OFG Bancorp

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Financial institutions like us, as well as our customers, colleagues, regulators, service providers and other third parties, have experienced a significant increase in information and cyber security risk in recent years and will likely continue to be the target of increasingly sophisticated cyberattacks, including computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing, impersonation and identity takeover attempts), corporate espionage, hacking, website defacement, denial-of-service attacks, exploitation of vulnerabilities and other attacks and similar disruptions from the misconfiguration or unauthorized use of or access to computer system. These risks are heightened further by the advent of new artificial intelligence technologies that may be adapted to increase the effectiveness of cyberattacks and their proper use may be necessary to aid in the defense of such attacks. A major information or cyber security incident or an increase in fraudulent activity could lead to reputational damage to our brand and material legal, regulatory and financial exposure, and could reduce the use and acceptance of our services.

Failure to keep pace with technological change, including developments in artificial intelligence, could adversely affect OFG’s results of operations and financial condition.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including artificial intelligence (“AI”) technologies. The effective use of technology increases efficiency and enables financial institutions to better serve clients and reduce costs. Our future success depends, in part, upon our ability to address client needs by using technology to provide products and services that will satisfy client demands, as well as to create additional efficiencies in our operations. We may not be able to effectively implement new technology-driven products and services, including AI-based solutions, or be successful in marketing these products and services to our clients. The rapid evolution of AI technologies presents risks from competitors that more effectively leverage AI capabilities and thus may gain significant advantages in operational efficiency, customer service, risk management, and product development. Additionally, the integration of AI into our operations may require substantial investment in technology infrastructure, talent acquisition, and ongoing training, and there can be no assurance that such investments will yield the anticipated benefits. Regulatory frameworks governing AI in financial services are also evolving, and future regulations may impose compliance burdens or restrict certain AI applications, which could limit our ability to fully realize the potential benefits of these technologies. Failure to successfully keep pace with technological change affecting the financial services industry could negatively affect our growth, revenue, and profit.

Our adoption of artificial intelligence technologies exposes us to evolving legal, regulatory, and operational risks.

We have adopted AI technologies for certain aspects of our operations, mainly customer service channels and data analytics, and may further incorporate AI capabilities in the future. We do not build or maintain proprietary AI systems. Instead, we utilize AI solutions provided by third-party technology vendors. Our reliance on these external AI platforms extends to tools that support real-time business analytics and improve operational decision-making. We also face indirect exposure to AI-related risks through vendors, business partners, and customers who may employ AI technologies in ways that affect our operations or services.

The rapidly evolving nature of AI regulation and technology creates significant uncertainty for our business. Federal and state lawmakers are actively developing new rules governing AI deployment, while existing regulatory frameworks—including consumer protection laws enforced by the CFPB, data privacy requirements under the Gramm-Leach-Bliley Act, and fair lending statutes—are being interpreted and applied to AI use cases in ways that remain unsettled. As a financial institution with more than $10 billion in assets, we face heightened regulatory scrutiny of our consumer-facing technologies, including AI applications. Our dependence on third-party AI vendors means that provider failures, service disruptions, or contract terminations could impair certain business functions with limited ability to quickly pivot to alternative solutions. Additionally, cybercriminals are increasingly using AI to conduct more sophisticated attacks against financial institutions. Failure to promptly adapt to and effectively implement security measures in response to rapidly evolving technological threats could significantly heighten our risks of data breaches, financial fraud, operational disruptions, regulatory scrutiny, reputational harm, and financial losses.

We believe that our Digital First strategy is making significant strides, expanding our positioning as leaders in banking innovation in Puerto Rico. The broad acceptance of OFG’s flagship mass-market Libre and mass affluent Elite accounts have driven customer acquisition and retention. Building on this success, OFG is enhancing its efforts with artificial intelligence (“AI”)-driven predictive customer insights. Customers now receive tailored insights based on cash flows and payment habits, helping them monitor their budgets and access value-added tools to improve their finances directly from their mobile phones or online.

"Our Digital First strategy is making significant strides, expanding our positioning as leaders in banking innovation in Puerto Rico. The broad acceptance of our flagship mass-market Libre and mass affluent Elite accounts has driven customer acquisition and retention. Building on this success, we are enhancing our efforts with AI-driven predictive customer insights. Customers now receive tailored insights based on cash flows and payment habits, helping them monitor their budgets and access value-added tools to improve their finances directly from their mobile phones or online. This quarter, we have also launched internal initiatives to apply AI to boost efficiency across all banking operations.”

Financial institutions like us, as well as our customers, colleagues, regulators, service providers and other third parties, have experienced a significant increase in information and cyber security risk in recent years and will likely continue to be the target of increasingly sophisticated cyberattacks, including computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing, impersonation and identity takeover attempts), corporate espionage, hacking, website defacement, denial-of-service attacks, exploitation of vulnerabilities and other attacks and similar disruptions from the misconfiguration or unauthorized use of or access to computer system. These risks are heightened further by the advent of new artificial intelligence technologies that may be adapted to increase the effectiveness of cyberattacks and their proper use may be necessary to aid in the defense of such attacks. A major information or cyber security incident or an increase in fraudulent activity could lead to reputational damage to our brand and material legal, regulatory and financial exposure, and could reduce the use and acceptance of our services.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, such as artificial intelligence technologies. The effective use of technology increases efficiency and enables financial institutions to better serve clients and to reduce costs. OFG’s future success depends, in part, upon its ability to address client needs by using technology to provide products and services that will satisfy client demands, as well as to create additional efficiencies in OFG’s operations. OFG may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its clients. Failure to successfully keep pace with technological change affecting the financial services industry could negatively affect OFG’s growth, revenue, and profit.

Financial institutions like us, as well as our customers, colleagues, regulators, service providers and other third parties, have experienced a significant increase in information and cyber security risk in recent years and will likely continue to be the target of increasingly sophisticated cyberattacks, including computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing, impersonation and identity takeover attempts), corporate espionage, hacking, website defacement, denial-of-service attacks, exploitation of vulnerabilities and other attacks and similar disruptions from the misconfiguration or unauthorized use of or access to computer system. These risks are heightened further by the advent of new artificial intelligence technologies that may be adapted to increase the

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, such as artificial intelligence technologies. The effective use of technology

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