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SEGMENT INFORMATION | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
SEGMENT INFORMATION | NOTE 26 – SEGMENT INFORMATION Based upon the Corporation’s organizational structure and the information provided to the Chief Executive Officer of the Corporation and, to a lesser extent, the Board of Directors, the operating segments are based primarily on the Corporation’s lines of business for its operations in Puerto Rico, the Corporation’s principal market, and by geographic areas for its operations outside of Puerto Rico. As of September 30, 2018, the Corporation had six reportable seg ments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations; and Virgin Islands Operations. Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors, such as the Corporation’s organizational chart, nature of the products, distribution channels, and the economic characteristics of the product, were also considered in the determi nation of the reportable segment. The Commercial and Corporate Banking segment consists of the Corporation’s lending and other services for large customers represented by specialized and middle-market clients and the public sector. The Commercial and Corp orate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. The Mortgage Banking segment consists of the origination, sale, and servicing of a variety of residential mortgage loans. The Mortgage Banking segment also acquires and sells mortgages in the secondary markets. In addition, the Mortgage Banking segment includes mortgage loans purchased from oth er local banks and mortgage bankers. The Consumer (Retail) Banking segment consists of the Corporation’s consumer lending and deposit-taking activities conducted mainly through its branch network and loan centers. The Treasury and Investments segment is r esponsible for the Corporation’s investment portfolio and treasury functions that are executed to manage and enhance liquidity. This segment also lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending resources and borrows from those segments. The Consumer (Retail) Banking and the United States Operations segments also lend funds to the other segments. The interest rates charged or credited by Treasury and Investments, the Cons umer (Retail) Banking, and the United States Operations segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporation’s actual net interest income from centralized management of funding co sts is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and retail banking services. The Virgin Islands Ope rations segment consists of all banking activities conducted by the Corporation in the USVI and BVI, including commercial and retail banking services. The accounting policies of the segments are the same as those referred to in Note 1 – “Nature of Busin ess and Summary of Significant Accounting Policies,” in the audited consolidated financial statements included in the 2017 Annual Report on Form 10-K. The Corporation evaluates the performance of the segments based on net interest income, the provision f or loan and lease losses, non-interest income and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest-earning assets less the allowance for loan and lease losses.
The following table presents information about the reportable segments:
(In thousands) | Mortgage Banking |  | Consumer (Retail) Banking |  | Commercial and Corporate |  | Treasury and Investments |  | United States Operations |  | Virgin Islands Operations |  | Total
For the quarter ended September 30, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income | $ | 31,746 |  | $ | 46,052 |  | $ | 34,644 |  | $ | 15,911 |  | $ | 21,227 |  | $ | 7,912 |  | $ | 157,492
Net (charge) credit for transfer of funds |  | (12,153) |  |  | 20,947 |  |  | (14,933) |  |  | 6,446 |  |  | (307) |  |  | - |  |  | -
Interest expense |  | - |  |  | (7,164) |  |  | - |  |  | (11,075) |  |  | (5,840) |  |  | (892) |  |  | (24,971)
Net interest income |  | 19,593 |  |  | 59,835 |  |  | 19,711 |  |  | 11,282 |  |  | 15,080 |  |  | 7,020 |  |  | 132,521
(Provision) release for loan and lease losses |  | 635 |  |  | 2,485 |  |  | (10,684) |  |  | - |  |  | (5,130) |  |  | 1,170 |  |  | (11,524)
Non-interest income (loss) |  | 4,552 |  |  | 12,323 |  |  | (685) |  |  | 151 |  |  | 624 |  |  | 1,558 |  |  | 18,523
Direct non-interest expenses |  | (12,001) |  |  | (28,210) |  |  | (7,911) |  |  | (878) |  |  | (8,279) |  |  | (7,194) |  |  | (64,473)
Segment income | $ | 12,779 |  | $ | 46,433 |  | $ | 431 |  | $ | 10,555 |  | $ | 2,295 |  | $ | 2,554 |  | $ | 75,047
Average earnings assets | $ | 2,248,691 |  | $ | 1,645,170 |  | $ | 2,486,910 |  | $ | 2,637,825 |  | $ | 1,752,007 |  | $ | 527,468 |  | $ | 11,298,071
(In thousands) | Mortgage Banking |  | Consumer (Retail) Banking |  | Commercial and Corporate |  | Treasury and Investments |  | United States Operations |  | Virgin Islands Operations |  | Total
For the quarter ended September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income | $ | 32,317 |  | $ | 43,769 |  | $ | 31,083 |  | $ | 13,374 |  | $ | 18,446 |  | $ | 9,006 |  | $ | 147,995
Net (charge) credit for transfer of funds |  | (11,268) |  |  | 9,351 |  |  | (8,748) |  |  | 11,198 |  |  | (533) |  |  | - |  |  | -
Interest expense |  | - |  |  | (6,520) |  |  | - |  |  | (12,924) |  |  | (4,932) |  |  | (787) |  |  | (25,163)
Net interest income |  | 21,049 |  |  | 46,600 |  |  | 22,335 |  |  | 11,648 |  |  | 12,981 |  |  | 8,219 |  |  | 122,832
Provision for loan and lease losses |  | (20,495) |  |  | (33,067) |  |  | (13,621) |  |  | - |  |  | (789) |  |  | (7,041) |  |  | (75,013)
Non-interest income |  | 2,908 |  |  | 11,242 |  |  | 1,014 |  |  | 1,459 |  |  | 697 |  |  | 1,325 |  |  | 18,645
Direct non-interest expenses |  | (8,174) |  |  | (27,193) |  |  | (8,102) |  |  | (1,014) |  |  | (7,605) |  |  | (7,254) |  |  | (59,342)
Segment (loss) income | $ | (4,712) |  | $ | (2,418) |  | $ | 1,626 |  | $ | 12,093 |  | $ | 5,284 |  | $ | (4,751) |  | $ | 7,122
Average earnings assets | $ | 2,434,963 |  | $ | 1,758,653 |  | $ | 2,477,266 |  | $ | 2,228,990 |  | $ | 1,581,726 |  | $ | 602,366 |  | $ | 11,083,964
(In thousands) | Mortgage Banking |  | Consumer (Retail) Banking |  | Commercial and Corporate |  | Treasury and Investments |  | United States Operations |  | Virgin Islands Operations |  | Total
Nine-Month Period Ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income | $ | 95,927 |  | $ | 132,652 |  | $ | 102,255 |  | $ | 45,593 |  | $ | 61,634 |  | $ | 24,482 |  | $ | 462,543
Net (charge) credit for transfer of funds |  | (35,027) |  |  | 54,233 |  |  | (43,181) |  |  | 25,125 |  |  | (1,150) |  |  | - |  |  | -
Interest expense |  | - |  |  | (20,863) |  |  | - |  |  | (34,475) |  |  | (16,959) |  |  | (2,561) |  |  | (74,858)
Net interest income |  | 60,900 |  |  | 166,022 |  |  | 59,074 |  |  | 36,243 |  |  | 43,525 |  |  | 21,921 |  |  | 387,685
Provision for loan and lease losses |  | (4,004) |  |  | (16,011) |  |  | (19,744) |  |  | - |  |  | (8,186) |  |  | (3,659) |  |  | (51,604)
Non-interest income |  | 13,302 |  |  | 35,504 |  |  | 2,785 |  |  | 2,600 |  |  | 2,492 |  |  | 5,096 |  |  | 61,779
Direct non-interest expenses |  | (30,192) |  |  | (84,173) |  |  | (22,710) |  |  | (2,777) |  |  | (24,768) |  |  | (22,224) |  |  | (186,844)
Segment income | $ | 40,006 |  | $ | 101,342 |  | $ | 19,405 |  | $ | 36,066 |  | $ | 13,063 |  | $ | 1,134 |  | $ | 211,016
Average earnings assets | $ | 2,269,960 |  | $ | 1,601,812 |  | $ | 2,546,090 |  | $ | 2,597,967 |  | $ | 1,734,970 |  | $ | 546,610 |  | $ | 11,297,409
(In thousands) | Mortgage Banking |  | Consumer (Retail) Banking |  | Commercial and Corporate |  | Treasury and Investments |  | United States Operations |  | Virgin Islands Operations |  | Total
Nine-Month Period Ended September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income | $ | 99,361 |  | $ | 130,055 |  | $ | 90,858 |  | $ | 41,788 |  | $ | 50,910 |  | $ | 27,625 |  | $ | 440,597
Net (charge) credit for transfer of funds |  | (34,466) |  |  | 20,799 |  |  | (27,071) |  |  | 41,858 |  |  | (1,120) |  |  | - |  |  | -
Interest expense |  | - |  |  | (18,603) |  |  | - |  |  | (36,842) |  |  | (13,499) |  |  | (2,368) |  |  | (71,312)
Net interest income |  | 64,895 |  |  | 132,251 |  |  | 63,787 |  |  | 46,804 |  |  | 36,291 |  |  | 25,257 |  |  | 369,285
Provision for loan and lease losses |  | (40,598) |  |  | (47,976) |  |  | (20,906) |  |  | - |  |  | (885) |  |  | (8,186) |  |  | (118,551)
Non-interest income |  | 11,258 |  |  | 37,224 |  |  | 2,972 |  |  | (10,273) |  |  | 1,776 |  |  | 4,480 |  |  | 47,437
Direct non-interest expenses |  | (27,675) |  |  | (82,677) |  |  | (27,240) |  |  | (3,190) |  |  | (23,579) |  |  | (20,922) |  |  | (185,283)
Segment income | $ | 7,880 |  | $ | 38,822 |  | $ | 18,613 |  | $ | 33,341 |  | $ | 13,603 |  | $ | 629 |  | $ | 112,888
Average earnings assets | $ | 2,469,037 |  | $ | 1,771,376 |  | $ | 2,500,180 |  | $ | 2,176,164 |  | $ | 1,492,727 |  | $ | 609,765 |  | $ | 11,019,249
The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
|  |  | Quarter Ended |  | Nine-Month Period Ended
|  |  | September 30, |  | September 30,
|  |  | 2018 |  | 2017 |  | 2018 |  | 2017
Net income : |  |  |  |  |  |  |  |  |  |  |  |
Total income for segments and other |  | $ | 75,047 |  | $ | 7,122 |  | $ | 211,016 |  | $ | 112,888
Other operating expenses (1) |  |  | (26,392) |  |  | (26,272) |  |  | (80,264) |  |  | (77,282)
Income (loss) before income taxes |  |  | 48,655 |  |  | (19,150) |  |  | 130,752 |  |  | 35,606
Income tax (expense) benefit |  |  | (12,332) |  |  | 8,398 |  |  | (30,249) |  |  | 7,181
Total consolidated net income (loss) |  | $ | 36,323 |  | $ | (10,752) |  | $ | 100,503 |  | $ | 42,787
Average assets: |  |  |  |  |  |  |  |  |  |  |  |
Total average earning assets for segments |  | $ | 11,298,071 |  | $ | 11,083,964 |  | $ | 11,297,409 |  | $ | 11,019,249
Average non-earning assets |  |  | 929,362 |  |  | 900,334 |  |  | 945,671 |  |  | 896,071
Total consolidated average assets |  | $ | 12,227,433 |  | $ | 11,984,298 |  | $ | 12,243,080 |  | $ | 11,915,320
(1) | Expenses pertaining to corporate administrative functions that support the operating segment, but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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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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