Popular Inc.
11/10/2025 | Press release | Distributed by Public on 11/10/2025 14:16
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS
Thisreportincludesmanagement'sdiscussionandanalysis("MD&A")oftheconsolidatedfinancialpositionandfinancial
performanceofPopular,Inc.(the"Corporation"or"Popular"). Allaccompanyingtables,financialstatementsandnotesincluded
elsewhere in this report should be considered anintegral part of this analysis.
The Corporation is adiversified, publicly owned financial holding company subjectto the supervision and regulationof the Board of
Governors of the Federal Reserve System. The Corporation hasoperations in Puerto Rico, the United States ("U.S.") mainland and
the U.S. and British Virgin Islands. In Puerto Rico, theCorporation provides retail, mortgage,commercial banking services and auto
and equipmentleasing andfinancing through itsprincipal banking subsidiary,Banco Popular dePuerto Rico("BPPR"), aswell as
broker-dealer andinsurance servicesthrough specializedsubsidiaries. IntheU.S. mainland,theCorporation providesretail and
commercialbankingservices,aswellasequipmentleasingandfinancing,throughitsNewYork-charteredbankingsubsidiary,
PopularBank("PB"or"PopularU.S."),whichhasbrancheslocatedinNewYork,NewJerseyandFlorida.Note28tothe
Consolidated Financial Statements presents informationabout the Corporation's business segments.
As a financial services company,the Corporation's earnings are significantly affectedby general business and economic conditions
in themarkets whichwe serve.Lending anddeposit activitiesand feeincome generationare influencedby thelevel ofbusiness
spending andinvestment, consumerincome, spendingand savings,capital marketactivities, competition,customer preferences,
interest rate conditions and prevailing market rateson competing products.
The Corporationoperates ina highlyregulated environmentand maybe adverselyaffected bychanges infederal andlocal laws
andregulations.Also,competitionwithotherfinancialinstitutions,aswellaswithnon-traditional financialserviceprovidersand
technologycompaniesthatprovideelectronicandinternet-basedfinancialsolutionsandservices,couldadverselyaffectits
profitability.
TheCorporationcontinuouslymonitorsgeneralbusinessandeconomicconditions,industry-relatedindicatorsandtrends,
competition, interest rate volatility, credit quality indicators, loan, and deposit demand, operational and systems efficiencies, revenue
enhancements and changes in the regulation of financialservices companies.
The description of the Corporation's business contained inItem 1 of the 2024 Form 10-K, while not all inclusive,discusses additional
information about the business of the Corporation. Readers should also refer to "Part I - Item 1A" of the 2024 Form 10-K and "Part II
- Item 1A" of this Form 10-Q for a discussion of certain risks and uncertainties to which the Corporation is subject, many beyond the
Corporation's control that, in addition to the other information inthis Form 10-Q, readers should consider.
The Corporation's common stock is traded on the NASDAQGlobal Select Market under the symbol BPOP.
OVERVIEW
Financial highlights for the quarter ended September 30,2025
The Corporation'snet income forthe quarterended September 30,2025 amounted to$211.3million, anincrease of$56.0 million
when compared to anet income of $155.3 millionfor the quarter ended September30, 2024. Higher netincome was mainly driven
by higher net interest income, offset in part by an increasein operating expense.
Financial highlights for the quarter ended September 30,2025 include:
●
Netinterestincomeamountedto$646.5million,anincreaseof$74.0millionwhencomparedtothequarterended
September 30,2024, drivenby lower costof deposits,investments in U.S.Treasury securitiesat higher yieldsand loan
growth.Net interest income ona taxable equivalent basis forthe third quarter of2025 was $720.8 million,an increase of
$107.9million.Netinterestmarginexpandedby27bpsto3.51%.Onataxableequivalentbasis,netinterestmargin
expanded by 43 basis points to 3.90%.
●
The provision forcredit losses amounted to$75.1 million for thequarter ended September 30,2025, an increase of$3.7
millionwhen comparedtothequarterendedSeptember30,2024,drivenbyhigherreservesinthecommercialloans
portfolio, mainly due to two unrelated NPL inflows during the quarter, partially offset bya lower provision for the consumer
loans portfolio due to improvements in credit quality.
●
Non-interestincomeamountedto$171.2million,anincreaseof$7.1millionwhencomparedtothequarterended
September 30, 2024, mainly driven byhigher credit and debit card fee income,a favorable valuation adjustment of equity
securities held for deferred compensation plans, higher other operating incomedue to a retroactive charge to a tenantfor
energy supplied in prior years, and higher investmentmanagement fees.
●
Operating expenses amounted to $495.3 million forthe quarter, reflectingan increase of $28.0 million whencompared to
the quarter ended September 30, 2024.The increase was mainly driven byhigher personnel costs, primarily due to profit
sharingaccrualandhigherincentives,andanon-cashgoodwillimpairmentchargerelatedtoourU.S.basedleasing
subsidiary,partially offset by lower insurance claims and operationallosses reserves and lower equipment expenses.
●
Income tax expenseof $36.0 million withan effective taxrate ("ETR") of14.5% during thequarter ended September 30,
2025, comparedto anincome taxexpense of$42.5 millionwith anETR of21.5% forthe quarterended September30,
2024 due to higher tax-exempt income and taxcredit purchases during 2025.
●
At September 30,2025, the Corporation'stotal assets amountedto $75.1 billion,compared to $73.0billion at December
31,2024.Theincreaseof$2.1billionisprimarilyduetohigherbalanceintheavailable-for-sale("AFS")securities
portfolio,mainlydrivenbyhigherU.S.Treasurysecurities,andanincreaseacrossmostloanportfolios,mainlyin
commercial,mortgage,andconstruction,partiallyoffsetbylowerbalanceinthemoneymarketinvestments,held-to-
maturity ("HTM") investment securities, and a decreasein other assets.
●
Deposits amounted to $66.5 billion at September 30, 2025, an increase of $1.6 billion from December 31, 2024, driven by
an increase in high-cost deposits,mainly time deposits at PB, and P.R. public deposits.
●
Stockholders' equity amounted to $6.1 billion at September 30, 2025,compared to $5.6 billion at December 31, 2024. The
Corporation anditsbanking subsidiariescontinue tobewell capitalized.AsofSeptember30,2025, theCorporation's
tangible book value per common share was $79.12, an increase of $10.96 from December 31, 2024. The Common Equity
Tier 1 Capital ratio at September 30, 2025 was 15.79%,compared to 16.03% at December 31, 2024.
Refer to Table 1 for selected financial data for the quarters ended September 30, 2025 andSeptember 30, 2024.
Table 1 - Financial Highlights
Financial Condition Highlights
Ending balances at
Average for the nine months ended
(In thousands)
September 30,
2025
December 31,
2024
Variance
September
30, 2025
September
30, 2024
Variance
Money market investments
$
4,754,391
$
6,380,948
$
(1,626,557)
$
6,205,101
$
6,663,967
$
(458,866)
Investment securities
28,371,673
26,244,977
2,126,696
28,758,022
27,701,911
1,056,111
Loans
[1]
38,694,941
37,113,075
1,581,866
37,692,744
35,411,807
2,280,937
Earning assets
71,821,005
69,739,000
2,082,005
72,655,867
69,777,685
2,878,182
Total assets
75,065,798
73,045,383
2,020,415
75,776,756
72,851,597
2,925,159
Deposits
66,513,404
64,884,345
1,629,059
66,452,057
64,521,953
1,930,104
Borrowings
1,246,807
1,176,126
70,681
1,145,836
1,039,130
106,706
Total liabilities
68,950,126
67,432,317
1,517,809
68,584,814
66,530,111
2,054,703
Stockholders' equity
6,115,672
5,613,066
502,606
7,191,941
6,321,486
870,455
Note: Average balances exclude unrealized gains or losses on debt securities available-for-sale and the unrealized loss related to certain securities transferred from available-for-
sale to held-to-maturity.
Operating Highlights
Quarters ended September 30,
Nine months ended September 30,
(In thousands, except per share information)
2025
2024
Variance
2025
2024
Variance
Net interest income
$
646,505
$
572,473
$
74,032
$
1,883,651
$
1,691,529
$
192,122
Provision for credit losses
(benefit)
75,125
71,448
3,677
188,147
190,840
(2,693)
Non-interest income
171,195
164,082
7,113
491,733
494,206
(2,473)
Operating expenses
495,287
467,321
27,966
1,459,060
1,420,010
39,050
Income before income tax
247,288
197,786
49,502
728,177
574,885
153,292
Income tax expense
35,971
42,463
(6,492)
128,918
138,490
(9,572)
Net income
$
211,317
$
155,323
$
55,994
$
599,259
$
436,395
$
162,864
Net income applicable to common stock
$
210,964
$
154,970
$
55,994
$
598,200
$
435,336
$
162,864
Net income per common share - basic
$
3.15
$
2.16
$
0.99
$
8.78
$
6.06
$
2.72
Net income per common share - diluted
$
3.14
$
2.16
$
0.98
$
8.78
$
6.05
$
2.73
Dividends declared per common share
$
0.75
$
0.62
$
0.13
$
2.15
$
1.86
$
0.29
Quarters ended September 30,
Nine months ended September 30,
Selected Statistical Information
2025
2024
2025
2024
Common Stock Data
End market price
$
129.10
100.27
$
129.10
100.27
Book value per common share at period end
91.00
80.35
91.00
80.35
Profitability Ratios
Return on assets
1.09
%
0.84
%
1.06
%
0.79
%
Return on common equity
11.60
8.82
11.15
8.43
Net interest spread (non-taxable equivalent basis)
2.87
2.43
2.81
2.41
Net interest spread (taxable equivalent) - Non-GAAP
3.26
2.66
3.18
2.65
Net interest margin (non-taxable equivalent basis)
3.51
3.24
3.46
3.20
Net interest margin (taxable equivalent) - Non-GAAP
3.90
3.47
3.83
3.44
Capitalization Ratios
Average equity to average assets
9.46
%
8.86
%
9.49
%
8.68
%
Common equity Tier 1 capital
15.79
16.42
15.79
16.42
Tangible commonbook value per common share (non-GAAP)
[2]
79.12
69.04
79.12
69.04
Return on average tangible common equity
[2]
13.06
9.98
12.57
9.56
Tier I capital
15.84
16.48
15.84
16.48
Total capital
17.58
18.24
17.58
18.24
Tier 1 leverage
8.48
8.67
8.48
8.67
[1]
Includes loans held-for-sale.
[2]
Refer to Table 10 for reconciliation to GAAP financial measures.
Non-GAAP Financial Measures
This Form 10-Qcontains financial informationprepared under accountingprinciples generally accepted inthe United States("U.S.
GAAP")andnon-GAAPfinancialmeasures.Managementusesnon-GAAPfinancialmeasureswhenitisdeterminedthatthese
measures providemeaningful informationabout theunderlying performanceof theCorporation's ongoingoperations. Non-GAAP
financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used byother
companies.
Adjusted net income - Non-GAAP Financial Measure
Inaddition toanalyzing theCorporation'sresults ona reportedbasis, managementmonitors whethertheimpact ofcertain non-
recurring orinfrequent transactionsneed tobe excludedfrom theresults ofoperations topresent whatis thenconsidered tobe
"adjustednetincome"oftheCorporation.Managementbelievesthatthe"adjustednetincome"providesmeaningfulinformation
abouttheunderlyingperformanceoftheCorporation'songoingoperations.The"adjustednetincome"isanon-GAAPfinancial
measure.
The followingtable presentsthe adjustednet incomefor thenine monthsended September30, 2024.There wereno non-GAAP
adjustments for the nine months ended September30, 2025.
Table 2 - Adjusted Net Incomefor the Nine Months Ended September 30, 2024 (Non-GAAP)
(In thousands)
Income before
income tax
Income tax
expense
(benefit)
Total
U.S. GAAP Net income
$574,885
$138,490
$436,395
Non-GAAP Adjustments:
FDIC Special Assessment [1]
14,287
(5,234)
9,053
Adjustments related to intercompany distributions [2]
6,400
16,483
22,883
Adjusted net income (Non-GAAP)
$595,572
$127,241
$468,331
[1] Expense recorded during the first quarter of 2024 toincrease the estimate recognized during the fourthquarter of 2023 related to the November 16,
2023 FDIC Special Assessment to recover the losses to thedeposit insurance fund used by the FDIC in connectionwith the receiverships of several
failed banks. The special assessment amount and collectionperiod may change if the estimated loss is periodicallyadjusted or if the total amount
collected varies.
[2] Income tax expense and other related expenses fromprior periods related to withholding taxes on certaindistributions from U.S. subsidiaries.
Net interest income on a taxable equivalent basis- Non-GAAP Financial Measure
Net interest income, ona taxable equivalent basis,is presented with itsdifferent components in Tables3 and 4 forthe quarter and
nine monthsended September30,2025, ascompared withthe sameperiod in2024, segregatedby majorcategories ofinterest
earning assets and interest-bearing liabilities.
Themainsourcesoftax-exemptinterestincomearecertainloansandinvestmentsinobligationsoftheU.S.Government,its
agencies and sponsored entities, andcertain obligations of theCommonwealth of Puerto Rico andits agencies and assetsheld by
the Corporation's internationalbanking entities. Ontables 3 and4, the interestincome has beenconverted to ataxable 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 attributable to exempt income, reducing the benefit ofthe tax-exempt income. The effective yield, on ataxable equivalent
basis, willvary depending onthe levelof theseexpenses that areattributable tothe available exemptincome. Under PuertoRico
taxlaw,theexemptinterestcanbededucteduptotheamountoftaxableincome.Management believesthatthispresentation
provides meaningful information since it facilitates the comparisonof revenues arising from taxable and exemptsources.
Tangible Common Equity and Tangible Assets
Tangiblecommon equity,tangible common equity ratio, tangibleassets and tangible book valueper common share arenon-GAAP
financial measures.Tangiblecommon equityratio andtangible bookvalue percommon shareshould beused inconjunction with
moretraditionalbankcapitalratioscommonlyusedbybanksandanalyststocomparethecapitaladequacyofbanking
organizationswithsignificantamountsofgoodwillorotherintangibleassets,typicallystemmingfromtheuseofthepurchase
accounting method formergers and acquisitions.Tangiblecommon equity,tangible assetsand other relatedmeasures should not
beusedinisolationorasa substituteforstockholders' equity,totalassetsoranyothermeasure calculatedinaccordancewith
GAAP.Moreover, theway the Corporationcalculates its tangiblecommon equity,tangible assets andother related measuresmay
differ from that of other companies reporting measureswith similar names.
Table10 providesa reconciliation oftotal stockholders' equityto tangible commonequity and totalassets to tangibleassets asof
September 30, 2025 and December 31, 2024.
CRITICAL ACCOUNTING POLICIES / ESTIMATES
The accounting and reporting policies followed by the Corporationand its subsidiaries conform to U.S. GAAP andgeneral practices
withinthefinancialservicesindustry.VariouselementsoftheCorporation'saccountingpolicies,bytheirnature,areinherently
subject to estimation techniques, valuation assumptionsand other subjective assessments.
ManagementhasdiscussedthedevelopmentandselectionofthecriticalaccountingestimateswiththeCorporation'sAudit
Committee. The Corporation has identified as critical accounting estimates those related to: (i) Fair ValueMeasurement of Financial
Instruments;(ii)LoansandAllowanceforCreditLosses;(iii)IncomeTaxes;(iv)GoodwillandOtherIntangibleAssets;and(v)
Pension and PostretirementBenefit Obligations. Fora summary ofthese critical accountingestimates, refer tothe MD&A included
inthe2024Form10-K.Also,refertoNote2totheConsolidatedFinancialStatementsincludedinthe2024Form10-Kfora
summary of the Corporation's significant accounting policies and to Note 3 to the Consolidated Financial Statements included in this
Form 10-Q for information on recently adopted accountingstandard updates.
STATEMENTOF OPERATIONS ANALYSIS
NET INTEREST INCOME
Net interest income ("NII")for the quarter endedSeptember 30, 2025 was$646.5 million an increase of$74.0 million, compared to
the same quarter in 2024. The increase in net interest income was supported by lower costof deposits, mainly P.R.public deposits,
higher income from investments in U.S. Treasury securities athigher yields, and from loan growth. Net interest income on ataxable
equivalent basis for the third quarter of 2025was $720.8 million, an increase of $107.9million.
Net interest margin("NIM") for thequarter was 3.51%,an increase of27 basis pointswhen compared to thethird quarter of2024.
On ataxable equivalentbasis, netinterest marginfor thethird quarterof 2025was 3.90%,an increaseof 43basis pointswhen
compared to the third quarter of 2024, drivenby higher level of tax-exempt securities and loans. NIM expansion, when comparedto
the same quarter ofthe previous year,was mainly attributable tolower deposit costs drivenas a result ofthe repricing of high-cost
deposits thatare market-linked,mainly thoseof P.R.public deposits,and higheryields onU.S. Treasurysecurities. Totalcost of
deposits decreased 37 basis points to 1.79%.
On a taxable equivalent basis, the main drivers ofthe increase for the third quarter of 2025 were:
●
higher income from investment securities and money market investmentsby $17.5 million, mainly driven by higher income
fromU.S. Treasurysecuritiesby$49.3millionor57basispoints, duetohigherre-investment activityathigher yields
partially offsetby lowerincome frommoney marketsecurities by$29.2 millionas aresult ofthe deploymentof fundsto
loan growthand thepurchase ofU.S. Treasurysecurities. Duringthe thirdquarter of2025, theCorporation purchased
approximately$2.5billionofU.S.Treasurynoteswithanaverage durationof1.4yearsandayieldofapproximately
3.65%, through a combinationof approximately $1.0 billionin maturing U.S. Treasuriesand a reduction ofapproximately
$1.5 billion in overnight Fed funds;
●
higherincomefromloansby$45.6milliondrivenbyloangrowthmostnotablyinthecommercial,constructionand
mortgage portfolios, including certaintax-exempt loans in BPPR,partially offset bylower yields by7 basis points,mainly
from adjustable rate commercial and construction portfoliosdue to short-term market rates decline; and
●
lower interest expense ondeposits by $47.6 million, or37 basis points, when comparedto the same periodin 2024. The
cost ofinterest-bearing depositsdecreased by52 basispoints, mainlydue tothe repricingof market-linkedP.R.public
depositswhichdecreasedby105basispointsto3.19%,andadecreaseinthecostofdepositsinPopularU.S.,
particularly in time deposits and those captured throughonline channels.
Table 3 - Analysis of Levels & Yieldson a Taxable Equivalent Basis(Non-GAAP)
Quarter ended September 30,
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2025
2024
Variance
2025
2024
Variance
2025
2024
Variance
Rate
Volume
(In millions)
(In thousands)
$
5,990
$
7,033
$
(1,043)
4.43
%
5.43
%
(1.00)
%
Money market
investments
$
66,867
$
96,061
$
(29,194)
$
(16,107)
$
(13,087)
28,957
27,569
1,388
3.42
2.92
0.50
Investment securities [1]
249,071
202,317
46,754
32,970
13,784
(2)
5.43
5.87
(0.44)
Trading securities
(45)
(31)
(14)
Total money market,
investment and
trading
34,975
34,632
3.59
3.43
0.16
securities
316,329
298,814
17,515
16,832
Loans:
19,229
17,798
1,431
6.72
6.90
(0.18)
Commercial
325,869
308,734
17,135
(7,239)
24,374
1,549
1,129
8.24
8.85
(0.61)
Construction
32,184
25,102
7,082
(1,732)
8,814
1,981
1,851
7.26
6.97
0.29
Leasing
35,957
32,241
3,716
1,378
2,338
8,484
7,911
5.96
5.73
0.23
Mortgage
126,352
113,409
12,943
4,523
8,420
3,257
3,211
13.80
14.08
(0.28)
Consumer
113,280
112,423
(787)
1,644
3,945
3,879
9.15
8.94
0.21
Auto
91,006
87,189
3,817
2,338
1,479
38,445
35,779
2,666
7.49
7.56
(0.07)
Total loans
724,648
679,098
45,550
(1,519)
47,069
$
73,420
$
70,411
$
3,009
5.63
%
5.53
%
0.10
%
Total earning assets
$
1,040,977
$
977,912
$
63,065
$
15,313
$
47,752
Interest bearing
deposits:
$
8,184
$
7,387
$
1.77
%
2.04
%
(0.27)
%
NOW and money
market
$
36,421
$
37,857
$
(1,436)
$
(4,891)
$
3,455
14,529
14,318
0.81
0.92
(0.11)
Savings
29,772
33,134
(3,362)
(3,981)
8,825
8,366
3.16
3.45
(0.29)
Time deposits
70,196
72,503
(2,307)
(6,096)
3,789
20,766
19,468
1,298
3.19
4.24
(1.05)
P.R. publicdeposits
167,043
207,491
(40,448)
(52,899)
12,451
52,304
49,539
2,765
2.30
2.82
(0.52)
Total interest bearing
deposits
303,432
350,985
(47,553)
(67,867)
20,314
14,846
14,968
(122)
Non-interest bearing
demand deposits
67,150
64,507
2,643
1.79
2.16
(0.37)
Total deposits
303,432
350,985
(47,553)
(67,867)
20,314
4.52
5.62
(1.10)
Short-term borrowings
4,616
1,430
3,186
(267)
3,453
Other medium and
(138)
5.98
5.32
0.66
long-term debt
12,096
12,560
(464)
(690)
Total interest bearing
53,521
50,590
2,931
2.37
2.87
(0.50)
liabilities (excluding
demand deposits)
320,144
364,975
(44,831)
(67,908)
23,077
Other sources of funds
5,053
4,853
$
73,420
$
70,411
$
3,009
1.73
%
2.06
%
(0.33)
%
Total source of funds
$
320,144
$
364,975
$
(44,831)
$
(67,908)
$
23,077
Net interest margin/
income on a taxable
equivalent basis (Non-
GAAP)
3.90
%
3.47
%
0.43
%
$
720,833
$
612,937
$
107,896
$
83,221
$
24,675
3.26
%
2.66
%
0.60
%
Net interest spread
Taxable equivalent
adjustment
74,328
40,464
33,864
Net interest margin/
income non-taxable
equivalent basis (GAAP)
3.51
%
3.24
%
0.27
%
$
646,505
$
572,473
$
74,032
Note: The changes that are not due solely to volume orrate are allocated to volume and rate based on theproportion of the change in each category.
[1] Average balances exclude unrealized gains or losseson debt securities available-for-sale and the unrealizedloss related to certain securities transferred from
available-for-sale to held-to-maturity.
Net Interest incomefor thenine-month period endedSeptember 30, 2025was $1.9billion, or $192.1million higher thanthe same
period in 2024.Taxableequivalent net interestincome was $2.1billion, an increaseof $264.6 millionwhen compared tothe same
period in2024. NIMwas 3.46%,an increaseof 26basis pointswhen comparedto 3.20%in 2024.NIM, ona taxableequivalent
basis, for thenine months ended September30, 2025 was3.83%, an increaseof 39 basispoints compared tothe same periodof
2024.
The main driversof the variancesin net interest incomeon a taxable equivalentbasis for thenine-month period ended September
30, 2025 were:
●
higher incomefrom investment securitiesand money marketinvestments by $29.3million drivenby higher incomefrom
U.S. Treasurysecurities by$103.2 million mainlydue tohigher yields by47 basispoints and higheraverage volumeby
$1.1 billion,as theCorporation continues tore-invest U.S.Treasury Notesmaturities athigher yields,as wellas useof
funds forthe purchaseof U.S.Treasurysecurities, partiallyoffset bylower incomefrom moneymarket investmentsby
$66.3million,or102basispoints,mainlyduemoneymarketinvestments loweryieldduetothedeclineinshort-term
market rates and the use offunds for loan growth and investments in U.S.Treasury securities , as discussed above;
●
higher income fromloans by $117.2million resulting fromhigher average balances by$2.3 billion, reflected acrossmost
portfolios, most notably in the commercial, construction and mortgage loan portfolios, partially offset by lower loan yield by
three basis points driven by adjustable-rate constructionand commercial portfolios due to the declinein market rates; and
●
lower deposit costby $124.1 millionmainly due tothe repricing ofmarket linked P.R.public deposits, whichdeclined by
96 basis points, and the repricing of high-cost depositsat Popular U.S.
Table 4 - Analysis of Levels & Yieldson a Taxable Equivalent Basisfrom Continuing Operations (Non-GAAP)
Period ended September 30,
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2025
2024
Variance
2025
2024
Variance
2025
2024
Variance
Rate
Volume
(In millions)
(In thousands)
$
6,205
$
6,664
$
(459)
4.45
%
5.47
%
(1.02)
%
Money market
investments
$
206,565
$
272,893
$
(66,328)
$
(48,483)
$
(17,845)
28,729
28,271
3.28
2.88
0.40
Investment securities
[1]
705,879
610,341
95,538
79,281
16,257
(1)
5.74
5.02
0.72
Trading securities
1,237
1,114
(32)
Total money market,
investment and
trading
34,963
34,965
(2)
3.49
3.38
0.11
securities
913,681
884,348
29,333
30,953
(1,620)
Loans:
18,802
17,707
1,095
6.72
6.87
(0.15)
Commercial
945,330
910,241
35,089
(20,306)
55,395
1,440
1,064
8.19
8.97
(0.78)
Construction
88,179
71,426
16,753
(6,722)
23,475
1,961
1,794
7.18
6.86
0.32
Leasing
105,650
92,292
13,358
4,501
8,857
8,331
7,818
5.89
5.67
0.22
Mortgage
368,141
332,626
35,515
13,125
22,390
3,224
3,209
14.10
13.94
0.16
Consumer
339,880
334,818
5,062
3,058
2,004
3,935
3,820
9.00
8.86
0.14
Auto
264,905
253,511
11,394
3,760
7,634
37,693
35,412
2,281
7.49
7.52
(0.03)
Total loans
2,112,085
1,994,914
117,171
(2,584)
119,755
$
72,656
$
70,377
$
2,279
5.57
%
5.46
%
0.11
%
Total earning assets
$
3,025,766
$
2,879,262
$
146,504
$
28,369
$
118,135
Interest bearing
deposits:
$
8,077
$
7,558
$
1.73
%
2.00
%
(0.27)
%
NOW and money
market
$
104,711
$
113,405
$
(8,694)
$
(14,883)
$
6,189
14,547
14,579
(32)
0.84
0.93
(0.09)
Savings
91,430
101,008
(9,578)
(9,213)
(365)
8,587
8,142
3.17
3.35
(0.18)
Time deposits
203,909
204,014
(105)
(11,631)
11,526
20,464
19,168
1,296
3.24
4.20
(0.96)
P.R. publicdeposits
496,303
601,993
(105,690)
(144,853)
39,163
51,675
49,447
2,228
2.32
2.76
(0.44)
Total interest bearing
deposits
896,353
1,020,420
(124,067)
(180,580)
56,513
14,778
15,075
(297)
Non-interest bearing
demand deposits
66,453
64,522
1,931
1.80
2.11
(0.31)
Total deposits
896,353
1,020,420
(124,067)
(180,580)
56,513
4.55
5.65
(1.10)
Short-term
borrowings
11,342
3,748
7,594
(669)
8,263
Other medium and
(140)
5.79
5.18
0.61
long-term debt
36,173
37,799
(1,626)
3,875
(5,501)
Total interest bearing
52,843
50,511
2,332
2.39
2.81
(0.42)
liabilities (excluding
demand deposits)
943,868
1,061,967
(118,099)
(177,374)
59,275
5,035
4,791
Other sources of
funds
$
72,656
$
70,377
$
2,279
1.74
%
2.02
%
(0.28)
%
Total source of funds
$
943,868
$
1,061,967
$
(118,099)
$
(177,374)
$
59,275
3.83
%
3.44
%
0.39
%
Net interest margin/
income on a taxable
equivalent basis
(Non-GAAP)
$
2,081,898
$
1,817,295
$
264,603
$
205,743
$
58,860
3.18
%
2.65
%
0.53
%
Net interest spread
Taxable equivalent
adjustment
198,247
125,766
72,481
3.46
%
3.20
%
0.26
%
Net interest margin/
income non-taxable
equivalent basis
(GAAP)
$
1,883,651
$
1,691,529
$
192,122
Note: The changes that are not due solely to volume orrate are allocated to volume and rate based on theproportion of the change in each category.
[1] Average balances exclude unrealized gains or losseson debt securities available-for-sale and the unrealizedloss related to certain securities transferred
from available-for-sale to held-to-maturity.
Provision for Credit Losses - Loans Held-in-Portfolioand Unfunded Commitments
For thequarter ended September30, 2025,the Corporationrecorded a provisionfor creditlosses of $75.1million, anincrease of
$3.7 million when compared to the same quarter of the previousyear. The provision for loanand lease losses was $74.5 million, an
increaseof$1.7million,andtheprovisionforunfunded commitmentswas$0.8million,anunfavorable varianceof$1.3million,
mainly driven by higher unfunded commitments at the BPPR segment.The provision release for HTM was $0.2 million,an increase
of $0.6 million when compared to the same quarterof the previous year.
As discussedin Note8 tothe ConsolidatedFinancial Statements,the Corporationestimates theACL byweighting theoutputs of
optimistic,baseline,andpessimisticscenarios.Duringthefirstquarterof2025,inresponsetotheeconomicuncertainty,the
Corporation increased the probability assigned to the pessimisticscenario making it equal to the baseline scenario. Subsequently, in
the second quarterof 2025, theprobability assigned to thepessimistic scenario was moderatelyreduced based onthe changes in
the economic outlook anda reassessment of uncertaintycompared to the previousquarter. Thenet impact of thesetwo events on
the ACL levels forthe nine months ended September30, 2025 was $13.7million in additional reserves. Therewere no changes to
the probability weights during the third quarterof 2025. The probability weight forthe pessimistic scenario remains above the levels
observed in 2024, given the ongoing economic uncertainty.
The majordrivers ofthe changesin theprovision forloan lossesduring thequarter bybusiness segmentwhen comparedto the
same quarter in 2024, were as follows:
●
In the BPPR segment,the provision for loans losseswas $72.6 million, a decreaseof $4.5 million when comparedto the
same quarter in 2024, driven by lower reserves for the consumerportfolio of $30.6 million, mainly in auto loans and credit
cards,duetoimprovementsincreditqualityandlowernetcharge-offs.Thefavorablevariancewaspartiallyoffsetby
higherreservesinthecommercialportfolioby$21.7millionduetoaspecificreserverecognizedfora$158.3million
commercialandindustrialfacilityanda$13.5millioncharge-offrecognizedduringthequarterfora$30.1million
commercial real estate facility,both classified as NPLs during the quarter.
●
In the PopularU.S. segment, the provisionfor loans losseswas $1.9 million,an increase of$6.3 million when compared
to thesame quarterin 2024,mainly drivenhigher qualitativereserves forthe commercialreal estateportfolios, partially
offset by lower net charge-offs mainly in consumer portfolios.
Forthe ninemonths endedSeptember 30,2025, theprovision forcreditlosses amountedto$188.1 million,a decreaseof$2.7
million, compared to thenine months ended September30, 2024. The provisionfor the loanportfolio was $189.3 million,flat when
compared to the nine months ended September 30, 2024. The provision release related to unfunded commitments was $1.6 million,
adecreaseof$3.0million,mainlydrivenbythereductioninunfunded commitmentswithintheU.S.constructionportfolio.The
provision for HTM was$0.5 million, an increaseof $0.9 million when comparedto the same periodof the previous year.The major
drivers of the provision for loan losses during the nine months ended September 30, 2025, bybusiness segment when compared to
the same period in 2024, were as follows:
●
In the BPPR segment, the provision forloan losses for the nine months ended September 30,2025 was $168.5 million, a
decreaseof$18.3millionwhencomparedtothesameperiodin2024,drivenbyimprovementincreditqualityinthe
consumer portfolio, mainly in credit cards, and the stable performance of the lease portfolio for which a qualitative reserve
was established in 2024, partially offset by an increase in provisions for themortgage portfolio, driven by lower recoveries
and changes in macroeconomic forecasts and creditquality.
●
InthePopularU.S.segment,theprovisionforloanlosseswas$20.8million,anincreaseof$18.2million,drivenby
changesincreditqualitywithinthecommercialportfolio,partiallyoffsetbylowernetcharge-offswithintheconsumer
portfolios.
AtSeptember 30,2025, thetotalallowance forcreditlosses forloans held-in-portfolioamounted to$786.2 million,compared to
$746.0millionasofDecember31,2024.Theratiooftheallowanceforcreditlossestoloansheld-in-portfoliowas2.03%at
September30,2025, comparedto2.01%atDecember 31,2024. RefertoNote8totheConsolidated FinancialStatementsfor
additional informationon theCorporation's methodologytoestimate itsACL. Referto theCredit Risksection ofthis MD&Afora
detailed analysis of net charge-offs, non-performing assets,the allowance for credit losses and selected loanlosses statistics.
Non-Interest Income
Non-interest incomeamounted to $171.2million forthe thirdquarter of2025, anincrease of$7.1 millionwhen compared withthe
same quarter for the previous year. This variance was primarily dueto:
●
higher gains from equity securities by $2.7 million mainly due to the valuation of securities held for deferred compensation
plans, which have an offsetting effect on personnel cost;
●
higher otherservice feesby$2.6 millionmainly duetohigher creditand debitcard feeincome by$3.3 million,due to
highervolumeofcostumertransactions,andhigherinvestmentmanagementfeesby$1.1million,drivenbyahigher
assets under management, partially offset by lower insurancefees by $2.4 million; and
●
higher other operating income by $2.1 million mainlydue to income of $5.3 million related toa retroactive charge billed to
a tenantfor energysupplied inprior yearsand higherincome frominvestments accountedunder theequity methodby
$4.1 million, partially offsetby lower daily carrental revenue by $5.0 millionand gains from the saleof car rental unitsby
$1.4 million, associated with the car rental businesssold in the fourth quarter of 2024;
Non-interest income amountedto $491.7million forthe ninemonths ended September30, 2025,a decrease of$2.5 million when
compared to the same period of the previousyear. The main factors that contributed to the variance were:
●
lower other operating income by $13.6 million mainly due to lower daily car rental revenue by $14.9 million and gains from
the saleof carrental unitsby $7.7millionduring thenine monthsended September30, 2025associated withthe car
rental business sold inthe fourth quarter of2024, partially offset byincome of $5.3 millionrelated to a retroactivecharge
billed toa tenantfor energysupplied inprior yearsand $3.3million ofincome relatedto thereimbursement ofexcess
interest paidto theU.S. InternalRevenue Service(the "IRS")for latepayment penaltiesrelated totax withholdingson
intercompany distributions for the years 2014-2024 asdisclosed in 2024; and
●
lower mortgagebanking activitiesby$1.4 millionmainly duetoa decreasein mortgageservicing feesdue toportfolio
runoff;
partially offset by:
●
higher otherservice feesby $6.5million duetohigher creditand debitcard feeincome by$7.3 million,due tohigher
volume oftransactions, higherinvestment managementfees by$3.8 million,due tohigher assetsunder management,
and higher merchant membership fees by $1.2million, partially offset by lower insurance fees by$6.5 million;
●
higherservicechargesondepositaccountsby$3.7millionmainlyduetohighernon-balancecompensationfeesin
commercial deposits; and
●
an impairment on equity securities of $2.3million recognized during 2024.
Operating Expenses
Operatingexpensesamountedto$495.3millionforthequarterendedSeptember30,2025,anincreaseof$28.0millionwhen
compared with the same quarter of 2024. Thevariance in operating expenses was mainly drivenby:
●
higher personnel costs by $31.1 million mainly due to higher incentives, including $13.0 million related to the profit-sharingplan
which is tied to the Corporation's financial performance and $9.0 million in other performance-based incentives, higher salaries
expense by $3.4 million, due toa higher headcount and annual merit increases, and a$3.4 million increase in other personnel
costs mainlyrelated tothe valuationof securitiesheld fordeferred compensationplans,higher payrolltaxes, andemployee
termination benefits resulting from ongoingefforts to improve ourprofitability, including thedecision to exit theU.S. residential
mortgage origination business and close four underperformingbranches in the New York metro area at Popular U.S.;
●
anon-cashgoodwillimpairmentof$13.0millioninourU.S.basedequipmentleasingsubsidiaryduetolowerprojected
earnings for the forecasted period; and
●
higher processingand transactionalservices expensesby $4.1million mainlydue tohigher creditand debitcard processing
expense as a result of higher transactional volumes;
partially offset by:
●
lower other operating expensesby $12.9 million mainlydriven by a reversalin the thirdquarter of 2025 ofa $4.8 million claim
reserve establishedduring thesecond quarterof 2025and loweraccruals forreserves foroperational lossesby $4.1million
mainly related to the mortgage servicing business; and
●
lower equipment expenses by $4.0 million, mainly due tothe elimination of the car rental fleetdepreciation expense, related to
the car rental business sold in 2024.
Operating expensesamounted to$1.5 billionfor thenine monthsended September30, 2025,an increaseof $39.1million when
compared with the sameperiod of 2024. Excluding the$6.4 million interest accrued relatedto prior period taxwithholdings and the
$14.3millionimpactoftheFDICSpecialAssessmentrecordedin2024,totaloperatingexpensesfortheninemonthsended
September 30,2025, increasedby $59.7million, whencompared withthe sameperiod of2024. Themain driversof theincrease
were:
●
higher personnel costs by $60.4 million mainly due to higher incentives, including $26.0 million related to the profit-sharingplan
whichistiedtotheCorporation'sfinancialperformanceand$18.3millioninotherperformance-basedincentives,higher
salaries expensesby $9.1million dueto ahigher headcountand annual meritincreases and a$5.7 millionincrease inother
personnel costs mainly related to the valuation ofsecurities held for deferred compensation plans andhigher payroll taxes;
●
a non-cash goodwill impairment of $13.0 millionin our U.S. based equipment leasing subsidiaryas discussed above;
●
higher other taxes expense by $7.9million mainly due to higher regulatory feesand an increase in municipal license tax in
Puerto Rico;
●
higher technologyand softwareexpenses,including softwarecost amortization,by $7.8million relatedto investmentsin the
Corporation's cloud infrastructure, among other continuing investmentsin technology and transformation initiatives;
●
higherprocessingandtransactionalservicesexpensesby$6.4millionmainlyduetohighercreditanddebitcardand
merchant processing expenses as a result of highertransactional volumes; and
●
higher businesspromotion expensesby $5.3million mainlydue tohigher customerrewards programsexpense inour credit
card business;
partially offset by:
●
lower otheroperating expensesby $17.3million mainlydriven by,lower accrualsfor reservesfor operationallosses by$9.7
million and lower pension plan cost by $3.3million due to changes in actuarial assumptions;
●
lower professional fees by $12.6 million mainly dueto lower costs associated with regulatory complianceactivities; and
●
lower equipment expenses by $12.2 million, mainly due to the depreciation of car rental units during 2024 associated with units
sold as part of the daily car rental transaction duringthe fourth quarter of 2024.
Table 5 - Operating Expenses
Quarters ended September 30,
Nine months ended September 30,
(In thousands)
2025
2024
Variance
2025
2024
Variance
Personnel costs:
Salaries
$
139,350
$
135,983
$
3,367
$
403,052
$
394,001
$
9,051
Commissions, incentives, and other bonuses
35,309
26,350
8,959
113,846
95,587
18,259
Profit sharing
13,000
-
13,000
26,000
-
26,000
Pension, postretirement, and medical insurance
18,749
16,387
2,362
51,773
50,391
1,382
Other personnel costs, including payroll taxes
26,580
23,136
3,444
80,385
74,678
5,707
Total personnelcosts
232,988
201,856
31,132
675,056
614,657
60,399
Net occupancy expenses
26,083
28,031
(1,948)
82,441
83,764
(1,323)
Equipment expenses
5,313
9,349
(4,036)
16,404
28,578
(12,174)
Other taxes
17,967
17,757
55,324
47,465
7,859
Professional fees
25,808
26,708
(900)
80,741
93,370
(12,629)
Technology andsoftware expenses
87,117
88,452
(1,335)
255,481
247,666
7,815
Processing and transactional services:
Credit and debit cards
14,728
11,761
2,967
40,698
37,644
3,054
Other processing and transactional services
23,680
22,559
1,121
73,352
69,966
3,386
Total processingand transactional services
38,408
34,320
4,088
114,050
107,610
6,440
Communications
4,836
5,229
(393)
14,750
14,143
Business promotion:
Rewards and customer loyalty programs
17,656
16,533
1,123
52,068
46,995
5,073
Other business promotion
9,648
9,104
25,296
25,080
Total businesspromotion
27,304
25,637
1,667
77,364
72,075
5,289
Deposit insurance
10,873
10,433
30,315
44,901
(14,586)
Other real estate owned (OREO) income
(3,408)
(2,674)
(734)
(10,862)
(13,745)
2,883
Other operating expenses:
Operational losses
1,634
5,769
(4,135)
13,957
21,153
(7,196)
All other
6,980
15,750
(8,770)
39,673
56,140
(16,467)
Total other operatingexpenses
8,614
21,519
(12,905)
53,630
77,293
(23,663)
Amortization of intangibles
(320)
1,366
2,233
(867)
Goodwill impairment
13,000
-
13,000
13,000
-
13,000
Total operatingexpenses
$
495,287
$
467,321
$
27,966
$
1,459,060
$
1,420,010
$
39,050
Income Taxes
For the quarter and nine monthsended September 30, 2025, the Corporation recorded an incometax expense of $36.0 million and
$128.9million,respectively,with aneffectivetaxrate("ETR") of14.5%and17.7%, respectively,compared to$42.5 millionand
$138.5 million, respectively, with an ETR of 21.5% and 24.1% for the respectiveperiods of year 2024.
The lower income tax expense of $6.5 million forthe third quarter, when compared tothe same quarter of 2024, is mainly attributed
to thehigher netexempt income.For thenine-months periodended September30, 2025,the lowerincome taxexpense of$9.6
millionreflectstheimpactofthetaxwithholdingexpenseof$22.9millionrecordedduringthefirstquarterofyear2024,in
connection with intercompany distributions for years2014-2024, as disclosed in Note 34 to the ConsolidatedFinancial Statements in
the2024Form10-K,andthebenefit of$5.2 millionrelatedtothe FDICSpecialAssessment expense;excluding thiscombined
impact, the adjusted increase of $8.1 million wasdue to higher income before tax, net of higherexempt income.
At September30, 2025, theCorporation had anet deferred taxasset amounting to$835.5 million, netof avaluation allowance of
$465.0 million. The netdeferred tax asset relatedto the U.S. operationswas $238.5 million, netof a valuation allowanceof $386.9
million.
Upon anamendment tothe PuertoRico internalrevenue codeduring thethird quarterof2025, theCorporation electedtotreat
certain single membersLLCs as disregarded entities,as allowed bythis amendment, onits 2024 corporate incometax return filed
subsequent to the quarterend in October.It is expected thatthis election will lowerour income tax expenseby approximately $7.7
million during the fourth quarter of 2025.
Refer toNote 26to theConsolidated FinancialStatements fora reconciliationof thestatutory incometax rateto theeffective tax
rate and additional information on the incometax expense and deferred tax asset balances.
REPORTABLE SEGMENT RESULTS
The Corporation'sreportable segmentsfor managerialreporting purposesconsist ofBanco Popularde PuertoRico andPopular
U.S. A Corporate grouphas also been defined to support the reportablesegments.
ForadescriptionoftheCorporation'sreportablesegments,includingadditionalfinancialinformationandtheunderlying
management accounting process, refer to Note 28to the Consolidated Financial Statements.
The corporate group reporteda net income of$4.6 million for thequarter ended September 30,2025, compared with anet income
of $0.5 million for the same quarter ofthe previous year, mainly due tohigher income from equity method investments.For the nine
months ended September 30, 2025, the corporate group reported net income of $4.3 million, compared to a net loss of $21.1 million
forthesameperiodofthepreviousyear.Thelossin2024wasmainlyattributabletotheexpenserelatedtothe$22.9million
adjustment recorded inthe first quarterof 2024 torecognize the taximpact associated withprior period intercompanydistributions
andtheadditional$6.5millionexpenseforthetaximpactofintercompanydistributionspaidduringthefirstquarterof2024.A
positive adjustmentof $3.9million wasrecorded duringthe secondquarter of2025, resultingfrom reimbursementsreceived from
the IRSrelated tointerest paidfor theseintercompany distributions.There wereno intercompanydistributions betweenthe U.S.
subsidiaries andthebank holdingcompanies during2025. Higherincome fromequity methodinvestments andlower expenses,
driven byprofessional services, alsocontributed to thepositive variance forthe nine months,partially offset bylower income from
money market investments due to a decrease in rates.
Highlights on the earnings results for the reportablesegments are discussed below:
Banco Popular de Puerto Rico
The Banco Popularde Puerto Ricoreportable segment's netincome amounted to$189.0 million forthe quarter endedSeptember
30, 2025, compared with a net income of $125.8 million for the samequarter of the previous year. The factors that contributed to the
variance in the financial results included the following:
●
net interestincome of $550.7million was higherby $62.7million primarily drivenby lower interestexpense on deposits,
mainly from there-pricing of P.R.public funds which aremarket-linked,higher income from U.S.Treasury securities with
higher yields and higher income from the loan portfolio driven by loan growth, partially offset bylower income from money
market investmentsdue todecline inshort-term marketrates. Thenet interestmargin forthe quarterended September
30, 2025 was3.71%, an increaseof 30basis points, comparedto 3.41% forthe same quarterin the previousyear. The
increase inthe marginwas mainlyimpacted bylower depositcosts andhigher yieldfrom investmentsecurities, aswell
loan growth,partially offset by lower rates on money market investments;
●
the provision forloan losses of$72.7 million waslower by $4.5million mainly driven bylower reserves for theconsumer
loanportfoliosduetoimprovements increditquality,partiallyoffsetbyahigherprovisioninthecommercialportfolio,
mainly attributable to reserves for two unrelated exposures with an aggregate balance of 188.4 million, which entered into
NPL status during the third quarter of 2025;
●
higher non-interest income by $1.6 million mainly due to higher service fees by $2.7 million mainly due to higher debit and
credit fees due to highervolume of transactions and higher assetsunder management, the income of $5.3 millionrelated
to a retroactive charge billed to a tenant for energy supplied in prior years, partially offset by lower daily car rental revenue
by $5.0 millionand gains fromthe sale ofcar rental unitsby $1.4 million,associated with thecar rental businesssold in
the fourth quarter of 2024;
●
higher operating expenses by $9.2million mostly due to higherpersonnel costs by $21.0 million, mainlydue to the profit-
sharingexpenseaccrualandotherperformance-relatedincentives,andhigherprocessingandtransactionalfees
expenses by$4.0 million,offset bylower operationallosses by$6.2 million,mainly relatedto mortgageservicing, lower
occupancyexpenseby$4.3milliondrivenbyafavorablereassessmentoftherealpropertytaxestimateforcertain
properties inPuerto Rico,and lowerequipment expensesby $3.7million mainlyrelated tothe dailycar rentalbusiness
sold in the fourth quarter of 2024; and
●
lower income tax expense by $4.0 million duemainly to higher exempt income.
Forthenine monthsended September30,2025, theBPPR segmentrecorded netincomeof$539.5 millioncomparedtoanet
income of $404.3 million for the same period of the previous year. The factors that contributed to the variance in the financial results
included the following:
●
net interestincome of$1.6billion washigher by$161.5 millionprimarily drivenby lowerinterest expenseon deposits,
mainly from the re-pricing of P.R.public funds, higher income from investment securities,mainly U.S. Treasury securities,
and higherincome fromloans dueto portfoliogrowth, partiallyoffset bylower incomefrom moneymarket investments
reflecting the decline in short-term market rates. Thenet interest margin for the nine monthsending September 30, 2025,
was 3.66%, 28 basispoints higher when comparedwith 3.38% for the sameperiod of the previousyear. Theincrease in
themarginwasmainlyimpactedbylowercostofdeposits,mainlyP.R.publicdeposits,higheryieldfrominvestment
securities andloan growth,partially offsetby lowerrates frommoney marketinvestments andlower balancesas funds
are deployed for loan growth and purchasing U.S.Treasury securities;
●
theprovision forloanlossesof$168.6millionwaslowerby$18.2millionmainlyattributable toimprovement incredit
quality for thecredit cards portfolios,lower balance ofpersonal loans andlower reserves inthe leases portfolio,partially
offsetbyanincreaseintheprovisionexpenseforthemortgageportfolio,drivenbylowernetrecoveries,changesin
macroeconomic forecasts, and changes in credit quality;
●
lower non-interestincome by$13.3 millionmainly dueto lowerdaily carrental revenueby $14.9million andgains from
thesaleofcarrentalunitsby$7.7millionassociatedwiththecarrentalbusiness soldinthefourthquarterof2024,
partially offset by the above mentioned retroactiveincome of $5.3 million, higher service fees by$4.1 million due to credit
and debit card income,from higher volume oftransactions and, higher investment management feesand higher charges
on deposit accounts by $3.3 million mainly dueto non-balance compensation in commercial deposits;
●
higher operating expenses by $28.3 millionmostly due to higher personnel costsby $38.3 million, including profit sharing
expenseby$21.2millionandhighersalariesexpenseby$15.5millionduetoannualmeritincreasesandahigher
headcount, higher regulatoryexamination fees, municipallicense tax andhigher technology expenses,partially offset by
lower equipmentexpenses relatedtothe dailyrental businesssoldandlower FDICexpense duetothe FDICSpecial
Assessment recorded in 2024; and
●
higher income tax expense by $4.0 million mainlydue to higher income before tax, net of highertax exempt income.
Popular U.S.
For the quarter ended September 30, 2025, the reportablesegment of Popular U.S. reported a net incomeof $17.8 million,
compared with a net income of $28.8 millionfor the same quarter of the previous year. The factors that contributedto the variance in
the financial results included the following:
●
net interest income of $105.2 million, higherby $12.1 million due to higher income fromloans by $16.5 million, mainly
from growth in the commercial and construction portfolios,and lower cost of deposits by $9.3 million dueto the repricing
of high-cost deposits, partially offset by lower incomefrom money market investments due to lower averagebalances and
lower yields reflecting the decrease in short-termrates. The net interest margin for the quarterended September 30, 2025
was 2.94% compared to 2.73% for the same quarterin the previous year driven by lowercost of deposits;
●
the provision for loan losses was $1.9 million,reflecting a higher provision for the commercialportfolio, offset by lower
provision for the consumer portfolio, compared to a releaseof $6.1 million in 2024, which was mainlyrelated to
improvements in commercial credit quality;
●
higher operating expenses by $19.0 million, reflectingthe goodwill impairment charge related to our U.S.based
equipment leasing subsidiary of $13.0 million recordedduring the third quarter of 2025, higher personnelcosts driven by
incentives and profit sharing; and higher occupancyexpense; and
●
lower income tax expense by $3.7 million dueto lower income before tax.
For the nine months ended September 30, 2025,the reportable segment of Popular U.S. recordednet income of $55.2 million,
compared with net income of $53.6 million forthe same period of the previous year. The factors that contributed tothe variance in
the financial results included the following:
●
higher net interest income by $36.5 milliondue to higher income from the loans portfoliomainly related to growth in the
commercial and construction portfolios and lower interestexpense from deposits, due to the repricing ofhigh-cost
deposits mentioned above, partially offset by lower incomefrom money market investments due to decline inshort-term
market rates. The net interest margin for the ninemonths ended September 30, 2025 was 2.87%compared to 2.64% for
the same period of the previous year driven bylower cost of deposits;
●
the provision for loan losses of $20.8 million washigher by $18.2 million driven by higherqualitative reserves and
changes in credit quality for the commercial real estateportfolio, partially offset by lower reserves forthe consumer loans;
●
higher operating expenses by $17.4 million reflectingthe goodwill impairment charge related to our U.S.based equipment
leasing subsidiary of $13.0 million recorded in 2025;and higher personnel costs and consulting fees;offset by lower FDIC
expense due to FDIC Special Assessment recordedin 2024 and lower professional fees; and
●
higher income tax expense by $0.8 million dueto higher income before tax.
STATEMENTOF FINANCIAL CONDITION ANALYSIS
Assets
TheCorporation's totalassets were$75.1billion atSeptember 30,2025, comparedto$73.0 billionatDecember 31,2024. The
variance intotal assetsof $2.1billion wasdriven byan increasein AFSsecurities andloan growthacross mostportfolios atboth
BPPR and PB segments,partially offset by a decrease in money market investments, HTM securities,and other assets. Refer to the
Consolidated Statements of Financial Condition includedin this report and to the following narrativefor additional information.
Money market investments and investment securities
Money market investments decreased by$1.6 billion as ofSeptember 30, 2025, whencompared to December 31,2024, driven by
funds used for loan growth and to purchase U.S. Treasury securities.AFS securities increased $2.4 billion, mainly due to investment
inU.S.TreasurysecuritiesandthedecreaseintheunrealizedlossesofAFSsecuritiesof$338.6million,partiallyoffsetby
maturitiesandprincipalpaydowns.HTMsecuritiesdecreasedby$324.9milliondrivenbymaturitiesandprincipalpaydowns,
partially offsetby theamortization of$138.7 millionof thediscount relatedto U.S.Treasury securitiespreviously reclassified from
the AFS toHTM.Refer to Note5 and toNote 6 tothe Consolidated Financial Statementsfor additional informationwith respect to
the Corporation's debt securities available-for-sale and held-to-maturity.
Loans
Refer to Table6 for abreakdown of the Corporation'sloan portfolio. Also, referto Note 7 inthe Consolidated Financial Statements
for detailed information about the Corporation's loan portfoliocomposition and loan purchases and sales.
Loans held-in-portfolioincreased by$1.6billion to$38.7 billionat September30, 2025,compared toDecember 31,2024. Inthe
BPPRsegmentloanbalances increasedby$982.8millionacross mostportfolios, mostnotably inthecommercial, construction,
mortgage, autoloans and leasingportfolios. Commercial loansincludedthe originationof a$265.0 million commercialloan during
the secondquarter of2025, whichrepresents theCorporation's portionof a$425.0 millionissuance inwhich BPPRacted asthe
lead bankand administrativeagent.Origination activitysupported thegrowth inthe mortgage,auto loans,and leasingportfolios,
despite the uncertainty about theeconomic outlook which may continueto have an impacton customer behavior.The PB segment
also increasedby $596.7 million, mainly driven by commercial andconstruction lending.
At September30, 2025,the Corporation'sloans tonon-depository financialinstitutions (''NDFIs'')amounted to$443.6 million,an
increase of $48.8 million,compared to December 31,2024. The increase wasmainly related to aloan to an insurancecompany in
PuertoRicoforgeneralcorporatepurposes,offsetbyadecreaseinotherexposures,mainlytoconsumerintermediaries.At
September 30, 2025, theCorporation's exposure to NDFIswas composed of approximately $272.4million to insurance companies
forgeneral corporatepurposesunrelated tolending activities,$85.6 millionrelatedtomortgage creditintermediaries, and$85.6
million to consumerand commercial creditintermediaries. All loansto NDFIs arecurrent in theircontractual payments andcarry a
'pass' rating.
Table 6 - Loans Ending Balances
(In thousands)
September 30, 2025
December 31, 2024
Variance
Loans held-in-portfolio:
Commercial
Commercial multi-family
$
2,489,589
$
2,399,620
$
89,969
Commercial real estate non-owner occupied
5,462,580
5,363,235
99,345
Commercial real estate owner occupied
3,090,724
3,157,746
(67,022)
Commercial and industrial
8,245,639
7,741,562
504,077
Total Commercial
19,288,532
18,662,163
626,369
Construction
1,604,612
1,263,792
340,820
Mortgage
8,558,408
8,114,183
444,225
Leasing
1,998,651
1,925,405
73,246
Consumer
Credit cards
1,225,567
1,218,079
7,488
Home equity lines of credit
78,890
73,571
5,319
Personal
1,900,325
1,855,244
45,081
Auto
3,850,953
3,823,437
27,516
Other
181,220
171,778
9,442
Total Consumer
7,236,955
7,142,109
94,846
Total loans held-in-portfolio
$
38,687,158
$
37,107,652
$
1,579,506
Loans held-for-sale:
Mortgage
$
7,783
$
5,423
$
2,360
Total loans held-for-sale
$
7,783
$
5,423
$
2,360
Total loans
$
38,694,941
$
37,113,075
$
1,581,866
Other assets
Otherassetsamountedto$1.7billionatSeptember30,2025,adecreaseof$52.9millionwhencomparedto$1.8billionat
December 31,2024. Thevariance wasmainly drivenby adecrease innet deferredtax assetsof $89.0million dueto apositive
varianceinthevaluationofAFSsecurities,areductioninunsettledtradereceivablesof$13.8millionrelatedtoproceedsfrom
maturities of U.S. Treasury securities,and lower principal, interest and escrow servicing advances of $12.6 million, partially offset by
an increase in capitalized softwarecosts of $45.8 millionmainly related to technology modernization,higher prepaid taxes of$11.5
million, and higher trades receivable from brokers and counterparties of$9.1 million. Refer to Note 10 tothe Consolidated Financial
Statements for a breakdownof the principal categoriesthat comprise the captionof "Other Assets" inthe Consolidated Statements
of Financial Condition at September 30, 2025 and December31, 2024.
Liabilities
The Corporation's total liabilities were $69.0 billion at September 30, 2025, an increase of $1.5 billion, when compared to December
31, 2024. The following is a discussion ofthe significant changes in liabilities.
Deposits and Borrowings
Total Deposits
The Corporation'sdeposits totaled$66.5 billionas ofSeptember 30,2025, comparedto$64.9 billionasofDecember 31,2024.
Endingdepositbalancesincreasedby$1.6billion,whileaveragequarterlybalancesgrewby$2.9billion.Theaveragedeposit
balance, excludingP.R.public deposits,increased by$1.5billion. Non-interest-bearingdeposits remainedflat whencompared to
December 31, 2024, demonstrating the impact of the Corporation'scontinued focus on deposit retention strategies.At the end of the
third quarter of 2025, Puerto Rico public deposits were $20.1 billion, an increase of $612.7 million when compared toDecember 31,
2024. P.Rpublic depositsrepresent 30%of totaldeposits andare expectedto continuetorange inthe shorttermbetween $18
billionand$20billion.However,therateatwhichpublicdeposit balancesmaychangeisuncertain anddifficulttopredict.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
isdistributed,theuseoflocalfundstocoverfederalassistanceprogramsduringtheU.S.governmentshutdown,thefinancial
condition, liquidity and cash management practices of the Puerto Rico Government and its instrumentalities,and the implementation
offiscalanddebtadjustmentplansapprovedpursuanttoPROMESAorotheractionsmandatedbytheFiscalOversightand
Management Board for Puerto Rico (the "Oversight Board"). Additionally, the TrumpAdministration is conducting a review of federal
funding, which could entaila reduction in federalfunding available for PuertoRico. P.Rpublic deposits costs aregenerally indexed
to changes in short-term market rates with aone-quarter lag, in accordance with contractualterms. As a result, these deposits' costs
have typically lagged variable asset repricing. These deposits requirethat the bank pledge high credit quality securities as collateral;
therefore, liquidity risks arising from deposit outflowsare lower.
At BPPR,excluding PuertoRico publicdeposits, endingdeposits increasedby $178million, whileat PBsegment endingdeposit
balances increased by $616 million, net of intercompanyactivity.
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 keyfactor in the Corporation's ability to expand its netinterest margin.
Refer to Table 7 for a breakdown of the Corporation's deposits at September 30, 2025 andDecember 31, 2024.
Table 7 - Deposits Ending Balances
(In thousands)
September 30, 2025
December 31, 2024
Variance
Deposits excluding P.R.public deposits:
Demand deposits
$
14,874,026
$
15,139,555
$
(265,529)
Savings, NOW and money market deposits (non-brokered)
21,739,958
21,177,506
562,452
Savings, NOW and money market deposits (brokered)
883,471
736,225
147,246
Time deposits (non-brokered)
8,014,080
7,476,924
537,156
Time deposits (brokered CDs)
925,761
890,704
35,057
Sub-total deposits excluding P.R.public deposits
46,437,296
45,420,914
1,016,382
P.R. publicdeposits:
Demand deposits
[1]
12,487,246
11,730,273
756,973
Savings, NOW and money market deposits (non-brokered)
6,907,309
7,087,904
(180,595)
Time deposits (non-brokered)
681,553
645,254
36,299
Sub-total P.R.public deposits
20,076,108
19,463,431
612,677
Total deposits
$
66,513,404
$
64,884,345
$
1,629,059
[1] Includes interest bearing demand deposits.
Borrowings
The Corporation's borrowings totaled $1.2billion at September 30, 2025an increase of $70.7 millionwhen compared to December
31,2024.TheincreasewasmainlyrelatedtohigherFHLBadvancesby$67.6million,mainlyatPB.RefertoNote13tothe
Consolidated FinancialStatements fordetailed informationon theCorporation's borrowings.Also, referto theLiquidity sectionin
this MD&A for additional information on the Corporation'sfunding sources.
Stockholders' Equity
Stockholders' equitytotaled $6.1billionat September30, 2025,an increaseof$502.6 millionwhen comparedtoDecember 31,
2024. The increase was principally due to net incomefor the nine months ended September 30, 2025 of $599.3million, coupled with
the after-tax effect of the decrease in net unrealized losses in the portfolio of AFS securitiesof $283.4 million and the amortization of
unrealized losses from securities previously reclassified toHTM of $
.0 million, partially offset byan increase in treasury stock of
$346.0 million, mainly due to common stock repurchases and the common and preferred dividends declared of $147.7million. Refer
to the Consolidated Statements of Financial Condition, Comprehensive Income and Changes in Stockholders' Equity for information
on the composition of stockholders' equity.
DuringthequarterandninemonthsendedSeptember30,2025,Popularrepurchased1,000,862sharesofcommonstockfor
$119.4million atan averageprice of$119.33per shareand 3,407,821shares ofcommon stockfor $353.7million atan average
price of$103.78 per sharerespectively, aspart of the2024 and 2025common stock repurchaseprograms previously announced.
As of September 30, 2025, $429.0 million remainedavailable for stock repurchase under the activerepurchase authorization.
Duringthethirdquarterof2025,theCorporationdeclaredacommonstockdividendof$0.75pershare,anincreasefromthe
common stock dividend of $0.70 per share.
The composition of the Corporation's financing to total assetsat September 30, 2025 and December 31,2024 is included in Table 8.
Table 8 - Financing to TotalAssets
September 30,
December 31,
% (decrease) increase
% of total assets
(Dollars in millions)
2025
2024
from 2024 to 2025
2025
2024
Non-interest-bearing core deposits
$
14,874
$
15,139
(1.8)
%
19.8
%
20.7
%
Interest-bearing core deposits
46,020
44,622
3.1
61.3
61.1
Interest-bearing other deposits
5,619
5,123
9.7
7.5
7.0
Repurchase agreements
3.6
0.1
0.1
Other short-term borrowings
77.8
0.5
0.3
Notes payable
(11.8)
1.1
1.2
Other liabilities
1,190
1,372
(13.3)
1.6
1.9
Stockholders' equity
6,116
5,613
9.0
8.1
7.7
CAPITAL
Regulatory Capital
The Corporation, BPPR and PBare subject to regulatory capitalrequirements established by the Federal Reserve Board.The risk-
basedcapitalstandardsapplicabletotheCorporation,BPPRandPB("BaselIIIcapitalrules")arebasedonthefinalcapital
framework for strengthening international capital standards, knownas Basel III, of the Basel Committee on Banking Supervision.As
of September 30,2025, the Corporation's,BPPR's and PB'scapital ratios continueto exceed theminimum requirements for being
"well-capitalized".
The risk-basedcapital ratiospresented inTable9,which includecommon equitytier 1,Tier1 capital,total capitaland leverage
capital as of September 30, 2025 and December31, 2024.
Table 9 - Capital AdequacyData
(Dollars in thousands)
September 30, 2025
December 31, 2024
Common equity tier 1 capital:
Common stockholders' equity - U.S. GAAP basis
$
6,093,529
$
5,590,923
CECL transitional amount
[1]
-
42,375
AOCI related adjustments due to opt-out election
1,191,224
1,589,875
Goodwill, net of associated deferred tax liability (DTL)
(641,809)
(657,181)
Intangible assets, net of associated DTLs
(5,460)
(6,826)
Deferred tax assets and other deductions
(223,648)
(296,374)
Common equity tier 1 capital
$
6,413,836
$
6,262,792
Additional tier 1 capital:
Preferred stock
22,143
22,143
Additional tier 1 capital
$
22,143
$
22,143
Tier 1 capital
$
6,435,979
$
6,284,935
Tier 2 capital:
Trust preferred securities subject to phase in astier 2
192,674
192,674
Other inclusions (deductions), net
511,230
490,594
Tier 2 capital
$
703,904
$
683,268
Total risk-based capital
$
7,139,883
$
6,968,203
Minimum total capital requirement to be well capitalized
$
4,062,200
$
3,907,346
Excess total capital over minimum well capitalized
$
3,077,683
$
3,060,857
Total risk-weightedassets
$
40,621,998
$
39,073,462
Total assets for leverageratio
$
75,897,616
$
72,593,464
Risk-based capital ratios:
Common equity tier 1 capital
15.79
%
16.03
%
Tier 1 capital
15.84
16.08
Total capital
17.58
17.83
Tier 1 leverage
8.48
8.66
[1] The CECL transitional amount includes the impactof Popular's adoption of the new CECL accounting standardon January 1, 2020.
The BaselIII capital rulesprovide that adepository institution isdeemed to bewell capitalized ifit maintains aleverage ratio ofat
least 5%,a common equityTier 1ratio ofat least 6.5%,a Tier1 capital ratioof at least8% and atotal risk-basedratio of atleast
10%.TheCorporation,BPPRandPBleverageratio,commonequityTier1ratioandTier1capitalratio,respectivelyasof
September 30, 2025, continue to exceed the minimumrequirements for being "well-capitalized" underthe Basel III capital rules.
PursuanttotheadoptionoftheCECLaccountingstandardonJanuary1,2020,theCorporationelectedtousethefive-year
transitionperiod optionasprovided inthefinalinterimregulatory capitalrules effectiveMarch 31,2020.Thefive-yeartransition
period provision delayed for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period
to phase outthe aggregate amount ofthe capital benefit providedduring the initial two-yeardelay. Duringthe first quarterof 2025,
the Corporation phased-in all the cumulative CECLdeferral over the three-year transition period.
The decrease in the common equity TierI capital ratio, TierI capital ratio, total capital ratio,and leverage ratio as of September 30,
2025 as compared to December 31, 2024 was mainly due to the repurchase of common stock, common stock dividends,and higher
riskweightedassetsdrivenbytheincreaseinloansheld-in-portfolioandhighernon-performingloansheld-in-portfolio,partially
offset by the nine-month period's earnings.
Reconciliation to Tangible Common Equity and Tangible Assets
Table10 providesa reconciliation oftotal stockholders' equityto tangible commonequity and totalassets to tangibleassets asof
September 30, 2025, and December 31, 2024.
Table 10 - Reconciliationof Tangible Common Equityand Tangible Assets
(In thousands, except share or per share information)
September 30, 2025
December 31, 2024
Total stockholders'equity
$
6,115,672
$
5,613,066
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,460)
(6,826)
Total tangible commonequity
$
5,298,115
$
4,781,143
Total assets
$
75,065,798
$
73,045,383
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,460)
(6,826)
Total tangible assets
$
74,270,384
$
72,235,603
Tangible commonequity to tangible assets
7.13
%
6.62
%
Common shares outstanding at end of period
66,959,866
70,141,291
Tangible book valueper common share
$
79.12
$
68.16
Quarterly average
Total stockholders'equity [1]
$
6,943,541
$
6,620,766
Average unrealized (gains) losses on AFS securitiestransferred to HTM
296,934
505,791
Adjusted total stockholder's equity
7,240,475
7,126,557
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(802,812)
(804,411)
Less: Other intangibles
(5,714)
(7,288)
Total tangible commonequity
$
6,409,806
$
6,292,715
Return on average tangible common equity
13.06
%
11.22
%
[1] Average balances exclude unrealized gains orlosses 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
Notes 5 and 6 tothe Consolidated Financial Statements for further information onthe debt securities available-for-sale and held-to-
maturity portfolios.Debt securitiesclassified asavailable-for-sale andheld-to-maturity amountedto$20.7 billionand$7.4 billion,
respectively,as of September30, 2025. Otherassets subject tomarket risk includemortgage servicing rights("MSRs") with afair
value of $99.5 million as of September 30, 2025.
Interest Rate Risk ("IRR")
The Corporation's net interest income is subjectto various categories of interest rate risk,including repricing, basis, yield curve and
option risks.In managinginterest raterisk, management mayalter themix offloating andfixed rateassets andliabilities, change
pricingschedules,adjustmaturitiesthroughsalesandpurchasesofinvestmentsecurities,andenterintoderivativecontracts,
among other alternatives.
Management utilizes various tools to assess IRR, including Net InterestIncome ("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 toIRR.
Thethreemethodologies complementeachotherandareused jointlyintheevaluation oftheCorporation's IRR.NII simulation
modeling, by legal entity and on a consolidated basis, is prepared for a five-year period, which in conjunctionwith the EVE analysis,
provides management a better view of long-termIRR.
The Corporation processes NIIsimulations under interest ratescenarios in which theyield curve is assumedto rise anddecline by
the same magnitude(parallel shifts). Therate scenarios considered inthese market risksimulations include instantaneous parallel
changes of-100,-200, +100,and +200basis pointsduring thesucceeding twelve-monthperiod. Assumptionsincluded inthese
analysesincludethatthebalancesheetremainsflat,relativelevelsofmarketinterestratesacrossallyieldcurvepointsand
indexes, interest rate spreads, loanprepayments and deposit elasticity.Thus, they should not berelied upon as indicative ofactual
resultsanddonotcontemplateactionsthatmanagementmayengageinasaresponsetofuturechangesininterestrates.
Additionally,the Corporationis alsosubject tothe riskinherent inthe useof differentrate indexesfor therepricing ofassets and
liabilities, as well therisk of pricing lagsdue to contractual ortiming differences between themarket and management responseto
changesintherateenvironment.Theseforward-lookingcomputationsaremanagement'sbestestimatebasedonknownand
available information and actual results may differ.
ThefollowingtablepresentstheresultsofthesimulationsatSeptember30,2025andDecember31,2024,assumingastatic
balance sheet and parallel changes over flat spot ratesover a one-year time horizon:
Table 11- Net Interest Income Sensitivity (One YearProjection)
September 30, 2025
December 31, 2024
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
(10,760)
(0.41)
44,747
1.78
+100 basis points
(6,125)
(0.23)
22,917
0.91
-100 basis points
2,953
0.11
9,157
0.36
-200 basis points
17,319
0.66
0.02
AsofSeptember30,2025,NIIsimulationsshowedashiftintheCorporation'ssensitivitypositiontobecomeliabilitysensitive.
Compared to the results as of December 31, 2024, the variation in sensitivity and the resulting profile was mainly due to an increase
in assetduration drivenby theextension ofU.S. TreasuryNotes anda declinein U.S.Treasury Billsand excessreserves atthe
FRB aspart ofa decisionto reducesensitivity todeclining ratescenarios. Inrising ratescenarios, Popular'snet interestincome
would decreasedue tothe lowervolume ofshort-term assetsas aresult ofthe investmentportfolio extension strategycombined
with higher deposits costs due to BPPR's large proportion of market-linked PuertoRico public sector deposits, this would be partially
offset byvariable rateloan repricingand intermediatematurity assetscoming duewithin oneyear.Changes inthe balancesheet
during the quarterthat contributed tothe variance insensitivity include thepurchase of $2.5billion in U.S.Treasury Noteswith an
average maturity of approximately 1.4 years, in additionto higher fixed rate loan balances.
TheCorporation'sloanandinvestmentportfoliosaresubjecttoprepaymentrisk.Prepaymentriskalsocouldhaveasignificant
impact on the duration of mortgage-backed securitiesand collateralized mortgage obligations.
Trading
The Corporationengages intrading activitiesin theordinary courseof businessat itssubsidiaries, BPPRand PopularSecurities.
Popular Securities'trading activitiesconsist primarilyof market-makingactivities tomeet expectedcustomers' needsrelated toits
retail brokerage business, and purchases and sales ofU.S. Government and government sponsored securities with the objective of
realizing gainsfrom expectedshort-term pricemovements. BPPR'strading activities consistprimarily ofholding U.S.Government
sponsoredmortgage-backedsecuritiesandeconomichedgesoftherelatedmarketriskwith"TBA"(to-be-announced)market
transactions. Inaddition, BPPRuses forwardcontracts orTBAs thathave characteristicssimilar tothat ofthe forecastedsecurity
and its conversion timeline to hedge its securitizationpipeline.
AtSeptember30,2025,theCorporationheldtradingsecuritieswithafairvalueof$33.1million,representing0.04%ofthe
Corporation'stotalassets,comparedwith$32.8millionand0.05%,respectively,atDecember31,2024.Thetradingportfolio
consistsprincipally ofinvestment gradesecuritiessuchas mortgage-backedsecuritiesof$24.3million withaweighted average
yield of 5.23% and U.S. Treasuriesof $8.0 million with a weighted averageyield of 2.57% at September 30, 2025and $29.1 million
with a yield of 5.54% and $2.8 million with ayield of 3.28%, respectively, as of December 31, 2024.
The Corporation's trading activities arelimited by internal policies. For eachof the two subsidiaries, themarket risk assumed under
tradingactivitiesismeasuredbythe5-daynetvalue-at-risk("VAR"),withaconfidencelevelof99%.TheVARmeasuresthe
maximum estimated loss that may occur over a5-day holding period, given a 99% probability.
TheCorporation'stradingportfolio hada5-dayVARof$0.4millionforthelastweekofSeptember 2025.VARmodelsinclude
assumptions andestimatesthus actualresults coulddiffer fromthe outputsfrom thesemodels andassumptions. Back-testingis
performedonmodelresultstocompareactualresultsagainstmaximumestimatedlosses,inordertoevaluatemodeland
assumptions accuracy.
In the opinion of management, the size and compositionof the trading portfolio does not representa significant source of market risk
for the Corporation.
Liquidity
Liquidity Risk Management Process
The Corporationhas adoptedpolicies andlimits tomonitor theCorporation's liquidityposition andthat ofits bankingsubsidiaries.
Refer tothe EnterpriseRisk Managementsection ofManagement's Discussionand Analysisincluded inthe 2024Form 10-Kfor
information on the frameworkin place to monitor,review, and approvepolicies to measure, limit andmanage funding activities and
strategiesimpactingliquidityrisk.Additionally,contingencyfundingplansareusedtomodelvariousstresseventsofdifferent
magnitudes thataffect differenttime horizons,to assistmanagement inevaluating thesize ofthe liquiditybuffers neededif those
events occur. However,such models may not predictaccurately how the market and customersmight react to everyevent and are
dependent onmany assumptions.The objectiveof effectiveliquidity managementis toensure thatthe Corporationhas sufficient
liquiditytomeetallitsfinancialobligations,financeexpectedfuturegrowth,fundplannedcapitaldistributionsandmaintaina
reasonable safety margin for cash needs under bothnormal and stressed market conditions.
Sources of Liquidity
Deposits, includingcustomer deposits,brokered depositsand publicfunds deposits,continue tobe themost significantsource of
funds for the Corporation, representing89% of funding of theCorporation's total assets at September 30,2025 and December 31,
2024. The ratioof total endingloans to depositswas 58% and57% at September30, 2025 andDecember 31, 2024, respectively.
In addition to traditional deposits, the Corporationmaintains borrowing arrangements, which amounted to $1.2 billionin outstanding
balancesatSeptember30,2025(December31,2024-$1.2billion).AdetaileddescriptionoftheCorporation'sborrowings,
including their terms,is included inNote 13to theConsolidated Financial Statements.Also, theConsolidated Statements ofCash
Flows in the accompanying Consolidated FinancialStatements provide information on the Corporation's cashinflows and outflows.
ThefollowingsectionsprovidefurtherinformationontheCorporation'smajorfundingactivitiesandneeds,aswellastherisks
involved in these activities.
Banking Subsidiaries
Primarysources offundingfor theCorporation'sbanking subsidiaries(BPPR andPBor,collectively,"the bankingsubsidiaries")
includeretail,commercialandpublicsectordeposits,brokereddeposits,unpledgedinvestmentsecurities,mortgageloan
securitization and, to a lesser extent, loan sales. Inaddition, the Corporation maintains borrowing facilities with the FHLB and at the
discount windowof theFederal ReserveBank ofNew York(the "FRB")and hasa considerableamount ofcollateral pledgedthat
can be used to raise funds under these facilities.
During the second quarter of 2025, BPPR was able to increase its availableliquidity by approximately $2.9 billion after the merger of
Popular Auto, LLC withand into BPPR, effectiveon May 1,2025, that allowed BPPRto pledge auto loansand leases as collateral
under the federal reserve'sdiscount window. AtSeptember 30, 2025, theCorporation's available liquidity increased to$25.8 billion
from $21.6billion onDecember 31, 2024.During the thirdquarter of2025, theCorporation had nomaterial incremental useof its
available liquidity sources. The liquidity sources ofthe Corporation at September 30, 2025 arepresented in Table 12 below:
Table 12 - Liquidity Sources
September 30, 2025
December 31, 2024
(In thousands)
BPPR
Popular U.S.
Total
BPPR
Popular U.S.
Total
Unpledged securities and unused funding
sources:
Money market (excess funds at the
Federal Reserve Bank)
$
3,719,430
$
1,024,811
$
4,744,241
$
4,882,358
$
1,488,857
$
6,371,215
Unpledged securities
4,658,303
1,010,386
5,668,689
3,806,066
522,869
4,328,935
FHLB borrowing capacity
3,134,633
1,023,693
4,158,326
2,777,090
1,058,921
3,836,011
Discount window of the Federal Reserve
Bank borrowing capacity
7,833,348
3,375,793
11,209,141
4,839,388
2,178,646
7,018,034
Total available liquidity
$
19,345,714
$
6,434,683
$
25,780,397
$
16,304,902
$
5,249,293
$
21,554,195
RefertoNote13totheConsolidatedFinancialStatementsforadditionalinformationoftheCorporation'sborrowingfacilities
available through its banking subsidiaries.
The principaluses offunds forthe bankingsubsidiaries includeloan originations,investment portfoliopurchases, loanpurchases
and repurchases, repayment of outstanding obligations (including deposits), advances on certain serviced portfolios and operational
expenses. Also, thebanking subsidiaries assume liquidityrisk related to collateralposting requirements for certainactivities mainly
inconnectionwithcontractualcommitments,recourseprovisions,servicingadvances,derivativesandcreditcardlicensing
agreements.
The bankingsubsidiaries maintainsufficient fundingcapacity toaddress largeincreases infunding requirementssuch asdeposit
outflows.TheCorporation hasestablishedliquidityguidelinesthatrequirethebankingsubsidiariestohavesufficientliquidityto
cover all short-term borrowings and a portion of deposits.
Deposits area keysource offunding. Referto Table7 fora breakdownof depositsby majortypes. Coredeposits aregenerated
from a large base of consumer, corporate and public sector customers. Core depositsinclude certificatesof deposit under $250,000,
allinterest-bearingtransactionaldepositaccounts,non-interest-bearingdeposits,andsavingsdeposits.Coredepositsexclude
brokereddepositsandcertificatesofdepositover$250,000.Coredeposits,excludingP.R.publicfunds,whicharefully
collateralized, havehistorically providedthe Corporationwith asizable sourceof relativelystable andlow-cost funds.P.R.public
funds, whilelinked to marketinterest rates,provide a stablesource of fundingwith anattractive earning spread.As ofSeptember
30, 2025, total Puerto Rico public sector deposits were$20.1 billion, compared to $19.5 billion at December31, 2024.
Core deposits represent 92%of total deposits at$60.9 billion, as ofSeptember 30, 2025, compared with92% at $59.9 billionas of
December 31, 2024. Coredeposits financed 85% ofthe Corporation's earning assetsat September 30, 2025,compared to 86% at
December 31, 2024.
The distribution by maturityof certificates of depositwith denominations of $250,000and over at September30, 2025 ispresented
in the table that follows:
Table 13 - Distribution byMaturity of Certificates of Deposit of $250,000 and Over
(In thousands)
3 months or less
$
2,374,866
Over 3 to 12 months
1,102,624
Over 1 year to 3 years
278,729
Over 3 years
147,806
Total
$
3,904,025
The Corporation had$1.8 billion inbrokered deposits at September30, 2025, whichfinanced approximately2% of itstotal assets
(December 31, 2024 - $1.6 billion and 2%,respectively).
As ofSeptember 30, 2025,the banking subsidiarieshad sufficient currentand projected liquiditysources to meettheir anticipated
cash flowobligations, aswell asspecial needsand off-balancesheet commitments,in theordinary courseof businessand have
sufficientliquidityresources toaddressastressevent.Although thebankingsubsidiarieshavehistoricallybeenabletoreplace
maturingdeposits andadvances, noassurance canbe giventhattheywould beable toreplace thosefundsin thefuture ifthe
Corporation'sfinancial conditionorgeneral marketconditionswere todeteriorate. TheCorporation's financialflexibility wouldbe
severely constrained ifthe banking subsidiariesare unable tomaintain access tofunding or ifadequate funding isnot available to
accommodate futurefinancing needsatacceptable interestrates. Thebanking subsidiariesalsoare requiredtodeposit cashor
qualifyingsecuritiestomeetmarginrequirementsonrepurchaseagreements,depositagreementsandothercollateralized
borrowing facilities. Tothe extent thatthe value ofsecurities previously pledged ascollateral declines because ofmarket changes,
the Corporation will be required to deposit additional cash or securities to meet its margin or collateral requirements and would need
torelymoreheavilyonalternativefundingsources.Inthesescenarios,theCorporation'sfinancialflexibilityandabilitytogrow
revenues may not increase proportionately to cover costs andprofitability would be adversely affected.
The Corporation considers balances inexcess of $250,000 to have ahigher potential liquidity risk.Table14 reflects the aggregate
balance indeposit accountsin excessof $250,000,including collateralizedpublic fundsand depositsoutside ofthe U.S.and its
territories.Collateralized public funds, as presented in Table 14, represent public deposit balances from governmentalentities in the
U.S.anditsterritories,includingPuertoRicoandtheUnitedStatesVirginIslands,collateralizedbasedonsuchjurisdictions'
applicable collateral requirements.
Table 14 - Deposits
30-Sep-25
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$
23,610,775
%
$
8,523,789
%
$
32,134,564
%
Transactional deposits balances over
$250,000
8,203,843
%
2,096,865
%
10,300,708
%
Time deposits balances over $250,000
2,013,907
%
925,802
%
2,939,709
%
Uninsured foreign deposits
399,980
%
-
-
%
399,980
%
Collateralized public funds
20,422,015
%
316,428
%
20,738,443
%
Intercompany deposits
227,477
-
%
298,714
%
-
-
%
Total deposits
$
54,877,997
%
$
12,161,598
%
$
66,513,404
%
[1] Includes the first $250,000 in balances of transactionaland time deposit accounts with balances in excessof $250,000.
31-Dec-24
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$
23,588,937
%
$
7,961,334
%
$
31,550,271
%
Transactional deposits balances over
$250,000
8,046,175
%
1,944,674
%
9,990,849
%
Time deposits balances over $250,000
1,991,934
%
813,424
%
2,805,358
%
Uninsured foreign deposits
450,068
%
-
-
%
450,068
%
Collateralized public funds
19,771,083
%
316,716
%
20,087,799
%
Intercompany deposits
205,839
-
%
667,839
%
-
-
%
Total deposits
$
54,054,036
%
$
11,703,987
%
$
64,884,345
%
[1] Includes the first $250,000 in balances of transactionaland time deposit accounts with balances in excessof $250,000.
Bank Holding Companies
The principalsources offunding forthe BHCs,which arePopular,Inc.(holding companyonly) andPNA, includecash onhand,
investmentsecurities,dividendsreceived frombankingandnon-banking subsidiaries,asset sales,creditfacilitiesavailable from
affiliate banking subsidiaries and proceeds from potential securities offerings.Dividends from banking and non-banking subsidiaries
are subjectto variousregulatory limitsand authorizationrequirements imposedby bankingregulators, includingthe FEDand the
NYDFS, that may limit the ability of those subsidiariesto 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.
TheoutstandingbalanceofnotespayableattheBHCsamountedto$595millionatSeptember30,2025and$594millionat
December 31, 2024.
The contractual maturities of the BHCs notes payableat September 30, 2025 are presented in Table 15.
Table 15- Distribution of BHC's Notes Payable by ContractualMaturity
Year
(In thousands)
2028
$
396,249
Later years
198,393
Total
$
594,642
As ofSeptember 30,2025, theBHCs hadcash andmoney marketsinvestments totaling$484 millionand borrowingpotential of
$165 million from its secured facility with BPPR.The BHCs' liquidity position continues to be adequate with sufficientcash on hand,
investments andother sources ofliquidity that areexpected to besufficient tomeet allinterest payments anddividend obligations
for theforeseeable future.Additionally,the Corporation'slatest quarterlypaid dividendwas $0.70per shareor approximately$47
million per quarter.
The BHCs have inthe past borrowed in thecorporate debt market primarily to financetheir non-banking subsidiaries and refinance
debtobligations.Thesesourcesoffundingaremorecostlygiventhattwooutofthreeprincipalcreditratingagenciesratethe
Corporation's debtsecurities below"investment grade".The Corporationhas ashelf registrationstatement filedand effectivewith
theSecuritiesandExchangeCommission,whichpermitstheCorporationtoissueanunspecifiedamountofdebtorequity
securities.
Non-Banking Subsidiaries
Theprincipalsourcesoffundingforthenon-bankingsubsidiariesincludeinternallygeneratedcashflowsfromoperations,loan
sales, repurchase agreements, capitalinjections and borrowed fundsfrom their directparent companies or theholding companies.
The principal uses of funds for the non-bankingsubsidiaries include repayment of maturing debt,operational expenses and payment
of dividends to the BHCs.
Dividends
Duringthethirdquarterof2025,theCorporationdeclaredaquarterlycommonstockdividendof$0.75percommonshare,an
increase from $0.70 per common share in the previous quarter. During the nine monthsended September 30, 2025, the Corporation
declaredcashdividendsof$2.15percommonshareoutstanding($146.6millionintheaggregate).Thedividendsforthe
Corporation's Series A preferred stock amounted to $1.1million.
During the nine monthsended September 30, 2025, theBHCs received dividends anddistributions amounting to $350million from
BPPR, $23from PopularInternational Bank,Inc. ("PIBI")and $22million fromits othernon-banking subsidiaries.Dividends from
BPPR constitute Popular,Inc.'s primary sourceof liquidity.In addition, duringthe nine monthsended September 30, 2025,PIBI, a
whollyownedsubsidiaryofPopular,Inc.,received$20.0millionincashdividendsand$5.3millioninstockdividendsfromits
investment in BHD.
Inaddition toregulatorylimits previouslydiscussed, theabilityof abanksubsidiary toup-stream dividendstoitsBHC couldbe
impacted byits financialperformance andcapital, includingtangible andregulatory capital,thus potentiallylimiting theamount of
cash upstreamed tothe BHCsfrom thebanking subsidiaries.This could,in turn,affect BHC'sability todeclare dividendson its
outstandingcommonandpreferredstock,repurchase itssecuritiesormeetitsdebtobligations. AtSeptember30,2025,BPPR
could declare a dividend of up to approximately $237 millionwithout prior approval of the Federal Reserve Board due toits retained
income, declared dividend activity and transfers to statutory reservesover the measurement period. In addition, pursuant to the FRB
requirements, PB may not declare or pay a dividendwithout the prior approval of the Federal ReserveBoard and the NYSDFS.
Other Funding Sources and Capital
In addition to cash reserves held at the FRB that totaled $4.7 billion at September 30, 2025, the debt securities portfolio provides an
additionalsourceofliquidity,whichmayberealizedthrougheithersecuritiessales,collateralizedborrowingsorrepurchase
agreements.TheCorporation'sdebtsecuritiesportfolioconsistsprimarilyofliquidU.S.governmentdebtsecuritiesandU.S.
government sponsored agencymortgage-backed securities that canbe used toraise funds inthe repo markets.The availability of
repurchaseagreementswouldbesubjecttohavingsufficientunpledgedcollateralavailableatthetimethetransactionsare
consummated,inadditiontooverallliquidityandriskappetite ofthevariouscounterparties.RefertoTable12fordetailsofthe
Corporation'sunpledgeddebtsecuritiesandavailablecreditfacilitieswiththeFHLBandthediscountwindowoftheFederal
Reserve Bank.A substantialportion ofthese debtsecurities couldbe usedto raisefinancing inthe U.S.money marketsor from
secured lending sources,subject to changes in their fair market value andcustomary adjustments (haircuts).
Additionalliquiditymaybeprovidedthroughloanmaturities,prepaymentsandsales.Theloanportfolioprovidesasourceof
collateral tosecure theavailable creditfacilities withthe FHLBand thediscount windowof theFederal ReserveBank. Theloan
portfoliocanalsobeusedtoobtainfundinginthecapitalmarkets.Mortgageloansandsometypesofconsumerloans,have
secondary markets which the Corporation could use.
Off-Balance Sheet Arrangements and Other Commitments
In the ordinary courseof business, the Corporationengages in financial transactions thatare not recorded onthe 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 offinancial services,the Corporationroutinely entersinto commitmentswith off-balancesheet riskto meetthe financial
needsofitscustomers.RefertoNote18totheConsolidatedFinancialStatementsforinformationontheCorporation's
commitments to extent credit and other non-credit commitments.
Other typesof off-balancesheet arrangementsthat theCorporation entersin theordinary courseof businessinclude derivatives,
operatingleasesandprovisionofguarantees,indemnifications,andrepresentationandwarranties.RefertoNote17tothe
Consolidated FinancialStatements fora detaileddiscussion relatedto theCorporation's guarantees,indemnifications obligations,
and representation and warranties arrangements.
The Corporation monitors its cash requirements, includingits contractual obligations and debt commitments.
Financial Information of Guarantor and Issuers of RegisteredGuaranteed Securities
The principal sources of funding for Popular, Inc. Holding Company ("PIHC") and Popular North America, Inc. ("PNA") have included
dividends receivedfrom theirbanking andnon-banking subsidiaries subjectto statutoryprovisions thatlimit dividendspaid bythe
banking subsidiary without regulatory approval,asset sales and proceeds from the issuanceof debt and equity.
The Corporation ("PIHC") isthe parent holding companyof 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 statutorytrusts established
by the Corporation using proceeds from trust preferredsecurities ("capital securities") and common securitiesof the trusts.
PIHC guaranteesthe juniorsubordinated debenturesissued byPNA. IfPIHC failsto makeinterest paymentson thedebentures
held by the trust,the trust will notdistribute payments on thecapital securities. The guaranteeranks subordinate and juniorin right
ofpayment toallother liabilitiesofPIHC andequally withallother PIHC-issuedguarantees, allowingdirectlegalaction against
PIHC without involving other entities.
FundingforPIHCandPNAincludesdividendsfromsubsidiaries,assetsales,andproceedsfromdebtandequityissuance.
Statutory provisions limit the dividends an insureddepository institution can pay to its holdingcompany without regulatory approval.
The summarized financial informationbelow shows the combinedfinancial position ofthe obligor group asof September 30,2025,
and December 31, 2024, and theresults of their operations for thenine-month periods ended September 30, 2025, and September
30, 2024. Excluded are investments and equityin earnings from subsidiaries and affiliates outside theobligor group.
Intercompany balancesand transactionswithin theobligor grouphave beeneliminated. Materialamounts duefrom, dueto, and
transactions with subsidiaries and affiliates are shown separately. Related party transactionsare also presented separately.
Table 16 - Summarized Statementof Condition
(In thousands)
September 30, 2025
December 31, 2024
Assets
Cash and money market investments
$
484,141
$
634,809
Investment securities
37,618
35,150
Accounts receivables from non-obligor subsidiaries
14,541
14,602
Other loans (net of allowance for credit losses of $163 (2024- $281))
24,486
25,381
Investment in equity method investees
5,265
5,279
Other assets
95,829
65,483
Total assets
$
661,880
$
780,704
Liabilities and Stockholders' equity
Accounts payable to non-obligor subsidiaries
$
5,839
$
12,163
Notes payable
594,642
593,571
Other liabilities
131,489
126,718
Stockholders' (deficit) equity
(70,090)
48,252
Total liabilities andstockholders' equity
$
661,880
$
780,704
Table 17 - Summarized Statementof Operations
For the period ended
(In thousands)
September 30, 2025
September 30, 2024
Income:
Dividends from non-obligor subsidiaries
$
371,500
$
473,000
Interest income from non-obligor subsidiaries and affiliates
3,125
8,489
(Losses) earnings from investments in equity method investees
(14)
Other operating income
8,027
3,116
Total income
$
382,638
$
484,634
Expenses:
Services provided by non-obligor subsidiaries and affiliates(net of
reimbursement by subsidiaries for services provided by parentof
$188,825 (2024 - $172,449))
$
13,390
$
9,654
Other expenses
19,492
30,000
Income tax expense
[1]
7,075
21,934
Total expenses
$
39,957
$
61,588
Net income
$
342,681
$
423,046
[1] The net incomefor the ninemonths ended September30, 2024, included$22.9 million ofexpenses, of which$16.5 million wasreflected
in income tax expenseand $6.4 millionwas reflected in otheroperating expenses, relatedto an out-of-period adjustmentassociated with the
Corporation's U.S.subsidiary's non-paymentof taxeson certainintercompany distributionsto theBank HoldingCompany (BHC)in Puerto
Rico, a foreign corporation for U.S. tax purposes.
Inaddition tothedividend incomereflectedintheStatementofOperations tableabove, duringtheninemonthsended
September 30, 2025, theobligor group recorded a$23.0 million of dividenddistributions from non-obligor subsidiary which
was recorded as a reduction to the investment(2024 - $67.4 million).
Risk to Liquidity
TheCorporation'sliquiditymaycomeunderpressureifitexperiencessignificantunexpectedcashoutflowsduetodeposit
withdrawals, which could arisefrom various factors likeeconomic conditions, loss ofdepositor confidence, competition, exogenous
events, regulatory requirements or changes, adowngrade in credit rating, or other eventscausing counterparties to avoid exposure.
Investors should refer to Liquidity Risks section of "Part I, Item 1A"of 2024 Form 10-K for an additional discussion of liquidityrisks 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 bybusiness segment reporting arepresented in Note32 to theConsolidated Financial Statements. Readers shouldrefer
toEconomicandMarketRisksectionandBusinessRiskSectionof"PartI,Item1A"ofthe2024Form10-Kforanadditional
discussiononhowtheCorporation isimpactedbyglobalandlocaleconomicandmarketconditions, includingweaknessinthe
economy,particularly in PuertoRico, where asignificant portion ofour business isconcentrated. This sectionalso addresses how
our credit risk and creditlosses can increase to the extentour loans are concentrated on borrowers engaged inthe same or similar
activities or in borrowers who as a groupmay be uniquely or disproportionately affected by certaineconomic or market conditions.
Commonwealth of Puerto Rico
Asignificant portionofour financialactivities andcreditexposure isconcentrated intheCommonwealth ofPuerto Rico("Puerto
Rico") which has faced severe economic and fiscalchallenges in the past and may face additionalchallenges in the future.
Economic Performance
The latest estimates from thePuerto Rico Planning Board (the"Planning Board") indicate that realGNP grew by 2.1%during fiscal
year2024(July 2023-June2024) andby1.1% infiscalyear2025 (July2024-June 2025).For fiscalyear 2026(July2025-June
2026),thePlanningBoardforecastsmoremodestGNPgrowthof0.5%.Meanwhile,thePuertoRicoEconomicActivityIndex
showed a 0.9% year-over-year decline and a 0.2% month-over-month decline in June 2025. While this index is not a direct measure
of real GNP, it serves as an indicator of ongoing economic activity.
In2021and2022,inflationrosesharplyintheU.S.andPuertoRicoduetopost-pandemicdemandandsupplychainissues.
Inflationbegantodecreasebymid-2022astheFederalReserveraisedinterestrates,largelystabilizingbySeptember2024,
leadingtoaseriesofratereductionsbytheFederalReserveforthefirsttimeinfouryears.AsofSeptember2025,theU.S.
Consumer Price Indexshowed a 3.0%year-over-year increase, whichis significantly lowerthan peak2022 inflation levelsbut still
above the Federal Reserve's 2% target. In Puerto Rico,the Consumer Price Index increased by 1.9%over the same period.
Moreover, since October 1,2025, a congressional impasse over fiscal year2026 appropriations has triggered a partial shutdownof
numerous U.S. federal agencies andservices. The shutdown has disrupted,and may continue todisrupt, federal payments toU.S.
governmentemployees, beneficiariesoffederalprogramsand transferstothe PuertoRicogovernment. Whilethesedisruptions
could adversely affectour customers andthe broader PuertoRico economy,the overall impactremains uncertain andwill depend
largely on the shutdown's duration and scope.
Fiscal Challenges of Puerto Rico and its Municipalities
AsPuerto Rico'seconomy contractedin the2000s, publicdebtincreased rapidlydue toborrowing tocoverdeficits topaydebt
service, pension benefits,and other expenditures.By 2016, thegovernment had over$120 billion incombined debt andunfunded
pension liabilities, lost access to capital markets, andfaced a fiscal crisis.
Inresponse,theU.S.CongressenactedPROMESAinJune2016.PROMESAestablishedanOversightBoardwithsignificant
control over Puerto Rico'sfiscal and economic affairs,including those of its publiccorporations, instrumentalities and municipalities
(collectively, "PR Government Entities").
In August 2025, President Donald J. Trump dismissed six of the seven members ofthe Oversight Board, reportedly due to inefficient
leadership and excessive spending. Three of the dismissed members subsequently filed suit in federalcourt challenging the legality
of their dismissal. On October 3, 2025, the court issued a preliminary injunction that effectively reinstated such members and barred
the seating of replacement memberswhile the case proceeds. Suchruling remains subject to potentialappeal. It is stilltoo early to
determine what impact these developments mayhave on Puerto Rico's fiscal and economic affairs.
Under PROMESA, the OversightBoard will remainin place until marketaccess is restored andbalanced budgets are achieved for
atleastfourconsecutiveyears.PROMESAalsoestablishedtwomechanismsfortherestructuringoftheobligationsofPR
Government Entities:(a) TitleIII, anin-court processakin tothat ofthe U.S.Bankruptcy Codeand whichpermits adjustmentof a
broad rangeofobligations, and(b) TitleVI,a largelyout-of-court processthrough whicha supermajorityof creditorscanaccept
modifications to debt and bind holdouts.
Since2017,PuertoRicoandseveralofitsinstrumentalitieshaveavailedthemselvesofthesemechanisms.ThePuertoRico
government exited Title III in March 2022, and several instrumentalities, such as the Government Development Bank and the Puerto
Rico Highways and TransportationAuthority have also completeddebt restructurings under TitlesIII or VIof PROMESA. However,
the Puerto Rico Electric Power Authority is still undergoingits debt restructuring.
PuertoRico's economicdifficultieshave alsoimpacted itsmunicipalities. Historically,the centralgovernment providedsignificant
municipal subsidies. However, these have decreased pursuant to fiscal measures required by the Oversight Board. This decline has
been partlyoffset byfederal disasterand COVID-relieffunding receivedby municipalitiesin recentyears. Thelatest PuertoRico
fiscal plan proposes arestructured grant system to enhancemunicipal services and encourage accountability throughperformance
metrics.
MunicipalitiesaresubjecttoPROMESA,andtheOversightBoardhasrequiredcertainmunicipalitiestosubmitfiscalplansand
annual budgetsfor reviewand approval.Municipalities arealso requiredto seekOversight Boardapproval toissue, guaranteeor
modifytheirdebtsandtoenterintosignificantcontracts.Todatenomunicipalityhasavaileditselfofthedebtrestructuring
mechanisms available to them under PROMESA.
Exposure of the Corporation
The credit quality of BPPR'sloan portfolio is closely tied to theeconomic conditions in Puerto Rico. Deterioration in the PuertoRico
economycouldpotentiallyincreasedelinquenciesandcharge-offs,therebyimpactingtheCorporation'sfinancialhealth.The
Corporation has direct exposure to P.R. Government Entities, which are mainly concentrated in obligations from various Puerto Rico
municipalities. Additionally,the Corporationholds loansand securitiesinsured byP.R.Government Entities,such asthe Housing
FinanceAuthority,whoseabilitytohonorguaranteesdependsonitsfinancialcondition.BPPR'scommercial,mortgage,and
consumer loan portfolios are also exposed to risks from private borrowers who are service providers or have other relationships with
the PuertoRico governmentand government employeeswho couldbe negativelyaffected byPuerto Rico'sfiscal challenges.For
furtherdiscussionoftheCorporation'sdirectandindirectexposuretothePuertoRicogovernment anditsinstrumentalities and
municipalities, please refer to Note 18 - Commitmentsand Contingencies to the ConsolidatedFinancial Statements.
TheCorporationalsomaintainssignificantdepositsfromP.R.GovernmentEntities,withfuturebalancessubjecttovarious
uncertainties.FurtherinformationonPuertoRicoGovernmentdepositsisincludedinNote12-DepositstotheConsolidated
Financial Statements.
United States Virgin Islands
The Corporation has operations in the UnitedStates Virgin Islands ("USVI") and has credit exposureto USVI government entities.
Non-Performing Assets
Duringthethirdquarterof2025,theCorporation'screditqualitymetricswereaffectedbytwosignificantunrelatedcommercial
exposures,resulting ina$188.4millionincrease inNPLs.ThedeterminationofclassifyingtheseloansasNPLswasdrivenby
factors specific to the individual borrowers andare not believed to be indicative of a broaderdecline in portfolio credit quality.
The firstloan classifiedas NPLis a$158.3 millioncommercial andindustrial facilityissued toa telecommunicationscompany in
Puerto Ricoexperiencing reducedrevenue dueto operationalchallenges followinga businessacquisition andclient attrition.The
secondloanclassifiedasNPLisa$30.1millioncommercialrealestatefacility,followinga$13.5millioncharge-offduringthe
quarter, and is secured by a hotel property in Florida.
Excluding these cases, credit quality metrics were stable. The Corporationcontinues to closely monitor the economic landscape and
borrower performance,as economicuncertainty remainsa keyconsideration. TheCorporation's experiencemanaging creditrisk
under differentmacroeconomic and operatingenvironments and, morerecently,the stepstaken aroundcredit tighteningsupports
management's viewthat exposure toriskier borrowers isadequately managed. Nonetheless, carefullymonitoring theperformance
of our loan portfolio and its response to theenvironment will continue to be a priority.
Total NPAsof $545.2 million as of September 30, 2025, increased by $137.1million when compared with December 31, 2024. Total
NPLs of$502.2 million increasedby $151.4million from December31, 2024.BPPR's NPLsincreased by $161.3million, primarily
due to the classification of the two commercial exposures with book values of $158.3 million and $30.1 million as NPLs, partly offset
by lower mortgage NPLs by $18.5 million.Popular U.S. NPLs decreased by $9.9 million, mostlydriven by decreases of $6.9 million
and $2.1 million in commercial and mortgage NPLs,respectively.
On September30, 2025,the ratioof NPLsto totalloans held-in-portfolio was1.30%, compared to0.95% onDecember 31,2024.
Other real estate owned loans ("OREOs") totaled $43.0million, a decrease of $14.3 million from December31, 2024. On September
30,2025,NPLs securedbyreal estateamounted to$211million inthe PuertoRicooperations and$47millionin PopularU.S,
compared with $200 million and $56 million, respectively, on December31, 2024.
The Corporation's commercial loanportfolio secured by realestate ("CRE") amounted to $11.0billion on September 30, 2025,with
$3.1 billion secured by owner-occupied properties(December 31, 2024 - $10.9 billion and $3.2billion, respectively).
CRE NPLs amounted to$78.4 million on September30, 2025, compared with $53.7million on December 31,2024. The CRE NPL
ratiosfortheBPPRandPopularU.S.segmentswere1.31%and0.25%,respectively,onSeptember30,2025,comparedwith
0.64% and 0.37%, respectively, on December 31, 2024.
The non-owner occupied CRE portfolio was $5.5 billion at September30, 2025, split between $3.3 billion in BPPR and $2.2 billion in
Popular U.S. This portfolio is diversified across sectors: retail (33%), hotels (19%),and office space (13%) which together represent
two-thirds oftotal non-owneroccupied CREexposure. Specifically,office spaceleasing accountsfor just1.8% ($713.4million) of
the totalloan portfolio,mainly comprisingmid-riseproperties withan averageloan sizeof $2.5million, andis welldiversified by
tenant type.
Within CRE, thecommercial multi-family portfolio is$2.5 billion (approximately 6%of total loans),concentrated in NewYorkMetro
($1.5 billion), South Florida ($672.2 million) and Puerto Rico ($199.6million) regions. In the New York Metro, there is no exposure to
rent-controlled buildings and rent-stabilizedunits make up less than 40% of total units,with most originated after 2019.
InadditiontotheNPLsincludedinTable18,onSeptember30,2025,therewere$724millionofperformingloans,mostly
commercialloans,whichinmanagement'sopinion,arecurrentlysubjecttopotentialfutureclassificationasnon-performing
(December 31, 2024 - $596 million).
The following table presents the Corporation's NPAs as of September 30, 2025 and December31, 2024:
Table 18 - Non-PerformingAssets
September 30, 2025
December 31, 2024
(Dollars in thousands)
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
Commercial
Commercial multi-family
$
$
8,467
$
8,641
0.3
%
$
$
8,700
$
8,779
0.4
%
Commercial real estate non-owner
occupied
37,043
7,083
44,126
0.8
6,429
8,015
14,444
0.3
Commercial real estate owner
occupied
25,619
-
25,619
0.8
25,258
5,191
30,449
1.0
Commercial and industrial
173,245
1,246
174,491
2.1
19,335
1,748
21,083
0.3
Total Commercial
236,081
16,796
252,877
1.3
51,101
23,654
74,755
0.4
Mortgage
139,958
27,809
167,767
2.0
158,442
29,890
188,332
2.3
Leasing
7,747
-
7,747
0.4
9,588
-
9,588
0.5
Consumer
Home equity lines of credit
-
3,257
3,257
4.1
-
3,393
3,393
4.6
Personal
18,375
19,316
1.0
20,269
1,741
22,010
1.2
Auto
49,432
-
49,432
1.3
51,792
-
51,792
1.4
Other
1,776
1,806
1.0
0.5
Total Consumer
69,583
4,228
73,811
1.0
72,960
5,145
78,105
1.1
Total non-performingloans held-in-
portfolio
453,369
48,833
502,202
1.3
%
292,091
58,689
350,780
0.9
%
Other real estate owned ("OREO")
42,446
42,950
57,197
57,268
Total non-performingassets
[1]
$
495,815
$
49,337
$
545,152
$
349,288
$
58,760
$
408,048
Accruing loans past due 90 days or
more
[2]
$
205,168
$
$
205,356
$
242,250
$
$
242,440
Ratios:
Non-performing assets to total assets
0.84
%
0.30
%
0.73
%
0.61
%
0.37
%
0.56
%
Non-performing loans held-in-portfolio
to loans held-in-portfolio
1.67
0.42
1.30
1.12
0.54
0.95
Allowance for credit losses to loans
held-in-portfolio
2.56
0.79
2.03
2.56
0.69
2.01
Allowance for credit losses to non-
performing loans, excluding held-for-
sale
153.38
186.07
156.55
229.61
128.40
212.68
[1] There were no non-performing loans held-for-saleas of September 30, 2025 and December 31, 2024.
[2] It is the Corporation's policy to report delinquentresidential mortgage loans insured by FHA or guaranteedby the VA as accruingloans past due 90
days ormoreasopposedtonon-performingsincethe principalrepaymentis insured.Thesebalancesinclude$49 millionof residentialmortgage
loans insuredby FHAor guaranteedby theVAthat areno longeraccruing interestas ofSeptember 30,2025 (December31, 2024- $65million).
Furthermore, the Corporationhas $29 millionin reverse mortgageloans which areguaranteed by FHA,but which arecurrently not accruinginterest.
Due to the guaranteednature of the loans,it is the Corporation'spolicy to exclude thesebalances from non-performingassets (December 31,2024 -
$31 million).
For the quarterended September 30,2025, total inflowsof NPLs held-in-portfolio,excluding consumer loans, increasedby $187.0
million, when compared to the inflows for the same period in 2024. Inflows of NPLs held-in-portfolio at the BPPR segment increased
by $205.2million, comparedto thesame periodin 2024,mainly drivenby thetwo commercialexposures thatwere classifiedas
NPLs duringthe quarter.Inflows ofNPLs held-in-portfolioat thePopular U.S.segment decreasedby $18.2million fromthe same
period in 2024, driven by lower mortgage NPLinflows by $17.4 million.
Tables 19 to 25 present the Corporation's inflows to NPLs for the quarters and nine monthsended September 30, 2025 and 2024.
Table 19 - Activity in Non-Performing Loans Held-in-Portfolio (Excluding ConsumerLoans)
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 Loans Held-in-Portfolio (Excluding ConsumerLoans)
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
219,960
$
49,317
$
269,277
$
254,476
$
22,354
$
276,830
Plus:
New non-performing loans
36,585
22,968
59,553
111,128
84,248
195,376
Advances on existing non-performing loans
-
-
Less:
Non-performing loans transferred to OREO
(4,016)
-
(4,016)
(12,665)
(24)
(12,689)
Non-performing loans charged-off
(4,031)
(82)
(4,113)
(17,930)
(1,050)
(18,980)
Loans returned to accrual status / loan collections
(36,759)
(5,325)
(42,084)
(123,270)
(38,970)
(162,240)
Ending balance NPLs
$
211,739
$
66,910
$
278,649
$
211,739
$
66,910
$
278,649
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 22 - Activity in Non-Performing Commercial Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
56,170
$
37,763
$
93,933
$
72,992
$
11,163
$
84,155
Plus:
New non-performing loans
4,460
2,582
7,042
12,834
39,561
52,395
Advances on existing non-performing loans
-
-
Less:
Non-performing loans transferred to OREO
-
-
-
(280)
-
(280)
Non-performing loans charged-off
(4,085)
(82)
(4,167)
(17,784)
(1,032)
(18,816)
Loans returned to accrual status / loan collections
(2,726)
(1,790)
(4,516)
(13,943)
(11,521)
(25,464)
Ending balance NPLs
$
53,819
$
38,476
$
92,295
$
53,819
$
38,476
$
92,295
Table 23 - Activity in Non-Performing Construction Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
-
$
-
$
-
$
6,378
$
-
$
6,378
Less:
Loans returned to accrual status / loan collections
-
-
-
(6,378)
-
(6,378)
Ending balance NPLs
$
-
$
-
$
-
$
-
$
-
$
-
Table 24 - Activity in Non-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2025
For the nine months endedSeptember 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 25 - Activity in Non-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
163,790
$
11,554
$
175,344
$
175,106
$
11,191
$
186,297
Plus:
New non-performing loans
32,125
20,386
52,511
98,294
44,687
142,981
Advances on existing non-performing loans
-
-
Less:
Non-performing loans transferred to OREO
(4,016)
-
(4,016)
(12,385)
(24)
(12,409)
Non-performing loans charged-off
-
(146)
(18)
(164)
Loans returned to accrual status / loan collections
(34,033)
(3,535)
(37,568)
(102,949)
(27,449)
(130,398)
Ending balance NPLs
$
157,920
$
28,434
$
186,354
$
157,920
$
28,434
$
186,354
Loan Delinquencies
Another key measure used to evaluate andmonitor the Corporation's asset quality is loandelinquencies. Loans delinquent 30 days
or more, as a percentage of their related portfoliocategory on September 30, 2025 and December 31,2024, are presented below.
Table 26 - Loan Delinquencies
(Dollars in thousands)
September 30, 2025
December 31, 2024
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
$
12,637
$
2,489,589
0.51
%
$
15,826
$
2,399,620
0.66
%
Commercial real estate
non-owner occupied
61,924
5,462,580
1.13
24,925
5,363,235
0.46
Commercial real estate
owner occupied
43,163
3,090,724
1.40
42,311
3,157,746
1.34
Commercial and industrial
200,876
8,245,639
2.44
49,942
7,741,562
0.65
Total Commercial
318,600
19,288,532
1.65
133,004
18,662,163
0.71
Construction
4,589
1,604,612
0.29
1,039
1,263,792
0.08
Mortgage
[1]
718,940
8,558,408
8.40
798,130
8,114,183
9.84
Leasing
36,656
1,998,651
1.83
39,641
1,925,405
2.06
Consumer
Credit cards
49,098
1,225,567
4.01
59,078
1,218,079
4.85
Home equity lines of credit
3,987
78,890
5.05
5,054
73,571
6.87
Personal
52,491
1,900,325
2.76
57,835
1,855,244
3.12
Auto
179,213
3,850,953
4.65
191,008
3,823,437
5.00
Other
5,377
181,220
2.97
3,930
171,778
2.29
Total Consumer
290,166
7,236,955
4.01
316,905
7,142,109
4.44
Loans held-for-sale
-
7,783
-
-
5,423
-
Total
$
1,368,951
$
38,694,941
3.54
%
$
1,288,719
$
37,113,075
3.47
%
[1]Loans delinquent 30 days or more includes $0.4 billionof residential mortgage loans insured by FHA or guaranteedby the VA as of September
30, 2025 (December 31, 2024 - $0.4 billion). Refer to Note7 to the Consolidated Financial Statements for additional informationof guaranteed loans.
Allowance for Credit Losses Loans Held-in-Portfolio
The ACLrepresents management'sestimate ofexpected creditlosses throughthe remainingcontractual lifeof thedifferent loan
segments, impacted by expected prepayments. The ACLis maintained at a sufficientlevel to provide for estimated creditlosses on
collateral dependent loans as well as loans modifiedfor borrowers with financial difficulties separately from the remainderof the loan
portfolio. Refer toNote 8 tothe Consolidated FinancialStatements, for additionalinformation on theCorporation's methodology to
estimate its ACL.
At September30, 2025,the ACL increasedby $40.2million fromDecember 31,2024 to$786.2 million. Theincrease inACL was
mainlydrivenbyacombinationofchangesintheeconomicscenarioprobabilityweights,increasesinqualitativereservesin
response tothe currenteconomic environment uncertainty,higher loan volumes,and aspecific reserverecognized for the$158.3
million commercial NPL inflow described above. These increaseswere offset in part by the net effect of changes incredit quality and
NCOs duringthe period.Given thatany economicoutlook isinherently uncertain, theCorporation leverages multiplescenarios to
estimate its ACL. Prior to the first quarter of 2025, the Corporation assigned the baseline scenario the highest probability among the
scenariosusedtoestimatetheACL,followedbythepessimisticscenariogiventheuncertaintiesintheeconomicoutlookand
downside risk, andthe optimistic scenariohad the lowestprobability. Duringthe first quarterof 2025, theCorporation modified the
weight assignedto thepessimistic scenario tobe equalto thebaseline scenarioin responseto thecurrent economicuncertainty,
resulting inan increaseof $18.2million inthe reserves.Inthe secondquarter of2025, theprobability weightfor thepessimistic
scenario was moderately decreased based on changes in the economic outlook and a reassessment of uncertainty compared to the
previousquarter.Thischangeresultedina$4.5millionreductioninACLreservelevels,fora$13.7millionnetincreasefrom
December31,2024.Theprobabilityweightforthepessimisticscenarioremainsabovethelevelsobservedin2024,giventhe
ongoing economic uncertainty.
At September 30, 2025, the ACL for BPPR increased by $24.7 million from December 31, 2024, driven by changes in the probability
weights thatresulted ina$8.8 millionnet ACLincrease, higherloan volumes,anda specificreserve recognizedforthe$158.3
million commercial NPLinflow described above.These increases were partiallyoffset byimprovements in creditquality and NCOs
during theperiod. InPB, theACL increasedby $15.5million, whencompared toDecember 31,2024. Thisincrease wasmainly
driven by higher qualitative reserves for the CRE portfolio in response to current market volatility and economic uncertainty, coupled
with changes in the probability weights that resulted ina $4.9 million net increase.
The Corporation's ratio of the allowance forcredit losses to loans held-in-portfolio was 2.03%on September 30, 2025, compared to
2.01% on December31, 2024. Theratio of theACL to NPLsheld-in-portfolio stood at 156.6%,compared to 212.7%on December
31, 2024.
Tables27 and28 detailthe allowancefor creditlosses byloan categoriesand thepercentage itrepresents oftotal loansheld-in-
portfolio andNPLs. Thebreakdown ismade foranalytical purposes,and itis notnecessarily indicativeof thecategories inwhich
future loan losses may occur.
Table 27 - Allowance for CreditLosses - Loan Portfolios
September 30, 2025
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
16,582
$
2,489,589
0.67
%
$
8,641
191.90
%
Commercial real estate non-owner occupied
58,845
5,462,580
1.08
%
44,126
133.36
%
Commercial real estate owner occupied
49,191
3,090,724
1.59
%
25,619
192.01
%
Commercial and industrial
169,307
8,245,639
2.05
%
174,491
97.03
%
Total Commercial
$
293,925
$
19,288,532
1.52
%
$
252,877
116.23
%
Construction
11,104
1,604,612
0.69
%
-
-
Mortgage
86,981
8,558,408
1.02
%
167,767
51.85
%
Leasing
19,220
1,998,651
0.96
%
7,747
248.10
%
Consumer
Credit cards
87,208
1,225,567
7.12
%
-
-
Home equity lines of credit
1,548
78,890
1.96
%
3,257
47.53
%
Personal
100,238
1,900,325
5.27
%
19,316
518.94
%
Auto
177,819
3,850,953
4.62
%
49,432
359.72
%
Other
8,177
181,220
4.51
%
1,806
452.77
%
Total Consumer
$
374,990
$
7,236,955
5.18
%
$
73,811
508.04
%
Total
$
786,220
$
38,687,158
2.03
%
$
502,202
156.55
%
Table 28 - Allowance for CreditLosses - Loan Portfolios
December 31, 2024
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
9,236
$
2,399,620
0.38
%
$
8,779
105.21
%
Commercial real estate non-owner occupied
54,494
5,363,235
1.02
%
14,444
377.28
%
Commercial real estate owner occupied
49,828
3,157,746
1.58
%
30,449
163.64
%
Commercial and industrial
146,006
7,741,562
1.89
%
21,083
692.53
%
Total Commercial
$
259,564
$
18,662,163
1.39
%
$
74,755
347.22
%
Construction
11,264
1,263,792
0.89
%
-
-
Mortgage
82,409
8,114,183
1.02
%
188,332
43.76
%
Leasing
16,419
1,925,405
0.85
%
9,588
171.25
%
Consumer
Credit cards
99,130
1,218,079
8.14
%
-
-
Home equity lines of credit
1,503
73,571
2.04
%
3,393
44.30
%
Personal
102,736
1,855,244
5.54
%
22,010
466.77
%
Auto
165,995
3,823,437
4.34
%
51,792
320.50
%
Other
7,004
171,778
4.08
%
769.67
%
Total Consumer
$
376,368
$
7,142,109
5.27
%
$
78,105
481.87
%
Total
$
746,024
$
37,107,652
2.01
%
$
350,780
212.68
%
Annualized net charge-offs (recoveries)
The followingtable presentsannualized net charge-offs(recoveries) to averageloans held-in-portfolio ("HIP")by loancategory for
the quarters and nine months ended September30, 2025 and 2024.
Table 29 - Annualized Net Charge-offs (Recoveries) to Average LoansHeld-in-Portfolio
Quarters ended
September 30, 2025
September 30, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
0.50
%
0.03
%
0.29
%
0.13
%
0.02
%
0.08
%
Construction
―
―
―
(2.33)
―
(0.37)
Mortgage
(0.12)
(0.01)
(0.11)
(0.24)
(0.01)
(0.20)
Leasing
0.41
―
0.41
0.49
―
0.49
Consumer
2.48
1.69
2.46
3.14
7.17
3.26
Total annualizednet charge-offs
(recoveries) to average loans held-in-
portfolio
0.84
%
0.04
%
0.60
%
0.86
%
0.15
%
0.65
%
Nine months ended
September 30, 2025
September 30, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
0.14
%
0.02
%
0.08
%
0.21
%
0.03
%
0.13
%
Construction
―
―
―
(0.82)
(0.01)
(0.14)
Mortgage
(0.14)
(0.03)
(0.12)
(0.25)
(0.01)
(0.21)
Leasing
0.55
―
0.55
0.64
―
0.64
Consumer
2.53
3.23
2.54
2.93
7.43
3.07
Total annualizednet charge-offs
(recoveries) to average loans held-in-
portfolio
0.73
%
0.06
%
0.53
%
0.86
%
0.18
%
0.66
%
NCOs forthe quarterended September30, 2025,amounted to$57.8 million,decreasing by$0.7 millionwhen comparedtothe
same period in 2024. The BPPRsegment increased by $2.0 million, mainly drivenby an increase of $9.9 millionand $1.7 million in
commercial and mortgage NCOs, respectively,mostly due to a $13.5 million charge-off related to the $30.1 million commercialNPL
inflow, partiallyoffset by a decreaseof $10.5 million in consumerNCOs. The PB segment NCOsdecreased by $2.7 million, mainly
driven by lower consumer NCOs by $3.0 million
NCOs for the ninemonths ended September 30, 2025,amounted to $149.1 million, decreasing by$25.3 million when compared to
the same period in 2024. The BPPR segment decreased by $16.6 million, mainly drivenby a decrease of $17.5 million in consumer
NCOs. The PB segment NCOs decreased by $8.6million, mainly driven by lower consumer NCOs by$7.9 million.
Loan Modifications
For the quarter ended September 30, 2025, modified loans to borrowers with financial difficulty amounted to $156.0 million, of which
$146.8 million were inaccruing status. The BPPR segment's modificationsto borrowers with financial difficultyamounted to $154.5
million, mainly comprised of commercial and mortgage loans of $130.1million and $17.7 million, respectively. A total of $12.9 million
ofthemortgagemodificationswererelatedtogovernmentguaranteedloans.ThePopularU.S.segment'smodificationsto
borrowers with financial difficulty amounted to $1.4 million,mostly comprised of commercial loans.
RefertoNote8totheConsolidatedFinancialStatementsforadditionalinformationonmodificationsmadetoborrowers
experiencing financial difficulties.
ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOTYET EFFECTIVE ACCOUNTING STANDARDS
Refer to Note 3, "New Accounting Pronouncements"to the Consolidated Financial Statements.
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