Segment reporting

6 Months Ended

Jun. 30, 2022

Segment reporting disclosure

Segment Reporting

Note 32 – Segment reporting

The Corporation’s corporate structure consists of two reportable segments – Banco Popular de Puerto Rico and Popular U.S. Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. The segments were determined based on the organizational structure, which focuses primarily on the markets the segments serve, as well as on the products and services offered by the segments.

Banco Popular de Puerto Rico:

The Banco Popular de Puerto Rico reportable segment includes commercial, consumer and retail banking operations conducted at BPPR. It also includes the lending operations of Popular Auto and Popular Mortgage. Other financial services within the BPPR segment include the trust service units of BPPR, asset management services of Popular Asset Management, the brokerage and investment banking operations of Popular Securities, and the insurance agency and reinsurance businesses of Popular Insurance, Popular Risk Services, Popular Life Re, and Popular Re.

Popular U.S.:

Popular U.S. reportable segment consists of the banking operations of Popular Bank (PB), Popular Insurance Agency, U.S.A., and Popular Equipment Finance (PEF). PB operates through a retail branch network in the U.S. mainland under the name of Popular, and equipment leasing and financing services through PEF. Popular Insurance Agency, U.S.A. offers investment and insurance services across the PB branch network.

The Corporate group consists primarily of the holding companies Popular, Inc., Popular North America, Popular International Bank and certain of the Corporation’s investments accounted for under the equity method, including Evertec and Centro Financiero BHD, León.

The accounting policies of the individual operating segments are the same as those of the Corporation. Transactions between reportable segments are primarily conducted at market rates, resulting in profits that are eliminated for reporting consolidated results of operations.

The tables that follow present the results of operations and total assets by reportable segments:

2022
For the quarter ended June 30, 2022
				Banco Popular				Intersegment
(In thousands)				de Puerto Rico		Popular U.S.		Eliminations
Net interest income			$	447,794	$	93,431	$	1
Provision for credit losses (benefit)				8,818		588		-
Non-interest income				144,377		4,919		(136)
Amortization of intangibles				485		310		-
Depreciation expense				11,675		1,755		-
Other operating expenses				337,979		55,911		(136)
Income tax expense				53,588		11,697		-
Net income			$	179,626	$	28,089	$	1
Segment assets			$	60,435,535	$	10,820,953	$	(172,039)
For the quarter ended June 30, 2022
		Reportable
(In thousands)		Segments		Corporate		Eliminations		Total Popular, Inc.
Net interest income (expense)	$	541,226	$	(7,364)	$	-	$	533,862
Provision for credit losses (benefit)		9,406		(44)		-		9,362
Non-interest income		149,160		11,567		(3,316)		157,411
Amortization of intangibles		795		-		-		795
Depreciation expense		13,430		294		-		13,724
Other operating expenses		393,754		(547)		(1,448)		391,759
Income tax expense (benefit)		65,285		(335)		(738)		64,212
Net income	$	207,716	$	4,835	$	(1,130)	$	211,421
Segment assets	$	71,084,449	$	5,456,518	$	(5,039,036)	$	71,501,931

For the six months ended June 30, 2022
				Banco Popular				Intersegment
(In thousands)				de Puerto Rico		Popular U.S.		Eliminations
Net interest income			$	862,963	$	179,951	$	2
Provision for credit losses (benefit)				(4,872)		(1,431)		-
Non-interest income				280,239		10,873		(273)
Amortization of intangibles				969		717		-
Depreciation expense				23,192		3,579		-
Other operating expenses				672,857		109,550		(272)
Income tax expense				92,904		23,289		-
Net income			$	358,152	$	55,120	$	1
Segment assets			$	60,435,535	$	10,820,953	$	(172,039)
For the six months ended June 30, 2022
		Reportable						Total
(In thousands)		Segments		Corporate		Eliminations		Popular, Inc.
Net interest income (expense)	$	1,042,916	$	(14,742)	$	-	$	1,028,174
Provision for credit losses (benefit)		(6,303)		165		-		(6,138)
Non-interest income		290,839		25,832		(4,568)		312,103
Amortization of intangibles		1,686		-		-		1,686
Depreciation expense		26,771		583		-		27,354
Other operating expenses		782,135		(103)		(2,455)		779,577
Income tax expense (benefit)		116,193		(667)		(835)		114,691
Net income	$	413,273	$	11,112	$	(1,278)	$	423,107
Segment assets	$	71,084,449	$	5,456,518	$	(5,039,036)	$	71,501,931

2021
For the quarter ended June 30, 2021
				Banco Popular				Intersegment
(In thousands)				de Puerto Rico		Popular U.S.		Eliminations
Net interest income			$	419,200	$	78,743	$	1
Provision for credit losses (benefit)				(22,042)		4,856		-
Non-interest income				136,052		5,267		(137)
Amortization of intangibles				860		167		-
Depreciation expense				11,808		1,597		-
Other operating expenses				307,663		48,533		(136)
Income tax expense				63,614		10,163		-
Net income			$	193,349	$	18,694	$	-
Segment assets			$	62,104,522	$	10,197,371	$	(23,954)
For the quarter ended June 30, 2021
		Reportable
(In thousands)		Segments		Corporate		Eliminations		Total Popular, Inc.
Net interest income (expense)	$	497,944	$	(10,142)	$	-	$	487,802
Provision for credit losses (benefit)		(17,186)		171		-		(17,015)
Non-interest income		141,182		15,274		(1,916)		154,540
Amortization of intangibles		1,027		228		-		1,255
Depreciation expense		13,405		265		-		13,670
Other operating expenses		356,060		(1,852)		(948)		353,260
Income tax expense (benefit)		73,777		(313)		(371)		73,093
Net income	$	212,043	$	6,633	$	(597)	$	218,079
Segment assets	$	72,277,939	$	5,407,659	$	(5,028,305)	$	72,657,293

For the six months ended June 30, 2021
				Banco Popular				Intersegment
(In thousands)				de Puerto Rico		Popular U.S.		Eliminations
Net interest income			$	829,523	$	157,912	$	3
Provision for credit losses (benefit)				(67,403)		(31,864)		-
Non-interest income				271,260		10,933		(275)
Amortization of intangibles				1,721		333		-
Depreciation expense				23,951		3,925		-
Other operating expenses				614,583		101,727		(272)
Income tax expense				122,427		28,198		-
Net income			$	405,504	$	66,526	$	-
Segment assets			$	62,104,522	$	10,197,371	$	(23,954)
For the six months ended June 30, 2021
		Reportable						Total
(In thousands)		Segments		Corporate		Eliminations		Popular, Inc.
Net interest income (expense)	$	987,438	$	(20,524)	$	-	$	966,914
Provision for credit losses (benefit)		(99,267)		26		-		(99,241)
Non-interest income		281,918		28,424		(2,149)		308,193
Amortization of intangibles		2,054		252		-		2,306
Depreciation expense		27,876		532		-		28,408
Other operating expenses		716,038		(1,182)		(1,857)		712,999
Income tax expense (benefit)		150,625		(646)		(55)		149,924
Net income	$	472,030	$	8,918	$	(237)	$	480,711
Segment assets	$	72,277,939	$	5,407,659	$	(5,028,305)	$	72,657,293

Geographic Information

The following information presents selected financial information based on the geographic location where the Corporation conducts its business. The banking operations of BPPR are primarily based in Puerto Rico, where it has the largest retail banking franchise. BPPR also conducts banking operations in the U.S. Virgin Islands, the British Virgin Islands and New York. BPPR’s banking operations in the United States include E-loan, an online platform used to offer personal loans, co-branded credit cards offerings, an online deposit gathering platform and commercial lending activities. In the Virgin Islands, the BPPR segment offers banking products, including loans and deposits. During the six months period ended June 30, 2022, the BPPR segment generated approximately $26.1 million (2021 - $25.5 million) in revenues from its operations in the United States, including net interest income, service charges on deposit accounts and other service fees. In addition, the BPPR segment generated $23.0 million in revenues (2021 - $23.4 million) from its operations in the U.S. and British Virgin Islands. At June 30, 2022, total assets for the BPPR segment related to its operations in the United States amounted to $831 million (December 31, 2021 - $595 million).

Geographic Information
			Quarter ended				Six months ended
(In thousands)			June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Revenues:[1]
Puerto Rico		$	560,635	$	529,143	$	1,088,308	$	1,047,852
United States			111,369		95,276		214,543		191,288
Other			19,269		17,923		37,426		35,967
Total consolidated revenues		$	691,273	$	642,342	$	1,340,277	$	1,275,107
[1]	Total revenues include net interest income, service charges on deposit accounts, other service fees, mortgage banking activities, net (loss) gain, including impairment on equity securities, net gain (loss) on trading account debt securities, net loss on sale of loans, including valuation adjustment on loans held-for-sale, adjustments (expense) to indemnity reserves on loans sold, and other operating income.

Selected Balance Sheet Information:
(In thousands)			June 30, 2022		December 31, 2021
Puerto Rico
	Total assets	$	58,506,196	$	63,221,282
	Loans		20,177,693		19,770,118
	Deposits		55,140,193		57,211,608
United States
	Total assets	$	11,651,798	$	10,986,055
	Loans		9,652,668		8,903,493
	Deposits		8,131,590		7,777,232
Other
	Total assets	$	1,343,937	$	890,562
	Loans		569,121		626,115
	Deposits[1]		2,055,881		2,016,248
[1]	Represents deposits from BPPR operations located in the U.S. and British Virgin Islands.