Business Combinations

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

BUSINESS COMBINATIONS

On December 31, 2019, OFG purchased from the BNS all outstanding common stock of SBPR. Immediately following the closing, OFG merged SBPR with and into the Bank, with the Bank continuing as the surviving entity. As part of this transaction, the Bank also acquired the USVI banking operations of BNS through an acquisition of certain assets (including loans, ATMs and physical branch locations) and an assumption of certain liabilities (including deposits). In addition, OFG acquired certain loans and assumed certain liabilities, from BNS’s Puerto Rico branch.

The assets acquired and liabilities assumed as of December 31, 2019 were presented at their estimated fair value. The fair values initially assigned to the assets acquired and liabilities assumed were preliminary and subject to refinement for up to one year after the closing date of the acquisition as new information relative to closing date fair values became available. During the year ended December 31, 2020, OFG finalized its fair value analysis of the acquired assets and liabilities assumed and recorded remeasurement adjustments of approximately $7.3 million to the preliminary estimated fair values of certain accrued interest receivables, deferred tax asset, and accounts receivables to reflect new information obtained during the measurement period (as defined by ASC Topic 805), about facts and circumstances that existed as of the acquisition date that, if known, would have affected the acquisition-date fair value measurements.

Merger and Restructuring Charges

Merger and restructuring charges incurred during the years ended December 31, 2020 and 2019 were recorded in the consolidated statement of operations and included incremental costs to integrate the operations of OFG and its most recent acquisition. These charges represent costs associated with these activities and do not represent ongoing costs of the fully integrated combined organization.

The following table presents severance and employee charges, systems integrations charges, branch consolidation, and other merger and restructuring charges related to the Scotiabank Acquisition, for the years ended December 31, 2020 and 2019:


	Year Ended December 31,
		2020		2019
	(In thousands)
Severance and employee-related charges		$	220	$	13,323
Professional services and system integrations		9,973		9,718
Branch consolidation		3,707		—
Other		2,183		1,013
Total merger and restructuring charges		$	16,083	$	24,054

Restructuring Reserve

Restructuring reserves are established by a charge to merger and restructuring charges, and the restructuring charges are included in the merger and restructuring charges table.

The following table presents the changes in restructuring reserves for the years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Balance at the beginning of the year	$	15,129	$	17,491	$	—
Merger and restructuring charges	—		16,083		24,054
Cash payments	(15,129)		(18,445)		(6,563)
Balance at the end of the year	$	—	$	15,129	$	17,491

Payments under merger and restructuring reserves associated with the Scotiabank Acquisition continued into 2021 but they were not material and were accounted under applicable accounting guidance to the cost being incurred.