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ALLOWANCE FOR CREDIT LOSSES
 6 Months Ended
Jun. 30, 2025
Credit Loss [Abstract]  
ALLOWANCE FOR CREDIT LOSSES ALLOWANCE FOR CREDIT LOSSES
OFG measures its ACL based on management’s best estimate of lifetime expected credit losses inherent in OFG’s relevant financial assets. The ACL is estimated using quantitative methods that consider a variety of factors such as historical loss experience, the current credit quality of the portfolio, and an economic outlook over the life of the loan. Also included in the ACL are qualitative reserves to cover losses that are expected but, in OFG’s assessment, may not be adequately represented in the quantitative methods or the economic assumptions. In its loss forecasting framework, OFG incorporates forward-looking information through the use of macroeconomic scenarios applied over the forecasted life of the assets. The scenarios that are chosen each quarter and the amount of weight given to each scenario depend on a variety of factors, including recent economic events, leading economic indicators, views of internal as well as third-party economists and industry trends. For more information on OFG’s credit loss accounting policies, including the ACL, see Note 1 – Summary of Significant Accounting Policies included in the 2024 Form 10-K.
At June 30, 2025, OFG used an economic probability-weighted scenario approach consisting of the baseline and moderate recession scenarios, giving more weight to the baseline scenario, except for the commercial US loan segment that uses a higher probability level in the moderate recessionary scenario. In addition, the ACL at June 30, 2025 continues to include qualitative reserves for certain segments that OFG views as higher risk that may not be fully recognized through its quantitative models, such as auto loan portfolio credit trends and the evolution of risk ratings applied to the commercial loans and collateral changes in real estate portfolios. There are still many unknown variables, including the results of the local and U.S. mainland governments’ fiscal and monetary actions resulting from the effect of inflation, geopolitical tension, and new trade and tax policies.

As of June 30, 2025, the ACL increased by $14.1 million compared to December 31, 2024. The provision for credit losses for the six-month period ended June 30, 2025, reflected adjustments of $34.6 million related to loan volume, $8.5 million in specific reserves and $6.0 million due to alignment of model assumptions and risk weighting factors mainly in Puerto Rico.

The net charge-offs for the six-month period ended June 30, 2025, amounted to $33.2 million, a decrease of $1.7 million when compared to the same period of 2024. The decrease corresponds to $3.8 million from commercial loans and $1.0 million from consumer loans, partially offset by an increase of $3.0 million from auto loans, mainly as a result of higher loan volume. Net charge-offs for the six-month period ended June 30, 2025 include a $2.9 million partial charge-off of a previously reserved commercial US loan. Net charge-offs for the six-month period ended June 30, 2024 include $3.5 million from previously and fully-reserved nonperforming paycheck protection program (“PPP”) loans.
The following tables present the activity in OFG’s ACL by segment for the quarters and six-month periods ended June 30, 2025 and 2024:
Quarter Ended June 30, 2025
CommercialMortgageConsumerAutoTotal
(In thousands)
Non-PCD:
Balance at beginning of period$45,452 $5,922 $32,236 $91,142 $174,752 
Provision for (recapture of) credit losses6,319 (972)6,708 8,831 20,886 
Charge-offs(273)(11)(6,970)(14,870)(22,124)
Recoveries88 745 848 7,570 9,251 
Balance at end of period$51,586 $5,684 $32,822 $92,673 $182,765 
PCD:
Balance at beginning of period$2,338 $4,068 $11 $5 $6,422 
Provision for (recapture of) credit losses1,112 (417)(11)(16)668 
Charge-offs(31)(59)(1)(13)(104)
Recoveries63 91 11 28 193 
Balance at end of period$3,482 $3,683 $10 $4 $7,179 
Total allowance for credit losses at end of period$55,068 $9,367 $32,832 $92,677 $189,944 
Six-Month Period Ended June 30, 2025
CommercialMortgageConsumerAutoTotal
(In thousands)
Non-PCD:
Balance at beginning of period$44,814 $6,395 $31,818 $87,682 $170,709 
Provision for (recapture of) credit losses9,835 (1,608)14,653 22,809 45,689 
Charge-offs(3,303)(34)(15,222)(33,062)(51,621)
Recoveries240 931 1,573 15,244 17,988 
Balance at end of period$51,586 $5,684 $32,822 $92,673 $182,765 
PCD:
Balance at beginning of period$622 $4,514 $11 $7 $5,154 
Provision for (recapture of) credit losses2,803 (1,204)(17)(36)1,546 
Charge-offs(31)(59)(1)(14)(105)
Recoveries88 432 17 47 584 
Balance at end of period$3,482 $3,683 $10 $4 $7,179 
Total allowance for credit losses at end of period$55,068 $9,367 $32,832 $92,677 $189,944 
Quarter Ended June 30, 2024
CommercialMortgageConsumer
Auto
Total
(In thousands)
Non-PCD:
Balance at beginning of period$37,371 $7,627 $27,453 $76,316 $148,767 
Recapture of (provision for) credit losses
(1,984)(1,280)9,308 11,039 17,083 
Charge-offs(1,734)(1)(8,180)(12,559)(22,474)
Recoveries156 540 851 5,926 7,473 
Balance at end of period$33,809 $6,886 $29,432 $80,722 $150,849 
PCD:
Balance at beginning of period$1,133 $6,638 $7 $18 $7,796 
Recapture of credit losses(237)(1,060)(6)(29)(1,332)
Charge-offs(265)(29)— (6)(300)
Recoveries158 93 7 30 288 
Balance at end of period$789 $5,642 $8 $13 $6,452 
Total allowance for credit losses at end of period$34,598 $12,528 $29,440 $80,735 $157,301 
Six-Month Period Ended June 30, 2024
CommercialMortgageConsumer
Auto
Total
(In thousands)
Non-PCD:
Balance at beginning of period$44,041 $7,998 $27,086 $73,485 $152,610 
Recapture of (provision for) credit losses
(3,390)(1,854)16,963 22,117 33,836 
Charge-offs(7,050)(65)(16,161)(26,777)(50,053)
Recoveries208 807 1,544 11,897 14,456 
Balance at end of period$33,809 $6,886 $29,432 $80,722 $150,849 
PCD:
Balance at beginning of period$1,113 $7,351 $7 $25 $8,496 
Recapture of credit losses(374)(2,328)(29)(85)(2,816)
Charge-offs(265)(112)— (15)(392)
Recoveries315 731 30 88 1,164 
Balance at end of period$789 $5,642 $8 $13 $6,452 
Total allowance for credit losses at end of period$34,598 $12,528 $29,440 $80,735 $157,301