FULLTEXT DEL 6 AV 6
10-Q – 2025-11-10 – d873220d10q.htm
●
In the BPPR segment,
the provision for loans losses
was $72.6 million, a decrease
of $4.5 million when compared
to the
same quarter in 2024, driven by lower reserves for the consumer
portfolio of $30.6 million, mainly in auto loans and credit
cards,
due
to
improvements
in
credit
quality
and
lower
net
charge-offs.
The
favorable
variance
was
partially
offset
by
higher
reserves
in
the
commercial
portfolio
by
$21.7
million
due
to
a
specific
reserve
recognized
for
a
$158.3
million
commercial
and
industrial
facility
and
a
$13.5
million
charge-off
recognized
during
the
quarter
for
a
$30.1
million
commercial real estate facility,
both classified as NPLs during the quarter.
●
In the Popular
U.S. segment, the provision
for loans losses
was $1.9 million,
an increase of
$6.3 million when compared
to the
same quarter
in 2024,
mainly driven
higher qualitative
reserves for
the commercial
real estate
portfolios, partially
offset by lower net charge-offs mainly in consumer portfolios.
For
the nine
months ended
September 30,
2025, the
provision for
credit
losses amounted
to
$188.1 million,
a decrease
of
$2.7
million, compared to the
nine months ended September
30, 2024. The provision
for the loan
portfolio was $189.3 million,
flat when
compared to the nine months ended September 30, 2024. The provision release related to unfunded commitments was $1.6 million,
a
decrease
of
$3.0
million,
mainly
driven
by
the
reduction
in
unfunded commitments
within
the
U.S.
construction
portfolio.
The
provision for HTM was
$0.5 million, an increase
of $0.9 million when compared
to the same period
of the previous year.
The major
drivers of the provision for loan losses during the nine months ended September 30, 2025, by
business segment when compared to
the same period in 2024, were as follows:
●
In the BPPR segment, the provision for
loan losses for the nine months ended September 30,
2025 was $168.5 million, a
decrease
of
$18.3
million
when
compared
to
the
same
period
in
2024,
driven
by
improvement
in
credit
quality
in
the
consumer portfolio, mainly in credit cards, and the stable performance of the lease portfolio for which a qualitative reserve
was established in 2024, partially offset by an increase in provisions for the
mortgage portfolio, driven by lower recoveries
and changes in macroeconomic forecasts and credit
quality.
●
In
the
Popular
U.S.
segment,
the
provision
for
loan
losses
was
$20.8
million,
an
increase
of
$18.2
million,
driven
by
changes
in
credit
quality
within
the
commercial
portfolio,
partially
offset
by
lower
net
charge-offs
within
the
consumer
portfolios.
At
September 30,
2025, the
total
allowance for
credit
losses for
loans held-in-portfolio
amounted to
$786.2 million,
compared to
$746.0
million
as
of
December
31,
2024.
The
ratio
of
the
allowance
for
credit
losses
to
loans
held-in-portfolio
was
2.03%
at
September
30,
2025, compared
to
2.01%
at
December 31,
2024. Refer
to
Note
8
to
the
Consolidated Financial
Statements
for
additional information
on the
Corporation’s methodology
to
estimate its
ACL. Refer
to the
Credit Risk
section of
this MD&A
for
a
detailed analysis of net charge-offs, non-performing assets,
the allowance for credit losses and selected loan
losses statistics.
Non-Interest Income
135
Non-interest income
amounted to $171.2
million for
the third
quarter of
2025, an
increase of
$7.1 million
when compared with
the
same quarter for the previous year. This variance was primarily due
to:
●
higher gains from equity securities by $2.7 million mainly due to the valuation of securities held for deferred compensation
plans, which have an offsetting effect on personnel cost;
●
higher other
service fees
by
$2.6 million
mainly due
to
higher credit
and debit
card fee
income by
$3.3 million,
due to
higher
volume
of
costumer
transactions,
and
higher
investment
management
fees
by
$1.1
million,
driven
by
a
higher
assets under management, partially offset by lower insurance
fees by $2.4 million; and
●
higher other operating income by $2.1 million mainly
due to income of $5.3 million related to
a retroactive charge billed to
a tenant
for energy
supplied in
prior years
and higher
income from
investments accounted
under the
equity method
by
$4.1 million, partially offset
by lower daily car
rental revenue by $5.0 million
and gains from the sale
of car rental units
by
$1.4 million, associated with the car rental business
sold in the fourth quarter of 2024;
Non-interest income amounted
to $491.7
million for
the nine
months ended September
30, 2025,
a decrease of
$2.5 million when
compared to the same period of the previous
year. The main factors that contributed to the variance were:
●
lower other operating income by $13.6 million mainly due to lower daily car rental revenue by $14.9 million and gains from
the sale
of car
rental units
by $7.7
million
during the
nine months
ended September
30, 2025
associated with
the car
rental business sold in
the fourth quarter of
2024, partially offset by
income of $5.3 million
related to a retroactive
charge
billed to
a tenant
for energy
supplied in
prior years
and $3.3
million of
income related
to the
reimbursement of
excess
interest paid
to the
U.S. Internal
Revenue Service
(the “IRS”)
for late
payment penalties
related to
tax withholdings
on
intercompany distributions for the years 2014-2024 as
disclosed in 2024; and
●
lower mortgage
banking activities
by
$1.4 million
mainly due
to
a decrease
in mortgage
servicing fees
due to
portfolio
runoff;
partially offset by:
●
higher other
service fees
by $6.5
million due
to
higher credit
and debit
card fee
income by
$7.3 million,
due to
higher
volume of
transactions, higher
investment management
fees by
$3.8 million,
due to
higher assets
under management,
and higher merchant membership fees by $1.2
million, partially offset by lower insurance fees by
$6.5 million;
●
higher
service
charges
on
deposit
accounts
by
$3.7
million
mainly
due
to
higher
non-balance
compensation
fees
in
commercial deposits; and
●
an impairment on equity securities of $2.3
million recognized during 2024.
136
Operating Expenses
Operating
expenses
amounted
to
$495.3
million
for
the
quarter
ended
September
30,
2025,
an
increase
of
$28.0
million
when
compared with the same quarter of 2024. The
variance in operating expenses was mainly driven
by:
●
higher personnel costs by $31.1 million mainly due to higher incentives, including $13.0 million related to the profit-sharing
plan
which is tied to the Corporation’s financial performance and $9.0 million in other performance-based incentives, higher salaries
expense by $3.4 million, due to
a higher headcount and annual merit increases, and a
$3.4 million increase in other personnel
costs mainly
related to
the valuation
of securities
held for
deferred compensation
plans,
higher payroll
taxes, and
employee
termination benefits resulting from ongoing
efforts to improve our
profitability, including the
decision to exit the
U.S. residential
mortgage origination business and close four underperforming
branches in the New York metro area at Popular U.S.;
●
a
non-cash
goodwill
impairment
of
$13.0
million
in
our
U.S.
based
equipment
leasing
subsidiary
due
to
lower
projected
earnings for the forecasted period; and
●
higher processing
and transactional
services expenses
by $4.1
million mainly
due to
higher credit
and debit
card processing
expense as a result of higher transactional volumes;
partially offset by:
●
lower other operating expenses
by $12.9 million mainly
driven by a reversal
in the third
quarter of 2025 of
a $4.8 million claim
reserve established
during the
second quarter
of 2025
and lower
accruals for
reserves for
operational losses
by $4.1
million
mainly related to the mortgage servicing business; and
●
lower equipment expenses by $4.0 million, mainly due to
the elimination of the car rental fleet
depreciation expense, related to
the car rental business sold in 2024.
Operating expenses
amounted to
$1.5 billion
for the
nine months
ended September
30, 2025,
an increase
of $39.1
million when
compared with the same
period of 2024. Excluding the
$6.4 million interest accrued related
to prior period tax
withholdings and the
$14.3
million
impact
of
the
FDIC
Special
Assessment
recorded
in
2024,
total
operating
expenses
for
the
nine
months
ended
September 30,
2025, increased
by $59.7
million, when
compared with
the same
period of
2024. The
main drivers
of the
increase
were:
●
higher personnel costs by $60.4 million mainly due to higher incentives, including $26.0 million related to the profit-sharing
plan
which
is
tied
to
the
Corporation’s
financial
performance
and
$18.3
million
in
other
performance-based
incentives,
higher
salaries expenses
by $9.1
million due
to a
higher headcount
and annual merit
increases and a
$5.7 million
increase in
other
personnel costs mainly related to the valuation of
securities held for deferred compensation plans and
higher payroll taxes;
●
a non-cash goodwill impairment of $13.0 million
in our U.S. based equipment leasing subsidiary
as discussed above;
●
higher other taxes expense by $7.9
million mainly due to higher regulatory fees
and an increase in municipal license tax in
Puerto Rico;
●
higher technology
and software
expenses,
including software
cost amortization,
by $7.8
million related
to investments
in the
Corporation’s cloud infrastructure, among other continuing investments
in technology and transformation initiatives;
●
higher
processing
and
transactional
services
expenses
by
$6.4
million
mainly
due
to
higher
credit
and
debit
card
and
merchant processing expenses as a result of higher
transactional volumes; and
●
higher business
promotion expenses
by $5.3
million mainly
due to
higher customer
rewards programs
expense in
our credit
card business;
partially offset by:
137
●
lower other
operating expenses
by $17.3
million mainly
driven by,
lower accruals
for reserves
for operational
losses by
$9.7
million and lower pension plan cost by $3.3
million due to changes in actuarial assumptions;
●
lower professional fees by $12.6 million mainly due
to lower costs associated with regulatory compliance
activities; and
●
lower equipment expenses by $12.2 million, mainly due to the depreciation of car rental units during 2024 associated with units
sold as part of the daily car rental transaction during
the fourth quarter of 2024.
138
Table 5 - Operating Expenses
Quarters ended September 30,
Nine months ended September 30,
(In thousands)
2025
2024
Variance
2025
2024
Variance
Personnel costs:
Salaries
$
139,350
$
135,983
$
3,367
$
403,052
$
394,001
$
9,051
Commissions, incentives, and other bonuses
35,309
26,350
8,959
113,846
95,587
18,259
Profit sharing
13,000
-
13,000
26,000
-
26,000
Pension, postretirement, and medical insurance
18,749
16,387
2,362
51,773
50,391
1,382
Other personnel costs, including payroll taxes
26,580
23,136
3,444
80,385
74,678
5,707
Total personnel
costs
232,988
201,856
31,132
675,056
614,657
60,399
Net occupancy expenses
26,083
28,031
(1,948)
82,441
83,764
(1,323)
Equipment expenses
5,313
9,349
(4,036)
16,404
28,578
(12,174)
Other taxes
17,967
17,757
210
55,324
47,465
7,859
Professional fees
25,808
26,708
(900)
80,741
93,370
(12,629)
Technology and
software expenses
87,117
88,452
(1,335)
255,481
247,666
7,815
Processing and transactional services:
Credit and debit cards
14,728
11,761
2,967
40,698
37,644
3,054
Other processing and transactional services
23,680
22,559
1,121
73,352
69,966
3,386
Total processing
and transactional services
38,408
34,320
4,088
114,050
107,610
6,440
Communications
4,836
5,229
(393)
14,750
14,143
607
Business promotion:
Rewards and customer loyalty programs
17,656
16,533
1,123
52,068
46,995
5,073
Other business promotion
9,648
9,104
544
25,296
25,080
216
Total business
promotion
27,304
25,637
1,667
77,364
72,075
5,289
Deposit insurance
10,873
10,433
440
30,315
44,901
(14,586)
Other real estate owned (OREO) income
(3,408)
(2,674)
(734)
(10,862)
(13,745)
2,883
Other operating expenses:
Operational losses
1,634
5,769
(4,135)
13,957
21,153
(7,196)
All other
6,980
15,750
(8,770)
39,673
56,140
(16,467)
Total other operating
expenses
8,614
21,519
(12,905)
53,630
77,293
(23,663)
Amortization of intangibles
384
704
(320)
1,366
2,233
(867)
Goodwill impairment
13,000
-
13,000
13,000
-
13,000
Total operating
expenses
$
495,287
$
467,321
$
27,966
$
1,459,060
$
1,420,010
$
39,050
Income Taxes
For the quarter and nine months
ended September 30, 2025, the Corporation recorded an income
tax expense of $36.0 million and
$128.9
million,
respectively,
with an
effective
tax
rate
(“ETR”) of
14.5%
and
17.7%, respectively,
compared to
$42.5 million
and
$138.5 million, respectively, with an ETR of 21.5% and 24.1% for the respective
periods of year 2024.
The lower income tax expense of $6.5 million for
the third quarter, when compared to
the same quarter of 2024, is mainly attributed
to the
higher net
exempt income.
For the
nine-months period
ended September
30, 2025,
the lower
income tax
expense of
$9.6
million
reflects
the
impact
of
the
tax
withholding
expense
of
$22.9
million
recorded
during
the
first
quarter
of
year
2024,
in
connection with intercompany distributions for years
2014-2024, as disclosed in Note 34 to the Consolidated
Financial Statements in
the
2024
Form
10-K,
and
the
benefit of
$5.2 million
related
to
the FDIC
Special
Assessment expense;
excluding this
combined
impact, the adjusted increase of $8.1 million was
due to higher income before tax, net of higher
exempt income.
At September
30, 2025, the
Corporation had a
net deferred tax
asset amounting to
$835.5 million, net
of a
valuation allowance of
$465.0 million. The net
deferred tax asset related
to the U.S. operations
was $238.5 million, net
of a valuation allowance
of $386.9
million.
Upon an
amendment to
the Puerto
Rico internal
revenue code
during the
third quarter
of
2025, the
Corporation elected
to
treat
certain single members
LLCs as disregarded entities,
as allowed by
this amendment, on
its 2024 corporate income
tax return filed
subsequent to the quarter
end in October.
It is expected that
this election will lower
our income tax expense
by approximately $7.7
million during the fourth quarter of 2025.
Refer to
Note 26
to the
Consolidated Financial
Statements for
a reconciliation
of the
statutory income
tax rate
to the
effective tax
rate and additional information on the income
tax expense and deferred tax asset balances.
REPORTABLE SEGMENT RESULTS
The Corporation’s
reportable segments
for managerial
reporting purposes
consist of
Banco Popular
de Puerto
Rico and
Popular
U.S. A Corporate group
has also been defined to support the reportable
segments.
139
For
a
description
of
the
Corporation’s
reportable
segments,
including
additional
financial
information
and
the
underlying
management accounting process, refer to Note 28
to the Consolidated Financial Statements.
The corporate group reported
a net income of
$4.6 million for the
quarter ended September 30,
2025, compared with a
net income
of $0.5 million for the same quarter of
the previous year, mainly due to
higher income from equity method investments.
For the nine
months ended September 30, 2025, the corporate group reported net income of $4.3 million, compared to a net loss of $21.1 million
for
the
same
period
of
the
previous
year.
The
loss
in
2024
was
mainly
attributable
to
the
expense
related
to
the
$22.9
million
adjustment recorded in
the first quarter
of 2024 to
recognize the tax
impact associated with
prior period intercompany
distributions
and
the
additional
$6.5
million
expense
for
the
tax
impact
of
intercompany
distributions
paid
during
the
first
quarter
of
2024.
A
positive adjustment
of $3.9
million was
recorded during
the second
quarter of
2025, resulting
from reimbursements
received from
the IRS
related to
interest paid
for these
intercompany distributions.
There were
no intercompany
distributions between
the U.S.
subsidiaries and
the
bank holding
companies during
2025. Higher
income from
equity method
investments and
lower expenses,
driven by
professional services, also
contributed to the
positive variance for
the nine months,
partially offset by
lower income from
money market investments due to a decrease in rates.
Highlights on the earnings results for the reportable
segments are discussed below:
Banco Popular de Puerto Rico
The Banco Popular
de Puerto Rico
reportable segment’s net
income amounted to
$189.0 million for
the quarter ended
September
30, 2025, compared with a net income of $125.8 million for the same
quarter of the previous year. The factors that contributed to the
variance in the financial results included the following:
●
net interest
income of $550.7
million was higher
by $62.7
million primarily driven
by lower interest
expense on deposits,
mainly from the
re-pricing of P.R.
public funds which are
market-linked,
higher income from U.S.
Treasury securities with
higher yields and higher income from the loan portfolio driven by loan growth, partially offset by
lower income from money
market investments
due to
decline in
short-term market
rates. The
net interest
margin for
the quarter
ended September
30, 2025 was
3.71%, an increase
of 30
basis points, compared
to 3.41% for
the same quarter
in the previous
year. The
increase in
the margin
was mainly
impacted by
lower deposit
costs and
higher yield
from investment
securities, as
well
loan growth,
partially offset by lower rates on money market investments;
●
the provision for
loan losses of
$72.7 million was
lower by $4.5
million mainly driven by
lower reserves for the
consumer
loan
portfolios
due
to
improvements in
credit
quality,
partially
offset
by
a
higher
provision
in
the
commercial
portfolio,
mainly attributable to reserves for two unrelated exposures with an aggregate balance of 188.4 million, which entered into
NPL status during the third quarter of 2025;
●
higher non-interest income by $1.6 million mainly due to higher service fees by $2.7 million mainly due to higher debit and
credit fees due to higher
volume of transactions and higher assets
under management, the income of $5.3 million
related
to a retroactive charge billed to a tenant for energy supplied in prior years, partially offset by lower daily car rental revenue
by $5.0 million
and gains from
the sale of
car rental units
by $1.4 million,
associated with the
car rental business
sold in
the fourth quarter of 2024;
●
higher operating expenses by $9.2
million mostly due to higher
personnel costs by $21.0 million, mainly
due to the profit-
sharing
expense
accrual
and
other
performance-related
incentives,
and
higher
processing
and
transactional
fees
expenses by
$4.0 million,
offset by
lower operational
losses by
$6.2 million,
mainly related
to mortgage
servicing, lower
occupancy
expense
by
$4.3
million
driven
by
a
favorable
reassessment
of
the
real
property
tax
estimate
for
certain
properties in
Puerto Rico,
and lower
equipment expenses
by $3.7
million mainly
related to
the daily
car rental
business
sold in the fourth quarter of 2024; and
●
lower income tax expense by $4.0 million due
mainly to higher exempt income.
140
For
the
nine months
ended September
30,
2025, the
BPPR segment
recorded net
income
of
$539.5 million
compared
to
a
net
income of $404.3 million for the same period of the previous year. The factors that contributed to the variance in the financial results
included the following:
●
net interest
income of
$1.6
billion was
higher by
$161.5 million
primarily driven
by lower
interest expense
on deposits,
mainly from the re-pricing of P.R.
public funds, higher income from investment securities,
mainly U.S. Treasury securities,
and higher
income from
loans due
to portfolio
growth, partially
offset by
lower income
from money
market investments
reflecting the decline in short-term market rates. The
net interest margin for the nine months
ending September 30, 2025,
was 3.66%, 28 basis
points higher when compared
with 3.38% for the same
period of the previous
year. The
increase in
the
margin
was
mainly
impacted
by
lower
cost
of
deposits,
mainly
P.R.
public
deposits,
higher
yield
from
investment
securities and
loan growth,
partially offset
by lower
rates from
money market
investments and
lower balances
as funds
are deployed for loan growth and purchasing U.S.
Treasury securities;
●
the
provision for
loan
losses
of
$168.6
million
was
lower
by
$18.2
million
mainly
attributable to
improvement in
credit
quality for the
credit cards portfolios,
lower balance of
personal loans and
lower reserves in
the leases portfolio,
partially
offset
by
an
increase
in
the
provision
expense
for
the
mortgage
portfolio,
driven
by
lower
net
recoveries,
changes
in
macroeconomic forecasts, and changes in credit quality;
●
lower non-interest
income by
$13.3 million
mainly due
to lower
daily car
rental revenue
by $14.9
million and
gains from
the
sale
of
car
rental
units
by
$7.7
million
associated
with
the
car
rental
business sold
in
the
fourth
quarter
of
2024,
partially offset by the above mentioned retroactive
income of $5.3 million, higher service fees by
$4.1 million due to credit
and debit card income,
from higher volume of
transactions and, higher investment management fees
and higher charges
on deposit accounts by $3.3 million mainly due
to non-balance compensation in commercial deposits;
●
higher operating expenses by $28.3 million
mostly due to higher personnel costs
by $38.3 million, including profit sharing
expense
by
$21.2
million
and
higher
salaries
expense
by
$15.5
million
due
to
annual
merit
increases
and
a
higher
headcount, higher regulatory
examination fees, municipal
license tax and
higher technology expenses,
partially offset by
lower equipment
expenses related
to
the daily
rental business
sold
and
lower FDIC
expense due
to
the FDIC
Special
Assessment recorded in 2024; and
●
higher income tax expense by $4.0 million mainly
due to higher income before tax, net of higher
tax exempt income.
Popular U.S.
For the quarter ended September 30, 2025, the reportable
segment of Popular U.S. reported a net income
of $17.8 million,
compared with a net income of $28.8 million
for the same quarter of the previous year. The factors that contributed
to the variance in
the financial results included the following:
●
net interest income of $105.2 million, higher
by $12.1 million due to higher income from
loans by $16.5 million, mainly
from growth in the commercial and construction portfolios,
and lower cost of deposits by $9.3 million due
to the repricing
of high-cost deposits, partially offset by lower income
from money market investments due to lower average
balances and
lower yields reflecting the decrease in short-term
rates. The net interest margin for the quarter
ended September 30, 2025
was 2.94% compared to 2.73% for the same quarter
in the previous year driven by lower
cost of deposits;
●
the provision for loan losses was $1.9 million,
reflecting a higher provision for the commercial
portfolio, offset by lower
provision for the consumer portfolio, compared to a release
of $6.1 million in 2024, which was mainly
related to
improvements in commercial credit quality;
●
higher operating expenses by $19.0 million, reflecting
the goodwill impairment charge related to our U.S.
based
equipment leasing subsidiary of $13.0 million recorded
during the third quarter of 2025, higher personnel
costs driven by
incentives and profit sharing; and higher occupancy
expense; and
141
●
lower income tax expense by $3.7 million due
to lower income before tax.
For the nine months ended September 30, 2025,
the reportable segment of Popular U.S. recorded
net income of $55.2 million,
compared with net income of $53.6 million for
the same period of the previous year. The factors that contributed to
the variance in
the financial results included the following:
●
higher net interest income by $36.5 million
due to higher income from the loans portfolio
mainly related to growth in the
commercial and construction portfolios and lower interest
expense from deposits, due to the repricing of
high-cost
deposits mentioned above, partially offset by lower income
from money market investments due to decline in
short-term
market rates. The net interest margin for the nine
months ended September 30, 2025 was 2.87%
compared to 2.64% for
the same period of the previous year driven by
lower cost of deposits;
●
the provision for loan losses of $20.8 million was
higher by $18.2 million driven by higher
qualitative reserves and
changes in credit quality for the commercial real estate
portfolio, partially offset by lower reserves for
the consumer loans;
●
higher operating expenses by $17.4 million reflecting
the goodwill impairment charge related to our U.S.
based equipment
leasing subsidiary of $13.0 million recorded in 2025;
and higher personnel costs and consulting fees;
offset by lower FDIC
expense due to FDIC Special Assessment recorded
in 2024 and lower professional fees; and
●
higher income tax expense by $0.8 million due
to higher income before tax.
STATEMENT
OF FINANCIAL CONDITION ANALYSIS
Assets
The
Corporation’s total
assets were
$75.1
billion at
September 30,
2025, compared
to
$73.0 billion
at
December 31,
2024. The
variance in
total assets
of $2.1
billion was
driven by
an increase
in AFS
securities and
loan growth
across most
portfolios at
both
BPPR and PB segments,
partially offset by a decrease in money market investments, HTM securities,
and other assets. Refer to the
Consolidated Statements of Financial Condition included
in this report and to the following narrative
for additional information.
Money market investments and investment securities
Money market investments decreased by
$1.6 billion as of
September 30, 2025, when
compared to December 31,
2024, driven by
funds used for loan growth and to purchase U.S. Treasury securities.
AFS securities increased $2.4 billion, mainly due to investment
in
U.S.
Treasury
securities
and
the
decrease
in
the
unrealized
losses
of
AFS
securities
of
$338.6
million,
partially
offset
by
maturities
and
principal
paydowns.
HTM
securities
decreased
by
$324.9
million
driven
by
maturities
and
principal
paydowns,
partially offset
by the
amortization of
$138.7 million
of the
discount related
to U.S.
Treasury securities
previously reclassified from
the AFS to
HTM.
Refer to Note
5 and to
Note 6 to
the Consolidated Financial Statements
for additional information
with respect to
the Corporation’s debt securities available-for-sale and held-to-maturity.
142
Loans
Refer to Table
6 for a
breakdown of the Corporation’s
loan portfolio. Also, refer
to Note 7 in
the Consolidated Financial Statements
for detailed information about the Corporation’s loan portfolio
composition and loan purchases and sales.
Loans held-in-portfolio
increased by
$1.6
billion to
$38.7 billion
at September
30, 2025,
compared to
December 31,
2024. In
the
BPPR
segment
loan
balances increased
by
$982.8
million
across most
portfolios, most
notably in
the
commercial, construction,
mortgage, auto
loans and leasing
portfolios. Commercial loans
included
the origination
of a
$265.0 million commercial
loan during
the second
quarter of
2025, which
represents the
Corporation’s portion
of a
$425.0 million
issuance in
which BPPR
acted as
the
lead bank
and administrative
agent.
Origination activity
supported the
growth in
the mortgage,
auto loans,
and leasing
portfolios,
despite the uncertainty about the
economic outlook which may continue
to have an impact
on customer behavior.
The PB segment
also increased
by $596.7 million, mainly driven by commercial and
construction lending.
At September
30, 2025,
the Corporation’s
loans to
non-depository financial
institutions (‘’NDFIs’’)
amounted to
$443.6 million,
an
increase of $48.8 million,
compared to December 31,
2024. The increase was
mainly related to a
loan to an insurance
company in
Puerto
Rico
for
general
corporate
purposes,
offset
by
a
decrease
in
other
exposures,
mainly
to
consumer
intermediaries.
At
September 30, 2025, the
Corporation’s exposure to NDFIs
was composed of approximately $272.4
million to insurance companies
for
general corporate
purposes
unrelated to
lending activities,
$85.6 million
related
to
mortgage credit
intermediaries, and
$85.6
million to consumer
and commercial credit
intermediaries. All loans
to NDFIs are
current in their
contractual payments and
carry a
‘pass’ rating.
143
Table 6 - Loans Ending Balances
(In thousands)
September 30, 2025
December 31, 2024
Variance
Loans held-in-portfolio:
Commercial
Commercial multi-family
$
2,489,589
$
2,399,620
$
89,969
Commercial real estate non-owner occupied
5,462,580
5,363,235
99,345
Commercial real estate owner occupied
3,090,724
3,157,746
(67,022)
Commercial and industrial
8,245,639
7,741,562
504,077
Total Commercial
19,288,532
18,662,163
626,369
Construction
1,604,612
1,263,792
340,820
Mortgage
8,558,408
8,114,183
444,225
Leasing
1,998,651
1,925,405
73,246
Consumer
Credit cards
1,225,567
1,218,079
7,488
Home equity lines of credit
78,890
73,571
5,319
Personal
1,900,325
1,855,244
45,081
Auto
3,850,953
3,823,437
27,516
Other
181,220
171,778
9,442
Total Consumer
7,236,955
7,142,109
94,846
Total loans held-in
-portfolio
$
38,687,158
$
37,107,652
$
1,579,506
Loans held-for-sale:
Mortgage
$
7,783
$
5,423
$
2,360
Total loans held-for-sale
$
7,783
$
5,423
$
2,360
Total loans
$
38,694,941
$
37,113,075
$
1,581,866
144
Other assets
Other
assets
amounted
to
$1.7
billion
at
September
30,
2025,
a
decrease
of
$52.9
million
when
compared
to
$1.8
billion
at
December 31,
2024. The
variance was
mainly driven
by a
decrease in
net deferred
tax assets
of $89.0
million due
to a
positive
variance
in
the
valuation
of
AFS
securities,
a
reduction
in
unsettled
trade
receivables
of
$13.8
million
related
to
proceeds
from
maturities of U.S. Treasury securities,
and lower principal, interest and escrow servicing advances of $12.6 million, partially offset by
an increase in capitalized software
costs of $45.8 million
mainly related to technology modernization,
higher prepaid taxes of
$11.5
million, and higher trades receivable from brokers and counterparties of
$9.1 million. Refer to Note 10 to
the Consolidated Financial
Statements for a breakdown
of the principal categories
that comprise the caption
of “Other Assets” in
the Consolidated Statements
of Financial Condition at September 30, 2025 and December
31, 2024.
Liabilities
The Corporation’s total liabilities were $69.0 billion at September 30, 2025, an increase of $1.5 billion, when compared to December
31, 2024. The following is a discussion of
the significant changes in liabilities.
Deposits and Borrowings
Total Deposits
The Corporation’s
deposits totaled
$66.5 billion
as of
September 30,
2025, compared
to
$64.9 billion
as
of
December 31,
2024.
Ending
deposit
balances
increased
by
$1.6
billion,
while
average
quarterly
balances
grew
by
$2.9
billion.
The
average
deposit
balance, excluding
P.R.
public deposits,
increased by
$1.5
billion. Non-interest-bearing
deposits remained
flat when
compared to
December 31, 2024, demonstrating the impact of the Corporation’s
continued focus on deposit retention strategies.
At the end of the
third quarter of 2025, Puerto Rico public deposits were $20.1 billion, an increase of $612.7 million when compared to
December 31,
2024. P.R
public deposits
represent 30%
of total
deposits and
are expected
to continue
to
range in
the short
term
between $18
billion
and
$20
billion.
However,
the
rate
at
which
public
deposit balances
may
change
is
uncertain and
difficult
to
predict.
The
amount and timing of any such change is likely to be impacted by,
for example, the level of federal assistance and speed at which it
is
distributed,
the
use
of
local
funds
to
cover
federal
assistance
programs
during
the
U.S.
government
shutdown,
the
financial
condition, liquidity and cash management practices of the Puerto Rico Government and its instrumentalities,
and the implementation
of
fiscal
and
debt
adjustment
plans
approved
pursuant
to
PROMESA
or
other
actions
mandated
by
the
Fiscal
Oversight
and
Management Board for Puerto Rico (the “Oversight Board”). Additionally, the Trump
Administration is conducting a review of federal
funding, which could entail
a reduction in federal
funding available for Puerto
Rico. P.R
public deposits costs are
generally indexed
to changes in short-term market rates with a
one-quarter lag, in accordance with contractual
terms. As a result, these deposits’ costs
have typically lagged variable asset repricing. These deposits require
that the bank pledge high credit quality securities as collateral;
therefore, liquidity risks arising from deposit outflows
are lower.
At BPPR,
excluding Puerto
Rico public
deposits, ending
deposits increased
by $178
million, while
at PB
segment ending
deposit
balances increased by $616 million, net of intercompany
activity.
The volume and cost of P.R.
public deposits and the proportion of high-cost deposits in the U.S, directly impact the balance and mix
of earning assets and therefore represent a key
factor in the Corporation’s ability to expand its net
interest margin.
Refer to Table 7 for a breakdown of the Corporation’s deposits at September 30, 2025 and
December 31, 2024.
145
Table 7 - Deposits Ending Balances
(In thousands)
September 30, 2025
December 31, 2024
Variance
Deposits excluding P.R.
public deposits:
Demand deposits
$
14,874,026
$
15,139,555
$
(265,529)
Savings, NOW and money market deposits (non-brokered)
21,739,958
21,177,506
562,452
Savings, NOW and money market deposits (brokered)
883,471
736,225
147,246
Time deposits (non-brokered)
8,014,080
7,476,924
537,156
Time deposits (brokered CDs)
925,761
890,704
35,057
Sub-total deposits excluding P.R.
public deposits
46,437,296
45,420,914
1,016,382
P.R. public
deposits:
Demand deposits
[1]
12,487,246
11,730,273
756,973
Savings, NOW and money market deposits (non-brokered)
6,907,309
7,087,904
(180,595)
Time deposits (non-brokered)
681,553
645,254
36,299
Sub-total P.R.
public deposits
20,076,108
19,463,431
612,677
Total deposits
$
66,513,404
$
64,884,345
$
1,629,059
[1] Includes interest bearing demand deposits.
Borrowings
The Corporation’s borrowings totaled $1.2
billion at September 30, 2025
an increase of $70.7 million
when compared to December
31,
2024.
The
increase
was
mainly
related
to
higher
FHLB
advances
by
$67.6
million,
mainly
at
PB.
Refer
to
Note
13
to
the
Consolidated Financial
Statements for
detailed information
on the
Corporation’s borrowings.
Also, refer
to the
Liquidity section
in
this MD&A for additional information on the Corporation’s
funding sources.
Stockholders’ Equity
Stockholders’ equity
totaled $6.1
billion
at September
30, 2025,
an increase
of
$502.6 million
when compared
to
December 31,
2024. The increase was principally due to net income
for the nine months ended September 30, 2025 of $599.3
million, coupled with
the after-tax effect of the decrease in net unrealized losses in the portfolio of AFS securities
of $283.4 million and the amortization of
unrealized losses from securities previously reclassified to
HTM of $
111
.0 million, partially offset by
an increase in treasury stock of
$346.0 million, mainly due to common stock repurchases and the common and preferred dividends declared of $147.7
million. Refer
to the Consolidated Statements of Financial Condition, Comprehensive Income and Changes in Stockholders’ Equity for information
on the composition of stockholders’ equity.
During
the
quarter
and
nine
months
ended
September
30,
2025,
Popular
repurchased
1,000,862
shares
of
common
stock
for
$119.4
million at
an average
price of
$119.33
per share
and 3,407,821
shares of
common stock
for $353.7
million at
an average
price of
$103.78 per share
respectively, as
part of the
2024 and 2025
common stock repurchase
programs previously announced.
As of September 30, 2025, $429.0 million remained
available for stock repurchase under the active
repurchase authorization.
During
the
third
quarter
of
2025,
the
Corporation
declared
a
common
stock
dividend
of
$0.75
per
share,
an
increase
from
the
common stock dividend of $0.70 per share.
The composition of the Corporation’s financing to total assets
at September 30, 2025 and December 31,
2024 is included in Table 8.
146
Table 8 - Financing to Total
Assets
September 30,
December 31,
% (decrease) increase
% of total assets
(Dollars in millions)
2025
2024
from 2024 to 2025
2025
2024
Non-interest-bearing core deposits
$
14,874
$
15,139
(1.8)
%
19.8
%
20.7
%
Interest-bearing core deposits
46,020
44,622
3.1
61.3
61.1
Interest-bearing other deposits
5,619
5,123
9.7
7.5
7.0
Repurchase agreements
57
55
3.6
0.1
0.1
Other short-term borrowings
400
225
77.8
0.5
0.3
Notes payable
790
896
(11.8)
1.1
1.2
Other liabilities
1,190
1,372
(13.3)
1.6
1.9
Stockholders’ equity
6,116
5,613
9.0
8.1
7.7
147
CAPITAL
Regulatory Capital
The Corporation, BPPR and PB
are subject to regulatory capital
requirements established by the Federal Reserve Board.
The risk-
based
capital
standards
applicable
to
the
Corporation,
BPPR
and
PB
(“Basel
III
capital
rules”)
are
based
on
the
final
capital
framework for strengthening international capital standards, known
as Basel III, of the Basel Committee on Banking Supervision.
As
of September 30,
2025, the Corporation’s,
BPPR’s and PB’s
capital ratios continue
to exceed the
minimum requirements for being
“well-capitalized”.
The risk-based
capital ratios
presented in
Table
9,
which include
common equity
tier 1,
Tier
1 capital,
total capital
and leverage
capital as of September 30, 2025 and December
31, 2024.
Table 9 - Capital Adequacy
Data
(Dollars in thousands)
September 30, 2025
December 31, 2024
Common equity tier 1 capital:
Common stockholders' equity - U.S. GAAP basis
$
6,093,529
$
5,590,923
CECL transitional amount
[1]
-
42,375
AOCI related adjustments due to opt-out election
1,191,224
1,589,875
Goodwill, net of associated deferred tax liability (DTL)
(641,809)
(657,181)
Intangible assets, net of associated DTLs
(5,460)
(6,826)
Deferred tax assets and other deductions
(223,648)
(296,374)
Common equity tier 1 capital
$
6,413,836
$
6,262,792
Additional tier 1 capital:
Preferred stock
22,143
22,143
Additional tier 1 capital
$
22,143
$
22,143
Tier 1 capital
$
6,435,979
$
6,284,935
Tier 2 capital:
Trust preferred securities subject to phase in as
tier 2
192,674
192,674
Other inclusions (deductions), net
511,230
490,594
Tier 2 capital
$
703,904
$
683,268
Total risk-based capital
$
7,139,883
$
6,968,203
Minimum total capital requirement to be well capitalized
$
4,062,200
$
3,907,346
Excess total capital over minimum well capitalized
$
3,077,683
$
3,060,857
Total risk-weighted
assets
$
40,621,998
$
39,073,462
Total assets for leverage
ratio
$
75,897,616
$
72,593,464
Risk-based capital ratios:
Common equity tier 1 capital
15.79
%
16.03
%
Tier 1 capital
15.84
16.08
Total capital
17.58
17.83
Tier 1 leverage
8.48
8.66
[1] The CECL transitional amount includes the impact
of Popular's adoption of the new CECL accounting standard
on January 1, 2020.
148
The Basel
III capital rules
provide that a
depository institution is
deemed to be
well capitalized if
it maintains a
leverage ratio of
at
least 5%,
a common equity
Tier 1
ratio of
at least 6.5%,
a Tier
1 capital ratio
of at least
8% and a
total risk-based
ratio of at
least
10%.
The
Corporation,
BPPR
and
PB
leverage
ratio,
common
equity
Tier
1
ratio
and
Tier
1
capital
ratio,
respectively
as
of
September 30, 2025, continue to exceed the minimum
requirements for being “well-capitalized” under
the Basel III capital rules.
Pursuant
to
the
adoption
of
the
CECL
accounting
standard
on
January
1,
2020,
the
Corporation
elected
to
use
the
five-year
transition
period option
as
provided in
the
final
interim
regulatory capital
rules effective
March 31,
2020.
The
five-year
transition
period provision delayed for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period
to phase out
the aggregate amount of
the capital benefit provided
during the initial two-year
delay. During
the first quarter
of 2025,
the Corporation phased-in all the cumulative CECL
deferral over the three-year transition period.
The decrease in the common equity Tier
I capital ratio, Tier
I capital ratio, total capital ratio,
and leverage ratio as of September 30,
2025 as compared to December 31, 2024 was mainly due to the repurchase of common stock, common stock dividends,
and higher
risk
weighted
assets
driven
by
the
increase
in
loans
held-in-portfolio
and
higher
non-performing
loans
held-in-portfolio,
partially
offset by the nine-month period’s earnings.
Reconciliation to Tangible Common Equity and Tangible Assets
Table
10 provides
a reconciliation of
total stockholders’ equity
to tangible common
equity and total
assets to tangible
assets as
of
September 30, 2025, and December 31, 2024.
149
Table 10 - Reconciliation
of Tangible Common Equity
and Tangible Assets
(In thousands, except share or per share information)
September 30, 2025
December 31, 2024
Total stockholders’
equity
$
6,115,672
$
5,613,066
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,460)
(6,826)
Total tangible common
equity
$
5,298,115
$
4,781,143
Total assets
$
75,065,798
$
73,045,383
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,460)
(6,826)
Total tangible assets
$
74,270,384
$
72,235,603
Tangible common
equity to tangible assets
7.13
%
6.62
%
Common shares outstanding at end of period
66,959,866
70,141,291
Tangible book value
per common share
$
79.12
$
68.16
Quarterly average
Total stockholders’
equity [1]
$
6,943,541
$
6,620,766
Average unrealized (gains) losses on AFS securities
transferred to HTM
296,934
505,791
Adjusted total stockholder's equity
7,240,475
7,126,557
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(802,812)
(804,411)
Less: Other intangibles
(5,714)
(7,288)
Total tangible common
equity
$
6,409,806
$
6,292,715
Return on average tangible common equity
13.06
%
11.22
%
[1] Average balances exclude unrealized gains or
losses on debt securities available-for-sale.
150
RISK MANAGEMENT
Market / Interest Rate Risk
The Corporation’s assets that are mainly subject to market valuation risk are debt securities classified as available-for-sale. Refer to
Notes 5 and 6 to
the Consolidated Financial Statements for further information on
the debt securities available-for-sale and held-to-
maturity portfolios.
Debt securities
classified as
available-for-sale and
held-to-maturity amounted
to
$20.7 billion
and
$7.4 billion,
respectively,
as of September
30, 2025. Other
assets subject to
market risk include
mortgage servicing rights
("MSRs") with a
fair
value of $99.5 million as of September 30, 2025.
Interest Rate Risk (“IRR”)
The Corporation’s net interest income is subject
to various categories of interest rate risk,
including repricing, basis, yield curve and
option risks.
In managing
interest rate
risk, management may
alter the
mix of
floating and
fixed rate
assets and
liabilities, change
pricing
schedules,
adjust
maturities
through
sales
and
purchases
of
investment
securities,
and
enter
into
derivative
contracts,
among other alternatives.
Management utilizes various tools to assess IRR, including Net Interest
Income (“NII”) simulation modeling, static gap analysis, and
Economic Value of Equity (“EVE”) to monitor the risk arising from the dynamic characteristics of assets and liabilities subject to
IRR.
The
three
methodologies complement
each
other
and
are
used jointly
in
the
evaluation of
the
Corporation’s IRR.
NII simulation
modeling, by legal entity and on a consolidated basis, is prepared for a five-year period, which in conjunction
with the EVE analysis,
provides management a better view of long-term
IRR.
The Corporation processes NII
simulations under interest rate
scenarios in which the
yield curve is assumed
to rise and
decline by
the same magnitude
(parallel shifts). The
rate scenarios considered in
these market risk
simulations include instantaneous parallel
changes of
-100,
-200, +100,
and +200
basis points
during the
succeeding twelve-month
period. Assumptions
included in
these
analyses
include
that
the
balance
sheet
remains
flat,
relative
levels
of
market
interest
rates
across
all
yield
curve
points
and
indexes, interest rate spreads, loan
prepayments and deposit elasticity.
Thus, they should not be
relied upon as indicative of
actual
results
and
do
not
contemplate
actions
that
management
may
engage
in
as
a
response
to
future
changes
in
interest
rates.
Additionally,
the Corporation
is also
subject to
the risk
inherent in
the use
of different
rate indexes
for the
repricing of
assets and
liabilities, as well the
risk of pricing lags
due to contractual or
timing differences between the
market and management response
to
changes
in
the
rate
environment.
These
forward-looking
computations
are
management’s
best
estimate
based
on
known
and
available information and actual results may differ.
The
following
table
presents
the
results
of
the
simulations
at
September
30,
2025
and
December
31,
2024,
assuming
a
static
balance sheet and parallel changes over flat spot rates
over a one-year time horizon:
151
Table 11
- Net Interest Income Sensitivity (One Year
Projection)
September 30, 2025
December 31, 2024
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
(10,760)
(0.41)
44,747
1.78
+100 basis points
(6,125)
(0.23)
22,917
0.91
-100 basis points
2,953
0.11
9,157
0.36
-200 basis points
17,319
0.66
588
0.02
As
of
September
30,
2025,
NII
simulations
showed
a
shift
in
the
Corporation’s
sensitivity
position
to
become
liability
sensitive.
Compared to the results as of December 31, 2024, the variation in sensitivity and the resulting profile was mainly due to an increase
in asset
duration driven
by the
extension of
U.S. Treasury
Notes and
a decline
in U.S.
Treasury Bills
and excess
reserves at
the
FRB as
part of
a decision
to reduce
sensitivity to
declining rate
scenarios. In
rising rate
scenarios, Popular’s
net interest
income
would decrease
due to
the lower
volume of
short-term assets
as a
result of
the investment
portfolio extension strategy
combined
with higher deposits costs due to BPPR’s large proportion of market-linked Puerto
Rico public sector deposits, this would be partially
offset by
variable rate
loan repricing
and intermediate
maturity assets
coming due
within one
year.
Changes in
the balance
sheet
during the quarter
that contributed to
the variance in
sensitivity include the
purchase of $2.5
billion in U.S.
Treasury Notes
with an
average maturity of approximately 1.4 years, in addition
to higher fixed rate loan balances.
The
Corporation’s
loan
and
investment
portfolios
are
subject
to
prepayment
risk.
Prepayment
risk
also
could
have
a
significant
impact on the duration of mortgage-backed securities
and collateralized mortgage obligations.
Trading
The Corporation
engages in
trading activities
in the
ordinary course
of business
at its
subsidiaries, BPPR
and Popular
Securities.
Popular Securities’
trading activities
consist primarily
of market-making
activities to
meet expected
customers’ needs
related to
its
retail brokerage business, and purchases and sales of
U.S. Government and government sponsored securities with the objective of
realizing gains
from expected
short-term price
movements. BPPR’s
trading activities consist
primarily of
holding U.S.
Government
sponsored
mortgage-backed
securities
and
economic
hedges
of
the
related
market
risk
with
“TBA”
(to-be-announced)
market
transactions. In
addition, BPPR
uses forward
contracts or
TBAs that
have characteristics
similar to
that of
the forecasted
security
and its conversion timeline to hedge its securitization
pipeline.
At
September
30,
2025,
the
Corporation
held
trading
securities
with
a
fair
value
of
$33.1
million,
representing
0.04%
of
the
Corporation’s
total
assets,
compared
with
$32.8
million
and
0.05%,
respectively,
at
December
31,
2024.
The
trading
portfolio
consists
principally of
investment grade
securities
such
as mortgage-backed
securities
of
$24.3
million with
a
weighted average
yield of 5.23% and U.S. Treasuries
of $8.0 million with a weighted average
yield of 2.57% at September 30, 2025
and $29.1 million
with a yield of 5.54% and $2.8 million with a
yield of 3.28%, respectively, as of December 31, 2024.
The Corporation’s trading activities are
limited by internal policies. For each
of the two subsidiaries, the
market risk assumed under
trading
activities
is
measured
by
the
5-day
net
value-at-risk
(“VAR”),
with
a
confidence
level
of
99%.
The
VAR
measures
the
maximum estimated loss that may occur over a
5-day holding period, given a 99% probability.
The
Corporation’s
trading
portfolio had
a
5-day
VAR
of
$0.4
million
for
the
last
week
of
September 2025.
VAR
models
include
assumptions and
estimates
thus actual
results could
differ from
the outputs
from these
models and
assumptions. Back-testing
is
performed
on
model
results
to
compare
actual
results
against
maximum
estimated
losses,
in
order
to
evaluate
model
and
assumptions accuracy.
In the opinion of management, the size and composition
of the trading portfolio does not represent
a significant source of market risk
for the Corporation.
152
Liquidity
Liquidity Risk Management Process
The Corporation
has adopted
policies and
limits to
monitor the
Corporation’s liquidity
position and
that of
its banking
subsidiaries.
Refer to
the Enterprise
Risk Management
section of
Management’s Discussion
and Analysis
included in
the 2024
Form 10-K
for
information on the framework
in place to monitor,
review, and approve
policies to measure, limit and
manage funding activities and
strategies
impacting
liquidity
risk.
Additionally,
contingency
funding
plans
are
used
to
model
various
stress
events
of
different
magnitudes that
affect different
time horizons,
to assist
management in
evaluating the
size of
the liquidity
buffers needed
if those
events occur. However,
such models may not predict
accurately how the market and customers
might react to every
event and are
dependent on
many assumptions.
The objective
of effective
liquidity management
is to
ensure that
the Corporation
has sufficient
liquidity
to
meet
all
its
financial
obligations,
finance
expected
future
growth,
fund
planned
capital
distributions
and
maintain
a
reasonable safety margin for cash needs under both
normal and stressed market conditions.
Sources of Liquidity
Deposits, including
customer deposits,
brokered deposits
and public
funds deposits,
continue to
be the
most significant
source of
funds for the Corporation, representing
89% of funding of the
Corporation’s total assets at September 30,
2025 and December 31,
2024. The ratio
of total ending
loans to deposits
was 58% and
57% at September
30, 2025 and
December 31, 2024, respectively.
In addition to traditional deposits, the Corporation
maintains borrowing arrangements, which amounted to $1.2 billion
in outstanding
balances
at
September
30,
2025
(December
31,
2024
-
$1.2
billion).
A
detailed
description
of
the
Corporation’s
borrowings,
including their terms,
is included in
Note 13
to the
Consolidated Financial Statements.
Also, the
Consolidated Statements of
Cash
Flows in the accompanying Consolidated Financial
Statements provide information on the Corporation’s cash
inflows and outflows.
The
following
sections
provide
further
information
on
the
Corporation’s
major
funding
activities
and
needs,
as
well
as
the
risks
involved in these activities.
Banking Subsidiaries
Primary
sources of
funding
for the
Corporation’s
banking subsidiaries
(BPPR and
PB
or,
collectively,
“the banking
subsidiaries”)
include
retail,
commercial
and
public
sector
deposits,
brokered
deposits,
unpledged
investment
securities,
mortgage
loan
securitization and, to a lesser extent, loan sales. In
addition, the Corporation maintains borrowing facilities with the FHLB and at the
discount window
of the
Federal Reserve
Bank of
New York
(the “FRB”)
and has
a considerable
amount of
collateral pledged
that
can be used to raise funds under these facilities.
During the second quarter of 2025, BPPR was able to increase its available
liquidity by approximately $2.9 billion after the merger of
Popular Auto, LLC with
and into BPPR, effective
on May 1,
2025, that allowed BPPR
to pledge auto loans
and leases as collateral
under the federal reserve’s
discount window. At
September 30, 2025, the
Corporation’s available liquidity increased to
$25.8 billion
from $21.6
billion on
December 31, 2024.
During the third
quarter of
2025, the
Corporation had no
material incremental use
of its
available liquidity sources. The liquidity sources of
the Corporation at September 30, 2025 are
presented in Table 12 below:
153
Table 12 - Liquidity Sources
September 30, 2025
December 31, 2024
(In thousands)
BPPR
Popular U.S.
Total
BPPR
Popular U.S.
Total
Unpledged securities and unused funding
sources:
Money market (excess funds at the
Federal Reserve Bank)
$
3,719,430
$
1,024,811
$
4,744,241
$
4,882,358
$
1,488,857
$
6,371,215
Unpledged securities
4,658,303
1,010,386
5,668,689
3,806,066
522,869
4,328,935
FHLB borrowing capacity
3,134,633
1,023,693
4,158,326
2,777,090
1,058,921
3,836,011
Discount window of the Federal Reserve
Bank borrowing capacity
7,833,348
3,375,793
11,209,141
4,839,388
2,178,646
7,018,034
Total available liquidity
$
19,345,714
$
6,434,683
$
25,780,397
$
16,304,902
$
5,249,293
$
21,554,195
Refer
to
Note
13
to
the
Consolidated
Financial
Statements
for
additional
information
of
the
Corporation’s
borrowing
facilities
available through its banking subsidiaries.
The principal
uses of
funds for
the banking
subsidiaries include
loan originations,
investment portfolio
purchases, loan
purchases
and repurchases, repayment of outstanding obligations (including deposits), advances on certain serviced portfolios and operational
expenses. Also, the
banking subsidiaries assume liquidity
risk related to collateral
posting requirements for certain
activities mainly
in
connection
with
contractual
commitments,
recourse
provisions,
servicing
advances,
derivatives
and
credit
card
licensing
agreements.
The banking
subsidiaries maintain
sufficient funding
capacity to
address large
increases in
funding requirements
such as
deposit
outflows.
The
Corporation has
established
liquidity
guidelines
that
require
the
banking
subsidiaries
to
have
sufficient
liquidity
to
cover all short-term borrowings and a portion of deposits.
Deposits are
a key
source of
funding. Refer
to Table
7 for
a breakdown
of deposits
by major
types. Core
deposits are
generated
from a large base of consumer, corporate and public sector customers. Core deposits
include certificates
of deposit under $250,000,
all
interest-bearing
transactional
deposit
accounts,
non-interest-bearing
deposits,
and
savings
deposits.
Core
deposits
exclude
brokered
deposits
and
certificates
of
deposit
over
$250,000.
Core
deposits,
excluding
P.R.
public
funds,
which
are
fully
collateralized, have
historically provided
the Corporation
with a
sizable source
of relatively
stable and
low-cost funds.
P.R.
public
funds, while
linked to market
interest rates,
provide a stable
source of funding
with an
attractive earning spread.
As of
September
30, 2025, total Puerto Rico public sector deposits were
$20.1 billion, compared to $19.5 billion at December
31, 2024.
Core deposits represent 92%
of total deposits at
$60.9 billion, as of
September 30, 2025, compared with
92% at $59.9 billion
as of
December 31, 2024. Core
deposits financed 85% of
the Corporation’s earning assets
at September 30, 2025,
compared to 86% at
December 31, 2024.
The distribution by maturity
of certificates of deposit
with denominations of $250,000
and over at September
30, 2025 is
presented
in the table that follows:
154
Table 13 - Distribution by
Maturity of Certificates of Deposit of $250,000 and Over
(In thousands)
3 months or less
$
2,374,866
Over 3 to 12 months
1,102,624
Over 1 year to 3 years
278,729
Over 3 years
147,806
Total
$
3,904,025
The Corporation had
$1.8 billion in
brokered deposits at September
30, 2025, which
financed approximately
2% of its
total assets
(December 31, 2024 - $1.6 billion and 2%,
respectively).
As of
September 30, 2025,
the banking subsidiaries
had sufficient current
and projected liquidity
sources to meet
their anticipated
cash flow
obligations, as
well as
special needs
and off-balance
sheet commitments,
in the
ordinary course
of business
and have
sufficient
liquidity
resources to
address
a
stress
event.
Although the
banking
subsidiaries
have
historically
been
able
to
replace
maturing
deposits and
advances, no
assurance can
be given
that
they
would be
able to
replace those
funds
in the
future if
the
Corporation’s
financial condition
or
general market
conditions
were to
deteriorate. The
Corporation’s financial
flexibility would
be
severely constrained if
the banking subsidiaries
are unable to
maintain access to
funding or if
adequate funding is
not available to
accommodate future
financing needs
at
acceptable interest
rates. The
banking subsidiaries
also
are required
to
deposit cash
or
qualifying
securities
to
meet
margin
requirements
on
repurchase
agreements,
deposit
agreements
and
other
collateralized
borrowing facilities. To
the extent that
the value of
securities previously pledged as
collateral declines because of
market changes,
the Corporation will be required to deposit additional cash or securities to meet its margin or collateral requirements and would need
to
rely
more
heavily
on
alternative
funding
sources.
In
these
scenarios,
the
Corporation’s
financial
flexibility
and
ability
to
grow
revenues may not increase proportionately to cover costs and
profitability would be adversely affected.
The Corporation considers balances in
excess of $250,000 to have a
higher potential liquidity risk.
Table
14 reflects the aggregate
balance in
deposit accounts
in excess
of $250,000,
including collateralized
public funds
and deposits
outside of
the U.S.
and its
territories.
Collateralized public funds, as presented in Table 14, represent public deposit balances from governmental
entities in the
U.S.
and
its
territories,
including
Puerto
Rico
and
the
United
States
Virgin
Islands,
collateralized
based
on
such
jurisdictions’
applicable collateral requirements.
155
Table 14 - Deposits
30-Sep-25
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$
23,610,775
43
%
$
8,523,789
70
%
$
32,134,564
48
%
Transactional deposits balances over
$250,000
8,203,843
15
%
2,096,865
17
%
10,300,708
16
%
Time deposits balances over $250,000
2,013,907
4
%
925,802
8
%
2,939,709
4
%
Uninsured foreign deposits
399,980
1
%
-
-
%
399,980
1
%
Collateralized public funds
20,422,015
37
%
316,428
3
%
20,738,443
31
%
Intercompany deposits
227,477
-
%
298,714
2
%
-
-
%
Total deposits
$
54,877,997
100
%
$
12,161,598
100
%
$
66,513,404
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
31-Dec-24
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$
23,588,937
44
%
$
7,961,334
68
%
$
31,550,271
49
%
Transactional deposits balances over
$250,000
8,046,175
15
%
1,944,674
16
%
9,990,849
15
%
Time deposits balances over $250,000
1,991,934
4
%
813,424
7
%
2,805,358
4
%
Uninsured foreign deposits
450,068
1
%
-
-
%
450,068
1
%
Collateralized public funds
19,771,083
36
%
316,716
3
%
20,087,799
31
%
Intercompany deposits
205,839
-
%
667,839
6
%
-
-
%
Total deposits
$
54,054,036
100
%
$
11,703,987
100
%
$
64,884,345
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
Bank Holding Companies
The principal
sources of
funding for
the BHCs,
which are
Popular,
Inc.
(holding company
only) and
PNA, include
cash on
hand,
investment
securities,
dividends
received from
banking
and
non-banking subsidiaries,
asset sales,
credit
facilities
available from
affiliate banking subsidiaries and proceeds from potential securities offerings.
Dividends from banking and non-banking subsidiaries
are subject
to various
regulatory limits
and authorization
requirements imposed
by banking
regulators, including
the FED
and the
NYDFS, that may limit the ability of those subsidiaries
to act as a source of funding to the BHCs.
The principal uses of these funds include the repayment of debt, interest payments to holders of senior debt and junior subordinated
deferrable interest debentures (related to trust preferred securities), the payment of dividends to common stockholders,
repurchases
of the Corporation’s securities and capitalizing its subsidiaries.
The
outstanding
balance
of
notes
payable
at
the
BHCs
amounted
to
$595
million
at
September
30,
2025
and
$594
million
at
December 31, 2024.
The contractual maturities of the BHCs notes payable
at September 30, 2025 are presented in Table 15.
Table 15
- Distribution of BHC's Notes Payable by Contractual
Maturity
Year
(In thousands)
2028
$
396,249
Later years
198,393
Total
$
594,642
156
As of
September 30,
2025, the
BHCs had
cash and
money markets
investments totaling
$484 million
and borrowing
potential of
$165 million from its secured facility with BPPR.
The BHCs’ liquidity position continues to be adequate with sufficient
cash on hand,
investments and
other sources of
liquidity that are
expected to be
sufficient to
meet all
interest payments and
dividend obligations
for the
foreseeable future.
Additionally,
the Corporation’s
latest quarterly
paid dividend
was $0.70
per share
or approximately
$47
million per quarter.
The BHCs have in
the past borrowed in the
corporate debt market primarily to finance
their non-banking subsidiaries and refinance
debt
obligations.
These
sources
of
funding
are
more
costly
given
that
two
out
of
three
principal
credit
rating
agencies
rate
the
Corporation’s debt
securities below
“investment grade”.
The Corporation
has a
shelf registration
statement filed
and effective
with
the
Securities
and
Exchange
Commission,
which
permits
the
Corporation
to
issue
an
unspecified
amount
of
debt
or
equity
securities.
Non-Banking Subsidiaries
The
principal
sources
of
funding
for
the
non-banking
subsidiaries
include
internally
generated
cash
flows
from
operations,
loan
sales, repurchase agreements, capital
injections and borrowed funds
from their direct
parent companies or the
holding companies.
The principal uses of funds for the non-banking
subsidiaries include repayment of maturing debt,
operational expenses and payment
of dividends to the BHCs.
Dividends
During
the
third
quarter
of
2025,
the
Corporation
declared
a
quarterly
common
stock
dividend
of
$0.75
per
common
share,
an
increase from $0.70 per common share in the previous quarter. During the nine months
ended September 30, 2025, the Corporation
declared
cash
dividends
of
$2.15
per
common
share
outstanding
($146.6
million
in
the
aggregate).
The
dividends
for
the
Corporation’s Series A preferred stock amounted to $1.1
million.
During the nine months
ended September 30, 2025, the
BHCs received dividends and
distributions amounting to $350
million from
BPPR, $23
from Popular
International Bank,
Inc. (“PIBI”)
and $22
million from
its other
non-banking subsidiaries.
Dividends from
BPPR constitute Popular,
Inc.’s primary source
of liquidity.
In addition, during
the nine months
ended September 30, 2025,
PIBI, a
wholly
owned
subsidiary
of
Popular,
Inc.,
received
$20.0
million
in
cash
dividends
and
$5.3
million
in
stock
dividends
from
its
investment in BHD.
In
addition to
regulatory
limits previously
discussed, the
ability
of a
bank
subsidiary to
up-stream dividends
to
its
BHC could
be
impacted by
its financial
performance and
capital, including
tangible and
regulatory capital,
thus potentially
limiting the
amount of
cash up
streamed to
the BHCs
from the
banking subsidiaries.
This could,
in turn,
affect BHC’s
ability to
declare dividends
on its
outstanding
common
and
preferred
stock,
repurchase its
securities
or
meet
its
debt
obligations. At
September
30,
2025,
BPPR
could declare a dividend of up to approximately $237 million
without prior approval of the Federal Reserve Board due to
its retained
income, declared dividend activity and transfers to statutory reserves
over the measurement period. In addition, pursuant to the FRB
requirements, PB may not declare or pay a dividend
without the prior approval of the Federal Reserve
Board and the NYSDFS.
Other Funding Sources and Capital
In addition to cash reserves held at the FRB that totaled $4.7 billion at September 30, 2025, the debt securities portfolio provides an
additional
source
of
liquidity,
which
may
be
realized
through
either
securities
sales,
collateralized
borrowings
or
repurchase
agreements.
The
Corporation’s
debt
securities
portfolio
consists
primarily
of
liquid
U.S.
government
debt
securities
and
U.S.
government sponsored agency
mortgage-backed securities that can
be used to
raise funds in
the repo markets.
The availability of
repurchase
agreements
would
be
subject
to
having
sufficient
unpledged
collateral
available
at
the
time
the
transactions
are
consummated,
in
addition
to
overall
liquidity
and
risk
appetite of
the
various
counterparties.
Refer
to
Table
12
for
details
of
the
Corporation’s
unpledged
debt
securities
and
available
credit
facilities
with
the
FHLB
and
the
discount
window
of
the
Federal
Reserve Bank.
A substantial
portion of
these debt
securities could
be used
to raise
financing in
the U.S.
money markets
or from
secured lending sources,
subject to changes in their fair market value and
customary adjustments (haircuts).
Additional
liquidity
may
be
provided
through
loan
maturities,
prepayments
and
sales.
The
loan
portfolio
provides
a
source
of
collateral to
secure the
available credit
facilities with
the FHLB
and the
discount window
of the
Federal Reserve
Bank. The
loan
portfolio
can
also
be
used
to
obtain
funding
in
the
capital
markets.
Mortgage
loans
and
some
types
of
consumer
loans,
have
secondary markets which the Corporation could use.
Off-Balance Sheet Arrangements and Other Commitments
157
In the ordinary course
of business, the Corporation
engages in financial transactions that
are not recorded on
the balance sheet or
may be recorded on the balance sheet in amounts that are different than the full contract or notional amount of the transaction. As a
provider of
financial services,
the Corporation
routinely enters
into commitments
with off-balance
sheet risk
to meet
the financial
needs
of
its
customers.
Refer
to
Note
18
to
the
Consolidated
Financial
Statements
for
information
on
the
Corporation’s
commitments to extent credit and other non-credit commitments.
Other types
of off-balance
sheet arrangements
that the
Corporation enters
in the
ordinary course
of business
include derivatives,
operating
leases
and
provision
of
guarantees,
indemnifications,
and
representation
and
warranties.
Refer
to
Note
17
to
the
Consolidated Financial
Statements for
a detailed
discussion related
to the
Corporation’s guarantees,
indemnifications obligations,
and representation and warranties arrangements.
The Corporation monitors its cash requirements, including
its contractual obligations and debt commitments.
Financial Information of Guarantor and Issuers of Registered
Guaranteed Securities
The principal sources of funding for Popular, Inc. Holding Company (“PIHC”) and Popular North America, Inc. (“PNA”) have included
dividends received
from their
banking and
non-banking subsidiaries subject
to statutory
provisions that
limit dividends
paid by
the
banking subsidiary without regulatory approval,
asset sales and proceeds from the issuance
of debt and equity.
The Corporation ("PIHC") is
the parent holding company
of Popular North America (“PNA”)
and operates financial services through
its subsidiaries. PNA, a wholly owned subsidiary of Popular, Inc., manages entities such as Equity One, Inc., and PB, including PB’s
subsidiaries: Popular Equipment Finance, LLC,
Popular Insurance Agency, U.S.A., and E-LOAN, Inc.
PNA has issued junior subordinated debentures guaranteed by PIHC (the “obligor group”), purchased by statutory
trusts established
by the Corporation using proceeds from trust preferred
securities (“capital securities”) and common securities
of the trusts.
PIHC guarantees
the junior
subordinated debentures
issued by
PNA. If
PIHC fails
to make
interest payments
on the
debentures
held by the trust,
the trust will not
distribute payments on the
capital securities. The guarantee
ranks subordinate and junior
in right
of
payment to
all
other liabilities
of
PIHC and
equally with
all
other PIHC-issued
guarantees, allowing
direct
legal
action against
PIHC without involving other entities.
Funding
for
PIHC
and
PNA
includes
dividends
from
subsidiaries,
asset
sales,
and
proceeds
from
debt
and
equity
issuance.
Statutory provisions limit the dividends an insured
depository institution can pay to its holding
company without regulatory approval.
The summarized financial information
below shows the combined
financial position of
the obligor group as
of September 30,
2025,
and December 31, 2024, and the
results of their operations for the
nine-month periods ended September 30, 2025, and September
30, 2024. Excluded are investments and equity
in earnings from subsidiaries and affiliates outside the
obligor group.
Intercompany balances
and transactions
within the
obligor group
have been
eliminated. Material
amounts due
from, due
to, and
transactions with subsidiaries and affiliates are shown separately. Related party transactions
are also presented separately.
158
Table 16 - Summarized Statement
of Condition
(In thousands)
September 30, 2025
December 31, 2024
Assets
Cash and money market investments
$
484,141
$
634,809
Investment securities
37,618
35,150
Accounts receivables from non-obligor subsidiaries
14,541
14,602
Other loans (net of allowance for credit losses of $163 (2024
- $281))
24,486
25,381
Investment in equity method investees
5,265
5,279
Other assets
95,829
65,483
Total assets
$
661,880
$
780,704
Liabilities and Stockholders' equity
Accounts payable to non-obligor subsidiaries
$
5,839
$
12,163
Notes payable
594,642
593,571
Other liabilities
131,489
126,718
Stockholders' (deficit) equity
(70,090)
48,252
Total liabilities and
stockholders' equity
$
661,880
$
780,704
Table 17 - Summarized Statement
of Operations
For the period ended
(In thousands)
September 30, 2025
September 30, 2024
Income:
Dividends from non-obligor subsidiaries
$
371,500
$
473,000
Interest income from non-obligor subsidiaries and affiliates
3,125
8,489
(Losses) earnings from investments in equity method investees
(14)
29
Other operating income
8,027
3,116
Total income
$
382,638
$
484,634
Expenses:
Services provided by non-obligor subsidiaries and affiliates
(net of
reimbursement by subsidiaries for services provided by parent
of
$188,825 (2024 - $172,449))
$
13,390
$
9,654
Other expenses
19,492
30,000
Income tax expense
[1]
7,075
21,934
Total expenses
$
39,957
$
61,588
Net income
$
342,681
$
423,046
[1] The net income
for the nine
months ended September
30, 2024, included
$22.9 million of
expenses, of which
$16.5 million was
reflected
in income tax expense
and $6.4 million
was reflected in other
operating expenses, related
to an out-of-period adjustment
associated with the
Corporation’s U.S.
subsidiary’s non-payment
of taxes
on certain
intercompany distributions
to the
Bank Holding
Company (BHC)
in Puerto
Rico, a foreign corporation for U.S. tax purposes.
In
addition to
the
dividend income
reflected
in
the
Statement
of
Operations table
above, during
the
nine
months
ended
September 30, 2025, the
obligor group recorded a
$23.0 million of dividend
distributions from non-obligor subsidiary which
was recorded as a reduction to the investment
(2024 - $67.4 million).
159
Risk to Liquidity
The
Corporation’s
liquidity
may
come
under
pressure
if
it
experiences
significant
unexpected
cash
outflows
due
to
deposit
withdrawals, which could arise
from various factors like
economic conditions, loss of
depositor confidence, competition, exogenous
events, regulatory requirements or changes, a
downgrade in credit rating, or other events
causing counterparties to avoid exposure.
Investors should refer to Liquidity Risks section of “Part I, Item 1A”
of 2024 Form 10-K for an additional discussion of liquidity
risks to
which the Corporation is subject.
Credit Risk
Geographic and Government Risk
The Corporation is exposed to geographic and government risk.
The Corporation’s assets and revenue composition by geographical
area and by
business segment reporting are
presented in Note
32 to the
Consolidated Financial Statements. Readers should
refer
to
Economic
and
Market
Risk
section
and
Business
Risk
Section
of
“Part
I,
Item
1A”
of
the
2024
Form
10-K
for
an
additional
discussion
on
how
the
Corporation is
impacted
by
global
and
local
economic
and
market
conditions, including
weakness
in
the
economy,
particularly in Puerto
Rico, where a
significant portion of
our business is
concentrated. This section
also addresses how
our credit risk and credit
losses can increase to the extent
our loans are concentrated on borrowers engaged in
the same or similar
activities or in borrowers who as a group
may be uniquely or disproportionately affected by certain
economic or market conditions.
Commonwealth of Puerto Rico
A
significant portion
of
our financial
activities and
credit
exposure is
concentrated in
the
Commonwealth of
Puerto Rico
(“Puerto
Rico”) which has faced severe economic and fiscal
challenges in the past and may face additional
challenges in the future.
Economic Performance
The latest estimates from the
Puerto Rico Planning Board (the
“Planning Board”) indicate that real
GNP grew by 2.1%
during fiscal
year
2024
(July 2023-June
2024) and
by
1.1% in
fiscal
year
2025 (July
2024-June 2025).
For fiscal
year 2026
(July
2025-June
2026),
the
Planning
Board
forecasts
more
modest
GNP
growth
of
0.5%.
Meanwhile,
the
Puerto
Rico
Economic
Activity
Index
showed a 0.9% year-over-year decline and a 0.2% month-over-month decline in June 2025. While this index is not a direct measure
of real GNP, it serves as an indicator of ongoing economic activity.
In
2021
and
2022,
inflation
rose
sharply
in
the
U.S.
and
Puerto
Rico
due
to
post-pandemic
demand
and
supply
chain
issues.
Inflation
began
to
decrease
by
mid-2022
as
the
Federal
Reserve
raised
interest
rates,
largely
stabilizing
by
September
2024,
leading
to
a
series
of
rate
reductions
by
the
Federal
Reserve
for
the
first
time
in
four
years.
As
of
September
2025,
the
U.S.
Consumer Price Index
showed a 3.0%
year-over-year increase, which
is significantly lower
than peak
2022 inflation levels
but still
above the Federal Reserve’s 2% target. In Puerto Rico,
the Consumer Price Index increased by 1.9%
over the same period.
Moreover, since October 1,
2025, a congressional impasse over fiscal year
2026 appropriations has triggered a partial shutdown
of
numerous U.S. federal agencies and
services. The shutdown has disrupted,
and may continue to
disrupt, federal payments to
U.S.
government
employees, beneficiaries
of
federal
programs
and transfers
to
the Puerto
Rico
government. While
these
disruptions
could adversely affect
our customers and
the broader Puerto
Rico economy,
the overall impact
remains uncertain and
will depend
largely on the shutdown’s duration and scope.
Fiscal Challenges of Puerto Rico and its Municipalities
As
Puerto Rico’s
economy contracted
in the
2000s, public
debt
increased rapidly
due to
borrowing to
cover
deficits to
pay
debt
service, pension benefits,
and other expenditures.
By 2016, the
government had over
$120 billion in
combined debt and
unfunded
pension liabilities, lost access to capital markets, and
faced a fiscal crisis.
In
response,
the
U.S.
Congress
enacted
PROMESA
in
June
2016.
PROMESA
established
an
Oversight
Board
with
significant
control over Puerto Rico’s
fiscal and economic affairs,
including those of its public
corporations, instrumentalities and municipalities
(collectively, “PR Government Entities”).
160
In August 2025, President Donald J. Trump dismissed six of the seven members of
the Oversight Board, reportedly due to inefficient
leadership and excessive spending. Three of the dismissed members subsequently filed suit in federal
court challenging the legality
of their dismissal. On October 3, 2025, the court issued a preliminary injunction that effectively reinstated such members and barred
the seating of replacement members
while the case proceeds. Such
ruling remains subject to potential
appeal. It is still
too early to
determine what impact these developments may
have on Puerto Rico’s fiscal and economic affairs.
Under PROMESA, the Oversight
Board will remain
in place until market
access is restored and
balanced budgets are achieved for
at
least
four
consecutive
years.
PROMESA
also
established
two
mechanisms
for
the
restructuring
of
the
obligations
of
PR
Government Entities:
(a) Title
III, an
in-court process
akin to
that of
the U.S.
Bankruptcy Code
and which
permits adjustment
of a
broad range
of
obligations, and
(b) Title
VI,
a largely
out-of-court process
through which
a supermajority
of creditors
can
accept
modifications to debt and bind holdouts.
Since
2017,
Puerto
Rico
and
several
of
its
instrumentalities
have
availed
themselves
of
these
mechanisms.
The
Puerto
Rico
government exited Title III in March 2022, and several instrumentalities, such as the Government Development Bank and the Puerto
Rico Highways and Transportation
Authority have also completed
debt restructurings under Titles
III or VI
of PROMESA. However,
the Puerto Rico Electric Power Authority is still undergoing
its debt restructuring.
Puerto
Rico's economic
difficulties
have also
impacted its
municipalities. Historically,
the central
government provided
significant
municipal subsidies. However, these have decreased pursuant to fiscal measures required by the Oversight Board. This decline has
been partly
offset by
federal disaster
and COVID-relief
funding received
by municipalities
in recent
years. The
latest Puerto
Rico
fiscal plan proposes a
restructured grant system to enhance
municipal services and encourage accountability through
performance
metrics.
Municipalities
are
subject
to
PROMESA,
and
the
Oversight
Board
has
required
certain
municipalities
to
submit
fiscal
plans
and
annual budgets
for review
and approval.
Municipalities are
also required
to seek
Oversight Board
approval to
issue, guarantee
or
modify
their
debts
and
to
enter
into
significant
contracts.
To
date
no
municipality
has
availed
itself
of
the
debt
restructuring
mechanisms available to them under PROMESA.
Exposure of the Corporation
The credit quality of BPPR’s
loan portfolio is closely tied to the
economic conditions in Puerto Rico. Deterioration in the Puerto
Rico
economy
could
potentially
increase
delinquencies
and
charge-offs,
thereby
impacting
the
Corporation’s
financial
health.
The
Corporation has direct exposure to P.R. Government Entities, which are mainly concentrated in obligations from various Puerto Rico
municipalities. Additionally,
the Corporation
holds loans
and securities
insured by
P.R.
Government Entities,
such as
the Housing
Finance
Authority,
whose
ability
to
honor
guarantees
depends
on
its
financial
condition.
BPPR’s
commercial,
mortgage,
and
consumer loan portfolios are also exposed to risks from private borrowers who are service providers or have other relationships with
the Puerto
Rico government
and government employees
who could
be negatively
affected by
Puerto Rico’s
fiscal challenges.
For
further
discussion
of
the
Corporation’s
direct
and
indirect
exposure
to
the
Puerto
Rico
government and
its
instrumentalities and
municipalities, please refer to Note 18 – Commitments
and Contingencies to the Consolidated
Financial Statements.
The
Corporation
also
maintains
significant
deposits
from
P.R.
Government
Entities,
with
future
balances
subject
to
various
uncertainties.
Further
information
on
Puerto
Rico
Government
deposits
is
included
in
Note
12
–
Deposits
to
the
Consolidated
Financial Statements.
United States Virgin Islands
The Corporation has operations in the United
States Virgin Islands (“USVI”) and has credit exposure
to USVI government entities.
Non-Performing Assets
During
the
third
quarter
of
2025,
the
Corporation’s
credit
quality
metrics
were
affected
by
two
significant
unrelated
commercial
exposures,
resulting in
a
$188.4
million
increase in
NPLs.
The
determination
of
classifying
these
loans
as
NPLs
was
driven
by
factors specific to the individual borrowers and
are not believed to be indicative of a broader
decline in portfolio credit quality.
The first
loan classified
as NPL
is a
$158.3 million
commercial and
industrial facility
issued to
a telecommunications
company in
Puerto Rico
experiencing reduced
revenue due
to operational
challenges following
a business
acquisition and
client attrition.
The
161
second
loan
classified
as
NPL
is
a
$30.1
million
commercial
real
estate
facility,
following
a
$13.5
million
charge-off
during
the
quarter, and is secured by a hotel property in Florida.
Excluding these cases, credit quality metrics were stable. The Corporation
continues to closely monitor the economic landscape and
borrower performance,
as economic
uncertainty remains
a key
consideration. The
Corporation’s experience
managing credit
risk
under different
macroeconomic and operating
environments and, more
recently,
the steps
taken around
credit tightening
supports
management’s view
that exposure to
riskier borrowers is
adequately managed. Nonetheless, carefully
monitoring the
performance
of our loan portfolio and its response to the
environment will continue to be a priority.
Total NPAs
of $545.2 million as of September 30, 2025, increased by $137.1
million when compared with December 31, 2024. Total
NPLs of
$502.2 million increased
by $151.4
million from December
31, 2024.
BPPR’s NPLs
increased by $161.3
million, primarily
due to the classification of the two commercial exposures with book values of $158.3 million and $30.1 million as NPLs, partly offset
by lower mortgage NPLs by $18.5 million.
Popular U.S. NPLs decreased by $9.9 million, mostly
driven by decreases of $6.9 million
and $2.1 million in commercial and mortgage NPLs,
respectively.
On September
30, 2025,
the ratio
of NPLs
to total
loans held-in-portfolio was
1.30%, compared to
0.95% on
December 31,
2024.
Other real estate owned loans (“OREOs”) totaled $43.0
million, a decrease of $14.3 million from December
31, 2024. On September
30,
2025,
NPLs secured
by
real estate
amounted to
$211
million in
the Puerto
Rico
operations and
$47
million
in Popular
U.S,
compared with $200 million and $56 million, respectively, on December
31, 2024.
The Corporation’s commercial loan
portfolio secured by real
estate (“CRE”) amounted to $11.0
billion on September 30, 2025,
with
$3.1 billion secured by owner-occupied properties
(December 31, 2024 - $10.9 billion and $3.2
billion, respectively).
CRE NPLs amounted to
$78.4 million on September
30, 2025, compared with $53.7
million on December 31,
2024. The CRE NPL
ratios
for
the
BPPR
and
Popular
U.S.
segments
were
1.31%
and
0.25%,
respectively,
on
September
30,
2025,
compared
with
0.64% and 0.37%, respectively, on December 31, 2024.
The non-owner occupied CRE portfolio was $5.5 billion at September
30, 2025, split between $3.3 billion in BPPR and $2.2 billion in
Popular U.S. This portfolio is diversified across sectors: retail (33%), hotels (19%),
and office space (13%) which together represent
two-thirds of
total non-owner
occupied CRE
exposure. Specifically,
office space
leasing accounts
for just
1.8% ($713.4
million) of
the total
loan portfolio,
mainly comprising
mid-rise
properties with
an average
loan size
of $2.5
million, and
is well
diversified by
tenant type.
Within CRE, the
commercial multi-family portfolio is
$2.5 billion (approximately 6%
of total loans),
concentrated in New
York
Metro
($1.5 billion), South Florida ($672.2 million) and Puerto Rico ($199.6
million) regions. In the New York Metro, there is no exposure to
rent-controlled buildings and rent-stabilized
units make up less than 40% of total units,
with most originated after 2019.
In
addition
to
the
NPLs
included
in
Table
18,
on
September
30,
2025,
there
were
$724
million
of
performing
loans,
mostly
commercial
loans,
which
in
management’s
opinion,
are
currently
subject
to
potential
future
classification
as
non-performing
(December 31, 2024 - $596 million).
The following table presents the Corporation’s NPAs as of September 30, 2025 and December
31, 2024:
162
Table 18 - Non-Performing
Assets
September 30, 2025
December 31, 2024
(Dollars in thousands)
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
Commercial
Commercial multi-family
$
174
$
8,467
$
8,641
0.3
%
$
79
$
8,700
$
8,779
0.4
%
Commercial real estate non-owner
occupied
37,043
7,083
44,126
0.8
6,429
8,015
14,444
0.3
Commercial real estate owner
occupied
25,619
-
25,619
0.8
25,258
5,191
30,449
1.0
Commercial and industrial
173,245
1,246
174,491
2.1
19,335
1,748
21,083
0.3
Total Commercial
236,081
16,796
252,877
1.3
51,101
23,654
74,755
0.4
Mortgage
139,958
27,809
167,767
2.0
158,442
29,890
188,332
2.3
Leasing
7,747
-
7,747
0.4
9,588
-
9,588
0.5
Consumer
Home equity lines of credit
-
3,257
3,257
4.1
-
3,393
3,393
4.6
Personal
18,375
941
19,316
1.0
20,269
1,741
22,010
1.2
Auto
49,432
-
49,432
1.3
51,792
-
51,792
1.4
Other
1,776
30
1,806
1.0
899
11
910
0.5
Total Consumer
69,583
4,228
73,811
1.0
72,960
5,145
78,105
1.1
Total non-performing
loans held-in-
portfolio
453,369
48,833
502,202
1.3
%
292,091
58,689
350,780
0.9
%
Other real estate owned (“OREO”)
42,446
504
42,950
57,197
71
57,268
Total non-performing
assets
[1]
$
495,815
$
49,337
$
545,152
$
349,288
$
58,760
$
408,048
Accruing loans past due 90 days or
more
[2]
$
205,168
$
188
$
205,356
$
242,250
$
190
$
242,440
Ratios:
Non-performing assets to total assets
0.84
%
0.30
%
0.73
%
0.61
%
0.37
%
0.56
%
Non-performing loans held-in-portfolio
to loans held-in-portfolio
1.67
0.42
1.30
1.12
0.54
0.95
Allowance for credit losses to loans
held-in-portfolio
2.56
0.79
2.03
2.56
0.69
2.01
Allowance for credit losses to non-
performing loans, excluding held-for-
sale
153.38
186.07
156.55
229.61
128.40
212.68
[1] There were no non-performing loans held-for-sale
as of September 30, 2025 and December 31, 2024.
[2] It is the Corporation’s policy to report delinquent
residential mortgage loans insured by FHA or guaranteed
by the VA as accruing
loans past due 90
days or
more
as
opposed
to
non-performing
since
the principal
repayment
is insured.
These
balances
include
$49 million
of residential
mortgage
loans insured
by FHA
or guaranteed
by the
VA
that are
no longer
accruing interest
as of
September 30,
2025 (December
31, 2024
- $65
million).
Furthermore, the Corporation
has $29 million
in reverse mortgage
loans which are
guaranteed by FHA,
but which are
currently not accruing
interest.
Due to the guaranteed
nature of the loans,
it is the Corporation’s
policy to exclude these
balances from non-performing
assets (December 31,
2024 -
$31 million).
For the quarter
ended September 30,
2025, total inflows
of NPLs held-in-portfolio,
excluding consumer loans, increased
by $187.0
million, when compared to the inflows for the same period in 2024. Inflows of NPLs held-in-portfolio at the BPPR segment increased
by $205.2
million, compared
to the
same period
in 2024,
mainly driven
by the
two commercial
exposures that
were classified
as
NPLs during
the quarter.
Inflows of
NPLs held-in-portfolio
at the
Popular U.S.
segment decreased
by $18.2
million from
the same
period in 2024, driven by lower mortgage NPL
inflows by $17.4 million.
Tables 19 to 25 present the Corporation’s inflows to NPLs for the quarters and nine months
ended September 30, 2025 and 2024.
163
Table 19 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the quarter ended September 30, 2025
For the nine months ended September 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
189,630
$
49,763
$
239,393
$
209,543
$
53,544
$
263,087
Plus:
New non-performing loans
241,745
4,786
246,531
310,973
21,853
332,826
Advances on existing non-performing loans
-
48
48
-
86
86
Less:
Non-performing loans transferred to OREO
(2,333)
-
(2,333)
(7,273)
(433)
(7,706)
Non-performing loans charged-off
(13,854)
-
(13,854)
(15,571)
(1,713)
(17,284)
Loans returned to accrual status / loan collections
(39,149)
(9,992)
(49,141)
(121,633)
(28,732)
(150,365)
Ending balance NPLs
$
376,039
$
44,605
$
420,644
$
376,039
$
44,605
$
420,644
Table 20 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
219,960
$
49,317
$
269,277
$
254,476
$
22,354
$
276,830
Plus:
New non-performing loans
36,585
22,968
59,553
111,128
84,248
195,376
Advances on existing non-performing loans
-
32
32
-
352
352
Less:
Non-performing loans transferred to OREO
(4,016)
-
(4,016)
(12,665)
(24)
(12,689)
Non-performing loans charged-off
(4,031)
(82)
(4,113)
(17,930)
(1,050)
(18,980)
Loans returned to accrual status / loan collections
(36,759)
(5,325)
(42,084)
(123,270)
(38,970)
(162,240)
Ending balance NPLs
$
211,739
$
66,910
$
278,649
$
211,739
$
66,910
$
278,649
Table 21 - Activity in Non
-Performing Commercial Loans Held-in-Portfolio
For the quarter ended September 30, 2025
For the nine months ended September 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
42,166
$
21,711
$
63,877
$
51,101
$
23,654
$
74,755
Plus:
New non-performing loans
211,193
1,775
212,968
218,742
12,820
231,562
Advances on existing non-performing loans
-
48
48
-
85
85
Less:
Non-performing loans transferred to OREO
-
-
-
(260)
-
(260)
Non-performing loans charged-off
(13,779)
-
(13,779)
(14,921)
(1,713)
(16,634)
Loans returned to accrual status / loan
collections
(3,499)
(6,738)
(10,237)
(18,581)
(18,050)
(36,631)
Ending balance NPLs
$
236,081
$
16,796
$
252,877
$
236,081
$
16,796
$
252,877
164
Table 22 - Activity in Non
-Performing Commercial Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
56,170
$
37,763
$
93,933
$
72,992
$
11,163
$
84,155
Plus:
New non-performing loans
4,460
2,582
7,042
12,834
39,561
52,395
Advances on existing non-performing loans
-
3
3
-
305
305
Less:
Non-performing loans transferred to OREO
-
-
-
(280)
-
(280)
Non-performing loans charged-off
(4,085)
(82)
(4,167)
(17,784)
(1,032)
(18,816)
Loans returned to accrual status / loan collections
(2,726)
(1,790)
(4,516)
(13,943)
(11,521)
(25,464)
Ending balance NPLs
$
53,819
$
38,476
$
92,295
$
53,819
$
38,476
$
92,295
Table 23 - Activity in Non
-Performing Construction Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
-
$
-
$
-
$
6,378
$
-
$
6,378
Less:
Loans returned to accrual status / loan collections
-
-
-
(6,378)
-
(6,378)
Ending balance NPLs
$
-
$
-
$
-
$
-
$
-
$
-
165
Table 24 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2025
For the nine months ended
September 30, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
147,464
$
28,052
$
175,516
$
158,442
$
29,890
$
188,332
Plus:
New non-performing loans
30,552
3,011
33,563
92,231
9,033
101,264
Advances on existing non-performing loans
-
-
-
-
1
1
Less:
Non-performing loans transferred to OREO
(2,333)
-
(2,333)
(7,013)
(433)
(7,446)
Non-performing loans charged-off
(75)
-
(75)
(650)
-
(650)
Loans returned to accrual status / loan collections
(35,650)
(3,254)
(38,904)
(103,052)
(10,682)
(113,734)
Ending balance NPLs
$
139,958
$
27,809
$
167,767
$
139,958
$
27,809
$
167,767
Table 25 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
163,790
$
11,554
$
175,344
$
175,106
$
11,191
$
186,297
Plus:
New non-performing loans
32,125
20,386
52,511
98,294
44,687
142,981
Advances on existing non-performing loans
-
29
29
-
47
47
Less:
Non-performing loans transferred to OREO
(4,016)
-
(4,016)
(12,385)
(24)
(12,409)
Non-performing loans charged-off
54
-
54
(146)
(18)
(164)
Loans returned to accrual status / loan collections
(34,033)
(3,535)
(37,568)
(102,949)
(27,449)
(130,398)
Ending balance NPLs
$
157,920
$
28,434
$
186,354
$
157,920
$
28,434
$
186,354
166
Loan Delinquencies
Another key measure used to evaluate and
monitor the Corporation’s asset quality is loan
delinquencies. Loans delinquent 30 days
or more, as a percentage of their related portfolio
category on September 30, 2025 and December 31,
2024, are presented below.
Table 26 - Loan Delinquencies
(Dollars in thousands)
September 30, 2025
December 31, 2024
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
of total loans
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
of total loans
Commercial
Commercial multi-family
$
12,637
$
2,489,589
0.51
%
$
15,826
$
2,399,620
0.66
%
Commercial real estate
non-owner occupied
61,924
5,462,580
1.13
24,925
5,363,235
0.46
Commercial real estate
owner occupied
43,163
3,090,724
1.40
42,311
3,157,746
1.34
Commercial and industrial
200,876
8,245,639
2.44
49,942
7,741,562
0.65
Total Commercial
318,600
19,288,532
1.65
133,004
18,662,163
0.71
Construction
4,589
1,604,612
0.29
1,039
1,263,792
0.08
Mortgage
[1]
718,940
8,558,408
8.40
798,130
8,114,183
9.84
Leasing
36,656
1,998,651
1.83
39,641
1,925,405
2.06
Consumer
Credit cards
49,098
1,225,567
4.01
59,078
1,218,079
4.85
Home equity lines of credit
3,987
78,890
5.05
5,054
73,571
6.87
Personal
52,491
1,900,325
2.76
57,835
1,855,244
3.12
Auto
179,213
3,850,953
4.65
191,008
3,823,437
5.00
Other
5,377
181,220
2.97
3,930
171,778
2.29
Total Consumer
290,166
7,236,955
4.01
316,905
7,142,109
4.44
Loans held-for-sale
-
7,783
-
-
5,423
-
Total
$
1,368,951
$
38,694,941
3.54
%
$
1,288,719
$
37,113,075
3.47
%
[1]
Loans delinquent 30 days or more includes $0.4 billion
of residential mortgage loans insured by FHA or guaranteed
by the VA as of September
30, 2025 (December 31, 2024 - $0.4 billion). Refer to Note
7 to the Consolidated Financial Statements for additional information
of guaranteed loans.
Allowance for Credit Losses Loans Held-in-Portfolio
The ACL
represents management’s
estimate of
expected credit
losses through
the remaining
contractual life
of the
different loan
segments, impacted by expected prepayments. The ACL
is maintained at a sufficient
level to provide for estimated credit
losses on
collateral dependent loans as well as loans modified
for borrowers with financial difficulties separately from the remainder
of the loan
portfolio. Refer to
Note 8 to
the Consolidated Financial
Statements, for additional
information on the
Corporation’s methodology to
estimate its ACL.
At September
30, 2025,
the ACL increased
by $40.2
million from
December 31,
2024 to
$786.2 million. The
increase in
ACL was
mainly
driven
by
a
combination
of
changes
in
the
economic
scenario
probability
weights,
increases
in
qualitative
reserves
in
response to
the current
economic environment uncertainty,
higher loan volumes,
and a
specific reserve
recognized for the
$158.3
million commercial NPL inflow described above. These increases
were offset in part by the net effect of changes in
credit quality and
NCOs during
the period.
Given that
any economic
outlook is
inherently uncertain, the
Corporation leverages multiple
scenarios to
estimate its ACL. Prior to the first quarter of 2025, the Corporation assigned the baseline scenario the highest probability among the
scenarios
used
to
estimate
the
ACL,
followed
by
the
pessimistic
scenario
given
the
uncertainties
in
the
economic
outlook
and
downside risk, and
the optimistic scenario
had the lowest
probability. During
the first quarter
of 2025, the
Corporation modified the
weight assigned
to the
pessimistic scenario to
be equal
to the
baseline scenario
in response
to the
current economic
uncertainty,
resulting in
an increase
of $18.2
million in
the reserves.
In
the second
quarter of
2025, the
probability weight
for the
pessimistic
167
scenario was moderately decreased based on changes in the economic outlook and a reassessment of uncertainty compared to the
previous
quarter.
This
change
resulted
in
a
$4.5
million
reduction
in
ACL
reserve
levels,
for
a
$13.7
million
net
increase
from
December
31,
2024.
The
probability
weight
for
the
pessimistic
scenario
remains
above
the
levels
observed
in
2024,
given
the
ongoing economic uncertainty.
At September 30, 2025, the ACL for BPPR increased by $24.7 million from December 31, 2024, driven by changes in the probability
weights that
resulted in
a
$8.8 million
net ACL
increase, higher
loan volumes,
and
a specific
reserve recognized
for
the
$158.3
million commercial NPL
inflow described above.
These increases were partially
offset by
improvements in credit
quality and NCOs
during the
period. In
PB, the
ACL increased
by $15.5
million, when
compared to
December 31,
2024. This
increase was
mainly
driven by higher qualitative reserves for the CRE portfolio in response to current market volatility and economic uncertainty, coupled
with changes in the probability weights that resulted in
a $4.9 million net increase.
The Corporation’s ratio of the allowance for
credit losses to loans held-in-portfolio was 2.03%
on September 30, 2025, compared to
2.01% on December
31, 2024. The
ratio of the
ACL to NPLs
held-in-portfolio stood at 156.6%,
compared to 212.7%
on December
31, 2024.
Tables
27 and
28 detail
the allowance
for credit
losses by
loan categories
and the
percentage it
represents of
total loans
held-in-
portfolio and
NPLs. The
breakdown is
made for
analytical purposes,
and it
is not
necessarily indicative
of the
categories in
which
future loan losses may occur.
168
Table 27 - Allowance for Credit
Losses - Loan Portfolios
September 30, 2025
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
16,582
$
2,489,589
0.67
%
$
8,641
191.90
%
Commercial real estate non-owner occupied
58,845
5,462,580
1.08
%
44,126
133.36
%
Commercial real estate owner occupied
49,191
3,090,724
1.59
%
25,619
192.01
%
Commercial and industrial
169,307
8,245,639
2.05
%
174,491
97.03
%
Total Commercial
$
293,925
$
19,288,532
1.52
%
$
252,877
116.23
%
Construction
11,104
1,604,612
0.69
%
-
-
Mortgage
86,981
8,558,408
1.02
%
167,767
51.85
%
Leasing
19,220
1,998,651
0.96
%
7,747
248.10
%
Consumer
Credit cards
87,208
1,225,567
7.12
%
-
-
Home equity lines of credit
1,548
78,890
1.96
%
3,257
47.53
%
Personal
100,238
1,900,325
5.27
%
19,316
518.94
%
Auto
177,819
3,850,953
4.62
%
49,432
359.72
%
Other
8,177
181,220
4.51
%
1,806
452.77
%
Total Consumer
$
374,990
$
7,236,955
5.18
%
$
73,811
508.04
%
Total
$
786,220
$
38,687,158
2.03
%
$
502,202
156.55
%
Table 28 - Allowance for 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
%
169
Annualized net charge-offs (recoveries)
The following
table presents
annualized net charge-offs
(recoveries) to average
loans held-in-portfolio (“HIP”)
by loan
category for
the quarters and nine months ended September
30, 2025 and 2024.
Table 29 - Annualized Net Charge
-offs (Recoveries) to Average Loans
Held-in-Portfolio
Quarters ended
September 30, 2025
September 30, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
0.50
%
0.03
%
0.29
%
0.13
%
0.02
%
0.08
%
Construction
―
―
―
(2.33)
―
(0.37)
Mortgage
(0.12)
(0.01)
(0.11)
(0.24)
(0.01)
(0.20)
Leasing
0.41
―
0.41
0.49
―
0.49
Consumer
2.48
1.69
2.46
3.14
7.17
3.26
Total annualized
net charge-offs
(recoveries) to average loans held-in-
portfolio
0.84
%
0.04
%
0.60
%
0.86
%
0.15
%
0.65
%
Nine months ended
September 30, 2025
September 30, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
0.14
%
0.02
%
0.08
%
0.21
%
0.03
%
0.13
%
Construction
―
―
―
(0.82)
(0.01)
(0.14)
Mortgage
(0.14)
(0.03)
(0.12)
(0.25)
(0.01)
(0.21)
Leasing
0.55
―
0.55
0.64
―
0.64
Consumer
2.53
3.23
2.54
2.93
7.43
3.07
Total annualized
net charge-offs
(recoveries) to average loans held-in-
portfolio
0.73
%
0.06
%
0.53
%
0.86
%
0.18
%
0.66
%
NCOs for
the quarter
ended September
30, 2025,
amounted to
$57.8 million,
decreasing by
$0.7 million
when compared
to
the
same period in 2024. The BPPR
segment increased by $2.0 million, mainly driven
by an increase of $9.9 million
and $1.7 million in
commercial and mortgage NCOs, respectively,
mostly due to a $13.5 million charge-off related to the $30.1 million commercial
NPL
inflow, partially
offset by a decrease
of $10.5 million in consumer
NCOs. The PB segment NCOs
decreased by $2.7 million, mainly
driven by lower consumer NCOs by $3.0 million
NCOs for the nine
months ended September 30, 2025,
amounted to $149.1 million, decreasing by
$25.3 million when compared to
the same period in 2024. The BPPR segment decreased by $16.6 million, mainly driven
by a decrease of $17.5 million in consumer
NCOs. The PB segment NCOs decreased by $8.6
million, mainly driven by lower consumer NCOs by
$7.9 million.
Loan Modifications
For the quarter ended September 30, 2025, modified loans to borrowers with financial difficulty amounted to $156.0 million, of which
$146.8 million were in
accruing status. The BPPR segment’s modifications
to borrowers with financial difficulty
amounted to $154.5
million, mainly comprised of commercial and mortgage loans of $130.1
million and $17.7 million, respectively. A total of $12.9 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 $1.4 million,
mostly comprised of commercial loans.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements
for
additional
information
on
modifications
made
to
borrowers
experiencing financial difficulties.
170
ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT
YET EFFECTIVE ACCOUNTING STANDARDS
Refer to Note 3, “New Accounting Pronouncements”
to the Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
Quantitative and qualitative disclosures for the current
period can be found in the Market Risk
section of this report, which includes
changes in market risk exposures from disclosures presented
in the 2024 Form 10-K.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Corporation’s management,
with the
participation of the
Corporation’s Chief Executive
Officer and Chief
Financial Officer,
has
evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based
on such evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that,
as of the end of such
period, the Corporation’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a
timely basis,
information required to
be disclosed
by the
Corporation in
the reports
that it
files or
submits under
the Exchange Act
and
such
information
is
accumulated
and
communicated
to
management,
as
appropriate,
to
allow
timely
decisions
regarding
required disclosures.
Internal Control Over Financial Reporting
There have been no changes in the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 that have materially affected, or
are reasonably likely to materially affect, the Corporation’s internal
control over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
For a discussion of Legal Proceedings, see Note 18
to the Consolidated Financial Statements.
Item 1A. Risk Factors
In addition to the other information set forth in
this report, you should carefully consider the risk
factors discussed under “Part I - Item
1A - Risk Factors” in our 2024 Form
10-K. These factors could materially adversely affect our business, financial condition, liquidity,
results of
operations and
capital position,
and could
cause our
actual results
to
differ
materially from
our historical
results or
the
results contemplated
by the
forward-looking statements
contained in
this report.
Also refer
to the
discussion in
“Part I
- Item
2 –
Management’s Discussion
and Analysis
of Financial
Condition and
Results of
Operations” in
this report
for additional
information
that may supplement or update the discussion
of risk factors below and in our 2024 Form 10-K.
There have been no material changes to the risk
factors previously disclosed under Item 1A of the
Corporation’s 2024 Form 10-K.
The risks described
in our 2024 Form
10-K and in
this report are not
the only risks
facing us. Additional risks
and uncertainties not
currently
known
to
us
or
that
we
currently
deem
to
be
immaterial
also
may
materially
adversely
affect
our
business,
financial
condition, liquidity, results of operations and capital position.
171
Item 2.
Unregistered Sales of Equity Securities and
Use of Proceeds
The Corporation did not have any unregistered
sales of equity securities during the quarter ended September
30, 2025.
Issuer Purchases of Equity Securities
The following table
sets forth the
details of
purchases of common
stock by
the Corporation and
its affiliated
purchasers during the
quarter ended September 30, 2025:
Issuer Purchases of Equity Securities
Not in thousands
Period
Total Number of
Shares Purchased [1]
Average Price Paid per
Share
Total Number of
Shares
Purchased as Part of Publicly
Announced Plans or Programs [2]
Approximate Dollar Value of
Shares that May Yet be
Purchased Under the Plans or
Programs [2]
July 1 - July 31
247,066
$
114.06
247,066
$520,194,763
August 1 -August 31
418,011
117.25
417,467
$471,246,181
September 1 - September 30
336,706
125.82
336,329
$428,924,967
Total
1,001,783
$
119.35
1,000,862
$428,924,967
[1] Includes 544
and 377 shares
of the Corporation’s
common stock
acquired by the
Corporation during
August and
September 2025,
respectively,
in
connection
with the
satisfaction
of tax
withholding
obligations
on vested
awards of
restricted
stock
or restricted
stock
units
granted to
directors
and
certain employees under the Corporation’s Omnibus Incentive
Plan. The acquired shares of common stock were added
back to treasury stock.
[2]
As part of its
capital plan, in July
2025, the Corporation announced
plans to repurchase up
to $500 million in common
stock, in addition to
the $500
million in
common stock
repurchase program
announced in
July 2024.
As of
September 30,
2025, the
Corporation repurchased
5,664,241 shares
of
common stock for $571 million at an average price
of $100.80 per share, as part of the 2024 and 2025
common stock repurchase programs.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans or Other Preplanned Trading Arrangements
Certain of our
officers or directors have
made, and may from
time to time make,
elections to participate in,
and are
participating in
,
our dividend reinvestment and purchase plan, the
Company stock fund associated with our 401(k)
plans and/or the Company stock
fund associated with
our non-qualified deferred compensation
plans and have shares
withheld to cover
withholding taxes upon the
vesting of
equity awards, which
may be
designed to satisfy
the affirmative defense
conditions of Rule
10b5-1 under the
Exchange
Act or may constitute non-Rule 10b5–1
trading arrangements
(as defined in Item 408(c) of Regulation
S-K).
172
Item 6.
Exhibits
Exhibit Index
Exhibit No
Exhibit Description
22.1
Issuers of Guaranteed Securities (Incorporated by reference to Exhibit 22.1 of Popular, Inc.’s Annual
Report on Form 10-K for the year ended December 31, 2024)
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(1)
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(1)
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
(1)
32.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
(1)
101. INS
XBRL Instance Document – the instance document
does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline Document.
101.SCH
Inline Taxonomy Extension Schema Document
(1)
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
(1)
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document
(1)
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
(1)
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
(1)
104
The cover page of Popular, Inc. Quarterly Report on Form 10-Q for the
quarter ended September 30,
2025, formatted in Inline XBRL (included within the Exhibit
101 attachments)
(1)
(1)
Included herewith
* This exhibit is a management contract or compensatory
plan or arrangement.
Popular, Inc. has not filed as exhibits certain instruments defining
the rights of holders of debt of Popular, Inc. not
exceeding 10% of the total assets of Popular, Inc. and its consolidated
subsidiaries. Popular, Inc. hereby agrees to
furnish upon request to the Commission a copy of
each instrument defining the rights of holders
of senior and
subordinated debt of Popular, Inc., or of any of its consolidated
subsidiaries.
173
SIGNATURES
Pursuant to the
requirements of the Securities Exchange
Act of 1934, the
registrant has duly caused this
report to be signed
on its
behalf by the undersigned thereunto duly authorized.
POPULAR, INC.
(Registrant)
Date: November 10, 2025
By: /s/ Jorge J. García
Jorge J. García
Executive Vice President &
Chief Financial Officer
Date: November 10, 2025
By: /s/ Denissa M. Rodríguez
Denissa M. Rodríguez
Senior Vice President & Corporate Comptroller