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Segment Reporting | 9 Months Ended
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Sep. 30, 2020
Disclosure Text Block |
Segment Reporting | Note 33 – 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 allocate 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 September 30, 2020, additional disclosures are provided for the business areas included in this reportable segment, as described 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 finance 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 investment 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. The consumer 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 Risk Services, and Popular Life Re. Most of the services that are provided by these subsidiaries generate profits based on fee income. 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 companies Popular, Inc., Popular North America, Popular International Bank and certain of the Corporation’s investments accounted for under the equity method, including EVERTEC and Centro Financiero BHD, León. 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, resulting in profits that are eliminated for reporting consolidated results of operations. The tables that follow present the results of operations and total assets by reportable segments:
2020
For the quarter ended September 30, 2020
|  |  |  | Banco Popular |  |  |  | Intersegment
(In thousands) |  |  |  | de Puerto Rico |  | Popular U.S. |  | Eliminations
Net interest income |  |  | $ | 394,662 | $ | 76,481 | $ | 2
Provision for credit losses |  |  |  | 7,288 |  | 11,770 |  | -
Non-interest income |  |  |  | 107,577 |  | 7,186 |  | (138)
Amortization of intangibles |  |  |  | 886 |  | 166 |  | -
Depreciation expense |  |  |  | 11,921 |  | 2,338 |  | -
Other operating expenses |  |  |  | 292,528 |  | 54,679 |  | (136)
Income tax expense |  |  |  | 35,834 |  | 5,350 |  | -
Net income |  |  | $ | 153,782 | $ | 9,364 | $ | -
Segment assets |  |  | $ | 55,388,782 | $ | 10,220,824 | $ | (28,177)
For the quarter ended September 30, 2020
|  | Reportable |  |  |  |  |  |
(In thousands) |  | Segments |  | Corporate |  | Eliminations |  | Total Popular, Inc.
Net interest income (expense) | $ | 471,145 | $ | (10,124) | $ | - | $ | 461,021
Provision for credit losses |  | 19,058 |  | 80 |  | - |  | 19,138
Non-interest income |  | 114,625 |  | 14,230 |  | (88) |  | 128,767
Amortization of intangibles |  | 1,052 |  | 24 |  | - |  | 1,076
Depreciation expense |  | 14,259 |  | 259 |  | - |  | 14,518
Other operating expenses |  | 347,071 |  | (748) |  | (851) |  | 345,472
Income tax expense (benefit) |  | 41,184 |  | (312) |  | 296 |  | 41,168
Net income | $ | 163,146 | $ | 4,803 | $ | 467 | $ | 168,416
Segment assets | $ | 65,581,429 | $ | 5,201,316 | $ | (4,872,376) | $ | 65,910,369
For the nine months ended September 30, 2020
|  |  |  | Banco Popular |  |  |  | Intersegment
(In thousands) |  |  |  | de Puerto Rico |  | Popular U.S. |  | Eliminations
Net interest income |  |  | $ | 1,191,452 | $ | 222,874 | $ | 9
Provision for credit losses |  |  |  | 180,659 |  | 90,442 |  | -
Non-interest income |  |  |  | 315,522 |  | 18,831 |  | (414)
Amortization of intangibles |  |  |  | 4,773 |  | 499 |  | -
Depreciation expense |  |  |  | 36,282 |  | 6,396 |  | -
Other operating expenses |  |  |  | 876,438 |  | 160,749 |  | (408)
Income tax expense |  |  |  | 69,040 |  | 666 |  | -
Net income (loss) |  |  | $ | 339,782 | $ | (17,047) | $ | 3
Segment assets |  |  | $ | 55,388,782 | $ | 10,220,824 | $ | (28,177)
For the nine months ended September 30, 2020
|  | Reportable |  |  |  |  |  | Total
(In thousands) |  | Segments |  | Corporate |  | Eliminations |  | Popular, Inc.
Net interest income (expense) | $ | 1,414,335 | $ | (29,338) | $ | - | $ | 1,384,997
Provision for credit losses |  | 271,101 |  | 217 |  | - |  | 271,318
Non-interest income |  | 333,939 |  | 35,645 |  | (2,119) |  | 367,465
Amortization of intangibles |  | 5,272 |  | 73 |  | - |  | 5,345
Depreciation expense |  | 42,678 |  | 741 |  | - |  | 43,419
Other operating expenses |  | 1,036,779 |  | (1,056) |  | (2,582) |  | 1,033,141
Income tax expense (benefit) |  | 69,706 |  | (964) |  | 151 |  | 68,893
Net income | $ | 322,738 | $ | 7,296 | $ | 312 | $ | 330,346
Segment assets | $ | 65,581,429 | $ | 5,201,316 | $ | (4,872,376) | $ | 65,910,369
2019
For the quarter ended September 30, 2019
|  |  |  | Banco Popular |  |  |  | Intersegment
(In thousands) |  |  |  | de Puerto Rico |  | Popular U.S. |  | Eliminations
Net interest income |  |  | $ | 412,182 | $ | 74,391 | $ | 4
Provision for credit losses |  |  |  | 34,481 |  | 2,060 |  | -
Non-interest income |  |  |  | 124,868 |  | 5,953 |  | (140)
Amortization of intangibles |  |  |  | 2,208 |  | 167 |  | -
Depreciation expense |  |  |  | 11,972 |  | 2,046 |  | -
Other operating expenses |  |  |  | 309,815 |  | 51,616 |  | (136)
Income tax expense |  |  |  | 35,286 |  | 6,216 |  | -
Net income |  |  | $ | 143,288 | $ | 18,239 | $ | -
Segment assets |  |  | $ | 42,080,292 | $ | 10,095,526 | $ | (14,414)
For the quarter ended September 30, 2019
|  | Reportable |  |  |  |  |  |
(In thousands) |  | Segments |  | Corporate |  | Eliminations |  | Total Popular, Inc.
Net interest income (expense) | $ | 486,577 | $ | (9,586) | $ | - | $ | 476,991
Provision (reversal) for credit losses |  | 36,541 |  | (2) |  | - |  | 36,539
Non-interest income |  | 130,681 |  | 12,137 |  | (106) |  | 142,712
Amortization of intangibles |  | 2,375 |  | 24 |  | - |  | 2,399
Depreciation expense |  | 14,018 |  | 186 |  | - |  | 14,204
Other operating expenses |  | 361,295 |  | (647) |  | (776) |  | 359,872
Income tax expense (benefit) |  | 41,502 |  | (392) |  | 260 |  | 41,370
Net income | $ | 161,527 | $ | 3,382 | $ | 410 | $ | 165,319
Segment assets | $ | 52,161,404 | $ | 5,134,608 | $ | (4,815,597) | $ | 52,480,415
For the nine months ended September 30, 2019
|  |  |  | Banco Popular |  |  |  | Intersegment
(In thousands) |  |  |  | de Puerto Rico |  | Popular U.S. |  | Eliminations
Net interest income |  |  | $ | 1,231,088 | $ | 221,856 | $ | (53)
Provision for credit losses |  |  |  | 94,651 |  | 23,647 |  | -
Non-interest income |  |  |  | 369,026 |  | 17,309 |  | (421)
Amortization of intangibles |  |  |  | 6,510 |  | 499 |  | -
Depreciation expense |  |  |  | 36,154 |  | 6,215 |  | -
Other operating expenses |  |  |  | 887,941 |  | 151,966 |  | (409)
Income tax expense |  |  |  | 117,413 |  | 15,528 |  | -
Net income |  |  | $ | 457,445 | $ | 41,310 | $ | (65)
Segment assets |  |  | $ | 42,080,292 | $ | 10,095,526 | $ | (14,414)
For the nine months ended September 30, 2019
|  | Reportable |  |  |  |  |  | Total
(In thousands) |  | Segments |  | Corporate |  | Eliminations |  | Popular, Inc.
Net interest income (expense) | $ | 1,452,891 | $ | (28,621) | $ | - | $ | 1,424,270
Provision for credit losses |  | 118,298 |  | 257 |  | - |  | 118,555
Non-interest income |  | 385,914 |  | 33,537 |  | (1,983) |  | 417,468
Amortization of intangibles |  | 7,009 |  | 73 |  | - |  | 7,082
Depreciation expense |  | 42,369 |  | 559 |  | - |  | 42,928
Other operating expenses |  | 1,039,498 |  | (233) |  | (2,365) |  | 1,036,900
Income tax expense (benefit) |  | 132,941 |  | (1,158) |  | 140 |  | 131,923
Net income | $ | 498,690 | $ | 5,418 | $ | 242 | $ | 504,350
Segment assets | $ | 52,161,404 | $ | 5,134,608 | $ | (4,815,597) | $ | 52,480,415
Additional disclosures with respect to the Banco Popular de Puerto Rico reportable segment are as follows:
2020
For the quarter ended September 30, 2020
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 | $ | 164,791 | $ | 228,293 | $ | 1,578 | $ | - | $ | 394,662
Provision for credit losses |  | 4,061 |  | 3,227 |  | - |  | - |  | 7,288
Non-interest income |  | 24,804 |  | 58,955 |  | 24,194 |  | (376) |  | 107,577
Amortization of intangibles |  | 50 |  | 699 |  | 137 |  | - |  | 886
Depreciation expense |  | 5,179 |  | 6,569 |  | 173 |  | - |  | 11,921
Other operating expenses |  | 77,906 |  | 195,624 |  | 19,389 |  | (391) |  | 292,528
Income tax expense |  | 32,331 |  | 2,275 |  | 1,228 |  | - |  | 35,834
Net income | $ | 70,068 | $ | 78,854 | $ | 4,845 | $ | 15 | $ | 153,782
Segment assets | $ | 47,920,631 | $ | 29,358,230 | $ | 2,408,998 | $ | (24,299,077) | $ | 55,388,782
For the nine months ended September 30, 2020
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 | $ | 486,050 | $ | 694,983 | $ | 10,419 | $ | - | $ | 1,191,452
Provision for credit losses |  | 23,244 |  | 157,415 |  | - |  | - |  | 180,659
Non-interest income |  | 74,771 |  | 170,205 |  | 71,459 |  | (913) |  | 315,522
Amortization of intangibles |  | 148 |  | 2,911 |  | 1,714 |  | - |  | 4,773
Depreciation expense |  | 15,406 |  | 20,383 |  | 493 |  | - |  | 36,282
Other operating expenses |  | 226,232 |  | 587,297 |  | 63,863 |  | (954) |  | 876,438
Income tax expense (benefit) |  | 82,271 |  | (18,912) |  | 5,681 |  | - |  | 69,040
Net income | $ | 213,520 | $ | 116,094 | $ | 10,127 | $ | 41 | $ | 339,782
Segment assets | $ | 47,920,631 | $ | 29,358,230 | $ | 2,408,998 | $ | (24,299,077) | $ | 55,388,782
| 2019
| For the quarter ended September 30, 2019
| 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 | $ | 160,038 | $ | 250,944 | $ | 1,212 | $ | (12) | $ | 412,182
Provision (reversal) for credit losses |  | (23,619) |  | 58,100 |  | - |  | - |  | 34,481
Non-interest income |  | 25,196 |  | 75,854 |  | 24,545 |  | (727) |  | 124,868
Amortization of intangibles |  | 50 |  | 1,072 |  | 1,086 |  | - |  | 2,208
Depreciation expense |  | 5,064 |  | 6,753 |  | 155 |  | - |  | 11,972
Other operating expenses |  | 82,817 |  | 210,753 |  | 16,986 |  | (741) |  | 309,815
Income tax expense |  | 29,340 |  | 2,649 |  | 3,297 |  | - |  | 35,286
Net income | $ | 91,582 | $ | 47,471 | $ | 4,233 | $ | 2 | $ | 143,288
Segment assets | $ | 35,590,229 | $ | 23,714,260 | $ | 379,126 | $ | (17,603,323) | $ | 42,080,292
| For the nine months ended September 30, 2019
| 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 | $ | 464,441 | $ | 762,913 | $ | 3,857 | $ | (123) | $ | 1,231,088
Provision (reversal) for credit losses |  | (22,756) |  | 117,407 |  | - |  | - |  | 94,651
Non-interest income |  | 74,481 |  | 220,064 |  | 76,733 |  | (2,252) |  | 369,026
Amortization of intangibles |  | 147 |  | 3,218 |  | 3,145 |  | - |  | 6,510
Depreciation expense |  | 14,615 |  | 21,071 |  | 468 |  | - |  | 36,154
Other operating expenses |  | 229,767 |  | 611,348 |  | 49,076 |  | (2,250) |  | 887,941
Income tax expense |  | 88,353 |  | 19,878 |  | 9,182 |  | - |  | 117,413
Net income | $ | 228,796 | $ | 210,055 | $ | 18,719 | $ | (125) | $ | 457,445
Segment assets | $ | 35,590,229 | $ | 23,714,260 | $ | 379,126 | $ | (17,603,323) | $ | 42,080,292
Geographic Information The following information presents selected financial information based on the geographic location where the Corporation conducts its business. The banking operations of BPPR are primarily based in Puerto Rico, where it has the largest retail banking franchise. BPPR also conducts banking operations in the U.S. Virgin Islands, the British Virgin Islands and New York. BPPR’s banking operations in the United States include E-loan, an online platform used to offer personal loans, co-branded credit cards offerings and an online deposit gathering platform. In the Virgin Islands, the BPPR segment offers banking products, including loans and deposits. During the quarter ended September 30, 2020, the BPPR segment generated approximately $41.7 million (2019 - $40.6 million) in revenues from its operations in the United States, including net interest income, service charges on deposit accounts and other service fees. In addition, the BPPR segment generated $33.5 million in revenues (2019 - $35.9 million) from its operations in the U.S. and British Virgin Islands. At September 30, 2020, total assets for the BPPR segment related to its operations in the United States amounted to $579 million (2019 - $574 million).
Geographic Information |  |  |  |
|  |  | Quarter ended |  | Nine months ended
(In thousands) |  | September 30, 2020 |  | September 30, 2019 |  | September 30, 2020 |  | September 30, 2019
Revenues:[1] |  |  |  |  |  |  |  |
Puerto Rico | $ | 476,863 | $ | 505,608 | $ | 1,418,243 | $ | 1,507,386
United States |  | 95,145 |  | 94,510 |  | 279,246 |  | 278,330
Other |  | 17,780 |  | 19,585 |  | 54,973 |  | 56,022
Total consolidated revenues | $ | 589,788 | $ | 619,703 | $ | 1,752,462 | $ | 1,841,738
[1] | Total revenues include net interest income, service charges on deposit accounts, other service fees, mortgage banking activities, net gain (loss) on sale of debt securities, net gain, including impairment on equity securities, net profit on trading account debt securities, net (loss) gain on sale of loans, including valuation adjustment on loans held-for-sale, adjustments (expense) to indemnity reserves on loans sold, and other operating income.
Selected Balance Sheet Information:
(In thousands) |  | September 30, 2020 |  | December 31, 2019
Puerto Rico |  |  |  |
| Total assets | $ | 54,218,254 | $ | 40,544,255
| Loans |  | 20,548,257 |  | 18,989,286
| Deposits |  | 46,831,116 |  | 34,664,243
United States |  |  |  |
| Total assets | $ | 10,797,883 | $ | 10,693,536
| Loans |  | 8,276,731 |  | 7,819,187
| Deposits |  | 7,662,877 |  | 7,664,792
Other |  |  |  |
| Total assets | $ | 894,232 | $ | 877,533
| Loans |  | 670,282 |  | 657,603
| Deposits[1] |  | 1,527,990 |  | 1,429,571
[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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