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SEGMENT INFORMATION
 12 Months Ended
Dec. 31, 2014
SEGMENT INFORMATION [Text Block]

NOTE 31 – SEGMENT INFORMATION

 

Based upon the Corporation's organizational structure and the information provided to the Chief Executive Officer of the Corporation and, to a lesser extent, the Board of Directors, the operating segments are driven primarily by the Corporation's lines of business for its operations in Puerto Rico, the Corporation's principal market, and by geographic areas for its operations outside of Puerto Rico. As of December 31, 2014, the Corporation had six reportable segments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations; and Virgin Islands Operations. Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Others factors such as the Corporation's organizational chart, nature of the products, distribution channels, and the economic characteristics of the product were also considered in the determination of the reportable segments.

 

The Commercial and Corporate Banking segment consists of the Corporation's lending and other services for large customers represented by specialized and middle-market clients and the public sector. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. The Mortgage Banking segment consists of the origination, sale, and servicing of a variety of residential mortgage loans. The Mortgage Banking segment also acquires and sells mortgages in the secondary markets. In addition, the Mortgage Banking segment includes mortgage loans purchased from other local banks and mortgage bankers. The Consumer (Retail) Banking segment consists of the Corporation's consumer lending and deposit-taking activities conducted mainly through its branch network and loan centers. The Treasury and Investments segment is responsible for the Corporation's investment portfolio and treasury functions executed to manage and enhance liquidity. This segment lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending activities and borrows from those segments and from the United States Operations segment. The Consumer (Retail) Banking and the United States Operations segments also lend funds to other segments. The interest rates charged or credited by Treasury and Investments, the Consumer (Retail) Banking, and the United States Operations segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporation's actual net interest income from centralized management of funding costs is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and retail banking services. The Virgin Islands Operations segment consists of all banking activities conducted by the Corporation in the USVI and BVI, including commercial and retail banking services.

 

The accounting policies of the segments are the same as those referred to in Note 1- “Nature of Business and Summary of Significant Accounting Policies.”

 

The Corporation evaluates the performance of the segments based on net interest income, the estimated provision for loan and lease losses, non-interest income, and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest-earning assets less the allowance for loan and lease losses.

 

The following table presents information about the reportable segments:
                     
 Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Banking Treasury and Investments United States Operations Virgin Islands Operations Total
 (In thousands)
For the year ended December 31, 2014:                    
Interest income$ 115,997 $ 215,170 $ 163,242 $ 54,223 $ 44,882 $ 40,435 $ 633,949
Net (charge) credit for transfer of funds  (37,375)   17,629   (12,364)   20,463   11,647   -   -
Interest expense  -   (24,445)   -   (68,517)   (19,273)   (3,641)   (115,876)
Net interest income   78,622   208,354   150,878   6,169   37,256   36,794   518,073
(Provision) release for loan and lease losses  (17,605)   (79,932)   (40,084)   -   27,650   441   (109,530)
Non-interest income (loss)  13,515   40,018   5,241   264   2,450   7,139   68,627
Direct non-interest expenses  (39,444)   (126,290)   (46,963)   (5,368)   (26,596)   (39,319)   (283,980)
Segment income $ 35,088 $ 42,150 $ 69,072 $ 1,065 $ 40,760 $ 5,055 $ 193,190
                     
Average earnings assets$ 2,142,122 $ 1,967,202 $ 3,613,354 $ 2,691,906 $ 976,151 $ 656,197 $ 12,046,932
                     
               
                     

 
                     
 Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Banking Treasury and Investments United States Operations Virgin Islands Operations Total
 (In thousands)
For the year ended December 31, 2013:                    
Interest income$ 109,074 $ 231,077 $ 171,972 $ 55,075 $ 36,999 $ 41,591 $ 645,788
Net (charge) credit for transfer of funds  (37,611)   1,549   (14,280)   41,074   9,268   -   -
Interest expense  -   (27,834)   -   (77,366)   (21,748)   (3,895)   (130,843)
Net interest income  71,463   204,792   157,692   18,783   24,519   37,696   514,945
(Provision) release for loan and lease losses  (89,439)   (54,240)   (101,971)   -   10,709   (8,810)   (243,751)
Non-interest income (loss)  15,826   38,968   3,904   (66,635)   1,284   7,855   1,202
Direct non-interest expenses  (48,941)   (122,560)   (64,611)   (10,629)   (28,554)   (45,680)   (320,975)
Segment (loss) income $ (51,091) $ 66,960 $ (4,986) $ (58,481) $ 7,958 $ (8,939) $ (48,579)
                     
Average earnings assets$ 2,030,120 $ 1,954,307 $ 4,068,942 $ 2,698,559 $ 748,209 $ 664,051 $ 12,164,188

 
                     
 Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Banking Treasury and Investments United States Operations Virgin Islands Operations Total
 (In thousands)
For the year ended December 31, 2012:                    
Interest income$ 110,164 $ 207,001 $ 187,860 $ 46,313 $ 37,376 $ 49,063 $ 637,777
Net (charge) credit for transfer of funds  (48,830)   474   (23,706)   59,970   12,092   -   -
Interest expense  -   (30,904)   -   (111,209)   (29,340)   (4,619)   (176,072)
Net interest income (loss)  61,334   176,571   164,154   (4,926)   20,128   44,444   461,705
(Provision) release for loan and lease losses  (36,553)   (32,924)   (42,940)   -   9,061   (17,143)   (120,499)
Non-interest income (loss)  18,080   33,362   10,140   (1,623)   1,803   6,885   68,647
Direct non-interest expenses  (43,058)   (102,364)   (50,364)   (6,296)   (27,734)   (37,751)   (267,567)
Segment (loss) income $ (197) $ 74,645 $ 80,990 $ (12,845) $ 3,258 $ (3,565) $ 142,286
                     
Average earnings assets$ 2,067,304 $ 1,637,729 $ 4,571,779 $ 2,426,091 $ 727,556 $ 805,720 $ 12,236,179
                     
               
                     

  The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
          
  Year Ended December 31,
  2014 2013 2012
  (In thousands)
          
 Net income (loss) :         
  Total income (loss) for segments and other$ 193,190 $ (48,579) $ 142,286
  Other non-interest loss (1)  (7,279)   (16,691)   (19,256)
  Other operating expenses (2)   (94,273)   (94,053)   (87,316)
  Income (loss) before income taxes  91,638   (159,323)   35,714
  Income tax benefit (expense)  300,649   (5,164)   (5,932)
  Total consolidated net income (loss) $ 392,287 $ (164,487) $ 29,782
 Average assets:        
  Total average earning assets for segments $ 12,046,932 $ 12,164,188 $ 12,236,179
  Other average earning assets (1)  1,943   18,089   36,706
  Average non-earning assets   598,570   630,184   693,489
  Total consolidated average assets$ 12,647,445 $ 12,812,461 $ 12,966,374
  
(1)The activities related to the Bank's equity interest in CPG/GS are presented as an Other non-interest loss and as Other
 average earning assets in the table above.
          
(2)Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically
 attributable to or managed by any segment are not included in the reported financial results of the operating segments.
 The unallocated corporate expenses include certain general and administrative expenses and related depreciation and
 amortization expenses.
          

  The following table presents revenues (interest income plus non-interest income) and selected balance sheet data by geography based on the location in which the transaction is originated:
          
  2014 2013 2012
  (In thousands)
          
 Revenues:        
  Puerto Rico$ 588,744 $ 533,302 $ 579,949
  United States  58,979   47,551   51,271
  Virgin Islands  47,574   49,446   55,948
  Total consolidated revenues$ 695,297 $ 630,299 $ 687,168
          
 Selected Balance Sheet Information:        
 Total assets:        
  Puerto Rico$ 10,969,305 $ 10,993,743 $ 11,421,073
  United States  1,072,962   940,590   913,831
  Virgin Islands  685,568   722,592   764,837
 Loans:        
  Puerto Rico$ 7,706,866 $ 8,173,873 $ 8,706,428
  United States  982,713   865,414   714,234
  Virgin Islands  649,813   672,852   718,846
 Deposits:        
  Puerto Rico (1)$ 6,687,844 $ 7,053,053 $ 7,004,301
  United States  1,836,430   1,895,394   1,921,066
  Virgin Islands  959,671   931,477   939,179
          
(1)For 2014, 2013, and 2012, includes $2.9 billion, $3.1 billion, and $3.4 billion, respectively, of brokered CDs allocated to Puerto Rico operations.