Income taxes (Tables)

9 Months Ended

Sep. 30, 2022

Components of Deferred Tax Assets and Liabilities

			September 30, 2022
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	261	$	2,781	$	3,042
Net operating loss and other carryforward available			121,840		640,545		762,385
Postretirement and pension benefits			50,997		-		50,997
Deferred loan origination fees/cost			20		-		20
Allowance for credit losses			240,578		34,147		274,725
Accelerated depreciation			5,246		7,367		12,613
FDIC-assisted transaction			152,665		-		152,665
Intercompany deferred gains			1,829		-		1,829
Lease liability			28,747		20,960		49,707
Unrealized net loss on trading and available-for-sale securities			291,285		26,109		317,394
Difference in outside basis from pass-through entities			42,459		-		42,459
Other temporary differences			33,017		8,218		41,235
	Total gross deferred tax assets		968,944		740,127		1,709,071
Deferred tax liabilities:
Indefinite-lived intangibles			79,617		53,778		133,395
Right of use assets			26,499		17,594		44,093
Deferred loan origination fees/cost			574		3,506		4,080
Other temporary differences			38,104		1,529		39,633
	Total gross deferred tax liabilities		144,794		76,407		221,201
Valuation allowance			138,219		444,444		582,663
Net deferred tax asset		$	685,931	$	219,276	$	905,207
			December 31, 2021
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	261	$	2,781	$	3,042
Net operating loss and other carryforward available			112,331		665,164		777,495
Postretirement and pension benefits			57,002		-		57,002
Deferred loan origination fees/cost			2,788		-		2,788
Allowance for credit losses			233,500		31,872		265,372
Deferred gains			1,642		-		1,642
Accelerated depreciation			5,246		7,422		12,668
FDIC-assisted transaction			152,665		-		152,665
Lease liability			31,211		23,894		55,105
Difference in outside basis from pass-through entities			54,781		-		54,781
Other temporary differences			38,512		8,418		46,930
	Total gross deferred tax assets		689,939		739,551		1,429,490
Deferred tax liabilities:
Indefinite-lived intangibles			76,635		51,150		127,785
Unrealized net gain (loss) on trading and available-for-sale securities			4,329		2,817		7,146
Right of use assets			29,025		20,282		49,307
Deferred loan origination fees/cost			-		3,567		3,567
Other temporary differences			43,856		1,530		45,386
	Total gross deferred tax liabilities		153,845		79,346		233,191
Valuation allowance			128,557		410,970		539,527
Net deferred tax asset		$	407,537	$	249,235	$	656,772

Reconciliation of Unrecognized Tax Benefits

(In millions)		2022		2021
Balance at January 1	$	3.5	$	14.8
Balance at March 31	$	3.5	$	14.8
Balance at June 30	$	3.5	$	14.8
Reduction as a result of lapse of statute of limitations - July through September		(1.1)		-
Reduction as a result of settlements - July through September		-		(11.3)
Balance at September 30	$	2.4	$	3.5

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, 2022				September 30, 2021
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	183,893	38	%	$	124,370	38	%
Net benefit of tax exempt interest income		(45,499)	(9)			(34,294)	(10)
Deferred tax asset valuation allowance		3,724	1			3,529	1
Difference in tax rates due to multiple jurisdictions		(7,147)	(2)			(9,600)	(3)
Effect of income subject to preferential tax rate		(109,588)	(22)			(5,441)	(2)
Unrecognized tax benefits		(1,503)	-			(5,484)	(2)
Adjustment due to estimate on the annual effective rate		10,096	2			4,001	1
State and local taxes		3,726	1			6,352	2
Others		30,284	6			109	-
Income tax expense	$	67,986	14	%	$	83,542	25	%

		Nine months ended
		September 30, 2022				September 30, 2021
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	385,567	38	%	$	360,859	38	%
Net benefit of tax exempt interest income		(123,324)	(12)			(105,297)	(11)
Deferred tax asset valuation allowance		9,662	1			19,682	2
Difference in tax rates due to multiple jurisdictions		(20,457)	(2)			(25,429)	(3)
Effect of income subject to preferential tax rate		(116,630)	(11)			(10,175)	(1)
Adjustment due to estimate on the annual effective rate		10,655	1			(6,732)	(1)
Unrecognized tax benefits		(1,503)	-			(5,484)	(1)
State and local taxes		10,957	1			8,943	1
Others		27,750	3			(2,901)	-
Income tax expense	$	182,677	18	%	$	233,466	24	%