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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense for the years ended December 31, 2021, 2020, and 2019 are as follows:

			Year Ended December 31,
			2021						2020						2019
			(In thousands)
Current income tax expense (benefit)			$	4,836					$	(7,347)					$	25,477
Deferred income tax expense (benefit)			63,616						27,846						(4,068)
Total income tax expense			$	68,452					$	20,499					$	21,409

Schedule of Effective Income Tax Rate Reconciliation

OFG’s income tax expense differs from amounts computed by applying the applicable statutory rate to income before income taxes as follows:

			Year Ended December 31,
			2021												2020												2019
			Amount						Rate						Amount						Rate						Amount						Rate
			(Dollars in thousands)
Income tax expense at statutory rates			$	80,476					37.50		%				$	35,567					37.50		%				$	28,219					37.50		%
Tax of exempt income, net			(9,489)						-4.42		%				(7,272)						-7.67		%				(8,728)						-11.60		%
Disallowed net operating loss carryover			(179)						-0.08		%				202						0.21		%				384						0.51		%
Change in valuation allowance			803						0.37		%				2,267						2.39		%				1,217						1.62		%
Unrecognized tax benefits, net			70						0.03		%				(1,941)						-2.05		%				1,794						2.38		%
Capital gain at preferential rate			(3)						—		%				(450)						-0.47		%				(265)						-0.35		%
Tax rate difference (ordinary vs capital)			(480)						-0.22		%				(4,218)						-4.45		%				—						—		%
Bargain purchase gain			—						—		%				(2,751)						-2.90		%				(118)						-0.16		%
Return to provision adjustments			(933)						-0.43		%				(1,099)						-1.16		%				(898)						-1.19		%
Foreign tax credit			187						0.09		%				361						0.38		%				—						—		%
Other items, net			(2,000)						-0.94		%				(167)						-0.16		%				(196)						-0.25		%
Income tax expense			$	68,452					31.90		%				$	20,499					21.62		%				$	21,409					28.46		%

Schedule of Income Tax Contingencies

The following table presents a reconciliation of unrecognized tax benefits:

			Year Ended December 31,
			2021						2020						2019
			(In thousands)
Balance at beginning of year			$	728					$	2,668					$	875
Additions for tax positions of prior years			70						50						51
Additions due to new tax positions			—						—						2,181
Reduction for tax positions as a result of lapse of statute of limitations or new information resulting in a change in assessment			—						(1,990)						(439)
Balance at end of year			$	798					$	728					$	2,668

Schedule of Deferred Tax Assets and Liabilities

Significant components of OFG’s deferred tax assets and liabilities as of December 31, 2021, and 2020 were as follows:

			December 31,
			2021						2020
			(In thousands)
Deferred tax asset:
Allowance for loan and lease losses and other reserves			$	61,009					$	83,578
Scotiabank PR discount			2,053						$	5,461
Loans and other real estate valuation adjustment			3,660						5,769
Deferred loan charge-offs			115,661						140,445
Net operating loss carry forwards			8,460						7,947
Alternative minimum tax			15,385						15,513
Unrealized net loss included in other comprehensive income			301						642
Deferred loan origination income, net			—						5,147
Goodwill			16,961						23,927
Acquired portfolio			53,687						52,301
Other assets allowances			929						525
Other deferred tax assets			20,292						24,767
Total gross deferred tax asset			298,397						366,022
Less: valuation allowance			(9,645)						(8,842)
Net gross deferred tax assets			288,752						357,180
Deferred tax liability:
Acquired loans tax basis			(137,402)						(135,816)
FDIC-assisted Eurobank acquisition, net			(6,636)						(9,171)
Customer deposit and customer relationship intangibles			(10,324)						(13,823)
Building valuation adjustment			(6,976)						(7,412)
Unrealized net gain on available-for-sale securities			(1,572)						(2,106)
Servicing asset			(15,311)						(14,682)
Other deferred tax liabilities			(11,468)						(11,692)
Total gross deferred tax liabilities			(189,689)						(194,702)
Net deferred tax asset			$	99,063					$	162,478

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months.

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