POPULAR INC
10-Ks and 10-Qs
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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended
or
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of Incorporation or
(IRS Employer Identification Number)
organization)
,
(Address of principal executive offices)
(Zip code)
(
)
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
The
NASDAQ Stock Market
The
NASDAQ Stock Market
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange
Act of
1934 during
the preceding
12 months
(or for
such shorter
period that
the registrant
was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X]
[
]
No
Indicate by
check mark
whether the registrant
has submitted
electronically every
Interactive Data
File required to
be
submitted pursuant to
Rule 405 of
Regulation S-T (§
232.405 of this
chapter) during the
preceding 12 months
(or for
such shorter period that the registrant was required to submit such files).
[X]
[
]
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company.
See definitions of “large accelerated filer”, “accelerated
filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer [
]
Non-accelerated filer [
]
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act.
[
]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[
]
Yes
Indicate
the
number
of
shares
outstanding
of
each
of
the
issuer’s
classes
of
common
stock,
as
of
the
latest
practicable date:
Common Stock, $0.01 par value,
2
POPULAR INC
INDEX
Part I – Financial Information
Page
Item 1. Financial Statements
Unaudited Consolidated Statements of Financial Condition
at June 30, 2025
and December 31, 2024
5
Unaudited Consolidated Statements of Operations for
the quarters
and six months ended June 30, 2025 and 2024
6
Unaudited Consolidated Statements of Comprehensive
Income for the
quarters and six months ended June 30, 2025 and
2024
7
Unaudited Consolidated Statements of Changes in
Stockholders’ Equity for the
quarters and six months ended June 30, 2025 and
2024
8
Unaudited Consolidated Statements of Cash Flows for
the six months
ended June 30, 2025 and 2024
10
Notes to Unaudited Consolidated Financial Statements
12
Item 2. Management’s Discussion and Analysis of Financial
Condition and
133
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
178
Item 4. Controls and Procedures
178
Part II – Other Information
Item 1. Legal Proceedings
178
Item 1A. Risk Factors
178
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds
179
Item 3. Defaults Upon Senior Securities
179
Item 4. Mine Safety Disclosures
179
Item 5. Other Information
179
Item 6. Exhibits
179
Signatures
181
3
Forward-Looking Statements
This
Form 10-Q
contains “forward-looking
statements” within
the meaning
of the
U.S. Private
Securities Litigation
Reform Act
of
1995,
including,
without
limitation,
statements
about
Popular,
Inc.’s
(the
“Corporation,”
“Popular,”
“we,”
“us,”
“our”)
business,
financial condition, results
of operations, plans,
objectives and future
performance. These statements
are not
guarantees of future
performance,
are
based
on
management’s
current
expectations
and,
by
their
nature,
involve
risks,
uncertainties,
estimates
and
assumptions. Potential
factors, some
of which
are beyond
the Corporation’s
control, could
cause actual
results to
differ materially
from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect
of competitive and
economic factors, and our
reaction to those factors,
the adequacy of
the allowance for loan
losses, delinquency
trends, market
risk and
the impact
of interest
rate changes
(including on
our cost
of deposits),
capital markets
conditions, capital
adequacy
and
liquidity,
and
the
effect
of
legal
and
regulatory
proceedings
and
new
accounting
standards
on
the
Corporation’s
financial condition
and results
of operations.
All statements
contained herein
that
are not
clearly
historical in
nature are
forward-
looking, and the words “anticipate,” “believe,” “continues,”
“expect,” “estimate,” “intend,” “project” and similar expressions
and future
or conditional verbs
such as
“will,” “would,” “should,”
“could,” “might,” “can,”
“may” or similar
expressions are
generally intended to
identify forward-looking statements.
Various factors, some of which
are beyond Popular’s control, could cause actual results to differ materially from those expressed in,
or implied by, such forward-looking statements. Factors that might cause such a
difference include, but are not limited to:
●
conditions
in
the
geographic
areas
we
serve
and,
in
particular,
in
the
Commonwealth
of
Puerto
Rico
(the
“Commonwealth” or “Puerto Rico”), where a significant
portion of our business is concentrated;
●
consumer confidence
and spending
habits which
may affect
in turn,
among other
things, our
level of
non-performing
assets, charge-offs and provision expense;
●
originations, affect
our ability
to originate
and distribute
financial products
in the
primary and
secondary markets
and
impact the value of our investment portfolio and
our ability to return capital to our stockholders;
●
banking industry in general on investor and depositor
sentiment regarding the stability and liquidity of
banks;
●
Puerto
Rico
Government
and
the
Federally-appointed
oversight
board
on
the
economy,
our
customers
and
our
business;
●
difficult
to
predict
and
may
be
impacted
by
factors
such
as
the
amount
of
Federal
funds
received
by
the
P.R.
Government
and
the
rate
of
expenditure
of
such
funds,
as
well
as
the
financial
condition,
liquidity
and
cash
management practices of the Puerto Rico Government
and its instrumentalities;
●
man-made disasters, acts of violence or war or
pandemics, epidemics and other health-related
crises, or the fear of any
such event
occurring, any of
which could cause
adverse consequences for
our business, including,
but not
limited to,
disruptions in our operations;
●
earnings, efficiencies and
return on tangible
common equity and
accurately anticipate costs
and expenses associated
therewith;
●
4
●
related requirements and the impact of other proposed
capital standards on our capital ratios;
●
examination and enforcement priorities of the federal
administration;
●
assessment implemented
by the
FDIC to
recover the
losses to
the deposit
insurance fund
(“DIF”) resulting
from the
receiverships of Silicon Valley Bank and Signature Bank;
●
as acquisitions and dispositions;
●
Puerto Rico and the other markets in which
our borrowers are located;
●
●
●
●
●
core financial
transaction processing and
information technology services,
or of
third parties
providing services
to us,
including
as
a
result
of
cyberattacks,
e-fraud,
denial-of-services
and
computer
intrusion,
resulting
in,
among
other
things, loss or breach of customer data, disruption
of services, reputational damage or additional
costs to Popular;
●
●
pending or future litigation and regulatory or government
investigations or actions;
●
●
●
●
Moreover, the
outcome of any
legal and
regulatory proceedings, as
discussed in “Part
II, Item
1. Legal Proceedings,”
is inherently
uncertain and depends on judicial interpretations of law and the findings of regulators, judges and/or juries. Investors should refer to
the Corporation’s Annual
Report on Form
10-K for the
year ended December 31,
2024 (the “2024
Form 10-K”), as
well as “Part
II,
Item 1A” of our Quarterly
Report on this Form 10-Q for
a discussion of such factors and
certain risks and uncertainties to which the
Corporation is subject.
All forward-looking
statements included
in this
Form 10-Q
are based
upon information
available to
Popular as
of the
date of
this
Form 10-Q, and other than as
required by law, including the
requirements of applicable securities laws, we assume no
obligation to
update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date
of such statements.
5
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION
(UNAUDITED)
[UNAUDITED]
June 30,
December 31,
(In thousands, except share information)
2025
2024
Assets:
Cash and due from banks
$
$
Money market investments:
Time deposits with other banks
Total money market investments
Trading account debt securities, at fair value
Debt securities available-for-sale, at fair
value:
Pledged securities with creditors’ right to repledge
Other debt securities available-for-sale
Debt securities available-for-sale
Debt securities held-to-maturity, at amortized cost:
Pledged securities with creditors’ right to repledge
Other debt securities held-to-maturity
Debt securities held-to-maturity (fair
value 2025 - $
; 2024 - $
)
Less – Allowance for credit losses
Debt securities held-to-maturity, net
Equity securities (realizable value 2025 -
$
; 2024 - $
)
Loans held-for-sale, at fair value
Loans held-in-portfolio
Less – Unearned income
Total loans held-in-portfolio, net
Premises and equipment, net
Other real estate
Accrued income receivable
Mortgage servicing rights, at fair value
Other assets
Goodwill
Other intangible assets
Total assets
$
$
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing
$
$
Interest bearing
Total deposits
Assets sold under agreements to repurchase
Other short-term borrowings
Notes payable
Other liabilities
Total liabilities
Commitments and contingencies (Refer
to Note 20)
Stockholders’ equity:
Preferred stock,
)
Common stock, $
) and
)
Surplus
Retained earnings
Treasury stock - at cost,
)
(
2,455,425
)
(
2,228,535
)
Accumulated other comprehensive loss, net
of tax
(
1,395,657
)
(
1,661,240
)
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
The accompanying notes are an integral part of
these Consolidated Financial Statements.
6
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
Quarters ended June 30,
Six months ended June 30,
(In thousands, except per share information)
2025
2024
2025
2024
Interest income:
Loans
$
$
$
$
Money market investments
Investment securities
Total interest income
Interest expense:
Deposits
Short-term borrowings
Long-term debt
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Non-interest income:
Service charges on deposit accounts
Other service fees
Mortgage banking activities (Refer to Note 9)
Net gain, including impairment on equity securities
Net gain on trading account debt securities
Adjustments to indemnity reserves on loans sold
(
25
)
Other operating income
Total non-interest income
Operating expenses:
Personnel costs
Net occupancy expenses
Equipment expenses
Other taxes
Professional fees
Technology and software expenses
Processing and transactional services
Communications
Business promotion
Deposit insurance
Other real estate owned (OREO) income
(
4,124
)
(
5,750
)
(
7,454
)
(
11,071
)
Other operating expenses
Amortization of intangibles
Total operating expenses
Income before income tax
Income tax expense
Net Income
$
$
$
$
Net Income Applicable to Common Stock
$
$
$
$
Net Income per Common Share – Basic
$
$
$
$
Net Income per Common Share – Diluted
$
$
$
$
The accompanying notes are an integral part of
these Consolidated Financial Statements.
7
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
(UNAUDITED)
Quarters ended,
Six months ended,
June 30,
June 30,
(In thousands)
2025
2024
2025
2024
Net income
$
$
$
$
Other comprehensive income (loss) before
tax:
Foreign currency translation adjustment
(
3,855
)
Amortization of net losses of pension and
postretirement benefit plans
Unrealized holding gains (losses) on debt securities
arising during the period
(
50,608
)
Amortization of unrealized losses of debt
securities transfer from available-for-
sale to held-to-maturity
Other comprehensive income before tax
Income tax expense
(
20,655
)
(
15,722
)
(
56,325
)
(
23,954
)
Total other comprehensive income, net of tax
Comprehensive income, net of tax
$
$
$
$
Tax effect allocated to each component of other comprehensive
income:
Quarters ended
Six months ended,
June 30,
June 30,
(In thousands)
2025
2024
2025
2024
Amortization of net losses of pension and
postretirement benefit plans
$(
852
)
$(
1,357
)
$(
1,704
)
$(
2,714
)
Unrealized holding losses on debt securities
arising during the period
(
10,555
)
(
5,481
)
(
36,311
)
(
3,555
)
Amortization of unrealized losses of debt
securities transfer from available-for-
sale to held-to-maturity
(
9,248
)
(
8,884
)
(
18,310
)
(
17,685
)
Income tax expense
$
(
20,655
)
$
(
15,722
)
$
(
56,325
)
$
(
23,954
)
The accompanying notes are an integral
part of the Consolidated Financial Statements.
8
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Accumulated
other
Common
Preferred
Retained
Treasury
comprehensive
(In thousands)
stock
stock
Surplus
earnings
stock
loss
Total
Balance at March 31, 2024
$
$
$
$
$
(
2,013,187
)
$
(
1,933,186
)
$
Net income
Issuances of common stock
Dividends declared:
Common stock
[1]
(
44,944
)
(
44,944
)
Preferred stock
(
353
)
(
353
)
Common stock purchases
(
3,200
)
(
3,200
)
Stock based compensation
Other comprehensive income, net of tax
Balance at June 30, 2024
$
$
$
$
$
(
2,010,500
)
$
(
1,878,282
)
$
Balance at March 31, 2025
$
$
$
$
$
(
2,346,093
)
$
(
1,489,987
)
$
Net income
Issuances of common stock
Dividends declared:
Common stock
[1]
(
47,826
)
(
47,826
)
Preferred stock
(
353
)
(
353
)
Common stock purchases
[2]
(
117,075
)
(
117,075
)
Stock based compensation
Other comprehensive income, net of tax
Balance at June 30, 2025
$
$
$
$
$
(
2,455,425
)
$
(
1,395,657
)
$
[1]
Dividends declared per common share during the quarter
ended June 30, 2025 - $
0 (2024 - $
).
[2]
Includes common stock repurchases
of $
.0 million as part of
a repurchase authorization up
to $
July 24, 2024 (the "2024 Repurchase Program"). Refer to Note
17 for additional information.
9
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Accumulated
other
Common
Preferred
Retained
Treasury
comprehensive
(In thousands)
stock
stock
Surplus
earnings
stock
loss
Total
Balance at December 31, 2023
$
$
$
$
$
(
2,018,957
)
$
(
1,895,531
)
$
Net income
Issuances of common stock
Dividends declared:
Common stock
[1]
(
89,695
)
(
89,695
)
Preferred stock
(
706
)
(
706
)
Common stock purchases
(
6,776
)
(
6,776
)
Stock based compensation
Other comprehensive income, net of tax
Balance at June 30, 2024
$
$
$
$
$
(
2,010,500
)
$
(
1,878,282
)
$
Balance at December 31, 2024
$
$
$
$
$
(
2,228,535
)
$
(
1,661,240
)
$
Net income
Issuances of common stock
Dividends declared:
Common stock
[1]
(
96,235
)
(
96,235
)
Preferred stock
(
706
)
(
706
)
Common stock purchases
[2]
(
243,055
)
(
243,055
)
Stock based compensation
Other comprehensive income, net of tax
Balance at June 30, 2025
$
$
$
$
$
(
2,455,425
)
$
(
1,395,657
)
$
[1]
Dividends declared per common share during the six months
ended June 30, 2025 - $
).
[2]
Includes common stock repurchases of $
For the six months ended
June 30,
June 30,
Disclosure of changes in number of shares:
2025
2024
Preferred Stock:
Balance at beginning and end of period
Common Stock – Issued:
Balance at beginning of period
Issuances of common stock
Balance at end of period
Treasury stock
(
36,951,712
)
(
32,446,045
)
Common Stock – Outstanding
The accompanying notes are an integral part of these Consolidated
Financial Statements.
10
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(UNAUDITED)
Six months ended June 30,
(In thousands)
2025
2024
Cash flows from operating activities:
Net income
$
$
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for credit losses
Amortization of intangibles
Depreciation and amortization of premises and equipment
Net accretion of discounts and amortization of premiums and
deferred fees
(
136,208
)
(
127,770
)
Interest capitalized on loans subject to the temporary payment
moratorium or loss mitigation alternatives
(
2,822
)
(
4,047
)
Share-based compensation
Fair value adjustments on mortgage servicing rights
Adjustments to indemnity reserves on loans sold
(
293
)
Earnings from investments under the equity method, net
of dividends or distributions
(
2,871
)
Deferred income tax expense
Gain on:
Disposition of premises and equipment and other productive
assets
(
91
)
(
6,295
)
Sale of loans, including valuation adjustments on loans
held-for-sale and mortgage banking activities
(
156
)
(
76
)
Sale of equity method investment
(
1,226
)
Sale of foreclosed assets, including write-downs
(
5,076
)
(
10,575
)
Acquisitions of loans held-for-sale
(
2,332
)
(
1,767
)
Proceeds from sale of loans held-for-sale
Net originations on loans held-for-sale
(
12,137
)
(
22,580
)
Net decrease (increase) in:
Trading debt securities
Equity securities
(
1,411
)
(
4,445
)
Accrued income receivable
(
11,419
)
(
17,340
)
Other assets
(
19,371
)
(
8,463
)
Net increase (decrease) in:
Interest payable
Pension and other postretirement benefits obligation
Other liabilities
(
59,481
)
Total adjustments
(
39,068
)
Net cash provided by operating activities
Cash flows from investing activities:
Net decrease in money market investments
Purchases of investment securities:
Available-for-sale
(
18,905,199
)
(
17,231,900
)
Equity
(
25,811
)
(
1,667
)
Proceeds from calls, paydowns, maturities and redemptions
of investment securities:
Available-for-sale
Held-to-maturity
Proceeds from sale of investment securities:
Equity
Net disbursements
on loans
(
912,037
)
(
287,684
)
Proceeds from sale of loans
Acquisition of loan portfolios
(
319,297
)
(
384,479
)
Return of capital from equity method investments
Net proceeds from sale of equity method investment
Acquisition of premises and equipment and other productive
assets
(
96,200
)
(
95,412
)
Proceeds from sale of:
Premises and equipment and other productive assets
Foreclosed assets
Net cash used in investing activities
(
2,664,595
)
(
2,087,772
)
11
Cash flows from financing activities:
Net increase in:
Deposits
Assets sold under agreements to repurchase
Other short-term borrowings
Payments of notes payable
(
88,522
)
(
46,000
)
Principal payments of finance leases
(
1,829
)
(
1,774
)
Proceeds from issuances of common stock
Dividends paid
(
98,661
)
(
90,151
)
Net payments for repurchase of common stock
(
236,203
)
(
452
)
Payments related to tax withholding for share-based compensation
(
7,983
)
(
6,324
)
Net cash provided by financing activities
Net decrease in cash and due from banks, and restricted
cash
(
18,404
)
(
60,316
)
Cash and due from banks, and restricted cash at beginning
of period
Cash and due from banks, and restricted cash at the end of
the period
$
$
The accompanying notes are an integral part of these Consolidated
Financial Statements.
12
Notes to Consolidated Financial
Statements
(Unaudited)
Note 1 -
Nature of operations
13
Note 2 -
Basis of presentation
14
Note 3 -
New accounting pronouncements
15
Note 4 -
Restrictions on cash and due from banks and
certain securities
20
Note 5 -
Debt securities available-for-sale
21
Note 6 -
Debt securities held-to-maturity
24
Note 7 -
Loans
27
Note 8 -
Allowance for credit losses – loans held-in-
portfolio
35
Note 9 -
Mortgage banking activities
78
Note 10 -
Transfers of financial assets and mortgage
servicing assets
79
Note 11 -
Other real estate owned
83
Note 12 -
Other assets
84
Note 13 -
Goodwill and other intangible assets
86
Note 14 -
Deposits
88
Note 15 -
Borrowings
89
Note 16 -
Other liabilities
91
Note 17 -
Stockholders’ equity
92
Note 18 -
Other comprehensive income
93
Note 19 -
Guarantees
95
Note 20 -
Commitments and contingencies
97
Note 21-
Non-consolidated variable interest entities
100
Note 22 -
Related party transactions
102
Note 23 -
Fair value measurement
103
Note 24 -
Fair value of financial instruments
111
Note 25 -
Net income per common share
114
Note 26 -
Revenue from contracts with customers
115
Note 27 -
Leases
116
Note 28 -
Pension and postretirement benefits
118
Note 29 -
Stock-based compensation
119
Note 30 -
Income taxes
122
Note 31 -
Supplemental disclosure on the consolidated
statements of cash flows
126
Note 32 -
Segment reporting
127
13
Note 1 – Nature of Operations
Popular,
Inc. (the
“Corporation” or
“Popular”) is
a diversified,
publicly owned
financial holding
company subject
to the
supervision
and
regulation
of
the
Board
of
Governors
of
the
Federal
Reserve
System.
The
Corporation
has
operations
in
Puerto
Rico,
the
mainland United
States (“U.S.”)
and U.S.
and British
Virgin Islands.
In Puerto
Rico, the
Corporation provides retail,
mortgage and
commercial banking services and auto and equipment leasing and financing through its principal banking subsidiary, Banco Popular
de Puerto
Rico (“BPPR”),
as well
as broker-dealer
and insurance
services through
specialized subsidiaries. In
the U.S.
mainland,
the
Corporation provides
retail, mortgage,
commercial banking
services, as
well as
equipment leasing
and
financing, through
its
New
York-chartered
banking
subsidiary,
Popular
Bank
(“PB”
or
“Popular U.S.”),
which
has
branches
located
in
New
York,
New
Jersey, and Florida.
14
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.
The consolidated statement
of financial condition
presented as
of December 31,
2024 was
derived from
audited
Consolidated Financial Statements of the Corporation
for the year ended December 31, 2024.
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
(U.S. 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,
2024,
included in
the 2024
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.
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.
15
Note 3 - New accounting pronouncements
Recently Adopted Accounting Standards Updates
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-02,
Liabilities (Topic 405) -
Amendments to SEC
Paragraphs Pursuant to
SEC Staff Accounting
Bulletin No. 122
The
Financial Accounting
Standards Board
("FASB")
issued
Accounting
Standard
Update
("ASU")
2025-02
in
March
2025,
which
amends
the
guidance
in
Accounting
Standards
Codification
("ASC")
450-10-
S99-1
by
removing
the
interpretative
guidance
of
Section
FF
of
Topic
5
in
the
Staff Accounting Bulletin Series ("SAB") text
that
addressed
the
accounting
for
obligations to
safeguard crypto-assets
held
by platform
users to
align the
ASC with
the
latest
SAB
112
directive,
ensuring
consistency and clarity.
March 18, 2025
The
Corporation
was
not
impacted
by
the
adoption of
this
ASU
since
it does
not hold crypto-assets.
FASB ASU 2024-02,
Codification
Improvements—
Amendments to Remove
References to the
Concepts Statements
The
FASB
issued
ASU
2024-02
in
March
2024, which
removes various
references to
concept statements from the ASC. The ASU
intends
to
simplify
the
Codification
and
distinguish
between
nonauthoritative
and
authoritative guidance.
January 1, 2025
The
Corporation
was
not
impacted
by
the adoption of this ASU since it did not
provide for
accounting changes
or new
presentation
or
disclosure
requirements.
The
ASU
eliminated
references
within
the
ASC
to
the
concept
statements,
which
is
considered non-authoritative guidance.
FASB ASU 2024-01,
Compensation - Stock
Compensation (Topic 718)
- Scope Application of
Profits Interest and Similar
Awards
The
FASB
issued
ASU
2024-01
in
March
2024,
which
amends
ASC
Topic
718
by
including
an
illustrative
example
to
demonstrate how
an entity
would apply
the
scope
guidance
in
paragraph
718-10-15-3
to determine whether profits interest awards
should be accounted
for in accordance
with
ASC
Topic
718.
The
ASU
is
intended
to
reduce complexity and diversity in practice.
January 1, 2025
The
Corporation
was
not
impacted
by
the
adoption
of
this
ASU
since
the
performance
share
awards
of
the
Corporation
continue
to
meet
the
requirements of ASC 718-10-15-3.
FASB ASU 2023-08,
Intangibles - Goodwill and
Other - Crypto Assets
(Subtopic 350-60) -
Accounting for and
Disclosure of Crypto
Assets
The
FASB
issued
ASU
2023-08
in
December
2023,
which
amends
ASC
Subtopic
350-60
by
requiring
that
crypto
assets
are
measured
at
fair
value
in
the
statement
of
financial
position
each
reporting
period
with
changes
from
remeasurement
being
recognized
in
net
income.
The
ASU
also
requires
enhanced
disclosures
for
both
annual
and
interim
reporting
periods
to
provide
investors
with
relevant information
to
analyze and
assess
the
exposure
and
risk
of
significant
individual crypto asset holdings.
January 1, 2025
The
Corporation
was
not
impacted
by
the
adoption of
this
ASU
since
it does
not hold crypto-assets.
16
Recently Adopted Accounting Standards Updates
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2023-05,
Business Combinations -
Joint Venture Formations
(Subtopic 805-60) -
Recognition and initial
measurement
The
FASB
issued
ASU
2023-05
in
August
2023, which
amends ASC
Subtopic 805-60
to include specific
guidance about how
joint
ventures
should
recognize
and
initially
measure
assets
contributed
and
liabilities
assumed.
The
amendments
require
that
a
joint venture, upon formation, recognize and
initially
measure its
assets and
liabilities at
fair value.
January 1, 2025
The
Corporation
was
not
impacted
by
the
adoption
of
this
ASU
but
it
will
consider
this
guidance
for
the
initial
measurement of assets and liabilities of
newly
created
joint
ventures
prospectively.
17
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-05,
Financial Instruments -
Credit Losses (Topic 326)
- Measurement of Credit
Losses for Accounts
Receivables and Contract
Assets
The
FASB
issued
ASU
2025-05
in
July
2025,
which
permits
entities
to
elect
a
practical
expedient
when
accounting
for
current
accounts
receivable
and
current
contract
assets
arising
from
transactions
accounted
for
under
Topic
606,
Revenue
from
Contracts
with
Customers.
This
practical
expedient
establishes
that,
in
developing
reasonable
and
supportable
forecasts
as
part
of
estimating
expected
credit
losses,
entities
assume
that
current
conditions as
of the
balance sheet
date do
not
change
for
the
remaining
life
of
the
asset.
January 1, 2026
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-04,
Compensation—Stock
Compensation (Topic 718)
and Revenue from
Contracts with Customers
(Topic 606) - Clarifications
to Share-Based
Consideration Payable to
a Customer
The
FASB
issued
ASU
2025-04
in
May
2025,
which
clarifies
the
accounting
for
share-based
awards
granted
as
consideration
payable
to
a
customer.
The
ASU expands
the definition
of performance
condition
for
share-based
consideration
under ASC 718 and eliminates the forfeiture
policy election for
service conditions. It
also
confirms
that
the
variable
consideration
constraint
in
ASC
606
does
not
apply
to
such awards.
January 1, 2027
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since
it
does
not
grant
share-based
payment awards to customers.
FASB ASU 2025-03,
Business Combinations
(Topic 805) and
Consolidation (Topic 810)
- Determining the
Accounting Acquirer in the
Acquisition of a Variable
Interest Entity
The
FASB
issued
ASU
2025-03
in
May
2025 which
requires that
an entity
consider
the
factors
in
paragraphs
805-10-55-12
through
55-15
when
it
is
involved
in
an
acquisition transaction
effected primarily
by
exchanging
equity
interests when
the
legal
acquiree is
a variable
interest entity
("VIE")
that
meets
the
definition
of
a
business
to
determine
which
entity
is
the
accounting
acquirer.
This
replaces
the
previous
requirement
that
the
primary
beneficiary
always is the acquirer.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
18
FASB ASU 2024-04,
Debt—Debt with
Conversion and Other
Options (Subtopic 470-
20) - Induced Conversions
of Convertible Debt
Instruments
The
FASB
issued
ASU
2024-04
in
November
2024,
which
clarifies
the
requirements
for
determining
whether
certain
settlements
of
convertible
debt
instruments should
be accounted
for as
an
induced
conversion.
Also
it
makes
additional
clarifications
to
assist
stakeholders in
applying the
guidance. The
ASU
clarifies
that
the
incorporation,
elimination,
or
modification
of
a
volume-
weighted
average
price
("VWAP")
formula
does
not
automatically
cause
a
settlement
to
be
accounted
for
as
an
extinguishment
and
that
the
induced
conversion
guidance
applies to a convertible
debt instrument that
is not currently
convertible as long as
it had
a substantive
conversion feature
as of
both
its
issuance
date
and
the
date
the
inducement offer is accepted.
January 1, 2026
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2024-03,
Income Statement—
Reporting Comprehensive
Income—Expense
Disaggregation
Disclosures (Subtopic
220-40) - Disaggregation
of Income Statement
Expenses (As updated by
ASU 2025-01)
The
FASB
issued
ASU
2024-03
in
November
2024,
which
requires
public
entities
to
disclose
additional
information
about
specific
expense
categories
in
the
notes to
financial statements
at interim
and
annual
reporting
periods
to
improve
financial transparency.
For fiscal years
beginning on
January 1, 2027
For interim periods
within fiscal years
beginning after
January 1, 2028
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2023-09,
Income Tax (Topic
740) -
Improvements to Income
Tax Disclosures
The
FASB
issued
ASU
2023-09
in
December 2023,
which amends
ASC Topic
740
by
enhancing
disclosures
regarding
rate
reconciliation
and
requiring
the
disclosure of
income taxes paid, income (or
loss)
before
income
tax
expense
and
income
tax
expense
disaggregated
by
national, state and foreign level. Disclosures
that
no
longer
were
considered
cost
beneficial
or
relevant
were
removed
from
ASC Topic 740.
For fiscal years
beginning on
January 1, 2025
The
Corporation
will
prospectively
adopt
ASU
2023-09
for
it's
Consolidated
Financial
Statements
in
the
2025
Form
10-K.
The
adoption
of
this standard
will result
in the
inclusion
of
certain
new
categories
in
the
effective
income
tax
rate
and
income
tax expense tabular disclosures, as well
as the
disclosure of income
taxes paid,
within the income taxes note.
19
FASB ASU 2023-06,
Disclosure Improvements -
Codification Amendments
in Response to the SEC’s
Disclosure Update and
Simplification Initiative
The FASB
issued ASU
2023-06 in
October
2023
which
modifies
the
disclosure
or
presentation
requirements
of
various
subtopics
in
the
Codification
with
the
purpose
of
aligning
U.S.
GAAP
requirements
with
those
of
the
SEC
under
Regulation S-X and S-K.
The date on which
the SEC removes
related disclosure
requirements from
Regulation S-X or
Regulation S-K. If by
June 30, 2027, the
SEC has not
removed the
applicable
requirements from
Regulation S-X or
Regulation S-K, the
pending content of
the related
amendment will be
removed from the
Codification and will
not become
effective for any
entity.
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since
it
is
subject
to
SEC's
current
disclosure
and
presentation
requirements under Regulation S-X and
S-K.
20
Note 4 - Restrictions on cash and due
from banks and certain securities
BPPR is
required by
regulatory agencies
to maintain
average reserve
balances with
the Federal
Reserve Bank
of New
York
(the
“Fed”) or other banks. Required average reserve
balances in BPPR amounted to $
$
balances.
At June
30, 2025,
the Corporation
held $
debt
securities
available
for
sale
and
equity
securities
(December
31,
2024
-
$
securities available for sale and equity securities consist primarily of assets
held for the Corporation’s non-qualified retirement plans
and fund deposits guaranteeing possible liens or encumbrances
over the title of insured properties.
21
Note 5 – Debt securities available-for-sale
The
following
tables
present
the
amortized
cost,
gross
unrealized
gains
and
losses,
fair
value,
weighted
average
yield
and
contractual maturities of debt securities available-for-sale
at June 30, 2025 and December 31,
2024.
At June 30, 2025
Gross
Gross
Weighted
Amortized
unrealized
unrealized
Fair
average
(In thousands)
cost
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
$
$
$
%
After 1 to 5 years
Total U.S. Treasury
securities
Collateralized mortgage obligations - federal agencies
After 1 to 5 years
After 5 to 10 years
After 10 years
Total collateralized
mortgage obligations - federal agencies
Mortgage-backed securities - federal agencies
Within 1 year
After 1 to 5 years
After 5 to 10 years
After 10 years
Total mortgage-backed
securities - federal agencies
Other
Within 1 year
After 1 to 5 years
Total other
Total debt securities
available-for-sale
[1]
$
$
$
$
%
[1]
servicing agreements that the secured parties are not permitted
to sell or repledge the collateral, of which $
public funds.
The Corporation had unpledged Available
for Sale securities with a fair value of $
.0 billion that could be used to increase its
borrowing facilities.
22
At December 31, 2024
Gross
Gross
Weighted
Amortized
unrealized
unrealized
Fair
average
(In thousands)
cost
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
$
$
$
%
After 1 to 5 years
Total U.S. Treasury
securities
Collateralized mortgage obligations - federal agencies
After 1 to 5 years
After 5 to 10 years
After 10 years
Total collateralized
mortgage obligations - federal agencies
Mortgage-backed securities - federal agencies
Within 1 year
After 1 to 5 years
After 5 to 10 years
After 10 years
Total mortgage-backed
securities - federal agencies
Other
Within 1 year
After 1 to 5 years
Total other
Total debt securities
available-for-sale
[1]
$
$
$
$
%
[1]
Includes $
servicing agreements that the secured parties are not permitted
to sell or repledge the collateral, of which $
public funds. The Corporation had unpledged Available
for Sale securities with a fair value of
$
borrowing facilities.
The weighted
average yield
on debt
securities available-for-sale
is based
on amortized
cost; therefore,
it
does not
give
effect to
changes in fair value.
Securities
not
due
on
a
single
contractual
maturity
date,
such
as
mortgage-backed
securities
and
collateralized
mortgage
obligations,
are
classified
based
on
the
period
of
final
contractual
maturity.
The
expected
maturities
of
collateralized
mortgage
obligations, mortgage-backed securities
and certain
other securities
may differ
from their
contractual maturities
because they
may
be subject to prepayments or may be called
by the issuer.
At June 30,
2025, the Corporation did not
intend to sell or
believed it was more
likely than not that
it would be required
to sell debt
securities classified
as available-for-sale. There
were
ended June 30, 2025 and 2024.
23
The
following
tables
present
the
Corporation’s
fair
value
and
gross
unrealized
losses
of
debt
securities
available-for-sale,
aggregated by investment category and length of
time that individual securities have been in a continuous
unrealized loss position at
June 30, 2025 and December 31, 2024.
At June 30, 2025
Less than 12 months
12 months or more
Total
Gross
Gross
Gross
Fair
Fair
Fair
(In thousands)
value
losses
value
losses
value
losses
U.S. Treasury securities
$
$
$
$
$
$
Collateralized mortgage obligations - federal agencies
Mortgage-backed securities -federal agencies
Total debt securities
available-for-sale in an unrealized loss position
$
$
$
$
$
$
At December 31, 2024
Less than 12 months
12 months or more
Total
Gross
Gross
Gross
Fair
Fair
Fair
(In thousands)
value
losses
value
losses
value
losses
U.S. Treasury securities
$
$
$
$
$
$
Collateralized mortgage obligations - federal agencies
Mortgage-backed securities - federal agencies
Total debt securities
available-for-sale in an unrealized loss position
$
$
$
$
$
$
As of June 30,
2025, the portfolio of
available-for-sale debt securities reflects gross unrealized losses
of $
2024 -
$
the
portfolio’s
longer
duration.
The
portfolio
of
available-for-sale
debt
securities
is
comprised
mainly
of
U.S
Treasuries
and
obligations
from
the
U.S.
Government,
its
agencies
or
government
sponsored
entities,
including
Federal
National
Mortgage
Association
(“FNMA”),
Federal
Home
Loan
Mortgage
Corporation
(“FHLMC”)
and
Government
National
Mortgage
Association
(“GNMA”).
These
securities
carry
an
explicit
or
implicit
guarantee
from
the
U.S.
Government,
are
highly
rated
by
major
rating
agencies, and have a long history of no credit
losses. Accordingly, the Corporation applies a zero-credit loss assumption.
24
Note 6 –Debt securities held-to-maturity
The following
tables present
the amortized
cost, allowance
for credit
losses, gross
unrealized gains
and losses,
approximate fair
value,
weighted average
yield
and contractual
maturities of
debt securities
held-to-maturity at
June 30,
2025
and
December 31,
2024.
At June 30, 2025
Allowance
Carrying
Value
Gross
Gross
Weighted
Amortized
Book
[1]
for Credit
Net of
unrealized
unrealized
Fair
average
(In thousands)
cost
Value
Losses
Allowance
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
$
$
$
$
$
$
%
After 1 to 5 years
Total U.S. Treasury
securities
Obligations of Puerto Rico, States and
political subdivisions
Within 1 year
After 1 to 5 years
After 5 to 10 years
After 10 years
Total obligations of
Puerto Rico, States and
political subdivisions
Collateralized mortgage obligations - federal
agencies
After 10 years
Total collateralized
mortgage obligations -
federal agencies
Securities in wholly owned statutory business
trusts
After 5 to 10 years
Total securities
in wholly owned statutory
business trusts
Total debt securities
held-to-maturity [2]
$
$
$
$
$
$
$
%
[1]
Book value includes $
securities previously transferred from available-for-sale securities
portfolio to the held-to-maturity securities portfolio.
[2]
Includes $
Corporation had unpledged held-to-maturities securities with
a fair value of $
25
At December 31, 2024
Allowance
Carrying
Value
Gross
Gross
Weighted
Amortized
Book
[1]
for Credit
Net of
unrealized
unrealized
Fair
average
(In thousands)
cost
Value
Losses
Allowance
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
$
$
$
$
$
$
%
After 1 to 5 years
Total U.S. Treasury
securities
Obligations of Puerto Rico, States and
political subdivisions
`
Within 1 year
After 1 to 5 years
After 5 to 10 years
After 10 years
Total obligations of
Puerto Rico, States and
political subdivisions
Collateralized mortgage obligations - federal
agencies
After 10 years
Total collateralized
mortgage obligations -
federal agencies
Securities in wholly owned statutory business
trusts
After 5 to 10 years
Total securities
in wholly owned statutory
business trusts
Total debt securities
held-to-maturity [2]
$
$
$
$
$
$
$
%
[1]
Book value includes $
securities transferred from available-for-sale securities
portfolio to the held-to-maturity securities portfolio.
[2]
Includes $
Corporation had unpledged held-to-maturities securities with
a fair value of $
Debt securities not due on a single contractual maturity date,
such as collateralized mortgage obligations, are classified in the period
of final
contractual maturity.
The expected
maturities of
collateralized mortgage
obligations and
certain other
securities may
differ
from their contractual maturities because they may be
subject to prepayments or may be called
by the issuer.
Credit Quality Indicators
The following describes the credit quality indicators by major security
type that the Corporation considers to develop the
estimate of
the allowance for credit losses for investment securities
held-to-maturity.
As discussed in
Note 2 of
the 2024 Form
10-K, U.S. Treasury
securities carry an explicit
guarantee from the U.S.
Government are
highly rated by major rating
agencies and have a long
history of no credit losses. Accordingly,
the Corporation applies a zero-credit
loss assumption and no allowance for credit losses
(“ACL”) for these securities has been established.
At June
30, 2025
and December 31,
2024, the “Obligations
of Puerto
Rico, States and
political subdivisions” classified
as held-to-
maturity,
includes
securities
issued
by
municipalities
of
Puerto
Rico
that
are
generally
not
rated
by
a
credit
rating
agency.
The
Corporation performs periodic credit quality
reviews of these securities and internally
assigns standardized credit risk ratings based
on
its
evaluation. For
the
definitions
of
the
obligor
risk
ratings, refer
to
the
Credit
Quality section
of
Note
8
to
the
Consolidated
Financial Statements.
This
includes
$
Rico,
of
which
$
municipality (compared to $
At June 30, 2025, the portfolio of “Obligations of Puerto Rico, States
and political subdivisions” also includes $
issued
by
the
Puerto
Rico
Housing Finance
Authority
(“HFA”),
a
government
instrumentality,
for
which the
underlying
source
of
payment
is
second
mortgage
loans
in
Puerto
Rico
residential
properties
(not
the
government),
but
for
which
HFA,
provides
a
guarantee in
the event
of default
and upon
the satisfaction
of certain
other conditions
(December 31,
2024 -
$
securities are not rated by a credit rating agency.
26
The
Corporation
assesses
the
credit
risk
associated
with
these
securities
by
evaluating
the
refreshed
FICO
scores
of
a
representative
sample
of
the
underlying
borrowers.
As
of
June
30,
2025,
the
average
refreshed
FICO
score
for
the
sample,
comprised
of
%
of
the
nominal
value
of
the
securities,
used
for
the
loss
estimate
was
of
%
and
,
respectively, at
December 31, 2024).
The loss estimates
for this portfolio
was based on
the methodology established
under CECL
for
similar
loan
obligations.
The
Corporation
does
not
consider
the
government
guarantee
when
estimating
the
credit
losses
associated with this portfolio.
A
deterioration of
the Puerto
Rico economy
or
of
the fiscal
health of
the
Government of
Puerto Rico
and/or
its
instrumentalities
(including if
any of
the issuing
municipalities become
subject to
a debt
restructuring proceeding
under the
Puerto Rico
Oversight
Management and Economic Stability Act (“PROMESA”) could
adversely affect the value of these securities, resulting in losses
to the
Corporation.
Refer to
Note 20
to the
Consolidated Financial
Statements
for additional
information on
the Corporation’s
exposure to
the Puerto
Rico Government.
Delinquency status
At June 30, 2025 and December 31, 2024, there were
Allowance for credit losses on debt securities held-to-maturity
The allowance for credit losses related to
the Obligations of Puerto Rico and the States
and Political subdivisions securities at June
30, 2025 was $
27
Note 7 – Loans
For
a summary
of
the accounting
policies related
to
loans, interest
recognition and
allowance for
credit
losses
refer to
Note
2
–
Summary of Significant Accounting Policies of the 2024
Form 10-K.
The following
table presents
the Corporation's loan
purchases for
the quarters
and six
months ended June
30, 2025
and 2024
by
class of loans:
Quarters ended June 30,
Six months ended June 30,
(In thousands)
2025
2024
2025
2024
Commercial
$
$
$
$
Mortgage
Ending balance
$
$
$
$
The following table presents
the Corporation’s loan sales for the quarters and six months ended June 30, 2025 and 2024 by class of
loans:
Quarters ended June 30,
Six months ended June 30,
(In thousands)
2025
2024
2025
2024
Commercial
$
$
$
$
Construction
Mortgage
Ending balance
$
$
$
$
During the
quarter ended
June
30,
2025,
the
Corporation securitized
$
securities, compared to $
into GNMA
mortgage-backed securities
during the
quarter ended
June 30,
2025. There
were
no
quarter ended June 30, 2024.
During the six months
ended June 30, 2025,
the Corporation securitized $
securities, compared to
$
loans into
GNMA mortgage-backed
securities during
the six
months ended
June 30,
2025, compared
to $
months ended June 30, 2024.
Delinquency status
The following tables present the
amortized cost basis of loans
held-in-portfolio (“HIP”), net of unearned
income, by past due status,
and by loan class including those that are in non-performing status or that are accruing
interest but are past due 90 days or more at
June 30, 2025 and December 31, 2024.
28
June 30, 2025
BPPR
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
$
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
Leasing
Consumer:
Credit cards
Home equity lines of credit
Personal
Auto
Other
Total
$
$
$
$
$
$
$
$
June 30, 2025
Popular U.S.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
$
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
Consumer:
Credit cards
Home equity lines of
credit
Personal
Other
Total
$
$
$
$
$
$
$
$
29
June 30, 2025
Popular, Inc.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
[2] [3]
loans
loans
Commercial multi-family
$
$
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
[1]
Leasing
Consumer:
Credit cards
Home equity lines of credit
Personal
Auto
Other
Total
$
$
$
$
$
$
$
$
[1]
At June 30, 2025, mortgage loans held-in-portfolio include
$
Corporation’s policy is to exclude them from non-performing
status, of which $
guaranteed loans includes $
Corporation has $
at June 30, 2025.
[2]
Loans held-in-portfolio are net of $
[3]
Includes $
of which $
Bank ("FRB") for discount window borrowings. As of June
30, 2025, the Corporation had an available borrowing
facility with the FHLB and the
discount window of FRB of $
.0 billion and $
30
December 31, 2024
BPPR
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
$
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
Leasing
Consumer:
Credit cards
Home equity lines of credit
Personal
Auto
Other
Total
$
$
$
$
$
$
$
$
December 31, 2024
Popular U.S.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
$
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
Consumer:
Credit cards
Home equity lines of credit
Personal
Other
Total
$
$
$
$
$
$
$
$
31
December 31, 2024
Popular, Inc.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
or more
past due
Current
Loans HIP
[2]
[3]
loans
loans
Commercial multi-family
$
$
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
[1]
Leasing
Consumer:
Credit cards
Home equity lines of credit
Personal
Auto
Other
Total
$
$
$
$
$
$
$
$
[1]
At December 31, 2024 mortgage loans held-in-portfolio include
$
which the Corporation’s policy is to exclude them
from non-performing status, of which $
guaranteed loans includes $
The Corporation has $
interest at December 31, 2024.
[2]
Loans held-in-portfolio are net of $
[3]
Includes $
of which $
December 31, 2024, the Corporation had an available borrowing
facility with the FHLB and the discount window
of FRB of $
.0
billion, respectively.
Recognition of interest income on mortgage loans is generally discontinued when loans are 90 days or more in arrears on payments
of principal or interest. The Corporation discontinues the recognition of interest income on residential mortgage loans insured by the
FHA or guaranteed by the VA when 15 months
delinquent as to principal or interest, since the principal repayment on these loans is
insured.
Loans with a
delinquency status of 90
days past due
as of June
30, 2025 include
$
securities (December 31, 2024 - $
to repurchase loans that
are 90 days or
more past due. For
accounting purposes, these loans subject to
the repurchase option are
required to be reflected on the financial statements of BPPR with an offsetting liability.
Loans in our serviced GNMA portfolio benefit
from payment forbearance programs but continue to reflect the
contractual delinquency until the borrower repays deferred payments
or completes a payment deferral modification or other
borrower assistance alternative.
The following tables present the amortized cost basis
of non-accrual loans as of June 30, 2025 and
December 31, 2024 by class of
loans:
32
June 30, 2025
BPPR
Popular U.S.
Popular, Inc.
(In thousands)
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Commercial multi-family
$
$
$
$
$
$
Commercial real estate non-owner occupied
Commercial real estate owner occupied
Commercial and industrial
Mortgage
Leasing
Consumer:
Total
$
$
$
$
$
$
December 31, 2024
BPPR
Popular U.S.
Popular, Inc.
(In thousands)
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Commercial multi-family
$
$
$
$
$
$
Commercial real estate non-owner occupied
Commercial real estate owner occupied
Commercial and industrial
Mortgage
Leasing
Consumer:
Total
$
$
$
$
$
$
The Corporation has
designated loans classified as
collateral dependent for
which the ACL
is measured based
on the fair
value of
the collateral less
cost to sell,
when foreclosure is
probable or when
the repayment is
expected to be
provided substantially by the
sale or
operation of
the collateral
and the
borrower is
experiencing financial
difficulty.
The fair
value of
the collateral
is based
on
appraisals,
which
may
be
adjusted
due
to
their
age,
type,
location,
and
condition
of
the
property
or
area
or
general
market
conditions to reflect the expected change in value between the effective date
of the appraisal and the measurement date. Appraisals
are updated every one to two years depending on
the type of loan and the total exposure of
the borrower.
Loans in
non-accrual status with
no allowance
at June
30, 2025 include
$
2024 -
$
June 30, 2025 (June 30, 2024 - $
The following tables present the amortized cost basis
of collateral-dependent loans, for which the ACL was measured
based on the
fair value of the collateral less cost to sell, by
class of loans and type of collateral as of June
30, 2025 and December 31, 2024:
33
June 30, 2025
(In thousands)
Real Estate
Auto
Equipment
Accounts
Receivables
Other
Total
BPPR
Commercial multi-family
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Mortgage
Leasing
Consumer:
Personal
Auto
Other
Total BPPR
$
$
$
$
$
$
Popular U.S.
Commercial multi-family
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Commercial and industrial
Mortgage
Total Popular U.S.
$
$
$
$
$
$
Popular, Inc.
Commercial multi-family
$
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Mortgage
Leasing
Consumer:
Personal
Auto
Other
Total Popular,
Inc.
$
$
$
$
$
$
34
December 31, 2024
(In thousands)
Real Estate
Auto
Equipment
Other
Total
BPPR
Commercial multi-family
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
Leasing
Consumer:
Personal
Auto
Other
Total BPPR
$
$
$
$
$
Popular U.S.
Commercial multi-family
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Mortgage
Total Popular U.S.
$
$
$
$
$
Popular, Inc.
Commercial multi-family
$
$
$
$
$
Commercial real estate:
Non-owner occupied
Owner occupied
Commercial and industrial
Construction
Mortgage
Leasing
Consumer:
Personal
Auto
Other
Total Popular,
Inc.
$
$
$
$
$
35
Note 8 – Allowance for credit losses – loans
held-in-portfolio
The
Corporation follows
the current
expected credit
loss
(“CECL”) model
to
establish and
evaluate the
adequacy of
the ACL
to
provide for
expected losses
in the
loan portfolio.
This model
establishes a forward-looking
methodology that
reflects the
expected
credit losses over the lives
of financial assets starting when such
assets are first acquired or originated.
In addition, CECL provides
that
the
initial ACL
on PCD
financial
assets be
recorded as
an
increase to
the
purchase price,
with subsequent
changes to
the
allowance
recorded
as
a
credit
loss
expense.
The
provision
for
credit
losses
recorded
in
current
operations
is
based
on
this
methodology.
Loan losses
are charged
and
recoveries are
credited to
the ACL.
The
Corporation’s modeling
framework includes
competing risk
models that
generate lifetime
default and
prepayment estimates as
well as
other loan
level techniques
to estimate
loss
severity.
These
models
combine
credit
risk
factors
which
include
the
impact
of
loan
modifications,
with
macroeconomic
expectations to derive the lifetime expected loss.
At June
30, 2025,
the Corporation
estimated the
ACL by
weighting the
outputs of
optimistic, baseline,
and pessimistic
scenarios.
The
weightings applied
are subject
to
evaluation on
a
quarterly basis
as
part
of
the ACL’s
governance process.
During the
first
quarter
of
2025,
the
Corporation
assigned
equal
probability
weights
to
the
baseline
and
pessimistic
scenarios
in
response
to
economic uncertainty,
the optimistic scenario
being the lowest
of probabilities. During
the second
quarter of 2025,
the Corporation
moderately
reduced
the
probability
weight
for
the
pessimistic
scenario
based
on
changes
in
the
economic
outlook
and
a
reassessment of uncertainty compared to the previous quarter. The net impact of these two changes in the
assigned weights on the
ACL
levels
for
the
six
months
ended
June
30,
2025
was
$
pessimistic scenario remains above the levels observed
in 2024, given the ongoing economic uncertainty.
The following tables
present the changes
in the ACL
of loans
held-in-portfolio and unfunded
commitments for the
quarters and six
months ended June 30, 2025 and 2024.
36
For the quarter ended June 30, 2025
BPPR
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
$
$
$
$
$
(
160
)
(
21
)
(
1,176
)
(
14
)
(
6,769
)
(
2,466
)
(
7,835
)
(
2,501
)
Construction
Mortgage
(
1,752
)
(
550
)
Leasing
(
3,982
)
Consumer
(
20,011
)
(
313
)
(
19,553
)
(
13,418
)
(
700
)
(
53,682
)
Total - Loans
$
$
$
(
60,715
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
(
1,569
)
$
$
$
Construction
Ending balance - unfunded commitments [1]
$
$
(
1,260
)
$
$
$
[1] Allowance for credit losses of unfunded commitments
is presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
37
For the quarter ended June 30, 2025
Popular U.S.
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
$
(
563
)
$
$
Commercial real estate non-owner occupied
Commercial real estate owner occupied
(
1,016
)
(
14
)
Commercial and industrial
(
49
)
Total Commercial
(
626
)
Construction
Mortgage
Consumer
Home equity lines of credit
(
799
)
(
16
)
Personal
(
2,920
)
Other
(
13
)
Total Consumer
(
2,949
)
Total - Loans
$
$
$
(
3,575
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
Construction
(
203
)
Consumer
Ending balance - unfunded commitments [1]
$
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
38
For the quarter ended June 30, 2025
Popular Inc.
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
$
(
563
)
$
$
Commercial real estate non-owner occupied
(
21
)
Commercial real estate owner occupied
(
2,192
)
(
28
)
Commercial and industrial
(
5,236
)
(
2,515
)
Total Commercial
(
3,226
)
(
3,127
)
Construction
Mortgage
(
1,315
)
(
550
)
Leasing
(
3,982
)
Consumer
Credit cards
(
20,011
)
Home equity lines of credit
(
1,112
)
(
16
)
Personal
(
22,473
)
Auto
(
13,418
)
Other
(
713
)
Total Consumer
(
56,631
)
Total - Loans
$
$
$
(
64,290
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
(
1,264
)
$
$
$
Construction
Consumer
Ending balance - unfunded commitments [1]
$
$
(
1,116
)
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
39
For the six months ended June 30, 2025
BPPR
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
$
$
$
$
Commercial real estate non-owner occupied
(
2,759
)
(
86
)
Commercial real estate owner occupied
(
2,918
)
(
103
)
Commercial and industrial
(
7,026
)
(
5,778
)
Total Commercial
(
11,798
)
(
5,967
)
Construction
Mortgage
(
2,870
)
(
985
)
Leasing
(
8,526
)
Consumer
Credit cards
(
38,876
)
Home equity lines of credit
(
421
)
(
25
)
Personal
(
41,506
)
Auto
(
34,474
)
Other
(
1,580
)
Total Consumer
(
116,461
)
Total - Loans
$
$
$
$
(
131,939
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
(
849
)
$
$
$
$
Construction
Ending balance - unfunded commitments [1]
$
$
(
643
)
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
40
For the six months ended June 30, 2025
Popular U.S.
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
$
(
563
)
$
$
Commercial real estate non-owner occupied
Commercial real estate owner occupied
(
26
)
Commercial and industrial
(
1,196
)
Total Commercial
(
1,785
)
Construction
(
1,017
)
Mortgage
Consumer
Home equity lines of credit
(
935
)
(
46
)
Personal
(
5,546
)
Other
(
42
)
Total Consumer
(
5,634
)
Total - Loans
$
$
$
(
7,419
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
Construction
(
2,120
)
Consumer
Ending balance - unfunded commitments [1]
$
$
(
1,774
)
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
41
For the six months ended June 30, 2025
Popular Inc.
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
$
$
(
563
)
$
$
Commercial real estate non-owner occupied
(
86
)
Commercial real estate owner occupied
(
2,725
)
(
129
)
Commercial and industrial
(
4,016
)
(
6,974
)
Total Commercial
(
7,752
)
Construction
(
685
)
Mortgage
(
2,386
)
(
985
)
Leasing
(
8,526
)
Consumer
Credit cards
(
38,876
)
Home equity lines of credit
(
1,356
)
(
71
)
Personal
(
47,052
)
Auto
(
34,474
)
Other
(
1,622
)
Total Consumer
(
122,095
)
Total - Loans
$
$
$
$
(
139,358
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
(
576
)
$
$
$
$
Construction
(
1,914
)
Consumer
Ending balance - unfunded commitments [1]
$
$
(
2,417
)
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
42
For the quarter ended June 30, 2024
BPPR
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
(
264
)
$
$
$
$
Commercial real estate non-owner occupied
(
324
)
Commercial real estate owner occupied
(
5,296
)
Commercial and industrial
(
8,072
)
Total Commercial
(
8,072
)
Construction
Mortgage
(
6,419
)
(
26
)
Leasing
(
3,841
)
Consumer
Credit cards
(
16,419
)
Home equity lines of credit
(
94
)
Personal
(
23,293
)
Auto
(
16,609
)
Other
(
680
)
Total Consumer
(
57,095
)
Total - Loans
$
$
$
$
(
69,034
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
$
Construction
Ending balance - unfunded commitments [1]
$
$
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
43
For the quarter ended June 30, 2024
Popular U.S.
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
(
1,303
)
$
$
$
Commercial real estate non-owner occupied
(
1,151
)
Commercial real estate owner occupied
(
1,514
)
Commercial and industrial
(
1,367
)
(
1,195
)
Total Commercial
(
5,335
)
(
1,195
)
Construction
Mortgage
(
502
)
(
18
)
Consumer
Home equity lines of credit
(
510
)
(
14
)
Personal
(
4,596
)
Other
(
2
)
(
18
)
Total Consumer
(
4,628
)
Total - Loans
$
$
(
4,428
)
$
(
5,841
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
Construction
Consumer
(
5
)
Ending balance - unfunded commitments [1]
$
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
44
For the quarter ended June 30, 2024
Popular Inc.
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
(
1,567
)
$
$
$
$
Commercial real estate non-owner occupied
(
1,475
)
Commercial real estate owner occupied
(
6,810
)
Commercial and industrial
(
9,267
)
Total Commercial
(
9,267
)
Construction
Mortgage
(
6,921
)
(
44
)
Leasing
(
3,841
)
Consumer
Credit cards
(
16,419
)
Home equity lines of credit
(
488
)
(
108
)
Personal
(
27,889
)
Auto
(
16,609
)
Other
(
698
)
Total Consumer
(
61,723
)
Total - Loans
$
$
$
$
(
74,875
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
$
Construction
Consumer
(
5
)
Ending balance - unfunded commitments [1]
$
$
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
45
For the six months ended June 30, 2024
BPPR
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
(
312
)
$
$
$
$
Commercial real estate non-owner occupied
(
737
)
Commercial real estate owner occupied
(
149
)
(
2,785
)
Commercial and industrial
(
14,741
)
Total Commercial
(
17,526
)
Construction
(
1,656
)
Mortgage
(
6,738
)
(
791
)
Leasing
(
8,691
)
Consumer
Credit cards
(
32,815
)
Home equity lines of credit
(
291
)
Personal
(
47,642
)
Auto
(
36,776
)
Other
(
1,344
)
Total Consumer
(
118,868
)
Total - Loans
$
$
$
$
(
145,876
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
$
Construction
Ending balance - unfunded commitments [1]
$
$
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
46
For the six months ended June 30, 2024
Popular U.S.
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
(
1,813
)
$
(
441
)
$
$
Commercial real estate non-owner occupied
(
956
)
Commercial real estate owner occupied
Commercial and industrial
(
1,759
)
Total Commercial
(
2,200
)
Construction
Mortgage
(
1,427
)
(
18
)
Consumer
Home equity lines of credit
(
763
)
(
21
)
Personal
(
10,308
)
Other
(
49
)
Total Consumer
(
10,378
)
Total - Loans
$
$
$
(
12,596
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
Construction
(
47
)
Consumer
(
29
)
Ending balance - unfunded commitments [1]
$
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
47
For the six months ended June 30, 2024
Popular Inc.
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
$
(
2,125
)
$
$
(
441
)
$
$
Commercial real estate non-owner occupied
(
1,693
)
Commercial real estate owner occupied
(
2,785
)
Commercial and industrial
(
16,500
)
Total Commercial
(
19,726
)
Construction
Mortgage
(
8,165
)
(
809
)
Leasing
(
8,691
)
Consumer
Credit cards
(
32,815
)
Home equity lines of credit
(
638
)
(
312
)
Personal
(
57,950
)
Auto
(
36,776
)
Other
(
1,393
)
Total Consumer
(
129,246
)
Total - Loans
$
$
$
$
(
158,472
)
$
$
Allowance for credit losses - unfunded commitments:
Commercial
$
$
$
$
$
$
Construction
Consumer
(
29
)
Ending balance - unfunded commitments [1]
$
$
$
$
$
$
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial
Condition.
Modifications
A
modification
constitutes
a
change
in
loan
terms
in
the
form
of
principal
forgiveness,
an
interest
rate
reduction,
other
than-
insignificant payment delay, term extension or combination of the above made
to a borrower experiencing financial difficulty.
The amount of outstanding commitments to lend additional funds to debtors with financial difficulties owing receivables whose terms
have been
modified during
the six
months ended
June 30,
2025 amounted
to $
2024 - $
The following tables show the amortized cost basis of the loans modified to borrowers experiencing financial difficulties at the end of
the reporting period disaggregated by
class of financing receivable and
type of concession granted
for the quarters and
six months
ended June 30, 2025 and 2024. Loans modified
to borrowers experiencing financial difficulties that were fully paid down,
charged-off
or foreclosed upon by period end are not reported.
48
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty for the quarter ended June 30, 2025
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June
30, 2025
% of total class
of Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Mortgage
%
%
%
Consumer:
-
%
%
%
%
%
%
Total
$
%
$
%
$
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June
30, 2025
% of total class
of Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Consumer:
-
%
%
%
%
%
%
Total
$
%
$
%
$
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June
30, 2025
% of total class
of Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Total
$
%
$
%
$
%
Combination - Term Extension
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June
30, 2025
% of total class
of Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
Total
$
%
$
%
$
%
Combination -
Other-Than-Insignificant Payment Delays and Interest Rate
Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June
30, 2025
% of total class
of Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June
30, 2025
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Consumer:
%
%
%
Total
$
%
$
%
$
%
49
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty for the six months ended June 30,
2025
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
%
%
%
Total
$
%
$
%
$
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
Total
$
%
$
%
$
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Total
$
%
$
%
$
%
Combination - Term Extension
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
Total
$
%
$
%
$
%
50
Combination - Other-Than-Insignificant Payment Delays
and Interest Rate Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2025
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Consumer:
%
%
%
Total
$
%
$
%
$
%
51
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty for the quarter ended June 30, 2024
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
CRE owner occupied
$
%
$
%
$
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
%
%
%
Total
$
%
$
%
$
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
Total
$
%
$
%
$
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Total
$
%
$
%
$
%
Combination - Term Extension
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Mortgage
%
%
%
Consumer:
%
%
%
Total
$
%
$
%
$
%
Combination -
Other-Than-Insignificant Payment Delays and Interest Rate
Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Commercial and industrial
$
%
$
%
$
%
Consumer:
%
%
%
Total
$
%
$
%
$
%
52
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty for the six months ended June 30,
2024
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
CRE owner occupied
$
%
$
%
$
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
%
%
%
Total
$
%
$
%
$
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Consumer:
%
%
%
%
%
%
Total
$
%
$
%
$
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
CRE owner occupied
%
%
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Total
$
%
$
%
$
%
Combination - Term Extension
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
%
$
%
$
%
Commercial and industrial
%
%
%
Mortgage
%
%
%
Consumer:
%
%
%
Total
$
%
$
%
$
%
53
Combination - Other-Than-Insignificant Payment Delays
and Interest Rate Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at June 30,
2024
% of total class of
Financing
Receivable
Commercial and industrial
$
%
%
Consumer:
%
%
Total
$
%
$
$
%
54
The following tables describe the financial effect of the
modifications made to borrowers experiencing
financial difficulties:
For the quarter ended June 30, 2025
Interest rate reduction
Loan Type
Financial Effect
Commercial and industrial
Reduced weighted-average contractual interest rate from
% to
%.
Mortgage
Reduced weighted-average contractual interest rate from
.0% to
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
% to
%.
Personal
Reduced weighted-average contractual interest rate from
% to
%.
Auto
Reduced weighted-average contractual interest rate from
0% to
%.
Term extension
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Personal
Added a weighted-average of
Auto
Added a weighted-average of
Other than insignificant payment delays
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Credit cards
Added a weighted-average of
For the six months ended June 30, 2025
Interest rate reduction
Loan Type
Financial Effect
Commercial and industrial
Reduced weighted-average contractual interest rate from
% to
%.
Mortgage
Reduced weighted-average contractual interest rate from
% to
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
.0% to
%.
Personal
Reduced weighted-average contractual interest rate from
% to
%.
Auto
Reduced weighted-average contractual interest rate from
0% to
%.
Other
Reduced weighted-average contractual interest rate from
.0% to
.0%.
Term extension
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Personal
Added a weighted-average of
Auto
Added a weighted-average of
55
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Credit cards
Added a weighted-average of
56
For the quarter ended June 30, 2024
Interest rate reduction
Loan Type
Financial Effect
CRE Owner occupied
Reduced weighted-average contractual interest rate from
.0% to
.0%.
Commercial and industrial
Reduced weighted-average contractual interest rate from
.0% to
%.
Mortgage
Reduced weighted-average contractual interest rate from
% to
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
% to
%.
Personal
Reduced weighted-average contractual interest rate from
% to
%.
Other
Reduced weighted-average contractual interest rate from
.0% to
.0%.
Term extension
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Personal
Added a weighted-average of
Auto
Added a weighted-average of
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Credit cards
Added a weighted-average of
57
For the six months ended June 30, 2024
Interest rate reduction
Loan Type
Financial Effect
CRE Non-owner occupied
Reduced weighted-average contractual interest rate from
% to
%.
CRE Owner occupied
Reduced weighted-average contractual interest rate from
.0% to
.0%.
Commercial and industrial
Reduced weighted-average contractual interest rate from
% to
%.
Mortgage
Reduced weighted-average contractual interest rate from
% to
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
% to
.0%.
Personal
Reduced weighted-average contractual interest rate from
% to
.0%.
Other
Reduced weighted-average contractual interest rate from
.0% to
.0%.
Term extension
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Personal
Added a weighted-average of
Auto
Added a weighted-average of
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
CRE Owner occupied
Added a weighted-average of
Commercial and industrial
Added a weighted-average of
Mortgage
Added a weighted-average of
Consumer:
Credit cards
Added a weighted-average of
58
The following tables present, by
class, the performance of loans
that have been modified
during the twelve months
preceding June
30,
2025.
The
past
due
90
days
or
more
categories
includes
all
loans
modified
classified
as
non-accruing
at
the
time
of
the
modification. These
loans will
continue in
non-accrual status,
and presented
as past
due 90
days or
more, until
the borrower
has
demonstrated a willingness and
ability to make
the restructured loan payments
(at least six
months of sustained
performance after
the modification
or one
year for
loans providing
for quarterly
or semi-annual
payments) and
management has
concluded that
it is
probable that the borrower would not be in payment
default in the foreseeable future.
BPPR
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
CRE non-owner occupied
$
$
$
$
$
$
$
$
CRE owner occupied
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
$
$
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular U.S.
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
$
$
$
$
$
$
CRE non-owner occupied
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
$
$
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
59
Popular Inc.
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
$
$
$
$
$
$
$
CRE non-owner occupied
CRE owner occupied
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
$
$
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments.
Payment default is defined as a restructured loan becoming
90 days past due after being modified, foreclosed
or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
60
The following tables present, by
class, the performance of loans
that have been modified
during the twelve months
preceding June
30, 2024.
BPPR
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
$
$
$
$
$
$
$
CRE non-owner occupied
CRE owner occupied
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
$
$
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular U.S.
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
CRE owner occupied
$
$
$
$
$
$
$
$
Mortgage
Consumer:
Total
$
$
$
$
$
$
$
$
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular Inc.
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
$
$
$
$
$
$
$
CRE non-owner occupied
CRE owner occupied
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
$
$
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments.
Payment default is defined as a restructured loan becoming
90 days past due after being modified, foreclosed
or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
61
Payment
default
is
defined
as
a
restructured
loan
becoming
90
days
past
due
after
being
modified,
foreclosed
or
charged-off,
whichever
occurs
first.
The
following
tables
provide
the
outstanding
balance
of
loans
modified
for
borrowers
under
financial
difficulties that were subject to payment default and that
had been modified during the twelve months prior
to default.
Amortized Cost Basis of Modified Financing Receivables That
Subsequently Defaulted During the Quarter Ended June
30, 2025
(In thousands)
Interest Rate
Reduction
Term Extension
Other-Than-
Insignificant
Payment Delays
Combination - Term
Extension and Interest
Rate Reduction
Combination - Other-
Than-Insignificant
Payment Delays and
Interest Rate
Reduction
Total
CRE non-owner occupied
$
$
$
$
$
$
CRE owner occupied
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
Amortized Cost Basis of Modified Financing Receivables That
Subsequently Defaulted During the Six Months Ended
June 30, 2025
(In thousands)
Interest Rate
Reduction
Term Extension
Other-Than-
Insignificant
Payment Delays
Combination - Term
Extension and Interest
Rate Reduction
Combination - Other-
Than-Insignificant
Payment Delays and
Interest Rate
Reduction
Total
CRE non-owner occupied
$
$
$
$
$
$
CRE owner occupied
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
Amortized Cost Basis of Modified Financing Receivables That
Subsequently Defaulted During the Quarter Ended June
30, 2024
62
(In thousands)
Interest Rate
Reduction
Term Extension
Other-Than-
Insignificant
Payment Delays
Combination - Term
Extension and Interest
Rate Reduction
Combination - Other-
Than-Insignificant
Payment Delays and
Interest Rate
Reduction
Total
Commercial and industrial
$
$
$
$
$
$
Mortgage
Consumer:
Total
$
$
$
$
$
$
Amortized Cost Basis of Modified Financing Receivables That
Subsequently Defaulted During the Six Months Ended
June 30, 2024
(In thousands)
Interest Rate
Reduction
Term Extension
Other-Than-
Insignificant
Payment Delays
Combination - Term
Extension and Interest
Rate Reduction
Combination - Other-
Than-Insignificant
Payment Delays and
Interest Rate
Reduction
Total
CRE owner occupied
$
$
$
$
$
$
Commercial and industrial
Mortgage
Consumer:
Total
$
$
$
$
$
$
Credit Quality
The risk
rating system
provides for
the assignment
of ratings
at the
obligor level
based on
the financial
condition of
the borrower.
The
risk rating
analysis process
is
performed at
least
once a
year
or more
frequently if
events or
conditions change
which may
deteriorate the credit quality.
In the case of
consumer and mortgage loans, these
loans are classified considering their
delinquency
status at the end of the reporting period.
The following tables present the amortized cost basis, net of unearned income, of
loans held-in-portfolio based on the Corporation’s
assignment of obligor risk ratings as defined at June 30,
2025 and December 31, 2024 and the gross write-offs recorded by
vintage
year.
For
the
definitions
of
the
obligor
risk
ratings,
refer
to
the
Credit
Quality
section
of
Note
8
to
the
Consolidated
Financial
Statements included in the 2024 Form 10-K:
63
June 30, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
BPPR
Commercial:
Commercial multi-family
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
multi-family
$
$
$
$
$
$
$
$
$
Commercial real estate non-owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
real estate non-
owner occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Total commercial
real estate owner
occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial and industrial
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Total commercial
and industrial
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Construction
Pass
$
$
$
$
$
$
$
$
$
Watch
Substandard
Total construction
$
$
$
$
$
$
$
$
$
Mortgage
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total mortgage
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
64
June 30, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
BPPR
Leasing
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total leasing
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Consumer:
Credit cards
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total credit cards
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
HELOCs
Pass
$
$
$
$
$
$
$
$
$
Total HELOCs
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Personal
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Personal
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Auto
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Auto
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Other consumer
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Other
consumer
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Total BPPR
$
$
$
$
$
$
$
$
$
65
June 30, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular U.S.
Commercial:
Commercial multi-family
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
multi-family
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate non-owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Substandard
Total commercial
real estate non-
owner occupied
$
$
$
$
$
$
$
$
$
Commercial real estate owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
real estate owner
occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial and industrial
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
and industrial
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Construction
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total construction
$
$
$
$
$
$
$
$
$
Mortgage
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total mortgage
$
$
$
$
$
$
$
$
$
66
June 30, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular U.S.
Consumer:
Credit cards
Pass
$
$
$
$
$
$
$
$
$
Total credit cards
$
$
$
$
$
$
$
$
$
HELOCs
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total HELOCs
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Personal
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Personal
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Other consumer
Pass
$
$
$
$
$
$
$
$
$
Total Other
consumer
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Total Popular U.S.
$
$
$
$
$
$
$
$
$
67
June 30, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular, Inc.
Commercial:
Commercial multi-family
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
multi-family
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate non-owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
real estate non-
owner occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Total commercial
real estate owner
occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial and industrial
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Total commercial
and industrial
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
68
June 30, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular, Inc.
Construction
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total construction
$
$
$
$
$
$
$
$
$
Mortgage
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total mortgage
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Leasing
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total leasing
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
69
June 30, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular, Inc.
Consumer:
Credit cards
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total credit cards
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
HELOCs
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total HELOCs
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Personal
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Personal
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Auto
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Auto
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Other consumer
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Other
consumer
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Total Popular Inc.
$
$
$
$
$
$
$
$
$
70
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
BPPR
Commercial:
Commercial multi-family
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
multi-family
$
$
$
$
$
$
$
$
$
Commercial real estate non-owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
real estate non-
owner occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Total commercial
real estate owner
occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial and industrial
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Loss
Total commercial
and industrial
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Construction
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total construction
$
$
$
$
$
$
$
$
$
Mortgage
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total mortgage
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
71
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
BPPR
Leasing
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total leasing
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Consumer:
Credit cards
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total credit cards
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
HELOCs
Pass
$
$
$
$
$
$
$
$
$
Total HELOCs
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Personal
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Personal
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Auto
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Auto
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Other consumer
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Other
consumer
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Total BPPR
$
$
$
$
$
$
$
$
$
72
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular U.S.
Commercial:
Commercial multi-family
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
multi-family
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate non-owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
real estate non-
owner occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
real estate owner
occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
73
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular U.S.
Commercial and industrial
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
and industrial
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Construction
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total construction
$
$
$
$
$
$
$
$
$
Mortgage
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total mortgage
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
74
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular U.S.
Consumer:
Credit cards
Pass
$
$
$
$
$
$
$
$
$
Total credit cards
$
$
$
$
$
$
$
$
$
HELOCs
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total HELOCs
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Personal
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Personal
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Other consumer
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total Other
consumer
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Total Popular U.S.
$
$
$
$
$
$
$
$
$
75
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular, Inc.
Commercial:
Commercial multi-family
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
multi-family
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate non-owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total commercial
real estate non-
owner occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial real estate owner occupied
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Total commercial
real estate owner
occupied
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Commercial and industrial
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Doubtful
Loss
Total commercial
and industrial
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
76
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular, Inc.
Construction
Pass
$
$
$
$
$
$
$
$
$
Watch
Special Mention
Substandard
Total construction
$
$
$
$
$
$
$
$
$
Mortgage
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total mortgage
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Leasing
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total leasing
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
77
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular, Inc.
Consumer:
Credit cards
Pass
$
$
$
$
$
$
$
$
$
Substandard
Total credit cards
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
HELOCs
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total HELOCs
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Personal
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Personal
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Auto
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Auto
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Other consumer
Pass
$
$
$
$
$
$
$
$
$
Substandard
Loss
Total Other
consumer
$
$
$
$
$
$
$
$
$
Year-to-Date gross
write-offs
$
$
$
$
$
$
$
$
$
Total Popular Inc.
$
$
$
$
$
$
$
$
$
78
Note 9 – Mortgage banking activities
Income
from
mortgage
banking
activities
includes
mortgage
servicing
fees
earned
in
connection
with
administering
residential
mortgage
loans
and
valuation
adjustments
on
mortgage
servicing
rights.
It
also
includes
gain
on
sales
and
securitizations
of
residential mortgage
loans, losses
on repurchased
loans, including
interest advances,
and trading
gains and
losses on
derivative
contracts
used
to
hedge
the
Corporation’s
securitization
activities.
In
addition,
fair
value
valuation
adjustments
to
residential
mortgage loans held for sale, if any, are recorded as part of the mortgage
banking activities.
The following table presents the components of mortgage
banking activities:
Quarters ended June 30,
Six months ended June 30,
(In thousands)
2025
2024
2025
2024
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees
$
$
$
$
Mortgage servicing rights fair value adjustments
(
1,954
)
(
1,945
)
(
5,524
)
(
5,384
)
Total mortgage
servicing fees, net of fair value adjustments
Net (loss) gain on sale of loans, including valuation on
loans held-for-sale
(
37
)
Trading account (loss) profit:
Unrealized (losses) gains on outstanding derivative positions
(
8
)
(
95
)
Realized (losses) gains on closed derivative positions
(
10
)
(
9
)
Total trading account
(loss) profit
(
18
)
(
104
)
Losses on repurchased loans, including interest advances
(
31
)
(
1
)
(
47
)
(
131
)
Total mortgage
banking activities
$
$
$
$
79
Note 10 – Transfers of financial assets and mortgage servicing assets
The
Corporation
typically
transfers
conforming
residential
mortgage
loans
in
conjunction
with
GNMA,
FNMA
and
FHLMC
securitization transactions
whereby the
loans are
exchanged for
cash or
securities and
servicing rights.
As seller,
the Corporation
has made
certain representations
and warranties
with respect
to the
originally transferred
loans and,
in the
past,
has sold
certain
loans
with
credit
recourse
to
a
government-sponsored
entity,
namely
FNMA.
Refer
to
Note
19
to
the
Consolidated
Financial
Statements for a description of such arrangements.
because they did not contain any credit recourse
arrangements.
The
following tables
present the
initial fair
value of
the
assets obtained
as
proceeds from
residential mortgage
loans securitized
during the quarters and six months ended June 30,
2025 and 2024:
Proceeds Obtained During the Quarter Ended June 30, 2025
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
$
$
$
Mortgage-backed securities - FNMA
Total trading account
debt securities
$
$
$
$
Mortgage servicing rights
$
$
$
$
Total
$
$
$
$
Proceeds Obtained During the Six months Ended June
30, 2025
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
$
$
$
Mortgage-backed securities - FNMA
Total trading account
debt securities
$
$
$
$
Mortgage servicing rights
$
$
$
$
Total
$
$
$
$
Proceeds Obtained During the Quarter Ended June 30, 2024
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - FNMA
$
$
$
$
Total trading account
debt securities
$
$
$
$
Mortgage servicing rights
$
$
$
$
Total
$
$
$
$
80
Proceeds Obtained During the Six months Ended June
30, 2024
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
$
$
$
Mortgage-backed securities - FNMA
Total trading account
debt securities
$
$
$
$
Mortgage servicing rights
$
$
$
$
Total
$
$
$
$
During the
six months
ended June 30,
2025, the
Corporation retained servicing
rights on
whole loan sales
involving $
principal balance
outstanding (June
30, 2024
- $
million). All loan sales performed during the six months
ended June 30, 2025 and 2024 were without
credit recourse agreements.
The Corporation recognizes as assets the rights to service loans for others,
whether these rights are purchased or result from asset
transfers such as sales and securitizations. These mortgage
servicing rights (“MSRs”) are measured at
fair value.
The
Corporation
uses
a
discounted
cash
flow
model
to
estimate
the
fair
value
of
MSRs.
The
discounted
cash
flow
model
incorporates
assumptions
that
market
participants
would
use
in
estimating
future
net
servicing
income,
including
estimates
of
prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, prepayment and late
fees, among other considerations. Prepayment speeds are
adjusted for the loans’ characteristics and portfolio behavior.
The following table
presents the changes
in MSRs measured
using the fair
value method for
the six months
ended June 30,
2025
and 2024.
81
Residential MSRs
(In thousands)
June 30, 2025
June 30, 2024
Fair value at beginning of period
$
$
Additions
Changes due to payments on loans
(
4,326
)
(
4,435
)
Reduction due to loan repurchases
(
221
)
(
247
)
Changes in fair value due to changes in valuation model inputs
or assumptions
(
977
)
(
702
)
Fair value at end of period
$
$
[1] Represents changes due to collection / realization
of expected cash flows over time.
[2] At June 30, 2025, PB had MSRs amounting to $
Residential mortgage loans serviced for others were $
Net mortgage servicing fees, a component of mortgage banking activities in the Consolidated Statements of Operations, include the
changes from period to period in the fair value of the MSRs, including changes due to collection / realization of expected cash flows.
The banking
subsidiaries receive servicing
fees based
on a
percentage of the
outstanding loan balance.
These servicing fees
are
credited to income
when they are collected.
At June 30,
2025, those weighted average
mortgage servicing fees were
% (June
30, 2024 -
%). Under these servicing agreements, the banking
subsidiaries do not generally earn significant prepayment
penalty
fees on the underlying loans serviced.
The section
below includes
information on
assumptions used
in the
valuation model
of the
MSRs, originated
and purchased.
Key
economic assumptions used
in measuring the
servicing rights derived
from loans securitized
or sold by
the Corporation during
the
quarters and six months ended June 30, 2025 and
2024 were as follows:
Quarters ended
Six months ended
June 30, 2025
June 30, 2024
June 30, 2025
June 30, 2024
BPPR
PB
BPPR
PB
BPPR
PB
BPPR
PB
Prepayment speed
%
%
%
%
%
%
%
%
Weighted average life (in years)
Discount rate (annual rate)
%
%
%
%
%
%
%
%
Key
economic
assumptions
used
to
estimate
the
fair
value
of
MSRs
derived
from
sales
and
securitizations
of
mortgage
loans
performed
by
the
banking
subsidiaries
and
servicing
rights
purchased
from
other
financial
institutions,
and
the
sensitivity
to
immediate changes in those assumptions, were as follows
as of the end of the periods reported:
82
Originated MSRs
Purchased MSRs
June 30,
December 31,
June 30,
December 31,
(In thousands)
2025
2024
2025
2024
Fair value of servicing rights
$
$
$
$
Weighted average life (in years)
Weighted average prepayment speed (annual
rate)
%
%
%
%
Impact on fair value of 10% adverse change
$
(
658
)
$
(
667
)
$
(
1,346
)
$
(
1,448
)
Impact on fair value of 20% adverse change
$
(
1,289
)
$
(
1,308
)
$
(
2,641
)
$
(
2,840
)
Weighted average discount rate (annual rate)
%
%
%
%
Impact on fair value of 10% adverse change
$
(
1,245
)
$
(
1,267
)
$
(
2,496
)
$
(
2,689
)
Impact on fair value of 20% adverse change
$
(
2,410
)
$
(
2,451
)
$
(
4,837
)
$
(
5,211
)
At
June
30,
2025,
the
Corporation
serviced
$
(December 31, 2024
- $
the Corporation’s liability of estimated losses related
to loans serviced with credit recourse.
During the
six months
ended June
30, 2025,
the Corporation
repurchased $
loans from
its GNMA
servicing portfolio.
The determination
to repurchase
these loans
was based
on the
economic benefits
of the
transaction, which
results in
a reduction
of the
servicing costs
for these
severely delinquent
loans, mainly
related to
principal and
interest advances. The
risk associated with
the loans is
reduced due to
their guaranteed nature.
The Corporation may place
these
loans under modification
programs offered by
FHA, VA
or United States
Department of Agriculture (USDA)
or other loss
mitigation
programs offered by the Corporation,
and once brought back to current status, these may be either
retained in portfolio or re-sold in
the secondary market.
83
Note 11 – Other real estate owned
The following tables present the activity related to Other
Real Estate Owned (“OREO”),
for the quarters
and six months ended June
30, 2025 and 2024.
For the quarter ended June 30, 2025
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
$
$
Write-downs in value
(
835
)
(
516
)
(
1,351
)
Additions
Sales
(
693
)
(
12,145
)
(
12,838
)
Other adjustments
(
21
)
(
21
)
Ending balance
$
$
$
For the quarter ended June 30, 2024
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
$
$
Write-downs in value
(
1,039
)
(
427
)
(
1,466
)
Additions
Sales
(
6,011
)
(
15,502
)
(
21,513
)
Ending balance
$
$
$
For the six months ended June 30, 2025
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
$
$
Write-downs in value
(
864
)
(
1,715
)
(
2,579
)
Additions
Sales
(
2,234
)
(
23,374
)
(
25,608
)
Other adjustments
(
223
)
(
223
)
Ending balance
$
$
$
For the six months ended June 30, 2024
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
$
$
Write-downs in value
(
1,064
)
(
711
)
(
1,775
)
Additions
Sales
(
6,557
)
(
32,436
)
(
38,993
)
Other adjustments
(
65
)
(
65
)
Ending balance
$
$
$
84
Note 12 − Other assets
The caption of other assets in the Consolidated
Statements of Financial Condition consists of the
following major categories:
(In thousands)
June 30, 2025
December 31, 2024
Net deferred tax assets (net of valuation allowance)
$
$
Investments under the equity method
Prepaid taxes
Other prepaid expenses
Capitalized software costs
Derivative assets
Trades receivable from brokers and counterparties
Receivables from investments maturities
Principal, interest and escrow servicing advances
Guaranteed mortgage loan claims receivable
Operating ROU assets (Note 27)
Finance ROU assets (Note 27)
Assets for pension benefit
Others
Total other assets
$
$
The Corporation regularly incurs in
capitalizable costs associated with software development or
licensing which are recorded within
the Other Assets line
item in the accompanying Consolidated Statements
of Financial Condition.
In addition, the Corporation incurs
costs
associated
with
hosting
arrangements
that
are
service
contracts
that
are
also
recorded
within
Other
Assets.
The
hosting
arrangements can
include capitalizable
implementation costs
that are
amortized during
the term
of the
hosting arrangement.
The
following
table
summarizes
the
composition
of
acquired
or
developed
software
costs
as
well
as
costs
related
to
hosting
arrangements:
Gross Carrying
Accumulated
Net Carrying
(In thousands)
Amount
Amortization
Value
June 30, 2025
Software development costs
$
$
$
Software license costs
Cloud computing arrangements
Total Capitalized
software costs [1] [2]
$
$
$
December 31, 2024
Software development costs
$
$
$
Software license costs
Cloud computing arrangements
Total Capitalized
software costs [1] [2]
$
$
$
[1]
Software intangible assets are presented as part of Other
Assets in the Consolidated Statements of Financial Condition.
[2]
The tables above exclude assets that have been fully
amortized.
Total
amortization expense for
all capitalized software
and hosting arrangement
cost, reflected as
part of
technology and software
expenses in the consolidated statement of operations,
is as follows:
85
Quarters ended June 30,
Six
months ended June 30,
(In thousands)
2025
2024
2025
2024
Software development and license costs
$
$
$
$
Cloud computing arrangements
Total amortization
expense
$
$
$
$
86
Note 13 – Goodwill and other intangible assets
Goodwill
There were
The following tables present the gross amount
of goodwill and accumulated impairment losses
by reportable segment:
June 30, 2025
Balance at
Balance at
June 30,
Accumulated
June 30,
2025
impairment
2025
(In thousands)
losses
Banco Popular de Puerto Rico
$
$
$
Popular U.S.
Total Popular,
Inc.
$
$
$
December 31, 2024
December 31,
Accumulated
December 31,
2024
impairment
2024
(In thousands)
losses
Banco Popular de Puerto Rico
$
$
$
Popular U.S.
Total Popular,
Inc.
$
$
$
Other Intangible Assets
The following table reflects the components of
other intangible assets subject to amortization:
Gross Carrying
Accumulated
Net Carrying
(In thousands)
Amount
Amortization
Value
June 30, 2025
Core deposits
$
$
$
Other customer relationships
Total other intangible
assets
$
$
$
December 31, 2024
Core deposits
$
$
$
Other customer relationships
Total other intangible
assets
$
$
$
During the quarter ended June 30, 2025, the Corporation recognized
$
assets
with
definite
useful
lives
(June
30,
2024
-
$
recognized $
The following
table presents
the estimated
amortization of
the intangible
assets with
definite useful
lives for
each of
the following
periods:
87
(In thousands)
Remaining 2025
$
Year 2026
Year 2027
Year 2028
Year 2029
88
Note 14 – Deposits
Total deposits as of the end of the periods presented consisted of:
(In thousands)
June 30, 2025
December 31, 2024
Savings accounts
$
$
NOW, money market and other interest
-bearing demand deposits
Total savings, NOW,
money market and other interest-bearing demand deposits
Certificates of deposit:
Under $250,000
$250,000 and over
Total interest-bearing
deposits
$
$
Non- interest-bearing deposits
$
$
Total deposits
$
$
A summary of certificates of deposits by maturity at
June 30, 2025 follows:
(In thousands)
2025
$
2026
2027
2028
2029
2030 and thereafter
Total certificates of
deposit
$
At June 30, 2025, the Corporation had brokered
deposits amounting to $
The aggregate amount
of overdrafts in
demand deposit accounts that
were reclassified to
loans was $
(December 31, 2024 - $
At
June
30,
2025,
Puerto
Rico
government
deposits
amounted
to
$
bearing accounts, which are indexed to short-term market
rates and fluctuate in cost with changes in those rates, in accordance
with
contractual terms.
89
Note 15 – Borrowings
Assets sold under agreements to repurchase
Assets sold under agreements to repurchase amounted
to $
The Corporation’s
repurchase transactions are
overcollateralized with the
securities detailed in
the table
below.
The Corporation’s
repurchase
agreements
have
a
right
of
set-off
with
the
respective
counterparty
under
the
supplemental
terms
of
the
master
repurchase agreements.
In an
event of
default,
each party
has a
right of
set-off
against the
other party
for amounts
owed in
the
related
agreement
and
any
other
amount
or
obligation
owed
in
respect
of
any
other
agreement
or
transaction
between
them.
Pursuant to the
Corporation’s accounting policy,
the repurchase agreements
are not offset
with other repurchase
agreements held
with the same counterparty.
The following table
presents information related to
the Corporation’s repurchase
transactions accounted for as
secured borrowings
that
are
collateralized
with
debt
securities
available-for-sale,
debt
securities
held-to-maturity,
and
other
assets
held-for-trading
purposes or
which have
been obtained
under agreements
to resell.
It is
the Corporation’s
policy to
maintain effective
control over
assets sold under agreements to repurchase; accordingly, such
securities continue to be carried on the Consolidated Statements of
Financial Condition.
Repurchase agreements accounted for as secured borrowings
June 30, 2025
December 31, 2024
Repurchase
Repurchase
(In thousands)
U.S. Treasury securities
Within 30 days
$
$
After 30 to 90 days
Total U.S. Treasury
securities
Mortgage-backed securities
Total mortgage-backed
securities
Total
$
$
Repurchase agreements in this portfolio
are generally short-term, often overnight.
As such our risk
is very limited.
We manage the
liquidity risks arising from secured
funding by sourcing funding globally from
a diverse group of counterparties, providing
a range of
securities collateral and pursuing longer durations,
when appropriate.
Other short-term borrowings
At June 30,
2025 and December 31,
2024, other short-term
borrowings consisted of
$
FHLB Advances.
90
Notes Payable
The following table presents the composition of notes
payable at June 30, 2025 and December
31, 2024.
(In thousands)
June 30, 2025
December 31, 2024
Advances with the FHLB with maturities ranging from
fixed rates ranging from
% to
%
$
$
Unsecured senior debt securities maturing on
%, net of debt issuance costs of $
Junior subordinated deferrable interest debentures (related to
trust preferred securities) maturing on
% to
%, net of debt issuance costs of $
Total notes payable
$
$
Note: Refer to the 2024 Form 10-K for rates information
at December 31, 2024.
A breakdown of borrowings by contractual maturities
at June 30, 2025 is included in the
table below.
Assets sold under
Short-term
(In thousands)
agreements to
repurchase
borrowings
Notes payable
Total
2025
$
$
$
$
2026
2028
2029
Later years
Total borrowings
$
$
$
$
At June 30, 2025 and
December 31, 2024, the Corporation had FHLB borrowing facilities whereby
the Corporation could borrow up
to $
31, 2024,
the Corporation
had placed
$
secure
deposits.
The
FHLB
borrowing
facilities
are
collateralized
with
securities
and
loans
held-in-portfolio,
and
do
not
have
restrictive covenants or callable features.
Also, at
June 30,
2025, the Corporation
had borrowing facilities
at the
discount window of
the Federal
Reserve Bank of
New York
amounting to
$
The facilities are a collateralized source of credit
that is highly dependable even under difficult market conditions.
91
Note 16 − Other liabilities
The caption of other liabilities in the Consolidated
Statements of Financial Condition consists of the
following major categories:
(In thousands)
June 30, 2025
December 31, 2024
Accrued expenses
$
$
Accrued interest payable
Accounts payable
Dividends payable
Trades payable
Liability for GNMA loans sold with an option to repurchase
Reserves for loan indemnifications
Reserve for operational losses
Operating lease liabilities (Note 27)
Finance lease liabilities (Note 27)
Pension benefit obligation
Postretirement benefit obligation
Others
Total other liabilities
$
$
92
Note 17 – Stockholders’ equity
As of June 30, 2025, stockholders’ equity totaled $
cash dividends of $
) per common share amounting to
$
of $
.
During
the
quarter
ended
June
30,
2025,
the
Corporation
completed
the
repurchase
of
$
the common stock repurchase program of up
to $
On July 16, 2025, the Corporation announced the following actions as part of its capital plan: (i) an increase in
its quarterly common
stock dividend from $
approval by its Board of Directors, and (ii) a new
common stock repurchase program of up to $
93
Note 18 – Other comprehensive income
The following
table presents changes
in accumulated other
comprehensive income by
component for the
quarters and six
months
ended June 30, 2025 and 2024.
Changes in Accumulated Other Comprehensive Loss
by Component [1]
Quarters ended
Six
months ended
June 30,
June 30,
(In thousands)
2025
2024
2025
2024
Foreign currency translation
Beginning Balance
$
(
78,011
)
$
(
68,548
)
$
(
71,365
)
$
(
64,528
)
Other comprehensive income (loss)
(
3,855
)
Net change
(
3,855
)
Ending balance
$
(
70,512
)
$
(
68,383
)
$
(
70,511
)
$
(
68,383
)
Adjustment of pension and
postretirement benefit plans
Beginning Balance
$
(
93,271
)
$
(
115,632
)
$
(
94,692
)
$
(
117,894
)
Amounts reclassified from accumulated other
comprehensive loss for amortization of net losses
Net change
Ending balance
$
(
91,851
)
$
(
113,371
)
$
(
91,851
)
$
(
113,372
)
Unrealized net holding losses
on debt securities
Beginning Balance
$
(
1,318,705
)
$
(
1,749,006
)
$
(
1,495,183
)
$
(
1,713,109
)
Other comprehensive income (loss)
(
54,163
)
Amounts reclassified from accumulated other
comprehensive loss for amortization of net unrealized
losses of debt securities transferred from available-for-
sale to held-to-maturity
Net change
Ending balance
$
(
1,233,294
)
$
(
1,696,528
)
$
(
1,233,295
)
$
(
1,696,527
)
Total
$
(
1,395,657
)
$
(
1,878,282
)
$
(
1,395,657
)
$
(
1,878,282
)
[1]
All amounts presented are net of tax.
94
The following
table presents
the amounts
reclassified out
of each
component of
accumulated other comprehensive
income during
the quarters and six months ended June 30, 2025
and 2024.
Reclassifications Out of Accumulated Other Comprehensive
Loss
Quarters ended
Six
months ended
Affected Line Item in the
June 30,
June 30,
(In thousands)
Consolidated Statements of Operations
2025
2024
2025
2024
Adjustment of pension and postretirement benefit plans
Amortization of net losses
Other operating expenses
$
(
2,272
)
$
(
3,618
)
$
(
4,545
)
$
(
7,236
)
Total before tax
(
2,272
)
(
3,618
)
(
4,545
)
(
7,236
)
Income tax benefit
Total net of tax
$
(
1,420
)
$
(
2,261
)
$
(
2,841
)
$
(
4,522
)
Unrealized net holding losses on debt securities
Amortization of unrealized net losses of debt
securities transferred to held-to-maturity
Interest income from investment securities
$
(
46,242
)
$
(
44,421
)
$
(
91,552
)
$
(
88,430
)
Total before tax
(
46,242
)
(
44,421
)
(
91,552
)
(
88,430
)
Income tax expense
Total net of tax
$
(
36,994
)
$
(
35,537
)
$
(
73,242
)
$
(
70,745
)
Total reclassification
adjustments, net of tax
$
(
38,414
)
$
(
37,798
)
$
(
76,083
)
$
(
75,267
)
95
Note 19 – Guarantees
The Corporation
has obligations
upon the
occurrence of
certain events
under financial
guarantees provided
in certain
contractual
agreements.
Also,
from
time
to
time,
the
Corporation
securitized
mortgage
loans
into
guaranteed
mortgage-backed
securities
subject in certain instances, to
lifetime credit recourse on the
loans that serve as collateral
for the mortgage-backed securities. The
Corporation has
not sold
any mortgage
loans subject
to credit
recourse since
2009. Also,
from time
to time,
the Corporation
may
sell, in
bulk sale
transactions, residential
mortgage loans
and Small
Business Administration
(“SBA”) commercial
loans subject
to
credit
recourse
or
to
certain
representations
and
warranties
from
the
Corporation
to
the
purchaser.
These
representations
and
warranties may
relate, for
example, to
borrower creditworthiness,
loan documentation,
collateral,
prepayment and
early payment
defaults. The
Corporation may
be required
to
repurchase the
loans under
the credit
recourse agreements
or
representation and
warranties
At June 30, 2025, the Corporation serviced $
credit recourse provisions, principally loans associated
with FNMA and FHLMC residential mortgage loan
securitization programs. In
the event
of any
customer default,
pursuant to
the credit
recourse provided,
the Corporation
is required
to repurchase
the loan
or
reimburse
the
third-party investor
for
the
loss
incurred. The
maximum
potential amount
of
future payments
that
the
Corporation
would be required
to make under
the recourse arrangements in
the event of
nonperformance by the
borrowers is equivalent to
the
total outstanding balance of the residential mortgage loans serviced with recourse and
interest, if applicable. During the quarter and
six
months
ended
June
30,
2025,
the
Corporation
repurchased
$
balance in mortgage loans subject
to the credit recourse provisions
(June 30, 2024
-
$
the event
of nonperformance
by the
borrower,
the Corporation
has rights
to the
underlying collateral
securing the
mortgage loan.
The
Corporation suffers
ultimate losses
on
these
loans
when the
proceeds
from
a foreclosure
sale
of
the
property
underlying a
defaulted mortgage loan are less
than the outstanding principal balance of
the loan plus any uncollected interest
advanced and the
costs of holding
and disposing the related
property. At
June 30, 2025,
the Corporation’s liability
established to cover
the estimated
credit loss exposure related to loans sold or serviced
with credit recourse amounted to $
The following table shows the changes in the Corporation’s liability of estimated losses related to loans serviced with credit recourse
provisions during the quarters and six months ended
June 30, 2025 and 2024.
Quarters ended June 30,
Six months ended June 30,
(In thousands)
2025
2024
2025
2024
Balance as of beginning of period
$
$
$
$
Provision (benefit) for recourse liability
(
205
)
(
204
)
(
375
)
Net charge-offs
(
21
)
(
91
)
(
65
)
(
193
)
Balance as of end of period
$
$
$
$
From time
to
time, the
Corporation sells
loans and
agrees to
indemnify the
purchaser for
credit
losses or
any
breach of
certain
representations and warranties made in connection
with the sale.
Servicing agreements
relating to
the mortgage-backed
securities programs
of FNMA,
FHLMC and
GNMA, and
to mortgage
loans
sold or serviced to certain other investors, including FHLMC,
require the Corporation to advance funds to
make scheduled payments
of
principal, interest,
taxes
and
insurance, if
such
payments have
not
been
received from
the
borrowers. At
June
30,
2025, the
Corporation serviced $
2024 - $
from liquidation proceeds when the mortgage
loan is foreclosed or,
in the case of FHA/VA
loans, under the applicable FHA
and
VA
insurance
and guarantees
programs. However,
in the
meantime, the
Corporation must
absorb the
cost
of the
funds
it
advances
during the
time the
advance is
outstanding. The
Corporation must
also bear
the costs
of attempting
to collect
on delinquent
and
defaulted
mortgage
loans.
In
addition,
if
a
defaulted
loan
is
not
cured,
the
mortgage
loan
would
be
canceled
as
part
of
the
foreclosure proceedings
and the
Corporation would
not receive
any future
servicing income
with respect
to that
loan. At
June 30,
2025,
the
outstanding balance
of
funds
advanced
by
the
Corporation under
such
mortgage
loan servicing
agreements was
$
million
(December
31,
2024
-
$
experience
increased delinquencies,
the
Corporation would
be
required to
dedicate
additional cash
resources to
comply
with its
obligation to advance funds as well as incur additional
administrative costs related to increases in collection
efforts.
96
Popular,
Inc. Holding
Company (“PIHC”) fully
and unconditionally guarantees
certain borrowing
obligations issued by
certain of
its
% owned consolidated subsidiaries amounting to $
at both June
30, 2025 and December
31, 2024, PIHC fully
and unconditionally guaranteed on a
subordinated basis $
capital securities
(trust preferred
securities) issued
by wholly-owned
issuing trust
entities to
the extent
set forth
in the
applicable
guarantee agreement. Refer to
Note 17 to
the Consolidated Financial Statements
in the 2024
Form 10-K for
further information on
the trust preferred securities.
97
Note 20 – Commitments and contingencies
Off-balance sheet risk
The Corporation
is a
party to
financial instruments
with off-balance
sheet credit
risk in
the normal
course of
business to
meet the
financial needs of its customers. These financial instruments
include loan commitments, letters of credit and standby
letters of credit.
These instruments involve,
to varying
degrees, elements of
credit and
interest rate
risk in
excess of
the amount
recognized in
the
Consolidated Statements of Financial Condition.
The
Corporation’s
exposure
to
credit
loss
in
the
event
of
nonperformance
by
the
other
party
to
the
financial
instrument
for
commitments to extend credit, standby
letters of credit and financial
guarantees is represented by the
contractual notional amounts
of those instruments. The
Corporation uses the same
credit policies in
making these commitments and conditional
obligations as it
does for those reflected on the Consolidated Statements
of Financial Condition.
Financial instruments with
off-balance sheet credit
risk, whose contract
amounts represent potential credit
risk as of
the end of
the
periods presented were as follows:
(In thousands)
June 30, 2025
December 31, 2024
Commitments to extend credit:
Credit card lines
$
$
Commercial lines of credit
Construction lines of credit
Other consumer unused credit commitments
Commercial letters of credit
Standby letters of credit
Commitments to originate or fund mortgage loans
At June
30, 2025
and December
31, 2024,
the Corporation
maintained a
reserve of
$
potential losses associated with unfunded loan commitments
related to commercial and construction lines of
credit.
Other commitments
At June
30, 2025
and December 31,
2024, the
Corporation also maintained
other non-credit
commitments for $
for the acquisition of other investments.
Business concentration
Since the Corporation’s business activities are concentrated primarily in Puerto Rico, its results of operations and financial condition
are dependent
upon the
general trends
of the
Puerto Rico
economy and,
in particular,
the residential
and commercial
real estate
markets. The concentration
of the Corporation’s
operations in Puerto Rico
exposes it to
greater risk than other
banking companies
with a wider geographic base. Its
asset and revenue composition by geographical area
is presented in Note 32
to the Consolidated
Financial Statements.
Puerto
Rico
has
faced
significant
fiscal
and
economic
challenges
for
over
a
decade.
In
response
to
such
challenges,
the
U.S.
Congress
enacted
PROMESA
in
2016,
which,
among
other
things,
established
the
Oversight
Board
and
a
framework
for
the
restructuring
of
the
debts
of
the
Commonwealth,
its
instrumentalities
and
municipalities.
The
Commonwealth
and
several
of
its
instrumentalities have
availed themselves
of debt
restructuring proceedings
under PROMESA.
As of
the date
of this
report, while
municipalities have been designated as covered entities under PROMESA, no municipality has commenced or has been authorized
by the Oversight Board to commence, any such debt
restructuring proceeding under PROMESA.
At
June
30,
2025,
the
Corporation’s
direct
exposure
to
the
Puerto
Rico
government
and
its
instrumentalities and
municipalities
totaled
$
Corporation’s exposure at
June 30, 2025
included up to
$
exposure, none of
which was outstanding. Of
the amount outstanding,
$
($
31, 2024 were obligations from various Puerto Rico municipalities. In most cases, these were “general obligations” of a municipality,
to
which
the
applicable
municipality
has
pledged
its
good
faith,
credit
and
unlimited
taxing
power,
or
“special
obligations”
of
a
municipality,
to
which
the
applicable
municipality
has
pledged
other
revenues.
At
June
30,
2025,
approximately
%
of
the
98
Corporation’s exposure
to municipal loans
and securities was
concentrated in the
municipalities of San
Juan, Guaynabo,
Carolina
and Caguas.
The following table details the loans and investments representing the Corporation’s direct exposure to
the Puerto Rico government
according to their maturities as of June 30, 2025
:
(In thousands)
Investment
Portfolio
Loans
Total Outstanding
Total Exposure
Central Government
Within 1 year
$
$
$
$
After 10 years
Total Central
Government
Municipalities
Within 1 year
After 1 to 5 years
After 5 to 10 years
After 10 years
Total Municipalities
Total Direct Government
Exposure
$
$
$
$
In addition,
at June
30, 2025,
the Corporation had
$
entities but for
which the principal
source of
repayment is non-governmental
($
$
instrumentality
that
has
been
designated
as
a
covered
entity
under
PROMESA
(December
31,
2024
-
$
mortgage loans
are secured
by first
mortgages on
Puerto Rico
residential properties
and the
HFA
insurance covers
losses in
the
event of
a borrower default
and upon
the satisfaction
of certain
other conditions. The
Corporation also had
at June
30, 2025,
$
million in
bonds issued by
HFA which
are secured by
second mortgage loans
on Puerto Rico
residential properties, and
for which
HFA also provides
insurance to cover losses in the
event of a borrower default and
upon the satisfaction of certain other
conditions
(December 31,
2024 -
$
those serving
as collateral
for the
HFA
bonds default
and the
collateral is
insufficient to
satisfy the
outstanding balance
of these
loans,
HFA’s
ability
to
honor
its
insurance
will
depend, among
other factors,
on
the
financial
condition
of
HFA
at
the
time
such
obligations
become
due
and
payable. The
Corporation does
not consider
the
government guarantee
when
estimating the
credit
losses
associated
with
this
portfolio.
Although
the
Governor
is
currently
authorized
by
local
legislation
to
impose
a
temporary
moratorium on the financial obligations of the HFA, a moratorium on
such obligations has not been imposed as of
the date hereof.
BPPR’s
commercial loan
portfolio also
includes loans
to
private borrowers
who
are service
providers, lessors,
suppliers or
have
other relationships with the government. These
borrowers could be negatively affected by
the Commonwealth’s fiscal crisis and
the
ongoing
Title
III
proceedings
under
PROMESA.
Similarly,
BPPR’s
mortgage
and
consumer
loan
portfolios
include
loans
to
government
employees
and
retirees,
which
could
also
be
negatively
affected
by
fiscal
measures
such
as
employee
layoffs
or
furloughs or reductions in pension benefits.
In
addition,
$
Government or its agencies at June 30,
2025 (compared to $
Corporation also had U.S. Treasury and obligations from the U.S.
Government, its agencies or government sponsored
entities within
the
portfolio
of
available-for-sale
and
held-to-maturity
securities
as
described
in
Note
5
and
6
to
the
Consolidated
Financial
Statements.
At
June
30,
2025, the
Corporation had
operations
in
the
United States
Virgin
Islands
(the
“USVI”) and
had
$
exposure to USVI government
entities (December 31, 2024
- $
economic challenges that could adversely affect the ability
of its public corporations and instrumentalities
to service their outstanding
debt obligations.
99
At June 30,
2025, the Corporation had
operations in the British
Virgin Islands (“BVI”)
and it had
a loan portfolio
amounting to $
million comprised
of various
retail and
commercial clients,
compared to
a loan
portfolio of
$
June 30, 2025, the Corporation had
FDIC Special Assessment
On
November 16,
2023, the
Federal Deposit
Insurance Corporation
(“FDIC”)
imposed a
special
assessment (the
“FDIC Special
Assessment”) amount to
recover the losses
to the
deposit insurance fund
resulting from the
FDIC’s funds
used, in March
2023, in
connection with the systemic risk exception, to the least-cost resolution
test, under the Federal Deposit Insurance Act to manage the
receiverships of several failed banks. In connection with this assessment, the Corporation accrued $
tax, in the fourth quarter of 2023, representing
the full amount of the assessment.
During the first quarter of 2024, the Corporation recorded an additional expense of $
FDIC's higher loss estimate communicated
by the FDIC. The
special assessment amount and collection
period may change as
the
estimated loss is periodically adjusted or if the total amount
collected varies.
Legal Proceedings
The nature of Popular’s
business ordinarily generates claims, litigation, arbitration,
regulatory and governmental investigations, and
legal
and
administrative
cases
and
proceedings
(collectively,
“Legal
Proceedings”).
Popular’s
Legal
Proceedings
may
involve
various lines
of business
and include
claims relating
to contract,
torts, consumer
protection, securities,
antitrust, employment,
tax
and
other
laws.
The
recovery
sought
in
Legal
Proceedings
may
include
substantial
or
indeterminate
compensatory
damages,
punitive
damages,
injunctive
relief,
or
recovery
on
a
class-wide
basis.
When
the
Corporation
determines
that
it
has
meritorious
defenses to the claims
asserted, it vigorously defends
itself. The Corporation will
consider the settlement of
cases (including cases
where it has meritorious defenses) when, in management’s judgment,
it is in the best interest of the Corporation and
its stockholders
to do so.
On at least
a quarterly basis,
Popular assesses its
liabilities and contingencies
relating to outstanding Legal
Proceedings
utilizing the most current information available. For
matters where it is probable that the Corporation will
incur a material loss and the
amount can be reasonably estimated, the Corporation establishes an accrual for
the loss. Once established, the accrual is
adjusted
on at least a quarterly basis to reflect any relevant
developments, as appropriate. For matters where a material loss is not probable,
or the amount of the loss cannot be reasonably
estimated, no accrual is established.
In certain cases,
exposure to loss
exists in
excess of any
accrual to the
extent such loss
is reasonably possible,
but not
probable.
Management believes and
estimates that the
range of reasonably
possible losses (with
respect to those
matters where such
limits
may be determined in excess of amounts accrued) for current Legal Proceedings ranged from $
June
30,
2025.
In
certain
cases, management
cannot
reasonably estimate
the
possible
loss
at
this
time.
Any
estimate involves
significant
judgment,
given
the
varying
stages
of
the
Legal
Proceedings
(including
the
fact
that
many
of
them
are
currently
in
preliminary stages), the existence of multiple defendants in several of the current Legal Proceedings whose share of liability has yet
to be
determined, the
numerous unresolved issues
in many
of the
Legal Proceedings,
and the
inherent uncertainty
of the
various
potential
outcomes
of
such
Legal
Proceedings.
Accordingly,
management’s
estimate
will
change
from
time-to-time,
and
actual
losses may be more or less than the current estimate.
While the
outcome of
Legal Proceedings
is inherently
uncertain, based
on information
currently available,
advice of
counsel, and
available
insurance
coverage,
management
believes
that
the
amount
it
has
already
accrued
is
adequate
and
any
incremental
liability arising from
the Legal Proceedings
in matters in
which a loss
amount can be
reasonably estimated will not
have a material
adverse effect
on the Corporation’s
consolidated financial position.
However, in
the event
of unexpected future
developments, it is
possible that
the ultimate
resolution of
these matters
in a
reporting period, if
unfavorable, could have
a material
adverse effect
on
the Corporation’s consolidated financial position for that period.
100
Note 21 – Non-consolidated variable interest
entities
The Corporation is involved with
deemed to
be variable
interest entities
(“VIEs”) since
the equity
investors at
risk have
no substantial
decision-making rights.
The
Corporation does not
hold any variable
interest in the
trusts, and therefore,
cannot be the
trusts’ primary beneficiary.
Furthermore,
the
Corporation concluded
that
it did
not
hold
a
controlling financial
interest
in
these
trusts
since the
decisions
of
the
trusts
are
predetermined through
the trust
documents and the
guarantee of
the trust
preferred securities is
irrelevant since
in substance
the
sponsor is guaranteeing its own debt.
Also, the
Corporation is
involved with
various special
purpose entities
mainly in
guaranteed mortgage
securitization transactions,
including
GNMA
and
FNMA.
The
Corporation
has
also
engaged
in
securitization
transactions
with
FHLMC,
but
considers
its
exposure in the form of servicing fees and servicing advances not to be significant
at June 30, 2025
.
These special purpose entities
are deemed
to be
VIEs since
they lack
equity investments
at risk.
The Corporation’s
continuing involvement in
these guaranteed
loan securitizations includes owning certain beneficial interests
in the form of securities as
well as the servicing rights
retained. The
Corporation is
not required to
provide additional financial
support to
any of
the variable
interest entities
to which
it has
transferred
the
financial
assets.
The
mortgage-backed
securities,
to
the
extent
retained,
are
classified
in
the
Corporation’s
Consolidated
Statements
of
Financial
Condition
as
available-for-sale
or
trading
securities.
The
Corporation
concluded
that,
essentially,
these
entities (FNMA
and GNMA)
control the
design of
their respective
VIEs, dictate
the quality
and nature
of the
collateral, require
the
underlying insurance, set
the servicing standards
via the servicing
guides and can
change them at
will, and can
remove a primary
servicer with cause,
and without cause
in the
case of
FNMA. Moreover,
through their guarantee
obligations, agencies (FNMA
and
GNMA) have the obligation to absorb losses that
could be potentially significant to the VIE.
The
Corporation
holds
variable
interests
in
these
VIEs
in
the
form
of
agency
mortgage-backed
securities
and
collateralized
mortgage obligations, including those securities originated by the Corporation and those acquired from
third parties. Additionally, the
Corporation holds agency mortgage-backed securities
and agency collateralized mortgage obligations
issued by third party
VIEs in
which
it
has
no
other
form
of
continuing
involvement. Refer
to
Note
23
to
the
Consolidated
Financial
Statements
for
additional
information on the
debt securities outstanding at
June 30, 2025
and December 31,
2024, which are
classified as available-for-sale
and
trading
securities
in
the
Corporation’s
Consolidated
Statements
of
Financial
Condition.
In
addition,
the
Corporation
holds
variable
interests
in
the
form
of
servicing
fees,
since
it
retains
the
right
to
service
the
transferred
loans
in
those
government-
sponsored special purpose entities (“SPEs”) and may also purchase the right to service loans in other government-sponsored SPEs
that were transferred to those SPEs by a third-party.
The following
table presents
the carrying
amount and
classification of
the assets
related to
the Corporation’s
variable interests
in
non-consolidated VIEs
and the
maximum exposure
to loss
as a
result of
the Corporation’s
involvement as
servicer of
GNMA and
FNMA loans at June 30, 2025 and December 31,
2024.
101
(In thousands)
June 30, 2025
December 31, 2024
Assets
Servicing assets:
Mortgage servicing rights
$
$
Total servicing
assets
$
$
Other assets:
Servicing advances
$
$
Total other assets
$
$
Total assets
$
$
Maximum exposure to loss
$
$
The size of
the non-consolidated VIEs,
in which the
Corporation has a
variable interest in
the form
of servicing fees,
measured as
the total unpaid principal balance of the loans,
amounted to $
The Corporation
determined that
the maximum
exposure to
loss includes
the fair
value of
the MSRs
and the
assumption that
the
servicing advances at June 30, 2025 and December 31, 2024, will not be recovered. The agency debt securities are not included as
part of the maximum exposure to loss since they
are guaranteed by the related agencies.
ASU 2009-17 requires that an ongoing primary beneficiary assessment should be made to determine whether the Corporation is the
primary beneficiary of any of the VIEs it is
involved with. The conclusion on the assessment of these non-consolidated VIEs has not
changed
since
their
initial
evaluation.
The
Corporation
concluded
that
it
is
still
not
the
primary
beneficiary
of
these
VIEs,
and
therefore, these VIEs are not required to be consolidated
in the Corporation’s financial statements at June 30, 2025.
102
Note 22 – Related party transactions
Centro Financiero BHD, S.A.
At June 30, 2025, the Corporation had
a
% equity interest in Centro Financiero BHD,
S.A. (“BHD”), one of the largest banking
and financial
services groups
in the
Dominican Republic.
During the
six months
ended June
30, 2025,
the Corporation
recorded
$
2024 - $
) million recorded through Other Comprehensive Income (June 30, 2024 - ($
) million) related
to
foreign
currency
translation adjustments
and
changes
in
the
fair value
of
available
for
sale
securities.
At
June
30,
2025,
the
investment in BHD had a carrying amount of
$
million in cash dividend distributions during the
six months ended June 30, 2025 (June 30, 2024 - $
103
Note 23 – Fair value measurement
ASC Subtopic
820-10 “Fair
Value
Measurements and
Disclosures” establishes
a fair
value hierarchy
that prioritizes
the inputs
to
valuation techniques
used to
measure fair
value into
three levels
in order
to increase
consistency and
comparability in
fair value
measurements and disclosures. The hierarchy is broken
down into three levels based on the reliability
of inputs as follows:
●
Level
1
- Unadjusted
quoted prices
in
active markets
for identical
assets
or liabilities
that
the
Corporation has
the
ability to
access at the
measurement date. Valuation
on these instruments
does not necessitate a
significant degree of judgment
since
valuations are based on quoted prices that are
readily available in an active market.
●
Level 2
- Quoted
prices other
than those
included in
Level 1
that are
observable either
directly or
indirectly.
Level 2
inputs
include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in
markets
that
are
not
active,
or
other inputs
that
are
observable
or that
can
be
corroborated by
observable market
data
for
substantially the full term of the financial instrument.
●
Level 3
- Inputs are unobservable and significant
to the fair value measurement.
Unobservable inputs reflect the Corporation’s
own judgements about assumptions that market participants
would use in pricing the asset or liability.
The
Corporation
maximizes
the
use
of
observable
inputs
and
minimizes
the
use
of
unobservable
inputs
by
requiring
that
the
observable inputs be used when
available. Fair value is
based upon quoted market prices
when available. If listed prices
or quotes
are
not
available,
the
Corporation
employs
internally-developed
models
that
primarily
use
market-based
inputs
including
yield
curves, interest rates,
volatilities, and credit
curves, among others.
Valuation
adjustments are limited
to those necessary
to ensure
that the financial instrument’s
fair value is adequately representative of
the price that would
be received or paid
in the marketplace.
These adjustments include amounts that reflect counterparty credit quality,
the Corporation’s credit standing, constraints on liquidity
and unobservable parameters that are applied consistently.
There have been no changes in the
Corporation’s methodologies used
to estimate the fair value of assets and liabilities from
those disclosed in the 2024 Form 10-K.
The estimated fair
value may
be subjective in
nature and may
involve uncertainties and
matters of
significant judgment for
certain
financial instruments. Changes in the underlying assumptions
used in calculating fair value could significantly
affect the results.
Fair Value on a Recurring and Nonrecurring Basis
The following fair value hierarchy tables
present information about the Corporation’s assets
and liabilities measured at fair value
on
a recurring basis at June 30, 2025 and December
31, 2024:
104
At June 30, 2025
(In thousands)
Level 1
Level 2
Level 3
Measured at NAV
Total
RECURRING FAIR VALUE
MEASUREMENTS
Assets
Debt securities available-for-sale:
U.S. Treasury securities
$
$
$
$
$
Collateralized mortgage obligations - federal
agencies
Mortgage-backed securities
Other
Total debt securities
available-for-sale
$
$
$
$
$
Trading account debt securities, excluding
derivatives:
U.S. Treasury securities
$
$
$
$
$
Obligations of Puerto Rico, States and political
subdivisions
Collateralized mortgage obligations
Mortgage-backed securities
Other
Total trading account
debt securities, excluding
derivatives
$
$
$
$
$
Equity securities
$
$
$
$
$
Mortgage servicing rights
Loans held-for-sale
Derivatives
Total assets measured
at fair value on a
recurring basis
$
$
$
$
$
Liabilities
Derivatives
$
$
(
23,349
)
$
$
$
(
23,349
)
Total liabilities measured
at fair value on a
recurring basis
$
$
(
23,349
)
$
$
$
(
23,349
)
105
At December 31, 2024
(In thousands)
Level 1
Level 2
Level 3
Measured at NAV
Total
RECURRING FAIR VALUE
MEASUREMENTS
Assets
Debt securities available-for-sale:
U.S. Treasury securities
$
$
$
$
$
Collateralized mortgage obligations - federal
agencies
Mortgage-backed securities
Other
Total debt securities
available-for-sale
$
$
$
$
$
Trading account debt securities, excluding
derivatives:
U.S. Treasury securities
$
$
$
$
$
Obligations of Puerto Rico, States and political
subdivisions
Collateralized mortgage obligations
Mortgage-backed securities
Other
Total trading account
debt securities, excluding
derivatives
$
$
$
$
$
Equity securities
$
$
$
$
$
Mortgage servicing rights
Loans held-for-sale
Derivatives
Total assets measured
at fair value on a
recurring basis
$
$
$
$
$
Liabilities
Derivatives
$
$
(
22,832
)
$
$
$
(
22,832
)
Total liabilities measured
at fair value on a
recurring basis
$
$
(
22,832
)
$
$
$
(
22,832
)
Loans held-for-sale measured at fair value
Loans held-for-sale measured at fair value were priced
based on secondary market prices. These loans
are classified as Level 2.
The
following
tables summarize
the difference
between the
aggregate fair
value
and the
aggregate unpaid
principal
balance
for
mortgage loans originated as held-for-sale measured
at fair value as of June 30, 2025 and December
31, 2024.
(In thousands)
June 30, 2025
Aggregate Unpaid
Fair Value
Principal Balance
Difference
Loans held for sale
$
$
$
(In thousands)
December 31, 2024
Aggregate Unpaid
Fair Value
Principal Balance
Difference
Loans held for sale
$
$
$
(
13
)
106
The fair value information included in the following tables is
not as of period end, but as of
the date that the fair value measurement
was recorded during the
six months ended June
30, 2025 and 2024
and excludes nonrecurring fair
value measurements of assets
no longer outstanding as of the reporting date.
Six months ended June 30, 2025
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE
MEASUREMENTS
Assets
Write-downs
Loans
[1]
$
$
$
$
$
(
91
)
Other real estate owned
[2]
(
1,573
)
Other foreclosed assets
[2]
(
46
)
Total assets measured
at fair value on a nonrecurring basis
$
$
$
$
$
(
1,710
)
[1] Relates mainly to certain impaired collateral dependent loans.
The impairment was measured based on the fair value
of the collateral, which is
derived from appraisals that take into consideration prices
in observed transactions involving similar assets in similar
locations. Costs to sell are
excluded from the reported fair value amount.
[2] Represents the fair value of foreclosed real estate and
other collateral owned that were written down to their fair
value. Costs to sell are
excluded from the reported fair value amount.
Six months ended June 30, 2024
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE
MEASUREMENTS
Assets
Write-downs
Loans
[1]
$
$
$
$
$
(
329
)
Loans held-for-sale
[2]
(
38
)
Other real estate owned
[3]
(
1,602
)
Other foreclosed assets
[3]
(
46
)
Total assets measured
at fair value on a nonrecurring basis
$
$
$
$
$
(
2,015
)
[1] Relates mainly to certain impaired collateral dependent loans.
The impairment was measured based on the fair value
of the collateral, which is
derived from appraisals that take into consideration prices
in observed transactions involving similar assets in similar
locations. Costs to sell are
excluded from the reported fair value amount.
[2] Relates to a quarterly valuation on loans held-for-sale.
Costs to sell are excluded from the reported fair value amount.
[3] Represents the fair value of foreclosed real estate and
other collateral owned that were written down to their fair
value. Costs to sell are
excluded from the reported fair value amount.
107
The following tables present the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarters
and six months ended June 30, 2025 and 2024.
Quarter ended June 30, 2025
MBS
Other
MBS
Other
classified
securities
classified
securities
as debt
classified as
as trading
classified
securities
account
as trading
Mortgage
available-
available-
account debt
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
rights
assets
Balance at March 31, 2025
$
$
$
$
$
$
Gains (losses) included in earnings
(
5
)
(
1,954
)
(
1,959
)
Additions
Settlements
(
25
)
(
25
)
Balance at June 30, 2025
$
$
$
$
$
$
Changes in unrealized gains (losses) included in
earnings relating to assets still held at June 30,
2025
$
$
$
$
$
$
Six months ended June 30, 2025
MBS
Other
MBS
Other
classified
securities
classified
securities
as debt
classified as
as trading
classified
securities
account
as trading
Mortgage
available-
available-
account debt
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
rights
assets
Balance at January 1, 2025
$
$
$
$
$
$
Gains (losses) included in earnings
(
11
)
(
5,524
)
(
5,535
)
Gains (losses) included in OCI
(
2
)
(
2
)
Additions
Settlements
(
50
)
(
50
)
Transfers out of Level 3
(
1,500
)
(
1,500
)
Balance at June 30, 2025
$
$
$
$
$
$
Changes in unrealized gains (losses) included in
earnings relating to assets still held at June 30,
2025
$
$
$
$
$
(
977
)
$
(
961
)
108
Quarter ended June 30, 2024
MBS
Other
Other
classified
securities
MBS
securities
as debt
classified as
classified
classified
securities
debt securities
as trading
as trading
Mortgage
available-
available-
account debt
account debt
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
rights
assets
Balance at March 31, 2024
$
$
$
$
$
$
Gains (losses) included in earnings
(
8
)
(
1,945
)
(
1,953
)
Gains (losses) included in OCI
(
1
)
(
1
)
Additions
Settlements
(
25
)
(
25
)
Balance at June 30, 2024
$
$
$
$
$
$
Changes in unrealized gains (losses) included in
earnings relating to assets still held at June 30,
2024
$
$
$
$
$
$
Six months ended June 30, 2024
MBS
Other
Other
classified
securities
CMOs
securities
as debt
classified as
classified
MBS
classified
securities
debt securities
as trading
classified as
as trading
Mortgage
available-
available-
account debt
trading account
account debt
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
securities
rights
assets
Balance at January 1,
2024
$
$
$
$
$
$
$
Gains (losses) included in earnings
(
500
)
(
9
)
(
5,384
)
(
5,893
)
Additions
Settlements
(
25
)
(
5
)
(
28
)
(
58
)
Balance at June 30, 2024
$
$
$
$
$
$
$
Changes in unrealized gains (losses)
included in earnings relating to assets
still held at June 30, 2024
$
$
(
500
)
$
$
$
$
(
702
)
$
(
1,190
)
109
Gains and losses (realized and
unrealized) included in earnings for the quarters
and six months ended June 30,
2025 and 2024 for
Level 3 assets and liabilities included in the
previous tables are reported in the Consolidated Statement
of Operations as follows:
Quarter ended June 30, 2025
Six months ended June 30, 2025
Changes in unrealized
Changes in unrealized
Total gains
gains (losses) relating to
Total gains
gains (losses) relating to
(losses) included
assets still held at
(losses) included
assets still held at
(In thousands)
in earnings
reporting date
in earnings
reporting date
Mortgage banking activities
$
(
1,954
)
$
$
(
5,524
)
$
(
977
)
Trading account profit (loss)
(
5
)
(
11
)
Total
$
(
1,959
)
$
$
(
5,535
)
$
(
961
)
Quarter ended June 30, 2024
Six months ended June 30, 2024
Changes in unrealized
Changes in unrealized
Total gains
gains (losses) relating to
Total gains
gains (losses) relating to
(losses) included
assets still held at
(losses) included
assets still held at
(In thousands)
in earnings
reporting date
in earnings
reporting date
Mortgage banking activities
$
(
1,945
)
$
$
(
5,384
)
$
(
702
)
Trading account profit (loss)
(
8
)
(
9
)
Provision for credit losses
(
500
)
(
500
)
Total
$
(
1,953
)
$
$
(
5,893
)
$
(
1,190
)
The following
tables include
quantitative information
about significant
unobservable inputs
used to
derive the
fair value
of Level
3
instruments, excluding those instruments
for which the
unobservable inputs were not
developed by the
Corporation such as
prices
of prior transactions and/or unadjusted third-party pricing
sources at June 30, 2025 and 2024.
Fair value at
(In thousands)
2025
Valuation technique
Unobservable inputs
Weighted average (range) [1]
Other - trading
$
Discounted cash flow model
Weighted average life
Yield
.0%
Prepayment speed
%
Loans held-in-portfolio
$
[2]
External appraisal
Haircut applied on
external appraisals
%
[1]
Weighted average of significant unobservable inputs
used to develop Level 3 fair value measurements
were calculated by relative fair value.
[2]
Loans held-in-portfolio in which haircuts were not applied
to external appraisals were excluded from this table.
110
Fair value at
(In thousands)
2024
Valuation technique
Unobservable inputs
Weighted average (range) [1]
Other - trading
$
Discounted cash flow model
Weighted average life
Yield
.0%
Prepayment speed
%
Loans held-in-portfolio
$
[2]
External appraisal
Haircut applied on
external appraisals
.0%
[1]
Weighted average of significant unobservable inputs
used to develop Level 3 fair value measurements
were calculated by relative fair value.
[2]
Loans held-in-portfolio in which haircuts were not applied
to external appraisals were excluded from this table.
111
Note 24 – Fair value of financial instruments
The fair
value of
financial instruments
is the
amount at
which an
asset or
obligation could
be exchanged
in a
current transaction
between
willing
parties,
other
than
in
a
forced
or
liquidation
sale.
For
those
financial
instruments
with
no
quoted
market
prices
available, fair values have been estimated using present
value calculations or other valuation techniques, as well
as management’s
best judgment with respect to current economic conditions, including discount rates, estimates of future cash flows, and prepayment
assumptions. Many of these
estimates involve various assumptions and
may vary significantly from
amounts that could be
realized
in actual transactions.
The fair
values reflected
herein have
been determined
based on
the prevailing
rate environment at
June 30,
2025 and
December
31, 2024, as applicable. In different interest rate environments,
fair value estimates can differ significantly, especially for certain fixed
rate
financial
instruments.
In
addition,
the
fair
values
presented
do
not
attempt
to
estimate
the
value
of
the
Corporation’s
fee
generating businesses
and anticipated
future business
activities, that
is, they
do not
represent the
Corporation’s value
as a
going
concern. There have been
no changes in the
Corporation’s valuation methodologies and inputs
used to estimate the
fair values for
each class of financial assets and liabilities not measured
at fair value.
The following tables present the
carrying amount and estimated fair
values of financial instruments with their
corresponding level in
the fair
value hierarchy.
The aggregate
fair value
amounts of
the financial
instruments disclosed
do not
represent management’s
estimate of the underlying value of the Corporation.
112
June 30, 2025
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Assets:
Cash and due from banks
$
$
$
$
$
$
Money market investments
Trading account debt securities, excluding
derivatives
[1]
Debt securities available-for-sale
[1]
Debt securities held-to-maturity:
U.S. Treasury securities
$
$
$
$
$
$
Obligations of Puerto Rico, States and political
subdivisions
Collateralized mortgage obligation-federal agency
Securities in wholly owned statutory business trusts
Total debt securities
held-to-maturity
$
$
$
$
$
$
Equity securities:
FHLB stock
$
$
$
$
$
$
FRB stock
Other investments
Total equity securities
$
$
$
$
$
$
Loans held-for-sale
$
$
$
$
$
$
Loans held-in-portfolio
Mortgage servicing rights
Derivatives
June 30, 2025
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Liabilities:
Deposits:
Demand deposits
$
$
$
$
$
$
Time deposits
Total deposits
$
$
$
$
$
$
Assets sold under agreements to repurchase
$
$
$
$
$
$
Other short-term borrowings
[2]
Notes payable:
FHLB advances
$
$
$
$
$
$
Unsecured senior debt securities
Junior subordinated deferrable interest debentures
(related to trust preferred securities)
Total notes payable
$
$
$
$
$
$
Derivatives
$
$
$
$
$
$
[1]
Refer to Note 23 to the Consolidated Financial Statements
for the fair value by class of financial asset and its hierarchy
level.
[2]
Refer to Note 15 to the Consolidated Financial Statements
for the composition of other short-term borrowings.
113
December 31, 2024
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Assets:
Cash and due from banks
$
$
$
$
$
$
Money market investments
Trading account debt securities, excluding
derivatives
[1]
Debt securities available-for-sale
[1]
Debt securities held-to-maturity:
U.S. Treasury securities
$
$
$
$
$
$
Obligations of Puerto Rico, States and political
subdivisions
Collateralized mortgage obligation-federal agency
Securities in wholly owned statutory business trusts
Total debt securities
held-to-maturity
$
$
$
$
$
$
Equity securities:
FHLB stock
$
$
$
$
$
$
FRB stock
Other investments
Total equity securities
$
$
$
$
$
$
Loans held-for-sale
$
$
$
$
$
$
Loans held-in-portfolio
Mortgage servicing rights
Derivatives
December 31, 2024
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Liabilities:
Deposits:
Demand deposits
$
$
$
$
$
$
Time deposits
Total deposits
$
$
$
$
$
$
Assets sold under agreements to repurchase
$
$
$
$
$
$
Other short-term borrowings
[2]
Notes payable:
FHLB advances
$
$
$
$
$
$
Unsecured senior debt securities
Junior subordinated deferrable interest debentures
(related to trust preferred securities)
Total notes payable
$
$
$
$
$
$
Derivatives
$
$
$
$
$
$
[1]
Refer to Note 23 to the Consolidated Financial Statements
for the fair value by class of financial asset and its hierarchy
level.
[2]
Refer to Note 15 to the Consolidated Financial Statements
for the composition of other short-term borrowings.
Refer
to
Note
20
to
the
Consolidated
Financial
Statements
for
the
notional
amount
of
commitments
to
extend
credit,
which
represents the unused portion of
credit facilities granted to customers,
and letters of credit,
which represent the contractual amount
that is required to be paid in the event of nonperformance, at June
30, 2025 and December 31, 2024. The fair value of commitments
to
extend credit
and
letters
of
credit,
which
are
based
on
the
fees
charged
to
enter
into
those
agreements, are
not
material
to
Popular’s financial statements.
114
Note 25 – Net income per common share
The following table sets
forth the computation of
net income per common
share (“EPS”), basic and
diluted, for the quarters
and six
months ended June 30, 2025 and 2024:
Quarters ended June 30,
Six
months ended June 30,
(In thousands, except per share information)
2025
2024
2025
2024
Net income
$
$
$
$
Preferred stock dividends
(
353
)
(
353
)
(
706
)
(
706
)
Net income applicable to common stock
$
$
$
$
Average common shares outstanding
Average potential dilutive common shares
Average common shares outstanding - assuming dilution
Basic EPS
$
$
$
$
Diluted EPS
$
$
$
$
For the quarters
and six months ended June 30, 2025 and 2024, the
Corporation calculated the impact of potential dilutive common
shares under the treasury stock method, consistent with the method used for the preparation of the financial statements for the year
ended December 31, 2024. For a discussion of the
calculation under the treasury stock method, refer
to Note 30 of the Consolidated
Financial Statements included in the 2024 Form 10-K.
115
Note 26 – Revenue from contracts with customers
The
following
table
presents
the
Corporation’s
revenue
streams
from
contracts
with
customers
by
reportable
segment
for
the
quarters and six months ended June 30, 2025 and
2024.
Quarter ended June 30,
Six
months ended June 30,
(In thousands)
2025
2025
BPPR
Popular U.S.
BPPR
Popular U.S.
Service charges on deposit accounts
$
$
$
$
Other service fees:
Debit card fees
Insurance fees, excluding reinsurance
Credit card fees, excluding late fees and membership
fees
Sale and administration of investment products
Trust fees
Total revenue from
contracts with customers [1]
$
$
$
$
[1]
The amounts include intersegment transactions of $
Quarter ended June 30,
Six
months ended June 30,
(In thousands)
2024
2024
BPPR
Popular U.S.
BPPR
Popular U.S.
Service charges on deposit accounts
$
$
$
$
Other service fees:
Debit card fees [2]
Insurance fees, excluding reinsurance
Credit card fees, excluding late fees and membership
fees [2]
Sale and administration of investment products
Trust fees
Total revenue from
contracts with customers [1]
$
$
$
$
[1]
The amounts include intersegment transactions of $
[2]
Effective in the third quarter of 2024, the Corporation
reclassified certain interchange fees, which were
previously included jointly with credit card fees
from common network activity,
as debit card fees. For the quarter and six month period
ended June 30, 2024, interchange fees of $
million were reclassified.
Revenue from contracts with
customers is recognized when,
or as, the performance
obligations are satisfied by
the Corporation by
transferring the promised services to the customers based on ASC 606 Revenue
from Contracts with Customers. Revenue streams
identified from contracts with customers, as
listed above, will have certain timing for
recognition based on the nature of
the contract
including when
the obligation is
satisfied and/or services
are rendered. Service
charges on
deposit accounts, debit
card fees,
and
credit card
fees are
recognized at
a point
in time,
upon the
occurrence of
an activity
or an
event. Interchange
fees on
debit and
credit
card
transactions
are
recognized upon
settlement
of
the
payment
transaction. For
more
details
over
nature
and
timing
of
revenue streams from contracts with customers refer to Note 31 on the
2024 Form 10-K for a complete description of the nature and
timing of revenue streams from contracts with customers.
116
Note 27 – Leases
The
Corporation enters
in
the
ordinary course
of
business
into
operating and
finance
leases
for
land,
buildings
and
equipment.
These contracts generally do not include purchase options or residual value guarantees.
The remaining lease terms of
years
considers options
to
extend the
leases for
up
to
obtain substantially all of the economic benefits from
the use of the asset and the right to direct
the use of the asset.
The Corporation
recognizes right-of-use
assets (“ROU
assets”) and
lease liabilities
related to
operating and
finance leases
in its
Consolidated Statements of Financial Condition under the caption of other assets and other liabilities, respectively. Refer to Note 12
and
Note
16
to
the
Consolidated Financial
Statements,
respectively,
for
information
on
the
balances of
these
lease
assets
and
liabilities.
The Corporation uses the incremental
borrowing rate for purposes of
discounting lease payments for operating and
finance leases,
since it
does not have
enough information to
determine the rates
implicit in the
leases. The discount
rates are based
on fixed-rate
and
fully
amortizing
borrowing
facilities
of
its
banking
subsidiaries
that
are
collateralized.
For
leases
held
by
non-banking
subsidiaries, a credit spread is added to this rate
based on financing transactions with a
similar credit risk profile.
The following table presents the undiscounted
cash flows of operating and finance leases for
each of the following periods:
June 30, 2025
(In thousands)
Remaining
2025
2026
2027
2028
2029
Later
Years
Total Lease
Payments
Less: Imputed
Interest
Total
Operating Leases
$
$
$
$
$
$
$
$
(
16,097
)
$
Finance Leases
(
2,612
)
The following table presents the lease cost recognized
by the Corporation in the Consolidated
Statements of Operations as follows:
Quarters ended June 30,
Six
months ended June 30,
(In thousands)
2025
2024
2025
2024
Finance lease cost:
Amortization of ROU assets
$
$
$
$
Interest on lease liabilities
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
(
20
)
(
21
)
(
40
)
(
41
)
Total lease cost
[1]
$
$
$
$
[1]
Total lease cost
is recognized as part of net occupancy expense.
117
The
following
table
presents
supplemental
cash
flow
information
and
other
related
information
related
to
operating
and
finance
leases.
Six months ended June 30, 2025
(Dollars in thousands)
2025
2024
Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows from operating leases
$
$
Operating cash flows from finance leases
Financing cash flows from finance leases
ROU assets obtained in exchange for new lease obligations:
Operating leases
$
$
Weighted-average remaining lease term:
Operating leases
years
years
Finance leases
years
years
Weighted-average discount rate:
Operating leases
%
%
Finance leases
%
%
118
Note 28 – Pension and postretirement benefits
The
Corporation
has
a
non-contributory
defined
benefit
pension
plan
and
supplementary
pension
benefit
restoration
plans
for
regular employees of
certain of its
subsidiaries (the “Pension
Plans”). The accrual
of benefits under
the Pension Plans
is frozen to
all
participants.
The
Corporation
also
provides
certain
postretirement
health
care
benefits
for
retired
employees
of
certain
subsidiaries (the “OPEB Plan”).
The components of net periodic cost for the
Pension Plans and the OPEB Plan for the periods presented
were as follows:
Pension Plans
OPEB Plan
Quarter ended June 30,
Quarter ended June 30,
(In thousands)
2025
2024
2025
2024
Personnel Cost:
$
$
$
$
Other operating expenses:
(
8,069
)
(
8,594
)
(
1,177
)
(
548
)
Total net periodic
pension cost
$
$
$
$
Pension Plans
OPEB Plan
Six months ended June 30,
Six months ended June 30,
(In thousands)
2025
2024
2025
2024
Personnel Cost:
$
$
$
$
Other operating expenses:
(
16,138
)
(
17,188
)
(
2,354
)
(
1,096
)
Total net periodic
pension cost
$
$
$
$
The
Corporation
paid
the
following
contributions
to
the
plans
for
the
six
months
ended
June
30,
2025
and
expects
to
pay
the
following contributions for the year ending December
31, 2025.
For the six months ended
For the year ending
(In thousands)
June 30, 2025
December 31, 2025
Pension Plans
$
$
OPEB Plan
$
$
119
Note 29 - Stock-based compensation
Incentive Plan
On May 12,
2020, the stockholders of
the Corporation approved the
Popular, Inc.
2020 Omnibus Incentive Plan,
which permits the
Corporation to
issue several
types of
stock-based compensation
to employees
and directors
of the
Corporation and/or
any of
its
subsidiaries (the
“2020 Incentive
Plan”). The
2020 Incentive
Plan replaced
the Popular,
Inc. 2004
Omnibus Incentive
Plan, which
was in effect
prior to the adoption of
the 2020 Incentive Plan (the
“2004 Incentive Plan” and, together
with the 2020 Incentive
Plan,
the “Incentive Plan”). Participants under the Incentive Plan are designated by the Talent and Compensation Committee of the Board
of Directors (or its delegate, as determined by the Board). Under the Incentive Plan, the Corporation has issued restricted stock and
performance shares to its employees and restricted
stock and restricted stock units (“RSUs”)
to its directors.
The restricted
stock granted
under the
Incentive Plan
to employees
becomes vested
based on
the employees’
continued service
with
Popular.
The
performance share
awards
granted
under
the
Incentive
Plan
consist
of
the
opportunity
to
receive
shares
of
Popular,
Inc.’s
common stock provided that the Corporation achieves certain goals during a three-year performance cycle.
The goals will be based
on
two
metrics
weighted
equally:
the
Relative
Total
Shareholder
Return
(“TSR”)
and
the
Absolute
Return
on
Average
Tangible
Common Equity
(“ROATCE”). The
TSR metric
is a
market condition
under ASC
718.
For equity
settled awards
based on
market
conditions, the
fair value
is determined
as of
the grant
date and
is not
subsequently revised
based on
actual performance.
The
ROATCE metric
is a performance condition under
ASC 718.
The fair value is
determined based on the probability of
achieving the
ROATCE
goal as
of each
reporting period.
The TSR
and ROATCE
metrics are
equally weighted
and work
independently.
The
following
table
summarizes
the
restricted
stock
and
performance
shares
activity
under
the
Incentive
Plan
for
members
of
management.
120
(Not in thousands)
Shares
Weighted-Average
Grant Date Fair
Value
Non-vested at December 31, 2023
$
Granted
Performance Shares Quantity Adjustment
(
18,650
)
Vested
(
267,873
)
Forfeited
(
7,939
)
Non-vested at December 31, 2024
$
Granted
Performance Shares Quantity Adjustment
Vested
(
277,721
)
Forfeited
(
5,515
)
Non-vested at June 30, 2025
$
During
the
quarter
ended
June
30,
2025,
)
were
awarded
to
management under the Incentive
Plan. During the
quarters ended June 30,
2025 and 2024,
to management under the Incentive Plan.
During the six months ended June 30, 2025,
2024 –
) and
) were awarded to management under the
Incentive Plan.
During the quarter ended June 30, 2025, the Corporation recognized
$
incentive awards, with a tax benefit of $
ended
June
30,
2025,
the
Corporation
recognized
$
awards, with a tax benefit of $
June 30, 2025, the fair market value
of the restricted stock and performance shares vested
was $
$
expense. During the
quarter ended June
30, 2025, the Corporation
recognized $
tax benefit of $
(
0.9
)
(
55
)
thousand).
For the six months ended June
30, 2025, the Corporation recognized $
a tax benefit
of $
cost related to non-vested restricted stock awards
and performance shares to members of management
at June 30, 2025 was $
million and is expected to be recognized over a
weighted-average period of
The following table summarizes the restricted stock
activity under the Incentive Plan for members of
the Board of Directors:
(Not in thousands)
RSUs / Restricted stock
Weighted-Average Grant
Date Fair Value per Unit
Non-vested at December 31, 2023
$
Granted
Vested
(
25,462
)
Forfeited
Non-vested at December 31, 2024
$
Granted
Vested
(
2,937
)
Forfeited
Non-vested at June 30, 2025
$
The
equity
awards
granted to
members of
the Board
of
Directors of
Popular,
Inc.
(the
“Directors”) after
May
2025
will
vest
and
become non-forfeitable on the first anniversary of the grant date of
such award. Equity awards granted to the Directors may be
paid
in either common stock or RSUs, at each Director’s
election. If RSUs are elected, the Directors may defer the delivery of the shares
121
of common stock underlying
the RSUs award until
their retirement. To
the extent that cash
dividends are paid on
the Corporation’s
outstanding common stock, the Directors
will receive an additional number of RSUs
that reflect a reinvested dividend equivalent.
During the quarter ended June 30, 2025,
2024
-
these shares with
a tax benefit
of $
ended June 30,
2025, the Corporation
granted
shares, with
a tax
benefit of $
date of the RSUs vested during the six months
ended June 30, 2025 for the Directors was
$
122
Note 30 – Income taxes
The table below presents a reconciliation of
the statutory income tax rate to the effective income tax
rate:
Quarters ended
June 30, 2025
June 30, 2024
(In thousands)
Amount
% of pre-tax
income
Amount
% of pre-tax
income
Computed income tax expense at statutory rates
$
%
$
%
Net benefit of tax exempt income
(
45,374
)
(
17.6
)
(
33,220
)
(
15.2
)
Effect of income subject to preferential tax rate
(
606
)
(
0.2
)
Deferred tax asset valuation allowance
(
235
)
(
0.1
)
Difference in tax rates due to multiple jurisdictions
(
2,282
)
(
0.9
)
(
4,456
)
(
2.1
)
Other tax benefits
(
4,500
)
(
2.1
)
State and local taxes
Others
(
5,189
)
(
2.0
)
(
2,449
)
(
1.1
)
Income tax expense
$
%
$
%
Six months ended
June 30, 2025
June 30, 2024
(In thousands)
Amount
% of pre-tax
income
Amount
% of pre-tax
income
Computed income tax expense at statutory rates
$
%
$
%
Net benefit of tax exempt income
(
85,329
)
(
17.7
)
(
61,979
)
(
16.4
)
Effect of income subject to preferential tax rate
(
1,519
)
(
0.3
)
(
148
)
Deferred tax asset valuation allowance
Difference in tax rates due to multiple jurisdictions
(
5,257
)
(
1.1
)
(
5,129
)
(
1.4
)
Other tax benefits
(
4,500
)
(
1.2
)
Tax on intercompany
distributions
[1]
U.S., States, and local taxes
Others
(
7,663
)
(
1.6
)
(
3,522
)
(
0.9
)
Income tax expense
$
%
$
%
[1]
Includes $
Deferred income taxes reflect the
net tax effects
of temporary differences between the
carrying amounts of assets and
liabilities for
financial reporting
purposes and
their tax
bases. Significant
components of
the Corporation’s
deferred tax
assets and
liabilities at
June 30, 2025, and December 31, 2024, were
as follows:
123
June 30, 2025
PR
US
Total
Deferred tax assets:
Tax credits available
for carryforward
$
$
$
Net operating loss and other carryforward available
Postretirement and pension benefits
Allowance for credit losses
Deferred loan origination fees/cost
(
2,702
)
Depreciation
FDIC-assisted transaction
Lease liability
Unrealized net loss on investment securities
Difference in outside basis from pass-through entities
Mortgage Servicing Rights
Other temporary differences
Total gross deferred
tax assets
Deferred tax liabilities:
Intangibles
Right of use assets
Loans acquired
Other temporary differences
Total gross deferred
tax liabilities
Valuation allowance
Net deferred tax asset
$
$
$
PR
US
Total
Deferred tax assets:
Tax credits available
for carryforward
$
$
$
Net operating loss and other carryforward available
Postretirement and pension benefits
Allowance for credit losses
Depreciation
FDIC-assisted transaction
Lease liability
Unrealized net loss on investment securities
Difference in outside basis from pass-through entities
Mortgage Servicing Rights
Other temporary differences
Total gross deferred
tax assets
Deferred tax liabilities:
Intangibles
Right of use assets
Deferred loan origination fees/cost
(
1,880
)
Loans acquired
Other temporary differences
Total gross deferred
tax liabilities
Valuation allowance
Net deferred tax asset
$
$
$
124
The net
deferred tax
assets
shown in
the table
above at
June 30,
2025, is
reflected in
the Consolidated
Statements of
Financial
Condition as $
million in deferred tax liabilities in the “Other liabilities” caption
(December 31, 2024 - $
tax assets or
liabilities of individual
tax-paying subsidiaries of the
Corporation in their
respective tax jurisdiction, Puerto
Rico or the
United States.
At
June
30,
2025,
the
net
deferred
tax
assets
of
the
U.S.
operations
amounted
to
$
$
basis the
realization of
the deferred
tax asset
by taxing
jurisdiction.
The U.
S. operations
sustained profitability
for the
last three
years
and
better
results
than
projected
for
the
period
ended
June
30,
2025.
These
historical
financial
results
are
objectively
verifiable positive evidence, evaluated together
with the positive evidence
of stable credit metrics,
in combination with the
length of
the
expiration
of
the
NOLs.
On
the
other
hand,
the
Corporation
evaluated
the
negative
evidence
accumulated
over
the
years,
including financial results lower than expectations and challenges to the economy due to inflationary pressures that could stem from
U. S. tariff policies and global geopolitical challenges,
in addition to the economic effect of cuts in federal government spending that
could negatively impact U. S. operations’ achieving expected pre-tax
income levels.
As of June 30, 2025, after weighting all positive
and negative evidence,
the Corporation concluded
that it is
more likely than
not that $
the
U.S.
operations, comprised
mainly
of
net
operating losses,
will
be
realized. The
Corporation based
this
determination on
its
estimated earnings
available to
realize the
deferred tax
assets for
the remaining
carryforward period,
together with
the historical
level
of
book
income
adjusted
by
permanent
differences.
Management
will
continue
to
monitor
and
review
the
U.S.
operation’s
results, including recent earnings trends, the pre-tax earnings
forecast, any new tax initiative, and other factors,
including net income
versus forecast, targeted loan growth, net interest income margin, changes in deposit costs, allowance
for credit losses, charge offs,
non-performing loans
held-in-portfolio (“NPLs”)
inflows
and
non-performing asset
(“NPA”)
balances. Significant
changes
in these
factors or sustainable continuance of financial improvement
could impact the future realization of the deferred
tax assets.
At June 30,
2025, the Corporation’s
net deferred tax
assets related to
its Puerto Rico
operations amounted to
$
Corporation’s Puerto Rico
Banking operation has
a historical record
of profitability.
This is considered
a strong piece
of objectively
verifiable positive evidence that outweighs any
negative evidence considered by Management in
the evaluation of the realization
of
the
deferred
tax
assets.
Based
on
this
evidence
and
management’s
estimate
of
future
taxable
income,
the
Corporation
has
concluded that it is more likely than not that such net
deferred tax assets of the Puerto Rico Banking
operations will be realized.
The Holding Company operation has been in a cumulative
loss position in recent years.
Management expects these losses will be a
trend
in
future
years.
This
objectively
verifiable
negative
evidence is
considered
by
Management strong
negative
evidence that
suggests that
income in
future years
will be
insufficient to
support the
realization of
all deferred
tax assets.
After weighting
of all
positive
and
negative evidence
Management concluded,
as
of
the reporting
date,
that
it
is
more
likely
than
not that
the
Holding
Company will not be
able to realize any
portion of the deferred tax
assets. Accordingly, the
Corporation has maintained a valuation
allowance on the deferred tax assets of $
The reconciliation of unrecognized tax benefits, excluding
interest, was as follows:
(In millions)
2025
2024
Balance at January 1
$
$
Balance at March 31
$
$
Balance at June 30
$
$
At June
30, 2025,
the total
amount of
accrued interest
recognized in the
statement of
financial condition
amounted to
$
(December 31, 2024 -
$
accrue for the payment of
penalties. The Corporation’s policy is to
report interest related to unrecognized tax benefits
in income tax
expense, while the penalties, if any, are reported in other operating expenses
in the Consolidated Statements of Operations.
After consideration
of the
effect on
U.S. federal
tax of
unrecognized U.S.
state tax
benefits, the
total amount
of unrecognized
tax
benefits that if recognized, would affect the Corporation’s effective tax rate, was $
$
125
The amount of
unrecognized tax benefits
may increase or
decrease in the
future for various
reasons including adding amounts
for
current
tax
year
positions,
expiration
of
open
income
tax
returns
due
to
the
statutes
of
limitation,
changes
in
Management’s
judgment about
the level
of uncertainty,
status of
examinations, litigation
and legislative
activity and
the addition
or elimination
of
uncertain tax positions.
The Corporation does not
anticipate a reduction
in the total
amount of unrecognized tax
benefits within the
next 12 months.
The
Corporation and
its subsidiaries
file
income tax
returns in
Puerto
Rico, the
U.S. federal
jurisdiction, various
U.S. states
and
political
subdivisions,
and
foreign
jurisdictions.
At
June
30,
2025,
the
following
years
remain
subject
to
examination
in
the
U.S.
Federal jurisdiction: 2021 and thereafter; and in
the Puerto Rico jurisdiction, 2018 and thereafter.
126
Note 31 – Supplemental disclosure on the consolidated
statements of cash flows
Additional disclosures on cash flow information and
non-cash activities for the six months ended June
30, 2025 and June 30, 2024
are listed in the following table:
(In thousands)
June 30, 2025
June 30, 2024
Non-cash activities:
$
$
[1]
[1]
Includes loans securitized into trading securities and subsequently
sold before quarter end.
The following table provides a reconciliation of
cash and due from banks, and restricted cash
reported within the Consolidated
Statement of Financial Condition that sum to the total of
the same such amounts shown in the Consolidated
Statement of Cash
Flows.
(In thousands)
June 30, 2025
June 30, 2024
Cash and due from banks
$
$
Restricted cash and due from banks
Restricted cash in money market investments
Total cash and due
from banks, and restricted cash
[2]
$
$
[2]
Refer to Note 4 - Restrictions on cash and due from banks
and certain securities for nature of restrictions.
127
Note 32 – Segment reporting
The
Corporation’s
corporate
structure
consists
of
markets the segments serve, as well as on the products
and services offered by the segments.
The chief operating
decision maker (“CODM”) of
the Corporation is
the Chief Executive
Officer (“CEO”) who
utilizes net income
as
one of
the segment
profitability measures,
to evaluate
the performance
of each
reportable segment and
assess where
to allocate
resources effectively.
The CEO
receives
profitability reports
that
include net
income
per segment,
net
interest income
and
other
income
and expense
categories. The
CODM uses
the segment’s
net income
and components
of net
income, including
segment
revenues and
expenses to
assess performance
and to
manage important
aspects by
each reportable
segments,
such as
human
capital, investment in technology, making budget allocations,
as well as other strategic decisions.
Banco Popular de Puerto Rico:
The Banco
Popular de
Puerto Rico
reportable segment
includes commercial,
consumer and
retail banking
operations, as
well as
mortgage and auto lending operations conducted
at BPPR, including U.S. based activities conducted
through its New York
Branch.
Other financial
services within the
BPPR segment
include the trust
service units
of BPPR,
asset management services
of Popular
Asset Management and
the brokerage operations
of Popular Securities,
and the insurance
agency and reinsurance
businesses of
Popular Insurance, Popular Risk Services, Popular Life
Re, and Popular Re.
Popular U.S.:
Popular U.S. reportable segment
consists of the
banking operations of Popular
Bank (PB), Popular Insurance
Agency, U.S.A.,
and
PEF.
PB
operates through
a retail
branch network
in the
U.S. mainland
under the
name of
Popular,
and equipment
leasing and
financing services through PEF.
Popular Insurance Agency,
U.S.A. offers investment and insurance
services across the PB
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 BHD.
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. Assets
representing transactions
between reportable
segments
or
the
Corporate
group
are
also
eliminated in
the
tables presented below.
The tables that follow present the results of operations
and total assets by reportable segments:
128
2025
For the quarter ended June 30, 2025
Intersegment
(In thousands)
BPPR
Popular U.S.
Eliminations
Interest income
$
$
$
(
1,041
)
Interest expense
(
1,041
)
Net interest income
Provision for credit losses
Non-interest income
Personnel costs
Professional fees
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
Total operating
expenses
Income before income tax
Income tax expense
Net income
$
$
$
Segment assets
$
$
$
(
120,633
)
For the quarter ended June 30, 2025
Reportable
(In thousands)
Segments
Corporate
Eliminations
Total Popular,
Inc.
Interest income
$
$
$
(
1,045
)
$
Interest expense
(
1,045
)
Net interest income (expense)
(
9,120
)
Provision for credit losses (benefit)
(
43
)
Non-interest income
(
736
)
Personnel costs
Professional fees
(
254
)
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
(
60,181
)
(
527
)
Total operating
expenses
(
781
)
Income before income tax
Income tax expense
Net income
$
$
$
(
26
)
$
Segment assets
$
$
$
(
5,392,992
)
$
[1]
Other operating expenses includes net occupancy expenses,
equipment expense, excluding depreciation, other operating
taxes,
communications expense, business promotion expenses, deposit
insurance costs and OREO expenses.
129
For the six months ended June 30, 2025
Intersegment
(In thousands)
BPPR
Popular U.S.
Eliminations
Interest income
$
$
$
(
2,722
)
Interest expense
(
2,722
)
Net interest income
Provision for credit losses
Non-interest income
Personnel costs
Professional fees
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
Total operating
expenses
Income before income tax
Income tax expense
Net income
$
$
$
Segment assets
$
$
$
(
120,633
)
For the six months ended June 30, 2025
Reportable
Total
(In thousands)
Corporate
Eliminations
Popular, Inc.
Interest income
$
$
$
(
2,182
)
$
Interest expense
(
2,182
)
Net interest income (expense)
(
18,357
)
Provision for credit losses (benefit)
(
84
)
Non-interest income
(
1,352
)
Personnel costs
Professional fees
(
584
)
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
(
116,583
)
(
1,350
)
Total operating
expenses
(
1,934
)
Income before income tax
Income tax expense
Net income (loss)
$
$
(
291
)
$
$
Segment assets
$
$
$
(
5,392,992
)
$
[1]
Other operating expenses includes net occupancy expenses,
equipment expense, excluding depreciation, other operating taxes,
communications expense, business promotion expenses, deposit
insurance costs and OREO expenses.
130
2024
For the quarter ended June 30, 2024
Intersegment
(In thousands)
BPPR
Eliminations
Interest income
$
$
$
(
2,622
)
Interest expense
(
2,622
)
Net interest income
Provision for credit losses (benefit)
(
3,563
)
Non-interest income
Personnel costs
Professional fees
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
Total operating
expenses
Income before income tax
Income tax expense
Net income
$
$
$
Segment assets
$
$
$
(
264,040
)
For the quarter ended June 30, 2024
Reportable
(In thousands)
Segments
Corporate
Eliminations
Total Popular,
Inc.
Interest income
(
3,798
)
Interest expense
(
3,798
)
Net interest income (expense)
$
$
(
6,284
)
$
$
Provision for credit losses (benefit)
(
25
)
Non-interest income
(
2,764
)
Personnel costs
Professional fees
(
302
)
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
(
54,854
)
(
922
)
Total operating
expenses
(
1,224
)
Income before income tax
(
1,540
)
Income tax expense (benefit)
(
476
)
(
594
)
Net income
$
$
$
(
946
)
$
Segment assets
$
$
$
(
5,471,702
)
$
[1]
Other operating expenses includes net occupancy expenses,
equipment expense, excluding depreciation, other operating taxes,
communications expense, business promotion expenses, deposit
insurance costs and OREO expenses.
131
For the six months ended June 30, 2024
Intersegment
(In thousands)
BPPR
Popular U.S.
Interest income
$
$
$
(
5,909
)
Interest expense
(
5,909
)
Net interest income
Provision for credit losses
Non-interest income
(
56
)
Personnel costs
Professional fees
(
56
)
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
Total operating
expenses
(
56
)
Income before income tax
Income tax expense
Net income
$
$
$
Segment assets
$
$
$
(
264,040
)
For the six months ended June 30, 2024
Reportable
Total
(In thousands)
Corporate
Eliminations
Popular, Inc.
Interest income
$
$
$
(
7,040
)
$
Interest expense
(
7,040
)
Net interest income (expense)
(
13,234
)
Provision for credit losses (benefit)
Non-interest income
(
3,401
)
Personnel costs
Professional fees
(
579
)
Technology and
software expenses
Processing and transactional services
Amortization of intangibles
Depreciation expense
Other operating expenses
[1]
(
104,339
)
(
1,836
)
Total operating
expenses
(
2,415
)
Income before income tax
(
986
)
Income tax expense (benefit)
(
364
)
Net income
$
$
(
21,625
)
$
(
622
)
$
Segment assets
$
$
$
(
5,471,702
)
$
[1]
Other operating expenses includes net occupancy expenses,
equipment expense, excluding depreciation, other operating taxes,
communications expense, business promotion expenses, deposit
insurance costs and OREO expenses.
132
Geographic Information
The following information presents selected
financial information based on the
geographic location where the Corporation conducts
its business. The
banking operations of BPPR
are primarily based in
Puerto Rico, where it
has the largest retail
banking franchise.
BPPR
also
conducts
banking
operations
in
the
U.S.
Virgin
Islands,
the
British
Virgin
Islands
and
New
York.
BPPR’s
banking
operations in
the mainland
United States
include commercial
lending activities
in addition
to
periodic loan
participations with
PB.
During
the
six
months
ended
June
30,
2025,
BPPR
participated
in
loans
originated
by
PB
totaling
$
9
million
(2024
-
did
t
participate). Total
assets for
the BPPR
segment related
to its
operations in the
United States
amounted to
$
31, 2024
- $
real estate loans (December 31, 2024 - $
in unsecured personal loans
(December 31, 2024 -
$
generated $
income. In the
Virgin Islands, the BPPR
segment offers banking
products, including loans and
deposits. Total
assets for the BPPR
segment related to
its operations in
the U.S. and
British Virgin Islands
amounted to $
The BPPR segment generated $
from its operations in the U.S. and British
Virgin Islands.
Geographic Information
Quarter ended
Six months ended
(In thousands)
June 30, 2025
June 30, 2024
June 30, 2025
June 30, 2024
Revenues:
[1]
$
$
$
$
Total consolidated
revenues
$
$
$
$
[1]
Total revenues include
net interest income, service charges on deposit accounts,
other service fees, mortgage banking activities, net
gain (loss),
including impairment, on equity securities, net gain on trading
account debt securities, adjustments to indemnity reserves
on loans sold, and
other operating income.
Selected Balance Sheet Information:
(In thousands)
June 30, 2025
December 31, 2024
Puerto Rico
Total assets
$
$
Loans
Deposits
United States
Total assets
$
$
Loans
Deposits
Other
Total assets
$
$
Loans
Deposits
[1]
[1]
Represents deposits from BPPR operations located in the
U.S. and British Virgin Islands.
133
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This
report
includes
management’s
discussion
and
analysis
(“MD&A”)
of
the
consolidated
financial
position
and
financial
performance
of
Popular,
Inc.
(the
“Corporation”
or
“Popular”). All
accompanying
tables,
financial
statements
and
notes
included
elsewhere in this report should be considered an
integral part of this analysis.
The Corporation is a
diversified, publicly owned financial holding company subject
to the supervision and regulation
of the Board of
Governors of the Federal Reserve System. The Corporation has
operations in Puerto Rico, the United States (“U.S.”) mainland and
the U.S. and British Virgin Islands. In Puerto Rico, the
Corporation provides retail, mortgage,
commercial banking services and auto
and equipment
leasing and
financing through its
principal banking subsidiary,
Banco Popular de
Puerto Rico
(“BPPR”), as
well as
broker-dealer
and
insurance
services
through
specialized
subsidiaries.
In
the
U.S.
mainland,
the
Corporation
provides
retail,
mortgage, and commercial
banking services, as
well as
equipment leasing and
financing, through its
New York
-chartered banking
subsidiary, Popular Bank (“PB” or “Popular U.S.”), which has branches located in New York,
New Jersey and Florida. Note 32 to the
Consolidated Financial Statements presents information
about the Corporation’s business segments.
As a financial services company,
the Corporation’s earnings are significantly affected
by general business and economic conditions
in the
markets which
we serve.
Lending and
deposit activities
and fee
income generation
are influenced
by the
level of
business
spending and
investment, consumer
income, spending
and savings,
capital market
activities, competition,
customer preferences,
interest rate conditions and prevailing market rates
on competing products.
The Corporation
operates in
a highly
regulated environment
and may
be adversely
affected by
changes in
federal and
local laws
and
regulations.
Also,
competition
with
other
financial
institutions,
as
well
as
with
non-traditional financial
service
providers
and
technology
companies
that
provide
electronic
and
internet-based
financial
solutions
and
services,
could
adversely
affect
its
profitability.
The
Corporation
continuously
monitors
general
business
and
economic
conditions,
industry-related
indicators
and
trends,
competition, interest rate volatility, credit quality indicators, loan, and deposit demand, operational and systems efficiencies, revenue
enhancements and changes in the regulation of financial
services companies.
The description of the Corporation’s business contained in
Item 1 of the 2024 Form 10-K, while not all inclusive,
discusses additional
information about the business of the Corporation. Readers should also refer to “Part I - Item 1A” of the 2024 Form 10-K and “Part II
- Item 1A” of this Form 10-Q for a discussion of certain risks and uncertainties to which the Corporation is subject, many beyond the
Corporation’s control that, in addition to the other information in
this Form 10-Q, readers should consider.
The Corporation’s common stock is traded on the NASDAQ
Global Select Market under the symbol BPOP.
SIGNIFICANT EVENTS
Capital Actions
On July 16, 2025, the Corporation announced
the following capital actions:
●
dividend payable in the fourth quarter of 2025,
subject to the approval by the Corporation’s Board of Directors;
and
●
This new common stock repurchase program is in addition
to the $500 million common stock repurchase program
announced by the
Corporation on July 24, 2024 (the “2024
Repurchase Program”).
The
Corporation’s
planned
common
stock
repurchases
may
be
executed
in
open
market
transactions,
privately
negotiated
transactions, block trades
or any other
manner determined by
the Corporation. The
timing, quantity and
price of such
repurchases
will
be
subject
to
various
factors,
including
market
conditions,
the
Corporation’s
capital
position
and
financial
performance,
the
capital impact of strategic initiatives and regulatory and tax considerations.
The common stock repurchase program does not require
134
the Corporation to acquire a specific dollar amount or
number of shares and may be modified, suspended or terminated
at any time
without prior notice.
During
the
quarter
and
six
months
ended
June
30,
2025,
the
Corporation
repurchased
1,136,390
shares
of
common
stock
for
$112.0 million at an average price of $98.54 per share and 2,406,959 shares
of common stock for $234.2 million at an average price
of $97.32 per share, respectively.
As of June 30, 2025, the
Corporation had repurchased a total of approximately 4.7 million
shares
of common stock for $451.5
million as part of the 2024 Repurchase
Program.
OVERVIEW
Financial highlights for the quarter ended June 30,
2025
The Corporation’s
net income for
the quarter
ended June 30,
2025 amounted to
$210.4 million, an
increase of
$32.6 million when
compared to a net income of $177.8 million for the quarter ended June 30, 2024. Higher net income was mainly driven by higher net
interest income, offset in part by an increase in operating
expense and income tax expense.
Financial highlights for the quarter ended June 30,
2025 include:
●
30, 2024, driven by
loan growth and higher
deposits,
higher volume of U.S.
Treasuries with higher
yields, and lower cost
of
deposits,
mainly
P.R.
public
deposits
and
re-pricing
at
PB,
partially
offset
by
lower
income
from
money
market
securities. Net interest margin expanded by 27 bps to 3.49%. On a taxable
equivalent basis, net interest margin expanded
by 37 basis points to 3.85% driven by tax-exempt
investment securities at higher yields.
●
when
compared
to
the
quarter
ended
June
30,
2024,
driven
by
additional
reserves
in
the
commercial
loans
portfolio,
specifically in Commercial
Real Estate portfolio in
the PB segment
due to higher
qualitative reserves and changes
in the
macroeconomic
scenario,
partially
offset
by
a
lower
provision
in
the
BPPR
segment
due
to
lower
net
charge-offs
and
improvements of credit quality in the commercial
portfolio.
●
30, 2024, mainly driven by higher
credit and debit card fee income,
higher investment management fees,
and a favorable
fair value
adjustment of
equity securities held
for deferred
benefit plans,
partially offset
by lower
other operating
income
mainly related to the daily rental car business sold
during the fourth quarter of 2024.
●
the quarter
ended June
30, 2024.
The increase
was driven
mainly by
higher personnel
costs due
to higher
incentives,
partially offset by lower professional fees.
●
compared to an income tax expense of $40.5
million with an ETR of 18.5% for the quarter ended
June 30, 2024.
●
2024. The
increase of
$3.1 billion
is primarily
due to
higher balance
in the
available-for-sale (“AFS”)
securities portfolio
and an
increase across
most loan
portfolios,
mainly in
commercial, mortgage,
and construction,
partially offset
by lower
balance in the held-to-maturity (“HTM”) investment
securities, money market investments, and a decrease in
other assets.
●
public deposits.
●
Corporation and its
banking subsidiaries continue
to be
well capitalized. As
of June
30, 2025, the
Corporation’s tangible
book value
per common
share was
$75.41, an
increase of
$7.25 from
December 31,
2024. The
Common Equity
Tier
1
Capital ratio at June 30, 2025 was 15.91%,
compared to 16.03% at December 31, 2024.
Refer to Table 1 for selected financial data for the quarters ended June 30, 2025 and June
30, 2024.
135
Table 1 - Financial Highlights
Financial Condition Highlights
Ending balances at
Average for the six months ended
(In thousands)
June 30, 2025
December 31,
2024
Variance
June 30,
2025
June 30,
2024
Variance
Money market investments
$
6,340,786
$
6,380,948
$
(40,162)
$
6,314,487
$
6,477,180
$
(162,693)
Investment securities
28,283,970
26,244,977
2,038,993
28,642,361
28,034,347
608,014
Loans
[1]
38,188,076
37,113,075
1,075,001
37,310,383
35,226,488
2,083,895
Earning assets
72,812,832
69,739,000
3,073,832
72,267,231
69,738,015
2,529,216
Total assets
76,065,090
73,045,383
3,019,707
75,391,749
72,800,664
2,591,085
Deposits
67,217,491
64,884,345
2,333,146
66,112,327
64,529,716
1,582,611
Borrowings
1,414,494
1,176,126
238,368
1,120,666
1,045,181
75,485
Total liabilities
70,111,072
67,432,317
2,678,755
68,224,476
66,549,458
1,675,018
Stockholders’ equity
5,954,018
5,613,066
340,952
7,167,273
6,251,206
916,067
Note: Average balances exclude unrealized gains or losses on debt securities available-for-sale and the unrealized loss related to certain securities transferred from available-for-
sale to held-to-maturity.
Operating Highlights
Quarters ended June 30,
Six months ended June 30,
(In thousands, except per share information)
2025
2024
Variance
2025
2024
Variance
Net interest income
$
631,549
$
568,312
$
63,237
$
1,237,146
$
1,119,056
$
118,090
Provision for credit losses
48,941
46,794
2,147
113,022
119,392
(6,370)
Non-interest income
168,477
166,306
2,171
320,538
330,124
(9,586)
Operating expenses
492,761
469,576
23,185
963,773
952,689
11,084
Income before income tax
258,324
218,248
40,076
480,889
377,099
103,790
Income tax expense
47,884
40,459
7,425
92,947
96,027
(3,080)
Net income
$
210,440
$
177,789
$
32,651
$
387,942
$
281,072
$
106,870
Net income applicable to common stock
$
210,087
$
177,436
$
32,651
$
387,236
$
280,366
$
106,870
Net income per common share – basic
$
3.09
$
2.47
$
0.62
$
5.64
$
3.90
$
1.74
Net income per common share – diluted
$
3.09
$
2.46
$
0.63
$
5.64
$
3.90
$
1.74
Dividends declared per common share
$
0.70
$
0.62
$
0.08
$
1.40
$
1.24
$
0.16
Quarters ended June 30,
Six months ended June 30,
Selected Statistical Information
2025
2024
2025
2024
Common Stock Data
$
110.21
88.43
$
110.21
88.43
87.31
73.94
87.31
73.94
Profitability Ratios
1.11
%
0.97
%
1.04
%
0.77
%
11.77
10.38
10.93
8.24
2.85
2.44
2.79
2.41
3.21
2.70
3.14
2.65
3.49
3.22
3.45
3.20
3.85
3.48
3.80
3.44
Capitalization Ratios
9.48
%
8.60
%
9.51
%
8.59
%
15.91
16.48
15.91
16.48
[2]
75.41
62.71
75.41
62.71
[2]
13.26
11.77
12.32
9.35
15.96
16.54
15.96
16.54
17.70
18.30
17.70
18.30
8.51
8.53
8.51
8.53
[1]
Includes loans held-for-sale.
[2]
Refer to Table 10 for reconciliation to GAAP financial measures.
Non-GAAP Financial Measures
This Form 10-Q
contains financial information
prepared under accounting
principles generally accepted in
the United States
(“U.S.
136
GAAP”)
and
non-GAAP
financial
measures.
Management
uses
non-GAAP
financial
measures
when
it
is
determined
that
these
measures provide
meaningful information
about the
underlying performance
of the
Corporation’s ongoing
operations. Non-GAAP
financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by
other
companies.
Adjusted net income - Non-GAAP Financial Measure
In
addition to
analyzing the
Corporation’s
results on
a reported
basis, management
monitors whether
the
impact of
certain non-
recurring or
infrequent transactions
need to
be excluded
from the
results of
operations to
present what
is then
considered to
be
“adjusted
net
income”
of
the
Corporation.
Management
believes
that
the
“adjusted
net
income”
provides
meaningful
information
about
the
underlying
performance
of
the
Corporation’s
ongoing
operations.
The
“adjusted
net
income”
is
a
non-GAAP
financial
measure.
The
following
table
presents
the
adjusted
net
income
for
the
six
months
ended
June
30,
2024.
There
were
no
non-GAAP
adjustments for the six months ended June 30, 2025.
Table 2 - Adjusted Net Income
for the Six Months Ended June 30, 2024 (Non-GAAP)
(In thousands)
Income before
income tax
Income tax
expense
(benefit)
Total
U.S. GAAP Net income
$377,099
$96,027
$281,072
Non-GAAP Adjustments:
FDIC Special Assessment [1]
14,287
(5,234)
9,053
Adjustments related to intercompany distributions [2]
6,400
16,483
22,883
Adjusted net income (Non-GAAP)
$397,786
$84,778
$313,008
[1] Expense recorded during the first quarter of 2024 to
increase the estimate recognized during the fourth
quarter of 2023 related to the November 16,
2023 FDIC Special Assessment to recover the losses to the
deposit insurance fund used by the FDIC in connection
with the receiverships of several
failed banks. The special assessment amount and collection
period may change if the estimated loss is periodically
adjusted or if the total amount
collected varies.
[2] Income tax expense and other related expenses from
prior periods related to withholding taxes on certain
distributions from U.S. subsidiaries.
137
Net interest income on a taxable equivalent basis
– Non-GAAP Financial Measure
Net interest income, on
a taxable equivalent basis,
is presented with its
different components in Table
s
3 and 4 for
the quarter and
six months
ended June
30, 2025,
as compared
with the
same period
in 2024,
segregated by
major categories
of interest
earning
assets and interest-bearing liabilities.
The
main
sources
of
tax-exempt
interest
income
are
certain
loans
and
investments
in
obligations
of
the
U.S.
Government,
its
agencies and sponsored entities, and
certain obligations of the
Commonwealth of Puerto Rico and
its agencies and assets
held by
the Corporation’s international
banking entities. On
tables 3 and
4, the interest
income has been
converted to a
taxable equivalent
basis, using the applicable statutory income tax rates for each period net of interest expense that the Puerto Rico tax law requires to
be disallowed, based on an equal proportion of tax-exempt assets to total assets, and by an allocation of general and administrative
expenses attributed to
exempt income, reducing
the benefit
of the
tax-exempt income. The
effective yield, on
a taxable
equivalent
basis, will vary depending on the
level of these expenses that are
attributed to the available exempt income.
Under Puerto Rico tax
law, the exempt interest can be
deducted up to the amount of taxable income. Management believes that this presentation provides
meaningful information since it facilitates the comparison
of revenues arising from taxable and exempt
sources.
Tangible Common Equity and Tangible Assets
Tangible
common equity,
tangible common equity ratio, tangible
assets and tangible book value
per common share are
non-GAAP
financial measures.
Tangible
common equity
ratio and
tangible book
value per
common share
should be
used in
conjunction with
more
traditional
bank
capital
ratios
commonly
used
by
banks
and
analysts
to
compare
the
capital
adequacy
of
banking
organizations
with
significant
amounts
of
goodwill
or
other
intangible
assets,
typically
stemming
from
the
use
of
the
purchase
accounting method for
mergers and acquisitions.
Tangible
common equity,
tangible assets
and other related
measures should not
be
used
in
isolation
or
as
a substitute
for
stockholders' equity,
total
assets
or
any
other
measure calculated
in
accordance
with
GAAP.
Moreover, the
way the Corporation
calculates its tangible
common equity,
tangible assets and
other related measures
may
differ from that of other companies reporting measures
with similar names.
Table
10 provides
a reconciliation of
total stockholders’ equity
to tangible common
equity and total
assets to tangible
assets
as of
June 30, 2025 and December 31, 2024.
138
CRITICAL ACCOUNTING POLICIES / ESTIMATES
The accounting and reporting policies followed by the Corporation
and its subsidiaries conform to U.S. GAAP and
general practices
within
the
financial
services
industry.
Various
elements
of
the
Corporation’s
accounting
policies,
by
their
nature,
are
inherently
subject to estimation techniques, valuation assumptions
and other subjective assessments.
Management
has
discussed
the
development
and
selection
of
the
critical
accounting
estimates
with
the
Corporation’s
Audit
Committee. The Corporation has identified as critical accounting estimates those related to: (i) Fair Value
Measurement of Financial
Instruments;
(ii)
Loans
and
Allowance
for
Credit
Losses;
(iii)
Income
Taxes;
(iv)
Goodwill
and
Other
Intangible
Assets;
and
(v)
Pension and Postretirement
Benefit Obligations. For
a summary of
these critical accounting
estimates, refer to
the MD&A included
in
the
2024
Form
10-K.
Also,
refer
to
Note
2
to
the
Consolidated
Financial
Statements
included
in
the
2024
Form
10-K
for
a
summary of the Corporation’s significant accounting policies and to Note 3 to the Consolidated Financial Statements included in this
Form 10-Q for information on recently adopted accounting
standard updates.
STATEMENT
OF OPERATIONS ANALYSIS
NET INTEREST INCOME
The
Corporation’s
net
interest
income
for
the
quarter
ended
June
30,
2025
was
$631.5
million
and
increased
$63.2
million,
compared to the same
quarter in 2024.
Higher net interest income
was supported by
an increase in average
deposit balances and
loan growth.
Net interest
income on
a taxable
equivalent basis
for the
second quarter
of 2025
was $697.2
million, an
increase of
$82.4 million.
Net interest margin (“NIM”) for the quarter was 3.49%, an increase
of 27 basis points when compared to the second quarter
of 2024.
On a
taxable equivalent
basis, net
interest margin
for the
second quarter
of
2025 was
3.85% or
37 basis
points higher
than the
second quarter
of 2024.
NIM expansion
was mainly
attributed to
lower deposit
costs driven
by the
repricing of
high-cost deposits
that are
market-linked, such
as P.R.
public deposits,
coupled with
a higher
volume of
loans and
higher yields
of U.S.
Treasuries.
Total cost of deposits decreased 32 basis points to 1.78%.
On a taxable equivalent basis, the main drivers of
the increase for the second quarter of 2025
were:
●
deposits growth.
The U.S.
Treasuries yield
increased 30
basis points
when compared
to the
second quarter
of 2024
as
reinvestment of maturing debt securities along with
incremental balances are being reinvested
at higher current rates;
●
commercial, construction,
mortgage, auto
and lease
portfolios, resulting
from origination
activity.
Higher yields
from the
auto, lease and
mortgage portfolios mitigated the
impact of lower
yields from the
commercial and construction portfolios,
due to
the impact of
short-term market rates
decline on adjustable-rate
loans. Overall, the
loan portfolio yield
decreased
by two basis points to 7.50%; and
●
The cost
of interest-bearing
deposits decreased
by 45
basis points,
mainly due
to the
repricing of
P.R.
public deposits
which decreased by 93 basis points to 3.22% and
a decrease in the cost of deposits in the
PB segment;
partially offset by:
●
resulting from lower short-term market rates.
139
Table 3 - Analysis of Levels & Yields
on a Taxable Equivalent Basis
(Non-GAAP)
Quarter ended June 30,
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2025
2024
Variance
2025
2024
2025
2024
Variance
Rate
Volume
(In millions)
(In thousands)
$
6,251
$
6,471
$
(220)
4.46
%
5.49
%
(1.03)
%
Money market
investments
$
69,532
$
88,316
$
(18,784)
$
(15,866)
$
(2,918)
28,809
28,943
(134)
3.29
3.01
0.28
Investment securities [1]
236,372
216,922
19,450
18,673
777
27
26
1
5.99
5.69
0.30
Trading securities
407
367
40
21
19
Total money market,
investment and
trading
35,087
35,440
(353)
3.50
3.47
0.03
securities
306,311
305,605
706
2,828
(2,122)
Loans:
18,676
17,707
969
6.73
6.86
(0.13)
Commercial
313,493
302,003
11,490
(4,831)
16,321
1,459
1,070
389
8.19
9.11
(0.92)
Construction
29,806
24,224
5,582
(2,558)
8,140
1,963
1,789
174
7.18
6.86
0.32
Leasing
35,249
30,697
4,552
1,467
3,085
8,339
7,817
522
5.89
5.66
0.23
Mortgage
122,873
110,673
12,200
4,632
7,568
3,211
3,192
19
14.00
13.97
0.03
Consumer
112,083
110,906
1,177
374
803
3,937
3,819
118
9.14
8.88
0.26
Auto
89,706
84,268
5,438
2,780
2,658
37,585
35,394
2,191
7.50
7.52
(0.02)
Total loans
703,210
662,771
40,439
1,864
38,575
$
72,672
$
70,834
$
1,838
5.57
%
5.49
%
0.08
%
Total earning assets
$
1,009,521
$
968,376
$
41,145
$
4,692
$
36,453
Interest bearing
deposits:
$
8,062
$
7,522
$
540
1.71
%
1.97
%
(0.26)
%
NOW and money
market
$
34,288
$
36,783
$
(2,495)
$
(4,611)
$
2,116
14,605
14,728
(123)
0.83
0.92
(0.09)
Savings
30,378
33,749
(3,371)
(2,862)
(509)
8,532
8,237
295
3.15
3.39
(0.24)
Time deposits
67,032
69,494
(2,462)
(4,857)
2,395
20,333
19,364
969
3.22
4.15
(0.93)
P.R. public
deposits
163,360
199,913
(36,553)
(45,918)
9,365
51,532
49,851
1,681
2.29
2.74
(0.45)
Total interest bearing
deposits
295,058
339,939
(44,881)
(58,248)
13,367
14,825
15,176
(351)
Non-interest bearing
demand deposits
66,357
65,027
1,330
1.78
2.10
(0.32)
Total deposits
295,058
339,939
(44,881)
(58,248)
13,367
470
80
390
4.52
5.64
(1.12)
Short-term borrowings
5,300
1,126
4,174
(213)
4,387
Other medium and
832
978
(146)
5.79
5.16
0.63
long-term debt
11,965
12,530
(565)
181
(746)
Total interest bearing
52,834
50,909
1,925
2.36
2.79
(0.43)
liabilities (excluding
demand deposits)
312,323
353,595
(41,272)
(58,280)
17,008
Other sources of funds
5,013
4,749
264
$
72,672
$
70,834
$
1,838
1.72
%
2.01
%
(0.29)
%
Total source of funds
$
312,323
$
353,595
$
(41,272)
$
(58,280)
$
17,008
Net interest margin/
income on a taxable
equivalent basis (Non-
GAAP)
3.85
%
3.48
%
0.37
%
$
697,198
$
614,781
$
82,417
$
62,972
$
19,445
3.21
%
2.70
%
0.51
%
Taxable equivalent
adjustment
65,649
46,469
19,180
Net interest margin/
income non-taxable
equivalent basis (GAAP)
3.49
%
3.22
%
0.27
%
$
631,549
$
568,312
$
63,237
Note: The changes that are not due solely to volume or
rate are allocated to volume and rate based on the
proportion of the change in each category.
[1] Average balances exclude unrealized gains or losses
on debt securities available-for-sale and the unrealized
loss related to certain securities transferred from
available-for-sale to held-to-maturity.
140
The Corporation’s net
interest income for the
six-month period ended June
30, 2025 was
$1.2 billion, or $118.1
million higher than
the same period
in 2024. Taxable
equivalent net interest
income was $1.4
billion, an increase
of $156.7 million
when compared to
the same
period in
2024. NIM
was 3.45%,
an increase
of
25 basis
points when
compared to
3.20% in
2024. NIM,
on a
taxable
equivalent basis, for the six months ended June
30, 2025, was 3.80%, an increase of
36 basis points compared to the same
period
of 2024.
The main drivers of the variances in net interest income on a taxable equivalent basis for the six-month period ended June 20, 2025
were:
●
volume by $640.0 million;
●
construction and
mortgage, and
higher yields
in the
mortgage, auto
and leasing
portfolios due
to originations
at higher
rates, partially
offset by
lower yields
in commercial
and construction
portfolios due
to
adjustable-rate loans
which were
impacted by the decline in index rates; and
●
lower cost by 90 basis points and deposit costs repricing
in both banks;
partially offset by:
●
average balances due to loan growth and investments,
mainly in U.S. Treasuries; and
●
Popular Bank.
141
Table 4 – Analysis of Levels & Yields
on a Taxable Equivalent Basis
from Continuing Operations (Non-GAAP)
Period ended June 30,
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2025
2024
Variance
2025
2024
2025
2024
Variance
Rate
Volume
(In millions)
(In thousands)
$
6,314
$
6,477
$
(163)
4.46
%
5.49
%
(1.03)
%
Money market
investments
$
139,698
$
176,832
$
(37,134)
$
(32,791)
$
(4,343)
28,613
28,626
(13)
3.22
2.86
0.36
Investment securities
[1]
456,807
408,024
48,783
45,804
2,979
29
30
(1)
5.90
4.60
1.30
Trading securities
847
678
169
186
(17)
Total money market,
investment and
trading
34,956
35,133
(177)
3.45
3.35
0.10
securities
597,352
585,534
11,818
13,199
(1,381)
Loans:
18,585
17,660
925
6.72
6.85
(0.13)
Commercial
619,461
601,507
17,954
(13,059)
31,013
1,385
1,031
354
8.15
9.04
(0.89)
Construction
55,995
46,324
9,671
(4,994)
14,665
1,951
1,766
185
7.14
6.80
0.34
Leasing
69,693
60,051
9,642
3,129
6,513
8,254
7,770
484
5.86
5.64
0.22
Mortgage
241,789
219,216
22,573
8,609
13,964
3,207
3,208
(1)
14.02
13.94
0.08
Consumer
222,989
222,396
593
230
363
3,929
3,791
138
9.11
8.82
0.29
Auto
177,511
166,322
11,189
5,010
6,179
37,311
35,226
2,085
7.49
7.50
(0.01)
Total loans
1,387,438
1,315,816
71,622
(1,075)
72,697
$
72,267
$
70,359
$
1,908
5.54
%
5.43
%
0.11
%
Total earning assets
$
1,984,790
$
1,901,350
$
83,440
$
12,124
$
71,316
Interest bearing
deposits:
$
8,022
$
7,643
$
379
1.72
%
1.99
%
(0.27)
%
NOW and money
market
$
68,290
$
75,548
$
(7,258)
$
(9,978)
$
2,720
14,556
14,711
(155)
0.85
0.93
(0.08)
Savings
61,658
67,873
(6,215)
(5,274)
(941)
8,466
8,029
437
3.18
3.29
(0.11)
Time deposits
133,713
131,511
2,202
(5,555)
7,757
20,310
19,017
1,293
3.27
4.17
(0.90)
P.R. public
deposits
329,260
394,503
(65,243)
(90,446)
25,203
51,354
49,400
1,954
2.33
2.73
(0.40)
Total interest bearing
deposits
592,921
669,435
(76,514)
(111,253)
34,739
14,758
15,129
(371)
Non-interest bearing
demand deposits
66,112
64,529
1,583
1.81
2.09
(0.28)
Total deposits
592,921
669,435
(76,514)
(111,253)
34,739
297
82
215
4.57
5.67
(1.10)
Short-term
borrowings
6,726
2,318
4,408
(404)
4,812
Other medium and
847
988
(141)
5.72
5.13
0.59
long-term debt
24,077
25,239
(1,162)
250
(1,412)
Total interest bearing
52,498
50,470
2,028
2.40
2.78
(0.38)
liabilities (excluding
demand deposits)
623,724
696,992
(73,268)
(111,407)
38,139
5,011
4,760
251
Other sources of
funds
$
72,267
$
70,359
$
1,908
1.74
%
1.99
%
(0.25)
%
Total source of funds
$
623,724
$
696,992
$
(73,268)
$
(111,407)
$
38,139
3.80
%
3.44
%
0.36
%
Net interest margin/
income on a taxable
equivalent basis
(Non-GAAP)
$
1,361,066
$
1,204,358
$
156,708
$
123,531
$
33,177
3.14
%
2.65
%
0.49
%
Net interest spread
Taxable equivalent
adjustment
123,920
85,302
38,618
3.45
%
3.20
%
0.25
%
Net interest margin/
income non-taxable
equivalent basis
(GAAP)
$
1,237,146
$
1,119,056
$
118,090
Note: The changes that are not due solely to volume or
rate are allocated to volume and rate based on the
proportion of the change in each category.
[1] Average balances exclude unrealized gains or losses
on debt securities available-for-sale and the unrealized
loss related to certain securities transferred
from available-for-sale to held-to-maturity.
142
Provision for Credit Losses - Loans Held-in-Portfolio
and Unfunded Commitments
For the
quarter ended
June 30,
2025,
the Corporation
recorded a
provision for
credit losses
related to
loans held-in-portfolio
and
unfunded commitments of
$48.4 million, an
increase of $2.1
million when compared to
the same quarter
of the previous
year.
The
provision
for
the
loan
portfolio
was
$49.5
million,
an
increase
of
$5.4
million,
and
the
provision
release
related
to
unfunded
commitments was $1.1
million, a favorable
variance of $3.2
million, mainly driven
by lower unfunded
commitments reserves at
the
BPPR segment.
As discussed
in Note
8 to
the Consolidated
Financial Statements,
the Corporation
estimates the
ACL by
weighting the
outputs of
optimistic,
baseline,
and
pessimistic
scenarios.
During
the
first
quarter
of
2025,
in
response
to
the
economic
uncertainty,
the
Corporation increased the probability assigned to the pessimistic
scenario making it equal to the baseline scenario. Subsequently, in
the second quarter
of 2025, the
probability assigned to the
pessimistic scenario was moderately
reduced based on
the changes in
the economic outlook and
a reassessment of uncertainty
compared to the previous
quarter. The
net impact of these
two events on
the
ACL
levels
for
the
six
months
ended June
30,
2025
was
$13.7
million
in
additional
reserves. The
probability
weight for
the
pessimistic scenario remains above the levels observed
in 2024, given the ongoing economic uncertainty.
The major
drivers of
the changes
in the
provision for
loan losses
during the
quarter by
business segment
when compared
to the
same quarter in 2024, were as follows:
●
same quarter in
2024, mainly driven
by lower reserves
for the commercial
portfolio of $16.4 million
due to improvements
in credit quality and lower net
charge-offs,
which offset the increase in the
weight assigned to the pessimistic scenario for
the
year
2025,
as
discussed
above.
The
favorable
variance
was
partially
offset
by
higher
reserves
in
the
consumer
portfolio due to changes in credit quality mainly within
the auto portfolio and changes in the macroeconomic
scenarios.
●
increase of
$10.8 million, mainly
driven by
higher qualitative reserves
for the
U.S. Commercial Real
Estate portfolio
and
changes in macroeconomic
scenarios, when compared to
the reserve release
recorded for the
same period in
2024 due
to improvement in credit ratings.
For the six
months ended June
30, 2025, the
provision for credit
loss related to
loans held-in-portfolio and
unfunded commitments
amounted to $112.3 million, a decrease of $6.1 million, compared to the six months ended June 30, 2024. The provision for the loan
portfolio
was
$114.8
million,
a
decrease
of
$1.8
million,
and
the
provision
release
related
to
unfunded
commitments
was
$2.4
million, a
decrease of
$4.3 million,
mainly driven
by the
reduction in
unfunded commitment
reserves within
the U.S.
construction
portfolio. The major drivers of the decrease
in the provision for loan losses during
the six months ended June 30,
2025 by business
segment when compared to the same period in
2024, were as follows:
●
charge-offs,
mainly
in
commercial
and
consumer
loans,
and
improvement
in
credit
quality,
mainly
in
the
commercial
portfolio, partially offset by the
increase in the probability weight assigned to
the pessimistic scenario which generated an
additional reserve of $8.8 million.
●
increase of $7.1 million mainly
due to credit quality changes and
additional qualitative reserves established, mainly within
the
commercial
portfolio,
and
an
increase
of
$4.9
million
related
to
the
increase
in
probability
weight
assigned
to
the
pessimistic scenario.
At June
30, 2025,
the total
allowance for
credit losses
for loans
held-in-portfolio amounted
to $769.5
million, compared
to $746.0
million as of December 31, 2024.
The ratio of the allowance for
credit losses to loans held-in-portfolio was
2.02% at June 30, 2025,
compared to 2.01% at
December 31, 2024. Refer to
Note 8 to the
Consolidated Financial Statements, for additional
information on
the
Corporation’s
methodology to
estimate
its
ACL.
Refer to
the
Credit Risk
section of
this MD&A
for a
detailed
analysis
of
net
charge-offs, non-performing assets, the allowance for credit losses
and selected loan losses statistics.
Non-Interest Income
143
Non-interest income amounted to $168.5 million for the second quarter of 2025, an increase of $2.2 million when compared with the
same quarter for the previous year. The variance was primarily due
to:
●
higher volume
of costumer
transactions,
and higher
investment management
fees by
$1.2 million,
due to
higher assets
under management; and
●
in personnel cost of $1.5 million;
partially offset by:
●
from
the sale
of car
rental units
by
$2.9 million,
both due
to
the sale
of
the daily
car rental
business during
the fourth
quarter of 2024, partially
offset by $2.3 million
of income related to
the reimbursement of excess
interest paid to the
U.S.
Internal Revenue Service
(“the IRS”) for
late payment penalties
related to tax
withholdings on intercompany
distributions
for the years 2014-2024
previously disclosed in 2024, and
a $1.2 million cash
distribution from the exit of
a legacy equity
investment.
Non-interest income amounted to $320.5 million for the six
months ended June 30, 2025, a decrease of $9.6 million when
compared
to the same period of the previous year. The main factors that
contributed to the variance were:
●
sale of car rental units by
$6.3 million during the six months ended June
30, 2024 associated with the car rental business
sold in the fourth quarter of 2024, partially offset
by $3.9
million income related to the reimbursement of interest paid from
the IRS, as discussed above;
partially offset by:
●
volume
of
transactions,
and
higher
investment
management
fees
by
$2.8
million,
due
to
higher
assets
under
management,
partially offset by lower insurance fees by $4.1 million;
and
●
commercial deposits.
144
Operating Expenses
Operating expenses amounted to $492.8 million for the
quarter ended June 30, 2025, an
increase of $23.2 million, when compared
with the same quarter of 2024. The variance
in operating expenses was mainly driven by:
●
which
is
tied
to
the
Corporation’s
financial
performance
and
$9.9
million
in
other
performance-based incentives
and
stock-
based compensation, and higher salaries expense by
$4.1 million due to a higher headcount and
annual salary revisions;
●
acquisition
and
renewal
of
multiple
technology
licenses
reflective
of
the
continuous
investment
in
technology
and
transformation initiatives and an increase in network
management services expense; and
●
partially offset by:
●
decrease, due
to
expense-recognition timing
differences,
in the
cost of
restricted stock
granted to
directors, and
lower legal
fees;
●
and
●
the car rental business sold in 2024.
Operating
expenses
amounted
to
$963.8
million
for
the
six
months
ended
June
30,
2025,
an
increase
of
$11.1
million
when
compared with the
same period of
2024. Excluding the
$6.4 million of
interest accrued related
to prior period
tax withholdings and
the
$14.3
million
impact
of
the
FDIC
Special
Assessment,
total
operating
expenses
for
the
six
months
ended
June
30,
2025,
increased by $31.8 million, when compared with
the same period of 2024. The main drivers of the increase
were:
●
which
is
tied
to
the
Corporation’s
financial
performance
and
$9.3
million
in
other
performance-based incentives
and
stock-
based compensation, and higher salaries expenses
by $5.7 million due to a higher headcount
and annual salary revisions;
●
acquisition
and
renewal
of
multiple
technology
licenses
reflective
of
the
continuous
investment
in
technology
and
transformation initiatives and an increase in network
management services expense;
and
●
partially offset by:
●
on compliance and cyber security efforts, a decrease in
IT professional services,
and lower legal fees;
●
transaction; and
●
145
Table 5 - Operating Expenses
Quarters ended June 30,
Six months ended June 30,
(In thousands)
2025
2024
Variance
2025
2024
Variance
Personnel costs:
Salaries
$
132,752
$
128,634
$
4,118
$
263,702
$
258,018
$
5,684
Commissions, incentives, and other bonuses
40,551
30,626
9,925
78,537
69,237
9,300
Profit sharing
13,000
-
13,000
13,000
-
13,000
Pension, postretirement, and medical insurance
18,458
16,619
1,839
33,024
34,004
(980)
Other personnel costs, including payroll taxes
24,594
21,545
3,049
53,805
51,542
2,263
Total personnel
costs
229,355
197,424
31,931
442,068
412,801
29,267
Net occupancy expenses
29,140
27,692
1,448
56,358
55,733
625
Equipment expenses
5,789
9,662
(3,873)
11,091
19,229
(8,138)
Other taxes
18,632
15,333
3,299
37,357
29,708
7,649
Professional fees
28,108
37,744
(9,636)
54,933
66,662
(11,729)
Technology and
software expenses
84,696
79,752
4,944
168,364
159,214
9,150
Processing and transactional services:
Credit and debit cards
13,044
13,739
(695)
25,970
25,883
87
Other processing and transactional services
24,817
25,357
(540)
49,672
47,407
2,265
Total processing
and transactional services
37,861
39,096
(1,235)
75,642
73,290
2,352
Communications
5,010
4,357
653
9,914
8,914
1,000
Business promotion:
Rewards and customer loyalty programs
18,047
16,406
1,641
34,412
30,462
3,950
Other business promotion
8,338
9,043
(705)
15,648
15,976
(328)
Total business
promotion
26,385
25,449
936
50,060
46,438
3,622
Deposit insurance
9,407
10,581
(1,174)
19,442
34,468
(15,026)
Other real estate owned (OREO) income
(4,124)
(5,750)
1,626
(7,454)
(11,071)
3,617
Other operating expenses:
Operational losses
6,185
11,823
(5,638)
12,323
15,384
(3,061)
All other
15,932
15,679
253
32,693
40,390
(7,697)
Total other operating
expenses
22,117
27,502
(5,385)
45,016
55,774
(10,758)
Amortization of intangibles
385
734
(349)
982
1,529
(547)
Total operating
expenses
$
492,761
$
469,576
$
23,185
$
963,773
$
952,689
$
11,084
Income Taxes
For the quarter
and six months
ended June 30,
2025, the Corporation recorded
an income tax
expense of $47.9
million and $92.9
million with an effective tax rate (“ETR”) of 18.5% and 19.3%, respectively, compared to $40.5 million and $96.0 million with an ETR
of 18.5% and 25.5% for the respective periods
of year 2024.
Higher income tax expense of $7.4
million for the second quarter,
when compared to the same quarter of
2024, is mainly attributed
to higher income before tax, partially offset with higher net exempt income. For the
six-month period ended June 30, 2025, the lower
income
tax
expense
of
$3.1
million
reflects
the
impact
of
the
tax
withholding
expense
of
$22.9
million
recorded
during
the
first
quarter of year 2024, in connection with intercompany distributions
for years 2014-2024, as disclosed in Note 34 to the Consolidated
Financial Statements in the
2024 Form 10-K,
and the benefit
of $5.2 million
related to the FDIC
Special Assessment expense; this
was partially offset by the increase in
income before tax. Excluding the impact of the
withholding tax expense and the additional net
expense related to the FDIC Special Assessment in the first quarter
of 2024, the ETR for the six-month period ended June 30, 2024,
would have been 21.3%.
At
June
30,
2025,
the
Corporation
had
a
net
deferred
tax
asset
amounting
to
$860.3
million,
net
of
a
valuation
allowance
of
$463.7million. The net
deferred tax asset
related to the
U.S. operations was
$242.2 million, net
of a valuation
allowance of $386.9
million.
Refer to
Note 30
to the
Consolidated Financial
Statements for
a reconciliation
of the
statutory income
tax rate
to the
effective tax
rate and additional information on the income
tax expense and deferred tax asset balances.
REPORTABLE SEGMENT RESULTS
The Corporation’s
reportable segments
for managerial
reporting purposes
consist of
Banco Popular
de Puerto
Rico and
Popular
U.S. A Corporate group
has also been defined to support the reportable
segments.
146
For
a
description
of
the
Corporation’s
reportable
segments,
including
additional
financial
information
and
the
underlying
management accounting process, refer to Note 32
to the Consolidated Financial Statements.
The corporate group reported a net income of $3.3
million for the quarter ended June 30, 2025, compared with a net income of $3.8
million for the same quarter of
the previous year. For
the six months ended June 30,
2025, the corporate group reported net loss
of
$0.3 million, compared
to a
net loss of
$21.6 million for
the same period
of the
previous year.
The higher loss
in 2024 was
mainly
attributed to
the expense
related to
the $22.9
million adjustment
recorded in
the first
quarter of
2024 to
recognize the
tax impact
associated with
prior period
intercompany distributions and
the additional
$6.5 million
expense for
the tax
impact of
intercompany
distributions paid
during the
first quarter
of 2024.
A positive
adjustment of
$3.9 million
was recorded
during the
six months
ended
June 30,
2025, resulting
from reimbursements
received from
the U.S.
Internal Revenue
Service related
to interest
paid for
these
intercompany
distributions.
There
were
no
intercompany
distributions
between
the
U.S.
subsidiaries
and
the
bank
holding
companies.
Highlights on the earnings results for the reportable
segments are discussed below:
Banco Popular de Puerto Rico
The Banco
Popular de
Puerto Rico
reportable segment’s
net income
amounted to
$184.5 million
for the
quarter ended
June 30,
2025, compared
with a
net income of
$157.2 million
for the
same quarter
of the
previous year.
The factors
that contributed
to the
variance in the financial results included the following:
●
mainly from the
re-pricing of P.R.
public funds,
higher income from
U.S. Treasury
securities, mainly due
to higher
yields
and
higher income
from
the
loans portfolio
driven by
loan
growth, partially
offset
by
lower income
from
money market
investments reflecting the
decline in rates.
The net interest
margin for the
quarter ended June
30, 2025 was
3.68%, and
increase of 28 basis points, compared to 3.40% for the same quarter in the previous year. The increase in the margin was
mainly impacted
by lower
cost of
deposits and
higher yield
from investment
securities, as
well as
higher loan
balances
which carry a higher yield, partially offset by lower rates
on money market investments;
●
loans,
due
to
improvements
in
credit
quality
and
lower
net
charge-offs
partially
offset
by
a
higher
provision
for
the
consumer loan portfolios due to changes in credit quality,
mainly within the auto portfolio, and changes in macroeconomic
scenarios;
●
the fourth quarter of 2024;
●
sharing expense accrual and other performance-related
incentives, and higher technology expenses by
$4.0 million, offset
by lower
equipment expenses by
$4.2 million
mainly related to
the daily
car rental
business sold
in the
fourth quarter
of
2024; and
●
income and other tax credits recorded during the
first quarter of 2025.
For the six months ended
June 30, 2025, the BPPR segment
recorded a net income of $350.4
million compared to a net income
of
$278.5 million for the
same period of the
previous year. The factors
that contributed to the variance
in the financial results
included
the following:
●
mainly from
the re-pricing
of P.R.
public funds,
higher income
from investment
securities and
higher income
from loans
due to portfolio growth, partially offset by lower income from money market
investments reflecting the decline in rates and
lower balances. The net interest margin for the six months ended June
30, 2025 was 3.66% compared with the 3.36% for
147
the same period
of the previous
year. The
increase in the
margin was mainly
impacted by
lower cost of
deposits, higher
yield from investment securities and loan growth, partially
offset by lower rates from money market investments;
●
portfolios due to lower net charge-offs and
improvements in credit quality,
partially offset by the increase in the
probability
weight assigned to the pessimistic economic scenario;
●
lower insurance fees, partially
offset by higher credit
and debit card income,
due to higher volume
of transactions, higher
investment management fees and an increase in non-balance
compensation fees in commercial deposits;
●
discussed
above,
higher
regulatory
examination
fees,
municipal
license
tax
and
higher
technology expenses,
partially
offset by
lower equipment
expenses related
to the
daily rental
business sold
and lower
FDIC expense
due to
the FDIC
Special Assessment recorded in 2024;
and
●
Popular U.S.
For the quarter ended June 30, 2025, the reportable segment of Popular U.S. reported a net income of $22.6 million, compared with
a net income
of $17.7 million for
the same quarter of
the previous year.
The factors that contributed
to the variance
in the financial
results included the following:
●
commercial and
construction portfolios,
and lower
cost of
deposits due
to the
repricing of
most interest-bearing
deposit
products,
partially
offset
by
lower
income
from
money
market
investments
due
to
average
balances
and
lower
yields
reflecting
the
decrease
in
short-term
rates.
The
net
interest
margin
for
the
quarter
ended
June
30,
2025
was
2.93%
compared to 2.60% for the same quarter in the
previous year driven by lower cost of deposits;
●
to a benefit of $4.4 million in 2024, which was
mainly related to improvements in commercial
credit ratings;
●
●
For the six months ended June 30, 2025, the reportable segment of Popular
U.S. recorded a net income of $37.4 million, compared
with
a
net
income
of
$24.8
million
for
the
same
period
of
the
previous
year.
The
factors
that
contributed
to
the
variance
in
the
financial results included the following:
●
commercial and construction
portfolios and lower
interest expense from
deposits, due to
product repricing as
mentioned
above, partially offset by lower income from money market investments due to lower rates. The net interest margin for the
six months ended June 30, 2025 was 2.84% compared to 2.60% for the same
period of the previous year driven by lower
cost of deposits;
●
portfolio due to higher loan balances;
148
●
recorded in
2024 and
lower professional
fees, offset
by higher
allocation of
Corporate expenses
reflective of
personnel
costs and consulting fees; and
●
STATEMENT
OF FINANCIAL CONDITION ANALYSIS
Assets
The Corporation’s total assets were $76.1 billion at June 30, 2025, compared
to $73.0 billion at December 31, 2024. The variance in
total assets of $3.1 billion was driven by an increase in AFS securities and loan growth across most portfolios at both BPPR and PB
segments,
partially offset by a decrease in
HTM securities, other assets, and money market investments.
Refer to the Consolidated
Statements of Financial Condition included in
this report and to the following narrative for
additional information.
Money market investments and investment securities
Money market investments decreased by $40.2 million as of June 30,
2025, when compared to December 31, 2024, driven by funds
deployed to support loan growth.
AFS securities increased $2.2 billion, mainly due to investment in U.S. Treasury securities and the
decrease in
the unrealized
losses of
AFS securities
of $232.7
million, partially
offset
by maturities
and principal
paydowns.
HTM
securities
decreased
by
$216.4 million
driven
by
maturities
and
principal
paydowns,
partially
offset
by
the
amortization
of
$91.6
million of the discount related to U.S. Treasury securities previously reclassified
from the AFS to HTM.
Refer to Note 5 and to Note 6
to the
Consolidated Financial
Statements for
additional information
with respect
to the
Corporation’s debt
securities available-for-
sale and held-to-maturity.
149
Loans
Refer to Table
6 for a
breakdown of the Corporation’s
loan portfolio. Also, refer
to Note 7 in
the Consolidated Financial Statements
for detailed information about the Corporation’s loan portfolio
composition and loan purchases and sales.
Loans held-in-portfolio
increased by
$1.1 billion
to $38.2
billion at
June 30,
2025, compared
to
December 31,
2024. Despite
the
uncertainty about the economic outlook, demand for credit across all segments was strong during the second quarter of 2025. In the
BPPR segment
loan balances
increased by
$626.0 million
across all
portfolios, mostly
due to
commercial and
construction loans,
which
include
the
origination
of
a
$265.0
million
commercial
loan
during
the
second
quarter
of
2025
which
represents
the
Corporation’s
portion
of
a
$425.0
million
issuance
in
which
BPPR
acted
as
the
lead
bank
and
administrative agent,
and
higher
mortgage loans,
driven primarily
by home
purchase activity.
Auto loans
and leases
also increased,
driven by
a strong
origination
activity. The PB
segment also increased
by $451.6 million, driven by commercial and construction lending.
Nonetheless, the impact
of trade and tariff policies on economic activity may affect
loan demand as uncertainty on the short-term
economic outlook exists.
150
Table 6 - Loans Ending Balances
(In thousands)
June 30, 2025
December 31, 2024
Variance
Loans held-in-portfolio:
Commercial
$
2,520,789
$
2,399,620
$
121,169
5,521,374
5,363,235
158,139
3,003,855
3,157,746
(153,891)
8,043,752
7,741,562
302,190
Total Commercial
19,089,770
18,662,163
427,607
Construction
1,468,201
1,263,792
204,409
Leasing
1,983,068
1,925,405
57,663
Mortgage
8,444,427
8,114,183
330,244
Consumer
1,215,293
1,218,079
(2,786)
77,479
73,571
3,908
1,876,463
1,855,244
21,219
3,861,702
3,823,437
38,265
168,775
171,778
(3,003)
Total Consumer
7,199,712
7,142,109
57,603
Total loans held-in
-portfolio
$
38,185,178
$
37,107,652
$
1,077,526
Loans held-for-sale:
$
2,898
$
5,423
$
(2,525)
Total loans held-for-sale
$
2,898
$
5,423
$
(2,525)
Total loans
$
38,188,076
$
37,113,075
$
1,075,001
151
Other assets
Other assets amounted to $1.7 billion at June 30, 2025, a decrease of
$52.7 million when compared to $1.8 billion at December 31,
2024.
The variance
was mainly
driven by
a
decrease in
net
deferred tax
assets
of
$64.2
million
due to
positive changes
in
the
valuation of
AFS securities,
a reduction
in unsettled
trade receivables
of $14.6
million related
to proceeds
from maturities
of U.S.
Treasury securities,
lower principal, interest and escrow servicing advances
of $8.0 million, and a reduction in investments under
the
equity
method
by
$7.0
million
mainly
related
to
unrealized
losses
on
the
underlying
investment
portfolio
held
by
the
investee,
partially offset
by an
increase in
capitalized software costs
of $33.1
million mainly
related to
technology modernization
and higher
prepaid
taxes
of
$20.8
million.
Refer
to
Note
12
to
the
Consolidated
Financial
Statements
for
a
breakdown
of
the
principal
categories that comprise the caption
of “Other Assets” in
the Consolidated Statements of Financial
Condition at June 30,
2025 and
December 31, 2024.
Liabilities
The Corporation’s total
liabilities were $70.1
billion at June
30, 2025, an
increase of $2.7
billion, when compared
to December 31,
2024. The following is a discussion of the significant
changes in liabilities.
Deposits and Borrowings
Total Deposits
The Corporation’s
deposits totaled $67.2
billion as
of June
30, 2025,
compared to
$64.9 billion
as of
December 31,
2024. Ending
deposit
balances increased
by
$2.3 billion,
while
average quarterly
balances grew
by $2.1
billion. The
average deposit
balance,
excluding P.R.
public deposits, increased by
$1.1 billion. Non-interest-bearing deposits
remained flat when compared to
December
31, 2024. At the end
of the second quarter of
2025, Puerto Rico public deposits were
$20.9 billion, an increase of
$1.5
billion when
compared to December 31, 2024.
P.R
public deposits represent 31% of
total deposits and are expected
to continue to range in
the
short term
between $18
billion and
$20 billion.
However,
the rate
at which
public deposit
balances may
change is
uncertain and
difficult to predict. The amount and timing of any such change is likely
to be impacted by, for example, the level of federal assistance
and speed
at which
any federal
assistance is
distributed, the
financial condition,
liquidity and
cash management
practices of
the
Puerto Rico Government and its instrumentalities,
and the implementation of fiscal and debt adjustment plans approved pursuant to
PROMESA or
other
actions
mandated by
the
Fiscal
Oversight and
Management Board
for Puerto
Rico
(the
“Oversight Board”).
Additionally,
the Trump
Administration is
conducting a
review of
federal funding,
which could
entail a
reduction in
federal funding
available for Puerto Rico. P.R
public deposits costs are generally
indexed to changes in short-term
market rates with a
one-quarter
lag, in
accordance with
contractual terms.
As a
result, these
deposits’ costs
have typically
lagged variable
asset repricing.
These
deposits require that the bank pledge high credit quality securities as collateral; therefore, liquidity risks arising
from deposit outflows
are lower.
At BPPR,
excluding Puerto
Rico public
deposits, ending
deposits increased
by $340
million, while
at PB
segment ending
deposit
balances increased by
$400 million, net
of intercompany activity.
We continue to
expect third quarter deposit
balances in BPPR
to
reflect historical seasonality and decrease based on past
experience of our retail client behavior.
The volume and cost of P.R.
public deposits and the proportion of high-cost deposits in the U.S, directly impact the balance and mix
of earning assets and therefore represent a key
factor in the Corporation’s ability to expand its net
interest margin.
Refer to Table 7 for a breakdown of the Corporation’s deposits at June 30, 2025 and December
31, 2024.
152
Table 7 - Deposits Ending Balances
(In thousands)
June 30, 2025
December 31, 2024
Variance
Deposits excluding P.R.
public deposits:
$
15,114,614
$
15,139,555
$
(24,941)
21,554,606
21,177,506
377,100
829,506
736,225
93,281
7,938,858
7,476,924
461,934
861,947
890,704
(28,757)
Sub-total deposits excluding P.R.
public deposits
46,299,531
45,420,914
878,617
P.R. public
deposits:
12,376,316
11,730,273
646,043
7,743,663
7,087,904
655,759
797,981
645,254
152,727
Sub-total P.R.
public deposits
20,917,960
19,463,431
1,454,529
Total deposits
$
67,217,491
$
64,884,345
$
2,333,146
[1] Includes interest bearing demand deposits.
Borrowings
The Corporation’s
borrowings totaled
$1.4 billion
at June
30, 2025
compared to
$1.2
billion at
December 31,
2024. The
increase
was
mainly
related
to
higher
FHLB
advances
by
$236.5
million,
mainly
at
PB.
Refer
to
Note
15
to
the
Consolidated
Financial
Statements for detailed
information on the
Corporation’s borrowings. Also,
refer to the
Liquidity section in
this MD&A for
additional
information on the Corporation’s funding sources.
Stockholders’ Equity
Stockholders’ equity totaled $6.0 billion at June 30, 2025, an increase of $341.0 million when compared to December 31, 2024. The
increase was
principally due
to net
income for
the six
months ended
June 30,
2025 of
$387.9 million,
coupled with
the after-tax
effect of the
decrease in net unrealized losses in
the portfolio of AFS securities
of $188.6 million and the
amortization of unrealized
losses
from
securities
previously reclassified
to
HTM
of
$73.2 million,
partially
offset
by
an
increase in
treasury
stock
of
$226.9
million, mainly due to
common stock repurchases, and
the common and preferred dividends
declared of $96.9 million.
Refer to the
Consolidated Statements
of Financial
Condition, Comprehensive
Income and
Changes in
Stockholders’ Equity
for information
on
the composition of stockholders’ equity.
The composition of the Corporation’s financing to total assets
at June 30, 2025 and December 31, 2024
is included in Table 8.
153
Table 8 - Financing to Total
Assets
June 30,
December 31,
% (decrease) increase
% of total assets
(Dollars in millions)
2025
2024
from 2024 to 2025
2025
2024
Non-interest-bearing core deposits
$
15,115
$
15,139
(0.2)
%
19.9
%
20.7
%
Interest-bearing core deposits
46,517
44,622
4.2
61.2
61.1
Interest-bearing other deposits
5,586
5,123
9.0
7.3
7.0
Repurchase agreements
56
55
1.8
0.1
0.1
Other short-term borrowings
550
225
144.4
0.7
0.3
Notes payable
808
896
(9.8)
1.1
1.2
Other liabilities
1,479
1,372
7.8
1.9
1.9
Stockholders’ equity
5,954
5,613
6.1
7.8
7.7
154
CAPITAL
Regulatory Capital
The Corporation, BPPR and PB
are subject to regulatory capital
requirements established by the Federal Reserve Board.
The risk-
based
capital
standards
applicable
to
the
Corporation,
BPPR
and
PB
(“Basel
III
capital
rules”)
are
based
on
the
final
capital
framework for strengthening international capital standards, known
as Basel III, of the Basel Committee on Banking Supervision.
As
of June 30,
2025, the Corporation’s, BPPR’s
and PB’s capital
ratios continue to
exceed the minimum requirements
for being “well-
capitalized”.
The risk-based
capital ratios
presented in
Table
9,
which include
common equity
tier 1,
Tier
1 capital,
total capital
and leverage
capital as of June 30, 2025 and December
31, 2024.
Table 9 - Capital Adequacy
Data
(Dollars in thousands)
June 30, 2025
December 31, 2024
Common equity tier 1 capital:
Common stockholders' equity - U.S. GAAP basis
$
5,931,875
$
5,590,923
CECL transitional amount
-
42,375
AOCI related adjustments due to opt-out election
1,325,146
1,589,875
Goodwill, net of associated deferred tax liability (DTL)
(653,493)
(657,181)
Intangible assets, net of associated DTLs
(5,844)
(6,826)
Deferred tax assets and other deductions
(228,617)
(296,374)
Common equity tier 1 capital
$
6,369,067
$
6,262,792
Additional tier 1 capital:
Preferred stock
22,143
22,143
Additional tier 1 capital
$
22,143
$
22,143
Tier 1 capital
$
6,391,210
$
6,284,935
Tier 2 capital:
Trust preferred securities subject to phase in as
tier 2
192,674
192,674
Other inclusions (deductions), net
503,781
490,594
Tier 2 capital
$
696,455
$
683,268
Total risk-based capital
$
7,087,665
$
6,968,203
Minimum total capital requirement to be well capitalized
$
4,003,691
$
3,907,346
Excess total capital over minimum well capitalized
$
3,083,974
$
3,060,857
Total risk-weighted
assets
$
40,036,914
$
39,073,462
Total assets for leverage
ratio
$
75,114,655
$
72,593,464
Risk-based capital ratios:
Common equity tier 1 capital
15.91
%
16.03
%
Tier 1 capital
15.96
16.08
Total capital
17.70
17.83
Tier 1 leverage
8.51
8.66
[1] The CECL transitional amount includes the impact
of Popular's adoption of the new CECL accounting standard
on January 1, 2020.
155
The Basel
III capital rules
provide that a
depository institution is
deemed to be
well capitalized if
it maintains a
leverage ratio of
at
least 5%,
a common equity
Tier 1
ratio of
at least 6.5%,
a Tier
1 capital ratio
of at least
8% and a
total risk-based
ratio of at
least
10%. The Corporation, BPPR and PB leverage ratio, common equity
Tier 1 ratio and Tier
1 capital ratio, respectively as of June 30,
2025, continue to exceed the minimum requirements
for being “well-capitalized” under the Basel III
capital rules.
Pursuant
to
the
adoption
of
the
CECL
accounting
standard
on
January
1,
2020,
the
Corporation
elected
to
use
the
five-year
transition
period option
as
provided in
the
final
interim
regulatory capital
rules effective
March 31,
2020.
The
five-year
transition
period provision delayed for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period
to phase out
the aggregate amount of
the capital benefit provided
during the initial two-year
delay. During
the first quarter
of 2025,
the Corporation phased-in all the cumulative CECL
deferral over the three-year transition period.
The decrease in the common
equity Tier I
capital ratio, Tier
I capital ratio, total capital
ratio,
and leverage ratio as of
June 30, 2025
as compared to December 31, 2024
was mainly due to
higher risk weighted assets driven by
the increase in loans held
in portfolio,
the
repurchase
of
shares
under
the
2024
Repurchase
Program
and
common
stock
dividends,
partially
offset
by
the
six-month
period’s earnings.
Reconciliation to Tangible Common Equity and Tangible Assets
Table
10 provides
a reconciliation of
total stockholders’ equity
to tangible common
equity and total
assets to tangible
assets as
of
June 30, 2025, and December 31, 2024.
156
Table 10 - Reconciliation
of Tangible Common Equity
and Tangible Assets
(In thousands, except share or per share information)
June 30, 2025
December 31, 2024
Total stockholders’
equity
$
5,954,018
$
5,613,066
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(802,954)
(802,954)
Less: Other intangibles
(5,844)
(6,826)
Total tangible common
equity
$
5,123,077
$
4,781,143
Total assets
$
76,065,090
$
73,045,383
Less: Goodwill
(802,954)
(802,954)
Less: Other intangibles
(5,844)
(6,826)
Total tangible assets
$
75,256,292
$
72,235,603
Tangible common
equity to tangible assets
6.81
%
6.62
%
Common shares outstanding at end of period
67,937,468
70,141,291
Tangible book value
per common share
$
75.41
$
68.16
Quarterly average
Total stockholders’
equity [1]
$
6,849,789
$
6,620,766
Average unrealized (gains) losses on AFS securities
transferred to HTM
334,183
505,791
Adjusted total stockholder's equity
7,183,972
7,126,557
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(802,953)
(804,411)
Less: Other intangibles
(6,096)
(7,288)
Total tangible common
equity
$
6,352,780
$
6,292,715
Return on average tangible common equity
13.26
%
11.22
%
157
RISK MANAGEMENT
Market / Interest Rate Risk
The Corporation’s assets that are mainly subject to market valuation risk are debt securities classified as available-for-sale. Refer to
Notes 5 and 6 to
the Consolidated Financial Statements for further information on
the debt securities available-for-sale and held-to-
maturity portfolios.
Debt securities
classified as
available-for-sale and
held-to-maturity amounted
to
$20.5 billion
and
$7.5 billion,
respectively, as of June 30, 2025. Other assets subject to market risk include mortgage servicing rights ("MSRs") with a fair value of
$103.1 million as of June 30, 2025.
Interest Rate Risk (“IRR”)
The Corporation’s net interest income is subject
to various categories of interest rate risk,
including repricing, basis, yield curve and
option risks.
In managing
interest rate
risk, management may
alter the
mix of
floating and
fixed rate
assets and
liabilities, change
pricing
schedules,
adjust
maturities
through
sales
and
purchases
of
investment
securities,
and
enter
into
derivative
contracts,
among other alternatives.
Management utilizes various tools to assess IRR, including Net Interest
Income (“NII”) simulation modeling, static gap analysis, and
Economic Value of Equity (“EVE”) to monitor the risk arising from the dynamic characteristics of assets and liabilities subject to IRR.
The
three
methodologies complement
each
other
and
are
used jointly
in
the
evaluation of
the
Corporation’s IRR.
NII simulation
modeling is prepared for a five-year period, which in conjunction with the EVE analysis, provides management a better view of long-
term IRR.
Net
interest
income
simulation
analysis
performed by
legal
entity and
on
a
consolidated
basis
is
used
to
estimate the
potential
change
in
net
interest
income
resulting
from
hypothetical
changes
in
interest
rates.
Sensitivity
analysis
is
calculated
using
a
simulation model which incorporates actual balance
sheet figures detailed by maturity and interest
yields or costs.
Management assesses interest
rate risk
by comparing various
NII simulations under
different interest rate
scenarios to assess
the
degree of
change and
the projected
shape of
the yield
curve. Management
also performs
analyses to
isolate and
measure basis
and
prepayment
risk
exposures.
These
models
are
periodically
monitored.
Assumptions
are
validated
by
management
and
are
subject to independent validations according to the Corporations’
Model Governance Policy.
The Corporation processes NII
simulations under interest rate
scenarios in which the
yield curve is assumed
to rise and
decline by
the same magnitude
(parallel shifts). The
rate scenarios considered in
these market risk
simulations include instantaneous parallel
changes of
-100,
-200, +100,
and +200
basis points
during the
succeeding twelve-month
period. Assumptions
included in
these
analyses
include
that
the
balance
sheet
remains
flat,
relative
levels
of
market
interest
rates
across
all
yield
curve
points
and
indexes, interest rate spreads, loan
prepayments and deposit elasticity.
Thus, they should not be
relied upon as indicative of
actual
results
and
do
not
contemplate
actions
that
management
may
engage
in
as
a
response
to
future
changes
in
interest
rates.
Additionally,
the Corporation
is also
subject to
the risk
inherent in
the use
of different
rate indexes
for the
repricing of
assets and
liabilities, as well the
risk of pricing lags
due to contractual or
timing differences between the
market and management response
to
changes
in
the
rate
environment.
These
forward-looking
computations
are
management’s
best
estimate
based
on
known
and
available information and actual results
may differ.
The following table presents the
results of the simulations at
June 30, 2025 and
December 31, 2024, assuming a static balance
sheet and parallel changes over flat spot rates
over a one-year time horizon:
158
Table 11
- Net Interest Income Sensitivity (One Year
Projection)
June 30, 2025
December 31, 2024
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
22,433
0.85
44,747
1.78
+100 basis points
10,515
0.40
22,917
0.91
-100 basis points
(12,636)
(0.48)
9,157
0.36
-200 basis points
(18,563)
(0.71)
588
0.02
As of June
30, 2025, NII simulations
show the Corporation maintains
an asset sensitive position
that is symmetric
in the rising
and
declining rates scenarios. Compared to the
results as of December 31, 2024,
the variation in sensitivity and the
resulting profile are
mainly driven
by updated
deposit beta
model assumptions that
reflect lower
elasticity in
declining rate
scenarios. In
declining rate
scenarios, the reduction in net interest income is driven by the repricing of short-term assets and variable rate loans offset in part by
declining
deposit
costs.
In
rising rate
scenarios, Popular’s
net interest
income
would increase
due
to
the
repricing
of
short-term
assets,
variable
rate
loans,
and
intermediate
maturity
assets
coming
due
within
one
year,
that
are
offset
in
part
by
increased
deposits costs
due to
BPPR’s large
proportion of
market-linked Puerto Rico
public sector
deposits. Changes
in the
balance sheet
during the quarter
led to reduced
asset sensitivity.
The Corporation purchased
$2.4 billion in
U.S. Treasury
Notes with an
average
maturity
of
approximately
1.5
years.
Higher
loan
balances
and
growth
in
market-linked
Puerto
Rico
public
sector
deposits
also
contributed to reduced asset sensitivity.
The
Corporation’s
loan
and
investment
portfolios
are
subject
to
prepayment
risk.
Prepayment
risk
also
could
have
a
significant
impact on the duration of mortgage-backed securities
and collateralized mortgage obligations.
Trading
The Corporation
engages in
trading activities
in the
ordinary course
of business
at its
subsidiaries, BPPR
and Popular
Securities.
Popular Securities’
trading activities
consist primarily
of market-making
activities to
meet expected
customers’ needs
related to
its
retail brokerage business, and purchases and sales of
U.S. Government and government sponsored securities with the objective of
realizing gains
from expected
short-term price
movements. BPPR’s
trading activities consist
primarily of
holding U.S.
Government
sponsored
mortgage-backed
securities
and
economic
hedges
of
the
related
market
risk
with
“TBA”
(to-be-announced)
market
transactions. In
addition, BPPR
uses forward
contracts or
TBAs that
have characteristics
similar to
that of
the forecasted
security
and its conversion timeline to hedge its securitization
pipeline.
At June 30,
2025, the Corporation held
trading securities with a
fair value of
$29.6 million, representing 0.04%
of the Corporation’s
total assets, compared
with $32.8 million
and 0.05%, respectively,
at December 31,
2024. The trading
portfolio consists principally
of investment grade securities such as mortgage-backed securities of $23.0
million with a weighted average yield of 5.28% and U.S.
Treasuries of $5.8 million with a weighted average yield of 3.41% at June 30, 2025
and $29.1 million with a yield of 5.54% and $2.8
million with a yield of 3.28%, respectively, as of December 31, 2024.
The Corporation’s trading activities are
limited by internal policies. For each
of the two subsidiaries, the
market risk assumed under
trading
activities
is
measured
by
the
5-day
net
value-at-risk
(“VAR”),
with
a
confidence
level
of
99%.
The
VAR
measures
the
maximum estimated loss that may occur over a
5-day holding period, given a 99% probability.
The Corporation’s trading portfolio had a 5-day VAR of $0.4 million for the last week
in June 2025. VAR models include assumptions
and estimates
thus actual
results could
differ from
the outputs
from these
models and
assumptions. Back-testing is
performed on
model results to compare actual results against maximum
estimated losses, in order to evaluate model
and assumptions accuracy.
In the opinion of management, the size and composition
of the trading portfolio does not represent
a significant source of market risk
for the Corporation.
159
Liquidity
Liquidity Risk Management Process
The Corporation
has adopted
policies and
limits to
monitor the
Corporation’s liquidity
position and
that of
its banking
subsidiaries.
Refer to
the Enterprise
Risk Management
section of
Management’s Discussion
and Analysis
included in
the 2024
Form 10-K
for
information on the framework
in place to monitor,
review, and approve
policies to measure, limit and
manage funding activities and
strategies
impacting
liquidity
risk.
Additionally,
contingency
funding
plans
are
used
to
model
various
stress
events
of
different
magnitudes that
affect different
time horizons,
to assist
management in
evaluating the
size of
the liquidity
buffers needed
if those
events occur. However,
such models may not predict
accurately how the market and customers
might react to every
event and are
dependent on
many assumptions.
The objective
of effective
liquidity management
is to
ensure that
the Corporation
has sufficient
liquidity
to
meet
all
its
financial
obligations,
finance
expected
future
growth,
fund
planned
capital
distributions
and
maintain
a
reasonable safety margin for cash needs under both
normal and stressed market conditions.
Sources of Liquidity
Deposits, including
customer deposits,
brokered deposits
and public
funds deposits,
continue to
be the
most significant
source of
funds for the Corporation,
representing
88% and 89% of
funding of the Corporation’s
total assets at June
30, 2025 and December
31, 2024, respectively.
The ratio of
total ending loans to
deposits remained at
57% at June
30, 2025 and
December 31, 2024.
In
addition to
traditional deposits,
the Corporation
maintains borrowing
arrangements, which
amounted to
$1.4 billion
in outstanding
balances at June 30, 2025 (December 31, 2024 - $1.2 billion). A detailed description of the Corporation’s borrowings, including their
terms, is
included in
Note 15
to the
Consolidated Financial
Statements. Also,
the Consolidated
Statements of
Cash Flows
in the
accompanying Consolidated Financial Statements provide
information on the Corporation’s cash inflows and outflows.
The
following
sections
provide
further
information
on
the
Corporation’s
major
funding
activities
and
needs,
as
well
as
the
risks
involved in these activities.
Banking Subsidiaries
Primary
sources of
funding
for the
Corporation’s
banking subsidiaries
(BPPR and
PB
or,
collectively,
“the banking
subsidiaries”)
include
retail,
commercial
and
public
sector
deposits,
brokered
deposits,
unpledged
investment
securities,
mortgage
loan
securitization and, to a lesser extent, loan sales. In
addition, the Corporation maintains borrowing facilities with the FHLB and at the
discount window
of the
Federal Reserve
Bank of
New York
(the “FRB”)
and has
a considerable
amount of
collateral pledged
that
can be used to raise funds under these facilities.
During the second quarter of 2025, BPPR was able to increase its available
liquidity by approximately $2.9 billion after the merger of
Popular Auto, LLC with
and into BPPR, effective
on May 1,
2025, that allowed BPPR
to pledge auto loans
and leases as collateral
under the federal
reserve’s discount
window. At
June 30,
2025, the Corporation’s
available liquidity increased
to $26.1 billion
from
$21.6
billion on
December 31,
2024. During
the second
quarter of
2025, the
Corporation had
no material
incremental use
of its
available liquidity sources. The liquidity sources of
the Corporation at June 30, 2025 are presented
in Table 12 below:
160
Table 12 - Liquidity Sources
June 30, 2025
December 31, 2024
(In thousands)
BPPR
Popular U.S.
Total
BPPR
Popular U.S.
Total
Unpledged securities and unused funding
sources:
Money market (excess funds at the
Federal Reserve Bank)
$
4,753,672
$
1,576,770
$
6,330,442
$
4,882,358
$
1,488,857
$
6,371,215
Unpledged securities
4,453,281
519,711
4,972,992
3,806,066
522,869
4,328,935
FHLB borrowing capacity
3,178,798
816,840
3,995,638
2,777,090
1,058,921
3,836,011
Discount window of the Federal Reserve
Bank borrowing capacity
7,895,298
2,875,787
10,771,085
4,839,388
2,178,646
7,018,034
Total available liquidity
$
20,281,049
$
5,789,108
$
26,070,157
$
16,304,902
$
5,249,293
$
21,554,195
Refer
to
Note
15
to
the
Consolidated
Financial
Statements
for
additional
information
of
the
Corporation’s
borrowing
facilities
available through its banking subsidiaries.
The principal
uses of
funds for
the banking
subsidiaries include
loan originations,
investment portfolio
purchases, loan
purchases
and repurchases, repayment of outstanding obligations (including deposits), advances on certain serviced portfolios and operational
expenses. Also, the
banking subsidiaries assume liquidity
risk related to collateral
posting requirements for certain
activities mainly
in
connection
with
contractual
commitments,
recourse
provisions,
servicing
advances,
derivatives
and
credit
card
licensing
agreements.
The banking
subsidiaries maintain
sufficient funding
capacity to
address large
increases in
funding requirements
such as
deposit
outflows.
The
Corporation has
established
liquidity
guidelines
that
require
the
banking
subsidiaries
to
have
sufficient
liquidity
to
cover all short-term borrowings and a portion of deposits.
Deposits are
a key
source of
funding. Refer
to Table
7 for
a breakdown
of deposits
by major
types. Core
deposits are
generated
from a large base of consumer, corporate and public sector customers. Core deposits
include certificates
of deposit under $250,000,
all
interest-bearing
transactional
deposit
accounts,
non-interest-bearing
deposits,
and
savings
deposits.
Core
deposits
exclude
brokered
deposits
and
certificates
of
deposit
over
$250,000.
Core
deposits,
excluding
P.R.
public
funds,
which
are
fully
collateralized, have
historically provided
the Corporation
with a
sizable source
of relatively
stable and
low-cost funds.
P.R.
public
funds, while
linked to
market interest
rates, provide
a stable
source of
funding with
an attractive
earning spread.
As of
June 30,
2025, total Puerto Rico public sector deposits were
$20.9 billion, compared to $19.5 billion at
December 31, 2024.
Core deposits
continue to
represent 92%
of total
deposits at
$61.6
billion, as
of June
30, 2025,
and compared
to
December 31,
2024. Core deposits financed 85% of the Corporation’s
earning assets at June 30, 2025, compared
to 86% at December 31, 2024.
The distribution by maturity
of certificates of deposit
with denominations of $250,000 and
over at June 30,
2025 is presented in
the
table that follows:
161
Table 13 - Distribution by
Maturity of Certificates of Deposit of $250,000 and Over
(In thousands)
3 months or less
$
2,591,418
Over 3 to 12 months
992,191
Over 1 year to 3 years
287,373
Over 3 years
147,470
Total
$
4,018,452
The
Corporation
had
$1.7
billion
in
brokered
deposits
at
June
30,
2025,
which
financed
approximately
2%
of
its
total
assets
(December 31, 2024 - $1.6 billion and 2%,
respectively).
As of
June 30,
2025, the
banking subsidiaries had
sufficient current
and projected
liquidity sources
to meet
their anticipated
cash
flow obligations, as well as special needs and off-balance sheet commitments,
in the ordinary course of business and have sufficient
liquidity
resources to
address
a
stress
event.
Although
the
banking
subsidiaries
have
historically
been
able
to
replace
maturing
deposits and advances, no assurance can
be given that they would
be able to replace those
funds in the future if
the Corporation’s
financial
condition
or
general
market
conditions
were
to
deteriorate.
The
Corporation’s
financial
flexibility
would
be
severely
constrained
if
the
banking
subsidiaries
are
unable
to
maintain
access
to
funding
or
if
adequate
funding
is
not
available
to
accommodate future
financing needs
at
acceptable interest
rates. The
banking subsidiaries
also
are required
to
deposit cash
or
qualifying
securities
to
meet
margin
requirements
on
repurchase
agreements,
deposit
agreements
and
other
collateralized
borrowing facilities. To
the extent that
the value of
securities previously pledged as
collateral declines because of
market changes,
the Corporation will be required to deposit additional cash or securities to meet its margin or collateral requirements and would need
to
rely
more
heavily
on
alternative
funding
sources.
In
these
scenarios,
the
Corporation’s
financial
flexibility
and
ability
to
grow
revenues may not increase proportionately to cover costs and
profitability would be adversely affected.
The Corporation considers balances in
excess of $250,000 to have a
higher potential liquidity risk.
Table
14 reflects the aggregate
balance in
deposit accounts
in excess
of $250,000,
including collateralized
public funds
and deposits
outside of
the U.S.
and its
territories.
Collateralized public funds, as presented in Table 14, represent public deposit balances from governmental
entities in the
U.S.
and
its
territories,
including
Puerto
Rico
and
the
United
States
Virgin
Islands,
collateralized
based
on
such
jurisdictions’
applicable collateral requirements.
162
Table 14 - Deposits
30-Jun-25
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$
23,741,443
42
%
$
8,341,661
70
%
$
32,083,104
48
%
Transactional deposits balances over
$250,000
7,968,081
14
%
2,042,469
17
%
10,010,550
15
%
Time deposits balances over $250,000
2,262,268
4
%
833,527
7
%
3,095,795
5
%
Uninsured foreign deposits
444,748
1
%
-
-
%
444,748
1
%
Collateralized public funds
21,269,940
39
%
313,354
3
%
21,583,294
31
%
Intercompany deposits
195,313
-
%
415,184
3
%
-
-
%
Total deposits
$
55,881,793
100
%
$
11,946,195
100
%
$
67,217,491
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
31-Dec-24
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$
23,588,937
44
%
$
7,961,334
68
%
$
31,550,271
49
%
Transactional deposits balances over
$250,000
8,046,175
15
%
1,944,674
16
%
9,990,849
15
%
Time deposits balances over $250,000
1,991,934
4
%
813,424
7
%
2,805,358
4
%
Uninsured foreign deposits
450,068
1
%
-
-
%
450,068
1
%
Collateralized public funds
19,771,083
36
%
316,716
3
%
20,087,799
31
%
Intercompany deposits
205,839
-
%
667,839
6
%
-
-
%
Total deposits
$
54,054,036
100
%
$
11,703,987
100
%
$
64,884,345
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
Bank Holding Companies
The principal
sources of
funding for
the BHCs,
which are
Popular,
Inc.
(holding company
only) and
PNA, include
cash on
hand,
investment
securities,
dividends
received from
banking
and
non-banking subsidiaries,
asset sales,
credit
facilities
available from
affiliate banking subsidiaries and proceeds from potential securities offerings.
Dividends from banking and non-banking subsidiaries
are subject
to various
regulatory limits
and authorization
requirements imposed
by banking
regulators, including
the FED
and the
NYDFS, that may limit the ability of those subsidiaries
to act as a source of funding to the BHCs.
The principal uses of these funds include the repayment of debt, interest payments to holders of senior debt and junior subordinated
deferrable interest debentures (related to trust preferred securities), the payment of dividends to common stockholders,
repurchases
of the Corporation’s securities and capitalizing its subsidiaries.
The outstanding balance of notes payable at the
BHCs amounted to $594 million at June 30, 2025
and December 31, 2024.
The contractual maturities of the BHCs notes payable
at June 30, 2025 are presented in Table 15.
Table 15
- Distribution of BHC's Notes Payable by Contractual
Maturity
Year
(In thousands)
2028
$
395,865
Later years
198,386
Total
$
594,251
163
As of
June 30,
2025, the
BHCs had
cash and
money markets
investments totaling
$503 million
and borrowing
potential of
$165
million
from
its
secured
facility
with
BPPR.
The
BHCs’
liquidity
position
continues
to
be
adequate
with
sufficient
cash
on
hand,
investments and
other sources of
liquidity that are
expected to be
sufficient to
meet all
interest payments and
dividend obligations
for the
foreseeable future.
Additionally,
the Corporation’s
latest quarterly
paid dividend
was $0.70
per share
or approximately
$48
million per quarter.
The BHCs have in
the past borrowed in the
corporate debt market primarily to finance
their non-banking subsidiaries and refinance
debt
obligations.
These
sources
of
funding
are
more
costly
given
that
two
out
of
three
principal
credit
rating
agencies
rate
the
Corporation’s debt
securities below
“investment grade”.
The Corporation
has a
shelf registration
statement filed
and effective
with
the
Securities
and
Exchange
Commission,
which
permits
the
Corporation
to
issue
an
unspecified
amount
of
debt
or
equity
securities.
Non-Banking Subsidiaries
The
principal
sources
of
funding
for
the
non-banking
subsidiaries
include
internally
generated
cash
flows
from
operations,
loan
sales, repurchase agreements, capital
injections and borrowed funds
from their direct
parent companies or the
holding companies.
The principal uses of funds for the non-banking
subsidiaries include repayment of maturing debt,
operational expenses and payment
of dividends to the BHCs.
Dividends
During
the
six
months
ended June
30,
2025,
the
Corporation declared
cash
dividends of
$1.40
per
common
share
outstanding
($96.2 million in the
aggregate). The dividends for the
Corporation’s Series A preferred stock amounted to
$0.7 million.
On July 16,
2025, the
Corporation announced an
increase in its
quarterly common stock
dividend from $0.70
to $0.75
per share, commencing
with the dividend payable in the fourth quarter of
2025, subject to the approval by the Corporation’s
Board of Directors.
During the six
months ended June 30,
2025, the BHCs
received dividends and distributions
amounting to $200 million
from BPPR,
$23 from
Popular International
Bank, Inc.
(“PIBI”) and
$15 million
from
its
other non-banking
subsidiaries. Dividends
from BPPR
constitute Popular,
Inc.’s primary
source of
liquidity.
In addition,
during the
six months
ended June
30, 2025,PIBI,
a wholly
owned
subsidiary of Popular, Inc., received $20.0 million in cash dividends
and $5.3 million in stock dividends from its investment
in BHD.
In
addition to
regulatory
limits previously
discussed, the
ability
of a
bank
subsidiary to
up-stream dividends
to
its
BHC could
be
impacted by
its financial
performance and
capital, including
tangible and
regulatory capital,
thus potentially
limiting the
amount of
cash up
streamed to
the BHCs
from the
banking subsidiaries.
This could,
in turn,
affect BHC’s
ability to
declare dividends
on its
outstanding common
and
preferred stock,
repurchase its
securities
or
meet
its
debt
obligations, for
example. At
June
30,
2025,
BPPR could declare
a dividend of
up to
approximately $209 million
without prior approval
of the Federal
Reserve Board due
to its
retained income, declared dividend activity and transfers to statutory reserves over the measurement period.
In addition, pursuant to
the
FRB
requirements, PB
may not
declare
or
pay
a
dividend without
the
prior
approval
of
the
Federal Reserve
Board
and
the
NYSDFS.
Other Funding Sources and Capital
In
addition to
cash
reserves held
at
the
FRB
that
totaled $6.3
billion at
June
30, 2025,
the
debt securities
portfolio provides
an
additional
source
of
liquidity,
which
may
be
realized
through
either
securities
sales,
collateralized
borrowings
or
repurchase
agreements.
The
Corporation’s
debt
securities
portfolio
consists
primarily
of
liquid
U.S.
government
debt
securities,
U.S.
government
sponsored
agency
debt
securities,
U.S.
government
sponsored
agency
mortgage-backed
securities,
and
U.S.
government
sponsored
agency
collateralized
mortgage
obligations
that
can
be
used
to
raise
funds
in
the
repo
markets.
The
availability
of
repurchase
agreements
would
be
subject
to
having
sufficient
unpledged
collateral
available
at
the
time
the
transactions are
consummated, in addition
to overall
liquidity and
risk appetite
of the
various counterparties.
Refer to
Table
12 for
details of
the Corporation’s
unpledged debt
securities and
available credit
facilities with
the FHLB
and the
discount window
of the
Federal Reserve Bank. A substantial portion
of these debt securities could
be used to raise financing
in the U.S. money markets
or
from secured lending sources, subject to changes in
their fair market value and customary adjustments (haircuts).
Additional
liquidity
may
be
provided
through
loan
maturities,
prepayments
and
sales.
The
loan
portfolio
provides
a
source
of
collateral to
secure the
available credit
facilities with
the FHLB
and the
discount window
of the
Federal Reserve
Bank. After
the
merger of Popular Auto LLC into its
parent company BPPR, effective on May 1, 2025, the
Corporation has $2.9 billion in auto loans
pledged at June 30, 2025, in
addition to mortgage loans, to secure credit
facilities with the Federal Reserve's discount window.
The
164
loan portfolio
can also
be used to
obtain funding
in the
capital markets. Mortgage
loans and
some types of
consumer loans, have
secondary markets which the Corporation could use.
Off-Balance Sheet Arrangements and Other Commitments
In the ordinary course
of business, the Corporation
engages in financial transactions that
are not recorded on
the balance sheet or
may be recorded on the balance sheet in amounts that are different than the full contract or notional amount of the transaction. As a
provider of
financial services,
the Corporation
routinely enters
into commitments
with off-balance
sheet risk
to meet
the financial
needs
of
its
customers.
Refer
to
Note
20
to
the
Consolidated
Financial
Statements
for
information
on
the
Corporation’s
commitments to extent credit and other non-credit commitments.
Other types
of off-balance
sheet arrangements
that the
Corporation enters
in the
ordinary course
of business
include derivatives,
operating
leases
and
provision
of
guarantees,
indemnifications,
and
representation
and
warranties.
Refer
to
Note
27
to
the
Consolidated
Financial
Statements
for
more
information
on
operating
leases
and
to
Note
19
to
the
Consolidated
Financial
Statements for
a detailed
discussion related
to the
Corporation’s guarantees,
indemnifications obligations, and
representation and
warranties arrangements.
The Corporation monitors its cash requirements, including
its contractual obligations and debt commitments.
Financial Information of Guarantor and Issuers of Registered
Guaranteed Securities
The principal sources of funding for Popular, Inc. Holding Company (“PIHC”) and Popular North America, Inc. (“PNA”) have included
dividends received
from their
banking and
non-banking subsidiaries subject
to statutory
provisions that
limit dividends
paid by
the
banking subsidiary without regulatory approval,
asset sales and proceeds from the issuance
of debt and equity.
The Corporation ("PIHC") is
the parent holding company
of Popular North America (“PNA”)
and operates financial services through
its subsidiaries. PNA, a wholly owned subsidiary of Popular, Inc., manages entities such as Equity One, Inc., and PB, including PB’s
subsidiaries: Popular Equipment Finance, LLC,
Popular Insurance Agency, U.S.A., and E-LOAN, Inc.
PNA has issued junior subordinated debentures guaranteed by PIHC (the “obligor group”), purchased by statutory
trusts established
by the Corporation using proceeds from trust preferred
securities (“capital securities”) and common securities
of the trusts.
PIHC guarantees
the junior
subordinated debentures
issued by
PNA. If
PIHC fails
to make
interest payments
on the
debentures
held by the trust,
the trust will not
distribute payments on the
capital securities. The guarantee
ranks subordinate and junior
in right
of
payment to
all
other liabilities
of
PIHC and
equally with
all
other PIHC-issued
guarantees, allowing
direct
legal
action against
PIHC without involving other entities.
Funding
for
PIHC
and
PNA
includes
dividends
from
subsidiaries,
asset
sales,
and
proceeds
from
debt
and
equity
issuance.
Statutory provisions limit the dividends an insured
depository institution can pay to its holding
company without regulatory approval.
The summarized
financial information
below shows
the combined
financial position
of the
obligor group
as of
June 30,
2025, and
December 31, 2024, and the results of
their operations for the six-month period ended June
30, 2025 and June 30, 2024. Excluded
are investments and equity in earnings from subsidiaries
and affiliates outside the obligor group.
Intercompany balances
and transactions
within the
obligor group
have been
eliminated. Material
amounts due
from, due
to, and
transactions with subsidiaries and affiliates are shown separately. Related party transactions
are also presented separately.
165
Table 16 - Summarized Statement
of Condition
(In thousands)
June 30, 2025
December 31, 2024
Assets
Cash and money market investments
$
502,784
$
634,809
Investment securities
35,557
35,150
Accounts receivables from non-obligor subsidiaries
29,111
14,602
Other loans (net of allowance for credit losses of $197 (2024
- $281))
24,791
25,381
Investment in equity method investees
5,281
5,279
Other assets
83,401
65,483
Total assets
$
680,925
$
780,704
Liabilities and Stockholders' equity
Accounts payable to non-obligor subsidiaries
$
5,004
$
12,163
Notes payable
594,251
593,571
Other liabilities
129,332
126,718
Stockholders' (deficit) equity
(47,662)
48,252
Total liabilities and
stockholders' equity
$
680,925
$
780,704
Table 17 - Summarized Statement
of Operations
For the period ended
(In thousands)
June 30, 2025
June 30, 2024
Income:
Dividends from non-obligor subsidiaries
$
215,100
$
313,000
Interest income from non-obligor subsidiaries and affiliates
2,248
7,106
Earnings (losses) from investments in equity method investees
1
(10)
Other operating income
6,155
2,439
Total income
$
223,504
$
322,535
Expenses:
Services provided by non-obligor subsidiaries and affiliates
(net of
reimbursement by subsidiaries for services provided by parent
of
$127,054 (2024 - $120,987))
$
7,739
$
6,447
Other expenses
14,359
22,685
Income tax expense
[1]
5,952
22,208
Total expenses
$
28,050
$
51,340
Net income
$
195,454
$
271,195
[1] 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.
In addition to the
dividend income reflected in the
Statement of Operations table
above, during the six months
ended June
30,
2025,
the
obligor
group
recorded
a
$23.0
million
of
dividend
distributions
from
non-obligor
subsidiary
which
was
recorded as a reduction to the investment (2024 -
$67.4 million).
166
Risk to Liquidity
The
Corporation’s
liquidity
may
come
under
pressure
if
it
experiences
significant
unexpected
cash
outflows
due
to
deposit
withdrawals, which could arise
from various factors like
economic conditions, loss of
depositor confidence, competition, exogenous
events, regulatory requirements or changes, a
downgrade in credit rating, or other events
causing counterparties to avoid exposure.
Investors should refer to Liquidity Risks section of “Part I, Item 1A”
of 2024 Form 10-K for an additional discussion of liquidity
risks to
which the Corporation is subject.
Credit Risk
Geographic and Government Risk
The Corporation is exposed to geographic and government risk.
The Corporation’s assets and revenue composition by geographical
area and by
business segment reporting are
presented in Note 32 to the
Consolidated Financial Statements. Readers
should refer
to
Economic
and
Market
Risk
section
and
Business
Risk
Section
of
“Part
I,
Item
1A”
of
the
2024
Form
10-K
for
an
additional
discussion
on
how
the
Corporation is
impacted
by
global
and
local
economic
and
market
conditions, including
weakness
in
the
economy,
particularly in Puerto
Rico, where a
significant portion of
our business is
concentrated. This section
also addresses how
our credit risk and credit
losses can increase to the extent
our loans are concentrated on borrowers engaged in
the same or similar
activities or in borrowers who as a group
may be uniquely or disproportionately affected by certain
economic or market conditions.
Commonwealth of Puerto Rico
A
significant portion
of
our financial
activities and
credit
exposure is
concentrated in
the
Commonwealth of
Puerto Rico
(“Puerto
Rico”) which has faced severe economic and fiscal
challenges in the past and may face additional
challenges in the future.
Economic Performance
The latest estimates from the
Puerto Rico Planning Board (the
“Planning Board”) indicate that real
GNP grew by 2.1%
during fiscal
year
2024
(July 2023-June
2024) and
by
1.1% in
fiscal
year
2025 (July
2024-June 2025).
For fiscal
year 2026
(July
2025-June
2026),
the
Planning
Board
forecasts
more
modest
GNP
growth
of
0.5%.
Meanwhile,
the
Puerto
Rico
Economic
Activity
Index
showed a
0.9% year-over-year
decline and
a 0.5%
month-over-month increase
in February
2025. While
this index
is not
a direct
measure of real GNP, it serves as an indicator of ongoing economic activity.
In
2021
and
2022,
inflation
rose
sharply
in
the
U.S.
and
Puerto
Rico
due
to
post-pandemic
demand
and
supply
chain
issues.
Inflation
began
to
decrease
by
mid-2022
as
the
Federal
Reserve
raised
interest
rates,
largely
stabilizing
by
September
2024,
leading to
a series
of rate
reductions by the
Federal Reserve for
the first
time in
four years.
As of
June 2025,
the U.S.
Consumer
Price Index
showed a
2.7% year-over-year increase,
which is
significantly lower
than peak
2022 inflation
levels but
still above
the
Federal Reserve’s
2%
target. In
Puerto
Rico, the
Consumer Price
Index
increased by
0.9% over
the 12
months ending
in June
2025.
Fiscal Challenges of Puerto Rico and its Municipalities
As
Puerto Rico’s
economy contracted
in the
2000s, public
debt
increased rapidly
due to
borrowing to
cover
deficits to
pay
debt
service, pension benefits,
and other expenditures.
By 2016, the
government had over
$120 billion in
combined debt and
unfunded
pension liabilities, lost access to capital markets, and
faced a fiscal crisis.
In
response,
the
U.S.
Congress
enacted
PROMESA
in
June
2016.
PROMESA
established
an
Oversight
Board
with
significant
control over Puerto Rico’s
fiscal and economic affairs,
including those of its public
corporations, instrumentalities and municipalities
(collectively, “PR Government Entities”). On August 5, 2025, President Donald J. Trump dismissed five of the seven members of the
Oversight Board, reportedly due to inefficient leadership and
excessive spending. As of the date of
this report, the vacant Oversight
Board seats remain unfilled, and no official replacements have been announced. While the two remaining members may continue to
act
on
behalf
of
the
Oversight
Board,
their
authority
is
limited
with
respect
to
certain
matters
specified
in
PROMESA
and
the
Oversight
Board’s
by-laws.
It
is
still
too
early
to
determine
what
impact
these
changes
may
have
on
the
Oversight
Board’s
operations or on Puerto Rico’s fiscal and economic
affairs.
167
Under PROMESA, the Oversight
Board will remain
in place until market
access is restored and
balanced budgets are achieved for
at
least
four
consecutive
years.
PROMESA
also
established
two
mechanisms
for
the
restructuring
of
the
obligations
of
PR
Government Entities:
(a) Title
III, an
in-court process
akin to
that of
the U.S.
Bankruptcy Code
and which
permits adjustment
of a
broad range
of
obligations, and
(b) Title
VI,
a largely
out-of-court process
through which
a supermajority
of creditors
can
accept
modifications to debt and bind holdouts.
Since
2017,
Puerto
Rico
and
several
of
its
instrumentalities
have
availed
themselves
of
these
mechanisms.
The
Puerto
Rico
government exited Title III in March 2022, and several instrumentalities, such as the Government Development Bank and the Puerto
Rico Highways and Transportation
Authority have also completed
debt restructurings under Titles
III or VI
of PROMESA. However,
the Puerto Rico Electric Power Authority is still undergoing
its debt restructuring.
Puerto
Rico's economic
difficulties
have also
impacted its
municipalities. Historically,
the central
government provided
significant
municipal subsidies.
However,
these, have
decreased pursuant
to fiscal
measures required
by the
Oversight Board.
This decline
has been partly offset by federal disaster and COVID-relief funding received
by municipalities in recent years. The latest Puerto
Rico
fiscal plan proposes a
restructured grant system to enhance
municipal services and encourage accountability through
performance
metrics.
Municipalities
are
subject
to
PROMESA,
and
the
Oversight
Board
has
required
certain
municipalities
to
submit
fiscal
plans
and
annual budgets
for review
and approval.
Municipalities are
also required
to seek
Oversight Board
approval to
issue, guarantee
or
modify
their
debts
and
to
enter
into
significant
contracts.
To
date
no
municipality
has
availed
itself
of
the
debt
restructuring
mechanisms available to them under PROMESA.
Exposure of the Corporation
The credit
quality of BPPR’s
loan portfolio
reflects, among other
things, the
general economic conditions
in Puerto
Rico and
other
adverse conditions affecting Puerto
Rico consumers and businesses.
Deterioration in the Puerto
Rico economy has resulted
in the
past, and could
result in the future,
in higher delinquencies, greater
charge-offs and increased losses,
which could materially affect
our financial condition and results of operations.
At June
30, 2025,
the Corporation’s
direct exposure
to
PR Government
Entities totaled
$412 million,
of
which $362
million were
outstanding, compared
to $336
million, at
December 31,
2024, all
of which
were outstanding.
The Corporation’s
exposure to
PR
Government Entities
at June
30, 2025
included up
to
$47.4 million
in Automated
Clearing House
(“ACH”) transaction
settlement
exposure, none of which
was outstanding.
Substantially all of the
Corporation’s direct exposure outstanding at
June 30, 2025
were
obligations from various
Puerto Rico municipalities.
In most
cases, these were
“general obligations” of
a municipality,
to which
the
applicable municipality
has
pledged its
good faith,
credit
and unlimited
taxing
power,
or “special
obligations” of
a municipality,
to
which the applicable municipality has pledged basic property tax or sales tax
revenues.
At June 30, 2025, 81% of the
Corporation’s
exposure to
municipal loans
and securities
was concentrated
in the
municipalities of
San Juan,
Guaynabo, Carolina
and Caguas.
For
additional
discussion
of
the
Corporation’s
direct
exposure
to
the
Puerto
Rico
government
and
its
instrumentalities
and
municipalities, refer to Note 20 – Commitments and
Contingencies to the Consolidated Financial
Statements.
In addition,
at June 30,
2025, the Corporation
had $212 million
in loans insured
or securities issued
by PR Governmental
Entities,
but
for which
the principal
source of
repayment is
non-governmental ($220 million
at
December 31, 2024).
These included
$168
million
in
residential mortgage
loans
insured
by
the
Puerto
Rico
Housing
Finance Authority
(“HFA”),
a
Puerto
Rico
Government
Entity ($176 million at December 31, 2024).
The Corporation also had, at June 30,
2025, $37 million in bonds issued by
HFA which
are secured
by second mortgage
loans on
Puerto Rico
residential properties, and
for which
HFA also
provides insurance to
cover
losses in the
event of a
borrower default, and
upon the satisfaction of
certain other conditions
($38 million at
December 31, 2024).
HFA’s
ability to honor its
insurance will depend, among
other factors, on the
financial condition of HFA
at the time such
obligations
become
due
and
payable.
The
Corporation
does
not
consider
the
government
guarantee
when
estimating
the
credit
losses
associated with this portfolio.
BPPR’s
commercial loan
portfolio also
includes loans
to
private borrowers
who
are service
providers, lessors,
suppliers or
have
other
relationships
with
the
PR
government.
These
borrowers
could
be
negatively
affected
by
a
deterioration
in
the
fiscal
and
economic
situation
of
PR
Government
Entities.
Similarly,
BPPR’s
mortgage
and
consumer
loan
portfolios
include
loans
to
government
employees
and
retirees,
which
could
also
be
negatively
affected
by
fiscal
measures,
such
as
employee
layoffs
or
furloughs or reductions in pension benefits, if the
fiscal and economic situation deteriorates.
As of June
30, 2025, BPPR had
$20.9 billion in deposits from
the Puerto Rico government, its
instrumentalities, and municipalities.
The
rate
at
which
public
deposit
balances
may
decline is
uncertain and
difficult
to
predict.
The
amount
and
timing
of
any
such
reduction is likely to
be impacted by,
for example, the level
of federal assistance, the
speed at which such
assistance is distributed
168
and
the financial
condition, liquidity
and cash
management practices
of such
entities, as
well as
the ability
of
BPPR to
maintain
these customer relationships.
United States Virgin Islands
The
Corporation
has
operations
in
the
United
States
Virgin
Islands
(the
“USVI”)
and
has
credit
exposure
to
USVI
government
entities.
The USVI has
been experiencing a
number of fiscal
and economic challenges,
which could adversely
affect the
ability of its
public
corporations and instrumentalities to service their outstanding
debt obligations. PROMESA does not apply to the USVI
and, as such,
there
is
currently
no
federal
legislation
permitting
the
restructuring
of
the
debts
of
the
USVI
and
its
public
corporations
and
instrumentalities.
Non-Performing Assets
NPAs
include primarily
past-due loans
that are
no longer
accruing interest,
renegotiated loans,
and real
estate property
acquired
through foreclosure. A summary, including certain credit quality metrics, is presented
in Table 18.
The Corporation’s
credit quality
metrics demonstrated
favorable trends
in the
second quarter
of 2025
with improvements
in NPLs
and Net Charge-Offs (NCOs). The Corporation continues to
closely monitor the economic landscape and borrower performance, as
economic
uncertainty
remains
a
key
consideration.
The
Corporation’s
experience
managing
credit
risk
under
different
macroeconomic and
operating environments and,
more recently,
the steps
taken around
credit tightening
supports management’s
view
that
exposure
to
riskier
borrowers
is
adequately
managed.
Nonetheless,
carefully
monitoring
the
performance
of
our
loan
portfolio and its response to the environment will
continue to be a priority.
Total
NPAs of $357.8 million
as of June 30, 2025 decreased by
$50.3 million when compared with December 31, 2024. Total
NPLs
of $311.6
million decreased by
$39.2 million from December
31, 2024. BPPR’s
NPLs decreased by $34.4
million, mainly driven
by
lower consumer,
mortgage and commercial
NPLs by $12.9
million, $11.0
million and $8.9
million, respectively.
Popular U.S. NPLs
decreased
by
$4.7
million,
mostly
driven
by
decreases
of
$1.9
million
and
$1.8
million
in
commercial
and
mortgage
NPLs,
respectively.
On June
30, 2025, the
ratio of
NPLs to total
loans held-in-portfolio was
0.82%, compared to
0.95% on December
31, 2024.
Other
real estate owned loans (“OREOs”) decreased by $11.1 million from December 31, 2024. The decrease in OREO was mainly driven
by the combination of
sales and lower residential
property foreclosures. On June
30, 2025, NPLs secured
by real estate amounted
to
$189
million
in
the
Puerto
Rico
operations
and
$50
million
in
Popular
U.S,
compared
with
$200
million
and
$56
million,
respectively, on December 31, 2024.
The Corporation’s commercial
loan portfolio secured
by real estate
(“CRE”) amounted to
$11.0
billion on June
30, 2025,
with $3.0
billion secured by owner-occupied properties (December
31, 2024 - $10.9 billion and $3.2 billion, respectively).
The
non-owner occupied
CRE portfolio
was $5.5
billion at
June
30, 2025,
split
between $3.3
billion in
BPPR
and $2.2
billion in
Popular U.S.
This portfolio is diversified across sectors: retail (33%), hotels (19%), and office
space (13%) which together represent
two-thirds of
total non-owner
occupied CRE
exposure. Specifically,
office space
leasing accounts
for just
1.8% ($688.8
million) of
the total
loan portfolio,
mainly comprising
mid-rise
properties with
an average
loan size
of $2.4
million, and
is well
diversified by
tenant type.
Within CRE, the
commercial multi-family portfolio is
$2.5 billion (approximately 7%
of total loans),
concentrated in New
York
Metro
($1.5 billion), South Florida ($716.6 million) and Puerto Rico
($202.1 million) regions. In the New York Metro, there is no exposure to
rent-controlled buildings and rent-stabilized
units make up less than 40% of total units,
with most originated after 2019.
CRE NPLs amounted to
$52.5 million on June 30,
2025, compared with $53.7 million
on December 31, 2024. The
CRE NPL ratios
for
the
BPPR
and
Popular
U.S.
segments
were
0.69%
and
0.30%,
respectively,
on
June
30,
2025,
compared
with
0.64%
and
0.37%, respectively, on December 31, 2024.
169
In addition
to the
NPLs included
in Table
18, on
June 30,
2025, there
were $529
million of
performing loans,
mostly commercial
loans, which in management’s opinion, are currently subject to potential future classification as non-performing (December 31, 2024
- $596 million).
The following table presents the Corporation’s NPAs as of June 30, 2025 and December
31, 2024:
170
Table 18 - Non-Performing
Assets
June 30, 2025
December 31, 2024
(Dollars in thousands)
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
Commercial
Commercial multi-family
$
174
$
10,751
$
10,925
0.4
%
$
79
$
8,700
$
8,779
0.4
%
Commercial real estate non-owner
occupied
6,084
7,893
13,977
0.3
6,429
8,015
14,444
0.3
Commercial real estate owner
occupied
27,320
231
27,551
0.9
25,258
5,191
30,449
1.0
Commercial and industrial
8,588
2,836
11,424
0.1
19,335
1,748
21,083
0.3
Total Commercial
42,166
21,711
63,877
0.3
51,101
23,654
74,755
0.4
Leasing
7,976
-
7,976
0.4
9,588
-
9,588
0.5
Mortgage
147,464
28,052
175,516
2.1
158,442
29,890
188,332
2.3
Consumer
-
3,120
3,120
4.0
-
3,393
3,393
4.6
17,499
1,094
18,593
1.0
20,269
1,741
22,010
1.2
40,595
-
40,595
1.1
51,792
-
51,792
1.4
1,948
-
1,948
1.2
899
11
910
0.5
Total Consumer
60,042
4,214
64,256
0.9
72,960
5,145
78,105
1.1
Total non-performing
loans held-in-
portfolio
257,648
53,977
311,625
0.8
%
292,091
58,689
350,780
0.9
%
Other real estate owned (“OREO”)
45,643
483
46,126
57,197
71
57,268
Total non-performing
assets
[1]
$
303,291
$
54,460
$
357,751
$
349,288
$
58,760
$
408,048
Accruing loans past due 90 days or
more
[2]
$
206,205
$
189
$
206,394
$
242,250
$
190
$
242,440
Ratios:
Non-performing assets to total assets
0.51
%
0.34
%
0.47
%
0.61
%
0.37
%
0.56
%
Non-performing loans held-in-portfolio
to loans held-in-portfolio
0.96
0.47
0.82
1.12
0.54
0.95
Allowance for credit losses to loans
held-in-portfolio
2.53
0.79
2.02
2.56
0.69
2.01
Allowance for credit losses to non-
performing loans, excluding held-for-
sale
263.63
167.17
246.93
229.61
128.40
212.68
[1] There were no non-performing loans held-for-sale
as of June 30, 2025 and December 31, 2024.
[2] It is the Corporation’s policy to report delinquent
residential mortgage loans insured by FHA or guaranteed
by the VA as accruing
loans past due 90
days or
more
as
opposed
to
non-performing
since
the principal
repayment
is insured.
These
balances
include
$52 million
of residential
mortgage
loans
insured
by
FHA
or
guaranteed
by
the
VA
that
are
no
longer
accruing
interest
as
of
June
30,
2025
(December
31,
2024
-
$65
million).
Furthermore, the Corporation
has $29 million
in reverse mortgage
loans which are
guaranteed by
FHA, but which
are currently
not accruing interest.
Due to the guaranteed
nature of the loans,
it is the Corporation’s
policy to exclude these
balances from non-performing
assets (December 31,
2024 -
$31 million).
For the quarter ended June 30,
2025, total inflows of NPLs held-in-portfolio, excluding consumer loans,
decreased by $26.1 million,
when compared
to the
inflows for
the same
period in
2024. Inflows
of NPLs
held-in-portfolio at
the BPPR
segment decreased
by
$8.8 million,
compared to
the same
period in
2024, mainly
driven by
lower mortgage
NPL inflows
by $6.6
million. Inflows
of NPLs
held-in-portfolio at the Popular U.S. segment decreased by
$17.3 million from the same period in
2024, driven by lower commercial
NPL inflows by $16.6 million, as the prior period
was impacted by a single $17.3 million loan.
Tables 19 to 25 present the Corporation’s inflows to NPLs for the quarters and six months ended
June 30, 2025 and 2024.
171
Table 19 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the quarter ended June 30, 2025
For the six months ended June 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
191,103
$
46,594
$
237,697
$
209,543
$
53,544
$
263,087
Plus:
New non-performing loans
32,205
8,909
41,114
69,228
17,067
86,295
Advances on existing non-performing loans
-
20
20
-
38
38
Less:
Non-performing loans transferred to OREO
(2,385)
(433)
(2,818)
(4,940)
(433)
(5,373)
Non-performing loans charged-off
(790)
(583)
(1,373)
(1,717)
(1,713)
(3,430)
Loans returned to accrual status / loan collections
(30,503)
(4,744)
(35,247)
(82,484)
(18,740)
(101,224)
Ending balance NPLs
$
189,630
$
49,763
$
239,393
$
189,630
$
49,763
$
239,393
Table 20 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the quarter ended June 30, 2024
For the six months ended June 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
229,796
$
49,478
$
279,274
$
254,476
$
22,354
$
276,830
Plus:
New non-performing loans
41,040
25,907
66,947
74,543
61,280
135,823
Advances on existing non-performing loans
-
298
298
-
320
320
Less:
Non-performing loans transferred to OREO
(4,540)
(24)
(4,564)
(8,649)
(24)
(8,673)
Non-performing loans charged-off
(5,590)
(18)
(5,608)
(13,899)
(968)
(14,867)
Loans returned to accrual status / loan collections
(40,746)
(26,324)
(67,070)
(86,511)
(33,645)
(120,156)
Ending balance NPLs
$
219,960
$
49,317
$
269,277
$
219,960
$
49,317
$
269,277
Table 21 - Activity in Non
-Performing Commercial Loans Held-in-Portfolio
For the quarter ended June 30, 2025
For the six months ended June 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
42,597
$
17,507
$
60,104
$
51,101
$
23,654
$
74,755
Plus:
New non-performing loans
1,768
5,632
7,400
7,549
11,045
18,594
Advances on existing non-performing loans
-
20
20
-
37
37
Less:
Non-performing loans transferred to OREO
(140)
-
(140)
(260)
-
(260)
Non-performing loans charged-off
(403)
(583)
(986)
(1,142)
(1,713)
(2,855)
Loans returned to accrual status / loan
collections
(1,656)
(865)
(2,521)
(15,082)
(11,312)
(26,394)
Ending balance NPLs
$
42,166
$
21,711
$
63,877
$
42,166
$
21,711
$
63,877
172
Table 22 - Activity in Non
-Performing Commercial Loans Held-in-Portfolio
For the quarter ended June 30, 2024
For the six months ended June 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
63,323
$
21,407
$
84,730
$
72,992
$
11,163
$
84,155
Plus:
New non-performing loans
4,031
21,940
25,971
8,374
36,979
45,353
Advances on existing non-performing loans
-
282
282
-
302
302
Less:
Non-performing loans transferred to OREO
(280)
-
(280)
(280)
-
(280)
Non-performing loans charged-off
(5,700)
-
(5,700)
(13,699)
(950)
(14,649)
Loans returned to accrual status / loan collections
(5,204)
(5,866)
(11,070)
(11,217)
(9,731)
(20,948)
Ending balance NPLs
$
56,170
$
37,763
$
93,933
$
56,170
$
37,763
$
93,933
Table 23 - Activity in Non
-Performing Construction Loans Held-in-Portfolio
For the quarter ended June 30, 2024
For the six months ended June 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
-
$
-
$
-
$
6,378
$
-
$
6,378
Less:
Loans returned to accrual status / loan collections
-
-
-
(6,378)
-
(6,378)
Ending balance NPLs
$
-
$
-
$
-
$
-
$
-
$
-
173
Table 24 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended June 30, 2025
For the six months ended
June 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
148,506
$
29,087
$
177,593
$
158,442
$
29,890
$
188,332
Plus:
New non-performing loans
30,437
3,277
33,714
61,679
6,022
67,701
Advances on existing non-performing loans
-
-
-
-
1
1
Less:
Non-performing loans transferred to OREO
(2,245)
(433)
(2,678)
(4,680)
(433)
(5,113)
Non-performing loans charged-off
(387)
-
(387)
(575)
-
(575)
Loans returned to accrual status / loan
collections
(28,847)
(3,879)
(32,726)
(67,402)
(7,428)
(74,830)
Ending balance NPLs
$
147,464
$
28,052
$
175,516
$
147,464
$
28,052
$
175,516
Table 25 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended June 30, 2024
For the six months ended June 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
166,473
$
28,071
$
194,544
$
175,106
$
11,191
$
186,297
Plus:
New non-performing loans
37,009
3,967
40,976
66,169
24,301
90,470
Advances on existing non-performing loans
-
16
16
-
18
18
Less:
Non-performing loans transferred to OREO
(4,260)
(24)
(4,284)
(8,369)
(24)
(8,393)
Non-performing loans charged-off
110
(18)
92
(200)
(18)
(218)
Loans returned to accrual status / loan collections
(35,542)
(20,458)
(56,000)
(68,916)
(23,914)
(92,830)
Ending balance NPLs
$
163,790
$
11,554
$
175,344
$
163,790
$
11,554
$
175,344
174
Loan Delinquencies
Another key measure used to evaluate and
monitor the Corporation’s asset quality is loan
delinquencies. Loans delinquent 30 days
or more, as a percentage of their related portfolio
category on June 30, 2025 and December 31, 2024,
are presented below.
Table 26 - Loan Delinquencies
(Dollars in thousands)
June 30, 2025
December 31, 2024
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
Commercial
Commercial multi-family
$
21,937
$
2,520,789
0.87
%
$
15,826
$
2,399,620
0.66
%
Commercial real estate
non-owner occupied
17,272
5,521,374
0.31
24,925
5,363,235
0.46
Commercial real estate
owner occupied
41,413
3,003,855
1.38
42,311
3,157,746
1.34
Commercial and industrial
37,213
8,043,752
0.46
49,942
7,741,562
0.65
Total Commercial
117,835
19,089,770
0.62
133,004
18,662,163
0.71
Construction
3,720
1,468,201
0.25
1,039
1,263,792
0.08
Leasing
36,714
1,983,068
1.85
39,641
1,925,405
2.06
Mortgage
[1]
728,253
8,444,427
8.62
798,130
8,114,183
9.84
Consumer
Credit cards
48,745
1,215,293
4.01
59,078
1,218,079
4.85
Home equity lines of credit
4,682
77,479
6.04
5,054
73,571
6.87
Personal
51,109
1,876,463
2.72
57,835
1,855,244
3.12
Auto
165,642
3,861,702
4.29
191,008
3,823,437
5.00
Other
5,567
168,775
3.30
3,930
171,778
2.29
Total Consumer
275,745
7,199,712
3.83
316,905
7,142,109
4.44
Loans held-for-sale
-
2,898
-
-
5,423
-
Total
$
1,162,267
$
38,188,076
3.04
%
$
1,288,719
$
37,113,075
3.47
%
[1]
Loans delinquent 30 days or more includes $0.4 billion
of residential mortgage loans insured by FHA or guaranteed
by the VA as of June
30,
2025 (December 31, 2024 - $0.4 billion). Refer to Note
7 to the Consolidated Financial Statements for additional
information of guaranteed loans.
Allowance for Credit Losses Loans Held-in-Portfolio
The ACL
represents management’s
estimate of
expected credit
losses through
the remaining
contractual life
of the
different loan
segments, impacted by expected prepayments. The ACL
is maintained at a sufficient
level to provide for estimated credit
losses on
collateral dependent loans as well as loans modified
for borrowers with financial difficulties separately from the remainder
of the loan
portfolio. Refer to
Note 8 to
the Consolidated Financial
Statements, for additional
information on the
Corporation’s methodology to
estimate its ACL.
On June 30,
2025, the ACL increased by
$23.5 million from December 31,
2024 to $769.5 million. The
increase in ACL was
driven
by changes in the economic scenario
probability weights and increases in qualitative reserves, in
response to the current economic
environment uncertainty,
coupled with
reserve build-up associated
with portfolio
growth and
unfavorable changes in
the economic
assumptions used
in the
ACL model.
These increases
were offset
in part
by the
net effect
of changes
in credit
quality and
NCOs
during the period.
Given that any economic outlook is inherently uncertain, the Corporation
leverages multiple scenarios to estimate
its
ACL.
Prior
to
the
first
quarter
of
2025,
the
Corporation
assigned
the
baseline
scenario
the
highest
probability
among
the
scenarios
used
to
estimate
the
ACL,
followed
by
the
pessimistic
scenario
given
the
uncertainties
in
the
economic
outlook
and
downside risk, and
the optimistic scenario
had the lowest
probability. During
the first quarter
of 2025, the
Corporation modified the
weight assigned
to the
pessimistic scenario to
be equal
to the
baseline scenario
in response
to the
current economic
uncertainty,
resulting in
an increase
of $18.2
million in
the reserves.
In
the second
quarter of
2025, the
probability weight
for the
pessimistic
175
scenario was moderately decreased based on changes in the economic outlook and a reassessment of uncertainty compared to the
previous
quarter.
This
change
resulted
in
a
$4.5
million
reduction
in
ACL
reserve
levels,
for
a
$13.7
million
net
increase
from
December
31,
2024.
The
probability
weight
for
the
pessimistic
scenario
remains
above
the
levels
observed
in
2024,
given
the
ongoing
economic
uncertainty.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements,
for
additional
information
on
the
Corporation’s methodology to estimate its ACL, including
probability weights assigned
On
June
30,
2025,
the
ACL
for BPPR
increased by
$8.6
million
from
December 31,
2024,
driven by
changes
in
the
probability
weights that resulted
in a
$8.8 million net
ACL increase, coupled
with an increase
in the reserves
for auto loans
due to migrations
between FICO
score categories
and changes
in the
economic scenarios.
This increase
was partially
offset by
lower reserves
for
commercial loans
due to
improvements in credit
quality,
partially offset
by ACL
reserve build-up
due to
portfolio growth. In
PB, on
June
30,
2025,
the
ACL
increased
by
$14.9
million,
when
compared
to
December
31,
2024.
This
increase
was
influenced
by
changes in
the forecast
of the
U.S. unemployment rate
as well
as higher
qualitative reserves for
the CRE
portfolio in
response to
current market volatility and economic uncertainty, coupled
with changes in the probability weights that resulted in a
$4.9 million net
increase.
The Corporation’s ratio of the allowance for credit losses to loans held-in-portfolio was 2.02% on June 30, 2025, compared to 2.01%
on
December 31,
2024. The
ratio of
the ACL
to
NPLs held-in-portfolio
stood
at
246.9%, compared
to
212.7% on
December 31,
2024.
Tables
27 and
28 detail
the allowance
for credit
losses by
loan categories
and the
percentage it
represents of
total loans
held-in-
portfolio and
NPLs. The
breakdown is
made for
analytical purposes,
and it
is not
necessarily indicative
of the
categories in
which
future loan losses may occur.
176
Table 27 - Allowance for Credit
Losses - Loan Portfolios
June 30, 2025
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
$
16,781
$
2,520,789
0.67
%
$
10,925
153.60
%
59,117
5,521,374
1.07
%
13,977
422.96
%
49,051
3,003,855
1.63
%
27,551
178.04
%
141,362
8,043,752
1.76
%
11,424
N.M.
Total Commercial
$
266,311
$
19,089,770
1.40
%
$
63,877
416.91
%
Construction
10,579
1,468,201
0.72
%
-
-
Leasing
20,040
1,983,068
1.01
%
7,976
251.25
%
Mortgage
85,175
8,444,427
1.01
%
175,516
48.53
%
Consumer
92,306
1,215,293
7.60
%
-
-
1,384
77,479
1.79
%
3,120
44.36
%
103,654
1,876,463
5.52
%
18,593
557.49
%
182,274
3,861,702
4.72
%
40,595
449.01
%
7,762
168,775
4.60
%
1,948
398.46
%
Total Consumer
$
387,380
$
7,199,712
5.38
%
$
64,256
602.87
%
Total
$
769,485
$
38,185,178
2.02
%
$
311,625
246.93
%
N.M. - Not meaningful.
Table 28 - Allowance for Credit
Losses - Loan Portfolios
December 31, 2024
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
$
9,236
$
2,399,620
0.38
%
$
8,779
105.21
%
54,494
5,363,235
1.02
%
14,444
377.28
%
49,828
3,157,746
1.58
%
30,449
163.64
%
146,006
7,741,562
1.89
%
21,083
692.53
%
Total Commercial
$
259,564
$
18,662,163
1.39
%
$
74,755
347.22
%
Construction
11,264
1,263,792
0.89
%
-
-
Leasing
16,419
1,925,405
0.85
%
9,588
171.25
%
Mortgage
82,409
8,114,183
1.02
%
188,332
43.76
%
Consumer
99,130
1,218,079
8.14
%
-
-
1,503
73,571
2.04
%
3,393
44.30
%
102,736
1,855,244
5.54
%
22,010
466.77
%
165,995
3,823,437
4.34
%
51,792
320.50
%
7,004
171,778
4.08
%
910
769.67
%
Total Consumer
$
376,368
$
7,142,109
5.27
%
$
78,105
481.87
%
Total
$
746,024
$
37,107,652
2.01
%
$
350,780
212.68
%
177
Annualized net charge-offs (recoveries)
The following
table presents
annualized net charge-offs
(recoveries) to average
loans held-in-portfolio (“HIP”)
by loan
category for
the quarters and six months ended June 30, 2025
and 2024.
Table 29 - Annualized Net Charge
-offs (Recoveries) to Average Loans
Held-in-Portfolio
Quarters ended
June 30, 2025
June 30, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
―
%
0.02
%
0.01
%
0.20
%
0.04
%
0.13
%
Construction
―
―
―
―
(0.04)
(0.04)
Mortgage
(0.14)
(0.01)
(0.12)
(0.23)
(0.01)
(0.19)
Leasing
0.56
―
0.56
0.60
―
0.60
Consumer
2.29
4.00
2.33
2.68
6.58
2.80
Total annualized
net charge-offs
(recoveries) to average loans held-in-
portfolio
0.61
%
0.07
%
0.45
%
0.79
%
0.16
%
0.61
%
Six months ended
June 30, 2025
June 30, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
(0.05)
%
0.02
%
(0.02)
%
0.25
%
0.04
%
0.15
%
Construction
―
―
―
―
(0.02)
(0.02)
Mortgage
(0.14)
(0.03)
(0.12)
(0.25)
(0.01)
(0.21)
Leasing
0.62
―
0.62
0.72
―
0.72
Consumer
2.55
3.95
2.59
2.83
7.54
2.98
Total annualized
net charge-offs
(recoveries) to average loans held-in-
portfolio
0.67
%
0.07
%
0.49
%
0.86
%
0.19
%
0.66
%
NCOs for the quarter ended June 30, 2025, amounted
to $42.2 million, decreasing by $11.4 million when compared to the same
period in 2024. The BPPR segment decreased by
$9.1 million, mainly driven by decreases of
$5.6 million and $4.9 million in
consumer and commercial NCOs, respectively. The PB segment NCOs decreased
by $2.3 million, mainly driven by lower
consumer
NCOs by $1.8 million
NCOs for the six months ended June 30, 2025,
amounted to $91.3 million, decreasing by $24.5
million when compared to the same
period in 2024. The BPPR segment decreased by
$18.6 million, mainly driven by decreases of
$14.4 million and $7.0 million in
commercial and consumer NCOs, respectively. The PB segment NCOs decreased
by $5.9 million, mainly driven by lower consumer
NCOs by $4.9 million.
Loan Modifications
For
the
quarter
ended
June
30,
2025,
modified
loans
to
borrowers
with
financial
difficulty
amounted
to
$276.9
million,
of
which
$266.6 million were in
accruing status. The BPPR segment’s
modifications to borrowers with financial difficulty
amounted to $217.5
million, mainly comprised of commercial and mortgage loans of $192.5
million and $17.4 million, respectively. A total of $10.7 million
of
the
mortgage
modifications
were
related
to
government
guaranteed
loans.
The
Popular
U.S.
segment’s
modifications
to
borrowers with financial difficulty amounted to $59.4 million,
mostly comprised of commercial loans.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements
for
additional
information
on
modifications
made
to
borrowers
experiencing financial difficulties.
178
ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT
YET EFFECTIVE ACCOUNTING STANDARDS
Refer to Note 3, “New Accounting Pronouncements”
to the Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
Quantitative and qualitative disclosures for the current
period can be found in the Market Risk
section of this report, which includes
changes in market risk exposures from disclosures presented
in the 2024 Form 10-K.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Corporation’s management,
with the
participation of the
Corporation’s Chief Executive
Officer and Chief
Financial Officer,
has
evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based
on such evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that,
as of the end of such
period, the Corporation’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a
timely basis,
information required to
be disclosed
by the
Corporation in
the reports
that it
files or
submits under
the Exchange Act
and
such
information
is
accumulated
and
communicated
to
management,
as
appropriate,
to
allow
timely
decisions
regarding
required disclosures.
Internal Control Over Financial Reporting
There have been no changes in the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) under
the Exchange Act)
that occurred during
the quarter ended
June 30,
2025 that have
materially affected, or
are
reasonably likely to materially affect, the Corporation’s internal control
over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
For a discussion of Legal Proceedings, see Note 20
to the Consolidated Financial Statements.
Item 1A. Risk Factors
In addition to the other information set forth in
this report, you should carefully consider the risk
factors discussed under “Part I - Item
1A - Risk Factors” in our 2024 Form
10-K. These factors could materially adversely affect our business, financial condition, liquidity,
results of
operations and
capital position,
and could
cause our
actual results
to
differ
materially from
our historical
results or
the
results contemplated
by the
forward-looking statements
contained in
this report.
Also refer
to the
discussion in
“Part I
- Item
2 –
Management’s Discussion
and Analysis
of Financial
Condition and
Results of
Operations” in
this report
for additional
information
that may supplement or update the discussion
of risk factors below and in our 2024 Form 10-K.
There have been no material changes to the risk
factors previously disclosed under Item 1A of the
Corporation’s 2024 Form 10-K.
The risks described
in our 2024 Form
10-K and in
this report are not
the only risks
facing us. Additional risks
and uncertainties not
currently
known
to
us
or
that
we
currently
deem
to
be
immaterial
also
may
materially
adversely
affect
our
business,
financial
condition, liquidity, results of operations and capital position.
179
Item 2.
Unregistered Sales of Equity Securities and
Use of Proceeds
The Corporation did not have any unregistered
sales of equity securities during the quarter ended
June 30, 2025.
Issuer Purchases of Equity Securities
The following table
sets forth the
details of
purchases of common
stock by
the Corporation and
its affiliated
purchasers during the
quarter ended June 30, 2025:
Issuer Purchases of Equity Securities
Not in thousands
Period
Total Number of
Shares Purchased [1]
Average Price Paid per
Share
Total Number of
Shares
Purchased as Part of Publicly
Announced Plans or Programs [2]
Approximate Dollar Value of
Shares that May Yet be
Purchased Under the Plans or
Programs [2]
April 1 - April 30
357,832
$
87.37
355,539
$129,330,233
May 1 -May 31
447,956
101.50
417,666
$86,774,331
June 1 - June 30
380,593
105.93
363,185
$48,375,729
Total
1,186,381
$
98.66
1,136,390
$48,375,729
[1]
Includes
2,293,
30,290
and
17,408
shares
of
the
Corporation’s
common
stock
acquired
by
the
Corporation
during
April,
May
and
June
2025,
respectively,
in connection
with the
satisfaction of
tax withholding
obligations on
vested awards
of restricted
stock or
restricted stock
units granted
to
directors and certain
employees under
the Corporation’s
Omnibus Incentive
Plan. The acquired
shares of common
stock were added
back to treasury
stock.
[2] As part of its capital
plan, in July 2024,
the Corporation announced plans
to repurchase up to
$500 million in common
stock and repurchases
began
in August 2024.
As of June 30, 2025,
the Corporation repurchased 4,663,379
shares of common stock for
$451.5 million at an average
price of $96.82
per share, under the previously announced share repurchase
authorization.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans or Other Preplanned Trading Arrangements
Certain of our
officers or directors have
made, and may from
time to time make,
elections to participate in,
and are
,
our dividend reinvestment and purchase plan, the
Company stock fund associated with our 401(k)
plans and/or the Company stock
fund associated with
our non-qualified deferred compensation
plans and have shares
withheld to cover
withholding taxes upon the
vesting of
equity awards, which
may be
designed to satisfy
the affirmative defense
conditions of Rule
10b5-1 under the
Exchange
Act or may constitute non-Rule 10b5–1
180
Item 6.
Exhibits
Exhibit Index
Exhibit No
Exhibit Description
10.1
Form of Director Compensation Letter, Election Form, Restricted Stock
Award Agreement and Restricted
10.2
10.3
2025 Long-Term Equity Incentive Award Agreement, dated as of June 26, 2025, by and between
Javier D.
22.1
31.1
31.2
32.1
32.2
101. INS
XBRL Instance Document – the instance document
does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline Document.
101.SCH
Inline Taxonomy Extension Schema Document
(1)
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
(1)
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document
(1)
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
(1)
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
(1)
104
The cover page of Popular, Inc. Quarterly Report on Form 10-Q for the
quarter ended June 30, 2025,
formatted in Inline XBRL (included within the Exhibit
101 attachments)
(1)
(1)
* This exhibit is a management contract or compensatory
plan or arrangement.
Popular, Inc. has not filed as exhibits certain instruments defining
the rights of holders of debt of Popular, Inc. not
exceeding 10% of the total assets of Popular, Inc. and its consolidated
subsidiaries. Popular, Inc. hereby agrees to
furnish upon request to the Commission a copy of
each instrument defining the rights of holders
of senior and
subordinated debt of Popular, Inc., or of any of its consolidated
subsidiaries.
181
SIGNATURES
Pursuant to the
requirements of the Securities Exchange
Act of 1934, the
registrant has duly caused this
report to be signed
on its
behalf by the undersigned thereunto duly authorized.
POPULAR, INC.
(Registrant)
Date: August 11, 2025
By: /s/ Jorge J. García
Jorge J. García
Executive Vice President &
Chief Financial Officer
Date: August 11, 2025
By: /s/ Denissa M. Rodríguez
Denissa M. Rodríguez
Senior Vice President & Corporate Comptroller
TABLE OF CONTENTS
Part I Financial InformationItem 1. Financial StatementsItem 2. Management S Discussion and Analysis Of Financial Condition andItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. ExhibitsNote 1 Nature Of OperationsNote 2 Basis Of PresentationNote 3 - New Accounting PronouncementsNote 4 - Restrictions on Cash and Due From Banks and Certain SecuritiesNote 5 Debt Securities Available-for-saleNote 6 Debt Securities Held-to-maturityNote 7 LoansNote 8 Allowance For Credit Losses Loans Held-in-portfolioNote 9 Mortgage Banking ActivitiesNote 10 Transfers Of Financial Assets and Mortgage Servicing AssetsNote 11 Other Real Estate OwnedNote 12 Other AssetsNote 13 Goodwill and Other Intangible AssetsNote 14 Deposits Total Deposits As Of The End Of The Periods Presented Consisted Of:Note 14 DepositsNote 15 BorrowingsNote 16 Other LiabilitiesNote 17 Stockholders EquityNote 18 Other Comprehensive IncomeNote 19 GuaranteesNote 20 Commitments and ContingenciesNote 21 Non-consolidated Variable Interest EntitiesNote 22 Related Party TransactionsNote 23 Fair Value MeasurementNote 24 Fair Value Of Financial InstrumentsNote 25 Net Income Per Common ShareNote 26 Revenue From Contracts with CustomersNote 27 LeasesNote 28 Pension and Postretirement BenefitsNote 29 - Stock-based CompensationNote 30 Income TaxesNote 31 Supplemental Disclosure on The Consolidated Statements Of Cash FlowsNote 32 Segment ReportingItem 2. Management's Discussion and Analysis Of Financial Condition and Results Of OperationsPart II - Other Information