Holding Company Financial Information

12 Months Ended

Dec. 31, 2017

Condensed Financial Information Of Parent Company Only Disclosure Abstract

CondensedFinancialInformationOfParentCompanyOnlyDisclosureTextBlock

NOTE 29 – OFG BANCORP (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

As a bank holding company subject to the regulations and supervisory guidance of the Federal Reserve Board, Oriental generally should inform the Federal Reserve Board and eliminate, defer or significantly reduce its dividends if: (i) its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or (iii) it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The payment of dividends by the Bank to Oriental may also be affected by other regulatory requirements and policies, such as the maintenance of certain regulatory capital levels. During 2017 and 2016, Oriental Insurance paid $4.0 million and $5.0million, respectively, in dividends to OFG Bancorp. During 2015, Oriental Insurance did not pay any dividends to OFG Bancorp. Oriental Financial Services paid $1.0 million in dividends to OFG Bancorp during 2016 but did not pay any dividends during 2017 and 2015.

The following condensed financial information presents the financial position of the holding company only as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the years ended December 31, 2017, 2016 and 2015:

OFG BANCORP

CONDENSED STATEMENTS OF FINANCIAL POSITION INFORMATION

(Holding Company Only)

	December 31,
	2017		2016
	(In thousands)
ASSETS
Cash and cash equivalents	$	24,430	$	22,573
Investment in bank subsidiary, equity method		941,198		920,085
Investment in nonbank subsidiaries, equity method		20,231		18,427
Due from bank subsidiary,net		22		92
Deferred tax asset, net		2,230		2,643
Other assets		1,616		2,085
Total assets	$	989,727	$	965,905
LIABILITIES AND STOCKHOLDERS’ EQUITY
Dividend payable		6,504		6,501
Due to affiliates		-		237
Accrued expenses and other liabilities		2,033		2,673
Subordinated capital notes		36,083		36,083
Total liabilities		44,620		45,494
Stockholders’ equity		945,107		920,411
Total liabilities and stockholders’ equity	$	989,727	$	965,905

OFG BANCORP

CONDENSED STATEMENTS OF OPERATIONS INFORMATION

(Holding Company Only)

	Year Ended December 31,
	2017		2016			2015
	(In thousands)
Income:
Interest income	$	188	$	174	$	321
Gain on sale of securities		-		211		-
Investment trading activities, net and other		4,511		4,066		4,007
Total income		4,699		4,451		4,328
Expenses:
Interest expense		1,556		1,370		1,222
Operating expenses		6,700		7,179		6,866
Total expenses		8,256		8,549		8,088
(Loss) before income taxes		(3,557)		(4,098)		(3,760)
Income tax expense (benefit)		403		518		(3,088)
(Loss) before changes in undistributed earnings of subsidiaries		(3,960)		(4,616)		(672)
Equity in undistributed earnings from:
Bank subsidiary		51,612		58,580		(3,804)
Nonbank subsidiaries		4,994		5,222		1,972
Net income (loss)	$	52,646	$	59,186	$	(2,504)

OFG BANCORP

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME INFORMATION

(Holding Company Only)

	Year ended December 31,
	2017		2016		2015
	(In thousands)
Net income (loss)	$	52,646	$	59,186	$	(2,504)
Other comprehensive (loss) before tax:
Unrealized loss on securities available-for-sale		-		(204)		(170)
Other comprehensive income from bank subsidiary		(4,545)		(12,238)		(5,578)
Other comprehensive (loss) before taxes		(4,545)		(12,442)		(5,748)
Income tax effect		-		41		34
Other comprehensive (loss) income after taxes		(4,545)		(12,401)		(5,714)
Comprehensive income (loss)	$	48,101	$	46,785	$	(8,218)

OFG BANCORP

CONDENSED STATEMENTS OF CASH FLOWS INFORMATION

(Holding Company Only)

	Year Ended December 31,
	2017		2016		2015
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	52,646	$	59,186	$	(2,504)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity in undistributed earnings from banking subsidiary		(51,612)		(58,580)		3,804
Equity in undistributed earnings from nonbanking subsidiaries		(4,994)		(5,222)		(1,972)
Amortization of investment securities premiums, net of accretion of discounts		-		12		44
Realized gain on sale of securities		-		211		-
Stock-based compensation		1,109		1,270		1,637
Employee benefit adjustment		(99)		-		-
Deferred income tax, net		414		444		(3,088)
Net decrease in other assets		(205)		42		148
Net (decrease) in accrued expenses, other liabilities, and dividend payable		(1,185)		800		(221)
Dividends from banking subsidiary		26,743		17,600		45,000
Dividends from non-banking subsidiary		4,002		6,000		-
Net cash provided by operating activities		26,819		21,763		42,848
Cash flows from investing activities:
Maturities and redemptions of investment securities available-for-sale		-		702		2,013
Proceeds from sales of investment securities available-for-sale		-		4,888		-
Net decrease (increase) in due from bank subsidiary, net		307		317		317
Proceeds from sales of premises and equipment		-		324		-
Capital contribution to banking subsidiary		(788)		(894)		(1,167)
Capital contribution to non-banking subsidiary		(50)		(68)		(94)
Additions to premises and equipment		(19)		(381)		(132)
Net cash (used in) provided by investing activities		(550)		4,888		937
Cash flows from financing activities:
Proceeds from (payments to) exercise of stock options and lapsed restricted units, net		-		(315)		204
Purchase of treasury stock		-		-		(8,950)
Dividends paid		(24,412)		(24,003)		(31,623)
Net cash used in financing activities		(24,412)		(24,318)		(40,369)
Net change in cash and cash equivalents		1,857		2,333		3,416
Cash and cash equivalents at beginning of year		22,573		20,240		16,824
Cash and cash equivalents at end of year	$	24,430	$	22,573	$	20,240