OFG BANCORP – 10-K – 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 "Note about Forward-Looking Statements,"
Part I, Item 1 "Business," Part I, Item 1A "Risk Factors," and our consolidated
financial statements and related notes included under Item 8 of this annual
report on Form 10-K. We have omitted discussion of 2020 results where it would
be redundant to the discussion previously included in Item 7 of our 2021 annual
report on Form 10-K. For our discussion and analysis of our financial condition
and results of operations for the year ended December 31, 2021 compared to the
year ended December 31, 2020, see Part II, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of our 2021 annual
report on Form 10-K.

RECENT DEVELOPMENTS

Natural Events

During 2022, OFG was impacted by the effects of Hurricane Fiona, which caused
power outages, widespread flooding, water and communication services
interruptions, property damages in some areas, and disrupted economic activity
throughout Puerto Rico. Although OFG's business operations were temporarily
disrupted by the damages to Puerto Rico's critical infrastructure, OFG's digital
channels, core banking and electronic funds transfer systems continued to
function uninterrupted during and after the hurricane, and within days after the
hurricane, OFG was able to open its main offices and many of its branches and
automated teller machines ("ATMs") in addition to its digital and phone trade
channels, and shortly after, business activity began to return to pre-Hurricane
Fiona levels.

Banking service revenues for 2022 were impacted due to Hurricane Fiona's
temporary effect on economic activity and OFG's decision to provide relief to
our clients by waiving late charges and other fees. OFG incurred $1.6 million in
expenses related to this event. Also, based on our assessments for the impact of
the hurricane on our credit portfolio, 2022 results included higher qualitative
reserves mainly from $1.1 million in loan loss provision, pre-tax. In addition,
as a result of the effects of Hurricane Fiona and Puerto Rico being declared a
disaster zone by local and federal authorities, OFG granted loan payment
accommodations to certain qualified borrowers in order to provide them with
flexibility to address the hurricane's immediate impact. Furthermore, for its
business banking segment, OFG granted loans up to $50,000 with
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three months of interest-only payments followed by up to thirty-three payments
of principal and interest. At December 31, 2022, the total loans outstanding
under the payment accommodations program amounted to $33.1 million.

Capital Actions

2022 Capital Actions

In January 2022, OFG announced that its Board of Directors approved the increase
of its regular quarterly cash dividend to $0.15 per common share from $0.12 per
share, beginning on the quarter ended March 31, 2022. Subsequently, in July
2022, OFG announced that its Board of Directors approved a new increase of its
regular quarterly cash dividend to $0.20 per common share, beginning on the
quarter ended September 30, 2022.

In January 2022, the Board of Directors also approved a new stock repurchase
program to purchase $100 million of its common stock in the open market. At
December 31, 2022, OFG has repurchased 2.4 million shares of common stock for
$64.1 million. OFG expects to continue to execute this repurchase program to the
extent favorable market opportunities exist at the relevant point in time.

Announcement of Forthcoming 2023 Capital Actions

In January 2023, OFG announced that its Board of Directors approved the increase
of its regular quarterly cash dividend to $0.22 per common share from $0.20 per
share, beginning on the quarter ending March 31, 2023.

Economic Conditions

Since March 2020, the Covid-19 pandemic has affected our communities and the way
we do business, as well as economic activity globally, nationally and locally.
Within the last year, as restrictions related to the pandemic eased in the
United States, employment increased and pent-up demand was released, which
together with Covid-19 lockdowns in foreign jurisdictions created global supply
chain issues and shortages of goods, which in turn triggered price inflation. In
an effort to address inflation, the Federal Open Market Committee of the Board
of Governors of the Federal Reserve System ("FRB") has tightened monetary policy
and increased the federal funds rate seven times during fiscal year 2022, with
the last increase of 2022 made on December 14, 2022 of 50 basis points. In
February 1, 2023, the FRB furthered increased federal funds rate by 25 basis
points updating the federal funds target rate range between 4.50% to 4.75% and
FRB officials forecast the federal funds target rate will continue to increase
during 2023. In addition, the FRB has also scaled back its asset purchase
program that provided liquidity to the bond markets.

Adding to economic uncertainty and increased inflationary pressures are military
actions taken by Russia against Ukraine commencing in February 2022, which have
added further stress to existing supply chain challenges and placed upward price
pressure on commodities such as oil and natural gas, which have further
exacerbated the global macroeconomic uncertainty and increased inflationary
pressures. However, we believe that the macroeconomic outlook for Puerto Rico
continues to show strength, notwithstanding the effects of Hurricane Fiona.
Recent data show that the Puerto Rico Economic Activity Index, as published by
the Economic Development Bank for Puerto Rico, has been increasing for over a
year which we believe signals a stable upward trend as employment gains remains
solid. Our commercial clients are experiencing a higher demand for their
products and services. Consumer demand also remains strong and, following five
years of bankruptcy proceedings under Title III of PROMESA, the Puerto Rico
central government has begun to implement the plan of adjustment approved by the
Title III bankruptcy court on January 18, 2022, setting the stage for its exit
from bankruptcy. Nevertheless, there remain several public instrumentalities
whose debt obligations have not been restructured under the mechanisms provided
by PROMESA and any recovery of the Puerto Rico economy could be adversely
impacted by macroeconomic developments within the United States and across the
globe. The global macroeconomic outlook continues to remain uncertain and, at
this time, OFG cannot reasonably estimate the scope, term or intensity of any
possible adverse impact on our financial position, operations or liquidity,
resulting from economic disruption and uncertainty related to Covid-19 variants,
economic recessions, trade and supply chain disruption, continuing inflationary
pressures, labor shortages, armed conflicts such as the ongoing military actions
against Ukraine, and the uncertainty of the timing and extent of potential
actions that might be taken by the FRB. However, we believe that the high levels
of reconstruction and stimulus funds being channeled towards the Puerto Rico
economy are mitigating the foregoing negative effects.



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LIBOR and Other Benchmark Rates

In July 2017, the Chief Executive of the Financial Conduct Authority ("FCA")
announced that the FCA intends to stop persuading or compelling banks to submit
rates for the calculation of LIBOR after 2021. However, the administrator of
LIBOR has proposed to extend publication of the most commonly used U.S. Dollar
LIBOR settings until June 30, 2023 and has ceased publishing other LIBOR
settings on December 31, 2021.

Although OFG believes that its exposure to LIBOR is not material, as it
represents only 3.1% of total assets, LIBOR-based contracts that will be
impacted by the cessation of LIBOR have been under review to ensure they contain
adequate fallback language. OFG has also been proactively working to transition
to alternative reference rates ("ARR") and/or fallback language in both existing
as well as new contracts to prepare for the cessation of LIBOR. Furthermore,
management has established a LIBOR transition team to lead OFG in the execution
of its project plan and is monitoring the development and adoption of Secured
Overnight Financing Rate ("SOFR") alternatives as well as other credit sensitive
ARR and their liquidity in the market. OFG is also working towards business and
system readiness to originate SOFR-based loans.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The accounting and reporting policies followed by OFG conform with GAAP and
general practices within the financial services industry. The preparation of
these financial statements requires our management to make judgments,
assumptions and estimates that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosures of contingent assets
and liabilities. We evaluate these judgments, assumptions and estimates for
changes that would affect the reported amounts. These estimates are based on
management's historical industry experience and on various other judgments and
assumptions that are believed to be reasonable under the circumstances. Actual
results may differ from these judgments, assumptions and estimates. The
following critical accounting estimate involves significant estimation
uncertainty that has or is reasonably likely to have a material impact on our
financial condition or results of operations. A discussion of OFG's significant
accounting policies, including further discussion of the accounting estimate
described below, can be found in "Note 1- Summary of Significant Accounting
Policies" to the consolidated financial statements and should be read in
conjunction with this section.

Allowance for Credit Losses related to loans collectively evaluated for
impairment

The most critical and complex accounting estimate is associated with the
determination of the allowance for credit losses. The provision for credit
losses charged to current operations is based on this determination. The
allowance for credit losses represents management's best estimate deemed
appropriate to provide current expected future credit losses in the portfolio as
of the date of the reporting period. OFG adopted ASU No. 2016-13, Financial
Instruments - Credit Losses (ASC Topic 326) as of January 1, 2020. The total
allowance for credit losses as of December 31, 2022 and 2021, which included
loans evaluated on a collective basis, was calculated consistent with our
adopted policy.

OFG's management evaluates the adequacy of the allowance for credit losses on a
quarterly basis following a systematic methodology in order to provide for
inherent risks in the loan portfolio. In developing its assessment of the
adequacy of the allowance for credit losses, OFG must rely on estimates and
exercise judgment regarding matters where the ultimate outcome is unknown, such
as economic developments affecting specific customers, industries or markets.
Other factors that can affect management's estimates are the key drivers used
for each macroeconomic scenario, the macroeconomic scenarios selected, and the
weighting given to each scenario, among others. Significant changes in the
financial condition of individual borrowers, in economic conditions, in
historical loss experience, and in the condition of the various markets in which
collateral may be sold may all affect the required level of the allowance for
credit losses. Consequently, the business, financial condition, liquidity,
capital and results of operations could also be affected.
The Allowance for Credit Losses ("ACL") estimation requires management to use
relevant forward-looking economic forecasts, by using variables such as
unemployment rate, gross national product, retail sales, and house price index,
including in the application of reasonable and supportable forecasts. ACL
estimations are performed by aggregating loans with similar risk
characteristics.

OFG applied a discounted cash flow (DCF) method for non-purchased credit
deteriorated loans (non-PCD) and an undiscounted cash flow (UDCF) method for
purchased credit deteriorated (PCD) loans to determine the allowance for credit
losses for loans collectively measured for impairment, except for credit cards
and overdrafts which utilize a remaining life methodology. For non-PCD, the
expected cash flows are calculated for each loan and discounted using the
effective yield. The discounted amount of expected cash flows is compared to the
amortized cost, and any shortfall is recorded as a reserve. For PCD loans, the
expected cash flows are calculated for each loan pool, pool reserve is
calculated
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by the aggregation of total loss from the UDCF. Expected cash flows are resulted
from applying the contractual payment term, probability of defaults, loss given
defaults, and prepayment assumptions.

Management's judgment is required in selecting the macroeconomic scenarios and
the weighting of the economic scenarios, which consist of baseline and moderate
recession scenarios, giving more weight to the baseline scenario, except for the
US loan segment that used the same level of probability in both economic
scenarios, as of December 31, 2022. Management selects the macroeconomic
forecast that is most reflective of expectations at that point in time. The
applicability of qualitative adjustments includes adjustments of inherent risk
not captured by the quantitative model.

OFG's sensitivity analysis does not represent management's view of expected
credit losses at December 31, 2022. OFG evaluated sensitivities by applying 100%
weight to baseline and moderate recession scenarios. The impact of assigning a
100% weight to the baseline scenario was a hypothetical decrease of 3% to the
collective ACL, and the impact of assigning a 100% weight to the moderate
recession scenario was a hypothetical increase of 6% to the collective ACL.
These hypothetical sensitivities do not incorporate the impact of management's
judgment for qualitative factors applied in the current ACL for loans. It is
possible that others performing similar sensitivity analyses could reach
different conclusions or results. The sensitivity analysis excludes the
allowance for credit losses for off-balance sheet credit exposures.

For a detailed description of the principal factors used to determine the
allowance for credit losses related to loans collectively evaluated for
impairment and for the principal enhancement's management made to its
methodology, please refer to "Note 1- Summary of Significant Accounting
Policies" and "Note 6 - Loans" to the consolidated financial statements.

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FINANCIAL HIGHLIGHTS

We believe that Puerto Rico businesses and consumers remain in good financial
shape. We look forward to a year of continued progress in 2023, keeping a
watchful eye to uncertainties from FRB interest rate actions, inflation, and the
forecasted mainland recession. We owe a debt of thanks to our team members for
their continued dedication, tireless commitment to sales and service, and
purposeful drive to bring financial progress to our customers and the
communities we serve every day.

Fourth Quarter of 2022:

The fourth quarter of 2022 reflected total core revenue growth of 7.3% when
compared to the third quarter of 2022. Key performance metrics improved, with
return on average assets of 1.86%, return on average tangible common
stockholders' equity of 20.36%, and an efficiency ratio of 54.45%. Tangible Book
Value per share increased to $19.56.

Earnings per share ("EPS") diluted was $0.97 compared to $0.87 in the third
quarter of 2022 and $0.66 in the fourth quarter of 2021. Total core revenues
were $168.3 million compared to $156.8 million in the third quarter of 2022 and
$141.0 million in the fourth quarter of 2021.

Net interest income of $135.3 million compared to $126.5 million in the third
quarter of 2022 and $104.2 million in the fourth quarter of 2021. Net interest
margin expanded to 5.69% from 5.23% in the third quarter of 2022, reflecting FRB
interest rate increases, along with increased investment and loan balances.

Interest income of $145.7 million compared to $134.7 million in the third
quarter of 2022 and $112.6 million in the fourth quarter of 2021. Compared to
the third quarter of 2022, the fourth quarter of 2022 benefited from higher
yields on increased average balances of loans and investment securities.

Total interest expense of $10.4 million compared to $8.2 million in the third
quarter of 2022 and $8.4 million in the fourth quarter of 2021. Compared to the
third quarter of 2022, the fourth quarter of 2022 reflected an 11-basis point
cost-increase, partially offset by a 1.8% balance decline.

Banking and financial service revenues of $33.0 million compared to $30.3
million in the third quarter of 2022 and $36.8 million in the fourth quarter of
2021. The fourth quarter of 2022 reflected higher electronic banking activity
and higher gain on sale of mortgages compared to the third quarter of 2022,
which was impacted by the interruption of services due to Hurricane Fiona.

Pre-provision net revenues were $76.9 million compared to $69.6 million in the
third quarter of 2022 and $55.8 million in the fourth quarter of 2021.

Provision for credit losses of $8.8 million compared to $7.1 million in the
third quarter of 2022 and $7.2 million in the fourth quarter of 2021. The fourth
quarter of 2022 reflected $9.2 million in higher provision due to increased loan
volume and a net release of $0.4 million mainly related to reduction in the
qualitative adjustment due to the improved macro-economic environment in Puerto
Rico as well as stable delinquency trends.

Credit quality: Net charge offs were $11.2 million compared to $11.3 million in
the third quarter of 2022 and $32.5 million in the fourth quarter of 2021. The
fourth quarter of 2022 reflected net-charge offs of $5.4 million for auto loans,
$4.0 million for consumer loans, and $3.3 million for a commercial loan
previously reserved. Total delinquency rates and the non-performing loan rate
for the fourth quarter of 2022 fell from the third quarter of 2022. Net
charge-offs for the fourth quarter of 2021 reflected the decision to sell $65.5
million of past due loans.

Non-interest expenses were $91.6 million compared to $87.5 million in the third
quarter of 2022 and $86.5 million in the fourth quarter of 2021. Compared to the
third quarter of 2022, the fourth quarter of 2022 reflected higher compensation
expense due to hourly salary increases implemented in the previous quarter,
increases in year-end performance bonuses, and added technology staffing;
increased amortization related to new digital projects; and reduced Hurricane
Fiona-related expenses.

Loans held for investment were $6.84 billion at December 31, 2022 compared to
$6.68 billion at September 30, 2022 and $6.40 billion at December 31, 2021.
Loans increased by 2.3% from September 30, 2022 and 6.8% from December 31, 2021.
Compared to the third quarter of 2022, the fourth quarter of 2022 loan growth
reflected increased balances of commercial, auto, and consumer loans.

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New loan origination was $616.4 million compared to $511.3 million in the third
quarter of 2022 and $632.7 million in the fourth quarter of 2021. Compared to
the third quarter of 2022, the fourth quarter of 2022 originations increased
20.5%, reflecting strong production of commercial loans in Puerto Rico and the
mainland United States, and continued high levels of auto loans at a record
$221.4 million.

Total investments of $1.97 billion at December 31, 2022 compared to $2.04
billion at September 30, 2022 and $895.8 million at December 31, 2021.
Investments declined by 3.5% from the third quarter of 2022 due to sales of U.S.
Treasury securities and paydowns of mortgage-backed securities.

Customer deposits of $8.56 billion at December 31, 2022 compared to $8.84
billion at September 30, 2022 and $8.59 billion at December 31, 2021. Core
deposits declined by $286.8 million from September 30, 2022 reflecting lower
account balances of approximately $115 million in retail and of $172 million in
commercial, including $59 million in public funds.

Total assets of $9.82 billion at December 31, 2022 compared to $10.06 billion at
September 30, 2022 and $9.90 billion at December 31, 2021.

Capital: CET1 ratio was 13.64% at December 31, 2022 compared to 13.38% at
September 30, 2022 and 13.77% at December 31, 2021. The change from the third
quarter of 2022 reflected increased retained earnings and other comprehensive
income. Tangible book value per share was $19.56 at December 31, 2022 compared
to $18.46 at September 30, 2022 and $19.08 at December 31, 2021.

Year Ended 2022:

EPS diluted was $3.44 for 2022 compared to $2.81 for 2021. Total core revenues
were $607.8 million in 2022 compared to $536.6 million in 2021. The fourth
quarter of 2022 annual insurance commission recognition of $1.0 million was $1.2
million lower than a year ago due to Hurricane Fiona-related claims.
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Selected income statement and balance sheet data and key performance indicators
are presented in the tables below:

                                             OFG Bancorp
                                          FINANCIAL OVERVIEW
                             YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020
                                                                                           Year Ended December 31,
                                                                                                                2022                  2021                    2020
EARNINGS DATA:                                                                                                (In thousands, except per share data)
Interest income                                                                                           $        515,573       $      449,199          $      473,347
Interest expense                                                                                                    33,493               41,829                  64,915
Net interest income                                                                                                482,080              407,370                 408,432
Provision for credit losses                                                                                         24,119                  221                  92,672
Net interest income after provision for credit
losses                                                                                                             457,961              407,149                 315,760
Non-interest income                                                                                                131,690              133,210                 124,352
Non-interest expenses                                                                                              345,546              325,756                 345,286
Income before taxes                                                                                                244,105              214,603                  94,826
Income tax expense                                                                                                  77,866               68,452                  20,499
Net income                                                                                                         166,239              146,151                  74,327
Less: dividends on preferred stock                                                                                       -              (1,255)         

(6,512)

Income available to common shareholders                                                                   $        166,239       $      144,896          $       67,815
PER SHARE DATA:
Basic                                                                                                     $           3.46       $         2.85          $         1.32
Diluted                                                                                                   $           3.44       $         2.81          $         1.32
Average common shares outstanding                                                                                   48,033               50,956         

51,358

Average common shares outstanding and equivalents                                                                   48,436               51,370         

51,555

Cash dividends declared per common share                                                                  $           0.70                 0.40                    0.28
Cash dividends declared on common shares                                                                  $         33,593               20,505         

14,381

PERFORMANCE RATIOS:
Return on average assets (ROA)                                                                                  1.64     %            1.42    %               0.77    %
Return on average tangible common stockholders'
equity                                                                                                         17.98     %           15.70    %               8.10    %
Return on average common equity (ROE)                                                                          15.95     %           13.80    %               6.96    %
Equity-to-assets ratio                                                                                         10.62     %           10.80    %              11.05    %
Efficiency ratio                                                                                               56.85     %           60.70    %              66.49    %
Interest rate spread                                                                                            5.02     %            4.18    %               4.51    %
Interest rate margin                                                                                            5.05     %            4.20    %               4.55    %


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                                                                      December 31,
                                                           2022                      2021                         2020
PERIOD END BALANCES AND CAPITAL RATIOS:                  (In thousands, except per share data)
Investments and loans
Investment securities                             $            1,971,522       $         895,818             $       458,700
Loans, net                                                     6,723,236               6,329,311                   6,501,259
Total investments and loans                       $            8,694,758       $       7,225,129             $     6,959,959
Deposits and borrowings
Deposits                                          $            8,568,364       $       8,603,118             $     8,415,640

Other borrowings                                                  27,034                  64,571                     102,351
Total deposits and borrowings                     $            8,595,398       $       8,667,689             $     8,517,991
Stockholders' equity
Preferred stock                                   $                    -       $               -             $        92,000
Common stock                                                      59,885                  59,885                      59,885
Additional paid-in capital                                       636,793                 637,061                     622,652
Legal surplus                                                    133,901                 117,677                     103,269
Retained earnings                                                516,371                 399,949                     300,096
Treasury stock, at cost                                        (211,135)               (150,572)                   (102,949)
Accumulated other comprehensive (loss) income                   (93,409)                   5,160                      11,022
Total stockholders' equity                        $            1,042,406       $       1,069,160             $     1,085,975
Per share data
Book value per common share                       $                21.91       $           21.54             $         19.54
Tangible book value per common share              $                19.56       $           19.08             $         16.97
Market price                                      $                27.56       $           26.56             $         18.54
Capital ratios
Leverage capital                                              10.36    %               9.69    %                  10.30    %
Common equity Tier 1 capital                                  13.64    %              13.77    %                  13.08    %
Tier 1 risk-based capital                                     13.64    %              14.27    %                  14.78    %
Total risk-based capital                                      14.89    %              15.52    %                  16.04    %
Financial assets managed
Trust assets managed                              $            2,334,672       $       3,758,895             $     3,476,491
Broker-dealer assets gathered                                  2,172,116               2,466,004                   2,474,234
Total assets managed                              $            4,506,788       $       6,224,899             $     5,950,725



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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 2022 and 2021.

TABLE 1 - ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

                                              Interest                                           Average rate                                                Average balance
                                December 2022           December 2021             December 2022                December 2021                 December 2022                    December 2021
                                                                                                     (Dollars in thousands)

A - TAX EQUIVALENT SPREAD
Interest-earning assets       $      515,573          $      449,199                         5.40  %                      4.64  %       $              9,544,055       $                 9,688,890
Tax equivalent adjustment             14,679                   9,350                         0.15  %                      0.10  %                           -                             -
Interest-earning assets - tax
equivalent                           530,252                 458,549                         5.55  %                      4.74  %                      9,544,055                         9,688,890
Interest-bearing liabilities          33,493                  41,829                         0.38  %                      0.46  %                      8,902,427                         9,043,126
Tax equivalent net interest
income / spread                      496,759                 416,720                         5.17  %                      4.28  %                     641,628                       645,764
Tax equivalent interest rate
margin                                                                                       5.32  %                      4.38  %
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities                 40,722                  12,180                         2.55  %                      1.78  %                      1,594,662                           684,476
Interest bearing cash and
money market investments              14,689                   3,231                         1.14  %                      0.13  %                      1,291,633                         2,466,926
Total investments                     55,411                  15,411                         1.92  %                      0.49  %                      2,886,295                         3,151,402
Non-PCD loans
Mortgage                              36,881                  40,270                         5.42  %                      5.27  %                        680,768                           764,153
Commercial                           138,715                 115,684                         5.90  %                      5.42  %                      2,349,114                         2,134,805
Consumer                              58,181                  45,669                        11.28  %                     11.21  %                        515,781                           407,403
Auto loans and leases                147,557                 136,445                         8.17  %                      8.45  %                      1,805,976                         1,614,825
Total Non-PCD loans                  381,334                 338,068                         7.13  %                      6.87  %                      5,351,639                         4,921,186
PCD loans
Mortgage                              66,610                  77,252                         6.02  %                      5.77  %                      1,106,708                         1,338,062
Commercial                            11,112                  16,213                         5.86  %                      6.29  %                        189,606                           257,820
Consumer                                 155                     238                        14.03  %                     14.98  %                          1,102                             1,592
Auto loans and leases                    951                   2,017                        10.94  %                     10.71  %                          8,705                            18,828
Total PCD loans                       78,828                  95,720                         6.04  %                      5.92  %                      1,306,121                         1,616,302
Total loans (1)                      460,162                 433,788                         6.91  %                      6.64  %                      6,657,760                         6,537,488
Total interest-earning assets        515,573                 449,199                         5.40  %                      4.64  %                      9,544,055                         9,688,890


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                                              Interest                                         Average rate                                          Average balance
                               December 2022          December 2021             December 2022                December 2021              December 2022              December 2021
                                                                                              (Dollars in thousands)
Interest-bearing liabilities:
Deposits:
NOW Accounts                        11,291                   9,179                         0.41  %                      0.35  %                2,761,653                   2,623,358
Savings and money market             6,470                   7,149                         0.28  %                      0.32  %                2,306,607                   2,233,824
Time deposits                        7,943                  15,130                         0.69  %                      1.01  %                1,143,469                   1,499,457
Total core deposits                 25,704                  31,458                         0.41  %                      0.49  %                6,211,729                   6,356,639
Brokered deposits                       35                     206                         0.30  %                      0.80  %                   11,366                      25,664
                                    25,739                  31,664                         0.41  %                      0.50  %                6,223,095                   6,382,303
Non-interest bearing deposits            -                       -                            -  %                         -  %                2,647,871                   2,566,924
Fair value premium and core
deposit intangible
amortizations                        6,500                   7,350                            -  %                         -  %                        -                           -
Total deposits                      32,239                  39,014                         0.36  %                      0.44  %                8,870,966                   8,949,227
Borrowings:

Advances from FHLB and other
borrowings                             733                   1,641                         2.67  %                      2.84  %                   27,497                      57,816
Subordinated capital notes             521                   1,174                        13.15  %                      3.25  %                    3,964                      36,083
Total borrowings                     1,254                   2,815                         3.99  %                      3.00  %                   31,461                      93,899
Total interest-bearing
liabilities                         33,493                  41,829                         0.38  %                      0.46  %                8,902,427                   9,043,126

Net interest income / spread   $   482,080          $      407,370                         5.02  %                      4.18  %
Interest rate margin                                                                       5.05  %                      4.20  %
Excess of average
interest-earning assets over
average interest-bearing
liabilities                                                                                                                           $          641,628       $             645,764
Average interest-earning
assets to average
interest-bearing liabilities
ratio                                                                                                                                          107.21  %                   107.14  %

(1) 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.

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C - CHANGES IN NET INTEREST INCOME DUE TO:

                                                              Volume             Rate              Total
                                                                            (In thousands)
Interest Income:
Investment securities                                       $ 22,705          $  5,837          $ 28,542
Interest-bearing cash and money market investments            (2,230)           13,688            11,458
Loans                                                          9,220            17,154            26,374
Total interest income                                         29,695            36,679            66,374
Interest Expense:
NOW Accounts                                                     503             1,609             2,112
Savings and money market                                         227              (906)             (679)
Time deposits                                                 (3,346)           (3,841)           (7,187)
Brokered deposits                                                (81)              (90)             (171)
Fair value premium and core deposit intangible
amortizations                                                      -              (850)             (850)

Advances from FHLB and other borrowings                         (814)              (94)             (908)
Subordinated capital notes                                    (1,765)            1,112              (653)
Total interest expense                                        (5,276)           (3,060)           (8,336)
Net Interest Income                                         $ 34,971          $ 39,739          $ 74,710


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 the years ended December 31, 2022 and 2021

Net interest income of $482.1 million increased by $74.7 million from $407.4
million. Tax equivalent basis net interest income of $496.8 million increased
$80.1 million, or 19.2%, from $416.7 million.

Interest rate spread increased by 84 basis points to 5.02% from 4.18% and net
interest margin increased 85 basis points to 5.05% from 4.20%. This increase
reflects an increase of 76 basis points in the total average yield of
interest-earning assets and a reduction in the average cost of interest-bearing
liabilities of 8 basis points.

Net interest income was positively impacted by:

•A $28.5 million increase in interest income from investment securities,
primarily related to a higher average volume of $910.2 million from purchases of
FNMA and FHLMC certificates and US Treasury securities during 2022, which
resulted in an increase in interest income of approximately $22.7 million, and
higher yield by 77 basis points, which contributed to the increase in net
interest income by approximately $5.8 million;

•A $26.4 million increase in interest income from loans driven by: (i) higher
interest income from commercial loans of $17.9 million, primarily related to the
upward repricing of variable rate commercial loans and increased yields on new
loans originated during 2022; (ii) higher interest income from consumer loans of
$12.4 million mainly due to an increase in the average balance of this portfolio
of $107.9 million; and (iii) higher interest income from auto loans of $10.0
million reflecting higher originations during 2022; partially offset by a
decrease of $14.0 million in interest income from mortgage loans due to a
reduction of $314.7 million in the average balance of this portfolio;

•A $11.5 million increase in interest income from higher yield in lower balances
of interest-bearing cash and money market related to the increase in FRB fund
rates during 2022; and

•Lower interest expense by $8.3 million, reflecting a reduction of
$140.7 million in the average balances of total deposits and borrowings and a
reduction of 8 basis points in total cost of interest-bearing liabilities, which
resulted in an increase in net interest income of approximately $5.3 million and
$3.1 million, respectively.
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TABLE 2 - NON-INTEREST INCOME SUMMARY

                                                                  Year Ended December 31,
                                                                                  2022               2021               Variance %
                                                                      (In thousands)
Banking service revenue                                                       $  71,161          $  71,706                     (0.8) %
Wealth management revenue                                                        32,635             35,044                     (6.9) %
Mortgage banking activities                                                      21,929             22,508                     (2.6) %
Total banking and financial service revenue                                     125,725            129,258                     (2.7) %
Net (loss) gain on:
Sale of securities                                                                 (247)                19                 (1,400.0) %
Early extinguishment of debt                                                         42             (1,481)                  -102.8  %

Other non-interest income                                                         6,170              5,414                     14.0  %
Total non-interest income                                                     $ 131,690          $ 133,210                     (1.1) %

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 on sales of assets.

Comparison of the years ended December 31, 2022 and 2021

OFG recorded non-interest income in the amount of $131.7 million, compared to
$133.2 million, a decrease of 1.1%, or $1.5 million. The decrease in
non-interest income was mainly due to:

•A decrease of $2.4 million in wealth management revenue, primarily related to a
$1.4 million decrease in broker-dealer revenues, a $1.3 million decrease in
trust division fees from lower balances in assets under management, and a $1.2
million decrease in contingent annual commissions due to Hurricane Fiona-related
claims, partially offset by a $1.5 million increase in income from the
reinsurance business;

•A decrease of $579 thousand in mortgage-banking activities due to lower net
gain on sales of $6.0 million, driven by lower sales volume, offset by an
increase of $3.4 million related to higher gain in repurchased loans and higher
servicing fees by $1.4 million;

•A decrease of $545 thousand in banking service revenues, primarily related to
lower electronic banking charges by $1.3 million reflecting lower debit card
interchange fees from lower debit card utilization, lower merchant- related
income due to business disruptions caused by Hurricane Fiona during the third
quarter of 2022, and lower fees from account analysis services. This decrease
was partially offset by increases of $469 thousand in checking and savings
account fees and $255 thousand in credit life commissions associated to higher
consumer loan production during 2022; and

•A $247 thousand loss associated with the sale of $242.4 million US Treasury
securities during 2022.

These decreases were partially offset by:

•The effect in 2021 of a $1.5 million loss recorded for the early termination of
$33.3 million in Federal Home Loan Bank advances with an average cost of 2.98%;
and

•An increase of $756 thousand in other non-interest income, primarily related to
a $4.6 million gain recognized on the sale of a branch building during 2022;
partially offset by a $2.4 million warrant revenue and a $1.5 million receivable
recoveries written-off in the Scotiabank Acquisition, both recorded during 2021.


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TABLE 3 - NON-INTEREST EXPENSES SUMMARY

                                                                Year Ended December 31,
                                                                                2022              2021               Variance %
                                                                    (In thousands)
Compensation and employee benefits                                           $   142,930       $   133,442                    7.1  %
Occupancy, equipment and infrastructure costs                                     51,308            50,158                    2.3  %
Electronic banking charges                                                        39,554            37,202                    6.3  %
Information technology expenses                                                   21,891            18,965                   15.4  %
Professional and service fees                                                     24,842            20,080                   23.7  %
Taxes, other than payroll and income taxes                                        12,999            13,829                   -6.0  %
Insurance                                                                          9,898            10,092                   -1.9  %
Loan servicing and clearing expenses                                               9,161             7,604                   20.5  %
Advertising, business promotion, and strategic
initiatives                                                                        8,240             6,999                   17.7  %
Communication                                                                      4,296             4,555                   -5.7  %
Printing, postage, stationery and supplies                                         3,563             4,037                  -11.7  %
Director and investor relations                                                    1,125             1,135                   -0.9  %
Climate event expenses                                                             1,574                 -                  100.0  %
Foreclosed real estate and other repossessed assets
income, net                                                                      (2,074)           (3,007)                   31.0  %

Other                                                                             16,239            20,665                  -21.4  %
Total non-interest expenses                                                  $   345,546       $   325,756                    6.1  %
Relevant ratios and data:
Efficiency ratio                                                                56.85  %          60.70  %
Compensation and benefits to non-interest expense                               41.36  %          40.96  %
Compensation to average total assets owned                                       1.41  %           1.29  %
Number of employees end of year                                                 2,253             2,269
Average number of employees                                                     2,249             2,251
Average compensation per employee (in thousands)                             $  63.55          $  59.28
Average loans per average employee                                           $  2,960          $  2,904


Non-Interest Expenses

Comparison of the years ended December 31, 2022 and 2021

Non-interest expense was $345.5 million, representing an increase of 6.1%, or
$19.8 million, compared to $325.8 million. The increase in non-interest expenses
was mainly due to:

•Increase in compensation and employee benefits of $9.5 million, primarily
related to a one-time $1.3 million pandemic employee tax credit in the prior
year, increases in minimum hourly wages and annual salaries in the current year,
higher provision for bonuses and added technology staffing as part of OFG's
"Digital First" strategy;

•Increase in professional and service fees expenses of $4.8 million, reflecting
higher balances in compliance related expenses due to greater levels of business
activity and supervisory examination fees by $4.6 million and $1.1 million,
respectively, partially offset by lower balances in legal expenses related to
residential mortgage loan servicing by $792 thousand;

•Increase of $2.9 million in information technology expenses driven by higher
cloud computing expenses, cyber security expenses and new digital projects;

•Increase in electronic banking charges of $2.4 million mainly due to increases
of $1.1 million in debit and credit card billing fees, $820 thousand in
point-of-sale ("POS") and merchant-related fees, and $458 thousand in
ATM/Interactive Teller Machines ("ITMs")-related expenses due to higher
transaction volume and new ITMs in 2022;

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•Increase in climate event expenses of $1.6 million related to expenses incurred
by OFG to operate in disaster response mode and provide assistance to employees
and the communities it serves after Hurricane Fiona in 2022;

•Increase of $1.6 million in loan servicing and clearing expenses, including the
impact of $750 thousand related to the termination of a mortgage servicing
contract for loans in portfolio with an unpaid principal balance of $473.7
million;

•Increase of $1.2 million in advertising, business promotion, and strategic
initiatives driven by increase marketing campaigns and digital marketing efforts
made during 2022;

•Increase in occupancy, equipment and infrastructure costs by $1.2 million
reflecting higher balances in depreciation and amortization expenses due to new
digital projects placed in production during 2022 and software maintenance
expenses, partially offset by lower internet service expenses and rent expenses
related to branch consolidations;

•Lower foreclosed real estate and other repossessed assets income of $933
thousand reflecting lower gain on sales of foreclosed and other repossessed
assets, partially offset by lower credit-related expenses; and

•Increase in charitable contributions of $572 thousand.

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

•Decrease in claims and settlement accruals of $3.1 million in the broker-dealer
subsidiary;

•Decrease of $3.1 million in COVID-19-related expenses; and

•Decrease in taxes, other than payroll and income taxes by $830 thousand
reflecting lower balances in license tax expenses and property and municipal
taxes, as a result of changes in tax law.

The efficiency ratio was 56.85% and improved from 60.70%. The efficiency ratio
measures how much of OFG's revenues is used to pay operating expenses. OFG
computes its efficiency ratio by dividing non-interest expenses by the sum of
its net interest income and non-interest income, but excluding gains on the sale
of investment securities, derivatives gains or losses, other gains and losses,
and other income that may be considered volatile in nature. Management believes
that the exclusion of those items permits consistent comparability. Amounts
presented as part of non-interest income that are excluded from the efficiency
ratio computation for 2022 and 2021 amounted to $6.0 million and $4.0 million,
respectively.

Provision for Credit Losses

Comparison of the years ended December 31, 2022 and 2021

Provision for credit losses increased $23.9 million to $24.1 million from $221
thousand. The provision for credit losses for 2022 reflected a provision of
$25.9 million related to the growth in loan balances, a provision of
$11.8 million related to commercial-specific loan reserves due to certain
commercial loans placed in non-accrual status, and a provision of $1.9 million
for changes in the economic and loss rate models, offset by a $15.2 million
release associated with qualitative adjustment due to improvement in the
performance of the portfolios and in Puerto Rico's labor market and $288
thousand release in other miscellaneous reserves. The provision for credit
losses for 2021 reflected improvements in macro-economic scenarios and continued
improvement in asset quality trends, partially offset by an additional expense
of $9.7 million related to the decision to sell $65.5 million of past due loans.

Income Tax Expense

Comparison of the years ended December 31, 2022 and 2021

Income tax expense increased $9.4 million to $77.9 million from $68.5 million.
The income tax expense for 2022 reflects greater income before taxes, increase
in foreign tax withholding due to higher income from U.S. Bank subsidiary
subject to lower tax rate and lower net exempt income.

Refer to "Note 18 - Income Taxes" to the consolidated financial statements for
additional information on the income tax expense.

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TABLE 4 - BUSINESS SEGMENTS

Year Ended December 31, 2022

                                                      Wealth                                                                              Consolidated
                                Banking             Management            Treasury               Total              Eliminations              Total
                                                                                   (In thousands)
Interest income              $   465,177          $        21          $   

56,955 $ 522,153 $ (6,580) $ 515,573
Interest expense

                 (31,926)                   -               (8,147)              (40,073)                 6,580               (33,493)
Net interest income              433,251                   21               48,808               482,080                      -               482,080
Provision for credit losses       24,111                    -                    8                24,119                      -                24,119
Non-interest income               98,407               33,481                 (198)              131,690                      -               131,690
Non-interest expenses           (323,125)             (19,206)              (3,215)             (345,546)                     -              (345,546)
Intersegment revenue               2,187                    -                    -                 2,187                 (2,187)                    -
Intersegment expenses                  -               (1,497)                (690)               (2,187)                 2,187                     -

Income before income taxes $ 186,609 $ 12,799 $ 44,697 $ 244,105 $

           -          $    244,105
Income tax expense                77,731                   97                   38                77,866                      -                77,866
Net income                   $   108,878          $    12,702          $    44,659          $    166,239          $           -          $    166,239
Total assets                 $ 8,347,767          $    23,085          $ 2,432,549          $ 10,803,401          $    (984,621)         $  9,818,780


Eliminations include interest income and expense for a borrowing by Oriental
Overseas, which is included in the Treasury Segment with its corresponding
interest expense, to fund its operations, from the Bank, which is included in
the Banking Segment with its corresponding interest income, with an unpaid
principal balance of $470.2 million and $262.9 million at December 31, 2022 and
2021, respectively, and is eliminated in the consolidation. Interest income is
accrued on the unpaid principal balance. The increase in interest income and
interest expense from previous year was mainly as a result of FRB interest rate
increases and higher average borrowing balance.

                                                                        

Year Ended December 31, 2021

                                                  Wealth                                                                             Consolidated
                            Banking             Management            Treasury               Total             Eliminations              Total
                                                                               (In thousands)
Interest income          $   432,375          $        30          $    17,072          $    449,477          $       (278)         $    449,199
Interest expense             (38,711)                   -               (3,396)              (42,107)                  278               (41,829)
Net interest income          393,664                   30               13,676               407,370                     -               407,370
Provision for (recapture
of) credit losses              1,342                    -               (1,121)                  221                     -                   221
Non-interest income           98,950               35,625               (1,365)              133,210                     -               133,210
Non-interest expenses       (300,568)             (20,941)              (4,247)             (325,756)                    -              (325,756)
Intersegment revenue           2,355                    -                    -                 2,355                (2,355)                    -
Intersegment expenses              -               (1,269)              (1,086)               (2,355)                2,355                     -
Income before income
taxes                    $   193,059          $    13,445          $     8,099          $    214,603          $          -          $    214,603
Income tax expense            68,409                    -                   43                68,452                     -                68,452
Net income               $   124,650          $    13,445          $     8,056          $    146,151          $          -          $    146,151
Total assets             $ 8,041,725          $    32,082          $ 2,894,612          $ 10,968,419          $ (1,068,699)         $  9,899,720




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

Comparison of years ended December 31, 2022 and 2021

Banking

OFG's banking segment net income before taxes decreased by $6.5 million from
$193.1 million to $186.6 million, mainly reflecting:

•Increase in provision for credit losses by $22.8 million. The provision for
credit losses for 2022 increased mainly as a result of growth in loan balances
and commercial-specific loan reserves due to certain commercial loans placed in
non-accrual status. The provision for credit losses for 2021 reflected
improvements in macro-economic scenarios and continued improvement in asset
quality trends as the Covid-19 pandemic conditions improved.

•Increase in non-interest expenses by $22.6 million, mainly due to higher
compensation and employee benefits by $9.8 million from salary increases and
added technology staffing, higher compliance related professional expenses and
electronic banking charges by $4.7 million and $2.4 million, respectively, due
to greater levels of business activity, as well as $2.8 million higher
technology expenses related to digital transformation, and $1.6 million in
climate event expenses from Hurricane Fiona.

The decreases in the banking segment's net income were partially offset by:

•Increase of $32.8 million in interest income from loans, driven by increased
yields on higher loan balances; and

•Lower interest expense on deposits by $6.8 million, mainly related to both,
lower average balances and reduced costs of core deposits.

Wealth Management

Wealth management segment revenue consists of commissions and fees from
fiduciary activities, securities brokerage and insurance activities. Net income
before taxes from this segment decreased by $646 thousand reflecting a decrease
of $1.4 million in broker-dealer revenues, a $1.3 million decrease in trust
division fees from lower balances in assets under management, and a $1.2 million
decrease in contingent commissions due to Hurricane Fiona-related claims,
partially offset by a $1.5 million increase in income from the reinsurance
business and lower claims and settlement expenses by $1.7 million.

Treasury

Treasury segment net income before taxes increased by $36.6 million, mainly
reflecting:

•Increase in interest income by $39.9 million, reflecting the purchase of agency
mortgage-backed securities and U.S. Treasury securities during the current year
and higher yield in lower balances of interest-bearing cash and money market
investments related to the increase in federal fund rates; and

•Increase in interest expense by $4.8 million, reflecting higher expense in
inter-segment borrowing by $6.2 million as a result of higher average balance
and federal funds rate increases during 2022, offset by the cancellation of
$33.1 million of FHLB advances during 2021 and the early redemption of $36.1
million subordinated capital notes during 2022.


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ANALYSIS OF FINANCIAL CONDITION

Assets Owned

At December 31, 2022, OFG's total assets amounted to $9.819 billion, a decrease
of $80.9 million, when compared to $9.900 billion at December 31, 2021.

The investment portfolio increased by $1.076 billion, or 120.1%, primarily
related to purchases of available-for-sale agency mortgage-backed securities and
US Treasury securities with face value amounting to $843 million and $550
million, respectively, and held-to-maturity US Treasury securities with face
value amounting to $200 million during 2022. This increase was partially offset
by the sale of available-for-sale US Treasury securities amounting to $242.4
million, net of discounts. OFG's strategy is to invest its liquidity in highly
liquid securities and designate them as available-for-sale or held-to-maturity
after taking into account the investment's characteristics with respect to yield
and term and the current market environment.

OFG's loan portfolio is comprised of residential mortgage loans, commercial
loans secured by real estate, other commercial and industrial loans, consumer
loans, and auto loans and leases. At December 31, 2022, OFG's net loan portfolio
increased by $393.9 million, or 6.2%, reflecting increases in auto, commercial
and consumer loans, partially offset by $84.4 million PPP loans forgiven by the
Small Business Administration and the sale of loans held for sale amounting to
$25.2 million, including $21.9 million of past due mortgage loans and a $3.3
million commercial loan.

Cash and due from banks of $546.1 million decreased by $1.468 billion,
reflecting cash used to purchase agency mortgage-backed securities and US
Treasury securities, disbursements for loans originated during 2022, the
redemption of $36.1 million in 3.23% variable rate subordinated notes, and lower
deposit account balances for commercial and retail accounts.

Financial Assets Managed

At December 31, 2022 OFG's financial assets include those managed by OFG's trust
division and assets gathered by its securities broker-dealer and insurance
agency subsidiaries. OFG's trust division offers various types of individual
retirement accounts ("IRAs") and manages 401(k) and Keogh retirement plans and
custodian and corporate trust accounts. At December 31, 2022, the total assets
managed by OFG's trust division amounted to $2.335 billion. At December 31, 2021
the total assets managed by OFG's trust division and retirement plan
administration subsidiary amounted to $3.759 billion. This decrease reflects the
sale of the retirement plan administration business managed by OPC during 2022.
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 December 31, 2022,
total assets gathered by the securities broker-dealer and insurance agency
subsidiaries from their customers' investment accounts amounted to $2.172
billion, compared to $2.466 billion at December 31, 2021. Changes in trust and
broker-dealer related assets also reflect changes in portfolio balances and
differences in market value resulting from the increase in interest rates.

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 indicates that it is more likely than not that goodwill is not
impaired. OFG completes its annual goodwill impairment test as of October 31 of
each year. OFG tests for impairment by first allocating its goodwill and other
assets and liabilities, as necessary, to defined reporting units. A fair value
is then determined for each reporting unit. If the fair values of the reporting
units exceed their book values, no write-down of the recorded goodwill is
necessary. If the fair values are less than the book values, an additional
valuation procedure is necessary to assess the proper carrying value of the
goodwill.

As of December 31, 2022, OFG had $84.2 million of goodwill allocated as follows:
$84.1 million to the banking segment and $0.1 million to the wealth management
segment. As of December 31, 2021, OFG had $86.1 million of goodwill allocated as
follows: $84.1 million to the banking segment and $2.0 million to the wealth
management segment. On December 30, 2022, OFG sold its retirement plan
administration business, which resulted in a decrease in goodwill by
$1.8 million. This goodwill was allocated to the wealth management segment.
Please refer to "Note 12 - Goodwill and other intangibles" to our consolidated
financial statements for more information on the annual goodwill impairment
test.
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TABLE 5 - ASSETS SUMMARY AND COMPOSITION

                                                                      December 31,                             Variance
                                                              2022                   2021                         %
                                                                     (In thousands)
Investments:
FNMA and FHLMC certificates                              $     1,105,551       $        550,809                      100.7  %

Obligations of US government-sponsored agencies                        -                  1,183                     -100.0  %
US Treasury securities                                           506,768                 10,825                    4,581.5  %

CMOs issued by US government-sponsored agencies                   14,851                 24,430                      -39.2  %
GNMA certificates                                                319,534                288,578                       10.7  %
Equity securities                                                 23,667                 17,578                       34.6  %
Other debt securities                                              1,142                  2,395                      -52.3  %
Trading securities                                                     9                     20                      -55.0  %
Total investments                                              1,971,522                895,818                      120.1  %
Loans, net                                                     6,723,236              6,329,311                        6.2  %
Total investments and loans                                    8,694,758              7,225,129                       20.3  %
Other assets:

Cash and due from banks (including restricted cash)              546,303              2,014,698                      -72.9  %
Money market investments                                           4,161                  8,952                      -53.5  %
Foreclosed real estate                                            11,214                 15,039                      -25.4  %
Accrued interest receivable                                       62,402                 56,560                       10.3  %
Deferred tax asset, net                                           55,485                 99,063                      -44.0  %
Premises and equipment, net                                      106,820                 92,124                       16.0  %
Servicing assets                                                  50,921                 48,973                        4.0  %
Goodwill                                                          84,241                 86,069                       -2.1  %
Other intangible assets                                           27,593                 36,093                      -23.6  %
Right of use assets                                               25,363                 28,846                      -12.1  %

Other assets and customers' liability on acceptances             149,519                188,174                      -20.5  %
Total other assets                                             1,124,022              2,674,591                      -58.0  %
Total assets                                             $     9,818,780       $      9,899,720                       -0.8  %
Investment portfolio composition:
FNMA and FHLMC certificates                                      56.0  %              61.5    %
Obligations of US government-sponsored agencies                   0.0  %               0.1    %
US Treasury securities                                           25.7  %               1.2    %
CMOs issued by US government-sponsored agencies                   0.8  %               2.7    %
GNMA certificates                                                16.2  %              32.2    %
Equity securities                                                 1.2  %               2.0    %
Other debt securities and trading securities                      0.1  %               0.3    %
                                                                100.0  %             100.0    %


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TABLE 6 - LOAN PORTFOLIO COMPOSITION

                                           December 31,              Variance
                                      2022             2021             %
                                          (In thousands)
Loans held for investment:
Commercial                        $ 2,629,929      $ 2,379,330         10.5  %
Mortgage                            1,704,221        1,907,271        (10.6) %
Consumer                              537,257          409,675         31.1  %
Auto loans and leases               1,963,915        1,706,310         15.1  %
                                    6,835,322        6,402,586          6.8  %

Allowance for credit losses (152,673) (155,937) (2.1) %
Total loans held for investment 6,682,649 6,246,649 7.0

 %
Mortgage loans held for sale           19,499           51,096        (61.8) %
Other loans held for sale              21,088           31,566        (33.2) %
Total loans, net                  $ 6,723,236      $ 6,329,311          6.2  %


OFG's loan portfolio is composed of mortgage, commercial, consumer, and auto
loans and leases. As shown in Table 6 above, total loans, net, amounted to
$6.723 billion at December 31, 2022 and $6.329 billion at December 31, 2021.
OFG's loans held-for-investment portfolio composition and trends were as
follows:

•Commercial loan portfolio amounted to $2.630 billion (38.5% of the gross loan
portfolio) compared to $2.379 billion (37.2% of the gross loan portfolio) at
December 31, 2021.

Commercial loan production, excluding PPP loans, decreased by 3.7%, or
$38.1 million, to $990.3 million in 2022 from $1.028 billion in 2021.

During 2021, OFG originated $159.0 million of PPP loans. There were no
originations of PPP loans during 2022, as the program concluded in 2021.

•Mortgage loan portfolio amounted to $1.704 billion (24.9% of the gross loan
portfolio) compared to $1.907 billion (29.8% of the gross originated loan
portfolio) at December 31, 2021. Mortgage loans included delinquent loans in the
GNMA buy-back option program amounting to $32.6 million and $14.5 million at
December 31, 2022 and December 31, 2021, 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 $200.9 million in 2022, which represents a
decrease of 44.8% from $364.2 million in 2021. The housing market in Puerto Rico
has been greatly impacted by the FRB interest rate increases during 2022, in
contrast with 2021 where there was a sudden increase in housing originations as
a result of higher liquidity from government funding from Hurricane Maria,
earthquakes and Covid-19 pandemic in the Puerto Rico economy combined with low
interest rates.

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 $537.3 million (7.9% of the gross loan
portfolio) compared to $409.7 million (6.4% of the gross loan portfolio) at
December 31, 2021. Consumer loan production increased 69.8% to $334.2 million in
2022 from $196.8 million in 2021.

•Auto loans and leasing portfolio amounted to $1.964 billion (28.7% of the gross
loan portfolio) compared to $1.706 billion (26.6% of the gross originated loan
portfolio) at December 31, 2021. Auto loans production increased by 26.6% to
$812.6 million in 2022 compared to $641.7 million in 2021.


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The following table presents the loans held for investment portfolio as of
December 31, 2022 by maturities and interest rates:

TABLE 7 - MATURITY DISTRIBUTION OF LOANS HELD FOR INVESTMENT

                                                                                                                          Maturities
                                                                                 After One to Five Years                    After Five Years To 15 Years                       After 15 Years
                                  Balance                                                                                                                                                    Variable
                               Outstanding at          One Year or         Fixed Interest           Variable            Fixed Interest             Variable          Fixed Interest          Interest
                             December 31, 2022            Less                 Rates             Interest Rates              Rates              Interest Rates            Rates                Rates
                                                                                      (In thousands)
Non-PCD
Mortgage                     $       675,793          $   21,991          $       7,472          $       320          $        226,492          $       851          $    405,314          $   13,353
Commercial                         2,470,777             638,415                668,384              713,888                   174,736              211,581                35,099              28,674
Consumer                             536,619              68,638                248,271                    -                   201,070                    -                18,640                   -
Auto loans and leases              1,958,257              35,051                923,838                    -                   999,368                    -                     -                   -
Total                        $     5,641,446          $  764,095          $   1,847,965          $   714,208          $      1,601,666          $   212,432          $    459,053          $   42,027
PCD
Mortgage                     $     1,028,428          $    4,002          $      13,788          $       405          $        414,364          $       772          $    581,566          $   13,531
Commercial                           159,152              44,607                 96,252                5,004                       955               12,251                    83                   -
Consumer                                 638                 325                     41                    -                         2                    -                   270                   -
Auto loans and leases                  5,658               1,498                  4,084                    -                        76                    -                     -                   -
Total                        $     1,193,876          $   50,432          $     114,165          $     5,409          $        415,397          $    13,023          $    581,919          $   13,531

Total loans                  $     6,835,322          $  814,527          $   1,962,130          $   719,617          $      2,017,063          $   225,455          $  1,040,972          $   55,558



The following table includes the maturities of OFG's lending exposure to the
Puerto Rico government amounting to $73.7 million, which is limited solely to
loans to municipalities secured by ad valorem property taxes, without limitation
as to rate or amount, on all taxable property within the issuing municipalities.
The good faith, credit and unlimited taxing power of each issuing municipality
are pledged for the payment of its general obligations. Deposits from the Puerto
Rico government totaled $284.2 million at December 31, 2022.

TABLE 8 - PUERTO RICO GOVERNMENT RELATED LOANS

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

Municipalities    $        73,686      $           8,460      $      24,157      $           41,069


At December 31, 2022, OFG has $73.7 million of direct credit exposure to the
Puerto Rico government, a $13.6 million decrease from December 31, 2021. At
December 31, 2021, total loan exposure to the Puerto Rico government included a
$1.1 million PCD loan granted to a public corporation classified as non-accrual,
which was repaid during 2022.

Credit Risk Management

Allowance for Credit Losses

OFG measures its allowance for credit losses based on management's best estimate
of future expected credit losses inherent in OFG's relevant financial assets.

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Tables 9 through 12 set forth an analysis of activity in the allowance for
credit losses and present selected credit loss statistics for 2022 and 2021 and
as of December 31, 2022 and December 31, 2021. In addition, Table 6 sets forth
the composition of the loan portfolio.

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 annual report on
Form 10-K and "Note 7 - Allowance for Credit Losses" of the accompanying
consolidated financial statements for a more detailed analysis of provisions and
allowance for credit losses.

Non-performing Assets

OFG's non-performing assets include non-performing loans, foreclosed real
estate, and other repossessed assets (see Tables 13 and 15). At December 31,
2022, OFG had $89.6 million of non-accrual loans held for investment, including
$9.2 million PCD loans, compared to $101.9 million at December 31, 2021,
reflecting decreases of $6.8 million, $6.1 million and $216 thousand in
commercial, mortgage and auto loan portfolios, respectively, partially offset by
an increase of $825 thousand in the consumer loan portfolio. At December 31,
2022 and 2021, total commercial non-accrual loans excludes $16.4 million and
$9.9 million, respectively, of non-accrual commercial loans held for sale.

At December 31, 2022 and December 31, 2021, loans whose terms have been extended
and which were classified as troubled-debt restructurings that were not included
in non-accrual loans amounted to $145.2 million and $125.9 million,
respectively, as they were performing under their modified terms.

Delinquent residential mortgage loans insured or guaranteed under applicable
Federal Housing Administration ("FHA") and United States Department of Veterans
Affairs ("VA") programs are classified as non-performing loans when they become
90 days or more past due but are not placed in non-accrual status until they
become 12 months or more past due, since they are insured loans. Therefore,
those loans are included as non-performing loans but excluded from non-accrual
loans.

At December 31, 2022, OFG's non-performing assets decreased by 10.3% to
$115.7 million (1.18% total assets) from $129.0 million (1.30% of total assets)
at December 31, 2021.

Foreclosed real estate decreased from $15.0 million at December 31, 2021 to
$11.2 million at December 31, 2022 and other repossessed assets increased from
$1.9 million at December 31, 2021 to $4.6 million at December 31, 2022, both
recorded at fair value. OFG does not expect non-performing loans to result in
significantly higher losses. At December 31, 2022, the allowance coverage ratio
to non-performing loans was 152.9% (139.2% at December 31, 2021).

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

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

Commercial loans - At December 31, 2022, OFG's non-performing commercial loans
amounted to $43.4 million (43.4% of OFG's non-performing loans), a 13.5%
decrease from $50.1 million at December 31, 2021 (44.8% of OFG's non-performing
loans). Non-PCD commercial loans are placed on non-accrual status when they
become 90 days or more past due and are written down, if necessary, based on the
specific evaluation of the underlying collateral, if any.

Mortgage loans - At December 31, 2022, OFG's non-performing mortgage loans
totaled $33.8 million (33.8% of OFG's non-performing loans), a 15.0% decrease
from $39.7 million (35.5% of OFG's non-performing loans) at December 31, 2021.
During 2022, OFG sold $21.9 million of past due mortgage loans, $4.0 million
were included as non-performing assets at December 31, 2021. Non-PCD mortgage
loans are placed on non-accrual status when they become 90 days or more past due
and are written-down, if necessary, based on the specific evaluation of the
collateral underlying the loan, except for FHA and VA insured mortgage loans
which are placed in non-accrual when they become 12 months or more past due.
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Consumer loans - At December 31, 2022, OFG's non-performing consumer loans
amounted to $3.1 million (3.1% of OFG's non-performing loans), an 35.8% increase
from $2.3 million at December 31, 2021 (2.1% of OFG's non-performing loans),
which reflect higher balances in the portfolio. 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 and leasing - At December 31, 2022, OFG's non-performing auto loans
and leases amounted to $19.6 million (19.7% of OFG's total non-performing
loans), a decrease of 1.1% from $19.8 million at December 31, 2021 (17.6% of
OFG's total non-performing loans), which reflect higher balances in the
portfolio. Non-PCD auto loans and leases 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, USDA Rural
Development (RURAL), 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/ FHLMC, and performing loans not meeting
secondary market guidelines processed pursuant OFG's current credit and
underwriting guidelines. OFG achieved an affordable and sustainable monthly
payment by taking specific, sequential, and necessary steps such as reducing the
interest rate, extending the loan term, capitalizing arrearages, deferring the
payment of principal or, if the borrower qualifies, refinancing the loan.

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

As a result of the effects of Hurricane Fiona and Puerto Rico being declared a
disaster zone by local and federal authorities during 2022, OFG granted loan
payment accommodations to certain qualified borrowers in order to provide them
with flexibility to address the hurricane's immediate impact. In addition, for
its business banking segment, OFG granted loans up to $50,000 with three months
of interest-only payments followed by up to thirty-three payments of principal
and interest. At December 31, 2022, the total loans outstanding under the
payment accommodations program amounted to $33.1 million.
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TABLE 9 - ALLOWANCE FOR CREDIT LOSSES BREAKDOWN

                                                             December 31,              Variance
                                                          2022            2021            %
                                                            (In thousands)
Allowance for credit losses:
Non-PCD
Commercial                                           $       39,158    $    32,262       21.4  %
Mortgage                                                      9,571         15,299      -37.4  %
Consumer                                                     23,264         19,141       21.5  %
Auto loans and leases                                        69,848         65,363        6.9  %
Total allowance for credit losses                    $      141,841    $   132,065        7.4  %

PCD
Commercial                                           $        1,388    $     4,508      -69.2  %
Mortgage                                                      9,359         19,018      -50.8  %
Consumer                                                         14             34      -58.8  %
Auto loans and leases                                            71            312      -77.2  %
Total allowance for credit losses                    $       10,832    $    

23,872 -54.6 %

Allowance for credit losses summary
Commercial                                           $       40,546    $    36,770       10.3  %
Mortgage                                                     18,930         34,317      -44.8  %
Consumer                                                     23,278         19,175       21.4  %
Auto loans and leases                                        69,919         65,675        6.5  %
Total allowance for credit losses                    $      152,673    $   155,937       -2.1  %

Allowance composition:
Commercial                                                  26.6  %       23.6   %
Mortgage                                                    12.4  %       22.0   %
Consumer                                                    15.2  %       12.3   %
Auto loans and leases                                       45.8  %       42.1   %
                                                           100.0  %      100.0   %

Allowance coverage ratio at end of year:
Commercial                                                   1.5  %        1.6   %       -0.6  %
Mortgage                                                     1.1  %        1.8   %      -38.3  %
Consumer                                                     4.3  %        4.7   %       -7.5  %
Auto loans and leases                                        3.6  %        3.9   %       -7.5  %
                                                             2.2  %        2.4   %       -8.6  %

Allowance coverage ratio to non-performing loans:
Commercial                                                  93.5  %       73.3   %       27.5  %
Mortgage                                                    56.1  %       86.4   %      -35.1  %
Consumer                                                   744.2  %      832.6   %      -10.6  %
Auto loans and leases                                      356.5  %      331.2   %        7.6  %
                                                           152.9  %      139.2   %        9.8  %




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TABLE 10 - ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES

                                                                      December 31,
                                                 2022                                              2021
                                                 Percent of loans in each                          Percent of loans in each
                                                 category of total loans                           category of total loans
                                Amount of ACL              [1]                    Amount of ACL              [1]
Commercial                    $           40,546                  38.5  %       $           36,770                  37.2  %
Mortgage                                  18,930                  24.9  %                   34,317                  29.8  %
Consumer                                  23,278                   7.9  %                   19,175                   6.4  %
Auto loans and leases                     69,919                  28.7  %                   65,675                  26.6  %
Total                         $       152,673                    100.0  %       $       155,937                    100.0  %

[1] Total loans in this table refers to total loans held for investment.

TABLE 11 - ALLOWANCE FOR CREDIT LOSSES SUMMARY

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

Provision for credit losses                                                                        24,408                883                  2,664.2  %
Charge-offs                                                                                       (63,774)           (86,546)                   -26.3  %
Recoveries                                                                                         36,102             36,791                     -1.9  %
Balance at end of year                                                                          $ 152,673          $ 155,937                     -2.1  %


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TABLE 12 - NET CREDIT LOSSES STATISTICS ON LOAN AND LEASES

                                      Year Ended December 31,
                                                                                        Variance
                                                            2022           2021            %
                                      (Dollars in thousands)
Non-PCD
Mortgage
Charge-offs                                              $    (284)     $  (5,789)       -95.1  %
Recoveries                                                   3,314          1,643        101.7  %
Total                                                        3,030         (4,146)      -173.1  %
Commercial
Charge-offs                                                (13,380)        (8,788)        52.3  %
Recoveries                                                   1,200          2,401        -50.0  %
Total                                                      (12,180)        (6,387)        90.7  %
Consumer
Charge-offs                                                (15,198)       (11,880)        27.9  %
Recoveries                                                   3,237          2,900         11.6  %
Total                                                      (11,961)        (8,980)        33.2  %
Auto loans and leases
Charge-offs                                                (32,662)       (26,530)        23.1  %
Recoveries                                                  21,131         23,970        -11.8  %
Total                                                      (11,531)        (2,560)       350.4  %

PCD Loans:
Mortgage
Charge-offs                                              $  (1,695)     $ (20,350)       (91.7) %
Recoveries                                                   2,665          1,423         87.3  %
Total                                                          970        (18,927)      (105.1) %
Commercial
Charge-offs                                                    (69)       (12,241)       (99.4) %
Recoveries                                                   3,804          2,929         29.9  %
Total                                                        3,735         (9,312)      (140.1) %
Consumer
Charge-offs                                                   (176)           (22)       700.0  %
Recoveries                                                      94            316        (70.3) %
Total                                                          (82)           294       (127.9) %
Auto loans and leases
Charge-offs                                                   (310)          (946)       (67.2) %
Recoveries                                                     657          1,209        (45.7) %
Total                                                          347            263         31.9  %

Total charge-offs                                          (63,774)       (86,546)       (26.3) %
Total recoveries                                            36,102         36,791         (1.9) %
Net credit losses                                        $ (27,672)     $ (49,755)       (44.4) %



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TABLE 12 - NET CREDIT LOSSES STATISTICS ON LOAN AND LEASES (CONTINUED)

                                                               Year Ended December 31,
                                                                                   2022                   2021                 Variance %
                                                                (Dollars in thousands)
Net credit losses to average
loans outstanding:
Mortgage                                                                           (0.22)   %              1.10    %                -120.39  %
Commercial                                                                          0.33    %              0.66    %                  -49.3  %
Consumer                                                                            2.33    %              2.12    %                    9.7  %
Auto loans and leases                                                               0.62    %              0.14    %                  338.3  %
Total                                                                               0.42    %              0.76    %                  -45.4  %
Recoveries to charge-offs                                                          56.61    %             42.51    %                   33.2  %
Average Loans Held for Investment
Mortgage                                                                      $     1,787,476       $      2,102,215                  -15.0  %
Commercial                                                                          2,538,720              2,392,625                    6.1  %
Consumer                                                                              516,883                408,995                   26.4  %
Auto loans and leases                                                               1,814,681              1,633,653                   11.1  %
Total                                                                         $     6,657,760       $      6,537,488                    1.8  %

Net charge-offs for 2022 amounted to $27.7 million, decreasing $22.1 million
when compared to $49.8 million in 2021. Net charge-offs variances were as
follows:

Residential mortgage loans net recoveries amounted to $4.0 million in 2022,
decreasing $27.1 million when compared to net charge-offs of $23.1 million in
2021. The change reflects the effect in 2021 of charge-offs amounting to $30.1
million associated with OFG's decision to sell past due mortgage loans during
the fourth quarter of 2021 and recoveries of $1.1 million associated with the
final settlement, during the first quarter of 2022, of the aforementioned
transfer of loans to held for sale.

Commercial loans net charge-offs amounted to $8.4 million in 2022, decreasing
$7.3 million when compared to net charge-offs of $15.7 million in 2021. The 2022
net charge-offs included $12.3 million charge-offs previously reserved for four
commercial loans, two of them were sold during 2022. In addition, the 2022 net
charge-offs included a $2.8 million recovery from a Puerto Rico government
public corporation PCD commercial loan repaid during the first quarter of 2022.

Consumer loans net charge-offs amounted to $12.0 million in 2022, increasing
$3.4 million when compared to net charge-offs of $8.7 million in 2021. The
increase in net-charge offs during 2022 was driven by an increase in business
volumes and change in the delinquency trend. During 2021, borrowers received
several federal incentives which facilitated the stabilization of delinquency
trends.

Auto loans net charge-offs amounted to $11.2 million, increasing $8.9 million
when compared to $2.3 million for 2021. The increase in net-charge offs during
2022 was driven by an increase in business volumes and the stabilization of
delinquency trends. During 2021, borrowers received several federal incentives
which facilitated the stabilization of delinquency trends






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TABLE 13 - NON-PERFORMING ASSETS

                                                 December 31,              Variance
                                              2022            2021            %
                                                   (Dollars in thousands)
Non-performing assets:
Non-PCD
Non-accruing loans
Troubled-Debt Restructuring loans        $       20,329    $    24,539      -17.2  %
Other loans                                      60,083         64,465       -6.8  %
Accruing loans
Troubled-Debt Restructuring loans                 8,978          9,087       -1.2  %
Other loans                                       1,295          1,038       24.8  %
Total                                    $       90,685    $    99,129       -8.5  %
PCD                                               9,186         12,879      -28.7  %
Total non-performing loans               $       99,871    $   112,008      -10.8  %
Foreclosed real estate                           11,214         15,039      -25.4  %
Other repossessed assets                          4,617          1,945      137.4  %
                                         $      115,702    $   128,992      -10.3  %

Non-performing assets to total assets           1.18  %       1.30   %       -9.2  %
Non-performing assets to total capital         11.10  %      12.06   %       -8.0  %



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TABLE 14 - NON-ACCRUAL LOANS
                                                           December 31,              Variance
                                                        2022            2021            %
                                                             (Dollars in thousands)
Non-accrual loans
Non-PCD
Commercial                                         $       34,432    $    37,603       -8.4  %
Mortgage                                                   23,241         29,269      -20.6  %
Consumer                                                    3,128          2,303       35.8  %
Auto loans and leases                                      19,613         19,829       -1.1  %
Total                                              $       80,414    $    89,004       -9.7  %
PCD
Commercial                                         $        8,927    $    12,545      -28.8  %
Mortgage                                                      259            334      -22.5  %

Total                                              $        9,186    $    12,879      -28.7  %
Total non-accrual loans                            $       89,600    $   101,883      -12.1  %
Non-accruals loans composition percentages:
Commercial                                                48.4  %       49.2   %
Mortgage                                                  26.2  %       29.1   %
Consumer                                                   3.5  %        2.3   %
Auto loans and leases                                     21.9  %       19.4   %
                                                         100.0  %      100.0   %
Non-accrual loans ratios:
Non-accrual loans to total loans                          1.31  %       1.59   %     -17.61  %
Allowance for credit losses to non-accrual loans        170.39  %     153.05   %      11.33  %


                                                                  Year Ended December 31,
                                                                                  2022                2021
                                                                       (In thousands)

Interest that would have been recorded in the year if the
loans had not been classified as non-accruing loans

$ 1,420 $ 1,467

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TABLE 15 - NON-PERFORMING LOANS

                                                                 December 31,                         Variance
                                                          2022                  2021                      %
                                                                         (Dollars in thousands)
Non-performing loans
Non-PCD
Commercial                                           $        34,432       $        37,603                   -8.4  %
Mortgage                                                      33,512                39,394                  -14.9  %
Consumer                                                       3,128                 2,303                   35.8  %
Auto loans and leases                                         19,613                19,829                   -1.1  %
Total                                                $        90,685       $        99,129                   -8.5  %
PCD
Commercial                                           $         8,927       $        12,545                  -28.8  %
Mortgage                                                         259                   334                  -22.5  %

Total                                                $         9,186       $        12,879                  -28.7  %
Total non-performing loans                           $        99,871       $       112,008                  -10.8  %
Non-performing loans composition percentages:
Commercial                                                   43.4  %              44.8   %
Mortgage                                                     33.8  %              35.5   %
Consumer                                                      3.1  %               2.1   %
Auto loans and leases                                        19.7  %              17.6   %
                                                            100.0  %             100.0   %
Non-performing loans to:
Total loans held for investment gross                        1.46  %              1.75   %                 -16.57  %
Total assets                                                 1.02  %              1.13   %                   -9.7  %
Total capital                                                9.58  %             10.48   %                   -8.6  %
Non-performing loans with partial charge-offs to:
Total loans held for investment gross                        0.40  %              0.46   %                  -13.0  %
Non-performing loans                                        27.27  %             26.53   %                    2.8  %
Other non-performing loans ratios:
Charge-off rate on non-performing loans to
non-performing loans on which charge-offs have been         99.57  %            170.31   %                  -41.5  %

taken

Allowance for credit losses to non-performing loans 210.18 %

     189.49   %                   10.9  %

on which no charge-offs have been taken

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TABLE 16 - LIABILITIES SUMMARY AND COMPOSITION

                                                         December 31,               Variance
                                                     2022             2021             %
                                                           (Dollars in thousands)
Deposits:
Non-interest-bearing deposits                   $    2,630,458    $   2,501,644        5.1  %
NOW accounts                                         2,546,245        2,702,636       -5.8  %
Savings and money market accounts                    2,227,963        2,177,779        2.3  %
Time deposits                                        1,162,959        1,220,262       -4.7  %
Total deposits                                       8,567,625        8,602,321       -0.4  %
Accrued interest payable                                   739              797       -7.3  %
Total deposits and accrued interest payable          8,568,364        8,603,118       -0.4  %
Borrowings:

Advances from FHLB                                      26,716           28,488       -6.2  %
Subordinated capital notes                                   -           36,083     -100.0  %
Other borrowings                                           318                -      100.0  %
Total borrowings                                        27,034           64,571      -58.1  %
Total deposits and borrowings                        8,595,398        8,667,689       -0.8  %
Other Liabilities:

Derivative liabilities                                       -              804     -100.0  %
Acceptances outstanding                                 28,607           35,329      -19.0  %
Lease liability                                         27,370           30,498      -10.3  %
Other liabilities                                      124,999           96,240       29.9  %
Total liabilities                               $    8,776,374    $   8,830,560       -0.6  %
Deposits portfolio composition percentages:
Non-interest-bearing deposits                          30.7  %        29.1  

%

NOW accounts                                           29.7  %        31.4  

%

Savings and money market accounts                      26.0  %        25.3    %
Time deposits                                          13.6  %        14.2    %
                                                      100.0  %       100.0    %

Borrowings portfolio composition percentages:

Advances from FHLB                                     98.8  %        44.1    %
Subordinated capital notes                              0.0  %        55.9    %
Other borrowings                                        1.2  %           -    %
                                                      100.0  %       100.0    %

Liabilities and Funding Sources

As shown in Table 16 above, at December 31, 2022, OFG's total liabilities were
$8.776 billion, 0.6% lower than the $8.831 billion reported at December 31,
2021. Deposits and borrowings, OFG's funding sources, amounted to $8.595 billion
at December 31, 2022 compared to $8.668 billion at December 31, 2021. Deposits,
excluding accrued interest payable, decreased 0.4% reflecting a decrease of
$57.4 million in time deposits from maturities, offset by an increase in
commercial and personal savings deposits of $22.6 million.

As of December 31, 2022 borrowings consist of short-term FHLB advances amounting
to $26.7 million. Borrowings decreased by $37.6 million, when compared to
$64.6 million at December 31, 2021, reflecting the redemption of all $36.1
million variable rate subordinated capital notes before maturity during 2022.

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Stockholders' Equity

At December 31, 2022, OFG's total stockholders' equity was $1.042 billion, a 3%
decrease when compared to $1.069 billion at December 31, 2021. This reduction in
stockholders' equity reflects a decrease of $60.6 million from treasury stock
and $268 thousand in additional paid-in capital, as a result of repurchases of
common stock in the aggregate amount of $64.1 million in connection with the
$100 million stock buyback program announced during the first quarter of 2022.
It also reflects a decrease in accumulated other comprehensive income, net of
tax, of $98.6 million from changes in the market value of available-for-sale
securities due to FRB interest rates increases during 2022. The decrease was
offset by an increase in retained earnings of $116.4 million and legal surplus
of $16.2 million, mainly due to $166.2 million in net income, partially offset
by $33.6 million common stock dividends issued during 2022.

Regulatory Capital

OFG and the Bank are subject to regulatory capital requirements established by
the Federal Reserve Board and the FDIC. The current risk-based capital standards
applicable to OFG and the Bank ("Basel III capital rules") 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 December 31,
2022, the capital ratios of OFG and the Bank continue to exceed the minimum
requirements for being "well-capitalized" under the Basel III capital rules.

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

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

The risk-based capital ratios presented in Table 17 include common equity tier
1, tier 1 capital, total capital and leverage capital as of December 31, 2022
and 2021 and are calculated based on the Basel III capital rules related to the
measurement of capital, risk-weighted assets and average assets.
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The following are OFG's consolidated capital ratios under the Basel III capital
rules at December 31, 2022 and 2021:

TABLE 17 - CAPITAL, DIVIDENDS AND STOCK DATA

                                                           December 31,                 December 31,                Variance
                                                               2022                         2021                        %
                                                       (Dollars in thousands, except per share data)
Capital data:
Stockholders' equity                                $                1,042,406       $         1,069,160                   (2.5) %
Regulatory Capital Ratios data:
Common equity tier 1 capital ratio                                   13.64   %                  13.77  %                   (0.9) %
Minimum common equity tier 1 capital ratio required                   4.50   %                   4.50  %                    0.0  %
Actual common equity tier 1 capital                 $                1,037,385                   964,284                    7.6  %
Minimum common equity tier 1 capital required       $                  342,246                   315,219                    8.6  %
Minimum capital conservation buffer required (2.5%) $                  190,137                   175,122                    8.6  %
Excess over regulatory requirement                  $                  505,002                   473,943                    6.6  %
Risk-weighted assets                                $                7,605,466                 7,004,876                    8.6  %
Tier 1 risk-based capital ratio                                      13.64   %                  14.27  %                   (4.4) %
Minimum tier 1 risk-based capital ratio required                      6.00   %                   6.00  %                    0.0  %
Actual tier 1 risk-based capital                    $                1,037,385       $           999,284                    3.8  %
Minimum tier 1 risk-based capital required          $                  456,328       $           420,293                    8.6  %
Minimum capital conservation buffer required (2.5%) $                  190,137                   175,122                    8.6  %
Excess over regulatory requirement                  $                  390,920       $           403,869                   (3.2) %
Risk-weighted assets                                $                7,605,466       $         7,004,876                    8.6  %
Total risk-based capital ratio                                       14.89   %                  15.52  %                   (4.1) %
Minimum total risk-based capital ratio required                       8.00   %                   8.00  %                    0.0  %
Actual total risk-based capital                     $                1,132,658       $         1,086,897                    4.2  %
Minimum total risk-based capital required           $                  608,437       $           560,390                    8.6  %
Minimum capital conservation buffer required (2.5%) $                  190,137                   175,122                    8.6  %
Excess over regulatory requirement                  $                  334,084       $           351,385                   (4.9) %
Risk-weighted assets                                $                7,605,466       $         7,004,876                    8.6  %
Leverage capital ratio                                               10.36   %                   9.69  %                    6.9  %
Minimum leverage capital ratio required                               4.00   %                   4.00  %                    0.0  %
Actual tier 1 capital                               $                1,037,385       $           999,284                    3.8  %
Minimum tier 1 capital required                     $                  400,445       $           412,359                   (2.9) %
Excess over regulatory requirement                  $                  636,940       $           586,925                    8.5  %
Tangible common equity to total assets                                9.48   %                   9.57  %                   (0.9) %
Tangible common equity to risk-weighted assets                       12.24   %                  13.52  %                   (9.5) %
Total equity to total assets                                         10.62   %                  10.80  %                   -1.7  %
Total equity to risk-weighted assets                                 13.71   %                  15.26  %                  (10.2) %
Stock data:
Outstanding common shares                                           47,581,375                49,636,352                   (4.1) %
Book value per common share                         $                    21.91       $             21.54                    1.7  %
Tangible book value per common share                $                    19.56       $             19.08                    2.5  %
Market price at end of year                         $                    27.56       $             26.56                    3.8  %
Market capitalization at end of year                $                1,311,343       $         1,318,342                   -0.5  %



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From December 31, 2021 to December 31, 2022, leverage capital ratio increased
from 9.69% to 10.36%, tier 1 risk-based capital ratio decreased from 14.27% to
13.64%, total risk-based capital ratio decreased from 15.52% to 14.89%, common
equity tier 1 capital ratio decreased from 13.77% to 13.64%, and tangible common
equity to tangible total assets decreased from 9.69% to 9.59%. The decreases in
capital ratios reflected common stock repurchases of $64.1 million during 2022
and an increase in risk-weighted assets, partially offset by increase in
retained earnings from net income. Risk-weighted assets increased, mainly from
higher loan and investment portfolios at December 31, 2022. Also, during 2022,
OFG completed the redemption and cancellation of its subordinated capital notes,
further reducing tier 1 risk-based capital and total risk-based capital by $35.0
million. Tangible common equity was also affected by $98.6 million other
comprehensive losses during 2022 in available-for-sale securities as a result of
increases in market interest rates as a result of recent developments in the
U.S. economy, particularly inflationary pressures.


                                              December 31,             Variance
                                           2022            2021           %
                                                (Dollars in thousands)
Common dividend data:
Cash dividends declared               $       33,593    $   20,505       63.8  %
Cash dividends declared per share     $         0.70    $     0.40       75.0  %
Payout ratio                                20.35  %     14.19   %       43.4  %
Dividend yield                               2.54  %      1.50   %       69.3  %


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

                                                                                December 31,
                                                                        2022                    2021
                                                                  (In

thousands, except share or per share

information)

Total stockholders' equity                                       $        

1,042,406 $ 1,069,160

Goodwill                                                                   (84,241)                (86,069)
Other intangible assets                                                    (27,593)                (36,093)
Total tangible common equity (non-GAAP)                          $          930,572       $         946,998
Total assets                                                     $        9,818,780               9,899,720
Goodwill                                                                   (84,241)                (86,069)
Core deposit intangible                                                    (21,131)                (27,630)
Customer relationship intangible                                            (6,462)                 (8,368)
Other intangibles                                                                 -                    (95)
Total tangible assets                                            $        9,706,946       $       9,777,558
Tangible common equity to tangible assets                                9.59     %               9.69    %
Common shares outstanding at end of year                                 47,581,375              49,636,352
Tangible book value per common share                             $            19.56       $           19.08


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


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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.

The following table presents OFG's capital adequacy information under the Basel
III capital rules:

                                                                 December 31,                         Variance
                                                         2022                   2021                      %
                                                                         (Dollars in thousands)
Risk-based capital:
Common equity tier 1 capital                        $     1,037,385       $        964,284                    7.6  %
Additional tier 1 capital                                         -                 35,000                 (100.0) %
Tier 1 capital                                            1,037,385                999,284                    3.8  %
Additional Tier 2 capital                                    95,273                 87,613                    8.7  %
Total risk-based capital                            $     1,132,658       $      1,086,897                    4.2  %
Risk-weighted assets:
Balance sheet items                                 $     6,976,335       $      6,406,115                    8.9  %
Off-balance sheet items                                     629,131                598,761                    5.1  %
Total risk-weighted assets                          $     7,605,466       $      7,004,876                    8.6  %
Ratios:
Common equity tier 1 capital (minimum required,
including capital conservation buffer - 7%)                13.64  %             13.77    %                   (0.9) %

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

                                13.64  %             14.27    %                   (4.4) %

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

                               14.89  %             15.52    %                   (4.1) %
Leverage ratio (minimum required - 4%)                     10.36  %              9.69    %                    6.9  %
Equity to assets                                           10.62  %             10.80    %                   -1.7  %
Tangible common equity to assets                            9.48  %              9.57    %                   (0.9) %


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

                                                                      December 31,                              Variance
                                                            2022                       2021                        %
                                                                              (Dollars in thousands)
Oriental Bank Regulatory Capital Ratios:
Common Equity Tier 1 Capital to Risk-Weighted Assets              12.36%                      13.09%                 (5.58) %
Actual common equity tier 1 capital                  $           933,494       $             908,717                   2.7  %
Minimum capital requirement (4.5%)                   $           339,910       $             312,371                   8.8  %
Minimum capital conservation buffer requirement
(2.5%)                                               $           188,839       $             173,540                   8.8  %
Minimum to be well capitalized (6.5%)                $           490,981       $             451,203                   8.8  %
Tier 1 Capital to Risk-Weighted Assets                            12.36%                      13.09%                  (5.6) %
Actual tier 1 risk-based capital                     $           933,494       $             908,717                   2.7  %
Minimum capital requirement (6%)                     $           453,214       $             416,495                   8.8  %
Minimum capital conservation buffer requirement
(2.5%)                                               $           188,839       $             173,540                   8.8  %
Minimum to be well capitalized (8%)                  $           604,285       $             555,327                   8.8  %
Total Capital to Risk-Weighted Assets                             13.61%                      14.34%                  (5.1) %
Actual total risk-based capital                      $         1,028,126       $             995,549                   3.3  %
Minimum capital requirement (8%)                     $           604,285       $             555,327                   8.8  %
Minimum capital conservation buffer requirement
(2.5%)                                               $           188,839       $             173,540                   8.8  %
Minimum to be well capitalized (10%)                 $           755,356       $             694,159                   8.8  %
Total Tier 1 Capital to Average Total Assets                       9.42%                       8.87%                   6.2  %
Actual tier 1 capital                                $           933,494       $             908,717                   2.7  %
Minimum capital requirement (4%)                     $           396,525       $             409,855                  (3.3) %
Minimum to be well capitalized (5%)                  $           495,656       $             512,319                  (3.3) %


OFG's common stock is traded on the New York Stock Exchange ("NYSE") under the
symbol "OFG." At December 31, 2022 and December 31, 2021, OFG's market
capitalization for its outstanding common stock was $1.311 billion ($27.56 per
share) and $1.318 billion ($26.56 per share), respectively.














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

                                                  Cash
                             Price              Dividend
                       High          Low        Per share

2022

December 31, 2022 $ 28.90 $ 25.50 $ 0.20

September 30, 2022   $ 29.45      $ 24.66      $    0.20
June 30, 2022        $ 29.22      $ 25.40      $    0.15
March 31, 2022       $ 30.54      $ 26.21      $    0.15
2021
December 31, 2021    $ 27.33      $ 23.84      $    0.12
September 30, 2021   $ 25.66      $ 20.04      $    0.12
June 30, 2021        $ 25.14      $ 21.61      $    0.08
March 31, 2021       $ 22.93      $ 16.48      $    0.08
2020
December 31, 2020    $ 18.54      $ 12.59      $    0.07
September 30, 2020   $ 14.35      $ 12.12      $    0.07
June 30, 2020        $ 15.10      $  9.38      $    0.07
March 31, 2020       $ 23.50      $  9.32      $    0.07



In January 2022, OFG announced the approval by the Board of Directors of a stock
repurchase program to purchase $100 million of its outstanding shares of common
stock. The shares of common stock repurchased are held by OFG as treasury
shares. During 2022, OFG repurchased 2,351,868 shares for a total of $64.1
million at an average price of $27.26 per share. During 2021, OFG repurchased
2,052,429 shares under the $50.0 million repurchase program approved at that
time for a total of $49.9 million, at an average price of $24.29 per share. OFG
did not repurchase any shares of its common stock during 2022 and 2021, other
than through its publicly announced stock repurchase program.

At December 31, 2022 the number of shares that may yet be purchased under the
$100 million stock buyback program is estimated at 1,302,242 and was calculated
by dividing the remaining balance of $35.9 million by $27.56 (closing price of
OFG's common stock at December 31, 2022).