Payment of Filing Fee (Check the appropriate box):

March 15, 201814, 2019

Dear Shareholder:

You are cordially invited to attend our annual meeting of shareholders, which will be held at our offices located at Oriental Center, 254 Muñoz Rivera Avenue, Ground Floor, San Juan, Puerto Rico, on Wednesday, April 25, 2018.24, 2019. The meeting will begin promptly at 10:00 a.m. (EST).

Details of the business to be conducted at the annual meeting are given in the attached notice of annual meeting and proxy statement.  Only shareholders of record as of March 2, 2018,February 27, 2019, are entitled to notice of, and to vote at, the annual meeting or any adjournments or postponements thereof.

Your vote is important.  Please review the enclosed proxy statement and complete, sign and return your proxy card promptly in the accompanying reply envelope, even if you plan to attend the meeting.

If you attend the meeting, you must show at the entrance to the meeting proof of ownership of our shares of common stock, such as a broker’s statement showing the shares held by you and a proper identification card.  If your shares are not registered in your own name and you plan to attend the meeting and vote your shares in person, you must contact your broker or agent in whose name your shares are registered to obtain a broker’s proxy issued in your name and bring it to the meeting in order to vote.  Remember that you may also vote by telephone or over the Internet.  For more details and instructions, please refer to the enclosed proxy statement and proxy card.

We look forward to seeing you at the annual meeting.

Sincerely,

Julian S. Inclán

Chairperson

Julian S. Inclán

Chairperson

P.O. Box 195115

San Juan, Puerto Rico 00919-5115

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 25, 201824, 2019

Notice is hereby given that the annual meeting of shareholders of OFG Bancorp (“we,” “us,” “our,” or the “Company”), a financial holding company and corporation organized under the laws of the Commonwealth of Puerto Rico, is scheduled to be held at Oriental Center, 254 Muñoz Rivera Avenue, Ground Floor, San Juan, Puerto Rico, commencing at 10:00 a.m. (EST) on Wednesday, April 25, 2018,24, 2019, to consider and vote upon the following matters described in this notice and the accompanying proxy statement:

These matters are described more fully in the accompanying proxy statement, which you are urged to read thoroughly.  The Company’s Board of Directors recommends a vote “FOR” each of the proposals.  Only shareholders of record at the close of business on March 2, 2018,February 27, 2019, are entitled to notice of, and to vote at, the annual meeting.

To assure representation at the annual meeting, shareholders are urged to return a proxy as promptly as possible either by voting through the Internet or telephone, or by signing, dating and returning a proxy card in accordance with the enclosed instructions. Any shareholder attending the annual meeting may vote in person even if he or she previously returned a proxy.

In San Juan, Puerto Rico, on March 15, 2018.14, 2019.

By order of the Board of Directors,

Carlos O. Souffront

Secretary

By order of the Board of Directors,

Carlos O. Souffront

Secretary

TABLE OF CONTENTS

PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON WEDNESDAY, APRIL 25, 201824, 2019

This proxy statement contains important information related to the annual meeting of shareholders of OFG Bancorp (“we,” “us,” “our,” or the “Company”) to be held on Wednesday, April 25, 201824, 2019 at 10:00 a.m. (EST), at its offices located at Oriental Center, 254 Munoz Rivera Avenue, Ground Floor, San Juan, Puerto Rico, or any adjournments or postponements thereof. This proxy statement and the accompanying proxy card are expected to be made available to shareholders on or about March 15, 2018.14, 2019.

GENERAL QUESTIONS ABOUT THE ANNUAL MEETINGGeneral Questions about the Annual Meeting

What information is contained in this proxy statement?

The information in this proxy statement relates to the proposals to be voted on at the annual meeting, the voting process, our Board of Directors and its committees, the compensation of our directors and executive officers, and other required information.

Who is soliciting my vote?

Our Board of Directors is soliciting your vote at the annual meeting.

Who will bear the costs of soliciting proxies for the annual meeting?

This solicitation of proxies is made on behalf of our Board of Directors, and we will bear the costs of solicitation. The expense of preparing, assembling, printing and mailing this proxy statement and the materials used in this solicitation of proxies also will be borne by us.  It is contemplated that proxies will be solicited principally through the internet or mail, but our directors, officers and employees may solicit proxies personally or by telephone.  Upon request, we will reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonableout-of-pocket expenses for distributing these proxy materials to our shareholders.

We have retained Georgeson LLC, an independent proxy solicitation firm, to assist us with the solicitation of proxies for a fee not to exceed $12,500, plus reimbursement forout-of-pocket expenses.

What is the purpose of the annual meeting?

At the annual meeting, shareholders will act upon the matters outlined in the accompanying notice of annual meeting of shareholders, including the election of twoseven directors, the advisory vote related to executive compensation, the amendment of our articles of incorporation, the ratification of the selection of the Company’s independent registered public accounting firm for 2018,2019, and the transaction of any other business that may properly come before the meeting or any adjournments or postponements thereof. Proxies solicited hereby may be exercised only at the annual meeting, including any adjournments or postponements thereof, and will not be used for any other purpose.

Who is entitled to vote?

Only shareholders of record at the close of business on the record date, March 2, 2018February 27, 2019 are entitled to receive notice of the annual meeting and to vote the shares of common stock that they held on that date at the meeting, or any adjournments or postponements thereof.  As of the close of business on the record date, there were 43,968,34251,293,924 shares of our common stock outstanding.

What is the difference between a holder of record and a beneficial owner of shares held in street name?

Holder of Record.If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the holder (or shareholder) of record with respect to those shares.  As a holder of record, you should have been furnished this proxy statement and a proxy card directly by us.

Beneficial Owner of Shares Held in Street Name.If your shares are held in an account at a securities broker, bank or other similar organization acting as a nominee, then you are considered the beneficial owner of shares held in “street name.” The organization holding your account is considered the holder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account. Accordingly, you should have been furnished this proxy statement and a voting instruction form by that organization.

How can I vote?

Holder of Record.If you are a holder of record, you may vote either in person at the annual meeting, via the Internet (by following the instructions provided on the proxy card), by telephone (by calling the toll free number found on the proxy card), or by mail (by filling out the proxy card and returning it in the reply envelope provided).

Beneficial Owner of Shares Held in Street Name.If you hold your shares in “street name,” you should receive a voting instruction form from your securities broker, bank or other similar organization acting as a nominee asking you how you want to vote your shares. If you do not, you should contact your securities broker, bank or other similar organization acting as a nominee and obtain a voting instruction form from them. If you plan to attend the annual meeting and vote your shares in person, you must contact the securities broker, bank or other similar organization acting as a nominee in whose name your shares are registered to obtain a broker’s proxy issued in your name and bring it to the annual meeting in order to vote.

How many votes do I have?

Each outstanding share of our common stock entitles its holder to cast one vote on each matter to be voted upon, except with respect to the election of directors in which you may cumulate your votes.

Pursuant to our articles of incorporation andby-laws, you have the right to cumulate your votes at annual meetings in which more than one director is being elected.  Cumulative voting entitles you to a number of votes equal to the number of shares of common stock held by you multiplied by the number of directors to be elected.  As a holder of our shares of common stock, you may cast all or any number of such votes for one nominee or distribute such votes among any two or more nominees as you desire.  Thus, for example, for the election of the twoseven nominees being considered at this annual meeting, a shareholder owning 1,000 shares of our common stock is entitled to 2,0007,000 votes and may distribute such votes equally among the nominees for election, cast them for the election of only one of such nominees, or otherwise distribute such votes as he or she desires.

If you return an executed proxy but do not expressly indicate that your votes should be cumulated in a particular fashion, the votes represented by your proxy will be distributed equally among the nominees designated by our Board of Directors or in such other fashion as will most likely ensure the election of all the nominees.

How does our Board of Directors recommend that I vote?

Our Board of Directors recommends that you vote “FOR” the election of each nominee to the Board, “FOR” the advisory vote related to the compensation of our executives, for “FOR” the amendments to our articles of incorporation, and “FOR” the ratification of our independent registered public accounting firm for 2018.2019.

Each proxy also confers discretionary authority on our Board of Directors to vote the proxy with respect to:  (i) the approval of the minutes of the last annual meeting of shareholders; (ii) the election of any person as director if any nominee is unable to serve or, for good cause, will not serve; (iii) matters incident to the conduct of the annual meeting; and (iv) such other matters as may properly come before the annual meeting.  Except with respect to procedural matters incident to the conduct of the annual meeting, we are not aware of any business that may properly come before the meeting other than those matters described in this proxy statement.  However, if any other matters should properly come before the annual meeting, it is intended that proxies solicited hereby will be voted with respect to those other matters as recommended by our Board of Directors or, if no recommendation is given, in accordance with the judgment of the proxy holders.

What constitutes a quorum at the annual meeting?

The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum, permitting us to hold the meeting.  As of the record date, 43,968,34251,293,924 shares of our common stock were outstanding.  Proxies received but marked as abstentions and brokernon-votes will be included in the calculation of the number of shares considered to be present at the meeting for purposes of determining quorum.  A “brokernon-vote” occurs when a securities broker, bank or other nominee indicates on the proxy card that it does not have discretionary authority to vote on a particular matter.  Votes cast by proxy will be counted by Broadridge Financial Solutions, Inc., an independent third party.  We urge you to vote by proxy even if you plan to attend the meeting, so that we will know as soon as possible that enough votes will be present for us to hold the meeting.

How do I vote?

You can vote either in person at the meeting or by proxy even if you plan to attend the meeting.  If you complete and properly sign the accompanying proxy card and return it in the enclosed reply envelope, it will be voted as you direct.  If you are a shareholder of record and attend the meeting, you may deliver your completed proxy card in person.  Alternatively, in lieu of signing the accompanying proxy card and returning it in the enclosed reply envelope, shareholders of record can vote their shares over the Internet, or by calling a specially designated telephone number.  Internet and telephone voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to provide their voting instructions and to confirm that their instructions have been recorded properly.   Specific instructions for shareholders of record who wish to use the Internet or telephone voting procedures are set forth in the enclosed proxy card.

Beneficial owners of shares held in “street name” who wish to vote at the meeting will have to obtain a proxy from the securities broker, bank or other nominee that holds their shares.  Such beneficial owners may vote their shares by telephone or the Internet if the brokers, banks or other nominees that hold their shares make those methods available.  If that is the case, each broker, bank or other nominee will enclose instructions with the proxy statement.

To avoid delays in ballot taking and counting, and in order to ensure that your proxy is voted in accordance with your wishes, we respectfully request that you give your full title when signing a proxy as attorney, executor, administrator, trustee, guardian, authorized officer of an entity, or on behalf of a minor.  If shares are registered in the name of more than one shareholder of record, all shareholders of record must sign the proxy card.

Can I change my vote after I return my proxy card?

Yes.  After you have submitted your proxy card, you may change your vote at any time before the proxy is exercised.  To do so, just send in a new proxy card with a later date or cast a new vote by telephone or over the Internet, or send a written notice of revocation to the Secretary of our Board of Directors, P.O. Box 195115, San Juan, Puerto Rico 00919-5115, delivered before the proxy is exercised.  If you attend the meeting, and want to vote in person, you may request that your previously submitted proxy not be used.  Attendance at the meeting will not by itself revoke a previously granted proxy.

What vote is required to approve each item and how are abstentions and brokernon-votes treated?

Action with respect to the election of directors will be taken by a majority of the votes cast by shareholders represented in person or by proxy at the annual meeting and entitled to vote on the election of directors (which number will take into account the accumulation of votes described above). To be elected, each director nominee must receive more votes cast “FOR” such nominee’s election than votes cast “WITHOLD AUTHORITY” for such nominee’s election.  Abstentions and brokernon-votes will not be counted as either an affirmative vote or a negative vote regarding the election of directors and, therefore, will not have a legal effect on such election.

For the advisory vote on the compensation of our executives and the ratification of our independent registered public accounting firm for 2018,2019, the affirmative vote of the holders of a majority of the shares represented in person or by proxy at the meeting and entitled to vote will be required for approval.  Abstentions will have the same effect as a negative vote, and brokernon-votes will not be counted in determining the number of shares necessary for approval.

For the amendment to our articles of incorporation, the affirmative vote of the holders of a majority of the outstanding shares entitled to vote at the annual meeting will be required for approval. Abstentions and brokernon-votes will have the same effect as a vote against the proposal.

What happens if I do not give specific voting instructions?

Holder of Record.If you are a holder of record and you sign and return a proxy card without giving specific instructions, then the proxy holders will vote your shares in the manner recommended by our Board of Directors and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the meeting.

Beneficial Owner of Shares Held in Street Name.If you are a beneficial owner of shares held in “street name” and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters but cannot vote onnon-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, the organization that holds your shares will inform us that it does not have the authority to vote on such matter with respect to your shares (that is, a “brokernon-vote”).  Except for the ratification of our independent registered public accounting firm for 2018,2019, we believe that each of the proposals set forth in this proxy statement will be considerednon-routine under the rules of the New York Stock Exchange (which apply to brokers), and therefore, there could be brokernon-votes on such proposals.

What happens if the annual meeting is adjourned or postponed?

Your proxy will still be valid and may be voted at the adjourned or postponed meeting.  You will still be able to change or revoke your proxy before it is exercised.

How can I obtain directions to attend the annual meeting?

If you need directions to be able to attend the annual meeting and vote in person, please visit our website atwww.ofgbancorp.com or contact Anreder & Company, our investor relations firm, at (212) 532-3232; email: 532-3232;ofg@anreder.com email:ofg@anreder.com.

PROPOSALProposal 1: ELECTION OF DIRECTORSElection of Directors

Ourby-laws provide that the Board of Directors will consistconsists of such numberone class of seven directors as fixed from time to time by resolution of the Board. The Board of Directors has established by resolution that the number of director positions, at present nine, will be decreased to seven effective the date of our 2018 annual meeting of shareholders. Our articles of incorporation also provide that the Board of Directors will be divided into three classes of directors as nearly equal in number as possible. Each member is elected annually until the end of thetheir one-year term of their class and until their successors are duly elected and qualified.  Each class serves a term of three years, and the term of only one class ends annually. Concurrently with the election of directors this year, we are proposing an amendment to our articles of incorporation to eliminate the classification of our Board of Directors effective at the 2019 annual meeting. If the amendments are approved at the 2018 annual meeting, the terms of all of our directors will expire at the 2019 annual meeting, and thereafter, all of our directors will be elected to annual terms at each annual meeting of shareholders.

Our Board of Directors also approved, upon the recommendation of our Corporate Governance and Nominating Committee, amendments to our bylaws to provide that directors in uncontested elections will be elected by a majority of the votes cast by our shareholders, rather than a plurality of the votes cast.  Our Corporate Governance and Nominating Committee also approved a Director Resignation Policy requiringrequires that any director that does not receive the majority of votes cast by our shareholders in an uncontested election submit itshis or her resignation to our Board of Directors promptly after the certification of the voting results.  Thereafter, our Board of Directors will have a 90 days period to evaluate the resignation, and if the resignation is not accepted, will disclose the reasons therefore to our shareholders.

Our Board of Directors currently has one vacancy, and Mr. Radamés Peña has decided to not stand for reelection. Given the Board’s decision to decrease the number of directors from nine to seven, effective at the 2018 annual meeting, there will not be any vacancies on the Board after the meeting.

There are no arrangements or understandings between us and any person pursuant to which such person has been elected as a director.  No director is related to any of our directors or executive officers, by blood, marriage or adoption (excluding those that are more remote than first cousin).

Mr. Julian S. Inclán has been nominated by our Board of Directors for election as director forone-year term expiring in 2019, and Mr. Pedro Morazzani has been nominated by our Board of Directors for election as director for a three-year term expiring in 2021. If the amendments to our articles of incorporation proposed herein are approved, the terms of all of our directors, including Mr. Morazzani, will expire at the 2019 annual meeting of shareholders, and all directors will thereafter be elected annually. Set forth below is certain information with respect to each nominee.

Stock Ownership Policy Compliance as of December 31, 2017:2018:

*****

Stock Ownership Policy Compliance as of December 31, 2017:

*****

If any person named as a nominee is unable or unwilling to stand for election at the time of the annual meeting, the proxy holders will nominate and vote for a replacement nominee or nominees recommended by our Board of Directors. At this time, the Board knows of no reason why any of the nominees listed above may not be able to serve as a director if elected.

Our Board of Directors recommends that you vote “FOR ALL” in this proposal.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as to our shares of common stock beneficially owned by persons, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), known to us to be beneficial owners of more than 5% of the outstanding shares. The information is based exclusively upon filings made by such persons or entities pursuant to the Exchange Act.

The following tables set forth information as to the number of our shares of common stock and serial preferred stock beneficially owned as of December 31, 2017, by (i) the directors; (ii) the Chief Executive Officer, Chief Financial Officer, the three most highly compensated executive officers, other than the CEO and CFO, who were serving as executive officers on December 31, 2017 (collectively, the “Named Executive Officers” or “NEOs”); and (iii) the directors and executive officers, including the NEOs, as a group. The information is based upon filings made by such individuals pursuant to the Exchange Act, and information furnished by each of them.

Name of Beneficial Owner		Amount and Nature of Beneficial Ownership of Common Stock (#)				Percent of Common Stock1
Named Executive Officers
José Rafael Fernández			450,526	2			1.03	%
Ganesh Kumar			150,454	3			—
Maritza Arizmendi			12,500	4			—
Ramón Rosado-Linera			27,044	5			—
César Ortiz			43,170	6			—
Directors and Executive Officers as a Group7			1,050,239				2.39	%

For purposes of the foregoing tables, beneficial ownership is determined in accordance with Rule13d-3 under the Exchange Act, pursuant to which shares are deemed to be beneficially owned by a person if he or she directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares the power to vote or direct the voting of the shares, and/or the power to dispose or direct the disposition of the shares, whether or not he or she has any economic interest therein. Unless otherwise indicated in the foregoing tables, the named beneficial owner has sole voting and investment power with respect to the shares, subject, in the case of those directors and officers who are married, to the marital community property laws of Puerto Rico. Under Rule13d-3, a person is deemed to have beneficial ownership of any shares of common stock which he or she has a right to acquire within 60 days, including, without limitation, pursuant to the exercise of any option, warrant or right. Shares of common stock which are subject to such options or other rights of acquisition are deemed to be outstanding for the purpose of computing the percentage of outstanding common stock owned by such person, but are not deemed outstanding for the purpose of computing the percentage of common stock owned by any other person.

INFORMATION WITH RESPECT TO CERTAIN DIRECTORS AND

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

Set forth below is certain information with respect to each director whose term continues.

Directors whose terms expire in 2019

Stock Ownership Policy Compliance as of December 31, 2017:2018:

*****

Stock Ownership Policy Compliance as of December 31, 2018:

*****

Stock Ownership Policy Compliance as of December 31, 2018:

*****

Stock Ownership Policy Compliance as of December 31, 2018:

*****

Stock Ownership Policy Compliance as of December 31, 2017:2018:

*****

Directors whose terms expire in 2020

Stock Ownership Policy Compliance as of December 31, 2017:2018:

*****

Our Board and Committees		Meeting		Attendance
Board		10 of 10			100	%
Audit		9 of 9			100	%
Risk and Compliance (Chair)		11 of 11			100	%
Strategic		2 of 2			100	%

Stock Ownership Policy Compliance as of December 31, 2017:Directors recommends that you vote “FOR ALL” in this proposal.

Information with Respect to Certain Executive Officers Who Are Not Directors

*****

Stock Ownership Policy Compliance as of December 31, 2017:

Executive officers who are not directors

The following information is provided with respect to the executive officers who do not serve on our Board of Directors.  There are no arrangements or understandings pursuant to which any of the following executive officers was selected as an officer of the Company.  No executive officer is related to any of our directors or executive officers, by blood, marriage or adoption (excluding those that are more remote than first cousin).

Stock Ownership Policy Compliance as of December 31, 2017:2018:

*****

Stock Ownership Policy Compliance as of December 31, 2017:2018:

*****

Stock Ownership Policy Compliance as of December 31, 2018:

*****

Stock Ownership Policy Compliance as of December 31, 2017:2018:

*****

Stock Ownership Policy Compliance as of December 31, 2017:2018:

BOARD INDEPENDENCE, LEADERSHIP STRUCTURE AND RISK OVERSIGHTSecurity Ownership of Certain Beneficial Owners and Management

The following table sets forth information as to our shares of common stock beneficially owned by persons, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), known to us to be beneficial owners of more than 5% of the outstanding shares.  The information is based exclusively upon filings made by such persons or entities pursuant to the Exchange Act.

The following tables set forth information as to the number of our shares of common stock and serial preferred stock beneficially owned as of December 31, 2018, by (i) the directors; (ii) the Chief Executive Officer, Chief Financial Officer, the three most highly compensated executive officers, other than the CEO and CFO, who were serving as executive officers on December 31, 2018, and an additional individual for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the registrant at the end of 2018 (collectively, the “Named Executive Officers” or “NEOs”); and (iii) the directors and executive officers, including the NEOs, as a group.  The information is based upon filings made by such individuals pursuant to the Exchange Act, and information furnished by each of them.

For purposes of the foregoing tables, beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which shares are deemed to be beneficially owned by a person if he or she directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares the power to vote or direct the voting of the shares, and/or the power to dispose or direct the disposition of the shares, whether or not he or she has any economic interest therein.  Unless otherwise indicated in the foregoing tables, the named beneficial owner has sole voting and investment power with respect to the shares, subject, in the case of those directors and officers who are married, to the marital community property laws of Puerto Rico.  Under Rule 13d-3, a person is deemed to have beneficial ownership of any shares of common stock which he or she has a right to acquire within 60 days, including, without limitation, pursuant to the exercise of any option, warrant or right.  Shares of common stock which are subject to such options or other rights of acquisition are deemed to be outstanding for the purpose of computing the percentage of outstanding common stock owned by such person but are not deemed outstanding for the purpose of computing the percentage of common stock owned by any other person.

Board Independence, Leadership Structure and Risk Oversight

Except for José Rafael Fernández, who is our President and CEO, all of our directors are “independent” pursuant to the corporate governance listing standards adopted by the New York Stock Exchange (“NYSE”) for listed companies.

Our Board of Directors has adopted standards and definitions to assist it in the evaluation of the independence of its members.  The standards and definitions adopted by the Board describe various types of relationships that could potentially exist between a director and the Company and sets thresholds at which such relationships would be deemed to be material.  If no relationship or transaction exists that would disqualify a director from being independent under such standards and definitions, and no other relationships or transactions exist of a type not specifically mentioned therein that in the Board’s opinion, taking into account all facts and circumstances, would impair a director’s ability to exercise his or her independent judgment, the Board will deem such director to be independent. Such standards and definitions are available on our website at www.ofgbancorp.com.

Our Board of Directors has nineseven positions and only one who is anon-independent member, the CEO.  At present, the roles of Chairperson and CEO are split. At the 2018 annual meeting, the number of positions on the Board of Directors will decrease to seven.  The position of Chairperson is held by Mr. Inclán, an independent director since 2008, and the position of CEO is held by Mr. Fernández, a director and CEO since 2005. Mr. Fernández has led our transformation into one of Puerto Rico’s leading banking and financial service companies with the successful acquisition of two Puerto Rico banks.

Pursuant to our bylaws, and as part of its review of corporate governance and succession planning, our Board of Directors, led by the Corporate Governance and Nominating Committee, conducts an annual self-evaluation and determines the most effective board leadership structure for the Company.  Our Board of Directors also recognizes that different structures may be appropriate for the Company at different times.  In this regard, the Board chooses whether to keep the roles of CEO and Chairperson separate or whether to have one person serve in both capacities.

Our  At this time, the Board has decided that the most appropriate structure for the Company is to have a corporate leadership structure has a split inthat splits the roles of the Chairperson of the Board and the CEO.  The position of Board Chairperson is held by Mr. Inclán, an independent director, whereas the position of CEO is held by Mr. Fernández. We believe that the separation of the Chairperson and CEO positions is the most appropriate structure for us at this time.

In order to align the interests of our directors and top executives with our shareholders, the Board adopted the Officers and Directors Stock Ownership Policy.  Pursuant to such policy, our directors are required to hold common and preferred stock of the Company with a total value that is not less than four times their annual cash compensation within a period of 3 years of their first equity award.

Our Board of Directors, its Audit Committee, Compensation Committee, Risk and Compliance Committee, Corporate Governance and Nominating Committee and the Bank’s Credit Committee and management’s Asset and Liability Management Committee (the “ALCO Committee”), Credit Risk Committee and Risk Management and Compliance Committee, are actively involved in overseeing the management of the risks involved in our business and operations.  However, the Board ultimately determines the level of risk that is acceptable for the Company within general guidelines and regulatory requirements. The Board considers that effective risk management is a fundamental part of good management practice and is committed to maintaining sound risk management systems.  To this end, the Board is responsible for adopting several risk policies and reviewing the effectiveness of our risk management program.  In order to appropriately discharge their risk oversight functions, the Board the Audit Committee, the Compensation Committee, and the Risk and Compliance Committeeits committees have access to senior management and the right to consult with and retain independent legal and other advisors at our expense pursuant to our Corporate Governance Principles and Guidelines.  The Board, the Audit Committee and the Risk and Compliance Committee also regularly meet with and receive written reports from senior management, including our Chief Risk and Compliance Officer and Internal Audit Department, who evaluate significant risk exposures and contribute to our risk management and internal control system.  The Compensation Committee assists the Board in ensuring that our compensation program encourages decision-making that is in the best long-term interest of the Company and its shareholders as a whole, and does not encourage excessive or inappropriate risk-taking. Moreover, the ALCO Committee has responsibility for overseeing the management of our assets and liabilities to balance our risk exposures.  Its principal objective is to enhance profitability while maintaining appropriate levels of liquidity and interest rate risks.  The Credit Committee of the Bank’s Board and management’s Credit Risk Committee have responsibility for setting strategies to achieve our credit risk goals and objectives in accordance with the credit policy approved by our Board of Directors.  The Risk Management and Compliance Committee has responsibility for the implementation of our risk management program.  In sum, all such committees assist and report to the Board in connection with the monitoring and oversight of certain risks and/or the implementation of the policies and objectives adopted by the Board.

BOARD MEETINGSBoard Meetings

Our Board of Directors held 1011 meetings in 2017.2018.  No incumbent director attended fewer than 75% of the aggregate of the total number of Board meetings and the total number of meetings of Board committees in which he served in that year.  Board members are required to attend our annual meeting of shareholders.  All Board members then in office attended last year’s annual meeting of shareholders.

EXECUTIVE MEETINGS OFNON-MANAGEMENT DIRECTORSExecutive Meetings of Non-Management Directors

Our Board of Directors holds regular meetings of“non-management “non-management directors” (that is, directors who are not executive officers of the Company) to promote open discussions and better communication among such directors.  Julian S. Inclán, the Chairperson of the Board, has been chosen to preside at such meetings.

BOARD COMMITTEESBoard Committees

Our Board of Directors has a standing the Audit Committee, Risk and Compliance Committee, Compensation Committee, Corporate Governance and Nominating Committee, and Strategic Committee.

The Audit Committee assists our Board of Directors in its oversight of our financial reporting process and meets regularly without management’s presence.  It fulfills its oversight responsibilities by reviewing:  (a) the integrity of the financial reports and other financial information provided by us to any governmental or regulatory body or to the public; and (b) our auditing, accounting, and financial reporting processes generally.  The members of this committee are Pedro Morazzani, Chairperson, Rafael F. Martínez-Margarida, JorgeColón-Gerena and Julian S. Inclán.  Our Board of Directors has determined that each member of this committee is financially literate or has accounting or related financial management expertise, and that both Pedro Morazzani and Rafael F. Martínez-Margarida areis an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of U.S. Securities and Exchange Commission (“SEC”) RegulationS-K.  It met 97 times in 2017.2018.

The Audit Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website atwww.ofgbancorp.com.  All of its members are independent directors as required by the NYSE and the SEC.

The Risk and Compliance Committee assists our Board of Directors in its oversight of our internal controls, enterprise risk management, and legal and regulatory compliance.  It fulfills its oversight responsibilities by reviewing our systems of internal controls regarding finance, accounting, legal and regulatory compliance, and ethics that management and our Board of Directors have established.  The members of this committee are Rafael F. Martínez-Margarida, Chairperson, Néstor de Jesús, Chairperson, Juan C. Aguayo, Vice Chairperson, and Julian S. Inclán.  It met 1110 times in 2017.2018.

The Risk and Compliance Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website atwww.ofgbancorp.com.  All of its members are independent directors.

The Compensation Committee discharges the responsibilities of our Board of Directors relating to compensation of our directors and executive officers.  Its general responsibilities are:  (a) reviewing and approving corporate goals and objectives relevant to the compensation of the CEO; (b) evaluating the CEO’s performance in light of those goals and objectives; (c) making recommendations to our Board of Directors with respect to CEO compensation, and approving director and executive officer compensation; (d) producing a committee report on executive compensation; (e) succession planning; and (e)(f) conducting an annual performance evaluation of itself.  This committee also administers our equity-based compensation plan and is given absolute discretion to, among other things, construe and interpret the plan; to prescribe, amend and rescind rules and regulations relating to the plan; to select the persons to whom plan awards will be given; to determine the number of shares subject to each plan award; and to determine the terms and conditions to which each plan award is subject.  The members of this committee are JorgeColón-Gerena, Chairperson, Julian S. Inclán, Vice Chairperson and Radamés Peña.Edwin Pérez.  It met 24 times in 2017.2018.

The Compensation Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website atwww.ofgbancorp.com.  All of its members are independent directors as required by the NYSE.

The Corporate Governance and Nominating Committee assists our Board of Directors by:  (a) identifying individuals qualified to become directors consistent with criteria approved by the Board; (b) selecting or recommending that the Board select the director nominees for the next annual meeting of shareholders; (c) developing and recommending to the Board a set of corporate governance principles applicable to us that are consistent with sound corporate governance practices and in compliance with applicable legal, regulatory, or other requirements; (d) monitoring and reviewing any other corporate governance matters which the Board may refer to this committee; and (e) performing an annual evaluation of the Board, Board committees and each of the directors individually. The members of this committee are Juan Carlos Aguayo, Chairperson, Julian S. Inclán, Vice Chairperson, and Néstor de Jesús and Radamés Peña.s. It met 2 times in 2017.2018.

The Corporate Governance and Nominating Committee operates pursuant to a written charter that has been approved by our Board of Directors, a current copy of which is available on our website at www.ofgbancorp.com.www.ofgbancorp.com. All of its members are independent directors as required by the NYSE.

Pursuant to ourby-laws, no nominations for directors, except those made by our Board of Directors upon the recommendation of the Corporate Governance and Nominating Committee, will be voted upon at the annual meeting unless other nominations by shareholders are made in writing, together with certain information about the nominating shareholder and the nominee, including the nominee’s qualifications for service and his or her written consent to serve on our Board of Directors if elected, and delivered to the Secretary of the Board at least 120 days prior to the anniversary date of the mailing of proxy materials in connection with last year’s annual meeting.  Ballots bearing the names of all of the persons nominated by our Board of Directors and by shareholders, if properly made,

will be provided for use at the annual meeting.  The Corporate Governance and Nominating Committee has not established any specific, minimum qualifications that it believes must be met by a nominee recommended by such committee for a position on our Board of Directors.  The Committee instead considers general factors, including, without limitation, the candidate’s experience with other businesses and organizations, the interplay of such experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any of its committees.

Board Diversity

The Corporate Governance and Nominating Committee generally identifies qualified candidates based on the basis of recommendations made by existing directors, management, or independent consultants.  There are no differences in the manner in which the committee evaluates nominees for director based on whether the nominee is recommended by a shareholder.  The committee will consider potential nominees by management, shareholders or other members of the Board, and develop and evaluate information from a variety of sources regarding the potential nominee before making a decision.

Pursuant to its charter, the Corporate Governance and Nominating Committee considers diversity, among other factors such as competencies, experience, age and other appropriate qualities, to determine which candidates it recommends to our Board of Directors for approval as nominees.  The committee focuses mainly on achieving a balance of experience on the Board that represents a cross-section of the local community, including directors with experience in the public and private sectors, experience in the medical, legal and accounting professions, and experience in a variety of industries relevant to our business needs. To achieve such balance,

After evaluating our strategic plan and the committee periodically updatescurrent composition of our Board, our Corporate Governance and reviews a Board skills matrixNominating Committee has identified the need to determine any shortcomingsrecruit women candidates and candidates based in the diversitycontinental United States.  To assist with our search for qualified women candidates, our Corporate Governance and competenciesNominating Committee engaged the services of the National Association of Corporate Directors (“NACD”).  Our Corporate Governance and Nominating Committee has already interviewed several women candidates and continues to evaluate the candidates identified by the NACD.  To ensure an appropriately diverse Board, our Corporate Governance and Nominating Committee is committed to assistrecruiting a woman candidate in identifying nominees for directorsthe short-term.

Corporate Social Responsibility

Our Company’s corporate social responsibility program seeks to harness our culture of constant innovation that has led to our success to improve the communities we serve.  Our program carries out this spirit of transformation through three pillars, social innovation, education and entrepreneurship.  Through this program, we coordinated over 1,000 community service hours by our participant employees last year and have the skillsprovided more than 30 grants to cover higher education expenses of children of our employees.  More information regarding our corporate social responsibility program, including our commitment to our workforce, is available on our website www.orientalbank.com.

Corporate Governance Principles and knowledge to strengthen the Board.

CORPORATE GOVERNANCE PRINCIPLES AND GUIDELINESGuidelines

We have adopted a set of Corporate Governance Principles and Guidelines to promote the functioning of our Board of Directors and its committees, to protect and enhance shareholder value, and to set forth a common set of expectations as to how the Board, its various committees, individual directors and management should perform their functions.  We have also adopted a Code of Business Conduct and Ethics that reaffirms our basic policies of business conduct and ethics for our directors, officers, employees and agents.  It consists of basic and general standards of business as well as personal conduct.  The Corporate Governance Principles and Guidelines and the Code of Business Conduct and Ethics are available on our website atwww.ofgbancorp.com.

Any shareholder who desires to contact our Board of Directors or any of its members may do so by writing to:  Chairperson of the Board, OFG Bancorp, P.O. Box 195145, San Juan, Puerto Rico 00919-5145.  Alternatively, any interested party, including, without limitation, shareholders and employees, may communicate directly with the independent members of the Board or report possible legal or ethical violations, including, without limitation, concerns regarding questionable accounting or auditing matters.  Any such interested party may direct his or her written communication or report, anonymously, to the Chairperson of the Audit Committee.  The mailing, postage prepaid, should be marked “confidential”“confidential” and addressed as follows:

PROPOSAL2: ADVISORY VOTE ON EXECUTIVE COMPENSATIONProposal 2: Advisory Vote on Executive Compensation

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), we are required to have a separatenon-binding shareholder vote to approve the compensation of our Named Executive Officers at least once every three years.  This is commonly known as a“say-on-pay” “say-on-pay” vote.  At the annual meeting of shareholders held in 2017,2018, a majority of our shareholders voted in favor of holding thesay-on-pay vote every year.  As previously disclosed, the Company has decided to hold such vote every year until the next shareholder advisory vote on the frequency of future advisory votes on executive compensation.

We have in place a comprehensive executive compensation program under the oversight of the Compensation Committee of our Board of Directors.  Our program is described under the heading “Compensation Discussion and Analysis” and in the tabular and narrative disclosures related to Named Executive Officers in this proxy statement.  The Compensation Committee continually monitors the program as well as general economic, regulatory and legislative developments affecting executive compensation.

Our executive compensation program is intended to reward achievements of individual and businessCompany performance objectives and to align such objectivesaligned with our corporate governance principlesstrategic plan and the creation of shareholder value.  Our main objective isWe seek to attract and retain the most talented and effective executive team for the Company by providing an appropriate mix of fixed versus variable compensation while emphasizingpay-for-performance in accordance with our short and long termlong-term goals.  We will continue to pursue compensation arrangements that are intended to align the financial interests of our executives with the long-term interests of our shareholders.

This proposal gives you the opportunity to vote for or against, or abstain from voting on, the following resolution related to the compensation of our Named Executive Officers:

RESOLVED, that the compensation paid to the Company’s named executive officers disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.

Since your vote is advisory, it is not binding on the Company or our Board of Directors, and may not be construed as overruling any of our executive compensation decisions.  However, our Board of Directors and its Compensation Committee may take into account the voting results when considering future compensation arrangements.

Our Board of Directors recommends that you vote “FOR” this proposal.

PROPOSAL 3: AMENDMENT TO ARTICLES EIGHTH AND TENTH OF OUR ARTICLES OF INCORPORATIONCompensation Discussion and Analysis

Overview

Our Board of Directors recommends the amendment of Articles Eighthexecutive compensation program aims to promote our long-term success, to attract and Tenthretain qualified and talented leaders and motivate them to accomplish our financial goals.  To this end, our executive compensation program considers our corporate results in light of our articlescompetitive position and goals, and also each executive’s individual performance, commitment and achievements.

This Compensation Discussion and Analysis explains our executive compensation program for our Named Executive Officers (“NEOs”) listed below.  It also describes how compensation decisions are made and the reasons for specific decisions made in 2018.

Executive Summary

2018 Compensation Highlights.  During 2018, we enhanced our equity compensation program to better align our NEOs’ interests with creating long-term shareholder value.  Upon the recommendation of incorporationour independent external consultant and based on feedback received from shareholders, our Compensation Committee adopted a framework under our Omnibus Plan governing future grants of equity awards.  Under such framework, half of the value (50%) of equity awards granted to our NEOs will be in the manner shown in Appendix A hereto. The proposed amendmentform of performance shares with a three-year performance cycle.  To further increase our focus on long-term performance-based compensation, for both Mr. Fernández and Mr. Kumar, the Compensation Committee approved grants of performance shares and decreases to Article Eighth would eliminatetheir annual cash bonus targets.  In addition, our Board increased the classification ofminimum stock ownership requirements for our CEO to five times base salary and adopted an anti-hedging and pledging policy and clawback policy.

2018 Advisory Vote on Executive Compensation.  At the Board of Directors into three classes each elected to three year terms effective at the 2019 annual meeting of shareholders. At such meeting, all of the terms of office of the our directors will expire, and thereafter, all of the directors will be elected on an annual basis to a term expiring at the next succeeding2018 annual meeting of shareholders, or when their successors are duly elected and qualified.

The proposed amendment to Article Tenth would eliminate this Article in its entirety. This Article provides that a voteour executive compensation program received the support of 75% of our shareholders, which was lower than the total numberlevels of outstanding sharessupport we have received in the past.  As a result, we communicated with shareholders to better understand their expectations and engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”), an independent compensation consultant, to provide us with recommendations as to how we can better align our compensation program with evolving best practices and better meet our shareholders’ expectations.  Based on these efforts, we increased our focus on long-term performance-based equity compensation to better align our executives’ interests with creating long-term shareholder value.  We continue to believe that our executive compensation program is requireddesigned to approve any proposal that does not havesupport the approvalCompany and our business strategies in concert with our compensation philosophies and objectives.

2018 Business and Financial Highlights.  In 2018, we executed on our strategy of 80%distinguishing Oriental Bank as a leader in quality of service among Puerto Rico banks and of diversifying our credit risk geographically into the continental United States.  Below are some highlights of the BoardCompany’s financial and operational performance for 2018:

Summary of Executive Compensation Practices.  Our executive compensation program includes the following practices and policies, which we believe promote sound compensation governance and are in the best interests of our shareholders and NEOs.

What Guides Our Program

Compensation Philosophy and Objectives.  The philosophy of our executive compensation program is to provide competitive compensation that seeksrewards achievements of our strategic objectives supporting the creation of shareholder value.  Accordingly, the main objectives of our program are to:

Our philosophy is to (i) amend Article Tenth, (ii) approvealign the interests of our executives with our shareholders by promoting ownership of our Company’s common stock through equity awards and minimum stock ownership requirements.  Furthermore, a significant component of our compensation program for executives, including the NEOs, is incentive (variable) compensation that is tied to financial, operational and strategic results over both short and long-term performance periods.  For certain executives, such as Mr. Rosado and Mr. Cruz, we provide incentives tied to the accomplishment of business combination, or (iii) approveunit and individual objectives to reward their contributions.

We are cognizant of our competitive environment for superior executive talent and seek to maintain a compensation strategy that is competitive in the dissolutionfinancial services industry in Puerto Rico and the United States.

Elements of Compensation. To assure the appropriate mix of fixed versus variable compensation and focus on both short and long-term business performance, we have established three primary elements for our executive compensation program: base salary, annual cash bonus awards and long-term equity-based compensation.

Base salary is designed to be competitive with comparable executive positions in peer group companies in the U.S. and Puerto Rico and considers the complexity and unique challenges of each executive’s position, individual skills, experience, background and performance.  

Annual cash bonus awards are based on a balanced scorecard that takes into consideration the accomplishment of Company-wide performance goals, and for some executives, business unit and individual performance goals as well.

Long-term incentives are granted to our executives in the form of performance-based and time-based awards to foster ownership of the Company. UponCompany’s common stock, link our executives’ compensation to shareholder value and support our leadership retention objectives.

Compensation Mix.  The charts below show the eliminationtarget total direct compensation of Article Tenth,Mr. Fernández, our CEO, Mr. Kumar, our COO and second highest ranking officer, and the approvalaverage of business combinations or the dissolutionour other NEOs for 2018.  These charts illustrate that a significant portion of such compensation is variable and performance-based.

2018 CEO COMPENSATION MIX Restricted Units 16% Performance Shares 16% Annual Cash Bonus 29% Base Salary 39% 2018 COO COMPENSATION MIX Restricted Units 12% Performance Shares 12% Annual Cash Bonus 38% Base Salary 38%

2018 NEOS (OTHER THAN CEO AND COO) COMPENSATION MIX Restricted Units 10% Performance Shares 10% Annual Cash Bonus 22% Base Salary 58%

Determination of Compensation Decisions

The Company’s Compensation Committee, senior management and independent compensation consultant play key roles in making compensation decisions with respect to our executives.

The Role of the Company will only require a majority of the total number of outstanding shares.

These changes will be effective upon the filing of the amendment to the articles of incorporation with the Department of State of the Commonwealth of Puerto Rico.

Compensation Committee.  The Board of Directors unanimously approved this proposal upon the recommendation of the Corporate Governance and Nominating Committee to align our shareholders’ rights with best corporate governance practices. The resolutions attached to this proxy statement as Appendix A will be submitted for adoption at this annual meeting. These amendment to our articles of incorporation require the affirmative vote of a majority of the outstanding shares of our common stock. Therefore, abstentions and brokernon-votes will have the same effect as votes cast against this proposal.

Our Board of Directors recommends that you vote for “FOR” this Proposal.

PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The AuditCompensation Committee of our Board of Directors plays a key role in the development and oversight of our compensation program.  It consists entirely of independent directors and operates under a written charter approved by our Board of Directors, which is publicly available at www.ofgbancorp.com.  The Compensation Committee approves the employment agreement that governs the compensation of our CEO Mr. Fernández, approves the corporate scorecard used to determine all or a significant portion of the annual cash bonus for our NEOs, and grants equity awards to all executives under our long-term incentive plan.  As appropriate, it looks to our senior management and independent compensation consultants for support in its work. While the Compensation Committee values input and advice from these and other sources, it exercises its independent judgment in reaching its decisions.

The Compensation Committee approves the compensation of the CEO.  His compensation level is guided by the terms of his 2018 Employment Agreement, as amended.  The Compensation Committee may increase his salary after the first year, his target performance bonus under our annual bonus plan is 75% of his base salary, and his target long-term incentive is 80% of his base salary.

In conducting its annual evaluation of the CEO’s performance, the Compensation Committee considers the CEO’s contributions to the overall performance of the Company, including his personal attributes and merits.  It also reviews our key operating results along with the accomplishment of our key strategic initiatives and considers the standard of living in San Juan, Puerto Rico, where our main offices are located.  As part of this process, the Compensation Committee reviews all relevant information or data, including the results of our CEO’s performance scorecard and compensation levels for chief executive officers at peer group companies and the operating environment in which the Company does business.  Furthermore, the Chairpersons of our Board of Directors and Compensation Committee meet periodically with our CEO to discuss his performance. The progress results of these meetings are reported to our Board of Directors.  The CEO does not participate in any decision regarding his compensation.

Our Compensation Committee also considers other relevant factors in making compensation decisions or recommendations for our CEO, including salary data for comparable positions at peer group companies in Puerto Rico and the U.S., and compensation levels at the Company.

Determining Goals.  The Compensation Committee is responsible for establishing both short and long-term goals that guide both our cash bonus award and the level of achievement of performance shares.  For the Compensation Committee to perform its goal-setting functions, the following process is followed.

Prior to the beginning of the year, the Board reviews and approves the Company’s strategic plan, and senior executives and department or division heads meet and discuss the Company’s strategic plan and the goals for the Company in the upcoming year that will form part of the Company scorecard.  At the beginning of the year, the Board reviews and approves an annual budget for the Company on a consolidated basis and separately for its banking subsidiary.  The Compensation Committee then reviews and assesses performance goals presented by management and determines the structure of the annual goals for the Company scorecard that determines the payout of all or a significant portion of annual bonus awards and the three-year goals for determining the payout of performance shares.  These goals include minimum performance thresholds that must be met to earn any award, as well as performance levels required to achieve maximum payouts.  Performance goals that form part of the business unit scorecards for the annual cash bonus are established by the CEO with the support of the Finance and Human Resources Departments.

The level of achievement of such goals that form part of the Company and business unit scorecards play an essential role in the determination of the annual cash bonus awards.  On a quarterly basis, senior management and our Board of Directors review our actual financial performance against the goals set for the year.  In addition, our Board of Directors receives quarterly reports detailing our actual financial performance compared to these goals.  Such reports are discussed in the corresponding Board meetings.

Each annual cash bonus performance goal is assigned a weight and requires a threshold level of accomplishment of 70% for any payout in connection with such goal.  Each performance goal has selected KPMG LLP (“KPMG”)a maximum level of achievement of either 100% or 125%.  Executives must achieve a minimum rating on their individual performance evaluations to be eligible for any annual cash bonus, and the Company must have a minimum level of earnings for any payout with respect to all company-wide performance goals or all business unit performance goals.  Each target bonus is expressed as a percentage of the executive’s base salary.

The Role of Senior Management.  Our CEO, with the assistance of our Human Resources Director and an independent registered public accounting firmcompensation consultant, establishes the base salary and target cash bonus award of all other executives of the Company and recommends to our Compensation Committee equity awards for other executives.  

In making compensation decisions, our CEO, with the assistance of our Human Resources Director, considers several factors, such as the scope, complexity and degree of challenge of each executive’s responsibilities, as well as his or her performance, skills, experience and succession potential.  In the past, he has also considered in making decisions, among other information, an industry compensation and benefits study prepared by a compensation consultant sponsored by the Puerto Rico Bankers Association.

On a quarterly basis, our Finance Department assesses the progress of the goals set for the year ending December 31, 2018, and has further directed thatat the selectionend of such firm be submitted for ratificationthe year evaluate their results.  These assessments are reviewed by the shareholders at this annual meeting. KPMG has served asCEO who together with our independent registered public accounting firm since 2005. Neither our articlesDirector of incorporation nor ourby-laws require that our shareholders ratifyHuman Resources and such executive’s direct supervisor undertakes an evaluation of each executive’s performance based, in part, on objective measures set forth in the selectionperformance scorecard.  The CEO considers the financial performance of such firm. If our shareholders do not ratify the selection,Company, the

Audit Committee will reconsider whether performance of each department or notdivision, and the individual performance of each executive relative to retain KPMG, but may nonetheless retain it. Even if the selection is ratified, the Audit Committee, in their discretion, may change the appointment at any time during the year if they determine that such change would be in our best interest.

KPMG will have representatives present at the annual meeting who will have an opportunity to make a brief statement if they desire to do so, and who will be available to respond to appropriate questions that may arise.

Our Board of Directors recommends that you vote “FOR” this proposal.

INDEPENDENT AUDITOR

KPMG served as our independent registered public accounting firmgoals set for the year ended December 31, 2017. and evaluates the compensatory recommendations provided by our Human Resources Director.  In the interest of fairness, he may also take into consideration subjective or non-formulaic factors.

The Role of the Compensation Consultant, Benchmarking and the Peer Group.  In 2018, our Compensation Committee engaged Pearl Meyer, an independent compensation consultant, to review the Company’s compensation practices with respect to our NEOs relative to our peers and develop recommendations that align better with our shareholders’ expectations.  As part of this process, they also updated the peer group of financial institutions for the

Company and prepared a comparison of the compensation of our Mr. Fernández, Mr. Kumar and Ms. Arizmendi with persons in comparable positions at such peer financial institutions.  It was also engaged to develop recommendations for their compensation considering the Company’s peer group evaluation.

The peer group established for the Company by Pearl Meyer, and approved by our Compensation Committee, for our compensation decisions in 2018 consisted of the following companies:

Pearl Meyer reports directly to the Compensation Committee and does not provide any other services that KPMG providedto the Company. The Compensation Committee has analyzed whether the work of Pearl Meyer has raised any conflicts of interest, taking into consideration the following factors, among others: (i) the provision of other services to the Company by Pearl Meyer; (ii) the amount of fees from the Company paid to Pearl Meyer as a percentage of their respective total revenues; (iii) Pearl Meyer’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Pearl Meyer or the individual compensation advisors employed by Pearl Meyer with an executive officer of the Company; (v) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any stock of the Company owned by Pearl Meyer or the individual compensation advisors employed by Pearl Meyer. The Compensation Committee has determined, based on its subsidiaries includedanalysis of the examinationabove factors, among others, that the work of our consolidated financial statements, limited revisions of our quarterly reports, audits of some of our subsidiaries, audits of our employee benefits plan, services related to our filings withPearl Meyer and the SEC and other regulatory agencies, and consultations on various tax and accounting matters.

The Audit Committee reviewed and approved all audit andnon-audit services renderedindividual compensation advisors employed by KPMGPearl Meyer as compensation consultants to the Company has not created any conflicts of interest.

Analysis of Compensation Decisions

Base Salary.  After a review of our peer group with the assistance of Pearl Meyer, our Compensation Committee did not increase the base salary of Mr. Fernández in 2018.  This decision also reflected the Compensation Committee’s focus on increasing performance-based long-term incentives.  The base salary for Ms. Arizmendi was increased based on a review of peer group companies to ensure that her compensation is competitive after her appointment as CFO in March 2017.  The base salaries of Mr. Kumar, Mr. Rosado, Mr. Cruz and its subsidiaries,Mr. Ortiz were increased between 2% and concluded3% reflecting the standard adjustments applied to our employees based on their individual evaluations.

Annual Cash Bonus.  After evaluating our annual cash bonus targets and those of our peer companies, upon the recommendation of our independent compensation consultant, the Compensation Committee decided to decrease the annual cash bonus target of Mr. Fernández from 100% to 75% of his base salary effective for the 2018 performance period.  Based on such review, Mr. Kumar’s target was also decreased from 100% to 75%, effective for the 2019 performance period and Mr. Arizmendi’s target was increased from 50% to 60% of her base salary effective for the 2018 performance period.  The annual cash bonus targets for Mr. Rosado, Mr. Cruz and Mr. Ortiz remained the same, and increased in dollar amount because of the corresponding increases to their base salaries.  The table below shows the changes in the targets for our NEOs both as a percentage of their base salaries and in dollar amounts.

The table below shows the weight given to each executive of our Company-wide performance scorecard, their respective department scorecard, and their individual performance evaluations.  Although no weight is given to the individual performance evaluations of Mr. Fernandez, Mr. Kumar and Ms. Arizmendi for purposes of calculating the amount of the annual cash bonus, they are still evaluated individually and must still achieve a satisfactory level of performance to receive any annual cash bonus.

The table below presents our 2018 Company-wide performance goals, including the weight of each goal and the percent of achievement of the target amount.  In addition to the performance goals, the Compensation Committee established a minimum diluted earnings per share goal of $0.79, which must be accomplished for any cash bonus to be paid in connection with any of the Company-wide performance goals.

To determine each NEO’s performance bonus, the target cash bonus percentage is multiplied by the executive’s base salary, which then is multiplied by the result of his performance scorecard.  Our Internal Audit Department verifies the accuracy of such results.

The table below shows the target cash bonus percentages for the NEOs in 2018.

Long-Term Incentive Compensation.  In 2018, our Compensation Committee approved a new framework for granting equity awards to increase our focus on performance-based compensation.  Under this new framework, the Compensation Committee will grant performance shares based on a three-year performance cycle and restricted units that vest in part annually over a three-year period.  We believe that this new framework reflects current trends at peer group companies and that it strengthens the link between executive performance and shareholder value.

As part of our new framework for granting equity awards under the Omnibus Plan, our Compensation Committee decided that the provisionvalue of the equity awards granted to our NEOs will be based on a percentage of their base salaries. Half of such services was compatible with the maintenance of KPMG’s independencevalue will be granted in the conductform of its auditing functions. The Auditperformance shares with a three-year performance cycle, and the other half of such value will be granted in the form of restricted units with a third of the restricted units vesting annually on a three-year vesting schedule.  In making these awards, the Compensation Committee has adopted apre-approval policy regardingexpects to continue to maintain our ability to retain key executives.  Each award is subject to service conditions that must be met by the procurement of audit andnon-audit services, which is available on our website atwww.ofgbancorp.com. The Audit Committee intends to review such policy periodically.

The aggregate fees billed by KPMGexecutive for the years endedaward to vest.

In 2018, as part of the restructuring of their compensation towards performance-based long-term incentives, the Compensation Committee granted to Mr. Fernández and Mr. Kumar performance shares based on a three-year performance cycle ending on December 31, 2020.  The Compensation Committee selected a performance metric, the growth in the Company’s tangible book value, supported by the Company’s three-year strategic plan and considering an evaluation of our peer group by our compensation consultant.  The tangible book value of the Company as of December 31, 2017 was $15.67 and 2016the target tangible book value for December 31, 2020 is $18.34. The Compensation Committee did not establish a performance goal based on peer comparisons given the difficulty in establishing a proper peer group for the various services providedCompany which primarily operates and serves the island of Puerto Rico.  Financial performance comparisons to banks in the continental United States is problematic.  For over 10 years, Puerto Rico has been suffering through a prolonged recession and government fiscal crisis while the United States has seen economic growth and a fiscally stable government.  In addition, the entire island of Puerto Rico was severely impacted by hurricanes Irma and Maria in September 2017 further complicating benchmarking long-term incentives against United States based peer groups.

The amount of common stock that will be earned in connection with these performance shares will be based on the growth of the Company’s tangible book value over the performance cycle.  The table below describes these performance share awards.

Under the new framework, the Compensation Committee approved equity awards to the NEOs for their performance in 2018 as follows:

The common stock that the executives will receive in connection with the performance shares will be based on the achievement of growth in the Company’s tangible book value over a three-year performance cycle ending on December 31, 2021.  The performance goal target was established based on the Company’s expected growth in the tangible book value according to its three-year strategic plan.  The threshold, target and maximum level of achievement of the growth in the Company’s tangible book value established for the performance shares and the percentage payout at each level of achievement are as follows:

Other Compensation Practices

Stock Ownership Requirements.  Our long-term incentive compensation is designed to ensure that executives have a continuing stake in our success and to encourage executives to focus on performance goals that will enhance the value of our franchise and capital stock.  Such incentives are also designed to retain key executives, reward risk management, and link executive performance to the creation of franchise and shareholder value.  Pursuant to our Officers and Directors Stock Ownership Policy, we require our NEOs (among other officers) to own a minimum amount of our equity stock (based on the higher of the market or book value of the stock) equal to five times annual base salary in the case of our CEO, Mr. Fernández, three times annual base salary in the case of certain executive officers, including Mr. Kumar and Ms. Arizmendi, and two times annual base salary in the case of other key officers, including our Mr. Rosado and Mr. Cruz.  Our executives are required to comply in periods ranging from 2 to 4 years after they receive their first equity award following their appointment.  

Anti-hedging and Pledging Policy.  Our Insider Trading and Blackout Policy prohibits our employees from entering into any transaction to hedge or offset any decrease in the market value of our securities and from pledging any of our securities.

Clawback Policy.  Our Compensation Recoupment Policy requires that our top executives, who received incentive-based compensation (e.g., bonus, annual incentive or other performance-based cash or equity compensation awards) in the three-year period prior to a restatement of the Company’s financial statements due to material non-compliance with financial reporting requirements under the applicable securities laws, return to the Company the amount of such compensation that the executive would not have received but for the misstated financial statements.

Change-in-Control Compensation Agreements.  An important objective of our compensation program is not only the recruitment of seasoned executives but also their retention and its subsidiaries werecommitment to our long-term success.  Therefore, to promote their retention and reduce any concerns that they may be adversely affected in the event of a change-in-control of the Company, we have entered into a change-in-control compensation agreement with Mr. Fernández and Mr. Kumar pursuant to which the executive is entitled to a cash payment equal to two times the sum of his annual base salary and last cash bonus if there is a change in control and as follows:a result thereof or within one year thereafter his employment is terminated.

The following table presents the estimated cash compensation under their respective change-in-control compensation agreements based on their salaries and bonuses for 2018.  No such payout has been required to date under any such agreement by the Company.

As defined by the SEC, (i) “audit fees” are fees for professional services rendered byNon-Qualified Deferred Compensation.  We also offer our principal accountantNEOs and other highly compensated executives a non-qualified deferred compensation plan for the auditdeferral of taxable income and certain allowances.  Such allowances are offered on a case-by-case basis and are not intended to constitute a significant portion of the executive’s compensation.  Our non-qualified deferred compensation plan is more fully described below.  

Fringe Benefits and Allowances.  We provide several fringe benefits, including a defined contribution plan and healthcare coverage, to our NEOs on the same terms as they are provided to all of our annual financial statements, includingemployees.  These benefits do not constitute a significant portion of the auditNEOs’ total compensation package and are generally available to all of our internal control over financial reporting,employees. We provide these benefits to retain and reviewattract an appropriate caliber of financial statements included on ourForms 10-Q, ortalent and recognize that other companies with which we compete for services that are normally provided by the accountant in connection with statutorytalent provide similar benefits to their officers and regulatory filings or engagements for those years; (ii) “audit-related fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements; (iii) “tax fees” are fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”

COMPENSATION RISK ASSESSMENTCompensation Risk Assessment

Our compensation program is a key component of the Company’s overall compliance andpay-for-performance culture.  The Board’s Compensation Committee, with the assistance of our internal risk management staff, regularly reviews this program and does not believe that the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company.

We believe that our approach to setting goals and targets with payouts at multiple levels of performance and the evaluation of annual performance results assist in mitigating excessive risk-taking that could harm our value or reward poor judgment by our executives.  Several features of our compensation program reflect sound risk management practices, including our Compensation Recoupment Policy and our Directors and Officers Stock Ownership Policy, which are described below under the heading “Compensation Discussion and Analysis.”

We allocate compensation among base salary and incentive compensation (bonus and equity awards) to target opportunities in such a way as to not encourage excessive risk-taking.  Furthermore, although the performance measures that determine bonus and equity awards for certain business unit leaders are based in part on the achievements of their respective business units, the measures that determine payouts for all of our executives include company-wide metrics.  Such metrics, which are not controlled or overly influenced by the results of any single

business unit, are given greater weight in the case of NEOs.  This is based on our belief that applying company-wide metrics encourages decision-making that is consistent with our philosophy and that is in the best long-term interests of the Company and its shareholders as a whole.shareholders.  Moreover, the mix of equity awards in our incentive program, which includes full value awards such as restricted stock units, and the minimum stock ownership requirements applicable to our top executives also mitigate risk.  In addition, the multi-year vesting of our equity awards properly accounts for the time horizon of risk.  Finally, each employee’s compliance with our internal policies and procedures, including ethics standards, is an important element of our annual bonus determinations.

COMPENSATION DISCUSSION AND ANALYSIS

Overview

We are guided by the principle that our compensation program must not only promote our long-term success, but also provide significant rewards for outstanding financial performance while establishing clear consequences for under-performance. To this end, each element of compensation takes into account not only our competitive position and goals, but also each executive’s individual performance, commitment and achievements.

Compensation Philosophy and Objectives

The compensation program for our executives, including our Named Executive Officers, is intended to reward achievements of individual and business performance objectives, and align such objectives with our corporate governance principles and the creation of shareholder value. It is also intended to attract and retain the most talented and effective executive team for us. Accordingly, the main objectives of our compensation program are to:

Our general philosophy for setting executive compensation is to increase base salary only in the case of promotions or as necessary in light of compensation data for comparable positions at peer group companies. Furthermore, a significant component of our compensation program for executives, including the NEOs, is incentive (variable) compensation that is tied to financial, operational and strategic results. Therefore, such compensation may vary depending on the level of achievement of specific performance measures linked to our business goals. We operate in a challenging market serving almost exclusively clients located in Puerto Rico, and our compensation program is a critical tool for maintaining our competitiveness.

The Compensation Committee of our Board of Directors plays a key role in the development of our compensation program. It consists entirely of independent directors and operates under a written charter approved by our Board of Directors, which is publicly available atwww.ofgbancorp.com. Each meeting of the Compensation Committee has an agenda established in accordance with an annual calendar set by its Chairperson in consultation with the Chairperson of the Board, senior management and the committee members. Additional discussion topics related to external or internal events are added to the agenda from time to time as necessary. The Compensation Committee receives and reviews materials in advance of each meeting, including information on management’s analyses and recommendations. As appropriate, it looks to our senior management and our Human Resources and Internal Audit Departments for support in its work. In the past, our senior management has considered in making its recommendations, among other information, an industry compensation and benefits study sponsored by the Puerto Rico Bankers Association and prepared by a compensation consultant. While the Compensation Committee values input and advice from these and other sources, it exercises its independent judgment in reaching its decisions.

We are cognizant of our competitive environment for superior executive talent and seek to maintain a compensation strategy that is competitive in the financial services industry in Puerto Rico and the United States. In evaluating our compensation program and authorizing bonus or equity grants under this program, the Compensation Committee takes into account several factors, including the total compensation package, individual and business performance, risk management, total compensation-related expense, and percentage of income allocated to compensation-related costs.

2017 Advisory Vote on Executive Compensation

At the 2017 annual meeting of shareholders, our shareholders expressed their continued support of our executive compensation program by approving the compensation of NEOs. More than 95% of the votes cast supported our executive compensation program. Following the advisory vote, we continue to believe that our executive compensation program is designed to support the Company and our business strategies in concert with our compensation philosophies and objectives.

Elements of Compensation

To assure the appropriate mix of fixed versus variable compensation and focus on both short and long-term business performance, we have established four basic elements for our executive compensation program: base salary, annual cash bonus awards, long-term equity-based compensation, andchange-in-control compensation. It is the Compensation Committee’s intention that the compensation paid to our NEOs be deductible by the Company for Puerto Rico income tax purposes, unless there are valid compensatory reasons for paying nondeductible amounts in order to ensure competitive levels of total compensation.

Base Salary. Base salary is generally designed to be competitive with comparable executive positions in peer group companies in the U.S. and Puerto Rico. However, each executive’s actual salary varies based on the complexity and unique challenges of his or her position, individual skills, experience, background and performance. Survey data for corporate executive salaries in Puerto Rico is also taken into consideration in determining any periodic increases. Base salaries for NEOs are reviewed at least annually by the Compensation Committee.

Annual Cash Bonus Awards. Our annual cash bonus awards reflect a combination of two key elements: level of attainment of business performance targets and individual performance ratings. Business performance targets consist of company and business unit targets based on annual performance goals approved by the Compensation Committee. We maintain performance scorecards for measuring financial, operational and strategic results to determine the level of attainment of our annual performance goals, and assign a weight to each performance measure, with the sum of the weights equal to 100%. Each executive’s performance bonus is based on one or more of the corporate scorecard and the business unit scorecards applicable to the executive. Individual performance evaluations are also considered for our Senior Vice Presidents. A minimum rating on the individual performance evaluations is always required to be eligible for any annual cash bonus. Each target bonus is expressed as a percentage of the executive’s base salary. We may also grant additional special bonuses from time to time to executives in recognition of extraordinary contributions that may not be reflected in the results of their scorecards, in lieu of long term incentive equity awards for NEOs that have already acquired a significant position in our common stock, or to ensure the retention of key executives.

The annual cash bonus award for our CEO, COO and CFO is based solely on the results of our corporate scorecard. For our Senior Vice Presidents, it is based on a combination of the corporate scorecard and the scorecard results of one or more business units. In addition to the corporate and business unit scorecards, the annual cash bonuses for our Senior Vice Presidents take into account the results of their individual performance evaluations.

Long-Term Incentive Compensation. Our long-term incentives are designed to ensure that executives have a continuing stake in our success and to encourage executives to focus on performance goals that will enhance the value of our franchise and capital stock. Such incentives are also designed to retain key executives, reward risk management, and link executive performance to the creation of franchise and shareholder value. Pursuant to our Officers and Directors Stock Ownership Policy, we require our NEOs (among other officers) to own a minimum amount of our equity stock (based on the higher of the market or book value of the stock) equal to four times annual base salary in the case of our CEO, three times annual base salary in the case of certain executive officers, including our COO and CFO, and two times annual base salary in the case of other key officers, including our Treasurer and Senior Vice President of Commercial Credit and Operations. Our executives are required to comply in periods ranging from 2 to 4 years after they receive their first equity award following their appointment. In addition, our Insider Trading and Blackout Policy prohibits all of our employees from entering into any transaction to hedge or offset any decrease in the market value of our securities. We believe that these policies align our executives’ interests with that of our shareholders.

Our Omnibus Plan, an equity based performance incentive plan, provides for awards of stock options, restricted shares, restricted stock units, performance shares, performance units, stock appreciation rights, and dividend equivalent rights. The Compensation Committee has discretion to grant awards from time to time under the Omnibus Plan, to determine the eligible individuals to whom awards will be granted, and to establish the terms and conditions of each award. The Compensation Committee has approved a three year vesting period for awards of restricted units and a five year vesting schedule for options with a quarter of the option awards vesting annually starting on the second anniversary of the award. Option awards may not be repriced or repurchased by the Company. We believe that the Omnibus Plan reflects current trends at peer group companies and that it strengthens the link between executive performance and shareholder value.

To further our goal of retaining our key executives, from time to time the Compensation Committee may, if recommended by our CEO, give certain executives who are in compliance with the minimum stock ownership requirements the option of receiving, instead of an equity award, a cash bonus calculated based on the market value of the equity award they would have otherwise been granted payable in equal annual installments.

Change-in-Control Compensation. An important objective of our compensation program is not only the recruitment of seasoned executives but also their retention and commitment to our long-term success. Therefore, to promote their retention and reduce any concerns that they may be adversely affected in the event of achange-in-control of the Company, we have entered into achange-in-control compensation agreement with our CEO and COO pursuant to which the executive is entitled to a cash payment equal to two times the sum of his annual base salary and last cash bonus if there is a change in control and as a result thereof or within one year thereafter his employment is terminated.

Fringe Benefits and Allowances. We provide several fringe benefits, including a defined contribution plan and healthcare coverage, to our NEOs. These benefits do not constitute a significant portion of the NEOs’ total compensation package and are generally available to all of our employees. We also offer our NEOs anon-qualified deferred compensation plan for the deferral of taxable income and certain allowances. Such allowances are offered on acase-by-case basis and are not intended to constitute a significant portion of the executive’s compensation. Ournon-qualified deferred compensation plan is more fully described below. We provide these benefits to retain and attract an appropriate caliber of talent and recognize that other companies with which we compete for talent provide similar benefits to their officers and employees. Such benefits and allowances are reviewed annually by the Compensation Committee.

Compensation Recoupment. Our Compensation Recoupment Policy, adopted in anticipation of the proposal and implementation of new SEC regulations and NYSE listing standards pursuant to the Dodd-Frank Act, requires that our top executives, who received incentive-based compensation (e.g., bonus, annual incentive or other performance-based cash or equity compensation awards) in the three-year period prior to a restatement of the Company’s financial statements due to materialnon-compliance with financial reporting requirements under the applicable securities laws, return to the Company the amount of such compensation that the executive would not have received but for the misstated financial statements. It is anticipated that this policy may need to be amended in order to conform to the listing standards to be adopted by the NYSE.

Determination of Compensation Decisions

Our decision-making process for determining executive compensation begins with a review of our strategic objectives and business plans. We then consider the scope of responsibilities of each executive, the compensation of similar executives at peer group companies, and the relationship between pay and performance. We further evaluate whether our compensation program meets our goals by monitoring the performance and retention of our executives. We also weigh the business results of the Company in light of the economic environment in Puerto Rico, where practically all of our clients are located. This environment has been particularly challenging in the wake of a ten year recession, a government fiscal crisis and, more recently, the natural disaster caused by hurricane María.

The Compensation Committee is responsible for establishing our compensation program and for making recommendations to our Board of Directors with respect to the compensation of our CEO. In order for the Compensation Committee to perform its functions, the following process for determining executive compensation is followed:

Determining Goals. Prior to the beginning of the year, senior executives and department or division heads meet and discuss goals for the Company in the upcoming year. At the beginning of such year, the Board reviews and approves an annual budget for the Company as a whole and for its banking subsidiary. The Compensation Committee then reviews and assesses performance goals presented by management and determines the structure of the annual bonus awards. These goals include minimum performance thresholds that must be met to earn any bonus awards, as well as performance levels required to achieve maximum payouts. Performance goals are established for each department or division of the Company and for certain executives.

The establishment of performance goals and the review of the level of achievement of such goals play an essential role in the determination of performance awards. On a quarterly basis during the course of the year, senior management and our Board of Directors review our actual financial performance against the goals set for the year. In addition, our Board of Directors receives quarterly reports detailing our actual financial performance compared to these goals. Such reports are discussed in the corresponding Board meetings.

Determining Executive Compensation. Our method of determining compensation for each NEO varies from case to case based on a discretionary but objective determination of what is appropriate in light of several factors, such as the scope, complexity and degree of challenge of each executive’s responsibilities, as well as his or her performance, skills and experience. Our Board of Directors (solely with respect to our CEO) and its Compensation

Committee may also take into account other relevant factors in making compensation decisions or recommendations for NEOs, including salary data for comparable positions at peer group companies in Puerto Rico and the U.S., and compensation levels at the Company.

On a quarterly basis, department or division heads assess their progress against the goals set for the year and at the end of the year evaluate their results. These self-assessments are reviewed by the CEO who together with our Human Resources Department undertakes an evaluation of each executive’s performance based, in part, on objective measures set forth in the performance scorecard. The CEO considers the financial performance of the Company, the performance of each department or division, and the individual performance of each executive relative to the goals set for the year. In the interest of fairness, he may also recommend subjective ornon-formulaic factors for consideration by the Compensation Committee.

The Compensation Committee annually reviews the performance evaluations of each executive and evaluates the compensatory recommendations provided by our management. Although the Compensation Committee is not obligated to follow any specific recommendation or formula, it generally takes the same formula-based approach in making its own decisions. At different times throughout the year, upon the recommendation of the CEO or otherwise, the Compensation Committee may grant equity awards to executives and/or directors.

Determining CEO Compensation. The Board approves the compensation of the CEO. His compensation level is guided by the terms of his 2018 Employment Agreement. As provided therein, the Compensation Committee has discretion to increase his salary after the first year, and his target performance bonus under our annual bonus plan is set at 100% of his base salary.

In conducting its annual evaluation of the CEO’s performance, the Compensation Committee considers the CEO’s contributions to the overall performance of the Company, including his personal attributes and merits. It also reviews our key operating results along with the accomplishment of our key strategic initiatives and considers the standard of living in San Juan, Puerto Rico, where our main offices are located. As part of this process, the Compensation Committee reviews all relevant information or data, including the results of our CEO’s performance scorecard and compensation levels for chief executive officers at peer group companies and the operating environment in which the Company does business. Furthermore, the Chairpersons of our Board of Directors and Compensation Committee meet periodically with our CEO to discuss his performance. The progress results of these meetings are reported to our Board of Directors. The CEO does not participate in any decision regarding his compensation. Upon completing its evaluation of the CEO’s compensation, the Compensation Committee submits its recommendations to our Board of Directors at its next regularly scheduled meeting.

Compensation Consultant

In 2016, our Compensation Committee engaged Pearl Meyer & Partners, LLC, an independent compensation consultant to develop a peer group of financial institutions for the Company, and prepare a comparison of the compensation of our CEO and COO with persons in comparable positions at such peer financial institutions. It was also engaged to develop recommendations for their compensation in light of the Company’s peer group evaluation.

Analysis of Compensation Decisions

After extensive consideration by our Compensation Committee with the assistance of the independent compensation consultant, which took into account a competitive review of peer banks, and our compensation philosophy and objectives, our Board maintained the compensation package of our CEO pursuant to his 2016 Employment Agreement upon the recommendation of our Compensation Committee. Our Compensation Committee also maintained the compensation of our COO with the target cash bonus percentages implemented for 2016 of 100% and maintaining the special retention bonus of $750,000 payable in 6 semiannual installments commencing on January 1, 2017. The base salary and target bonus percentage of our CFO were increased for 2017 in light of her appointment to the CFO position.

The base salaries of our Treasurer and our current SVP of Commercial Credit and Operations remained the same in 2016 and 2017 in light of a companywide freeze in executive salaries as a part of a broader cost control initiative in light of the challenging economic environment.

In order to determine each NEO’s performance bonus, the target cash bonus percentage is multiplied by the executive’s base salary, which then is multiplied by the result of his performance scorecard. Our Internal Audit Department verifies the accuracy of such results.

The table below shows the target cash bonus percentages for the NEOs in 2017.