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Segment Reporting | 3 Months Ended
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Mar. 31, 2019
Disclosure Text Block |
Segment Reporting | Note 34 – Segment reporting The Corporation’s corporate structure consists of two reportable segments – Banco Popular de Puerto Rico and Popular U.S. Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allo cate resources. The segments were determined based on the organizational structure, which focuses primarily on the markets the segments serve, as well as on the products and services offered by the segments. Banco Popular de Puerto Rico: Given that Banco Popular de Puerto Rico constitutes a significant portion of the Corporation’s results of operations and total assets at March 31, 2019, additional disclosures are provided for the business areas included in this reportable segment, as de scribed below: Commercial banking represents the Corporation’s banking operations conducted at BPPR, which are targeted mainly to corporate, small and middle size businesses. It includes aspects of the lending and depository businesses, as well as other fi nance and advisory services. BPPR allocates funds across business areas based on duration matched transfer pricing at market rates. This area also incorporates income related with the investment of excess funds, as well as a proportionate share of the inve stment function of BPPR. Consumer and retail banking represents the branch banking operations of BPPR which focus on retail clients. It includes the consumer lending business operations of BPPR, as well as the lending operations of Popular Auto and Popular Mortgage. Popular Auto focuses on auto and lease financing, while Popular Mortgage focuses principally on residential mortgage loan originations. During 2018, the Reliable brand was transferred to Popular, Inc. and is being used by Popular Auto. The consu mer and retail banking area also incorporates income related with the investment of excess funds from the branch network, as well as a proportionate share of the investment function of BPPR. Other financial services include the trust and asset management service units of BPPR, the brokerage and investment banking operations of Popular Securities, and the insurance agency and reinsurance businesses of Popular Insurance, Popular Insurance V.I., Popular Risk Services, and Popular Life Re. Most of the services that are provided by these subsidiaries generate profits based on fee income. Popular Insurance V.I. was dissolved on December 31, 2018. Popular U.S.: Popular U.S. reportable segment consists of the banking operations of Popular Bank (PB) and Popular Insurance Agency, U.S.A. PB operates through a retail branch network in the U.S. mainland under the name of Popular. Popular Insurance Agency, U.S.A. offers investment and insurance services across the PB branch network. The Corporate group consists primarily of the holding companie s Popular, Inc., Popular North America, Popular International Bank and certain of the Corporation’s investments accounted for under the equi ty method, including EVERTEC and Centro Financiero BHD, Leó n. The accounting policies of the individual operating segments are the same as those of the Corporation. Transactions between reportable segments are primarily conducted at market rates, resultin g in profits that are eliminated for reporting consolidated results of operations. Effective on January 1, 2019, the Corporation’s management changed the measurement basis for its reportable segments. Historically, for management reporting purposes, the Co rporation had reversed the effect of the intercompany billings from Popular Inc., holding company, to its subsidiaries for certain services or expenses incurred on their behalf. In addition, the Corporation used to reflect an income tax expense allocation for several of its subsidiaries which are Limited Liability Companies (“LLCs”) and had made an election to be treated as a pass through entities for income tax purposes. The Corporation’s management has determined to discontinue making these adjustments, effective on January 1, 2019, for purposes of its management and reportable segment reporting. The Corporation reflected these changes in the measurement of the reportable segments’ results prospectively beginning on January 1, 2019. The tables that follo w present the results of operations and total assets by reportable segments:
2019
For the quarter ended March 31, 2019
|  |  |  | Banco Popular |  |  |  | Intersegment
(In thousands) |  |  |  | de Puerto Rico |  | Popular Bank |  | Eliminations
Net interest income |  |  | $ | 407,357 | $ | 72,828 | $ | 4
Provision for loan losses |  |  |  | 31,349 |  | 10,371 |  | -
Non-interest income |  |  |  | 120,770 |  | 5,864 |  | (141)
Amortization of intangibles |  |  |  | 2,122 |  | 166 |  | -
Depreciation expense |  |  |  | 11,939 |  | 2,168 |  | -
Other operating expenses |  |  |  | 280,698 |  | 48,609 |  | (136)
Income tax expense |  |  |  | 45,376 |  | 5,215 |  | -
Net income |  |  | $ | 156,643 | $ | 12,163 | $ | (1)
Segment assets |  |  | $ | 38,896,514 | $ | 9,585,380 | $ | (113,126)
For the quarter ended March 31, 2019
|  | Reportable |  |  |  |  |  |
(In thousands) |  | Segments |  | Corporate |  | Eliminations |  | Total Popular, Inc.
Net interest income (expense) | $ | 480,189 | $ | (9,226) | $ | - | $ | 470,963
Provision for loan losses |  | 41,720 |  | 105 |  | - |  | 41,825
Non-interest income |  | 126,493 |  | 10,061 |  | (124) |  | 136,430
Amortization of intangibles |  | 2,288 |  | 24 |  | - |  | 2,312
Depreciation expense |  | 14,107 |  | 188 |  | - |  | 14,295
Other operating expenses |  | 329,171 |  | 2,358 |  | (716) |  | 330,813
Income tax expense |  | 50,591 |  | (586) |  | 218 |  | 50,223
Net income (loss) | $ | 168,805 | $ | (1,254) | $ | 374 | $ | 167,925
Segment assets | $ | 48,368,768 | $ | 5,021,367 | $ | (4,709,528) | $ | 48,680,607
2018
For the quarter ended March 31, 2018
|  |  |  | Banco Popular |  |  |  | Intersegment
(In thousands) |  |  |  | de Puerto Rico |  | Popular Bank |  | Eliminations
Net interest income |  |  | $ | 332,268 | $ | 74,993 | $ | 4
Provision for loan losses |  |  |  | 58,469 |  | 12,615 |  | -
Non-interest income |  |  |  | 96,625 |  | 4,341 |  | (139)
Amortization of intangibles |  |  |  | 2,159 |  | 166 |  | -
Depreciation expense |  |  |  | 10,528 |  | 2,118 |  | -
Other operating expenses |  |  |  | 240,529 |  | 45,220 |  | (136)
Income tax benefit |  |  |  | 25,847 |  | 1,089 |  | -
Net income |  |  | $ | 91,361 | $ | 18,126 | $ | 1
Segment assets |  |  | $ | 36,244,300 | $ | 9,227,093 | $ | (14,471)
For the quarter ended March 31, 2018
|  | Reportable |  |  |  |  |  |
(In thousands) |  | Segments |  | Corporate |  | Eliminations |  | Total Popular, Inc.
Net interest income (expense) | $ | 407,265 | $ | (14,218) | $ | - | $ | 393,047
Provision (reversal) for loan losses |  | 71,084 |  | (21) |  | - |  | 71,063
Non-interest income |  | 100,827 |  | 12,948 |  | (278) |  | 113,497
Amortization of intangibles |  | 2,325 |  | - |  | - |  | 2,325
Depreciation expense |  | 12,646 |  | 187 |  | - |  | 12,833
Other operating expenses |  | 285,613 |  | 22,082 |  | (851) |  | 306,844
Income tax expense (benefit) |  | 26,936 |  | (5,012) |  | 231 |  | 22,155
Net income (loss) | $ | 109,488 | $ | (18,506) | $ | 342 | $ | 91,324
Segment assets | $ | 45,456,922 | $ | 5,033,543 | $ | (4,733,704) | $ | 45,756,761
Additional disclosures with respect to the Banco Popular de Puerto Rico reportable segment are as follows:
2019
For the quarter ended March 31, 2019
Banco Popular de Puerto Rico
|  |  |  | Consumer |  | Other |  | Eliminations |  | Total Banco
|  | Commercial |  | and Retail |  | Financial |  | and Other |  | Popular de
(In thousands) |  | Banking |  | Banking |  | Services |  | Adjustments [1] |  | Puerto Rico
Net interest income | $ | 151,460 | $ | 254,668 | $ | 1,318 | $ | (89) | $ | 407,357
Provision for loan losses |  | (1,992) |  | 33,341 |  | - |  | - |  | 31,349
Non-interest income |  | 23,589 |  | 75,404 |  | 22,534 |  | (757) |  | 120,770
Amortization of intangibles |  | 49 |  | 1,072 |  | 1,001 |  | - |  | 2,122
Depreciation expense |  | 4,654 |  | 7,127 |  | 158 |  | - |  | 11,939
Other operating expenses |  | 72,929 |  | 192,670 |  | 15,827 |  | (728) |  | 280,698
Income tax expense |  | 31,194 |  | 11,743 |  | 2,439 |  | - |  | 45,376
Net income | $ | 68,215 | $ | 84,119 | $ | 4,427 | $ | (118) | $ | 156,643
Segment assets | $ | 29,478,917 | $ | 23,039,995 | $ | 327,487 | $ | (13,949,885) | $ | 38,896,514
2018
For the quarter ended March 31, 2018
Banco Popular de Puerto Rico
|  |  |  | Consumer |  | Other |  |  |  | Total Banco
|  | Commercial |  | and Retail |  | Financial |  |  |  | Popular de
(In thousands) |  | Banking |  | Banking |  | Services |  | Eliminations |  | Puerto Rico
Net interest income | $ | 139,270 | $ | 191,434 | $ | 1,576 | $ | (12) | $ | 332,268
Provision for loan losses |  | 20,693 |  | 37,776 |  | - |  | - |  | 58,469
Non-interest income |  | 12,562 |  | 61,857 |  | 22,449 |  | (243) |  | 96,625
Amortization of intangibles |  | 52 |  | 1,069 |  | 1,038 |  | - |  | 2,159
Depreciation expense |  | 4,289 |  | 6,085 |  | 154 |  | - |  | 10,528
Other operating expenses |  | 60,261 |  | 162,490 |  | 18,033 |  | (255) |  | 240,529
Income tax expense |  | 16,875 |  | 7,457 |  | 1,515 |  | - |  | 25,847
Net income | $ | 49,662 | $ | 38,414 | $ | 3,285 | $ | - | $ | 91,361
Segment assets | $ | 23,652,941 | $ | 20,618,670 | $ | 346,096 | $ | (8,373,407) | $ | 36,244,300
Geographic Information
|  | Quarter ended
(In thousands) |  | March 31, 2019 |  | March 31, 2018
Revenues:[1] |  |  |  |
Puerto Rico | $ | 500,138 | $ | 399,414
United States |  | 89,856 |  | 86,528
Other |  | 17,399 |  | 20,602
Total consolidated revenues | $ | 607,393 | $ | 506,544
[1] Total revenues include net interest income, service charges on deposit accounts, other service fees, mortgage banking activities, net profit (loss) on trading account debt securities, net gain (loss), including impairment on equity securities, adjustments (expense) to indemnity reserves on loans sold, FDIC loss share e xpense and other operating income.
Selected Balance Sheet Information:
(In thousands) |  | March 31, 2019 |  | December 31, 2018
Puerto Rico |  |  |  |
Total assets | $ | 37,656,205 | $ | 36,863,930
Loans |  | 18,855,650 |  | 18,837,742
Deposits |  | 32,343,773 |  | 31,237,529
United States |  |  |  |
Total assets | $ | 10,145,457 | $ | 9,847,944
Loans |  | 7,158,946 |  | 7,034,075
Deposits |  | 7,048,008 |  | 6,878,599
Other |  |  |  |
Total assets | $ | 878,945 | $ | 892,703
Loans |  | 677,097 |  | 687,494
Deposits [1] |  | 1,488,057 |  | 1,593,911
[1] Represents deposits from BPPR operations located in the U.S. and British Virgin Islands.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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