OPERATING LEASESSubstantially all leases in which OFG is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2038. OFG’s leases do not contain residual value guarantees or material variable lease payments. All leases are classified as operating leases and are included on the consolidated statements of financial condition as a right-of-use asset and a corresponding lease liability. OFG leases to others certain space in its principal offices for terms extending through 2026 with two additional extension through to 2030; all are operating leases.
Operating Lease Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | | Statement of Operations |
| | | | | 2025 | | 2024 | | 2023 | | | | Classification |
| | | | | (In thousands) | | | | |
| Lease costs | | | | | $ | 8,935 | | | $ | 9,474 | | | $ | 10,414 | | | | | Occupancy and equipment |
| Variable lease costs | | | | | 1,635 | | | 1,697 | | | 1,452 | | | | | Occupancy and equipment |
| Short-term lease costs | | | | | 585 | | | 384 | | | 529 | | | | | Occupancy and equipment |
| Lease income | | | | | (51) | | | (77) | | | (123) | | | | | Occupancy and equipment |
| Total lease costs | | | | | $ | 11,104 | | | $ | 11,478 | | | $ | 12,272 | | | | | |
Operating Lease Assets and Liabilities
| | | | | | | | | | | | | | | | | |
| December 31, | | Statement of Financial Condition |
| 2025 | | 2024 | | Classification |
| (In thousands) | | |
| Right-of-use assets | $ | 21,261 | | | $ | 19,197 | | | Operating lease right-of-use assets |
| Lease Liabilities | $ | 23,157 | | | $ | 21,388 | | | Operating leases liabilities |
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (In thousands) |
| Weighted-average remaining lease term | 4.4 years | | 4.8 years |
| Weighted-average discount rate | 7.4 | % | | 7.6 | % |
Future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2025, were as follows:
| | | | | |
| Minimum Rent |
| As of December 31, 2025 | (In thousands) |
| 2026 | $ | 7,644 | |
| 2027 | 6,520 | |
| 2028 | 5,127 | |
| 2029 | 3,527 | |
| 2030 | 1,986 | |
| Thereafter | 2,387 | |
| Total lease payments | $ | 27,191 | |
| Less imputed interest | 4,034 | |
| Present value of lease liabilities | $ | 23,157 | |
OFG, as lessor, leases or subleases real property to tenants under operating leases. As of December 31, 2025, no material lease concessions have been granted to tenants. As of December 31, 2025, OFG, as lessee, has not requested any lease concessions.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.