Filed 2026-03-02 · Period ending 2025-12-31 · 122,008 words · SEC EDGAR
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# POPULAR, INC. (BPOP) — 10-K
**Filed:** 2026-03-02
**Period ending:** 2025-12-31
**Accession:** 0001193125-26-085756
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/763901/000119312526085756/)
**Origin leaf:** c5a46dfd3f36faf755fb264f0220b7742a3feb9904331c018a63c7e1bfab7efa
**Words:** 122,008
---
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended
December 31, 2025
Or
[ ]
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number:
001-34084
POPULAR, INC.
Incorporated in the Commonwealth of
Puerto Rico
IRS Employer Identification No.
66-0667416
Principal Executive Offices
209 Muoz Rivera Avenue
Hato Rey
,
Puerto Rico
00918
Telephone Number: (
787
)
765-9800
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock ($0.01 par value)
BPOP
The
Nasdaq Global Select Stock Market
6.125% Cumulative Monthly Income Trust Preferred
Securities
BPOPM
The
Nasdaq Global Select Stock Market
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
X No
.
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section
15(d) of the Act. Yes
No
X.
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by
Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the
registrant was required to file such reports),
and
(2) has been subject to such filing requirements for the
past 90 days.
Yes
X No
.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required
to be submitted pursuant to
Rule 405 of Regulation S-T (232.405 of this chapter)
during the preceding 12 months (or for such
shorter period that the registrant was
required to submit such files).
Yes
X No
.
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting
company
and emerging growth company in Rule 12b-2
of the Exchange Act.
Large accelerated filer
[X]
Accelerated filer [
]
Non-accelerated filer [
]
Smaller reporting company
[ ]
Emerging growth company
[ ]
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended
transition period for
complying with any new or revised financial accounting
standards provided pursuant to Section 13(a)
of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on
and attestation to its managements assessment of the effectiveness of
its internal
control over
financial reporting
under Section
404(b) of
the Sarbanes-Oxley Act
(15 U.S.C.
7262(b)) by
the registered
public
accounting firm that prepared or issued its audit
report.
[X]
If securities are registered
pursuant to Section 12(b)
of the Act, indicate
by check mark whether
the financial statements of
the registrant
included in the filing reflect the correction of an
error to previously issued financial statements.
Indicate
by
check
mark
whether any
of
those
error
corrections
are
restatements
that
required
a
recovery
analysis
of
incentive-based
compensation received by any of the registrants executive
officers during the relevant recovery period pursuant to
240.10D-1(b).
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the
Act). Yes
No
X
As of June 30, 2025, the aggregate market
value of the Common Stock held by non-affiliates of
Popular, Inc. was approximately $
7.5
billion based upon the reported closing price of $110.21 on the Nasdaq
Global Select Market on that date.
As of February 26, 2026, there were
65,104,302
shares of Popular, Inc.s Common Stock outstanding.
2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Popular,
Inc.s definitive proxy
statement relating to the
2026 Annual Meeting
of Stockholders of Popular,
Inc. (the Proxy
Statement) are incorporated herein by reference in response to Items 10 through
14 of Part III. The Proxy Statement will be
filed with
the Securities and Exchange Commission (the SEC)
on or about March 24, 2026.
3
Forward-Looking Statements
This
Form
10-K contains
forward-looking statements
within the
meaning
of
the
U.S. Private
Securities Litigation
Reform Act
of
1995,
including,
without
limitation,
statements
about
Popular,
Inc.s
(the
Corporation,
Popular,
we,
us,
our)
business,
financial condition, results
of operations, plans,
objectives and future
performance. These statements
are not
guarantees of future
performance,
are
based
on
managements
current
expectations
and,
by
their
nature,
involve
risks,
uncertainties,
estimates
and
assumptions. Potential
factors, some
of which
are beyond
the Corporations
control, could
cause actual
results to
differ materially
from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect
of competitive and
economic factors, and our
reaction to those factors,
the adequacy of
the allowance for loan
losses, delinquency
trends, market
risk and
the impact
of interest
rate changes
(including on
our cost
of deposits),
capital markets
conditions, capital
adequacy
and
liquidity,
and
the
effect
of
legal
and
regulatory
proceedings
and
new
accounting
standards
on
the
Corporations
financial condition
and results
of operations.
All statements
contained herein
that
are not
clearly
historical in
nature are
forward-
looking, and the words anticipate, believe, continues,
expect, estimate, intend, project and similar expressions
and future
or conditional verbs
such as
will, would, should,
could, might, can,
may or similar
expressions are
generally intended to
identify forward-looking statements.
Various factors, some of which
are beyond Populars control, could cause actual results to differ materially from those expressed in,
or implied by, such forward-looking statements. Factors that might cause such a
difference include, but are not limited to:
the
rate
of
growth
or
decline
in
the
economy
and
employment
levels,
as
well
as
general
business
and
economic
conditions
in
the
geographic
areas
we
serve
and,
in
particular,
in
the
Commonwealth
of
Puerto
Rico
(the
Commonwealth or Puerto Rico), where a significant
portion of our business is concentrated;
adverse
economic conditions,
including high
levels
of
inflation, that
adversely affect
housing
prices, the
job
market,
consumer confidence
and spending
habits which
may affect
in turn,
among other
things, our
level of
non-performing
assets, charge-offs and provision expense;
changes in interest rates and market liquidity,
which may reduce interest margins, impact funding sources, reduce loan
originations, affect
our ability
to originate
and distribute
financial products
in the
primary and
secondary markets
and
impact the value of our investment portfolio and
our ability to return capital to our shareholders;
the
impact
of
bank
failures
or
adverse
developments
at
other
banks
and
related
negative
media
coverage
of
the
banking industry in general on investor and depositor
sentiment regarding the stability and liquidity of
banks;
the impact of the current fiscal and economic challenges of Puerto Rico and
the measures taken and to be taken by the
Puerto
Rico
Government
and
the
Federally-appointed
oversight
board
on
the
economy,
our
customers
and
our
business;
the
amount of
Puerto Rico
public sector
deposits held
at
the Corporation,
whose future
balances are
uncertain and
difficult
to
predict
and
may
be
impacted
by
factors
such
as
the
amount
of
Federal
funds
received
by
the
P.R.
Government
and
the
rate
of
expenditure
of
such
funds,
as
well
as
the
financial
condition,
liquidity
and
cash
management practices of the Puerto Rico Government
and its instrumentalities;
unforeseen or
catastrophic events,
including extreme
weather events
such as
hurricanes and
other natural
disasters,
man-made disasters, acts of violence or war or
pandemics, epidemics and other health-related
crises, or the fear of any
such event
occurring, any of
which could cause
adverse consequences for
our business, including,
but not
limited to,
disruptions in our operations;
our ability to achieve the
expected benefits from our transformation initiatives, including our
ability to achieve projected
earnings, efficiencies and
return on tangible
common equity and
accurately anticipate costs
and expenses associated
therewith;
4
our ability to execute capital actions, including with
respect to share repurchases and dividends;
the fiscal and monetary policies of the federal government
and its agencies;
changes in
federal
bank
regulatory and
supervisory policies,
including required
levels of
capital, liquidity,
resolution-
related requirements and the impact of other proposed
capital standards on our capital ratios;
changes
in
and
uncertainty
regarding
federal
funding,
tax
and
trade
policies,
and
federal
rulemaking,
supervision,
examination and enforcement priorities;
adjustments to or additional Federal Deposit Insurance
Corporation (FDIC) assessments;
regulatory approvals
that may
be necessary
to undertake
certain actions
or consummate
strategic transactions,
such
as acquisitions and dispositions;
the
relative strength
or
weakness
of
the
consumer and
commercial credit
sectors
and
of
the
real
estate markets
in
Puerto Rico and the other markets in which
our borrowers are located;
a deterioration in the credit quality of our
clients, customers and counterparties;
the performance of the stock and bond markets;
competition in the financial services industry;
possible legislative, tax or regulatory changes;
a failure
in or
breach of
our operational
or security
systems or
infrastructure or
those of
Evertec, Inc.,
our provider
of
core financial
transaction processing and
information technology services,
or of
third parties
providing services
to us,
including
as
a
result
of
cyberattacks, e-fraud,
denial-of-services and
computer intrusion,
that
might result
in,
among
other
things,
loss
or
breach
of
customer
data,
disruption
of
services,
reputational
damage
or
additional
costs
to
Popular;
changes in market rates and prices which may
adversely impact the value of financial assets
and liabilities;
potential judgments,
claims, damages,
penalties, fines,
enforcement actions
and
reputational damage
resulting from
pending or future litigation and regulatory or government
investigations or actions;
changes in accounting standards, rules and interpretations;
our ability to grow our core businesses;
decisions to downsize, sell or close branches or business
units or otherwise change our business mix;
and
managements ability to identify and manage these and
other risks.
Moreover,
the outcome
of any
legal and
regulatory proceedings, as
discussed in
Part I,
Item 3.
Legal Proceedings,
is inherently
uncertain and depends on judicial interpretations of law and the findings of regulators, judges and/or juries. Investors should refer to
Part I, Item 1A of this Form 10-K for a discussion
of certain risks and uncertainties to which
the Corporation is subject.
All forward-looking
statements included
in this
Form 10-K
are based
upon information
available to
Popular as
of the
date of
this
Form 10- K, and other than as required by law,
including the requirements of applicable securities laws, we assume no obligation to
update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date
of such statements.
5
TABLE OF CONTENTS
PART I
Page
Item 1
Business
6
Item 1A
Risk Factors
23
Item 1B
Unresolved Staff Comments
37
Item 1C
Cybersecurity
37
Item 2
Properties
40
Item 3
Legal Proceedings
41
Item 4
Mine Safety Disclosures
41
PART II
Item 5
Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
41
Item 6
[Reserved]
43
Item 7
Managements Discussion and Analysis of Financial Condition
and Results of
Operations
43
Item 7A
Quantitative and Qualitative Disclosures About Market
Risk
43
Item 8
Financial Statements and Supplementary Data
43
Item 9
Changes in and Disagreements with Accountants
on Accounting and Financial
Disclosure
44
Item 9A
Controls and Procedures
44
Item 9B
Other Information
44
Item 9C
Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
44
PART III
Item 10
Directors, Executive Officers and Corporate Governance
44
Item 11
Executive Compensation
45
Item 12
Security Ownership of Certain Beneficial Owners
and Management and
Related Stockholders
Matters
45
Item 13
Certain Relationships and Related Transactions, and Director
Independence
45
Item 14
Principal Accountant Fees and Services
45
PART IV
Item 15
Exhibits and Financial Statement Schedules
45
Item 16
Form 10-K Summary
46
6
PART I POPULAR, INC.
ITEM 1. BUSINESS
General:
Popular
is
a diversified,
publicly-owned financial
holding company,
registered under
the Bank
Holding Company
Act
of
1956, as
amended (the BHC Act), and subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the
Federal Reserve Board). Popular was incorporated in 1984 under the laws of the Commonwealth of Puerto Rico and is the
largest
financial institution
based in Puerto
Rico, with
consolidated assets of
$75.3 billion, total
deposits of
$66.2 billion
and stockholders
equity of $6.2 billion at
December 31, 2025. At December 31,
2025, we ranked among the
50 largest U.S. bank holding companies
based on total assets according to information gathered
and disclosed by the Federal Reserve Board.
We operate in two principal markets:
Puerto
Rico:
We
provide
retail,
mortgage
and
commercial
banking
services,
as
well
as
auto
and
equipment
leasing
and
financing through
our principal
banking subsidiary,
Banco Popular
de Puerto
Rico (Banco
Popular or
BPPR), and
broker-
dealer
and
insurance
services
through
specialized
subsidiaries.
BPPRs
deposits
are
insured
under
the
Deposit
Insurance
Fund (DIF)
of the
Federal Deposit
Insurance Corporation
(FDIC). The
banking operations
of BPPR
are primarily
based in
Puerto Rico, where BPPR has the largest retail banking
franchise.
Mainland
United
States:
We
provide
retail
and
commercial
banking
services,
as
well
as
equipment
leasing
and
financing,
through our New York
-chartered banking subsidiary,
Popular Bank (PB or
Popular U.S.), which has branches
in New York,
New Jersey,
and Florida. PBs deposits are insured under the DIF
of the FDIC.
BPPR
also
conducts
banking
operations
in
the
U.S.
Virgin
Islands,
the
British
Virgin
Islands
and
New
York.
In
addition
to
BPPRs commercial
banking operations
in New
York
that include
direct loan
origination and
participating loans
originated by
PB,
BPPR
offers
or
holds
financial
products
on
a
national
scale
in
the
U.S.
market,
including
personal
loans
previously
originated under
the E-Loan
brand, purchased
personal loans
originated by
third parties,
and
gathering insured
institutional
deposits via online deposit gathering platforms. In the U.S. and British
Virgin Islands, BPPR offers a range of banking products,
including loans and deposits to both retail and
commercial customers.
For further information about the Corporations results segregated by
its reportable segments, see Reportable Segment Results in
the Managements Discussion
and Analysis of
Financial Condition and Results
of Operations section (MD&A)
and Note 36
to the
Consolidated Financial Statements included in this
Form 10-K.
Lending Activities
We concentrate our lending activities in the following areas:
(1) Commercial. Commercial loans are comprised of (i) commercial and industrial (C&I) loans and leases to commercial
customers
for use in normal
business operations and to finance
working capital needs, equipment purchases or
other projects, (ii) commercial
real
estate
(CRE)
loans
(excluding
construction
loans)
for
income-producing real
estate
properties
as
well
as
owner-occupied
properties, and
(iii) multifamily loans
with residential buildings
with five
or more living
units. C&I loans
are underwritten individually
and usually secured with the assets of the company and
the personal guarantee of the business owners. CRE
loans consist of loans
for income-producing
real estate
properties and
the financing
of owner-occupied
facilities if
there is
real estate
as collateral.
Non-
owner-occupied CRE
loans are
generally made
to finance
office and
industrial buildings,
healthcare facilities,
and retail
shopping
centers and are
repaid through cash
flows related to
the operation, sale
or refinancing of
the property.
Multifamily loans, in
certain
cases, result from the conversion of the
Banks construction financing to permanent financing and are repaid
through the cash flow,
sale or refinance of the properties.
(2) Mortgage. Mortgage
loans include residential
mortgage loans to
consumers for the
purchase or refinancing
of a
residence and
7
also include residential construction loans made
to individuals for the construction of refurbishment
of their residence.
(3) Consumer.
Consumer loans
are mainly
comprised of
unsecured personal
loans, credit
cards, and
automobile loans,
and to
a
lesser extent home equity lines of credit (HELOCs)
and other loans made by banks to individual
borrowers.
(4)
Construction.
Construction
loans
are
CRE
loans
to
companies
or
developers
used
for
the
construction
of
a
commercial
or
residential property for which repayment will be generated by the sale
or permanent financing of the property.
Our construction loan
portfolio primarily consists of residential land development,
multifamily housing, and condominium projects.
(5) Lease Financings. Lease financings are offered by
BPPR and are primarily comprised of automobile loans/leases made through
automotive dealerships.
Business Concentration
Since our
business activities
are currently concentrated
primarily in
Puerto Rico,
our results
of operations
and financial
condition are dependent upon the general trends of
the Puerto Rico economy and, in particular,
the residential and commercial real
estate markets. The concentration of our
operations in Puerto Rico exposes us
to greater risk than other
banking companies with a
wider
geographic
base.
Our
asset
and
revenue
composition
by
geographical
area
is
presented
in
Note
36
to
the
Consolidated
Financial Statements included in this Form 10-K.
Our loan portfolio is diversified by loan category.
However, 52% of our loan portfolio at
December 31, 2025 consisted of real estate-
related loans,
including residential
mortgage loans,
construction loans
and commercial
loans secured
by commercial
real estate.
The table below presents the distribution of
our loan portfolio by loan category at December
31, 2025.
Loan category
(Dollars in millions)
BPPR
%
PB
%
POPULAR
%
Commercial multi-family
$303
1
$2,152
18
$2,455
6
Commercial real estate:
Non-owner occupied
3,395
12
2,148
18
5,543
14
Owner occupied
1,197
4
1,957
17
3,154
8
Commercial and industrial
5,970
22
2,637
23
8,607
22
Construction
358
1
1,317
11
1,675
4
Mortgage
7,348
27
1,301
11
8,649
22
Leasing
2,001
7
2,001
5
Consumer:
Credit cards
1,257
4
-
-
1,257
3
Home equity lines of credit
2
-
77
1
79
-
Personal
1,836
7
70
1
1,906
5
Auto
3,820
14
-
-
3,820
10
Other
172
1
9
-
181
1
Total
$27,659
100
$11,668
100
$39,327
100
Except for the Corporations exposure to the Puerto Rico and U.S. Governments, no individual or single group of related accounts is
considered material
in relation
to our
total assets
or deposits,
or in
relation to
our overall
business.
For a
discussion of
our loan,
investment,
and
deposits
portfolios
and
our
exposure
to
the
Government
of
Puerto
Rico,
see
Financial
Condition
Loans,
Financial Condition Deposits and Credit Risk Geographical and Government Risk in the MD&A and to Note 23 - Commitment
and Contingencies to the Consolidated Financial Statements
included in this Form 10-K.
Credit
Administration
and
Credit
Policies
Interest
from our
loan portfolios
is our
principal source
of revenue.
Whenever we
make loans,
we expose
ourselves
to
credit
risk.
Credit
risk
is
controlled
and
monitored
through
active
asset
quality
management,
including
the
use
of
lending
standards,
thorough
review
of
potential
borrowers
and through
active
asset quality
administration.
8
Business
activities
that
expose
us to
credit
risk are
managed
within
the
Board
of Directors
Risk Management policy,
and the Credit Risk Tolerance
Limits policy,
which establishes
limits
that
consider
factors
such
as maintainin
g
a prudent
balance
of risk-taking
across
diversified
risk types
and business
units,
compliance
with regulator
y
guidance,
and
controlling
the
exposure
to lower
credit
quality
assets.
We maintain
comprehensive
credit policies
for all lines of
business in order
to mitigate credit
risk. Our credit
policies
are
approved by
our Board
of Directors.
These policies set
forth,
among
other
things,
the objectives, scope and
responsibilities of the
credit
management cycle.
Our
internal
written
procedures
establish
underwriting
standards
and
procedures
for
monitoring
and
evaluating
loan
portfolio
quality
and
require
prompt
identificatio
n
and
quantificatio
n
of
asset
quality
deterioration
or
potential
loss
to provide for the adequacy of the allowance for credit losses. These written procedures establish various approval and lending
limit levels,
ranging
from
bank
branch
or departmen
t
officers
to managerial
and senior
management
levels.
Approval
levels
are
primarily
determined
by the
amount, type
of loan and
risk characteristics
of the credit
facility.
Our
credit
policies
and
procedures
establish
documentation
requirements
for
each
loan
and
related
collateral
type,
when
applicable,
during
the
underwriting,
closing
and
monitoring
phases.
For
commercial
and
construction
loans,
during
the
initial
loan
underwriting
process,
the
credit
policies
require,
at
a
minimum,
historical
financial
statements
or
tax
returns
of
the
borrower,
an analysis
of financial
information
contained
in
a
credit
approval
package,
a
risk
rating
determination
and
reports
from
credit
agencies
and appraisal
s
for
real
estate-related
loans when applicable
.
The credit
policies
also
set
forth
the
required
closing
documentation
depending
on the
loan
and the
collateral
type.
Although
we originate
most
of our
loans
internally
in both
the Puerto
Rico
and mainland
United
States
markets,
we
occasionally
purchase
or participate
in loans
originated
by other
financial
institutions.
When we
purchase
or participate
in loans
originated by
others, we ensure
that those loans
meet our underwriting
standards and
are consistent
with our risk
appetite.
Refer
to
the
Credit
Risk
section
of
the
MD&A
included
in
this
Form
10-K
for
information
related
to
management
committees and divisions with responsibilities for establishing
policies and monitoring the Corporations credit risk.
Loan
extensions
,
renewals
and restructurings
Loans with
satisfactory
credit profiles
can be
extended, renewed
or restructured
.
Some commercia
l
loan facilities
are
structured
as lines
of credit, which
are mainly
one year
in term
and therefore
are required
to be renewed
annually.
Other
facilities
may be restructure
d
or extended
from time
to time based
upon changes
in the
borrowers
business
needs,
use
of
funds,
timing
of
completion
of
projects
and
other
factors.
If
the
borrower
is
not
deemed
to
have
financial
difficulties
,
extensions,
renewals
and restructurings
are done
in the
normal
course
of busines
s
and the
loans
continue
to be recorde
d
as performing.
We
evaluate
various
factors
to
determine
if
a
borrower
is
experiencing
financial
difficulties.
Indicators
that
the
borrower
is
experiencing
financial difficultie
s
include,
for example:
(i)
the borrower
is currently
in default on any
of its debt
or it is
probable tha
t
the borrower
would be
in payment
default on
any of
its debt
in th
e
foreseeable
future
without
the modification
;
(ii)
the
borrower
has declare
d
or is in
the
process
of declarin
g
bankruptcy;
(iii)
there
is significan
t
doubt
as to whether
the
borrower
will
continue
to
be
a
going
concern;
(iv)
the
borrower
has
securities
that
have
been
delisted,
are
in
the
process
of
being
delisted,
or
are
under threa
t
of bein
g
delisted
from
an exchange
;
(v) based
on estimates
and projection
s
that
only
encompass
the
current
business
capabilities
,
the
borrower
forecasts
that
its
entity-specifi
c
cash
flows
will
be
insufficien
t
to
service
the
debt
(both
interest
and
principal)
in
accordance
with
the
contractual
terms
of
the
existing
agreement
through
maturity;
and
(vi)
absent
the
current
modification,
the
borrower
cannot
obtain
funds
from
sources
other
than
the
existing
creditors
at
an
effective
interest
rate
equal to the current market
interest
rate for similar
debt for a non-troubled
debtor.
We
have
specialized
workout
officers
who
handle
the majority
of
commercial
loans
that
are
past
due
90
days
and
over,
borrowers
experiencing
financial
difficulties
,
and loans
that
are considered
problem loans
based on
their risk
profile. As
a
general
policy,
we
do
not
advance
additional
money
to
borrowers
who
have
loans
that
are
90
days
past
due
or
over.
In
commercial
and
construction
loans,
certain
exceptions
may
be approved
under
certain
circumstances,
including
(i) when
past
due
status
is administrativ
e
in nature,
such
as expiration
of a loan
facility
before
the
new documentatio
n
is executed,
and not as
a result
of paymen
t
or credit
issues;
(ii) to
improve
our collateral
position
or
otherwise
maximize
recovery
or
mitigate
potential
future
losses;
and
(iii)
with
respect
to
certain
entities
that,
although
related
through
common
ownership,
are
not
cross
9
defaulted
nor
cross-collateralized
and
are
performing
satisfactorily
under
their
respective
loan
facilities.
Such
advances
are
underwritten
and
approved
following
our
credit
policy
guidelines
and
limits,
which
are
dependent
on
the
borrowers
financial
condition,
collateral
and guarantee,
among
others.
In addition
to the legal
lending limit
established under
applicable
state banking
law, discusse
d
in detail
below,
business
activities
that
expose the
Corporation to
credit
risk
are managed
within
guidelines described
in the
Credit
Risk Tolerance
Limits
policy.
Limits are defined for
loss and credit
performance metrics, portfolio composition and
concentration, and industry and
name-
level,
which
monitors
lending
concentration
to
a
single
borrower
or
a
group
of
related
borrowers,
including
specific
lending
limits
based
on industr
y
or other
criteria,
such
as a percentage
of the
banks
capital.
Refer to Note 2 and Note 8 to the Consolidated Financial Statements included
in this Form 10-K, for additional information
on loan modifications to borrowers with financial difficulties.
Competition
The
financial
services
industry
in
which
we
operate
is
highly
competitive.
In
Puerto
Rico,
our
primary
market,
the
banking
business
is
highly
competitive
with
respect
to
originatin
g
loans,
acquiring
deposits
and
providing
other
banking
services.
Most
of
our
direct
competitio
n
for
our
products
and
services
comes
from
commercial
banks and
credit unions.
The
principal
competitors
for
BPPR
include
locally
based
commercial
banks
and
a
few
large
U.S.
and
foreign
banks
with
operations in Puerto Rico.
We
also
compete
with
specialized
players
in th
e
local
financial
industry
that
are
not
subject
to
the
same
regulatory
restrictions
as domestic
banks
and bank holdin
g
companies.
Those
competitors
include
brokerage
firms,
mortgage
companies,
insurance
companies,
automobile
and
equipment
finance
companies,
local
and
federal
credit
unions
(locally
known
as
cooperativas),
credit car
d
companies,
consumer
finance
companies,
institutional
lenders,
and other
financial
and non-financia
l
institutions
and entities.
Credit
unions
generally
provide
basic consume
r
financial
services and collectively
represent a
significant
portion of the
market with
a lower cost structure
and fewer regulatory
constraints.
While our main competition continues to come from other Puerto Rico banks and financial institutions, we face increased
competition from non-Puerto
Rico institutions, as
emerging technologies and
the growth
of e-commerce have
significantly reduced
geographic barriers. These technologies have
also made it easier
for non-depositary institutions to
offer products and
services that
were
traditionally
considered
banking
products
and
have
allowed
non-traditional
financial
service
providers
and
technology
companies
to
provide
electronic
and
internet-based
financial
solutions
and
services.
In
addition,
nonbank
firms
may
have
a
competitive advantage over
traditional banks
and bank
holding companies,
such as
Popular,
due to factors
such as
differences in
regulation, funding models and tax treatment.
In
the
United
States
we
continue
to
face
substantial
competitive
pressure
as
our
footprint
resides
in
the
two
large
metropolitan markets of
New York
City /
Northern New Jersey
and the
greater Miami area.
There are a
large number
of banks in
both markets, including community, regional, and national ones, most of which
have more resources than us.
In both
Puerto Rico
and the
United States,
the primary
factors in
competing
for business
include
pricing,
convenience
of branch
locations
and other
delivery
methods,
range of
products offered,
and the
level of
service delivered.
We must
compete
effectively
along
all
these
parameters
to
be
successful.
We
experience
pricing
pressure
as
some
of
our
competitors
seek
to
increase
market
share
by
reducing
prices
for
services
or
the
rates
charged
on
loans,
increasing
the
interest
rates
offered
on
deposits
or offering
more flexible
terms. Increased
competition
could require
that we
increase
the rates
offered
on deposits
and
lower the rates
charged on loans,
which could adversely
affect our profitability.
Economic
factors,
along
with
legislative
and
technological
changes,
have
an
ongoing
impact
on
the
competitive
environment
within
the financia
l
services
industry.
We work
to anticipat
e
and adap
t
to dynamic
competitive
conditions
whether
through developing
and marketing
innovative
products
and services,
adopting
or developin
g
new technologie
s
that
differentiat
e
our products
and
services,
cross-marketing,
or
providing
personalized
banking
services.
We
strive
to
distinguish
ourselves
from
other
banks
and
financial
services
providers
in our
marketplace
by providin
g
a high
level
of service
to enhance
customer
loyalty
and to attrac
t
and retain
business.
However,
we can
provide
no assurance
as
to
the
effectiveness
of
these
efforts
on
our
future
business
or
results
of
operations,
and
as
to
our
continued
ability
to
anticipate
and
adapt
to
changing
10
conditions,
and
to
sufficientl
y
improve
our
services
and/or
banking
products,
in
order
to
successfully
compete
in
our
primary
service
areas.
Transformation Initiatives
The Corporation
continues
its broad-based
,
multi-year,
technological
and business
process transformation,
which was
launched
in
2022.
As
part
of
this
transformation,
we
are
making
significant
investments
in
technology,
talent
and
new
digital
and
data
capabilities
in order
to provide
our customers
with more
personalized
and accessible
services,
increase
employee
performance
and satisfaction
with more agile
work processes,
and generate sustainable
profitable growth
and value for our
shareholders.
During
2025,
the
Corporation
continued
to
make
meaningful
progress
in
the
modernization
of
our
customer
channels
and
enhancement
of our customers'
experience.
For example,
we started
the rollout
of a commercial
cash management
solution
and
deployed
a new
consumer
credit
origination
platform
in Puerto
Rico
and the
Virgin
Islands.
We
also
continued
to
invest
in our
physical
retail
network
and
executed
a series
of
efficiency
initiatives,
including
exiting
our
U.S.
mortgage
business,
optimizing
mortgage
servicing
operations
in Puerto
Rico,
and transforming
our Enterprise
Resource
Planning
(ERP)
platform
to a
modern
cloud-based solution
implemented
in January 2026
.
In
connection
with
the
Corporations
transformation
initiatives,
the
Corporation
is
working
to
achieve
a
sustainable
return
on
tangible
common
equity
(ROTCE)
of
14%
over
the
long
term.
The
Corporation
made
progress
towards
this
goal
in
2025,
achieving 13%
ROTCE for the full
year.
Refer
to
the
Overview
section
of
Managements
Discussion
and
Analysis
included
in this
Form
10-K
for
information
on
recent
significant
events that have
impacted or
will impact
our current and
future operations.
Human Capital Management
Popular seeks
to embody our
values and
behaviors throughout
our human capital
management practices.
Attracting,
developing,
and retaining
top talent
in an
environment
that promotes
wellness, inclusion,
respect, continuous
learning,
and transparency
are
fundamental
pillars of
the Corporations
long-term strategy.
As of December
31, 2025, Popular
employed 9,427
individuals,
none
of whom were
represented
by a collective
bargaining group.
Nurturing Well
-Being: Employee
Health & Financial
Security
Popular
believes
that the
health and
financial
wellness
of our
employees
is fundamental
to delivering
high-quality
service
to our
customers
and
contributing
positively
to
the
communities
in
which
we
operate.
Accordingly,
the
Corporation
offers
a
comprehensive
health and
wellness program
that includes
medical, pharmacy,
vision, and
dental insurance,
as well as additional
wellness initiatives.
Our programs
are designed
to ensure that
healthcare is
both accessible
and affordable
for our employees,
with Popular covering
up to 78%
of health
insurance premiums,
a figure that
surpasses regional
benchmarks.
In 2025,
we strengthened
our health
and
wellness
offerings
by opening
a state-of-the-art
fitness center
in our San
Juan, Puerto
Rico campus,
to encourage
an active
and
balanced
lifestyle.
As of
December
2025,
the fitness
center
had
a total
of 2,030
members,
including
active
employees,
eligible
family members
and retirees.
Additionally,
the
Corporation
promotes
employee
health
and
well-being
by
encouraging
annual
physical
examinations
and
operating
a comprehensive
health and
wellness center
at its Puerto
Rico corporate
offices, staffed
with healthcare
providers and
enhanced
by
the
addition
of
an
on-site
psychologist
to
provide
mental
health
support.
The
center
received
over
15,000
visits
from employees
during 2025.
Popular
also seeks
to foster
work-life
balance
by offering
paid time
off
benefits
to our
employees,
including
community
service
leave,
paid
parental
leave,
and
flexible
work
arrangements.
Our
hybrid
work
model,
available
to
approximately
half
of
our
workforce,
is
designed
to
strike
an
appropriate
balance
between
employee
flexibility
and
business
needs,
reinforcing
our
commitment
to
a flexible
and
productive
work
environment.
In
addition,
we regularly
offer
activities
and
workshops
focused
on
physical fitness
and personal financial
management.
Popular
further
offers
a 401(k)
savings
and
investment
plan,
in
which
98%
of
employees
participate.
Under
the
plan,
Popular
11
matches
$0.50 for
every
dollar
contributed
by an
employee,
up to
8% of
the employees
salary.
Moreover,
Popular
maintains
a
profit-sharing
plan, contingent
upon the
achievement
of pre-established
financial
goals, to
further
align employee
compensation
with
the
Corporations
overall
performance.
Under
the
profit-sharing
plan,
employees
may
receive
up
to
8%
of
their
eligible
compensation
(capped
at $70,000),
with the
first
4% paid
in cash
and any
amount
above that
threshold
paid to
the employees
savings
and
investment
plan
account.
Additionally,
Popular
regularly
reviews
employees
base
compensation
to
remain
competitive
with market salaries
for comparable
positions.
Empowering Growth:
Our Commitment
to Talent
Developmen
t
We
are committed
to fostering
the continuous
development
and upskilling
of our
employees
and
believe
this
is fundamental
to
maintaining
our competitive
advantage.
Towards
that end,
Popular
offers
development
opportunities
designed
to strengthen
our
employees
knowledge,
capabilities
and
skills,
supporting
their
personal
growth
while
enhancing
Populars
business
strategies
and organizational
effectiveness.
Our 40,000
square foot
development
center in
San Juan,
Puerto Rico,
and our satellite
facilities
in New York,
South Florida,
and
the
Virgin
Islands,
offer
year-round
training
sessions,
activities
and
workshops.
In
2025,
there
were
approximately
6,700
registered
participations
in corporate
academy
voluntary
courses,
new
employee
orientations,
health
coordinator
certifications,
and
manager
onboarding
programsan
increase
of
approximately
2,500
compared
to
the
participation
levels
in
2024.
These
courses
offer
instructor-led
training
experiences
for
employees
to
develop
and
apply
critical
core
and
technical
skills.
Our
commitment
to
continuous
learning
is
further
supported
through
employee
access
to
LinkedIn
Learning,
which
provides
an
extensive
library
of
over
16,000
e-learning
courses,
enabling
employees
to
pursue
self-directed
learning
aligned
with
both
professional
development goals
and business
needs.
Our
focus
on
training
and
development
has
provided
internal
growth
opportunities
for
our
workforce.
As
a
result,
the
Corporations
internal
mobility
rate in
2025 was
47%, reflecting
employees
who applied
for or
were selected
for open
positions,
received
promotions,
or made
lateral
moves
within
the
organization.
Additionally,
we continued
strengthening
key skills
across
accelerated
development
programs
focused
on
data
science,
agile
methodologies,
analytics,
process
efficiency,
and
product
management.
During
2025,
approximately
400
employees
participated
in these
programs,
further
enhancing
the
organizations
talent.
During
2025,
Popular
successfully
implemented
the Executive
Development
Program,
engaging
over
80 executive
leaders
in a
comprehensive
initiative
focused
on strengthening
key
behaviors,
including
agility,
accountability,
collaboration,
and leadership
mindset,
aligned
with
our
company
values.
In
addition,
we
introduced
the
Middle
Management
Development
Program,
a two-
year
development
journey
for
over
1,700
leaders
designed
to
reinforce
alignment
with
the
Corporations
values
and
expected
behaviors
while
fostering
sustainable
organizational
transformation.
Furthermore,
we provided
our
leaders
with
advanced
tools
to support more
effective and
impactful performance
discussions.
Our
organizational
effectiveness
strategy
was
crucial
in
advancing
organizational
development
through
targeted
initiatives,
including
assessments,
team
integration
activities,
new
manager
integration
facilitations,
and
team
alignment
sessions.
These
efforts
are
designed
to
foster
a
cohesive,
agile,
and
adaptable
workforce
capable
of
supporting
the
Corporations
evolving
business objectives.
Enhancing Leadership
Continuity through
Strategic Succession
Planning
Populars
business
strategy
integrates
succession
planning
to
ensure
effective
and
orderly
leadership
transitions.
Succession
plans
for senior
management
are
developed
by the
Chief
Executive
Officer
and
presented
to the
Board
of Directors.
Populars
succession
planning
also
leverages
our
Executive
Talent
Management
Program
to
identify
high-potential
and
high-performing
managers,
providing
them
with
targeted
learning
opportunities
to
enhance
their
skills
and
prepare
them
for
future
senior
management positions.
Employee Experience
Popular
is
committed
to
providing
an
exceptional
employee
experience
that
inspires
our
employees
to
deliver
outstanding
service
to
our
customers
and
communities.
We
recognize
the
evolving
nature
of
our
employees
needs
and
expectations
and
have
a
robust
approach
to
measuring
and
understanding
their
journey.
Our
employee
engagement
and
experience
survey
program
includes
biannual
pulse surveys,
an annual
enterprise-wide
survey,
and additional
surveys
that assess
the end
-to-end
employee
journey.
We believe
that these
insights
contributed
to our
ability
to maintain
a stable
employee
turnover
rate of
8.5%
as
of
the
end
of
2025.
Furthermore,
our
employee-experience
efforts
are
reflected
in
record
participation
rate
of
77%
and
a
sustained
employee-loyalty
score of
81%, positioning
us above
the 50th
percentile
of the Qualtrics
global benchmark
and above
the financial
services industry
average benchmark.
12
Board Oversight
in Human Capital
The
Talent
and
Compensation
Committee
of
the
Corporations
Board
of
Directors
has
oversight
responsibility
for
the
Corporations
human
capital
management
practices.
As
part
of
its
responsibilities,
the
Talent
and
Compensation
Committee
reviews
and
advises
management
on
the
Corporations
overall
compensation
philosophy,
programs
and
policies,
and
on
the
Corporations
talent
acquisition
and
development,
workforce
engagement,
succession
planning,
and
corporate
culture,
among
other human capital
matters.
We
encourage
you
to
review
our Corporate
Sustainability
Report
published
on www.popular.com
for more
detailed
information
regarding
the Corporations
human capital
management
programs
and initiatives.
The information
on the
Corporations
website,
including
the
Corporations
Corporate
Sustainability
Report,
is
not,
and
will
not
be
deemed
to
be,
a
part
of
this
Form
10-K
or
incorporated
into any of the
Corporations
filings with
the SEC.
Regulation and Supervision
Described below are the material elements of selected laws and regulations applicable to Popular, Popular North America
(PNA)
and
their
respective
subsidiaries.
Such
laws
and
regulations
are
continually
under
review
by
Congress
and
state
legislatures
and
federal
and
state
regulatory
agencies.
Any
change
in
the
laws
and
regulations
applicable
to
Popular
and
its
subsidiaries could have a material effect on the
business of Popular and its subsidiaries. We will continue to
assess our businesses
and risk management and compliance practices
to conform to developments in the regulatory
environment.
General
Popular and PNA are bank holding companies subject to consolidated supervision and
regulation by the Federal Reserve
Board under
the Bank
Holding Company Act
of 1956
(as amended, the
BHC Act). BPPR
and PB
are subject to
supervision and
examination by applicable
federal and state
banking agencies including,
in the
case of BPPR,
the Federal Reserve
Board and the
Office of
the Commissioner
of Financial
Institutions of
Puerto Rico
(the Office
of the
Commissioner), and, in
the case
of PB,
the
Federal
Reserve
Board
and
the
New
York
State
Department
of
Financial
Services
(the
NYSDFS).
Populars
broker-dealer
/
investment adviser
subsidiary,
Popular Securities,
LLC (PS)
and investment
adviser subsidiary
Popular Asset
Management LLC
(PAM)
are subject
to
regulation by
the SEC,
the Financial
Industry
Regulatory Authority
(FINRA), and
the Securities
Investor
Protection Corporation, among others. Other of our non-bank subsidiaries conduct reinsurance and
insurance producer and agency
activities, which are
subject to other
federal, state and
Puerto Rico laws
and regulations as
well as licensing
and regulation by
the
Puerto Rico Office of the Commissioner of Insurance and,
for one insurance agency subsidiary, the NYSDFS.
Enhanced Prudential Standards
Under
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act
(the
Dodd-Frank
Act),
as
modified
by
the
Economic
Growth,
Regulatory
Relief,
and
Consumer
Protection
Act
and
the
federal
banking
regulators
2019
Tailoring
Rules,
banking
organizations are
categorized based
on status
as
a U.S.
G-SIB,
size
and four
other risk-based
indicators. Among
bank
holding companies with $100
billion or more in
total consolidated assets, the
most stringent standards apply
to U.S. G-SIBs,
which
are subject to Category I standards,
and the least stringent standards apply to Category IV organizations, which have between $100
billion and $250 billion in total consolidated assets and less than $75 billion in all four other risk-based indicators and
which are also
not U.S. G-SIBs. Bank holding companies with total consolidated assets of $50 billion or more are subject to risk committee and risk
management requirements. As of December 31, 2025,
Popular had total consolidated assets of $75.3 billion.
13
Transactions with Affiliates
BPPR
and
PB
are
subject
to
restrictions
that
limit
the
amount
of
extensions
of
credit
and
certain
other
covered
transactions (as defined in Section
23A of the Federal
Reserve Act) between BPPR or
PB, on the
one hand, and Popular,
PNA or
any
of
our
other
non-banking
subsidiaries,
on
the
other
hand,
and
that
impose
collateralization
requirements
on
such
credit
extensions. A bank may not engage in any covered transaction if the aggregate amount of the banks covered transactions with that
affiliate would exceed 10% of
the banks capital stock and
surplus or the aggregate amount of
the banks covered transactions with
all non-bank affiliates would exceed 20%
of the banks capital stock and
surplus. In addition, any transaction between BPPR
or PB,
on the one
hand, and Popular,
PNA or any
of our other
non-banking subsidiaries, on
the other,
is required to
be carried out
on an
arms length basis.
Source of Financial Strength
The
Dodd-Frank Act
requires bank
holding companies,
such
as Popular
and
PNA, to
act
as
a source
of
financial
and
managerial strength to their subsidiary banks. Popular
and PNA are expected to commit resources
to support their subsidiary banks,
including at times when Popular
and PNA may not be
in a financial position to
provide such resources. Any capital loans
by a bank
holding company
to any
of its
subsidiary depository
institutions are
subordinated in
right of
payment to
depositors and
to certain
other indebtedness of such subsidiary depository institution. In the
event of a bank holding companys bankruptcy,
any commitment
by
the
bank
holding
company
to
a
federal
banking
agency
to
maintain
the
capital
of
a
subsidiary
depository
institution
will
be
assumed by
the bankruptcy
trustee and
entitled to
a priority
of payment.
BPPR and
PB are
currently the
only insured
depository
institution subsidiaries of Popular and PNA.
Resolution Planning and Resolution-Related Requirements
A
bank holding
company with
$250 billion
or more
in total
consolidated assets
(or that
is a
Category III
firm based
on
certain risk-based indicators described in the Tailoring
Rules) is required to report periodically to the FDIC
and the Federal Reserve
Board
such
companys
plan
for
its
rapid
and
orderly
resolution
in
the
event
of
material
financial
distress
or
failure.
In
addition,
insured depository institutions with total
assets of $50 billion or
more are required to
submit to the FDIC
periodic contingency plans
for
resolution
in
the
event
of
the
institutions
failure.
In
June
2024,
the
FDIC
finalized
amendments
to
the
resolution
planning
requirements for insured depository institutions with
$50 billion or more in
total assets. The amendments require insured
depository
institutions with
between $50
billion and $100
billion in
assets to submit
informational filings on
a three-year cycle,
with an
interim
supplement updating key information submitted in the off years. These amendments
became effective October 1, 2024, and BPPRs
first submission under the new rule is due by
April 1, 2026.
On August
29, 2023,
the Federal
Reserve Board,
FDIC and
Office of
the Comptroller
of the
Currency (OCC)
issued a
proposed
rule
that
would
require
bank
holding
companies
and
insured
depository
institutions
with
$100
billion
or
more
in
consolidated assets (as well as their insured depository institution affiliates) to maintain minimum
amounts of eligible long-term debt
(generally, debt
that is unsecured, has
a maturity greater than one
year from issuance and satisfies
additional criteria), subject to a
three-year phase-in
period. The
proposal would
also apply
clean holding
company requirements
to Category
II through
IV bank
holding companies,
which would,
among other
things, prohibit
those holding
companies from
entering into
derivatives and
certain
other financial
contracts with
third parties.
As of
December 31,
2025, Popular,
PNA, BPPR
and PBs
total assets
were below
the
thresholds for applicability
of these rules,
except that BPPR
is subject to
the FDICs resolution
planning requirements applicable to
insured depository institutions with more than $50
billion but less than $100 billion in assets.
FDIC Insurance
Substantially all the deposits of BPPR and PB are insured up to applicable limits by the Deposit Insurance Fund (DIF) of
the
FDIC,
and
BPPR
and
PB
are
subject
to
FDIC
deposit
insurance
assessments
to
maintain
the
DIF.
Deposit
insurance
assessments are
based on
the average
consolidated total
assets of
the insured
depository institution
minus the
average tangible
equity of the institution during the assessment period. For larger
depository institutions with over $10 billion in assets,
such as BPPR
and PB, the FDIC uses a scorecard methodology, which considers CAMELS ratings, among
other measures, that seeks to capture
both the probability that an individual large institution will
fail and the magnitude of the impact on the DIF
if such a failure occurs. The
FDIC has the ability
to make discretionary adjustments to the
total score based upon significant
risk factors that are not
adequately
captured in the calculations. The initial base deposit insurance assessment rate for larger depository institutions ranges from 3 to 30
basis
points
on
an
annualized
basis.
Taking
into
account the
adjustments the
FDIC
may
make
to
the
base
rate,
the
total
base
assessment rate could range from 1.5 to 40 basis points
on an annualized basis.
In
October
2022,
the
FDIC
finalized
a
rule
that
increased
initial
base
deposit
insurance
assessment
rates
by
2
basis
points, beginning with the first quarterly assessment period of 2023. The FDIC, as required under the Federal Deposit Insurance Act
14
(FDIA), established
a plan
in September
2020 to
restore the
DIF reserve
ratio to
meet or
exceed the
statutory minimum
of 1.35
percent within
eight years. The
increased assessment is
intended to improve
the likelihood that
the DIF
reserve ratio would
reach
the required minimum by the statutory deadline
of September 30, 2028.
As of December 31, 2025, BPPR and
PB had a DIF average total asset
less average tangible equity assessment base of
$69 billion.
On
November 16,
2023,
the
FDIC finalized
a
rule
that
imposes
a special
assessment to
recover the
costs to
the
DIF
resulting
from
the
FDICs
use,
in
March
2023,
of
the systemic
risk
exception to
the
least-cost resolution
test
under the
FDIA
in
connection with the
receiverships of Silicon
Valley Bank
and Signature Bank.
The FDIC estimated
in approving the
rule that those
assessed losses total $16.3 billion. The rule provides
that this loss estimate will be periodically adjusted,
which will affect the amount
of
the special
assessment. Under
the rule,
the assessment
base is
the
estimated uninsured
deposits that
an insured
depository
institution reported in its Consolidated Reports of Condition and Income (Call Report) at December 31, 2022,
excluding the first $5
billion
in estimated
uninsured deposits.
For
a holding
company
that
has
more than
one
insured depository
institution subsidiary,
such as Popular,
the $5 billion
exclusion is allocated
among the companys
insured depository institution subsidiaries
in proportion
to each
insured depository
institutions estimated
uninsured deposits.
The special
assessments were
to be
collected at
an annual
rate of approximately 13.4 basis points per
year (3.36 basis points per quarter) over
eight quarters,
with the first assessment period
having begun
January 1,
2024. In
June 2024,
due to
the increase
in the
estimate of
losses, the
FDIC announced that
it projected
that the special
assessment would be collected
for an additional
two quarters beyond the
initial eight quarter collection
period, at a
lower rate.
In December
2025, the
FDIC reduced
the rate
at which
the assessment
is collected,
with an
invoice payment
date of
March 30, 2026, from 3.36 basis points to
2.97 basis points,
and also reduced the collection period back
to eight quarters.
Brokered Deposits
The FDIA
and regulations
adopted thereunder
restrict the
use of
brokered deposits
and the
rate of
interest payable
on
deposits for institutions
that are less
than well capitalized.
Popular does not
believe the brokered
deposits regulations have
had or
will have a material effect on the funding or liquidity
of BPPR and PB.
Capital Adequacy
Popular, PNA,
BPPR and PB are
each required to comply
with applicable capital adequacy standards
established by the
federal
banking
agencies
(the
Capital
Rules),
which
implement
the
Basel
III
framework
set
forth
by
the
Basel
Committee
on
Banking Supervision (the Basel Committee) as
well as certain provisions of the Dodd-Frank
Act.
Among other
matters, the
Capital Rules:
(i) impose
a capital
measure called
Common Equity
Tier
1 (CET1)
and the
related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and Additional Tier 1
capital instruments meeting
certain revised requirements;
and (iii) mandate
that most deductions/adjustments to
regulatory capital
measures be made
to CET1
and not to
the other components
of capital.
Under the Capital
Rules, for most
banking organizations,
including
Popular,
the
most
common
form
of
Additional
Tier
1
capital
is
non-cumulative
perpetual preferred
stock
and
the
most
common form of Tier
2 capital is subordinated notes and
a portion of the
allocation for loan and lease losses,
in each case, subject
to the Capital Rules specific requirements.
Pursuant to the Capital Rules, the minimum
capital ratios are:
4.5% CET1 to risk-weighted assets;
6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted
assets;
8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and
4% Tier 1 capital to average consolidated assets as reported
on consolidated financial statements (known
as the
leverage ratio).
The Capital Rules also impose
a capital conservation buffer,
composed entirely of CET1, on top
of these minimum risk-
weighted
asset
ratios. The
capital
conservation
buffer
is
designed
to
absorb
losses
during
periods
of
economic stress.
Banking
institutions
with
a
ratio
of
CET1
to
risk-weighted
assets
above
the
minimum
but
below
the
capital
conservation
buffer
will
face
constraints on
dividends, equity repurchases
and compensation based
on the
amount of
the shortfall and
eligible retained
income
(that is, four
quarter trailing net income, net
of distributions and tax effects
not reflected in net
income). Popular, BPPR
and PB are
therefore required to maintain such additional capital
conservation buffer of 2.5% of CET1,
effectively resulting in minimum ratios of
(i) CET1
to risk-weighted
assets of
at least
7%, (ii)
Tier
1 capital
to risk-weighted
assets of
at least
8.5%, and
(iii) Total
capital to
15
risk-weighted assets of at least 10.5%.
Pursuant
to
the
Capital
Rules,
the
effects
of
certain
accumulated other
comprehensive income
or
loss
(AOCI)
items
included in stockholders equity
(for example, marks-to-market of securities
held in the available
for sale portfolio) are
not excluded
from
regulatory
capital
ratios;
however,
banking
organizations
that
are
not
subject
to
Categories
I
or
II
standards
under
the
framework for
banking organizations
with $100
billion or
more in
assets, including
Popular,
BPPR and
PB, may
make a
one-time
permanent election to continue to
exclude these items. Popular,
BPPR and PB have
made this election in order
to avoid significant
variations in
the level
of capital
depending upon
the impact
of interest
rate fluctuations
on the
fair value
of their
available for
sale
securities portfolios.
On July
27, 2023,
the federal
banking regulators
proposed revisions
to the
Capital Rules
to implement
the
Basel Committees 2017 standards, described
below, and make
other changes to the
Capital Rules, including the ability
of banking
organizations in Categories III and IV to elect not to recognize most elements of AOCI in regulatory capital. The proposal introduces
revised credit risk, equity risk, operational risk, credit valuation adjustment risk and market risk requirements, among other changes.
However, the
revised capital requirements
of the
proposed rule would
not apply
to Popular,
BPPR, or
PB because
they have
less
than $100 billion in total consolidated assets and trading
assets and liabilities below the threshold for market risk requirements. The
federal
banking
regulators have
subsequently indicated
that
they
expect to
issue
a
revised
proposal, the
timing
and contents
of
which are uncertain.
The
Capital
Rules
preclude certain
hybrid
securities, such
as
trust
preferred
securities, from
inclusion
in
bank
holding
companies
Tier
1
capital.
Trust
preferred
securities
not
included
in
Populars
Tier
1
capital
may
nonetheless
be
included
as
a
component of
Tier 2 capital.
Popular has
not issued
any trust
preferred securities since
May 19,
2010. As
of December
31, 2025,
Popular has
$193 million
of trust
preferred securities
outstanding which
no longer
qualify for
Tier
1 capital
treatment, but
instead
qualify for Tier 2 capital treatment.
The Capital Rules also provide for a number of deductions
from and adjustments to CET1.
Banking organizations that are
not subject to Category
I or II standards
are subject to rules that
provide for simplified capital requirements relating
to the threshold
deductions
for
certain
mortgage
servicing
assets,
deferred
tax
assets,
investments
in
the
capital
of
unconsolidated
financial
institutions and inclusion of minority interests
in regulatory capital.
Failure
to
meet
capital
guidelines
could
subject
Popular
and
its
depository
institution
subsidiaries
to
a
variety
of
enforcement remedies, including the termination of deposit insurance by the FDIC
and to certain restrictions on our business. Refer
to Prompt Corrective Action below for further
discussion.
In
December 2017,
the Basel
Committee published
standards that
it
described as
the finalization
of the
Basel III
post-
crisis regulatory
reforms. Among other
things, these
standards revise
the Basel
Committees standardized approach
for credit
risk
(including
by
recalibrating
risk
weights
and
introducing
new
capital
requirements
for
certain
unconditionally
cancellable
commitments, such
as
unused credit
card
lines of
credit) and
provide
a new
standardized approach
for operational
risk capital.
Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to Category I and Category II
banking organizations and not to Popular, BPPR and PB.
In 2020, federal bank regulators adopted a rule
that allowed banking organizations to elect to delay
temporarily the
estimated effects of adopting the Current Expected Credit
Loss (CECL) model of ASU 2016-13 on regulatory
capital until January
2022 and subsequently to phase in the effects through
January 2025. The Corporations capital ratios
at December 31, 2025 reflect
the full phased in impact from the adoption of CECL.
Refer to
the Consolidated
Financial Statements
in this
Form 10-K.,
Note 20
and Table
10 of
Managements Discussion
and Analysis for the
capital ratios of Popular,
BPPR and PB
under Basel III. Refer
to the Consolidated Financial Statements
in this
Form 10-K Note 2 for more information regarding
CECL.
Prompt Corrective Action
The
FDIA
requires,
among
other
things,
the
federal
banking
agencies
to
take
prompt
corrective
action
in
respect
of
insured
depository
institutions
that
do
not
meet
minimum
capital
requirements.
The
FDIA
establishes
five
capital
tiers:
well
capitalized,
adequately
capitalized,
undercapitalized,
significantly
undercapitalized,
and
critically
undercapitalized.
A
depository institutions capital tier will depend upon how its
capital levels compare with various relevant capital
measures and certain
other factors.
16
An insured
depository institution will
be deemed
to be
(i) well
capitalized if
the institution
has a
total risk-based
capital
ratio of 10.0% or greater, a CET1 capital ratio of 6.5%
or greater, a Tier 1
risk-based capital ratio of 8.0% or greater, and a leverage
ratio of 5.0% or
greater, and is
not subject to any order
or written directive by
any such regulatory authority to
meet and maintain a
specific capital level for any capital
measure; (ii) adequately capitalized if the institution
has a total risk-based capital ratio
of 8.0%
or greater, a
CET1 capital ratio of 4.5%
or greater, a
Tier 1 risk-based capital
ratio of 6.0% or greater,
and a leverage ratio of
4.0%
or greater
and is
not well
capitalized; (iii)
undercapitalized if
the institution
has a
total risk-based
capital ratio
that is
less than
8.0%, a CET1 capital
ratio less than 4.5%,
a Tier 1
risk-based capital ratio of
less than 6.0% or
a leverage ratio of
less than 4.0%;
(iv) significantly
undercapitalized if
the institution
has a
total risk-based
capital ratio
of less
than 6.0%,
a CET1
capital ratio
less
than 3%, a Tier
1 risk-based capital ratio of less than 4.0% or
a leverage ratio of less than 3.0%;
and (v) critically undercapitalized
if
the
institutions
tangible
equity
is
equal
to
or
less
than
2.0%
of
average
quarterly
tangible
assets.
An
institution
may
be
downgraded to, or deemed
to be in, a
capital category that is
lower than indicated by
its capital ratios if
it is determined to
be in an
unsafe
or
unsound
condition
or
if
it
receives
an
unsatisfactory
examination
rating
with
respect
to
certain
matters.
An
insured
depository institutions capital category is determined solely for the purpose of applying prompt corrective action
regulations, and the
capital category
may not
constitute an
accurate representation
of the
institutions overall
financial condition
or prospects
for other
purposes.
The FDIA generally prohibits an insured depository institution from making any capital
distribution (including payment of a
dividend) or
paying any
management fee to
its holding
company, if
the depository
institution would thereafter
be undercapitalized.
Undercapitalized
depository
institutions
are
subject
to
restrictions
on
borrowing
from
the
Federal
Reserve
System.
In
addition,
undercapitalized
depository
institutions
are
subject
to
growth
limitations
and
are
required
to
submit
capital
restoration
plans.
A
depository institutions
holding company must
guarantee the capital
restoration plan, up
to an
amount equal to
the lesser
of 5%
of
the
depository
institutions
assets
at
the
time
it
becomes
undercapitalized
or
the
amount
of
the
capital
deficiency,
when
the
institution fails to comply with the
plan. The federal banking agencies may not
accept a capital restoration plan without determining,
among other things,
that the plan
is based
on realistic assumptions
and is
likely to succeed
in restoring the
depository institutions
capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly
undercapitalized
depository
institutions
may
be
subject
to
a
number
of
requirements
and
restrictions,
including orders to
sell sufficient voting
stock to become
adequately capitalized, requirements to
reduce total assets
and cessation
of receipt
of deposits
from correspondent
banks. Critically
undercapitalized depository
institutions are
subject to
appointment of
a
receiver or conservator.
The capital-based prompt
corrective action provisions
of the FDIA
apply to
the FDIC-insured depository
institutions such
as
BPPR
and
PB,
but
they
are
not
directly
applicable
to
holding
companies
such
as
Popular
and
PNA,
which
control
such
institutions. As of December 31, 2025,
both BPPR and PB met the quantitative requirements
for well capitalized status.
Restrictions on Dividends and Repurchases
The
principal
sources
of
funding
for
Popular
and
PNA
have
included
dividends
received
from
their
banking
and
non-
banking subsidiaries, asset sales
and proceeds from
the issuance of
debt and equity.
Various statutory
provisions limit the amount
of
dividends an
insured depository
institution may
pay to
its
holding company
without regulatory
approval. A
member bank
must
obtain the approval of the
Federal Reserve Board for any
dividend, if the total of
all dividends declared by the
member bank during
the calendar year would exceed the total of its net income for that year,
combined with its retained net income for the preceding two
years, after
considering those
years dividend
activity,
less any
required transfers to
surplus or
to a
fund for
the retirement
of any
preferred stock. During the year
ended December 31, 2025, BPPR declared
cash dividends of $575
million, a portion of
which was
used by Popular for the payments of the cash dividends on its
outstanding common stock. At December 31, 2025, BPPR needed to
obtain prior approval of the Federal Reserve Board before declaring a dividend
in excess of $191 million due to its
retained income,
declared dividend activity and transfers to statutory reserves over the three years ended December 31, 2025. In addition, a member
bank may
not declare
or pay
a dividend
in an
amount greater
than its
undivided profits
as reported
in its
Report of
Condition and
Income, unless the member bank has received the approval of
the Federal Reserve Board. A member bank also may not permit
any
portion of its permanent capital to
be withdrawn unless the withdrawal has
been approved by the Federal Reserve Board.
Pursuant
to
these
requirements, PB
may
not
declare
or
pay
a
dividend without
the
prior
approval
of
the
Federal
Reserve
Board
and
the
NYSDFS.
During the
year ended
December 31,
2025, Popular
received cash
dividends of
$23 million
from Popular
International
Bank, Inc. (PIBI) and $22 million from its other
non-banking subsidiaries.
It is Federal Reserve Board policy that bank holding companies generally should pay dividends on common
stock only out
17
of net
income available to
common shareholders
over the past
year and
only if
the prospective rate
of earnings retention
appears
consistent with the organizations current and
expected future capital needs, asset quality
and overall financial condition. Moreover,
under Federal Reserve Board policy, a bank
holding company should not maintain dividend levels that place undue pressure on the
capital of depository
institution subsidiaries or that
may undermine the bank
holding companys ability to
be a source
of strength to
its
banking subsidiaries.
Federal Reserve
policy
also
provides that
a
bank
holding company
should
inform
the
Federal
Reserve
reasonably in advance of declaring or paying a dividend that
exceeds earnings for the period for which the dividend is
being paid or
that could result in a material adverse change
to the bank holding companys capital structure.
The
Federal Reserve
Board
also restricts
the
ability of
banking
organizations to
conduct stock
repurchases. In
certain
circumstances, a banking organizations repurchases
of its common stock may
be subject to a
prior approval or notice requirement
under other regulations or policies of the Federal Reserve. Any redemption or
repurchase of preferred stock or subordinated debt is
subject to the prior approval of the Federal Reserve.
Subject to compliance with certain conditions, distributions of U.S. sourced dividends to a corporation
organized under the
laws
of the
Commonwealth of
Puerto Rico
are subject
to
a withholding
tax
of 10%
instead of
the 30%
applied to
other foreign
corporations. Accordingly, dividends from current or accumulated earnings and profits
paid by PNA to Popular, Inc. sourced from the
U.S. operations of PB are subject to a 10% tax withholding.
A corporation organized under the laws of the Commonwealth of Puerto
Rico that is engaged in a U.S. trade or business is generally subject to a branch profits tax of 30% on its earnings and profits
for the
taxable year that are effectively connected with
such U.S. trade or business, adjusted as
provided by U.S. federal income tax law.
Accordingly,
to
the extent
BPPRs
U.S. operations
generate effectively
connected earnings
and profits
that
are not
reinvested in
such U.S. operations
(and that are
not otherwise adjusted
as provided by
U.S. federal income tax
law), such effectively
connected
earnings and profits will generally be subject
to a branch profits tax of 30%.
Refer to
Part II,
Item 5,
Market for
Registrants Common
Equity,
Related Stockholder
Matters and
Issuer Purchases
of
Equity Securities for further information on Populars
distribution of dividends and repurchases of equity
securities.
See
Puerto
Rico
Regulation
below
for
a
description
of
certain
restrictions
on
BPPRs
ability
to
pay
dividends
under
Puerto Rico law.
Interstate Branching
The Dodd-Frank
Act amended
the Riegle-Neal
Interstate Banking
and Branching
Efficiency Act
of 1994
(the Interstate
Banking
Act)
to
authorize
national
banks
and
state
banks
to
branch
interstate
through
de
novo
branches. For
purposes
of
the
Interstate Banking Act, BPPR is treated as a state bank and is subject to the same restrictions on interstate branching as other state
banks.
Activities and Acquisitions
In general, the BHC Act limits the activities
permissible for bank holding companies to the business of banking, managing
or controlling banks and such other activities as the Federal Reserve Board has determined to be so closely related to banking as to
be
properly
incidental
thereto.
A
company
that
meets
management
and
capital
standards
and
whose
subsidiary
depository
institutions meet management,
capital and
Community Reinvestment Act
(CRA) standards may
elect to
be treated
as a
financial
holding company
and engage
in a
substantially broader
range of
nonbanking financial
activities, including
securities underwriting
and dealing, insurance underwriting and making
merchant banking investments in nonfinancial
companies.
In order for a bank holding company to elect to be treated as a financial
holding company, (i) all of its depository institution
subsidiaries
must
be
well capitalized
(as described
above)
and
well managed
and
(ii)
it
must
file a
declaration with
the Federal
Reserve Board that it elects to be a financial holding
company. As noted above, a bank
holding company electing to be a financial
holding company must itself be and remain
well capitalized and well managed. The Federal Reserve Boards
regulations applicable
to bank holding companies separately define
well capitalized for bank holding companies,
such as Popular,
to require maintaining
a tier 1 capital
ratio of at least
6% and a total capital
ratio of at least 10%.
Popular and PNA have elected
to be treated as
financial
holding
companies.
A
depository
institution
is
deemed
to
be
well
managed
if,
at
its
most
recent
inspection,
examination
or
subsequent review
by the
appropriate federal banking
agency (or
the appropriate state
banking agency), the
depository institution
received
at
least
a
satisfactory
composite
rating
and
at
least
a
satisfactory
rating
for
the
management
component
of
the
composite
rating.
If,
after
becoming
a
financial
holding
company,
the
company
fails
to
continue
to
meet
any
of
the
capital
or
management requirements
for financial
holding company
status, the
company
must
enter into
a confidential
agreement with
the
Federal
Reserve
Board
to
comply
with
all
applicable capital
and
management
requirements.
If
the
company
does
not
return
to
18
compliance
within
180
days,
the
Federal
Reserve
Board
may
extend
the
agreement
or
may
order
the
company
to
divest
its
subsidiary banks or the
company may discontinue, or
divest investments in companies
engaged in, activities permissible only
for a
bank holding company that has elected to be treated as a financial
holding company. In addition, if a depository institution subsidiary
controlled by a financial holding company does not
maintain a CRA rating of at least satisfactory, the financial holding company
will
be subject to restrictions on certain new activities
and acquisitions.
The Federal Reserve Board
may in certain circumstances limit
our ability to conduct
activities and make acquisitions that
would otherwise be permissible for
a financial holding company.
Furthermore, a financial holding company must obtain
prior written
approval from the Federal Reserve Board before acquiring a nonbank company with $10 billion or more in total consolidated assets.
In addition, we
are required to
obtain prior Federal
Reserve Board approval
before engaging in
certain banking and
other financial
activities both in the United States and abroad.
The Volcker
Rule adopted
as part
of the
Dodd-Frank Act
restricts the
ability of
Popular and
its subsidiaries,
including
BPPR and PB as
well as non-banking subsidiaries, to
sponsor or invest in
covered funds, including private funds,
or to engage in
certain types
of proprietary
trading. Popular
and its
subsidiaries generally
do not
engage in
the businesses
subject to
the Volcker
Rule; therefore, the Volcker Rule does not have a material effect on our
operations.
Anti-Money Laundering Initiative and the USA PATRIOT Act
A major focus of governmental policy relating to financial institutions in
recent years has been aimed at combating money
laundering and
terrorist financing.
The USA
PATRIOT
Act of
2001 (the
USA PATRIOT
Act) strengthened
the ability
of the
U.S.
government to help prevent, detect and prosecute international money
laundering and the financing of terrorism. Title
III of the USA
PATRIOT
Act imposed
significant compliance
and due
diligence obligations,
created new
crimes and
penalties and
expanded the
extra-territorial jurisdiction of the United States. Failure of a financial institution to comply with the USA PATRIOT Acts requirements
could have serious legal and reputational consequences
for the institution.
The
Anti-Money
Laundering
Act
of
2020
(AMLA),
which
amended
the
Bank
Secrecy
Act
(the
BSA),
is
intended
to
comprehensively
reform
and
modernize
U.S.
anti-money
laundering
laws.
Among
other
things,
the
AMLA
codifies
a
risk-based
approach to anti-money laundering compliance for financial institutions; requires the U.S. Department of the Treasury to
promulgate
priorities
for
anti-money
laundering
and
countering
the
financing
of
terrorism
policy;
requires
the
development
of
standards
for
testing technology and
internal processes for BSA
compliance; expands enforcement-
and investigation-related authority,
including
a
significant
expansion
in
the
available
sanctions
for
certain
BSA
violations;
and
expands
BSA
whistleblower
incentives
and
protections.
Many
of
the
statutory
provisions
in
the
AMLA
require
additional
rulemakings,
reports
and
other
measures,
and
the
impact
of
the
AMLA
will
depend on,
among
other
things,
rulemaking and
implementation guidance.
In
June
2021,
the
Financial
Crimes Enforcement Network, a bureau of
the U.S. Department of the
Treasury,
issued the priorities for anti-money laundering
and
countering the
financing of
terrorism policy
required under AMLA.
The priorities
include: corruption, cybercrime,
terrorist financing,
fraud, transnational crime, drug trafficking, human trafficking and
proliferation financing.
Federal regulators
regularly examine BSA/Anti-Money
Laundering and sanctions
compliance to
enhance their
adequacy
and effectiveness, and the frequency and extent of such examinations
and related remedial actions have been
increasing.
Community Reinvestment Act
The
CRA
requires
banks
to
help
serve
the
credit
needs
of
their
communities,
including
extending
credit
to
low-
and
moderate-income individuals
and geographies.
Should
Popular
or our
bank
subsidiaries
fail
to
serve
adequately
the community,
potential penalties may include regulatory denials of applications to expand branches, relocate offices or branches, add subsidiaries
and affiliates, expand into new financial activities and merge
with or purchase other financial institutions.
Interchange Fees Regulation
The Federal Reserve Board
has established standards for
debit card interchange fees
and prohibited network exclusivity
arrangements and routing restrictions. The
maximum permissible interchange fee that
an issuer may receive
for an electronic debit
transaction is
the sum
of
21 cents
per transaction
and 5
basis points
multiplied by
the value
of
the transaction.
Additionally,
the
Federal Reserve
Board allows
for an
upward adjustment
of
no more
than 1
cent
to
an issuers
debit card
interchange fee
if the
issuer develops and implements policies and procedures
reasonably designed to achieve certain fraud-prevention
standards.
In
October
2023,
the
Federal
Reserve
Board
proposed
amendments
to
its
rules
on
interchange
fees.
If
adopted,
the
19
proposed changes
would establish
a maximum
permissible interchange
fee of
no more
than 14.4
cents per
transaction plus
four
basis
points
multiplied
by
the
value
of
the
transaction.
The
fraud
prevention
adjustment
would
be
increased
to
1.3
cents
per
transaction. The proposed changes would also establish an automatic update of
the interchange fee cap every other year based on
a survey of debit card issuers.
Consumer Financial Protection Act of 2010
The Consumer
Financial Protection
Bureau (the
CFPB) supervises
covered persons
(broadly defined
to include
any
person offering or
providing a consumer financial
product or service and
any affiliated service
provider) for compliance with
federal
consumer financial laws. The CFPB
also has the broad power
to prescribe rules applicable to
a covered person or service
provider
identifying
as
unlawful,
unfair,
deceptive,
or
abusive
acts
or
practices
in
connection
with
any
transaction
with
a
consumer
for
a
consumer financial product or service, or the offering of
a consumer financial product or service. We are subject to examination and
regulation by the CFPB. During 2025, the CFPB reduced its staff by over 80%. The
reduction in force is the subject of litigation, and
the
staffing
cuts
are
currently
stayed
pending
the
federal
circuit
courts
en
banc
rehearing
of
the
case.
The
impact
of
these
developments
on
banking
organizations
subject
to
CFPB
regulation
and
supervision,
including
us,
is
uncertain.
The
Consumer
Financial Protection Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted
at
the federal
level and,
in certain
circumstances, permits
state attorneys
general to
enforce compliance
with both
the state
and
federal laws and regulations. States and state attorneys general
may increase regulatory, investigative and enforcement activity with
respect to consumer protection, in
response to changes in regulation, supervision
and enforcement of consumer protection laws
by
federal regulators.
On October 22, 2024, the CFPB finalized a new rule to implement Section 1033 of the Consumer Financial Protection Act
that
requires
a
provider
of
payment
accounts
or
products,
such
as
a
bank,
to
make
data
available
to
consumers
upon
request
regarding the
products or
services they
obtain from
the provider.
Any such
data provider
also has
to make
such data
available to
third parties, with the consumers express authorization and
through an interface that satisfies formatting, performance
and security
standards,
for
the
purpose
of
such
third
parties
providing
the
consumer
with
financial
products
or
services
requested
by
the
consumer. Data required to be made available under the rule includes
transaction information, account balance, account and routing
numbers,
terms
and
conditions,
upcoming
bill
information,
and
certain
account
verification
data.
The
rule
is
intended
to
give
consumers
control
over
their
financial
data,
including
with
whom
it
is
shared,
and
encourage
competition
in
the
provision
of
consumer financial
products or
services. For
banks with
at least
$10 billion
and less
than $250
billion in
total assets,
compliance
with the rules requirements is required beginning on
April 1, 2027. The rule is the subject of litigation,
which is currently stayed while
the CFPB considers revisions to the rule.
Office of Foreign Assets Control Regulation
The
U.S.
Treasury
Department
Office
of
Foreign
Assets
Control
(OFAC)
administers
economic
sanctions
that
affect
transactions
with
designated
foreign
countries,
nationals
and
others.
The
OFAC-administered
sanctions
targeting
countries
take
many
different
forms.
Generally,
however,
they
contain
one
or
more
of
the
following
elements:
(i)
restrictions
on
trade
with
or
investment in a sanctioned country; and (ii) a blocking
of assets in which the government of the
sanctioned country or other specially
designated nationals have an interest, by prohibiting
transfers of property subject to U.S. jurisdiction (including
property in the United
States or the possession or control of U.S.
persons outside of the United States). Blocked assets (e.g., property
and bank deposits)
cannot
be
paid
out,
withdrawn, set
off
or
transferred
in
any
manner without
a
license
from
OFAC.
Failure
to
comply
with these
sanctions
could
have
serious
legal
and
reputational
consequences,
including
denial
by
federal
regulators
of
proposed
merger,
acquisition, restructuring, or other expansionary activity.
Protection of Customer Personal Information and
Cybersecurity
The privacy
provisions of
the Gramm-Leach-Bliley Act
of 1999
generally prohibit financial
institutions, including
us, from
disclosing nonpublic personal financial information of consumer customers to third
parties for certain purposes (primarily marketing)
unless
customers
have
the
opportunity
to
opt
out
of
the
disclosure.
The
Fair
Credit
Reporting
Act
restricts
information
sharing
among affiliates for marketing purposes and governs
the use and provision of information to consumer
reporting agencies.
The federal banking regulators have also issued guidance and rules regarding cybersecurity that are intended to enhance
cyber risk management standards among financial institutions. A financial institution is expected to establish lines
of defense and to
maintain risk management processes that are designed to address the risk posed by compromised customer credentials. A financial
institutions
management
is
expected
to
maintain
sufficient
business
continuity
planning
processes
for
the
rapid
recovery,
resumption and maintenance of
the institutions operations
after a cyber-attack involving
destructive malware. A financial
institution
20
is
also
expected
to
develop
appropriate
processes
to
enable
recovery
of
data
and
business
operations
and
address
rebuilding
network capabilities and restoring data if the institution or its critical service
providers fall victim to this type of cyber-attack. If we
fail
to observe the
regulatory guidance, we could
be subject to various
regulatory sanctions, including financial
penalties. In November
2021, the U.S.
federal bank regulatory agencies
issued a final
rule requiring banking organizations,
including Popular,
PNA, BPPR
and PB, to notify
their primary federal banking regulator
within 36 hours of determining
that a notification incident has
occurred. A
notification incident
is a
computer-security incident that
has materially
disrupted or degraded,
or is
reasonably likely to
materially
disrupt or
degrade, the
banking organizations
ability to
deliver services
to a
material portion
of its
customer base,
jeopardize the
viability
of
key
operations
of
the
banking
organization,
or
impact
the
stability
of
the
financial
sector.
The
final
rule
also
requires
specific and immediate notifications by bank
service providers that become aware of similar
incidents.
State and foreign regulators
have also been increasingly active
in implementing privacy and cybersecurity
standards and
regulations. Several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and
providing detailed requirements with respect to these
programs, including data encryption requirements. In New York,
the NYSDFS
requires
financial
institutions
regulated
by
the
NYSDFS,
including
PB,
to,
among
other
things,
(i)
establish
and
maintain
a
cybersecurity program designed
to enhance the
confidentiality, integrity
and availability of
their information systems;
(ii) implement
and maintain a written
cyber security policy setting forth
policies and procedures for the
protection of their information systems
and
nonpublic
information;
and
(iii)
designate
a
Chief
Information
Security
Officer.
On
November
1,
2023,
the
NYSDFS
adopted
amendments to
its
cybersecurity regulations
that
represent
a
significant
update
to
the
regulation of
cybersecurity practices.
The
amendments
generally
fall
within
the
following
five
categories:
(i)
increased
mandatory
controls
associated
with
common
attack
vectors,
(ii)
enhanced
requirements
for
privileged
accounts,
(iii)
enhanced
notification
obligations,
(iv)
expansion
of
cyber
governance practices and (v) additional cybersecurity
requirements for larger companies.
On
July
6,
2023,
the
SEC
adopted
new
rules
that
would
require
registrants,
such
as
Popular,
to
(i)
report
material
cybersecurity incidents
on Form
8-K and,
(ii) disclose
in Annual
Report on
Form 10-K
cybersecurity policies
and procedures
and
governance practices, including at the board and
management levels.
Many states and foreign
governments have also recently implemented or
modified their data breach notification
and data
privacy
requirements. The
California Consumer
Privacy Act
(CCPA)
imposes privacy
compliance obligations
with regard
to
the
collection,
use
and
disclosure of
personal
information of
California residents,
and the
November 2020
amendment to
the
CCPA
creates the California Privacy Protection Agency, a watchdog privacy agency, and further expands the scope of businesses covered
by the law
and certain rights relating
to personal information. The
substantive obligations under the
2020 amendment to the
CCPA
became effective on January 1, 2023. In the European Union, the General Data Protection Regulation heightens privacy compliance
obligations and
imposes strict
standards for
reporting data
breaches. We
continue to
monitor these
developments to
comply with
applicable requirements.
See
Puerto
Rico
Regulation
below
for
a
description
of
legislations
and
regulations
on
information
privacy
and
cybersecurity in Puerto Rico.
Climate-Related and ESG Developments
In recent years, certain lawmakers and regulators in and outside the United States have increased their focus on financial
institutions
and
other
companies
risk
oversight,
disclosures
and
practices
in
connection
with
climate
change
and
other
environmental,
social
and
governance (ESG)
matters.
For
example,
in
2023,
the
NYSDFS
issued
guidance
on
climate-related
financial
risk
management
applicable
to
NYSDFS-regulated
banking
and
mortgage
organizations,
including
PB.
The
guidance
addresses material
financial
risks related
to
climate change
faced by
these
organizations in
the context
of
risk assessment,
risk
management,
and
risk
appetite
setting.
In
2023,
California
enacted
climate-related
disclosure
laws
requiring
certain
companies
doing business in
California to make
certain climate-related disclosures
beginning in 2026,
including but not
limited to greenhouse
gas
emissions data
and climate-related
risks. On
the other
hand, certain
states
have enacted,
or have
proposed to
enact, anti-
ESG
statutes,
regulations
or
policies, including
statutes
that
prohibit
financial
institutions from
denying or
canceling products
or
services to
a person,
or otherwise discriminating
against a
person in making
available products or
services, on
the basis
of social
credit scores and certain other factors. Additionally, in August 2025, President Trump signed Executive Order 14331, Guaranteeing
Fair Banking
Access for
All Americans,
which states
that it
is the
policy of
the United
States that
no American
should be
denied
access
to
financial
services
because
of
their
constitutionally
or
statutorily
protected
beliefs,
affiliations,
or
political
views.
The
Executive
Order
directs
the
Treasury
Secretary
and
federal
banking
regulators
to
address
politicized
or
unlawful
debanking
activities.
21
Incentive Compensation
The Federal Reserve Board reviews, as
part of its regular,
risk-focused examination process, the incentive compensation
arrangements of
banking organizations, such
as Popular,
that are
not large,
complex banking
organizations. Deficiencies will
be
incorporated into
the
organizations supervisory
ratings, which
can
affect
the
organizations ability
to
make
acquisitions and
take
other
actions. Enforcement
actions may
be taken
against
a
banking
organization if
its
incentive compensation
arrangements, or
related
risk-management
control
or
governance
processes,
pose
a
risk
to
the
organizations
safety
and
soundness
and
the
organization is not taking prompt and effective measures
to correct the deficiencies.
The
Federal
Reserve
Board,
OCC
and
FDIC
have
issued
comprehensive
final
guidance
on
incentive
compensation
policies intended to discourage excessive risk-taking in
the incentive compensation policies of banking organizations
in order to not
undermine
the
safety
and
soundness
of
such
organizations.
The
guidance,
which
covers
all
employees
that
have
the
ability
to
materially affect
the risk
profile of an
organization, either individually
or as
part of
a group,
is based
upon the key
principles that
a
banking organizations incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond
the
organizations
ability
to
effectively
identify
and
manage
risks,
(ii)
be
compatible
with
effective
internal
controls
and
risk
management, and (iii)
be supported by
strong corporate governance,
including active and
effective oversight
by the
organizations
board of directors.
The Dodd-Frank Act requires the U.S. financial regulators, including the Federal Reserve Board, the other federal banking
agencies
and
the
SEC,
to
adopt
rules
prohibiting
incentive-based
payment
arrangements that
encourage
inappropriate
risks
by
providing excessive
compensation or
that could
lead to
a material
financial loss
at specified
regulated entities
having at
least $1
billion in total
assets (including Popular,
PNA, BPPR and
PB). The U.S.
financial regulators proposed revised
rules in 2016,
which
have not been finalized.
In October
2022, the SEC
adopted a final
rule requiring securities
exchanges to adopt
rules mandating, in
the case of
a
restatement, the
recovery or
clawback of
excess incentive-based
compensation paid
to current
or former
executive officers
and
requiring listed
issuers to
disclose any
recovery analysis where
recovery is
triggered by
a restatement.
The excess
compensation
would be based
on the amount
the executive officer
would have received
had the incentive-based
compensation been determined
using the restated
financials. The Nasdaq
Stock Markets listing
standards pursuant to the
SECs rule became
effective October 2,
2023. Populars clawback policy adopted in accordance
with these listing standards is included as
Exhibit 97.1.
Regulation of Broker-Dealers
Our subsidiary,
PS, is a
registered broker-dealer with the
SEC and subject to
regulation and examination by
the SEC as
well
as
FINRA
and
other
self-regulatory
organizations.
These
regulations
cover
a
broad
range
of
issues,
including
capital
requirements;
sales
and
trading
practices;
use
of
client
funds
and
securities;
the
conduct
of
directors,
officers
and
employees;
record-keeping and recording;
supervisory procedures to
prevent improper trading
on material
non-public information; qualification
and
licensing
of
sales
personnel;
and
limitations
on
the
extension
of
credit
in
securities
transactions.
In
addition
to
federal
registration, state securities
commissions require the
registration of certain
broker-dealers. PS is
registered with 35
U.S. state and
territory securities commissions.
Regulation of Reinsurers, Insurance Producers and
Agents
Populars subsidiaries that are engaged in
insurance agency and producer activities are
subject to regulatory supervision
by the Puerto
Rico Office of
the Commissioner of Insurance
and to insurance laws
and regulations requiring licensing
of insurance
producers and
agents. Populars
reinsurance subsidiaries
are subject
to
licensure and
regulatory supervision
by the
Puerto Rico
Office of the Commissioner of Insurance and
to insurance laws and regulations requiring, among
other things, minimum capital and
solvency standards, financial reporting, restrictions on
the amount of dividends payable, record
keeping and examinations.
Puerto Rico Regulation
As
a
commercial
bank
organized
under
the
laws
of
Puerto
Rico,
BPPR
is
subject
to
supervision,
examination
and
regulation by the Office of the Commissioner of Financial Institutions, pursuant to the Puerto Rico Banking Act of 1933, as amended
(the Banking Law).
Section 27 of the Banking Law requires that at least ten percent (10%) of BPPRs annual retained earnings be transferred
22
annually to a statutory reserve fund. The
apportionment must be done every year until the
reserve fund is equal to the
total of paid-
in capital on common and preferred stock. Under Regulation 9680 of the Puerto Rico Banking Law, dated July 22, 2025, Banks may
be exempted from
the requirement to transfer
such funds to
the statutory reserve
fund if they
are well capitalized,
have obtained a
rating of
1 or
2 in
the last
examination performed by
the Office
of the
Commissioner or an
applicable regulatory agency
and have
accumulated at least 50% of the paid in
capital for their common and preferred stock in
their reserve fund.
Section
27
of
the
Banking
Law
also
provides that
when
the
expenditures
of
a
bank
are
greater
than
its
receipts, the
excess of the
former over the latter
must be charged against
the undistributed profits of
the bank, and the
balance, if any,
must be
charged against the statutory reserve fund. If
the statutory reserve fund is not sufficient to cover such balance
in whole or in part, the
outstanding amount must be charged against the capital account and
no dividend may be declared until capital has been restored to
its original amount and the statutory reserve fund to
20% of the original capital.
Section 16 of the
Banking Law requires every
bank to maintain a
legal reserve that, except
as otherwise provided by
the
Office of
the Commissioner,
may not be
less than 20%
of its
demand liabilities, excluding
government deposits (federal,
state and
municipal) that
are secured
by collateral.
If a
bank is
authorized to
establish one
or more
bank branches
in a
state of
the United
States or in a foreign country, where such branches are subject to the reserve requirements of that state
or country, the Office of the
Commissioner
may
exempt
said
branch
or
branches
from
the
reserve
requirements
of
Section
16.
Pursuant
to
an
order
of
the
Federal
Reserve
Board
dated
November
24,
1982,
BPPR
has
been
exempted
from
the
reserve
requirements
of
the
Federal
Reserve
System
with
respect
to
deposits
payable
in
Puerto
Rico.
Accordingly,
BPPR
is
subject
to
the
reserve
requirement
prescribed by Section 16 of the Banking Law. During 2025, BPPR was
in compliance with the legal reserve requirement.
Section 17 of the Banking Law permits a bank to make loans to
any one person, firm, partnership or corporation, up to an
aggregate
amount
of
fifteen
percent
(15%)
of
the
paid-in
capital
and
reserve
fund
of
the
bank.
In
the
case
of
loans
which
are
secured by collateral worth at
least 25% more than the
amount of the loan, the
maximum aggregate amount of such secured
loans
is increased to one
third of the paid-in capital
of the bank and
its reserve fund. In no
event may the total of
unsecured and secured
loans to any one person, firm, partnership or corporation exceed an aggregate amount of
33 1/3% of the paid-in capital and reserve
fund of the bank. If the institution is well capitalized and had been rated 1 or
2 in the last examination performed by the Office of the
Commissioner or an applicable
regulatory agency,
its legal lending
limit shall also
include 15% of 100%
of its undivided
profits and
for loans
secured by
collateral worth
at least
25% more
than the
amount of
the loan,
the capital
of the
bank shall
also include
33
1/3% of 100% of
its undivided profits. Institutions rated
3 in their last
regulatory examination may include this
additional component
in their
legal lending
limit only
with the
previous authorization
of the
Office
of the
Commissioner.
There are
no restrictions
under
Section
17
on
the
amount
of
loans
that
are
wholly
secured
by
bonds,
securities
and
other
evidence
of
indebtedness
of
the
Government of
the United
States or
Puerto Rico,
or by
current debt
bonds, not
in default,
of municipalities
or instrumentalities
of
Puerto Rico. As
of December 31, 2025,
the legal lending
limit for BPPR
under this provision
was $723 million.
During 2025, BPPR
was in compliance with the lending limit requirements
of Section 17 of the Banking Law.
Section
14
of
the
Banking
Law
authorizes
a
bank
to
conduct
certain
financial
and
related
activities,
including
finance
leasing
of
personal
property
and
originating
and
servicing
mortgage
loans,
directly
or
through
subsidiaries.
BPPR
engages
in
finance
leasing
and
conducts
the
origination
and
servicing
of
mortgage
loans
through
its
Popular
Auto
and
Popular
Mortgage
divisions, respectively.
With
respect to
information privacy,
Puerto
Rico
law
requires businesses
to
implement information
security
controls to
protect consumers
personal information from
breaches, as
well as to
provide notice of
any breach to
affected customers. In
2024
Puerto
Rico
enacted the
Cybersecurity Act
of
the
Commonwealth of
Puerto
Rico,
which
establishes cybersecurity
standards for
government entities
and their
contractors, including
certain reporting
and certification
obligations. As
a depositary
of government
funds, BPPR
could be
considered a
contractor under
the statute;
however,
the Puerto
Rico Innovation
and Technology
Service
has
not
yet
adopted
implementing
regulation
which
we
expect
to
address
applicability
and
any
exceptions
to
the
statutes
requirements.
In addition,
as noted
above in
Regulation of
Reinsurers, Insurance
Producers and
Agents, Populars reinsurance
subsidiaries are subject to
licensure and regulatory supervision
by the Puerto Rico
Office of the
Commissioner of Insurance and
to
insurance laws and regulations.
Available Information
We maintain an
Internet website at www.popular.com.
Via the Investor
Relations link at our
website, our annual reports
on
Form 10-K,
quarterly reports
on
Form 10-Q,
current
reports on
Form 8-K
and amendments
to
such
reports filed
or furnished
23
pursuant to Section 13(a) or
15(d) of the Securities Exchange Act
of 1934, as amended (the
Exchange Act), are available, free
of
charge, as
soon as
reasonably practicable
after such
forms are
electronically filed
with, or
furnished to,
the SEC.
The SEC
also
maintains an
internet website at
http://www.sec.gov that
contains reports, proxy
and information statements,
and other information
regarding issuers that file electronically with the
SEC. You may obtain copies of our filings on the SEC site.
We have
adopted a
written code
of ethics
that applies
to all
directors, officers
and employees
of Popular,
including our
principal executive officer
and senior financial
officers, in accordance
with Section 406
of the Sarbanes-Oxley
Act of 2002
and the
rules
of
the
SEC
promulgated
thereunder.
Our
Code
of
Ethics
is
available
on
our
corporate
website,
www.popular.com,
in
the
section entitled Corporate Governance. In the event that we make changes to, or provide waivers from, the provisions of this Code
of Ethics that
the SEC requires
us to disclose,
we intend to
disclose these events
on our corporate
website in such
section. In
the
Corporate Governance
section
of our
corporate
website,
we
have also
posted the
charters
for
our Audit
Committee, Talent
and
Compensation
Committee,
Risk
Management
Committee,
Corporate
Governance
and
Nominating
Committee
and
Technology
Committee, as well as our Corporate Governance Guidelines. In addition, information concerning
purchases and sales of our equity
securities by our executive officers and directors is
posted on our website.
All
website
addresses
given
in
this
document
are
for
information
only
and
are
not
intended
to
be
active
links
or
to
incorporate any website information into this Form
10-K.
ITEM 1A. RISK FACTORS
We, like
other financial institutions,
face risks
inherent to
our business,
financial condition, liquidity,
results of
operations
and
capital
position.
These
risks
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.
The risks described in
this report are not the
only risks we face. Additional
risks and uncertainties not currently
known by
us
or
that
we
currently
deem
to
be
immaterial,
or
that
are
generally
applicable
to
all
financial
institutions,
may
also
materially
adversely affect our business, financial condition, liquidity, results of operations or capital
position.
ECONOMIC AND MARKET RISKS
Weakness in
the economy,
particularly in
Puerto Rico,
where a
significant portion
of our
business is
concentrated, has
adversely impacted us in the past and may adversely
impact us in the future.
We have been, and will continue to be, impacted by global and local
economic and market conditions, including weakness
in
the
economy,
disruptions
and
volatility
in
the
financial
markets,
inflation,
monetary,
trade
and
fiscal
policies,
public
policy,
geopolitical conflicts, business and consumer sentiment
and unemployment. A significant portion of
our business is concentrated in
Puerto Rico, which accounted for 77% of our assets and 79%
of our deposits as of December 31, 2025 and
80% of our revenues for
the
year
ended
December
31,
2025.
As
a
result,
our
financial
condition
and
results
of
operations
are
highly
dependent
on
the
general
trends
of
the
Puerto
Rico
economy
and
other
conditions
affecting
Puerto
Rico
consumers
and
businesses.
The
concentration of
our operations in
Puerto Rico
exposes us to
greater risks than
other banking companies
with a
wider geographic
base.
Puerto Rico
has faced significant
economic and fiscal
challenges in the
past, including a
severe recession that
began in
2007 and
persisted for
over a
decade and
an acute
fiscal crisis
that led
the Puerto
Rico government
to file
for a
form
of federal
bankruptcy protection
in 2017.
Puerto Ricos
fiscal and
economic challenges
have in
the past
adversely affected
our customers,
resulting
in
higher
delinquencies,
charge-offs
and
increased
losses
for
us.
While
Puerto
Ricos
economy
has
been
gradually
recovering
and
the
Puerto
Rico
government
emerged from
bankruptcy
in
2022,
Puerto
Rico
still
faces
significant
economic
and
fiscal challenges.
Puerto Ricos
economy is
closely tied
to the
U.S. economy,
as well
as
highly reliant
on U.S.
public policy
and funding
decisions. Puerto Rico
has historically received
significant federal support
for a
wide range of
government programs and
services,
including healthcare, education,
infrastructure and social
assistance programs. More
recently, Puerto
Rico has
received significant
federal stimulus,
disaster relief and
reconstruction funding, which
has served as
a major
driver of
economic activity.
Reductions in
federal
funding
to
programs that
have
benefited the
Puerto
Rico
economy
or
delays
in
disbursements could
significantly impact
Puerto
Ricos
economy
and
hinder
reconstruction
efforts,
including
the
restoration
and
improvement
of
critical
infrastructure.
In
addition, given that Puerto Ricos Medicaid program is
funded through federal block grants, absent federal legislative action,
annual
24
Medicaid funding for Puerto
Rico is projected to
drop significantly during the
2027-2028 fiscal year,
which would require the
Puerto
Rico government
to cover
substantial program costs
and potentially
place significant
strain on
its finances.
Beyond direct
funding,
broader shifts in U.S. policy,
such as changes to tax or trade policies, and
shifts in policies of other governments in response, could
also adversely
impact the
Puerto Rico
economy.
A weakening
of the
Puerto Rico
economy or
other adverse
economic conditions
affecting Puerto Rico consumers and businesses could result in decreased demand for our products or services, deterioration in the
credit
quality
of
our
customers,
higher
delinquencies,
charge-offs
or
increased
losses,
all
of
which
could
adversely
affect
our
business, financial condition, liquidity, results of operations or capital position.
We are
also exposed
to risks
related to
the state
of the
local economies
of the
other markets
in which
we do
business,
such as
New York
and Florida, as
well as to
the state of
the global and
U.S. economy and
financial markets. Evolving
geopolitical
tensions, the introduction
or escalation of tariffs,
inflationary pressures and other
political or economic shifts
may lead to
increased
market volatility
and disruption.
These factors
could, in
turn, adversely
impact our
business, financial condition,
liquidity,
results of
operations or capital position.
Changes
in
interest
rates
and
credit
spreads
can
adversely
impact
our
financial
condition,
including
our
investment
portfolio,
since
a
significant
portion
of
our
business involves
borrowing
and
lending
money,
and
investing in
financial
instruments.
Our business
and financial
performance are
impacted by
market interest
rates and
movements in
those rates.
Since a
high percentage of our assets and liabilities are interest bearing or otherwise sensitive in value to changes in interest rates, changes
in interest rates, in the shape of the yield curve or in spreads between different types of rates, have had and could in the future have
a material impact on our results
of operations and the values of our
assets and liabilities, including our investment portfolio.
Interest
rates are
highly sensitive
to many
factors over
which we
have no
control and
which we
may not
be able
to anticipate
adequately,
including general
economic conditions
and the
monetary and
tax policies
of various
governmental bodies,
particularly the
Federal
Reserve Board.
Changes in
these policies,
including changes
in interest
rates, impact
various aspects
of our
business, including
loan originations,
the speed
of prepayments,
loan delinquencies,
the value
of our
investments, the
rates we
receive on
our loans
and investment
securities, our
ability to
maintain and
generate deposits
and the
rates we
pay on
our deposits
and other
funding
sources. The
effects of
these changes
may be
amplified if
we are
unable to
effectively manage
the sensitivity
of our
assets and
liabilities to market interest rate changes.
The rapid
rise in
interest rates
in 2022
resulted in
$2.5 billion
in unrealized
mark-to-market losses
on available-for-sale
securities held
in our
investment securities
portfolio. In
October 2022,
we transferred
U.S. Treasury
securities with
a fair
value of
$6.5 billion (par value of $7.4 billion), and with accumulated unrealized losses of
$873 million, from our available-for-sale portfolio to
our
held-to-maturity
portfolio.
While
the
size
of
our
unrealized
mark-to-market
losses
on
available-for-sale
securities
had
been
reduced
to
$0.9
billion
as
of
December 31,
2025,
if
interest
rates
were
to
again
rise
rapidly
or
for
a
prolonged
period,
we
may
accumulate
significant
additional
mark-to-market
losses
on
investment
securities
in
our
available-for-sale
portfolio,
which
may
adversely affect our tangible capital and impact our
ability to return capital to our stockholders.
For a discussion of the Corporations
interest rate sensitivity, please refer
to the Risk Management section of the MD&A
in this Form 10-K.
BUSINESS RISKS
Negative
changes
in
the
financial
condition
of
our
clients
have
adversely
impacted
us
in
the
past
and
may
adversely
impact us in the future.
A significant portion of
our business involves lending money,
which exposes us to
credit risk and
risk of loss if
borrowers
do
not
repay
their
loans,
leases, credit
cards
or
other
credit
obligations.
The
performance of
these
credit
portfolios
significantly
affects our
financial condition
and results
of operations.
We have
in the
past been
adversely affected
by negative
changes in
the
financial condition of our clients due to weakness in
the Puerto Rico and U.S. economy. If the current economic environment were to
deteriorate, more customers may have difficulty in repaying their credit obligations, which may result in higher levels
of credit losses
and reserves for credit losses.
We are exposed to
increased credit risks and credit losses
to the extent our clients are
concentrated by industry segment
or type of client.
Our credit risk and credit
losses can increase to the extent
our loans are concentrated in 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. We have significant
exposure to borrowers in certain
economic sectors, such as residential
and commercial real estate,
25
hospitality and healthcare. Challenging economic or market conditions that affect
the industries or types of clients to
which we have
significant exposure
could result
in higher
credit
losses and
adversely affect
our business,
financial condition,
liquidity,
results of
operations or capital position.
We also
have direct
lending and
investment exposure
to Puerto
Rico government
entities, which
have faced
significant
fiscal challenges.
At December
31, 2025,
our exposure
to the
Puerto Rico
government consisted
of $391
million in
direct lending
exposure to Puerto
Rico municipalities and
$209 million in
loans insured or
securities issued by
Puerto Rico governmental
entities
but for
which the
principal source
of repayment
is non-governmental.
We also
have indirect
lending exposure
to the
Puerto Rico
government in the
form of loans
to private borrowers
who are service
providers, lessors, suppliers
or have other
relationships with
the Puerto Rico government. While the overall fiscal situation
of the Puerto Rico government has improved in recent years,
including
as
a
result
of
the
government
and
certain
of
its
instrumentalities
having
restructured
their
debt
obligations,
some
Puerto
Rico
government entities, including certain municipalities, still face significant
fiscal challenges. A deterioration in the fiscal situation of the
Puerto Rico government and
its instrumentalities, and in
particular the fiscal situation
of the Puerto
Rico municipalities to
which we
have direct lending exposure,
could result in higher
credit losses and reserves
for credit losses. For
a discussion of risks
related to
the Corporations credit
exposure to the
Puerto Rico and
USVI governments, see
the Geographic and
Government Risk section
in
the MD&A section of this Form 10-K.
Deterioration in the
values of real
properties securing our commercial, mortgage
loan and construction portfolios
have in
the past resulted, and may in the future result,
in increased credit losses and harm our results
of operations.
As of
December 31,
2025, 55%
of
our loan
portfolio consisted
of loans
secured by
real estate
collateral (comprised
of
29% in
commercial loans,
22% in
residential mortgage
loans and
4%
in construction
loans). The
value of
the collateral
securing
such loans is dependent upon economic conditions in the area in which the collateral is located. Weakness in the economy of some
of the markets we serve has in
the past resulted in significant declines in the value
of the real properties securing our loan portfolio,
leading to
increased credit losses.
If the
value of
the real
estate properties securing
our loan portfolio
declines again in
the future,
we
may be
required to
increase our
provisions for
loan losses
and allowance
for loan
losses. Any
such
increase could
have an
adverse effect
on our
financial condition
and results
of operations.
For more
information on
the credit
quality of
our construction,
commercial and mortgage portfolio, see the Credit
Risk section of the MD&A included in this
Form 10-K.
Defective and repurchased loans may harm our business
and financial condition.
In
connection
with
the
sale
and
securitization
of
mortgage
loans,
we
are
required
to
make
a
variety
of
customary
representations
and
warranties regarding
Popular
and
the
loans
being
sold
or
securitized.
Our
obligations with
respect to
these
representations and warranties are generally outstanding for the
life of the loan, and they
relate to, among other things, compliance
with
laws
and
regulations,
underwriting
standards,
the
accuracy
of
information
in
the
loan
documents
and
loan
file
and
the
characteristics
and
enforceability of
the
loan.
A
loan
that
does
not
comply
with
the
secondary
markets
requirements
may
take
longer to
sell, impact
our ability
to securitize
the loans
or pledge
the loans
as collateral
for borrowings,
or be
unsalable or
salable
only
at
a
significant
discount.
Moreover,
if
any
such
loan
is
sold
before
we
detect
non-compliance,
we
may
be
obligated
to
repurchase the loan and bear any associated loss directly,
or we may be obligated to indemnify the purchaser against any loss.
We
seek to
minimize repurchases and
losses from defective
loans by correcting
flaws, if possible,
and selling or
re-selling such loans.
However,
if
we
were
to
suffer
significant
losses
from
defective
and
repurchased
loans,
our
results
of
operations
and
financial
condition could be materially impacted.
If we are
unable to maintain
or grow our
deposits, we may
be subject to
paying higher funding costs
and our net
interest
income may decrease.
We rely primarily on bank deposits as a low cost and
stable source of funding for our lending and
investment activities and
the operation of
our business. Therefore, our
funding costs are largely
dependent on our ability
to maintain and
grow our deposits.
As
our
competitors
have
raised
the
interest
rates
they
pay
on
deposits,
our
funding
costs
have
increased,
as
we
have
had
to
increase the
rates we
pay to
our depositors
to avoid
losing deposits and
to procure
new ones.
Rising interest
rates have
also led
customers to move their funds to other
financial institutions or to alternative investments that pay higher interest
rates.
Additionally,
periods of market stress
or lack of market or
customer confidence in financial institutions may
result in a loss of
customer deposits,
especially to the
extent those deposits are
in excess of
the FDIC-insured limit
of $250,000. As of
December 31, 2025, we
had $14
billion of total deposits (other than collateralized public funds, which represent public deposit balances from
governmental entities in
the
U.S.
and
its
territories,
including
Puerto
Rico
and
the
United
States
Virgin
Islands,
that
are
collateralized
based
on
such
jurisdictions applicable
collateral requirements)
in excess
of the
FDIC-insured limit.
If deposits
decrease, we
may need
to rely
on
26
more expensive sources of
funding, which would
negatively impact our interest
rate margin and net
interest income.
In addition, a
reduction in our deposits would decrease our earning
assets, which would also negatively affect our net interest
income.
We have a significant amount of deposits from the Puerto
Rico government, its instrumentalities and municipalities ($19.4
billion, or
29% of our
total deposits, as
of December 31,
2025), and the
amount of these
deposits may fluctuate
depending on the
financial condition and liquidity of
these entities, as well
as on our ability
to maintain these customer
relationships. Under the terms
of BPPRs deposit
pricing agreement with the
Puerto Rico government, most
public fund deposit rates
are market linked
with a lag
minus a
specified spread.
Therefore, as
market rates
rise, we
are required
to sequentially
increase the
rates we
pay our
public
deposits. If the mix of our deposits shifts towards a higher proportion of higher-cost deposits for any reason, our funding costs would
increase and our net interest income would be expected
to decrease.
OPERATIONAL RISKS
We and
our third-party
providers have
been, and
expect in
the future
to continue
to be,
subject to
cyber-attacks. Future
cyber-attacks could cause substantial harm and
have an adverse effect on our business
and results of operations.
Cybersecurity
risks
for
large
financial
institutions
such
as
Popular
have
increased
significantly
in
recent
years
in
part
because
of
the
proliferation
of
new
technologies,
such
as
mobile
banking,
cloud
hosting,
artificial
intelligence
and
the
ability
to
conduct instant financial transactions anywhere globally, as well as due to geopolitical conflicts and the increased sophistication and
activities
of
organized crime,
hackers, terrorists,
nation-states, hacktivists
and
other parties.
Cybersecurity threats
are constantly
evolving,
especially
given
the
advances
in,
and
the
rise
of
the
use
of,
artificial
intelligence
and
quantum
computing,
thereby
increasing the difficulty of preventing, detecting and
successfully defending against them.
In
the
ordinary
course
of
business,
we
rely
on
electronic
communications
and
information
systems
to
conduct
our
operations
and
to
transmit
and
store
sensitive
data.
Notwithstanding
our
defensive
measures
and
the
significant
resources
we
devote to protecting the security of our systems, there
is no assurance that all of our security measures
will be effective at all times,
especially
as
the
threats
from
cyber-attacks
are
continuous
and
severe.
The
risk
of
a
security
breach
due
to
a
cyber-attack
is
expected to
increase as
we continue to
expand our
digital capabilities, mobile
banking and other
internet-based product offerings,
the use of the cloud for system development and
hosting and internal use of internet-based
products and applications.
We
continue to
detect and
identify attacks
that are
becoming more
sophisticated and
increasing in
volume, as
well as
attackers
that
respond
rapidly
to
changes
in
defensive
countermeasures. The
most
significant
cyber-attack
risks
that
we
or
our
critical service providers may face include, but are not limited to, e-fraud,
denial-of-service (DDoS), ransomware, computer intrusion
and
the
exploitation
of
software
zero-day
vulnerabilities
that
might
result
in
disruption
of
services,
in
the
exposure
or
loss
of
customer or proprietary data, and significant financial loss. These types of cyber-attacks have in the past resulted and may continue
to result
in the
compromise of
sensitive customer
data, such
as account
numbers, credit
cards and
social security
numbers, and
could present significant reputational, legal and regulatory
costs to Popular if successful.
Our
customer-facing
platforms
are
also
routinely
targeted
by
threat
actors
aiming
to
gain
unauthorized
access
to
our
clients
accounts.
Although
we
have
implemented
defensive
measures
designed
to
protect
against
such
attacks,
there
is
no
assurance that these
defensive measures will
keep pace with
threats that are
continuous and growing
in severity.
For example, in
2022, certain customers were affected by brute force attacks on one of our platforms, which resulted in certain of our customers log-
in credentials
and information
being exposed,
resulting in
fraudulent transfers
or withdrawals.
Popular customers
have also
been
impacted by
card skimming
events in
our ATM
terminals. As
a result,
we have
notified, and
conducted additional
remediation for,
customers identified as
affected by
these incidents. Cyber-security
risks have also
been exacerbated by
the discovery of
zero-day
vulnerabilities in
widely distributed
third party
software, which
have in
the past
affected and
in the
future could
affect Populars
or
any of its service providers systems, as
further detailed below.
The
increased
use
of
remote
access
and
third-party
video
conferencing
solutions
to
enable
work-from-home
arrangements for employees has
also increased our exposure
to cyber-attacks, including through
the use of
deep fakes and brand
impersonation.
We
expect
the
rise
and
use
of
artificial
intelligence
to
exacerbate
this
risk.
In
addition,
a
third
party
could
misappropriate confidential information
obtained by intercepting
signals or communications
from mobile
devices used by
Populars
customers or employees. Recent geopolitical conflicts have also exacerbated the risks related to supply-chain
compromises and de-
stabilizing activities of nation-state sponsored actors.
A material compromise or circumvention of the security of our systems could
have serious negative consequences for us,
including
significant
disruption
of
our
operations
and
those
of
our
clients,
customers
and
counterparties,
misappropriation
of
27
confidential
information
of
Popular
or
that
of
our
clients,
customers,
counterparties
or
employees,
or
damage
to
computers
or
systems used
by us
or by
our clients,
customers and
counterparties, and
could result
in violations of
applicable privacy
and other
laws,
financial
loss
to
us
or
to
our
customers,
increased
regulatory
scrutiny
and
enforcement
actions,
customer
dissatisfaction,
significant litigation exposure and harm to our reputation, all of which could have a material adverse effect on us. Banking regulators
increasingly scrutinize third-party relationships supporting critical activities. If our regulators determine that our oversight,
contractual
protections, or
the performance
and controls
of our
third-party providers
(including critical
providers) are
inadequate, we
could be
required
to
implement
enhanced
controls,
conduct
independent
reviews,
restrict
or
terminate
relationships,
or
undertake
costly
remediation or
conversion activities,
any of
which could
disrupt operations,
increase expenses,
or adversely
affect our
reputation
and results of operations.
The
extent
of
a
particular
cyber-attack
and
the
steps
that
we
may
need
to
take
to
investigate
the
attack
may
not
be
immediately
clear,
and
it
may
take
a
significant
amount
of
time
before
such
an
investigation
can
be
completed.
While
such
an
investigation is ongoing, Popular may not necessarily know the full extent
of the harm caused by the cyber-attack, and that
damage
may continue to spread.
These factors may inhibit
our ability to provide
rapid, full and reliable
information about the cyber-attack to
our clients, customers, counterparties and regulators, as well as the public. Moreover, we may be required under SEC rules
or bank
regulations to disclose information about a cybersecurity event before it has been resolved
or fully investigated. Furthermore, it may
not be clear how best to contain and remediate the potential harm
caused by the cyber-attack, and certain errors or actions could be
repeated or compounded before they are discovered
and remediated. Cyber-attacks could also cause interruptions
in our operations
and result in the incurrence of significant costs,
including those related to forensic analysis
and legal counsel.
We also
rely on
third parties
for the
performance of
a significant
portion of
our information
technology functions and
the
provision of information security,
technology and business process services. As a result, a
successful compromise or circumvention
of
the security
of
the systems
of these
third-party service
providers could
have serious
negative consequences
for us,
including
compromise
of
our
systems,
misappropriation of
our
confidential
information
or
that
of
our
clients,
customers,
counterparties
or
employees, or
other negative
implications identified
above with
respect to
a cyber-attack
on our
systems. The
most important
of
these
third-party service
providers for
us
is
Evertec. As
a result,
we
depend on
Evertec to
identify and
remediate certain
of
our
cybersecurity vulnerabilities. Cyber-attacks at third-party service
providers are also becoming increasingly common, and,
as a result,
cybersecurity risks relating to our vendors, including Evertec have increased.
Certain risks particular to Evertec and our dependence
on
third
parties
are
discussed
under
We
rely
on
other
companies
to
provide
key
components
of
our
business
infrastructure,
including certain of our core financial transaction processing and
information technology and security services, which exposes us to
a number
of operational
risks that
could have
a material
adverse effect
on us
in the
Operational Risks
section of
Item 1A
in this
Form 10-K. During 2023, personal information of Popular customers data was compromised in a data breach incident that impacted
MOVEit, the third-party file transfer platform used by one of our service
providers. Popular notified, as required or otherwise deemed
appropriate,
customers
identified
as
affected
by
the
incident.
Furthermore,
during
2024,
threat
actors
exploited
a
zero-day
vulnerability in
the Fortinet
enterprise management
server software
used by
Evertec, which
migrated to
one of
Popular's domain
controllers
due
to
a shared
network
environment. While
Evertec
eventually determined
that
no
BPPR
customer
information was
exfiltrated as a result of
this incident, the event underscores
the risks inherent in Populars dependency
on Evertec. Although these
incidents did not
have a material
effect on
Popular, including
its business strategy,
results of operations
or financial condition,
and
our
third-party
service
providers
agreed
to
cover
external
remediation
costs
associated
therewith,
a
compromise
of
Popular
information
or
the
personal
information
of
our
customers
maintained
by
third
party
vendors
could
result
in
significant
regulatory
consequences, reputational damage and financial
loss to us. The
success of our business
depends in part on
the continuing ability
of these
(and other)
third parties
to perform
these functions
and services
in a
timely and
satisfactory manner,
which performance
could be disrupted or otherwise adversely affected
due to failures or other information security events originating
at the third parties
or
at
the
third
parties
suppliers
or
vendors
(so-called
fourth
party
risk).
We
may
not
be
able
to
effectively
directly
monitor
or
mitigate
fourth-party
risk,
in
particular
as
it
relates
to
the
use
of
common
suppliers
or
vendors
by
the
third
parties
that
perform
functions and services for us.
As cyber
threats continue
to evolve,
we also
expect to
expend significant
additional resources
to continue
to modify
or
enhance
our
layers
of
defense
or
to
investigate
and
remediate
additional
information
security
vulnerabilities
or
incidents.
The
obsolescence
in
our
hardware
or
software
limits
our
ability
to
mitigate
vulnerabilities.
System
enhancements and
updates
also
create
risks
associated
with
implementing new
systems
and
integrating
them
with
existing
ones,
including
risks
associated
with
supply chain compromises and the software development lifecycle of the systems used by us and our service providers. In
addition,
addressing certain
information security
vulnerabilities, such
as hardware-based
vulnerabilities, may
affect
the performance
of our
information
technology
systems.
The
ability
of
our
hardware
and
software
providers
to
deliver
patches
and
updates
to
mitigate
vulnerabilities in a timely manner can introduce
additional risks, particularly when a vulnerability is being actively
exploited by threat
28
actors.
Moreover,
our
efforts
to
timely
mitigate
vulnerabilities
and
manage
such
risks,
given
the
rise
in
number
and
urgency
of
required patches and third-party software, as well as
the obsolescence in some of our hardware and
software, may impact our day-
to-day operations, the availability of our systems and
delay the deployment of technology enhancements
and innovation.
If Populars operational systems,
or those of
external parties on which
Populars businesses depend, are
unable to meet
the requirements of our businesses and operations or the standards of our regulators
or other applicable data protection and privacy
laws, or if they fail, have other significant shortcomings or are impacted by cyber-attacks,
Popular could be materially and adversely
affected.
We
rely
on
other
companies
to
provide
key
components
of
our
business
infrastructure,
including
certain
of
our
core
financial
transaction
processing
and
information
technology
and
security
services,
which
exposes
us
to
a
number
of
operational risks that could have a material
adverse effect on us.
Third parties provide key components of our business operations, such
as data processing, information security, recording
and monitoring transactions,
online banking interfaces and
services, Internet connections and
network access. The most
important
of
these
third-party service
providers for
us
is
Evertec
due
in
large
part
to
its
role
as
a service
provider to
BPPR,
our
principal
banking subsidiary.
We are dependent on Evertec for the provision of
essential services to our business, including certain
of BPPRs
core financial
transaction processing and
information technology and
security services. As
a result,
we are particularly
exposed to
the operational risks of Evertec,
including those related to its
security architecture and potential breakdowns or
failures of Evertecs
systems or internal controls environment.
Over the
course of our
relationship with Evertec,
we have experienced
interruptions and delays
in key
services provided
by Evertec, as well as cyber events, as a result of system breakdowns, their exposure to zero-day vulnerabilities, misconfigurations,
human
error,
application
obsolescence
and
dependency
on
shared
infrastructure
components
and
shared
environments,
which
have in certain cases also
led to exposure of Popular information
and BPPR customer information. In particular,
the current level of
obsolescence in the hardware and
software used by Evertec
to service us exposes
us to heightened operational and
cybersecurity
risks, including system outages.
Our ability to cure
legacy obsolescence in the
hardware and software we
procure from Evertec, to
expand
our
oversight
over
security
services
being
provided
by
Evertec,
as
well
as
to
effect
the
segregation
of
our
shared
infrastructure,
is
expected
to
be
lengthy
and
complex,
which
exacerbates
our
exposure
to
resulting
operational,
including
cybersecurity,
risks. See
The transition
to new
financial services
technology providers,
and the
replacement of
services currently
provided to us by Evertec, will be lengthy and
complex in the Operational Risks section of Item 1A
in this Form 10-K below.
While
we
select
third-party vendors
carefully
and
have
increased our
oversight
of
these
relationships, our
oversight is
constrained by
the level
of our
ongoing visibility into
our vendors systems
and operations, and
we do not
have direct control
over
their actions, assets
or services. Any
problems caused by
these vendors, including
those resulting from
disruptions in the
services
provided, vulnerabilities
in or
breaches of
the vendors
systems or
environments, failure
of the
vendor to
handle current
or higher
volumes, failure of the vendor to provide services for any reason or
poor performance of services, failure of the vendor to notify us
of
a
reportable
event
in
a
timely
manner,
or
our
vendors
misuse
of
artificial
intelligence
and
other
automatic
decision
making
technologies,
could
adversely
affect
our
ability
to
deliver
products
and
services
to
our
customers
and
otherwise
conduct
our
business,
disrupt
our
operations,
result
in
potential
liability
to
customers
and
counterparties,
result
in
the
imposition
of
fines,
penalties or judgments by our regulators, lead to exposure of our information or that of our customers or harm to our reputation, any
of which
could materially
and adversely
affect us.
The inability
of our
third-party service
providers to
timely address
cybersecurity
threats may further exacerbate these
risks. Financial or operational difficulties of
a third-party vendor could also
hurt our operations
if
those
difficulties
interfere
with the
vendors ability
to
serve
us.
Replacing these
third-party vendors,
when possible,
could
also
create
significant
delay
and
expense.
Accordingly,
the
use
of
third
parties
creates
an
unavoidable inherent
risk
to
our
business
operations.
The transition to new financial services technology providers, and the replacement of services currently provided to
us by
Evertec, will be lengthy and complex.
Switching from one vendor of core financial transaction processing and related technology and security services to one or
more new
vendors is
a complex
process that
carries business
and financial
risks. The
implementation cycle
for such
a transition
would be
lengthy and require
significant financial and
management resources from
BPPR and
Popular. Such
a transition can
also
increase costs (including conversion costs), impede or disrupt business or technological initiatives, and expose us and our clients to
business disruption, as well as operational and cybersecurity risks. As
we transition all or a portion of
the existing services provided
by Evertec
to new
financial services
technology providers,
either (i)
at the
end of
the term
of the
Second Amended
and Restated
Master Services Agreement
(the MSA) and
related agreements or
(ii) earlier upon
the termination of
any service for
convenience
29
under the MSA, these transition risks could result in an adverse effect on our
business, financial condition and results of operations.
Although Evertec
has agreed
to provide
certain transition
assistance to
us in
connection with
the termination
of the
MSA, we
are
ultimately dependent on their ability to provide those
services in a responsive and competent manner, as well as their ability to retain
experienced personnel to
provide the services. A
successful transition will
also depend on
our ability to
retain personnel who
have
relevant experience
and expertise.
Furthermore, we
may require
transition assistance
from Evertec
beyond the
term of
the MSA,
potentially delaying and lengthening any transition
process away from Evertec while increasing
related costs and risks
of disruption
to us and our clients.
Under the
MSA, we
are able
to terminate
services for
convenience with
180 days
prior notice.
We expect
to exercise
during the
term of
the MSA
the right
to terminate
certain services
for convenience
and to
transition such
services to
other service
providers prior to the expiration
of the MSA, subject to
complying with the revenue minimums contemplated in
the MSA and certain
other conditions. In
practice, in order
to switch
to a
new provider for
a particular service,
we will have
to commence procuring
and
working on
a transition
process for
such service
significantly in
advance of
its termination
and, in
any case,
much earlier
than the
expiration date of the MSA, and such process may extend beyond the current term of the MSA. Furthermore, if we are unsuccessful
or
decide
not
to
complete
the
transition
after
expending significant
funds
and
management resources,
it
could
also
result
in
an
adverse effect on our business, financial condition and
results of operations.
Unforeseen or
catastrophic events,
including
extreme weather
events and
other natural
disasters, man-made
disasters,
acts of violence or
war, or the
emergence of pandemics or epidemics, could
cause a disruption in our
operations or other
consequences that could have a material adverse
effect on our financial condition and results
of operations.
A
significant
portion
of
our
operations
are
located
in
the
Caribbean
and
Florida,
a
region
susceptible
to
hurricanes,
earthquakes and other
similar events. In
2017, Puerto Rico,
USVI and BVI
were severely impacted
by Hurricanes Irma
and Mara,
which resulted in significant disruption to our operations and adversely affected
our clients in these markets, and in 2022, Hurricane
Fiona impacted the
southwest area of
Puerto Rico,
adversely affecting our
customers in
that region. Other
types of
unforeseen or
catastrophic events, including
pandemics, epidemics, man-made
disasters, or acts
of violence or
war, or
the fear that
such events
could occur
in the
future, could
also adversely
impact our
operations and
financial results.
For example,
in 2020,
the COVID-19
pandemic
severely
impacted
global
health,
financial
markets,
consumer
spending
and
global
economic
conditions,
and
caused
significant disruption to businesses
worldwide, including our business
and those of
our customers, service providers
and suppliers.
Future unforeseen or catastrophic events, and actions taken by governmental authorities and other third parties in response to such
events, could
adversely affect
our operations,
cause economic
and market
disruption, adversely
impact the
ability of
borrowers to
timely repay
their loans,
or affect
the value
of any
collateral held
by us,
any of
which could
have a
material adverse
effect on
our
business, financial condition or results of operations. The frequency, severity and impact of future unforeseen or catastrophic events
is
difficult
to
predict. While
we maintain
insurance against
natural disasters
and
other unforeseen
events, including
coverage
for
business interruption, the insurance may not be sufficient to cover all of the damage from any such event, and there is
no insurance
against the
disruption that
a catastrophic
event could
produce to
the markets
that we
serve and
the potential
negative impact
to
economic activity.
Climate change could have a material adverse
impact on our business operations and that
of our clients and customers.
Our business and
the activities and
operations of our
clients and customers
may be disrupted
by global climate
change.
Potential physical risks
from climate change
include the increase
in the
frequency and severity
of weather
events, such as
storms
and
hurricanes,
and
long-term
shifts
in
climate
patterns, such
as
sustained
higher
and
lower
temperatures,
sea
level
rise,
heat
waves
and
droughts,
among
others.
Our
geographic
concentration
in
localities,
including
Puerto
Rico,
the
U.S.V.I.,
B.V.I.
and
Florida, particularly
susceptible to
risks arising
from climate
change, including
severe hurricanes
and sea
level rise,
heighten the
threat we
face from
climate change. Additionally,
the impact
of climate
change in
the markets
that we
operate and
in other
global
markets may
have the
effect of
increasing the
costs or
reducing the
availability of
insurance needed
for our
business operations.
Climate change may also create transitional risks resulting from a shift to a low-carbon economy.
These transition risks may include
changes in the legal and regulatory landscape, technology, consumer sentiment and preferences, and market demands that seek to
mitigate the
effects
of climate
change. Changes
in the
legal
and regulatory
landscape may
additionally increase
our compliance
costs.
These
climate-driven
changes
could
have
a
material
adverse
impact
on
asset
values
and
on
our
business
and
financial
performance and those of our clients and customers.
LEGAL AND REGULATORY RISKS
Our
businesses
are
highly
regulated,
and
the
laws
and
regulations
that
apply
to
us
have
a
significant
impact
on
our
business and operations.
30
We are subject to extensive and evolving
regulation under U.S. federal, state and Puerto Rico laws that
govern almost all
aspects of our operations and
limit the businesses in which
we may be engaged,
including regulation, supervision and examination
by federal, state
and foreign banking
authorities. These laws
and regulations have
expanded significantly over an
extended period
of
time
and
are
primarily
intended
for
the
protection
of
consumers,
borrowers
and
depositors.
Compliance
with
these
laws
and
regulations has resulted, and will continue
to result, in significant costs. Additionally,
the current federal administration is
pursuing a
policy
and
regulatory
agenda
significantly
different
from
that
of
the
previous
administration,
including
the
reversal
of
rules
promulgated
under
the
past
administration
and
shifts
in
rulemaking,
supervision,
examination
and
enforcement
priorities.
The
implementation of that agenda is happening rapidly and is constantly
evolving. The potential impact of any such changes cannot be
predicted.
Additional
laws
and
regulations
may
be
enacted
or
adopted
in
the
future,
and
the
application,
interpretation
or
enforcement
of
laws
and
regulations
may
in
the
future
be
changed
(including
through
executive
orders),
in
ways
that
could
significantly affect
our powers,
authority and
operations and
which could
have a
material adverse
effect on
our financial
condition
and
results
of
operations. In
particular,
we
could
be
adversely impacted
by
changes
in
laws
and
regulations,
or changes
in
the
application, interpretation
or enforcement
of laws
and regulations,
that proscribe
or institute
more stringent
restrictions on
certain
financial
services
activities, impose
monetary fines
or
other
penalties on
institutions that
fail
to
comply
with
applicable laws
and
regulations, or impose new requirements.
In addition, new laws or regulations could require significant system and process changes
that require
systems upgrades
and could
limit our
ability to
meet adoption timeframes
or pursue
our innovation roadmap.
If we
do
not
appropriately
comply
with
current
or
future
laws
or
regulations,
adapt
to
the
changing
interpretation
of
existing
laws
or
regulations,
or
if
we
fail
to
meet
supervisory
expectations,
we
may
be
subject
to
fines,
penalties
or
judgements,
or
to
material
regulatory restrictions on
our business, which could
also materially and
adversely affect our
business,
financial condition, liquidity,
results of operations or capital position.
Our participation
(or lack
of participation)
in certain
governmental programs,
such as
the Paycheck
Protection Program
(PPP) enacted
in response
to the
COVID-19 pandemic,
also exposes
us to
increased legal
and regulatory
risks. We
have also
been and could continue to
be exposed to adverse
action for the violation of
applicable legal requirements or the improper
conduct
of our employees in connection with such loans. For example, on January 24, 2023, Popular Bank consented to the imposition of an
order from
the Federal
Reserve Board
requiring it
to
pay a
$2.3 million
civil money
penalty to
settle certain
findings arising
from
Popular Banks approval of six Payment Protection Program
loans.
In addition,
due to
divergent policies
and stakeholder
viewpoints regarding
climate and
sustainability matters,
we are
at
increased risk of
being subject to conflicting
legal and regulatory requirements
and stakeholder expectations regarding climate
and
sustainability
matters.
For
example,
certain
states
have
enacted
or
proposed
laws
addressing
climate
change
and
other
sustainability issues, including climate-related disclosure requirements. On the other hand, certain states have enacted
or proposed
laws or regulations or
taken other actions to
prohibit the consideration of environmental
and social factors in state
investments and
contracting. In addition, in August 2025, President Trump signed Executive Order 14331, Guaranteeing Fair Banking Access for All
Americans, which
states that
it is
the policy
of the
United States
that no
American should
be denied
access to
financial services
because
of
their
constitutionally
or
statutorily
protected
beliefs,
affiliations,
or
political
views.
The
Executive
Order
directs
the
Treasury Secretary
and federal
banking regulators
to address
politicized or
unlawful debanking
activities. These,
as well
as other
laws,
regulations,
guidance
and
expectations,
many
of
which
may
have
broad
and
extraterritorial
application,
have
in
the
past
subjected and may
in the future
subject us to
additional requirements or
different and conflicting
requirements and expectations
in
the various jurisdictions in which we operate, which
could negatively affect our business and brand.
We
are from
time to
time subject
to information
requests, investigations
and other
regulatory enforcement
proceedings
from
departments
and
agencies
of
the
U.S.,
Puerto
Rico,
New
York
and
other
state
governments, including
those
that
investigate
compliance
with
U.S.
sanctions
and
consumer
protection
laws
and
regulations,
which
may
expose
us
to
significant
penalties
and
collateral
consequences,
and
could
result
in
higher
compliance
costs
or
restrictions
on
our
operations.
We
from
time-to-time
self-report
compliance
matters
to,
or
receive
requests
for
information
from,
departments
and
agencies
of
the
U.S.,
Puerto
Rico,
New
York
and
other state
governments, including
with
respect to
compliance
with consumer
protection laws and regulations. For example, BPPR
has in the past received requests for
information, such as subpoenas and civil
investigative demands from U.S. government regulators,
including concerning add-ons on consumer products, real
estate appraisals
and
residential
and
construction
loans
in
Puerto
Rico.
BPPR
has
also
self-identified
and
reported
to
applicable
regulators
compliance matters related to U.S. sanctions, as well
as mortgage, credit reporting and other
consumer lending practices.
31
Incidents of this nature and investigations or examinations by governmental authorities have resulted in the past, and may
in the
future result, in
judgments, settlements, fines,
enforcement actions, penalties
or other sanctions
adverse to the
Corporation,
which could materially and adversely affect the Corporations business, financial
condition, results of operations or capital position or
cause serious reputational harm. Any such settlements or orders
that we enter into, or that regulatory authorities impose
on us could
require enhancements to our
procedures and controls and
entail significant operational and
compliance costs. Furthermore, issues
or delays in satisfying the requirements of a regulatory settlement or
action on a timely basis could result in additional
penalties and
enforcement actions, which could be significant. In connection with the resolution of regulatory proceedings, enforcement authorities
may seek admissions of wrongdoing and, in some cases, criminal pleas, which
could lead to increased exposure to private litigation,
loss of clients or customers, and restrictions on offering certain products or
services. In addition, responding to information-gathering
requests,
investigations
and
other
regulatory
proceedings,
regardless
of
the
ultimate
outcome
of
the
matter,
could
be
time-
consuming, expensive and divert management attention
from our business.
Financial services
institutions such
as Popular
have been
subject to
heightened expectations
and regulatory
scrutiny in
recent years.
Our regulators
oversight is
not limited
to banking
and financial
services laws
but extends
to other
significant laws
such as those related to anti
money laundering, anti-bribery and anti-corruption laws. Further,
regulators in the performance of their
supervisory and enforcement
duties, have significant
discretion and power
to prevent or
remedy what they
deem to be
unsafe and
unsound
practices
or
violations
of
laws
by
banks
and
bank
holding
companies.
Therefore,
the
outcome
of
any
investigative
or
enforcement action, which may take years and be
material to Popular, may be difficult to predict or estimate.
Complying with economic and trade sanctions programs
and anti-money laundering laws and regulations
can increase our
operational and compliance costs. If
we, and our subsidiaries, affiliates or
third-party service providers, are found to
have
failed to comply with applicable economic and trade sanctions programs and anti-money laundering laws
and regulations,
we
could
be
exposed
to
fines,
sanctions
and
penalties,
and
other
regulatory
actions,
as
well
as
governmental
investigations.
As
a
federally
regulated
financial
institution,
we
must
comply
with
regulations
and
economic
and
trade
sanctions
and
embargo
programs
administered by
the
Office
of
Foreign
Assets
Control
(OFAC)
of
the
U.S.
Treasury,
as
well
as
anti-money
laundering laws and regulations, including those under
the Bank Secrecy Act.
Economic and trade sanctions regulations and programs administered by OFAC prohibit U.S.-based entities from entering
into or facilitating
unlicensed transactions with, for
the benefit of,
or in some
cases involving the
property and property interests
of,
persons,
governments or
countries
designated by
the
U.S.
government under
one
or
more
sanctions
regimes,
and
also
prohibit
transactions
that
provide
a
benefit
that
is
received in
a
country
designated
under
one
or
more
sanctions
regimes.
We
are
also
subject to
a variety
of reporting
and other
requirements under
the Bank
Secrecy Act,
including the
requirement to
file suspicious
activity and currency
transaction reports, that
are designed to
assist in
the detection
and prevention of
money laundering, terrorist
financing
and
other
criminal
activities.
In
addition,
as
a
financial
institution
we
are
required
to,
among
other
things,
identify
our
customers, adopt formal
and comprehensive anti-money
laundering programs, scrutinize
or altogether prohibit
certain transactions
of special concern, and be prepared to respond to inquiries from U.S.
law enforcement agencies concerning our customers and
their
transactions. Failure
by the
Corporation, its
subsidiaries, affiliates
or
third-party service
providers to
comply with
these
laws
and
regulations
could
have
serious
legal
and
reputational
consequences
for
the
Corporation,
including
the
possibility
of
regulatory
enforcement
or
other
legal
action,
including
significant
civil
and
criminal
penalties.
We
also
incur
higher
costs
and
face
greater
compliance risks in
structuring and operating
our businesses to comply
with these requirements. The
markets in which
we operate
heighten these costs and risks.
We have established risk-based policies and procedures and employed software designed to
assist us and our personnel
in complying
with these
applicable laws
and regulations.
Even if
the appropriate
controls are
in place,
there can
be no
assurance
that
our
policies
and
procedures will
prevent
us
from
blocking
and
rejecting
all
applicable
transactions
of
our
customers
or
our
customers customers
that may
involve a
sanctioned person,
government or
country.
Any failure
to detect
and prevent
any such
transaction
could
result
in
a
violation
of
applicable
laws
and
regulations
and
adversely
affect
our
reputation,
business,
financial
condition and results of operations.
From time
to time
we have
identified and
voluntarily self-disclosed
to OFAC
transactions that
were not
timely identified,
blocked
or
rejected
by
our
policies,
controls
and
procedures
for
screening
transactions
that
might
violate
the
regulations
and
economic and
trade sanctions
programs administered
by OFAC.
For example,
during the
second quarter
of 2022,
BPPR entered
into
a
settlement
agreement
with
OFAC
with
respect
to
certain
transactions
processed
on
behalf
of
two
employees
of
the
Government of Venezuela,
in apparent violation of U.S. sanctions
against Venezuela. Popular agreed
to pay $256,000 to settle
the
apparent
violations,
which
had
been
self-disclosed
to
OFAC.
There
can
be
no
assurances
that
any
failure
to
comply
with
U.S.
32
sanctions and
embargoes, or
with anti-money
laundering laws
and regulations,
will not
result in
material fines,
sanctions or
other
penalties being imposed on us.
Furthermore, if
the policies,
controls, and
procedures of
one of
the Corporations
third-party service
providers, together
with our
third-party oversight
of such
providers, do
not prevent
it from
violating applicable
laws and
regulations in
transactions in
which it engages, such violations could adversely affect its
ability to provide services to us.
We are
subject to
regulatory capital
adequacy requirements, and
if we
fail to
meet these
requirements our
business and
financial condition will be adversely affected.
Under regulatory capital adequacy requirements, and other
regulatory requirements, Popular and our banking
subsidiaries
must
meet
requirements
that
include
quantitative
measures
of
assets,
liabilities
and
certain
off-balance
sheet
items,
subject
to
qualitative
judgments
by
regulators
regarding
components,
risk
weightings
and
other
factors.
If
we
fail
to
meet
these
minimum
capital
requirements
and
other
regulatory
requirements,
our
business
and
financial
condition
will
be
materially
and
adversely
affected. If
a financial
holding company
fails to
maintain well-capitalized
status under
the regulatory
framework, or
is deemed
not
well managed
under regulatory
exam procedures, or
if it
experiences certain
regulatory violations, its
status as
a financial
holding
company and its
related eligibility for
a streamlined review
process for acquisition
proposals, and its
ability to offer
certain financial
products, may be
compromised and its
financial condition and
results of operations
could be adversely
affected. The failure
of any
depository
institution
subsidiary
of
a
financial
holding
company
to
maintain
well-capitalized
or
well-managed
status
could
have
similar consequences.
See Our businesses are
highly regulated, and the
laws and regulations that apply
to us have a
significant impact on our
business and operations in the Legal and Regulatory
Risks section of Item 1A in this Form 10-K.
Increases in FDIC insurance premiums may
have a material adverse effect on our earnings.
Substantially
all
the
deposits
of
BPPR
and
PB
are
subject
to
insurance
up
to
applicable
limits
by
the
FDICs
deposit
insurance fund
(DIF) and, as
a result, BPPR
and PB
are subject to
FDIC deposit
insurance assessments. On
October 18, 2022,
the FDIC
finalized a
rule that
increased initial
base deposit
insurance assessment
rates by
2 basis
points, beginning
with the
first
quarterly assessment period of 2023. In addition, in November 2023, the FDIC finalized a rule that imposes a special assessment to
recover the costs to the DIF resulting from the FDICs
use, in March 2023, of the systemic risk exception to
the least-cost resolution
test
under
the
FDIA
in
connection
with
the
receiverships
of
Silicon
Valley
Bank
and
Signature
Bank.
The
exact
amount
of
this
assessment will be determined when the FDIC terminates
the related receiverships considered in the final
rule. Accordingly, the final
special assessment
amount and collection
period may change
as the
estimated cost
is periodically adjusted
or if
the total
amount
collected varies.
For example,
in December
2025, the
FDIC reduced
the rate
at which
the assessment
is collected
for the
eighth
quarter of the collection period, with an invoice
payment date of March 30, 2026, due
to its updated estimate of losses.
We
are generally
unable to
control the
amount of
premiums or
additional assessments
that we
are required
to pay
for
FDIC insurance. If there
are additional bank or financial
institution failures, our level of
non-performing assets increases, or our
risk
profile changes
or our
capital position
is impaired,
we may
be required
to pay
even higher
FDIC premiums.
Any future
additional
increases in
FDIC premiums,
assessment rates
or special
assessments may
materially adversely
affect our
results of
operations.
See the Supervision
and RegulationFDIC Insurance discussion
in Item 1.
Business of this
Form 10-K for
additional information
related to the FDICs deposit insurance assessments applicable
to BPPR and PB.
The resolution of pending litigation and regulatory proceedings, if unfavorable to us, could have material adverse financial
effects or cause us significant reputational
harm, which, in turn, could seriously harm
our business prospects.
We
face
legal
risks
in
our
businesses,
and
the
volume
of
claims
and
amount
of
damages
and
penalties
claimed
in
litigation and regulatory proceedings against financial institutions
remains high. We are involved
in a number of litigation,
arbitration
and regulatory proceedings
in the
ordinary course of
our business. Substantial
legal liability or
significant regulatory action
against
us could have material
adverse financial effects or cause significant
reputational harm to us or
other adverse consequences, which
in turn could seriously harm our business prospects. For further information relating to our legal risk, see Note 23 - Commitments &
Contingencies, to the Consolidated Financial Statements
in this Form 10-K.
LIQUIDITY RISKS
We
are subject
to liquidity
risks arising
from market
events or
disruptions and
instances of
low
investor and
depositor
confidence. Furthermore, actions by the rating agencies
or decreases in our capital levels may have adverse
effects on our
liquidity and business, including by raising the
cost of our obligations or affecting our ability
to borrow.
33
We must
maintain adequate liquidity
and funding sources
to support
our operations, fund
customer deposit withdrawals,
repay
borrowings
and
debt,
comply
with
our
financial
obligations,
fund
planned
capital
distributions
and
meet
regulatory
requirements.
The
Corporations
most
significant
source
of
funds
are
bank
deposits,
including
customer
deposits
and
brokered
deposits.
In
addition
to
deposits,
sources
of
liquidity
include
secured
borrowing
arrangements,
such
as
those
with
the
Federal
Reserve Bank of
New York
and the Federal
Home Loan Bank
of New York
(FHLBNY), unpledged securities from
our investment
portfolio, the capital markets and proceeds from loan
sales or securitizations.
Populars
liquidity
and
ability
to
fund
and
operate
its
business
could
be
materially
adversely
affected
by
a
variety
of
conditions and
factors, some
of which
are out
of Populars control.
For example,
market events
or disruptions,
such as
periods of
market stress and
low investor confidence in
financial institutions could result
in deposit withdrawals, especially
to the extent
those
deposits are in
excess of the
FDIC-insured limit of
$250,000. As of
December 31, 2025,
we had $14
billion of total
deposits (other
than collateralized
public funds,
which represent
public deposit
balances from
governmental entities
in the
U.S. and
its territories,
including Puerto Rico
and the
United States Virgin
Islands, that are
collateralized based on
such jurisdictions
applicable collateral
requirements) in excess of
the FDIC-insured limit. We
may also suffer outflows
of customer deposits due
to competition from
other
banks or
alternative investments. In
addition, in
periods of
stress, we
may not
be able
to access
existing funding sources,
access
the capital markets or to sell or securitize loans or
other assets, or to access such sources or to
sell or securitize assets on favorable
terms.
In addition, actions
by the rating agencies
could raise the cost
of our borrowings, since
lower rated securities are
usually
required by the
market to pay
higher rates than
obligations of higher credit
quality. Our
credit ratings were
reduced substantially in
2009 and, although one of
the three major rating agencies upgraded our
senior unsecured rating back to
investment grade during
2021,
the
remaining
two
rating
agencies
have
not
upgraded
their
current
non-investment
grade
rating.
The
market
for
non-
investment
grade securities
is
much
smaller
and
less
liquid than
for investment
grade securities.
If
we
were to
attempt
to
issue
preferred stock
or debt
securities into
the capital
markets, it
is possible
that there
would not
be sufficient
demand to
complete a
transaction or
that the
cost could
be substantially
higher than
for more
highly rated
securities. If
Popular is
unable to
access the
capital markets on favorable terms, our liquidity
may be adversely affected.
Changes in our ratings and capital levels could affect our
relationships with some creditors and limit our
access to funding.
For example,
having negative
tangible capital
may impact
our ability
to
access some
sources of
wholesale funding.
The Federal
Housing Finance
Agency restricts the
FHLBNY from
lending to
members of
the FHLBNY
with negative
tangible capital
unless the
members primary banking regulator makes a written request to the
FHLBNY to maintain access to borrowings. Both BPPR
and PB
have secured borrowing facilities with the FHLBNY and
could borrow up to $3.3 billion
and $1.5 billion respectively as of
December
31, 2025,
of which
$42.7 million
and $0.8
billion respectively
were used.
Losing access
to the
FHLBNY borrowing
facilities could
adversely
impact
liquidity
at
the
banking
subsidiaries.
Additionally,
if
BPPR
or
PB
cease
to
be
well-capitalized,
the
FDIA
and
regulations
adopted
thereunder
would
restrict
their
ability
to
accept
brokered
deposits
and
limit
the
rate
of
interest
payable
on
deposits.
Our banking
subsidiaries also
have recourse
obligations under certain
agreements with
third parties,
including servicing
and custodial agreements, that include ratings covenants. Upon failure to maintain the required credit ratings,
the third parties could
have
the
right
to
require
us
to
engage
a
substitute
fund
custodian
and
increase
collateral
levels
securing
recourse
obligations.
Collateral
pledged by
us
to
secure
recourse
obligations approximated
$23.8 million
on
December 31,
2025.
While management
expects that we would be able to meet any additional
collateral requirements if and when needed, the requirements
to post collateral
under certain agreements or the loss of custodian
funds could reduce our liquidity resources and
impact our results of operations.
As a bank holding company, we depend on dividends and distributions
from our subsidiaries for liquidity.
As a bank holding company,
we depend primarily on dividends from
our banking and other operating subsidiaries
to fund
our cash needs, including to capitalize our subsidiaries. Our banking subsidiaries, BPPR and PB, are limited by law in their ability to
make dividend
payments and other
distributions to
us based
on their earnings,
dividend history,
and capital
position. Based on
its
current financial condition,
PB may
not declare or
pay a
dividend without the
prior approval of
the Federal Reserve
Board and
the
NYSDFS. A
failure by
our banking subsidiaries
to generate
sufficient income
and free
cash flow to
make dividend
payments to
us
may
affect
our
ability to
fund
our cash
needs, which
could have
a negative
impact on
our financial
condition, liquidity,
results
of
operation or capital position. Such failure could also affect
our ability to pay dividends to our stockholders and to
repurchase shares
of our common stock. We have in the past suspended dividend payments
on our common stock and preferred stock during times of
economic uncertainty,
and there
can be
no assurance
that we
will be
able to
continue to
declare dividends to
our stockholders
in
any future periods.
34
An
impact
on
the
tangible
capital
levels
of
our
operating
subsidiaries,
could
also
limit
the
amount
of
capital
we
may
upstream to the holding company. Tangible
capital levels have in the past been, and may in the future be,
adversely affected by the
impact of
rapidly rising interest
rates on investment
securities in our
available-for-sale portfolio. For
a discussion of
risks related to
changes in interest
rates, see Changes
in interest rates
and credit spreads
can adversely impact
our financial condition,
including
our investment portfolio, since a significant portion of
our business involves borrowing and lending money,
and investing in financial
instruments in Item 1A of this Form 10-K.
We also depend
on dividends from our
banking and other operating subsidiaries
to pay debt service
on outstanding debt
and to repay maturing debt. Our ability to
declare such dividends would be subject to regulatory requirements and could
require the
prior approval of the Federal Reserve Board.
STRATEGIC RISKS
Potential acquisitions of businesses or
loan portfolios could increase some
of the risks that
we face, and may
be delayed
or prohibited due to regulatory constraints.
To
the extent
permitted by
our applicable
regulators, we
may pursue
strategic acquisition
opportunities. Acquiring
other
businesses, however, involves various risks,
including potential exposure to unknown or contingent liabilities of the
target company,
exposure
to
potential
asset
quality
issues
of
the
target
company,
potential
disruption
to
our
business,
the
possible
loss
of
key
employees and customers of
the target company,
and difficulty in
estimating the value of
the target company.
If we pay
a premium
over book or
market value in
connection with an
acquisition, some dilution of
our tangible book
value and net
income per common
share may occur.
Furthermore, failure to
realize the expected
revenue increases, cost savings,
increases in geographic
or product
presence, or
other projected
benefits from an
acquisition could have
a material
adverse effect
on our
business, financial condition
and results of operations.
Similarly,
acquiring
loan
portfolios
involves
various
risks.
When
acquiring
loan
portfolios,
management
makes
assumptions and
judgments about
the collectability
of the
loans, including
the creditworthiness
of borrowers
and the
value of
the
real
estate and
other assets
serving
as collateral
for the
repayment of
secured loans.
In
estimating the
extent of
the losses,
we
analyze
the
loan
portfolio
based
on
historical
loss
experience,
volume
and
classification
of
loans,
volume
and
trends
in
delinquencies
and
nonaccruals,
local
economic
conditions,
and
other
pertinent
information.
If
our
assumptions
are
incorrect,
however,
our actual
losses could
be higher
than estimated
and increased
loss reserves
may be
required, which
would negatively
affect our results of operations.
Finally, certain
acquisitions by financial institutions,
including us, are
subject to approval
by a variety
of federal and
state
regulatory agencies.
Regulatory approvals
could be
delayed, impeded,
restrictively conditioned
or denied.
We may
fail to
pursue,
evaluate
or
complete
strategic
and
competitively
significant
acquisition
opportunities
as
a
result
of
our
inability,
or
perceived
or
anticipated inability,
to obtain regulatory
approvals in a
timely manner,
under reasonable conditions or
at all. Difficulties
associated
with
potential
acquisitions
that
may
result
from
these
factors
could
have
a
material
adverse
effect
on
our
business,
financial
condition and results of operations.
We
continue our
broad-based multi-year,
technological and
business process
transformation. The
failure to
achieve the
goals of the transformation project, the inability to maintain expenses related to our transformation program within current
estimates
or
delays
in
executing
our
plans
may
materially
and
adversely
affect
our
business,
competitive
position,
financial condition, results of operations, or
cause reputational harm.
The
Corporation
continues
its
broad-based
multi-year,
technological
and
business
process
transformation,
which
was
launched in
2022. As
part of
this transformation,
we are
making significant
investments in
technology,
talent and
new digital
and
data capabilities in order to provide our customers with more personalized and accessible services, increase employee
performance
and satisfaction with more agile work processes,
and generate sustainable profitable growth and
value for our shareholders.
We may not succeed in executing all projects or aspects of the transformation
program, may abandon projects or aspects,
or fail to successfully launch new applications or achieve the intended
functionality and operational benefits from these technological
initiatives, which could
result in failed
or partially successful
implementations. In addition,
we may fail
to properly estimate
costs of
the
transformation
program
or
may
experience
delays
in
executing
our
plans.
Such
failures
or
delays
may
in
turn
cause
the
Corporation to
incur costs
exceeding our
current
estimates or
disrupt our
operations, including
our technological
services
to
our
customers,
or
fall
short
of
our
projected earnings
or
expense reduction
targets
driven
by
these
efforts.
To
the
extent that
these
disruptions
persist
over
time
and/or recur,
this
could
negatively
impact
our
competitive
position,
require additional
expenditures,
35
and/or harm our relationships with
our customers and thus may
materially adversely affect our
business, financial condition, results
of operations, or cause reputational harm.
We face
significant and
increasing competition in
the rapidly
evolving financial services
industry,
and face
challenges in
the adoption of new technologies such as
artificial intelligence which may put us at a
competitive disadvantage.
We
operate
in
a
highly competitive
environment, in
which
we
compete
on
the
basis
of
a
number of
factors,
including
customer service,
quality and variety
of products
and services,
price, interest rates
on loans
and deposits,
innovation, technology,
ease of use, reputation, and transaction execution. While our main competition
continues to come from other Puerto Rico banks and
financial institutions, we
face increased competition
from non-Puerto Rico
institutions, as emerging
technologies and the
growth of
e-commerce
have
significantly
reduced
geographic
barriers.
These
technologies
have
also
made
it
easier
for
non-depositary
institutions to
offer products
and services
that were
traditionally considered
banking products
and allowed
non-traditional financial
service providers
and technology
companies to
provide electronic
and internet-based
financial solutions
and services.
In addition,
nonbank
firms
may
have
a
competitive
advantage
over
traditional
banks
and
bank
holding
companies
such
as
Popular
due
to
factors
such
as
differences
in
regulation,
funding
models
and
tax
treatment.
We
may
also
be
unable
to
adopt
or
integrate
new
technologies
that
could
reduce
expenses
and
simplify
our
operations,
including
artificial intelligence,
automation
and
algorithmic
tools,
at
the
pace
of
such
competitors
due
to
operational
and
compliance
challenges
and
risks
relating
to
data
quality,
internal
controls, privacy and consumer protection, among others.
Our failure to successfully adopt and
integrate these new technologies in
a
timely
and
effective
manner may
impair our
ability to
compete effectively
or to
attract or
retain business.
Moreover,
increased
competition could create pressure to lower prices, fees, commissions or
credit standards on our products and services, which could
adversely affect our
financial condition and results
of operations. Increased competition could
also create pressure to
raise interest
rates
on deposits
or increase
deposit attrition,
which could
negatively impact
our business,
financial condition,
liquidity results
of
operations or capital position.
If we are unable to
meet constant technological changes and react quickly to
meet new industry standards, including as a
result
of our
continued dependence
on
Evertec, we
may
be unable
to enhance
our
current services
and introduce
new
products and
services in
a timely
and cost-effective
manner,
placing us
at a
competitive disadvantage
and significantly
affecting our business, financial condition, liquidity, results of operations
or capital position.
To compete effectively,
we need to constantly enhance and modify our products and services and introduce new products
and
services
to
attract
and
retain
clients
or
to
match
products
and
services
offered
by
our
competitors,
including
technology
companies
and
other
nonbank firms
that
are
engaged in
providing similar
products
and services,
some
of
which are
or
may
be
provided by Evertec
itself.
Our ability to
compete effectively will
depend in part
on our
ability to
react quickly to
meet new industry
standards
and
use
new
technology,
such
as
artificial
intelligence,
to
satisfy
customer
demands,
as
well
as
to
create
additional
efficiencies in our operations. Popular expects that it will continue to depend
on Evertecs technology services to operate and control
current products and services and to implement future products and services, making
our success dependent on Evertecs ability to
timely complete and introduce these enhancements and
new products and services in a cost-effective
manner.
Some
of
our
competitors
rely
on
financial
services
technology
and
outsourcing
companies
that
are
much
larger
than
Evertec, serve a
greater number of
clients than Evertec,
and may have
better technological capabilities and
product offerings than
Evertec.
Furthermore,
financial
services
technology
companies
typically
make
capital
investments
to
develop
and
modify
their
product
and
service
offerings
to
facilitate
their
customers
compliance
with
the
extensive
and
evolving
regulatory
and
industry
requirements, and,
in most
cases, such
costs are
borne by
the technology
provider.
Because of
our contractual
relationship with
Evertec, and because Popular is the sole
customer of certain of Evertecs services
and products,
including core bank processing of
BPPR, we have
in the past borne
the full cost
of such developments and
modifications and may be
required to do so
in the future,
subject to the terms of the MSA.
Moreover,
the terms,
speed, scalability,
and functionality
of certain
of Evertecs
technology services
are not
competitive
when compared
to offerings
from its
competitors. Evertecs
failure to
sufficiently invest
in and
upscale its
technology and
services
infrastructure to
meet the
rapidly changing
technology demands
of our
industry may
result in
our being
unable to
meet customer
expectations and
attract or
retain customers.
Furthermore, Evertecs
strategy and
investments may
also be
refocused away
from
Popular towards other strategic
initiatives,
potentially including initiatives that could
have the effect
of disintermediating us from
our
customers
or
otherwise
present
a
competitive
risk.
Any
such
impact
could,
in
turn,
reduce
Populars
revenues,
place
us
at
a
competitive disadvantage and significantly
affect our business,
financial condition, liquidity,
results of operations
or capital position.
While we
have over time
narrowed the scope
of services which
we are
dependent on Evertec
to obtain, in
exchange for obtaining
releases
in
2022
from
exclusivity restrictions
that
limited
our
ability
to
engage
other
third-party
providers
of
financial
technology
services, we
agreed to
extensions of
certain existing
commercial agreements
with Evertec
and, as
a result,
have prolonged
the
36
duration of
our exposure to
the risks
presented by Evertecs
technological capabilities and
its failures
to enhance
its products
and
services
and
otherwise
meet
evolving
demands.
We
may
also
be
exposed
to
heightened
business
risks
in
connection
with
our
dependency on Evertec with
respect to BPPRs merchant
acquiring business, which exclusivity runs
until 2035, and with
respect to
the ATH
Network, which commitment
runs until
2030, in
light of
the pace
of technology changes
and competition in
the payments
industry.
The ability to attract and retain qualified employees
is critical to our success.
Our
success
depends,
in
large
part,
on
our
ability
to
attract
and
retain
qualified
employees.
Competition
for
qualified
candidates,
especially in
the
area of
information technology,
is
intense
and
has
increased
recently as
a
result
of
a
tighter
labor
market.
Increased
competition
may
lead
to
difficulties
in
attracting
or
retaining
qualified
employees, which
may,
in
turn,
lead
to
significant challenges in the execution of our business strategies
and have an adverse effect on the quality of the service we provide
to
the
customers
and
communities
we
serve.
Such
challenges
could
adversely
affect
our
business,
operations
and
financial
condition. In addition, increased competition
may lead to higher compensation
packages and more flexible work
arrangements. We
may also be required to hire employees outside of
our market areas for certain positions that require specific expertise,
which could
result in
employment and tax
compliance-related expenses, challenges
and risks. In
addition, flexible work
arrangements, such as
remote or hybrid work
models, have led to
other workplace challenges, including fewer opportunities for
face-to-face interactions or
to promote a cohesive corporate culture and heightened
cybersecurity, information security and other operational risks.
Our
ability
to
attract
and
retain
qualified
employees
is
also
impacted
by
regulatory
limitations
on
our
compensation
practices, such as clawback requirements of incentive compensation, which may not affect other institutions with which we compete
for talent.
The scope
and content of
regulators policies
on executive compensation
continue to
develop and are
likely to
continue
evolving. Such policies and limitations on our compensation
practices could adversely affect our ability to attract, retain and motivate
talented senior leaders in support of our long-term
strategy.
OTHER RISKS
An impairment
of our
goodwill, deferred
tax assets
or amortizable
intangible assets
could adversely
affect our
financial
condition and results of operations.
As of December
31, 2025, we
had $790 million,
$814 million and
$188 million, respectively,
of goodwill, net
deferred tax
assets and amortizable intangible assets, including
capitalized software costs, recorded on our balance
sheet.
Under
GAAP,
goodwill
is
tested
for
impairment
at
least
annually
and
amortizable
intangible
assets
are
tested
for
impairment
when
events
or
changes
in
circumstances indicate
the
carrying value
may
not
be
recoverable. Factors
that
may
be
considered a change in circumstances, indicating that the carrying value of the goodwill or amortizable intangible assets may not be
recoverable, include
a decline in
Populars stock price
related to
a deterioration in
global or
local economic conditions,
declines in
our market capitalization, reduced future earnings estimates, and interest rate changes. The goodwill impairment evaluation process
requires
us
to
make
estimates
and
assumptions
with
regards
to
the
fair
value
of
our
reporting
units.
Actual
values
may
differ
significantly
from
these
estimates.
Such
differences
could
result
in
future
impairment
of
goodwill
that
would,
in
turn,
negatively
impact our results of operations and the reporting
unit where the goodwill is recorded.
The
determination
of
whether
a
deferred
tax
asset
is
realizable
is
based
on
weighting
all
available
evidence.
The
realization
of
deferred
tax
assets, including
carryforwards
and
deductible temporary
differences,
depends upon
the
existence
of
sufficient taxable
income of the
same character during
the carryback or
carryforward period. The
analysis considers all
sources of
taxable income
available to
realize the
deferred tax
asset, including
the future
reversal of
existing taxable
temporary differences,
future taxable income
exclusive of reversing temporary
differences and carryforwards,
taxable income in
prior carryback years
and
tax-planning strategies. Changes in these
factors may affect
the realizability of our
deferred tax assets in
our Puerto Rico and
U.S.
operations.
If our
goodwill, deferred
tax assets
or amortizable
intangible assets
become impaired,
we may
be required
to record
a
significant charge to earnings, which could adversely
affect our financial condition and results of operations.
We could experience unexpected
losses if the estimates
or assumptions we use
in preparing our financial
statements are
incorrect or differ materially from actual results.
In preparing
our financial
statements pursuant to
U.S. GAAP,
we are
required to
make estimates
and assumptions
that
are often based
on subjective and
complex judgments about
matters that are
inherently uncertain. For example,
we use estimates
and assumptions to determine our allowance for credit losses, our
liability for contingent litigation losses, and the fair value of certain
37
of our
assets and
liabilities, such
as debt
securities, loans
held for
sale, MSRs,
intangible assets
and deferred
tax assets.
If such
estimates
or
assumptions are
incorrect
or
differ
materially
from
actual
results,
we
could
experience
unexpected
losses
or
other
adverse impacts, some of which could be significant.
For further information on other risks faced by
Popular please refer to the MD&A section of
this Form 10-K.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Item 1C. Cybersecurity
The
Corporation
assesses,
identifies
and
manages
cybersecurity
risk
as
part
of
the
Corporations
overall
risk
management
framework, alongside
associated information
security,
anti-money laundering
and counterterrorism,
operational, fraud,
regulatory,
legal and reputational risks, among others.
The Corporation has established three management
committees that oversee and monitor different aspects of
cybersecurity risk.
The
Enterprise Risk
Management Committee
(the ERM
Committee), chaired
by
the Chief
Risk Officer,
oversees and
monitors
the
risks
included
in
the
Risk Appetite
Statement
(the
RAS)
of
the
Corporations
Risk
Management
Policy,
including cybersecurity risks.
The Information
Technology and
Cyber Risk
Committee (ITCRC),
chaired by
the Chief
Security
Officer and
the Chief
Information and
Digital Strategy
Officer, oversees
and monitors
information technology
(IT), privacy
and cybersecurity
risks, mitigating
actions and
controls, applicable
regulatory developments, key
risks metrics,
and IT
and cyber
incidents
that may result in operational, compliance and reputational
risks.
The
Operational
Risk
Committee (ORCO),
chaired
by
the
Chief Risk
Officer,
oversees
and
monitors
operational
risk
management activities
to ensure
the development
and consistent
application of
operational risk
policies, processes
and
procedures that
measure, limit
and manage
the Corporation's
operational risks
while maintaining
the effectiveness
and
efficiency
of
the
operating and
business
processes. As
part
of
its
responsibilities, ORCO
oversees business
continuity
matters, as well as operational losses stemming
from any cybersecurity or fraud events.
The ITCRC and ORCO meet at least quarterly
and report on cybersecurity and other matters
to the ERM Committee.
The
Board
has
established
a
Board-level
Risk
Management
Committee
(RMC),
which
is
responsible
for
the
oversight
of
the
Corporations overall risk framework, and assists the Board in the monitoring, review and approval of the policies that measure, limit
and manage the Corporations risks, including cybersecurity
risk. The RMC holds periodic meetings in
which management provides
an
overview of
Populars cybersecurity
threat
risk management
and strategy
processes,
which includes
summaries
of
escalated
incidents
and
incident
remediation
status.
Our
Chief
Security
Officer,
Chief
Information
and
Digital
Strategy
Officer,
Chief
Information Security Officer
(CISO), Chief Risk
Officer and the
Financial and Operational
Risk Management Division
(the FORM
Division)
Manager
generally
participate
in
such
meetings.
The
RMC
is
also
responsible
for
(i)
overseeing
the
development,
implementation
and
maintenance
of
the
Corporations
information
security
program
(the
Information
Security
Program);
(ii)
approving the Corporations risk management program
and any related policies and controls;
(iii) overseeing the implementation by
the Corporations
management of
the Corporations
risk management
program and
any related
policies, procedures
and controls;
(iv)
overseeing the
Corporations risk
management with
respect to
emerging technologies,
including artificial
intelligence;
and (v)
reviewing reports regarding selected topics such as
cyber.
In addition, the
Board also has
a standing Technology
Committee (the TC)
that oversees the
Corporations technology functions,
strategy, operations, investments and needs.
The TC meets at least quarterly and
our Chief Information and Digital Strategy Officer
and our Chief
Security Officer
generally participate in
such meetings. The
TC (i) oversees
the development and
implementation of
the Corporations technology
strategy and initiatives,
(ii) monitors the
risks associated with
critical technology vendor
relationships,
including
cyber
risks,
and
(iii)
reviews
and
receives
reports
from
management
and
third
parties
regarding
the
Corporations
technology
functions,
operations,
strategy
and
initiatives,
as
well
as
current
and
emerging
technology
trends
and
risks
arising
therefrom.
The Board in turn also receives briefings on cybersecurity matters and risks, including an annual presentation from the Chief
38
Security
Officer
and
the
CISO
on
the
Information
Security
Program.
In
addition,
as
part
of
the
Boards
director
education
plan,
members of the
Board take, on
an annual basis,
a cybersecurity training that
provides the Board with
an overview of
cybersecurity
principles and regulations that are relevant to our institution
and the Boards oversight function.
To identify, assess and manage risks from cybersecurity threats, the Corporation has established a three lines of defense
framework. The first line of defense is composed of business line management that identifies and manages the risks associated with
business activities, including cybersecurity risk. The second line of defense is made up of members of the Corporations Corporate
Risk Management Group and the Corporate Security and Operations Group (the CSOG) who, among other things, measure and
report on the Corporations risk activities. In such line of defense, the FORM Division, within the Corporate Risk Management
Group, is responsible for (i) establishing baseline metrics that measure, monitor, limit and manage the framework that identifies and
manages multiple and cross-enterprise risks, including cybersecurity risks; and (ii) articulating the RAS and supporting metrics,
including those related to operational risk, business continuity, disaster recovery and third-party management oversight processes.
Meanwhile, Populars Corporate Information Security and Privacy Division (the CISP), which is headed by the CISO and reports to
the CSOG, is responsible for the development of strategies, policies and programs to assess and mitigate cybersecurity and privacy
risks. Members of the CISP (including the CISO) and FORM Division report on and escalate cybersecurity, IT and privacy risks to
management committees, such as the ITCRC, ORCO and ERM Committees, and, if appropriate, to the RMC, TC, and the Board of
Directors, as required under relevant policies and procedures. Lastly, the third line of defense consists of the Corporate Auditing
Division, which independently provides assurance regarding the effectiveness of the risk framework and reports directly to the Audit
Committee of the Board.
Popular monitors various vectors of threats and utilizes open-source intelligence forums and communities such as the Financial
Services Information Sharing and Analysis Center and the Cybersecurity and Infrastructure Security Agency, among others, to
receive threat intelligence feeds which are reviewed by the CISP. As cybersecurity threats are identified, they are evaluated to
assess the level of exposure and the potential risk to Popular. The ITCRC and the ERM Committee discuss and track the threats
identified in internal assessments and scans or in third-party reports. Depending on the evolution and materiality of the threat, these
are escalated to the RMC as appropriate.
The CISP
develops the Information
Security Program, which
considers and evaluates
risks posed by
cybersecurity threats, events
and
activities
impacting
the
industry
and
the
Corporation.
The
Information
Security
Program
outlines
the
Corporations
overall
strategy and
governance to
protect the
confidentiality,
integrity and
availability of
information and
prevent access
by unauthorized
personnel, and is based on standards and controls set by the National Institute of Standards and Technology
(NIST), including the
NISTs Framework for
Improving Critical Infrastructure
Cybersecurity. Popular
currently leverages the
Cyber Assessment Tool
(the
CAT), a tool based on NIST standards and controls developed by the Federal Financial Institutions
Examination Council (FFIEC),
in order to measure the
Corporations cybersecurity preparedness and maturity levels.
The CAT
assessment results are integrated
into the overall Information
Security Program evaluation. In
2025, we began the
transition to the Cyber
Risk Institute (CRI) Profile
2.0
assessment
framework,
following
the
announcement
by
the
FFIEC
of
the
sunset
of
the
CAT.
The
transition
to
the
CRI
framework is
expected to be
completed in
2026. The CRI
Profile was
produced through public-private
collaboration and is
a list
of
assessment
questions
curated
based
on
the
intersection
of
global
regulations
and
cyber
standards,
such
as
the
International
Standards Organization (ISO) and the NIST.
The CISP also
manages the Incident
Response Program (IRP)
of the Corporation
and is in
charge of overseeing,
assessing and
managing cyber
incidents. The
IRP outlines
the measures
Popular must
take to
prepare for,
detect, respond
to and
recover from
cybersecurity
incidents,
which
include
processes
to
triage,
assess
severity
for,
escalate,
contain,
investigate
and
remediate
incidents, as well as to comply with potentially
applicable legal obligations and mitigate brand
and reputational damage.
The Corporation also undertakes the below listed
additional activities in its effort
to maintain regulatory compliance, identify,
assess
and manage its material risks from cybersecurity
threats, and to protect against, detect and
respond to cybersecurity incidents:
Conduct
tabletop
exercises
that
simulate
cybersecurity
incidents
to
raise
awareness
and
enhance
Populars
responsive
measures;
Assess how business
and corporate strategies, new
products, technology deployments, external
events and the
evolution of
threats impact
the Corporations
information security
controls in
order to
determine if
they require
any additional
resources,
technology or processes;
Discuss cybersecurity risks with law enforcement, peer
groups, industry forums and trade associations;
39
Provide training
to all
Popular employees
upon hiring
and annually
thereafter on
cybersecurity and
customer data
handling
and use requirements;
Offer training and awareness campaigns to customers and employees
based on their role;
Conduct
phishing
simulations
for
employees,
with
escalation
protocols
for
employees
that
fail
such
tests
to
enhance
awareness and responsiveness to such possible
threats;
Offer learning and development opportunities to employees
who handle and manage cybersecurity matters;
Carry cyber insurance to provide protection against
potential losses arising from cybersecurity incidents;
and
Monitor emerging
legal and
regulatory requirements
and implement
changes to
our processes,
policies and
statements, as
necessary.
Popular engages third parties to assist in certain cybersecurity matters.
In particular, Popular uses the expertise of third parties to
perform specialized assessments to test its systems, such as periodic penetration testing, that provide insights into the effectiveness
of its controls. Popular also engages third parties to provide computer forensics and investigations services as needed to assess
and address actual or potential cybersecurity incidents. In addition, Popular hires third parties to provide the first level security
monitoring of Populars external and internal networks.
Populars Third Party Risk Management Policy outlines the management of risks associated with
the Corporations use of third-party
service
providers,
and
the
CSOG
assesses
the
impact
and
level
of
cybersecurity
and
privacy
risk
of
such
providers.
Popular
performs due diligence on
third parties and monitors third
parties that have access to
its systems, data or facilities
that house such
systems or data on a
periodic basis, and based on due
diligence results, determines how often vendor assessments are
performed
on such third party.
Popular also conducts periodic application and vendor assessments for third-party providers
and their products.
Furthermore, Popular requires third parties that have
access to its systems, data or facilities that house
such systems or data to take
a training on cybersecurity at least annually.
For a
description of how
identified cybersecurity threats
may affect Populars
business strategy or
results, see under
the headings
We
and
our third-party
providers have
been, and
expect in
the future
to continue
to
be, subject
to
cyber-attacks. Future
cyber-
attacks could cause substantial harm and have
an adverse effect on our business
and results of operations. and We
rely on other
companies to
provide key components
of our
business infrastructure, including
certain of
our core financial
transaction processing
and information
technology and
security services,
which exposes
us to
a number
of
operational risks
that could
have a
material
adverse
effect
on
us.,
included
as
part
of
our
risk
factor
disclosures
in
Item
1A
in
this
Form
10-K,
which
disclosures
are
incorporated by reference herein.
To date, previous cybersecurity incidents have not materially affected our results of operations or
financial condition.
The CSOG
operates under the
direction of the
Chief Security
Officer.
The Chief
Security Officer
has over
37 years
of experience,
including over 13 years of
professional experience in information technology and cybersecurity matters such
as the oversight of the
Information
Security
Program
and
the
design
and
execution
of
the
information
security
audit
plan
of
the
Corporation.
She
is
a
Certified Public Accountant and also holds a Juris Doctor degree and FINRA administered
Series 7 and Series 27 certifications. She
holds the title
of Executive Vice
President and Chief Security
Officer and has been
in her role
since 2018. Prior to
that, she served
as Senior
Vice President
and General
Auditor of
the Corporation
from November
2012 to
April 2018.
Before 2012,
she served
in
various risk
related functions of
the Corporation and
as the Chief
Operating Officer
and Chief Financial
Officer of
Populars broker
dealer business.
The
CISO
has
over
30
years
of
work
experience.
She
holds
the
title
of
Senior
Vice
President
and
Corporate
Chief
Information
Security
Officer and
assumed this
role in
January 2026.
Prior to
this role,
since 2022,
she
served as
Senior Vice
President and
Financial
and
Operational
Risk
Management
Division
Manager,
with
oversight
of
the
enterprise
and
operational
risks
of
the
Corporation. Before 2022, she held
positions for 18 years as
Operational and IT Risk Director,
Head of ERM and Operational
Risk,
and Chief
Information Security
Officer for
other financial
institutions. She
holds a
BBA with
majors in
Accounting and
Information
Systems, and a Master of Science in Information
Technology Management.
The Corporate Risk
Management Group operates under
the direction of
the Chief Risk
Officer. The
Chief Risk Officer
has over 32
years of work experience.
He holds the title of Executive Vice President and
Chief Risk Officer and has been in
his role since 2011.
Prior to
joining the
Corporation, he served
for 17
years as
Chief Financial
Officer,
Head of
Retail Bank
and Mortgage
Operations,
Head of Commercial and Construction Mortgage and
Head of Interest Rate Risk, among
other positions, for other banks.
He holds
a BS with a major in Computer Engineering
and an MBA with majors in Finance and
Accounting.
40
The FORM Division Manager has over 30 years of work experience. She holds the title of Senior Vice President and FORM Division
Manager and has been in
her role since January 2026.
Prior to this role, since
2018, she held the position
of Senior Vice President
and
Division
Manager
of
the
Corporate
Risk
Reviews
Division
reporting
directly
to
the
RMC.
She
has
leadership
experience
in
treasury
management,
investment
strategy
and
enterprise
risk
oversight.
She
holds
a
BSBA
with
majors
in
Finance
and
International Business and an MBA with concentrations
in Finance and Management.
ITEM 2. PROPERTIES
As of December 31, 2025, BPPR operated 162 branches, of which 67 were owned and 95 were leased premises, and PB
operated 39 branches
of which 3
were owned and
36 were on
leased premises. Also,
the Corporation had
582 ATMs
operating in
Puerto Rico, 27 in the Virgin Islands
and 97 in the U.S. Mainland. The principal properties owned by Popular
for banking operations
and other services
are described below.
Our management believes that
each of our
facilities is well
maintained and suitable
for its
purpose.
Puerto Rico
Popular Center, the twenty-story Popular and BPPR headquarters building, located
at 209 Muoz Rivera Avenue, Hato Rey,
Puerto
Rico.
Popular Center North Building, a three-story building, on
the same block as Popular Center.
Popular Street Building, a parking and office building located
at Ponce de Len Avenue and Popular Street, Hato
Rey, Puerto Rico.
Cupey Center
Complex,
one building, three-stories
high, two
buildings, two-stories high
each, and
two buildings three-stories
high
each located in Cupey, Ro Piedras, Puerto Rico.
Old San Juan Building, a twelve-story structure located
in Old San Juan, Puerto Rico.
Guaynabo Corporate Office Park Building, a two-story building
located in Guaynabo, Puerto Rico.
Altamira Building,
a nine-story office building located in Guaynabo,
Puerto Rico.
El Seorial Center, a four-story office building and a two-story branch building
located in Ro Piedras, Puerto Rico.
Ponce de Len 167 Building, a five-story office building
located in Hato Rey, Puerto Rico.
Muoz Rivera 200, a ten-story building located
in Hato Rey, Puerto Rico.
U.S. & British Virgin Islands
BPPR Virgin Islands Center, a three-story building located in St. Thomas,
U.S. Virgin Islands.
Popular Center -Tortola,
a four-story building located in Tortola, British Virgin Islands.
41
ITEM 3. LEGAL PROCEEDINGS
For a discussion
of Legal proceedings,
see Note 23,
Commitments and Contingencies, to
the Consolidated Financial Statements
in this Form 10-K.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
PART II
ITEM
5.
MARKET
FOR
REGISTRANTS
COMMON
EQUITY,
RELATED
STOCKHOLDER
MATTERS
AND
ISSUER
PURCHASES OF EQUITY SECURITIES
Common Stock
Populars Common Stock is traded on
the Nasdaq Global Select Market under the symbol BPOP.
During 2025, the Corporation declared cash dividends in the
total amount of $2.90 per common share outstanding,
for an
aggregate amount of $196.2 million. The Common Stock ranks junior to all series of
Preferred Stock as to dividend rights and rights
on liquidation,
dissolution or
winding up
of Popular.
Our ability
to declare
or pay
dividends on,
or purchase,
redeem or
otherwise
acquire, the Common
Stock is subject
to certain restrictions
in the event
that Popular fails
to pay or
set aside full
dividends on the
Preferred Stock for the latest dividend period.
During the year ended
December 31, 2025, the Corporation
repurchased 4,660,124 shares of common stock
for $501.5
million,
at
an
average
price
of
$107.61
per
common
share,
and
during
the
year
ended
December
31,
2024,
the
Corporation
repurchased 2,256,420 shares of common stock for
$217.3 million, at an average price of
$96.32 per common share. At December
31, 2025, $281.2 million remained on our active common stock repurchase authorization. The Corporations planned common stock
repurchases
may
be
executed
in
open
market
transactions,
privately
negotiated transactions,
block
trades
or
any
other
manner
determined
by
the
Corporation.
The
timing,
quantity
and
price
of
such
repurchases
will
be
subject
to
various
factors,
including
market
conditions,
the
Corporations
capital
position
and
financial
performance,
the
capital
impact
of
strategic
initiatives
and
regulatory and
tax considerations.
The common
stock repurchase
program does
not require
the Corporation
to acquire
a specific
dollar amount or number of shares and may be
modified, suspended or terminated at any time
without prior notice.
Additional information concerning legal or
regulatory restrictions on the payment
of dividends by Popular,
BPPR and PB
is contained under the caption Regulation and Supervision
in Item 1 herein.
As
of
February
26,
2026,
Popular
had
5,721
stockholders
of
record
of
the
Common
Stock,
not
including
beneficial
owners whose shares
are held in
record names
of brokers
or other
nominees. The last
sales price
for the
Common Stock
on that
date was $142.51 per share.
Preferred Stock
Popular has 30,000,000 shares of
authorized Preferred Stock that may
be issued in one
or more series, and the
shares
of each series
shall have such
rights and preferences as
shall be fixed
by the Board
of Directors when authorizing
the issuance of
that particular series. Populars Preferred Stock
issued and outstanding at December 31, 2025
consisted of:
885,726 shares of 6.375% non-cumulative monthly income Preferred Stock, Series A, no par value, liquidation preference
value of $25 per share.
All series of
Preferred Stock are pari
passu. Dividends on each
series of Preferred Stock
are payable if declared
by our
Board
of
Directors.
Our
ability
to
declare
and
pay
dividends
on
the
Preferred
Stock
is
dependent
on
certain
Federal
regulatory
42
considerations,
including
the
guidelines
of
the
Federal
Reserve
Board
regarding
capital
adequacy
and
dividends.
The
Board
of
Directors is not obligated to declare dividends and
dividends do not accumulate in the event
they are not paid.
Monthly
dividends
on
the
Preferred
Stock
amounted
to
a
total
of
$1.4
million
for
the
year
2025.
There
can
be
no
assurance that any dividends will be declared on
the Preferred Stock in any future periods.
Dividend Reinvestment and Stock Purchase Plan
Popular
offers
a
dividend reinvestment
and stock
purchase plan
(the Plan)
for
our shareholders
that
allows them
to
reinvest their dividends in shares of the Common Stock at a
5% discount from the average market price at the time of the
issuance.
Under the
Plan, shareholders
may
also purchase
shares of
Common Stock
at
prevailing market
prices by
making
optional cash
payments.
Equity Based Plans
On May
12, 2020, the
stockholders of
the Corporation
approved the Popular,
Inc. 2020
Omnibus Incentive Plan,
which
permits the
Corporation to issue
several types of
stock-based compensation to
employees and directors
of the Corporation
and/or
any of its subsidiaries (the 2020 Incentive Plan). The 2020 Incentive Plan replaced the Popular, Inc. 2004 Omnibus Incentive Plan,
which was in
effect prior to
the adoption of the
2020 Incentive Plan.
As of December 31,
2025, the maximum number of
shares of
common stock remaining available for future issuance under this plan was 2,599,105. For information about
the securities remaining
available for issuance under our equity-based plans,
refer to Part III, Item 12.
Purchases of Equity Securities
The following table sets forth the details of purchases of Common Stock by the Corporation during the quarter ended December 31,
2025:
Issuer Purchases of Equity Securities
Not in thousands
Period
Total Number of
Shares Purchased [1]
Average Price Paid
per Share
Total Number of
Shares
Purchased as Part of Publicly
Announced Plans or Programs [2]
Maximum Dollar Value
of Shares that May Yet
be Purchased Under the
Plans or Programs [2]
October 1 October 31
232,575
$120.97
232,539
$400,794,897
November 1 November 30
496,688
113.84
496,688
344,252,709
December 1 December 31
523,147
120.78
523,076
281,075,956
Total December 31, 2025
1,252,410
$118.06
1,252,303
$281,075,956
[1] Includes 36 and 71 shares of the Corporation's
common stock acquired by the Corporation during
October and December 2025,
respectively, in connection with the satisfaction of tax withholding obligations on
vested awards of restricted stock or restricted stock
units granted to directors and certain employees
under the Corporations 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 December 31, 2025, the Corporation
had repurchased 6,916,544 shares of common stock
for $718.8 million at an average price of
$103.92 per share, as part of the 2024
and 2025 common stock repurchase programs.
Equity Compensation Plans
For information about our equity compensation plans,
refer to Part III, Item 12.
Stock Performance Graph (1)
43
The graph
below compares
the cumulative
total stockholder
return during
the measurement
period with
the cumulative
total return, assuming reinvestment of dividends, of
the Nasdaq Bank Index and the Nasdaq Composite
Index.
The
cumulative
total
stockholder
return
was
obtained
by
dividing
(i)
the
cumulative
amount
of
dividends
per
share,
assuming dividend reinvestment since the measurement point, December 31, 2020, plus (ii) the change
in the per share price since
the measurement date, by the share price at
the measurement date.
Comparison of Five-Year Cumulative Total Return (TSR)
Assumes all dividends were reinvested
Base Year:
December 31, 2020 = $100
(1) Unless Popular specifically states otherwise, this Stock Performance Graph shall not be deemed to be incorporated by
reference
and
shall
not
constitute
soliciting
material
or
otherwise
be
considered
filed
under
the
Securities
Act
of
1933
or
the
Securities Exchange Act of 1934.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this item is included in
this Form 10-K, commencing on page 54.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The information regarding the
market risk of our
investments appears under the caption
Risk Management, on page
79
within Managements Discussion and Analysis of Financial
Condition and Results of Operations in this
Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
44
The information required by this item appears under the caption Statistical Summaries on pages 104 to 106 of this Form
10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our
management,
with
the
participation
of
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
has
evaluated
the
effectiveness
of
our
disclosure
controls
and
procedures
(as
such
term
is
defined
in
Rules
13a-15(e)
and
15d-15(e)
under
the
Exchange Act) as
of the end
of the period covered
by this report.
Based on such
evaluation, our Chief Executive
Officer and Chief
Financial
Officer
have
concluded
that,
as
of
the
end
of
such
period,
our
disclosure
controls
and
procedures
are
effective
in
recording, processing, summarizing and
reporting, on a timely
basis, information required to
be disclosed by Popular
in the reports
that
we
file
or
submit
under
the
Exchange
Act
and
such
information
is
accumulated
and
communicated
to
management,
as
appropriate, to allow timely decisions regarding required
disclosures.
Assessment on Internal Control over Financial
Reporting
Information relating to our assessment on
internal control over financial reporting is presented under the
captions Report
of
Management
on
Internal
Control
Over
Financial
Reporting
and
Report
of
Independent
Registered
Public
Accounting
Firm
located on pages 107 and 108 of this Form 10-K.
Changes in Internal Control over Financial Reporting
There have
been no
changes in
our 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 December 31, 2025, that have materially affected, or
are reasonably likely to materially affect, our internal control
over financial reporting.
ITEM 9B. 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 10b51
trading arrangements
(as defined in Item 408(c) of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN
JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
45
The
information
contained
under
the
captions
Security
Ownership
of
Certain
Beneficial
Owners
and
Management,
Delinquent Section
16(a) Reports,
Corporate Governance, Nominees
for Election
as Directors
and Executive
Officers in
the
Proxy Statement
are incorporated herein
by reference.
Information about our
Code of
Ethics, which
applies to
our senior
financial
officers, is included in Business Available Information in Part I
of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The
information
in
the
Proxy
Statement
under
the
caption
Executive
and
Director
Compensation,
including
the
Compensation
Discussion
and
Analysis,
the
2025
Executive
Compensation
Tables
and
Compensation
Information
and
the
Compensation
of
Non-Employee
Directors,
and
under
the
caption
Committees
of
the
Board
Talent
and
Compensation
Committee Talent and Compensation Committee Interlocks and Insider Participation is
incorporated herein by reference.
ITEM
12.
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
AND
RELATED
STOCKHOLDERS MATTERS
The information under the captions Principal Shareholders and Shares Beneficially
Owned by Directors,
Nominees and
Executive Officers in the Proxy Statement is incorporated herein
by reference.
The following tables sets forth information as
of December 31, 2025 regarding securities remaining available for issuance
to directors and eligible employees under our
equity-based compensation plans.
Plan Category
Plan
Number of Securities
Remaining Available
for Future Issuance
Under Equity Compensation
Plan
Equity compensation plan approved by security holders
2020 Omnibus Incentive Plan
2,599,105
Total
2,599,105
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The
information
under
the
caption
Board
of
Directors
and
Nominees
Independence
and
Certain
Relationships
and
Transactions in the Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information regarding principal accountant fees and services is set forth under Proposal 5 Ratification of Appointment of
Independent Registered Public Accounting Firm in
the Proxy Statement, which is incorporated herein
by reference.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a). The following financial statements and reports are included
on pages 108 through 260 in this Form10K.
(1)
Financial Statements
Report of Independent Registered Public Accounting Firm
(
PCAOB ID
238
)
46
Consolidated Statements of Financial Condition as of
December 31, 2025 and 2024
Consolidated Statements of Operations for each of
the years in the three-year period ended December
31, 2025
Consolidated Statements of
Comprehensive Income for
each of
the years
in the
three-year period
ended December 31,
2025
Consolidated
Statements
of
Changes
in
Stockholders
Equity
for
each
of
the
years
in
the
three-year
period
ended
December 31, 2025
Consolidated Statements of Cash Flows for each of
the years in the three-year period ended
December 31, 2025
Notes to Consolidated Financial Statements
(2)
Financial
Statement
Schedules:
No
schedules
are
presented
because
the
information
is
not
applicable
or
is
included
in
the
Consolidated Financial Statements described in (a) (1)
above or in the notes thereto.
(3) Exhibits
ITEM 16. FORM 10-K SUMMARY
None.
The exhibits listed on the Exhibits Index below are
filed herewith or are incorporated herein by
reference.
47
Exhibit Index
3.1
[RestatedCertificateofIncorporationofPopular,Inc.(incorporatedbyreferencetoExhibit3.1oftheCorporations](http://www.sec.gov/Archives/edgar/data/763901/000119312520214878/d904207dex31.htm)
[Quarterly Report on Form 10-Q for the quarter endedJune 30, 2020).](http://www.sec.gov/Archives/edgar/data/763901/000119312520214878/d904207dex31.htm)
3.2
[Amended and Restated Bylaws ofPopular, Inc. asof May 9, 2024 (incorporatedby reference to Exhibit 3.1of Popular,](http://www.sec.gov/Archives/edgar/data/763901/000119312524135771/d786162dex31.htm)
[Inc.s Current Report on Form 8-K dated May 9, 2024 andfiled on May 10, 2024).](http://www.sec.gov/Archives/edgar/data/763901/000119312524135771/d786162dex31.htm)
4.1
[Specimen ofPhysical CommonStock Certificateof Popular,Inc. (incorporatedby referenceto Exhibit4.1 ofPopular,](http://www.sec.gov/Archives/edgar/data/763901/000119312512253705/d360769dex41.htm)
[Inc.s Current Report on Form 8-K dated May 29, 2012and filed on May 30, 2012).](http://www.sec.gov/Archives/edgar/data/763901/000119312512253705/d360769dex41.htm)
4.2
[Certificate ofDesignation ofPopular,Inc.s 6.375%Non-Cumulative MonthlyIncome PreferredStock, 2003Series A](http://www.sec.gov/Archives/edgar/data/763901/000095014403002353/g80874exv3w3.txt)
[(incorporated by reference to Exhibit 3.3 of Popular, Inc.s Form 8-A filed onFebruary 25, 2003).](http://www.sec.gov/Archives/edgar/data/763901/000095014403002353/g80874exv3w3.txt)
4.3
[Form of certificate representing Popular, Inc.s 6.375% Non-Cumulative Monthly Income Preferred Stock, 2003 Series A](http://www.sec.gov/Archives/edgar/data/763901/000095014403002353/g80874exv4w1.txt)
[(incorporated by reference to Exhibit 4.1 of Popular, Inc.s Form 8-A filed onFebruary 25, 2003).](http://www.sec.gov/Archives/edgar/data/763901/000095014403002353/g80874exv4w1.txt)
4.4
[Senior Indenture of Popular, Inc., datedas of February 15, 1995, as supplemented by theFirst Supplemental Indenture](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[thereto, dated as ofMay 8, 1997, eachbetween Popular, Inc.and The Bank ofNew YorkMellon, as successor trustee](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[(incorporated byreference toExhibit 4(d)to theRegistration Statement onForm S-3,File No.333-26941, ofPopular,](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[Inc., Popular International Bank, Inc., and Popular NorthAmerica, Inc., filed on May 12, 1997).](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
4.5
[Second Supplemental Indentureof Popular,Inc., datedas ofAugust 5,1999, between Popular,Inc. and TheBank of](http://www.sec.gov/Archives/edgar/data/763901/000095014499010495/0000950144-99-010495.txt)
[New YorkMellon, as successortrustee (incorporated byreference to Exhibit4(e) toPopular, Inc.sCurrent Report on](http://www.sec.gov/Archives/edgar/data/763901/000095014499010495/0000950144-99-010495.txt)
[Form 8-K dated August 5, 1999 and filed onAugust 17, 1999).](http://www.sec.gov/Archives/edgar/data/763901/000095014499010495/0000950144-99-010495.txt)
4.6
[Subordinated Indenture of Popular,Inc., dated asof November 30, 1995,between Popular,Inc. and The Bankof New](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[York Mellon, as successor trustee (incorporated by reference to Exhibit 4(e) tothe Registration Statement on Form S-3,](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[File No. 333- 26941, of Popular, Inc., Popular International Bank, Inc.and Popular North America, Inc., filed on May 12,](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[1997).](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
4.7
[SeniorIndentureofPopularNorthAmerica,Inc.,datedasofOctober1,1991,assupplementedbytheFirst](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[Supplemental Indenturethereto, datedas ofFebruary 28,1995, andby theSecond SupplementalIndenture thereto,](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[dated as ofMay 8, 1997,each among PopularNorth America, Inc.,Popular, Inc.,as guarantor,and The Bankof New](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[York Mellon,as successor trustee (incorporated by reference to Exhibit4(f) to the Registration Statement on FormS-3,](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[File No. 333-26941, of Popular,Inc., Popular International Bank, Inc. andPopular North America, Inc., filed onMay 12,](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
[1997).](http://www.sec.gov/Archives/edgar/data/763901/0000950144-97-005499.txt)
4.8
[ThirdSupplementalIndentureofPopularNorthAmerica,Inc.,datedasofAugust5,1999,amongPopularNorth](http://www.sec.gov/Archives/edgar/data/763901/000095014499010495/0000950144-99-010495.txt)
[America, Inc.,Popular,Inc., asguarantor,and TheBank ofNew YorkMellon, assuccessor trustee(incorporated by](http://www.sec.gov/Archives/edgar/data/763901/000095014499010495/0000950144-99-010495.txt)
[reference toExhibit 4(h)to Popular,Inc.s CurrentReport onForm 8-K,dated August5, 1999,as filedon August17,](http://www.sec.gov/Archives/edgar/data/763901/000095014499010495/0000950144-99-010495.txt)
[1999).](http://www.sec.gov/Archives/edgar/data/763901/000095014499010495/0000950144-99-010495.txt)
4.9
[Junior Subordinated Indentureof Popular,Inc., datedas of October31, 2003, betweenPopular, Inc.and TheBank of](http://www.sec.gov/Archives/edgar/data/763901/000095014403012175/g85589exv4w2.txt)
[New YorkMellon, assuccessor trustee(incorporated byreference toExhibit 4.2of Popular,Inc.s CurrentReport on](http://www.sec.gov/Archives/edgar/data/763901/000095014403012175/g85589exv4w2.txt)
[Form 8-K, dated October 31, 2003 and filedon November 4, 2003).](http://www.sec.gov/Archives/edgar/data/763901/000095014403012175/g85589exv4w2.txt)
4.10
[Description of Popular, Inc.s securities registered pursuant to Section 12 ofthe Securities Exchange Act. (1)](d17859dex410.htm)
48
10.1
[Popular, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 4.4of Popular, Inc.s Form S-8 filed on](http://www.sec.gov/Archives/edgar/data/763901/000119312520140601/d893295dex44.htm)
[May 12, 2020). *](http://www.sec.gov/Archives/edgar/data/763901/000119312520140601/d893295dex44.htm)
10.2
[Popular, Inc. Puerto Rico Nonqualified Deferred Compensation Plan. (1)*](d17859dex102.htm)
10.3
[Form of Compensation Agreement for Directors Elected Chairman of a Committee (incorporated by reference to Exhibit](http://www.sec.gov/Archives/edgar/data/763901/000095014404010731/g91439exv10w1.txt)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended September 30, 2004). *](http://www.sec.gov/Archives/edgar/data/763901/000095014404010731/g91439exv10w1.txt)
10.4
[FormofCompensation AgreementforDirectors notElected Chairmanofa Committee(incorporated byreference to](http://www.sec.gov/Archives/edgar/data/763901/000095014404010731/g91439exv10w2.txt)
[Exhibit 10.2 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended September 30, 2004). *](http://www.sec.gov/Archives/edgar/data/763901/000095014404010731/g91439exv10w2.txt)
10.5
[Compensation Agreement for Alejandro M.Ballester as director ofPopular, Inc.,dated January 28, 2010(incorporated](http://www.sec.gov/Archives/edgar/data/763901/000095012310019250/g21994exv10w9.htm)
[by reference to Exhibit 10.9 of Popular, Inc.s Annual Report on Form10-K for the year ended December 31, 2009).*](http://www.sec.gov/Archives/edgar/data/763901/000095012310019250/g21994exv10w9.htm)
10.6
[Compensation Agreement forCarlos A.Unanue asdirector ofPopular, Inc.,dated January28, 2010(incorporated by](http://www.sec.gov/Archives/edgar/data/763901/000095012310019250/g21994exv10w10.htm)
[reference to Exhibit 10.10 of Popular, Inc.s Annual Report on Form 10-Kfor the year ended December 31, 2009). *](http://www.sec.gov/Archives/edgar/data/763901/000095012310019250/g21994exv10w10.htm)
10.7
[CompensationAgreementforC.KimGoodwinasdirectorofPopular,Inc.,datedMay10,2011(incorporatedby](http://www.sec.gov/Archives/edgar/data/763901/000119312511216374/dex101.htm)
[reference to Exhibit 10.1 of Popular, Inc.s Quarterly Report on Form10-Q for the quarter ended June 30, 2011). *](http://www.sec.gov/Archives/edgar/data/763901/000119312511216374/dex101.htm)
10.8
[Compensation Agreement for JoaquinE. Bacardi, IIIas director ofPopular, Inc.,dated April 30,2013 (incorporated by](http://www.sec.gov/Archives/edgar/data/763901/000119312513327595/d553638dex102.htm)
[reference to Exhibit 10.2 of Popular, Inc.s Quarterly Report on Form10-Q for the quarter ended June 30, 2013). *](http://www.sec.gov/Archives/edgar/data/763901/000119312513327595/d553638dex102.htm)
10.9
[Compensation Agreement for John. W.Diercksen as director of Popular,Inc., dated October 18, 2013 (incorporated by](http://www.sec.gov/Archives/edgar/data/763901/000119312514077711/d626440dex1013.htm)
[reference to Exhibit 10.13 of Popular, Inc.s Annual Report on 10-K forthe year ended December 31, 2013). *](http://www.sec.gov/Archives/edgar/data/763901/000119312514077711/d626440dex1013.htm)
10.10
[Form of 2015 Long-TermEquity Incentive Award andAgreement (incorporated by reference to Exhibit10.1 of Popular,](http://www.sec.gov/Archives/edgar/data/763901/000119312515182220/d923232dex101.htm)
[Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2015). *](http://www.sec.gov/Archives/edgar/data/763901/000119312515182220/d923232dex101.htm)
10.11
[Form of 2016 Long-Term Equity Incentive Award and Agreement (incorporated by reference to Exhibit 10.27 of Popular,](http://www.sec.gov/Archives/edgar/data/763901/000119312516485443/d21916dex1027.htm)
[Inc.s Annual Report on Form 10-K for the year ended December31, 2015). *](http://www.sec.gov/Archives/edgar/data/763901/000119312516485443/d21916dex1027.htm)
10.12
[FormofDirectorCompensationLetter,ElectionFormandRestrictedStockAgreement,effectiveApril26,2016](http://www.sec.gov/Archives/edgar/data/763901/000119312516585678/d124633dex1001.htm)
[(incorporated by reference to Exhibit 10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarter ended March](http://www.sec.gov/Archives/edgar/data/763901/000119312516585678/d124633dex1001.htm)
[31, 2016). *](http://www.sec.gov/Archives/edgar/data/763901/000119312516585678/d124633dex1001.htm)
10.13
[Form of 2017 Long-TermEquity Incentive Award andAgreement (incorporated by reference to Exhibit10.1 of Popular,](http://www.sec.gov/Archives/edgar/data/763901/000119312517165435/d389076dex101.htm)
[Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2017). *](http://www.sec.gov/Archives/edgar/data/763901/000119312517165435/d389076dex101.htm)
10.14
[Long-TermEquityIncentiveAwardandAgreementforIgnacioAlvarez,datedasofJune22,2017(incorporatedby](http://www.sec.gov/Archives/edgar/data/763901/000119312517251294/d413551dex101.htm)
[reference to Exhibit 10.1 of Popular, Inc.s Quarterly report on Form 10-Qfor the quarter ended June 30, 2017). *](http://www.sec.gov/Archives/edgar/data/763901/000119312517251294/d413551dex101.htm)
10.15
[FormofPopular,Inc.2018Long-TermEquity IncentiveAwardandAgreement(incorporated byreference toExhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312518159348/d581804dex101.htm)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2018). *](http://www.sec.gov/Archives/edgar/data/763901/000119312518159348/d581804dex101.htm)
49
10.16
[Director Compensation Letter,Election Form and Restricted StockAgreement for Myrna M.Soto, dated June 22,2018](http://www.sec.gov/Archives/edgar/data/763901/000119312518241100/d568576dex101.htm)
[(incorporated by reference to Exhibit10.1 of Popular,Inc.s Quarterly Report onForm 10-Q for thequarter ended June](http://www.sec.gov/Archives/edgar/data/763901/000119312518241100/d568576dex101.htm)
[30, 2018). *](http://www.sec.gov/Archives/edgar/data/763901/000119312518241100/d568576dex101.htm)
10.17
[Director Compensation Letter, Election Formand Restricted Stock Agreement for Robert Carrady,dated December 29,](http://www.sec.gov/Archives/edgar/data/763901/000119312519059912/d667927dex1025.htm)
[2018(incorporated byreference toExhibit10.25 ofPopular,Inc.sAnnualReport onForm 10-Kfor theyearended](http://www.sec.gov/Archives/edgar/data/763901/000119312519059912/d667927dex1025.htm)
[December 31, 2018). *](http://www.sec.gov/Archives/edgar/data/763901/000119312519059912/d667927dex1025.htm)
10.18
[FormofDirector CompensationLetter,Election FormandRestricted StockUnit AwardAgreement,effectiveMay7,](http://www.sec.gov/Archives/edgar/data/763901/000119312519059912/d667927dex1026.htm)
[2019(incorporated byreference toExhibit10.26 ofPopular,Inc.sAnnualReport onForm 10-Kfor theyearended](http://www.sec.gov/Archives/edgar/data/763901/000119312519059912/d667927dex1026.htm)
[December 31, 2018). *](http://www.sec.gov/Archives/edgar/data/763901/000119312519059912/d667927dex1026.htm)
10.19
[FormofPopular,Inc.2019Long-TermEquity IncentiveAwardandAgreement(incorporated byreference toExhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312519144133/d738164dex101.htm)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2019). *](http://www.sec.gov/Archives/edgar/data/763901/000119312519144133/d738164dex101.htm)
10.20
[Director Compensation Letter, ElectionForm and Restricted Stock Unit AwardAgreement for Richard L. Carrin, dated](http://www.sec.gov/Archives/edgar/data/763901/000119312519287952/d791379dex101.htm)
[July 1,2019 (incorporated byreference toExhibit 10.1of Popular,Inc.s AnnualReport onForm 10-Qfor thequarter](http://www.sec.gov/Archives/edgar/data/763901/000119312519287952/d791379dex101.htm)
[ended September 30, 2019). *](http://www.sec.gov/Archives/edgar/data/763901/000119312519287952/d791379dex101.htm)
10.21
[FormofPopular,Inc.2020Long-TermEquity IncentiveAwardandAgreement(incorporated byreference toExhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312520139100/d900881dex101.htm)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2020). *](http://www.sec.gov/Archives/edgar/data/763901/000119312520139100/d900881dex101.htm)
10.22
[FormofDirectorCompensation ElectionFormandRestricted StockUnitAwardAgreement,effectiveMay12,2020](http://www.sec.gov/Archives/edgar/data/763901/000119312520214878/d904207dex102.htm)
[(incorporated by reference to Exhibit10.2 of Popular,Inc.s Quarterly Report onForm 10-Q for thequarter ended June](http://www.sec.gov/Archives/edgar/data/763901/000119312520214878/d904207dex102.htm)
[30, 2020). *](http://www.sec.gov/Archives/edgar/data/763901/000119312520214878/d904207dex102.htm)
10.23
[FormofPopular,Inc.2021Long-TermEquity IncentiveAwardandAgreement(incorporated byreference toExhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312521156311/d128626dex101.htm)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2021). *](http://www.sec.gov/Archives/edgar/data/763901/000119312521156311/d128626dex101.htm)
10.24
[Form of Director Compensation Letter,Election Form and Restricted Stock Unit AwardAgreement for Betty DeVita and](http://www.sec.gov/Archives/edgar/data/763901/000119312521240290/d164129dex101.htm)
[JosR.Rodriguez,effectiveJune25,2021(incorporatedbyreferencetoExhibit10.1ofPopular,Inc.sQuarterly](http://www.sec.gov/Archives/edgar/data/763901/000119312521240290/d164129dex101.htm)
[Report on Form 10-Q for the quarter endedJune 30, 2021). *](http://www.sec.gov/Archives/edgar/data/763901/000119312521240290/d164129dex101.htm)
10.25
[FormofPopular,Inc.2022Long-TermEquity IncentiveAwardandAgreement(incorporated byreference toExhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312522146240/d314097dex101.htm)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2022). *](http://www.sec.gov/Archives/edgar/data/763901/000119312522146240/d314097dex101.htm)
50
10.26
[Asset Purchase Agreement, dated as of February 24, 2022,among Evertec, Inc. and Evertec Group, LLC, Popular,](http://www.sec.gov/Archives/edgar/data/763901/000119312522052060/d322924dex21.htm)
[Inc. and Banco Popular de Puerto Rico (incorporatedby reference to Exhibit 2.1 of Popular, Inc.s Current Report on](http://www.sec.gov/Archives/edgar/data/763901/000119312522052060/d322924dex21.htm)
[Form 8-K dated and filed on February 24,2022).](http://www.sec.gov/Archives/edgar/data/763901/000119312522052060/d322924dex21.htm)
10.27
[Second Amended andRestated Master Service Agreement,dated as ofJuly 1,2022, among Popular,Inc., Banco](http://www.sec.gov/Archives/edgar/data/763901/000119312522186782/d335340dex991.htm)
[Popular de Puerto Rico, andEvertec Group, LLC and its Subsidiaries(Incorporated by reference to Exhibit 99.1on](http://www.sec.gov/Archives/edgar/data/763901/000119312522186782/d335340dex991.htm)
[Form 8-K filed on July 1, 2022.)](http://www.sec.gov/Archives/edgar/data/763901/000119312522186782/d335340dex991.htm)
10.28
[Form of Popular, Inc.2023 Long-Term EquityIncentive Award and Agreement (incorporated by reference to Exhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312523140853/d485048dex101.htm)
[10.1 of Popular, Incs Quarterly Report on Form 10-Q for the quarterended March 31, 2023). *](http://www.sec.gov/Archives/edgar/data/763901/000119312523140853/d485048dex101.htm)
10.29
[AwardAgreement,datedasofDecember7,2023,byandbetweenCarlosJ.VzquezandPopular,Inc.](http://www.sec.gov/Archives/edgar/data/763901/000119312524053017/d52551dex1028.htm)
[(incorporatedbyreferencetoExhibit10.28ofPopular,Inc.sAnnualReportonForm10-Kfortheyearended](http://www.sec.gov/Archives/edgar/data/763901/000119312524053017/d52551dex1028.htm)
[December 31, 2023). *](http://www.sec.gov/Archives/edgar/data/763901/000119312524053017/d52551dex1028.htm)
10.30
[ServicesAgreement,datedasofDecember7,2023,byandbetweenCarlosJ.VzquezandPopular,Inc.](http://www.sec.gov/Archives/edgar/data/763901/000119312524053017/d52551dex1029.htm)
[(incorporatedbyreferencetoExhibit10.29ofPopular,Inc.sAnnualReportonForm10-Kfortheyearended](http://www.sec.gov/Archives/edgar/data/763901/000119312524053017/d52551dex1029.htm)
[December 31, 2023). *](http://www.sec.gov/Archives/edgar/data/763901/000119312524053017/d52551dex1029.htm)
10.31
[Form of Popular, Inc.2024 Long-Term EquityIncentive Award and Agreement (incorporated by reference to Exhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312525043848/d924089dex101.htm)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2024). *](http://www.sec.gov/Archives/edgar/data/763901/000119312525043848/d924089dex101.htm)
10.32
[Form of Popular, Inc.2025 Long-Term EquityIncentive Award and Agreement (incorporated by reference to Exhibit](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex101.htm)
[10.1 of Popular, Inc.s Quarterly Report on Form 10-Q for the quarterended March 31, 2025).*](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex101.htm)
10.33
[EquityAwardAgreement,datedasofFebruary25,2025,byandbetweenIgnacioAlvarezandPopular,Inc.](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex102.htm)
[(incorporated byreference toExhibit 10.2of Popular,Inc.s QuarterlyReport onForm 10-Qfor thequarter ended](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex102.htm)
[March 31, 2025).*](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex102.htm)
10.34
[ServicesAgreement,datedasofFebruary25,2025,byandbetweenIgnacioAlvarezandPopular,Inc.](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex103.htm)
[(incorporated byreference toExhibit 10.3of Popular,Inc.s QuarterlyReport onForm 10-Qfor thequarter ended](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex103.htm)
[March 31, 2025).*](http://www.sec.gov/Archives/edgar/data/763901/000119312525117624/d936763dex103.htm)
10.35
[Form of Director Compensation Letter, Election Form, Restricted Stock Award Agreement and Restricted Stock Unit](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex101.htm)
[AwardAgreement,effectiveMay8,2025(incorporatedbyreferencetoExhibit10.1ofPopular,Inc.sQuarterly](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex101.htm)
[Report on Form 10-Q for the quarter endedJune 30, 2025).*](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex101.htm)
10.36
[EquityAwardAgreement,datedasofJune26,2025,byandbetweenIgnacioAlvarezandPopular,Inc.](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex102.htm)
[(incorporated byreference toExhibit 10.2of Popular,Inc.s QuarterlyReport onForm 10-Qfor thequarter ended](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex102.htm)
[June 30, 2025).*](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex102.htm)
10.37
[2025 Long-TermEquity IncentiveAward Agreement,dated asof June26, 2025,by andbetween Javier D.Ferrer](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex103.htm)
[and Popular, Inc. (incorporated by reference to Exhibit 10.3 of Popular, Inc.s Quarterly Report on Form 10-Q for the](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex103.htm)
[quarter ended June 30, 2025).*](http://www.sec.gov/Archives/edgar/data/763901/000119312525177928/d82325dex103.htm)
19.1
[Insider Trading Policy and Procedures (1).](d17859dex191.htm)
21.1
[Schedule of Subsidiaries of Popular, Inc. (1)](d17859dex211.htm)
22.1
[Issuers of Guaranteed Securities (1)](d17859dex221.htm)
23.1
[Consent of Independent Registered Public AccountingFirm. (1)](d17859dex231.htm)
31.1
[Certification of Principal Executive Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002. (1)](d17859dex311.htm)
31.2
[Certification of Principal Financial Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002. (1)](d17859dex312.htm)
32.1
[Certification of Principal Executive Officerpursuant to 18 U.S.C. Section1350, as adopted pursuant toSection 906](d17859dex321.htm)
[of the Sarbanes-Oxley Act of 2002. (1)(2)](d17859dex321.htm)
32.2
[Certification of PrincipalFinancial Officer pursuantto 18 U.S.C.Section 1350, asadopted pursuant toSection 906](d17859dex322.htm)
[of the Sarbanes-Oxley Act of 2002. (1)(2)](d17859dex322.htm)
97.1
[Compensation Recoupment Policy of Popular, Inc. (1)](d17859dex971.htm)
101.INS
XBRL Instance
Document -
the instance
document does not
appear in the
Interactive Data File
because its XBRL
tags are embedded within the Inline Document. (1)
101.SCH
Inline XBRL Taxonomy Extension Schema Document (1)
51
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document (1)
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)
104
The cover page of Popular, Inc. Annual Report on Form 10-K for the
year ended December 31, 2025, formatted in
Inline XBRL (included within the Exhibit 101 attachments)
(1)
(1)
Included herewith
(2)
Furnished herewith. This
exhibit shall not
be deemed filed
for purposes of
Section 18 of
the Securities Exchange
Act of 1934, or otherwise subject
to the liability of that Section,
and shall not be deemed incorporated into
any filing
under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
*
This exhibit is a management contract or compensatory
plan or arrangement.
Popular,
Inc. has
not filed
as exhibits
certain instruments
defining the rights
of holders
of debt
of Popular,
Inc. not
exceeding 10% of the
total assets of Popular,
Inc. and its consolidated
subsidiaries. Popular, Inc.
hereby agrees to
furnish
upon
request
to
the
Commission
a
copy
of
each
instrument
defining
the
rights
of
holders
of
senior
and
subordinated debt of Popular, Inc., or of any of its consolidated
subsidiaries.
52
Financial Review and
Supplementary Information
Managements Discussion and Analysis of
Financial Condition and Results of Operations
54
Statistical Summaries
104
Report of Management on Internal Control Over Financial
Reporting
107
Report of Independent Registered Public
Accounting Firm
108
Consolidated Statements of Financial Condition as of
December 31, 2025 and 2024
111
Consolidated Statements of Operations for the
years ended December 31, 2025, 2024 and
2023
112
Consolidated Statements of Comprehensive
Income for the years ended December 31, 2025,
2024 and
2023
113
Consolidated Statements of Changes in Stockholders
Equity for the years ended December 31, 2025,
2024 and
2023
114
Consolidated Statements of Cash Flows for the
years ended December 31, 2025, 2024 and
2023
115
Notes to Consolidated Financial Statements
117
Signatures
261
53
Managements Discussion and
Analysis of Financial Condition
and Results of Operations
Forward-Looking Statements
54
Overview
55
Critical Accounting Policies / Estimates
60
Statement of Operations Analysis
64
Net Interest Income
64
Provision for Credit Losses
67
Non-Interest Income
67
Operating Expenses
68
Income Taxes
69
Fourth Quarter Operational Results
70
Reportable Segment Results
70
Statement of Financial Condition Analysis
72
Assets
72
Liabilities
73
Stockholders Equity
75
Capital
76
Risk Management
79
Market / Interest Rate Risk
79
Liquidity
82
Enterprise Risk Management
102
Adoption of New Accounting Standards and Issued
but
Not Yet Effective Accounting Standards
103
Statistical Summaries
Statements of Financial Condition
104
Statements of Operations
105
Average Balance Sheet and Summary of Net Interest
Income
106
54
FORWARD-LOOKING STATEMENTS
This
Form
10-K contains
forward-looking statements
within the
meaning
of
the
U.S. Private
Securities Litigation
Reform Act
of
1995,
including,
without
limitation,
statements
about
Popular,
Inc.s
(the
Corporation,
Popular,
we,
us,
our)
business,
financial condition, results
of operations, plans,
objectives and future
performance. These statements
are not
guarantees of future
performance,
are
based
on
managements
current
expectations
and,
by
their
nature,
involve
risks,
uncertainties,
estimates
and
assumptions. Potential
factors, some
of which
are beyond
the Corporations
control, could
cause actual
results to
differ materially
from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect
of competitive and
economic factors, and our
reaction to those factors,
the adequacy of
the allowance for loan
losses, delinquency
trends, market
risk and
the impact
of interest
rate changes
(including on
our cost
of deposits),
capital markets
conditions, capital
adequacy
and
liquidity,
and
the
effect
of
legal
and
regulatory
proceedings
and
new
accounting
standards
on
the
Corporations
financial condition
and results
of operations.
All statements
contained herein
that
are not
clearly
historical in
nature are
forward-
looking, and the words anticipate, believe, continues,
expect, estimate, intend, project and similar expressions
and future
or conditional verbs
such as
will, would, should,
could, might, can,
may or similar
expressions are
generally intended to
identify forward-looking statements.
Various factors, some of which
are beyond Populars control, could cause actual results to differ materially from those expressed in,
or implied by,
such forward-looking statements. Factors that might cause such a
difference include, but are not limited to
the rate of
growth or
decline in the
economy and employment
levels, as well
as general
business and economic
conditions in the
geographic
areas we serve and,
in particular, in
the Commonwealth of Puerto Rico
(the Commonwealth or Puerto Rico), where
a significant
portion of our business is concentrated; adverse economic conditions, including high levels of inflation, that adversely affect housing
prices, the
job market,
consumer confidence
and spending
habits which
may affect
in turn,
among other
things, our
level of
non-
performing assets,
charge-offs
and
provision expense;
changes in
interest
rates
and
market liquidity,
which may
reduce interest
margins,
impact
funding
sources,
reduce
loan
originations,
affect
our
ability
to
originate
and
distribute
financial
products
in
the
primary and secondary markets and impact the value of our investment portfolio and our ability to return capital to our shareholders;
the impact of bank failures or adverse
developments at other banks and related negative media coverage of
the banking industry in
general
on
investor
and
depositor
sentiment
regarding
the
stability
and
liquidity
of
banks;
the
impact
of
the
current
fiscal
and
economic challenges
of Puerto
Rico and
the measures
taken and
to be
taken by
the Puerto
Rico Government and
the Federally-
appointed oversight board on the economy,
our customers and our business; the amount of Puerto
Rico public sector deposits held
at the Corporation, whose future balances are uncertain
and difficult to predict and may
be impacted by factors such as the
amount
of
Federal funds
received by
the P.R.
Government and
the rate
of expenditure
of such
funds, as
well as
the financial
condition,
liquidity
and
cash
management
practices
of
the
Puerto
Rico
Government
and
its
instrumentalities;
unforeseen
or
catastrophic
events, including extreme
weather events such
as hurricanes and
other natural disasters,
man-made disasters, acts
of violence or
war or
pandemics, epidemics
and other
health-related crises,
or the
fear of
any such
event occurring,
any of
which could
cause
adverse
consequences
for
our
business,
including,
but
not
limited
to,
disruptions
in
our
operations;
our
ability
to
achieve
the
expected benefits
from our
transformation initiatives,
including our
ability to
achieve projected
earnings, efficiencies
and return
on
tangible common
equity and
accurately anticipate
costs and
expenses associated therewith;
our ability
to execute
capital actions,
including
with
respect
to
share
repurchases
and
dividends;
the
fiscal
and
monetary
policies
of
the
federal
government
and
its
agencies;
changes
in
federal
bank
regulatory
and
supervisory
policies,
including
required
levels
of
capital,
liquidity,
resolution-
related requirements and the impact of other proposed capital
standards on our capital ratios; changes in and
uncertainty regarding
federal funding, tax and
trade policies, and federal
rulemaking, supervision, examination and enforcement priorities;
adjustments to
or
additional
Federal
Deposit
Insurance
Corporation
(FDIC)
assessments;
regulatory
approvals
that
may
be
necessary
to
undertake
certain
actions
or
consummate
strategic
transactions,
such
as
acquisitions
and
dispositions;
the
relative
strength
or
weakness of
the consumer
and commercial
credit sectors
and of
the real
estate markets
in Puerto
Rico and
the other
markets in
which our borrowers are located; a deterioration in the credit
quality of our clients, customers and counterparties; the performance
of
the stock and bond markets; competition in the financial services industry; possible legislative, tax or regulatory changes; a failure in
or breach of our
operational or security systems or
infrastructure or those of Evertec,
Inc., our provider of core
financial transaction
processing and information technology services, or
of third parties providing services to
us, including as a
result of cyberattacks, e-
fraud, denial-of-services and computer intrusion, that might result
in, among other things, loss or breach of customer data, disruption
of services, reputational damage or additional costs to Popular; changes in market rates and prices which may adversely impact the
value of financial assets and liabilities; potential judgments, claims, damages, penalties, fines, enforcement actions and reputational
damage resulting
from
pending or
future litigation
and regulatory
or government
investigations or
actions; changes
in accounting
standards,
rules
and
interpretations;
our
ability
to
grow
our
core
businesses;
decisions
to
downsize,
sell
or
close
branches
or
business units or otherwise change our business
mix; and managements ability to identify and manage
these and other risks.
55
Moreover,
the outcome
of any
legal and
regulatory proceedings, as
discussed in
Part I,
Item 3.
Legal Proceedings,
is inherently
uncertain and depends on judicial interpretations of law and the findings of regulators, judges and/or juries. Investors should refer to
Part I, Item 1A of this Form 10-K for a discussion
of certain risks and uncertainties to which
the Corporation is subject.
All forward-looking
statements included
in this
Form 10-K
are based
upon information
available to
Popular as
of the
date of
this
Form 10- K, and other than as required by law,
including the requirements of applicable securities laws, we assume no obligation to
update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date
of such statements.
OVERVIEW
The Corporation is a
diversified, publicly owned financial holding company subject
to the supervision and regulation
of the Board of
Governors of the Federal Reserve System. The Corporation has operations in Puerto Rico, the United States (U.S.) mainland, and
the
U.S.
and
British
Virgin
Islands.
In
Puerto
Rico,
the
Corporation
provides
retail,
mortgage,
as
well
as
commercial
banking
services as
well as
auto and
equipment leasing
and financing,
through its
principal banking
subsidiary,
Banco Popular
de Puerto
Rico (BPPR),
and broker-dealer
and insurance
services through
specialized subsidiaries.
In the
U.S. mainland,
the Corporation
provides
retail
and
commercial
banking
services,
as
well
as
equipment
leasing
and
financing,
through
its
New
York-chartered
banking subsidiary, Popular Bank
(PB or Popular U.S.), which has
branches located in New York,
New Jersey and Florida. Note
36 to the Consolidated Financial Statements presents
information about the Corporations business segments.
The shares of the Corporations common stock are traded
on the Nasdaq Global Select Market under the
symbol BPOP.
RESULTS OF OPERATIONS
YEAR 2025 SIGNIFICANT EVENTS
Capital Actions
During the year
ended December 31,
2025, the Corporation
repurchased 4,660,124 shares
of common stock
for $501.5 million,
at
an average price of $107.61 per common share.
At December 31, 2025, $281.2 million remained
on our common stock repurchase
authorization. The
Corporations common
stock
repurchases may
be
executed
in
open
market
transactions,
privately negotiated
transactions, block trades
or any other
manner determined by
the Corporation. The
timing, quantity and
price of such
repurchases
will
be
subject
to
various
factors,
including
market
conditions,
the
Corporations
capital
position
and
financial
performance,
the
capital impact of strategic initiatives and regulatory and tax considerations.
The common stock repurchase program does not require
the Corporation to acquire a specific dollar amount or
number of shares and may be modified, suspended or terminated
at any time
without prior notice.
The
Corporation
increased
its
quarterly
common
stock
dividend
from
$0.70
to
$0.75
per
share,
commencing
with
the
dividend
declared in the
third quarter of
2025. During 2025,
the Corporation declared
dividends of $196.2
million, or $2.90
per share, on
its
common stock.
Transformation Initiatives
The Corporation continues
its broad-based, multi-year,
technological and business
process transformation, which
was launched in
2022. As part of this transformation, we are making
significant investments in technology, talent and new digital and data capabilities
in order to provide our customers with more personalized and accessible services, increase employee performance and satisfaction
with more agile work processes, and generate
sustainable profitable growth and value for our
shareholders.
In
2025, the
Corporation achieved
significant
advancements in
transforming customer
channels and
enhancing the
overall client
experience. The organization
remains committed to
delivering solutions efficiently
and increasing productivity.
During the year,
the
56
Corporation introduced a
commercial cash management
platform and implemented
a new consumer
origination platform in
Puerto
Rico and
the Virgin
Islands. The
lending initiatives
contributed to
an upward
trend in
online originations
in the
latter part
of 2025,
resulting in $36 million in new originations since
the third quarter launch.
During the year the
Corporation also executed a
series of efficiency
initiatives, including exiting our
mortgage business in the
U.S.,
and
optimizing
our
mortgage
servicing
business
in
Puerto
Rico.
We
also
transformed
our
Enterprise
Resource
Planning
(ERP)
solution to a modern cloud platform,
as implemented in January 2026.
The Corporation anticipates that these investments, along with
future initiatives, will deliver an improved digital experience for
clients
and provide enhanced technology and more
efficient processes for employees. The
technology and business transformation efforts
will continue to be a strategic priority
for the Corporation.
Financial highlights for the year ended December 31,
2025
The Corporations
net income
for the
year ended
December 31,
2025
amounted to
$833.2 million,
an increase
of $219.0
million
when compared to a net
income of $614.2 million for
2024. Excluding the partial reversal of
the FDIC Special Assessment reserve,
adjusted net income
for 2025
was $823.5 million,
compared to $646.1
million in
2024, which also
excluded the impact
of an
FDIC
special
assessment expense
and
prior
period
tax
withholdings.
For
more
information on
adjusted
net
income
refer
to
the
Non-
GAAP Financial Measures section below.
Financial highlights for the year ended December 31,
2025 include:
Net interest income amounted
to $2.5 billion, an
increase of $258.9 million
when compared to the
year ended December
31,
2024,
mainly
driven
by
lower cost
of
deposits,
loan
growth,
and
investments
in
U.S.
Treasury
securities
at
higher
yields, partially
offset by
a decrease
in interest
income from
money market
investments.
Net interest
income on
taxable
equivalent
basis
for
the
year
ended
December
31,
2025
was
$2.8
billion,
an
increase
of
$359.9
million.
Net
interest
margin expanded by 25 bps to 3.49%. On a
taxable equivalent basis, net interest margin expanded
by 39 bps to 3.88%.
The provision
for credit
losses amounted
to $260.2
million for
the year
ended December
31, 2025,
an increase
of $3.2
million when
compared to 2024,
driven by
higher reserves for
the CRE
portfolio at PB
and higher
reserves in the
BPPR
commercial portfolio, mainly due to two unrelated NPL inflows and portfolio growth, partially offset by a lower provision for
the consumer portfolios, particularly for credit cards
and auto loans.
Non
-interest
income
amounted
to
$658.0
million,
a
decrease
of
$0.9
million,
when compared
with the
previous year,
mainly due to lower
revenues related to the car
rental business sold in the
fourth quarter of 2024,
partially offset by other
service fees
income from
our fee
generating business such
as debit
and credit
card fees,
investment management fees
and higher non-balance compensation fees from commercial deposits.
Operating expenses amounted to $1.9 billion for 2025, an increase of
$44.6 million when compared to 2024. The increase
was mainly driven
by higher personnel
costs, primarily due
to the profit
sharing expense of
$38.8 million which
is tied to
the
Corporations
financial
performance
and
other
performance-based
incentives,
a
$13.0
million
non-cash
goodwill
impairment
charge
related
to
the
U.S.
based
leasing
subsidiary,
higher
technology
and
software
costs
from
transformation initiatives and higher
credit and debit card
merchant processing fees, partially
offset by lower
reserves for
operational losses, lower costs
associated with compliance activities, and lower
depreciation expense related to the
daily
car rental business sold during the fourth quarter
of 2024.
Income tax expense amounted to $173.6 million for the year ended December 31, 2025, with an effective tax
rate (ETR)
of 17.3%, compared to an income tax expense of $182.4 million for the previous
year, with an ETR of 22.9%.
The income
tax expense in 2024 included the impact of $16.5
million related to intercompany distributions for the
years 2014-2023.
At December 31, 2025, the Corporations total assets were $75.3 billion, compared to $73.0 billion at December 31, 2024.
The increase of
$2.3 billion is
primarily due to
an increase in loans
held-in-portfolio, mainly in the
commercial, mortgage,
and construction portfolios,
and an increase in available-for-sale (AFS) securities, mainly U.S. Treasuries, partially offset
by a decrease in money market investments.
Deposits amounted to $66.2 billion at
December 31, 2025, an increase of
$1.3 billion from December 31, 2024,
driven by
higher savings, NOW and money market deposits,
demand deposits and time deposits,
all primarily at BPPR.
57
Stockholders equity amounted to $6.2 billion at December 31, 2025, compared to $5.6
billion at December 31, 2024. The
Corporation
and
its
banking
subsidiaries
continue
to
be
well
capitalized. As
of
December
31,
2025,
the
Corporations
tangible book value per common share was $82.65, an increase of $14.49 from December 31, 2024. The Common Equity
Tier 1 Capital ratio at December 31, 2025 was 15.72%, compared
to 16.03% at December 31, 2024.
For a
discussion of
our 2024
results of
operations compared with
2023, see
Managements Discussion and
Analysis of
Financial
Condition and Results of Operations in our Form
10-K for the year ended December 31, 2024.
Refer to Table 1 for selected financial data for the past three years.
58
Table 1 - Selected Financial Data
Years ended December
31,
(Dollars in thousands, except per common share data)
2025
2024
2023
CONDENSED STATEMENTS
OF OPERATIONS
Interest income
$
3,783,009
$
3,673,263
$
3,245,307
Interest expense
1,241,806
1,390,975
1,113,783
Net interest income
2,541,203
2,282,288
2,131,524
Provision for credit losses
260,163
256,942
208,609
Non-interest income
658,019
658,909
650,724
Operating expenses
1,932,266
1,887,637
1,898,100
Income tax expense
173,634
182,406
134,197
Net income
$
833,159
$
614,212
$
541,342
Net income applicable to common stock
$
831,747
$
612,800
$
539,930
PER COMMON SHARE DATA
Net income per common share - basic
$
12.31
$
8.56
$
7.53
Net income per common share - diluted
12.30
8.56
7.52
Dividends declared
2.90
2.56
2.27
Common equity per share
94.75
79.71
71.03
Market value per common share
124.52
94.06
82.07
Outstanding shares:
Average - basic
67,586,130
71,590,757
71,710,265
Average - assuming dilution
67,612,847
71,623,702
71,791,692
End of period
65,719,385
70,141,291
72,153,621
AVERAGE BALANCES
Net loans
[1]
$
37,982,637
$
35,701,240
$
33,164,960
Earning assets
72,636,005
70,327,465
68,175,022
Total assets
75,740,647
73,400,279
71,234,236
Deposits
66,402,180
64,444,283
62,546,480
Borrowings
1,156,769
1,022,063
1,227,094
Total stockholders'
equity
7,207,682
7,053,193
6,600,603
PERIOD END BALANCE
Net loans
[1]
$
39,337,516
$
37,113,075
$
35,069,272
Allowance for credit losses - loans portfolio
808,056
746,024
729,341
Earning assets
72,132,940
69,739,000
67,216,816
Total assets
75,348,267
73,045,383
70,758,155
Deposits
66,190,093
64,884,345
63,618,243
Borrowings
1,448,578
1,176,126
1,078,332
Total stockholders'
equity
6,249,079
5,613,066
5,146,953
SELECTED RATIOS
Net interest margin (non-taxable equivalent basis)
3.49
%
3.24
%
3.13
%
Net interest margin (taxable equivalent basis) -Non-GAAP
3.88
3.49
3.31
Return on assets
1.10
0.84
0.76
Return on average common equity
11.58
8.72
8.21
Tangible common
book value per common share (non-GAAP)
[2]
82.65
68.16
59.74
Return on average tangible common equity
[2]
13.04
9.85
9.40
Tier I capital
15.77
16.08
16.36
Total capital
17.50
17.83
18.13
[1]
Includes loans held-for-sale.
[2]
Refer to Table 11
for reconciliation to GAAP financial measures.
Table 2 presents
a three-year summary of the components of net income
as a percentage of average total assets.
59
Table 2 - Components of Net
Income as a Percentage of Average Total
Assets
2025
2024
2023
Net interest income
3.36
%
3.11
%
2.99
%
Provision for credit losses
(0.34)
(0.35)
(0.29)
Service charges on deposit accounts
0.21
0.21
0.21
Other service fees
0.53
0.53
0.53
Other non-interest income
0.12
0.16
0.17
Total net interest
income and non-interest income, net of provision
for credit losses
3.88
3.66
3.61
Operating expenses
(2.55)
(2.57)
(2.66)
Income before income tax
1.33
1.09
0.95
Income tax expense
(0.23)
(0.25)
(0.19)
Net income
1.10
%
0.84
%
0.76
%
Non-GAAP Financial Measures
This Form
10-K contains financial
information prepared under
accounting principles generally
accepted in the
United States (U.S.
GAAP)
and
non-GAAP
financial
measures.
Management
uses
non-GAAP
financial
measures
when
it
is
determined
that
these
measures provide
meaningful information
about the
underlying performance
of the
Corporations 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
Corporations
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
Corporations
ongoing
operations.
The
adjusted
net
income
is
a
non-GAAP
financial
measure.
The following tables present adjusted net income
for the years ended December 31, 2025 and
2024.
Table 3 - Adjusted Net Income
for the Year Ended December 31,
2025 (Non-GAAP)
(In thousands)
Income before
income tax
Income tax
expense
(benefit)
Net Income
U.S. GAAP Net income
$1,006,793
$173,634
$833,159
Non-GAAP Adjustments:
FDIC Special Assessment [1]
(15,323)
5,622
(9,701)
Adjusted net income (Non-GAAP)
$991,470
$168,012
$823,458
[1] Partial reversal of the FDIC special assessment reserve
imposed in connection with the receivership of several
failed banks. Refer to the Operating
Expenses section in the Managements Discussion
and Analysis of Financial Condition and Results of Operations
section (MD&A) included in this
Form 10-K for additional information.
60
Table 4 - Adjusted Net Income
for the Year Ended December 31,
2024 (Non-GAAP)
(In thousands)
Income before
income tax
Income tax
expense
(benefit)
Net Income
U.S. GAAP Net income
$796,618
$182,406
$614,212
Non-GAAP Adjustments:
FDIC Special Assessment [1]
14,287
(5,234)
9,053
Adjustments related to intercompany distributions [2]
6,400
16,483
22,883
Adjusted net income (Non-GAAP)
$817,305
$171,157
$646,148
[1] Expense recorded in the first quarter of 2024 related to
the special assessment imposed by the FDIC to
recover the losses in connection with the
receivership of several failed banks.
[2] Expense recorded in the first quarter of 2024 related to
tax withholdings on prior period distributions from U.S.
subsidiaries.
Net interest income on a taxable equivalent basis
Net
interest
income,
on
a
taxable
equivalent
basis,
is
presented
with
its
different
components
in
Table
5
for
the
year
ended
December 31,
2025
as compared
with
the same
period in
2024, segregated
by
major categories
of
interest
earning assets
and
interest-bearing liabilities.
The
main
sources
of
tax-exempt
interest
income
are
certain
loans
and
investments
in
obligations
of
the
U.S.
Government,
its
agencies and sponsored entities, and
certain obligations of the
Commonwealth of Puerto Rico and
its agencies and assets
held by
the Corporations
international banking
entities. On
table 5,
the interest
income has
been converted
to a
taxable equivalent
basis,
using the
applicable statutory income
tax rates
for each
period net
of interest
expense that the
Puerto Rico
tax law
requires to
be
disallowed, based
on an
equal proportion
of tax-exempt
assets to
total assets,
and by
an allocation
of general
and administrative
expenses attributable to exempt income, reducing the benefit of
the tax-exempt income. The effective yield, on a
taxable equivalent
basis, will
vary depending on
the level
of these
expenses that are
attributable to
the available exempt
income. Under Puerto
Rico
tax
law,
the
exempt
interest
can
be
deducted
up
to
the
amount
of
taxable
income.
Management believes
that
this
presentation
provides meaningful information since it facilitates the comparison
of revenues arising from taxable and exempt
sources.
Tangible Common Equity and Tangible Assets
Tangible
common equity,
tangible common equity ratio, tangible
assets and tangible book value
per common share are
non-GAAP
financial measures.
Tangible
common equity
ratio and
tangible book
value per
common share
should be
used in
conjunction with
more
traditional
bank
capital
ratios
commonly
used
by
banks
and
analysts
to
compare
the
capital
adequacy
of
banking
organizations
with
significant
amounts
of
goodwill
or
other
intangible
assets,
typically
stemming
from
the
use
of
the
purchase
accounting method for
mergers and acquisitions.
Tangible
common equity,
tangible assets
and other related
measures should not
be
used
in
isolation
or
as
a substitute
for
stockholders' equity,
total
assets
or
any
other
measure calculated
in
accordance
with
GAAP.
Moreover,
the manner
in which
the
Corporation calculates
its
tangible common
equity,
tangible assets
and
other
related
measures may differ from that of other companies
reporting measures with similar names.
Table
12 provides
a reconciliation of
total stockholders equity
to tangible common
equity and total
assets to tangible
assets as
of
December 31, 2025, and December 31, 2024.
CRITICAL ACCOUNTING POLICIES / ESTIMATES
The accounting
and reporting
policies followed
by the
Corporation and
its subsidiaries
conform U.S.
GAAP and
general practices
within the financial services
industry. The
Corporations significant accounting policies, including
those related to critical
accounting
estimates, are
described in
detail in
Note 2
to the
Consolidated Financial
Statements and
should be
read in
conjunction with
this
section.
61
Critical accounting
policies that
require management
to make
estimates and
assumptions may
involve significant
judgment about
the effect
of matters
that are
inherently uncertain
and that
involve a
high degree
of subjectivity.
These estimates
are made
under
facts and
circumstances at
a point
in time
and changes
in those
facts and
circumstances could
produce actual
results that
differ
from
those
estimates.
The
following
MD&A
section
is
a
summary
of
what
management
considers
the
Corporations
critical
accounting estimates.
Fair Value Measurement of Financial Instruments
The Corporation
currently measures
at fair
value on
a recurring
basis its
trading debt
securities, debt
securities available-for-sale,
certain equity securities, derivatives and
mortgage servicing rights. Occasionally,
the Corporation is required to
record other assets
at fair
value on
a nonrecurring
basis, such
as loans
held-for-sale, loans
held-in-portfolio that
are collateral
dependent and
certain
other assets. These nonrecurring fair value
adjustments typically result from the application of lower of
cost or fair value accounting
or write-downs of individual assets.
The
Corporation categorizes
its
assets and
liabilities measured
at fair
value under
the three-level
hierarchy.
The level
within the
hierarchy is based on whether the inputs to
the valuation methodology used for fair value measurement
are observable.
Management assesses the fair value of its
portfolio of investment securities at least on
a quarterly basis. Securities are classified in
the
fair
value
hierarchy
according
to
product
type,
characteristics
and
market
liquidity.
At
the
end
of
each
period,
management
assesses
the
valuation
hierarchy
for
each
asset
or
liability
measured.
The
fair
value
measurement
analysis
performed
by
the
Corporation includes
validation
procedures and
review
of
market
changes,
pricing methodology,
assumption
and
level
hierarchy
changes, and evaluation of distressed transactions.
Most of the values for trading debt securities and debt securities available-for-sale are obtained from third-party pricing services and
are validated with alternate pricing sources when available.
Securities not priced by a secondary pricing source
are documented and
validated internally according to their significance to the Corporations financial statements. Management has established materiality
thresholds
according
to
the
investment
class
to
monitor
and
investigate
material
deviations
in
prices
obtained
from
the
primary
pricing
service
provider
and
the
secondary
pricing
source
used
as
support
for
the
valuation
results.
During
the
year
ended
December 31, 2025, the Corporation
did not adjust any prices
obtained from pricing service providers or
broker dealers. During the
year
ended December
31,
2025, none
of
the
Corporations
debt securities
were subject
to
pricing discontinuance
by the
pricing
service providers. The pricing methodology and approach of our primary pricing service providers is concluded to be consistent with
the fair value measurement guidance
Broker quotes reflect
market illiquidity as
they are exit
prices. As of
December 31, 2025,
$8 million in
financial assets were
valued
using broker
quotes: $1 million
in Level 3
assets (mainly tax-exempt
GNMA mortgage-backed securities)
and $7 million
in Level
2
assets. Level 3 asset values were based on an
internal matrix using local broker quotes from
limited trading activity.
Refer to
Note 27
to the
Consolidated Financial Statements for
a description of
the Corporations
valuation methodologies used
for
the assets and liabilities measured at fair value.
Loans and Allowance for Credit Losses
One of
the most
critical and
complex accounting
estimates is
associated with
the determination
of the
allowance for
credit losses
(ACL). The Corporation establishes an ACL for its loan portfolio based on its estimate of expected credit losses over the remaining
contractual term
of the
loans, adjusted
for expected
prepayments, in
accordance with
Accounting Standards
Codification (ASC)
Topic
326.
An
ACL
is
recognized
for
all
loans
including
originated
and
purchased
loans,
since
inception,
with
a
corresponding
charge to the provision for credit losses, except for purchased
credit deteriorated (PCD) loans. Upon the acquisition of a PCD
loan,
the Corporation recognizes the estimate of the expected credit losses over the remaining contractual term of each individual loan as
an ACL with a corresponding addition to the loan purchase price.
The Corporation follows a methodology to establish
the ACL which
includes a
reasonable and supportable
forecast period
for estimating credit
losses, considering
quantitative and
qualitative factors
as well
as the
economic outlook. As
part of
this methodology,
management evaluates various
macroeconomic scenarios provided
by third parties. At December 31, 2025, management
applied probability weights to the outcome of
the selected scenarios.
62
The
Corporation
has
designated
as
collateral
dependent
loans
secured
by
collateral
when
foreclosure
is
probable
or
when
foreclosure is
not probable but
the practical expedient
is used.
The practical expedient
is used
when repayment is
expected to
be
provided
substantially
by
the
sale
or
operation
of
the
collateral
and
the
borrower is
experiencing financial
difficulty.
The
ACL
of
collateral dependent loans
is measured based
on the fair
value of the
collateral less costs
to sell. The
fair value of
the collateral is
based on appraisals, which may be adjusted due to their
age, and the type, location, and condition of the
property or area or general
market conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date.
In
addition,
refer
to
the
Credit
Risk
section
of
this
MD&A
and
to
Note
2
to
the
Consolidated
Financial
Statements
for
detailed
information on
the
Corporations collateral
value estimation
for other
real
estate. In
addition, refer
to
Note
8 to
the Consolidated
Financial Statements for additional information on
the allowance for credit losses.
Income Taxes
Income taxes are
accounted for using the
asset and liability method,
recognizing deferred tax assets and
liabilities based on future
tax consequences of temporary differences between financial statement carrying amounts
and their respective tax basis. These are
measured using
enacted tax
rates expected
to apply
when the
temporary differences
are recovered
or paid,
with changes
in tax
rates recognized in earnings when enacted.
Calculating periodic income taxes involves complexity and requires estimates
and judgments. The Corporation has two accruals
for
income taxes: (i)
the net estimated
amount currently due
or receivable, including any
reserve for potential
examination issues, and
(ii)
a
deferred
income
tax
reflecting the
estimated
impact
of
temporary differences
between
asset and
liability
recognition under
GAAP and the tax
code. Differences in actual
future tax consequences could affect
the Corporations financial position or
results of
operations.
Management evaluates
the realization
of the
deferred tax
asset by
its three
major components:
U.S. mainland
operations, Puerto
Rico banking operations
and Holding Company.
This evaluation requires judgment
related to the
Corporations estimation of future
taxable income
over the
term the
deferred tax
assets will
expire. For
the evaluation
of the
realization of
the deferred
tax asset
by
taxing jurisdiction, refer to Note 34 to the Consolidated
Financial Statements.
Under the Puerto Rico Internal Revenue Code, the
Corporation and its subsidiaries are treated as separate taxable
entities and are
not entitled to file
consolidated tax returns. The Code
provides a dividends-received deduction of 100%
on dividends received from
controlled domestic subsidiaries subject to taxation in
Puerto Rico
Changes in
the Corporations
estimates can occur
due to changes
in tax
rates, new business
strategies, newly
enacted guidance,
and resolution of issues with taxing authorities regarding previously taken tax
positions. In estimating taxes, management evaluates
the merits and risks of
appropriate tax treatment, considering statutory,
judicial and regulatory guidance. Such changes could affect
the
amount
of
accrued
taxes.
The
Corporation
has
made
tax
payments
in
accordance
with
estimated
tax
payments
rules.
Any
remaining payment will not have any significant impact
on liquidity and capital resources.
Refer to Note 34 to the
Consolidated Financial Statements for additional information on the Corporations unrecognized tax benefits
and their possible effect on its effective tax rate.
Goodwill and Other Intangible Assets
The
Corporations
goodwill
and
other
identifiable
intangible
assets
having
an
indefinite
useful
life
are
tested
for
impairment.
Intangibles with indefinite lives are evaluated for impairment at least annually or on a more frequent basis if events or circumstances
indicate impairment could have taken place. Such events could include, among others, a significant adverse change in the business
climate, an
adverse action
by a
regulator,
an unanticipated
change in
the competitive
environment and
a decision
to change
the
operations or
dispose of
a reporting
unit. Other
identifiable intangible
assets with
a finite
useful life
are evaluated
periodically for
impairment when events or changes in circumstances
indicate that the carrying amount may not be
recoverable.
Goodwill impairment is recognized when the carrying amount of any
of the reporting units exceeds its fair value up
to the amount of
the goodwill. The Corporation estimates the fair value of each reporting unit generally using a combination of methods which include
market price multiples
of comparable companies
and transactions, as
well as discounted
cash flow analyses.
Subsequent reversal
of goodwill impairment losses is not permitted under
applicable accounting standards.
63
For a
detailed description
of the
annual goodwill
impairment evaluations
performed by
the Corporation
during the
third and
fourth
quarter of 2025, refer to Note 14 to the Consolidated
Financial Statements.
Pension and Postretirement Benefit Obligations
The Corporation provides pension and
restoration benefit plans for certain employees
of various subsidiaries. The Corporation also
provides certain
health care
benefits for
retired employees of
BPPR. The
non-contributory defined pension
and benefit
restoration
plans (the Pension Plans) are frozen with regards
to all future benefit accruals.
The estimated
benefit costs
and obligations
of the
Pension Plans and
Postretirement Health
Care Benefit Plan
(OPEB Plan) are
impacted by
the use
of subjective
assumptions, which can
materially affect
recorded amounts, including
expected returns on
plan
assets,
discount
rates,
termination
rates,
retirement
rates
and
health
care
trend
rates.
The
Corporation
uses
an
independent
actuarial firm for assistance in the determination of
the Pension Plans and OPEB Plan costs and obligations.
The Corporation periodically reviews its assumption for the long-term expected return on Pension Plans
assets. The Pension Plans
assets
fair
value
at
December
31,
2025
was
$625.8
million.
The
expected
return
on
plan
assets
is
determined
by
considering
various factors,
including a
total funds
return estimate
based on
a weighted-average
of estimated
returns for
each asset
class in
each plan.
Asset class returns are estimated using current and projected economic and
market factors such as real rates of
return,
inflation, credit spreads, equity risk premiums and
excess return expectations.
Net Periodic Benefit Cost
(pension expense) for the Pension Plans
amounted to $11.2
million in 2025. The
total pension expense
included
a
benefit
of
$32.3
million
for
the
expected
return
on
assets.
Management
believes
that
the
fair
value
estimates
of
the
Pension Plans assets are reasonable given the valuation methodologies used to measure the investments at fair value as described
in
Note
27
to
the
Consolidated Financial
Statements. Also,
the
compositions
of
the
plan assets
are primarily
in
equity
and
debt
securities, which have readily determinable quoted
market prices.
Detailed
information
on
the
Plans
and
related
valuation
assumptions
are
included
in
Note
29
to
the
Consolidated
Financial
Statements.
As part of the review,
the Corporations independent consulting actuaries performed an analysis of expected
returns based on each
plans expected asset
allocation for the year
2026 using the
Willis Towers
Watson US Expected
Return Estimator.
This analysis is
reviewed by the Corporation
and used as a
tool to develop expected
rates of return, together
with other data. This
forecast reflects
the actuarial firms view of
expected long-term rates of return for each significant asset
class or economic indicator as of January
1,
2026;
for
example, 8.7%
for
large
cap
stocks,
9.0% for
small cap
stocks,
8.9% for
international stocks,
6.4% for
long
corporate
bonds
and
5.8%
for
long
Treasury
bonds.
A
range
of
expected
investment
returns
is
developed,
and
this
range
relies
both
on
forecasts and on broad-market historical benchmarks
for expected returns, correlations, and volatilities
for each asset class.
As a consequence of
recent reviews, the Corporation selected its
expected return on plan
assets for the year
2026 to be 5.6% and
6.7% for
the Pension
Plans. Expected
rates of
return for
the Pension
Plans of
5.6% and
6.7% had
been used
for 2025
and 5.6%
and 6.6% had been used for 2024. The expected
return can be materially impacted by a
change in the plans asset allocation.
Pension expense is sensitive
to changes in the
expected return on assets.
For example, decreasing the expected
rate of return for
2026 from
5.6% to
5.35% would
increase the
projected 2026
pension expense
for the
Banco Popular
de Puerto
Rico Retirement
Plan, the Corporations largest plan, by approximately
$1.4
million.
The Corporation had recorded a pension balance sheet asset of $38.2 million and a pension balance sheet liability of $4.7 million
at
December 31, 2025.
The Corporation uses
the spot rate
yield curve from
the Willis Towers
Watson RATE:
Link (10/90) Model
to discount the
expected
projected
cash
flows
of
the
plans.
The
equivalent
single
weighted
average
discount
rate
ranged
from
5.25%
to
5.29%
for
the
Pension Plans and 5.44% for the OPEB Plan to determine
the benefit obligations at December 31, 2025.
A 50
basis point
decrease to
each of
the rates
in the
December 31,
2025 Willis
Towers
Watson RATE:
Link (10/90)
Model would
increase the
projected 2026
expense for
the Banco
Popular de
Puerto Rico
Retirement Plan
by approximately
$1.8
million. The
change would not affect the minimum required contribution
to the Pension Plans.
The OPEB Plan was unfunded (no assets were held by the plan) at December 31, 2025. The Corporation had recorded a liability for
the underfunded postretirement benefit obligation of
$104.0 million at December 31, 2025.
64
STATEMENT
OF OPERATIONS ANALYSIS
Net Interest Income
Net interest income is the interest earned from loans, debt securities and money market investments, including loan fees, minus
the
interest cost of deposits and borrowed money.
Various risk factors
affect net interest income including the economic
environment in
which we operate, market related events, the mix and size of the earning assets and related funding, changes in volumes, re-pricing
characteristics, loan fees
collected, delay
charges and
interest collected on
nonaccrual loans, as
well as
strategic decisions made
by the Corporations management.
The average key index rates for the years 2025
and 2024 were as follows:
2025
2024
Prime rate
7.37%
8.31%
SOFR
4.24
5.15
Fed funds rate.
4.20
5.12
3-month Treasury Bill.
4.15
5.09
10-year Treasury
4.29
4.20
FNMA 30-year.
5.47
5.58
Net interest
income (NII) for
the year
ended December 31,
2025 was
$2.5 billion,
or $258.9
million higher than
2024. NII
growth
was driven by
lower interest expense on
deposits by $158.2 million
primarily due to
lower P.R.
public deposits cost,
higher income
from loans by $137.1
million primarily due to
loan growth mainly attributed to
the commercial, construction loans in
both banks and
mortgage loans
in BPPR
and higher
income resulting
from higher
yields of
U.S. Treasuries
by $83.4
million also
supported to
NII
expansion. This
increase in
NII was
partially
offset
by
lower
income from
money market
investments by
$97.4 million
driven
by
short-term market rates
declines by the
Federal Open Market
Committee coupled with
lower average balances
due to loan
growth
and investments in U.S.
Treasuries. Net interest margin
(NIM) of 3.49% in
2025 increased 25 basis points, compared
to 3.24% in
2024, driven by lower deposit costs, higher yielding
U.S. treasuries and loan growth.
Total
deposit costs of 1.77%
decreased 30 basis points
when compared to 2024. Excluding
P.R.
public deposits, average deposits
increased by $903.0 million and total deposit
costs decreased seven basis points to 1.16% year-over-year.
Net Interest Income on a taxable equivalent basis (FTE) for the year ended December 31, 2025 was $2.8 billion, compared
to $2.5
billion for the same period in 2024,
an increase of $359.9 million. NIM on a
taxable equivalent (NIM FT) basis in 2025 was
3.88%
or 39 basis points higher than the 3.49%
reported in 2024. NIM FTE expansion during 2025 is
primarily due to higher re-investment
in U.S. treasuries
which are tax
exempt in Puerto
Rico and exempt
interest income on
certain loan portfolios.
The main factors
for
the increase in net interest income FTE were:
Higher income
from
investment securities
by
$147.1 million
driven by
the
re-investment of
maturities of
U.S. Treasury
securities at higher yields by 50 basis points
Higher
interest
income
from
loans
by
$160.9
million,
due
to
growth,
most
notably
in
commercial,
construction
and
mortgage portfolios, which include income of certain
loans in Banco Popular de Puerto Rico (BPPR)
that are tax-exempt,
partially offset in part by the re-pricing of adjustable-rate
loans;
Lower
interest
expense
by
$158.2
million
or
30
basis
points,
mainly
due
to
a
decrease
in
market-linked
P.R.
public
deposits cost
by
88
basis points
and
Popular Bank
(PB) savings
online
deposits by
76
basis points,
driven by
lower
short-term market rates;
Partially offset by:
65
Lower income
from money
markets by
$97.4 million
driven by
lower yield
by 95
basis points
due to
short-term market
rates decline
and lower
average balances
due to
the use
of funds
to support
loan growth
and U.S.
Treasury
securities
purchases, as mentioned above.
Table
5 presents
the
different
components
of
the
Corporations
net
interest
income,
on
a
taxable
equivalent
basis,
for
the
year
ended December 31,
2025, as compared
with the same
period in 2024,
segregated by major
categories of interest
earning assets
and interest-bearing liabilities.
66
Table 5 Analysis of Levels & Yields
on a Taxable Equivalent Basis
from Continuing Operations (Non-GAAP)
Period ended December 31, 2025
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2025
2024
Variance
2025
2024
Variance
2025
2024
Variance
Rate
Volume
(In millions)
(In thousands)
$
5,853
$
6,641
$
(788)
4.35
%
5.30
%
(0.95)
%
Money market
investments
$
254,786
$
352,194
$
(97,408)
$
(58,638)
$
(38,770)
28,770
27,955
815
3.32
2.89
0.43
Investment securities
[1]
955,548
808,458
147,090
113,349
33,741
30
30
-
5.61
5.23
0.38
Trading securities
1,667
1,583
84
112
(28)
Total money market,
investment and
trading
34,653
34,626
27
3.50
3.36
0.14
securities
1,212,001
1,162,235
49,766
54,823
(5,057)
Loans:
18,951
17,855
1,096
6.73
6.86
(0.13)
Commercial
1,275,422
1,224,856
50,566
(23,568)
74,134
1,490
1,099
391
8.19
8.81
(0.62)
Construction
122,051
96,778
25,273
(7,168)
32,441
1,969
1,820
149
7.20
6.90
0.30
Leasing
141,828
125,652
16,176
5,637
10,539
8,397
7,873
524
5.92
5.70
0.22
Mortgage
497,419
448,880
48,539
17,945
30,594
3,241
3,211
30
13.85
13.90
(0.05)
Consumer
448,958
446,357
2,601
(1,950)
4,551
3,935
3,843
92
9.15
8.90
0.25
Auto
359,870
342,075
17,795
9,537
8,258
37,983
35,701
2,282
7.49
7.52
(0.03)
Total loans
2,845,548
2,684,598
160,950
433
160,517
$
72,636
$
70,327
$
2,309
5.59
%
5.47
%
0.12
%
Total earning assets
$
4,057,549
3,846,833
210,716
55,256
155,460
Interest bearing
deposits:
$
8,147
$
7,498
$
649
1.73
%
1.99
%
(0.26)
%
NOW and money
market
$
141,344
$
149,438
$
(8,094)
$
(18,950)
$
10,856
14,543
14,495
48
0.83
0.91
(0.08)
Savings
120,525
132,321
(11,796)
(12,160)
364
8,656
8,183
473
3.15
3.35
(0.20)
Time deposits
272,686
273,814
(1,128)
(17,272)
16,144
20,259
19,203
1,056
3.18
4.06
(0.88)
P.R. public
deposits
643,341
780,548
(137,207)
(178,506)
41,299
51,605
49,379
2,226
2.28
2.71
(0.43)
Total interest bearing
deposits
1,177,896
1,336,121
(158,225)
(226,888)
68,663
14,798
15,065
(267)
Non-interest bearing
demand deposits
66,403
64,444
1,959
1.77
2.07
(0.30)
Total deposits
1,177,896
1,336,121
(158,225)
(226,888)
68,663
356
84
272
4.44
5.53
(1.09)
Short-term
borrowings
15,818
4,676
11,142
(801)
11,943
Other medium and
824
962
(138)
5.83
5.22
0.61
long-term debt
48,092
50,178
(2,086)
5,241
(7,327)
Total interest bearing
52,785
50,425
2,360
2.35
2.76
(0.41)
liabilities (excluding
demand deposits)
1,241,806
1,390,975
(149,169)
(222,448)
73,279
5,053
4,837
216
Other sources of
funds
$
72,636
70,327
2,309
1.71
1.98
(0.27)
%
Total source of funds
$
1,241,806
$
1,390,975
$
(149,169)
$
(222,448)
$
73,279
3.88
%
3.49
%
0.39
%
Net interest margin/
income on a taxable
equivalent basis
(Non-GAAP)
$
2,815,743
$
2,455,858
$
359,885
$
277,704
$
82,181
3.24
%
2.71
%
0.53
%
Net interest spread
Taxable equivalent
adjustment
274,540
173,570
100,970
3.49
%
3.24
%
0.25
%
Net interest margin/
income non-taxable
equivalent basis
(GAAP)
$
2,541,203
$
2,282,288
$
258,915
Note: The changes that are not due solely to volume or
rate are allocated to volume and rate based on the
proportion of the change in each category.
[1] Average balances exclude unrealized gains or losses
on debt securities available-for-sale and the unrealized
loss related to certain securities transferred
from available-for-sale to held-to-maturity.
67
Provision for Credit Losses - Loans Held-in-Portfolio
and Unfunded Commitments
For the year ended December 31, 2025, the Corporation recorded a provision for credit of $260.2 million, an increase of $3.2 million
when compared
to
$256.9 million
for the
year ended
December 31,
2024. The
provision for
loan and
lease losses
for 2025
was
$260.7 million, an increase of $2.3 million.
As discussed
in Note
8 to
the Consolidated
Financial Statements,
the Corporation
estimates the
ACL by
weighting the
outputs of
optimistic,
baseline,
and
pessimistic
scenarios.
During
the
first
quarter
of
2025,
in
response
to
the
economic
uncertainty,
the
Corporation increased the probability assigned to the pessimistic
scenario making it equal to the baseline scenario. Subsequently, in
the second quarter
of 2025, the
probability assigned to the
pessimistic scenario was moderately
reduced based on
the changes in
the economic outlook and
a reassessment of uncertainty
compared to the previous
quarter. The
net impact of these
two events on
the ACL levels for the year ended December 31, 2025 was $13.7 million in additional reserves. There were no additional changes
to
the probability weights during the
year 2025. The probability
weight for the pessimistic scenario
remains above the levels observed
in 2024, given the ongoing economic uncertainty.
The major drivers of the changes in
the provision for loan losses during the year
by business segments when compared to the year
2024 were as follows:
In BPPR,
the provision
for loan
losses for
was $240.2
million, a
decrease of
$13.6 million
when compared
to the
year
ended in 2024,
driven by lower
reserves for the
consumer portfolio of
$34.7 million mainly
due to improvements in
credit
quality,
for
the
credit
cards
portfolio,
lower
net
charge-offs,
in
the
auto
portfolio
and
a
lower
provision
for
the
leases
portfolio. These favorable variance were partially offset by higher reserves in the commercial portfolio by $20.5 million due
to a specific reserve recognized for a $158.3 million commercial and industrial facility and a $13.5 million provision related
to
a
charge-off
recognized
during
the
third
quarter
for
a
$30.1
million
commercial
real
estate
(CRE)
facility,
both
classified as NPLs during the year.
In
the
Popular
U.S.
segment,
the
provision
for
loans
losses
was
$20.5
million,
an
increase
of
$15.9
million
when
compared to
the year
2024., mainly
driven by
higher qualitative
reserves and
changes in
credit quality
within the
CRE
portfolio partially offset by lower net charge-offs within the consumer
portfolio.
At
December
31,
2025,
the
total
allowance
for
credit
losses
for
loans
held-in-portfolio amounted
to
$808.1
million,
compared
to
$746.0
million
as
of
December
31,
2024.
The
ratio
of
the
allowance
for
credit
losses
to
loans
held-in-portfolio
was
2.05%
at
December
31,
2025, compared
to
2.01%
at
December 31,
2024. Refer
to
Note
8
to
the
Consolidated Financial
Statements, for
additional
information
on
the
Corporations
methodology
to
estimate
its
ACL
and
to
the
Credit
Risk
section
of
this
MD&A
for
a
detailed analysis of net charge-offs, non-performing assets,
the allowance for credit losses and selected loan
losses statistics.
Non-Interest Income
For the year ended December 31, 2025, non-interest
income was $658.0 million, a decrease of $0.9
million when compared with the
previous year. The variance was primarily due to:
lower other operating income by $16.8 million
mainly due to lower daily car rental revenue
by $18.1 million and gains from
the sale of car rental units by $8.0 million, associated
with the car rental business sold in the fourth
quarter of 2024,
partially offset by income of $5.3 million related to a retroactive
charge billed to a tenant for energy supplied in
prior years
and higher income from investments accounted under
the equity method by $3.9 million; and
lower income from mortgage banking activities by
$4.1 million mainly due to a decrease in
mortgage servicing fees due to
portfolio runoff and an unfavorable variance in the fair value adjustments
of mortgage servicing rights (MSRs);
partially offset by:
68
higher other service fees by $13.7 million mainly
due to higher debit and credit card
fees by $12.7 million, driven by higher
customer purchase activity, and higher investment management fees by $4.5
million, due to higher assets under
management, partially offset by lower insurance fees by
$6.6 million;
higher service charges on deposit accounts by $4.5
million mainly due to higher non-balance
compensation fees in
commercial deposits; and
higher income from equity securities by $3.2 million,
mainly due to an impairment on equity
securities of $2.3 million
recognized during 2024 and a favorable variance
of $1.1 million in the fair value adjustment of equity
securities related to
the deferred benefit plans, which have an offsetting
effect in personnel cost.
Operating Expenses
Operating expenses for the
year ended December
31, 2025 amount to
$1.9 billion, an increase
of $44.6 million
when compared to
the previous year. The results of 2025 include a partial reversal of the FDIC special assessment reserve
of $15.3 million imposed on
banks to recover losses in connection with the
receivership of two failed banks during 2023. Management revised its reserve
based
on the FDICs interim final rule, which became effective December
19, 2025 and amended, among other
things, the collection rate of
the
special
assessment.
Operating
expenses
for
the
year
ended
December
31,
2024
included
$6.4
million
of
interest
accrued
related to prior period tax withholdings and the $14.3 million expense related to the FDIC special assessment. The other factors that
contributed to the increase in operating expenses
for the year were:
higher personnel costs by $84.8
million mainly due to higher incentives, including $38.8 million
related to the profit-sharing
plan
which is
tied
to
the
Corporations financial
performance and
$24.2
million
in
other
performance-based incentives,
higher
salaries
expenses
by
$12.9
million
due
to
a
higher
headcount
and
annual
merit
increases,
and
a
$7.7
million
increase in
other personnel costs
mainly related to
the valuation
of securities
held for
deferred compensation plans
and
higher payroll tax;
a non-cash goodwill impairment of $13.0 million
in the Corporations U.S. based equipment leasing subsidiary due
to
lower projected earnings for the forecasted period;
higher technology and software expenses,
including software cost amortization, by $12.5 million
related to investments in
the Corporations cloud infrastructure, among other continuing
investments in technology and transformation
initiatives;
higher
processing
and
transactional
services
expenses
by
$9.7
million
mainly
due
to
higher credit
and
debit
card
and
merchant processing expenses as a result of higher
transactional volumes;
higher
other
taxes
expense
by
$6.9
million
mainly
due
to
an
increase
in
municipal
license
tax
and
higher
regulatory
examination fees in BPPR; and
higher business
promotion expenses
by
$5.4 million
mainly
due to
higher customer
rewards programs
expense in
our
credit card business reflecting an increase in
customer purchase activity;
partially offset by:
lower other
operating expenses
by $33.0
million mainly
driven by
lower accruals
for reserves
for operational
losses by
$10.6 million;
lower professional fees by $15.7 million mainly due
to lower costs associated with regulatory compliance
activities; and
lower equipment expenses by $11.3 million, mainly due to the
depreciation of car rental units during 2024 associated with
units sold as part of the daily car rental transaction
during the fourth quarter of 2024.
69
Table 6 provides a breakdown of operating expenses by major categories.
Table 6 - Operating Expenses
Years ended December
31,
(Dollars in thousands)
2025
2024
2023
Personnel costs:
Salaries
$
542,717
$
529,794
$
505,935
Commissions, incentives, profit sharing and other bonuses
189,041
126,081
112,657
Pension, postretirement and medical insurance
69,329
68,185
67,469
Other personnel costs, including payroll taxes
104,127
96,391
91,984
Total personnel
costs
905,214
820,451
778,045
Net occupancy expenses
110,213
111,430
111,586
Equipment expenses
22,110
33,424
37,057
Other taxes
72,939
66,046
55,926
Professional fees
110,098
125,822
161,142
Technology and
software expenses
341,605
329,061
290,615
Processing and transactional services:
Credit and debit cards
56,168
49,301
44,578
Other processing and transactional services
96,218
93,376
93,492
Total processing
and transactional services
152,386
142,677
138,070
Communications
19,270
18,899
16,664
Business promotion:
Rewards and customer loyalty programs
69,809
63,773
59,092
Other business promotion
37,474
38,157
35,834
Total business
promotion
107,283
101,930
94,926
FDIC deposit insurance
24,369
54,626
105,985
Other real estate owned (OREO) income
(13,393)
(18,124)
(15,375)
Other operating expenses:
Operational losses
16,581
27,200
23,505
All other
48,841
71,257
73,774
Total other operating
expenses
65,422
98,457
97,279
Amortization of intangibles
1,750
2,938
3,180
Goodwill impairment charge
13,000
-
23,000
Total operating
expenses
$
1,932,266
$
1,887,637
$
1,898,100
Personnel costs to average assets
1.20
%
1.12
%
1.09
%
Operating expenses to average assets
2.55
2.57
2.66
Employees (full-time equivalent)
9,238
9,231
9,088
Average assets per employee (in millions)
$8.20
$7.95
$7.84
Income Taxes
For the
year ended
December 31,
2025, the
Corporation recorded an
income tax
expense of
$173.6 million,
compared to
$182.4
million for the year 2024.
The decrease of $8.8 million reflects the impact of
the tax withholding expense of $22.9 million recorded in
the year 2024
related to intercompany distributions for
the years 2014-2024, coupled with
higher exempt income, partially offset
by
higher income before tax for the year 2025.
At December
31, 2025,
the Corporation
had a
net deferred
tax asset
amounting to
$812.3 million, net
of a
valuation allowance
of
$464.7 million. The net
deferred tax asset related
to the U.S. operations
was $228.2 million, net
of a valuation allowance
of $386.6
million.
70
Refer to
Note 34
to the
Consolidated Financial
Statements for
a reconciliation
of the
statutory income
tax rate
to the
effective tax
rate and additional information on the income
tax expense and deferred tax asset balances.
Fourth Quarter Operational Results
For
the
quarter
ended
December
31,
2025,
the
Corporation
recorded
net
income
of
$233.9
million,
compared
to
net
income
of
$177.8 million
for
the same
quarter of
the
previous year.
Excluding the
partial
reversal of
the
FDIC special
assessment reserve of $9.7 million, net of tax,
adjusted net income for the fourth quarter of
2025 was $224.2 million.
Net interest income for the fourth
quarter of 2025 amounted to $657.6
million, compared with $590.8 million for the
fourth
quarter
of
2024.
On
a
taxable
equivalent
basis,
net
interest
income
amounted
to
$733.8
million,
compared
to
$638.6
million.
The
increase
of
$95.2
million
in
net
interest
income,
on
a
taxable
equivalent
basis,
was
mainly
due
to
higher
income from investment securities by $51.6 million mainly due
to higher yields by 51 basis points and average balances
of
U.S. Treasury securities, higher interest income from loans by $43.8
million, due to growth across most portfolios at
BPPR
and
the
commercial and
construction portfolios
in
PB,
and lower
cost
of
deposits by
$34.2
million, or
38
basis
points,
primarily in P.R.
public deposits,
which declined by 72
basis points as these are
mainly linked to short-term market rates;
partially
offset
by
lower
income
from
money
market
investments
by
$31.1
million
due
to
lower
average
balances
and
yields by 82 basis points as a result of short-term
market rate declines.
Net interest margin increased by 26 basis points
to
3.61%. On a taxable equivalent basis, the net interest margin for the fourth quarter of 2025
was 4.03%, or 41 basis points
higher when compared to 3.62% for the fourth
quarter of 2024.
The provision
for loan
losses was
$71.4 million
for the
fourth quarter
of
2025, compared
to $69.1
million for
the same
quarter of the previous year. The increase of $2.3 million was driven by the commercial portfolios, loan modifications, loan
growth,
and
the
qualitative
reserve
release
recorded
in
2024
due
to
the
implementation
of
a
new
CRE
non-owner
occupied model; partially offset by lower NCOs and improvements
in credit quality at the consumer portfolios.
Non-interest income amounted to $166.3 million for
the quarter ended December 31, 2025,
compared with $164.7 million
for the same
quarter in 2024.
The increase of
$1.6 million was
driven by higher
other service fees
by $7.2 million
due to
higher debit and
credit card fees
from higher customer
purchase activity,
partially offset by
lower other operating
income
by $3.2 million due to lower daily car
rental revenue by $3.2 million, due to the sale
of the daily car rental business during
the
fourth
quarter
of
2024,
and
lower
income
from
mortgage
banking
activities
by
$2.7
million
mainly
due
to
an
unfavorable variance
in the
fair value
adjustment
of MSRs
driven by
portfolio runoff
compared
to
the fourth
quarter of
2024.
Operating expenses totaled $473.2 million for the quarter
ended December 31, 2025, compared with $467.6
million for the
same quarter
in the
previous year.
The increase
of $5.6
million was
mainly related
to higher
personnel costs
by $24.4
million due to
annual salary revisions,
higher headcount, and higher incentives,
which include $12.8 million related to
the
quarterly accrual for the profit-sharing plan driven by the
Corporations performance,
partially offset by a reversal of $15.3
million from
the reserve
related to
the FDIC
special assessment imposed
on banks
to recover
losses in
connection with
the receivership of two failed banks during 2023 and
lower accruals for reserves for operational losses
by $6.8 million.
For the quarter
ended December 31,
2025, the Corporation
recorded an income tax
expense of $44.7
million, compared
with an income tax expense of $43.9 million for the same quarter of 2024. The unfavorable variance was mostly attributed
to a higher income before tax.
REPORTABLE SEGMENT RESULTS
The Corporations
reportable segments
for managerial
reporting purposes
consist of
Banco Popular
de Puerto
Rico and
Popular
U.S. A Corporate group has been defined to
support the reportable segments.
For
a
description
of
the
Corporations
reportable
segments,
including
additional
financial
information
and
the
underlying
management accounting process, refer to Note 36
to the Consolidated Financial Statements.
The Corporate
group reported
a net
income of
$15.6 million
for the
year ended
December 31,
2025, compared
with a
net loss
of
$19.0 million for
the previous year.
The loss in
2024 was mainly
attributable to the
expense related to the
$22.9 million adjustment
recorded in
the
first
quarter of
2024 to
recognize the
tax
impact associated
with prior
period intercompany
distributions and
the
71
additional
$6.5
million
expense
for
the
tax
impact
of
intercompany
distributions
paid
during
the
first
quarter
of
2024.
A
positive
adjustment of
$3.9 million
was recorded
during the
second quarter
of 2025,
resulting from
reimbursements received from
the IRS
related
to
interest
paid
for
the
intercompany
distributions.
Higher
income
from
equity
method
investments
and
lower
expenses
driven by
professional services, also
contributed to
the positive
variance for
the year
ended December 31,2025,
partially offset
by
lower income from money market investments due
to a decrease in rates.
Highlights on the earnings results for the reportable
segments are discussed below:
Banco Popular de Puerto Rico
The Banco Popular de Puerto Rico reportable segments
net income amounted to $729.5 million for
the year ended December 31,
2025, compared with $555.7 million for the year ended
December 31, 2024. The principal factors that
contributed to the variance in
the financial results included the following:
Net interest income by $2.2 billion was higher
by $209.1 million primary driven by lower
expense on deposits, mainly from
the re-pricing of P.R. public funds, which decreased by $137.2 million, or 88 basis points and higher
income from loans by
$79.9 million due to portfolio growth, higher income
from in U.S. Treasury securities by $75.7 million, or 20 basis
points,
mainly from reinvestments at higher yields, partially offset
by lower income from money market securities investments
by
$72.7 million reflecting the decline in short-term market
rates and lower average balances. The net
interest margin for the
year ended December 31,2025 was 3.69%, 27 basis
points higher when compared with 3.43%
the previous year;
The provision for credit losses for the loan portfolio
of $240.4 million was lower by $13.2 million
mainly attributable to
improvement in credit quality for the credit
cards portfolios, lower net charge-offs in the auto portfolio,
and lower reserves
in the leases portfolios, partially offset by an increase
in the reserves in the commercial portfolio mainly
due to the impact
of two unrelated NPL inflows;
Non-interest income of $584.4 million, lower by $11.8 million, mainly due to lower
daily car rental revenue by $18.1 million
and gains from the sale of car rental units by $8.0
million related to the car rental business
sold in the fourth quarter of
2024, lower mortgage banking activities by $4.1
million mainly due to a decrease in mortgage
servicing fees and fair value
adjustments in MSRs;
partially offset by the $5.3 million retroactive charge
billed to a tenant for energy supplied in prior
years, higher service fees by $10.9 million due
to credit and debit card fees, from higher volume
of transactions, higher
investment management fees and higher charges on
deposit accounts by $4.0 million mainly due
to non-balance
compensation in commercial deposits;
Higher operating expenses by $33.0 million mostly due
to
higher personnel costs of $53.8 million, including
profit sharing expense by $30.8 million and
higher salaries
expense by $22.2 million due to annual merit
increases and a higher headcount;
higher other taxes by $7.3 million due to municipal
license and regulatory examination fees;
higher processing fees by $9.7 million due to credit
and debit card transactions; and
higher technology expenses by $8.0 million mainly related
to investments in technology and transformation
initiatives;
partially offset by
lower equipment expenses by $10.8 million mainly related
to the daily rental business sold in 2024;
lower FDIC expense by $26.8 million due to the reversal
in 2025 of the FDIC special assessment of
$13.6
million compared to the expense of $12.7 million
recorded in 2024;
lower other operating expenses by $8.1 million
due to reserves for operational losses; and
lower professional fees by $6.6 million;
Higher income tax expense by $4.2 million mainly
due to higher income before tax, offset by higher exempt
income.
72
Popular U.S.
For the
year ended
December 31, 2025, Popular
U.S. reported
net income
of $87.8
million, compared with
a net
income of
$77.6
million for the year ended
December 31, 2024. The principal factors
that contributed to the variance
in the financial results included
the following:
Net interest
income of
$411.9
million, higher
by $55.9
million mainly
due to
higher interest
income from
loans by
$57.2
million,
or
10
basis
points,
mainly
related
to
growth
in
the
commercial
and
construction
portfolios
and
lower
interest
expense from deposits by $32.8 million, or 44 basis points,
due to the repricing of high-cost deposits, mainly direct on-line
deposits, partially
offset by
lower income
from money
market investments due
to decline
in short-term
market rates
and
lower average
balances. The
net interest
margin for
the year
ended December
31,2025 was
2.94%, higher
by 28
basis
points when compared to 2.66% for the previous
year;
The provision for credit losses for the loan portfolio of $20.5 million was
higher by $15.9 million driven by higher qualitative
reserves and
changes in
credit quality
for the
commercial real
estate portfolio;
partially offset
by lower
reserves for
the
consumer loans;
Higher operating
expenses by
$18.4 million
reflecting the
$13.0 million
goodwill impairment
charge related
to
our U.S.
based
equipment leasing
subsidiary recorded
in 2025;
higher personnel
costs
by
$4.1 million
mainly due
to
the
profit-
sharing expense;
partially offset
by lower
FDIC expense
by $3.4
million due
to the
reversal in
2025 of
the FDIC
special
assessment $1.7 million compared to an expense
of $1.6 million in 2024;
Higher income tax expense by $9.9 million due
to higher income before tax.
STATEMENT
OF FINANCIAL CONDITION ANALYSIS
Assets
The
Corporations
total
assets
were $75.3
billion
at
December 31,
2025, compared
to
$73.0
billion
at
December 31,
2024.
The
increase in
total assets
of $2.3
billion was
driven by
an increase
in AFS
securities and
loan growth
across most
portfolios at
both
BPPR and PB segments, partially offset by a decrease in money market
investments, HTM securities, and other assets. Refer to the
Corporations
Consolidated
Statements
of
Financial
Condition
at
December
31,
2025
and
2024
included
in
this
Form
10-K
for
additional
information.
Also,
refer
to
the
Statistical
Summary
2025-2024
in
this
MD&A
for
Condensed
Statements
of
Financial
Condition.
Money market investments and debt securities
Money market investments decreased by
$1.8 billion at December 31,
2025, when compared to December 31,
2024, mainly driven
by funds
used for
loan growth
and to
purchase U.S.
Treasury securities.
Debt securities
available-for-sale (AFS) increased
$2.3
billion, mainly due to reinvestment in U.S. Treasury Securities. Debt securities
held-to-maturity (HTM) decreased by $430.5 million
driven by
maturities and
paydowns, partially
offset
by the
amortization of
$186.4 million
of the
discount related
to
U.S. Treasury
securities previously reclassified from
AFS to HTM.
Refer to Notes
5 and 6
to the Consolidated Financial
Statements for additional
information with respect to the Corporations debt securities
available-for-sale and held-to-maturity.
Loans
Refer to Table
7 for a breakdown of
the Corporations loan portfolio. Also,
refer to Note 7
to the Consolidated Financial Statements
for detailed information about the Corporations loan portfolio
composition and loan purchases and sales.
Loans
held-in-portfolio increased
by
$2.2
billion to
$39.3 billion
at December
31, 2025,
compared to
December 31,
2024. In
the
BPPR
segment,
loan
balances
increased
by
$1.5
billion
across
most
portfolios,
most
notably
commercial,
mortgage,
and
construction portfolios.
The PB segment also increased by $740.3 million,
mainly driven by commercial and construction lending.
During the year
ended December 31,
2025, the Corporations
loans to non-depository
financial institutions (NDFIs),
increased by
$150.2 million
to $545.0
million. The increase
was mainly
related to a
loan for
working capital to
an insurance
company in
Puerto
Rico.
At
December 31,
2025, the
Corporations
exposure to
NDFIs
was composed
of
approximately $337.3
million
to
insurance
73
companies
for
working
capital
needs
unrelated
to
lending
activities,
$105.9
million
to
consumer
and
commercial
credit
intermediaries,
and
$101.8
million
related
to
mortgage
credit
intermediaries.
All
loans
to
NDFIs
are
current
in
their
contractual
payments and carry a pass rating.
Refer to
Note 7
to the
Consolidated Financial
Statements for
additional information
on delinquency,
asset quality
and origination
vintage information of these loan segments.
Table 7 provides a breakdown of loan balance per portfolio.
Table 7 - Loans Ending Balances
(In thousands)
December 31, 2025
December 31, 2024
Variance
Loans held-in-portfolio:
Commercial
Commercial multi-family
$
2,455,790
$
2,399,620
$
56,170
Commercial real estate non-owner occupied
5,543,284
5,363,235
180,049
Commercial real estate owner occupied
3,153,080
3,157,746
(4,666)
Commercial and industrial
8,607,412
7,741,562
865,850
Total Commercial
19,759,566
18,662,163
1,097,403
Construction
1,674,899
1,263,792
411,107
Mortgage
8,649,440
8,114,183
535,257
Leasing
2,001,365
1,925,405
75,960
Consumer
Credit cards
1,256,717
1,218,079
38,638
Home equity lines of credit
78,692
73,571
5,121
Personal
1,906,228
1,855,244
50,984
Auto
3,819,812
3,823,437
(3,625)
Other
180,799
171,778
9,021
Total Consumer
7,242,248
7,142,109
100,139
Total loans held-in
-portfolio
$
39,327,518
$
37,107,652
$
2,219,866
Loans held-for-sale:
Mortgage
$
9,998
$
5,423
$
4,575
Total loans held-for-sale
$
9,998
$
5,423
$
4,575
Total loans
$
39,337,516
$
37,113,075
$
2,224,441
Other assets
Other assets amounted to $1.7 billion
at December 31, 2025, a decrease of
$91.8 million compared to $1.8 billion at
December 31,
2024.
The variance
was mainly
driven
by
a
decrease in
net
deferred tax
assets
of
approximately $112.1
million
due
to
positive
changes
in
the
valuation
of
AFS
securities,
a
reduction
in
unsettled
trade
receivables
of
$14.6
million
related
to
proceeds
from
maturities of U.S. Treasury securities, and lower principal, interest and escrow servicing advances of $13.5 million, partially offset by
an increase in capitalize software costs of approximately $46.9 million mainly
related to technology modernization. Refer to Note 13
to the Consolidated Financial Statements
for a breakdown of
the principal categories that comprise the
caption of Other Assets in
the Consolidated Statements of Financial Condition
at December 31, 2025 and 2024.
Liabilities
The Corporations
total liabilities were
$69.1 billion
at December
31, 2025,
an increase
of $1.7
billion compared to
$67.4 billion
at
December
31,
2024,
mainly
due
to
an
increase in
deposits
as
discussed
below.
The
following
is
a
discussion
of
the
significant
changes in liabilities.
Deposits and Borrowings
Total Deposits
74
The Corporations
deposits totaled
$66.2 billion
at December
31, 2025,
compared to
$64.9 billion
at December
31, 2024.
Ending
deposit balances increased
by $1.3 billion,
while average balances for
the year grew
by $2.0 billion.
The average deposit
balance,
excluding P.R.
public deposits, increased by $0.9 billion. Non-interest-bearing deposits increased by $164.7 million when
compared
to December 31, 2024, demonstrating the impact
of the Corporations continued focus on deposit retention
strategies.
Excluding P.R.
Government deposits, as of December 31, 2025, deposits amounted to $46.8 billion, compared to
$45.4 billion as of
December 31, 2024. This $1.4 billion increase included higher savings, NOW,
and money market deposits by $829.8 million, higher
time deposits by $361.0 million and higher
demand deposits by $159.2 million, all primarily
at BPPR.
At December 31, 2025, Puerto Rico public deposits were $19.4 billion, a decrease of approximately $44.2 million when compared to
December 31,
2024. P.R
public deposits
represent 29%
of total
deposits and
are expected
to continue
to range
in the
short term
between $18
billion and
$20
billion. However,
the rate
at
which public
deposit balances
may change
is
uncertain and
difficult
to
predict. The
amount and
timing of
any such
change is
likely to
be impacted
by,
for example,
the level
of federal
assistance and
speed at which
any federal assistance is
distributed, the financial condition, liquidity
and cash management practices
of the Puerto
Rico
Government
and
its
instrumentalities,
and
the
implementation
of
fiscal
and
debt
adjustment
plans
approved
pursuant
to
PROMESA or
other
actions
mandated by
the
Fiscal
Oversight and
Management Board
for Puerto
Rico
(the
Oversight Board).
Additionally,
the Trump
Administration is
conducting a
review of
federal funding,
which could
entail a
reduction in
federal funding
available for Puerto Rico. P.R
public deposits costs are generally indexed
to changes in short-term market
rates with a one-quarter
lag, in
accordance with
contractual terms.
As a
result, these
deposits costs
have typically
lagged variable
asset repricing.
These
deposits require that the bank pledge high credit quality securities as collateral; therefore, liquidity risks arising
from deposit outflows
are lower.
The volume and cost of P.R.
public deposits and the proportion of high-cost deposits in the U.S, directly impact the balance and mix
of earning assets and therefore represent a key
factor in the Corporations ability to expand its net
interest margin.
Refer to Table 8 for a breakdown of the Corporations deposits at December 31, 2025 and 2024.
Table 8 - Deposits Ending Balances
(In thousands)
December 31, 2025
December 31, 2024
[2]
Variance
Deposits excluding P.R.
public deposits:
Demand deposits
$
15,298,712
$
15,139,555
$
159,157
Savings, NOW and money market deposits (non-brokered)
22,655,936
21,814,632
841,304
Savings, NOW and money market deposits (brokered)
87,566
99,099
(11,533)
Time deposits (non-brokered)
7,861,848
7,620,265
241,583
Time deposits (brokered CDs)
866,772
747,363
119,409
Sub-total deposits excluding P.R.
public deposits
46,770,834
45,420,914
1,349,920
P.R. public
deposits:
Demand deposits
[1]
11,534,301
11,730,273
(195,972)
Savings, NOW and money market deposits (non-brokered)
7,134,217
7,087,904
46,313
Time deposits (non-brokered)
750,741
645,254
105,487
Sub-total P.R.
public deposits
19,419,259
19,463,431
(44,172)
Total deposits
$
66,190,093
$
64,884,345
$
1,305,748
[1] Includes interest bearing demand deposits.
[2] Savings, NOW and money market deposits include
reciprocal deposits of $780 million (2024-$637.1 million)
that were categorized as brokered
deposits at December 31, 2024 and recharacterized
as non-brokered for December 31, 2025. Similarly,
Time deposits include reciprocal deposits
of
$92.6 million (2024-$143.3 million) that were categorized
as brokered deposits at December 31, 2024 and recharacterized
as non-brokered for
December 31, 2025. The presentation for the year 2024
has been adjusted to conform to the 2025 presentation.
75
Borrowings
The Corporations borrowings amounted to $1.4
billion at December 31, 2025, compared to
$1.2 billion at December 31,
2024. The
increase was mainly due to FHLB advances which increased
by $286.9 million, partially offset by lower repurchase commitments by
$15.8 million.
Refer to Note
16 to
the Consolidated Financial
Statements for
detailed information on
the Corporations
borrowings.
Also, refer to the Liquidity section in this MD&A
for additional information on the Corporations funding
sources.
Stockholders Equity
Stockholders equity totaled
$6.2 billion at
December 31, 2025,
an increase of
$0.6 billion when
compared to December
31, 2024.
The increase was principally
due to net
income for the year
ended December 31, 2025 of
$833.2 million,
coupled with the after-tax
effect of the
decrease in net unrealized losses in
the portfolio of AFS securities
of $340.4 million and the
amortization of unrealized
losses from
securities previously reclassified
to HTM
of $149.1
million,
partially offset
by an
increase in
Treasury Stock
of $494.3
million mainly
due to
the repurchases
of common stock
during the
year and
the common
and preferred dividends
declared during
the year of $196.2 million and $1.4 million, respectively.
During
the
year
ended
December
31,
2025,
Popular
repurchased
4,660,124
shares
of
common
stock
for
$501.5
million
at
an
average price of $107.61 per share, as part of the 2024 and 2025 common stock repurchase programs previously announced. As of
December 31, 2025, $281.2 million remained available
for stock repurchase under the active repurchase authorization.
The
Corporation
increased
its
quarterly
common
stock
dividend
from
$0.70
to
$0.75
per
share,
commencing
with
the
dividend
declared in the third quarter of 2025.
Refer
to
the
Consolidated
Statements
of
Financial
Condition,
Comprehensive
Income
and
Changes
in
Stockholders
Equity
for
information on the composition of stockholders equity. Also, refer to Note 21 to the Consolidated Financial Statements
for a detail of
accumulated other comprehensive income (loss), an
integral component of stockholders equity.
The composition of the Corporations financing to total assets
at December 31, 2025 and 2024 is included
in Table 9.
76
Table 9 - Financing to Total
Assets
December 31,
December 31,
% (decrease) increase
% of total assets
(Dollars in millions)
2025
2024
from 2024 to 2025
2025
2024
Non-interest-bearing core deposits
$
15,304
$
15,139
1.1
%
20.3
%
20.7
%
Interest-bearing core deposits
46,017
44,622
3.1
61.1
61.1
Interest-bearing other deposits
4,869
5,123
(5.0)
6.4
7.0
Repurchase agreements
39
55
(29.1)
0.1
0.1
Other short-term borrowings
650
225
188.9
0.9
0.3
Notes payable
760
896
(15.2)
1.0
1.2
Other liabilities
1,460
1,372
6.4
1.9
1.9
Stockholders equity
6,249
5,613
11.3
8.3
7.7
CAPITAL
Regulatory Capital
The Corporation and its bank subsidiaries are subject to capital adequacy
standards established by the Federal Reserve Board. The
risk-based capital
standards applicable
to Popular,
Inc., BPPR
and PB,
are based
on the
final capital
framework of
Basel III.
The
Basel III capital rules include a Common Equity Tier 1 (CET1) capital ratio and define Tier 1 capital as CET1 plus Additional Tier
1
Capital
instruments
meeting
specified
requirements.
Note
20
to
the
Consolidated
Financial
Statements
presents
further
information on the Corporations regulatory capital requirements,
including the regulatory capital ratios of BPPR
and PB.
An institution
is considered well-capitalized
if it
maintains a total
capital ratio
of 10%,
a Tier
1 capital ratio
of 8%,
a CET1 capital
ratio
of
6.5%
and
a
leverage
ratio
of
5%.
The
Corporations
ratios
presented
in
Table
10
show
that
the
Corporation
was
well
capitalized for
regulatory purposes,
the highest
classification, under
Basel III
for years
2025 and
2024. BPPR
and PB
were also
well-capitalized for all the years presented.
The
Basel
III
Capital
Rules
also
require
an
additional
2.5%
capital
conservation
buffer,
composed entirely
of
CET1,
on
top
of
minimum risk-weighted asset ratios, which excludes the leverage ratio. The capital conservation buffer is
designed to absorb losses
during periods of
economic stress. Banking
institutions with a
ratio of CET1
to risk-weighted assets
above the minimum
but below
the capital conservation buffer will face constraints on dividends, equity repurchases, and compensation
based on the amount of the
shortfall. Popular,
BPPR and
PB are
required to
maintain this
additional capital
conservation buffer
of 2.5%
of CET1,
resulting in
minimum ratios
of (i) CET1
to risk-weighted
assets of
at least
7%, (ii) Tier
1 capital
to risk-weighted
assets of
at least
8.5%, and
(iii) Total capital to risk-weighted assets of at least 10.5%.
Table 10 presents the Corporations capital adequacy information for the years 2025 and 2024.
77
Table 10 - Capital Adequacy
Data
At December 31,
(Dollars in thousands)
2025
2024
Risk-based capital:
Common Equity Tier 1 capital
$
6,463,527
$
6,262,792
Additional Tier 1 Capital
22,143
22,143
Tier 1 capital
$
6,485,670
$
6,284,935
Supplementary (Tier 2) capital
710,397
683,268
Total
capital
$
7,196,067
$
6,968,203
Total
risk-weighted assets
$
41,123,753
$
39,073,462
Adjusted average quarterly assets
$
74,661,894
$
72,593,464
Ratios:
Common Equity Tier 1 capital
15.72
%
16.03
%
Tier 1 capital
15.77
16.08
Total capital
17.50
17.83
Leverage ratio
8.69
8.66
Average equity to assets
[1]
9.51
9.61
Average tangible equity to assets
[1]
8.54
8.60
[1]
Average balances exclude unrealized gains or losses
on debt securities available-for-sale and unrealized
losses on debt securities transfer
to held-to-maturities
The decrease in the CET1 capital ratio,
Tier 1 capital ratio
and, total capital ratio as of
December 31, 2025, compared to December
31, 2024,
was due
primarily to
the repurchase
of shares
under the
common stock
repurchase authorization
plan, common
stock
dividends and higher risk
weighted assets driven by the
loan growth in the
commercial loans held-in-portfolio, partially offset
by the
annual earnings. The increase in
the leverage capital ratio
was mainly due to the
increase in capital driven by
the annual earnings,
partially offset by an increase in average total assets.
Pursuant
to
the
adoption
of
CECL
on
January
1,
2020,
the
Corporation elected
to
use
the
five-year
transition
period
option
as
provided in the final interim regulatory capital rules effective March
31, 2020. The five-year transition period provision delays for two
years the
estimated impact
of
CECL on
regulatory capital,
followed by
a three-year
transition period
to
phase out
the aggregate
amount of the capital
benefits provided during the initial two-year
delay. During the
first quarter of 2025,
the Corporation completed
the phase-in of all the cumulative impact of the
CECL adoption.
Table 11
reconciles the Corporations total common stockholders
equity to common equity Tier 1 capital.
Table 11
- Reconciliation Common Equity Tier 1 Capital
At December 31,
(Dollars in thousands)
2025
2024
Common stockholders equity
$
6,226,936
$
5,633,298
AOCI related adjustments due to opt-out election
1,096,805
1,589,875
Goodwill, net of associated deferred tax liability
(DTL)
(639,734)
(657,181)
Intangible assets, net of associated DTLs
(5,076)
(6,826)
Deferred tax assets and other deductions
(215,404)
(296,374)
Common equity tier 1 capital
$
6,463,527
$
6,262,792
Common equity tier 1 capital to risk-weighted assets
15.72
%
16.03
%
Reconciliation to Tangible Common Equity and Tangible Assets
Table
12
provides
a
reconciliation of
total
stockholders
equity
to
tangible
common
equity
and
total
assets
to
tangible
assets
at
December 31, 2025 and 2024.
78
Table 12 - Reconciliation
of Tangible Common Equity
and Tangible Assets
At December 31,
(In thousands, except share or per share information)
2025
2024
Total stockholders
equity
$
6,249,079
$
5,613,066
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,076)
(6,826)
Total tangible common
equity
$
5,431,906
$
4,781,143
Total assets
$
75,348,267
$
73,045,383
Less: Goodwill
(789,954)
(802,954)
Less: Other intangibles
(5,076)
(6,826)
Total tangible assets
$
74,553,237
$
72,235,603
Tangible common
equity to tangible assets
7.29
%
6.62
%
Common shares outstanding at end of period
65,719,385
70,141,291
Tangible book value
per common share
$
82.65
$
68.16
Year-to-date average
Total stockholders
equity [1]
$
6,892,821
$
6,480,598
Average unrealized (gains) losses on AFS securities
transferred to HTM
314,861
572,595
Adjusted total stockholder's equity
7,207,682
7,053,193
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(799,641)
(804,423)
Less: Other intangibles
(5,927)
(8,366)
Total tangible common
equity
$
6,379,971
$
6,218,261
Average return on tangible common equity
13.04
%
9.85
%
[1] Average balances exclude unrealized gains or losses
on debt securities available-for-sale.
79
RISK MANAGEMENT
Market / Interest Rate Risk
The Corporations assets that are mainly subject to market valuation risk are debt securities classified as available-for-sale. Refer to
Notes 5 and 6 to
the Consolidated Financial Statements for further information on
the debt securities available-for-sale and held-to-
maturity portfolios.
Debt securities
classified as
available-for-sale and
held-to-maturity amounted
to
$20.6 billion
and
$7.3
billion,
respectively,
as of
December 31, 2025.
Other assets
subject to
market risk
include mortgage
servicing rights
("MSRs") with
a fair
value of $96.4 million as of December 31,
2025.
Interest Rate Risk (IRR)
The Corporations 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
Corporations IRR.
NII simulation
modeling, by legal entity and on a consolidated basis, is prepared for a five-year period, which in conjunction
with the EVE analysis,
provides management a better view of long-term
IRR.
The Corporation processes NII
simulations under interest rate
scenarios in which the
yield curve is assumed
to rise and
decline by
the same magnitude
(parallel shifts). The
rate scenarios considered in
these market risk
simulations include instantaneous parallel
changes of
-100,
-200, +100,
and +200
basis points
during the
succeeding twelve-month
period. Assumptions
included in
these
analyses
include
that
the
balance
sheet
remains
flat,
relative
levels
of
market
interest
rates
across
all
yield
curve
points
and
indexes, interest rate spreads, loan
prepayments and deposit elasticity.
Thus, they should not be
relied upon as indicative of
actual
results
and
do
not
contemplate
actions
that
management
may
engage
in
as
a
response
to
future
changes
in
interest
rates.
Additionally,
the Corporation
is also
subject to
the risk
inherent in
the use
of different
rate indexes
for the
repricing of
assets and
liabilities, as well the
risk of pricing lags
due to contractual or
timing differences between the
market and management response
to
changes
in
the
rate
environment.
These
forward-looking
computations
are
managements
best
estimate
based
on
known
and
available information and actual results may differ.
The
following
table
presents
the
results
of
the
simulations
at
December
31,
2025
and
December
31,
2024,
assuming
a
static
balance sheet and parallel changes over flat spot rates
over a one-year time horizon:
80
Table 13 - Net Interest Income
Sensitivity (One Year Projection)
December 31, 2025
December 31, 2024
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
(7,520)
(0.27)
44,747
1.78
+100 basis points
(4,379)
(0.16)
22,917
0.91
-100 basis points
2,691
0.10
9,157
0.36
-200 basis points
7,488
0.27
588
0.02
As of
December 31,
2025, NII
simulations showed
a liability
sensitive position
for the
Corporation, compared
to the
results as
of
December 31,
2024, when the
Corporation showed an
asset sensitive position.
The variation in
sensitivity and the
resulting profile
was mainly due to an increase in asset
duration driven by the extension of U.S. Treasury Notes
and a decline in U.S. Treasury Bills
and excess
reserves at the
FRB as
part of
a decision to
reduce sensitivity to
declining rate scenarios,
combined with the
runoff in
the agency MBS portfolio
and rise in fixed-rate
loans. In rising rate
scenarios, Populars net interest income
would decrease due to
the lower volume of short-term assets as a result
of the investment portfolio extension strategy combined with higher deposits costs
due to
BPPRs large
proportion of
market-linked Puerto
Rico public
sector deposits,
this would
be partially
offset by
variable rate
loan repricing and
intermediate maturity assets
coming due within
one year.
The portfolio extension
transactions completed during
the
year
that
contributed
to
the
variance
in
sensitivity
include
purchases
of
$2.4
billion
of
U.S.
Treasury
Notes
with
maturities
between 6
months up
to 3
years with
an average
yield of
4.04% executed
mostly during
May 2025,
$2.5 billion
in U.S.
Treasury
Notes with
an average
maturity of
approximately 1.4 years
executed in
September 2025,
and $900
million in
U.S. Treasury
notes
with an average maturity of 2.2 years and a
yield of approximately 3.56% executed between
November and December 2025.
The
Corporations
loan
and
investment
portfolios
are
subject
to
prepayment
risk.
Prepayment
risk
also
could
have
a
significant
impact on the duration of mortgage-backed securities
and collateralized mortgage obligations.
Table 14 presents the Corporations sensitivity to interest rates, reflecting its assets and liabilities
by repricing date.
Table 14 - Interest Rate Sensitivity
At December 31, 2025
By repricing dates
(Dollars in thousands)
0-30 days
Within 31 -
90 days
After three
months but
within six
months
After six
months but
within nine
months
After nine
months but
within one
year
After one
year but
within two
years
After two
years
Non-
interest
bearing
funds
Total
Assets:
Money market investments
$
4,626,506
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
4,626,506
Investment and trading securities
3,318,045
4,951,458
1,939,100
1,650,773
1,639,760
6,563,518
8,243,704
(143,252)
28,163,106
Loans
6,422,687
3,983,535
1,628,570
1,716,373
1,766,974
6,117,288
17,770,822
(68,733)
39,337,516
Other assets
-
-
-
-
-
-
-
3,221,139
3,221,139
Total
14,367,238
8,934,993
3,567,670
3,367,146
3,406,734
12,680,806
26,014,526
3,009,154
75,348,267
Liabilities and stockholders' equity:
Savings, NOW and money market and
other interest bearing demand deposits
21,254,342
216,993
318,597
310,549
302,973
1,139,963
17,863,106
-
41,406,523
Certificates of deposit
2,338,802
1,066,684
1,531,137
1,074,288
676,054
1,166,414
1,625,982
-
9,479,361
Federal funds purchased and assets
sold under agreements to repurchase
29,356
9,645
-
-
-
-
-
-
39,001
Other short-term borrowings
650,000
-
-
-
-
-
-
-
650,000
Notes payable
25,000
-
25,000
24,500
-
6,112
678,965
-
759,577
Non-interest bearing deposits
-
-
-
-
-
-
15,304,209
15,304,209
Other non-interest bearing liabilities
-
-
-
-
-
-
-
1,460,517
1,460,517
Stockholders' equity
-
-
-
-
-
-
-
6,249,079
6,249,079
Total
$
24,297,500
$
1,293,322
$
1,874,734
$
1,409,337
$
979,027
$
2,312,489
$
20,168,053
$
23,013,805
$
75,348,267
Interest rate sensitive gap
(9,930,262)
7,641,671
1,692,936
1,957,809
2,427,707
10,368,317
5,846,473
(20,004,651)
-
Cumulative interest rate sensitive gap
(9,930,262)
(2,288,591)
(595,655)
1,362,154
3,789,861
14,158,178
20,004,651
-
-
Cumulative interest rate sensitive gap
to earning assets
(13.73)
%
(3.16)
%
(0.82)
%
(1.88)
%
(5.24)
%
(19.57)
%
(27.65)
%
-
-
81
Table 15, which presents the maturity distribution of earning assets, takes into consideration
prepayment assumptions.
Table 15 - Maturity Distribution
of Earning Assets
As of December 31, 2025
Maturities
After one year
After five years
through five years
through fifteen years
After fifteen years
One year
Fixed
Variable
Fixed
Variable
Fixed
Variable
(In thousands)
or less
interest rates
interest rates
interest rates
interest rates
interest rates
interest rates
Total
Money market securities
$
4,626,506
$
-
$
-
$
-
$
-
$
-
$
-
$
4,626,506
Investment and trading
securities
13,417,856
12,937,914
5,198
1,583,947
38,966
-
-
27,983,881
Loans:
Commercial
5,969,126
7,262,593
3,880,219
1,358,283
781,363
69,452
278,574
19,599,610
Construction
1,035,786
166,330
411,834
899
60,048
-
-
1,674,897
Leasing
687,344
1,459,161
-
9,743
-
-
-
2,156,248
Consumer
1,956,190
3,864,793
258,658
267,021
796,771
264
103,626
7,247,323
Mortgage
697,026
2,415,129
197,246
4,464,224
18,644
670,803
196,366
8,659,438
Subtotal loans
10,345,472
15,168,006
4,747,957
6,100,170
1,656,826
740,519
578,566
39,337,516
Total earning assets
$
28,389,834
$
28,105,920
$
4,753,155
$
7,684,117
$
1,695,792
$
740,519
$
578,566
$
71,947,903
Note: Equity securities available-for-sale and other investment
securities, including Federal Reserve Bank stock and
Federal Home Loan Bank stock
held by the Corporation, are not included in this table.
Loans held-for-sale have been allocated according to the
expected sale date.
Trading
The Corporation
engages in
trading activities
in the
ordinary course
of business
at its
subsidiaries, BPPR
and Popular
Securities.
Popular Securities
trading activities
consist primarily
of market-making
activities to
meet expected
customers needs
related to
its
retail brokerage business, and purchases and sales of
U.S. Government and government sponsored securities with the objective of
realizing gains
from expected
short-term price
movements. BPPRs
trading activities consist
primarily of
holding U.S.
Government
sponsored
mortgage-backed
securities
and
economic
hedges
of
the
related
market
risk
with
TBA
(to-be-announced)
market
transactions. In
addition, BPPR
uses forward
contracts or
TBAs that
have characteristics
similar to
that of
the forecasted
security
and its conversion timeline to hedge its securitization
pipeline.
At
December
31,
2025,
the
Corporation
held
trading
securities
with
a
fair
value
of
$36.6
million,
representing
0.05%
of
the
Corporations
total
assets,
compared
with
$32.8
million
and
0.05%,
respectively,
at
December
31,
2024.
The
trading
portfolio
consists
principally of
investment grade
securities
such
as mortgage-backed
securities
of
$23.4
million with
a
weighted average
yield of 5.20% and U.S. Treasuries of $12.5 million with a weighted average yield
of 2.57% at December 31, 2025 and $29.1 million
with a yield of 5.54% and $2.8 million with a
yield of 3.28%, respectively, as of December 31, 2024.
The Corporations trading activities are
limited by internal policies. For each
of the two subsidiaries, the
market risk assumed under
trading
activities
is
measured
by
the
5-day
net
value-at-risk
(VAR),
with
a
confidence
level
of
99%.
The
VAR
measures
the
maximum estimated loss that may occur over a
5-day holding period, given a 99% probability.
The
Corporations
trading
portfolio
had
a
5-day
VAR
of
$0.3
million
for
the
last
week
of
December
2025.
VAR
models
include
assumptions and
estimates thus
actual results
could differ
from the
outputs from
these models
and assumptions.
Back-testing is
performed
on
model
results
to
compare
actual
results
against
maximum
estimated
losses,
in
order
to
evaluate
model
and
assumptions accuracy.
82
In the opinion of management, the size and composition
of the trading portfolio does not represent
a significant source of market risk
for the Corporation.
Foreign Exchange
The Corporation holds
an interest in
BHD Len in
the Dominican Republic,
which is an
investment accounted for
under the equity
method. The
Corporations carrying
value of
the equity
interest in
BHD Len
approximated $249.4
million at
December 31,
2025.
This business is conducted in
the countrys foreign currency.
The resulting foreign currency translation
adjustment, from operations
for which the functional
currency is other than
the U.S. dollar,
is reported in accumulated
other comprehensive income (loss) in
the
consolidated
statements
of
condition,
except
for
highly-inflationary
environments
in
which
the
effects
would
be
included
in
the
consolidated statements
of
operations. At
December 31,
2025, the
Corporation had
approximately $
85 million in
an unfavorable
foreign currency translation
adjustment as part
of accumulated other
comprehensive income (loss),
compared with an
unfavorable
adjustment of $ 71 million at December 31,
2024 and $ 65 million at December 31,
2023.
Liquidity
Liquidity Risk Management Process
The Corporation
has adopted
policies and
limits to
monitor the
Corporations liquidity
position and
that of
its banking
subsidiaries.
Refer to
the Enterprise
Risk Management
section of
Managements Discussion
and Analysis
included in
the 2025
Form 10-K
for
information on the framework
in place to monitor,
review, and approve
policies to measure, limit and
manage funding activities and
strategies
impacting
liquidity
risk.
Additionally,
contingency
funding
plans
are
used
to
model
various
stress
events
of
different
magnitudes that
affect different
time horizons,
to assist
management in
evaluating the
size of
the liquidity
buffers needed
if those
events occur. However,
such models may not predict
accurately how the market and customers
might react to every
event and are
dependent on
many assumptions.
The objective
of effective
liquidity management
is to
ensure that
the Corporation
has sufficient
liquidity
to
meet
all
its
financial
obligations,
finance
expected
future
growth,
fund
planned
capital
distributions
and
maintain
a
reasonable safety margin for cash needs under both
normal and stressed market conditions.
Sources of Liquidity
Deposits, including
customer deposits,
brokered deposits
and public
funds deposits,
continue to
be the
most significant
source of
funds for the
Corporation, representing
88% of funding
of the Corporations
total assets at
December 31, 2025 and
December 31,
2024. The ratio of total ending loans to deposits was 59% and 57% at December 31, 2025 and December 31, 2024, respectively.
In
addition to
traditional deposits,
the Corporation
maintains borrowing
arrangements, which
amounted to
$1.4 billion
in outstanding
balances at December 31, 2025 (December 31, 2024 - $1.2 billion). A detailed
description of the Corporations borrowings, including
their terms,
is included
in Note
16 to
the Consolidated
Financial Statements. Also,
the Consolidated Statements
of Cash
Flows in
the accompanying Consolidated Financial Statements provide
information on the Corporations cash inflows and outflows.
The
following
sections
provide
further
information
on
the
Corporations
major
funding
activities
and
needs,
as
well
as
the
risks
involved in these activities.
Banking Subsidiaries
Primary
sources of
funding
for the
Corporations
banking subsidiaries
(BPPR and
PB
or,
collectively,
the banking
subsidiaries)
include
retail,
commercial
and
public
sector
deposits,
brokered
deposits,
unpledged
investment
securities,
mortgage
loan
securitization and, to a lesser extent, loan sales. In
addition, the Corporation maintains borrowing facilities with the FHLB and at the
discount window
of the
Federal Reserve
Bank of
New York
(the FRB)
and has
a considerable
amount of
collateral pledged
that
can be used to raise funds under these facilities.
During the second quarter of 2025, BPPR was able to increase its available
liquidity by approximately $2.9 billion after the merger of
Popular Auto, LLC with
and into BPPR, effective
on May 1,
2025, that allowed BPPR
to pledge auto loans
and leases as collateral
under the federal
reserves discount window.
At December 31,
2025, the Corporations
available liquidity amounted to
$27.0 billion
(December
31,
2024
-
$21.6
million),
which
includes
$3.2
billion
related
to
auto
loans
and
leases
pledged
under
the
federal
83
reserves
discount
window.
During
the
fourth
quarter
of
2025,
the
Corporation
had
no
material
incremental
use
of
its
available
liquidity sources. The liquidity sources of the Corporation
at December 31, 2025 are presented in Table 16 below:
Table 16 - Liquidity Sources
December 31, 2025
December 31, 2024
(In thousands)
BPPR
Popular U.S.
Total
BPPR
Popular U.S.
Total
Unpledged securities and unused funding
sources:
Money market (excess funds at the
Federal Reserve Bank)
$
3,595,806
$
1,020,478
$
4,616,284
$
4,882,358
$
1,488,857
$
6,371,215
Unpledged securities
5,215,981
1,057,129
6,273,110
3,806,066
522,869
4,328,935
FHLB borrowing capacity
3,291,672
692,744
3,984,416
2,777,090
1,058,921
3,836,011
Discount window of the Federal Reserve
Bank borrowing capacity
8,472,866
3,644,486
12,117,352
4,839,388
2,178,646
7,018,034
Total available liquidity
$
20,576,325
$
6,414,837
$
26,991,162
$
16,304,902
$
5,249,293
$
21,554,195
Refer
to
Note
16
to
the
Consolidated
Financial
Statements
for
additional
information
of
the
Corporations
borrowing
facilities
available through its banking subsidiaries.
The principal
uses of
funds for
the banking
subsidiaries include
loan originations,
investment portfolio
purchases, loan
purchases
and repurchases, repayment of outstanding obligations (including deposits), advances on certain serviced portfolios and operational
expenses. Also, the
banking subsidiaries assume liquidity
risk related to collateral
posting requirements for certain
activities mainly
in
connection
with
contractual
commitments,
recourse
provisions,
servicing
advances,
derivatives
and
credit
card
licensing
agreements.
The banking
subsidiaries maintain
sufficient funding
capacity to
address large
increases in
funding requirements
such as
deposit
outflows.
The
Corporation has
established
liquidity
guidelines
that
require
the
banking
subsidiaries
to
have
sufficient
liquidity
to
cover all short-term borrowings and a portion of deposits.
Deposits are
a key
source of
funding. Refer
to Table
8 for
a breakdown
of deposits
by major
types. Core
deposits are
generated
from a large base of consumer, corporate and public sector customers. Core deposits
include certificates
of deposit under $250,000,
all
interest-bearing
transactional
deposit
accounts,
non-interest-bearing
deposits,
and
savings
deposits.
Core
deposits
exclude
brokered
deposits
and
certificates
of
deposit
over
$250,000.
Core
deposits,
excluding
P.R.
public
funds,
which
are
fully
collateralized, have
historically provided
the Corporation
with a
sizable source
of relatively
stable and
low-cost funds.
P.R.
public
funds, while linked to market interest rates, provide a stable source of funding with an
attractive earning spread. As of December 31,
2025, total Puerto Rico public sector deposits were $19.4
billion, compared to $19.5 billion at December
31, 2024.
Core deposits represent
92% of total
deposits at $60.9 billion,
as of December
31, 2025, compared with
92% at $59.9
billion as of
December 31, 2024.
Core deposits financed
85% of the
Corporations earning assets
at December 31,
2025, compared to
86% at
December 31, 2024.
The Corporation
had $1.0
billion in
brokered deposits
at December
31, 2025,
which financed
approximately 1%
of its
total assets
(December 31, 2024 - $1.6 billion and 2% respectively.
The distribution by maturity of certificates of deposit with denominations of $250,000 and over at December 31, 2025 is presented in
the table that follows:
84
Table 17 - Distribution by
Maturity of Certificates of Deposit of $250,000 and Over
(In thousands)
3 months or less
$
2,479,766
Over 3 to 12 months
1,017,526
Over 1 year to 3 years
280,721
Over 3 years
136,733
Total
$
3,914,746
For
the
year
ended
December
31,
2025,
average
deposits,
including
brokered
deposits,
represented
91%
of
average
earning
assets, compared with 92% for the year ended December
31, 2024. Table 18 summarizes average deposits for the past two years.
Table 18 - Average
Total Deposits
For the years ended December 31,
(In thousands)
2025
2024
[2]
Deposits excluding P.R.
public deposits
Demand deposits
$
14,787,933
$
15,065,039
Savings, NOW and money market deposits (non-brokered)
22,599,111
21,889,652
Savings, NOW and money market deposits (brokered)
90,776
103,201
Time deposits (non-brokered)
7,890,260
7,360,538
Time deposits (brokered CDs)
765,424
823,145
Sub-total deposits excluding P.R.
public deposits
46,133,504
45,241,575
P.R. public
deposits:
Demand deposits
[1]
12,125,807
11,754,910
Savings, NOW and money market deposits (non-brokered)
7,407,669
6,728,781
Time deposits (non-brokered)
735,200
719,017
Sub-total P.R.
public deposits
20,268,676
19,202,708
Average total deposits
$
66,402,180
$
64,444,283
[1] Includes interest bearing demand deposits.
[2] Savings, NOW and money market deposits include
reciprocal deposits of $790 million (2024-$661.5 million)
that were categorized as brokered
deposits at December 31, 2024 and recharacterized
as non-brokered for December 31, 2025. Similarly,
Time deposits include reciprocal deposits
of
$120.1 million (2024-$133.1 million) that were categorized
as brokered deposits at December 31, 2024 and recharacterized
as non-brokered for
December 31, 2025. The presentation for the year 2024
has been adjusted to conform to the 2025 presentation.
As of
December 31,
2025, the
banking subsidiaries
had sufficient
current and
projected liquidity
sources to
meet their
anticipated
cash flow
obligations, as
well as
special needs
and off-balance
sheet commitments,
in the
ordinary course
of business
and have
sufficient
liquidity
resources
to
address
stress
events.
Although
the
banking
subsidiaries
have
historically
been
able
to
replace
maturing
deposits and
advances, no
assurance can
be given
that
they
would be
able to
replace those
funds
in the
future if
the
Corporations
financial condition
or
general market
conditions
were to
deteriorate. The
Corporations 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
Corporations
financial
flexibility
and
ability
to
grow
revenues may not increase proportionately to cover costs and
profitability would be adversely affected.
85
The Corporation considers balances in
excess of $250,000 to have a
higher potential liquidity risk.
Table
19 reflects the aggregate
balance in
deposit accounts
in excess
of $250,000,
including collateralized
public funds
and deposits
outside of
the U.S.
and its
territories.
Collateralized public funds, as presented in Table 19, represent public deposit balances from governmental
entities in the
U.S.
and
its
territories,
including
Puerto
Rico
and
the
United
States
Virgin
Islands,
collateralized
based
on
such
jurisdictions
applicable collateral requirements.
86
Table 19 - Deposits
31-Dec-25
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$
23,873,328
44
%
$
8,283,967
69
%
$
32,157,295
49
%
Transactional deposits balances over
$250,000
8,254,961
15
%
2,341,365
19
%
10,596,326
16
%
Time deposits balances over $250,000
2,182,301
4
%
794,183
7
%
2,976,484
4
%
Uninsured foreign deposits
446,360
1
%
-
-
%
446,360
1
%
Collateralized public funds
19,748,934
36
%
264,694
2
%
20,013,628
30
%
Intercompany deposits
235,251
-
%
349,483
3
%
-
-
%
Total deposits
$
54,741,135
100
%
$
12,033,692
100
%
$
66,190,093
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
31-Dec-24
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$
23,588,937
44
%
$
7,961,334
68
%
$
31,550,271
49
%
Transactional deposits balances over
$250,000
8,046,175
15
%
1,944,674
16
%
9,990,849
15
%
Time deposits balances over $250,000
1,991,934
4
%
813,424
7
%
2,805,358
4
%
Uninsured foreign deposits
450,068
1
%
-
-
%
450,068
1
%
Collateralized public funds
19,771,083
36
%
316,716
3
%
20,087,799
31
%
Intercompany deposits
205,839
-
%
667,839
6
%
-
-
%
Total deposits
$
54,054,036
100
%
$
11,703,987
100
%
$
64,884,345
100
%
[1] Includes the first $250,000 in balances of transactional
and time deposit accounts with balances in excess
of $250,000.
Bank Holding Companies
The principal
sources of
funding for
the BHCs,
which are
Popular,
Inc.
(holding company
only) and
PNA, include
cash on
hand,
investment
securities,
dividends
received from
banking
and
non-banking subsidiaries,
asset sales,
credit
facilities
available from
affiliate banking subsidiaries and proceeds from potential securities offerings.
Dividends from banking and non-banking subsidiaries
are subject
to various
regulatory limits
and authorization
requirements imposed
by banking
regulators, including
the FED
and the
NYDFS, that may limit the ability of those subsidiaries
to act as a source of funding to the BHCs.
The principal uses of these funds include the repayment of debt, interest payments to holders of senior debt and junior subordinated
deferrable interest debentures (related to trust preferred securities), the payment of dividends to common stockholders,
repurchases
of the Corporations securities and capitalizing its subsidiaries.
The
outstanding
balance
of
notes
payable
at
the
BHCs
amounted
to
$595
million
at
December
31,
2025
and
$594
million
at
December 31, 2024.
The contractual maturities of the BHCs notes payable
at December 31, 2025 are presented in
Table 20.
Table 20
- Distribution of BHC's Notes Payable by Contractual
Maturity
Year
(In thousands)
2028
396,558
Later years
198,399
Total
$
594,957
87
As of
December 31,
2025, the
BHCs had
cash and
money markets
investments totaling
$524.8 million
and borrowing
potential of
$165 million from its secured facility with BPPR.
The BHCs liquidity position continues to be adequate with sufficient
cash on hand,
investments and
other sources of
liquidity that are
expected to be
sufficient to
meet all
interest payments and
dividend obligations
for the
foreseeable future.
Additionally,
the Corporations
latest quarterly
paid dividend
was $0.75
per share
or approximately
$47
million per quarter.
The BHCs have in
the past borrowed in the
corporate debt market primarily to finance
their non-banking subsidiaries and refinance
debt
obligations.
These
sources
of
funding
are
more
costly
given
that
two
out
of
three
principal
credit
rating
agencies
rate
the
Corporations debt
securities below
investment grade.
The Corporation
has a
shelf registration
statement filed
and effective
with
the
Securities
and
Exchange
Commission,
which
permits
the
Corporation
to
issue
an
unspecified
amount
of
debt
or
equity
securities.
Non-Banking Subsidiaries
The
principal
sources
of
funding
for
the
non-banking
subsidiaries
include
internally
generated
cash
flows
from
operations,
loan
sales, repurchase agreements, capital
injections and borrowed funds
from their direct
parent companies or the
holding companies.
The principal uses of funds for the non-banking
subsidiaries include repayment of maturing debt,
operational expenses and payment
of dividends to the BHCs.
Dividends
The
Corporation
increased
its
quarterly
common
stock
dividend
from
$0.70
to
$0.75
per
share,
commencing
with
the
dividend
declared in the third
quarter of 2025. During the
year ended December 31, 2025,
the Corporation declared cash dividends of
$2.90
per
common
share
outstanding
($196.2
million
in
the
aggregate).
The
dividends
for
the
Corporations
Series
A
preferred
stock
amounted to $1.4 million.
During the
year ended December
31, 2025,
the BHCs
received dividends and
distributions amounting to
$575 million
from BPPR,
$23 million
from Popular
International Bank,
Inc. (PIBI)
and $22
million from
its other
non-banking subsidiaries.
Dividends from
BPPR constitute
Popular,
Inc.s primary
source of
liquidity.
In addition,
during the
year ended
December 31,
2025, PIBI,
a wholly
owned subsidiary of Popular, Inc., received $20.0 million in cash dividends and $5.3
million in stock dividends from its investment in
BHD.
In
addition to
regulatory
limits previously
discussed, the
ability
of a
bank
subsidiary to
up-stream dividends
to
its
BHC could
be
impacted by
its financial
performance and
capital, including
tangible and
regulatory capital,
thus potentially
limiting the
amount of
cash up
streamed to
the BHCs
from the
banking subsidiaries.
This could,
in turn,
affect BHCs
ability to
declare dividends
on its
outstanding common and preferred stock, repurchase its securities or meet its debt obligations. At December 31, 2025, BPPR could
declare
a
dividend
of
up
to
approximately
$191
million
without
prior
approval
of
the
Federal
Reserve
Board
due
to
its
retained
income, declared dividend activity and transfers to statutory reserves
over the measurement period. In addition, pursuant to the FRB
requirements, PB may not declare or pay a dividend
without the prior approval of the Federal Reserve
Board and the NYSDFS.
Other Funding Sources and Capital
In addition to cash reserves held at
the FRB that totaled $4.7 billion at
December 31, 2025, the debt securities portfolio provides an
additional
source
of
liquidity,
which
may
be
realized
through
either
securities
sales,
collateralized
borrowings
or
repurchase
agreements.
The
Corporations
debt
securities
portfolio
consists
primarily
of
liquid
U.S.
government
debt
securities
and
U.S.
government sponsored agency
mortgage-backed securities that can
be used to
raise funds in
the repo markets.
The availability of
repurchase
agreements
would
be
subject
to
having
sufficient
unpledged
collateral
available
at
the
time
the
transactions
are
consummated,
in
addition
to
overall
liquidity
and
risk
appetite of
the
various
counterparties.
Refer
to
Table
16
for
details
of
the
Corporations
unpledged
debt
securities
and
available
credit
facilities
with
the
FHLB
and
the
discount
window
of
the
Federal
Reserve Bank.
A substantial
portion of
these debt
securities could
be used
to raise
financing in
the U.S.
money markets
or from
secured lending sources,
subject to changes in their fair market value and
customary adjustments (haircuts).
Additional
liquidity
may
be
provided
through
loan
maturities,
prepayments
and
sales.
The
loan
portfolio
provides
a
source
of
collateral to
secure the
available credit
facilities with
the FHLB
and the
discount window
of the
Federal Reserve
Bank. The
loan
portfolio
can
also
be
used
to
obtain
funding
in
the
capital
markets.
Mortgage
loans
and
some
types
of
consumer
loans,
have
secondary markets which the Corporation could use.
Off-Balance Sheet Arrangements and Other Commitments
88
In the ordinary course
of business, the Corporation
engages in financial transactions that
are not recorded on
the balance sheet or
may be recorded on the balance sheet in amounts that are different than the full contract or notional amount of the transaction. As a
provider of
financial services,
the Corporation
routinely enters
into commitments
with off-balance
sheet risk
to meet
the financial
needs
of
its
customers.
Refer
to
Note
23
to
the
Consolidated
Financial
Statements
for
information
on
the
Corporations
commitments to extent credit and other non-credit commitments.
Other types
of off-balance
sheet arrangements
that the
Corporation enters
in the
ordinary course
of business
include derivatives,
operating
leases
and
provision
of
guarantees,
indemnifications,
and
representation
and
warranties.
Refer
to
Note
22
to
the
Consolidated Financial
Statements for
a detailed
discussion related
to the
Corporations 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 PBs
subsidiaries: Popular Equipment Finance, LLC,
Popular Insurance Agency, U.S.A., and E-LOAN, Inc.
PNA has issued junior subordinated debentures guaranteed by PIHC (the obligor group), purchased by statutory
trusts established
by the Corporation using proceeds from trust preferred
securities (capital securities) and common securities
of the trusts.
PIHC guarantees
the junior
subordinated debentures
issued by
PNA. If
PIHC fails
to make
interest payments
on the
debentures
held by the trust,
the trust will not
distribute payments on the
capital securities. The guarantee
ranks subordinate and junior
in right
of
payment to
all
other liabilities
of
PIHC and
equally with
all
other PIHC-issued
guarantees, allowing
direct
legal
action against
PIHC without involving other entities.
Funding
for
PIHC
and
PNA
includes
dividends
from
subsidiaries,
asset
sales,
and
proceeds
from
debt
and
equity
issuance.
Statutory provisions limit the dividends an insured
depository institution can pay to its holding
company without regulatory approval.
The summarized financial
information below shows
the combined financial
position of the
obligor group as
of December 31,
2025,
and December
31, 2024,
and the
results of
their operations
for the
years
ending on
those dates.
Excluded are
investments and
equity in earnings from subsidiaries and affiliates outside
the obligor group.
Intercompany balances
and transactions
within the
obligor group
have been
eliminated. Material
amounts due
from, due
to, and
transactions with subsidiaries and affiliates are shown separately. Related party transactions
are also presented separately.
89
Table 21 - Summarized Statement
of Condition
(In thousands)
December 31, 2025
December 31, 2024
Assets
Cash and money market investments
$
524,882
$
634,809
Investment securities
38,656
35,150
Accounts receivables from non-obligor subsidiaries
12,798
14,602
Accounts receivables from affiliates and related parties
-
-
Other loans (net of allowance for credit losses of $132 (2024
- $281))
24,169
25,381
Investment in equity method investees
5,145
5,279
Other assets
91,618
65,483
Total assets
$
697,268
$
780,704
Liabilities and Stockholders' equity
Accounts payable to non-obligor subsidiaries
$
7,669
$
12,163
Notes payable
594,958
593,571
Other liabilities
135,785
126,718
Stockholders' (deficit) equity
(41,144)
48,252
Total liabilities and
stockholders' equity
$
697,268
$
780,704
Table 22 - Summarized Statement
of Operations
For the years ended
(In thousands)
December 31, 2025
December 31, 2024
Income:
Dividends from non-obligor subsidiaries
$
596,500
$
623,000
Interest income from non-obligor subsidiaries and affiliates
4,021
9,784
(Losses) earnings from investments in equity method
investees
(135)
15
Other operating income
7,571
2,399
Total income
$
607,957
$
635,198
Expenses:
Services provided by non-obligor subsidiaries and affiliates
(net of
reimbursement by subsidiaries for services provided by parent
of
$253,213 (2024 - $172,449))
$
19,240
$
13,328
Other expenses
24,328
37,391
Income tax (benefit) expense
[1]
(2,443)
20,725
Total expenses
$
41,125
$
71,444
Net income
$
566,832
$
563,754
[1] The net income for the year ended
December 31, 2024, included $22.9 million
of expenses, of which $16.5 million was
reflected in income
tax
expense
and
$6.4
million
was
reflected
in
other
operating
expenses,
related
to
an
out-of-period
adjustment
associated
with
the
Corporations U.S.
subsidiarys non-payment
of taxes
on certain
intercompany distributions
to the
Bank Holding
Company (BHC)
in Puerto
Rico, a foreign corporation for U.S. tax purposes.
90
In addition to
the dividend income
reflected in the
Statement of Operations
table above,
during the year
ended December
31,
2025,
the
obligor
group
recorded
a
$23.0
million
of
dividend
distributions
from
non-obligor
subsidiary
which
was
recorded as a reduction to the investment (2024 -
$67.4 million).
91
Risk to Liquidity
The
Corporations
liquidity
may
come
under
pressure
if
it
experiences
significant
unexpected
cash
outflows
due
to
deposit
withdrawals, which could arise
from various factors like
economic conditions, loss of
depositor confidence, competition, exogenous
events, regulatory requirements or changes, a
downgrade in credit rating, or other events
causing counterparties to avoid exposure.
Investors should refer to Liquidity Risks section
of Part I, Item 1A of
this Form 10-K for an
additional discussion of liquidity risks to
which the Corporation is subject.
Credit Risk
Geographic and Government Risk
The Corporation is exposed to geographic and government risk.
The Corporations assets and revenue composition by geographical
area and by
business segment reporting are
presented in Note
32 to the
Consolidated Financial Statements. Readers should
refer
to
the Economic
and Market
Risk section
and the
Business Risk
section of
Part I,
Item 1A
of
this Form
10-K for
an additional
discussion
on
how
the
Corporation is
impacted
by
global
and
local
economic
and
market
conditions, including
weakness
in
the
economy,
particularly in Puerto
Rico, where a
significant portion of
our business is
concentrated. This section
also addresses how
our credit risk and credit
losses can increase to the extent
our loans are concentrated on borrowers engaged in
the same or similar
activities or in borrowers who as a group
may be uniquely or disproportionately affected by certain
economic or market conditions.
Commonwealth of Puerto Rico
A
significant portion
of
our financial
activities and
credit
exposure is
concentrated in
the
Commonwealth of
Puerto Rico
(Puerto
Rico) which has faced severe economic and fiscal
challenges in the past and may face additional
challenges in the future.
Economic Performance
The latest estimates from the
Puerto Rico Planning Board (the
Planning Board) indicate that real
GNP grew by 2.1%
during fiscal
year
2024
(July 2023-June
2024) and
by
1.1% in
fiscal
year
2025 (July
2024-June 2025).
For fiscal
year 2026
(July
2025-June
2026), the Planning Board
forecasted modest GNP growth of
0.5%. Meanwhile, the Puerto Rico
Economic Activity Index showed a
0.8% year-over-year increase and a 0.1% month-over-month
increase in November 2025. While this index is not
a direct measure of
real GNP, it serves as an indicator of ongoing economic activity.
In
2021
and
2022,
inflation
rose
sharply
in
the
U.S.
and
Puerto
Rico
due
to
post-pandemic
demand
and
supply
chain
issues.
Inflation
began
to
decrease
by
mid-2022
as
the
Federal
Reserve
raised
interest
rates,
largely
stabilizing
by
September
2024,
leading
to
a
series
of
rate
reductions
by
the
Federal
Reserve
for
the
first
time
in
four
years.
As
of
December
2025,
the
U.S.
Consumer Price Index
showed a 2.7%
year-over-year increase, which
is significantly lower
than peak
2022 inflation levels
but still
above the Federal Reserves 2% target. In Puerto Rico,
the Consumer Price Index increased by 1.9%
over the same period.
Fiscal Challenges of Puerto Rico and its Municipalities
As
Puerto Ricos
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 Ricos
fiscal and economic affairs,
including those of its public
corporations, instrumentalities and municipalities
(collectively, PR Government Entities).
In August 2025, President Donald J. Trump dismissed six of the seven members of
the Oversight Board, reportedly due to inefficient
leadership and excessive spending. Three of the dismissed members subsequently filed suit in federal
court challenging the legality
of their dismissal. On October 3, 2025, the court issued a preliminary injunction that effectively reinstated such members and barred
the seating of replacement members while the case proceeds. An
appeal of this ruling has been filed and remains
pending. It is still
too early to determine what impact these developments
may have on Puerto Ricos fiscal and economic affairs.
92
Under PROMESA, the Oversight
Board will remain
in place until market
access is restored and
balanced budgets are achieved for
at
least
four
consecutive
years.
PROMESA
also
established
two
mechanisms
for
the
restructuring
of
the
obligations
of
PR
Government Entities:
(a) Title
III, an
in-court process
akin to
that of
the U.S.
Bankruptcy Code
and which
permits adjustment
of a
broad range
of
obligations, and
(b) Title
VI,
a largely
out-of-court process
through which
a supermajority
of creditors
can
accept
modifications to debt and bind holdouts.
Since
2017,
Puerto
Rico
and
several
of
its
instrumentalities
have
availed
themselves
of
these
mechanisms.
The
Puerto
Rico
government exited Title III in March 2022, and several instrumentalities, such as the Government Development Bank and the Puerto
Rico Highways and Transportation
Authority have also completed
debt restructurings under Titles
III or VI
of PROMESA. However,
the Puerto Rico Electric Power Authority is still undergoing
its debt restructuring.
Puerto
Rico's economic
difficulties
have also
impacted its
municipalities. Historically,
the central
government provided
significant
municipal subsidies. However, these have decreased pursuant to fiscal measures required by the Oversight Board. This decline has
been partly
offset by
federal disaster
and COVID-relief
funding received
by municipalities
in recent
years. The
latest Puerto
Rico
fiscal plan proposes a
restructured grant system to enhance
municipal services and encourage accountability through
performance
metrics.
Municipalities
are
subject
to
PROMESA,
and
the
Oversight
Board
has
required
certain
municipalities
to
submit
fiscal
plans
and
annual budgets
for review
and approval.
Municipalities are
also required
to seek
Oversight Board
approval to
issue, guarantee
or
modify
their
debts
and
to
enter
into
significant
contracts.
To
date
no
municipality
has
availed
itself
of
the
debt
restructuring
mechanisms available to them under PROMESA.
Exposure of the Corporation
The credit quality of BPPRs
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
Corporations
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.
BPPRs
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 Ricos
fiscal challenges.
For
further
discussion
of
the
Corporations
direct
and
indirect
exposure
to
the
Puerto
Rico
government and
its
instrumentalities and
municipalities, please refer to Note 23 Commitments
and Contingencies to the Consolidated
Financial Statements.
The
Corporation
also
maintains
significant
deposits
from
P.R.
Government
Entities,
with
future
balances
subject
to
various
uncertainties.
Further
information
on
Puerto
Rico
Government
deposits
is
included
in
Note
15
Deposits
to
the
Consolidated
Financial Statements.
United States Virgin Islands
The Corporation has operations in the United
States Virgin Islands (USVI) and has credit exposure
to USVI government entities.
Non-Performing Assets
Non-performing assets (NPAs)
include primarily past-due
loans that
are no
longer accruing interest,
renegotiated loans, and
real
estate property acquired through foreclosure. A summary, including certain credit
quality metrics, is presented in Table 23.
During 2025, the Corporations credit quality metrics were affected by two significant unrelated commercial exposures, resulting in a
$188.4 million increase
in non-performing loans (NPLs).
The determination to classify
these loans as
NPLs was driven
by factors
specific to the individual borrowers and are not
believed to be indicative of a broader decline
in portfolio credit quality.
The first
loan classified
as NPL
is a
$158.3 million
commercial and
industrial facility
issued to
a telecommunications
company in
Puerto Rico
experiencing reduced
revenue due
to operational
challenges following
a business
acquisition and
client attrition.
The
second loan classified as
NPL is a $30.1
million commercial real estate
facility, following
a $13.5 million charge-off,
and is secured
by a hotel property in Florida.
93
Excluding these cases, credit
quality metrics reflected favorable trends. The
Corporation continues to closely monitor the
economic
landscape
and
borrower
performance,
as
economic
uncertainty
remains
a
key
consideration.
The
Corporations
experience
managing credit risk under
different macroeconomic and operating
environments and, more recently,
the steps taken
around credit
tightening
supports
managements
view
that
exposure
to
riskier
borrowers
is
adequately
managed.
Nonetheless,
carefully
monitoring the performance of our loan portfolio and
its response to the environment will continue
to be a priority.
Total
NPAs of $540.8 million as of December
31, 2025, increased by $132.7 million when compared with December 31, 2024. Total
NPLs of
$498.3 million increased
by $147.6
million from December
31, 2024.
BPPRs NPLs
increased by $166.6
million, primarily
due to the classification of the two commercial exposures with book values of $158.3 million and $30.1 million as NPLs, partly offset
by lower mortgage
NPLs by $26.1
million. Popular U.S.
NPLs decreased by
$19.1 million, mostly
driven by a
decrease of $16.5
in
the mortgage NPLs, due to the return
to accrual of a single loan after a period of
sustained performance.
On December
31, 2025,
the ratio
of NPLs
to total
loans held-in-portfolio
was 1.27%,
compared to
0.95%, at
December 31,
2024.
Other real estate owned loans (OREOs) totaled
$42.4 million, a decrease of $14.8 million from December
31, 2024.
The Corporations
commercial loan
portfolio secured
by real
estate (CRE)
amounted to
$11.2
billion on
December 31,
2025, of
which
$3.2
billion
was
secured
with
owner
occupied
properties,
compared
with
$10.9
billion
and
$3.2
billion,
respectively,
on
December 31, 2024.
CRE NPLs
amounted to
$76.0 million
at December
31, 2025,
compared with
$53.7 million
at December
31, 2024.
The CRE
NPL
ratios for the BPPR and Popular U.S. segments were 1.23% and 0.25%, respectively,
at December 31, 2025, compared with 0.64%
and 0.37%, respectively, on December 31, 2024.
The non-owner occupied CRE portfolio was $5.5 billion at December 31, 2025, split between $3.4 billion in BPPR and $2.1
billion in
Popular U.S. This portfolio is diversified across sectors: retail (34%), hotels (19%),
and office space (12%) which together represent
two-thirds of
total non-owner
occupied CRE
exposure. Specifically,
office space
leasing accounts
for just
1.7% ($685.2
million) of
the total loan portfolio, mainly comprising mid-rise properties with an average loan size of $3 million, and is well diversified by tenant
type.
Within CRE, the
commercial multi-family portfolio is
$2.5 billion (approximately 6%
of total loans),
concentrated in New
York
Metro
($1.4 billion), South Florida ($664.1 million) and Puerto Rico ($196.7
million) regions. In the New York Metro, there is no exposure to
rent-controlled buildings and rent-stabilized
units make up less than 40% of total units,
with most originated after 2019.
In
addition
to
the
NPLs
included
in
Table
23,
at
December
31,
2025,
there
were
$499.6
million
of
performing
loans,
mostly
commercial
loans,
which
in
managements
opinion,
are
currently
subject
to
potential
future
classification
as
non-performing
(December 31, 2024 - $596 million).
The following table presents the Corporations NPAs as of December 31, 2025 and
2024:
94
Table 23 - Non-Performing
Assets
December 31, 2025
December 31, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Non-accrual loans:
Commercial
Commercial multi-family
$
112
$
8,636
$
8,748
$
79
$
8,700
$
8,779
Commercial real estate non-owner
occupied
35,692
7,020
42,712
6,429
8,015
14,444
Commercial real estate owner occupied
24,567
-
24,567
25,258
5,191
30,449
Commercial and industrial
183,914
6,498
190,412
19,335
1,748
21,083
Total Commercial
244,285
22,154
266,439
51,101
23,654
74,755
Leasing
9,179
-
9,179
9,588
-
9,588
Mortgage
132,373
13,422
145,795
158,442
29,890
188,332
Consumer
Home equity lines of credit
-
2,796
2,796
-
3,393
3,393
Personal
18,863
1,233
20,096
20,269
1,741
22,010
Auto
52,200
-
52,200
51,792
-
51,792
Other
1,809
29
1,838
899
11
910
Total Consumer
72,872
4,058
76,930
72,960
5,145
78,105
Total non-performing
loans held-in-portfolio
458,709
39,634
498,343
292,091
58,689
350,780
Other real estate owned (OREO)
41,929
504
42,433
57,197
71
57,268
Total non-performing
assets
[1]
$
500,638
$
40,138
$
540,776
$
349,288
$
58,760
$
408,048
Accruing loans past due 90 days or more
[2]
$
228,772
$
188
$
228,960
$
242,250
$
190
$
242,440
Non-performing loans
to loans held-in-
portfolio
1.27
%
0.95
%
Interest Lost
12,598
15,565
[1] There were no non-performing loans held-for-sale
as of December 31, 2025 and December 31, 2024.
[2] It is the Corporations
policy to report delinquent
residential mortgage loans
insured by FHA or
guaranteed by the VA
as accruing loans past
due 90
days or more as opposed to non-performing
since the principal repayment is insured.
These balances include $47 million of
residential mortgage loans
insured by FHA or guaranteed by the VA
that are no longer accruing interest as of
December 31, 2025 (December 31, 2024
- $65 million). Furthermore,
at December 31, 2025 the
Corporation had approximately
$27 million in reverse
mortgage loans which are
guaranteed by FHA, but
which are currently
not accruing
interest. Due
to the
guaranteed nature
of the
loans, it
is the
Corporations
policy to
exclude these
balances from
non-performing assets
(December 31, 2024 - $31 million).
For
the
year
ended December
31,
2025,
total
inflows
of
NPLs
held-in-portfolio, excluding
consumer loans,
increased by
$132.1
million, compared to
the same
period in 2024.
Inflows of
NPLs held-in-portfolio at
the BPPR segment
increased by $198.2
million,
compared to the same period in 2024, mainly driven
by higher commercial inflows by $216.2 million, in
part offset by lower mortgage
inflows by $18.0 million. The increase in commercial inflows was primarily driven by the abovementioned exposures, totaling $188.4
million, which were classified as NPLs during the third quarter of 2025. Inflows
of NPLs held-in-portfolio at the Popular U.S. segment
decreased by $66.0 million from the same period in 2024, mainly
driven by lower commercial and mortgage inflows by $29.9 million
and $36.2 million, respectively.
Tables 24 to 30 present the Corporations inflows to NPLs for the years ended 2025 and 2024.
95
Table 24 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the year ended December 31, 2025
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
- NPLs
$
209,543
$
53,544
$
263,087
Plus:
New non-performing loans
359,190
32,318
391,508
Advances on existing non-performing loans
(2,312)
117
(2,195)
Less:
Non-performing loans transferred to OREO
(13,067)
(433)
(13,500)
Non-performing loans charged-off
(18,325)
(1,730)
(20,055)
Loans returned to accrual status / loan collections
(158,371)
(48,240)
(206,611)
Ending balance - NPLs
$
376,658
$
35,576
$
412,234
Table 25 - Activity in Non
-Performing Loans Held-in-Portfolio (Excluding Consumer
Loans)
For the year ended December 31, 2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$
254,476
$
22,354
$
276,830
Plus:
New non-performing loans
158,713
98,088
256,801
Advances on existing non-performing loans
-
382
382
Less:
Non-performing loans transferred to OREO
(16,572)
(24)
(16,596)
Non-performing loans charged-off
(18,643)
(1,885)
(20,528)
Loans returned to accrual status / loan collections
(168,431)
(65,371)
(233,802)
Ending balance -
NPLs
$
209,543
$
53,544
$
263,087
96
Table 26 - Activity in Non
-Performing Commercial Loans Held-In-Portfolio
For the year ended December 31, 2025
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$51,101
$23,654
$74,755
Plus:
New non-performing loans
234,270
19,092
253,362
Advances on existing non-performing loans
(2,312)
116
(2,196)
Less:
Non-performing loans transferred to OREO
(260)
-
(260)
Non-performing loans charged-off
(17,948)
(1,730)
(19,678)
Loans returned to accrual status / loan collections
(20,566)
(18,978)
(39,544)
Ending balance - NPLs
$244,285
$22,154
$266,439
Table 27 - Activity in Non
-Performing Commercial Loans Held-in-Portfolio
For the year ended December 31, 2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$72,992
11,163
$84,155
Plus:
New non-performing loans
15,749
48,764
64,513
Advances on existing non-performing loans
-
314
314
Less:
Non-performing loans transferred to OREO
(358)
-
(358)
Non-performing loans charged-off
(18,485)
(1,867)
(20,352)
Loans returned to accrual status / loan collections
(18,797)
(34,720)
(53,517)
Ending balance - NPLs
$51,101
$23,654
$74,755
97
Table 28 -
Activity in Non-Performing Construction Loans Held-in
-Portfolio
For the year ended December 31, 2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$6,378
$-
$6,378
Less:
Loans returned to accrual status / loan collections
(6,378)
-
(6,378)
Ending balance - NPLs
$-
$-
$-
Table 29 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the year ended December 31,
2025
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$158,442
$29,890
$188,332
Plus:
New non-performing loans
124,920
13,226
138,146
Advances on existing non-performing loans
-
1
1
Less:
Non-performing loans transferred to OREO
(12,807)
(433)
(13,240)
Non-performing loans charged-off
(377)
-
(377)
Loans returned to accrual status / loan collections
(137,805)
(29,262)
(167,067)
Ending balance - NPLs
$132,373
$13,422
$145,795
Table 30 - Activity in Non
-Performing Mortgage Loans Held-in-Portfolio
For the year ended December 31,
2024
(In thousands)
BPPR
Popular U.S.
Popular, Inc.
Beginning balance - NPLs
$175,106
$11,191
$186,297
Plus:
New non-performing loans
142,964
49,324
192,288
Advances on existing non-performing loans
-
68
68
Less:
Non-performing loans transferred to OREO
(16,214)
(24)
(16,238)
Non-performing loans charged-off
(158)
(18)
(176)
Loans returned to accrual status / loan collections
(143,256)
(30,651)
(173,907)
Ending balance - NPLs
$158,442
$29,890
$188,332
98
Loan Delinquencies
Another key measure used to evaluate and
monitor the Corporations asset quality is loan
delinquencies. Loans delinquent 30 days
or
more
and
delinquencies, as
a
percentage
of
their
related
portfolio
category
at
December
31,
2025
and
2024,
are
presented
below.
Table 31 - Loan Delinquencies
(Dollars in thousands)
December 31, 2025
December 31, 2024
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
of total loans
Loans delinquent
30 days or more
Total loans
Total delinquencies
as a percentage
of total loans
Commercial
Commercial multi-family
$
24,982
$
2,455,790
1.02
%
$
15,826
$
2,399,620
0.66
%
Commercial real estate
non-owner occupied
47,068
5,543,284
0.85
24,925
5,363,235
0.46
Commercial real estate
owner occupied
28,008
3,153,080
0.89
42,311
3,157,746
1.34
Commercial and industrial
215,068
8,607,412
2.50
49,942
7,741,562
0.65
Total Commercial
315,126
19,759,566
1.59
133,004
18,662,163
0.71
Construction
17,283
1,674,899
1.03
1,039
1,263,792
0.08
Mortgage
[1]
759,300
8,649,440
8.78
798,130
8,114,183
9.84
Leasing
37,567
2,001,365
1.88
39,641
1,925,405
2.06
Consumer
Credit cards
51,846
1,256,717
4.13
59,078
1,218,079
4.85
Home equity lines of credit
4,160
78,692
5.29
5,054
73,571
6.87
Personal
53,632
1,906,228
2.81
57,835
1,855,244
3.12
Auto
186,798
3,819,812
4.89
191,008
3,823,437
5.00
Other
5,929
180,799
3.28
3,930
171,778
2.29
Total Consumer
302,365
7,242,248
4.18
316,905
7,142,109
4.44
Loans held-for-sale
-
9,998
-
-
5,423
-
Total
$
1,431,641
$
39,337,516
3.64
%
$
1,288,719
$
37,113,075
3.47
%
[1]
Loans delinquent 30 days or more includes $0.4 billion
of residential mortgage loans insured by FHA or guaranteed
by the VA as of December
31, 2025 (December 31, 2024 - $0.4 billion). Refer to Note
7 to the Consolidated Financial Statements for additional information
of guaranteed loans.
Allowance for Credit Losses (ACL)
The ACL
represents managements
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 Corporations
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 managements estimates
are
recalibration
of
statistical
models
used
to
calculate
lifetime
expected
losses,
changes
in
underwriting
standards,
financial
accounting standards and loan impairment measurements,
among others. Changes in the financial condition
of individual borrowers,
in economic
conditions, and
in the
condition of
the various
markets in
which collateral
may be
sold, may
also affect
the required
level of
the allowance
for credit
losses. Consequently,
the business
financial condition,
liquidity,
capital, and
results of
operations
could also be affected.
99
At December
31, 2025,
the ACL
increased by
$62.1
million from
December 31,
2024 to
$808.1 million.
The increase
in ACL
was
driven
by
a
combination
of
changes
in
the
economic
scenario,
probability
weights,
loan
volumes
and
increases
in
qualitative
reserves, in
response to
the current
economic environment uncertainty,
coupled with
a specific
reserve recognized
for the
above-
mentioned $158.3 million commercial NPL inflow.
The
ACL
for
BPPR
increased
by
$47.3
million,
driven
by
a
combination
of
a
specific
reserve
recognized for
the
$158.3
million
commercial
NPL
inflow,
higher
loan
volumes,
changes
in
the
economic
scenario,
and
changes
in
the
probability
weights
that
resulted in a $8.8 million net ACL increase. In PB, the ACL
increased by $14.8 million, when compared to December 31, 2024. This
increase was
influenced by
higher qualitative
reserves for
the CRE
portfolio in
response to
current market
volatility and
economic
uncertainty, coupled with changes in the probability weights that resulted in a
$4.9 million net increase.
The Corporations ratio of
the allowance for credit
losses to loans held-in-portfolio was
2.05% on December 31,
2025, compared to
2.01% on December 31, 2024.
The ratio of the allowance for
credit losses to NPLs held-in-portfolio stood at
162.15%, compared to
212.68% on December 31, 2024.
Refer to Note 8 Allowance for credit losses loans held-in-portfolio to the Consolidated Financial Statements, and to the Provision
for Credit Losses section of this MD&A for additional
information.
Tables 32 to 33 details the allowance for credit losses by loan categories and the percentage
it represents of total loans held-in-
portfolio and NPLs. The breakdown is made for analytical
purposes, and it is not necessarily indicative of the
categories in which
future loan losses may occur.
100
Table 32 - Allowance for Credit
Losses - Loan Portfolios
December 31, 2025
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
19,345
$
2,455,790
0.79
%
$
8,748
221.14
%
Commercial real estate non-owner occupied
58,717
5,543,284
1.06
%
42,712
137.47
%
Commercial real estate owner occupied
48,451
3,153,080
1.54
%
24,567
197.22
%
Commercial and industrial
180,934
8,607,412
2.10
%
190,412
95.02
%
Total Commercial
$
307,447
$
19,759,566
1.56
%
$
266,439
115.39
%
Construction
13,826
1,674,899
0.83
%
-
-
Mortgage
80,554
8,649,440
0.93
%
145,795
55.25
%
Leasing
18,620
2,001,365
0.93
%
9,179
202.85
%
Consumer
Credit cards
91,124
1,256,717
7.25
%
-
-
Home equity lines of credit
1,335
78,692
1.70
%
2,796
47.75
%
Personal
106,612
1,906,228
5.59
%
20,096
530.51
%
Auto
180,364
3,819,812
4.72
%
52,200
345.52
%
Other
8,174
180,799
4.52
%
1,838
444.72
%
Total Consumer
$
387,609
$
7,242,248
5.35
%
$
76,930
503.85
%
Total
$
808,056
$
39,327,518
2.05
%
$
498,343
162.15
%
Table 33 - Allowance for Credit
Losses - Loan Portfolios
December 31, 2024
(Dollars in thousands)
Total ACL
Total loans held-
in-portfolio
ACL to loans held-
in-portfolio
Total non-
performing loans
held-in-portfolio
ACL to non-
performing loans
held-in-portfolio
Commercial
Commercial multi-family
$
9,236
$
2,399,620
0.38
%
$
8,779
105.21
%
Commercial real estate non-owner occupied
54,494
5,363,235
1.02
%
14,444
377.28
%
Commercial real estate owner occupied
49,828
3,157,746
1.58
%
30,449
163.64
%
Commercial and industrial
146,006
7,741,562
1.89
%
21,083
692.53
%
Total Commercial
$
259,564
$
18,662,163
1.39
%
$
74,755
347.22
%
Construction
11,264
1,263,792
0.89
%
-
-
Mortgage
82,409
8,114,183
1.02
%
188,332
43.76
%
Leasing
16,419
1,925,405
0.85
%
9,588
171.25
%
Consumer
Credit cards
99,130
1,218,079
8.14
%
-
-
Home equity lines of credit
1,503
73,571
2.04
%
3,393
44.30
%
Personal
102,736
1,855,244
5.54
%
22,010
466.77
%
Auto
165,995
3,823,437
4.34
%
51,792
320.50
%
Other
7,004
171,778
4.08
%
910
769.67
%
Total Consumer
$
376,368
$
7,142,109
5.27
%
$
78,105
481.87
%
Total
$
746,024
$
37,107,652
2.01
%
$
350,780
212.68
%
Table
34
details
the
breakdown
of
the
allowance
for
credit
losses
by
loan
categories.
The
breakdown
is
made
for
analytical
purposes, and it is not necessarily indicative of
the categories in which future loan losses may occur.
101
Table 34 - Allocation of the
Allowance for Credit Losses - Loans
At December 31,
2025
2024
% of loans
% of loans
in each
in each
category to
category to
(Dollars in millions)
ACL
total loans
ACL
total loans
Commercial
Commercial multi-family
$19.3
6.2
%
$9.2
6.5
%
Commercial real estate non-owner occupied
58.7
14.1
54.5
14.5
Commercial real estate owner occupied
48.6
8.0
49.9
8.5
Commercial and industrial
180.9
21.9
146.0
20.8
Total Commercial
$307.5
50.2
%
$259.6
50.3
%
Construction
13.8
4.3
11.3
3.4
Mortgage
80.6
22.0
82.4
21.9
Leasing
18.6
5.1
16.4
5.2
Consumer
Credit cards
91.1
3.2
99.1
3.3
Home equity lines of credit
1.3
0.2
1.5
0.2
Personal
106.6
4.8
102.7
5.0
Auto
180.4
9.7
166.0
10.2
Other Consumer
8.2
0.5
7.0
0.5
Total Consumer
$387.6
18.4
%
$376.3
19.2
%
Total
[1]
$808.1
100.0
%
$746.0
100.0
%
[1] Note: For purposes of this table the term loans refers to
loans held-in-portfolio excluding loans held-for-sale.
The following
table presents
net charge-offs
to average
loans held-in-portfolio
(HIP) ratios
by loan
category for
the years
ended
December 31, 2025 and 2024:
Table 35 - Net Charge-Offs
(Recoveries) to Average Loans HIP
December 31, 2025
December 31, 2024
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
0.14
%
0.01
%
0.08
%
0.17
%
0.04
%
0.11
%
Construction
(0.01)
(0.01)
(0.01)
(0.59)
(0.01)
(0.10)
Mortgage
(0.14)
(0.02)
(0.12)
(0.21)
(0.01)
(0.18)
Leasing
0.55
-
0.55
0.67
-
0.67
Consumer
2.53
3.01
2.55
3.06
7.44
3.20
Total
0.72
%
0.05
%
0.52
%
0.89
%
0.18
%
0.68
%
NCOs for the year ended December 31, 2025, amounted to $198.7 million, decreasing by $43.1 million when compared to the same
period in
2024. The
BPPR segment
decreased by
$30.1 million
mainly driven
by lower
consumer NCOs
by $32.1
million. The
PB
segment NCOs decreased by $13.0 million, primarily
driven by lower consumer NCOs by $10.6
million.
102
Loan Modifications
For the year ended December 31, 2025, modified
loans to borrowers with financial difficulty amounted
to $406.6 million, of which
$386.8 million were in accruing status. The BPPR
segments modifications to borrowers with financial difficulty amounted
to $345.7
million, mainly comprised of commercial and mortgage
loans of $264.9 million and $54.9 million, respectively. A total of $35.9 million
of the mortgage modifications were related to government
guaranteed loans. The Popular U.S. segments modifications
to
borrowers with financial difficulty amounted to $60.9 million,
mostly comprised of commercial loans.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements
for
additional
information
on
modifications
made
to
borrowers
experiencing financial difficulties.
Enterprise Risk Management
The Corporations
Board of
Directors has
established a
Risk Management
Committee (RMC)
to, among
other things,
assist the
Board in its (i) oversight of the Corporations overall risk framework and (ii)
to monitor, review, and approve policies to measure, limit
and manage the Corporations risks.
The
Corporation
has
established
a
three
lines
of
defense
framework:
(a)
business
line
management constitutes
the
first
line
of
defense by identifying
and managing the
risks associated with
business activities, (b) components
of the Risk
Management Group
and
the
Corporate
Security
Group,
among
others,
act
as
the
second
line
of
defense
by,
among
other
things,
measuring
and
reporting on the Corporations risk activities, and (c) the Corporate Auditing Division
,
as the third line of defense, reporting directly to
the Audit Committee of the Board, by independently providing
assurance regarding the effectiveness of the risk
framework.
The Enterprise Risk Management Committee (the ERM Committee)
is a management committee whose purpose is to oversee and
monitor Market, Interest, Liquidity,
Regulatory and Financial Compliance, BSA/AML & Sanctions, Regulatory,
Strategic, Operational
(including
Fraud
and
Third
Party
Risk,
among
others),
Information
Technology
and
Cyber
Security,
Legal,
Credit,
Climate
and
Reputational risks, as
defined in the
Risk Appetite Statement
(RAS) of the
Risk Management Policy
and within the
Corporations
Enterprise Risk
Management (ERM)
framework. The
ERM
Committee and
the Enterprise
Risk Management
Department in
the
Financial and
Operational Risk
Management Division
(the FORM
Division), in
coordination with
the Chief
Risk Officer
(CRO),
create the framework to identify and manage multiple
and cross-enterprise risks, and to articulate the
RAS and supporting metrics.
The
Enterprise
Risk
Management
Department
has
established
a
process
to
ensure
that
an
appropriate
standard
readiness
assessment is performed before we launch a new product or service. Similar procedures are performed by the Treasury Division for
transactions involving
the purchase
and sale
of assets,
and by
the Mergers
and Acquisitions
Division for
acquisition transactions.
The Enterprise Risk Management Department has a Corporate
Issues Management Policy to promote on time remediation of
issues
and increase the
governance and transparency around
the number and
the severity of
issues identified for each
business unit and
corporate
function
by
all
sources.
The
Enterprise
Risk
Management
Department
also
has
a
Corporate
Regulatory
Change
Management Program
to
oversee,
on
a
risk
basis,
the
implementation of
laws
and
regulations by
the
appropriate
business and
support areas.
The Asset/Liability
Committee (ALCO),
composed of
senior management
representatives from
the business
lines and
corporate
functions, and the Corporate Finance Group, are responsible for planning and executing the
Corporations market, interest rate risk,
funding
activities
and
strategy,
as
well
as
for
implementing
approved
policies
and
procedures.
The
ALCO
also
reviews
the
Corporations
capital
policy
and
the
attainment
of
the
capital
management
objectives.
In
addition,
the
Financial
Risk,
Corporate
Insurance & Advisory Department independently measures,
monitors and reports compliance with
liquidity and market risk policies,
and oversees controls surrounding interest risk measurements.
The Corporate Compliance
Committee, comprised of
senior management team
members and representatives
from the Regulatory
and Financial
Compliance Division
and the
Financial Crimes
Compliance Division,
among others,
are responsible
for overseeing
and
assessing
the
adequacy
of
the
risk
management
processes
that
support
Populars
compliance
program
for
identifying,
assessing,
measuring,
monitoring,
testing,
mitigating,
and
reporting
compliance
risks.
They
also
supervise
Populars
reporting
obligations
under
the
compliance
program
to
assess
the
adequacy,
consistency
and
timeliness
of
the
reporting
of
compliance-
related risks across the Corporation.
103
The Regulatory Affairs
team is responsible
for maintaining an
open dialog with
the banking regulatory
agencies to have
regulatory
risks properly identified, measured, monitored, as well as communicated to
the appropriate regulatory agency as necessary to keep
them apprised of material matters within the purview
of these agencies.
The
Credit
Strategy
Committee,
composed
of
senior
level
management
representatives
from
the
business
lines
and
corporate
functions, and the Corporate Credit Risk Management Division,
are responsible for monitoring credit risk management
activities both
at
the corporate
level
and
across all
Popular subsidiaries
providing for
the
development and
consistent
application of
credit
risk
policies, processes
and procedures
that measure,
limit and
manage credit
risks, while
seeking to
maintain the
effectiveness and
efficiency of the operating and businesses processes.
The Corporations Operational Risk Committee (ORCO) composed of senior
level management representatives from the business
lines
and
corporate
functions,
provide
executive
oversight
of
the
operational
risk
management
activities
of
Popular
and
its
subsidiaries providing
for the
development and
consistent application
of operational
risk policies,
processes, and
procedures that
measure,
limit,
and
manage
operational
risks
while
maintaining
the
effectiveness
and
efficiency
of
the
operating
and
business
processes.
The
FORM
Division,
within
the
Risk
Management
Group,
serves
as
ORCOs
operating
arm
and
is
responsible
for
establishing baseline processes to measure, monitor, limit and manage
operational risk.
The Corporate Security Group (CSG), under the direction of the
Chief Security Officer, leads
all efforts pertaining to cybersecurity,
enterprise fraud and data
privacy, including
developing strategies and oversight processes with
policies and programs that mitigate
compliance, operational,
strategic, financial
and reputational
risks associated
with the
Corporations and
our customers
data and
assets.
The Information Technology
and Cyber Risk
Committee, composed of senior
management representatives from the
business lines
and
corporate
functions,
the
Information
Technology
Division
and
the
CSG,
are
responsible
for
the
oversight
and
monitoring
of
information
technology
and
cybersecurity
risks,
mitigation
strategies,
actions
and
controls,
key
risk
metrics,
and
information
technology and cyber incidents that may result in operational, compliance and reputational risks.
The Chief Security Officer also co-
chairs the Information Technology & Cyber Security Risk Committee along with the Chief Information
& Digital Strategy Officer.
The Corporate Legal Division, in this context, has the responsibility
of assessing, monitoring, managing and reporting with respect to
legal risks, including those related to litigation, investigations
and other material legal matters.
The
Corporation has
also
established
a
Corporate Sustainability
Committee
whose
purpose
and
responsibility is
to
oversee the
Corporations sustainability efforts and support the development and consistent application of policies, strategies and guidelines that
measure and
manage sustainability
matters and
risks. The
Corporate Sustainability
Committee also
assesses environmental
and
social considerations
with respect
to certain
commercial credit
applications, in
accordance with
the applicable
Commercial Credit
Policy and Commercial Credit Manuals of BPPR
and PB.
The processes
of strategic
risk planning
and the
evaluation of
reputational risk
are on-going
processes through
which continuous
data gathering and analysis are performed. In order to have strategic risks properly identified and monitored, the Corporate Strategy
and
Transformation
Division,
performs
periodic
assessments
regarding
corporate
strategic
priority
initiatives,
such
as
the
Corporations transformation initiative and other emerging issues. The
Acquisitions and Corporate Investments Division continuously
assesses potential
strategic transactions.
The Corporate
Communications Division is
responsible for
the monitoring,
management
and implementation of action plans with respect
to reputational risk issues.
Populars capital planning process integrates the Corporations risk profile
as well as its strategic focus, operating
environment, and
other factors
that could
materially affect
capital adequacy
in hypothetical
highly-stressed business
scenarios. Capital
ratio targets
and triggers take into consideration the different risks evaluated
under Populars risk management framework.
In
addition to
establishing a
formal process
to manage
risk, our
corporate culture
is also
critical to
an effective
risk management
function.
Through our Code
of Ethics, the
Corporation provides a framework
for all our
employees to conduct themselves
with the
highest integrity.
ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT
YET EFFECTIVE ACCOUNTING STANDARDS
Refer to Note 3 New Accounting Pronouncements
to the Consolidated Financial Statements.
104
Statistical Summary 2025-2024
Statements of Financial Condition
At December 31,
(In thousands)
2025
2024
Assets:
Cash and due from banks
$
402,755
$
419,638
Money market investments:
Time deposits with other banks
4,626,506
6,380,948
Total money market investments
4,626,506
6,380,948
Trading account debt securities, at fair value
36,569
32,831
Debt securities available-for-sale, at fair
value
20,574,972
18,245,903
Debt securities held-to-maturity, at amortized cost
7,327,529
7,758,077
Less Allowance for credit losses
5,812
5,317
Debt securities held-to-maturity, net
7,321,717
7,752,760
Equity securities
229,848
208,166
Loans held-for-sale, at fair value
9,998
5,423
Loans held-in-portfolio:
Loans held-in-portfolio
39,749,142
37,522,995
Less Unearned income
421,624
415,343
Allowance for credit losses
808,056
746,024
Total loans held-in-portfolio, net
38,519,462
36,361,628
Premises and equipment, net
685,820
601,787
Other real estate
42,433
57,268
Accrued income receivable
300,824
263,389
Mortgage servicing rights, at fair value
96,356
108,103
Other assets
1,705,977
1,797,759
Goodwill
789,954
802,954
Other intangible assets
5,076
6,826
Total assets
$
75,348,267
$
73,045,383
Liabilities and Stockholders Equity
Liabilities:
Deposits:
Non-interest bearing
$
15,304,209
$
15,139,555
Interest bearing
50,885,884
49,744,790
Total deposits
66,190,093
64,884,345
Assets sold under agreements to repurchase
39,001
54,833
Other short-term borrowings
650,000
225,000
Notes payable
759,577
896,293
Other liabilities
1,460,517
1,371,846
Total liabilities
69,099,188
67,432,317
Stockholders equity:
Preferred stock
22,143
22,143
Common stock
1,049
1,048
Surplus
4,924,296
4,908,693
Retained earnings
5,206,497
4,570,957
Treasury stock at cost
(2,722,819)
(2,228,535)
Accumulated other comprehensive loss, net
of tax
(1,182,087)
(1,661,240)
Total stockholders equity
6,249,079
5,613,066
Total liabilities and stockholders equity
$
75,348,267
$
73,045,383
105
Statistical Summary 2023-2025
Statements of Operations
For the years ended December 31,
(In thousands)
2025
2024
2023
Interest income:
Loans
$
2,763,118
$
2,626,058
$
2,331,654
Money market investments
254,786
352,195
366,625
Investment securities
765,105
695,010
547,028
Total interest income
3,783,009
3,673,263
3,245,307
Less - Interest expense
1,241,806
1,390,975
1,113,783
Net interest income
2,541,203
2,282,288
2,131,524
Provision for credit losses
260,163
256,942
208,609
Net interest income after provision for
credit losses
2,281,040
2,025,346
1,922,915
Mortgage banking activities
14,956
19,059
21,497
Net gain (loss), including impairment, on
equity securities
1,596
(1,583)
3,482
Net gain on trading account debt securities
1,908
1,445
1,382
Net gain (loss) on sale of loans, including
valuation adjustments on loans held-for-sale
-
440
(115)
Adjustment to indemnity reserves on loans
sold
(174)
1,266
2,319
Other non-interest income
639,733
638,282
622,159
Total non-interest income
658,019
658,909
650,724
Operating expenses:
Personnel costs
905,214
820,451
778,045
All other operating expenses
1,027,052
1,067,186
1,120,055
Total operating expenses
1,932,266
1,887,637
1,898,100
Income before income tax
1,006,793
796,618
675,539
Income tax expense
173,634
182,406
134,197
Net Income
$
833,159
$
614,212
$
541,342
Net Income Applicable to Common Stock
$
831,747
$
612,800
$
539,930
106
Statistical Summary 2025-2023
Average Balance Sheet and Summary of
Net Interest Income
On a Taxable Equivalent
Basis*
2025
2024
2023
(Dollars in thousands)
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Assets
Interest earning assets:
Money market investments
$
5,853,342
$
254,786
4.35
%
$
6,640,514
$
352,195
5.30
%
$
7,051,718
$
366,625
5.20
%
U.S.
Treasury securities
22,491,878
812,239
3.61
21,047,129
654,712
3.11
20,305,488
441,179
2.17
Obligations of U.S.
Government
Obligations of Puerto Rico, States
and political subdivisions
53,292
5,743
10.78
59,668
6,215
10.42
64,682
5,863
9.06
Collateralized mortgage obligations and
mortgage-backed securities
6,007,691
126,136
2.10
6,642,953
136,016
2.05
7,360,071
157,196
2.14
Other
217,451
11,430
5.26
205,711
11,514
5.60
196,226
11,519
5.87
Total investment securities
28,770,312
955,548
3.32
27,955,461
808,457
2.89
27,926,467
615,757
2.20
Trading account securities
29,714
1,667
5.61
30,250
1,583
5.23
31,876
1,377
4.32
Loans (net of unearned income)
37,982,637
2,845,548
7.49
35,701,240
2,684,598
7.52
33,164,961
2,387,351
7.20
Total interest earning
assets/Interest
income
$
72,636,005
$
4,057,549
5.59
%
$
70,327,465
$
3,846,833
5.47
%
$
68,175,022
$
3,371,110
4.94
%
Total non-interest
earning assets
3,104,642
3,072,814
3,059,214
Total assets
$
75,740,647
$
73,400,279
$
71,234,236
Liabilities and Stockholders' Equity
Interest bearing liabilities:
Savings, NOW,
money market and
other
interest bearing demand accounts
$
42,213,411
$
884,594
2.10
%
$
40,476,544
$
1,046,100
2.58
%
$
39,463,481
$
862,981
2.19
%
Time deposits
9,390,884
293,303
3.12
8,902,700
290,021
3.26
7,775,846
187,043
2.41
Federal funds purchased
6,027
264
4.39
6,011
322
5.36
6
-
5.25
Securities purchased under agreement
to resell
59,793
2,726
4.56
70,145
3,900
5.56
115,808
6,019
5.20
Other short-term borrowings
290,617
12,827
4.41
8,402
454
5.40
27,302
1,310
4.80
Notes payable
824,356
48,092
5.83
961,886
50,178
5.22
1,109,163
56,430
5.09
Total interest bearing
liabilities/Interest
expense
52,785,088
1,241,806
2.35
50,425,688
1,390,975
2.76
48,491,606
1,113,783
2.30
Total non-interest
bearing liabilities
15,747,877
15,921,398
16,142,027
Total liabilities
68,532,965
66,347,086
64,633,633
Stockholders' equity
7,207,682
7,053,193
6,600,603
Total liabilities and
stockholders' equity
$
75,740,647
$
73,400,279
$
71,234,236
Net interest income on a taxable
equivalent basis
$
2,815,743
$
2,455,858
$
2,257,327
Cost of funding earning assets
1.71
%
1.98
%
1.63
%
Net interest margin
3.88
%
3.49
%
3.31
%
Effect of the taxable equivalent
adjustment
274,540
173,570
125,803
Net interest income per books
$
2,541,203
$
2,282,288
$
2,131,524
*
Shows
the
effect
of
the
tax
exempt
status
of
some
loans
and
investments
on
their
yield,
using
the
applicable
statutory
income
tax
rates.
The
computation considers
the interest
expense disallowance
required by
the Puerto
Rico Internal
Revenue Code.
This adjustment
is shown
in order
to
compare the yields of the tax exempt and taxable assets
on a taxable basis.
Note: Average loan
balances include the
average balance of
non-accruing loans. No
interest income is
recognized for these
loans in accordance
with
the Corporations
policy.
Average
balances
exclude
unrealized
gains
or
losses
on
debt
securities
available-for-sale
and
unrealized
losses
on
debt
securities transfer to held-to-maturities.
107
Report of Management on Internal Control Over Financial
Reporting
The management of
Popular, Inc.
(the Corporation) is responsible
for establishing and
maintaining adequate internal control
over
financial reporting as defined in Rules 13a - 15(f) and 15d -
15(f) under the Securities Exchange Act of 1934 and for our assessment
of internal control over financial reporting. The Corporations internal
control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America,
and
includes
controls
over
the
preparation of
financial statements
in accordance
with the
instructions to
the Consolidated
Financial Statements
for Bank
Holding
Companies (Form FR Y-9C)
to comply with the reporting requirements of Section 112
of the Federal Deposit Insurance Corporation
Improvement Act (FDICIA). The Corporations internal control
over financial reporting includes those policies
and procedures that:
(i)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
transactions
and
dispositions of the assets of the Corporation;
(ii)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements in accordance with accounting principles generally accepted in the United States of America, and that receipts
and expenditures of the Corporation are being made only in accordance with authorizations of management and directors
of the Corporation; and
(iii) provide reasonable assurance regarding
prevention or timely detection of
unauthorized acquisition, use or disposition
of the Corporations assets that could have a material effect
on the financial statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
The management of Popular,
Inc. has assessed the
effectiveness of the Corporations
internal control over financial reporting
as of
December
31,
2025.
In
making
this
assessment,
management
used
the
criteria
set
forth
in
the
Internal
Control-Integrated
Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
Based on our assessment, management concluded that the Corporation maintained effective internal control over financial reporting
as of December 31, 2025 based on the
criteria referred to above.
The Corporations
independent registered
public accounting
firm,
PricewaterhouseCoopers LLP
,
has audited
the effectiveness
of
the Corporations
internal control
over financial
reporting as
of December
31, 2025,
as stated
in their
report dated
March 2,
2026
which appears herein.
/s/ Javier D. Ferrer
/s/ Jorge J. Garca
Javier D. Ferrer
Jorge J. Garca
President and Chief Executive Officer
Executive Vice President
and Chief Financial Officer
108
Report of Independent Registered Public Accounting Firm
To
the
Board of Directors and Stockholders of Popular, Inc.
Opinions on the Financial Statements and Internal
Control over Financial Reporting
We
have
audited
the
accompanying
consolidated
statements
of
financial
condition
of
Popular,
Inc.
and
its
subsidiaries
(the
Corporation)
as
of
December
31,
2025
and
2024,
and
the
related
consolidated
statements
of
operations, comprehensive income, changes
in stockholders equity and cash
flows for each of
the three years in
the
period ended
December 31,
2025, including
the related
notes (collectively
referred to
as the
consolidated financial
statements).
We
also
have
audited
the
Corporation's
internal
control
over
financial
reporting
as
of
December
31,
2025,
based
on
criteriaestablishedinInternal
Control
-
Integrated
Framework(2013)
issued
by
the
Committee
of
Sponsoring Organizations of the Treadway Commission (COSO).
In
our
opinion,
the
consolidated
financial
statements
referred
to
above
present
fairly,
in
all
material
respects,
the
financial position of the Corporation as of
December 31, 2025 and 2024, and the
results of its operations and its cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,
2025
in
conformity with
accounting
principles
generally
accepted
in
the
United
States
of
America.Alsoin
our
opinion,
the
Corporationmaintained,
in
all
material
respects,
effective
internal
control
over
financial
reporting
as
of
December
31,
2025,
based
on
criteriaestablishedinInternal Control - Integrated Framework(2013) issued by the COSO.
Basis for Opinions
The
Corporation's management
is responsible
for these
consolidated
financial statements,
for maintaining
effective
internal control
over financial
reporting, and
for its
assessment of
the effectiveness
of internal
control over
financial
reporting,
included
in
the
accompanying
Report
of
Management
on
Internal
Control
over
Financial
Reporting.
Our
responsibility is
to express
opinions on
the Corporations
consolidated financial
statements and
on the
Corporation's
internal
control
over
financial
reporting
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Corporation
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits
in accordance with the standards
of the PCAOB. Those standards
require that we plan and
perform
the audits
to obtain
reasonable assurance
about
whether the
consolidated financial
statements are
free of
material
misstatement,
whether due
to error
or
fraud, and
whether
effective
internal control
over financial
reporting
was maintained in all material respects.
Our
audits
of
the
consolidated
financial
statements
included
performing
procedures
to
assess
the
risks of
material
misstatement of the consolidated
financial statements, whether due
to error or fraud,
and performing procedures that
respond to
those risks.
Such procedures
included examining,
on a
test basis,
evidence regarding
the amounts
and
disclosures
in
the
consolidated
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
consolidated
financial
statements.
Our
audit
of
internal
control
over
financial
reporting
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audits also included performing such other procedures as we considered necessary in
the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
109
Definition and Limitations of Internal Control over Financial Reporting
A
companys
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
Management's
assessment
and
our
audit
of
Popular,
Inc.'s
internal
control
over
financial
reporting
also
included
controls
over
the
preparation
of
financial
statements
in
accordance with the instructions
to the Consolidated Financial Statements
for Bank Holding Companies
(Form FR Y-
9C)
to
comply
with
the
reporting
requirements
of
Section
112
of
the
Federal
Deposit
Insurance
Corporation
Improvement
Act
(FDICIA).
A
companys
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that (i)
pertain to
the maintenance
of records
that, in
reasonable detail,
accurately
and fairly
reflect the
transactions and
dispositions of
the assets
of the
company; (ii)
provide reasonable
assurance that
transactions are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generally
accepted
accounting
principles, and
that receipts
and expenditures
of the
company are
being made
only
in accordance
with
authorizations
of
management
and
directors
of
the
company;
and
(iii)
provide
reasonable
assurance
regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have
a material effect on the financial statements.
Because of
its inherent
limitations, internal
control over
financial reporting
may not
prevent or
detect misstatements.
Also, projections of
any evaluation of effectiveness
to future periods are
subject to the risk
that controls may become
inadequate because
of changes
in conditions,
or that
the degree
of compliance
with the
policies or
procedures may
deteriorate.
Critical Audit Matters
The
critical
audit
matter
communicated
below
is
a
matter
arising
from
the
current
period
audit
of
the
consolidated
financial
statements
that
was
communicated
or
required
to
be
communicated
to
the
audit
committee
and
that
(i)
relates
to
accounts
or
disclosures
that
are
material
to
the
consolidated
financial
statements
and
(ii)
involved
our
especially challenging,
subjective, or
complex judgments.
The communication
of critical
audit matters
does not
alter
in any way our opinion on the consolidated financial statements, taken as a whole, and
we are not, by communicating
the
critical
audit
matter
below,
providing
a
separate
opinion
on
the
critical
audit
matter
or
on
the
accounts
or
disclosures to which it relates.
Allowance for Credit Losses Certain Loans Held-in-Portfolio
As described
in Notes
2 and
8 to
the consolidated
financial statements,
as of
December 31,
2025, the
Corporation
had an allowance for credit
losses (ACL) on loans held-in-portfolio
of $307.4 million related to
the commercial loans
portfolio, $13.8 million related to the construction loans
portfolio, $70.7 million related to the Banco Popular de
Puerto
Ricos (BPPR) mortgage loans portfolio,
$97.8 million related to BPPRs
personal loans portfolio, and $180.4 million
related to
the BPPRs
auto loans
portfolio (collectively
certain loans
held-in-portfolio). Management
establishes an
ACL
for
the
loan
portfolio
based
on
an
estimate
of
credit
losses
over
the
remaining
contractual
term
of
the
loans,
adjusted
for
expected
prepayments.
Management
follows
a
methodology
to
estimate
the
ACL
which
includes
a
reasonable
and
supportable
forecast
period
for
estimating
credit
losses,
considering
quantitative
and
qualitative
factors as
well as
the economic
outlook. The
modeling framework
includes internally
developed quantitative
models
that generate
lifetime default
and prepayments,
and other
loan level
techniques to
estimate loss
severity.
As part
of
the
methodology,
management
evaluates
various
macroeconomic
scenarios
and
applies
probability
weights
to
the
outcome
of
the
selected
macroeconomic
scenarios.
The
macroeconomic
variables
chosen
by
management
to
estimate
credit
losses
are
selected
by
combining
quantitative
procedures
with
expert
judgement.
The
ACL
also
includes a
qualitative adjustment
framework that
addresses two
main components:
losses that
are expected
but not
captured within the quantitative modeling framework and model imprecision.
The
principal
considerations
for
our
determination
that
performing
procedures
relating
to
the
allowance
for
credit
losses for
certain
loans held-in-portfolio
is a
critical audit
matter are
(i) a
high degree
of auditor
effort in
performing
procedures and evaluating audit
evidence related to
the allowance for credit
losses for certain loans
held-in-portfolio;
and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.
110
Addressing the
matter involved
performing procedures
and evaluating audit
evidence in
connection with
forming our
overall
opinion
on
the
consolidated
financial
statements.
These
procedures
included
testing
the
effectiveness
of
controls relating to
the allowance for credit
losses for certain loans
held-in-portfolio. These procedures
also included,
among others, (i) testing managements process for developing
the allowance for credit losses for certain
loans held-
in-portfolio;
(ii) testing
the completeness
and
accuracy of
certain
data
used
in
the
internally
developed quantitative
models; and
(iii) the
involvement of
professionals with
specialized skill
and knowledge
to assist
in evaluating
(a) the
appropriateness of
the methodology
and the internally
developed quantitative models
used by management;
and (b)
the
lifetime
default,
prepayment
and
loss
severity
estimates,
managements
selection
of
various
macroeconomic
scenarios
and
macroeconomic
variables,
the
probability
weights
applied
to
the
outcome
of
the
selected
macroeconomic
scenarios,
the
reasonable
and
supportable
forecast
period,
and
the
qualitative
adjustments
for
losses that are expected but not captured within the quantitative modeling framework and model imprecision.
/s/ PricewaterhouseCoopers LLP
San Juan, Puerto Rico
March 2, 2026
We have served as the Corporations auditor since 1971, which includes periods before the Corporation became
subject to SEC reporting requirements
Stamp DLLP216-854 of the P.R. Society of
Certified Public Accountants is affixed to
the original of this report
111
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION
[UNAUDITED]
December 31,
December 31,
(In thousands, except share information)
2025
2024
Assets:
Cash and due from banks
$
402,755
$
419,638
Money market investments
4,626,506
6,380,948
Trading account debt securities, at fair value
36,569
32,831
Debt securities available-for-sale, at fair
value:
Pledged securities with creditors right to repledge
30,687
30,486
Other debt securities available-for-sale
20,544,285
18,215,417
Debt securities available-for-sale
20,574,972
18,245,903
Debt securities held-to-maturity, at amortized cost:
Pledged securities with creditors right to repledge
9,298
27,405
Other debt securities held-to-maturity
7,318,231
7,730,672
Debt securities held-to-maturity (fair
value 2025 - $
7,363,587
; 2024 - $
7,682,664
)
7,327,529
7,758,077
Less Allowance for credit losses
5,812
5,317
Debt securities held-to-maturity, net
7,321,717
7,752,760
Equity securities (realizable value 2025 -
$
230,388
; 2024 - $
208,663
)
229,848
208,166
Loans held-for-sale, at fair value
9,998
5,423
Loans held-in-portfolio
39,749,142
37,522,995
Less Unearned income
421,624
415,343
Allowance for credit losses
808,056
746,024
Total loans held-in-portfolio, net
38,519,462
36,361,628
Premises and equipment, net
685,820
601,787
Other real estate
42,433
57,268
Accrued income receivable
300,824
263,389
Mortgage servicing rights, at fair value
96,356
108,103
Other assets
1,705,977
1,797,759
Goodwill
789,954
802,954
Other intangible assets
5,076
6,826
Total assets
$
75,348,267
$
73,045,383
Liabilities and Stockholders Equity
Liabilities:
Deposits:
Non-interest bearing
$
15,304,209
$
15,139,555
Interest bearing
50,885,884
49,744,790
Total deposits
66,190,093
64,884,345
Assets sold under agreements to repurchase
39,001
54,833
Other short-term borrowings
650,000
225,000
Notes payable
759,577
896,293
Other liabilities
1,460,517
1,371,846
Total liabilities
69,099,188
67,432,317
Commitments and contingencies (Refer
to Note 23)
Stockholders equity:
Preferred stock,
30,000,000
shares authorized;
885,726
shares issued and outstanding (2024
-
885,726
)
22,143
22,143
Common stock, $
0.01
par value;
170,000,000
shares authorized;
104,921,229
shares issued (2024 -
104,849,460
) and
65,719,385
shares outstanding (2024 -
70,141,291
)
1,049
1,048
Surplus
4,924,296
4,908,693
Retained earnings
5,206,497
4,570,957
Treasury stock - at cost,
39,201,844
shares (2024 -
34,708,169
)
(2,722,819)
(2,228,535)
Accumulated other comprehensive loss, net
of tax
(1,182,087)
(1,661,240)
Total stockholders equity
6,249,079
5,613,066
Total liabilities and stockholders equity
$
75,348,267
$
73,045,383
The accompanying notes are an integral part of
these Consolidated Financial Statements.
112
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS
Years ended December 31,
(In thousands, except per share information)
2025
2024
2023
Interest income:
Loans
$
2,763,118
$
2,626,058
$
2,331,654
Money market investments
254,786
352,195
366,625
Investment securities
765,105
695,010
547,028
Total interest income
3,783,009
3,673,263
3,245,307
Interest expense:
Deposits
1,177,896
1,336,121
1,050,024
Short-term borrowings
15,818
4,676
7,329
Long-term debt
48,092
50,178
56,430
Total interest expense
1,241,806
1,390,975
1,113,783
Net interest income
2,541,203
2,282,288
2,131,524
Provision for credit losses
260,163
256,942
208,609
Net interest income after provision for credit losses
2,281,040
2,025,346
1,922,915
Service charges on deposit accounts
155,868
151,343
147,476
Other service fees
402,911
389,233
374,440
Mortgage banking activities (Refer to Note 9)
14,956
19,059
21,497
Net gain (loss), including impairment on equity securities
1,596
(1,583)
3,482
Net gain on trading account debt securities
1,908
1,445
1,382
Net gain (loss) on sale of loans, including
valuation adjustments on loans
held-for-sale
-
440
(115)
Adjustments to indemnity reserves on loans sold
(174)
1,266
2,319
Other operating income
80,954
97,706
100,243
Total non-interest income
658,019
658,909
650,724
Operating expenses:
Personnel costs
905,214
820,451
778,045
Net occupancy expenses
110,213
111,430
111,586
Equipment expenses
22,110
33,424
37,057
Other taxes
72,939
66,046
55,926
Professional fees
110,098
125,822
161,142
Technology and software expenses
341,605
329,061
290,615
Processing and transactional services
152,386
142,677
138,070
Communications
19,270
18,899
16,664
Business promotion
107,283
101,930
94,926
FDIC deposit insurance
24,369
54,626
105,985
Other real estate owned (OREO) income
(13,393)
(18,124)
(15,375)
Other operating expenses
65,422
98,457
97,279
Amortization of intangibles
1,750
2,938
3,180
Goodwill impairment charge
13,000
-
23,000
Total operating expenses
1,932,266
1,887,637
1,898,100
Income before income tax
1,006,793
796,618
675,539
Income tax expense
173,634
182,406
134,197
Net Income
$
833,159
$
614,212
$
541,342
Net Income Applicable to Common Stock
$
831,747
$
612,800
$
539,930
Net Income per Common Share Basic
$
12.31
$
8.56
$
7.53
Net Income per Common Share Diluted
$
12.30
$
8.56
$
7.52
The accompanying notes are an integral part of
these consolidated financial statements.
113
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
Years ended December 31,
(In thousands)
2025
2024
2023
Net income
$
833,159
$
614,212
$
541,342
Other comprehensive income before tax:
Foreign currency translation adjustment
(13,917)
(6,837)
(7,793)
Adjustment of pension and postretirement
benefit plans
(3,431)
22,652
23,052
Amortization of net losses
9,090
14,471
19,253
Unrealized net holding gains (losses) on debt
securities arising during the period
402,862
101,442
391,633
Amortization of unrealized losses of debt
securities transfer from available-for-sale
to
held-to-maturity
186,381
179,563
172,883
Unrealized net gains (losses) on cash flow
hedges
-
-
(30)
Reclassification adjustment for net (gains)
losses included in net income
-
-
(41)
Other comprehensive income before tax
580,985
311,291
598,957
Income tax (expense) benefit
(101,832)
(77,000)
30,440
Total other comprehensive income, net of tax
479,153
234,291
629,397
Comprehensive income, net of tax
$
1,312,312
$
848,503
$
1,170,739
Tax effect allocated to each component of other comprehensive
income (loss):
Years ended December 31,
(In thousands)
2025
2024
2023
Adjustment of pension and postretirement
benefit plans
$
1,287
$
(8,495)
$
(8,644)
Amortization of net losses
(3,409)
(5,427)
(7,219)
Unrealized net holding (losses) gains on debt
securities arising during the period
(62,435)
(27,165)
80,854
Amortization of unrealized losses of debt
securities transferred from available-for-sale
to
held-to-maturity
(37,275)
(35,913)
(34,577)
Unrealized net gains on cash flow hedges
-
-
11
Reclassification adjustment for net (gains)
losses included in net income
-
-
15
Income tax (expense) benefit
$
(101,832)
$
(77,000)
$
30,440
The accompanying notes are an integral
part of these consolidated financial statements.
114
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS EQUITY
Accumulated
other
Common
Preferred
Retained
Treasury
comprehensive
(In thousands)
stock
stock
Surplus
earnings
stock
loss
Total
Balance at December 31, 2022
$
1,047
$
22,143
$
4,790,993
$
3,834,348
$
(2,030,178)
$
(2,524,928)
$
4,093,425
Cumulative effect of accounting change
28,752
28,752
Net income
541,342
541,342
Issuance of stock
1
6,310
6,311
Dividends declared:
Common stock
[1]
(163,664)
(163,664)
Preferred stock
(1,412)
(1,412)
Common stock purchases
-
(4,550)
(4,550)
Stock based compensation
1,581
15,771
17,352
Other comprehensive income, net of tax
629,397
629,397
Transfer to statutory reserve
44,515
(44,515)
-
Balance at December 31, 2023
$
1,048
$
22,143
$
4,843,399
$
4,194,851
$
(2,018,957)
$
(1,895,531)
$
5,146,953
Net income
614,212
614,212
Issuance of stock
6,860
6,860
Dividends declared:
Common stock
[1]
(183,854)
(183,854)
Preferred stock
(1,412)
(1,412)
Common stock purchases
[2]
(224,626)
(224,626)
Stock based compensation
5,594
15,048
20,642
Other comprehensive income, net of tax
234,291
234,291
Transfer to statutory reserve
52,840
(52,840)
-
Balance at December 31, 2024
$
1,048
$
22,143
$
4,908,693
$
4,570,957
$
(2,228,535)
$
(1,661,240)
$
5,613,066
Net income
833,159
833,159
Issuance of stock
1
7,118
7,119
Dividends declared:
Common stock
[1]
(196,207)
(196,207)
Preferred stock
(1,412)
(1,412)
Common stock purchases
[3]
(510,639)
(510,639)
Stock based compensation
8,485
16,355
24,840
Other comprehensive income, net of tax
479,153
479,153
Balance at December 31, 2025
$
1,049
$
22,143
$
4,924,296
$
5,206,497
$
(2,722,819)
$
(1,182,087)
$
6,249,079
[1]
Dividends declared per common share during the year ended
December 31, 2025 - $
2.90
(2024 - $
2.56
; 2023 - $
2.27
).
[2]
Includes common
stock
repurchases
of $
217.3
million
as
part of
the 2024
common
stock
repurchase
program.
Refer to
Note
19
for additional
information.
[3]
Includes common stock repurchases of $
501.5
million as part of the 2024 and 2025 common stock
repurchase program previously announced by
the Corporation. Refer to Note 19 for additional information.
Years ended December
31,
Disclosure of changes in number of shares:
2025
2024
2023
Preferred Stock:
Balance at beginning and end of year
885,726
885,726
885,726
Common Stock:
Balance at beginning of year
104,849,460
104,767,348
104,657,522
Issuance of stock
71,769
82,112
109,826
Balance at end of year
104,921,229
104,849,460
104,767,348
Treasury stock
(39,201,844)
(34,708,169)
(32,613,727)
Common Stock Outstanding
65,719,385
70,141,291
72,153,621
The accompanying notes are an integral part of these consolidated
financial statements.
115
POPULAR, INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
Years ended December
31,
(In thousands)
2025
2024
2023
Cash flows from operating activities:
Net income
$
833,159
$
614,212
$
541,342
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for credit losses
260,163
256,942
208,609
Goodwill impairment charge
13,000
-
23,000
Amortization of intangibles
1,750
2,938
3,180
Depreciation and amortization of premises and equipment
53,230
57,078
58,507
Net accretion of discounts and amortization of premiums and
deferred fees
(256,758)
(252,413)
(45,249)
Interest capitalized on loans subject to the temporary
payment moratorium or loss mitigation
alternatives
(5,360)
(7,109)
(9,868)
Share-based compensation
26,937
19,676
16,773
Fair value adjustments on mortgage servicing rights
12,881
11,370
12,339
Adjustments to indemnity reserves on loans sold
174
(1,266)
(2,319)
Earnings from investments under the equity method, net
of dividends or distributions
(25,886)
(23,541)
(27,450)
Deferred income tax expense (benefit)
6,382
23,711
(43,139)
(Gain) loss on:
Disposition of premises and equipment and other productive
assets
(187)
(7,558)
(12,756)
Proceeds from insurance claims
-
-
(145)
Sale of loans, including valuation adjustments on loans
held-for-sale and mortgage banking
activities
(608)
(758)
203
Sale of equity method investment
(1,226)
-
(152)
Sale of stock in equity method investee
-
(551)
-
Sale of foreclosed assets, including write-downs
(11,890)
(17,953)
(22,665)
Acquisitions of loans held-for-sale
(8,688)
(6,886)
(7,639)
Proceeds from sale of loans held-for-sale
35,968
47,809
44,734
Net originations on loans held-for-sale
(34,214)
(49,579)
(68,310)
Net decrease (increase) in:
Trading debt securities
10,512
13,898
33,500
Equity securities
(5,186)
(6,847)
(11,341)
Accrued income receivable
(37,401)
216
(23,238)
Other assets
54,935
30,043
24,200
Net increase (decrease) in:
Interest payable
5,517
1,622
19,814
Pension and other postretirement benefits obligation
4,461
8,463
16,092
Other liabilities
(53,218)
(38,795)
(41,410)
Total adjustments
45,288
60,510
145,270
Net cash provided by operating activities
878,447
674,722
686,612
Cash flows from investing activities:
Net decrease (increase) in money market investments
1,754,908
620,578
(1,383,821)
Purchases of investment securities:
Available-for-sale
(36,751,680)
(34,339,865)
(16,707,264)
Held-to-maturity
-
-
(8,615)
Equity
(60,163)
(27,216)
(18,477)
Proceeds from calls, paydowns, maturities and redemptions
of investment securities:
Available-for-sale
35,211,557
33,789,182
18,215,910
Held-to-maturity
607,310
659,543
458,806
Proceeds from sale of investment securities:
Equity
45,167
19,623
31,946
Net disbursements on loans
(1,792,913)
(1,636,569)
(2,475,837)
Proceeds from sale of loans
66,982
42,287
135,231
Acquisition of loan portfolios
(733,410)
(668,215)
(770,493)
Return of capital from equity method investments
3
279
249
Payments to acquire equity method investments
(687)
(1,250)
(1,500)
Proceeds from sale of equity method investment
1,226
-
152
Proceeds from sale of stock in equity method investee
-
4,489
-
116
Acquisition of premises and equipment
(197,460)
(213,412)
(208,044)
Proceeds from insurance claims
-
-
145
Proceeds from sale of:
Premises and equipment and other productive assets
659
8,890
8,658
Foreclosed assets
89,056
109,182
109,547
Net cash used in investing activities
(1,759,445)
(1,632,474)
(2,613,407)
Cash flows from financing activities:
Net increase (decrease) in:
Deposits
1,300,698
1,261,053
2,365,451
Assets sold under agreements to repurchase
(15,832)
(36,551)
(57,225)
Other short-term borrowings
425,000
225,000
(365,000)
Payments of notes payable
(144,214)
(91,943)
(343,261)
Principal payments of finance leases
(3,933)
(3,977)
(5,360)
Proceeds from issuances of notes payable
6,112
-
441,705
Proceeds from issuances of common stock
7,118
6,860
6,311
Dividends paid
(197,568)
(180,461)
(159,860)
Net payments for repurchase of common stock
(504,721)
(213,922)
(461)
Payments related to tax withholding for share-based compensation
(8,079)
(6,476)
(4,089)
Net cash provided by (used in) financing activities
864,581
959,583
1,878,211
Net (decrease) increase
in cash and due from banks, and restricted cash
(16,417)
1,831
(48,584)
Cash and due from banks, and restricted cash at beginning
of period
429,406
427,575
476,159
Cash and due from banks, and restricted cash at end of period
$
412,989
$
429,406
$
427,575
The accompanying notes are an integral part of these consolidated
financial statements.
117
Notes to Consolidated Financial Statements
Note 1 -
Nature of Operations
118
Note 2 -
Summary of Significant Accounting Policies
119
Note 3 -
New Accounting Pronouncements
129
Note 4 -
Restrictions on Cash and Due from Banks and Certain Securities
135
Note 5 -
Debt Securities Available-For-Sale
136
Note 6 -
Debt Securities Held-to-Maturity
139
Note 7 -
Loans
142
Note 8 -
Allowance for Credit Losses Loans Held-In-Portfolio
150
Note 9 -
Mortgage Banking Activities
186
Note 10 -
Transfers of Financial Assets and Mortgage
Servicing Assets
187
Note 11 -
Premises and Equipment
190
Note 12 -
Other Real Estate Owned
191
Note 13 -
Other Assets
192
Note 14 -
Goodwill and Other Intangible Assets
194
Note 15 -
Deposits
196
Note 16 -
Borrowings
197
Note 17 -
Trust Preferred Securities
200
Note 18 -
Other Liabilities
201
Note 19 -
Stockholders Equity
202
Note 20 -
Regulatory Capital Requirements
203
Note 21 -
Other Comprehensive Income (Loss)
206
Note 22 -
Guarantees
208
Note 23 -
Commitments and Contingencies
210
Note 24-
Non-consolidated Variable Interest
Entities
213
Note 25 -
Derivative Instruments and Hedging Activities
215
Note 26 -
Related Party Transactions
218
Note 27 -
Fair Value Measurement
219
Note 28 -
Fair Value of Financial Instruments
227
Note 29 -
Employee Benefits
230
Note 30 -
Net Income per Common Share
238
Note 31 -
Revenue from Contracts with Customers
239
Note 32 -
Leases
241
Note 33 -
Stock-Based Compensation
243
Note 34 -
Income Taxes
246
Note 35 -
Supplemental Disclosure on the Consolidated Statements of Cash
Flows
251
Note 36 -
Segment Reporting
252
Note 37 -
Popular, Inc. (Holding company only)
Financial Information
257
118
Note 1 Nature of Operations
Popular,
Inc. (the
Corporation or
Popular) is
a diversified,
publicly owned
financial holding
company subject
to the
supervision
and
regulation
of
the
Board
of
Governors
of
the
Federal
Reserve
System.
The
Corporation
has
operations
in
Puerto
Rico,
the
mainland United
States (U.S.)
and the
U.S. and
British Virgin
Islands. In
Puerto Rico,
the Corporation
provides retail,
mortgage,
and
commercial banking
services, as
well as
auto and
equipment leasing
and financing
through its
principal banking
subsidiary,
Banco Popular
de Puerto
Rico (BPPR),
as well
as broker-dealer
and insurance
services through
specialized subsidiaries.
In the
U.S.
mainland,
the
Corporation
provides
retail
and
commercial
banking
services,
as
well
as
equipment
leasing
and
financing,
through
its
New
York-chartered
banking subsidiary,
Popular
Bank
(PB
or
Popular
U.S.),
which
has
branches
located
in
New
York, New Jersey, and Florida.
119
Note 2 Summary of significant accounting
policies
The
accounting
and
financial
reporting
policies
of
Popular,
Inc.
and
its
subsidiaries
(the
Corporation) conform
with
accounting
principles generally accepted in the United States
of America and with prevailing practices within
the financial services industry.
The following is a description of the most significant
of these policies:
Principles of consolidation
The
consolidated
financial
statements
include
the
accounts
of
Popular,
Inc.
and
its
subsidiaries.
Intercompany
accounts
and
transactions have been
eliminated in consolidation. In
accordance with the
consolidation guidance for variable
interest entities, the
Corporation
would
also
consolidate
any
variable
interest
entities
(VIEs)
for
which
it
has
a
controlling
financial
interest;
and
therefore, it is the primary beneficiary. Assets
held in a fiduciary capacity are not assets of the Corporation and, accordingly,
are not
included in the Consolidated Statements of Financial
Condition.
Unconsolidated investments, in
which there is
at least
20% ownership and
/ or
the Corporation exercises
significant influence, are
generally
accounted
for
by
the
equity
method
with
earnings
recorded
in
other
operating
income.
Limited
partnerships
are
also
accounted for by the equity method unless the investors
interest is so minor that the limited partner may have
virtually no influence
over
partnership
operating
and
financial
policies.
These
investments
are
included
in
other
assets
and
the
Corporations
proportionate share of income or loss is included
in other operating income.
Statutory business trusts that are wholly-owned by the Corporation and are
issuers of trust preferred securities are not consolidated
in the Corporations Consolidated Financial Statements.
Business combinations
Business combinations are accounted for under the acquisition method. Under this method, assets acquired, liabilities assumed and
any noncontrolling
interest in
the acquiree
at the
acquisition date
are measured
at their
fair values
as of
the acquisition
date. The
acquisition
date
is
the
date
the
acquirer
obtains
control.
Transaction
costs
are
expensed
as
incurred.
Contingent
consideration
classified as an asset
or a liability is remeasured to
fair value at each reporting
date until the contingency is
resolved. The changes
in fair
value of
the contingent
consideration are
recognized in
earnings unless
the arrangement
is a
hedging instrument
for which
changes are initially recognized in other comprehensive income (loss). The Corporation did not engage
in any business combination
activities during the years ended December 31,
2025 and 2024.
Use of estimates in the preparation of financial
statements
The preparation of financial
statements in conformity with
accounting principles generally accepted in
the United States
of America
requires management to make
estimates and assumptions that
affect the reported
amounts of assets and
liabilities and contingent
assets
and
liabilities
at
the
date
of
the
financial
statements,
and
the
reported
amounts
of
revenues
and
expenses
during
the
reporting period. Actual results could differ from those estimates.
Fair value measurements
The Corporation determines the fair values of its
financial instruments based on the fair value framework
established in the guidance
for Fair Value
Measurements in Accounting
Standards Codification (ASC)
Subtopic 820-10, which
requires an entity
to maximize
the use
of observable inputs
and minimize the
use of
unobservable inputs when
measuring fair value.
Fair value is
defined as the
exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous
market
for
the
asset
or
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The
standard
describes three
levels of
inputs that
may be
used to
measure fair
value which
are (1)
quoted market
prices for
identical assets
or
liabilities in active markets, (2) observable market-based
inputs or unobservable inputs that are corroborated
by market data, and (3)
unobservable
inputs
that
are
not
corroborated
by
market
data.
The
fair
value
hierarchy
ranks
the
quality
and
reliability
of
the
information used to determine fair values.
The
guidance
in
ASC
Subtopic
820-10
also
addresses
measuring
fair
value
in
situations
where
markets
are
inactive
and
transactions are
not orderly.
Transactions
or quoted
prices for
assets and
liabilities may
not be
determinative of
fair value
when
transactions are not
orderly, and
thus, may require
adjustments to estimate fair
value. Price quotes
based on transactions
that are
not orderly should be given
little, if any,
weight in measuring fair value. Price
quotes based on transactions that are
orderly shall be
considered
in
determining
fair
value,
and
the
weight
given
is
based
on
facts
and
circumstances.
If
sufficient
information
is
not
available to
determine if
price quotes
are based
on orderly
transactions, less
weight should
be given to
the price
quote relative
to
other transactions that are known to be orderly.
120
Investment securities
Investment securities are classified in four categories and
accounted for as follows:
Debt securities that
the Corporation has
the intent and
ability to hold
to maturity are
classified as debt
securities held-to-
maturity and reported
at amortized cost. An
ACL is established
for the expected credit
losses over the remaining
term of
debt securities held-to-maturity. The Corporation has established a methodology to estimate credit losses which
considers
qualitative factors,
including internal credit
ratings and
the underlying source
of repayment
in determining
the amount
of
expected
credit
losses.
Debt
securities
held-to-maturity
are
written-off
through
the
ACL
when
a
portion
or
the
entire
amount is deemed uncollectible, based on the information considered to develop expected credit losses through the life of
the
asset.
The
ACL
is
estimated
by
leveraging
the
expected
loss
framework
for
mortgages
in
the
case
of
securities
collateralized by
2
nd
lien loans
and the
commercial C&I
models for
municipal bonds.
As part
of this
framework, internal
factors are stressed,
as a qualitative
adjustment, to reflect current
conditions that are
not necessarily captured within
the
historical
loss
experience.
The
modeling
framework
includes
a
2-year
reasonable
and
supportable
period
gradually
reverting, over a
3-years horizon, to
historical information at
the model input
level. The Corporations
portfolio of held-to-
maturity
securities
includes
U.S. Treasury
notes
and
obligations from
the
U.S.
Government. These
securities
have
an
explicit or implicit guarantee from the U.S. government, are highly rated by major
rating agencies, and have a long history
of no
credit losses.
Accordingly,
the Corporation
applies a
zero-credit loss
assumption and
no ACL
for these
securities
has been established. The
Corporation may not sell
or transfer held-to-maturity securities without
calling into question its
intent
to
hold
other
debt
securities
to
maturity,
unless
a
nonrecurring
or
unusual
event
that
could
not
have
been
reasonably anticipated has occurred.
Debt securities
classified as
trading securities
are reported
at fair
value, with
unrealized and
realized gains
and losses
included in non-interest income.
Debt
securities
classified
as
available-for-sale
are
reported
at
fair
value.
Declines
in
fair
value
below
the
securities
amortized cost which are
not related to estimated credit losses
are recorded through other comprehensive income
(loss),
net of
taxes. If
the Corporation intends
to sell
or believes
it is
more likely than
not that it
will be
required to sell
the debt
security,
it is
written down
to
fair value
through earnings.
Credit losses
relating to
available-for-sale debt
securities are
recorded through an
ACL, which are
limited to the
difference between the
amortized cost and the
fair value of
the asset.
The ACL is established for the expected credit losses over the remaining term of debt security. The Corporations portfolio
of
available-for-sale securities
is comprised
mainly
of
U.S. Treasury
notes
and
obligations from
the
U.S.
Government.
These
securities
have
an
explicit
or
implicit
guarantee
from
the
U.S.
government,
are
highly
rated
by
major
rating
agencies, and have a
long history of no
credit losses. Accordingly,
the Corporation applies a
zero-credit loss assumption
and no
ACL for
these securities
has been
established. The Corporation
monitors its securities
portfolio composition and
credit performance on a
quarterly basis to determine if
any allowance is considered necessary.
Debt securities available-
for-sale are written-off when
a portion or
the entire amount is
deemed uncollectible, based on the
information considered
to
develop expected
credit losses
through the
life of
the asset.
The specific
identification method
is used
to
determine
realized
gains
and
losses
on
debt
securities
available-for-sale,
which
are
included
in
net
(loss)
gain
on
sale
of
debt
securities in the Consolidated Statements of Operations.
Equity securities that have readily available fair values are reported at fair value. Equity securities that do not have readily
available fair
values are
measured at
cost, less
any impairment,
plus or
minus changes
resulting from
observable price
changes in
orderly transactions
for the
identical or
a similar
investment of
the same
issuer.
Stock that
is owned
by the
Corporation
to
comply
with
regulatory
requirements,
such
as
Federal
Reserve
Bank
and
Federal
Home
Loan
Bank
(FHLB) stock, is included in this category, and their realizable value equals their cost. Unrealized and realized gains and
losses and any impairment on equity securities are included in net gain (loss), including impairment on equity securities in
the Consolidated Statements
of Operations. Dividend income
from investments in
equity securities is included
in interest
income.
The
amortization
of
premiums is
deducted
and
the
accretion of
discounts is
added to
net
interest income
based on
the
interest
method
over the
outstanding period
of
the
related
securities.
Purchases and
sales
of
securities
are
recognized
on
a
trade
date
basis.
Derivative financial instruments
All derivatives are recognized on the Statements of Financial Condition at
fair value. The Corporations policy is not to
offset the fair
value
amounts
recognized
for
multiple
derivative
instruments
executed
with
the
same
counterparty
under
a
master
netting
121
arrangement nor to offset the fair value amounts recognized for the
right to reclaim cash collateral (a receivable) or the obligation
to
return cash collateral (a payable) arising from the
same master netting arrangement as the derivative
instruments.
For
a
cash
flow
hedge,
changes
in
the
fair
value
of
the
derivative
instrument
are
recorded
net
of
taxes
in
accumulated
other
comprehensive income (loss) and subsequently reclassified
to net income in the same period(s) that the hedged
transaction impacts
earnings. For free-standing derivative instruments,
changes in fair values are reported in current
period earnings.
Prior
to
entering
a
hedge
transaction,
the
Corporation
formally
documents
the
relationship
between
hedging
instruments
and
hedged
items,
as
well
as
the
risk
management objective
and
strategy for
undertaking various
hedge
transactions.
This
process
includes
linking all
derivative instruments
to
specific assets
and
liabilities on
the Statements
of
Financial Condition
or to
specific
forecasted transactions
or firm
commitments along
with a
formal assessment,
at both
inception of
the hedge
and on
an ongoing
basis,
as
to
the
effectiveness
of the
derivative instrument
in
offsetting
changes
in
fair
values
or
cash
flows
of
the
hedged
item.
Hedge accounting
is discontinued
when the
derivative instrument
is not
highly effective
as a
hedge, a
derivative expires,
is sold,
terminated, when it is unlikely that a forecasted transaction will
occur or when it is determined that it is
no longer appropriate. When
hedge accounting is discontinued the derivative continues
to be carried at fair value with changes in fair
value included in earnings.
The Corporation
utilizes forward
contracts to
hedge the
sale
of mortgage-backed
securities with
duration terms
over one
month.
Interest rate forwards are contracts for the delayed delivery of securities,
which the seller agrees to deliver on a specified future date
at
a
specified
price
or
yield.
Based
on
the
election
to
apply
fair
value
accounting
for
its
mortgage
loans
held
for
sale,
hedge
accounting
is
not
used
for
these
forward
contracts
and
changes
in
the
fair
value
of
the
loans
are
expected
to
be
offset
by
the
changes in the fair value of the forward
contract, both of which are recorded through net
income (loss).
For non-exchange
traded contracts,
fair value
is based
on dealer
quotes, pricing
models, discounted
cash flow
methodologies or
similar techniques for which the determination of
fair value may require significant management judgment
or estimation.
The fair value of derivative instruments considers
the risk of non-performance by the counterparty
or the Corporation, as applicable.
The Corporation obtains or pledges collateral in
connection with its derivative activities when applicable
under the agreement.
Loans
Loans
are
classified
as
loans
held-in-portfolio when
management has
the
intent
and
ability
to
hold
the
loan
for
the
foreseeable
future, or
until maturity
or payoff.
The foreseeable
future is
a management
judgment which
is determined
based upon
the type
of
loan,
business strategies,
current market
conditions, balance
sheet
management and
liquidity needs.
Managements view
of
the
foreseeable future may change based on changes in these conditions. When a decision is made to sell or securitize a loan that
was
not originated or
initially acquired with the
intent to sell
or securitize, the loan
is reclassified from held-in-portfolio
into held-for-sale.
Due to changing market conditions or other strategic
initiatives, managements intent with respect to the disposition of
the loan may
change,
and
accordingly,
loans
previously classified
as
held-for-sale
may
be
reclassified into
held-in-portfolio. Loans
transferred
between loans held-for-sale and held-in-portfolio
classifications are recorded at the lower of cost or
fair value at the date of transfer.
Purchased
loans
with
no
evidence
of
credit
deterioration
since
origination
are
recorded
at
fair
value
upon
acquisition.
Credit
discounts are included in the determination of fair
value.
Loans held-in-portfolio
are reported
at their
outstanding principal
balances net
of any
unearned income,
charge-offs, unamortized
deferred fees and
costs on originated
loans, and premiums
or discounts on
purchased loans. Fees
collected and costs
incurred in
the
origination of
new
loans are
deferred and
amortized using
the interest
method or
a method
which approximates
the interest
method over the term of the loan as an adjustment
to interest yield.
Loans held-for-sale,
except for
mortgage loans
originated as
held-for-sale, are
stated at
the lower
of cost
or fair
value, cost
being
determined based
on the
outstanding loan
balance less
unearned income,
and fair
value determined,
generally in
the aggregate.
Fair value is measured based on current market prices for similar loans, outstanding investor commitments, prices
of recent sales or
discounted cash
flow analyses
which utilize
inputs and
assumptions which
are believed
to be
consistent with
market participants
views. The
cost basis
also includes
consideration of
deferred origination
fees and
costs, which
are recognized
in earnings
at the
time of sale.
Upon reclassification to held-for-sale,
credit related fair
value adjustments are recorded
as a reduction
in the ACL.
To
the extent that the loan's reduction in value
has not already been provided for in the ACL,
an additional provision for credit losses is
recorded. Subsequent to reclassification to held-for-sale, the amount, by
which cost exceeds fair value, if any,
is accounted for as a
valuation allowance
with changes
therein included
in the
determination of
net income
for the
period in
which the
change occurs.
Newly originated mortgage loans held-for-sale are reported
at fair value, with changes recorded through
earnings.
122
The past due status of a loan is determined in accordance with its
contractual repayment terms. Furthermore, loans are reported as
past due when either interest or principal remains
unpaid for 30 days or more in accordance
with its contractual repayment terms.
Non-accrual loans are those loans on which the
accrual of interest is discontinued. When a loan is
placed on non-accrual status, all
previously
accrued
and
unpaid interest
is
charged against
interest
income
and
the
loan
is
accounted for
either
on
a cash-basis
method or
on the
cost-recovery method.
Loans designated
as non-accruing
are returned
to accrual
status when
the Corporation
expects repayment of the remaining contractual principal
and interest.
Recognition of interest income on commercial and construction loans is discontinued when the loans are 90 days or more in arrears
on payments of principal or interest or when other factors indicate that the collection of principal and interest is
doubtful. The portion
of
a
secured
loan
deemed
uncollectible
is
charged-off
no
later
than
365
days
past
due.
However,
in
the
case
of
a
collateral
dependent
loan,
the
excess
of
the
recorded
investment
over
the
fair
value
of
the
collateral
(portion
deemed
uncollectible)
is
generally
promptly charged-off,
but
in
any
event,
not
later
than
the
quarter
following
the
quarter
in
which
such
excess was
first
recognized.
Commercial
unsecured
loans
are
charged-off
no
later
than
180
days
past
due.
Recognition
of
interest
income
on
mortgage
loans
is
generally
discontinued
when
loans
are
90
days
or
more
in
arrears
on
payments
of
principal
or
interest.
The
portion of a
mortgage loan deemed
uncollectible is charged-off
when the loan
is 180 days
past due. The
Corporation discontinues
the recognition
of interest
on residential
mortgage loans
insured by
the Federal
Housing Administration
(FHA) or
guaranteed by
the U.S.
Department of Veterans
Affairs (VA)
when 15-months
delinquent as
to principal
or interest.
The principal
repayment on
these loans is insured. Recognition of interest income on closed-end consumer loans and home equity lines of credit is discontinued
when the
loans are
90 days
or more
in arrears
on payments
of principal
or interest.
Income is
generally recognized
on open-end
consumer loans,
except for
home equity
lines
of
credit,
until
the
loans are
charged-off.
Recognition of
interest
income
for
lease
financing is ceased when
loans are 90 days
or more in arrears.
Closed-end consumer loans and leases
are charged-off when they
are 120
days in
arrears. Open-end
(revolving credit)
consumer loans
are charged-off
when 180
days in
arrears. Commercial
and
consumer overdrafts are generally charged-off no later than
60 days past their due date.
A loan
modified with
financial difficulties
is typically
in non-accrual
status at
the time
of the
modification. These
loans continue
in
non-accrual status until the borrower has demonstrated a willingness
and ability to make the restructured loan payments (at
least six
months of sustained performance after the modification (or one year for loans providing for quarterly or semi-annual payments)) and
management has concluded that it is probable
that the borrower would not be in payment
default in the foreseeable future.
Loan modifications
A modification
is subject to
disclosure under ASC
Topic
326 when the
Corporation separately concludes
that both
of the
following
conditions exist: 1) the
debtor is experiencing financial difficulties
and 2) the modification
constitutes a reduction in
the interest rate
on the
loan, a
payment extension,
a forgiveness
of principal,
a more-than-insignificant
payment delay,
or a
combination of
these.
Determination
that
a
borrower
is
experiencing
financial
difficulties
involves
a
degree
of
judgment.
The
identification
of
loan
modifications to debtors with financial difficulties is critical
in the determination of the adequacy of
the ACL.
Refer
to
Note
8
to
the
Consolidated
Financial
Statements
for
additional
qualitative
information
on
loan
modifications
and
the
Corporations determination of the ACL.
Lease financing
The
Corporation leases
passenger and
commercial
vehicles
and
equipment
to
individual
and
corporate
customers.
The
finance
method of accounting
is used to
recognize revenue on lease
contracts that meet
the criteria specified in
the guidance for leases
in
ASC Topic
842. Aggregate
rentals due
over the
term of
the leases
less unearned
income are
included in
finance lease
contracts
receivable.
Unearned
income
is
amortized
using
a
method
which
results
in
approximate
level
rates
of
return
on
the
principal
amounts outstanding. Finance lease origination
fees and costs
are deferred and amortized
over the average life
of the lease as
an
adjustment to the interest yield.
Revenue for other leases is recognized as it becomes
due under the terms of the agreement.
Loans acquired with deteriorated credit quality
Purchased credit
deteriorated (PCD) loans
are defined
as those
with evidence
of a
more-than-insignificant deterioration in
credit
quality
since
origination.
PCD
loans
are
initially
recorded at
their
purchase
price
plus
an
estimated allowance
for
credit
losses
(ACL). Upon
the acquisition of
a PCD loan,
the Corporation makes
an estimate of
the expected credit
losses over the
remaining
contractual
term
of
each
individual
loan.
The
estimated
credit
losses
over
the
life
of
the
loan
are
recorded
as
an
ACL
with
a
corresponding addition to the
loan purchase price. The
amount of the purchased
premium or discount which
is not related to
credit
123
risk
is
amortized
over
the
life
of
the
loan
through
net
interest
income
using
the
effective
interest
method
or
a
method
that
approximates the effective interest method. Changes in
expected credit losses are recorded as an
increase or decrease to the ACL
with a
corresponding charge (reverse)
to the
provision for credit
losses in
the Consolidated Statement
of Operations. These
loans
follow the same nonaccrual policies as non-PCD
loans.
Refer to Note
7
and Note 8
to the Consolidated
Financial Statements for
additional information with
respect to loans
acquired with
deteriorated credit quality and the corresponding allowance
for credit losses.
Accrued interest receivable
The
amortized
basis
for
loans
and
investments
in
debt
securities
is
presented
exclusive
of
accrued
interest
receivable.
The
Corporation has elected
not to establish
an ACL for
accrued interest receivable for
loans and investments
in debt securities,
given
the Corporations
non-accrual policies, in
which accrual
of interest is
discontinued and reversed
based on the
assets delinquency
status.
Allowance for credit losses loans portfolio
The Corporation establishes an ACL
for its loan
portfolio based on its
estimate of credit losses
over the remaining contractual
term
of the loans, adjusted for expected prepayments. An ACL is recognized for all loans including originated and purchased loans, since
inception, with
a corresponding charge
to the
provision for
credit losses,
except for
PCD loans
for which
the ACL
at acquisition
is
recorded
as
an
addition
to
the
purchase
price
with
subsequent
changes
recorded
in
earnings.
Loan
losses
are
charged
and
recoveries are credited to the ACL.
The
Corporation
follows
a
methodology
to
estimate
the
ACL
which
includes
a
reasonable
and
supportable
forecast
period
for
estimating
credit
losses,
considering
quantitative
and
qualitative
factors
as
well
as
the
economic
outlook.
As
part
of
this
methodology,
management
evaluates
various
macroeconomic
scenarios
provided
by
third
parties.
At
December
31,
2025,
management
applied
probability
weights
to
the
outcome
of
the
selected
macroeconomic
scenarios.
This
evaluation
includes
benchmarking procedures as well as
careful analysis of the
underlying assumptions used to
build the scenarios. The
application of
probability
weights
include
baseline,
optimistic
and
pessimistic
scenarios.
The
weights
applied
are
subject
to
evaluation
on
a
quarterly basis as part of the ACLs
governance process. The Corporation considers additional macroeconomic scenarios as part of
its qualitative adjustment framework.
The
macroeconomic variables
chosen
to
estimate credit
losses
were selected
by
combining
quantitative
procedures with
expert
judgment.
These
variables
were
determined
to
be
the
best
predictors
of
expected
credit
losses
within
the
Corporations
loan
portfolios and
include drivers such
as unemployment rate,
different measures
of employment levels,
house prices,
gross domestic
product
and
measures
of
disposable
income,
amongst
others.
The
loss
estimation
framework
includes
a
reasonable
and
supportable period of
2 years for
PR portfolios, gradually
reverting over a
3-years horizon to
historical macroeconomic variables at
the
model
input
level.
For
the
U.S.
portfolio,
the
reasonable
and
supportable
period
considers
the
contractual
life
of
the
asset,
impacted by
prepayments, except for
the U.S.
CRE portfolio. The
U.S. CRE portfolio
utilizes a 2-year
reasonable and supportable
period gradually reverting, over a 3-years horizon,
to historical information at the output level.
The
Corporation
developed
loan
level
quantitative
models
distributed
by
geography
and
loan
type.
This
segmentation
was
determined
by
evaluating
their
risk
characteristics,
which
include
default
patterns,
source
of
repayment,
type
of
collateral,
and
lending channels,
amongst others. The
modeling framework
includes internally
developed quantitative models
to generate
lifetime
defaults
and
prepayments,
and
other
loan
level
modeling
techniques
to
estimate
loss
severity.
Recoveries
on
future
losses
are
contemplated
as
part
of
the
loss
severity
modeling.
These
parameters
are
estimated
by
combining
internal
risk
factors
with
macroeconomic expectations.
In order
to
generate the
expected credit
losses, the
output of
these models
is combined
with loan
level repayment information. The internal risk factors contemplated within
the models may include borrowers credit scores, loan-to-
value, delinquency status, risk ratings, interest rate, loan
term, loan age and type of collateral, amongst
others.
The ACL also
includes a qualitative
adjustment framework that
addresses two main
components: losses that
are expected but
not
captured
within
the
quantitative
modeling
framework
and
model
imprecision.
In
order
to
identify
potential
losses
that
are
not
captured through the models,
management evaluates model limitations
as well as the
different risks covered
by the variables used
in each quantitative model. The Corporation considers
additional macroeconomic scenarios to address these
risks. This assessment
takes
into
consideration
factors
listed
as
part
of
ASC
326-20-55-4.
To
complement
the
analysis,
management
also
evaluates
whether there are sectors that
have low levels of historical
defaults, but current conditions show the
potential for future losses. This
type of
qualitative adjustment
is more
prevalent in
the commercial
portfolios. The
model imprecision
component of
the qualitative
124
adjustments
is
determined
after
evaluating
model
performance
for
these
portfolios
through
different
time
periods.
This
type
of
qualitative adjustment mainly impacts consumer portfolios.
The
Corporation
has
designated
as
collateral
dependent
loans
secured
by
collateral
when
foreclosure
is
probable
or
when
foreclosure is
not probable but
the practical expedient
is used.
The practical expedient
is used
when repayment is
expected to
be
provided
substantially
by
the
sale
or
operation
of
the
collateral
and
the
borrower is
experiencing financial
difficulty.
The
ACL
of
collateral dependent loans
is measured based
on the fair
value of the
collateral less costs
to sell. The
fair value of
the collateral is
based on appraisals, which may be adjusted due to their
age, and the type, location, and condition of the
property or area or general
market conditions to reflect the expected change in
value between the effective date of the appraisal
and the measurement date.
The Credit Cards
portfolio, due to
its revolving nature,
does not have
a specified maturity date.
To
estimate the average remaining
term
of
this
segment,
management evaluated
the
portfolios
payment
behavior
based
on
internal
historical data.
These payment
behaviors were
further classified
into sub-categories
that accounted
for delinquency
history and
differences between
transactors,
revolvers and customers that have exhibited mixed transactor/revolver behavior. Transactors are defined as active accounts without
any
finance
charge
in
the
last
6
months.
The
paydown
curves
generated
for
each
sub-category
are
applied
to
the
outstanding
exposure at
the measurement
date using
the first-in
first-out (FIFO)
methodology.
These amortization
patterns are
combined with
loan level default and loss severity modeling to arrive
at the ACL.
Reserve for unfunded commitments
The Corporation
establishes a
reserve for
unfunded commitments,
based on
the estimated
losses over
the remaining
term of
the
facility.
An allowance
is not
established for
commitments that
are unconditionally
cancellable by
the Corporation.
Accordingly,
no
reserve
is
established
for
unfunded commitments
related to
its
credit
cards
portfolio.
Reserve for
the
unfunded
portion
of
credit
commitments
is
presented
within
other
liabilities
in
the
Consolidated Statements
of
Financial
Condition.
Net
adjustments
to
the
reserve for unfunded commitments are
reflected in the Consolidated Statements
of Operations as provision for credit
losses for the
years ended December 31, 2025, 2024, and 2023.
Transfers and servicing of financial assets
The transfer
of an
entire financial
asset, a
group of
entire financial
assets, or
a participating interest
in an
entire financial
asset in
which the Corporation surrenders control over the assets is accounted
for as a sale
if all of the following conditions set forth in
ASC
Topic
860 are met:
(1) the assets
must be isolated
from creditors of
the transferor,
(2) the transferee
must obtain the
right (free of
conditions that constrain it
from taking advantage
of that right)
to pledge or
exchange the transferred assets,
and (3) the
transferor
cannot maintain effective control over
the transferred assets through an agreement
to repurchase them before their
maturity. When
the
Corporation
transfers
financial
assets
and
the
transfer
fails
any
one
of
these
criteria,
the
Corporation
is
prevented
from
derecognizing the transferred financial
assets and the
transaction is accounted for
as a secured
borrowing. For federal and
Puerto
Rico income
tax purposes,
the Corporation
treats the
transfers of
loans which
do not
qualify as
under the
applicable
accounting guidance, as sales, recognizing a deferred
tax asset or liability on the transaction.
For transfers
of financial
assets that
satisfy the
conditions to
be accounted
for as
sales, the
Corporation derecognizes
all assets
sold; recognizes all
assets obtained and liabilities
incurred in consideration as
proceeds of the
sale, including servicing
assets and
servicing liabilities, if
applicable; initially measures
at fair
value assets obtained
and liabilities incurred
in a
sale; and
recognizes in
earnings any gain or loss on the sale.
The guidance
on transfer
of financial
assets requires a
analysis of
the treatment
of the
transfer under state
law as
if the
Corporation was a debtor under the bankruptcy code. A true sale legal analysis includes several legally relevant factors, such as the
nature and level of recourse to the transferor, and the nature of retained interests in the loans sold. The analytical conclusion as to a
is never
absolute and
unconditional, but
contains qualifications
based on
the inherent
equitable powers
of a
bankruptcy
court, as
well as
the unsettled
state of
the common
law.
Once the
legal isolation
test has
been met,
other factors
concerning the
nature
and
extent
of
the
transferors
control
over
the
transferred
assets
are
taken
into
account
in
order
to
determine
whether
derecognition of assets is warranted.
The Corporation sells mortgage loans to the Government National Mortgage Association (GNMA)
in the normal course of business
and retains the servicing rights. The GNMA programs under which the loans
are sold allow the Corporation to repurchase individual
delinquent loans that meet certain criteria. At the Corporations option, and without GNMAs prior authorization, the Corporation may
repurchase the delinquent
loan for an
amount equal to
100% of the
remaining principal balance
of the loan.
Once the Corporation
has the
unconditional ability
to repurchase
the delinquent
loan, the
Corporation is
deemed to
have regained
effective control
over
125
the
loan
and
recognizes
the
loan
on
its
balance
sheet
as
well
as
an
offsetting
liability,
regardless of
the
Corporations
intent
to
repurchase the loan.
Servicing assets
The
Corporation
periodically
sells
or
securitizes
loans
while
retaining
the
obligation
to
perform
the
servicing
of
such
loans.
In
addition,
the
Corporation
may
purchase
or
assume
the
right
to
service
loans
originated
by
others.
Whenever
the
Corporation
undertakes an
obligation to
service a
loan, management
assesses whether
a servicing
asset or
liability should
be recognized.
A
servicing
asset
is
recognized
whenever
the
compensation
for
servicing
is
expected
to
more
than
adequately
compensate
the
servicer
for
performing
the
servicing.
Likewise,
a
servicing
liability
would
be
recognized
in
the
event
that
servicing
fees
to
be
received are not
expected to adequately
compensate the Corporation
for its
expected cost. Mortgage servicing
assets recorded at
fair value are separately presented on the Consolidated
Statements of Financial Condition.
All separately recognized servicing assets are initially recognized at fair value. For subsequent measurement of
servicing rights, the
Corporation
has
elected
the
fair
value
method
for
mortgage
loans
servicing
rights
(MSRs).
Under
the
fair
value
measurement
method,
MSRs
are
recorded
at
fair
value
each
reporting
period,
and
changes
in
fair
value
are
reported
in
mortgage
banking
activities in the Consolidated Statement of Operations. Contractual
servicing fees including ancillary income and late
fees, as well as
fair
value
adjustments, are
reported in
mortgage
banking
activities in
the
Consolidated Statement
of
Operations. Loan
servicing
fees, which are based on a percentage of the principal balances of the
loans serviced, are credited to income as loan payments are
collected.
The fair value
of servicing rights is
estimated by using a
cash flow valuation model
which calculates the present value
of estimated
future net servicing cash flows, taking into consideration actual and expected loan prepayment rates, discount
rates, servicing costs,
and other economic factors, which are determined
based on current market conditions.
Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on a
straight-
line basis over
the estimated useful
life of each
type of asset.
Amortization of leasehold
improvements is computed
over the fixed,
non-cancelable terms
of the
respective lease
contracts or
the
estimated useful
lives
of the
asset, whichever
is shorter.
Costs of
maintenance
and
repairs
which
do
not
improve
or
extend
the
life
of
the
respective
assets
are
expensed
as
incurred.
Costs
of
renewals
and
betterments
are
capitalized.
When
assets
are
disposed
of,
their
cost
and
related
accumulated
depreciation
are
removed from the accounts and any gain or loss
is reflected in earnings as realized or incurred,
respectively.
The
Corporation
recognizes
right-of-use
assets
(ROU
assets)
and
lease
liabilities
relating
to
operating
and
finance
lease
arrangements in its Consolidated Statements of Financial Condition within other assets and other liabilities, respectively. For finance
leases, interest is recognized on the
lease liability separately from the amortization
of the ROU asset, whereas for
operating leases
a single lease cost
is recognized so that
the cost of the
lease is allocated over
the lease term on
a straight-line basis. Impairments
on ROU assets are evaluated under the guidance for impairment
or disposal of long-lived assets.
The Corporation recognizes gains
on sale and
leaseback transactions in earnings when
the transfer constitutes a
sale, and the transaction
was at fair value.
Refer to
Note 32 to the Consolidated Financial Statements
for additional information on operating and finance
lease arrangements.
Impairment of long-lived assets
The
Corporation
evaluates
for
impairment
its
long-lived
assets
to
be
held
and
used,
and
long-lived
assets
to
be
disposed
of,
whenever events or changes
in circumstances indicate that the
carrying amount of an
asset may not be recoverable
and records a
write down for the difference between the carrying amount
and the fair value less costs to sell.
Other real estate
Other
real
estate,
received
in
satisfaction
of
a
loan,
is
recorded
at
fair
value
less
estimated
costs
of
disposal.
The
difference
between the carrying amount of the loan and the fair value less cost to
sell is recorded as an adjustment to the ACL. Subsequent to
foreclosure, any
losses in
the carrying
value arising
from periodic
re-evaluations of the
properties, and any
gains or
losses on
the
sale of these properties are credited or charged to expense in the period incurred and are included as OREO expenses. The cost of
maintaining and operating such properties is expensed
as incurred.
Updated appraisals
are obtained
to adjust
the value
of the
other real
estate assets.
The frequency
depends on
the loan
type and
total credit exposure. The appraisal for a commercial or construction other real estate property with a book value
equal to or greater
than $1 million is updated annually and if lower
than $1 million it is updated every two years.
For residential mortgage properties, the
Corporation requests appraisals annually.
126
Appraisals
may
be
adjusted
due
to
age,
collateral
inspections,
property
profiles,
or
general
market
conditions.
The
adjustments
applied are based upon
internal information such
as other appraisals for
the type of
properties and/or loss severity
information that
can provide historical trends in the real estate market
and may change from time to time based
on market conditions.
Goodwill and other intangible assets
Goodwill is recognized when the purchase price
is higher than the fair value
of net assets acquired in business combinations
under
the purchase
method of
accounting. Goodwill
is not
amortized but
is tested
for impairment
at least
annually or
more frequently
if
events or circumstances indicate possible impairment. When evaluating goodwill for impairment, the Corporation may
decide to first
perform a qualitative assessment, or Step Zero impairment test, to determine whether it is more likely than not that impairment has
occurred. The qualitative
assessment includes a
review of macroeconomic conditions,
industry and market
considerations, internal
cost factors, and our own overall
financial and share price performance, among other factors. If
it is determined that it is
more likely
than
not
that
the
carrying
amounts
of
our
reporting
units
exceed
their
fair
value,
the
Corporation
will
perform
a
quantitative
assessment and calculate the estimated fair value of the respective
reporting unit. If the carrying amount of any of
the reporting units
exceeds its fair value,
the Corporation would be required
to record an impairment charge
for the difference up
to the amount of
the
goodwill. In
determining the
fair value
of each
reporting unit,
the Corporation
generally uses
a combination
of methods,
including
market price
multiples of
comparable companies
and transactions,
as well
as discounted
cash flow
analysis. Goodwill
impairment
losses are recorded as part of operating expenses
in the Consolidated Statements of Operations.
Other intangible assets deemed
to have an
indefinite life are
not amortized but are
tested for impairment using
a one-step process
which compares the fair value with the carrying amount of the asset.
In determining that an intangible asset has an indefinite life, the
Corporation
considers
expected
cash
inflows
and
legal,
regulatory,
contractual,
competitive,
economic
and
other
factors,
which
could limit the intangible assets useful life.
Other
identifiable
intangible
assets
with
a
finite
useful
life,
mainly
core
deposits,
are
amortized
using
various
methods
over
the
periods
benefited,
which
range
from
5
to
10
years.
These
intangibles are
evaluated
periodically for
impairment
when
events
or
changes in circumstances
indicate that the carrying
amount may not
be recoverable. Impairments on
intangible assets with
a finite
useful life are evaluated under the guidance for
impairment or disposal of long-lived assets.
Assets sold / purchased under agreements to repurchase
/ resell
Repurchase and resell agreements
are treated as collateralized
financing transactions and are
carried at the
amounts at which the
assets will be subsequently reacquired or resold as
specified in the respective agreements.
It is the
Corporations policy to take possession
of securities purchased under agreements to
resell. However, the counterparties
to
such
agreements
maintain
effective
control
over
such
securities,
and
accordingly
those
securities
are
not
reflected
in
the
Corporations Consolidated Statements
of Financial
Condition. The Corporation
monitors the
fair value of
the underlying
securities
as compared to the related receivable, including accrued
interest.
It
is
the
Corporations
policy
to
maintain
effective
control
over
assets
sold
under
agreements
to
repurchase;
accordingly,
such
securities continue to be carried on the Consolidated
Statements of Financial Condition.
The Corporation may require counterparties to deposit
additional collateral or return collateral pledged,
when appropriate.
Software
Capitalized
software
is
stated
at
cost,
less
accumulated
amortization.
Capitalized
software
includes
purchased
software
and
capitalizable application development costs associated with internally-developed software. Amortization, computed on a straight-line
method, is charged to operations
over the estimated useful life
of the software. Capitalized software is
included in Other assets in
the Consolidated Statement of Financial Condition.
Guarantees, including indirect guarantees of indebtedness
to others
The estimated losses to be absorbed under the credit
recourse arrangements are recorded as a liability when
the loans are sold and
are updated by
accruing or reversing expense
(categorized in the line
item Adjustments (expense) to
indemnity reserves on loans
sold
in
the
Consolidated
Statements
of
Operations)
throughout
the
life
of
the
loan,
as
necessary,
when
additional
relevant
information
becomes
available.
The
methodology
used
to
estimate
the
recourse
liability
considers
current
conditions,
macroeconomic expectations through a 2-years reasonable and supportable period, gradually reverting to historical macroeconomic
variables at the model input level over a 3-year period, portfolio
composition by risk characteristics, amongst other factors. Statistical
methods are used
to estimate the
recourse liability.
Expected loss rates
are applied to
different loan segmentations.
The expected
127
loss, which
represents the
amount expected
to be
lost on
a given
loan, considers
the probability
of default
and loss
severity.
The
reserve
for
the
estimated
losses
under
the
credit
recourse
arrangements
is
presented
separately
within
other
liabilities
in
the
Consolidated Statements of
Financial Condition. Refer
to Note
22 to
the Consolidated Financial
Statements for further
disclosures
on guarantees.
Treasury stock
Treasury stock is
recorded at cost and
is carried as a
reduction of stockholders equity in
the Consolidated Statements of Financial
Condition.
At the
date of
retirement or
subsequent reissue,
the treasury
stock account
is reduced
by
the cost
of such
stock.
At
retirement, the excess of the cost of the treasury stock over
its par value is recorded entirely to surplus. At reissuance,
the difference
between the consideration received upon issuance and
the specific cost is charged or credited to surplus.
Revenues from contracts with customers
Refer
to
Note
31
for
a
detailed
description
of
the
Corporations
policies
on
the
recognition
and
presentation
of
revenues
from
contract with customers.
Foreign exchange
Assets and liabilities
denominated in foreign currencies
are translated to U.S.
dollars using prevailing rates
of exchange at
the end
of
the
period.
Revenues, expenses,
gains
and
losses
are
translated using
weighted
average
rates
for
the
period.
The
resulting
foreign currency translation adjustment
from operations for which
the functional currency is
other than the U.S.
dollar is reported in
accumulated
other comprehensive
income
(loss), except
for
highly inflationary
environments in
which the
effects
are
included
in
other operating expenses.
The Corporation
holds interests
in Centro
Financiero BHD
Len, S.A.
(BHD Len)
in the
Dominican Republic.
The business
of
BHD Len is
mainly conducted in their
countrys foreign currency.
The resulting foreign currency
translation adjustment from these
operations is reported in accumulated other comprehensive
income (loss).
Refer to the disclosure of accumulated other comprehensive
income (loss) included in Note 21.
Income taxes
The Corporation
recognizes deferred tax
assets and
liabilities for
the expected
future tax
consequences of
events that
have been
recognized in
the Corporations
financial statements
or tax
returns. Deferred
income tax
assets and
liabilities are
determined for
differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible
amounts in the
future.
The
computation
is
based
on
enacted
tax
laws
and
rates
applicable
to
periods
in
which
the
temporary
differences
are
expected to be recovered or settled.
The
guidance for
income
taxes
requires a
reduction of
the
carrying
amounts
of
deferred tax
assets
by
a valuation
allowance if,
based on the available evidence, it is more likely
than not (defined as a likelihood of more
than 50 percent) that such assets will not
be
realized.
Accordingly,
the
need
to
establish
valuation
allowances
for
deferred
tax
assets
is
assessed
periodically
by
the
Corporation
based
on
the
more
likely
than
not
realization
threshold
criterion.
In
the
assessment
for
a
valuation
allowance,
appropriate consideration
is given
to all
positive and
negative evidence
related to
the realization
of the
deferred tax
assets. This
assessment considers, among others,
all sources of
taxable income available to
realize the deferred tax
asset, including the future
reversal of existing temporary differences, the future taxable income
exclusive of reversing temporary differences and carryforwards,
taxable income in carryback years and tax-planning strategies. In making such
assessments, significant weight is given to evidence
that can be objectively verified.
The valuation
of deferred
tax assets
requires judgment
in assessing
the likely
future tax
consequences of
events that
have been
recognized in the Corporations financial statements or tax returns and future profitability.
The Corporations accounting for deferred
tax consequences represents managements best estimate
of those future events.
Positions taken in
the Corporations
tax returns may
be subject to
challenge by the
taxing authorities upon
examination. Uncertain
tax positions
are initially
recognized in the
financial statements when
it is
more likely than
not (greater than
50%) that
the position
will be sustained upon examination by the tax authorities, assuming full knowledge of the position and all relevant facts.
The amount
of unrecognized tax benefit may increase or decrease in
the future for various reasons including adding amounts for
current tax year
positions,
expiration of open income tax returns due to the statute of limitations, changes in managements judgment about the level
of
uncertainty,
including
addition
or
elimination
of
uncertain
tax
positions,
status
of
examinations, litigation,
settlements
with
tax
authorities and legislative activity.
128
The Corporation accounts for the taxes collected from customers
and remitted to governmental authorities on a net
basis (excluded
from revenues).
Income
tax
expense
or
benefit
for
the
year
is
allocated
among
continuing
operations,
discontinued
operations,
and
other
comprehensive income (loss), as applicable. The amount allocated to continuing operations is the tax effect of the pre-tax income or
loss from continuing operations that occurred during the year, plus or minus
income tax effects of (a) changes in circumstances that
cause
a
change
in
judgment
about
the
realization
of
deferred
tax
assets
in
future
years,
(b)
changes
in
tax
laws
or
rates,
(c)
changes in tax status, and (d) tax-deductible
dividends paid to stockholders, subject to certain
exceptions.
Employees retirement and other postretirement benefit
plans
Pension costs are
computed on the
basis of accepted
actuarial methods and are
charged to current
operations. Net pension costs
are based
on various actuarial
assumptions regarding future
experience under the
plan, which include
costs for services
rendered
during the
period, interest
costs and
return on
plan assets,
as well
as deferral
and amortization
of certain
items such
as actuarial
gains or losses.
The funding policy is
to contribute to the
plan, as necessary,
to provide for services
to date and for
those expected to be
earned in
the
future.
To
the
extent
that
these
requirements
are
fully
covered
by
assets
in
the
plan,
a
contribution
may
not
be
made
in
a
particular year.
The cost
of postretirement
benefits, which
is determined
based on
actuarial assumptions
and estimates
of the
costs of
providing
these benefits in the future, is accrued during
the years that the employee renders the required
service.
The guidance for compensation
retirement benefits of ASC
Topic
715 requires the recognition
of the funded status
of each defined
pension
benefit
plan,
retiree
health
care
and
other
postretirement
benefit
plans
on
the
Consolidated
Statements
of
Financial
Condition.
Stock-based compensation
The
Corporation
opted
to
use
the
fair
value
method
of
recording
stock-based
compensation
as
described
in
the
guidance
for
employee share plans in ASC Subtopic 718-50.
Comprehensive income
Comprehensive income
(loss) is
defined as
the change
in equity
of
a business
enterprise during
a period
from
transactions and
other events
and circumstances,
except those
resulting from
investments by
owners and
distributions to
owners. Comprehensive
income (loss) is separately presented in the Consolidated
Statements of Comprehensive Income.
Net income per common share
Basic income per common share is computed by dividing net income adjusted for preferred stock dividends, including undeclared or
unpaid dividends
if cumulative,
and charges
or credits
related to
the extinguishment
of preferred
stock or
induced conversions
of
preferred stock, by the weighted average number of
common shares outstanding during the year. Diluted income per common
share
takes into consideration the weighted average common shares adjusted for the effect of stock options, restricted stock, performance
shares and warrants, if any, using the treasury stock method.
Statement of cash flows
For purposes of reporting cash flows, cash includes
cash on hand and amounts due from banks, including
restricted cash.
129
Note 3 - New accounting pronouncements
Recently Adopted Accounting Standards Updates
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-02,
Liabilities (Topic 405) -
Amendments to SEC
Paragraphs Pursuant to
SEC Staff Accounting
Bulletin No. 122
The
Financial Accounting
Standards Board
("FASB")
issued
Accounting
Standard
Update
("ASU")
2025-02
in
March
2025,
which
amends
the
guidance
in
Accounting
Standards
Codification
("ASC")
450-10-
S99-1
by
removing
the
interpretative
guidance
of
Section
FF
of
Topic
5
in
the
Staff Accounting Bulletin Series ("SAB") text
that
addressed
the
accounting
for
obligations to
safeguard crypto-assets
held
by platform
users to
align the
ASC with
the
latest
SAB
112
directive,
ensuring
consistency and clarity.
March 18, 2025
The
Corporation
was
not
impacted
by
the
adoption of
this
ASU
since
it does
not currently hold crypto-assets.
FASB ASU 2024-02,
Codification Improvements
- Amendments to Remove
References to the
Concepts Statements
The
FASB
issued
ASU
2024-02
in
March
2024, which
removes various
references to
concept statements from the ASC. The ASU
intends
to
simplify
the
Codification
and
distinguish
between
nonauthoritative
and
authoritative guidance.
January 1, 2025
The
Corporation
was
not
impacted
by
the adoption of this ASU since it did not
provide for
accounting changes
or new
presentation
or
disclosure
requirements.
The
ASU
eliminated
references
within
the
ASC
to
the
concept
statements,
which
is
considered non-authoritative guidance.
FASB ASU 2024-01,
Compensation - Stock
Compensation (Topic 718)
- Scope Application of
Profits Interest and Similar
Awards
The
FASB
issued
ASU
2024-01
in
March
2024,
which
amends
ASC
Topic
718
by
including
an
illustrative
example
to
demonstrate how
an entity
would apply
the
scope
guidance
in
paragraph
718-10-15-3
to determine whether profits interest awards
should be accounted
for in accordance
with
ASC
Topic
718.
The
ASU
is
intended
to
reduce complexity and diversity in practice.
January 1, 2025
The
Corporation
was
not
impacted
by
the
adoption
of
this
ASU
since
the
performance
share
awards
of
the
Corporation
continue
to
meet
the
requirements of ASC 718-10-15-3.
FASB ASU 2023-09,
Income Tax (Topic
740) -
Improvements to Income
Tax Disclosures
The
FASB
issued
ASU
2023-09
in
December 2023,
which amends ASC
Topic
740
by
enhancing
disclosures
regarding
rate
reconciliation
and
requiring
the
disclosure of
income taxes paid, income (or
loss)
before
income
tax
expense
and
income
tax
expense
disaggregated
by
national, state and foreign level. Disclosures
that
no
longer
were
considered
cost
beneficial
or
relevant
were
removed
from
ASC Topic 740.
January 1, 2025
The Corporation adopted ASU
2023-09
for
it's
Consolidated
Financial
Statements
in
this
Form
10-K
as
of
December
31,
2025.
The
adoption
of
this
standard
resulted
in
the
prospective
inclusion
of
certain
new
categories
in
the
effective
income
tax
rate
and
income
tax
expense
tabular
disclosures, as well as the disclosure of
income taxes
paid. Refer
to Note
34
Income
taxes
for
the
additional
disclosures included.
130
Recently Adopted Accounting Standards Updates
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2023-08,
Intangibles - Goodwill and
Other - Crypto Assets
(Subtopic 350-60) -
Accounting for and
Disclosure of Crypto
Assets
The
FASB
issued
ASU
2023-08
in
December
2023,
which
amends
ASC
Subtopic
350-60
by
requiring
that
crypto
assets
are
measured
at
fair
value
in
the
statement
of
financial
position
each
reporting
period
with
changes
from
remeasurement
being
recognized
in
net
income.
The
ASU
also
requires
enhanced
disclosures
for
both
annual
and
interim
reporting
periods
to
provide
investors
with
relevant information
to
analyze and
assess
the
exposure
and
risk
of
significant
individual crypto asset holdings.
January 1, 2025
The
Corporation
was
not
impacted
by
the
adoption of
this
ASU
since
it does
not currently hold crypto-assets.
FASB ASU 2023-05,
Business Combinations -
Joint Venture Formations
(Subtopic 805-60) -
Recognition and initial
measurement
The
FASB
issued
ASU
2023-05
in
August
2023, which
amends ASC
Subtopic 805-60
to include specific
guidance about how
joint
ventures
should
recognize
and
initially
measure
assets
contributed
and
liabilities
assumed.
The
amendments
require
that
a
joint venture, upon formation, recognize and
initially
measure its
assets and
liabilities at
fair value.
January 1, 2025
The
Corporation
was
not
impacted
at
the time of adoption of this ASU since it
elected
to
prospectively
apply
the
standard. The Corporation will
consider
this
guidance
for
the
initial
measurement of assets and liabilities of
joint
ventures created
after the
date of
adoption.
131
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-12,
Codification Improvements
The
FASB
issued
ASU
2025-12
in
December
2025
which
clarify
and
correct
errors within
the ASC.
The update
includes
targeted
refinements
across multiple
topics
and
it
is not
expected to
have a
significant
effect on current accounting practices.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-11,
Interim Reporting (Topic
270) - Narrow-Scope
Improvements
The
FASB
issued
ASU
2025-11
in
December 2025, to clarify interim disclosure
requirements
under
ASC
Topic
270.
The
update
provides
a
comprehensive
list
of
interim
disclosures
that
are
required
within
interim
financial
statements
and
introduces
a principles-based requirement to disclose
events since the last annual period that may
have a material impact.
January 1, 2028
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-10,
Government Grants (Topic
832) - Accounting for
Government Grants
Received by Business
Entities
The
FASB
issued
ASU
2025-10
in
December
2025,
which
establishes
the
accounting
for
government
grants
received
by
a
business
entity.
The
update
establishes
recognition,
measurement,
and
disclosure
requirements
for
government
grants.
It
allows
asset
related
grants to
be
recognized either
as deferred
income or
as
an adjustment
to the
cost basis
of an
asset
and
income-related
grants
as
deferred
income.
January 1, 2029
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-09,
Derivatives and Hedging
(Topic 815) - Hedge
Accounting Improvements
The
FASB
issued
ASU
2025-09
in
November 2025, which aims to improve and
broaden
hedge
accounting
under
ASC
Topic
815
by
allowing
entities
to
group
forecasted
transaction
with
similar
risk
exposures,
provides
a
model
for
hedging
choose-your
rate
debt
,
expands
hedge
accounting
for
forecasted
purchases
and
sales of non
financial assets, eliminates net
written
option
limitations
for
certain
compound
derivatives,
and
resolves
recognition
mismatches
in
dual
hedging
strategies
involving
foreign
currency
denominated debt.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
132
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-08,
Financial Instruments -
Credit Losses (Topic 326)
-
Purchased Loans
The
FASB
issued
ASU
2025-08
in
November 2025, which aims
to simplify and
reduce the
complexity of
the accounting
for
purchased loans under ASC Topic
326. The
update
expands
the
population
of
loans
subject to
the gross-up
approach to
include
purchased
seasoned
loans,
regardless
whether they had credit deterioration.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-07,
Derivatives and Hedging
(Topic 815) and Revenue
from Contracts with
Customers (Topic 606) -
Derivatives Scope
Refinements and Scope
Clarification for Share-
Based Noncash
Consideration from a
Customer in a Revenue
Contract
The
FASB
issued
ASU
2025-07
in
September 2025, which refines the scope of
derivative accounting under
ASC Topic
815
and
clarifies
the
treatment
of
share-based
noncash
consideration
under
ASC
Topic
606.
The
update
excludes
certain
non-
exchange
traded
contracts
with
underlying
based
on
the
operations
of
one
of
the
parties from derivative accounting, aiming to
better
reflect
the
nature
of
these
arrangements
and
reduce
complexity.
It
also
confirms
that
share-based
noncash
consideration
from
a
customer
should
be
accounted
for
under
ASC
Topic
606
until
the right
to receive
or retain
such non-cash
consideration
becomes
unconditional,
promoting
consistency
in
revenue
recognition practices.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2025-06,
Intangibles - Goodwill and
Other - Internal-Use
Software (Subtopic 350-
40) - Targeted
Improvements to the
Accounting for Internal-
Use Software
The
FASB
issued
ASU
2025-06
in
September 2025, which seeks to modernize
the
accounting
for
internal-use
software
under
ASC
Subtopic
350-40,
Intangibles
Goodwill and OtherInternal-Use Software.
The
update
replaces
the
traditional
stage-
based
model
(preliminary,
development,
post-implementation)
with
a
principles-
based framework that better
reflects current
software
development
practices,
including
agile and cloud-based approaches.
January 1, 2028
The Corporation
is currently
evaluating
the
impact
that
the
adoption
of
this
guidance
will
have
on
our
accounting
for
internal
use
software
considering
our
development
practices
which
may
include
agile
and
cloud
based
approaches. Given the
recent issuance
of
this
guidance
it
is
too
early
to
tell
whether
the
impact
will
be
material
in
our
financial
statements
and
presentation and disclosures.
FASB ASU 2025-05,
Financial Instruments -
Credit Losses (Topic 326)
- Measurement of Credit
Losses for Accounts
Receivables and Contract
Assets
The
FASB
issued
ASU
2025-05
in
July
2025,
which
permits
entities
to
elect
a
practical
expedient
when
accounting
for
current
accounts
receivable
and
current
contract
assets
arising
from
transactions
accounted
for
under
ASC
Topic
606,
Revenue
from
Contracts
with
Customers.
This practical
expedient establishes
that, in
developing
reasonable
and
supportable
forecasts
as
part
of
estimating
expected
credit
losses,
entities
assume
that
current
conditions as
of the
balance sheet
date do
not
change
for
the
remaining
life
of
the
asset.
January 1, 2026
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
standard as it will not
elect the practical
expedient.
133
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2025-04,
Compensation - Stock
Compensation (Topic 718)
and Revenue from
Contracts with Customers
(Topic 606) - Clarifications
to Share-Based
Consideration Payable to
a Customer
The
FASB
issued
ASU
2025-04
in
May
2025,
which
clarifies
the
accounting
for
share-based
awards
granted
as
consideration
payable
to
a
customer.
The
ASU expands
the definition
of performance
condition
for
share-based
consideration
under ASC 718 and eliminates the forfeiture
policy election for
service conditions. It
also
confirms
that
the
variable
consideration
constraint
in
ASC
606
does
not
apply
to
such awards.
January 1, 2027
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since
it
does
not
grant
share-based
payment awards to customers.
FASB ASU 2025-03,
Business Combinations
(Topic 805) and
Consolidation (Topic 810)
- Determining the
Accounting Acquirer in the
Acquisition of a Variable
Interest Entity
The
FASB
issued
ASU
2025-03
in
May
2025 which
requires that
an entity
consider
the
factors
in
paragraphs
805-10-55-12
through
55-15
when
it
is
involved
in
an
acquisition transaction
effected primarily
by
exchanging
equity
interests when
the
legal
acquiree is
a variable
interest entity
("VIE")
that
meets
the
definition
of
a
business
to
determine
which
entity
is
the
accounting
acquirer.
This
replaces
the
previous
requirement
that
the
primary
beneficiary
always is the acquirer.
January 1, 2027
The Corporation
is currently
evaluating
any
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
FASB ASU 2024-04, Debt
- Debt with Conversion
and Other Options
(Subtopic 470- 20) -
Induced Conversions of
Convertible Debt
Instruments
The
FASB
issued
ASU
2024-04
in
November
2024,
which
clarifies
the
requirements
for
determining
whether
certain
settlements
of
convertible
debt
instruments should
be accounted
for as
an
induced
conversion.
Also
it
makes
additional
clarifications
to
assist
stakeholders in
applying the
guidance. The
ASU
clarifies
that
the
incorporation,
elimination,
or
modification
of
a
volume-
weighted
average
price
("VWAP")
formula
does
not
automatically
cause
a
settlement
to
be
accounted
for
as
an
extinguishment
and
that
the
induced
conversion
guidance
applies to a convertible
debt instrument that
is not currently
convertible as long as
it had
a substantive
conversion feature
as of
both
its
issuance
date
and
the
date
the
inducement offer is accepted.
January 1, 2026
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since it does not hold convertible debt.
FASB ASU 2024-03,
Income Statement -
Reporting Comprehensive
Income - Expense
Disaggregation
Disclosures (Subtopic
220-40) - Disaggregation
of Income Statement
Expenses (As updated by
ASU 2025-01)
The
FASB
issued
ASU
2024-03
in
November
2024,
which
requires
public
entities
to
disclose
additional
information
about
specific
expense
categories
in
the
notes to
financial statements
at interim
and
annual
reporting
periods
to
improve
financial transparency.
For fiscal years
beginning on
January 1, 2027
For interim periods
within fiscal years
beginning after
January 1, 2028
The Corporation
is currently
evaluating
the
impact
that
the
adoption
of
this
guidance
will
have
on
its
financial
statements
and
presentation
and
disclosures.
134
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
FASB ASU 2023-06,
Disclosure Improvements -
Codification Amendments
in Response to the SECs
Disclosure Update and
Simplification Initiative
The FASB
issued ASU
2023-06 in
October
2023
which
modifies
the
disclosure
or
presentation
requirements
of
various
subtopics
in
the
Codification
with
the
purpose
of
aligning
U.S.
GAAP
requirements
with
those
of
the
SEC
under
Regulation S-X and S-K.
The date on which
the SEC removes
related disclosure
requirements. If by
June 30, 2027 the
SEC has not
removed the
applicable
requirements, the
standard will not
become
effective.
The Corporation
does not
expect to
be
impacted
by
the
adoption
of
this
ASU
since
it
is
subject
to
SEC's
current
disclosure
and
presentation
requirements under Regulation S-X and
S-K.
135
Note 4 - Restrictions on cash and due
from banks and certain securities
BPPR is
required by
regulatory agencies
to maintain
average reserve
balances with
the Federal
Reserve Bank
of New
York
(the
Fed) or other banks. Required average
reserve balances in BPPR amounted to
$
2.7
billion at December 31, 2025 (December 31,
2024 -
$
2.6
billion). Cash
and due
from banks,
as well
as other
highly liquid
securities, are
used to
cover these
required average
reserve balances.
At
December
31,
2025,
the
Corporation
held
$
64
million
in
restricted
assets
in
the
form
of
funds
deposited
in
money
market
accounts, debt
securities available for
sale and
equity securities (December
31, 2024
- $
61
million).
The restricted
assets held
in
debt securities available for
sale and equity securities
consist primarily of assets
held for the Corporations
non-qualified retirement
plans and fund deposits guaranteeing possible liens
or encumbrances over the title of insured
properties.
136
Note 5 Debt securities available-for-sale
The
following
tables
present
the
amortized
cost,
gross
unrealized
gains
and
losses,
fair
value,
weighted
average
yield
and
contractual maturities of debt securities available-for-sale
at December 31, 2025 and December 31,
2024.
At December 31, 2025
Gross
Gross
Weighted
Amortized
unrealized
unrealized
Fair
average
(In thousands)
cost
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
10,154,698
$
4,716
$
1,528
$
10,157,886
3.44
%
After 1 to 5 years
5,555,079
29,795
19,306
5,565,568
3.70
Total U.S. Treasury
securities
15,709,777
34,511
20,834
15,723,454
3.53
Collateralized mortgage obligations - federal agencies
Within 1 year
152
-
1
151
1.97
After 1 to 5 years
4,879
-
88
4,791
1.49
After 5 to 10 years
11,524
-
482
11,042
2.45
After 10 years
90,018
180
5,941
84,257
2.92
Total collateralized
mortgage obligations - federal agencies
106,573
180
6,512
100,241
2.80
Mortgage-backed securities - federal agencies
Within 1 year
963
1
9
955
2.08
After 1 to 5 years
65,843
11
1,530
64,324
2.35
After 5 to 10 years
1,030,661
256
67,116
963,801
1.85
After 10 years
4,527,032
881
806,466
3,721,447
1.75
Total mortgage-backed
securities - federal agencies
5,624,499
1,149
875,121
4,750,527
1.78
Other
Within 1 year
750
-
-
750
4.43
Total other
750
-
-
750
4.43
Total debt securities
available-for-sale
[1]
$
21,441,599
$
35,840
$
902,467
$
20,574,972
3.07
%
[1]
Includes $
14.3
billion pledged to secure government and trust
deposits, credit facilities and loan servicing agreements that
the secured parties
are not permitted to sell or repledge the collateral, of which
$
13.2
billion serve as collateral for public funds.
The Corporation had unpledged
Available for Sale securities with a fair value of
$
6.3
billion that could be used to increase its borrowing
facilities.
137
At December 31, 2024
Gross
Gross
Weighted
Amortized
unrealized
unrealized
Fair
average
(In thousands)
cost
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
10,555,397
$
1,282
$
46,275
$
10,510,404
3.33
%
After 1 to 5 years
2,547,936
151
63,381
2,484,706
3.07
Total U.S. Treasury
securities
13,103,333
1,433
109,656
12,995,110
3.28
Collateralized mortgage obligations - federal agencies
After 1 to 5 years
10,538
-
345
10,193
1.53
After 5 to 10 years
15,334
-
904
14,430
2.24
After 10 years
104,168
132
8,639
95,661
2.76
Total collateralized
mortgage obligations - federal agencies
130,040
132
9,888
120,284
2.60
Mortgage-backed securities - federal agencies
Within 1 year
776
-
5
771
1.65
After 1 to 5 years
79,542
8
2,700
76,850
2.35
After 5 to 10 years
733,506
82
45,078
688,510
2.37
After 10 years
5,468,448
337
1,106,657
4,362,128
1.67
Total mortgage-backed
securities - federal agencies
6,282,272
427
1,154,440
5,128,259
1.75
Other
Within 1 year
500
-
-
500
5.00
After 1 to 5 years
1,750
-
-
1,750
5.50
Total other
2,250
-
-
2,250
5.39
Total debt securities
available-for-sale
[1]
$
19,517,895
$
1,992
$
1,273,984
$
18,245,903
2.78
%
[1]
Includes $
13.9
billion pledged to secure government and trust deposits,
assets sold under agreements to repurchase, credit facilities
and loan
servicing agreements that the secured parties are not permitted
to sell or repledge the collateral, of which $
12.9
billion serve as collateral for
public funds. The Corporation had unpledged Available
for Sale securities with a fair value of
$
4.3
billion that could be used to increase its
borrowing facilities.
The weighted
average yield
on debt
securities available-for-sale
is based
on amortized
cost; therefore,
it
does not
give
effect to
changes in fair value.
Securities
not
due
on
a
single
contractual
maturity
date,
such
as
mortgage-backed
securities
and
collateralized
mortgage
obligations, are classified
in the period
of final contractual
maturity. The
expected maturities of
collateralized mortgage obligations,
mortgage-backed securities and certain other securities may
differ from their contractual maturities
because they may be subject to
prepayments or may be called by the issuer.
The following table presents the
aggregate amortized cost and fair value of
debt securities available-for-sale at December 31, 2025
by contractual maturity.
(In thousands)
Amortized cost
Fair value
Within 1 year
$
10,156,563
$
10,159,742
After 1 to 5 years
5,625,801
5,634,683
After 5 to 10 years
1,042,185
974,843
After 10 years
4,617,050
3,805,704
Total debt securities
available-for-sale
$
21,441,599
$
20,574,972
At December 31, 2025,
the Corporation did not intend
to sell or believed
it was more likely than
not that it would be
required to sell
debt
securities
classified
as
available-for-sale.
There
were
no
debt
securities
available-for-sale
sold
during
the
years
ended
December 31, 2025, December 31, 2024 and December
31, 2023.
138
The
following
tables
present
the
Corporations
fair
value
and
gross
unrealized
losses
of
debt
securities
available-for-sale,
aggregated by investment category
and length of time
that individual securities have been
in a continuous unrealized loss
position,
at December 31, 2025 and 2024.
At December 31, 2025
Less than 12 months
12 months or more
Total
Gross
Gross
Gross
Fair
unrealized
Fair
unrealized
Fair
unrealized
(In thousands)
value
losses
value
losses
value
losses
U.S. Treasury securities
$
992,083
$
82
$
943,699
$
20,752
$
1,935,782
$
20,834
Collateralized mortgage obligations - federal agencies
1,481
3
83,266
6,509
84,747
6,512
Mortgage-backed securities -federal agencies
222,333
9,975
4,469,097
865,146
4,691,430
875,121
Total debt securities
available-for-sale in an unrealized loss position
$
1,215,897
$
10,060
$
5,496,062
$
892,407
$
6,711,959
$
902,467
At December 31, 2024
Less than 12 months
12 months or more
Total
Gross
Gross
Gross
Fair
unrealized
Fair
unrealized
Fair
unrealized
(In thousands)
value
losses
value
losses
value
losses
U.S. Treasury securities
$
2,309,894
$
24,646
$
3,638,092
$
85,010
$
5,947,986
$
109,656
Collateralized mortgage obligations - federal agencies
4,878
27
102,160
9,861
107,038
9,888
Mortgage-backed securities - federal agencies
70,777
3,175
5,031,414
1,151,265
5,102,191
1,154,440
Total debt securities
available-for-sale in an unrealized loss position
$
2,385,549
$
27,848
$
8,771,666
$
1,246,136
$
11,157,215
$
1,273,984
As of December 31, 2025, the portfolio of available-for-sale
debt securities reflects gross unrealized losses of $
0.9
billion (December
31,
2024
-
$
1.3
billion), driven
mainly
by
mortgage-backed securities,
impacted
by
the
higher-interest
rate
environment
and
the
portfolios longer
duration.
The portfolio
of available-for-sale debt
securities is
comprised mainly of
U.S Treasuries
and obligations
from
the
U.S.
Government,
its
agencies
or
government
sponsored
entities,
including
Federal
National
Mortgage
Association
(FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Government National Mortgage Association (GNMA). These
securities carry
an explicit
or implicit
guarantee from the
U.S. Government,
are highly
rated by
major rating
agencies, and
have a
long history of no credit losses. Accordingly, the Corporation applies a zero-credit
loss assumption.
139
Note 6 Debt securities held-to-maturity
The following tables present the amortized cost, allowance for
credit losses,
gross unrealized gains and losses, fair value, weighted
average yield and contractual maturities of debt securities
held-to-maturity at December 31, 2025 and
2024.
At December 31, 2025
Allowance
Carrying
Value
Gross
Gross
Weighted
Amortized
Book
[1]
for Credit
Net of
unrealized
unrealized
Fair
average
(In thousands)
cost
Value
Losses
Allowance
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
2,558,293
$
2,519,071
$
-
$
2,519,071
$
5,224
$
110
$
2,524,185
1.31
%
After 1 to 5 years
5,003,219
4,749,896
-
4,749,896
35,910
-
4,785,806
1.27
Total U.S. Treasury
securities
7,561,512
7,268,967
-
7,268,967
41,134
110
7,309,991
1.28
Obligations of Puerto Rico, States and
political subdivisions
Within 1 year
2,605
2,605
5
2,600
4
-
2,604
6.43
After 1 to 5 years
12,508
12,508
39
12,469
24
87
12,406
3.49
After 5 to 10 years
450
450
15
435
15
-
450
5.81
After 10 years
35,544
35,544
5,753
29,791
2,908
1,829
30,870
1.43
Total obligations of
Puerto Rico, States and
political subdivisions
51,107
51,107
5,812
45,295
2,951
1,916
46,330
2.22
Collateralized mortgage obligations - federal
agencies
After 10 years
1,495
1,495
-
1,495
-
189
1,306
2.87
Total collateralized
mortgage obligations -
federal agencies
1,495
1,495
-
1,495
-
189
1,306
2.87
Securities in wholly owned statutory business
trusts
After 5 to 10 years
5,960
5,960
-
5,960
-
-
5,960
6.33
Total securities
in wholly owned statutory
business trusts
5,960
5,960
-
5,960
-
-
5,960
6.33
Total debt securities
held-to-maturity [2]
$
7,620,074
$
7,327,529
$
5,812
$
7,321,717
$
44,085
$
2,215
$
7,363,587
1.29
%
[1]
Book value includes $
293
million of unrealized loss which remains in Accumulated
other comprehensive (loss) income (AOCI) related
to certain
securities previously transferred from available-for-sale securities
portfolio to the held-to-maturity securities portfolio.
[2]
Includes $
7.3
billion pledged to secure public and trust deposits that
the secured parties are not permitted to sell or repledge
the collateral.
The
Corporation had unpledged held-to-maturities securities with
a fair value of $
98.8
million that could be used to increase its borrowing facilities.
140
At December 31, 2024
Allowance
Carrying
Value
Gross
Gross
Weighted
Amortized
Book
[1]
for Credit
Net of
unrealized
unrealized
Fair
average
(In thousands)
cost
Value
Losses
Allowance
gains
losses
value
yield
U.S. Treasury securities
Within 1 year
$
599,910
$
599,910
$
-
$
599,910
$
-
$
4,498
$
595,412
2.76
%
After 1 to 5 years
7,572,435
7,093,508
-
7,093,508
-
65,096
7,028,412
1.28
Total U.S. Treasury
securities
8,172,345
7,693,418
-
7,693,418
-
69,594
7,623,824
1.39
Obligations of Puerto Rico, States and
political subdivisions
`
Within 1 year
2,440
2,440
5
2,435
3
-
2,438
6.39
After 1 to 5 years
16,454
16,454
80
16,374
47
80
16,341
3.69
After 5 to 10 years
655
655
22
633
20
-
653
5.81
After 10 years
37,633
37,633
5,210
32,423
2,318
2,596
32,145
1.42
Total obligations of
Puerto Rico, States and
political subdivisions
57,182
57,182
5,317
51,865
2,388
2,676
51,577
2.34
Collateralized mortgage obligations - federal
agencies
After 10 years
1,518
1,518
-
1,518
-
214
1,304
2.87
Total collateralized
mortgage obligations -
federal agencies
1,518
1,518
-
1,518
-
214
1,304
2.87
Securities in wholly owned statutory business
trusts
After 5 to 10 years
5,959
5,959
-
5,959
-
-
5,959
6.33
Total securities
in wholly owned statutory
business trusts
5,959
5,959
-
5,959
-
-
5,959
6.33
Total debt securities
held-to-maturity [2]
$
8,237,004
$
7,758,077
$
5,317
$
7,752,760
$
2,388
$
72,484
$
7,682,664
1.40
%
[1]
Book value includes $
479
million of unrealized loss which remains in Accumulated
other comprehensive (loss) income (AOCI) related
to certain
securities transferred from available-for-sale securities
portfolio to the held-to-maturity securities portfolio.
[2]
Includes $
7.6
billion pledged to secure public and trust deposits that
the secured parties are not permitted to sell or repledge
the collateral. The
Corporation had unpledged held-to-maturities securities with
a fair value of $
139.9
million that could be used to increase its borrowing
facilities.
Securities not due
on a single
contractual maturity date,
such as collateralized
mortgage obligations, are classified
in the
period of
final contractual maturity. The
expected maturities of collateralized mortgage obligations and certain other securities may differ from
their contractual maturities because they may be
subject to prepayments or may be called by
the issuer.
The following
table presents the
aggregate amortized cost
and fair value
of debt securities
held-to-maturity at December
31, 2025
by contractual maturity.
(In thousands)
Amortized cost
Book Value
Fair value
Within 1 year
$
2,560,898
$
2,521,676
$
2,526,789
After 1 to 5 years
5,015,727
4,762,404
4,798,212
After 5 to 10 years
6,410
6,410
6,410
After 10 years
37,039
37,039
32,176
Total debt securities
held-to-maturity
$
7,620,074
$
7,327,529
$
7,363,587
Credit Quality Indicators
The following describes the credit quality indicators by major security
type that the Corporation considers to develop the
estimate of
the allowance for credit losses for investment securities
held-to-maturity.
As discussed in Note
2 to the
Consolidated Financial Statement,
U.S. Treasury securities
carry an explicit guarantee
from the U.S.
Government,
are highly
rated by
major rating
agencies,
and have
a long
history of
no credit
losses. Accordingly,
the Corporation
applies a zero-credit loss assumption and no allowance
for credit losses (ACL) for these securities
has been established.
141
At December 31, 2025 and December 31, 2024, the Obligations
of Puerto Rico, States and political subdivisions classified
as held-
to-maturity,
included securities
issued by
municipalities of
Puerto Rico
that are
generally not
rated by
a credit
rating agency.
The
Corporation performs periodic credit quality
reviews of these securities and internally
assigns standardized credit risk ratings based
on
its
evaluation. For
the
definitions
of
the
obligor
risk
ratings, refer
to
the
Credit
Quality section
of
Note
8
to
the
Consolidated
Financial
Statements.
This
includes
an
amortized
cost
of
$
8.7
million
of
general
and
special
obligation
bonds
issued
by
three
municipalities
of
Puerto
Rico,
of
which
$
7.9
million
have
a
Pass
rating,
that
are
payable
primarily
from
certain
property
taxes
imposed by the issuing municipality (compared to $
13
million and $
11.1
million, respectively, at December 31, 2024).
At December
31, 2025,
the portfolio
of Obligations
of Puerto
Rico, States
and political
subdivisions also
included $
36
million in
securities
issued
by
the
Puerto
Rico
Housing
Finance
Authority
(HFA),
a
government
instrumentality,
for
which
the
underlying
source of payment is second mortgage loans in Puerto Rico
residential properties (not the government), but for which HFA, provides
a guarantee
in the
event of default
and upon the
satisfaction of certain
other conditions (December
31, 2024 -
$
38
million). These
securities
are
not
rated
by
a
credit
rating
agency.
Refer
to
Note
23
to
the
Consolidated
Financial
Statements
for
additional
information on the Corporations exposure to the Puerto
Rico Government.
The
Corporation
assesses
the
credit
risk
associated
with
these
HFA
securities
by
evaluating
the
refreshed
FICO
scores
of
a
representative sample
of the
underlying borrowers.
As of
December 31,
2025, the
average refreshed
FICO score
for the
sample,
comprised
of
77
%
of
the
nominal
value
of
the
securities,
used
for
the
loss
estimate
was
of
698
(compared
to
72
%
and
674
,
respectively, at
December 31, 2024).
The loss estimates
for this portfolio
was based on
the methodology established
under CECL
for
similar
loan
obligations.
The
Corporation
does
not
consider
the
government
guarantee
when
estimating
the
credit
losses
associated with this portfolio.
A
deterioration of
the Puerto
Rico economy
or
of
the fiscal
health of
the
Government of
Puerto Rico
and/or
its
instrumentalities
(including if
any of
the issuing
municipalities become
subject to
a debt
restructuring proceeding
under the
Puerto Rico
Oversight
Management and Economic Stability Act (PROMESA)
could adversely affect the value of these securities, resulting in losses
to the
Corporation.
At December
31, 2025,
the portfolio
of Obligations
of Puerto
Rico, States
and political
subdivisions also
included $
6.8
million in
securities issued
by the
HFA
for which
the underlying
source of
payment is
U.S. Treasury
securities (December
31, 2024
- $
6.9
million).
The Corporation
applies a
zero-credit loss
assumption for
these securities,
and no
ACL
has
been
established for
these
securities given that U.S. Treasury securities carry an explicit guarantee from
the U.S. Government, are highly rated by major rating
agencies, and have a long history of no credit
losses.
Delinquency status
At December 31, 2025 and December 31, 2024,
there were
no
securities held-to-maturity in past due or non-performing
status.
Allowance for credit losses on debt securities held-to-maturity
The
allowance
for
credit
losses
related
to
the
Obligations
of
Puerto
Rico
and
the
States
and
Political
subdivisions
securities
at
December 31, 2025 was $
5.8
million (December 31, 2024 - $
5.3
million).
142
Note 7 Loans
For a summary of the
accounting policies related to loans, interest recognition
and allowance for credit losses refer to
Note 2 to the
Consolidated Financial Statements.
The following table presents the Corporation's loan
purchases (including repurchases) for the years ended December 31,
2025 and
2024 by class of loans:
For the years ended December 31,
(In thousands)
2025
2024
Commercial
$
250,032
$
296,201
Mortgage
491,832
378,573
Ending balance
$
741,864
$
674,774
The following table presents the Corporations whole-loan
sales for the years ended December 31, 2025
and 2024 by class of loans:
For the years ended December 31,
(In thousands)
2025
2024
Commercial
$
47,347
$
25,155
Construction
9,338
16,656
Mortgage
35,454
44,680
Ending balance
$
92,139
$
86,491
Delinquency status
The following tables present the
amortized cost basis of loans
held-in-portfolio (HIP), net of unearned
income, by past due status,
and by loan class including those that are in non-performing status or that are accruing
interest but are past due 90 days or more at
December 31, 2025 and 2024.
143
December 31, 2025
BPPR
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
6,579
$
155
$
112
$
6,846
$
296,502
$
303,348
$
112
$
-
Commercial real estate:
Non-owner occupied
2,457
299
35,692
38,448
3,356,682
3,395,130
35,692
-
Owner occupied
2,760
681
24,567
28,008
1,168,585
1,196,593
24,567
-
Commercial and industrial
8,864
3,760
187,222
199,846
5,770,227
5,970,073
183,914
3,308
Construction
17,283
-
-
17,283
340,258
357,541
-
-
Mortgage
261,145
133,124
329,613
723,882
6,624,085
7,347,967
132,373
197,240
Leasing
23,748
4,640
9,179
37,567
1,963,798
2,001,365
9,179
-
Consumer:
Credit cards
13,700
10,617
27,529
51,846
1,204,885
1,256,731
-
27,529
Home equity lines of credit
-
-
-
-
1,908
1,908
-
-
Personal
19,608
11,894
19,082
50,584
1,785,818
1,836,402
18,863
219
Auto
109,103
25,495
52,200
186,798
3,633,014
3,819,812
52,200
-
Other
927
2,688
2,285
5,900
165,858
171,758
1,809
476
Total
$
466,174
$
193,353
$
687,481
$
1,347,008
$
26,311,620
$
27,658,628
$
458,709
$
228,772
December 31, 2025
Popular U.S.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
9,500
$
-
$
8,636
$
18,136
$
2,134,306
$
2,152,442
$
8,636
$
-
Commercial real estate:
Non-owner occupied
-
1,600
7,020
8,620
2,139,534
2,148,154
7,020
-
Owner occupied
-
-
-
-
1,956,487
1,956,487
-
-
Commercial and industrial
7,608
928
6,686
15,222
2,622,117
2,637,339
6,498
188
Construction
-
-
-
-
1,317,358
1,317,358
-
-
Mortgage
15,596
6,400
13,422
35,418
1,266,055
1,301,473
13,422
-
Consumer:
Credit cards
-
-
-
-
(14)
(14)
-
-
Home equity lines of
credit
1,282
82
2,796
4,160
72,624
76,784
2,796
-
Personal
983
832
1,233
3,048
66,778
69,826
1,233
-
Other
-
-
29
29
9,012
9,041
29
-
Total
$
34,969
$
9,842
$
39,822
$
84,633
$
11,584,257
$
11,668,890
$
39,634
$
188
144
December 31, 2025
Popular, Inc.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
[2] [3]
loans
loans
Commercial multi-family
$
16,079
$
155
$
8,748
$
24,982
$
2,430,808
$
2,455,790
$
8,748
$
-
Commercial real estate:
Non-owner occupied
2,457
1,899
42,712
47,068
5,496,216
5,543,284
42,712
-
Owner occupied
2,760
681
24,567
28,008
3,125,072
3,153,080
24,567
-
Commercial and industrial
16,472
4,688
193,908
215,068
8,392,344
8,607,412
190,412
3,496
Construction
17,283
-
-
17,283
1,657,616
1,674,899
-
-
Mortgage
[1]
276,741
139,524
343,035
759,300
7,890,140
8,649,440
145,795
197,240
Leasing
23,748
4,640
9,179
37,567
1,963,798
2,001,365
9,179
-
Consumer:
Credit cards
13,700
10,617
27,529
51,846
1,204,871
1,256,717
-
27,529
Home equity lines of credit
1,282
82
2,796
4,160
74,532
78,692
2,796
-
Personal
20,591
12,726
20,315
53,632
1,852,596
1,906,228
20,096
219
Auto
109,103
25,495
52,200
186,798
3,633,014
3,819,812
52,200
-
Other
927
2,688
2,314
5,929
174,870
180,799
1,838
476
Total
$
501,143
$
203,195
$
727,303
$
1,431,641
$
37,895,877
$
39,327,518
$
498,343
$
228,960
[1]
At December 31, 2025, mortgage loans held-in-portfolio
include $
3.2
billion of loans that carry certain guarantees from
the FHA or the VA, for
which the Corporations policy is to exclude them
from non-performing status, of which $
197
million are 90 days or more past due. The portfolio
of
guaranteed loans includes $
47
million of residential mortgage loans in Puerto Rico that
are no longer accruing interest as of December 31,
2025.
The Corporation has $
27
million in reverse mortgage loans in Puerto Rico which
are guaranteed by FHA, but which are currently not accruing
interest at December 31, 2025.
[2]
Loans held-in-portfolio are net of $
422
million in unearned income and exclude $
10
million in loans held-for-sale.
[3]
Includes $
22.7
billion pledged to secure credit facilities and public funds
that the secured parties are not permitted to sell or repledge
the collateral,
of which $
7.5
billion were pledged at the Federal Home Loan Bank
("FHLB") as collateral for borrowings and $
15.2
billion at the Federal Reserve
Bank ("FRB") for discount window borrowings. As of December
31, 2025, the Corporation had an available borrowing
facility with the FHLB and
the discount window of FRB of $
4
.0 billion and $
12.1
billion, respectively.
145
December 31, 2024
BPPR
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
1,491
$
113
$
79
$
1,683
$
306,318
$
308,001
$
79
$
-
Commercial real estate:
Non-owner occupied
3,103
586
6,429
10,118
3,236,385
3,246,503
6,429
-
Owner occupied
11,054
808
25,258
37,120
1,338,791
1,375,911
25,258
-
Commercial and industrial
5,738
2,712
23,895
32,345
5,314,549
5,346,894
19,335
4,560
Construction
1,039
-
-
1,039
211,251
212,290
-
-
Mortgage
262,222
116,694
365,759
744,675
6,065,206
6,809,881
158,442
207,317
Leasing
23,991
6,062
9,588
39,641
1,885,764
1,925,405
9,588
-
Consumer:
Credit cards
17,399
11,719
29,960
59,078
1,158,975
1,218,053
-
29,960
Home equity lines of credit
16
129
-
145
1,895
2,040
-
-
Personal
19,503
13,005
20,269
52,777
1,697,600
1,750,377
20,269
-
Auto
111,358
27,858
51,792
191,008
3,632,429
3,823,437
51,792
-
Other
1,816
277
1,312
3,405
156,824
160,229
899
413
Total
$
458,730
$
179,963
$
534,341
$
1,173,034
$
25,005,987
$
26,179,021
$
292,091
$
242,250
December 31, 2024
Popular U.S.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
loans
loans
Commercial multi-family
$
-
$
5,443
$
8,700
$
14,143
$
2,077,476
$
2,091,619
$
8,700
$
-
Commercial real estate:
Non-owner occupied
6,792
-
8,015
14,807
2,101,925
2,116,732
8,015
-
Owner occupied
-
-
5,191
5,191
1,776,644
1,781,835
5,191
-
Commercial and industrial
10,336
5,323
1,938
17,597
2,377,071
2,394,668
1,748
190
Construction
-
-
-
-
1,051,502
1,051,502
-
-
Mortgage
18,148
5,417
29,890
53,455
1,250,847
1,304,302
29,890
-
Consumer:
Credit cards
-
-
-
-
26
26
-
-
Home equity lines of credit
530
986
3,393
4,909
66,622
71,531
3,393
-
Personal
1,808
1,509
1,741
5,058
99,809
104,867
1,741
-
Other
514
-
11
525
11,024
11,549
11
-
Total
$
38,128
$
18,678
$
58,879
$
115,685
$
10,812,946
$
10,928,631
$
58,689
$
190
146
December 31, 2024
Popular, Inc.
Past due
Past due 90 days or more
30-59
60-89
90 days
Total
Non-accrual
Accruing
(In thousands)
days
days
or more
past due
Current
Loans HIP
[2] [3]
loans
loans
Commercial multi-family
$
1,491
$
5,556
$
8,779
$
15,826
$
2,383,794
$
2,399,620
$
8,779
$
-
Commercial real estate:
Non-owner occupied
9,895
586
14,444
24,925
5,338,310
5,363,235
14,444
-
Owner occupied
11,054
808
30,449
42,311
3,115,435
3,157,746
30,449
-
Commercial and industrial
16,074
8,035
25,833
49,942
7,691,620
7,741,562
21,083
4,750
Construction
1,039
-
-
1,039
1,262,753
1,263,792
-
-
Mortgage
[1]
280,370
122,111
395,649
798,130
7,316,053
8,114,183
188,332
207,317
Leasing
23,991
6,062
9,588
39,641
1,885,764
1,925,405
9,588
-
Consumer:
Credit cards
17,399
11,719
29,960
59,078
1,159,001
1,218,079
-
29,960
Home equity lines of credit
546
1,115
3,393
5,054
68,517
73,571
3,393
-
Personal
21,311
14,514
22,010
57,835
1,797,409
1,855,244
22,010
-
Auto
111,358
27,858
51,792
191,008
3,632,429
3,823,437
51,792
-
Other
2,330
277
1,323
3,930
167,848
171,778
910
413
Total
$
496,858
$
198,641
$
593,220
$
1,288,719
$
35,818,933
$
37,107,652
$
350,780
$
242,440
[1]
At December 31, 2024 mortgage loans held-in-portfolio include
$
2.6
billion of loans that carry certain guarantees from the FHA
or the VA, for
which the Corporations policy is to exclude them
from non-performing status, of which $
207
million are 90 days or more past due. The portfolio
of
guaranteed loans includes $
65
million of residential mortgage loans in Puerto Rico that
are no longer accruing interest as of December 31,
2024.
The Corporation has $
31
million in reverse mortgage loans in Puerto Rico which
are guaranteed by FHA, but which are currently not accruing
interest at December 31, 2024.
[2]
Loans held-in-portfolio are net of $
415
million in unearned income and exclude $
5
million in loans held-for-sale.
[3]
Includes $
16.8
billion pledged to secure credit facilities and public funds
that the secured parties are not permitted to sell or repledge
the collateral,
of which $
7.3
billion were pledged at the FHLB as collateral for borrowings
and $
9.5
billion at the FRB for discount window borrowings. As
of
December 31, 2024, the Corporation had an available borrowing
facility with the FHLB and the discount window
of FRB of $
3.8
billion and $
7
.0
billion, respectively.
The components of the net financing leases,
including finance leases within the C&I category,
receivable at December 31, 2025 and
2024 were as follows:
(In thousands)
2025
2024
Total minimum lease
payments
$
1,722,141
$
1,676,763
Estimated residual value of leased property
820,333
774,752
Deferred origination costs, net of fees
28,800
29,398
Less - Unearned financing income
408,735
403,273
Net minimum lease payments
2,162,539
2,077,640
Less - Allowance for credit losses
20,095
17,691
Net minimum lease payments, net of allowance for credit losses
$
2,142,444
$
2,059,949
At December 31, 2025, future minimum lease payments
are expected to be received as follows:
(In thousands)
2026
$
169,390
2027
227,657
2028
313,503
2029
393,504
2030
448,441
2031 and thereafter
169,646
Total
$
1,722,141
147
The following tables present the amortized cost basis
of non-accrual loans as of December 31, 2025
and December 31, 2024 by
class of loans:
December 31, 2025
BPPR
Popular U.S.
Popular, Inc.
(In thousands)
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Commercial multi-family
$
-
$
112
$
8,137
$
499
$
8,137
$
611
Commercial real estate non-owner occupied
31,408
4,284
6,979
41
38,387
4,325
Commercial real estate owner occupied
16,576
7,991
-
-
16,576
7,991
Commercial and industrial
6,245
177,669
5,985
513
12,230
178,182
Mortgage
59,302
73,071
732
12,690
60,034
85,761
Leasing
771
8,408
-
-
771
8,408
Consumer:
HELOCs
-
-
-
2,796
-
2,796
Personal
3,314
15,549
-
1,233
3,314
16,782
Auto
2,252
49,948
-
-
2,252
49,948
Other
378
1,431
-
29
378
1,460
Total
$
120,246
$
338,463
$
21,833
$
17,801
$
142,079
$
356,264
December 31, 2024
BPPR
Popular U.S.
Popular, Inc.
(In thousands)
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Non-accrual
with no
allowance
Non-accrual
with
allowance
Commercial multi-family
$
-
$
79
$
8,700
$
-
$
8,700
$
79
Commercial real estate non-owner occupied
3,450
2,979
7,115
900
10,565
3,879
Commercial real estate owner occupied
17,767
7,491
4,957
234
22,724
7,725
Commercial and industrial
9,020
10,315
-
1,748
9,020
12,063
Mortgage
66,176
92,266
1,069
28,821
67,245
121,087
Leasing
500
9,088
-
-
500
9,088
Consumer:
HELOCs
-
-
-
3,393
-
3,393
Personal
2,960
17,309
-
1,741
2,960
19,050
Auto
1,992
49,800
-
-
1,992
49,800
Other
-
899
-
11
-
910
Total
$
101,865
$
190,226
$
21,841
$
36,848
$
123,706
$
227,074
The Corporation has
designated loans classified as
collateral dependent for
which the ACL
is measured based
on the fair
value of
the collateral less
cost to sell,
when foreclosure is
probable or when
the repayment is
expected to be
provided substantially by the
sale or
operation of
the collateral
and the
borrower is
experiencing financial
difficulty.
The fair
value of
the collateral
is based
on
appraisals,
which
may
be
adjusted
due
to
their
age,
type,
location,
and
condition
of
the
property
or
area
or
general
market
conditions to reflect the expected change in value between the effective date
of the appraisal and the measurement date. Appraisals
are updated every one to two years depending on
the type of loan and the total exposure of
the borrower.
Loans in non-accrual status with no
allowance at December 31, 2025 include
$
142
million in collateral dependent loans (December
31,
2024
-
$
124
million).
The
Corporation recognized
$
6
million
in
interest
income
on
non-accrual
loans
during
the
year
ended
December 31, 2025 (December 31, 2024 - $
4
million).
The following tables present the amortized cost basis
of collateral-dependent loans, for which the ACL was measured
based on the
fair value of the collateral less cost to sell, by
class of loans and type of collateral as of December
31, 2025 and December 31, 2024:
148
December 31, 2025
(In thousands)
Real Estate
Auto
Equipment
Accounts
Receivables
Other
Total
BPPR
Commercial multi-family
$
1,206
$
-
$
-
$
-
$
-
$
1,206
Commercial real estate:
Non-owner occupied
127,031
-
-
-
-
127,031
Owner occupied
23,014
-
-
-
-
23,014
Commercial and industrial
2,378
-
4,476
203
94
7,151
Mortgage
67,380
-
-
-
-
67,380
Leasing
-
1,925
-
-
-
1,925
Consumer:
Personal
3,402
-
-
-
-
3,402
Auto
-
16,512
-
-
-
16,512
Other
-
31
-
-
363
394
Total BPPR
$
224,411
$
18,468
$
4,476
$
203
$
457
$
248,015
Popular U.S.
Commercial multi-family
$
16,395
$
-
$
-
$
-
$
-
$
16,395
Commercial real estate:
Non-owner occupied
65,630
-
-
-
-
65,630
Commercial and industrial
4,187
-
-
-
1,798
5,985
Mortgage
1,398
-
-
-
-
1,398
Total Popular U.S.
$
87,610
$
-
$
-
$
-
$
1,798
$
89,408
Popular, Inc.
Commercial multi-family
$
17,601
$
-
$
-
$
-
$
-
$
17,601
Commercial real estate:
Non-owner occupied
192,661
-
-
-
-
192,661
Owner occupied
23,014
-
-
-
-
23,014
Commercial and industrial
6,565
-
4,476
203
1,892
13,136
Mortgage
68,778
-
-
-
-
68,778
Leasing
-
1,925
-
-
-
1,925
Consumer:
Personal
3,402
-
-
-
-
3,402
Auto
-
16,512
-
-
-
16,512
Other
-
31
-
-
363
394
Total Popular,
Inc.
$
312,021
$
18,468
$
4,476
$
203
$
2,255
$
337,423
149
December 31, 2024
(In thousands)
Real Estate
Auto
Equipment
Other
Total
BPPR
Commercial multi-family
$
1,278
$
-
$
-
$
-
$
1,278
Commercial real estate:
Non-owner occupied
145,974
-
-
-
145,974
Owner occupied
23,361
-
-
-
23,361
Commercial and industrial
2,754
-
-
11,593
14,347
Construction
576
-
-
-
576
Mortgage
77,910
-
-
-
77,910
Leasing
-
1,437
1
-
1,438
Consumer:
Personal
3,347
-
-
-
3,347
Auto
-
15,782
-
-
15,782
Other
-
-
-
16
16
Total BPPR
$
255,200
$
17,219
$
1
$
11,609
$
284,029
Popular U.S.
Commercial multi-family
$
14,517
$
-
$
-
$
-
$
14,517
Commercial real estate:
Non-owner occupied
7,116
-
-
-
7,116
Owner occupied
4,956
-
-
-
4,956
Commercial and industrial
-
-
18
1,154
1,172
Mortgage
1,430
-
-
-
1,430
Total Popular U.S.
$
28,019
$
-
$
18
$
1,154
$
29,191
Popular, Inc.
Commercial multi-family
$
15,795
$
-
$
-
$
-
$
15,795
Commercial real estate:
Non-owner occupied
153,090
-
-
-
153,090
Owner occupied
28,317
-
-
-
28,317
Commercial and industrial
2,754
-
18
12,747
15,519
Construction
576
-
-
-
576
Mortgage
79,340
-
-
-
79,340
Leasing
-
1,437
1
-
1,438
Consumer:
Personal
3,347
-
-
-
3,347
Auto
-
15,782
-
-
15,782
Other
-
-
-
16
16
Total Popular,
Inc.
$
283,219
$
17,219
$
19
$
12,763
$
313,220
150
Note 8 Allowance for credit losses loans
held-in-portfolio
The
Corporation follows
the current
expected credit
loss
(CECL) model
to
establish and
evaluate the
adequacy of
the ACL
to
provide for
expected losses
in the
loan portfolio.
This model
establishes a forward-looking
methodology that
reflects the
expected
credit losses over the lives
of financial assets starting when such
assets are first acquired or originated.
In addition, CECL provides
that
the
initial ACL
on PCD
financial
assets be
recorded as
an
increase to
the
purchase price,
with subsequent
changes to
the
allowance
recorded
as
a
credit
loss
expense.
The
provision
for
credit
losses
recorded
in
current
operations
is
based
on
this
methodology.
Loan losses
are charged
and
recoveries are
credited to
the ACL.
The
Corporations modeling
framework includes
internally
developed
quantitative
models
that
generate
lifetime
default
and
prepayment
estimates
as
well
as
other
loan
level
techniques to estimate
loss severity.
These models combine credit
risk factors which
include the impact
of loan modifications,
with
macroeconomic expectations to derive the lifetime
expected loss.
At
December
31,
2025,
the
Corporation
estimated
the
ACL
by
weighting
the
outputs
of
optimistic,
baseline,
and
pessimistic
scenarios. The
weightings applied are
subject to
evaluation on a
quarterly basis as
part of
the ACLs
governance process.
During
the first quarter of 2025, the Corporation assigned equal probability weights to the baseline and pessimistic scenarios in response to
economic uncertainty,
the optimistic scenario
being the lowest
of probabilities. During
the second
quarter of 2025,
the Corporation
moderately
reduced
the
probability
weight
for
the
pessimistic
scenario
based
on
changes
in
the
economic
outlook
and
a
reassessment of uncertainty compared to the first quarter. The net impact of these two changes in the assigned weights on the ACL
levels for
the year
ended December
31, 2025
was $
13.7
million in
additional reserves.
There were
no changes
to the
probability
weights during
the third
and fourth
quarter of
2025. The
probability weight
for the
pessimistic scenario
remains above
the levels
observed in 2024, given the ongoing economic uncertainty.
The
following
tables
present
the
changes
in
the
ACL
of
loans
held-in-portfolio
and
unfunded
commitments
for
the
year
ended
December 31, 2025 and 2024.
151
For the year ended December 31, 2025
BPPR
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
2,783
$
1,076
$
-
$
-
$
12
$
3,871
Commercial real estate non-owner occupied
44,852
10,870
-
(13,576)
2,003
44,149
Commercial real estate owner occupied
37,355
(5,674)
-
(363)
3,404
34,722
Commercial and industrial
130,136
40,009
-
(14,745)
8,477
163,877
Total Commercial
215,126
46,281
-
(28,684)
13,896
246,619
Construction
2,743
1,714
-
-
31
4,488
Mortgage
72,901
(12,386)
17
(1,436)
11,578
70,674
Leasing
16,419
12,987
-
(16,856)
6,070
18,620
Consumer
Credit cards
99,130
54,602
-
(75,428)
12,820
91,124
Home equity lines of credit
54
(651)
-
(25)
680
58
Personal
91,296
74,586
-
(82,979)
14,901
97,804
Auto
165,995
59,363
-
(76,284)
31,290
180,364
Other
7,002
3,717
-
(3,148)
598
8,169
Total Consumer
363,477
191,617
-
(237,864)
60,289
377,519
Total - Loans
$
670,666
$
240,213
$
17
$
(284,840)
$
91,864
$
717,920
Allowance for credit losses - unfunded commitments:
Commercial
$
6,725
$
(732)
$
-
$
-
$
-
$
5,993
Construction
1,663
907
-
-
-
2,570
Ending balance - unfunded commitments [1]
$
8,388
$
175
$
-
$
-
$
-
$
8,563
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
152
For the year ended December 31, 2025
Popular U.S.
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
6,453
$
9,485
$
(563)
$
99
$
15,474
Commercial real estate non-owner occupied
9,642
4,926
-
-
14,568
Commercial real estate owner occupied
12,473
625
(27)
658
13,729
Commercial and industrial
15,870
2,349
(2,445)
1,283
17,057
Total Commercial
44,438
17,385
(3,035)
2,040
60,828
Construction
8,521
692
-
125
9,338
Mortgage
9,508
84
-
288
9,880
Consumer
Home equity lines of credit
1,449
(1,437)
(84)
1,349
1,277
Personal
11,440
2,925
(8,140)
2,583
8,808
Other
2
838
(924)
89
5
Total Consumer
12,891
2,326
(9,148)
4,021
10,090
Total - Loans
$
75,358
$
20,487
$
(12,183)
$
6,474
$
90,136
Allowance for credit losses - unfunded commitments:
Commercial
$
1,662
$
(92)
$
-
$
-
$
1,570
Construction
5,409
(1,248)
-
-
4,161
Consumer
11
133
-
-
144
Ending balance - unfunded commitments [1]
$
7,082
$
(1,207)
$
-
$
-
$
5,875
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
153
For the year ended December 31, 2025
Popular Inc.
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
9,236
$
10,561
$
-
$
(563)
$
111
$
19,345
Commercial real estate non-owner occupied
54,494
15,796
-
(13,576)
2,003
58,717
Commercial real estate owner occupied
49,828
(5,049)
-
(390)
4,062
48,451
Commercial and industrial
146,006
42,358
-
(17,190)
9,760
180,934
Total Commercial
259,564
63,666
-
(31,719)
15,936
307,447
Construction
11,264
2,406
-
-
156
13,826
Mortgage
82,409
(12,302)
17
(1,436)
11,866
80,554
Leasing
16,419
12,987
-
(16,856)
6,070
18,620
Consumer
Credit cards
99,130
54,602
-
(75,428)
12,820
91,124
Home equity lines of credit
1,503
(2,088)
-
(109)
2,029
1,335
Personal
102,736
77,511
-
(91,119)
17,484
106,612
Auto
165,995
59,363
-
(76,284)
31,290
180,364
Other
7,004
4,555
-
(4,072)
687
8,174
Total Consumer
376,368
193,943
-
(247,012)
64,310
387,609
Total - Loans
$
746,024
$
260,700
$
17
$
(297,023)
$
98,338
$
808,056
Allowance for credit losses - unfunded commitments:
Commercial
$
8,387
$
(824)
$
-
$
-
$
-
$
7,563
Construction
7,072
(341)
-
-
-
6,731
Consumer
11
133
-
-
-
144
Ending balance - unfunded commitments [1]
$
15,470
$
(1,032)
$
-
$
-
$
-
$
14,438
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
154
For the year ended December 31, 2024
BPPR
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
3,614
$
(834)
$
-
$
-
$
3
$
2,783
Commercial real estate non-owner occupied
53,754
(9,630)
-
(128)
856
44,852
Commercial real estate owner occupied
40,637
(4,196)
-
(2,793)
3,707
37,355
Commercial and industrial
107,577
40,418
-
(24,555)
6,696
130,136
Total Commercial
205,582
25,758
-
(27,476)
11,262
215,126
Construction
5,294
(3,587)
-
-
1,036
2,743
Mortgage
72,440
(13,580)
34
(1,084)
15,091
72,901
Leasing
9,708
18,967
-
(16,975)
4,719
16,419
Consumer
Credit cards
80,487
78,024
-
(69,731)
10,350
99,130
Home equity lines of credit
103
(45)
-
(380)
376
54
Personal
101,181
78,574
-
(98,669)
10,210
91,296
Auto
157,931
68,096
-
(85,400)
25,368
165,995
Other
7,132
1,621
-
(2,801)
1,050
7,002
Total Consumer
346,834
226,270
-
(256,981)
47,354
363,477
Total - Loans
$
639,858
$
253,828
$
34
$
(302,516)
$
79,462
$
670,666
Allowance for credit losses - unfunded commitments:
Commercial
$
5,062
$
1,663
$
-
$
-
$
-
$
6,725
Construction
1,618
45
-
-
-
1,663
Ending balance - unfunded commitments [1]
$
6,680
$
1,708
$
-
$
-
$
-
$
8,388
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
155
For the year ended December 31, 2024
Popular U.S.
Provision for
Beginning
credit losses
Ending
(In thousands)
Balance
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
10,126
$
(3,243)
$
(441)
$
11
$
6,453
Commercial real estate non-owner occupied
11,699
(2,533)
(54)
530
9,642
Commercial real estate owner occupied
16,227
(3,721)
(154)
121
12,473
Commercial and industrial
14,779
4,304
(3,978)
765
15,870
Total Commercial
52,831
(5,193)
(4,627)
1,427
44,438
Construction
7,392
1,029
-
100
8,521
Mortgage
10,774
(1,381)
(18)
133
9,508
Consumer
Home equity lines of credit
1,875
(1,181)
(53)
808
1,449
Personal
16,609
11,278
(19,203)
2,756
11,440
Other
2
61
(101)
40
2
Total Consumer
18,486
10,158
(19,357)
3,604
12,891
Total - Loans
$
89,483
$
4,613
$
(24,002)
$
5,264
$
75,358
Allowance for credit losses - unfunded commitments:
Commercial
$
1,851
$
(189)
$
-
$
-
$
1,662
Construction
8,446
(3,037)
-
-
5,409
Consumer
29
(18)
-
-
11
Ending balance - unfunded commitments [1]
$
10,326
$
(3,244)
$
-
$
-
$
7,082
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial Condition.
156
For the year ended December 31, 2024
Popular Inc.
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
13,740
$
(4,077)
$
-
$
(441)
$
14
$
9,236
Commercial real estate non-owner occupied
65,453
(12,163)
-
(182)
1,386
54,494
Commercial real estate owner occupied
56,864
(7,917)
-
(2,947)
3,828
49,828
Commercial and industrial
122,356
44,722
-
(28,533)
7,461
146,006
Total Commercial
258,413
20,565
-
(32,103)
12,689
259,564
Construction
12,686
(2,558)
-
-
1,136
11,264
Mortgage
83,214
(14,961)
34
(1,102)
15,224
82,409
Leasing
9,708
18,967
-
(16,975)
4,719
16,419
Consumer
Credit cards
80,487
78,024
-
(69,731)
10,350
99,130
Home equity lines of credit
1,978
(1,226)
-
(433)
1,184
1,503
Personal
117,790
89,852
-
(117,872)
12,966
102,736
Auto
157,931
68,096
-
(85,400)
25,368
165,995
Other
7,134
1,682
-
(2,902)
1,090
7,004
Total Consumer
365,320
236,428
-
(276,338)
50,958
376,368
Total - Loans
$
729,341
$
258,441
$
34
$
(326,518)
$
84,726
$
746,024
Allowance for credit losses - unfunded commitments:
Commercial
$
6,913
$
1,474
$
-
$
-
$
-
$
8,387
Construction
10,064
(2,992)
-
-
-
7,072
Consumer
29
(18)
-
-
-
11
Ending balance - unfunded commitments [1]
$
17,006
$
(1,536)
$
-
$
-
$
-
$
15,470
[1]
Allowance for credit losses of unfunded commitments is
presented as part of Other Liabilities in the Consolidated
Statements of Financial
Condition.
Modifications
A
modification
constitutes
a
change
in
loan
terms
in
the
form
of
principal
forgiveness,
an
interest
rate
reduction,
other
than-
insignificant payment delay, term extension or combination of the above made
to a borrower experiencing financial difficulty.
The amount of outstanding commitments to lend additional funds to debtors with financial difficulties owing receivables whose terms
have been
modified during
the year
ended December
31, 2025
amounted to
$
159
million (during
the years
ended December
31,
2024 and 2023 - $
75
million and $21 million, respectively), related to
the commercial loan portfolios.
The following tables show the amortized cost basis of the loans modified to borrowers experiencing financial difficulties at the end of
the reporting period
disaggregated by class
of financing receivable and
type of concession
granted for the
years ended December
31, 2025,
2024, and 2023.
Loans modified to
borrowers experiencing financial
difficulties that
were fully paid
down, charged-off
or
foreclosed upon by period end are not reported.
157
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty for the year ended December 31, 2025
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Commercial and industrial
$
2,968
0.05
%
$
-
-
%
$
2,968
0.03
%
Mortgage
69
-
%
-
-
%
69
-
%
Consumer:
Credit cards
547
0.04
%
-
-
%
547
0.04
%
Personal
2,919
0.16
%
-
-
%
2,919
0.15
%
Other
4
-
%
-
-
%
4
-
%
Total
$
6,507
0.02
%
$
-
-
%
$
6,507
0.02
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
CRE non-owner occupied
$
1,731
0.05
%
$
58,652
2.73
%
$
60,383
1.09
%
CRE owner occupied
19,606
1.64
%
-
-
%
19,606
0.62
%
Commercial and industrial
14,510
0.24
%
919
0.03
%
15,429
0.18
%
Mortgage
43,025
0.59
%
1,127
0.09
%
44,152
0.51
%
Consumer:
-
-
-
Personal
895
0.05
%
6
0.01
%
901
0.05
%
Auto
298
0.01
%
-
-
%
298
0.01
%
Total
$
80,065
0.29
%
$
60,704
0.52
%
$
140,769
0.36
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
CRE non-owner occupied
$
102
-
%
$
-
-
%
$
102
-
%
CRE owner occupied
29,958
2.50
%
-
-
%
29,958
0.95
%
Commercial and industrial
194,151
3.25
%
-
-
%
194,151
2.26
%
Mortgage
718
0.01
%
-
-
%
718
0.01
%
Consumer:
Credit cards
11
-
%
-
-
%
11
-
%
Total
$
224,940
0.81
%
$
-
-
%
$
224,940
0.57
%
Combination - Term Extension
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
CRE non-owner occupied
$
169
-
%
$
-
-
%
$
169
-
%
CRE owner occupied
162
0.01
%
-
-
%
162
0.01
%
Commercial and industrial
301
0.01
%
-
-
%
301
-
%
Mortgage
11,115
0.15
%
-
-
%
11,115
0.13
%
Consumer:
Personal
11,748
0.64
%
124
0.18
%
11,872
0.62
%
Auto
59
-
%
-
-
%
59
-
%
Total
$
23,554
0.09
%
$
124
-
%
$
23,678
0.06
%
158
Combination - Other-Than-Insignificant Payment Delays
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2025
% of total class of
Financing
Receivable
Commercial and industrial
$
1,270
0.02
%
$
-
-
%
$
1,270
0.01
%
Consumer:
-
-
Credit cards
9,390
0.75
%
-
-
%
9,390
0.75
%
Total
$
10,660
0.04
%
$
-
-
%
$
10,660
0.03
%
159
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty for the year ended December 31, 2024
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
CRE owner occupied
$
169
0.01
%
$
-
-
%
$
169
0.01
%
Commercial and industrial
3,472
0.06
%
-
-
%
3,472
0.04
%
Mortgage
42
-
%
-
-
%
42
-
%
Consumer:
Credit cards
853
0.07
%
-
-
%
853
0.07
%
Personal
2,941
0.17
%
-
-
%
2,941
0.16
%
Other
23
0.01
%
-
-
%
23
0.01
%
Total
$
7,500
0.03
%
$
-
-
%
$
7,500
0.02
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Commercial multi-family
$
-
-
%
$
5,818
0.28
%
$
5,818
0.24
%
CRE non-owner occupied
36,585
1.13
%
-
-
%
36,585
0.68
%
CRE owner occupied
20,431
1.48
%
5,993
0.34
%
26,424
0.84
%
Commercial and industrial
24,820
0.46
%
684
0.03
%
25,504
0.33
%
Construction
576
0.27
%
-
-
%
576
0.05
%
Mortgage
51,238
0.75
%
1,460
0.11
%
52,698
0.65
%
Consumer:
-
-
Personal
683
0.04
%
17
0.02
%
700
0.04
%
Auto
83
-
%
-
-
%
83
-
%
Total
$
134,416
0.51
%
$
13,972
0.13
%
$
148,388
0.40
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
455
0.01
%
$
-
-
%
$
455
0.01
%
CRE owner occupied
20,399
1.48
%
-
-
%
20,399
0.65
%
Commercial and industrial
104,423
1.95
%
-
-
%
104,423
1.35
%
Mortgage
175
-
%
-
-
%
175
-
%
Total
$
125,452
0.48
%
$
-
-
%
$
125,452
0.34
%
Combination - Term Extension
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
885
0.03
%
$
-
-
%
$
885
0.02
%
CRE owner occupied
143,886
10.46
%
-
-
%
143,886
4.56
%
Commercial and industrial
644
0.01
%
-
-
%
644
0.01
%
Mortgage
14,674
0.22
%
66
0.01
%
14,740
0.18
%
Consumer:
Personal
8,662
0.49
%
329
0.31
%
8,991
0.48
%
Total
$
168,751
0.64
%
$
395
-
%
$
169,146
0.46
%
160
Combination - Other-Than-Insignificant Payment Delays
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2024
% of total class of
Financing
Receivable
CRE owner occupied
$
1,033
0.08
%
$
-
-
%
$
1,033
0.03
%
Commercial and industrial
440
0.01
%
-
-
%
440
0.01
%
Consumer:
Credit cards
3,511
0.29
%
-
-
%
3,511
0.29
%
Total
$
4,984
0.02
%
$
-
-
%
$
4,984
0.01
%
161
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty for the year ended December 31, 2023
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
CRE owner occupied
$
141,291
10.10
%
$
-
-
%
$
141,291
4.59
%
Commercial and industrial
70
-
%
-
-
%
70
-
%
Mortgage
301
-
%
-
-
%
301
-
%
Consumer:
Credit cards
700
0.06
%
-
-
%
700
0.06
%
Personal
783
0.04
%
-
-
%
783
0.04
%
Other
6
-
%
-
-
%
6
-
%
Total
$
143,151
0.58
%
$
-
-
%
$
143,151
0.41
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
33,318
1.11
%
$
-
-
%
$
33,318
0.65
%
CRE owner occupied
4,921
0.35
%
60,669
3.61
%
65,590
2.13
%
Commercial and industrial
39,445
0.82
%
250
0.01
%
39,695
0.56
%
Construction
-
-
%
5,990
0.76
%
5,990
0.62
%
Mortgage
53,447
0.84
%
5,450
0.42
%
58,897
0.77
%
Consumer:
Personal
413
0.02
%
129
0.08
%
542
0.03
%
Auto
91
-
%
-
-
%
91
-
%
Total
$
131,635
0.54
%
$
72,488
0.69
%
$
204,123
0.58
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
1,854
0.06
%
$
-
-
%
$
1,854
0.04
%
CRE owner occupied
16,068
1.15
%
13,468
0.80
%
29,536
0.96
%
Commercial and industrial
10,545
0.22
%
814
0.03
%
11,359
0.16
%
Mortgage
137
-
%
-
-
%
137
-
%
Total
$
28,604
0.12
%
$
14,282
0.14
%
$
42,886
0.12
%
Combination - Term Extension
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Commercial multi-family
$
65
0.02
%
$
-
-
%
$
65
-
%
CRE non-owner occupied
19,983
0.66
%
-
-
%
19,983
0.39
%
CRE owner occupied
14,416
1.03
%
-
-
%
14,416
0.47
%
Commercial and industrial
335
0.01
%
-
-
%
335
-
%
Mortgage
37,179
0.58
%
405
0.03
%
37,584
0.49
%
Consumer:
Personal
2,318
0.13
%
62
0.04
%
2,380
0.12
%
Auto
27
-
%
-
-
%
27
-
%
Total
$
74,323
0.30
%
$
467
-
%
$
74,790
0.21
%
162
Combination - Other-Than-Insignificant Payment Delays
and Interest Rate Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
180
0.01
%
$
-
-
%
$
180
-
%
Commercial and industrial
199
-
%
-
-
%
199
-
%
Consumer:
-
Credit cards
814
0.07
-
-
814
0.07
%
Total
$
1,193
-
%
$
-
-
%
$
1,193
-
%
Combination - Other-Than-Insignificant Payment Delays
and Principal Forgiveness
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
December 31,
2023
% of total class of
Financing
Receivable
CRE owner occupied
$
158
0.01
%
$
-
-
$
158
0.01
%
Total
$
158
-
%
$
-
-
%
$
158
-
%
163
The following tables describe the financial effect of the
modifications made to borrowers experiencing
financial difficulties:
For the year ended December 31, 2025
Interest rate reduction
Loan Type
Financial Effect
CRE Non-owner occupied
Reduced weighted-average contractual interest rate from
9.3
% to
7.5
%.
CRE Owner occupied
Reduced weighted-average contractual interest rate from
10
.0% to
7.5
%.
Commercial and industrial
Reduced weighted-average contractual interest rate from
23.8
% to
9.7
%.
Mortgage
Reduced weighted-average contractual interest rate from
6.7
% to
5.5
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
21.1
% to
8.6
%.
Personal
Reduced weighted-average contractual interest rate from
20.6
% to
11.7
%.
Auto
Reduced weighted-average contractual interest rate from
11.87
% to
11.86
%.
Other
Reduced weighted-average contractual interest rate from
18
.0% to
0
.0%.
Term extension
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
2
years to the life of loans.
CRE Owner occupied
Added a weighted-average of
3
years to the life of loans.
Commercial and industrial
Added a weighted-average of
6
years to the life of loans.
Mortgage
Added a weighted-average of
13
years to the life of loans.
Consumer:
Personal
Added a weighted-average of
6
years to the life of loans.
Auto
Added a weighted-average of
2
years to the life of loans.
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
12
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
12
months to the life of loans.
Commercial and industrial
Added a weighted-average of
12
months to the life of loans.
Mortgage
Added a weighted-average of
21
months to the life of loans.
Consumer:
Credit cards
Added a weighted-average of
17
months to the life of loans.
164
For the year ended December 31, 2024
Interest rate reduction
Loan Type
Financial Effect
CRE Non-owner occupied
Reduced weighted-average contractual interest rate from
10.1
% to
8.3
%.
CRE Owner occupied
Reduced weighted-average contractual interest rate from
6.7
% to
5.8
%.
Commercial and industrial
Reduced weighted-average contractual interest rate from
21.6
% to
9.6
%.
Mortgage
Reduced weighted-average contractual interest rate from
6.1
% to
4.4
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
21.2
% to
7.6
%.
Personal
Reduced weighted-average contractual interest rate from
19.8
% to
10.6
%.
Other
Reduced weighted-average contractual interest rate from
18
.0% to
0
.0%.
Term extension
Loan Type
Financial Effect
Commercial multi-family
Added a weighted-average of
4
months to the life of loans.
CRE Non-owner occupied
Added a weighted-average of
1
year to the life of loans.
CRE Owner occupied
Added a weighted-average of
21
months to the life of loans.
Commercial and industrial
Added a weighted-average of
21
months to the life of loans.
Construction
Added a weighted-average of
2
months to the life of loans.
Mortgage
Added a weighted-average of
12
years to the life of loans.
Consumer:
Personal
Added a weighted-average of
7
years to the life of loans.
Auto
Added a weighted-average of
3
years to the life of loans.
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
13
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
6
months to the life of loans.
Commercial and industrial
Added a weighted-average of
12
months to the life of loans.
Mortgage
Added a weighted-average of
53
months to the life of loans.
Consumer:
Credit cards
Added a weighted-average of
16
months to the life of loans.
165
For the year ended December 31, 2023
Interest rate reduction
Loan Type
Financial Effect
Commercial multi-family
Reduced weighted-average contractual interest rate from
7.5
% to
5.3
%.
CRE Non-owner occupied
Reduced weighted-average contractual interest rate from
9.1
% to
7.3
%.
CRE Owner occupied
Reduced weighted-average contractual interest rate from
8.4
% to
6.6
%.
Commercial and industrial
Reduced weighted-average contractual interest rate from
17.8
% to
7.8
%.
Mortgage
Reduced weighted-average contractual interest rate from
5.8
% to
4.2
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
18.8
% to
4.5
%.
Personal
Reduced weighted-average contractual interest rate from 17.8%
to 9.3%.
Other
Reduced weighted-average contractual interest rate from
18
.0% to
0
.0%.
Term extension
Loan Type
Financial Effect
Commercial multi-family
Added a weighted-average of
43
years to the life of loans.
CRE Non-owner occupied
Added a weighted-average of
20
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
1
year to the life of loans.
Commercial and industrial
Added a weighted-average of
2
years to the life of loans.
Construction
Added a weighted-average of
1
year to the life of loans.
Mortgage
Added a weighted-average of
11
years to the life of loans.
Consumer:
Personal
Added a weighted-average of
8
years to the life of loans.
Auto
Added a weighted-average of
2
years to the life of loans.
Principal forgiveness
Loan Type
Financial Effect
CRE Owner occupied
Reduced the amortized cost basis of the loans by $
88
thousand.
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
11
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
9
months to the life of loans.
Commercial and industrial
Added a weighted-average of
7
months to the life of loans.
Mortgage
Added a weighted-average of
40
months to the life of loans.
Consumer:
Credit cards
Added a weighted-average of
25
months to the life of loans.
166
The
following
tables
present,
by
class,
the
performance
of
loans
that
have
been
modified
during
the
twelve
months
preceding
December 31,
2025. The
past due
90 days
or more
categories include all
loans modified
classified as
non-accruing at the
time of
the modification. These loans will continue in non-accrual status, and presented as past due 90 days or more, until the borrower has
demonstrated a willingness and
ability to make
the restructured loan payments
(at least six
months of sustained
performance after
the modification
or one
year for
loans providing
for quarterly
or semi-annual
payments) and
management has
concluded that
it is
probable that the borrower would not be in payment
default in the foreseeable future.
BPPR
December 31, 2025
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
CRE non-owner occupied
$
-
$
-
$
267
$
267
$
1,736
$
2,003
$
-
$
267
CRE owner occupied
1,100
274
2,722
4,096
45,630
49,726
-
2,722
Commercial and industrial
2,099
186
2,558
4,843
208,355
213,198
532
2,026
Mortgage
6,651
2,878
18,223
27,752
27,176
54,928
7,486
10,737
Consumer:
Credit cards
850
676
1,343
2,869
7,079
9,948
1,209
134
Personal
925
208
2,036
3,169
12,393
15,562
331
1,705
Auto
19
-
-
19
338
357
-
-
Other
-
-
-
-
4
4
-
-
Total
$
11,644
$
4,222
$
27,149
$
43,015
$
302,711
$
345,726
$
9,558
$
17,591
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular U.S.
December 31, 2025
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
CRE non-owner occupied
$
-
$
-
$
-
$
-
$
58,652
$
58,652
$
-
$
-
Commercial and industrial
-
-
-
-
919
919
-
-
Mortgage
-
-
-
-
1,127
1,127
-
-
Consumer:
Personal
-
-
-
-
130
130
-
-
Total
$
-
$
-
$
-
$
-
$
60,828
$
60,828
$
-
$
-
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular Inc.
December 31, 2025
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
CRE non-owner occupied
$
-
$
-
$
267
$
267
$
60,388
$
60,655
$
-
$
267
CRE owner occupied
1,100
274
2,722
4,096
45,630
49,726
-
2,722
Commercial and industrial
2,099
186
2,558
4,843
209,274
214,117
532
2,026
Mortgage
6,651
2,878
18,223
27,752
28,303
56,055
7,486
10,737
Consumer:
-
Credit cards
850
676
1,343
2,869
7,079
9,948
1,209
134
Personal
925
208
2,036
3,169
12,523
15,692
331
1,705
Auto
19
-
-
19
338
357
-
-
Other
-
-
-
-
4
4
-
-
Total
$
11,644
$
4,222
$
27,149
$
43,015
$
363,539
$
406,554
$
9,558
$
17,591
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments.
Payment default is defined as a restructured loan becoming
90 days past due after being modified, foreclosed
or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
167
The
following
tables
present,
by
class,
the
performance
of
loans
that
have
been
modified
during
the
twelve
months
preceding
December 31, 2024.
BPPR
December 31, 2024
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
CRE non-owner occupied
$
-
$
-
$
1,340
$
1,340
$
36,585
$
37,925
$
-
$
1,340
CRE owner occupied
5,509
112
2,347
7,968
177,950
185,918
-
2,347
Commercial and industrial
217
108
4,701
5,026
128,773
133,799
399
4,302
Construction
-
-
-
-
576
576
-
-
Mortgage
5,253
4,127
20,236
29,616
36,513
66,129
7,679
12,557
Consumer:
Credit cards
491
347
630
1,468
2,896
4,364
362
268
Personal
288
201
2,047
2,536
9,750
12,286
190
1,857
Auto
-
-
-
-
83
83
-
-
Other
-
-
-
-
23
23
-
-
Total
$
11,758
$
4,895
$
31,301
$
47,954
$
393,149
$
441,103
$
8,630
$
22,671
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular U.S.
December 31, 2024
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
-
$
-
$
-
$
-
$
5,818
$
5,818
$
-
$
-
CRE owner occupied
-
-
-
-
5,993
5,993
-
-
Commercial and industrial
-
-
-
-
684
684
-
-
Mortgage
-
-
736
736
790
1,526
-
736
Consumer:
Personal
11
5
98
114
232
346
15
83
Total
$
11
$
5
$
834
$
850
$
13,517
$
14,367
$
15
$
819
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular Inc.
December 31, 2024
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
-
$
-
$
-
$
-
$
5,818
$
5,818
$
-
$
-
CRE non-owner occupied
-
-
1,340
1,340
36,585
37,925
-
1,340
CRE owner occupied
5,509
112
2,347
7,968
183,943
191,911
-
2,347
Commercial and industrial
217
108
4,701
5,026
129,457
134,483
399
4,302
Construction
-
-
-
-
576
576
-
-
Mortgage
5,253
4,127
20,972
30,352
37,303
67,655
7,679
13,293
Consumer:
Credit cards
491
347
630
1,468
2,896
4,364
362
268
Personal
299
206
2,145
2,650
9,982
12,632
205
1,940
Auto
-
-
-
-
83
83
-
-
Other
-
-
-
-
23
23
-
-
Total
$
11,769
$
4,900
$
32,135
$
48,804
$
406,666
$
455,470
$
8,645
$
23,490
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments.
Payment default is defined as a restructured loan becoming
90 days past due after being modified, foreclosed
or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
168
The
following
tables
present,
by
class,
the
performance
of
loans
that
have
been
modified
during
the
twelve
months
preceding
December 31, 2023.
BPPR
December 31, 2023
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
-
$
-
$
65
$
65
$
-
$
65
$
-
$
65
CRE non-owner occupied
-
-
2,094
2,094
53,241
55,335
-
2,094
CRE owner occupied
339
-
2,267
2,606
174,248
176,854
-
2,267
Commercial and industrial
2,519
77
14,881
17,477
33,117
50,594
556
14,325
Mortgage
7,520
3,358
28,128
39,006
52,058
91,064
8,319
19,809
Consumer:
Credit cards
59
51
294
404
1,110
1,514
176
118
Personal
140
-
817
957
2,557
3,514
63
754
Auto
-
-
15
15
103
118
-
15
Other
-
-
-
-
6
6
-
-
Total
$
10,577
$
3,486
$
48,561
$
62,624
$
316,440
$
379,064
$
9,114
$
39,447
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular U.S.
December 31, 2023
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
CRE owner occupied
$
-
$
-
$
-
$
-
$
74,137
$
74,137
$
-
$
-
Commercial and industrial
-
250
-
250
814
1,064
-
-
Construction
-
-
-
-
5,990
5,990
-
-
Mortgage
-
-
388
388
5,467
5,855
-
388
Consumer:
Personal
-
-
125
125
68
193
-
125
Total
$
-
$
250
$
513
$
763
$
86,476
$
87,239
$
-
$
513
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments. Payment default
is defined as a restructured loan becoming 90 days past
due after being modified, foreclosed or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
Popular Inc.
December 31, 2023
Past Due 90 days or more [1]
(In thousands)
30-59 days
60-89 days
Past due 90
days or more
Total past
due
Current
Total
With Payment
Default
Without
Payment Default
Commercial multi-family
$
-
$
-
$
65
$
65
$
-
$
65
$
-
$
65
CRE non-owner occupied
-
-
2,094
2,094
53,241
55,335
-
2,094
CRE owner occupied
339
-
2,267
2,606
248,385
250,991
-
2,267
Commercial and industrial
2,519
327
14,881
17,727
33,931
51,658
556
14,325
Construction
-
-
-
-
5,990
5,990
-
-
Mortgage
7,520
3,358
28,516
39,394
57,525
96,919
8,319
20,197
Consumer:
Credit cards
59
51
294
404
1,110
1,514
176
118
Personal
140
-
942
1,082
2,625
3,707
63
879
Auto
-
-
15
15
103
118
-
15
Other
-
-
-
-
6
6
-
-
Total
$
10,577
$
3,736
$
49,074
$
63,387
$
402,916
$
466,303
$
9,114
$
39,960
[1] Loans that were in non-accrual status at the time
of modification are presented as past due until the borrower
has demonstrated a willingness and ability
to make the restructured loan payments.
Payment default is defined as a restructured loan becoming
90 days past due after being modified, foreclosed
or
charged-off, whichever occurs first. The recorded investment
as of period end is inclusive of all partial paydowns
and charge-offs since the modification
date. Loans modified with financial difficulty that
were fully paid down, charged-off or foreclosed upon
by period end are not reported.
169
Payment
default
is
defined
as
a
restructured
loan
becoming
90
days
past
due
after
being
modified,
foreclosed
or
charged-off,
whichever
occurs
first.
The
following
tables
provide
the
outstanding
balance
of
loans
modified
for
borrowers
under
financial
difficulties that were subject to payment default and that
had been modified during the twelve months prior
to default.
Amortized Cost Basis of Modified Financing Receivables That
Subsequently Defaulted for the Year
Ended December 31, 2025
(In thousands)
Interest Rate
Reduction
Term Extension
Other-Than-
Insignificant
Payment Delays
Combination - Term
Extension and Interest
Rate Reduction
Combination - Other-
Than-Insignificant
Payment Delays and
Interest Rate
Reduction
Total
CRE non-owner occupied
$
-
$
-
$
435
$
-
$
-
$
435
CRE owner occupied
-
-
179
-
-
179
Commercial and industrial
151
68
200
-
416
835
Mortgage
-
16,739
429
1,998
-
19,166
Consumer:
Credit cards
322
-
-
-
1,725
2,047
Personal
131
45
-
323
-
499
Total
$
604
$
16,852
$
1,243
$
2,321
$
2,141
$
23,161
Amortized Cost Basis of Modified Financing Receivables That
Subsequently Defaulted During the Year
Ended December 31, 2024
(In thousands)
Interest Rate
Reduction
Term Extension
Other-Than-
Insignificant
Payment Delays
Combination - Term
Extension and Interest
Rate Reduction
Combination - Other-
Than-Insignificant
Payment Delays and
Interest Rate
Reduction
Total
CRE owner occupied
$
-
$
319
$
89
$
-
$
-
$
408
Commercial and industrial
97
11,407
11
-
96
11,611
Mortgage
-
16,436
-
3,926
-
20,362
Consumer:
Credit cards
222
-
-
-
307
529
Personal
222
24
-
273
-
519
Total
$
541
$
28,186
$
100
$
4,199
$
403
$
33,429
Amortized Cost Basis of Modified Financing Receivables That
Subsequently Defaulted During the Year
Ended December 31, 2023
(In thousands)
Interest Rate
Reduction
Term Extension
Other-Than-
Insignificant
Payment Delays
Combination - Term
Extension and Interest
Rate Reduction
Combination - Other-
Than-Insignificant
Payment Delays and
Interest Rate
Reduction
Total
Commercial and industrial
$
-
$
556
$
-
$
-
$
24
$
580
Mortgage
-
7,011
137
2,309
-
9,457
Consumer:
Credit cards
167
-
-
-
102
269
Personal
87
-
-
20
-
107
Total
$
254
$
7,567
$
137
$
2,329
$
126
$
10,413
170
Credit Quality
The
Corporation
has
defined
a
risk
rating
system
to
assign
a
rating
to
all
credit
exposures,
particularly
for
the
commercial
and
construction loan
portfolios. Risk
ratings in
the aggregate
provide the
Corporations management
the asset
quality profile
for
the
loan portfolio. The risk rating system provides for the
assignment of ratings at the obligor level based
on the financial condition of the
borrower. The risk rating analysis process is performed at least once a
year or more frequently if events or conditions change which
may
deteriorate
the
credit
quality.
In
the
case
of
consumer
and
mortgage
loans,
these
loans
are
classified
considering
their
delinquency status at the end of the reporting period.
The Corporations obligor risk rating scales range from rating 1 (Excellent) to rating 14 (Loss). The obligor risk rating reflects the risk
of payment default of a borrower in the ordinary
course of business.
Pass Credit Classifications:
Pass (Scales 1 through 8)
Loans classified as
pass have a well defined
primary source of repayment, with no
apparent
risk, strong financial position, minimal operating risk, profitability, liquidity and strong
capitalization.
Watch
(Scale 9)
Loans
classified as
watch have
acceptable business
credit,
but borrowers
operations, cash
flow or
financial condition evidence more than average risk, requires above
average levels of supervision and attention from Loan
Officers.
Special Mention (Scale 10) -
Loans classified as special mention have
potential weaknesses that deserve managements
close attention.
If left uncorrected, these potential weaknesses may result
in deterioration of the repayment prospects for
the loan or of the Corporations credit position at
some future date.
Adversely Classified Classifications:
Substandard
(Scales
11
and
12)
-
Loans
classified
as
substandard
are
deemed
to
be
inadequately
protected
by
the
current net worth
and payment capacity
of the obligor
or of the
collateral pledged, if
any.
Loans classified as
such have
well-defined weaknesses that jeopardize the liquidation of
the debt.
They are characterized by the
distinct possibility that
the institution will sustain some loss if the deficiencies
are not corrected.
Doubtful (Scale
13) - Loans
classified as
doubtful have
all the
weaknesses inherent
in those
classified as
substandard,
with the
additional characteristic
that the
weaknesses make
the collection
or liquidation
in full,
on the
basis of
currently
existing facts, conditions, and values, highly questionable
and improbable.
Loss
(Scale
14)
-
Uncollectible
and
of
such
little
value
that
continuance
as
a
bankable
asset
is
not
warranted.
This
classification does
not mean
that the
asset has
absolutely no
recovery or
salvage value,
but rather
it is
not practical
or
desirable to defer writing off this asset even though partial
recovery may be effected in the future.
Risk
ratings scales
10
through
14
conform
to
regulatory
ratings.
The
assignment
of
the
obligor
risk
rating
is
based
on
relevant
information about the ability of borrowers to
service their debts such as current
financial information, historical payment experience,
credit documentation, public information, and
current economic trends, among other factors.
The following tables present the amortized cost basis, net of unearned income, of
loans held-in-portfolio based on the Corporations
assignment of obligor risk ratings as defined at
December 31, 2025 and 2024 by vintage year.
171
December 31, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
BPPR
Commercial:
Commercial multi-family
Pass
$
12,328
$
32,906
$
36,473
$
131,276
$
20,536
$
47,303
$
107
$
-
$
280,929
Watch
-
15,795
-
523
-
1,742
-
-
18,060
Special Mention
222
-
-
-
73
127
-
-
422
Substandard
-
-
-
-
-
3,937
-
-
3,937
Total commercial
multi-family
$
12,550
$
48,701
$
36,473
$
131,799
$
20,609
$
53,109
$
107
$
-
$
303,348
Commercial real estate non-owner occupied
Pass
$
435,616
$
447,234
$
265,238
$
786,465
$
484,427
$
671,455
$
8,480
$
-
$
3,098,915
Watch
23,801
11,965
43,001
5,140
34,140
69,153
-
-
187,200
Special Mention
933
-
872
144
23,724
18,398
-
-
44,071
Substandard
-
726
8,406
28,490
1,438
25,884
-
-
64,944
Total commercial
real estate non-
owner occupied
$
460,350
$
459,925
$
317,517
$
820,239
$
543,729
$
784,890
$
8,480
$
-
$
3,395,130
Year-to-Date gross
write-offs
$
-
$
13,356
$
-
$
134
$
-
$
86
$
-
$
-
$
13,576
Commercial real estate owner occupied
Pass
$
157,288
$
113,778
$
71,288
$
55,715
$
169,037
$
278,495
$
20,468
$
-
$
866,069
Watch
6,255
26,923
6,348
35,565
29,409
78,046
2,191
-
184,737
Special Mention
-
-
1,494
18,063
726
12,637
1,500
-
34,420
Substandard
9,405
1,879
1,839
19,190
7,386
71,358
-
-
111,057
Doubtful
75
-
-
-
62
173
-
-
310
Total commercial
real estate owner
occupied
$
173,023
$
142,580
$
80,969
$
128,533
$
206,620
$
440,709
$
24,159
$
-
$
1,196,593
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
363
$
-
$
-
$
363
Commercial and industrial
Pass
$
1,357,401
$
598,521
$
649,249
$
442,753
$
193,173
$
346,563
$
1,376,855
$
-
$
4,964,515
Watch
11,706
92,478
19,194
43,529
6,909
19,218
223,490
-
416,524
Special Mention
4,991
26,356
10,178
6,857
454
4,338
14,957
-
68,131
Substandard
38,422
12,526
48,230
89,771
156,970
15,079
159,854
-
520,852
Doubtful
21
-
-
24
-
6
-
-
51
Total commercial
and industrial
$
1,412,541
$
729,881
$
726,851
$
582,934
$
357,506
$
385,204
$
1,775,156
$
-
$
5,970,073
Year-to-Date gross
write-offs
$
1,587
$
716
$
1,643
$
655
$
21
$
803
$
9,320
$
-
$
14,745
Construction
Pass
$
28,575
$
99,963
$
70,674
$
-
$
3,608
$
9,692
$
52,758
$
-
$
265,270
Watch
-
43,202
40,231
8,129
-
-
709
-
92,271
Total construction
$
28,575
$
143,165
$
110,905
$
8,129
$
3,608
$
9,692
$
53,467
$
-
$
357,541
Mortgage
Pass
$
986,795
$
872,826
$
683,325
$
386,318
$
373,153
$
3,977,979
$
-
$
-
$
7,280,396
Substandard
-
151
3,115
1,915
764
61,626
-
-
67,571
Total mortgage
$
986,795
$
872,977
$
686,440
$
388,233
$
373,917
$
4,039,605
$
-
$
-
$
7,347,967
Year-to-Date gross
write-offs
$
31
$
-
$
1
$
-
$
-
$
1,404
$
-
$
-
$
1,436
172
December 31, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
BPPR
Leasing
Pass
$
682,378
$
535,227
$
354,748
$
251,520
$
135,973
$
32,270
$
-
$
-
$
1,992,116
Substandard
601
1,891
2,424
2,249
1,302
585
-
-
9,052
Loss
175
-
22
-
-
-
-
-
197
Total leasing
$
683,154
$
537,118
$
357,194
$
253,769
$
137,275
$
32,855
$
-
$
-
$
2,001,365
Year-to-Date gross
write-offs
$
990
$
4,449
$
5,041
$
4,541
$
1,807
$
28
$
-
$
-
$
16,856
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,229,201
$
-
$
1,229,201
Substandard
-
-
-
-
-
-
27,526
-
27,526
Loss
-
-
-
-
-
-
4
-
4
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,256,731
$
-
$
1,256,731
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
75,428
$
-
$
75,428
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,908
$
-
$
1,908
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
-
$
1,908
$
-
$
1,908
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
25
$
-
$
25
Personal
Pass
$
842,532
$
422,156
$
261,441
$
132,551
$
51,320
$
77,214
$
-
$
29,700
$
1,816,914
Substandard
1,452
3,310
3,509
1,632
618
6,654
-
2,278
19,453
Loss
-
4
7
12
-
12
-
-
35
Total Personal
$
843,984
$
425,470
$
264,957
$
134,195
$
51,938
$
83,880
$
-
$
31,978
$
1,836,402
Year-to-Date gross
write-offs
$
2,597
$
19,480
$
33,310
$
17,825
$
4,576
$
2,160
$
-
$
3,031
$
82,979
Auto
Pass
$
1,139,411
$
995,283
$
702,884
$
464,005
$
314,721
$
142,456
$
-
$
-
$
3,758,760
Substandard
3,992
17,559
14,881
11,699
7,590
5,306
-
-
61,027
Loss
-
-
-
-
19
6
-
-
25
Total Auto
$
1,143,403
$
1,012,842
$
717,765
$
475,704
$
322,330
$
147,768
$
-
$
-
$
3,819,812
Year-to-Date gross
write-offs
$
6,682
$
29,448
$
20,777
$
12,602
$
5,203
$
1,572
$
-
$
-
$
76,284
Other consumer
Pass
$
35,716
$
25,008
$
20,233
$
15,243
$
7,179
$
1,756
$
64,322
$
-
$
169,457
Substandard
-
45
211
114
20
47
476
-
913
Loss
-
-
-
1,025
363
-
-
-
1,388
Total Other
consumer
$
35,716
$
25,053
$
20,444
$
16,382
$
7,562
$
1,803
$
64,798
$
-
$
171,758
Year-to-Date gross
write-offs
$
64
$
226
$
286
$
254
$
358
$
1,960
$
-
$
-
$
3,148
Total BPPR
$
5,780,091
$
4,397,712
$
3,319,515
$
2,939,917
$
2,025,094
$
5,979,515
$
3,184,806
$
31,978
$
27,658,628
173
December 31, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular U.S.
Commercial:
Commercial multi-family
Pass
$
349,850
$
138,662
$
118,143
$
380,479
$
274,195
$
534,623
$
4,394
$
-
$
1,800,346
Watch
-
2,468
21,142
94,135
39,881
151,526
1,249
-
310,401
Special Mention
-
-
2,711
7,840
-
4,560
-
-
15,111
Substandard
-
-
1,775
2,729
-
22,080
-
-
26,584
Total commercial
multi-family
$
349,850
$
141,130
$
143,771
$
485,183
$
314,076
$
712,789
$
5,643
$
-
$
2,152,442
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
563
$
-
$
-
$
563
Commercial real estate non-owner occupied
Pass
$
216,537
$
162,382
$
296,653
$
467,811
$
163,984
$
582,004
$
6,024
$
-
$
1,895,395
Watch
10,300
11,369
11,441
15,141
9,333
65,750
500
-
123,834
Special Mention
-
2,069
-
-
-
1,902
-
-
3,971
Substandard
-
-
-
5,973
4,726
114,255
-
-
124,954
Total commercial
real estate non-
owner occupied
$
226,837
$
175,820
$
308,094
$
488,925
$
178,043
$
763,911
$
6,524
$
-
$
2,148,154
Commercial real estate owner occupied
Pass
$
561,716
$
198,946
$
192,174
$
188,536
$
180,981
$
288,439
$
8,803
$
-
$
1,619,595
Watch
-
48,837
39,519
30,764
12,813
52,010
3,179
-
187,122
Special Mention
-
17,946
-
-
-
10,944
-
-
28,890
Substandard
-
2,705
-
39,474
1,571
77,130
-
-
120,880
Total commercial
real estate owner
occupied
$
561,716
$
268,434
$
231,693
$
258,774
$
195,365
$
428,523
$
11,982
$
-
$
1,956,487
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
27
$
-
$
-
$
27
Commercial and industrial
Pass
$
247,703
$
357,722
$
230,702
$
278,950
$
249,467
$
545,331
$
338,026
$
-
$
2,247,901
Watch
34,700
5,196
47,136
70,767
42,072
151,368
15,650
-
366,889
Special Mention
-
-
4,649
63
284
198
738
-
5,932
Substandard
-
5,546
838
4,145
112
1,393
4,583
-
16,617
Total commercial
and industrial
$
282,403
$
368,464
$
283,325
$
353,925
$
291,935
$
698,290
$
358,997
$
-
$
2,637,339
Year-to-Date gross
write-offs
$
100
$
1,106
$
483
$
-
$
599
$
25
$
132
$
-
$
2,445
Construction
Pass
$
358,475
$
427,221
$
291,714
$
85,385
$
-
$
6,030
$
12,491
$
-
$
1,181,316
Watch
1,366
15,771
72,580
27,870
-
6,941
-
-
124,528
Special Mention
-
-
2,912
-
-
-
-
-
2,912
Substandard
-
-
-
8,602
-
-
-
-
8,602
Total construction
$
359,841
$
442,992
$
367,206
$
121,857
$
-
$
12,971
$
12,491
$
-
$
1,317,358
Mortgage
Pass
$
100,210
$
78,166
$
79,367
$
205,446
$
259,877
$
564,985
$
-
$
-
$
1,288,051
Substandard
-
-
644
495
217
12,066
-
-
13,422
Total mortgage
$
100,210
$
78,166
$
80,011
$
205,941
$
260,094
$
577,051
$
-
$
-
$
1,301,473
174
December 31, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular U.S.
Consumer:
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
(14)
$
-
$
(14)
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
(14)
$
-
$
(14)
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
5,201
$
59,363
$
9,422
$
73,986
Substandard
-
-
-
-
-
1,276
12
543
1,831
Loss
-
-
-
-
-
139
-
828
967
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
6,616
$
59,375
$
10,793
$
76,784
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
84
$
-
$
84
Personal
Pass
$
18,658
$
17,906
$
12,102
$
15,593
$
3,061
$
1,272
$
-
$
-
$
68,592
Substandard
74
329
309
153
55
256
-
-
1,176
Loss
10
-
-
-
-
48
-
-
58
Total Personal
$
18,742
$
18,235
$
12,411
$
15,746
$
3,116
$
1,576
$
-
$
-
$
69,826
Year-to-Date gross
write-offs
$
37
$
1,787
$
2,212
$
3,420
$
638
$
46
$
-
$
-
$
8,140
Other consumer
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
9,012
$
-
$
9,012
Substandard
-
-
-
-
-
-
1
-
1
Loss
-
-
-
-
-
-
28
-
28
Total Other
consumer
$
-
$
-
$
-
$
-
$
-
$
-
$
9,041
$
-
$
9,041
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
924
$
-
$
924
Total Popular U.S.
$
1,899,599
$
1,493,241
$
1,426,511
$
1,930,351
$
1,242,629
$
3,201,727
$
464,039
$
10,793
$
11,668,890
175
December 31, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular, Inc.
Commercial:
Commercial multi-family
Pass
$
362,178
$
171,568
$
154,616
$
511,755
$
294,731
$
581,926
$
4,501
$
-
$
2,081,275
Watch
-
18,263
21,142
94,658
39,881
153,268
1,249
-
328,461
Special Mention
222
-
2,711
7,840
73
4,687
-
-
15,533
Substandard
-
-
1,775
2,729
-
26,017
-
-
30,521
Total commercial
multi-family
$
362,400
$
189,831
$
180,244
$
616,982
$
334,685
$
765,898
$
5,750
$
-
$
2,455,790
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
563
$
-
$
-
$
563
Commercial real estate non-owner occupied
Pass
$
652,153
$
609,616
$
561,891
$
1,254,276
$
648,411
$
1,253,459
$
14,504
$
-
$
4,994,310
Watch
34,101
23,334
54,442
20,281
43,473
134,903
500
-
311,034
Special Mention
933
2,069
872
144
23,724
20,300
-
-
48,042
Substandard
-
726
8,406
34,463
6,164
140,139
-
-
189,898
Total commercial
real estate non-
owner occupied
$
687,187
$
635,745
$
625,611
$
1,309,164
$
721,772
$
1,548,801
$
15,004
$
-
$
5,543,284
Year-to-Date gross
write-offs
$
-
$
13,356
$
-
$
134
$
-
$
86
$
-
$
-
$
13,576
Commercial real estate owner occupied
Pass
$
719,004
$
312,724
$
263,462
$
244,251
$
350,018
$
566,934
$
29,271
$
-
$
2,485,664
Watch
6,255
75,760
45,867
66,329
42,222
130,056
5,370
-
371,859
Special Mention
-
17,946
1,494
18,063
726
23,581
1,500
-
63,310
Substandard
9,405
4,584
1,839
58,664
8,957
148,488
-
-
231,937
Doubtful
75
-
-
-
62
173
-
-
310
Total commercial
real estate owner
occupied
$
734,739
$
411,014
$
312,662
$
387,307
$
401,985
$
869,232
$
36,141
$
-
$
3,153,080
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
390
$
-
$
-
$
390
Commercial and industrial
Pass
$
1,605,104
$
956,243
$
879,951
$
721,703
$
442,640
$
891,894
$
1,714,881
$
-
$
7,212,416
Watch
46,406
97,674
66,330
114,296
48,981
170,586
239,140
-
783,413
Special Mention
4,991
26,356
14,827
6,920
738
4,536
15,695
-
74,063
Substandard
38,422
18,072
49,068
93,916
157,082
16,472
164,437
-
537,469
Doubtful
21
-
-
24
-
6
-
-
51
Total commercial
and industrial
$
1,694,944
$
1,098,345
$
1,010,176
$
936,859
$
649,441
$
1,083,494
$
2,134,153
$
-
$
8,607,412
Year-to-Date gross
write-offs
$
1,687
$
1,822
$
2,126
$
655
$
620
$
828
$
9,452
$
-
$
17,190
176
December 31, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular, Inc.
Construction
Pass
$
387,050
$
527,184
$
362,388
$
85,385
$
3,608
$
15,722
$
65,249
$
-
$
1,446,586
Watch
1,366
58,973
112,811
35,999
-
6,941
709
-
216,799
Special Mention
-
-
2,912
-
-
-
-
-
2,912
Substandard
-
-
-
8,602
-
-
-
-
8,602
Total construction
$
388,416
$
586,157
$
478,111
$
129,986
$
3,608
$
22,663
$
65,958
$
-
$
1,674,899
Mortgage
Pass
$
1,087,005
$
950,992
$
762,692
$
591,764
$
633,030
$
4,542,964
$
-
$
-
$
8,568,447
Substandard
-
151
3,759
2,410
981
73,692
-
-
80,993
Total mortgage
$
1,087,005
$
951,143
$
766,451
$
594,174
$
634,011
$
4,616,656
$
-
$
-
$
8,649,440
Year-to-Date gross
write-offs
$
31
$
-
$
1
$
-
$
-
$
1,404
$
-
$
-
$
1,436
Leasing
Pass
$
682,378
$
535,227
$
354,748
$
251,520
$
135,973
$
32,270
$
-
$
-
$
1,992,116
Substandard
601
1,891
2,424
2,249
1,302
585
-
-
9,052
Loss
175
-
22
-
-
-
-
-
197
Total leasing
$
683,154
$
537,118
$
357,194
$
253,769
$
137,275
$
32,855
$
-
$
-
$
2,001,365
Year-to-Date gross
write-offs
$
990
$
4,449
$
5,041
$
4,541
$
1,807
$
28
$
-
$
-
$
16,856
177
December 31, 2025
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2025
2024
2023
2022
2021
Prior
Years
Total
Popular, Inc.
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,229,187
$
-
$
1,229,187
Substandard
-
-
-
-
-
-
27,526
-
27,526
Loss
-
-
-
-
-
-
4
-
4
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,256,717
$
-
$
1,256,717
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
75,428
$
-
$
75,428
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
5,201
$
61,271
$
9,422
$
75,894
Substandard
-
-
-
-
-
1,276
12
543
1,831
Loss
-
-
-
-
-
139
-
828
967
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
6,616
$
61,283
$
10,793
$
78,692
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
109
$
-
$
109
Personal
Pass
$
861,190
$
440,062
$
273,543
$
148,144
$
54,381
$
78,486
$
-
$
29,700
$
1,885,506
Substandard
1,526
3,639
3,818
1,785
673
6,910
-
2,278
20,629
Loss
10
4
7
12
-
60
-
-
93
Total Personal
$
862,726
$
443,705
$
277,368
$
149,941
$
55,054
$
85,456
$
-
$
31,978
$
1,906,228
Year-to-Date gross
write-offs
$
2,634
$
21,267
$
35,522
$
21,245
$
5,214
$
2,206
$
-
$
3,031
$
91,119
Auto
Pass
$
1,139,411
$
995,283
$
702,884
$
464,005
$
314,721
$
142,456
$
-
$
-
$
3,758,760
Substandard
3,992
17,559
14,881
11,699
7,590
5,306
-
-
61,027
Loss
-
-
-
-
19
6
-
-
25
Total Auto
$
1,143,403
$
1,012,842
$
717,765
$
475,704
$
322,330
$
147,768
$
-
$
-
$
3,819,812
Year-to-Date gross
write-offs
$
6,682
$
29,448
$
20,777
$
12,602
$
5,203
$
1,572
$
-
$
-
$
76,284
Other consumer
Pass
$
35,716
$
25,008
$
20,233
$
15,243
$
7,179
$
1,756
$
73,334
$
-
$
178,469
Substandard
-
45
211
114
20
47
477
-
914
Loss
-
-
-
1,025
363
-
28
-
1,416
Total Other
consumer
$
35,716
$
25,053
$
20,444
$
16,382
$
7,562
$
1,803
$
73,839
$
-
$
180,799
Year-to-Date gross
write-offs
$
64
$
226
$
286
$
254
$
358
$
1,960
$
924
$
-
$
4,072
Total Popular Inc.
$
7,679,690
$
5,890,953
$
4,746,026
$
4,870,268
$
3,267,723
$
9,181,242
$
3,648,845
$
42,771
$
39,327,518
178
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
BPPR
Commercial:
Commercial multi-family
Pass
$
50,384
$
37,211
$
136,093
$
20,939
$
20,134
$
34,009
$
105
$
-
$
298,875
Watch
-
-
541
-
-
1,601
-
-
2,142
Special Mention
-
-
-
-
-
3,161
-
-
3,161
Substandard
-
-
-
-
-
3,823
-
-
3,823
Total commercial
multi-family
$
50,384
$
37,211
$
136,634
$
20,939
$
20,134
$
42,594
$
105
$
-
$
308,001
Commercial real estate non-owner occupied
Pass
$
419,200
$
322,998
$
828,404
$
547,674
$
335,060
$
525,088
$
6,159
$
-
$
2,984,583
Watch
26,097
2,296
654
5,349
28,832
50,924
72
-
114,224
Special Mention
7,018
41,274
156
406
-
46,390
-
-
95,244
Substandard
-
1,002
110
26,430
1,954
22,956
-
-
52,452
Total commercial
real estate non-
owner occupied
$
452,315
$
367,570
$
829,324
$
579,859
$
365,846
$
645,358
$
6,231
$
-
$
3,246,503
Year-to-Date gross
write-offs
$
-
$
-
$
69
$
-
$
-
$
59
$
-
$
-
$
128
Commercial real estate owner occupied
Pass
$
131,449
$
79,109
$
94,008
$
214,520
$
46,206
$
309,791
$
7,214
$
-
$
882,297
Watch
14,002
2,637
64,735
7,225
4,890
85,580
3
-
179,072
Special Mention
-
1,209
19,436
19,288
-
15,872
1,499
-
57,304
Substandard
455
1,651
20,528
3,872
140,579
77,098
13,021
-
257,204
Doubtful
-
-
-
-
-
34
-
-
34
Total commercial
real estate owner
occupied
$
145,906
$
84,606
$
198,707
$
244,905
$
191,675
$
488,375
$
21,737
$
-
$
1,375,911
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
2,793
$
-
$
-
$
2,793
Commercial and industrial
Pass
$
790,273
$
910,355
$
602,454
$
304,227
$
66,395
$
331,493
$
1,495,490
$
-
$
4,500,687
Watch
124,987
24,935
49,497
6,394
3,465
31,609
135,811
-
376,698
Special Mention
5,519
7,316
1,895
157,627
53
30,360
28,171
-
230,941
Substandard
6,063
30,496
37,558
4,203
14,776
23,135
122,275
-
238,506
Doubtful
-
-
-
-
-
11
-
-
11
Loss
-
-
-
-
-
-
51
-
51
Total commercial
and industrial
$
926,842
$
973,102
$
691,404
$
472,451
$
84,689
$
416,608
$
1,781,798
$
-
$
5,346,894
Year-to-Date gross
write-offs
$
1,099
$
707
$
331
$
122
$
2,838
$
11,841
$
7,617
$
-
$
24,555
Construction
Pass
$
63,107
$
53,070
$
33,423
$
14,908
$
9,483
$
1,011
$
16,782
$
-
$
191,784
Watch
-
13,872
-
-
-
-
-
-
13,872
Special Mention
-
-
-
6,058
-
-
-
-
6,058
Substandard
-
-
-
576
-
-
-
-
576
Total construction
$
63,107
$
66,942
$
33,423
$
21,542
$
9,483
$
1,011
$
16,782
$
-
$
212,290
Mortgage
Pass
$
879,075
$
724,383
$
409,133
$
401,113
$
234,486
$
4,085,088
$
-
$
-
$
6,733,278
Substandard
-
1,961
1,331
1,675
347
71,289
-
-
76,603
Total mortgage
$
879,075
$
726,344
$
410,464
$
402,788
$
234,833
$
4,156,377
$
-
$
-
$
6,809,881
Year-to-Date gross
write-offs
$
-
$
9
$
-
$
8
$
-
$
1,067
$
-
$
-
$
1,084
179
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
BPPR
Leasing
Pass
$
731,053
$
477,226
$
362,426
$
217,537
$
104,812
$
22,762
$
-
$
-
$
1,915,816
Substandard
1,195
2,280
2,834
1,885
920
402
-
-
9,516
Loss
-
-
-
-
-
73
-
-
73
Total leasing
$
732,248
$
479,506
$
365,260
$
219,422
$
105,732
$
23,237
$
-
$
-
$
1,925,405
Year-to-Date gross
write-offs
$
1,733
$
4,842
$
5,373
$
3,281
$
694
$
1,052
$
-
$
-
$
16,975
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,188,093
$
-
$
1,188,093
Substandard
-
-
-
-
-
-
29,960
-
29,960
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,218,053
$
-
$
1,218,053
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
69,731
$
-
$
69,731
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
2,040
$
-
$
2,040
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
-
$
2,040
$
-
$
2,040
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
380
$
-
$
380
Personal
Pass
$
722,949
$
499,604
$
262,011
$
101,155
$
29,078
$
91,004
$
-
$
23,802
$
1,729,603
Substandard
924
4,965
3,561
1,221
271
8,205
-
1,626
20,773
Loss
-
-
-
1
-
-
-
-
1
Total Personal
$
723,873
$
504,569
$
265,572
$
102,377
$
29,349
$
99,209
$
-
$
25,428
$
1,750,377
Year-to-Date gross
write-offs
$
2,362
$
39,193
$
38,077
$
10,822
$
2,708
$
3,525
$
-
$
1,982
$
98,669
Auto
Pass
$
1,277,016
$
938,769
$
665,431
$
494,529
$
254,621
$
133,054
$
-
$
-
$
3,763,420
Substandard
7,239
16,876
13,579
10,775
6,377
5,131
-
-
59,977
Loss
14
15
-
2
-
9
-
-
40
Total Auto
$
1,284,269
$
955,660
$
679,010
$
505,306
$
260,998
$
138,194
$
-
$
-
$
3,823,437
Year-to-Date gross
write-offs
$
11,229
$
36,992
$
20,486
$
9,997
$
4,965
$
1,731
$
-
$
-
$
85,400
Other consumer
Pass
$
28,543
$
29,585
$
20,021
$
10,129
$
4,588
$
3,364
$
62,678
$
-
$
158,908
Substandard
-
228
44
-
29
57
413
-
771
Loss
-
-
-
550
-
-
-
-
550
Total Other
consumer
$
28,543
$
29,813
$
20,065
$
10,679
$
4,617
$
3,421
$
63,091
$
-
$
160,229
Year-to-Date gross
write-offs
$
29
$
213
$
130
$
96
$
128
$
2,205
$
-
$
-
$
2,801
Total BPPR
$
5,286,562
$
4,225,323
$
3,629,863
$
2,580,268
$
1,307,356
$
6,014,384
$
3,109,837
$
25,428
$
26,179,021
180
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular U.S.
Commercial:
Commercial multi-family
Pass
$
139,370
$
148,423
$
491,750
$
313,610
$
207,327
$
560,891
$
5,700
$
-
$
1,867,071
Watch
-
10,974
27,441
26,679
10,668
114,419
-
-
190,181
Special Mention
-
-
8,004
-
-
-
-
-
8,004
Substandard
-
-
2,761
-
-
23,602
-
-
26,363
Total commercial
multi-family
$
139,370
$
159,397
$
529,956
$
340,289
$
217,995
$
698,912
$
5,700
$
-
$
2,091,619
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
441
$
-
$
-
$
441
Commercial real estate non-owner occupied
Pass
$
178,355
$
368,597
$
480,055
$
167,839
$
193,309
$
456,689
$
8,588
$
-
$
1,853,432
Watch
-
12,932
17,125
13,138
45,864
64,390
300
-
153,749
Special Mention
-
-
-
-
-
594
-
-
594
Substandard
-
-
2,657
2,741
5,758
97,801
-
-
108,957
Total commercial
real estate non-
owner occupied
$
178,355
$
381,529
$
499,837
$
183,718
$
244,931
$
619,474
$
8,888
$
-
$
2,116,732
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
54
$
-
$
-
$
54
Commercial real estate owner occupied
Pass
$
304,778
$
257,586
$
244,811
$
279,419
$
35,459
$
246,158
$
7,669
$
-
$
1,375,880
Watch
-
25,614
13,531
32,132
16,301
54,877
-
-
142,455
Special Mention
-
488
69,505
34,428
27,406
10,825
-
-
142,652
Substandard
-
-
17,101
2,596
3,678
97,473
-
-
120,848
Total commercial
real estate owner
occupied
$
304,778
$
283,688
$
344,948
$
348,575
$
82,844
$
409,333
$
7,669
$
-
$
1,781,835
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
154
$
-
$
-
$
154
181
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular U.S.
Commercial and industrial
Pass
$
260,479
$
275,971
$
318,564
$
322,697
$
268,591
$
506,973
$
273,222
$
-
$
2,226,497
Watch
-
11,420
48,953
28,138
9,521
35,498
15,050
-
148,580
Special Mention
58
-
5,270
568
-
255
3,835
-
9,986
Substandard
2,276
-
-
195
45
1,610
5,479
-
9,605
Total commercial
and industrial
$
262,813
$
287,391
$
372,787
$
351,598
$
278,157
$
544,336
$
297,586
$
-
$
2,394,668
Year-to-Date gross
write-offs
$
1,103
$
1,571
$
190
$
300
$
211
$
480
$
123
$
-
$
3,978
Construction
Pass
$
259,194
$
512,428
$
155,268
$
-
$
-
$
765
$
-
$
-
$
927,655
Watch
-
1,541
36,264
-
-
7,172
24,691
-
69,668
Special Mention
-
4,897
6,367
-
-
-
-
-
11,264
Substandard
-
-
8,104
-
-
25,473
9,338
-
42,915
Total construction
$
259,194
$
518,866
$
206,003
$
-
$
-
$
33,410
$
34,029
$
-
$
1,051,502
Mortgage
Pass
$
98,345
$
88,788
$
215,600
$
272,908
$
216,025
$
382,746
$
-
$
-
$
1,274,412
Substandard
-
644
106
860
-
28,280
-
-
29,890
Total mortgage
$
98,345
$
89,432
$
215,706
$
273,768
$
216,025
$
411,026
$
-
$
-
$
1,304,302
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
18
$
-
$
-
$
18
182
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular U.S.
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
26
$
-
$
26
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
26
$
-
$
26
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
5,914
$
50,533
$
11,691
$
68,138
Substandard
-
-
-
-
-
1,657
15
700
2,372
Loss
-
-
-
-
-
122
-
899
1,021
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
7,693
$
50,548
$
13,290
$
71,531
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
53
$
-
$
53
Personal
Pass
$
28,083
$
23,084
$
41,182
$
8,618
$
651
$
1,507
$
-
$
-
$
103,125
Substandard
157
399
627
134
7
302
-
-
1,626
Loss
53
10
-
5
-
48
-
-
116
Total Personal
$
28,293
$
23,493
$
41,809
$
8,757
$
658
$
1,857
$
-
$
-
$
104,867
Year-to-Date gross
write-offs
$
802
$
4,536
$
10,869
$
2,458
$
231
$
307
$
-
$
-
$
19,203
Other consumer
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
11,537
$
-
$
11,537
Substandard
-
-
-
-
-
-
12
-
12
Total Other
consumer
$
-
$
-
$
-
$
-
$
-
$
-
$
11,549
$
-
$
11,549
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
101
$
-
$
101
Total Popular U.S.
$
1,271,148
$
1,743,796
$
2,211,046
$
1,506,705
$
1,040,610
$
2,726,041
$
415,995
$
13,290
$
10,928,631
183
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular, Inc.
Commercial:
Commercial multi-family
Pass
$
189,754
$
185,634
$
627,843
$
334,549
$
227,461
$
594,900
$
5,805
$
-
$
2,165,946
Watch
-
10,974
27,982
26,679
10,668
116,020
-
-
192,323
Special Mention
-
-
8,004
-
-
3,161
-
-
11,165
Substandard
-
-
2,761
-
-
27,425
-
-
30,186
Total commercial
multi-family
$
189,754
$
196,608
$
666,590
$
361,228
$
238,129
$
741,506
$
5,805
$
-
$
2,399,620
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
441
$
-
$
-
$
441
Commercial real estate non-owner occupied
Pass
$
597,555
$
691,595
$
1,308,459
$
715,513
$
528,369
$
981,777
$
14,747
$
-
$
4,838,015
Watch
26,097
15,228
17,779
18,487
74,696
115,314
372
-
267,973
Special Mention
7,018
41,274
156
406
-
46,984
-
-
95,838
Substandard
-
1,002
2,767
29,171
7,712
120,757
-
-
161,409
Total commercial
real estate non-
owner occupied
$
630,670
$
749,099
$
1,329,161
$
763,577
$
610,777
$
1,264,832
$
15,119
$
-
$
5,363,235
Year-to-Date gross
write-offs
$
-
$
-
$
69
$
-
$
-
$
113
$
-
$
-
$
182
Commercial real estate owner occupied
Pass
$
436,227
$
336,695
$
338,819
$
493,939
$
81,665
$
555,949
$
14,883
$
-
$
2,258,177
Watch
14,002
28,251
78,266
39,357
21,191
140,457
3
-
321,527
Special Mention
-
1,697
88,941
53,716
27,406
26,697
1,499
-
199,956
Substandard
455
1,651
37,629
6,468
144,257
174,571
13,021
-
378,052
Doubtful
-
-
-
-
-
34
-
-
34
Total commercial
real estate owner
occupied
$
450,684
$
368,294
$
543,655
$
593,480
$
274,519
$
897,708
$
29,406
$
-
$
3,157,746
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
2,947
$
-
$
-
$
2,947
Commercial and industrial
Pass
$
1,050,752
$
1,186,326
$
921,018
$
626,924
$
334,986
$
838,466
$
1,768,712
$
-
$
6,727,184
Watch
124,987
36,355
98,450
34,532
12,986
67,107
150,861
-
525,278
Special Mention
5,577
7,316
7,165
158,195
53
30,615
32,006
-
240,927
Substandard
8,339
30,496
37,558
4,398
14,821
24,745
127,754
-
248,111
Doubtful
-
-
-
-
-
11
-
-
11
Loss
-
-
-
-
-
-
51
-
51
Total commercial
and industrial
$
1,189,655
$
1,260,493
$
1,064,191
$
824,049
$
362,846
$
960,944
$
2,079,384
$
-
$
7,741,562
Year-to-Date gross
write-offs
$
2,202
$
2,278
$
521
$
422
$
3,049
$
12,321
$
7,740
$
-
$
28,533
184
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular, Inc.
Construction
Pass
$
322,301
$
565,498
$
188,691
$
14,908
$
9,483
$
1,776
$
16,782
$
-
$
1,119,439
Watch
-
15,413
36,264
-
-
7,172
24,691
-
83,540
Special Mention
-
4,897
6,367
6,058
-
-
-
-
17,322
Substandard
-
-
8,104
576
-
25,473
9,338
-
43,491
Total construction
$
322,301
$
585,808
$
239,426
$
21,542
$
9,483
$
34,421
$
50,811
$
-
$
1,263,792
Mortgage
Pass
$
977,420
$
813,171
$
624,733
$
674,021
$
450,511
$
4,467,834
$
-
$
-
$
8,007,690
Substandard
-
2,605
1,437
2,535
347
99,569
-
-
106,493
Total mortgage
$
977,420
$
815,776
$
626,170
$
676,556
$
450,858
$
4,567,403
$
-
$
-
$
8,114,183
Year-to-Date gross
write-offs
$
-
$
9
$
-
$
8
$
-
$
1,085
$
-
$
-
$
1,102
Leasing
Pass
$
731,053
$
477,226
$
362,426
$
217,537
$
104,812
$
22,762
$
-
$
-
$
1,915,816
Substandard
1,195
2,280
2,834
1,885
920
402
-
-
9,516
Loss
-
-
-
-
-
73
-
-
73
Total leasing
$
732,248
$
479,506
$
365,260
$
219,422
$
105,732
$
23,237
$
-
$
-
$
1,925,405
Year-to-Date gross
write-offs
$
1,733
$
4,842
$
5,373
$
3,281
$
694
$
1,052
$
-
$
-
$
16,975
185
December 31, 2024
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2024
2023
2022
2021
2020
Prior
Years
Total
Popular, Inc.
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,188,119
$
-
$
1,188,119
Substandard
-
-
-
-
-
-
29,960
-
29,960
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,218,079
$
-
$
1,218,079
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
69,731
$
-
$
69,731
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
5,914
$
52,573
$
11,691
$
70,178
Substandard
-
-
-
-
-
1,657
15
700
2,372
Loss
-
-
-
-
-
122
-
899
1,021
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
7,693
$
52,588
$
13,290
$
73,571
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
433
$
-
$
433
Personal
Pass
$
751,032
$
522,688
$
303,193
$
109,773
$
29,729
$
92,511
$
-
$
23,802
$
1,832,728
Substandard
1,081
5,364
4,188
1,355
278
8,507
-
1,626
22,399
Loss
53
10
-
6
-
48
-
-
117
Total Personal
$
752,166
$
528,062
$
307,381
$
111,134
$
30,007
$
101,066
$
-
$
25,428
$
1,855,244
Year-to-Date gross
write-offs
$
3,164
$
43,729
$
48,946
$
13,280
$
2,939
$
3,832
$
-
$
1,982
$
117,872
Auto
Pass
$
1,277,016
$
938,769
$
665,431
$
494,529
$
254,621
$
133,054
$
-
$
-
$
3,763,420
Substandard
7,239
16,876
13,579
10,775
6,377
5,131
-
-
59,977
Loss
14
15
-
2
-
9
-
-
40
Total Auto
$
1,284,269
$
955,660
$
679,010
$
505,306
$
260,998
$
138,194
$
-
$
-
$
3,823,437
Year-to-Date gross
write-offs
$
11,229
$
36,992
$
20,486
$
9,997
$
4,965
$
1,731
$
-
$
-
$
85,400
Other consumer
Pass
$
28,543
$
29,585
$
20,021
$
10,129
$
4,588
$
3,364
$
74,215
$
-
$
170,445
Substandard
-
228
44
-
29
57
425
-
783
Loss
-
-
-
550
-
-
-
-
550
Total Other
consumer
$
28,543
$
29,813
$
20,065
$
10,679
$
4,617
$
3,421
$
74,640
$
-
$
171,778
Year-to-Date gross
write-offs
$
29
$
213
$
130
$
96
$
128
$
2,205
$
101
$
-
$
2,902
Total Popular Inc.
$
6,557,710
$
5,969,119
$
5,840,909
$
4,086,973
$
2,347,966
$
8,740,425
$
3,525,832
$
38,718
$
37,107,652
186
Note 9 Mortgage banking activities
Income
from
mortgage
banking
activities
includes
mortgage
servicing
fees
earned
in
connection
with
administering
residential
mortgage
loans
and
valuation
adjustments
on
mortgage
servicing
rights.
It
also
includes
gain
on
sales
and
securitizations
of
residential mortgage
loans, losses
on repurchased
loans, including
interest advances,
and trading
gains and
losses on
derivative
contracts
used
to
hedge
the
Corporations
securitization
activities.
In
addition,
fair
value
valuation
adjustments
to
residential
mortgage loans held for sale, if any, are recorded as part of the mortgage
banking activities.
The following table presents the components of mortgage
banking activities:
Years ended December
31,
(In thousands)
2025
2024
2023
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees
$
27,629
$
30,227
$
32,981
Mortgage servicing rights fair value adjustments
(12,880)
(11,370)
(11,589)
Total mortgage
servicing fees, net of fair value adjustments
14,749
18,857
21,392
Net gain (loss) on sale of loans, including valuation on loans
held for sale [1]
608
317
(88)
Trading account profit:
Unrealized (loss) gains on outstanding derivative positions
(89)
185
(138)
Realized (loss) gains on closed derivative positions
(184)
(150)
614
Total trading account
(loss) profit
(273)
35
476
Losses on repurchased loans, including interest advances
(128)
(150)
(283)
Total mortgage
banking activities
$
14,956
$
19,059
$
21,497
187
Note 10 Transfers of financial assets and mortgage servicing assets
The
Corporation
typically
transfers
conforming
residential
mortgage
loans
in
conjunction
with
GNMA,
FNMA
and
FHLMC
securitization transactions
whereby the
loans are
exchanged for
cash or
securities and
servicing rights.
As seller,
the Corporation
has made
certain representations
and warranties
with respect
to the
originally transferred
loans and,
in the
past,
has sold
certain
loans
with
credit
recourse
to
a
government-sponsored
entity,
namely
FNMA.
Refer
to
Note
22
to
the
Consolidated
Financial
Statements for a description of such arrangements.
No
liabilities were incurred
as a result
of these securitizations
during the years
ended December 31, 2025
and 2024 because
they
did not contain any credit recourse arrangements.
The
following tables
present the
initial fair
value of
the
assets obtained
as
proceeds from
residential mortgage
loans securitized
during the years ended December 31, 2025 and
2024:
Proceeds Obtained During the Year
Ended December 31, 2025
(In thousands)
Level 1
Level 2
Level 3
Initial fair value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
-
$
5,690
$
-
$
5,690
Mortgage-backed securities - FNMA
-
8,560
-
8,560
Total trading account
debt securities
$
-
$
14,250
$
-
$
14,250
Total
$
-
$
14,250
$
-
$
14,250
Proceeds Obtained During the Year
Ended December 31, 2024
(In thousands)
Level 1
Level 2
Level 3
Initial fair value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
-
$
6,783
$
-
$
6,783
Mortgage-backed securities - FNMA
-
8,377
-
8,377
Total trading account
debt securities
$
-
$
15,160
$
-
$
15,160
Mortgage servicing rights
$
-
$
-
$
302
$
302
Total
$
-
$
15,160
$
302
$
15,462
During the
year ended
December 31,
2025, the
Corporation retained
servicing rights
on whole
loan sales
involving approximately
$
35
million in
principal balance outstanding
(2024 -
$
44
million), with net
realized gains
of approximately $
1.2
million (2024
- $
1.1
million). All loan sales performed during the
years ended December 31, 2025 and 2024 were without
credit recourse agreements.
The Corporation recognizes as assets the rights to service loans for others,
whether these rights are purchased or result from asset
transfers such as sales and securitizations. These mortgage
servicing rights (MSRs) are measured at fair
value.
The
Corporation
uses
a
discounted
cash
flow
model
to
estimate
the
fair
value
of
MSRs.
The
discounted
cash
flow
model
incorporates
assumptions
that
market
participants
would
use
in
estimating
future
net
servicing
income,
including
estimates
of
prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, prepayment and late
fees, among other considerations. Prepayment speeds are
adjusted for the loans characteristics and portfolio behavior.
The following table
presents the changes
in MSRs measured
using the fair
value method for
the years ended
December 31, 2025
and 2024.
188
Residential MSRs
(In thousands)
December 31, 2025
December 31, 2024
December 31, 2023
Fair value at beginning of period
$
108,103
118,109
$
128,350
Additions
1,133
1,364
2,097
Changes due to payments on loans
[1]
(8,590)
(8,739)
(9,934)
Reduction due to loan repurchases
(503)
(511)
(606)
Changes in fair value due to changes in valuation model inputs
or assumptions
(3,787)
(2,120)
(529)
Other
-
-
(1,269)
Fair value at end of period
[2]
$
96,356
108,103
$
118,109
[1] Represents changes due to collection / realization
of expected cash flows over time.
[2] At December 31, 2025, PB had MSRs amounting to $
1.8
million (December 31, 2024 - $
1.9
million).
During the
quarter ended June
30, 2023
the Corporation terminated
a servicing agreement,
in which it
acted as sub-servicer
for a
third
party,
for
a
portfolio
with
an
unpaid
principal
balance
of
approximately
$
260
million
and
a
related
MSR
fair
value
of
approximately $
2
million.
The transaction did not result in a material
effect on the financial results of the Corporation.
Residential mortgage loans serviced for others were
$
8.2
billion at December 31, 2025 (2024 - $
9.0
billion).
Net mortgage servicing fees, a component of mortgage banking activities in the Consolidated Statements of Operations, include the
changes from period to period in the fair value of the MSRs, including changes due to collection / realization of expected cash flows.
The banking
subsidiaries receive servicing
fees based
on a
percentage of the
outstanding loan balance.
These servicing fees
are
credited to
income when they
are collected. At
December 31,
2025, those weighted
average mortgage servicing
fees were
0.32
%
(2024
0.32
%). Under these
servicing agreements, the
banking subsidiaries do
not generally earn
significant prepayment penalty
fees on the underlying loans serviced.
The section
below includes
information on
assumptions used
in the
valuation model
of the
MSRs, originated
and purchased.
Key
economic assumptions used
in measuring the
servicing rights derived
from loans securitized
or sold by
the Corporation during
the
years ended December 31, 2025 and 2024 were
as follows:
Years ended
December 31, 2025
December 31, 2024
BPPR
PB
BPPR
PB
Prepayment speed
6.4
%
6.1
%
6.8
%
6.3
%
Weighted average life (in years)
10.2
8.8
9.4
8.7
Discount rate (annual rate)
9.8
%
12.6
%
9.7
%
12.8
%
Key
economic
assumptions
used
to
estimate
the
fair
value
of
MSRs
derived
from
sales
and
securitizations
of
mortgage
loans
performed
by
the
banking
subsidiaries
and
servicing
rights
purchased
from
other
financial
institutions,
and
the
sensitivity
to
immediate changes in those assumptions, were as follows
as of the end of the periods reported:
189
Originated MSRs
Purchased MSRs
December 31,
December 31,
December 31,
December 31,
(In thousands)
2025
2024
2025
2024
Fair value of servicing rights
$
29,784
$
34,019
$
66,572
$
74,084
Weighted average life (in years)
6.2
6.4
6.6
6.6
Weighted average prepayment speed (annual
rate)
5.2
%
5.8
%
6.3
%
6.9
%
Impact on fair value of 10% adverse change
$
(555)
$
(667)
$
(1,223)
$
(1,448)
Impact on fair value of 20% adverse change
$
(1,090)
$
(1,308)
$
(2,402)
$
(2,840)
Weighted average discount rate (annual rate)
10.6
%
11.4
%
10.8
%
10.8
%
Impact on fair value of 10% adverse change
$
(1,087)
$
(1,267)
$
(2,377)
$
(2,689)
Impact on fair value of 20% adverse change
$
(2,105)
$
(2,451)
$
(4,609)
$
(5,211)
The sensitivity analyses presented in the table above for servicing rights are hypothetical and should be used with caution. As the
figures indicate, changes in fair value based on a 10 and 20 percent variation in assumptions generally cannot be extrapolated
because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the sensitivity tables
included herein, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without
changing any other assumption. In reality, changes in one factor may result in changes in another (for example, increases in market
interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.
At December 31, 2025, the Corporation serviced $
429
million (2024 - $
495
million) in residential mortgage loans with credit recourse
to the Corporation, from which $
9
million was 60 days or more past due (2024 - $
12
million). Also refer to Note 22 for information on
changes in the Corporations liability of estimated losses
related to loans serviced with credit recourse.
During
the
year
ended
December 31,
2025,
the
Corporation
repurchased
approximately
$
39
million
of
mortgage
loans
from
its
GNMA servicing portfolio (2024 - $
38
million). The determination to repurchase these loans
was based on the economic benefits
of
the transaction, which results in a reduction of the servicing costs for
these severely delinquent loans, mostly related to principal and
interest advances. The
risk associated with
the loans is
reduced due to
their guaranteed nature.
The Corporation may place
these
loans under modification
programs offered by
FHA, VA
or United States
Department of Agriculture (USDA)
or other loss
mitigation
programs offered by the Corporation, and once brought back to
current status, these may be either retained in portfolio or re-sold
in
the secondary market.
190
Note 11 - Premises and equipment
Premises and equipment are stated at cost less accumulated
depreciation and amortization as follows:
(In thousands)
Useful life in years
2025
2024
Premises and equipment:
Land
$
89,519
$
89,519
Buildings
10
-
50
589,394
497,631
Equipment
2
-
10
380,683
365,716
Leasehold improvements
3
-
10
102,737
96,521
1,072,814
959,868
Less - Accumulated depreciation and amortization
630,842
606,187
Subtotal
441,972
353,681
Construction in progress
154,329
158,587
Premises and equipment, net
$
685,820
$
601,787
Depreciation and amortization
of premises and
equipment for the
year 2025 was
$
53.3
million (2024 -
$
57.1
million; 2023 -
$
58.5
million), of
which $
31.0
million (2024
- $
26.4
million; 2023
- $
26.5
million) was
charged to
occupancy expense
and $
22.3
million
(2024
-
$
30.7
million;
2023
-
$
32.0
million)
was charged
to
equipment, technology
and
software
and
other
operating expenses.
Occupancy expense of premises and equipment
is net of rental income
of $
13.9
million (2024 - $
11.5
million; 2023 - $
13.1
million).
For information related to the amortization expense
of finance leases, refer to Note 32 - Leases.
191
Note 12 Other real estate owned
The following
tables present
the activity
related to
Other Real
Estate Owned
(OREO), for
the years
ended December
31, 2025,
2024 and 2023.
For the year ended December 31, 2025
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
8,424
$
48,844
$
57,268
Write-downs in value
(970)
(2,356)
(3,326)
Additions
931
36,319
37,250
Sales
(3,474)
(45,069)
(48,543)
Other adjustments
-
(216)
(216)
Ending balance
$
4,911
$
37,522
$
42,433
For the year ended December 31, 2024
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
11,189
$
69,227
$
80,416
Write-downs in value
(1,104)
(1,749)
(2,853)
Additions
7,155
43,458
50,613
Sales
(8,816)
(61,845)
(70,661)
Other adjustments
-
(247)
(247)
Ending balance
$
8,424
$
48,844
$
57,268
For the year ended December 31, 2023
OREO
OREO
(In thousands)
Commercial/ Construction
Mortgage
Total
Balance at beginning of period
$
12,500
$
76,626
$
89,126
Write-downs in value
(607)
(2,179)
(2,786)
Additions
2,707
68,582
71,289
Sales
(3,428)
(73,548)
(76,976)
Other adjustments
17
(254)
(237)
Ending balance
$
11,189
$
69,227
$
80,416
192
Note 13 Other assets
The caption of other assets in the Consolidated
Statements of Financial Condition consists of the
following major categories:
(In thousands)
December 31, 2025
December 31, 2024
Net deferred tax assets (net of valuation allowance)
$
814,265
$
926,329
Investments under the equity method
261,687
251,537
Prepaid taxes
42,762
42,909
Other prepaid expenses
25,542
28,376
Capitalized software costs
183,381
136,442
Derivative assets
27,913
25,975
Trades receivable from brokers and counterparties
245
588
Receivables from investments maturities
-
14,600
Principal, interest and escrow servicing advances
30,252
43,793
Guaranteed mortgage loan claims receivable
9,184
17,226
Operating ROU assets
95,234
93,389
Finance ROU assets
23,686
19,174
Assets for pension benefit
38,157
33,233
Others
153,669
164,188
Total other assets
$
1,705,977
$
1,797,759
The Corporation regularly incurs in
capitalizable costs associated with software development or
licensing which are recorded within
the Other Assets line
item in the accompanying Consolidated Statements
of Financial Condition.
In addition, the Corporation incurs
costs
associated
with
hosting
arrangements
that
are
service
contracts
that
are
also
recorded
within
Other
Assets.
The
hosting
arrangements can
include capitalizable
implementation costs
that are
amortized during
the term
of the
hosting arrangement.
The
following
table
summarizes
the
composition
of
acquired
or
developed
software
costs
as
well
as
costs
related
to
hosting
arrangements:
Gross Carrying
Accumulated
Net Carrying
(In thousands)
Amount
Amortization
Value
December 31, 2025
Software development costs
$
103,628
$
34,170
$
69,458
Software license costs
46,538
24,475
22,063
Cloud computing arrangements
106,410
14,550
91,860
Total Capitalized
software costs [1] [2]
$
256,576
$
73,195
$
183,381
December 31, 2024
Software development costs
$
79,233
$
23,057
$
56,176
Software license costs
42,234
21,459
20,775
Cloud computing arrangements
65,797
6,306
59,491
Total Capitalized
software costs [1] [2]
$
187,264
$
50,822
$
136,442
[1]
Software intangible assets are presented as part of Other
Assets in the Consolidated Statements of Financial Condition.
[2]
The tables above exclude assets that have been fully
amortized.
Total
amortization expense for
all capitalized software
and hosting arrangement
cost, reflected as
part of
technology and software
expenses in the consolidated statement of operations,
is as follows:
193
Year ended December
31,
(In thousands)
2025
2024
2023
Software development and license costs
$
89,752
$
77,731
$
66,233
Cloud computing arrangements
8,566
4,398
3,324
Total amortization
expense
$
98,318
$
82,129
$
69,557
194
Note 14 Goodwill and other intangible assets
Goodwill
The following
table shows
the changes
in the
carrying amount
of goodwill
for the
years ended
December 31,
2025 and
2024, by
reportable segments (refer to Note 36 for the definition
of the Corporations reportable segments):
December 31, 2025
Balance at
Goodwill
Balance at
(In thousands)
January 1, 2025
impairment
December 31, 2025
Banco Popular de Puerto Rico
$
434,909
$
-
$
434,909
Popular U.S.
368,045
(13,000)
355,045
Total Popular,
Inc.
$
802,954
$
(13,000)
$
789,954
December 31, 2024
Balance at
Write down from
Balance at
(In thousands)
January 1, 2024
a disposal group [1]
December 31, 2024
Banco Popular de Puerto Rico
$
436,383
$
(1,474)
$
434,909
Popular U.S.
368,045
-
368,045
Total Popular,
Inc.
$
804,428
$
(1,474)
$
802,954
[1] During the year ended December 31, 2024, the Corporation
recognized a write-down to goodwill due to the sale
of its daily-rental business.
Other intangible assets
At
December
31,
2025,
the
Corporation
had
intangible
assets
subject
to
amortization
amounting
to
$
4.3
million
(December
31,
2024- $
6.1
million), which will be amortized through
the year 2029.
Results of the Annual Goodwill Impairment Test
The
Corporation
evaluates
goodwill
for
impairment
at
least
annually
and
on
a
more
frequent
basis
if
events
or
circumstances
indicate impairment could have taken place. Such events could include, among others, a significant adverse change in the business
climate, an
adverse action
by a
regulator,
an unanticipated
change in
the competitive
environment and
a decision
to change
the
operations or dispose of a reporting unit.
Management
monitors
events
or
changes
in
circumstances
between
annual
tests
to
determine
if
these
events
or
changes
in
circumstances would
more likely
than not
reduce the
fair value
of its
reporting units
below their
carrying amounts.
The reporting
units evaluated are one level below the business
segments and correspond to the legal entities within
each reportable segment.
When
evaluating
goodwill
for
impairment,
the
Corporation
may
decide
to
first
perform
a
qualitative
assessment,
or
Step
Zero
impairment test, to determine whether it is more likely than not that impairment has occurred. The qualitative assessment includes a
review of
macroeconomic conditions,
industry and
market considerations,
internal cost
factors, and
our own
overall financial
and
share
price performance,
among other
factors. If
it
is
determined that
it
is more
likely than
not that
the carrying
amounts
of
our
reporting units exceed their fair value,
the Corporation will perform a quantitative
assessment and calculate the estimated fair value
of
the
respective
reporting
unit.
If
the
carrying
amount
of
a
reporting
units
goodwill
exceeds
the
fair
value
of
that
goodwill,
an
impairment loss is recognized.
To
assess
a
reporting units
fair value,
the
Corporation generally
uses
a
combination of
methods
such
as
discounted cash
flow
analysis and market
multiples.
The financial projections used
in the discounted
cash flow (DCF)
valuation analysis are
based on
the
most
recent
(as
of
the
valuation
date)
projections
presented
to
the
Corporations
Asset
/
Liability
Management
Committee
(ALCO). These
projections reflect
managements
expectations for
the
reporting units
financial
prospects considering
economic
and industry conditions. The Corporation evaluates the results obtained under the valuation methodology to identify and understand
195
the
key
value
drivers,
to
ascertain
that
the
results
obtained are
reasonable and
appropriate under
the
circumstances. Elements
considered include current market and
economic conditions, developments in specific lines of
business, and any particular features
of the individual reporting units.
The Corporation
completed its
annual goodwill
impairment evaluation during
the third
quarter of
2025, using
July 31,
2025 as
the
evaluation date.
Through a
qualitative analysis,
Step
Zero, the
Corporation determined
that for
all
reporting units,
except for
the
Popular Equipment
Finance (PEF)
reporting unit,
it is
more-likely-than-not that
the fair
value exceeded
the carrying
value. As
a
result, the Corporation performed a quantitative test
to assess PEFs goodwill impairment.
The results
of the
PEF annual
goodwill impairment
test as
of July
31, 2025,
indicated that
the estimated
fair value
was below
its
carrying amount. Accordingly, the Corporation recognized a goodwill impairment
charge of $
13.0
million, which was mainly driven by
lower projected earnings for the forecasted period,
primarily due to lower lending activity.
Changes to the Annual Goodwill Impairment Test Date
The Corporation has historically evaluated its goodwill for impairment annually as of July 31 or more frequently.
After completing the
annual test during
the third quarter
of 2025, the
Corporation changed the
date of its
annual assessment of
goodwill to October
1st
for all
reporting units.
The change
in testing
date for
goodwill is
a change
in accounting
principle, which
management believes
is
preferable as
the new
date of
the assessment
will create
a more
efficient and
timely process surrounding
the impairment
tests by
better aligning
with its
annual planning and
budgeting process.
The Corporation has
determined that this
change does
not have
a
material effect on its financial statements considering the requirements to assess goodwill impairment upon certain triggering events
in current and prior periods and its internal control over financial reporting.
The Corporation has determined that it is impracticable to
objectively determine
projected cash
flows and
related valuation
estimates that
would have
been used
as of
each October
1st of
prior reporting
periods without
the use
of hindsight.
As such,
the Corporation
prospectively applied
the change
in annual
goodwill
impairment testing date from October 1, 2025.
As of October 1, 2025, management performed a qualitative impairment assessment and determined that for the Puerto Rico based
reporting units, it was more-likely-than-not that
the fair value exceeded their carrying
value, resulting in no impairment.
For the U.S.
based subsidiaries, Popular Bank and PEF, a quantitative goodwill impairment test was performed,
resulting in no impairment.
The following tables present the gross amount
of goodwill and accumulated impairment losses
by reportable segments.
December 31, 2025
Balance at
Balance at
December 31,
Accumulated
December 31,
2025
impairment
2025
(In thousands)
(gross amounts)
losses
(net amounts)
Banco Popular de Puerto Rico
$
438,710
$
3,801
$
434,909
Popular U.S.
564,456
209,411
355,045
Total Popular,
Inc.
$
1,003,166
$
213,212
$
789,954
December 31, 2024
Balance at
Balance at
December 31,
Accumulated
December 31,
2024
impairment
2024
(In thousands)
(gross amounts)
losses
(net amounts)
Banco Popular de Puerto Rico
$
438,710
$
3,801
$
434,909
Popular U.S.
564,456
196,411
368,045
Total Popular,
Inc.
$
1,003,166
$
200,212
$
802,954
196
Note 15 Deposits
Total deposits as of the end of the periods presented consisted of:
(In thousands)
December 31, 2025
December 31, 2024
Savings accounts
$
14,368,599
$
14,224,271
NOW, money market and other interest
-bearing demand deposits
27,037,924
26,507,637
Total savings, NOW,
money market and other interest-bearing demand deposits
41,406,523
40,731,908
Certificates of deposit:
Under $250,000
5,564,615
5,383,331
$250,000 and over
3,914,746
3,629,551
Total certificates
of deposit
9,479,361
9,012,882
Total interest-bearing
deposits
$
50,885,884
$
49,744,790
Non- interest-bearing deposits
$
15,304,209
$
15,139,555
Total deposits
$
66,190,093
$
64,884,345
A summary of certificates of deposits by maturity at
December 31, 2025 follows:
(In thousands)
2026
$
6,716,134
2027
1,100,623
2028
709,395
2029
423,171
2030
434,716
2031 and thereafter
95,322
Total certificates of
deposit
$
9,479,361
At December 31, 2025, the Corporation had brokered
deposits amounting to $
1.0
billion (December 31, 2024 - $
1.6
billion).
The aggregate amount of overdrafts
in demand deposit accounts that
were reclassified to loans was $
10.7
million at December 31,
2025 (December 31, 2024 - $
10.4
million).
At December
31, 2025,
Puerto Rico
government deposits
amounted to
$
19.4
billion. Puerto
Rico government
deposits are
mostly
interest
bearing
accounts,
which
are
indexed
to
short-term
market
rates
and
fluctuate
in
cost
with
changes
in
those
rates,
in
accordance with contractual terms.
197
Note 16 Borrowings
Assets sold under agreements to repurchase
Assets sold under agreements to repurchase amounted
to $
39
million at December 31, 2025 and $
55
million at December 31, 2024.
The Corporations
repurchase transactions are
overcollateralized with the
securities detailed in
the table
below.
The Corporations
repurchase
agreements
have
a
right
of
set-off
with
the
respective
counterparty
under
the
supplemental
terms
of
the
master
repurchase agreements.
In an
event of
default,
each party
has a
right of
set-off
against the
other party
for amounts
owed in
the
related
agreement
and
any
other
amount
or
obligation
owed
in
respect
of
any
other
agreement
or
transaction
between
them.
Pursuant to the
Corporations accounting policy,
the repurchase agreements
are not offset
with other repurchase
agreements held
with the same counterparty.
The following table
presents information related to
the Corporations repurchase
transactions accounted for as
secured borrowings
that
are
collateralized
with
debt
securities
available-for-sale,
debt
securities
held-to-maturity,
and
other
assets
held-for-trading
purposes or
which have
been obtained
under agreements
to resell.
It is
the Corporations
policy to
maintain effective
control over
assets sold under agreements to repurchase; accordingly, such
securities continue to be carried on the Consolidated Statements of
Financial Condition.
Repurchase agreements accounted for as secured borrowings
December 31, 2025
December 31, 2024
Repurchase liability
Repurchase liability
Repurchase
weighted average
Repurchase
weighted average
(Dollars in thousands)
liability
interest rate
liability
interest rate
U.S. Treasury securities
Within 30 days
$
29,356
4.11
%
$
22,591
5.04
%
After 30 to 90 days
9,645
4.15
13,813
4.71
Total U.S. Treasury
securities
39,001
4.12
36,404
4.92
Mortgage-backed securities
Within 30 days
-
-
4,924
4.90
After 30 to 90 days
-
-
13,505
4.88
Total mortgage-backed
securities
-
-
18,429
4.89
Total
$
39,001
4.12
%
$
54,833
4.91
%
Repurchase agreements in this portfolio are generally short-term, often overnight.
As such, our risk is very
limited.
We manage the
liquidity risks arising from secured
funding by sourcing funding globally from
a diverse group of counterparties, providing
a range of
securities collateral and pursuing longer durations,
when appropriate.
198
(Dollars in thousands)
2025
2024
Maximum aggregate balance outstanding at any month-end
$
107,572
$
105,684
Average monthly aggregate balance outstanding
$
50,401
$
76,156
Weighted average interest rate:
For the year
4.27
%
5.54
%
At December 31
4.16
%
4.99
%
Other short-term borrowings
At December 31, 2025, other short-term borrowings
consisted of $
650
million in FHLB Advances, compared to $
225
million in FHLB
Advances at December 31, 2024.
The following table presents additional information
related to the Corporations other short-term
borrowings at December 31, 2025 and December 31,
2024.
(Dollars in thousands)
2025
2024
Maximum aggregate balance outstanding at any month-end
$
650,000
$
225,000
Average monthly aggregate balance outstanding
$
374,728
$
8,402
Weighted average interest rate:
For the year
4.16
%
5.40
%
At December 31
3.98
%
4.67
%
199
Notes Payable
The following table presents the composition of notes
payable at December 31, 2025 and December
31, 2024.
(In thousands)
December 31, 2025
December 31, 2024
Advances with the FHLB with maturities ranging from
2026
through
2029
paying interest at monthly
fixed rates ranging from
0.69
% to
4.17
%
(2024 -
0.54
% to
5.26
%)
$
164,620
$
302,722
Unsecured senior debt securities maturing on
2028
paying interest
semiannually
at a fixed rate of
7.25
% (2024-
7.25
%), net of debt issuance costs of $
3,442
(2024 - $
4,082
)
[1]
396,558
395,198
Junior subordinated deferrable interest debentures (related to
trust preferred securities) maturing on
2034
with fixed interest rates ranging from
6.125
% to
6.564
% (2024 -
6.125
% to
6.564
%), net of debt
issuance costs of $
234
(2024 - $
261
)
198,399
198,373
Total notes payable
$
759,577
$
896,293
[1] On March 13, 2023, the Corporation issued $
400
million aggregate principal amount of
7.25
% Senior Notes due
2028
(the 2028 Notes) in an
underwritten public offering. The Corporation used a
portion of the net proceeds of the 2028 Notes offering
to redeem, on August 14, 2023, the
outstanding $
300
million aggregate principal amount of its
6.125
% Senior Notes which were due on September
2023
. The redemption price was
equal to
100
% of the principal amount plus accrued and unpaid
interest through the redemption date.
A breakdown of borrowings by contractual maturities
at December 31, 2025 is included in
the table below.
Assets sold under
Short-term
(In thousands)
agreements to
repurchase
borrowings
Notes payable
Total
2026
$
39,001
650,000
74,500
763,501
2027
-
-
6,112
6,112
2028
-
-
440,908
440,908
2029
-
-
39,657
39,657
Later years
-
-
198,400
198,400
Total borrowings
$
39,001
$
650,000
$
759,577
$
1,448,578
At
December
31,
2025
and
December
31,
2024,
the
Corporation had
FHLB
borrowing
facilities
whereby
the
Corporation could
borrow up to
$
4.8
billion and $
4.7
billion, respectively,
of which $
0.8
billion and $
0.5
billion, respectively,
were used. In
addition, at
December 31, 2024, the Corporation had
placed $
0.3
billion of the available FHLB
credit facility as collateral for municipal
letters of
credit to secure deposits. The FHLB borrowing facilities are collateralized with securities and loans held-in-portfolio,
and do not have
restrictive covenants or callable features.
Also, at
December 31, 2025,
the Corporation had
borrowing facilities at
the discount window
of the Federal
Reserve Bank of
New
York
amounting to $
12.1
billion (December 31,
2024 - $
7.0
billion), which remained
unused at December
31, 2025 and
December
31, 2024.
The facilities are a collateralized source of credit
that is highly dependable even under difficult market
conditions.
200
Note 17 Trust preferred securities
Statutory trusts established by the Corporation (Popular North America
Capital Trust I and Popular
Capital Trust II) had issued
trust
preferred
securities
(also
referred
to
as
capital
securities)
to
the
public.
The
proceeds
from
such
issuances,
together
with
the
proceeds of the related issuances of common securities of the trusts (the common securities), were used by the trusts to purchase
junior subordinated deferrable interest debentures (the
junior subordinated debentures) issued by the
Corporation.
The sole
assets of
the trusts
consisted of
the junior
subordinated debentures
of the
Corporation and
the related
accrued interest
receivable. These trusts are not consolidated
by the Corporation pursuant to accounting
principles generally accepted in the United
States of America.
The junior subordinated
debentures are included
by the Corporation
as notes payable
in the Consolidated
Statements of Financial
Condition, while
the common
securities issued
by the
issuer trusts
are included
as debt
securities held-to-maturity.
The common
securities of each trust are wholly-owned, or indirectly
wholly-owned, by the Corporation.
The following table presents financial data pertaining
to the different trusts at December 31, 2025 and 2024.
(Dollars in thousands)
December 31, 2025 and 2024
Popular
North America
Popular
Issuer
Capital Trust I
Capital Trust Il
Capital securities
$
91,651
$
101,023
Distribution rate
6.564
%
6.125
%
Common securities
$
2,835
$
3,125
Junior subordinated debentures aggregate liquidation amount
$
94,486
$
104,148
Stated maturity date
September 2034
December 2034
Reference notes
[1],[3],[5]
[2],[4],[5]
[1] Statutory business trust that is wholly-owned by
PNA and indirectly wholly-owned by the Corporation.
[2] Statutory business trust that is wholly-owned by
the Corporation.
[3] The obligation of PNA under the junior subordinated
debenture and its guarantees of the capital securities under
the trust is fully and unconditionally
guaranteed on a subordinated basis by the Corporation
to the extent set forth in the guarantee agreement.
[4] These capital securities are fully and unconditionally guaranteed
on a subordinated basis by the Corporation to the extent
set forth in the guarantee
agreement.
[5] The Corporation has the right, subject to any required
prior approval from the Federal Reserve, to redeem
after certain dates or upon the
occurrence of certain events mentioned below,
the junior subordinated debentures at a redemption
price equal to 100% of the principal amount, plus
accrued and unpaid interest to the date of redemption. The
maturity of the junior subordinated debentures may
be shortened at the option of the
Corporation prior to their stated maturity dates (i) on or
after the stated optional redemption dates stipulated in
the agreements, in whole at any time or
in part from time to time, or (ii) in whole, but not in part,
at any time within 90 days following the occurrence
and during the continuation of a tax event,
an investment company event or a capital treatment event
as set forth in the indentures relating to the capital securities,
in each case subject to
regulatory approval.
At December
31, 2025
and 2024,
the Corporations
$
193
million in
trust preferred
securities outstanding
do not
qualify for
Tier
1
capital treatment but qualify for Tier 2 capital treatment.
201
Note 18 Other liabilities
The caption of other liabilities in the Consolidated
Statements of Financial Condition consists of the following
major categories:
(In thousands)
December 31, 2025
December 31, 2024
Accrued expenses
$
321,203
$
334,145
Accrued interest payable
66,240
60,723
Accounts payable
78,998
91,218
Dividends payable
49,596
49,546
Trades payable
595,911
495,139
Liability for GNMA loans sold with an option to repurchase
8,734
9,108
Reserves for loan indemnifications
2,704
2,779
Reserve for operational losses
20,723
29,465
Operating lease liabilities
104,958
103,198
Finance lease liabilities
27,389
23,141
Pension benefit obligation
4,739
5,816
Postretirement benefit obligation
103,974
99,172
Others
75,348
68,396
Total other liabilities
$
1,460,517
$
1,371,846
202
Note 19 Stockholders equity
The Corporations common stock ranks junior to all series of
preferred stock as to dividend rights and / or as
to rights on liquidation,
dissolution
or
winding
up
of
the
Corporation.
Dividends
on
preferred
stock
are
payable
if
declared.
The
Corporations
ability
to
declare or
pay dividends
on, or
purchase, redeem
or otherwise
acquire, its
common stock
is subject
to certain
restrictions in
the
event that the
Corporation fails to pay
or set aside
full dividends on the
preferred stock for the
latest dividend period. The
ability of
the Corporation to
pay dividends in
the future is
limited by regulatory
requirements, legal availability of
funds, recent and
projected
financial results, capital levels and liquidity of the Corporation, general
business conditions and other factors deemed relevant by the
Corporations Board of Directors.
The Corporations
common stock
trades on
the Nasdaq
Global Select
Market (the
Nasdaq) under
the symbol
BPOP.
The 2003
Series A Preferred Stock are not listed on Nasdaq.
Preferred stocks
The Corporation has
30,000,000
shares of authorized
preferred stock that may
be issued in
one or more
series, and the
shares of
each series shall have such rights and preferences as shall be fixed by the Board of Directors when authorizing the issuance of that
particular series. The Corporations shares of preferred stock at
December 31, 2025 consisted of:
6.375
% non-cumulative monthly income preferred stock, 2003 Series
A,
no
par value, liquidation preference value of
$
25
per share. Holders on record of the 2003 Series A Preferred Stock are entitled to
receive, when, as and if declared by the
Board of
Directors of
the Corporation
or an
authorized committee thereof,
out of
funds legally
available, non-cumulative
cash dividends at the
annual rate per share
of
6.375
% of their
liquidation preference value, or
$
0.1328125
per share per
month.
These
shares
of
preferred
stock
are
perpetual,
nonconvertible,
have
no
preferential
rights
to
purchase
any
securities of the
Corporation and are redeemable solely
at the option of
the Corporation with the
consent of the Board
of
Governors
of
the
Federal
Reserve
System.
The
redemption
price
per
share
is
$
25.00
.
The
shares
of
2003
Series
A
Preferred Stock have no voting
rights, except for certain rights in
instances when the Corporation does not
pay dividends
for a defined period. These
shares are not subject to
any sinking fund requirement. Cash dividends declared and
paid on
the 2003
Series A
Preferred Stock
amounted to
$
1.4
million for
the years
ended December
31, 2025,
2024 and
2023.
Outstanding shares of 2003 Series A Preferred Stock amounted
to
885,726
at December 31, 2025, 2024 and 2023.
Common stock
Dividends
During
the
year
2025,
cash
dividends
of
$
2.90
(2024
-
$
2.56
;
2023
-
$
2.27
)
per
common
share
outstanding
were
declared
amounting to $
196.2
million (2024 - $
183.9
million; 2023 -
$
163.7
million) of which
$
49.6
million were payable to
stockholders of
common stock at December 31, 2025 (2024 -
$
49.5
million; 2023 - $
44.7
million).
Common stock repurchases
During the year ended December 31, 2025, the Corporation repurchased
4,660,124
(2024
2,256,420
) shares of common stock for
$
501.5
million (2024 -
$
217.3
million), at an
average price of
$
107.61
(2024 - $
96.32
) per common
share. At December
31, 2025,
$
281.2
million
remained
on
the
Corporations
common
stock
repurchase
authorization.
The
common
stock
repurchase
program
does
not
require
the
Corporation to
acquire
a
specific
dollar
amount
or
number
of
shares
and
may
be
modified,
suspended
or
terminated at any time without prior notice.
Statutory reserve
The Banking Act
of the Commonwealth of
Puerto Rico (the
Act) requires that
a minimum of 10% of BPPRs
retained earnings for
the year be transferred to a statutory
reserve account until such statutory reserve equals the total
of paid-in capital on common and
preferred stock.
Any losses
incurred by
a bank
must first
be charged
to retained
earnings and
then to
the reserve
fund. Amounts
transferred to
the reserve
fund may
not be
used to
pay dividends
without the
prior consent
of the
Puerto Rico
Commissioner of
Financial Institutions. The failure to maintain sufficient statutory reserves would preclude BPPR from paying dividends.
BPPR was in
compliance with the statutory reserve requirement in 2025, 2024 and 2023. BPPRs statutory reserve fund amounted to $
961
million
at December 31, 2025 (2024 -
$
961
million; 2023 - $
908
million). Banks that are well capitalized, have obtained
a rating of 1 or 2
in
the last examination performed by the Office of the Commissioner
or an applicable regulatory agency and have
accumulated at least
50% of
the paid
in capital
for their
common and
preferred stock
in their
reserve fund
may be
exempted from
the requirement
to
transfer such funds to
the statutory reserve fund.
During 2024, $
53
million was transferred to
the statutory reserve account
(2023 -
$
45
million).
203
Note 20 Regulatory capital requirements
The Corporation,
BPPR and
PB are
subject to
various regulatory
capital requirements
imposed by
the federal
banking agencies.
Failure to meet minimum capital requirements can
lead to certain mandatory and additional
discretionary actions by regulators that,
if undertaken,
could have
a direct
material effect
on the
Corporations consolidated financial
statements. Popular,
Inc., BPPR
and
PB are
subject to
Basel III
capital requirements,
including minimum
and well
capitalized regulatory
capital ratios
and compliance
with the standardized approach for determining
risk-weighted assets.
The Basel III Capital
Rules established a Common Equity
Tier I (CET1) capital
measure and related regulatory capital ratio
CET1
to risk-weighted assets.
The Basel III Capital Rules provide that a
depository institution will be deemed to be well capitalized if
it maintained a leverage ratio
of at
least
5
%, a
CET1 ratio of
at least
6.5
%, a Tier
1 risk-based capital
ratio of at
least
8
% and
a total risk-based
ratio of
at least
10
%.
Management
has
determined
that
at
December
31,
2025
and
2024,
the
Corporation
exceeded
all
capital
adequacy
requirements to which it is subject.
The Corporation
has
been designated
by the
Federal Reserve
Board as
a Financial
Holding Company
(FHC) and
is eligible
to
engage in certain financial activities permitted under
the Gramm-Leach-Bliley Act of 1999.
Pursuant to the adoption of the CECL accounting standard on
January 1, 2020, the Corporation elected to use a five-year
transition
period
option
as
permitted
in
the
final
interim
regulatory
capital
rules
effective
March
31,
2020.
The
five-year
transition
period
provision delays for two years the estimated impact of the adoption of the CECL accounting standard on regulatory capital, followed
by a three-year transition period
to phase out the
aggregate amount of the capital
benefit provided during the initial
two-year delay.
This period ended in 2025.
At December 31, 2025 and 2024, BPPR and
PB were well-capitalized under the regulatory
framework for prompt corrective action.
The following
tables present
the Corporations
risk-based capital
and leverage
ratios at
December 31,
2025 and
2024 under
the
Basel III regulatory guidance.
204
Actual
Capital adequacy minimum
requirement (including
conservation capital buffer) [1]
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
2025
Total Capital (to Risk-Weighted
Assets):
Corporation
$
7,196,067
17.50
%
$
4,317,994
10.50
%
BPPR
4,847,767
16.85
3,020,156
10.50
PB
1,727,818
14.60
1,242,517
10.50
Common Equity Tier I Capital (to Risk-Weighted
Assets):
Corporation
$
6,463,527
15.72
%
$
2,878,663
7.00
%
BPPR
4,483,826
15.59
2,013,437
7.00
PB
1,631,808
13.79
828,345
7.00
Tier I Capital (to Risk-Weighted Assets):
Corporation
$
6,485,670
15.77
%
$
3,495,519
8.50
%
BPPR
4,483,826
15.59
2,444,888
8.50
PB
1,631,808
13.79
1,005,847
8.50
Tier I Capital (to Average Assets):
Corporation
$
6,485,670
8.69
%
$
2,986,476
4.00
%
BPPR
4,483,826
7.52
2,385,171
4.00
PB
1,631,808
11.26
579,937
4.00
[1] The conservation capital buffer included for these
ratios is
2.5
%, except for the Tier I to Average
Asset ratio for which the buffer is not applicable
and therefore the capital adequacy minimum of
4
% is presented.
205
Actual
Capital adequacy minimum
requirement (including
conservation capital buffer)
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
2024
Total Capital (to Risk-Weighted
Assets):
Corporation
$
6,968,203
17.83
%
$
4,102,713
10.50
%
BPPR
4,734,198
17.04
2,917,399
10.50
PB
1,524,930
13.93
1,149,278
10.50
Common Equity Tier I Capital (to Risk-Weighted
Assets):
Corporation
$
6,262,792
16.03
%
$
2,735,142
7.00
%
BPPR
4,383,759
15.78
1,944,932
7.00
PB
1,461,436
13.35
766,186
7.00
Tier I Capital (to Risk-Weighted Assets):
Corporation
$
6,284,935
16.08
%
$
3,321,244
8.50
%
BPPR
4,383,759
15.78
2,361,704
8.50
PB
1,461,436
13.35
930,368
8.50
Tier I Capital (to Average Assets):
Corporation
$
6,284,935
8.66
%
$
2,903,739
4.00
%
BPPR
4,383,759
7.48
2,343,289
4.00
PB
1,461,436
10.64
549,618
4.00
The following table presents the minimum amounts
and ratios for the Corporations banks to be
categorized as well-capitalized.
2025
2024
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Total Capital (to Risk-Weighted
Assets):
BPPR
$
2,876,339
10.00
%
$
2,778,475
10.00
%
PB
1,183,349
10.00
1,094,551
10.00
Common Equity Tier I Capital (to Risk-Weighted
Assets):
BPPR
$
1,869,620
6.50
%
$
1,806,009
6.50
%
PB
769,177
6.50
711,458
6.50
Tier I Capital (to Risk-Weighted Assets):
BPPR
$
2,301,071
8.00
%
$
2,222,780
8.00
%
PB
946,679
8.00
875,641
8.00
Tier I Capital (to Average Assets):
BPPR
$
2,981,464
5.00
%
$
2,929,111
5.00
%
PB
724,922
5.00
687,022
5.00
206
Note 21 Other comprehensive income (loss)
The
following
table
presents
changes
in
accumulated
other
comprehensive
income
(loss)
by
component
for
the
years
ended
December 31, 2025, 2024 and 2023.
Changes in Accumulated Other Comprehensive (Loss) Income
by Component [1]
Years ended December
31,
(In thousands)
2025
2024
2023
Foreign currency translation
Beginning Balance
$
(71,365)
$
(64,528)
$
(56,735)
Other comprehensive (loss)
(13,917)
(6,837)
(7,793)
Net change
(13,917)
(6,837)
(7,793)
Ending balance
$
(85,282)
$
(71,365)
$
(64,528)
Adjustment of pension and
postretirement benefit plans
Beginning Balance
$
(94,692)
$
(117,893)
$
(144,335)
Other comprehensive (loss) income before reclassifications
(2,144)
14,157
14,408
Amounts reclassified from accumulated other comprehensive loss
for
amortization of net losses
5,681
9,044
12,034
Net change
3,537
23,201
26,442
Ending balance
$
(91,155)
$
(94,692)
$
(117,893)
Unrealized net holding
(losses) gains on debt
securities
Beginning Balance
$
(1,495,183)
$
(1,713,110)
$
(2,323,903)
Other comprehensive income before reclassifications
340,427
74,277
472,487
Amounts reclassified from accumulated other comprehensive
(loss)
income for gains on securities
-
-
-
Amounts reclassified from accumulated other comprehensive income
for amortization of net unrealized losses of debt securities
transferred
from available-for-sale to held-to-maturity
149,106
143,650
138,306
Net change
489,533
217,927
610,793
Ending balance
$
(1,005,650)
$
(1,495,183)
$
(1,713,110)
Unrealized net gains (losses)
on cash flow hedges
Beginning Balance
$
-
$
-
$
45
Other comprehensive (loss) income before reclassifications
-
-
(19)
Amounts reclassified from accumulated other comprehensive
(loss)
income for gains on securities
-
-
(26)
Net change
-
-
(45)
Ending balance
$
-
$
-
$
-
Total
$
(1,182,087)
$
(1,661,240)
$
(1,895,531)
[1] All amounts presented are net of tax.
207
The following table presents the amounts reclassified out of each component of accumulated other comprehensive (loss) income for
the years ended December 31, 2025, 2024, and
2023.
Reclassifications Out of Accumulated Other Comprehensive
(Loss) Income
Affected Line Item in the
Years ended December
31,
(In thousands)
Consolidated Statements of Operations
2025
2024
2023
Adjustment of pension and postretirement benefit plans
Amortization of net losses
Other operating expenses
$
(9,090)
$
(14,471)
$
(19,253)
Total before tax
(9,090)
(14,471)
(19,253)
Income tax benefit
3,409
5,427
7,219
Total net of tax
$
(5,681)
$
(9,044)
$
(12,034)
Unrealized net holding (losses) gains on debt securities
Amortization of unrealized net losses of debt
securities transferred to held-to-maturity
Investment securities
(186,381)
(179,563)
(172,883)
Total before tax
(186,381)
(179,563)
(172,883)
Income tax benefit
37,275
35,913
34,577
Total net of tax
$
(149,106)
$
(143,650)
$
(138,306)
Unrealized net gains (losses) on cash flow hedges
Forward contracts
Mortgage banking activities
$
-
$
-
$
41
Total before tax
-
-
41
Income tax expense
-
-
(15)
Total net of tax
$
-
$
-
$
26
Total reclassification
adjustments, net of tax
$
(154,787)
$
(152,694)
$
(150,314)
208
Note 22 Guarantees
The Corporation
has obligations
upon the
occurrence of
certain events
under financial
guarantees provided
in certain
contractual
agreements.
Also,
from
time
to
time,
the
Corporation
securitized
mortgage
loans
into
guaranteed
mortgage-backed
securities
subject in certain instances, to
lifetime credit recourse on the
loans that serve as collateral
for the mortgage-backed securities. The
Corporation has
not sold
any mortgage
loans subject
to credit
recourse since
2009. Also,
from time
to time,
the Corporation
may
sell, in
bulk sale
transactions, residential
mortgage loans
and Small
Business Administration
(SBA) commercial
loans subject
to
credit
recourse
or
to
certain
representations
and
warranties
from
the
Corporation
to
the
purchaser.
These
representations
and
warranties may
relate, for
example, to
borrower creditworthiness,
loan documentation,
collateral,
prepayment and
early payment
defaults. The
Corporation may
be required
to
repurchase the
loans under
the credit
recourse agreements
or
representation and
warranties.
At
December 31,
2025, the
Corporation serviced
$
429
million
(December 31,
2024
- $
495
million) in
residential mortgage
loans
subject to
credit recourse
provisions, principally loans
associated with
FNMA and
FHLMC residential
mortgage loan
securitization
programs. In the event
of any customer default, pursuant to
the credit recourse provided, the
Corporation is required to repurchase
the
loan
or
reimburse
the
third-party
investor for
the
incurred
loss.
During
2025,
the
Corporation repurchased
approximately $
1
million of unpaid principal
balance in mortgage loans
subject to the credit
recourse provisions (2024 -
$
2
million). At December 31,
2025, the Corporations
liability established to cover
the estimated credit
loss exposure related to
loans sold or
serviced with credit
recourse amounted to $
3
million (December 31, 2024 - $
3
million).
The estimated losses to be absorbed under the credit
recourse arrangements are recorded as a liability when
the loans are sold and
are updated by
accruing or reversing expense
(categorized in the line
item Adjustments (expense) to
indemnity reserves on loans
sold
in
the
consolidated
statements
of
operations)
throughout
the
life
of
the
loan,
as
necessary,
when
additional
relevant
information becomes available. The
methodology used to
estimate the recourse
liability is a
function of the
recourse arrangements
given and
considers a
variety of
factors, which
include actual
defaults and
historical loss
experience, foreclosure
rate, estimated
future defaults
and the
probability that
a loan
would be
delinquent. Statistical
methods are
used to
estimate the
recourse liability.
Expected loss
rates are
applied to
different loan
segmentations. The
expected loss,
which represents
the amount
expected to
be
lost on a given loan, considers the
probability of default and loss severity.
The probability of default represents the probability that
a
loan in
good standing
would become
90 days
delinquent within
the following
twelve-month period.
Regression analysis
quantifies
the relationship
between the
default event
and loan-specific
characteristics, including
credit scores,
loan-to-value ratios,
and loan
aging, among others.
When the
Corporation sells or
securitizes mortgage loans,
it generally makes
customary representations and
warranties regarding
the characteristics
of the
loans sold. The
Corporations mortgage operations
in Puerto
Rico group conforming
mortgage loans into
pools which are
exchanged for FNMA and
GNMA mortgage-backed securities, which are
generally sold to
private investors, or are
sold directly
to FNMA
for cash.
As required
under the
government agency
programs, quality
review procedures
are performed
by
the Corporation to
ensure that asset
guideline qualifications are met.
To
the extent the
loans do not
meet specified characteristics,
the
Corporation may
be required
to
repurchase such
loans or
indemnify for
losses and
bear any
subsequent loss
related to
the
loans. The
amount purchased
under representation
and warranty
arrangements during
the years
ended December
31, 2025
and
December 31, 2024 was not considered material
for the Corporation.
From
time
to
time, the
Corporation sells
loans and
agrees to
indemnify the
purchaser for
credit
losses
or
any
breach
of
certain
representations and warranties made in connection
with the sale.
Servicing agreements
relating to
the mortgage-backed
securities programs
of FNMA,
FHMLC and
GNMA, and
to mortgage
loans
sold or serviced to certain other investors, including FHLMC,
require the Corporation to advance funds to
make scheduled payments
of principal, interest, taxes and insurance, if such payments have not been received from the borrowers. At December 31, 2025,
the
Corporation serviced $
8.2
billion in mortgage loans for third-parties, including the loans serviced with credit recourse (December 31,
2024 - $
9.0
billion). The Corporation generally recovers funds advanced pursuant to these arrangements from
the mortgage owner,
from liquidation proceeds when the mortgage
loan is foreclosed or,
in the case of FHA/VA
loans, under the applicable FHA
and
VA
insurance
and guarantees
programs. However,
in the
meantime, the
Corporation must
absorb the
cost
of the
funds
it
advances
during the
time the
advance is
outstanding. The
Corporation must
also bear
the costs
of attempting
to collect
on delinquent
and
defaulted
mortgage
loans.
In
addition,
if
a
defaulted
loan
is
not
cured,
the
mortgage
loan
would
be
canceled
as
part
of
the
foreclosure proceedings and the
Corporation would not
receive any future servicing
income with respect
to that loan. At
December
209
31,
2025,
the
outstanding
balance
of
funds
advanced
by
the
Corporation under
such
mortgage
loan
servicing
agreements
was
approximately
$
30
million
(December
31,
2024
-
$
44
million).
To
the
extent
the
mortgage
loans
underlying
the
Corporations
servicing portfolio experience
increased delinquencies, the Corporation
would be required
to dedicate additional
cash resources to
comply with its obligation to advance funds as well
as incur additional administrative costs related
to increases in collection efforts.
Popular,
Inc. Holding
Company (PIHC) fully
and unconditionally guarantees
certain borrowing
obligations issued by
certain of
its
100
% owned consolidated subsidiaries amounting to
$
94
million at both December 31,
2025 and December 31, 2024, respectively.
In addition, at both December 31, 2025 and December 31, 2024, PIHC
fully and unconditionally guaranteed on a subordinated basis
$
193
million of capital securities (trust preferred securities) issued by wholly-owned issuing trust entities to the extent set forth in the
applicable
guarantee
agreement.
Refer
to
Note
17
to
the
consolidated
financial
statements
for
further
information
on
the
trust
preferred securities.
210
Note 23 Commitments and contingencies
Off-balance sheet risk
The Corporation
is a
party to
financial instruments
with off-balance
sheet credit
risk in
the normal
course of
business to
meet the
financial needs of its customers. These financial instruments
include loan commitments, letters of credit and standby
letters of credit.
These instruments involve,
to varying
degrees, elements of
credit and
interest rate
risk in
excess of
the amount
recognized in
the
Consolidated Statements of Financial Condition.
The
Corporations
exposure
to
credit
loss
in
the
event
of
nonperformance
by
the
other
party
to
the
financial
instrument
for
commitments to extend credit, standby
letters of credit and financial
guarantees is represented by the
contractual notional amounts
of those instruments. The
Corporation uses the same
credit policies in
making these commitments and conditional
obligations as it
does for those reflected on the Consolidated Statements
of Financial Condition.
Financial instruments with
off-balance sheet credit
risk, whose contract
amounts represent potential credit
risk as of
the end of
the
periods presented were as follows:
(In thousands)
December 31, 2025
December 31, 2024
Commitments to extend credit:
Credit card lines
$
6,415,208
$
5,599,823
Commercial lines of credit
4,257,505
3,971,331
Construction lines of credit
1,197,319
1,131,824
Other consumer unused credit commitments
277,635
260,121
Commercial letters of credit
21,248
5,002
Standby letters of credit
111,554
144,845
Commitments to originate or fund mortgage loans
20,099
29,604
At December 31,
2025 and December 31,
2024, the Corporation maintained
a reserve of
$
14
million and $
15
million, respectively,
for potential losses associated with unfunded loan
commitments related to commercial and construction
lines of credit.
Other commitments
At December
31, 2025
and December 31,
2024, the Corporation
also maintained other
non-credit commitments for
$
7
million and
$
2
million, respectively, primarily for the acquisition of other investments.
Business concentration
Since the Corporations business activities are concentrated primarily in Puerto Rico, its results of operations and financial condition
are dependent
upon the
general trends
of the
Puerto Rico
economy and,
in particular,
the residential
and commercial
real estate
markets. The concentration
of the Corporations
operations in Puerto Rico
exposes it to
greater risk than other
banking companies
with a wider geographic base. Its
asset and revenue composition by geographical area
is presented in Note 36
to the Consolidated
Financial Statements.
Puerto
Rico
has
faced
significant
fiscal
and
economic
challenges
for
over
a
decade.
In
response
to
such
challenges,
the
U.S.
Congress
enacted
PROMESA
in
2016,
which,
among
other
things,
established
the
Oversight
Board
and
a
framework
for
the
restructuring
of
the
debts
of
the
Commonwealth,
its
instrumentalities
and
municipalities.
The
Commonwealth
and
several
of
its
instrumentalities have
availed themselves
of debt
restructuring proceedings
under PROMESA.
As of
the date
of this
report, while
municipalities have been designated as covered entities under PROMESA, no municipality has commenced or has been authorized
by the Oversight Board to commence, any such debt
restructuring proceeding under PROMESA.
At December 31, 2025, the Corporations direct exposure to the
Puerto Rico government and its instrumentalities and municipalities
totaled $
391
million, of which
$
342
million were outstanding
($
336
million and $
336
million at December
31, 2024). Of
the amount
outstanding,
$
333
million
consists
of
loans
and
$
9
million
are
securities
($
323
million
and
$
13
million
at
December
31,
2024).
Substantially all
of the
amount outstanding
at December
31, 2025
and December
31, 2024
were obligations
from various
Puerto
Rico
municipalities.
In
most
cases,
these
were
general
obligations
of
a
municipality,
to
which
the
applicable
municipality
has
pledged
its
good
faith,
credit
and
unlimited
taxing
power,
or
special
obligations
of
a
municipality,
to
which
the
applicable
municipality has
pledged other
revenues. At
December 31,
2025, approximately
77
%
of the
Corporations exposure
to municipal
loans
and
securities
was
concentrated
in
the
municipalities
of
San
Juan,
Guaynabo,
Carolina
and
Caguas.
The
Corporations
211
exposure
at
December
31,
2025,
included
up
to
$
47.4
million
in
Automated
Clearing
House
(ACH)
transaction
settlement
exposure, none of which was outstanding.
The following table details the loans and investments representing the Corporations direct exposure to
the Puerto Rico government
according to their maturities as of December 31, 2025
:
(In thousands)
Investment
Portfolio
Loans
Total Outstanding
Total Exposure
Central Government
Within 1 year
$
41
$
-
$
41
$
47,441
Total Central
Government
41
-
41
47,441
Municipalities
Within 1 year
2,605
11,574
14,179
16,179
After 1 to 5 years
5,660
166,515
172,175
172,175
After 5 to 10 years
450
124,087
124,537
124,537
After 10 years
-
30,991
30,991
30,991
Total Municipalities
8,715
333,167
341,882
343,882
Total Direct Government
Exposure
$
8,756
$
333,167
$
341,923
$
391,323
In
addition,
at
December
31,
2025,
the
Corporation
had
$
209
million
in
loans
insured
or
securities
issued
by
Puerto
Rico
governmental entities
but for
which the
principal source
of repayment
is non-governmental
($
220
million at
December 31,
2024).
These
included
$
167
million
in
residential
mortgage
loans
insured
by
the
Puerto
Rico
Housing
Finance
Authority
(HFA),
a
governmental instrumentality that
has been
designated as a
covered entity under
PROMESA (December 31,
2024 -
$
176
million).
These mortgage loans are secured by first mortgages on Puerto Rico residential properties and the HFA
insurance covers losses in
the event
of a
borrower default
and upon
the satisfaction
of certain
other conditions.
The Corporation
also had
at December
31,
2025, $
36
million in bonds
issued by HFA
which are secured by
second mortgage loans on
Puerto Rico residential properties,
and
for which HFA
also provides insurance to
cover losses in
the event of
a borrower default
and upon the
satisfaction of certain
other
conditions (December
31, 2024
- $
38
million). In
the event
that the
mortgage loans
insured by
HFA
and held
by the
Corporation
directly or those serving as collateral for the HFA
bonds default and the collateral is insufficient to satisfy the
outstanding balance of
these loans, HFAs
ability to honor its insurance will depend, among other factors, on the financial condition of HFA
at the time such
obligations
become
due
and
payable. The
Corporation does
not consider
the
government guarantee
when
estimating the
credit
losses
associated
with
this
portfolio.
Although
the
Governor
is
currently
authorized
by
local
legislation
to
impose
a
temporary
moratorium on the financial obligations of the HFA, a moratorium on
such obligations has not been imposed as of
the date hereof.
BPPRs
commercial loan
portfolio also
includes loans
to
private borrowers
who
are service
providers, lessors,
suppliers or
have
other relationships with the government. These
borrowers could be negatively affected by
the Commonwealths fiscal crisis and
the
ongoing
Title
III
proceedings
under
PROMESA.
Similarly,
BPPRs
mortgage
and
consumer
loan
portfolios
include
loans
to
government
employees
and
retirees,
which
could
also
be
negatively
affected
by
fiscal
measures
such
as
employee
layoffs
or
furloughs or reductions in pension benefits.
In
addition,
$
2.5
billion
of
residential
mortgages
and
$
80.5
million
commercial
loans
were
insured
or
guaranteed
by
the
U.S.
Government or its agencies at December 31, 2025 (compared to $
2.1
billion and $
87.4
million, respectively, at December 31, 2024).
The Corporation also had
U.S. Treasury and
obligations from the U.S.
Government, its agencies or
government sponsored entities
within the
portfolio of
available-for-sale and
held-to-maturity securities as
described in
Note 5
and 6
to the
Consolidated Financial
Statements.
At December 31, 2025, the Corporation had operations in the
United States Virgin Islands (the USVI) and had $
28
million in direct
exposure to USVI government
entities (December 31, 2024
- $
28
million). The USVI has
been experiencing a number of
fiscal and
economic challenges that could adversely affect the ability
of its public corporations and instrumentalities to service
their outstanding
debt
obligations.
PROMESA
does
not
apply
to
the
USVI
and,
as
such,
there
is
currently
no
federal
legislation
permitting
the
restructuring of the debts of the USVI and
its public corporations and instrumentalities.
212
At December 31,
2025, the Corporation
had operations in
the British Virgin
Islands (BVI) and
it had a
loan portfolio amounting to
$
195
million comprised of various retail and commercial
clients, compared to a loan portfolio
of $
196
million at December 31, 2024.
At December 31, 2025, the Corporation had
no
significant exposure to a single borrower in
the BVI.
FDIC Special Assessment
On
November 16,
2023, the
Federal Deposit
Insurance Corporation
(FDIC)
imposed a
special
assessment (the
FDIC Special
Assessment) amount to
recover the losses
to the
deposit insurance fund
resulting from the
FDICs funds
used, in March
2023, in
connection with the systemic risk exception, to the least-cost resolution
test, under the Federal Deposit Insurance Act to manage the
receiverships of several failed banks. In connection with this assessment, the Corporation accrued $
71.4
million, $
45.3
million net of
tax, in the fourth quarter of 2023 and an additional expense of $
14.3
million, $
9.1
million net of tax, during the first quarter of 2024 to
reflect the
FDIC's higher
loss estimate
communicated by
them at
the time.
Notwithstanding, the
results of
2025 include
a partial
reversal
of
this
reserve
of
$
15.3
million,
$
9.7
million
net
of
tax,
based
in
the
FDICs
interim
final
rule,
which
became
effective
December
19,
2025
and
amended,
among
other
things,
the
collection
rate
of
the
special
assessment. The
special
assessment
amount and collection
period may change
as the estimated
loss is periodically
adjusted or if
the total amount collected
varies. The
last payment for the FDIC special assessment is projected
to be in the third quarter, September 2026.
Legal Proceedings
The nature of Populars
business ordinarily generates claims, litigation, arbitration,
regulatory and governmental investigations, and
legal
and
administrative
cases
and
proceedings
(collectively,
Legal
Proceedings).
Populars
Legal
Proceedings
may
involve
various lines
of business
and include
claims relating
to contract,
torts, consumer
protection, securities,
antitrust, employment,
tax
and
other
laws.
The
recovery
sought
in
Legal
Proceedings
may
include
substantial
or
indeterminate
compensatory
damages,
punitive
damages,
injunctive
relief,
or
recovery
on
a
class-wide
basis.
When
the
Corporation
determines
that
it
has
meritorious
defenses to the claims
asserted, it vigorously defends
itself. The Corporation will
consider the settlement of
cases (including cases
where it has meritorious defenses) when, in managements judgment,
it is in the best interest of the Corporation and
its stockholders
to do so.
On at least
a quarterly basis,
Popular assesses its
liabilities and contingencies
relating to outstanding Legal
Proceedings
utilizing the most current information available. For
matters where it is probable that the Corporation will
incur a material loss and the
amount can be reasonably estimated, the Corporation establishes an accrual for
the loss. Once established, the accrual is
adjusted
on at least a quarterly basis to reflect any relevant
developments, as appropriate. For matters where a material loss is not probable,
or the amount of the loss cannot be reasonably
estimated, no accrual is established.
In certain cases,
exposure to loss
exists in
excess of any
accrual to the
extent such loss
is reasonably possible,
but not
probable.
Management believes and
estimates that the
range of reasonably
possible losses (with
respect to those
matters where such
limits
may be determined in excess of amounts accrued) for current Legal Proceedings ranged from $
0
to approximately $
6.3
million as of
December 31, 2025. In certain cases, management cannot reasonably estimate the possible loss at this time. Any estimate involves
significant
judgment,
given
the
varying
stages
of
the
Legal
Proceedings
(including
the
fact
that
many
of
them
are
currently
in
preliminary stages), the existence of multiple defendants in several of the current Legal Proceedings whose share of liability has yet
to be
determined, the
numerous unresolved issues
in many
of the
Legal Proceedings,
and the
inherent uncertainty
of the
various
potential
outcomes
of
such
Legal
Proceedings.
Accordingly,
managements
estimate
will
change
from
time-to-time,
and
actual
losses may be more or less than the current estimate.
While the
outcome of
Legal Proceedings
is inherently
uncertain, based
on information
currently available,
advice of
counsel, and
available
insurance
coverage,
management
believes
that
the
amount
it
has
already
accrued
is
adequate
and
any
incremental
liability arising from
the Legal Proceedings
in matters in
which a loss
amount can be
reasonably estimated will not
have a material
adverse effect
on the Corporations
consolidated financial position.
However, in
the event
of unexpected future
developments, it is
possible that
the ultimate
resolution of
these matters
in a
reporting period, if
unfavorable, could have
a material
adverse effect
on
the Corporations consolidated financial position for that period.
213
Note 24 Non-consolidated variable interest
entities
The Corporation is
involved with
three
statutory trusts which
it created to
issue trust preferred
securities to the
public. These trusts
are deemed to be variable interest entities (VIEs) since the equity investors at risk have no substantial decision-making rights. The
Corporation does not
hold any variable
interest in the
trusts, and therefore,
cannot be the
trusts primary beneficiary.
Furthermore,
the
Corporation concluded
that
it did
not
hold
a
controlling financial
interest
in
these
trusts
since the
decisions
of
the
trusts
are
predetermined through
the trust
documents and the
guarantee of
the trust
preferred securities is
irrelevant since
in substance
the
sponsor is guaranteeing its own debt.
Also, the
Corporation is
involved with
various special
purpose entities
mainly in
guaranteed mortgage
securitization transactions,
including
GNMA
and
FNMA.
The
Corporation
has
also
engaged
in
securitization
transactions
with
FHLMC,
but
considers
its
exposure in the
form of servicing
fees and servicing
advances not to be
significant at December
31, 2025.
These special purpose
entities
are
deemed
to
be
VIEs
since
they
lack
equity
investments
at
risk.
The
Corporations
continuing
involvement
in
these
guaranteed loan
securitizations includes
owning certain
beneficial interests in
the form
of securities as
well as
the servicing
rights
retained. The Corporation is not required to provide additional financial support to
any of the variable interest entities to which it has
transferred
the
financial
assets.
The
mortgage-backed
securities,
to
the
extent
retained,
are
classified
in
the
Corporations
Consolidated
Statements
of
Financial
Condition
as
available-for-sale
or
trading
securities.
The
Corporation
concluded
that,
essentially,
these
entities
(FNMA
and
GNMA)
control
the
design
of
their
respective
VIEs,
dictate
the
quality
and
nature
of
the
collateral, require
the underlying
insurance, set
the servicing
standards via
the servicing
guides and
can change
them at
will, and
can remove a
primary servicer with cause,
and without cause in
the case of
FNMA. Moreover, through
their guarantee obligations,
agencies (FNMA and GNMA) have the obligation
to absorb losses that could be potentially significant
to the VIE.
The
Corporation
holds
variable
interests
in
these
VIEs
in
the
form
of
agency
mortgage-backed
securities
and
collateralized
mortgage obligations, including those securities originated by the Corporation and those acquired from
third parties. Additionally, the
Corporation holds agency mortgage-backed securities
and agency collateralized mortgage obligations
issued by third party
VIEs in
which
it
has
no
other
form
of
continuing
involvement.
Refer
to
Note
27
to
the
Consolidated
Financial
Statements
for
additional
information
on
the
debt
securities
outstanding
at
December
31,
2025
and
2024,
which
are
classified
as
available-for-sale
and
trading securities
in the
Corporations Consolidated
Statements of
Financial Condition.
In addition,
the Corporation
holds variable
interests
in
the
form
of
servicing fees,
since
it
retains
the
right
to
service
the
transferred
loans
in
those
government-sponsored
special purpose entities (SPEs) and
may also purchase the
right to service loans
in other government-sponsored SPEs that
were
transferred to those SPEs by a third-party.
The following
table presents
the carrying
amount and
classification of
the assets
related to
the Corporations
variable interests
in
non-consolidated VIEs
and the
maximum exposure
to loss
as a
result of
the Corporations
involvement as
servicer of
GNMA and
FNMA loans at December 31, 2025 and 2024.
214
(In thousands)
December 31, 2025
December 31, 2024
Assets
Servicing assets:
Mortgage servicing rights
$
74,236
$
84,356
Total servicing
assets
$
74,236
$
84,356
Other assets:
Servicing advances
$
3,385
$
6,112
Total other assets
$
3,385
$
6,112
Total assets
$
77,621
$
90,468
Maximum exposure to loss
$
77,621
$
90,468
The size of
the non-consolidated VIEs,
in which the
Corporation has a
variable interest in
the form
of servicing fees,
measured as
the total unpaid principal balance of the loans,
amounted to $
6.0
billion at December 31, 2025 (December
31, 2024 - $
6.6
billion).
The Corporation
determined that
the maximum
exposure to
loss includes
the fair
value of
the MSRs
and the
assumption that
the
servicing advances
at December 31,
2025 and
2024 will
not be
recovered. The agency
debt securities are
not included as
part of
the maximum exposure to loss since they are guaranteed
by the related agencies.
ASU 2009-17 requires that an ongoing primary beneficiary assessment should be made to determine whether the Corporation is the
primary beneficiary of any of the VIEs it is
involved with. The conclusion on the assessment of these non-consolidated VIEs has not
changed
since
their
initial
evaluation.
The
Corporation
concluded
that
it
is
still
not
the
primary
beneficiary
of
these
VIEs,
and
therefore, these VIEs are not required to be consolidated
in the Corporations financial statements at December 31,
2025.
215
Note 25 Derivative instruments and hedging
activities
The
use
of
derivatives
is
incorporated
as
part
of
the
Corporations
overall
interest
rate
risk
management
strategy
to
minimize
significant unplanned fluctuations in
earnings and cash flows
that are caused
by interest rate volatility.
The Corporations goal
is to
manage interest
rate sensitivity by
modifying the repricing
or maturity characteristics
of certain
balance sheet assets
and liabilities
so
that the
net interest
income is
not materially
affected
by movements
in interest
rates. The
Corporation uses
derivatives in
its
trading activities
to facilitate
customer transactions,
and as
a means
of risk
management. As
a result
of interest
rate fluctuations,
hedged fixed and
variable interest rate
assets and liabilities
will appreciate or
depreciate in fair
value. The effect
of this
unrealized
appreciation or depreciation is expected to be
substantially offset by the Corporations
gains or losses on the derivative instruments
that are linked to these hedged assets and liabilities. As a matter of policy,
the Corporation does not use highly leveraged derivative
instruments for interest rate risk management.
The credit
risk attributed to
the counterpartys
nonperformance risk is
incorporated in the
fair value
of the
derivatives. Additionally,
the fair value of the Corporations own credit standing is
considered in the fair value of the derivative liabilities.
The Corporations derivatives are subject to agreements which allow a right of set-off with each respective counterparty.
In an event
of default, each party has a right of set-off
against the other party for amounts owed in the related agreement and any other amount
or obligation owed in respect of any
other agreement or transaction between them.
Pursuant to the Corporations accounting policy,
the
fair
value
of
derivatives
is
not
offset
with
the
fair
value
of
other
derivatives
held
with
the
same
counterparty
even
if
these
agreements allow
a right
of set-off.
In
addition,
the fair
value of
derivatives is
not offset
with the
amounts for
the right
to
reclaim
financial collateral or the obligation to return financial
collateral.
Financial instruments designated as non-hedging derivatives
outstanding at December 31, 2025 and 2024
were as follows:
216
Notional amount
Derivative assets
Derivative liabilities
Statement of
Fair value at
Statement of
Fair value at
At December 31,
condition
December 31,
condition
December 31,
(In thousands)
2025
2024
classification
2025
2024
classification
2025
2024
Derivatives not designated
as hedging instruments:
Forward contracts
$
13,250
$
11,150
Trading
account debt
securities
$
-
$
48
Other liabilities
$
42
$
1
Interest rate caps
93,125
95,625
Other assets
-
26
Other liabilities
-
26
Indexed options on deposits
95,467
93,510
Other assets
27,913
25,949
-
-
-
Bifurcated embedded options
90,459
86,278
-
-
-
Interest
bearing
deposits
25,698
22,805
Total derivatives not
designated as
hedging instruments
$
292,301
$
286,563
$
27,913
$
26,023
$
25,740
$
22,832
Total derivative assets
and liabilities
$
292,301
$
286,563
$
27,913
$
26,023
$
25,740
$
22,832
Cash Flow Hedges
The Corporation
utilizes forward
contracts to
hedge the
sale
of mortgage-backed
securities with
duration terms
over one
month.
Interest rate forwards are contracts for the delayed delivery of securities,
which the seller agrees to deliver on a specified future date
at
a specified
price or
yield.
These forward
contracts are
hedging a
forecasted transaction
and thus
qualify for
cash flow
hedge
accounting.
Changes
in
the
fair
value
of
these
forward
contracts
designated
as
cash
flow
hedges
are
recorded
in
other
comprehensive income (loss).
Effective on
January 1,
2023, the
Corporation discontinued
the hedge
accounting treatment
of certain
forward contracts
for which
the
changes
in
fair
value
were
recorded,
net
of
taxes,
in
accumulated
other
comprehensive
income
(loss)
and
subsequently
reclassified to net
income (loss) in
the same
period that the
hedged transaction impacted
earnings. As a
result of this
change, the
changes in the fair value of these forward
contracts are being recorded through net income.
For cash flow hedges, net gains (losses) on derivative
contracts that are reclassified from accumulated other
comprehensive income
(loss) to current period earnings are included in the line item
in which the hedged item is recorded and during
the period in which the
forecasted transaction impacts earnings, as presented
in the tables below.
Year ended December
31, 2023
(In thousands)
Amount of net gain (loss)
recognized in OCI on
derivatives (effective
portion)
Classification in the statement of
operations of the net gain (loss)
reclassified from AOCI into income
(effective portion and ineffective
portion)
Amount of net gain
(loss) reclassified from
AOCI into income
(effective portion)
Amount of net gain
(loss) recognized in
income on derivatives
(ineffective portion)
Forward contracts
$
(30)
Mortgage banking activities
$
41
$
-
Total
$
(30)
$
41
$
-
Fair Value Hedges
At December 31, 2025 and 2024, there were
no
derivatives designated as fair value hedges.
Non-Hedging Activities
217
For the year ended December 31, 2025, the Corporation recognized a
gain of $
0.4
million (2024 gain of $
0.6
million; 2023 gain
of $
1.5
million) related to its non-hedging derivatives, as
detailed in the table below.
Amount of Net Gain (Loss) Recognized in Income on Derivatives
Year ended
Year ended
Year ended
Classification of Net Gain (Loss)
December 31,
December 31,
December 31,
(In thousands)
Recognized in Income on Derivatives
2025
2024
2023
Forward contracts
Mortgage banking activities
$
(272)
$
34
$
655
Interest rate caps
Other operating income
-
18
(18)
Indexed options on deposits
Interest expense
6,068
7,423
6,201
Bifurcated embedded options
Interest expense
(5,402)
(6,842)
(5,326)
Total
$
394
$
633
$
1,512
Forward Contracts
The Corporation has forward contracts to sell
mortgage-backed securities, which are accounted for as trading
derivatives. Changes
in their fair value are recognized in mortgage banking
activities.
Interest Rate Caps
The
Corporation enters
into
interest rate
caps as
an intermediary
on
behalf of
its customers
and simultaneously
takes offsetting
positions under the same terms and conditions, thus
minimizing its market and credit risks.
Indexed and Embedded Options
The Corporation offers certain customers deposits whose
return are tied to the performance of the Standard
and Poors (S&P 500)
stock
market
indexes,
and
other
deposits
whose
returns
are
tied
to
other
stock
market
indexes
or
other
equity
securities
performance. The
Corporation bifurcated the
related options embedded
within these
customers deposits from
the host
contract in
accordance with
ASC Subtopic
815-15. In
order to
limit the
Corporations exposure
to changes
in these
indexes, the
Corporation
purchases indexed options which
returns are tied to
the same indexes from
major broker dealer companies
in the over the
counter
market. Accordingly, the embedded options and the related indexed options are
marked-to-market through earnings.
218
Note 26 Related party transactions
The Corporation has had loan transactions with
the Corporations directors, executive officers, including certain
related individuals or
organizations, and affiliates, and
proposes to continue such
transactions in the ordinary
course of its business,
on substantially the
same
terms,
including
interest
rates
and
collateral,
as
those
prevailing
for
comparable
loan
transactions
with
third
parties.
The
activity and balance of all these loans were
as follows:
(In thousands)
Balance at December 31, 2023
$
146,017
New loans
10,365
Payments
(11,743)
Other changes, including existing loans to new related parties
(2,422)
Balance at December 31, 2024
$
142,217
New loans
14,610
Payments
(7,097)
Other changes, including existing loans to new related parties
(621)
Balance at December 31, 2025
$
149,109
New loans and payments include disbursements and collections
from existing lines of credit.
Certain
loans
to
related
parties
have
participated
in
the
Corporations
loan
mitigation
programs
that
are
also
available
to
third
parties.
From time
to time,
the Corporation,
in the
ordinary course
of business,
also obtains
services from
related parties
that have
some
association with the
Corporation. Management believes the
terms of such
arrangements are consistent with
arrangements entered
into with independent third parties.
Centro Financiero BHD, S.A.
At December
31, 2025,
the Corporation
had a
15.63
% equity
interest in
Centro Financiero
BHD, S.A.
(BHD), one
of the
largest
banking
and
financial
services
groups
in
the
Dominican
Republic.
During
the
year
ended
December
31,
2025,
the
Corporation
recorded
$
29.9
million
in
equity
pickup
(December
31,
2024
-
$
33.0
million),
including
the
net
impact
of
$
46.3
million
from
net
earnings (December 31, 2024
- $
39.3
million), offset by
($
16.4
) million recorded through
Other Comprehensive Income (December
31,
2024
-
($
6.3
)
million)
related
to
foreign
currency
translation
adjustments
and
changes
in
the
fair
value
of
available
for
sale
securities. At
December 31,
2025, the
investment in
BHD had
a carrying
amount of
$
249.4
million (December
31, 2024
- $
239.5
million)
and
the
Corporation
received
$
20.0
million
in
cash
dividend
distributions
during
the
year
ended
December
31,
2025
(December 31, 2024 - $
19.4
million).
219
Note 27 Fair value measurement
ASC Subtopic
820-10 Fair
Value
Measurements and
Disclosures establishes
a fair
value hierarchy
that prioritizes
the inputs
to
valuation techniques
used to
measure fair
value into
three levels
in order
to increase
consistency and
comparability in
fair value
measurements and disclosures. The hierarchy is broken
down into three levels based on the reliability
of inputs as follows:
Level 1
- Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to
access at
the measurement date.
Valuation
on these
instruments does not
necessitate a
significant degree of
judgment
since valuations are based on quoted prices that
are readily available in an active market.
Level 2
- Quoted prices other than those included in Level 1 that are observable either directly or indirectly.
Level 2 inputs
include
quoted
prices
for
similar
assets
or
liabilities
in
active
markets,
quoted
prices
for
identical
or
similar
assets
or
liabilities in
markets that
are
not active,
or other
inputs that
are
observable or
that can
be corroborated
by
observable
market data for substantially the full term of the
financial instrument.
Level
3
-
Inputs
are
unobservable
and
significant
to
the
fair
value
measurement.
Unobservable
inputs
reflect
the
Corporations own judgements about assumptions that
market participants would use in pricing the asset
or liability.
The
Corporation
maximizes
the
use
of
observable
inputs
and
minimizes
the
use
of
unobservable
inputs
by
requiring
that
the
observable inputs be used when
available. Fair value is
based upon quoted market prices
when available. If listed prices
or quotes
are
not
available,
the
Corporation
employs
internally-developed
models
that
primarily
use
market-based
inputs
including
yield
curves, interest rates,
volatilities, and credit
curves, among others.
Valuation
adjustments are limited
to those necessary
to ensure
that the financial instruments
fair value is adequately representative of
the price that would
be received or paid
in the marketplace.
These adjustments include amounts that reflect counterparty credit quality,
the Corporations credit standing, constraints on liquidity
and unobservable parameters that are applied consistently.
The estimated fair
value may
be subjective in
nature and may
involve uncertainties and
matters of
significant judgment for
certain
financial instruments. Changes in the underlying assumptions
used in calculating fair value could significantly
affect the results.
Fair Value on a Recurring and Nonrecurring Basis
The following fair value hierarchy tables
present information about the Corporations assets
and liabilities measured at fair value
on
a recurring basis at December 31, 2025 and
2024:
220
At December 31, 2025
(In thousands)
Level 1
Level 2
Level 3
Measured at NAV
Total
RECURRING FAIR VALUE
MEASUREMENTS
Assets
Debt securities available-for-sale:
U.S. Treasury securities
$
6,576,313
$
9,147,141
$
-
$
-
$
15,723,454
Collateralized mortgage obligations - federal
agencies
-
100,241
-
-
100,241
Mortgage-backed securities
-
4,750,122
405
-
4,750,527
Other
-
-
750
-
750
Total debt securities
available-for-sale
$
6,576,313
$
13,997,504
$
1,155
$
-
$
20,574,972
Trading account debt securities, excluding
derivatives:
U.S. Treasury securities
$
12,450
$
10
$
-
$
-
$
12,460
Obligations of Puerto Rico, States and political
subdivisions
-
45
-
-
45
Collateralized mortgage obligations
-
567
-
-
567
Mortgage-backed securities
-
23,314
84
-
23,398
Other
-
-
99
-
99
Total trading account
debt securities, excluding
derivatives
$
12,450
$
23,936
$
183
$
-
$
36,569
Equity securities
$
-
$
50,632
$
-
$
852
$
51,484
Mortgage servicing rights
-
-
96,356
-
96,356
Loans held-for-sale
-
9,998
-
-
9,998
Derivatives
-
27,913
-
-
27,913
Total assets measured
at fair value on a
recurring basis
$
6,588,763
$
14,109,983
$
97,694
$
852
$
20,797,292
Liabilities
Derivatives
$
-
$
(25,740)
$
-
$
-
$
(25,740)
Total liabilities measured
at fair value on a
recurring basis
$
-
$
(25,740)
$
-
$
-
$
(25,740)
221
At December 31, 2024
(In thousands)
Level 1
Level 2
Level 3
Measured at NAV
Total
RECURRING FAIR VALUE
MEASUREMENTS
Assets
Debt securities available-for-sale:
U.S. Treasury securities
$
7,512,171
$
5,482,939
$
-
$
-
$
12,995,110
Collateralized mortgage obligations - federal
agencies
-
120,284
-
-
120,284
Mortgage-backed securities
-
5,127,775
484
-
5,128,259
Other
-
-
2,250
-
2,250
Total debt securities
available-for-sale
$
7,512,171
$
10,730,998
$
2,734
$
-
$
18,245,903
Trading account debt securities, excluding
derivatives:
U.S. Treasury securities
$
2,814
$
10
$
-
$
-
$
2,824
Obligations of Puerto Rico, States and political
subdivisions
-
55
-
-
55
Collateralized mortgage obligations
-
655
-
-
655
Mortgage-backed securities
-
29,032
84
-
29,116
Other
-
-
133
-
133
Total trading account
debt securities, excluding
derivatives
$
2,814
$
29,752
$
217
$
-
$
32,783
Equity securities
$
-
$
45,664
$
-
$
381
$
46,045
Mortgage servicing rights
-
-
108,103
-
108,103
Loans held-for-sale
-
5,423
-
-
5,423
Derivatives
-
26,023
-
-
26,023
Total assets measured
at fair value on a
recurring basis
$
7,514,985
$
10,837,860
$
111,054
$
381
$
18,464,280
Liabilities
Derivatives
$
-
$
(22,832)
$
-
$
-
$
(22,832)
Total liabilities measured
at fair value on a
recurring basis
$
-
$
(22,832)
$
-
$
-
$
(22,832)
Loans held-for-sale measured at fair value
Loans held-for-sale measured at fair value were priced
based on secondary market prices. These loans
are classified as Level 2.
The
following
tables summarize
the difference
between the
aggregate fair
value
and the
aggregate unpaid
principal
balance
for
mortgage loans originated as held-for-sale measured
at fair value as of December 31, 2025 and December
31, 2024.
(In thousands)
December 31, 2025
Aggregate Unpaid
Fair Value
Principal Balance
Difference
Loans held for sale
$
9,998
$
9,839
$
159
(In thousands)
December 31, 2024
Aggregate Unpaid
Fair Value
Principal Balance
Difference
Loans held for sale
$
5,423
$
5,436
$
(13)
No
loans held-for-sale were 90 or more days past
due or on nonaccrual status as of December 31,
2025 and December 31, 2024.
222
The fair value information included in the following
tables is not as of period end, but as
of the date that the fair value measurement
was recorded during the years ended December 31, 2025,
2024 and 2023
and excludes nonrecurring fair value measurements
of
assets no longer outstanding
as of the reporting date.
Year ended December
31, 2025
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE
MEASUREMENTS
Assets
Write-downs
Loans
[1]
$
-
$
-
$
3,800
$
3,800
$
(424)
Other real estate owned
[2]
-
-
4,228
4,228
(1,532)
Other foreclosed assets
[2]
-
-
125
125
(53)
Total assets measured
at fair value on a nonrecurring basis
$
-
$
-
$
8,153
$
8,153
$
(2,009)
[1] Relates mainly to certain impaired collateral dependent loans.
The impairment was measured based on the fair value
of the collateral, which is
derived from appraisals that take into consideration prices
in observed transactions involving similar assets in similar
locations. Costs to sell are
excluded from the reported fair value amount.
[2] Represents the fair value of foreclosed real estate and
other collateral owned that were written down to their fair
value. Costs to sell are
excluded from the reported fair value amount.
Year ended December
31, 2024
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE
MEASUREMENTS
Assets
Write-downs
Loans
[1]
$
-
$
-
$
6,808
$
6,808
$
(939)
Other real estate owned
[2]
-
-
6,050
6,050
(1,934)
Other foreclosed assets
[2]
-
-
134
134
(55)
Total assets measured
at fair value on a nonrecurring basis
$
-
$
-
$
12,992
$
12,992
$
(2,928)
[1] Relates mainly to certain impaired collateral dependent loans.
The impairment was measured based on the fair value
of the collateral, which is
derived from appraisals that take into consideration prices
in observed transactions involving similar assets in similar
locations. Costs to sell are
excluded from the reported fair value amount.
[2] Represents the fair value of foreclosed real estate and
other collateral owned that were written down to their fair
value. Costs to sell are
excluded from the reported fair value amount.
Year ended December
31, 2023
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE
MEASUREMENTS
Assets
Write-downs
Loans
[1]
$
-
$
-
$
10,091
$
10,091
$
(3,157)
Other real estate owned
[2]
-
-
6,560
6,560
(1,516)
Other foreclosed assets
[2]
-
-
102
102
(28)
Total assets measured
at fair value on a nonrecurring basis
$
-
$
-
$
16,753
$
16,753
$
(4,701)
[1] Relates mostly to certain impaired collateral dependent loans.
The impairment was measured based on the fair value
of the collateral, which
is derived from appraisals that take into consideration
prices in observed transactions involving similar assets
in similar locations. Costs to sell are
excluded from the reported fair value amount.
[2] Represents the fair value of foreclosed real estate and
other collateral owned that were written down to their fair
value. Costs to sell are
excluded from the reported fair value amount.
223
The following tables present the changes in Level
3 assets and liabilities measured at fair
value on a recurring basis for the years
ended December 31, 2025, 2024, and 2023.
Year ended December
31, 2025
MBS
Other
classified
classified
CMOs
MBS
Other
as debt
as debt
classified
classified
securities
securities
securities
as trading
as trading
classified as
Mortgage
available-
available-
account debt
account debt
trading account
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
debt securities
rights
assets
Balance at January 1,
2025
$
484
$
2,250
$
-
$
84
$
133
$
108,103
$
111,054
Gains (losses) included in earnings
-
-
-
-
(34)
(12,880)
(12,914)
Gains (losses) included in OCI
(4)
-
-
-
-
-
(4)
Additions
-
-
-
-
-
1,133
1,133
Settlements
(75)
-
-
-
-
-
(75)
Transfers out of Level 3
-
(1,500)
-
-
-
-
(1,500)
Balance at December 31, 2025
$
405
$
750
$
-
$
84
$
99
$
96,356
$
97,694
Changes in unrealized gains (losses)
included in earnings relating to assets
still held at December 31, 2025
$
-
$
-
$
-
$
(1)
$
18
$
(3,786)
$
(3,769)
Year ended December
31, 2024
MBS
Other
Other
classified
classified
CMOs
MBS
securities
as debt
as debt
classified
classified
classified
securities
securities
as trading
as trading
as trading
Mortgage
available-
available-
account debt
account debt
account debt
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
securities
rights
assets
Balance at January 1, 2024
$
606
$
2,500
$
5
$
112
$
167
$
118,109
$
121,499
Gains (losses) included in earnings
-
(500)
-
-
(34)
(11,370)
(11,904)
Gains (losses) included in OCI
3
-
-
-
-
-
3
Additions
-
-
-
-
-
1,364
1,364
Sales
-
250
-
-
-
-
250
Settlements
(125)
-
(5)
(28)
-
-
(158)
Balance at December 31, 2024
$
484
$
2,250
$
-
$
84
$
133
$
108,103
$
111,054
Changes in unrealized gains (losses)
included in earnings relating to assets
still held at December 31, 2024
$
-
$
-
$
-
$
1
$
7
$
(2,120)
$
(2,112)
Year ended December
31, 2023
MBS
Other
Other
classified
classified
CMOs
MBS
securities
as debt
as debt
classified
classified as
classified
securities
securities
as trading
trading
as trading
Mortgage
available-
available-
account debt
account debt
account debt
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
securities
rights
assets
Balance at January 1,
2023
$
711
$
1,000
$
113
$
215
$
207
$
128,350
$
130,596
Gains (losses) included in earnings
-
-
-
(2)
(40)
(11,589)
(11,631)
Gains (losses) included in OCI
(5)
-
-
-
-
-
(5)
Additions
-
1,500
4
-
-
2,097
3,601
Sales
-
-
-
-
-
(1,269)
(1,269)
Settlements
(100)
-
(112)
(101)
-
520
207
Balance at December 31, 2023
$
606
$
2,500
$
5
$
112
$
167
$
118,109
$
121,499
Changes in unrealized gains (losses)
included in earnings relating to
assets still held at December 31,
2023
$
-
$
-
$
-
$
(1)
$
18
$
(529)
$
(512)
224
Gains and losses (realized and
unrealized) included in earnings for the
years ended December 31, 2025,
2024, and 2023 for Level
3 assets and liabilities included in the previous
tables are reported in the consolidated statement
of operations as follows:
2025
2024
2023
Total
Changes in
unrealized
Total
Changes in
unrealized
Total
Changes in
unrealized
gains (losses)
gains (losses)
gains (losses)
gains (losses)
gains (losses)
gains (losses)
included
relating to assets still
included
relating to assets still
included
relating to assets still
(In thousands)
in earnings
held at reporting date
in earnings
held at reporting date
in earnings
held at reporting date
Mortgage banking activities
$
(12,880)
$
(3,786)
$
(11,370)
$
(2,120)
$
(11,589)
$
(529)
Trading account (loss) profit
(34)
17
(34)
8
(42)
17
Provision for credit losses
-
-
(500)
-
-
-
Total
$
(12,914)
$
(3,769)
$
(11,904)
$
(2,112)
$
(11,631)
$
(512)
The following
tables include
quantitative information
about significant
unobservable inputs
used to
derive the
fair value
of Level
3
instruments, excluding those instruments
for which the
unobservable inputs were not
developed by the
Corporation such as
prices
of prior transactions and/or unadjusted third-party pricing
sources at December 31, 2025 and 2024.
Fair value at
December 31,
(In thousands)
2025
Valuation technique
Unobservable inputs
Weighted average (range) [1]
Other - trading
$
99
Discounted cash flow model
Weighted average life
2
years
Yield
12
.0%
Prepayment speed
10.8
%
Loans held-in-portfolio
$
3,800
[2]
External appraisal
Haircut applied on
external appraisals
5.0
%
Other real estate owned
$
34
[2]
External appraisal
Haircut applied on
external appraisals
20
%
[1]
Weighted average of significant unobservable inputs
used to develop Level 3 fair value measurements
were calculated by relative fair value.
[2]
Loans held-in-portfolio in which haircuts were not applied
to external appraisals were excluded from this table.
[2]
Other real estate owned in which haircuts were not applied
to external appraisals were excluded from this table.
225
Fair value at
December 31,
(In thousands)
2024
Valuation technique
Unobservable inputs
Weighted average (range) [1]
Other - trading
$
133
Discounted cash flow model
Weighted average life
2
years
Yield
12
.0%
Prepayment speed
10.8
%
Loans held-in-portfolio
$
6,808
[2]
External appraisal
Haircut applied on
external appraisals
6.6
% (
5
.0% -
10
.0%)
Other real estate owned
$
53
[3]
External appraisal
Haircut applied on
external appraisals
60.1
% (
35
.0% -
65.6
%)
[1]
Weighted average of significant unobservable inputs
used to develop Level 3 fair value measurements
were calculated by relative fair value.
[2]
Loans held-in-portfolio in which haircuts were not applied
to external appraisals were excluded from this table.
[3]
Other real estate owned in which haircuts were not applied
to external appraisals were excluded from this table.
The significant unobservable inputs used in the fair value measurement of the Corporations collateralized mortgage obligations and
interest-only
collateralized
mortgage
obligation
(reported
as
other),
which
are
classified
in
the
trading
category,
are
yield,
constant
prepayment rate,
and
weighted average
life. Significant
increases (decreases)
in
any
of
those
inputs in
isolation would
result
in
significantly
lower
(higher)
fair
value
measurement.
Generally,
a
change
in
the
assumption
used
for
the
constant
prepayment
rate
will
generate
a
directionally
opposite
change
in
the
weighted
average
life.
For
example,
as
the
average life
is
reduced
by
a
higher
constant
prepayment
rate,
a
lower
yield
will
be
realized,
and
when
there
is
a
reduction
in
the
constant
prepayment
rate,
the
average
life
of
these
collateralized
mortgage
obligations
will
extend,
thus
resulting
in
a
higher
yield.
The
significant
unobservable
inputs
used
in
the
fair
value
measurement
of
the
Corporations
mortgage
servicing
rights
are
constant
prepayment rates and discount rates.
Increases in interest rates may result in lower prepayments. Discount rates vary
according to
products and / or portfolios depending on the
perceived risk. Increases in discount rates result
in a lower fair value measurement.
Following is
a description
of the
Corporations valuation
methodologies used
for assets
and liabilities
measured at
fair value.
The
disclosure requirements exclude certain financial instruments and all
non-financial instruments. Accordingly, the aggregate fair value
amounts of the financial instruments disclosed do
not represent managements estimate of the underlying
value of the Corporation.
Trading account debt securities and debt securities available-for-sale
U.S. Treasury securities:
The fair value
of U.S. Treasury
notes is based
on yields that
are interpolated from the
constant
maturity treasury curve.
These securities are classified
as Level 2.
U.S. Treasury
bills are classified as
Level 1 given the
high volume of trades and pricing based on those
trades.
Obligations of U.S.
Government sponsored entities: The
Obligations of U.S. Government
sponsored entities include U.S.
agency
securities,
which
fair
value
is
based
on
an
active
exchange
market
and
on
quoted
market
prices
for
similar
securities. The U.S. agency securities are classified as
Level 2.
Obligations of Puerto
Rico, States and
political subdivisions: Obligations of
Puerto Rico, States
and political subdivisions
include
municipal
bonds.
The
bonds
are
segregated
and
the
like
characteristics
divided
into
specific
sectors.
Market
inputs used in the
evaluation process include all or
some of the following:
trades, bid price or
spread, two sided markets,
quotes, benchmark curves including but not limited to Treasury
benchmarks and swap curves, market data feeds such as
those obtained from
municipal market sources,
discount and capital
rates, and
trustee reports. The
municipal bonds are
classified as Level 2.
Mortgage-backed securities: Certain agency mortgage-backed
securities (MBS) are priced based on a bonds theoretical
value
derived
from
similar
bonds
defined
by
credit
quality
and
market
sector.
Their
fair
value
incorporates
an
option
adjusted spread. The
agency MBS are classified
as Level 2.
Other agency MBS
such as GNMA
Puerto Rico Serials
are
priced using an internally-prepared pricing matrix with quoted prices from local brokers dealers. These particular MBS are
classified as Level 3.
Collateralized mortgage
obligations: Agency
collateralized mortgage
obligations (CMOs)
are priced
based on
a bonds
theoretical
value
derived
from
similar
bonds
defined
by
credit
quality
and
market
sector
and
for
which
fair
value
incorporates
an
option
adjusted
spread.
The
option
adjusted
spread
model
includes
prepayment
and
volatility
assumptions,
ratings
(whole
loans
collateral)
and
spread
adjustments.
These
CMOs
are
classified
as
Level
2.
Other
CMOs, due
to their
limited liquidity,
are classified
as Level
3 due
to the
insufficiency of
inputs such
as executed
trades,
credit information and cash flows.
226
Corporate securities (included
as other in
the available-for-sale category):
Given that the
quoted prices are
for similar
instruments, these securities are classified as Level
2.
Corporate securities
and
interest-only strips
(included as
other in
the
trading account
debt securities
category): For
corporate securities, quoted prices for these security types are obtained from broker dealers. Given that the quoted prices
are for similar instruments or do not trade in highly liquid
markets, these securities are classified as Level 2. Given
that the
fair
value
was
estimated
based
on
a
discounted
cash
flow
model
using
unobservable
inputs,
interest-only
strips
are
classified as Level 3.
Equity securities
Equity
securities
are
comprised principally
of
shares
in
closed-ended
and
open-ended mutual
funds
and
other
equity
securities.
Closed-end funds are
traded on the
secondary market at
the shares market value.
Open-ended funds are considered
to be liquid,
as investors can sell their shares continually to the fund and are priced at NAV.
Mutual funds are classified as Level 2. Other equity
securities that
do not
trade in
highly liquid
markets are
also classified
as Level
2, except
for one
equity security
that do
not have
readily determinable fair value and is under an investment
company is measured at NAV.
Mortgage servicing rights
Mortgage
servicing
rights
(MSRs)
do
not
trade
in
an
active
market
with
readily
observable
prices.
MSRs
are
priced
using
a
discounted cash
flow model
valuation performed
by a
third party.
The discounted
cash flow
model incorporates
assumptions that
market
participants
would
use
in
estimating
future
net
servicing
income,
including
portfolio
characteristics,
prepayments
assumptions, discount
rates, delinquency
and foreclosure
rates, late
charges, other
ancillary revenues,
cost to
service and
other
economic factors.
Prepayment speeds
are adjusted
for the
loans characteristics
and portfolio
behavior.
Due to
the unobservable
nature of certain valuation inputs, the MSRs are
classified as Level 3.
Derivatives
Interest
rate
caps
and
indexed
options
are
traded
in
over-the-counter
active
markets.
These
derivatives
are
indexed
to
an
observable interest rate benchmark, such
as LIBOR or equity indexes,
and are priced using an
income approach based on present
value
and
option
pricing
models
using
observable
inputs.
Other
derivatives
are
liquid
and
have
quoted
prices,
such
as
forward
contracts or
to be
announced securities
(TBAs). All
of these
derivatives are
classified as
Level 2.
The non-performance
risk is
determined using internally-developed models that
consider the collateral
held, the remaining
term, and the
creditworthiness of the
entity that
bears the
risk, and
uses available
public data
or internally-developed
data related
to current
spreads that
denote their
probability of default.
Loans held-in-portfolio that are collateral dependent
The impairment is
measured based on
the fair value
of the collateral,
which is derived
from appraisals that
take into consideration
prices
in
observed
transactions
involving
similar
assets
in
similar
locations
and
which
could
be
subject
to
internal
adjustments.
These collateral dependent loans are classified as Level
3.
Loans measured at fair value or measured at
the lower of cost or market
Loans
held-for-sale measured
at fair
value
or measured
at the
lower of
cost
or market
were priced
based
on secondary
market
prices. These loans are classified as Level 2.
Other real estate owned and other foreclosed assets
Other
real
estate
owned
includes
real
estate
properties
securing
mortgage,
consumer,
and
commercial
loans.
Other
foreclosed
assets include primarily automobiles
securing auto loans. The
fair value of
foreclosed assets may be
determined using an external
appraisal, broker price opinion, or an
internal valuation.
These foreclosed assets are classified as Level
3 since they are subject
to
internal adjustments.
227
Note 28 Fair value of financial instruments
The fair
value of
financial instruments
is the
amount at
which an
asset or
obligation could
be exchanged
in a
current transaction
between
willing
parties,
other
than
in
a
forced
or
liquidation
sale.
For
those
financial
instruments
with
no
quoted
market
prices
available, fair values have been estimated using present
value calculations or other valuation techniques, as well
as managements
best judgment with respect to current economic conditions, including discount rates, estimates of future cash flows, and prepayment
assumptions. Many of these
estimates involve various assumptions and
may vary significantly from
amounts that could be
realized
in actual transactions.
The
fair
values
reflected
herein
have
been
determined
based
on
the
prevailing
rate
environment
at
December
31,
2025
and
December 31, 2024, as
applicable. In different interest
rate environments, fair value
estimates can differ significantly,
especially for
certain
fixed
rate
financial
instruments.
In
addition,
the
fair
values
presented
do
not
attempt
to
estimate
the
value
of
the
Corporations fee
generating businesses and
anticipated future business
activities, that
is, they
do not
represent the
Corporations
value as
a going concern.
There have been
no changes in
the Corporations valuation
methodologies and inputs
used to estimate
the fair values for each class of financial assets and
liabilities not measured at fair value.
The following tables present the
carrying amount and estimated fair
values of financial instruments with their
corresponding level in
the fair
value hierarchy.
The aggregate
fair value
amounts of
the financial
instruments disclosed
do not
represent managements
estimate of the underlying value of the Corporation.
228
December 31, 2025
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Assets:
Cash and due from banks
$
402,755
$
402,755
$
-
$
-
$
-
$
402,755
Money market investments
4,626,506
4,616,272
10,234
-
-
4,626,506
Trading account debt securities, excluding
derivatives
[1]
36,569
12,450
23,936
183
-
36,569
Debt securities available-for-sale
[1]
20,574,972
6,576,313
13,997,504
1,155
-
20,574,972
Debt securities held-to-maturity:
U.S. Treasury securities
$
7,268,967
$
-
$
7,309,991
$
-
$
-
$
7,309,991
Obligations of Puerto Rico, States and political
subdivisions
45,295
-
6,766
39,564
-
46,330
Collateralized mortgage obligation-federal agency
1,495
-
1,306
-
-
1,306
Securities in wholly owned statutory business trusts
5,960
-
5,960
-
-
5,960
Total debt securities
held-to-maturity
$
7,321,717
$
-
$
7,324,023
$
39,564
$
-
$
7,363,587
Equity securities:
FHLB stock
$
68,422
$
-
$
68,422
$
-
$
-
$
68,422
FRB stock
102,665
-
102,665
-
-
102,665
Other investments
58,761
-
50,632
7,817
852
59,301
Total equity securities
$
229,848
$
-
$
221,719
$
7,817
$
852
$
230,388
Loans held-for-sale
$
9,998
$
-
$
9,998
$
-
$
-
$
9,998
Loans held-in-portfolio
38,519,462
-
-
37,858,044
-
37,858,044
Mortgage servicing rights
96,356
-
-
96,356
-
96,356
Derivatives
27,913
-
27,913
-
-
27,913
December 31, 2025
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Liabilities:
Deposits:
Demand deposits
$
56,710,732
$
-
$
56,710,732
$
-
$
-
$
56,710,732
Time deposits
9,479,361
-
9,305,980
-
-
9,305,980
Total deposits
$
66,190,093
$
-
$
66,016,712
$
-
$
-
$
66,016,712
Assets sold under agreements to repurchase
$
39,001
$
-
$
39,004
$
-
$
-
$
39,004
Other short-term borrowings
[2]
650,000
-
650,000
-
-
650,000
Notes payable:
FHLB advances
$
164,620
$
-
$
163,417
$
-
$
-
$
163,417
Unsecured senior debt securities
396,558
-
419,300
-
-
419,300
Junior subordinated deferrable interest debentures
(related to trust preferred securities)
198,399
-
191,909
-
-
191,909
Total notes payable
$
759,577
$
-
$
774,626
$
-
$
-
$
774,626
Derivatives
$
25,740
$
-
$
25,740
$
-
$
-
$
25,740
[1]
Refer to Note 27 to the Consolidated Financial Statements
for the fair value by class of financial asset and its hierarchy
level.
[2]
Refer to Note 16 to the Consolidated Financial Statements
for the composition of other short-term borrowings.
229
December 31, 2024
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Assets:
Cash and due from banks
$
419,638
$
419,638
$
-
$
-
$
-
$
419,638
Money market investments
6,380,948
6,371,180
9,768
-
-
6,380,948
Trading account debt securities, excluding
derivatives
[1]
32,783
2,814
29,752
217
-
32,783
Debt securities available-for-sale
[1]
18,245,903
7,512,171
10,730,998
2,734
-
18,245,903
Debt securities held-to-maturity:
U.S. Treasury securities
$
7,693,418
$
-
$
7,623,824
$
-
$
-
$
7,623,824
Obligations of Puerto Rico, States and political
subdivisions
51,865
-
6,866
44,711
-
51,577
Collateralized mortgage obligation-federal agency
1,518
-
1,304
-
-
1,304
Securities in wholly owned statutory business trusts
5,959
-
5,959
-
-
5,959
Total debt securities
held-to-maturity
$
7,752,760
$
-
$
7,637,953
$
44,711
$
-
$
7,682,664
Equity securities:
FHLB stock
$
55,786
$
-
$
55,786
$
-
$
-
$
55,786
FRB stock
100,304
-
100,304
-
-
100,304
Other investments
52,076
-
45,664
6,528
381
52,573
Total equity securities
$
208,166
$
-
$
201,754
$
6,528
$
381
$
208,663
Loans held-for-sale
$
5,423
$
-
$
5,423
$
-
$
-
$
5,423
Loans held-in-portfolio
36,361,628
-
-
35,652,539
-
35,652,539
Mortgage servicing rights
108,103
-
-
108,103
-
108,103
Derivatives
26,023
-
26,023
-
-
26,023
December 31, 2024
Carrying
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
Financial Liabilities:
Deposits:
Demand deposits
$
55,871,463
$
-
$
55,871,463
$
-
$
-
$
55,871,463
Time deposits
9,012,882
-
8,795,803
-
-
8,795,803
Total deposits
$
64,884,345
$
-
$
64,667,266
$
-
$
-
$
64,667,266
Assets sold under agreements to repurchase
$
54,833
$
-
$
54,845
$
-
$
-
$
54,845
Other short-term borrowings
[2]
225,000
-
225,000
-
-
225,000
Notes payable:
FHLB advances
$
302,722
$
-
$
295,023
$
-
$
-
$
295,023
Unsecured senior debt securities
395,198
-
415,148
-
-
415,148
Junior subordinated deferrable interest debentures
(related to trust preferred securities)
198,373
-
189,758
-
-
189,758
Total notes payable
$
896,293
$
-
$
899,929
$
-
$
-
$
899,929
Derivatives
$
22,832
$
-
$
22,832
$
-
$
-
$
22,832
[1]
Refer to Note 27 to the Consolidated Financial Statements
for the fair value by class of financial asset and its hierarchy
level.
[2]
Refer to Note 16 to the Consolidated Financial Statements
for the composition of other short-term borrowings.
Refer
to
Note
23
to
the
Consolidated
Financial
Statements
for
the
notional
amount
of
commitments
to
extend
credit,
which
represents the unused portion of
credit facilities granted to customers,
and letters of credit,
which represent the contractual amount
that
is
required
to
be
paid
in
the
event
of
nonperformance,
at
December
31,
2025
and
December
31,
2024.
The
fair
value
of
commitments to
extend credit
and letters
of credit,
which are
based on
the fees
charged to
enter into
those agreements,
are not
material to Populars financial statements.
230
Note 29 Employee benefits
Certain employees of BPPR are covered by three
non-contributory defined benefit pension plans,
the Banco Popular de Puerto Rico
Retirement Plan and two Restoration Plans (the
Pension Plans).
Pension benefits are based on age, years of
credited service,
and final average compensation.
The Pension
Plans are
currently closed to
new hires
and the
accrual of
benefits are
frozen to
all participants. The
Pension Plans
benefit formula
is based
on a
percentage of
average final
compensation and
years of
service as
of the
plan freeze
date. Normal
retirement age under
the retirement plan
is age 65
with 5 years
of service. Pension
costs are funded
in accordance with
minimum
funding standards
under the
Employee Retirement
Income Security
Act of
1974 (ERISA).
Benefits under
the Pension
Plans are
subject to
the U.S.
and Puerto
Rico Internal Revenue
Code limits
on compensation
and benefits.
Benefits under restoration
plans
restore benefits
to selected
employees that are
limited under
the Banco
Popular de
Puerto Rico
Retirement Plan
due to
U.S. and
Puerto Rico
Internal Revenue
Code limits
and a
compensation definition
that excludes
amounts deferred pursuant
to nonqualified
arrangements.
In
addition
to
providing
pension
benefits,
BPPR
provides
certain
health
care
benefits
for
certain
retired
employees
(the
OPEB
Plan).
Regular employees
of BPPR,
hired before
February 1,
2000, may
become eligible
for health
care benefits,
provided they
reach retirement age while working for BPPR.
The
Corporations
funding
policy is
to
make
annual contributions
to
the
Pension Plans,
when necessary,
in amounts
which fully
provide for all benefits as they become due under
the plans.
The Corporations pension fund investment strategy
is to invest in a
prudent manner for the exclusive
purpose of providing benefits
to participants. A well defined internal structure has
been established to develop and implement
a risk-controlled investment strategy
that is targeted to
produce a total return that,
when combined with BPPR contributions to
the fund, will maintain the
funds ability to
meet all
required benefit obligations.
Risk is controlled
through diversification of
asset types, such
as investments in
domestic and
international equities and fixed income.
Equity investments include various types of stock and index funds. Also, this category
includes Popular, Inc.s common stock. Fixed
income
investments include
U.S. Government
securities
and
other U.S.
agencies obligations,
corporate
bonds, mortgage
loans,
mortgage-backed securities
and index
funds, among
others. A
designated committee
periodically reviews
the performance
of the
pension
plans
investments
and
assets
allocation.
The
Trustee
and
the
money
managers
are
allowed
to
exercise
investment
discretion, subject
to limitations
established by
the pension
plans investment
policies. The
plans forbid
money managers
to enter
into derivative transactions, unless approved by the
Trustee.
The
overall
expected
long-term
rate-of-return-on-assets assumption
reflects
the
average rate
of
earnings
expected
on
the funds
invested or
to
be invested
to provide
for the
benefits included
in the
benefit obligation.
The assumption
has been
determined by
reflecting
expectations
regarding
future
rates
of
return
for
the
plan
assets,
with
consideration
given
to
the
distribution
of
the
investments by asset
class and
historical rates of
return for each
individual asset class.
This process is
reevaluated at least
on an
annual basis and if market, actuarial and economic
conditions change, adjustments to the rate of return
may come into place.
The
Pension
Plans
weighted
average
asset
allocation
as
of
December
31,
2025
and
2024
and
the
approved
asset
allocation
ranges, by asset category, are summarized in the table below.
Minimum allotment
Maximum allotment
2025
2024
Equity
0
%
70
%
12
%
10
%
Debt securities
0
%
100
%
85
%
85
%
Popular related securities
0
%
5
%
1
%
1
%
Cash and cash equivalents
0
%
100
%
2
%
4
%
231
The following table sets
forth by level, within
the fair value hierarchy,
the Pension Plans assets at
fair value at December
31, 2025
and 2024. Investments
measured at net
asset value per share
(NAV) as
a practical expedient have
not been classified
in the fair
value hierarchy, but are presented in order to permit reconciliation of
the plans assets.
2025
2024
(In thousands)
Level 1
Level 2
Level 3
Measured
at NAV
Total
Level 1
Level 2
Level 3
Measured
at NAV
Total
Obligations of the U.S.
Government, its agencies,
states and political
subdivisions
$
-
$
15,473
$
-
$
183,353
$
198,826
$
-
$
6,956
$
-
$
125,476
$
132,432
Corporate bonds and
debentures
-
315,583
-
9,146
324,729
-
364,900
-
10,734
375,634
Equity securities - Common
Stock
5,205
-
-
-
5,205
3,821
-
-
-
3,821
Equity securities - ETF's
37,021
8,416
-
-
45,437
32,372
6,503
-
-
38,875
Foreign commingled trust
funds
-
-
-
26,553
26,553
-
-
-
20,097
20,097
Mutual fund
-
11,207
-
-
11,207
-
9,833
-
-
9,833
Mortgage-backed securities
-
138
-
-
138
-
14,160
-
-
14,160
Cash and cash equivalents
9,387
-
-
-
9,387
17,034
-
-
-
17,034
Accrued investment income
-
-
4,356
-
4,356
-
-
5,289
-
5,289
Total assets
$
51,613
$
350,817
$
4,356
$
219,052
$
625,838
$
53,227
$
402,352
$
5,289
$
156,307
$
617,175
232
The closing prices reported in the active markets
in which the securities are traded are used
to value the investments.
Following is a description of the valuation methodologies
used for investments measured at fair value:
Obligations
of
U.S.
Government,
its
agencies,
states
and
political
subdivisions
-
The
fair
value
of
Obligations
of
U.S.
Government and its agencies obligations are based on an
active exchange market and on quoted market prices for
similar
securities. U.S.
agency structured
notes
are
priced based
on
a bonds
theoretical value
from similar
bonds
defined by
credit quality
and market sector
and for
which the
fair value
incorporates an
option adjusted spread
in deriving
their fair
value.
The fair value
of municipal bonds
are based on
trade data on
these instruments reported on
Municipal Securities
Rulemaking Board (MSRB)
transaction reporting system
or comparable bonds
from the same
issuer and credit
quality.
These securities are classified as Level 2, except for
the governmental index funds that are measured
at NAV.
Corporate bonds and debentures -
Corporate bonds and debentures are
valued at fair value at
the closing price reported
in the active market in
which the bond is traded. These
securities are classified as Level
2, except for the
c
orporate bond
funds that are measured at NAV.
Equity securities common stock
- Equity securities with
quoted market prices obtained from
an active exchange market
and high liquidity are classified as Level 1.
Equity securities ETFs
Exchange Traded Funds
shares with quoted market prices
obtained from an active exchange
market. Highly liquid ETFs are classified as Level 1 while
less liquid ETFs are classified as Level 2.
Foreign commingled trust fund-
Collective investment funds that are
valued using the NAV
per share practical expedient,
were not
categorized within
the fair
value
hierarchy and
were presented
separately.
The Fund's
investments are
in an
international equity portfolio and in an emerging markets
equity fund.
Mutual
funds
Mutual
funds
held
by
the
Plan
are
open-end
mutual
funds
that
are
registered
with
the
Securities
and
Exchange
Commission (SEC)
and are
required to
publish their
daily NAV.
Since these
funds
have liquid
markets with
trading activity of these or similar securities they
are considered level 2.
Cash and cash equivalents - The carrying amount of
cash and cash equivalents is a reasonable estimate of the
fair value
since it is available on demand or due
to their short-term maturity. Cash and cash equivalents are classified as Level 1.
Accrued investment income Given the
short-term nature of these assets, their carrying
amount approximates fair value.
Since there is a lack of observable inputs
related to instrument specific attributes,
these are reported as Level 3.
The preceding valuation methods may produce a fair value calculation that may not be indicative of net realizable value
or reflective
of future fair values. Furthermore, although the plan believes its valuation methods are appropriate and consistent with other market
participants, the
use
of
different
methodologies
or
assumptions to
determine
the
fair value
of
certain financial
instruments could
result in a different fair value measurement at the reporting
date.
The following table presents the change in Level
3 assets measured at fair value.
233
(In thousands)
2025
2024
Balance at beginning of year
$
5,289
$
3,927
Purchases, sales, issuance and settlements (net)
(933)
1,362
Balance at end of year
$
4,356
$
5,289
There were
no
transfers in
and/or out
of Level
3 for
financial instruments
measured at
fair value
on a
recurring basis
during the
years ended
December 31,
2025 and
2024. There
were
no
transfers in
and/or out
of Level
1 and
Level 2
during the
years ended
December 31, 2025 and 2024.
Information on the shares of common stock held by
the pension plans is provided in the table that
follows.
(In thousands, except number of shares information)
2025
2024
Shares of Popular, Inc. common stock
41,796
40,619
Fair value of shares of Popular, Inc. common
stock
$
5,204
$
3,821
Dividends paid on shares of Popular,
Inc. common stock held by the plan
$
117
$
360
The following table presents the components of net
periodic benefit cost for the years ended
December 31, 2025, 2024 and 2023.
Pension Plans
OPEB Plan
(In thousands)
2025
2024
2023
2025
2024
2023
(in thousands)
Service cost
$
-
$
-
$
-
$
59
$
127
$
191
Other operating expenses:
Interest cost
29,642
30,234
31,548
5,163
5,686
6,082
Expected return on plan assets
(32,277)
(34,376)
(34,365)
-
-
-
Recognized net actuarial loss
13,799
16,664
21,465
(4,707)
(2,193)
(2,212)
Net periodic cost (benefit)
$
11,164
$
12,522
$
18,648
$
515
$
3,620
$
4,061
Other Adjustments
-
-
-
40
-
-
Total cost (benefit)
$
11,164
$
12,522
$
18,648
$
555
$
3,620
$
4,061
234
The following table sets forth the aggregate status of the plans and the amounts recognized in the consolidated financial statements
at December 31, 2025 and 2024.
Pension Plans
OPEB Plan
(In thousands)
2025
2024
2025
2024
Change in benefit obligation:
Benefit obligation at beginning of year
$
589,758
$
635,794
$
99,172
$
117,045
Service cost
-
-
59
127
Interest cost
29,642
30,234
5,163
5,686
Actuarial (gain)/loss
[1]
17,556
(31,747)
6,370
(16,787)
Benefits paid
(44,537)
(44,523)
(6,830)
(6,899)
Other adjustments
-
-
40
-
Benefit obligation at end of year
$
592,419
$
589,758
$
103,974
$
99,172
Change in fair value of plan assets:
Fair value of plan assets at beginning of year
$
617,175
$
652,426
$
-
$
-
Actual return on plan assets
52,970
9,042
-
-
Employer contributions
230
230
6,830
6,899
Benefits paid
(44,537)
(44,523)
(6,830)
(6,899)
Fair value of plan assets at end of year
$
625,838
$
617,175
$
-
$
-
Funded status of the plan:
Benefit obligation at end of year
$
(592,419)
$
(589,758)
$
(103,974)
$
(99,172)
Fair value of plan assets at end of year
625,838
617,175
-
-
Funded status at year end
$
33,419
$
27,417
$
(103,974)
$
(99,172)
Amounts recognized in accumulated other comprehensive
loss:
Net loss/(gain)
160,081
177,017
(28,971)
(40,048)
Accumulated other comprehensive loss (AOCL)
$
160,081
$
177,017
$
(28,971)
$
(40,048)
Reconciliation of net (liabilities) assets:
Net asset (liabilities) at beginning of year
$
27,417
$
16,632
$
(99,172)
$
(117,045)
Amount recognized in AOCL at beginning of year,
pre-tax
177,017
200,094
(40,048)
(25,454)
Amount prepaid (liability) at beginning of year
204,434
216,726
(139,220)
(142,499)
Total benefit
cost
(11,164)
(12,522)
(555)
(3,620)
Contributions
230
230
6,830
6,899
Amount prepaid (liability) at end of year
193,500
204,434
(132,945)
(139,220)
Amount recognized in AOCL
(160,081)
(177,017)
28,971
40,048
Net asset/(liabilities) at end of year
$
33,419
$
27,417
$
(103,974)
$
(99,172)
[1]
For 2025, the significant component of the Pension Plans
actuarial loss was mainly related to an increase in the
obligation due to a decrease in the
single weighted-average discount rates. For OPEB plans, significant
components of the actuarial loss that changed the
benefit obligation were
mainly related to the per capita cost assumption at year
end that deteriorated the funded position as well as
an increase in the obligation due to a
decrease in the single weighted-average discount rate. For 2024,
the significant component of the Pension Plans
actuarial gain were mainly related
to an decrease in the obligation due to an increase in the
single weighted-average discount rates and a change
to certain demographic assumptions
partially offset by a lower return on the fair value of
plan assets.
For OPEB plans, significant components of the actuarial
gain that changed the
benefit obligation were mainly related to the per capita
assumption at year end that improved the funded position,
a change to certain demographic
assumptions, a favorable demographic experience from larger
than expected reductions and an increase in discount
rates.
235
The following table presents the change in accumulated other
comprehensive loss (AOCL), pre-tax, for the years ended December
31, 2025 and 2024.
(In thousands)
Pension Plans
OPEB Plan
2025
2024
2025
2024
Accumulated other comprehensive loss at beginning of year
$
177,017
$
200,094
$
(40,048)
$
(25,454)
Increase (decrease) in AOCL:
Recognized during the year:
Amortization of actuarial losses
(13,799)
(16,664)
4,707
2,193
Occurring during the year:
Net actuarial (gains)/losses
(3,137)
(6,413)
6,370
(16,787)
Total (decrease) increase
in AOCL
(16,936)
(23,077)
11,077
(14,594)
Accumulated other comprehensive loss at end of year
$
160,081
$
177,017
$
(28,971)
$
(40,048)
The Corporation estimates
the service
and interest cost
components utilizing a
full yield curve
approach in the
estimation of these
components
by
applying the
specific spot
rates
along
the yield
curve
used in
the
determination of
the
benefit obligation
to
their
underlying projected cash flows.
To
determine
benefit
obligation
at
year
end,
the
Corporation
used
a
weighted
average
of
annual
spot
rates
applied
to
future
expected cash flows for years ended December 31, 2025
and 2024.
The following
table presents
the discount
rate and
assumed health
care cost
trend rates
used to
determine the
benefit obligation
and net periodic benefit cost for the plans:
Pension Plan
OPEB Plan
Weighted average assumptions used to
determine net periodic benefit cost for the
years ended December 31:
2025
2024
2023
2025
2024
2023
Discount rate for benefit obligation
5.54
-
5.57
%
5.02
-
5.05
%
5.34
-
5.37
%
5.65
%
5.10
%
5.42
%
Discount rate for service cost
N/A
N/A
N/A
5.95
%
5.37
%
5.66
%
Discount rate for interest cost
5.26
-
5.27
%
4.95
-
4.96
%
5.23
-
5.24
%
5.37
%
4.99
%
5.28
%
Expected return on plan assets
5.6
0 -
6.70
%
5.6
0 -
6.60
%
5.9
0 -
6.5
0
%
N/A
N/A
N/A
Initial health care cost trend rate
N/A
N/A
N/A
7.00
%
7.25
%
7.50
%
Ultimate health care cost trend rate
N/A
N/A
N/A
4.50
%
4.50
%
4.50
%
Year that the ultimate trend
rate is reached
N/A
N/A
N/A
2035
2035
2035
Pension Plans
OPEB Plan
Weighted average assumptions used to determine
benefit obligation at
December 31:
2025
2024
2025
2024
Discount rate for benefit obligation
5.25
-
5.29
%
5.54
-
5.57
%
5.44
%
5.65
%
Initial health care cost trend rate
N/A
N/A
6.75
%
7.00
%
Ultimate health care cost trend rate
N/A
N/A
4.50
%
4.50
%
Year that the ultimate trend
rate is reached
N/A
N/A
2035
2035
236
The following table presents information for plans with a projected benefit obligation and accumulated benefit obligation in excess of
plan assets for the years ended December 31,
2025 and 2024.
Pension Plans
OPEB Plan
(In thousands)
2025
2024
2025
2024
Projected benefit obligation
$
34,236
$
33,993
$
103,974
$
99,172
Accumulated benefit obligation
34,236
33,993
103,974
99,172
Fair value of plan assets
29,498
28,177
-
-
The
following table
presents information
for plans
with plan
assets in
excess of
its
projected benefit
obligation and
accumulated
benefit obligation for the years ended December 31,
2025 and 2024.
Pension Plans
OPEB Plan
(In thousands)
2025
2024
2025
2024
Projected benefit obligation
$
558,183
$
555,765
$
-
$
-
Accumulated benefit obligation
558,183
555,765
-
-
Fair value of plan assets
596,341
588,998
-
-
The Corporation expects to make the following contributions
to the plans during the year ended December
31, 2026.
(In thousands)
2026
Pension Plans
$
227
OPEB Plan
$
5,914
Benefit payments projected to be made from the
plans during the next ten years are presented
in the table below.
(In thousands)
Pension Plans
OPEB Plan
2026
$
50,385
$
5,914
2027
45,855
6,089
2028
45,683
6,321
2029
45,394
6,534
2030
45,017
6,733
2031 - 2035
215,895
35,655
237
The table below presents a breakdown of the
plans assets and liabilities at December
31, 2025 and 2024.
Pension Plans
OPEB Plan
(In thousands)
2025
2024
2025
2024
Non-current assets
$
38,157
$
33,233
$
-
$
-
Current liabilities
222
222
5,805
5,304
Non-current liabilities
4,516
5,594
98,169
93,868
Savings plans
The
Corporation
also
provides
defined
contribution
savings
plans
pursuant
to
Section
1081.01(d)
of
the
Puerto
Rico
Internal
Revenue
Code
and
Section
401(k)
of
the
U.S.
Internal
Revenue Code,
as
applicable, for
substantially
all
the
employees
of
the
Corporation. Investments
in the
plans are
participant-directed, and employer
matching contributions
are determined
based on
the
specific provisions
of each
plan. Employees
are fully
vested in
the employers
contribution after
five years
of service.
The cost
of
providing these benefits in the year ended
December 31, 2025 was $
22.2
million (2024 - $
21.4
million, 2023 - $
20.3
million).
The
plans held
1,150,624
(2024
1,177,588
) shares
of common
stock
of
the
Corporation with
a market
value of
approximately
$
143.3
million at December 31, 2025 (2024 - $
110.8
million).
238
Note 30 Net income per common share
The
following table
sets
forth the
computation of
net
income per
common share
(EPS), basic
and diluted,
for the
years
ended
December 31, 2025, 2024 and 2023:
(In thousands, except per share information)
2025
2024
2023
Net income
$
833,159
$
614,212
$
541,342
Preferred stock dividends
(1,412)
(1,412)
(1,412)
Net income applicable to common stock
$
831,747
$
612,800
$
539,930
Average common shares outstanding
67,586,130
71,590,757
71,710,265
Average potential dilutive common shares
26,717
32,945
81,427
Average common shares outstanding - assuming dilution
67,612,847
71,623,702
71,791,692
Basic EPS
$
12.31
$
8.56
$
7.53
Diluted EPS
$
12.30
$
8.56
$
7.52
Potential common shares consist of shares of common stock issuable under the assumed exercise of stock options, restricted stock
and
performance
share
awards
using
the
treasury
stock
method.
This
method
assumes
that
the
potential
common
shares
are
issued and
the proceeds
from exercise,
in addition
to the
amount of
compensation cost
attributed to
future services,
are used
to
purchase shares of common stock at the exercise date. The difference between the number of potential common shares issued and
the shares
of common
stock
purchased is
added as
incremental shares
to
the actual
number of
shares outstanding
to
compute
diluted
earnings
per
share.
Warrants,
stock
options,
restricted
stock
and
performance share
awards,
if
any,
that
result
in
lower
potential common shares
issued than shares
of common stock
purchased under the treasury
stock method are
not included in
the
computation of dilutive earnings per share
since their inclusion would have an antidilutive effect in earnings
per common share.
239
Note 31 Revenue from contracts with customers
The following table presents
the Corporations revenue streams
from contracts with customers
by reportable segment for the
years
ended December 31, 2025, 2024, and 2023.
Years ended December
31,
(In thousands)
2025
2024
2023
BPPR
Popular U.S.
BPPR
Popular U.S.
BPPR
Popular U.S.
Service charges on deposit accounts
$
145,244
$
10,624
$
141,240
$
10,103
$
137,297
$
10,179
Other service fees:
Debit card fees
[1]
111,979
854
105,017
793
98,779
853
Insurance fees, excluding reinsurance
36,540
7,759
44,808
6,946
46,903
5,602
Credit card fees, excluding late fees and membership
fees
[1]
109,614
1,363
102,849
1,587
102,214
1,597
Sale and administration of investment products
37,693
-
33,213
-
26,316
-
Trust fees
28,313
-
27,659
-
26,160
-
Total revenue from
contracts with customers
[2]
$
469,383
$
20,600
$
454,786
$
19,429
$
437,669
$
18,231
[1] Effective in the third quarter of 2024, the
Corporation reclassified certain interchange fees, which
were previously included jointly with credit card
fees from common network activity,
as debit card fees. For the year ended December 31, 2024,
these interchange fees were approximately $
45.5
million, which include approximately $
22.2
million corresponding to the first and second quarters
of 2024 which were reclassified. For the year
ended December 31, 2023, interchange fees of approximately
$
45.3
million were reclassified.
[2] The amounts include intersegment transactions of $
2.4
million, $
4.5
million and $
5
.0 million, respectively, for the
years ended December 31,
2025, 2024 and 2023.
Revenue from contracts with
customers is recognized when,
or as, the performance
obligations are satisfied by
the Corporation by
transferring the
promised services
to
the customers.
A
service is
transferred to
the customer
when, or
as, the
customer obtains
control
of
that
service.
A
performance obligation
may
be
satisfied over
time
or
at
a
point
in
time.
Revenue from
a
performance
obligation satisfied
over time
is recognized
based on
the services
that have
been rendered
to date.
Revenue from
a performance
obligation satisfied at a point in time
is recognized when the customer obtains control over the
service. The transaction price, or the
amount of revenue
recognized, reflects the
consideration the Corporation expects
to be entitled
to in exchange
for those promised
services. In determining the transaction price, the Corporation considers the effects of variable consideration. Variable consideration
is included
in the
transaction price
only to
the extent
it is
probable that a
significant reversal
in the
amount of
cumulative revenue
recognized will
not occur.
The Corporation
is the
principal in
a transaction
if it
obtains control
of the
specified goods
or services
before they
are transferred
to
the customer.
If the
Corporation acts
as principal,
revenues are
presented in
the gross
amount
of
consideration to which it expects to
be entitled and are not
netted with any related expenses. On the
other hand, the Corporation is
an agent if it does not control
the specified goods or services before they are transferred
to the customer. If
the Corporation acts as
an agent, revenues are presented in the amount
of consideration to which it expects to be entitled,
net of related expenses.
Following is a description of the nature and timing
of revenue streams from contracts with customers:
Service charges on deposit accounts
Service
charges
on
deposit
accounts
are
earned
on
retail
and
commercial
deposit
activities
and
include,
but
are
not
limited
to,
nonsufficient fund
fees, overdraft
fees and
checks stop
payment fees.
These transaction-based
fees are
recognized at
a point
in
time,
upon
occurrence
of
an
activity
or
event
or
upon
the
occurrence
of
a
condition
which
triggers
the
fee
assessment.
The
Corporation is acting as principal in these transactions.
Debit card fees
Debit card fees include, but are not limited to, interchange
fees, surcharging income and foreign transaction
fees. These transaction-
based fees
are recognized at
a point in
time, upon
occurrence of an
activity or
event or upon
the occurrence of
a condition which
triggers
the
fee
assessment.
Interchange
fees
are
recognized
upon
settlement
of
the
debit
card
payment
transactions.
The
Corporation is acting as principal in these transactions.
Insurance fees
240
Insurance fees
include, but
are
not limited
to, commissions
and contingent
commissions. Commissions
and fees
are
recognized
when related
policies are effective
since the Corporation
does not
have an enforceable
right to
payment for services
completed to
date.
An
allowance
is
created
for
expected
adjustments
to
commissions
earned
related
to
policy
cancellations.
Contingent
commissions
are
recorded
on
an
accrual
basis
when
the
amount
to
be
received
is
notified
by
the
insurance
company.
The
Corporation is acting
as an
agent since it
arranges for the
sale of
the policies and
receives commissions if,
and when, it
achieves
the sale.
Credit card fees
Credit card
fees include,
but are
not limited
to, interchange
fees, additional
card fees,
cash advance
fees, balance
transfer fees,
foreign transaction fees, and returned payments
fees. Credit card fees are
recognized at a point in
time, upon the occurrence of
an
activity or
an event.
Interchange fees
are recognized
upon settlement
of the
credit card
payment transactions. The
Corporation is
acting as principal in these transactions.
Sale and administration of investment products
Fees from
the sale
and administration
of investment
products include,
but are
not limited
to, commission
income from
the sale
of
investment products, asset management fees, underwriting
fees, and mutual fund fees.
Commission income from investment products is recognized on the trade date since clearing, trade execution, and custody services
are satisfied when
the customer acquires
or disposes of
the rights to
obtain the economic
benefits of the
investment products and
brokerage contracts have no fixed duration and
are terminable at will by
either party. The
Corporation is acting as principal in these
transactions since it
performs the service
of providing the
customer with the
ability to acquire
or dispose of
the rights to
obtain the
economic benefits of investment products.
Asset
management
fees
are
satisfied
over
time
and
are
recognized
in
arrears.
At
contract
inception,
the
estimate
of
the
asset
management fee
is constrained
from the
inclusion in
the transaction
price since
the promised
consideration is
dependent on
the
market and thus
is highly susceptible
to factors
outside the managers
influence. As advisor,
the broker-dealer subsidiary
is acting
as principal.
Underwriting fees are
recognized at a point
in time, when
the investment products
are sold in
the open market at
a markup. When
the broker-dealer subsidiary is lead
underwriter, it is
acting as an agent. In
turn, when it is
a participating underwriter, it
is acting as
principal.
Mutual fund fees,
such as distribution fees,
are considered variable consideration
and are recognized over
time, as the
uncertainty
of the fees to be
received is resolved as NAV
is determined and investor activity occurs. The
promise to provide distribution-related
services
is
considered
a
single
performance
obligation
as
it
requires
the
provision
of
a
series
of
distinct
services
that
are
substantially the same and have the same pattern of
transfer. When the broker-dealer subsidiary is acting as a distributor, it is acting
as principal. In turn, when it acts as third-party dealer, it is acting
as an agent.
Trust fees
Trust fees
are recognized from
retirement plan, mutual fund
administration, investment management, trustee,
escrow, and
custody
and
safekeeping services.
These
asset
management services
are
considered
a
single
performance obligation
as
it
requires the
provision of
a series
of distinct
services that
are substantially
the same
and have
the same
pattern of
transfer.
The performance
obligation
is
satisfied
over
time,
except
for
optional
services
and
certain
other
services
that
are
satisfied
at
a
point
in
time.
Revenues are recognized in
arrears, when, or as,
the services are rendered.
The Corporation is acting
as principal since,
as asset
manager, it has the obligation to provide the specified service to the customer and
has the ultimate discretion in establishing the fee
paid by the customer for the specified services.
241
Note 32 Leases
The
Corporation enters
in
the
ordinary course
of
business
into
operating and
finance
leases
for
land,
buildings
and
equipment.
These contracts generally do not include purchase options or residual value guarantees.
The remaining lease terms of
0.30
to
29.0
years
considers options
to
extend the
leases for
up
to
20
years. The
Corporation identifies
leases when
it
has
both the
right to
obtain substantially all of the economic benefits from
the use of the asset and the right to direct
the use of the asset.
The Corporation
recognizes right-of-use
assets (ROU
assets) and
lease liabilities
related to
operating and
finance leases
in its
Consolidated Statements of Financial Condition under the caption of other assets and other liabilities, respectively. Refer to Note 13
and
Note
18
to
the
Consolidated Financial
Statements,
respectively,
for
information
on
the
balances of
these
lease
assets
and
liabilities.
The Corporation uses the
incremental borrowing rate for
purposes of discounting lease payments
for operating and finance leases,
since it
does not have
enough information to
determine the rates
implicit in the
leases. The discount
rates are based
on fixed-rate
and
fully
amortizing
borrowing
facilities
of
its
banking
subsidiaries
that
are
collateralized.
For
leases
held
by
non-banking
subsidiaries, a credit spread is added to this rate
based on financing transactions with a
similar credit risk profile.
The following table presents the undiscounted
cash flows of operating and finance leases for
each of the following periods:
December 31, 2025
(In thousands)
2026
2027
2028
2029
2030
Later
Years
Total Lease
Payments
Less: Imputed
Interest
Total
Operating Leases
$
24,644
$
20,150
$
17,858
$
15,645
$
9,997
$
35,309
$
123,603
$
(18,645)
$
104,958
Finance Leases
5,051
3,805
3,506
3,351
3,288
12,854
31,855
(4,466)
27,389
The following table presents the lease cost recognized
by the Corporation in the Consolidated
Statements of Operations as follows:
Years ended December
31,
(In thousands)
2025
2024
2023
Finance lease cost:
Amortization of ROU assets
$
3,351
$
3,006
$
4,192
Interest on lease liabilities
944
912
1,063
Operating lease cost
29,670
30,660
31,596
Short-term lease cost
814
497
456
Variable lease cost
354
290
211
Sublease income
(60)
(81)
(66)
Total lease cost
[1]
$
35,073
$
35,284
$
37,452
[1]
Total lease cost
is recognized as part of net occupancy expense.
The
following
table
presents
supplemental
cash
flow
information
and
other
related
information
related
to
operating
and
finance
leases.
242
Years ended December
31,
(Dollars in thousands)
2025
2024
2023
Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows from operating leases
$
30,054
$
31,416
$
31,124
Operating cash flows from finance leases
943
912
1,063
Financing cash flows from finance leases
3,933
3,977
5,360
ROU assets obtained in exchange for new lease obligations:
Operating leases
$
12,231
$
2,290
$
8,048
Finance leases
6,954
732
6,198
Weighted-average remaining lease term:
Operating leases
7.8
years
7.2
years
7.3
years
Finance leases
9.3
years
8.1
years
8.3
years
Weighted-average discount rate:
Operating leases
3.7
%
3.4
%
3.3
%
Finance leases
3.8
%
3.6
%
3.9
%
As of December 31, 2025, the Corporation had
additional operating leases contracts that have
not yet commenced with an
undiscounted contract amount of $
5.2
million, which will have lease terms of
10
years.
243
Note 33 - Stock-based compensation
Incentive Plan
On May 12, 2020, the shareholders of the Corporation approved the Popular, Inc. 2020 Omnibus Incentive Plan, which permits
the Corporation to issue several types of stock-based compensation to employees and directors of
the Corporation and/or any of its
subsidiaries (the
2020 Incentive
Plan). The
2020 Incentive
Plan replaced
the Popular,
Inc. 2004
Omnibus Incentive
Plan, which
was in effect
prior to the adoption of
the 2020 Incentive Plan (the
2004 Incentive Plan and, together
with the 2020 Incentive
Plan,
the Incentive Plan). Participants under the Incentive Plan are designated by the Talent and Compensation Committee of the Board
of Directors (or its delegate, as determined by the Board). Under the Incentive Plan, the Corporation has issued restricted stock and
performance shares to its employees and restricted
stock and restricted stock units (RSUs)
to its directors.
The restricted
stock granted
under the
Incentive Plan
to employees
becomes vested
based on
the employees
continued service
with
Popular.
Unless
otherwise
stated
in
an
agreement,
the compensation cost associated with the shares of restricted stock
granted prior to 2021 was determined based on a two-prong vesting schedule. These grants include ratable vesting over five or four
years commencing at the date of grant (the graduated vesting portion) with a portion vested at termination of employment after
attainment of 55 years of age and 10 years of service or 60 years of age and 5 years of service (the retirement vesting portion).
The graduated vesting portion is accelerated at termination of employment after attaining 55 years of age and 10 years of service or
60 years of age and 5 years of service. Restricted stock granted on or after 2021 have ratable vesting in equal annual installments
over a period of 4 years or 3 years, depending in the classification of the employee. The vesting schedule is accelerated at
termination of employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age and 5 years of
service.
The
performance share
awards
granted
under
the
Incentive
Plan
consist
of
the
opportunity
to
receive
shares
of
Popular,
Inc.s
common stock provided that the Corporation achieves certain goals during a three-year performance cycle.
The goals will be based
on
two
metrics
weighted
equally:
the
Relative
Total
Shareholder
Return
(TSR)
and
the
Absolute
Return
on
Average
Tangible
Common Equity
(ROATCE).
The TSR metric
is considered to
be a
market condition under
ASC 718.
For equity settled
awards
based
on a
market condition,
the
fair value
is
determined as
of the
grant date
and
is not
subsequently revised
based on
actual
performance.
The
ROATCE
metric
is
considered
to
be
a
performance condition
under ASC
718.
The
fair value
is
determined
based on
the probability
of achieving
the ROATCE
goal as
of each
reporting period.
The TSR
and ROATCE
metrics are
equally
weighted and
work independently.
The number of shares that will ultimately vest ranges from 50% to a 150% of target based on
both market (TSR) and performance (ROATCE) conditions. The performance shares will vest at the end of the three-year
performance cycle. If a participant terminates employment after attaining the earlier of 55 years of age and 10 years of service or 60
years of age and 5 years of service, the performance shares shall continue outstanding and vest at the end of the performance
cycle.
The
following
table
summarizes
the
restricted
stock
and
performance
shares
activity
under
the
Incentive
Plan
for
members
of
management.
244
(Not in thousands)
Shares
Weighted-average
grant date fair value
Non-vested at January 1, 2023
281,963
$
56.50
Granted
257,757
66.01
Performance Shares Quantity Adjustment
19,753
75.32
Vested
(243,133)
66.31
Forfeited
(16,444)
55.82
Non-vested at December 31, 2023
299,896
$
58.20
Granted
242,474
86.62
Performance Shares Quantity Adjustment
(18,650)
87.79
Vested
(267,873)
74.26
Forfeited
(7,939)
50.68
Non-vested at December 31, 2024
247,908
$
66.86
Granted
226,259
100.35
Performance Shares Quantity Adjustment
55,517
91.18
Vested
(293,939)
90.00
Forfeited
(8,787)
66.53
Non-vested at December 31, 2025
226,958
$
76.13
During
the
year
ended
December
31,
2025,
194,599
shares
of
restricted
stock
(2024
-
177,249
;
2023
-
200,303
)
and
31,660
performance shares (2024 -
65,225
; 2023 -
57,454
) were awarded to management under the
Incentive Plan.
During
the
year
ended
December
31,
2025,
the
Corporation
recognized
$
18.3
million
of
restricted
stock
expense
related
to
management incentive awards, with a tax benefit of $
2.5
million (2024 - $
14.0
million, with a tax benefit of $
2.4
million; 2023 - $
11.5
million, with
a tax
benefit of
$
1.9
million). During
the year
ended December
31, 2025,
the fair
market value
of the
restricted stock
and performance shares vested was $
20.4
million at grant date and $
28.0
million at vesting date. This differential triggers
a windfall
of $
2.8
million that was recorded as a reduction in income tax expense.
During the year ended December 31, 2025, the Corporation
recognized $
4.3
million of performance
shares expense, with
a tax benefit
of $
0.4
million (2024 -
$
3.9
million, with a
tax benefit of
$
0.3
million; 2023 - $
3.5
million, with a tax benefit of $
0.1
million).
The total unrecognized compensation cost related to non-vested
restricted
stock
awards
and
performance
shares
to
members
of
management
at
December
31,
2025
was
$
12.4
million
and
is
expected to be recognized over a weighted-average
period of
1.58
years.
The following table summarizes the restricted stock
activity under the Incentive Plan for members of
the Board of Directors:
(Not in thousands)
Units/Stocks
Weighted-average
grant
date fair value
Non-vested at January 1, 2023
-
-
Granted
39,104
$
55.30
Vested
(39,104)
55.30
Forfeited
-
-
Non-vested at December 31, 2023
-
-
Granted
25,462
$
89.51
Vested
(25,462)
89.51
Forfeited
-
-
Non-vested at December 31, 2024
-
-
Granted
24,476
$
101.33
Vested
(5,363)
104.33
Forfeited
-
-
Non-vested at December 31, 2025
19,113
100.49
245
The equity awards granted to members of the Board of Directors of Popular,
Inc. (the Directors) on or after May 2025 will vest and
become non-forfeitable on the first anniversary of the grant date
of such award. Equity awards granted to the Directors may be
paid
in either common stock or RSUs
at each Director`s election. If RSUs
are elected, the Directors may defer the delivery
of the shares
of common stock underlying
the RSUs award until
their retirement. To
the extent that cash
dividends are paid on
the Corporations
outstanding common stock, the Directors will
receive an additional number of RSUs
that reflect a reinvested dividend equivalent.
For 2025, 2024 and
2023, Directors elected RSUs and
common stock.
For the year ended December
31, 2025,
21,788
RSUs and
2,688
shares of
restricted stock
were granted
to the
Directors (2024
-
24,070
RSUs and
1,392
shares of
restricted stock;
2023 -
36,804
RSUs
and
2,300
shares
of
restricted
stock).
For
the
year
ended
December
31,
2025,
$
2.0
million
of
restricted
stock
expense related
to these
shares was
recognized, with
a tax
benefit of
$
0.4
million (2024
- $
2.2
million with
a tax
benefit of
$
0.4
million; 2023
- $
2.2
million with
a tax
benefit of
$
0.4
million).
The fair
value at
vesting date
of the
RSUs vested
during the
year
ended December 31, 2025 for the Directors was $
0.6
million.
246
Note 34 Income taxes
The
income
before
income tax
and the
components of
income tax
expense
disaggregated between
domestic (Puerto
Rico) and
foreign (including Unites
States federal and
state) for the
years ended December
31, 2025, 2024
and 2023 are
summarized in the
following tables:
(In thousands)
2025
2024
2023
Income before income tax
Puerto Rico
$
730,740
$
545,298
$
468,001
Foreign
276,053
251,320
207,538
Total income
before tax
$
1,006,793
$
796,618
$
675,539
Current income tax expense:
Puerto Rico
$
107,055
$
107,405
$
168,001
Foreign
60,197
51,291
9,335
Total current income
tax expense
$
167,252
$
158,696
$
177,336
Deferred income tax (benefit) expense:
Puerto Rico
$
(7,473)
$
(6,982)
$
(50,871)
Foreign
13,855
30,692
7,732
Total deferred income
tax expense (benefit)
$
6,382
$
23,710
$
(43,139)
Total income tax
expense
$
173,634
$
182,406
$
134,197
The following table represents income taxes paid
(net of refunds) for the year ended December
31, 2025:
(In thousands)
2025
Income Taxes Paid
Puerto Rico [1]
$
148,043
Foreign income tax paid
United States Federal
40,820
United States - States and Local
15,077
Other Foreign
234
Total foreign income
tax paid
56,131
Total income tax
paid
$
204,174
[1] Includes $
141.8
million paid for the purchase of tax credits in Puerto
Rico.
The tables below
present a reconciliation
of the statutory
income tax rate
to the effective
income tax rate.
The Company uses
the
Puerto Rico statutory tax rate as the national
tax rate, since Popular, Inc. is based in Puerto Rico.
247
2025
(In thousands)
Amount
% of pre-tax
income
Computed income tax at Puerto Rico statutory tax
rate
$
377,547
37.5
%
Foreign Tax Effects
United States
Statutory Tax Rate
difference between United States and Puerto Rico
(21,337)
(2.1)
BPPR U.S. Branch Federal and State Taxes
30,789
3.1
State and Local Taxes
14,821
1.5
Other adjustments
1,050
0.1
Other foreign jurisdictions
(89)
-
Total foreign tax
effects
25,234
2.6
Effect of Cross Borders Tax
Laws
P.R. Tax
on Intercompany Distributions
(980)
(0.1)
P.R. foreign
tax credit
(30,789)
(3.1)
Total effect
of cross borders tax laws
(31,769)
(3.2)
Tax Credits
Discount on Tax
Credits Purchased
(8,443)
(0.8)
Total tax credits
(8,443)
(0.8)
Change in Valuation Allowance
11,512
1.1
Non taxable or Non deductible Items
Net benefit of tax-exempt interest income
(152,774)
(15.2)
International banking entity exempt income
(36,484)
(3.6)
Other
(5,729)
(0.6)
Total non-taxable
or non-deductible items
(194,987)
(19.4)
Effect of Other Adjustments
(5,460)
(0.5)
Income tax expense
$
173,634
17.3
%
2024
2023
(In thousands)
Amount
% of pre-tax
income
Amount
% of pre-tax
income
Computed income tax at statutory states
$
298,732
37.5
%
253,327
37.5
%
Net benefit of tax-exempt interest income
(125,732)
(15.8)
(95,222)
(14.1)
Effect of income subject to preferential tax rate
(29)
-
(1,854)
(0.3)
Deferred tax asset valuation allowance
3,390
0.4
2,304
0.3
Difference in tax rates due to multiple jurisdictions
(17,111)
(2.1)
(12,857)
(1.9)
Change in tax rates
Unrecognized tax benefits
-
-
(1,529)
(0.2)
Other tax benefits
(4,500)
(0.6)
(2,925)
(0.4)
Tax on intercompany
distributions
24,325
3.1
-
-
States and local taxes
9,634
1.2
6,687
1.0
Others
(6,303)
(0.8)
(13,734)
(2.0)
Income tax expense
$
182,406
22.9
%
134,197
19.9
%
Deferred income taxes reflect the
net tax effects
of temporary differences between the
carrying amounts of assets and
liabilities for
financial reporting
purposes and
their tax
bases. Significant
components of
the Corporations
deferred tax
assets and
liabilities at
2025 and 2024 were as follows:
248
December 31, 2025
(In thousands)
PR
US
Total
Deferred tax assets:
Tax credits available
for carryforward
$
7,318
$
46,632
$
53,950
Net operating loss and other carryforward available
59,578
568,156
627,734
Postretirement and pension benefits
29,453
-
29,453
Allowance for credit losses
255,017
28,465
283,482
Deferred loan origination fees/cost
7,205
(2,474)
4,731
Depreciation
8,422
7,899
16,321
FDIC-assisted transaction
152,665
-
152,665
Lease liability
27,382
17,758
45,140
Unrealized net loss on investment securities
160,809
12,850
173,659
Difference in outside basis from pass-through entities
54,457
-
54,457
Mortgage Servicing Rights
15,375
-
15,375
Other temporary differences
26,347
7,586
33,933
Total gross deferred
tax assets
804,028
686,872
1,490,900
Deferred tax liabilities:
Intangibles
92,797
55,760
148,557
Right of use assets
24,846
15,875
40,721
Loans acquired
17,053
-
17,053
Other temporary differences
7,082
429
7,511
Total gross deferred
tax liabilities
141,778
72,064
213,842
Valuation allowance
78,153
386,587
464,740
Net deferred tax asset
$
584,097
$
228,221
$
812,318
December 31, 2024
(In thousands)
PR
US
Total
Deferred tax assets:
Tax credits available
for carryforward
$
4,861
$
24,728
$
29,589
Net operating loss and other carryforward available
52,211
610,279
662,490
Postretirement and pension benefits
27,786
-
27,786
Allowance for credit losses
247,153
24,415
271,568
Depreciation
7,700
7,229
14,929
FDIC-assisted transaction
152,665
-
152,665
Lease liability
25,167
16,451
41,618
Unrealized net loss on investment securities
252,411
20,996
273,407
Difference in outside basis from pass-through entities
50,144
-
50,144
Mortgage Servicing Rights
14,475
-
14,475
Other temporary differences
41,127
9,072
50,199
Total gross deferred
tax assets
875,700
713,170
1,588,870
Deferred tax liabilities:
Intangibles
88,351
55,926
144,277
Right of use assets
22,784
14,454
37,238
Deferred loan origination fees/cost
(1,880)
2,085
205
Loans acquired
18,415
-
18,415
Other temporary differences
6,799
429
7,228
Total gross deferred
tax liabilities
134,469
72,894
207,363
Valuation allowance
69,837
386,914
456,751
Net deferred tax asset
$
671,394
$
253,362
$
924,756
249
The net deferred tax
asset shown in the
table above at
December 31, 2025, is
reflected in the consolidated
statements of financial
condition as $
814.2
million in net deferred tax
assets (in the other assets
caption) (December 31, 2024 -
$
926.3
million) and $
1.9
million in deferred tax liabilities (in the other liabilities caption) (December 31, 2024- $
1.6
million), reflecting the aggregate deferred
tax assets or
liabilities of individual
tax-paying subsidiaries of the
Corporation in their
respective tax jurisdiction, Puerto
Rico or the
United States.
During the year ended December 31, 2025,
the net valuation allowance increased by approximately
$
8.0
million.
The deferred tax asset related to the NOLs and
other carryforwards as of December 31, 2025, expires
as follows:
(In thousands)
2027
406
2028
196,569
2029
118,594
2030
127,136
2031
103,555
2032
15,872
2033
21,032
2034
-
2035
44,570
$
627,734
At December
31, 2025, the
net deferred tax
asset of the
U.S. operations amounted
to $
614.8
million with
a valuation allowance
of
$
386.6
million, for a net deferred tax asset
of $
228.2
million. The Corporation evaluates the realization of the
deferred tax assets by
taxing jurisdiction,
on a quarterly basis.
The U.S. Operations have generated taxable income each of the last three years,
with 2025
having the highest
taxable income. 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
December 31,
2025, after weighting
all positive
and negative evidence,
the Corporation concluded
that it
is more
likely than
not that approximately $
228.2
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. operations
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 December 31,
2025, the Corporations
net deferred tax
assets related to
its Puerto Rico
operations amounted to
$
662.3
million.
The Corporations
Puerto Rico
Banking operation
has strong
historical record
of profitability.
This is
considered a
strong piece
of
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 Managements 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 $
78.2
million as of December 31, 2025.
250
The Corporations
subsidiaries in
the United
States file
a consolidated
federal income
tax return.
The intercompany
settlement of
taxes paid is based on tax sharing agreements
which generally allocate taxes to each
entity based on a separate return basis.
The following table presents a reconciliation of
unrecognized tax benefits.
(In millions)
Balance at January 1, 2024
$
1.5
Balance at December 31, 2024
$
1.5
Balance at December 31, 2025
$
1.5
At
December 31,
2025, the
total amount
of
interest recognized
in the
statement of
financial condition
approximated
$
2.5
million
(2024 - $
2.4
million). The total interest
expense recognized during 2025 was
$
110
thousand (2024 - $
110
thousand). Management
determined that, as of
December 31, 2025 and
2024, there was
no
need to accrue for
the payment of penalties.
The Corporations
policy is
to report
interest related
to unrecognized
tax benefits
in income
tax expense,
while the
penalties, if
any,
are reported
in
other operating expenses in the consolidated statements
of operations.
After consideration
of the
effect on
U.S. federal
tax of
unrecognized U.S.
state tax
benefits, the
total amount
of unrecognized
tax
benefits, including U.S. and Puerto Rico that, if recognized, would affect the Corporations effective tax rate, was approximately $
3.0
million at December 31, 2025 (2024 - $
3.0
million).
The amount of
unrecognized tax benefits
may increase or
decrease in the
future for various
reasons including adding amounts
for
current
tax
year
positions,
expiration
of
open
income
tax
returns
due
to
the
statute
of
limitations,
changes
in
managements
judgment about
the level
of uncertainty,
status of
examinations, litigation
and legislative
activity,
and the
addition or
elimination of
uncertain tax positions.
The Corporation does not anticipate a
reduction in the total amount
of unrecognized tax benefits within the
next 12 months.
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. As
of December 31,
2025, 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.
251
Note 35 Supplemental disclosure on the consolidated
statements of cash flows
Additional disclosures on cash flow information and
non-cash activities for the years ended December
31, 2025, 2024 and 2023 are
listed in the following table:
(In thousands)
2025
2024
2023
Income taxes paid
$
204,174
$
186,659
$
185,423
Interest paid
1,236,290
1,389,354
1,093,968
Non-cash activities:
Loans transferred to other real estate
30,755
43,082
60,976
Loans transferred to other property
87,209
83,851
72,069
Total loans transferred
to foreclosed assets
117,964
126,933
133,045
Loans transferred to other assets
47,338
50,478
28,616
Financed sales of other real estate assets
6,059
10,620
10,378
Financed sales of other foreclosed assets
56,384
52,385
49,361
Total financed sales
of foreclosed assets
62,443
63,005
59,739
Financed sale of premises and equipment
63,610
127,785
88,537
Transfers from premises and equipment to
long-lived assets held-for-sale
-
50,645
-
Transfers from loans held-in-portfolio to
loans held-for-sale
5,740
28,001
57,256
Transfers from loans held-for-sale to loans
held-in-portfolio
2,510
6,007
5,354
Loans securitized into investment securities
[1]
14,251
15,160
37,345
Trades payable to brokers and counterparties
595,911
495,139
30
Net change in receivables from investments securities
14,670
161,400
51,000
Recognition of mortgage servicing rights on securitizations
or asset transfers
1,133
1,364
2,097
Loans booked under the GNMA buy-back option
5,274
3,537
6,014
Capitalization of right of use assets
35,702
5,202
23,991
[1]
Includes loans securitized into trading securities and subsequently
sold before year end.
The following table provides a reconciliation of
cash and due from banks, and restricted cash
reported within the Consolidated
Statement of Financial Condition that sum to the total of
the same such amounts shown in the Consolidated
Statement of Cash
Flows.
(In thousands)
December 31, 2025
December 31, 2024
December 31, 2023
Cash and due from banks
$
396,735
$
411,375
$
383,385
Restricted cash and due from banks
6,020
8,263
37,077
Restricted cash in money market investments
10,234
9,768
7,113
Total cash and due
from banks, and restricted cash
[2]
$
412,989
$
429,406
$
427,575
[2]
Refer to Note 4 - Restrictions on cash and due from banks
and certain securities for nature of restrictions.
252
Note 36 Segment reporting
The
Corporations
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 segments
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 Corporations 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:
253
For the year ended December 31, 2025
Intersegment
(In thousands)
BPPR
Popular U.S.
Eliminations
Interest income
$
2,995,591
$
787,775
$
(3,145)
Interest expense
829,974
375,876
(3,145)
Net interest income
2,165,617
411,899
-
Provision for credit losses
241,032
19,280
-
Non-interest income
584,442
26,679
-
Personnel costs
655,433
109,053
-
Professional fees
52,088
10,978
-
Technology and
software expenses
262,540
39,583
-
Processing and transactional services
149,998
2,370
-
Amortization of intangibles
1,062
688
-
Goodwill impairment charge
-
13,000
-
Depreciation expense
42,664
8,979
-
Other operating expenses
[1]
483,255
103,437
-
Total operating
expenses
1,647,040
288,088
-
Income before income tax
861,987
131,210
-
Income tax expense
132,434
43,449
-
Net income
$
729,553
$
87,761
$
-
Segment assets
$
59,934,092
$
15,062,430
$
(66,857)
For the year ended December 31, 2025
Reportable
Total
(In thousands)
Segments
Corporate
Eliminations
Popular, Inc.
Interest income
$
3,780,221
$
6,654
$
(3,866)
$
3,783,009
Interest expense
1,202,705
42,967
(3,866)
1,241,806
Net interest income (expense)
2,577,516
(36,313)
-
2,541,203
Provision for credit losses (benefit)
260,312
(149)
-
260,163
Non-interest income
611,121
50,902
(4,004)
658,019
Personnel costs
764,486
140,728
-
905,214
Professional fees
63,066
48,145
(1,113)
110,098
Technology and
software expenses
302,123
39,482
-
341,605
Processing and transactional services
152,368
18
-
152,386
Amortization of intangibles
1,750
-
-
1,750
Goodwill impairment charge
13,000
-
-
13,000
Depreciation expense
51,643
1,587
-
53,230
Other operating expenses
[1]
586,692
(228,292)
(3,417)
354,983
Total operating
expenses
1,935,128
1,668
(4,530)
1,932,266
Income before income tax
993,197
13,070
526
1,006,793
Income tax expense
175,883
(2,554)
305
173,634
Net income
$
817,314
$
15,624
$
221
$
833,159
Segment assets
$
74,929,665
$
5,820,869
$
(5,402,267)
$
75,348,267
[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.
254
For the year ended December 31, 2024
Intersegment
(In thousands)
BPPR
Popular U.S.
Eliminations
Interest income
$
2,926,996
$
753,912
$
(10,600)
Interest expense
970,430
397,910
(10,600)
Net interest income
1,956,566
356,002
-
Provision for credit losses
254,843
1,369
-
Non-interest income
596,262
26,247
(56)
Personnel costs
601,652
104,948
-
Professional fees
58,687
12,562
(56)
Technology and
software expenses
254,584
37,884
-
Processing and transactional services
140,293
2,362
-
Amortization of intangibles
1,696
1,242
-
Depreciation expense
47,019
8,499
-
Other operating expenses
[1]
510,108
102,207
-
Total operating
expenses
1,614,039
269,704
(56)
Income before income tax
683,946
111,176
-
Income tax expense
128,207
33,549
-
Net income
$
555,739
$
77,627
$
-
Segment assets
$
58,601,802
$
14,333,292
$
(264,885)
For the year ended December 31, 2024
Reportable
Total
(In thousands)
Segments
Corporate
Eliminations
Popular, Inc.
Interest income
$
3,670,308
$
12,589
$
(9,634)
$
3,673,263
Interest expense
1,357,740
42,869
(9,634)
1,390,975
Net interest income (expense)
2,312,568
(30,280)
-
2,282,288
Provision for credit losses (benefit)
256,212
730
-
256,942
Non-interest income
622,453
41,046
(4,590)
658,909
Personnel costs
706,600
113,851
-
820,451
Professional fees
71,193
55,608
(979)
125,822
Technology and
software expenses
292,468
36,593
-
329,061
Processing and transactional services
142,655
22
-
142,677
Amortization of intangibles
2,938
-
-
2,938
Depreciation expense
55,518
1,560
-
57,078
Other operating expenses
[1]
612,315
(199,165)
(3,540)
409,610
Total operating
expenses
1,883,687
8,469
(4,519)
1,887,637
Income before income tax
795,122
1,567
(71)
796,618
Income tax expense (benefit)
161,756
20,609
41
182,406
Net income
$
633,366
$
(19,042)
$
(112)
$
614,212
Segment assets
$
72,670,209
$
5,895,389
$
(5,520,215)
$
73,045,383
[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.
255
December 31, 2023
Intersegment
(In thousands)
BPPR
Popular U.S.
Eliminations
Interest income
$
2,631,407
$
627,600
$
(16,432)
Interest expense
819,752
276,955
(16,434)
Net interest income
1,811,655
350,645
2
Provision for credit losses
(benefit)
194,325
14,584
-
Non-interest income
586,677
24,868
(404)
Personnel costs
571,516
102,994
-
Professional fees
79,108
17,410
(401)
Technology and
software expenses
232,652
31,890
-
Processing and transactional services
135,528
2,521
-
Amortization of intangibles
1,937
1,243
-
Goodwill impairment charge
-
23,000
-
Depreciation expense
49,135
7,888
-
Other operating expenses
[1]
544,767
99,438
(3)
Total operating
expenses
1,614,643
286,384
(404)
Income before income tax
589,364
74,545
2
Income tax expense (benefit)
117,412
18,198
-
Net income
$
471,952
$
56,347
$
2
Segment assets
$
57,023,071
$
13,812,158
$
(426,058)
December 31, 2023
Reportable
Total
(In thousands)
Segments
Corporate
Eliminations
Popular, Inc.
Interest income
$
3,242,575
$
18,141
$
(15,409)
$
3,245,307
Interest expense
1,080,273
48,919
(15,409)
1,113,783
Net interest income (expense)
2,162,302
(30,778)
-
2,131,524
Provision for credit losses
(benefit)
208,909
(300)
-
208,609
Non-interest income
611,141
44,410
(4,827)
650,724
Personnel costs
674,510
103,535
-
778,045
Professional fees
96,117
65,713
(688)
161,142
Technology and
software expenses
264,542
26,073
-
290,615
Processing and transactional services
138,049
21
-
138,070
Amortization of intangibles
3,180
-
-
3,180
Goodwill impairment charge
23,000
-
-
23,000
Depreciation expense
57,023
1,484
-
58,507
Other operating expenses (benefit)
[1]
644,202
(194,824)
(3,837)
445,541
Total operating
expenses
1,900,623
2,002
(4,525)
1,898,100
Income before income tax
663,911
11,930
(302)
675,539
Income tax expense
(benefit)
135,610
(1,333)
(80)
134,197
Net income
$
528,301
$
13,263
$
(222)
$
541,342
Segment assets
$
70,409,171
$
5,607,833
$
(5,258,849)
$
70,758,155
[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.
256
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.
BPPRs
banking
operations in
the mainland
United States
include commercial
lending activities
in addition
to
periodic loan
participations with
PB.
During
the
year
ended
December
31,
2025,
BPPR
participated
in
loans
originated
by
PB
totaling
$
29
million
(2024
-
did
no
t
participate, 2023 -
$
81
million). Total
assets for the BPPR
segment related to
its operations in
the United States
amounted to $
1.4
billion
(December
31,
2024
-
$
1.6
billion),
including
$
102
million
in
multifamily
loans
(December
31,
2024
-
$
104
million),
$
435
million in
commercial real
estate loans (December
31, 2024
- $
588
million), $
714
million in
C&I loans (December
31, 2024
- $
685
million), and
$
41
million in
unsecured personal
loans (December
31, 2024
- $
113
million). During
the year
ended December
31,
2025, the
BPPR segment generated
$
98.4
million (2024
- $
124.2
million, 2023 -
$
117.7
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 $
1.0
billion (December 31, 2024 - $
1.0
billion). The BPPR segment generated $
52.1
million in revenues during the year ended December
31, 2025 (2024 - $
43.4
million, 2023 - $
45.0
million) from its operations in the U.S. and
British Virgin Islands.
(In thousands)
2025
2024
2023
Revenues:
[1]
Puerto Rico
$
2,558,396
$
2,334,721
$
2,175,938
United States
542,287
520,534
518,805
Other
98,539
85,942
87,505
Total consolidated
revenues
$
3,199,222
$
2,941,197
$
2,782,248
[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 (loss) gain
on trading account debt securities, net gain (loss) on sale
of loans, including valuation
adjustments on loans held-for-sale, adjustments to indemnity
reserves on loans sold, and other operating income.
Selected Balance Sheet Information
(In thousands)
2025
2024
2023
Puerto Rico
Total assets
$
57,955,465
$
55,888,211
$
54,181,300
Loans
25,853,231
24,154,610
22,519,961
Deposits
52,451,498
52,099,309
51,282,007
United States
Total assets
$
16,101,705
$
15,890,339
$
15,343,156
Loans
12,966,468
12,431,859
12,006,012
Deposits
11,987,581
11,030,879
10,643,602
Other
Total assets
$
1,291,097
$
1,266,833
$
1,233,699
Loans
517,817
526,606
543,299
Deposits
[1]
1,751,014
1,754,157
1,692,634
[1]
Represents deposits from BPPR operations located in the
U.S. and British Virgin Islands.
257
Note 37 - Popular, Inc. (holding company only) financial information
The following
condensed financial
information presents
the financial
position of
Popular,
Inc. Holding
Company only
at December
31, 2025 and 2024, and the results of its
operations and cash flows for the years ended
December 31, 2025, 2024 and 2023.
Condensed Statements of Condition
December 31,
(In thousands)
2025
2024
ASSETS
Cash and due from banks (includes $
185,376
due from bank subsidiary (2024 - $
175,715
))
$
185,376
$
175,715
Money market investments
328,027
453,723
Debt securities held-to-maturity,
at amortized cost (includes $
3,125
in common
securities from statutory trusts (2024 - $
3,125
))
[1]
3,125
3,125
Equity securities, at lower of cost or realizable value
32,677
29,170
Investment in BPPR and subsidiaries, at equity
3,783,899
3,183,855
Investment in Popular North America and subsidiaries,
at equity
2,021,808
1,908,608
Investment in other non-bank subsidiaries, at equity
427,453
408,639
Other loans
24,301
25,662
Less - Allowance for credit losses
132
281
Premises and equipment
5,228
6,299
Investment in equity method investees
5,145
5,279
Other assets (includes $
1,967
due from subsidiaries and affiliate (2024 - $
3,875
))
73,887
48,986
Total assets
$
6,890,794
$
6,248,780
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable
$
500,706
$
499,346
Other liabilities (includes $
6,924
due to subsidiaries and affiliate (2024 - $
11,418
))
140,773
136,249
Stockholders equity
6,249,315
5,613,185
Total liabilities and
stockholders equity
$
6,890,794
$
6,248,780
[1] Refer to Note 17 to the consolidated financial statements
for information on the statutory trusts.
258
Condensed Statements of Operations
Years ended December 31,
(In thousands)
2025
2024
2023
Income:
Dividends from subsidiaries
$
596,500
$
623,000
$
208,000
Interest income (includes $
3,984
due from subsidiaries and affiliates (2024 -
$
9,693
; 2023 -
$
15,401
))
6,487
12,139
17,715
(Losses) earnings from investments in equity method investees
(135)
15
(84)
Other operating income
1
3
-
Net gain (losses), including impairment, on equity securities
297
(293)
2,012
Total income
603,150
634,864
227,643
Expenses:
Interest expense
36,738
36,640
42,691
Provision for credit losses (benefit)
(149)
230
(300)
Operating expenses (includes expenses for services provided
by subsidiaries and affiliate of
$
17,767
(2024 - $
13,265
; 2023 - $
13,463
)), net of reimbursement by subsidiaries for services
provided by parent of $
253,213
(2024 - $
226,299
; 2023 - $
215,479
)
315
730
924
Total expenses
36,904
37,600
43,315
Income before income taxes and equity in undistributed
earnings of subsidiaries
566,246
597,264
184,328
Income tax (benefit) expense
[1]
(2,053)
23,410
-
Income before equity in undistributed earnings of subsidiaries
568,299
573,854
184,328
Equity in undistributed earnings of subsidiaries
264,860
40,358
357,014
Net income
$
833,159
$
614,212
$
541,342
Comprehensive income, net of tax
$
1,312,312
$
848,503
$
1,170,739
[1] The net income
for the year ended
December 31, 2024,
included $22.9 million
of expenses, of
which $16.5 million
was reflected in income
tax
expense and $6.4 million
was reflected in other
operating expenses, related
to an out-of-period adjustment
associated with the Corporations
U.S.
subsidiarys non-payment of taxes
on certain intercompany distributions to
the Bank Holding Company (BHC)
in Puerto Rico, a foreign corporation
for U.S. tax purposes.
259
Condensed Statements of Cash Flows
Years ended December 31,
(In thousands)
2025
2024
2023
Cash flows from operating activities:
Net income
$
833,159
$
614,212
$
541,342
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in earnings of subsidiaries, net of dividends or
distributions
(264,860)
(40,358)
(357,014)
Provision for credit (benefit) losses
(149)
230
(300)
Net accretion of discounts and amortization of premiums and
deferred fees
1,347
1,248
1,754
Share-based compensation
14,527
10,785
9,735
Losses (earnings) from investments under the equity method,
net of dividends or distributions
135
(15)
84
Net increase in:
Equity securities
(3,507)
(5,176)
(5,158)
Other assets
(22,723)
(10,531)
(62)
Net increase (decrease) in:
Interest payable
-
-
3,239
Other liabilities
6,255
12,507
(3,377)
Total adjustments
(268,975)
(31,310)
(351,099)
Net cash provided by operating activities
564,184
582,902
190,243
Cash flows from investing activities:
Net decrease (increase) in money market investments
126,000
(210,000)
(165,000)
Net repayments on other loans
1,373
1,307
1,252
Capital contribution to subsidiaries
(10,000)
(1,725)
(4,150)
Return of capital from wholly owned subsidiaries
23,000
67,400
64,000
Acquisition of premises and equipment
(639)
(961)
(2,266)
Proceeds from sale of premises and equipment
123
135
68
Net cash provided by (used in) investing activities
139,857
(143,844)
(106,096)
Cash flows from financing activities:
Payments of notes payable
-
-
(300,000)
Proceeds from issuances of notes payable
-
-
393,061
Proceeds from issuances of common stock
16,698
16,312
14,045
Dividends paid
(197,568)
(180,461)
(159,860)
Net payments for repurchase of common stock
(504,815)
(218,619)
(1,396)
Payments related to tax withholding for share-based compensation
(8,392)
(6,699)
(4,083)
Net cash used in financing activities
(694,077)
(389,467)
(58,233)
Net increase in cash and due from banks, and restricted
cash
9,964
49,591
25,914
Cash and due from banks, and restricted cash at beginning
of period
178,438
128,847
102,933
Cash and due from banks, and restricted cash at end of period
$
188,402
$
178,438
$
128,847
260
During
the
year
ended
December
31,
2025,
Popular,
Inc.
(parent
company
only)
received
dividend
distributions
from
PIBIs
amounting to $
23.0
million (2024 - $
17.4
million; 2023 - $
14.0
million). PIBIs main source of income is its investment in BHD. There
were no dividend distributions from PNA for the year
ended December 31, 2025 (2024 - $
50.0
million; 2023 - $
50.0
million).
Notes payable include junior
subordinated debentures issued by
the Corporation that are
associated to capital securities
issued by
the
Popular Capital
Trust
II
and medium-term
notes. Refer
to
Note 17
for
a description
of
significant provisions
related to
these
junior subordinated
debentures. The following
table presents
the aggregate amounts
by contractual maturities
of notes
payable at
December 31, 2025:
Year
(In thousands)
2026
$
-
2027
-
2028
396,558
2029
-
2030
-
Later years
104,148
Total
$
500,706
261
SIGNATURES
Pursuant to the
requirements of Section
13 or
15 (d)
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 on March 2, 2026.
POPULAR, INC.
(Registrant)
By: /S/ JAVIER D. FERRER
Javier D. Ferrer
President and Chief Executive
Officer
Pursuant to the requirements
of the Securities Exchange Act
of 1934, this report
has been signed below by
the following persons
on behalf of the registrant and in the capacities
and on the dates indicated.
/S/ RICHARD L. CARRIN
Chairman of the Board
03/02/2026
Richard L. Carrin
Chairman of the Board
/S/ JAVIER D. FERRER
President, Chief Executive Officer
03/02/2026
Javier D. Ferrer
and Director
President and Chief Executive Officer
/S/ JORGE J. GARCA
Principal Financial Officer
03/02/2026
Jorge J. Garca
Executive
Vice
President
and
Chief
Financial
Officer
/S/ DENISSA M. RODRGUEZ
Principal Accounting Officer
03/02/2026
Denissa M. Rodrguez
Senior Vice President and Comptroller
/S/ ALEJANDRO M. BALLESTER
Director
03/02/2026
Alejandro M. Ballester
/S/ ROBERT CARRADY
Director
03/02/2026
Robert Carrady
/S/ BERTIL E. CHAPPUIS
Director
03/02/2026
Bertil E. Chappuis
/S/ BETTY DEVITA
Director
03/02/2026
Betty Devita
S/ MARA LUISA FERR
Director
03/02/2026
Mara Luisa Ferr
/S/ C. KIM GOODWIN
Director
03/02/2026
C. Kim Goodwin
/S/ JOS R. RODRGUEZ
Director
03/02/2026
Jos R. Rodrguez
/S/ ALEJANDRO M. SNCHEZ
Director
03/02/2026
Alejandro M. Snchez
/S/ MYRNA M. SOTO
Director
03/02/2026
Myrna M. Soto
/S/ CARLOS A. UNANUE
Director
03/02/2026
Carlos A. Unanue