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INCOME TAXES (Tables)

12 Months Ended

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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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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