Income taxes (Tables)

9 Months Ended

Sep. 30, 2020

Components of Deferred Tax Assets and Liabilities

			September 30, 2020
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	3,003	$	5,269	$	8,272
Net operating loss and other carryforward available			121,842		701,733		823,575
Postretirement and pension benefits			78,175		-		78,175
Deferred loan origination fees			15,410		(2,453)		12,957
Allowance for credit losses			405,681		42,452		448,133
Accelerated depreciation			3,439		4,989		8,428
FDIC-assisted transaction			82,994		-		82,994
Intercompany deferred gains			1,453		-		1,453
Lease liability			23,350		21,287		44,637
Difference in outside basis from pass-through entities			59,348		-		59,348
Other temporary differences			37,883		7,901		45,784
	Total gross deferred tax assets		832,578		781,178		1,613,756
Deferred tax liabilities:
Indefinite-lived intangibles			39,908		37,662		77,570
Unrealized net gain (loss) on trading and available-for-sale securities			74,101		8,793		82,894
Right of use assets			21,266		19,412		40,678
Other temporary differences			13,473		1,182		14,655
	Total gross deferred tax liabilities		148,748		67,049		215,797
Valuation allowance			110,435		406,590		517,025
Net deferred tax asset		$	573,395	$	307,539	$	880,934
			December 31, 2019
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	2,368	$	5,269	$	7,637
Net operating loss and other carryforward available			112,803		716,796		829,599
Postretirement and pension benefits			82,623		-		82,623
Deferred loan origination fees			2,519		(2,759)		(240)
Allowance for loan losses			405,475		10,981		416,456
Accelerated depreciation			3,439		4,914		8,353
FDIC-assisted transaction			82,684		-		82,684
Intercompany deferred gains			1,604		-		1,604
Lease liability			22,694		23,387		46,081
Difference in outside basis from pass-through entities			21,670		-		21,670
Other temporary differences			26,554		7,460		34,014
	Total gross deferred tax assets		764,433		766,048		1,530,481
Deferred tax liabilities:
Indefinite-lived intangibles			37,411		36,058		73,469
Unrealized net gain (loss) on trading and available-for-sale securities			15,635		432		16,067
Right of use assets			20,598		21,430		42,028
Other temporary differences			12,778		1,179		13,957
	Total gross deferred tax liabilities		86,422		59,099		145,521
Valuation allowance			100,175		399,800		499,975
Net deferred tax asset		$	577,836	$	307,149	$	884,985

Reconciliation of Unrecognized Tax Benefits

(In millions)		2020		2019
Balance at January 1	$	16.3	$	7.2
Additions for tax positions - January through March		-		0.3
Balance at March 31	$	16.3	$	7.5
Additions for tax positions - April through June		-		0.2
Balance at June 30	$	16.3	$	7.7
Reduction as a result of lapse of statute of limitations - July through September		(1.5)		-
Balance at September 30	$	14.8	$	7.7

PUERTO RICO

Differences Between Income Tax Expense (Benefit) Applicable to Income Before Income Taxes and Amount Computed by Applying the Statutory Tax Rate in Puerto Rico

		Quarters ended
		September 30, 2020				September 30, 2019
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	78,594	38	%	$	77,508	38	%
Net benefit of tax exempt interest income		(31,177)	(15)			(38,103)	(18)
Deferred tax asset valuation allowance		2,185	1			3,170	1
Difference in tax rates due to multiple jurisdictions		(2,584)	(1)			(4,233)	(2)
Effect of income subject to preferential tax rate		(3,095)	(2)			(2,243)	(1)
Unrecognized tax benefits		(2,163)	(1)			-	-
Adjustment due to estimate on the annual effective rate		(4,030)	(2)			2,711	1
State and local taxes		3,748	2			2,180	1
Others		(310)	-			380	-
Income tax expense	$	41,168	20	%	$	41,370	20	%

		Nine months ended
		September 30, 2020				September 30, 2019
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	149,715	38	%	$	238,602	38	%
Net benefit of tax exempt interest income		(93,497)	(24)			(95,986)	(15)
Deferred tax asset valuation allowance		10,333	3			9,915	2
Difference in tax rates due to multiple jurisdictions		2,081	1			(9,851)	(2)
Effect of income subject to preferential tax rate		(7,722)	(2)			(7,458)	(1)
Adjustment due to estimate on the annual effective rate		2,821	1			-	-
Unrecognized tax benefits		(2,163)	(1)			-	-
State and local taxes		5,807	1			5,535	1
Others		1,518	-			(8,834)	(2)
Income tax expense	$	68,893	17	%	$	131,923	21	%