FULLTEXT DEL 5 AV 9
10-K – 2026-03-02 – d17859d10k.htm
Under Equity Compensation
Plan
Equity compensation plan approved by security holders
2020 Omnibus Incentive Plan
2,599,105
Total
2,599,105
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The
information
under
the
caption
“Board
of
Directors
and
Nominees’
Independence”
and
“Certain
Relationships
and
Transactions” in the Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information regarding principal accountant fees and services is set forth under Proposal 5 – Ratification of Appointment of
Independent Registered Public Accounting Firm in
the Proxy Statement, which is incorporated herein
by reference.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a). The following financial statements and reports are included
on pages 108 through 260 in this Form10K.
(1)
Financial Statements
Report of Independent Registered Public Accounting Firm
(
PCAOB ID
238
)
46
Consolidated Statements of Financial Condition as of
December 31, 2025 and 2024
Consolidated Statements of Operations for each of
the years in the three-year period ended December
31, 2025
Consolidated Statements of
Comprehensive Income for
each of
the years
in the
three-year period
ended December 31,
2025
Consolidated
Statements
of
Changes
in
Stockholders’
Equity
for
each
of
the
years
in
the
three-year
period
ended
December 31, 2025
Consolidated Statements of Cash Flows for each of
the years in the three-year period ended
December 31, 2025
Notes to Consolidated Financial Statements
(2)
Financial
Statement
Schedules:
No
schedules
are
presented
because
the
information
is
not
applicable
or
is
included
in
the
Consolidated Financial Statements described in (a) (1)
above or in the notes thereto.
(3) Exhibits
ITEM 16. FORM 10-K SUMMARY
None.
The exhibits listed on the Exhibits Index below are
filed herewith or are incorporated herein by
reference.
47
Exhibit Index
3.1
Restated Certificate of Incorporation of Popular, Inc. (incorporated by reference to Exhibit 3.1 of the Corporation’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2020).
3.2
Amended and Restated Bylaws of Popular, Inc. as of May 9, 2024 (incorporated by reference to Exhibit 3.1 of Popular,
Inc.’s Current Report on Form 8-K dated May 9, 2024 and filed on May 10, 2024).
4.1
Specimen of Physical Common Stock Certificate of Popular, Inc. (incorporated by reference to Exhibit 4.1 of Popular,
Inc.’s Current Report on Form 8-K dated May 29, 2012 and filed on May 30, 2012).
4.2
Certificate of Designation of Popular, Inc.’s 6.375% Non-Cumulative Monthly Income Preferred Stock, 2003 Series A
(incorporated by reference to Exhibit 3.3 of Popular, Inc.’s Form 8-A filed on February 25, 2003).
4.3
Form of certificate representing Popular, Inc.’s 6.375% Non-Cumulative Monthly Income Preferred Stock, 2003 Series A
(incorporated by reference to Exhibit 4.1 of Popular, Inc.’s Form 8-A filed on February 25, 2003).
4.4
Senior Indenture of Popular, Inc., dated as of February 15, 1995, as supplemented by the First Supplemental Indenture
thereto, dated as of May 8, 1997, each between Popular, Inc. and The Bank of New York Mellon, as successor trustee
(incorporated by reference to Exhibit 4(d) to the Registration Statement on Form S-3, File No. 333-26941, of Popular,
Inc., Popular International Bank, Inc., and Popular North America, Inc., filed on May 12, 1997).
4.5
Second Supplemental Indenture of Popular, Inc., dated as of August 5, 1999, between Popular, Inc. and The Bank of
New York Mellon, as successor trustee (incorporated by reference to Exhibit 4(e) to Popular, Inc.’s Current Report on
Form 8-K dated August 5, 1999 and filed on August 17, 1999).
4.6
Subordinated Indenture of Popular, Inc., dated as of November 30, 1995, between Popular, Inc. and The Bank of New
York Mellon, as successor trustee (incorporated by reference to Exhibit 4(e) to the Registration Statement on Form S-3,
File No. 333- 26941, of Popular, Inc., Popular International Bank, Inc. and Popular North America, Inc., filed on May 12,
1997).
4.7
Senior Indenture of Popular North America, Inc., dated as of October 1, 1991, as supplemented by the First
Supplemental Indenture thereto, dated as of February 28, 1995, and by the Second Supplemental Indenture thereto,
dated as of May 8, 1997, each among Popular North America, Inc., Popular, Inc., as guarantor, and The Bank of New
York Mellon, as successor trustee (incorporated by reference to Exhibit 4(f) to the Registration Statement on Form S-3,
File No. 333-26941, of Popular, Inc., Popular International Bank, Inc. and Popular North America, Inc., filed on May 12,
1997).
4.8
Third Supplemental Indenture of Popular North America, Inc., dated as of August 5, 1999, among Popular North
America, Inc., Popular, Inc., as guarantor, and The Bank of New York Mellon, as successor trustee (incorporated by
reference to Exhibit 4(h) to Popular, Inc.’s Current Report on Form 8-K, dated August 5, 1999, as filed on August 17,
1999).
4.9
Junior Subordinated Indenture of Popular, Inc., dated as of October 31, 2003, between Popular, Inc. and The Bank of
New York Mellon, as successor trustee (incorporated by reference to Exhibit 4.2 of Popular, Inc.’s Current Report on
Form 8-K, dated October 31, 2003 and filed on November 4, 2003).
4.10
Description of Popular, Inc.’s securities registered pursuant to Section 12 of the Securities Exchange Act. (1)
48
10.1
Popular, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 4.4 of Popular, Inc.’s Form S-8 filed on
May 12, 2020). *
10.2
Popular, Inc. Puerto Rico Nonqualified Deferred Compensation Plan. (1)*
10.3
Form of Compensation Agreement for Directors Elected Chairman of a Committee (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004). *
10.4
Form of Compensation Agreement for Directors not Elected Chairman of a Committee (incorporated by reference to
Exhibit 10.2 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004). *
10.5
Compensation Agreement for Alejandro M. Ballester as director of Popular, Inc., dated January 28, 2010 (incorporated
by reference to Exhibit 10.9 of Popular, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009). *
10.6
Compensation Agreement for Carlos A. Unanue as director of Popular, Inc., dated January 28, 2010 (incorporated by
reference to Exhibit 10.10 of Popular, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009). *
10.7
Compensation Agreement for C. Kim Goodwin as director of Popular, Inc., dated May 10, 2011 (incorporated by
reference to Exhibit 10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011). *
10.8
Compensation Agreement for Joaquin E. Bacardi, III as director of Popular, Inc., dated April 30, 2013 (incorporated by
reference to Exhibit 10.2 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013). *
10.9
Compensation Agreement for John. W. Diercksen as director of Popular, Inc., dated October 18, 2013 (incorporated by
reference to Exhibit 10.13 of Popular, Inc.’s Annual Report on 10-K for the year ended December 31, 2013). *
10.10
Form of 2015 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit 10.1 of Popular,
Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015). *
10.11
Form of 2016 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit 10.27 of Popular,
Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015). *
10.12
Form of Director Compensation Letter, Election Form and Restricted Stock Agreement, effective April 26, 2016
(incorporated by reference to Exhibit 10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2016). *
10.13
Form of 2017 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit 10.1 of Popular,
Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017). *
10.14
Long-Term Equity Incentive Award and Agreement for Ignacio Alvarez, dated as of June 22, 2017 (incorporated by
reference to Exhibit 10.1 of Popular, Inc.’s Quarterly report on Form 10-Q for the quarter ended June 30, 2017). *
10.15
Form of Popular, Inc. 2018 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018). *
49
10.16
Director Compensation Letter, Election Form and Restricted Stock Agreement for Myrna M. Soto, dated June 22, 2018
(incorporated by reference to Exhibit 10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2018). *
10.17
Director Compensation Letter, Election Form and Restricted Stock Agreement for Robert Carrady, dated December 29,
2018 (incorporated by reference to Exhibit 10.25 of Popular, Inc.’s Annual Report on Form 10-K for the year ended
December 31, 2018). *
10.18
Form of Director Compensation Letter, Election Form and Restricted Stock Unit Award Agreement, effective May 7,
2019 (incorporated by reference to Exhibit 10.26 of Popular, Inc.’s Annual Report on Form 10-K for the year ended
December 31, 2018). *
10.19
Form of Popular, Inc. 2019 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019). *
10.20
Director Compensation Letter, Election Form and Restricted Stock Unit Award Agreement for Richard L. Carrión, dated
July 1, 2019 (incorporated by reference to Exhibit 10.1 of Popular, Inc.’s Annual Report on Form 10-Q for the quarter
ended September 30, 2019). *
10.21
Form of Popular, Inc. 2020 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020). *
10.22
Form of Director Compensation Election Form and Restricted Stock Unit Award Agreement, effective May 12, 2020
(incorporated by reference to Exhibit 10.2 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2020). *
10.23
Form of Popular, Inc. 2021 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021). *
10.24
Form of Director Compensation Letter, Election Form and Restricted Stock Unit Award Agreement for Betty DeVita and
José R. Rodriguez, effective June 25, 2021 (incorporated by reference to Exhibit 10.1 of Popular, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2021). *
10.25
Form of Popular, Inc. 2022 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022). *
50
10.26
Asset Purchase Agreement, dated as of February 24, 2022, among Evertec, Inc. and Evertec Group, LLC, Popular,
Inc. and Banco Popular de Puerto Rico (incorporated by reference to Exhibit 2.1 of Popular, Inc.’s Current Report on
Form 8-K dated and filed on February 24, 2022).
10.27
Second Amended and Restated Master Service Agreement, dated as of July 1, 2022, among Popular, Inc., Banco
Popular de Puerto Rico, and Evertec Group, LLC and its Subsidiaries (Incorporated by reference to Exhibit 99.1 on
Form 8-K filed on July 1, 2022.)
10.28
Form of Popular, Inc. 2023 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023). *
10.29
Award Agreement, dated as of December 7, 2023, by and between Carlos J. Vázquez and Popular, Inc.
(incorporated by reference to Exhibit 10.28 of Popular, Inc.’s Annual Report on Form 10-K for the year ended
December 31, 2023). *
10.30
Services Agreement, dated as of December 7, 2023, by and between Carlos J. Vázquez and Popular, Inc.
(incorporated by reference to Exhibit 10.29 of Popular, Inc.’s Annual Report on Form 10-K for the year ended
December 31, 2023). *
10.31
Form of Popular, Inc. 2024 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024). *
10.32
Form of Popular, Inc. 2025 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit
10.1 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025).*
10.33
Equity Award Agreement, dated as of February 25, 2025, by and between Ignacio Alvarez and Popular, Inc.
(incorporated by reference to Exhibit 10.2 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2025).*
10.34
Services Agreement, dated as of February 25, 2025, by and between Ignacio Alvarez and Popular, Inc.
(incorporated by reference to Exhibit 10.3 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2025).*
10.35
Form of Director Compensation Letter, Election Form, Restricted Stock Award Agreement and Restricted Stock Unit
Award Agreement, effective May 8, 2025 (incorporated by reference to Exhibit 10.1 of Popular, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2025).*
10.36
Equity Award Agreement, dated as of June 26, 2025, by and between Ignacio Alvarez and Popular, Inc.
(incorporated by reference to Exhibit 10.2 of Popular, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2025).*
10.37
2025 Long-Term Equity Incentive Award Agreement, dated as of June 26, 2025, by and between Javier D. Ferrer
and Popular, Inc. (incorporated by reference to Exhibit 10.3 of Popular, Inc.’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2025).*
19.1
Insider Trading Policy and Procedures (1).
21.1
Schedule of Subsidiaries of Popular, Inc. (1)
22.1
Issuers of Guaranteed Securities (1)
23.1
Consent of Independent Registered Public Accounting Firm. (1)
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. (1)(2)
32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. (1)(2)
97.1
Compensation Recoupment Policy of Popular, Inc. (1)
101.INS
XBRL Instance
Document -
the instance
document does not
appear in the
Interactive Data File
because its XBRL
tags are embedded within the Inline Document. (1)
101.SCH
Inline XBRL Taxonomy Extension Schema Document (1)
51
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document (1)
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)
104
The cover page of Popular, Inc. Annual Report on Form 10-K for the
year ended December 31, 2025, formatted in
Inline XBRL (included within the Exhibit 101 attachments)
(1)
(1)
Included herewith
(2)
Furnished herewith. This
exhibit shall not
be deemed “filed”
for purposes of
Section 18 of
the Securities Exchange
Act of 1934, or otherwise subject
to the liability of that Section,
and shall not be deemed incorporated into
any filing
under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
*
This exhibit is a management contract or compensatory
plan or arrangement.
Popular,
Inc. has
not filed
as exhibits
certain instruments
defining the rights
of holders
of debt
of Popular,
Inc. not
exceeding 10% of the
total assets of Popular,
Inc. and its consolidated
subsidiaries. Popular, Inc.
hereby agrees to
furnish
upon
request
to
the
Commission
a
copy
of
each
instrument
defining
the
rights
of
holders
of
senior
and
subordinated debt of Popular, Inc., or of any of its consolidated
subsidiaries.
52
Financial Review and
Supplementary Information
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
54
Statistical Summaries
104
Report of Management on Internal Control Over Financial
Reporting
107
Report of Independent Registered Public
Accounting Firm
108
Consolidated Statements of Financial Condition as of
December 31, 2025 and 2024
111
Consolidated Statements of Operations for the
years ended December 31, 2025, 2024 and
2023
112
Consolidated Statements of Comprehensive
Income for the years ended December 31, 2025,
2024 and
2023
113
Consolidated Statements of Changes in Stockholders’
Equity for the years ended December 31, 2025,
2024 and
2023
114
Consolidated Statements of Cash Flows for the
years ended December 31, 2025, 2024 and
2023
115
Notes to Consolidated Financial Statements
117
Signatures
261
53
Management’s Discussion and
Analysis of Financial Condition
and Results of Operations
Forward-Looking Statements
54
Overview
55
Critical Accounting Policies / Estimates
60
Statement of Operations Analysis
64
Net Interest Income
64
Provision for Credit Losses
67
Non-Interest Income
67
Operating Expenses
68
Income Taxes
69
Fourth Quarter Operational Results
70
Reportable Segment Results
70
Statement of Financial Condition Analysis
72
Assets
72
Liabilities
73
Stockholders’ Equity
75
Capital
76
Risk Management
79
Market / Interest Rate Risk
79
Liquidity
82
Enterprise Risk Management
102
Adoption of New Accounting Standards and Issued
but
Not Yet Effective Accounting Standards
103
Statistical Summaries
Statements of Financial Condition
104
Statements of Operations
105
Average Balance Sheet and Summary of Net Interest
Income
106
54
FORWARD-LOOKING STATEMENTS
This
Form
10-K contains
“forward-looking statements”
within the
meaning
of
the
U.S. Private
Securities Litigation
Reform Act
of
1995,
including,
without
limitation,
statements
about
Popular,
Inc.’s
(the
“Corporation,”
“Popular,”
“we,”
“us,”
“our”)
business,
financial condition, results
of operations, plans,
objectives and future
performance. These statements
are not
guarantees of future
performance,
are
based
on
management’s
current
expectations
and,
by
their
nature,
involve
risks,
uncertainties,
estimates
and
assumptions. Potential
factors, some
of which
are beyond
the Corporation’s
control, could
cause actual
results to
differ materially
from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect
of competitive and
economic factors, and our
reaction to those factors,
the adequacy of
the allowance for loan
losses, delinquency
trends, market
risk and
the impact
of interest
rate changes
(including on
our cost
of deposits),
capital markets
conditions, capital
adequacy
and
liquidity,
and
the
effect
of
legal
and
regulatory
proceedings
and
new
accounting
standards
on
the
Corporation’s
financial condition
and results
of operations.
All statements
contained herein
that
are not
clearly
historical in
nature are
forward-
looking, and the words “anticipate,” “believe,” “continues,”
“expect,” “estimate,” “intend,” “project” and similar expressions
and future
or conditional verbs
such as
“will,” “would,” “should,”
“could,” “might,” “can,”
“may” or similar
expressions are
generally intended to
identify forward-looking statements.
Various factors, some of which
are beyond Popular’s control, could cause actual results to differ materially from those expressed in,
or implied by,
such forward-looking statements. Factors that might cause such a
difference include, but are not limited to
the rate of
growth or
decline in the
economy and employment
levels, as well
as general
business and economic
conditions in the
geographic
areas we serve and,
in particular, in
the Commonwealth of Puerto Rico
(the “Commonwealth” or “Puerto Rico”), where
a significant
portion of our business is concentrated; adverse economic conditions, including high levels of inflation, that adversely affect housing
prices, the
job market,
consumer confidence
and spending
habits which
may affect
in turn,
among other
things, our
level of
non-
performing assets,
charge-offs
and
provision expense;
changes in
interest
rates
and
market liquidity,
which may
reduce interest
margins,
impact
funding
sources,
reduce
loan
originations,
affect
our
ability
to
originate
and
distribute
financial
products
in
the
primary and secondary markets and impact the value of our investment portfolio and our ability to return capital to our shareholders;
the impact of bank failures or adverse
developments at other banks and related negative media coverage of
the banking industry in
general
on
investor
and
depositor
sentiment
regarding
the
stability
and
liquidity
of
banks;
the
impact
of
the
current
fiscal
and
economic challenges
of Puerto
Rico and
the measures
taken and
to be
taken by
the Puerto
Rico Government and
the Federally-
appointed oversight board on the economy,
our customers and our business; the amount of Puerto
Rico public sector deposits held
at the Corporation, whose future balances are uncertain
and difficult to predict and may
be impacted by factors such as the
amount
of
Federal funds
received by
the P.R.
Government and
the rate
of expenditure
of such
funds, as
well as
the financial
condition,
liquidity
and
cash
management
practices
of
the
Puerto
Rico
Government
and
its
instrumentalities;
unforeseen
or
catastrophic
events, including extreme
weather events such
as hurricanes and
other natural disasters,
man-made disasters, acts
of violence or
war or
pandemics, epidemics
and other
health-related crises,
or the
fear of
any such
event occurring,
any of
which could
cause
adverse
consequences
for
our
business,
including,
but
not
limited
to,
disruptions
in
our
operations;
our
ability
to
achieve
the
expected benefits
from our
transformation initiatives,
including our
ability to
achieve projected
earnings, efficiencies
and return
on
tangible common
equity and
accurately anticipate
costs and
expenses associated therewith;
our ability
to execute
capital actions,
including
with
respect
to
share
repurchases
and
dividends;
the
fiscal
and
monetary
policies
of
the
federal
government
and
its
agencies;
changes
in
federal
bank
regulatory
and
supervisory
policies,
including
required
levels
of
capital,
liquidity,
resolution-
related requirements and the impact of other proposed capital
standards on our capital ratios; changes in and
uncertainty regarding
federal funding, tax and
trade policies, and federal
rulemaking, supervision, examination and enforcement priorities;
adjustments to
or
additional
Federal
Deposit
Insurance
Corporation
(“FDIC”)
assessments;
regulatory
approvals
that
may
be
necessary
to
undertake
certain
actions
or
consummate
strategic
transactions,
such
as
acquisitions
and
dispositions;
the
relative
strength
or
weakness of
the consumer
and commercial
credit sectors
and of
the real
estate markets
in Puerto
Rico and
the other
markets in
which our borrowers are located; a deterioration in the credit
quality of our clients, customers and counterparties; the performance
of
the stock and bond markets; competition in the financial services industry; possible legislative, tax or regulatory changes; a failure in
or breach of our
operational or security systems or
infrastructure or those of Evertec,
Inc., our provider of core
financial transaction
processing and information technology services, or
of third parties providing services to
us, including as a
result of cyberattacks, e-
fraud, denial-of-services and computer intrusion, that might result
in, among other things, loss or breach of customer data, disruption
of services, reputational damage or additional costs to Popular; changes in market rates and prices which may adversely impact the
value of financial assets and liabilities; potential judgments, claims, damages, penalties, fines, enforcement actions and reputational
damage resulting
from
pending or
future litigation
and regulatory
or government
investigations or
actions; changes
in accounting
standards,
rules
and
interpretations;
our
ability
to
grow
our
core
businesses;
decisions
to
downsize,
sell
or
close
branches
or
business units or otherwise change our business
mix; and management’s ability to identify and manage
these and other risks.
55
Moreover,
the outcome
of any
legal and
regulatory proceedings, as
discussed in
“Part I,
Item 3.
Legal Proceedings,”
is inherently
uncertain and depends on judicial interpretations of law and the findings of regulators, judges and/or juries. Investors should refer to
“Part I, Item 1A” of this Form 10-K for a discussion
of certain risks and uncertainties to which
the Corporation is subject.
All forward-looking
statements included
in this
Form 10-K
are based
upon information
available to
Popular as
of the
date of
this
Form 10- K, and other than as required by law,
including the requirements of applicable securities laws, we assume no obligation to
update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date
of such statements.
OVERVIEW
The Corporation is a
diversified, publicly owned financial holding company subject
to the supervision and regulation
of the Board of
Governors of the Federal Reserve System. The Corporation has operations in Puerto Rico, the United States (“U.S.”) mainland, and
the
U.S.
and
British
Virgin
Islands.
In
Puerto
Rico,
the
Corporation
provides
retail,
mortgage,
as
well
as
commercial
banking
services as
well as
auto and
equipment leasing
and financing,
through its
principal banking
subsidiary,
Banco Popular
de Puerto
Rico (“BPPR”),
and broker-dealer
and insurance
services through
specialized subsidiaries.
In the
U.S. mainland,
the Corporation
provides
retail
and
commercial
banking
services,
as
well
as
equipment
leasing
and
financing,
through
its
New
York-chartered
banking subsidiary, Popular Bank
(“PB” or “Popular U.S.”), which has
branches located in New York,
New Jersey and Florida. Note
36 to the Consolidated Financial Statements presents
information about the Corporation’s business segments.
The shares of the Corporation’s common stock are traded
on the Nasdaq Global Select Market under the
symbol BPOP.
RESULTS OF OPERATIONS
YEAR 2025 SIGNIFICANT EVENTS
Capital Actions
During the year
ended December 31,
2025, the Corporation
repurchased 4,660,124 shares
of common stock
for $501.5 million,
at
an average price of $107.61 per common share.
At December 31, 2025, $281.2 million remained
on our common stock repurchase
authorization. The
Corporation’s common
stock
repurchases may
be
executed
in
open
market
transactions,
privately negotiated
transactions, block trades
or any other
manner determined by
the Corporation. The
timing, quantity and
price of such
repurchases
will
be
subject
to
various
factors,
including
market
conditions,
the
Corporation’s
capital
position
and
financial
performance,
the
capital impact of strategic initiatives and regulatory and tax considerations.
The common stock repurchase program does not require
the Corporation to acquire a specific dollar amount or
number of shares and may be modified, suspended or terminated
at any time
without prior notice.
The
Corporation
increased
its
quarterly
common
stock
dividend
from
$0.70
to
$0.75
per
share,
commencing
with
the
dividend
declared in the
third quarter of
2025. During 2025,
the Corporation declared
dividends of $196.2
million, or $2.90
per share, on
its
common stock.
Transformation Initiatives
The Corporation continues
its broad-based, multi-year,
technological and business
process transformation, which
was launched in
2022. As part of this transformation, we are making
significant investments in technology, talent and new digital and data capabilities
in order to provide our customers with more personalized and accessible services, increase employee performance and satisfaction
with more agile work processes, and generate
sustainable profitable growth and value for our
shareholders.
In
2025, the
Corporation achieved
significant
advancements in
transforming customer
channels and
enhancing the
overall client
experience. The organization
remains committed to
delivering solutions efficiently
and increasing productivity.
During the year,
the
56
Corporation introduced a
commercial cash management
platform and implemented
a new consumer
origination platform in
Puerto
Rico and
the Virgin
Islands. The
lending initiatives
contributed to
an upward
trend in
online originations
in the
latter part
of 2025,
resulting in $36 million in new originations since
the third quarter launch.
During the year the
Corporation also executed a
series of efficiency
initiatives, including exiting our
mortgage business in the
U.S.,
and
optimizing
our
mortgage
servicing
business
in
Puerto
Rico.
We
also
transformed
our
Enterprise
Resource
Planning
(ERP)
solution to a modern cloud platform,
as implemented in January 2026.
The Corporation anticipates that these investments, along with
future initiatives, will deliver an improved digital experience for
clients
and provide enhanced technology and more
efficient processes for employees. The
technology and business transformation efforts
will continue to be a strategic priority
for the Corporation.
Financial highlights for the year ended December 31,
2025
The Corporation’s
net income
for the
year ended
December 31,
2025
amounted to
$833.2 million,
an increase
of $219.0
million
when compared to a net
income of $614.2 million for
2024. Excluding the partial reversal of
the FDIC Special Assessment reserve,
adjusted net income
for 2025
was $823.5 million,
compared to $646.1
million in
2024, which also
excluded the impact
of an
FDIC
special
assessment expense
and
prior
period
tax
withholdings.
For
more
information on
adjusted
net
income
refer
to
the
“Non-
GAAP Financial Measures” section below.
Financial highlights for the year ended December 31,
2025 include:
●
Net interest income amounted
to $2.5 billion, an
increase of $258.9 million
when compared to the
year ended December
31,
2024,
mainly
driven
by
lower cost
of
deposits,
loan
growth,
and
investments
in
U.S.
Treasury
securities
at
higher
yields, partially
offset by
a decrease
in interest
income from
money market
investments.
Net interest
income on
taxable
equivalent
basis
for
the
year
ended
December
31,
2025
was
$2.8
billion,
an
increase
of
$359.9
million.
Net
interest
margin expanded by 25 bps to 3.49%. On a
taxable equivalent basis, net interest margin expanded
by 39 bps to 3.88%.
●
The provision
for credit
losses amounted
to $260.2
million for
the year
ended December
31, 2025,
an increase
of $3.2
million when
compared to 2024,
driven by
higher reserves for
the CRE
portfolio at PB
and higher
reserves in the
BPPR
commercial portfolio, mainly due to two unrelated NPL inflows and portfolio growth, partially offset by a lower provision for
the consumer portfolios, particularly for credit cards
and auto loans.
●
Non
-interest
income
amounted
to
$658.0
million,
a
decrease
of
$0.9
million,
when compared
with the
previous year,
mainly due to lower
revenues related to the car
rental business sold in the
fourth quarter of 2024,
partially offset by other
service fees
income from
our fee
generating business such
as debit
and credit
card fees,
investment management fees
and higher non-balance compensation fees from commercial deposits.
●
Operating expenses amounted to $1.9 billion for 2025, an increase of
$44.6 million when compared to 2024. The increase
was mainly driven
by higher personnel
costs, primarily due
to the profit
sharing expense of
$38.8 million which
is tied to
the
Corporation’s
financial
performance
and
other
performance-based
incentives,
a
$13.0
million
non-cash
goodwill
impairment
charge
related
to
the
U.S.
based
leasing
subsidiary,
higher
technology
and
software
costs
from
transformation initiatives and higher
credit and debit card
merchant processing fees, partially
offset by lower
reserves for
operational losses, lower costs
associated with compliance activities, and lower
depreciation expense related to the
daily
car rental business sold during the fourth quarter
of 2024.
●
Income tax expense amounted to $173.6 million for the year ended December 31, 2025, with an effective tax
rate (“ETR”)
of 17.3%, compared to an income tax expense of $182.4 million for the previous
year, with an ETR of 22.9%.
The income
tax expense in 2024 included the impact of $16.5
million related to intercompany distributions for the
years 2014-2023.
●
At December 31, 2025, the Corporation’s total assets were $75.3 billion, compared to $73.0 billion at December 31, 2024.
The increase of
$2.3 billion is
primarily due to
an increase in loans
held-in-portfolio, mainly in the
commercial, mortgage,
and construction portfolios,
and an increase in available-for-sale (“AFS”) securities, mainly U.S. Treasuries, partially offset
by a decrease in money market investments.
●
Deposits amounted to $66.2 billion at
December 31, 2025, an increase of
$1.3 billion from December 31, 2024,
driven by
higher savings, NOW and money market deposits,
demand deposits and time deposits,
all primarily at BPPR.
57
●
Stockholders’ equity amounted to $6.2 billion at December 31, 2025, compared to $5.6
billion at December 31, 2024. The
Corporation
and
its
banking
subsidiaries
continue
to
be
well
capitalized. As
of
December
31,
2025,
the
Corporation’s
tangible book value per common share was $82.65, an increase of $14.49 from December 31, 2024. The Common Equity
Tier 1 Capital ratio at December 31, 2025 was 15.72%, compared
to 16.03% at December 31, 2024.
For a
discussion of
our 2024
results of
operations compared with
2023, see
“Management’s Discussion and
Analysis of
Financial
Condition and Results of Operations” in our Form
10-K for the year ended December 31, 2024.
Refer to Table 1 for selected financial data for the past three years.
58
Table 1 - Selected Financial Data
Years ended December
31,
(Dollars in thousands, except per common share data)
2025
2024
2023
CONDENSED STATEMENTS
OF OPERATIONS
Interest income
$
3,783,009
$
3,673,263
$
3,245,307
Interest expense
1,241,806
1,390,975
1,113,783
Net interest income
2,541,203
2,282,288
2,131,524
Provision for credit losses
260,163
256,942
208,609
Non-interest income
658,019
658,909
650,724
Operating expenses
1,932,266
1,887,637
1,898,100
Income tax expense
173,634
182,406
134,197
Net income
$
833,159
$
614,212
$
541,342
Net income applicable to common stock
$
831,747
$
612,800
$
539,930
PER COMMON SHARE DATA
Net income per common share - basic
$
12.31
$
8.56
$
7.53
Net income per common share - diluted
12.30
8.56
7.52
Dividends declared
2.90
2.56
2.27
Common equity per share
94.75
79.71
71.03
Market value per common share
124.52
94.06
82.07
Outstanding shares:
Average - basic
67,586,130
71,590,757
71,710,265
Average - assuming dilution
67,612,847
71,623,702
71,791,692
End of period
65,719,385
70,141,291
72,153,621
AVERAGE BALANCES
Net loans
[1]
$
37,982,637
$
35,701,240
$
33,164,960
Earning assets
72,636,005
70,327,465
68,175,022
Total assets
75,740,647
73,400,279
71,234,236
Deposits
66,402,180
64,444,283
62,546,480
Borrowings
1,156,769
1,022,063
1,227,094
Total stockholders'
equity
7,207,682
7,053,193
6,600,603
PERIOD END BALANCE
Net loans
[1]
$
39,337,516
$
37,113,075
$
35,069,272
Allowance for credit losses - loans portfolio
808,056
746,024
729,341
Earning assets
72,132,940
69,739,000
67,216,816
Total assets
75,348,267
73,045,383
70,758,155
Deposits
66,190,093
64,884,345
63,618,243
Borrowings
1,448,578
1,176,126
1,078,332
Total stockholders'
equity
6,249,079
5,613,066
5,146,953
SELECTED RATIOS
Net interest margin (non-taxable equivalent basis)
3.49
%
3.24
%
3.13
%
Net interest margin (taxable equivalent basis) -Non-GAAP
3.88
3.49
3.31
Return on assets
1.10
0.84
0.76
Return on average common equity
11.58
8.72
8.21
Tangible common
book value per common share (non-GAAP)
[2]
82.65
68.16
59.74
Return on average tangible common equity
[2]
13.04
9.85
9.40
Tier I capital
15.77
16.08
16.36
Total capital
17.50
17.83
18.13
[1]
Includes loans held-for-sale.
[2]
Refer to Table 11
for reconciliation to GAAP financial measures.
Table 2 presents
a three-year summary of the components of net income
as a percentage of average total assets.
59
Table 2 - Components of Net
Income as a Percentage of Average Total
Assets
2025
2024
2023
Net interest income
3.36
%
3.11
%
2.99
%
Provision for credit losses
(0.34)
(0.35)
(0.29)
Service charges on deposit accounts
0.21
0.21
0.21
Other service fees
0.53
0.53
0.53
Other non-interest income
0.12
0.16
0.17
Total net interest
income and non-interest income, net of provision
for credit losses
3.88
3.66
3.61
Operating expenses
(2.55)
(2.57)
(2.66)
Income before income tax
1.33
1.09
0.95
Income tax expense
(0.23)
(0.25)
(0.19)
Net income
1.10
%
0.84
%
0.76
%
Non-GAAP Financial Measures
This Form
10-K contains financial
information prepared under
accounting principles generally
accepted in the
United States (“U.S.
GAAP”)
and
non-GAAP
financial
measures.
Management
uses
non-GAAP
financial
measures
when
it
is
determined
that
these
measures provide
meaningful information
about the
underlying performance
of the
Corporation’s ongoing
operations. Non-GAAP
financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by
other
companies.
Adjusted net income - Non-GAAP Financial Measure
In
addition to
analyzing the
Corporation’s
results on
a reported
basis, management
monitors whether
the
impact of
certain non-
recurring or
infrequent transactions
need to
be excluded
from the
results of
operations to
present what
is then
considered to
be
“adjusted
net
income”
of
the
Corporation.
Management
believes
that
the
“adjusted
net
income”
provides
meaningful
information
about
the
underlying
performance
of
the
Corporation’s
ongoing
operations.
The
“adjusted
net
income”
is
a
non-GAAP
financial
measure.
The following tables present adjusted net income
for the years ended December 31, 2025 and
2024.
Table 3 - Adjusted Net Income
for the Year Ended December 31,
2025 (Non-GAAP)
(In thousands)
Income before
income tax
Income tax
expense
(benefit)
Net Income
U.S. GAAP Net income
$1,006,793
$173,634
$833,159
Non-GAAP Adjustments:
FDIC Special Assessment [1]
(15,323)
5,622
(9,701)
Adjusted net income (Non-GAAP)
$991,470
$168,012
$823,458
[1] Partial reversal of the FDIC special assessment reserve
imposed in connection with the receivership of several
failed banks. Refer to the Operating
Expenses section in the Management’s Discussion
and Analysis of Financial Condition and Results of Operations
section (“MD&A”) included in this
Form 10-K for additional information.
60
Table 4 - Adjusted Net Income
for the Year Ended December 31,
2024 (Non-GAAP)
(In thousands)
Income before
income tax
Income tax
expense
(benefit)
Net Income
U.S. GAAP Net income
$796,618
$182,406
$614,212
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)
$817,305
$171,157
$646,148
[1] Expense recorded in the first quarter of 2024 related to
the special assessment imposed by the FDIC to
recover the losses in connection with the
receivership of several failed banks.
[2] Expense recorded in the first quarter of 2024 related to
tax withholdings on prior period distributions from U.S.
subsidiaries.
Net interest income on a taxable equivalent basis
Net
interest
income,
on
a
taxable
equivalent
basis,
is
presented
with
its
different
components
in
Table
5
for
the
year
ended
December 31,
2025
as compared
with
the same
period in
2024, segregated
by
major categories
of
interest
earning assets
and
interest-bearing liabilities.
The
main
sources
of
tax-exempt
interest
income
are
certain
loans
and
investments
in
obligations
of
the
U.S.
Government,
its
agencies and sponsored entities, and
certain obligations of the
Commonwealth of Puerto Rico and
its agencies and assets
held by
the Corporation’s
international banking
entities. On
table 5,
the interest
income has
been converted
to a
taxable equivalent
basis,
using the
applicable statutory income
tax rates
for each
period net
of interest
expense that the
Puerto Rico
tax law
requires to
be
disallowed, based
on an
equal proportion
of tax-exempt
assets to
total assets,
and by
an allocation
of general
and administrative
expenses attributable to exempt income, reducing the benefit of
the tax-exempt income. The effective yield, on a
taxable equivalent
basis, will
vary depending on
the level
of these
expenses that are
attributable to
the available exempt
income. Under Puerto
Rico
tax
law,
the
exempt
interest
can
be
deducted
up
to
the
amount
of
taxable
income.
Management believes
that
this
presentation
provides meaningful information since it facilitates the comparison
of revenues arising from taxable and exempt
sources.
Tangible Common Equity and Tangible Assets
Tangible
common equity,
tangible common equity ratio, tangible
assets and tangible book value
per common share are
non-GAAP
financial measures.
Tangible
common equity
ratio and
tangible book
value per
common share
should be
used in
conjunction with
more
traditional
bank
capital
ratios
commonly
used
by
banks
and
analysts
to
compare
the
capital
adequacy
of
banking
organizations
with
significant
amounts
of
goodwill
or
other
intangible
assets,
typically
stemming
from
the
use
of
the
purchase
accounting method for
mergers and acquisitions.
Tangible
common equity,
tangible assets
and other related
measures should not
be
used
in
isolation
or
as
a substitute
for
stockholders' equity,
total
assets
or
any
other
measure calculated
in
accordance
with
GAAP.
Moreover,
the manner
in which
the
Corporation calculates
its
tangible common
equity,
tangible assets
and
other
related
measures may differ from that of other companies
reporting measures with similar names.
Table
12 provides
a reconciliation of
total stockholders’ equity
to tangible common
equity and total
assets to tangible
assets as
of
December 31, 2025, and December 31, 2024.
CRITICAL ACCOUNTING POLICIES / ESTIMATES
The accounting
and reporting
policies followed
by the
Corporation and
its subsidiaries
conform U.S.
GAAP and
general practices
within the financial services
industry. The
Corporation’s significant accounting policies, including
those related to critical
accounting
estimates, are
described in
detail in
Note 2
to the
Consolidated Financial
Statements and
should be
read in
conjunction with
this
section.
61
Critical accounting
policies that
require management
to make
estimates and
assumptions may
involve significant
judgment about
the effect
of matters
that are
inherently uncertain
and that
involve a
high degree
of subjectivity.
These estimates
are made
under
facts and
circumstances at
a point
in time
and changes
in those
facts and
circumstances could
produce actual
results that
differ
from
those
estimates.
The
following
MD&A
section
is
a
summary
of
what
management
considers
the
Corporation’s
critical
accounting estimates.
Fair Value Measurement of Financial Instruments
The Corporation
currently measures
at fair
value on
a recurring
basis its
trading debt
securities, debt
securities available-for-sale,
certain equity securities, derivatives and
mortgage servicing rights. Occasionally,
the Corporation is required to
record other assets
at fair
value on
a nonrecurring
basis, such
as loans
held-for-sale, loans
held-in-portfolio that
are collateral
dependent and
certain
other assets. These nonrecurring fair value
adjustments typically result from the application of lower of
cost or fair value accounting
or write-downs of individual assets.
The
Corporation categorizes
its
assets and
liabilities measured
at fair
value under
the three-level
hierarchy.
The level
within the
hierarchy is based on whether the inputs to
the valuation methodology used for fair value measurement
are observable.
Management assesses the fair value of its
portfolio of investment securities at least on
a quarterly basis. Securities are classified in
the
fair
value
hierarchy
according
to
product
type,
characteristics
and
market
liquidity.
At
the
end
of
each
period,
management
assesses
the
valuation
hierarchy
for
each
asset
or
liability
measured.
The
fair
value
measurement
analysis
performed
by
the
Corporation includes
validation
procedures and
review
of
market
changes,
pricing methodology,
assumption
and
level
hierarchy
changes, and evaluation of distressed transactions.
Most of the values for trading debt securities and debt securities available-for-sale are obtained from third-party pricing services and
are validated with alternate pricing sources when available.
Securities not priced by a secondary pricing source
are documented and
validated internally according to their significance to the Corporation’s financial statements. Management has established materiality
thresholds
according
to
the
investment
class
to
monitor
and
investigate
material
deviations
in
prices
obtained
from
the
primary
pricing
service
provider
and
the
secondary
pricing
source
used
as
support
for
the
valuation
results.
During
the
year
ended
December 31, 2025, the Corporation
did not adjust any prices
obtained from pricing service providers or
broker dealers. During the
year
ended December
31,
2025, none
of
the
Corporation’s
debt securities
were subject
to
pricing discontinuance
by the
pricing
service providers. The pricing methodology and approach of our primary pricing service providers is concluded to be consistent with
the fair value measurement guidance
Broker quotes reflect
market illiquidity as
they are exit
prices. As of
December 31, 2025,
$8 million in
financial assets were
valued
using broker
quotes: $1 million
in Level 3
assets (mainly tax-exempt
GNMA mortgage-backed securities)
and $7 million
in Level
2
assets. Level 3 asset values were based on an
internal matrix using local broker quotes from
limited trading activity.
Refer to
Note 27
to the
Consolidated Financial Statements for
a description of
the Corporation’s
valuation methodologies used
for
the assets and liabilities measured at fair value.
Loans and Allowance for Credit Losses
One of
the most
critical and
complex accounting
estimates is
associated with
the determination
of the
allowance for
credit losses
(“ACL”). The Corporation establishes an ACL for its loan portfolio based on its estimate of expected credit losses over the remaining
contractual term
of the
loans, adjusted
for expected
prepayments, in
accordance with
Accounting Standards
Codification (“ASC”)
Topic
326.
An
ACL
is
recognized
for
all
loans
including
originated
and
purchased
loans,
since
inception,
with
a
corresponding
charge to the provision for credit losses, except for purchased
credit deteriorated (“PCD”) loans. Upon the acquisition of a PCD
loan,
the Corporation recognizes the estimate of the expected credit losses over the remaining contractual term of each individual loan as
an ACL with a corresponding addition to the loan purchase price.
The Corporation follows a methodology to establish
the ACL which
includes a
reasonable and supportable
forecast period
for estimating credit
losses, considering
quantitative and
qualitative factors
as well
as the
economic outlook. As
part of
this methodology,
management evaluates various
macroeconomic scenarios provided
by third parties. At December 31, 2025, management
applied probability weights to the outcome of
the selected scenarios.
62
The
Corporation
has
designated
as
collateral
dependent
loans
secured
by
collateral
when
foreclosure
is
probable
or
when
foreclosure is
not probable but
the practical expedient
is used.
The practical expedient
is used
when repayment is
expected to
be
provided
substantially
by
the
sale
or
operation
of
the
collateral
and
the
borrower is
experiencing financial
difficulty.
The
ACL
of
collateral dependent loans
is measured based
on the fair
value of the
collateral less costs
to sell. The
fair value of
the collateral is
based on appraisals, which may be adjusted due to their
age, and the type, location, and condition of the
property or area or general
market conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date.
In
addition,
refer
to
the
Credit
Risk
section
of
this
MD&A
and
to
Note
2
to
the
Consolidated
Financial
Statements
for
detailed
information on
the
Corporation’s collateral
value estimation
for other
real
estate. In
addition, refer
to
Note
8 to
the Consolidated
Financial Statements for additional information on
the allowance for credit losses.
Income Taxes
Income taxes are
accounted for using the
asset and liability method,
recognizing deferred tax assets and
liabilities based on future
tax consequences of temporary differences between financial statement carrying amounts
and their respective tax basis. These are
measured using
enacted tax
rates expected
to apply
when the
temporary differences
are recovered
or paid,
with changes
in tax
rates recognized in earnings when enacted.
Calculating periodic income taxes involves complexity and requires estimates
and judgments. The Corporation has two accruals
for
income taxes: (i)
the net estimated
amount currently due
or receivable, including any
reserve for potential
examination issues, and
(ii)
a
deferred
income
tax
reflecting the
estimated
impact
of
temporary differences
between
asset and
liability
recognition under
GAAP and the tax
code. Differences in actual
future tax consequences could affect
the Corporation’s financial position or
results of
operations.
Management evaluates
the realization
of the
deferred tax
asset by
its three
major components:
U.S. mainland
operations, Puerto
Rico banking operations
and Holding Company.
This evaluation requires judgment
related to the
Corporation’s estimation of future
taxable income
over the
term the
deferred tax
assets will
expire. For
the evaluation
of the
realization of
the deferred
tax asset
by
taxing jurisdiction, refer to Note 34 to the Consolidated
Financial Statements.
Under the Puerto Rico Internal Revenue Code, the
Corporation and its subsidiaries are treated as separate taxable
entities and are
not entitled to file
consolidated tax returns. The Code
provides a dividends-received deduction of 100%
on dividends received from
“controlled” domestic subsidiaries subject to taxation in
Puerto Rico
Changes in
the Corporation’s
estimates can occur
due to changes
in tax
rates, new business
strategies, newly
enacted guidance,
and resolution of issues with taxing authorities regarding previously taken tax
positions. In estimating taxes, management evaluates
the merits and risks of
appropriate tax treatment, considering statutory,
judicial and regulatory guidance. Such changes could affect
the
amount
of
accrued
taxes.
The
Corporation
has
made
tax
payments
in
accordance
with
estimated
tax
payments
rules.
Any
remaining payment will not have any significant impact
on liquidity and capital resources.
Refer to Note 34 to the
Consolidated Financial Statements for additional information on the Corporation’s unrecognized tax benefits
and their possible effect on its effective tax rate.
Goodwill and Other Intangible Assets
The
Corporation’s
goodwill
and
other
identifiable
intangible
assets
having
an
indefinite
useful
life
are
tested
for
impairment.
Intangibles with indefinite lives are evaluated for impairment at least annually or on a more frequent basis if events or circumstances
indicate impairment could have taken place. Such events could include, among others, a significant adverse change in the business
climate, an
adverse action
by a
regulator,
an unanticipated
change in
the competitive
environment and
a decision
to change
the
operations or
dispose of
a reporting
unit. Other
identifiable intangible
assets with
a finite
useful life
are evaluated
periodically for
impairment when events or changes in circumstances
indicate that the carrying amount may not be
recoverable.
Goodwill impairment is recognized when the carrying amount of any
of the reporting units exceeds its fair value up
to the amount of
the goodwill. The Corporation estimates the fair value of each reporting unit generally using a combination of methods which include
market price multiples
of comparable companies
and transactions, as
well as discounted
cash flow analyses.
Subsequent reversal
of goodwill impairment losses is not permitted under
applicable accounting standards.
63
For a
detailed description
of the
annual goodwill
impairment evaluations
performed by
the Corporation
during the
third and
fourth
quarter of 2025, refer to Note 14 to the Consolidated
Financial Statements.
Pension and Postretirement Benefit Obligations
The Corporation provides pension and
restoration benefit plans for certain employees
of various subsidiaries. The Corporation also
provides certain
health care
benefits for
retired employees of
BPPR. The
non-contributory defined pension
and benefit
restoration
plans (“the Pension Plans”) are frozen with regards
to all future benefit accruals.
The estimated
benefit costs
and obligations
of the
Pension Plans and
Postretirement Health
Care Benefit Plan
(“OPEB Plan”) are
impacted by
the use
of subjective
assumptions, which can
materially affect
recorded amounts, including
expected returns on
plan
assets,
discount
rates,
termination
rates,
retirement
rates
and
health
care
trend
rates.
The
Corporation
uses
an
independent
actuarial firm for assistance in the determination of
the Pension Plans and OPEB Plan costs and obligations.
The Corporation periodically reviews its assumption for the long-term expected return on Pension Plans
assets. The Pension Plans’
assets
fair
value
at
December
31,
2025
was
$625.8
million.
The
expected
return
on
plan
assets
is
determined
by
considering
various factors,
including a
total funds
return estimate
based on
a weighted-average
of estimated
returns for
each asset
class in
each plan.
Asset class returns are estimated using current and projected economic and
market factors such as real rates of
return,
inflation, credit spreads, equity risk premiums and
excess return expectations.
Net Periodic Benefit Cost
(“pension expense”) for the Pension Plans
amounted to $11.2
million in 2025. The
total pension expense
included
a
benefit
of
$32.3
million
for
the
expected
return
on
assets.
Management
believes
that
the
fair
value
estimates
of
the
Pension Plans assets are reasonable given the valuation methodologies used to measure the investments at fair value as described
in
Note
27
to
the
Consolidated Financial
Statements. Also,
the
compositions
of
the
plan assets
are primarily
in
equity
and
debt
securities, which have readily determinable quoted
market prices.
Detailed
information
on
the
Plans
and
related
valuation
assumptions
are
included
in
Note
29
to
the
Consolidated
Financial
Statements.
As part of the review,
the Corporation’s independent consulting actuaries performed an analysis of expected
returns based on each
plan’s expected asset
allocation for the year
2026 using the
Willis Towers
Watson US Expected
Return Estimator.
This analysis is
reviewed by the Corporation
and used as a
tool to develop expected
rates of return, together
with other data. This
forecast reflects
the actuarial firm’s view of
expected long-term rates of return for each significant asset
class or economic indicator as of January
1,
2026;
for
example, 8.7%
for
large
cap
stocks,
9.0% for
small cap
stocks,
8.9% for
international stocks,
6.4% for
long
corporate
bonds
and
5.8%
for
long
Treasury
bonds.
A
range
of
expected
investment
returns
is
developed,
and
this
range
relies
both
on
forecasts and on broad-market historical benchmarks
for expected returns, correlations, and volatilities
for each asset class.
As a consequence of
recent reviews, the Corporation selected its
expected return on plan
assets for the year
2026 to be 5.6% and
6.7% for
the Pension
Plans. Expected
rates of
return for
the Pension
Plans of
5.6% and
6.7% had
been used
for 2025
and 5.6%
and 6.6% had been used for 2024. The expected
return can be materially impacted by a
change in the plan’s asset allocation.
Pension expense is sensitive
to changes in the
expected return on assets.
For example, decreasing the expected
rate of return for
2026 from
5.6% to
5.35% would
increase the
projected 2026
pension expense
for the
Banco Popular
de Puerto
Rico Retirement
Plan, the Corporation’s largest plan, by approximately
$1.4
million.
The Corporation had recorded a pension balance sheet asset of $38.2 million and a pension balance sheet liability of $4.7 million
at
December 31, 2025.
The Corporation uses
the spot rate
yield curve from
the Willis Towers
Watson RATE:
Link (10/90) Model
to discount the
expected
projected
cash
flows
of
the
plans.
The
equivalent
single
weighted
average
discount
rate
ranged
from
5.25%
to
5.29%
for
the
Pension Plans and 5.44% for the OPEB Plan to determine
the benefit obligations at December 31, 2025.
A 50
basis point
decrease to
each of
the rates
in the
December 31,
2025 Willis
Towers
Watson RATE:
Link (10/90)
Model would
increase the
projected 2026
expense for
the Banco
Popular de
Puerto Rico
Retirement Plan
by approximately
$1.8
million. The
change would not affect the minimum required contribution
to the Pension Plans.
The OPEB Plan was unfunded (no assets were held by the plan) at December 31, 2025. The Corporation had recorded a liability for
the underfunded postretirement benefit obligation of
$104.0 million at December 31, 2025.
64
STATEMENT
OF OPERATIONS ANALYSIS
Net Interest Income
Net interest income is the interest earned from loans, debt securities and money market investments, including loan fees, minus
the
interest cost of deposits and borrowed money.
Various risk factors
affect net interest income including the economic
environment in
which we operate, market related events, the mix and size of the earning assets and related funding, changes in volumes, re-pricing
characteristics, loan fees
collected, delay
charges and
interest collected on
nonaccrual loans, as
well as
strategic decisions made
by the Corporation’s management.
The average key index rates for the years 2025
and 2024 were as follows:
2025
2024
Prime rate…………………………………………………………………………………………………
7.37%
8.31%
SOFR………………………………………………………………………………………………………
4.24
5.15
Fed funds rate…………………………………………………………………………………………….
4.20
5.12
3-month Treasury Bill…………………………………………………………………………………….
4.15
5.09
10-year Treasury…………………………………………………………………………………………
4.29
4.20
FNMA 30-year…………………………………………………………………………………………….
5.47
5.58
Net interest
income (“NII”) for
the year
ended December 31,
2025 was
$2.5 billion,
or $258.9
million higher than
2024. NII
growth
was driven by
lower interest expense on
deposits by $158.2 million
primarily due to
lower P.R.
public deposits cost,
higher income
from loans by $137.1
million primarily due to
loan growth mainly attributed to
the commercial, construction loans in
both banks and
mortgage loans
in BPPR
and higher
income resulting
from higher
yields of
U.S. Treasuries
by $83.4
million also
supported to
NII
expansion. This
increase in
NII was
partially
offset
by
lower
income from
money market
investments by
$97.4 million
driven
by
short-term market rates
declines by the
Federal Open Market
Committee coupled with
lower average balances
due to loan
growth
and investments in U.S.
Treasuries. Net interest margin
(“NIM”) of 3.49% in
2025 increased 25 basis points, compared
to 3.24% in
2024, driven by lower deposit costs, higher yielding
U.S. treasuries and loan growth.
Total
deposit costs of 1.77%
decreased 30 basis points
when compared to 2024. Excluding
P.R.
public deposits, average deposits
increased by $903.0 million and total deposit
costs decreased seven basis points to 1.16% year-over-year.
Net Interest Income on a taxable equivalent basis (“FTE”) for the year ended December 31, 2025 was $2.8 billion, compared
to $2.5
billion for the same period in 2024,
an increase of $359.9 million. NIM on a
taxable equivalent (“NIM FT””) basis in 2025 was
3.88%
or 39 basis points higher than the 3.49%
reported in 2024. NIM FTE expansion during 2025 is
primarily due to higher re-investment
in U.S. treasuries
which are tax
exempt in Puerto
Rico and exempt
interest income on
certain loan portfolios.
The main factors
for
the increase in net interest income FTE were:
●
Higher income
from
investment securities
by
$147.1 million
driven by
the
re-investment of
maturities of
U.S. Treasury
securities at higher yields by 50 basis points
●
Higher
interest
income
from
loans
by
$160.9
million,
due
to
growth,
most
notably
in
commercial,
construction
and
mortgage portfolios, which include income of certain
loans in Banco Popular de Puerto Rico (“BPPR”)
that are tax-exempt,
partially offset in part by the re-pricing of adjustable-rate
loans;
●
Lower
interest
expense
by
$158.2
million
or
30
basis
points,
mainly
due
to
a
decrease
in
market-linked
P.R.
public
deposits cost
by
88
basis points
and
Popular Bank
(“PB”) savings
online
deposits by
76
basis points,
driven by
lower
short-term market rates;
Partially offset by:
65
●
Lower income
from money
markets by
$97.4 million
driven by
lower yield
by 95
basis points
due to
short-term market
rates decline
and lower
average balances
due to
the use
of funds
to support
loan growth
and U.S.
Treasury
securities
purchases, as mentioned above.
Table
5 presents
the
different
components
of
the
Corporation’s
net
interest
income,
on
a
taxable
equivalent
basis,
for
the
year
ended December 31,
2025, as compared
with the same
period in 2024,
segregated by major
categories of interest
earning assets
and interest-bearing liabilities.
66
Table 5 – Analysis of Levels & Yields
on a Taxable Equivalent Basis
from Continuing Operations (Non-GAAP)
Period ended December 31, 2025
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2025
2024
Variance
2025
2024
Variance
2025
2024
Variance
Rate
Volume
(In millions)
(In thousands)
$
5,853
$
6,641
$
(788)
4.35
%
5.30
%
(0.95)
%
Money market
investments
$
254,786
$
352,194
$
(97,408)
$
(58,638)
$
(38,770)
28,770
27,955
815
3.32
2.89
0.43
Investment securities
[1]
955,548
808,458
147,090
113,349
33,741
30
30
-
5.61
5.23
0.38
Trading securities
1,667
1,583
84
112
(28)
Total money market,
investment and
trading
34,653
34,626
27
3.50
3.36
0.14
securities
1,212,001
1,162,235
49,766
54,823
(5,057)
Loans:
18,951
17,855
1,096
6.73
6.86
(0.13)
Commercial
1,275,422
1,224,856
50,566
(23,568)
74,134
1,490
1,099
391
8.19
8.81
(0.62)
Construction
122,051
96,778
25,273
(7,168)
32,441
1,969
1,820
149
7.20
6.90
0.30
Leasing
141,828
125,652
16,176
5,637
10,539
8,397
7,873
524
5.92
5.70
0.22
Mortgage
497,419
448,880
48,539
17,945
30,594
3,241
3,211
30
13.85
13.90
(0.05)
Consumer
448,958
446,357
2,601
(1,950)
4,551
3,935
3,843
92
9.15
8.90
0.25
Auto
359,870
342,075
17,795
9,537
8,258
37,983
35,701
2,282
7.49
7.52
(0.03)
Total loans
2,845,548
2,684,598
160,950
433
160,517
$
72,636
$
70,327
$
2,309
5.59
%
5.47
%
0.12
%
Total earning assets
$
4,057,549
3,846,833
210,716
55,256
155,460
Interest bearing
deposits:
$
8,147
$
7,498
$
649
1.73
%
1.99
%
(0.26)
%
NOW and money
market
$
141,344
$
149,438
$
(8,094)
$
(18,950)
$
10,856
14,543
14,495
48
0.83
0.91
(0.08)
Savings
120,525
132,321
(11,796)
(12,160)
364
8,656
8,183
473
3.15
3.35
(0.20)
Time deposits
272,686
273,814
(1,128)
(17,272)
16,144
20,259
19,203
1,056
3.18
4.06
(0.88)
P.R. public
deposits
643,341
780,548
(137,207)
(178,506)
41,299
51,605
49,379
2,226
2.28
2.71
(0.43)
Total interest bearing
deposits
1,177,896
1,336,121
(158,225)
(226,888)
68,663
14,798
15,065
(267)
Non-interest bearing
demand deposits
66,403
64,444
1,959
1.77
2.07
(0.30)
Total deposits
1,177,896
1,336,121
(158,225)
(226,888)
68,663
356
84
272
4.44
5.53
(1.09)
Short-term
borrowings
15,818
4,676
11,142
(801)
11,943
Other medium and
824
962
(138)
5.83
5.22
0.61
long-term debt
48,092
50,178
(2,086)
5,241
(7,327)
Total interest bearing
52,785
50,425
2,360
2.35
2.76
(0.41)
liabilities (excluding
demand deposits)
1,241,806
1,390,975
(149,169)
(222,448)
73,279
5,053
4,837
216
Other sources of
funds
$
72,636
70,327
2,309
1.71
1.98
(0.27)
%
Total source of funds
$
1,241,806
$
1,390,975
$
(149,169)
$
(222,448)
$
73,279
3.88
%
3.49
%
0.39
%
Net interest margin/
income on a taxable
equivalent basis
(Non-GAAP)
$
2,815,743
$
2,455,858
$
359,885
$
277,704
$
82,181
3.24
%
2.71
%
0.53
%
Net interest spread
Taxable equivalent
adjustment
274,540
173,570
100,970
3.49
%
3.24
%
0.25
%
Net interest margin/
income non-taxable
equivalent basis
(GAAP)
$
2,541,203
$
2,282,288
$
258,915
Note: The changes that are not due solely to volume or
rate are allocated to volume and rate based on the
proportion of the change in each category.
[1] Average balances exclude unrealized gains or losses
on debt securities available-for-sale and the unrealized
loss related to certain securities transferred
from available-for-sale to held-to-maturity.
67
Provision for Credit Losses - Loans Held-in-Portfolio
and Unfunded Commitments
For the year ended December 31, 2025, the Corporation recorded a provision for credit of $260.2 million, an increase of $3.2 million
when compared
to
$256.9 million
for the
year ended
December 31,
2024. The
provision for
loan and
lease losses
for 2025
was
$260.7 million, an increase of $2.3 million.
As discussed
in Note
8 to
the Consolidated
Financial Statements,
the Corporation
estimates the
ACL by
weighting the
outputs of
optimistic,
baseline,
and
pessimistic
scenarios.
During
the
first
quarter
of
2025,
in
response
to
the
economic
uncertainty,
the
Corporation increased the probability assigned to the pessimistic
scenario making it equal to the baseline scenario. Subsequently, in
the second quarter
of 2025, the
probability assigned to the
pessimistic scenario was moderately
reduced based on
the changes in
the economic outlook and
a reassessment of uncertainty
compared to the previous
quarter. The
net impact of these
two events on
the ACL levels for the year ended December 31, 2025 was $13.7 million in additional reserves. There were no additional changes
to
the probability weights during the
year 2025. The probability
weight for the pessimistic scenario
remains above the levels observed
in 2024, given the ongoing economic uncertainty.
The major drivers of the changes in
the provision for loan losses during the year
by business segments when compared to the year
2024 were as follows:
●
In BPPR,
the provision
for loan
losses for
was $240.2
million, a
decrease of
$13.6 million
when compared
to the
year
ended in 2024,
driven by lower
reserves for the
consumer portfolio of
$34.7 million mainly
due to improvements in
credit
quality,
for
the
credit
cards
portfolio,
lower
net
charge-offs,
in
the
auto
portfolio
and
a
lower
provision
for
the
leases
portfolio. These favorable variance were partially offset by higher reserves in the commercial portfolio by $20.5 million due
to a specific reserve recognized for a $158.3 million commercial and industrial facility and a $13.5 million provision related
to
a
charge-off
recognized
during
the
third
quarter
for
a
$30.1
million
commercial
real
estate
(“CRE”)
facility,
both
classified as NPLs during the year.
●
In
the
Popular
U.S.
segment,
the
provision
for
loans
losses
was
$20.5
million,
an
increase
of
$15.9
million
when
compared to
the year
2024., mainly
driven by
higher qualitative
reserves and
changes in
credit quality
within the
CRE
portfolio partially offset by lower net charge-offs within the consumer
portfolio.
At
December
31,
2025,
the
total
allowance
for
credit
losses
for
loans
held-in-portfolio amounted
to
$808.1
million,
compared
to
$746.0
million
as
of
December
31,
2024.
The
ratio
of
the
allowance
for
credit
losses
to
loans
held-in-portfolio
was
2.05%
at
December
31,
2025, compared
to
2.01%
at
December 31,
2024. Refer
to
Note
8
to
the
Consolidated Financial
Statements, for
additional
information
on
the
Corporation’s
methodology
to
estimate
its
ACL
and
to
the
Credit
Risk
section
of
this
MD&A
for
a
detailed analysis of net charge-offs, non-performing assets,
the allowance for credit losses and selected loan
losses statistics.
Non-Interest Income
For the year ended December 31, 2025, non-interest
income was $658.0 million, a decrease of $0.9
million when compared with the
previous year. The variance was primarily due to:
●
lower other operating income by $16.8 million
mainly due to lower daily car rental revenue
by $18.1 million and gains from
the sale of car rental units by $8.0 million, associated
with the car rental business sold in the fourth
quarter of 2024,
partially offset by income of $5.3 million related to a retroactive
charge billed to a tenant for energy supplied in
prior years
and higher income from investments accounted under
the equity method by $3.9 million; and
●
lower income from mortgage banking activities by
$4.1 million mainly due to a decrease in
mortgage servicing fees due to
portfolio runoff and an unfavorable variance in the fair value adjustments
of mortgage servicing rights (“MSRs”);
partially offset by:
68
●
higher other service fees by $13.7 million mainly
due to higher debit and credit card
fees by $12.7 million, driven by higher
customer purchase activity, and higher investment management fees by $4.5
million, due to higher assets under
management, partially offset by lower insurance fees by
$6.6 million;
●
higher service charges on deposit accounts by $4.5
million mainly due to higher non-balance
compensation fees in
commercial deposits; and
●
higher income from equity securities by $3.2 million,
mainly due to an impairment on equity
securities of $2.3 million
recognized during 2024 and a favorable variance
of $1.1 million in the fair value adjustment of equity
securities related to
the deferred benefit plans, which have an offsetting
effect in personnel cost.
Operating Expenses
Operating expenses for the
year ended December
31, 2025 amount to
$1.9 billion, an increase
of $44.6 million
when compared to
the previous year. The results of 2025 include a partial reversal of the FDIC special assessment reserve
of $15.3 million imposed on
banks to recover losses in connection with the
receivership of two failed banks during 2023. Management revised its reserve
based
on the FDIC’s interim final rule, which became effective December
19, 2025 and amended, among other
things, the collection rate of
the
special
assessment.
Operating
expenses
for
the
year
ended
December
31,
2024
included
$6.4
million
of
interest
accrued
related to prior period tax withholdings and the $14.3 million expense related to the FDIC special assessment. The other factors that
contributed to the increase in operating expenses
for the year were:
●
higher personnel costs by $84.8
million mainly due to higher incentives, including $38.8 million
related to the profit-sharing
plan
which is
tied
to
the
Corporation’s financial
performance and
$24.2
million
in
other
performance-based incentives,
higher
salaries
expenses
by
$12.9
million
due
to
a
higher
headcount
and
annual
merit
increases,
and
a
$7.7
million
increase in
other personnel costs
mainly related to
the valuation
of securities
held for
deferred compensation plans
and
higher payroll tax;
●
a non-cash goodwill impairment of $13.0 million
in the Corporation’s U.S. based equipment leasing subsidiary due
to
lower projected earnings for the forecasted period;
●
higher technology and software expenses,
including software cost amortization, by $12.5 million
related to investments in
the Corporation’s cloud infrastructure, among other continuing
investments in technology and transformation
initiatives;
●
higher
processing
and
transactional
services
expenses
by
$9.7
million
mainly
due
to
higher credit
and
debit
card
and
merchant processing expenses as a result of higher
transactional volumes;
●
higher
other
taxes
expense
by
$6.9
million
mainly
due
to
an
increase
in
municipal
license
tax
and
higher
regulatory
examination fees in BPPR; and
●
higher business
promotion expenses
by
$5.4 million
mainly
due to
higher customer
rewards programs
expense in
our
credit card business reflecting an increase in
customer purchase activity;
partially offset by:
●
lower other
operating expenses
by $33.0
million mainly
driven by
lower accruals
for reserves
for operational
losses by
$10.6 million;
●
lower professional fees by $15.7 million mainly due
to lower costs associated with regulatory compliance
activities; and
●
lower equipment expenses by $11.3 million, mainly due to the
depreciation of car rental units during 2024 associated with
units sold as part of the daily car rental transaction
during the fourth quarter of 2024.
69
Table 6 provides a breakdown of operating expenses by major categories.
Table 6 - Operating Expenses
Years ended December
31,
(Dollars in thousands)
2025
2024
2023
Personnel costs:
Salaries
$
542,717
$
529,794
$
505,935
Commissions, incentives, profit sharing and other bonuses
189,041
126,081
112,657
Pension, postretirement and medical insurance
69,329
68,185
67,469
Other personnel costs, including payroll taxes
104,127
96,391
91,984
Total personnel
costs
905,214
820,451
778,045
Net occupancy expenses
110,213
111,430
111,586
Equipment expenses
22,110
33,424
37,057
Other taxes
72,939
66,046
55,926
Professional fees
110,098
125,822
161,142
Technology and
software expenses
341,605
329,061
290,615
Processing and transactional services:
Credit and debit cards
56,168
49,301
44,578
Other processing and transactional services
96,218
93,376
93,492
Total processing
and transactional services
152,386
142,677
138,070
Communications
19,270
18,899
16,664
Business promotion:
Rewards and customer loyalty programs
69,809
63,773
59,092
Other business promotion
37,474
38,157
35,834
Total business
promotion
107,283
101,930
94,926
FDIC deposit insurance
24,369
54,626
105,985
Other real estate owned (OREO) income
(13,393)
(18,124)
(15,375)
Other operating expenses:
Operational losses
16,581
27,200
23,505
All other
48,841
71,257
73,774
Total other operating
expenses
65,422
98,457
97,279
Amortization of intangibles
1,750
2,938
3,180
Goodwill impairment charge
13,000
-
23,000
Total operating
expenses
$
1,932,266
$
1,887,637
$
1,898,100
Personnel costs to average assets
1.20
%
1.12
%
1.09
%
Operating expenses to average assets
2.55
2.57
2.66
Employees (full-time equivalent)
9,238
9,231
9,088
Average assets per employee (in millions)
$8.20
$7.95
$7.84
Income Taxes
For the
year ended
December 31,
2025, the
Corporation recorded an
income tax
expense of
$173.6 million,
compared to
$182.4
million for the year 2024.
The decrease of $8.8 million reflects the impact of
the tax withholding expense of $22.9 million recorded in
the year 2024
related to intercompany distributions for
the years 2014-2024, coupled with
higher exempt income, partially offset
by
higher income before tax for the year 2025.
At December
31, 2025,
the Corporation
had a
net deferred
tax asset
amounting to
$812.3 million, net
of a
valuation allowance
of
$464.7 million. The net
deferred tax asset related
to the U.S. operations
was $228.2 million, net
of a valuation allowance
of $386.6
million.
70
Refer to
Note 34
to the
Consolidated Financial
Statements for
a reconciliation
of the
statutory income
tax rate
to the
effective tax
rate and additional information on the income
tax expense and deferred tax asset balances.
Fourth Quarter Operational Results
●
For
the
quarter
ended
December
31,
2025,
the
Corporation
recorded
net
income
of
$233.9
million,
compared
to
net
income
of
$177.8 million
for
the same
quarter of
the
previous year.
Excluding the
partial
reversal of
the
FDIC special
assessment reserve of $9.7 million, net of tax,
adjusted net income for the fourth quarter of
2025 was $224.2 million.
●
Net interest income for the fourth
quarter of 2025 amounted to $657.6
million, compared with $590.8 million for the
fourth
quarter
of
2024.
On
a
taxable
equivalent
basis,
net
interest
income
amounted
to
$733.8
million,
compared
to
$638.6
million.
The
increase
of
$95.2
million
in
net
interest
income,
on
a
taxable
equivalent
basis,
was
mainly
due
to
higher
income from investment securities by $51.6 million mainly due
to higher yields by 51 basis points and average balances
of
U.S. Treasury securities, higher interest income from loans by $43.8
million, due to growth across most portfolios at
BPPR
and
the
commercial and
construction portfolios
in
PB,
and lower
cost
of
deposits by
$34.2
million, or
38
basis
points,
primarily in P.R.
public deposits,
which declined by 72
basis points as these are
mainly linked to short-term market rates;
partially
offset
by
lower
income
from
money
market
investments
by
$31.1
million
due
to
lower
average
balances
and
yields by 82 basis points as a result of short-term
market rate declines.
Net interest margin increased by 26 basis points
to
3.61%. On a taxable equivalent basis, the net interest margin for the fourth quarter of 2025
was 4.03%, or 41 basis points
higher when compared to 3.62% for the fourth
quarter of 2024.
●
The provision
for loan
losses was
$71.4 million
for the
fourth quarter
of
2025, compared
to $69.1
million for
the same
quarter of the previous year. The increase of $2.3 million was driven by the commercial portfolios, loan modifications, loan
growth,
and
the
qualitative
reserve
release
recorded
in
2024
due
to
the
implementation
of
a
new
CRE
non-owner
occupied model; partially offset by lower NCOs and improvements
in credit quality at the consumer portfolios.
●
Non-interest income amounted to $166.3 million for
the quarter ended December 31, 2025,
compared with $164.7 million
for the same
quarter in 2024.
The increase of
$1.6 million was
driven by higher
other service fees
by $7.2 million
due to
higher debit and
credit card fees
from higher customer
purchase activity,
partially offset by
lower other operating
income
by $3.2 million due to lower daily car
rental revenue by $3.2 million, due to the sale
of the daily car rental business during
the
fourth
quarter
of
2024,
and
lower
income
from
mortgage
banking
activities
by
$2.7
million
mainly
due
to
an
unfavorable variance
in the
fair value
adjustment
of MSRs
driven by
portfolio runoff
compared
to
the fourth
quarter of
2024.
●
Operating expenses totaled $473.2 million for the quarter
ended December 31, 2025, compared with $467.6
million for the
same quarter
in the
previous year.
The increase
of $5.6
million was
mainly related
to higher
personnel costs
by $24.4
million due to
annual salary revisions,
higher headcount, and higher incentives,
which include $12.8 million related to
the
quarterly accrual for the profit-sharing plan driven by the
Corporation’s performance,
partially offset by a reversal of $15.3
million from
the reserve
related to
the FDIC
special assessment imposed
on banks
to recover
losses in
connection with
the receivership of two failed banks during 2023 and
lower accruals for reserves for operational losses
by $6.8 million.
●
For the quarter
ended December 31,
2025, the Corporation
recorded an income tax
expense of $44.7
million, compared
with an income tax expense of $43.9 million for the same quarter of 2024. The unfavorable variance was mostly attributed
to a higher income before tax.
REPORTABLE SEGMENT RESULTS
The Corporation’s
reportable segments
for managerial
reporting purposes
consist of
Banco Popular
de Puerto
Rico and
Popular
U.S. A Corporate group has been defined to
support the reportable segments.
For
a
description
of
the
Corporation’s
reportable
segments,
including
additional
financial
information
and
the
underlying
management accounting process, refer to Note 36
to the Consolidated Financial Statements.
The Corporate
group reported
a net
income of
$15.6 million
for the
year ended
December 31,
2025, compared
with a
net loss
of
$19.0 million for
the previous year.
The loss in
2024 was mainly
attributable to the
expense related to the
$22.9 million adjustment
recorded in
the
first
quarter of
2024 to
recognize the
tax
impact associated
with prior
period intercompany
distributions and
the
71
additional
$6.5
million
expense
for
the
tax
impact
of
intercompany
distributions
paid
during
the
first
quarter
of
2024.
A
positive
adjustment of
$3.9 million
was recorded
during the
second quarter
of 2025,
resulting from
reimbursements received from
the IRS
related
to
interest
paid
for
the
intercompany
distributions.
Higher
income
from
equity
method
investments
and
lower
expenses
driven by
professional services, also
contributed to
the positive
variance for
the year
ended December 31,2025,
partially offset
by
lower income from money market investments due
to a decrease in rates.
Highlights on the earnings results for the reportable
segments are discussed below:
Banco Popular de Puerto Rico
The Banco Popular de Puerto Rico reportable segment’s
net income amounted to $729.5 million for
the year ended December 31,
2025, compared with $555.7 million for the year ended
December 31, 2024. The principal factors that
contributed to the variance in
the financial results included the following:
●
Net interest income by $2.2 billion was higher
by $209.1 million primary driven by lower
expense on deposits, mainly from
the re-pricing of P.R. public funds, which decreased by $137.2 million, or 88 basis points and higher
income from loans by
$79.9 million due to portfolio growth, higher income
from in U.S. Treasury securities by $75.7 million, or 20 basis
points,
mainly from reinvestments at higher yields, partially offset
by lower income from money market securities investments
by
$72.7 million reflecting the decline in short-term market
rates and lower average balances. The net
interest margin for the
year ended December 31,2025 was 3.69%, 27 basis
points higher when compared with 3.43%
the previous year;
●
The provision for credit losses for the loan portfolio
of $240.4 million was lower by $13.2 million
mainly attributable to
improvement in credit quality for the credit
cards portfolios, lower net charge-offs in the auto portfolio,
and lower reserves
in the leases portfolios, partially offset by an increase
in the reserves in the commercial portfolio mainly
due to the impact
of two unrelated NPL inflows;
●
Non-interest income of $584.4 million, lower by $11.8 million, mainly due to lower
daily car rental revenue by $18.1 million
and gains from the sale of car rental units by $8.0
million related to the car rental business
sold in the fourth quarter of
2024, lower mortgage banking activities by $4.1
million mainly due to a decrease in mortgage
servicing fees and fair value
adjustments in MSRs;
partially offset by the $5.3 million retroactive charge
billed to a tenant for energy supplied in prior
years, higher service fees by $10.9 million due
to credit and debit card fees, from higher volume
of transactions, higher
investment management fees and higher charges on
deposit accounts by $4.0 million mainly due
to non-balance
compensation in commercial deposits;
●
Higher operating expenses by $33.0 million mostly due
to
●
higher personnel costs of $53.8 million, including
profit sharing expense by $30.8 million and
higher salaries
expense by $22.2 million due to annual merit
increases and a higher headcount;
●
higher other taxes by $7.3 million due to municipal
license and regulatory examination fees;
●
higher processing fees by $9.7 million due to credit
and debit card transactions; and
●
higher technology expenses by $8.0 million mainly related
to investments in technology and transformation
initiatives;
partially offset by
●
lower equipment expenses by $10.8 million mainly related
to the daily rental business sold in 2024;
●
lower FDIC expense by $26.8 million due to the reversal
in 2025 of the FDIC special assessment of
$13.6
million compared to the expense of $12.7 million
recorded in 2024;
●
lower other operating expenses by $8.1 million
due to reserves for operational losses; and
●
lower professional fees by $6.6 million;
●
Higher income tax expense by $4.2 million mainly
due to higher income before tax, offset by higher exempt
income.
72
Popular U.S.
For the
year ended
December 31, 2025, Popular
U.S. reported
net income
of $87.8
million, compared with
a net
income of
$77.6
million for the year ended
December 31, 2024. The principal factors
that contributed to the variance
in the financial results included
the following:
●
Net interest
income of
$411.9
million, higher
by $55.9
million mainly
due to
higher interest
income from
loans by
$57.2
million,
or
10
basis
points,
mainly
related
to
growth
in
the
commercial
and
construction
portfolios
and
lower
interest
expense from deposits by $32.8 million, or 44 basis points,
due to the repricing of high-cost deposits, mainly direct on-line
deposits, partially
offset by
lower income
from money
market investments due
to decline
in short-term
market rates
and
lower average
balances. The
net interest
margin for
the year
ended December
31,2025 was
2.94%, higher
by 28
basis
points when compared to 2.66% for the previous
year;
●
The provision for credit losses for the loan portfolio of $20.5 million was
higher by $15.9 million driven by higher qualitative
reserves and
changes in
credit quality
for the
commercial real
estate portfolio;
partially offset
by lower
reserves for
the
consumer loans;
●
Higher operating
expenses by
$18.4 million
reflecting the
$13.0 million
goodwill impairment
charge related
to
our U.S.
based
equipment leasing
subsidiary recorded
in 2025;
higher personnel
costs
by
$4.1 million
mainly due
to
the
profit-
sharing expense;
partially offset
by lower
FDIC expense
by $3.4
million due
to the
reversal in
2025 of
the FDIC
special
assessment $1.7 million compared to an expense
of $1.6 million in 2024;
●
Higher income tax expense by $9.9 million due
to higher income before tax.
STATEMENT
OF FINANCIAL CONDITION ANALYSIS
Assets
The
Corporation’s
total
assets
were $75.3
billion
at
December 31,
2025, compared
to
$73.0
billion
at
December 31,
2024.
The
increase in
total assets
of $2.3
billion was
driven by
an increase
in AFS
securities and
loan growth
across most
portfolios at
both
BPPR and PB segments, partially offset by a decrease in money market
investments, HTM securities, and other assets. Refer to the
Corporation’s
Consolidated
Statements
of
Financial
Condition
at
December
31,
2025
and
2024
included
in
this
Form
10-K
for
additional
information.
Also,
refer
to
the
Statistical
Summary
2025-2024
in
this
MD&A
for
Condensed
Statements
of
Financial
Condition.
Money market investments and debt securities
Money market investments decreased by
$1.8 billion at December 31,
2025, when compared to December 31,
2024, mainly driven
by funds
used for
loan growth
and to
purchase U.S.
Treasury securities.
Debt securities
available-for-sale (“AFS”) increased
$2.3
billion, mainly due to reinvestment in U.S. Treasury Securities. Debt securities
held-to-maturity (“HTM”) decreased by $430.5 million
driven by
maturities and
paydowns, partially
offset
by the
amortization of
$186.4 million
of the
discount related
to
U.S. Treasury
securities previously reclassified from
AFS to HTM.
Refer to Notes
5 and 6
to the Consolidated Financial
Statements for additional
information with respect to the Corporation’s debt securities
available-for-sale and held-to-maturity.
Loans
Refer to Table
7 for a breakdown of
the Corporation’s loan portfolio. Also,
refer to Note 7
to the Consolidated Financial Statements
for detailed information about the Corporation’s loan portfolio
composition and loan purchases and sales.
Loans
held-in-portfolio increased
by
$2.2
billion to
$39.3 billion
at December
31, 2025,
compared to
December 31,
2024. In
the
BPPR
segment,
loan
balances
increased
by
$1.5
billion
across
most
portfolios,
most
notably
commercial,
mortgage,
and
construction portfolios.
The PB segment also increased by $740.3 million,
mainly driven by commercial and construction lending.
During the year
ended December 31,
2025, the Corporation’s
loans to non-depository
financial institutions (“NDFIs’’),
increased by
$150.2 million
to $545.0
million. The increase
was mainly
related to a
loan for
working capital to
an insurance
company in
Puerto
Rico.
At
December 31,
2025, the
Corporation’s
exposure to
NDFIs
was composed
of
approximately $337.3
million
to
insurance
73
companies
for
working
capital
needs
unrelated
to
lending
activities,
$105.9
million
to
consumer
and
commercial
credit
intermediaries,
and
$101.8
million
related
to
mortgage
credit
intermediaries.
All
loans
to
NDFIs
are
current
in
their
contractual
payments and carry a ‘pass’ rating.
Refer to
Note 7
to the
Consolidated Financial
Statements for
additional information
on delinquency,
asset quality
and origination
vintage information of these loan segments.
Table 7 provides a breakdown of loan balance per portfolio.
Table 7 - Loans Ending Balances
(In thousands)
December 31, 2025
December 31, 2024
Variance
Loans held-in-portfolio:
Commercial
Commercial multi-family
$
2,455,790
$
2,399,620
$
56,170
Commercial real estate non-owner occupied
5,543,284
5,363,235
180,049
Commercial real estate owner occupied
3,153,080
3,157,746
(4,666)
Commercial and industrial
8,607,412
7,741,562
865,850
Total Commercial
19,759,566
18,662,163
1,097,403
Construction
1,674,899
1,263,792
411,107
Mortgage
8,649,440
8,114,183
535,257
Leasing
2,001,365
1,925,405
75,960
Consumer
Credit cards
1,256,717
1,218,079
38,638
Home equity lines of credit
78,692
73,571
5,121
Personal
1,906,228
1,855,244
50,984
Auto
3,819,812
3,823,437
(3,625)
Other
180,799
171,778
9,021
Total Consumer
7,242,248
7,142,109
100,139
Total loans held-in
-portfolio
$
39,327,518
$
37,107,652
$
2,219,866
Loans held-for-sale:
Mortgage
$
9,998
$
5,423
$
4,575
Total loans held-for-sale
$
9,998
$
5,423
$
4,575
Total loans
$
39,337,516
$
37,113,075
$
2,224,441
Other assets
Other assets amounted to $1.7 billion
at December 31, 2025, a decrease of
$91.8 million compared to $1.8 billion at
December 31,
2024.
The variance
was mainly
driven
by
a
decrease in
net
deferred tax
assets
of
approximately $112.1
million
due
to
positive
changes
in
the
valuation
of
AFS
securities,
a
reduction
in
unsettled
trade
receivables
of
$14.6
million
related
to
proceeds
from
maturities of U.S. Treasury securities, and lower principal, interest and escrow servicing advances of $13.5 million, partially offset by
an increase in capitalize software costs of approximately $46.9 million mainly
related to technology modernization. Refer to Note 13
to the Consolidated Financial Statements
for a breakdown of
the principal categories that comprise the
caption of “Other Assets” in
the Consolidated Statements of Financial Condition
at December 31, 2025 and 2024.
Liabilities
The Corporation’s
total liabilities were
$69.1 billion
at December
31, 2025,
an increase
of $1.7
billion compared to
$67.4 billion
at
December
31,
2024,
mainly
due
to
an
increase in
deposits
as
discussed
below.
The
following
is
a
discussion
of
the
significant
changes in liabilities.
Deposits and Borrowings
Total Deposits
74
The Corporation’s
deposits totaled
$66.2 billion
at December
31, 2025,
compared to
$64.9 billion
at December
31, 2024.
Ending
deposit balances increased
by $1.3 billion,
while average balances for
the year grew
by $2.0 billion.
The average deposit
balance,
excluding P.R.
public deposits, increased by $0.9 billion. Non-interest-bearing deposits increased by $164.7 million when
compared
to December 31, 2024, demonstrating the impact
of the Corporation’s continued focus on deposit retention
strategies.
Excluding P.R.
Government deposits, as of December 31, 2025, deposits amounted to $46.8 billion, compared to
$45.4 billion as of
December 31, 2024. This $1.4 billion increase included higher savings, NOW,
and money market deposits by $829.8 million, higher
time deposits by $361.0 million and higher
demand deposits by $159.2 million, all primarily
at BPPR.
At December 31, 2025, Puerto Rico public deposits were $19.4 billion, a decrease of approximately $44.2 million when compared to
December 31,
2024. P.R
public deposits
represent 29%
of total
deposits and
are expected
to continue
to range
in the
short term
between $18
billion and
$20
billion. However,
the rate
at
which public
deposit balances
may change
is
uncertain and
difficult
to
predict. The
amount and
timing of
any such
change is
likely to
be impacted
by,
for example,
the level
of federal
assistance and
speed at which
any federal assistance is
distributed, the financial condition, liquidity
and cash management practices
of the Puerto
Rico
Government
and
its
instrumentalities,
and
the
implementation
of
fiscal
and
debt
adjustment
plans
approved
pursuant
to
PROMESA or
other
actions
mandated by
the
Fiscal
Oversight and
Management Board
for Puerto
Rico
(the
“Oversight Board”).
Additionally,
the Trump
Administration is
conducting a
review of
federal funding,
which could
entail a
reduction in
federal funding
available for Puerto Rico. P.R
public deposits costs are generally indexed
to changes in short-term market
rates with a one-quarter
lag, in
accordance with
contractual terms.
As a
result, these
deposits’ costs
have typically
lagged variable
asset repricing.
These
deposits require that the bank pledge high credit quality securities as collateral; therefore, liquidity risks arising
from deposit outflows
are lower.
The volume and cost of P.R.
public deposits and the proportion of high-cost deposits in the U.S, directly impact the balance and mix
of earning assets and therefore represent a key
factor in the Corporation’s ability to expand its net
interest margin.
Refer to Table 8 for a breakdown of the Corporation’s deposits at December 31, 2025 and 2024.
Table 8 - Deposits Ending Balances
(In thousands)
December 31, 2025
December 31, 2024
[2]
Variance
Deposits excluding P.R.
public deposits:
Demand deposits
$
15,298,712
$
15,139,555
$
159,157
Savings, NOW and money market deposits (non-brokered)
22,655,936
21,814,632
841,304
Savings, NOW and money market deposits (brokered)
87,566
99,099
(11,533)
Time deposits (non-brokered)
7,861,848
7,620,265
241,583
Time deposits (brokered CDs)
866,772
747,363
119,409
Sub-total deposits excluding P.R.
public deposits
46,770,834
45,420,914
1,349,920
P.R. public
deposits:
Demand deposits
[1]
11,534,301
11,730,273
(195,972)
Savings, NOW and money market deposits (non-brokered)
7,134,217
7,087,904
46,313
Time deposits (non-brokered)
750,741
645,254
105,487
Sub-total P.R.
public deposits
19,419,259
19,463,431
(44,172)
Total deposits
$
66,190,093
$
64,884,345
$
1,305,748
[1] Includes interest bearing demand deposits.
[2] Savings, NOW and money market deposits include
reciprocal deposits of $780 million (2024-$637.1 million)
that were categorized as brokered
deposits at December 31, 2024 and recharacterized
as non-brokered for December 31, 2025. Similarly,
Time deposits include reciprocal deposits
of
$92.6 million (2024-$143.3 million) that were categorized
as brokered deposits at December 31, 2024 and recharacterized
as non-brokered for
December 31, 2025. The presentation for the year 2024
has been adjusted to conform to the 2025 presentation.
75
Borrowings
The Corporation’s borrowings amounted to $1.4
billion at December 31, 2025, compared to
$1.2 billion at December 31,
2024. The
increase was mainly due to FHLB advances which increased
by $286.9 million, partially offset by lower repurchase commitments by
$15.8 million.
Refer to Note
16 to
the Consolidated Financial
Statements for
detailed information on
the Corporation’s
borrowings.
Also, refer to the Liquidity section in this MD&A
for additional information on the Corporation’s funding
sources.
Stockholders’ Equity
Stockholders’ equity totaled
$6.2 billion at
December 31, 2025,
an increase of
$0.6 billion when
compared to December
31, 2024.
The increase was principally
due to net
income for the year
ended December 31, 2025 of
$833.2 million,
coupled with the after-tax
effect of the
decrease in net unrealized losses in
the portfolio of AFS securities
of $340.4 million and the
amortization of unrealized
losses from
securities previously reclassified
to HTM
of $149.1
million,
partially offset
by an
increase in
Treasury Stock
of $494.3
million mainly
due to
the repurchases
of common stock
during the
year and
the common
and preferred dividends
declared during
the year of $196.2 million and $1.4 million, respectively.
During
the
year
ended
December
31,
2025,
Popular
repurchased
4,660,124
shares
of
common
stock
for
$501.5
million
at
an
average price of $107.61 per share, as part of the 2024 and 2025 common stock repurchase programs previously announced. As of
December 31, 2025, $281.2 million remained available
for stock repurchase under the active repurchase authorization.
The
Corporation
increased
its
quarterly
common
stock
dividend
from
$0.70
to
$0.75
per
share,
commencing
with
the
dividend
declared in the third quarter of 2025.
Refer
to
the
Consolidated
Statements
of
Financial
Condition,
Comprehensive
Income
and
Changes
in
Stockholders’
Equity
for
information on the composition of stockholders’ equity. Also, refer to Note 21 to the Consolidated Financial Statements
for a detail of
accumulated other comprehensive income (loss), an
integral component of stockholders’ equity.
The composition of the Corporation’s financing to total assets
at December 31, 2025 and 2024 is included
in Table 9.
76
Table 9 - Financing to Total
Assets
December 31,
December 31,
% (decrease) increase
% of total assets
(Dollars in millions)
2025
2024
from 2024 to 2025
2025
2024
Non-interest-bearing core deposits
$
15,304
$
15,139
1.1
%
20.3
%
20.7
%
Interest-bearing core deposits
46,017
44,622
3.1
61.1
61.1
Interest-bearing other deposits
4,869
5,123
(5.0)
6.4
7.0
Repurchase agreements
39
55
(29.1)
0.1
0.1
Other short-term borrowings
650
225
188.9
0.9
0.3
Notes payable
760
896
(15.2)
1.0
1.2
Other liabilities
1,460
1,372
6.4
1.9
1.9
Stockholders’ equity
6,249
5,613
11.3
8.3
7.7
CAPITAL
Regulatory Capital
The Corporation and its bank subsidiaries are subject to capital adequacy
standards established by the Federal Reserve Board. The
risk-based capital
standards applicable
to Popular,
Inc., BPPR
and PB,
are based
on the
final capital
framework of
Basel III.
The
Basel III capital rules include a “Common Equity Tier 1” (“CET1”) capital ratio and define Tier 1 capital as CET1 plus “Additional Tier
1
Capital”
instruments
meeting
specified
requirements.
Note
20
to
the
Consolidated
Financial
Statements
presents
further
information on the Corporation’s regulatory capital requirements,
including the regulatory capital ratios of BPPR
and PB.
An institution
is considered “well-capitalized”
if it
maintains a total
capital ratio
of 10%,
a Tier
1 capital ratio
of 8%,
a CET1 capital
ratio
of
6.5%
and
a
leverage
ratio
of
5%.
The
Corporation’s
ratios
presented
in
Table
10
show
that
the
Corporation
was
“well
capitalized” for
regulatory purposes,
the highest
classification, under
Basel III
for years
2025 and
2024. BPPR
and PB
were also
well-capitalized for all the years presented.
The
Basel
III
Capital
Rules
also
require
an
additional
2.5%
“capital
conservation
buffer”,
composed entirely
of
CET1,
on
top
of
minimum risk-weighted asset ratios, which excludes the leverage ratio. The capital conservation buffer is
designed to absorb losses
during periods of
economic stress. Banking
institutions with a
ratio of CET1
to risk-weighted assets
above the minimum
but below
the capital conservation buffer will face constraints on dividends, equity repurchases, and compensation
based on the amount of the
shortfall. Popular,
BPPR and
PB are
required to
maintain this
additional capital
conservation buffer
of 2.5%
of CET1,
resulting in
minimum ratios
of (i) CET1
to risk-weighted
assets of
at least
7%, (ii) Tier
1 capital
to risk-weighted
assets of
at least
8.5%, and
(iii) Total capital to risk-weighted assets of at least 10.5%.
Table 10 presents the Corporation’s capital adequacy information for the years 2025 and 2024.
77
Table 10 - Capital Adequacy
Data
At December 31,
(Dollars in thousands)
2025
2024
Risk-based capital:
Common Equity Tier 1 capital
$
6,463,527
$
6,262,792
Additional Tier 1 Capital
22,143
22,143
Tier 1 capital
$
6,485,670
$
6,284,935
Supplementary (Tier 2) capital
710,397
683,268
Total
capital
$
7,196,067
$
6,968,203
Total
risk-weighted assets
$
41,123,753
$
39,073,462
Adjusted average quarterly assets
$
74,661,894
$
72,593,464
Ratios:
Common Equity Tier 1 capital
15.72
%
16.03
%
Tier 1 capital
15.77
16.08
Total capital
17.50
17.83
Leverage ratio
8.69
8.66
Average equity to assets
[1]
9.51
9.61
Average tangible equity to assets
[1]
8.54
8.60
[1]
Average balances exclude unrealized gains or losses
on debt securities available-for-sale and unrealized
losses on debt securities transfer
to held-to-maturities
The decrease in the CET1 capital ratio,
Tier 1 capital ratio
and, total capital ratio as of
December 31, 2025, compared to December
31, 2024,
was due
primarily to
the repurchase
of shares
under the
common stock
repurchase authorization
plan, common
stock
dividends and higher risk
weighted assets driven by the
loan growth in the
commercial loans held-in-portfolio, partially offset
by the
annual earnings. The increase in
the leverage capital ratio
was mainly due to the
increase in capital driven by
the annual earnings,
partially offset by an increase in average total assets.
Pursuant
to
the
adoption
of
CECL
on
January
1,
2020,
the
Corporation elected
to
use
the
five-year
transition
period
option
as
provided in the final interim regulatory capital rules effective March
31, 2020. The five-year transition period provision delays for two
years the
estimated impact
of
CECL on
regulatory capital,
followed by
a three-year
transition period
to
phase out
the aggregate
amount of the capital
benefits provided during the initial two-year
delay. During the
first quarter of 2025,
the Corporation completed
the phase-in of all the cumulative impact of the
CECL adoption.
Table 11
reconciles the Corporation’s total common stockholders’
equity to common equity Tier 1 capital.
Table 11
- Reconciliation Common Equity Tier 1 Capital
At December 31,
(Dollars in thousands)
2025
2024
Common stockholders’ equity
$
6,226,936
$
5,633,298
AOCI related adjustments due to opt-out election
1,096,805
1,589,875
Goodwill, net of associated deferred tax liability
(DTL)
(639,734)
(657,181)
Intangible assets, net of associated DTLs
(5,076)
(6,826)
Deferred tax assets and other deductions
(215,404)
(296,374)
Common equity tier 1 capital
$
6,463,527
$
6,262,792
Common equity tier 1 capital to risk-weighted assets
15.72
%
16.03
%
Reconciliation to Tangible Common Equity and Tangible Assets
Table
12
provides
a
reconciliation of
total
stockholders’
equity
to
tangible
common
equity
and
total
assets
to
tangible
assets
at
December 31, 2025 and 2024.
78
Table 12 - Reconciliation
of Tangible Common Equity
and Tangible Assets
At December 31,
(In thousands, except share or per share information)
2025
2024
Total stockholders’
equity
$
6,249,079
$
5,613,066
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,076)
(6,826)
Total tangible common
equity
$
5,431,906
$
4,781,143
Total assets
$
75,348,267
$
73,045,383
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,076)
(6,826)
Total tangible assets
$
74,553,237
$
72,235,603
Tangible common
equity to tangible assets
7.29
%
6.62
%
Common shares outstanding at end of period
65,719,385
70,141,291
Tangible book value
per common share
$
82.65
$
68.16
Year-to-date average
Total stockholders’
equity [1]
$
6,892,821
$
6,480,598
Average unrealized (gains) losses on AFS securities
transferred to HTM
314,861
572,595
Adjusted total stockholder's equity
7,207,682
7,053,193
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(799,641)
(804,423)
Less: Other intangibles
(5,927)
(8,366)
Total tangible common
equity
$
6,379,971
$
6,218,261
Average return on tangible common equity
13.04
%
9.85
%
[1] Average balances exclude unrealized gains or losses
on debt securities available-for-sale.
79
RISK MANAGEMENT
Market / Interest Rate Risk
The Corporation’s assets that are mainly subject to market valuation risk are debt securities classified as available-for-sale. Refer to
Notes 5 and 6 to
the Consolidated Financial Statements for further information on
the debt securities available-for-sale and held-to-
maturity portfolios.
Debt securities
classified as
available-for-sale and
held-to-maturity amounted
to
$20.6 billion
and
$7.3
billion,
respectively,
as of
December 31, 2025.
Other assets
subject to
market risk
include mortgage
servicing rights
("MSRs") with
a fair
value of $96.4 million as of December 31,
2025.
Interest Rate Risk (“IRR”)
The Corporation’s net interest income is subject
to various categories of interest rate risk,
including repricing, basis, yield curve and
option risks.
In managing
interest rate
risk, management may
alter the
mix of
floating and
fixed rate
assets and
liabilities, change
pricing
schedules,
adjust
maturities
through
sales
and
purchases
of
investment
securities,
and
enter
into
derivative
contracts,
among other alternatives.
Management utilizes various tools to assess IRR, including Net Interest
Income (“NII”) simulation modeling, static gap analysis, and
Economic Value of Equity (“EVE”) to monitor the risk arising from the dynamic characteristics of assets and liabilities subject to
IRR.
The
three
methodologies complement
each
other
and
are
used jointly
in
the
evaluation of
the
Corporation’s IRR.
NII simulation
modeling, by legal entity and on a consolidated basis, is prepared for a five-year period, which in conjunction
with the EVE analysis,
provides management a better view of long-term
IRR.
The Corporation processes NII
simulations under interest rate
scenarios in which the
yield curve is assumed
to rise and
decline by
the same magnitude
(parallel shifts). The
rate scenarios considered in
these market risk
simulations include instantaneous parallel
changes of
-100,
-200, +100,
and +200
basis points
during the
succeeding twelve-month
period. Assumptions
included in
these
analyses
include
that
the
balance
sheet
remains
flat,
relative
levels
of
market
interest
rates
across
all
yield
curve
points
and
indexes, interest rate spreads, loan
prepayments and deposit elasticity.
Thus, they should not be
relied upon as indicative of
actual
results
and
do
not
contemplate
actions
that
management
may
engage
in
as
a
response
to
future
changes
in
interest
rates.
Additionally,
the Corporation
is also
subject to
the risk
inherent in
the use
of different
rate indexes
for the
repricing of
assets and
liabilities, as well the
risk of pricing lags
due to contractual or
timing differences between the
market and management response
to
changes
in
the
rate
environment.
These
forward-looking
computations
are
management’s
best
estimate
based
on
known
and
available information and actual results may differ.
The
following
table
presents
the
results
of
the
simulations
at
December
31,
2025
and
December
31,
2024,
assuming
a
static
balance sheet and parallel changes over flat spot rates
over a one-year time horizon:
80
Table 13 - Net Interest Income
Sensitivity (One Year Projection)
December 31, 2025
December 31, 2024
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
(7,520)
(0.27)
44,747
1.78
+100 basis points
(4,379)
(0.16)
22,917
0.91
-100 basis points
2,691
0.10
9,157
0.36
-200 basis points
7,488
0.27
588
0.02
As of
December 31,
2025, NII
simulations showed
a liability
sensitive position
for the
Corporation, compared
to the
results as
of
December 31,
2024, when the
Corporation showed an
asset sensitive position.
The variation in
sensitivity and the
resulting profile
was mainly due to an increase in asset
duration driven by the extension of U.S. Treasury Notes
and a decline in U.S. Treasury Bills
and excess
reserves at the
FRB as
part of
a decision to
reduce sensitivity to
declining rate scenarios,
combined with the
runoff in
the agency MBS portfolio
and rise in fixed-rate
loans. In rising rate
scenarios, Popular’s net interest income
would decrease due to
the lower volume of short-term assets as a result
of the investment portfolio extension strategy combined with higher deposits costs
due to
BPPR’s large
proportion of
market-linked Puerto
Rico public
sector deposits,
this would
be partially
offset by
variable rate
loan repricing and
intermediate maturity assets
coming due within
one year.
The portfolio extension
transactions completed during
the
year
that
contributed
to
the
variance
in
sensitivity
include
purchases
of
$2.4
billion
of
U.S.
Treasury
Notes
with
maturities
between 6
months up
to 3
years with
an average
yield of
4.04% executed
mostly during
May 2025,
$2.5 billion
in U.S.
Treasury
Notes with
an average
maturity of
approximately 1.4 years
executed in
September 2025,
and $900
million in
U.S. Treasury
notes
with an average maturity of 2.2 years and a
yield of approximately 3.56% executed between
November and December 2025.
The
Corporation’s
loan
and
investment
portfolios
are
subject
to
prepayment
risk.
Prepayment
risk
also
could
have
a
significant
impact on the duration of mortgage-backed securities
and collateralized mortgage obligations.
Table 14 presents the Corporation’s sensitivity to interest rates, reflecting its assets and liabilities
by repricing date.
Table 14 - Interest Rate Sensitivity
At December 31, 2025
By repricing dates
(Dollars in thousands)
0-30 days
Within 31 -
90 days
After three
months but
within six
months
After six
months but
within nine
months
After nine
months but
within one
year
After one
year but
within two
years
After two
years
Non-
interest
bearing
funds
Total
Assets:
Money market investments
$
4,626,506
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
4,626,506
Investment and trading securities
3,318,045
4,951,458
1,939,100
1,650,773
1,639,760
6,563,518
8,243,704
(143,252)
28,163,106
Loans
6,422,687
3,983,535
1,628,570
1,716,373
1,766,974
6,117,288
17,770,822
(68,733)
39,337,516
Other assets
-
-
-
-
-
-
-
3,221,139
3,221,139
Total
14,367,238
8,934,993
3,567,670
3,367,146
3,406,734
12,680,806
26,014,526
3,009,154
75,348,267
Liabilities and stockholders' equity:
Savings, NOW and money market and
other interest bearing demand deposits
21,254,342
216,993
318,597
310,549
302,973
1,139,963
17,863,106
-
41,406,523
Certificates of deposit
2,338,802
1,066,684
1,531,137
1,074,288
676,054
1,166,414
1,625,982
-
9,479,361
Federal funds purchased and assets
sold under agreements to repurchase
29,356
9,645
-
-
-
-
-
-
39,001
Other short-term borrowings
650,000
-
-
-
-
-
-
-
650,000
Notes payable
25,000
-
25,000
24,500
-
6,112
678,965
-
759,577
Non-interest bearing deposits
-
-
-
-
-
-
15,304,209
15,304,209
Other non-interest bearing liabilities
-
-
-
-
-
-
-
1,460,517
1,460,517
Stockholders' equity
-
-
-
-
-
-
-
6,249,079
6,249,079
Total
$
24,297,500
$
1,293,322
$
1,874,734
$
1,409,337
$
979,027
$
2,312,489
$
20,168,053
$
23,013,805
$
75,348,267
Interest rate sensitive gap
(9,930,262)
7,641,671
1,692,936
1,957,809
2,427,707
10,368,317
5,846,473
(20,004,651)
-
Cumulative interest rate sensitive gap
(9,930,262)
(2,288,591)
(595,655)
1,362,154
3,789,861
14,158,178
20,004,651
-
-
Cumulative interest rate sensitive gap
to earning assets
(13.73)
%
(3.16)
%
(0.82)
%
(1.88)
%
(5.24)
%
(19.57)
%
(27.65)
%
-
-
81
Table 15, which presents the maturity distribution of earning assets, takes into consideration
prepayment assumptions.
Table 15 - Maturity Distribution
of Earning Assets
As of December 31, 2025
Maturities
After one year
After five years
through five years
through fifteen years
After fifteen years
One year
Fixed
Variable
Fixed
Variable
Fixed
Variable
(In thousands)
or less
interest rates
interest rates
interest rates
interest rates
interest rates
interest rates
Total
Money market securities
$
4,626,506
$
-
$
-
$
-
$
-
$
-
$
-
$
4,626,506
Investment and trading
securities
13,417,856
12,937,914
5,198
1,583,947
38,966
-
-
27,983,881
Loans:
Commercial
5,969,126
7,262,593
3,880,219
1,358,283
781,363
69,452
278,574
19,599,610
Construction
1,035,786
166,330
411,834
899
60,048
-
-
1,674,897
Leasing
687,344
1,459,161
-
9,743
-
-
-
2,156,248
Consumer
1,956,190
3,864,793
258,658
267,021
796,771
264
103,626
7,247,323
Mortgage
697,026
2,415,129
197,246
4,464,224
18,644
670,803
196,366
8,659,438
Subtotal loans
10,345,472
15,168,006
4,747,957
6,100,170
1,656,826
740,519
578,566
39,337,516
Total earning assets
$
28,389,834
$
28,105,920
$
4,753,155
$
7,684,117
$
1,695,792
$
740,519
$
578,566
$
71,947,903
Note: Equity securities available-for-sale and other investment
securities, including Federal Reserve Bank stock and
Federal Home Loan Bank stock
held by the Corporation, are not included in this table.
Loans held-for-sale have been allocated according to the
expected sale date.
Trading
The Corporation
engages in
trading activities
in the
ordinary course
of business
at its
subsidiaries, BPPR
and Popular
Securities.
Popular Securities’
trading activities
consist primarily
of market-making
activities to
meet expected
customers’ needs
related to
its
retail brokerage business, and purchases and sales of
U.S. Government and government sponsored securities with the objective of
realizing gains
from expected
short-term price
movements. BPPR’s
trading activities consist
primarily of
holding U.S.
Government
sponsored
mortgage-backed
securities
and
economic
hedges
of
the
related
market
risk
with
“TBA”
(to-be-announced)
market
transactions. In
addition, BPPR
uses forward
contracts or
TBAs that
have characteristics
similar to
that of
the forecasted
security
and its conversion timeline to hedge its securitization
pipeline.
At
December
31,
2025,
the
Corporation
held
trading
securities
with
a
fair
value
of
$36.6
million,
representing
0.05%
of
the
Corporation’s
total
assets,
compared
with
$32.8
million
and
0.05%,
respectively,
at
December
31,
2024.
The
trading
portfolio
consists
principally of
investment grade
securities
such
as mortgage-backed
securities
of
$23.4
million with
a
weighted average
yield of 5.20% and U.S. Treasuries of $12.5 million with a weighted average yield
of 2.57% at December 31, 2025 and $29.1 million
with a yield of 5.54% and $2.8 million with a
yield of 3.28%, respectively, as of December 31, 2024.
The Corporation’s trading activities are
limited by internal policies. For each
of the two subsidiaries, the
market risk assumed under
trading
activities
is
measured
by
the
5-day
net
value-at-risk
(“VAR”),
with
a
confidence
level
of
99%.
The
VAR
measures
the
maximum estimated loss that may occur over a
5-day holding period, given a 99% probability.
The
Corporation’s
trading
portfolio
had
a
5-day
VAR
of
$0.3
million
for
the
last
week
of
December
2025.
VAR
models
include
assumptions and
estimates thus
actual results
could differ
from the
outputs from
these models
and assumptions.
Back-testing is
performed
on
model
results
to
compare
actual
results
against
maximum
estimated
losses,
in
order
to
evaluate
model
and
assumptions accuracy.
82
In the opinion of management, the size and composition
of the trading portfolio does not represent
a significant source of market risk
for the Corporation.
Foreign Exchange
The Corporation holds
an interest in
BHD León in
the Dominican Republic,
which is an
investment accounted for
under the equity
method. The
Corporation’s carrying
value of
the equity
interest in
BHD León
approximated $249.4
million at
December 31,
2025.
This business is conducted in
the country’s foreign currency.
The resulting foreign currency translation
adjustment, from operations
for which the functional
currency is other than
the U.S. dollar,
is reported in accumulated
other comprehensive income (loss) in
the
consolidated
statements
of
condition,
except
for
highly-inflationary
environments
in
which
the
effects
would
be
included
in
the
consolidated statements
of
operations. At
December 31,
2025, the
Corporation had
approximately $
85 million in
an unfavorable
foreign currency translation
adjustment as part
of accumulated other
comprehensive income (loss),
compared with an
unfavorable
adjustment of $ 71 million at December 31,
2024 and $ 65 million at December 31,
2023.
Liquidity
Liquidity Risk Management Process
The Corporation
has adopted
policies and
limits to
monitor the
Corporation’s liquidity
position and
that of
its banking
subsidiaries.
Refer to
the Enterprise
Risk Management
section of
Management’s Discussion
and Analysis
included in
the 2025
Form 10-K
for
information on the framework
in place to monitor,
review, and approve
policies to measure, limit and
manage funding activities and
strategies
impacting
liquidity
risk.
Additionally,
contingency
funding
plans
are
used
to
model
various
stress
events
of
different
magnitudes that
affect different
time horizons,
to assist
management in
evaluating the
size of
the liquidity
buffers needed
if those
events occur. However,
such models may not predict
accurately how the market and customers
might react to every
event and are
dependent on
many assumptions.
The objective
of effective
liquidity management
is to
ensure that
the Corporation
has sufficient
liquidity
to
meet
all
its
financial
obligations,
finance
expected
future
growth,
fund
planned
capital
distributions
and
maintain
a
reasonable safety margin for cash needs under both
normal and stressed market conditions.
Sources of Liquidity
Deposits, including
customer deposits,
brokered deposits
and public
funds deposits,
continue to
be the
most significant
source of
funds for the
Corporation, representing
88% of funding
of the Corporation’s
total assets at
December 31, 2025 and
December 31,
2024. The ratio of total ending loans to deposits was 59% and 57% at December 31, 2025 and December 31, 2024, respectively.
In
addition to
traditional deposits,
the Corporation
maintains borrowing
arrangements, which
amounted to
$1.4 billion
in outstanding
balances at December 31, 2025 (December 31, 2024 - $1.2 billion). A detailed
description of the Corporation’s borrowings, including
their terms,
is included
in Note
16 to
the Consolidated
Financial Statements. Also,
the Consolidated Statements
of Cash
Flows in
the accompanying Consolidated Financial Statements provide
information on the Corporation’s cash inflows and outflows.
The
following
sections
provide
further
information
on
the
Corporation’s
major
funding
activities
and
needs,
as
well
as
the
risks
involved in these activities.
Banking Subsidiaries
Primary
sources of
funding
for the
Corporation’s
banking subsidiaries
(BPPR and
PB
or,
collectively,
“the banking
subsidiaries”)
include
retail,
commercial
and
public
sector
deposits,
brokered
deposits,
unpledged
investment
securities,
mortgage
loan
securitization and, to a lesser extent, loan sales. In
addition, the Corporation maintains borrowing facilities with the FHLB and at the
discount window
of the
Federal Reserve
Bank of
New York
(the “FRB”)
and has
a considerable
amount of
collateral pledged
that
can be used to raise funds under these facilities.
During the second quarter of 2025, BPPR was able to increase its available
liquidity by approximately $2.9 billion after the merger of
Popular Auto, LLC with
and into BPPR, effective
on May 1,
2025, that allowed BPPR
to pledge auto loans
and leases as collateral
under the federal
reserve’s discount window.
At December 31,
2025, the Corporation’s
available liquidity amounted to
$27.0 billion
(December
31,
2024
-
$21.6
million),
which
includes
$3.2
billion
related
to
auto
loans
and
leases
pledged
under
the
federal
83
reserve’s
discount
window.
During
the
fourth
quarter
of
2025,
the
Corporation
had
no
material
incremental
use
of
its
available
liquidity sources. The liquidity sources of the Corporation
at December 31, 2025 are presented in Table 16 below:
Table 16 - Liquidity Sources
December 31, 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)
$
3,595,806
$
1,020,478
$
4,616,284
$
4,882,358
$
1,488,857
$
6,371,215
Unpledged securities
5,215,981
1,057,129
6,273,110
3,806,066
522,869
4,328,935
FHLB borrowing capacity
3,291,672
692,744
3,984,416
2,777,090
1,058,921
3,836,011
Discount window of the Federal Reserve
Bank borrowing capacity
8,472,866
3,644,486
12,117,352
4,839,388
2,178,646
7,018,034
Total available liquidity
$
20,576,325
$
6,414,837
$
26,991,162
$
16,304,902
$
5,249,293
$
21,554,195
Refer
to
Note
16
to
the
Consolidated
Financial
Statements
for
additional
information
of
the
Corporation’s
borrowing
facilities
available through its banking subsidiaries.
The principal
uses of
funds for
the banking
subsidiaries include
loan originations,
investment portfolio
purchases, loan
purchases
and repurchases, repayment of outstanding obligations (including deposits), advances on certain serviced portfolios and operational
expenses. Also, the
banking subsidiaries assume liquidity
risk related to collateral
posting requirements for certain
activities mainly
in
connection
with
contractual
commitments,
recourse
provisions,
servicing
advances,
derivatives
and
credit
card
licensing
agreements.
The banking
subsidiaries maintain
sufficient funding
capacity to
address large
increases in
funding requirements
such as
deposit
outflows.
The
Corporation has
established
liquidity
guidelines
that
require
the
banking
subsidiaries
to
have
sufficient
liquidity
to
cover all short-term borrowings and a portion of deposits.
Deposits are
a key
source of
funding. Refer
to Table
8 for
a breakdown
of deposits
by major
types. Core
deposits are
generated
from a large base of consumer, corporate and public sector customers. Core deposits
include certificates
of deposit under $250,000,
all
interest-bearing
transactional
deposit
accounts,
non-interest-bearing
deposits,
and
savings
deposits.
Core
deposits
exclude
brokered
deposits
and
certificates
of
deposit
over
$250,000.
Core
deposits,
excluding
P.R.
public
funds,
which
are
fully
collateralized, have
historically provided
the Corporation
with a
sizable source
of relatively
stable and
low-cost funds.
P.R.
public
funds, while linked to market interest rates, provide a stable source of funding with an
attractive earning spread. As of December 31,
2025, total Puerto Rico public sector deposits were $19.4
billion, compared to $19.5 billion at December
31, 2024.
Core deposits represent
92% of total
deposits at $60.9 billion,
as of December
31, 2025, compared with
92% at $59.9
billion as of
December 31, 2024.
Core deposits financed
85% of the
Corporation’s earning assets
at December 31,
2025, compared to
86% at
December 31, 2024.
The Corporation
had $1.0
billion in
brokered deposits
at December
31, 2025,
which financed
approximately 1%
of its
total assets
(December 31, 2024 - $1.6 billion and 2% respectively.
The distribution by maturity of certificates of deposit with denominations of $250,000 and over at December 31, 2025 is presented in
the table that follows:
84
Table 17 - Distribution by
Maturity of Certificates of Deposit of $250,000 and Over
(In thousands)
3 months or less
$
2,479,766
Over 3 to 12 months
1,017,526
Over 1 year to 3 years
280,721
Over 3 years
136,733
Total
$
3,914,746
For
the
year
ended
December
31,
2025,
average
deposits,
including
brokered
deposits,
represented
91%
of
average
earning
assets, compared with 92% for the year ended December
31, 2024. Table 18 summarizes average deposits for the past two years.
Table 18 - Average
Total Deposits
For the years ended December 31,
(In thousands)
2025
2024
[2]
Deposits excluding P.R.
public deposits
Demand deposits
$
14,787,933
$
15,065,039
Savings, NOW and money market deposits (non-brokered)
22,599,111
21,889,652
Savings, NOW and money market deposits (brokered)
90,776
103,201
Time deposits (non-brokered)
7,890,260
7,360,538
Time deposits (brokered CDs)
765,424
823,145
Sub-total deposits excluding P.R.
public deposits
46,133,504
45,241,575
P.R. public
deposits:
Demand deposits
[1]
12,125,807
11,754,910
Savings, NOW and money market deposits (non-brokered)
7,407,669
6,728,781
Time deposits (non-brokered)
735,200
719,017
Sub-total P.R.
public deposits
20,268,676
19,202,708
Average total deposits
$
66,402,180
$
64,444,283
[1] Includes interest bearing demand deposits.
[2] Savings, NOW and money market deposits include
reciprocal deposits of $790 million (2024-$661.5 million)
that were categorized as brokered
deposits at December 31, 2024 and recharacterized
as non-brokered for December 31, 2025. Similarly,
Time deposits include reciprocal deposits
of
$120.1 million (2024-$133.1 million) that were categorized
as brokered deposits at December 31, 2024 and recharacterized
as non-brokered for
December 31, 2025. The presentation for the year 2024
has been adjusted to conform to the 2025 presentation.
As of
December 31,
2025, the
banking subsidiaries
had sufficient
current and
projected liquidity
sources to
meet their
anticipated
cash flow
obligations, as
well as
special needs
and off-balance
sheet commitments,
in the
ordinary course
of business
and have
sufficient
liquidity
resources
to
address
stress
events.
Although
the
banking
subsidiaries
have
historically
been
able
to
replace
maturing
deposits and
advances, no
assurance can
be given
that
they
would be
able to
replace those
funds
in the
future if
the
Corporation’s
financial condition
or
general market
conditions
were to
deteriorate. The
Corporation’s financial
flexibility would
be
severely constrained if
the banking subsidiaries
are unable to
maintain access to
funding or if
adequate funding is
not available to
accommodate future
financing needs
at
acceptable interest
rates. The
banking subsidiaries
also
are required
to
deposit cash
or
qualifying
securities
to
meet
margin
requirements
on
repurchase
agreements,
deposit
agreements
and
other
collateralized
borrowing facilities. To
the extent that
the value of
securities previously pledged as
collateral declines because of
market changes,
the Corporation will be required to deposit additional cash or securities to meet its margin or collateral requirements and would need
to
rely
more
heavily
on
alternative
funding
sources.
In
these
scenarios,
the
Corporation’s
financial
flexibility
and
ability
to
grow
revenues may not increase proportionately to cover costs and
profitability would be adversely affected.
85
The Corporation considers balances in
excess of $250,000 to have a
higher potential liquidity risk.
Table
19 reflects the aggregate
balance in
deposit accounts
in excess
of $250,000,
including collateralized
public funds
and deposits
outside of
the U.S.
and its
territories.
Collateralized public funds, as presented in Table 19, represent public deposit balances from governmental
entities in the
U.S.
and
its
territories,
including
Puerto
Rico
and
the
United
States
Virgin
Islands,
collateralized
based
on
such
jurisdictions’
applicable collateral requirements.
86
Table 19 - Deposits
31-Dec-25
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$
23,873,328
44
%
$
8,283,967
69
%
$
32,157,295
49
%
Transactional deposits balances over
$250,000
8,254,961
15
%
2,341,365
19
%
10,596,326
16
%
Time deposits balances over $250,000
2,182,301
4
%
794,183
7
%
2,976,484
4
%
Uninsured foreign deposits
446,360
1
%
-
-
%
446,360
1
%
Collateralized public funds
19,748,934
36
%
264,694
2
%
20,013,628
30
%
Intercompany deposits
235,251
-
%
349,483
3
%
-
-
%
Total deposits
$
54,741,135
100
%
$
12,033,692
100
%
$
66,190,093
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
31-Dec-24
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$
23,588,937
44
%
$
7,961,334
68
%
$
31,550,271
49
%
Transactional deposits balances over
$250,000
8,046,175
15
%
1,944,674
16
%
9,990,849
15
%
Time deposits balances over $250,000
1,991,934
4
%
813,424
7
%
2,805,358
4
%
Uninsured foreign deposits
450,068
1
%
-
-
%
450,068
1
%
Collateralized public funds
19,771,083
36
%
316,716
3
%
20,087,799
31
%
Intercompany deposits
205,839
-
%
667,839
6
%
-
-
%
Total deposits
$
54,054,036
100
%
$
11,703,987
100
%
$
64,884,345
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
Bank Holding Companies
The principal
sources of
funding for
the BHCs,
which are
Popular,
Inc.
(holding company
only) and
PNA, include
cash on
hand,
investment
securities,
dividends
received from
banking
and
non-banking subsidiaries,
asset sales,
credit
facilities
available from
affiliate banking subsidiaries and proceeds from potential securities offerings.
Dividends from banking and non-banking subsidiaries
are subject
to various
regulatory limits
and authorization
requirements imposed
by banking
regulators, including
the FED
and the
NYDFS, that may limit the ability of those subsidiaries
to act as a source of funding to the BHCs.
The principal uses of these funds include the repayment of debt, interest payments to holders of senior debt and junior subordinated
deferrable interest debentures (related to trust preferred securities), the payment of dividends to common stockholders,
repurchases
of the Corporation’s securities and capitalizing its subsidiaries.
The
outstanding
balance
of
notes
payable
at
the
BHCs
amounted
to
$595
million
at
December
31,
2025
and
$594
million
at
December 31, 2024.
The contractual maturities of the BHCs notes payable
at December 31, 2025 are presented in
Table 20.
Table 20
- Distribution of BHC's Notes Payable by Contractual
Maturity
Year
(In thousands)
2028
396,558
Later years
198,399
Total
$
594,957
87
As of
December 31,
2025, the
BHCs had
cash and
money markets
investments totaling
$524.8 million
and borrowing
potential of
$165 million from its secured facility with BPPR.
The BHCs’ liquidity position continues to be adequate with sufficient
cash on hand,
investments and
other sources of
liquidity that are
expected to be
sufficient to
meet all
interest payments and
dividend obligations
for the
foreseeable future.
Additionally,
the Corporation’s
latest quarterly
paid dividend
was $0.75
per share
or approximately
$47
million per quarter.
The BHCs have in
the past borrowed in the
corporate debt market primarily to finance
their non-banking subsidiaries and refinance
debt
obligations.
These
sources
of
funding
are
more
costly
given
that
two
out
of
three
principal
credit
rating
agencies
rate
the
Corporation’s debt
securities below
“investment grade”.
The Corporation
has a
shelf registration
statement filed
and effective
with
the
Securities
and
Exchange
Commission,
which
permits
the
Corporation
to
issue
an
unspecified
amount
of
debt
or
equity
securities.
Non-Banking Subsidiaries
The
principal
sources
of
funding
for
the
non-banking
subsidiaries
include
internally
generated
cash
flows
from
operations,
loan
sales, repurchase agreements, capital
injections and borrowed funds
from their direct
parent companies or the
holding companies.
The principal uses of funds for the non-banking
subsidiaries include repayment of maturing debt,
operational expenses and payment
of dividends to the BHCs.
Dividends
The
Corporation
increased
its
quarterly
common
stock
dividend
from
$0.70
to
$0.75
per
share,
commencing
with
the
dividend
declared in the third
quarter of 2025. During the
year ended December 31, 2025,
the Corporation declared cash dividends of
$2.90
per
common
share
outstanding
($196.2
million
in
the
aggregate).
The
dividends
for
the
Corporation’s
Series
A
preferred
stock
amounted to $1.4 million.
During the
year ended December
31, 2025,
the BHCs
received dividends and
distributions amounting to
$575 million
from BPPR,
$23 million
from Popular
International Bank,
Inc. (“PIBI”)
and $22
million from
its other
non-banking subsidiaries.
Dividends from
BPPR constitute
Popular,
Inc.’s primary
source of
liquidity.
In addition,
during the
year ended
December 31,
2025, PIBI,
a wholly
owned subsidiary of Popular, Inc., received $20.0 million in cash dividends and $5.3
million in stock dividends from its investment in
BHD.
In
addition to
regulatory
limits previously
discussed, the
ability
of a
bank
subsidiary to
up-stream dividends
to
its
BHC could
be
impacted by
its financial
performance and
capital, including
tangible and
regulatory capital,
thus potentially
limiting the
amount of
cash up
streamed to
the BHCs
from the
banking subsidiaries.
This could,
in turn,
affect BHC’s
ability to
declare dividends
on its
outstanding common and preferred stock, repurchase its securities or meet its debt obligations. At December 31, 2025, BPPR could
declare
a
dividend
of
up
to
approximately
$191
million
without
prior
approval
of
the
Federal
Reserve
Board
due
to
its
retained
income, declared dividend activity and transfers to statutory reserves
over the measurement period. In addition, pursuant to the FRB
requirements, PB may not declare or pay a dividend
without the prior approval of the Federal Reserve
Board and the NYSDFS.
Other Funding Sources and Capital
In addition to cash reserves held at
the FRB that totaled $4.7 billion at
December 31, 2025, the debt securities portfolio provides an
additional
source
of
liquidity,
which
may
be
realized
through
either
securities
sales,
collateralized
borrowings
or
repurchase
agreements.
The
Corporation’s
debt
securities
portfolio
consists
primarily
of
liquid
U.S.
government
debt
securities
and
U.S.
government sponsored agency
mortgage-backed securities that can
be used to
raise funds in
the repo markets.
The availability of
repurchase
agreements
would
be
subject
to
having
sufficient
unpledged
collateral
available
at
the
time
the
transactions
are
consummated,
in
addition
to
overall
liquidity
and
risk
appetite of
the
various
counterparties.
Refer
to
Table
16
for
details
of
the
Corporation’s
unpledged
debt
securities
and
available
credit
facilities
with
the
FHLB
and
the
discount
window
of
the
Federal
Reserve Bank.
A substantial
portion of
these debt
securities could
be used
to raise
financing in
the U.S.
money markets
or from
secured lending sources,
subject to changes in their fair market value and
customary adjustments (haircuts).
Additional
liquidity
may
be
provided
through
loan
maturities,
prepayments
and
sales.
The
loan
portfolio
provides
a
source
of
collateral to
secure the
available credit
facilities with
the FHLB
and the
discount window
of the
Federal Reserve
Bank. The
loan
portfolio
can
also
be
used
to
obtain
funding
in
the
capital
markets.
Mortgage
loans
and
some
types
of
consumer
loans,
have
secondary markets which the Corporation could use.
Off-Balance Sheet Arrangements and Other Commitments
88
In the ordinary course
of business, the Corporation
engages in financial transactions that
are not recorded on
the balance sheet or
may be recorded on the balance sheet in amounts that are different than the full contract or notional amount of the transaction. As a
provider of
financial services,
the Corporation
routinely enters
into commitments
with off-balance
sheet risk
to meet
the financial
needs
of
its
customers.
Refer
to
Note
23
to
the
Consolidated
Financial
Statements
for
information
on
the
Corporation’s
commitments to extent credit and other non-credit commitments.
Other types
of off-balance
sheet arrangements
that the
Corporation enters
in the
ordinary course
of business
include derivatives,
operating
leases
and
provision
of
guarantees,
indemnifications,
and
representation
and
warranties.
Refer
to
Note
22
to
the
Consolidated Financial
Statements for
a detailed
discussion related
to the
Corporation’s guarantees,
indemnifications obligations,
and representation and warranties arrangements.
The Corporation monitors its cash requirements, including
its contractual obligations and debt commitments.
Financial Information of Guarantor and Issuers of Registered
Guaranteed Securities
The principal sources of funding for Popular, Inc. Holding Company (“PIHC”) and Popular North America, Inc. (“PNA”) have included
dividends received
from their
banking and
non-banking subsidiaries subject
to statutory
provisions that
limit dividends
paid by
the
banking subsidiary without regulatory approval, asset
sales and proceeds from the issuance of debt
and equity.
The Corporation ("PIHC") is
the parent holding company
of Popular North America (“PNA”)
and operates financial services through
its subsidiaries. PNA, a wholly owned subsidiary of Popular, Inc., manages entities such as Equity One, Inc., and PB, including PB’s
subsidiaries: Popular Equipment Finance, LLC,
Popular Insurance Agency, U.S.A., and E-LOAN, Inc.
PNA has issued junior subordinated debentures guaranteed by PIHC (the “obligor group”), purchased by statutory
trusts established
by the Corporation using proceeds from trust preferred
securities (“capital securities”) and common securities
of the trusts.
PIHC guarantees
the junior
subordinated debentures
issued by
PNA. If
PIHC fails
to make
interest payments
on the
debentures
held by the trust,
the trust will not
distribute payments on the
capital securities. The guarantee
ranks subordinate and junior
in right
of
payment to
all
other liabilities
of
PIHC and
equally with
all
other PIHC-issued
guarantees, allowing
direct
legal
action against
PIHC without involving other entities.
Funding
for
PIHC
and
PNA
includes
dividends
from
subsidiaries,
asset
sales,
and
proceeds
from
debt
and
equity
issuance.
Statutory provisions limit the dividends an insured
depository institution can pay to its holding
company without regulatory approval.
The summarized financial
information below shows
the combined financial
position of the
obligor group as
of December 31,
2025,
and December
31, 2024,
and the
results of
their operations
for the
years
ending on
those dates.
Excluded are
investments and
equity in earnings from subsidiaries and affiliates outside
the obligor group.
Intercompany balances
and transactions
within the
obligor group
have been
eliminated. Material
amounts due
from, due
to, and
transactions with subsidiaries and affiliates are shown separately. Related party transactions
are also presented separately.
89
Table 21 - Summarized Statement
of Condition
(In thousands)
December 31, 2025
December 31, 2024
Assets
Cash and money market investments
$
524,882
$
634,809
Investment securities
38,656
35,150
Accounts receivables from non-obligor subsidiaries
12,798
14,602
Accounts receivables from affiliates and related parties
-
-
Other loans (net of allowance for credit losses of $132 (2024
- $281))
24,169
25,381
Investment in equity method investees
5,145
5,279
Other assets
91,618
65,483
Total assets
$
697,268
$
780,704
Liabilities and Stockholders' equity
Accounts payable to non-obligor subsidiaries
$
7,669
$
12,163
Notes payable
594,958
593,571
Other liabilities
135,785
126,718
Stockholders' (deficit) equity
(41,144)
48,252
Total liabilities and
stockholders' equity
$
697,268
$
780,704
Table 22 - Summarized Statement
of Operations
For the years ended
(In thousands)
December 31, 2025
December 31, 2024
Income:
Dividends from non-obligor subsidiaries
$
596,500
$
623,000
Interest income from non-obligor subsidiaries and affiliates
4,021
9,784
(Losses) earnings from investments in equity method
investees
(135)
15
Other operating income
7,571
2,399
Total income
$
607,957
$
635,198
Expenses:
Services provided by non-obligor subsidiaries and affiliates
(net of
reimbursement by subsidiaries for services provided by parent
of
$253,213 (2024 - $172,449))
$
19,240
$
13,328
Other expenses
24,328
37,391
Income tax (benefit) expense
[1]
(2,443)
20,725
Total expenses
$
41,125
$
71,444
Net income
$
566,832
$
563,754
[1] The net income for the year ended
December 31, 2024, included $22.9 million
of expenses, of which $16.5 million was
reflected in income
tax
expense
and
$6.4
million
was
reflected
in
other
operating
expenses,
related
to
an
out-of-period
adjustment
associated
with
the
Corporation’s U.S.
subsidiary’s non-payment
of taxes
on certain
intercompany distributions
to the
Bank Holding
Company (BHC)
in Puerto
Rico, a foreign corporation for U.S. tax purposes.
90
In addition to
the dividend income
reflected in the
Statement of Operations
table above,
during the year
ended December
31,
2025,
the
obligor
group
recorded
a
$23.0
million
of
dividend
distributions
from
non-obligor
subsidiary
which
was
recorded as a reduction to the investment (2024 -
$67.4 million).
91
Risk to Liquidity
The
Corporation’s
liquidity
may
come
under
pressure
if
it
experiences
significant
unexpected
cash
outflows
due
to
deposit
withdrawals, which could arise
from various factors like
economic conditions, loss of
depositor confidence, competition, exogenous
events, regulatory requirements or changes, a
downgrade in credit rating, or other events
causing counterparties to avoid exposure.
Investors should refer to Liquidity Risks section
of “Part I, Item 1A” of
this Form 10-K for an
additional discussion of liquidity risks to
which the Corporation is subject.
Credit Risk
Geographic and Government Risk
The Corporation is exposed to geographic and government risk.
The Corporation’s assets and revenue composition by geographical
area and by
business segment reporting are
presented in Note
32 to the
Consolidated Financial Statements. Readers should
refer
to
the Economic
and Market
Risk section
and the
Business Risk
section of
“Part I,
Item 1A”
of
this Form
10-K for
an additional
discussion
on
how
the
Corporation is
impacted
by
global
and
local
economic
and
market
conditions, including
weakness
in
the
economy,
particularly in Puerto
Rico, where a
significant portion of
our business is
concentrated. This section
also addresses how
our credit risk and credit
losses can increase to the extent
our loans are concentrated on borrowers engaged in
the same or similar
activities or in borrowers who as a group
may be uniquely or disproportionately affected by certain
economic or market conditions.
Commonwealth of Puerto Rico
A
significant portion
of
our financial
activities and
credit
exposure is
concentrated in
the
Commonwealth of
Puerto Rico
(“Puerto
Rico”) which has faced severe economic and fiscal
challenges in the past and may face additional
challenges in the future.
Economic Performance
The latest estimates from the
Puerto Rico Planning Board (the
“Planning Board”) indicate that real
GNP grew by 2.1%
during fiscal
year
2024
(July 2023-June
2024) and
by
1.1% in
fiscal
year
2025 (July
2024-June 2025).
For fiscal
year 2026
(July
2025-June
2026), the Planning Board
forecasted modest GNP growth of
0.5%. Meanwhile, the Puerto Rico
Economic Activity Index showed a
0.8% year-over-year increase and a 0.1% month-over-month
increase in November 2025. While this index is not
a direct measure of
real GNP, it serves as an indicator of ongoing economic activity.
In
2021
and
2022,
inflation
rose
sharply
in
the
U.S.
and
Puerto
Rico
due
to
post-pandemic
demand
and
supply
chain
issues.
Inflation
began
to
decrease
by
mid-2022
as
the
Federal
Reserve
raised
interest
rates,
largely
stabilizing
by
September
2024,
leading
to
a
series
of
rate
reductions
by
the
Federal
Reserve
for
the
first
time
in
four
years.
As
of
December
2025,
the
U.S.
Consumer Price Index
showed a 2.7%
year-over-year increase, which
is significantly lower
than peak
2022 inflation levels
but still
above the Federal Reserve’s 2% target. In Puerto Rico,
the Consumer Price Index increased by 1.9%
over the same period.
Fiscal Challenges of Puerto Rico and its Municipalities
As
Puerto Rico’s
economy contracted
in the
2000s, public
debt
increased rapidly
due to
borrowing to
cover
deficits to
pay
debt
service, pension benefits,
and other expenditures.
By 2016, the
government had over
$120 billion in
combined debt and
unfunded
pension liabilities, lost access to capital markets, and
faced a fiscal crisis.
In
response,
the
U.S.
Congress
enacted
PROMESA
in
June
2016.
PROMESA
established
an
Oversight
Board
with
significant
control over Puerto Rico’s
fiscal and economic affairs,
including those of its public
corporations, instrumentalities and municipalities
(collectively, “PR Government Entities”).
In August 2025, President Donald J. Trump dismissed six of the seven members of
the Oversight Board, reportedly due to inefficient
leadership and excessive spending. Three of the dismissed members subsequently filed suit in federal
court 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 members while the case proceeds. An
appeal of this ruling has been filed and remains
pending. It is still
too early to determine what impact these developments
may have on Puerto Rico’s fiscal and economic affairs.
92
Under PROMESA, the Oversight
Board will remain
in place until market
access is restored and
balanced budgets are achieved for
at
least
four
consecutive
years.
PROMESA
also
established
two
mechanisms
for
the
restructuring
of
the
obligations
of
PR
Government Entities:
(a) Title
III, an
in-court process
akin to
that of
the U.S.
Bankruptcy Code
and which
permits adjustment
of a
broad range
of
obligations, and
(b) Title
VI,
a largely
out-of-court process
through which
a supermajority
of creditors
can
accept
modifications to debt and bind holdouts.
Since
2017,
Puerto
Rico
and
several
of
its
instrumentalities
have
availed
themselves
of
these
mechanisms.
The
Puerto
Rico
government exited Title III in March 2022, and several instrumentalities, such as the Government Development Bank and the Puerto
Rico Highways and Transportation
Authority have also completed
debt restructurings under Titles
III or VI
of PROMESA. However,
the Puerto Rico Electric Power Authority is still undergoing
its debt restructuring.
Puerto
Rico's economic
difficulties
have also
impacted its
municipalities. Historically,
the central
government provided
significant
municipal subsidies. However, these have decreased pursuant to fiscal measures required by the Oversight Board. This decline has
been partly
offset by
federal disaster
and COVID-relief
funding received
by municipalities
in recent
years. The
latest Puerto
Rico
fiscal plan proposes a
restructured grant system to enhance
municipal services and encourage accountability through
performance
metrics.
Municipalities
are
subject
to
PROMESA,
and
the
Oversight
Board
has
required
certain
municipalities
to
submit
fiscal
plans
and
annual budgets
for review
and approval.
Municipalities are
also required
to seek
Oversight Board
approval to
issue, guarantee
or
modify
their
debts
and
to
enter
into
significant
contracts.
To
date
no
municipality
has
availed
itself
of
the
debt
restructuring
mechanisms available to them under PROMESA.
Exposure of the Corporation
The credit quality of BPPR’s
loan portfolio is closely tied to the
economic conditions in Puerto Rico. Deterioration in the Puerto
Rico
economy
could
potentially
increase
delinquencies
and
charge-offs,
thereby
impacting
the
Corporation’s
financial
health.
The
Corporation has direct exposure to P.R. Government Entities, which are mainly concentrated in obligations from various Puerto Rico
municipalities. Additionally,
the Corporation
holds loans
and securities
insured by
P.R.
Government Entities,
such as
the Housing
Finance
Authority,
whose
ability
to
honor
guarantees
depends
on
its
financial
condition.
BPPR’s
commercial,
mortgage,
and
consumer loan portfolios are also exposed to risks from private borrowers who are service providers or have other relationships with
the Puerto
Rico government
and government employees
who could
be negatively
affected by
Puerto Rico’s
fiscal challenges.
For
further
discussion
of
the
Corporation’s
direct
and
indirect
exposure
to
the
Puerto
Rico
government and
its
instrumentalities and
municipalities, please refer to Note 23 – Commitments
and Contingencies to the Consolidated
Financial Statements.
The
Corporation
also
maintains
significant
deposits
from
P.R.
Government
Entities,
with
future
balances
subject
to
various
uncertainties.
Further
information
on
Puerto
Rico
Government
deposits
is
included
in
Note
15
–
Deposits
to
the
Consolidated
Financial Statements.
United States Virgin Islands
The Corporation has operations in the United
States Virgin Islands (“USVI”) and has credit exposure
to USVI government entities.
Non-Performing Assets
Non-performing assets (“NPAs”)
include primarily past-due
loans that
are no
longer accruing interest,
renegotiated loans, and
real
estate property acquired through foreclosure. A summary, including certain credit
quality metrics, is presented in Table 23.
During 2025, the Corporation’s credit quality metrics were affected by two significant unrelated commercial exposures, resulting in a
$188.4 million increase
in non-performing loans (“NPLs”).
The determination to classify
these loans as
NPLs was driven
by factors
specific to the individual borrowers and are not
believed to be indicative of a broader decline
in portfolio credit quality.
The first
loan classified
as NPL
is a
$158.3 million
commercial and
industrial facility
issued to
a telecommunications
company in
Puerto Rico
experiencing reduced
revenue due
to operational
challenges following
a business
acquisition and
client attrition.
The
second loan classified as
NPL is a $30.1
million commercial real estate
facility, following
a $13.5 million charge-off,
and is secured
by a hotel property in Florida.
93
Excluding these cases, credit
quality metrics reflected favorable trends. The
Corporation continues to closely monitor the
economic
landscape
and
borrower
performance,
as
economic
uncertainty
remains
a
key
consideration.
The
Corporation’s
experience
managing credit risk under
different macroeconomic and operating
environments and, more recently,
the steps taken
around credit
tightening
supports
management’s
view
that
exposure
to
riskier
borrowers
is
adequately
managed.
Nonetheless,
carefully
monitoring the performance of our loan portfolio and
its response to the environment will continue
to be a priority.
Total
NPAs of $540.8 million as of December
31, 2025, increased by $132.7 million when compared with December 31, 2024. Total
NPLs of
$498.3 million increased
by $147.6
million from December
31, 2024.
BPPR’s NPLs
increased by $166.6
million, 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 $26.1
million. Popular U.S.
NPLs decreased by
$19.1 million, mostly
driven by a
decrease of $16.5
in
the mortgage NPLs, due to the return
to accrual of a single loan after a period of
sustained performance.
On December
31, 2025,
the ratio
of NPLs
to total
loans held-in-portfolio
was 1.27%,
compared to
0.95%, at
December 31,
2024.
Other real estate owned loans (“OREOs”) totaled
$42.4 million, a decrease of $14.8 million from December
31, 2024.
The Corporation’s
commercial loan
portfolio secured
by real
estate (“CRE”)
amounted to
$11.2
billion on
December 31,
2025, of
which
$3.2
billion
was
secured
with
owner
occupied
properties,
compared
with
$10.9
billion
and
$3.2
billion,
respectively,
on
December 31, 2024.
CRE NPLs
amounted to
$76.0 million
at December
31, 2025,
compared with
$53.7 million
at December
31, 2024.
The CRE
NPL
ratios for the BPPR and Popular U.S. segments were 1.23% and 0.25%, respectively,
at December 31, 2025, compared with 0.64%
and 0.37%, respectively, on December 31, 2024.
The non-owner occupied CRE portfolio was $5.5 billion at December 31, 2025, split between $3.4 billion in BPPR and $2.1
billion in
Popular U.S. This portfolio is diversified across sectors: retail (34%), hotels (19%),
and office space (12%) which together represent
two-thirds of
total non-owner
occupied CRE
exposure. Specifically,
office space
leasing accounts
for just
1.7% ($685.2
million) of
the total loan portfolio, mainly comprising mid-rise properties with an average loan size of $3 million, and is well diversified by tenant
type.
Within CRE, the
commercial multi-family portfolio is
$2.5 billion (approximately 6%
of total loans),
concentrated in New
York
Metro
($1.4 billion), South Florida ($664.1 million) and Puerto Rico ($196.7
million) regions. In the New York Metro, there is no exposure to
rent-controlled buildings and rent-stabilized
units make up less than 40% of total units,
with most originated after 2019.
In
addition
to
the
NPLs
included
in
Table
23,
at
December
31,
2025,
there
were
$499.6
million
of
performing
loans,
mostly
commercial
loans,
which
in
management’s
opinion,
are
currently
subject
to
potential
future
classification
as
non-performing
(December 31, 2024 - $596 million).
The following table presents the Corporation’s NPAs as of December 31, 2025 and
2024:
94
Table 23 - Non-Performing
Assets
December 31, 2025
December 31, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Non-accrual loans:
Commercial
Commercial multi-family
$
112
$
8,636
$
8,748
$
79
$
8,700
$
8,779
Commercial real estate non-owner
occupied
35,692
7,020
42,712
6,429
8,015
14,444
Commercial real estate owner occupied
24,567
-
24,567
25,258
5,191
30,449
Commercial and industrial
183,914
6,498
190,412
19,335
1,748
21,083
Total Commercial
244,285
22,154
266,439
51,101
23,654
74,755
Leasing
9,179
-
9,179
9,588
-
9,588
Mortgage
132,373
13,422
145,795
158,442
29,890
188,332
Consumer
Home equity lines of credit
-
2,796
2,796
-
3,393
3,393
Personal
18,863
1,233
20,096
20,269
1,741
22,010
Auto
52,200
-
52,200
51,792
-
51,792
Other
1,809
29
1,838
899
11
910
Total Consumer
72,872
4,058
76,930
72,960
5,145
78,105
Total non-performing
loans held-in-portfolio
458,709
39,634
498,343
292,091
58,689
350,780
Other real estate owned (“OREO”)
41,929
504
42,433
57,197
71
57,268
Total non-performing
assets
[1]
$
500,638
$
40,138
$
540,776
$
349,288
$
58,760
$
408,048
Accruing loans past due 90 days or more
[2]
$
228,772
$
188
$
228,960
$
242,250
$
190
$
242,440
Non-performing loans
to loans held-in-
portfolio
1.27
%
0.95
%
Interest Lost
12,598
15,565
[1] There were no non-performing loans held-for-sale
as of December 31, 2025 and December 31, 2024.
[2] It is the Corporation’s
policy to report delinquent
residential mortgage loans
insured by FHA or
guaranteed by the VA
as accruing loans past
due 90
days or more as opposed to non-performing
since the principal repayment is insured.
These balances include $47 million of
residential mortgage loans
insured by FHA or guaranteed by the VA
that are no longer accruing interest as of
December 31, 2025 (December 31, 2024
- $65 million). Furthermore,
at December 31, 2025 the
Corporation had approximately
$27 million in reverse
mortgage loans which are
guaranteed by FHA, but
which are currently
not accruing
interest. Due
to the
guaranteed nature
of the
loans, it
is the
Corporation’s
policy to
exclude these
balances from
non-performing assets
(December 31, 2024 - $31 million).
For
the
year
ended December
31,
2025,
total
inflows
of
NPLs
held-in-portfolio, excluding
consumer loans,
increased by
$132.1
million, compared to
the same
period in 2024.
Inflows of
NPLs held-in-portfolio at
the BPPR segment
increased by $198.2
million,
compared to the same period in 2024, mainly driven
by higher commercial inflows by $216.2 million, in
part offset by lower mortgage
inflows by $18.0 million. The increase in commercial inflows was primarily driven by the abovementioned exposures, totaling $188.4
million, which were classified as NPLs during the third quarter of 2025. Inflows
of NPLs held-in-portfolio at the Popular U.S. segment
decreased by $66.0 million from the same period in 2024, mainly
driven by lower commercial and mortgage inflows by $29.9 million
and $36.2 million, respectively.
Tables 24 to 30 present the Corporation’s inflows to NPLs for the years ended 2025 and 2024.
95
Table 24 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the year ended December 31, 2025
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
- NPLs
$
209,543
$
53,544
$
263,087
Plus:
New non-performing loans
359,190
32,318
391,508
Advances on existing non-performing loans
(2,312)
117
(2,195)
Less:
Non-performing loans transferred to OREO
(13,067)
(433)
(13,500)
Non-performing loans charged-off
(18,325)
(1,730)
(20,055)
Loans returned to accrual status / loan collections
(158,371)
(48,240)
(206,611)
Ending balance - NPLs
$
376,658
$
35,576
$
412,234
Table 25 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the year ended December 31, 2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
254,476
$
22,354
$
276,830
Plus:
New non-performing loans
158,713
98,088
256,801
Advances on existing non-performing loans
-
382
382
Less:
Non-performing loans transferred to OREO
(16,572)
(24)
(16,596)
Non-performing loans charged-off
(18,643)
(1,885)
(20,528)
Loans returned to accrual status / loan collections
(168,431)
(65,371)
(233,802)
Ending balance -
NPLs
$
209,543
$
53,544
$
263,087
96
Table 26 - Activity in Non
-Performing Commercial Loans Held-In-Portfolio
For the year ended December 31, 2025
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$51,101
$23,654
$74,755
Plus:
New non-performing loans
234,270
19,092
253,362
Advances on existing non-performing loans
(2,312)
116
(2,196)
Less:
Non-performing loans transferred to OREO
(260)
-
(260)
Non-performing loans charged-off
(17,948)
(1,730)
(19,678)
Loans returned to accrual status / loan collections
(20,566)
(18,978)
(39,544)
Ending balance - NPLs
$244,285
$22,154
$266,439
Table 27 - Activity in Non
-Performing Commercial Loans Held-in-Portfolio
For the year ended December 31, 2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$72,992
11,163
$84,155
Plus:
New non-performing loans
15,749
48,764
64,513
Advances on existing non-performing loans
-
314
314
Less:
Non-performing loans transferred to OREO
(358)
-
(358)
Non-performing loans charged-off
(18,485)
(1,867)
(20,352)
Loans returned to accrual status / loan collections
(18,797)
(34,720)
(53,517)
Ending balance - NPLs
$51,101
$23,654
$74,755
97
Table 28 -
Activity in Non-Performing Construction Loans Held-in
-Portfolio
For the year ended December 31, 2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$6,378
$-
$6,378
Less:
Loans returned to accrual status / loan collections
(6,378)
-
(6,378)
Ending balance - NPLs
$-
$-
$-
Table 29 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the year ended December 31,
2025
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$158,442
$29,890
$188,332
Plus:
New non-performing loans
124,920
13,226
138,146
Advances on existing non-performing loans
-
1
1
Less:
Non-performing loans transferred to OREO
(12,807)
(433)
(13,240)
Non-performing loans charged-off
(377)
-
(377)
Loans returned to accrual status / loan collections
(137,805)
(29,262)
(167,067)
Ending balance - NPLs
$132,373
$13,422
$145,795
Table 30 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the year ended December 31,
2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$175,106
$11,191
$186,297
Plus:
New non-performing loans
142,964
49,324
192,288
Advances on existing non-performing loans
-
68
68
Less:
Non-performing loans transferred to OREO
(16,214)
(24)
(16,238)
Non-performing loans charged-off
(158)
(18)
(176)
Loans returned to accrual status / loan collections
(143,256)
(30,651)
(173,907)
Ending balance - NPLs
$158,442
$29,890
$188,332
98
Loan Delinquencies
Another key measure used to evaluate and
monitor the Corporation’s asset quality is loan
delinquencies. Loans delinquent 30 days
or
more
and
delinquencies, as
a
percentage
of
their
related
portfolio
category
at
December
31,
2025
and
2024,
are
presented
below.
Table 31 - Loan Delinquencies
(Dollars in thousands)
December 31, 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
$
24,982
$
2,455,790
1.02
%
$
15,826
$
2,399,620
0.66
%
Commercial real estate
non-owner occupied
47,068
5,543,284
0.85
24,925
5,363,235
0.46
Commercial real estate
owner occupied
28,008
3,153,080
0.89
42,311
3,157,746
1.34
Commercial and industrial
215,068
8,607,412
2.50
49,942
7,741,562
0.65
Total Commercial
315,126
19,759,566
1.59
133,004
18,662,163
0.71
Construction
17,283
1,674,899
1.03
1,039
1,263,792
0.08
Mortgage
[1]
759,300
8,649,440
8.78
798,130
8,114,183
9.84
Leasing
37,567
2,001,365
1.88
39,641
1,925,405
2.06
Consumer
Credit cards
51,846
1,256,717
4.13
59,078
1,218,079
4.85
Home equity lines of credit
4,160
78,692
5.29
5,054
73,571
6.87
Personal
53,632
1,906,228
2.81
57,835
1,855,244
3.12
Auto
186,798
3,819,812
4.89
191,008
3,823,437
5.00
Other
5,929
180,799
3.28
3,930
171,778
2.29
Total Consumer
302,365
7,242,248
4.18
316,905
7,142,109
4.44
Loans held-for-sale
-
9,998
-
-
5,423
-
Total