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Segment Reporting
 6 Months Ended
Jun. 30, 2013
Notes to Financial Statements [Abstract]  
Segment Reporting Disclosure [Text Block]

Note 33 – Segment reporting

The Corporation's corporate structure consists of two reportable segments – Banco Popular de Puerto Rico and Banco Popular North America.

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:

Given that Banco Popular de Puerto Rico constitutes a significant portion of the Corporation's results of operations and total assets at June 30, 2013, additional disclosures are provided for the business areas included in this reportable segment, as described below:

  • Commercial banking represents the Corporation's banking operations conducted at BPPR, which are targeted mainly to corporate, small and middle size businesses. It includes aspects of the lending and depository businesses, as well as other finance and advisory services. BPPR allocates funds across business areas based on duration matched transfer pricing at market rates. This area also incorporates income related with the investment of excess funds, as well as a proportionate share of the investment function of BPPR.
  • Consumer and retail banking represents the branch banking operations of BPPR which focus on retail clients. It includes the consumer lending business operations of BPPR, as well as the lending operations of Popular Auto and Popular Mortgage. Popular Auto focuses on auto and lease financing, while Popular Mortgage focuses principally on residential mortgage loan originations. The consumer and retail banking area also incorporates income related with the investment of excess funds from the branch network, as well as a proportionate share of the investment function of BPPR.
  • Other financial services include the trust and asset management service units of BPPR, the brokerage and investment banking operations of Popular Securities, and the insurance agency and reinsurance businesses of Popular Insurance, Popular Insurance V.I., Popular Risk Services, and Popular Life Re. Most of the services that are provided by these subsidiaries generate profits based on fee income.

Banco Popular North America:

Banco Popular North America's reportable segment consists of the banking operations of BPNA, E-LOAN, Popular Equipment Finance, Inc. and Popular Insurance Agency, U.S.A. BPNA operates through a retail branch network in the U.S. mainland, while E-LOAN supports BPNA's deposit gathering through its online platform. All direct lending activities at E-LOAN were ceased during the fourth quarter of 2008. Popular Equipment Finance, Inc. also holds a running-off loan portfolio as this subsidiary ceased originating loans during 2009. Popular Insurance Agency, U.S.A. offers investment and insurance services across the BPNA 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, S.A. The Corporate group also includes the expenses of certain corporate areas that are identified as critical to the organization: Finance, Risk Management and Legal.

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:

2013

For the quarter ended June 30, 2013
  Banco Popular  Banco Popular  Intersegment
(In thousands) de Puerto Rico North America Eliminations
Net interest income$ 314,748$ 67,835$ -
Provision (reversal of provision) for loan losses  255,944  (6,556)  -
Non-interest income   103,331  12,753  -
Amortization of intangibles  1,787  680  -
Depreciation expense  10,306  2,287  -
Other operating expenses  225,726  52,498  -
Income tax (benefit) expense  (235,766)  936  -
Net income $ 160,082$ 30,743$ -
Segment assets$ 27,698,695$ 8,800,354$ (14,051)

For the quarter ended June 30, 2013
  Reportable       
(In thousands) Segments Corporate Eliminations Total Popular, Inc.
Net interest income (expense)$ 382,583$ (26,864)$ -$ 355,719
Provision for loan losses  249,388  20  -  249,408
Non-interest income  116,084  178,614  (1,335)  293,363
Amortization of intangibles  2,467  -  -  2,467
Depreciation expense  12,593  162  -  12,755
Other operating expenses  278,224  16,830  (690)  294,364
Income tax benefit  (234,830)  (2,258)  (292)  (237,380)
Net income$ 190,825$ 136,996$ (353)$ 327,468
Segment assets$ 36,484,998$ 5,443,792$ (5,244,196)$ 36,684,594

For the six months ended June 30, 2013
  Banco Popular  Banco Popular  Intersegment
(In thousands) de Puerto Rico North America Eliminations
Net interest income$ 619,776$ 135,853$ -
Provision (reversal of provision) for loan losses  477,829  (4,545)  -
Non-interest income   119,708  22,824  -
Amortization of intangibles  3,575  1,360  -
Depreciation expense  20,072  4,612  -
Other operating expenses  475,361  107,345  -
Income tax (benefit) expense  (288,631)  1,872  -
Net income $ 51,278$ 48,033$ -

For the six months ended June 30, 2013
  Reportable      
(In thousands)  Segments Corporate Eliminations Total Popular, Inc.
Net interest income (expense)$ 755,629$ (53,597)$ -$ 702,032
Provision (reversal of provision) for loan losses  473,284  (20)  -  473,264
Non-interest income  142,532  186,286  (1,398)  327,420
Amortization of intangibles  4,935  -  -  4,935
Depreciation expense  24,684  325  -  25,009
Other operating expenses  582,706  32,002  (1,368)  613,340
Income tax benefit  (286,759)  (7,391)  (107)  (294,257)
Net income$ 99,311$ 107,773$ 77$ 207,161

2012

For the quarter ended June 30, 2012
  Banco Popular  Banco Popular  Intersegment
(In thousands) de Puerto Rico  North America Eliminations
Net interest income$ 298,636$ 69,555$ -
Provision for loan losses  103,690  15,300  -
Non-interest income   84,416  15,250  -
Amortization of intangibles  1,851  680  -
Depreciation expense  9,237  1,988  -
Loss on early extinguishment of debt  25,072  -  -
Other operating expenses  230,960  55,303  -
Income tax (benefit) expense  (73,724)  936  -
Net income$ 85,966$ 10,598$ -

For the quarter ended June 30, 2012
  Reportable       
(In thousands) Segments Corporate Eliminations Total Popular, Inc.
Net interest income (expense)$ 368,191$ (26,175)$ 163$ 342,179
Provision for loan losses  118,990  209  -  119,199
Non-interest income  99,666  11,005  (1,239)  109,432
Amortization of intangibles  2,531  -  -  2,531
Depreciation expense  11,225  301  -  11,526
Loss on early extinguishment of debt  25,072  -  -  25,072
Other operating expenses  286,263  19,851  (677)  305,437
Income tax benefit  (72,788)  (4,961)  (144)  (77,893)
Net income (loss)$ 96,564$ (30,570)$ (255)$ 65,739

For the six months ended June 30, 2012
  Banco Popular  Banco Popular  Intersegment
(In thousands) de Puerto Rico North America  Eliminations
Net interest income$ 588,938$ 143,630$ -
Provision for loan losses  189,547  30,026  -
Non-interest income   197,955  30,706  -
Amortization of intangibles  3,764  1,360  -
Depreciation expense  18,624  4,017  -
Loss on early extinguishment of debt  25,141  -  -
Other operating expenses  453,317  117,185  -
Income tax (benefit) expense  (56,371)  1,872  -
Net income$ 152,871$ 19,876$ -

For the six months ended June 30, 2012
  Reportable      
(In thousands)  Segments Corporate Eliminations Total Popular, Inc.
Net interest income (expense)$ 732,568$ (52,116)$ 325$ 680,777
Provision for loan losses  219,573  349  -  219,922
Non-interest income  228,661  21,990  (1,293)  249,358
Amortization of intangibles  5,124  -  -  5,124
Depreciation expense  22,641  641  -  23,282
Loss on early extinguishment of debt  25,141  -  -  25,141
Other operating expenses  570,502  35,031  (1,313)  604,220
Income tax benefit  (54,499)  (7,257)  55  (61,701)
Net income (loss)$ 172,747$ (58,890)$ 290$ 114,147

Additional disclosures with respect to the Banco Popular de Puerto Rico reportable segment are as follows:

 

2013

For the quarter ended June 30, 2013
Banco Popular de Puerto Rico
    Consumer Other   Total Banco
  Commercial   and Retail  Financial   Popular de
(In thousands) Banking  Banking  Services Eliminations  Puerto Rico
Net interest income $ 118,716$ 193,548$ 2,484$ -$ 314,748
(Reversal of provision) provision for loan losses  (6,161)  262,105  -  -  255,944
Non-interest (expense) income  19,743  56,218  27,389  (19)  103,331
Amortization of intangibles  1  1,710  76  -  1,787
Depreciation expense  4,864  5,123  319  -  10,306
Other operating expenses  68,463  139,592  17,690  (19)  225,726
Income tax (benefit) expense  (36,883)  (202,573)  3,690  -  (235,766)
Net income $ 108,175$ 43,809$ 8,098$ -$ 160,082
Segment assets$ 11,796,579$ 18,579,730$ 778,833$ (3,456,447)$ 27,698,695

For the six months ended June 30, 2013
Banco Popular de Puerto Rico
    Consumer  Other    Total Banco
  Commercial and Retail  Financial    Popular de
(In thousands)  Banking Banking Services Eliminations Puerto Rico
Net interest income $ 232,519$ 382,701$ 4,556$ -$ 619,776
Provision for loan losses  139,612  338,217  -  -  477,829
Non-interest (expense) income  (45,484)  114,436  50,791  (35)  119,708
Amortization of intangibles  2  3,419  154  -  3,575
Depreciation expense  8,840  10,614  618  -  20,072
Other operating expenses  147,296  293,877  34,223  (35)  475,361
Income tax (benefit) expense  (92,534)  (201,895)  5,798  -  (288,631)
Net (loss) income $ (16,181)$ 52,905$ 14,554$ -$ 51,278

2012

For the quarter ended June 30, 2012
Banco Popular de Puerto Rico
    Consumer  Other    Total Banco
  Commercial  and Retail  Financial    Popular de
(In thousands) Banking Banking Services Eliminations Puerto Rico
Net interest income $ 109,262$ 185,944$ 3,430$ -$ 298,636
Provision for loan losses  42,725  60,965  -  -  103,690
Non-interest (expense) income  (2,263)  56,113  30,606  (40)  84,416
Amortization of intangibles  1  1,710  140  -  1,851
Depreciation expense  4,204  4,797  236  -  9,237
Loss on early extinguishment of debt  7,793  17,279  -  -  25,072
Other operating expenses  74,068  139,297  17,635  (40)  230,960
Income tax (benefit) expense  (30,152)  (47,660)  4,088  -  (73,724)
Net income $ 8,360$ 65,669$ 11,937$ -$ 85,966

For the six months ended June 30, 2012
Banco Popular de Puerto Rico
    Consumer Other    Total Banco
  Commercial   and Retail  Financial   Popular de
(In thousands) Banking Banking  Services Eliminations Puerto Rico
Net interest income $ 209,653$ 372,202$ 7,079$ 4$ 588,938
Provision for loan losses  56,423  133,124  -  -  189,547
Non-interest income  18,634  122,117  57,270  (66)  197,955
Amortization of intangibles  10  3,418  336  -  3,764
Depreciation expense  8,372  9,776  476  -  18,624
Loss on early extinguishment of debt  7,862  17,279  -  -  25,141
Other operating expenses  135,249  283,144  34,990  (66)  453,317
Income tax (benefit) expense  (20,390)  (43,359)  7,376  2  (56,371)
Net income $ 40,761$ 90,937$ 21,171$ 2$ 152,871

Additional disclosures with respect to the Banco Popular North America reportable segments are as follows:

 

2013

For the quarter ended June 30, 2013
Banco Popular North America
(In thousands) Banco Popular North America E-LOAN Eliminations Total Banco Popular North America
Net interest income $ 67,088$ 747$ -$ 67,835
(Reversal of provision) provision for loan losses  (11,329)  4,773  -  (6,556)
Non-interest income (expense)  13,313  (560)  -  12,753
Amortization of intangibles  680  -  -  680
Depreciation expense  2,287  -  -  2,287
Other operating expenses  51,909  589  -  52,498
Income tax expense  936  -  -  936
Net income ( loss)$ 35,918$ (5,175)$ -$ 30,743
Segment assets$ 9,534,310$ 338,430$ (1,072,386)$ 8,800,354

For the six months ended June 30, 2013
Banco Popular North America
  Banco Popular      Total Banco Popular North
(In thousands) North America E-LOAN Eliminations America
Net interest income $ 134,205$ 1,648$ -$ 135,853
(Reversal of provision) provision for loan losses  (9,047)  4,502  -  (4,545)
Non-interest income (expense)  24,522  (1,698)  -  22,824
Amortization of intangibles  1,360  -  -  1,360
Depreciation expense  4,612  -  -  4,612
Other operating expenses  106,077  1,268  -  107,345
Income tax expense  1,872  -  -  1,872
Net income (loss)$ 53,853$ (5,820)$ -$ 48,033

2012

For the quarter ended June 30, 2012
Banco Popular North America
        Total Banco
  Banco Popular      Popular North
(In thousands) North America E-LOAN Eliminations America
Net interest income $ 68,459$ 1,096$ -$ 69,555
Provision for loan losses  13,490  1,810  -  15,300
Non-interest income   14,445  805  -  15,250
Amortization of intangibles  680  -  -  680
Depreciation expense  1,988  -  -  1,988
Other operating expenses  54,523  780  -  55,303
Income tax expense   936  -  -  936
Net income (loss)$ 11,287$ (689)$ -$ 10,598

For the six months ended June 30, 2012
Banco Popular North America
        Total Banco
  Banco Popular      Popular North
(In thousands) North America E-LOAN Eliminations  America
Net interest income $ 142,066$ 1,564$ -$ 143,630
Provision for loan losses  22,886  7,140  -  30,026
Non-interest income  29,737  969  -  30,706
Amortization of intangibles  1,360  -  -  1,360
Depreciation expense  4,017  -  -  4,017
Other operating expenses  115,546  1,639  -  117,185
Income tax expense   1,872  -  -  1,872
Net income (loss)$ 26,122$ (6,246)$ -$ 19,876

Geographic Information     
  Quarter ended Six months ended
(In thousands) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Revenues:[1]        
Puerto Rico $ 551,826$ 346,500$ 837,640$ 717,044
United States  76,181  80,518  151,820  164,242
Other  21,075  24,593  39,992  48,849
Total consolidated revenues $ 649,082$ 451,611$ 1,029,452$ 930,135

[1] Total revenues include net interest income, service charges on deposit accounts, other service fees, net gain (loss) and valuation adjustments of investment securities, trading account profit (loss), net gain (loss) on sale of loans and valuation adjustments on loans held-for-sale, adjustments to indemnity reserves on loans sold, FDIC loss share expense (income) and other operating income.

Selected Balance Sheet Information:
(In thousands) June 30, 2013 December 31, 2012
Puerto Rico    
Total assets$ 26,515,496$ 26,582,248
Loans  18,170,567  18,484,977
Deposits  19,617,123  19,984,830
United States    
Total assets$ 9,045,478$ 8,816,143
Loans  5,984,916  5,852,705
Deposits  6,088,033  6,049,168
Other    
Total assets$ 1,123,620$ 1,109,144
Loans  757,026  755,950
Deposits [1]  1,054,272  966,615
[1] Represents deposits from BPPR operations located in the U.S. and British Virgin Islands.