XML 35 R24.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

INCOME TAXES | 6 Months Ended
--- | ---
Jun. 30, 2024
INCOME TAXES [Abstract] |
INCOME TAXES | NOTE 16 – INCOME TAXES The Corporation is subject to Puerto Rico income tax on its income from all sources. Under the Puerto Rico Internal Revenue Code, as amended (the “PR Tax Code”), the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns. However, certain subsidiaries that are organized as limited liability companies with a partnership election are treated as pass-through entities for Puerto Rico tax purposes. Furthermore, the Corporation conducts business through certain entities that have special tax treatments, including doing business through an IBE unit of the Bank and through FirstBank Overseas Corporation, each of which are generally exempt from Puerto Rico income taxation under the International Banking Entity Act of Puerto Rico (“IBE Act”), and through a wholly-owned subsidiary that engages in certain Puerto Rico qualified investing and lending activities that have certain tax advantages under Act 60 of 2019. For the second quarter of 2024, the Corporation recorded an income tax expense of $ 25.5 million, compared to $ 30.3 million in the second quarter of 2023. For the first six months of 2024, the Corporation recorded an income tax expense of $ 49.5 million, compared to $ 62.2 million for the same period in 2023. The decrease in income tax expense for the second quarter and first six months of 2024 was mainly driven by a lower effective tax rate as a result of the Corporation engaging in certain business activities with preferential tax treatment under the PR Tax Code during the fourth quarter of 2023 which resulted in a lower effective tax rate for the second half of 2023 and for the year 2024. The Corporation has maintained an effective tax rate lower than the Puerto Rico maximum statutory rate of 37.5 %. The Corporation’s estimated annual effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, was 24.1 % for the first six months of 2024, compared to 30.1 % for the same period in 2023. Income tax expense also includes USVI income taxes, as well as applicable U.S. federal and state taxes. As a Puerto Rico corporation, FirstBank is treated as a foreign corporation for U.S. and USVI income tax purposes and is generally subject to U.S. and USVI income tax only on its income from sources within the U.S. and USVI or income effectively connected with the conduct of a trade or business in those jurisdictions. Such tax paid in the U.S. and USVI is also creditable against the Corporation’s Puerto Rico tax liability, subject to certain conditions and limitations. For the quarter and six-month period ended June 30, 2024, FirstBank incurred current income tax expense of approximately $ 2.9 million and $ 5.1 million, respectively, related to its U.S. operations, compared to $ 1.5 million and $ 4.0 million, respectively, for the comparable periods in 2023. As of June 30, 2024, the Corporation had a net deferred tax asset of $ 142.7 million, net of a valuation allowance of $ 141.1 million against the deferred tax asset, compared to a net deferred tax asset of $ 150.1 million, net of a valuation allowance of $ 139.2 million, as of December 31, 2023. The net deferred tax asset of the Corporation’s banking subsidiary, FirstBank, amounted to $ 142.7 million as of June 30, 2024, net of a valuation allowance of $ 113.2 million, compared to a net deferred tax asset of $ 150.1 million, net of a valuation allowance of $ 111.4 million, as of December 31, 2023. The decrease in the net deferred tax asset was mainly related to the usage of alternative minimum tax credits and the decrease in the ACL. Meanwhile, the increase in the valuation allowance was related primarily to changes in the market value of available-for-sale debt securities which resulted in an equal change in the net deferred tax asset without impacting earnings. The Corporation maintains a full valuation allowance for its deferred tax assets associated with capital loss carryforwards, NOL carryforwards and unrealized losses of available -for-sale debt securities. See Note 22 – “Income Taxes,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K for information on the tax treatment of net operating loss (“NOL”) carryforwards and dividend received deduction under the PR Tax Code and the limitation under Section 382 of the U.S. Internal Revenue Code. The Corporation accounts for uncertain tax positions under the provisions of ASC Topic 740, Income Taxes. The Corporation’s policy is to report interest and penalties related to unrecognized tax positions in income tax expense. As of June 30, 2024, the Corporation had $ 0.2 million of accrued interest and penalties related to uncertain tax positions in the amount of $ 0.8 million that it acquired from BSPR, which, if recognized, would decrease the effective income tax rate in future periods. 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 statute of limitations, changes in management’s judgment about the level of uncertainty, the status of examinations, litigation and legislative activity, and the addition or elimination of uncertain tax positions. The statute of limitations under the PR Tax Code is four years after a tax return is due or filed, whichever is later; the statute of limitations for U.S. and USVI income tax purposes is three years after a tax return is due or filed, whichever is later. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Corporation’s liability for income taxes. Any such adjustment could be material to the results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. For U.S. and USVI income tax purposes, all tax years subsequent to 2019 remain open to examination. For Puerto Rico tax purposes, all tax years subsequent to 2018 remain open to examination.

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 taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: 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 2: 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 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: 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 5: 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 6: 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//1943274/2147482526/740-270-50-1 Reference 7: 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 8: 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 9: 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 10: 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