BANKING AND FINANCIAL SERVICE REVENUES

12 Months Ended

Dec. 31, 2023

Banking and Thrift, Interest [Abstract]

The following table presents the major categories of banking and financial service revenues for 2023, 2022 and 2021:


	Year Ended December 31,
		2023		2022		2021
	(In thousands)
Banking service revenues:
Electronic banking fees		$	54,109	$	54,639	$	55,968
Checking accounts fees		8,924		8,933		8,593
Savings accounts fees		1,334		1,265		1,141
Credit life commissions		318		724		469
Branch service commissions		1,538		1,456		1,467
Servicing and other loan fees		3,120		3,222		3,256
International fees		720		902		794
Miscellaneous income		15		20		18
Total banking service revenues		70,078		71,161		71,706

Wealth management revenue:
Insurance income		17,178		15,084		14,647
Broker fees		7,375		6,793		8,213
Trust fees		8,402		10,013		11,303
Retirement plan and administration fees		35		745		881

Total wealth management revenue		32,990		32,635		35,044

Mortgage banking activities:
Net servicing fees		15,077		18,258		16,818
Net gains on sale of mortgage loans and valuation		2,993		3,786		10,119
Net gain (loss) on repurchased loans and other		717		(115)		(4,429)
Total mortgage banking activities		18,787		21,929		22,508
Total banking and financial service revenues		$	121,855	$	125,725	$	129,258

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 generated in the sale of insurance policies issued by unaffiliated insurance companies and sale of annuities are recorded once the sale has been completed. Reinsurance revenue is recorded based on earned

premium confirmed by the fronting insurance company. Contingent insurance commissions are recorded once the paying insurance companies confirm the amounts earned.

Broker 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. These generally include payment for trustee services, distribution services, custodial services of plan assets, due diligence services, and investment advisory services. 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 generally collected on an annual or quarterly basis once the administrative service has been completed. Fees do 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.