NOTE 26  SEGMENT INFORMATION Based upon the Corporations organizational structure and the information provided to the Chief Executive Officer of the Corporation and, to a lesser extent, the Board of Directors, the operating segments are based primarily on the Corporations lines of business for its operations in Puerto Rico, the Corporations principal market, and by geographic areas for its operations outside of Puerto Rico. As of September 30, 2018 , the Corporation had six reportable seg ments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations; and Virgin Islands Operations. Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors, such as the Corporations organizational chart, nature of the products, distribution channels, and the economic characteristics of the product, were also considered in the determi nation of the reportable segment. The Commercial and Corporate Banking segment consists of the Corporations lending and other services for large customers represented by specialized and middle-market clients and the public sector. The Commercial and Corp orate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. 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 markets. In addition, the Mortgage Banking segment includes mortgage loans purchased from oth er local banks and mortgage bankers. The Consumer (Retail) Banking segment consists of the Corporations consumer lending and deposit-taking activities conducted mainly through its branch network and loan centers. The Treasury and Investments segment is r esponsible for the Corporations investment portfolio and treasury functions that are executed to manage and enhance liquidity. This segment also lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending resources and borrows from those segments. The Consumer (Retail) Banking and the United States Operations segments also lend funds to the other segments. The interest rates charged or credited by Treasury and Investments, the Cons umer (Retail) Banking, and the United States Operations segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporations actual net interest income from centralized management of funding co sts is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and retail banking services. The Virgin Islands Ope rations segment consists of all banking activities conducted by the Corporation in the USVI and BVI, including commercial and retail banking services. The accounting policies of the segments are the same as those referred to in Note 1  Nature of Busin ess and Summary of Significant Accounting Policies, in the audited consolidated financial statements included in the 2017 Annual Report on Form 10-K. The Corporation evaluates the performance of the segments based on net interest income, the provision f or loan and lease losses, non-interest income and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest-earning assets less the allowance for loan and lease losses. The following table presents information about the reportable segments: (In thousands) Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total For the quarter ended September 30, 2018: Interest income $ 31,746 $ 46,052 $ 34,644 $ 15,911 $ 21,227 $ 7,912 $ 157,492 Net (charge) credit for transfer of funds (12,153) 20,947 (14,933) 6,446 (307) - - Interest expense - (7,164) - (11,075) (5,840) (892) (24,971) Net interest income 19,593 59,835 19,711 11,282 15,080 7,020 132,521 (Provision) release for loan and lease losses 635 2,485 (10,684) - (5,130) 1,170 (11,524) Non-interest income (loss) 4,552 12,323 (685) 151 624 1,558 18,523 Direct non-interest expenses (12,001) (28,210) (7,911) (878) (8,279) (7,194) (64,473) Segment income $ 12,779 $ 46,433 $ 431 $ 10,555 $ 2,295 $ 2,554 $ 75,047 Average earnings assets $ 2,248,691 $ 1,645,170 $ 2,486,910 $ 2,637,825 $ 1,752,007 $ 527,468 $ 11,298,071 (In thousands) Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total For the quarter ended September 30, 2017: Interest income $ 32,317 $ 43,769 $ 31,083 $ 13,374 $ 18,446 $ 9,006 $ 147,995 Net (charge) credit for transfer of funds (11,268) 9,351 (8,748) 11,198 (533) - - Interest expense - (6,520) - (12,924) (4,932) (787) (25,163) Net interest income 21,049 46,600 22,335 11,648 12,981 8,219 122,832 Provision for loan and lease losses (20,495) (33,067) (13,621) - (789) (7,041) (75,013) Non-interest income 2,908 11,242 1,014 1,459 697 1,325 18,645 Direct non-interest expenses (8,174) (27,193) (8,102) (1,014) (7,605) (7,254) (59,342) Segment (loss) income $ (4,712) $ (2,418) $ 1,626 $ 12,093 $ 5,284 $ (4,751) $ 7,122 Average earnings assets $ 2,434,963 $ 1,758,653 $ 2,477,266 $ 2,228,990 $ 1,581,726 $ 602,366 $ 11,083,964 (In thousands) Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total Nine-Month Period Ended September 30, 2018 Interest income $ 95,927 $ 132,652 $ 102,255 $ 45,593 $ 61,634 $ 24,482 $ 462,543 Net (charge) credit for transfer of funds (35,027) 54,233 (43,181) 25,125 (1,150) - - Interest expense - (20,863) - (34,475) (16,959) (2,561) (74,858) Net interest income 60,900 166,022 59,074 36,243 43,525 21,921 387,685 Provision for loan and lease losses (4,004) (16,011) (19,744) - (8,186) (3,659) (51,604) Non-interest income 13,302 35,504 2,785 2,600 2,492 5,096 61,779 Direct non-interest expenses (30,192) (84,173) (22,710) (2,777) (24,768) (22,224) (186,844) Segment income $ 40,006 $ 101,342 $ 19,405 $ 36,066 $ 13,063 $ 1,134 $ 211,016 Average earnings assets $ 2,269,960 $ 1,601,812 $ 2,546,090 $ 2,597,967 $ 1,734,970 $ 546,610 $ 11,297,409 (In thousands) Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total Nine-Month Period Ended September 30, 2017 Interest income $ 99,361 $ 130,055 $ 90,858 $ 41,788 $ 50,910 $ 27,625 $ 440,597 Net (charge) credit for transfer of funds (34,466) 20,799 (27,071) 41,858 (1,120) - - Interest expense - (18,603) - (36,842) (13,499) (2,368) (71,312) Net interest income 64,895 132,251 63,787 46,804 36,291 25,257 369,285 Provision for loan and lease losses (40,598) (47,976) (20,906) - (885) (8,186) (118,551) Non-interest income 11,258 37,224 2,972 (10,273) 1,776 4,480 47,437 Direct non-interest expenses (27,675) (82,677) (27,240) (3,190) (23,579) (20,922) (185,283) Segment income $ 7,880 $ 38,822 $ 18,613 $ 33,341 $ 13,603 $ 629 $ 112,888 Average earnings assets $ 2,469,037 $ 1,771,376 $ 2,500,180 $ 2,176,164 $ 1,492,727 $ 609,765 $ 11,019,249 The following table presents a reconciliation of the reportable segment financial information to the consolidated totals: Quarter Ended Nine-Month Period Ended September 30, September 30, 2018 2017 2018 2017 Net income : Total income for segments and other $ 75,047 $ 7,122 $ 211,016 $ 112,888 Other operating expenses (1) (26,392) (26,272) (80,264) (77,282) Income (loss) before income taxes 48,655 (19,150) 130,752 35,606 Income tax (expense) benefit (12,332) 8,398 (30,249) 7,181 Total consolidated net income (loss) $ 36,323 $ (10,752) $ 100,503 $ 42,787 Average assets: Total average earning assets for segments $ 11,298,071 $ 11,083,964 $ 11,297,409 $ 11,019,249 Average non-earning assets 929,362 900,334 945,671 896,071 Total consolidated average assets $ 12,227,433 $ 11,984,298 $ 12,243,080 $ 11,915,320 (1) Expenses pertaining to corporate administrative functions that support the operating segment, but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.