OFG Bancorp (OFG) 11-K Annual report of employee stock purchases

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,DC 20549

____________________________

FORM 11-K

_________________________

FOR ANNUAL REPORTS OF EMPLOYEE

STOCK REPURCHASE SAVINGSAND

SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One):

………………………………………………………………………………………………………..

☒

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934.

For the fiscal year ended December 31, 2019

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGEACT

OF 1934.

For the transition period from __________ to __________

Commission file number 001-12647

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

c/o Oriental Bank

254 Muñoz Rivera Avenue,

Oriental Center 15

th

Floor

San Juan, Puerto Rico 00918

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

OFG BANCORP

254 Muñoz Rivera Avenue,

Oriental Center 15

th

Floor

San Juan, Puerto Rico 00918

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

TABLE OF CONTENTS

Page

Report of Independent Registered Public Accounting Firm

1

Financial Statements:

Statements of Net Assets Available for Benefits as of December 31, 2019 and 2018

3

Statement of Changes in Net Assets Available for Benefits for the year ended

December 31, 2019

4

Notes to Financial Statements

5 – 12

Supplemental Schedules:

Schedule I – Schedule G, Part III - Nonexempt Transactions for the year ended

December 31, 2019

13

Schedule II – Schedule H, Line 4i - Schedule of Assets (Held at YearEnd) as of

December 31, 2019

14

Exhibits

15

Signatures

16

Report of Independent Registered Public Accounting Firm

To the Plan Participants and Plan Administrator

Oriental Bank CODA Profit Sharing Plan:

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of TheOriental Bank CODA

Profit Sharing Plan (the Plan) as of December 31, 2019 and 2018, the related statement of changes in net

assets available for benefits for the year ended December 31, 2019, and the related notes (collectively, the

financial statements). In our opinion, the financial statements present fairly, in all material respects, the net

assets available for benefits of the Plan as of December 31, 2019 and 2018, and the changes in net assets

available for benefits for the year ended December 31, 2019, in conformity with U.S. generally accepted

accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an

opinion on these financial statements based on our audits. We are a public accountingfirm registered with the

Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent

with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the

risks of material misstatement of the financial statements, whether due to error or fraud, and performing

procedures that respond to those risks. Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall

presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Accompanying Supplemental Information

The supplemental information, Schedule G, Part III - Nonexempt Transactions for the year ended

December 31, 2019, and the Schedule H, Line 4i – Schedule of Assets (Held at End of Year)as of

December 31, 2019 have been subjected to audit procedures performed in conjunction with the audit of the

Plan’s financial statements. The supplemental information is the responsibility of the Plan’smanagement. Our

audit procedures included determining whether the supplemental information reconciles to the financial

statements or the underlying accounting and other records, as applicable, and performing procedures to test

the completeness and accuracy of the information presented in the supplemental information. In forming our

opinion on the supplemental information, we evaluated whether the supplemental information, including its form

and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting

and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental

information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ KPMG LLP

We have served as the Plan’sauditor since 2005

San Juan, Puerto Rico

June 26, 2020

Stamp No. E403596 of the Puerto Rico

Society of Certified Public Accountants

was affixed to the record copy of this report

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

Statement of Net Assets Available for Benefits

as of December 31, 2019 and 2018

3

2019

2018

Assets:

Investments at fair value:

Cash and money market instruments

$

222,863

$

5,976

Common stock

6,189,993

4,548,003

Insurance company investment contracts

(pooled separate accounts)

45,586,165

35,985,003

51,999,021

40,538,982

Fully benefit-responsive investment contract

(stable value fund), at contract value

6,565,321

6,410,664

Total investments

58,564,342

46,949,646

Receivables:

Account receivable from plan sponsor

567,528

-

Dividends

18,353

19,348

Notes receivable from participants

7,227

8,257

Total receivables

593,108

27,605

Other assets

176,535

31,045

Total assets

$

59,333,985

$

47,008,296

Liabilities:

Other liabilities

$

56,812

$

-

Total liabilities

56,812

-

Net assets available for benefits

$

59,277,173

$

47,008,296

See accompanying notes to financial statements.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

Statement of Changes in Net Assets Available for Benefits

Year endedDecember 31, 2019

4

2019

Additions to net assets attributed to:

Net appreciation in fair value of investments

$

9,908,028

Dividends

76,245

Interest and other

310,769

Contributions:

Participants

3,237,126

Employer

883,178

Commissions reimbursement from plan sponsor (refer to Note 9)

567,528

Total additions

14,982,874

Deductions from assets attributed to:

Benefits paid to participants

(2,682,656)

Administrative fees

(31,341)

Total deductions

(2,713,997)

Net increase

12,268,877

Net assets available for benefits:

Beginning of year

47,008,296

End of year

$

59,277,173

See accompanying notes to financial statements.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

5

(1)

Description of the Plan

The following description of The Oriental Bank CODA Profit Sharing Plan (the “Plan”) provides only general

information. Participants should refer to the plan agreement for a more complete description of the Plan’s

provisions.

a)

General

The Plan was organized on January 1, 1992 as a defined contribution plan originally maintained by Oriental

Bank (the “Employer”), a wholly owned subsidiary of OFG Bancorp (the “Company”), for the benefit of

the Employer’s and its affiliated companies’ employees who are residents of Puerto Rico and are age 21 or

older. The Plan is intended to be a qualified plan pursuant to the Puerto Rico Internal Revenue Code of

2011, as amended (the “PR Code”). In 2016, the Plan was amended or restated to meet the requirements of

Sections 401(a) and (k) of the U.S. Internal Revenue Code of 1986, as amended (the “US Code”).In 2018,

the Puerto Rico Treasury Department (the “PR Treasury”) reaffirmedthe Plan’s qualification under the PR

Code.It contains a cash or deferred arrangement qualifying under the PR Code and is subject to the

provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).As such, the

Plan must comply with reporting and disclosure requirements, participation and vesting standards, and

fiduciary standards and duties, among other requirements.The U.S. Department of Labor (DOL) has full

authority to regulate and investigate the Plan. The DOL reviewed the Plan, as it was selected under the

DOL’sordinary investigation procedures. On December 18, 2019, the Employer received a findings letter

from the DOL outlining certain potential violations of the Prohibited Transaction Rules of ERISA. The

Employer worked with the DOL to resolve this matter in early 2020. The DOL has not yet issued a closing

letter in this matter, as it is reviewing the corrective actions taken by the Employer.For more information

related thereto, please refer to Note 9.

b)

Contributions

Each year, participants may contribute up to the maximum deferral amount under the provisions of Section

402(g) of the US Code as annually indexed by the U.S. Internal Revenue Service (the “IRS”). For the

periods ended 2019 and 2018,the limits were $19,000 and $18,500,respectively.If, in addition to a

deferral election under the Plan, participants contribute to an individual retirement account (“IRA”) in

Puerto Rico, pre-tax contributionsto both the Plan and the Puerto Rico IRA in the aggregate cannot exceed

the sum of the annual deferral limit under the PR Code ($20,000 for the tax years ended December 31,

2019 and 2018). Participants may also contribute amounts representing distributions from other Puerto Rico

and U.S. qualified defined benefit or contribution plans.

Participants direct the investment of their contributions into various investment options offered by the Plan.

The Plan currently offers pooled separate accounts, a stable value fund, and shares of common stock of the

Company as investment options for participants. Participants direct the investment of their matching

contributions in the Plan. The Employer provides a discretionary matching contribution of 50% of each

participant’s contributions up to a maximum contribution for matching purposes of 4% of the participant’s

compensation per year.

c)

Participant Accounts

Each participant’s account is credited with the participant’scontribution and allocations of the Employer’s

contribution and Plan earnings and charged with an allocation of administrative fees. Allocations are based

on participant earnings or account balances, as defined. The benefit to which a participant is entitled to is

the benefit that can be provided from the participant’s vested account.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

6

d)

Vesting

Participants are immediately vested in their contributions plus actual earnings thereon. The Employer’s

contribution portion of their accounts plus actual earnings thereon vest upon the occurrence of any of the

following events: completion of three years of credited service; attaining age 65; total disability while

employed by the Employer; or death while employed by the Employer.

e)

Payment of Benefits

On termination of service due to death, disability, or retirement, a participant or its heirs may elect to

receive the value of the vested interest in his or her account in either a lump sum amount, a fixed period

that may not exceed the participant’s life expectancy or through a fixed annuity contract. For termination of

service for other reasons, a participant may receive the value of the vested interest in his or her account as a

lump sum distribution.

f)

Loans to Participants

The Plan does not allow for loans to participants. In October 2013, the

Plan Participación en Beneficios

1081 Banco Bilb

ao Vizcaya Argentaria Puerto Rico, a defined contribution plan which covered all full-time

employees of the Banco Bilbao Vizcaya Argentaria Puerto Rico, which mergedwith and into Oriental

Bank, transferred its existing participant loans amounting to approximately $54,000 to the Plan. These

loans will be extinguished as they are repaid by participants. Loan terms range from 1-5 years or up to 30

years for a home loan. The loans are secured by the balance in the participant’s account and bear interest at

a rate commensurate with the interest rate charged by persons in the business of lending money for loans

which would be made under similar circumstances. Principal and interest are paid ratably through payroll

deductions. No additional loans will be granted to participants.

g)

Forfeited Accounts

Employer contributions that are not vested upon termination of employment are forfeited and may be used

to pay administrative expenses and then reduce future contributions to the Plan by the Employer. For the

year ended December 31, 2019, forfeitures totaling approximately $35,000 were used to offset Employer

contributions. At December 31, 2019, the Plan had approximately $2,900 in forfeitures available to pay

administrative expenses and reduce future Employer contributions.

h)

Plan Termination

Although it has not expressed any intent to do so, the Employer has the right under the Plan to discontinue

its contributions at any time and to terminate the Plan subject to ERISA provisions. In the event of Plan

termination, participants will become 100% vested in their Employer’s contributions.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

7

(2)

Summaryof Significant Accounting Policies

Following are the significant accounting policies followed by the Plan:

a)

Basis of Presentation

The accompanying financial statements have been prepared under the accrual method of accounting.

b)

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles

requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets

and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could

differ from those estimates. A material estimate that is particularly susceptible to significant change in the

near term is the valuation of investments.

c)

Risks and Uncertainties

The Plan invests in various financial instruments. Investment securities are exposed to various risks, such

as interest rate, credit, and market risks. Due to the level of risk associated with certain investment

securities, it is reasonably possible that changes in the fair values of investment securities will occur in the

near term and that such changes could materially affect participants’ account balances and the amounts

reported in the statements of net assets available for benefits.

d)

Investments Valuationand Income Recognition

Plan investments, other than fully benefit –responsive investment contracts (FBRICs), are stated at fair

value. See Note 3 for discussion of fair value measurements.

FBRICs are reported at contract value, which is the amount participants would receive if they were to

initiate permitted transactions under the terms of the Plan. The Plan invests in FBRICs through the Stable

ValueFund.

Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the

accrual basis. Dividends are recorded on the declaration date, taking into consideration the ex-dividend

date. Net appreciation/ depreciation includes the Plan’s gains and losses on investments bought and sold as

well as held during the year.

e)

Payments of Benefits

Benefits are recorded when paid.

f)

Plan Expenses

Under the Plan’s contract entered into with Transamerica Retirement SolutionsCorporation

(“Transamerica”), contract asset charges are assessed each month based on the actual combined balance of

all separate accounts and the stable value fund. These charges are presented as administrative fees in the

Plan’s statement of changes in net assets available for benefits.

Administrative expenses, including trustee, legal, auditing, and other fees, may be paid out of the invested

assets unless paid by the Employer. Expenses assumed and paid by the Employer during the year ended

December 31, 2019 amounted to approximately $137,000.

g)

Recent Accounting Developments

Accounting standards that have been issued by the Financial Accounting Standards Board (“FASB”)or

other standards-setting bodies are not expected to have a material impact on the Plan’s statements of net

assets available for benefits or the related statement of changes in net assets available for benefits.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

8

(3)

Fair Value

As discussed in Note 2, the Plan uses the fair value measurement framework under U.S. generally accepted

accounting principles.

Fair ValueMeasurement

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the

principal or most advantageous market for the asset or liability in an orderly transaction between market participants

on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and

minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to

measure fair value are:

Level 1

– assets include equity securities that are traded in an active exchange market, as well as certain

money market instruments. Valuationsare obtained from readily available pricing sources for market

transactions involving identical assets.

Level 2

– observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted prices in

markets that are not active; or other inputs that are observable or can be corroborated by observable market

data for substantially the full term of the assets.

Level 3

– unobservable inputs that are supported by little or no market activity and that are significant to the

fair value of the assets or liabilities. Level 3 assets include financial instruments whose value is determined

using pricing models, for which the determination of fair value requires significant management judgment or

estimation. As of December 31, 2019, and 2018, the Plan did not have such assets.

The following is a description of the valuation methodologies used for instruments measured at fair value:

Shares of the Company’scommon stock

: valued at quoted closing market prices (“Level 1”).

Money Market Instruments

: stated at fair value, which approximates cost plus accumulated interest earnings less

distributions to date (“Level 1”).

Pooled Separate Accounts

: stated at readily determinable fair value. The fair value is determined by the issuer and is

valued daily using publicly available quoted market prices matched with the current underlying investment holdings

of the accounts (“Level 2”).

The estimated fair value is subjective in nature and involves uncertainties and matters of significant judgment and,

therefore, cannot be determined with precision. Changes in assumptions could affect these fair value estimates.The

fair value estimates do not take into consideration the value of future business and the value of assets and liabilities

that are not financial instruments.

There were no transfers into or out of Level 1 and Level 2 fair value measurements during the years ended

December 31, 2019 and 2018.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

9

The following tables set forth by level, within the fair value hierarchy, the Plan’sfair value measurements at

December 31, 2019 and 2018:

December 31, 2019

Fair ValueMeasurements

Level 1

Level 2

Level 3

Total

Cash and money market instruments

$

222,863

$

-

$

-

$

222,863

Common stock

6,189,993

-

-

6,189,993

Pooled separate accounts

Hybrid (a)

-

20,526,364

-

20,526,364

Bond (b)

-

5,039,106

-

5,039,106

International Equity (c)

-

1,928,406

-

1,928,406

Equity - Large Cap (d)

-

13,251,803

-

13,251,803

Equity - Mid Cap (e)

-

2,780,446

-

2,780,446

Equity - Small Cap (f)

-

2,060,040

-

2,060,040

$

6,412,856

$

45,586,165

$

-

$

51,999,021

December 31, 2018

Fair ValueMeasurements

Level 1

Level 2

Level 3

Total

Cash and money market instruments

$

5,976

$

-

$

-

$

5,976

Common stock

4,548,003

-

-

4,548,003

Pooled separate accounts

Hybrid (a)

-

15,872,006

-

15,872,006

Bond (b)

-

4,603,338

-

4,603,338

International Equity (c)

-

1,587,625

-

1,587,625

Equity - Large Cap (d)

-

10,145,617

-

10,145,617

Equity - Mid Cap (e)

-

2,182,299

-

2,182,299

Equity - Small Cap (f)

-

1,594,118

-

1,594,118

$

4,553,979

$

35,985,003

$

-

$

40,538,982

(a)The pooled separate accounts in this category primarily invest in U.S. and non-U.S. stocks, and fixed-income

securities which may include bonds, mutual funds, cash equivalents or other money market instruments.

(b)The pooled separate accounts in this category primarily invest in bonds (at least 80% of total assets), preferred

stocks, cash equivalents or other money market instruments.

(c)The pooled separate accounts in this category primarily invest at least 80% of assets in equity and debt

securities of issuers from countries outside of the United States.

(d)The pooled separate accounts in this category primarily invest in equity securities of medium and large

capitalization companies, and may invest in securities of non-U.S. issuers.

(e)The pooled separate accounts in this category primarily invest in domestic equity securities with growth

potential, including foreign equity securities and debt securities.

(f)The pooled separate accounts in this category primarily invest in common stocks contained in both the Small

Cap 1750 Index and the Russell 2000 ValueIndex.

Investments can be redeemed with no advance notice on any day on which the New YorkStock Exchange is open

for trading.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

10

(4)

Stable Value Fund

Transamerica offers a stable value fund that the participant may elect to transfer all or part of his or her funds. The

stable value fund is considered a fully benefit-responsive investment contract. Contract value is the relevant

measurement attribute for that portion of the net assets available for benefits. Contract value, as reported by

Transamerica, is the beginning balance plus any deposit and credited interest, less any withdrawals, charges, or

expenses, a measurement that approximates fair value. Participants may ordinarily direct the withdrawal or transfer

of all or a portion of their investment at contract value.

There are no reserves against contract value for credit risk of Transamerica or otherwise. The contract value of the

investment contract at December 31, 2019 and 2018was $6,565,321 and $6,410,664,respectively. The stable value

fund invests in Guaranteed Investment Contracts (“GICs”). These investments seek to protect against any loss of

principal while providing returns in excess of money market funds and one-year U.S. Treasury bills. The investment

has a portfolio investment rate design in which all deposits are credited with the same interest rate, on a daily basis,

and with no set maturity. The effectivecredited interest rate is set monthly and effective on the first day of the

month. Contract charges may reduce this return. The Transamerica stable value fund is not a separate account

investment choice – it is an investment in Transamerica’s general account.

Certain events limit the ability of the Plan to transact at contract value with Transamerica. Such events include the

following: (1) the Plan is changed so as to significantly affect Transamerica’sobligations to the contract, (2) the

contract can no longer be treated as a pension plan contract, (3) the Plan is terminated, (4) failure to comply with the

contract’s requirements, (5) failure to provide information, (6) the sum of the contract account values at any time

equals $20,000 or less, or (7) the failure of the trust to qualify for exemption from federal income taxes or any

required prohibited transaction exemption under ERISA. The plan administrator is not aware of any events, which

would limit the Plan’s ability to transact at contract value with participants that are probable.

(5)

Other assets

Transamerica rebates certain amounts to the Plan based on a fee concession. The rebate amount at December 31,

2019 and 2018 is equal to 34 and 14 basis points, respectively, per year based on the balances with Transamerica.

This rebate is calculated on a monthly basis and credited to the Expense Budget Account; a suspense account used

by Transamerica.

The Expense Budget Account may be used for plan expenses or allocated to participants as additional income.

During the years ended December 31, 2019 and 2018, the Plan reallocated to participants approximately $31,000

and $22,000,respectively.As of December 31, 2019, and 2018, the Expense Budget Account maintained a balance

of approximately $177,000 and $31,000, respectively, included as other assets in the statements of net asset

available for benefit.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

11

(6)

Related-Party Transactions

Certain Plan investments are shares of the Company’s common stock. The Employer is the Plan sponsor and trustee

and a wholly owned subsidiary of the Company and, therefore, qualifies as a party in interest. At December 31, 2019

and 2018, the Plan held an investment of 262,176 and 276,306 shares of the Company’s common stock,

respectively. The fair value of the common stock at December 31, 2019 and 2018 was $6,189,993 and $4,548,003,

respectively.

Transamerica serves as custodian and manages the pooled separate accounts and stable value fund, therefore,

qualifies as party in interest. Transamerica contracted Oriental Insurance, LLC, a subsidiary of the Company,as the

insurance agent. Another party in interest to the Plan is MidAdtlantic, which serves as the custodian for the Plan.

The recordkeeper of the Plan is Oriental Pension Consultants, Inc. (“OPC”), a subsidiary of the Company. Fees

charged by OPC for services provided were assumed by the Employer.

(7)

Income Taxes

The trust that forms part of the Plan (the “Trust”) is intended to be exempt from Puerto Rico and U.S. federal

incomes taxes pursuant to the PR Code and the US Code, respectively.Accordingly, the IRS ruled on March 31,

2014 that the Trust constitutes a qualified trust under Section 401(a) of the US Code, and, therefore, the Trust is not

subject to U.S. federal income tax.The PR Treasury ruled on March 28, 2018 that the Plan constitutes a qualified

plan pursuant to the provisions of Section 1081.01 of the PR Code and, therefore, the Trust is not subject to Puerto

Rico income tax.As applicable, the Plan is required to operate in accordance with the provisions of the PR Code

and the US Code to maintain its qualification.The Plan administrator believes that the Plan is designed and

operating in compliance with such provisions and, therefore, remains qualified under the PR Code and the US Code.

U.S. generally accepted accounting principles require plan management to evaluate tax positions taken by the Plan

and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not

be sustained upon examination by the IRS and the PR Treasury.As of December 31, 2019, and 2018, there are no

uncertain tax positions taken or expected to be taken that would require recognition or disclosure in the financial

statements.The Plan is subject to routine audits by taxing jurisdictions.However, there are currently no audits in

progress for any tax periods. The Plan is no longer subject to income tax examinations for the years prior to 2015.

(8)

Excess Contributions Payable to Participants

The Plan is subject to certain non-discrimination rules under the PR Code. As of December 31, 2019, the Plan failed

certain of the non-discrimination tests under the PR Code due to lower contribution percentages by non-highly

compensated eligible employees relative to the contribution percentages of highly compensated eligible employees.

In order to meet the requirements of the non-discrimination rules, the Plan refunded a portion of the contributions

made by highly compensated participants, in accordance with applicable provisions of the PR Code. The refund for

2019, paid in March 2020,totaled $56,812 and was included as other liabilities in the Plan’s statement of net assets

available for benefits. For the year ended on December 31, 2018, the Plan was in compliance with all of the non-

discrimination tests under the PR Code.

(9)

Non-Exempt Prohibited Transaction

FromDecember 31, 2013 through December 31, 2018, Oriental Bank engaged in certain non-exempt prohibited

transactions under ERISA in connection with Plan assets. As a result of such transactions, Oriental Bank benefited

from the use of Plan assets by receiving certain commissions from a third party without offset or rebates to the Plan.

Oriental Bank remitted $567,528, including interest, to the Plan and allocated this amount to Plan participants in

May 2020 as remediation for said transactions. It is recorded as an account receivable in the Plan’s statement of net

assets available for benefits.

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND 2018 AND YEAR ENDED DECEMBER 31, 2019

12

(10)

Subsequent events

On March 11, 2020, the WorldHealth Organization (WHO) classified the COVID-19 outbreak as a pandemic,

triggering volatility in financial markets and a significant negative impact on the global economy. The values of the

Plan’s individual investments are expected to fluctuate in response to changing market conditions and the amount of

losses that will be recognized in subsequent periods cannot be determined. The full impact of the COVID-19

outbreak continues to evolve as of the date of this annual report.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the

United States. The CARES Act offers relief provisions to tax-qualified retirement plans and their participants. Plan

management has adopted certain relief provisions included in the CARES Act and continues to evaluate provisions

in relation to the Plan.

The Plan was amended to allow eligible plan participants,who are Puerto Rico residents in 2020, to take earthquake

and COVID-19 eligible distributions from February 20, 2020 through June 30, 2020 pursuant to PR Treasury

Administrative Determinations 20-09 and 20-23. Any such eligible distributions, which are available only in a lump

sum payment, are limited to $100,000 overall and receive a favorable tax benefit under said administrative

determinations. In particular, the first $10,000 is exempt from income taxes and the alternative minimum tax (AMT)

under the PR Code and the amount over $10,000 up to $100,000 is subject to a flat 10% income tax rate if the tax is

withheld at the time of the distribution.

The Plan has evaluated subsequent events from the date of the statement of net assets available for benefits through

June 26, 2020 (the filing date of this annual report).

SCHEDULE I

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

Schedule G, Part III - Nonexempt Transactions

For the year ended December 31, 2019

13

Party involved:

Oriental Bank

Relationship to Plan, employer or other party-in-interest:

Plan Sponsor

Transaction:

Reimbursement of Commissions

Dates of Payments:

January 1, 2013 to December 31, 2018

Amounts of Payments:

$567,528

Reason Transaction is Nonexempt:

Transaction with a party-in-interest.

See the accompanying report of independent registered public accounting firm.

SCHEDULE II

THE ORIENTAL BANK CODA PROFIT SHARING PLAN

Schedule H, Line 4i - Schedule of Assets (Held at End of Year)

December 31, 2019

14

(b)

(c)

(d)

(e)

(a)

Identity of issue,

borrower,

lessor, orsimilar party

Description of Investment, including maturity

date, rate of interest, collateral, par,

or maturity value

Cost

Current value

Participant directed:

*

OFG Bancorp

OFG Bancorp:

Common Stock

262,176

shares

**

$

6,189,993

*

Transamerica

Pooled Separate Accounts:

Transamerica AA - Moderate

473,180

units

**

11,947,896

WMC Core Equity

371,350

units

**

6,737,186

AEGON Balanced

43,323

units

**

4,994,399

SSgA Russell Lg Cap Grth Ind

200,972

units

**

5,540,224

American Century Government Bond

118,035

units

**

2,445,641

Franklin Small-Mid Cap Growth

67,222

units

**

2,780,446

SSgA International Index

57,959

units

**

1,928,406

SSgA Russell SC ValueIndex

14,421

units

**

1,477,859

Transamerica AA - Moderate Growth

50,311

units

**

1,334,895

Loomis Sayles Investment Grade Bond

27,787

units

**

1,251,927

Transamerica AA - Growth

42,937

units

**

1,190,890

SSgA Russell LC ValueIndex

24,918

units

**

892,626

Transamerica AA - Conservative

44,245

units

**

1,058,284

Transamerica Partners High YieldBond

14,374

units

**

685,101

Loomis Sayles Bond

8,062

units

**

656,437

TA VanguardSmall- Cap Index

1,874

units

**

512,741

Invesco American Value

4,143

units

**

81,767

TA VanguardSmall- Cap Grth Idx

1,251

units

**

69,440

45,586,165

Cash and money markets

Cash and Bank Deposit Sweep Program

**

222,863

Fully benefit-responsive

investment contract:

*

Transamerica

Transamerica Stable Value

322,861

units

**

6,565,321

Other assets:

*

Transamerica

Expense budget account

—

176,535

*

Participant Loans

Notes, with interest rate of 9.5%;

maturities ranges through 2032

—

7,227

$

58,748,104

*

Party-in-interest as defined by ERISA

**

Not applicable as these are participant directed.

See the accompanying report of independent registered public accounting firm.

15

INDEX OF EXHIBITS

Exhibit No.

Description of Document

23.1

Consent of KPMG LLP

16

SIGNATURES

The Plan

. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who

administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the

undersigned hereunto duly authorized.

THE ORIENTAL BANK CODA

PROFIT SHARING PLAN

(Name of Plan)

Date:June 26, 2020/s/ Maritza Arizmendi

Maritza Arizmendi

Executive Vice President and

Chief Financial Officer

/s/ Juan J. Santiago

Senior Vice President and TrustOfficer