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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense for 2022, 2021, and 2020 were as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (In thousands)
Current income tax expense (benefit) | $ | 16,740 |  |  | $ | 4,836 |  |  | $ | (7,347) |
Deferred income tax expense | 61,126 |  |  | 63,616 |  |  | 27,846 |
Total income tax expense | $ | 77,866 |  |  | $ | 68,452 |  |  | $ | 20,499 |
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,
| 2022 |  | 2021 |  | 2020
| Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
| (Dollars in thousands)
Income tax expense at statutory rates | $ | 91,539 |  |  | 37.50 | % |  | $ | 80,476 |  |  | 37.50 | % |  | $ | 35,567 |  |  | 37.50 | %
Tax of exempt income, net | (11,523) |  |  | -4.72 | % |  | (9,489) |  |  | -4.42 | % |  | (7,272) |  |  | -7.67 | %
Disallowed net operating loss carryover | (267) |  |  | -0.11 | % |  | (179) |  |  | (0.08) | % |  | 202 |  |  | 0.21 | %
Change in valuation allowance | (502) |  |  | -0.21 | % |  | 803 |  |  | 0.37 | % |  | 2,267 |  |  | 2.39 | %
Unrecognized tax benefits, net | 69 |  |  | 0.03 | % |  | 70 |  |  | 0.03 | % |  | (1,941) |  |  | -2.05 | %
Capital gain at preferential rate | (787) |  |  | -0.32 | % |  | (3) |  |  | — | % |  | (450) |  |  | -0.47 | %
Tax rate difference (ordinary vs capital) | (247) |  |  | -0.10 | % |  | (480) |  |  | -0.22 | % |  | (4,218) |  |  | -4.45 | %
Bargain purchase gain | — |  |  | — | % |  | — |  |  | — | % |  | (2,751) |  |  | -2.90 | %
Return to provision adjustments | (407) |  |  | -0.17 | % |  | (933) |  |  | -0.43 | % |  | (1,099) |  |  | -1.16 | %
Foreign tax credit | — |  |  | — | % |  | 187 |  |  | 0.09 | % |  | 361 |  |  | 0.38 | %
Other items, net | (9) |  |  | — | % |  | (2,000) |  |  | -0.94 | % |  | (167) |  |  | -0.16 | %
Income tax expense | $ | 77,866 |  |  | 31.90 | % |  | $ | 68,452 |  |  | 31.90 | % |  | $ | 20,499 |  |  | 21.62 | %
Schedule of Income Tax Contingencies | The following table presents a reconciliation of unrecognized tax benefits:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (In thousands)
Balance at beginning of year | $ | 798 |  |  | $ | 728 |  |  | $ | 2,668 |
Additions for tax positions of prior years | 69 |  |  | 70 |  |  | 50 |
Reduction for tax positions as a result of lapse of statute of limitations or new information resulting in a change in assessment | — |  |  | — |  |  | (1,990) |
Balance at end of year | $ | 867 |  |  | $ | 798 |  |  | $ | 728 |
Schedule of Deferred Tax Assets and Liabilities | Significant components of OFG’s deferred tax assets and liabilities as of December 31, 2022, and 2021 were as follows:
| December 31,
| 2022 |  | 2021
| (In thousands)
Deferred tax asset: |  |  |
Allowance for credit losses and other reserves | $ | 57,273 |  |  | $ | 61,009 |
Scotiabank PR discount | 1,453 |  |  | $ | 2,053 |
Loans and other real estate valuation adjustment | 2,313 |  |  | 3,660 |
Deferred loan charge-offs | 72,376 |  |  | 115,661 |
Net operating loss carry forwards | 9,022 |  |  | 8,460 |
Alternative minimum tax | 14,467 |  |  | 15,385 |
Unrealized net loss included in other comprehensive income | — |  |  | 301 |
Unrealized net loss on available-for-sale securities | 16,422 |  |  | — |
Goodwill | 10,252 |  |  | 16,961 |
Acquired portfolio | 45,761 |  |  | 53,687 |
Other assets allowances | 1,538 |  |  | 929 |
Other deferred tax assets | 16,570 |  |  | 20,291 |
Total gross deferred tax asset | 247,447 |  |  | 298,397 |
Less: valuation allowance | (9,143) |  |  | (9,645) |
Net gross deferred tax assets | 238,304 |  |  | 288,752 |
Deferred tax liability: |  |  |
Acquired loans tax basis | (137,195) |  |  | (137,402) |
FDIC-assisted Eurobank acquisition, net | (5,760) |  |  | (6,636) |
Customer deposit and customer relationship intangibles | (7,314) |  |  | (10,324) |
Building valuation adjustment | (6,540) |  |  | (6,976) |
Unrealized net gain on available-for-sale securities | — |  |  | (1,572) |
Unrealized net gain included in other comprehensive income | (152) |  |  | — |
Servicing asset | (16,041) |  |  | (15,311) |
Other deferred tax liabilities | (9,817) |  |  | (11,468) |
Total gross deferred tax liabilities | (182,819) |  |  | (189,689) |
Net deferred tax asset | $ | 55,485 |  |  | $ | 99,063 |

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- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15A -URI https://asc.fasb.org/extlink&oid=121826272&loc=SL6600010-109319 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32718-109319 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 19 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32840-109319 + Details
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