Income taxes |
12 Months Ended |
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Dec. 31, 2022 | |
Income Tax Disclosure | |
Income Taxes | Note 35 – Income taxes The components of income tax expense for the years (In thousands) 2022 2021 2020 Current income tax (benefit) expense: Puerto Rico $ 156,425 $ 69,415 $ 33,281 Federal and States 9,034 10,232 3,613 165,459 79,647 36,894 Deferred income tax expense (benefit): Puerto Rico (4,373) 179,688 69,300 Federal and States (28,756) 49,683 5,744 (33,129) 229,371 75,044 Total income tax $ 132,330 $ 309,018 $ 111,938 The reasons amount computed by applying the statutory tax rate 2022 2021 2020 (In thousands) Amount % of pre-tax income Amount % of pre-tax income Amount % of pre-tax income Computed income tax at statutory rates $ 463,114 38 % $ 466,465 38 % $ 231,960 38 % Benefit of net tax exempt interest income (165,065) (13) (139,426) (12) (126,232) (20) Effect of income subject to preferential tax rate (86,797) (7) (11,981) (1) (10,141) (2) Deferred tax asset valuation allowance (21,469) (2) 20,932 2 15,276 2 NOL Adjustments (34,817) (3) - - - - Difference in tax rates due to multiple jurisdictions (26,887) (2) (30,719) (3) (1,903) - Unrecognized tax benefits (1,503) - (5,484) - (2,163) - State and local taxes 14,981 1 14,629 1 4,350 - Others (9,227) (1) (5,398) - 791 - Income tax expense $ 132,330 11 % $ 309,018 25 % $ 111,938 18 % For the year ended December 31, 2022, the Corporation 132.3 309.0 for the asset (“DTA”) valuation allowance of the U.S. operations amounting to $ 68.2 tax rates, primarily attributed to the gain from the Deferred income taxes reflect the financial reporting December 31 were as follows: December 31, 2022 PR US Total Deferred tax assets: Tax credits available $ 261 $ 2,781 $ 3,042 Net operating loss and other carryforward available 121,742 661,144 782,886 Postretirement and pension benefits 47,122 - 47,122 Allowance for credit losses 250,615 32,688 283,303 Accelerated depreciation 5,972 6,309 12,281 FDIC-assisted transaction 152,665 - 152,665 Intercompany deferred gains 1,548 - 1,548 Lease liability 28,290 23,521 51,811 Unrealized net loss on investment securities 265,955 23,913 289,868 Difference in outside basis from pass-through entities 40,602 - 40,602 Other temporary differences 29,285 7,815 37,100 Total gross deferred 944,057 758,171 1,702,228 Deferred tax liabilities: Intangibles 81,174 54,623 135,797 Right of use assets 26,015 20,262 46,277 Deferred loan origination fees/cost 1,076 2,961 4,037 Other temporary differences 24,884 - 24,884 Total gross deferred 133,149 77,846 210,995 Valuation allowance 137,863 402,333 540,196 Net deferred tax asset $ 673,045 $ 277,992 $ 951,037 PR US Total Deferred tax assets: Tax credits available $ 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 689,939 739,551 1,429,490 Deferred tax liabilities: Intangibles 76,635 51,150 127,785 Unrealized net gain on investment 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 153,845 79,346 233,191 Valuation allowance 128,557 410,970 539,527 Net deferred tax asset $ 407,537 $ 249,235 $ 656,772 The net deferred condition as 1.0 0.7 “other assets” caption) and 2.6 825 tax subsidiaries of the Corporation. The deferred tax asset related to the NOLs and (In thousands) 2023 $ 1,363 2024 9,310 2025 13,516 2026 13,367 2027 15,202 2028 260,622 2029 111,307 2030 121,017 2031 122,324 2032 55,335 2033 10,565 2034 5,666 2035 43,121 2036 171 $ 782,886 At December 680.3 $ 402.3 278 by taxing jurisdiction. and 2021 were build-ups and the impairment by a strong economic recovery that resulted in ACL reserve releases, reversing the year 2020 build-up. year ended December 31, 2022, demonstrate financial stability for the of verifiable positive evidence, evaluated in expiration of the NOLs. financial Accordingly, partial release of its 68.2 $ 278 525 asset related 135 expiration dates the deferred tax asset for the remaining carryforward period, together differences. tax initiative, and other factors, including net income credit losses, charge offs, NPLs inflows and NPA balances. At December 31, 2022, the Corporation’s net deferred 673 The Corporation’s years period ended any evidence and such net deferred tax asset of the Puerto Rico The temporary differences, for future years. This that income negative evidence management concluded, as of the reporting date, that it is be able to realize any portion of the deferred maintained a full valuation allowance on the deferred 138 Under the Puerto Rico Internal Revenue Code, the not partnership deduction of 100 % 85 % received from other taxable domestic corporations. The Corporation’s taxes paid is based on tax sharing agreements The following table presents a reconciliation of (In millions) Balance at January 1, 2021 $ 14.8 Reduction as a result of lapse of statute of limitations (11.3) Balance at December 31, 2021 $ 3.5 Reduction as a result of lapse of statute of limitations (1.0) Balance at December 31, 2022 $ 2.5 At 2.6 (2021 - 2.8 268 448 due to the 892 2.9 that, as of report interest related to unrecognized tax benefits in income tax expense, while the penalties, if any, are reported in other operating expenses in the consolidated statements of operations. After consideration benefits, including U.S. approximately $ 4.3 5.5 The amount of current judgment about uncertain tax positions. The political subdivisions, and U.S. anticipates approximately $ 1.5 |