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 OFG’s 2025 Form 10-K.

At March 31, 2026, 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 March 31, 2026, 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. 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 March 31, 2026, the ACL increased by $1.6 million compared to December 31, 2025. The provision for credit losses for the quarter ended March 31, 2026, reflected $17.5 million related to loan volume, increased allowance of $3.7 million for a previously reserved commercial US loan and $1.0 million related mainly to newly classified small commercial loans.

The net charge-offs for the quarter ended March 31, 2026, amounted to $21.4 million, an increase of $1.0 million when compared to the same period of 2025. The increase corresponds to $1.1 million from commercial loans, mainly due the previously reserved commercial US loan mentioned before, compared to net charge-offs for the quarter ended March 31, 2025, which include $2.9 million partial charge-off of a previously reserved commercial US loan.


	Quarter Ended March 31, 2026
	Commercial		Mortgage		Consumer		Auto		Total
	(In thousands)
Non-PCD:
Balance at beginning of period	$	65,943	$	6,358	$	33,466	$	92,472	$	198,239
Provision for (recapture of) credit losses	6,422		(242)		7,283		9,990		23,453
Charge-offs	(4,009)		(66)		(8,819)		(18,159)		(31,053)
Recoveries	52		193		1,068		8,159		9,472
Balance at end of period	$	68,408	$	6,243	$	32,998	$	92,462	$	200,111
PCD:
Balance at beginning of period	$	493	$	3,599	$	9	$	1	$	4,102
Recapture of credit losses	(19)		(422)		(5)		(13)		(459)
Charge-offs	—		(6)		—		—		(6)
Recoveries	21		167		6		14		208
Balance at end of period	$	495	$	3,338	$	10	$	2	$	3,845
Total allowance for credit losses at end of period	$	68,903	$	9,581	$	33,008	$	92,464	$	203,956