BUSINESS COMBINATIONS

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

The assets acquired and liabilities assumed in the Scotiabank Acquisition 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 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 2020 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 2020:


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

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 2021 and 2020:


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

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.