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Banking and Finanial Service Revenues

6 Months Ended

Jun. 30, 2021

Banking and Financial Service Reveues [Abstract]

NOTE 23 – BANKING AND FINANCIAL SERVICE REVENUES

The following table presents the major categories of banking and financial service revenues for the quarters and six-month periods ended June 30, 2021 and 2020:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2021		2020		2021		2020
	(In thousands)				(In thousands)
Banking service revenues:
Checking accounts fees	$	2,084	$	1,971	$	4,048	$	4,631
Savings accounts fees		297		397		549		838
Electronic banking fees		14,640		10,574		27,523		21,822
Credit life commissions		70		13		187		142
Branch service commissions		275		216		636		727
Servicing and other loan fees		713		299		1,472		809
International fees		154		141		305		297
Miscellaneous income		15		57		21		115
Total banking service revenues		18,248		13,668		34,741		29,381

Wealth management revenue:
Insurance income		2,995		2,412		5,226		4,821
Broker fees		2,328		1,467		4,452		3,382
Trust fees		2,717		2,276		5,499		5,029
Retirement plan and administration fees		223		211		474		420
Total wealth management revenue		8,263		6,366		15,651		13,652

Mortgage banking activities:
Net servicing fees		3,127		2,676		7,477		5,366
Net gains on sale of mortgage loans and valuation		2,931		318		5,423		1,067
Other		(1,521)		78		(2,792)		(127)
Total mortgage banking activities		4,537		3,072		10,108		6,306
Total banking and financial service revenues	$	31,048	$	23,106	$	60,500	$	49,339

OFG recognizes the revenue from banking services, wealth management and mortgage banking based on the nature and timing of revenue streams from contracts with customer:

Banking Service Revenues

Electronic banking fees are credit and debit card processing services, use of the Bank’s ATMs by non-customers, debit card interchange income and service charges on deposit accounts. Revenue is recorded once the contracted service has been provided.

Service charges on checking and saving accounts as consumer periodic maintenance revenue is recognized once the service is rendered, while overdraft and late charges revenue are recorded after the contracted service has been provided.

Other income as credit life commissions, servicing and other loan fees, international fees, and miscellaneous fees recognized as banking services revenue are out of the scope of ASC 606 – Revenue from Contracts with Customers.

Wealth Management Revenue

Insurance income from commissions and sale of annuities are recorded once the sale has been completed.

Brokers fees consist of two categories:

 Sales commissions generated by advisors for their clients’ purchases and sales of securities and other investment products, which are collected once the stand-alone transactions are completed at trade date or as earned, and managed account fees which are fees charged to advisors’ clients’ accounts on the Company corporate advisory platform. These revenues do not cover future services, as a result there is no need to allocate the amount received to any other service.

 Fees for providing distribution services related to mutual funds, net of compensation paid to a service provider who provides such services, as well as trailer fees (also known as 12b-1 fees). These fees are considered variable and are recognized over time, as the uncertainty of the fees to be received is resolved as the net asset value of the mutual fund is determined and investor activity occurs. Fees do not cover future services, as a result there is no need to allocate the amount received to any other service.

Retirement plan and administration fees are revenues related to the payment received from the clients of OPC for assistance with the planning, design and administration of retirement plans, acting as third-party administrator for such plans, and daily record keeping services of retirement plans. Fees are collected once the stand-alone transaction was completed at trade date. Fees do not cover future services, as a result there is no need to allocate the amount received to any other service.

Trust fees are revenues related to investment advisory services provided to a registered investment company and fiduciary services provided to 401K retirement plans, an IRA trust, and retirement plans, which include investment management, payment of distributions, if any, safekeeping, custodial services of plan assets, servicing of Trust officers, on-going due diligence of the Trust, and recordkeeping of transactions. Fees are billed based on services contracted. Negotiated fees are detailed in the contract. Fees collected in advance, are amortized over the term of the contract. Fees are collected on a monthly basis once the administrative service has been completed. Monthly fee does not include future services.

Investment banking fees as compensation fees are out of the scope of ASC 606.

Mortgage Banking Activities

Mortgage banking activities as servicing fees, gain on sale of mortgage loans valuation and other are out of the scope of ASC 606.