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Operating Leases

9 Months Ended

Sep. 30, 2021

NOTE 21— OPERATING LEASES

Substantially all leases in which OFG is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2038. OFG’s leases do not contain residual value guarantees or variable lease payments. All leases are classified as operating leases and are included on the consolidated statements of financial condition as a right-of-use asset and a corresponding lease liability. OFG leases to others certain space in its principal offices for terms extending through 2022; and all are operating leases.

Operating Lease Cost

	Quarter Ended September 30,				Nine-Month Period Ended September 30,
	2021		2020		2021		2020		Statement of Operations Classification
	(In thousands)
Lease costs	$	2,590	$	3,260	$	8,814	$	10,148	Occupancy and equipment
Variable lease costs		348		459		1,336		1,630	Occupancy and equipment
Short-term lease cost		414		358		560		386	Occupancy and equipment
Lease income		(110)		(125)		(342)		(374)	Occupancy and equipment
Total lease cost	$	3,242	$	3,952	$	10,368	$	11,790

Operating Lease Assets and Liabilities

	September 30,		December 31
	2021		2020		Statement of Financial Condition Classification
	(In thousands)
Right-of-use assets	$	30,625	$	31,383	Operating lease right-of-use assets
Lease Liabilities	$	32,167	$	32,566	Operating leases liabilities

	September 30, 2021
	September 30, 2021
	(In thousands)
Weighted-average remaining lease term		5.7 years
Weighted-average discount rate		6.6%

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2021 were as follows:

	Minimum Rent
As of September 30, 2021	(In thousands)
2021	$	10,253
2022		9,299
2023		8,197
2024		6,100
2025		4,417
Thereafter		10,264
Total lease payments	$	48,530
Less imputed interest		16,363
Present value of lease liabilities	$	32,167

OFG, as lessor, leases and subleases real property to lessee tenants under operating leases. As of September 30, 2021, no material lease concessions have been granted to lessees. OFG, as lessee, also leases real estate property for branch locations, ATM locations, and office space. As of September 30, 2021, OFG has not requested any lease concessions.

During the year ended December 31, 2020, OFG decided to consolidate several branches as a result of the Scotiabank Acquisition and modified certain lease contracts. These contracts were evaluated under Topic 842 lease modification guidance and removed from books, as they were considered short-term at December 31, 2020.