BANKING AND FINANCIAL SERVICE REVENUES

3 Months Ended

Mar. 31, 2024

Banking and Thrift, Interest [Abstract]

The following table presents the major categories of banking and financial service revenues for the quarters ended March 31, 2024 and 2023:


	Quarter Ended March 31,
	2024		2023
	(In thousands)
Banking service revenues:
Electronic banking fees	$	13,690	$	13,366
Checking accounts fees	2,167		2,220
Savings accounts fees	308		333
Credit life commissions	4		105
Branch service commissions	346		422
Servicing and other loan fees	568		881
International fees	172		183
Miscellaneous income	4		3
Total banking service revenues	17,259		17,513

Wealth management revenue:
Insurance income	3,774		3,369
Broker fees	2,091		1,784
Trust fees	2,242		1,924
Other fees	—		43

Total wealth management revenue	8,107		7,120

Mortgage banking activities:
Net servicing fees	3,951		2,842
Net gains on sale of mortgage loans and valuation	653		769
Net gain on repurchased loans and other	89		287
Total mortgage banking activities	4,693		3,898
Total banking and financial service revenues	$	30,059	$	28,531

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 provider of 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.

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.