Popular Inc.

11/09/2026 | Press release | Distributed by Public on 11/09/2026 06:33

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 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 26 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 2025 Annual Report on 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 2025 Annual Report on
Form 10-K and "Part II - Item 1A" of this Quarterly Report on 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 Quarterly Report on Form 10-
Q, readers should consider.
The Corporation's common stock is traded on the NASDAQ Global Select Market under the symbol BPOP.
OVERVIEW
Financial highlights for the quarter ended September 30, 2026
The Corporation's net income for the quarter ended September 30, 2026 amounted to $242 million, an increase of $31 million when
compared to net income of $211 million for the quarter ended September 30, 2025. Higher net income was mainly driven by higher net
interest income and higher non-interest income, partially offset by higher provision for credit losses and operating expenses.
Financial highlights for the quarter ended September 30, 2026 include:
•Net interest income amounted to $699 million, an increase of $52 million when compared to the quarter ended September 30,
2025 driven by higher investments in U.S. Treasury securities at higher yields, loan growth and lower cost of deposits, mainly P.R.
public deposits. Net interest income on a taxable equivalent basis for the third quarter of 2026 was $801 million, an increase of
$81 million when compared to the same quarter for 2025. Net interest margin expanded by 12 basis points to 3.63% when
compared to the same period in 2025, while a taxable equivalent basis net interest margin expanded by 26 basis points to 4.16%.
•The provision for credit losses amounted to $97 million for the quarter ended September 30, 2026, an increase of $22 million
when compared to the quarter ended September 30, 2025, primarily driven by higher specific reserves in the commercial
portfolio, partially offset by lower provision expense in the consumer and mortgage loan portfolios.
•Non-interest income amounted to $176 million, an increase of $4 million when compared to the quarter ended September 30,
2025, mainly driven by higher other service fees resulting from higher debit card activity and credit card transaction volumes and
higher asset management fees associated with growth in assets under management. In addition, mortgage banking revenues
benefited from a favorable mortgage servicing rights ("MSR") valuation adjustment and lower portfolio runoff.
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•Operating expenses amounted to $506 million for the quarter, reflecting an increase of $10 million when compared to the quarter
ended September 30, 2025. The increase was mainly driven by higher salaries resulting from annual merit increases, incentives
and profit sharing. Higher other operating expenses, net occupancy expense and an increase in technology and software
expenses are results of our continued investment in technology and higher business promotion expenses.
•Income tax expense amounted to $30 million with an effective tax rate ("ETR") of 11.0% during the quarter ended September 30,
2026, compared to $36 million with an ETR of 14.5% for the quarter ended September 30, 2025.
•At September 30, 2026, the Corporation's total assets amounted to $77.7 billion, compared to $75.3 billion at December 31, 2025.
The increase of $2.4 billion was primarily due to an increase in the available-for-sale ("AFS") securities portfolio, driven by
reinvestment in U.S. Treasury securities, and higher loans held-in-portfolio partially offset by a decrease in held-to-maturity
("HTM") investment securities driven by maturities and principal paydowns.
•Deposits amounted to $68.7 billion at September 30, 2026, an increase of $2.5 billion from December 31, 2025, primarily driven
by growth at BPPR, mainly in P.R. public deposits and commercial deposits.
•Stockholders' equity amounted to $6.2 billion at September 30, 2026, a decrease of $34 million when compared to December 31,
2025. The Corporation and its banking subsidiaries continue to be well capitalized. As of September 30, 2026, the Corporation's
tangible book value per common share was $85.92, an increase of $3.27 from December 31, 2025. The Common Equity Tier 1
Capital Ratio at September 30, 2026 was 16.01%, compared to 15.72% at December 31, 2025.
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Refer to Table 1 for selected financial data for the quarters and for the nine months ended September 30, 2026 and September 30, 2025, as
well as balance sheet information as of September 30, 2026 and December 31, 2025.
Table 1 Financial Highlights
Financial Condition Highlights
Ending balances at
Average for the nine months ended
(In thousands)
September 30,
2026
December 31,
2025
Variance
September 30,
2026
September 30,
2025
Variance
Money market investments
$5,112,689
$4,626,506
$486,183
$4,933,273
$6,205,101
$(1,271,828)
Investment securities
29,174,878
28,168,918
1,005,960
30,927,746
28,758,022
2,169,724
Loans[1]
40,045,870
39,337,516
708,354
39,557,344
37,692,744
1,864,600
Earning assets[2]
74,333,437
72,132,940
2,200,497
75,418,363
72,655,867
2,762,496
Total assets
77,735,045
75,348,267
2,386,778
77,486,736
75,776,756
1,709,980
Deposits
68,704,991
66,190,093
2,514,898
68,839,721
66,452,057
2,387,664
Borrowings
1,325,246
1,448,578
(123,332)
1,324,522
1,145,836
178,686
Total liabilities
71,520,149
69,099,188
2,420,961
71,126,310
68,584,814
2,541,496
Stockholders' equity[3]
6,214,896
6,249,079
(34,183)
6,360,426
7,191,941
(831,515)
Operating Highlights
Quarters ended September 30,
Nine months ended September 30,
(In thousands, except per share information)
2026
2025
Variance
2026
2025
Variance
Net interest income
$698,930
$646,505
$52,425
$2,062,529
$1,883,651
$178,878
Provision for credit losses
96,716
75,125
21,591
238,475
188,147
50,328
Non-interest income
175,658
171,195
4,463
521,829
491,733
30,096
Operating expenses
505,590
495,287
10,303
1,457,030
1,459,060
(2,030)
Income before income tax
272,282
247,288
24,994
888,853
728,177
160,676
Income tax expense
29,897
35,971
(6,074)
122,580
128,918
(6,338)
Net income
$242,385
$211,317
$31,068
$766,273
$599,259
$167,014
Net income applicable to common stock
$242,033
$210,964
$31,069
$765,214
$598,200
$167,014
Net income per common share - basic
$3.84
$3.15
$0.69
$11.97
$8.78
$3.19
Net income per common share - diluted
$3.83
$3.14
$0.69
$11.96
$8.78
$3.18
Dividends declared per common share
$0.90
$0.75
$0.15
$2.40
$2.15
$0.25
Quarters ended September 30,
Nine months ended September 30,
Selected Statistical Information
2026
2025
2026
2025
Common Stock Data
End market price
$155.45
$129.10
$155.45
$129.10
Book value per common share at period end
98.56
91.00
98.56
91.00
Profitability Ratios
Return on assets
1.21%
1.09%
1.30%
1.06%
Return on common equity
12.86
11.60
13.92
11.15
Net interest spread (non-taxable equivalent basis)
3.06
2.87
3.08
2.81
Net interest spread (taxable equivalent) - Non-GAAP
3.59
3.26
3.59
3.18
Net interest margin (non-taxable equivalent basis)
3.63
3.51
3.65
3.46
Net interest margin (taxable equivalent) - Non-GAAP
4.16
3.90
4.16
3.83
Capitalization Ratios
Average equity to average assets
9.39%
9.46%
9.37%
9.49%
Common equity Tier 1 capital
16.01
15.79
16.01
15.79
Tangible common book value per common share (Non-GAAP)[4]
85.92
79.12
85.92
79.12
Return on average tangible common equity before adjusting for the impact of
unrealized (gains) losses on AFS securities including those transferred to HTM
(Non-GAAP)[4]
17.09
13.83
18.45
13.47
Return on average tangible common equity ("ROTCE") (Non-GAAP) [2][4]
14.39
13.06
15.61
12.57
Tier I capital
16.06
15.84
16.06
15.84
Total capital
17.78
17.58
17.78
17.58
Tier 1 leverage
8.49
8.48
8.49
8.48
[1] Includes loans held-for-sale.
[2] Excludes 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
[3] Stockholders' equity for September 30, 2025 excludes certain 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
[4] Refer to Table 9 for reconciliation to GAAP financial measures.
Non-GAAP Financial Measures
This Quarterly Report on Form 10-Q contains financial information prepared under accounting principles generally accepted in the United
States ("U.S. GAAP") and non-GAAP financial measures. Management uses non-GAAP financial measures when it is determined that these
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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.
There were no non-GAAP adjustments for the quarter and nine months ended September 30, 2026.
Net interest income on a taxable equivalent basis - Non-GAAP Financial Measure
Net interest income and net interest margin, on a taxable equivalent basis, are presented with its different components in Tables 2 and 3 for
the quarter and nine months ended September 30, 2026, as compared with the same period in 2025, 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 2 and 3, 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. Return on average tangible common equity is also a measure commonly used by banks and analysts to measure the return
on that tangible common equity. The Corporation presents return on average tangible common equity with and without the impact of
unrealized (gains) losses on AFS securities including those transferred to HTM in the denominator because we believe that adding back the
impact of unrealized (gains) losses on AFS securities including those transferred to HTM to the denominator provides meaningful
information about the Corporation's return on capital. Unless otherwise indicated, references to "ROTCE" in this Quarterly Report on Form
10-Q means return on average tangible common equity as adjusted to add back unrealized (gains) losses on AFS securities, including
those transferred to HTM. 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 9 provides a reconciliation of total stockholders' equity to tangible common equity and total assets to tangible assets as of
September 30, 2026 and December 31, 2025.
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 2025 Annual Report on Form 10-K.
Also, refer to Note 2 to the Consolidated Financial Statements included in the 2025 Annual Report on Form 10-K for a summary of the
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Corporation's significant accounting policies including those considered critical accounting estimates and to Note 3 to the Consolidated
Financial Statements included in this Quarterly Report on Form 10-Q for information on recently adopted accounting standard updates.
STATEMENT OF OPERATIONS ANALYSIS
NET INTEREST INCOME
Net interest income ("NII") for the quarter ended September 30, 2026 was $699 million, an increase of $52 million, when compared to the
same quarter in 2025. NII growth was attributable to higher income from investments in U.S. Treasury Securities, loan growth and lower
cost of deposits by $14 million, primarily due to P.R. public deposits. Net interest income on a taxable equivalent basis for the third quarter of
2026 was $801 million, an increase of $81 million when compared to the same period in 2025.
Net interest margin ("NIM") for the quarter was 3.63%, an increase of 12 basis points when compared to the third quarter of 2025. On a
taxable equivalent basis, NIM for the third quarter of 2026 was 4.16%, higher by 26 basis points compared to the third quarter of 2025,
mainly due to higher level of tax-exempt securities and loans. NIM expansion, when compared to the same quarter of the previous year,
was primarily due to higher yields on U.S. Treasury securities and lower deposit costs resulting from the repricing of market-linked P.R.
public deposits and the repricing of interest-bearing deposits in Popular U.S. Total cost of deposits decreased 15 basis points to 1.64%
compared to the third quarter of 2025. Excluding P.R. public deposits, total deposit costs decreased four basis points to 1.13% compared to
the same quarter in 2025.
On a taxable equivalent basis, the main drivers of the increase in NII for the third quarter of 2026 compared to the same quarter in 2025
were:
•higher income from investment securities by $57 million or 40 basis points mainly due to higher average balances of U.S.
Treasury securities, at higher yields, resulting from higher deposit balances and the reinvesting of maturities in higher-yielding
investment securities;
•higher income from loans by $33 million, mostly due to higher average loan portfolio balances by $1.4 billion mainly driven by the
commercial, mortgage and personal loan portfolio along with higher loan yields, which increased by seven basis points to 7.56%;
and
•lower interest expense on deposits by $14 million or 15 basis points. The cost of interest-bearing deposits decreased by 21 basis
points, driven by repricing of market-linked P.R. public deposits, which decreased by 47 basis points to 2.72% as their lagged
repricing continued to reflect lower short-term market rates prevailing earlier in the year, coupled with lower deposit costs in
Popular U.S.;
partially offset by:
•lower income from money market investments by $21 million or 68 basis points, as a result of lower average balances, driven by
higher re-investment activity in U.S. Treasury securities and loan growth, coupled with lower yields resulting from short-term
market rates which declined in late 2025.
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Table 2 - Analysis of Levels & Yields on a Taxable Equivalent Basis (Non-GAAP)
Quarter ended September 30,
Average Volume
Average Yields / Costs
Interest
Variance
Attributable to
2026
2025
Variance
2026
2025
Variance
2026
2025
Variance
Rate
Volume
(In millions)
(In thousands)
$4,854
$5,990
$(1,136)
3.75%
4.43%
(0.68)%
Money market
investments
$45,868
$66,867
$(20,999)
$(9,397)
$(11,602)
31,761
28,957
2,804
3.82
3.42
0.40
Investment securities [1]
305,684
249,071
56,613
22,433
34,180
5.43
5.43
-
Trading securities
-
36,650
34,975
1,675
3.81
3.59
0.22
Total money market,
investment and trading
securities
352,030
316,329
35,701
13,036
22,665
Loans:
20,154
19,229
6.82
6.72
0.10
Commercial
346,506
325,869
20,637
4,788
15,849
1,680
1,549
7.80
8.24
(0.44)
Construction
33,029
32,184
(1,793)
2,638
1,949
1,981
(32)
7.41
7.26
0.15
Leasing
36,113
35,957
(595)
8,809
8,484
6.17
5.96
0.21
Mortgage
135,933
126,352
9,581
4,643
4,938
3,382
3,257
13.54
13.80
(0.26)
Consumer
115,388
113,280
2,108
(1,965)
4,073
3,846
3,945
(99)
9.31
9.15
0.16
Auto
90,287
91,006
(719)
1,581
(2,300)
39,820
38,445
1,375
7.56
7.49
0.07
Total loans
757,256
724,648
32,608
8,005
24,603
$76,470
$73,420
$3,050
5.76%
5.63%
0.13%
Total earning assets
$1,109,286
$1,040,977
$68,309
$21,041
$47,268
Interest bearing deposits:
$8,790
$8,184
$606
1.68%
1.77%
(0.09)%
NOW and money
market
$37,141
$36,421
$720
$(2,252)
$2,972
14,537
14,529
0.79
0.81
(0.02)
Savings
28,909
29,772
(863)
(100)
(763)
8,959
8,825
3.01
3.16
(0.15)
Time deposits
67,988
70,196
(2,208)
(2,947)
22,623
20,766
1,857
2.72
3.19
(0.47)
P.R. public deposits
155,147
167,043
(11,896)
(25,359)
13,463
54,909
52,304
2,605
2.09
2.30
(0.21)
Total interest bearing
deposits
289,185
303,432
(14,247)
(30,658)
16,411
14,906
14,846
Non-interest bearing
demand deposits
69,815
67,150
2,665
1.64
1.79
(0.15)
Total deposits
289,185
303,432
(14,247)
(30,658)
16,411
3.94
4.52
(0.58)
Short-term borrowings
6,881
4,616
2,265
(653)
2,918
(94)
6.51
5.98
0.53
Other medium and long-
term debt
11,777
12,096
(319)
1,194
(1,513)
56,320
53,521
2,799
2.17
2.37
(0.20)
Total interest bearing
liabilities (excluding
demand deposits)
307,843
320,144
(12,301)
(30,117)
17,816
5,244
5,053
Other sources of funds
$76,470
$73,420
$3,050
1.60%
1.73%
(0.13)%
Total source of funds
$307,843
$320,144
$(12,301)
$(30,117)
$17,816
4.16%
3.90%
0.26%
Net interest margin/
income on a taxable
equivalent basis (Non-
GAAP)
$801,443
$720,833
$80,610
$51,158
$29,452
3.59%
3.26%
0.33%
Net interest spread
Taxable equivalent
adjustment
102,513
74,328
28,185
3.63%
3.51%
0.12%
Net interest margin/
income non-taxable
equivalent basis
(GAAP)
$698,930
$646,505
$52,425
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.
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NII for the nine months ended September 30, 2026 was $2.1 billion, an increase of $179 million when compared to the same period in 2025.
The NII increase was attributable to higher income from U.S. Treasury securities and loan growth, and lower cost on deposits by $76 million,
mainly due to lower cost of P.R. public deposits by 58 basis points and repricing of deposits in PB when compared to the same period in
2025. NII on a taxable equivalent basis ("FTE") of $2.3 billion, increased $266 million when compared with the same period of 2025.
NIM increased 19 basis points to 3.65%. NIM FTE was 4.16%, an increase of 33 basis points when compared to the same period in 2025.
NIM expansion was mainly driven by investment securities yields which increased by 20 basis points, due to purchases and re-investments
of maturities into higher yielding U.S. Treasury securities, and lower deposit costs resulting mainly from the repricing of P.R. public market-
linked deposits. Total cost of deposits decreased 21 basis points to 1.59% compared to the same period in 2025. Excluding P.R. public
deposits, total deposit costs decreased five basis points to 1.11% compared to the same period in 2025.
On a taxable equivalent basis, the main drivers for the variance on NII for the nine months ended on September 30, 2026 compared to the
nine months ended September 30, 2025 were:
•higher income from loans by $120 million, or five basis points, driven by loan growth across most portfolios, along with higher loan
yields driven by the mortgage, auto and commercial portfolios;
•higher income from U.S. Treasury securities by $156 million, or 44 basis points, driven by higher average balances from
purchases and reinvestments, mainly in higher yielding U.S. Treasury notes; and
•lower interest expense on deposits by $76 million or 21 basis points. The cost of interest-bearing deposits declined by 28 basis
points, driven by a 58 basis points decrease in market-linked P.R. public deposits to 2.66%, coupled with lower deposit costs in
Popular U.S. attributable to repricing of online savings and time deposits;
partially offset by:
•lower income from money market investments by $69 million or 73 basis points, reflecting lower average balances and lower
yields attributable to the decline in short-term market rates in late 2025.
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Table 3 - Analysis of Levels & Yields on a Taxable Equivalent Basis (Non-GAAP)
Nine month period ended September 30,
Average Volume
Average Yields / Costs
Interest
Variance
Attributable to
2026
2025
Variance
2026
2025
Variance
2026
2025
Variance
Rate
Volume
(In millions)
(In thousands)
$4,933
$6,205
$(1,272)
3.72%
4.45%
(0.73)%
Money market
investments
$137,129
$206,565
$(69,436)
$(30,967)
$(38,469)
30,894
28,729
2,165
3.68
3.28
0.40
Investment securities [1]
850,696
705,879
144,817
87,021
57,796
5.58
5.74
(0.16)
Trading securities
1,394
1,237
(37)
35,860
34,963
3.69
3.49
0.20
Total money market,
investment and trading
securities
989,219
913,681
75,538
56,017
19,521
Loans:
19,938
18,802
1,136
6.76
6.72
0.04
Commercial
1,007,387
945,330
62,057
4,679
57,378
1,714
1,440
7.94
8.19
(0.25)
Construction
101,825
88,179
13,646
(2,676)
16,322
1,968
1,961
7.40
7.18
0.22
Leasing
109,252
105,650
3,602
3,239
8,736
8,331
6.13
5.89
0.24
Mortgage
401,848
368,141
33,707
15,440
18,267
3,334
3,224
13.71
14.10
(0.39)
Consumer
341,874
339,880
1,994
(9,009)
11,003
3,868
3,935
(67)
9.32
9.00
0.32
Auto
269,685
264,905
4,780
9,292
(4,512)
39,558
37,693
1,865
7.54
7.49
0.05
Total loans
2,231,871
2,112,085
119,786
20,965
98,821
$75,418
$72,656
$2,762
5.71%
5.57%
0.14%
Total earning assets
$3,221,090
$3,025,766
$195,324
$76,982
$118,342
Interest bearing deposits:
$8,722
$8,077
$645
1.66%
1.73%
(0.07)%
NOW and money
market
$108,537
$104,711
$3,826
$(8,150)
$11,976
14,662
14,547
0.78
0.84
(0.06)
Savings
85,262
91,430
(6,168)
(3,378)
(2,790)
8,861
8,587
2.98
3.17
(0.19)
Time deposits
197,643
203,909
(6,266)
(12,640)
6,374
21,504
20,464
1,040
2.66
3.24
(0.58)
P.R. public deposits
428,415
496,303
(67,888)
(90,826)
22,938
53,749
51,675
2,074
2.04
2.32
(0.28)
Total interest bearing
deposits
819,857
896,353
(76,496)
(114,994)
38,498
15,091
14,778
Non-interest bearing
demand deposits
68,840
66,453
2,387
1.59
1.80
(0.21)
Total deposits
819,857
896,353
(76,496)
(114,994)
38,498
3.89
4.55
(0.66)
Short-term borrowings
17,756
11,342
6,414
(1,830)
8,244
(92)
6.38
5.79
0.59
Other medium and long-
term debt
35,486
36,173
(687)
3,668
(4,355)
55,102
52,843
2,259
2.12
2.39
(0.27)
Total interest bearing
liabilities (excluding
demand deposits)
873,099
943,868
(70,769)
(113,156)
42,387
5,225
5,035
Other sources of funds
$75,418
$72,656
$2,762
1.55%
1.74%
(0.19)%
Total source of funds
$873,099
$943,868
$(70,769)
$(113,156)
$42,387
4.16%
3.83%
0.33%
Net interest margin/
income on a taxable
equivalent basis (Non-
GAAP)
$2,347,991
$2,081,898
$266,093
$190,138
$75,955
3.59%
3.18%
0.41%
Net interest spread
Taxable equivalent
adjustment
285,462
198,247
87,215
3.65%
3.46%
0.19%
Net interest margin/
income non-taxable
equivalent basis
(GAAP)
$2,062,529
$1,883,651
$178,878
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.
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Provision for Credit Losses - Loans Held-in-Portfolio and Unfunded Commitments
For the quarter ended September 30, 2026, the Corporation recorded a provision for credit losses related to loans held-in-portfolio and
unfunded commitments of $97 million, an increase of $22 million when compared to the same quarter of the previous year.
As discussed in Note 8 to the Consolidated Financial Statements, the Corporation estimates the ACL by weighting the outputs of various
economic scenarios (optimistic, baseline, and pessimistic). Among the three scenarios evaluated to estimate the ACL, the baseline scenario
was assigned the highest probability, followed by the pessimistic scenario, and then the optimistic scenario with the lowest probability.
There were no changes to the probability weights assigned during the third quarter of 2026 when compared to September 30, 2025.
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 2025, were as follows:
•In the BPPR segment, the provision for loan losses was $99 million, an increase of $27 million, mainly driven by the commercial
portfolio, partially offset by a decrease in the mortgage, consumer, and construction loan portfolios. The increase was mainly
attributable to specific reserves related to two commercial & industrial ("C&I") relationships totaling $71 million, compared to the
impact of $31 million provision for a specific reserve related to a single C&I relationship during the same quarter in 2025. This
was partially offset by lower reserve requirements in the auto and personal loan portfolios due to improved portfolio credit
composition and due to improved macroeconomic assumptions combined with higher net recoveries in the mortgage portfolio.
The decrease in the construction portfolio was primarily driven by lower reserve requirements due to changes in macroeconomic
variables.
•In the Popular U.S. segment, there was a release of $3 million for the quarter ended September 30, 2026, a positive variance of
$4 million when compared with the same quarter in the previous year, mainly driven by lower provision expense in both the
commercial and consumer loan segments by $3 million and $1 million, respectively. The decrease in reserve needs for the
consumer portfolio were driven by improvements in the credit quality of the portfolio and the decrease in reserve needs for the
commercial portfolio were mainly attributed to reductions in the Commercial Real Estate ("CRE") portfolio, following the
implementation of a new U.S. CRE model during the quarter.
For the nine months ended September 30, 2026, the provision for credit losses related to loans held-in-portfolio and unfunded commitments
amounted to $238 million, an increase of $51 million, compared to the nine months ended September 30, 2025. The provision for loan
losses was $238 million, an increase of $48 million, and the provision related to reserves for unfunded commitments was $0.5 million, an
unfavorable variance of $2 million, mainly driven in the BPPR segment with higher reserves in the commercial portfolio and U.S. segment in
the construction portfolio, compared to the nine-month period ended September 30, 2025. The major drivers of the change in the provision
for loan losses during the nine months ended September 30, 2026 by business segment when compared to the same period in 2025 were
as follows:
•In the BPPR segment, the provision for loan losses was $234 million, an increase of $66 million, driven by higher provision
expense in the commercial loan portfolio of $127 million, mainly attributed to higher specific reserves for certain C&I loans during
the second and third quarters of 2026. These specific reserves are related to certain C&I loans placed in non-performing status
during 2026 due to borrower-specific circumstances that are not believed to be indicative of broader deterioration in the
commercial portfolio. This increase was partially offset by lower provision expense in the consumer portfolio of $45 million, the
mortgage portfolio of $9 million, and the lease portfolio of $7 million, reflecting improved credit performance, lower reserve
requirements, and favorable changes in macroeconomic scenarios.
•In the Popular U.S. segment, the provision for loan losses was $3 million, a decrease of $18 million, driven by lower provision
expense in the commercial and consumer portfolios of $12 million and $4 million, respectively. The reduction in the commercial
portfolio primarily reflected higher qualitative reserves established in the third quarter of 2025 to address economic uncertainty,
while the decrease in the consumer portfolio was driven by continued improvements in credit quality.
At September 30, 2026, the total allowance for credit losses for loans held-in-portfolio amounted to $809 million, an increase of $754
thousand when compared to December 31, 2025. The ratio of the allowance for credit losses to loans held-in-portfolio was 2.02% at
September 30, 2026 compared to 2.05% at December 31, 2025. 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.
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Non-Interest Income
Non-interest income for the third quarter of 2026 was $176 million, an increase of $5 million when compared with the same quarter for the
previous year. The variance was primarily due to:
•higher other service fees by $9 million, driven by higher credit card fees by $3 million reflecting higher transaction activity and
higher purchase volumes due, in part, to a new commercial credit card product launched in the second quarter of 2026, higher
debit card fees by $3 million due to higher transaction activity, and an increase in asset management and other fees by $4 million
primarily driven by higher assets under management; and
•higher mortgage banking activities by $2 million, primarily due to a favorable fair value adjustment to the Mortgage Servicing
Rights ("MSR") and lower net portfolio runoff;
partially offset by;
•an impairment charge on certain equity investments of $2 million; and a $2 million unfavorable fair value adjustment of securities
held for deferred benefit plans, which have an offsetting effect on personnel costs; and
•lower services charge on deposits by $2 million driven by a new deposit product launched during the third quarter of 2026, which
offers $0 service fees to clients that meet certain criteria.
Non-interest income for the nine months ended September 30, 2026 totaled $522 million, an increase of $30 million when compared to the
same period of the previous year. The main factors that contributed to the variance were:
•higher other service fees by $30 million driven by higher credit card fees by $7 million reflecting higher transaction activity and
higher purchase volumes due, in part, to higher purchase volume driven by a new commercial credit card product launched during
the second quarter of 2026, higher debit card fees by $10 million due to growth in transaction activity and increased foreign
transaction fees, and an increase in asset management and other fees by $8 million primarily driven by higher assets under
management; and
•higher other operating income by $6 million, primarily reflecting a $11 million increase in earnings from an investment accounted
for under the equity method, partially offset by a $3 million reimbursement received on excess interest paid to the U.S. Internal
Revenue Service ("IRS") related to late payment penalties on tax withholdings for intercompany distributions during the third
quarter of 2025, and a $1 million cash distribution from the exit of a legacy equity investment;
partially offset by;
•an impairment charge on certain equity investments by $2 million;
•$2 million in trading losses attributable to market interest rates increase; and
•lower services charge on deposits by $2 million driven by a new deposit product launched during the quarter, which offers $0
service fees to clients that meet certain criteria.
Operating Expenses
Operating expenses for the third quarter of 2026 totaled $506 million, an increase of $10 million when compared to the same quarter of
2025. The main drivers of the variance were:
•higher personnel costs by $12 million, mainly due to higher salaries by $2 million driven by annual merit increases and higher
incentives by $10 million, including $7 million related to the maximum contribution to the profit-sharing plan and $2 million related
to short-term incentives, which both are tied to the Corporation's financial performance;
•higher other operating expenses by $4 million primarily due to a claim reserve reversal of $5 million recorded in the third quarter
of 2025;
•higher net occupancy expenses by $3 million driven by a reassessment of real property tax estimate for certain properties in
Puerto Rico performed during the third quarter of 2025; and
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•higher technology and software expenses by $3 million, primarily reflecting increased software cost amortization by $6 million
driven by continued investments in technology and transformation initiatives, coupled with a $2 million software impairment. This
was partially offset by a $3 million decrease in IT professional fees and lower application and network management service
charges by $3 million;
partially offset by:
•a non-cash goodwill impairment of $13 million that was recorded in the third quarter of 2025 due to lower projected earnings in our
U.S. based equipment leasing subsidiary.
Operating expenses for the nine months ended September 30, 2026 were $1.5 billion, a decrease of $2 million when compared to the same
period of 2025. The variance was primarily due to:
•lower other operating expenses by $15 million, primarily due to lower reserves for operational losses by $5 million, lower
insurance claim reserves by $4 million, and a $6 million decrease in pension expense due to a lower discount rate used in the
actuarial analysis when compared to the same nine month period of 2025;
•non-cash goodwill impairment of $13 million recorded in the third quarter of 2025 due to lower projected earnings in our U.S.
based equipment leasing subsidiary; and
•lower professional fees by $5 million, primarily driven by lower expenses associated with corporate initiatives and regulatory
compliance activities;
partially offset by:
•higher personnel costs by $15 million, mainly due to higher salaries by $8 million driven by annual merit increases, and higher
short-term incentives by $8 million, which are tied to the Corporation's financial performance; and
•higher technology and software expenses by $15 million, primarily reflecting increased software cost amortization by $18 million
driven by continued investments in technology and transformation initiatives, higher IT professional fees $6 million, and a $2
million software impairment charge, partially offset by lower application and network management service charges by $11.1
million.
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Table 4 - Operating Expenses
Quarters ended September 30,
Nine Months Ended September 30,
(Dollars in thousands)
2026
2025
Variance
2026
2025
Variance
Salaries
$141,357
$139,350
$2,007
$410,618
$403,052
$7,566
Commissions, incentives and other bonuses
42,709
35,309
7,400
117,523
113,846
3,677
Profit sharing
15,097
13,000
2,097
23,894
26,000
(2,106)
Pension, postretirement and medical insurance
18,446
18,749
(303)
52,115
51,773
Other personnel costs, including payroll taxes
27,461
$26,580
86,020
80,385
5,635
Total personnel costs
245,070
232,988
12,082
690,170
675,056
15,114
Net occupancy expenses
29,157
26,083
3,074
84,220
82,441
1,779
Equipment expenses
6,324
5,313
1,011
17,432
16,404
1,028
Other taxes
17,665
17,967
(302)
53,049
55,324
(2,275)
Professional fees
25,587
25,808
(221)
75,624
80,741
(5,117)
Technology and software expenses
90,068
87,117
2,951
270,178
255,481
14,697
Processing and transactional services
Credit and debit cards
15,498
14,728
42,940
40,698
2,242
Other processing and transactional services
24,172
23,680
73,083
73,352
(269)
Total processing and transactional services
39,670
38,408
1,262
116,023
114,050
1,973
Communications
4,562
4,836
(274)
13,332
14,750
(1,418)
Business promotion
Rewards and customer loyalty programs
19,045
17,656
1,389
54,037
52,068
1,969
Other business promotion
9,383
9,648
(265)
25,151
25,296
(145)
Total business promotion
28,428
27,304
1,124
79,188
77,364
1,824
Deposit insurance
9,692
10,873
(1,181)
29,586
30,315
(729)
Other real estate owned (OREO) expense (income)
(3,733)
(3,408)
(325)
(11,589)
(10,862)
(727)
Other operating expenses
Operational losses
1,895
1,634
8,988
13,957
(4,969)
All other
10,821
6,980
3,841
29,677
39,673
(9,996)
Total other operating expenses
12,716
8,614
4,102
38,665
53,630
(14,965)
Amortization of intangibles
-
1,152
1,366
(214)
Goodwill impairment
-
13,000
(13,000)
-
13,000
(13,000)
Total operating expenses
$505,590
$495,287
$10,303
$1,457,030
$1,459,060
$(2,030)
Income Taxes
For the quarter ended September 30, 2026, the Corporation recorded income tax expense of $30 million, a decrease of $6 million when
compared to $36 million for the same period in 2025; the decrease is mostly related to the higher tax exempt income. The effective tax rate
("ETR") decreased to 11.0% from 14.5% driven by higher proportion of tax exempt income and other benefits such as tax credits purchased.
For the nine-month period ended September 30, 2026, income tax expense was $123 million, compared to $129 million reported for the
same period in 2025; the decrease of $6 million is attributed to the higher proportion of tax exempt income. The ETR for the nine-month
period ended September 30, 2026, was 13.8% compared to 17.7% in the same period for 2025. The decrease was primarily driven by
higher tax exempt income and tax benefits recognized upon the vesting of restricted stock awards.
At September 30, 2026, the Corporation had a net deferred tax asset amounting to $834 million, net of a valuation allowance of $475
million. The net deferred tax asset related to the U.S. Operations was $214 million, net of a valuation allowance of $387 million.
Refer to Note 24 to the Consolidated Financial Statements for additional information on deferred tax asset balances.
REPORTABLE SEGMENT RESULTS
The Corporation's reportable segments for managerial reporting purposes consist of BPPR and Popular U.S. A Corporate group has also
been defined to support the reportable segments.
For a description of the Corporation's reportable segments, including additional financial information and the underlying management
accounting process, refer to Note 26 to the Consolidated Financial Statements.
The corporate group reported net income of $3 million for the quarter ended September 30, 2026, compared with net income of $5 million
for the same quarter of the previous year. For the nine-month period ended September 30, 2026, the corporate group reported a net income
of $16 million, compared to net income of $4 million for the same period of the previous year, mainly due to higher income from equity
method investments. There were no intercompany distributions between the U.S. subsidiaries and the bank holding companies.
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Highlights of the earnings results for the reportable segments are discussed below:
Banco Popular de Puerto Rico
BPPR reportable segment's net income amounted to $198 million for the quarter ended September 30, 2026, higher by $9 million when
compared to the same quarter of the previous year. The main drivers for a higher net income included:
•net interest income of $592 million, increased by $41 million when compared to the same quarter in the previous year. The
increase was primarily driven by higher income from money market and investment securities by $19 million or eight basis points
mainly driven by higher income from U.S. Treasury securities and by higher income from loans by $14 million driven by loan
growth in the commercial, mortgage and personal loans portfolios. Higher net income was also attributable to an $8 million, or 19
basis point, decrease on interest expense from deposits, primarily due to a 47 basis point reduction in the cost of market-linked
Puerto Rico public deposits driven by a decline in short-term market rates when compared to the same period in 2025. NIM
expanded ten basis points to 3.81%. Deposit costs, at 1.41%, were lower by 12 basis points;
•higher non-interest income by $5 million mainly due to higher service fees by $8 million driven by higher debit and credit card fees
due to higher transaction activity and higher purchase volumes, as well as an increase in mortgage banking activities by $2
million; partially offset by lower service charges on deposits accounts by $2 million driven by a new deposit product launched in
August 2026 which offers $0 service fees to clients that meet certain criteria; and
•lower income tax expense by $13 million mainly due to higher proportion of tax exempt income;
partially offset by:
•Higher provision for credit losses by $27 million for a total of $99 million for the quarter ended September 30, 2026. Refer to the
"Provision for credit losses - Loans held-in-portfolio and unfunded commitments" section in this MD&A for more discussion over
the drivers of the provision for credit losses by business segment; and
•higher operating expenses by $25 million mainly due to higher personnel costs by $12 million mostly driven by higher
compensation and higher salaries expense, higher occupancy expense by $6 million driven by a reassessment of real property
tax estimate for certain properties in Puerto Rico, as well as higher technology and software expenses by $3 million mostly due to
continued investments in technology and transformation initiatives and higher equipment and software amortization.
For the nine-month period ended September 30, 2026, the BPPR segment recorded net income of $635 million compared to net income of
$539 million for the same period of the previous year. The factors that contributed to the variance in the financial results included the
following:
•net interest income increased $139 million to $1.7 billion compared with the same period of 2025. The increase was primarily
driven by higher income from loans by $55 million driven by loan growth across most portfolios and higher income from
investment securities by $26 million mainly driven by U.S. Treasury securities, partially offset by lower income from money market
investments. The increase also reflected a $58 million, or 26 basis point, decrease in interest expense on deposits, primarily due
to a 58 basis point reduction in the cost of market-linked Puerto Rico public deposits driven by a decline in short-term market
rates. NIM expanded 17 basis points to 3.83%. Deposit costs, at 1.35%, were lower by 19 basis points;
•higher non-interest income by $23 million mainly due to higher service fees driven by higher debit and credit card fees due to
higher transaction activity and higher purchase volumes, as well as an increase in asset management fees; and
•lower income tax expense by $20 million due mainly to higher exempt income;
partially offset by:
•the provision for credit losses increased by $66 million to $234 million. Refer to section "Provision for credit losses-Loans held-in-
portfolio and unfunded commitments" in this MD&A for more discussion over the drivers of the provision for credit losses by
business segment.
•higher operating expenses by $19 million mostly due to higher personnel costs by $8 million mainly due to an increase in salaries
expenses driven by annual salary revisions and annual incentives, higher technology and software expenses by $5 million due to
continuing investments in technology and transformation initiatives, and higher occupancy expenses by $5 million;
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Popular U.S.
For the quarter ended September 30, 2026, the reportable segment of Popular U.S. reported net income of $42 million, compared with net
income of $18 million for the same quarter of the previous year. The main drivers for higher net income are the following:
•net interest income increased $11 million to $117 million. The increase was primarily driven by higher income from loans resulting
from higher average balances and yields in the commercial portfolio by 25 basis points, or $13 million. The increase was also due
to a $7 million, or 24 basis point, decrease in interest expense on deposits, primarily due to repricing across most deposit
products driven by a decline in short-term market rates when compared to the same period in 2025;
•the provision for loan losses was a release of $3 million, a positive variance of $4 million. Refer to "Provision for credit losses -
Loans held-in-portfolio and unfunded commitments" section in this MD&A for more discussion over the drivers of the provision for
credit losses by business segment; and
•lower operating expenses by $16 million, reflecting the goodwill impairment charge related to a U.S. based equipment leasing
subsidiary of $13 million recorded during the third quarter of 2025, as well as lower occupancy expenses;
partially offset by:
•higher income tax expense by $9 million due to higher income before tax.
For the nine months ended September 30, 2026, the reportable segment of Popular U.S. recorded net income of $115 million, compared
with net income of $55 million for the same period of the previous year. The factors that contributed to the variance in the financial results
included the following:
•net interest income increased $41 million to $341 million. The increase was primarily driven by higher income from loans resulting
from higher average balances and yields in the commercial portfolio by $33 million or 15 basis points. The increase also benefited
from a $24 million, or 30 basis point, decrease in deposit interest expense, primarily due to repricing across most deposit products
driven by a decline in short-term market rates; and
•the provision for loan losses was $3 million, a decrease of $18 million. Refer to the "Provision for Credit Losses - Loans Held-in-
Portfolio and Unfunded Commitments" section in this MD&A for more discussion over the drivers of the provision for credit losses
by business segment;
•lower operating expenses by $21 million, reflecting the goodwill impairment charge related to our U.S. based equipment leasing
subsidiary of $13 million recorded in 2025, as well as lower occupancy expenses and professional fees;
partially offset by:
•higher income tax expense by $22 million due to higher income before tax.
STATEMENT OF FINANCIAL CONDITION ANALYSIS
Assets
The Corporation's total assets were $77.7 billion at September 30, 2026, compared to $75.3 billion at December 31, 2025. The variance in
total assets of $2.4 billion was driven by an increase in AFS securities and loan growth across most portfolios, partially offset by a decrease
in HTM securities. 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 increased by $486 million as of September 30, 2026, when compared to December 31, 2025, mainly driven by
an increase in excess balance in the Federal Reserve Bank. AFS securities increased $2.9 billion, driven by investments in U.S. Treasury
securities of $3.5 billion, partially offset by maturities and principal paydowns, mainly in mortgage-backed securities ("MBS") by $0.7 billion
and higher unrealized losses in AFS securities by $396 million. HTM securities decreased by $1.8 billion, mainly driven by maturities and
principal paydowns, partially offset by the amortization of $130 million of the discount related to U.S. Treasury securities previously
reclassified from 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.
Loans
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Loans held-in-portfolio were $40.0 billion at September 30, 2026, an increase of $715 million when compared to December 31, 2025. In the
BPPR segment, loan balances increased by $586 million, mainly in the mortgage, commercial and construction portfolios. The Popular U.S.
segment also increased by $129 million, mainly due to higher commercial real estate loans, partially offset by lower construction and
mortgage loans.
At September 30, 2026, the Corporation's loans to non-depository financial institutions (''NDFIs'') amounted to $540 million, a decrease of
$5 million compared to December 31, 2025. The decrease was primarily related to lower loans to insurance companies and credit
intermediaries by $36 million and $7 million, respectively, mostly at BPPR, partially offset by $37 million increase in loans to mortgage credit
intermediaries. At September 30, 2026, the Corporation's exposure to NDFIs consisted of approximately $233 million to insurance
companies for general corporate purposes unrelated to lending activities, $167 million related to consumer and commercial credit
intermediaries, and $141 million related to mortgage credit intermediaries. All loans to NDFIs are current in their contractual payments and
carry a 'pass' rating.
Refer to Table 5 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.
Table 5 - Loans Ending Balances
(In thousands)
September 30, 2026
%
December 31, 2025
%
Variance
Loans held-in-portfolio:
Commercial
Commercial multi-family
$2,396,981
6%
$2,455,790
6%
$(58,809)
Commercial real estate non-owner occupied
5,842,740
15%
5,543,284
14%
299,456
Commercial real estate owner occupied
3,412,200
9%
3,153,080
8%
259,120
Commercial and industrial
8,709,058
22%
8,607,412
22%
101,646
Total Commercial
20,360,979
52%
19,759,566
50%
601,413
Construction
1,585,873
4%
1,674,899
4%
(89,026)
Mortgage
8,860,185
22%
8,649,440
22%
210,745
Leasing
1,952,125
5%
2,001,365
5%
(49,240)
Consumer
Credit cards
1,260,053
3%
1,256,717
3%
3,336
Home equity lines of credit
88,606
-%
78,692
-%
9,914
Personal
1,994,260
5%
1,906,228
5%
88,032
Auto
3,756,459
9%
3,819,812
10%
(63,353)
Other
184,116
-%
180,799
-%
3,317
Total Consumer
7,283,494
17%
7,242,248
18%
41,246
Total loans held-in-portfolio
$40,042,656
100%
$39,327,518
100%
$715,138
Loans held-for-sale:
Commercial
$-
$-
$-
Mortgage
3,214
9,998
(6,784)
Total loans held-for-sale
$3,214
$9,998
$(6,784)
Total loans
$40,045,870
$39,337,516
$708,354
Other assets
Other assets amounted to $1.8 billion at September 30, 2026, an increase of $140 million when compared to $1.7 billion at December 31,
2025. Refer to Note 10 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 September 30, 2026 and December 31, 2025.
Liabilities
The Corporation's total liabilities were $71.5 billion at September 30, 2026, an increase of $2.4 billion, when compared to December 31,
2025. The following is a discussion of the significant changes in liabilities.
Deposits and Borrowings
Total Deposits
The Corporation's deposits totaled $68.7 billion as of September 30, 2026, compared to $66.2 billion as of December 31, 2025. Ending
deposit balances increased by $2.5 billion, while average quarterly balances grew by $3.5 billion, from December 31, 2025 to September
30, 2026. The average deposit balance, excluding P.R. public deposits, increased by $0.6 billion for the same period.
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At the end of the third quarter of 2026, P.R. public deposits were $21.5 billion, representing 31% of total deposits. P.R. public deposits are
expected to range between $20 billion and $22 billion through the end of 2026. 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 it 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") or by reductions 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. Total
deposit costs, excluding P.R. public deposits, demonstrate the stability of BPPR's core deposits with low cost and low betas.
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 6 for a breakdown of the Corporation's deposits at September 30, 2026 and December 31, 2025.
Table 6 - Deposits Ending Balances
(In thousands)
September 30, 2026
%
December 31, 2025
%
Variance
Deposits excluding P.R. public deposits:
Demand deposits
$15,005,068
22%
$15,298,712
23%
$(293,644)
Savings, NOW and money market deposits (non-brokered)
23,037,725
34%
22,655,936
34%
381,789
Savings, NOW and money market deposits (brokered)
75,278
-%
87,566
-%
(12,288)
Time deposits (non-brokered)
8,227,389
12%
7,861,848
12%
365,541
Time deposits (brokered CDs)
893,371
1%
866,772
1%
26,599
Sub-total deposits excluding P.R. public deposits
47,238,831
69%
46,770,834
71%
467,997
P.R. public deposits:
Demand deposits [1]
11,033,195
16%
11,534,301
17%
(501,106)
Savings, NOW and money market deposits (non-brokered)
9,515,457
14%
7,134,217
11%
2,381,240
Time deposits (non-brokered)
917,508
1%
750,741
1%
166,767
Sub-total P.R. public deposits
21,466,160
31%
19,419,259
29%
2,046,901
Total deposits
$68,704,991
100%
$66,190,093
100%
$2,514,898
[1] Includes interest bearing demand deposits.
Borrowings
The Corporation's borrowings totaled $1.3 billion at September 30, 2026 compared to $1.4 billion at December 31, 2025. Refer to Note 12 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 $6.2 billion at September 30, 2026, a decrease of $34 million when compared to December 31, 2025. The
decrease was principally due to a $458 million increase in treasury stock, mainly due to common stock repurchases, higher unrealized
losses on debt securities available for sale of $330 million, and common and preferred dividends of $155 million, partially offset by net
income for the nine months ended September 30, 2026 of $766 million and $104 million of amortization of unrealized losses on securities
transferred to held-to-maturity. Refer to the Consolidated Statements of Financial Condition, Comprehensive Income and Changes in
Stockholders' Equity for information on the composition of stockholders' equity.
During the nine months ended September 30, 2026, Popular repurchased 3,049,008 shares of common stock for $459 million at an average
price of $150.55 per share.
The composition of the Corporation's financing to total assets at September 30, 2026 and December 31, 2025 is included in Table 7 .
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Table 7 - Financing to Total Assets
September 30,
December 31,
% (decrease) increase
% of total assets
(Dollars in millions)
2026
2025
from 2026 to 2025
2026
2025
Non-interest-bearing core deposits
$15,011
$15,304
(1.9)%
19.3%
20.3%
Interest-bearing core deposits
47,674
46,017
3.6%
61.3%
61.1%
Interest-bearing other deposits
6,020
4,869
23.6%
7.8%
6.4%
Repurchase agreements
289.7%
0.2%
0.1%
Other short-term borrowings
(25.1)%
0.6%
0.9%
Notes payable
(9.7)%
0.9%
1.0%
Other liabilities
1,490
1,460
2.1%
1.9%
1.9%
Stockholders' equity
6,215
6,249
(0.5)%
8.0%
8.3%
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 September 30,
2026, 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 8, include common equity tier 1, Tier 1 capital, total capital and leverage capital as of
September 30, 2026 and December 31, 2025.
Table 8 - Capital Adequacy Data
(Dollars in thousands)
September 30, 2026
December 31, 2025
Common equity tier 1 capital:
Common stockholders' equity - U.S. GAAP basis
$6,192,753
6,226,936
AOCI related adjustments due to opt-out election
1,317,985
1,096,805
Goodwill, net of associated deferred tax liability (DTL)
(626,085)
(639,734)
Intangible assets, net of associated DTLs
(3,924)
(5,076)
Deferred tax assets and other deductions
(206,903)
(215,404)
Common equity tier 1 capital
$6,673,826
$6,463,527
Additional tier 1 capital:
Preferred stock
22,143
22,143
Additional tier 1 capital
$22,143
$22,143
Tier 1 capital
$6,695,969
$6,485,670
Tier 2 capital:
Trust preferred securities subject to phase in as tier 2
192,674
192,674
Other inclusions (deductions), net
524,805
517,723
Tier 2 capital
$717,479
$710,397
Total risk-based capital
$7,413,448
$7,196,067
Minimum total capital requirement to be well capitalized
$4,169,348
$4,112,375
Excess total capital over minimum well capitalized
$3,244,100
$3,083,692
Total risk-weighted assets
$41,693,477
$41,123,753
Total assets for leverage ratio
$78,908,764
$74,661,894
Risk-based capital ratios:
Common equity tier 1 capital
16.01%
15.72%
Tier 1 capital
16.06
15.77
Total capital
17.78
17.50
Tier 1 leverage
8.49
8.69
Under the regulatory capital framework applicable to insured depository institutions, a depository institution is considered "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%. At September 30, 2026, the Corporation, BPPR and PB exceeded their applicable minimum regulatory capital
requirements. In addition, BPPR and PB met the applicable regulatory capital requirements to be considered "well capitalized" under the
Basel III capital rules.
The increase in the common equity Tier I capital ratio, Tier I capital ratio, and total capital ratio, as of September 30, 2026 as compared to
December 31, 2025 was mainly due to earnings from the nine month period, partially offset by the repurchases of common stock, common
stock dividends, and higher risk weighted assets driven by the increase in loans held-in-portfolio. The decrease in the leverage ratio was
Table of Content
driven by higher total assets which are impacted by zero-risk weighted assets that did not have a significant impact on the risk weighted
assets, partially offset by the nine-month period earnings.
Reconciliation to Tangible Common Equity and Tangible Assets
Table 9 provides a reconciliation of total stockholders' equity to tangible common equity and total assets to tangible assets as of
September 30, 2026 and December 31, 2025.
Table 9 - Reconciliation of Tangible Common Equity and Tangible Assets
(In thousands, except share or per share information)
September 30,
2026
December 31,
2025
Total stockholders' equity
$6,214,896
$6,249,079
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(789,954)
Less: Other intangibles
(3,924)
(5,076)
Total tangible common equity
$5,398,875
$5,431,906
Total assets
77,735,045
75,348,267
Less: Goodwill
(789,954)
(789,954)
Less: Other intangibles
(3,924)
(5,076)
Total tangible assets
$76,941,167
$74,553,237
Tangible common equity to tangible assets
7.02%
7.29%
Common shares outstanding at end of period
62,834,136
65,719,385
Tangible book value per common share
$85.92
$82.65
Quarterly average
Total stockholders' equity
$6,435,638
$6,938,571
[1]
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(789,954)
Less: Other intangibles
(4,177)
(5,328)
Total tangible equity before adjusting for the impact of unrealized (gains) losses on AFS securities including
those transferred to HTM
$5,619,364
$6,121,146
Return on average tangible common equity before adjusting the impact of unrealized (gains) losses on AFS
securities including those transferred to HTM
17.09%
15.14%
Add: Average unrealized (gains) losses on AFS securities
903,931
56,761
Add: Average unrealized (gains) losses on AFS securities transferred to HTM
150,274
259,058
Total tangible equity after add back of impact of unrealized (gains) losses on AFS securities, including those to
HTM
$6,673,569
$6,436,965
Return on average tangible common equity after add back of impact of unrealized (gains) losses on AFS
securities including those transferred to HTM (''ROTCE'')
14.39%
14.39%
[1] Average balances exclude unrealized gains or losses on debt securities available-for-sale.
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 Note 5
and Note 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 $23.4 billion and $5.5 billion, respectively, as of
September 30, 2026. Other assets subject to market risk include mortgage servicing rights ("MSRs") with a fair value of $93 million as of
September 30, 2026.
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 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 view of long-term IRR.
Table of Content
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 as 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 September 30, 2026 and December 31, 2025, assuming a static balance sheet
and parallel changes over flat spot rates over a one-year time horizon:
Table 10 - Net Interest Income Sensitivity (One Year Projection)
September 30, 2026
December 31, 2025
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
21,224
0.71
(7,520)
(0.27)
+100 basis points
10,970
0.37
(4,379)
(0.16)
-100 basis points
(11,926)
(0.40)
2,691
0.10
-200 basis points
(12,246)
(0.41)
7,488
0.27
As of September 30, 2026, NII simulations showed that the Corporation's sensitivity position had shifted to asset sensitive. The variation in
results as compared to December 31, 2025, was mainly due to an increase in U.S. Treasury Bills and excess reserves at the Federal
Reserve Bank of New York partly offset by a rise in market-linked P.R. public deposits. The profile reflects that in rising rate scenarios, the
Corporation's net interest income would increase slightly during the one-year horizon driven primarily by repricing of variable rate loans and
fixed-rate intermediate maturity assets coming within one year, offset in part by the repricing of market-linked P.R. public deposits.
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. 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 September 30, 2026, the Corporation held trading securities with a fair value of $31 million, representing 0.04% of the Corporation's total
assets, compared with $37 million and 0.05%, respectively, at December 31, 2025. The trading portfolio consists principally of investment
grade securities such as mortgage-backed securities of $30 million with a weighted average yield of 5.03% and U.S. Treasury securities of
$1 million with a weighted average yield of 3.95% at September 30, 2026 and $23 million with a weighted average yield of 5.20% and $13
million with a weighted average yield of 2.57%, respectively, as of December 31, 2025.
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 $1 million during the last week of September 2026. 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.
Table of Content
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 2025 Annual Report on 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% of total assets at both September 30, 2026 and December 31, 2025. The ratio of total ending loans to
deposits was 58% at September 30, 2026 and 59% at December 31, 2025. In addition to traditional deposits, the Corporation maintains
borrowing arrangements, which amounted to $1.3 billion in outstanding balances at September 30, 2026 (December 31, 2025 - $1.4 billion).
A detailed description of the Corporation's borrowings, including their terms, is included in Note 12 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 Federal Home Loan Bank of New York ("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.
At September 30, 2026, the Corporation's available liquidity decreased to $26.2 billion from $27.0 billion on December 31, 2025. During the
third quarter of 2026, the Corporation continued to have significant on-balance sheet and off-balance sheet sources of liquidity. The liquidity
sources of the Corporation at September 30, 2026 are presented below:
Table 11 - Liquidity Sources
September 30, 2026
December 31, 2025
(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)
$4,011,375
$1,091,510
$5,102,885
$3,595,806
$1,020,478
$4,616,284
Unpledged securities
3,973,647
737,982
4,711,629
5,215,981
1,057,129
6,273,110
FHLB borrowing capacity
3,289,591
1,087,521
4,377,112
3,291,672
692,744
3,984,416
Discount window of the Federal Reserve Bank borrowing
capacity
8,201,159
3,836,638
12,037,797
8,472,866
3,644,486
12,117,352
Total available liquidity
$19,475,772
$6,753,651
$26,229,423
$20,576,325
$6,414,837
$26,991,162
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.
Table of Content
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 6 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 September 30, 2026, total Puerto Rico public sector deposits were
$21.5 billion, compared to $19.4 billion at December 31, 2025. Because public deposits are collateralized by pledged high-credit-quality
securities, the liquidity risk associated with potential outflows is limited.
Core deposits represented 91% of total deposits at $62.7 billion as of September 30, 2026, compared with 92% at $60.9 billion as of
December 31, 2025. Core deposits financed 84% of the Corporation's earning assets at September 30, 2026, compared to 85% at
December 31, 2025.
The distribution by maturity of certificates of deposit with denominations of $250,000 and over at September 30, 2026 is presented in the
table that follows:
Table 12 - Distribution by Maturity of Certificates of Deposit of $250,000 and Over
(In thousands)
3 months or less
$2,450,677
Over 3 to 12 months
1,216,225
Over 1 year to 3 years
395,203
Over 3 years
139,735
Total
$4,201,840
The Corporation had $1.0 billion in brokered deposits at September 30, 2026, which financed approximately 1% of its total assets
(December 31, 2025 - $1.0 billion and 1%, respectively).
As of September 30, 2026, 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 13 presents deposit balances by
reportable segment and by category, including balances under $250,000, balances exceeding $250,000, uninsured foreign deposits, and
collateralized public funds. Collateralized public funds, as presented in Table 13, 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.
Table of Content
Table 13 - Deposits
(Dollars in thousands)
September 30, 2026
BPPR
% of Total
Popular U.S.
% of Total
Popular, Inc.
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$23,849,612
42%
$8,628,522
71%
$32,478,134
47%
Transactional deposits balances over $250,000
8,148,297
14%
2,602,834
21%
10,751,131
16%
Time deposits balances over $250,000
2,412,881
4%
539,336
4%
2,952,217
4%
Uninsured foreign deposits
443,108
1%
-
-%
443,108
1%
Collateralized public funds
21,892,656
39%
187,745
2%
22,080,401
32%
Intercompany deposits
160,959
-%
195,778
2%
-
-%
Total deposits
$56,907,513
100%
$12,154,215
100%
$68,704,991
100%
[1] Includes the first $250,000 in balances of transactional and time deposit accounts with balances in excess of $250,000.
(Dollars in thousands)
December 31, 2025
BPPR
% of Total
Popular U.S.
% of Total
Popular, Inc.
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$23,873,328
44%
$8,283,967
69%
$32,157,295
49%
Transactional deposits balances over $250,000
8,254,961
15%
2,341,365
19%
10,596,326
16%
Time deposits balances over $250,000
2,182,301
4%
794,183
7%
2,976,484
4%
Uninsured foreign deposits
446,360
1%
-
-%
446,360
1%
Collateralized public funds
19,748,934
36%
264,694
2%
20,013,628
30%
Intercompany deposits
235,251
-%
349,483
3%
-
-%
Total deposits
$54,741,135
100%
$12,033,692
100%
$66,190,093
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 bank holding companies (the "BHCs"), which are Popular, Inc. (holding company only) and Popular
North America ("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 FRB and the New York Department of Financial Services ("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 $596 million at September 30, 2026 and $595 million December 31,
2025.
The contractual maturities of the BHCs notes payable at September 30, 2026 are presented in Table 14
Table 14 - Distribution of BHC's Notes Payable by Contractual Maturity
Year
(In thousands)
2028
$397,688
Later years
198,420
Total
$596,108
As of September 30, 2026, the BHCs had cash and money markets investments totaling $329 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 common stock dividend paid on October 1, 2026 was $0.90 per common
share or approximately $57 million.
Table of Content
The BHCs have in the past borrowed in the corporate debt market primarily to finance their non-banking subsidiaries and refinance debt
obligations. Recent rating actions by credit rating agencies increased the Corporation's senior debt to investment grade. Management
expects these actions to enhance access to wholesale funding and, over time, reduce funding costs, subject to market conditions. 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 nine months ended September 30, 2026, the Corporation declared cash dividends totaling $2.40 per common share outstanding
($154 million in the aggregate). The dividends for the Corporation's Series A preferred stock amounted to $1 million for the nine months
ended on September 30, 2026. During the third quarter, the Corporation's Board of Directors approved an increase in its quarterly common
stock dividend from $0.75 to $0.90 per share, commencing with the dividend paid on October 1, 2026.
During the nine months ended September 30, 2026, the BHCs received dividends and distributions amounting to $400 million from BPPR.
Dividends from BPPR constitute Popular's primary source of liquidity. In addition, during the nine months ended September 30, 2026, the
BHCs received distributions amounting to $20 million from the equity investment in Centro Financiero BHD ("BHD"), $20 million from
Popular International Bank, Inc. ("PIBI"), a wholly owned subsidiary of Popular, Inc., and $30 million from the non-banking subsidiaries.
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 a BHC's ability to declare dividends on its outstanding common and
preferred stock, repurchase its securities or meet its debt obligations, for example. At September 30, 2026, BPPR could declare a dividend
of up to approximately $212 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 NYDFS.
Other Funding Sources and Capital
In addition to cash reserves held at the FRB that totaled $5.1 billion at September 30, 2026, 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 11 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. The 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 16 to the Consolidated Financial Statements for information on the Corporation's commitments to extend 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 Note 15 to the Consolidated Financial
Table of Content
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 September 30, 2026 and
December 31, 2025, and the results of their operations for the nine-month periods ended September 30, 2026 and September 30, 2025.
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.
Table 15 - Summarized Statement of Condition
(In thousands)
September 30, 2026
December 31, 2025
Assets
Cash and money market investments
$328,577
$524,882
Investment securities
42,725
38,656
Accounts receivables from non-obligor subsidiaries
21,605
12,798
Other loans (net of allowance for credit losses of $36 (2025 - $132))
23,203
24,169
Investment in equity method investees
5,056
5,145
Other assets
101,432
91,618
Total assets
$522,598
$697,268
Liabilities and Stockholders' deficit
Accounts payable to non-obligor subsidiaries
$5,665
$7,669
Notes payable
596,108
594,958
Other liabilities
135,472
135,785
Stockholders' deficit
(214,647)
(41,144)
Total liabilities and stockholders' deficit
$522,598
$697,268
Table of Content
Table 16 - Summarized Statement of Operations
For the period ended
(In thousands)
September 30, 2026
September 30, 2025
Income:
Dividends from non-obligor subsidiaries
$430,000
$371,500
Interest income from non-obligor subsidiaries and affiliates
2,132
3,125
Losses from investments in equity method investees
(89)
(14)
Other operating income
4,002
8,027
Total income
$436,045
$382,638
Expenses:
Services provided by non-obligor subsidiaries and affiliates (net of reimbursement by subsidiaries for services
provided by parent of $204,000 (2025 - $188,825))
$14,888
$13,390
Other expenses
17,550
19,492
Income tax (benefit) expense
(937)
7,075
Total expenses
$31,501
$39,957
Net income
$404,544
$342,681
In addition to the dividend income reflected in the Statement of Operations table above, during the nine months ended September 30, 2026,
the obligor group recorded $20 million of capital distributions from non-obligor subsidiary which was recorded as a reduction to the
investment (2025 - $23 million).
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 1 A" of 2025 Annual Report on 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 26 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 2025 Annual Report on 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
Based on the latest estimates of the Puerto Rico Planning Board, real GNP in Puerto Rico is projected to have grown by 0.3% in fiscal year
2026 (July 2025-June 2026) and to grow by 0.2% in fiscal year 2027 (July 2026-June 2027). Meanwhile, the Puerto Rico Economic Activity
Index reflected a 0.1% year-over-year increase in August 2026. 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 disruptions. 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. However, inflation has accelerated during 2026, with the annual rate of inflation in the U.S.
Consumer Price Index rising from 2.4% in January 2026 to 3.7% in September 2026. In Puerto Rico, the Consumer Price Index reflected an
increase from 2% to 3.8% in the annual rate of inflation over the same period of time.
The increase has been driven in significant part by higher energy and gasoline prices amid the recent geopolitical conflict involving Iran. The
full extent to which the ongoing conflict involving Iran may affect the global economy, energy markets, and, in turn, the Puerto Rico economy
remains uncertain. In response to inflationary pressures, the Federal Reserve raised interest rates in September 2026 for the first time since
July 2023.
Table of Content
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 the Puerto Rico Oversight Management and Economic Stability Act ("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, "P.R. Government Entities").
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 P.R. 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 central
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. These reductions have been
partially offset in recent years by federal disaster and COVID-relief funding received by municipalities. 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 is closely tied to the economic conditions in Puerto Rico. Deterioration in the Puerto Rico
economy could potentially increase delinquencies and charge-offs, thereby impacting the Corporation's financial health. The Corporation
has direct exposure to P.R. Government Entities, which are mainly concentrated in obligations from various Puerto Rico municipalities.
Additionally, the Corporation holds loans and securities insured by P.R. Government Entities, such as the Housing Finance Authority, whose
ability to honor guarantees depends on its financial condition. BPPR's commercial, mortgage, and consumer loan portfolios are also
exposed to credit risks arising from private borrowers that are service providers to, or otherwise maintain business relationships with, the
Puerto Rico government, as well as government employees whose financial condition could be adversely affected by Puerto Rico's fiscal
challenges. For further discussion of the Corporation's direct and indirect exposure to the Puerto Rico government and its instrumentalities
and municipalities, please refer to Note 16 - Commitments and Contingencies to the Consolidated Financial Statements.
The Corporation also maintains significant deposits from P.R. Government Entities, with future balances subject to various uncertainties.
Further information on Puerto Rico Government deposits is included in Note 11 - Deposits to the Consolidated Financial Statements.
United States Virgin Islands
The Corporation has operations in the United States Virgin Islands (the "USVI") and has credit exposure to USVI government entities. For
further discussion of the Corporation's direct and indirect exposure to USVI government entities, please refer to Note 16.
Non-Performing Assets ("NPAs")
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 17.
During the third quarter of 2026, the Corporation's overall credit quality remained stable. Consumer and mortgage portfolio performance
remained favorable, with historically low net charge-offs (despite a slight seasonal increase in the auto portfolio), historically low delinquency
levels, and net recoveries in the mortgage portfolio. Changes in commercial credit metrics during the quarter were driven by borrower-
specific developments; core commercial portfolios continue to show stable credit trends.
Table of Content
Total NPAs decreased by $31 million, from $541 million at December 31, 2025 to $510 million as of September 30, 2026. Total NPLs
declined by $33 million to $466 million. BPPR NPLs decreased by $37 million, primarily driven by a $21 million decrease in consumer NPLs,
mainly reflecting improved credit performance in the auto portfolio, and a $13 million decrease in commercial NPLs. Popular U.S. NPLs
increased by $4 million, mostly driven by higher commercial NPLs by $9 million, offset in part by a decrease of $4 million in the mortgage
NPLs.
On September 30, 2026, the ratio of NPLs to total loans held-in-portfolio was 1.16%, compared to 1.27% on December 31, 2025. Other real
estate owned loans ("OREOs") totaled $44 million, an increase of $2 million from December 31, 2025.
The Corporation's commercial real estate ("CRE") loan portfolio includes loans secured by multifamily, non-owner-occupied, and owner-
occupied properties. At September 30, 2026, the CRE portfolio totaled $11.7 billion, comprising $2.4 billion, $5.8 billion, and $3.4 billion,
respectively, compared with $11.2 billion at December 31, 2025, comprising $2.5 billion, $5.5 billion, and $3.2 billion, respectively.
C&I NPLs in the BPPR segment totaled $184 million as of September 30, 2026, unchanged from the same period in the previous year, as
new NPL inflows during 2026 concentrated in three relationships totaling $198 million, offset by the resolution of a $155 million relationship
in the second quarter of 2026 and a $34 million partial charge-off in the third quarter of 2026.
During the second quarter of 2026, a borrower under a commercial and industrial loan relationship in the quick service restaurant industry
with BPPR, entered nonperforming status. Reserves and charge-offs related to the relationship were recorded during the third quarter of
2026. Subsequent to September 30, 2026, the borrower filed for bankruptcy and substantially ceased operations. Because this development
provided additional evidence regarding conditions that existed at September 30, 2026, the Corporation recognized an additional provision
for credit losses of $38 million for the quarter ended September 30, 2026. The Corporation expects the development to result in an
additional charge-off related to the relationship during the fourth quarter of 2026. See Note 27-Subsequent Events to the unaudited interim
consolidated financial statements.
At September 30, 2026, BPPR's funded exposure to borrowers in the quick service restaurant industry was $327 million, representing
approximately 5.4% of BPPR's commercial and industrial loan portfolio, with an additional $45 million of unfunded commitments. Excluding
the relationship described above, the remaining funded exposure totaled $277 million, of which 99.6% was current and not adversely
classified as of the end of the third quarter of 2026.
The non-owner occupied CRE portfolio was $5.8 billion at September 30, 2026, split between $3.4 billion in BPPR and $2.4 billion in
Popular U.S. This portfolio is diversified across sectors: retail (32%), hotels (18%), and office space (12%) which together represent two-
thirds of total non-owner occupied CRE exposure. Specifically, office space leasing accounts for just 1.8% ($705.4 million) of the total loan
portfolio, mainly comprising mid-rise properties with an average loan size of $3.0 million, and is well diversified by tenant type.
Within CRE, the commercial multi-family portfolio is $2.4 billion (approximately 6% of total loans), concentrated in New York Metro ($1.3
billion), South Florida ($639 million) and Puerto Rico ($240 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.
Construction loans, which are excluded from the CRE portfolio described above, represent another significant real estate-secured loan
exposure. At September 30, 2026, the Corporation's construction loan portfolio totaled $1.6 billion, including $469 million at BPPR and $1.1
billion at Popular U.S.
CRE NPLs amounted to $70 million on September 30, 2026, compared with $76 million on December 31, 2025. The CRE NPL ratios for the
BPPR and Popular U.S. segments were 0.96% and 0.33%, respectively, on September 30, 2026, compared with 1.23% and 0.25%,
respectively, on December 31, 2025.
In addition to the NPLs included in Table 18, on September 30, 2026, there were $344 million of performing loans, mostly commercial loans,
which in management's opinion, are currently subject to potential future classification as non-performing (December 31, 2025 - $500
million).
Table of Content
Table 17 -Non-Performing Assets
(Dollars in thousands)
September 30, 2026
December 31, 2025
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
$3,222
$7,151
$10,373
0.4%
$112
$8,636
$8,748
0.4%
Commercial real estate non-owner
occupied
25,930
6,329
32,259
0.6
35,692
7,020
42,712
0.8
Commercial real estate owner
occupied
18,601
8,865
27,466
0.8
24,567
-
24,567
0.8
Commercial and industrial
183,940
8,469
192,409
2.2
183,914
6,498
190,412
2.2
Total Commercial
231,693
30,814
262,507
1.3
244,285
22,154
266,439
1.3
Leasing
7,713
-
7,713
0.4
9,179
-
9,179
0.5
Mortgage
130,982
9,256
140,238
1.6
132,373
13,422
145,795
1.7
Consumer
Home equity lines of credit
-
2,876
2,876
3.2
-
2,796
2,796
3.6
Personal
16,349
17,186
0.9
18,863
1,233
20,096
1.1
Auto
32,223
-
32,223
0.9
52,200
-
52,200
1.4
Other
2,994
3,042
1.7
1,809
1,838
1.0
Total Consumer
51,566
3,761
55,327
0.8
72,872
4,058
76,930
1.1
Total non-performing loans held-in-
portfolio
421,954
43,831
465,785
1.2%
458,709
39,634
498,343
1.3%
Other real estate owned ("OREO")
43,835
44,299
41,929
42,433
Total non-performing assets
$465,789
$44,295
$510,084
$500,638
$40,138
$540,776
Accruing loans past due 90 days or
more[1]
$218,290
$163
$218,453
$228,772
$188
$228,960
Ratios:
Non-performing assets to total assets
0.60%
0.27%
0.66%
0.85%
0.25%
0.72%
Non-performing loans held-in-portfolio to
loans held-in-portfolio
1.49
0.37
1.16
1.66
0.34
1.27
Allowance for credit losses to loans held-
in-portfolio
2.55
0.76
2.02
2.60
0.77
2.05
Allowance for credit losses to non-
performing loans, excluding held-for-sale
170.56
203.38
173.64
156.51
227.42
162.15
[1] 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 $35 million of residential mortgage loans insured by FHA
or guaranteed by the VA that are no longer accruing interest as of September 30, 2026 (December 31, 2025 - $47 million). Furthermore, the Corporation has
$23 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, 2025 - $27 million).
For the quarter ended September 30, 2026, total inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $116 million,
when compared to the inflows for the same period in 2025. Inflows of NPLs held-in-portfolio at the BPPR segment decreased $120 million
from $242 million in the third quarter of 2025 to $122 million in the third quarter of 2026. The decline reflected $188 million in inflows from
two C&I relationships in the third quarter of 2025, compared with $74 million from one relationship in the third quarter of 2026. These inflows
to commercial NPLs stemmed from issues specific to the individual borrowers and are not believed to be indicative of a broader decline in
the commercial portfolio or the industries in which the borrowers operate. During the quarter ended June 30, 2026, a non-performing
commercial loan with a carrying amount of $83.7 million was transferred from held-in-portfolio to held-for-sale. The loan was subsequently
sold during the quarter ended September 30, 2026. Inflows of NPLs held-in-portfolio at the Popular U.S. segment increased by $4 million
from the same period in 2025, primarily reflecting a $4 million increase in commercial NPL inflows.
Table of Content
Table 18 to Table 23 present the Corporation's inflows to NPLs for the quarters and nine months ended September 30, 2026 and 2025.
Table 18 - Activity in Non-Performing Loans Held-in-Portfolio (Excluding Consumer Loans)
For the quarter ended September 30, 2026
For the nine months ended September 30, 2026
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$309,019
$41,542
$350,561
$376,658
$35,576
$412,234
Plus:
New non-performing loans
121,755
8,728
130,483
331,975
34,094
366,069
Advances on existing non-performing loans
-
Less:
Non-performing loans transferred to OREO
(1,497)
-
(1,497)
(6,894)
-
(6,894)
Non-performing loans charged-off
(34,765)
(589)
(35,354)
(119,882)
(2,193)
(122,075)
Loans returned to accrual status / loan
collections
(31,837)
(9,821)
(41,658)
(135,482)
(27,864)
(163,346)
Loans transferred to held-for-sale
-
-
-
(83,700)
-
(83,700)
Ending balance NPLs
$362,675
$40,070
$402,745
$362,675
$40,070
$402,745
Table 19 -Activity in Non-Performing Loans Held-in-Portfolio (Excluding Consumer Loans)
For the quarter ended September 30, 2025
For the nine months ended September 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$189,630
$49,763
$239,393
$209,543
$53,544
$263,087
Plus:
New non-performing loans
241,745
4,786
246,531
310,973
21,853
332,826
Advances on existing non-performing loans
-
-
Less:
Non-performing loans transferred to OREO
(2,333)
-
(2,333)
(7,273)
(433)
(7,706)
Non-performing loans charged-off
(13,854)
-
(13,854)
(15,571)
(1,713)
(17,284)
Loans returned to accrual status / loan
collections
(39,149)
(9,992)
(49,141)
(121,633)
(28,732)
(150,365)
Ending balance NPLs
$376,039
$44,605
$420,644
$376,039
$44,605
$420,644
Table 20 - Activity in Non-Performing Commercial Loans Held-in-Portfolio
For the quarter ended September 30, 2026
For the nine months ended September 30, 2026
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$179,779
$31,309
$211,088
$244,285
$22,154
$266,439
Plus:
New non-performing loans
91,131
5,924
97,055
232,230
25,511
257,741
Advances on existing non-performing loans
-
-
Less:
Non-performing loans transferred to OREO
-
-
-
(951)
-
(951)
Non-performing loans charged-off
(34,809)
(585)
(35,394)
(119,505)
(2,159)
(121,664)
Loans returned to accrual status / loan
collections
(4,408)
(6,044)
(10,452)
(40,666)
(15,134)
(55,800)
Loans transferred to held-for-sale
-
-
-
(83,700)
-
(83,700)
Ending balance NPLs
$231,693
$30,814
$262,507
$231,693
$30,814
$262,507
Table 21 - Activity in Non-Performing Commercial Loans Held-in-Portfolio
For the quarter ended September 30, 2025
For the nine months ended September 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$42,166
$21,711
$63,877
$51,101
$23,654
$74,755
Plus:
New non-performing loans
211,193
1,775
212,968
218,742
12,820
231,562
Advances on existing non-performing loans
-
-
Less:
Non-performing loans transferred to OREO
-
-
-
(260)
-
(260)
Non-performing loans charged-off
(13,779)
-
(13,779)
(14,921)
(1,713)
(16,634)
Loans returned to accrual status / loan
collections
(3,499)
(6,738)
(10,237)
(18,581)
(18,050)
(36,631)
Ending balance NPLs
$236,081
$16,796
$252,877
$236,081
$16,796
$252,877
Table of Content
Table 22 - Activity in Non-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2026
For the nine months ended September 30, 2026
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$129,240
$10,233
$139,473
$132,373
$13,422
$145,795
Plus:
New non-performing loans
30,624
2,804
33,428
99,745
8,583
108,328
Advances on existing non-performing loans
-
-
-
-
Less:
Non-performing loans transferred to OREO
(1,497)
-
(1,497)
(5,943)
-
(5,943)
Non-performing loans charged-off
(4)
(377)
(34)
(411)
Loans returned to accrual status / loan
collections
(27,429)
(3,777)
(31,206)
(94,816)
(12,730)
(107,546)
Ending balance NPLs
$130,982
$9,256
$140,238
$130,982
$9,256
$140,238
Table 23 - Activity in Non-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2025
For the nine months ended September 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$147,464
$28,052
$175,516
$158,442
$29,890
$188,332
Plus:
New non-performing loans
30,552
3,011
33,563
92,231
9,033
101,264
Advances on existing non-performing loans
-
-
-
-
Less:
Non-performing loans transferred to OREO
(2,333)
-
(2,333)
(7,013)
(433)
(7,446)
Non-performing loans charged-off
(75)
-
(75)
(650)
-
(650)
Loans returned to accrual status / loan
collections
(35,650)
(3,254)
(38,904)
(103,052)
(10,682)
(113,734)
Ending balance NPLs
$139,958
$27,809
$167,767
$139,958
$27,809
$167,767
Table of Content
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 September 30, 2026 and December 31, 2025, are presented below.
Table 24 - Loan Delinquencies
(Dollars in thousands)
September 30, 2026
December 31, 2025
Loans delinquent
30 days or more
Total loans
Total
delinquencies
as a percentage
of total loans
Loans delinquent
30 days or more
Total loans
Total
delinquencies
as a percentage
of total loans
Commercial
Commercial multi-family
$24,570
$2,396,981
1.03%
$24,982
$2,455,790
1.02%
Commercial real estate non-owner
occupied
67,099
5,842,740
1.15
47,068
5,543,284
0.85
Commercial real estate owner
occupied
39,644
3,412,200
1.16
28,008
3,153,080
0.89
Commercial and industrial
221,814
8,709,058
2.55
215,068
8,607,412
2.50
Total Commercial
353,127
20,360,979
1.73
315,126
19,759,566
1.59
Construction
24,435
1,585,873
1.54
17,283
1,674,899
1.03
Mortgage
Mortgage insured [1]
413,935
3,545,025
11.68
429,796
3,166,679
13.57
Mortgage uninsured
281,957
5,315,160
5.30
329,504
5,482,761
6.01
Total Mortgage
695,892
8,860,185
7.85
759,300
8,649,440
8.78
Leasing
35,781
1,952,125
1.83
37,567
2,001,365
1.88
Consumer
Credit cards
48,254
1,260,053
3.83
51,846
1,256,717
4.13
Home equity lines of credit
4,657
88,606
5.26
4,160
78,692
5.29
Personal
52,140
1,994,260
2.61
53,632
1,906,228
2.81
Auto
164,067
3,756,459
4.37
186,798
3,819,812
4.89
Other
4,000
184,116
2.17
5,929
180,799
3.28
Total Consumer
273,118
7,283,494
3.75
302,365
7,242,248
4.18
Loans held-for-sale
-
3,214
-
-
9,998
-
Total
$1,382,353
$40,045,870
3.45%
$1,431,641
$39,337,516
3.64%
[1] Loans that carry certain guarantees from FHA or the VA. 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. The
Corporation's management evaluates the adequacy of the ACL on a quarterly basis. In this evaluation, management considers current
conditions, macroeconomic expectations through a reasonable and supportable period, historical loss experience, portfolio composition by
loan type and risk characteristics, results of periodic credit reviews of individual loans, and regulatory requirements, amongst other factors.
The Corporation must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown, such as
economic developments affecting specific customers, industries, or markets. Other factors that can affect management's estimates are
recalibration of statistical models used to calculate lifetime expected losses, changes in underwriting standards, financial accounting
standards and loan impairment measurements, among others. Changes in the financial condition of individual borrowers, in economic
conditions, and in the condition of the various markets in which collateral may be sold, may also affect the required level of the allowance for
credit losses. Consequently, the business, financial condition, liquidity, capital, and results of operations of the Corporation could also be
affected. On September 30, 2026, the ACL amounted to $809 million, an increase of $754 thousand from December 31, 2025.
The ACL for BPPR increased by $2 million to $720 million as of September 30, 2026, compared to December 31, 2025, mostly driven by a
$47 million increase in reserves for commercial loans, mainly from specific reserves in the commercial and industrial loan portfolio. This
increase was offset by a $42 million decrease in reserves for consumer loans due to favorable changes in the credit composition of the auto,
credit cards and personal loans portfolios.
The Corporation's ratio of the allowance for credit losses to loans held-in-portfolio was 2.02% on September 30, 2026, compared to 2.05%
on December 31, 2025. The ratio of the ACL to NPLs held-in-portfolio stood at 173.64%, compared to 162.1% on December 31, 2025.
Table of Content
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. Tables 25 and 26 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.
Table 25 - Allowance for Credit Losses - Loan Portfolios
September 30, 2026
(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
Commercial multi-family
$15,811
$2,396,981
0.66%
$10,373
152.42%
Commercial real estate non-owner occupied
52,648
5,842,740
0.90%
32,259
163.20%
Commercial real estate owner occupied
57,833
3,412,200
1.69%
27,466
210.56%
Commercial and industrial
234,802
8,709,058
2.70%
192,409
122.03%
Total Commercial
$361,094
$20,360,979
1.77%
$262,507
137.56%
Construction
11,354
1,585,873
0.72%
-
-
Mortgage
77,648
8,860,185
0.88%
140,238
55.37%
Leasing
16,870
1,952,125
0.86%
7,713
218.72%
Consumer
Credit cards
84,992
1,260,053
6.75%
-
-
Home equity lines of credit
1,726
88,606
1.95%
2,876
60.01%
Personal
94,601
1,994,260
4.74%
17,186
550.45%
Auto
152,931
3,756,459
4.07%
32,223
474.60%
Other
7,594
184,116
4.12%
3,042
249.64%
Total Consumer
$341,844
$7,283,494
4.69%
$55,327
617.86%
Total
$808,810
$40,042,656
2.02%
$465,785
173.64%
Table 26 - Allowance for Credit Losses - Loan Portfolios
December 31, 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
Commercial multi-family
$19,345
$2,455,790
0.79%
$8,748
221.14%
Commercial real estate non-owner occupied
58,717
5,543,284
1.06%
42,712
137.47%
Commercial real estate owner occupied
48,451
3,153,080
1.54%
24,567
197.22%
Commercial and industrial
180,934
8,607,412
2.10%
190,412
95.02%
Total Commercial
$307,447
$19,759,566
1.56%
$266,439
115.39%
Construction
13,826
1,674,899
0.83%
-
-
Mortgage
80,554
8,649,440
0.93%
145,795
55.25%
Leasing
18,620
2,001,365
0.93%
9,179
202.85%
Consumer
Credit cards
91,124
1,256,717
7.25%
-
-
Home equity lines of credit
1,335
78,692
1.70%
2,796
47.75%
Personal
106,612
1,906,228
5.59%
20,096
530.51%
Auto
180,364
3,819,812
4.72%
52,200
345.52%
Other
8,174
180,799
4.52%
1,838
444.72%
Total Consumer
$387,609
$7,242,248
5.35%
$76,930
503.85%
Total
$808,056
$39,327,518
2.05%
$498,343
162.15%
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 nine months ended September 30, 2026 and 2025.
Table of Content
Table 27 - Annualized Net Charge-offs (Recoveries) to Average Loans Held-in-Portfolio
Quarters ended
September 30, 2026
September 30, 2025
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
1.06%
0.02%
0.59%
0.50%
0.03%
0.29%
Construction
(0.07)
-
(0.02)
-
-
-
Mortgage
(0.18)
(0.01)
(0.15)
(0.12)
(0.01)
(0.11)
Leasing
0.33
-
0.33
0.41
-
0.41
Consumer
2.53
1.04
2.49
2.48
1.69
2.46
Total annualized net charge-offs (recoveries) to
average loans held-in- portfolio
1.03%
0.03%
0.73%
0.84%
0.04%
0.60%
Nine months ended
September 30, 2026
September 30, 2025
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
2.96%
0.05%
1.65%
0.14%
0.02%
0.08%
Construction
(0.06)
-
(0.02)
-
-
-
Mortgage
(0.42)
(0.02)
(0.37)
(0.14)
(0.03)
(0.12)
Leasing
0.92
-
0.92
0.55
-
0.55
Consumer
5.51
5.38
5.51
2.53
3.23
2.54
Total annualized net charge-offs (recoveries) to
average loans held-in-portfolio
1.11%
0.05%
0.80%
0.73%
0.06%
0.53%
NCOs for the quarter ended September 30, 2026 amounted to $73 million, increasing by $15 million when compared to the same period in
2025. The BPPR segment increased by $16 million, mainly driven by an increase of the same amount in the commercial NCOs, primarily
related to the $34 million partial charge-off related to a commercial NPL that had entered non-performing status in the second quarter of
2026. The PB segment NCOs remained flat compared with the same period in 2025.
NCOs for the nine months ended September 30, 2026, amounted to $237 million, increasing by $88 million when compared to the same
period in 2025. The BPPR segment NCOs increased by $89 million, mainly driven by the $71 million charge-off related to the $155 million
commercial NPL and the $34 million partial charge-off recorded in the third quarter of 2026 discussed above.
Loan Modifications
For the quarter ended September 30, 2026, modified loans to borrowers with financial difficulty amounted to $219 million, of which $101
million were in accruing status. The BPPR segment's modifications to borrowers with financial difficulty amounted to $206 million, mainly
comprised of commercial and mortgage loans of $177 million and $23 million, respectively. A total of $17 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 $13 million, mostly comprised of construction loans, which represented $12.5 million.
Refer to Note 8 to the Consolidated Financial Statements for additional information on modifications made to borrowers experiencing
financial difficulties.
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.
Table of Content
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