Income taxes (Tables)

9 Months Ended

Sep. 30, 2021

Components of Deferred Tax Assets and Liabilities

			September 30, 2021
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	3,718	$	2,781	$	6,499
Net operating loss and other carryforward available			106,024		682,305		788,329
Postretirement and pension benefits			73,189		-		73,189
Deferred loan origination fees			11,251		(3,997)		7,254
Allowance for credit losses			254,120		32,493		286,613
Accelerated depreciation			4,400		7,325		11,725
FDIC-assisted transaction			152,665		-		152,665
Intercompany deferred gains			1,458		-		1,458
Lease liability			27,670		24,757		52,427
Difference in outside basis from pass-through entities			56,358		-		56,358
Other temporary differences			40,689		8,443		49,132
	Total gross deferred tax assets		731,542		754,107		1,485,649
Deferred tax liabilities:
Indefinite-lived intangibles			75,803		50,562		126,365
Unrealized net gain (loss) on trading and available-for-sale securities			35,095		5,882		40,977
Right of use assets			25,564		21,065		46,629
Other temporary differences			52,623		1,507		54,130
	Total gross deferred tax liabilities		189,085		79,016		268,101
Valuation allowance			124,351		417,013		541,364
Net deferred tax asset		$	418,106	$	258,078	$	676,184
			December 31, 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			124,355		698,842		823,197
Postretirement and pension benefits			80,179		-		80,179
Deferred loan origination fees			12,079		(2,652)		9,427
Allowance for credit losses			373,010		38,606		411,616
Accelerated depreciation			3,439		5,390		8,829
FDIC-assisted transaction			152,665		-		152,665
Intercompany deferred gains			1,728		-		1,728
Lease liability			22,790		18,850		41,640
Difference in outside basis from pass-through entities			61,222		-		61,222
Other temporary differences			38,954		7,344		46,298
	Total gross deferred tax assets		873,424		771,649		1,645,073
Deferred tax liabilities:
Indefinite-lived intangibles			73,305		37,745		111,050
Unrealized net gain (loss) on trading and available-for-sale securities			67,003		8,595		75,598
Right of use assets			20,708		15,510		36,218
Other temporary differences			50,247		1,169		51,416
	Total gross deferred tax liabilities		211,263		63,019		274,282
Valuation allowance			112,871		407,225		520,096
Net deferred tax asset		$	549,290	$	301,405	$	850,695

Reconciliation of Unrecognized Tax Benefits

(In millions)		2021		2020
Balance at January 1	$	14.8	$	16.3
Balance at March 31	$	14.8	$	16.3
Balance at June 30	$	14.8	$	16.3
Reduction as a result of lapse of statute of limitations - July through September		(11.3)		(1.5)
Balance at September 30	$	3.5	$	14.8

PR

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, 2021				September 30, 2020
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	124,370	38	%	$	78,594	38	%
Net benefit of tax exempt interest income		(34,294)	(10)			(31,177)	(15)
Deferred tax asset valuation allowance		3,529	1			2,185	1
Difference in tax rates due to multiple jurisdictions		(9,600)	(3)			(2,584)	(1)
Effect of income subject to preferential tax rate		(5,441)	(2)			(3,095)	(2)
Unrecognized tax benefits		(5,484)	(2)			(2,163)	(1)
Adjustment due to estimate on the annual effective rate		4,001	1			(4,030)	(2)
State and local taxes		6,352	2			3,748	2
Others		109	-			(310)	-
Income tax expense	$	83,542	25	%	$	41,168	20	%

		Nine months ended
		September 30, 2021				September 30, 2020
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	360,859	38	%	$	149,715	38	%
Net benefit of tax exempt interest income		(105,297)	(11)			(93,497)	(24)
Deferred tax asset valuation allowance		19,682	2			10,333	3
Difference in tax rates due to multiple jurisdictions		(25,429)	(3)			2,081	1
Effect of income subject to preferential tax rate		(10,175)	(1)			(7,722)	(2)
Adjustment due to estimate on the annual effective rate		(6,732)	(1)			2,821	1
Unrecognized tax benefits		(5,484)	(1)			(2,163)	(1)
State and local taxes		8,943	1			5,807	1
Others		(2,901)	-			1,518	-
Income tax expense	$	233,466	24	%	$	68,893	17	%