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Segment reporting
 12 Months Ended
Dec. 31, 2021
Segment reporting disclosure  
Segment Reporting Note 37 – 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 December 31, 2021, 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 service units of BPPR, asset management services of Popular Asset Management, 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), Popular Insurance Agency, U.S.A., and Popular Equipment Finance (PEF). PB operates through a retail branch network in the U.S. mainland under the name of Popular, and equipment leasing and financing services through PEF. 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:

December 31, 2021

 

 

 

 

Banco Popular

 

 

 

Intersegment

(In thousands)

 

 

 

de Puerto Rico

 

Popular U.S.

 

Eliminations

Net interest income

 

 

$

1,674,589

$

321,154

$

6

Provision for credit losses (benefit)

 

 

 

(136,352)

 

(56,897)

 

-

Non-interest income

 

 

 

565,310

 

24,518

 

(548)

Amortization of intangibles

 

 

 

2,813

 

665

 

-

Depreciation expense

 

 

 

46,539

 

7,415

 

-

Other operating expenses

 

 

 

1,285,959

 

203,892

 

(544)

Income tax expense

 

 

 

253,479

 

56,538

 

-

Net income

 

 

$

787,461

$

134,059

$

2

Segment assets

 

 

$

64,336,681

$

10,399,066

$

(31,528)

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

Reportable

 

 

 

 

 

Total

(In thousands)

 

Segments

 

Corporate

 

Eliminations

 

Popular, Inc.

Net interest income (expense)

$

1,995,749

$

(38,159)

$

-

$

1,957,590

Provision for credit losses (benefit)

 

(193,249)

 

(215)

 

-

 

(193,464)

Non-interest income

 

589,280

 

56,535

 

(3,687)

 

642,128

Amortization of intangibles

 

3,478

 

5,656

 

-

 

9,134

Depreciation expense

 

53,954

 

1,150

 

-

 

55,104

Other operating expenses

 

1,489,307

 

(545)

 

(3,725)

 

1,485,037

Income tax expense (benefit)

 

310,017

 

(1,085)

 

86

 

309,018

Net income

$

921,522

$

13,415

$

(48)

$

934,889

Segment assets

$

74,704,219

$

5,458,718

$

(5,065,038)

$

75,097,899

December 31, 2020

 

 

 

 

Banco Popular

 

 

 

Intersegment

(In thousands)

 

 

 

de Puerto Rico

 

Popular U.S.

 

Eliminations

Net interest income

 

 

$

1,593,599

$

302,517

$

11

Provision for credit losses

 

 

 

210,955

 

81,486

 

-

Non-interest income

 

 

 

445,893

 

24,285

 

(553)

Amortization of intangibles

 

 

 

5,634

 

665

 

-

Depreciation expense

 

 

 

47,890

 

9,558

 

-

Other operating expenses

 

 

 

1,169,816

 

228,406

 

(544)

Income tax expense

 

 

 

106,211

 

7,411

 

-

Net income (loss)

 

 

$

498,986

$

(724)

$

2

Segment assets

 

 

$

55,353,626

$

10,255,954

$

(33,935)

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

Reportable

 

 

 

 

 

Total

(In thousands)

 

Segments

 

Corporate

 

Eliminations

 

Popular, Inc.

Net interest income (expense)

$

1,896,127

$

(39,514)

$

-

$

1,856,613

Provision for credit losses

 

292,441

 

95

 

-

 

292,536

Non-interest income

 

469,625

 

46,442

 

(3,755)

 

512,312

Amortization of intangibles

 

6,299

 

98

 

-

 

6,397

Depreciation expense

 

57,448

 

1,004

 

-

 

58,452

Other operating expenses

 

1,397,678

 

(1,212)

 

(3,486)

 

1,392,980

Income tax expense (benefit)

 

113,622

 

(1,560)

 

(124)

 

111,938

Net income

$

498,264

$

8,503

$

(145)

$

506,622

Segment assets

$

65,575,645

$

5,214,439

$

(4,864,084)

$

65,926,000

December 31, 2019

 

 

 

 

Banco Popular

 

 

 

Intersegment

(In thousands)

 

 

 

de Puerto Rico

 

Popular U.S.

 

Eliminations

Net interest income

 

 

$

1,633,950

$

295,470

$

(51)

Provision for credit losses

 

 

 

135,495

 

30,028

 

-

Non-interest income

 

 

 

506,739

 

23,160

 

(561)

Amortization of intangibles

 

 

 

8,610

 

664

 

-

Depreciation expense

 

 

 

49,058

 

8,263

 

-

Other operating expenses

 

 

 

1,208,458

 

205,219

 

(547)

Income tax expense

 

 

 

129,145

 

19,164

 

-

Net income

 

 

$

609,923

$

55,292

$

(65)

Segment assets

 

 

$

41,756,864

$

10,056,316

$

(18,576)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

Reportable

 

 

 

 

 

Total

(In thousands)

 

Segments

 

Corporate

 

Eliminations

 

Popular, Inc.

Net interest income (expense)

$

1,929,369

$

(37,675)

$

-

$

1,891,694

Provision for credit losses

 

165,523

 

256

 

-

 

165,779

Non-interest income

 

529,338

 

43,901

 

(3,356)

 

569,883

Amortization of intangibles

 

9,274

 

96

 

-

 

9,370

Depreciation expense

 

57,321

 

746

 

-

 

58,067

Other operating expenses

 

1,413,130

 

55

 

(3,140)

 

1,410,045

Income tax expense (benefit)

 

148,309

 

(1,041)

 

(87)

 

147,181

Net income

$

665,150

$

6,114

$

(129)

$

671,135

Segment assets

$

51,794,604

$

5,228,276

$

(4,907,556)

$

52,115,324

Additional disclosures with respect to the Banco Popular de Puerto Rico reportable segment are as follows:

December 31, 2021

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

$

734,501

$

934,611

$

5,477

$

-

$

1,674,589

Provision for credit losses (benefit)

 

(85,990)

 

(50,362)

 

-

 

-

 

(136,352)

Non-interest income

 

118,126

 

343,125

 

109,018

 

(4,959)

 

565,310

Amortization of intangibles

 

290

 

2,110

 

609

 

(196)

 

2,813

Depreciation expense

 

20,512

 

25,386

 

641

 

-

 

46,539

Other operating expenses

 

377,563

 

818,503

 

91,652

 

(1,759)

 

1,285,959

Income tax expense

 

180,874

 

66,616

 

5,989

 

-

 

253,479

Net income

$

359,378

$

415,483

$

15,604

$

(3,004)

$

787,461

Segment assets

$

64,994,081

$

31,313,708

$

2,038,402

$

(34,009,510)

$

64,336,681

 

December 31, 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

$

653,091

$

927,165

$

13,343

$

-

$

1,593,599

Provision for credit losses

 

47,905

 

163,050

 

-

 

-

 

210,955

Non-interest income

 

100,329

 

249,464

 

97,443

 

(1,343)

 

445,893

Amortization of intangibles

 

197

 

3,609

 

1,828

 

-

 

5,634

Depreciation expense

 

20,488

 

26,746

 

656

 

-

 

47,890

Other operating expenses

 

303,534

 

782,521

 

85,122

 

(1,361)

 

1,169,816

Income tax expense (benefit)

 

104,617

 

(5,934)

 

7,528

 

-

 

106,211

Net income

$

276,679

$

206,637

$

15,652

$

18

$

498,986

Segment assets

$

49,806,766

$

29,000,270

$

2,218,444

$

(25,671,854)

$

55,353,626

December 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

 

Puerto Rico

Net interest income

$

619,926

$

1,009,196

$

4,828

$

-

$

1,633,950

Provision for credit losses (benefit)

 

(46,099)

 

181,594

 

-

 

-

 

135,495

Non-interest income

 

99,758

 

303,268

 

106,218

 

(2,505)

 

506,739

Amortization of intangibles

 

195

 

4,294

 

4,121

 

-

 

8,610

Depreciation expense

 

20,024

 

28,411

 

623

 

-

 

49,058

Other operating expenses

 

309,762

 

835,582

 

65,631

 

(2,517)

 

1,208,458

Income tax expense

 

104,636

 

11,999

 

12,510

 

-

 

129,145

Net income

$

331,166

$

250,584

$

28,161

$

12

$

609,923

Segment assets

$

34,340,842

$

23,976,004

$

380,557

$

(16,940,539)

$

41,756,864

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 year ended December 31, 2021, the BPPR segment generated approximately $50.6 million (2020 - $55.3 million, 2019 - $55.7 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 $45.4 million in revenues (2020 - $44.2 million, 2019 - $47.6 million) from its operations in the U.S. and British Virgin Islands. At December 31, 2021, total assets for the BPPR segment related to its operations in the United States amounted to $589 million (2020 - $627 million).

(In thousands)

 

2021

 

2020

 

2019

 

Revenues:[1]

 

 

 

 

 

 

 

 

Puerto Rico

$

2,136,481

$

1,921,207

$

2,016,089

 

 

United States

 

390,201

 

376,529

 

371,368

 

 

Other

 

73,036

 

71,189

 

74,120

 

Total consolidated revenues

$

2,599,718

$

2,368,925

$

2,461,577

 

[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 (loss) profit on trading account debt securities, net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale, adjustments (expense) to indemnity reserves on loans sold, and other operating income.

Selected Balance Sheet Information

(In thousands)

 

2021

 

2020

 

2019

Puerto Rico

 

 

 

 

 

 

 

Total assets

$

63,221,282

$

54,143,954

$

40,544,255

 

Loans

 

19,770,118

 

20,413,112

 

18,989,286

 

Deposits

 

57,211,608

 

47,586,880

 

34,664,243

United States

 

 

 

 

 

 

 

Total assets

$

10,986,055

$

10,878,030

$

10,693,536

 

Loans

 

8,903,493

 

8,396,983

 

7,819,187

 

Deposits

 

7,777,232

 

7,672,549

 

7,664,792

Other

 

 

 

 

 

 

 

Total assets

$

890,562

$

904,016

$

877,533

 

Loans

 

626,115

 

674,556

 

657,603

 

Deposits [1]

 

2,016,248

 

1,606,911

 

1,429,571

[1]

Represents deposits from BPPR operations located in the U.S. and British Virgin Islands.