OFG Bancorp(OFG) - 2025 Q1 - Quarterly Report

FORM 10-Q (Cover Page) Cover Page Information This section presents the cover page for OFG Bancorp's 10-Q quarterly report as of March 31, 2025, identifying the company as a large accelerated filer and detailing its registered securities and outstanding shares - Filing Type: 10-Q quarterly report as of March 31, 2025[2] - Registrant: OFG Bancorp, Commission File Number: 001-12647[2] - Filing Status: Large accelerated filer[4] Securities Registered Pursuant to Section 12(b) of the Exchange Act | Class Title | Trading Symbol | Name of Each Exchange on Which Registered | | :--- | :--- | :--- | | Common Stock, $1.00 par value per share | OFG | New York Stock Exchange | - Outstanding Common Stock as of April 30, 2025: 44,913,111 shares ($1.00 par value per share)[5] TABLE OF CONTENTS Report Structure This section provides the detailed table of contents for the 10-Q report, clearly dividing financial information (Part I) and other information (Part II), listing all financial statements, notes, management's discussion and analysis, market risk disclosures, controls and procedures, legal proceedings, risk factors, and exhibits - The report is divided into Part I (Financial Information) and Part II (Other Information), covering financial statements, notes, management's discussion and analysis, market risk, controls and procedures, legal proceedings, risk factors, and exhibits[8] FORWARD-LOOKING STATEMENTS Nature and Risks of Forward-Looking Statements This section cautions that forward-looking statements in the report are not guarantees of future performance and involve unpredictable risks, uncertainties, estimates, and assumptions, including economic conditions, interest rate changes, government credit defaults, bank failures, natural disasters, and regulatory policy shifts - The report contains forward-looking statements related to OFG Bancorp's financial condition, operating results, plans, objectives, future performance, and business[10] - These statements are not guarantees of future performance and involve unpredictable risks, uncertainties, estimates, and management assumptions[11] - Key risk factors include economic growth rates, employment levels, inflationary pressures, interest rate changes, credit defaults by the Government of Puerto Rico or the U.S. Government, impacts of bank failures, changes in regulatory policies, unforeseen catastrophic events (such as natural disasters, cyberattacks), and the pace and magnitude of Puerto Rico's economic recovery[11][12][14] PART I – FINANCIAL INFORMATION This part includes OFG Bancorp's unaudited consolidated financial statements as of March 31, 2025, comprising statements of financial condition, operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes, management's discussion and analysis of financial condition and results of operations, quantitative and qualitative disclosures about market risk, and controls and procedures Item 1. Financial Statements This section presents OFG Bancorp's unaudited consolidated financial statements as of March 31, 2025, and December 31, 2024, including statements of financial condition, operations, comprehensive income, changes in stockholders' equity, and cash flows, accompanied by detailed notes explaining significant accounting policies and specific financial accounts Unaudited Consolidated Statements of Financial Condition The consolidated statements of financial condition show that as of March 31, 2025, OFG Bancorp's total assets and total stockholders' equity both increased compared to December 31, 2024, with increases in cash and cash equivalents, total investments, and total loans, while total borrowings decreased Consolidated Statements of Financial Condition (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | Quarter-over-Quarter Change | | :--- | :--- | :--- | :--- | | Total Assets | $11,729,257 | $11,500,734 | +$228,523 | | Total Liabilities | $10,433,896 | $10,246,363 | +$187,533 | | Total Stockholders' Equity | $1,295,361 | $1,254,371 | +$40,990 | | Cash and Cash Equivalents | $710,600 | $591,137 | +$119,463 | | Total Investments | $2,785,965 | $2,720,277 | +$65,688 | | Total Loans | $7,688,271 | $7,633,831 | +$54,440 | | Total Deposits | $9,922,969 | $9,604,786 | +$318,183 | | Total Borrowings | $255,642 | $401,174 | -$145,532 | Unaudited Consolidated Statements of Operations The consolidated statements of operations indicate that for the quarter ended March 31, 2025, OFG Bancorp's net interest income increased year-over-year, but a significant rise in the provision for credit losses led to a decrease in net income and diluted earnings per share Consolidated Statements of Operations (in thousands of dollars, except per share data) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Total Interest Income | $189,222 | $183,426 | +$5,796 | | Total Interest Expense | $40,151 | $39,324 | +$827 | | Net Interest Income | $149,071 | $144,102 | +$4,969 | | Provision for Credit Losses | $25,688 | $15,121 | +$10,567 | | Total Non-Interest Income | $29,517 | $30,348 | -$831 | | Total Non-Interest Expense | $93,452 | $91,412 | +$2,040 | | Income Before Income Taxes | $59,448 | $67,917 | -$8,469 | | Income Tax Expense | $13,876 | $18,225 | -$4,349 | | Net Income Attributable to Common Stockholders | $45,572 | $49,692 | -$4,120 | | Basic Earnings Per Share | $1.01 | $1.06 | -$0.05 | | Diluted Earnings Per Share | $1.00 | $1.05 | -$0.05 | | Cash Dividends Per Common Share | $0.30 | $0.25 | +$0.05 | Unaudited Consolidated Statements of Comprehensive Income The consolidated statements of comprehensive income show that OFG Bancorp's comprehensive income significantly increased for the quarter ended March 31, 2025, primarily driven by unrealized gains on available-for-sale securities, despite a year-over-year decrease in net income Consolidated Statements of Comprehensive Income (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Net Income | $45,572 | $49,692 | -$4,120 | | Unrealized Gain (Loss) on Available-for-Sale Securities (Pre-Tax) | $38,113 | $(17,557) | +$55,670 | | Other Comprehensive Income (Loss) (Net of Tax) | $31,838 | $(14,718) | +$46,556 | | Comprehensive Income | $77,410 | $34,974 | +$42,436 | Unaudited Consolidated Statements of Changes in Stockholders' Equity This statement outlines the changes in OFG Bancorp's stockholders' equity for the quarters ended March 31, 2025, and March 31, 2024, reflecting increases in retained earnings and statutory surplus, partially offset by treasury stock repurchases Consolidated Statements of Changes in Stockholders' Equity (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Common Stock | $59,885 | $59,885 | | Additional Paid-in Capital | $638,475 | $636,208 | | Statutory Surplus | $173,905 | $155,732 | | Retained Earnings | $802,024 | $672,455 | | Treasury Stock (at cost) | $(320,927) | $(226,896) | | Accumulated Other Comprehensive Loss (Net of Tax) | $(58,001) | $(81,731) | | Total Stockholders' Equity | $1,295,361 | $1,215,653 | - In Q1 2025, OFG repurchased $23.392 million of treasury stock, compared to no repurchases in Q1 2024[25] - Cash dividends per common share increased to $0.30 in Q1 2025 from $0.25 in Q1 2024[25] Unaudited Consolidated Statements of Cash Flows The consolidated statements of cash flows show that for the quarter ended March 31, 2025, OFG Bancorp experienced a significant increase in net cash from operating activities, a shift from net cash outflow to inflow in financing activities, and a change from net cash inflow to outflow in investing activities Consolidated Statements of Cash Flows (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $83,071 | $60,991 | | Net Cash Provided by (Used in) Investing Activities | $(97,319) | $163,518 | | Net Cash Provided by (Used in) Financing Activities | $133,711 | $(218,290) | | Net Change in Cash and Cash Equivalents | $119,463 | $6,219 | | Cash and Cash Equivalents at End of Period | $710,600 | $754,392 | - Net cash provided by operating activities increased by $22.08 million year-over-year, driven by higher net income and adjustments for non-cash items[28] - Cash flow from investing activities shifted from a net inflow of $163.5 million in Q1 2024 to a net outflow of $97.3 million in Q1 2025, primarily due to increased loan originations and investment security purchases[30] - Cash flow from financing activities shifted from a net outflow of $218.29 million in Q1 2024 to a net inflow of $133.71 million in Q1 2025, mainly due to increased deposits and reduced FHLB advances, partially offset by treasury stock purchases[30] Notes to Unaudited Consolidated Financial Statements This section provides detailed disclosures and explanations for the unaudited consolidated financial statements, covering significant accounting policies, specific asset and liability categories, capital requirements, and fair value measurements of financial instruments Note 1 – Summary of Significant Accounting Policies This note describes OFG Bancorp's nature of operations, basis of financial statement presentation, and recent accounting standard updates, highlighting its role as a financial holding company primarily offering diversified banking and financial services in Puerto Rico - OFG is a financial holding company providing commercial, consumer, auto, and mortgage loans, financial planning, insurance, investment advisory, and securities brokerage services through subsidiaries like Oriental Bank[35] - Financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and SEC guidance, requiring management estimates and assumptions[37] - New accounting standard updates include ASU 2024-03 (income statement expense disaggregation, effective 2027) and ASU 2023-09 (income tax disclosures, effective 2025), while ASU 2024-02 and 2024-01 were adopted in Q1 2025 with no material impact[39][40][41][42] Note 2 – Cash Restrictions This note details Oriental Bank's requirement under Puerto Rico law to maintain average weekly reserve balances to cover demand deposits (excluding government deposits) and confirms the bank's compliance with this requirement - Oriental Bank is required by Puerto Rico law to maintain average weekly reserve balances to cover demand deposits (excluding government deposits)[43] Minimum Average Reserve Balances (in millions of dollars) | Date | Amount | | :--- | :--- | | March 31, 2025 | $475.6 | | December 31, 2024 | $472.0 | - As of March 31, 2025, the bank complied with this requirement, using cash and due from banks and other short-term highly liquid securities to cover the required average reserve balances[43] Note 3 – Investment Securities This note details OFG Bancorp's investment securities, including available-for-sale and held-to-maturity categories, their fair values, unrealized gains/losses, and yields, noting that most securities are issued by U.S. government entities with a zero credit loss assumption Total Investments (in thousands of dollars) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Available-for-Sale Securities (Fair Value) | $2,415,337 | $2,338,205 | | Held-to-Maturity Securities (Amortized Cost) | $321,824 | $327,158 | | Equity Securities | $48,785 | $54,896 | | Trading Securities | $19 | $18 | | Total Investments | $2,785,965 | $2,720,277 | Unrealized Losses on Available-for-Sale Securities (in thousands of dollars) | Date | Fair Value | Total Unrealized Losses | | :--- | :--- | :--- | | March 31, 2025 | $1,248,567 | $88,392 | | December 31, 2024 | $1,662,446 | $115,544 | - Unrealized losses on federal agency mortgage-backed securities are due to market fluctuations from interest rate volatility, but OFG does not intend to sell these investments before the recovery of amortized cost[55] - Most securities are issued by U.S. government entities and government-sponsored agencies, carrying a zero credit loss assumption[49] - As of March 31, 2025, $1.567 billion of investment securities were pledged to secure government deposits, FHLB advances, and regulatory collateral[50] Note 4 – Loans This note details OFG Bancorp's loan portfolio, segmented by commercial, mortgage, consumer, and auto loans, providing amortized cost, aging, non-accrual status, and credit quality indicators, showing an increase in total loans held for investment and a rise in non-accrual loans Loan Portfolio Composition (Amortized Cost Basis, in thousands of dollars) | Loan Type | March 31, 2025 | December 31, 2024 | Quarter-over-Quarter Change | | :--- | :--- | :--- | :--- | | Commercial Loans | $3,153,060 | $3,103,091 | +$49,969 | | Mortgage Loans | $1,435,573 | $1,470,817 | -$35,244 | | Consumer Loans | $670,808 | $668,561 | +$2,247 | | Auto Loans | $2,593,203 | $2,549,493 | +$43,710 | | Total Loans Held for Investment (Gross) | $7,852,644 | $7,791,962 | +$60,682 | Non-Accrual Loans (Amortized Cost Basis, in thousands of dollars) | Loan Type | March 31, 2025 | December 31, 2024 | Quarter-over-Quarter Change | | :--- | :--- | :--- | :--- | | Commercial Loans | $44,150 | $38,913 | +$5,237 | | Mortgage Loans | $11,581 | $11,923 | -$342 | | Consumer Loans | $3,482 | $4,207 | -$725 | | Auto Loans | $14,043 | $20,055 | -$6,012 | | Total Non-PCD Non-Accrual Loans | $73,256 | $75,098 | -$1,842 | | PCD Non-Accrual Loans | $8,900 | $2,880 | +$6,020 | | Total Non-Accrual Loans | $82,156 | $77,978 | +$4,178 | - As of March 31, 2025, past due mortgage loans included $44.7 million in delinquent loans under the GNMA repurchase option program, compared to $48.6 million as of December 31, 2024[60] - OFG offers various loan modification programs (interest rate reductions, term extensions, principal forbearance) to borrowers facing financial difficulties, detailing the financial impact of these modifications[67][70][73] - Credit quality indicators categorize loans into pass, special mention, substandard, doubtful, and loss grades, based on borrower repayment capacity and collateral protection[81][82][83][84][85] Note 5 – Allowance for Credit Losses This note explains OFG Bancorp's methodology for measuring the Allowance for Credit Losses (ACL), which uses a lifetime expected credit loss approach adjusted for current conditions and forward-looking macroeconomic scenarios, with Q1 2025 ACL increasing by $5.3 million due to loan volume, specific reserves, and auto loan loss trends - ACL is estimated using quantitative methods considering historical loss experience, current portfolio credit quality, and economic outlook over the loan's life, supplemented by qualitative reserves for high-risk segments[94][95] Allowance for Credit Losses (ACL) Summary (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | Quarter-over-Quarter Change | | :--- | :--- | :--- | :--- | | Total ACL | $181,174 | $175,863 | +$5,311 | | Non-PCD ACL | $174,752 | $170,709 | +$4,043 | | PCD ACL | $6,422 | $5,154 | +$1,268 | - The Q1 2025 provision for credit losses was $25.688 million, including $17.4 million for increased loan volume, $4.8 million for specific reserves on three commercial loans, and $3.5 million reflecting post-pandemic auto loan loss trends[96] - Net charge-offs for Q1 2025 were $20.4 million, an increase of $0.6 million year-over-year, primarily driven by auto and consumer loans, partially offset by a decrease in commercial loans[97] Note 6 – Foreclosed Real Estate This note presents OFG Bancorp's foreclosed real estate activity for the quarters ended March 31, 2025, and March 31, 2024, showing a slight increase in the ending balance for Q1 2025 compared to the beginning of the period Foreclosed Real Estate Activity (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Beginning Balance | $4,002 | $10,780 | | Additions | $557 | $1,345 | | Sales | $(695) | $(1,826) | | Valuation Decreases | $(122) | $(170) | | Other Adjustments | $529 | $721 | | Ending Balance | $4,271 | $10,850 | Note 7 – Servicing Assets This note details OFG Bancorp's servicing assets, primarily mortgage servicing rights, which are measured using the fair value method, with a slight decrease in fair value in Q1 2025 due to loan payments and changes in valuation model inputs - OFG recognizes servicing assets when the compensation for servicing loans is expected to adequately compensate for servicing costs[101] Fair Value of Mortgage Servicing Rights (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Ending Fair Value | $69,238 | $70,435 | Changes in Servicing Rights (Fair Value Method, in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Beginning Fair Value | $70,435 | $49,520 | | Servicing Rights from Mortgage Loan Securitization or Asset Transfers | $659 | $527 | | Changes Due to Loan Payments | $(1,262) | $(920) | | Changes in Fair Value Due to Changes in Valuation Model Inputs or Assumptions | $(594) | $426 | | Ending Fair Value | $69,238 | $49,553 | - Key economic assumptions for fair value measurement include fixed prepayment rates (1.30%-18.14% in Q1 2025) and discount rates (10.00%-15.50% in Q1 2025)[104] - Mortgage servicing and ancillary fees totaled $5.5 million in Q1 2025, up from $4.4 million in Q1 2024[107] Note 8 – Goodwill and Other Intangible Assets This note provides information on OFG Bancorp's goodwill and other intangible assets, confirming no impairment was identified in Q1 2025, with other intangible assets, primarily core deposit and customer relationship intangibles, amortized over their determined useful lives Goodwill by Reportable Business Segment (in thousands of dollars) | Segment | December 31, 2024 | March 31, 2025 | | :--- | :--- | :--- | | Banking | $84,063 | $84,063 | | Wealth Management | $178 | $178 | | Financial | $0 | $0 | | Total Goodwill | $84,241 | $84,241 | - Based on an assessment of events and circumstances, no goodwill impairment was identified as of March 31, 2025[111] Other Intangible Assets (Net Book Value, in thousands of dollars) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Core Deposit Intangible Assets | $10,377 | $11,320 | | Customer Relationship Intangible Assets | $3,173 | $3,462 | | Total Other Intangible Assets | $13,550 | $14,782 | - Amortization expense for other intangible assets was $1.2 million in Q1 2025, compared to $1.5 million in Q1 2024[113] Note 9 – Accrued Interest Receivable and Other Assets This note details the composition of accrued interest receivable and other assets, including prepaid expenses and repossessed automobiles, also highlighting the allowance for credit losses on accrued interest receivable for loans in deferral programs Accrued Interest Receivable (in thousands of dollars) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans | $58,953 | $60,864 | | Investments | $11,076 | $10,803 | | Total | $70,029 | $71,667 | Other Assets (in thousands of dollars) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid Expenses | $68,332 | $72,093 | | Other Repossessed Assets | $6,656 | $6,595 | | Accounts Receivable and Other Assets | $64,296 | $70,191 | | Total | $139,284 | $148,879 | - As of March 31, 2025, prepaid expenses included $60.6 million in prepaid municipal, property, and income taxes[115] - As of March 31, 2025, the allowance for credit losses on accrued interest receivable for loans in deferral programs was $0.028 million[114] Note 10 – Deposits and Related Interest This note provides a breakdown of OFG Bancorp's deposits by type, weighted average interest rates, and maturity schedule for time deposits, also detailing public fund deposits and their collateralization Total Deposits (in thousands of dollars) | Deposit Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-Interest Bearing Demand Deposits | $2,600,555 | $2,493,860 | | Interest Bearing Savings and Demand Deposits | $5,348,484 | $5,198,462 | | Retail Time Deposits | $1,184,359 | $1,170,560 | | Institutional Time Deposits | $623,759 | $585,829 | | Total Deposits | $9,922,969 | $9,604,786 | - The weighted average interest rate on deposits decreased from 1.56% as of December 31, 2024, to 1.50% as of March 31, 2025[118] - Total uninsured deposits as of March 31, 2025, were $5.176 billion (52.16% of total deposits)[117] - Public fund deposits from Puerto Rico government entities and instrumentalities totaled $1.537 billion as of March 31, 2025, collateralized by $1.591 billion in securities and commercial loans[119] Note 11 – Borrowings and Related Interest This note details OFG Bancorp's borrowings, primarily Federal Home Loan Bank (FHLB) advances and securities sold under repurchase agreements, showing a significant decrease in total borrowings due to maturities and strategic asset/liability management FHLB Advances (in thousands of dollars) | Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Short-Term Fixed Rate Advances | $0 | $270,000 | | Long-Term Fixed Rate Advances | $255,000 | $55,000 | | Total FHLB Advances | $255,000 | $325,000 | - Total borrowings decreased by $145.5 million (36.3%) as of March 31, 2025, compared to December 31, 2024, reflecting maturities of FHLB advances and repurchase agreements[16][124][126] - As of March 31, 2025, OFG had an additional borrowing capacity of $435.9 million at the FHLB[123] - As of March 31, 2025, there were no securities sold under repurchase agreements, compared to $75.222 million as of December 31, 2024[16][127] Note 12 – Offsetting of Financial Assets and Liabilities This note explains OFG Bancorp's right of offset for securities sold under repurchase agreements, which allows for offsetting amounts owed in case of default, noting no outstanding repurchase agreements as of March 31, 2025 - OFG has a right of offset with counterparties for securities sold under repurchase agreements, pursuant to supplemental terms of the master repurchase agreement[128] - In the event of default, each party has the right to offset any other amounts or obligations due under the relevant agreement and any other agreements or transactions between the parties[128] - As of March 31, 2025, there were no repurchase agreements, thus no offsetting financial assets and liabilities to report[129] Note 13 – Income Taxes This note outlines OFG Bancorp's income tax situation, including its subjection to Puerto Rico and U.S. federal/state tax laws, detailing deferred tax assets and liabilities, effective tax rates, and a reduction in unrecognized tax benefits - OFG is subject to the Puerto Rico Internal Revenue Code of 2011, as amended (maximum statutory corporate tax rate of 37.5%), with its U.S. mainland subsidiaries and U.S. Virgin Islands branch subject to federal and state income taxes[130] Deferred Tax Assets and Liabilities (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Deferred Tax Assets | $6,300 | $6,200 | | Net Deferred Tax Liabilities | $44,200 | $40,700 | - The effective tax rate for Q1 2025 was 23.3%, down from 26.8% in Q1 2024, primarily due to preferential tax treatment under the Puerto Rico Code, discrete tax windfalls from stock options, and the release of unrecognized tax benefits in the current period[132] - Unrecognized tax benefits were zero as of March 31, 2025, compared to $1 million as of December 31, 2024, due to the expiration of the statute of limitations in Q1 2025[133] Note 14 – Regulatory Capital Requirements This note confirms that OFG Bancorp and Oriental Bank met all Basel III capital adequacy requirements as of March 31, 2025, and December 31, 2024, and are categorized as "well capitalized" institutions under the regulatory framework - OFG and its subsidiary, Oriental Bank, are subject to risk-based capital standards (Basel III Capital Rules) by federal and Puerto Rico banking agencies and elected to exclude accumulated other comprehensive income (loss) related to available-for-sale securities and derivative valuations from common equity tier 1 capital[135] - As of March 31, 2025, and December 31, 2024, both OFG and Oriental Bank met all capital adequacy requirements and were rated "well capitalized" under the prompt corrective action regulatory framework[136] OFG Bancorp Regulatory Capital Ratios (March 31, 2025, and December 31, 2024) | Ratio | March 31, 2025 | December 31, 2024 | Minimum Requirement to be Well Capitalized | | :--- | :--- | :--- | :--- | | Total Capital to Risk-Weighted Assets | 15.53% | 15.52% | 10.00% | | Tier 1 Capital to Risk-Weighted Assets | 14.27% | 14.26% | 8.00% | | Common Equity Tier 1 Capital to Risk-Weighted Assets | 14.27% | 14.26% | 6.50% | | Tier 1 Capital to Average Total Assets (Leverage Ratio) | 10.83% | 10.93% | 5.00% | Note 15 – Stockholders' Equity This note details the composition of OFG Bancorp's stockholders' equity, including common stock, additional paid-in capital, statutory surplus, retained earnings, and treasury stock, highlighting the increase in statutory surplus and significant stock repurchases in Q1 2025 - Statutory surplus increased from $169.5 million as of December 31, 2024, to $173.9 million as of March 31, 2025, with $4.4 million transferred from retained earnings in Q1 2025[141] - In Q1 2025, OFG repurchased 582,399 shares for $23.4 million at an average price of $40.17 per share under its $50 million stock repurchase program[143][144] - As of March 31, 2025, the estimated number of shares remaining to be purchased under the $50 million repurchase program was 157,017 shares, with a remaining amount of $6.3 million[143] Note 16 – Accumulated Other Comprehensive Loss This note presents the changes in OFG Bancorp's Accumulated Other Comprehensive Loss (AOCL) (net of tax), which significantly decreased in Q1 2025 due to unrealized gains on available-for-sale securities Accumulated Other Comprehensive Loss (AOCL) (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unrealized Losses on Available-for-Sale Securities | $(67,817) | $(105,930) | | Income Tax Impact | $9,816 | $16,091 | | Net Unrealized Losses on Available-for-Sale Securities (AOCL) | $(58,001) | $(89,839) | - AOCL decreased by $31.838 million in Q1 2025, primarily due to other comprehensive income (gain) of $31.838 million, reflecting unrealized gains on available-for-sale securities[145] Note 17 – Earnings per Common Share This note provides the calculation of OFG Bancorp's basic and diluted earnings per common share for the quarters ended March 31, 2025, and March 31, 2024, showing a slight year-over-year decrease in EPS Earnings per Common Share (in thousands of dollars, except per share data) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Income Attributable to Common Stockholders | $45,572 | $49,692 | | Average Common Shares Outstanding | 45,295 | 47,096 | | Basic Earnings Per Share | $1.01 | $1.06 | | Diluted Earnings Per Share | $1.00 | $1.05 | - In Q1 2025, OFG increased its quarterly cash dividend per common share to $0.30 from $0.25 as of December 31, 2024[150] Note 18 – Guarantees This note details OFG Bancorp's guarantees, including standby letters of credit and liabilities for residential mortgage loans sold with credit recourse, outlining estimated losses and repurchase obligations associated with these guarantees - The nominal amount of obligations under standby letters of credit was $25.3 million as of both March 31, 2025, and December 31, 2024[151] - The outstanding principal balance of residential mortgage loans sold with credit recourse was $88.8 million as of March 31, 2025, and $90.5 million as of December 31, 2024[152] Estimated Credit Loss Liabilities (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans Sold with Credit Recourse | $220 | $155 | | Loans in Breach of Representations and Warranties | $388 | $562 | - As of March 31, 2025, OFG serviced $5.6 billion in mortgage loans for third parties and had advanced approximately $4.8 million under such mortgage servicing agreements[159] Note 19 – Commitments and Contingencies This note outlines OFG Bancorp's credit-related financial instruments with off-balance sheet risk, including commitments to extend credit and financial guarantees, also addressing legal proceedings and other contingencies, stating no material adverse impact is expected Credit-Related Financial Instruments (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commitments to Extend Credit | $1,338,010 | $1,360,351 | | Commercial Letters of Credit | $2,308 | $1,096 | | Standby Letters of Credit and Financial Guarantees | $25,321 | $25,321 | | Loans Sold with Recourse | $88,764 | $90,464 | - The allowance for credit losses for off-balance sheet credit exposures was $0.925 million as of March 31, 2025[166] - As of March 31, 2025, OFG had $14.2 million in other non-credit commitments and $3.8 million in technology capital expenditure commitments[167] - The accrued liability for legal contingencies was $0.62 million as of March 31, 2025, and management believes the ultimate outcome of all matters will not have a material adverse effect on OFG's financial condition or results of operations[170][171] Note 20 – Operating Leases This note details OFG Bancorp's real estate operating leases, presenting lease costs, assets, liabilities, and future minimum payments, also including information on OFG as a lessor Operating Lease Costs (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Lease Cost | $2,240 | $2,653 | | Variable Lease Cost | $382 | $411 | | Short-Term Lease Cost | $100 | $50 | | Lease Income | $(13) | $(22) | | Total Lease Cost | $2,709 | $3,092 | Operating Lease Assets and Liabilities (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Right-of-Use Assets | $18,663 | $19,197 | | Lease Liabilities | $20,795 | $21,388 | - As of March 31, 2025, the weighted average remaining lease term was 4.7 years, and the weighted average discount rate was 7.6%[174] Note 21 – Fair Value of Financial Instruments This note explains OFG Bancorp's fair value measurement framework, classifying assets and liabilities into Level 1, 2, or 3 based on input observability, and provides detailed tables for recurring and non-recurring fair value measurements, along with sensitivity analysis for unobservable input changes - Fair value is defined as the price to exchange an asset or transfer a liability in an orderly transaction between market participants in the principal or most advantageous market, maximizing observable inputs and minimizing unobservable inputs[176] - Investment securities are classified as Level 1 or 2, with one held-to-maturity security classified as Level 3; servicing assets, foreclosed real estate, and other repossessed assets are classified as Level 3 due to unobservable inputs[178][179][180][181] Recurring Fair Value Measurements (March 31, 2025, in thousands of dollars) | Category | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Available-for-Sale Investment Securities | $1,384 | $2,413,953 | $0 | $2,415,337 | | Trading Securities | $0 | $19 | $0 | $19 | | Money Market Investments | $7,107 | $0 | $0 | $7,107 | | Servicing Assets | $0 | $0 | $69,238 | $69,238 | | Total | $8,491 | $2,413,972 | $69,238 | $2,491,701 | - Sensitivity analysis for servicing assets shows that an adverse 10% change in fixed prepayment rates would decrease fair value by $1.309 million, and an adverse 10% change in discount rates would decrease fair value by $3.035 million[184] Note 22 – Banking and Financial Service Revenues This note presents the main categories of banking and financial service revenues, including banking service income, wealth management income, and mortgage banking activities, explaining the recognition policies for each revenue stream Banking and Financial Service Revenues (in thousands of dollars) | Category | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Banking Service Income | $15,981 | $17,259 | | Wealth Management Income | $8,455 | $8,107 | | Mortgage Banking Activities | $4,776 | $4,693 | | Total Banking and Financial Service Revenues | $29,212 | $30,059 | - Banking service income decreased primarily due to reduced interchange fees following the implementation of the Durbin Amendment on July 1, 2024[193] - Wealth management income includes insurance income, brokerage fees (securities sales commissions, managed account fees, mutual fund distribution fees), and trust fees[195][196][198] Note 23 – Business Segments This note describes OFG Bancorp's three reportable business segments: Banking, Wealth Management, and Financial, providing operating results and selected financial information for each segment, emphasizing performance assessment based on net income - OFG operates through three segments: Banking (traditional banking products, mortgages), Wealth Management (financial planning, brokerage, insurance, trust services), and Financial (asset/liability management, investment securities, borrowings)[200][201] - The Chief Operating Decision Maker (CEO) primarily assesses segment performance and allocates resources based on net income[203] Net Income by Business Segment (Quarter Ended March 31, 2025, in thousands of dollars) | Segment | Net Income | | :--- | :--- | | Banking | $14,340 | | Wealth Management | $3,563 | | Financial | $27,669 | | Consolidated Total | $45,572 | Net Income by Business Segment (Quarter Ended March 31, 2024, in thousands of dollars) | Segment | Net Income | | :--- | :--- | | Banking | $19,254 | | Wealth Management | $2,582 | | Financial | $27,856 | | Consolidated Total | $49,692 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on OFG Bancorp's financial performance and condition, offering a detailed analysis of operating results, financial position, and key performance indicators for the quarter ended March 31, 2025, compared to prior periods Introduction This introduction outlines OFG Bancorp's business model as a financial holding company, providing diversified banking and financial services primarily in Puerto Rico and the U.S. Virgin Islands through its Banking, Wealth Management, and Financial segments, emphasizing its "digital-first" strategy to enhance client convenience and financial progress - OFG is a financial holding company operating through Banking, Wealth Management, and Financial segments, offering a broad range of services in Puerto Rico and the U.S. Virgin Islands[213] - OFG's long-term goals include strengthening its financial franchise by expanding lending, enhancing integration of banking and financial service marketing and delivery, continuously improving asset/liability management, increasing non-interest income from banking and financial services, and improving operational efficiency[213] - The company is implementing a "digital-first" strategy to enhance client experience through digital channels, self-service, and value-added services, aiming for clients' financial progress and well-being[215] Recent Developments This section highlights recent capital actions, including increased quarterly cash dividends and significant stock repurchases, and discusses Puerto Rico's economic conditions, noting its resilience but also potential impacts from federal spending cuts and global uncertainties - In January 2025, OFG announced an increase in its regular quarterly cash dividend on common stock from $0.25 to $0.30 per share[216] - In Q1 2025, OFG repurchased 582,399 shares for $23.4 million at an average price of $40.17 per share[216] - On April 30, 2025, the Board of Directors approved a new $100 million stock repurchase program[217] - Puerto Rico's economy continues to show resilience with positive wage, employment, and business conditions, benefiting from federal stimulus and infrastructure reconstruction funds, but OFG is closely monitoring potential impacts of federal funding reductions and global uncertainties on the local economy and business operating results[218] Critical Accounting Policies and Estimates This section reiterates that the Allowance for Credit Losses (ACL) related to collectively assessed impairment remains a critical accounting policy and estimate due to significant estimation uncertainty, but its methodology has not materially changed since the previous annual report - The Allowance for Credit Losses (ACL) related to collectively assessed impairment is identified as a critical accounting policy and estimate due to significant estimation uncertainty[220] - Management continuously evaluates and updates critical accounting estimates, with no material changes in methodology since the 2024 Form 10-K[221] Financial Highlights OFG Bancorp demonstrated strong performance in Q1 2025 with solid overall results, customer and deposit growth, improved consumer credit, and strategic technology investments; despite a slight year-over-year decrease in net income and diluted EPS, capital levels remained strong, and dividends increased - Q1 2025 results were strong, with customer and deposit growth, improved consumer credit, and excellent operational execution, supported by strategic investments in technology (digital-first strategy, omnichannel applications, intelligent banking insights, Apple Pay)[222] Key Financial Highlights (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Diluted EPS | $1.00 | $1.05 | -4.8% | | Net Income | $45.6M | $49.7M | -8.3% | | Net Interest Margin | 5.42% | 5.40% | +0.02% | | Return on Average Assets (ROA) | 1.56% | 1.77% | -11.9% | | Return on Average Tangible Common Equity | 15.28% | 17.92% | -14.7% | | Efficiency Ratio | 52.42% | 52.49% | -0.07% | | Total Interest Income | $189.2M | $183.4M | +3.2% | | Total Interest Expense | $40.2M | $39.3M | +2.1% | | Total Banking and Financial Service Revenues | $29.2M | $30.1M | -2.8% | | Pre-Provision Net Revenue | $85.1M | $83.0M | +2.5% | | Total Provision for Credit Losses | $25.7M | $15.1M | +69.9% | | Net Charge-Offs (NCOs) | $20.4M | $19.8M | +2.8% | | Non-Performing Loan Ratio | 1.11% | N/A | N/A | | Total Non-Interest Expense | $93.5M | $91.4M | +2.2% | | Income Tax Expense | $13.9M | $18.2M | -23.9% | | Loans Held for Investment | $7.85B | $7.54B | +4.15% | | New Loan Originations | $558.9M | $536.6M | +4.16% | | Total Investments | $2.79B | $2.48B | +12.5% | | Customer Deposits | $9.76B | $9.55B | +2.2% | | Total Borrowings and Brokered Deposits | $421.5M | $203.3M | +107.3% | | Cash and Cash Equivalents | $710.6M | $754.4M | -5.8% | | CET1 Ratio | 14.27% | 14.45% | -0.18% | | Tangible Common Equity Ratio | 10.30% | 10.06% | +0.24% | | Tangible Book Value Per Share | $26.66 | $23.55 | +13.2% | Analysis of Results of Operations This section provides a detailed comparison of OFG Bancorp's financial results for the quarters ended March 31, 2025, and March 31, 2024, focusing on net interest income, non-interest income, non-interest expenses, provision for credit losses, income tax expense, and performance across business segments Net Interest Income Net interest income increased by $5 million (3.4%) year-over-year, driven by higher interest income from loans and investment securities, partially offset by decreased interest income from cash and money market investments and increased interest expense on borrowings Net Interest Income (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $149,071 | $144,102 | +$4,969 | | Interest Spread | 5.27% | 5.26% | +0.01% | | Net Interest Margin | 5.42% | 5.40% | +0.02% | - Loan interest income increased by $3.8 million, primarily from auto loans (up $5.6 million due to higher average balances) and consumer loans (up $1.2 million), partially offset by commercial loans (down $1.4 million) and mortgage loans (down $1.6 million)[253] - Investment securities interest income increased by $3.7 million, driven by acquisitions of higher-yielding investment securities and increased average volumes[253] - These increases were partially offset by a $1.7 million decrease in interest income from interest-bearing cash and money market investments and a $0.9 million increase in interest expense on borrowings[252] Non-Interest Income Total non-interest income decreased by $0.831 million (2.7%) year-over-year, primarily due to lower banking service income from reduced interchange fees, partially offset by increased wealth management income and mortgage banking activities Non-Interest Income Summary (in thousands of dollars) | Category | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Banking Service Income | $15,981 | $17,259 | (7.4)% | | Wealth Management Income | $8,455 | $8,107 | 4.3% | | Mortgage Banking Activities | $4,776 | $4,693 | 1.8% | | Total Non-Interest Income | $29,517 | $30,348 | (2.7)% | - Banking service income decreased by $1.3 million, mainly due to reduced interchange fees after the Durbin Amendment implementation, partially offset by increased merchant income and sponsorship commissions[256] - Wealth management income increased by $0.348 million, driven by higher investment advisory services and insurance income[256] - Mortgage banking activities increased by $0.083 million, primarily from higher servicing fees and favorable valuations of the mortgage loans held for sale portfolio, partially offset by lower MSR valuations and increased repurchase loan losses[256] Non-Interest Expenses Total non-interest expenses increased by $2 million (2.2%) year-over-year, primarily driven by higher professional services fees, occupancy, equipment and infrastructure costs, taxes and fees, and foreclosed real estate expenses, partially offset by lower electronic banking fees Non-Interest Expenses Summary (in thousands of dollars) | Category | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Salaries and Employee Benefits | $39,932 | $39,816 | 0.3% | | Occupancy, Equipment, and Infrastructure Costs | $14,820 | $14,322 | 3.5% | | Electronic Banking Fees | $9,670 | $10,366 | -6.7% | | Information Technology Expenses | $6,287 | $6,603 | -4.8% | | Professional and Service Fees | $5,118 | $4,004 | 27.8% | | Taxes and Fees (Excluding Payroll and Income Taxes) | $3,726 | $3,243 | 14.9% | | Insurance | $2,766 | $2,676 | 3.4% | | Loan Servicing and Clearing Fees | $2,234 | $2,110 | 5.9% | | Advertising, Business Development, and Strategic Initiatives | $2,617 | $2,379 | 10.0% | | Communications | $1,120 | $1,081 | 3.6% | | Printing, Postage, Stationery, and Supplies | $1,147 | $959 | 19.6% | | Foreclosed Real Estate and Other Repossessed Assets Expense (Net) | $1,028 | $668 | 53.9% | | Other | $2,987 | $3,185 | -6.2% | | Total Non-Interest Expenses | $93,452 | $91,412 | 2.2% | - The increase primarily stemmed from professional and service fees (up $1.1 million), occupancy, equipment, and infrastructure costs (up $0.498 million), taxes and fees (up $0.483 million), and foreclosed real estate expenses (up $0.36 million)[260] - This was partially offset by a $0.696 million decrease in electronic banking fees, reflecting a $3.1 million quantitative incentive payment from a business partner, partially offset by increased electronic banking fee volume and other related costs[258] - The efficiency ratio remained stable at 52.42% in Q1 2025, compared to 52.49% in Q1 2024[259] Provision for Credit Losses The provision for credit losses significantly increased by $10.6 million (69.9%) year-over-year to $25.7 million, primarily due to increased loan volume, specific reserves for commercial loans, and auto loan loss trends Provision for Credit Losses (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $25,688 | $15,121 | 69.9% | - The increase in the Q1 2025 provision reflects $17.4 million for increased loan volume, $4.8 million for specific reserves on three commercial loans, and $3.5 million to reflect post-pandemic auto loan default loss trends[261] Income Tax Expense Income tax expense decreased by $4.3 million (23.9%) year-over-year to $13.9 million, resulting in a lower effective tax rate of 23.3% due to preferential tax treatment, stock option windfalls, and the release of unrecognized tax benefits Income Tax Expense (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Income Tax Expense | $13,876 | $18,225 | (23.9)% | - The effective tax rate decreased from 26.8% in Q1 2024 to 23.3% in Q1 2025[262] - The decrease is primarily associated with preferential tax treatment under the Puerto Rico Code, discrete tax windfalls from stock options, and the release of unrecognized tax benefits in the current period[262] Business Segments This section analyzes the performance of OFG Bancorp's three business segments: Banking, Wealth Management, and Financial, noting that the Banking segment's pre-tax net income decreased due to higher credit loss provisions and lower non-interest income, while Wealth Management grew, and the Financial segment's pre-tax net income slightly declined due to increased interest expense Pre-Tax Net Income by Segment (in thousands of dollars) | Segment | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Banking | $28,148 | $37,420 | | Wealth Management | $3,580 | $2,595 | | Financial | $27,720 | $27,902 | | Consolidated Total | $59,448 | $67,917 | - The Banking segment's pre-tax net income decreased by $9.3 million, primarily due to a $10.5 million increase in the provision for credit losses and a $2.4 million decrease in non-interest income (reduced interchange fees)[267][269] - The Wealth Management segment's pre-tax net income increased by $1 million, driven by higher non-interest income from investment advisory service fees, mutual fund retailer fees, and insurance income[267] - The Financial segment's pre-tax net income decreased by $0.182 million, mainly due to a $2.3 million increase in interest expense on borrowings and brokered deposits, partially offset by a $1.9 million increase in interest income from higher-yielding investment securities[268] Analysis of Financial Condition This section provides an in-depth analysis of OFG Bancorp's financial condition, covering changes in assets, liabilities, and stockholders' equity, with detailed discussions on the loan portfolio, allowance for credit losses, non-performing assets, funding sources, and regulatory capital Assets Owned As of March 31, 2025, OFG Bancorp's total assets increased by $228.6 million (2.0%) to $11.729 billion, primarily driven by higher cash and due from banks, growth in the investment portfolio, and increased net loans Total Assets (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Total Assets | $11,729,257 | $11,500,734 | 2.0% | | Cash and Due from Banks | $703,493 | $584,467 | 20.4% | | Total Investments | $2,785,965 | $2,720,277 | 2.4% | | Net Loans | $7,688,271 | $7,633,831 | 0.7% | - The investment portfolio increased by $65.7 million (2.4%), primarily from $100 million in new available-for-sale mortgage-backed securities and $19.2 million in mortgage loan securitizations[271] - Net loans increased by $54.4 million (0.7%), reflecting growth in U.S. and Puerto Rico commercial, auto, and consumer loan portfolios, partially offset by natural reductions in residential mortgages[272] Financial Assets Managed As of March 31, 2025, OFG Bancorp's total financial assets under management increased to $4.581 billion, with a slight decrease in trust assets under management due to market conditions, but a significant increase in assets managed by brokerage-dealer and insurance agency subsidiaries due to new client accounts Total Assets Under Management (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trust Assets Under Management | $2,246,182 | $2,262,446 | | Broker-Dealer Assets Under Management | $2,335,238 | $2,246,884 | | Total Assets Under Management | $4,581,420 | $4,509,330 | - Trust assets under management decreased by $16.3 million, reflecting changes in current market conditions[273] - Broker-dealer and insurance agency subsidiaries' assets under management increased by $88.4 million, primarily due to new client accounts opened during the quarter[273] Goodwill As of March 31, 2025, OFG Bancorp's goodwill remained unchanged at $84.2 million, with no impairment identified during the quarter, as goodwill is tested annually for impairment and qualitatively analyzed quarterly - Goodwill is not amortized but is tested for impairment annually (as of October 31) and assessed quarterly for triggering events[274] Goodwill Allocation (in thousands of dollars) | Segment | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Banking | $84,100 | $84,100 | | Wealth Management | $100 | $100 | | Total Goodwill | $84,241 | $84,241 | - No impairment was identified as of March 31, 2025[274] Loan Portfolio Composition As of March 31, 2025, OFG Bancorp's net loans increased by 0.7% to $7.688 billion, with increases in commercial and auto loan portfolios, while mortgage loans decreased due to repayments and securitizations Loan Portfolio Composition (Gross, in thousands of dollars) | Loan Type | March 31, 2025 | December 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Commercial Loans | $3,153,060 | $3,103,091 | 1.6% | | Mortgage Loans | $1,435,573 | $1,470,817 | (2.4)% | | Consumer Loans | $670,808 | $668,561 | 0.3% | | Auto Loans | $2,593,203 | $2,549,493 | 1.7% | | Total Loans Held for Investment (Gross) | $7,852,644 | $7,791,962 | 0.8% | - Commercial loan originations increased by 8.7% to $221.2 million in Q1 2025, primarily concentrated in the U.S. commercial loan portfolio[277] - The mortgage loan portfolio decreased by 2.4% due to scheduled repayments of residential mortgages and securitization of eligible loans; mortgage loan originations increased by 15.0% to $37 million[277] - As of March 31, 2025, OFG's direct credit exposure to the Government of Puerto Rico was $87.3 million, an increase of $20.8 million from December 31, 2024[279] Allowance for Credit Losses The Allowance for Credit Losses (ACL) increased by 3.0% to $181.174 million as of March 31, 2025, with a significant rise in the provision for credit losses and increased net charge-offs, primarily driven by auto and consumer loans, reflecting post-pandemic credit normalization and higher business volumes Allowance for Credit Losses (ACL) Summary (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Total ACL | $181,174 | $175,863 | 3.0% | | Commercial Loans ACL | $47,790 | $45,436 | 5.2% | | Mortgage Loans ACL | $9,990 | $10,909 | (8.4)% | | Consumer Loans ACL | $32,247 | $31,829 | 1.3% | | Auto Loans ACL | $91,147 | $87,689 | 3.9% | Provision for Credit Losses (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $25,681 | $15,269 | 68.2% | Net Credit Losses (in thousands of dollars) | Item | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Net Credit Losses | $(20,370) | $(19,812) | 2.8% | | Net Credit Losses as a Percentage of Average Loans | 1.05% | 1.05% | 0.0% | - Net charge-offs for auto loans increased by $2.3 million, reflecting post-pandemic credit normalization and increased business volumes[300] Non-performing Assets As of March 31, 2025, OFG Bancorp's non-performing assets increased by 5.2% to $98.4 million, primarily due to a significant increase in non-accrual commercial loans, partially offset by decreases in non-accrual auto, consumer, and mortgage loans Non-Performing Assets (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Total Non-Performing Loans | $87,484 | $82,983 | 5.4% | | Foreclosed Real Estate | $4,271 | $4,002 | 6.7% | | Other Repossessed Assets | $6,656 | $6,595 | 0.9% | | Total Non-Performing Assets | $98,411 | $93,580 | 5.2% | Non-Accrual Loans (in thousands of dollars) | Loan Type | March 31, 2025 | December 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Commercial Loans | $52,816 | $41,554 | 27.1% | | Mortgage Loans | $11,815 | $12,162 | (2.9)% | | Consumer Loans | $3,482 | $4,207 | (17.2)% | | Auto Loans | $14,043 | $20,055 | (30.0)% | | Total Non-Accrual Loans | $82,156 | $77,978 | 5.4% | - The increase in non-accrual commercial loans is primarily related to a $6.8 million PCD commercial loan and a $6.1 million non-PCD U.S. commercial loan[288] - As of March 31, 2025, the allowance for credit losses coverage of non-performing loans was 207.1% (compared to 211.9% as of December 31, 2024)[285] Liabilities and Funding Sources As of March 31, 2025, OFG Bancorp's total liabilities increased by 1.8% to $10.434 billion, with deposits as the primary funding source increasing by 3.3%, while borrowings significantly decreased by 36.3% due to maturities and strategic asset/liability management Total Liabilities (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Total Liabilities | $10,433,896 | $10,246,363 | 1.8% | | Total Deposits | $9,922,969 | $9,604,786 | 3.3% | | Total Borrowings | $255,642 | $401,174 | (36.3)% | - Deposits increased by $318.4 million, reflecting growth in demand deposits (up $214 million), time deposits (up $61.7 million), and savings and money market accounts (up $42.7 million)[305] - Borrowings decreased by $145.5 million, reflecting maturities of FHLB advances and securities sold under repurchase agreements[307] - As of March 31, 2025, public fund deposits from Puerto Rico government entities and instrumentalities totaled $1.537 billion, collateralized by $1.591 billion in securities and commercial loans[306] Stockholders' Equity As of March 31, 2025, OFG Bancorp's total stockholders' equity increased by 3.3% to $1.295 billion, primarily driven by net income, increased statutory surplus, and reduced accumulated other comprehensive loss due to favorable market value adjustments on available-for-sale securities, partially offset by treasury stock repurchases Total Stockholders' Equity (in thousands of dollars) | Item | March 31, 2025 | December 31, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $1,295,361 | $1,254,371 | 3.3% | - The increase reflects $45.6 million in net income, a $4.4 million increase in statutory surplus, and a $31.8 million decrease in accumulated other comprehensive loss (favorable market value adjustments on available-for-sale securities)[308] - These positive impacts were partially offset by $11.2 million in common stock dividends and $23.9 million in treasury stock repurchases[308] Regulatory Capital OFG Bancorp and Oriental Bank continue to exceed all Basel III regulatory capital requirements and are rated "well capitalized"; while the leverage capital ratio slightly decreased, risk-weighted cap