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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended
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Sep. 30, 2023
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, 2023 |
| Fair Value Measurements |
| Level 1 |  | Level 2 |  | Level 3 |  | Total |
| (In thousands) |
Recurring fair value measurements: |  |  |  |  |  |  |  |
Investment securities available-for-sale | $ | 739 |  |  | $ | 1,512,414 |  |  | $ | — |  |  | $ | 1,513,153 |  |
Trading securities | — |  |  | 14 |  |  | — |  |  | 14 |  |
Money market investments | 4,073 |  |  | — |  |  | — |  |  | 4,073 |  |
Servicing assets | — |  |  | — |  |  | 50,601 |  |  | 50,601 |  |
| $ | 4,812 |  |  | $ | 1,512,428 |  |  | $ | 50,601 |  |  | $ | 1,567,841 |  |
Non-recurring fair value measurements: |  |  |  |  |  |  |  |
Collateral dependent loans | $ | — |  |  | $ | — |  |  | $ | 8,605 |  |  | $ | 8,605 |  |
Foreclosed real estate | — |  |  | — |  |  | 9,555 |  |  | 9,555 |  |
Other repossessed assets | — |  |  | — |  |  | 4,432 |  |  | 4,432 |  |
Mortgage loans held for sale | — |  |  | — |  |  | 564 |  |  | 564 |  |
Other loans held for sale | $ | — |  |  | $ | — |  |  | 25,282 |  |  | 25,282 |  |
| $ | — |  |  | $ | — |  |  | $ | 48,438 |  |  | $ | 48,438 |  |
| December 31, 2022
| Fair Value Measurements
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (In thousands)
Recurring fair value measurements: |  |  |  |  |  |  |
Investment securities available-for-sale | $ | 309,133 |  |  | $ | 1,103,237 |  |  | $ | 406 |  |  | $ | 1,412,776 |
Trading securities | — |  |  | 9 |  |  | — |  |  | 9 |
Money market investments | 4,161 |  |  | — |  |  | — |  |  | 4,161 |
Derivative assets | — |  |  | 406 |  |  | — |  |  | 406 |
Servicing assets | — |  |  | — |  |  | 50,921 |  |  | 50,921 |
| $ | 313,294 |  |  | $ | 1,103,652 |  |  | $ | 51,327 |  |  | $ | 1,468,273 |
Non-recurring fair value measurements: |  |  |  |  |  |  |
Collateral dependent loans | $ | — |  |  | $ | — |  |  | $ | 8,805 |  |  | $ | 8,805 |
Foreclosed real estate | — |  |  | — |  |  | 11,214 |  |  | 11,214 |
Other repossessed assets | — |  |  | — |  |  | 4,617 |  |  | 4,617 |
Mortgage loans held for sale | — |  |  | — |  |  | 19,499 |  |  | 19,499 |
Other loans held for sale | $ | — |  |  | $ | — |  |  | $ | 21,088 |  |  | 21,088 |
| $ | — |  |  | $ | — |  |  | $ | 65,223 |  |  | $ | 65,223 |
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 ended September 30, 2023 and 2022: Level 3 Instruments Only
| Quarter Ended September 30,
| 2023 |  | 2022 |  |
| Other debt securities available for sale | Servicing Assets | Total |  | Other debt securities available for sale | Servicing Assets | Total |  |
| (In thousands) |  |
Balance at beginning period | $ | 413 |  | $ | 49,966 |  | $ | 50,379 |  |  | $ | 1,581 |  | $ | 49,280 |  | $ | 50,861 |  |  |
New instruments acquired | — |  | 453 |  | 453 |  |  | 376 |  | 666 |  | 1,042 |  |  |
Principal repayments and amortization | — |  | (1,060) |  | (1,060) |  |  | — |  | (1,191) |  | (1,191) |  |  |
Instrument converted to equity security | (413) |  | — |  | (413) |  |  | (1,581) |  | — |  | (1,581) |  |  |
Gains included in earnings | — |  | 1,242 |  | 1,242 |  |  | — |  | 1,306 |  | 1,306 |  |  |
Gains included in other comprehensive income | — |  | — |  | — |  |  | 23 |  | — |  | 23 |  |  |
Balance at end of period | $ | — |  | $ | 50,601 |  | $ | 50,601 |  |  | $ | 399 |  | $ | 50,061 |  | $ | 50,460 |  |  |
| Nine-Month Period Ended September 30, 2023
| 2023 |  | 2022 |  |
| Other debt securities available for sale | Servicing Assets | Total |  | Other debt securities available for sale | Servicing Assets | Total |  |
| (In thousands)
Balance at beginning period | $ | 406 |  | $ | 50,921 |  | $ | 51,327 |  |  | $ | 1,530 |  | $ | 48,973 |  | $ | 50,503 |  |  |
New instruments acquired | — |  | 1,818 |  | 1,818 |  |  | 376 |  | 2,935 |  | 3,311 |  |  |
Principal repayments and amortization | — |  | (3,210) |  | (3,210) |  |  | — |  | (4,168) |  | (4,168) |  |  |
Instrument converted to equity security | (406) |  | — |  | (406) |  |  | (1,581) |  | — |  | (1,581) |  |  |
Gains included in earnings | — |  | 1,072 |  | 1,072 |  |  | — |  | 2,321 |  | 2,321 |  |  |
Gains included in other comprehensive income | — |  | — |  | — |  |  | 74 |  | — |  | 74 |  |  |
Balance at end of period | $ | — |  | $ | 50,601 |  | $ | 50,601 |  |  | $ | 399 |  | $ | 50,061 |  | $ | 50,460 |  |  |
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, 2023 and December 31, 2022:
| September 30, 2023
| Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
| (In thousands) |  |  |  |  |  |  |  |
Servicing assets | $ | 50,601 |  |  | Cash flow valuation |  | Constant prepayment rate |  | 3.33% - 20.40% |  | 5.70 | %
|  |  |  |  | Discount rate |  | 10.00% - 15.50% |  | 11.45 | %
Collateral dependent loans | $ | 8,605 |  |  | Fair value of property or collateral |  | Appraised value less disposition costs |  | 10.20% - 33.20% |  | 17.01 | %
Foreclosed real estate | $ | 9,555 |  |  | Fair value of property or collateral |  | Appraised value less disposition costs |  | 10.20% - 33.20% |  | 11.62 | %
Other repossessed assets | $ | 4,432 |  |  | Fair value of property or collateral |  | Estimated net realizable value less disposition costs |  | 29.00% - 77.00% |  | 59.97 | %
Mortgage loans held for sale | $ | 564 |  |  | Market prices |  | Pricing and execution whole loan |  | 94.66% - 97.92% |  | 96.70 | %
Other loans held for sale | $ | 25,282 |  |  | Bids or sales contract prices |  | Estimated market value |  | 52.00% - 103.20% |  | 84.80 | %
| December 31, 2022
| Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
| (In thousands) |  |  |  |  |  |  |  |
Other debt securities available-for-sale | $ | 406 |  |  | 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 | $ | 50,921 |  |  | Cash flow valuation |  | Constant prepayment rate |  | 3.43% - 21.20% |  | 5.66 | %
|  |  |  |  | Discount rate |  | 10.00% - 15.50% |  | 11.45 | %
Collateral dependent loans | $ | 8,805 |  |  | Fair value of property or collateral |  | Appraised value less disposition costs |  | 10.20% - 51.20% |  | 17.11 | %
Foreclosed real estate | $ | 11,214 |  |  | Fair value of property or collateral |  | Appraised value less disposition costs |  | 10.20% - 33.20% |  | 11.81 | %
Other repossessed assets | $ | 4,617 |  |  | Fair value of property or collateral |  | Estimated net realizable value less disposition costs |  | 22.00% - 80.00% |  | 58.49 | %
Mortgage loans held for sale | $ | 19,499 |  |  | Fair value of property |  | Estimated net realizable value |  | 83.25% - 102.43% |  | 71.86%
Other loans held for sale | $ | 21,088 |  |  | Bids or sales contract prices |  | Estimated market value |  | 100.00% - 103.20% |  | 74.65%
Schedule of Estimated Fair Value and Carrying Value | The estimated fair value and carrying value of OFG’s financial instruments at September 30, 2023 and December 31, 2022 was as follows:
| September 30, |  | December 31,
| 2023 |  | 2022
| Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
| (In thousands)
Financial Assets: |  |  |  |  |  |  |
Level 1 |  |  |  |  |  |  |
Cash and cash equivalents | $ | 532,699 |  |  | $ | 532,699 |  |  | $ | 550,307 |  |  | $ | 550,307 |
Restricted cash | $ | — |  |  | $ | — |  |  | $ | 157 |  |  | $ | 157 |
Investment securities available-for-sale | $ | 739 |  |  | $ | 739 |  |  | $ | 309,133 |  |  | $ | 309,133 |
Level 2 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Trading securities | $ | 14 |  |  | $ | 14 |  |  | $ | 9 |  |  | $ | 9 |
Investment securities available-for-sale | $ | 1,512,414 |  |  | $ | 1,512,414 |  |  | $ | 1,103,237 |  |  | $ | 1,103,237 |
Investment securities held-to-maturity | $ | 441,759 |  |  | $ | 519,145 |  |  | $ | 469,186 |  |  | $ | 535,070 |
Federal Home Loan Bank (FHLB) stock | $ | 18,988 |  |  | $ | 18,988 |  |  | $ | 6,005 |  |  | $ | 6,005 |
Equity securities | $ | 23,174 |  |  | $ | 23,174 |  |  | $ | 17,662 |  |  | $ | 17,662 |
Derivative assets | $ | — |  |  | $ | — |  |  | $ | 406 |  |  | $ | 406 |
Level 3 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Investment securities available for sale | $ | — |  |  | $ | — |  |  | $ | 406 |  |  | $ | 406 |
Total loans, net of allowance for credit losses | $ | 6,916,132 |  |  | $ | 7,130,052 |  |  | $ | 6,467,878 |  |  | $ | 6,723,236 |
Accrued interest receivable | $ | 67,868 |  |  | $ | 67,868 |  |  | $ | 62,402 |  |  | $ | 62,402 |
Servicing assets | $ | 50,601 |  |  | $ | 50,601 |  |  | $ | 50,921 |  |  | $ | 50,921 |
Accounts receivable and other assets | $ | 48,096 |  |  | $ | 48,096 |  |  | $ | 61,014 |  |  | $ | 61,014 |
Financial Liabilities: |  |  |  |  |  |  |
Deposits | $ | 8,545,617 |  |  | $ | 8,541,553 |  |  | $ | 8,556,300 |  |  | $ | 8,568,364 |
Securities sold under agreements to repurchase | $ | 150,658 |  |  | $ | 150,701 |  |  | $ | — |  |  | $ | — |
Advances from FHLB | $ | 297,532 |  |  | $ | 300,774 |  |  | $ | 26,716 |  |  | $ | 26,716 |
Other borrowings | $ | — |  |  | $ | — |  |  | $ | 318 |  |  | $ | 318 |
Accrued expenses and other liabilities | $ | 115,394 |  |  | $ | 115,394 |  |  | $ | 124,999 |  |  | $ | 124,999 |

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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 -Name Accounting Standards Codification -Section 50 -Paragraph 2C -SubTopic 10 -Topic 820 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2C Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-3 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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