BANKING AND FINANCIAL SERVICE REVENUES

9 Months Ended

Sep. 30, 2023

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, 2023 and 2022:


	Quarter Ended September 30,				Nine-Month Period Ended September 30,
	2023		2022		2023		2022
	(In thousands)				(In thousands)
Banking service revenues:
Electronic banking fees	$	13,447	$	13,335	$	40,416	$	40,509
Checking accounts fees	2,233		2,332		6,638		6,702
Savings accounts fees	333		332		993		937
Credit life commissions	90		70		314		665
Branch service commissions	352		319		1,098		979
Servicing and other loan fees	668		621		2,251		2,427
International fees	174		217		536		702
Miscellaneous income	6		8		10		16
Total banking service revenues	17,303		17,234		52,256		52,937

Wealth management revenue:
Insurance income	3,607		3,906		11,146		10,758
Broker fees	1,945		1,601		5,525		5,204
Trust fees	2,139		2,489		6,298		7,796
Retirement plan and administration fees	—		177		36		542

Total wealth management revenue	7,691		8,173		23,005		24,300

Mortgage banking activities:
Net servicing fees	4,764		5,206		12,256		13,408
Net gains on sale of mortgage loans and valuation	450		(116)		2,009		2,192
Net gain (loss) on repurchased loans and other	196		(199)		268		(124)
Total mortgage banking activities	5,410		4,891		14,533		15,476
Total banking and financial service revenues	$	30,404	$	30,298	$	89,794	$	92,713

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

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.

Service charges on checking and saving accounts is recognized as consumer periodic maintenance revenue once the service is rendered, while overdraft and late charges revenues are recorded after 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 advisers 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 advisers’ 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. The 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. Effective December 31, 2022, OFG sold its retirement plan administration business which was operated under OPC, which thereafter ceased its operations.

Mortgage Banking Activities

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