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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Assets and Liabilities on Recurring and Non-Recurring Basis

Assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized below:

			December 31, 2021
			Fair Value Measurements
			Level 1						Level 2						Level 3						Total
			(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale			$	10,825					$	498,358					$	1,530					$	510,713
Trading securities			—						20						—						20
Money market investments			8,952						—						—						8,952
Derivative assets			—						1						—						1
Servicing assets			—						—						48,973						48,973
Derivative liabilities			—						(804)						—						(804)
			$	19,777					$	497,575					$	50,503					$	567,855
Non-recurring fair value measurements:
Collateral dependent loans			—						—						10,233						10,233
Foreclosed real estate			—						—						15,039						15,039
Other repossessed assets			—						—						1,945						1,945
			$	—					$	—					$	27,217					$	27,217

			December 31, 2020
			Fair Value Measurements
			Level 1						Level 2						Level 3						Total
			(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale			$	10,983					$	435,455					$	—					$	446,438
Trading securities			—						22						—						22
Money market investments			11,908						—						—						11,908
Servicing assets			—						—						47,295						47,295
Derivative liabilities			—						(1,712)						—						(1,712)
			$	22,891					$	433,765					$	47,295					$	503,951
Non-recurring fair value measurements:
Collateral dependent loans			$	—					$	—					$	29,279					$	29,279
Foreclosed real estate			—						—						11,596						11,596
Other repossessed assets			—						—						1,816						1,816
			$	—					$	—					$	42,691					$	42,691

Reconciliation of Assets and Liabilities Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2021, 2020 and 2019:

Level 3 Instruments Only

			Other debt securities available for sale			Servicing Assets			Total						Servicing Assets						Servicing Assets
			Year Ended December 31,
			2021												2020						2019
			(In thousands)
Balance at beginning year			$	—		$	47,295		$	47,295					$	50,779					$	10,716
New instruments acquired			—			6,089			6,089						2,394						41,637
Transfer from Level 2			1,500			—			1,500						—						—
Principal repayments and amortization			—			(6,738)			(6,738)						(4,067)						(906)
Gain (losses) included in earnings			—			2,327			2,327						(1,811)						(668)
Gains included in other comprehensive income			30			—			30						—						—
Balance at end of year			$	1,530		$	48,973		$	50,503					$	47,295					$	50,779

Qualitative Information for Assets and Liabilities

The table below presents quantitative information for all assets and liabilities measured at fair value on a recurring and non-recurring basis using significant unobservable inputs (Level 3) at December 31, 2021:

			December 31, 2021
			Fair Value						Valuation Technique						Unobservable Input						Range						Weighted Average
			(In thousands)
Other debt securities available-for-sale			$	1,530					Cash flow valuation						Credit Rating						Baa1 - Baa3						Baa2
															Probability of Default Rate						0.16% - 2.28%						0.35		%
															Recovery Rate						33.08		%				33.08		%
Servicing assets			$	48,973					Cash flow valuation						Constant prepayment rate						3.90% - 24.48%						6.17		%
															Discount rate						10.00% - 15.50%						11.47		%
Collateral dependent loans			$	10,233					Fair value of property or collateral						Appraised value less disposition costs						10.20% - 30.20%						20.20		%
Foreclosed real estate			$	15,039					Fair value of property or collateral						Appraised value less disposition costs						10.20% - 30.20%						12.54		%
Other repossessed assets			$	1,945					Fair value of property or collateral						Estimated net realizable value less disposition costs						39.00% - 80.00%						60.54		%

Estimated Fair Value and Carrying Value

The estimated fair value and carrying value of OFG’s financial instruments at December 31, 2021 and 2020 is as follows:

			December 31,
			2021												2020
			Fair Value						Carrying Value						Fair Value						Carrying Value
			(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents			$	2,023,475					$	2,023,475					$	2,154,202					$	2,154,202
Restricted cash			$	175					$	175					$	1,375					$	1,375
Investment securities available-for-sale			$	10,825					$	10,825					$	10,983					$	10,983
Level 2
Financial Assets:
Trading securities			$	20					$	20					$	22					$	22
Investment securities available-for-sale			$	498,358					$	498,358					$	435,455					$	435,455
Investment securities held-to-maturity			$	363,653					$	367,507					$	—					$	—
Federal Home Loan Bank (FHLB) stock			$	5,966					$	5,966					$	8,278					$	8,278
Equity securities			$	11,612					$	11,612					$	3,962					$	3,962
Derivative assets			$	1					$	1					$	—					$	—
Financial Liabilities:
Derivative liabilities			$	804					$	804					$	1,712					$	1,712
Level 3
Financial Assets:
Investment securities available for sale			$	1,530					$	1,530					$	—					$	—
Total loans (including loans held-for-sale)			$	6,197,347					$	6,329,311					$	6,323,689					$	6,501,259
Accrued interest receivable			$	56,560					$	56,560					$	65,547					$	65,547
Servicing assets			$	48,973					$	48,973					$	47,295					$	47,295
Accounts receivable and other assets			$	88,756					$	88,756					$	78,845					$	78,845
Financial Liabilities:
Deposits			$	8,614,073					$	8,603,118					$	8,422,599					$	8,415,640
Advances from FHLB			$	28,480					$	28,488					$	68,147					$	65,561
Other borrowings			$	—					$	—					$	707					$	707
Subordinated capital notes			$	36,084					$	36,083					$	33,325					$	36,083
Accrued expenses and other liabilities			$	96,240					$	96,240					$	154,418					$	154,418

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- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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