XML 97 R13.htm IDEA: XBRL DOCUMENT
v2.4.0.8

FDIC Loss Share Asset and True-up Payment Obligation | 3 Months Ended
--- | ---
Mar. 31, 2014
Banking and Thrift [Abstract] |
FDIC Share Loss Indemnification Asset and True-up Payment Obligation [Text Block] | NOTE 6- FDIC LOSS SHARE ASSET AND TRUE-UP PAYMENT OBLIGATION As part of the Purchase and Assumption Agreement between the Bank and the FDIC (the “Purchase and Assumption Agreement”), the Bank and the FDIC ente red into shared-loss agreements whereby the FDIC in connection with the Eurobank acquisition, covers a substantial portion of any losses on loans (and related unfunded loan commitments), foreclosed real estate and other repossessed properties. The acquired loans, foreclosed real estate, and other repossessed properties subject to the shared-loss agreements are collectively referred to as “covered assets.” Under the terms of the shared-loss agreements, the FDIC absorbs 80% of losses and shares in 80% of loss recoveries on covered assets. The term of the shared-loss agreement covering single family residential mortgage loans is ten years with respect to losses and loss recoveries, while the term of the shared-loss agreement covering commercial loans is five years with respect to losses and eight years with respect to loss recoveries, from the April 30, 2010 acquisition date. The shared-loss agreements also provide for certain costs directly related to the collection and preservation of covered assets to be reimbursed at an 80% level. The indemnification asset represents the portion of estimated losses covered by the shared-loss agreements between the Bank and the FDIC. The following table presents the activity in the FDIC loss share asset and true-up payment obligation for the quarter s ended March 31, 2014 and 2013:
| Quarter Ended March 31,
| 2014 |  | 2013
| (In thousands)
FDIC share-loss indemnification asset: |  |  |  |  |
Balance at beginning of period | $ | 189,240 |  | $ | 302,295
Shared-loss agreements reimbursements from the FDIC |  | (8,236) |  |  | (6,650)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net |  | 40 |  |  | (1,822)
FDIC shared-loss expense |  | (17,622) |  |  | (12,201)
Incurred expenses to be reimbursed under shared-loss agreements |  | 2,772 |  |  | 1,502
Balance at end of period | $ | 166,194 |  | $ | 283,124
True-up payment obligation: |  |  |  |  |
Balance at beginning of period | $ | 18,510 |  | $ | 15,496
FDIC shared-loss expense |  | 865 |  |  | 670
Balance at end of period | $ | 19,375 |  | $ | 16,166
The FDIC share d-loss expense increase d as the Company continues to forecast better performance and cash flows from covered loans than previously expected resulting in a minor increase in the amortization of the FDIC share d-loss indemnification asset. The FDIC shared-loss expense of $18.5 million for the quarter ended March 31, 2014 compared to $12.9 million for the same period in 2013, resulted from the ongoing evaluation of expected cash flows of the covered loan portfolio, which resulted in reduced projected losses expected to be collected from the FDIC and the improved accretable yield on the covered loans. Forecasted losses show a decreasing trend during the quarter ended March 31, 2014 as com pared to the projections in 2013.The reduction in claimable losses amortizes the shared-loss indemnification asset through the shorter of the life of the shared loss agreement or the loan holding period. This amortization is net of the accretion of the discount recorded to reflect the expected claimable loss at its net present value. During the quarter ended March 31, 2014, the net amortization included $3.5 million of additional amortization of the FDIC indemnification asset from stepped up cost recoveries on certain construction, commercial, and leasing loan pools. Additional amortization of the FDIC indemnification asset may be record ed, should the Company continue to experience reduced expected losses. The majority of the FDIC indemnification asset is recorded for projected claimable losses on non-single family residential loans whose loss share period ends in the second quarter of 2015, although the recovery share period extends for an additional three-year period. The Bank agreed to make a true-up payment, al so known as clawback liability or clawback provision, to the FDIC on the date that is 45 days following the last day (such day, the “True-Up Measurement Date”) of the final shared-loss month, or upon the final disposition of all covered assets under the shared-loss agreements in the event losses thereunder fail to reach expected levels. Under the shared-loss agreements, the Bank will pay to the FDIC 50% of the excess, if any, of: (i) 20% of the Intrinsic Loss Estimate of $906.0 million (or $181.2 million) (as determined by the FDIC) less (ii) the sum of: (A) 25% of the asset discount (per bid) (or $227.5 million); plus (B) 25% of the cumulative shared-loss payments (defined as the aggregate of all of the payments made or payable to the Bank minus the aggregate of all of the payments made or payable to the FDIC); plus (C) the sum of the period servicing amounts for every consecutive twelve-month period prior to and ending on the True-Up Measurement Date in respect of each of the shared-loss agreements during which the shared-loss provisions of the applicable shared-loss agreement is in effect (defined as the product of the simple average of the principal amount of shared-loss loans and shared-loss assets at the beginning and end of such period times 1%). The true-up payment represents an estimated liability of $1 9.4 million and $18.5 million, net of discount, as of March 31, 2014 and December 31, 2013, respectively. The esti mated liability is included within other liabilities in the unaudited consolidated statements of financial condition.

X
- Definition The FDIC loss share indemnification asset represents the present value of losses on covered assets to be reimbursed by the FDIC under the loss share agreements. + References No definition available. + Details
Name: | ofg_FdicShareLossIndemnificationAssetAndTrueUpPaymentObligationTextBlock
Namespace Prefix: | ofg_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_BankingAndThriftAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration