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Business Segments
 6 Months Ended
Jun. 30, 2021
Business Segments [Abstract]  
Business Segments

NOTE 24 – BUSINESS SEGMENTS

 

OFG 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 OFG’s organization, nature of its products, distribution channels and economic characteristics of the products were also considered in the determination of the reportable segments. OFG 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. OFG’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 OFG’s own portfolio. As part of its mortgage banking activities, OFG 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, investment advisory services, insurance sales activity, corporate and individual trust and retirement services, as well as retirement plan administration services.

 

The Treasury segment encompasses all of OFG’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 six-month periods ended June 30, 2021 and 2020:

 

Quarter Ended June 30, 2021

 

 

 

 

Wealth

 

 

 

 

Total Major

 

 

 

 

Consolidated

 

Banking

 

Management

 

Treasury

 

Segments

 

Eliminations

 

Total

 

(In thousands)

Interest income

$

110,452

 

$

6

 

$

3,005

 

$

113,463

 

$

-

 

$

113,463

Interest expense

 

(10,712)

 

 

-

 

 

(494)

 

 

(11,206)

 

 

-

 

 

(11,206)

Net interest income

 

99,740

 

 

6

 

 

2,511

 

 

102,257

 

 

-

 

 

102,257

Recapture of credit losses, net

 

7,737

 

 

-

 

 

568

 

 

8,305

 

 

-

 

 

8,305

Non-interest income

 

24,209

 

 

7,974

 

 

8

 

 

32,191

 

 

-

 

 

32,191

Non-interest expenses

 

(76,623)

 

 

(5,015)

 

 

(1,038)

 

 

(82,676)

 

 

-

 

 

(82,676)

Intersegment revenue

 

545

 

 

-

 

 

-

 

 

545

 

 

(545)

 

 

-

Intersegment expenses

 

-

 

 

(302)

 

 

(243)

 

 

(545)

 

 

545

 

 

-

Income before income taxes

$

55,608

 

$

2,663

 

$

1,806

 

$

60,077

 

$

-

 

$

60,077

Income tax expense

 

19,239

 

 

-

 

 

11

 

 

19,250

 

 

-

 

 

19,250

Net income

$

36,369

 

$

2,663

 

$

1,795

 

$

40,827

 

$

-

 

$

40,827

Total assets

$

8,271,348

 

$

31,165

 

$

3,232,968

 

$

11,535,481

 

$

(1,073,668)

 

$

10,461,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six-Month Period Ended June 30, 2021

 

 

 

 

Wealth

 

 

 

 

Total Major

 

 

 

 

Consolidated

 

Banking

 

Management

 

Treasury

 

Segments

 

Eliminations

 

Total

 

(In thousands)

Interest income

$

218,688

 

$

18

 

$

5,739

 

$

224,445

 

$

-

 

$

224,445

Interest expense

 

(22,848)

 

 

-

 

 

(1,136)

 

 

(23,984)

 

 

-

 

 

(23,984)

Net interest income

 

195,840

 

 

18

 

 

4,603

 

 

200,461

 

 

-

 

 

200,461

Recapture of credit losses, net

 

1,149

 

 

-

 

 

832

 

 

1,981

 

 

-

 

 

1,981

Non-interest income

 

47,076

 

 

15,505

 

 

17

 

 

62,598

 

 

-

 

 

62,598

Non-interest expenses

 

(150,497)

 

 

(7,844)

 

 

(2,001)

 

 

(160,342)

 

 

-

 

 

(160,342)

Intersegment revenue

 

1,098

 

 

-

 

 

-

 

 

1,098

 

 

(1,098)

 

 

-

Intersegment expenses

 

-

 

 

(593)

 

 

(505)

 

 

(1,098)

 

 

1,098

 

 

-

Income before income taxes

$

94,666

 

$

7,086

 

$

2,946

 

$

104,698

 

$

-

 

$

104,698

Income tax expense

 

33,475

 

 

-

 

 

23

 

 

33,498

 

 

-

 

 

33,498

Net income

$

61,191

 

$

7,086

 

$

2,923

 

$

71,200

 

$

-

 

$

71,200

Total assets

$

8,271,348

 

$

31,165

 

$

3,232,968

 

$

11,535,481

 

$

(1,073,668)

 

$

10,461,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30, 2020

 

 

 

 

Wealth

 

 

 

 

Total Major

 

 

 

 

Consolidated

 

Banking

 

Management

 

Treasury

 

Segments

 

Eliminations

 

Total

 

(In thousands)

Interest income

$

119,722

 

$

14

 

$

1,956

 

$

121,692

 

$

-

 

$

121,692

Interest expense

 

(14,326)

 

 

-

 

 

(2,306)

 

 

(16,632)

 

 

-

 

 

(16,632)

Net interest income

 

105,396

 

 

14

 

 

(350)

 

 

105,060

 

 

-

 

 

105,060

Provision for credit losses, net

 

(16,211)

 

 

-

 

 

(1,485)

 

 

(17,696)

 

 

-

 

 

(17,696)

Non-interest income

 

20,811

 

 

6,391

 

 

(50)

 

 

27,152

 

 

-

 

 

27,152

Non-interest expenses

 

(78,402)

 

 

(5,957)

 

 

(1,122)

 

 

(85,481)

 

 

-

 

 

(85,481)

Intersegment revenue

 

694

 

 

-

 

 

-

 

 

694

 

 

(694)

 

 

-

Intersegment expenses

 

-

 

 

(201)

 

 

(493)

 

 

(694)

 

 

694

 

 

-

Income before income taxes

$

32,288

 

$

247

 

$

(3,500)

 

$

29,035

 

$

-

 

$

29,035

Income tax expense

 

5,316

 

 

3,201

 

 

(1,269)

 

 

7,248

 

 

-

 

 

7,248

Net income

$

26,972

 

$

(2,954)

 

$

(2,231)

 

$

21,787

 

$

-

 

$

21,787

Total assets

$

9,462,407

 

$

30,214

 

$

1,524,913

 

$

11,017,534

 

$

(1,084,815)

 

$

9,932,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six-Month Period Ended June 30, 2020

 

 

 

 

Wealth

 

 

 

 

Total Major

 

 

 

 

Consolidated

 

Banking

 

Management

 

Treasury

 

Segments

 

Eliminations

 

Total

 

(In thousands)

Interest income

$

239,101

 

$

32

 

$

6,256

 

$

245,389

 

$

-

 

$

245,389

Interest expense

 

(30,215)

 

 

-

 

 

(5,013)

 

 

(35,228)

 

 

-

 

 

(35,228)

Net interest income

 

208,886

 

 

32

 

 

1,243

 

 

210,161

 

 

-

 

 

210,161

Provision for credit losses, net

 

(63,334)

 

 

-

 

 

(1,493)

 

 

(64,827)

 

 

-

 

 

(64,827)

Non-interest income

 

40,355

 

 

13,766

 

 

4,481

 

 

58,602

 

 

-

 

 

58,602

Non-interest expenses

 

(160,955)

 

 

(9,681)

 

 

(2,167)

 

 

(172,803)

 

 

-

 

 

(172,803)

Intersegment revenue

 

1,151

 

 

-

 

 

-

 

 

1,151

 

 

(1,151)

 

 

-

Intersegment expenses

 

-

 

 

(355)

 

 

(796)

 

 

(1,151)

 

 

1,151

 

 

-

Income before income taxes

$

26,103

 

$

3,762

 

$

1,268

 

$

31,133

 

$

-

 

$

31,133

Income tax expense

 

2,997

 

 

4,519

 

 

29

 

 

7,545

 

 

-

 

 

7,545

Net income

$

23,106

 

$

(757)

 

$

1,239

 

$

23,588

 

$

-

 

$

23,588

Total assets

$

9,462,407

 

$

30,214

 

$

1,524,913

 

$

11,017,534

 

$

(1,084,815)

 

$

9,932,719