SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2024

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

NOTE 25 – SEGMENT INFORMATION

The Corporation’s operating segments are based primarily on 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, 2024, the

Corporation had

six

 reportable segments: Mortgage Banking; Consumer (Retail) Banking; Commercial and Corporate Banking;

Treasury and Investments; United States Operations; and Virgin Islands Operations. The Chief Executive Officer (“CEO”), who is the

designated chief operating decision maker (“CODM”), as ultimate decision maker, evaluates performance and allocates resources

based on financial information provided by management. In determining the reportable segments, the Corporation considers factors

such as the organizational structure, nature of the products, distribution channels, customer relationship management, and economic

characteristics of the business lines. The Corporation evaluates the performance of the segments based on segment income or loss,

which consists of net interest income, the provision for credit losses, non-interest income and non-interest expenses. Segment income

or loss is measured on a pre-tax basis, consistent with the Corporation’s consolidated financial statements under GAAP. The total

segment income or loss equals consolidated pre-tax income or loss, and no adjustments or reconciliations are necessary. The segments

are also evaluated based on the average volume of their interest-earning assets (net of fair value adjustments of investment securities

and the ACL).

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 market. The Consumer (Retail) Banking segment

includes the Corporation’s consumer lending, commercial lending to small businesses, commercial transaction banking, and deposit-

taking activities primarily conducted through its branch network and loan centers. 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 government sector. The Commercial and Corporate Banking segment consists of the Corporation’s commercial lending (other than

small business commercial loans) and commercial deposit-taking activities (other than the government sector). The Treasury and

Investments segment is responsible for the Corporation’s investment portfolio and treasury functions that are executed to manage and

enhance liquidity. Under the Corporation’s fund transfer pricing (“FTP”) methodology, the Treasury and Investments segment

centrally manages funding by providing funds to the Mortgage Banking, Consumer (Retail) Banking, Commercial and Corporate

Banking, United States Operations, and Virgin Islands Operations segments to support their lending activities and compensating these

units for deposits gathered. The mismatch between funds provided and funds used is managed by the Treasury and Investments

segment. The funds transfer pricing charged or credited are calculated using the SOFR/swap curve with term rates, adjusted for a

funding spread that reflects the Corporation’s cost of funds. The methodology, which is performed based on matched maturity

funding, ensures a market-based allocation of funding costs and credits, impacting segment profitability by aligning internal pricing

with external market conditions. The United States Operations segment consists of all banking activities conducted by FirstBank in the

United States mainland, including commercial and consumer banking services. The Virgin Islands Operations segment consists of all

banking activities conducted by the Corporation in the USVI and the BVI, including commercial and consumer banking services.

During the fourth quarter of 2024, the Corporation adopted ASU 2023-07. In addition, as part of the Corporation’s ongoing efforts

to enhance internal reporting, in the fourth quarter of 2024, the Corporation refined its segment performance methodology. These

refinements align with improvements in internal reporting. Key changes included the following:

Support units and Overhead Expense Allocations

 – Previously, support units and corporate overhead expenses were not allocated to

segments due to limitations in identifying appropriate cost drivers. With enhanced granularity in expense drivers, the Corporation

implemented a refined allocation methodology based on specific usage, allowing for a reasonable allocation of these expenses to each

reportable segment. This change resulted in a decrease in segment income across business lines, as expenses that were previously

excluded from segment reporting are now appropriately allocated.

Recharacterization of Certain Business Products and Enhancements to FTP

– Previously, certain commercial and retail business

products were reported under the segment where the product is reported for purposes of credit-risk oversight, rather than the segment

responsible for the customer relationship and overall business results. The shift from commercial products to retail business products

aligns product classification with the business unit managing the customer relationship. Also, the Corporation refined its FTP

methodology to better reflect the cost of funds and transfer pricing mechanics across business lines and recharacterization. These

refinements resulted in adjustments to the FTP charges and credits, improving the comparability of segment results. Specifically, the

Corporation transitioned to a SOFR/swap curve with term rates-based approach, replacing the previous methodology that was based

on historical market rates tied to the portfolio type of each segment. In the aggregate, due to the above, this resulted in lower income

from funds loaned to other business segments in the Consumer (Retail) Banking Segment and a related impact on the remaining

segments. 

To ensure comparability, prior period segment results have been recast to reflect these refinements.

See Note 1 – “Nature of Business and Summary of Significant Accounting Policies” for the accounting policies of the segments and

information related to the adoption of ASU 2023-07.

The following tables present information about the reportable segments for the indicated periods:

Mortgage

Banking

Consumer

(Retail) Banking

Commercial and

Corporate

Banking

Treasury and

Investments

United States

Operations

Virgin Islands

Operations

Total

(In thousands)

Year Ended December 31, 2024

Interest income

$

127,189

$

423,738

$

251,899

$

116,734

$

146,637

$

28,956

$

1,095,153

Net (charge) credit for transfer of funds

(54,734)

284,065

(78,291)

(184,627)

(7,215)

40,802

-

Interest expense

-

(156,983)

(15,936)

(44,258)

(61,434)

(9,063)

(287,674)

Net interest income (loss)

72,455

550,820

157,672

(112,151)

77,988

60,695

807,479

Provision for credit losses - (benefit) expense

(15,526)

95,315

(12,928)

(50)

(6,661)

(229)

59,921

Non-interest income

13,507

96,239

6,996

455

3,589

9,936

130,722

Non-interest expenses:

 Employees' compensation and benefits

27,144

139,176

19,538

3,648

28,203

17,986

235,695

 Occupancy and equipment

5,858

59,478

5,725

739

7,607

9,020

88,427

 Business promotion

1,264

12,331

1,166

727

1,280

877

17,645

 Professional fees

7,638

27,618

4,022

1,313

4,383

4,481

49,455

 Taxes, other than income taxes

1,808

16,702

2,107

407

503

669

22,196

 FDIC deposit insurance

1,832

3,415

2,926

-

962

683

9,818

 Net (gain) loss on OREO operations

(5,553)

(51)

(2,483)

-

(4)

617

(7,474)

 Credit and debit processing expenses

-

23,620

764

-

10

3,206

27,600

 Other non-interest expenses

(1)

2,994

26,159

5,956

2,363

2,640

3,599

43,711

 Total non-interest expenses

42,985

308,448

39,721

9,197

45,584

41,138

487,073

 Segment income (loss)

$

58,503

$

243,296

$

137,875

$

(120,843)

$

42,654

$

29,722

$

391,207

Average interest-earning assets

$

2,134,551

$

4,042,201

$

3,518,554

$

5,850,884

$

2,176,701

$

403,365

$

18,126,256

Mortgage

Banking

Consumer

(Retail) Banking

Commercial and

Corporate

Banking

Treasury and

Investments

United States

Operations

Virgin Islands

Operations

Total

(In thousands)

Year Ended December 31, 2023

Interest income

$

127,154

$

390,619

$

229,217

$

116,382

$

132,490

$

27,624

$

1,023,486

Net (charge) credit for transfer of funds

(51,380)

214,392

(71,813)

(111,433)

(12,830)

33,064

-

Interest expense

-

(120,705)

(15,091)

(36,893)

(48,862)

(4,825)

(226,376)

Net interest income (loss)

75,774

484,306

142,313

(31,944)

70,798

55,863

797,110

Provision for credit losses - (benefit) expense

(7,908)

66,072

(5,997)

20

8,687

66

60,940

Non-interest income

11,213

92,608

11,053

2,125

6,839

8,856

132,694

Non-interest expenses:

 Employees' compensation and benefits

25,463

133,422

17,426

3,354

25,960

17,230

222,855

 Occupancy and equipment

6,015

58,000

4,987

717

6,959

9,233

85,911

 Business promotion

1,446

13,787

1,218

881

1,221

1,073

19,626

 Professional fees

7,054

25,251

3,501

654

4,300

5,081

45,841

 Taxes, other than income taxes

1,382

16,891

1,272

425

552

714

21,236

 FDIC deposit insurance

2,879

5,043

4,311

-

1,524

1,116

14,873

 Net (gain) loss on OREO operations

(7,305)

(58)

96

-

(150)

279

(7,138)

 Credit and debit processing expenses

-

22,258

1,457

-

10

2,272

25,997

 Other non-interest expenses

(1)

2,968

25,878

5,332

2,562

2,393

3,094

42,227

 Total non-interest expenses

39,902

300,472

39,600

8,593

42,769

40,092

471,428

 Segment income (loss)

$

54,993

$

210,370

$

119,763

$

(38,432)

$

26,181

$

24,561

$

397,436

Average interest-earning assets

$

2,149,445

$

3,770,393

$

3,299,209

$

6,186,018

$

2,072,292

$

389,489

$

17,866,846

Mortgage

Banking

Consumer

(Retail) Banking

Commercial and

Corporate

Banking

Treasury and

Investments

United States

Operations

Virgin Islands

Operations

Total

(In thousands)

Year ended December 31, 2022:

Interest income

$

130,844

$

331,558

$

177,526

$

102,991

$

94,782

$

24,913

$

862,614

Net (charge) credit for transfer of funds

(52,746)

161,946

(30,130)

(96,178)

(9,065)

26,173

-

Interest expense

-

(30,301)

(3,620)

(20,777)

(11,549)

(1,074)

(67,321)

Net interest income (loss)

78,098

463,203

143,776

(13,964)

74,168

50,012

795,293

Provision for credit losses - (benefit) expense

(7,936)

54,934

(17,759)

(434)

(3,073)

1,964

27,696

Non-interest income

15,698

88,857

7,274

(161)

3,006

8,418

123,092

Non-interest expenses:

 Employees' compensation and benefits

24,460

120,356

16,841

3,168

24,626

16,587

206,038

 Occupancy and equipment

6,647

58,036

5,449

814

7,141

10,190

88,277

 Business promotion

1,371

12,754

1,061

901

1,104

1,040

18,231

 Professional fees

7,716

25,120

3,990

1,292

4,472

5,258

47,848

 Taxes, other than income taxes

964

17,105

816

370

419

593

20,267

 FDIC deposit insurance

1,346

1,983

1,793

-

565

462

6,149

 Net (gain) loss on OREO operations

(6,391)

27

610

-

(172)

100

(5,826)

 Credit and debit processing expenses

-

19,452

1,292

-

11

1,981

22,736

 Other non-interest expenses

(1)

2,802

23,644

4,619

2,451

2,531

3,338

39,385

 Total non-interest expenses

38,915

278,477

36,471

8,996

40,697

39,549

443,105

 Segment income (loss)

$

62,817

$

218,649

$

132,338

$

(22,687)

$

39,550

$

16,917

$

447,584

Average interest-earning assets

$

2,240,946

$

3,372,309

$

3,165,020

$

7,300,208

$

2,069,030

$

369,591

$

18,517,104

(1)

Consists of communication expenses and the expense categories included in Note 19 - “Other Non-Interest Expenses.”

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals for the indicated periods:

Year Ended December 31,

2024

2023

2022

(In thousands)

Average assets:

Total average interest-earning assets for segments 

$

18,126,256

$

17,866,846

$

18,517,104

Average non-interest-earning assets

(1)

835,100

839,577

861,545

 Total consolidated average assets

$

18,961,356

$

18,706,423

$

19,378,649

(1)

Includes, among other things, non-interest-earning cash, premises and equipment, net deferred tax asset, ROU assets, and accrued interest receivable on loans and investments.

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 was originated as of the indicated dates:

2024

2023

2022

(In thousands)

Revenues:

 Puerto Rico

$

1,036,757

$

980,371

$

854,587

 United States

150,226

139,329

97,788

 Virgin Islands

38,892

36,480

33,331

 Total consolidated revenues

$

1,225,875

$

1,156,180

$

985,706

Selected Balance Sheet Information:

Total assets:

 Puerto Rico

$

16,427,587

$

16,308,000

$

16,020,987

 United States

2,403,379

2,141,427

2,213,333

 Virgin Islands

461,955

460,122

400,164

Loans:

 Puerto Rico

$

10,036,686

$

9,745,872

$

9,097,013

 United States

2,295,234

2,022,261

2,088,351

 Virgin Islands

429,912

424,718

379,767

Deposits:

 Puerto Rico

(1)

$

13,562,227

$

13,429,303

$

12,933,570

 United States

(2)

1,864,772

1,631,402

1,623,725

 Virgin Islands

1,444,299

1,495,280

1,586,172

(1)

For 2024, 2023, and 2022, includes $

33.0

 million, $

420.2

 million, and $

1.4

 million, respectively, of brokered CDs allocated to Puerto Rico operations.

(2)

For 2024, 2023, and 2022, includes $

445.1

 million, $

363.1

 million, and $

104.4

 million, respectively, of brokered CDs allocated to United States operations.