BANKING AND FINANCIAL SERVICE REVENUES

9 Months Ended

Sep. 30, 2022

Banking and Thrift, Interest [Abstract]

The following table presents the major categories of banking and financial service revenues for the quarters and nine-month periods ended September 30, 2022 and 2021:


	Quarter Ended September 30,				Nine-Month Period Ended September 30,
	2022		2021		2022		2021
	(In thousands)				(In thousands)
Banking service revenues:
Checking accounts fees	$	2,332	$	2,279	$	6,702	$	6,323
Savings accounts fees	332		297		937		846
Electronic banking fees	13,335		13,937		40,509		41,458
Credit life commissions	70		182		665		369
Branch service commissions	319		301		979		937
Servicing and other loan fees	621		995		2,427		2,480
International fees	217		215		702		520
Miscellaneous income (expense)	8		(6)		16		15
Total banking service revenues	17,234		18,200		52,937		52,948

Wealth management revenue:
Insurance income	3,906		2,542		10,758		7,768
Broker fees	1,601		1,981		5,204		6,433
Trust fees	2,489		2,887		7,796		8,386
Retirement plan and administration fees	177		209		542		683

Total wealth management revenue	8,173		7,619		24,300		23,270

Mortgage banking activities:
Net servicing fees	5,206		4,388		13,408		11,865
Net (loss) gains on sale of mortgage loans and valuation	(116)		2,622		2,192		8,045
Other	(199)		(813)		(124)		(3,600)
Total mortgage banking activities	4,891		6,197		15,476		16,310
Total banking and financial service revenues	$	30,298	$	32,016	$	92,713	$	92,528

OFG recognizes the revenue from banking services, wealth management and mortgage banking based on the nature and timing of revenue streams from contracts with customers:

Banking Service Revenues

Service charges on checking and saving accounts as consumer periodic maintenance revenue is recognized once the service is rendered, while overdraft and late charges revenue are recorded after the contracted service has been provided.

Electronic banking fees are credit and debit card processing services, use of the Bank’s ATMs by non-customers, debit card interchange income and service charges on deposit accounts. Revenue is recorded once the contracted service has been provided.

Other income as credit life and branch service commissions, servicing and other loan fees, international fees, and miscellaneous income recognized as banking services revenue are out of the scope of ASC 606 – Revenue from Contracts with Customers.

Wealth Management Revenue

Insurance income from commissions and sale of annuities are recorded once the sale has been completed.

Brokers fees consist of two categories:

•Sales commissions generated by advisors for their clients’ purchases and sales of securities and other investment products, which are collected once the stand-alone transactions are completed at trade date or as earned, and managed account fees which are fees charged to advisors’ clients’ accounts on OFG’s corporate advisory platform. These revenues do not cover future services, as a result there is no need to allocate the amount received to any other service.

•Fees for providing distribution services related to mutual funds, net of compensation paid to a service provider who provides such services, as well as trailer fees (also known as 12b-1 fees). These fees are considered variable and are recognized over time, as the uncertainty of the fees to be received is resolved as the net asset value of the mutual fund is determined and investor activity occurs. Fees do not cover future services, as a result there is no need to allocate the amount received to any other service.

Trust fees are revenues related to fiduciary services provided to 401K retirement plans, an IRA trust, and retirement plans, which include investment management, payment of distributions, if any, safekeeping, custodial services of plan assets, servicing of Trust officers, on-going due diligence of the Trust, recordkeeping of transactions, and investment advisory services provided to a registered investment company. Fees are billed based on services contracted. Negotiated fees are detailed in the contract. Fees collected in advance, are amortized over the term of the contract. Fees are collected on a monthly basis once the administrative service has been completed. Monthly fee does not include future services.

Retirement plan and administration fees are revenues related to the payment received from the clients of OPC for assistance with the planning, design and administration of retirement plans, acting as third-party administrator for such plans, and daily record keeping services of retirement plans. Fees are collected once the stand-alone transaction was completed at trade date. Fees do not cover future services, as a result there is no need to allocate the amount received to any other service.

Mortgage Banking Activities

Mortgage banking activities as servicing fees, gain on sale of mortgage loans and valuation, and other are out of the scope of ASC 606.