FULLTEXT DEL 6 AV 9
10-K – 2026-03-02 – d17859d10k.htm
$
1,431,641
$
39,337,516
3.64
%
$
1,288,719
$
37,113,075
3.47
%
[1]
Loans delinquent 30 days or more includes $0.4 billion
of residential mortgage loans insured by FHA or guaranteed
by the VA as of December
31, 2025 (December 31, 2024 - $0.4 billion). Refer to Note
7 to the Consolidated Financial Statements for additional information
of guaranteed loans.
Allowance for Credit Losses (“ACL”)
The ACL
represents management’s
estimate of
expected credit
losses through
the remaining
contractual life
of the
different loan
segments, impacted by expected prepayments. The ACL
is maintained at a sufficient
level to provide for estimated credit
losses on
collateral dependent loans as well as loans modified
for borrowers with financial difficulties separately from the remainder
of the loan
portfolio. The Corporation’s
management evaluates the adequacy
of the ACL
on a quarterly
basis. In this
evaluation, management
considers current
conditions, macroeconomic
economic expectations through
a reasonable
and supportable
period, historical
loss
experience,
portfolio composition
by
loan
type
and
risk
characteristics,
results
of
periodic credit
reviews
of
individual loans,
and
regulatory requirements, amongst other factors.
The Corporation must rely on
estimates and exercise judgment regarding matters where
the ultimate outcome is unknown, such
as
economic developments affecting specific
customers, industries, or markets.
Other factors that can
affect management’s estimates
are
recalibration
of
statistical
models
used
to
calculate
lifetime
expected
losses,
changes
in
underwriting
standards,
financial
accounting standards and loan impairment measurements,
among others. Changes in the financial condition
of individual borrowers,
in economic
conditions, and
in the
condition of
the various
markets in
which collateral
may be
sold, may
also affect
the required
level of
the allowance
for credit
losses. Consequently,
the business
financial condition,
liquidity,
capital, and
results of
operations
could also be affected.
99
At December
31, 2025,
the ACL
increased by
$62.1
million from
December 31,
2024 to
$808.1 million.
The increase
in ACL
was
driven
by
a
combination
of
changes
in
the
economic
scenario,
probability
weights,
loan
volumes
and
increases
in
qualitative
reserves, in
response to
the current
economic environment uncertainty,
coupled with
a specific
reserve recognized
for the
above-
mentioned $158.3 million commercial NPL inflow.
The
ACL
for
BPPR
increased
by
$47.3
million,
driven
by
a
combination
of
a
specific
reserve
recognized for
the
$158.3
million
commercial
NPL
inflow,
higher
loan
volumes,
changes
in
the
economic
scenario,
and
changes
in
the
probability
weights
that
resulted in a $8.8 million net ACL increase. In PB, the ACL
increased by $14.8 million, when compared to December 31, 2024. This
increase was
influenced by
higher qualitative
reserves for
the CRE
portfolio in
response to
current market
volatility and
economic
uncertainty, coupled with changes in the probability weights that resulted in a
$4.9 million net increase.
The Corporation’s ratio of
the allowance for credit
losses to loans held-in-portfolio was
2.05% on December 31,
2025, compared to
2.01% on December 31, 2024.
The ratio of the allowance for
credit losses to NPLs held-in-portfolio stood at
162.15%, compared to
212.68% on December 31, 2024.
Refer to Note 8 – Allowance for credit losses – loans held-in-portfolio to the Consolidated Financial Statements, and to the Provision
for Credit Losses section of this MD&A for additional
information.
Tables 32 to 33 details the allowance for credit losses by loan categories and the percentage
it represents of total loans held-in-
portfolio and NPLs. The breakdown is made for analytical
purposes, and it is not necessarily indicative of the
categories in which
future loan losses may occur.
100
Table 32 - Allowance for Credit
Losses - Loan Portfolios
December 31, 2025
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
19,345
$
2,455,790
0.79
%
$
8,748
221.14
%
Commercial real estate non-owner occupied
58,717
5,543,284
1.06
%
42,712
137.47
%
Commercial real estate owner occupied
48,451
3,153,080
1.54
%
24,567
197.22
%
Commercial and industrial
180,934
8,607,412
2.10
%
190,412
95.02
%
Total Commercial
$
307,447
$
19,759,566
1.56
%
$
266,439
115.39
%
Construction
13,826
1,674,899
0.83
%
-
-
Mortgage
80,554
8,649,440
0.93
%
145,795
55.25
%
Leasing
18,620
2,001,365
0.93
%
9,179
202.85
%
Consumer
Credit cards
91,124
1,256,717
7.25
%
-
-
Home equity lines of credit
1,335
78,692
1.70
%
2,796
47.75
%
Personal
106,612
1,906,228
5.59
%
20,096
530.51
%
Auto
180,364
3,819,812
4.72
%
52,200
345.52
%
Other
8,174
180,799
4.52
%
1,838
444.72
%
Total Consumer
$
387,609
$
7,242,248
5.35
%
$
76,930
503.85
%
Total
$
808,056
$
39,327,518
2.05
%
$
498,343
162.15
%
Table 33 - Allowance for Credit
Losses - Loan Portfolios
December 31, 2024
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
9,236
$
2,399,620
0.38
%
$
8,779
105.21
%
Commercial real estate non-owner occupied
54,494
5,363,235
1.02
%
14,444
377.28
%
Commercial real estate owner occupied
49,828
3,157,746
1.58
%
30,449
163.64
%
Commercial and industrial
146,006
7,741,562
1.89
%
21,083
692.53
%
Total Commercial
$
259,564
$
18,662,163
1.39
%
$
74,755
347.22
%
Construction
11,264
1,263,792
0.89
%
-
-
Mortgage
82,409
8,114,183
1.02
%
188,332
43.76
%
Leasing
16,419
1,925,405
0.85
%
9,588
171.25
%
Consumer
Credit cards
99,130
1,218,079
8.14
%
-
-
Home equity lines of credit
1,503
73,571
2.04
%
3,393
44.30
%
Personal
102,736
1,855,244
5.54
%
22,010
466.77
%
Auto
165,995
3,823,437
4.34
%
51,792
320.50
%
Other
7,004
171,778
4.08
%
910
769.67
%
Total Consumer
$
376,368
$
7,142,109
5.27
%
$
78,105
481.87
%
Total
$
746,024
$
37,107,652
2.01
%
$
350,780
212.68
%
Table
34
details
the
breakdown
of
the
allowance
for
credit
losses
by
loan
categories.
The
breakdown
is
made
for
analytical
purposes, and it is not necessarily indicative of
the categories in which future loan losses may occur.
101
Table 34 - Allocation of the
Allowance for Credit Losses - Loans
At December 31,
2025
2024
% of loans
% of loans
in each
in each
category to
category to
(Dollars in millions)
ACL
total loans
ACL
total loans
Commercial
Commercial multi-family
$19.3
6.2
%
$9.2
6.5
%
Commercial real estate non-owner occupied
58.7
14.1
54.5
14.5
Commercial real estate owner occupied
48.6
8.0
49.9
8.5
Commercial and industrial
180.9
21.9
146.0
20.8
Total Commercial
$307.5
50.2
%
$259.6
50.3
%
Construction
13.8
4.3
11.3
3.4
Mortgage
80.6
22.0
82.4
21.9
Leasing
18.6
5.1
16.4
5.2
Consumer
Credit cards
91.1
3.2
99.1
3.3
Home equity lines of credit
1.3
0.2
1.5
0.2
Personal
106.6
4.8
102.7
5.0
Auto
180.4
9.7
166.0
10.2
Other Consumer
8.2
0.5
7.0
0.5
Total Consumer
$387.6
18.4
%
$376.3
19.2
%
Total
[1]
$808.1
100.0
%
$746.0
100.0
%
[1] Note: For purposes of this table the term loans refers to
loans held-in-portfolio excluding loans held-for-sale.
The following
table presents
net charge-offs
to average
loans held-in-portfolio
(“HIP”) ratios
by loan
category for
the years
ended
December 31, 2025 and 2024:
Table 35 - Net Charge-Offs
(Recoveries) to Average Loans HIP
December 31, 2025
December 31, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
0.14
%
0.01
%
0.08
%
0.17
%
0.04
%
0.11
%
Construction
(0.01)
(0.01)
(0.01)
(0.59)
(0.01)
(0.10)
Mortgage
(0.14)
(0.02)
(0.12)
(0.21)
(0.01)
(0.18)
Leasing
0.55
-
0.55
0.67
-
0.67
Consumer
2.53
3.01
2.55
3.06
7.44
3.20
Total
0.72
%
0.05
%
0.52
%
0.89
%
0.18
%
0.68
%
NCOs for the year ended December 31, 2025, amounted to $198.7 million, decreasing by $43.1 million when compared to the same
period in
2024. The
BPPR segment
decreased by
$30.1 million
mainly driven
by lower
consumer NCOs
by $32.1
million. The
PB
segment NCOs decreased by $13.0 million, primarily
driven by lower consumer NCOs by $10.6
million.
102
Loan Modifications
For the year ended December 31, 2025, modified
loans to borrowers with financial difficulty amounted
to $406.6 million, of which
$386.8 million were in accruing status. The BPPR
segment’s modifications to borrowers with financial difficulty amounted
to $345.7
million, mainly comprised of commercial and mortgage
loans of $264.9 million and $54.9 million, respectively. A total of $35.9 million
of the mortgage modifications were related to government
guaranteed loans. The Popular U.S. segment’s modifications
to
borrowers with financial difficulty amounted to $60.9 million,
mostly comprised of commercial loans.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements
for
additional
information
on
modifications
made
to
borrowers
experiencing financial difficulties.
Enterprise Risk Management
The Corporation’s
Board of
Directors has
established a
Risk Management
Committee (“RMC”)
to, among
other things,
assist the
Board in its (i) oversight of the Corporation’s overall risk framework and (ii)
to monitor, review, and approve policies to measure, limit
and manage the Corporation’s risks.
The
Corporation
has
established
a
three
lines
of
defense
framework:
(a)
business
line
management constitutes
the
first
line
of
defense by identifying
and managing the
risks associated with
business activities, (b) components
of the Risk
Management Group
and
the
Corporate
Security
Group,
among
others,
act
as
the
second
line
of
defense
by,
among
other
things,
measuring
and
reporting on the Corporation’s risk activities, and (c) the Corporate Auditing Division
,
as the third line of defense, reporting directly to
the Audit Committee of the Board, by independently providing
assurance regarding the effectiveness of the risk
framework.
The Enterprise Risk Management Committee (the “ERM Committee”)
is a management committee whose purpose is to oversee and
monitor Market, Interest, Liquidity,
Regulatory and Financial Compliance, BSA/AML & Sanctions, Regulatory,
Strategic, Operational
(including
Fraud
and
Third
Party
Risk,
among
others),
Information
Technology
and
Cyber
Security,
Legal,
Credit,
Climate
and
Reputational risks, as
defined in the
Risk Appetite Statement
(“RAS”) of the
Risk Management Policy
and within the
Corporation’s
Enterprise Risk
Management (“ERM”)
framework. The
ERM
Committee and
the Enterprise
Risk Management
Department in
the
Financial and
Operational Risk
Management Division
(the “FORM
Division”), in
coordination with
the Chief
Risk Officer
(“CRO”),
create the framework to identify and manage multiple
and cross-enterprise risks, and to articulate the
RAS and supporting metrics.
The
Enterprise
Risk
Management
Department
has
established
a
process
to
ensure
that
an
appropriate
standard
readiness
assessment is performed before we launch a new product or service. Similar procedures are performed by the Treasury Division for
transactions involving
the purchase
and sale
of assets,
and by
the Mergers
and Acquisitions
Division for
acquisition transactions.
The Enterprise Risk Management Department has a Corporate
Issues Management Policy to promote on time remediation of
issues
and increase the
governance and transparency around
the number and
the severity of
issues identified for each
business unit and
corporate
function
by
all
sources.
The
Enterprise
Risk
Management
Department
also
has
a
Corporate
Regulatory
Change
Management Program
to
oversee,
on
a
risk
basis,
the
implementation of
laws
and
regulations by
the
appropriate
business and
support areas.
The Asset/Liability
Committee (“ALCO”),
composed of
senior management
representatives from
the business
lines and
corporate
functions, and the Corporate Finance Group, are responsible for planning and executing the
Corporation’s market, interest rate risk,
funding
activities
and
strategy,
as
well
as
for
implementing
approved
policies
and
procedures.
The
ALCO
also
reviews
the
Corporation’s
capital
policy
and
the
attainment
of
the
capital
management
objectives.
In
addition,
the
Financial
Risk,
Corporate
Insurance & Advisory Department independently measures,
monitors and reports compliance with
liquidity and market risk policies,
and oversees controls surrounding interest risk measurements.
The Corporate Compliance
Committee, comprised of
senior management team
members and representatives
from the Regulatory
and Financial
Compliance Division
and the
Financial Crimes
Compliance Division,
among others,
are responsible
for overseeing
and
assessing
the
adequacy
of
the
risk
management
processes
that
support
Popular’s
compliance
program
for
identifying,
assessing,
measuring,
monitoring,
testing,
mitigating,
and
reporting
compliance
risks.
They
also
supervise
Popular’s
reporting
obligations
under
the
compliance
program
to
assess
the
adequacy,
consistency
and
timeliness
of
the
reporting
of
compliance-
related risks across the Corporation.
103
The Regulatory Affairs
team is responsible
for maintaining an
open dialog with
the banking regulatory
agencies to have
regulatory
risks properly identified, measured, monitored, as well as communicated to
the appropriate regulatory agency as necessary to keep
them apprised of material matters within the purview
of these agencies.
The
Credit
Strategy
Committee,
composed
of
senior
level
management
representatives
from
the
business
lines
and
corporate
functions, and the Corporate Credit Risk Management Division,
are responsible for monitoring credit risk management
activities both
at
the corporate
level
and
across all
Popular subsidiaries
providing for
the
development and
consistent
application of
credit
risk
policies, processes
and procedures
that measure,
limit and
manage credit
risks, while
seeking to
maintain the
effectiveness and
efficiency of the operating and businesses processes.
The Corporation’s Operational Risk Committee (“ORCO”) composed of senior
level management representatives from the business
lines
and
corporate
functions,
provide
executive
oversight
of
the
operational
risk
management
activities
of
Popular
and
its
subsidiaries providing
for the
development and
consistent application
of operational
risk policies,
processes, and
procedures that
measure,
limit,
and
manage
operational
risks
while
maintaining
the
effectiveness
and
efficiency
of
the
operating
and
business
processes.
The
FORM
Division,
within
the
Risk
Management
Group,
serves
as
ORCO’s
operating
arm
and
is
responsible
for
establishing baseline processes to measure, monitor, limit and manage
operational risk.
The Corporate Security Group (“CSG”), under the direction of the
Chief Security Officer, leads
all efforts pertaining to cybersecurity,
enterprise fraud and data
privacy, including
developing strategies and oversight processes with
policies and programs that mitigate
compliance, operational,
strategic, financial
and reputational
risks associated
with the
Corporation’s and
our customers’
data and
assets.
The Information Technology
and Cyber Risk
Committee, composed of senior
management representatives from the
business lines
and
corporate
functions,
the
Information
Technology
Division
and
the
CSG,
are
responsible
for
the
oversight
and
monitoring
of
information
technology
and
cybersecurity
risks,
mitigation
strategies,
actions
and
controls,
key
risk
metrics,
and
information
technology and cyber incidents that may result in operational, compliance and reputational risks.
The Chief Security Officer also co-
chairs the Information Technology & Cyber Security Risk Committee along with the Chief Information
& Digital Strategy Officer.
The Corporate Legal Division, in this context, has the responsibility
of assessing, monitoring, managing and reporting with respect to
legal risks, including those related to litigation, investigations
and other material legal matters.
The
Corporation has
also
established
a
Corporate Sustainability
Committee
whose
purpose
and
responsibility is
to
oversee the
Corporation’s sustainability efforts and support the development and consistent application of policies, strategies and guidelines that
measure and
manage sustainability
matters and
risks. The
Corporate Sustainability
Committee also
assesses environmental
and
social considerations
with respect
to certain
commercial credit
applications, in
accordance with
the applicable
Commercial Credit
Policy and Commercial Credit Manuals of BPPR
and PB.
The processes
of strategic
risk planning
and the
evaluation of
reputational risk
are on-going
processes through
which continuous
data gathering and analysis are performed. In order to have strategic risks properly identified and monitored, the Corporate Strategy
and
Transformation
Division,
performs
periodic
assessments
regarding
corporate
strategic
priority
initiatives,
such
as
the
Corporation’s transformation initiative and other emerging issues. The
Acquisitions and Corporate Investments Division continuously
assesses potential
strategic transactions.
The Corporate
Communications Division is
responsible for
the monitoring,
management
and implementation of action plans with respect
to reputational risk issues.
Popular’s capital planning process integrates the Corporation’s risk profile
as well as its strategic focus, operating
environment, and
other factors
that could
materially affect
capital adequacy
in hypothetical
highly-stressed business
scenarios. Capital
ratio targets
and triggers take into consideration the different risks evaluated
under Popular’s risk management framework.
In
addition to
establishing a
formal process
to manage
risk, our
corporate culture
is also
critical to
an effective
risk management
function.
Through our Code
of Ethics, the
Corporation provides a framework
for all our
employees to conduct themselves
with the
highest integrity.
ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT
YET EFFECTIVE ACCOUNTING STANDARDS
Refer to Note 3 “New Accounting Pronouncements”
to the Consolidated Financial Statements.
104
Statistical Summary 2025-2024
Statements of Financial Condition
At December 31,
(In thousands)
2025
2024
Assets:
Cash and due from banks
$
402,755
$
419,638
Money market investments:
Time deposits with other banks
4,626,506
6,380,948
Total money market investments
4,626,506
6,380,948
Trading account debt securities, at fair value
36,569
32,831
Debt securities available-for-sale, at fair
value
20,574,972
18,245,903
Debt securities held-to-maturity, at amortized cost
7,327,529
7,758,077
Less – Allowance for credit losses
5,812
5,317
Debt securities held-to-maturity, net
7,321,717
7,752,760
Equity securities
229,848
208,166
Loans held-for-sale, at fair value
9,998
5,423
Loans held-in-portfolio:
Loans held-in-portfolio
39,749,142
37,522,995
Less – Unearned income
421,624
415,343
Allowance for credit losses
808,056
746,024
Total loans held-in-portfolio, net
38,519,462
36,361,628
Premises and equipment, net
685,820
601,787
Other real estate
42,433
57,268
Accrued income receivable
300,824
263,389
Mortgage servicing rights, at fair value
96,356
108,103
Other assets
1,705,977
1,797,759
Goodwill
789,954
802,954
Other intangible assets
5,076
6,826
Total assets
$
75,348,267
$
73,045,383
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing
$
15,304,209
$
15,139,555
Interest bearing
50,885,884
49,744,790
Total deposits
66,190,093
64,884,345
Assets sold under agreements to repurchase
39,001
54,833
Other short-term borrowings
650,000
225,000
Notes payable
759,577
896,293
Other liabilities
1,460,517
1,371,846
Total liabilities
69,099,188
67,432,317
Stockholders’ equity:
Preferred stock
22,143
22,143
Common stock
1,049
1,048
Surplus
4,924,296
4,908,693
Retained earnings
5,206,497
4,570,957
Treasury stock – at cost
(2,722,819)
(2,228,535)
Accumulated other comprehensive loss, net
of tax
(1,182,087)
(1,661,240)
Total stockholders’ equity
6,249,079
5,613,066
Total liabilities and stockholders’ equity
$
75,348,267
$
73,045,383
105
Statistical Summary 2023-2025
Statements of Operations
For the years ended December 31,
(In thousands)
2025
2024
2023
Interest income:
Loans
$
2,763,118
$
2,626,058
$
2,331,654
Money market investments
254,786
352,195
366,625
Investment securities
765,105
695,010
547,028
Total interest income
3,783,009
3,673,263
3,245,307
Less - 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
Net interest income after provision for
credit losses
2,281,040
2,025,346
1,922,915
Mortgage banking activities
14,956
19,059
21,497
Net gain (loss), including impairment, on
equity securities
1,596
(1,583)
3,482
Net gain on trading account debt securities
1,908
1,445
1,382
Net gain (loss) on sale of loans, including
valuation adjustments on loans held-for-sale
-
440
(115)
Adjustment to indemnity reserves on loans
sold
(174)
1,266
2,319
Other non-interest income
639,733
638,282
622,159
Total non-interest income
658,019
658,909
650,724
Operating expenses:
Personnel costs
905,214
820,451
778,045
All other operating expenses
1,027,052
1,067,186
1,120,055
Total operating expenses
1,932,266
1,887,637
1,898,100
Income before income tax
1,006,793
796,618
675,539
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
106
Statistical Summary 2025-2023
Average Balance Sheet and Summary of
Net Interest Income
On a Taxable Equivalent
Basis*
2025
2024
2023
(Dollars in thousands)
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Assets
Interest earning assets:
Money market investments
$
5,853,342
$
254,786
4.35
%
$
6,640,514
$
352,195
5.30
%
$
7,051,718
$
366,625
5.20
%
U.S.
Treasury securities
22,491,878
812,239
3.61
21,047,129
654,712
3.11
20,305,488
441,179
2.17
Obligations of U.S.
Government
Obligations of Puerto Rico, States
and political subdivisions
53,292
5,743
10.78
59,668
6,215
10.42
64,682
5,863
9.06
Collateralized mortgage obligations and
mortgage-backed securities
6,007,691
126,136
2.10
6,642,953
136,016
2.05
7,360,071
157,196
2.14
Other
217,451
11,430
5.26
205,711
11,514
5.60
196,226
11,519
5.87
Total investment securities
28,770,312
955,548
3.32
27,955,461
808,457
2.89
27,926,467
615,757
2.20
Trading account securities
29,714
1,667
5.61
30,250
1,583
5.23
31,876
1,377
4.32
Loans (net of unearned income)
37,982,637
2,845,548
7.49
35,701,240
2,684,598
7.52
33,164,961
2,387,351
7.20
Total interest earning
assets/Interest
income
$
72,636,005
$
4,057,549
5.59
%
$
70,327,465
$
3,846,833
5.47
%
$
68,175,022
$
3,371,110
4.94
%
Total non-interest
earning assets
3,104,642
3,072,814
3,059,214
Total assets
$
75,740,647
$
73,400,279
$
71,234,236
Liabilities and Stockholders' Equity
Interest bearing liabilities:
Savings, NOW,
money market and
other
interest bearing demand accounts
$
42,213,411
$
884,594
2.10
%
$
40,476,544
$
1,046,100
2.58
%
$
39,463,481
$
862,981
2.19
%
Time deposits
9,390,884
293,303
3.12
8,902,700
290,021
3.26
7,775,846
187,043
2.41
Federal funds purchased
6,027
264
4.39
6,011
322
5.36
6
-
5.25
Securities purchased under agreement
to resell
59,793
2,726
4.56
70,145
3,900
5.56
115,808
6,019
5.20
Other short-term borrowings
290,617
12,827
4.41
8,402
454
5.40
27,302
1,310
4.80
Notes payable
824,356
48,092
5.83
961,886
50,178
5.22
1,109,163
56,430
5.09
Total interest bearing
liabilities/Interest
expense
52,785,088
1,241,806
2.35
50,425,688
1,390,975
2.76
48,491,606
1,113,783
2.30
Total non-interest
bearing liabilities
15,747,877
15,921,398
16,142,027
Total liabilities
68,532,965
66,347,086
64,633,633
Stockholders' equity
7,207,682
7,053,193
6,600,603
Total liabilities and
stockholders' equity
$
75,740,647
$
73,400,279
$
71,234,236
Net interest income on a taxable
equivalent basis
$
2,815,743
$
2,455,858
$
2,257,327
Cost of funding earning assets
1.71
%
1.98
%
1.63
%
Net interest margin
3.88
%
3.49
%
3.31
%
Effect of the taxable equivalent
adjustment
274,540
173,570
125,803
Net interest income per books
$
2,541,203
$
2,282,288
$
2,131,524
*
Shows
the
effect
of
the
tax
exempt
status
of
some
loans
and
investments
on
their
yield,
using
the
applicable
statutory
income
tax
rates.
The
computation considers
the interest
expense disallowance
required by
the Puerto
Rico Internal
Revenue Code.
This adjustment
is shown
in order
to
compare the yields of the tax exempt and taxable assets
on a taxable basis.
Note: Average loan
balances include the
average balance of
non-accruing loans. No
interest income is
recognized for these
loans in accordance
with
the Corporation’s
policy.
Average
balances
exclude
unrealized
gains
or
losses
on
debt
securities
available-for-sale
and
unrealized
losses
on
debt
securities transfer to held-to-maturities.
107
Report of Management on Internal Control Over Financial
Reporting
The management of
Popular, Inc.
(the “Corporation”) is responsible
for establishing and
maintaining adequate internal control
over
financial reporting as defined in Rules 13a - 15(f) and 15d -
15(f) under the Securities Exchange Act of 1934 and for our assessment
of internal control over financial reporting. The Corporation’s internal
control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America,
and
includes
controls
over
the
preparation of
financial statements
in accordance
with the
instructions to
the Consolidated
Financial Statements
for Bank
Holding
Companies (Form FR Y-9C)
to comply with the reporting requirements of Section 112
of the Federal Deposit Insurance Corporation
Improvement Act (FDICIA). The Corporation’s internal control
over financial reporting includes those policies
and procedures that:
(i)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
transactions
and
dispositions of the assets of the Corporation;
(ii)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements in accordance with accounting principles generally accepted in the United States of America, and that receipts
and expenditures of the Corporation are being made only in accordance with authorizations of management and directors
of the Corporation; and
(iii) provide reasonable assurance regarding
prevention or timely detection of
unauthorized acquisition, use or disposition
of the Corporation’s assets that could have a material effect
on the financial statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
The management of Popular,
Inc. has assessed the
effectiveness of the Corporation’s
internal control over financial reporting
as of
December
31,
2025.
In
making
this
assessment,
management
used
the
criteria
set
forth
in
the
Internal
Control-Integrated
Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
Based on our assessment, management concluded that the Corporation maintained effective internal control over financial reporting
as of December 31, 2025 based on the
criteria referred to above.
The Corporation’s
independent registered
public accounting
firm,
PricewaterhouseCoopers LLP
,
has audited
the effectiveness
of
the Corporation’s
internal control
over financial
reporting as
of December
31, 2025,
as stated
in their
report dated
March 2,
2026
which appears herein.
/s/ Javier D. Ferrer
/s/ Jorge J. García
Javier D. Ferrer
Jorge J. García
President and Chief Executive Officer
Executive Vice President
and Chief Financial Officer
108
Report of Independent Registered Public Accounting Firm
To
the
Board of Directors and Stockholders of Popular, Inc.
Opinions on the Financial Statements and Internal
Control over Financial Reporting
We
have
audited
the
accompanying
consolidated
statements
of
financial
condition
of
Popular,
Inc.
and
its
subsidiaries
(the
“Corporation”)
as
of
December
31,
2025
and
2024,
and
the
related
consolidated
statements
of
operations, comprehensive income, changes
in stockholders’ equity and cash
flows for each of
the three years in
the
period ended
December 31,
2025, including
the related
notes (collectively
referred to
as the
“consolidated financial
statements”).
We
also
have
audited
the
Corporation's
internal
control
over
financial
reporting
as
of
December
31,
2025,
based
on
criteria established in Internal
Control
-
Integrated
Framework (2013)
issued
by
the
Committee
of
Sponsoring Organizations of the Treadway Commission (COSO).
In
our
opinion,
the
consolidated
financial
statements
referred
to
above
present
fairly,
in
all
material
respects,
the
financial position of the Corporation as of
December 31, 2025 and 2024, and the
results of its operations and its cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,
2025
in
conformity with
accounting
principles
generally
accepted
in
the
United
States
of
America. Also in
our
opinion,
the
Corporation maintained,
in
all
material
respects,
effective
internal
control
over
financial
reporting
as
of
December
31,
2025,
based
on
criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The
Corporation's management
is responsible
for these
consolidated
financial statements,
for maintaining
effective
internal control
over financial
reporting, and
for its
assessment of
the effectiveness
of internal
control over
financial
reporting,
included
in
the
accompanying
Report
of
Management
on
Internal
Control
over
Financial
Reporting.
Our
responsibility is
to express
opinions on
the Corporation’s
consolidated financial
statements and
on the
Corporation's
internal
control
over
financial
reporting
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Corporation
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits
in accordance with the standards
of the PCAOB. Those standards
require that we plan and
perform
the audits
to obtain
reasonable assurance
about
whether the
consolidated financial
statements are
free of
material
misstatement,
whether due
to error
or
fraud, and
whether
effective
internal control
over financial
reporting
was maintained in all material respects.
Our
audits
of
the
consolidated
financial
statements
included
performing
procedures
to
assess
the
risks of
material
misstatement of the consolidated
financial statements, whether due
to error or fraud,
and performing procedures that
respond to
those risks.
Such procedures
included examining,
on a
test basis,
evidence regarding
the amounts
and
disclosures
in
the
consolidated
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
consolidated
financial
statements.
Our
audit
of
internal
control
over
financial
reporting
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audits also included performing such other procedures as we considered necessary in
the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
109
Definition and Limitations of Internal Control over Financial Reporting
A
company’s
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
Management's
assessment
and
our
audit
of
Popular,
Inc.'s
internal
control
over
financial
reporting
also
included
controls
over
the
preparation
of
financial
statements
in
accordance with the instructions
to the Consolidated Financial Statements
for Bank Holding Companies
(Form FR Y-
9C)
to
comply
with
the
reporting
requirements
of
Section
112
of
the
Federal
Deposit
Insurance
Corporation
Improvement
Act
(FDICIA).
A
company’s
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that (i)
pertain to
the maintenance
of records
that, in
reasonable detail,
accurately
and fairly
reflect the
transactions and
dispositions of
the assets
of the
company; (ii)
provide reasonable
assurance that
transactions are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generally
accepted
accounting
principles, and
that receipts
and expenditures
of the
company are
being made
only
in accordance
with
authorizations
of
management
and
directors
of
the
company;
and
(iii)
provide
reasonable
assurance
regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of
its inherent
limitations, internal
control over
financial reporting
may not
prevent or
detect misstatements.
Also, projections of
any evaluation of effectiveness
to future periods are
subject to the risk
that controls may become
inadequate because
of changes
in conditions,
or that
the degree
of compliance
with the
policies or
procedures may
deteriorate.
Critical Audit Matters
The
critical
audit
matter
communicated
below
is
a
matter
arising
from
the
current
period
audit
of
the
consolidated
financial
statements
that
was
communicated
or
required
to
be
communicated
to
the
audit
committee
and
that
(i)
relates
to
accounts
or
disclosures
that
are
material
to
the
consolidated
financial
statements
and
(ii)
involved
our
especially challenging,
subjective, or
complex judgments.
The communication
of critical
audit matters
does not
alter
in any way our opinion on the consolidated financial statements, taken as a whole, and
we are not, by communicating
the
critical
audit
matter
below,
providing
a
separate
opinion
on
the
critical
audit
matter
or
on
the
accounts
or
disclosures to which it relates.
Allowance for Credit Losses – Certain Loans Held-in-Portfolio
As described
in Notes
2 and
8 to
the consolidated
financial statements,
as of
December 31,
2025, the
Corporation
had an allowance for credit
losses (“ACL”) on loans held-in-portfolio
of $307.4 million related to
the commercial loans
portfolio, $13.8 million related to the construction loans
portfolio, $70.7 million related to the Banco Popular de
Puerto
Rico’s (“BPPR”) mortgage loans portfolio,
$97.8 million related to BPPR’s
personal loans portfolio, and $180.4 million
related to
the BPPR’s
auto loans
portfolio (collectively
“certain loans
held-in-portfolio”). Management
establishes an
ACL
for
the
loan
portfolio
based
on
an
estimate
of
credit
losses
over
the
remaining
contractual
term
of
the
loans,
adjusted
for
expected
prepayments.
Management
follows
a
methodology
to
estimate
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. The
modeling framework
includes internally
developed quantitative
models
that generate
lifetime default
and prepayments,
and other
loan level
techniques to
estimate loss
severity.
As part
of
the
methodology,
management
evaluates
various
macroeconomic
scenarios
and
applies
probability
weights
to
the
outcome
of
the
selected
macroeconomic
scenarios.
The
macroeconomic
variables
chosen
by
management
to
estimate
credit
losses
are
selected
by
combining
quantitative
procedures
with
expert
judgement.
The
ACL
also
includes a
qualitative adjustment
framework that
addresses two
main components:
losses that
are expected
but not
captured within the quantitative modeling framework and model imprecision.
The
principal
considerations
for
our
determination
that
performing
procedures
relating
to
the
allowance
for
credit
losses for
certain
loans held-in-portfolio
is a
critical audit
matter are
(i) a
high degree
of auditor
effort in
performing
procedures and evaluating audit
evidence related to
the allowance for credit
losses for certain loans
held-in-portfolio;
and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.
110
Addressing the
matter involved
performing procedures
and evaluating audit
evidence in
connection with
forming our
overall
opinion
on
the
consolidated
financial
statements.
These
procedures
included
testing
the
effectiveness
of
controls relating to
the allowance for credit
losses for certain loans
held-in-portfolio. These procedures
also included,
among others, (i) testing management’s process for developing
the allowance for credit losses for certain
loans held-
in-portfolio;
(ii) testing
the completeness
and
accuracy of
certain
data
used
in
the
internally
developed quantitative
models; and
(iii) the
involvement of
professionals with
specialized skill
and knowledge
to assist
in evaluating
(a) the
appropriateness of
the methodology
and the internally
developed quantitative models
used by management;
and (b)
the
lifetime
default,
prepayment
and
loss
severity
estimates,
management’s
selection
of
various
macroeconomic
scenarios
and
macroeconomic
variables,
the
probability
weights
applied
to
the
outcome
of
the
selected
macroeconomic
scenarios,
the
reasonable
and
supportable
forecast
period,
and
the
qualitative
adjustments
for
losses that are expected but not captured within the quantitative modeling framework and model imprecision.
/s/ PricewaterhouseCoopers LLP
San Juan, Puerto Rico
March 2, 2026
We have served as the Corporation’s auditor since 1971, which includes periods before the Corporation became
subject to SEC reporting requirements
Stamp DLLP216-854 of the P.R. Society of
Certified Public Accountants is affixed to
the original of this report
111
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION
[UNAUDITED]
December 31,
December 31,
(In thousands, except share information)
2025
2024
Assets:
Cash and due from banks
$
402,755
$
419,638
Money market investments
4,626,506
6,380,948
Trading account debt securities, at fair value
36,569
32,831
Debt securities available-for-sale, at fair
value:
Pledged securities with creditors’ right to repledge
30,687
30,486
Other debt securities available-for-sale
20,544,285
18,215,417
Debt securities available-for-sale
20,574,972
18,245,903
Debt securities held-to-maturity, at amortized cost:
Pledged securities with creditors’ right to repledge
9,298
27,405
Other debt securities held-to-maturity
7,318,231
7,730,672
Debt securities held-to-maturity (fair
value 2025 - $
7,363,587
; 2024 - $
7,682,664
)
7,327,529
7,758,077
Less – Allowance for credit losses
5,812
5,317
Debt securities held-to-maturity, net
7,321,717
7,752,760
Equity securities (realizable value 2025 -
$
230,388
; 2024 - $
208,663
)
229,848
208,166
Loans held-for-sale, at fair value
9,998
5,423
Loans held-in-portfolio
39,749,142
37,522,995
Less – Unearned income
421,624
415,343
Allowance for credit losses
808,056
746,024
Total loans held-in-portfolio, net
38,519,462
36,361,628
Premises and equipment, net
685,820
601,787
Other real estate
42,433
57,268
Accrued income receivable
300,824
263,389
Mortgage servicing rights, at fair value
96,356
108,103
Other assets
1,705,977
1,797,759
Goodwill
789,954
802,954
Other intangible assets
5,076
6,826
Total assets
$
75,348,267
$
73,045,383
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing
$
15,304,209
$
15,139,555
Interest bearing
50,885,884
49,744,790
Total deposits
66,190,093
64,884,345
Assets sold under agreements to repurchase
39,001
54,833
Other short-term borrowings
650,000
225,000
Notes payable
759,577
896,293
Other liabilities
1,460,517
1,371,846
Total liabilities
69,099,188
67,432,317
Commitments and contingencies (Refer
to Note 23)
Stockholders’ equity:
Preferred stock,
30,000,000
shares authorized;
885,726
shares issued and outstanding (2024
-
885,726
)
22,143
22,143
Common stock, $
0.01
par value;
170,000,000
shares authorized;
104,921,229
shares issued (2024 -
104,849,460
) and
65,719,385
shares outstanding (2024 -
70,141,291
)
1,049
1,048
Surplus
4,924,296
4,908,693
Retained earnings
5,206,497
4,570,957
Treasury stock - at cost,
39,201,844
shares (2024 -
34,708,169
)
( 2,722,819 )
( 2,228,535 )
Accumulated other comprehensive loss, net
of tax
( 1,182,087 )
( 1,661,240 )
Total stockholders’ equity
6,249,079
5,613,066
Total liabilities and stockholders’ equity
$
75,348,267
$
73,045,383
The accompanying notes are an integral part of
these Consolidated Financial Statements.
112
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS
Years ended December 31,
(In thousands, except per share information)
2025
2024
2023
Interest income:
Loans
$
2,763,118
$
2,626,058
$
2,331,654
Money market investments
254,786
352,195
366,625
Investment securities
765,105
695,010
547,028
Total interest income
3,783,009
3,673,263
3,245,307
Interest expense:
Deposits
1,177,896
1,336,121
1,050,024
Short-term borrowings
15,818
4,676
7,329
Long-term debt
48,092
50,178
56,430
Total 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
Net interest income after provision for credit losses
2,281,040
2,025,346
1,922,915
Service charges on deposit accounts
155,868
151,343
147,476
Other service fees
402,911
389,233
374,440
Mortgage banking activities (Refer to Note 9)
14,956
19,059
21,497
Net gain (loss), including impairment on equity securities
1,596
( 1,583 )
3,482
Net gain on trading account debt securities
1,908
1,445
1,382
Net gain (loss) on sale of loans, including
valuation adjustments on loans
held-for-sale
-
440
( 115 )
Adjustments to indemnity reserves on loans sold
( 174 )
1,266
2,319
Other operating income
80,954
97,706
100,243
Total non-interest income
658,019
658,909
650,724
Operating expenses:
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
152,386
142,677
138,070
Communications
19,270
18,899
16,664
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
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
Income before income tax
1,006,793
796,618
675,539
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
Net Income per Common Share – Basic
$
12.31
$
8.56
$
7.53
Net Income per Common Share – Diluted
$
12.30
$
8.56
$
7.52
The accompanying notes are an integral part of
these consolidated financial statements.
113
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
Years ended December 31,
(In thousands)
2025
2024
2023
Net income
$
833,159
$
614,212
$
541,342
Other comprehensive income before tax:
Foreign currency translation adjustment
( 13,917 )
( 6,837 )
( 7,793 )
Adjustment of pension and postretirement
benefit plans
( 3,431 )
22,652
23,052
Amortization of net losses
9,090
14,471
19,253
Unrealized net holding gains (losses) on debt
securities arising during the period
402,862
101,442
391,633
Amortization of unrealized losses of debt
securities transfer from available-for-sale
to
held-to-maturity
186,381
179,563
172,883
Unrealized net gains (losses) on cash flow
hedges
-
-
( 30 )
Reclassification adjustment for net (gains)
losses included in net income
-
-
( 41 )
Other comprehensive income before tax
580,985
311,291
598,957
Income tax (expense) benefit
( 101,832 )
( 77,000 )
30,440
Total other comprehensive income, net of tax
479,153
234,291
629,397
Comprehensive income, net of tax
$
1,312,312
$
848,503
$
1,170,739
Tax effect allocated to each component of other comprehensive
income (loss):
Years ended December 31,
(In thousands)
2025
2024
2023
Adjustment of pension and postretirement
benefit plans
$
1,287
$
( 8,495 )
$
( 8,644 )
Amortization of net losses
( 3,409 )
( 5,427 )
( 7,219 )
Unrealized net holding (losses) gains on debt
securities arising during the period
( 62,435 )
( 27,165 )
80,854
Amortization of unrealized losses of debt
securities transferred from available-for-sale
to
held-to-maturity
( 37,275 )
( 35,913 )
( 34,577 )
Unrealized net gains on cash flow hedges
-
-
11
Reclassification adjustment for net (gains)
losses included in net income
-
-
15
Income tax (expense) benefit
$
( 101,832 )
$
( 77,000 )
$
30,440
The accompanying notes are an integral
part of these consolidated financial statements.
114
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY
Accumulated
other
Common
Preferred
Retained
Treasury
comprehensive
(In thousands)
stock
stock
Surplus
earnings
stock
loss
Total
Balance at December 31, 2022
$
1,047
$
22,143
$
4,790,993
$
3,834,348
$
( 2,030,178 )
$
( 2,524,928 )
$
4,093,425
Cumulative effect of accounting change
28,752
28,752
Net income
541,342
541,342
Issuance of stock
1
6,310
6,311
Dividends declared:
Common stock
[1]
( 163,664 )
( 163,664 )
Preferred stock
( 1,412 )
( 1,412 )
Common stock purchases
-
( 4,550 )
( 4,550 )
Stock based compensation
1,581
15,771
17,352
Other comprehensive income, net of tax
629,397
629,397
Transfer to statutory reserve
44,515
( 44,515 )
-
Balance at December 31, 2023
$
1,048
$
22,143
$
4,843,399
$
4,194,851
$
( 2,018,957 )
$
( 1,895,531 )
$
5,146,953
Net income
614,212
614,212
Issuance of stock
6,860
6,860
Dividends declared:
Common stock
[1]
( 183,854 )
( 183,854 )
Preferred stock
( 1,412 )
( 1,412 )
Common stock purchases
[2]
( 224,626 )
( 224,626 )
Stock based compensation
5,594
15,048
20,642
Other comprehensive income, net of tax
234,291
234,291
Transfer to statutory reserve
52,840
( 52,840 )
-
Balance at December 31, 2024
$
1,048
$
22,143
$
4,908,693
$
4,570,957
$
( 2,228,535 )
$
( 1,661,240 )
$
5,613,066
Net income
833,159
833,159
Issuance of stock
1
7,118
7,119
Dividends declared:
Common stock
[1]
( 196,207 )
( 196,207 )
Preferred stock
( 1,412 )
( 1,412 )
Common stock purchases
[3]
( 510,639 )
( 510,639 )
Stock based compensation
8,485
16,355
24,840
Other comprehensive income, net of tax
479,153
479,153
Balance at December 31, 2025
$
1,049
$
22,143
$
4,924,296
$
5,206,497
$
( 2,722,819 )
$
( 1,182,087 )
$
6,249,079
[1]
Dividends declared per common share during the year ended
December 31, 2025 - $
2.90
(2024 - $
2.56
; 2023 - $
2.27
).
[2]
Includes common
stock
repurchases
of $
217.3
million
as
part of
the 2024
common
stock
repurchase
program.
Refer to
Note
19
for additional
information.
[3]
Includes common stock repurchases of $
501.5
million as part of the 2024 and 2025 common stock
repurchase program previously announced by
the Corporation. Refer to Note 19 for additional information.
Years ended December
31,
Disclosure of changes in number of shares:
2025
2024
2023
Preferred Stock:
Balance at beginning and end of year
885,726
885,726
885,726
Common Stock:
Balance at beginning of year
104,849,460
104,767,348
104,657,522
Issuance of stock
71,769
82,112
109,826
Balance at end of year
104,921,229
104,849,460
104,767,348
Treasury stock
( 39,201,844 )
( 34,708,169 )
( 32,613,727 )
Common Stock – Outstanding
65,719,385
70,141,291
72,153,621
The accompanying notes are an integral part of these consolidated
financial statements.
115
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
Years ended December
31,
(In thousands)
2025
2024
2023
Cash flows from operating activities:
Net income
$
833,159
$
614,212
$
541,342
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for credit losses
260,163
256,942
208,609
Goodwill impairment charge
13,000
-
23,000
Amortization of intangibles
1,750
2,938
3,180
Depreciation and amortization of premises and equipment
53,230
57,078
58,507
Net accretion of discounts and amortization of premiums and
deferred fees
( 256,758 )
( 252,413 )
( 45,249 )
Interest capitalized on loans subject to the temporary
payment moratorium or loss mitigation
alternatives
( 5,360 )
( 7,109 )
( 9,868 )
Share-based compensation
26,937
19,676
16,773
Fair value adjustments on mortgage servicing rights
12,881
11,370
12,339
Adjustments to indemnity reserves on loans sold
174
( 1,266 )
( 2,319 )
Earnings from investments under the equity method, net
of dividends or distributions
( 25,886 )
( 23,541 )
( 27,450 )
Deferred income tax expense (benefit)
6,382
23,711
( 43,139 )
(Gain) loss on:
Disposition of premises and equipment and other productive
assets
( 187 )
( 7,558 )
( 12,756 )
Proceeds from insurance claims
-
-
( 145 )
Sale of loans, including valuation adjustments on loans
held-for-sale and mortgage banking
activities
( 608 )
( 758 )
203
Sale of equity method investment
( 1,226 )
-
( 152 )
Sale of stock in equity method investee
-
( 551 )
-
Sale of foreclosed assets, including write-downs
( 11,890 )
( 17,953 )
( 22,665 )
Acquisitions of loans held-for-sale
( 8,688 )
( 6,886 )
( 7,639 )
Proceeds from sale of loans held-for-sale
35,968
47,809
44,734
Net originations on loans held-for-sale
( 34,214 )
( 49,579 )
( 68,310 )
Net decrease (increase) in:
Trading debt securities
10,512
13,898
33,500
Equity securities
( 5,186 )
( 6,847 )
( 11,341 )
Accrued income receivable
( 37,401 )
216
( 23,238 )
Other assets
54,935
30,043
24,200
Net increase (decrease) in:
Interest payable
5,517
1,622
19,814
Pension and other postretirement benefits obligation
4,461
8,463
16,092
Other liabilities
( 53,218 )
( 38,795 )
( 41,410 )
Total adjustments
45,288
60,510
145,270
Net cash provided by operating activities
878,447
674,722
686,612
Cash flows from investing activities:
Net decrease (increase) in money market investments
1,754,908
620,578
( 1,383,821 )
Purchases of investment securities:
Available-for-sale
( 36,751,680 )
( 34,339,865 )
( 16,707,264 )
Held-to-maturity
-
-
( 8,615 )
Equity
( 60,163 )
( 27,216 )
( 18,477 )
Proceeds from calls, paydowns, maturities and redemptions
of investment securities:
Available-for-sale
35,211,557
33,789,182
18,215,910
Held-to-maturity
607,310
659,543
458,806
Proceeds from sale of investment securities:
Equity
45,167
19,623
31,946
Net disbursements on loans
( 1,792,913 )
( 1,636,569 )
( 2,475,837 )
Proceeds from sale of loans
66,982
42,287
135,231
Acquisition of loan portfolios
( 733,410 )
( 668,215 )
( 770,493 )
Return of capital from equity method investments
3
279
249
Payments to acquire equity method investments
( 687 )
( 1,250 )
( 1,500 )
Proceeds from sale of equity method investment
1,226
-
152
Proceeds from sale of stock in equity method investee
-
4,489
-
116
Acquisition of premises and equipment
( 197,460 )
( 213,412 )
( 208,044 )
Proceeds from insurance claims
-
-
145
Proceeds from sale of:
Premises and equipment and other productive assets
659
8,890
8,658
Foreclosed assets
89,056
109,182
109,547
Net cash used in investing activities
( 1,759,445 )
( 1,632,474 )
( 2,613,407 )
Cash flows from financing activities:
Net increase (decrease) in:
Deposits
1,300,698
1,261,053
2,365,451
Assets sold under agreements to repurchase
( 15,832 )
( 36,551 )
( 57,225 )
Other short-term borrowings
425,000
225,000
( 365,000 )
Payments of notes payable
( 144,214 )
( 91,943 )
( 343,261 )
Principal payments of finance leases
( 3,933 )
( 3,977 )
( 5,360 )
Proceeds from issuances of notes payable
6,112
-
441,705
Proceeds from issuances of common stock
7,118
6,860
6,311
Dividends paid
( 197,568 )
( 180,461 )
( 159,860 )
Net payments for repurchase of common stock
( 504,721 )
( 213,922 )
( 461 )
Payments related to tax withholding for share-based compensation
( 8,079 )
( 6,476 )
( 4,089 )
Net cash provided by (used in) financing activities
864,581
959,583
1,878,211
Net (decrease) increase
in cash and due from banks, and restricted cash
( 16,417 )
1,831
( 48,584 )
Cash and due from banks, and restricted cash at beginning
of period
429,406
427,575
476,159
Cash and due from banks, and restricted cash at end of period
$
412,989
$
429,406
$
427,575
The accompanying notes are an integral part of these consolidated
financial statements.
117
Notes to Consolidated Financial Statements
Note 1 -
Nature of Operations
118
Note 2 -
Summary of Significant Accounting Policies
119
Note 3 -
New Accounting Pronouncements
129
Note 4 -
Restrictions on Cash and Due from Banks and Certain Securities
135
Note 5 -
Debt Securities Available-For-Sale
136
Note 6 -
Debt Securities Held-to-Maturity
139
Note 7 -
Loans
142
Note 8 -
Allowance for Credit Losses – Loans Held-In-Portfolio
150
Note 9 -
Mortgage Banking Activities
186
Note 10 -
Transfers of Financial Assets and Mortgage
Servicing Assets
187
Note 11 -
Premises and Equipment
190
Note 12 -
Other Real Estate Owned
191
Note 13 -
Other Assets
192
Note 14 -
Goodwill and Other Intangible Assets
194
Note 15 -
Deposits
196
Note 16 -
Borrowings
197
Note 17 -
Trust Preferred Securities
200
Note 18 -
Other Liabilities
201
Note 19 -
Stockholders’ Equity
202
Note 20 -
Regulatory Capital Requirements
203
Note 21 -
Other Comprehensive Income (Loss)
206
Note 22 -
Guarantees
208
Note 23 -
Commitments and Contingencies
210
Note 24-
Non-consolidated Variable Interest
Entities
213
Note 25 -
Derivative Instruments and Hedging Activities
215
Note 26 -
Related Party Transactions
218
Note 27 -
Fair Value Measurement
219
Note 28 -
Fair Value of Financial Instruments
227
Note 29 -
Employee Benefits
230
Note 30 -
Net Income per Common Share
238
Note 31 -
Revenue from Contracts with Customers
239
Note 32 -
Leases
241
Note 33 -
Stock-Based Compensation
243
Note 34 -
Income Taxes
246
Note 35 -
Supplemental Disclosure on the Consolidated Statements of Cash
Flows
251
Note 36 -
Segment Reporting
252
Note 37 -
Popular, Inc. (Holding company only)
Financial Information
257
118
Note 1 – Nature of Operations
Popular,
Inc. (the
“Corporation” or
“Popular”) is
a diversified,
publicly owned
financial holding
company subject
to the
supervision
and
regulation
of
the
Board
of
Governors
of
the
Federal
Reserve
System.
The
Corporation
has
operations
in
Puerto
Rico,
the
mainland United
States (“U.S.”)
and the
U.S. and
British Virgin
Islands. In
Puerto Rico,
the Corporation
provides retail,
mortgage,
and
commercial banking
services, as
well as
auto and
equipment leasing
and financing
through its
principal banking
subsidiary,
Banco Popular
de Puerto
Rico (“BPPR”),
as well
as broker-dealer
and insurance
services through
specialized subsidiaries.
In the
U.S.
mainland,
the
Corporation
provides
retail
and
commercial
banking
services,
as
well
as
equipment
leasing
and
financing,
through
its
New
York-chartered
banking subsidiary,
Popular
Bank
(“PB”
or
“Popular
U.S.”),
which
has
branches
located
in
New
York, New Jersey, and Florida.
119
Note 2 – Summary of significant accounting
policies
The
accounting
and
financial
reporting
policies
of
Popular,
Inc.
and
its
subsidiaries
(the
“Corporation”) conform
with
accounting
principles generally accepted in the United States
of America and with prevailing practices within
the financial services industry.
The following is a description of the most significant
of these policies:
Principles of consolidation
The
consolidated
financial
statements
include
the
accounts
of
Popular,
Inc.
and
its
subsidiaries.
Intercompany
accounts
and
transactions have been
eliminated in consolidation. In
accordance with the
consolidation guidance for variable
interest entities, the
Corporation
would
also
consolidate
any
variable
interest
entities
(“VIEs”)
for
which
it
has
a
controlling
financial
interest;
and
therefore, it is the primary beneficiary. Assets
held in a fiduciary capacity are not assets of the Corporation and, accordingly,
are not
included in the Consolidated Statements of Financial
Condition.
Unconsolidated investments, in
which there is
at least
20% ownership and
/ or
the Corporation exercises
significant influence, are
generally
accounted
for
by
the
equity
method
with
earnings
recorded
in
other
operating
income.
Limited
partnerships
are
also
accounted for by the equity method unless the investor’s
interest is so “minor” that the limited partner may have
virtually no influence
over
partnership
operating
and
financial
policies.
These
investments
are
included
in
other
assets
and
the
Corporation’s
proportionate share of income or loss is included
in other operating income.
Statutory business trusts that are wholly-owned by the Corporation and are
issuers of trust preferred securities are not consolidated
in the Corporation’s Consolidated Financial Statements.
Business combinations
Business combinations are accounted for under the acquisition method. Under this method, assets acquired, liabilities assumed and
any noncontrolling
interest in
the acquiree
at the
acquisition date
are measured
at their
fair values
as of
the acquisition
date. The
acquisition
date
is
the
date
the
acquirer
obtains
control.
Transaction
costs
are
expensed
as
incurred.
Contingent
consideration
classified as an asset
or a liability is remeasured to
fair value at each reporting
date until the contingency is
resolved. The changes
in fair
value of
the contingent
consideration are
recognized in
earnings unless
the arrangement
is a
hedging instrument
for which
changes are initially recognized in other comprehensive income (loss). The Corporation did not engage
in any business combination
activities during the years ended December 31,
2025 and 2024.
Use of estimates in the preparation of financial
statements
The preparation of financial
statements in conformity with
accounting principles generally accepted in
the United States
of America
requires management to make
estimates and assumptions that
affect the reported
amounts of assets and
liabilities and contingent
assets
and
liabilities
at
the
date
of
the
financial
statements,
and
the
reported
amounts
of
revenues
and
expenses
during
the
reporting period. Actual results could differ from those estimates.
Fair value measurements
The Corporation determines the fair values of its
financial instruments based on the fair value framework
established in the guidance
for Fair Value
Measurements in Accounting
Standards Codification (“ASC”)
Subtopic 820-10, which
requires an entity
to maximize
the use
of observable inputs
and minimize the
use of
unobservable inputs when
measuring fair value.
Fair value is
defined as the
exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous
market
for
the
asset
or
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The
standard
describes three
levels of
inputs that
may be
used to
measure fair
value which
are (1)
quoted market
prices for
identical assets
or
liabilities in active markets, (2) observable market-based
inputs or unobservable inputs that are corroborated
by market data, and (3)
unobservable
inputs
that
are
not
corroborated
by
market
data.
The
fair
value
hierarchy
ranks
the
quality
and
reliability
of
the
information used to determine fair values.
The
guidance
in
ASC
Subtopic
820-10
also
addresses
measuring
fair
value
in
situations
where
markets
are
inactive
and
transactions are
not orderly.
Transactions
or quoted
prices for
assets and
liabilities may
not be
determinative of
fair value
when
transactions are not
orderly, and
thus, may require
adjustments to estimate fair
value. Price quotes
based on transactions
that are
not orderly should be given
little, if any,
weight in measuring fair value. Price
quotes based on transactions that are
orderly shall be
considered
in
determining
fair
value,
and
the
weight
given
is
based
on
facts
and
circumstances.
If
sufficient
information
is
not
available to
determine if
price quotes
are based
on orderly
transactions, less
weight should
be given to
the price
quote relative
to
other transactions that are known to be orderly.
120
Investment securities
Investment securities are classified in four categories and
accounted for as follows:
●
Debt securities that
the Corporation has
the intent and
ability to hold
to maturity are
classified as debt
securities held-to-
maturity and reported
at amortized cost. An
ACL is established
for the expected credit
losses over the remaining
term of
debt securities held-to-maturity. The Corporation has established a methodology to estimate credit losses which
considers
qualitative factors,
including internal credit
ratings and
the underlying source
of repayment
in determining
the amount
of
expected
credit
losses.
Debt
securities
held-to-maturity
are
written-off
through
the
ACL
when
a
portion
or
the
entire
amount is deemed uncollectible, based on the information considered to develop expected credit losses through the life of
the
asset.
The
ACL
is
estimated
by
leveraging
the
expected
loss
framework
for
mortgages
in
the
case
of
securities
collateralized by
2
nd
lien loans
and the
commercial C&I
models for
municipal bonds.
As part
of this
framework, internal
factors are stressed,
as a qualitative
adjustment, to reflect current
conditions that are
not necessarily captured within
the
historical
loss
experience.
The
modeling
framework
includes
a
2-year
reasonable
and
supportable
period
gradually
reverting, over a
3-years horizon, to
historical information at
the model input
level. The Corporation’s
portfolio of held-to-
maturity
securities
includes
U.S. Treasury
notes
and
obligations from
the
U.S.
Government. These
securities
have
an
explicit or implicit guarantee from the U.S. government, are highly rated by major
rating agencies, and have a long history
of no
credit losses.
Accordingly,
the Corporation
applies a
zero-credit loss
assumption and
no ACL
for these
securities
has been established. The
Corporation may not sell
or transfer held-to-maturity securities without
calling into question its
intent
to
hold
other
debt
securities
to
maturity,
unless
a
nonrecurring
or
unusual
event
that
could
not
have
been
reasonably anticipated has occurred.
●
Debt securities
classified as
trading securities
are reported
at fair
value, with
unrealized and
realized gains
and losses
included in non-interest income.
●
Debt
securities
classified
as
available-for-sale
are
reported
at
fair
value.
Declines
in
fair
value
below
the
securities’
amortized cost which are
not related to estimated credit losses
are recorded through other comprehensive income
(loss),
net of
taxes. If
the Corporation intends
to sell
or believes
it is
more likely than
not that it
will be
required to sell
the debt
security,
it is
written down
to
fair value
through earnings.
Credit losses
relating to
available-for-sale debt
securities are
recorded through an
ACL, which are
limited to the
difference between the
amortized cost and the
fair value of
the asset.
The ACL is established for the expected credit losses over the remaining term of debt security. The Corporation’s portfolio
of
available-for-sale securities
is comprised
mainly
of
U.S. Treasury
notes
and
obligations from
the
U.S.
Government.
These
securities
have
an
explicit
or
implicit
guarantee
from
the
U.S.
government,
are
highly
rated
by
major
rating
agencies, and have a
long history of no
credit losses. Accordingly,
the Corporation applies a
zero-credit loss assumption
and no
ACL for
these securities
has been
established. The Corporation
monitors its securities
portfolio composition and
credit performance on a
quarterly basis to determine if
any allowance is considered necessary.
Debt securities available-
for-sale are written-off when
a portion or
the entire amount is
deemed uncollectible, based on the
information considered
to
develop expected
credit losses
through the
life of
the asset.
The specific
identification method
is used
to
determine
realized
gains
and
losses
on
debt
securities
available-for-sale,
which
are
included
in
net
(loss)
gain
on
sale
of
debt
securities in the Consolidated Statements of Operations.
●
Equity securities that have readily available fair values are reported at fair value. Equity securities that do not have readily
available fair
values are
measured at
cost, less
any impairment,
plus or
minus changes
resulting from
observable price
changes in
orderly transactions
for the
identical or
a similar
investment of
the same
issuer.
Stock that
is owned
by the
Corporation
to
comply
with
regulatory
requirements,
such
as
Federal
Reserve
Bank
and
Federal
Home
Loan
Bank
(“FHLB”) stock, is included in this category, and their realizable value equals their cost. Unrealized and realized gains and
losses and any impairment on equity securities are included in net gain (loss), including impairment on equity securities in
the Consolidated Statements
of Operations. Dividend income
from investments in
equity securities is included
in interest
income.
The
amortization
of
premiums is
deducted
and
the
accretion of
discounts is
added to
net
interest income
based on
the
interest
method
over the
outstanding period
of
the
related
securities.
Purchases and
sales
of
securities
are
recognized
on
a
trade
date
basis.
Derivative financial instruments
All derivatives are recognized on the Statements of Financial Condition at
fair value. The Corporation’s policy is not to
offset the fair
value
amounts
recognized
for
multiple
derivative
instruments
executed
with
the
same
counterparty
under
a
master
netting
121
arrangement nor to offset the fair value amounts recognized for the
right to reclaim cash collateral (a receivable) or the obligation
to
return cash collateral (a payable) arising from the
same master netting arrangement as the derivative
instruments.
For
a
cash
flow
hedge,
changes
in
the
fair
value
of
the
derivative
instrument
are
recorded
net
of
taxes
in
accumulated
other
comprehensive income (loss) and subsequently reclassified
to net income in the same period(s) that the hedged
transaction impacts
earnings. For free-standing derivative instruments,
changes in fair values are reported in current
period earnings.
Prior
to
entering
a
hedge
transaction,
the
Corporation
formally
documents
the
relationship
between
hedging
instruments
and
hedged
items,
as
well
as
the
risk
management objective
and
strategy for
undertaking various
hedge
transactions.
This
process
includes
linking all
derivative instruments
to
specific assets
and
liabilities on
the Statements
of
Financial Condition
or to
specific
forecasted transactions
or firm
commitments along
with a
formal assessment,
at both
inception of
the hedge
and on
an ongoing
basis,
as
to
the
effectiveness
of the
derivative instrument
in
offsetting
changes
in
fair
values
or
cash
flows
of
the
hedged
item.
Hedge accounting
is discontinued
when the
derivative instrument
is not
highly effective
as a
hedge, a
derivative expires,
is sold,
terminated, when it is unlikely that a forecasted transaction will
occur or when it is determined that it is
no longer appropriate. When
hedge accounting is discontinued the derivative continues
to be carried at fair value with changes in fair
value included in earnings.
The Corporation
utilizes forward
contracts to
hedge the
sale
of mortgage-backed
securities with
duration terms
over one
month.
Interest rate forwards are contracts for the delayed delivery of securities,
which the seller agrees to deliver on a specified future date
at
a
specified
price
or
yield.
Based
on
the
election
to
apply
fair
value
accounting
for
its
mortgage
loans
held
for
sale,
hedge
accounting
is
not
used
for
these
forward
contracts
and
changes
in
the
fair
value
of
the
loans
are
expected
to
be
offset
by
the
changes in the fair value of the forward
contract, both of which are recorded through net
income (loss).
For non-exchange
traded contracts,
fair value
is based
on dealer
quotes, pricing
models, discounted
cash flow
methodologies or
similar techniques for which the determination of
fair value may require significant management judgment
or estimation.
The fair value of derivative instruments considers
the risk of non-performance by the counterparty
or the Corporation, as applicable.
The Corporation obtains or pledges collateral in
connection with its derivative activities when applicable
under the agreement.
Loans
Loans
are
classified
as
loans
held-in-portfolio when
management has
the
intent
and
ability
to
hold
the
loan
for
the
foreseeable
future, or
until maturity
or payoff.
The foreseeable
future is
a management
judgment which
is determined
based upon
the type
of
loan,
business strategies,
current market
conditions, balance
sheet
management and
liquidity needs.
Management’s view
of
the
foreseeable future may change based on changes in these conditions. When a decision is made to sell or securitize a loan that
was
not originated or
initially acquired with the
intent to sell
or securitize, the loan
is reclassified from held-in-portfolio
into held-for-sale.
Due to changing market conditions or other strategic
initiatives, management’s intent with respect to the disposition of
the loan may
change,
and
accordingly,
loans
previously classified
as
held-for-sale
may
be
reclassified into
held-in-portfolio. Loans
transferred
between loans held-for-sale and held-in-portfolio
classifications are recorded at the lower of cost or
fair value at the date of transfer.
Purchased
loans
with
no
evidence
of
credit
deterioration
since
origination
are
recorded
at
fair
value
upon
acquisition.
Credit
discounts are included in the determination of fair
value.
Loans held-in-portfolio
are reported
at their
outstanding principal
balances net
of any
unearned income,
charge-offs, unamortized
deferred fees and
costs on originated
loans, and premiums
or discounts on
purchased loans. Fees
collected and costs
incurred in
the
origination of
new
loans are
deferred and
amortized using
the interest
method or
a method
which approximates
the interest
method over the term of the loan as an adjustment
to interest yield.
Loans held-for-sale,
except for
mortgage loans
originated as
held-for-sale, are
stated at
the lower
of cost
or fair
value, cost
being
determined based
on the
outstanding loan
balance less
unearned income,
and fair
value determined,
generally in
the aggregate.
Fair value is measured based on current market prices for similar loans, outstanding investor commitments, prices
of recent sales or
discounted cash
flow analyses
which utilize
inputs and
assumptions which
are believed
to be
consistent with
market participants’
views. The
cost basis
also includes
consideration of
deferred origination
fees and
costs, which
are recognized
in earnings
at the
time of sale.
Upon reclassification to held-for-sale,
credit related fair
value adjustments are recorded
as a reduction
in the ACL.
To
the extent that the loan's reduction in value
has not already been provided for in the ACL,
an additional provision for credit losses is
recorded. Subsequent to reclassification to held-for-sale, the amount, by
which cost exceeds fair value, if any,
is accounted for as a
valuation allowance
with changes
therein included
in the
determination of
net income
for the
period in
which the
change occurs.
Newly originated mortgage loans held-for-sale are reported
at fair value, with changes recorded through
earnings.
122
The past due status of a loan is determined in accordance with its
contractual repayment terms. Furthermore, loans are reported as
past due when either interest or principal remains
unpaid for 30 days or more in accordance
with its contractual repayment terms.
Non-accrual loans are those loans on which the
accrual of interest is discontinued. When a loan is
placed on non-accrual status, all
previously
accrued
and
unpaid interest
is
charged against
interest
income
and
the
loan
is
accounted for
either
on
a cash-basis
method or
on the
cost-recovery method.
Loans designated
as non-accruing
are returned
to accrual
status when
the Corporation
expects repayment of the remaining contractual principal
and interest.
Recognition of interest income on commercial and construction loans is discontinued when the loans are 90 days or more in arrears
on payments of principal or interest or when other factors indicate that the collection of principal and interest is
doubtful. The portion
of
a
secured
loan
deemed
uncollectible
is
charged-off
no
later
than
365
days
past
due.
However,
in
the
case
of
a
collateral
dependent
loan,
the
excess
of
the
recorded
investment
over
the
fair
value
of
the
collateral
(portion
deemed
uncollectible)
is
generally
promptly charged-off,
but
in
any
event,
not
later
than
the
quarter
following
the
quarter
in
which
such
excess was
first
recognized.
Commercial
unsecured
loans
are
charged-off
no
later
than
180
days
past
due.
Recognition
of
interest
income
on
mortgage
loans
is
generally
discontinued
when
loans
are
90
days
or
more
in
arrears
on
payments
of
principal
or
interest.
The
portion of a
mortgage loan deemed
uncollectible is charged-off
when the loan
is 180 days
past due. The
Corporation discontinues
the recognition
of interest
on residential
mortgage loans
insured by
the Federal
Housing Administration
(“FHA”) or
guaranteed by
the U.S.
Department of Veterans
Affairs (“VA”)
when 15-months
delinquent as
to principal
or interest.
The principal
repayment on
these loans is insured. Recognition of interest income on closed-end consumer loans and home equity lines of credit is discontinued
when the
loans are
90 days
or more
in arrears
on payments
of principal
or interest.
Income is
generally recognized
on open-end
consumer loans,
except for
home equity
lines
of
credit,
until
the
loans are
charged-off.
Recognition of
interest
income
for
lease
financing is ceased when
loans are 90 days
or more in arrears.
Closed-end consumer loans and leases
are charged-off when they
are 120
days in
arrears. Open-end
(revolving credit)
consumer loans
are charged-off
when 180
days in
arrears. Commercial
and
consumer overdrafts are generally charged-off no later than
60 days past their due date.
A loan
modified with
financial difficulties
is typically
in non-accrual
status at
the time
of the
modification. These
loans continue
in
non-accrual status until the borrower has demonstrated a willingness
and ability to make the restructured loan payments (at
least six
months of sustained performance after the modification (or one year for loans providing for quarterly or semi-annual payments)) and
management has concluded that it is probable
that the borrower would not be in payment
default in the foreseeable future.
Loan modifications
A modification
is subject to
disclosure under ASC
Topic
326 when the
Corporation separately concludes
that both
of the
following
conditions exist: 1) the
debtor is experiencing financial difficulties
and 2) the modification
constitutes a reduction in
the interest rate
on the
loan, a
payment extension,
a forgiveness
of principal,
a more-than-insignificant
payment delay,
or a
combination of
these.
Determination
that
a
borrower
is
experiencing
financial
difficulties
involves
a
degree
of
judgment.
The
identification
of
loan
modifications to debtors with financial difficulties is critical
in the determination of the adequacy of
the ACL.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements
for
additional
qualitative
information
on
loan
modifications
and
the
Corporation’s determination of the ACL.
Lease financing
The
Corporation leases
passenger and
commercial
vehicles
and
equipment
to
individual
and
corporate
customers.
The
finance
method of accounting
is used to
recognize revenue on lease
contracts that meet
the criteria specified in
the guidance for leases
in
ASC Topic
842. Aggregate
rentals due
over the
term of
the leases
less unearned
income are
included in
finance lease
contracts
receivable.
Unearned
income
is
amortized
using
a
method
which
results
in
approximate
level
rates
of
return
on
the
principal
amounts outstanding. Finance lease origination
fees and costs
are deferred and amortized
over the average life
of the lease as
an
adjustment to the interest yield.
Revenue for other leases is recognized as it becomes
due under the terms of the agreement.
Loans acquired with deteriorated credit quality
Purchased credit
deteriorated (“PCD”) loans
are defined
as those
with evidence
of a
more-than-insignificant deterioration in
credit
quality
since
origination.
PCD
loans
are
initially
recorded at
their
purchase
price
plus
an
estimated allowance
for
credit
losses
(“ACL”). Upon
the acquisition of
a PCD loan,
the Corporation makes
an estimate of
the expected credit
losses over the
remaining
contractual
term
of
each
individual
loan.
The
estimated
credit
losses
over
the
life
of
the
loan
are
recorded
as
an
ACL
with
a
corresponding addition to the
loan purchase price. The
amount of the purchased
premium or discount which
is not related to
credit
123
risk
is
amortized
over
the
life
of
the
loan
through
net
interest
income
using
the
effective
interest
method
or
a
method
that
approximates the effective interest method. Changes in
expected credit losses are recorded as an
increase or decrease to the ACL
with a
corresponding charge (reverse)
to the
provision for credit
losses in
the Consolidated Statement
of Operations. These
loans
follow the same nonaccrual policies as non-PCD
loans.
Refer to Note
7
and Note 8
to the Consolidated
Financial Statements for
additional information with
respect to loans
acquired with
deteriorated credit quality and the corresponding allowance
for credit losses.
Accrued interest receivable
The
amortized
basis
for
loans
and
investments
in
debt
securities
is
presented
exclusive
of
accrued
interest
receivable.
The
Corporation has elected
not to establish
an ACL for
accrued interest receivable for
loans and investments
in debt securities,
given
the Corporation’s
non-accrual policies, in
which accrual
of interest is
discontinued and reversed
based on the
asset’s delinquency
status.
Allowance for credit losses – loans portfolio
The Corporation establishes an ACL
for its loan
portfolio based on its
estimate of credit losses
over the remaining contractual
term
of the loans, adjusted for expected prepayments. 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
PCD loans
for which
the ACL
at acquisition
is
recorded
as
an
addition
to
the
purchase
price
with
subsequent
changes
recorded
in
earnings.
Loan
losses
are
charged
and
recoveries are credited to the ACL.
The
Corporation
follows
a
methodology
to
estimate
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
macroeconomic
scenarios.
This
evaluation
includes
benchmarking procedures as well as
careful analysis of the
underlying assumptions used to
build the scenarios. The
application of
probability
weights
include
baseline,
optimistic
and
pessimistic
scenarios.
The
weights
applied
are
subject
to
evaluation
on
a
quarterly basis as part of the ACL’s
governance process. The Corporation considers additional macroeconomic scenarios as part of
its qualitative adjustment framework.
The
macroeconomic variables
chosen
to
estimate credit
losses
were selected
by
combining
quantitative
procedures with
expert
judgment.
These
variables
were
determined
to
be
the
best
predictors
of
expected
credit
losses
within
the
Corporation’s
loan
portfolios and
include drivers such
as unemployment rate,
different measures
of employment levels,
house prices,
gross domestic
product
and
measures
of
disposable
income,
amongst
others.
The
loss
estimation
framework
includes
a
reasonable
and
supportable period of
2 years for
PR portfolios, gradually
reverting over a
3-years horizon to
historical macroeconomic variables at
the
model
input
level.
For
the
U.S.
portfolio,
the
reasonable
and
supportable
period
considers
the
contractual
life
of
the
asset,
impacted by
prepayments, except for
the U.S.
CRE portfolio. The
U.S. CRE portfolio
utilizes a 2-year
reasonable and supportable
period gradually reverting, over a 3-years horizon,
to historical information at the output level.
The
Corporation
developed
loan
level
quantitative
models
distributed
by
geography
and
loan
type.
This
segmentation
was
determined
by
evaluating
their
risk
characteristics,
which
include
default
patterns,
source
of
repayment,
type
of
collateral,
and
lending channels,
amongst others. The
modeling framework
includes internally
developed quantitative models
to generate
lifetime
defaults
and
prepayments,
and
other
loan
level
modeling
techniques
to
estimate
loss
severity.
Recoveries
on
future
losses
are
contemplated
as
part
of
the
loss
severity
modeling.
These
parameters
are
estimated
by
combining
internal
risk
factors
with
macroeconomic expectations.
In order
to
generate the
expected credit
losses, the
output of
these models
is combined
with loan
level repayment information. The internal risk factors contemplated within
the models may include borrowers’ credit scores, loan-to-
value, delinquency status, risk ratings, interest rate, loan
term, loan age and type of collateral, amongst
others.
The ACL also
includes a qualitative
adjustment framework that
addresses two main
components: losses that
are expected but
not
captured
within
the
quantitative
modeling
framework
and
model
imprecision.
In
order
to
identify
potential
losses
that
are
not
captured through the models,
management evaluates model limitations
as well as the
different risks covered
by the variables used
in each quantitative model. The Corporation considers
additional macroeconomic scenarios to address these
risks. This assessment
takes
into
consideration
factors
listed
as
part
of
ASC
326-20-55-4.
To
complement
the
analysis,
management
also
evaluates
whether there are sectors that
have low levels of historical
defaults, but current conditions show the
potential for future losses. This
type of
qualitative adjustment
is more
prevalent in
the commercial
portfolios. The
model imprecision
component of
the qualitative
124
adjustments
is
determined
after
evaluating
model
performance
for
these
portfolios
through
different
time
periods.
This
type
of
qualitative adjustment mainly impacts consumer portfolios.
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.
The Credit Cards
portfolio, due to
its revolving nature,
does not have
a specified maturity date.
To
estimate the average remaining
term
of
this
segment,
management evaluated
the
portfolios
payment
behavior
based
on
internal
historical data.
These payment
behaviors were
further classified
into sub-categories
that accounted
for delinquency
history and
differences between
transactors,
revolvers and customers that have exhibited mixed transactor/revolver behavior. Transactors are defined as active accounts without
any
finance
charge
in
the
last
6
months.
The
paydown
curves
generated
for
each
sub-category
are
applied
to
the
outstanding
exposure at
the measurement
date using
the first-in
first-out (FIFO)
methodology.
These amortization
patterns are
combined with
loan level default and loss severity modeling to arrive
at the ACL.
Reserve for unfunded commitments
The Corporation
establishes a
reserve for
unfunded commitments,
based on
the estimated
losses over
the remaining
term of
the
facility.
An allowance
is not
established for
commitments that
are unconditionally
cancellable by
the Corporation.
Accordingly,
no
reserve
is
established
for
unfunded commitments
related to
its
credit
cards
portfolio.
Reserve for
the
unfunded
portion
of
credit
commitments
is
presented
within
other
liabilities
in
the
Consolidated Statements
of
Financial
Condition.
Net
adjustments
to
the
reserve for unfunded commitments are
reflected in the Consolidated Statements
of Operations as provision for credit
losses for the
years ended December 31, 2025, 2024, and 2023.
Transfers and servicing of financial assets
The transfer
of an
entire financial
asset, a
group of
entire financial
assets, or
a participating interest
in an
entire financial
asset in
which the Corporation surrenders control over the assets is accounted
for as a sale
if all of the following conditions set forth in
ASC
Topic
860 are met:
(1) the assets
must be isolated
from creditors of
the transferor,
(2) the transferee
must obtain the
right (free of
conditions that constrain it
from taking advantage
of that right)
to pledge or
exchange the transferred assets,
and (3) the
transferor
cannot maintain effective control over
the transferred assets through an agreement
to repurchase them before their
maturity. When
the
Corporation
transfers
financial
assets
and
the
transfer
fails
any
one
of
these
criteria,
the
Corporation
is
prevented
from
derecognizing the transferred financial
assets and the
transaction is accounted for
as a secured
borrowing. For federal and
Puerto
Rico income
tax purposes,
the Corporation
treats the
transfers of
loans which
do not
qualify as
“true sales”
under the
applicable
accounting guidance, as sales, recognizing a deferred
tax asset or liability on the transaction.
For transfers
of financial
assets that
satisfy the
conditions to
be accounted
for as
sales, the
Corporation derecognizes
all assets
sold; recognizes all
assets obtained and liabilities
incurred in consideration as
proceeds of the
sale, including servicing
assets and
servicing liabilities, if
applicable; initially measures
at fair
value assets obtained
and liabilities incurred
in a
sale; and
recognizes in
earnings any gain or loss on the sale.
The guidance
on transfer
of financial
assets requires a
true sale
analysis of
the treatment
of the
transfer under state
law as
if the
Corporation was a debtor under the bankruptcy code. A true sale legal analysis includes several legally relevant factors, such as the
nature and level of recourse to the transferor, and the nature of retained interests in the loans sold. The analytical conclusion as to a
true sale
is never
absolute and
unconditional, but
contains qualifications
based on
the inherent
equitable powers
of a
bankruptcy
court, as
well as
the unsettled
state of
the common
law.
Once the
legal isolation
test has
been met,
other factors
concerning the
nature
and
extent
of
the
transferor’s
control
over
the
transferred
assets
are
taken
into
account
in
order
to
determine
whether
derecognition of assets is warranted.
The Corporation sells mortgage loans to the Government National Mortgage Association (“GNMA”)
in the normal course of business
and retains the servicing rights. The GNMA programs under which the loans
are sold allow the Corporation to repurchase individual
delinquent loans that meet certain criteria. At the Corporation’s option, and without GNMA’s prior authorization, the Corporation may
repurchase the delinquent
loan for an
amount equal to
100% of the
remaining principal balance
of the loan.
Once the Corporation
has the
unconditional ability
to repurchase
the delinquent
loan, the
Corporation is
deemed to
have regained
effective control
over
125
the
loan
and
recognizes
the
loan
on
its
balance
sheet
as
well
as
an
offsetting
liability,
regardless of
the
Corporation’s
intent
to
repurchase the loan.
Servicing assets
The
Corporation
periodically
sells
or
securitizes
loans
while
retaining
the
obligation
to
perform
the
servicing
of
such
loans.
In
addition,
the
Corporation
may
purchase
or
assume
the
right
to
service
loans
originated
by
others.
Whenever
the
Corporation
undertakes an
obligation to
service a
loan, management
assesses whether
a servicing
asset or
liability should
be recognized.
A
servicing
asset
is
recognized
whenever
the
compensation
for
servicing
is
expected
to
more
than
adequately
compensate
the
servicer
for
performing
the
servicing.
Likewise,
a
servicing
liability
would
be
recognized
in
the
event
that
servicing
fees
to
be
received are not
expected to adequately
compensate the Corporation
for its
expected cost. Mortgage servicing
assets recorded at
fair value are separately presented on the Consolidated
Statements of Financial Condition.
All separately recognized servicing assets are initially recognized at fair value. For subsequent measurement of
servicing rights, the
Corporation
has
elected
the
fair
value
method
for
mortgage
loans
servicing
rights
(“MSRs”).
Under
the
fair
value
measurement
method,
MSRs
are
recorded
at
fair
value
each
reporting
period,
and
changes
in
fair
value
are
reported
in
mortgage
banking
activities in the Consolidated Statement of Operations. Contractual
servicing fees including ancillary income and late
fees, as well as
fair
value
adjustments, are
reported in
mortgage
banking
activities in
the
Consolidated Statement
of
Operations. Loan
servicing
fees, which are based on a percentage of the principal balances of the
loans serviced, are credited to income as loan payments are
collected.
The fair value
of servicing rights is
estimated by using a
cash flow valuation model
which calculates the present value
of estimated
future net servicing cash flows, taking into consideration actual and expected loan prepayment rates, discount
rates, servicing costs,
and other economic factors, which are determined
based on current market conditions.
Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on a
straight-
line basis over
the estimated useful
life of each
type of asset.
Amortization of leasehold
improvements is computed
over the fixed,
non-cancelable terms
of the
respective lease
contracts or
the
estimated useful
lives
of the
asset, whichever
is shorter.
Costs of
maintenance
and
repairs
which
do
not
improve
or
extend
the
life
of
the
respective
assets
are
expensed
as
incurred.
Costs
of
renewals
and
betterments
are
capitalized.
When
assets
are
disposed
of,
their
cost
and
related
accumulated
depreciation
are
removed from the accounts and any gain or loss
is reflected in earnings as realized or incurred,
respectively.
The
Corporation
recognizes
right-of-use
assets
(“ROU
assets”)
and
lease
liabilities
relating
to
operating
and
finance
lease
arrangements in its Consolidated Statements of Financial Condition within other assets and other liabilities, respectively. For finance
leases, interest is recognized on the
lease liability separately from the amortization
of the ROU asset, whereas for
operating leases
a single lease cost
is recognized so that
the cost of the
lease is allocated over
the lease term on
a straight-line basis. Impairments
on ROU assets are evaluated under the guidance for impairment
or disposal of long-lived assets.
The Corporation recognizes gains
on sale and
leaseback transactions in earnings when
the transfer constitutes a
sale, and the transaction
was at fair value.
Refer to
Note 32 to the Consolidated Financial Statements
for additional information on operating and finance
lease arrangements.
Impairment of long-lived assets
The
Corporation
evaluates
for
impairment
its
long-lived
assets
to
be
held
and
used,
and
long-lived
assets
to
be
disposed
of,
whenever events or changes
in circumstances indicate that the
carrying amount of an
asset may not be recoverable
and records a
write down for the difference between the carrying amount
and the fair value less costs to sell.
Other real estate
Other
real
estate,
received
in
satisfaction
of
a
loan,
is
recorded
at
fair
value
less
estimated
costs
of
disposal.
The
difference
between the carrying amount of the loan and the fair value less cost to
sell is recorded as an adjustment to the ACL. Subsequent to
foreclosure, any
losses in
the carrying
value arising
from periodic
re-evaluations of the
properties, and any
gains or
losses on
the
sale of these properties are credited or charged to expense in the period incurred and are included as OREO expenses. The cost of
maintaining and operating such properties is expensed
as incurred.
Updated appraisals
are obtained
to adjust
the value
of the
other real
estate assets.
The frequency
depends on
the loan
type and
total credit exposure. The appraisal for a commercial or construction other real estate property with a book value
equal to or greater
than $1 million is updated annually and if lower
than $1 million it is updated every two years.
For residential mortgage properties, the
Corporation requests appraisals annually.
126
Appraisals
may
be
adjusted
due
to
age,
collateral
inspections,
property
profiles,
or
general
market
conditions.
The
adjustments
applied are based upon
internal information such
as other appraisals for
the type of
properties and/or loss severity
information that
can provide historical trends in the real estate market
and may change from time to time based
on market conditions.
Goodwill and other intangible assets
Goodwill is recognized when the purchase price
is higher than the fair value
of net assets acquired in business combinations
under
the purchase
method of
accounting. Goodwill
is not
amortized but
is tested
for impairment
at least
annually or
more frequently
if
events or circumstances indicate possible impairment. When evaluating goodwill for impairment, the Corporation may
decide to first
perform a qualitative assessment, or “Step Zero” impairment test, to determine whether it is more likely than not that impairment has
occurred. The qualitative
assessment includes a
review of macroeconomic conditions,
industry and market
considerations, internal
cost factors, and our own overall
financial and share price performance, among other factors. If
it is determined that it is
more likely
than
not
that
the
carrying
amounts
of
our
reporting
units
exceed
their
fair
value,
the
Corporation
will
perform
a
quantitative
assessment and calculate the estimated fair value of the respective
reporting unit. If the carrying amount of any of
the reporting units
exceeds its fair value,
the Corporation would be required
to record an impairment charge
for the difference up
to the amount of
the
goodwill. In
determining the
fair value
of each
reporting unit,
the Corporation
generally uses
a combination
of methods,
including
market price
multiples of
comparable companies
and transactions,
as well
as discounted
cash flow
analysis. Goodwill
impairment
losses are recorded as part of operating expenses
in the Consolidated Statements of Operations.
Other intangible assets deemed
to have an
indefinite life are
not amortized but are
tested for impairment using
a one-step process
which compares the fair value with the carrying amount of the asset.
In determining that an intangible asset has an indefinite life, the
Corporation
considers
expected
cash
inflows
and
legal,
regulatory,
contractual,
competitive,
economic
and
other
factors,
which
could limit the intangible asset’s useful life.
Other
identifiable
intangible
assets
with
a
finite
useful
life,
mainly
core
deposits,
are
amortized
using
various
methods
over
the
periods
benefited,
which
range
from
5
to
10
years.
These
intangibles are
evaluated
periodically for
impairment
when
events
or
changes in circumstances
indicate that the carrying
amount may not
be recoverable. Impairments on
intangible assets with
a finite
useful life are evaluated under the guidance for
impairment or disposal of long-lived assets.
Assets sold / purchased under agreements to repurchase
/ resell
Repurchase and resell agreements
are treated as collateralized
financing transactions and are
carried at the
amounts at which the
assets will be subsequently reacquired or resold as
specified in the respective agreements.
It is the
Corporation’s policy to take possession
of securities purchased under agreements to
resell. However, the counterparties
to
such
agreements
maintain
effective
control
over
such
securities,
and
accordingly
those
securities
are
not
reflected
in
the
Corporation’s Consolidated Statements
of Financial
Condition. The Corporation
monitors the
fair value of
the underlying
securities
as compared to the related receivable, including accrued
interest.
It
is
the
Corporation’s
policy
to
maintain
effective
control
over
assets
sold
under
agreements
to
repurchase;
accordingly,
such
securities continue to be carried on the Consolidated
Statements of Financial Condition.
The Corporation may require counterparties to deposit
additional collateral or return collateral pledged,
when appropriate.
Software
Capitalized
software
is
stated
at
cost,
less
accumulated
amortization.
Capitalized
software
includes
purchased
software
and
capitalizable application development costs associated with internally-developed software. Amortization, computed on a straight-line
method, is charged to operations
over the estimated useful life
of the software. Capitalized software is
included in “Other assets” in
the Consolidated Statement of Financial Condition.
Guarantees, including indirect guarantees of indebtedness
to others
The estimated losses to be absorbed under the credit
recourse arrangements are recorded as a liability when
the loans are sold and
are updated by
accruing or reversing expense
(categorized in the line
item “Adjustments (expense) to
indemnity reserves on loans
sold”
in
the
Consolidated
Statements
of
Operations)
throughout
the
life
of
the
loan,
as
necessary,
when
additional
relevant
information
becomes
available.
The
methodology
used
to
estimate
the
recourse
liability
considers
current
conditions,
macroeconomic expectations through a 2-years reasonable and supportable period, gradually reverting to historical macroeconomic
variables at the model input level over a 3-year period, portfolio
composition by risk characteristics, amongst other factors. Statistical
methods are used
to estimate the
recourse liability.
Expected loss rates
are applied to
different loan segmentations.
The expected
127
loss, which
represents the
amount expected
to be
lost on
a given
loan, considers
the probability
of default
and loss
severity.
The
reserve
for
the
estimated
losses
under
the
credit
recourse
arrangements
is
presented
separately
within
other
liabilities
in
the
Consolidated Statements of
Financial Condition. Refer
to Note
22 to
the Consolidated Financial
Statements for further
disclosures
on guarantees.
Treasury stock
Treasury stock is
recorded at cost and
is carried as a
reduction of stockholders’ equity in
the Consolidated Statements of Financial
Condition.
At the
date of
retirement or
subsequent reissue,
the treasury
stock account
is reduced
by
the cost
of such
stock.
At
retirement, the excess of the cost of the treasury stock over
its par value is recorded entirely to surplus. At reissuance,
the difference
between the consideration received upon issuance and
the specific cost is charged or credited to surplus.
Revenues from contracts with customers
Refer
to
Note
31
for
a
detailed
description
of
the
Corporation’s
policies
on
the
recognition
and
presentation
of
revenues
from
contract with customers.
Foreign exchange
Assets and liabilities
denominated in foreign currencies
are translated to U.S.
dollars using prevailing rates
of exchange at
the end
of
the
period.
Revenues, expenses,
gains
and
losses
are
translated using
weighted
average
rates
for
the
period.
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), except
for
highly inflationary
environments in
which the
effects
are
included
in
other operating expenses.
The Corporation
holds interests
in Centro
Financiero BHD
León, S.A.
(“BHD León”)
in the
Dominican Republic.
The business
of
BHD León is
mainly conducted in their
country’s foreign currency.
The resulting foreign currency
translation adjustment from these
operations is reported in accumulated other comprehensive
income (loss).
Refer to the disclosure of accumulated other comprehensive
income (loss) included in Note 21.
Income taxes
The Corporation
recognizes deferred tax
assets and
liabilities for
the expected
future tax
consequences of
events that
have been
recognized in
the Corporation’s
financial statements
or tax
returns. Deferred
income tax
assets and
liabilities are
determined for
differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible
amounts in the
future.
The
computation
is
based
on
enacted
tax
laws
and
rates
applicable
to
periods
in
which
the
temporary
differences
are
expected to be recovered or settled.
The
guidance for
income
taxes
requires a
reduction of
the
carrying
amounts
of
deferred tax
assets
by
a valuation
allowance if,
based on the available evidence, it is more likely
than not (defined as a likelihood of more
than 50 percent) that such assets will not
be
realized.
Accordingly,
the
need
to
establish
valuation
allowances
for
deferred
tax
assets
is
assessed
periodically
by
the
Corporation
based
on
the
more
likely
than
not
realization
threshold
criterion.
In
the
assessment
for
a
valuation
allowance,
appropriate consideration
is given
to all
positive and
negative evidence
related to
the realization
of the
deferred tax
assets. This
assessment considers, among others,
all sources of
taxable income available to
realize the deferred tax
asset, including the future
reversal of existing temporary differences, the future taxable income
exclusive of reversing temporary differences and carryforwards,
taxable income in carryback years and tax-planning strategies. In making such
assessments, significant weight is given to evidence
that can be objectively verified.
The valuation
of deferred
tax assets
requires judgment
in assessing
the likely
future tax
consequences of
events that
have been
recognized in the Corporation’s financial statements or tax returns and future profitability.
The Corporation’s accounting for deferred
tax consequences represents management’s best estimate
of those future events.
Positions taken in
the Corporation’s
tax returns may
be subject to
challenge by the
taxing authorities upon
examination. Uncertain
tax positions
are initially
recognized in the
financial statements when
it is
more likely than
not (greater than
50%) that
the position
will be sustained upon examination by the tax authorities, assuming full knowledge of the position and all relevant facts.
The amount
of unrecognized tax benefit may increase or decrease in
the future for various reasons including adding amounts for
current tax year
positions,
expiration of open income tax returns due to the statute of limitations, changes in management’s judgment about the level
of
uncertainty,
including
addition
or
elimination
of
uncertain
tax
positions,
status
of
examinations, litigation,
settlements
with
tax
authorities and legislative activity.
128
The Corporation accounts for the taxes collected from customers
and remitted to governmental authorities on a net
basis (excluded
from revenues).
Income
tax
expense
or
benefit
for
the
year
is
allocated
among
continuing
operations,
discontinued
operations,
and
other
comprehensive income (loss), as applicable. The amount allocated to continuing operations is the tax effect of the pre-tax income or
loss from continuing operations that occurred during the year, plus or minus
income tax effects of (a) changes in circumstances that
cause
a
change
in
judgment
about
the
realization
of
deferred
tax
assets
in
future
years,
(b)
changes
in
tax
laws
or
rates,
(c)
changes in tax status, and (d) tax-deductible
dividends paid to stockholders, subject to certain
exceptions.
Employees’ retirement and other postretirement benefit
plans
Pension costs are
computed on the
basis of accepted
actuarial methods and are
charged to current
operations. Net pension costs
are based
on various actuarial
assumptions regarding future
experience under the
plan, which include
costs for services
rendered
during the
period, interest
costs and
return on
plan assets,
as well
as deferral
and amortization
of certain
items such
as actuarial
gains or losses.
The funding policy is
to contribute to the
plan, as necessary,
to provide for services
to date and for
those expected to be
earned in
the
future.
To
the
extent
that
these
requirements
are
fully
covered
by
assets
in
the
plan,
a
contribution
may
not
be
made
in
a
particular year.
The cost
of postretirement
benefits, which
is determined
based on
actuarial assumptions
and estimates
of the
costs of
providing
these benefits in the future, is accrued during
the years that the employee renders the required
service.
The guidance for compensation
retirement benefits of ASC
Topic
715 requires the recognition
of the funded status
of each defined
pension
benefit
plan,
retiree
health
care
and
other
postretirement
benefit
plans
on
the
Consolidated
Statements
of
Financial
Condition.
Stock-based compensation
The
Corporation
opted
to
use
the
fair
value
method
of
recording
stock-based
compensation
as
described
in
the
guidance
for
employee share plans in ASC Subtopic 718-50.
Comprehensive income
Comprehensive income
(loss) is
defined as
the change
in equity
of
a business
enterprise during
a period
from
transactions and
other events
and circumstances,
except those
resulting from
investments by
owners and
distributions to
owners. Comprehensive
income (loss) is separately presented in the Consolidated
Statements of Comprehensive Income.
Net income per common share
Basic income per common share is computed by dividing net income adjusted for preferred stock dividends, including undeclared or
unpaid dividends
if cumulative,
and charges
or credits
related to
the extinguishment
of preferred
stock or
induced conversions
of
preferred stock, by the weighted average number of
common shares outstanding during the year. Diluted income per common
share
takes into consideration the weighted average common shares adjusted for the effect of stock options, restricted stock, performance
shares and warrants, if any, using the treasury stock method.
Statement of cash flows
For purposes of reporting cash flows, cash includes
cash on hand and amounts due from banks, including
restricted cash.
129
Note 3 - New accounting pronouncements
Recently Adopted Accounting Standards Updates
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-02,
Liabilities (Topic 405) -
Amendments to SEC
Paragraphs Pursuant to
SEC Staff Accounting
Bulletin No. 122
The
Financial Accounting
Standards Board
("FASB")
issued
Accounting
Standard
Update
("ASU")
2025-02
in
March
2025,
which
amends
the
guidance
in
Accounting
Standards
Codification
("ASC")
450-10-
S99-1
by
removing
the
interpretative
guidance
of
Section
FF
of
Topic
5
in
the
Staff Accounting Bulletin Series ("SAB") text
that
addressed
the
accounting
for
obligations to
safeguard crypto-assets
held
by platform
users to
align the
ASC with
the
latest
SAB
112
directive,
ensuring
consistency and clarity.
March 18, 2025
The
Corporation
was
not
impacted
by
the
adoption of
this
ASU
since
it does
not currently hold crypto-assets.
FASB ASU 2024-02,
Codification Improvements
- Amendments to Remove
References to the
Concepts Statements
The
FASB
issued
ASU
2024-02
in
March
2024, which
removes various
references to
concept statements from the ASC. The ASU
intends
to
simplify
the
Codification
and
distinguish
between
nonauthoritative
and
authoritative guidance.
January 1, 2025
The
Corporation
was
not
impacted
by
the adoption of this ASU since it did not
provide for
accounting changes
or new
presentation
or
disclosure
requirements.
The
ASU
eliminated
references
within
the
ASC
to
the
concept
statements,
which
is
considered non-authoritative guidance.
FASB ASU 2024-01,
Compensation - Stock
Compensation (Topic 718)
- Scope Application of
Profits Interest and Similar
Awards
The
FASB
issued
ASU
2024-01
in
March
2024,
which
amends
ASC
Topic
718
by
including
an
illustrative
example
to
demonstrate how
an entity
would apply
the
scope
guidance
in
paragraph
718-10-15-3
to determine whether profits interest awards
should be accounted
for in accordance
with
ASC
Topic
718.
The
ASU
is
intended
to
reduce complexity and diversity in practice.
January 1, 2025
The
Corporation
was
not
impacted
by
the
adoption
of
this
ASU
since
the
performance
share
awards
of
the
Corporation
continue
to
meet
the
requirements of ASC 718-10-15-3.
FASB ASU 2023-09,
Income Tax (Topic
740) -
Improvements to Income
Tax Disclosures
The
FASB
issued
ASU
2023-09
in
December 2023,
which amends ASC
Topic
740
by
enhancing
disclosures
regarding
rate
reconciliation
and
requiring
the
disclosure of
income taxes paid, income (or
loss)
before
income
tax
expense
and
income
tax
expense
disaggregated
by
national, state and foreign level. Disclosures
that
no
longer
were
considered
cost
beneficial
or
relevant
were
removed
from
ASC Topic 740.
January 1, 2025
The Corporation adopted ASU
2023-09
for
it's
Consolidated
Financial
Statements
in
this
Form
10-K
as
of
December
31,
2025.
The
adoption
of
this
standard
resulted
in
the
prospective
inclusion
of
certain
new
categories
in
the
effective
income
tax
rate
and
income
tax
expense
tabular
disclosures, as well as the disclosure of
income taxes
paid. Refer
to Note
34 –
Income
taxes
for
the
additional
disclosures included.
130
Recently Adopted Accounting Standards Updates
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2023-08,
Intangibles - Goodwill and
Other - Crypto Assets
(Subtopic 350-60) -
Accounting for and
Disclosure of Crypto
Assets
The
FASB
issued
ASU
2023-08
in
December
2023,
which
amends
ASC
Subtopic
350-60
by
requiring
that
crypto
assets
are
measured
at
fair
value
in
the
statement
of
financial
position
each
reporting
period
with
changes
from
remeasurement
being
recognized
in
net
income.
The
ASU
also
requires
enhanced
disclosures
for
both
annual
and
interim
reporting
periods
to
provide
investors
with
relevant information
to
analyze and
assess
the
exposure
and
risk
of
significant
individual crypto asset holdings.
January 1, 2025
The
Corporation
was
not
impacted
by
the
adoption of
this
ASU
since
it does
not currently hold crypto-assets.
FASB ASU 2023-05,
Business Combinations -
Joint Venture Formations
(Subtopic 805-60) -
Recognition and initial
measurement
The
FASB
issued
ASU
2023-05
in
August
2023, which
amends ASC
Subtopic 805-60
to include specific
guidance about how
joint
ventures
should
recognize
and
initially
measure
assets
contributed
and
liabilities
assumed.
The
amendments
require
that
a
joint venture, upon formation, recognize and
initially
measure its
assets and
liabilities at
fair value.
January 1, 2025
The
Corporation
was
not
impacted
at
the time of adoption of this ASU since it
elected
to
prospectively
apply
the
standard. The Corporation will
consider
this
guidance
for
the
initial
measurement of assets and liabilities of
joint
ventures created
after the
date of
adoption.
131
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-12,
Codification Improvements
The
FASB
issued
ASU
2025-12
in
December
2025
which
clarify
and
correct
errors within
the ASC.
The update
includes
targeted
refinements
across multiple
topics
and
it
is not
expected to
have a
significant
effect on current accounting practices.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-11,
Interim Reporting (Topic
270) - Narrow-Scope
Improvements
The
FASB
issued
ASU
2025-11
in
December 2025, to clarify interim disclosure
requirements
under
ASC
Topic
270.
The
update
provides
a
comprehensive
list
of
interim
disclosures
that
are
required
within
interim
financial
statements
and
introduces
a principles-based requirement to disclose
events since the last annual period that may
have a material impact.
January 1, 2028
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-10,
Government Grants (Topic
832) - Accounting for
Government Grants
Received by Business
Entities
The
FASB
issued
ASU
2025-10
in
December
2025,
which
establishes
the
accounting
for
government
grants
received
by
a
business
entity.
The
update
establishes
recognition,
measurement,
and
disclosure
requirements
for
government
grants.
It
allows
asset
related
grants to
be
recognized either
as deferred
income or
as
an adjustment
to the
cost basis
of an
asset
and
income-related
grants
as
deferred
income.
January 1, 2029
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-09,
Derivatives and Hedging
(Topic 815) - Hedge
Accounting Improvements
The
FASB
issued
ASU
2025-09
in
November 2025, which aims to improve and
broaden
hedge
accounting
under
ASC
Topic
815
by
allowing
entities
to
group
forecasted
transaction
with
similar
risk
exposures,
provides
a
model
for
hedging
choose-your
rate
debt
,
expands
hedge
accounting
for
forecasted
purchases
and
sales of non
financial assets, eliminates net
written
option
limitations
for
certain
compound
derivatives,
and
resolves
recognition
mismatches
in
dual
hedging
strategies
involving
foreign
‑
currency
‑
denominated debt.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
132
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-08,
Financial Instruments -
Credit Losses (Topic 326)
-
Purchased Loans
The
FASB
issued
ASU
2025-08
in
November 2025, which aims
to simplify and
reduce the
complexity of
the accounting
for
purchased loans under ASC Topic
326. The
update
expands
the
population
of
loans
subject to
the gross-up
approach to
include
purchased
seasoned
loans,
regardless
whether they had credit deterioration.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-07,
Derivatives and Hedging
(Topic 815) and Revenue
from Contracts with
Customers (Topic 606) -
Derivatives Scope
Refinements and Scope
Clarification for Share-
Based Noncash
Consideration from a
Customer in a Revenue
Contract
The
FASB
issued
ASU
2025-07
in
September 2025, which refines the scope of
derivative accounting under
ASC Topic
815
and
clarifies
the
treatment
of
share-based
noncash
consideration
under
ASC
Topic
606.
The
update
excludes
certain
non-
exchange
traded
contracts
with
underlying
based
on
the
operations
of
one
of
the
parties from derivative accounting, aiming to
better
reflect
the
nature
of
these
arrangements
and
reduce
complexity.
It
also
confirms
that
share-based
noncash
consideration
from
a
customer
should
be
accounted
for
under
ASC
Topic
606
until
the right
to receive
or retain
such non-cash
consideration
becomes
unconditional,
promoting
consistency
in
revenue
recognition practices.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-06,
Intangibles - Goodwill and
Other - Internal-Use
Software (Subtopic 350-
40) - Targeted
Improvements to the
Accounting for Internal-
Use Software
The
FASB
issued
ASU
2025-06
in
September 2025, which seeks to modernize
the
accounting
for
internal-use
software
under
ASC
Subtopic
350-40,
Intangibles—
Goodwill and Other—Internal-Use Software.
The
update
replaces
the
traditional
stage-
based
model
(preliminary,
development,
post-implementation)
with
a
principles-
based framework that better
reflects current
software
development
practices,
including
agile and cloud-based approaches.
January 1, 2028
The Corporation
is currently
evaluating
the
impact
that
the
adoption
of
this
guidance
will
have
on
our
accounting
for
internal
use
software
considering
our
development
practices
which
may
include
agile
and
cloud
based
approaches. Given the
recent issuance
of
this
guidance
it
is
too
early
to
tell
whether
the
impact
will
be
material
in
our
financial
statements
and
presentation and disclosures.
FASB ASU 2025-05,
Financial Instruments -
Credit Losses (Topic 326)
- Measurement of Credit
Losses for Accounts
Receivables and Contract
Assets
The
FASB
issued
ASU
2025-05
in
July
2025,
which
permits
entities
to
elect
a
practical
expedient
when
accounting
for
current
accounts
receivable
and
current
contract
assets
arising
from
transactions
accounted
for
under
ASC
Topic
606,
Revenue
from
Contracts
with
Customers.
This practical
expedient establishes
that, in
developing
reasonable
and
supportable
forecasts
as
part
of
estimating
expected
credit
losses,
entities
assume
that
current
conditions as
of the
balance sheet
date do
not
change
for
the
remaining
life
of
the
asset.
January 1, 2026
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
standard as it will not
elect the practical
expedient.
133
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-04,
Compensation - Stock
Compensation (Topic 718)
and Revenue from
Contracts with Customers
(Topic 606) - Clarifications
to Share-Based
Consideration Payable to
a Customer
The
FASB
issued
ASU
2025-04
in
May
2025,
which
clarifies
the
accounting
for
share-based
awards
granted
as
consideration
payable
to
a
customer.
The
ASU expands
the definition
of performance
condition
for
share-based
consideration
under ASC 718 and eliminates the forfeiture
policy election for
service conditions. It
also
confirms
that
the
variable
consideration
constraint
in
ASC
606
does
not
apply
to
such awards.
January 1, 2027
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since
it
does
not
grant
share-based
payment awards to customers.
FASB ASU 2025-03,
Business Combinations
(Topic 805) and
Consolidation (Topic 810)
- Determining the
Accounting Acquirer in the
Acquisition of a Variable
Interest Entity
The
FASB
issued
ASU
2025-03
in
May
2025 which
requires that
an entity
consider
the
factors
in
paragraphs
805-10-55-12
through
55-15
when
it
is
involved
in
an
acquisition transaction
effected primarily
by
exchanging
equity
interests when
the
legal
acquiree is
a variable
interest entity
("VIE")
that
meets
the
definition
of
a
business
to
determine
which
entity
is
the
accounting
acquirer.
This
replaces
the
previous
requirement
that
the
primary
beneficiary
always is the acquirer.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2024-04, Debt
- Debt with Conversion
and Other Options
(Subtopic 470- 20) -
Induced Conversions of
Convertible Debt
Instruments
The
FASB
issued
ASU
2024-04
in
November
2024,
which
clarifies
the
requirements
for
determining
whether
certain
settlements
of
convertible
debt
instruments should
be accounted
for as
an
induced
conversion.
Also
it
makes
additional
clarifications
to
assist
stakeholders in
applying the
guidance. The
ASU
clarifies
that
the
incorporation,
elimination,
or
modification
of
a
volume-
weighted
average
price
("VWAP")
formula
does
not
automatically
cause
a
settlement
to
be
accounted
for
as
an
extinguishment
and
that
the
induced
conversion
guidance
applies to a convertible
debt instrument that
is not currently
convertible as long as
it had
a substantive
conversion feature
as of
both
its
issuance
date
and
the
date
the
inducement offer is accepted.
January 1, 2026
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since it does not hold convertible debt.
FASB ASU 2024-03,
Income Statement -
Reporting Comprehensive
Income - Expense
Disaggregation
Disclosures (Subtopic
220-40) - Disaggregation
of Income Statement
Expenses (As updated by
ASU 2025-01)
The
FASB
issued
ASU
2024-03
in
November
2024,
which
requires
public
entities
to
disclose
additional
information
about
specific
expense
categories
in
the
notes to
financial statements
at interim
and
annual
reporting
periods
to
improve
financial transparency.
For fiscal years
beginning on
January 1, 2027
For interim periods
within fiscal years
beginning after
January 1, 2028
The Corporation
is currently
evaluating
the
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
134
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2023-06,
Disclosure Improvements -
Codification Amendments
in Response to the SEC’s
Disclosure Update and
Simplification Initiative
The FASB
issued ASU
2023-06 in
October
2023
which
modifies
the
disclosure
or
presentation
requirements
of
various
subtopics
in
the
Codification
with
the
purpose
of
aligning
U.S.
GAAP
requirements
with
those
of
the
SEC
under
Regulation S-X and S-K.
The date on which
the SEC removes
related disclosure
requirements. If by
June 30, 2027 the
SEC has not
removed the
applicable
requirements, the
standard will not
become
effective.
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since
it
is
subject
to
SEC's
current
disclosure
and
presentation
requirements under Regulation S-X and
S-K.
135
Note 4 - Restrictions on cash and due
from banks and certain securities
BPPR is
required by
regulatory agencies
to maintain
average reserve
balances with
the Federal
Reserve Bank
of New
York
(the
“Fed”) or other banks. Required average
reserve balances in BPPR amounted to
$
2.7
billion at December 31, 2025 (December 31,
2024 -
$
2.6
billion). Cash
and due
from banks,
as well
as other
highly liquid
securities, are
used to
cover these
required average
reserve balances.
At
December
31,
2025,
the
Corporation
held
$
64
million
in
restricted
assets
in
the
form
of
funds
deposited
in
money
market
accounts, debt
securities available for
sale and
equity securities (December
31, 2024
- $
61
million).
The restricted
assets held
in
debt securities available for
sale and equity securities
consist primarily of assets
held for the Corporation’s
non-qualified retirement
plans and fund deposits guaranteeing possible liens
or encumbrances over the title of insured
properties.
136
Note 5 – Debt securities available-for-sale
The
following
tables
present
the
amortized
cost,
gross
unrealized
gains
and
losses,
fair
value,
weighted
average
yield
and
contractual maturities of debt securities available-for-sale
at December 31, 2025 and December 31,
2024.
At December 31, 2025
Gross
Gross
Weighted
Amortized
unrealized
unrealized
Fair
average
(In thousands)
cost
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
10,154,698
$
4,716
$
1,528
$
10,157,886
3.44
%
After 1 to 5 years
5,555,079
29,795
19,306
5,565,568
3.70
Total U.S. Treasury
securities
15,709,777
34,511
20,834
15,723,454
3.53
Collateralized mortgage obligations - federal agencies
Within 1 year
152
-
1
151
1.97
After 1 to 5 years
4,879
-
88
4,791
1.49
After 5 to 10 years
11,524
-
482
11,042
2.45
After 10 years
90,018
180
5,941
84,257
2.92
Total collateralized
mortgage obligations - federal agencies
106,573
180
6,512
100,241
2.80
Mortgage-backed securities - federal agencies
Within 1 year
963
1
9
955
2.08
After 1 to 5 years
65,843
11
1,530
64,324
2.35
After 5 to 10 years
1,030,661
256
67,116
963,801
1.85
After 10 years
4,527,032
881
806,466
3,721,447
1.75
Total mortgage-backed
securities - federal agencies
5,624,499
1,149
875,121
4,750,527
1.78
Other
Within 1 year
750
-
-
750
4.43
Total other
750
-
-
750
4.43
Total debt securities
available-for-sale
[1]
$
21,441,599
$
35,840
$
902,467
$
20,574,972
3.07
%
[1]
Includes $
14.3
billion pledged to secure government and trust
deposits, credit facilities and loan servicing agreements that
the secured parties
are not permitted to sell or repledge the collateral, of which
$
13.2
billion serve as collateral for public funds.
The Corporation had unpledged
Available for Sale securities with a fair value of
$
6.3
billion that could be used to increase its borrowing
facilities.
137
At December 31, 2024
Gross
Gross
Weighted
Amortized
unrealized
unrealized
Fair
average
(In thousands)
cost
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
10,555,397
$
1,282
$
46,275
$
10,510,404
3.33
%
After 1 to 5 years
2,547,936
151
63,381
2,484,706
3.07
Total U.S. Treasury
securities
13,103,333
1,433
109,656
12,995,110
3.28
Collateralized mortgage obligations - federal agencies
After 1 to 5 years
10,538
-
345
10,193
1.53
After 5 to 10 years
15,334
-
904
14,430
2.24
After 10 years
104,168
132
8,639
95,661
2.76
Total collateralized
mortgage obligations - federal agencies
130,040
132
9,888
120,284
2.60
Mortgage-backed securities - federal agencies
Within 1 year
776
-
5
771
1.65
After 1 to 5 years
79,542
8
2,700
76,850
2.35
After 5 to 10 years
733,506
82
45,078
688,510
2.37
After 10 years
5,468,448
337
1,106,657
4,362,128
1.67
Total mortgage-backed
securities - federal agencies
6,282,272
427
1,154,440
5,128,259
1.75
Other
Within 1 year
500
-
-
500
5.00
After 1 to 5 years
1,750
-
-
1,750
5.50
Total other
2,250
-
-
2,250
5.39
Total debt securities
available-for-sale
[1]
$
19,517,895
$
1,992
$
1,273,984
$
18,245,903
2.78
%
[1]
Includes $
13.9
billion pledged to secure government and trust deposits,
assets sold under agreements to repurchase, credit facilities
and loan
servicing agreements that the secured parties are not permitted
to sell or repledge the collateral, of which $
12.9
billion serve as collateral for
public funds. The Corporation had unpledged Available
for Sale securities with a fair value of
$
4.3
billion that could be used to increase its
borrowing facilities.
The weighted
average yield
on debt
securities available-for-sale
is based
on amortized
cost; therefore,
it
does not
give
effect to
changes in fair value.
Securities
not
due
on
a
single
contractual
maturity
date,
such
as
mortgage-backed
securities
and
collateralized
mortgage
obligations, are classified
in the period
of final contractual
maturity. The
expected maturities of
collateralized mortgage obligations,
mortgage-backed securities and certain other securities may
differ from their contractual maturities
because they may be subject to
prepayments or may be called by the issuer.
The following table presents the
aggregate amortized cost and fair value of
debt securities available-for-sale at December 31, 2025
by contractual maturity.
(In thousands)
Amortized cost
Fair value
Within 1 year
$
10,156,563
$
10,159,742
After 1 to 5 years
5,625,801
5,634,683
After 5 to 10 years
1,042,185
974,843
After 10 years
4,617,050
3,805,704
Total debt securities
available-for-sale
$
21,441,599
$
20,574,972
At December 31, 2025,
the Corporation did not intend
to sell or believed
it was more likely than
not that it would be
required to sell
debt
securities
classified
as
available-for-sale.
There
were
no
debt
securities
available-for-sale
sold
during
the
years
ended
December 31, 2025, December 31, 2024 and December
31, 2023.
138
The
following
tables
present
the
Corporation’s
fair
value
and
gross
unrealized
losses
of
debt
securities
available-for-sale,
aggregated by investment category
and length of time
that individual securities have been
in a continuous unrealized loss
position,
at December 31, 2025 and 2024.
At December 31, 2025
Less than 12 months
12 months or more
Total
Gross
Gross
Gross
Fair
unrealized
Fair
unrealized
Fair
unrealized
(In thousands)
value
losses
value
losses
value
losses
U.S. Treasury securities
$
992,083
$
82
$
943,699
$
20,752
$
1,935,782
$
20,834
Collateralized mortgage obligations - federal agencies
1,481
3
83,266
6,509
84,747
6,512
Mortgage-backed securities -federal agencies
222,333
9,975
4,469,097
865,146
4,691,430
875,121
Total debt securities
available-for-sale in an unrealized loss position
$
1,215,897
$
10,060
$
5,496,062
$
892,407
$
6,711,959
$
902,467
At December 31, 2024
Less than 12 months
12 months or more
Total
Gross
Gross
Gross
Fair
unrealized
Fair
unrealized
Fair
unrealized
(In thousands)
value
losses
value
losses
value
losses
U.S. Treasury securities
$
2,309,894
$
24,646
$
3,638,092
$
85,010
$
5,947,986
$
109,656
Collateralized mortgage obligations - federal agencies
4,878
27
102,160
9,861
107,038
9,888
Mortgage-backed securities - federal agencies
70,777
3,175
5,031,414
1,151,265
5,102,191
1,154,440
Total debt securities
available-for-sale in an unrealized loss position
$
2,385,549
$
27,848
$
8,771,666
$
1,246,136
$
11,157,215
$
1,273,984
As of December 31, 2025, the portfolio of available-for-sale
debt securities reflects gross unrealized losses of $
0.9
billion (December
31,
2024
-
$
1.3
billion), driven
mainly
by
mortgage-backed securities,
impacted
by
the
higher-interest
rate
environment
and
the
portfolio’s longer
duration.
The portfolio
of available-for-sale debt
securities is
comprised mainly of
U.S Treasuries
and obligations
from
the
U.S.
Government,
its
agencies
or
government
sponsored
entities,
including
Federal
National
Mortgage
Association
(“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”) and Government National Mortgage Association (“GNMA”). These
securities carry
an explicit
or implicit
guarantee from the
U.S. Government,
are highly
rated by
major rating
agencies, and
have a
long history of no credit losses. Accordingly, the Corporation applies a zero-credit
loss assumption.
139
Note 6 –Debt securities held-to-maturity
The following tables present the amortized cost, allowance for
credit losses,
gross unrealized gains and losses, fair value, weighted
average yield and contractual maturities of debt securities
held-to-maturity at December 31, 2025 and
2024.
At December 31, 2025
Allowance
Carrying
Value
Gross
Gross
Weighted
Amortized
Book
[1]
for Credit
Net of
unrealized
unrealized
Fair
average
(In thousands)
cost
Value
Losses
Allowance
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
2,558,293
$
2,519,071
$
-
$
2,519,071
$
5,224
$
110
$
2,524,185
1.31
%
After 1 to 5 years
5,003,219
4,749,896
-
4,749,896
35,910
-
4,785,806
1.27
Total U.S. Treasury
securities
7,561,512
7,268,967
-
7,268,967
41,134
110
7,309,991
1.28
Obligations of Puerto Rico, States and
political subdivisions
Within 1 year
2,605
2,605
5
2,600
4
-
2,604
6.43
After 1 to 5 years
12,508
12,508
39
12,469
24
87
12,406
3.49
After 5 to 10 years
450
450
15
435
15
-
450
5.81
After 10 years
35,544
35,544
5,753
29,791
2,908
1,829
30,870
1.43
Total obligations of
Puerto Rico, States and
political subdivisions
51,107
51,107
5,812
45,295
2,951
1,916
46,330
2.22
Collateralized mortgage obligations - federal
agencies
After 10 years
1,495
1,495
-
1,495
-
189
1,306
2.87
Total collateralized
mortgage obligations -
federal agencies
1,495
1,495
-
1,495
-
189
1,306
2.87
Securities in wholly owned statutory business
trusts
After 5 to 10 years
5,960
5,960
-
5,960
-
-
5,960
6.33
Total securities
in wholly owned statutory
business trusts
5,960
5,960
-
5,960
-
-
5,960
6.33
Total debt securities
held-to-maturity [2]
$
7,620,074
$
7,327,529
$
5,812
$
7,321,717
$
44,085
$
2,215
$
7,363,587
1.29
%
[1]
Book value includes $
293
million of unrealized loss which remains in Accumulated
other comprehensive (loss) income (AOCI) related
to certain
securities previously transferred from available-for-sale securities
portfolio to the held-to-maturity securities portfolio.
[2]
Includes $
7.3
billion pledged to secure public and trust deposits that
the secured parties are not permitted to sell or repledge
the collateral.
The
Corporation had unpledged held-to-maturities securities with
a fair value of $
98.8
million that could be used to increase its borrowing facilities.
140
At December 31, 2024
Allowance
Carrying
Value
Gross
Gross
Weighted
Amortized
Book
[1]
for Credit
Net of
unrealized
unrealized
Fair
average
(In thousands)
cost
Value
Losses
Allowance
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
599,910
$
599,910
$
-
$
599,910
$
-
$
4,498
$
595,412
2.76
%
After 1 to 5 years
7,572,435
7,093,508
-
7,093,508
-
65,096
7,028,412
1.28
Total U.S. Treasury
securities
8,172,345
7,693,418
-
7,693,418
-
69,594
7,623,824
1.39
Obligations of Puerto Rico, States and
political subdivisions
`
Within 1 year
2,440
2,440
5
2,435
3
-
2,438
6.39
After 1 to 5 years
16,454
16,454
80
16,374
47
80
16,341
3.69
After 5 to 10 years
655
655
22
633
20
-
653
5.81
After 10 years
37,633
37,633
5,210
32,423
2,318
2,596
32,145
1.42
Total obligations of
Puerto Rico, States and
political subdivisions
57,182
57,182
5,317
51,865
2,388
2,676
51,577
2.34
Collateralized mortgage obligations - federal
agencies
After 10 years
1,518
1,518
-
1,518
-
214
1,304
2.87
Total collateralized
mortgage obligations -
federal agencies
1,518
1,518
-
1,518
-
214
1,304
2.87
Securities in wholly owned statutory business
trusts
After 5 to 10 years
5,959
5,959
-
5,959
-
-
5,959
6.33
Total securities
in wholly owned statutory
business trusts
5,959
5,959
-
5,959
-
-
5,959
6.33
Total debt securities
held-to-maturity [2]
$
8,237,004
$
7,758,077
$
5,317
$
7,752,760
$
2,388
$
72,484
$
7,682,664
1.40
%
[1]
Book value includes $
479
million of unrealized loss which remains in Accumulated
other comprehensive (loss) income (AOCI) related
to certain
securities transferred from available-for-sale securities
portfolio to the held-to-maturity securities portfolio.
[2]
Includes $
7.6
billion pledged to secure public and trust deposits that
the secured parties are not permitted to sell or repledge
the collateral. The
Corporation had unpledged held-to-maturities securities with
a fair value of $
139.9
million that could be used to increase its borrowing
facilities.
Securities not due
on a single
contractual maturity date,
such as collateralized
mortgage obligations, are classified
in the
period of
final contractual maturity. The
expected maturities of collateralized mortgage obligations and certain other securities may differ from
their contractual maturities because they may be
subject to prepayments or may be called by
the issuer.
The following
table presents the
aggregate amortized cost
and fair value
of debt securities
held-to-maturity at December
31, 2025
by contractual maturity.
(In thousands)
Amortized cost
Book Value
Fair value
Within 1 year
$
2,560,898
$
2,521,676
$
2,526,789
After 1 to 5 years
5,015,727
4,762,404
4,798,212
After 5 to 10 years
6,410
6,410
6,410
After 10 years
37,039
37,039
32,176
Total debt securities
held-to-maturity
$
7,620,074
$
7,327,529
$
7,363,587
Credit Quality Indicators
The following describes the credit quality indicators by major security
type that the Corporation considers to develop the
estimate of
the allowance for credit losses for investment securities
held-to-maturity.
As discussed in Note
2 to the
Consolidated Financial Statement,
U.S. Treasury securities
carry an explicit guarantee
from the U.S.
Government,
are highly
rated by
major rating
agencies,
and have
a long
history of
no credit
losses. Accordingly,
the Corporation
applies a zero-credit loss assumption and no allowance
for credit losses (“ACL”) for these securities
has been established.
141
At December 31, 2025 and December 31, 2024, the “Obligations
of Puerto Rico, States and political subdivisions” classified
as held-
to-maturity,
included securities
issued by
municipalities of
Puerto Rico
that are
generally not
rated by
a credit
rating agency.
The
Corporation performs periodic credit quality
reviews of these securities and internally
assigns standardized credit risk ratings based
on
its
evaluation. For
the
definitions
of
the
obligor
risk
ratings, refer
to
the
Credit
Quality section
of
Note
8
to
the
Consolidated
Financial
Statements.
This
includes
an
amortized
cost
of
$
8.7
million
of
general
and
special
obligation
bonds
issued
by
three
municipalities
of
Puerto
Rico,
of
which
$
7.9
million
have
a
“Pass”
rating,
that
are
payable
primarily
from
certain
property
taxes
imposed by the issuing municipality (compared to $
13
million and $
11.1
million, respectively, at December 31, 2024).
At December
31, 2025,
the portfolio
of “Obligations
of Puerto
Rico, States
and political
subdivisions” also
included $
36
million in
securities
issued
by
the
Puerto
Rico
Housing
Finance
Authority
(“HFA”),
a
government
instrumentality,
for
which
the
underlying
source of payment is second mortgage loans in Puerto Rico
residential properties (not the government), but for which HFA, provides
a guarantee
in the
event of default
and upon the
satisfaction of certain
other conditions (December
31, 2024 -
$
38
million). These
securities
are
not
rated
by
a
credit
rating
agency.
Refer
to
Note
23
to
the
Consolidated
Financial
Statements
for
additional
information on the Corporation’s exposure to the Puerto
Rico Government.
The
Corporation
assesses
the
credit
risk
associated
with
these
HFA
securities
by
evaluating
the
refreshed
FICO
scores
of
a
representative sample
of the
underlying borrowers.
As of
December 31,
2025, the
average refreshed
FICO score
for the
sample,
comprised
of
77
%
of
the
nominal
value
of
the
securities,
used
for
the
loss
estimate
was
of
698
(compared
to
72
%
and
674
,
respectively, at
December 31, 2024).
The loss estimates
for this portfolio
was based on
the methodology established
under CECL
for
similar
loan
obligations.
The
Corporation
does
not
consider
the
government
guarantee
when
estimating
the
credit
losses
associated with this portfolio.
A
deterioration of
the Puerto
Rico economy
or
of
the fiscal
health of
the
Government of
Puerto Rico
and/or
its
instrumentalities
(including if
any of
the issuing
municipalities become
subject to
a debt
restructuring proceeding
under the
Puerto Rico
Oversight
Management and Economic Stability Act (“PROMESA”)
could adversely affect the value of these securities, resulting in losses
to the
Corporation.
At December
31, 2025,
the portfolio
of “Obligations
of Puerto
Rico, States
and political
subdivisions” also
included $
6.8
million in
securities issued
by the
HFA
for which
the underlying
source of
payment is
U.S. Treasury
securities (December
31, 2024
- $
6.9
million).
The Corporation
applies a
zero-credit loss
assumption for
these securities,
and no
ACL
has
been
established for
these
securities given that U.S. Treasury securities carry an explicit guarantee from
the U.S. Government, are highly rated by major rating
agencies, and have a long history of no credit
losses.
Delinquency status
At December 31, 2025 and December 31, 2024,
there were
no
securities held-to-maturity in past due or non-performing
status.
Allowance for credit losses on debt securities held-to-maturity
The
allowance
for
credit
losses
related
to
the
Obligations
of
Puerto
Rico
and
the
States
and
Political
subdivisions
securities
at
December 31, 2025 was $
5.8
million (December 31, 2024 - $
5.3
million).
142
Note 7 – Loans
For a summary of the
accounting policies related to loans, interest recognition
and allowance for credit losses refer to
Note 2 to the
Consolidated Financial Statements.
The following table presents the Corporation's loan
purchases (including repurchases) for the years ended December 31,
2025 and
2024 by class of loans:
For the years ended December 31,
(In thousands)
2025
2024
Commercial
$
250,032
$
296,201
Mortgage
491,832
378,573
Ending balance
$
741,864
$
674,774
The following table presents the Corporation’s whole-loan
sales for the years ended December 31, 2025
and 2024 by class of loans:
For the years ended December 31,
(In thousands)
2025
2024
Commercial
$
47,347
$
25,155
Construction
9,338
16,656
Mortgage
35,454
44,680
Ending balance
$
92,139
$
86,491
Delinquency status
The following tables present the
amortized cost basis of loans
held-in-portfolio (“HIP”), net of unearned
income, by past due status,
and by loan class including those that are in non-performing status or that are accruing
interest but are past due 90 days or more at
December 31, 2025 and 2024.
143
December 31, 2025
BPPR
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
6,579
$
155
$
112
$
6,846
$
296,502
$
303,348
$
112
$
-
Commercial real estate:
Non-owner occupied
2,457
299
35,692
38,448
3,356,682
3,395,130
35,692
-
Owner occupied
2,760
681
24,567
28,008
1,168,585
1,196,593
24,567
-
Commercial and industrial
8,864
3,760
187,222
199,846
5,770,227
5,970,073
183,914
3,308
Construction
17,283
-
-
17,283
340,258
357,541
-
-
Mortgage
261,145
133,124
329,613
723,882
6,624,085
7,347,967
132,373
197,240
Leasing
23,748
4,640
9,179
37,567
1,963,798
2,001,365
9,179
-
Consumer:
Credit cards
13,700
10,617
27,529
51,846
1,204,885
1,256,731
-
27,529
Home equity lines of credit
-
-
-
-
1,908
1,908
-
-
Personal
19,608
11,894
19,082
50,584
1,785,818
1,836,402
18,863
219
Auto
109,103
25,495
52,200
186,798
3,633,014
3,819,812
52,200
-
Other
927
2,688
2,285
5,900
165,858
171,758
1,809
476
Total
$
466,174
$
193,353
$
687,481
$
1,347,008
$
26,311,620
$
27,658,628
$
458,709
$
228,772
December 31, 2025
Popular U.S.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
9,500
$
-
$
8,636
$
18,136
$
2,134,306
$
2,152,442
$
8,636
$
-
Commercial real estate:
Non-owner occupied
-
1,600
7,020
8,620
2,139,534
2,148,154
7,020
-
Owner occupied
-
-
-
-
1,956,487
1,956,487
-
-
Commercial and industrial
7,608
928
6,686
15,222
2,622,117
2,637,339
6,498
188
Construction
-
-
-
-
1,317,358
1,317,358
-
-
Mortgage
15,596
6,400
13,422
35,418
1,266,055
1,301,473
13,422
-
Consumer:
Credit cards
-
-
-
-
( 14 )
( 14 )
-
-
Home equity lines of
credit
1,282
82
2,796
4,160
72,624
76,784
2,796
-
Personal
983
832
1,233
3,048
66,778
69,826
1,233
-
Other
-
-
29
29
9,012
9,041
29
-
Total
$
34,969
$
9,842
$
39,822
$
84,633
$
11,584,257
$
11,668,890
$
39,634
$
188
144
December 31, 2025
Popular, Inc.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
[2] [3]
loans
loans
Commercial multi-family
$
16,079
$
155
$
8,748
$
24,982
$
2,430,808
$
2,455,790
$
8,748
$
-
Commercial real estate:
Non-owner occupied
2,457
1,899
42,712
47,068
5,496,216
5,543,284
42,712
-
Owner occupied
2,760
681
24,567
28,008
3,125,072
3,153,080
24,567
-
Commercial and industrial
16,472
4,688
193,908
215,068
8,392,344
8,607,412
190,412
3,496
Construction
17,283
-
-
17,283
1,657,616
1,674,899
-
-
Mortgage
[1]
276,741
139,524
343,035
759,300
7,890,140
8,649,440
145,795
197,240
Leasing
23,748
4,640
9,179
37,567
1,963,798
2,001,365
9,179
-
Consumer:
Credit cards
13,700
10,617
27,529
51,846
1,204,871
1,256,717
-
27,529
Home equity lines of credit
1,282
82
2,796
4,160
74,532
78,692
2,796
-
Personal
20,591
12,726
20,315
53,632
1,852,596
1,906,228
20,096
219
Auto
109,103
25,495
52,200
186,798
3,633,014
3,819,812
52,200
-
Other
927
2,688
2,314
5,929
174,870
180,799
1,838
476
Total
$
501,143
$
203,195
$
727,303
$
1,431,641
$
37,895,877
$
39,327,518
$
498,343
$
228,960
[1]
At December 31, 2025, mortgage loans held-in-portfolio
include $
3.2
billion of loans that carry certain guarantees from
the FHA or the VA, for
which the Corporation’s policy is to exclude them
from non-performing status, of which $
197
million are 90 days or more past due. The portfolio
of
guaranteed loans includes $
47
million of residential mortgage loans in Puerto Rico that
are no longer accruing interest as of December 31,
2025.
The Corporation has $
27
million in reverse mortgage loans in Puerto Rico which
are guaranteed by FHA, but which are currently not accruing
interest at December 31, 2025.
[2]
Loans held-in-portfolio are net of $
422
million in unearned income and exclude $
10
million in loans held-for-sale.
[3]
Includes $
22.7
billion pledged to secure credit facilities and public funds
that the secured parties are not permitted to sell or repledge
the collateral,
of which $
7.5
billion were pledged at the Federal Home Loan Bank
("FHLB") as collateral for borrowings and $
15.2
billion at the Federal Reserve
Bank ("FRB") for discount window borrowings. As of December
31, 2025, the Corporation had an available borrowing
facility with the FHLB and
the discount window of FRB of $
4
.0 billion and $
12.1
billion, respectively.
145
December 31, 2024
BPPR
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
1,491
$
113
$
79
$
1,683
$
306,318
$
308,001
$
79
$
-
Commercial real estate:
Non-owner occupied
3,103
586
6,429
10,118
3,236,385
3,246,503
6,429
-
Owner occupied
11,054
808
25,258
37,120
1,338,791
1,375,911
25,258
-
Commercial and industrial
5,738
2,712
23,895
32,345
5,314,549
5,346,894
19,335
4,560
Construction
1,039
-
-
1,039
211,251
212,290
-
-
Mortgage
262,222
116,694
365,759
744,675
6,065,206
6,809,881
158,442
207,317
Leasing
23,991
6,062
9,588
39,641
1,885,764
1,925,405
9,588
-
Consumer:
Credit cards
17,399
11,719
29,960
59,078
1,158,975
1,218,053
-
29,960
Home equity lines of credit
16
129
-
145
1,895
2,040
-
-
Personal
19,503
13,005
20,269
52,777
1,697,600
1,750,377
20,269
-
Auto
111,358
27,858
51,792
191,008
3,632,429
3,823,437
51,792
-
Other
1,816
277
1,312
3,405
156,824
160,229
899
413
Total
$
458,730
$
179,963
$
534,341
$
1,173,034
$
25,005,987
$
26,179,021
$
292,091
$
242,250
December 31, 2024
Popular U.S.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
-
$
5,443
$
8,700
$
14,143
$
2,077,476
$
2,091,619
$
8,700
$
-
Commercial real estate:
Non-owner occupied
6,792
-
8,015
14,807
2,101,925
2,116,732
8,015
-
Owner occupied
-
-
5,191
5,191
1,776,644
1,781,835
5,191
-
Commercial and industrial
10,336
5,323
1,938
17,597
2,377,071
2,394,668
1,748
190
Construction
-
-
-
-
1,051,502
1,051,502
-
-
Mortgage
18,148
5,417
29,890
53,455
1,250,847
1,304,302
29,890
-
Consumer:
Credit cards
-
-
-
-
26
26
-
-
Home equity lines of credit
530
986
3,393
4,909
66,622
71,531
3,393
-
Personal
1,808
1,509
1,741
5,058
99,809
104,867
1,741
-
Other
514
-
11
525
11,024
11,549
11
-
Total
$
38,128
$
18,678
$
58,879
$
115,685
$
10,812,946
$
10,928,631
$
58,689
$
190
146
December 31, 2024
Popular, Inc.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
[2] [3]
loans
loans
Commercial multi-family
$
1,491
$
5,556
$
8,779
$
15,826
$
2,383,794
$
2,399,620
$
8,779
$
-
Commercial real estate:
Non-owner occupied
9,895
586
14,444
24,925
5,338,310
5,363,235
14,444
-
Owner occupied
11,054
808
30,449
42,311
3,115,435
3,157,746
30,449
-
Commercial and industrial
16,074
8,035
25,833
49,942
7,691,620
7,741,562
21,083
4,750
Construction
1,039
-
-
1,039
1,262,753
1,263,792
-
-
Mortgage
[1]
280,370
122,111
395,649
798,130
7,316,053
8,114,183
188,332
207,317
Leasing
23,991
6,062
9,588
39,641
1,885,764
1,925,405
9,588
-
Consumer:
Credit cards
17,399
11,719
29,960
59,078
1,159,001
1,218,079
-
29,960
Home equity lines of credit
546
1,115
3,393
5,054
68,517
73,571
3,393
-
Personal
21,311
14,514
22,010
57,835
1,797,409
1,855,244
22,010
-
Auto
111,358
27,858
51,792
191,008
3,632,429
3,823,437
51,792
-
Other
2,330
277
1,323
3,930
167,848
171,778
910
413
Total
$
496,858
$
198,641
$
593,220
$
1,288,719
$
35,818,933
$
37,107,652
$
350,780
$
242,440
[1]
At December 31, 2024 mortgage loans held-in-portfolio include
$
2.6
billion of loans that carry certain guarantees from the FHA
or the VA, for
which the Corporation’s policy is to exclude them
from non-performing status, of which $
207
million are 90 days or more past due. The portfolio
of
guaranteed loans includes $
65
million of residential mortgage loans in Puerto Rico that
are no longer accruing interest as of December 31,
2024.
The Corporation has $
31
million in reverse mortgage loans in Puerto Rico which
are guaranteed by FHA, but which are currently not accruing
interest at December 31, 2024.
[2]
Loans held-in-portfolio are net of $
415
million in unearned income and exclude $
5
million in loans held-for-sale.
[3]
Includes $
16.8
billion pledged to secure credit facilities and public funds
that the secured parties are not permitted to sell or repledge
the collateral,
of which $
7.3
billion were pledged at the FHLB as collateral for borrowings
and $
9.5
billion at the FRB for discount window borrowings. As
of
December 31, 2024, the Corporation had an available borrowing
facility with the FHLB and the discount window
of FRB of $
3.8
billion and $
7
.0
billion, respectively.
The components of the net financing leases,
including finance leases within the C&I category,
receivable at December 31, 2025 and
2024 were as follows:
(In thousands)
2025
2024
Total minimum lease
payments
$
1,722,141
$
1,676,763
Estimated residual value of leased property
820,333
774,752
Deferred origination costs, net of fees
28,800
29,398
Less - Unearned financing income
408,735
403,273
Net minimum lease payments
2,162,539
2,077,640
Less - Allowance for credit losses
20,095
17,691
Net minimum lease payments, net of allowance for credit losses
$
2,142,444
$
2,059,949
At December 31, 2025, future minimum lease payments
are expected to be received as follows:
(In thousands)
2026
$
169,390
2027
227,657
2028
313,503
2029
393,504
2030
448,441
2031 and thereafter
169,646
Total
$
1,722,141
147
The following tables present the amortized cost basis
of non-accrual loans as of December 31, 2025
and December 31, 2024 by
class of loans: