OFG BANCORP – 10-Q – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – InsuranceNewsNet

Please read the following discussion and analysis of our financial condition and
results of operations together with the "Selected Financial Data" and our
consolidated financial statements and related notes included under Item I,
"Financial Statements" of this report on Form 10-Q. This discussion and analysis
contains forward-looking statements. Please see "Forward-Looking Statements,"
"Risk Factors," and "Quantitative and Qualitative Disclosures about Market Risk"
in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and
set forth in our Form 10-K for the year ended December 31, 2021 (the "2021 Form
10-K"), for discussion of the uncertainties, risks and assumptions associated
with these statements. We have omitted discussion of 2020 results where it would
be redundant to the discussion previously included in Item 2 of our Form 10-Q
for the quarter ended March 31, 2021.


Other factors not identified above, including those described under the headings
in our Annual Report on Form 10-K for the year ended December 31, 2021 may also
cause actual results to differ materially from those described in our
forward-looking statements.


OFG is a publicly-owned financial holding company that provides wide range of
banking and financial services such as commercial, consumer and mortgage
lending, auto loans and leasing, financial planning, insurance sales, money
management and investment banking and brokerage services, as well as corporate
and individual trust services. OFG operates through three major business
segments: Banking, Wealth Management, and Treasury, and distinguishes itself
based on quality service. OFG conducts its business through its main office in
San Juan, Puerto Rico, forty nine branches in Puerto Rico and two branches in
the U.S. Virgin Islands (the "USVI"). OFG has three subsidiaries with operations
in Puerto Rico: the Bank, Oriental Financial Services and Oriental Insurance;
three subsidiaries in the United States, OPC, OFG USA and OFG Ventures; and one
subsidiary in the Cayman Islands, OFG Reinsurance. OFG's long-term goal is to
strengthen its banking and financial services franchise by expanding its lending
businesses, increasing the level of integration in the marketing and delivery of
banking and financial services, continuously improving our already effective
asset-liability management, growing non-interest revenue from banking and
financial services, and achieving greater operating efficiencies.


OFG's diversified mix of businesses and products generates both the interest
income traditionally associated with a banking institution and non-interest
income traditionally associated with a financial services institution (generated
by such businesses as securities brokerage, fiduciary services, investment
banking, insurance agency, reinsurance and retirement plan administration).
Although all of these businesses, to varying degrees, are affected by interest
rate and financial market fluctuations and other external factors, OFG's
commitment is to continue producing a balanced and growing revenue stream.

RECENT DEVELOPMENTS

Capital Actions

In January 2022, OFG announced that its Board of Directors approved the increase
of its regular quarterly cash dividend by 25%, to $0.15 per common share from
$0.12 per share, beginning on the quarter ended March 31, 2022. The Board of
Directors also approved a new stock repurchase program to purchase $100 million
of its common stock in the open market, which OFG expects to complete during the
2022 fiscal year. At March 31, 2022, OFG has repurchased 1.2 million shares of
common stock for $33.5 million.

Covid-19 Pandemic and Economic Conditions

Since March 2020, the COVID-19 pandemic has adversely affected our communities
and the way we do business, as well as, economic activity globally, nationally
and locally. Among other things, interest rates declined, unemployment increased
and economic output slowed dramatically during 2020.

Within the last year, as restrictions related to the pandemic eased in the
United States, employment increased and pent-up demand was released, which
together with COVID-19 lockdowns in foreign jurisdictions created global supply
chain issues and shortages of goods, which in turn has triggered price
inflation. In an effort to address inflation, the Federal Reserve Bank ("FRB")
has slowed monetary accommodation and on March 16, 2022 increased the federal
funds rate 25 bps, in the first of what is expected to be a series of rate
increases during 2022.
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Adding to economic uncertainty and increased inflationary pressures are military
actions taken by Russia against Ukraine commencing in February 2022, which have
added stress to existing supply chain concerns and placed upward pressure on oil
and natural gas prices.

The macroeconomic outlook for Puerto Rico continues to show strength.
Unemployment, employment participation, manufacturing, residential home values
are all moving in the right direction. Our commercial clients are experiencing a
higher demand for their products and services. Consumer demand also remains
strong, and at long last, Puerto Rico has exited bankruptcy. Nevertheless, any
recovery of the Puerto Rican economy could be adversely impacted by
macroeconomic developments within the United States and across the globe. The
global macroeconomic outlook continues to remain uncertain and at this time, OFG
cannot reasonably estimate the term or intensity of any possible adverse impact
on our financial position, operations or liquidity, resulting from economic
disruption and uncertainty related to COVID-19 variants, trade and supply chain
disruption, continuing inflationary pressures, ongoing military actions against
Ukraine, and the uncertainty of the timing and extent of potential actions that
might be taken by the FRB. However, the high levels of reconstruction and
stimulus funds are serving as a good cushion to dampen the negative effects.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


The preparation of financial statements in accordance with GAAP requires
management to make a number of judgments, estimates and assumptions that affect
the reported amount of assets, liabilities, income and expenses in the
consolidated financial statements. Understanding our accounting policies and the
extent to which we use management judgment and estimates in applying these
policies is integral to understanding our financial statements. We provide a
summary of our significant accounting policies in "Note 1-Summary of Significant
Accounting Policies" of our 2021 Form 10-K.


In the "Management's Discussion and Analysis of Financial Condition and Results
of Operations-Critical Accounting Policies and Estimates" section of our 2021
Form 10-K, we identified the Allowance for Credit Losses related to loans
collectively evaluated for impairment as a critical accounting policy and
estimate, because it involves significant estimation uncertainty that has or is
reasonably likely to have a material impact on our financial condition or
results of operations.


We evaluate our critical accounting estimates and judgments on an ongoing basis
and update them as necessary based on changing conditions. There have been no
material changes in the methods used to formulate these critical accounting
estimates from those discussed in our 2021 Form 10-K.

FINANCIAL HIGHLIGHTS

National Gold 2022-05 Body Leaderboard
During the quarter ended March 31, 2022, OFG's core business demonstrated strong
momentum with solid loan and deposit growth, net interest margin ("NIM")
expansion, and lower provision. Total assets reached $10.2 billion, expenses
remained in line, and OFG repurchased $33.5 million of shares of common stock as
part of our $100 million buyback program. The Puerto Rico economic environment
continues to trend positively, while OFG continues to focus on improving the
customer experience and growing together with our clients and the communities we
serve. During the quarter, for example, OFG introduced fully proprietary digital
processes to apply for consumer loans and to open and contribute into our IRA
fund.

Earnings Per Share was diluted $ 0.76 compared to $ 0.66 in the fourth quarter of
2021 and $ 0.56 in the first quarter of 2021. Total core revenues were
$ 136.4 million compared to $ 141.0 million in the fourth quarter of 2021 and
$ 127.7 million in the first quarter of 2021.

Net Interest Income was $105.2 million compared to $104.2 million in the fourth
quarter of 2021 and $98.2 million in the first quarter of 2021. NIM expanded to
4.47% from 4.18% in the fourth quarter of 2021 primarily due to increased volume
of loans and investments.

Interest Income totaled $112.9 million compared to $112.6 million in the fourth
quarter of 2021 and $111.0 million in the first quarter of 2021. Compared to the
fourth quarter of 2021, interest income benefited from higher yields on higher
average balances of loans and investment securities and higher average yields on
cash, which was offset by two fewer days that reduced interest income by $1.7
million.

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Total Interest Expense of $7.8 million compared to $8.4 million in the fourth
quarter of 2021 and 12.8 million in the first quarter of 2021. Compared to the
fourth quarter of 2021, interest expense reflected lower average balances and
costs of deposits and borrowings, partially offset by $0.4 million to expense
unamortized issuance costs as a result of the redemption of $36.1 million in
3.23% variable rate subordinated notes.

Banking and Financial Service Revenues was $31.2 million compared to
$29.5 million in the first quarter of 2021 and $36.8 million in the fourth
quarter of 2021, which included $4.3 million in annual insurance commissions.
These revenues reflected higher levels of banking service, mortgage banking, and
wealth management revenues compared to the first quarter of 2021.

Pre-Provision Net Revenues totaled $ 55.6 million compared to $ 55.8 million in
the fourth quarter of 2021 and $ 50.9 million in the first quarter of 2021.

Provision for credit losses of $1.6 million compared to $7.2 million in the
fourth quarter of 2021 and $6.3 million in the first quarter of 2021. The
provision for credit losses included a $4.0 million increase related to the
growth of loan balances and a $4.2 million increase for a commercial loan
previously placed in non-accrual, partially offset by a $5.7 million reduction
in the qualitative adjustment due to improved economic conditions. The fourth
quarter of 2021 included a provision of $9.7 million related to transferring
certain past due loans to held for sale.

Credit Quality: Net charge off rate and early and total delinquency rates fell
to 0.04%, 1.97% and 3.17%, respectively, compared to the previous and year ago
quarters. The first quarter of 2022 net charge offs included a $2.8 million
recovery from an acquired PCD loan and a $1.1 million recovery as part of the
final settlement of the non-performing mortgage loans sale contracted for in the
fourth quarter of 2021.

Non-Interest Expenses totaled $81.2 million compared to $86.5 million in the
fourth quarter of 2021 and $77.7 million in the first quarter of 2021. The $5.3
million reduction from the fourth quarter of 2021 primarily reflected lower
legal reserve provisions ($2.4 million) and lower combination of other items
(totaling $2.1 million), including operational losses, technology related
expenses, and training costs.

Loans Held for Investment were $6.55 billion compared to $6.40 billion at
December 31, 2021 and $6.59 billion at March 31, 2021. Loans grew $145.4 million
from the fourth quarter of 2021, reflecting increases in commercial loans (net
of PPP forgiveness) as well as increases in consumer and auto loans.

New Loan Originations of $623.2 million compared to $632.7 million in the fourth
quarter of 2021 and $527.6 million in the first quarter of 2021, which included
$126.3 million of PPP loans. The first quarter of 2022 reflected continued, high
levels of auto lending, commercial lending in Puerto Rico and US, and increased
demand for consumer lending.

Customer Deposits totaled $8.97 billion at March 31, 2022 compared to
$8.59 billion at December 31, 2021 and $8.72 billion at March 31, 2021. Core
deposits grew $375.1 million from December 31, 2021, reflecting increases in
commercial and retail accounts.

Capital: CET1 ratio was 13.24% compared to 13.77% at December 31, 2021 and
13.56% at March 31, 2021. Tangible book value per share was $18.90 compared to
$19.08 at December 31, 2021 and $17.39 at March 31, 2021. The decline in CET1
and tangible book value per share from December 31, 2021 reflected the
repurchase of 1.2 million shares of common stock and reduction in other
comprehensive income, partially offset by an increase in retained earnings.
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Selected income statement and balance sheet data and key performance indicators
are presented in the tables below:

                                                                         Quarter Ended March 31,
                                                          2022                     2021                  Variance %
EARNINGS DATA:                                                    (In thousands, except per share data)
Interest income                                    $           112,949       $         110,976                     1.8%
Interest expense                                                 7,755                  12,778                  (39.3)%
Net interest income                                            105,194                  98,198                     7.1%
Provision for loan and lease losses                              1,551                   6,324                  (75.5)%
Net interest income after provision for loan and
leases losses                                                  103,643                  91,874                    12.8%
Non-interest income                                             31,606                  30,413                     3.9%
Non-interest expenses                                           81,155                  77,666                     4.5%
Income before taxes                                             54,094                  44,621                    21.2%
Income tax expense                                              16,573                  14,248                    16.3%
Net income                                                      37,521                  30,373                    23.5%
Less: dividends on preferred stock                                   -                 (1,255)                 (100.0)%
Income available to common shareholders            $            37,521       $          29,118                    28.9%
PER SHARE DATA:
Basic                                              $              0.77       $            0.57                    35.1%
Diluted                                            $              0.76       $            0.56                    35.7%
Average common shares outstanding                               48,968                  51,397                   (4.7)%
Average common shares outstanding and equivalents               49,484                  51,752                   (4.4)%
Cash dividends declared per common share           $              0.15                    0.08                    87.5%
Cash dividends declared on common shares           $             7,438                   4,116                    80.7%
PERFORMANCE RATIOS:
Return on average assets (ROA)                                 1.48  %               1.21    %                    22.3%
Return on average tangible common stockholders'
equity                                                        15.88  %              13.11    %                    21.1%
Return on average common equity (ROE)                         14.08  %              11.43    %                    23.2%

Efficiency ratio                                              59.50  %              60.84    %                   (2.2)%
Interest rate spread                                           4.45  %               4.21    %                     5.7%
Interest rate margin                                           4.47  %               4.26    %                     4.9%


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                                                         March 31,               December 31,               Variance
                                                            2022                     2021                      %
PERIOD END BALANCES AND CAPITAL RATIOS:                             (In thousands, except per share data)
Investments and loans
Investment securities                                $        1,258,718       $           895,818                  40.5%
Loans, net                                                    6,449,130                 6,329,311                   1.9%
Total investments and loans                          $        7,707,848       $         7,225,129                   6.7%
Deposits and borrowings
Deposits                                             $        8,978,222       $         8,603,118                   4.4%

Other borrowings                                                 28,035                    64,571                (56.6)%
Total deposits and borrowings                        $        9,006,257       $         8,667,689                   3.9%
Stockholders' equity

Common stock                                                     59,885                    59,885                     -%
Additional paid-in capital                                      633,796                   637,061                 (0.5)%
Legal surplus                                                   121,389                   117,677                   3.2%
Retained earnings                                               426,320                   399,949                   6.6%
Treasury stock, at cost                                       (180,717)                 (150,572)                  20.0%
Accumulated other comprehensive (loss) income                  (20,638)                     5,160               (500.0)%
Total stockholders' equity                           $        1,040,035       $         1,069,160                 (2.7)%
Per share data
Book value per common share                          $            21.37       $             21.54                 (0.8)%
Tangible book value per common share                 $            18.90       $             19.08                 (0.9)%
Market price                                         $            26.64       $             26.56                   0.3%
Capital ratios
Leverage capital                                              9.54    %                   9.69  %                 (1.5)%
Common equity Tier 1 capital                                 13.24    %                  13.77  %                 (3.8)%
Tier 1 risk-based capital                                    13.24    %                  14.27  %                 (7.2)%
Total risk-based capital                                     14.49    %                  15.52  %                 (6.6)%
Financial assets managed
Trust assets managed                                 $        3,608,480       $         3,758,895                 (4.0)%
Broker-dealer assets gathered                                 2,311,922                 2,466,004                 (6.2)%
Total assets managed                                 $        5,920,402       $         6,224,899                 (4.9)%


ANALYSIS OF RESULTS OF OPERATIONS

The following tables show major categories of interest-earning assets and
interest-bearing liabilities, their respective interest income, expenses, yields
and costs, and their impact on net interest income due to changes in volume and
rates for the quarters ended March 31, 2022 and 2021.


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TABLE 1 – ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME / RATE
FOR THE QUARTERS ENDED MARCH 31, 2022 AND 2021

                                          Interest                                     Average rate                                            Average balance
                               March 2022          March 2021              March 2022                March 2021                   March 2022                     March 2021
                                                                                             (Dollars in thousands)
A - TAX EQUIVALENT SPREAD
Interest-earning assets       $  112,949          $  110,976                       4.80  %                   4.81  %       $              9,540,266       $              9,358,377
Tax equivalent adjustment          2,476               2,170                       0.11  %                   0.09  %                           -                          -
Interest-earning assets - tax
equivalent                       115,425             113,146                       4.91  %                   4.90  %                      9,540,266                      9,358,377
Interest-bearing liabilities       7,755              12,778                       0.35  %                   0.60  %                      8,864,175                      8,682,584
Tax equivalent net interest
income / spread                  107,670             100,368                       4.56  %                   4.30  %                        676,091                        675,793
Tax equivalent interest rate
margin                                                                             4.67  %                   4.39  %
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities              4,455               2,176                       1.88  %                   1.68  %                        949,035                        518,038
Interest bearing cash and
money market investments             929                 595                       0.18  %                   0.11  %                      2,072,112                      2,204,431
Total investments                  5,384               2,771                       0.72  %                   0.41  %                      3,021,147                      2,722,469
Non-PCD loans
Mortgage                           9,353              10,774                       5.29  %                   5.35  %                        706,715                        806,090
Commercial                        29,571              27,726                       5.36  %                   5.29  %                      2,236,213                      2,126,872
Consumer                          12,716              11,615                      11.20  %                  11.45  %                        460,571                        411,377
Auto and leasing                  34,991              32,815                       8.30  %                   8.59  %                      1,710,216                      1,549,535
Total Non-PCD loans               86,631              82,930                       6.87  %                   6.87  %                      5,113,715                      4,893,874
PCD loans
Mortgage                          17,342              20,031                       5.89  %                   5.57  %                      1,178,444                      1,437,214
Commercial                         3,250               4,588                       6.16  %                   6.68  %                        213,964                        278,550
Consumer                              47                  37                      14.24  %                   8.05  %                          1,319                          1,810
Auto and leasing                     295                 619                      10.25  %                  10.26  %                         11,677                         24,460
Total PCD loans                   20,934              25,275                       5.96  %                   5.80  %                      1,405,404                      1,742,034
Total loans (1)                  107,565             108,205                       6.69  %                   6.61  %                      6,519,119                      6,635,908
Total interest-earning assets    112,949             110,976                       4.80  %                   4.81  %                      9,540,266                      9,358,377

Interest-bearing liabilities:
Deposits:
NOW Accounts                       2,140               2,393                       0.31  %                   0.40  %                      2,813,037                      2,397,673
Savings and money market           1,198               2,124                       0.22  %                   0.43  %                      2,248,193                      2,003,963
Time deposits                      2,057               5,507                       0.70  %                   1.26  %                      1,199,340                      1,775,828
Total core deposits                5,395              10,024                       0.35  %                   0.66  %                      6,260,570                      6,177,464
Brokered deposits                      8                 163                       0.30  %                   1.44  %                         11,366                         45,955
                                   5,403              10,187                       0.35  %                   0.66  %                      6,271,936                      6,223,419
Non-interest bearing deposits          -                   -                          -                      0.00  %                      2,547,977                      2,358,214


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Fair value premium and core
deposit intangible
amortizations                     1,638             1,837                   -                0.00  %                     -                     -
Total deposits                    7,041            12,024                0.32  %             0.57  %             8,819,913             8,581,633
Borrowings:
Securities sold under
agreements to repurchase              -                 -                   -  %                -  %                     -                     -
Advances from FHLB and other
borrowings                          193               459                2.77  %             2.87  %                28,184                64,868
Subordinated capital notes          521               295               13.15  %             3.31  %                16,078                36,083
Total borrowings                    714               754                6.54  %             3.03  %                44,262               100,951
Total interest-bearing
liabilities                       7,755            12,778                0.35  %             0.60  %             8,864,175             8,682,584
Net interest income / spread  $ 105,194          $ 98,198                4.45  %             4.21  %
Interest rate margin                                                     4.47  %             4.26  %
Excess of average
interest-earning assets over
average interest-bearing
liabilities                                                                                                $       676,091       $       675,793
Average interest-earning
assets to average
interest-bearing liabilities
ratio                                                                                                            107.63  %             107.78  %

(1) Includes loans held for sale and excludes allowance for credit losses.

C – CHANGES IN NET INTEREST INCOME DUE TO:

                                                           Volume             Rate              Total
                                                                         (In thousands)
Interest Income:
Investment securities                                    $  1,957          $    322          $  2,279
Interest bearing cash and money market investments            (36)              370               334
Loans                                                         617            (1,257)             (640)
Total interest income                                       2,538              (565)            1,973
Interest Expense:
NOW Accounts                                                  373              (626)             (253)
Savings and money market                                      233            (1,159)             (926)
Time deposits                                              (1,532)           (1,918)           (3,450)
Brokered deposits                                             (75)              (80)             (155)
Fair value premium and core deposit intangible
amortizations                                                   -              (199)             (199)

Advances from FHLB and other borrowings                      (251)              (15)             (266)
Subordinated capital notes                                   (240)              466               226
Total interest expense                                     (1,492)           (3,531)           (5,023)
Net Interest Income                                      $  4,030          $  2,966          $  6,996




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Net Interest Income

Net interest income is a function of the difference between rates earned on
OFG's interest-earning assets and rates paid on its interest-bearing liabilities
(interest rate spread) and the relative amounts of its interest earning assets
and interest-bearing liabilities (interest rate margin). OFG constantly monitors
the composition and re-pricing of its assets and liabilities to maintain its net
interest income at adequate levels.

Comparison of quarters ended March 31, 2022 and 2021

Net interest income of $ 105.2 million increased $ 7.0 million from $ 98.2 million.
Tax equivalent basis net interest income of $ 107.7 million increased
$ 7.3 millionor 7.3%, from $ 100.4 million.

Interest rate spread increased 24 basis points to 4.45% from 4.21% and net
interest margin increased 21 basis points to 4.47% from 4.26%. This increase
reflects a decrease of 25 basis point in the total average cost of
interest-bearing liabilities.

Net interest income was positively impacted by:

•Lower interest expense by $5.0 million, reflecting both a reduced cost and
lower average balances of total deposits and borrowings, partially offset by a
$405 thousand write off unamortized issuance costs related to the early
redemption of $36.1 million variable rate subordinated capital notes during the
quarter.

•An increase of $2.3 million in interest income from investments securities
related to purchases of available-for-sale and held-to-maturity mortgage backed
securities during 2022 and 2021.

Net interest income was negatively impacted by a decrease in interest income
from loans of $ 0.6 millionreflecting a decrease of $ 4.3 million mostly in
commercial and mortgage loan portfolios purchased with credit deterioration
(“PCD”), offset by higher interest income of $ 3.7 million in non-PCD auto,
commercial and consumer loans.

TABLE 2 – NON-INTEREST INCOME SUMMARY

                                                           Quarter Ended March 31,
                                                       2022               2021        Variance
                                                                (In thousands)
Banking service revenue                        $     17,562            $ 16,497          6.5  %
Wealth management revenue                             7,857               7,388          6.3  %
Mortgage banking activities                           5,782               5,573          3.8  %
Total banking and financial service revenue          31,201              29,458          5.9  %
Net gain (loss) on:

Other non-interest income                               405                 955        (57.6) %
Total non-interest income, net                 $     31,606            $ 30,413          3.9  %


Non-Interest Income

Non-interest income is affected by the amount of the Bank's trust department
assets under management, transactions generated by clients' financial assets
serviced by OFG's securities broker-dealer, insurance agency and reinsurance
subsidiaries, the level of mortgage banking activities, fees generated from
loans and deposit accounts, and gains on sales of assets.

Comparison of quarters ended March 31, 2022 and 2021

OFG recorded non-interest income, net, in the amount of $ 31.6 millioncompared
to $ 30.4 millionan increase of 3.9%, or $ 1.2 million. The increase in
non-interest income was mainly due to:

•An increase of $1.1 million in banking service revenues, as a result of an
increase of $370 thousand in servicing and prepayment loan fees, $213 thousand
in electronic banking fees from transaction volumes, $188 thousand in credit
life commissions, $183 thousand in checking account fees, and $88 thousand in
international fees;

• An increase of $ 469 thousand in wealth management revenue due to the new
reinsurance business income of $ 803 thousandpartially offset by a decrease in
broker-dealer revenues of $ 235 thousand. Broker-dealer revenues

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decreased due to lower income from equity and mutual fund retailer fees by $ 461
thousand
and higher advisory and trailer fees by $ 242 thousand; and

• An increase of $ 209 thousand in mortgage-banking activities due to lower losses
on repurchase loans and other mortgage banking activities by $ 1.4 million,
offset by lower gains on loans sold by $ 1.2 million due to decrease in sales.

The increases mentioned above were partially offset by a $592 thousand decrease
in other non-interest income, primarily related to the effect in the prior year
quarter of a recovery of $610 thousand on a receivable previously written-off.

TABLE 3 – NON-INTEREST EXPENSES SUMMARY

                                                                           Quarter Ended March 31,
                                                           2022                      2021                Variance %
                                                                                (In thousands)
Compensation and employee benefits                    $        34,768            $     32,618                     6.6  %
Occupancy, equipment and infrastructure costs                  11,916                  13,128                    -9.2  %
Electronic banking charges                                      9,786                   8,232                    18.9  %
Professional and service fees                                   5,421                   4,536                    19.5  %
Information technology expenses                                 4,804                   4,254                    12.9  %
Taxes, other than payroll and income taxes                      3,307                   3,661                    -9.7  %
Insurance                                                       2,635                   2,455                     7.3  %
Loan servicing and clearing expenses                            1,922                   1,841                     4.4  %
Advertising, business promotion, and strategic
initiatives                                                     2,062                   1,431                    44.1  %
Pandemic expenses                                                 881                   1,769                   -50.2  %
Communication                                                   1,116                     966                    15.5  %
Printing, postage, stationery and supplies                      1,092                   1,217                   -10.3  %
Director and investor relations                                   249                     300                   -17.0  %
Foreclosed real estate and other repossessed assets
income, net of expenses                                       (1,482)                    (50)                 2,864.0  %

Other                                                           2,678                   1,308                   104.7  %
Total non-interest expenses                           $        81,155            $     77,666                     4.5  %
Relevant ratios and data:
Efficiency ratio                                            59.50   %                60.84  %
Compensation and benefits to non-interest expense           42.84   %                42.00  %
Compensation to average total assets owned
(annualized)                                                 1.38   %                 1.30  %

Average number of employees                                 2,259                    2,231
Average compensation per employee (annualized, in
thousands)                                            $     61.56                $    58.5
Average loans per average employee                    $     2,886                $   2,974


Non-Interest Expenses

Comparison of quarters ended March 31, 2022 and 2021

Non-interest expense was $ 81.2 millionrepresenting an increase of 4.5%, or
$ 3.5 millioncompared to $ 77.7 million.

The increase in non-interest expense was mainly due to:

•Increase in compensation and employee benefits by $2.2 million, mainly due to a
one-time $1.3 million pandemic employee tax credit in prior year quarter, $1.5
million higher salary expenses associated with an increase in minimum hourly
wages during the third quarter of 2021 and annual salary increase during the
current quarter. These increases were offset by a $825 thousand decrease in
commissions and incentives mainly due to a change in payout structure;

•Increase in electronic banking charges by $1.6 million driven by increases in
merchant fees and debit and credit card billing fees due to higher transaction
volumes in the current quarter;
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•Increase in other non-interest expense by $1.4 million, mainly reflecting
higher claims and settlements by $873 thousand due to the reversal of $1.2
million reserve in the prior year quarter as a result of a favorable arbitration
award, and $568 thousand higher operational losses; and

• Increase in professional and service fees by $ 885 thousand due to higher
consulting, outsourcing and legal fees.

The increase in non-interest expense was partially offset by:

•Improvements in foreclosed real estate and other repossessed assets income by
$1.4 million reflecting an increase of $924 thousand in gains on sales of other
repossessed assets and $559 thousand in net gain on sale of foreclosed real
estate; and

•Decrease in occupancy, equipment and infrastructure expenses by $1.2 million
reflecting lower rent, building maintenance and security guard expenses related
to branch consolidations during 2021 and 2022.

The efficiency ratio was 59.50% and improved from 60.84%. The efficiency ratio
measures how much of OFG's revenues is used to pay operating expenses. OFG
computes its efficiency ratio by dividing non-interest expenses by the sum of
its net interest income and non-interest income, but excluding gains on the sale
of investment securities, derivatives gains or losses, other gains and losses,
and other income that may be considered volatile in nature. Management believes
that the exclusion of those items permits consistent comparability. Amounts
presented as part of non-interest income that are excluded from the adjusted
efficiency ratio computation for the quarters ended March 31, 2022 and 2021
amounted to $405 thousand and $955 thousand, respectively.

Provision for Credit Losses

Comparison of quarters ended March 31, 2022 and 2021

Based on an analysis of the credit quality and the composition of OFG's loan
portfolio, management determined that the provision for the quarter ended
March 31, 2022 was adequate to maintain the allowance for credit losses at an
appropriate level to provide for expected credit losses based upon an evaluation
of known and inherent risks.

Provision for credit losses decreased $4.8 million from $6.3 million to $1.6
million. The provision for credit losses for the quarter ended March 31, 2022
includes a provision of $4.0 million related to growth in loan balances, an
increase of $4.2 million related to a commercial loan previously placed in
non-accrual status, and a decrease of $5.7 million associated with qualitative
adjustments due to improved macroeconomic conditions. The provision for credit
losses for prior year quarter included a $3.7 million release of Covid-19
related loan reserves and a $3.5 million provision for a commercial loan in
workout prior to the pandemic.

Income Taxes

Comparison of quarters ended March 31, 2022 and 2021

OFG’s effective tax rate (“ETR”) was 30.6% in 2022 compared to 31.9% in 2021.
The decrease in ETR is mainly related to a discrete income tax windfall for
stocks vested during the quarter.

Business Segments

OFG segregates its businesses into the following major reportable segments:
Banking, Wealth Management, and Treasury. Management established the reportable
segments based on the internal reporting used to evaluate performance and to
assess where to allocate resources. Other factors such as OFG's organization,
nature of its products, distribution channels and economic characteristics of
its services were also considered in the determination of the reportable
segments. OFG measures the performance of these reportable segments based on
pre-established goals of different financial parameters such as net income, net
interest income, loan production, and fees generated. OFG's methodology for
allocating non-interest expenses among segments is based on several factors such
as revenue, employee headcount, occupied space, dedicated services or time,
among others. Following are the results of operations and the selected financial
information by operating segment for the quarters ended March 31, 2022 and 2021.
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Quarter Ended March 31, 2022

                                                  Wealth                                  Total Major                                Consolidated
                            Banking             Management            Treasury             Segments            Eliminations              Total
                                                                               (In thousands)
Interest income          $   108,483          $         5          $     4,461          $    112,949          $          -          $    112,949
Interest expense              (7,532)                   -                 (223)               (7,755)                    -                (7,755)
Net interest income          100,951                    5                4,238               105,194                     -               105,194
Provision (recapture)
for credit losses              1,710                    -                 (159)                1,551                     -                 1,551
Non-interest income           23,550                8,006                   50                31,606                     -                31,606
Non-interest expenses        (75,916)              (4,585)                (654)              (81,155)                    -               (81,155)
Intersegment revenue             489                    -                    -                   489                  (489)                    -
Intersegment expenses              -                 (343)                (146)                 (489)                  489                     -
Income before income
taxes                         47,364                3,083                3,647                54,094                     -                54,094
Income tax expense            16,564                    -                    9                16,573                     -                16,573
Net income               $    30,800          $     3,083          $     3,638          $     37,521          $          -          $     37,521
Total assets             $ 8,176,217          $    24,695          $ 3,036,638          $ 11,237,550          $ (1,047,430)         $ 10,190,120



                                                                        Quarter Ended March 31, 2021
                                                  Wealth                                  Total Major                                Consolidated
                            Banking             Management            Treasury             Segments            Eliminations              Total
                                                                               (In thousands)
Interest income          $   108,230          $        12          $     2,734          $    110,976          $          -          $    110,976
Interest expense             (12,136)                   -                 (642)              (12,778)                    -               (12,778)
Net interest income           96,094                   12                2,092                98,198                     -                98,198
Provision (recapture)
for credit losses              6,588                    -                 (264)                6,324                     -                 6,324
Non-interest income           22,873                7,531                    9                30,413                     -                30,413
Non-interest expenses        (73,874)              (2,829)                (963)              (77,666)                    -               (77,666)
Intersegment revenue             553                    -                    -                   553                  (553)                    -
Intersegment expenses              -                 (291)                (262)                 (553)                  553                     -
Income before income
taxes                         39,058                4,423                1,140                44,621                     -                44,621
Income tax expense            14,236                    -                   12                14,248                     -                14,248
Net income               $    24,822          $     4,423          $     1,128          $     30,373          $          -          $     30,373
Total assets             $ 8,312,367          $    28,505          $ 2,849,709          $ 11,190,581          $ (1,037,239)         $ 10,153,342



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Comparison of quarters ended March 31, 2022 and 2021

Banking

OFG’s banking segment net income before taxes increased by $ 8.3 million from
$ 39.1 million to $ 47.4 millionmainly reflecting:

• Lower interest expense by $ 4.6 million from both, reduced costs and lower
average balances of core deposits;

•Decrease in provision for credit losses by $4.9 million. The provision for
credit losses for the first quarter of 2021 included a $3.5 million provision
for a commercial loan in workout prior to the pandemic; and

•An increase of $677 thousand in non-interest income, mainly from a $1.1 million
increase in banking service revenues on servicing and other loan fees,
electronic banking fees, credit life commissions, checking accounts, and
international fees; $209 thousand increase in mortgage-banking activities due to
lower losses on repurchased loans and other mortgage banking activities,
partially offset by lower gains on loans sold due to a decrease in sales; and a
$592 thousand decrease in other non-interest income, primarily related to the
effect in prior year quarter of receivable recoveries previously written-off.

The net income before taxes was partially offset by an increase in non-interest
expenses by $2.0 million, mainly due to a one-time $1.3 million pandemic
employee tax credit in the prior year quarter, $1.5 million higher salary
expenses associated with an increase in minimum hourly wages during the third
quarter of 2021 and annual salary increase during the current quarter. These
increases were offset by a $825 thousand decrease in commissions and incentives
mainly due to a change in payout structure.

Wealth Management

Wealth management segment revenue consists of commissions and fees from
fiduciary activities, and securities brokerage and insurance activities. Net
income before taxes from this segment decreased by $1.3 million due to higher
non-interest expense by $1.8 million, mainly reflecting higher claims and
settlements by $873 thousand due to the reversal of $1.2 million reserve in the
prior year quarter as a result of a claim settled in favor of OFG, higher
consulting and advisory expenses by $245 thousand and higher compensation and
employee benefits by $201 thousand. This decrease was partially offset by an
increase in non-interest income of $475 thousand, mainly due to new reinsurance
business income of $803 thousand and lower broker-dealer revenues by $235
thousand.

Treasury

Treasury segment net income before taxes increased by $ 2.5 millionmainly
reflecting:

•An increase in interest income by $1.7 million related to the purchases of
available-for-sale and held-to-maturity mortgage backed securities during 2022
and 2021; and

• Lower interest expense by $ 419 thousandreflecting the cancellation of $ 33.1
million
of FHLB advances during 2021 and reduced costs and lower average
balances of brokered deposits.

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ANALYSIS OF FINANCIAL CONDITION

Assets Owned

At March 31, 2022OFG’s total assets amounted to $ 10.190 billionfor an
increase of $ 290.4 millionwhen compared to $ 9.900 billion at December 31,
2021
.

The investment portfolio increased by $362.9 million, or 40.5%, primarily
related to the purchase of agency mortgage-backed securities during the first
quarter of 2022 amounting to $398.9 million. OFG's strategy is to invest its
liquidity in mortgage-backed securities and designate them as available for sale
or held-to-maturity after taking into account the bond's characteristics with
respect to yield and term and the current market environment.

OFG's loan portfolio is comprised of residential mortgage loans, commercial
loans secured by real estate, other commercial and industrial loans, consumer
loans, and auto loans and leases. At March 31, 2022, OFG's net loan portfolio
increased by $119.8 million, or 1.9%, reflecting increases in commercial,
consumer and auto loans, offset by a decrease in mortgage loans, SBA PPP loans
forgiven during the quarter of $33.2 million and the sale of $21.9 million of
past due mortgage loans held for sale.

Cash and due from banks of $1.850 billion decreased by $164.6 million,
reflecting cash used to purchase agency mortgage-backed securities,
disbursements for loans originated during the quarter, and the redemption of
$36.1 million in 3.23% variable rate subordinated notes, partially offset by an
increase in commercial and government-related deposits.

Financial Assets Managed

OFG's financial assets include those managed by OFG's trust division, retirement
plan administration subsidiary, and assets gathered by its broker-dealer and
insurance subsidiaries. OFG's trust division offers various types of individual
retirement accounts ("IRAs") and manages 401(k) and Keogh retirement plans and
custodian and corporate trust accounts, while the retirement plan administration
subsidiary manages private retirement plans. At March 31, 2022, the total assets
managed by OFG's trust division and retirement plan administration subsidiary
amounted to $3.608 billion, compared to $3.759 billion at December 31, 2021.
OFG's broker-dealer subsidiary offers a wide array of investment alternatives to
its client base, such as tax-advantaged fixed income securities, mutual funds,
stocks, bonds and money management wrap-fee programs. At March 31, 2022, total
assets gathered by the broker-dealer and insurance agency subsidiaries from
their customers' investment accounts amounted to $2.312 billion, compared to
$2.466 billion at December 31, 2021. Changes in trust and broker-dealer related
assets primarily reflect changes in portfolio balances and differences in market
values.

Goodwill

OFG's goodwill is not amortized to expense but is tested at least annually for
impairment. A quantitative annual impairment test is not required if, based on a
qualitative analysis, OFG determines that the existence of events and
circumstances indicate that it is more likely than not that goodwill is not
impaired. OFG completes its annual goodwill impairment test as of October 31 of
each year. OFG tests for impairment by first allocating its goodwill and other
assets and liabilities, as necessary, to defined reporting units. A fair value
is then determined for each reporting unit. If the fair values of the reporting
units exceed their book values, no write-down of the recorded goodwill is
necessary. If the fair values are less than the book values, an additional
valuation procedure is necessary to assess the proper carrying value of the
goodwill.
As of March 31, 2022 and December 31, 2021, OFG had $86.1 million of goodwill
allocated as follows: $84.1 million to the banking segment and $2.0 million to
the wealth management segment. Please refer to Note 9 - Goodwill and Other
Intangible Assets to our consolidated financial statements for more information
on the annual goodwill impairment test.
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TABLE 4 – ASSETS SUMMARY AND COMPOSITION

                                                               March 31,              December 31,                   Variance
                                                                 2022                     2021                          %
                                                                         (In thousands)
Investments:
FNMA and FHLMC certificates                                $         918,696       $           550,809                     66.8  %

Obligations of US government-sponsored agencies                            -                     1,183                   -100.0  %
US Treasury securities                                                10,763                    10,825                     -0.6  %
CMOs issued by US government-sponsored agencies                       21,105                    24,430                    -13.6  %
GNMA certificates                                                    287,196                   288,578                     -0.5  %
Equity securities                                                     18,556                    17,578                      5.6  %
Other debt securities                                                  2,384                     2,395                     -0.5  %
Trading securities                                                        18                        20                    -10.0  %
Total investments                                                  1,258,718                   895,818                     40.5  %
Loans, net                                                         6,449,130                 6,329,311                      1.9  %
Total investments and loans                                        7,707,848                 7,225,129                      6.7  %

Other assets:

Cash and due from banks (including restricted cash)                1,850,081                 2,014,698                     -8.2  %
Money market investments                                               5,648                     8,952                    -36.9  %
Foreclosed real estate                                                15,297                    15,039                      1.7  %
Accrued interest receivable                                           56,097                    56,560                     -0.8  %
Deferred tax asset, net                                               87,608                    99,063                    -11.6  %
Premises and equipment, net                                           97,403                    92,124                      5.7  %
Servicing assets                                                      49,446                    48,973                      1.0  %
Goodwill                                                              86,069                    86,069                      0.0  %
Right of use assets                                                   28,576                    28,846                     -0.9  %
Core deposit, customer relationship and other intangibles             33,947                    36,093                     -5.9  %

Other assets and customers' liability on acceptances                 172,100                   188,174                     -8.5  %
Total other assets                                                 2,482,272                 2,674,591                     -7.2  %
Total assets                                               $      10,190,120       $         9,899,720                      2.9  %
Investment portfolio composition:
FNMA and FHLMC certificates                                          73.0  %                   61.5  %
Obligations of US government-sponsored agencies                       0.0  %                    0.1  %
US Treasury securities                                                0.9  %                    1.2  %
CMOs issued by US government-sponsored agencies                       1.7  %                    2.7  %
GNMA certificates                                                    22.8  %                   32.2  %
Equity securities                                                     1.5  %                    2.0  %
Other debt securities and trading securities                          0.1  %                    0.3  %
                                                                    100.0  %                  100.0  %


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TABLE 5 – LOAN PORTFOLIO COMPOSITION

                                    March 31,       December 31,      Variance
                                      2022              2021             %
                                          (In thousands)
Loans held for investment:
Commercial                        $ 2,499,914      $  2,379,330          5.1  %
Mortgage                            1,848,641         1,907,271         (3.1) %
Consumer                              455,792           409,675         11.3  %
Auto and leasing                    1,743,624         1,706,310          2.2  %
                                    6,547,971         6,402,586          2.3  %
Allowance for credit losses          (157,075)         (155,937)         0.7  %
Total loans held for investment     6,390,896         6,246,649          2.3  %
Mortgage loans held for sale           26,761            51,096        (47.6) %
Other loans held for sale              31,473            31,566         (0.3) %
Total loans, net                  $ 6,449,130      $  6,329,311          1.9  %


OFG's loan portfolio is composed of mortgage, commercial, consumer, and auto
loans. As shown in Table 5 above, total loans, net, amounted to $6.449 billion
at March 31, 2022 and $6.329 billion at December 31, 2021. OFG's loans
held-for-investment portfolio composition and trends were as follows:

•Commercial loan portfolio amounted to $2.500 billion (38.2% of the gross loan
portfolio) compared to $2.379 billion (37.2% of the gross loan portfolio) at
December 31, 2021.

Commercial production, excluding PPP loans, increased 120.7%, or $155.3 million
from $128.7 million in prior year quarter to $283.9 million in the quarter ended
March 31, 2022. During the first quarter of 2021, OFG originated $126.3 million
of PPP loans. There were no originations of PPP loans during the quarter ended
March 31, 2022, as the program concluded in 2021.

• Mortgage loan portfolio amounted to $ 1.849 billion (28.2% of the gross loan
portfolio) compared to $ 1.907 billion (29.8% of the gross originated loan
portfolio) at December 31, 2021.

Mortgage loan production totaled $63.9 million for the quarter ended March 31,
2022 which represents a decrease of 33.4% from $95.9 million in prior year
quarter. Mortgage loans included delinquent loans in the GNMA buy-back option
program amounting to $9.7 million and $14.5 million at March 31, 2022 and
December 31, 2021, respectively. Servicers of loans underlying GNMA
mortgage-backed securities must report as their own assets the defaulted loans
that they have the option (but not the obligation) to repurchase, even when they
elect not to exercise that option.

•Consumer loan portfolio amounted to $455.8 million (7.0% of the gross loan
portfolio) compared to $409.7 million (6.4% of the gross loan portfolio) at
December 31, 2021. Consumer loan production increased 253.2% to $97.1 million in
the quarter ended March 31, 2022 from $27.5 million in the prior year quarter.

•Auto and leasing portfolio amounted to $1.744 billion (26.6% of the gross loan
portfolio) compared to $1.706 billion (26.7% of the gross originated loan
portfolio) at December 31, 2021. Auto loans production increased 19.4% to $178.3
million in the quarter ended March 31, 2022 compared to $149.3 million in the
prior year quarter.

TABLE 6 – PUERTO RICO GOVERNMENT RELATED LOANS AND SECURITIES

                       March 31, 2022
                                                           Maturity
                   Carrying Value             1 to 3 Years       More than 3 Years
Loans:                          (In thousands)

Municipalities    $        86,089            $      35,020      $           51,069


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At March 31, 2022OFG has $ 86.1 million of direct credit exposure to the Puerto
Rico
government, a $ 1.2 million decrease from December 31, 2021.

Credit Risk Management

Allowance for Credit Losses

On January 1, 2020, OFG adopted the new accounting standard that requires the
measurement of the allowance for credit losses to be based on management's best
estimate of future expected credit losses inherent in OFG's relevant financial
assets.

Tables 7 through 9 set forth an analysis of activity in the allowance for credit
losses and present selected credit loss statistics for the quarters ended
March 31, 2022 and 2021 and as of March 31, 2022 and December 31, 2021. In
addition, Table 5 sets forth the composition of the loan portfolio.

Please refer to the "Provision for Credit Losses" and "Critical Accounting
Estimates" sections in the Management's Discussion and Analysis of Financial
Condition and Results of Operations section and Note 7 - Allowance for Credit
Losses of this report for a more detailed analysis of provisions and allowance
for credit losses.

Non-performing Assets

OFG's non-performing assets include non-performing loans and foreclosed real
estate (see Tables 10 and 12). At March 31, 2022, OFG had $86.8 million of
non-accrual loans, including $11.2 million PCD loans, compared to $101.9 million
at December 31, 2021.

At March 31, 2022 and December 31, 2021, loans whose terms have been extended
and which were classified as troubled-debt restructurings that were not included
in non-accrual loans amounted to $123.4 million and $125.9 million,
respectively, as they were performing under their new terms.

Delinquent residential mortgage loans insured or guaranteed under applicable FHA
and VA programs are classified as non-performing loans when they become 90 days
or more past due but are not placed in non-accrual status until they become 12
months or more past due, since they are insured loans. Therefore, those loans
are included as non-performing loans but excluded from non-accrual loans.

At March 31, 2022, OFG's non-performing assets decreased by 10.6% to $115.3
million (1.13% of total assets) from $129.0 million (1.30% of total assets) at
December 31, 2021. Foreclosed real estate and other repossessed assets amounting
to $15.3 million and $2.6 million, respectively, at March 31, 2022, increased
from $15.0 million and $1.9 million, respectively, at December 31, 2021,
recorded at fair value. OFG does not expect non-performing loans to result in
significantly higher losses. At March 31, 2022, the allowance coverage ratio to
non-performing loans was 161.3% (139.2% at December 31, 2021).

Upon adoption of the current expected credit losses ("CECL") methodology, OFG
elected to maintain pools of loans that were previously accounted for under ASC
310-30 and will continue to account for these pools as a unit of account. As
such, for PCD loans the determination of nonaccrual or accrual status is made at
the pool level, not the individual loan level. Upon adoption of CECL, the
allowance for credit losses was determined for each pool and added to the pool's
carrying amount to establish a new amortized cost basis. The difference between
the unpaid principal balance of the pool and the new amortized cost basis is the
non-credit premium or discount which will be amortized interest income over the
remaining life of the pool. On a quarterly basis, management will monitor the
composition and behavior of the pools to assess the ability for cash flow
estimation and timing. If based on the analysis performed the pool is classified
as non-accrual, the accretion/amortization of the non-credit (discount) premium
will cease.

OFG follows a conservative residential mortgage lending policy with more than
90% of its residential mortgage portfolio consisting of fixed-rate, fully
amortizing, fully documented loans that do not have the level of risk associated
with subprime loans offered by certain major U.S. mortgage loan originators.
Furthermore, OFG has never been active in negative amortization loans or
adjustable rate mortgage loans, including those with teaser rates.

The following items comprise non-performing loans held for investment, including
Non-PCD and PCDs:

Commercial loans – At March 31, 2022OFG’s non-performing commercial loans
amounted to $ 45.8 million (47.0% of OFG’s non-performing loans), an 8.7%
decrease from $ 50.1 million at December 31, 2021 (44.8% of OFG’s non-

                                       74
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performing loans). Non-PCD commercial loans are placed on non-accrual status
when they become 90 days or more past due and are written down, if necessary,
based on the specific evaluation of the underlying collateral, if any.

Mortgage loans - At March 31, 2022, OFG's non-performing mortgage loans totaled
$37.1 million (38.1% of OFG's non-performing loans), a 6.7% decrease from
$39.7 million (35.5% of OFG's non-performing loans) at December 31, 2021.
Non-PCD mortgage loans are placed on non-accrual status when they become 90 days
or more past due and are written-down, if necessary, based on the specific
evaluation of the collateral underlying the loan, except for FHA and VA insured
mortgage loans which are placed in non-accrual when they become 12 months or
more past due.

Consumer loans - At March 31, 2022, OFG's non-performing consumer loans amounted
to $2.0 million (2.1% of OFG's non-performing loans), an 11.9% decrease from
$2.3 million at December 31, 2021 (2.1% of OFG's non-performing loans). Non-PCD
consumer loans are placed on non-accrual status when they become 90 days past
due and written-off when payments are delinquent 120 days in personal loans and
180 days in credit cards and personal lines of credit.

Auto and leasing loans - At March 31, 2022, OFG's non-performing auto and
leasing loans amounted to $12.5 million (12.8% of OFG's total non-performing
loans), a decrease of 37.0% from $19.8 million at December 31, 2021 (17.6% of
OFG's total non-performing loans). Non-PCD auto and leasing loans are placed on
non-accrual status when they become 90 days past due, partially written-off to
collateral value when payments are delinquent 120 days, and fully written-off
when payments are delinquent 180 days.

OFG has two mortgage loan modification programs. These are the Loss Mitigation
Program and the Non-Conforming Mortgage Loan Program. Both programs are intended
to help responsible homeowners to remain in their homes and avoid foreclosure,
while also reducing OFG's losses on non-performing mortgage loans.

The Loss Mitigation Program helps mortgage borrowers who are or will become
financially unable to meet the current or scheduled mortgage payments. Loans
that qualify under this program are those guaranteed by FHA, VA, RURAL, PRHFA,
conventional loans guaranteed by Mortgage Guaranty Insurance Corporation (MGIC),
conventional loans sold to FNMA and FHLMC, and conventional loans retained by
OFG. The program offers diversified alternatives such as regular or reduced
payment plans, payment moratorium, mortgage loan modification, partial claims
(only FHA), short sale, and deed in lieu of foreclosure.

The Non-Conforming Mortgage Loan Program is for non-conforming mortgages,
including balloon payment, interest only/interest first, variable interest rate,
adjustable interest rate and other qualified loans. Non-conforming mortgage loan
portfolios are segregated into the following categories: performing loans that
meet secondary market requirement and are refinanced under the credit
underwriting guidelines of FHA/VA/FNMA/ FHLMC, and performing loans not meeting
secondary market guidelines processed pursuant OFG's current credit and
underwriting guidelines. OFG achieved an affordable and sustainable monthly
payment by taking specific, sequential, and necessary steps such as reducing the
interest rate, extending the loan term, capitalizing arrearages, deferring the
payment of principal or, if the borrower qualifies, refinancing the loan.

In order to apply for any of our loan modification programs, if the borrower is
active in Chapter 13 bankruptcy, it must request an authorization from the
bankruptcy trustee to allow for the loan modification. Borrowers with discharged
Chapter 7 bankruptcies may also apply. Loans in these programs are evaluated by
designated underwriters for troubled-debt restructuring classification if OFG
grants a concession for legal or economic reasons due to the debtor's financial
difficulties.
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TABLE 7 – ALLOWANCE FOR CREDIT LOSSES BREAKDOWN

                                                         March 31,              December 31,                Variance
                                                            2022                    2021                       %
                                                                    (In thousands)
Allowance for credit losses:
Non-PCD
Commercial                                            $         37,097       $            32,262                  15.0  %
Mortgage                                                        14,952                    15,299                  -2.3  %
Consumer                                                        21,100                    19,141                  10.2  %
Auto and leasing                                                64,195                    65,363                  -1.8  %
Total allowance for credit losses                     $        137,344       $           132,065                   4.0  %

PCD
Commercial                                            $          3,622       $             4,508                 -19.7  %
Mortgage                                                        15,881                    19,018                 -16.5  %
Consumer                                                            31                        34                  -8.8  %
Auto and leasing                                                   197                       312                 -36.9  %
Total allowance for credit losses                     $         19,731       $            23,872                 -17.3  %

Allowance for credit losses summary
Commercial                                            $         40,719       $            36,770                  10.7  %
Mortgage                                                        30,833                    34,317                 -10.2  %
Consumer                                                        21,131                    19,175                  10.2  %
Auto and leasing                                                64,392                    65,675                  -2.0  %
Total allowance for credit losses                     $        157,075       $           155,937                   0.7  %

Allowance composition:
Commercial                                                     25.9  %                   23.6  %
Mortgage                                                       19.6  %                   22.0  %
Consumer                                                       13.5  %                   12.3  %
Auto and leasing                                               41.0  %                   42.1  %
                                                              100.0  %                  100.0  %

Allowance coverage ratio at end of year:
Commercial                                                      1.6  %                    1.6  %                   5.2  %
Mortgage                                                        1.7  %                    1.8  %                  -7.2  %
Consumer                                                        4.6  %                    4.7  %                  -0.9  %
Auto and leasing                                                3.7  %                    3.9  %                  -4.2  %
                                                                2.4  %                    2.4  %                  -1.6  %

Allowance coverage ratio to non-performing loans:
Commercial                                                     89.0  %                   73.3  %                  21.3  %
Mortgage                                                       83.1  %                   86.4  %                  -3.8  %
Consumer                                                     1040.9  %                  832.6  %                  25.0  %
Auto and leasing                                              515.3  %                  331.2  %                  55.6  %
                                                              161.3  %                  139.2  %                  15.9  %


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TABLE 8 – ALLOWANCE FOR CREDIT LOSSES SUMMARY

                                              Quarter Ended March 31,
                                           2022           2021         Variance %
                                                  (Dollars in thousands)
Allowance for credit losses:
Balance at beginning of period          $ 155,937      $ 204,809          -23.9  %

Provision for credit losses                 1,715          6,269          -72.6  %
Charge-offs                               (12,417)       (17,518)         -29.1  %
Recoveries                                 11,840          8,413           40.7  %
Balance at end of period                $ 157,075      $ 201,973          -22.2  %


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TABLE 9 – NET CREDIT LOSSES STATISTICS ON LOAN AND LEASES

                                 Quarter Ended March 31,
                            2022               2021        Variance %
                                  (Dollars in thousands)
Non-PCD
Mortgage
Charge-offs         $         (3)           $   (787)         -99.6  %
Recoveries                 2,074                 615          237.2  %
Total                      2,071                (172)      -1,304.1  %
Commercial
Charge-offs                 (544)                (68)         700.0  %
Recoveries                   192                 430          -55.3  %
Total                       (352)                362         -197.2  %
Consumer
Charge-offs               (2,659)             (4,469)         -40.5  %
Recoveries                   655                 565           15.9  %
Total                     (2,004)             (3,904)         -48.7  %
Auto and leasing
Charge-offs               (7,890)             (9,083)         -13.1  %
Recoveries                 4,891               5,817          -15.9  %
Total                     (2,999)             (3,266)          -8.2  %

PCD Loans:
Mortgage
Charge-offs         $     (1,134)           $ (2,590)         (56.2) %
Recoveries                   845                 146          478.8  %
Total                       (289)             (2,444)         (88.2) %
Commercial
Charge-offs                  (34)                (43)         (20.9) %
Recoveries                 3,023                 436          593.3  %
Total                      2,989                 393          660.6  %
Consumer
Charge-offs                  (39)                (22)          77.3  %
Recoveries                    23                  21            9.5  %
Total                        (16)                 (1)       1,500.0  %
Auto and leasing
Charge-offs                 (114)               (456)         (75.0) %
Recoveries                   137                 383          (64.2) %
Total                         23                 (73)        (131.5) %

Total charge-offs        (12,417)            (17,518)         (29.1) %
Total recoveries          11,840               8,413           40.7  %
Net credit losses   $       (577)           $ (9,105)         (93.7) %



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TABLE 9 – NET CREDIT LOSSES STATISTICS ON LOAN AND LEASES (CONTINUED)

                                                                            Quarter Ended March 31,
                                                            2022                    2021                   Variance %
                                                                            (Dollars in thousands)
Net credit losses to average
loans outstanding:
Mortgage                                                     (0.38)   %               0.47    %                 -181.06  %
Commercial                                                   (0.43)   %              (0.13)   %                   242.9  %
Consumer                                                      1.75    %               3.78    %                   -53.7  %
Auto and leasing                                              0.69    %               0.85    %                   -18.5  %
Total                                                         0.04    %               0.55    %                   -93.5  %
Recoveries to charge-offs                                    95.35    %              48.02    %                    98.5  %
Average Loans Held for Investment
Mortgage                                             $        1,885,159       $       2,243,304                   -16.0  %
Commercial                                                    2,450,177               2,405,422                     1.9  %
Consumer                                                        461,890                 413,187                    11.8  %
Auto and leasing                                              1,721,893               1,573,995                     9.4  %
Total                                                $        6,519,119       $       6,635,908                    -1.8  %

TABLE 10 – NON-PERFORMING ASSETS

                                            March 31,          December 31,         Variance
                                              2022                 2021                %
                                                 (Dollars in thousands)
Non-performing assets:
Non-PCD
Non-accruing loans
Troubled-Debt Restructuring loans        $        24,420    $            24,539       -0.5  %
Other loans                                       51,202                 64,465      -20.6  %
Accruing loans
Troubled-Debt Restructuring loans                  9,832                  9,087        8.2  %
Other loans                                          738                  1,038      -28.9  %
Total                                    $        86,192    $            99,129      -13.1  %
PCD                                               11,187                 12,879      -13.1  %
Total non-performing loans               $        97,379    $           112,008      -13.1  %
Foreclosed real estate                            15,297                 15,039        1.7  %
Other repossessed assets                           2,625                  1,945       35.0  %
                                         $       115,301    $           128,992      -10.6  %

Non-performing assets to total assets            1.13  %                1.30  %      -13.1  %
Non-performing assets to total capital          11.09  %               12.06  %       -8.0  %



                                                                       Quarter Ended March 31,
                                                                      2022                  2021
                                                                          

(In thousands)
Interest that would have been recorded in the period if the
loans had not been classified as non-accruing loans

             $         

486 $ 797

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TABLE 11 - NON-ACCRUAL LOANS

                                                        March 31,              December 31,                Variance
                                                           2022                    2021                       %
                                                                           (Dollars in thousands)
Non-accrual loans
Non-PCD
Commercial                                           $         34,893       $            37,604                  -7.2  %
Mortgage                                                       26,204                    29,268                 -10.5  %
Consumer                                                        2,030                     2,303                 -11.9  %
Auto and leasing                                               12,495                    19,829                 -37.0  %
Total                                                $         75,622       $            89,004                 -15.0  %
PCD
Commercial                                           $         10,877       $            12,545                 -13.3  %
Mortgage                                                          310                       334                  -7.2  %

Total                                                $         11,187       $            12,879                 -13.1  %
Total non-accrual loans                              $         86,809       $           101,883                 -14.8  %
Non-accruals loans composition percentages:
Commercial                                                    52.7  %                   49.2  %
Mortgage                                                      30.5  %                   29.1  %
Consumer                                                       2.3  %                    2.3  %
Auto and leasing                                              14.5  %                   19.4  %
                                                             100.0  %                  100.0  %
Non-accrual loans ratios:
Non-accrual loans to total loans                              1.33  %                   1.59  %                -16.35  %
Allowance for credit losses to non-accrual loans            180.94  %                 153.05  %                 18.22  %


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TABLE 12 – NON-PERFORMING LOANS

                                                          March 31,              December 31,                Variance
                                                             2022                    2021                       %
                                                                             (Dollars in thousands)
Non-performing loans
Non-PCD
Commercial                                             $         34,892       $            37,603                  -7.2  %
Mortgage                                                         36,775                    39,394                  -6.6  %
Consumer                                                          2,030                     2,303                 -11.9  %
Auto and leasing                                                 12,495                    19,829                 -37.0  %
Total                                                  $         86,192       $            99,129                 -13.1  %
PCD
Commercial                                             $         10,877       $            12,545                 -13.3  %
Mortgage                                                            310                       334                  -7.2  %

Total                                                  $         11,187       $            12,879                 -13.1  %
Total non-performing loans                             $         97,379       $           112,008                 -13.1  %
Non-performing loans composition percentages:
Commercial                                                      47.0  %                   44.8  %
Mortgage                                                        38.1  %                   35.5  %
Consumer                                                         2.1  %                    2.1  %
Auto and leasing                                                12.8  %                   17.6  %
                                                               100.0  %                  100.0  %
Non-performing loans to:
Total loans                                                     1.49  %                   1.75  %                -14.86  %
Total assets                                                    0.96  %                   1.13  %                 -15.0  %
Total capital                                                   9.36  %                  10.48  %                 -10.7  %
Non-performing loans with partial charge-offs to:
Total loans                                                     0.46  %                   0.46  %                     -  %
Non-performing loans                                           30.70  %                  26.53  %                  15.7  %
Other non-performing loans ratios:
Charge-off rate on non-performing loans to
non-performing loans on which charge-offs have been            96.85  %                 170.31  %                 -43.1  %

taken

Allowance for credit losses to non-performing loans on 232.77%

             189.49  %                  22.8  %

which no charge-offs have been taken

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TABLE 13 – LIABILITIES SUMMARY AND COMPOSITION

                                                         March 31,               December 31,                Variance
                                                            2022                     2021                       %
                                                                            (Dollars in thousands)
Deposits:
Non-interest bearing deposits                        $        2,667,508       $         2,501,644                   6.6  %
NOW accounts                                                  2,837,072                 2,702,636                   5.0  %
Savings and money market accounts                             2,295,111                 2,177,779                   5.4  %
Time deposits                                                 1,177,891                 1,220,262                  -3.5  %
Total deposits                                                8,977,582                 8,602,321                   4.4  %
Accrued interest payable                                            640                       797                 -19.7  %
Total deposits and accrued interest payable                   8,978,222                 8,603,118                   4.4  %
Borrowings:

Advances from FHLB                                               28,035                    28,488                  -1.6  %
Subordinated capital notes                                            -                    36,083                -100.0  %

Total borrowings                                                 28,035                    64,571                 -56.6  %
Total deposits and borrowings                                 9,006,257                 8,667,689                   3.9  %
Other Liabilities:

Derivative liabilities                                              191                       804                 -76.2  %
Acceptances outstanding                                          29,858                    35,329                 -15.5  %
Lease liability                                                  30,287                    30,498                  -0.7  %
Other liabilities                                                83,492                    96,240                 -13.2  %
Total liabilities                                    $        9,150,085       $         8,830,560                   3.6  %
Deposits portfolio composition percentages:
Non-interest bearing deposits                                 29.7    %                   29.1  %
NOW accounts                                                  31.6    %                   31.4  %
Savings and money market accounts                             25.6    %                   25.3  %
Time deposits                                                 13.1    %                   14.2  %
                                                             100.0    %                  100.0  %

Borrowings portfolio composition percentages:

Advances from FHLB                                           100.0    %                   44.1  %
Subordinated capital notes                                     0.0    %                   55.9  %

                                                             100.0    %                  100.0  %


Liabilities and Funding Sources

As shown in Table 13 above, at March 31, 2022, OFG's total liabilities were
$9.150 billion, 3.6% more than the $8.831 billion reported at December 31, 2021.
Deposits and borrowings, OFG's funding sources, amounted to $9.006 billion at
March 31, 2022 compared to $8.668 billion at December 31, 2021. Deposits,
excluding accrued interest payable, increased 4.4% mainly from higher commercial
and retail deposits by $417.6 million, offset by a decrease of $42.5 million in
time deposits from maturities, with the majority of them transferred into demand
deposit and savings accounts.

As of March 31, 2022 borrowings consist of FHLB-NY advances amounting to $28.0
million. Borrowings decreased by $36.5 million, when compared to $64.6 million
at December 31, 2021, reflecting the redemption during the quarter ended
March 31, 2022 of all $36.1 million variable rate subordinated capital notes
before maturity.


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Stockholders’ Equity

At March 31, 2022, OFG's total stockholders' equity was $1.040 billion, a 3%
decrease when compared to $1.069 billion at December 31, 2021. This reduction in
stockholders' equity reflects decreases (i) in treasury stock of $30.1 million
and additional paid-in capital of $3.3 million, from $33.5 million in
repurchases of common stock as part of the $100 million buyback program adopted
during the first quarter of 2022; and (ii) in accumulated other comprehensive
income, net of tax, of $25.8 million from changes in the market value of
available-for-sale securities. The decrease was partially offset by an increase
in retained earnings of $26.4 million and legal surplus of $3.7 million, mainly
due to $37.5 million in net income, partially offset by $7.4 million common
stock dividends issued during the quarter ended March 31, 2022.

Regulatory Capital

OFG and the Bank are subject to regulatory capital requirements established by
the Federal Reserve Board and the FDIC. The current risk-based capital standards
applicable to OFG and the Bank ("Basel III capital rules"), which have been
effective since January 1, 2015, are based on the final capital framework for
strengthening international capital standards, known as Basel III, of the Basel
Committee on Banking Supervision. As of March 31, 2022, the capital ratios of
OFG and the Bank continue to exceed the minimum requirements for being
"well-capitalized" under the Basel III capital rules.

On January 1, 2020, the Company implemented CECL using the modified
retrospective approach, with an impact to capital of $25.5 million, net of its
corresponding deferred tax effect. On March 27, 2020, in response to the
Covid-19 pandemic, U.S. banking regulators issued an interim final rule that the
Company adopted to delay for two years the initial adoption impact of CECL on
regulatory capital, followed by a three-year transition period to phase out the
aggregate amount of the capital benefit provided during 2020 and 2021 (i.e., a
five-year transition period). During the two-year delay, OFG added back to
common equity tier 1 ("CET1") capital 100% of the initial adoption impact of
CECL plus 25% of the cumulative quarterly changes in the allowance for credit
losses (i.e., quarterly transitional amounts). After two years, starting on
January 1, 2022, the quarterly transitional amounts along with the initial
adoption impact of CECL will be phased out of CET1 capital over a three-year
period.

During the quarter ended March 31, 2022, OFG redeemed all of its $36.1 million
subordinated capital notes and, as a result, OFG's tier 1 capital was reduced by
the corresponding $35.0 million qualified trust preferred securities, which were
previously included in tier 1 capital.

The risk-based capital ratios presented in Table 14, which include common equity
tier 1, tier 1 capital, total capital and leverage capital as of March 31, 2022
and December 31, 2021, are calculated based on the Basel III capital rules
related to the measurement of capital, risk-weighted assets and average assets.
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The following are OFG’s consolidated capital ratios under the Basel III capital
rules at March 31, 2022 and December 31, 2021:

TABLE 14 – CAPITAL, DIVIDENDS AND STOCK DATA

                                                             March 31,                  December 31,                Variance
                                                                2022                        2021                       %
                                                        (Dollars in thousands, except per share data)
Capital data:
Stockholders' equity                                  $              1,040,035       $         1,069,160                  (2.7) %
Regulatory Capital Ratios data:
Common equity tier 1 capital ratio                                  13.24    %                  13.77  %                  (3.8) %
Minimum common equity tier 1 capital ratio required                  4.50    %                   4.50  %                   0.0  %
Actual common equity tier 1 capital                   $                955,221                   964,284                  (0.9) %
Minimum common equity tier 1 capital required         $                324,661                   315,219                   3.0  %
Minimum capital conservation buffer required (2.5%)   $                180,367                   175,122                   3.0  %
Excess over regulatory requirement                    $                450,193                   473,943                  (5.0) %
Risk-weighted assets                                  $              7,214,692                 7,004,876                   3.0  %
Tier 1 risk-based capital ratio                                     13.24    %                  14.27  %                  (7.2) %
Minimum tier 1 risk-based capital ratio required                     6.00    %                   6.00  %                   0.0  %
Actual tier 1 risk-based capital                      $                955,221       $           999,284                  (4.4) %
Minimum tier 1 risk-based capital required            $                432,882       $           420,293                   3.0  %
Minimum capital conservation buffer required (2.5%)   $                180,367                   175,122                   3.0  %
Excess over regulatory requirement                    $                341,972       $           403,869                 (15.3) %
Risk-weighted assets                                  $              7,214,692       $         7,004,876                   3.0  %
Total risk-based capital ratio                                      14.49    %                  15.52  %                  (6.6) %
Minimum total risk-based capital ratio required                      8.00    %                   8.00  %                   0.0  %
Actual total risk-based capital                       $              1,045,437       $         1,086,897                  (3.8) %
Minimum total risk-based capital required             $                577,175       $           560,390                   3.0  %
Minimum capital conservation buffer required (2.5%)   $                180,367                   175,122                   3.0  %
Excess over regulatory requirement                    $                287,894       $           351,385                 (18.1) %
Risk-weighted assets                                  $              7,214,692       $         7,004,876                   3.0  %
Leverage capital ratio                                               9.54    %                   9.69  %                  (1.5) %
Minimum leverage capital ratio required                              4.00    %                   4.00  %                   0.0  %
Actual tier 1 capital                                 $                955,221       $           999,284                  (4.4) %
Minimum tier 1 capital required                       $                400,333       $           412,359                  (2.9) %
Excess over regulatory requirement                    $                554,888       $           586,925                  (5.5) %
Tangible common equity to total assets                               9.03    %                   9.57  %                  (5.6) %
Tangible common equity to risk-weighted assets                      12.75    %                  13.52  %                  (5.7) %
Total equity to total assets                                        10.21    %                  10.80  %                  -5.5  %
Total equity to risk-weighted assets                                14.42    %                  15.26  %                  (5.5) %
Stock data:
Outstanding common shares                                           48,673,113                49,636,352                  (1.9) %
Book value per common share                           $                  21.37       $             21.54                  (0.8) %
Tangible book value per common share                  $                  18.90       $             19.08                  (0.9) %
Market price at end of year                           $                  26.64       $             26.56                   0.3  %
Market capitalization at end of year                  $              1,296,652       $         1,318,342                  -1.6  %


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From December 31, 2021 to March 31, 2022, tangible common equity to tangible
total assets decreased from 9.69% to 9.14%, leverage capital ratio decreased
from 9.69% to 9.54%, tier 1 risk-based capital ratio decreased from 14.27% to
13.24%, total risk-based capital ratio decreased from 15.52% to 14.49% and
common equity tier 1 capital ratio decreased from 13.77% to 13.24%. The
decreases in capital ratios were mainly due to common stock repurchases of $33.5
million, dividends of $7.4 million issued, and lower CECL transition provision
by $6.9 million from the expiration of the Covid-19 deferral period, partially
offset by net income for the quarter. Also, during the quarter ended March 31,
2022, OFG completed the redemption and cancellation of subordinated capital
notes, further reducing tier 1 capital and total risk based capital by $35.0
million.

The following table presents a reconciliation of OFG’s total stockholders’
equity to tangible common equity and total assets to tangible assets at
March 31, 2022 and December 31, 2021:

                                                                       March 31,                December 31,
                                                                         2022                       2021
                                                                    (In

thousands, except share or per share

information)

Total stockholders' equity                                       $           1,040,035       $         1,069,160

Goodwill                                                                      (86,069)       $          (86,069)
Core deposit intangible                                                       (25,992)       $          (27,630)
Customer relationship intangible                                               (7,884)       $           (8,368)
Other intangibles                                                                 (71)       $              (95)
Total tangible common equity (non-GAAP)                          $             920,019       $           946,998
Total assets                                                     $          10,190,120                 9,899,720
Goodwill                                                                      (86,069)                  (86,069)
Core deposit intangible                                                       (25,992)                  (27,630)
Customer relationship intangible                                               (7,884)                   (8,368)
Other intangibles                                                                 (71)                      (95)
Total tangible assets                                            $          10,070,104       $         9,777,558
Tangible common equity to tangible assets                                    9.14    %                   9.69  %
Common shares outstanding at end of period                                  48,673,113                49,636,352
Tangible book value per common share                             $               18.90       $             19.08


The tangible common equity ratio and tangible book value per common share are
non-GAAP measures and, unlike tier 1 capital and common equity tier 1 capital,
are not codified in the federal banking regulations. Management and many stock
analysts use the tangible common equity ratio and tangible book value per common
share in conjunction with more traditional bank capital ratios to compare the
capital adequacy of banking organizations. Neither tangible common equity nor
tangible assets or related measures should be considered in isolation or as a
substitute for stockholders' equity, total assets or any other measure
calculated in accordance with GAAP. Moreover, the manner in which OFG calculates
its tangible common equity, tangible assets and any other related measures may
differ from that of other companies reporting measures with similar names.

Non-GAAP financial measures have inherent limitations, are not required to be
uniformly applied, and are not audited. To mitigate these limitations, OFG has
procedures in place to calculate these measures using the appropriate GAAP or
regulatory components. Although these non-GAAP financial measures are frequently
used by stakeholders in the evaluation of a company, they have limitations as
analytical tools and should not be considered in isolation or as a substitute
for analyses of results as reported under GAAP.
                                       85
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The following table presents OFG's capital adequacy information under the Basel
III capital rules:

                                                         March 31,              December 31,                Variance
                                                            2022                    2021                       %
                                                                            (Dollars in thousands)
Risk-based capital:
Common equity tier 1 capital                          $        955,221       $           964,284                  (0.9) %
Additional tier 1 capital                                            -                    35,000                (100.0) %
Tier 1 capital                                                 955,221                   999,284                  (4.4) %
Additional Tier 2 capital                                       90,216                    87,613                   3.0  %
Total risk-based capital                              $      1,045,437       $         1,086,897                  (3.8) %
Risk-weighted assets:
Balance sheet items                                   $      6,630,593       $         6,406,115                   3.5  %
Off-balance sheet items                                        584,099                   598,761                  (2.4) %
Total risk-weighted assets                            $      7,214,692       $         7,004,876                   3.0  %
Ratios:
Common equity tier 1 capital (minimum required,
including capital conservation buffer - 7%)                   13.24  %                  13.77  %                  (3.8) %

Tier 1 capital (minimum required, including capital
conservation buffer – 8.5%)

                                   13.24  %                  14.27  %                  (7.2) %

Total capital (minimum required, including capital
conservation buffer – 10.5%)

                                  14.49  %                  15.52  %                  (6.6) %
Leverage ratio (minimum required - 4%)                         9.54  %                   9.69  %                  (1.5) %
Equity to assets                                              10.21  %                  10.80  %                  -5.5  %
Tangible common equity to assets                               9.03  %                   9.57  %                  (5.6) %


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The Bank is considered "well capitalized" under the regulatory framework for
prompt corrective action. The table below shows the Bank's regulatory capital
ratios at March 31, 2022 and December 31, 2021:

                                                             March 31,                     December 31,                   Variance
                                                               2022                            2021                          %
                                                                                   (Dollars in thousands)
Oriental Bank Regulatory Capital Ratios:
Common Equity Tier 1 Capital to Risk-Weighted Assets                   12.68%                           13.09%                 (3.13) %
Actual common equity tier 1 capital                   $               910,777       $                  908,717                   0.2  %
Minimum capital requirement (4.5%)                    $               323,197       $                  312,371                   3.5  %
Minimum capital conservation buffer requirement
(2.5%)                                                $               179,554       $                  173,540                   3.5  %
Minimum to be well capitalized (6.5%)                 $               466,840       $                  451,203                   3.5  %
Tier 1 Capital to Risk-Weighted Assets                                 12.68%                           13.09%                  (3.1) %
Actual tier 1 risk-based capital                      $               910,777       $                  908,717                   0.2  %
Minimum capital requirement (6%)                      $               430,930       $                  416,495                   3.5  %
Minimum capital conservation buffer requirement
(2.5%)                                                $               179,554       $                  173,540                   3.5  %
Minimum to be well capitalized (8%)                   $               574,573       $                  555,327                   3.5  %
Total Capital to Risk-Weighted Assets                                  13.93%                           14.34%                  (2.9) %
Actual total risk-based capital                       $             1,000,591       $                  995,549                   0.5  %
Minimum capital requirement (8%)                      $               574,573       $                  555,327                   3.5  %
Minimum capital conservation buffer requirement
(2.5%)                                                $               179,554       $                  173,540                   3.5  %
Minimum to be well capitalized (10%)                  $               718,216       $                  694,159                   3.5  %
Total Tier 1 Capital to Average Total Assets                            9.17%                            8.87%                   3.4  %
Actual tier 1 capital                                 $               910,777       $                  908,717                   0.2  %
Minimum capital requirement (4%)                      $               397,348       $                  409,855                  (3.1) %
Minimum to be well capitalized (5%)                   $               496,685       $                  512,319                  (3.1) %


OFG's common stock is traded on the New York Stock Exchange ("NYSE") under the
symbol "OFG." At March 31, 2022 and December 31, 2021, OFG's market
capitalization for its outstanding common stock was $1.297 billion ($26.64 per
share) and $1.318 billion ($26.56 per share), respectively.

The following table provides the high and low prices and dividends per share of
OFG’s common stock for each quarter of the last three calendar years:

                                                  Cash
                             Price              Dividend
                       High          Low        Per share
2022

March 31, 2022       $ 30.54      $ 26.21      $    0.15
2021
December 31, 2021    $ 27.33      $ 23.84      $    0.12
September 30, 2021   $ 25.66      $ 20.04      $    0.12
June 30, 2021        $ 25.14      $ 21.61      $    0.08
March 31, 2021       $ 22.93      $ 16.48      $    0.08
2020
December 31, 2020    $ 18.54      $ 12.59      $    0.07
September 30, 2020   $ 14.35      $ 12.12      $    0.07
June 30, 2020        $ 15.10      $  9.38      $    0.07
March 31, 2020       $ 23.50      $  9.32      $    0.07




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In January 2022, the Company announced the approval by the Board of Directors of
a new stock repurchase program to purchase an additional $100 million of the
Company's common stock in the open market, in effect at March 31, 2022. The
shares of common stock repurchased are to be held by OFG as treasury shares.
During the quarter ended March 31, 2022, OFG repurchased 1,219,132 shares under
this program for a total of $33.5 million, at an average price of $27.46 per
share. OFG did not repurchase any shares of its common stock in the quarter
ended March 31, 2022, other than through its publicly announced stock repurchase
program. There were no stock repurchases by OFG during the quarter ended March
31, 2021.


At March 31, 2022, the number of shares that may yet be purchased under such
program is estimated at 2,497,051 and was calculated by dividing the remaining
balance of $66.5 million by $26.64 (closing price of OFG's common stock at
March 31, 2022).

Impact of Inflation and Changing Prices


The financial statements and related data presented herein (except for certain
non-GAAP measures as previously indicated) have been prepared in accordance with
GAAP which require the measurement of financial position and operating results
in terms of historical dollars without considering changes in the relative
purchasing power of money over time due to inflation.


Unlike most industrial companies, virtually all of the assets and liabilities of
a financial institution are monetary in nature. As a result, interest rates have
a more significant impact on a financial institution's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or with the same magnitude as the prices of goods and
services since such prices are affected by inflation.

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