XML 61 R40.htm IDEA: XBRL DOCUMENT
v3.25.2

Income taxes | 6 Months Ended
--- | ---
Jun. 30, 2025
Income Tax Disclosure |
Income Taxes | Note 30 – Income taxes The table below presents a reconciliation of the statutory income tax rate to the effective income tax rate: Quarters ended June 30, 2025 June 30, 2024 (In thousands) Amount % of pre-tax income Amount % of pre-tax income Computed income tax expense at statutory rates $ 96,871 37.5 % $ 81,843 37.5 % Net benefit of tax exempt income (45,374) (17.6) (33,220) (15.2) Effect of income subject to preferential tax rate (606) (0.2) 1,272 0.6 Deferred tax asset valuation allowance 4,050 1.6 (235) (0.1) Difference in tax rates due to multiple jurisdictions (2,282) (0.9) (4,456) (2.1) Other tax benefits - - (4,500) (2.1) State and local taxes 414 0.1 2,204 1.0 Others (5,189) (2.0) (2,449) (1.1) Income tax expense $ 47,884 18.5 % $ 40,459 18.5 % Six months ended June 30, 2025 June 30, 2024 (In thousands) Amount % of pre-tax income Amount % of pre-tax income Computed income tax expense at statutory rates $ 180,333 37.5 % $ 141,412 37.5 % Net benefit of tax exempt income (85,329) (17.7) (61,979) (16.4) Effect of income subject to preferential tax rate (1,519) (0.3) (148) - Deferred tax asset valuation allowance 7,932 1.6 2,328 0.6 Difference in tax rates due to multiple jurisdictions (5,257) (1.1) (5,129) (1.4) Other tax benefits - - (4,500) (1.2) Tax on intercompany distributions [1] - - 24,325 6.4 U.S., States, and local taxes 4,450 0.9 3,240 0.9 Others (7,663) (1.6) (3,522) (0.9) Income tax expense $ 92,947 19.3 % $ 96,027 25.5 % [1] Includes $ 16.5 million of out-of-period adjustment recorded during the first quarter of 2024. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Significant components of the Corporation’s deferred tax assets and liabilities at June 30, 2025, and December 31, 2024, were as follows: June 30, 2025 (In thousands) PR US Total Deferred tax assets: Tax credits available for carryforward $ 4,861 $ 32,925 $ 37,786 Net operating loss and other carryforward available 59,441 594,642 654,083 Postretirement and pension benefits 28,197 - 28,197 Allowance for credit losses 245,070 28,339 273,409 Deferred loan origination fees/cost 3,005 (2,702) 303 Depreciation 7,700 7,551 15,251 FDIC-assisted transaction 152,665 - 152,665 Lease liability 27,417 13,953 41,370 Unrealized net loss on investment securities 202,822 15,914 218,736 Difference in outside basis from pass-through entities 53,043 - 53,043 Mortgage Servicing Rights 14,561 - 14,561 Other temporary differences 36,015 8,743 44,758 Total gross deferred tax assets 834,797 699,365 1,534,162 Deferred tax liabilities: Intangibles 90,392 57,493 147,885 Right of use assets 24,908 12,280 37,188 Loans acquired 17,471 - 17,471 Other temporary differences 7,138 429 7,567 Total gross deferred tax liabilities 139,909 70,202 210,111 Valuation allowance 76,804 386,914 463,718 Net deferred tax asset $ 618,084 $ 242,249 $ 860,333 December 31, 2024 (In thousands) PR US Total Deferred tax assets: Tax credits available for carryforward $ 4,861 $ 24,728 $ 29,589 Net operating loss and other carryforward available 52,211 610,279 662,490 Postretirement and pension benefits 27,786 - 27,786 Allowance for credit losses 247,153 24,415 271,568 Depreciation 7,700 7,229 14,929 FDIC-assisted transaction 152,665 - 152,665 Lease liability 25,167 16,451 41,618 Unrealized net loss on investment securities 252,411 20,996 273,407 Difference in outside basis from pass-through entities 50,144 - 50,144 Mortgage Servicing Rights 14,475 - 14,475 Other temporary differences 41,127 9,072 50,199 Total gross deferred tax assets 875,700 713,170 1,588,870 Deferred tax liabilities: Intangibles 88,351 55,926 144,277 Right of use assets 22,784 14,454 37,238 Deferred loan origination fees/cost (1,880) 2,085 205 Loans acquired 18,415 - 18,415 Other temporary differences 6,799 429 7,228 Total gross deferred tax liabilities 134,469 72,894 207,363 Valuation allowance 69,837 386,914 456,751 Net deferred tax asset $ 671,394 $ 253,362 $ 924,756 The net deferred tax assets shown in the table above at June 30, 2025, is reflected in the Consolidated Statements of Financial Condition as $ 862.1 million in net deferred tax assets in the “Other assets” caption (December 31, 2024 - $ 926.3 million) and $ 1.8 million in deferred tax liabilities in the “Other liabilities” caption (December 31, 2024 - $ 1.6 million), reflecting the aggregate deferred tax assets or liabilities of individual tax-paying subsidiaries of the Corporation in their respective tax jurisdiction, Puerto Rico or the United States. At June 30, 2025, the net deferred tax assets of the U.S. operations amounted to $ 629.1 million with a valuation allowance of $ 386.9 million, for net deferred tax assets after valuation allowance of $ 242.2 million. The Corporation evaluates on a quarterly basis the realization of the deferred tax asset by taxing jurisdiction. The U. S. operations sustained profitability for the last three years and better results than projected for the period ended June 30, 2025. These historical financial results are objectively verifiable positive evidence, evaluated together with the positive evidence of stable credit metrics, in combination with the length of the expiration of the NOLs. On the other hand, the Corporation evaluated the negative evidence accumulated over the years, including financial results lower than expectations and challenges to the economy due to inflationary pressures that could stem from U. S. tariff policies and global geopolitical challenges, in addition to the economic effect of cuts in federal government spending that could negatively impact U. S. operations’ achieving expected pre-tax income levels. As of June 30, 2025, after weighting all positive and negative evidence, the Corporation concluded that it is more likely than not that $ 242.2 million of the deferred tax assets from the U.S. operations, comprised mainly of net operating losses, will be realized. The Corporation based this determination on its estimated earnings available to realize the deferred tax assets for the remaining carryforward period, together with the historical level of book income adjusted by permanent differences. Management will continue to monitor and review the U.S. operation’s results, including recent earnings trends, the pre-tax earnings forecast, any new tax initiative, and other factors, including net income versus forecast, targeted loan growth, net interest income margin, changes in deposit costs, allowance for credit losses, charge offs, non-performing loans held-in-portfolio (“NPLs”) inflows and non-performing asset (“NPA”) balances. Significant changes in these factors or sustainable continuance of financial improvement could impact the future realization of the deferred tax assets. At June 30, 2025, the Corporation’s net deferred tax assets related to its Puerto Rico operations amounted to $ 618.1 million. The Corporation’s Puerto Rico Banking operation has a historical record of profitability. This is considered a strong piece of objectively verifiable positive evidence that outweighs any negative evidence considered by Management in the evaluation of the realization of the deferred tax assets. Based on this evidence and management’s estimate of future taxable income, the Corporation has concluded that it is more likely than not that such net deferred tax assets of the Puerto Rico Banking operations will be realized. The Holding Company operation has been in a cumulative loss position in recent years. Management expects these losses will be a trend in future years. This objectively verifiable negative evidence is considered by Management strong negative evidence that suggests that income in future years will be insufficient to support the realization of all deferred tax assets. After weighting of all positive and negative evidence Management concluded, as of the reporting date, that it is more likely than not that the Holding Company will not be able to realize any portion of the deferred tax assets. Accordingly, the Corporation has maintained a valuation allowance on the deferred tax assets of $ 76.8 million as of June 30, 2025. The reconciliation of unrecognized tax benefits, excluding interest, was as follows: (In millions) 2025 2024 Balance at January 1 $ 1.5 $ 1.5 Balance at March 31 $ 1.5 $ 1.5 Balance at June 30 $ 1.5 $ 1.5 At June 30, 2025, the total amount of accrued interest recognized in the statement of financial condition amounted to $ 2.5 million (December 31, 2024 - $ 2.4 million). Management determined that at June 30, 2025 and December 31, 2024, there was no need to accrue for the payment of penalties. The Corporation’s policy is to report interest related to unrecognized tax benefits in income tax expense, while the penalties, if any, are reported in other operating expenses in the Consolidated Statements of Operations. After consideration of the effect on U.S. federal tax of unrecognized U.S. state tax benefits, the total amount of unrecognized tax benefits that if recognized, would affect the Corporation’s effective tax rate, was $ 3.0 million at June 30, 2025 (December 31, 2024 - $ 3.0 million). The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current tax year positions, expiration of open income tax returns due to the statutes of limitation, changes in Management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the addition or elimination of uncertain tax positions. The Corporation does not anticipate a reduction in the total amount of unrecognized tax benefits within the next 12 months. The Corporation and its subsidiaries file income tax returns in Puerto Rico, the U.S. federal jurisdiction, various U.S. states and political subdivisions, and foreign jurisdictions. At June 30, 2025, the following years remain subject to examination in the U.S. Federal jurisdiction: 2021 and thereafter; and in the Puerto Rico jurisdiction, 2018 and thereafter.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration