Income taxes (Tables)

6 Months Ended

Jun. 30, 2020

Components of Deferred Tax Assets and Liabilities

			June 30, 2020
(In thousands)			PR		US		Total
Deferred tax assets:
Tax credits available for carryforward		$	3,003	$	5,269	$	8,272
Net operating loss and other carryforward available			119,928		710,208		830,136
Postretirement and pension benefits			79,712		-		79,712
Deferred loan origination fees			16,926		(2,213)		14,713
Allowance for credit losses			438,379		39,319		477,698
Accelerated depreciation			3,439		4,922		8,361
FDIC-assisted transaction			83,016		-		83,016
Intercompany deferred gains			1,749		-		1,749
Lease liability			23,679		21,832		45,511
Difference in outside basis from pass-through entities			57,001		-		57,001
Other temporary differences			34,366		7,821		42,187
	Total gross deferred tax assets		861,198		787,158		1,648,356
Deferred tax liabilities:
Indefinite-lived intangibles			39,075		38,122		77,197
Unrealized net gain (loss) on trading and available-for-sale securities			79,510		8,465		87,975
Right of use assets			21,607		19,927		41,534
Other temporary differences			13,080		1,180		14,260
	Total gross deferred tax liabilities		153,272		67,694		220,966
Valuation allowance			108,250		406,919		515,169
Net deferred tax asset		$	599,676	$	312,545	$	912,221
			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

Reconciliation of Unrecognized Tax Benefits

(In millions)		2020		2019
Balance at January 1	$	16.3	$	7.2
Additions for tax positions - January through March		-		0.3
Balance at March 31	$	16.3	$	7.5
Additions for tax positions - April through June		-		0.2
Balance at June 30	$	16.3	$	7.7

PUERTO RICO

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

		Quarters ended
		June 30, 2020				June 30, 2019
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	57,096	38	%	$	79,289	38	%
Net benefit of tax exempt interest income		(29,424)	(19)			(30,939)	(15)
Deferred tax asset valuation allowance		2,610	2			1,263	1
Difference in tax rates due to multiple jurisdictions		(4,210)	(3)			(2,756)	(2)
Effect of income subject to preferential tax rate		(2,727)	(2)			(2,287)	(1)
Adjustment due to estimate on the annual effective rate		(2,153)	(2)			419	-
State and local taxes		2,614	2			1,731	1
Others		822	-			(6,390)	(3)
Income tax expense	$	24,628	16	%	$	40,330	19	%

		Six months ended
		June 30, 2020				June 30, 2019
(In thousands)		Amount	% of pre-tax income			Amount	% of pre-tax income
Computed income tax expense at statutory rates	$	71,121	38	%	$	161,094	38	%
Net benefit of tax exempt interest income		(62,320)	(33)			(57,883)	(14)
Deferred tax asset valuation allowance		8,148	4			6,745	2
Difference in tax rates due to multiple jurisdictions		4,665	2			(5,618)	(2)
Effect of income subject to preferential tax rate		(4,627)	(2)			(5,215)	(1)
Adjustment due to estimate on the annual effective rate		6,851	4			(2,711)	(1)
State and local taxes		2,059	1			3,355	1
Others		1,828	1			(9,214)	(2)
Income tax expense	$	27,725	15	%	$	90,553	21	%