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Business Segments

9 Months Ended

Sep. 30, 2020

Business Segments [Abstract]

Business Segments

NOTE 25 – BUSINESS SEGMENTS

Oriental segregates its businesses into the following major reportable segments of business: Banking, Wealth Management, and Treasury. Management established the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors such as Oriental’s organization, nature of its products, distribution channels and economic characteristics of the products were also considered in the determination of the reportable segments. Oriental measures the performance of these reportable segments based on pre-established goals of different financial parameters such as net income, net interest income, loan production, and fees generated. Oriental’s methodology for allocating non-interest expenses among segments is based on several factors such as revenue, employee headcount, occupied space, dedicated services or time, among others. These factors are reviewed on a periodical basis and may change if the conditions warrant.

Banking includes the Bank’s branches and traditional banking products such as deposits and commercial, consumer and mortgage loans. Mortgage banking activities are carried out by the Bank’s mortgage banking division, whose principal activity is to originate mortgage loans for Oriental’s own portfolio. As part of its mortgage banking activities, Oriental may sell loans directly into the secondary market or securitize conforming loans into mortgage-backed securities.

Wealth Management is comprised of the Bank’s trust division, Oriental Financial Services, Oriental Insurance, and OPC. The core operations of this segment are financial planning, money management and investment banking, brokerage services, insurance sales activity, corporate and individual trust and retirement services, as well as retirement plan administration services.

The Treasury segment encompasses all of Oriental’s asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings. Intersegment sales and transfers, if any, are accounted for as if the sales or transfers were to third parties, that is, at current market prices.

Following are the results of operations and the selected financial information by operating segment for the quarters and nine-month periods ended September 30, 2020 and 2019:

	Quarter Ended September 30, 2020
				Wealth						Total Major						Consolidated
	Banking			Management			Treasury			Segments			Eliminations			Total
	(In thousands)
Interest income	$	112,832		$	14		$	2,091		$	114,937		$	-		$	114,937
Interest expense		(14,092)			-			(1,312)			(15,404)			-			(15,404)
Net interest income		98,740			14			779			99,533			-			99,533
Provision for loan and lease losses, net		(14,461)			-			792			(13,669)			-			(13,669)
Non-interest income		23,994			7,323			9			31,326			-			31,326
Non-interest expenses		(76,988)			(5,138)			(1,318)			(83,444)			-			(83,444)
Intersegment revenue		769			-			-			769			(769)			-
Intersegment expenses		-			(225)			(544)			(769)			769			-
Income before income taxes	$	32,054		$	1,974		$	(282)		$	33,746		$	-		$	33,746
Income tax expense		6,308			(13)			13			6,308			-			6,308
Net income	$	25,746		$	1,987		$	(295)		$	27,438		$	-		$	27,438
Total assets	$	9,367,141		$	33,006		$	1,725,221		$	11,125,368		$	(1,106,377)		$	10,018,991
	Nine-Month Period Ended September 30, 2020
				Wealth						Total Major						Consolidated
	Banking			Management			Treasury			Segments			Eliminations			Total
	(In thousands)
Interest income	$	351,933		$	46		$	8,347		$	360,326		$	-		$	360,326
Interest expense		(44,307)			-			(6,325)			(50,632)			-			(50,632)
Net interest income		307,626			46			2,022			309,694			-			309,694
Provision for loan and lease losses, net		(77,795)			-			(701)			(78,496)			-			(78,496)
Non-interest income		64,349			21,089			4,490			89,928			-			89,928
Non-interest expenses		(237,943)			(14,819)			(3,485)			(256,247)			-			(256,247)
Intersegment revenue		1,920			-			-			1,920			(1,920)			-
Intersegment expenses		-			(580)			(1,340)			(1,920)			1,920			-
Income before income taxes	$	58,157		$	5,736		$	986		$	64,879		$	-		$	64,879
Income tax expense		9,305			4,506			42			13,853			-			13,853
Net income	$	48,852		$	1,230		$	944		$	51,026		$	-		$	51,026
Total assets	$	9,367,141		$	33,006		$	1,725,221		$	11,125,368		$	(1,106,377)		$	10,018,991

	Quarter Ended September 30, 2019
				Wealth						Total Major						Consolidated
	Banking			Management			Treasury			Segments			Eliminations			Total
	(In thousands)
Interest income	$	85,147		$	16		$	8,492		$	93,655		$	-		$	93,655
Interest expense		(9,260)			-			(3,685)			(12,945)			-			(12,945)
Net interest income		75,887			16			4,807			80,710			-			80,710
Provision for loan and lease losses, net		(43,678)			-			(92)			(43,770)			-			(43,770)
Non-interest income		11,946			6,719			3,513			22,178			-			22,178
Non-interest expenses		(46,555)			(3,450)			(722)			(50,727)			-			(50,727)
Intersegment revenue		507			-			-			507			(507)			-
Intersegment expenses		-			(141)			(366)			(507)			507			-
Income before income taxes	$	(1,893)		$	3,144		$	7,140		$	8,391		$	-		$	8,391
Income tax expense		(738)			1,226			520			1,008			-			1,008
Net income	$	(1,155)		$	1,918		$	6,620		$	7,383		$	-		$	7,383
Total assets	$	5,919,877		$	26,596		$	1,465,329		$	7,411,802		$	(1,078,297)		$	6,333,505
	Nine-Month Period Ended September 30, 2019
				Wealth						Total Major						Consolidated
	Banking			Management			Treasury			Segments			Eliminations			Total
	(In thousands)
Interest income	$	253,138		$	53		$	29,429		$	282,620		$	-		$	282,620
Interest expense		(27,083)			-			(11,953)			(39,036)			-			(39,036)
Net interest income		226,055			53			17,476			243,584			-			243,584
Provision for loan and lease losses, net		(73,560)			-			(164)			(73,724)			-			(73,724)
Non-interest income		34,932			19,537			8,313			62,782			-			62,782
Non-interest expenses		(139,384)			(11,675)			(3,272)			(154,331)			-			(154,331)
Intersegment revenue		1,648			-			-			1,648			(1,648)			-
Intersegment expenses		-			(480)			(1,168)			(1,648)			1,648			-
Income before income taxes	$	49,691		$	7,435		$	21,185		$	78,311		$	-		$	78,311
Income tax expense		18,634			2,788			2,057			23,479			-			23,479
Net income	$	31,057		$	4,647		$	19,128		$	54,832		$	-		$	54,832
Total assets	$	5,919,877		$	26,596		$	1,465,329		$	7,411,802		$	(1,078,297)		$	6,333,505

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The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

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