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Goodwill And Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill And Intangible Assets [Abstract]

NOTE 12 — GOODWILL AND OTHER INTANGIBLE ASSETS

As of December 31, 2020 and 2019, Oriental had $86.1 million of goodwill allocated as follows: $84.1 million to the banking segment and $2.0 million to the wealth management segment (refer to Note 30 for the definition of Oriental’s reportable business segments). There were no changes in the carrying amount of goodwill for the years ended December 31, 2020, 2019 and 2018.

Goodwill recorded in connection with the BBVAPR Acquisition and the FDIC-assisted Eurobank Acquisition is not amortized to expense but is tested at least annually for impairment. No goodwill was recorded in connection with the recent Scotiabank PR & USVI Acquisition. A quantitative annual impairment test is not required if, based on a qualitative analysis, Oriental determines that the existence of events and circumstances indicate that it is more likely than not that goodwill is not impaired. Oriental performs annual goodwill impairment test as of October 31 and monitors for interim triggering events on an ongoing basis. Oriental tests for impairment by first allocating its goodwill and other assets and liabilities, as necessary, to defined reporting segments. A fair value is then determined for each reporting segment. If the fair values of the reporting segments exceed their book values, no write-down of the recorded goodwill is necessary.

Reporting segment valuation is inherently subjective, with a number of factors based on assumptions and management judgments or estimates. Actual values may differ significantly from such estimates. Among these are future growth rates for the reporting units, selection of comparable market transactions, discount rates and earnings capitalization rates. Changes in assumptions and results due to economic conditions, industry factors, and reporting unit performance and cash flow projections could result in different assessments of the fair values of reporting segments and could result in impairment charges. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting segment below its carrying amount, an interim impairment test is required.

Relevant events and circumstances for evaluating whether it is more likely than not that the fair value of a reporting segment is less than its carrying amount may include macroeconomic conditions (such as a further deterioration of the Puerto Rico economy or the liquidity for Puerto Rico securities or loans secured by assets in Puerto Rico), adverse changes in legal factors or in the business climate, adverse actions by a regulator, unanticipated competition, the loss of key employees, natural disasters, or similar events.

Oriental performed its annual impairment review of goodwill during the fourth quarters of 2020 and 2019 using October 31, 2020 and 2019, respectively, as the annual evaluation dates and concluded that there was no impairment at December 31, 2020 and 2019.

In connection with reviewing our financial condition in light of the pandemic, we evaluated our assets, including goodwill and other intangibles, for potential impairment. Based upon our review as of December 31, 2020, no impairments have been recorded.

The following table reflects the components of other intangible assets subject to amortization at December 31, 2020 and 2019:

	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Value
	(In thousands)
December 31, 2020
Core deposit intangibles	$	51,402	$	16,419	$	34,983
Customer relationship intangibles		17,753		7,124		10,629
Other intangibles		567		283		284
Total other intangible assets	$	69,722	$	23,826	$	45,896
December 31, 2019
Core deposit intangibles	$	51,402	$	8,217	$	43,185
Customer relationship intangibles		17,753		4,540		13,213
Other intangibles		567		-		567
Total other intangible assets	$	69,722	$	12,757	$	56,965

In connection with the Eurobank FDIC-assisted acquisition, the BBVAPR Acquisition and the Scotiabank PR & USVI Acquisition, Oriental recorded a core deposit intangible representing the value of checking and savings deposits acquired. At December 31, 2020, this core deposit intangible amounted to $35.0 million. At December 31, 2019, core deposit intangible amounted to $43.2 million, including $41.5 from the Scotiabank PR & USVI Acquisition. In addition, Oriental recorded a customer relationship intangible representing the value of customer relationships acquired with the acquisition of a securities broker-dealer and insurance agency in the BBVAPR Acquisition and an insurance agency in the Scotiabank PR & USVI Acquisitions. At December 31, 2020 this customer relationship intangible amounted to $10.6 million. At December 31, 2019 customer relationship intangible amounted to $13.2 million, including $12.7 million from the Scotiabank PR & USVI Acquisition. Oriental also recorded other intangibles from the Scotiabank PR & USVI Acquisition which amounted to $284 thousand and $567 thousand at December 31, 2020 and 2019, respectively.

Other intangible assets have a definite useful life. Amortization of other intangible assets for the years ended December 31, 2020, 2019 and 2018 was $11.1 million, $1.2 million, and $1.3 million, respectively.

The following table presents the estimated amortization of other intangible assets for each of the following periods.


Year Ending December 31,	(In thousands)
2021	$	9,802
2022		8,501
2023		6,898
2024		5,913
2025		4,927
Thereafter		9,854