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Income Taxes | 3 Months Ended
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Mar. 31, 2020
Income Taxes [Abstract] |
Income Taxes | NOTE 15 — INCOME TAXES Oriental is subject to the provisions of the Puerto Rico Internal Revenue Code of 2011, as amended (the “Code”), which imposes a maximum statutory corporate tax rate of 37.5% on a corporation’s net taxable income. Under the Code, all corporations are treated as separate taxable entities and are not entitled to file consolidated tax returns. Such entities are subject to Puerto Rico regular income tax or the alternative minimum tax (“AMT”) on income earned from all sources pursuant to the Code. The AMT is payable if it exceeds regular income tax. The excess of AMT over regular income tax paid in any one year may be used to offset regular income tax in future years, subject to certain limitations. Oriental also has operations in the United States mainland through its wholly owned subsidiary, OPC, a retirement plan administrator based in Florida. In October 2017, Oriental expanded its operations in the United States through the Bank’s wholly owned subsidiary, OFG USA. In addition, on December 31, 2019, Oriental established a new branch in USVI as a result of the purchase transaction from BNS. The United States subsidiaries are subject to federal income taxes at the corporate level, while for USVI branch applies the federal income taxes under a mirror system and a 10% surtax included in the maximum tax rate. OPC is subject to Florida state taxes and OFG USA is subject to North Carolina state taxes. At March 31, 2020 and December 31, 2019, Oriental’s net deferred tax asset amounted to $196.1 million and $176.7 million, respectively. In assessing the realizability of the deferred tax asset, management considers whether it is more likely than not that some portion or the entire deferred tax asset will not be realized. The ultimate realization of the deferred tax asset is mainly dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax asset is deductible, management believes it is more likely than not that Oriental will realize the deferred tax asset, net of the existing valuation allowances recorded at March 31, 2020 and December 31, 2019. The amount of the deferred tax asset that is considered realizable could be reduced in the near term if there are changes in estimates of future taxable income. Oriental maintained an effective tax rate lower than statutory rate for the quarters ended March 31, 2020 and 2019 of 14.2% and 33.0%, respectively. The estimated annual effective tax rate was 26%; however, the current effective tax rate was 14.2% due to a discrete tax windfall on stock awards, compared to 33.0% the change of which reflected a higher proportion of exempt income and income tax at preferential tax rates. Oriental classifies unrecognized tax benefits in other liabilities. These gross unrecognized tax benefits would affect the effective tax rate if realized. At both, March 31, 2020 and December 31, 2019, unrecognized tax benefits amounted at $2.7 million, respectively. Oriental had accrued $8 thousand at March 31, 2020 (December 31, 2019 - $51 thousand) for the payment of interest and penalties relating to unrecognized tax benefits. Income tax expense for the quarters ended March 31, 2020 and 2019, was $297 thousand and $11.6 million, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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