

(5,928)

(5,950)

(3,405)

(4,211)

(4,123)

Total auto

6,143

4,173

9,895

8,842

8,807

Total

10,992

8,456

13,681

16,631

14,395

PCD

Mortgage:

Charge-offs

1,344

1,677

2,178

5,143

Recoveries

(63)

(89)

(580)

(122)

Total mortgage

1,281

1,588

1,598

5,021

Commercial:

Charge-offs

33,061

(a)

293

386

2,357

Recoveries

(234)

(91)

(286)

(375)

Total commercial

32,827

202

100

1,982

Consumer:

Charge-offs

431

Recoveries

(200)

(30)

(63)

Total consumer

(179)

368

Auto:

Charge-offs

574

474

600

375

Recoveries

(681)

(211)

(229)

(343)

Total auto

(107)

263

371

Total

33,822

(a)

2,114

2,069

7,403

Total Net Charge

-offs

44,814

10,570

15,750

24,034

14,395

Net Charge-off Rates

(21)

Mortgage

0.25%

0.24%

0.30%

0.86%

0.24%

Commercial

5.45%

(a)

0.04%

-0.01%

0.76%

-0.03%

Consumer

4.09%

3.94%

3.12%

4.63%

5.15%

Auto

1.56%

1.17%

2.72%

2.31%

2.73%

Total

2.67%

(a)

0.62%

0.92%

1.44%

1.28%

Average Loans Held For Investment

(21)

Mortgage

2,305,495

2,325,756

2,366,600

2,414,685

1,062,845

Commercial

2,416,703

2,484,977

2,484,573

2,239,684

1,753,069

Consumer

434,565

457,620

479,957

496,313

395,611

Auto

1,551,521

1,518,669

1,509,521

1,537,194

1,288,546

Total

6,708,284

6,787,022

6,840,650

6,687,875

4,500,071

(a) During 4Q 2020, commercial charge-offs reflected

$31.2 million from two commercial non-performing PCD

loans from the government and hospital sectors,

reducing loan balance

and their corresponding allowance for credit losses by

that amount.

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

22,339

16,783

15,665

20,518

22,389

Commercial

8,043

5,151

7,704

6,074

9,895

Consumer

12,230

12,032

18,254

13,127

9,560

Auto

88,357

87,912

89,825

110,959

103,749

Total

130,969

121,878

131,448

150,678

(a)

145,593

Early Delinquency Rates (30 - 89 days past due)

Mortgage

2.71%

1.98%

1.79%

2.31%

2.49%

Commercial

0.44%

0.29%

0.40%

0.32%

0.53%

Consumer

2.96%

2.77%

3.98%

2.73%

1.93%

Auto

5.76%

5.81%

6.17%

7.46%

7.01%

Total

2.68%

2.50%

2.64%

3.16%

3.07%

Total Delinquency (30 days

and over past due)

Mortgage:

Traditional, Non traditional,

and Loans under Loss Mitigation

67,671

51,123

40,719

46,768

41,314

GNMA's buy-back option program

56,193

62,651

75,091

75,314

75,181

Total mortgage

123,864

113,774

115,810

122,082

116,495

Commercial

30,604

35,596

38,258

33,746

30,111

Consumer

17,147

17,080

22,796

16,808

12,258

Auto

108,842

109,735

100,027

131,715

118,020

Total

280,457

276,185

276,891

304,351

(a)

276,884

Total Delinquency Rates

(30 days and over past due)

Mortgage:

Traditional, Non traditional,

and Loans under Loss Mitigation

8.22%

6.03%

4.66%

5.27%

4.60%

GNMA's buy-back option program

6.82%

7.39%

8.59%

8.48%

8.37%

Total mortgage

15.04%

13.42%

13.25%

13.75%

12.97%

Commercial

1.67%

1.99%

1.77%

1.62%

Consumer

4.15%

3.93%

4.97%

3.49%

2.48%

Auto

7.09%

7.26%

6.87%

8.85%

7.98%

Total

5.74%

5.67%

5.56%

6.38%

5.85%

Nonperforming Assets

(14)

Mortgage

46,967

40,477

30,491

31,073

22,552

Commercial

41,999

44,941

44,187

42,668

42,606

Consumer

4,987

5,206

4,933

3,690

5,287

Auto

20,766

22,583

10,539

21,147

14,295

Total nonperforming

loans

114,719

113,207

90,150

98,578

(a)

84,740

Foreclosed real estate

11,596

19,456

24,792

27,292

29,909

Other repossessed assets

1,816

1,918

1,360

3,096

3,327

Total nonperforming

assets

128,131

134,581

116,302

128,966

117,976

Nonperforming Loan Rates

Mortgage

5.70%

4.78%

3.49%

3.50%

2.51%

Commercial

2.29%

2.52%

2.30%

2.23%

2.29%

Consumer

1.21%

1.20%

1.08%

0.77%

1.07%

Auto

1.35%

1.49%

0.72%

1.42%

0.97%

Total loans

2.35%

2.33%

1.81%

2.07%

1.79%

(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 and further to 1.4% in 4Q 2020. Most of that relates

to about $76 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

36,470

(a)

79,631

81,064

82,411

225

Consumer

499

Total nonperforming

loans

37,474

(a)

80,638

82,449

83,762

724

Nonperforming PCD Loan Rates

Mortgage

0.07%

0.09%

0.00%

Commercial

12.88%

(a)

22.59%

21.00%

21.07%

0.06%

Consumer

0.07%

0.17%

0.41%

0.30%

5.39%

Total

2.11%

(a)

4.26%

4.19%

0.04%

Total PCD Loans Held for

Investment

(21)

Mortgage

1,459,932

1,504,914

1,541,637

1,561,557

1,591,112

Commercial

283,160

352,555

386,046

391,158

359,601

Consumer

1,394

2,336

2,950

3,350

9,263

Total loans

1,744,486

1,859,805

1,930,633

1,956,065

1,959,976

2020

2019

(Dollars in thousands) (unaudited)

Total Nonperforming

Loans

(14)

Mortgage

47,970

41,480

31,864

32,414

22,552

Commercial

78,469

(a)

124,572

125,251

125,079

42,831

Consumer

4,988

5,210

4,945

3,700

5,786

Auto

20,766

22,583

10,539

21,147

14,295

Total nonperforming

loans

152,193

(a)

193,845

172,599

182,340

85,464

Total Nonperforming

Loan Rates

Mortgage

2.10%

1.76%

1.32%

0.91%

Commercial

3.27%

(a)

5.13%

4.85%

5.44%

1.93%

Consumer

1.20%

1.19%

1.07%

0.76%

1.15%

Auto

1.33%

1.46%

0.71%

1.38%

0.94%

Total

2.28%

(a)

2.87%

2.48%

2.69%

1.27%

Total Loans Held for

Investment

(21)

Mortgage

2,283,375

2,352,585

2,415,923

2,449,507

2,489,230

Commercial

2,402,010

2,426,795

2,582,529

2,301,350

2,222,085

Consumer

414,946

436,882

461,664

485,060

504,507

Auto

1,561,802

1,543,665

1,492,396

1,530,167

1,522,973

Total loans

6,662,133

6,759,927

6,952,512

6,766,084

6,738,795

(a) During 4Q 2020, commercial charge-offs reflected

$31.2 million from two commercial non-performing PCD

loans from the government and hospital sectors,

reducing loan

balance and their corresponding allowance for credit

losses by that amount.

OFG Bancorp (NYSE: OFG)

Table 7: Allowance for Credit Losses (1)

Quarter Ended December 31, 2020

(Dollars in thousands) (unaudited)

Mortgage

Commercial

Consumer

Auto

Total

Allowance for credit losses Non-PCD:

Balance at beginning of period

19,622

41,195

27,125

68,467

156,409

(Recapture) provision for credit

losses

211

4,663

2,752

7,972

15,598

Charge-offs

(225)

(413)

(6,456)

(12,071)

(19,165)

Recoveries

334

1,832

5,928

8,173

Balance at end of period

19,687

45,779

25,253

70,296

161,015

Allowance for credit losses PCD:

Balance at beginning of period

30,408

47,450

108

938

78,904

Provision (recapture) for credit

losses

(2,739)

1,783

(230)

(102)

(1,288)

Charge-offs

(1,344)

(33,061)

(21)

(574)

(35,000)

Recoveries

234

200

681

1,178

Balance at end of period

26,388

16,406

943

43,794

Allowance for credit losses summary:

Balance at beginning of period

50,030

88,645

27,233

69,405

235,313

Provision (recapture) for credit

losses

(2,528)

6,446

2,522

7,870

14,310

Charge-offs

(1,569)

(33,474)

(6,477)

(12,645)

(54,165)

Recoveries

142

568

2,032

6,609

9,351

Balance at end of period

46,075

62,185

25,310

71,239

204,809

Allowance coverage ratio

2.02%

2.59%

6.10%

4.56%

3.07%

Allowance coverage ratio excluding

PPP loans (Non-GAAP)

2.02%

2.93%

6.10%

4.56%

3.21%

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

1,085,975

1,064,322

1,041,284

1,022,594

(a)

1,045,478

Less:

Intangible assets

(131,965)

(134,719)

(137,475)

(140,243)

(143,034)

Noncumulative perpetual preferred stock

(92,000)

Noncumulative perpetual preferred stock

issuance costs

10,130

Tangible common equity

872,140

847,733

821,939

800,481

820,574

Common shares outstanding at end of period

51,387

51,345

51,342

51,327

51,399

Tangible book value per common

share (Non-GAAP)

16.97

16.51

16.01

15.60

15.96

Total Assets to Tangible

Assets

Total assets

9,826,011

10,018,991

9,932,719

9,238,571

9,297,661

Less:

Intangible assets

(131,965)

(134,719)

(137,475)

(140,243)

(143,034)

Tangible assets (Non-GAAP)

9,694,046

9,884,272

9,795,244

9,098,328

9,154,627

Non-GAAP TCE Ratio

Tangible common equity

872,140

847,733

821,939

800,481

820,574

Tangible assets

9,694,046

9,884,272

9,795,244

9,098,328

9,154,627

TCE ratio

9.00%

8.58%

8.39%

8.80%

8.96%

Average Equity to Non-GAAP Average

Tangible Common Equity

Average total stockholders'

equity

1,083,423

1,062,460

1,037,195

1,043,481

1,062,720

Less:

Average noncumulative perpetual preferred

stock

(92,000)

Average noncumulative perpetual preferred

stock issuance costs

10,130

Average total common stockholders'

equity

1,001,553

980,590

955,325

961,611

980,850

Less:

Average intangible assets

(133,542)

(136,138)

(139,094)

(141,875)

(89,005)

Average tangible common equity

868,011

844,452

816,231

819,736

891,845

(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

894,074

862,636

836,899

816,356

735,442

Tier 1 capital

1,010,944

979,506

953,769

933,226

852,312

Total risk-based

capital

(15)

1,096,764

1,065,744

1,040,987

1,020,748

937,963

Risk-weighted assets

6,837,846

6,875,108

6,957,906

6,983,626

(a)

6,740,846

Regulatory Capital Ratios

Common equity Tier 1 capital ratio

(16)

13.08%

12.55%

12.03%

11.69%

10.91%

Tier 1 risk-based capital ratio

(17)

14.78%

14.25%

13.71%

13.36%

12.64%

Total risk-based

capital ratio

(18)

16.04%

15.50%

14.96%

14.62%

13.91%

Leverage ratio

(19)

10.30%

10.00%

10.16%

10.14%

9.24%

Common Equity Tier 1 Capital Ratio Under Basel III Standardized

Approach

Total stockholders'

equity

(1)

1,085,975

1,064,322

1,041,284

1,022,594

1,045,478

Plus: CECL transition adjustment

(20)

34,646

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

(12,091)

(9,453)

(8,885)

(7,576)

441

Unrealized losses on cash flow hedges, net of income tax

1,069

1,185

1,297

1,286

567

1,027,729

1,007,678

984,095

966,316

964,616

Less:

Disallowed goodwill

(86,069)

Disallowed other intangible assets, net

(32,073)

(33,810)

(35,563)

(37,241)

(39,127)

Disallowed deferred tax assets, net

(15,513)

(25,163)

(25,564)

(26,650)

(a)

(95,879)

Threshold 15%

(a)

(8,099)

Common equity Tier 1 capital

894,074

862,636

836,899

816,356

735,442

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

1,010,944

979,506

953,769

933,226

852,312

Plus tier 2 capital:

Qualifying allowance for loan and lease losses

85,820

86,238

87,218

87,522

85,651

Total risk-based

capital

1,096,764

1,065,744

1,040,987

1,020,748

937,963

(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 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.