OFG Bancorp (OFG) 8-K OFG Bancorp Reports 4Q14 and 2014 Results

Exhibit 99

 

OFG Bancorp Reports 4Q14 and 2014 Results

SAN JUAN, Puerto Rico, January 30, 2015 – OFG Bancorp (NYSE: OFG) today reported results for the fourth quarter and year ended December 31, 2014.

4Q14 Highlights

·Income available to common shareholders totaled $17.1 million, or $0.36 per share diluted. This compares to $16.1 million, or $0.34 per share diluted, in the preceding quarter, and $16.6 million, or $0.35 per share diluted, in the year ago quarter.

·Compared to the preceding quarter, 4Q14 primarily reflected a combination of lower interest income and lack of significant cost recoveries from acquired loans; higher originated loan balances and interest income and higher banking and wealth management revenues, and lower credit expenses, lower FDIC indemnification asset amortization, and lower recurring non-interest expenses.

·4Q14 also included a non-recurring accrual of $3.8 million for a cost savings initiative planned for 2015 and a lower effective tax rate.

·In addition, mortgage, auto and consumer loan production increased; demand deposit and savings account balances as a percentage of total deposits continued to grow; deposit costs continued to decrease; and Puerto Rico government related loan and investment security balances declined an additional 1.3%.

·Performance metrics remained high. Net interest margin was a more normalized 5.65%, return on average assets was 1.09%, return on average tangible common stockholders’ equity was 10.16%, and the efficiency ratio was 52.41% (excluding the aforementioned accrual, the efficiency ratio was 49.19%).

·Tangible book value per common share increased 2.9%, to $15.25, from the prior quarter. Book value per common share rose 2.6% to $17.40.

·OFG repurchased 444,613 common shares, at an average price of $14.65 per share, as part of its current stock repurchase program, as previously announced. The Company’s strategy generally is to buy back shares when the price approaches TBV. OFG has bought back $83.3 million of shares over the last five years.

·The Board of Directors increased OFG’s regular quarterly cash dividend per common share by 25%, to $0.10 per share, from $0.08 per share, as previously announced. The Board has raised the dividend four times over the past five years.

2014 Highlights

·Income available to common shareholders was $71.3 million, or $1.50 per share diluted, compared to $84.6 million, or $1.74 per share diluted, last year. Excluding major non-recurring items, OFG earned $1.31 per share in 2013.

·2014 performance metrics remained high, with net interest margin at a more normalized 5.84%, return on average assets of 1.10%, return on average tangible common stockholders’ equity of 10.91%, and an efficiency ratio of 49.90%.

CEO Comment

José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman, commented:

“The fourth quarter reflects continued success in our core business segments. It also highlights the merits of our sound strategy in light of Puerto Rico’s tough economic environment.

“While we continue to harvest acquired loans, we are prudently originating new loans and optimizing both loan yields and credit costs. Concurrently, we are focused on managing our expense footprint and on further refining our loan servicing capabilities.

“Our primary goal is to both maximize profitability and build capital. We aim to preserve our flexibility so that we can pursue a range of alternatives to deploy our capital and increase shareholder return in a sustainable manner.

“We also exceeded 2013’s results on an adjusted basis. This was a significant accomplishment that highlights the success of our strategy as well as our ability to steer the institution in our operating environment.

“Our outlook for 2015 calls for preserving our performance characteristics, albeit with a small decline in interest earnings assets and net interest margin, while diligently managing our operating costs, differentiating ourselves in terms of our service delivery and innovation, and continuing to build our franchise.”

4Q14 Income Statement Highlights

The following compares data for the fourth quarter 2014 to the third quarter of 2014 unless otherwise noted.

·Non-covered loan income declined $2.0 million, to $85.6 million, primarily due to a lower volume of acquired loans, partially offset by increased volume of originated loans.

·Covered loan income declined $1.0 million, to $19.8 million, due to lower cost recoveries and balances as these loans continued to be repaid.

·Investment securities interest income declined $1.2 million, to $10.6 million, primarily due to higher premium amortization.

·Total interest expense increased less than $0.5 million, to $18.9 million, due to the absence of premium amortization on higher cost time deposits that matured in the previous quarter.

·Cost of deposits fell to 65 bps from 68 bps. OFG’s funding profile continued to improve as the percentage of lower cost demand and savings deposits increased and higher cost time deposits declined.

·Total provision for loan and lease losses was approximately level, declining $0.4 million, to $16.9 million.

·Net Interest Margin declined 19 basis points, to 5.65%, due to lower interest income and the absence of premium amortization on higher cost time deposits.

·Total core non-interest income increased $2.0 million, to $21.0 million. This was primarily due to expanded banking service revenues, reflecting seasonal credit and debit card activity.

·FDIC indemnification asset amortization declined $5.0 million, to $12.0 million. The indemnification asset was $97.4 million at December 31, 2014 versus $120.6 million at September 30, 2014.

·Recurring non-interest expenses fell $1.5 million, to $58.1 million. The decline primarily reflects reduced general and administrative expenses.

·The effective income tax rate decreased to 24.98% from 29.05%. For the year, the estimated effective tax rate was 30.43%.

December 31, 2014 Balance Sheet Highlights

The following compares data as of December 31, 2014 to September 30, 2014 or for the fourth quarter of 2014 to the third quarter of 2014 unless otherwise noted.

·Average interest earning assets of $6.8 billion declined 1.5%. Acquired loans declined 6.7% or $144.2 million due to scheduled maturities and a reduction of government loan balances, while originated loans increased 4.3% or $116.7 million.

·Production of new loans (excluding renewals) declined marginally by $3.7 million, to $238.9 million. Mortgage, auto and consumer loan production increased. Commercial production declined, but remained significantly above the quarterly rate in the first half of 2014.

·Puerto Rico government related loans and securities contractual balances fell $9.4 million, to $652.7 million, due to the pay down of central government loans. Year over year, PR government related loans and securities declined 24.1%, from $859.4 million at December 31, 2013.

·Deposits declined $144.8 million, to $4.9 billion, due primarily to reductions in higher cost time deposits and brokered deposits as this funding was no longer needed.

·Stock repurchases totaled 444,613 shares, costing $6.5 million. Approximately $16.7 million of Board authorization remains. For all of 2014, OFG repurchased 1,152,113 common shares (equal to 2.52% of total shares issued and outstanding as of 12/31/13), at an average price of $14.66 each, for a total of $16.9 million.

·Total stockholders’ equity increased $12.2 million, to $942.2 million, primarily reflecting the increase in retained earnings. An increase in other comprehensive income offset most of the increase in treasury stock from the stock buyback.

Credit Quality Highlights

The following compares data excluding acquired loans for the fourth quarter 2014 to the third quarter 2014 unless otherwise noted.

·Net charge offs were down slightly, to $8.6 million, as we continue to make improvements in our collection efforts.

·Total delinquency declined 28 basis points, to 8.99%, primarily due to improvements in mortgage servicing procedures.

·Nonperforming loans increased $5.2 million, primarily due to inflows in the form of repurchases from GSEs and as well as TDRs, in mortgages.

·Allowance for loan and lease losses increased $1.2 million, to $51.4 million.

Capital Position

The following compares data for the fourth quarter 2014 to the third quarter of 2014.

Regulatory capital ratios continued to be significantly above requirements for a well-capitalized institution.

·Tangible common equity to total tangible assets increased to 9.25% from 8.81%, based on a 1.9% increase in tangible common equity, to $680.5 million, and a 2.9% decline in tangible assets, to $7.4 billion.

·Tier 1 risk-based capital ratio increased to 16.02% from 15.96%, based on a 0.8% decline in Tier 1 capital, to $776.5 million, and a 1.2% decline in total risk weighted assets, to $4.8 billion. This decrease, despite lower risk weighted assets, is primarily due to an increase in our estimation of deferred tax asset used in the calculation of this ratio.

·Total risk-based capital ratio declined to 17.57% from 17.50%, based on a 0.8% decline in total risk-based capital, to $851.4 million, and total risk weighted assets of $4.8 billion.

Conference Call

A conference call to discuss OFG’s results for the fourth quarter of 2014, outlook and related matters will be held today, Friday, January 30, 2015 at 10:00 AM Eastern Time. The call will be accessible live via a webcast on OFG’s Investor Relations website at www.ofgbancorp.com. A webcast replay will be available shortly thereafter. Access the webcast link in advance to download any necessary software.

Financial Supplement

OFG’s Financial Supplement, with full financial tables for the quarter and year ended December 31, 2014, can be found on the Webcasts, Presentations & Other Files page, on OFG’s Investor Relations website at www.ofgbancorp.com.

Forward Looking Statements

The information included in this document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements.

Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) a credit default by the government of Puerto Rico; (iv) the fiscal and monetary policies of the federal government and its agencies; (v) changes in federal bank regulatory and supervisory policies, including required levels of capital; (vi) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate market in Puerto Rico; (vii) the performance of the stock and bond markets; (viii) competition in the financial services industry; and (ix) possible legislative, tax or regulatory changes.

For a discussion of such factors and certain risks and uncertainties to which OFG is subject, see OFG’s annual report on Form 10-K for the year ended December 31, 2013, as well as its other filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, OFG assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

About OFG Bancorp

Now in its 51^st  year in business, OFG Bancorp is a diversified financial holding company that operates under U.S. and Puerto Rico banking laws and regulations. Its three principal subsidiaries, Oriental Bank, Oriental Financial Services and Oriental Insurance, provide a full range of commercial, consumer and mortgage banking services, as well as financial planning, trust, insurance, investment brokerage and investment banking services, primarily in Puerto Rico, through 53  financial centers. Investor information can be found at www.ofgbancorp.com.

# # #

Contacts

Puerto Rico: Alexandra López (allopez@orientalbank.com), OFG Bancorp, (787) 522-6970

US: Steven Anreder (steven.anreder@anreder.com) and Gary Fishman (gary.fishman@anreder.com), Anreder & Company, (212) 532-3232

OFG Bancorp
Financial Supplement
The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our December 31, 2014 Annual Report on Form 10-K once it is filed with the Securities and Exchange Commission.
Table of Contents
			Pages
	OFG Bancorp (Consolidated Financial Information)
	Table  1:	Financial and Statistical Summary - Consolidated		2
	Table  2:	Consolidated Statements of Operations		3
	Table  3:	Consolidated Statements of Financial Condition		4-5
	Table  4:	Information on Loan Portfolio and Production		6
	Table  5:	Average Balances, Net Interest Income and Net Interest Margin		7-8
	Table  6:	Loan Information and Performance Statistics (Excluding Acquired Loans)		9-10
	Table  7:	Allowance for Loan and Lease Losses		11
	Table  8:	Accretable Yield on Loans Accounted for Under ASC 310-30 (Loans Acquired
		with Deteriorated Credit Quality, Including those by Analogy)		12
	Table  9:	Reconciliation of Non-GAAP Measures and Calculation of Regulatory
		Capital Measures		13-14
	Table  10:	Notes to Financial Summary, Selected Metrics, Loans, and Consolidated
		Financial Statements		15

1

OFG Bancorp (NYSE: OFG)
Table 1: Financial and Statistical Summary - Consolidated
		2014		2014		2014		2014		2013		2014		2013
(Dollars in thousands, except per share data) (unaudited)		Q4		Q3		Q2		Q1		Q4		YTD		YTD
Earnings
Net interest income		$	97,128	$	101,871	$	106,078	$	103,398	$	110,671	$	408,475	$	409,672
Non-interest income, net (core)	(3)		20,981		18,963		18,885		19,119		17,284		77,948		86,158
Non-interest expense			61,898		59,575		59,848		61,404		65,603		242,725		264,136
Provision for loan and lease losses			16,877		17,257		14,815		11,691		12,593		60,640		72,894
FDIC shared-loss expense, net			11,980		16,934		18,355		18,487		20,466		65,756		69,267
Net income before income taxes			27,449		27,530		31,922		35,532		29,608		122,433		89,737
Effective income tax rate			24.98%		29.05%		33.25%		33.17%		32.13%		30.43%		-9.71%
Net income			20,593		19,532		21,309		23,747		20,094		85,181		98,446
Net income available to common stockholders		$	17,127	$	16,067	$	17,843	$	20,282	$	16,628	$	71,319	$	84,584
Common Share Statistics
Earnings per common share - basic	(5)	$	0.38	$	0.36	$	0.40	$	0.45	$	0.36	$	1.58	$	1.85
Earnings per common share - diluted	(6)	$	0.36	$	0.34	$	0.38	$	0.42	$	0.35	$	1.50	$	1.74
Average common shares outstanding			44,705		45,054		45,014		45,329		45,674		45,024		45,706
Average common shares outstanding and equivalents			52,000		52,362		52,352		52,598		52,987		52,326		53,033
Cash dividends per common share	(2)	$	0.10	$	0.08	$	0.08	$	0.08	$	0.08	$	0.34	$	0.26
Book value per common share (period end)		$	17.40	$	16.96	$	16.87	$	16.23	$	15.74	$	17.40	$	15.74
Tangible book value per common share (period end)	(7)	$	15.25	$	14.82	$	14.71	$	14.07	$	13.60	$	15.25	$	13.60
Balance Sheet (Average Balances)
Loans held for investment	(8)	$	4,856,143	$	4,939,895	$	5,019,381	$	5,007,347	$	5,118,298	$	4,966,708	$	5,095,211
Interest-earning assets			6,817,770		6,923,410		6,972,134		7,108,864		7,303,067		6,992,631		7,499,993
Total assets			7,528,917		7,646,430		7,736,711		8,041,159		8,326,893		7,736,649		8,527,183
Total deposits			5,001,820		5,113,758		5,218,663		5,334,564		5,537,142		5,166,143		5,598,964
Borrowings			1,431,076		1,457,908		1,470,669		1,632,782		1,742,115		1,497,447		1,883,055
Stockholders' equity			936,218		919,804		914,395		894,636		881,131		916,376		868,975
Common stockholders' equity			770,348		753,934		748,525		728,766		715,261		750,506		703,104
Performance Metrics
Net interest margin	(9)		5.65%		5.84%		6.10%		5.90%		6.01%		5.84%		5.46%
Return on average assets	(10)		1.09%		1.02%		1.10%		1.18%		0.97%		1.10%		1.15%
Return on average tangible common stockholders' equity	(11)		10.16%		9.78%		10.96%		12.86%		10.78%		10.91%		14.01%
Efficiency ratio	(12)		52.41%		49.30%		47.89%		50.12%		51.27%		49.90%		53.27%
Full-time equivalent employees, period end			1,567		1,570		1,575		1,546		1,534		1,567		1,534
Credit Quality Metrics
Excluding acquired loans:	(1)
Allowance for loan and lease losses		$	51,441	$	50,279	$	50,638	$	49,507	$	49,081	$	51,441	$	49,081
Allowance as a % of loans held for investment			1.81%		1.84%		1.92%		1.95%		2.04%		1.81%		2.04%
Net charge-offs	(19)	$	8,640	$	8,928	$	6,300	$	5,199	$	5,427	$	29,067	$	46,420
Net charge-off rate	(14)		1.25%		1.34%		0.96%		0.86%		0.91%		1.11%		2.69%
Early delinquency rate (30 - 89 days past due)	(16)		4.91%		5.20%		4.85%		4.51%		4.97%		4.91%		4.97%
Total delinquency rate (30 days and over)	(16)		8.99%		9.27%		8.61%		8.10%		8.92%		8.99%		8.92%
Capital Ratios	(17)
Leverage ratio			10.61%		10.51%		10.26%		9.51%		9.06%		10.61%		9.06%
Tier 1 common ratio			11.88%		11.86%		11.47%		10.79%		10.46%		11.88%		10.46%
Tier 1 risk-based capital ratio			16.02%		15.96%		15.49%		14.76%		14.38%		16.02%		14.38%
Total risk-based capital ratio			17.57%		17.50%		17.30%		16.56%		16.16%		17.57%		16.16%
Tangible common equity ("TCE") ratio			9.25%		8.81%		8.70%		8.16%		7.71%		9.25%		7.71%

2

OFG Bancorp (NYSE: OFG)
Table 2: Consolidated Statements of Operations
		Quarter Ended										Year Ended
		December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
(Dollars in thousands, except per share data) (unaudited)		2014		2014		2014		2014		2013		2014		2013
Interest income:
Loans
Loans not covered under shared-loss agreements with the FDIC		$	85,615	$	87,662	$	88,064	$	85,243	$	92,565	$	346,584	$	352,133
Loans covered under shared-loss agreements with the FDIC			19,816		20,886		24,879		23,388		25,885		88,969		91,769
Total interest income from loans			105,431		108,548		112,943		108,631		118,450		435,553		443,902
Investment securities			10,551		11,753		12,957		14,443		13,607		49,704		49,730
Total interest income			115,982		120,301		125,900		123,074		132,057		485,257		493,632
Interest expense:
Deposits
Core deposits			6,887		6,410		7,875		7,662		8,834		28,834		35,951
Brokered deposits			1,263		1,251		1,290		1,316		1,387		5,120		5,026
Total deposits			8,150		7,661		9,165		8,978		10,221		33,954		40,977
Borrowings			10,704		10,769		10,657		10,698		11,165		42,828		42,983
Total interest expense			18,854		18,430		19,822		19,676		21,386		76,782		83,960
Net interest income			97,128		101,871		106,078		103,398		110,671		408,475		409,672
Provision for loan and lease losses, excluding acquired loans			9,802		8,569		7,431		5,625		6,934		31,427		55,578
Provision for acquired loan and lease losses	(1)		7,075		8,688		7,384		6,066		5,659		29,213		17,316
Total provision for loan and lease losses, net			16,877		17,257		14,815		11,691		12,593		60,640		72,894
Net interest income after provision for loan and lease losses			80,251		84,614		91,263		91,707		98,078		347,835		336,778
Non-interest income:
Banking service revenues			10,407		9,753		9,995		10,557		7,748		40,712		44,239
Wealth management revenues			8,539		7,113		7,336		6,867		7,839		29,855		30,924
Mortgage banking activities			2,035		2,097		1,554		1,695		1,697		7,381		10,995
Total banking and wealth management revenues			20,981		18,963		18,885		19,119		17,284		77,948		86,158
FDIC shared-loss expense, net	(22)		(11,980)		(16,934)		(18,355)		(18,487)		(20,466)		(65,756)		(69,267)
Net gain (loss) on:
Sales of securities and derivative activities			(239)		76		(511)		4,179		57		3,505		(2,097)
Early extinguishment of borrowings			-		-		-		-		-		-		1,061
Other	(18)		334		386		488		418		258		1,626		1,240
Total non-interest income (loss), net			9,096		2,491		507		5,229		(2,867)		17,323		17,095
Non-interest expense:
Compensation and employee benefits			20,396		18,592		20,707		21,787		22,030		81,482		91,957
Rent and occupancy costs			9,026		8,770		8,605		8,309		8,856		34,710		34,408
Merger and restructuring charges	(4)		-		-		-		-		4,600		-		17,660
Other non-recurring expenses	(23)		3,800		-		-		-		-		3,800		-
General and administrative expenses			28,676		32,213		30,536		31,308		30,117		122,733		120,111
Total non-interest expense			61,898		59,575		59,848		61,404		65,603		242,725		264,136
Income before income taxes			27,449		27,530		31,922		35,532		29,608		122,433		89,737
Income tax expense (benefit)			6,856		7,998		10,613		11,785		9,514		37,252		(8,709)
Net income			20,593		19,532		21,309		23,747		20,094		85,181		98,446
Less:  dividends on preferred stock
Convertible preferred stock			(1,838)		(1,837)		(1,838)		(1,837)		(1,838)		(7,350)		(7,350)
Other preferred stock			(1,628)		(1,628)		(1,628)		(1,628)		(1,628)		(6,512)		(6,512)
Net income available to common shareholders		$	17,127	$	16,067	$	17,843	$	20,282	$	16,628	$	71,319	$	84,584

4

OFG Bancorp (NYSE: OFG)
Table 3: Consolidated Statements of Financial Condition
		December 31,		September 30,		June 30,		March 31,		December 31,
(Dollars in thousands) (unaudited)		2014		2014		2014		2014		2013
Cash and cash equivalents		$	581,834	$	704,146	$	611,655	$	639,806	$	703,468
Securities purchased under agreements to resell			-		-		-		-		60,000
Investments:
Trading securities			1,594		1,687		1,613		1,910		1,869
Investment securities available-for-sale, at fair value, with amortized cost of $1,187,679
(September 30, 2014 - $1,249,769; June 30, 2014 - $1,385,438; March 31, 2014 - $1,437,106;
December 31, 2013 - $1,575,043)
Mortgage-backed securities			1,190,391		1,247,161		1,314,677		1,334,865		1,439,539
Other investment securities			26,147		26,718		104,281		120,820		148,886
Total investment securities available-for-sale			1,216,538		1,273,879		1,418,958		1,455,685		1,588,425
Mortgage-backed securities held-to-maturity, at amortized cost, with fair value of $164,154
(September 30, 2014 - $144,217; June 30, 2014 - $26,844)			162,752		144,305		26,706		-		-
Federal Home Loan Bank (FHLB) stock, at cost			21,169		21,189		24,381		24,430		24,450
Other investments			3		65		65		65		65
Total investments			1,402,056		1,441,125		1,471,723		1,482,090		1,614,809
Loans:
Loans not covered under shared-loss agreements with the FDIC:
Commercial
Puerto Rico Government and its dependencies			618,998		626,831		655,429		718,823		695,996
Other Commercial Loans			1,241,971		1,211,526		1,198,618		1,178,287		1,180,886
			1,860,969		1,838,357		1,854,047		1,897,110		1,876,882
Mortgage			1,447,873		1,461,294		1,480,070		1,485,604		1,484,168
Consumer			261,992		259,636		254,966		247,851		247,539
Auto and Leasing			1,007,597		1,030,449		1,054,945		1,058,694		1,060,603
Total loans receivable not covered under shared-loss agreements with the FDIC, gross			4,578,431		4,589,736		4,644,028		4,689,259		4,669,192
Less: Deferred loan costs, net			4,282		3,575		3,236		2,318		1,035
Total loans receivable not covered under shared-loss agreements with the FDIC			4,582,713		4,593,311		4,647,264		4,691,577		4,670,227
Allowance for loan and lease losses on non-covered loans			(69,517)		(64,859)		(60,360)		(56,183)		(54,298)
Loans receivable held for investment, net			4,513,196		4,528,452		4,586,904		4,635,394		4,615,929
Mortgage loans held for sale	(13)		14,539		16,757		14,792		19,355		46,529
Total loans not covered under shared-loss agreements with the FDIC, net			4,527,735		4,545,209		4,601,696		4,654,749		4,662,458
Loans covered under shared-loss agreements with the FDIC			363,156		373,920		393,859		402,263		409,690
Allowance for loan and lease losses on covered loans			(64,245)		(62,227)		(59,515)		(54,398)		(52,729)
Loans covered under shared-loss agreements with the FDIC, net			298,911		311,693		334,344		347,865		356,961
Total loans, net			4,826,646		4,856,902		4,936,040		5,002,614		5,019,419
Other assets:
FDIC shared-loss indemnification asset			97,378		120,619		143,660		166,194		189,240
Derivative assets			8,107		8,445		9,558		15,861		20,502
Prepaid expenses			16,018		18,375		17,422		15,531		15,439
Deferred tax asset, net			108,708		121,217		123,298		127,657		137,564
Foreclosed real estate and repossessed properties			117,461		122,297		119,110		110,849		102,607
Premises and equipment, net			80,599		82,099		82,167		83,029		82,903
Goodwill			86,069		86,069		86,069		86,069		86,069
Accounts receivable and other assets	(24)		124,233		112,045		109,443		125,938		125,995
Total assets		$	7,449,109	$	7,673,339	$	7,710,145	$	7,855,638	$	8,158,015

5

OFG Bancorp (NYSE: OFG)
Table 3: Consolidated Statement of Financial Condition (Continued)
		December 31,		September 30,		June 30,		March 31,		December 31,
(Dollars in thousands) (unaudited)		2014		2014		2014		2014		2013
Deposits:
Demand deposits	(25)	$	1,997,108	$	2,132,073	$	2,135,369	$	2,188,458	$	2,138,005
Savings accounts	(25)		1,292,698		1,169,330		1,136,155		1,172,117		1,096,271
Time deposits			1,015,290		1,098,128		1,151,234		1,227,504		1,320,875
Brokered deposits			619,310		669,644		718,475		712,913		828,114
Total deposits			4,924,406		5,069,175		5,141,233		5,300,992		5,383,265
Borrowings:
Securities sold under agreements to repurchase			980,087		1,012,228		1,012,233		1,012,240		1,267,618
Advances from FHLB and other borrowings			338,334		338,659		364,077		339,397		339,806
Federal funds purchased			-		-		-		23,712		-
Subordinated capital notes			101,584		101,190		100,797		100,404		100,010
Total borrowings			1,420,005		1,452,077		1,477,107		1,475,753		1,707,434
Other liabilities:
Securities purchased but not yet received			-		30,057		-		-		-
Derivative liabilities			11,221		11,414		13,617		13,830		14,937
Acceptances outstanding			17,989		21,077		17,581		28,152		23,042
Accrued expenses and other liabilities			133,291		159,541		135,405		140,420		144,424
Total liabilities			6,506,912		6,743,341		6,784,943		6,959,147		7,273,102
Stockholders' equity:
Preferred stock			176,000		176,000		176,000		176,000		176,000
Common stock			52,626		52,761		52,730		52,714		52,707
Additional paid-in capital			539,311		539,522		538,936		538,287		538,071
Legal surplus			70,467		68,437		66,438		64,292		61,957
Retained earnings			181,152		170,519		160,055		147,919		133,629
Treasury stock, at cost	(21)		(97,070)		(90,652)		(90,712)		(90,743)		(80,642)
Accumulated other comprehensive income, net			19,711		13,411		21,755		8,022		3,191
Total stockholders' equity			942,197		929,998		925,202		896,491		884,913
Total liabilities and stockholders' equity		$	7,449,109	$	7,673,339	$	7,710,145	$	7,855,638	$	8,158,015

7

OFG Bancorp (NYSE: OFG)
Table 4: Information on Loan Portfolio and Production
		December 31,		September 30,		June 30,		March 31,		December 31,
(Dollars in thousands) (unaudited)		2014		2014		2014		2014		2013
Acquired loans:	(1)
Non-covered loans
Accounted for under ASC 310-30
Period-end unpaid principal balance		$	1,553,988	$	1,660,521	$	1,804,645	$	1,900,112	$	1,998,913
Period-end carrying amount			1,491,806		1,577,545		1,676,677		1,754,041		1,832,213
Average carrying amount			1,516,571		1,636,983		1,720,553		1,805,535		1,881,737
Accounted for under ASC 310-20
Period-end unpaid principal balance			241,569		280,389		318,970		381,405		420,646
Period-end carrying amount			242,801		285,076		326,602		392,491		435,439
Average carrying amount			271,029		298,262		340,940		424,766		482,396
Covered loans
Accounted for under ASC 310-30
Period-end unpaid principal balance			607,893		648,995		707,120		750,781		812,672
Period-end carrying amount			298,911		311,693		334,344		347,865		356,961
Average carrying amount			303,012		331,778		343,351		355,531		358,158
Total acquired loans
Period-end unpaid principal balance			2,403,450		2,589,905		2,830,735		3,032,298		3,232,231
Period-end  carrying amount			2,033,518		2,174,314		2,337,623		2,494,397		2,624,613
Average carrying amount			2,090,612		2,267,023		2,404,844		2,585,832		2,722,291
Non-acquired loans held for investment:
Period-end unpaid principal balance			2,863,277		2,749,421		2,659,198		2,558,795		2,496,751
Period-end  carrying amount			2,843,824		2,727,115		2,640,749		2,542,727		2,401,540
Average carrying amount			2,765,531		2,672,872		2,614,537		2,421,514		2,396,008
Total loans
Period-end unpaid principal balance		$	5,266,727	$	5,339,326	$	5,489,933	$	5,591,093	$	5,728,982
Period-end carrying amount			4,877,342		4,901,429		4,978,372		5,037,124		5,026,153
Average carrying amount			4,856,143		4,939,895		5,019,381		5,007,347		5,118,298
		2014		2014		2014		2014		2013
(Dollars in thousands) (unaudited)		Q4		Q3		Q2		Q1		Q4
Quarterly loan production	(15)
Mortgage		$	57,226	$	55,299	$	51,999	$	50,843	$	67,535
Commercial			83,430		90,067		45,432		43,943		156,898
Consumer			28,902		28,689		34,530		27,796		23,604
Auto and Leasing			69,335		68,519		89,630		93,750		84,639
Total		$	238,893	$	242,574	$	221,591	$	216,332	$	332,676

8

OFG Bancorp (NYSE: OFG)

Table 5: Average Balances, Net Interest Income and Net Interest Margin

2014 Q4

2014 Q3

2014 Q2

2014 Q1

2013 Q4

Interest

Interest

Interest

Interest

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

(Dollars in thousands) (unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Interest earning assets:
Cash equivalents and securities purchased under agreements to resell	$	551,238	$	360	0.26	%	$	593,391	$	316	0.21	%	$	559,230	$	351	0.25	%	$	482,497	$	283	0.24	%	$	532,753	$	366	0.27	%
Investment securities		1,410,389		10,191	2.87	%		1,390,124		11,437	3.26	%		1,393,523		12,606	3.63	%		1,619,020		14,160	3.55	%		1,652,016		13,241	3.18	%
Loans
Non-acquired loans		2,765,531		45,925	6.59	%		2,672,872		44,706	6.64	%		2,614,537		43,083	6.61	%		2,421,514		39,003	6.53	%		2,396,008		37,543	6.22	%
Acquired loans accounted for under ASC 310-30		1,516,571		35,213	9.21	%		1,636,983		38,340	9.29	%		1,720,553		39,714	9.26	%		1,805,535		40,269	9.05	%		1,881,737		48,731	10.27	%
Acquired loans accounted for under ASC 310-20		271,029		4,477	6.55	%		298,262		4,616	6.14	%		340,940		5,267	6.20	%		424,766		5,971	5.70	%		482,396		6,291	5.17	%
Loans not covered under shared-loss agreements with the FDIC		4,553,131		85,615	7.46	%		4,608,117		87,662	7.55	%		4,676,030		88,064	7.55	%		4,651,816		85,243	7.43	%		4,760,140		92,565	7.71	%
Loans covered under shared-loss agreements with the FDIC		303,012		19,816	25.95	%		331,778		20,886	24.98	%		343,351		24,879	29.06	%		355,531		23,388	26.68	%		358,158		25,885	28.67	%
Total loans		4,856,143		105,431	8.61	%		4,939,895		108,548	8.72	%		5,019,381		112,943	9.03	%		5,007,347		108,631	8.80	%		5,118,298		118,450	9.18	%
Total interest-earning assets	$	6,817,770	$	115,982	6.75	%	$	6,923,410	$	120,301	6.89	%	$	6,972,134	$	125,900	7.24	%	$	7,108,864	$	123,074	7.02	%	$	7,303,067	$	132,057	7.17	%
Interest bearing liabilities:
Deposits
Demand deposits	$	2,093,425	$	1,652	0.31	%	$	2,130,457	$	1,817	0.34	%	$	2,147,931	$	2,208	0.41	%	$	2,160,959	$	2,324	0.44	%	$	2,194,780	$	2,665	0.48	%
Savings accounts		1,224,708		1,829	0.59	%		1,154,712		1,780	0.61	%		1,168,911		2,192	0.75	%		1,128,703		2,296	0.82	%		1,058,152		2,347	0.88	%
Time deposits		1,052,552		3,426	1.29	%		1,128,333		3,769	1.33	%		1,192,447		3,972	1.34	%		1,293,344		4,405	1.38	%		1,512,962		5,553	1.46	%
Brokered deposits		631,135		1,331	0.84	%		700,256		1,400	0.79	%		709,374		1,468	0.83	%		751,558		1,516	0.82	%		771,248		1,610	0.83	%
		5,001,820		8,238	0.65	%		5,113,758		8,766	0.68	%		5,218,663		9,840	0.76	%		5,334,564		10,541	0.80	%		5,537,142		12,175	0.87	%
Fair value premium amortization and core deposit intangible amortization		-		(88)	-			-		(1,105)	-			-		(675)	-			-		(1,563)	-			-		(1,954)	-
Total deposits		5,001,820		8,150	0.65	%		5,113,758		7,661	0.59	%		5,218,663		9,165	0.70	%		5,334,564		8,978	0.68	%		5,537,142		10,221	0.73	%
Borrowings
Securities sold under agreements to repurchase		990,932		7,415	2.97	%		1,010,000		7,453	2.93	%		1,010,000		7,372	2.93	%		1,156,747		7,411	2.60	%		1,265,000		7,680	2.41	%
Advances from FHLB and other borrowings		338,815		2,287	2.68	%		346,977		2,314	2.65	%		360,130		2,289	2.55	%		375,862		2,295	2.48	%		377,422		2,344	2.46	%
Subordinated capital notes		101,329		1,002	3.92	%		100,931		1,002	3.94	%		100,539		996	3.97	%		100,173		992	4.02	%		99,693		1,141	4.54	%
Total borrowings		1,431,076		10,704	2.97	%		1,457,908		10,769	2.93	%		1,470,669		10,657	2.91	%		1,632,782		10,698	2.66	%		1,742,115		11,165	2.54	%
Total interest-bearing liabilities	$	6,432,896	$	18,854	1.16	%	$	6,571,666	$	18,430	1.11	%	$	6,689,332	$	19,822	1.19	%	$	6,967,346	$	19,676	1.15	%	$	7,279,257	$	21,386	1.17	%
Interest rate spread			$	97,128	5.59	%			$	101,871	5.78	%			$	106,078	6.05	%			$	103,398	5.87	%			$	110,671	6.00	%
Net interest margin					5.65	%					5.84	%					6.10	%					5.90	%					6.01	%

9

OFG Bancorp (NYSE: OFG)
Table 5: Average Balances, Net Interest Income and Net Interest Margin (Continued)
	2014 YTD						2013 YTD
			Interest						Interest
	Average		Income/		Yield/		Average		Income/		Yield/
(Dollars in thousands) (unaudited)	Balance		Expense		Rate		Balance		Expense		Rate
Interest earning assets:
Cash equivalents and securities purchased under agreements to resell	$	573,403	$	1,311	0.23	%	$	540,724	$	1,157	0.21	%
Investment securities		1,452,520		48,393	3.33	%		1,864,058		48,573	2.61	%
Loans
Non-acquired loans		2,630,432		172,645	6.56	%		1,725,748		105,661	6.12	%
Acquired loans accounted for under ASC 310-30		1,669,033		153,536	9.20	%		2,238,157		199,178	8.90	%
Acquired loans accounted for under ASC 310-20		333,974		20,403	6.11	%		758,794		47,294	6.23	%
Loans not covered under shared-loss agreements with the FDIC		4,633,439		346,584	7.48	%		4,722,699		352,133	7.46	%
Loans covered under shared-loss agreements with the FDIC		333,269		88,969	26.70	%		372,512		91,769	24.64	%
Total loans		4,966,708		435,553	8.77	%		5,095,211		443,902	8.71	%
Total interest-earning assets	$	6,992,631	$	485,257	6.94	%	$	7,499,993	$	493,632	6.58	%
Interest bearing liabilities:
Deposits
Demand deposits	$	2,133,001	$	8,001	0.38	%	$	2,203,787	$	11,151	0.51	%
Savings accounts		1,169,482		8,097	0.69	%		938,450		9,481	1.01	%
Time deposits		1,165,904		15,573	1.34	%		1,635,615		26,019	1.59	%
Brokered deposits		697,756		5,715	0.82	%		821,112		7,068	0.86	%
		5,166,143		37,386	0.72	%		5,598,964		53,719	0.96	%
Fair value premium amortization and core deposit intangible amortization		-		(3,432)	-			-		(12,741)	-
Total deposits		5,166,143		33,954	0.66	%		5,598,964		40,978	0.73	%
Borrowings
Securities sold under agreements to repurchase		1,041,378		29,652	2.85	%		1,353,011		29,249	2.16	%
Advances from FHLB and other borrowings		355,322		9,184	2.58	%		419,880		8,619	2.05	%
Subordinated capital notes		100,747		3,992	3.96	%		110,164		5,114	4.64	%
Total borrowings		1,497,447		42,828	2.86	%		1,883,055		42,982	2.28	%
Total interest-bearing liabilities	$	6,663,590	$	76,782	1.15	%	$	7,482,019	$	83,960	1.12	%
Interest rate spread			$	408,475	5.79	%			$	409,672	5.46	%
Net interest margin					5.84	%					5.46	%

11

OFG Bancorp (NYSE: OFG)
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (1)
	2014		2014		2014		2014		2013
(Dollars in thousands) (unaudited)	Q4		Q3		Q2		Q1		Q4
Net Charge-offs
Mortgage:
Charge-offs	$	1,245	$	1,563	$	987	$	1,214	$	3,102
Recoveries		(54)		(138)		(88)		(148)		(6)
Total mortgage		1,191		1,425		899		1,066		3,096
Commercial:
Charge-offs		381		1,081		543		419		211
Recoveries		(64)		(56)		(115)		(98)		(91)
Total commercial		317		1,025		428		321		120
Consumer:
Charge-offs		1,962		1,585		1,397		838		451
Recoveries		(113)		(66)		(244)		(147)		(23)
Total consumer		1,849		1,519		1,153		691		428
Auto and Leasing:
Charge-offs		8,047		7,393		5,956		4,645		2,496
Recoveries		(2,764)		(2,434)		(2,136)		(1,524)		(713)
Total auto and leasing		5,283		4,959		3,820		3,121		1,783
Total	$	8,640	$	8,928	$	6,300	$	5,199	$	5,427
Net Charge-off Rates
Mortgage		0.61%		0.72%		0.46%		0.57%		1.66%
Commercial		0.10%		0.34%		0.14%		0.11%		0.04%
Consumer		4.23%		3.77%		3.13%		2.16%		1.46%
Auto and Leasing		3.73%		3.73%		3.15%		2.99%		2.02%
Total		1.25%		1.34%		0.96%		0.86%		0.91%
Period-end Loans Held For Investment
Mortgage:
Traditional, Non traditional, and Loans under Loss Mitigation	$	749,511	$	751,040	$	749,676	$	746,868	$	731,345
GNMA's buy-back option program		42,243		40,066		38,329		35,282		34,920
Total mortgage		791,754		791,106		788,005		782,150		766,265
Commercial		1,289,730		1,217,235		1,183,172		1,170,145		1,127,657
Consumer		186,759		175,882		161,538		142,492		127,744
Auto and Leasing		575,581		542,892		508,034		447,940		379,874
Total	$	2,843,824	$	2,727,115	$	2,640,749	$	2,542,727	$	2,401,540
Average Loans Held For Investment
Mortgage	$	787,121	$	789,204	$	773,425	$	753,248	$	744,989
Commercial		1,236,976		1,190,607		1,209,346		1,121,953		1,180,142
Consumer		175,049		161,147		147,230		128,239		117,391
Auto and Leasing		566,385		531,914		484,536		418,074		353,486
Total	$	2,765,531	$	2,672,872	$	2,614,537	$	2,421,514	$	2,396,008

12

OFG Bancorp (NYSE: OFG)
Table 6: Loan Information and Performance Statistics (Excluding Acquired Loans) (Continued) (1)
		2014		2014		2014		2014		2013
(Dollars in thousands) (unaudited)		Q4		Q3		Q2		Q1		Q4
Early Delinquency (30 - 89 days past due)
Mortgage	(16)	$	68,671	$	76,236	$	70,453	$	67,016	$	72,028
Commercial			2,814		2,776		4,258		2,419		9,581
Consumer			3,525		3,287		2,797		2,995		2,665
Auto and Leasing			64,574		59,493		50,667		42,347		34,968
Total		$	139,584	$	141,792	$	128,175	$	114,777	$	119,242
Early Delinquency Rates (30 - 89 days past due)
Mortgage	(16)		8.67%		9.64%		8.94%		8.57%		9.40%
Commercial			0.22%		0.23%		0.36%		0.21%		0.85%
Consumer			1.89%		1.87%		1.73%		2.10%		2.09%
Auto and Leasing			11.22%		10.96%		9.97%		9.45%		9.21%
Total			4.91%		5.20%		4.85%		4.51%		4.97%
Total Delinquency (30 days and over past due)
Mortgage:	(16)
Traditional, Non traditional, and Loans under Loss Mitigation		$	124,559	$	128,556	$	115,180	$	107,908	$	111,263
GNMA's buy-back option program			42,243		40,066		38,329		35,282		34,920
Total mortgage			166,802		168,622		153,509		143,190		146,183
Commercial			12,164		12,109		12,437		10,865		24,738
Consumer			4,689		4,365		3,923		3,674		3,315
Auto and Leasing			71,994		67,772		57,620		48,219		40,057
Total		$	255,649	$	252,868	$	227,489	$	205,948	$	214,293
Total Delinquency Rates (30 days and over past due)
Mortgage:	(16)
Traditional, Non traditional, and Loans under Loss Mitigation			15.73%		16.25%		14.62%		13.80%		14.52%
GNMA's buy-back option program			5.34%		5.06%		4.86%		4.51%		4.56%
Total mortgage			21.07%		21.31%		19.48%		18.31%		19.08%
Commercial			0.94%		0.99%		1.05%		0.93%		2.19%
Consumer			2.51%		2.48%		2.43%		2.58%		2.60%
Auto and Leasing			12.51%		12.48%		11.34%		10.76%		10.54%
Total			8.99%		9.27%		8.61%		8.10%		8.92%
Nonperforming Assets	(20)
Mortgage	(16)	$	72,815	$	67,028	$	57,314	$	51,728	$	51,058
Commercial			21,679		22,290		23,506		23,792		22,830
Consumer			1,590		1,241		1,454		1,084		805
Auto and Leasing			8,668		9,008		7,300		6,047		5,089
Total nonperforming loans			104,752		99,567		89,574		82,651		79,782
Foreclosed real estate			12,343		13,608		13,920		14,592		16,009
Other repossessed assets			11,107		9,914		7,317		5,542		3,266
Mortgage loans held for sale			-		-		-		1,554		-
Total nonperforming assets		$	128,202	$	123,089	$	110,811	$	104,339	$	99,057
Nonperforming Loan Rates
Mortgage	(16)		9.20%		8.47%		7.27%		6.61%		6.66%
Commercial			1.68%		1.83%		1.99%		2.03%		2.02%
Consumer			0.85%		0.71%		0.90%		0.76%		0.63%
Auto and Leasing			1.51%		1.66%		1.44%		1.35%		1.34%
Total loans			3.68%		3.65%		3.39%		3.25%		3.32%

13

OFG Bancorp (NYSE: OFG)
Table 7: Allowance for Loan and Lease Losses
	Quarter Ended December 31, 2014
							Auto and
(Dollars in thousands) (unaudited)	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
Non-covered loans
Non-acquired loans
Balance at beginning of period	$	18,872	$	9,112	$	8,709	$	13,404	$	182	$	50,279
Provision (recapture) for loan and lease losses		1,999		(363)		2,212		6,135		(181)		9,802
Charge-offs		(1,245)		(381)		(1,962)		(8,047)		-		(11,635)
Recoveries		54		64		113		2,764		-		2,995
Balance at end of period	$	19,680	$	8,432	$	9,072	$	14,256	$	1	$	51,441
Allowance coverage ratio		2.49%	$	0.65%	$	4.86%	$	2.48%	$	0.00%	$	1.81%
Acquired
Acquired loans accounted for under ASC 310-30
Balance at beginning of period	$	-	$	10,115	$	5	$	-	$	-	$	10,120
Provision (recapture) for loan and lease losses, net		-		3,361		-		-		-		3,361
Balance at end of period		-	$	13,476	$	5	$	-	$	-	$	13,481
Acquired loans accounted for under ASC 310-20
Balance at beginning of period			$	270	$	1,031	$	3,159	$	-	$	4,460
Provision (recapture) for loan and lease losses				(193)		1,473		1,093		-		2,373
Charge-offs				(20)		(1,461)		(1,598)		-		(3,079)
Recoveries				8		168		665		-		841
Balance at end of period			$	65	$	1,211	$	3,319	$	-	$	4,595
Total non-covered loans
Balance at beginning of period	$	18,872	$	19,497	$	9,745	$	16,563	$	182	$	64,859
Provision for loan and lease losses		1,999		2,805		3,685		7,228		(181)		15,536
Charge-offs		(1,245)		(401)		(3,423)		(9,645)		-		(14,714)
Recoveries		54		72		281		3,429		-		3,836
Balance at end of period	$	19,680	$	21,973	$	10,288	$	17,575	$	1	$	69,517
Covered loans
Balance at beginning of period	$	15,252	$	46,586	$	389	$	-	$	-	$	62,227
Provision (recapture) for loan and lease losses, net		-		1,341		-		-		-		1,341
FDIC shared-loss portion of provision for covered loan and lease losses, net		271		406		-		-		-		677
Balance at end of period	$	15,523	$	48,333	$	389	$	-	$	-	$	64,245

14

OFG Bancorp (NYSE: OFG)
Table 8: Accretable Yield on Loans Accounted for Under ASC 310-30
	Quarter Ended December 31, 2014
(Dollars in thousands) (unaudited)	Mortgage		Commercial		Construction		Auto		Consumer		Total
Accretable Yield and Non-Accretable Discount
Non-Covered Loans:
Accretable Yield
Balance at beginning of period	$	259,478	$	59,053	$	21,194	$	56,032	$	8,374	$	404,131
Accretion		(9,253)		(11,530)		(5,506)		(7,780)		(1,144)		(35,213)
Transfers (to) from non-accretable discount		48,139		13,673		10,141		5,746		(671)		77,028
Balance at end of period	$	298,364	$	61,196	$	25,829	$	53,998	$	6,559	$	445,946
Non-Accretable Discount
Balance at beginning of period	$	439,987	$	35,699	$	-	$	24,243	$	24,059	$	523,988
Change in actual and expected losses		(2,009)		1,043		13,627		(2,282)		(712)		9,667
Transfers from (to) accretable yield		(48,139)		(13,673)		(10,141)		(5,746)		671		(77,028)
Balance at end of period	$	389,839	$	23,069	$	3,486	$	16,215	$	24,018	$	456,627
					Construction &
					Development
	Loans Secured				Secured by
	by 1-4 Family		Commercial		1-4 Family
	Residential		and Other		Residential
	Properties		Construction		Properties		Leasing		Consumer		Total
Covered Loans:
Accretable Yield
Balance at beginning of period	$	46,704	$	57,881	$	-	$	2,905	$	2,494	$	109,984
Accretion		(3,652)		(12,063)		(896)		(1,949)		(1,256)		(19,816)
Transfers from (to) non-accretable discount		4,584		(7,899)		21,649		1,523		(167)		19,690
Balance at end of period	$	47,636	$	37,919	$	20,753	$	2,479	$	1,071	$	109,858
Non-Accretable Discount
Balance at beginning of period	$	28,971	$	40,250	$	-	$	-	$	8,719	$	77,940
Change in actual and expected losses		2,961		(23,685)		21,649		1,523		1,712		4,160
Transfers (to) from accretable yield		(4,584)		7,899		(21,649)		(1,523)		167		(19,690)
Balance at end of period	$	27,348	$	24,464	$	-	$	-	$	10,598	$	62,410

15

OFG Bancorp (NYSE: OFG)
Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures
In addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible common equity, tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our regulatory capital and non-GAAP capital measures. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies.
	2014		2014		2014		2014		2013
(Dollars in thousands) (unaudited)	Q4		Q3		Q2		Q1		Q4
Average Equity to Non-GAAP Average Tangible Common Equity
Average total stockholders' equity	$	936,218	$	919,804	$	914,395	$	894,636	$	881,131
Less:  Average noncumulative perpetual preferred stock		(176,000)		(176,000)		(176,000)		(176,000)		(176,000)
Average noncumulative perpetual preferred stock issuance costs		10,130		10,130		10,130		10,130		10,130
Average total common stockholders' equity	$	770,348	$	753,934	$	748,525	$	728,766	$	715,261
Less:  Average intangible assets		(96,164)		(96,712)		(97,252)		(97,792)		(98,367)
Average tangible common equity	$	674,184	$	657,222	$	651,273	$	630,974	$	616,894
Stockholders' Equity to Non-GAAP Tangible Common Equity
Total stockholders' equity	$	942,197	$	929,998	$	925,202	$	896,491	$	884,913
Less:  Intangible assets		(95,812)		(96,354)		(96,896)		(97,439)		(97,981)
Noncumulative perpetual preferred stock		(176,000)		(176,000)		(176,000)		(176,000)		(176,000)
Noncumulative perpetual preferred stock issuance costs		10,130		10,130		10,130		10,130		10,130
Tangible common equity	$	680,515	$	667,774	$	662,436	$	633,182	$	621,062
Common stock outstanding at end of period		44,614		45,060		45,023		45,004		45,677
Tangible book value	$	15.25	$	14.82	$	14.71	$	14.07	$	13.60
Total Assets to Tangible Assets
Total assets	$	7,449,109	$	7,673,339	$	7,710,145	$	7,855,638	$	8,158,015
Less:  Intangible assets		(95,812)		(96,354)		(96,896)		(97,439)		(97,981)
Tangible assets	$	7,353,297	$	7,576,985	$	7,613,249	$	7,758,199	$	8,060,034
Non-GAAP TCE Ratio
Tangible common equity	$	680,515	$	667,774	$	662,436	$	633,182	$	621,062
Tangible assets		7,353,297		7,576,985		7,613,249		7,758,199		8,060,034
TCE ratio		9.25%		8.81%		8.70%		8.16%		7.71%

16

OFG Bancorp (NYSE: OFG)
Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures (Continued)
	2014		2014		2014		2014		2013
(Dollars in thousands) (unaudited)	Q4		Q3		Q2		Q1		Q4
Regulatory Capital Ratios
Total stockholders' equity	$	942,197	$	929,998	$	925,202	$	896,491	$	884,913
Less:  Unrealized gains on available-for-sale securities, net of income tax		(25,765)		(20,318)		(29,759)		(16,034)		(11,434)
Unrealized losses on cash flow hedges, net of income tax		6,054		6,907		8,004		8,013		8,243
Disallowed goodwill and other intangible assets		(95,812)		(96,354)		(96,896)		(97,439)		(97,981)
Disallowed deferred tax assets		(83,750)		(71,037)		(66,362)		(79,016)		(81,254)
Disallowed servicing assets		(1,399)		(1,399)		(1,365)		(1,397)		(1,380)
Noncumulative perpetual preferred stock		(176,000)		(176,000)		(176,000)		(176,000)		(176,000)
Noncumulative perpetual preferred stock issuance costs		10,130		10,130		10,130		10,130		10,130
Tier 1 common equity capital		575,655		581,927		572,954		544,748		535,237
Plus:  Qualifying noncumulative perpetual preferred stock		176,000		176,000		176,000		176,000		176,000
Qualifying noncumulative perpetual preferred stock issuance costs		(10,130)		(10,130)		(10,130)		(10,130)		(10,130)
Subordinated capital notes		35,000		35,000		35,000		35,000		35,000
Tier 1 capital		776,525		782,797		773,824		745,618		736,107
Plus:  Long-term debt qualifying as Tier 2 capital		13,400		13,400		26,800		26,800		26,800
Qualifying allowance for loan and lease losses		61,485		62,159		63,166		63,749		64,553
Tier 2 capital		74,885		75,559		89,966		90,549		91,353
Total risk-based capital	$	851,410	$	858,356	$	863,791	$	836,168	$	827,460
Risk-weighted assets	$	4,847,150	$	4,905,814	$	4,994,378	$	5,050,672	$	5,118,927
Leverage ratio		10.61%		10.51%		10.26%		9.51%		9.06%
Tier 1 common ratio		11.88%		11.86%		11.47%		10.79%		10.46%
Tier 1 risk-based capital ratio		16.02%		15.96%		15.49%		14.76%		14.38%
Total risk-based capital ratio		17.57%		17.50%		17.30%		16.56%		16.16%

17

OFG Bancorp (NYSE: OFG)
Table 10: Notes to Financial Summary, Selected Metrics, Loans, and Consolidated Financial Statements (Tables 1 - 9)
(1)	We use the term "acquired loans" to refer to loans acquired from the BBVAPR acquisition (December 18, 2012) and covered loans acquired in the Eurobank FDIC-Assisted acquisition (April 30, 2010), recorded at fair value at acquisition. The majority of these loans acquired are subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard known as ASC 310-30). Because the guidance takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with this loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. Acquired loans also include loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which at the end of the reporting period still have unamortized premium or discount. The fair value of these loans already include a credit mark for losses estimated on these loans.  The allowance for loan and lease losses for these loans consider such marks applied. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans. Loans acquired in the BBVAPR acquisition that were accounted for under the provisions of ASC 310-20, which had fully amortized their premium or discount recorded at the date of acquisition at the end of the reporting period, are removed from the acquired loans category.
(2)	The Board of directors increased OFG's regular quarterly dividend per common share to $0.08 per share during Q4 2013 and to $0.10 per share during Q4 2014.
(3)	Total banking and wealth management revenues.
(4)	Results include merger and restructuring expenses, which include (1) planned integration and other activities related to the BBVAPR acquisition, and (2) organizational restructuring initiatives. The total acquisition related expense for 2013 was $17.7 million.
(5)	Calculated based on net income available to common shareholders divided by average common shares outstanding for the period.
(6)	Calculated based on net income available to common shareholders plus the preferred dividends on the convertible preferred stock, divided by total average common shares outstanding and equivalents for the period as if converted.
(7)	Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.
(8)	Information includes all loans held for investment, including all acquired loans. Acquired loans, including those accounted for under ASC 310-30, are disclosed at carrying amount.
(9)	Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.
(10)	Calculated based on annualized income, net of tax, for the period divided by average total assets for the period.
(11)	Calculated based on annualized income available to common shareholders for the period divided by average tangible common equity for the period.  See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.
(12)	Calculated based on non-interest expense, excluding merger and restructuring charges, for the period divided by total net interest income and total banking and financial services revenues for the period.
(13)	The Company sells most of its conforming mortgages in the secondary market and retains servicing rights.
(14)	Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.
(15)	Production of new loans (excluding renewals).
(16)	During Q1 2014, the Company changed its methodology for determining mortgage delinquency from calendar days to missed installments.
(17)	Non-GAAP ratios. See "Table 9: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios.
(18)	Results for 2013 YTD include $1.4 million loss from the sale of Oriental non-acquired non-performing residential mortgage loans held-for-sale.
(19)	Results for 2013 YTD include $27.0 million charge-offs due to the reclassification to held-for-sale of non-performing residential mortgage loans with unpaid principal balance of $59.0 million.
(20)	Loans accounted for under ASC 310-30 (Loans acquired with deteriorated credit quality, including those by analogy), including covered loans, are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses. Therefore, they are not included as non-performing loans.
(21)	During Q1 2014, the Company purchased 707,400 shares under the current stock repurchase program for a total of $10.4 million, at an average price of $14.66 per share. In addition, during Q4 2014, the Company purchased 444,613 shares under the current stock repurchase program for a total of $6.5 million, at an average price of $14.65 per share.
(22)	During Q4 2014, the FDIC and the Company agreed to a methodology for the determination of the fair value of covered assets.  This change, resulted in higher claims to the FDIC from previously expected.  As a result, lower amortization of the indemnification asset was required during the quarter.
(23)	During Q4 2014, the Company offered a voluntary early retirement program for qualified employees and accumulated additional compensation expenses of $3.8 million related to this program.
(24)	At December 31, 2014, amount includes a $15 million receivable from the FDIC corresponding to the Q3 loss-share certification that was received during January 2015.
(25)	During Q4 2014, the Company transferred 3,731 accounts with balances of approximately $100 million from demand deposit accounts to savings accounts.

18