FULLTEXT DEL 5 AV 5
10-Q – 2026-05-08 – d121739d10q.htm
At
March 31,
2026, the
net deferred
tax assets
of the
U.S. operations
amounted to
$
610.2
million with
a valuation
allowance of
approximately $
386.6
million, for net deferred
tax assets after valuation
allowance of $
223.6
million. The Corporation evaluates the
realization of the deferred tax asset by taxing jurisdiction on a quarterly basis.
The U.S. Operations have generated taxable income
each of the last three
years. The financial results for
the first quarter of 2026
continue to show an
upward trend similar to 2024
and
2025.
These
financial
results
are
objectively
verifiable
positive
evidence.
Additionally,
the
Corporation
considered
as negative
evidence
inconsistency
in
performance
trends,
including lower
than
anticipated
results
in
recent
periods.
Also,
management
considered
the
uncertainty
in
predicting
future
taxable
income,
as
given
the
impact
of
external
factors
such
as
changes
in
macroeconomic
conditions,
geopolitical
issues,
and
shifts
in
monetary
policy.
In
addition,
management
evaluated
the
expiration
period of the NOLs carried forward which begin
to expire in 2028
As of
March 31,
2026, after
weighting all
positive and
negative evidence, the
Corporation concluded that
it is
more likely
than not
that $
223.6
million of
the deferred
tax assets
from the
U.S. operations, comprised
mainly of
net operating losses,
will be
realized.
The
Corporation
based
this
determination
on
its
estimated
taxable
income
available
to
realize
the
deferred
tax
assets
for
the
remaining carryforward
periods, together
with the
historical level
of
book income
adjusted by
permanent differences
and taxable
income.
Management
will
continue
to
monitor
and
review
the
U.S.
operation’s
results,
including
recent
earnings
trends,
pre-tax
earnings forecasts,
new tax
initiatives, and
performance indicators, such
as net
income versus
forecast, targeted
loan growth,
net
interest
income
margin,
changes
in
deposit
costs,
allowance
for
credit
losses,
charge-offs,
NPLs
inflows,
and
NPA
balances.
Significant changes,
or
a combination
of changes,
could
positively or
negatively impact
the amount
of
deferred tax
assets to
be
realized in the future.
At March 31, 2026, the
Corporation’s net deferred tax assets related to
its Puerto Rico operations amounted to $
668.6
million.
The
Corporation’s Puerto Rico Banking operation has a historical record of profitability. This is considered as strong objectively verifiable
positive
evidence
that
outweighs
any
negative
evidence
considered
by
management
in
the
evaluation
of
the
realization
of
the
deferred tax assets.
Based on this evidence
and management’s estimate of
future taxable income, the
Corporation has concluded
that it is more likely than not that such net deferred
tax assets
of the Puerto Rico Banking operations will
be realized.
The Holding Company operation has been in a cumulative loss position in recent years. Management expects these losses will be a
trend
in
future
years.
This
objectively
verifiable
negative
evidence is
considered
by
management strong
negative
evidence that
suggests that
income in
future years
will be
insufficient to
support the
realization of
all deferred
tax assets.
After weighting
of all
positive
and
negative evidence
Management concluded,
as
of
the reporting
date,
that
it
is
more
likely
than
not that
the
Holding
Company will not be
able to realize any
portion of the deferred tax
assets. Accordingly, the
Corporation has maintained a valuation
allowance on the deferred tax assets of $
81.7
million as of March 31, 2026.
The
Corporation and
its subsidiaries
file
income tax
returns in
Puerto
Rico, the
U.S. federal
jurisdiction, various
U.S. states
and
political subdivisions,
and foreign
jurisdictions. At
March 31,
2026, the
following years
remain subject
to
examination in
the U.S.
Federal jurisdiction, 2022 and thereafter; and in
the Puerto Rico jurisdiction, 2019 and thereafter.
100
Note 27 – Supplemental disclosure on the consolidated
statements of cash flows
Additional disclosures on cash flow information and
non-cash activities for the quarters ended March
31, 2026 and March 31, 2025
are listed in the following table:
(In thousands)
March 31, 2026
March 31, 2025
Non-cash activities:
Loans transferred to other real estate
$
10,427
$
7,067
Loans transferred to other property
21,752
24,673
Total loans transferred
to foreclosed assets
32,179
31,740
Loans transferred to other assets
11,852
13,992
Financed sales of other real estate assets
783
1,932
Financed sales of other foreclosed assets
13,461
14,979
Total financed sales
of foreclosed assets
14,244
16,911
Financed sale of premises and equipment
14,372
15,329
Transfers from loans held-in-portfolio to
loans held-for-sale
9,094
-
Transfers from loans held-for-sale to loans
held-in-portfolio
409
776
Loans securitized into investment securities
[1]
11,453
1,718
Trades receivable from brokers and counterparties
51
936
Trades payable to brokers and counterparties
297,657
495,397
Net change in receivables from investments maturities
-
14,589
Recognition of mortgage servicing rights on securitizations
or asset transfers
515
210
Loans booked under the GNMA buy-back option
3,483
1,921
Capitalization of lease right of use asset
10,396
7,288
[1]
Includes loans securitized into trading securities and subsequently
sold before quarter end.
The following table provides a reconciliation of
cash and due from banks, and restricted cash
reported within the Consolidated
Statements of Financial Condition that sum to
the total of the same such amounts shown
in the Consolidated Statements of Cash
Flows.
(In thousands)
March 31, 2026
March 31, 2025
Cash and due from banks
$
378,866
$
373,718
Restricted cash and due from banks
6,056
6,447
Restricted cash in money market investments
9,803
10,457
Total cash and due
from banks, and restricted cash
[2]
$
394,725
$
390,622
[2]
Refer to Note 4 - Restrictions on cash and due from banks
and certain securities for nature of restrictions.
101
Note 28 – Segment reporting
The
Corporation’s
corporate
structure
consists
of
two
reportable
segments
–
Banco Popular de Puerto Rico and Popular U.S.
Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess
where to allocate resources.
The segments were
determined based on the
organizational structure, which focuses
primarily on the
markets the segments serve, as well as on the products
and services offered by the segments.
The chief operating
decision maker (“CODM”) of
the Corporation is
the Chief Executive
Officer (“CEO”) who
utilizes net income
as
one of
the segment
profitability measures,
to evaluate
the performance
of each
reportable segment and
assess where
to allocate
resources effectively.
The CEO
receives
profitability reports
that
include net
income
per segment,
net
interest income
and
other
income
and expense
categories. The
CODM uses
the segment’s
net income
and components
of net
income, including
segment
revenues and
expenses to
assess performance
and to
manage important
aspects by
each reportable
segments,
such as
human
capital, investment in technology, making budget allocations,
as well as other strategic decisions.
Banco Popular de Puerto Rico:
The Banco
Popular de
Puerto Rico
reportable segment
includes commercial,
consumer and
retail banking
operations, as
well as
mortgage and auto lending operations conducted
at BPPR, including U.S. based activities conducted
through its New York
Branch.
Other financial
services within the
BPPR segment
include the trust
service units
of BPPR,
asset management services
of Popular
Asset Management and
the brokerage operations
of Popular Securities,
and the insurance
agency and reinsurance
businesses of
Popular Insurance, Popular Risk Services, Popular Life
Re, and Popular Re.
Popular U.S.:
Popular U.S. reportable segment
consists of the
banking operations of Popular
Bank (PB), Popular Insurance
Agency, U.S.A.,
and
PEF.
PB
operates through
a retail
branch network
in the
U.S. mainland
under the
name of
Popular,
and equipment
leasing and
financing services through PEF.
Popular Insurance Agency,
U.S.A. offers investment and insurance
services across the PB
branch
network.
The Corporate group
consists primarily of
the holding companies
Popular, Inc.,
Popular North America,
Popular International Bank
and certain of the Corporation’s investments accounted for under
the equity method, including BHD.
The
accounting
policies
of
the
individual
operating
segments
are
the
same
as
those
of
the
Corporation.
Transactions
between
reportable segments are primarily conducted at market rates, resulting
in profits that are eliminated for reporting consolidated results
of
operations. Assets
representing transactions
between reportable
segments
or
the
Corporate
group
are
also
eliminated in
the
tables presented below.
The tables that follow present the results of operations
and total assets by reportable segments:
102
2026
For the quarter ended March 31, 2026
Intersegment
(In thousands)
BPPR
Popular U.S.
Eliminations
Interest income
$
748,501
$
198,248
$
-
Interest expense
180,555
86,541
-
Net interest income
567,946
111,707
-
Provision for credit losses
73,533
2,383
-
Non-interest income
144,777
7,952
( 21 )
Personnel costs
152,634
25,147
( 21 )
Professional fees
11,966
2,649
-
Technology and
software expenses
65,721
9,534
-
Processing and transactional services
38,457
607
-
Amortization of intangibles
240
144
-
Depreciation expense
10,966
2,189
-
Other operating expenses
[1]
122,325
25,289
-
Total operating
expenses
402,309
65,559
( 21 )
Income before income tax
236,881
51,717
-
Income tax expense
32,511
14,752
-
Net income
$
204,370
$
36,965
$
-
Segment assets
$
60,785,767
$
14,953,476
$
( 49,214 )
For the quarter ended March 31, 2026
Reportable
(In thousands)
Segments
Corporate
Eliminations
Total Popular,
Inc.
Interest income
$
946,749
$
1,326
$
( 859 )
$
947,216
Interest expense
267,096
10,799
( 859 )
277,036
Net interest income (expense)
679,653
( 9,473 )
-
670,180
Provision for credit losses (benefit)
75,916
( 30 )
-
75,886
Non-interest income
152,708
13,844
( 926 )
165,626
Personnel costs
177,760
38,338
( 29 )
216,069
Professional fees
14,615
11,347
( 409 )
25,553
Technology and
software expenses
75,255
13,884
-
89,139
Processing and transactional services
39,064
23
-
39,087
Amortization of intangibles
384
-
-
384
Depreciation expense
13,155
383
-
13,538
Other operating expenses
[1]
147,614
( 63,662 )
( 412 )
83,540
Total operating
expenses
467,847
313
( 850 )
467,310
Income before income tax
288,598
4,088
( 76 )
292,610
Income tax expense
47,263
( 327 )
-
46,936
Net income
$
241,335
$
4,415
$
( 76 )
$
245,674
Segment assets
$
75,690,029
$
5,797,656
$
( 5,356,667 )
$
76,131,018
[1]
Other operating expenses includes net occupancy expenses,
equipment expense, excluding depreciation, other operating taxes,
communications expense, business promotion expenses, deposit
insurance costs and OREO expenses.
103
2025
For the quarter ended March 31, 2025
Intersegment
(In thousands)
BPPR
Popular U.S.
Eliminations
Interest income
$
731,888
$
186,392
$
( 1,681 )
Interest expense
209,996
93,450
( 1,681 )
Net interest income
521,892
92,942
-
Provision for credit losses (benefit)
53,512
10,610
-
Non-interest income
137,505
6,143
-
Personnel costs
151,284
25,442
-
Professional fees
13,059
2,739
-
Technology and
software expenses
64,151
10,088
-
Processing and transactional services
37,179
597
-
Amortization of intangibles
342
255
-
Depreciation expense
9,694
2,197
-
Other operating expenses
[1]
128,754
25,619
-
Total operating
expenses
404,463
66,937
-
Income before income tax
201,422
21,538
-
Income tax expense
35,443
6,722
-
Net income
$
165,979
$
14,816
$
-
Segment assets
$
59,288,907
$
14,529,602
$
( 166,540 )
For the quarter ended March 31, 2025
Reportable
(In thousands)
Segments
Corporate
Eliminations
Total Popular,
Inc.
Interest income
916,599
1,536
( 1,137 )
916,998
Interest expense
301,765
10,773
( 1,137 )
311,401
Net interest income (expense)
$
614,834
$
( 9,237 )
$
-
$
605,597
Provision for credit losses (benefit)
64,122
( 41 )
-
64,081
Non-interest income
143,648
9,029
( 616 )
152,061
Personnel costs
176,726
35,987
-
212,713
Professional fees
15,798
11,357
( 330 )
26,825
Technology and
software expenses
74,239
9,429
-
83,668
Processing and transactional services
37,776
5
-
37,781
Amortization of intangibles
597
-
-
597
Depreciation expense
11,891
389
-
12,280
Other operating expenses
[1]
154,373
( 56,402 )
( 823 )
97,148
Total operating
expenses
471,400
765
( 1,153 )
471,012
Income before income tax
222,960
( 932 )
537
222,565
Income tax expense (benefit)
42,165
2,675
223
45,063
Net income
$
180,795
$
( 3,607 )
$
314
$
177,502
Segment assets
$
73,651,969
$
5,906,249
$
( 5,519,612 )
$
74,038,606
[1]
Other operating expenses includes net occupancy expenses,
equipment expense, excluding depreciation, other operating taxes,
communications expense, business promotion expenses, deposit
insurance costs and OREO expenses.
104
Geographic Information
The following information presents selected
financial information based on the
geographic location where the Corporation conducts
its business. The
banking operations of BPPR
are primarily based in
Puerto Rico, where it
has the largest retail
banking franchise.
BPPR
also
conducts
banking
operations
in
the
U.S.
Virgin
Islands,
the
British
Virgin
Islands
and
New
York.
BPPR’s
banking
operations in
the mainland
United States
include commercial
lending activities
in addition
to
periodic loan
participations with
PB.
During the first
quarter of 2026,
BPPR did
no
t participate in
loans originated by
PB (2025 -
$
6
million). Total
assets for the
BPPR
segment related
to its
operations in
the United
States amounted
to $
1.4
billion (December 31,
2025 -
$
1.4
billion), including
$
102
million in multifamily loans
(December 31, 2025 -
$
102
million), $
413
million in commercial
real estate loans (December
31, 2025 -
$
435
million), $
735
million in C&I loans (December 31, 2025 - $
714
million), and $
31
million in unsecured personal loans (December
31, 2025
- $
41
million). During
the quarter
ended March
31, 2026,
the BPPR
segment generated
$
21.5
million (March
31, 2025
-
$
26.3
million) in revenues from its
operations in the United States,
mainly from net interest income.
In the Virgin Islands,
the BPPR
segment offers
banking products, including
loans and deposits.
Total
assets for the
BPPR segment related
to its
operations in the
U.S. and
British Virgin
Islands amounted
to $
1.1
billion (December
31, 2025
- $
1.0
billion). The
BPPR segment
generated $
13.6
million in revenues during the
first quarter of 2026 (March 31,
2025 - $
11.8
million) from its operations in
the U.S. and British Virgin
Islands.
Geographic Information
Quarter ended
(In thousands)
March 31, 2026
March 31, 2025
Revenues:
[1]
Puerto Rico
$
668,071
$
609,961
United States
139,663
127,216
Other
28,072
20,481
Total consolidated
revenues
$
835,806
$
757,658
[1]
Total revenues include
net interest income, service charges on deposit accounts,
other service fees, mortgage banking activities, net
(loss)
gain, including impairment on equity securities, net gain
on trading account debt securities, adjustments to indemnity
reserves on loans sold
and other operating income.
Selected Balance Sheet Information:
(In thousands)
March 31, 2026
December 31, 2025
Puerto Rico
Total assets
$
58,510,727
$
57,955,465
Loans
25,884,571
25,853,231
Deposits
53,602,880
52,451,498
United States
Total assets
$
16,278,568
$
16,101,705
Loans
12,894,276
12,966,468
Deposits
12,185,414
11,987,581
Other
Total assets
$
1,341,723
$
1,291,097
Loans
516,458
517,817
Deposits
[1]
1,823,022
1,751,014
[1]
Represents deposits from BPPR operations located in the
U.S. and British Virgin Islands.
105
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This
report
includes
management’s
discussion
and
analysis
(“MD&A”)
of
the
consolidated
financial
position
and
financial
performance
of
Popular,
Inc.
(the
“Corporation”
or
“Popular”). All
accompanying
tables,
financial
statements
and
notes
included
elsewhere in this report should be considered an
integral part of this analysis.
The Corporation is a
diversified, publicly owned financial holding company subject
to the supervision and regulation
of the Board of
Governors of the Federal Reserve System. The Corporation has
operations in Puerto Rico, the United States (“U.S.”) mainland and
the U.S. and British Virgin Islands. In Puerto Rico, the
Corporation provides retail, mortgage,
commercial banking services and auto
and equipment
leasing and
financing through its
principal banking subsidiary,
Banco Popular de
Puerto Rico
(“BPPR”), as
well as
broker-dealer and
insurance services
through specialized
subsidiaries. In
the
U.S. mainland,
the
Corporation provides
retail and
commercial
banking
services,
as
well
as
equipment
leasing
and
financing,
through
its
New
York-chartered
banking
subsidiary,
Popular
Bank
(“PB”
or
“Popular
U.S.”),
which
has
branches
located
in
New
York,
New
Jersey
and
Florida.
Note
28
to
the
Consolidated Financial Statements presents information
about the Corporation’s business segments.
As a financial services company,
the Corporation’s earnings are significantly affected
by general business and economic conditions
in the
markets which
we serve.
Lending and
deposit activities
and fee
income generation
are influenced
by the
level of
business
spending and
investment, consumer
income, spending
and savings,
capital market
activities, competition,
customer preferences,
interest rate conditions and prevailing market rates
on competing products.
The Corporation
operates in
a highly
regulated environment
and may
be adversely
affected by
changes in
federal and
local laws
and
regulations.
Also,
competition
with
other
financial
institutions,
as
well
as
with
non-traditional financial
service
providers
and
technology
companies
that
provide
electronic
and
internet-based
financial
solutions
and
services,
could
adversely
affect
its
profitability.
The
Corporation
continuously
monitors
general
business
and
economic
conditions,
industry-related
indicators
and
trends,
competition, interest rate volatility, credit quality indicators, loan, and deposit demand, operational and systems efficiencies, revenue
enhancements and changes in the regulation of financial
services companies.
The description of the Corporation’s business contained in
Item 1 of the 2025 Form 10-K, while not all inclusive,
discusses additional
information about the business of the Corporation. Readers should also refer to “Part I - Item 1A” of the 2025 Form 10-K and “Part II
- Item 1A” of this Form 10-Q for a discussion of certain risks and uncertainties to which the Corporation is subject, many beyond the
Corporation’s control that, in addition to the other information in
this Form 10-Q, readers should consider.
The Corporation’s common stock is traded on the NASDAQ
Global Select Market under the symbol BPOP.
OVERVIEW
Financial highlights for the quarter ended March 31, 2026
The Corporation’s net income
for the quarter ended March
31, 2026 amounted to $245.7
million, an increase of
$68.2 million when
compared to a
net income of
$177.5 million for the
quarter ended March
31, 2025. Higher net
income was mainly
driven by higher
net interest income of $64.6 million and lower
operating expenses
by $3.7 million.
Financial highlights for the quarter ended March 31, 2026
include:
●
Net interest income amounted to $670.2
million, an increase of $64.6 million
when compared to the quarter ended March
31, 2025, driven
by loan growth
and investments in
U.S. Treasury securities
at higher yields,
and lower cost
of deposits,
mainly
P.R.
public
deposits,
partially
offset
by
lower
money
market
investments.
Net
interest
income
on
a
taxable
equivalent
basis
for
the
first
quarter
of
2026
was
$757.8
million,
an
increase
of
$93.9
million.
Net
interest
margin
expanded by 26 basis points to 3.66%. On
a taxable equivalent basis, net interest margin expanded by
41 basis points to
4.14%.
106
●
The
provision for
credit
losses amounted
to
$75.9 million
for the
quarter ended
March 31,
2026, an
increase of
$11.8
million when compared to the quarter ended March 31, 2025, driven by a higher provision at BPPR in the commercial and
mortgage
loans
portfolio,
partially
offset
by
a
lower
provision
for
the
leases
and
consumer
loans
portfolio
due
to
improvements in credit
quality metrics. Provision
for credit losses
decreased at PB
primarily due to
the higher qualitative
reserves
established
during
the
first
quarter
of
2025
to
maintain
adequate
ACL
coverage,
for
certain
portfolios,
and
improvements in overall credit quality.
●
Non-interest income amounted to $165.6 million, an increase of $13.6 million when compared to the quarter ended March
31, 2025, mainly driven by
higher credit and debit card fee income,
higher asset management fees, and higher insurance
fees.
●
Operating expenses
amounted to
$467.3
million for
the quarter,
reflecting a
decrease of
$3.7 million
when compared
to
the
quarter
ended
March
31,
2025.
The
decrease
was
mainly
driven
by
lower
operational
loss
reserves
and
lower
professional services
expense, partially
offset by
higher technology
and software
expenses as
a result
of our
continued
investment in technology and higher personnel costs, mainly related to salaries, as well as
the valuation of securities held
for deferred benefit plans.
●
Income tax expense of $46.9 million with an effective tax rate (“ETR”) of 16.0%
during the quarter ended March 31, 2026,
compared to an income
tax expense of $45.1
million with an ETR
of 20.2% for the
quarter ended March 31,
2025 due to
higher income before tax, partially offset by higher exempt
income.
●
At March
31, 2026,
the Corporation’s
total assets
amounted to
$76.1 billion, compared
to $75.3
billion at
December 31,
2025.
The
increase
of
$782.8
million
was
primarily
due
to
higher
balance
in
the
available-for-sale
(“AFS”)
securities
portfolio,
driven
by
reinvestment in
U.S.
Treasury
securities,
and
an
increase
in
money market
investments and
other
assets, partially
offset
by a
decrease in
held-to-maturity (“HTM”)
investment securities
and a
decrease in
loan portfolio
balances, mainly at PB.
●
Deposits
amounted
to
$67.6
billion
at
March
31,
2026,
an
increase
of
$1.4
billion
from
December 31,
2025,
primarily
driven by growth at BPPR across retail, corporate,
and P.R. public deposits.
●
Stockholders’ equity
amounted to
$6.3 billion
at March
31, 2026,
compared to
$6.2 billion
at December
31, 2025.
The
Corporation and its banking subsidiaries continue
to be well capitalized. As
of March 31, 2026, the
Corporation’s tangible
book value
per common
share was
$84.98, an
increase of
$2.33 from
December 31,
2025. The
Common Equity
Tier
1
Capital ratio at March 31, 2026 was 15.92%,
compared to 15.72% at December 31, 2025.
Refer to Table 1 for selected financial data for the quarters ended March 31, 2026 and March
31, 2025.
107
Table 1 - Financial highlights
Financial Condition Highlights
Ending Balances at
Average for the quarter ended
(In thousands)
March 31, 2026
December 31,
2025
Variance
March 31, 2026
March 31,
2025
Variance
Money market investments
$
4,655,699
$
4,626,506
$
29,193
$
4,850,141
$
6,379,085
$
(1,528,944)
Investment securities
28,943,544
28,168,918
774,626
29,008,686
28,446,090
562,596
Loans
[1]
39,295,305
39,337,516
(42,211)
39,270,501
37,006,149
2,264,352
Earning assets
72,894,548
72,132,940
761,608
73,129,328
71,831,324
1,298,004
Total assets
76,131,018
75,348,267
782,751
77,089,305
74,951,813
2,137,492
Deposits
67,611,316
66,190,093
1,421,223
67,364,627
65,858,092
1,506,535
Borrowings
1,119,557
1,448,578
(329,021)
1,335,239
959,211
376,028
Total liabilities
69,819,932
69,099,188
720,744
69,688,807
67,795,911
1,892,896
Stockholders’ equity
6,311,086
6,249,079
62,007
6,289,337
7,155,902
(866,565)
Note: Average balances, for balances prior to the period ended March 31, 2026, exclude unrealized gains or losses on debt securities available-for-sale and the unrealized loss related to
certain securities transferred from available-for-sale to held-to-maturity.
Operating Highlights
Quarter ended March 31,
(In thousands, except per share information)
2026
2025
Variance
Net interest income
$
670,180
$
605,597
$
64,583
Provision for credit losses
75,886
64,081
11,805
Non-interest income
165,626
152,061
13,565
Operating expenses
467,310
471,012
(3,702)
Income before income tax
292,610
222,565
70,045
Income tax expense
46,936
45,063
1,873
Net income
$
245,674
$
177,502
$
68,172
Net income applicable to common stock
$
245,321
$
177,149
$
68,172
Net income per common share - basic
$
3.78
$
2.56
$
1.22
Net income per common share - diluted
$
3.78
$
2.56
$
1.22
Dividends declared per common share
$
0.75
$
0.70
$
0.05
Quarter ended March 31,
Selected Statistical Information
2026
2025
Common Stock Data
End market price
$
134.17
$
92.37
Book value per common share at period end
97.27
83.75
Profitability Ratios
Return on average assets
1.29
%
0.96
%
Return on average common equity
13.76
10.07
Net interest spread (non-taxable equivalent basis)
3.09
2.74
Net interest spread (taxable equivalent basis) -non-GAAP
3.57
3.07
Net interest margin (non-taxable equivalent basis)
3.66
3.40
Net interest margin (taxable equivalent basis) -non-GAAP
4.14
3.73
Capitalization Ratios
Average equity to average assets
9.41
%
8.99
%
Common equity Tier 1 capital
15.92
16.11
Tangible common
book value per common share (non-GAAP)
[2]
84.98
72.02
Return on average tangible common equity
[2]
15.46
11.36
Tier 1 capital
15.98
16.17
Total capital
17.71
17.92
Tier 1 leverage
8.60
8.50
[1] Includes loans held-for-sale.
108
[2] Refer to Table 10 for reconciliation to GAAP financial measures.
Non-GAAP Financial Measures
This Form 10-Q
contains financial information
prepared under accounting
principles generally accepted in
the United States
(“U.S.
GAAP”) and
non-GAAP financial
measures. Management
uses non-GAAP
financial measures
when it
has determined
that these
measures provide
meaningful information
about the
underlying performance
of the
Corporation’s ongoing
operations. Non-GAAP
financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by
other
companies.
Adjusted net income - Non-GAAP Financial Measure
In
addition to
analyzing the
Corporation’s results
on
a reported
basis, management
monitors whether
the
impact of
certain non-
recurring or
infrequent transactions
need to
be excluded
from the
results of
operations to
present what
is then
considered to
be
“adjusted
net
income”
of
the
Corporation.
Management believes
that
the
“adjusted
net
income”
provides
meaningful
information
about
the
underlying
performance of
the
Corporation’s
ongoing
operations.
The
“adjusted
net
income”
is
a
non-GAAP
financial
measure.
There were no non-GAAP adjustments to net income
for the quarters ended March 31, 2026
and March 31, 2025.
109
Net interest income on a taxable equivalent basis
– Non-GAAP Financial Measure
Net interest income, on a taxable equivalent basis, is presented with
its different components in Table 2 for the quarter ended March
31, 2026, as compared with the same period in 2025,
segregated by major categories of interest earning
assets and interest-bearing
liabilities.
The
main
sources
of
tax-exempt
interest
income
are
certain
loans
and
investments
in
obligations
of
the
U.S.
Government,
its
agencies and sponsored entities, and
certain obligations of the
Commonwealth of Puerto Rico and
its agencies and assets
held by
the Corporation’s
international banking entities.
On Table
2, the interest
income has been
converted to a
taxable equivalent basis,
using the
applicable statutory income
tax rates
for each
period net
of interest
expense that the
Puerto Rico
tax law
requires to be
disallowed, based
on an
equal proportion
of tax-exempt
assets to
total assets,
and by
an allocation
of general
and administrative
expenses attributable to exempt income, reducing the benefit of
the tax-exempt income. The effective yield, on a
taxable equivalent
basis, will
vary depending on
the level
of these
expenses that are
attributable to
the available exempt
income. Under Puerto
Rico
tax
law,
the
exempt
interest
can
be
deducted
up
to
the
amount
of
taxable
income.
Management believes
that
this
presentation
provides meaningful information since it facilitates the comparison
of revenues arising from taxable and exempt
sources.
Tangible Common Equity and Tangible Assets
Tangible
common equity,
tangible common equity ratio, tangible
assets and tangible book
value per common share
are non-GAAP
financial measures.
Tangible
common equity
ratio and
tangible book
value per
common share
should be
used in
conjunction with
more
traditional
bank
capital
ratios
commonly
used
by
banks
and
analysts
to
compare
the
capital
adequacy
of
banking
organizations
with
significant
amounts
of
goodwill
or
other
intangible
assets,
typically
stemming
from
the
use
of
the
purchase
accounting method for
mergers and acquisitions.
Tangible
common equity,
tangible assets
and other related
measures should not
be
used
in
isolation
or
as
a substitute
for
stockholders' equity,
total
assets
or
any
other
measure calculated
in
accordance
with
GAAP.
Moreover, the
way the Corporation
calculates its tangible
common equity,
tangible assets and
other related measures
may
differ from that of other companies reporting measures
with similar names.
Table
8 provides
a reconciliation
of total
stockholders’ equity
to tangible
common equity
and total
assets to
tangible assets
as of
March 31, 2026 and December 31, 2025.
110
CRITICAL ACCOUNTING POLICIES / ESTIMATES
The accounting and reporting policies followed by the Corporation
and its subsidiaries conform to U.S. GAAP and
general practices
within
the
financial
services
industry.
Various
elements
of
the
Corporation’s
accounting
policies,
by
their
nature,
are
inherently
subject to estimation techniques, valuation assumptions
and other subjective assessments.
Management
has
discussed
the
development
and
selection
of
the
critical
accounting
estimates
with
the
Corporation’s
Audit
Committee. The Corporation has identified as critical accounting estimates those related to: (i) Fair Value
Measurement of Financial
Instruments;
(ii)
Loans
and
Allowance
for
Credit
Losses;
(iii)
Income
Taxes;
(iv)
Goodwill
and
Other
Intangible
Assets;
and
(v)
Pension and Postretirement
Benefit Obligations. For
a summary of
these critical accounting
estimates, refer to
the MD&A included
in
the
2025
Form
10-K.
Also,
refer
to
Note
2
to
the
Consolidated
Financial
Statements
included
in
the
2025
Form
10-K
for
a
summary of the Corporation’s significant accounting policies and to Note 3 to the Consolidated Financial Statements included in this
Form 10-Q for information on recently adopted accounting
standard updates.
STATEMENT
OF OPERATIONS ANALYSIS
NET INTEREST INCOME
Net interest income (“NII”) for the quarter ended March 31, 2026 was $670.2 million an increase of
$64.6 million, when compared to
the
same
quarter
in
2025.
NII
growth
was
attributable
to
lower
cost
of
deposits
by
$38.4
million,
primarily
due
to
P.R.
public
deposits, loan growth
and higher income
from investments in
U.S Treasury
securities. Net interest
income on a
taxable equivalent
basis for the first quarter of 2026 was $757.8
million, an increase of $94.0 million.
Net interest margin (“NIM”) for the first quarter of 2026 was 3.66%,
an increase of 26 basis points when compared
to the first quarter
of 2025. On
a taxable equivalent basis,
net interest margin for
the first quarter of
2026 was 4.14%, higher
by 41 basis
points when
compared to the first quarter of 2025, mainly due to higher level
of tax-exempt securities and loans. NIM expansion, when
compared
to the same quarter of the previous year,
was primarily due to lower deposit costs resulting from the
repricing of market-linked high-
cost deposits, mainly P.R.
public deposits, and higher yields on
U.S. Treasury securities. Total
cost of deposits decreased 27 basis
points
to
1.56%.
Excluding
P.R.
public
deposits,
total
deposit
costs
decreased
8
basis
points
to
1.09%
compared
to
the
same
quarter in 2025.
On a taxable equivalent basis, the main drivers of
the increase for the first quarter of 2026 were:
●
higher income from
U.S. Treasury
securities by $42.4
million or 44
basis points, attributable
to higher investment
activity
at higher yields with average balances increasing by $2.0 billion supported by deposit growth and purchases completed in
the
third
quarter
of
2025
of
approximately
$2.5
billion
of
U.S.
Treasury
notes
with
an
average
duration
of
1.4
years
through a
combination of
approximately $1.0
billion in
maturing U.S.
Treasuries
and a
reduction of
approximately $1.5
billion in overnight Fed funds;
●
higher income from loans
by $47.0 million or
5 basis points, mostly due
to loan growth, average loan
balances increased
by $2.2 billion when
compared to the same
period in the previous year
driven by commercial, construction and
mortgage
portfolio, along
with higher
yields from
auto, leases
and mortgage
portfolios.
Loan portfolio
yields increased
five basis
points to 7.53%; and
●
lower interest expense on deposits
by $38.4 million or 27
basis points, when compared to the
same quarter in 2025. The
cost of
interest-bearing deposits decreased
by 35
basis points,
driven by
repricing of
market-linked P.R.
public deposits
which
decreased
by
66
basis
points
to
2.66%,
coupled
with
a
decrease
in
Popular
U.S.
deposit
costs
attributable
to
repricing across most deposit products, mainly online
savings and time deposits;
partially offset by:
●
lower income from money
market investments by $26.0 million
or 76 basis points,
as a result of
lower average balances,
driven by higher
re-investment activity in
U.S. Treasuries
and loan growth
as described above, coupled
with lower yields
resulting from declining short-term market rates during
2025.
111
Table 2 - Analysis of Levels & Yields
on a Taxable Equivalent Basis
(Non-GAAP)
Quarter ended March 31,
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2026
2025
Variance
2026
2025
Variance
2026
2025
Variance
Rate
Volume
(In millions)
(In thousands)
$
4,850
$
6,379
$
(1,529)
3.70
%
4.46
%
(0.76)
%
Money market
investments
$
44,240
$
70,166
$
(25,926)
$
(10,784)
$
(15,142)
29,810
28,415
1,395
3.52
3.14
0.38
Investment securities [1]
258,897
220,435
38,462
24,348
14,114
34
31
3
5.56
5.82
(0.26)
Trading securities
463
440
23
(20)
43
Total money market,
investment and
trading
34,694
34,825
(131)
3.54
3.38
0.16
securities
303,600
291,041
12,559
13,544
(985)
Loans:
19,723
18,489
1,234
6.71
6.71
-
Commercial
326,387
305,968
20,419
3
20,416
1,697
1,309
388
8.14
8.11
0.03
Construction
34,068
26,190
7,878
102
7,776
1,985
1,930
55
7.35
7.14
0.21
Leasing
36,459
34,444
2,015
1,015
1,000
8,664
8,168
496
6.08
5.82
0.26
Mortgage
131,679
118,917
12,762
5,360
7,402
3,309
3,203
106
13.86
14.04
(0.18)
Consumer
113,129
110,859
2,270
(1,351)
3,621
3,892
3,907
(15)
9.33
9.12
0.21
Auto
89,496
87,850
1,646
1,980
(334)
39,270
37,006
2,264
7.53
7.48
0.05
Total loans
731,218
684,228
46,990
7,109
39,881
$
73,964
$
71,831
$
2,133
5.66
%
5.49
%
0.17
%
Total earning assets
$
1,034,818
$
975,269
$
59,549
$
20,653
$
38,896
Interest bearing
deposits:
$
8,554
$
7,983
$
571
1.62
%
1.73
%
(0.11)
%
NOW and money
market
$
34,159
$
34,002
$
157
$
(4,227)
$
4,384
14,633
14,507
126
0.77
0.87
(0.10)
Savings
27,714
31,280
(3,566)
(2,118)
(1,448)
8,714
8,400
314
2.99
3.22
(0.23)
Time deposits
64,243
66,681
(2,438)
(4,969)
2,531
20,362
20,286
76
2.66
3.32
(0.66)
P.R. public
deposits
133,302
165,900
(32,598)
(33,046)
448
52,263
51,176
1,087
2.01
2.36
(0.35)
Total interest bearing
deposits
259,418
297,863
(38,445)
(44,360)
5,915
15,101
14,682
419
Non-interest bearing
demand deposits
67,364
65,858
1,506
1.56
1.83
(0.27)
Total deposits
259,418
297,863
(38,445)
(44,360)
5,915
597
121
476
3.88
4.77
(0.89)
Short-term borrowings
5,703
1,426
4,277
(284)
4,561
Other medium and
772
862
(90)
6.26
5.66
0.60
long-term debt
11,915
12,112
(197)
1,223
(1,420)
Total interest bearing
53,632
52,159
1,473
2.09
2.42
(0.33)
liabilities (excluding
demand deposits)
277,036
311,401
(34,365)
(43,421)
9,056
Other sources of funds
5,231
4,990
241
$
73,964
$
71,831
$
2,133
1.52
%
1.76
%
(0.24)
%
Total source of funds
$
277,036
$
311,401
$
(34,365)
$
(43,421)
$
9,056
Net interest margin/
income on a taxable
equivalent basis (Non-
GAAP)
4.14
%
3.73
%
0.41
%
$
757,782
$
663,868
$
93,914
$
64,074
$
29,840
3.57
%
3.07
%
0.50
%
Net interest spread
Taxable equivalent
adjustment
87,602
58,271
29,331
Net interest margin/
income non-taxable
equivalent basis (GAAP)
3.66
%
3.40
%
0.26
%
$
670,180
$
605,597
$
64,583
Note: The changes that are not due solely to volume or
rate are allocated to volume and rate based on the
proportion of the change in each category.
112
[1] Average balances exclude unrealized gains or losses
on debt securities available-for-sale and the unrealized
loss related to certain securities transferred from
available-for-sale to held-to-maturity.
113
Provision for Credit Losses - Loans Held-in-Portfolio
and Unfunded Commitments
For the quarter ended
March 31, 2026, the
Corporation recorded a provision for
credit losses of $75.8
million, an increase of
$11.9
million
when compared
to
the same
quarter of
the previous
year.
The
provision for
loan
and lease
losses
was $75.7
million, an
increase of
$10.5 million,
and the
provision for
unfunded commitments
was $0.1
million, an
unfavorable variance
of $1.4
million,
mainly driven by higher unfunded commitments in the
Popular Bank.
As discussed
in Note
8 to
the Consolidated
Financial Statements,
the Corporation
estimates the
ACL by
weighting the
outputs of
optimistic, baseline, and pessimistic scenarios. During the first quarter of 2026, among the three scenarios evaluated
to estimate the
ACL, the baseline scenario
was assigned the highest probability,
followed by the pessimistic scenario,
which weight was increased
during 2025 in response to ongoing uncertainty.
The major
drivers of
the changes
in the
provision for
loan losses
during the
quarter by
business segment
when compared
to the
same quarter in 2025, were as follows:
●
In the BPPR segment, the provision for
loan losses was $73.3 million, an increase of
$20.6 million when compared to the
same quarter
in 2025,
driven by
higher provision
expense for
the commercial
portfolio by
$39.1 million,
primarily due
to
loan modifications, an
additional specific reserve to
a single borrower
in the telecommunications
industry,
and higher net
charge-offs due to an impairment recorded during the quarter of $11.1 million mainly due to a commercial real
estate loan.
Both
the
borrower
with
the
specific
reserve
and
the
commercial
real
estate
loan
were
classified
as
NPLs
in
the
third
quarter of
2025. Higher
provisions were
partially offset
by decreases
of $15.8
million and
$4.5 million
in the
consumer
loan and leases portfolios,
respectively, showing improvement in credit quality.
●
In the Popular U.S. segment, the
provision for loans losses was
$2.4 million, a decrease of
$10.1 million when compared
to the
same quarter
in 2025. The
decrease was primarily
driven by lower
provision expense in
both the commercial
and
consumer loan
portfolio, with
reductions of
$7.5 million
and $2.6
million, respectively.
The reduction
in the
commercial
loan
segment
was mainly
driven by
higher qualitative
reserves established
during the
first
quarter of
2025 to
maintain
adequate ACL coverage. The
decrease in the consumer
loan portfolio was mainly
attributable to improvements in overall
credit quality and lower ending balances.
At March 31,
2026, the total allowance
for credit losses for
loans held-in-portfolio amounted to $823.7
million, an increase of
$15.6
million when
compared to
December 31, 2025.
The ratio
of the
allowance for credit
losses to
loans held-in-portfolio was
2.10% at
March 31,
2026 versus
to 2.05%
at December
31, 2025.
Refer to
Note 8
to the
Consolidated Financial
Statements for
additional
information
on
the
Corporation’s methodology
to
estimate its
ACL.
Refer
to
the
Credit
Risk
section
of
this
MD&A
for
a
detailed
analysis of net charge-offs, non-performing assets, the allowance
for credit losses and selected loan losses statistics.
Non-Interest Income
Non-interest income amounted
to $165.6 million
for the
first quarter of
2026, an increase
of $13.6 million
when compared with
the
same quarter for the previous year. The variance was primarily
due to:
●
higher other services fees
by $8.4 million mainly
due to $5.4 million
in higher debit
and credit card fees
and higher asset
management commissions by $1.2 million; and
●
higher other operating income by
$3.9 million mainly due
to a $4.4 million increase
in earnings from an
investment under
equity method.
Operating Expenses
Operating expenses for the first quarter of 2026 totaled $467.3 million, a decrease of $3.7 million when compared to the first quarter
of 2025, mainly driven by:
●
lower other
operating expenses
by $8.7
million mainly
driven by
lower reserves
for operational
losses and
lower
pension plan costs due to changes in actuarial assumptions;
114
●
lower professional fees by $1.3 million due to lower
costs associated with regulatory compliance activities;
and
●
net gains in other
real estate owned (OREO) by
$1.3 million due to fair
value increases as well
as higher gains on
sale;
partially offset by:
●
higher technology and
software expenses, including
software amortization, by
$5.5 million mainly
due to continuing
investments in technology and transformation initiatives;
and
●
higher personnel costs
of $3.4 million
mainly due to
increase in salaries
expenses of $3.9
million driven
by exempt
employees as well higher valuation of securities held
for deferred benefit plans.
115
Table 3 - Operating Expenses
Quarters ended March 31,
(In thousands)
2026
2025
Variance
Personnel costs:
Salaries
$
134,813
$
130,950
$
3,863
Commissions, incentives and other bonuses
40,185
37,986
2,199
Profit sharing
(1,203)
-
(1,203)
Pension, postretirement and medical insurance
14,896
14,566
330
Other personnel costs, including payroll taxes
27,378
29,211
(1,833)
Total personnel
costs
216,069
212,713
3,356
Net occupancy expenses
27,299
27,218
81
Equipment expenses
5,229
5,302
(73)
Other taxes
17,677
18,725
(1,048)
Professional fees
25,553
26,825
(1,272)
Technology and
software expenses
89,139
83,668
5,471
Processing and transactional services:
Credit and debit cards
14,206
12,926
1,280
Other processing and transactional services
24,881
24,855
26
Total processing
and transactional services
39,087
37,781
1,306
Communications
4,509
4,904
(395)
Business promotion:
Rewards and customer loyalty programs
15,393
16,365
(972)
Other business promotion
7,467
7,310
157
Total business
promotion
22,860
23,675
(815)
Deposit insurance
9,917
10,035
(118)
Other real estate owned (OREO) expense (income)
(4,618)
(3,330)
(1,288)
Other operating expenses:
Operational losses
3,975
6,138
(2,163)
All other
10,230
16,761
(6,531)
Total other operating
expenses
14,205
22,899
(8,694)
Amortization of intangibles
384
597
(213)
Total operating
expenses
$
467,310
$
471,012
$
(3,702)
Income Taxes
For the
quarter ended
March 31,
2026, the
Corporation recorded
an income
tax expense
of $46.9
million with
an ETR
of 16.0%,
compared to $45.1 million with
an ETR of 20.2% for
the same period of
year 2025.
Lower ETR when compared to
the first quarter
of 2025 is driven by higher net exempt income.
At March 31, 2026, the Corporation had a net deferred tax asset amounting to $810.5 million, net of a valuation allowance of $468.3
million. The net deferred tax asset related to the U.S.
operations was $223.6 million, net of a valuation
allowance of $386.6
million.
Refer to Note 26 to the Consolidated Financial
Statements for additional information on deferred
tax asset balances.
REPORTABLE SEGMENT RESULTS
The Corporation’s
reportable segments
for managerial
reporting purposes
consist of
Banco Popular
de Puerto
Rico and
Popular
U.S. A Corporate group
has also been defined to support the reportable
segments.
For
a
description
and
definition
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.
116
The corporate group reported
a net income
of $4.4 million for
the quarter ended March
31, 2026, compared with
a net loss
of $3.6
million
for
the same
quarter of
the previous
year,
mainly
due
to
higher income
from
equity
method investments.
There
were no
intercompany distributions between the U.S. subsidiaries
and the bank holding companies during the
first quarters of 2026 or 2025.
Highlights on the earnings results for the reportable
segments are discussed below:
Banco Popular de Puerto Rico
The Banco
Popular de
Puerto Rico
(“BPPR”) reportable
segment’s net
income amounted
to $204.4
million for
the quarter
ended
March 31,
2026, higher
by $38.4
million when
compared to
the same
quarter of
the previous
year.
The main
drivers for
a higher
income included:
●
net interest income of
$567.9 million, an increase of
$46.1 million, mainly driven by
lower deposit cost by $29.4
million or
32 basis points.
P.R.
public deposits costs, which are market linked,
decreased by $32.6 million or 66
basis points as the
cost was favorably impacted by declines in short-term market rates during
2025. Additionally, higher income from loans by
$20.1
million
attributable
to
loan
growth
led
by
commercial,
construction
and
mortgage
portfolios
during
2025,
which
resulted in higher average balances by
$1.6 billion when compared to the first
quarter of 2025. In addition, higher
income
from
investment securities
by $16.7
million or
16
basis points
contributed to
higher net
interest income,
due in
part to
higher investment activity in higher yielding U.S.
Treasury securities. This was partially offset by lower income from money
market investments by
$20.2 million driven
by lower average
balances by $1.2
billion driven by
the deployment of
funds
for loan growth and investments activity,
and lower yields by 78 basis points due to declining short-term market rates. Net
interest margin
expanded 22
basis points
to 3.85%
when compared
to the
same quarter
of 2025
drive by
lower deposit
costs;
●
higher non-interest income by $7.3 million mainly due to higher service fees by $7.0 million mainly due to higher debit and
credit card fees due to higher transaction volume, and
higher asset management fees;
●
lower
operating
expenses
by
$2.2
million
mostly
due
to
lower
operational losses
by
$2.0
million
mainly
related
to
the
mortgage servicing loss
reserves and higher gains
on repossessed unit
sales by $1.3
million, lower professional
fees by
$1.1 million, partially
offset by higher
technology and software expenses
by $1.6 million due
to continuing investments in
technology
and
transformation initiatives,
higher
personnel costs
by
$1.4
million
mainly
due
to
an
increase
in
salaries
expenses driven by exempt employees,
and higher processing and transactional fees
expenses by $1.3 million; and
●
lower income tax expense by $2.9 million due
mainly to higher exempt income;
partially offset by:
●
provision for credit
losses increased by
$20.6 million to
$73.3 million.
Refer to section
Provision for Credit
Losses-Loans
Held-in-Portfolio and Unfunded Commitments in this MD&A for more discussion over the drivers
of the provision for credit
losses by business segment.
Popular U.S.
For the quarter ended March 31, 2026, the
reportable segment of Popular U.S. reported a
net income of $37.0 million, compared
with a net income of $14.8 million for the
same quarter of the previous year. The main drivers for higher net
income are the
following:
●
net interest income of $111.7 million, an increase of $18.8 million, driven by higher interest income
from loans by $15.4
million or 22 basis points, primarily attributable
to loan growth coupled with lower deposit cost driven
by repricing in most
deposit products, most notably in online savings
and time deposits. Additionally, higher income from investment securities
by $3.9 million in part due to higher investment
activity in U.S. Treasury securities. This was partially offset by
lower
income from money market investments by $7.4
million due to lower average balances and an
increase in short-term
117
borrowings expense by $4.3 million resulting from
higher FHLB advances when compared
to the same period of 2025.
Net interest margin at 3.15% expanded 41
basis points, driven by the earning assets
mix and lower deposit costs;
and
●
provision for loan losses was $2.4 million, a decrease
of $10.1 million when compared to the same quarter
in 2025. Refer
to section Provision for Credit Losses-Loans Held-in-Portfolio
and Unfunded Commitments in this MD&A for
more
discussion over the drivers of the provision for
credit losses by business segment;
partially offset by:
●
higher income tax expense by $8.0 million due
to higher income before tax.
STATEMENT
OF FINANCIAL CONDITION ANALYSIS
Assets
The Corporation’s total
assets were $76.1
billion at March
31, 2026, compared
to $75.3 billion
at December 31,
2025. Higher total
assets by $782.8
million was driven
by an increase
in AFS securities
at both BPPR
and PB segments,
money market investments
and
other
assets,
partially
offset
by
a
decrease
in
HTM
securities
and
lower
loan
balances
at
PB.
Refer
to
the
Consolidated
Statements of Financial Condition included in this
report and to the following narrative for
additional information.
Money market investments and investment securities
Money market investments increased by $29.2
million as of March 31,
2026, when compared to December 31,
2025, mainly driven
by
higher deposit
balances.
AFS securities
increased $1.2
billion,
driven by
investment in
U.S. treasury
securities of
$1.3 billion,
partially offset by
maturities and principal paydowns, mainly
in mortgage-backed securities (“MBS”) and higher
unrealized losses in
AFS securities
of $37.9
million. HTM
securities decreased by
$365.0 million
driven by
maturities and
principal paydowns,
partially
offset by
the accretion of
$46.9 million of the
discount related to
U.S. Treasury securities
previously reclassified from AFS
to HTM.
Refer to Note
5 and to
Note 6 to
the Consolidated Financial Statements
for additional information with
respect to the
Corporation’s
debt securities available-for-sale and held-to-maturity.
Loans
Refer to Table
4 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
were $39.3
billion at
March 31,
2026, a
slight decrease
of $37.8
million when
compared to
December 31,
2025.
In
the PB
segment loan
balances decreased
by
$56.1 million
across the
construction, mortgage
and
consumer portfolios,
mainly
due
to
paydowns
in
the
construction
segment
and
runoff
from
the
exited
residential
mortgage
business.
In
the
BPPR
segment, loan
balances increased by
$18.3 million with
modest growth in
the mortgage
and commercial segments,
partially offset
by lower auto loans and leases lending activities.
At
March
31,
2026,
the
Corporation’s
loans
to
non-depository
financial
institutions
(‘’NDFIs’’)
amounted
to
$540.8
million,
an
decrease of $4.2 million, compared to December 31, 2025. At March 31, 2026, the Corporation’s exposure to NDFIs was composed
of approximately $266.1 million to insurance companies
for general corporate purposes unrelated to lending activities,
$105.5 million
related to mortgage
credit intermediaries, and $169.3
million to consumer and
commercial credit intermediaries. All
loans to NDFIs
are current in their contractual payments and carry a
‘pass’ rating.
118
Table 4 - Loans Ending Balances
(In thousands)
March 31, 2026
December 31, 2025
Variance
Loans held-in-portfolio:
Commercial
Commercial multi-family
$
2,427,295
$
2,455,790
$
(28,495)
Commercial real estate non-owner occupied
5,543,451
5,543,284
167
Commercial real estate owner occupied
3,212,356
3,153,080
59,276
Commercial and industrial
8,565,559
8,607,412
(41,853)
Total Commercial
19,748,661
19,759,566
(10,905)
Construction
1,674,193
1,674,899
(706)
Mortgage
8,712,361
8,649,440
62,921
Leasing
1,986,165
2,001,365
(15,200)
Consumer
Credit cards
1,214,199
1,256,717
(42,518)
Home equity lines of credit
79,764
78,692
1,072
Personal
1,913,281
1,906,228
7,053
Auto
3,783,904
3,819,812
(35,908)
Other
177,174
180,799
(3,625)
Total Consumer
7,168,322
7,242,248
(73,926)
Total loans held-in
-portfolio
$
39,289,702
$
39,327,518
$
(37,816)
Loans held-for-sale:
Mortgage
$
5,603
$
9,998
$
(4,395)
Total loans held-for-sale
$
5,603
$
9,998
$
(4,395)
Total loans
$
39,295,305
$
39,337,516
$
(42,211)
119
Other assets
Other assets amounted to
$1.7
billion at March 31,
2026, an increase of
$25.8 million when compared to
December 31, 2025. The
variance
was
mainly
driven
by
an
increase
of
$18.6
million
in
investments under
the
equity
method,
primarily due
to
the
equity
pickup
from
our
investment
in
BHD,
and
an
increase
in
capitalized
software
costs
of
$10.6
million
related
to
technology
modernization, partially offset by lower prepaid taxes 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 March 31, 2026 and December 31,
2025.
Liabilities
The Corporation’s total
liabilities were $69.8 billion
at March 31,
2026, an increase of
$720.7 million, when compared to
December
31, 2025. The following is a discussion of
the significant changes in liabilities.
Deposits and Borrowings
Total Deposits
The Corporation’s deposits
totaled $67.6 billion as
of March 31,
2026, compared to $66.2
billion as of
December 31, 2025. Ending
deposit balances
increased by
$1.4 billion
mainly from
higher retail and
commercial deposits
in BPPR
in part
due to
seasonal tax
refunds. Excluding P.R.
public deposits, customer deposits increased by
$1.2 billion. Average deposits increased
by $1.1 billion, or
$383.5 million when excluding P.R. public deposits.
At the
end of
the first
quarter of
2026, Puerto
Rico public
deposits were
$19.7 billion,
representing 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.
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 5 for a breakdown of the Corporation’s deposits at March 31, 2026 and December
31, 2025.
120
Table 5 - Deposits Ending Balances
(In thousands)
March 31, 2026
December 31, 2025
Variance
Deposits excluding P.R.
public deposits:
Demand deposits
$
15,778,435
$
15,298,712
$
479,723
Savings, NOW and money market deposits (non-brokered)
23,208,340
22,655,936
552,404
Savings, NOW and money market deposits (brokered)
82,417
87,566
(5,149)
Time deposits (non-brokered)
7,958,260
7,861,848
96,412
Time deposits (brokered CDs)
914,526
866,772
47,754
Sub-total deposits excluding P.R.
public deposits
47,941,978
46,770,834
1,171,144
P.R. public
deposits:
Demand deposits
[1]
11,967,888
11,534,301
433,587
Savings, NOW and money market deposits (non-brokered)
6,828,306
7,134,217
(305,911)
Time deposits (non-brokered)
873,144
750,741
122,403
Sub-total P.R.
public deposits
19,669,338
19,419,259
250,079
Total deposits
$
67,611,316
$
66,190,093
$
1,421,223
[1] Includes interest bearing demand deposits.
Borrowings
The Corporation’s borrowings totaled $1.1 billion at
March 31, 2026, a decrease of $329.0 million
when compared to December 31,
2025.
The
decrease
was
mainly
related
to
lower
FHLB
advances
by
$325.0
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 $6.3 billion at March 31, 2026, an increase of $62.0 million when compared to December 31, 2025. The
increase was principally due to
net income for the
quarter ended March 31, 2026
of $245.7 million, coupled with
the after-tax effect
of the amortization of unrealized losses from securities previously reclassified to HTM of $37.5 million, partially offset by an increase
in
treasury stock
of
$152.4
million, mainly
due
to
common
stock
repurchases, the
common
and
preferred dividends
declared
of
$48.9 million, and
an increase in net
unrealized losses in the
portfolio of AFS
securities of $25.3
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 ended March 31, 2026, Popular repurchased 1,555,398 shares of common stock for $155.2 million at an average
price of $134.31 per share. As of March
31, 2026, $126.0 million remained available for stock repurchase under the currently active
authorization.
The composition of the Corporation’s financing to total assets
at March 31, 2026 and December 31, 2025
is included in Table 6.
121
Table 6 - Financing to Total
Assets
March 31,
December 31,
% (decrease) increase
% of total assets
(Dollars in millions)
2026
2025
from 2025 to 2026
2026
2025
Non-interest-bearing core deposits
$
15,785
$
15,304
3.1
%
20.7
%
20.3
%
Interest-bearing core deposits
45,872
46,017
(0.3)
60.3
61.1
Interest-bearing other deposits
5,954
4,869
22.3
7.8
6.4
Repurchase agreements
35
39
(10.3)
-
0.1
Other short-term borrowings
350
650
(46.2)
0.5
0.9
Notes payable
735
760
(3.3)
1.0
1.0
Other liabilities
1,089
1,460
(25.4)
1.4
1.9
Stockholders’ equity
6,311
6,249
1.0
8.3
8.3
122
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 March 31, 2026, the Corporation’s, BPPR’s and
PB’s capital ratios continue to exceed the minimum requirements for being
“well-
capitalized”.
The risk-based
capital ratios
presented in
Table
7,
which include
common equity
tier 1,
Tier
1 capital,
total capital
and leverage
capital as of March 31, 2026 and December 31,
2025.
Table 7 - Capital Adequacy
Data
(Dollars in thousands)
March 31, 2026
December 31, 2025
Common equity tier 1 capital:
Common stockholders' equity - U.S. GAAP basis
$
6,288,943
$
6,226,936
AOCI related adjustments due to opt-out election
1,083,150
1,096,805
Goodwill, net of associated deferred tax liability (DTL)
(637,705)
(639,734)
Intangible assets, net of associated DTLs
(4,692)
(5,076)
Deferred tax assets and other deductions
(209,380)
(215,404)
Common equity tier 1 capital
$
6,520,316
$
6,463,527
Additional tier 1 capital:
Preferred stock
22,143
22,143
Additional tier 1 capital
$
22,143
$
22,143
Tier 1 capital
$
6,542,459
$
6,485,670
Tier 2 capital:
Trust preferred securities subject to phase in as
tier 2
192,674
192,674
Other inclusions (deductions), net
515,782
517,723
Tier 2 capital
$
708,456
$
710,397
Total risk-based capital
$
7,250,915
$
7,196,067
Minimum total capital requirement to be well capitalized
$
4,095,067
$
4,112,375
Excess total capital over minimum well capitalized
$
3,155,848
$
3,083,692
Total risk-weighted
assets
$
40,950,669
$
41,123,753
Total assets for leverage
ratio
$
76,104,777
$
74,661,894
Risk-based capital ratios:
Common equity tier 1 capital
15.92
%
15.72
%
Tier 1 capital
15.98
15.77
Total capital
17.71
17.50
Tier 1 leverage
8.60
8.69
123
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
March
31, 2026, continue to exceed the minimum requirements
for being “well-capitalized” under the Basel III
capital rules.
The increase in the common equity Tier I capital ratio, Tier I capital ratio, and total capital ratio as of March
31, 2026 as compared to
December 31, 2025 was mainly due to
the quarter’s earnings,
and lower risk weighted assets driven by
the decrease in loans held-
in-portfolio and lower non-performing
loans held-in-portfolio, partially offset
by the repurchase of
common stock and
common stock
dividends. The decrease in the leverage ratio was driven
by higher total assets which are impacted
by zero-risk weighted assets that
did not have a significant impact on the risk
weighted assets, partially offset by the quarter’s earnings.
Reconciliation to Tangible Common Equity and Tangible Assets
Table
8 provides
a reconciliation
of total
stockholders’ equity
to tangible
common equity
and total
assets to
tangible assets
as of
March 31, 2026, and December 31, 2025.
124
Table 8 - Reconciliation of Tangible
Common Equity and Tangible
Assets
(In thousands, except share or per share information)
March 31, 2026
December 31, 2025
Total stockholders’
equity
$
6,311,086
$
6,249,079
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(789,954)
Less: Other intangibles
(4,692)
(5,076)
Total tangible common
equity
$
5,494,297
$
5,431,906
Total assets
$
76,131,018
$
75,348,267
Less: Goodwill
(789,954)
(789,954)
Less: Other intangibles
(4,692)
(5,076)
Total tangible assets
$
75,336,372
$
74,553,237
Tangible common
equity to tangible assets
7.29
%
7.29
%
Common shares outstanding at end of period
64,654,788
65,719,385
Tangible book value
per common share
$
84.98
$
82.65
Quarterly average
Total stockholders’
equity
$
6,289,337
$
6,938,571
[1]
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(789,954)
Less: Other intangibles
(4,944)
(5,328)
Total tangible equity
before adjusting for the impact of unrealized losses
on AFS securities including those transferred to HTM
$
5,472,296
$
6,121,146
Return on average tangible common equity before adjusting
for the
impact of unrealized losses on AFS securities including
those transferred
to HTM
18.18
%
15.14
%
Add: Average unrealized losses on AFS securities
743,809
56,761
Add: Average unrealized losses on AFS securities
transferred to HTM
221,114
259,058
Total tangible equity
after add back of impact of unrealized losses on AFS
securities, including those transferred to HTM
$
6,437,219
$
6,436,965
Return on average tangible common equity after add back
of impact of
unrealized losses on AFS securities including those transferred
to HTM
(''ROTCE'')
15.46
%
14.39
%
[1] Average balances exclude certain unrealized
gains or losses on debt securities available-for-sale.
125
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
$21.7 billion
and
$7.0 billion,
respectively, as
of March 31, 2026.
Other assets subject to market risk
include mortgage servicing rights ("MSRs") with
a fair value
of $94.2 million as of March 31, 2026.
Interest Rate Risk (“IRR”)
The Corporation’s net interest income is subject
to various categories of interest rate risk,
including repricing, basis, yield curve and
option risks.
In managing
interest rate
risk, management may
alter the
mix of
floating and
fixed rate
assets and
liabilities, change
pricing
schedules,
adjust
maturities
through
sales
and
purchases
of
investment
securities,
and
enter
into
derivative
contracts,
among other alternatives.
Management utilizes various tools to assess IRR, including 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 as
the risk of pricing lags
due to contractual or timing
differences between the market and
management response
to
changes in
the
rate environment.
These forward-looking
computations are
management’s best
estimate based
on known
and
available information and actual results may differ.
The following
table presents
the results
of the
simulations at
March 31,
2026 and
December 31,
2025, assuming
a static
balance
sheet and parallel changes over flat spot rates over
a one-year time horizon:
126
Table 9 - Net Interest Income Sensitivity
(One Year Projection)
March 31, 2026
December 31, 2025
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
17,583
0.61
(7,520)
(0.27)
+100 basis points
8,316
0.29
(4,379)
(0.16)
-100 basis points
(10,053)
(0.35)
2,691
0.10
-200 basis points
(17,168)
(0.60)
7,488
0.27
As
of
March
31,
2026,
NII
simulations
showed
that
the
Corporation’s
sensitivity
position
was
asset
sensitive.
Compared
to
the
results as of December 31, 2025, the variation in sensitivity and the resulting profile was
mainly due to an increase in U.S. Treasury
Bills as a result
of a rise in
non-interest bearing and low-cost interest-bearing deposits in
Puerto Rico offset in
part by the purchase
of
two-to-three-year
U.S.
Treasury
Notes.
The
profile
reflects
that
in
rising
rate
scenarios,
Popular’s
net
interest
income
would
increase
during
the
one-year
horizon
due
to
the
larger
volume
of
assets
repricing
and
generating
more
interest
income,
while
interest expense increases modestly due to the high
proportion of low-cost deposits.
The
Corporation’s
loan
and
investment
portfolios
are
subject
to
prepayment
risk.
Prepayment
risk
also
could
have
a
significant
impact on the duration of mortgage-backed securities
and collateralized mortgage obligations.
Trading
The Corporation
engages in
trading activities
in the
ordinary course
of business
at its
subsidiaries, BPPR
and Popular
Securities.
Popular Securities’
trading activities
consist primarily
of market-making
activities to
meet expected
customers’ needs
related to
its
retail brokerage business, and purchases and sales of
U.S. Government and government sponsored securities 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 March 31, 2026, the Corporation held trading securities with a fair value of $30.4 million,
representing 0.04% of the Corporation’s
total assets, compared with $36.6 million and 0.05%,
respectively, at December 31, 2025.
The Corporation’s trading activities are
limited by internal policies. For each
of the two subsidiaries, the
market risk assumed under
trading
activities
is
measured
by
the
5-day
net
value-at-risk
(“VAR”),
with
a
confidence
level
of
99%.
The
VAR
measures
the
maximum estimated loss that may occur over a
5-day holding period, given a 99% probability. .
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.
Liquidity
Liquidity Risk Management Process
The Corporation
has adopted
policies and
limits to
monitor the
Corporation’s liquidity
position and
that of
its banking
subsidiaries.
Refer to
the Enterprise
Risk Management
section of
Management’s Discussion
and Analysis
included in
the 2025
Form 10-K
for
information on the framework
in place to monitor,
review, and approve
policies to measure, limit and
manage funding activities and
strategies
impacting
liquidity
risk.
Additionally,
contingency
funding
plans
are
used
to
model
various
stress
events
of
different
magnitudes that
affect different
time horizons,
to assist
management in
evaluating the
size of
the liquidity
buffers needed
if those
events occur. However,
such models may not predict
accurately how the market and customers
might react to every
event and are
dependent on
many assumptions.
The objective
of effective
liquidity management
is to
ensure that
the Corporation
has sufficient
127
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% and 88% of funding of the Corporation’s total assets at March 31, 2026 and December
31, 2025,
respectively. The
ratio of
total ending
loans to
deposits was 58%
and 59%
at March
31, 2026
and December
31, 2025,
respectively.
In addition to
traditional deposits, the
Corporation maintains borrowing arrangements, which
amounted to $1.1
billion
in
outstanding
balances
at
March
31,
2026
(December
31,
2025
-
$1.4
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.
At March 31,
2026, the Corporation’s
available liquidity increased to
$27.7 billion from
$27.0 billion on
December 31, 2025.
During
the first
quarter of 2026,
the Corporation had
no material incremental
use of
its available liquidity
sources. The liquidity
sources of
the Corporation at March 31, 2026 are presented
in Table 10 below:
128
Table 10 - Liquidity Sources
March 31, 2026
December 31, 2025
(In thousands)
BPPR
Popular U.S.
Total
BPPR
Popular U.S.
Total
Unpledged securities and unused funding
sources:
Money market (excess funds at the
Federal Reserve Bank)
$
3,635,635
$
1,010,262
$
4,645,897
$
3,595,806
$
1,020,478
$
4,616,284
Unpledged securities
5,617,332
1,051,193
6,668,525
5,215,981
1,057,129
6,273,110
FHLB borrowing capacity
3,315,007
927,693
4,242,700
3,291,672
692,744
3,984,416
Discount window of the Federal Reserve
Bank borrowing capacity
8,365,380
3,788,737
12,154,117
8,472,866
3,644,486
12,117,352
Total available liquidity
$
20,933,354
$
6,777,885
$
27,711,239
$
20,576,325
$
6,414,837
$
26,991,162
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
5 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
deposits,
which
are
fully
collateralized, have
historically provided
the Corporation
with a
sizable source
of relatively
stable and
low-cost funds.
P.R.
public
deposits, while linked to market interest rates,
provide a stable source of funding with
an attractive earning spread. As of March
31,
2026, total Puerto Rico public sector deposits were
$19.7 billion, compared to $19.4 billion at
December 31, 2025.
Core deposits
represent 91%
of total
deposits at
$61.7 million,
as of
March 31,
2026, compared
with 92%
at
$60.9 billion
as
of
December
31,
2025.
Core
deposits
financed
85%
of
the
Corporation’s
earning
assets
at
March
31,
2026,
compared
to
85%
at
December 31, 2025.
The
Corporation
had
$1.0
billion
in
brokered
deposits
at
March
31,
2026,
which
financed
approximately
1%
of
its
total
assets
(December 31, 2025 - $1.0 billion and 1%,
respectively).
The distribution by maturity of certificates of deposit with denominations of $250,000 and over at March 31, 2026 is presented in the
table that follows:
129
Table 11
- Distribution by Maturity of Certificates of Deposit
of $250,000 and Over
(In thousands)
3 months or less
$
2,600,756
Over 3 to 12 months
1,109,024
Over 1 year to 3 years
299,828
Over 3 years
119,622
Total
$
4,129,230
As of March
31, 2026, the
banking subsidiaries had sufficient
current and projected
liquidity sources to meet
their anticipated cash
flow obligations, as well as special needs and off-balance sheet commitments,
in the ordinary course of business and have sufficient
liquidity
resources
to
address
stress
events.
Although
the
banking
subsidiaries
have
historically
been
able
to
replace
maturing
deposits and advances, no assurance can
be given that they would
be able to replace those
funds in the future if
the Corporation’s
financial
condition
or
general
market
conditions
were
to
deteriorate.
The
Corporation’s
financial
flexibility
would
be
severely
constrained
if
the
banking
subsidiaries
are
unable
to
maintain
access
to
funding
or
if
adequate
funding
is
not
available
to
accommodate future
financing needs
at
acceptable interest
rates. The
banking subsidiaries
also
are required
to
deposit cash
or
qualifying
securities
to
meet
margin
requirements
on
repurchase
agreements,
deposit
agreements
and
other
collateralized
borrowing facilities. To
the extent that
the value of
securities previously pledged as
collateral declines because of
market changes,
the Corporation will be required to deposit additional cash or securities to meet its margin or collateral requirements and would need
to
rely
more
heavily
on
alternative
funding
sources.
In
these
scenarios,
the
Corporation’s
financial
flexibility
and
ability
to
grow
revenues may not increase proportionately to cover costs and
profitability would be adversely affected.
The Corporation considers balances in
excess of $250,000 to have a
higher potential liquidity risk.
Table
12 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 12, 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.
130
Table 12 - Deposits
31-Mar-26
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$
24,374,849
44
%
$
8,292,411
68
%
$
32,667,260
48
%
Transactional deposits balances over
$250,000
8,431,271
15
%
2,845,596
23
%
11,276,867
17
%
Time deposits balances over $250,000
2,386,858
4
%
521,619
4
%
2,908,477
4
%
Uninsured foreign deposits
444,415
1
%
-
-
%
444,415
1
%
Collateralized public funds
20,048,501
36
%
265,796
2
%
20,314,297
30
%
Intercompany deposits
200,890
-
%
305,233
3
%
-
-
%
Total deposits
$
55,886,784
100
%
$
12,230,655
100
%
$
67,611,316
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
31-Dec-25
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$
23,873,328
44
%
$
8,283,967
69
%
$
32,157,295
49
%
Transactional deposits balances over
$250,000
8,254,961
15
%
2,341,365
19
%
10,596,326
16
%
Time deposits balances over $250,000
2,182,301
4
%
794,183
7
%
2,976,484
4
%
Uninsured foreign deposits
446,360
1
%
-
-
%
446,360
1
%
Collateralized public funds
19,748,934
36
%
264,694
2
%
20,013,628
30
%
Intercompany deposits
235,251
-
%
349,483
3
%
-
-
%
Total deposits
$
54,741,135
100
%
$
12,033,692
100
%
$
66,190,093
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
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
March 31, 2026 and
$595 million at December
31, 2025.
The contractual maturities of the BHCs notes payable
at March 31, 2026 are presented in Table 13.
Table 13
- Distribution of BHC's Notes Payable by Contractual
Maturity
Year
(In thousands)
2028
$
396,955
Later years
198,406
Total
$
595,361
131
As of
March 31,
2026, the
BHCs had
cash and
money markets
investments totaling
$1.6 million
and borrowing
potential of
$165
million
from
its
secured
facility
with
BPPR.
The
BHCs’
liquidity
position
continues
to
be
adequate
with
sufficient
cash
on
hand,
investments and
other sources of
liquidity that are
expected to be
sufficient to
meet all
interest payments and
dividend obligations
for the
foreseeable future.
Additionally,
the Corporation’s
latest quarterly
paid dividend
was $0.75
per share
or approximately
$48
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
quarter ended March
31, 2026,
the Corporation
declared cash
dividends of
$0.75 per
common share
outstanding ($49
million in the aggregate). The dividends for the Corporation’s
Series A preferred stock amounted to $0.4 million.
During the quarter ended March 31, 2026, the
BHCs received dividends and distributions amounting
to $175 million from BPPR, and
$12 million
from its
other non-banking
subsidiaries. Dividends
from BPPR
constitute Popular,
Inc.’s primary
source of
liquidity.
In
addition, during the quarter ended March 31, 2026,
PIBI, a wholly owned subsidiary of Popular, Inc., had no dividends.
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
March 31,
2026, BPPR
could
declare
a
dividend
of
up
to
approximately
$13
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 March
31, 2026, debt securities provide 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
10 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
132
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 March
31, 2026
and
December 31, 2025,
and the results
of their operations
for the
quarters ended March
31, 2026 and
March 31,
2025. Excluded are
investments and equity in earnings from subsidiaries
and affiliates outside the obligor group.
Intercompany balances
and transactions
within the
obligor group
have been
eliminated. Material
amounts due
from, due
to, and
transactions with subsidiaries and affiliates are shown separately. Related party transactions
are also presented separately.
133
Table 14 - Summarized Statement
of Condition
(In thousands)
March 31, 2026
December 31, 2025
Assets
Cash and money market investments
$
468,987
$
524,882
Investment securities
39,780
38,656
Accounts receivables from non-obligor subsidiaries
15,521
12,798
Other loans (net of allowance for credit losses of $102 (2025
- $132))
23,844
24,169
Investment in equity method investees
5,145
5,145
Other assets
103,289
91,618
Total assets
$
656,566
$
697,268
Liabilities and Stockholders' deficit
Accounts payable to non-obligor subsidiaries
$
11,998
$
7,669
Notes payable
595,362
594,958
Other liabilities
108,959
135,785
Stockholders' deficit
(59,753)
(41,144)
Total liabilities and
stockholders' deficit
$
656,566
$
697,268
Table 15 - Summarized Statement
of Operations
For the quarters ended
(In thousands)
March 31, 2026
March 31, 2025
Income:
Dividends from non-obligor subsidiaries
$
187,000
$
206,000
Interest income from non-obligor subsidiaries and affiliates
904
1,181
Other operating income
1,281
838
Total income
$
189,185
$
208,019
Expenses:
Services provided by non-obligor subsidiaries and affiliates
(net of
reimbursement by subsidiaries for services provided by parent
of
$69,903 (2025 - $61,777))
$
5,126
$
3,903
Other expenses
5,694
7,339
Income tax (benefit) expense
(323)
2,679
Total expenses
$
10,497
$
13,921
Net income
$
178,688
$
194,098
134
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 2025 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
2025
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
reflected a 1.1% year-over-year increase in December 2025, with no change on a month-over-month basis. While this index is not a
direct measure of real GNP, it serves as an indicator of ongoing economic activity.
In 2021
and 2022,
inflation rose
sharply in
the U.S.
and Puerto
Rico due
to post-pandemic
demand and supply
chain disruptions.
Inflation
began
to
decrease
by
mid-2022
as
the
Federal
Reserve
raised
interest
rates,
largely
stabilizing
by
September
2024,
leading to a
series of rate
reductions by the Federal
Reserve for the
first time in
four years. As
of March 2026, the
U.S. Consumer
Price Index
reflected a
3.3% year-over-year increase,
which, while below
peak 2022
levels, remains above
the Federal
Reserve’s
2% target. The year-over-year
increase accelerated from 2.4%
in February 2026 to
3.3% in March
2026, primarily driven by
higher
energy and
gasoline prices
resulting from
the recent
geopolitical conflict involving
Iran. In
Puerto Rico,
the Consumer
Price Index
reflected a year-over-year
increase of 2.5%
in March 2026,
up from 2.3%
in February 2026.
It is still
too early to
determine the full
extent to which the conflict involving Iran and its
indirect impacts may impact the global and Puerto
Rico economies.
Fiscal Challenges of Puerto Rico and its Municipalities
As
Puerto Rico’s
economy contracted
in the
2000s, public
debt
increased rapidly
due to
borrowing to
cover
deficits to
pay
debt
service, pension benefits,
and other expenditures.
By 2016, the
government had over
$120 billion in
combined debt and
unfunded
pension liabilities, lost access to capital markets, and
faced a fiscal crisis.
In
response,
the
U.S.
Congress
enacted
PROMESA
in
June
2016.
PROMESA
established
an
Oversight
Board
with
significant
control over Puerto Rico’s
fiscal and economic affairs,
including those of its public
corporations, instrumentalities and municipalities
(collectively, “PR Government Entities”).
In August 2025, President Donald J. Trump dismissed six of the seven members of
the Oversight Board, reportedly due to inefficient
leadership and excessive spending. Three of the dismissed members subsequently filed suit in federal
court challenging the legality
135
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 was
appealed to the
United States Court of
Appeals for
the First Circuit
on December 3, 2025,
and the appeal remains
pending as of March
31, 2026. 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.
For
further
discussion
of
the
Corporation’s
direct
and
indirect
exposure to
USVI
government
entities,
please
refer
to
Note
18
–
Commitments and Contingencies to the Consolidated
Financial Statements.
Non-Performing Assets
Non-performing assets (“NPAs”)
include primarily past-due
loans that
are no
longer accruing interest,
renegotiated loans, and
real
estate property acquired through foreclosure. A summary, including certain credit
quality metrics, is presented in Table 16.
During
the
first
quarter
of
2026,
the
Corporation’s
credit
quality
metrics
remained
stable.
The
Corporation
continues
to
closely
monitor
the
economic
landscape and
borrower performance,
as
macro-economic uncertainty
and
increased volatility
remain key
136
considerations. Management believes that the
improvements in risk management practices over
recent years and the
overall credit
risk profile of the loan portfolio position the Corporation
to continue to operate successfully in the current environment.
Total
NPAs
of $503.8 million
as of
March 31,
2026 decreased by
$37.0 million when
compared with December
31, 2025. BPPR’s
NPLs
decreased
by
$38.4
million,
primarily driven
by
reductions in
commercial, consumer
and
mortgage
NPLs
of
$17.6 million,
$17.5 million
and $3.0
million, respectively.
The decrease
in commercial
NPLs was
mainly driven
by
an
$11.1
million charge-off
related to a
commercial real estate
facility classified as
NPL in the
third quarter of
2025. The improvement
in consumer NPLs
was
primarily due to a $16.8 million
reduction in auto NPLs driven by increased
payment activity. Popular U.S.
NPLs decreased by $1.8
million, mostly driven by a decrease of $3.7
million in the mortgage NPLs.
On March 31, 2026,
the ratio of NPLs
to total loans held-in-portfolio was
1.17%, compared to 1.27% on
December 31, 2025. Other
real estate owned loans (“OREOs”) totaled $45.7
million, an increase of $3.2 million from December
31, 2025.
The Corporation’s commercial loan
portfolio secured by real
estate (“CRE”) amounted to
$11.2 billion
on March 31,
2026, of which
$3.2 billion was secured with owner occupied properties,
compared with $11.2 billion and $3.2 billion, respectively, on December 31,
2025.
CRE NPLs
amounted to $58.6
million at March
31, 2026, compared
with $76.0 million
at December 31,
2025, driven by
the $11.
1
million net
charge off
on the
CRE facility
discussed above.
The CRE
NPL ratios
for the
BPPR and
Popular U.S.
segments were
0.83% and 0.28%, respectively, on March 31, 2026, compared with 1.23% and
0.25%, respectively, on December 31, 2025.
The non-owner
occupied CRE
portfolio was
$5.5 billion
at March
31, 2026,
split between
$3.4 billion
in BPPR
and $2.2
billion in
Popular U.S. This portfolio is diversified across sectors: retail (33%), hotels (19%), and office space (12%),
which together represent
two-thirds of
total non-owner
occupied CRE
exposure. Specifically,
office space
leasing accounts
for just
1.7% ($673.6
million) of
the total loan portfolio, mainly comprising mid-rise properties with an average loan size of $3 million, and is well diversified by tenant
type.
Within CRE, the
commercial multi-family portfolio is
$2.4 billion (approximately 6%
of total loans),
concentrated in New
York
Metro
($1.4 billion), South Florida ($664.6
million) and Puerto Rico ($238.5 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
16, on March
31, 2026 there were
$593.2 million of
performing loans, mostly commercial
loans, which in management’s opinion, are currently subject to potential future classification as non-performing (December 31, 2025
- $499.6 million).
The following table presents the Corporation’s NPAs as of March 31, 2026 and December
31, 2025:
137
Table 16 - Non-Performing
Assets
March 31, 2026
December 31, 2025
(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
$
-
$
10,962
$
10,962
0.5
%
$
112
$
8,636
$
8,748
0.4
%
Commercial real estate non-owner
occupied
26,457
6,987
33,444
0.6
35,692
7,020
42,712
0.8
Commercial real estate owner
occupied
14,192
-
14,192
0.4
24,567
-
24,567
0.8
Commercial and industrial
185,993
6,524
192,517
2.2
183,914
6,498
190,412
2.2
Total Commercial
226,642
24,473
251,115
1.3
244,285
22,154
266,439
1.3
Mortgage
129,367
9,700
139,067
1.6
132,373
13,422
145,795
1.7
Leasing
8,892
-
8,892
0.4
9,179
-
9,179
0.5
Consumer
Home equity lines of credit
-
2,766
2,766
3.5
-
2,796
2,796
3.6
Personal
15,755
905
16,660
0.9
18,863
1,233
20,096
1.1
Auto
35,390
-
35,390
0.9
52,200
-
52,200
1.4
Other
4,227
-
4,227
2.4
1,809
29
1,838
1.0
Total Consumer
55,372
3,671
59,043
0.8
72,872
4,058
76,930
1.1
Total non-performing
loans held-in-
portfolio
420,273
37,844
458,117
1.2
%
458,709
39,634
498,343
1.3
%
Other real estate owned (“OREO”)
45,176
504
45,680
41,929
504
42,433
Total non-performing
assets
[1]
$
465,449
$
38,348
$
503,797
$
500,638
$
40,138
$
540,776
Accruing loans past due 90 days or
more
[2]
$
226,218
$
169
$
226,387
$
228,772
$
188
$
228,960
Ratios:
Non-performing assets to total assets
0.78
%
0.24
%
0.66
%
0.85
%
0.25
%
0.72
%
Non-performing loans held-in-portfolio
to loans held-in-portfolio
1.52
0.33
1.17
1.66
0.34
1.27
Allowance for credit losses to loans
held-in-portfolio
2.65
0.79
2.10
2.60
0.77
2.05
Allowance for credit losses to non-
performing loans, excluding held-for-
sale
174.23
241.77
179.81
156.51
227.42
162.15
[1] There were no non-performing loans held-for-sale
as of March 31, 2026 and December 31, 2025.
[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
$43 million
of residential
mortgage
loans
insured
by
FHA
or
guaranteed
by
the
VA
that
are
no
longer
accruing
interest
as
of
March
31,
2026
(December
31,
2025
-
$47
million).
Furthermore, the Corporation
has $26 million
in reverse mortgage
loans which are
guaranteed by
FHA, but which
are currently
not accruing interest.
Due to the guaranteed
nature of the loans,
it is the Corporation’s
policy to exclude these
balances from non-performing
assets (December 31,
2025 -
$27 million).
For the quarter ended
March 31, 2026, total
inflows of NPLs held-in-portfolio,
excluding consumer loans, increased by
$4.2 million,
compared to the
same period in
2025. Inflows of
NPLs held-in-portfolio at the
BPPR segment increased by
$6.4 million, compared
to the same period in 2025, mainly driven by higher mortgage inflows
by $7.2 million. Inflows of NPLs held-in-portfolio at the Popular
U.S. segment decreased by $2.3 million from the
same period in 2025, mainly driven by lower
commercial inflows by $2.1 million.
Tables 17 to 22 present the Corporation’s inflows to NPLs for the quarters ended March 31,
2026 and 2025.
138
Table 17 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the quarter ended March 31, 2026
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
376,658
$
35,576
$
412,234
Plus:
New non-performing loans
43,461
5,733
49,194
Advances on existing non-performing loans
-
181
181
Less:
Non-performing loans transferred to OREO
(3,111)
-
(3,111)
Non-performing loans charged-off
(12,201)
(24)
(12,225)
Loans returned to accrual status / loan collections
(48,798)
(7,293)
(56,091)
Ending balance -
NPLs
$
356,009
$
34,173
$
390,182
Table 18 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the quarter ended March 31, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
209,543
$
53,544
$
263,087
Plus:
New non-performing loans
37,023
8,158
45,181
Advances on existing non-performing loans
-
18
18
Less:
Non-performing loans transferred to OREO
(2,555)
-
(2,555)
Non-performing loans charged-off
(927)
(1,130)
(2,057)
Loans returned to accrual status / loan collections
(51,981)
(13,996)
(65,977)
Ending balance -
NPLs
$
191,103
$
46,594
$
237,697
Table 19 - Activity in Non
-Performing Commercial Loans Held-In-Portfolio
For the quarter ended March 31, 2026
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
244,285
$
22,154
$
266,439
Plus:
New non-performing loans
5,004
3,205
8,209
Advances on existing non-performing loans
-
170
170
Less:
Non-performing loans transferred to OREO
(650)
-
(650)
Non-performing loans charged-off
(11,661)
(3)
(11,664)
Loans returned to accrual status / loan collections
(10,336)
(1,053)
(11,389)
Ending balance - NPLs
$
226,642
$
24,473
$
251,115
139
Table 20 - Activity in Non
-Performing Commercial Loans Held-In-Portfolio
For the quarter ended March 31, 2025
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
51,101
$
23,654
$
74,755
Plus:
New non-performing loans
5,781
5,413
11,194
Advances on existing non-performing loans
-
17
17
Less:
Non-performing loans transferred to OREO
(120)
-
(120)
Non-performing loans charged-off
(739)
(1,130)
(1,869)
Loans returned to accrual status / loan collections
(13,426)
(10,447)
(23,873)
Ending balance - NPLs
$
42,597
$
17,507
$
60,104
Table 21 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended March 31, 2026
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
132,373
$
13,422
$
145,795
Plus:
New non-performing loans
38,457
2,528
40,985
Advances on existing non-performing loans
-
11
11
Less:
Non-performing loans transferred to OREO
(2,461)
-
(2,461)
Non-performing loans charged-off
(540)
(21)
(561)
Loans returned to accrual status / loan collections
(38,462)
(6,240)
(44,702)
Ending balance - NPLs
$
129,367
$
9,700
$
139,067
Table 22 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended March 31, 2025
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
158,442
$
29,890
$
188,332
Plus:
New non-performing loans
31,242
2,745
33,987
Advances on existing non-performing loans
-
1
1
Less:
Non-performing loans transferred to OREO
(2,435)
-
(2,435)
Non-performing loans charged-off
(188)
-
(188)
Loans returned to accrual status / loan collections
(38,555)
(3,549)
(42,104)
Ending balance - NPLs
$
148,506
$
29,087
$
177,593
140
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 March 31, 2026 and December 31, 2025,
are presented below.
Table 23 - Loan Delinquencies
(Dollars in thousands)
March 31, 2026
December 31, 2025
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
of total loans
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
of total loans
Commercial
Commercial multi-family
$
27,339
$
2,427,295
1.13
%
$
24,982
$
2,455,790
1.02
%
Commercial real estate
non-owner occupied
48,779
5,543,451
0.88
47,068
5,543,284
0.85
Commercial real estate
owner occupied
39,782
3,212,356
1.24
28,008
3,153,080
0.89
Commercial and industrial
220,994
8,565,559
2.58
215,068
8,607,412
2.50
Total Commercial
336,894
19,748,661
1.71
315,126
19,759,566
1.59
Construction
20,538
1,674,193
1.23
17,283
1,674,899
1.03
Mortgage
Mortgage insured
[1]
395,379
3,281,279
12.05
429,796
3,166,679
13.57
Mortgage uninsured
287,933
5,431,082
5.30
329,504
5,482,761
6.01
Total Mortgage
683,312
8,712,361
7.84
759,300
8,649,440
8.78
Leasing
34,091
1,986,165
1.72
37,567
2,001,365
1.88
Consumer
Credit cards
46,467
1,214,199
3.83
51,846
1,256,717
4.13
Home equity lines of credit
3,798
79,764
4.76
4,160
78,692
5.29
Personal
48,279
1,913,281
2.52
53,632
1,906,228
2.81
Auto
129,540
3,783,904
3.42
186,798
3,819,812
4.89
Other
5,374
177,174
3.03
5,929
180,799
3.28
Total Consumer
233,458
7,168,322
3.26
302,365
7,242,248
4.18
Loans held-for-sale
-
5,603
-
-
9,998
-
Total
$
1,308,293
$
39,295,305
3.33
%
$
1,431,641
$
39,337,516
3.64
%
[1]
Loans that carry certain guarantees from FHA or the
VA. Refer to Note 7 to
the Consolidated Financial Statements for additional
information of
guaranteed loans.
Allowance for Credit Losses Loans Held-in-Portfolio
The ACL
represents management’s
estimate of
expected credit
losses through
the remaining
contractual life
of the
different loan
segments, impacted by expected prepayments. The ACL
is maintained at a sufficient
level to provide for estimated credit
losses on
collateral dependent loans as well as loans modified
for borrowers with financial difficulties separately from the remainder
of the loan
portfolio. The Corporation’s
management evaluates the adequacy
of the ACL
on a quarterly
basis. In this
evaluation, management
considers current
conditions, macroeconomic
economic expectations through
a reasonable
and supportable
period, historical
loss
experience,
portfolio composition
by
loan
type
and
risk
characteristics,
results
of
periodic credit
reviews
of
individual loans,
and
regulatory requirements, amongst other factors.
The Corporation must rely on
estimates and exercise judgment regarding matters where
the ultimate outcome is unknown, such
as
economic developments affecting specific
customers, industries, or markets.
Other factors that can
affect management’s estimates
are
recalibration
of
statistical
models
used
to
calculate
lifetime
expected
losses,
changes
in
underwriting
standards,
financial
accounting standards and loan impairment measurements,
among others. Changes in the financial condition
of individual borrowers,
in economic
conditions, and
in the
condition of
the various
markets in
which collateral
may be
sold, may
also affect
the required
141
level of
the allowance
for credit
losses. Consequently,
the business
financial condition,
liquidity,
capital, and
results of
operations
could also be affected.
At March 31, 2026, the
ACL increased by $15.6 million from December 31,
2025 to $823.7 million. The increase in
ACL was driven
by
a combination
of changes
in
the economic
scenario,
loan volumes
and increases
in
qualitative reserves.
The
ACL for
BPPR
increased by $14.3 million
when compared to December 31,
2025 due to a
$22.3 million increase in reserves for
commercial loans
driven
by
higher
specific
reserves
for
a
single-borrower
exposure
in
non-accrual,
a
$11.1
million
net
charge
off
related
to
a
commercial real
estate facility
classified as
NPL in
the third
quarter of
2025, and
other loan
modifications. The
ACL for
mortgage
loans increased by $3.1 million, mostly
due to changes in the
macroeconomic scenarios. These increases were partially offset
by a
$12.4 million decrease
in the ACL
for consumer loans,
mainly in the
auto portfolio, reflecting
improvements in credit
quality. In
the
PB segment, the ACL remained stable, increasing by
$1.4 million from the previous quarter.
The
Corporation’s
ratio
of
the
allowance
for
credit
losses
to
loans held-in-portfolio
was
2.10%
on
March
31,
2026
compared
to
2.05% on December 31, 2025.
The ratio of the allowance for
credit losses to NPLs held-in-portfolio stood at
179.81%, compared to
162.15% on December 31, 2025.
Refer to Note 8 – Allowance for credit losses – loans
held-in-portfolio to the Consolidated Financial
Statements, and to the Provision
for Credit Losses section of this MD&A for additional
information.
Tables
24 and
25 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.
142
Table 24 - Allowance for Credit
Losses - Loan Portfolios
March 31, 2026
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
20,069
$
2,427,295
0.83
%
$
10,962
183.08
%
Commercial real estate non-owner occupied
64,146
5,543,451
1.16
%
33,444
191.80
%
Commercial real estate owner occupied
51,116
3,212,356
1.59
%
14,192
360.17
%
Commercial and industrial
197,476
8,565,559
2.31
%
192,517
102.58
%
Total Commercial
$
332,807
$
19,748,661
1.69
%
$
251,115
132.53
%
Construction
15,160
1,674,193
0.91
%
-
-
Mortgage
83,624
8,712,361
0.96
%
139,067
60.13
%
Leasing
18,588
1,986,165
0.94
%
8,892
209.04
%
Consumer
Credit cards
89,376
1,214,199
7.36
%
-
-
Home equity lines of credit
1,178
79,764
1.48
%
2,766
42.59
%
Personal
104,739
1,913,281
5.47
%
16,660
628.69
%
Auto
170,544
3,783,904
4.51
%
35,390
481.90
%
Other
7,713
177,174
4.35
%
4,227
182.47
%
Total Consumer
$
373,550
$
7,168,322
5.21
%
$
59,043
632.67
%
Total
$
823,729
$
39,289,702
2.10
%
$
458,117
179.81
%
Table 25 - Allowance for Credit
Losses - Loan Portfolios
December 31, 2025
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
19,345
$
2,455,790
0.79
%
$
8,748
221.14
%
Commercial real estate non-owner occupied
58,717
5,543,284
1.06
%
42,712
137.47
%
Commercial real estate owner occupied
48,451
3,153,080
1.54
%
24,567
197.22
%
Commercial and industrial
180,934
8,607,412
2.10
%
190,412
95.02
%
Total Commercial
$
307,447
$
19,759,566
1.56
%
$
266,439
115.39
%
Construction
13,826
1,674,899
0.83
%
-
-
Mortgage
80,554
8,649,440
0.93
%
145,795
55.25
%
Leasing
18,620
2,001,365
0.93
%
9,179
202.85
%
Consumer
Credit cards
91,124
1,256,717
7.25
%
-
-
Home equity lines of credit
1,335
78,692
1.70
%
2,796
47.75
%
Personal
106,612
1,906,228
5.59
%
20,096
530.51
%
Auto
180,364
3,819,812
4.72
%
52,200
345.52
%
Other
8,174
180,799
4.52
%
1,838
444.72
%
Total Consumer
$
387,609
$
7,242,248
5.35
%
$
76,930
503.85
%
Total
$
808,056
$
39,327,518
2.05
%
$
498,343
162.15
%
143
Annualized net charge-offs (recoveries)
The
following
table
presents
annualized
net
charge-offs
(recoveries)
(“NCOs“)
to
average
loans
held-in-portfolio
(“HIP”)
by
loan
category for the quarters ended March 31, 2026
and 2025.
Table 26
- Annualized Net Charge-offs (Recoveries) to
Average Loans Held-in-Portfolio
Quarter ended March 31, 2026
Quarter ended March 31, 2025
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Commercial
0.42
%
(0.01)
%
0.23
%
(0.10)
%
0.02
%
(0.05)
%
Construction
(0.01)
―
―
―
―
―
Mortgage
(0.13)
(0.01)
(0.11)
(0.15)
(0.06)
(0.13)
Leasing
0.52
―
0.52
0.68
―
0.68
Consumer
2.68
3.09
2.69
2.82
3.90
2.85
Total annualized
net charge-offs to
average loans held-in-portfolio
0.85
%
0.04
%
0.61
%
0.72
%
0.07
%
0.53
%
NCOs for
the quarter
ended March
31, 2026
amounted to
$60.0 million,
increasing by
$10.9 million
when compared
to the
same
period in 2025.
The BPPR segment increased
by $11.9
million mainly driven by
higher commercial NCOs by
$14.0 million, mostly
due to the above referenced $11.1 million NCO.
The PB segment NCOs decreased by $1.0 million.
Loan Modifications
For the
quarter ended
March
31, 2026,
modified loans
to
borrowers with
financial difficulty
amounted to
$248.4 million,
of
which
$240.0
million
were
in
accruing
status.
The
BPPR
segment’s
modifications
to
borrowers
with
financial
difficulty
amounted
to
approximately $248.4 million, mainly
comprised of commercial
and mortgage loans of
$233.7 million and $8.6
million, respectively.
A total of $3.5 million of the mortgage modifications
were related to government guaranteed loans.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements
for
additional
information
on
modifications
made
to
borrowers
experiencing financial difficulties.
ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT
YET EFFECTIVE ACCOUNTING STANDARDS
Refer to Note 3, “New Accounting Pronouncements”
to the Consolidated Financial Statements.
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 2025 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
144
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
The
Company
continues
to
implement
new
business
systems
and
solutions,
including
an
enterprise
resource
planning
(“ERP”)
system, which are expected to improve the efficiency of
certain financial and related business processes.
On January
1, 2026,
the Corporation
implemented a
new ERP
system, replacing
our previous
ERP system
that had
supported a
significant portion
of our
transactional records
and general
ledger. As
a result
of this
implementation, we modified
certain existing
controls
and
implemented
new
controls
and
procedures to
maintain
appropriate
internal
control
over
financial
reporting
and
will
continue to evaluate the design and operating effectiveness
of these controls.
Except as described above, 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 March
31, 2026
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 2025 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 2025 Form 10-K.
There have been no material changes to the risk
factors previously disclosed under Item 1A of the
Corporation’s 2025 Form 10-K.
The risks described
in our 2025
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.
145
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 March
31, 2026.
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 March 31, 2026:
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]
January 1 - January 31
306,003
$
127.73
301,380
$242,576,163
February 1 - February 28
345,242
143.58
344,075
$193,162,299
March 1 - March 31
540,114
132.49
509,943
$125,867,052
Total
1,191,359
$
134.48
1,155,398
$125,867,052
[1] Includes
4,623,
1,167, and
30,171
shares of
the Corporation’s
common stock
acquired
by the
Corporation
during
January,
February,
and March
2026, 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
March 31, 2026,
and since the
first authorization in
2024, the Corporation
had repurchased 8,071,942
shares of common
stock for $874
million at an
average price of
$108.27 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).
146
Item 6.
Exhibits
Exhibit Index
Exhibit No
Exhibit Description
10.1
Form of Popular, Inc. 2026 Long-Term Equity Incentive Award and Agreement
(1)(*)
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, 2025)
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 March 31, 2026,
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.
147
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: May 8, 2026
By: /s/ Jorge J. García
Jorge J. García
Executive Vice President &
Chief Financial Officer
Date: May 8, 2026
By: /s/ Denissa M. Rodríguez
Denissa M. Rodríguez
Senior Vice President & Corporate Comptroller