OFG Bancorp

11/05/2026 | Press release | Distributed by Public on 11/05/2026 12:22

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Item 1, "Financial Statements" of this quarterly report on
Form 10-Q. This discussion and analysis section contains forward-looking statements. Please see the discussion under "Forward-Looking Statements," "Risk Factors," and "Quantitative and Qualitative Disclosures about Market Risk" in this quarterly report on Form 10-Q and our 2025 Form 10-K, as supplemented and amended by subsequent quarterly reports on Form 10-Q, for a discussion of the uncertainties, risks and assumptions associated with these statements.
Other factors not identified above, including those described under the headings in our 2025 Form 10-K and any subsequent quarterly reports on Form 10-Q, may also cause actual results to differ materially from those described in our forward-looking statements.
INTRODUCTION
OFG is a publicly owned financial holding company that provides a wide range of banking and financial services such as commercial, consumer, auto, and mortgage lending, financial planning, insurance sales, investment advisory and securities brokerage services, as well as corporate trust services. It operates through three 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-two branches in Puerto Rico and two branches in the USVI. It has five subsidiaries with operations in Puerto Rico: the Bank, Oriental Financial Services, Oriental Insurance, OIB and OBPEF; two subsidiaries in the United States, 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, as well as 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 advisory, insurance agency and reinsurance). Although all 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.
OFG's mission is to make possible the progress of our customers, employees, shareholders, and communities we serve. As the world evolves rapidly, we seek to amplify our ambition, with the goal of advancing from steady progress to bold transformation. We believe that our strategy is designed to accelerate our transformation into a fully digital, data-driven, customer-centric financial institution, while maintaining the strong human relationships that define our brand. OFG aims to deliver intelligent growth, operational excellence, and deeper financial empowerment to make progress possible for our communities. OFG aims to position itself as a trusted digital financial coach, by understanding the customers' objectives and needs by offering value-added services that help them achieve financial progress and well-being. OFG is transitioning from a digital-first model to a truly digital bank, one where customers should be able to perform every financial activity seamlessly, securely, and intuitively, anytime, anywhere. Our goal is to provide a one-stop digital experience that is enriched by human connection and powered by intelligence.
RECENT DEVELOPMENTS
Capital Actions
In October 2026, OFG announced that its Board approved the increase of its regular quarterly cash dividend to $0.40 per common share from $0.35 per share, beginning in the quarter ending December 31, 2026.
Economic Conditions
Puerto Rico's economy has remained resilient, supported by healthy system liquidity, favorable labor market conditions, and continued infrastructure investment. According to the Puerto Rico Department of Economic Development and Commerce, the Puerto Rico Economic Activity Index ("PR-EAI") increased 0.8% year over year in September 2026, while total non-farm payroll employment averaged approximately 956,200 jobs, up 0.8% from the prior year. Economic activity continues to benefit from infrastructure projects and private investment, while manufacturing expansion and new on-shoring initiatives support the long-term economic outlook. OFG remains attentive to evolving macroeconomic conditions, including higher energy costs, inflation and interest rates, and broader geopolitical developments, and continues to monitor their possible impact on Puerto Rico's economy and on OFG's business and results of operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with GAAP requires management to make judgments, assumptions and estimates 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 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 2025 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 2025 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 that we used to formulate these critical accounting estimates from those discussed in our 2025 Form 10-K.
FINANCIAL HIGHLIGHTS
With year-over-year increases of 14.7% in EPS, 9.2% in net income and 1.0% in core revenues, third quarter results reflected continued momentum in commercial loan growth, stable credit quality and core deposit balances, disciplined expense management, and healthy profitability. OFG also repurchased $13.5 million of common shares, reinforcing its commitment to creating long-term shareholder value.
During the third quarter of 2026, OFG continued advancing its digital bank with a human touch strategy. Customers are embracing OFG's digital tools and value-added services while our Libre+, Elite, and My Biz accounts are attracting new clients and helping our bankers deepen existing relationships.
On a macro level, the Puerto Rico economy remains stable, supported by a healthy labor market and ongoing expansion by local and mainland businesses.
Third Quarter of 2026:
Earnings per common share diluted was $1.33 compared to $1.39 in the second quarter of 2026 and $1.16 in the third quarter of 2025. Net income available to common shareholders was $56.6 million compared to $58.8 million in the second quarter of 2026 and $51.8 million in the third quarter of 2025. Total core revenues (non-GAAP) were $185.7 million compared to $190.3 million in the second quarter of 2026 and $184.0 million in the third quarter of 2025. Please see the "Management's Discussion and Analysis of Financial Condition and Results of Operations-Non-GAAP financial measures" section in this quarterly report on Form 10-Q.
Performance metrics: Net interest margin of 5.23%, return on average assets of 1.86%, return on average tangible common stockholders' equity of 17.06%, and efficiency ratio of 51.83%.
Total Interest Income of $195.7 million compared to $197.2 million in the second quarter of 2026 and $200.1 million in the third quarter of 2025. The third quarter of 2026 decreased $1.4 million sequentially, primarily reflecting the absence of $4.1 million from three paid in full commercial loans in the second quarter of 2026, partially offset by higher average balances of loans and cash, higher yields in cash and the investment portfolio, and $1.6 million from one additional business day.
Total Interest Expense was $42.2 million compared to $39.9 million in the second quarter of 2026 and $45.4 million in the third quarter of 2025. Interest expense increased $2.3 million sequentially in the third quarter of 2026 primarily reflecting higher average deposit balances at a higher cost and $0.4 million from one additional business day.
Total Banking and Financial Service Revenues were $32.2 million compared to $33.0 million in the second quarter of 2026 and $29.3 million in the third quarter of 2025. These revenues decreased $0.8 million sequentially in the third quarter of 2026, reflecting the absence of $1.1 million in insurance and annuity fees in wealth management in the second quarter of 2026 and lower mortgage banking revenues, partially offset by higher banking service revenues.
Pre-Provision Net Revenues (Non-GAAP) were $89.9 million compared to $87.5 million in the second quarter of 2026 and $89.6 million in the third quarter of 2025. Please see the "Management's Discussion and Analysis of Financial Condition and Results of Operations-Non-GAAP financial measures" section in this quarterly report on Form 10-Q.
Total Provision for Credit Losses of $18.1 million compared to $13.0 million in the second quarter of 2026 and $28.3 million in the third quarter of 2025. Total provision for credit losses in the third quarter of 2026 primarily reflected $17.5 million for increased loan volume and $1.3 million due to seasonal adjustment for auto delinquency, while the second quarter of 2026 included $14.7 million for increased loan volume and $1.9 million in commercial loan recoveries.
Credit Quality: The early and total delinquency rates of 2.65% and 3.91% both increased sequentially from the second quarter of 2026 due to seasonal trends, but declined year over year compared to third quarter of 2025. At the same time, the third quarter of 2026 net charge-offs ("NCOs") and nonperforming loan rates of 0.70% and 0.74% both declined compared to both the second quarter of 2026 and the third quarter of 2025.
Total Non-Interest Expense was $96.3 million compared to $102.8 million in the second quarter of 2026 and $96.5 million in the third quarter of 2025. The third quarter of 2026 primarily reflected the absence of $5.8 million in business related operational charges in the second quarter of 2026.
Income Tax Expense was $15.2 million compared to $15.7 million in the second quarter of 2026 and $9.5 million in the third quarter of 2025.
Loans Held-for-Investment of $8.45 billion compared to $8.30 billion in the second quarter of 2026 and $8.12 billion in the third quarter of 2025. Loans held-for-investment in the third quarter of 2026 grew $150.9 million or 1.8% sequentially, reflecting increases in Puerto Rico commercial and consumer loans, more than offsetting declines in other categories. Year over year, loans are up 4.1%.
New loan production of $693.8 million compared to $755.0 million in the second quarter of 2026 and $623.9 million in the third quarter of 2025. The third quarter of 2026 production decreased $61.2 million sequentially, reflecting decreases in Puerto Rico commercial, auto, and residential mortgage, partially offset by increases in U.S. commercial and Puerto Rico consumer loans.
Total Investments of $2.72 billion compared to $2.70 billion in the second quarter of 2026 and $2.94 billion in the third quarter of 2025. The third quarter of 2026 primarily reflected purchases of $216.1 million of mortgage-backed securities toward the end of the quarter and $21.1 million of securitizations, partially offset by market value adjustments and mortgage-backed securities principal paydowns.
Customer Deposits of $9.66 billion compared to $9.74 billion in the second quarter of 2026 and $9.82 billion in the third quarter of 2025. The third quarter of 2026 deposits decreased $79.9 million or 0.8% sequentially, reflecting decreases in demand and savings deposits, partially offset by an increase in time deposits.
Total Borrowings and Brokered Deposits of $926.6 million compared to $795.5 million in the second quarter of 2026 and $746.4 million in the third quarter of 2025. The third quarter of 2026 total borrowings and brokered deposits increased $131.1 million sequentially for liquidity management purposes.
Cash and Cash Equivalents of $566.8 million compared to $745.7 million in the second quarter of 2026 and $740.3 million in the third quarter of 2025. Cash in the third quarter of 2026 decreased $178.9 million sequentially primarily due to the above mentioned mortgage-backed securities purchases and loan growth.
Capital: CET1 ratio was 14.10% compared to 14.07% in the second quarter of 2026 and 14.13% in the third quarter of 2025. Tangible common equity to tangible assets ratio was 10.34% compared to 10.90% in the second quarter of 2026 and 10.55% in the third quarter of 2025. Tangible Book Value ("TBV") per share was $29.66 compared to $31.12 in the second quarter of 2026 and $28.92 in the third quarter of 2025. The third quarter of 2026 TBV declined sequentially primarily due to the change in accumulated other comprehensive loss.
Selected income statement and balance sheet data and key performance indicators are presented in the tables below:
Quarter Ended September 30, Nine-Month Period Ended September 30,
2026 2025 Variance % 2026 2025 Variance %
EARNINGS DATA: (Dollars in thousands, except per share data)
Interest income $ 195,744 $ 200,145 (2.2)% $ 587,020 $ 583,714 0.6%
Interest expense 42,174 45,421 (7.1)% 122,338 127,991 (4.4)%
Net interest income 153,570 154,724 (0.7)% 464,682 455,723 2.0%
Provision for credit losses 18,140 28,258 (35.8)% 53,629 75,624 (29.1)%
Net interest income after provision for credit losses 135,430 126,466 7.1% 411,053 380,099 8.1%
Non-interest income 32,644 31,453 3.8% 97,834 91,400 7.0%
Non-interest expenses 96,265 96,548 (0.3)% 293,800 284,802 3.2%
Income before taxes 71,809 61,371 17.0% 215,087 186,697 15.2%
Income tax expense 15,198 9,533 59.4% 45,762 37,487 22.1%
Net income available to common shareholders
$ 56,611 $ 51,838 9.2% $ 169,325 $ 149,210 13.5%
PER SHARE DATA:
EPS Basic $ 1.34 $ 1.17 14.5% $ 3.99 $ 3.33 19.8%
EPS Diluted $ 1.33 $ 1.16 14.7% $ 3.97 $ 3.31 19.9%
Average common shares outstanding 42,191 44,430 (5.0)% 42,410 44,857 (5.5)%
Average common shares outstanding and equivalents 42,444 44,658 (5.0)% 42,620 45,056 (5.4)%
Cash dividends declared per common share $ 0.35 $ 0.30 16.7% $ 1.05 $ 0.90 16.7%
Cash dividends declared on common shares $ 14,884 $ 13,419 10.9% $ 44,343 $ 40,300 10.0%
Dividend payout ratio 26.32 % 25.86 % 1.8% 26.45 % 27.19 % (2.7)%
PERFORMANCE RATIOS:
Return on average assets (ROA) 1.86 % 1.69 % 10.1% 1.86 % 1.66 % 12.0%
Return on average common equity (ROE) 15.96 % 15.23 % 4.8% 16.02 % 15.03 % 6.6%
Return on average tangible common stockholders' equity (non-GAAP, see Table 18) 17.06 % 16.39 % 4.1% 17.14 % 16.22 % 5.7%
Efficiency ratio 51.83 % 52.48 % (1.2)% 52.29 % 52.31 % -%
Interest rate spread 5.09 % 5.09 % -% 5.19 % 5.17 % 0.4%
Interest rate margin 5.23 % 5.24 % (0.2)% 5.35 % 5.32 % 0.6%
September 30, December 31, Variance
2026 2025 %
PERIOD END BALANCES AND CAPITAL RATIOS: (Dollars in thousands, except per share data)
Investments and loans
Investment securities $ 2,717,135 $ 2,843,141 (4.4)%
Loans, net 8,266,856 8,014,246 3.2%
Total investments and loans $ 10,983,991 $ 10,857,387 1.2%
Deposits and borrowings
Deposits $ 9,988,919 $ 10,262,752 (2.7)%
Securities sold under agreements to repurchase 200,673 100,714 99.3%
Advances from FHLB and other borrowings
401,361 456,590 (12.1)%
Total deposits and borrowings $ 10,590,953 $ 10,820,056 (2.1)%
Stockholders' equity
Common stock 59,885 59,885 -%
Additional paid-in capital 643,653 642,973 0.1%
Legal surplus 204,892 188,490 8.7%
Retained earnings 1,013,210 904,630 12.0%
Treasury stock, at cost (445,597) (389,067) 14.5%
Accumulated other comprehensive loss (139,167) (16,906) 723.2%
Total stockholders' equity $ 1,336,876 $ 1,390,005 (3.8)%
Per share data
Book value per common share $ 31.83 $ 32.13 (0.9)%
Tangible book value per common share (non-GAAP, see Table 17) $ 29.66 $ 29.96 (1.0)%
Market price $ 50.08 $ 40.98 22.2%
Capital ratios
Leverage capital 11.44 % 10.71 % 6.8%
Common equity Tier 1 capital 14.10 % 13.97 % 0.9%
Tier 1 risk-based capital 14.10 % 13.97 % 0.9%
Total risk-based capital 15.36 % 15.24 % 0.8%
Financial assets managed
Trust assets managed $ 2,408,906 $ 2,490,272 (3.3)%
Broker-dealer assets managed 3,309,195 2,612,508 26.7%
Total assets managed $ 5,718,101 $ 5,102,780 12.1%
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 and nine-month periods ended September 30, 2026 and 2025.
TABLE 1 - ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE FOR THE QUARTERS ENDED SEPTEMBER 30, 2026 AND 2025
Interest Average rate Average balance
September 30, September 30, September 30,
2026 2025 2026 2025 2026 2025
(Dollars in thousands)
A - TAX-EQUIVALENT SPREAD (Non-GAAP)
Interest-earning assets $ 195,744 $ 200,145 6.67 % 6.78 % $ 11,648,826 $ 11,715,599
Tax-equivalent adjustment 4,587 4,045 0.16 % 0.14 % - -
Interest-earning assets
tax-equivalent (1)
200,331 204,190 6.83 % 6.92 % 11,648,826 11,715,599
Interest-bearing liabilities 42,174 45,421 1.58 % 1.69 % 10,561,360 10,635,563
Tax-equivalent net interest income / spread 158,157 158,769 5.25 % 5.23 % 1,087,466 1,080,036
Tax-equivalent interest rate margin 5.41 % 5.37 %
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities 29,479 30,256 4.33 % 4.27 % 2,722,141 2,832,563
Interest-bearing cash and money market investments 5,859 8,555 3.61 % 4.32 % 644,029 784,978
Total investments 35,338 38,811 4.17 % 4.26 % 3,366,170 3,617,541
Non-PCD loans
Mortgage 8,722 8,146 5.77 % 5.63 % 604,784 579,185
Commercial 63,080 60,839 6.98 % 7.34 % 3,587,794 3,287,304
Consumer 20,747 20,551 11.53 % 11.56 % 714,142 705,515
Auto
55,445 57,129 8.42 % 8.53 % 2,613,057 2,656,916
Total Non-PCD loans 147,994 146,665 7.81 % 8.05 % 7,519,777 7,228,920
PCD loans
Mortgage 11,036 12,856 6.33 % 6.57 % 697,008 782,580
Commercial 1,356 1,746 8.28 % 8.12 % 65,533 86,052
Consumer 15 48 21.98 % 44.65 % 273 430
Auto
5 19 30.77 % 98.70 % 65 76
Total PCD loans 12,412 14,669 6.51 % 6.75 % 762,879 869,138
Total loans (2)
160,406 161,334 7.68 % 7.90 % 8,282,656 8,098,058
Total interest-earning assets 195,744 200,145 6.67 % 6.78 % 11,648,826 11,715,599
Interest Average rate Average balance
September 30, September 30, September 30,
2026 2025 2026 2025 2026 2025
(Dollars in thousands)
Interest-bearing liabilities:
Deposits:
NOW accounts 5,959 15,941 1.14 % 1.97 % 2,076,510 3,208,598
Savings and money market 6,316 6,212 1.07 % 1.11 % 2,333,667 2,215,538
Time deposits 20,639 14,362 3.21 % 3.07 % 2,553,623 1,854,320
32,914 36,515 1.88 % 1.99 % 6,963,800 7,278,456
Brokered deposits 2,671 2,284 4.09 % 4.11 % 259,219 220,362
35,585 38,799 1.95 % 2.05 % 7,223,019 7,498,818
Non-interest-bearing deposits - - - % - % 2,756,880 2,587,913
Fair value premium and core deposit intangible amortizations 755 943 - % - % - -
Total deposits 36,340 39,742 1.44 % 1.56 % 9,979,899 10,086,731
Borrowings:
Securities sold under agreements to repurchase 1,225 986 3.62 % 4.21 % 134,360 93,028
Advances from FHLB and other borrowings 4,609 4,693 4.09 % 4.08 % 447,101 455,804
Total borrowings 5,834 5,679 3.98 % 4.10 % 581,461 548,832
Total interest-bearing liabilities 42,174 45,421 1.58 % 1.69 % 10,561,360 10,635,563
Net interest income / spread $ 153,570 $ 154,724 5.09 % 5.09 %
Interest rate margin 5.23 % 5.24 %
Excess of average interest-earning assets over average interest-bearing liabilities $ 1,087,466 $ 1,080,036
Average interest-earning assets to average interest-bearing liabilities ratio 110.30 % 110.15 %
(1) To provide meaningful comparisons of interest income, yields, and net interest margins, we calculate interest income on a tax-equivalent basis. This involves adjusting the interest income from tax-exempt assets to be equivalent to taxable investments. Note that this adjustment is not permitted under GAAP in the unaudited consolidated statements of operations.
(2) Includes loans held for sale and excludes allowance for credit losses. Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.
C - CHANGES IN NET INTEREST INCOME DUE TO:
Volume Rate Total
(In thousands)
Interest income:
Investment securities $ (1,033) $ 256 $ (777)
Interest-bearing cash and money market investments (1,404) (1,292) (2,696)
Loans 3,286 (4,214) (928)
Total interest income 849 (5,250) (4,401)
Interest expense:
NOW accounts (7,230) (2,752) (9,982)
Savings and money market 391 (287) 104
Time deposits 5,628 649 6,277
Brokered deposits 400 (13) 387
Fair value premium and core deposit intangible amortizations - (188) (188)
Securities sold under agreements to repurchase 392 (153) 239
Advances from FHLB and other borrowings (90) 6 (84)
Total interest expense (509) (2,738) (3,247)
Net interest income $ 1,358 $ (2,512) $ (1,154)
TABLE 1A - ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2026 AND 2025
Interest Average rate Average balance
2026
2025
2026 2025 2026 2025
(Dollars in thousands)
A - TAX-EQUIVALENT SPREAD (Non-GAAP)
Interest-earning assets $ 587,020 583,714 6.75 % 6.82 % $ 11,621,623 $ 11,446,863
Tax-equivalent adjustment 12,541 11,440 0.14 % 0.13 % - -
Interest-earning assets
tax-equivalent (1)
599,561 595,154 6.89 % 6.95 % 11,621,623 11,446,863
Interest-bearing liabilities 122,338 127,991 1.56 % 1.65 % 10,517,670 10,396,817
Tax-equivalent net interest income / spread 477,223 467,163 5.33 % 5.30 % 1,103,953 1,050,046
Tax-equivalent interest rate margin 5.47 % 5.43 %
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities 88,438 89,036 4.29 % 4.26 % 2,749,370 2,787,888
Interest-bearing cash and money market investments 17,207 22,949 3.60 % 4.33 % 639,915 708,922
Total investments 105,645 111,985 4.17 % 4.28 % 3,389,285 3,496,810
Non-PCD loans
Mortgage 25,669 24,401 5.76 % 5.65 % 594,524 576,202
Commercial 184,374 173,222 7.00 % 7.34 % 3,519,855 3,157,315
Consumer 61,041 60,495 11.54 % 11.57 % 706,973 698,827
Auto
165,983 168,034 8.45 % 8.57 % 2,625,137 2,622,485
Total Non-PCD loans 437,067 426,152 7.85 % 8.08 % 7,446,489 7,054,829
Interest Average rate Average balance
2026
2025
2026 2025 2026 2025
(Dollars in thousands)
PCD loans
Mortgage 33,782 38,065 6.28 % 6.30 % 717,770 805,877
Commercial 10,465 7,390 20.66 % 11.12 % 67,719 88,596
Consumer 43 85 19.91 % 19.41 % 288 581
Auto
18 37 33.33 % 28.67 % 72 170
Total PCD loans 44,308 45,577 7.52 % 6.79 % 785,849 895,224
Total loans (2)
481,375 471,729 7.82 % 7.93 % 8,232,338 7,950,053
Total interest-earning assets $ 587,020 $ 583,714 6.75 % 6.82 % $ 11,621,623 $ 11,446,863
Interest-bearing liabilities:
Deposits:
NOW accounts 24,838 46,288 1.37 % 1.93 % 2,428,203 3,204,413
Savings accounts 18,988 16,415 1.09 % 1.02 % 2,333,056 2,143,116
Time deposits 50,735 42,099 3.11 % 3.08 % 2,180,119 1,824,830
Total core deposits 94,561 104,802 1.82 % 1.95 % 6,941,378 7,172,359
Brokered deposits 7,507 6,281 4.05 % 4.15 % 247,942 202,309
102,068 111,083 1.90 % 2.01 % 7,189,320 7,374,668
Non-interest-bearing deposits - - - % - % 2,721,477 2,570,680
Fair value premium and core deposit intangible amortizations 2,264 2,830 - % - % - -
Total deposits 104,332 113,913 1.41 % 1.53 % 9,910,797 9,945,348
Borrowings:
Securities sold under agreements to repurchase 4,154 1,816 3.62 % 4.35 % 153,585 55,800
Advances from FHLB and other borrowings 13,852 12,262 4.09 % 4.14 % 453,288 395,669
Total borrowings 18,006 14,078 3.97 % 4.17 % 606,873 451,469
Total interest-bearing liabilities 122,338 127,991 1.56 % 1.65 % 10,517,670 10,396,817
Net interest income / spread $ 464,682 $ 455,723 5.19 % 5.17 %
Interest rate margin 5.35 % 5.32 %
Excess of average interest-earning assets over average interest-bearing liabilities $ 1,103,953 $ 1,050,046
Average interest-earning assets to average interest-bearing liabilities ratio 110.50 % 110.10 %
(1) To provide meaningful comparisons of interest income, yields, and net interest margins, we calculate interest income on a tax-equivalent basis. This involves adjusting the interest income from tax-exempt assets to be equivalent to taxable investments. Note that this adjustment is not permitted under GAAP in the unaudited consolidated statements of operations.
(2) Includes loans held for sale and excludes allowance for credit losses. Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.
C - CHANGES IN NET INTEREST INCOME DUE TO:
Volume Rate Total
(In thousands)
Interest income:
Investment securities $ (706) $ 108 $ (598)
Interest-bearing cash and money market investments (2,096) (3,646) (5,742)
Loans 16,585 (6,939) 9,646
Total interest income 13,783 (10,477) 3,306
Interest expense:
NOW accounts
(16,002) (5,448) (21,450)
Savings accounts 2,571 2 2,573
Time deposits 8,265 371 8,636
Brokered deposits 1,385 (159) 1,226
Fair value premium and core deposit intangible amortizations - (566) (566)
Securities sold under agreements to repurchase 2,692 (354) 2,338
Advances from FHLB and other borrowings 1,763 (173) 1,590
Total interest expense 674 (6,327) (5,653)
Net interest income $ 13,109 $ (4,150) $ 8,959
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 September 30, 2026 and 2025
Net interest income of $153.6 million decreased $1.2 million from $154.7 million, reflecting lower interest income from interest-bearing cash and money market investments, investment securities, and loans, as well as higher borrowing costs. This decrease was partially offset by lower deposit costs.
On a tax-equivalent basis net interest income decreased $612 thousand or 0.4% to $158.2 million from $158.8 million.
The interest rate spread remained stable at 5.09% in both periods, while the net interest margin decreased by one basis point to 5.23% from 5.24%.
The decrease in net interest income reflected:
•A $2.7 million decrease in interest income on interest-bearing cash and money market investments, primarily reflecting a $140.9 million reduction in average balances and a 71 basis point decrease in yields;
•A $928 thousand decrease in loan interest income, reflecting lower interest income from auto loans of $1.7 million, primarily due to a $43.9 million decline in average balances, and from residential mortgage loans of $1.2 million, reflecting a $60.0 million decrease in average balances primarily due to the extinguishment of the PCD portfolio, securitization and sale of conforming loans, and normal paydowns. These declines were partially offset by a $1.9 million increase in commercial loan interest income, mainly due to the increase of $280.0 million in average balances and repricing of variable-rate loans, consistent with OFG's strategy to grow commercial lending in Puerto Rico and the U.S. mainland; and
•A $777 thousand decrease in interest income from investment securities, reflecting a $110.4 million decline in average balances primarily due to principal paydowns of mortgage-backed securities, partially offset by a 6 basis point increase in yields.
These decreases were offset by a $3.4 million decrease in deposit costs, reflecting lower average yields and the previously mentioned $500 million government demand deposit transfer into a wealth management account in January 2026, partially offset by growth in retail and commercial deposits.
Comparison of the nine-month periods ended September 30, 2026 and 2025
Net interest income of $464.7 million increased $9.0 million from $455.7 million reflecting higher loan interest income and lower deposit costs. This increase was partially offset by lower interest income from interest-bearing cash and money market investments, investment securities, as well as higher borrowing costs.
On a tax-equivalent basis net interest income increased $10.0 million, or 2.1%, to $477.2 million from $467.2 million.
Interest rate spread increased 2 basis points to 5.19% from 5.17%, while the net interest margin increased 3 basis points to 5.35% from 5.32%.
Net interest income was positively impacted by:
•A $9.6 million increase in loan interest income, primarily driven by higher commercial loan interest income of $14.2 million, reflecting a $341.7 million increase in average balances and the repricing of variable-rate loans consistent with OFG's strategy to grow commercial lending in Puerto Rico and the U.S. mainland, as well as a $504 thousand increase in consumer loan interest income due to an increase of $7.9 million in average balance. These increases were partially offset by a $3.0 million decrease from mortgage loan interest income, reflecting a reduction of $69.8 million in average balances from the extinguishment of the PCD portfolio, securitization and sale of conforming loans and regular paydowns, and a $2.1 million decrease in auto loan interest income, reflecting a 14 basis point decline in yield; and
•A $9.6 million decrease in deposit costs, reflecting lower yields and the previously mentioned $500 million government demand deposit transfer into a wealth management account in January 2026, partially offset by growth in retail and commercial deposits.
This increase was partially offset by a $5.7 million decrease in interest income on interest-bearing cash and money market investments, reflecting lower average balances and a decline in yields attributable to lower market interest rates, and a $3.9 million increase in interest paid on borrowings related to higher volume of securities under agreements to repurchase and FHLB advances from liquidity management strategies.
TABLE 2 - NON-INTEREST INCOME SUMMARY
Quarter Ended September 30, Nine-Month Period Ended September 30,
2026 2025 Variance % 2026 2025 Variance %
(Dollars in thousands)
Banking service revenue $ 17,674 $ 15,930 11.0 % $ 52,015 $ 47,893 8.6 %
Wealth management revenue 9,367 9,014 3.9 % 28,007 26,387 6.1 %
Mortgage banking activities 5,137 4,312 19.1 % 17,128 14,434 18.7 %
Total banking and financial service revenue 32,178 29,256 10.0 % 97,150 88,714 9.5 %
Other non-interest income 466 2,197 (78.8) % 684 2,686 (74.5) %
Total non-interest income $ 32,644 $ 31,453 3.8 % $ 97,834 $ 91,400 7.0 %
Non-interest income
Non-interest income is affected by fees generated from loans and deposit accounts, the amount of assets under management of the Bank's trust department, transactions generated by clients' financial assets serviced by OFG's securities broker-dealer, insurance agency and reinsurance subsidiaries, the level of mortgage banking activities, and gains or losses on sales of assets.
Comparison of quarters ended September 30, 2026 and 2025
Non-interest income increased $1.2 million or 3.8% to $32.6 million from $31.5 million. The increase in non-interest income was due to:
•A $1.7 million increase in banking service revenue, primarily reflecting a $1.6 million increase in electronic banking fees driven by higher debit card interchange income and merchant business activity, and a $158 thousand increase in deposit account fees due to higher checking account service charges;
•An $825 thousand increase in mortgage banking activities, reflecting a $1.7 million increase in servicing fees, including a $1.9 million favorable variance in the valuation of mortgage servicing rights, and $117 thousand increase in gains on sale of repurchased loans, partially offset by a $1.0 million decrease in gains on sale of loans and securitization; and
•A $353 thousand increase in wealth management revenues, mainly due to a $427 thousand increase in broker fees related to investment advisory services fees and securities sales commissions, partially offset by a $163 thousand decrease in insurance income due to lower annuities and contingency commissions.
The increase was partially offset by a $1.7 million decrease in other non-interest income reflecting $1.9 million gains recognized during the prior year quarter on investments held by OFG Ventures in fintech-focused funds.
Comparison of the nine-month periods ended September 30, 2026 and 2025
Non-interest income increased $6.4 million to $97.8 million from $91.4 million. The increase was mainly due to:
•A $4.1 million increase in banking service revenues, reflecting a $4.7 million increase in electronic banking fees driven by higher debit card interchange income, merchant business activity, and cash management and account analysis fees. These increases were partially offset by a $496 thousand decrease in loan prepayments and servicing fees and commissions, and a $130 thousand decrease in deposit account fees due to lower checking account service charges;
•A $2.7 million increase in mortgage banking activities, mainly due to $4.8 million in servicing fees, including a $5.3 million favorable variance in the valuation of mortgage servicing rights, partially offset by a $1.9 million decrease in gains on sale of loans and securitizations and a $197 thousand decrease in gains on sale of repurchased loans; and
•A $1.6 million increase in wealth management revenue primarily reflecting a $1.4 million increase in broker fees related to investment advisory service fees, securities sales commissions and mutual funds retailer fees, and a $215 thousand increase in trust fees.
The increase was partially offset by a $2.0 million decrease in other non-interest income reflecting $1.9 million gains recognized on investments held by OFG Ventures in fintech-focused funds during the prior year period.
TABLE 3 - NON-INTEREST EXPENSES SUMMARY
Quarter Ended September 30, Nine-Month Period Ended September 30,
2026 2025 Variance % 2026 2025 Variance %
(Dollars in thousands)
Compensation and employee benefits $ 40,511 $ 39,836 1.7 % $ 123,034 $ 119,333 3.1 %
Occupancy, equipment and infrastructure costs 14,760 14,994 (1.6) % 42,451 44,443 (4.5) %
Electronic banking charges 12,502 12,657 (1.2) % 33,336 34,602 (3.7) %
Information technology expenses 5,823 6,805 (14.4) % 19,537 19,771 (1.2) %
Professional and service fees 4,344 5,336 (18.6) % 15,397 15,267 0.9 %
Taxes, other than payroll and income taxes 4,267 4,153 2.8 % 12,558 11,622 8.1 %
Insurance 2,738 2,721 0.6 % 8,412 8,511 (1.2) %
Advertising, business promotion, and strategic initiatives 3,277 2,875 14.0 % 9,480 8,036 18.0 %
Loan servicing and clearing expenses 2,505 2,288 9.5 % 7,566 6,694 13.0 %
Communication 1,035 1,080 (4.2) % 3,234 3,421 (5.5) %
Printing, postage, stationery and supplies 930 1,022 (9.0) % 3,349 3,151 6.3 %
Director and investor relations 298 296 0.7 % 1,007 1,013 (0.6) %
Foreclosed real estate and other repossessed assets expenses (income), net 96 (521) 118.4 % (494) 817 (160.5) %
Operational losses and related loss provisions 426 292 45.9 % 6,973 671 939.2 %
Other 2,753 2,714 1.4 % 7,960 7,450 6.8 %
Total non-interest expenses $ 96,265 $ 96,548 (0.3) % $ 293,800 $ 284,802 3.2 %
Relevant ratios and data:
Efficiency ratio 51.83 % 52.48 % 52.29 % 52.31 %
Compensation and benefits to non-interest expense 42.08 % 41.26 % 41.88 % 41.90 %
Compensation to average total assets owned 1.33 % 1.30 % 1.35 % 1.33 %
Number of employees end of period 2,156 2,217 2,156 2,217
Average number of employees 2,162 2,214 2,176 2,219
Average compensation per employee (in thousands) $ 74.95 $ 71.97 $ 75.39 $ 71.69
Average loans per average employee $ 3,831 $ 3,658 $ 3,783 $ 3,582
Non-Interest Expense
Comparison of quarters ended September 30, 2026 and 2025
Non-interest expense was $96.3 million, representing a decrease of 0.3% or $283 thousand, compared to $96.5 million. The decrease in non-interest expense was mainly due to:
•A $992 thousand decrease in professional and service fees reflecting lower compliance-related expenses; and
•A $982 thousand decrease in information technology expenses primarily reflecting $724 thousand in reduced data processing costs and $772 thousand in reduced IT support expenses, partially offset by a $520 thousand increase in cloud computing costs.
These decreases in non-interest expense were partially offset by:
•A $675 thousand increase in compensation and employee benefits, as a result of higher salaries and benefits, including payroll taxes;
•A $617 thousand increase in foreclosed real estate and other repossessed assets expenses, net, primarily reflecting a $481 thousand unfavorable variance in the valuation of foreclosed real estate and $138 thousand in higher credit-related expenses; and
•A $402 thousand increase in advertising, business promotion, and strategic initiatives driven by a new branding marketing campaign during 2026.
The efficiency ratio was 51.83% compared to 52.48%. 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, 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 were excluded from the adjusted efficiency ratio computation for the quarters ended September 30, 2026 and 2025, amounted to $466 thousand and $2.2 million, respectively.
Comparison of the nine-month periods ended September 30, 2026 and 2025
Non-interest expense was $293.8 million, representing an increase of 3.2% or $9.0 million, compared to $284.8 million. The increase in non-interest expense was mainly due to:
•A $6.3 million increase in operational losses and related loss provisions, which includes a provision of $5.8 million recorded in the second quarter of 2026;
•A $3.7 million increase in compensation and employee benefits from higher salaries and benefits, including payroll taxes; and
•A $1.4 million increase in advertising, business promotion, and strategic initiatives driven by a new branding marketing campaign during 2026.
These increases in non-interest expense were partially offset by:
•A $2.0 million decrease in occupancy, equipment and infrastructure costs, driven by lower internet services expenses of $1.1 million, $572 thousand in reduced software maintenance expenses, and a $445 thousand insurance reimbursement related to equipment;
•A $1.3 million decrease in foreclosed real estate and other repossessed assets expenses, net. This reduction primarily reflects a $1.4 million increase in gains from the sale of other repossessed assets due to improved pricing and a $509 thousand decrease in credit-related expenses, which includes $421 thousand in escrow recoveries related to acquired residential loans recognized in the second quarter of 2026. These decreases were partially offset by a $523 thousand unfavorable variance in the valuation of foreclosed real estate; and
•A $1.3 million decrease in electronic banking charges mainly due to the benefit recognized from a $3.6 million business-related volume incentive payment in the first quarter of 2026.
The efficiency ratio was 52.29% compared to 52.31%. Amounts presented as part of non-interest income that were excluded from the efficiency ratio computation for 2026 and 2025 amounted to $684 thousand and $2.7 million, respectively.
Provision for Credit Losses
Comparison of quarters ended September 30, 2026 and 2025
Provision for credit losses decreased by $10.1 million to $18.1 million from $28.3 million. The provision for credit losses for the third quarter of 2026, reflected $17.5 million for increased loan volume and $1.3 million due to seasonal adjustment for auto delinquency. The provision for credit losses for the third quarter of 2025, reflected $13.5 million for increased loan volume, $5.6 million in specific reserves on two commercial loans, $4.3 million for updated prepayment assumptions in commercial loans and residential mortgage loans, $2.9 million for macroeconomic factors, and $1.3 million due to qualitative adjustment.
Comparison of the nine-month periods ended September 30, 2026 and 2025
Provision for credit losses decreased by $22.0 million to $53.6 million from $75.6 million. The provision for credit losses for the nine-month period ended September 30, 2026, reflected $49.6 million related to loan volume and $3.0 million related to specific commercial loan reserves. The provision for credit losses for the nine-month period ended September 30, 2025, reflected $48.1 million related to loan volume, $14.2 million in commercial loans specific reserves and $13.6 million due to alignment of economic and loss rate model assumptions.
Income Tax Expense
Comparison of quarters ended September 30, 2026 and 2025
Income tax expense for the third quarter of 2026 increased by $5.7 million to $15.2 million from $9.5 million, primarily due to higher income before taxes and fewer favorable discrete items. OFG maintained an ETR lower than the statutory rate for the third quarter of 2026 and 2025 of 21.2% and 15.5%, respectively. The lower ETR is mainly related to exempt income and investments subject to preferential tax treatment under the PR Code. The third quarter of 2025 ETR was further reduced by the cumulative effect of changes in the applicable tax rate recognized during the year.
Comparison of the nine-month periods ended September 30, 2026 and 2025
Income tax expense increased by $8.3 million to $45.8 million from $37.5 million, primarily due to higher income before taxes and fewer favorable discrete tax benefits. OFG maintained an ETR lower than the statutory rate for the nine-month periods ended September 30, 2026 and 2025 of 21.3% and 20.1%, reflecting exempt income, investments subject to preferential tax treatment under the PR Code, a discrete tax windfall on stock options, and benefits related to the purchase of tax credits at a discount.
Business Segments
OFG segregates its businesses into the following segments: Banking, Wealth Management, and Treasury. Management established the reportable segments based on the internal reporting used to evaluate performance and 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 net income. OFG's methodology for allocating expenses for corporate services among segments is based on several factors such as revenue, employee headcount, occupied space, and dedicated services or time, among others. Following are the results of operations and the selected financial information by operating segment for the quarters and nine-month periods ended September 30, 2026 and 2025.
TABLE 4 - BUSINESS SEGMENTS
Quarter Ended September 30, 2026
Banking Wealth
Management 		Treasury Total Major
Segments 		Eliminations Consolidated
Total
(In thousands)
Interest income $ 161,730 $ 9 $ 35,429 $ 197,168 $ (1,424) $ 195,744
Interest expense (33,518) - (10,080) (43,598) 1,424 (42,174)
Net interest income 128,212 9 25,349 153,570 - 153,570
(Provision for) recapture of credit losses (18,143) - 3 (18,140) - (18,140)
Non-interest income, net 22,978 9,666 - 32,644 - 32,644
Non-interest expenses:
Compensation and employee benefits (37,628) (2,591) (292) (40,511) - (40,511)
Occupancy, equipment and infrastructure costs (10,402) (133) (20) (10,555) - (10,555)
Depreciation and amortization of premises and equipment (4,190) (10) (5) (4,205) - (4,205)
Electronic banking charges (12,502) - - (12,502) - (12,502)
Information technology expenses (5,786) (38) 1 (5,823) - (5,823)
Professional and service fees (3,535) (758) (51) (4,344) - (4,344)
Loan servicing and clearing expenses (1,893) (478) (134) (2,505) - (2,505)
Amortization of other intangible assets (230) - - (230) - (230)
Intersegment expenses 1,055 (605) (450) - - -
Other (14,813) (585) (192) (15,590) - (15,590)
Total non-interest expense (89,924) (5,198) (1,143) (96,265) - (96,265)
Income before income taxes $ 43,123 $ 4,477 $ 24,209 $ 71,809 $ - $ 71,809
Income tax expense (15,152) - (46) (15,198) - (15,198)
Net income $ 27,971 $ 4,477 $ 24,163 $ 56,611 $ - $ 56,611
Total assets $ 10,208,889 $ 42,346 $ 3,212,469 $ 13,463,704 $ (1,319,225) $ 12,144,479
Nine-Month Period Ended September 30, 2026
Banking Wealth
Management 		Treasury Total Eliminations Consolidated
Total
(In thousands)
Interest income $ 485,249 $ 21 $ 105,925 $ 591,195 $ (4,175) $ 587,020
Interest expense (96,381) - (30,132) (126,513) 4,175 (122,338)
Net interest income 388,868 21 75,793 464,682 - 464,682
Provision for credit losses (53,632) - 3 (53,629) - (53,629)
Non-interest income, net 69,017 28,764 53 97,834 - 97,834
Non-interest expense:
Compensation and employee benefits (114,406) (7,710) (918) (123,034) - (123,034)
Occupancy, equipment and infrastructure costs (28,123) (392) (54) (28,569) - (28,569)
Depreciation and amortization of premises and equipment (13,833) (29) (20) (13,882) - (13,882)
Electronic banking charges (33,336) - - (33,336) - (33,336)
Information technology expenses (19,413) (124) - (19,537) - (19,537)
Professional and service fees (11,699) (2,430) (1,268) (15,397) - (15,397)
Loan servicing and clearing expenses (5,657) (1,502) (407) (7,566) - (7,566)
Amortization of other intangible assets (692) - - (692) - (692)
Intersegment expenses 3,151 (1,784) (1,367) - - -
Other (49,714) (1,585) (488) (51,787) - (51,787)
Total non-interest expense (273,722) (15,556) (4,522) (293,800) - (293,800)
Income before income taxes $ 130,531 $ 13,229 $ 71,327 $ 215,087 $ - $ 215,087
Income tax expense (45,607) - (155) (45,762) - (45,762)
Net income $ 84,924 $ 13,229 $ 71,172 $ 169,325 $ - $ 169,325
Total assets $ 10,208,889 $ 42,346 $ 3,212,469 $ 13,463,704 $ (1,319,225) $ 12,144,479
Eliminations include interest income and expense for a time deposit opened by the Bank in Oriental Overseas, the IBE unit, that operates within the Bank. The time deposit, with balances of $288.1 million and $282.5 million at September 30, 2026 and 2025, respectively, is used to fund Oriental Overseas operations. The deposit and corresponding interest expense are included in the Treasury segment, and the related interest income is included in the Banking segment. These intersegment balances and amounts are eliminated in consolidation. Interest income is accrued on the unpaid principal balance.
Quarter Ended September 30, 2025
Banking Wealth
Management 		Treasury Total Major
Segments 		Eliminations Consolidated
Total
(In thousands)
Interest income $ 163,168 $ 5 $ 38,422 $ 201,595 $ (1,450) $ 200,145
Interest expense (37,346) - (9,525) (46,871) 1,450 (45,421)
Net interest income 125,822 5 28,897 154,724 - 154,724
Provision for credit losses (28,216) - (42) (28,258) - (28,258)
Non-interest income, net 20,232 9,276 1,945 31,453 - 31,453
Non-interest expenses:
Compensation and employee benefits (37,048) (2,520) (268) (39,836) - (39,836)
Occupancy, equipment and infrastructure costs (9,518) (179) (19) (9,716) - (9,716)
Depreciation and amortization of premises and equipment (5,260) (13) (5) (5,278) - (5,278)
Electronic banking charges (12,657) - - (12,657) - (12,657)
Information technology expenses (6,749) (50) (6) (6,805) - (6,805)
Professional and service fees (4,677) (690) 31 (5,336) - (5,336)
Loan servicing and clearing expenses (1,750) (412) (126) (2,288) - (2,288)
Amortization of other intangibles assets (288) - - (288) - (288)
Intersegment expenses 1,183 (614) (569) - - -
Other
(13,638) (582) (124) (14,344) - (14,344)
Total non-interest expense (90,402) (5,060) (1,086) (96,548) - (96,548)
Income before income taxes $ 27,436 $ 4,221 $ 29,714 $ 61,371 $ - $ 61,371
Income tax expense (9,481) - (52) (9,533) - (9,533)
Net income $ 17,955 $ 4,221 $ 29,662 $ 51,838 $ - $ 51,838
Total assets $ 9,992,368 $ 30,113 $ 3,556,709 $ 13,579,190 $ (1,349,378) $ 12,229,812
Nine-Month Period Ended September 30, 2025
Banking Wealth
Management 		Treasury Total Eliminations Consolidated
Total
(In thousands)
Interest income $ 476,973 $ 16 $ 110,830 $ 587,819 $ (4,105) $ 583,714
Interest expense (107,302) - (24,794) (132,096) 4,105 (127,991)
Net interest income 369,671 16 86,036 455,723 - 455,723
(Provision for) recapture of credit losses
(75,584) - (40) (75,624) - (75,624)
Non-interest income, net 62,231 27,222 1,947 91,400 - 91,400
Non-interest expenses
Compensation and employee benefits (110,796) (7,711) (826) (119,333) - (119,333)
Occupancy, equipment and infrastructure costs (28,393) (548) (53) (28,994) - (28,994)
Depreciation and amortization of premises and equipment (15,396) (38) (15) (15,449) - (15,449)
Electronic banking charges (34,602) - - (34,602) - (34,602)
Information technology expenses (19,624) (147) - (19,771) - (19,771)
Professional and service fees (13,035) (2,157) (75) (15,267) - (15,267)
Loan servicing and clearing expenses (5,031) (1,339) (324) (6,694) - (6,694)
Amortization of other intangible assets (865) - - (865) - (865)
Intersegment expenses 2,988 (1,704) (1,284) - - -
Other
(42,104) (1,345) (378) (43,827) - (43,827)
Total non-interest expense (266,858) (14,989) (2,955) (284,802) - (284,802)
Income before income taxes $ 89,460 $ 12,249 $ 84,988 $ 186,697 $ - $ 186,697
Income tax expense (37,326) (17) (144) (37,487) - (37,487)
Net income $ 52,134 $ 12,232 $ 84,844 $ 149,210 $ - $ 149,210
Total assets $ 9,992,368 $ 30,113 $ 3,556,709 $ 13,579,190 $ (1,349,378) $ 12,229,812
Comparison of quarters ended September 30, 2026 and 2025
Banking
OFG's banking segment income before income taxes increased $15.7 million to $43.1 million from $27.4 million, mainly due to:
•A $3.8 million decrease in interest expense, reflecting the $500 million government demand deposit transfer into a wealth management account in January 2026 and lower interest rates, partially offset by higher retail and commercial deposit balances;
•A $10.1 million decrease in provision for credit losses, mainly due to lower specific reserves and changes in assumptions, factors, and qualitative adjustments in the previous year quarter; and
•A $2.7 million increase in non-interest income primarily related to $1.7 million increase in banking service revenue due to higher customer activity and transaction volumes and an $825 thousand increase in mortgage banking activities, mainly from favorable variance in the valuation of mortgage servicing rights.
These increases in banking segment income were partially offset by a $1.4 million decrease in interest income, primarily reflecting lower interest income from loans.
Wealth Management
Wealth management segment revenue consists of commissions and fees earned from fiduciary activities, securities brokerage and investment advisory services, and insurance and reinsurance activities. Income before income taxes for this segment increased to $4.5 million from $4.2 million, mainly from higher non-interest income of $390 thousand reflecting higher broker-dealer fees related to investment advisory service fees and securities sales commissions.
Treasury
Treasury segment income before income taxes decreased $5.5 million to $24.2 million from $29.7 million. The decrease primarily reflected $3.0 million lower interest income on interest-bearing cash and money market investments due to lower average balances and interest rates, $1.9 million lower non-interest income from gains recognized in the prior year quarter on investments held by OFG Ventures in fintech-focused funds, and $555 thousand higher interest expense reflecting $150 thousand from borrowings and $387 thousand from brokered deposits, which were utilized to enhance liquidity and support strategic growth in the commercial loan portfolio.
Comparison of nine-month periods ended September 30, 2026 and 2025
Banking
OFG's banking segment income before income taxes increased $41.1 million to $130.5 million from $89.5 million, mainly due to:
•A $9.6 million increase in interest income from loans, driven by higher average loan balances;
•A $10.9 million decrease in interest expense reflecting the $500 million government demand deposit transfer into a wealth management account in January 2026 and lower interest rates, partially offset by higher retail and commercial deposit balances;
•A $22.0 million decrease in provision for credit losses, mainly due to lower specific reserves and the alignment in prior year period of economic and loss rate model assumptions; and
•A $6.8 million increase in non-interest income, related to $4.1 million increase in banking service revenue due to higher customer activity and transaction volumes and a $2.7 million increase in mortgage banking activities, mainly from favorable variance in the valuation of mortgage servicing rights.
These increases in banking segment income were partially offset by a $6.9 million increase in non-interest expenses, reflecting $5.8 million in business-related operational charges, $3.6 million higher salaries and benefits, and $1.4 million from new branding marketing campaign during 2026.
Wealth Management
Income before income taxes for this segment increased to $13.2 million from $12.2 million, reflecting a $1.5 million increase in non-interest income from higher broker-dealer fees related to investment advisory service fees, securities sales commissions, and mutual funds retailer fees, partially offset by a $273 thousand increase in professional and service fees related to consulting and advisory services.
Treasury
Treasury segment income before income taxes decreased $13.7 million to $71.3 million from $85.0 million. The decrease was mainly due to a $5.3 million increase in interest expense, reflecting $3.9 million from interest paid on borrowings and $1.2 million from brokered deposits, which were utilized to enhance liquidity and support strategic growth in the commercial loan portfolio, a $4.9 million decrease in interest income on interest-bearing cash and money market investments due to lower average balances and interest rates, and a $1.2 million increase in professional and service fees, including $1.0 million of costs associated with a capital markets readiness and registration process.
ANALYSIS OF FINANCIAL CONDITION
Assets Owned
At September 30, 2026, OFG's total assets amounted to $12.144 billion, a decrease of $321.2 million, when compared to $12.466 billion at December 31, 2025.
Cash and due from banks decreased by $475.6 million to $560.5 million, reflecting the $500 million transfer of a government demand deposit into a wealth management account in January 2026.
The investment portfolio decreased $126.0 million or 4.43% primarily reflecting $313.4 million principal paydowns and maturities, as well as $147.8 million in unfavorable market value adjustments, partially offset by $267.4 million of new available-for-sale mortgage-backed securities and US Treasury securities, and $66.6 million related to mortgage loan securitizations. OFG's investment strategy focuses on liquidity and highly liquid securities, considering their investment and the current market environment.
OFG's loan portfolio is comprised of Puerto Rico residential mortgage loans, consumer loans, auto loans, commercial loans secured by real estate, other commercial and industrial loans, and commercial US loans. At September 30, 2026, OFG's net loan portfolio increased by $252.6 million or 3.2% reflecting increases in US and Puerto Rico commercial loans and consumer loans, partially offset by a decrease in auto and mortgage loans, from portfolio run-off and mortgage securitizations.
Financial Assets Managed
At September 30, 2026, OFG's financial assets include assets managed by its trust division and its securities broker-dealer and insurance agency subsidiaries. OFG's trust division offers various types of IRAs and manages retirement plans and custodian and corporate trust accounts. At September 30, 2026, and December 31, 2025, total assets managed by OFG's trust division amounted to $2.409 billion and $2.490 billion, respectively. The $81.4 million decrease reflects the discontinuance of Keogh plan services during the period, partially offset by favorable market conditions. 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 September 30, 2026, total assets managed by the securities broker-dealer and insurance agency subsidiaries from their customers' investment accounts amounted to $3.309 billion, compared to $2.613 billion at December 31, 2025. The $696.7 million increase in broker-dealer related assets is mainly due to the transfer of a $500 million government demand deposit from the Bank into a wealth management account during the period, as well as favorable changes in market conditions.
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. During the third quarter of 2026, OFG performed an assessment of events or circumstances that could trigger reductions in the book value of goodwill. Based on this assessment, no impairments were identified at September 30, 2026.
As of both September 30, 2026, and December 31, 2025, OFG had $84.2 million of goodwill allocated as follows: $84.1 million to the banking segment and $178 thousand to the wealth management segment. Please refer to "Note 8 - Goodwill and Other Intangible Assets" to our consolidated financial statements for more information on the annual goodwill impairment test.
TABLE 5 - ASSETS SUMMARY AND COMPOSITION
September 30, December 31, Variance
%
2026 2025
(Dollars in thousands)
Investments:
FNMA and FHLMC certificates $ 2,152,841 $ 2,285,078 (5.8) %
GNMA certificates 495,793 490,571 1.1 %
Equity securities 64,727 62,738 3.2 %
US Treasury securities 2,124 1,651 28.6 %
CMOs issued by US government-sponsored enterprises 1,128 2,579 (56.3) %
Other debt securities 500 501 (0.2) %
Trading securities 22 23 (4) %
Total investments 2,717,135 2,843,141 (4.4) %
Loans, net 8,266,856 8,014,246 3.2 %
Total investments and loans 10,983,991 10,857,387 1.2 %
Other assets:
Cash and due from banks
560,485 1,036,074 (45.9) %
Money market investments 6,288 4,261 47.6 %
Foreclosed real estate 1,615 2,490 (35.1) %
Accrued interest receivable 69,143 71,110 (2.8) %
Deferred tax asset, net 127,364 104,359 22.0 %
Premises and equipment, net 96,538 93,554 3.2 %
Customers' liability on acceptances 23,734 22,442 5.8 %
Servicing assets 68,542 66,333 3.3 %
Goodwill 84,241 84,241 - %
Other intangible assets 6,898 9,854 (30.0) %
Operating lease right-of-use assets 22,815 21,261 7.3 %
Other assets 92,825 92,291 0.6 %
Total other assets 1,160,488 1,608,270 (27.8) %
Total assets $ 12,144,479 $ 12,465,657 (2.6) %
Investment portfolio composition:
FNMA and FHLMC certificates 79.3 % 80.3 %
GNMA certificates 18.2 % 17.3 %
Equity securities 2.4 % 2.2 %
US Treasury securities 0.1 % 0.1 %
CMOs issued by US government-sponsored enterprises 0.0 % 0.1 %
100.0 % 100.0 %
TABLE 6 - LOAN PORTFOLIO COMPOSITION
September 30, December 31, Variance
%
2026 2025
(In thousands)
Loans held-for-investment:
Commercial loans $ 3,789,686 $ 3,490,169 8.6 %
Mortgage loans 1,359,658 1,390,346 (2.2) %
Consumer loans 697,222 683,548 2.0 %
Auto loans 2,601,833 2,636,979 (1.3) %
8,448,399 8,201,042 3.0 %
Allowance for credit losses (191,829) (202,341) (5.2) %
Total loans held-for-investment, net 8,256,570 7,998,701 3.2 %
Mortgage loans held-for-sale 10,286 12,483 (17.6) %
Other loans held-for-sale - 3,062 (100.0) %
Total loans held-for-sale 10,286 15,545 (33.8) %
Total loans, net $ 8,266,856 $ 8,014,246 3.2 %
OFG's loan portfolio is composed of commercial, mortgage, consumer, and auto loans. As shown in Table 6 above, total loans, net, amounted to $8.267 billion at September 30, 2026, a 3.2% increase when compared to $8.014 billion at December 31, 2025. The composition and trends of OFG's gross loans held-for-investment were as follows:
•Commercial loan portfolio amounted to $3.790 billion (44.9% of gross loans held-for-investment) compared to $3.490 billion (42.6% of gross loans held-for-investment) at December 31, 2025, an 8.6% increase resulting from originations and credit lines usage in the nine-month period ended September 30, 2026. Commercial loans secured by non-owner-occupied commercial real estate amounted to $756.5 million and $774.1 million at September 30, 2026, and December 31, 2025, respectively, which represented 9.0% and 9.4% of our gross loans held-for-investment. Commercial US loans amounted to $862.9 million and $830.0 million at September 30, 2026, and December 31, 2025, respectively, which represented 10.2% and 10.1% of our gross loans held-for-investment.
At December 31, 2025, OFG had $3.1 million in commercial loans held-for-sale and sold them during the nine-month period ended September 30, 2026, recognizing a $28 thousand loss included in other non-interest income in the consolidated statements of operations. Additionally, during the nine-month period ended September 30, 2026, OFG sold two previously reserved non-performing commercial loans held-for-investment with an aggregate reporting balance of $49.6 million and recognized $15.6 million in related charge-offs.
Commercial loan production increased by 14.1% or $46.9 million to $379.8 million in the third quarter of 2026 from $332.9 million in the prior year quarter, reflecting higher production in both commercial PR and commercial US portfolios. For the nine-month period ended September 30, 2026, commercial loan production increased by 16% or $156.5 million to $1.112 billion from $955.2 million for the same period of 2025, resulting from the commercial PR loan portfolio, while commercial US loan production decreased slightly. Commercial US loan activities include the purchase of middle-market senior secured cash flow loan participations and the purchase of participations in loans to small and medium sized businesses.
•Mortgage loan portfolio amounted to $1.360 billion (16.1% of gross loans held-for-investment) compared to $1.390 billion (17.0% of gross loans held-for-investment) at December 31, 2025, a 2.2% decrease resulting from securitization of conforming loans into mortgage-backed securities and regular paydowns. Mortgage loans included delinquent loans in the GNMA buy-back option program amounting to $58.7 million and $56.5 million at September 30, 2026, and December 31, 2025, respectively. Under the GNMA program, issuers such as OFG have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase option are required to be reflected (rebooked) on our financial statements with an offsetting liability.
Mortgage loan production totaled $49.8 million and $147.3 million in the quarter and nine-month period ended September 30, 2026, respectively, which represents increases of 17.5% and 9.1%, respectively, from $42.4 million and $135.0 million for the same periods in 2025.
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 offered adjustable-rate mortgage loans with teaser rates.
•Consumer loan portfolio amounted to $697.2 million (8.3% of gross loans held-for-investment) compared to $683.5 million (8.3% of gross loans held-for-investment) at December 31, 2025, a 2.0% increase resulting from originations. Consumer loan production increased by 15.4% to $87.7 million in the third quarter of 2026 from $76.0 million in the prior year quarter, and increased by 8.1% or $17.8 million to $238.5 million in the nine-month period ended September 30, 2026 from $220.6 million for the same period in 2025.
•Auto loans portfolio amounted to $2.602 billion (30.7% of gross loans held-for-investment) compared to $2.637 billion (32.1% of gross loans held-for-investment) at December 31, 2025. Auto loans production increased by 2.3% or $4.0 million to $176.5 million in the third quarter of 2026 compared to $172.6 million in the prior year quarter, and decreased by 14.6% or $95.5 million to $560.2 million in the nine-month period ended September 30, 2026, from $655.7 million for the same period in 2025. Production during the first quarters of 2025 reflected unusually strong auto sales made ahead of anticipated tariff-related price increases later in 2025.
The following table includes the maturities of OFG's lending exposure to the Puerto Rico government.
TABLE 7 - PUERTO RICO GOVERNMENT RELATED LOANS
September 30, 2026
Maturity
Carrying Value Less than 1 Year 1 to 3 Years More than 3 Years
Loans: (In thousands)
Municipalities $ 87,219 $ - $ 3,232 $ 83,987
At September 30, 2026, OFG has $87.2 million of direct credit exposure to the Puerto Rico government, a $9.9 million increase from $77.3 million at December 31, 2025. The Bank's loans to the Puerto Rico government are general obligations of municipalities secured by ad valorem taxation, without limitation as to rate or amount, on all taxable property within the issuing municipalities and are in current status. The good faith, credit and unlimited taxing power of each issuing municipality are pledged for the payment of its general obligations.
Allowance for Credit Losses
OFG measures its ACL based on management's best estimate of expected credit losses inherent in OFG's relevant financial assets. Tables 8 through 11 set forth an analysis of activity in the ACL and present selected credit loss statistics for the quarters and nine-month period ended September 30, 2026, and 2025 and as of September 30, 2026 and December 31, 2025. In addition, Table 6 sets forth the composition of the loan portfolio.
The decline in the allowance for credit losses reflected, in part, the impact of the sale of two non-performing commercial loans during the period, which reduced specific credit exposure and contributed to improved asset-quality metrics. However, management continued to retain qualitative reserves for areas of uncertainty not fully captured by the quantitative model, including trends in the auto portfolio. As a result, the reserve release reflected an improved risk profile following the non-performing commercial loan sales and other portfolio credit metrics, while qualitative reserves continued to address portfolio-specific risks and uncertainties not fully captured by the quantitative models.
On the retail side, consumer and auto loan portfolios continued to perform well, reporting lower early delinquency and 90 days and over delinquency levels compared to December 31, 2025. The residential mortgage loan portfolio experienced lower early delinquency and a modest increase of $1.3 million or 1.9% in the 90 days and over delinquency amount, mainly as a result of a $2.2 million increase in the GNMA buy-back option program, compared to December 31, 2025.
Net charge-offs for consumer and auto loans improved year-over-year, and recovery performance remained strong. Collateral liquidation values in the auto loan portfolio have remained stable, resulting in consistent loss severity. Mortgage loan recoveries continued to exceed charge-offs.
Commercial non-performing loan rates at September 30, 2026 were 0.68 percent compared to 2.50 percent at December 31, 2025. Delinquencies and non-performing levels are down, criticized exposure has declined, and overall asset quality has improved materially.
Please refer to the "Provision for Credit Losses" and "Critical Accounting Policies and Estimates" sections in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of this quarterly report on Form 10-Q and "Note 5 - Allowance for Credit Losses" of the accompanying consolidated financial statements for a more detailed analysis of provisions and ACL.
Non-performing Assets
OFG's non-performing assets include non-performing loans, foreclosed real estate, and other repossessed assets (see Tables 12 to 14). At September 30, 2026, non-accrual loans held-for-investment amounted to $57.5 million, a decrease of $67.1 million from $124.6 million at December 31, 2025. The decrease is mainly related to the sale of two previously reserved non-performing commercial loans held-for-investment with an aggregate reporting balance of $49.6 million and recognized $15.6 million in related charge-offs.
As of December 31, 2025, OFG had $3.1 million in non-accrual commercial US loans held-for-sale. There were no past due or non-accrual commercial loans held-for-sale as of September 30, 2026.
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. As of September 30, 2026, and December 31, 2025, the outstanding balance of these residential mortgage loans was $4.9 million and $5.5 million, respectively.
At September 30, 2026, OFG's non-performing assets decreased by 49.5% to $68.7 million (0.57% of total assets) from $136.0 million (1.09% of total assets) at December 31, 2025, mainly related to the previously mentioned sale of non-performing commercial loans during the nine-month period ended September 30, 2026.
Foreclosed real estate decreased from $2.5 million at December 31, 2025, to $1.6 million at September 30, 2026, and other repossessed assets increased from $3.5 million at December 31, 2025, to $4.7 million at September 30, 2026, both recorded at fair value. OFG does not expect non-performing loans to result in significantly higher losses. At September 30, 2026, the allowance coverage ratio to non-performing loans was 307.2% (155.6% at December 31, 2025).
Upon adoption of CECL, 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, the determination of non-accrual or accrual status for PCD loans is made at the pool level, not the individual loan level. The ACL 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 is amortized as interest income over the remaining life of the pool. On a quarterly basis, management monitors 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 ceases.
The following items comprise non-performing loans held-for-investment, including non-PCD and PCDs:
Commercial loans - At September 30, 2026, OFG's non-performing commercial loans amounted to $25.7 million (41.2% of OFG's non-performing loans), a $61.6 million or 70.6% decrease from $87.3 million at December 31, 2025 (67.1% of OFG's non-performing loans). During the nine-month period ended September 30, 2026, OFG sold two non-performing commercial loans held-for-investment with an aggregate reporting balance of $49.6 million. 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 September 30, 2026, OFG's non-performing mortgage loans totaled $16.1 million (25.7% of OFG's non-performing loans), an 8.8% decrease from $17.6 million (13.6% of OFG's non-performing loans) at December 31, 2025. 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 September 30, 2026, OFG's non-performing consumer loans amounted to $3.7 million (6.0% of OFG's non-performing loans), a 14.6% decrease from $4.4 million at December 31, 2025 (3.4% 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 loans - At September 30, 2026, OFG's non-performing auto loans amounted to $16.9 million (27.1% of OFG's total non-performing loans), an 18.5% decrease from $20.8 million at December 31, 2025 (15.9% of OFG's total non-performing loans). Non-PCD auto 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 Housing Service (RHS), Puerto Rico Housing Finance Authority (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 or FHLMC, as applicable, 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. 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 the loan modification. Borrowers with discharged Chapter 7 bankruptcies may also apply. Loans in these programs are evaluated by designated credit underwriters for financial difficulty modification if OFG grants a concession for legal or economic reasons due to the debtor's financial difficulties.
TABLE 8 - ALLOWANCE FOR CREDIT LOSSES BREAKDOWN
September 30, December 31, Variance
2026 2025 %
(Dollars in thousands)
ACL:
Non-PCD
Commercial loans
$ 52,998 $ 65,943 (19.6) %
Mortgage loans
6,413 6,358 0.9 %
Consumer loans
34,470 33,466 3.0 %
Auto loans 93,284 92,472 1 %
Total ACL
$ 187,165 $ 198,239 (5.6) %
PCD
Commercial loans
$ 1,667 $ 493 238.1 %
Mortgage loans
2,988 3,599 (17.0) %
Consumer loans
8 9 (11.1) %
Auto loans 1 1 0.0 %
Total ACL
$ 4,664 $ 4,102 13.7 %
ACL summary
Commercial loans
$ 54,665 $ 66,436 (17.7) %
Mortgage loans
9,401 $ 9,957 (5.6) %
Consumer loans
34,478 $ 33,475 3.0 %
Auto loans 93,285 $ 92,473 1 %
Total ACL
$ 191,829 $ 202,341 (5.2) %
ACL composition:
Commercial loans
28.5 % 32.8 %
Mortgage loans
4.9 % 4.9 %
Consumer loans
18.0 % 16.5 %
Auto loans 48.6 % 45.8 %
100.0 % 100.0 %
ACL coverage ratio at end of period:
Commercial loans
1.44 % 1.90 % (24.2) %
Mortgage loans
0.69 % 0.72 % (4.2) %
Consumer loans
4.95 % 4.90 % 1.0 %
Auto loans 3.59 % 3.51 % 2.3 %
2.27 % 2.47 % (8.1) %
ACL coverage ratio to non-performing loans:
Commercial loans
212.7 % 76.1 % 179.5 %
Mortgage loans
58.5 % 56.5 % 3.5 %
Consumer loans
921.9 % 764.6 % 20.6 %
Auto loans 551.4 % 445.7 % 23.7 %
307.2 % 155.6 % 97.4 %
TABLE 9 - ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES
September 30, December 31,
2026 2025
Amount of ACL
Percent of loans in each category of total loans [1]
Amount of ACL
Percent of loans in each category of total loans [1]
(In thousands) (In thousands)
Commercial loans
$ 54,665 44.9% $ 66,436 42.6%
Mortgage loans
9,401 16.1% 9,957 17.0%
Consumer loans
34,478 8.3% 33,475 8.3%
Auto loans
93,285 30.7% 92,473 32.1%
Total $ 191,829 100.0 % $ 202,341 100.0 %
[1] Total loans in this table refers to total loans held-for-investment.
TABLE 10 - ALLOWANCE FOR CREDIT LOSSES SUMMARY
Quarter Ended September 30, Nine-Month Period Ended September 30,
2026 2025 Variance % 2026 2025 Variance
%
(In thousands) (In thousands)
Balance at beginning of period
$ 188,255 $ 189,944 (0.9) % $ 202,341 $ 175,863 15.1 %
Provision for credit losses 18,034 28,046 (35.7) % 54,118 75,281 (28.1) %
Charge-offs (24,563) (29,747) (17.4) % (94,640) (81,473) 16.2 %
Recoveries 10,103 9,539 5.9 % 30,010 28,111 6.8 %
Balance at end of period
$ 191,829 $ 197,782 (3.0) % $ 191,829 $ 197,782 (3.0) %
TABLE 11 - NET CREDIT LOSSES STATISTICS ON LOANS
Quarter Ended September 30, Nine-Month Period Ended September 30,
2026 2025 Variance % 2026 2025 Variance
%
(Dollars in thousands)
Non-PCD:
Mortgage loans
Charge-offs $ (85) $ - 100.0 % $ (151) $ (34) 344.1 %
Recoveries 187 171 9.4 % 645 1,102 (41.5) %
Total 102 171 (40.4) % 494 1,068 (53.7) %
Commercial PR
Charge-offs (295) (1,446) (79.6) % (15,595) (1,831) 751.7 %
Recoveries 169 922 (81.7) % 394 1,162 (66.1) %
Total (126) (524) (76.0) % (15,201) (669) 2,172.2 %
Commercial US
Charge-offs (299) (3,647) (91.8) % (5,841) (6,565) (11.0) %
Recoveries 1,137 - 100.0 % 1,192 - 100.0 %
Total 838 (3,647) (123.0) % (4,649) (6,565) (29.2) %
Consumer loans
Charge-offs (7,774) (7,704) 0.9 % (24,358) (22,926) 6.2 %
Recoveries 1,104 896 23.2 % 3,283 2,469 33.0 %
Total (6,670) (6,808) (2.0) % (21,075) (20,457) 3.0 %
Auto loans
Charge-offs (16,110) (16,743) (3.8) % (48,689) (49,805) (2.2) %
Recoveries 7,353 7,108 3.4 % 22,653 22,352 1.3 %
Total $ (8,757) $ (9,635) (9.1) % (26,036) (27,453) (5.2) %
PCD:
Mortgage loans
Charge-offs $ - $ - - % $ (6) $ (59) (89.8) %
Recoveries 100 281 (64.4) % 345 713 (51.6) %
Total 100 281 (64.4) % 339 654 (48.2) %
Commercial PR
Charge-offs - (205) (100) % - (236) (100.0) %
Recoveries 15 118 (87.3) % 1,416 206 587.4 %
Total 15 (87) (117.2) % 1,416 (30) (4,820.0) %
Consumer loans
Charge-offs - - - % - (1) (100.0) %
Recoveries 14 10 40.0 % 33 27 22.2 %
Total 14 10 40.0 % 33 26 26.9 %
Auto loans
Charge-offs - (2) (100.0) % - (16) (100.0) %
Recoveries 24 33 (27.3) % 49 80 (38.8) %
Total $ 24 $ 31 (22.6) % 49 64 (23.4) %
Total charge-offs $ (24,563) $ (29,747) (17.4) % (94,640) (81,473) 16.2 %
Total recoveries 10,103 9,539 5.9 % 30,010 28,111 6.8 %
Net credit losses $ (14,460) $ (20,208) (28.4) % $ (64,630) $ (53,362) 21.1 %
TABLE 11 - NET CREDIT LOSSES STATISTICS ON LOANS (CONTINUED)
Quarter Ended September 30, Nine-Month Period Ended September 30,
2026 2025 Variance % 2026 2025 Variance %
(Dollars in thousands)
Net credit losses (recoveries) to average loans outstanding:
Mortgage loans (0.06) % (0.13) % (53.8) % (0.08) % (0.17) % (52.9) %
Commercial PR 0.02 % 0.10 % (80.0) % 0.67 % 0.04 % 1575.0 %
Commercial US (0.39) % 1.74 % (122.4) % 0.72 % 1.12 % (35.7) %
Consumer loans 3.73 % 3.85 % (3.1) % 3.97 % 3.89 % 2.1 %
Auto loans 1.34 % 1.45 % (7.6) % 1.32 % 1.39 % (5.0) %
Total 0.70 % 1.00 % (30.0) % 1.05 % 0.89 % 18.0 %
Recoveries to charge-offs 41.13 % 32.07 % 28.3 % 31.71 % 34.50 % (8.1) %
Average Loans Held-for-Investment
Mortgage loans $ 1,301,792 $ 1,361,765 (4.4) % $ 1,312,294 $ 1,382,079 (5.0) %
Commercial PR 2,793,499 2,536,829 10.1 % 2,725,458 2,464,483 10.6 %
Commercial US 859,828 836,527 2.8 % 862,116 781,428 10.3 %
Consumer loans 714,415 705,945 1.2 % 707,261 699,408 1.1 %
Auto loans 2,613,122 2,656,992 (1.7) % 2,625,209 2,622,655 0.1 %
Total $ 8,282,656 $ 8,098,058 2.3 % $ 8,232,338 $ 7,950,053 3.6 %
Net charge-offs for the quarter ended September 30, 2026, amounted to $14.5 million (0.70% of average loans), decreasing by $5.7 million when compared to $20.2 million (1.00% of average loans) in prior year quarter. Net charge-offs for the nine-month period ended September 30, 2026, amounted to $64.6 million (1.05% of average loans), increasing by $11.3 million when compared to $53.4 million (0.89% of average loans) in prior year period.
Net charge-offs variances were as follows:
•Residential mortgage loans net recoveries in the third quarter of 2026 amounted to $202 thousand, decreasing by $250 thousand when compared to $452 thousand in prior year quarter. Residential mortgage loans net recoveries for the nine-month period ended September 30, 2026, amounted to $833 thousand, decreasing by $889 thousand when compared to $1.7 million in prior year period.
•Commercial loans net recoveries in the third quarter of 2026 amounted to $727 thousand, increasing by $5.0 million when compared to net charge-offs of $4.3 million in prior year quarter. The net charge-offs for the nine-month period ended September 30, 2026, amounted to $18.4 million, increasing by $11.2 million when compared to $7.3 million in prior year period. The net charge-offs for the nine-month period ended September 30, 2026, included $15.6 million charge-offs recognized from the sale of two non-performing commercial loans during the period. Net charge-offs for the nine-month period ended September 30, 2025, included $6.5 million from commercial US loans.
•Consumer loans net charge-offs in the third quarter of 2026 amounted to $6.7 million, decreasing by $142 thousand when compared to net charge-offs of $6.8 million in the prior year quarter. The charge-offs for the nine-month period ended September 30, 2026, amounted to $21.0 million, increasing by $611 thousand when compared to net charge-offs of $20.4 million in prior year period.
•Auto loans net charge-offs for the third quarter of 2026 amounted to $8.7 million, decreasing by $871 thousand when compared to $9.6 million in the prior year quarter. The charge-offs for the nine-month period ended September 30, 2026, amounted to $26.0 million, decreasing by $1.4 million when compared to net charge-offs of $27.4 million in the prior year period.
TABLE 12 - NON-PERFORMING ASSETS
September 30, December 31, Variance
%
2026 2025
(Dollars in thousands)
Non-performing assets:
Non-PCD
Non-accruing loans $ 57,308 $ 124,300 (53.9)%
Accruing loans 4,911 5,481 (10.4)%
Total $ 62,219 $ 129,781 (52.1)%
PCD 217 282 (23.0)%
Total non-performing loans $ 62,436 $ 130,063 (52.0)%
Foreclosed real estate 1,615 2,490 (35.1)%
Other repossessed assets 4,681 3,457 35.4%
$ 68,732 $ 136,010 (49.5)%
Non-performing assets to total assets 0.57 % 1.09 % (47.7) %
Non-performing assets to total capital 5.14 % 9.78 % (47.4) %
The decrease in non-performing assets and related percentages is mainly due to the sale of two non-performing commercial loans during the nine-month period ended September 30, 2026 with a reporting balance of $49.6 million.
TABLE 13 - NON-ACCRUAL LOANS
September 30, December 31, Variance
%
2026 2025
(Dollars in thousands)
Non-accrual loans
Non-PCD
Commercial loans $ 25,700 $ 87,253 (70.5)%
Mortgage loans 10,949 11,919 (8.1)%
Consumer loans 3,740 4,378 (14.6)%
Auto loans 16,919 20,750 (18.5)%
Total $ 57,308 $ 124,300 (53.9)%
PCD
Commercial loans $ - $ 55 (100.0)%
Mortgage loans 217 227 (4.4)%
Total $ 217 $ 282 (23.0)%
Total non-accrual loans $ 57,525 $ 124,582 (53.8)%
Non-accruals loans composition percentages:
Commercial loans 44.7 % 70.1 %
Mortgage loans 19.4 % 9.7 %
Consumer loans 6.5 % 3.5 %
Auto loans 29.4 % 16.7 %
100.0 % 100.0 %
Non-accrual loans ratios:
Non-accrual loans to total loans 0.68 % 1.52 % (55.3)%
Allowance for credit losses to non-accrual loans 333.47 % 162.42 % 105.3%
Quarter Ended September 30, Nine-Month Period Ended September 30,
2026 2025 2026 2025
(In thousands)
Interest that would have been recorded in the period if the loans had not been classified as non-accruing loans
$ 371 $ 464 $ 637 $ 962
The decrease in non-accrual loans and related percentages is mainly due to the sale of two non-performing commercial loans during the nine-month period ended September 30, 2026 with a reporting balance of $49.6 million.
TABLE 14 - NON-PERFORMING LOANS
September 30, December 31, Variance
%
2026 2025
(Dollars in thousands)
Non-performing loans
Non-PCD
Commercial loans
$ 25,700 $ 87,253 (70.5)%
Mortgage loans
15,860 17,400 (8.9)%
Consumer loans
3,740 4,378 (14.6)%
Auto loans
16,919 20,750 (18.5)%
Total $ 62,219 $ 129,781 (52.1)%
PCD
Commercial loans
$ - $ 55 (100.0)%
Mortgage loans
217 227 (4.4)%
Total $ 217 $ 282 (23.0)%
Total non-performing loans $ 62,436 $ 130,063 (52.0)%
Non-performing loans composition percentages:
Commercial loans
41.2 % 67.1 %
Mortgage loans
25.7 % 13.6 %
Consumer loans
6.0 % 3.4 %
Auto loans
27.1 % 15.9 %
100.0 % 100.0 %
Non-performing loans to:
Total loans held-for-investment, gross 0.74 % 1.59 % (53.5)%
Total assets 0.51 % 1.04 % (51.0)%
Total capital 4.67 % 9.36 % (50.1)%
Non-performing loans with partial charge-offs to:
Total loans held-for-investment, gross 0.17 % 0.19 % (10.5)%
Non-performing loans 23.10 % 11.95 % 93.3%
Other non-performing loans ratios:
Charge-off rate on non-performing loans to non-performing loans on which charge-offs have been taken 115.21 % 109.85 % 4.9%
Allowance for credit losses to non-performing loans on which no charge-offs have been taken 399.51 % 176.69 % 126.1%
The decrease in non-performing loans and related percentages is mainly due to the sale of two non-performing commercial loans during nine-month period ended September 30, 2026 with an aggregate reporting balance of $49.6 million.
TABLE 15 - LIABILITIES SUMMARY AND COMPOSITION
September 30, December 31, Variance
%
2026 2025
(Dollars in thousands)
Deposits:
Non-interest-bearing deposits $ 2,694,014 $ 2,626,768 2.6 %
NOW accounts 2,057,144 3,173,142 (35.2) %
Savings accounts
2,276,913 2,259,973 0.7 %
Time deposits 2,955,402 2,197,358 34.5 %
Total deposits 9,983,473 10,257,241 (2.7) %
Accrued interest payable 5,446 5,511 (1.2) %
Total deposits and accrued interest payable 9,988,919 10,262,752 (2.7) %
Borrowings:
Securities sold under agreements to repurchase 200,673 100,714 99.3 %
Advances from FHLB 401,358 456,581 (12.1) %
Other borrowings 3 9 (66.7) %
Total borrowings 602,034 557,304 8.0 %
Total deposits and borrowings 10,590,953 10,820,056 (2.1) %
Other liabilities:
Acceptances executed and outstanding 23,734 22,442 5.8 %
Operating lease liabilities 24,505 23,157 5.8 %
Deferred tax liabilities, net 755 - 100.0 %
Accrued expenses and other liabilities 167,656 209,997 (20.2) %
Total liabilities $ 10,807,603 $ 11,075,652 (2.4) %
Deposits portfolio composition percentages:
Non-interest-bearing deposits 27.0 % 25.6 %
NOW accounts 20.6 % 31.0 %
Savings accounts
22.8 % 22.0 %
Time deposits 29.6 % 21.4 %
100.0 % 100.0 %
Borrowings portfolio composition percentages:
Securities sold under agreements to repurchase 33.3 % 18.1 %
Advances from FHLB 66.7 % 81.9 %
100.0 % 100.0 %
Securities sold under agreements to repurchase (excluding accrued interest)
Amount outstanding at period-end $ 200,400 $ 100,000
Daily average outstanding balance $ 153,585 $ 66,941
Maximum outstanding balance at any month-end $ 300,000 $ 127,344
Liabilities and Funding Sources
As shown in Table 15 above, at September 30, 2026, OFG's total liabilities were $10.808 billion, representing a 2.4% decrease from $11.076 billion at December 31, 2025. Deposits and borrowings, OFG's primary funding sources, amounted to $10.591 billion at September 30, 2026, compared to $10.820 billion at December 31, 2025. Deposits, excluding accrued interest payable, decreased by $273.8 million or 2.7%, driven primarily by a decline in demand deposits of $1.049 billion, partially offset by the growth of $758.0 million in time deposits and $16.9 million in savings and money market accounts.
At September 30, 2026, and December 31, 2025, total public fund deposits from various Puerto Rico government municipalities, agencies and corporations amounted to $1.269 billion and $1.676 billion, respectively, of which $500 million
moved to our wealth management business as an advisory account in January 2026. Public funds were collateralized with securities and commercial loans amounting to $1.302 billion and $1.691 billion at September 30, 2026, and December 31, 2025, respectively.
As of September 30, 2026, borrowings amounted to $602.0 million, consisting of short-term FHLB advances and repurchase agreements. This balance increased by $44.7 million or 8.0% compared to December 31, 2025, primarily reflecting a new $100.4 million repurchase agreement taken during the period to enhance liquidity and support strategic growth in the commercial loan portfolio, partially offset by maturities of FHLB advances.
Stockholders' Equity
At September 30, 2026, OFG's total stockholders' equity was $1.337 billion, representing a 3.8% decrease from $1.390 billion at December 31, 2025. The decrease primarily reflected a $122.3 million increase in accumulated other comprehensive loss, net of tax, driven by unfavorable market value adjustments in available-for-sale investment securities, and a $56.5 million increase in treasury stock resulting from repurchases of common stock under the approved stock repurchase programs. During the nine-month period ended September 30, 2026, OFG repurchased $58.0 million of its common stock. These decreases were partially offset by a $108.6 million increase in retained earnings, primarily due to net income of $169.3 million, partially offset by dividends declared on common stock of $44.3 million and transfers to legal surplus of $16.4 million.
Unfavorable market value adjustments in available-for-sale investment securities during the nine-month period ended September 30, 2026 were primarily driven by higher market interest rates. Inflation remained above the Federal Reserve's long-term target and proved more persistent than previously anticipated. In September 2026, the Federal Open Market Committee raised the federal funds target range by 25 basis points to 3.75%-4.00% and signaled a higher-for-longer policy stance. U.S. Treasury yields increased significantly across the intermediate and longer portions of the curve during the quarter ended September 30, 2026, reducing the fair value of fixed-rate securities. Consequently, unrealized losses in available-for-sale securities increased from approximately $18.4 million at December 31, 2025, to $166.2 million at September 30, 2026. The losses were concentrated in the agency mortgage-backed securities portfolio, primarily within the over 10 years contractual maturity, which represented most of our available-for-sale portfolio balance at September 30, 2026. Although elevated mortgage rates in a higher interest rate environment may somewhat slow securities prepayment speeds, the modified duration of OFG's available-for-sale portfolio remained relatively stable as of September 30, 2026, compared with December 31, 2025. Nevertheless, the fair value of the portfolio will remain sensitive to future changes in interest rates. The decline in fair value was attributable to changes in market interest rates and does not reflect credit deterioration. OFG purchased those investments at a discount relative to their face amount, and the contractual cash flows of those investments are guaranteed by an agency of the U.S. government or by a government-sponsored enterprise. Accordingly, it is expected that the securities would not be settled at a price that is less than the amortized cost basis of OFG's investments. OFG does not intend to sell the investments, and it is not more likely than not that OFG will be required to sell the investments before recovery of their amortized cost basis.
OFG maintains a strong liquidity position, supported by a diversified funding base. Although a higher interest rate environment affects funding costs and elevated mortgage rates may somewhat slow securities prepayment speeds, OFG's liquidity sources remain ample to meet its funding needs. OFG continues to actively monitor market conditions and manage its liquidity and funding to support its operations and balance sheet strategies.
Regulatory capital ratios are not affected by these market value adjustments as OFG has made the election not to include accumulated other comprehensive income (losses) in its regulatory capital calculations. Nevertheless, other capital ratios and measures, such as total equity to total assets, total equity to risk-weighted assets, tangible common equity to total assets, tangible common equity to tangible assets, book value per common share, and tangible book value per common share, have been affected.
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 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 September 30, 2026, the capital ratios of OFG and the Bank continue to exceed the minimum requirements for being "well-capitalized" under the Basel III capital rules.
The risk-based capital ratios presented in Table 16 include CET1, tier 1 capital, total capital and leverage capital as of September 30, 2026, and December 31, 2025, and are calculated based on the Basel III capital rules related to the measurement
of capital, risk-weighted assets and average assets. The following are OFG's consolidated capital, dividends, and stock data, including capital ratios under the Basel III capital rules at September 30, 2026, and December 31, 2025:
TABLE 16 - CAPITAL, DIVIDENDS AND STOCK DATA
September 30, December 31, Variance
2026 2025 %
(Dollars in thousands, except per share data)
Capital data:
Stockholders' equity $ 1,336,876 $ 1,390,005 (3.8)%
Regulatory Capital Ratios data:
Common equity tier 1 capital ratio 14.10 % 13.97 % 0.9 %
Minimum common equity tier 1 capital ratio required 4.50 % 4.50 % - %
Actual common equity tier 1 capital $ 1,390,580 1,318,633 5.5%
Minimum common equity tier 1 capital required $ 443,867 424,620 4.5%
Minimum capital conservation buffer required (2.5%) $ 246,593 235,900 4.5%
Excess over regulatory requirement $ 700,120 658,113 6.4%
Risk-weighted assets $ 9,863,708 9,436,010 4.5%
Tier 1 risk-based capital ratio 14.10 % 13.97 % 0.9 %
Minimum tier 1 risk-based capital ratio required 6.00 % 6.00 % - %
Actual tier 1 risk-based capital $ 1,390,580 $ 1,318,633 5.5%
Minimum tier 1 risk-based capital required $ 591,822 $ 566,161 4.5%
Minimum capital conservation buffer required (2.5%) $ 246,593 235,900 4.5%
Excess over regulatory requirement $ 552,165 $ 516,572 6.9%
Risk-weighted assets $ 9,863,708 $ 9,436,010 4.5%
Total risk-based capital ratio 15.36 % 15.24 % 0.8 %
Minimum total risk-based capital ratio required 8.00 % 8.00 % - %
Actual total risk-based capital $ 1,514,680 $ 1,437,596 5.4%
Minimum total risk-based capital required $ 789,097 $ 754,881 4.5%
Minimum capital conservation buffer required (2.5%) $ 246,593 235,900 4.5%
Excess over regulatory requirement $ 478,990 $ 446,815 7.2%
Risk-weighted assets $ 9,863,708 $ 9,436,010 4.5%
Leverage capital ratio 11.44 % 10.71 % 6.8 %
Minimum leverage capital ratio required 4.00 % 4.00 % - %
Actual tier 1 capital $ 1,390,580 $ 1,318,633 5.5%
Minimum tier 1 capital required $ 486,292 $ 492,568 (1.3)%
Excess over regulatory requirement $ 904,288 $ 826,065 9.5%
Total equity to total assets 11.01 % 11.15 % (1.3) %
Tangible common equity to total assets (non-GAAP, see Table 17) 10.26 % 10.40 % (1.3) %
Total equity to risk-weighted assets 13.55 % 14.73 % (8.0) %
Stock data:
Outstanding common shares 42,004,638 43,257,167 (2.9)%
Book value per common share $ 31.83 $ 32.13 (0.9)%
Tangible book value per common share (non-GAAP, see Table 17) $ 29.66 $ 29.96 (1.0)%
Market price at end of period $ 50.08 $ 40.98 22.2%
Market capitalization at end of period $ 2,103,592 $ 1,772,679 18.7%
The following table presents OFG's capital adequacy information under the Basel III capital rules:
September 30, December 31, Variance
2026 2025 %
(Dollars in thousands)
Risk-based capital:
Common equity tier 1 capital $ 1,390,580 $ 1,318,633 5.5%
Tier 1 capital 1,390,580 1,318,633 5.5%
Additional Tier 2 capital 124,100 118,963 4.3%
Total risk-based capital $ 1,514,680 $ 1,437,596 5.4%
Risk-weighted assets:
Balance sheet items $ 9,104,672 $ 8,798,325 3.5%
Off-balance sheet items 759,036 637,685 19.0%
Total risk-weighted assets $ 9,863,708 $ 9,436,010 4.5%
Ratios:
Common equity tier 1 capital (minimum required, including capital conservation buffer - 7%) 14.10 % 13.97 % 0.9%
Tier 1 capital (minimum required, including capital conservation buffer - 8.5%) 14.10 % 13.97 % 0.9%
Total capital (minimum required, including capital conservation buffer - 10.5%) 15.36 % 15.24 % 0.8%
Leverage ratio (minimum required - 4%) 11.44 % 10.71 % 6.8%
From December 31, 2025 to September 30, 2026, the leverage capital ratio increased from 10.71% to 11.44%, the tier 1 risk-based and common equity tier 1 capital ratios increased from 13.97% to 14.10%, and the total risk-based capital ratio increased from 15.24% to 15.36%. The increases in regulatory capital ratios reflected a $77.1 million increase in regulatory capital, partially offset by an increase in risk-weighted assets of $427.7 million. Regulatory capital increased mainly due to net income, partially offset by dividends and treasury stock repurchases. Risk-weighted assets increased mainly due to higher loan balances from originations, and an increase in deferred tax assets, primarily related to an investment in OBPEF, our private equity fund, during the period.
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 September 30, 2026, and December 31, 2025:
September 30, December 31, Variance
2026 2025 %
(Dollars in thousands)
Oriental Bank Regulatory Capital Ratios:
Common Equity Tier 1 Capital to Risk-Weighted Assets 13.33% 13.44% (0.8)%
Actual common equity tier 1 capital $ 1,306,828 $ 1,260,530 3.7%
Minimum capital requirement (4.5%) $ 441,243 $ 422,175 4.5%
Minimum capital conservation buffer requirement (2.5%) $ 245,135 $ 234,542 4.5%
Minimum to be well capitalized (6.5%) $ 637,351 $ 609,808 4.5%
Tier 1 Capital to Risk-Weighted Assets 13.33% 13.44% (0.8)%
Actual tier 1 risk-based capital $ 1,306,828 $ 1,260,530 3.7%
Minimum capital requirement (6%) $ 588,324 $ 562,900 4.5%
Minimum capital conservation buffer requirement (2.5%) $ 245,135 $ 234,542 4.5%
Minimum to be well capitalized (8%) $ 784,432 $ 750,533 4.5%
Total Capital to Risk-Weighted Assets 14.59% 14.70% (0.7)%
Actual total risk-based capital $ 1,430,208 $ 1,378,822 3.7%
Minimum capital requirement (8%) $ 784,432 $ 750,533 4.5%
Minimum capital conservation buffer requirement (2.5%) $ 245,135 $ 234,542 4.5%
Minimum to be well capitalized (10%) $ 980,541 $ 938,167 4.5%
Total Tier 1 Capital to Average Total Assets 10.85% 10.31% 5.2%
Actual tier 1 capital $ 1,306,828 $ 1,260,530 3.7%
Minimum capital requirement (4%) $ 481,972 $ 489,159 (1.5)%
Minimum to be well capitalized (5%) $ 602,464 $ 611,449 (1.5)%
Non-GAAP financial measures
OFG reports certain financial measures that are not in accordance with GAAP. These non-GAAP financial measures are provided as supplemental information to the financial measures in this report that are calculated and presented in accordance with GAAP.
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. Below is a reconciliation of non-GAAP financial measures.
TABLE 17 - RECONCILIATION OF TANGIBLE COMMON EQUITY AND TANGIBLE ASSETS (NON-GAAP)
The following table presents a reconciliation of OFG's total stockholders' equity to tangible common equity and total assets to tangible assets and their respective capital ratios and measures at September 30, 2026, and December 31, 2025:
September 30, December 31, Variance
2026 2025 %
(Dollars in thousands, except share or per share data)
Total stockholders' equity $ 1,336,876 $ 1,390,005 (3.8) %
Goodwill (84,241) (84,241) - %
Other intangible assets (6,898) (9,854) (30.0) %
Total tangible common equity (non-GAAP) $ 1,245,737 $ 1,295,910 (3.9) %
Total assets $ 12,144,479 12,465,657 (2.6) %
Goodwill (84,241) (84,241) - %
Core deposit intangible (5,283) (7,547) (30.0) %
Customer relationship intangible (1,615) (2,307) (30.0) %
Total tangible assets (non-GAAP) $ 12,053,340 $ 12,371,562 (2.6) %
Tangible common equity to total assets (non-GAAP) 10.26 % 10.40 % (1.3) %
Tangible common equity to tangible assets (non-GAAP) 10.34 % 10.47 % (1.2) %
Common shares outstanding at end of period
42,004,638 43,257,167 (2.9) %
Tangible book value per common share (non-GAAP) $ 29.66 $ 29.96 (1.0) %
These capital ratios and measures 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 these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations. They should not 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 these measures may differ from that of other companies reporting measures with similar names.
Tangible common equity to tangible assets decreased from 10.47% to 10.34%, reflecting a decrease in total stockholders' equity, mainly related to market value adjustments of investment securities available-for-sale.
TABLE 18 - RECONCILIATION OF OTHER NON-GAAP MEASURES
The following table presents a reconciliation of OFG's other non-GAAP measures for the quarters and nine-month periods ended September 30, 2026, and 2025:
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2026 2025
Variance %
2026 2025
Variance %
(Dollars in thousands)
Net interest income $ 153,570 $ 154,724 (0.7) % $ 464,682 $ 455,723 2.0 %
Total banking and financial service revenues 32,178 29,256 10.0 % 97,150 88,714 9.5 %
Core revenues (non-GAAP) $ 185,748 $ 183,980 1.0 % $ 561,832 $ 544,437 3.2 %
Other non-interest income 466 2,197 (78.8) % 684 2,686 (74.5) %
Non-interest expense 96,265 96,548 (0.3) % 293,800 284,802 3.2 %
Pre-provision net revenues (non-GAAP)
$ 89,949 $ 89,629 0.4 % $ 268,716 $ 262,321 2.4 %
Net income available to common shareholders $ 56,611 $ 51,838 9.2 % $ 169,325 $ 149,210 13.5 %
Average stockholders' equity
$ 1,418,891 $ 1,361,055 4.2 % $ 1,409,699 $ 1,323,866 6.5 %
Average intangible assets (91,489) (95,756) (4.5) % (92,466) (96,980) (4.7) %
Average tangible common equity (non-GAAP) $ 1,327,402 $ 1,265,299 4.9 % $ 1,317,233 $ 1,226,886 7.4 %
Average return on tangible common equity (non-GAAP) 17.06% 16.39% 4.1 % 17.14% 16.22% 5.7 %
Common Stock
OFG's common stock is traded on the NYSE under the symbol "OFG". At September 30, 2026, and December 31, 2025, OFG's market capitalization for its outstanding common stock was $2.104 billion ($50.08 per share) and $1.773 billion ($40.98 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
2026
September 30, 2026 $ 53.95 $ 48.82 $ 0.35
June 30, 2026 $ 49.31 $ 41.09 $ 0.35
March 31, 2026 $ 42.66 $ 37.15 $ 0.35
2025
December 31, 2025 $ 43.38 $ 38.21 $ 0.30
September 30, 2025 $ 45.47 $ 41.72 $ 0.30
June 30, 2025 $ 43.28 $ 34.78 $ 0.30
March 31, 2025 $ 44.74 $ 38.85 $ 0.30
2024
December 31, 2024 $ 46.72 $ 38.97 $ 0.25
September 30, 2024 $ 46.84 $ 36.77 $ 0.25
June 30, 2024 $ 38.16 $ 33.37 $ 0.25
March 31, 2024 $ 38.51 $ 34.78 $ 0.25
In January 2026, the Board approved a $200.0 million stock repurchase program in addition to the $100.0 million stock repurchase program approved in April 2025. The shares of common stock repurchased are held by OFG as treasury shares. OFG records treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.
OFG did not repurchase any shares of common stock during the nine-month periods ended September 30, 2026 and 2025, other than through its publicly announced stock repurchase programs.
At September 30, 2026, the estimated remaining number of shares that may be purchased under the repurchase programs is 3,595,531 and was calculated by dividing the remaining balance of $180.1 million by $50.08 (closing price of OFG's common stock September 30, 2026).
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