Components of Deferred Tax Assets and Liabilities

			December 31, 2019
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	2,368	$	5,269	$	7,637
Net operating loss and other carryforward available			112,803		716,796		829,599
Postretirement and pension benefits			82,623		-		82,623
Deferred loan origination fees			2,519		(2,759)		(240)
Allowance for loan losses			405,475		10,981		416,456
Accelerated depreciation			3,439		4,914		8,353
FDIC-assisted transaction			82,684		-		82,684
Intercompany deferred gains			1,604		-		1,604
Lease liability			22,694		23,387		46,081
Difference in outside basis from pass-through entities			21,670		-		21,670
Other temporary differences			26,554		7,460		34,014
	Total gross deferred tax assets		764,433		766,048		1,530,481
Deferred tax liabilities:
Indefinite-lived intangibles			37,411		36,058		73,469
Unrealized net gain (loss) on trading and available-for-sale securities			15,635		432		16,067
Right of use assets			20,598		21,430		42,028
Other temporary differences			12,778		1,179		13,957
	Total gross deferred tax liabilities		86,422		59,099		145,521
Valuation allowance			100,175		399,800		499,975
Net deferred tax asset		$	577,836	$	307,149	$	884,985

			December 31, 2018
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	15,900	$	7,757	$	23,657
Net operating loss and other carryforward available			116,154		720,933		837,087
Postretirement and pension benefits			83,390		-		83,390
Deferred loan origination fees			3,216		(1,280)		1,936
Allowance for loan losses			516,643		18,612		535,255
Deferred gains			-		2,551		2,551
Accelerated depreciation			1,963		5,786		7,749
FDIC-assisted transaction			95,851		-		95,851
Intercompany deferred gains			1,518		-		1,518
Difference in outside basis from pass-through entities			20,209		-		20,209
Other temporary differences			24,957		7,522		32,479
	Total gross deferred tax assets		879,801		761,881		1,641,682
Deferred tax liabilities:
Indefinite-lived intangibles			34,081		39,597		73,678
Unrealized net gain (loss) on trading and available-for-sale securities			23,823		(12,783)		11,040
Other temporary differences			10,579		1,109		11,688
	Total gross deferred tax liabilities		68,483		27,923		96,406
Valuation allowance			89,852		406,455		496,307
Net deferred tax asset		$	721,466	$	327,503	$	1,048,969

Reconciliation of Unrecognized Tax Benefits

(In millions)
Balance at January 1, 2018		$	7.3
Additions for tax positions related to 2018			1.1
Reduction as a result of lapse of statute of limitations			(1.2)
Balance at December 31, 2018		$	7.2
Additions for tax positions related to prior years ^[1]			9.1
Balance at December 31, 2019		$	16.3
[1]	The Corporation recorded a deferred tax asset of $8.7 million associated with the unrecognized tax benefit. Since the uncertainty of the tax position is related to the timing of the tax benefit, it met the more likely than not standard of ASC 740-10-25-6.

Differences Between Income Tax Expense (Benefit) Applicable to Income Before Income Taxes and Amount Computed by Applying the Statutory Tax Rate in Puerto Rico

		2019				2018				2017
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax at statutory rates	$	306,869	38	%	$	287,717	39	%	$	132,020	39	%
Benefit of net tax exempt interest income		(145,597)	(18)			(97,199)	(13)			(76,815)	(23)
Effect of income subject to preferential tax rate^[1]		(9,562)	(1)			(111,738)	(15)			(13,104)	(4)
Deferred tax asset valuation allowance		16,992	2			27,336	4			20,882	6
Difference in tax rates due to multiple jurisdictions		(12,888)	(2)			(16,324)	(3)			(2,217)	(1)
Adjustment in net deferred tax due to change in the applicable tax rate		(6,559)	(1)			27,686	4			168,358	50
Unrecognized tax benefits		-	-			(1,621)	-			(1,185)	-
State and local taxes		4,749	1			8,772	1			4,123	1
Others		(6,823)	(1)			(5,050)	(1)			(1,232)	-
Income tax expense	$	147,181	18	%	$	119,579	16	%	$	230,830	68	%
[1] For the year ended December 31,2018, includes the impact of the Tax Closing Agreement entered into in connection with the Westernbank FDIC-assisted Transaction.