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v3.22.2.2

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended
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Sep. 30, 2022
Fair Value Disclosures [Abstract] |
Schedule of 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:
| September 30, 2022
| Fair Value Measurements
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (In thousands)
Recurring fair value measurements: |  |  |  |  |  |  |
Investment securities available-for-sale | $ | 401,414 |  |  | $ | 1,076,596 |  |  | $ | 399 |  |  | $ | 1,478,409 |
Trading securities | — |  |  | 11 |  |  | — |  |  | 11 |
Money market investments | 4,988 |  |  | — |  |  | — |  |  | 4,988 |
Derivative assets | — |  |  | 438 |  |  | — |  |  | 438 |
Servicing assets | — |  |  | — |  |  | 50,061 |  |  | 50,061 |
Derivative liabilities | — |  |  | (28) |  |  | — |  |  | (28) |
| $ | 406,402 |  |  | $ | 1,077,017 |  |  | $ | 50,460 |  |  | $ | 1,533,879 |
Non-recurring fair value measurements: |  |  |  |  |  |  |
Collateral dependent loans | $ | — |  |  | $ | — |  |  | $ | 19,977 |  |  | $ | 19,977 |
Foreclosed real estate | — |  |  | — |  |  | 14,561 |  |  | 14,561 |
Other repossessed assets | — |  |  | — |  |  | 3,307 |  |  | 3,307 |
| $ | — |  |  | $ | — |  |  | $ | 37,845 |  |  | $ | 37,845 |
| 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 |
Schedule of Reconciliation of Assets and Liabilities Using Significant Unobservable Inputs (Level 3) | The tables below present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and nine-month periods ended September 30, 2022 and 2021: Level 3 Instruments Only
| Quarter Ended September 30,
| 2022 |  | 2021 |  |
| Other debt securities available for sale | Servicing Assets | Total |  | Other debt securities available for sale | Servicing Assets | Total |  |
| (In thousands) |  |
Balance at beginning period | $ | 1,581 |  | $ | 49,280 |  | $ | 50,861 |  |  | $ | — |  | $ | 47,712 |  | $ | 47,712 |  |  |
New instruments acquired | 376 |  | 666 |  | 1,042 |  |  | — |  | 1,339 |  | 1,339 |  |  |
Transfer from Level 2 | — |  | — |  | — |  |  | 1,500 |  | — |  | 1,500 |  |  |
Principal repayments and amortization | — |  | (1,191) |  | (1,191) |  |  | — |  | (1,740) |  | (1,740) |  |  |
Instrument converted to equity security | (1,581) |  | — |  | (1,581) |  |  | — |  | — |  | — |  |  |
Gains included in earnings | — |  | 1,306 |  | 1,306 |  |  | — |  | 916 |  | 916 |  |  |
Gains included in other comprehensive income | 23 |  | — |  | 23 |  |  | 7 |  | — |  | 7 |  |  |
Balance at end of period | $ | 399 |  | $ | 50,061 |  | $ | 50,460 |  |  | $ | 1,507 |  | $ | 48,227 |  | $ | 49,734 |  |  |
| Other debt securities available for sale | Servicing Assets | Total |  | Other debt securities available for sale | Servicing Assets | Total |  |
| Nine-Month Period Ended September 30,
| 2022 |  | 2021 |  |
| (In thousands)
Balance at beginning period | $ | 1,530 |  | $ | 48,973 |  | $ | 50,503 |  |  | $ | — |  | $ | 47,295 |  | $ | 47,295 |  |  |
New instruments acquired | 376 |  | 2,935 |  | 3,311 |  |  | — |  | 4,782 |  | $ | 4,782 |  |  |
Transfer from Level 2 | — |  | — |  | — |  |  | 1,500 |  | — |  | $ | 1,500 |  |  |
Principal repayments and amortization | — |  | (4,168) |  | (4,168) |  |  | — |  | (5,109) |  | $ | (5,109) |  |  |
Instrument converted to equity security | (1,581) |  | — |  | (1,581) |  |  | — |  | — |  | $ | — |  |  |
Gains included in earnings | — |  | 2,321 |  | 2,321 |  |  | — |  | 1,259 |  | $ | 1,259 |  |  |
Gains included in other comprehensive income | 74 |  | — |  | 74 |  |  | 7 |  | — |  | $ | 7 |  |  |
Balance at end of period | $ | 399 |  | $ | 50,061 |  | $ | 50,460 |  |  | $ | 1,507 |  | $ | 48,227 |  | $ | 49,734 |  |  |
Schedule of 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 September 30, 2022:
| September 30, 2022
| Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
| (In thousands) |  |  |  |  |  |  |  |
Other debt securities available-for-sale | $ | 399 |  |  | Cash flow valuation |  | Credit Rating |  | Baa1 - Baa3 |  | Baa2
|  |  |  |  | Probability of Default Rate |  | 0.15% - 2.12% |  | 0.15 | %
|  |  |  |  | Recovery Rate |  | 34.73 | % |  | 34.73 | %
Servicing assets | $ | 50,061 |  |  | Cash flow valuation |  | Constant prepayment rate |  | 3.38% - 20.36% |  | 5.69 | %
|  |  |  |  | Discount rate |  | 10.00% - 15.50% |  | 11.45 | %
Collateral dependent loans | $ | 19,977 |  |  | Fair value of property or collateral |  | Appraised value less disposition costs |  | 10.20% - 33.20% |  | 17.16 | %
Foreclosed real estate | $ | 14,561 |  |  | Fair value of property or collateral |  | Appraised value less disposition costs |  | 10.20% - 33.20% |  | 11.71 | %
Other repossessed assets | $ | 3,307 |  |  | Fair value of property or collateral |  | Estimated net realizable value less disposition costs |  | 22.00% - 80.00% |  | 62.96 | %
Schedule of Estimated Fair Value and Carrying Value | The estimated fair value and carrying value of OFG’s financial instruments at September 30, 2022 and December 31, 2021 is as follows:
| September 30, |  | December 31,
| 2022 |  | 2021
| Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
| (In thousands)
Financial Assets: |  |  |  |  |  |  |
Level 1 |  |  |  |  |  |  |
Cash and cash equivalents | $ | 815,269 |  |  | $ | 815,269 |  |  | $ | 2,023,475 |  |  | $ | 2,023,475 |
Restricted cash | $ | 164 |  |  | $ | 164 |  |  | $ | 175 |  |  | $ | 175 |
Investment securities available-for-sale | $ | 401,414 |  |  | $ | 401,414 |  |  | $ | 10,825 |  |  | $ | 10,825 |
Level 2 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Trading securities | $ | 11 |  |  | $ | 11 |  |  | $ | 20 |  |  | $ | 20 |
Investment securities available-for-sale | $ | 1,076,596 |  |  | $ | 1,076,596 |  |  | $ | 498,358 |  |  | $ | 498,358 |
Investment securities held-to-maturity | $ | 471,718 |  |  | $ | 540,774 |  |  | $ | 363,653 |  |  | $ | 367,507 |
Federal Home Loan Bank (FHLB) stock | $ | 6,026 |  |  | $ | 6,026 |  |  | $ | 5,966 |  |  | $ | 5,966 |
Equity securities | $ | 17,346 |  |  | $ | 17,346 |  |  | $ | 11,612 |  |  | $ | 11,612 |
Derivative assets | $ | 438 |  |  | $ | 438 |  |  | $ | 1 |  |  | $ | 1 |
Financial Liabilities: |  |  |  |  |  |  |
Derivative liabilities | $ | 28 |  |  | $ | 28 |  |  | $ | 804 |  |  | $ | 804 |
Level 3 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Investment securities available for sale | $ | 399 |  |  | $ | 399 |  |  | $ | 1,530 |  |  | $ | 1,530 |
Total loans (including loans held-for-sale) | $ | 6,516,221 |  |  | $ | 6,591,028 |  |  | $ | 6,197,347 |  |  | $ | 6,329,311 |
Accrued interest receivable | $ | 59,400 |  |  | $ | 59,400 |  |  | $ | 56,560 |  |  | $ | 56,560 |
Servicing assets | $ | 50,061 |  |  | $ | 50,061 |  |  | $ | 48,973 |  |  | $ | 48,973 |
Accounts receivable and other assets | $ | 68,329 |  |  | $ | 68,329 |  |  | $ | 88,756 |  |  | $ | 88,756 |
Financial Liabilities: |  |  |  |  |  |  |
Deposits | $ | 8,846,913 |  |  | $ | 8,855,117 |  |  | $ | 8,614,073 |  |  | $ | 8,603,118 |
Advances from FHLB | $ | 27,152 |  |  | $ | 27,153 |  |  | $ | 28,480 |  |  | $ | 28,488 |
Other borrowings | $ | 110 |  |  | $ | 110 |  |  | $ | — |  |  | $ | — |
Subordinated capital notes | $ | — |  |  | $ | — |  |  | $ | 36,084 |  |  | $ | 36,083 |
Accrued expenses and other liabilities | $ | 124,545 |  |  | $ | 124,545 |  |  | $ | 96,240 |  |  | $ | 96,240 |

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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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19279-110258 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2C -URI https://asc.fasb.org/extlink&oid=126976982&loc=SL7498348-110258 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (bb) -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19279-110258 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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