OFG Bancorp Sells Remaining Commercial NPAs as FDIC Loss Share Agreement Ends

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

OFG Bancorp OFG today announced that its Oriental Bank subsidiary, as expected, has entered into a definitive agreement to sell the remaining covered non-performing commercial loans and real estate owned arising from the 2010 FDIC-assisted acquisition of Eurobank.

The loan portfolio totals $197.1 million of unpaid principal balance (UPB), or $100.0 million of reporting balance. The sale price is $36.3 million in cash, or 18.44% of UPB. As previously disclosed, the FDIC has agreed to cover the first $20.0 million of losses as part of its loss share agreement with OFG.

Also, as part of this transaction, Oriental Bank is selling certain non-performing commercial loans and real estate from the 2012 BBVA PR acquisition. These loans total $38.1 million in UPB, or $9.9 million in reporting balance. The sale price is $5.2 million in cash, or 13.57% of UPB. In addition, certain real estate owned with a book value of $9.2 million is being sold for $1.7 million in cash.

The aggregate pre-tax loss from all of the above sales is $40.9 million. After applying the FDIC coverage, the pre-tax loss is $20.9 million.

"This transaction is in line with our strategy of reducing the bank's credit exposure in light of profound fiscal challenges and uncertainties regarding the economic prospects of Puerto Rico," said José Rafael Fernández, President, Chief Executive Officer, and Vice Chairman of the Board.

"Our track record shows such timely, prudent decisions have ensured OFG's growth and its commitment to maximize shareholder value. At this point, the chance of any significant recovery on these loans is low. Rather than assume any additional expense or risk in the future, it makes more sense to sell them now. From an operating viewpoint, the third quarter is progressing as planned."

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 51 financial centers. Investor information can be found at www.ofgbancorp.com.

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