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Section 1: 10-Q (FORM 10-Q)

UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

     EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2018

 

or

 

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

       EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission File Number 001-12647

 

OFG Bancorp

Incorporated in the Commonwealth of Puerto Rico, IRS Employer Identification No. 66-0538893

 

Principal Executive Offices:

254 Muñoz Rivera Avenue

San Juan, Puerto Rico 00918

Telephone Number: (787) 771-6800

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer               Accelerated Filer ý               Non-Accelerated Filer                 Smaller Reporting Company                                                                                                                                                                                          (Do not check if a smaller reporting company)

Emerging Growth Company    

 

If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x

 

 

Number of shares outstanding of the registrant’s common stock, as of the latest practicable date:

 

 43,968,342 common shares ($1.00 par value per share) outstanding as of April 30, 2018

 


 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

Page

Item 1.

Financial Statements

 

 

Unaudited Consolidated Statements of Financial Condition

1

 

Unaudited Consolidated Statements of Operations

3

 

Unaudited Consolidated Statements of Comprehensive Income

5

 

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

6

 

Unaudited Consolidated Statements of Cash Flows

7

 

Notes to Unaudited Consolidated Financial Statements

 

 

 

Note 1 – Organization, Consolidation and Basis of Presentation

9

 

 

Note 2 – Significant Events

 10 

 

 

Note 3 – Restricted Cash

11

 

 

Note 4 – Investment Securities

12

 

 

Note 5 – Loans  

17

 

 

Note 6 – Allowance for Loan and Lease Losses

41

 

 

Note 7 – FDIC Indemnification Asset and True-Up Payment Obligation

49

 

 

Note 8 – Foreclosed Real Estate

48

 

 

Note 9 – Derivatives

50

 

 

Note 10 – Accrued Interest Receivable and Other Assets

51

 

 

Note 11 – Deposits and Related Interest

52

 

 

Note 12 – Borrowings and Related Interest

54

 

 

Note 13 – Offsetting of  Financial Assets and Liabilities

56

 

 

Note 14 – Income Taxes

58

 

 

Note 15 – Regulatory Capital Requirements

59

 

 

Note 16 – Stockholders’ Equity

60

 

 

Note 17 – Accumulated Other Comprehensive Income

61

 

 

Note 18 – Earnings per Common Share

63

 

 

Note 19 – Guarantees

64

 

 

Note 20 – Commitments and Contingencies

65

 

 

Note 21 – Banking and Financial Service Revenues

68

 

 

Note 22 – Fair Value of Financial Instruments

69

 

 

Note 23 – Business Segments

75

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations  

77

 

 

Critical Accounting Policies and  Estimates  

77

 

 

Overview of Financial Performance:

77

 

 

Selected Financial Data

78

 

 

Financial Highlights of the First Quarter of 2018

80

 

 

Analysis of Results of Operations  

81

 

 

Analysis of Financial Condition  

90

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

117

Item 4.

Controls and Procedures

121

PART II – OTHER INFORMATION

 

Item 1.

Legal Proceedings

122

Item 1A.

Risk Factors

122

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

122

Item 3.

Default upon Senior Securities

122

Item 4.

Mine Safety Disclosures

122

Item 5.

Other Information

122

Item 6.

Exhibits

123

Signatures

124

 


 

FORWARD-LOOKING STATEMENTS

 

The information included in this quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to the financial condition, results of operations, plans, objectives, future performance and business of OFG Bancorp (“we,” “our,” “us” or “Oriental”), including, but not limited to, statements with respect to the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital markets conditions, capital adequacy and liquidity, and the effect of legal proceedings and new accounting standards on the Oriental’s financial condition and results of operations. All statements contained herein that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may,” or similar expressions are generally intended to identify forward-looking statements.

 

These statements are not guarantees of future performance and involve certain risks, uncertainties, estimates and assumptions by management that are difficult to predict. Various factors, some of which by their nature are beyond Oriental’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Factors that might cause such a difference include, but are not limited to:

 

·     the rate of growth in the economy and employment levels, as well as general business and economic conditions;

·     changes in interest rates, as well as the magnitude of such changes;

·     the credit default by the government of Puerto Rico or its municipalities;

·     amendments to the fiscal plan approved by the Financial Oversight and Management Board of Puerto Rico;

·     determinations in the court-supervised debt-restructuring process under Title III of PROMESA for the Puerto Rico government and all of its agencies, including some of its public corporations;

·     the impact of property, credit and other losses in Puerto Rico as a result of hurricanes Irma and Maria;

·     the amount of government, private and philanthropic financial assistance for the reconstruction of Puerto Rico’s critical infrastructure, which suffered catastrophic damages caused by hurricane Maria;

·     the pace and magnitude of Puerto Rico’s economic recovery;

·     the potential impact of damages from future hurricanes and natural disasters in Puerto Rico;

·     the fiscal and monetary policies of the federal government and its agencies;

·     changes in federal bank regulatory and supervisory policies, including required levels of capital;

·     the relative strength or weakness of the commercial and consumer credit sectors and the real estate market in Puerto Rico;

·     the performance of the stock and bond markets;

·     competition in the financial services industry; and

·     possible legislative, tax or regulatory changes

 

Other possible events or factors that could cause results or performance to differ materially from those expressed in these forward-looking statements include the following: negative economic conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of non-performing assets, charge-offs and provision expense; changes in interest rates and market liquidity which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets; adverse movements and volatility in debt and equity capital markets; changes in market rates and prices which may adversely impact the value of financial assets and liabilities; liabilities resulting from litigation and regulatory investigations; changes in accounting standards, rules and interpretations; increased competition; Oriental’s ability to grow its core businesses; decisions to downsize, sell or close units or otherwise change Oriental’s business mix; and management’s ability to identify and manage these and other risks.

All forward-looking statements included in this quarterly report on Form 10-Q are based upon information available to Oriental as of the date of this report, and other than as required by law, including the requirements of applicable securities laws, Oriental assumes no obligation to update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

AS OF MARCH 31, 2018 AND DECEMBER 31, 2017

 

  

 

March 31,

 

December 31,

 

 

2018

 

2017

 

 

(In thousands)

ASSETS

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

    Cash and due from banks

 

$

354,930

 

$

478,182

    Money market investments

 

 

7,428

 

 

7,021

        Total cash and cash equivalents

 

 

362,358

 

 

485,203

Restricted cash

 

 

3,030

 

 

3,030

Investments:

 

 

 

 

 

 

    Trading securities, at fair value, with amortized cost of $647 (December 31, 2017 - $647)

 

 

293

 

 

191

    Investment securities available-for-sale, at fair value, with amortized cost of $815,970 (December 31, 2017 - $648,800)

 

 

801,641

 

 

645,797

    Investment securities held-to-maturity, at amortized cost, with fair value of $467,980 (December 31, 2017 - $497,681)

 

 

485,143

 

 

506,064

    Federal Home Loan Bank (FHLB) stock, at cost

 

 

11,499

 

 

13,995

    Other investments

 

 

3

 

 

3

        Total investments

 

 

1,298,579

 

 

1,166,050

Loans:

 

 

 

 

 

 

    Loans held-for-sale, at lower of cost or fair value

 

 

10,505

 

 

12,272

    Loans held for investment, net of allowance for loan and lease losses of $168,592 (December 31, 2017 - $167,509)

 

 

4,122,924

 

 

4,044,057

        Total loans

 

 

4,133,429

 

 

4,056,329

Other assets:

 

 

 

 

 

 

    Foreclosed real estate

 

 

40,314

 

 

44,174

    Accrued interest receivable

 

 

35,141

 

 

49,969

    Deferred tax asset, net

 

 

128,270

 

 

127,421

    Premises and equipment, net

 

 

67,163

 

 

67,860

    Customers' liability on acceptances

 

 

25,869

 

 

27,663

    Servicing assets

 

 

10,533

 

 

9,821

    Derivative assets

 

 

898

 

 

771

    Goodwill

 

 

86,069

 

 

86,069

    Other assets

 

 

55,468

 

 

64,693

                Total assets

 

$

6,247,121

 

$

6,189,053

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements

1 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

AS OF MARCH 31, 2018 AND DECEMBER 31, 2017 (CONTINUED)

 

  

 

March 31,

 

December 31,

 

 

2018

 

2017

 

 

(In thousands)

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

    Demand deposits

 

$

2,117,857

 

$

2,039,126

    Savings accounts

 

 

1,274,414

 

 

1,251,398

    Time deposits

 

 

1,441,157

 

 

1,508,958

        Total deposits

 

 

4,833,428

 

 

4,799,482

Borrowings:

 

 

 

 

 

 

    Securities sold under agreements to repurchase

 

 

273,926

 

 

192,869

    Advances from FHLB

 

 

43,934

 

 

99,643

    Subordinated capital notes

 

 

36,083

 

 

36,083

    Other borrowings

 

 

394

 

 

153

        Total borrowings

 

 

354,337

 

 

328,748

Other liabilities:

 

 

 

 

 

 

    Derivative liabilities

 

 

752

 

 

1,281

    Acceptances executed and outstanding

 

 

25,869

 

 

27,644

    Accrued expenses and other liabilities

 

 

85,886

 

 

86,791

            Total liabilities

 

 

5,300,272

 

 

5,243,946

Commitments and contingencies (See Note 20)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

    Preferred stock; 10,000,000 shares authorized;

 

 

 

 

 

 

        1,340,000 shares of Series A, 1,380,000 shares of Series B, and 960,000

           shares of Series D issued and outstanding

 

 

 

 

 

 

           (December 31, 2017 - 1,340,000 shares; 1,380,000 shares; and 960,000

           shares) $25 liquidation value

 

 

92,000

 

 

92,000

        84,000 shares of Series C issued and outstanding (December 31, 2017 -

           84,000 shares); $1,000 liquidation value

 

 

84,000

 

 

84,000

    Common stock, $1 par value; 100,000,000 shares authorized; 52,625,869 shares

        issued: 43,968,342 shares outstanding (December 31, 2017 - 52,625,869;

 

 

 

 

 

 

        43,947,442)

 

 

52,626

 

 

52,626

    Additional paid-in capital

 

 

541,404

 

 

541,600

    Legal surplus

 

 

83,138

 

 

81,454

    Retained earnings

 

 

210,008

 

 

200,878

    Treasury stock, at cost, 8,657,527 shares (December 31, 2017 - 8,678,427

        shares)

 

 

(104,142)

 

 

(104,502)

    Accumulated other comprehensive (loss), net of tax of $1,999 (December 31, 2017  $564)

 

 

(12,185)

 

 

(2,949)

            Total stockholders’ equity

 

 

946,849

 

 

945,107

                Total liabilities and stockholders’ equity

 

 $  

6,247,121

 

 $  

6,189,053

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements

2 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE QUARTERS ENDED MARCH 31, 2018 AND 2017

 

 

Quarter Ended March 31,

 

2018

 

2017

 

 

(In thousands, except per share data)

Interest income:

 

 

 

 

 

 

        Loans

$

74,612

 

$

77,650

 

        Mortgage-backed securities

 

7,051

 

 

7,206

 

        Investment securities and other

 

1,507

 

 

1,322

 

                    Total interest income

 

83,170

 

 

86,178

 

Interest expense:

 

 

 

 

 

 

        Deposits

 

7,298

 

 

7,353

 

        Securities sold under agreements to repurchase

 

1,076

 

 

3,245

 

        Advances from FHLB and other borrowings

 

374

 

 

596

 

        Subordinated capital notes

 

428

 

 

366

 

                    Total interest expense

 

9,176

 

 

11,560

 

Net interest income

 

73,994

 

 

74,618

 

Provision for loan and lease losses, net

 

15,460

 

 

17,654

 

Net interest income after provision for loan and lease losses

 

58,534

 

 

56,964

 

Non-interest income:

 

 

 

 

 

 

        Banking service revenue

 

10,463

 

 

10,626

 

        Wealth management revenue

 

6,019

 

 

6,215

 

        Mortgage banking activities

 

1,757

 

 

587

 

                    Total banking and financial service revenues

 

18,239

 

 

17,428

 

 

 

 

 

 

 

 

        FDIC shared-loss benefit, net

 

-

 

 

1,403

 

        Net gain on:

 

 

 

 

 

 

            Derivatives

 

-

 

 

81

 

            Other non-interest income

 

275

 

 

162

 

                    Total non-interest income, net

 

18,514

 

 

19,074

 

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements

 

 

 

 

 

 

 

3 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE QUARTERS ENDED MARCH 31, 2018 AND 2017 (CONTINUED)

 

 

Quarter Ended March 31,

 

2018

 

2017

 

(In thousands, except per share data)

Non-interest expense:

 

 

 

 

 

        Compensation and employee benefits

 

20,608

 

 

20,347

        Professional and service fees

 

2,694

 

 

3,237

        Occupancy and equipment

 

7,768

 

 

7,199

        Insurance

 

1,478

 

 

1,600

        Electronic banking charges

 

4,966

 

 

4,902

        Information technology expenses

 

2,009

 

 

1,998

        Advertising, business promotion, and strategic initiatives

 

1,347

 

 

1,395

        Loss on sale of foreclosed real estate and other repossessed assets

 

1,226

 

 

1,326

        Loan servicing and clearing expenses

 

1,161

 

 

1,189

        Taxes, other than payroll and income taxes

 

2,260

 

 

2,372

        Communication

 

885

 

 

914

        Printing, postage, stationary and supplies

 

644

 

 

637

        Director and investor relations

 

240

 

 

280

        Credit related expenses

 

2,419

 

 

2,626

        Other

 

2,416

 

 

1,662

                    Total non-interest expense

 

52,121

 

 

51,684

Income before income taxes

 

24,927

 

 

24,354

        Income tax expense

 

8,010

 

 

9,204

Net income

 

16,917

 

 

15,150

        Less: dividends on preferred stock

 

(3,465)

 

 

(3,465)

Income available to common shareholders

$

13,452

 

$

11,685

Earnings per common share:

 

 

 

 

 

        Basic

$

0.31

 

$

0.27

        Diluted

$

0.30

 

$

0.26

Average common shares outstanding and equivalents

 

51,121

 

 

51,131

Cash dividends per share of common stock

$

0.06

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements

4 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE QUARTERS ENDED MARCH 31, 2018 AND 2017

 

 

 

 

 

 

 

  

Quarter Ended March 31,

 

2018

 

2017

 

(In thousands)

 

 

 

 

 

 

Net income

$

16,917

 

$

15,150

Other comprehensive income before tax:

 

 

 

 

 

     Unrealized (loss) gain on securities available-for-sale

 

(11,326)

 

 

1,866

     Unrealized gain on cash flow hedges

 

656

 

 

182

Other comprehensive (loss) income before taxes

 

(10,670)

 

 

2,048

     Income tax effect

 

1,434

 

 

(296)

Other comprehensive (loss) income after taxes

 

(9,236)

 

 

1,752

Comprehensive income

$

7,681

 

$

16,902

 

 

 

 

 

 

See notes to unaudited consolidated financial statements

5 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE QUARTERS ENDED MARCH 31, 2018 AND 2017

 

 

 

 

 

 

 

 

  

Quarter Ended March 31,

  

2018

 

2017

 

 

(In thousands)

Preferred stock:

 

 

 

 

 

 

Balance at beginning of period

$

176,000

 

$

176,000

 

       Balance at end of period

 

176,000

 

 

176,000

 

Common stock:

 

 

 

 

 

 

Balance at beginning of period

 

52,626

 

 

52,626

 

       Balance at end of period

 

52,626

 

 

52,626

 

Additional paid-in capital:

 

 

 

 

 

 

Balance at beginning of period

 

541,600

 

 

540,948

 

Stock-based compensation expense

 

291

 

 

218

 

Stock-based compensation excess tax benefit recognized in income

 

(127)

 

 

-

 

Lapsed restricted stock units

 

(360)

 

 

(358)

 

       Balance at end of period

 

541,404

 

 

540,808

 

Legal surplus:

 

 

 

 

 

 

Balance at beginning of period

 

81,454

 

 

76,293

 

Transfer from retained earnings

 

1,684

 

 

1,479

 

       Balance at end of period

 

83,138

 

 

77,772

 

Retained earnings:

 

 

 

 

 

 

Balance at beginning of period

 

200,878

 

 

177,808

 

Net income

 

16,917

 

 

15,150

 

Cash dividends declared on common stock

 

(2,638)

 

 

(2,637)

 

Cash dividends declared on preferred stock

 

(3,465)

 

 

(3,465)

 

Transfer to legal surplus

 

(1,684)

 

 

(1,479)

 

       Balance at end of period

 

210,008

 

 

185,377

 

Treasury stock:

 

 

 

 

 

 

Balance at beginning of period

 

(104,502)

 

 

(104,860)

 

Lapsed restricted stock units

 

360

 

 

358

 

       Balance at end of period

 

(104,142)

 

 

(104,502)

 

Accumulated other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

Balance at beginning of period

 

(2,949)

 

 

1,596

 

Other comprehensive (loss) income, net of tax

 

(9,236)

 

 

1,752

 

       Balance at end of period

 

(12,185)

 

 

3,348

 

Total stockholders’ equity

$

946,849

 

$

931,429

 

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements

 

6 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE QUARTERS ENDED MARCH 31, 2018 AND 2017

 

 

 

 

 

 

 

 

  

Quarter Ended March 31,

  

2018

 

2017

 

 

(In thousands)

Cash flows from operating activities:

 

 

 

 

 

 

Net income

$

16,917

 

$

15,150

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Amortization of deferred loan origination fees and fair value premiums on acquired loans

 

1,118

 

 

618

 

Amortization of investment securities premiums, net of accretion of discounts

 

1,614

 

 

2,336

 

Amortization of core deposit and customer relationship intangibles

 

330

 

 

369

 

FDIC shared-loss benefit

 

-

 

 

(1,403)

 

Depreciation and amortization of premises and equipment

 

2,277

 

 

2,110

 

Deferred income tax expense, net

 

586

 

 

2,443

 

Provision for loan and lease losses, net

 

15,460

 

 

17,654

 

Stock-based compensation

 

291

 

 

218

 

  Stock-based compensation excess tax benefit recognized in income

 

(127)

 

 

-

 

(Gain) loss on:

 

 

 

 

 

 

   Sale of mortgage loans held-for-sale

 

(87)

 

 

(207)

 

   Derivatives

 

-

 

 

(81)

 

   Foreclosed real estate

 

1,284

 

 

1,570

 

   Sale of other repossessed assets

 

217

 

 

(160)

 

Originations of loans held-for-sale

 

(23,292)

 

 

(38,945)

 

Proceeds from sale of mortgage loans held-for-sale

 

5,945

 

 

10,893

 

Net (increase) decrease in:

 

 

 

 

 

 

   Trading securities

 

(102)

 

 

33

 

   Accrued interest receivable

 

14,828

 

 

1,672

 

   Servicing assets

 

(712)

 

 

170

 

   Other assets

 

10,448

 

 

11,615

 

Net (decrease) in:

 

 

 

 

 

 

   Accrued interest on deposits and borrowings

 

(359)

 

 

(1,031)

 

   Accrued expenses and other liabilities

 

(11,235)

 

 

(25)

 

Net cash provided by operating activities

 

35,401

 

 

24,999

 

 

 

 

 

 

 

 

See notes to unaudited consolidated financial statements

 

7 


OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE QUARTERS ENDED MARCH 31, 2018 AND 2017 (CONTINUED)

 

  

Quarter Ended March 31,

  

2018

 

2017

 

 

(In thousands)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of:

 

 

 

 

 

 

   Investment securities available-for-sale

 

(173,162)

 

 

(51,430)

 

   FHLB stock

 

(35,775)

 

 

(7,065)

 

Maturities and redemptions of:

 

 

 

 

 

 

   Investment securities available-for-sale

 

23,408

 

 

28,659

 

   Investment securities held-to-maturity

 

19,844

 

 

20,551

 

   FHLB stock

 

38,271

 

 

697

 

Proceeds from sales of:

 

 

 

 

 

 

   Foreclosed real estate and other repossessed assets, including write-offs

 

(619)

 

 

(127)

 

Origination and purchase of loans, excluding loans held-for-sale

 

(286,129)

 

 

(171,153)

 

Principal repayment of loans, including covered loans

 

197,622

 

 

213,135

 

(Repayments to) reimbursements from the FDIC on shared-loss agreements, net

 

-

 

 

(10,125)

 

Additions to premises and equipment

 

(1,580)

 

 

(1,489)

 

Net cash (used in) provided by investing activities

 

(218,120)

 

 

21,653

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Net increase (decrease) in:

 

 

 

 

 

 

   Deposits

 

40,198

 

 

51,853

 

   Securities sold under agreements to repurchase

 

81,000

 

 

(121,792)

 

   FHLB advances, federal funds purchased, and other borrowings

 

(55,221)

 

 

(378)

 

Exercise of stock options and restricted units lapsed, net

 

-

 

 

(1)

 

Dividends paid on preferred stock

 

(3,465)

 

 

(3,465)

 

Dividends paid on common stock

 

(2,638)

 

 

(3,037)

 

Net cash used in financing activities

$

59,874

 

 $  

(76,820)

 

Net change in cash, cash equivalents and restricted cash

 

(122,845)

 

 

(30,168)

 

Cash, cash equivalents and restricted cash at beginning of period

 

488,233

 

 

513,469

 

Cash, cash equivalents and restricted at end of period

$

365,388

 

$

483,301

 

Supplemental Cash Flow Disclosure and Schedule of Non-cash Activities:

 

 

 

 

 

 

Interest paid

$

9,103

 

$

12,131

 

Mortgage loans securitized into mortgage-backed securities

$

17,954

 

 $  

24,921

 

Transfer from loans to foreclosed real estate and other repossessed assets

$

11,179

 

$

1,601

 

Reclassification of loans held-for-sale portfolio to held-for-investment portfolio

$

1,247

 

 $  

-

 

Financed sales of foreclosed real estate

$

369

 

$

242

 

Loans booked under the GNMA buy-back option

$

12,515

 

 $  

9,973

 

See notes to unaudited consolidated financial statements

 

8 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION  

 

Nature of Operations

 

OFG Bancorp (“Oriental”) is a publicly-owned financial holding company incorporated under the laws of the Commonwealth of Puerto Rico. Oriental operates through various subsidiaries including, a commercial bank, Oriental Bank (the “Bank”), a securities broker-dealer, Oriental Financial Services Corp. (“Oriental Financial Services”), an insurance agency, Oriental Insurance, LLC. (“Oriental Insurance”), a retirement plan administrator, Oriental Pension Consultants, Inc. (“OPC”), and two operating subsidiaries of the Bank, OFG USA, LLC ("OFG USA") and Oriental International Bank, Inc. Through these subsidiaries and their respective divisions, Oriental provides a wide range of banking and financial services such as commercial, consumer and mortgage lending, auto loans, financial planning, insurance sales, money management and investment banking and brokerage services, as well as corporate and individual trust services.

 

On April 30, 2010, the Bank acquired certain assets and assumed certain deposits and other liabilities of Eurobank, a Puerto Rico commercial bank, in an FDIC-assisted acquisition. On February 6, 2017, the Bank and the FDIC agreed to terminate the shared-loss agreements related to the Eurobank Acquisition. On December 18, 2012, Oriental acquired a group of Puerto Rico-based entities that included Banco Bilbao Vizcaya Argentaria Puerto Rico (“BBVAPR”), a Puerto Rico commercial bank, as well as a securities broker-dealer and an insurance agency, which is referred to herein as the “BBVAPR Acquisition.” These acquired businesses have been integrated with Oriental’s existing business.  

 

 

New Accounting Updates Not Yet Adopted

 

Premium Amortization on Purchased Callable Debt Securities Receivables. In March 2017, the FASB issued ASU No. 2017-08, which requires the amortization of  the premium on callable debt securities to the earliest call date. The amortization period for callable debt securities purchased at a discount would not be impacted by the ASU. This ASU will be applied prospectively for annual and interim periods in fiscal years beginning after December 15, 2018. The ASU is not expected to have a material impact on Oriental's consolidated financial position or results of operations. At March 31, 2018, Oriental does not have callable debt securities.

 

Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force). In  February 2017,  the FASB issued ASU No. 2017-06, which intended to reduce diversity and improve the usefulness of information provided by employee benefit plans that hold interests in master trusts. This ASU will be applied prospectively for annual and interim periods in fiscal years beginning after December 15, 2018. The ASU is not expected to have a material impact on Oriental's consolidated financial position or results of operations.

 

Simplifying the Test for Goodwill Impairment. In January 2017, the FASB issued ASU No. 2017-04, which simplifies the measurement of goodwill impairment. An entity will no longer perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit. This ASU will be applied prospectively for annual and interim periods in fiscal years beginning after December 15, 2019. We will assess the impact that the adoption of ASU 2017-04 will have on our consolidated financial statements and related disclosures during this year.

 

Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued ASU No. 2016-13, which includes an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. ASU No. 2016-13 is effective for fiscal years, and interim periods, beginning after December 15, 2019. Oriental will implement ASU No. 2016-13 on January 1, 2020. While we continue to assess the impact of ASU No. 2016-13, we have developed a roadmap with time schedules in place from 2016 to implementation date. Oriental's cross-functional implementation team has developed a project plan to ensure we comply with all updates from this ASU at the time of adoption. We recently have selected the software and are in the process of assessing the methodology to be used in order to develop an acceptable model to estimate the expected credit losses. After the model has been developed, reviewed and validated in accordance with our governance policies, Oriental will provide further disclosure regarding the estimated impact on our allowance for loan and lease losses. Also, we are assessing the additional disclosure requirements from this update. Although Oriental expects the allowance for credit losses to increase upon adoption with a corresponding adjustment to retained earnings, the ultimate amount of the increase will depend on the portfolio composition, credit quality, economic conditions and reasonable and supportable forecasts at that time.

 

9 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

Leases. In February 2016, the FASB issued ASU No. 2016-02, the FASB issued ASU No. 2016-02, which requires lessees to recognize a right-of-use asset and related lease liability for leases classified as operating leases at the commencement date that have lease terms of more than 12 months. This ASU retains the classification distinction between finance leases and operating leases. ASU No. 2016-02 is effective for fiscal years, and interim periods, beginning after December 15, 2018. Oriental plans to adopt this guidance effective January 1, 2019 using the required modified retrospective approach, which includes presenting the cumulative effect of initial application along with supplementary disclosures. As a lessor and lessee, we do not anticipate the classification of our leases to change, but we expect to recognize right-of-use assets and lease liabilities for substantially all of our operating lease commitments for which we are the lessee as a lease liability and corresponding right-of-use asset on our consolidated financial statements. Oriental has made substantial progress in reviewing contractual arrangements for embedded leases in an effort to identify Oriental’s full lease population and is presently evaluating all of its leases, as well as contracts that may contain embedded leases, for compliance with the new lease accounting rules. Oriental’s leases primarily consist of leased office space, and information technology equipment. At March 31, 2018, Oriental had $33.7 million of minimum lease commitments from these operating leases (refer to Note 20). Although Oriental is still evaluating the impact that the adoption of this accounting pronouncement will have on its consolidated financial statements, preliminarily it expects that the amounts to be recognized as right-of-use assets and lease liabilities will be less than 1% of its total assets and is not expected to have a material impact on its regulatory capital.

 

New Accounting Updates Adopted During the Current Quarter

 

Restricted Cash. In November 2016, the FASB issued ASU No. 2016-18, which amends Topic 230 (Statement of Cash Flows) and requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU No. 2016-18 is intended to reduce diversity in practice in how restricted cash or restricted cash equivalents are presented and classified in the statement of cash flows. ASU No. 2016-18 is effective for fiscal years, and interim periods, beginning after December 15, 2017. The standard requires application using a retrospective transition method. The adoption of ASU No. 2016-18 on January 1, 2018, changed the presentation and classification of restricted cash and restricted cash equivalents in our consolidated statements of cash flows.

 

Revenue from Contracts with Customers. In May 2014, the FASB issued ASU No. 2014-09, which supersedes the revenue recognition requirements Topic 605 (Revenue Recognition), and most industry-specific guidance. ASU No. 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU No. 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). In August 2015, the FASB issued ASU No. 2015-14 to defer the effective date of ASU No. 2014-09 by one year to fiscal years beginning after December 15, 2017. Oriental has adopted this ASU on January 1, 2018 using the modified retrospective method. Oriental’s implementation efforts included the identification of revenue streams that are within the scope of the new guidance and the review of related contracts with customers to determine their effect on certain non-interest income items presented in our consolidated statements of operations and the additional presentation disclosures required (refer to note 21). We concluded that substantially all of Oriental’s revenues are generated from activities that are outside the scope of this ASU, and the adoption did not have a material impact on our consolidated financial statements. Therefore, there was no cumulative effect adjustment recorded.

 

NOTE 2 SIGNIFICANT EVENTS

 

Hurricanes Irma and Maria

 

During 2017, Oriental was impacted by hurricanes Irma and Maria, which struck the Island on September 7, 2017 and September 20, 2017, respectively. Hurricane Maria caused catastrophic damages throughout Puerto Rico, including homes, businesses, roads, bridges, power lines, commercial establishments, and public facilities. It caused an unprecedented crisis when it ravaged the Island’s electric power grid less than two weeks after hurricane Irma left over a million Puerto Rico residents without power. For several months after the hurricanes, a large part of Puerto Rico was and some areas still remain without electricity, many businesses were unable to operate, and government authorities struggled to deliver emergency supplies and clean drinking water to many communities outside the San Juan metropolitan area. Further, payment and delivery systems, including the U.S. Post Office, were unable to operate for weeks after hurricane Maria.      

 

10 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

Almost all of Oriental’s operations and clients are located in Puerto Rico. Although Oriental’s business operations were disrupted by major damages to Puerto Rico’s critical infrastructure, including its electric power grid and telecommunications network, Oriental’s digital channels, core banking and electronic funds transfer systems continued to function uninterrupted during and after the hurricanes. Within days after hurricane Maria, and upon securing a continuing supply of diesel fuel for its electric power generators, Oriental was able to open its main offices and many of its branches and ATMs in addition to its digital and phone trade channels.

 

As a result of this event, and based on current assessments of information available for the impact of the hurricanes on our credit portfolio, 2017 third and fourth quarter results included an additional loan loss provision of $27.0 million and $5.4 million, respectively. During the quarter ended March 31, 2018, Oriental recorded a $8.6 million provision for loan losses to replenish the allowance for loan charge-offs of $8.2 million related to the hurricanes.

 

Oriental implemented its disaster response plan as these storms approached its service areas. To operate in disaster response mode, Oriental incurred expenses for, among other things, buying diesel and generators for electric power, debris removal, security matters, property damages, and emergency communication with customers regarding the status of Bank operations. The estimated total losses as of December 31, 2017 amounted to $6.6 million. No additional losses have been incurred at March 31, 2018.

  

Oriental maintains insurance for casualty losses as well as for disaster response costs and certain revenue lost through business interruption. Management believes that recovery of $2.2 million incurred costs as of December 31, 2017 is probable. Oriental received a $1.0 million partial payment from the insurance company during the quarter ended December 2017 and a $0.7 million payment during the quarter ended March 31, 2018. Accordingly, a receivable of $0.5 million and $1.2 million was included in other assets at March 31, 2018 and December 31, 2017, respectively, for the expected recovery.   

 

NOTE 3 – RESTRICTED CASH

 

The following table includes the composition of Oriental’s restricted cash:

 

   

March 31,

 

December 31,

 

2018

 

2017

 

(In thousands)

Cash pledged as collateral to other financial institutions to secure:

 

 

 

 

 

    Derivatives

$

1,980

 

$

1,980

    Obligations under agreement of loans sold with recourse

 

1,050

 

 

1,050

 

$

3,030

 

$

3,030

 

At both March 31, 2018 and  December 31, 2017, the Bank’s international banking entities, Oriental International Bank Inc. (“OIB”) and Oriental Overseas, a division of the Bank, held an unencumbered certificate of deposit and other short-term highly liquid securities in the amount of $300 thousand and $325 thousand, respectively, as the legal reserve required for international banking entities under Puerto Rico law.  These instruments cannot be withdrawn or transferred by OIB or Oriental Overseas without prior written approval of the Office of the Commissioner of Financial Institutions of Puerto Rico (the "OCFI").

 

As part of its derivative activities, Oriental has entered into collateral agreements with certain financial counterparties.  At both March 31, 2018 and December 31, 2017, Oriental had delivered approximately $2.0 million of cash as collateral for such derivatives activities.

 

Oriental has a contract with FNMA which requires collateral to guarantee the repurchase, if necessary, of loans sold with recourse. At both March 31, 2018 and December 31, 2017, Oriental delivered as collateral cash amounting to approximately $1.1 million.

 

The Bank is required by Puerto Rico law to maintain average weekly reserve balances to cover demand deposits. The amount of those minimum average reserve balances for the week that covered March 31, 2018 was $208.5 million (December 31, 2017 - $189.2 million). At March 31, 2018 and December 31, 2017, the Bank complied with the requirement. Cash and due from bank as well as other short-term, highly liquid securities are used to cover the required average reserve balances.

11 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

NOTE 4 – INVESTMENT SECURITIES

 

Money Market Investments

 

Oriental considers as cash equivalents all money market instruments that are not pledged and that have maturities of three months or less at the date of acquisition. At March 31, 2018 and December 31, 2017, money market instruments included as part of cash and cash equivalents amounted to $7.4 million and $7.0 million, respectively.

 

Investment Securities

 

The amortized cost, gross unrealized gains and losses, fair value, and weighted average yield of the securities owned by Oriental at March 31, 2018 and December 31, 2017 were as follows:

 

  

March 31, 2018

 

 

 

Gross

 

Gross

 

 

 

Weighted

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Average

  

Cost

 

Gains

 

Losses

 

Value

 

Yield

 

(In thousands)

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

        FNMA and FHLMC certificates

$

538,900

 

$

328

 

$

9,133

 

$

530,095

 

2.51%

        GNMA certificates

 

182,055

 

 

317

 

 

2,870

 

 

179,502

 

2.97%

        CMOs issued by US government-sponsored agencies

 

78,104

 

 

-

 

 

2,729

 

 

75,375

 

1.90%

            Total mortgage-backed securities

 

799,059

 

 

645

 

 

14,732

 

 

784,972

 

2.56%

    Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

        US Treasury securities

 

10,280

 

 

-

 

 

156

 

 

10,124

 

1.28%

        Obligations of US government-sponsored agencies

 

2,773

 

 

-

 

 

72

 

 

2,701

 

1.38%

        Obligations of Puerto Rico government and

            public instrumentalities

 

2,455

 

 

-

 

 

43

 

 

2,412

 

5.55%

        Other debt securities

 

1,403

 

 

29

 

 

-

 

 

1,432

 

2.98%

            Total investment securities

 

16,911

 

 

29

 

 

271

 

 

16,669

 

2.06%

               Total securities available for sale

$

815,970

 

$

674

 

$

15,003

 

$

801,641

 

2.55%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

        FNMA and FHLMC certificates

$

485,143

 

$

-

 

$

17,163

 

$

467,980

 

2.07%

12 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

  

December 31, 2017

 

 

 

Gross

 

Gross

 

 

 

Weighted

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Average

  

Cost

 

Gains

 

Losses

 

Value

 

Yield

 

(In thousands)

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

        FNMA and FHLMC certificates

$

383,194

 

$

1,402

 

$

2,881

 

$

381,715

 

2.39%

        GNMA certificates

 

166,436

 

 

1,486

 

 

584

 

 

167,338

 

2.94%

        CMOs issued by US government-sponsored agencies

 

82,026

 

 

-

 

 

1,955

 

 

80,071

 

1.90%

            Total mortgage-backed securities

 

631,656

 

 

2,888

 

 

5,420

 

 

629,124

 

2.47%

    Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

        US Treasury securities

 

10,276

 

 

-

 

 

113

 

 

10,163

 

1.25%

        Obligations of US government-sponsored agencies

 

2,927

 

 

-

 

 

48

 

 

2,879

 

1.38%

        Obligations of Puerto Rico government and

            public instrumentalities

 

2,455

 

 

-

 

 

362

 

 

2,093

 

5.55%

        Other debt securities

 

1,486

 

 

52

 

 

-

 

 

1,538

 

2.97%

            Total investment securities

 

17,144

 

 

52

 

 

523

 

 

16,673

 

2.04%

                Total securities available-for-sale

$

648,800

 

$

2,940

 

$

5,943

 

$

645,797

 

2.46%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

        FNMA and FHLMC certificates

$

506,064

 

$

-

 

$

8,383

 

$

497,681

 

2.07%

 

The amortized cost and fair value of Oriental’s investment securities at March 31, 2018, by contractual maturity, are shown in the next table. Securities not due on a single contractual maturity date, such as collateralized mortgage obligations, are classified in the period of final contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

13 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

 

March 31, 2018

  

Available-for-sale

 

Held-to-maturity

 

Amortized Cost

 

Fair Value

 

Amortized Cost

 

Fair Value

 

(In thousands)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

    Due from 1 to 5 years

 

 

 

 

 

 

 

 

 

 

 

        FNMA and FHLMC certificates

$

5,651

 

$

5,598

 

$

-

 

$

-

            Total due from 1 to 5 years

 

5,651

 

 

5,598

 

 

-

 

 

-

    Due after 5 to 10 years

 

 

 

 

 

 

 

 

 

 

 

        CMOs issued by US government-sponsored agencies

$

69,086

 

$

66,513

 

$

-

 

$

-

        FNMA and FHLMC certificates

 

216,028

 

 

212,418

 

 

-

 

 

-

            Total due after 5 to 10 years

 

285,114

 

 

278,931

 

 

-

 

 

-

    Due after 10 years

 

 

 

 

 

 

 

 

 

 

 

        FNMA and FHLMC certificates

$

317,221

 

$

312,079

 

$

485,143

 

$

467,980

        GNMA certificates

 

182,055

 

 

179,502

 

 

-

 

 

-

        CMOs issued by US government-sponsored agencies

 

9,018

 

 

8,862

 

 

-

 

 

-

            Total due after 10 years

 

508,294

 

 

500,443

 

 

485,143

 

 

467,980

                Total  mortgage-backed securities

 

799,059

 

 

784,972

 

 

485,143

 

 

467,980

Investment securities

 

 

 

 

 

 

 

 

 

 

 

    Due less than one year

 

 

 

 

 

 

 

 

 

 

 

        US Treasury securities

$

322

 

$

322

 

$

-

 

$

-

        Obligations of Puerto Rico government and

            public instrumentalities

 

2,455

 

 

2,412

 

 

-

 

 

-

            Total due in less than one year

 

2,777

 

 

2,734

 

 

-

 

 

-

    Due from 1 to 5 years

 

 

 

 

 

 

 

 

 

 

 

        US Treasury securities

$

9,958

 

$

9,802

 

$

-

 

$

-

        Obligations of US government and sponsored agencies

 

2,773

 

 

2,701

 

 

-

 

 

-

            Total due from 1 to 5 years

 

12,731

 

 

12,503

 

 

-

 

 

-

    Due from 5 to 10 years

 

 

 

 

 

 

 

 

 

 

 

        Other debt securities

 

1,403

 

 

1,432

 

 

-

 

 

-

            Total due after 5 to 10 years

 

1,403

 

 

1,432

 

 

-

 

 

-

                Total  investment securities

 

16,911

 

 

16,669

 

 

-

 

 

-

Total

$

815,970

 

$

801,641

 

$

485,143

 

$

467,980

 

 

 

 

 

 

 

 

 

 

 

 

 

During the quarter ended March 31, 2018, Oriental retained securitized GNMA pools totaling $18.0 million amortized cost, at a yield of 3.26% from its own originations while, during the quarter ended March 31, 2017, that amount totaled $25.0 million, amortized cost, at a yield of 3.14%. 

 

During the quarters ended March 31, 2018 and 2017, Oriental did not sell any mortgage-backed securities or investment securities.

14 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

The following tables show Oriental’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position at March 31, 2018 and December 31, 2017:

 

March 31, 2018

  

12 months or more

  

Amortized

 

Unrealized

 

Fair

  

Cost

 

Loss

 

Value

 

(In thousands)

Securities available-for-sale

 

 

 

 

 

 

 

 

    CMOs issued by US Government-sponsored agencies

$

69,921

 

$

2,594

 

$

67,327

    FNMA and FHLMC certificates

 

106,196

 

 

3,804

 

 

102,392

    Obligations of US Government and sponsored agencies

 

2,773

 

 

72

 

 

2,701

    Obligations of Puerto Rico government and public instrumentalities

 

2,455

 

 

43

 

 

2,412

    GNMA certificates

 

20,678

 

 

906

 

 

19,772

    US Treasury Securities

 

9,958

 

 

156

 

 

9,802

 

$

211,981

 

$

7,575

 

$

204,406

Securities held to maturity

 

 

 

 

 

 

 

 

    FNMA and FHLMC certificates

$

338,260

 

$

13,311

 

$

324,949

 

 

 

 

 

 

 

 

 

  

Less than 12 months

  

Amortized

 

Unrealized

 

Fair

  

Cost

 

Loss

 

Value

 

(In thousands)

Securities available-for-sale

 

 

 

 

 

 

 

 

    CMOs issued by US government-sponsored agencies

$

8,183

 

$

135

 

$

8,048

    FNMA and FHLMC certificates

 

367,587

 

 

5,329

 

 

362,258

    GNMA certificates

 

131,685

 

 

1,964

 

 

129,721

    US Treausury Securities

 

322

 

 

-

 

 

322

 

$

507,777

 

$

7,428

 

$

500,349

Securities held-to-maturity

 

 

 

 

 

 

 

 

    FNMA and FHLMC Certificates

$

146,883

 

$

3,852

 

$

143,031

 

 

 

 

 

 

 

 

 

  

Total

  

Amortized

 

Unrealized

 

Fair

  

Cost

 

Loss

 

Value

 

(In thousands)

Securities available-for-sale

 

 

 

 

 

 

 

 

    CMOs issued by US government-sponsored agencies

$

78,104

 

$

2,729

 

$

75,375

    FNMA and FHLMC certificates

 

473,783

 

 

9,133

 

 

464,650

    Obligations of Puerto Rico government and public instrumentalities

 

2,455

 

 

43

 

 

2,412

    Obligations of US government and sponsored agencies

 

2,773

 

 

72

 

 

2,701

    GNMA certificates

 

152,363

 

 

2,870

 

 

149,493

    US Treausury Securities

 

10,280

 

 

156

 

 

10,124

 

$

719,758

 

$

15,003

 

$

704,755

Securities held-to-maturity

 

 

 

 

 

 

 

 

    FNMA and FHLMC certificates

$

485,143

 

$

17,163

 

$

467,980

15 


OFG BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

 

December 31, 2017

  

12 months or more

  

Amortized

 

Unrealized

 

Fair

  

Cost

 

Loss

 

Value

 

(In thousands)

Securities available-for-sale

 

 

 

 

 

 

 

 

    CMOs issued by US Government-sponsored agencies

$

72,562

 

$

1,857

 

$

70,705

    FNMA and FHLMC certificates

 

111,635

 

 

2,122

 

 

109,513

    Obligations of US Government and sponsored agencies

 

2,927

 

 

48

 

 

2,879

    Obligations of Puerto Rico government and public instrumentalities

 

2,455

 

 

362

 

 

2,093

    GNMA certificates

 

20,803

 

 

499

 

 

20,304

    US Treasury Securities

 

9,952

 

 

113

 

 

9,839

 

$

220,334

 

$

5,001

 

$

215,333

 

 

 

 

 

 

 

 

 

Securities available-for-sale

 

 

 

 

 

 

 

 

    FNMA and FHLMC certificates

$

352,399

 

 

7,264

 

 

345,135

 

 

 

 

 

 

 

 

 

  

Less than 12 months

  

Amortized

 

Unrealized

 

Fair

  

Cost

 

Loss

 

Value

 

(In thousands)

Securities available-for-sale

 

 

 

 

 

 

 

 

    CMOs issued by US Government-sponsored agencies

 

9,464

 

 

98

 

 

9,366

    FNMA and FHLMC certificates

 

125,107

 

 

759

 

 

124,348

    GNMA certificates

 

14,001

 

 

85

 

 

13,916

    US Treausury Securities

 

324

 

 

-

 

 

324

 

$

148,896

 

$

942

 

$

147,954

Securities held to maturity

 

 

 

 

 

 

 

 

    FNMA and FHLMC certificates

$

153,665

 

$

1,119

 

$

152,546

 

 

 

 

 

 

 

 

 

  

Total

  

Amortized

 

Unrealized

 

Fair

  

Cost

 

Loss

 

Value

 

(In thousands)

Securities available-for-sale

 

 

 

 

 

 

 

 

    CMOs issued by US Government-sponsored agencies

 

82,026

 

 

1,955

 

 

80,071

    FNMA and FHLMC certificates

 

236,742

 

 

2,881

 

 

233,861

    Obligations of Puerto Rico government and public instrumentalities

 

2,455

 

 

362

 

 

2,093

    Obligations of US government and sponsored agencies