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SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
SEGMENT INFORMATION [Text Block]

NOTE 28 – SEGMENT INFORMATION

 

Based upon the Corporation’s organizational structure and the information provided to the Chief Executive Officer, 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, 2021, the Corporation had six reportable segments: 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 structure 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 products, were also considered in the determination of the reportable segments.

 

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 Corporate 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 other 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 responsible for the Corporation’s investment portfolio and treasury functions that are executed to manage and enhance liquidity. This segment lends funds to the Commercial and Corporate Banking, Mortgage Banking, Consumer (Retail) Banking and United States Operations segments to finance their lending activities and borrows from those segments. The Consumer (Retail) Banking segment also lends funds to other segments. The interest rates charged or credited by Treasury and Investments and the Consumer (Retail) Banking 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 costs 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 Operations 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 Business and Summary of Significant Accounting Policies, in the audited consolidated financial statements, which are included in the 2020 Annual Report on Form 10-K.

 

The Corporation evaluates the performance of the segments based on net interest income, the provision for credit 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 ACL.

The following table presents information about the reportable segments for the indicated periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Mortgage Banking

 

Consumer (Retail) Banking

 

Commercial and Corporate Banking

 

Treasury and Investments

 

United States Operations

 

Virgin Islands Operations

 

Total

For the Quarter Ended September 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

35,722

 

$

68,883

 

$

48,558

 

$

19,342

 

$

20,847

 

$

6,820

 

$

200,172

Net (charge) credit for transfer of funds

 

(9,187)

 

 

13,094

 

 

(2,200)

 

 

(909)

 

 

(798)

 

 

-

 

 

-

Interest expense

 

-

 

 

(6,634)

 

 

-

 

 

(5,677)

 

 

(2,794)

 

 

(324)

 

 

(15,429)

Net interest income

 

26,535

 

 

75,343

 

 

46,358

 

 

12,756

 

 

17,255

 

 

6,496

 

 

184,743

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses - (benefit) expense

 

(10,210)

 

 

6,532

 

 

(8,332)

 

 

(9)

 

 

(1,158)

 

 

1,095

 

 

(12,082)

Non-interest income

 

5,921

 

 

17,544

 

 

3,894

 

 

61

 

 

965

 

 

1,561

 

 

29,946

Direct non-interest expenses

 

6,792

 

 

40,130

 

 

7,916

 

 

803

 

 

8,343

 

 

7,120

 

 

71,104

 

Segment income (loss)

$

35,874

 

$

46,225

 

$

50,668

 

$

12,023

 

$

11,035

 

$

(158)

 

$

155,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earnings assets

$

2,446,111

 

$

2,590,938

 

$

3,655,172

 

$

8,751,623

 

$

2,177,681

 

$

425,872

 

$

20,047,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Mortgage Banking

 

Consumer (Retail) Banking

 

Commercial and Corporate Banking

 

Treasury and Investments

 

United States Operations

 

Virgin Islands Operations

 

Total

For the Quarter Ended September 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

32,293

 

$

60,157

 

$

37,571

 

$

12,572

 

$

20,427

 

$

7,382

 

$

170,402

Net (charge) credit for transfer of funds

 

(11,627)

 

 

3,514

 

 

(1,768)

 

 

11,972

 

 

(2,091)

 

 

-

 

 

-

Interest expense

 

-

 

 

(9,348)

 

 

-

 

 

(5,967)

 

 

(5,418)

 

 

(973)

 

 

(21,706)

Net interest income

 

20,666

 

 

54,323

 

 

35,803

 

 

18,577

 

 

12,918

 

 

6,409

 

 

148,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses expense

 

11,614

 

 

12,404

 

 

19,139

 

 

-

 

 

1,679

 

 

2,078

 

 

46,914

Non-interest income

 

6,756

 

 

12,315

 

 

2,838

 

 

5,457

 

 

1,058

 

 

1,510

 

 

29,934

Direct non-interest expenses

 

7,659

 

 

32,035

 

 

6,251

 

 

717

 

 

8,387

 

 

7,231

 

 

62,280

 

Segment income (loss)

$

8,149

 

$

22,199

 

$

13,251

 

$

23,317

 

$

3,910

 

$

(1,390)

 

$

69,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earnings assets

$

2,243,345

 

$

2,197,601

 

$

3,064,272

 

$

4,725,125

 

$

2,061,596

 

$

466,315

 

$

14,758,254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Mortgage Banking

 

Consumer (Retail) Banking

 

Commercial and Corporate Banking

 

Treasury and Investments

 

United States Operations

 

Virgin Islands Operations

 

Total

Nine-Month Period Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

109,727

 

$

200,853

 

$

153,849

 

$

48,812

 

$

61,830

 

$

21,202

 

$

596,273

Net (charge) credit for transfer of funds

 

(31,621)

 

 

20,050

 

 

(7,012)

 

 

22,216

 

 

(3,633)

 

 

-

 

 

-

Interest expense

 

-

 

 

(22,326)

 

 

-

 

 

(17,650)

 

 

(9,513)

 

 

(993)

 

 

(50,482)

Net interest income

 

78,106

 

 

198,577

 

 

146,837

 

 

53,378

 

 

48,684

 

 

20,209

 

 

545,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses - (benefit) expense

 

(9,966)

 

 

11,285

 

 

(53,263)

 

 

(136)

 

 

(535)

 

 

(874)

 

 

(53,489)

Non-interest income

 

19,174

 

 

51,513

 

 

11,930

 

 

202

 

 

3,008

 

 

4,959

 

 

90,786

Direct non-interest expenses

 

22,314

 

 

124,476

 

 

27,752

 

 

3,164

 

 

25,740

 

 

21,826

 

 

225,272

 

Segment income

$

84,932

 

$

114,329

 

$

184,278

 

$

50,552

 

$

26,487

 

$

4,216

 

$

464,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earnings assets

$

2,555,476

 

$

2,508,777

 

$

3,855,854

 

$

7,535,752

 

$

2,120,144

 

$

438,024

 

$

19,014,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Mortgage Banking

 

Consumer (Retail) Banking

 

Commercial and Corporate Banking

 

Treasury and Investments

 

United States Operations

 

Virgin Islands Operations

 

Total

Nine-Month Period Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

89,353

 

$

174,848

 

$

102,225

 

$

41,631

 

$

63,754

 

$

22,471

 

$

494,282

Net (charge) credit for transfer of funds

 

(34,176)

 

 

19,485

 

 

(15,594)

 

 

34,441

 

 

(4,156)

 

 

-

 

 

-

Interest expense

 

-

 

 

(28,724)

 

 

-

 

 

(20,523)

 

 

(19,659)

 

 

(2,821)

 

 

(71,727)

Net interest income

 

55,177

 

 

165,609

 

 

86,631

 

 

55,549

 

 

39,939

 

 

19,650

 

 

422,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses - expense

 

29,491

 

 

56,254

 

 

51,844

 

 

2,765

 

 

15,944

 

 

6,996

 

 

163,294

Non-interest income

 

14,843

 

 

36,634

 

 

7,673

 

 

13,777

 

 

2,534

 

 

5,565

 

 

81,026

Direct non-interest expenses

 

22,647

 

 

89,659

 

 

19,688

 

 

2,133

 

 

25,221

 

 

21,970

 

 

181,318

 

Segment income (loss)

$

17,882

 

$

56,330

 

$

22,772

 

$

64,428

 

$

1,308

 

$

(3,751)

 

$

158,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earnings assets

$

2,076,419

 

$

2,141,329

 

$

2,684,803

 

$

3,690,782

 

$

2,025,482

 

$

460,217

 

$

13,079,032

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals for the indicated periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine-Month Period Ended

 

 

 

September 30,

 

September 30,

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income for segments

$

155,667

 

$

69,436

 

$

464,794

 

$

158,969

 

Other operating expenses (1)

 

42,932

 

 

45,228

 

 

152,237

 

 

108,160

 

Income before income taxes

 

112,735

 

 

24,208

 

 

312,557

 

 

50,809

 

Income tax expense (benefit)

 

37,057

 

 

(4,405)

 

 

105,171

 

 

(1,326)

 

 

Total consolidated net income

$

75,678

 

$

28,613

 

$

207,386

 

$

52,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average earning assets for segments

$

20,047,397

 

$

14,758,254

 

$

19,014,027

 

$

13,079,032

 

Average non-earning assets

 

1,024,385

 

 

1,047,401

 

 

1,105,223

 

 

975,744

 

 

Total consolidated average assets

$

21,071,782

 

$

15,805,655

 

$

20,119,250

 

$

14,054,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.