XML 27 R12.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Basis of presentation
 6 Months Ended
Jun. 30, 2024
Basis of presentation [Abstract]  
Basis of presentation
Note 2 – Basis of Presentation
 
Basis of Presentation
The (unaudited) interim Consolidated Financial Statements are, in the opinion of management, a fair statement of the results
 
for the
periods reported
 
and include
 
all necessary
 
adjustments, all
 
of a
 
normal recurring
 
nature, for
 
a fair
 
statement of
 
such results.
 
The
consolidated statement of financial
 
condition presented as of
 
December 31, 2023 was
 
derived from audited Consolidated Financial
Statements of the Corporation for the year ended
 
December 31, 2023.
Certain
 
information
 
and
 
notes
 
to
 
the
 
financial
 
statements
 
disclosures
 
which
 
would
 
normally
 
be
 
included
 
in
 
financial
 
statements
prepared in
 
accordance
 
with Accounting
 
Principles
 
Generally Accepted
 
in
 
the
 
United
 
States
 
of
 
America
 
(US
 
GAAP), have
 
been
condensed or omitted from the unaudited financial statements pursuant
 
to the rules and regulations of the
 
Securities and Exchange
Commission.
 
Accordingly,
 
these
 
financial
 
statements
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
audited
 
Consolidated
 
Financial
Statements of
 
the Corporation
 
for the
 
year ended
 
December 31,
 
2023,
 
included in
 
the 2023
 
Form 10-K.
 
Operating results
 
for the
interim periods disclosed herein are not necessarily
 
indicative of the results that may be expected
 
for a full year or any future period
 
Tax impact on Intercompany Distributions
 
The net income for the six months
 
ended June 30, 2024, included $
22.9
 
million of expenses, of which $
16.5
 
million was reflected in
income tax
 
expense and $
6.4
 
million was
 
reflected in
 
other operating expenses,
 
related to an
 
out-of-period adjustment associated
with the
 
Corporation’s U.S. subsidiary’s
 
non-payment of taxes
 
on certain intercompany
 
distributions to the
 
Bank Holding Company
(BHC) in
 
Puerto Rico,
 
a foreign
 
corporation for
 
U.S. tax
 
purposes. The
 
adjustment corrected
 
errors for
 
income tax
 
expense that
should have
 
been recognized
 
of $
5.5
 
million and
 
$
5.4
 
million in
 
the years
 
2023 and
 
2022, respectively,
 
and an
 
aggregate of
 
$
5.6
million, in the years prior to 2022. The $
6.4
 
million recognized as other operating expense corresponded to interest due up to March
31, 2024 on
 
the related late
 
payment of the
 
withholding tax, of which
 
approximately $
3.0
 
million correspond to years
 
prior to 2022.
As a result of this adjustment, the deferred
 
tax asset related to NOL of the BHC
 
and its related valuation allowance was reduced by
$
53.7
 
million.
 
The
 
Corporation
 
evaluated
 
the
 
impact
 
of
 
the
 
out-of-period
 
adjustment
 
and
 
concluded
 
it
 
was
 
not
 
material
 
to
 
any
previously issued interim or
 
annual consolidated financial statements and
 
the adjustment is
 
not expected to be
 
material to the
 
year
ending December 31, 2024.
 
Use of Estimates in the Preparation of Financial Statements
The preparation of financial
 
statements in conformity with
 
accounting principles generally accepted in
 
the United States
 
of America
requires management to make
 
estimates and assumptions that
 
affect the reported
 
amounts of assets and
 
liabilities and contingent
assets
 
and
 
liabilities
 
at
 
the
 
date
 
of
 
the
 
financial
 
statements,
 
and
 
the
 
reported
 
amounts
 
of
 
revenues
 
and
 
expenses
 
during
 
the
reporting period. Actual results could differ from those estimates.