OFG to Take Provision on PREPA Fuel Purchase Line of Credit

SAN JUAN, Puerto Rico--(BUSINESS WIRE)--

OFG Bancorp OFG today announced that its Oriental Bank subsidiary ("Oriental") will place its $200 million participation in a fuel purchase line of credit with the Puerto Rico Electric Power Authority (PREPA) on non-accrual status and will take a $24.0 million provision.

Oriental is forced to take the provision because PREPA, despite its increasing ability to meet contractual obligations with creditors, has signaled an unwillingness do so.

The provision will impact OFG's earnings per share net of tax by $0.35 for the first quarter ended March 31, 2015. It will impact tangible book value per common share by the same amount, not considering 1Q15 earnings. TBV per common share was $15.25 at December 31, 2014. OFG plans to report 1Q15 results on Friday, April 24, 2015.

José Rafael Fernández, President and CEO of OFG and Oriental, said, "Our credit analysis, based principally on data provided by PREPA and its advisors, shows the utility has the financial capability to pay its creditors. However, in the recent negotiation for extending the more than 8-month forbearance period previously granted by its creditors, PREPA clearly demonstrated a reluctance to commit to do so, despite the utility's improved cash flows."

Notwithstanding the provision, Mr. Fernández said OFG and Oriental's regulatory capital ratios remain significantly above requirements for a well-capitalized institution. Oriental's $200 million PREPA exposure was acquired through the late 2012 purchase of BBVA's Puerto Rico operations, and is part of a syndicated $550 million fuel purchase line of credit.

Forward Looking Statements

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

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

For a discussion of such factors and certain risks and uncertainties to which OFG is subject, see OFG's annual report on Form 10-K for the year ended December 31, 2014, as well as its other filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, OFG assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

About OFG Bancorp

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