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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10-Q
[X]
 
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended
 
September 30, 2024
or
[ ]
 
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number:
 
001-34084
POPULAR, INC.
(Exact name of registrant as specified in its charter)
Puerto Rico
66-0667416
(State or other jurisdiction of Incorporation or
(IRS Employer Identification Number)
organization)
Popular Center Building
209 Muñoz Rivera Avenue
Hato Rey
,
Puerto Rico
00918
(Address of principal executive offices)
(Zip code)
(
787
)
765-9800
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
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 Stock Market
6.125% Cumulative Monthly Income Trust
Preferred Securities
BPOPM
The
NASDAQ Stock Market
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.
[X]
 
Yes
[
 
]
 
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).
[X]
 
Yes
[
 
]
 
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company.
 
See 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[
 
]
 
Yes
[X]
 
No
Indicate
 
the
 
number
 
of
 
shares
 
outstanding
 
of
 
each
 
of
 
the
 
issuer’s
 
classes
 
of
 
common
 
stock,
 
as
 
of
 
the
 
latest
practicable date:
 
Common Stock, $0.01 par value,
71,306,133
 
shares outstanding as of November 7, 2024.
 
 
 
2
POPULAR INC
INDEX
Part I – Financial Information
Page
Item 1. Financial Statements
Unaudited Consolidated Statements of Financial Condition
 
at September 30, 2024
and December 31, 2023
6
Unaudited Consolidated Statements of Operations for
 
the quarters
 
and nine months ended September 30, 2024
 
and 2023
7
Unaudited Consolidated Statements of Comprehensive
 
Income (Loss) for the
quarters and nine months ended September 30,
 
2024 and 2023
8
Unaudited Consolidated Statements of Changes in
 
Stockholders’ Equity for the
quarters and nine months ended September 30,
 
2024 and 2023
9
Unaudited Consolidated Statements of Cash Flows for
 
the nine months
 
ended September 30, 2024 and 2023
11
Notes to Unaudited Consolidated Financial Statements
13
Item 2. Management’s Discussion and Analysis of Financial
 
Condition and
 
 
Results of Operations
135
Item 3. Quantitative and Qualitative Disclosures about
 
Market Risk
 
185
Item 4. Controls and Procedures
185
Part II – Other Information
Item 1. Legal Proceedings
185
Item 1A. Risk Factors
185
Item 2. Unregistered Sales of Equity Securities and
 
Use of Proceeds
185
Item 3. Defaults Upon Senior Securities
186
Item 4. Mine Safety Disclosures
186
Item 5. Other Information
186
Item 6. Exhibits
186
Signatures
188
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
Forward-Looking Statements
This
 
Form 10-Q
 
contains “forward-looking
 
statements” within
 
the meaning
 
of the
 
U.S. Private
 
Securities Litigation
 
Reform Act
 
of
1995,
 
including,
 
without
 
limitation,
 
statements
 
about
 
Popular,
 
Inc.’s
 
(the
 
“Corporation,”
 
“Popular,”
 
“we,”
 
“us,”
 
“our”)
 
business,
financial condition, results
 
of operations, plans,
 
objectives and future
 
performance. These statements
 
are not
 
guarantees of future
performance,
 
are
 
based
 
on
 
management’s
 
current
 
expectations
 
and,
 
by
 
their
 
nature,
 
involve
 
risks,
 
uncertainties,
 
estimates
 
and
assumptions. Potential
 
factors, some
 
of which
 
are beyond
 
the Corporation’s
 
control, could
 
cause actual
 
results to
 
differ materially
from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect
of competitive and
 
economic factors, and our
 
reaction to those factors,
 
the adequacy of
 
the allowance for loan
 
losses, delinquency
trends, market risk and the impact of interest rate changes, capital markets conditions, capital adequacy and liquidity,
 
and the effect
of legal and regulatory proceedings and new accounting
 
standards on the Corporation’s financial condition and
 
results of operations.
All statements
 
contained herein
 
that are
 
not clearly
 
historical in
 
nature are
 
forward-looking, and
 
the words
 
“anticipate,” “believe,”
“continues,” “expect,”
 
“estimate,” “intend,”
 
“project” and
 
similar expressions
 
and future
 
or conditional
 
verbs such
 
as “will,”
 
“would,”
“should,” “could,” “might,” “can,” “may” or similar
 
expressions are generally intended to identify
 
forward-looking statements.
 
Various factors, some of which
 
are beyond Popular’s control, could cause actual results to differ materially from those expressed in,
or implied by, such forward-looking statements. Factors that might cause such a
 
difference include, but are not limited to:
 
 
the
 
rate
 
of
 
growth
 
or
 
decline
 
in
 
the
 
economy
 
and
 
employment
 
levels,
 
as
 
well
 
as
 
general
 
business
 
and
 
economic
conditions
 
in
 
the
 
geographic
 
areas
 
we
 
serve
 
and,
 
in
 
particular,
 
in
 
the
 
Commonwealth
 
of
 
Puerto
 
Rico
 
(the
“Commonwealth” or “Puerto Rico”), where a significant
 
portion of our business is concentrated;
 
adverse
 
economic conditions,
 
including high
 
levels
 
of
 
inflation, that
 
adversely affect
 
housing
 
prices, the
 
job
 
market,
consumer confidence
 
and spending
 
habits which
 
may affect
 
in turn,
 
among other
 
things, our
 
level of
 
non-performing
assets, charge-offs and provision expense;
 
changes in interest rates and market liquidity,
 
which may reduce interest margins, impact funding sources, reduce loan
originations, affect
 
our ability
 
to originate
 
and distribute
 
financial products
 
in the
 
primary and
 
secondary markets
 
and
impact the value of our investment portfolio and
 
our ability to return capital to our shareholders;
 
the
 
impact
 
of
 
bank
 
failures
 
or
 
adverse
 
developments
 
at
 
other
 
banks
 
and
 
related
 
negative
 
media
 
coverage
 
of
 
the
banking industry in general on investor and depositor
 
sentiment regarding the stability and liquidity of
 
banks;
 
the impact of the current fiscal and economic challenges of Puerto Rico and the measures
 
taken and to be taken by the
Puerto
 
Rico
 
Government
 
and
 
the
 
Federally-appointed
 
oversight
 
board
 
on
 
the
 
economy,
 
our
 
customers
 
and
 
our
business;
 
the impact of the pending debt
 
restructuring proceedings under Title III of the
 
Puerto Rico Oversight, Management and
Economic
 
Stability
 
Act
 
(“PROMESA”)
 
and
 
of
 
other
 
actions
 
taken
 
or
 
to
 
be
 
taken
 
to
 
address
 
Puerto
 
Rico’s
 
fiscal
challenges on the value of our portfolio of Puerto Rico government securities and
 
loans to governmental entities and of
our
 
commercial,
 
mortgage
 
and
 
consumer
 
loan
 
portfolios
 
where
 
private
 
borrowers
 
could
 
be
 
directly
 
affected
 
by
governmental action;
 
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,
 
including
 
hurricanes,
 
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;
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
our ability to
 
achieve the expected
 
benefits from our
 
transformation initiative, including
 
our ability to
 
achieve projected
earnings, efficiencies and our targeted sustainable return on
 
tangible common equity of 14% by the end
 
of 2025;
 
risks related to Popular’s acquisition of certain information technology and related assets formerly used by Evertec, Inc.
to
 
service certain
 
of Banco
 
Popular de
 
Puerto Rico’s
 
key channels,
 
as well
 
as the
 
entry into
 
amended and
 
restated
commercial agreements (the “Evertec Business Acquisition
 
Transaction”);
 
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;
 
additional Federal Deposit Insurance Corporation (“FDIC”) assessments,
 
such as the special assessment implemented
by the FDIC to recover the losses to the deposit insurance fund (“DIF”)
 
resulting from the receiverships of Silicon Valley
Bank and Signature Bank;
 
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,
 
resulting
 
in,
 
among
 
other
things, loss or breach of customer data, disruption
 
of services, reputational damage or additional
 
costs to Popular;
 
changes in market rates and prices which may
 
adversely impact the value of financial assets
 
and liabilities;
 
potential judgments,
 
claims, damages,
 
penalties, fines,
 
enforcement actions
 
and
 
reputational damage
 
resulting from
pending or future litigation and regulatory or government
 
investigations or actions;
 
changes in accounting standards, rules and interpretations;
 
our ability to grow our core businesses;
 
decisions to downsize, sell or close branches or business
 
units or otherwise change our business mix;
 
and
 
management’s ability to identify and manage these and
 
other risks.
Moreover,
 
the
 
outcome
 
of
 
legal
 
and
 
regulatory
 
proceedings,
 
as
 
discussed
 
in
 
“Part
 
II,
 
Item
 
1.
 
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
the Corporation’s Annual
 
Report on Form
 
10-K for the
 
year ended December 31,
 
2023 (the “2023
 
Form 10-K”), as
 
well as “Part
 
II,
Item 1A”
 
of our
 
Quarterly Reports
 
on Form
 
10-Q for
 
a discussion
 
of such
 
factors and
 
certain risks
 
and uncertainties
 
to which
 
the
Corporation is subject.
5
All forward-looking
 
statements included
 
in this
 
Form 10-Q
 
are based
 
upon information
 
available to
 
Popular as
 
of the
 
date of
 
this
Form 10-Q, 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
POPULAR, INC.
CONSOLIDATED STATEMENTS
 
OF FINANCIAL CONDITION
(UNAUDITED)
[UNAUDITED]
September 30,
December 31,
(In thousands, except share information)
2024
2023
Assets:
Cash and due from banks
$
427,594
$
420,462
Money market investments:
 
Time deposits with other banks
 
6,530,788
6,998,871
Total money market investments
6,530,788
6,998,871
Trading account debt securities, at fair value:
 
Other trading account debt securities
30,843
31,568
Debt securities available-for-sale, at fair
 
value:
Pledged securities with creditors’ right to repledge
 
31,500
72,827
Other debt securities available-for-sale
17,154,623
16,656,217
Debt securities available-for-sale
17,186,123
16,729,044
Debt securities held-to-maturity, at amortized cost:
Pledged securities with creditors’ right to repledge
 
27,154
27,083
Other debt securities held-to-maturity
7,838,140
8,167,252
Debt securities held-to-maturity (fair
 
value 2024 - $
7,915,928
; 2023 - $
8,159,385
)
7,865,294
8,194,335
Less – Allowance for credit losses
5,430
5,780
Debt securities held-to-maturity, net
7,859,864
8,188,555
Equity securities (realizable value 2024 -
 
$
198,920
; 2023 - $
194,641
)
198,191
193,726
Loans held-for-sale, at fair value
5,509
4,301
Loans held-in-portfolio
36,599,612
35,420,879
Less – Unearned income
404,645
355,908
 
Allowance for credit losses
744,320
729,341
Total loans held-in-portfolio, net
35,450,647
34,335,630
Premises and equipment, net
624,376
565,284
Other real estate
63,028
80,416
Accrued income receivable
257,406
263,433
Mortgage servicing rights, at fair value
108,827
118,109
Other assets
1,767,919
2,014,564
Goodwill
804,428
804,428
Other intangible assets
7,531
9,764
Total assets
$
71,323,074
$
70,758,155
Liabilities and Stockholders’ Equity
Liabilities:
 
Deposits:
Non-interest bearing
$
15,276,071
$
15,419,624
Interest bearing
48,392,430
48,198,619
Total deposits
63,668,501
63,618,243
Assets sold under agreements to repurchase
55,360
91,384
Notes payable
918,376
986,948
Other liabilities
890,323
914,627
Total liabilities
65,532,560
65,611,202
Commitments and contingencies (Refer
 
to Note 20)
 
 
Stockholders’ equity:
 
Preferred stock,
30,000,000
 
shares authorized;
885,726
 
shares issued and outstanding (2023 -
885,726
)
22,143
22,143
Common stock, $
0.01
 
par value;
170,000,000
 
shares authorized;
104,832,712
 
shares issued (2023 -
104,767,348
) and
71,787,349
 
shares outstanding (2023 -
72,153,621
)
1,048
1,048
Surplus
4,853,869
4,843,399
Retained earnings
4,495,878
4,194,851
Treasury stock - at cost,
33,045,363
 
shares (2023 -
32,613,727
)
 
(2,069,430)
(2,018,957)
Accumulated other comprehensive loss, net
 
of tax
 
(1,512,994)
(1,895,531)
Total stockholders’ equity
 
5,790,514
5,146,953
Total liabilities and stockholders’ equity
$
71,323,074
$
70,758,155
The accompanying notes are an integral part of
 
these Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
POPULAR, INC.
CONSOLIDATED STATEMENTS
 
OF OPERATIONS
(UNAUDITED)
Quarters ended September 30,
Nine months ended September 30,
(In thousands, except per share information)
2024
2023
2024
2023
Interest income:
Loans
$
664,731
$
596,886
$
1,952,200
$
1,708,216
Money market investments
96,061
99,286
272,893
265,785
Investment securities
176,656
148,614
528,403
403,814
Total interest income
937,448
844,786
2,753,496
2,377,815
Interest expense:
 
Deposits
350,985
294,121
1,020,420
730,824
Short-term borrowings
1,430
1,478
3,748
5,987
Long-term debt
12,560
15,167
37,799
43,660
Total interest expense
364,975
310,766
1,061,967
780,471
Net interest income
572,473
534,020
1,691,529
1,597,344
Provision for credit losses
 
71,448
45,117
190,840
129,946
Net interest income after provision for credit losses
 
501,025
488,903
1,500,689
1,467,398
Non-interest income:
 
Service charges on deposit accounts
38,315
37,318
113,283
109,777
Other service fees
98,748
93,407
289,883
277,748
Mortgage banking activities (Refer to Note 9)
2,670
5,393
12,753
15,109
Net (loss) gain, including impairment on equity securities
(546)
(1,319)
876
1,165
Net gain on trading account debt securities
817
219
1,455
632
Net loss on sale of loans on loans held-for-sale, including
valuation adjustments
-
(44)
-
(44)
Adjustments to indemnity reserves on loans sold
808
(187)
783
(31)
Other operating income
23,270
24,762
75,173
77,625
Total non-interest income
164,082
159,549
494,206
481,981
Operating expenses:
 
Personnel costs
201,856
193,152
614,657
583,380
Net occupancy expenses
28,031
28,100
83,764
81,304
Equipment expenses
9,349
8,905
28,578
26,878
Other taxes
17,757
8,590
47,465
41,290
Professional fees
26,708
38,514
93,370
122,077
Technology and software expenses
 
88,452
72,930
247,666
213,843
Processing and transactional services
34,320
37,899
107,610
108,609
Communications
5,229
4,220
14,143
12,483
Business promotion
25,637
23,075
72,075
67,029
Deposit insurance
10,433
8,932
44,901
24,600
Other real estate owned (OREO) income
(2,674)
(5,189)
(13,745)
(10,197)
Other operating expenses
21,519
23,061
77,293
70,274
Amortization of intangibles
704
795
2,233
2,385
Goodwill impairment charge
-
23,000
-
23,000
Total operating expenses
467,321
465,984
1,420,010
1,366,955
Income before income tax
197,786
182,468
574,885
582,424
Income tax expense
42,463
45,859
138,490
135,676
Net Income
$
155,323
$
136,609
$
436,395
$
446,748
Net Income Applicable to Common Stock
 
$
154,970
$
136,256
$
435,336
$
445,689
Net Income per Common Share – Basic
$
2.16
$
1.90
$
6.06
$
6.22
Net Income per Common Share – Diluted
$
2.16
$
1.90
$
6.05
$
6.21
The accompanying notes are an integral part of
 
these Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
POPULAR, INC.
CONSOLIDATED STATEMENTS
 
OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Quarters ended,
 
Nine months ended,
September 30,
September 30,
(In thousands)
2024
2023
2024
2023
Net income
$
155,323
$
136,609
$
436,395
$
446,748
Other comprehensive income (loss) before
 
tax:
Foreign currency translation adjustment
615
(976)
(3,240)
(220)
Amortization of net losses of pension and
 
postretirement benefit plans
3,618
4,814
10,854
14,440
Unrealized holding gains (losses) on debt securities
 
arising during the period
 
380,927
(234,827)
330,319
(99,360)
Amortization of unrealized losses of debt
 
securities transfer from available-for-
sale to held-to-maturity
45,331
43,783
133,761
128,726
Unrealized net gains (losses) on cash flow
 
hedges
-
-
-
(30)
Reclassification adjustment for net gains( losses)
 
included in net income
-
-
-
(41)
Other comprehensive income (loss) before
 
tax
430,491
(187,206)
471,694
43,515
Income tax expense
(65,203)
(18,301)
(89,157)
(52,529)
Total other comprehensive income (loss), net of tax
365,288
(205,507)
382,537
(9,014)
Comprehensive income (loss), net of tax
$
520,611
$
(68,898)
$
818,932
$
437,734
Tax effect allocated to each component of other comprehensive
 
income (loss):
Quarters ended
Nine months ended,
September 30,
September 30,
(In thousands)
2024
2023
2024
2023
Adjustment of pension and postretirement
 
benefit plans
$
-
$
-
$
-
$
-
Amortization of net losses of pension and
 
postretirement benefit plans
(1,357)
(1,805)
(4,070)
(5,415)
Unrealized holding losses on debt securities
 
arising during the period
 
(54,779)
(7,740)
(58,334)
(21,396)
Amortization of unrealized losses of debt
 
securities transfer from available-for-
sale to held-to-maturity
(9,067)
(8,756)
(26,753)
(25,744)
Unrealized net (losses) gains on cash flow
 
hedges
-
-
-
11
Reclassification adjustment for net (gains)
 
losses included in net income
-
-
-
15
Income tax expense
$
(65,203)
$
(18,301)
$
(89,157)
$
(52,529)
The accompanying notes are an integral
 
part of the Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
POPULAR, INC.
CONSOLIDATED STATEMENTS
 
OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Accumulated
 
other
Common
Preferred
 
Retained
Treasury
comprehensive
(In thousands)
stock
stock
Surplus
earnings
stock
(loss) income
Total
Balance at June 30, 2023
$
1,047
$
22,143
$
4,795,581
$
4,093,284
$
(2,018,611)
$
(2,328,435)
$
4,565,009
Net income
136,609
136,609
Issuances of common stock
1
1,599
1,600
Dividends declared:
Common stock
[1]
(39,675)
(39,675)
Preferred stock
(353)
(353)
Common stock purchases
(250)
(250)
Stock based compensation
184
(9)
175
Other comprehensive loss, net of tax
(205,507)
(205,507)
Balance at September 30, 2023
 
$
1,048
$
22,143
$
4,797,364
$
4,189,865
$
(2,018,870)
$
(2,533,942)
$
4,457,608
Balance at June 30, 2024
$
1,048
$
22,143
$
4,852,747
$
4,385,522
$
(2,010,500)
$
(1,878,282)
$
5,372,678
Net income
155,323
155,323
Issuances of common stock
1,704
1,704
Dividends declared:
Common stock
[1]
(44,614)
(44,614)
Preferred stock
(353)
(353)
Common stock purchases
(59,147)
(59,147)
Stock based compensation
(582)
217
(365)
Other comprehensive income, net of tax
365,288
365,288
Balance at September 30, 2024
$
1,048
$
22,143
$
4,853,869
$
4,495,878
$
(2,069,430)
$
(1,512,994)
$
5,790,514
[1]
Dividends declared per common share during the quarter
 
ended September 30, 2024 - $
0.62
 
(2023 - $
0.55
).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
POPULAR, INC.
CONSOLIDATED STATEMENTS
 
OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Accumulated
 
other
Common
Preferred
 
Retained
Treasury
comprehensive
(In thousands)
stock
stock
Surplus
earnings
stock
(loss) income
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
446,748
446,748
Issuances of common stock
1
4,716
4,717
Dividends declared:
Common stock
[1]
(118,924)
(118,924)
Preferred stock
(1,059)
(1,059)
Common stock purchases
(4,491)
(4,491)
Stock based compensation
1,655
15,799
17,454
Other comprehensive loss, net of tax
(9,014)
(9,014)
Balance at September 30, 2023
 
$
1,048
$
22,143
$
4,797,364
$
4,189,865
$
(2,018,870)
$
(2,533,942)
$
4,457,608
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
436,395
436,395
Issuances of common stock
5,271
5,271
Dividends declared:
Common stock
[1]
(134,309)
(134,309)
Preferred stock
(1,059)
(1,059)
Common stock purchases
(65,923)
(65,923)
Stock based compensation
5,199
15,450
20,649
Other comprehensive income, net of tax
382,537
382,537
Balance at September 30, 2024
$
1,048
$
22,143
$
4,853,869
$
4,495,878
$
(2,069,430)
$
(1,512,994)
$
5,790,514
[1]
Dividends declared per common share during the nine months
 
ended September 30, 2024 - $
1.86
 
(2023 - $
1.65
).
For the period ended
September 30,
September 30,
Disclosure of changes in number of shares:
2024
2023
Preferred Stock:
Balance at beginning and end of period
885,726
885,726
Common Stock – Issued:
Balance at beginning of period
104,767,348
104,657,522
Issuances of common stock
65,364
82,789
Balance at end of period
104,832,712
104,740,311
Treasury stock
(33,045,363)
(32,612,716)
Common Stock – Outstanding
71,787,349
72,127,595
The accompanying notes are an integral part of these Consolidated
 
Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
POPULAR, INC.
CONSOLIDATED STATEMENTS
 
OF CASH FLOWS
(UNAUDITED)
Nine months ended September 30,
(In thousands)
2024
2023
Cash flows from operating activities:
Net income
$
436,395
$
446,748
Adjustments to reconcile net income to net cash provided
 
by operating activities:
Provision for credit losses
190,840
129,946
Goodwill impairment charge
-
23,000
Amortization of intangibles
2,233
2,385
Depreciation and amortization of premises and equipment
46,720
43,180
Net accretion of discounts and amortization of premiums and
 
deferred fees
 
(196,221)
(22,495)
Interest capitalized on loans subject to the temporary payment
 
moratorium or loss mitigation alternatives
(5,933)
(7,956)
Share-based compensation
17,853
15,079
Fair value adjustments on mortgage servicing rights
10,280
11,135
Adjustments to indemnity reserves on loans sold
(783)
31
Earnings from investments under the equity method, net
 
of dividends or distributions
(12,723)
(17,387)
Deferred income tax expense (benefit)
 
19,247
(13,539)
(Gain) loss on:
Disposition of premises and equipment and other productive
 
assets
(7,651)
(9,744)
Proceeds from insurance claims
-
(145)
Sale of loans, including valuation adjustments on loans
 
held-for-sale and mortgage banking activities
(396)
177
Sale of foreclosed assets, including write-downs
(13,590)
(18,137)
Acquisitions of loans held-for-sale
(5,810)
(6,678)
Proceeds from sale of loans held-for-sale
28,697
35,286
Net originations on loans held-for-sale
(31,284)
(60,285)
Net decrease (increase) in:
Trading debt securities
10,445
29,415
Equity securities
(7,337)
(7,481)
Accrued income receivable
 
6,032
(17,638)
Other assets
15,425
(981)
Net (decrease) increase in:
Interest payable
(4,785)
8,009
Pension and other postretirement benefits obligation
5,937
11,985
Other liabilities
(28,352)
(100,887)
Total adjustments
38,844
26,275
Net cash provided by operating activities
475,239
473,023
Cash flows from investing activities:
 
Net decrease (increase) in money market investments
469,042
(775,597)
Purchases of investment securities:
Available-for-sale
(24,469,345)
(12,665,449)
Held-to-maturity
-
(8,615)
Equity
(2,370)
(18,279)
Proceeds from calls, paydowns, maturities and redemptions
 
of investment securities:
Available-for-sale
24,670,995
13,138,765
Held-to-maturity
508,511
308,129
Proceeds from sale of investment securities:
 
 
Equity
5,242
30,926
Net disbursements on loans
(833,899)
(1,609,387)
Proceeds from sale of loans
18,266
133,078
Acquisition of loan portfolios
(510,556)
(556,659)
Return of capital from equity method investments
279
249
Payments to acquire equity method investments
(1,250)
(1,500)
Acquisition of premises and equipment and other productive
 
assets
(153,085)
(133,598)
Proceeds from insurance claims
-
145
Proceeds from sale of:
Premises and equipment and other productive assets
5,570
6,620
Foreclosed assets
82,986
84,446
Net cash used in investing activities
(209,614)
(2,066,726)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Cash flows from financing activities:
 
Net increase (decrease) in:
Deposits
46,924
2,085,956
Assets sold under agreements to repurchase
 
(36,024)
(55,538)
Other short-term borrowings
-
(365,000)
Payments of notes payable
(69,570)
(321,000)
Principal payments of finance leases
(2,717)
(3,557)
Proceeds from issuances of notes payable
-
437,411
Proceeds from issuances of common stock
5,271
4,716
Dividends paid
(135,495)
(119,715)
Net payments for repurchase of common stock
(59,556)
(414)
Payments related to tax withholding for share-based compensation
(6,367)
(4,077)
Net cash (used in) provided by financing activities
(257,534)
1,658,782
Net increase in cash and due from banks, and restricted
 
cash
8,091
65,079
Cash and due from banks, and restricted cash at beginning
 
of period
427,575
476,159
Cash and due from banks, and restricted cash at the end of
 
the period
$
435,666
$
541,238
The accompanying notes are an integral part of these Consolidated
 
Financial Statements.
13
Notes to Consolidated Financial
 
Statements
 
(Unaudited)
Note 1 -
Nature of operations
14
Note 2 -
Basis of presentation
15
Note 3 -
New accounting pronouncements
16
Note 4 -
Restrictions on cash and due from banks and
certain securities
19
Note 5 -
Debt securities available-for-sale
20
Note 6 -
Debt securities held-to-maturity
23
Note 7 -
Loans
27
Note 8 -
Allowance for credit losses – loans held-in-
portfolio
36
Note 9 -
Mortgage banking activities
78
Note 10 -
Transfers of financial assets and mortgage
servicing assets
79
Note 11 -
Other real estate owned
83
Note 12 -
Other assets
84
Note 13 -
Goodwill and other intangible assets
 
85
Note 14 -
Deposits
89
Note 15 -
Borrowings
90
Note 16 -
Other liabilities
92
Note 17 -
Stockholders’ equity
93
Note 18 -
Other comprehensive income (loss)
 
94
Note 19 -
Guarantees
96
Note 20 -
Commitments and contingencies
98
Note 21-
Non-consolidated variable interest entities
102
Note 22 -
Related party transactions
104
Note 23 -
Fair value measurement
105
Note 24 -
Fair value of financial instruments
113
Note 25 -
Net income per common share
116
Note 26 -
Revenue from contracts with customers
117
Note 27 -
Leases
120
Note 28 -
Pension and postretirement benefits
122
Note 29 -
Stock-based compensation
123
Note 30 -
Income taxes
126
Note 31 -
Supplemental disclosure on the consolidated
statements of cash flows
130
Note 32 -
Segment reporting
131
14
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 U.S.
 
and British Virgin
 
Islands. In Puerto
 
Rico, the Corporation
 
provides retail, mortgage,
 
and
commercial banking services,
 
through its principal
 
banking subsidiary,
 
Banco Popular de
 
Puerto Rico (“BPPR”),
 
as well as
 
broker-
dealer,
 
auto and
 
equipment leasing
 
and financing,
 
and insurance
 
services through
 
specialized subsidiaries.
 
In the
 
U.S. mainland,
the
 
Corporation provides
 
retail, mortgage,
 
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.
 
15
Note 2 – Basis of Presentation
 
Basis of Presentation
The (unaudited) interim Consolidated Financial Statements are, in the opinion of management, a fair statement of the results
 
for the
periods reported
 
and include
 
all necessary
 
adjustments, all
 
of a
 
normal recurring
 
nature, for
 
a fair
 
statement of
 
such results.
 
The
consolidated statement of financial
 
condition presented as of
 
December 31, 2023 was
 
derived from audited Consolidated Financial
Statements of the Corporation for the year ended
 
December 31, 2023.
Certain
 
information
 
and
 
notes
 
to
 
the
 
financial
 
statements
 
disclosures
 
which
 
would
 
normally
 
be
 
included
 
in
 
financial
 
statements
prepared in
 
accordance
 
with Accounting
 
Principles
 
Generally Accepted
 
in
 
the
 
United
 
States
 
of
 
America
 
(US
 
GAAP), have
 
been
condensed or omitted from the unaudited financial statements pursuant
 
to the rules and regulations of the
 
Securities and Exchange
Commission.
 
Accordingly,
 
these
 
financial
 
statements
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
audited
 
Consolidated
 
Financial
Statements of
 
the Corporation
 
for the
 
year ended
 
December 31,
 
2023,
 
included in
 
the 2023
 
Form 10-K.
 
Operating results
 
for the
interim periods disclosed herein are not necessarily
 
indicative of the results that may be expected
 
for a full year or any future period.
 
Tax impact on Intercompany Distributions
 
The
 
net income
 
for the
 
nine months
 
ended September
 
30, 2024
 
included $
22.9
 
million of
 
expenses, of
 
which $
16.5
 
million
 
was
reflected in income
 
tax expense and
 
$
6.4
 
million was reflected
 
in other operating
 
expenses, related to
 
an out-of-period adjustment
associated with the Corporation’s U.S. subsidiary’s
 
non-payment of taxes on certain intercompany
 
distributions to the Bank Holding
Company
 
(BHC)
 
in
 
Puerto
 
Rico,
 
a
 
foreign
 
corporation
 
for
 
U.S.
 
tax
 
purposes.
 
The
 
adjustment
 
corrected
 
errors
 
for
 
income
 
tax
expense
 
that
 
should
 
have
 
been
 
recognized
 
of
 
$
5.5
 
million
 
and
 
$
5.4
 
million
 
in
 
the
 
years
 
2023
 
and
 
2022,
 
respectively,
 
and
 
an
aggregate
 
of
 
$
5.6
 
million,
 
in
 
the
 
years
 
prior
 
to
 
2022.
 
The
 
$
6.4
 
million
 
recognized
 
as
 
other
 
operating
 
expense
 
corresponded
 
to
interest due up to March 31, 2024 on the related late payment of the
 
withholding tax, of which approximately $
3.0
 
million correspond
to years
 
prior to
 
2022. As
 
a result
 
of this
 
adjustment, the
 
deferred tax
 
asset related
 
to NOL
 
of the
 
BHC and
 
its
 
related valuation
allowance was reduced by $
53.7
 
million. The Corporation evaluated the impact of the out-of-period
 
adjustment and concluded it was
not material
 
to any previously
 
issued interim or
 
annual consolidated financial statements
 
and the adjustment
 
is not expected
 
to be
material to the year ending December 31, 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.
16
Note 3 - New accounting pronouncements
 
Recently Adopted Accounting Standards Updates
Standard
Description
Date of adoption
Effect on the financial statements
 
FASB ASU 2023-02,
Investments—Equity
Method and Joint
Ventures (Topic 323) -
Accounting for
Investments in Tax Credit
Structures Using the
Proportional Amortization
Method
The
 
Financial Accounting
 
Standards Board
("FASB")
 
issued
 
Accounting
 
Standard
Update
 
("ASU")
 
2023-02
 
in
 
March
 
2023,
which
 
amends
 
Accounting
 
Standards
Codification
 
("ASC")
 
Topic
 
323
 
by
permitting the election to apply the
proportional amortization method to account
for
 
tax
 
equity
 
investments
 
that
 
generate
income
 
tax
 
credits
 
through
 
investment
 
in
low-income-housing
 
tax
 
credit
 
(LIHTC)
structures
 
and
 
other
 
tax
 
credit
 
programs
 
if
certain
 
conditions
 
are
 
met.
 
The
 
ASU
 
also
eliminates
 
the
 
application
 
of
 
the
 
ASC
Subtopic 323-740 to LIHTC investments not
accounted
 
for
 
using
 
the
 
proportional
amortization
 
method
 
and
 
instead
 
requires
the use of other guidance.
January 1, 2024
The
 
Corporation
 
was
 
not
 
impacted
 
by
the
 
adoption of
 
this
 
ASU
 
since
 
it does
not
 
hold
 
investments
 
in
 
tax
 
equity
investments.
FASB ASU 2023-01,
Leases (Topic 842) -
Common Control
Arrangements
The FASB issued ASU 2023-01 in March
2023, which amends ASC Topic 842 and
requires the amortization leasehold
improvements associated with common
control leases over the useful life of the
leasehold improvements to the common
control group as long as the lessee controls
the use of the underlying assets through a
lease. In addition, the ASU requires
companies to account for leasehold
improvements associated with common
control leases as a transfer between entities
under common control through an
adjustments to equity if, and when, the
lessee no longer controls the use of the
underlying asset.
January 1, 2024
The
 
Corporation
 
was
 
not
 
impacted
 
by
the
 
adoption of
 
this
 
ASU
 
since
 
it does
not
 
hold
 
common
 
control
 
leasehold
improvements, however, it
 
will consider
this
 
guidance
 
to
 
determine
 
the
amortization
 
period for
 
and
 
accounting
treatment
 
of
 
leasehold
 
improvements
associated with common control
 
leases
acquired on or after the effective date.
FASB ASU 2022-03, Fair
Value Measurement
(Topic 820) - Fair Value
Measurement of Equity
Securities Subject to
Contractual Sale
Restriction
The FASB issued ASU 2022-03 in June
2022, which clarifies that a contractual
restriction that prohibits the sale of an equity
security is not considered part of the unit of
account of the equity security, therefore, is
not considered in measuring its fair value.
The ASU also provides enhanced
disclosures for equity securities subject to a
contractual sale restriction.
January 1, 2024
The
 
Corporation
 
was
 
not
 
impacted
 
by
the
 
adoption
 
of
 
this
 
accounting
pronouncement
 
since
 
it
 
does
 
not
 
hold
equity securities measured at
 
fair value
with sale restrictions.
17
 
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
 
FASB ASU 2024-03,
Income Statement—
Reporting Comprehensive
Income—Expense
Disaggregation
Disclosures (Subtopic
220-40): Disaggregation of
Income Statement
Expenses
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
any
 
impact
 
that
 
the
 
adoption
 
of
 
this
guidance
 
will
 
have
 
on
 
its
 
financial
statements
 
and
 
presentation
 
and
disclosures.
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
 
FASB
Accounting
 
Standards
 
Codification.
 
The
ASU
 
intends
 
to
 
simplify
 
the
 
Codification
and
 
distinguish
 
between
 
nonauthoritative
and authoritative guidance.
January 1, 2025
The Corporation
 
does not
 
expect to
 
be
impacted
 
by
 
the
 
adoption
 
of
 
this
 
ASU
since it does
 
not provide for accounting
changes
 
or
 
new
 
presentation
 
or
disclosure
 
requirements.
 
The
 
ASU
eliminated
 
references
 
within
 
the
Accounting
 
Standards
 
Codification
 
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
 
does not
 
expect to
 
be
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)
 
from
 
continuing
 
operations
 
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.
For fiscal years
beginning on
January 1, 2025
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 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 does not expect to be
impacted by the adoption of this ASU
since it does not hold crypto-assets.
18
 
Accounting Standards Updates Not Yet Adopted
Standard
Description
Date of adoption
Effect on the financial statements
 
FASB ASU 2023-07,
Segment Reporting (Topic
280) - Improvements to
Reportable Segment
Disclosures
The
 
FASB
 
issued
 
ASU
 
2023-07
 
in
November 2023,
 
which amends
 
ASC Topic
 
280
 
by
 
requiring
 
additional
 
disclosures
about significant segment expenses.
For fiscal years
beginning on
January 1, 2024
For interim periods
within fiscal years
beginning after
January 1, 2025
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 2023-06,
Disclosure Improvements -
Codification Amendments
in Response to the SEC’s
 
Disclosure Update and
Simplification Initiative
The FASB
 
issued ASU
 
2023-06 in
 
October
2023
 
which
 
modifies
 
the
 
disclosure
 
or
presentation
 
requirements
 
of
 
various
subtopics
 
in
 
the
 
Codification
 
with
 
the
purpose
 
of
 
aligning
 
U.S.
 
GAAP
requirements
 
with
 
those
 
of
 
the
 
SEC
 
under
Regulation S-X and S-K.
 
The date on which
the SEC removes
related disclosure
requirements from
Regulation S-X or
Regulation S-K. If by
June 30, 2027, the
SEC has not
removed the
applicable
requirements from
Regulation S-X or
Regulation S-K, the
pending content of
the related
amendment will be
removed from the
Codification and will
not become
 
effective for any
entity.
The Corporation
 
does not
 
expect to
 
be
impacted
 
by
 
the
 
adoption
 
of
 
this
 
ASU
since
 
it
 
is
 
currently
 
subject
 
to
 
SEC's
current
 
disclosure
 
and
 
presentation
requirements under Regulation S-X and
S-K.
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
 
does not
 
expect to
 
be
impacted
 
by
 
the
 
adoption
 
of
 
this
 
ASU
but it
 
will consider this
 
guidance for the
initial
 
measurement
 
of
 
assets
 
and
liabilities
 
of
 
newly
 
created
 
joint
ventures.
19
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.
 
Average reserve
 
balances in BPPR
 
amounted to $
2.1
 
billion at
 
September 30, 2024
 
(December 31, 2023
 
-
$
2.7
 
billion). Cash and
 
due from banks,
 
as well
 
as other highly
 
liquid securities, are
 
used to cover
 
these required average
 
reserve
balances.
 
At
 
September
 
30,
 
2024,
 
the
 
Corporation
 
held
 
$
61
 
million
 
in
 
restricted
 
assets
 
in
 
the
 
form
 
of
 
funds
 
deposited
 
in
 
money
 
market
accounts, debt
 
securities available for
 
sale and
 
equity securities (December
 
31, 2023
 
- $
78
 
million).
 
The restricted
 
assets held
 
in
debt securities available for
 
sale and equity securities
 
consist primarily of assets
 
held for the Corporation’s
 
non-qualified retirement
plans and fund deposits guaranteeing possible liens
 
or encumbrances over the title of insured
 
properties.
20
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 September 30, 2024 and December 31,
 
2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At September 30, 2024
Gross
Gross
Weighted
Amortized
unrealized
unrealized
Fair
 
average
(In thousands)
cost
gains
 
losses
value
yield
U.S. Treasury securities
Within 1 year
$
8,914,560
$
1,555
$
45,154
$
8,870,961
3.77
%
After 1 to 5 years
2,715,749
3,393
65,673
2,653,469
2.35
Total U.S. Treasury
 
securities
11,630,309
4,948
110,827
11,524,430
3.44
Collateralized mortgage obligations - federal agencies
After 1 to 5 years
12,176
-
393
11,783
1.54
After 5 to 10 years
16,512
-
763
15,749
2.25
After 10 years
107,656
403
7,038
101,021
2.76
Total collateralized
 
mortgage obligations - federal agencies
136,344
403
8,194
128,553
2.59
Mortgage-backed securities - federal agencies
Within 1 year
1,393
-
14
1,379
1.69
After 1 to 5 years
74,263
11
1,993
72,281
2.39
After 5 to 10 years
781,628
244
33,408
748,464
2.36
After 10 years
5,603,282
1,480
895,746
4,709,016
1.67
Total mortgage-backed
 
securities - federal agencies
6,460,566
1,735
931,161
5,531,140
1.76
Other
Within 1 year
500
-
-
500
4.00
After 1 to 5 years
1,500
-
-
1,500
8.50
Total other
 
2,000
-
-
2,000
7.38
Total debt securities
 
available-for-sale
[1]
$
18,229,219
$
7,086
$
1,050,182
$
17,186,123
2.84
%
[1]
 
Includes $
12.9
 
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 $
12.1
 
billion serve as collateral for
public funds.
 
The Corporation had unpledged Available
 
for Sale securities with a fair value of
 
$
4.2
 
billion that could be used to increase its
borrowing facilities.
21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At December 31, 2023
Gross
 
Gross
 
Weighted
 
Amortized
 
unrealized
unrealized
Fair
 
average
 
(In thousands)
cost
gains
 
losses
value
yield
U.S. Treasury securities
 
Within 1 year
$
7,103,518
$
526
$
59,415
$
7,044,629
3.51
%
After 1 to 5 years
3,598,209
84
170,209
3,428,084
1.35
After 5 to 10 years
307,512
-
33,164
274,348
1.63
Total U.S. Treasury
 
securities
11,009,239
610
262,788
10,747,061
2.75
Collateralized mortgage obligations - federal agencies
After 1 to 5 years
17,899
-
838
17,061
1.55
After 5 to 10 years
20,503
2
1,321
19,184
2.28
After 10 years
108,280
29
9,868
98,441
2.54
Total collateralized
 
mortgage obligations - federal agencies
146,682
31
12,027
134,686
2.38
Mortgage-backed securities - federal agencies
Within 1 year
637
-
3
634
3.72
After 1 to 5 years
82,310
11
3,536
78,785
2.34
After 5 to 10 years
792,431
75
48,250
744,256
2.28
After 10 years
6,067,353
667
1,046,909
5,021,111
1.64
Total mortgage-backed
 
securities - federal agencies
6,942,731
753
1,098,698
5,844,786
1.72
Other
Within 1 year
1,011
-
-
1,011
4.00
After 1 to 5 years
1,500
-
-
1,500
8.50
Total other
 
2,511
-
-
2,511
6.69
Total debt securities
 
available-for-sale
[1]
$
18,101,163
$
1,394
$
1,373,513
$
16,729,044
2.35
%
[1]
Includes $
12
 
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 $
11.1
 
billion serve as collateral for
public funds. The Corporation had unpledged Available
 
for Sale securities with a fair value of
 
$
4.6
 
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
 
based
 
on
 
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.
At September 30, 2024, 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 nine
 
months ended
September 30, 2024 and 2023.
 
 
 
22
The
 
following
 
tables
 
present
 
the
 
Corporation’s
 
fair
 
value
 
and
 
gross
 
unrealized
 
losses
 
of
 
debt
 
securities
 
available-for-sale,
aggregated by investment category and length of
 
time that individual securities have been in a continuous
 
unrealized loss position at
September 30, 2024 and December 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At September 30, 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
$
651,502
$
2,369
$
4,457,595
$
108,458
$
5,109,097
$
110,827
Collateralized mortgage obligations - federal agencies
 
1,909
2
109,743
8,192
111,652
8,194
Mortgage-backed securities
27,420
569
5,428,612
930,592
5,456,032
931,161
Total debt securities
 
available-for-sale in an unrealized loss position
 
$
680,831
$
2,940
$
9,995,950
$
1,047,242
$
10,676,781
$
1,050,182
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At December 31, 2023
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
$
244,925
$
5,126
$
6,550,941
$
257,662
$
6,795,866
$
262,788
Collateralized mortgage obligations - federal agencies
 
5,234
35
124,930
11,992
130,164
12,027
Mortgage-backed securities
37,118
405
5,779,260
1,098,293
5,816,378
1,098,698
Total debt securities
 
available-for-sale in an unrealized loss position
 
$
287,277
$
5,566
$
12,455,131
$
1,367,947
$
12,742,408
$
1,373,513
As
 
of
 
September
 
30,
 
2024,
 
the
 
portfolio
 
of
 
available-for-sale
 
debt
 
securities
 
reflects
 
gross
 
unrealized
 
losses
 
of
 
$
1.1
 
billion
(December 31,
 
2023 -
 
$
1.4
 
billion), driven
 
mainly by
 
mortgage-backed securities,
 
which have
 
been impacted
 
by a
 
decline in
 
fair
value as a result of the rising interest rate
 
environment.
 
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”). As
 
discussed in
 
Note 2
 
of the
 
2023 Form
 
10-K, 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.
 
 
23
Note 6 –Debt securities held-to-maturity
The following
 
tables present
 
the amortized
 
cost, allowance
 
for credit
 
losses, gross
 
unrealized gains
 
and losses,
 
approximate fair
value, weighted
 
average yield
 
and contractual maturities
 
of debt
 
securities held-to-maturity
 
at September 30,
 
2024 and
 
December
31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At September 30, 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
$
599,518
$
599,518
$
-
$
599,518
$
-
$
4,538
$
594,980
2.70
%
After 1 to 5 years
7,725,178
7,200,448
-
7,200,448
62,265
2,958
7,259,755
1.31
Total U.S. Treasury
 
securities
8,324,696
7,799,966
-
7,799,966
62,265
7,496
7,854,735
1.41
Obligations of Puerto Rico, States and
political subdivisions
Within 1 year
2,440
2,440
7
2,433
4
2
2,435
6.39
After 1 to 5 years
16,474
16,474
84
16,390
62
83
16,369
3.69
After 5 to 10 years
655
655
22
633
22
-
655
5.81
After 10 years
38,276
38,276
5,317
32,959
3,561
2,144
34,376
1.42
Total obligations of
 
Puerto Rico, States and
political subdivisions
57,845
57,845
5,430
52,415
3,649
2,229
53,835
2.33
Collateralized mortgage obligations - federal
agencies
After 10 years
1,523
1,523
-
1,523
-
125
1,398
2.87
Total collateralized
 
mortgage obligations -
federal agencies
1,523
1,523
-
1,523
-
125
1,398
2.87
Securities in wholly owned statutory business
trusts
After 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]
$
8,390,024
$
7,865,294
$
5,430
$
7,859,864
$
65,914
$
9,850
$
7,915,928
1.42
%
[1]
Book value includes $
525
 
million of net 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 $
7.8
 
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 $
66
.0 million that could be used to increase its borrowing facilities.
 
24
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At December 31, 2023
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
$
597,768
$
597,768
$
-
$
597,768
$
-
$
7,526
$
590,242
2.58
%
After 1 to 5 years
7,971,072
7,335,159
-
7,335,159
637
21,996
7,313,800
1.39
After 5 to 10 years
211,061
188,484
-
188,484
-
187
188,297
1.50
Total U.S. Treasury
 
securities
8,779,901
8,121,411
-
8,121,411
637
29,709
8,092,339
1.47
Obligations of Puerto Rico, States and
political subdivisions
`
Within 1 year
4,820
4,820
9
4,811
3
-
4,814
6.17
After 1 to 5 years
20,171
20,171
147
20,024
96
125
19,995
3.80
After 5 to 10 years
845
845
28
817
28
-
845
5.80
After 10 years
39,572
39,572
5,596
33,976
2,814
2,766
34,024
1.41
Total obligations of
 
Puerto Rico, States and
political subdivisions
65,408
65,408
5,780
59,628
2,941
2,891
59,678
2.55
Collateralized mortgage obligations - federal
agencies
Within 1 year
13
13
-
13
-
-
13
6.44
After 10 years
1,543
1,543
-
1,543
-
148
1,395
2.87
Total collateralized
 
mortgage obligations -
federal agencies
1,556
1,556
-
1,556
-
148
1,408
2.90
Securities in wholly owned statutory business
trusts
After 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]
$
8,852,825
$
8,194,335
$
5,780
$
8,188,555
$
3,578
$
32,748
$
8,159,385
1.48
%
[1]
Book value includes $
658
 
million of net 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 as
 
discussed in Note 6 of the 2023 Form
10-K.
[2]
Includes $
8.1
 
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
 
$
67.3
 
million that could be used to increase its borrowing
 
facilities.
Debt 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.
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
 
of
 
2023 Form
 
10-K,
 
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.
At
 
September 30,
 
2024 and
 
December 31,
 
2023, the
 
“Obligations of
 
Puerto Rico,
 
States and
 
political subdivisions”
 
classified as
held-to-maturity,
 
includes securities
 
issued by
 
municipalities of
 
Puerto Rico
 
that are
 
generally not
 
rated by
 
a credit
 
rating agency.
This includes
 
$
13
 
million of
 
general and
 
special obligation
 
bonds issued
 
by three
 
municipalities of
 
Puerto Rico,
 
that are
 
payable
primarily from certain property
 
taxes imposed by the
 
issuing municipality (December 31,
 
2023 - $
19
 
million). In the
 
case of general
obligations, they
 
also benefit
 
from a
 
pledge of
 
the full
 
faith, credit
 
and unlimited
 
taxing power
 
of the
 
issuing municipality,
 
which is
required by law to levy property taxes in an amount sufficient for the payment of
 
debt service on such general obligation bonds. The
Corporation performs periodic credit quality
 
reviews of these securities and internally
 
assigns standardized credit risk ratings based
on its evaluation. The
 
Corporation considers these ratings in
 
its estimate to develop the
 
allowance for credit losses
 
associated with
these
 
securities.
 
For
 
the
 
definitions
 
of
 
the
 
obligor
 
risk
 
ratings,
 
refer
 
to
 
the
 
Credit
 
Quality
 
section
 
of
 
Note
 
8
 
to
 
the
 
Consolidated
Financial Statements.
 
 
25
The
 
following
 
presents
 
the
 
amortized
 
cost
 
basis
 
of
 
securities
 
held
 
by
 
the
 
Corporation
 
issued
 
by
 
municipalities
 
of
 
Puerto
 
Rico
aggregated by the internally assigned standardized
 
credit risk rating:
 
 
 
 
 
 
 
 
At September 30, 2024
At December 31, 2023
(In thousands)
Securities issued by Puerto Rico municipalities
Watch
$
1,555
$
2,255
Pass
11,060
16,565
Total
$
12,615
$
18,820
At September
 
30, 2024,
 
the portfolio
 
of “Obligations
 
of Puerto
 
Rico, States
 
and political
 
subdivisions” also
 
includes $
38
 
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, 2023 -
 
$
40
 
million). These
securities are not rated by a credit rating agency.
 
The
 
Corporation
 
assesses
 
the
 
credit
 
risk
 
associated
 
with
 
these
 
securities
 
by
 
evaluating
 
the
 
refreshed
 
FICO
 
scores
 
of
 
a
representative sample of
 
the underlying
 
borrowers. As
 
of September 30,
 
2024, the
 
average refreshed FICO
 
score for
 
the sample,
comprised
 
of
70
%
 
of
 
the
 
nominal
 
value
 
of
 
the
 
securities,
 
used
 
for
 
the
 
loss
 
estimate
 
was
 
of
672
 
(compared
 
to
67
%
 
and
708
,
respectively, at
 
December 31, 2023).
 
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
 
PROMESA) could adversely
affect the value of these securities, resulting in losses to
 
the Corporation.
 
Refer to
 
Note 20
to the
 
Consolidated Financial
 
Statements
for additional
 
information on
 
the Corporation’s
 
exposure to
 
the Puerto
Rico Government.
At September 30,
 
2024 and December 31,
 
2023, the portfolio of
 
“Obligations of Puerto Rico,
 
States and political subdivisions”
 
also
includes
 
$
7
 
million
 
in securities
 
issued
 
by the
 
HFA
 
for
 
which the
 
underlying source
 
of
 
payment
 
is U.S.
 
Treasury
 
securities.
 
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. Refer
 
to Note 2 of 2023 Form 10-K for further details.
Delinquency status
At September 30, 2024 and December 31, 2023, 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 following table provides the
 
activity in the allowance for
 
credit losses related to debt securities
 
held-to-maturity by security type
for the quarters and nine months ended
 
September 30, 2024 and September 30, 2023:
 
 
26
 
 
 
 
 
 
 
 
 
 
For the quarters ended September 30,
 
2024
2023
(In thousands)
Obligations of Puerto Rico, States and political subdivisions
Allowance for credit losses:
Beginning balance
$
6,251
$
6,145
Provision for credit losses (benefit)
(821)
(88)
Securities charged-off
-
-
Recoveries
-
-
Ending balance
$
5,430
$
6,057
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30,
 
2024
2023
(In thousands)
Obligations of Puerto Rico, States and political subdivisions
Allowance for credit losses:
Beginning balance
$
5,780
$
6,911
Provision for credit losses (benefit)
(350)
(854)
Securities charged-off
-
-
Recoveries
-
-
Ending balance
$
5,430
$
6,057
The
 
allowance
 
for
 
credit
 
losses
 
for
 
the
 
Obligations
 
of
 
Puerto
 
Rico,
 
States
 
and
 
political
 
subdivisions
 
includes
 
$
0.1
 
million
 
for
securities issued by municipalities of
 
Puerto Rico, and $
5.3
 
million for bonds issued by
 
the Puerto Rico HFA,
 
which are secured by
second mortgage loans on
 
Puerto Rico residential properties (compared to
 
$
0.2
 
million and $
5.6
 
million, respectively, at
 
December
31, 2023).
27
Note 7 – Loans
For
 
a summary
 
of
 
the accounting
 
policies related
 
to
 
loans, interest
 
recognition and
 
allowance for
 
credit
 
losses
 
refer to
 
Note
 
2
 
Summary of Significant Accounting Policies of the 2023
 
Form 10-K.
During the
 
quarter and
 
nine months
 
ended September
 
30, 2024,
 
the Corporation
 
recorded purchases
 
(including repurchases)
 
of
mortgage
 
loans
 
amounting
 
to
 
$
97
 
million
 
and
 
$
268
 
million,
 
respectively
 
(September
 
30,
 
2023
 
-
 
$
102
 
million
 
and
 
$
274
 
million,
respectively). The
 
Corporation did
no
t purchase
 
consumer loans
 
during the
 
quarter and
 
nine months
 
ended September
 
30, 2024
(during the quarter and nine months ended September 30, 2023 - $
55
 
million and $
127
 
million, respectively). During the quarter and
nine months
 
ended September
 
30, 2024,
 
the Corporation
 
purchased $
33
 
million and
 
$
248
 
million commercial
 
loans, respectively
(September 30, 2023 - $
79
 
million and $
162
 
million, respectively).
The Corporation performed whole-loan sales involving approximately $
9
 
million and $
33
 
million of residential mortgage loans during
the
 
quarter
 
and
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
respectively
 
(September
 
30,
 
2023
 
-
 
$
12
 
million
 
and
 
$
39
 
million,
respectively). During the
 
nine months ended
 
September 30, 2024,
 
the Corporation performed
 
sales of commercial
 
loans, including
loan participations
 
amounting to
 
$
12
 
million. The
 
Corporation did
no
t perform
 
sales of
 
commercial loans
 
during the
 
quarter ended
September 30, 2024 (during the quarter and nine
 
months ended September 30, 2023 - $
45
 
million and $
81
 
million, respectively).
 
During the quarter and nine months ended September 30, 2024, the Corporation
 
securitized approximately $
3
 
million and $
4
 
million,
respectively,
 
of
 
mortgage
 
loans
 
into
 
GNMA
 
mortgage-backed
 
securities
 
(September
 
30,
 
2023
 
-
 
$
1
 
million
 
and
 
$
2
 
million,
respectively), and $
3
 
million and $
7
 
million, respectively, of
 
mortgage loans into FNMA mortgage-backed securities (September 30,
2023 - $
10
 
million and $
33
 
million, respectively).
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
September 30, 2024 and December 31, 2023.
 
 
28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
1,866
$
-
$
87
$
1,953
$
303,581
$
305,534
$
87
$
-
Commercial real estate:
Non-owner occupied
170
174
7,493
7,837
3,140,418
3,148,255
7,493
-
Owner occupied
1,544
1,681
26,600
29,825
1,374,025
1,403,850
26,600
-
Commercial and industrial
19,074
6,694
23,819
49,587
5,126,538
5,176,125
19,639
4,180
Construction
-
-
-
-
190,343
190,343
-
-
Mortgage
246,220
122,592
359,986
728,798
5,966,619
6,695,417
157,920
202,066
Leasing
19,840
4,661
7,367
31,868
1,855,184
1,887,052
7,367
-
Consumer:
Credit cards
16,210
11,415
27,214
54,839
1,132,050
1,186,889
-
27,214
Home equity lines of credit
-
-
-
-
2,131
2,131
-
-
Personal
21,726
13,153
21,007
55,886
1,698,195
1,754,081
20,992
15
Auto
104,363
26,090
47,828
178,281
3,640,326
3,818,607
47,828
-
Other
727
500
1,188
2,415
154,775
157,190
889
299
Total
$
431,740
$
186,960
$
522,589
$
1,141,289
$
24,584,185
$
25,725,474
$
288,815
$
233,774
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
1,060
$
-
$
8,700
$
9,760
$
2,090,008
$
2,099,768
$
8,700
$
-
Commercial real estate:
Non-owner occupied
10,330
3,013
2,282
15,625
2,021,501
2,037,126
2,282
-
Owner occupied
250
1,825
22,248
24,323
1,664,220
1,688,543
22,248
-
Commercial and industrial
11,478
2,312
5,443
19,233
2,205,195
2,224,428
5,246
197
Construction
-
34,349
-
34,349
888,615
922,964
-
-
Mortgage
899
3,640
28,434
32,973
1,264,958
1,297,931
28,434
-
Consumer:
Credit cards
-
-
-
-
4
4
-
-
Home equity lines of
credit
74
984
3,834
4,892
62,668
67,560
3,834
-
Personal
1,696
2,015
1,837
5,548
113,546
119,094
1,837
-
Other
10
508
2
520
11,555
12,075
2
-
Total
$
25,797
$
48,646
$
72,780
$
147,223
$
10,322,270
$
10,469,493
$
72,583
$
197
 
 
29
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
2,926
$
-
$
8,787
$
11,713
$
2,393,589
$
2,405,302
$
8,787
$
-
Commercial real estate:
Non-owner occupied
10,500
3,187
9,775
23,462
5,161,919
5,185,381
9,775
-
Owner occupied
1,794
3,506
48,848
54,148
3,038,245
3,092,393
48,848
-
Commercial and industrial
30,552
9,006
29,262
68,820
7,331,733
7,400,553
24,885
4,377
Construction
-
34,349
-
34,349
1,078,958
1,113,307
-
-
Mortgage
[1]
247,119
126,232
388,420
761,771
7,231,577
7,993,348
186,354
202,066
Leasing
19,840
4,661
7,367
31,868
1,855,184
1,887,052
7,367
-
Consumer:
Credit cards
16,210
11,415
27,214
54,839
1,132,054
1,186,893
-
27,214
Home equity lines of credit
74
984
3,834
4,892
64,799
69,691
3,834
-
Personal
23,422
15,168
22,844
61,434
1,811,741
1,873,175
22,829
15
Auto
104,363
26,090
47,828
178,281
3,640,326
3,818,607
47,828
-
Other
737
1,008
1,190
2,935
166,330
169,265
891
299
Total
$
457,537
$
235,606
$
595,369
$
1,288,512
$
34,906,455
$
36,194,967
$
361,398
$
233,971
[1]
At September 30, 2024, mortgage loans held-in-portfolio
 
include $
2.5
 
billion of loans that carry certain guarantees from
 
the FHA or the VA, for
which the Corporation’s policy is to exclude them
 
from non-performing status, of which $
202.2
 
million are 90 days or more past due. The portfolio
of guaranteed loans includes $
70
 
million of residential mortgage loans in Puerto Rico
 
that are no longer accruing interest as of September
 
30,
2024. The Corporation has approximately $
32
 
million in reverse mortgage loans in Puerto Rico
 
which are guaranteed by FHA, but which are
currently not accruing interest at September 30, 2024.
[2]
Loans held-in-portfolio are net of $
405
 
million in unearned income and exclude $
6
 
million in loans held-for-sale.
[3]
Includes $
14.7
 
billion pledged to secure credit facilities and public funds
 
that the secured parties are not permitted to sell or repledge
 
the collateral,
of which $
7.3
 
billion were pledged at the Federal Home Loan Bank
 
("FHLB") as collateral for borrowings and $
7.4
 
billion at the Federal Reserve
Bank ("FRB") for discount window borrowings. As of September
 
30, 2024, the Corporation had an available borrowing
 
facility with the FHLB and
the discount window of Federal Reserve Bank of New York
 
of $
4
.0 billion and $
5.8
 
billion, respectively.
 
 
30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
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
$
524
$
-
$
1,991
$
2,515
$
289,427
$
291,942
$
1,991
$
-
Commercial real estate:
Non-owner occupied
5,510
77
8,745
14,332
2,990,922
3,005,254
8,745
-
Owner occupied
2,726
249
29,430
32,405
1,365,978
1,398,383
29,430
-
Commercial and industrial
6,998
3,352
36,210
46,560
4,749,666
4,796,226
32,826
3,384
Construction
-
-
6,378
6,378
163,479
169,857
6,378
-
Mortgage
260,897
114,282
416,528
791,707
5,600,117
6,391,824
175,106
241,422
Leasing
20,140
6,719
8,632
35,491
1,696,318
1,731,809
8,632
-
Consumer:
Credit cards
13,243
9,912
23,281
46,436
1,089,292
1,135,728
-
23,281
Home equity lines of credit
230
-
26
256
2,392
2,648
-
26
Personal
19,065
14,611
19,031
52,707
1,723,603
1,776,310
19,031
-
Auto
100,061
27,443
45,615
173,119
3,487,661
3,660,780
45,615
-
Other
1,641
204
1,213
3,058
147,104
150,162
964
249
Total
$
431,035
$
176,849
$
597,080
$
1,204,964
$
23,305,959
$
24,510,923
$
328,718
$
268,362
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
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
$
9,141
$
2,001
$
-
$
11,142
$
2,112,536
$
2,123,678
$
-
$
-
Commercial real estate:
Non-owner occupied
566
1,036
1,117
2,719
2,079,448
2,082,167
1,117
-
Owner occupied
30,560
-
6,274
36,834
1,645,418
1,682,252
6,274
-
Commercial and industrial
7,815
697
3,881
12,393
2,317,502
2,329,895
3,772
109
Construction
-
-
-
-
789,423
789,423
-
-
Mortgage
48,818
7,821
11,191
67,830
1,236,263
1,304,093
11,191
-
Consumer:
Credit cards
-
-
-
-
19
19
-
-
Home equity lines of credit
1,472
4
3,733
5,209
58,096
63,305
3,733
-
Personal
 
2,222
1,948
2,805
6,975
161,962
168,937
2,805
-
Other
4
-
1
5
10,274
10,279
1
-
Total
$
100,598
$
13,507
$
29,002
$
143,107
$
10,410,941
$
10,554,048
$
28,893
$
109
 
 
31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
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
$
9,665
$
2,001
$
1,991
$
13,657
$
2,401,963
$
2,415,620
$
1,991
$
-
Commercial real estate:
Non-owner occupied
6,076
1,113
9,862
17,051
5,070,370
5,087,421
9,862
-
Owner occupied
33,286
249
35,704
69,239
3,011,396
3,080,635
35,704
-
Commercial and industrial
14,813
4,049
40,091
58,953
7,067,168
7,126,121
36,598
3,493
Construction
-
-
6,378
6,378
952,902
959,280
6,378
-
Mortgage
[1]
309,715
122,103
427,719
859,537
6,836,380
7,695,917
186,297
241,422
Leasing
20,140
6,719
8,632
35,491
1,696,318
1,731,809
8,632
-
Consumer:
Credit cards
13,243
9,912
23,281
46,436
1,089,311
1,135,747
-
23,281
Home equity lines of credit
1,702
4
3,759
5,465
60,488
65,953
3,733
26
Personal
21,287
16,559
21,836
59,682
1,885,565
1,945,247
21,836
-
Auto
100,061
27,443
45,615
173,119
3,487,661
3,660,780
45,615
-
Other
1,645
204
1,214
3,063
157,378
160,441
965
249
Total
$
531,633
$
190,356
$
626,082
$
1,348,071
$
33,716,900
$
35,064,971
$
357,611
$
268,471
[1]
At December 31, 2023, mortgage loans held-in-portfolio
 
include $
2.2
 
billion of loans that carry certain guarantees from
 
the FHA or the VA, for
which the Corporation’s policy is to exclude them
 
from non-performing status, of which $
241.6
 
million are 90 days or more past due. The portfolio
of guaranteed loans includes $
106
 
million of residential mortgage loans in Puerto Rico
 
that are no longer accruing interest as of December
 
31,
2023. The Corporation has approximately $
38
 
million in reverse mortgage loans in Puerto Rico
 
which are guaranteed by FHA, but which are
currently not accruing interest at December 31, 2023.
[2]
Loans held-in-portfolio are net of $
356
 
million in unearned income and exclude $
4
 
million in loans held-for-sale.
[3]
Includes $
14.2
 
billion pledged to secure credit facilities and public funds
 
that the secured parties are not permitted to sell or repledge
 
the collateral,
of which $
7.0
 
billion were pledged at the FHLB as collateral for borrowings
 
and $
7.2
 
billion at the FRB for discount window borrowings. As
 
of
December 31, 2023, the Corporation had an available borrowing
 
facility with the FHLB and the discount window
 
of FRB of $
3.5
 
billion and $
4.4
billion, respectively.
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 Corporation discontinues the recognition of interest income on residential mortgage loans insured by the
FHA or guaranteed by the VA when 15 months
 
delinquent as to principal or interest, since the principal repayment on these loans is
insured.
Loans with
 
a delinquency
 
status of
 
90 days
 
past due
 
as of
 
September 30,
 
2024 include
 
$
8
 
million in
 
loans previously
 
pooled into
GNMA securities (December 31, 2023 -
 
$
11
 
million). Under the GNMA program, issuers
 
such as BPPR have the
 
option but not the
obligation to repurchase loans
 
that are 90
 
days or more
 
past due. For
 
accounting purposes, these loans
 
subject to the
 
repurchase
option
 
are
 
required to
 
be
 
reflected on
 
the
 
financial statements
 
of BPPR
 
with
 
an
 
offsetting
 
liability.
 
Loans
 
in
 
our
 
serviced
 
GNMA
portfolio benefit
 
from payment
 
forbearance programs
 
but continue
 
to reflect
 
the contractual
 
delinquency until
 
the borrower
 
repays
deferred payments or completes a payment deferral
 
modification or other borrower assistance alternative.
 
The following tables present the amortized cost basis
 
of non-accrual loans as of September 30, 2024
 
and December 31, 2023 by
class of loans:
 
 
32
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
-
$
87
$
8,700
$
-
$
8,700
$
87
Commercial real estate non-owner occupied
3,514
3,979
1,332
950
4,846
4,929
Commercial real estate owner occupied
17,870
8,730
22,248
-
40,118
8,730
Commercial and industrial
9,020
10,619
-
5,246
9,020
15,865
Mortgage
68,248
89,672
206
28,228
68,454
117,900
Leasing
445
6,922
-
-
445
6,922
Consumer:
 
HELOCs
-
-
-
3,834
-
3,834
 
Personal
 
3,649
17,343
-
1,837
3,649
19,180
 
Auto
 
2,077
45,751
-
-
2,077
45,751
 
Other
-
889
-
2
-
891
Total
$
104,823
$
183,992
$
32,486
$
40,097
$
137,309
$
224,089
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
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
$
-
$
1,991
$
-
$
-
$
-
$
1,991
Commercial real estate non-owner occupied
3,695
5,050
-
1,117
3,695
6,167
Commercial real estate owner occupied
20,432
8,998
3,877
2,397
24,309
11,395
Commercial and industrial
6,991
25,835
-
3,772
6,991
29,607
Construction
-
6,378
-
-
-
6,378
Mortgage
84,677
90,429
120
11,071
84,797
101,500
Leasing
481
8,151
-
-
481
8,151
Consumer:
 
HELOCs
-
-
-
3,733
-
3,733
 
Personal
 
3,589
15,442
-
2,805
3,589
18,247
 
Auto
 
1,833
43,782
-
-
1,833
43,782
 
Other
263
701
-
1
263
702
Total
$
121,961
$
206,757
$
3,997
$
24,896
$
125,958
$
231,653
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, 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. 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 September 30, 2024 include $
137
 
million in collateral dependent loans (December
31,
 
2023 -
 
$
126
 
million). The
 
Corporation recognized
 
$
3
 
million in
 
interest income
 
on non-accrual
 
loans during
 
the nine
 
months
ended September 30, 2024 (September 30, 2023
 
- $
3
 
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 September
 
30, 2024
 
and December
 
31,
2023:
 
33
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
(In thousands)
Real Estate
Auto
Equipment
Other
Total
BPPR
Commercial multi-family
$
1,293
$
-
$
-
$
-
$
1,293
Commercial real estate:
Non-owner occupied
168,887
-
-
-
168,887
Owner occupied
23,683
-
-
-
23,683
Commercial and industrial
3,304
-
-
12,177
15,481
Construction
768
-
-
-
768
Mortgage
75,374
-
-
-
75,374
Leasing
-
1,367
1
-
1,368
Consumer:
Personal
3,961
-
-
-
3,961
Auto
-
15,173
-
-
15,173
Other
-
-
-
36
36
Total BPPR
$
277,270
$
16,540
$
1
$
12,213
$
306,024
Popular U.S.
Commercial multi-family
$
19,270
$
-
$
-
$
-
$
19,270
Commercial real estate:
Non-owner occupied
1,332
-
-
-
1,332
Owner occupied
22,248
-
-
-
22,248
Commercial and industrial
-
-
35
-
35
Mortgage
1,529
-
-
-
1,529
Total Popular U.S.
$
44,379
$
-
$
35
$
-
$
44,414
Popular, Inc.
Commercial multi-family
$
20,563
$
-
$
-
$
-
$
20,563
Commercial real estate:
Non-owner occupied
170,219
-
-
-
170,219
Owner occupied
45,931
-
-
-
45,931
Commercial and industrial
3,304
-
35
12,177
15,516
Construction
768
-
-
-
768
Mortgage
76,903
-
-
-
76,903
Leasing
-
1,367
1
-
1,368
Consumer:
Personal
3,961
-
-
-
3,961
Auto
-
15,173
-
-
15,173
Other
-
-
-
36
36
Total Popular,
 
Inc.
$
321,649
$
16,540
$
36
$
12,213
$
350,438
 
34
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
(In thousands)
Real Estate
Auto
Equipment
Other
Total
BPPR
Commercial multi-family
$
1,339
$
-
$
-
$
-
$
1,339
Commercial real estate:
Non-owner occupied
160,555
-
-
-
160,555
Owner occupied
25,848
-
-
-
25,848
Commercial and industrial
1,103
-
-
30,287
31,390
Construction
6,378
-
-
-
6,378
Mortgage
85,113
-
-
-
85,113
Leasing
-
1,373
-
-
1,373
Consumer:
Personal
4,338
-
-
-
4,338
Auto
-
12,965
-
-
12,965
Other
-
-
-
305
305
Total BPPR
$
284,674
$
14,338
$
-
$
30,592
$
329,604
Popular U.S.
Commercial real estate:
Owner occupied
$
3,877
$
-
$
-
$
-
$
3,877
Commercial and industrial
-
-
105
400
505
Construction
5,990
-
-
-
5,990
Mortgage
1,303
-
-
-
1,303
Total Popular U.S.
$
11,170
$
-
$
105
$
400
$
11,675
Popular, Inc.
Commercial multi-family
$
1,339
$
-
$
-
$
-
$
1,339
Commercial real estate:
Non-owner occupied
160,555
-
-
-
160,555
Owner occupied
29,725
-
-
-
29,725
Commercial and industrial
1,103
-
105
30,687
31,895
Construction
12,368
-
-
-
12,368
Mortgage
86,416
-
-
-
86,416
Leasing
-
1,373
-
-
1,373
Consumer:
Personal
4,338
-
-
-
4,338
Auto
-
12,965
-
-
12,965
Other
-
-
-
305
305
Total Popular,
 
Inc.
$
295,844
$
14,338
$
105
$
30,992
$
341,279
 
 
35
Purchased Credit Deteriorated (PCD) Loans
The Corporation has purchased loans during
 
the quarter and nine months ended September 30,
 
2024 and 2023, for which there
was, at acquisition, evidence of more than insignificant
 
deterioration of credit quality since origination.
 
The carrying amount of those
loans is as follows:
 
 
 
 
 
 
 
 
(In thousands)
For the quarter ended
September 30, 2024
For the nine months
ended September 30,
2024
Purchase price of loans at acquisition
$
105
$
681
Allowance for credit losses at acquisition
3
26
Par value of acquired loans at acquisition
$
108
$
707
 
 
 
 
 
 
 
 
(In thousands)
For the quarter ended
September 30, 2023
For the nine months
ended September 30,
2023
Purchase price of loans at acquisition
$
227
$
759
Allowance for credit losses at acquisition
9
87
Non-credit discount / (premium) at acquisition
-
9
Par value of acquired loans at acquisition
$
236
$
855
36
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
 
Corporation’s modeling
 
framework includes
competing risk
 
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
 
September
 
30,
 
2024,
 
the
 
Corporation
 
estimated
 
the
 
ACL
 
by
 
weighting
 
the
 
outputs
 
of
 
optimistic,
 
baseline,
 
and
 
pessimistic
scenarios. Among
 
the three
 
scenarios used
 
to estimate
 
the ACL,
 
the baseline
 
is assigned
 
the highest
 
probability,
 
followed by
 
the
pessimistic
 
scenario
 
given
 
the
 
uncertainties
 
in
 
the
 
economic
 
outlook
 
and
 
downside
 
risk.
 
The
 
weightings
 
applied
 
are
 
subject
 
to
evaluation on
 
a quarterly
 
basis as
 
part of
 
the ACL’s
 
governance process. The
 
Corporation evaluates, at
 
least on
 
an annual
 
basis,
the
 
assumptions
 
tied
 
to
 
the
 
CECL
 
accounting
 
framework.
 
These
 
include
 
the
 
reasonable
 
and
 
supportable
 
period
 
as
 
well
 
as
 
the
reversion window.
The following tables
 
present the changes in
 
the ACL of
 
loans held-in-portfolio and
 
unfunded commitments for the
 
quarter and nine
months ended September 30, 2024 and 2023.
 
37
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2024
BPPR
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-offs
Recoveries
Balances
Allowance for credit losses - loans:
Commercial
 
Commercial multi-family
$
3,303
$
(417)
$
-
$
-
$
-
$
2,886
 
Commercial real estate non-owner occupied
53,386
3,344
-
(69)
59
56,720
 
Commercial real estate owner occupied
39,375
(2,418)
-
(2)
1,556
38,511
 
Commercial and industrial
111,263
16,597
-
(6,190)
1,461
123,131
 
Total Commercial
207,327
17,106
-
(6,261)
3,076
221,248
Construction
3,638
(970)
-
-
1,036
3,704
Mortgage
73,900
(5,221)
3
(208)
4,102
72,576
Leasing
14,385
3,725
-
(3,630)
1,374
15,854
Consumer
 
Credit cards
86,313
21,238
-
(17,503)
2,646
92,694
 
Home equity lines of credit
83
(90)
-
(82)
158
69
 
Personal
94,021
20,232
-
(24,712)
2,526
92,067
 
Auto
157,449
20,765
-
(23,011)
6,110
161,313
 
Other
6,489
362
-
(728)
526
6,649
 
Total Consumer
344,355
62,507
-
(66,036)
11,966
352,792
Total - Loans
$
643,605
$
77,147
$
3
$
(76,135)
$
21,554
$
666,174
Allowance for credit losses - unfunded commitments:
Commercial
$
5,540
$
816
$
-
$
-
$
-
$
6,356
Construction
2,095
373
-
-
-
2,468
Ending balance - unfunded commitments [1]
$
7,635
$
1,189
$
-
$
-
$
-
$
8,824
[1] Allowance for credit losses of unfunded commitments
 
is presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
38
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 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
$
7,877
$
(1,126)
$
-
$
5
$
6,756
Commercial real estate non-owner occupied
10,849
53
(54)
62
10,910
Commercial real estate owner occupied
18,815
(4,430)
-
19
14,404
Commercial and industrial
15,219
(1,617)
(613)
241
13,230
Total Commercial
52,760
(7,120)
(667)
327
45,300
Construction
9,251
259
-
-
9,510
Mortgage
9,389
(361)
-
46
9,074
Consumer
Home equity lines of credit
1,643
22
(4)
124
1,785
Personal
13,427
2,799
(4,442)
691
12,475
Other
2
23
(28)
5
2
Total Consumer
15,072
2,844
(4,474)
820
14,262
Total - Loans
$
86,472
$
(4,378)
$
(5,141)
$
1,193
$
78,146
Allowance for credit losses - unfunded commitments:
Commercial
$
2,850
$
(1,080)
$
-
$
-
$
1,770
Construction
8,399
(609)
-
-
7,790
Ending balance - unfunded commitments [1]
$
11,249
$
(1,689)
$
-
$
-
$
9,560
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
39
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 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
$
11,180
$
(1,543)
$
-
$
-
$
5
$
9,642
Commercial real estate non-owner occupied
64,235
3,397
-
(123)
121
67,630
Commercial real estate owner occupied
58,190
(6,848)
-
(2)
1,575
52,915
Commercial and industrial
126,482
14,980
-
(6,803)
1,702
136,361
Total Commercial
260,087
9,986
-
(6,928)
3,403
266,548
Construction
12,889
(711)
-
-
1,036
13,214
Mortgage
83,289
(5,582)
3
(208)
4,148
81,650
Leasing
14,385
3,725
-
(3,630)
1,374
15,854
Consumer
Credit cards
86,313
21,238
-
(17,503)
2,646
92,694
Home equity lines of credit
1,726
(68)
-
(86)
282
1,854
Personal
107,448
23,031
-
(29,154)
3,217
104,542
Auto
157,449
20,765
-
(23,011)
6,110
161,313
Other
6,491
385
-
(756)
531
6,651
Total Consumer
359,427
65,351
-
(70,510)
12,786
367,054
Total - Loans
$
730,077
$
72,769
$
3
$
(81,276)
$
22,747
$
744,320
Allowance for credit losses - unfunded commitments:
Commercial
$
8,390
$
(264)
$
-
$
-
$
-
$
8,126
Construction
10,494
(236)
-
-
-
10,258
Ending balance - unfunded commitments [1]
$
18,884
$
(500)
$
-
$
-
$
-
$
18,384
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
40
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2024
BPPR
Provision for
Allowance for
Beginning
credit losses
credit losses -
Ending
(In thousands)
Balance
(benefit)
PCD Loans
Charge-off
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
3,614
$
(729)
$
-
$
-
$
1
$
2,886
Commercial real estate non-owner occupied
53,754
2,607
-
(69)
428
56,720
Commercial real estate owner occupied
40,637
(2,567)
-
(2,787)
3,228
38,511
Commercial and industrial
107,577
31,413
-
(20,931)
5,072
123,131
Total Commercial
205,582
30,724
-
(23,787)
8,729
221,248
Construction
5,294
(2,626)
-
-
1,036
3,704
Mortgage
72,440
(11,959)
26
(999)
13,068
72,576
Leasing
9,708
14,787
-
(12,321)
3,680
15,854
Consumer
Credit cards
80,487
54,734
-
(50,318)
7,791
92,694
Home equity lines of credit
103
35
-
(373)
304
69
Personal
101,181
55,987
-
(72,354)
7,253
92,067
Auto
157,931
44,386
-
(59,787)
18,783
161,313
Other
7,132
672
-
(2,072)
917
6,649
Total Consumer
346,834
155,814
-
(184,904)
35,048
352,792
Total - Loans
$
639,858
$
186,740
$
26
$
(222,011)
$
61,561
$
666,174
Allowance for credit losses - unfunded commitments:
Commercial
$
5,062
$
1,294
$
-
$
-
$
-
$
6,356
Construction
1,618
850
-
-
-
2,468
Ending balance - unfunded commitments [1]
$
6,680
$
2,144
$
-
$
-
$
-
$
8,824
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
41
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 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
$
(2,939)
$
(441)
$
10
$
6,756
Commercial real estate non-owner occupied
11,699
(903)
(54)
168
10,910
Commercial real estate owner occupied
16,227
(1,925)
-
102
14,404
Commercial and industrial
14,779
219
(2,372)
604
13,230
Total Commercial
52,831
(5,548)
(2,867)
884
45,300
Construction
7,392
2,018
-
100
9,510
Mortgage
10,774
(1,788)
(18)
106
9,074
Consumer
Home equity lines of credit
1,875
(741)
(25)
676
1,785
Personal
16,609
8,585
(14,750)
2,031
12,475
Other
2
46
(77)
31
2
Total Consumer
18,486
7,890
(14,852)
2,738
14,262
Total - Loans
$
89,483
$
2,572
$
(17,737)
$
3,828
$
78,146
Allowance for credit losses - unfunded commitments:
Commercial
$
1,851
$
(81)
$
-
$
-
$
1,770
Construction
8,446
(656)
-
-
7,790
Consumer
29
(29)
-
-
-
Ending balance - unfunded commitments [1]
$
10,326
$
(766)
$
-
$
-
$
9,560
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
42
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 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
$
(3,668)
$
-
$
(441)
$
11
$
9,642
Commercial real estate non-owner occupied
65,453
1,704
-
(123)
596
67,630
Commercial real estate owner occupied
56,864
(4,492)
-
(2,787)
3,330
52,915
Commercial and industrial
122,356
31,632
-
(23,303)
5,676
136,361
Total Commercial
258,413
25,176
-
(26,654)
9,613
266,548
Construction
12,686
(608)
-
-
1,136
13,214
Mortgage
83,214
(13,747)
26
(1,017)
13,174
81,650
Leasing
9,708
14,787
-
(12,321)
3,680
15,854
Consumer
Credit cards
80,487
54,734
-
(50,318)
7,791
92,694
Home equity lines of credit
1,978
(706)
-
(398)
980
1,854
Personal
117,790
64,572
-
(87,104)
9,284
104,542
Auto
157,931
44,386
-
(59,787)
18,783
161,313
Other
7,134
718
-
(2,149)
948
6,651
Total Consumer
365,320
163,704
-
(199,756)
37,786
367,054
Total - Loans
$
729,341
$
189,312
$
26
$
(239,748)
$
65,389
$
744,320
Allowance for credit losses - unfunded commitments:
Commercial
$
6,913
$
1,213
$
-
$
-
$
-
$
8,126
Construction
10,064
194
-
-
-
10,258
Consumer
29
(29)
-
-
-
-
Ending balance - unfunded commitments [1]
$
17,006
$
1,378
$
-
$
-
$
-
$
18,384
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
43
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2023
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
$
4,787
$
(1,306)
$
-
$
-
$
-
$
3,481
Commercial real estate non-owner occupied
53,366
(326)
-
(27)
195
53,208
Commercial real estate owner occupied
41,901
(242)
-
(446)
280
41,493
Commercial and industrial
81,637
(4,605)
-
(2,311)
12,858
87,579
Total Commercial
181,691
(6,479)
-
(2,784)
13,333
185,761
Construction
9,554
(1,486)
-
(2,611)
-
5,457
Mortgage
82,899
(6,808)
9
(62)
3,862
79,900
Leasing
13,927
(2,287)
-
(2,292)
850
10,198
Consumer
Credit cards
71,408
9,773
-
(10,865)
2,234
72,550
Home equity lines of credit
96
(39)
-
(43)
73
87
Personal
96,046
28,964
-
(19,260)
1,957
107,707
Auto
134,247
30,880
-
(14,553)
4,862
155,436
Other
6,240
1,499
-
(494)
193
7,438
Total Consumer
308,037
71,077
-
(45,215)
9,319
343,218
Total - Loans
$
596,108
$
54,017
$
9
$
(52,964)
$
27,364
$
624,534
Allowance for credit losses - unfunded commitments:
Commercial
$
5,288
$
(400)
$
-
$
-
$
-
$
4,888
Construction
3,110
(1,768)
-
-
-
1,342
Ending balance - unfunded commitments [1]
$
8,398
$
(2,168)
$
-
$
-
$
-
$
6,230
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
44
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2023
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
$
21,392
$
(9,651)
$
-
$
1
$
11,742
Commercial real estate non-owner occupied
18,350
(4,475)
-
66
13,941
Commercial real estate owner occupied
9,506
(1,688)
(1,218)
16
6,616
Commercial and industrial
18,014
(1,109)
(1,228)
329
16,006
Total Commercial
67,262
(16,923)
(2,446)
412
48,305
Construction
1,778
3,736
-
-
5,514
Mortgage
13,194
(1,252)
-
62
12,004
Consumer
Home equity lines of credit
2,074
238
(224)
212
2,300
Personal
19,782
3,659
(5,636)
604
18,409
Other
2
39
(43)
4
2
Total Consumer
21,858
3,936
(5,903)
820
20,711
Total - Loans
$
104,092
$
(10,503)
$
(8,349)
$
1,294
$
86,534
Allowance for credit losses - unfunded commitments:
Commercial
$
1,348
$
197
$
-
$
-
$
1,545
Construction
1,797
3,658
-
-
5,455
Consumer
50
4
-
-
54
Ending balance - unfunded commitments [1]
$
3,195
$
3,859
$
-
$
-
$
7,054
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
45
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2023
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
$
26,179
$
(10,957)
$
-
$
-
$
1
$
15,223
Commercial real estate non-owner occupied
71,716
(4,801)
-
(27)
261
67,149
Commercial real estate owner occupied
51,407
(1,930)
-
(1,664)
296
48,109
Commercial and industrial
99,651
(5,714)
-
(3,539)
13,187
103,585
Total Commercial
248,953
(23,402)
-
(5,230)
13,745
234,066
Construction
11,332
2,250
-
(2,611)
-
10,971
Mortgage
96,093
(8,060)
9
(62)
3,924
91,904
Leasing
13,927
(2,287)
-
(2,292)
850
10,198
Consumer
Credit cards
71,408
9,773
-
(10,865)
2,234
72,550
Home equity lines of credit
2,170
199
-
(267)
285
2,387
Personal
115,828
32,623
-
(24,896)
2,561
126,116
Auto
134,247
30,880
-
(14,553)
4,862
155,436
Other
6,242
1,538
-
(537)
197
7,440
Total Consumer
329,895
75,013
-
(51,118)
10,139
363,929
Total - Loans
$
700,200
$
43,514
$
9
$
(61,313)
$
28,658
$
711,068
Allowance for credit losses - unfunded commitments:
Commercial
$
6,636
$
(203)
$
-
$
-
$
-
$
6,433
Construction
4,907
1,890
-
-
-
6,797
Consumer
50
4
-
-
-
54
Ending balance - unfunded commitments [1]
$
11,593
$
1,691
$
-
$
-
$
-
$
13,284
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
46
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2023
BPPR
Impact of
Provision for
Allowance for
Beginning
Adopting
credit losses
credit losses -
Net write
Ending
(In thousands)
Balance
ASU 2022-02
(benefit)
PCD Loans
Charge-offs
Recoveries
down
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
5,210
$
-
$
(1,730)
$
-
$
-
$
1
$
-
$
3,481
Commercial real estate non-owner occupied
52,475
-
860
-
(636)
509
-
53,208
Commercial real estate owner occupied
48,393
(1,161)
(7,409)
-
(525)
2,195
-
41,493
Commercial and industrial
68,217
(552)
8,378
-
(4,979)
16,515
-
87,579
Total Commercial
174,295
(1,713)
99
-
(6,140)
19,220
-
185,761
Construction
2,978
-
5,090
-
(2,611)
-
-
5,457
Mortgage
117,344
(33,556)
(15,113)
87
(1,205)
12,343
-
79,900
Leasing
20,618
(35)
(7,023)
-
(6,249)
2,887
-
10,198
Consumer
Credit cards
58,670
-
35,901
-
(27,998)
6,578
(601)
72,550
Home equity lines of credit
103
-
(107)
-
(111)
202
-
87
Personal
96,369
(7,020)
60,347
-
(49,441)
7,452
-
107,707
Auto
129,735
(21)
45,108
-
(34,770)
15,384
-
155,436
Other
15,433
-
3,297
-
(11,855)
563
-
7,438
Total Consumer
300,310
(7,041)
144,546
-
(124,175)
30,179
(601)
343,218
Total - Loans
$
615,545
$
(42,345)
$
127,599
$
87
$
(140,380)
$
64,629
$
(601)
$
624,534
Allowance for credit losses - unfunded commitments:
Commercial
$
4,336
$
-
$
552
$
-
$
-
$
-
$
-
$
4,888
Construction
2,022
-
(680)
-
-
-
-
1,342
Ending balance - unfunded commitments [1]
$
6,358
$
-
$
(128)
$
-
$
-
$
-
$
-
$
6,230
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
47
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2023
Popular U.S.
Impact of
Provision for
Beginning
Adopting
credit losses
Ending
(In thousands)
Balance
ASU 2022-02
(benefit)
Charge-offs
Recoveries
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
21,101
$
-
$
(9,363)
$
-
$
4
$
11,742
Commercial real estate non-owner occupied
19,065
-
(7,108)
-
1,984
13,941
Commercial real estate owner occupied
8,688
-
(738)
(1,395)
61
6,616
Commercial and industrial
12,227
-
5,943
(3,808)
1,644
16,006
Total Commercial
61,081
-
(11,266)
(5,203)
3,693
48,305
Construction
1,268
-
4,246
-
-
5,514
Mortgage
17,910
(2,098)
(3,993)
-
185
12,004
Consumer
Credit cards
-
-
1
(1)
-
-
Home equity lines of credit
2,439
-
(419)
(419)
699
2,300
Personal
22,057
(1,140)
10,019
(14,093)
1,566
18,409
Other
2
-
134
(143)
9
2
Total Consumer
24,498
(1,140)
9,735
(14,656)
2,274
20,711
Total - Loans
$
104,757
$
(3,238)
$
(1,278)
$
(19,859)
$
6,152
$
86,534
Allowance for credit losses - unfunded commitments:
Commercial
$
1,175
$
-
$
370
$
-
$
-
$
1,545
Construction
1,184
-
4,271
-
-
5,455
Consumer
88
-
(34)
-
-
54
Ending balance - unfunded commitments [1]
$
2,447
$
-
$
4,607
$
-
$
-
$
7,054
[1]
Allowance for credit losses of unfunded commitments is
 
presented as part of Other Liabilities in the Consolidated
 
Statements of Financial Condition.
 
48
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2023
Popular Inc.
Impact
Provision for
Allowance
for
Beginning
of adopting
credit losses
credit losses
-
Net write
Ending
(In thousands)
Balance
ASU 2022-02
(benefit)
PCD Loans
Charge-offs
Recoveries
down
Balance
Allowance for credit losses - loans:
Commercial
Commercial multi-family
$
26,311
$
-
$
(11,093)
$
-
$
-
$
5
$
-
$
15,223
Commercial real estate non-owner occupied
71,540
-
(6,248)
-
(636)
2,493
-
67,149
Commercial real estate owner occupied
57,081
(1,161)
(8,147)
-
(1,920)
2,256
-
48,109
Commercial and industrial
80,444
(552)
14,321
-
(8,787)
18,159
-
103,585
Total Commercial
235,376
(1,713)
(11,167)
-
(11,343)
22,913
-
234,066
Construction
4,246
-
9,336
-
(2,611)
-
-
10,971
Mortgage
135,254
(35,654)
(19,106)
87
(1,205)
12,528
-
91,904
Leasing
20,618
(35)
(7,023)
-
(6,249)
2,887
-
10,198
Consumer
Credit cards
58,670
-
35,902
-
(27,999)
6,578
(601)
72,550
Home equity lines of credit
2,542
-
(526)
-
(530)
901
-
2,387
Personal
118,426
(8,160)
70,366
-
(63,534)
9,018
-
126,116
Auto
129,735
(21)
45,108
-
(34,770)
15,384
-
155,436
Other
15,435
-
3,431
-
(11,998)
572
-
7,440
Total Consumer
324,808
(8,181)
154,281
-
(138,831)
32,453
(601)
363,929
Total - Loans
$
720,302
$
(45,583)
$
126,321
$
87
$
(160,239)
$
70,781
$
(601)
$
711,068
Allowance for credit losses - unfunded commitments:
Commercial
$
5,511
$
-
$
922
$
-
$
-
$
-
$
-
$
6,433
Construction
3,206
-
3,591
-
-
-
-
6,797
Consumer
88
-
(34)
-
-
-
-
54
Ending balance - unfunded commitments [1]
$
8,805
$
-
$
4,479
$
-
$
-
$
-
$
-
$
13,284
[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 nine
 
months ended
 
September 30,
 
2024 and
 
September 30,
 
2023 amounted
 
to $
65.0
 
million and
$
17.0
 
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 quarters and nine months
ended September
 
30, 2024
 
and September
 
30, 2023.
 
Loans modified
 
to borrowers
 
under financial
 
difficulties that
 
were fully
 
paid
down, charged-off or foreclosed upon by period end
 
are not reported.
 
 
49
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan Modifications Made to Borrowers Experiencing Financial
 
Difficulty for the quarter ended September 30,
 
2024
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
CRE owner occupied
$
147
0.01
%
$
-
-
%
$
147
-
%
Commercial and industrial
693
0.01
%
-
-
%
693
0.01
%
Consumer:
 
Credit cards
213
0.02
%
-
-
%
213
0.02
%
 
Personal
830
0.05
%
-
-
%
830
0.04
%
Total
$
1,883
0.01
%
$
-
-
%
$
1,883
0.01
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Commercial multi-family
$
-
-
%
$
10,570
0.50
%
$
10,570
0.44
%
CRE non-owner occupied
13,108
0.42
%
-
-
%
13,108
0.25
%
CRE owner occupied
764
0.05
%
-
-
%
764
0.02
%
Commercial and industrial
20,966
0.41
%
-
-
%
20,966
0.28
%
Construction
768
0.40
%
-
-
%
768
0.07
%
Mortgage
11,850
0.18
%
429
0.03
%
12,279
0.15
%
Consumer:
 
Personal
148
0.01
%
-
-
%
148
0.01
%
Total
$
47,604
0.19
%
$
10,999
0.11
%
$
58,603
0.16
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
139
-
%
$
-
-
%
$
139
-
%
CRE owner occupied
4,993
0.36
%
-
-
%
4,993
0.16
%
Commercial and industrial
71,867
1.39
%
-
-
%
71,867
0.97
%
Consumer:
 
Credit cards
5
-
%
-
-
%
5
-
%
Total
$
77,004
0.30
%
$
-
-
%
$
77,004
0.21
%
Combination - Term Extension
 
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
CRE owner occupied
$
202
0.01
%
$
-
-
%
$
202
0.01
%
Commercial and industrial
44
-
%
-
-
%
44
-
%
Mortgage
4,728
0.07
%
-
-
%
4,728
0.06
%
Consumer:
 
Personal
2,569
0.15
%
65
0.05
%
2,634
0.14
%
Total
$
7,543
0.03
%
$
65
-
%
$
7,608
0.02
%
Combination -
 
Other-Than-Insignificant Payment Delays and Interest Rate
 
Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Commercial and industrial
$
23
-
%
$
-
-
%
$
23
-
%
Consumer:
 
Credit cards
862
0.07
%
-
-
%
862
0.07
%
Total
$
885
-
%
$
-
-
%
$
885
-
%
50
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan Modifications Made to Borrowers Experiencing Financial
 
Difficulty for the nine months ended September
 
30, 2024
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
CRE owner occupied
$
175
0.01
%
$
-
-
%
$
175
0.01
%
Commercial and industrial
2,756
0.05
%
-
-
%
2,756
0.04
%
Mortgage
42
-
%
-
-
%
42
-
%
Consumer:
 
Credit cards
721
0.06
%
-
-
%
721
0.06
%
 
Personal
1,873
0.11
%
-
-
%
1,873
0.10
%
 
Other
24
0.02
%
-
-
%
24
0.01
%
Total
$
5,591
0.02
%
$
-
-
%
$
5,591
0.02
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Commercial multi-family
$
-
-
%
$
10,570
0.50
%
$
10,570
0.44
%
CRE non-owner occupied
55,655
1.77
%
-
-
%
55,655
1.07
%
CRE owner occupied
11,482
0.82
%
6,033
0.36
%
17,515
0.57
%
Commercial and industrial
23,837
0.46
%
-
-
%
23,837
0.32
%
Construction
768
0.40
%
-
-
%
768
0.07
%
Mortgage
41,649
0.62
%
1,075
0.08
%
42,724
0.53
%
Consumer:
 
Personal
537
0.03
%
-
-
%
537
0.03
%
 
Auto
53
-
%
-
-
%
53
-
%
Total
$
133,981
0.52
%
$
17,678
0.17
%
$
151,659
0.42
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
139
-
%
$
-
-
%
$
139
-
%
CRE owner occupied
20,591
1.47
%
-
-
%
20,591
0.67
%
Commercial and industrial
75,231
1.45
%
-
-
%
75,231
1.02
%
Mortgage
127
-
%
-
-
%
127
-
%
Consumer:
 
Credit cards
5
-
%
-
-
%
5
-
%
Total
$
96,093
0.37
%
$
-
-
%
$
96,093
0.27
%
Combination - Term Extension
 
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
CRE non-owner occupied
$
889
0.03
%
$
-
-
%
$
889
0.02
%
CRE owner occupied
202
0.01
%
-
-
%
202
0.01
%
Commercial and industrial
615
0.01
%
-
-
%
615
0.01
%
Mortgage
13,404
0.20
%
67
0.01
%
13,471
0.17
%
Consumer:
 
Personal
5,755
0.33
%
312
0.26
%
6,067
0.32
%
Total
$
20,865
0.08
%
$
379
-
%
$
21,244
0.06
%
 
51
 
 
 
 
 
 
 
 
 
 
 
 
 
Combination - Other-Than-Insignificant Payment Delays
 
and Interest Rate Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2024
% of total class of
Financing
Receivable
Commercial and industrial
$
110
-
%
$
-
-
%
$
110
-
%
Consumer:
 
Credit cards
1,335
0.11
%
-
-
%
1,335
0.11
%
Total
$
1,445
0.01
%
$
-
-
%
$
1,445
-
%
 
52
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan Modifications Made to Borrowers Experiencing Financial
 
Difficulty for the quarter ended September 30,
 
2023
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE owner occupied
$
141,807
10.07
%
$
-
-
%
$
141,807
4.66
%
Commercial and industrial
43
-
%
-
-
%
43
-
%
Mortgage
76
-
%
-
-
%
76
-
%
Consumer:
 
Credit cards
154
0.01
%
-
-
%
154
0.01
%
 
Personal
247
0.01
%
-
-
%
247
0.01
%
Total
$
142,327
0.60
%
$
-
-
%
$
142,327
0.42
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
8,760
0.30
%
$
-
-
%
$
8,760
0.17
%
CRE owner occupied
2,667
0.19
%
10,847
0.66
%
13,514
0.44
%
Commercial and industrial
16,535
0.38
%
-
-
%
16,535
0.25
%
Mortgage
17,057
0.27
%
933
0.07
%
17,990
0.24
%
Consumer:
 
Personal
122
0.01
%
-
-
%
122
0.01
%
Total
$
45,141
0.19
%
$
11,780
0.11
%
$
56,921
0.17
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE owner occupied
$
8,980
0.64
%
$
-
-
%
$
8,980
0.29
%
Commercial and industrial
3,287
0.08
%
-
-
%
3,287
0.05
%
Total
$
12,267
0.05
%
$
-
-
%
$
12,267
0.04
%
Combination - Term Extension
 
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
18,705
0.63
%
$
-
-
%
$
18,705
0.37
%
CRE owner occupied
14,683
1.04
%
-
-
%
14,683
0.48
%
Commercial and industrial
558
0.01
%
-
-
%
558
0.01
%
Mortgage
7,691
0.12
%
-
-
%
7,691
0.10
%
Consumer:
 
Personal
815
0.05
%
11
0.01
%
826
0.04
%
Total
$
42,452
0.18
%
$
11
-
%
$
42,463
0.12
%
Combination -
 
Other-Than-Insignificant Payment Delays and Interest Rate
 
Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class
of Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
182
0.01
%
$
-
-
%
$
182
-
%
Commercial and industrial
78
-
%
-
-
%
78
-
%
Consumer:
 
Credit cards
195
-
%
-
-
%
195
0.02
%
Total
$
455
-
%
$
-
-
%
$
455
-
%
53
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan Modifications Made to Borrowers Experiencing Financial
 
Difficulty for the nine months ended September
 
30, 2023
Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE owner occupied
$
141,807
10.07
%
$
-
-
%
$
141,807
4.66
%
Commercial and industrial
43
-
%
-
-
%
43
-
%
Mortgage
302
-
%
-
-
%
302
-
%
Consumer:
 
Credit cards
565
0.05
%
-
-
%
565
0.05
%
 
Personal
540
0.03
%
3
-
%
543
0.03
%
 
Other
3
-
%
-
-
%
3
-
%
Total
$
143,260
0.60
%
$
3
-
%
$
143,263
0.42
%
Term Extension
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
33,059
1.12
%
$
-
-
%
$
33,059
0.66
%
CRE owner occupied
4,293
0.30
%
26,509
1.62
%
30,802
1.01
%
Commercial and industrial
38,713
0.89
%
-
-
%
38,713
0.59
%
Construction
2,169
1.27
%
5,309
0.71
%
7,478
0.81
%
Mortgage
41,916
0.67
%
5,423
0.42
%
47,339
0.62
%
Consumer:
 
Personal
196
0.01
%
129
0.07
%
325
0.02
%
 
Auto
36
-
%
-
-
%
36
-
%
Total
$
120,382
0.51
%
$
37,370
0.36
%
$
157,752
0.46
%
Principal Forgiveness
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE owner occupied
$
18
-
%
$
-
-
%
$
18
-
%
Total
$
18
-
%
$
-
-
%
$
18
-
%
Other-Than-Insignificant Payment Delays
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
1,736
0.06
%
$
-
-
%
$
1,736
0.03
%
CRE owner occupied
12,833
0.91
%
13,556
0.83
%
26,389
0.87
%
Commercial and industrial
4,653
0.11
%
828
0.04
%
5,481
0.08
%
Mortgage
137
-
%
-
-
%
137
-
%
Consumer:
 
Other
31
0.02
%
-
-
%
31
0.02
%
Total
$
19,390
0.08
%
$
14,384
0.14
%
$
33,774
0.10
%
 
54
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combination - Term Extension
 
and Interest Rate Reduction
BPPR
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
18,705
0.63
%
$
-
-
%
$
18,705
0.37
%
CRE owner occupied
14,784
1.05
%
-
-
%
14,784
0.49
%
Commercial and industrial
614
0.01
%
-
-
%
614
0.01
%
Mortgage
29,044
0.46
%
407
0.03
%
29,451
0.39
%
Consumer:
 
Personal
1,711
0.10
%
43
0.02
%
1,754
0.09
%
 
Auto
27
-
%
-
-
%
27
-
%
Total
$
64,885
0.27
%
$
450
-
%
$
65,335
0.19
%
Combination - Other-Than-Insignificant Payment Delays
 
and Interest Rate Reduction
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE non-owner occupied
$
182
0.01
%
$
-
-
$
182
-
%
Commercial and industrial
153
-
%
-
-
153
-
%
Consumer:
 
Credit cards
587
0.05
%
-
-
587
0.05
%
Total
$
922
-
%
$
-
-
$
922
-
%
Combination - Other-Than-Insignificant Payment Delays
 
and Principal Forgiveness
Puerto Rico
Popular U.S.
Popular, Inc.
(Dollars in thousands)
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
Amortized Cost
Basis at
September 30,
2023
% of total class of
Financing
Receivable
CRE owner occupied
$
195
0.01
%
$
-
-
$
195
0.01
%
Total
$
195
-
%
$
-
-
$
195
-
%
 
55
The following tables describe the financial effect of the
 
modifications made to borrowers experiencing
 
financial difficulties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2024
Interest rate reduction
Loan Type
Financial Effect
CRE Owner occupied
Reduced weighted-average contractual interest rate from
10.45
% to
6.62
%
Commercial and industrial
Reduced weighted-average contractual interest rate from
25.76
% to
10.21
%.
Mortgage
Reduced weighted-average contractual interest rate from
5.87
% to
4.32
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
21.46
% to
8.02
%.
Personal
Reduced weighted-average contractual interest rate from
19.47
% to
10.35
%.
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
7
 
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
5
 
years to the life of loans.
Commercial and industrial
Added a weighted-average of
1
 
year 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
5
 
years to the life of loans.
Other than insignificant payment delays
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
14
 
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
7
 
months to the life of loans.
Commercial and industrial
Added a weighted-average of
7
 
months to the life of loans.
Consumer:
Credit cards
Added a weighted-average of
16
 
months to the life of loans.
56
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 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
10.6
% to
6.5
%.
Commercial and industrial
Reduced weighted-average contractual interest rate from
20.6
% 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
20.9
% to
6.5
%.
Personal
Reduced weighted-average contractual interest rate from
19.1
% to
10
.0%.
Other
Reduced weighted-average contractual interest rate from
18
.0% to
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
9
 
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
11
 
months 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
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
8
 
years to the life of loans.
Auto
Added a weighted-average of
4
 
years to the life of loans.
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
14
 
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
10
 
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
30
 
months to the life of loans.
Consumer:
Credit cards
Added a weighted-average of
18
 
months to the life of loans.
 
57
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2023
Interest rate reduction
Loan Type
Financial Effect
CRE Non-owner occupied
Reduced weighted-average contractual interest rate from
9
.0% to
7.2
%.
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
12.5
% to
7.6
%.
Mortgage
Reduced weighted-average contractual interest rate from
5.7
% to
4.2
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
19.6
% to
3.6
%.
Personal
Reduced weighted-average contractual interest rate from
17
.0% to
9.1
%.
Term extension
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
28
 
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
3
 
years 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
7
 
years to the life of loans.
Other than insignificant payment delay
Loan Type
Financial Effect
CRE Non-owner occupied
Added a weighted-average of
7
 
months to the life of loans.
CRE Owner occupied
Added a weighted-average of
10
 
months to the life of loans.
Commercial and industrial
Added a weighted-average of
7
 
months to the life of loans.
Consumer:
Credit cards
Added a weighted-average of
29
 
months to the life of loans.
 
58
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2023
Interest rate reduction
Loan Type
Financial Effect
CRE Non-owner occupied
Reduced weighted-average contractual interest rate from
9
.0% to
7.2
%.
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
14
.0% to
7.7
%.
Mortgage
Reduced weighted-average contractual interest rate from
5.7
% to
4.2
%.
Consumer:
Credit cards
Reduced weighted-average contractual interest rate from
18
.0% to
4.3
%.
Personal
Reduced weighted-average contractual interest rate from
18
.0% to
9.7
%.
Auto
Reduced weighted-average contractual interest rate from
12.64
% to
12.62
%.
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
19
 
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
6
 
months 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
7
 
years to the life of loans.
Auto
Added a weighted-average of
3
 
years to the life of loans.
Principal forgiveness
Loan Type
Financial Effect
CRE Owner occupied
Reduced the amortized cost basis of the loans by $
0.1
 
million.
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
8
 
months to the life of loans.
Commercial and industrial
Added a weighted-average of
8
 
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
26
 
months to the life of loans.
Other
Added a weighted-average of
11
 
months to the life of loans.
59
The
 
following
 
tables
 
present,
 
by
 
class,
 
the
 
performance
 
of
 
loans
 
that
 
have
 
been
 
modified
 
during
 
the
 
twelve
 
months
 
preceding
September 30, 2024. The
 
past due 90 days or
 
more categories includes 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 nine 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
 
September 30, 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
$
-
$
-
$
63
$
63
$
-
$
63
$
-
$
63
CRE non-owner occupied
-
-
2,798
2,798
55,766
58,564
-
2,798
CRE owner occupied
92
-
2,232
2,324
36,355
38,679
89
2,143
Commercial and industrial
12,359
26
4,817
17,202
86,203
103,405
96
4,721
Construction
-
-
-
-
768
768
-
-
Mortgage
5,649
4,359
24,206
34,214
40,358
74,572
6,609
17,597
Consumer:
 
Credit cards
205
81
283
569
1,715
2,284
197
86
 
Personal
286
51
1,914
2,251
6,854
9,105
210
1,704
 
Auto
-
-
34
34
69
103
-
34
 
Other
24
-
-
24
4
28
-
-
Total
$
18,615
$
4,517
$
36,347
$
59,479
$
228,092
$
287,571
$
7,201
$
29,146
[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.
 
September 30, 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
$
-
$
-
$
-
$
-
$
10,570
10,570
$
-
$
-
CRE owner occupied
-
-
-
-
39,855
39,855
-
-
Mortgage
-
-
795
795
407
1,202
-
795
Consumer:
 
Personal
29
-
85
114
216
330
-
85
Total
$
29
$
-
$
880
$
909
$
51,048
$
51,957
$
-
$
880
[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.
60
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Popular Inc.
 
September 30, 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
$
-
$
-
$
63
$
63
$
10,570
$
10,633
$
-
$
63
CRE non-owner occupied
-
-
2,798
2,798
55,766
58,564
-
2,798
CRE owner occupied
92
-
2,232
2,324
76,210
78,534
89
2,143
Commercial and industrial
12,359
26
4,817
17,202
86,203
103,405
96
4,721
Construction
-
-
-
-
768
768
-
-
Mortgage
5,649
4,359
25,001
35,009
40,765
75,774
6,609
18,392
Consumer:
 
Credit cards
205
81
283
569
1,715
2,284
197
86
 
Personal
315
51
1,999
2,365
7,070
9,435
210
1,789
 
Auto
-
-
34
34
69
103
-
34
 
Other
24
-
-
24
4
28
-
-
Total
$
18,644
$
4,517
$
37,227
$
60,388
$
279,140
$
339,528
$
7,201
$
30,026
[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.
61
The following tables present, by class, the
 
performance of loans that have been modified
 
during the nine months ended September
30, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BPPR
 
September 30, 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 non-owner occupied
$
-
$
-
$
122
$
122
$
53,560
$
53,682
$
-
$
122
CRE owner occupied
-
-
2,488
2,488
171,442
173,930
-
2,488
Commercial and industrial
-
-
1,735
1,735
42,441
44,176
729
1,006
Construction
-
-
-
-
2,169
2,169
-
-
Mortgage
4,913
2,572
22,291
29,776
41,623
71,399
4,196
18,095
Consumer:
 
Credit cards
117
87
130
334
818
1,152
93
37
 
Personal
48
19
550
617
1,830
2,447
-
550
 
Auto
-
-
11
11
52
63
-
11
 
Other
-
-
31
31
3
34
31
-
Total
$
5,078
$
2,678
$
27,358
$
35,114
$
313,938
$
349,052
$
5,049
$
22,309
[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.
 
September 30, 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
$
-
$
-
$
-
$
-
$
40,065
$
40,065
$
-
$
-
Commercial and industrial
-
-
-
-
828
828
-
-
Construction
-
-
-
-
5,309
5,309
-
-
Mortgage
-
-
334
334
5,496
5,830
103
231
Consumer:
 
Personal
-
-
129
129
46
175
-
129
Total
$
-
$
-
$
463
$
463
$
51,744
$
52,207
$
103
$
360
[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.
62
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Popular Inc.
 
September 30, 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 non-owner occupied
$
-
$
-
$
122
$
122
$
53,560
$
53,682
$
-
$
122
CRE owner occupied
-
-
2,488
2,488
211,507
213,995
-
2,488
Commercial and industrial
-
-
1,735
1,735
43,269
45,004
729
1,006
Construction
-
-
-
-
7,478
7,478
-
-
Mortgage
4,913
2,572
22,625
30,110
47,119
77,229
4,299
18,326
Consumer:
 
Credit cards
117
87
130
334
818
1,152
93
37
 
Personal
48
19
679
746
1,876
2,622
-
679
 
Auto
-
-
11
11
52
63
-
11
 
Other
-
-
31
31
3
34
31
-
Total
$
5,078
$
2,678
$
27,821
$
35,577
$
365,682
$
401,259
$
5,152
$
22,669
[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.
Payment
 
default
 
is
 
defined
 
as
 
a
 
restructured
 
loan
 
becoming
 
90
 
days
 
past
 
due
 
after
 
being
 
modified,
 
foreclosed
 
or
 
charged-off,
whichever occurs first.
 
During the quarter
 
and nine months
 
ended September 30,
 
2024, 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
preceding the default date was $
7
 
million and $
25
 
million, respectively. The amount was not considered material for the quarter and
nine months ended September 30, 2023.
For the
 
quarter ended
 
September 30,
 
2024, extension
 
of maturity
 
and the
 
combination of
 
interest rate
 
reduction and
 
extension of
maturity
 
amounted
 
to
 
$
6
 
million
 
and
 
$
1
 
million,
 
respectively,
 
of
 
the
 
outstanding
 
balance
 
of
 
loans
 
modified
 
for
 
borrowers
 
under
financial
 
difficulties
 
that
 
were subject
 
to
 
payment default
 
during the
 
year
 
preceding the
 
default date.
 
For the
 
nine months
 
ended
September 30,
 
2024, interest
 
rate reduction,
 
extension of maturity
 
and the
 
combination of
 
interest rate
 
reduction and
 
extension of
maturity amounted to $
1
 
million, $
22
 
million and $
2
 
million, respectively of the
 
outstanding balance of loans
 
modified for borrowers
under financial difficulties that were subject to payment default
 
during the year preceding the default date.
 
Credit Quality
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 following tables present the amortized cost basis, net of unearned income, of
 
loans held-in-portfolio based on the Corporation’s
assignment of obligor
 
risk ratings as
 
defined at September
 
30, 2024 and
 
December 31, 2023
 
and the gross
 
write-offs recorded by
vintage year. For
 
the definitions of the obligor risk ratings,
 
refer to the Credit Quality section of
 
Note 9 to the Consolidated Financial
Statements included in the 2023 Form 10-K:
 
 
 
 
63
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
45,745
$
37,386
$
136,798
$
21,021
$
20,224
$
28,713
$
-
$
-
$
289,887
Watch
-
-
-
-
-
5,796
-
-
5,796
Special Mention
-
-
546
-
-
4,665
-
-
5,211
Substandard
-
-
-
-
-
4,640
-
-
4,640
Total commercial
multi-family
$
45,745
$
37,386
$
137,344
$
21,021
$
20,224
$
43,814
$
-
$
-
$
305,534
Commercial real estate non-owner occupied
Pass
$
319,714
$
315,434
$
821,480
$
551,468
$
340,485
$
542,362
$
6,213
$
-
$
2,897,156
Watch
-
2,118
1,061
5,015
29,165
56,824
-
-
94,183
Special Mention
-
41,558
7,153
24,424
-
65,985
-
-
139,120
Substandard
-
1,006
111
174
2,028
14,477
-
-
17,796
Total commercial
real estate non-
owner occupied
$
319,714
$
360,116
$
829,805
$
581,081
$
371,678
$
679,648
$
6,213
$
-
$
3,148,255
Year-to-Date gross
write-offs
$
-
$
-
$
69
$
-
$
-
$
-
$
-
$
-
$
69
Commercial real estate owner occupied
Pass
$
89,427
$
95,335
$
149,373
$
217,165
$
47,671
$
334,396
$
5,904
$
-
$
939,271
Watch
845
2,032
41,922
9,003
4,559
83,693
3
-
142,057
Special Mention
-
1,232
19,778
20,381
887
20,676
1,350
-
64,304
Substandard
467
1,149
20,644
4,714
141,549
76,725
12,932
-
258,180
Doubtful
-
-
-
-
-
38
-
-
38
Total commercial
real estate owner
occupied
$
90,739
$
99,748
$
231,717
$
251,263
$
194,666
$
515,528
$
20,189
$
-
$
1,403,850
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
2,787
$
-
$
-
$
2,787
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
Pass
$
628,977
$
923,130
$
609,454
$
322,189
$
216,674
$
324,173
$
1,239,993
$
-
$
4,264,590
Watch
42,726
54,796
48,349
4,210
3,445
71,412
233,386
-
458,324
Special Mention
4,836
13,934
3,931
158,133
2,723
44,297
36,007
-
263,861
Substandard
4,716
1,136
34,868
6,335
12,056
22,380
107,781
-
189,272
Doubtful
-
-
-
-
14
17
-
-
31
Loss
-
-
-
-
-
-
47
-
47
Total commercial
and industrial
$
681,255
$
992,996
$
696,602
$
490,867
$
234,912
$
462,279
$
1,617,214
$
-
$
5,176,125
Year-to-Date gross
write-offs
$
420
$
318
$
331
$
122
$
2,838
$
11,685
$
5,217
$
-
$
20,931
Construction
Pass
$
46,479
$
53,586
$
41,492
$
10,539
$
10,572
$
1,011
$
19,731
$
-
$
183,410
Special Mention
-
-
-
6,165
-
-
-
-
6,165
Substandard
-
-
-
768
-
-
-
-
768
Total construction
$
46,479
$
53,586
$
41,492
$
17,472
$
10,572
$
1,011
$
19,731
$
-
$
190,343
Mortgage
Pass
$
636,253
$
734,172
$
419,816
$
413,048
$
242,256
$
4,173,843
$
-
$
-
$
6,619,388
Substandard
-
1,863
1,051
775
348
71,992
-
-
76,029
Total mortgage
$
636,253
$
736,035
$
420,867
$
413,823
$
242,604
$
4,245,835
$
-
$
-
$
6,695,417
Year-to-Date gross
write-offs
$
-
 
$
-
 
$
-
 
$
8
 
$
-
 
$
991
$
-
$
-
$
999
 
64
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
577,747
$
508,333
$
394,476
$
240,244
$
118,620
$
40,264
$
-
$
-
$
1,879,684
Substandard
315
1,772
2,219
1,744
564
664
-
-
7,278
Loss
-
29
30
-
-
31
-
-
90
Total leasing
$
578,062
$
510,134
$
396,725
$
241,988
$
119,184
$
40,959
$
-
$
-
$
1,887,052
Year-to-Date gross
write-offs
$
639
$
3,534
$
4,220
$
2,477
$
453
$
998
$
-
$
-
$
12,321
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,159,675
$
-
$
1,159,675
Substandard
-
-
-
-
-
-
27,121
-
27,121
Loss
-
-
-
-
-
-
93
-
93
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,186,889
$
-
$
1,186,889
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
50,318
$
-
$
50,318
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
2,131
$
-
$
2,131
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
-
$
2,131
$
-
$
2,131
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
373
$
-
$
373
Personal
Pass
$
560,994
$
584,410
$
308,630
$
118,359
$
34,512
$
103,723
$
-
$
21,944
$
1,732,572
Substandard
347
5,248
3,938
1,556
265
8,660
-
1,293
21,307
Loss
3
85
100
6
6
2
-
-
202
Total Personal
$
561,344
$
589,743
$
312,668
$
119,921
$
34,783
$
112,385
$
-
$
23,237
$
1,754,081
Year-to-Date gross
write-offs
$
882
$
26,352
$
30,020
$
8,457
$
2,294
$
2,934
$
-
$
1,415
$
72,354
Auto
Pass
$
1,013,543
$
1,007,006
$
721,883
$
547,046
$
290,297
$
183,490
$
-
$
-
$
3,763,265
Substandard
3,665
14,590
13,569
10,585
6,934
5,820
-
-
55,163
Loss
-
60
58
5
15
41
-
-
179
Total Auto
$
1,017,208
$
1,021,656
$
735,510
$
557,636
$
297,246
$
189,351
$
-
$
-
$
3,818,607
Year-to-Date gross
write-offs
$
3,815
$
28,070
$
15,143
$
7,377
$
3,930
$
1,452
$
-
$
-
$
59,787
Other consumer
Pass
$
21,944
$
30,575
$
20,718
$
11,621
$
4,962
$
3,709
$
62,453
$
-
$
155,982
Substandard
-
233
22
14
29
61
299
-
658
Loss
-
-
-
550
-
-
-
-
550
Total Other
consumer
$
21,944
$
30,808
$
20,740
$
12,185
$
4,991
$
3,770
$
62,752
$
-
$
157,190
Year-to-Date gross
write-offs
$
25
$
196
$
130
$
96
$
128
$
1,497
$
-
$
-
$
2,072
Total BPPR
$
3,998,743
$
4,432,208
$
3,823,470
$
2,707,257
$
1,530,860
$
6,294,580
$
2,915,119
$
23,237
$
25,725,474
 
 
 
 
65
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
88,767
$
156,950
$
517,888
$
353,958
$
195,703
$
620,641
$
2,840
$
-
$
1,936,747
Watch
-
-
16,549
1,990
23,777
89,401
-
-
131,717
Special Mention
-
-
-
-
-
4,765
-
-
4,765
Substandard
-
-
-
-
-
26,539
-
-
26,539
Total commercial
multi-family
$
88,767
$
156,950
$
534,437
$
355,948
$
219,480
$
741,346
$
2,840
$
-
$
2,099,768
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
441
$
-
$
-
$
441
Commercial real estate non-owner occupied
Pass
$
45,320
$
397,410
$
496,311
$
156,546
$
223,062
$
469,514
$
12,572
$
-
$
1,800,735
Watch
-
-
13,532
24,646
17,280
63,562
-
-
119,020
Special Mention
-
-
-
2,373
-
63,304
-
-
65,677
Substandard
-
-
2,684
2,763
7,878
38,369
-
-
51,694
Total commercial
real estate non-
owner occupied
$
45,320
$
397,410
$
512,527
$
186,328
$
248,220
$
634,749
$
12,572
$
-
$
2,037,126
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
54
$
-
$
-
$
54
Commercial real estate owner occupied
Pass
$
137,358
$
287,290
$
236,338
$
253,353
$
30,402
$
253,735
$
5,954
$
-
$
1,204,430
Watch
-
13,320
33,982
36,980
50,577
70,804
1,905
-
207,568
Special Mention
-
490
45,220
59,249
31,221
10,899
-
-
147,079
Substandard
-
-
17,165
2,379
-
109,922
-
-
129,466
Total commercial
real estate owner
occupied
$
137,358
$
301,100
$
332,705
$
351,961
$
112,200
$
445,360
$
7,859
$
-
$
1,688,543
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
Pass
$
145,968
$
255,118
$
314,585
$
324,851
$
264,907
$
501,314
$
193,158
$
-
$
1,999,901
Watch
22
8,581
51,322
32,037
20,747
67,302
9,533
-
189,544
Special Mention
55
9,052
5,503
726
1
297
5,190
-
20,824
Substandard
1,807
670
261
61
2,595
3,212
5,553
-
14,159
Total commercial
and industrial
$
147,852
$
273,421
$
371,671
$
357,675
$
288,250
$
572,125
$
213,434
$
-
$
2,224,428
Year-to-Date gross
write-offs
$
1,103
$
644
$
190
$
300
$
5
$
44
$
86
$
-
$
2,372
Construction
Pass
$
169,148
$
460,457
$
149,988
$
14,567
$
-
$
769
$
9,133
$
-
$
804,062
Watch
-
-
28,896
-
-
7,229
24,280
-
60,405
Special Mention
-
10,026
6,224
-
-
-
-
-
16,250
Substandard
-
-
7,898
-
-
34,349
-
-
42,247
Total construction
$
169,148
$
470,483
$
193,006
$
14,567
$
-
$
42,347
$
33,413
$
-
$
922,964
Mortgage
Pass
$
69,138
$
91,580
$
217,752
$
275,884
$
219,511
$
395,632
$
-
$
-
$
1,269,497
Substandard
-
-
106
252
-
28,076
-
-
28,434
Total mortgage
$
69,138
$
91,580
$
217,858
$
276,136
$
219,511
$
423,708
$
-
$
-
$
1,297,931
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
18
$
-
$
-
$
18
 
66
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
-
$
-
$
-
$
-
$
-
$
-
$
4
$
-
$
4
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
4
$
-
$
4
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
6,335
$
45,803
$
11,587
$
63,725
Substandard
-
-
-
-
-
1,733
16
1,132
2,881
Loss
-
-
-
-
-
99
-
855
954
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
8,167
$
45,819
$
13,574
$
67,560
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
25
$
-
$
25
Personal
Pass
$
23,428
$
27,043
$
52,498
$
11,362
$
1,089
$
1,836
$
-
$
-
$
117,256
Substandard
147
656
536
122
16
338
-
-
1,815
Loss
-
23
-
-
-
-
-
-
23
Total Personal
$
23,575
$
27,722
$
53,034
$
11,484
$
1,105
$
2,174
$
-
$
-
$
119,094
Year-to-Date gross
write-offs
$
253
$
3,161
$
8,859
$
2,030
$
180
$
267
$
-
$
-
$
14,750
Other consumer
Pass
$
17
$
-
$
-
$
-
$
-
$
-
$
12,056
$
-
$
12,073
Substandard
-
-
-
-
-
-
2
-
2
Total Other
consumer
$
17
$
-
$
-
$
-
$
-
$
-
$
12,058
$
-
$
12,075
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
77
$
-
$
77
Total Popular U.S.
$
681,175
$
1,718,666
$
2,215,238
$
1,554,099
$
1,088,766
$
2,869,976
$
327,999
$
13,574
$
10,469,493
 
67
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
134,512
$
194,336
$
654,686
$
374,979
$
215,927
$
649,354
$
2,840
$
-
$
2,226,634
Watch
-
-
16,549
1,990
23,777
95,197
-
-
137,513
Special Mention
-
-
546
-
-
9,430
-
-
9,976
Substandard
-
-
-
-
-
31,179
-
-
31,179
Total commercial
multi-family
$
134,512
$
194,336
$
671,781
$
376,969
$
239,704
$
785,160
$
2,840
$
-
$
2,405,302
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
441
$
-
$
-
$
441
Commercial real estate non-owner occupied
Pass
$
365,034
$
712,844
$
1,317,791
$
708,014
$
563,547
$
1,011,876
$
18,785
$
-
$
4,697,891
Watch
-
2,118
14,593
29,661
46,445
120,386
-
-
213,203
Special Mention
-
41,558
7,153
26,797
-
129,289
-
-
204,797
Substandard
-
1,006
2,795
2,937
9,906
52,846
-
-
69,490
Total commercial
real estate non-
owner occupied
$
365,034
$
757,526
$
1,342,332
$
767,409
$
619,898
$
1,314,397
$
18,785
$
-
$
5,185,381
Year-to-Date gross
write-offs
$
-
$
-
$
69
$
-
$
-
$
54
$
-
$
-
$
123
Commercial real estate owner occupied
Pass
$
226,785
$
382,625
$
385,711
$
470,518
$
78,073
$
588,131
$
11,858
$
-
$
2,143,701
Watch
845
15,352
75,904
45,983
55,136
154,497
1,908
-
349,625
Special Mention
-
1,722
64,998
79,630
32,108
31,575
1,350
-
211,383
Substandard
467
1,149
37,809
7,093
141,549
186,647
12,932
-
387,646
Doubtful
-
-
-
-
-
38
-
-
38
Total commercial
real estate owner
occupied
$
228,097
$
400,848
$
564,422
$
603,224
$
306,866
$
960,888
$
28,048
$
-
$
3,092,393
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
2,787
$
-
$
-
$
2,787
Commercial and industrial
Pass
$
774,945
$
1,178,248
$
924,039
$
647,040
$
481,581
$
825,487
$
1,433,151
$
-
$
6,264,491
Watch
42,748
63,377
99,671
36,247
24,192
138,714
242,919
-
647,868
Special Mention
4,891
22,986
9,434
158,859
2,724
44,594
41,197
-
284,685
Substandard
6,523
1,806
35,129
6,396
14,651
25,592
113,334
-
203,431
Doubtful
-
-
-
-
14
17
-
-
31
Loss
-
-
-
-
-
-
47
-
47
Total commercial
and industrial
$
829,107
$
1,266,417
$
1,068,273
$
848,542
$
523,162
$
1,034,404
$
1,830,648
$
-
$
7,400,553
Year-to-Date gross
write-offs
$
1,523
$
962
$
521
$
422
$
2,843
$
11,729
$
5,303
$
-
$
23,303
 
68
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
215,627
$
514,043
$
191,480
$
25,106
$
10,572
$
1,780
$
28,864
$
-
$
987,472
Watch
-
-
28,896
-
-
7,229
24,280
-
60,405
Special Mention
-
10,026
6,224
6,165
-
-
-
-
22,415
Substandard
-
-
7,898
768
-
34,349
-
-
43,015
Total construction
$
215,627
$
524,069
$
234,498
$
32,039
$
10,572
$
43,358
$
53,144
$
-
$
1,113,307
Mortgage
Pass
$
705,391
$
825,752
$
637,568
$
688,932
$
461,767
$
4,569,475
$
-
$
-
$
7,888,885
Substandard
-
1,863
1,157
1,027
348
100,068
-
-
104,463
Total mortgage
$
705,391
$
827,615
$
638,725
$
689,959
$
462,115
$
4,669,543
$
-
$
-
$
7,993,348
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
8
$
-
$
1,009
$
-
$
-
$
1,017
Leasing
Pass
$
577,747
$
508,333
$
394,476
$
240,244
$
118,620
$
40,264
$
-
$
-
$
1,879,684
Substandard
315
1,772
2,219
1,744
564
664
-
-
7,278
Loss
-
29
30
-
-
31
-
-
90
Total leasing
$
578,062
$
510,134
$
396,725
$
241,988
$
119,184
$
40,959
$
-
$
-
$
1,887,052
Year-to-Date gross
write-offs
$
639
$
3,534
$
4,220
$
2,477
$
453
$
998
$
-
$
-
$
12,321
 
69
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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
$
-
$
-
$
-
$
-
$
-
$
-
$
1,159,679
$
-
$
1,159,679
Substandard
-
-
-
-
-
-
27,121
-
27,121
Loss
-
-
-
-
-
-
93
-
93
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,186,893
$
-
$
1,186,893
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
50,318
$
-
$
50,318
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
6,335
$
47,934
$
11,587
$
65,856
Substandard
-
-
-
-
-
1,733
16
1,132
2,881
Loss
-
-
-
-
-
99
-
855
954
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
8,167
$
47,950
$
13,574
$
69,691
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
398
$
-
$
398
Personal
Pass
$
584,422
$
611,453
$
361,128
$
129,721
$
35,601
$
105,559
$
-
$
21,944
$
1,849,828
Substandard
494
5,904
4,474
1,678
281
8,998
-
1,293
23,122
Loss
3
108
100
6
6
2
-
-
225
Total Personal
$
584,919
$
617,465
$
365,702
$
131,405
$
35,888
$
114,559
$
-
$
23,237
$
1,873,175
Year-to-Date gross
write-offs
$
1,135
$
29,513
$
38,879
$
10,487
$
2,474
$
3,201
$
-
$
1,415
$
87,104
Auto
Pass
$
1,013,543
$
1,007,006
$
721,883
$
547,046
$
290,297
$
183,490
$
-
$
-
$
3,763,265
Substandard
3,665
14,590
13,569
10,585
6,934
5,820
-
-
55,163
Loss
-
60
58
5
15
41
-
-
179
Total Auto
$
1,017,208
$
1,021,656
$
735,510
$
557,636
$
297,246
$
189,351
$
-
$
-
$
3,818,607
Year-to-Date gross
write-offs
$
3,815
$
28,070
$
15,143
$
7,377
$
3,930
$
1,452
$
-
$
-
$
59,787
Other consumer
Pass
$
21,961
$
30,575
$
20,718
$
11,621
$
4,962
$
3,709
$
74,509
$
-
$
168,055
Substandard
-
233
22
14
29
61
301
-
660
Loss
-
-
-
550
-
-
-
-
550
Total Other
consumer
$
21,961
$
30,808
$
20,740
$
12,185
$
4,991
$
3,770
$
74,810
$
-
$
169,265
Year-to-Date gross
write-offs
$
25
$
196
$
130
$
96
$
128
$
1,497
$
77
$
-
$
2,149
Total Popular Inc.
$
4,679,918
$
6,150,874
$
6,038,708
$
4,261,356
$
2,619,626
$
9,164,556
$
3,243,118
$
36,811
$
36,194,967
 
 
 
 
70
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
 
Years
Total
BPPR
Commercial:
Commercial multi-family
Pass
$
37,976
$
138,619
$
21,334
$
20,487
$
32,554
$
24,248
$
306
$
-
$
275,524
Watch
-
-
-
-
1,068
5,179
-
-
6,247
Special Mention
-
559
-
-
-
4,780
-
-
5,339
Substandard
-
-
-
-
-
4,832
-
-
4,832
Total commercial
multi-family
$
37,976
$
139,178
$
21,334
$
20,487
$
33,622
$
39,039
$
306
$
-
$
291,942
Commercial real estate non-owner occupied
Pass
$
305,243
$
871,191
$
560,785
$
359,853
$
41,262
$
563,794
$
7,042
$
-
$
2,709,170
Watch
1,959
882
5,205
22,211
5,938
27,015
-
-
63,210
Special Mention
43,020
5,413
24,730
-
15,843
68,368
-
-
157,374
Substandard
1,016
1,307
180
2,231
53,729
12,968
4,069
-
75,500
Total commercial
real estate non-
owner occupied
$
351,238
$
878,793
$
590,900
$
384,295
$
116,772
$
672,145
$
11,111
$
-
$
3,005,254
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
609
$
-
$
521
$
-
$
-
$
1,130
Commercial real estate owner occupied
Pass
$
92,234
$
155,819
$
227,246
$
51,038
$
24,184
$
357,429
$
9,146
$
-
$
917,096
Watch
2,947
45,106
9,913
4,285
5,017
62,217
1,000
-
130,485
Special Mention
-
16,860
20,741
1,462
887
44,069
-
-
84,019
Substandard
1,316
15,710
5,080
143,696
845
87,383
12,617
-
266,647
Doubtful
-
-
-
-
-
136
-
-
136
Total commercial
real estate owner
occupied
$
96,497
$
233,495
$
262,980
$
200,481
$
30,933
$
551,234
$
22,763
$
-
$
1,398,383
Year-to-Date gross
write-offs
$
-
$
4
$
-
$
-
$
1
$
4,432
$
-
$
-
$
4,437
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
Pass
$
1,109,898
$
634,401
$
511,912
$
241,452
$
123,458
$
258,872
$
1,343,885
$
-
$
4,223,878
Watch
28,841
95,785
6,111
4,043
15,560
65,360
182,756
-
398,456
Special Mention
6,401
3,269
276
3,200
2,088
41,289
9,410
-
65,933
Substandard
731
1,760
8,644
22,065
1,922
32,087
40,670
-
107,879
Doubtful
-
-
-
54
-
26
-
-
80
Total commercial
and industrial
$
1,145,871
$
735,215
$
526,943
$
270,814
$
143,028
$
397,634
$
1,576,721
$
-
$
4,796,226
Year-to-Date gross
write-offs
$
896
$
184
$
215
$
335
$
555
$
1,086
$
4,468
$
-
$
7,739
Construction
Pass
$
26,662
$
24,462
$
27,364
$
10,758
$
1,944
$
1,049
$
38,720
$
-
$
130,959
Watch
-
16,546
5,458
-
-
-
9,506
-
31,510
Special Mention
-
-
1,009
-
-
-
1
-
1,010
Substandard
-
6,378
-
-
-
-
-
-
6,378
Total construction
$
26,662
$
47,386
$
33,831
$
10,758
$
1,944
$
1,049
$
48,227
$
-
$
169,857
Year-to-Date gross
write-offs
$
-
 
$
2,611
$
-
 
$
-
 
$
-
 
$
-
 
$
-
 
$
-
 
$
2,611
Mortgage
Pass
$
751,532
$
439,373
$
421,297
$
259,412
$
164,438
$
4,280,509
$
-
$
-
$
6,316,561
Substandard
96
161
162
345
2,606
71,893
-
-
75,263
Total mortgage
$
751,628
$
439,534
$
421,459
$
259,757
$
167,044
$
4,352,402
$
-
$
-
$
6,391,824
Year-to-Date gross
write-offs
$
-
 
$
-
 
$
-
 
$
-
 
$
-
 
$
1,638
$
-
$
-
$
1,638
 
71
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
 
Years
Total
BPPR
Leasing
Pass
$
647,659
$
488,506
$
313,133
$
163,189
$
88,983
$
21,706
$
-
$
-
$
1,723,176
Substandard
806
2,516
3,053
906
818
517
-
-
8,616
Loss
-
-
-
-
-
17
-
-
17
Total leasing
$
648,465
$
491,022
$
316,186
$
164,095
$
89,801
$
22,240
$
-
$
-
$
1,731,809
Year-to-Date gross
write-offs
$
1,065
$
4,424
$
2,878
$
849
$
976
$
687
$
-
$
-
$
10,879
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,112,447
$
-
$
1,112,447
Substandard
-
-
-
-
-
-
23,259
-
23,259
Loss
-
-
-
-
-
-
22
-
22
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,135,728
$
-
$
1,135,728
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
41,007
$
-
$
41,007
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
2,622
$
-
$
2,622
Substandard
-
-
-
-
-
-
26
-
26
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
-
$
2,648
$
-
$
2,648
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
213
$
-
$
213
Personal
Pass
$
859,434
$
480,771
$
181,483
$
57,227
$
58,849
$
96,956
$
-
$
22,034
$
1,756,754
Substandard
1,815
4,985
1,939
493
933
8,322
-
1,006
19,493
Loss
-
-
14
-
12
37
-
-
63
Total Personal
$
861,249
$
485,756
$
183,436
$
57,720
$
59,794
$
105,315
$
-
$
23,040
$
1,776,310
Year-to-Date gross
write-offs
$
4,458
$
35,915
$
18,076
$
4,210
$
4,891
$
2,952
$
-
$
1,475
$
71,977
Auto
Pass
$
1,210,622
$
899,797
$
711,439
$
405,768
$
260,355
$
120,318
$
-
$
-
$
3,608,299
Substandard
6,980
14,049
11,916
9,157
7,051
3,199
-
-
52,352
Loss
9
44
45
16
9
6
-
-
129
Total Auto
$
1,217,611
$
913,890
$
723,400
$
414,941
$
267,415
$
123,523
$
-
$
-
$
3,660,780
Year-to-Date gross
write-offs
$
10,170
$
23,849
$
11,820
$
5,914
$
3,553
$
-
$
-
$
-
$
55,306
Other consumer
Pass
$
36,144
$
24,238
$
14,942
$
5,618
$
3,433
$
2,753
$
61,796
$
-
$
148,924
Substandard
244
25
-
73
16
131
249
-
738
Loss
-
-
137
-
-
363
-
-
500
Total Other
consumer
$
36,388
$
24,263
$
15,079
$
5,691
$
3,449
$
3,247
$
62,045
$
-
$
150,162
Year-to-Date gross
write-offs
$
47
$
154
$
125
$
164
$
88
$
11,876
$
-
$
-
$
12,454
Total BPPR
$
5,173,585
$
4,388,532
$
3,095,548
$
1,789,039
$
913,802
$
6,267,828
$
2,859,549
$
23,040
$
24,510,923
 
72
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
Years
Total
Popular U.S.
Commercial:
Commercial multi-family
Pass
$
166,410
$
417,169
$
326,047
$
164,887
$
182,528
$
410,836
$
5,112
$
-
$
1,672,989
Watch
-
116,794
39,319
71,237
93,239
98,365
-
-
418,954
Special Mention
-
-
862
1,171
-
3,377
-
-
5,410
Substandard
-
-
-
-
5,545
20,780
-
-
26,325
Total commercial
multi-family
$
166,410
$
533,963
$
366,228
$
237,295
$
281,312
$
533,358
$
5,112
$
-
$
2,123,678
Commercial real estate non-owner occupied
Pass
$
396,712
$
490,316
$
170,074
$
201,225
$
86,595
$
394,455
$
6,086
$
-
$
1,745,463
Watch
-
39,721
38,713
43,705
39,908
91,922
4,557
-
258,526
Special Mention
-
-
-
-
1,327
63,365
-
-
64,692
Substandard
-
-
-
8,054
1,702
3,730
-
-
13,486
Total commercial
real estate non-
owner occupied
$
396,712
$
530,037
$
208,787
$
252,984
$
129,532
$
553,472
$
10,643
$
-
$
2,082,167
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
193
$
-
$
-
$
193
Commercial real estate owner occupied
Pass
$
303,202
$
278,380
$
226,289
$
58,505
$
47,083
$
204,888
$
9,753
$
-
$
1,128,100
Watch
-
69,894
84,218
53,066
14,057
98,502
1,905
-
321,642
Special Mention
-
-
77,912
4,955
6,074
11,224
-
-
100,165
Substandard
-
477
2,430
-
21,763
107,675
-
-
132,345
Total commercial
real estate owner
occupied
$
303,202
$
348,751
$
390,849
$
116,526
$
88,977
$
422,289
$
11,658
$
-
$
1,682,252
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
1,395
$
-
$
-
$
1,395
 
73
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
Years
Total
Popular U.S.
Commercial and industrial
Pass
$
196,959
$
278,238
$
346,428
$
268,835
$
148,502
$
379,635
$
414,883
$
-
$
2,033,480
Watch
198
37,022
47,299
44,939
23,493
93,299
32,497
-
278,747
Special Mention
208
889
1,021
30
151
39
8,674
-
11,012
Substandard
636
628
152
1,152
730
1,841
1,517
-
6,656
Total commercial
and industrial
$
198,001
$
316,777
$
394,900
$
314,956
$
172,876
$
474,814
$
457,571
$
-
$
2,329,895
Year-to-Date gross
write-offs
$
247
$
221
$
1,994
$
44
$
1,320
$
-
$
49
$
-
$
3,875
Construction
Pass
$
280,188
$
251,627
$
89,450
$
14,733
$
25,254
$
-
$
-
$
-
$
661,252
Watch
-
22,867
12,869
-
21,896
782
-
-
58,414
Special Mention
2,120
13,151
-
-
-
-
-
-
15,271
Substandard
-
1
13,997
3,895
-
36,593
-
-
54,486
Total construction
$
282,308
$
287,646
$
116,316
$
18,628
$
47,150
$
37,375
$
-
$
-
$
789,423
Mortgage
Pass
$
99,296
$
229,720
$
288,767
$
233,805
$
177,245
$
264,069
$
-
$
-
$
1,292,902
Substandard
-
235
-
646
2,102
8,208
-
-
11,191
Total mortgage
$
99,296
$
229,955
$
288,767
$
234,451
$
179,347
$
272,277
$
-
$
-
$
1,304,093
 
74
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
Years
Total
Popular U.S.
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
19
$
-
$
19
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
19
$
-
$
19
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
1
$
-
$
1
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
7,394
$
39,925
$
12,253
$
59,572
Substandard
-
-
-
-
-
1,849
-
966
2,815
Loss
-
-
-
-
-
99
-
819
918
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
9,342
$
39,925
$
14,038
$
63,305
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
471
$
-
$
-
$
471
Personal
Pass
$
41,016
$
93,759
$
23,325
$
2,993
$
3,597
$
1,441
$
-
$
-
$
166,131
Substandard
333
1,630
325
50
126
211
-
-
2,675
Loss
-
-
-
-
1
130
-
-
131
Total Personal
$
41,349
$
95,389
$
23,650
$
3,043
$
3,724
$
1,782
$
-
$
-
$
168,937
Year-to-Date gross
write-offs
$
735
$
13,136
$
4,450
$
618
$
872
$
160
$
-
$
-
$
19,971
Other consumer
Pass
$
19
$
-
$
-
$
-
$
-
$
-
$
10,259
$
-
$
10,278
Substandard
-
-
-
-
-
-
1
-
1
Total Other
consumer
$
19
$
-
$
-
$
-
$
-
$
-
$
10,260
$
-
$
10,279
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
171
$
-
$
171
Total Popular U.S.
$
1,487,297
$
2,342,518
$
1,789,497
$
1,177,883
$
902,918
$
2,304,709
$
535,188
$
14,038
$
10,554,048
 
75
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
Years
Total
Popular, Inc.
Commercial:
Commercial multi-family
Pass
$
204,386
$
555,788
$
347,381
$
185,374
$
215,082
$
435,084
$
5,418
$
-
$
1,948,513
Watch
-
116,794
39,319
71,237
94,307
103,544
-
-
425,201
Special Mention
-
559
862
1,171
-
8,157
-
-
10,749
Substandard
-
-
-
-
5,545
25,612
-
-
31,157
Total commercial
multi-family
$
204,386
$
673,141
$
387,562
$
257,782
$
314,934
$
572,397
$
5,418
$
-
$
2,415,620
Commercial real estate non-owner occupied
Pass
$
701,955
$
1,361,507
$
730,859
$
561,078
$
127,857
$
958,249
$
13,128
$
-
$
4,454,633
Watch
1,959
40,603
43,918
65,916
45,846
118,937
4,557
-
321,736
Special Mention
43,020
5,413
24,730
-
17,170
131,733
-
-
222,066
Substandard
1,016
1,307
180
10,285
55,431
16,698
4,069
-
88,986
Total commercial
real estate non-
owner occupied
$
747,950
$
1,408,830
$
799,687
$
637,279
$
246,304
$
1,225,617
$
21,754
$
-
$
5,087,421
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
609
$
-
$
714
$
-
$
-
$
1,323
Commercial real estate owner occupied
Pass
$
395,436
$
434,199
$
453,535
$
109,543
$
71,267
$
562,317
$
18,899
$
-
$
2,045,196
Watch
2,947
115,000
94,131
57,351
19,074
160,719
2,905
-
452,127
Special Mention
-
16,860
98,653
6,417
6,961
55,293
-
-
184,184
Substandard
1,316
16,187
7,510
143,696
22,608
195,058
12,617
-
398,992
Doubtful
-
-
-
-
-
136
-
-
136
Total commercial
real estate owner
occupied
$
399,699
$
582,246
$
653,829
$
317,007
$
119,910
$
973,523
$
34,421
$
-
$
3,080,635
Year-to-Date gross
write-offs
$
-
$
4
$
-
$
-
$
1
$
5,827
$
-
$
-
$
5,832
Commercial and industrial
Pass
$
1,306,857
$
912,639
$
858,340
$
510,287
$
271,960
$
638,507
$
1,758,768
$
-
$
6,257,358
Watch
29,039
132,807
53,410
48,982
39,053
158,659
215,253
-
677,203
Special Mention
6,609
4,158
1,297
3,230
2,239
41,328
18,084
-
76,945
Substandard
1,367
2,388
8,796
23,217
2,652
33,928
42,187
-
114,535
Doubtful
-
-
-
54
-
26
-
-
80
Total commercial
and industrial
$
1,343,872
$
1,051,992
$
921,843
$
585,770
$
315,904
$
872,448
$
2,034,292
$
-
$
7,126,121
Year-to-Date gross
write-offs
$
1,143
$
405
$
2,209
$
379
$
1,875
$
1,086
$
4,517
$
-
$
11,614
 
76
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
Years
Total
Popular, Inc.
Construction
Pass
$
306,850
$
276,089
$
116,814
$
25,491
$
27,198
$
1,049
$
38,720
$
-
$
792,211
Watch
-
39,413
18,327
-
21,896
782
9,506
-
89,924
Special Mention
2,120
13,151
1,009
-
-
-
1
-
16,281
Substandard
-
6,379
13,997
3,895
-
36,593
-
-
60,864
Total construction
$
308,970
$
335,032
$
150,147
$
29,386
$
49,094
$
38,424
$
48,227
$
-
$
959,280
Year-to-Date gross
write-offs
$
-
$
2,611
$
-
$
-
$
-
$
-
$
-
$
-
$
2,611
Mortgage
Pass
$
850,828
$
669,093
$
710,064
$
493,217
$
341,683
$
4,544,578
$
-
$
-
$
7,609,463
Substandard
96
396
162
991
4,708
80,101
-
-
86,454
Total mortgage
$
850,924
$
669,489
$
710,226
$
494,208
$
346,391
$
4,624,679
$
-
$
-
$
7,695,917
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
1,638
$
-
$
-
$
1,638
Leasing
Pass
$
647,659
$
488,506
$
313,133
$
163,189
$
88,983
$
21,706
$
-
$
-
$
1,723,176
Substandard
806
2,516
3,053
906
818
517
-
-
8,616
Loss
-
-
-
-
-
17
-
-
17
Total leasing
$
648,465
$
491,022
$
316,186
$
164,095
$
89,801
$
22,240
$
-
$
-
$
1,731,809
Year-to-Date gross
write-offs
$
1,065
$
4,424
$
2,878
$
849
$
976
$
687
$
-
$
-
$
10,879
 
77
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Term Loans
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Amortized Cost Basis by Origination Year
(In thousands)
2023
2022
2021
2020
2019
Prior
Years
Total
Popular, Inc.
Consumer:
Credit cards
Pass
$
-
$
-
$
-
$
-
$
-
$
-
$
1,112,466
$
-
$
1,112,466
Substandard
-
-
-
-
-
-
23,259
-
23,259
Loss
-
-
-
-
-
-
22
-
22
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
1,135,747
$
-
$
1,135,747
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
41,008
$
-
$
41,008
HELOCs
Pass
$
-
$
-
$
-
$
-
$
-
$
7,394
$
42,547
$
12,253
$
62,194
Substandard
-
-
-
-
-
1,849
26
966
2,841
Loss
-
-
-
-
-
99
-
819
918
Total HELOCs
$
-
$
-
$
-
$
-
$
-
$
9,342
$
42,573
$
14,038
$
65,953
Year-to-Date gross
write-offs
$
-
$
-
$
-
$
-
$
-
$
471
$
213
$
-
$
684
Personal
Pass
$
900,450
$
574,530
$
204,808
$
60,220
$
62,446
$
98,397
$
-
$
22,034
$
1,922,885
Substandard
2,148
6,615
2,264
543
1,059
8,533
-
1,006
22,168
Loss
$
-
$
-
$
14
$
-
$
13
$
167
$
-
$
-
$
194
Total Personal
$
902,598
$
581,145
$
207,086
$
60,763
$
63,518
$
107,097
$
-
$
23,040
$
1,945,247
Year-to-Date gross
write-offs
$
5,193
$
49,051
$
22,526
$
4,828
$
5,763
$
3,112
$
-
$
1,475
$
91,948
Auto
Pass
$
1,210,622
$
899,797
$
711,439
$
405,768
$
260,355
$
120,318
$
-
$
-
$
3,608,299
Substandard
6,980
14,049
11,916
9,157
7,051
3,199
-
-
52,352
Loss
9
44
45
16
9
6
-
-
129
Total Auto
$
1,217,611
$
913,890
$
723,400
$
414,941
$
267,415
$
123,523
$
-
$
-
$
3,660,780
Year-to-Date gross
write-offs
$
10,170
$
23,849
$
11,820
$
5,914
$
3,553
$
-
$
-
$
-
$
55,306
Other consumer
Pass
$
36,163
$
24,238
$
14,942
$
5,618
$
3,433
$
2,753
$
72,055
$
-
$
159,202
Substandard
244
25
-
73
16
131
250
-
739
Loss
-
-
137
-
-
363
-
-
500
Total Other
consumer
$
36,407
$
24,263
$
15,079
$
5,691
$
3,449
$
3,247
$
72,305
$
-
$
160,441
Year-to-Date gross
write-offs
$
47
$
154
$
125
$
164
$
88
$
11,876
$
171
$
-
$
12,625
Total Popular Inc.
$
6,660,882
$
6,731,050
$
4,885,045
$
2,966,922
$
1,816,720
$
8,572,537
$
3,394,737
$
37,078
$
35,064,971
78
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
 
Corporation’s
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended September 30,
Nine months ended September 30,
(In thousands)
2024
2023
2024
2023
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees
$
7,559
$
8,025
$
22,912
$
25,083
Mortgage servicing rights fair value adjustments
(4,896)
(2,793)
(10,280)
(10,385)
Total mortgage
 
servicing fees, net of fair value adjustments
2,663
5,232
12,632
14,698
Net gain (loss) on sale of loans, including valuation on loans
 
held-for-sale
320
(335)
396
(133)
Trading account (loss) profit:
Unrealized (loss) gains on outstanding derivative positions
(44)
45
113
160
Realized (loss) gains on closed derivative positions
(261)
494
(249)
661
Total trading account
 
(loss) profit
(305)
539
(136)
821
Losses on repurchased loans, including interest advances
(8)
(43)
(139)
(277)
Total mortgage
 
banking activities
$
2,670
$
5,393
$
12,753
$
15,109
[1
]
 
Effective on January 1, 2023, loans held-for-sale
 
are stated at fair value. Prior to such date, loans held-for-sale
 
were stated at lower-of-cost-or-
market.
 
 
 
79
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
 
19
 
to
 
the
 
Consolidated
 
Financial
Statements for a description of such arrangements.
 
No
 
liabilities were incurred as a
 
result of these securitizations during the
 
quarters and nine months ended September
 
30, 2024 and
2023 because they
 
did not contain
 
any credit recourse
 
arrangements. The securitizations completed
 
by the Corporation
 
during the
quarters and nine months ended September 30,
 
2024 and 2023 were completed without credit
 
recourse.
The
 
following tables
 
present the
 
initial fair
 
value of
 
the
 
assets obtained
 
as
 
proceeds from
 
residential mortgage
 
loans securitized
during the quarters and nine months ended September
 
30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds Obtained During the Quarter Ended September
 
30, 2024
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
-
$
3,083
$
-
$
3,083
Mortgage-backed securities - FNMA
$
-
$
3,273
$
-
$
3,273
Total trading account
 
debt securities
$
-
$
6,356
$
-
$
6,356
Mortgage servicing rights
$
-
$
-
$
117
$
117
Total
 
$
-
$
6,356
$
117
$
6,473
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds Obtained During the Nine months Ended September
 
30, 2024
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
-
$
4,183
$
-
$
4,183
Mortgage-backed securities - FNMA
-
6,979
-
6,979
Total trading account
 
debt securities
$
-
$
11,162
$
-
$
11,162
Mortgage servicing rights
$
-
$
-
$
234
$
234
Total
 
$
-
$
11,162
$
234
$
11,396
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds Obtained During the Quarter Ended September
 
30, 2023
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
-
$
1,421
$
-
$
1,421
Mortgage-backed securities - FNMA
-
10,178
-
10,178
Total trading account
 
debt securities
$
-
$
11,599
$
-
$
11,599
Mortgage servicing rights
$
-
$
-
$
301
$
301
Total
 
$
-
$
11,599
$
301
$
11,900
 
80
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds Obtained During the Nine months Ended September
 
30, 2023
(In thousands)
Level 1
Level 2
Level 3
Initial Fair Value
Assets
Trading account debt securities:
Mortgage-backed securities - GNMA
$
-
$
2,488
$
-
$
2,488
Mortgage-backed securities - FNMA
-
33,470
-
33,470
Total trading account
 
debt securities
$
-
$
35,958
$
-
$
35,958
Mortgage servicing rights
$
-
$
-
$
945
$
945
Total
 
$
-
$
35,958
$
945
$
36,903
During
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
retained
 
servicing
 
rights
 
on
 
whole
 
loan
 
sales
 
involving
approximately
 
$
32
 
million
 
in
 
principal
 
balance
 
outstanding
 
(September
 
30,
 
2023
 
-
 
$
39
 
million),
 
with
 
net
 
realized
 
gains
 
of
approximately $
0.9
 
million
 
(September 30,
 
2023 -
 
gains of
 
$
0.6
 
million). All
 
loan sales
 
performed during
 
the
 
nine months
 
ended
September 30, 2024 and 2023 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 nine months ended September
 
30,
2024 and 2023.
 
81
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential MSRs
(In thousands)
September 30, 2024
September 30, 2023
Fair value at beginning of period
$
118,109
$
128,350
Additions
998
1,814
Changes due to payments on loans
 
[1]
(6,629)
(7,569)
Reduction due to loan repurchases
(372)
(468)
Changes in fair value due to changes in valuation model inputs
 
or assumptions
(3,279)
(1,828)
Other
-
(1,269)
Fair value at end of period
 
[2]
$
108,827
$
119,030
[1] Represents changes due to collection / realization
 
of expected cash flows over time.
[2] At September 30, 2024, PB had MSRs amounting to
 
$
1.8
 
million (September 30, 2023 - $
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.
 
Residential mortgage loans serviced for others were $
9.2
 
billion at September 30, 2024 (December 31,
 
2023 -$
9.9
 
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 September
 
30, 2024, those
 
weighted average mortgage servicing
 
fees were
0.32
%
(September
 
30,
 
2023
 
-
0.31
%).
 
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
quarters and nine months ended September 30,
 
2024 and 2023 were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended
Nine months ended
 
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
BPPR
PB
BPPR
PB
BPPR
PB
BPPR
PB
Prepayment speed
7.8
%
6.8
%
7.3
%
7.0
%
6.9
%
6.4
%
7.1
%
7.1
%
Weighted average life (in years)
8.7
8.8
9.2
8.0
9.2
8.7
9.2
8.0
Discount rate (annual rate)
9.5
%
12.9
%
9.6
%
11.0
%
9.6
%
12.8
%
9.6
%
10.7
%
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:
82
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Originated MSRs
Purchased MSRs
September 30,
December 31,
September 30,
December 31,
 
(In thousands)
2024
2023
2024
2023
Fair value of servicing rights
$
34,493
$
39,757
$
74,334
$
78,352
Weighted average life (in years)
6.4
6.6
6.6
6.8
Weighted average prepayment speed (annual
 
rate)
5.9
%
5.9
%
6.9
%
7.0
%
Impact on fair value of 10% adverse change
$
(704)
$
(696)
$
(1,513)
$
(1,440)
Impact on fair value of 20% adverse change
$
(1,377)
$
(1,365)
$
(2,965)
$
(2,827)
Weighted average discount rate (annual rate)
11.4
%
11.3
%
10.8
%
10.9
%
Impact on fair value of 10% adverse change
$
(1,277)
$
(1,387)
$
(2,685)
$
(2,871)
Impact on fair value of 20% adverse change
$
(2,470)
$
(2,686)
$
(5,203)
$
(5,562)
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 September 30, 2024,
 
the Corporation serviced $
511
 
million in residential mortgage loans
 
with credit recourse to
 
the Corporation
(December 31, 2023
 
- $
561
 
million). Also refer
 
to Note
 
19 to
 
the Consolidated Financial
 
Statements for information
 
on changes in
the Corporation’s liability of estimated losses related
 
to loans serviced with credit recourse.
Under the GNMA
 
securitizations, the Corporation, as
 
servicer, has
 
the right to
 
repurchase (but not the
 
obligation), at its
 
option and
without
 
GNMA’s
 
prior
 
authorization,
 
any
 
loan
 
that
 
is
 
collateral
 
for
 
a
 
GNMA
 
guaranteed
 
mortgage-backed
 
security
 
when
 
certain
delinquency
 
criteria
 
are
 
met.
 
At
 
the
 
time
 
that
 
individual
 
loans
 
meet
 
GNMA’s
 
specified
 
delinquency
 
criteria
 
and
 
are
 
eligible
 
for
repurchase, the Corporation is deemed to have regained effective control over these loans if the Corporation was the pool issuer. At
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
recorded
 
$
9
 
million
 
in
 
mortgage
 
loans
 
on
 
its
 
Consolidated
 
Statements
 
of
 
Financial
Condition related to this
 
buy-back option program (December 31,
 
2023 - $
11
 
million). Loans in our serviced
 
GNMA portfolio benefit
from payment forbearance programs but continue to reflect the
 
contractual delinquency until the borrower repays deferred payments
or
 
completes
 
a
 
payment
 
deferral modification
 
or
 
other
 
borrower assistance
 
alternative. As
 
long
 
as
 
the
 
Corporation continues
 
to
service the
 
loans that
 
continue to
 
be collateral
 
in a
 
GNMA guaranteed
 
mortgage-backed security,
 
the MSR
 
is recognized
 
by the
Corporation.
 
During the nine months ended
 
September 30, 2024, the Corporation repurchased approximately
 
$
27
 
million (September 30, 2023 -
$
34
 
million) of
 
mortgage loans
 
from its
 
GNMA servicing
 
portfolio. 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, mainly
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.
 
 
 
 
 
83
Note 11 – Other real estate owned
The following
 
tables present
 
the activity
 
related to
 
Other Real
 
Estate Owned
 
(“OREO”),
 
for the
 
quarters and
 
nine months
 
ended
September 30, 2024 and 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2024
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
9,428
$
60,797
$
70,225
Write-downs in value
(39)
(549)
(588)
Additions
1,125
7,966
9,091
Sales
(588)
(15,112)
(15,700)
Ending balance
$
9,926
$
53,102
$
63,028
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter ended September 30, 2023
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
11,819
$
74,397
$
86,216
Write-downs in value
(123)
(567)
(690)
Additions
257
14,795
15,052
Sales
(900)
(17,356)
(18,256)
Ending balance
$
11,053
$
71,269
$
82,322
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2024
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
11,189
$
69,227
$
80,416
Write-downs in value
(1,103)
(1,260)
(2,363)
Additions
6,985
32,748
39,733
Sales
(7,145)
(47,548)
(54,693)
Other adjustments
-
(65)
(65)
Ending balance
$
9,926
$
53,102
$
63,028
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2023
OREO
OREO
(In thousands)
Commercial/Construction
Mortgage
Total
Balance at beginning of period
$
12,500
$
76,626
$
89,126
Write-downs in value
(362)
(1,587)
(1,949)
Additions
1,524
54,625
56,149
Sales
(2,626)
(58,277)
(60,903)
Other adjustments
17
(118)
(101)
Ending balance
$
11,053
$
71,269
$
82,322
 
 
84
Note 12 − Other assets
The caption of other assets in the consolidated
 
statements of financial condition consists of the following
 
major categories:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
December 31, 2023
Net deferred tax assets (net of valuation allowance)
$
917,793
$
1,009,068
Investments under the equity method
248,235
236,485
Prepaid taxes
53,395
39,052
Other prepaid expenses
39,000
29,338
Capitalized software costs
117,894
93,404
Derivative assets
25,934
24,419
Trades receivable from brokers and counterparties
5,701
23,102
Receivables from investments maturities
-
176,000
Principal, interest and escrow servicing advances
44,665
48,557
Guaranteed mortgage loan claims receivable
19,736
29,648
Operating ROU assets (Note 27)
98,077
116,106
Finance ROU assets (Note 27)
19,301
21,093
Assets for pension benefit
26,409
23,404
Others
151,779
144,888
Total other assets
$
1,767,919
$
2,014,564
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
September 30, 2024
Software development costs
$
83,179
$
28,978
$
54,201
Software license costs
49,072
29,477
19,595
Cloud computing arrangements
56,599
12,501
44,098
Total Capitalized
 
software costs [1] [2]
$
188,850
$
70,956
$
117,894
December 31, 2023
Software development costs
$
76,497
$
22,086
$
54,411
Software license costs
42,868
18,048
24,820
Cloud computing arrangements
23,623
9,450
14,173
Total Capitalized
 
software costs [1] [2]
$
142,988
$
49,584
$
93,404
[1]
Software intangible assets are presented as part of Other
 
Assets in the Consolidated Statements of Financial Condition.
[2]
The tables above excludes 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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended September 30,
Nine months ended September 30,
(In thousands)
2024
2023
2024
2023
Software development and license costs
$
21,118
$
16,820
$
57,431
$
47,962
Cloud computing arrangements
1,514
923
3,052
2,685
Total amortization
 
expense
$
22,632
$
17,743
$
60,483
$
50,647
 
 
 
85
Note 13 – Goodwill and other intangible assets
 
Goodwill
There were
no
 
changes in the carrying
 
amount of goodwill for
 
the quarter and nine
 
months ended September 30,
 
2024. During the
third quarter of 2023, the Corporation recorded an impairment of
 
$
23
 
million as a result of its annual goodwill impairment test related
to
 
its
 
U.S. based
 
equipment leasing
 
subsidiary,
 
Popular Equipment
 
Finance (“PEF”),
 
due to
 
lower forecasted
 
cash flows
 
and an
increase in the rate used to discount cash flows.
The following table shows the changes in the carrying
 
amount of goodwill for the nine months ended
 
September 30, 2024 and 2023,
allocated by reportable segments, were as follows
 
(refer to Note 32 for the definition of the Corporation’s
 
reportable segments):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
Balance at
 
Goodwill on
Goodwill
Balance at
(In thousands)
January 1, 2024
 
acquisition
 
impairment
September 30, 2024
Banco Popular de Puerto Rico
$
436,383
$
-
$
-
$
436,383
Popular U.S.
368,045
-
-
368,045
Total Popular,
 
Inc.
 
$
804,428
$
-
$
-
$
804,428
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2023
Balance at
 
Goodwill on
Goodwill
Balance at
(In thousands)
January 1, 2023
 
acquisition
 
impairment
September 30, 2023
Banco Popular de Puerto Rico
$
436,383
$
-
$
-
$
436,383
Popular U.S.
391,045
-
(23,000)
368,045
Total Popular,
 
Inc.
 
$
827,428
$
-
$
(23,000)
$
804,428
 
Other Intangible Assets
The following table reflects the components of
 
other intangible assets subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Carrying
Accumulated
Net
Carrying
(In thousands)
Amount
Amortization
Value
September 30, 2024
Core deposits
$
12,810
$
12,275
$
535
Other customer relationships
14,286
8,050
6,236
Total other intangible
 
assets
$
27,096
$
20,325
$
6,771
December 31, 2023
Core deposits
$
12,810
$
11,315
$
1,495
Other customer relationships
14,286
6,777
7,509
Total other intangible
 
assets
$
27,096
$
18,092
$
9,004
During the
 
quarter ended
 
September 30,
 
2024, the
 
Corporation recognized
 
$
0.7
 
million in
 
amortization expense
 
related to
 
other
intangible assets with definite useful lives (September 30, 2023 - $
0.8
 
million). During the nine months ended September 30, 2024,
the Corporation
 
recognized $
2.2
 
million in
 
amortization related to
 
other intangible assets
 
with definite useful
 
lives (September 30,
2023 - $
2.4
 
million).
 
The following
 
table presents
 
the estimated
 
amortization of
 
the intangible
 
assets with
 
definite useful
 
lives for
 
each of
 
the following
periods:
86
 
 
 
 
 
 
 
 
(In thousands)
Remaining 2024
$
704
Year 2025
1,750
Year 2026
1,440
Year 2027
959
Year 2028
959
Later years
959
 
Results of the Annual Goodwill Impairment Test
 
The Corporation’s goodwill and
 
other identifiable intangible assets having
 
an indefinite useful life
 
are tested 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 Corporation
 
performed the
 
annual goodwill
 
impairment evaluation
 
for the
 
entire organization
 
during the
 
third quarter
 
of 2024
using July 31, 2024 as the annual evaluation date. The reporting units
 
utilized for this evaluation were those that are one level below
the business segments,
 
which are the
 
legal entities within the
 
reportable segment. The Corporation
 
follows push-down accounting,
as such all goodwill is assigned to the reporting
 
units when carrying out a business combination.
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.
 
Management
 
evaluates
 
the
particular circumstances
 
of each
 
reporting unit
 
in order
 
to determine
 
the most
 
appropriate valuation methodology
 
and the
 
weights
applied
 
to
 
each
 
valuation
 
methodology,
 
as
 
applicable.
 
The
 
Corporation
 
evaluates
 
the
 
results
 
obtained
 
under
 
each
 
valuation
methodology to
 
identify and
 
understand the
 
key
 
value drivers
 
in order
 
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 in the individual reporting units.
 
The computations
 
require management
 
to make
 
estimates and
 
assumptions. Critical
 
assumptions that
 
are used
 
as part
 
of these
evaluations include:
 
a selection of comparable publicly traded companies,
 
based on nature of business, location and
 
size;
 
a selection of comparable acquisitions;
 
the discount rate applied to future earnings, based
 
on an estimate of the cost of equity;
 
the potential future earnings of the reporting unit;
 
and
 
the market growth and new business assumptions.
For
 
purposes
 
of
 
the
 
market
 
comparable
 
companies’
 
approach,
 
valuations
 
were
 
determined
 
by
 
calculating
 
price
 
multiples
 
(using
averages or applying regression analyses) of relevant value drivers from a
 
group of companies that are comparable to the reporting
unit being analyzed and
 
applying those price multiples
 
to the value drivers
 
of the reporting unit.
 
Management uses judgment in
 
the
determination
 
of
 
which
 
value
 
drivers
 
are
 
considered
 
more
 
appropriate
 
for
 
each
 
reporting
 
unit.
 
Comparable
 
companies’
 
price
multiples represent minority-based multiples and thus, a control premium adjustment is added to the comparable
 
companies’ market
multiples applied to the reporting unit’s value drivers.
 
For purposes
 
of the
 
market comparable transactions’
 
approach, valuations had
 
been previously determined
 
by the
 
Corporation by
calculating
 
average
 
price
 
multiples
 
of
 
relevant
 
value
 
drivers
 
from
 
a
 
group
 
of
 
transactions
 
for
 
which
 
the
 
target
 
companies
 
are
comparable to the reporting unit being analyzed and
 
applying those price multiples to the value drivers
 
of the reporting unit.
For purposes
 
of the
 
discounted cash flows
 
(“DCF”) approach, the
 
valuation is
 
based on
 
estimated future cash
 
flows. The
 
financial
projections
 
used
 
in
 
the
 
DCF
 
valuation
 
analysis
 
for
 
each
 
reporting
 
unit
 
are
 
based
 
on
 
the
 
most
 
recent
 
(as
 
of
 
the
 
valuation
 
date)
financial
 
projections presented
 
to
 
the
 
Corporation’s Asset
 
/
 
Liability Management
 
Committee (“ALCO”).
 
The
 
growth assumptions
 
87
included
 
in
 
these
 
projections
 
are
 
based
 
on
 
management’s
 
expectations for
 
each
 
reporting
 
unit’s
 
financial
 
prospects
 
considering
economic and industry conditions as well
 
as particular plans of each entity
 
(i.e. restructuring plans, de-leveraging, etc.). The cost
 
of
equity used to
 
discount the cash flows
 
was calculated using the
 
Ibbotson Build-Up Method and
 
ranged from
11.99
% to
15.93
% for
the 2024 analysis. The Ibbotson Build-Up Method
 
builds up a cost of equity
 
starting with the rate of
 
return of a “risk-free” asset (20-
year U.S. Treasury
 
note) and adds
 
to it additional
 
risk elements such as
 
equity risk premium, size
 
premium, industry risk
 
premium,
and a
 
specific geographic risk
 
premium (as applicable).
 
The resulting discount
 
rates were
 
analyzed in terms
 
of reasonability given
the current market conditions.
The
 
results
 
of
 
the
 
BPPR
 
annual
 
goodwill
 
impairment
 
test
 
as
 
of
 
July
 
31,
 
2024
 
indicated
 
that
 
the
 
estimated
 
fair
 
value
 
using
 
a
combination of
 
valuation methodologies
 
exceeded BPPR’s
 
equity value
 
by
 
approximately $
3.7
 
billion or
303
%
 
compared to
 
$
3.7
billion or
468
%, for the annual goodwill impairment test completed as
 
of July 31, 2023. PB’s annual
 
goodwill impairment test results
as
 
of such
 
dates indicated
 
that the
 
average estimated
 
fair value
 
using a
 
combination of
 
valuation methodologies
 
exceeded PB’s
equity
 
value
 
by
 
approximately
 
$
584
 
million
 
or
34
%,
 
compared
 
to
 
$
129
 
million
 
or
8
%,
 
for
 
the
 
annual
 
goodwill
 
impairment
 
test
completed as of July 31, 2023. Accordingly,
no
 
impairment was recognized for BPPR or PB. The goodwill balance of BPPR and PB,
as legal entities, represented approximately
93
% of the Corporation’s total goodwill balance as of
 
the July 31, 2024 valuation date.
Furthermore,
 
as
 
part
 
of
 
the
 
analyses,
 
management
 
performed
 
a
 
reconciliation
 
of
 
the
 
aggregate
 
fair
 
values
 
determined
 
for
 
the
reporting units to the market capitalization of the Corporation concluding that the
 
fair value results determined for the reporting units
in the July 31, 2024 annual assessment were reasonable.
The goodwill
 
impairment evaluation
 
process requires
 
the Corporation
 
to
 
make estimates
 
and assumptions
 
with regard
 
to the
 
fair
value
 
of
 
the
 
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 the Corporation’s results of operations and the
 
reporting units where the
goodwill is recorded. Particularly for reporting units with recognized impairments or where the
 
estimated fair value approximates the
equity value,
 
future decreases
 
in fair
 
value estimates
 
could result
 
in additional
 
impairment charges.
 
Additionally,
 
declines in
 
the
Corporation’s
 
market
 
capitalization and
 
adverse economic
 
conditions
 
sustained
 
over
 
a
 
longer
 
period of
 
time
 
negatively
 
affecting
forecasted earnings could increase the risk of goodwill
 
impairment in the future.
 
A decline in
 
the Corporation’s stock
 
price related to
 
global and/or regional macroeconomic
 
conditions, a deterioration in
 
the Puerto
Rico
 
or
 
the
 
U.S.
 
economies,
 
increases
 
in
 
the
 
rate
 
to
 
discount
 
future
 
cash
 
flows,
 
and
 
lower
 
future
 
earnings
 
estimates
 
could,
individually or
 
in the
 
aggregate, have a
 
material impact on
 
the determination of
 
the fair value
 
of our reporting
 
units, which could
 
in
turn
 
result
 
in
 
an
 
impairment of
 
goodwill in
 
the
 
future.
 
An
 
impairment of
 
goodwill would
 
result
 
in
 
a non-cash
 
expense,
 
net
 
of
 
tax
impact. A charge to earnings related to a goodwill
 
impairment would not materially impact regulatory
 
capital calculations.
The following tables present the gross amount
 
of goodwill and accumulated impairment losses
 
by reportable segments.
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
Balance at
Balance at
September 30,
Accumulated
September 30,
2024
impairment
 
2024
(In thousands)
 
(gross amounts)
losses
 
(net amounts)
Banco Popular de Puerto Rico
$
440,184
$
3,801
$
436,383
Popular U.S.
564,456
196,411
368,045
Total Popular,
 
Inc.
 
$
1,004,640
$
200,212
$
804,428
 
88
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
 
Balance at
 
 
Balance at
 
December 31,
Accumulated
December 31,
2023
impairment
 
2023
(In thousands)
 
(gross amounts)
losses
 
(net amounts)
Banco Popular de Puerto Rico
$
440,184
$
3,801
$
436,383
Popular U.S.
564,456
196,411
368,045
Total Popular,
 
Inc.
 
$
1,004,640
$
200,212
$
804,428
 
89
Note 14 – Deposits
Total deposits as of the end of the periods presented consisted of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
December 31, 2023
Savings accounts
$
14,149,122
$
14,602,411
NOW, money market and other interest
 
bearing demand deposits
25,162,318
25,094,316
Total savings, NOW,
 
money market and other interest bearing demand
 
deposits
39,311,440
39,696,727
Certificates of deposit:
Under $250,000
5,619,851
5,443,062
$250,000 and over
3,461,139
3,058,830
 
Total certificates
 
of deposit
9,080,990
8,501,892
Total interest bearing
 
deposits
$
48,392,430
$
48,198,619
Non- interest bearing deposits
$
15,276,071
$
15,419,624
Total deposits
$
63,668,501
$
63,618,243
A summary of certificates of deposits by maturity at
 
September 30, 2024 follows:
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
2024
$
3,258,241
2025
3,214,257
2026
903,183
2027
640,857
2028
596,378
2029 and thereafter
468,074
Total certificates of
 
deposit
$
9,080,990
At September 30, 2024, the Corporation had brokered
 
deposits amounting to $
1.7
 
billion (December 31, 2023 - $
1.7
 
billion).
The aggregate amount of overdrafts in demand deposit accounts that were reclassified to
 
loans was $
16.2
 
million at September 30,
2024 (December 31, 2023 - $
9.1
 
million).
At September 30, 2024,
 
Puerto Rico government deposits amounted
 
to $
18.7
 
billion. Puerto Rico government deposits
 
are interest
bearing accounts.
 
These government
 
deposits are
 
indexed to
 
short-term market
 
rates and
 
fluctuate in
 
cost with
 
changes in
 
those
rates, in
 
accordance with contractual
 
terms. Public
 
deposit balances are
 
difficult to
 
predict. For example,
 
the receipt
 
by the Puerto
Rico
 
Government
 
of
 
hurricane
 
recovery
 
related
 
Federal
 
assistance
 
and
 
seasonal
 
tax
 
collections
 
could
 
increase
 
public
 
deposit
balances at BPPR.
 
On the other hand,
 
the amount and
 
timing of reductions
 
in balances are
 
likely to be
 
impacted by,
 
for example,
the speed at
 
which 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”).
Generally, these deposits require that
 
the bank pledge high credit quality securities as collateral, therefore,
 
liquidity risk arising from
government deposit outflows are lower.
 
90
Note 15 – Borrowings
Assets sold under agreements to repurchase
Assets sold under agreements to repurchase amounted
 
to $
55
 
million at September 30, 2024 and $
91
 
million at December 31,
2023.
The Corporation’s
 
repurchase transactions are
 
overcollateralized with the
 
securities detailed in
 
the table
 
below.
 
The Corporation’s
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
 
Corporation’s 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 Corporation’s 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 Corporation’s
 
policy to
 
maintain effective
 
control over
assets sold under agreements to repurchase; accordingly, such
 
securities continue to be carried on the Consolidated Statements of
Financial Condition.
Repurchase agreements accounted for as secured borrowings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
December 31, 2023
Repurchase
Repurchase
(In thousands)
 
liability
 
liability
U.S. Treasury securities
Within 30 days
$
21,956
$
16,931
After 30 to 90 days
13,882
18,369
After 90 days
-
8,292
Total U.S. Treasury
 
securities
35,838
43,592
Mortgage-backed securities
 
Within 30 days
5,206
27,171
 
After 30 to 90 days
14,316
20,394
Total mortgage-backed
 
securities
19,522
47,565
Collateralized mortgage obligations
 
Within 30 days
-
227
Total collateralized
 
mortgage obligations
-
227
Total
$
55,360
$
91,384
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.
Other short-term borrowings
There were
no
 
other short-term borrowings outstanding at September
 
30, 2024 and December 31, 2023.
 
 
91
Notes Payable
The following table presents the composition of notes
 
payable at September 30, 2024 and December
 
31, 2023.
 
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
December 31, 2023
Advances with the FHLB with maturities ranging from
2024
 
through
2029
 
paying interest at
monthly
fixed rates ranging from
0.54
% to
5.26
%
$
325,095
$
394,665
Unsecured senior debt securities maturing on
2028
 
paying interest
semiannually
 
at a fixed rate of
7.25
%, net of debt issuance costs of $
5,085
[1]
394,915
393,937
Junior subordinated deferrable interest debentures (related to
 
trust preferred securities) maturing on
2034
 
with fixed interest rates ranging from
6.13
% to
6.56
%, net of debt issuance costs of $
268
198,366
198,346
Total notes payable
$
918,376
$
986,948
Note: Refer to the 2023 Form 10-K for rates information
 
at December 31, 2023.
[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 September 30, 2024 is included in the table
 
below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets sold under
 
(In thousands)
agreements to
repurchase
Notes payable
Total
2024
$
55,360
$
22,373
$
77,733
2025
-
144,214
144,214
2026
-
74,500
74,500
2028
-
439,265
439,265
Later years
-
238,024
238,024
Total borrowings
$
55,360
$
918,376
$
973,736
At
 
September
 
30,
 
2024
 
and
 
December 31,
 
2023,
 
the
 
Corporation had
 
FHLB
 
borrowing facilities
 
whereby the
 
Corporation could
borrow up to
 
$
4.6
 
billion and $
4.2
 
billion, respectively,
 
of which $
0.3
 
billion and $
0.4
 
billion, respectively,
 
were used. In
 
addition, at
each of September 30, 2024 and December 31, 2023, 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 September
 
30, 2024, the Corporation
 
had borrowing facilities
 
at the discount
 
window of the
 
Federal Reserve Bank of
 
New
York
 
amounting to
 
$
5.8
 
billion (December 31,
 
2023 -
 
$
4.4
 
billion), which remained
 
unused at
 
September 30, 2024
 
and December
31, 2023.
 
The facilities are a collateralized source of credit
 
that is highly reliable even under difficult market conditions.
 
92
Note 16 − Other liabilities
The caption of other liabilities in the consolidated
 
statements of financial condition consists of the following
 
major categories:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
December 31, 2023
Accrued expenses
$
336,223
$
337,695
Accrued interest payable
54,316
59,102
Accounts payable
91,226
89,339
Dividends payable
44,614
44,741
Trades payable
3,540
31
Liability for GNMA loans sold with an option to repurchase
8,558
10,960
Reserves for loan indemnifications
3,376
4,408
Reserve for operational losses
28,841
27,994
Operating lease liabilities (Note 27)
108,165
126,946
Finance lease liabilities (Note 27)
23,793
25,778
Pension benefit obligation
6,543
6,772
Postretirement benefit obligation
115,363
117,045
Others
65,765
63,816
Total other liabilities
$
890,323
$
914,627
93
Note 17 – Stockholders’ equity
 
As
 
of
 
September
 
30,
 
2024,
 
stockholders’
 
equity
 
totaled
 
$
5.8
 
billion.
 
During
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
Corporation declared cash dividends of $
1.86
 
(2023 - $
1.65
) per common share amounting to $
134.3
 
million (2023 - $
118.9
 
million).
The quarterly dividend of $
0.62
 
per share declared to stockholders of record as
 
of the close of business on
September 13, 2024
 
was
paid on
October 1, 2024
.
During the quarter
 
ended September 30,
 
2024, the Corporation
 
completed the repurchase
 
of
599,096
 
shares of common
 
stock for
$
58.8
 
million at an average price of $
98.11
 
per share, under the previously announced share repurchase authorization of
 
up to $
500
million.
94
Note 18 – Other comprehensive income (loss)
 
The
 
following
 
table
 
presents
 
changes
 
in
 
accumulated
 
other
 
comprehensive
 
income
 
(loss)
 
by
 
component
 
for
 
the
 
quarters
 
ended
September 30, 2024 and, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in Accumulated Other Comprehensive Loss
 
by Component [1]
Quarters ended
Nine months ended
September 30,
September 30,
(In thousands)
2024
2023
2024
2023
Foreign currency translation
Beginning Balance
$
(68,383)
$
(55,979)
$
(64,528)
$
(56,735)
Other comprehensive income (loss)
615
(976)
(3,240)
(220)
Net change
615
(976)
(3,240)
(220)
Ending balance
$
(67,768)
$
(56,955)
$
(67,768)
$
(56,955)
Adjustment of pension and
postretirement benefit plans
Beginning Balance
$
(113,371)
$
(138,319)
$
(117,894)
$
(144,335)
Amounts reclassified from accumulated other
comprehensive loss for amortization of net losses
2,261
3,009
6,784
9,025
Net change
2,261
3,009
6,784
9,025
Ending balance
$
(111,110)
$
(135,310)
$
(111,110)
$
(135,310)
Unrealized net holding losses
on debt securities
Beginning Balance
$
(1,696,528)
$
(2,134,137)
$
(1,713,109)
$
(2,323,903)
Other comprehensive income (loss)
326,148
(242,567)
271,985
(120,756)
Amounts reclassified from accumulated other
comprehensive loss for amortization of net unrealized
losses of debt securities transferred from available-for-
sale to held-to-maturity
36,264
35,027
107,008
102,982
Net change
362,412
(207,540)
378,993
(17,774)
Ending balance
$
(1,334,116)
$
(2,341,677)
$
(1,334,116)
$
(2,341,677)
Unrealized net (losses) gains
on cash flow hedges
Beginning Balance
$
-
$
-
$
-
$
45
Other comprehensive (loss) income before
reclassifications
-
-
-
(19)
Amounts reclassified from accumulated other
comprehensive income (loss)
-
-
-
(26)
Net change
-
-
-
(45)
Total
 
$
(1,512,994)
$
(2,533,942)
$
(1,512,994)
$
(2,533,942)
[1]
 
All amounts presented are net of tax.
 
95
The following table
 
presents the amounts
 
reclassified out of
 
each component of
 
accumulated other comprehensive loss
 
during the
quarters and nine months ended September 30,
 
2024 and 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassifications Out of Accumulated Other Comprehensive
 
Loss
Quarters ended
 
Nine months ended
Affected Line Item in the
 
September 30,
September 30,
(In thousands)
Consolidated Statements of Operations
2024
2023
2024
2023
Adjustment of pension and postretirement benefit plans
Amortization of net losses
Other operating expenses
$
(3,618)
$
(4,814)
$
(10,854)
$
(14,440)
Total before tax
(3,618)
(4,814)
(10,854)
(14,440)
Income tax benefit
1,357
1,805
4,070
5,415
Total net of tax
$
(2,261)
$
(3,009)
$
(6,784)
$
(9,025)
Unrealized net holding losses on debt securities
Amortization of unrealized net losses of debt
securities transferred to held-to-maturity
Interest income from investment securities
$
(45,331)
$
(43,783)
$
(133,761)
$
(128,726)
Total before tax
(45,331)
(43,783)
(133,761)
(128,726)
Income tax expense
9,067
8,756
26,753
25,744
Total net of tax
$
(36,264)
$
(35,027)
$
(107,008)
$
(102,982)
Unrealized net (losses) gains on cash flow hedges
Forward contracts
Mortgage banking activities
$
-
$
-
$
-
$
41
Total before tax
-
-
-
41
Income tax benefit
-
-
-
(15)
Total net of tax
$
-
$
-
$
-
$
26
Total reclassification
 
adjustments, net of tax
$
(38,525)
$
(38,036)
$
(113,792)
$
(111,981)
 
96
Note 19 – Guarantees
At September
 
30, 2024,
 
the Corporation
 
recorded a
 
liability of
 
$
1
 
million (December
 
31, 2023
 
- $
1
 
million), which
 
represents the
unamortized balance of the obligations
 
undertaken in issuing the
 
guarantees under the standby letters of
 
credit. Management does
not anticipate any material losses related to these
 
instruments.
From time to time, the Corporation securitized mortgage loans into guaranteed mortgage-backed securities subject to limited, and in
certain instances, 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.
 
At
 
September
 
30, 2024,
 
the Corporation
 
serviced
 
$
511
million
 
(December
 
31,
 
2023
 
-
 
$
561
 
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. The
 
maximum potential
 
amount of
 
future payments
 
that the
 
Corporation would
 
be required
 
to
 
make
 
under the
recourse
 
arrangements
 
in
 
the
 
event
 
of
 
nonperformance
 
by
 
the
 
borrowers
 
is
 
equivalent
 
to
 
the
 
total
 
outstanding
 
balance
 
of
 
the
residential mortgage loans serviced with
 
recourse and interest, if applicable. During
 
the quarter and nine months
 
ended September
30,
 
2024,
 
the
 
Corporation
 
repurchased
 
approximately
 
$
0.5
 
million
 
and
 
$
1.5
 
million,
 
respectively,
 
of
 
unpaid
 
principal
 
balance
 
in
mortgage loans subject
 
to the credit
 
recourse provisions (September 30,
 
2023
-
$
0.4
 
million and $
2.0
 
million, respectively).
 
In the
event of
 
nonperformance by the
 
borrower, the
 
Corporation has
 
rights to
 
the underlying
 
collateral securing
 
the mortgage
 
loan. The
Corporation suffers ultimate losses on these loans when the proceeds from a foreclosure sale of the property underlying a defaulted
mortgage loan are
 
less than the
 
outstanding principal balance
 
of the
 
loan plus any
 
uncollected interest advanced
 
and the costs
 
of
holding and
 
disposing the
 
related property.
 
At September
 
30, 2024,
 
the Corporation’s
 
liability established
 
to cover
 
the estimated
credit loss exposure related to loans sold or serviced
 
with credit recourse amounted to $
3
 
million (December 31, 2023 - $
4
 
million).
The following table shows the changes in the Corporation’s liability of estimated losses related to loans serviced with credit recourse
provisions during the quarters and nine months
 
ended September 30, 2024 and 2023.
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended September 30,
Nine months ended September 30,
(In thousands)
2024
2023
2024
2023
Balance as of beginning of period
$
4,058
$
6,223
$
4,211
$
6,897
Provision (benefit) for recourse liability
(808)
228
(768)
52
Net charge-offs
(54)
(54)
(247)
(552)
Balance as of end of period
$
3,196
$
6,397
$
3,196
$
6,397
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,
 
FHLMC 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 September 30, 2024, the
Corporation serviced $
9.2
 
billion in mortgage loans for third-parties, including the loans serviced with credit recourse (December 31,
2023 - $
9.9
 
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
 
September
30,
 
2024,
 
the
 
outstanding
 
balance
 
of
 
funds
 
advanced
 
by
 
the
 
Corporation under
 
such
 
mortgage
 
loan
 
servicing
 
agreements
 
was
approximately
 
$
45
 
million
 
(December
 
31,
 
2023
 
-
 
$
49
 
million).
 
To
 
the
 
extent
 
the
 
mortgage
 
loans
 
underlying
 
the
 
Corporation’s
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
 
September 30,
 
2024 and
 
December 31,
 
2023, respectively.
 
In
addition, at both
 
September 30, 2024 and
 
December 31, 2023, 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
97
applicable
 
guarantee
 
agreement.
 
Refer
 
to
 
Note
 
18
 
to
 
the
 
Consolidated Financial
 
Statements
 
in
 
the
 
2023
 
Form
 
10-K
 
for
 
further
information on the trust preferred securities.
98
Note 20 – 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
 
Corporation’s
 
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)
September 30, 2024
December 31, 2023
Commitments to extend credit:
Credit card lines
$
5,582,089
$
6,108,939
Commercial lines of credit
3,874,209
3,626,269
Construction lines of credit
1,234,365
1,287,679
Other consumer unused credit commitments
 
261,470
256,610
Commercial letters of credit
2,157
1,404
Standby letters of credit
123,685
80,889
Commitments to originate or fund mortgage loans
23,217
32,968
Once At September 30,
 
2024 and December 31,
 
2023, the Corporation maintained a
 
reserve of approximately $
18
 
million and $
17
million, respectively, for potential losses associated with unfunded loan commitments related to
 
commercial and construction lines of
credit.
Other commitments
At September 30,
 
2024 and December
 
31, 2023, the
 
Corporation also maintained
 
other non-credit commitments
 
for approximately
$
2.0
 
million and $
3.3
 
million, respectively, primarily for the acquisition of other investments.
 
Business concentration
Since the Corporation’s 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 Corporation’s
 
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 32
 
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 the
 
Puerto Rico Oversight
 
Management and Economic
 
Stability Act (“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 September 30, 2024, the Corporation’s direct exposure to the Puerto Rico government and its instrumentalities and municipalities
totaled $
336
 
million, of which
 
$
336
 
million were outstanding
 
($
362
 
million and $
333
 
million at December
 
31, 2023). Of
 
the amount
outstanding,
 
$
323
 
million
 
consists
 
of
 
loans
 
and
 
$
13
 
million
 
are
 
securities
 
($
314
 
million
 
and
 
$
19
 
million
 
at
 
December 31,
 
2023).
Substantially all
 
of the
 
amount outstanding
 
at September
 
30, 2024
 
and December
 
31, 2023
 
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
 
September
 
30,
 
2024,
80
%
 
of
 
the
 
Corporation’s
 
exposure
 
to
 
municipal
 
loans
 
and
 
 
99
securities
 
was
 
concentrated
 
in
 
the
 
municipalities
 
of
 
San
 
Juan,
 
Guaynabo,
 
Carolina
 
and
 
Caguas.
In
 
July
 
2024,
 
the
 
Corporation
received scheduled principal payments amounting to $
40
 
million from various obligations from Puerto Rico
 
municipalities.
The following table details the loans and investments representing the Corporation’s direct exposure to
 
the Puerto Rico government
according to their maturities as of September 30, 2024
:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
Investment
Portfolio
Loans
Total Outstanding
Total Exposure
Central Government
Within 1 year
3
-
3
3
After 5 to 10 years
1
-
1
1
After 10 years
42
-
42
42
Total Central
 
Government
46
-
46
46
Municipalities
Within 1 year
2,440
12,764
15,204
15,204
After 1 to 5 years
9,520
147,033
156,553
156,553
After 5 to 10 years
655
119,073
119,728
119,728
After 10 years
-
44,582
44,582
44,582
Total Municipalities
12,615
323,452
336,067
336,067
Total Direct Government
 
Exposure
$
12,661
$
323,452
$
336,113
$
336,113
In
 
addition,
 
at
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
$
225
 
million
 
in
 
loans
 
insured
 
or
 
securities
 
issued
 
by
 
Puerto
 
Rico
governmental entities
 
but for
 
which the
 
principal source
 
of repayment
 
is non-governmental
 
($
238
 
million at
 
December 31,
 
2023).
These
 
included
 
$
179
 
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,
 
2023 -
 
$
191
 
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 September
 
30,
2024, $
38
 
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, 2023
 
- $
40
 
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, HFA’s
 
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.
 
BPPR’s
 
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 Commonwealth’s fiscal crisis and
 
the
ongoing
 
Title
 
III
 
proceedings
 
under
 
PROMESA.
 
Similarly,
 
BPPR’s
 
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,
 
$
2.0
 
billion
 
of
 
residential
 
mortgages
 
and
 
$
88.4
 
million
 
commercial
 
loans
 
were
 
insured
 
or
 
guaranteed
 
by
 
the
 
U.S.
Government
 
or
 
its
 
agencies
 
at
 
September
 
30,
 
2024
 
(compared
 
to
 
$
1.9
 
billion
 
and
 
$
89.2
 
million,
 
respectively,
 
at
 
December
 
31,
2023). 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 September 30, 2024, the Corporation had
 
operations in the United States Virgin
 
Islands (the “USVI”) and had approximately $
28
million
 
in
 
direct
 
exposure
 
to
 
USVI
 
government
 
entities
 
(December
 
31,
 
2023
 
-
 
$
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.
 
100
At September 30, 2024,
 
the Corporation had operations
 
in the British Virgin
 
Islands (“BVI”) and it
 
had a loan portfolio
 
amounting to
approximately
 
$
200
 
million
 
comprised
 
of
 
various
 
retail
 
and
 
commercial
 
clients,
 
compared
 
to
 
a
 
loan
 
portfolio
 
of
 
$
205
 
million
 
at
December 31, 2023. At September 30, 2024, 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”)
 
approved
 
a
 
final
 
rule
 
that
 
imposes
 
a
 
special
assessment (the “FDIC
 
Special Assessment”) to recover
 
the losses to
 
the deposit insurance
 
fund resulting from
 
the FDIC’s use,
 
in
March 2023,
 
of the systemic
 
risk exception to
 
the least-cost resolution
 
test under the
 
Federal Deposit Insurance
 
Act in
 
connection
with the
 
receiverships of
 
several failed
 
banks. In
 
connection with
 
this assessment,
 
the Corporation
 
recorded an
 
expense of
 
$
71.4
million, $
45.3
 
million net of tax, in the fourth quarter
 
of 2023, representing the full amount of the
 
assessment.
During the first quarter of 2024, the Corporation recorded an additional expense of $
14.3
 
million, $
9.1
 
million net of tax, to reflect the
FDIC's
 
higher
 
loss
 
estimate
 
which increased
 
from
 
$
16.3
 
billion,
 
when
 
approved,
 
to
 
$
20.4
 
billion
 
during the
 
quarter.
 
The
 
special
assessment amount and collection period may
 
change as the estimated loss
 
is periodically adjusted or if
 
the total amount collected
varies.
Legal Proceedings
The nature
 
of Popular’s business
 
ordinarily generates
 
claims, litigation,
 
regulatory and
 
governmental investigations, and
 
legal and
administrative cases
 
and proceedings (collectively,
 
“Legal Proceedings”). 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 management’s 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 $
6.49
 
million as
of
 
September
 
30,
 
2024.
 
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,
 
management’s
 
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 Corporation’s
 
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 Corporation’s consolidated financial position for that period.
 
Set forth below is a description of the Corporation’s
 
significant Legal Proceedings.
Insufficient Funds and Overdraft Fees Class Actions
Popular, Inc. (“Popular”) was named as a defendant on a putative class action complaint captioned Golden v. Popular, Inc. originally
filed in March 2020
 
before the U.S. District Court for
 
the Southern District of New
 
York, seeking
 
damages, restitution and injunctive
relief. Plaintiff alleged
 
breach of contract, violation
 
of the covenant of
 
good faith and fair
 
dealing, unjust enrichment and
 
violation of
101
New York
 
consumer protection law due to Popular’s purported
 
practice of charging overdraft fees
 
(“OD Fees”) on transactions that,
under plaintiffs’ theory,
 
do not overdraw the account. In
 
October 2022, the parties reached a
 
settlement in principle on a
 
class-wide
basis subject
 
to final
 
court approval. On
 
July 9,
 
2024, the
 
court granted
 
final approval
 
to the
 
settlement agreement. This
 
matter is
now closed.
Popular was named as a defendant on a putative class action complaint captioned Lipsett v. Popular, Inc. d/b/a Banco Popular, filed
on January 31, 2022 before the U.S. District Court for the Southern District of
 
New York, seeking damages, restitution and injunctive
relief. Similar
 
to the
 
claims set
 
forth in
 
the aforementioned
 
Golden complaint,
 
Plaintiff alleged
 
breach of
 
contract, violations
 
of the
covenant of
 
good faith and
 
fair dealing
 
and unjust enrichment,
 
as a
 
result of Popular’s
 
purported practice of
 
charging OD Fees
 
on
transactions that,
 
under plaintiffs’
 
theory,
 
do not
 
overdraw the
 
account.
 
The complaint
 
further
 
alleged that
 
Popular
 
assessed OD
Fees over authorized transactions for which sufficient funds are
 
held for settlement.
 
On May 2,
 
2024, the parties
 
reached a settlement
 
in principle on
 
a class-wide basis.
On July 25,
 
2024, the parties
 
filed before the
Court
 
a motion
 
for preliminary
 
approval of
 
the settlement
 
agreement, and,
 
on July
 
26, 2024,
 
the Court
 
issued an
 
order granting
preliminary approval of
 
the settlement
 
agreement. The Court
 
scheduled the final
 
approval hearing of
 
the settlement
 
agreement for
January 27, 2025.
 
102
Note 21 – 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 September 30,
 
2024
.
These special purpose
entities
 
are
 
deemed
 
to
 
be
 
VIEs
 
since
 
they
 
lack
 
equity
 
investments
 
at
 
risk.
 
The
 
Corporation’s
 
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
 
Corporation’s
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
 
23
 
to
 
the
 
Consolidated
 
Financial
 
Statements
 
for
 
additional
information on the debt securities outstanding at September 30, 2024 and December 31, 2023, which are classified as available-for-
sale and
 
trading securities
 
in the
 
Corporation’s 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 Corporation’s
 
variable interests
 
in
non-consolidated VIEs
 
and the
 
maximum exposure
 
to loss
 
as a
 
result of
 
the Corporation’s
 
involvement as
 
servicer of
 
GNMA and
FNMA loans at September 30, 2024 and
 
December 31, 2023.
 
103
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
December 31, 2023
Assets
Servicing assets:
Mortgage servicing rights
$
85,146
$
92,999
Total servicing
 
assets
 
$
85,146
$
92,999
Other assets:
Servicing advances
$
7,121
$
6,291
Total other assets
$
7,121
$
6,291
Total assets
$
92,267
$
99,290
Maximum exposure to loss
$
92,267
$
99,290
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 $
6.7
 
billion at September 30, 2024 (December 31, 2023
 
- $
7.2
 
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
 
September 30,
 
2024
 
and
 
December 31,
 
2023,
 
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 Corporation’s financial statements at September 30,
 
2024.
104
Note 22 – Related party transactions
 
 
Centro Financiero BHD, S.A.
At September
 
30, 2024,
 
the Corporation
 
had a
15.84
% equity
 
interest in
 
Centro Financiero BHD,
 
S.A. (“BHD”),
 
one of
 
the largest
banking
 
and
 
financial
 
services
 
groups
 
in
 
the
 
Dominican
 
Republic.
 
During
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
Corporation recorded $
29.6
 
million in equity pickup,
 
including the impact of
 
changes in the fair
 
value of available for
 
sale securities
included as
 
a component
 
of Other Comprehensive
 
Income, from
 
its investment
 
in BHD
 
(September 30, 2023
 
- $
38
 
million), which
had a
 
carrying amount
 
of $
236.1
 
million at
 
September 30,
 
2024 (December
 
31, 2023
 
- $
225.9
 
million). The
 
Corporation received
$
19.4
 
million
 
in
 
cash
 
dividend
 
distributions
 
and
 
$
2.9
 
in
 
stock
 
dividends
 
during
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024
(September 30, 2023 - $
14.1
 
million in cash dividends and $
2.1
 
million in stock dividends).
 
Investment Companies
The
 
Corporation,
 
through
 
its
 
wholly
 
owned
 
subsidiary
 
Popular
 
Asset
 
Management
 
LLC
 
(“PAM”)
 
provided
 
investment
 
advisory
services to several investment companies registered under the Investment
 
Company Act of 1940 in exchange for a
 
fee. These fees
are calculated
 
at an
 
annual rate
 
of the
 
average net
 
assets of
 
the investment
 
company,
 
as defined
 
in each
 
agreement. Due
 
to its
advisory
 
role,
 
the
 
Corporation considers
 
these
 
investment companies
 
as
 
related
 
parties. The
 
Corporation, through
 
its
 
subsidiary
BPPR, also provides transfer agency services to
 
investment companies considered affiliates up to the second
 
quarter of 2024.
For
 
the
 
nine months
 
ended September
 
30,
 
2024, administrative
 
fees charged
 
to
 
these
 
investment companies
 
amounted to
 
$
1.6
million (September 30, 2023 -
 
$
1.7
 
million) and waived fees amounted to
 
$
0.5
 
million (September 30, 2023 -
 
$
0.7
 
million), for a net
fee of $
1.1
 
million (September 30, 2023 - $
1
 
million).
105
Note 23 – 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 Corporation’s
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 instrument’s
 
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 Corporation’s credit standing, constraints on liquidity
and unobservable parameters that are applied consistently.
 
There have been no changes in the
 
Corporation’s methodologies used
to estimate the fair value of assets and liabilities from
 
those disclosed in the 2023 Form 10-K.
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 Corporation’s assets
 
and liabilities measured at fair value
 
on
a recurring basis at September 30, 2024 and December
 
31, 2023:
 
106
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At September 30, 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
$
5,879,911
$
5,644,519
$
-
$
-
$
11,524,430
Collateralized mortgage obligations - federal
agencies
-
128,553
-
-
128,553
Mortgage-backed securities
-
5,530,582
558
-
5,531,140
Other
-
-
2,000
-
2,000
Total debt securities
 
available-for-sale
$
5,879,911
$
11,303,654
$
2,558
$
-
$
17,186,123
Trading account debt securities, excluding
derivatives:
U.S. Treasury securities
$
7,675
$
10
$
-
$
-
$
7,685
Obligations of Puerto Rico, States and political
subdivisions
-
58
-
-
58
Collateralized mortgage obligations
-
132
-
-
132
Mortgage-backed securities
-
22,723
84
-
22,807
Other
-
-
154
-
154
Total trading account
 
debt securities, excluding
derivatives
$
7,675
$
22,923
$
238
$
-
$
30,836
Equity securities
$
-
$
46,248
$
-
$
385
$
46,633
Mortgage servicing rights
-
-
108,827
-
108,827
Loans held-for-sale
-
5,509
-
-
5,509
Derivatives
 
-
25,941
-
-
25,941
Total assets measured
 
at fair value on a
recurring basis
$
5,887,586
$
11,404,275
$
111,623
$
385
$
17,403,869
Liabilities
Derivatives
$
-
$
(23,608)
$
-
$
-
$
(23,608)
Total liabilities measured
 
at fair value on a
recurring basis
$
-
$
(23,608)
$
-
$
-
$
(23,608)
 
 
 
107
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At December 31, 2023
(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
$
3,936,036
$
6,811,025
$
-
$
-
$
10,747,061
Collateralized mortgage obligations - federal
agencies
-
134,686
-
-
134,686
Mortgage-backed securities
-
5,844,180
606
-
5,844,786
Other
-
11
2,500
-
2,511
Total debt securities
 
available-for-sale
$
3,936,036
$
12,789,902
$
3,106
$
-
$
16,729,044
Trading account debt securities, excluding
derivatives:
U.S. Treasury securities
$
16,859
$
-
$
-
$
-
$
16,859
Obligations of Puerto Rico, States and political
subdivisions
-
71
-
-
71
Collateralized mortgage obligations
-
93
5
-
98
Mortgage-backed securities
-
14,261
112
-
14,373
Other
-
-
167
-
167
Total trading account
 
debt securities, excluding
derivatives
$
16,859
$
14,425
$
284
$
-
$
31,568
Equity securities
$
-
$
37,965
$
-
$
310
$
38,275
Mortgage servicing rights
-
-
118,109
-
118,109
Loans held-for-sale
-
3,239
-
-
3,239
Derivatives
 
-
24,419
-
-
24,419
Total assets measured
 
at fair value on a
recurring basis
$
3,952,895
$
12,869,950
$
121,499
$
310
$
16,944,654
Liabilities
 
 
 
Derivatives
$
-
$
(21,103)
$
-
$
-
$
(21,103)
Total liabilities measured
 
at fair value on a
recurring basis
$
-
$
(21,103)
$
-
$
-
$
(21,103)
Beginning in the first quarter of 2023, the Corporation has elected the fair value option for
 
newly originated mortgage loans held-for-
sale. This election better aligns with the management
 
of the portfolio from a business perspective.
 
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 September 30, 2024 and
 
December 31, 2023.
 
 
 
 
 
 
(In thousands)
September 30, 2024
Aggregate Unpaid
Fair Value
Principal Balance
Difference
Loans held for sale
$
5,509
$
5,507
$
2
 
 
 
 
 
 
(In thousands)
December 31, 2023
Aggregate Unpaid
Fair Value
Principal Balance
Difference
Loans held for sale
$
3,239
$
3,202
$
37
 
 
108
No
 
loans held-for-sale were 90 or more days past
 
due or on nonaccrual status as of September 30,
 
2024 and December 31, 2023.
For the nine months ended September 30, 2024, changes in the fair value of mortgage loans held-for-sale for which the Corporation
elected the fair value option, were not considered material.
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
 
quarters
 
and
 
nine
 
months
 
ended
 
September
 
30,
 
2024
 
and
 
2023
 
and
 
excludes
 
nonrecurring fair
 
value
measurements of assets no longer outstanding as of
 
the reporting date.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2024
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE
 
MEASUREMENTS
Assets
 
 
 
 
 
Write-downs
Loans
[1]
$
-
$
-
$
4,166
$
4,166
$
(654)
Other real estate owned
[2]
-
-
5,749
5,749
(1,889)
Other foreclosed assets
[2]
-
-
174
174
(38)
Total assets measured
 
at fair value on a nonrecurring basis
$
-
$
-
$
10,089
$
10,089
$
(2,581)
[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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2023
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE
 
MEASUREMENTS
Assets
 
 
 
 
 
Write-downs
Loans
[1]
$
-
$
-
$
9,113
$
9,113
$
(3,087)
Other real estate owned
[2]
-
-
5,457
5,457
(1,012)
Other foreclosed assets
[2]
-
-
44
44
(14)
Total assets measured
 
at fair value on a nonrecurring basis
$
-
$
-
$
14,614
$
14,614
$
(4,113)
[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.
109
The following tables present the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarters
 
and nine months ended September 30, 2024 and
 
2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended September 30, 2024
MBS
Other
MBS
Other
classified
securities
classified
securities
as debt
classified as
 
as trading
classified
securities
 
debt securities
account
as trading
Mortgage
available-
available-
 
debt
account debt
servicing
Total
(In thousands)
for-sale
for-sale
securities
securities
rights
assets
Balance at June 30, 2024
$
581
$
2,000
$
84
$
158
$
113,386
$
116,209
Gains (losses) included in earnings
-
-
-
(4)
(4,896)
(4,900)
Gains (losses) included in OCI
2
-
-
-
-
2
Additions
-
-
-
-
337
337
Settlements
(25)
-
-
-
-
(25)
Balance at September 30, 2024
$
558
$
2,000
$
84
$
154
$
108,827
$
111,623
Changes in unrealized gains (losses) included in
earnings relating to assets still held at September
30, 2024
$
-
$
-
$
-
$
6
$
(2,577)
$
(2,571)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2024
MBS
Other
MBS
Other
classified
securities
CMOs
classified
securities
as debt
classified as
 
classified
as trading
classified
securities
 
debt securities
as trading
account
as trading
Mortgage
available-
available-
account debt
 
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)
-
-
(13)
(10,280)
(10,793)
Gains (losses) included in OCI
2
-
-
-
-
-
2
Additions
-
-
-
-
-
998
998
Settlements
(50)
-
(5)
(28)
-
-
(83)
Balance at September 30, 2024
$
558
$
2,000
$
-
$
84
$
154
$
108,827
$
111,623
Changes in unrealized gains (losses) included
in earnings relating to assets still held at
September 30, 2024
$
-
$
-
$
-
$
-
$
18
$
(3,279)
$
(3,261)
 
110
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended September 30, 2023
MBS
Other
Other
classified
securities
CMOs
MBS
securities
as debt
classified as
classified
classified
classified
securities
debt 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 June 30, 2023
$
655
$
1,000
$
56
$
163
$
191
$
121,249
$
123,314
Gains (losses) included in earnings
-
-
-
-
(3)
(2,793)
(2,796)
Gains (losses) included in OCI
(2)
-
-
-
-
-
(2)
Additions
-
-
-
-
-
574
574
Settlements
-
-
(46)
(26)
-
-
(72)
Balance at September 30, 2023
$
653
$
1,000
$
10
$
137
$
188
$
119,030
$
121,018
Changes in unrealized gains (losses)
included in earnings relating to assets
still held at September 30, 2023
$
-
$
-
$
-
$
-
$
4
$
(381)
$
(377)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2023
MBS
Other
Other
classified
securities
CMOs
securities
as debt
classified as
classified
MBS
 
classified
securities
debt securities
as trading
classified as
as trading
Mortgage
available-
available-
account debt
trading account
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)
(19)
(10,386)
(10,407)
Gains (losses) included in OCI
(8)
-
-
-
-
-
(8)
Additions
-
-
4
-
-
1,814
1,818
Sales
-
-
-
-
-
(1,269)
(1,269)
Settlements
(50)
-
(107)
(76)
-
521
288
Balance at September 30, 2023
$
653
$
1,000
$
10
$
137
$
188
$
119,030
$
121,018
Changes in unrealized gains (losses)
included in earnings relating to assets
still held at September 30, 2023
$
-
$
-
$
-
$
(1)
$
22
$
(1,828)
$
(1,807)
 
 
 
111
Gains and losses
 
(realized and unrealized)
 
included in earnings
 
for the
 
quarters
 
and nine months
 
ended September 30,
 
2024 and
2023 for
 
Level 3
 
assets and
 
liabilities included
 
in the
 
previous tables
 
are reported
 
in the
 
consolidated statement
 
of operations
 
as
follows:
 
 
 
 
 
 
 
 
 
Quarter ended September 30, 2024
Nine months ended September 30, 2024
Changes in unrealized
Changes in unrealized
Total gains
gains (losses) relating to
Total gains
gains (losses) relating to
(losses) included
assets still held at
(losses) included
assets still held at
(In thousands)
in earnings
reporting date
in earnings
reporting date
Mortgage banking activities
$
(4,896)
$
(2,577)
$
(10,280)
$
(3,279)
Trading account profit (loss)
(4)
6
(13)
18
Provision for credit losses
-
-
(500)
-
Total
 
$
(4,900)
$
(2,571)
$
(10,793)
$
(3,261)
 
 
 
 
 
 
 
Quarter ended September 30, 2023
Nine months ended September 30, 2023
Changes in unrealized
Changes in unrealized
Total gains
gains (losses) relating to
Total gains
gains (losses) relating to
(losses) included
assets still held at
(losses) included
assets still held at
(In thousands)
in earnings
reporting date
in earnings
reporting date
Mortgage banking activities
$
(2,793)
$
(381)
$
(10,386)
$
(1,828)
Trading account profit (loss)
(3)
4
(21)
21
Total
 
$
(2,796)
$
(377)
$
(10,407)
$
(1,807)
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 September 30, 2024 and 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value at
 
September 30,
(In thousands)
2024
Valuation technique
Unobservable inputs
Weighted average (range) [1]
Other - trading
$
154
Discounted cash flow model
Weighted average life
2.3
 
years
Yield
12
.0%
Prepayment speed
10.8
%
Loans held-in-portfolio
$
4,166
[2]
External appraisal
Haircut applied on
external appraisals
7.5
% (
5.0
% -
10.0
%)
Other real estate owned
$
16
[3]
External appraisal
Haircut applied on
external appraisals
35
.0%
[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.
 
112
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value at
 
September 30,
(In thousands)
2023
Valuation technique
Unobservable inputs
Weighted average (range) [1]
CMO's - trading
$
10
Discounted cash flow model
Weighted average life
0.2
 
years (
0.2
 
-
0.3
 
years)
Yield
4.9
%
Prepayment speed
7.3
%
Other - trading
$
188
Discounted cash flow model
Weighted average life
2.5
 
years
Yield
12
.0%
Prepayment speed
10.8
%
Loans held-in-portfolio
$
9,044
[2]
External appraisal
Haircut applied on
external appraisals
7.2
% (
5
.0% -
10
.0%)
Other real estate owned
$
325
[3]
External appraisal
Haircut applied on
external appraisals
35
.0%
[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.
113
Note 24 – 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 management’s
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
 
September
 
30,
 
2024
 
and
December 31, 2023, 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
Corporation’s fee
 
generating businesses and
 
anticipated future business
 
activities, that
 
is, they
 
do not
 
represent the
 
Corporation’s
value as
 
a going concern.
 
There have been
 
no changes in
 
the Corporation’s 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 management’s
estimate of the underlying value of the Corporation.
 
114
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
Carrying
 
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
 
Financial Assets:
Cash and due from banks
$
427,594
$
427,594
$
-
$
-
$
-
$
427,594
Money market investments
6,530,788
6,522,716
8,072
-
-
6,530,788
Trading account debt securities, excluding
 
derivatives
[1]
30,836
7,675
22,923
238
-
30,836
Debt securities available-for-sale
[1]
17,186,123
5,879,911
11,303,654
2,558
-
17,186,123
Debt securities held-to-maturity:
U.S. Treasury securities
$
7,799,966
$
-
$
7,854,735
$
-
$
-
$
7,854,735
Obligations of Puerto Rico, States and political
subdivisions
52,415
-
6,930
46,905
-
53,835
Collateralized mortgage obligation-federal agency
1,523
-
1,398
-
-
1,398
Securities in wholly owned statutory business trusts
5,960
-
5,960
-
-
5,960
Total debt securities
 
held-to-maturity
$
7,859,864
$
-
$
7,869,023
$
46,905
$
-
$
7,915,928
Equity securities:
FHLB stock
$
46,668
$
-
$
46,668
$
-
$
-
$
46,668
FRB stock
98,957
-
98,957
-
-
98,957
Other investments
52,566
-
46,248
6,662
385
53,295
Total equity securities
$
198,191
$
-
$
191,873
$
6,662
$
385
$
198,920
Loans held-for-sale
$
5,509
$
-
$
5,509
$
-
$
-
$
5,509
Loans held-in-portfolio
35,450,647
-
-
34,681,826
-
34,681,826
Mortgage servicing rights
108,827
-
-
108,827
-
108,827
Derivatives
25,941
-
25,941
-
-
25,941
September 30, 2024
Carrying
 
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
 
Financial Liabilities:
Deposits:
Demand deposits
$
54,587,511
$
-
$
54,587,511
$
-
$
-
$
54,587,511
Time deposits
9,080,990
-
8,872,969
-
-
8,872,969
Total deposits
$
63,668,501
$
-
$
63,460,480
$
-
$
-
$
63,460,480
Assets sold under agreements to repurchase
$
55,360
$
-
$
55,369
$
-
$
-
$
55,369
Notes payable:
FHLB advances
$
325,095
$
-
$
318,450
$
-
$
-
$
318,450
Unsecured senior debt securities
394,915
-
417,316
-
-
417,316
Junior subordinated deferrable interest debentures
(related to trust preferred securities)
198,366
-
189,592
-
-
189,592
Total notes payable
$
918,376
$
-
$
925,358
$
-
$
-
$
925,358
Derivatives
$
23,608
$
-
$
23,608
$
-
$
-
$
23,608
[1]
Refer to Note 23 to the Consolidated Financial Statements
 
for the fair value by class of financial asset and its hierarchy
 
level.
 
115
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Carrying
 
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
 
Financial Assets:
Cash and due from banks
$
420,462
$
420,462
$
-
$
-
$
-
$
420,462
Money market investments
6,998,871
6,991,758
7,113
-
-
6,998,871
Trading account debt securities, excluding
 
derivatives
[1]
31,568
16,859
14,425
284
-
31,568
Debt securities available-for-sale
[1]
16,729,044
3,936,036
12,789,902
3,106
-
16,729,044
Debt securities held-to-maturity:
U.S. Treasury securities
$
8,121,411
$
-
$
8,092,339
$
-
$
-
$
8,092,339
Obligations of Puerto Rico, States and political
subdivisions
59,628
-
7,007
52,671
-
59,678
Collateralized mortgage obligation-federal agency
1,556
-
1,395
13
-
1,408
Securities in wholly owned statutory business trusts
5,960
-
5,960
-
-
5,960
Total debt securities
 
held-to-maturity
$
8,188,555
$
-
$
8,106,701
$
52,684
$
-
$
8,159,385
Equity securities:
FHLB stock
$
49,549
$
-
$
49,549
$
-
$
-
$
49,549
FRB stock
98,948
-
98,948
-
-
98,948
Other investments
45,229
-
37,965
7,869
310
46,144
Total equity securities
$
193,726
$
-
$
186,462
$
7,869
$
310
$
194,641
Loans held-for-sale
$
4,301
$
-
$
4,328
$
-
$
-
$
4,328
Loans held-in-portfolio
34,335,630
-
-
33,376,255
-
33,376,255
Mortgage servicing rights
118,109
-
-
118,109
-
118,109
Derivatives
24,419
-
24,419
-
-
24,419
December 31, 2023
Carrying
 
Measured
(In thousands)
amount
Level 1
Level 2
Level 3
at NAV
Fair value
 
Financial Liabilities:
Deposits:
Demand deposits
$
55,116,351
$
-
$
55,116,351
$
-
$
-
$
55,116,351
Time deposits
8,501,892
-
8,154,823
-
-
8,154,823
Total deposits
$
63,618,243
$
-
$
63,271,174
$
-
$
-
$
63,271,174
Assets sold under agreements to repurchase
$
91,384
$
-
$
91,386
$
-
$
-
$
91,386
Notes payable:
FHLB advances
$
394,665
$
-
$
377,851
$
-
$
-
$
377,851
Unsecured senior debt securities
393,937
-
400,848
-
-
400,848
Junior subordinated deferrable interest debentures
(related to trust preferred securities)
198,346
-
180,076
-
-
180,076
Total notes payable
$
986,948
$
-
$
958,775
$
-
$
-
$
958,775
Derivatives
$
21,103
$
-
$
21,103
$
-
$
-
$
21,103
[1]
Refer to Note 23 to the Consolidated Financial Statements
 
for the fair value by class of financial asset and its hierarchy
 
level.
 
The
 
notional
 
amount of
 
commitments to
 
extend credit
 
at September
 
30,
 
2024
 
and
 
December 31,
 
2023 was
 
$
11
 
billion and
 
$
10
billion, respectively,
 
and represented
 
the unused
 
portion of
 
credit facilities
 
granted to
 
customers. The notional
 
amount of
 
letters of
credit
 
at
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023
 
was
 
$
126
 
million
 
and
 
$
82
 
million,
 
respectively,
 
and
 
represented
 
the
contractual amount that
 
is required to
 
be paid in
 
the event of
 
nonperformance. 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
 
Popular’s
 
financial
statements.
 
 
116
Note 25 – Net income per common share
The following table sets forth the computation of net income per common share (“EPS”), basic and diluted, for the quarters and nine
months ended September 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended September 30,
Nine months ended September 30,
(In thousands, except per share information)
2024
2023
2024
2023
Net income
$
155,323
$
136,609
$
436,395
$
446,748
Preferred stock dividends
(353)
(353)
(1,059)
(1,059)
Net income applicable to common stock
$
154,970
$
136,256
$
435,336
$
445,689
Average common shares outstanding
71,807,136
71,794,934
71,882,273
71,676,630
Average potential dilutive common shares
 
21,266
23,168
29,880
59,884
Average common shares outstanding - assuming dilution
71,828,402
71,818,102
71,912,153
71,736,514
Basic EPS
$
2.16
$
1.90
$
6.06
$
6.22
Diluted EPS
$
2.16
$
1.90
$
6.05
$
6.21
For the quarters
 
and nine months
 
ended September 30,
 
2024 and 2023,
 
the Corporation calculated the
 
impact of potential
 
dilutive
common shares under the treasury stock method, consistent with the method used
 
for the preparation of the financial statements for
the year
 
ended December
 
31, 2023.
 
For a
 
discussion of
 
the calculation
 
under the
 
treasury stock
 
method, refer
 
to Note
 
31 of
 
the
Consolidated Financial Statements included in the
 
2023 Form 10-K.
 
117
Note 26 – Revenue from contracts with customers
The
 
following
 
table
 
presents
 
the
 
Corporation’s
 
revenue
 
streams
 
from
 
contracts
 
with
 
customers
 
by
 
reportable
 
segment
 
for
 
the
quarters and nine months ended September 30,
 
2024 and 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended September 30,
Nine months ended September 30,
(In thousands)
2024
2024
BPPR
Popular U.S.
BPPR
Popular U.S.
Service charges on deposit accounts
$
35,699
$
2,616
$
105,770
$
7,513
Other service fees:
Debit card fees [1]
25,997
200
78,308
599
Insurance fees, excluding reinsurance
11,702
1,684
33,966
5,130
Credit card fees, excluding late fees and membership
 
fees [1]
26,189
379
76,828
1,205
Sale and administration of investment products
8,387
-
23,664
-
Trust fees
6,902
-
20,810
-
Total revenue from
 
contracts with customers [2]
$
114,876
$
4,879
$
339,346
$
14,447
[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 nine month period ended September
 
30, 2024, interchange fees of approximately $
22.2
 
million,
corresponding to the first and second quarters were
 
reclassified.
[2]
The amounts include intersegment transactions of $
0.6
 
million and $
3.9
 
million, respectively, for the
 
quarter and nine months ended September 30, 2024.
Quarter ended September 30,
Nine months ended September 30,
(In thousands)
2023
2023
BPPR
Popular U.S.
BPPR
Popular U.S.
Service charges on deposit accounts
$
34,740
$
2,578
$
102,145
$
7,632
Other service fees:
Debit card fees [1]
24,390
213
73,489
654
Insurance fees, excluding reinsurance
11,487
1,535
34,437
4,130
Credit card fees, excluding late fees and membership
 
fees [1]
25,336
340
77,128
1,255
Sale and administration of investment products
6,820
-
19,454
-
Trust fees
6,540
-
19,304
-
Total revenue from
 
contracts with customers [2]
$
109,313
$
4,666
$
325,957
$
13,671
[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 quarter and nine month
 
period ended September 30, 2023, interchange fees
 
of approximately
$
11
 
million and $
33.8
 
million were reclassified.
[2]
The amounts include intersegment transactions of $
1.2
 
million and $
5
 
million, respectively, for the
 
quarter and nine months ended September 30,
 
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.
118
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
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 manager’s
 
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
119
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.
 
 
120
Note 27 – 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
0.1
 
to
30.3
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 12
and
 
Note
 
16
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
(In thousands)
Remaining
 
2024
2025
2026
2027
2028
Later
Years
Total Lease
Payments
Less: Imputed
Interest
Total
Operating Leases
$
7,818
$
28,553
$
20,088
$
14,681
$
12,221
40,309
$
123,670
$
(15,505)
$
108,165
Finance Leases
1,156
4,692
4,462
3,105
2,432
10,908
26,755
(2,962)
23,793
The following table presents the lease cost recognized
 
by the Corporation in the Consolidated
 
Statements of Operations as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended September 30,
Nine months ended September 30,
(In thousands)
2024
2023
2024
2023
Finance lease cost:
Amortization of ROU assets
$
775
$
1,071
$
2,272
$
2,966
Interest on lease liabilities
239
219
702
749
Operating lease cost
7,626
7,924
22,964
23,578
Short-term lease cost
123
101
359
322
Variable lease cost
69
49
208
150
Sublease income
(20)
(20)
(61)
(46)
Total lease cost
[1]
$
8,812
$
9,344
$
26,444
$
27,719
[1]
Total lease cost
 
is recognized as part of net occupancy expense, except
 
for the net gain recognized from sale and leaseback
 
transactions which
was included as part of other operating income.
121
The
 
following
 
table
 
presents
 
supplemental
 
cash
 
flow
 
information
 
and
 
other
 
related
 
information
 
related
 
to
 
operating
 
and
 
finance
leases.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,2024
(Dollars in thousands)
2024
2023
Cash paid for amounts included in the measurement of
 
lease liabilities:
Operating cash flows from operating leases
$
23,500
$
23,218
Operating cash flows from finance leases
702
749
Financing cash flows from finance leases
2,717
3,557
ROU assets obtained in exchange for new lease obligations:
Operating leases
$
1,618
$
4,864
Finance leases
732
1,796
Weighted-average remaining lease term:
Operating leases
7.2
years
7.3
years
Finance leases
8.2
years
7.8
years
Weighted-average discount rate:
Operating leases
3.3
%
3.2
%
Finance leases
3.7
%
3.8
%
As
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
additional
 
operating
 
leases
 
contracts
 
that
 
have
 
not
 
yet
 
commenced
 
with
 
an
undiscounted contract amount of $
3.9
 
million, which will have lease terms ranging from
10
 
to
20
 
years.
 
 
122
Note 28 – Pension and postretirement benefits
The
 
Corporation
 
has
 
a
 
non-contributory
 
defined
 
benefit
 
pension
 
plan
 
and
 
supplementary
 
pension
 
benefit
 
restoration
 
plans
 
for
regular employees of
 
certain of its
 
subsidiaries (the “Pension
 
Plans”). The accrual
 
of benefits under
 
the Pension Plans
 
is frozen to
all
 
participants.
 
The
 
Corporation
 
also
 
provides
 
certain
 
postretirement
 
health
 
care
 
benefits
 
for
 
retired
 
employees
 
of
 
certain
subsidiaries (the “OPEB Plan”).
 
The components of net periodic cost for the
 
Pension Plans and the OPEB Plan for the periods presented
 
were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension Plans
OPEB Plan
Quarter ended September 30,
Quarter ended September 30,
(In thousands)
2024
2023
2024
2023
Personnel Cost:
 
Service cost
$
-
$
-
$
32
$
48
Other operating expenses:
 
Interest cost
7,558
7,886
1,421
1,520
 
Expected return on plan assets
(8,594)
(8,591)
-
-
 
Amortization of prior service cost/(credit)
-
-
-
-
 
Amortization of net loss
4,166
5,367
(548)
(553)
Total net periodic
 
pension cost
 
$
3,130
$
4,662
$
905
$
1,015
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension Plans
OPEB Plan
Nine months ended September 30,
Nine months ended September 30,
(In thousands)
2024
2023
2024
2023
Personnel Cost:
 
Service cost
$
-
$
-
$
95
$
143
Other operating expenses:
 
Interest cost
22,675
23,661
4,264
4,561
 
Expected return on plan assets
(25,782)
(25,774)
-
-
 
Amortization prior service cost/(credit)
-
-
-
-
 
Amortization of net loss
12,498
16,099
(1,644)
(1,659)
Total net periodic
 
pension cost
$
9,391
$
13,986
$
2,715
$
3,045
The Corporation paid the following contributions to the plans for the nine months ended September 30, 2024 and expects to pay the
following contributions for the year ending December
 
31, 2024.
 
 
 
 
 
For the nine months ended
For the year ending
(In thousands)
September 30, 2024
December 31, 2024
Pension Plans
$
171
$
228
OPEB Plan
$
5,012
$
5,744
123
Note 29 - 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 the earlier of 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 on 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 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.
 
 
124
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Not in thousands)
Shares
Weighted-Average
Grant Date Fair
Value
Non-vested at December 31, 2022
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
241,744
86.60
Performance Shares Quantity Adjustment
6,739
85.37
Vested
 
(285,048)
75.54
Forfeited
(2,952)
64.83
Non-vested at September 30, 2024
260,379
$
67.13
During
 
the
 
quarter
 
ended
 
September
 
30,
 
2024,
928
 
shares
 
of
 
restricted
 
stock
 
(September
 
30,
 
2023
 
0
)
 
were
 
awarded
 
to
management under
 
the Incentive
 
Plan.
 
During the
 
quarters ended
 
September
 
30, 2024
 
and
 
2023,
no
 
performance shares
 
were
awarded to management
 
under the Incentive
 
Plan.
 
For the nine
 
months ended September
 
30, 2024,
176,519
 
shares of
 
restricted
stock
 
(September
 
30,
 
2023
 
200,303
)
 
and
65,225
 
performance
 
shares
 
(September
 
30,
 
2023
 
-
51,355
)
 
were
 
awarded
 
to
management under the Incentive Plan.
 
During
 
the
 
quarter
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
recognized
 
$
1.8
 
million
 
of
 
restricted
 
stock
 
expense
 
related
 
to
management
 
incentive
 
awards,
 
with
 
a
 
tax
 
benefit
 
of
 
$
0.4
 
million
 
(September
 
30,
 
2023
 
-
 
$
2.0
 
million,
 
with
 
a
 
tax
 
benefit
 
of
 
$
0.4
million).
 
For
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation recognized
 
$
12.3
 
million
 
of
 
restricted
 
stock
 
expense
related to management
 
incentive awards, with a
 
tax benefit of
 
$
2.0
 
million (September 30, 2023
 
- $
9.7
 
million, with a
 
tax benefit of
$
1.5
 
million). For the nine months ended
 
September 30, 2024, the fair market
 
value of the restricted stock
 
and performance shares
vested was $
16.9
 
million at grant
 
date and $
23.2
 
million at vesting date.
 
This differential triggers
 
a windfall of
 
$
2.3
 
million that was
recorded as a
 
reduction on income tax
 
expense. During the quarter ended
 
September 30, 2024, the
 
Corporation recognized $
(0.5)
million of performance shares benefit, with a tax benefit of $
(32)
 
thousand due to performance shares target adjustment (September
30,
 
2023
 
-
 
$
0.1
 
million,
 
with
 
a
 
tax
 
benefit
 
of
 
$
8
 
thousand).
 
For
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
recognized $
3.5
 
million of performance shares expense, with a tax
 
benefit of $
0.2
 
million (September 30, 2023 - $
3.6
 
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 September 30, 2024 was $
13.9
 
million and is expected to be recognized over a
weighted-average period of
1.65
 
years.
The following table summarizes the restricted stock
 
activity under the Incentive Plan for members of
 
the Board of Directors:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Not in thousands)
RSUs / Unrestricted stock
Weighted-Average
 
Grant
Date Fair Value per Unit
Non-vested at December 31, 2022
-
$
-
Granted
39,104
55.30
Vested
 
(39,104)
55.30
Forfeited
-
-
Non-vested at December 31, 2023
-
$
-
Granted
24,279
89.22
Vested
 
(24,279)
89.22
Forfeited
-
-
Non-vested at September 30, 2024
-
$
-
125
The
 
equity
 
awards
 
granted
 
to
 
members
 
of
 
the
 
Board
 
of
 
Directors
 
of
 
Popular,
 
Inc.
 
(the
 
“Directors”)
 
will
 
vest
 
and
 
become
 
non-
forfeitable on the
 
grant date of
 
such award. Effective
 
in May 2019,
 
all equity awards
 
granted to the
 
Directors may be
 
paid in either
unrestricted stock
 
or RSUs
 
at each
 
Directors 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 Corporation’s
outstanding common stock, the Directors
 
will receive an additional number of RSUs
 
that reflect a reinvested dividend equivalent.
 
For 2024
 
and 2023,
 
Directors elected
 
RSUs and
 
unrestricted stock.
 
During the
 
quarter ended
 
September 30,
 
2024,
1,281
 
RSUs
and
no
 
shares of unrestricted stock were granted to the
 
Directors (September 30, 2023 -
1,384
 
RSUs and
no
 
shares of unrestricted
stock)
 
and
 
the
 
Corporation
 
recognized
 
expense
 
related
 
to
 
these
 
shares
 
of
 
$
0.1
 
million
 
with
 
a
 
tax
 
benefit
 
of
 
$
21
 
thousand
(September
 
30,
 
2023
 
-
 
$
0.1
 
million
 
with
 
a
 
tax
 
benefit
 
of
 
$
16
 
thousand).
 
For
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
Corporation
granted
22,887
 
RSUs and
1,392
 
shares of unrestricted stock to the
 
Directors (September 30, 2023 -
35,412
 
RSUs and
2,300
 
shares
 
of
 
unrestricted
 
stock)
 
and
 
the
 
Corporation
 
recognized
 
$
2.2
 
million
 
of
 
expense
 
related
 
to
 
these
 
shares,
 
with
 
a
 
tax
benefit of
 
$
0.4
 
million, (September
 
30, 2023
 
- $
2.1
 
million, with
 
a tax
 
benefit of
 
$
0.4
 
million). The
 
fair value
 
at vesting
 
date of
 
the
shares vested during the nine months ended September
 
30, 2024 for the Directors was $
2.2
 
million.
 
 
126
Note 30 – Income taxes
 
The reason for the difference between the income
 
tax expense applicable to income before provision
 
for income taxes and the
amount computed by applying the statutory tax rate
 
in Puerto Rico, were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended
September 30, 2024
September 30, 2023
(In thousands)
Amount
 
% of pre-tax
income
 
Amount
% of pre-tax
income
Computed income tax expense at statutory rates
 
$
74,169
38
%
$
68,426
38
%
Net benefit of tax exempt interest income
(29,055)
(13)
(22,862)
(13)
Effect of income subject to preferential tax rate
(327)
-
(199)
-
Deferred tax asset valuation allowance
451
-
1,355
1
Difference in tax rates due to multiple jurisdictions
(6,764)
(3)
(2,839)
(2)
U.S., States, and local taxes
3,429
1
2,436
1
Others
560
-
(458)
-
Income tax expense
$
42,463
22
%
$
45,859
25
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended
September 30, 2024
September 30, 2023
(In thousands)
Amount
 
% of pre-tax
income
 
Amount
% of pre-tax
income
 
Computed income tax expense at statutory rates
 
$
215,582
38
%
$
218,409
38
%
Net benefit of tax exempt interest income
(91,035)
(16)
(72,080)
(13)
Effect of income subject to preferential tax rate
(475)
-
(775)
-
Deferred tax asset valuation allowance
2,779
-
(2,217)
-
Difference in tax rates due to multiple jurisdictions
(11,893)
(2)
(11,879)
(3)
Other tax benefits
(4,500)
(1)
-
-
Tax on intercompany
 
distributions
[1]
24,325
4
-
-
U.S., States, and local taxes
6,669
1
8,829
2
Others
(2,962)
(1)
(4,611)
(1)
Income tax expense
$
138,490
24
%
$
135,676
23
%
[1]
Includes $
16.5
 
million of out-of-period adjustment.
For the quarter and nine months
 
ended September 30, 2024, the Corporation recorded an income
 
tax expense of $
42.5
 
million and
$
138.5
 
million respectively, compared to
 
$
45.9
 
million and $
135.7
 
million for the respective periods
 
of 2023. During the
 
first quarter
of
 
2024,
 
the
 
Corporation
 
recorded
 
a
 
tax
 
expense
 
related
 
to
 
tax
 
withholding
 
on
 
certain
 
intercompany
 
distributions,
 
amounting
 
to
$
22.9
 
million, out of
 
which $
16.5
 
million corresponded to
 
years 2014-2023 and
 
$
6.5
 
million was related
 
to a
 
distribution completed
during the period ended
 
March 31, 2024, as
 
previously disclosed.
 
As a result
 
of this adjustment, the deferred
 
tax assets related to
NOL of the Bank Holding Company (BHC) and
 
its related valuation allowance was reduced
 
by $
53.7
 
million.
 
The following table presents a breakdown of the
 
significant components of the Corporation’s deferred tax assets
 
and liabilities.
 
127
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
 
(In thousands)
PR
US
Total
Deferred tax assets:
Tax credits available
 
for carryforward
$
263
$
20,192
$
20,455
Net operating loss and other carryforward available
 
54,294
609,814
664,108
Postretirement and pension benefits
36,895
-
36,895
Allowance for credit losses
248,766
24,588
273,354
Depreciation
6,774
6,864
13,638
Deferred loan origination fees/cost
2,470
(2,323)
147
FDIC-assisted transaction
152,665
-
152,665
Lease liability
26,138
16,913
43,051
Unrealized net loss on investment securities
237,859
13,489
251,348
Difference in outside basis from pass-through entities
47,413
-
47,413
Mortgage Servicing Rights
14,854
-
14,854
Other temporary differences
44,651
9,136
53,787
Total gross deferred
 
tax assets
873,042
698,673
1,571,715
Deferred tax liabilities:
Intangibles
87,422
54,256
141,678
Right of use assets
23,725
14,806
38,531
Loans acquired
17,123
-
17,123
Other temporary differences
7,139
422
7,561
 
Total gross deferred
 
tax liabilities
135,409
69,484
204,893
Valuation allowance
71,596
378,911
450,507
Net deferred tax asset
$
666,037
$
250,278
$
916,315
 
December 31, 2023
 
(In thousands)
PR
US
Total
Deferred tax assets:
Tax credits available
 
for carryforward
$
263
$
10,281
$
10,544
Net operating loss and other carryforward available
 
122,634
620,982
743,616
Postretirement and pension benefits
38,121
-
38,121
Allowance for credit losses
244,956
28,222
273,178
Depreciation
6,774
6,578
13,352
FDIC-assisted transaction
152,665
-
152,665
Lease liability
29,070
20,492
49,562
Unrealized net loss on investment securities
312,583
19,037
331,620
Difference in outside basis from pass-through entities
46,056
-
46,056
Mortgage Servicing Rights
14,085
-
14,085
Other temporary differences
47,679
9,625
57,304
Total gross deferred
 
tax assets
1,014,886
715,217
1,730,103
Deferred tax liabilities:
Intangibles
84,635
51,944
136,579
Right of use assets
26,648
18,030
44,678
Deferred loan origination fees/cost
(1,056)
1,486
430
Loans acquired
20,430
-
20,430
Other temporary differences
6,402
422
6,824
 
Total gross deferred
 
tax liabilities
137,059
71,882
208,941
Valuation allowance
139,347
374,035
513,382
Net deferred tax asset
$
738,480
$
269,300
$
1,007,780
128
The net deferred tax assets
 
shown in the table above at September 30, 2024, is reflected in the consolidated statements of financial
condition as
 
$
917.8
 
million
 
in net
 
deferred tax
 
assets in
 
the
 
“Other assets”
 
caption
 
(December 31,
 
2023
 
-
 
$
1.0
 
billion) and
 
$
1.5
million in deferred tax liabilities in the “Other liabilities” caption
 
(December 31, 2023 - $
1.3
 
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.
 
At September 30,
 
2024, the net
 
deferred tax assets
 
of the U.S.
 
operations amounted to
 
$
629
 
million with a
 
valuation allowance of
approximately $
379
 
million, for
 
net deferred
 
tax
 
assets after
 
valuation allowance
 
of
 
approximately $
250
 
million.
 
The
 
Corporation
evaluates the
 
realization of
 
the deferred
 
tax
 
assets on
 
a quarterly
 
basis by
 
taxing
 
jurisdiction. The
 
U.S.
 
operation has
 
sustained
profitability for
 
the last
 
three calendar
 
years
 
and for
 
the
 
period ended
 
September 30,
 
2024. These
 
historical financial
 
results are
objectively verifiable positive evidence, evaluated together with
 
the positive evidence of stable credit metrics, in combination with the
length of
 
the expiration
 
of the
 
NOLs. On
 
the other
 
hand, the
 
Corporation evaluated
 
the negative
 
evidence accumulated
 
over the
years, including
 
financial results
 
lower than
 
expectations and
 
challenges to
 
the economy
 
due to
 
inflationary pressures
 
and global
geopolitical uncertainty that
 
have resulted in
 
a trend
 
of reduction of
 
pre-tax income over
 
the last
 
three years.
 
As of
 
September 30,
2024, after weighting all positive and negative
 
evidence, the Corporation concluded that it is more likely
 
than not that approximately
$
250
 
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
 
earnings
 
available
 
to
 
realize
 
the
 
deferred
 
tax
 
assets
 
for
 
the
 
remaining
carryforward period, together with the historical level
 
of book income adjusted by permanent
 
differences. Management will continue
to
 
monitor
 
and
 
review
 
the
 
U.S.
 
operation’s
 
results,
 
including
 
recent
 
earnings
 
trends,
 
the
 
pre-tax
 
earnings
 
forecast,
 
any
 
new
 
tax
initiative,
 
and
 
other
 
factors,
 
including
 
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
 
adverse
 
changes
 
or
 
a
combination of changes in these factors could impact
 
the future realization of the deferred tax assets.
At September
 
30, 2024, the
 
Corporation’s net
 
deferred tax assets
 
related to its
 
Puerto Rico
 
operations amounted to
 
$
666
 
million.
 
The
 
Corporation’s
 
Puerto
 
Rico
 
Banking
 
operation
 
has
 
a
 
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
 
management’s
 
estimate
 
of
 
future
 
taxable
 
income,
 
the
Corporation has concluded that it is more likely than not that such net deferred tax assets
 
of the Puerto Rico Banking operations will
be realized.
The Holding Company operation has been in a cumulative
 
loss position in recent years.
 
Management expects these losses will be a
trend
 
in
 
future
 
years.
 
This
 
objectively
 
verifiable
 
negative
 
evidence is
 
considered
 
by
 
Management strong
 
negative
 
evidence that
suggests that
 
income in
 
future years
 
will be
 
insufficient to
 
support the
 
realization of
 
all deferred
 
tax assets.
 
After weighting
 
of all
positive
 
and
 
negative evidence
 
Management concluded,
 
as
 
of
 
the reporting
 
date,
 
that
 
it
 
is
 
more
 
likely
 
than
 
not that
 
the
 
Holding
Company will not be
 
able to realize any
 
portion of the deferred tax
 
assets. Accordingly, the
 
Corporation has maintained a valuation
allowance on the deferred tax assets of $
72
 
million as of September 30, 2024.
The reconciliation of unrecognized tax benefits, excluding
 
interest, was as follows:
 
129
 
 
 
 
 
 
 
 
 
 
(In millions)
2024
2023
Balance at
 
January 1
$
1.5
$
2.5
Balance at
 
March 31
$
1.5
$
2.5
Balance at
 
June 30
$
1.5
$
2.5
Balance at September 30
$
1.5
$
2.5
At September
 
30, 2024,
 
the total
 
amount of
 
accrued interest
 
recognized in
 
the statement
 
of financial
 
condition amounted
 
to $
2.4
million
 
(December
 
31,
 
2023
 
-
 
$
2.3
 
million).
 
The
 
total
 
interest
 
expense
 
recognized
 
at
 
September
 
30,
 
2024
 
was
 
$
70
 
thousand,
(September 30, 2023– $
79
 
thousand). Management determined that at September 30, 2024 and
 
December 31, 2023, there was
no
need to
 
accrue for
 
the payment
 
of penalties.
 
The Corporation’s
 
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 that if
 
recognized, would affect
 
the Corporation’s effective
 
tax rate, was
 
approximately $
3.0
 
million at September
 
30, 2024
(December 31, 2023 - $
2.9
 
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
 
statutes
 
of
 
limitation,
 
changes
 
in
 
Management’s
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. At September 30, 2024, the following years remain subject to examination in the U.S.
Federal jurisdiction: 2020 and thereafter; and in
 
the Puerto Rico jurisdiction, 2018 and thereafter.
 
 
 
130
Note 31 – Supplemental disclosure on the consolidated
 
statements of cash flows
Additional disclosures on cash flow information and
 
non-cash activities for the nine months ended
 
September 30, 2024 and
September 30, 2023 are listed in the following table:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
September 30, 2023
Non-cash activities:
 
Loans transferred to other real estate
$
34,756
$
48,704
 
Loans transferred to other property
61,447
53,021
 
Total loans transferred
 
to foreclosed assets
96,203
101,725
 
Loans transferred to other assets
37,495
15,738
 
Financed sales of other real estate assets
8,551
7,617
 
Financed sales of other foreclosed assets
39,283
38,136
 
Total financed sales
 
of foreclosed assets
47,834
45,753
 
Financed sale of premises and equipment
59,628
59,345
 
Transfers from loans held-in-portfolio to
 
loans held-for-sale
7,505
55,497
 
Transfers from loans held-for-sale to loans
 
held-in-portfolio
5,084
3,772
 
Loans securitized into investment securities
[1]
11,162
35,958
 
Trades receivable from brokers and counterparties
4,983
11,823
 
Trades payable to brokers and counterparties
3,540
14,761
 
Net change in receivables from investments maturities
176,000
176,000
 
Recognition of mortgage servicing rights on securitizations
 
or asset transfers
998
1,814
 
Loans booked under the GNMA buy-back option
2,836
2,805
 
Capitalization of lease right of use asset
2,553
14,672
[1]
Includes loans securitized into trading securities and subsequently
 
sold before quarter end.
The following table provides a reconciliation of
 
cash and due from banks, and restricted cash
 
reported within the Consolidated
Statement of Financial Condition that sum to the total of
 
the same such amounts shown in the Consolidated
 
Statement of Cash
Flows.
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
September 30, 2023
Cash and due from banks
$
418,168
$
509,538
Restricted cash and due from banks
9,426
25,797
Restricted cash in money market investments
8,072
5,903
Total cash and due
 
from banks, and restricted cash
[2]
$
435,666
$
541,238
[2]
 
Refer to Note 4 - Restrictions on cash and due from banks
 
and certain securities for nature of restrictions.
131
Note 32 – Segment reporting
The
 
Corporation’s
 
corporate
 
structure
 
consists
 
of
two
 
reportable
 
segments
 
Banco Popular de Puerto Rico and Popular U.S.
Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess
where to allocate resources.
 
The segments were
 
determined based on the
 
organizational structure, which focuses
 
primarily on the
markets the segments serve, as well as on the products
 
and services offered by the segments.
Banco Popular de Puerto Rico:
 
The Banco Popular de
 
Puerto Rico reportable segment
 
includes commercial, consumer and retail
 
banking operations conducted at
BPPR, including
 
U.S. based
 
activities conducted
 
through its
 
New York
 
Branch. It
 
also includes
 
the lending
 
operations of
 
Popular
Auto
 
and
 
Popular
 
Mortgage.
 
Other
 
financial
 
services
 
within
 
the
 
BPPR
 
segment
 
include
 
the
 
trust
 
service
 
units
 
of
 
BPPR,
 
asset
management services of Popular Asset Management and the brokerage operations of Popular Securities,
 
and the insurance agency
and reinsurance businesses of Popular Insurance,
 
Popular Risk Services, Popular Life Re, and
 
Popular Re.
Popular U.S.:
 
Popular U.S. reportable segment
 
consists of the
 
banking operations of Popular
 
Bank (PB), Popular Insurance
 
Agency, U.S.A.,
 
and
PEF.
 
PB
 
operates through
 
a retail
 
branch network
 
in the
 
U.S. mainland
 
under the
 
name of
 
Popular,
 
and equipment
 
leasing and
financing services through PEF.
 
Popular Insurance Agency,
 
U.S.A. offers investment and insurance
 
services across the PB
 
branch
network.
 
The Corporate group
 
consists primarily of
 
the holding companies
 
Popular, Inc.,
 
Popular North America,
 
Popular International Bank
and certain of the Corporation’s investments accounted for under
 
the equity method, including BHD.
 
The
 
accounting
 
policies
 
of
 
the
 
individual
 
operating
 
segments
 
are
 
the
 
same
 
as
 
those
 
of
 
the
 
Corporation.
 
Transactions
 
between
reportable segments are primarily conducted at market rates, resulting
 
in profits that are eliminated for reporting consolidated results
of operations.
The tables that follow present the results of operations
 
and total assets by reportable segments:
 
 
 
132
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
For the quarter ended September 30, 2024
Intersegment
 
(In thousands)
BPPR
Popular U.S.
Eliminations
Net interest income
$
488,008
$
93,128
$
-
Provision for credit losses (benefit)
77,514
(6,066)
-
Non-interest income
 
149,050
6,789
-
Amortization of intangibles
394
310
-
Depreciation expense
13,023
2,063
-
Other operating expenses
390,227
62,356
-
Income tax expense
30,064
12,472
-
Net income
$
125,836
$
28,782
$
-
Segment assets
$
56,906,693
$
14,306,045
$
(260,464)
For the quarter ended September 30, 2024
Reportable
 
(In thousands)
Segments
Corporate
Eliminations
Total Popular,
 
Inc.
Net interest income (expense)
$
581,136
$
(8,663)
$
-
$
572,473
Provision for credit losses
71,448
-
-
71,448
Non-interest income
155,839
8,876
(633)
164,082
Amortization of intangibles
704
-
-
704
Depreciation expense
15,086
385
-
15,471
Other operating expenses
452,583
(391)
(1,046)
451,146
Income tax expense (benefit)
42,536
(279)
206
42,463
Net income
$
154,618
$
498
$
207
$
155,323
Segment assets
$
70,952,274
$
5,887,340
$
(5,516,540)
$
71,323,074
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2024
Intersegment
 
(In thousands)
BPPR
Popular U.S.
Eliminations
Net interest income
$
1,449,594
$
263,832
$
-
Provision for credit losses
188,576
1,806
-
Non-interest income
 
447,073
19,909
(56)
Amortization of intangibles
1,302
931
-
Depreciation expense
39,349
6,210
-
Other operating expenses
1,170,263
197,307
(56)
Income tax expense
92,810
23,917
-
Net income
$
404,367
$
53,570
$
-
Segment assets
$
56,906,693
$
14,306,045
$
(260,464)
For the nine months ended September 30, 2024
Reportable
Total
(In thousands)
 
Segments
Corporate
Eliminations
Popular, Inc.
Net interest income (expense)
$
1,713,426
$
(21,897)
$
-
$
1,691,529
Provision for credit losses
190,382
458
-
190,840
Non-interest income
466,926
31,314
(4,034)
494,206
Amortization of intangibles
2,233
-
-
2,233
Depreciation expense
45,559
1,161
-
46,720
Other operating expenses
1,367,514
7,004
(3,461)
1,371,057
Income tax expense
116,727
21,921
(158)
138,490
Net income (loss)
$
457,937
$
(21,127)
$
(415)
$
436,395
Segment assets
$
70,952,274
$
5,887,340
$
(5,516,540)
$
71,323,074
 
 
 
133
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023
For the quarter ended September 30, 2023
Intersegment
 
(In thousands)
BPPR
 
Popular U.S.
Eliminations
Net interest income
$
453,879
$
87,445
$
1
Provision for credit losses (benefit)
51,899
(6,644)
-
Non-interest income
 
144,691
5,894
(134)
Amortization of intangibles
484
311
-
Goodwill impairment charge
-
23,000
-
Depreciation expense
12,880
1,962
-
Other operating expenses
369,738
58,341
(134)
Income tax expense
40,861
5,358
-
Net income
$
122,708
$
11,011
$
1
Segment assets
$
57,039,000
$
12,806,630
$
(448,100)
For the quarter ended September 30, 2023
Reportable
 
(In thousands)
Segments
Corporate
Eliminations
Total Popular,
 
Inc.
Net interest income (expense)
$
541,325
$
(7,305)
$
-
$
534,020
Provision for credit losses (benefit)
45,255
(138)
-
45,117
Non-interest income
150,451
10,179
(1,081)
159,549
Amortization of intangibles
795
-
-
795
Goodwill impairment charge
23,000
-
-
23,000
Depreciation expense
14,842
381
-
15,223
Other operating expenses
427,945
180
(1,159)
426,966
Income tax expense (benefit)
46,219
(396)
36
45,859
Net income
$
133,720
$
2,847
$
42
$
136,609
Segment assets
$
69,397,530
$
5,554,370
$
(5,214,964)
$
69,736,936
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2023
Intersegment
(In thousands)
BPPR
Popular U.S.
 
Eliminations
Net interest income
$
1,356,774
$
265,033
$
2
Provision for credit losses
126,952
3,328
-
Non-interest income
 
435,966
18,165
(404)
Amortization of intangibles
1,453
932
-
Goodwill impairment charge
-
23,000
-
Depreciation expense
36,424
5,661
-
Other operating expenses
1,119,522
182,809
(404)
Income tax expense
120,996
16,184
-
Net income
$
387,393
$
51,284
$
2
Segment assets
$
57,039,000
$
12,806,630
$
(448,100)
For the nine months ended September 30, 2023
Reportable
Total
(In thousands)
 
Segments
Corporate
Eliminations
Popular, Inc.
Net interest income (expense)
$
1,621,809
$
(24,465)
$
-
$
1,597,344
Provision for credit losses (benefit)
130,280
(334)
-
129,946
Non-interest income
453,727
32,905
(4,651)
481,981
Amortization of intangibles
2,385
-
-
2,385
Goodwill impairment charge
23,000
-
-
23,000
Depreciation expense
42,085
1,095
-
43,180
Other operating expenses
1,301,927
(146)
(3,391)
1,298,390
Income tax expense (benefit)
137,180
(1,006)
(498)
135,676
Net income
$
438,679
$
8,831
$
(762)
$
446,748
Segment assets
$
69,397,530
$
5,554,370
$
(5,214,964)
$
69,736,936
 
134
Geographic Information
The following information presents selected
 
financial information based on the
 
geographic location where the Corporation
 
conducts
its business. The
 
banking operations of BPPR
 
are primarily based in
 
Puerto Rico, where it
 
has the largest retail
 
banking franchise.
BPPR
 
also
 
conducts
 
banking
 
operations
 
in
 
the
 
U.S.
 
Virgin
 
Islands,
 
the
 
British
 
Virgin
 
Islands
 
and
 
New
 
York.
 
BPPR’s
 
banking
operations in
 
the mainland
 
United States
 
include commercial
 
lending activities.
 
BPPR’s commercial
 
lending activities
 
in the
 
U.S.,
through its New York Branch, include periodic loan participations with PB. During the quarter and nine
 
months ended September 30,
2024, BPPR did
no
t participate in loans originated by PB (2023 – $
10
 
million and $
33
 
million, respectively). At September 30, 2024,
total assets for the BPPR segment related to its operations in the United States amounted to $
1.6
 
billion (December 31, 2023 - $
1.5
billion), including $
105
 
million in multifamily loans (December
 
31, 2023 - $
106
 
million), $
521
 
million in commercial real
 
estate loans
(December 31, 2023
 
- $
528
 
million), $
747
 
million in
 
C&I loans (December
 
31, 2023
 
- $
557
 
million), and $
140
 
million in
 
unsecured
personal
 
loans
 
(December
 
31,
 
2023
 
-
 
$
229
 
million).
 
During
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
 
BPPR
 
segment
generated
 
approximately
 
$
91.2
 
million
 
(2023
 
-
 
$
86.0
 
million)
 
in
 
revenues from
 
its
 
operations
 
in
 
the
 
United
 
States,
 
including
 
net
interest income, service charge on deposit accounts and other service fees. In the Virgin Islands, the BPPR segment
 
offers banking
products, including loans
 
and deposits. At
 
September 30, 2024,
 
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, 2023
 
- $
1.0
 
billion). The
 
BPPR segment
 
generated $
32.3
million in
 
revenues during
 
the nine
 
months ended
 
September 30,
 
2024 (2023
 
- $
33.6
 
million) from
 
its operations
 
in the
 
U.S. and
British Virgin Islands.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Geographic Information
Quarter ended
Nine months ended
(In thousands)
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Revenues:
[1]
 
Puerto Rico
 
$
582,953
$
539,985
$
1,735,035
$
1,623,963
 
United States
133,067
131,698
386,819
389,463
 
Other
20,535
21,886
63,881
65,899
Total consolidated
 
revenues
 
$
736,555
$
693,569
$
2,185,735
$
2,079,325
[1]
Total revenues include
 
net interest income, service charges on deposit accounts,
 
other service fees, mortgage banking activities, net
 
(loss) gain,
including impairment, on equity securities, net gain on trading
 
account debt securities, net 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)
September 30, 2024
December 31, 2023
Puerto Rico
 
Total assets
$
54,200,914
$
54,181,300
 
Loans
23,672,112
22,519,961
 
Deposits
50,759,657
51,282,007
United States
 
Total assets
$
15,883,947
$
15,343,156
 
Loans
11,998,043
12,006,012
 
Deposits
11,203,741
10,643,602
Other
 
Total assets
$
1,238,213
$
1,233,699
 
Loans
[1]
530,321
543,299
 
Deposits
[2]
1,705,103
1,692,634
[1]
Represents loans from BPPR operations located in the U.S.
 
and British Virgin Islands.
[2]
Represents deposits from BPPR operations located in the
 
U.S. and British Virgin Islands.
135
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
 
AND RESULTS OF OPERATIONS
This
 
report
 
includes
 
management’s
 
discussion
 
and
 
analysis
 
(“MD&A”)
 
of
 
the
 
consolidated
 
financial
 
position
 
and
 
financial
performance
 
of
 
Popular,
 
Inc.
 
(the
 
“Corporation”
 
or
 
“Popular”). All
 
accompanying
 
tables,
 
financial
 
statements
 
and
 
notes
 
included
elsewhere in this report should be considered an
 
integral part of this analysis.
 
The Corporation is a
 
diversified, publicly-owned financial holding company subject to the
 
supervision and regulation of the Board
 
of
Governors of the Federal Reserve System. The Corporation has
 
operations in Puerto Rico, the United States (“U.S.”) mainland and
the
 
U.S.
 
and
 
British
 
Virgin
 
Islands.
 
In
 
Puerto
 
Rico,
 
the
 
Corporation
 
provides
 
retail,
 
mortgage
 
and
 
commercial
 
banking
 
services
through its
 
principal banking
 
subsidiary,
 
Banco
 
Popular
 
de
 
Puerto Rico
 
(“BPPR”), as
 
well as
 
broker-dealer,
 
auto
 
and
 
equipment
leasing and financing, and insurance services through
 
specialized subsidiaries. In the U.S. mainland, the Corporation
 
provides retail,
mortgage 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 32 to the
Consolidated Financial Statements presents information
 
about the Corporation’s business segments.
As a financial services company,
 
the Corporation’s earnings are significantly affected
 
by general business and economic conditions
in the
 
markets which
 
we serve.
 
Lending and
 
deposit activities
 
and fee
 
income generation
 
are influenced
 
by the
 
level of
 
business
spending and
 
investment, consumer
 
income, spending
 
and savings,
 
capital market
 
activities, competition,
 
customer preferences,
interest rate conditions and prevailing market rates
 
on competing products.
The Corporation
 
operates in
 
a highly
 
regulated environment
 
and may
 
be adversely
 
affected by
 
changes in
 
federal and
 
local laws
and
 
regulations.
 
Also,
 
competition
 
with
 
other
 
financial
 
institutions,
 
as
 
well
 
as
 
with
 
non-traditional financial
 
service
 
providers
 
and
technology
 
companies
 
that
 
provide
 
electronic
 
and
 
internet-based
 
financial
 
solutions
 
and
 
services,
 
could
 
adversely
 
affect
 
its
profitability.
The
 
Corporation
 
continuously
 
monitors
 
general
 
business
 
and
 
economic
 
conditions,
 
industry-related
 
indicators
 
and
 
trends,
competition, interest rate volatility, credit
 
quality indicators, loan and deposit demand, operational and systems efficiencies,
 
revenue
enhancements and changes in the regulation of financial
 
services companies.
 
The description of the Corporation’s business contained in
 
Item 1 of the 2023 Form 10-K, while not all inclusive,
 
discusses additional
information about the business of the Corporation. Readers should also refer to “Part I - Item 1A” of the 2023 Form 10-K and “Part II
- Item 1A” of this Form 10-Q for a discussion of certain risks and uncertainties to which the Corporation is subject, many beyond the
Corporation’s control that, in addition to the other information in
 
this Form 10-Q, readers should consider.
The Corporation’s common stock is traded on the NASDAQ
 
Global Select Market under the symbol BPOP.
OVERVIEW
Table 1 provides selected financial data and performance indicators for the quarters ended
 
September 30, 2024 and 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
136
Table 1 - Financial Highlights
Financial Condition Highlights
Ending balances at
 
Average for the nine months ended
(In thousands)
September
30, 2024
December 31,
2023
Variance
September
30, 2024
September
30, 2023
Variance
Money market investments
$
6,530,788
$
6,998,871
$
(468,083)
$
6,663,967
$
6,965,588
$
(301,621)
Investment securities
25,280,451
25,148,673
131,778
27,701,911
27,463,370
238,541
Loans
36,200,476
35,069,272
1,131,204
35,411,807
32,732,877
2,678,930
Earning assets
68,011,715
67,216,816
794,899
69,777,685
67,161,835
2,615,850
Total assets
71,323,074
70,758,155
564,919
72,851,597
70,209,477
2,642,120
Deposits
63,668,501
63,618,243
50,258
64,521,953
62,304,083
2,217,870
Borrowings
973,736
1,078,332
(104,596)
1,039,130
1,274,682
(235,552)
Total liabilities
65,532,560
65,611,202
(78,642)
66,530,111
64,430,204
2,099,907
Stockholders’ equity
5,790,514
5,146,953
643,561
6,321,486
5,779,273
542,213
Note: 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.
 
Operating Highlights
Quarters ended September 30,
Nine months ended September 30,
(In thousands, except per share information)
2024
2023
Variance
2024
2023
Variance
Net interest income
 
$
572,473
$
534,020
$
38,453
$
1,691,529
$
1,597,344
$
94,185
Provision for credit losses
 
(benefit)
71,448
45,117
26,331
190,840
129,946
60,894
Non-interest income
164,082
159,549
4,533
494,206
481,981
12,225
Operating expenses
467,321
465,984
1,337
1,420,010
1,366,955
53,055
Income before income tax
197,786
182,468
15,318
574,885
582,424
(7,539)
Income tax expense
42,463
45,859
(3,396)
138,490
135,676
2,814
Net income
$
155,323
$
136,609
$
18,714
$
436,395
$
446,748
$
(10,353)
Net income applicable to common stock
$
154,970
$
136,256
$
18,714
$
435,336
$
445,689
$
(10,353)
Net income per common share – basic
$
2.16
$
1.90
$
0.26
$
6.06
$
6.22
$
(0.16)
Net income per common share – diluted
$
2.16
$
1.90
$
0.26
$
6.05
$
6.21
$
(0.16)
Dividends declared per common share
$
0.62
$
0.55
$
0.07
$
1.86
$
1.65
$
0.21
Quarters ended September 30,
Nine months ended September 30,
Selected Statistical Information
2024
2023
2024
2023
Common Stock Data
 
End market price
$
100.27
63.01
$
100.27
63.01
 
Book value per common share at period end
80.35
61.49
80.35
61.49
Profitability Ratios
 
Return on assets
0.84
%
0.75
%
0.79
%
0.84
%
 
Return on common equity
8.82
8.17
8.43
9.13
 
Net interest spread
2.43
2.37
2.41
2.52
 
Net interest spread (taxable equivalent) - Non-GAAP
2.66
2.54
2.65
2.70
 
Net interest margin
3.24
3.07
3.20
3.14
 
Net interest margin (taxable equivalent) - Non-GAAP
3.47
3.24
3.44
3.32
Capitalization Ratios
 
Average equity to average assets
8.86
%
8.26
%
8.68
%
8.23
%
 
Common equity Tier 1 capital
16.42
16.81
16.42
16.81
 
Tier I capital
 
16.48
16.87
16.48
16.87
 
Total capital
18.24
18.67
18.24
18.67
 
Tier 1 leverage
8.67
8.41
8.67
8.41
 
 
 
 
 
 
 
 
 
 
 
137
Non-GAAP Financial Measures
This Form 10-Q
 
contains financial information
 
prepared under accounting
 
principles generally accepted in
 
the United States
 
(“U.S.
GAAP”) and
 
non-GAAP financial
 
measures. Management
 
uses non-GAAP
 
financial measures
 
when it
 
has determined
 
that these
measures provide
 
meaningful information
 
about the
 
underlying performance
 
of the
 
Corporation’s ongoing
 
operations. Non-GAAP
financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by
 
other
companies.
Adjusted net income - Non-GAAP Financial Measure
In
 
addition
 
to
 
analyzing
 
the
 
Corporation’s
 
results
 
on
 
a
 
reported
 
basis,
 
management
 
monitors
 
the
 
“adjusted
 
net
 
income”
 
of
 
the
Corporation and excludes the impact of certain transactions on the results of its operations. Management believes that the “adjusted
net
 
income”
 
provides
 
meaningful
 
information
 
about
 
the
 
underlying
 
performance
 
of
 
the
 
Corporation’s
 
ongoing
 
operations.
 
The
“adjusted net income” is a non-GAAP financial measure.
The following table presents the
 
adjusted net income for the
 
nine months ended of September 30,
 
2024.
 
There were no non-GAAP
adjustments for the nine months ended September
 
30, 2023.
Table 2 - Adjusted Net Income
 
for the Nine Months Ended September 30, 2024 (Non-GAAP)
(Unaudited)
(In thousands)
Income before
 
income tax
Income tax
expense
(benefit)
Total
U.S. GAAP Net income
$574,885
$138,490
$436,395
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)
$595,572
$127,241
$468,331
[1] Expense recorded during the first quarter of 2024 related
 
to the November 16, 2023 FDIC Special Assessment
 
to recover the losses to the deposit
insurance fund used by the FDIC in connection with the receiverships
 
of several failed banks. The special assessment amount
 
and collection period
may change as the estimated loss is periodically adjusted or
 
if the total amount collected varies.
[2] Income tax expense and other related expenses from
 
prior periods, but recorded during the first quarter
 
of 2024, related to withholding taxes on
certain distributions from U.S. subsidiaries.
 
138
Net interest income on a taxable equivalent basis
 
– Non-GAAP Financial Measure
Net interest
 
income on
 
a taxable
 
equivalent basis
 
is a
 
non-GAAP financial
 
measure. Management
 
believes that
 
this presentation
provides meaningful information since it facilitates the comparison
 
of revenues arising from taxable and tax-exempt sources.
The Corporation’s
 
interest earning
 
assets include
 
investment securities
 
and loans
 
that are
 
exempt from
 
income tax,
 
principally in
Puerto
 
Rico. The
 
main sources
 
of tax-exempt
 
interest income
 
are certain
 
investments in
 
obligations of
 
the
 
U.S. Government,
 
its
agencies and
 
sponsored entities,
 
certain obligations
 
of the
 
Commonwealth of
 
Puerto Rico
 
and/or its
 
agencies and
 
municipalities,
and assets
 
held by the
 
Corporation’s international banking
 
entities. To
 
facilitate the comparison
 
of interest related
 
to these
 
assets,
net interest income has been converted to a taxable
 
equivalent basis, using the applicable statutory
 
income tax rates for each period
on those interest earning assets that are
 
tax exempt. In addition, this measure is also
 
impacted by a portion of interest cost
 
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 attributed 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
 
attributed to the
 
available
exempt income.
Net interest income on
 
a taxable equivalent basis, with
 
its different components, along
 
with the reconciliation to net
 
interest income
(GAAP), for the
 
quarter ended September 30,
 
2024 as compared with
 
the same period in
 
2023, segregated by major categories
 
of
interest earning assets and interest-bearing
 
liabilities are included in Table 3 of the Operating Results Analysis section below.
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
 
in conjunction
 
with more
 
traditional
bank
 
capital
 
ratios
 
are
 
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
 
10 provides
 
a reconciliation of
 
total stockholders’ equity
 
to tangible common
 
equity and total
 
assets to tangible
 
assets
 
as of
September 30, 2024, and December 31, 2023.
Financial highlights for the quarter ended September 30, 2024
 
For the quarter ended September 30, 2024, the Corporation recorded net income of $ 155.3 million, compared to net income of
$
 
136.6
 
million
 
for
 
the
 
same
 
quarter of
 
the
 
previous year.
 
Net
 
interest margin
 
for
 
the
 
third
 
quarter of
 
2024
 
was
 
3.24%, an
increase of 17 basis
 
points when compared to
 
3.07% for the same
 
quarter of the previous
 
year. The
 
increase was mainly due
to
 
higher
 
yields
 
in
 
investment
 
securities,
 
mainly
 
due
 
to
 
reinvestment
 
of
 
maturities
 
in
 
higher
 
yielding
 
U.S.
 
Treasury
securities, and to
 
higher average
 
loan balances
 
and higher
 
yields in
 
almost all
 
loans portfolios,
 
which was
 
partially offset
 
by
higher deposit
 
costs,
 
principally due
 
to higher
 
average volume
 
and higher
 
cost
 
of interest-bearing
 
deposits,
 
mainly from
 
the
Puerto Rico government and time deposits at PB. On a taxable equivalent basis, the net interest margin was 3.47%, compared
to 3.24% for the same quarter of the previous year.
 
 
For the quarter ended September 30, 2024, the Corporation
 
recorded a provision for credit losses of $71.4 million,
 
compared to
$45.1 million for
 
the same quarter
 
of the previous
 
year. The
 
increase in provision
 
for credit losses
 
was mainly reflected
 
within
the commercial
 
loan portfolio
 
for both
 
of the
 
Corporation’s segments.
 
The increase
 
was mainly
 
due to
 
net charge-offs
 
in the
commercial loan
 
portfolio during
 
the third
 
quarter of
 
2024, compared
 
to net
 
recoveries recognized
 
during the
 
third quarter
 
of
2023, and
 
the changes
 
in credit
 
quality and
 
macroeconomic variables.
 
In the
 
U.S. commercial
 
portfolio, the
 
release of
 
$4.4
million was
 
lower compared
 
with the
 
third quarter
 
of 2023
 
due to
 
the impact
 
of the
 
new model
 
for the
 
U.S. commercial
 
real
estate segment that was implemented during that
 
quarter which resulted in a higher benefit.
 
Non-interest
 
income
 
was
 
$164.1
 
million
 
for
 
the
 
quarter,
 
an
 
increase
 
of
 
$4.5
 
million
 
when
 
compared
 
to
 
the
 
quarter
 
ended
139
September 30,
 
2023
, mainly
 
due to
 
higher other
 
service fees,
 
due to
 
higher credit
 
and debit
 
card service
 
fees as
 
a result
 
of
higher volume
 
of transactions,
 
partially offset
 
by lower
 
income from
 
mortgage banking
 
activities resulting
 
from the
 
fair value
adjustments of mortgage servicing rights.
 
 
Operating
 
expenses
 
of
 
$467.3
 
million
 
for
 
the
 
quarter
 
were
 
higher
 
by
 
$1.3
 
million
 
when
 
compared
 
to
 
the
 
quarter
 
ended
September 30, 2023.
 
Higher operating expenses
 
were driven mainly
 
by higher technology
 
and software expenses,
 
personnel
costs
 
and
 
regulatory
 
examination
 
fees
 
included
 
as
 
other
 
taxes,
 
partially
 
offset
 
by
 
lower
 
professional
 
fees
 
and
 
a
 
goodwill
impairment charge related to our U.S. based leasing
 
subsidiary recorded in 2023.
 
Income tax
 
expense of
 
$42.5 million
 
during the
 
quarter was
 
lower by
 
$3.4 million
 
compared to
 
the quarter
 
ended September
30, 2023, mainly due to higher exempt income.
 
Total
 
assets at September 30, 2024 amounted to $71.3 billion, compared to $70.8 billion, at
 
December 31, 2023. The increase
was
 
driven
 
by
 
loan
 
growth,
 
mainly
 
in
 
the
 
commercial
 
portfolio,
 
and
 
higher
 
portfolio
 
balance
 
in
 
available-for-sale
 
(“AFS”)
securities,
 
impacted
 
by
 
lower
 
unrealized
 
losses,
 
and
 
partially
 
offset
 
by
 
a
 
decrease
 
in
 
held-to-maturity
 
(“HTM”)
 
investment
securities driven by maturities of U.S. Treasury securities.
Total
 
deposits at
 
September 30,
 
2024 increased
 
by $50.3
 
million when
 
compared to
 
deposits at
 
December 31,
 
2023, mainly
due to higher deposits in PB, mainly those captured
 
via the online channel.
 
Stockholders’ equity
 
as of
 
September 30,
 
2024 increased
 
by $643.6
 
million from
 
the December
 
31, 2023,
 
mainly due
 
to net
income for the nine months ended September 30, 2024 of $436.4 million, the after-tax impact of the decrease in net unrealized
losses
 
in
 
the
 
portfolio
 
of
 
AFS
 
securities
 
of
 
$272.0
 
million
 
and
 
the
 
net
 
accretion
 
of
 
the
 
discount
 
from
 
securities
 
previously
reclassified to HTM of $107.0 million,
 
net of taxes, partially offset
 
by the repurchases of common stock
 
for $58.8 million during
the
 
third
 
quarter
 
and
 
dividends
 
declared
 
during
 
the
 
period
 
of
 
$135.4
 
million.
 
As
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation’s
tangible book value per common share was $69.04,
 
an increase of $9.30 from December 31,
 
2023.
 
Regulatory
 
capital
 
ratios
 
remain
 
strong.
 
At
 
September
 
30,
 
2024,
 
the
 
Corporation’s
 
common
 
equity
 
tier
 
1
 
capital
 
ratio
 
was
16.42%, the tier 1 leverage ratio was 8.67%, and
 
the total capital ratio was 18.24%. Refer to
 
Table 9 for capital ratios.
 
 
 
 
 
140
CRITICAL ACCOUNTING POLICIES / ESTIMATES
 
The accounting
 
and reporting
 
policies followed
 
by the
 
Corporation and
 
its subsidiaries
 
conform to
 
generally accepted
 
accounting
principles
 
in
 
the
 
United
 
States
 
of
 
America
 
and
 
general
 
practices
 
within
 
the
 
financial
 
services
 
industry.
 
Various
 
elements
 
of
 
the
Corporation’s accounting policies, by
 
their nature, are
 
inherently subject to
 
estimation techniques, valuation assumptions and
 
other
subjective assessments.
 
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.
 
Management has discussed
 
the development and
 
selection of the
 
critical accounting policies
 
and estimates with
 
the Corporation’s
Audit
 
Committee.
 
The
 
Corporation
 
has
 
identified
 
as
 
critical
 
accounting
 
policies
 
those
 
related
 
to:
 
(i)
 
Fair
 
Value
 
Measurement
 
of
Financial Instruments; (ii) Loans
 
and Allowance for Credit
 
Losses; (iii) Loans Acquired
 
with Deteriorated Credit Quality;
 
(iv) Income
Taxes;
 
(v) Goodwill and
 
Other Intangible Assets; and
 
(vi) Pension and Postretirement
 
Benefit Obligations. For a
 
summary of these
critical
 
accounting
 
policies
 
and
 
estimates,
 
refer
 
to
 
the
 
MD&A
 
included
 
in
 
the
 
2023
 
Form
 
10-K.
 
Also,
 
refer
 
to
 
Note
 
2
 
to
 
the
Consolidated
 
Financial
 
Statements
 
included
 
in
 
the
 
2023
 
Form
 
10-K
 
for
 
a
 
summary
 
of
 
the
 
Corporation’s
 
significant
 
accounting
policies
 
and
 
to
 
Note 3
 
to
 
the
 
Consolidated Financial
 
Statements included
 
in
 
this Form
 
10-Q for
 
information on
 
recently adopted
accounting standard updates.
OPERATING RESULTS ANALYSIS
NET INTEREST INCOME
Net interest income for
 
the quarter ended September
 
30, 2024 was $572.5
 
million, compared to $534.0
 
million in the same
 
quarter
of 2023,
 
an increase
 
of $38.5
 
million. Net
 
interest income
 
on a
 
taxable equivalent
 
basis for
 
the third
 
quarter of
 
2024 was
 
$612.9
million compared to $563.7 million in the third
 
quarter of 2023, an increase of $49.2 million.
 
Net interest margin for the quarter
 
was 3.24% compared to 3.07% in the
 
third quarter of 2023 or an
 
increase of 17 basis points. On
a taxable equivalent basis, net interest margin for the third quarter of 2024 was 3.47%, compared to 3.24% for the same quarter the
prior year. The main variances in net interest income on a taxable
 
equivalent basis were:
 
higher interest income from
 
investment securities by $33.8
 
million mainly driven higher
 
yield by 48
 
basis points, due to
 
a
higher interest rate environment and reinvestment
 
of investment maturities in higher yielding U.S.
 
Treasury bills;
higher interest income from
 
loans by $69.6 million
 
resulting from higher balances in
 
both PB and BPPR
 
and across most
portfolios and higher yield on loans by 32 basis
 
points when compared to the same quarter
 
of 2023.
Partially offset by:
higher interest expense
 
on interest-bearing deposits
 
by $56.9 million
 
driven by a
 
higher cost of
 
interest-bearing deposits
by 41 basis points
 
due to higher average volume
 
by $884.1 million and
 
higher cost of market
 
linked interest-bearing P.R.
Government deposits and higher volume of U.S.
 
deposits, mainly those captured via the online channel.
Net interest income
 
for the BPPR
 
segment amounted to
 
$488.0 million for
 
the third quarter
 
of 2024, compared
 
to $453.9 million
 
in
the third
 
quarter of
 
2023. Net interest
 
margin increased to
 
3.41% compared to
 
3.14% in the
 
third quarter of
 
2023. The increase
 
in
net interest income of $34.1
 
million was driven by higher
 
yields from earning assets and loan
 
growth partially offset by the
 
increase
in the
 
cost of
 
deposits, mainly
 
from P.R.
 
Government deposits.
 
The cost
 
of interest-bearing
 
deposits increased
 
29 basis
 
points to
2.55% from 2.25% in
 
the same quarter of
 
2023. Total
 
deposit costs for the quarter
 
increased by 21 basis
 
points, from 1.68% in the
third quarter of 2023 to 1.89%.
Net interest income for
 
PB was $93.1 million
 
for the quarter ended
 
September 30, 2024, compared to
 
$87.4 million during the
 
third
quarter of
 
2023,
 
an
 
increase of
 
$5.7 million.
 
Net interest
 
margin
 
decreased 17
 
basis
 
points to
 
2.73%
 
when compared
 
to
 
2.90%
during the third
 
quarter of 2023.
 
The decrease in
 
net interest margin
 
was mostly driven
 
by higher balances
 
and cost of
 
deposits in
most
 
of
 
the
 
interest-bearing
 
categories,
 
partially
 
offset
 
by
 
the
 
increase
 
in
 
loan
 
volume
 
and
 
yield.
 
The
 
cost
 
of
 
interest-bearing
deposits was 3.80% compared to 3.31% in the third quarter of 2023,
 
or an increase of 49 basis points.
 
Total deposit cost was 3.35%
compared to 2.84%, or a decrease of 51 basis
 
points in the third quarter of 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
141
Table 3 - Analysis of Levels & Yields
 
on a Taxable Equivalent Basis
 
(Non-GAAP)
Quarter ended September 30,
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2024
2023
Variance
2024
2023
 
Variance
2024
2023
Variance
Rate
Volume
(In millions)
(In thousands)
$
7,033
$
7,292
$
(259)
5.43
%
5.40
%
0.03
%
Money market investments
$
96,061
$
99,285
$
(3,224)
$
311
$
(3,535)
27,569
28,396
(827)
2.92
2.31
0.61
Investment securities [1]
202,317
165,319
36,998
41,382
(4,384)
30
34
(4)
5.87
4.43
1.44
Trading securities
 
436
375
61
110
(49)
Total money market,
 
investment and trading
34,632
35,722
(1,090)
3.43
2.95
0.48
securities
298,814
264,979
33,835
41,803
(7,968)
Loans:
17,798
16,611
1,187
6.90
6.64
0.26
Commercial
308,734
277,977
30,757
10,336
20,421
1,129
865
264
8.85
8.99
(0.14)
Construction
25,102
19,580
5,522
(364)
5,886
1,851
1,669
182
6.97
6.50
0.47
Leasing
32,241
27,142
5,099
2,022
3,077
7,911
7,504
407
5.73
5.42
0.31
Mortgage
113,409
101,700
11,709
6,038
5,671
3,211
3,147
64
14.08
13.39
0.69
Consumer
112,423
105,042
7,381
4,260
3,121
3,879
3,657
222
8.94
8.47
0.47
Auto
87,189
78,055
9,134
4,248
4,886
35,779
33,453
2,326
7.56
7.24
0.32
Total loans
679,098
609,496
69,602
26,540
43,062
$
70,411
$
69,175
$
1,236
5.53
%
5.02
%
0.51
%
Total earning assets
$
977,912
$
874,475
$
103,437
$
68,343
$
35,094
Interest bearing deposits:
$
26,148
$
25,652
$
496
3.64
%
3.31
%
0.33
%
NOW and money market [2]
$
238,923
$
213,957
$
24,966
$
26,317
$
(1,351)
14,322
14,875
(553)
0.92
0.73
0.19
Savings
 
33,169
27,373
5,796
6,429
(633)
9,069
7,986
1,083
3.46
2.62
0.84
Time deposits
78,893
52,791
26,102
16,893
9,209
49,539
48,513
1,026
2.82
2.41
0.41
Total interest bearing
 
deposits
350,985
294,121
56,864
49,639
7,225
14,968
15,038
(70)
Non-interest bearing demand
deposits
64,507
63,551
956
2.16
1.84
0.32
Total deposits
350,985
294,121
56,864
49,639
7,225
101
108
(7)
5.62
5.45
0.17
Short-term borrowings
1,430
1,478
(48)
44
(92)
Other medium and
 
950
1,172
(222)
5.32
5.20
0.12
long-term debt
12,560
15,167
(2,607)
415
(3,022)
Total interest bearing
50,590
49,793
797
2.87
2.48
0.39
liabilities (excluding demand
deposits)
364,975
310,766
54,209
50,098
4,111
4,853
4,344
509
Other sources of funds
$
70,411
$
69,175
$
1,236
2.06
%
1.78
%
0.28
%
Total source of funds
364,975
310,766
54,209
50,098
4,111
Net interest margin/
 
3.47
%
3.24
%
0.23
%
income on a taxable
equivalent basis (Non-
GAAP)
612,937
563,709
49,228
$
18,245
$
30,983
2.66
%
2.54
%
0.12
%
 
Net interest spread
Taxable equivalent
 
adjustment
40,464
29,689
10,775
Net interest margin/ income
3.24
%
3.07
%
0.17
%
non-taxable equivalent basis
(GAAP)
$
572,473
$
534,020
$
38,453
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.
[2] Includes interest bearing demand deposits corresponding
 
to certain government entities in Puerto Rico.
142
Net interest income for the nine months
 
ended September 30, 2024 was $1.7 billion, or $94.2 million higher than the same period in
2023. Taxable
 
equivalent net interest income
 
was $1.8 billion,
 
an increase of
 
$124.8 million when compared
 
to the same
 
period in
2023.
 
Net
 
interest
 
margin
 
was
 
3.20%,
 
an
 
increase
 
of
 
six
 
basis
 
points
 
when
 
compared
 
to
 
3.14%
 
for
 
the
 
nine
 
months
 
ended
September 30,
 
2023. The
 
increase in
 
net interest
 
margin was
 
mainly driven
 
by a
 
higher yield
 
on earning
 
assets due
 
to a
 
higher
interest rate environment.
 
Net interest margin,
 
on a taxable
 
equivalent basis, for
 
the nine months
 
ended September 30, 2024,
 
was
3.44%, an increase of 12 basis points when compared to the 3.32% for the same period of
 
2023. The drivers of the variances in net
interest income for the nine-month period are:
 
Positive variances:
 
higher interest
 
income
 
from
 
investment securities
 
by
 
$156.8 million
 
resulting from
 
higher yield
 
of
 
the portfolio
 
by
 
62
 
basis
points driven by the
 
re-investment of maturities and deployment of
 
liquidity to higher yield short-term
 
Treasury bills, for which
interest is tax exempt in Puerto Rico;
 
higher interest income from loans by
 
$249.5 million reflecting higher interest income from commercial loans
 
by $122.9 million
due
 
to
 
higher
 
yield
 
by
 
37
 
basis
 
points
 
related
 
to
 
higher
 
rates
 
in
 
adjustable-rate
 
loans
 
and
 
higher
 
volume
 
of
 
$1.5
 
billion,
increasing in BPPR and PB, and higher volume and
 
yield across the rest of the portfolios as shown in
 
Table 4; and
partially offset by:
 
higher interest
 
expense from
 
deposits by
 
$289.6 million
 
mainly due
 
to
 
the increase
 
in interest
 
rates that
 
has resulted
 
in a
higher cost in most deposit
 
categories in both BPPR and PB;
 
but particularly from P.R
 
Government deposits that are market-
linked and PB online deposits.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
143
Table 4 – Analysis of Levels & Yields
 
on a Taxable Equivalent Basis
 
from Continuing Operations (Non-GAAP)
Period ended September 30,
Variance
Average Volume
Average Yields / Costs
Interest
Attributable to
2024
2023
Variance
2024
2023
 
Variance
2024
2023
Variance
Rate
Volume
(In millions)
(In thousands)
$
6,664
$
6,966
$
(302)
5.47
%
5.10
%
0.37
%
Money market investments
$
272,893
$
265,785
$
7,108
$
18,902
$
(11,794)
28,271
28,205
66
2.88
2.18
0.70
Investment securities [1]
610,341
460,641
149,700
148,136
1,564
30
32
(2)
5.02
4.52
0.50
Trading securities
 
1,114
1,084
30
117
(87)
Total money market,
 
investment and trading
34,965
35,203
(238)
3.38
2.76
0.62
securities
884,348
727,510
156,838
167,155
(10,317)
Loans:
17,707
16,206
1,501
6.87
6.50
0.37
Commercial
 
910,241
787,381
122,860
47,469
75,391
1,064
778
286
8.97
8.79
0.18
Construction
71,426
51,178
20,248
1,090
19,158
1,794
1,630
164
6.86
6.31
0.55
Leasing
92,292
77,135
15,157
7,024
8,133
7,818
7,434
384
5.67
5.45
0.22
Mortgage
332,626
303,777
28,849
12,819
16,030
3,209
3,082
127
13.94
13.10
0.84
Consumer
334,818
302,050
32,768
17,783
14,985
3,820
3,603
217
8.86
8.31
0.55
Auto
253,511
223,929
29,582
15,682
13,900
35,412
32,733
2,679
7.52
7.13
0.39
Total loans
1,994,914
1,745,450
249,464
101,867
147,597
$
70,377
$
67,936
$
2,441
5.46
%
4.86
%
0.60
%
Total earning assets
$
2,879,262
$
2,472,960
$
406,302
$
269,022
$
137,280
Interest bearing deposits:
$
25,986
$
24,407
$
1,579
3.62
%
2.93
%
0.69
%
NOW and money market [2]
$
704,396
$
534,567
$
169,829
$
137,718
$
32,111
14,584
14,889
(305)
0.93
0.62
0.31
Savings
 
101,136
69,262
31,874
30,343
1,531
8,877
7,603
1,274
3.23
2.23
1.00
Time deposits
214,888
126,995
87,893
56,973
30,920
49,447
46,899
2,548
2.76
2.08
0.68
Total interest bearing
 
deposits
1,020,420
730,824
289,596
225,034
64,562
15,075
15,405
(330)
Non-interest bearing demand
deposits
64,522
62,304
2,218
2.11
1.57
0.54
Total deposits
1,020,420
730,824
289,596
225,034
64,562
89
160
(71)
5.65
5.02
0.63
Short-term borrowings
3,748
5,987
(2,239)
681
(2,920)
Other medium and
 
975
1,140
(165)
5.18
5.12
0.06
long-term debt
37,799
43,660
(5,861)
152
(6,013)
Total interest bearing
50,511
48,199
2,312
2.81
2.16
0.65
liabilities (excluding demand
deposits)
1,061,967
780,471
281,496
225,867
55,629
4,791
4,332
459
Other sources of funds
$
70,377
$
67,936
$
2,441
2.02
%
1.54
%
0.48
%
Total source of funds
1,061,967
780,471
281,496
225,867
55,629
3.44
%
3.32
%
0.12
%
Net interest margin/ income
on a taxable equivalent basis
(Non-GAAP)
1,817,295
1,692,489
124,806
$
43,155
$
81,651
2.65
%
2.70
%
(0.05)
%
Net interest spread
Taxable equivalent
adjustment
125,766
95,145
30,621
3.20
%
3.14
%
0.06
%
Net interest margin/ income
non-taxable equivalent basis
(GAAP)
$
1,691,529
$
1,597,344
$
94,185
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.
[2] Includes interest bearing demand deposits corresponding
 
to certain government entities in Puerto Rico.
144
Provision for Credit Losses - Loans Held-in-Portfolio
 
and Unfunded Commitments
For the quarter
 
ended September 30,
 
2024, the Corporation
 
recorded a provision
 
for credit losses
 
related to loans
 
held-in-portfolio
and unfunded commitments
 
of $72.3 million,
 
an increase of
 
$27.1 million, compared to
 
the same quarter
 
of the previous
 
year. The
provision for the loan portfolio increased by $29.3 million. Refer to Note 8 to the Consolidated Financial Statements for details of the
movement of the allowance for credit losses. The drivers of
 
the increase in the provision for loan losses by business
 
segments when
comparing the third quarter of 2024,
 
to the same quarter in 2023 were
 
as follows:
 
In the BPPR segment,
 
the provision for credit losses increased
 
by $23.1 million, to $77.1 million. The increase was mainly
reflected within the
 
commercial loan portfolio
 
driven by net
 
charge-offs, instead of
 
net recoveries for
 
the same
 
quarter in
2023, along with changes in credit quality and
 
macroeconomic variables.
 
In the Popular U.S. segment,
 
a release of $4.4 million
 
was recorded for the quarter ended
 
September 30, 2024 driven by
changes in
 
credit quality,
 
and improvements in
 
credit ratings
 
related to
 
the commercial
 
portfolio. This release
 
was lower
when
 
compared
 
to
 
the
 
same
 
quarter
 
in
 
2023
 
for
 
which
 
a
 
release
 
of
 
$10.5
 
million
 
was
 
recorded mainly
 
driven
 
by
 
the
implementation of a new model for the U.S.
 
commercial real estate portfolio based on more
 
granular regional data.
For
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
recorded
 
a
 
provision
 
for
 
credit
 
loss
 
related
 
to
 
loans
 
held-in-
portfolio and unfunded commitments of $190.7 million, an increase of $59.9 million, compared to the nine months ended September
30, 2023. The provision
 
for the loan portfolio increased
 
by $63.0 million. The
 
drivers of the increase in
 
the provision for loan
 
losses
by business segments when comparing the nine months
 
ended September 30, 2024, to the same period
 
in 2023 were as follows:
 
In the BPPR segment, the provision for loan losses was of $186.7 million for the nine months ended September 30, 2024,
compared
 
to
 
$127.6
 
million
 
for
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2023,
 
attributable
 
to
 
higher
 
reserves
 
in
 
the
commercial, auto leases and consumer portfolios due
 
to loan growth,
 
higher losses, and changes in credit quality.
 
In
 
the Popular
 
U.S. segment,
 
the provision
 
for loan
 
losses was
 
an expense
 
of
 
$2.6
 
million for
 
the nine
 
months ended
September 30, 2024, compared to
 
a release of $1.3
 
million for the same
 
period in 2023. The
 
higher provision was driven
by the
 
reduction in reserves
 
during the same
 
period of
 
2023 due to
 
the implementation of
 
a new
 
model, based on
 
more
granular regional data, for the U.S. commercial real
 
estate portfolio.
At
 
September 30,
 
2024, the
 
total
 
allowance for
 
credit
 
losses for
 
loans held-in-portfolio
 
amounted to
 
$744.3 million,
 
compared to
$729.3
 
million
 
as
 
of
 
December
 
31,
 
2023.
 
The
 
ratio
 
of
 
the
 
allowance
 
for
 
credit
 
losses
 
to
 
loans
 
held-in-portfolio
 
was
 
2.06%
 
at
September 30,
 
2024, compared
 
to
 
2.08% at
 
December 31,
 
2023. Refer
 
to
 
Note 8
 
to
 
the Consolidated
 
Financial Statements,
 
for
additional information
 
on the
 
Corporation’s methodology
 
to
 
estimate its
 
ACL. Refer
 
to the
 
Credit Risk
 
section of
 
this MD&A
 
for a
detailed analysis of net charge-offs, non-performing assets,
 
the allowance for credit losses and selected loan
 
losses statistics.
Provision for Credit Losses – Investment Securities
The
 
Corporation’s
 
provision
 
for
 
credit
 
losses
 
related
 
to
 
its
 
investment
 
securities
 
held-to-maturity
 
is
 
related
 
to
 
the
 
portfolio
 
of
obligations from
 
the Government
 
of Puerto
 
Rico, states
 
and political
 
subdivisions. At
 
September 30,
 
2024, the
 
total allowance
 
for
credit
 
losses
 
for
 
this
 
portfolio
 
amounted
 
to
 
$5.4
 
million,
 
compared
 
to
 
$5.8
 
million
 
at
 
December
 
31,
 
2023.
 
Refer
 
to
 
Note
 
6
to
Consolidated Financial Statements
for additional information on the ACL for this portfolio.
Non-Interest Income
Non-interest
 
income
 
amounted to
 
$164.1
 
million
 
for
 
the
 
quarter ended
 
September
 
30,
 
2024, compared
 
to
 
$159.5 million
 
for
 
the
same quarter of the previous year. The main factors that contributed
 
to the variance in non-interest income were:
 
higher other service fees by $5.3 million
 
mainly due to higher credit and debit
 
card service fees as a result
 
of higher volume of
transactions;
partially offset by:
 
lower income from mortgage banking activities by
 
$2.7 million mainly due to a
 
decrease in the fair value of
 
mortgage servicing
rights (“MSRs”).
145
Non-interest income amounted to $494.2 million for the nine months ended September 30, 2024, compared to $482.0 million for the
same period of the previous year. The main factors that contributed to
 
the variance in non-interest income were:
 
 
higher other service
 
fees by $12.1
 
million mainly due
 
to an increase
 
in debit and
 
credit cards fees
 
due to higher
 
transactional
volume and higher income from the sale and
 
administration of investment products;
 
and
 
higher
 
service
 
charges
 
on
 
deposit
 
accounts
 
by
 
$3.5
 
million
 
mainly
 
due
 
to
 
higher
 
fees
 
resulting
 
mainly
 
from
 
non-balance
compensation in commercial deposits;
partially offset by:
 
lower
 
mortgage
 
banking
 
activities
 
by
 
$2.4
 
million
 
mainly
 
due
 
to
 
a
 
decrease
 
in
 
mortgage
 
servicing
 
fees
 
due
 
to
 
higher
delinquencies in the serviced portfolio.
146
Operating Expenses
Operating
 
expenses
 
amounted
 
to
 
$467.3
 
million
 
for
 
the
 
quarter
 
ended
 
September
 
30,
 
2024,
 
an
 
increase
 
of
 
$1.3
 
million,
 
when
compared with the same quarter of 2023. The
 
variance in operating expenses was driven primarily
 
by:
 
higher
 
technology
 
and
 
software
 
expenses
 
by
 
$15.5
 
million
 
mainly
 
due
 
to
 
higher
 
IT
 
consulting
 
fees
 
by
 
$5.8
 
million,
 
higher
software amortization expense by $3.9 million and an
 
increase of $2.9 million from network management
 
services;
 
higher other taxes expense by $9.2 million mainly due the reversal of an accrual of
 
$8.2 million during the third quarter of 2023
related to regulatory examination fees in BPPR;
 
higher personnel costs by $8.7 million mainly due to higher
 
salaries by $8.2 million as a result of annual salary
 
revisions and an
increase in headcount;
 
higher
 
business
 
promotion
 
expenses
 
by
 
$2.6
 
million
 
mainly
 
due
 
to
 
higher
 
donations
 
granted
 
during
 
the
 
quarter,
 
higher
advertising costs and higher customer rewards programs
 
expense in our credit card business; and
 
lower other
 
real estate
 
owned (OREO)
 
benefit by
 
$2.5 million
 
mainly due
 
to lower
 
gain on
 
sale of
 
mortgage and
 
commercial
properties;
partially offset by:
 
a goodwill
 
impairment charge
 
of $23.0
 
million recorded
 
during the
 
third quarter
 
of 2023
 
in our
 
U.S. based
 
equipment leasing
subsidiary due to lower forecasted cash flows and
 
an increase in the rate used to discount cash
 
flows;
 
lower professional fees by $11.8 million mainly due to a decrease in advisory
 
expenses arising from corporate initiatives;
 
and
 
lower processing
 
and transactional
 
services expenses
 
by $3.6
 
million mainly
 
due to
 
lower point
 
of service
 
(POS) processing
fees,
driven by a lower fee rate and higher
 
incentive rebates in 2024.
Operating expenses
 
amounted to
 
$1.4 billion
 
for the
 
nine months
 
ended September
 
30, 2024,
 
an increase
 
of $53.1
 
million when
compared with the
 
same period of
 
2023. Excluding the
 
$6.4 million of
 
interest accrued related
 
to prior period
 
tax withholdings and
the $14.3 million impact of the FDIC Special Assessment, total
 
expenses for the nine months ended September 30, 2024 increased
by $32.4 million, when compared with the same
 
period of 2023. The main drivers of
 
the $32.4 million variance were:
 
higher technology
 
and software
 
expenses by
 
$33.8 million
 
mainly due
 
to higher
 
IT professional
 
fees by
 
$11.2
 
million, higher
software amortization expense by $9.7 million, an increase of $7.6 million from network management services and an increase
of $2.4 million in application processing and
 
hosting services;
 
higher personnel costs by $31.3 million mainly due to higher salaries by $15.9 million as a result of annual salary revisions and
an
 
increase
 
in
 
headcount,
 
an
 
increase
 
in
 
restricted
 
shares,
 
commissions
 
and
 
incentive
 
compensation
 
by
 
$9.6
 
million
 
and
higher payroll taxes and other compensation expenses
 
by $5.3 million;
 
higher other taxes expense by $6.2 million
 
mainly due to an increase in
 
municipal license tax and to the impact
 
of the reversal
in 2023 of regulatory examination fees in BPPR,
 
as mentioned above;
 
higher
 
promotion
 
expenses
 
by
 
$5.0
 
million
 
mainly
 
due
 
to
 
higher donations,
 
advertising
 
and
 
sponsorship
 
expenses
 
by
 
$3.0
million and higher customer rewards programs expense
 
in our credit card business by $2.0 million; and
 
higher operational losses by $4.6 million due to
 
build up on reserves for operational losses;
partially offset by:
 
lower
 
professional
 
fees
 
by
 
$28.7
 
million
 
mainly
 
due
 
to
 
advisory
 
expenses
 
arising
 
from
 
corporate
 
initiatives
 
including
 
those
related to the Corporation's transformation initiative
 
incurred during the nine months ended September
 
30, 2023; and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
147
A
goodwill impairment charge
 
of $23.0 million
 
recorded during the
 
third quarter
 
of 2023
 
in our
 
U.S. based equipment
 
leasing
subsidiary due to lower forecasted cash flows and
 
an increase in the rate used to discount cash
 
flows;
Table 5 - Operating Expenses
Quarters ended September 30,
Nine months ended September 30,
(In thousands)
2024
2023
Variance
2024
2023
Variance
Personnel costs:
Salaries
$
135,983
$
127,832
$
8,151
$
394,001
$
378,126
$
15,875
Commissions, incentives and other bonuses
26,350
27,670
(1,320)
95,587
86,025
9,562
Pension, postretirement and medical insurance
16,387
16,985
(598)
50,391
49,871
520
Other personnel costs, including payroll taxes
23,136
20,665
2,471
74,678
69,358
5,320
Total personnel
 
costs
201,856
193,152
8,704
614,657
583,380
31,277
Net occupancy expenses
28,031
28,100
(69)
83,764
81,304
2,460
Equipment expenses
9,349
8,905
444
28,578
26,878
1,700
Other taxes
17,757
8,590
9,167
47,465
41,290
6,175
Professional fees
26,708
38,514
(11,806)
93,370
122,077
(28,707)
Technology and
 
software expenses
88,452
72,930
15,522
247,666
213,843
33,823
Processing and transactional services:
Credit and debit cards
11,761
13,762
(2,001)
37,644
37,896
(252)
Other processing and transactional services
22,559
24,137
(1,578)
69,966
70,713
(747)
Total processing
 
and transactional services
34,320
37,899
(3,579)
107,610
108,609
(999)
Communications
5,229
4,220
1,009
14,143
12,483
1,660
Business promotion:
Rewards and customer loyalty programs
16,533
15,988
545
46,995
44,962
2,033
Other business promotion
9,104
7,087
2,017
25,080
22,067
3,013
Total business
 
promotion
25,637
23,075
2,562
72,075
67,029
5,046
Deposit insurance
10,433
8,932
1,501
44,901
24,600
20,301
Other real estate owned (OREO) income
(2,674)
(5,189)
2,515
(13,745)
(10,197)
(3,548)
Other operating expenses:
Operational losses
5,769
5,504
265
21,153
16,584
4,569
All other
15,750
17,557
(1,807)
56,140
53,690
2,450
Total other operating
 
expenses
21,519
23,061
(1,542)
77,293
70,274
7,019
Amortization of intangibles
704
795
(91)
2,233
2,385
(152)
Goodwill impairment charge
-
23,000
(23,000)
-
23,000
(23,000)
Total operating
 
expenses
$
467,321
$
465,984
$
1,337
$
1,420,010
$
1,366,955
$
53,055
Income Taxes
For the quarter and nine months
 
ended September 30, 2024, the Corporation recorded an income
 
tax expense of $42.5 million and
$138.5 million with an effective
 
tax rate (ETR) of
 
21.5% and 24.1%, respectively,
 
compared to $45.9 million and
 
$135.7 million with
an ETR
 
of 25.1% and
 
23.3% for the
 
respective periods of
 
2023.
 
The lower
 
income tax expense
 
for the
 
quarter ended September
30, 2024, compared
 
to the same
 
quarter of
 
2023, is mostly
 
due to the
 
higher exempt income
 
recorded for the
 
current quarter.
 
For
the nine
 
months ended
 
September 30,
 
2024, the
 
higher income
 
tax reflects
 
the tax
 
withholding expense
 
recorded during
 
the first
quarter on
 
certain intercompany
 
distributions, amounting
 
to $22.9
 
million, out
 
of which
 
$16.5 million
 
corresponded to
 
years 2014-
2023 and $6.5
 
million was related
 
to a
 
distribution completed during the
 
period ended March
 
31, 2024; this
 
negative variance was
partially offset
 
by the
 
lower income
 
before tax,
 
higher exempt
 
income and
 
other tax
 
credits recorded
 
this year,
 
compared with
 
the
same period of year 2023.
 
At September
 
30, 2024,
 
the Corporation
 
had a
 
net deferred
 
tax asset
 
amounting to
 
$916 million,
 
net of
 
a valuation
 
allowance of
$451 million. The net deferred tax asset related
 
to the U.S. operations was $250 million, net of
 
a valuation allowance of $379 million.
Refer to
 
Note 30
 
to the
 
Consolidated Financial
 
Statements for
 
a reconciliation
 
of the
 
statutory income
 
tax rate
 
to the
 
effective tax
rate and additional information on the income
 
tax expense and deferred tax asset balances.
REPORTABLE SEGMENT RESULTS
The Corporation’s
 
reportable segments
 
for managerial
 
reporting purposes
 
consist of
 
Banco Popular
 
de Puerto
 
Rico and
 
Popular
U.S. A Corporate group
 
has also been defined to support the reportable
 
segments.
 
 
 
 
 
 
 
148
For
 
a
 
description
 
of
 
the
 
Corporation’s
 
reportable
 
segments,
 
including
 
additional
 
financial
 
information
 
and
 
the
 
underlying
management accounting process, refer to Note 32
 
to the Consolidated Financial Statements.
 
The Corporate group reported a net
 
income of $0.5 million for the
 
quarter ended September 30, 2024, compared with
 
a net income
of
 
$2.8 million
 
for the
 
same quarter
 
of
 
the previous
 
year.
 
For the
 
nine months
 
ended September
 
30, 2024,
 
the Corporate
 
group
reported net loss of
 
$21.7 million, compared to
 
a net income
 
of $8.8 million for
 
the same period of
 
the previous year.
 
The negative
variance was mainly attributed to the $22.9 million adjustment to recognize the tax impact associated with prior period intercompany
distributions and
 
the additional
 
$6.5 million
 
recognized for the
 
tax impact related
 
to intercompany
 
distributions paid during
 
the first
quarter of 2024.
 
Highlights on the earnings results for the reportable
 
segments are discussed below:
Banco Popular de Puerto Rico
 
The Banco Popular
 
de Puerto Rico
 
reportable segment’s net
 
income amounted to
 
$125.8 million for
 
the quarter ended
 
September
30, 2024, compared with
 
net income of $122.7
 
million for the same
 
quarter of the previous year.
 
The factors that contributed to
 
the
variance in the financial results included the following:
 
 
Higher net interest income by $34.1 million mainly
 
due to:
 
higher interest income from money market
 
and investment securities by $4.9 million
 
due to higher yields driven
by the reinvestment into higher interest rates U.S.
 
Treasury securities;
 
and
 
higher interest income from loans by $53.6 million
 
mainly due to higher average balances across all portfolios;
partially offset by
 
higher interest expense on deposits by $23.9 million mainly due to the higher interest rate environment’s impact
on the cost of P.R. Government deposits.
The net interest margin
 
for the quarter ended
 
September 30, 2024 was 3.41%
 
compared to 3.14% for the
 
same quarter in the
previous year.
 
The increase in
 
net interest margin
 
is driven by
 
the earnings assets
 
mix and the
 
higher yields from
 
investment
securities and loans, particularly commercial and consumer loans, due to the increase in rates; partially offset by
 
higher cost of
deposits.
 
A
 
provision for
 
loan
 
losses
 
of
 
$77.1 million,
 
compared
 
to
 
a
 
provision of
 
$54.2
 
million
 
in
 
quarter ended
 
September
 
30,
2023, higher by
 
$22.9 million mainly
 
in the commercial
 
portfolio due to
 
net charge offs
 
as compared to
 
net recoveries in
2023, and changes in credit quality in the commercial
 
portfolio;
 
 
Non-interest income was higher by $4.4 million mainly
 
due to:
 
higher other service
 
fees by $4.3
 
million due to
 
higher interchange income from
 
debit and credit
 
card as result
of higher volume of transactions and higher ancillary
 
fees;
partially offset by
 
lower income
 
from mortgage
 
banking activities
 
by $2.6
 
million mainly
 
due to
 
an unfavorable
 
variance of
 
$2.0
million in the fair value adjustment of mortgage service
 
rights;
 
Higher operating expenses by $20.6 million mostly due
 
to:
149
 
higher
 
technology
 
and
 
software
 
expenses
 
by
 
$9.9
 
million
 
mainly
 
due
 
to
 
higher
 
IT
 
professional
 
fees,
 
higher
amortization of software costs and higher network management
 
fees;
 
higher other operating taxes by $9.4 million due
 
to the accrual reversal in the quarter ended September
 
30,2023
related to regulatory examination fees in BPPR by
 
$8.2 million;
 
higher personnel costs by $4.0 million driven by
 
annual salary revisions, and an increase in headcount;
 
lower net recoveries from
 
OREO by $2.5 million
 
mainly due to lower
 
gain on sale
 
of mortgage and commercial
properties; and
partially offset by
 
lower
 
processing
 
and
 
transactional
 
services
 
by
 
$3.5
 
million
 
mainly
 
due
 
to
 
a
 
lower
 
point
 
of
 
service
 
(“POS”)
processing fees, driven by a lower fee rate and higher
 
incentive rebates in 2024; and
 
lower professional fees of $6.1 million mainly due
 
to lower consulting fees related to corporate initiatives;
 
Lower income tax expense by $10.8 million is mainly
 
due to higher net exempt income.
 
For
 
the
 
nine months
 
ended September
 
30,
 
2024, the
 
BPPR segment
 
recorded net
 
income
 
of
 
$404.3 million
 
compared
 
to
 
a
 
net
income of $387.4 million for the same period of the previous year. The factors that contributed to the variance in the financial results
included the following:
 
Higher net interest income by $92.8 million
 
mainly due to:
 
higher interest income from money market and investment
 
securities by $77.5 million due to higher yields driven
by the re-investments of maturities and deployment
 
of liquidity to higher yield U.S. Treasury securities;
 
and
 
higher interest
 
income from
 
loans by
 
$183.0 million
 
mainly due
 
to higher
 
average balances
 
from commercial
and consumer loans,
partially offset by
 
higher interest
 
expense on
 
deposits by
 
$166.9 million
 
mainly due
 
to higher
 
costs on
 
the market-linked
 
Puerto
Rico government deposits.
The net interest
 
margin for the
 
nine months ended September
 
30, 2024 was
 
3.38% compared to
 
3.24% for the
 
same period in
 
the
previous
 
year.
 
The
 
increase
 
in
 
net
 
interest
 
margin
 
is
 
driven
 
by
 
the
 
earnings
 
assets
 
mix
 
and
 
the
 
higher
 
yields
 
from
 
investment
securities and loans, due to the increase in
 
rates; partially offset by higher cost of deposits.
 
An
 
unfavorable variance
 
of
 
$58.8
 
million
 
on
 
the
 
provision for
 
loan
 
losses
 
mainly
 
attributable to
 
higher reserves
 
in
 
the
commercial, auto leases and consumer portfolios
 
due to loan growth, higher losses, and changes
 
in credit quality;
 
 
Non-interest income was higher by $11.1 million mainly due to:
 
higher other service fees by $9.4 million mainly due to higher debit and credit card fees by $5.0 million as result
of higher volume of customer transactions; and
 
higher
 
service
 
charges
 
on
 
deposit
 
accounts
 
by
 
$3.6
 
million
 
mainly
 
due
 
to
 
higher
 
fees
 
from
 
non-
 
balance
compensation in commercial deposits;
partially offset by
150
 
lower income
 
from mortgage
 
banking activities
 
by $2.3
 
million mainly
 
due to
 
an unfavorable
 
variance of
 
$2.0
million in the fair value adjustment of mortgage service
 
rights.
 
Higher operating expenses by $53.6 million mostly due
 
to:
 
higher
 
personnel
 
costs
 
by
 
$19.3
 
million
 
driven
 
by
 
annual
 
salary
 
revisions,
 
an
 
increase
 
in
 
headcount,
 
an
increase in restricted shares, higher commissions and
 
incentive compensation, and an increase in payroll
 
taxes;
 
higher technology and software expenses by $19.0 million mainly due to higher amortization of software, higher
IT consulting fees, higher network management fees
 
and higher application and hosting services;
 
higher
 
FDIC
 
deposit
 
insurance
 
expense
 
by
 
$15.1
 
million
 
due
 
to
 
$12.7
 
million
 
on
 
FDIC
 
Special
 
Assessment
recorded in the first quarter of 2024;
 
higher
 
other
 
operating
 
expenses
 
by
 
$6.5
 
million
 
mostly
 
due
 
to
 
higher
 
charges
 
from
 
the
 
Corporate
 
segment
group;
 
higher other operating taxes by $5.7 million due to reversal in the nine-month period ended September 30,2023
related to regulatory examination fees in BPPR by
 
$8.2 million;
 
higher business promotions by $4.0 million due to higher donations,
 
advertising and sponsorship expenses, and
higher customer rewards expense in credit card business;
partially offset by
 
lower professional
 
fees of
 
$17.5 million
 
mainly due
 
to
 
lower advisory
 
costs associated
 
with several
 
initiatives
including the Corporations transformation initiatives;
 
higher net
 
recoveries from
 
OREO by
 
$3.6 million
 
mainly due
 
to an
 
increase in
 
gain on
 
sale of
 
mortgage and
commercial properties;
 
Lower income
 
tax
 
expense of
 
$28.2 million
 
is mainly
 
due to
 
higher net
 
exempt income
 
and
 
higher tax
 
credit
 
recorded
during this period.
Popular U.S.
For
 
the
 
quarter
 
ended
 
September
 
30,
 
2024,
 
the
 
reportable
 
segment
 
of
 
Popular
 
U.S.
 
reported
 
a
 
net
 
income
 
of
 
$28.8
 
million,
compared with a net income of $11.0 million for the same quarter of the
 
previous year. The factors that contributed to the variance in
the financial results included the following:
 
Higher net interest income by $5.7 million due
 
to:
 
higher interest
 
income from
 
loans by
 
$14.3 million,
 
mainly from
 
growth in
 
the commercial
 
portfolio as
 
well as
higher yields due to higher interest rates; and
 
higher
 
interest
 
income
 
from
 
money
 
market
 
and
 
investment
 
securities
 
by
 
$17.9
 
million
 
due
 
to
 
higher
 
yields,
mainly in money markets;
partially offset by:
151
 
higher interest
 
expense on
 
deposits by
 
$27.3 million
 
mainly
 
due
 
to
 
higher interest
 
rates
 
and
 
higher average
balances.
 
The
 
net
 
interest
 
margin
 
for
 
the
 
quarter ended
 
September
 
30,
 
2024
 
was
 
2.73% compared
 
to
 
2.90%
 
for
 
the
 
same
 
quarter in
 
the
previous year driven by the higher cost of deposits.
 
An unfavorable variance of $6.1 million on the provision for loan losses reflecting a release of the reserve for credit losses
of
 
$4.4
 
million
 
for
 
the
 
third
 
quarter
 
of
 
2024
 
compared
 
to
 
a
 
release
 
of
 
$10.5
 
million
 
recorded
 
in
 
the
 
quarter
 
ended
September 30, 2023;
 
A favorable variance of $5.5 million in the reserve
 
for unfunded commitments, mainly related to
 
the construction portfolio;
 
 
Lower operating expenses by $18.9 million mostly
 
due to:
 
 
the
 
goodwill impairment
 
charge
 
related to
 
our U.S.
 
based leasing
 
subsidiary of
 
$23.0 million
 
recorded in
 
the
third
 
quarter of
 
2023, due
 
to
 
lower forecasted
 
cash flows
 
and
 
an increase
 
in the
 
rate used
 
to
 
discount cash
flows;
partially offset by
 
higher personnel costs and technology and software
 
expenses by $3.6 million;
 
Higher income tax expense by $7.1 million is related
 
to higher income before tax.
For the
 
nine months
 
ended September
 
30, 2024,
 
the reportable
 
segment of
 
Popular U.S.
 
recorded a
 
net income
 
of $53.6
 
million,
compared with a net income of $51.3 million for the same period of the previous year.
 
The factors that contributed to the variance in
the financial results included the following:
 
Lower net interest income by $1.2 million due
 
to:
 
higher interest
 
expense on
 
deposits by
 
$114.6
 
million mainly
 
due to
 
higher interest
 
rates and
 
higher average
balance;
partially offset by
 
higher interest
 
income from
 
loans by
 
$61.0 million,
 
mainly from
 
growth in
 
the commercial
 
portfolio as
 
well as
higher yields due to higher rates; and
 
higher interest income
 
from money market
 
and investment securities
 
by $49.6 million
 
due to higher
 
yields and
higher average balance.
The net interest margin for
 
the nine months ended September
 
30, 2024 was 2.64% compared to
 
3.08% for the same quarter
 
in the
previous year.
 
An unfavorable variance of $3.8 million
 
on the provision for loan losses reflecting
 
a release mainly due to the reduction
 
in
reserves in 2023
 
due to the
 
implementation of a
 
new model, based
 
on more granular
 
regional performance, for
 
the U.S.
commercial real estate portfolio;
 
A favorable variance of $5.4 million in the reserve
 
for unfunded commitments, mainly related to
 
the construction portfolio;
 
Lower operating expenses by $8.0 million mostly
 
due to:
 
 
the goodwill impairment
 
charge related to
 
our U.S. based
 
leasing subsidiary of
 
$23.0 million recorded in
 
2023,
due to lower forecasted cash flows and an increase
 
in the rate used to discount cash flows;
 
152
 
lower professional fees of
 
$4.0 million mainly due
 
to lower costs associated with
 
corporate initiatives and lower
legal fees;
partially offset by:
 
higher personnel costs by $2.1 million driven by
 
higher annual salary revisions and increase in headcount;
 
higher
 
technology
 
and
 
software
 
expenses
 
by
 
$5.5
 
million
 
mainly
 
due
 
to
 
higher
 
network
 
management
 
fees,
higher amortization of software costs and higher IT
 
consulting fees;
 
higher
 
other
 
operating
 
expense
 
by
 
$5.7
 
million
 
mainly
 
due
 
to
 
higher
 
charges
 
allocated
 
from
 
the
 
Corporate
segment group;
 
and
 
higher FDIC deposit insurance expense by $5.3
 
million mostly due to FDIC Special Assessment;
 
Higher income tax expense by $7.7 million due
 
to a higher net income before income tax.
FINANCIAL CONDITION ANALYSIS
 
Assets
The Corporation’s total assets were $71.3
 
billion at September 30, 2024,
 
compared to $70.8 billion at December
 
31, 2023. Refer to
the Consolidated Statements of Financial Condition
 
included in this report for additional information.
 
Money market investments and debt securities available-for-sale
 
and held-to-maturity
Money market investments decreased by
 
$468.1 million as of
 
September 30, 2024, when
 
compared to December 31,
 
2023, driven
by lower
 
deposits and
 
loan growth.
 
Debt securities available-for-sale
 
increased $457.1
 
million, mainly
 
due to
 
reinvestment of
 
U.S.
Treasury Securities
 
and the
 
decrease in
 
the unrealized
 
losses of
 
AFS securities
 
of $329.0 million.
 
Debt securities
 
held-to-maturity
decreased by
 
$328.7 million
 
driven by
 
maturities and
 
paydowns, partially
 
offset by
 
the accretion
 
of $133.8
 
million of
 
the discount
related to U.S. Treasury
 
securities previously reclassified from the
 
AFS to HTM.
 
Refer to Note 5
 
and to Note 6
 
to the Consolidated
Financial
 
Statements
 
for
 
additional
 
information
 
with
 
respect
 
to
 
the
 
Corporation’s
 
debt
 
securities
 
available-for-sale
 
and
 
held-to-
maturity.
 
153
Loans
Refer to Table
 
6 for a
 
breakdown of the Corporation’s
 
loan portfolio. Also, refer
 
to Note 7 in
 
the Consolidated Financial Statements
for detailed information about the Corporation’s loan portfolio
 
composition and loan purchases and sales.
 
Loans held-in-portfolio
 
increased by
 
$1.1 billion
 
to $36.2
 
billion as
 
of September
 
30, 2024,
 
compared to
 
December 31,
 
2023. The
BPPR portfolio increased by $1.2 billion, driven by the growth in the commercial, mortgage
 
and auto loan portfolios, and the PB loan
portfolio decreased by $0.1 billion, due in part
 
by commercial loans payoffs, offset by growth in the
 
construction loan portfolio.
The Corporation’s
 
$5.2 billion
 
non-owner occupied
 
commercial real
 
estate portfolio
 
is comprised
 
of $3.2
 
billion in
 
BPPR and
 
$2.0
billion in Popular U.S. and
 
is well diversified across a number
 
of tenants in different industries
 
and segments with exposure to retail
(34%
 
of
 
non-owner
 
occupied
 
CRE),
 
hotels
 
(19%)
 
and
 
office
 
space
 
(14%)
 
accounting
 
for
 
two
 
thirds
 
of
 
the
 
total
 
exposure.
 
The
approximate $708 million office space
 
exposure represents only 2.0% of
 
the total loan portfolio
 
and is comprised mainly of
 
mid-rise
properties with diversified tenants with average loan
 
size of $2 million across both BPPR and Popular
 
U.S.
Popular’s $2.4 billion commercial multi-family
 
portfolio represents approximately 7% of
 
total loans and is
 
concentrated in New York
Metro ($1.5
 
billion), South Florida ($698 million)
 
and Puerto Rico ($192
 
million). In the New York
 
Metro region, the Corporation has
no exposure to rent controlled buildings. The
 
rent stabilized units represent less than
 
40% of the total units in
 
the loan portfolio with
the majority originated after 2019.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
154
Table 6 - Loans Ending Balances
(In thousands)
September 30, 2024
December 31, 2023
Variance
 
Loans held-in-portfolio:
Commercial
 
 
Commercial multi-family
$
2,405,302
$
2,415,620
$
(10,318)
 
Commercial real estate non-owner occupied
5,185,381
5,087,421
97,960
 
Commercial real estate owner occupied
3,092,393
3,080,635
11,758
 
Commercial and industrial
7,400,553
7,126,121
274,432
Total Commercial
18,083,629
17,709,797
373,832
Construction
1,113,307
959,280
154,027
Leasing
1,887,052
1,731,809
155,243
Mortgage
7,993,348
7,695,917
297,431
Consumer
 
Credit cards
 
1,186,893
1,135,747
51,146
 
Home equity lines of credit
69,691
65,953
3,738
 
Personal
 
1,873,175
1,945,247
(72,072)
 
Auto
3,818,607
3,660,780
157,827
 
Other
169,265
160,441
8,824
Total Consumer
 
7,117,631
6,968,168
149,463
Total loans held-in
 
-portfolio
$
36,194,967
$
35,064,971
$
1,129,996
Loans held-for-sale:
 
Mortgage
$
5,509
$
4,301
$
1,208
Total loans held-for-sale
$
5,509
$
4,301
$
1,208
Total loans
$
36,200,476
$
35,069,272
$
1,131,204
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
155
Other assets
Other assets
 
amounted to
 
$1.8 billion
 
at September
 
30, 2024,
 
compared to
 
$2.0 billion
 
at December
 
31, 2023.
 
The decrease
 
in
other assets was
 
driven by unsettled
 
trade receivables related
 
to proceeds from
 
maturities of U.S.
 
Treasury securities
 
and interest
payments from
 
the fourth
 
quarter of
 
2023 which
 
were received
 
in the
 
first quarter
 
of 2024.
 
Refer to
 
Note 12
 
to the
 
Consolidated
Financial Statements
 
for a
 
breakdown of
 
the principal
 
categories that
 
comprise the
 
caption of
 
“Other Assets”
 
in the
 
Consolidated
Statements of Financial Condition at September 30,
 
2024 and December 31, 2023.
 
Liabilities
The
 
Corporation’s
 
total
 
liabilities
 
were
 
$65.5
 
billion
 
at
 
September
 
30,
 
2024,
 
a
 
decrease
 
of
 
$78.6
 
million,
 
when
 
compared
 
to
December 31, 2023. The following is a discussion
 
of the significant changes in liabilities.
Deposits and Borrowings
The composition of the Corporation’s financing to total assets
 
at September 30, 2024 and December 31,
 
2023 is included in Table 7.
Table 7 - Financing to Total
 
Assets
September 30,
December 31,
 
% increase (decrease)
 
% of total assets
(In millions)
2024
2023
from 2023 to 2024
2024
2023
Non-interest bearing core deposits
$
15,276
$
15,420
(0.9)
%
21.4
%
21.8
%
Interest-bearing core deposits
43,346
43,571
(0.5)
60.8
61.6
Interest-bearing other deposits
5,047
4,627
9.1
7.1
6.5
Repurchase agreements
55
91
(39.6)
0.1
0.1
Notes payable
919
987
(6.9)
1.3
1.4
Other liabilities
890
915
(2.7)
1.2
1.3
Stockholders’ equity
5,790
5,147
12.5
8.1
7.3
Total Deposits
The Corporation’s deposits totaled $63.7 billion as of
 
September 30, 2024, compared to $63.6 billion as
 
of December 31, 2023. An
increase in the P.R. public sector, as well as an increase in interest-bearing deposits, were the main drivers of the $0.1
 
billion
increase during the period.
 
Excluding
 
P.R
 
.
 
public
 
deposits,
 
as
 
of
 
September
 
30,
 
2024,
 
deposits
 
amounted
 
to
 
$45.0
 
billion,
 
compared
 
to
 
$45.6
 
billion
 
as
 
of
December
 
31,
 
2023.
 
This
 
$0.6
 
billion
 
decrease
 
includes
 
a
 
reduction
 
of
 
approximately
 
$0.9
 
billion
 
in
 
low-cost
 
interest-bearing
deposits, partially offset by a $0.5 billion increase
 
in higher cost interest-bearing deposits, mainly related to time deposits in Popular
Bank.
 
In BPPR, deposit
 
balances, excluding P.R
 
public funds, have been
 
impacted during 2023 and
 
2024 by outflows driven
 
by changes
in client
 
behavior,
 
mainly by
 
commercial and
 
affluent retail
 
clients seeking
 
products that
 
provide for
 
high rates
 
in the
 
current rate
environment, along with significant spending and use
 
of balances including the retail client base, which
 
had experienced an increase
in average deposit balances during the pandemic driven by federal incentives. Notwithstanding this decrease, average retail deposit
balances at BPPR are still higher than pre-pandemic
 
levels.
As
 
of
 
September
 
30,
 
2024,
 
the
 
Puerto
 
Rico
 
public
 
sector
 
deposits
 
amounted
 
to
 
$18.7
 
billion,
 
compared
 
to
 
$18.1
 
billion
 
as
 
of
December 31, 2023.
Approximately 29% of the Corporation’s deposits as of September 30, 2024 are funds deposited by the Government of Puerto Rico,
municipalities and government
 
instrumentalities and corporations. P.R
 
public sector deposit
 
costs are indexed
 
to changes in
 
short-
term market
 
rates with
 
a one-quarter lag,
 
in accordance with
 
contractual terms.
 
During the second
 
quarter of
 
2024, approximately
$800 million of low-cost government-related accounts
 
managed by our fiduciary services group were
 
repriced to market-linked rates.
156
Fluctuations of public sector deposit balances are uncertain
 
and difficult to predict. Factors that could impact these
 
balances include,
but are not limited to, the receipt
 
of funds by the Puerto Rico Government from federal
 
disaster funding assistance (i.e. hurricane or
pandemic related funds) and other events such as seasonal tax collections, actions resulting
 
from changes in the financial condition,
liquidity
 
and
 
cash
 
management practices
 
of
 
the
 
Puerto
 
Rico
 
Government and
 
its
 
instrumentalities, and/or
 
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”).
 
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 public deposits at BPPR and the proportion of high-cost deposits in the U.S, directly impact the balance and
mix of earning assets and therefore represent a
 
key factor in the Corporation’s ability to expand its
 
net interest margin.
 
Refer to Table 8 for a breakdown of the Corporation’s deposits at September 30, 2024 and
 
December 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
157
Table 8 - Deposits Ending Balances
(In thousands)
September 30, 2024
December 31, 2023
Variance
Deposits excluding P.R.
 
government deposits:
 
Demand deposits
 
[1]
$
15,276,071
$
15,419,624
$
(143,553)
 
Savings, NOW and money market deposits (non-brokered)
20,584,328
21,541,261
(956,933)
 
Savings, NOW and money market deposits (brokered)
735,231
719,453
15,778
 
Time deposits (non-brokered)
7,363,477
6,914,035
449,442
 
Time deposits (brokered CDs)
993,522
955,754
37,768
Sub-total deposits excluding P.R.
 
government
 
deposits
44,952,629
45,550,127
(597,498)
P.R. government
 
deposits:
 
Demand deposits
11,088,511
12,159,430
(1,070,919)
 
Savings, NOW and money market deposits (non-brokered)
6,903,370
5,276,583
1,626,787
 
Time deposits (non-brokered)
723,991
632,103
91,888
Sub-total P.R.
 
government
 
deposits
18,715,872
18,068,116
647,756
Total deposits
$
63,668,501
$
63,618,243
$
50,258
[1] Includes interest and non-interest bearing demand deposits.
 
Borrowings
The
 
Corporation’s
 
borrowings
 
totaled
 
$1.0
 
billion
 
at
 
September
 
30,
 
2024
 
compared
 
to
 
$1.1
 
billion
 
at
 
December
 
31,
 
2023.
 
The
decrease was mainly due
 
to lower assets sold
 
under agreements to repurchase and
 
lower advances from the
 
FHLB. Refer to Note
15 to
 
the Consolidated
 
Financial Statements
 
for detailed
 
information on
 
the Corporation’s
 
borrowings. Also,
 
refer to
 
the Liquidity
section in this MD&A for additional information
 
on the Corporation’s funding sources.
Refer to the Liquidity section in this MD&A for additional
 
information on the Corporation’s funding sources.
Stockholders’ Equity
Stockholders’ equity
 
totaled $5.8
 
billion
 
at September
 
30, 2024,
 
an increase
 
of
 
$643.6 million
 
when compared
 
to
 
December 31,
2023, principally due to net income for the nine months ended September 30, 2024 of $436.4 million, coupled with the
 
change in the
accumulated other comprehensive loss
 
driven by the
 
decrease in net
 
unrealized losses in
 
the portfolio of
 
AFS securities of
 
$272.0
million
 
and
 
the
 
amortization
 
of
 
unrealized
 
losses
 
from
 
securities
 
previously
 
reclassified
 
to
 
HTM
 
of
 
$107.0
 
million,
 
net
 
of
 
taxes,
partially offset
 
by common
 
and preferred
 
dividends declared
 
during the
 
nine months
 
ended September 30,
 
2024 of
 
$135.4 million
and by an
 
increase in Treasury
 
Stock due to
 
the repurchases of 599,096
 
shares of common stock
 
for $58.8 million
 
during the third
quarter
 
of
 
2024
 
as
 
part
 
of
 
the
 
previously
 
announced
 
$500
 
million
 
share
 
repurchase
 
authorization.
 
Refer
 
to
 
the
 
Consolidated
Statements
 
of
 
Financial
 
Condition,
 
Comprehensive
 
Income
 
and
 
of
 
Changes
 
in
 
Stockholders’
 
Equity
 
for
 
information
 
on
 
the
composition of stockholders’ equity.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
158
CAPITAL
Regulatory Capital
The Corporation, BPPR and PB
 
are subject to regulatory capital
 
requirements established by the Federal Reserve Board.
 
The risk-
based
 
capital
 
standards
 
applicable
 
to
 
the
 
Corporation,
 
BPPR
 
and
 
PB
 
(“Basel
 
III
 
capital
 
rules”)
 
are
 
based
 
on
 
the
 
final
 
capital
framework for strengthening international capital standards, known
 
as Basel III, of the Basel Committee on Banking Supervision.
 
As
of September 30,
 
2024, the Corporation’s,
 
BPPR’s and PB’s
 
capital ratios continue
 
to exceed the
 
minimum requirements for being
“well-capitalized” under the Basel III capital rules.
 
The risk-based
 
capital ratios
 
presented in
 
Table
 
9,
 
which include
 
common equity
 
tier 1,
 
Tier
 
1 capital,
 
total capital
 
and leverage
capital as of September 30, 2024 and December
 
31, 2023.
Table 9 - Capital Adequacy
 
Data
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
September 30, 2024
 
 
December 31, 2023
 
Common equity tier 1 capital:
 
 
 
 
 
 
Common stockholders equity - GAAP basis
$
5,768,371
$
5,124,810
CECL transitional amount
 
[1]
42,376
84,751
AOCI related adjustments due to opt-out election
1,445,226
1,831,003
Goodwill, net of associated deferred tax liability (DTL)
(661,318)
(666,538)
Intangible assets, net of associated DTLs
(7,531)
(9,764)
Deferred tax assets and other deductions
 
(291,963)
(310,947)
Common equity tier 1 capital
$
6,295,161
$
6,053,315
Additional tier 1 capital:
Preferred stock
22,143
22,143
Additional tier 1 capital
$
22,143
 
$
22,143
Tier 1 capital
$
6,317,304
 
$
6,075,458
 
Tier 2 capital:
Trust preferred securities subject to phase in as
 
tier 2
192,674
192,674
Other inclusions (deductions), net
481,462
465,833
Tier 2 capital
$
674,136
$
658,507
Total risk-based capital
 
$
6,991,440
 
$
6,733,965
 
Minimum total capital requirement to be well capitalized
$
3,833,094
 
$
3,714,633
 
Excess total capital over minimum well capitalized
$
3,158,346
 
$
3,019,332
 
Total risk-weighted
 
assets
$
38,330,941
 
$
37,146,330
 
Total assets for leverage
 
ratio
$
72,835,384
 
$
71,353,184
 
Risk-based capital ratios:
 
 
 
 
 
 
Common equity tier 1 capital
16.42
%
16.30
%
 
Tier 1 capital
 
 
16.48
 
16.36
 
Total capital
 
18.24
 
 
18.13
 
 
Tier 1 leverage
 
8.67
 
 
8.51
 
[1] The CECL transitional amount includes the impact
 
of Popular's adoption of the new CECL accounting standard
 
on January 1, 2020.
159
The Basel
 
III capital rules
 
provide that a
 
depository institution is
 
deemed to be
 
well capitalized if
 
it maintains a
 
leverage ratio of
 
at
least 5%,
 
a common equity
 
Tier 1
 
ratio of
 
at least 6.5%,
 
a Tier
 
1 capital ratio
 
of at least
 
8% and a
 
total risk-based
 
ratio of at
 
least
10%.
 
The
 
Corporation,
 
BPPR
 
and
 
PB
 
leverage
 
ratio,
 
common
 
equity
 
Tier
 
1
 
ratio
 
and
 
Tier
 
1
 
capital
 
ratio,
 
respectively
 
as
 
of
September 30, 2024, continue to exceed the minimum
 
requirements for being “well-capitalized” under
 
the Basel III capital rules.
 
Pursuant
 
to
 
the
 
adoption
 
of
 
the
 
CECL
 
accounting
 
standard
 
on
 
January
 
1,
 
2020,
 
the
 
Corporation
 
elected
 
to
 
use
 
the
 
five-year
transition
 
period option
 
as
 
provided in
 
the
 
final
 
interim
 
regulatory capital
 
rules effective
 
March 31,
 
2020.
 
The
 
five-year
 
transition
period provision delayed for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period
to phase
 
out the aggregate
 
amount of
 
the capital benefit
 
provided during the
 
initial two-year delay.
 
As of September
 
30, 2024, the
Corporation had phased-in 75% of
 
the cumulative CECL deferral with
 
the remaining impact to
 
be recognized over the
 
remainder of
the three-year transition period.
The
 
increase
 
in
 
the
 
common
 
equity
 
Tier
 
I
 
capital
 
ratio,
 
Tier
 
I
 
capital
 
ratio,
 
and
 
total
 
capital
 
ratio
 
as
 
of
 
September
 
30,
 
2024
 
as
compared to December 31, 2023 was mainly
 
due to the nine months period earnings,
 
partially offset by higher risk weighted
 
assets
driven by
 
the increase
 
in loans
 
held-in-portfolio. The
 
increase in
 
the leverage
 
capital ratio
 
was mainly
 
due to
 
the period
 
earnings,
partially offset by higher average assets.
Reconciliation to Tangible Common Equity and Tangible Assets
Table
 
10 provides
 
a reconciliation of
 
total stockholders’ equity
 
to tangible common
 
equity and total
 
assets to tangible
 
assets
 
as of
September 30, 2024, and December 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
160
Table 10 - Reconciliation
 
of Tangible Common Equity
 
and Tangible Assets
(In thousands, except share or per share information)
September 30, 2024
December 31, 2023
Total stockholders’
 
equity
$
5,790,514
$
5,146,953
Less: Preferred stock
(22,143)
(22,143)
Less: Goodwill
(804,428)
(804,428)
Less: Other intangibles
(7,531)
(9,764)
Total tangible common
 
equity
$
4,956,412
$
4,310,618
Total assets
 
$
71,323,074
$
70,758,155
Less: Goodwill
(804,428)
(804,428)
Less: Other intangibles
(7,531)
(9,764)
Total tangible assets
$
70,511,115
$
69,943,963
Tangible common
 
equity to tangible assets
7.03
%
6.16
%
Common shares outstanding at end of period
71,787,349
72,153,621
Tangible book value
 
per common share
$
69.04
$
59.74
Quarterly average
Total stockholders’
 
equity [1]
$
6,460,517
$
6,072,871
Average unrealized (gains) losses on AFS securities
 
transferred to HTM
 
550,971
683,077
Adjusted total stockholder's equity
7,011,488
6,755,948
Less: Preferred Stock
(22,143)
(22,143)
Less: Goodwill
(804,427)
(804,427)
Less: Other intangibles
(7,995)
(10,286)
Total tangible common
 
equity
$
6,176,923
$
5,919,092
Return on average tangible common equity
9.98
%
6.32
%
 
[1] Average balances exclude unrealized gains or
 
losses on debt securities available-for-sale.
 
161
RISK MANAGEMENT
Market / Interest Rate Risk
The financial results and capital levels of the
 
Corporation are constantly exposed to market, interest
 
rate and liquidity risks.
Market risk
 
refers to the
 
risk of a
 
reduction in the
 
Corporation’s capital due
 
to changes in
 
the market valuation
 
of its assets
 
and/or
liabilities.
 
Most of the assets
 
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-for-sale
 
amounted
 
to
 
$17.2
 
billion
 
and
 
$7.9
 
billion,
 
respectively,
 
as
 
of
September
 
30,
 
2024.
 
Other
 
assets
 
subject
 
to
 
market
 
risk
 
include
 
loans
 
held-for-sale,
 
which
 
amounted
 
to
 
$6
 
million,
 
mortgage
servicing rights (“MSRs”) which amounted to $109
 
million, and securities classified as “trading”, which
 
amounted to $31 million, as of
September 30, 2024.
 
Interest Rate Risk (“IRR”)
The Corporation’s net interest income is subject
 
to various categories of interest rate risk,
 
including repricing, basis, yield curve and
option risks.
 
In managing
 
interest rate
 
risk, management may
 
alter the
 
mix of
 
floating and
 
fixed rate
 
assets and
 
liabilities, change
pricing
 
schedules,
 
adjust
 
maturities
 
through
 
sales
 
and
 
purchases
 
of
 
investment
 
securities,
 
and
 
enter
 
into
 
derivative
 
contracts,
among other alternatives.
 
Interest
 
rate
 
risk
 
management
 
is
 
an
 
active
 
process
 
that
 
encompasses
 
monitoring
 
loan
 
and
 
deposit
 
flows
 
complemented
 
by
investment and funding
 
activities. Effective management of
 
interest rate risk begins
 
with understanding the dynamic
 
characteristics
of assets and
 
liabilities and determining the
 
appropriate rate risk position
 
given line of
 
business forecasts, management objectives,
market expectations and policy constraints.
Management utilizes various tools to assess IRR, including Net Interest
 
Income (“NII”) simulation modeling, static gap analysis, and
Economic Value
 
of Equity
 
(“EVE”). The
 
three methodologies
 
complement each
 
other and
 
are used
 
jointly in
 
the evaluation
 
of the
Corporation’s IRR. NII
 
simulation modeling is
 
prepared for a
 
five-year period, which
 
in conjunction with
 
the EVE analysis,
 
provides
management a better view of long-term IRR.
Net interest
 
income simulation analysis
 
performed by legal
 
entity and on
 
a consolidated basis
 
is a
 
tool used
 
by the
 
Corporation in
estimating the
 
potential change
 
in net
 
interest income
 
resulting from
 
hypothetical changes
 
in interest
 
rates. Sensitivity
 
analysis is
calculated using a simulation model which incorporates
 
actual balance sheet figures detailed by maturity
 
and interest yields or costs.
 
Management assesses
 
interest rate
 
risk by
 
comparing various
 
NII simulations
 
under different
 
interest rate
 
scenarios that
 
differ in
direction of interest
 
rate changes, the
 
degree of change
 
and the projected
 
shape of the
 
yield curve. For
 
example, the types
 
of rate
scenarios processed during the
 
quarter include flat rates,
 
implied forwards, and parallel
 
and non-parallel rate shocks.
 
Management
also performs analyses to isolate and measure basis
 
and prepayment risk exposures.
 
The asset
 
and liability
 
management group
 
performs validation
 
procedures on
 
various assumptions
 
used as
 
part of
 
the simulation
analyses as well as validations
 
of results on a
 
monthly basis. In addition, the
 
model and processes used to
 
assess IRR are subject
to independent validations according to the guidelines
 
established in the Model Governance and
 
Validation policy.
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. Simulation analyses
 
are based on
many assumptions,
 
including that
 
the balance
 
sheet remains
 
flat, the
 
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. Further, the estimates do not
 
contemplate actions that management could take to respond to changes in
interest rates. Additionally, the Corporation is also subject to basis risk in the repricing of its assets and liabilities, including the basis
related to
 
using different
 
rate indexes
 
for the
 
repricing of
 
assets and
 
liabilities, as
 
well as
 
the effect
 
of pricing
 
lags which
 
may be
contractual
 
or
 
due to
 
historical differences
 
in the
 
timing
 
of
 
management responses
 
to
 
changes in
 
the rate
 
environment. By
 
their
nature, these forward-looking computations are only estimates and may be different from
 
what may actually occur in the future. The
following table
 
presents the
 
results of
 
the simulations
 
at September
 
30, 2024
 
and December
 
31, 2023,
 
assuming a
 
static balance
sheet and parallel changes over flat spot rates over
 
a one-year time horizon:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
162
Table 11
 
- Net Interest Income Sensitivity (One Year
 
Projection)
September 30, 2024
December 31, 2023
(Dollars in thousands)
Amount Change
Percent Change
Amount Change
Percent Change
Change in interest rate
+200 basis points
37,814
1.60
20,822
0.92
+100 basis points
20,577
0.87
11,496
0.51
-100 basis points
10,734
0.46
19,589
0.87
-200 basis points
1,617
0.07
16,971
0.75
As
 
of
 
September
 
30,
 
2024,
 
NII
 
simulations
 
show
 
the
 
Corporation
 
maintains
 
an
 
asset
 
sensitive
 
position
 
that
 
is
 
slightly
 
more
pronounced in the rising rates scenarios and closer to neutral
 
in the declining scenarios as compared to the results as
 
of December
31,
 
2023.
 
The
 
primary
 
reasons
 
for
 
the
 
variation
 
in
 
sensitivity
 
are
 
changes
 
in
 
balance
 
sheet
 
composition
 
primarily
 
driven
 
by
 
an
increase in short-term U.S Treasury
 
Bills (“T-
 
Bills”) as well as
 
higher loan balances, partially offset
 
by an increase in market-linked
Puerto
 
Rico
 
public
 
sector
 
deposits
 
and
 
a
 
reduction
 
in
 
overnight
 
Fed
 
Funds.
 
These
 
results
 
suggest
 
that
 
fluctuations
 
in
 
the
Corporation’s net interest income sensitivity are primarily driven by changes in the composition of the investment portfolio as well as
the
 
level
 
of
 
loan
 
balances.
 
During
 
the
 
quarter
 
ended
 
on
 
September
 
30,
 
2024,
 
the
 
Corporation
 
began
 
to
 
reinvest
 
some
 
of
 
the
proceeds of the
 
maturing portfolio into U.S
 
Treasury Notes with
 
average maturities between 2
 
to 3 years.
 
Additionally, variations
 
in
liability
 
cost,
 
primarily
 
driven
 
by
 
Puerto
 
Rico
 
public
 
sector
 
deposits
 
that
 
represented
 
$18.7
 
billion
 
or
 
29%
 
of
 
deposits
 
as
 
of
September 30,
 
2024, as
 
well as
 
changes in
 
the composition
 
and mix
 
of deposits,
 
also
 
impact the
 
sensitivity profile.
 
In the
 
more
extreme declining rate scenarios, net interest income would be affected as the repricing of short-term assets and variable rate loans
slightly
 
exceeds
 
the
 
benefit
 
in
 
cost
 
reduction
 
of
 
these
 
deposits.
 
In
 
rising
 
rate
 
scenarios,
 
Popular’s
 
net
 
interest
 
income
 
is
 
also
impacted by its large proportion
 
of Puerto Rico public sector
 
deposit, however the repricing of assets
 
as they either reset
 
or mature
lead to an increase in net interest income.
The Corporation’s
 
loan and
 
investment portfolios
 
are subject
 
to
 
prepayment risk,
 
which results
 
from the
 
ability of
 
a third-party
 
to
repay debt
 
obligations prior
 
to maturity.
 
Prepayment risk
 
also could
 
have a
 
significant impact
 
on the
 
duration of
 
mortgage-backed
securities
 
and
 
collateralized
 
mortgage
 
obligations
 
since
 
prepayments
 
could
 
shorten
 
(or
 
lower
 
prepayments
 
could
 
extend)
 
the
weighted average life of these portfolios.
Trading
 
The Corporation
 
engages in
 
trading activities
 
in the
 
ordinary course
 
of business
 
at its
 
subsidiaries, BPPR
 
and Popular
 
Securities.
Popular Securities’
 
trading activities
 
consist primarily
 
of market-making
 
activities to
 
meet expected
 
customers’ needs
 
related to
 
its
retail brokerage business,
 
and purchases and sales of U.S. Government and
 
government sponsored securities with the objective of
realizing gains
 
from expected
 
short-term price
 
movements. BPPR’s
 
trading activities consist
 
primarily of
 
holding U.S.
 
Government
sponsored
 
mortgage-backed securities
 
classified
 
as
 
“trading” and
 
hedging
 
the
 
related
 
market
 
risk
 
with
 
“TBA”
 
(to-be-announced)
market
 
transactions.
 
The
 
objective
 
is
 
to
 
derive
 
spread
 
income
 
from
 
the
 
portfolio
 
and
 
not
 
to
 
benefit
 
from
 
short-term
 
market
movements. In
 
addition, BPPR
 
uses forward
 
contracts or
 
TBAs to
 
hedge its
 
securitization pipeline.
 
Risks related
 
to variations
 
in
interest rates
 
and market volatility
 
are hedged
 
with TBAs
 
that have
 
characteristics similar to
 
that of
 
the forecasted security
 
and its
conversion timeline.
At September 30, 2024, the Corporation held trading securities
 
with a fair value of $31 million, representing approximately 0.04%
 
of
the Corporation’s total assets, compared with $32 million and
 
0.05%, respectively, at December 31, 2023. As shown in Table 12, the
trading
 
portfolio
 
consists
 
principally
 
of
 
mortgage-backed
 
securities
 
and
 
U.S.
 
Treasuries,
 
which
 
at
 
September
 
30,
 
2024
 
were
investment grade securities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
163
Table 12 - Trading
 
Portfolio
September 30, 2024
December 31, 2023
(Dollars in thousands)
Amount
 
Weighted
Average Yield
[1]
Amount
Weighted
Average Yield
[1]
Mortgage-backed securities
 
$
22,807
5.65
%
$
14,373
5.69
%
U.S. Treasury securities
7,685
3.94
16,859
4.29
Collateralized mortgage obligations
132
5.13
98
5.21
Puerto Rico government obligations
58
0.58
71
0.91
Interest-only strips
 
154
12.00
167
12.00
Other (includes related trading derivatives)
7
6.00
-
-
Total
 
$
30,843
5.24
%
$
31,568
4.96
%
[1] Not on a taxable equivalent basis.
The Corporation’s trading activities are limited by internal policies.
 
For each of the three subsidiaries, the market risk
 
assumed under
trading
 
activities
 
is
 
measured
 
by
 
the
 
5-day
 
net
 
value-at-risk
 
(“VAR”),
 
with
 
a
 
confidence
 
level
 
of
 
99%.
 
The
 
VAR
 
measures
 
the
maximum estimated loss that may occur over a
 
5-day holding period, given a 99% probability.
 
The Corporation’s trading portfolio had a 5-day VAR of approximately $0.5 million for the last week in September 2024.
 
VAR models
include
 
assumptions and
 
estimates thus
 
actual
 
results could
 
differ
 
from
 
the
 
outputs from
 
these
 
models
 
and
 
assumptions. Back-
testing is performed on model
 
results to compare actual results
 
against maximum estimated losses, in order
 
to evaluate model and
assumptions accuracy.
 
In the opinion of management, the size and composition
 
of the trading portfolio does not represent
 
a significant source of market risk
for the Corporation.
Liquidity Sources and Risk
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. The Board
 
of Directors
 
is responsible
 
for establishing the
 
Corporation’s
tolerance for liquidity risk,
 
including approving relevant risk limits and
 
policies. The Board of
 
Directors has delegated the monitoring
of these risks to the Board’s Risk Management Committee
 
and the Asset/Liability Management Committee.
 
An
 
institution’s liquidity
 
may be
 
pressured if,
 
for example,
 
it experiences
 
a sudden
 
and unexpected
 
substantial cash
 
outflow due
deposit
 
outflows,
 
whether due
 
to
 
a
 
loss
 
of confidence
 
by
 
depositors, or
 
other
 
reasons, including
 
exogenous events
 
such
 
as
 
the
COVID-19 pandemic,
 
a downgrading
 
of its
 
credit rating,
 
or some
 
other event
 
that causes
 
counterparties to
 
avoid exposure
 
to the
institution. Factors
 
that the
 
Corporation does
 
not control,
 
such
 
as the
 
economic outlook,
 
adverse ratings
 
of its
 
principal markets,
perceptions of the financial services industry and regulatory
 
changes, could also affect its ability to obtain
 
funding.
 
The Corporation
 
has adopted
 
policies and
 
limits to
 
monitor the
 
Corporation’s liquidity
 
position and
 
that of
 
its banking
 
subsidiaries.
Additionally,
 
contingency funding
 
plans are
 
used to
 
model various
 
stressful events
 
of different
 
magnitudes and
 
affecting different
time horizons
 
that assist
 
management in
 
evaluating the size
 
of the
 
liquidity buffers
 
needed if
 
those stress
 
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.
Deposits, including
 
customer deposits,
 
brokered deposits
 
and public
 
funds deposits,
 
continue to
 
be the
 
most significant
 
source of
funds for
 
the Corporation,
 
funding 89%
 
of the
 
Corporation’s total
 
assets at
 
September 30,
 
2024 and
 
90% at
 
December 31,
 
2023.
 
The
 
ratio
 
of
 
total
 
ending
 
loans
 
to
 
deposits
 
was
 
57%
 
at
 
September
 
30,
 
2024
 
and
 
55%
 
at
 
December
 
31,
 
2023.
 
In
 
addition
 
to
traditional deposits, the Corporation maintains borrowing
 
arrangements, which amounted to approximately
 
$1.0 billion in outstanding
balances
 
at
 
September
 
30,
 
2024
 
(December
 
31,
 
2023
 
-
 
$1.1
 
billion).
 
A
 
detailed
 
description
 
of
 
the
 
Corporation’s
 
borrowings,
including their terms,
 
is included in
 
Note 15
 
to the
 
Consolidated Financial Statements.
 
Also, the
 
Consolidated Statements of
 
Cash
Flows in the accompanying Consolidated Financial
 
Statements provide information on the Corporation’s cash
 
inflows and outflows.
 
 
164
The importance of
 
the Puerto Rico
 
market for the
 
Corporation is an
 
additional risk factor
 
that could affect
 
its financing activities.
 
In
the case
 
of a
 
deterioration in
 
the outlook
 
and/or credit
 
ratings of
 
its principal
 
markets and/or
 
due to
 
regulatory changes
 
and fiscal
conditions in
 
Puerto Rico
 
that are
 
outside the
 
control of
 
the Corporation,
 
the credit
 
quality of
 
the Corporation
 
could be
 
adversely
affected and result in higher credit costs. These adverse
 
events could also affect the Corporation’s ability to obtain
 
funding.
To
 
plan for the possibility of
 
such a scenario, management adopted contingency
 
plans to address events that could
 
limit or partially
limit important
 
sources of
 
funds that
 
are usually
 
fully available
 
for use.
 
These plans
 
call for
 
using alternate
 
funding mechanisms,
such as the
 
pledging of certain
 
asset classes and accessing
 
secured credit lines
 
and loan facilities
 
put in place
 
with the FHLB
 
and
the
 
FRB. The
 
Corporation is
 
subject to
 
positive tangible
 
capital
 
requirements to
 
utilize secured
 
loan facilities
 
with the
 
FHLB that
could
 
result
 
in
 
a
 
limitation
 
of
 
borrowing
 
amounts
 
or
 
maturity
 
terms,
 
even
 
if
 
the
 
Corporation
 
exceeds
 
well-capitalized
 
regulatory
capital levels.
 
The credit
 
ratings of
 
Popular’s debt
 
obligations are
 
a relevant
 
factor for
 
liquidity because
 
they impact
 
the Corporation’s
 
ability to
borrow
 
in
 
the
 
capital
 
markets,
 
its
 
cost
 
and
 
access
 
to
 
funding
 
sources.
 
Credit
 
ratings
 
are
 
based
 
on
 
the
 
financial
 
strength,
 
credit
quality and
 
concentrations in
 
the loan
 
portfolio, the
 
level and
 
volatility of
 
earnings, capital
 
adequacy,
 
the quality
 
of management,
geographic concentration
 
in Puerto
 
Rico, the
 
liquidity of
 
the balance
 
sheet, the
 
availability of
 
a significant
 
base of
 
core retail
 
and
commercial deposits, and the Corporation’s ability to access
 
a broad array of wholesale funding sources,
 
among other factors.
 
Furthermore,
 
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 combined net income for that year
and the retained net income for
 
the preceding two years, net of
 
those years’ dividend activity,
 
less any required transfers to surplus
or to a
 
fund for the
 
retirement of any
 
preferred stock. 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. The ability of
 
a bank subsidiary to up-stream dividends to
its BHC
 
could thus
 
be impacted
 
by its
 
financial performance
 
and capital,
 
including tangible
 
and regulatory
 
capital, thus
 
potentially
limiting the
 
amount of
 
cash moving
 
up to
 
the BHCs
 
from
 
the banking
 
subsidiaries. This
 
could,
 
in turn,
 
affect
 
the BHCs
 
ability to
declare
 
dividends
 
on
 
its
 
outstanding
 
common
 
and
 
preferred
 
stock,
 
repurchase
 
its
 
securities
 
or
 
meet
 
its
 
debt
 
obligations,
 
for
example.
The
 
following
 
sections
 
provide
 
further
 
information
 
on
 
the
 
Corporation’s
 
major
 
funding
 
activities
 
and
 
needs,
 
as
 
well
 
as
 
the
 
risks
involved in these activities.
Banking Subsidiaries
Primary
 
sources of
 
funding
 
for the
 
Corporation’s
 
banking subsidiaries
 
(BPPR and
 
PB
 
or,
 
collectively,
 
“the banking
 
subsidiaries”)
include
 
retail,
 
commercial
 
and
 
public
 
sector
 
deposits,
 
brokered
 
deposits,
 
unpledged
 
investment
 
securities,
 
mortgage
 
loan
securitization and, to a lesser extent, loan sales.
 
Refer to Table 8 in this MD&A section 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
 
that
 
are
 
fully
 
collateralized,
 
have
 
historically
provided the Corporation
 
with a sizable source
 
of low-cost funds. P.R.
 
public funds, while
 
linked to market
 
interest rates, provide
 
a
stable source of funding
 
with attractive earnings spread. Core
 
deposits totaled $60.3 billion, or
 
95% of total deposits,
 
at September
30,
 
2024,
 
compared
 
with
 
$59.0
 
billion,
 
or
 
93%
 
of
 
total
 
deposits,
 
at
 
December
 
31,
 
2023.
 
Core
 
deposits
 
financed
 
89%
 
of
 
the
Corporation’s earning assets at September 30, 2024, compared
 
with 88% at December 31, 2023.
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 third quarter of 2024 the
 
Corporation had no material incremental use of its
 
available liquidity sources. At September 30,
2024, the Corporation’s available liquidity increased to
 
$ 20.5 billion from $19.5 billion
 
on December 31, 2023. The liquidity sources
of the Corporation at September 30, 2024 are
 
presented in Table 13 below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
165
Table 13 - Liquidity Sources
September 30, 2024
December 31, 2023
(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)
$
4,731,444
$
1,791,310
$
6,522,754
$
5,516,636
$
1,475,143
$
6,991,779
Unpledged securities
3,522,169
659,633
4,181,802
4,212,480
347,791
4,560,271
FHLB borrowing capacity
2,648,539
1,322,807
3,971,346
2,157,685
1,341,329
3,499,014
Discount window of the Federal Reserve
Bank borrowing capacity
3,536,149
2,282,798
5,818,947
2,605,674
1,818,946
4,424,620
Total available liquidity
$
14,438,301
$
6,056,548
$
20,494,849
$
14,492,475
$
4,983,209
$
19,475,684
Refer
 
to
 
Note
 
15
 
to
 
the
 
Consolidated
 
Financial
 
Statements
 
for
 
additional
 
information
 
of
 
the
 
Corporation’s
 
borrowing
 
facilities
available through its banking subsidiaries.
 
The principal
 
uses of
 
funds for
 
the banking
 
subsidiaries include
 
loan originations,
 
investment portfolio
 
purchases, loan
 
purchases
and repurchases, repayment of outstanding obligations (including deposits), advances on certain serviced portfolios and operational
expenses. Also, the
 
banking subsidiaries assume liquidity
 
risk related to collateral
 
posting requirements for certain
 
activities mainly
in
 
connection
 
with
 
contractual
 
commitments,
 
recourse
 
provisions,
 
servicing
 
advances,
 
derivatives
 
and
 
credit
 
card
 
licensing
agreements.
 
The banking
 
subsidiaries maintain
 
sufficient funding
 
capacity to
 
address large
 
increases in
 
funding requirements
 
such as
 
deposit
outflows.
 
The
 
Corporation has
 
established
 
liquidity
 
guidelines
 
that
 
require
 
the
 
banking
 
subsidiaries
 
to
 
have
 
sufficient
 
liquidity
 
to
cover all short-term borrowings and a portion of deposits.
 
The Corporation’s ability to compete
 
successfully in the marketplace for
 
deposits, excluding brokered deposits, depends on various
factors, including pricing, service, convenience
 
and financial stability as
 
reflected by operating results and
 
financial condition, credit
ratings (by
 
nationally recognized credit
 
rating agencies), customer
 
confidence, and
 
importantly,
 
FDIC deposit
 
insurance coverage.
Deposits at all of the Corporation’s banking subsidiaries are federally insured
 
(subject to FDIC limits) and this is expected to mitigate
the potential effect of the aforementioned risks.
The distribution by maturity
 
of certificates of deposit
 
with denominations of $250,000
 
and over at September
 
30, 2024 is
 
presented
in the table that follows:
Table 14 - Distribution by
 
Maturity of Certificates of Deposit of $250,000 and Over
(In thousands)
3 months or less
$
2,175,549
Over 3 to 12 months
908,450
Over 1 year to 3 years
198,615
Over 3 years
178,525
Total
$
3,461,139
The Corporation had
 
$1.7 billion in
 
brokered deposits at September
 
30, 2024, which
 
financed approximately
 
2% of its
 
total assets
(December 31, 2023 -
 
$1.7 billion and 2%,
 
respectively).
 
In the event that
 
any of the Corporation’s
 
banking subsidiaries’ regulatory
capital
 
ratios fall
 
below those
 
required by
 
a
 
well-capitalized institution
 
or
 
are
 
subject
 
to
 
capital
 
restrictions by
 
the
 
regulators, the
Corporation would be
 
at risk that
 
such banking subsidiary
 
would not be
 
able to raise
 
or maintain brokered deposits
 
and could also
face limitations
 
on the
 
rate paid
 
on deposits,
 
which may
 
hinder the
 
Corporation’s ability
 
to effectively
 
compete in
 
its retail
 
markets
and could affect its deposit raising efforts.
 
Deposits from the public sector
 
represent an important source of
 
funds for the Corporation.
 
As of September 30,
 
2024, total Puerto
Rico
 
public sector
 
deposits were
 
$18.7 billion,
 
compared to
 
$18.1 billion
 
at December
 
31, 2023.
 
These deposits
 
require that
 
the
 
 
166
bank pledges
 
high credit quality securities as collateral;
 
therefore, liquidity risks arising from public sector deposit outflows are lower
given
 
that
 
the
 
bank
 
receives
 
its
 
collateral
 
in
 
return.
 
This,
 
now
 
unpledged,
 
collateral
 
can
 
either
 
be
 
financed
 
via
 
repurchase
agreements
 
or
 
sold
 
for
 
cash.
 
However,
 
timing
 
differences
 
between the
 
time
 
the
 
deposit
 
outflow and
 
when the
 
bank
 
receives
 
its
collateral may occur. Additionally,
 
the Corporation uses fixed-rate U.S. Treasury
 
debt securities as collateral that have limited
 
credit
risk,
 
but
 
are
 
nonetheless
 
subject
 
to
 
market
 
value
 
risk
 
based
 
on
 
changes
 
in
 
the
 
interest
 
rate
 
environment.
 
When
 
interest
 
rates
increase, the value of this collateral decreases and could result in the Corporation having to provide additional collateral to cover the
same
 
amount
 
of
 
deposit
 
liabilities.
 
This
 
additional
 
collateral
 
could
 
reduce
 
unpledged
 
securities
 
otherwise
 
available
 
as
 
liquidity
sources to the Corporation.
 
As of September 30, 2024, management believes that 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.
 
Management also believes that
 
as of September
 
30, 2024 its
 
banking subsidiaries have sufficient
 
liquidity current and
projected
 
resources to
 
address an
 
event
 
that
 
would stress
 
the
 
Corporation’s liquidity
 
position. Although
 
the
 
banking subsidiaries
have
 
historically
 
been
 
able
 
to
 
replace
 
maturing
 
deposits
 
and
 
advances,
 
no
 
assurance can
 
be
 
given
 
that
 
they
 
would
 
be
 
able
 
to
replace
 
those
 
funds
 
in
 
the
 
future
 
if
 
the
 
Corporation’s
 
financial
 
condition
 
or
 
general
 
market
 
conditions
 
were
 
to
 
deteriorate.
 
The
Corporation’s financial flexibility will be severely constrained if the banking
 
subsidiaries are unable to maintain access to funding or if
adequate financing is not
 
available to accommodate future financing
 
needs at acceptable interest
 
rates. The Corporation’s banking
subsidiaries have to
 
meet margin requirements
 
on repurchase agreements
 
and other collateralized
 
borrowing facilities that
 
include
certain required
 
levels of
 
cash deposits
 
and qualifying
 
securities. To
 
the extent
 
that the
 
value of
 
securities previously
 
pledged as
collateral declines below such required
 
amounts because of market changes, the
 
Corporation is required to deposit additional
 
cash
or securities
 
to meet
 
its margin
 
requirements, thereby
 
adversely affecting
 
its liquidity.
 
Finally,
 
to the
 
extent the
 
Corporation relies
more heavily on more
 
expensive funding sources in order
 
to meet its future
 
growth, revenues may not
 
increase in a manner
 
that is
proportionate to cover these costs. In this case, the Corporation’s
 
profitability would be adversely effected.
The Corporation
 
monitors uninsured
 
deposits under
 
applicable FDIC
 
regulations.
 
Additionally,
 
the Corporation
 
monitors accounts
with balances over $250,000.
 
While the Corporation has a
 
diverse deposit base from retail, commercial,
 
corporate and government
clients,
 
as
 
well
 
as
 
wholesale funding
 
sources such
 
as
 
brokered deposits,
 
it
 
considers
 
balance
 
in
 
excess
 
of
 
$250,000 to
 
have a
higher
 
potential
 
liquidity
 
risk.
 
Table
 
15
 
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
 
15,
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.
 
On September
 
30, 2024,
 
deposits with
 
balances in
 
excess of
 
$250,000, excluding
 
foreign deposits
 
(mainly deposits
 
in the
 
British
Virgin Islands) intercompany deposits and collateralized public funds, were $9.8 billion or
 
19% at BPPR and $ 2.7 billion or
 
23% at
Popular U.S., compared to available liquidity sources
 
of $ 14.4 billion at BPPR and $ 6.1 billion
 
at Popular U.S.
The
 
aggregate
 
balance
 
in
 
deposit
 
accounts
 
under
 
$250,000
 
and
 
in
 
excess
 
of
 
$250,000,
 
including
 
intercompany
 
deposits.
collateralized public funds and deposits outside of the U.S. and its territories as of September 30, 2024 is presented in the table that
follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
167
Table 15 - Deposits
30-Sep-24
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits:
Deposits balances under $250,000 [1]
$
23,277,654
44
%
$
8,154,480
68
%
$
31,432,134
49
%
Transactional deposits balances over
$250,000
7,777,195
15
%
2,092,906
18
%
9,870,101
16
%
Time deposits balances over $250,000
1,976,234
4
%
647,223
5
%
2,623,457
4
%
Uninsured foreign deposits
406,713
1
%
-
-
%
406,713
1
%
Collateralized public funds
19,025,936
36
%
310,160
3
%
19,336,096
30
%
Intercompany deposits
237,328
-
%
686,292
6
%
-
-
%
Total deposits
$
52,701,060
100
%
$
11,891,061
100
%
$
63,668,501
100
%
[1] Includes the first $250,000 in balances of transactional
 
and time deposit accounts with balances in excess
 
of $250,000.
31-Dec-23
Popular, Inc.
(Dollars in thousands)
BPPR
% of Total
Popular U.S.
% of Total
(Consolidated)
% of Total
Deposits
Deposits balances under $250,000 [1]
$
23,683,475
45
%
$
7,760,363
69
%
$
31,443,838
49
%
Transactional deposits balances over
$250,000
8,632,491
16
%
2,230,978
20
%
10,863,469
17
%
Time deposits balances over $250,000
1,926,005
4
%
361,315
3
%
2,287,320
4
%
Uninsured foreign deposits
418,334
1
%
-
-
%
418,334
1
%
Collateralized public funds
18,313,612
34
%
291,670
3
%
18,605,282
29
%
Intercompany deposits
159,163
-
%
626,312
6
%
-
-
%
Total deposits
$
53,133,080
100
%
$
11,270,638
100
%
$
63,618,243
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 that are further described
 
below and 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,
 
and
 
interest
 
payments
 
to
 
holders
 
of
 
senior
 
debt
 
and
 
junior
subordinated
 
deferrable
 
interest
 
(related
 
to
 
trust
 
preferred
 
securities),
 
the
 
payment
 
of
 
dividends
 
to
 
common
 
stockholders,
repurchases of the Corporation’s securities and capitalizing its
 
banking subsidiaries.
 
On
 
July
 
24,
 
2024,
 
the
 
Corporation
 
announced
 
the
 
authorization
 
for
 
a
 
common
 
stock
 
repurchase
 
of
 
up
 
to
 
$500
 
million.
 
The
Corporation’s 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
 
Corporation’s capital
 
position and
 
financial performance,
 
the capital
 
impact of
strategic initiatives and regulatory and tax considerations. The common stock repurchase program does not
 
require the Corporation
to acquire
 
a specific
 
dollar amount
 
or number
 
of shares
 
and may
 
be modified,
 
suspended or
 
terminated at
 
any time
 
without prior
notice. During
 
the quarter
 
ended September
 
30, 2024,
 
the Corporation
 
completed the
 
repurchase of
 
599,096 shares
 
of common
stock
 
for
 
$58.8 million
 
at
 
an average
 
price
 
of
 
$98.11
 
per share,
 
under the
 
previously announced
 
$500 million
 
share
 
repurchase
authorization.
 
The
 
outstanding
 
balance
 
of
 
notes
 
payable
 
at
 
the
 
BHCs
 
amounted
 
to
 
$593
 
million
 
at
 
September
 
30,
 
2024
 
and
 
$592
 
million
 
at
December 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
168
The contractual maturities of the BHCs notes payable
 
at September 30, 2024 are presented in Table 16.
Table 16
 
- Distribution of BHC's Notes Payable by Contractual
 
Maturity
Year
(In thousands)
2028
$
394,915
Later years
198,366
Total
$
593,281
As of
 
September 30,
 
2024, the
 
BHCs had
 
cash and
 
money markets
 
investments totaling
 
$689 million
 
and borrowing
 
potential of
$165 million from its secured facility with BPPR.
 
The BHCs’
 
liquidity position continues to be adequate with sufficient cash
 
on hand,
investments and
 
other sources of
 
liquidity that are
 
expected to be
 
sufficient to
 
meet all
 
interest payments and
 
dividend obligations
for the foreseeable future.
 
Additionally, the Corporation’s
 
latest quarterly dividend was $0.62 per share
 
or approximately $45 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. The issuance of corporate debt as
 
a source of funding is likely more
 
costly due to the fact that
 
two out of the three
principal credit
 
rating agencies
 
rate the
 
Corporation below
 
“investment grade”,
 
which affects
 
the Corporation’s
 
cost
 
and ability
 
to
raise
 
funds
 
in
 
the
 
capital
 
markets.
 
Factors
 
that
 
the
 
Corporation
 
does
 
not
 
control,
 
such
 
as
 
the
 
economic
 
outlook,
 
interest
 
rate
volatility,
 
inflation, disruptions in
 
the debt market,
 
among others, could
 
also affect
 
its ability to
 
obtain funding. The
 
Corporation has
an
 
automatic
 
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. The liquidity needs
 
of the non-banking subsidiaries
 
are minimal since most
 
of them are
 
funded internally
from operating
 
cash flows
 
or from
 
intercompany borrowings or
 
capital contributions
 
from their
 
holding companies.
 
During the
 
nine
months
 
ended
 
September
 
30,
 
2024,
 
Popular,
 
Inc.
 
made
 
capital
 
contributions
 
of
 
$1.3
 
million
 
to
 
Popular
 
Impact
 
Fund,
 
its
 
wholly
owned subsidiary.
Dividends
During
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
declared
 
cash
 
dividends
 
of
 
$1.86
 
per
 
common
 
share
outstanding ($134.3 million in the aggregate). The dividends for the Corporation’s Series A preferred
 
stock amounted to $1.1 million.
On July 24, 2024, the corporation announced an increase in the Corporation’s quarterly common stock dividend from $0.62 to $0.70
per share, commencing with
 
the dividend payable in
 
the first quarter of
 
2025, subject to the
 
approval by the Corporation’s
 
Board of
Directors.
During the nine months
 
ended September 30, 2024, the
 
BHCs received dividends and
 
distributions amounting to $450 million
 
from
BPPR,
 
$50
 
million
 
from
 
PNA
 
and
 
$23
 
million
 
from
 
its
 
other
 
non-banking
 
subsidiaries. Dividends
 
from
 
BPPR
 
constitute
 
Popular,
Inc.’s primary
 
source of
 
liquidity.
 
In addition,
 
during the
 
nine months
 
ended September
 
30, 2024,
 
Popular International
 
Bank Inc.,
wholly
 
owned
 
subsidiary
 
of
 
Popular,
 
Inc.,
 
received
 
$19.4
 
million
 
in
 
cash
 
dividends
 
and
 
$2.9
 
million
 
in
 
stock
 
dividends
 
from
 
its
investment in BHD.
Other Funding Sources and Capital
In addition to cash reserves held at the FRB that totaled $ 6.5 billion
 
at September 30, 2024, the debt securities portfolio provides an
additional
 
source
 
of
 
liquidity,
 
which
 
may
 
be
 
realized
 
through
 
either
 
securities
 
sales,
 
collateralized
 
borrowings
 
or
 
repurchase
agreements.
 
The
 
Corporation’s
 
debt
 
securities
 
portfolio
 
consists
 
primarily
 
of
 
liquid
 
U.S.
 
government
 
debt
 
securities,
 
U.S.
government
 
sponsored
 
agency
 
debt
 
securities,
 
U.S.
 
government
 
sponsored
 
agency
 
mortgage-backed
 
securities,
 
and
 
U.S.
government
 
sponsored
 
agency
 
collateralized
 
mortgage
 
obligations
 
that
 
can
 
be
 
used
 
to
 
raise
 
funds
 
in
 
the
 
repo
 
markets.
 
The
availability
 
of
 
the
 
repurchase
 
agreement
 
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.
 
The
 
Corporation’s
unpledged debt
 
securities amounted
 
to
 
$ 4.2
 
billion at
 
September 30,
 
2024 and
 
$4.6 billion
 
December 31,
 
2023 as
 
discussed in
 
 
 
169
Table
 
13. 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 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
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. These
 
commitments may include
 
loan commitments and
 
standby letters of
 
credit. These commitments
 
are
subject
 
to
 
the
 
same
 
credit
 
policies
 
and
 
approval
 
process
 
used
 
for
 
on-balance
 
sheet
 
instruments.
 
These
 
instruments
 
involve,
 
to
varying degrees, elements
 
of credit and
 
interest rate risk
 
in excess of
 
the amount recognized
 
in the statement
 
of financial position.
Refer to
 
Note 20
 
to the
 
Consolidated Financial
 
Statements for
 
information on
 
the Corporation’s
 
commitments to
 
extent credit
 
and
other non-credit commitments.
 
Other types
 
of off-balance
 
sheet arrangements
 
that the
 
Corporation enters
 
in the
 
ordinary course
 
of business
 
include derivatives,
operating
 
leases
 
and
 
provision
 
of
 
guarantees,
 
indemnifications,
 
and
 
representation
 
and
 
warranties.
 
Refer
 
to
 
Note
 
27
 
to
 
the
Consolidated
 
Financial
 
Statements
 
for
 
more
 
information
 
on
 
operating
 
leases
 
and
 
to
 
Note
 
19
 
to
 
the
 
Consolidated
 
Financial
Statements for
 
a detailed
 
discussion related
 
to the
 
Corporation’s guarantees,
 
indemnifications, and
 
representation and
 
warranties
arrangements.
 
The Corporation monitors its cash requirements, including
 
its contractual obligations and debt commitments.
 
FDIC Special Assessments
 
On
 
November
 
16,
 
2023,
 
the
 
Federal
 
Deposit
 
Insurance
 
Corporation
 
(“FDIC”)
 
approved
 
a
 
final
 
rule
 
that
 
imposes
 
a
 
special
assessment (the “FDIC
 
Special Assessment”) to recover
 
the losses to
 
the deposit insurance
 
fund resulting from
 
the FDIC’s use,
 
in
March
 
2023,
 
of
 
the
 
systemic
 
risk
 
exception. In
 
connection with
 
this assessment,
 
the
 
Corporation recorded
 
an
 
expense of
 
$71.4
million, $45.3 million net of tax,
 
in the fourth quarter of 2023,
 
representing the full amount of the
 
estimated assessment at that time.
The
 
special
 
assessment
 
amount
 
and
 
collection
 
period
 
may
 
change
 
as
 
the
 
estimated
 
loss
 
is
 
periodically
 
adjusted
 
or
 
if
 
the
 
total
amount collected varies. As
 
a result, the Corporation
 
recorded an additional expense
 
of $14.3 million, $9.1
 
million net of tax,
 
in the
first quarter of 2024, based on the updated
 
loss estimates.
Financial Information of Guarantor and Issuers of Registered
 
Guaranteed Securities
The Corporation (not
 
including any of
 
its subsidiaries, “PIHC”)
 
is the parent
 
holding company of
 
Popular North America
 
“PNA” and
has other subsidiaries through which it
 
conducts its financial services operations. PNA is
 
an operating, 100% subsidiary of Popular,
Inc.
 
Holding Company
 
(“PIHC”) and
 
is the
 
holding company
 
of its
 
wholly-owned subsidiaries:
 
Equity One,
 
Inc.
 
and PB,
 
including
PB’s wholly-owned subsidiaries Popular Equipment Finance,
 
LLC, Popular Insurance Agency, U.S.A., and E-LOAN, Inc.
PNA
 
has
 
issued
 
junior
 
subordinated
 
debentures
 
guaranteed
 
by
 
PIHC
 
(together
 
with
 
PNA,
 
the
 
“obligor
 
group”)
 
purchased
 
by
statutory trusts
 
established by
 
the Corporation.
 
These debentures
 
were purchased
 
by the
 
statutory trust
 
using the
 
proceeds from
trust preferred securities issued to the public (referred to as
 
“capital securities”), together with the proceeds of the related issuances
of common securities of the trusts.
PIHC
 
fully
 
and
 
unconditionally
 
guarantees
 
the
 
junior
 
subordinated
 
debentures
 
issued
 
by
 
PNA.
 
PIHC’s
 
obligation
 
to
 
make
 
a
guaranteed
 
payment may be satisfied by direct payment of the required
 
amounts to the holders of the applicable capital securities or
by causing the applicable trust to pay such amounts to such holders. Each guarantee does not apply to any payment of distributions
by
 
the
 
applicable
 
trust
 
except
 
to
 
the
 
extent
 
such
 
trust
 
has
 
funds
 
available
 
for
 
such
 
payments.
 
If
 
PIHC
 
does
 
not
 
make
 
interest
payments on the
 
debentures held by such
 
trust, such trust
 
will not pay
 
distributions on the applicable
 
capital securities and
 
will not
have
 
funds
 
available
 
for
 
such
 
payments.
 
PIHC’s
 
guarantee
 
of
 
PNA’s
 
junior
 
subordinated
 
debentures
 
is
 
unsecured
 
and
 
ranks
subordinate and junior in
 
right of payment to
 
all the PIHC’s other
 
liabilities in the same manner
 
as the applicable debentures as
 
set
170
forth in the applicable indentures; and equally with all other guarantees
 
that the PIHC issues. The guarantee constitutes a guarantee
of
 
payment
 
and
 
not
 
of
 
collection,
 
which means
 
that
 
the
 
guaranteed party
 
may
 
sue
 
the
 
guarantor to
 
enforce its
 
rights
 
under the
respective guarantee without suing any other person
 
or entity.
The
 
principal
 
sources
 
of
 
funding
 
for
 
PIHC
 
and
 
PNA
 
have
 
included
 
dividends
 
received
 
from
 
their
 
banking
 
and
 
non-banking
subsidiaries, asset sales and proceeds from the issuance
 
of debt and equity.
 
The
 
following
 
summarized
 
financial
 
information
 
presents
 
the
 
financial
 
position
 
of
 
the
 
obligor
 
group,
 
on
 
a
 
combined
 
basis
 
at
September 30, 2024
 
and December 31,
 
2023, and the
 
results of their
 
operations for the
 
nine-month periods ended September
 
30,
2024
 
and
 
September
 
30,
 
2023.
 
Investments in
 
and
 
equity
 
in
 
the
 
earnings
 
from
 
the
 
other
 
subsidiaries
 
and
 
affiliates
 
that
 
are
 
not
members of the obligor group have been excluded.
The
 
summarized
 
financial
 
information
 
of
 
the
 
obligor
 
group
 
in
 
the
 
following
 
tables
 
is
 
presented
 
on
 
a
 
combined
 
basis
 
with
intercompany balances
 
and transactions
 
between entities
 
in the
 
obligor group
 
eliminated. The
 
obligor group's
 
amounts due
 
from,
amounts due to and
 
transactions with subsidiaries and affiliates
 
have been presented in separate
 
line items, if they
 
are material. In
addition, related parties transactions are presented
 
separately.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
171
Table 17 - Summarized Statement
 
of Condition
(In thousands)
September 30, 2024
December 31, 2023
Assets
Cash and money market investments
$
688,740
$
388,025
Investment securities
35,710
29,973
Accounts receivables from non-obligor subsidiaries
14,228
14,469
Other loans (net of allowance for credit losses of $9 (2023
 
- $51))
25,984
26,906
Investment in equity method investees
5,294
5,265
Other assets
63,807
51,315
Total assets
$
833,763
$
515,953
Liabilities and Stockholders' equity
Accounts payable to non-obligor subsidiaries
$
11,150
$
7,023
Notes payable
593,281
592,283
Other liabilities
114,309
114,660
Stockholders' equity (deficit)
115,023
(198,013)
Total liabilities and
 
stockholders' equity
$
833,763
$
515,953
Table 18 - Summarized Statement
 
of Operations
For the period ended
(In thousands)
September 30, 2024
September 30, 2023
Income:
Dividends from non-obligor subsidiaries
$
473,000
$
154,000
Interest income from non-obligor subsidiaries and affiliates
8,489
12,280
Earnings (losses) from investments in equity method investees
29
(82)
Other operating income
3,116
2,293
Total income
$
484,634
$
168,491
Expenses:
Services provided by non-obligor subsidiaries and affiliates
 
(net of
reimbursement by subsidiaries for services provided by parent
 
of
$172,449 (2023 - $161,333))
$
9,654
$
16,593
Other expenses
30,000
21,625
Income tax expense (benefit)
[1]
21,934
(919)
Total expenses
$
61,588
$
37,299
Net income
$
423,046
$
131,192
[1]
 
As
 
discussed
 
in
 
Note
 
2
 
to
 
the
 
Consolidated
 
Financial
 
Statements,
 
the
 
net
 
income
 
for
 
the
 
nine
 
months
 
ended
 
September
 
30,
 
2024,
included
 
$22.9
 
million
 
of
 
expenses,
 
of
 
which
 
$16.5
 
million
 
was
 
reflected
 
in
 
income
 
tax
 
expense
 
and
 
$6.4
 
million
 
was
 
reflected
 
in
 
other
operating
 
expenses,
 
related
 
to
 
an
 
out-of-period
 
adjustment
 
associated
 
with
 
the Corporation’s
 
U.S.
 
subsidiary’s
 
non-payment
 
of
 
taxes
 
on
certain intercompany distributions to the Bank Holding
 
Company (BHC) in Puerto Rico, a foreign corporation
 
for U.S. tax purposes.
In
 
addition to
 
the
 
dividend income
 
reflected
 
in the
 
Statement of
 
Operations table
 
above, during
 
the nine
 
months
 
ended
September 30, 2024, the obligor
 
group recorded a $67.4 million of
 
capital distributions from non-obligor subsidiaries which
were in an accumulated loss position and accordingly
 
were recorded as a reduction to the investments.
 
 
 
 
172
During the nine
 
months ended September
 
30, 2024, BPPR
 
declared cash dividends
 
of $450 million
 
to PIHC. As
 
of September 30,
2024, BPPR
 
can declare
 
a dividend
 
of approximately
 
$377 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.
 
Pursuant
 
to
 
the
requirements listed above,
 
PB may not
 
declare or pay
 
a dividend without
 
the prior approval
 
of the Federal
 
Reserve Board and
 
the
New York State Department of Financial Services.
The Corporation’s banking subsidiaries have historically not
 
used unsecured capital market borrowings to finance
 
its operations, and
therefore are less sensitive to the level and
 
changes in the Corporation’s overall credit ratings.
Refer to the
 
Geographic and Government Risk section
 
of this MD&A for
 
some highlights on the
 
status of the Puerto
 
Rico economy
and the ongoing fiscal crisis.
Obligations Subject to Rating Triggers or Collateral Requirements
The
 
Corporation’s
 
banking
 
subsidiaries
 
currently
 
do
 
not
 
issue
 
unsecured
 
senior
 
debt,
 
as
 
these
 
banking
 
subsidiaries
 
are
 
funded
primarily with
 
deposits and secured
 
borrowings. The banking
 
subsidiaries had
 
$6.6 million in
 
deposits at
 
September 30, 2024
 
that
are subject to rating triggers.
 
In addition,
 
certain mortgage servicing
 
and custodial agreements
 
that BPPR
 
has with
 
third parties
 
include rating covenants.
 
In the
event of a credit rating downgrade, the third parties have the right to require the institution to engage a substitute cash custodian for
escrow deposits and/or increase collateral levels
 
securing the recourse obligations.
 
As discussed
 
in Note
 
19 to
 
the Consolidated Financial
 
Statements, the Corporation
 
services residential mortgage
 
loans subject
 
to
credit
 
recourse
 
provisions.
 
Certain
 
contractual
 
agreements
 
require
 
the
 
Corporation
 
to
 
post
 
collateral
 
to
 
secure
 
such
 
recourse
obligations if
 
the institution’s
 
required credit
 
ratings are
 
not maintained.
 
Collateral pledged
 
by the
 
Corporation to
 
secure recourse
obligations amounted
 
to approximately
 
$25.7 million
 
at September 30,
 
2024. The
 
Corporation could be
 
required to
 
post additional
collateral under the
 
agreements. Management expects that
 
it would be
 
able to meet
 
additional collateral requirements if
 
and when
needed. The requirements to post collateral under certain agreements or the loss of escrow deposits could reduce the Corporation’s
liquidity resources and impact its operating results.
Credit Risk
Geographic and Government Risk
 
The Corporation is exposed to geographic and government risk.
 
The Corporation’s assets and revenue composition by geographical
area and by business segment reporting are presented
 
in Note 32 to the Consolidated Financial Statements.
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.
 
Puerto
 
Rico’s
 
economy suffered
 
a
 
severe and
 
prolonged recession
 
from
 
2007
 
to
 
2017,
 
with real
 
gross national
 
product (“GNP”)
contracting approximately 15%
 
during this period.
 
In 2017, Hurricane
 
María caused significant
 
damage and destruction
 
across the
island, resulting in further economic contraction. Puerto Rico’s
 
economy has been gradually recovering since 2018, in
 
part aided by
the large amount
 
of federal disaster
 
relief and recovery
 
assistance funds injected
 
into the Puerto
 
Rico economy in
 
connection with
Hurricane María
 
and other
 
recent natural
 
disasters. This
 
growth was
 
interrupted by
 
the economic
 
shock caused
 
by the
 
COVID-19
pandemic in 2020, but has since resumed, in part
 
aided by additional federal assistance from
 
pandemic-related stimulus measures.
The
 
latest
 
Puerto
 
Rico
 
Economic Activity
 
Index,
 
published
 
by
 
the
 
Economic
 
Development Bank
 
for
 
Puerto
 
Rico
 
(the
 
“Economic
Activity
 
Index”),
 
reflected
 
a
 
0.8%
 
year-over-year
 
decline
 
and
 
a
 
0.1%
 
month-over-month
 
decline
 
in
 
August
 
2024.
 
The
 
Economic
Activity Index
 
is a
 
coincident indicator
 
of
 
ongoing economic
 
activity but
 
not a
 
direct measurement
 
of
 
real GNP.
 
The Puerto
 
Rico
 
 
 
173
Planning Board estimates that Puerto Rico’s
 
real GNP grew 2.8% during fiscal
 
year 2024 (July 2023-June 2024) and
 
projects 1.4%
real GNP growth for fiscal year 2025
 
(July 2024-June 2025).
While the
 
Puerto Rico
 
economy has
 
not directly
 
tracked the
 
United States
 
economy in
 
recent years,
 
many of
 
the external
 
factors
that impact
 
the Puerto
 
Rico economy
 
are affected
 
by the
 
policies and performance
 
of the
 
United States
 
economy.
 
These external
factors include the level
 
of interest rates and
 
the rate of
 
inflation. In 2021 and
 
2022, inflation rose sharply
 
in both the
 
United States
and Puerto
 
Rico as
 
the economy
 
reopened following
 
the COVID-19
 
pandemic and
 
demand surged
 
beyond what
 
disrupted supply
chains could meet.
 
After peaking in
 
mid-2022, inflation rates
 
gradually decreased as the
 
Federal Reserve implemented
 
a series of
benchmark interest
 
rate increases.
 
By September
 
2024, inflation
 
had largely
 
stabilized, prompting
 
the Federal
 
Reserve to
 
reduce
interest rates for the first time
 
in four years. As of
 
September 2024, the United States Consumer Price Index
 
(published by the U.S.
Bureau
 
of
 
Labor Statistics)
 
reflects
 
a
 
year-over-year increase
 
of
 
2.4%. Meanwhile,
 
inflation
 
in
 
Puerto
 
Rico,
 
as
 
measured
 
by
 
the
Puerto Rico Consumer Price
 
Index (published by the
 
Department of Labor and
 
Human Resources of Puerto
 
Rico), increased 1.5%
during the 12 months ending in August 2024.
Fiscal Challenges.
 
As the
 
Puerto Rico
 
economy contracted, the
 
government’s public
 
debt rose
 
rapidly,
 
in part
 
from borrowing to
 
cover deficits
 
to pay
debt service,
 
pension benefits and
 
other government expenditures.
 
By 2016,
 
the Puerto
 
Rico government had
 
over $120
 
billion in
combined debt and unfunded pension liabilities, had
 
lost access to the capital markets, and was in
 
the midst of a fiscal crisis.
Puerto
 
Rico’s
 
escalating fiscal
 
and economic
 
challenges
 
and imminent
 
widespread defaults
 
in
 
its
 
public debt
 
prompted the
 
U.S.
Congress to
 
enact the
 
Puerto Rico
 
Oversight, Management,
 
and Economic
 
Stability Act
 
(“PROMESA”) in
 
June 2016.
 
PROMESA
created the “Oversight Board” with ample powers over Puerto Rico’s fiscal and economic affairs and those of its public corporations,
instrumentalities and municipalities (collectively,
 
“PR Government Entities”). Pursuant
 
to PROMESA, the
 
Oversight Board will be
 
in
place
 
until
 
market
 
access
 
is
 
restored
 
and
 
balanced
 
budgets
 
are
 
produced
 
for
 
at
 
least
 
four
 
consecutive
 
years.
 
PROMESA
 
also
established two
 
mechanisms for
 
the restructuring
 
of the
 
obligations of
 
PR Government
 
Entities: (a)
 
Title III,
 
which provides
 
an in-
court process that incorporates many of the
 
powers and provisions of the U.S. Bankruptcy Code
 
and permits adjustment of a broad
range of obligations, and
 
(b) Title VI,
 
which provides for a
 
largely out-of-court process through which
 
modifications to financial debt
can be accepted by a supermajority of creditors
 
and bind holdouts.
Since 2017, Puerto Rico and several
 
of its instrumentalities have availed themselves
 
of the debt restructuring mechanisms of Titles
III and VI of PROMESA. The Puerto Rico government emerged from Title III of PROMESA in March 2022. Several instrumentalities,
including
 
Government
 
Development
 
Bank
 
for
 
Puerto
 
Rico,
 
the
 
Puerto
 
Rico
 
Sales
 
Tax
 
Financing
 
Corporation,
 
the
 
Puerto
 
Rico
Highways
 
and
 
Transportation
 
Authority,
 
and
 
the
 
Puerto
 
Rico
 
Industrial
 
Development
 
Company,
 
have
 
also
 
completed
 
debt
restructurings
 
under
 
Titles
 
III
 
or
 
VI
 
of
 
PROMESA.
 
While
 
the
 
majority
 
of
 
the
 
debt
 
has
 
already
 
been
 
restructured,
 
some
 
PR
Government
 
Entities
 
still
 
face
 
significant
 
fiscal
 
challenges.
 
For
 
example,
 
the
 
Puerto
 
Rico
 
Electric
 
Power
 
Authority
 
is
 
still
 
in
 
the
process of restructuring its debts under Title III of PROMESA.
Municipalities.
 
Puerto Rico’s
 
fiscal and
 
economic challenges
 
have also
 
adversely impacted its
 
municipalities. Historically,
 
the central
 
government
provided
 
significant
 
annual
 
subsidies
 
to
 
municipalities
 
based
 
on
 
a
 
statutory
 
formula.
 
However,
 
as
 
part
 
of
 
the
 
fiscal
 
measures
required
 
by
 
the
 
Oversight
 
Board,
 
municipal
 
subsidies
 
have
 
decreased
 
significantly
 
over
 
several
 
years
 
and
 
are
 
now
 
approved
through specific, non-recurring
 
appropriations. This decrease
 
has been partially
 
offset by
 
substantial non-recurring federal
 
disaster
and
 
COVID-relief funding
 
received by
 
municipalities in
 
recent years.
 
The latest
 
Puerto Rico
 
fiscal plan
 
certified by
 
the Oversight
Board provides for
 
the implementation of
 
a restructured grant
 
and transfer system
 
through which the
 
Commonwealth would award
specific
 
service
 
grants to
 
municipalities to
 
augment
 
existing municipal
 
service
 
delivery,
 
while also
 
incentivizing performance
 
and
enhanced accountability through the monitoring of outcome
 
metrics.
 
Municipalities are subject to PROMESA, and the Oversight Board
 
has the authority to require them to submit fiscal plans and annual
budgets for
 
review and
 
approval. The
 
Oversight Board
 
has imposed
 
this requirement
 
for certain
 
municipalities. Municipalities
 
are
also
 
required
 
to
 
seek
 
Oversight
 
Board
 
approval
 
to
 
issue,
 
guarantee
 
or
 
modify
 
their
 
debts
 
and
 
to
 
enter
 
into
 
contracts
 
with
 
an
aggregate value of
 
$10 million or
 
more. With the
 
Oversight Board’s approval,
 
municipalities are also
 
eligible to avail
 
themselves of
the
 
debt
 
restructuring processes
 
provided
 
by
 
PROMESA. To
 
date,
 
however,
 
no municipality
 
has
 
been
 
subject to
 
any
 
such
 
debt
restructuring process.
 
 
174
Exposure of the Corporation
 
The credit
 
quality of BPPR’s
 
loan portfolio
 
reflects, among other
 
things, the
 
general economic conditions
 
in Puerto
 
Rico and
 
other
adverse conditions affecting Puerto
 
Rico consumers and businesses.
 
Deterioration in the Puerto
 
Rico economy has resulted
 
in the
past, and could
 
result in the future,
 
in higher delinquencies, greater
 
charge-offs and increased losses,
 
which could materially affect
our financial condition and results of operations.
 
At September
 
30, 2024,
 
the Corporation’s
 
direct exposure
 
to PR
 
Government Entities
 
totaled $336
 
million, of
 
which $336
 
million
were
 
outstanding,
 
compared
 
to
 
$362
 
million
 
at
 
December
 
31,
 
2023,
 
of
 
which
 
$333
 
million
 
were
 
outstanding.
 
A
 
deterioration
 
in
Puerto Rico’s fiscal
 
and economic situation could adversely
 
affect the value of
 
our Puerto Rico government
 
obligations, resulting in
losses to us. Of
 
the amount outstanding, $323 million
 
consists of loans and
 
$13 million are securities ($314
 
million and $19 million,
respectively, at December 31,
 
2023). Substantially all of the Corporation’s direct exposure outstanding at September 30,
 
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
 
basic
 
property
 
tax
 
or
 
sales
 
tax
 
revenues.
At
 
September
 
30,
 
2024,
 
80%
 
of
 
the
Corporation’s exposure
 
to municipal loans
 
and securities was
 
concentrated in the
 
municipalities of San
 
Juan, Guaynabo,
 
Carolina
and Caguas.
 
In July 2024, the Corporation received scheduled principal payments amounting to $40 million from various obligations
from Puerto
 
Rico municipalities. For
 
additional discussion of
 
the Corporation’s
 
direct exposure to
 
the Puerto
 
Rico government and
its
 
instrumentalities
 
and
 
municipalities,
 
refer
 
to
 
Note
 
20
 
 
Commitments
 
and
 
Contingencies
 
to
 
the
 
Consolidated
 
Financial
Statements.
 
In
 
addition,
 
at
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
$225
 
million
 
in
 
loans
 
insured
 
or
 
securities
 
issued
 
by
 
Puerto
 
Rico
governmental entities,
 
but for
 
which the
 
principal source
 
of repayment
 
is non-governmental
 
($238 million at
 
December 31, 2023).
These
 
included
 
$179
 
million
 
in
 
residential mortgage
 
loans
 
insured by
 
the
 
Puerto
 
Rico
 
Housing
 
Finance Authority
 
(“HFA”),
 
a PR
Government
 
Entity
 
(December
 
31,
 
2023
 
-
 
$191
 
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
 
September
 
30,
 
2024,
 
$38
 
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, 2023 - $40 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, HFA’s
 
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.
 
BPPR’s
 
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 a deterioration in the fiscal and
 
economic
situation
 
of
 
PR
 
Government
 
Entities.
 
Similarly,
 
BPPR’s
 
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, if the fiscal and economic
 
situation deteriorates.
As
 
of
 
September
 
30,
 
2024,
 
BPPR
 
had
 
$18.7
 
billion
 
in
 
deposits
 
from
 
the
 
Puerto
 
Rico
 
government,
 
its
 
instrumentalities,
 
and
municipalities. The rate at
 
which public deposit balances may
 
decline is uncertain and
 
difficult to predict. The
 
amount and timing of
any such
 
reduction is
 
likely to
 
be impacted
 
by,
 
for example,
 
the speed
 
at which
 
federal assistance
 
is distributed
 
and the
 
financial
condition, liquidity
 
and cash
 
management practices of
 
such entities,
 
as well
 
as on
 
the ability
 
of BPPR
 
to maintain
 
these customer
relationships.
United States Virgin Islands
The
 
Corporation
 
has
 
operations
 
in
 
the
 
United
 
States
 
Virgin
 
Islands
 
(the
 
“USVI”)
 
and
 
has
 
credit
 
exposure
 
to
 
USVI
 
government
entities.
The USVI has
 
been experiencing a
 
number of fiscal
 
and economic challenges,
 
which 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.
To
 
the extent that
 
the fiscal condition
 
of the USVI
 
continues to deteriorate, the
 
U.S. Congress or the
 
Government of the
 
USVI may
enact legislation allowing for the restructuring of the
 
financial obligations of USVI government entities or imposing a
 
stay on creditor
remedies, including by making PROMESA applicable
 
to the USVI.
 
 
175
At September 30,
 
2024, the Corporation
 
had approximately $28
 
million in direct
 
exposure to USVI
 
government entities (December
31, 2023 - $28 million).
 
British Virgin Islands
The
 
Corporation has
 
operations
 
in
 
the
 
British Virgin
 
Islands
 
(“BVI”),
 
which
 
was
 
negatively
 
affected by
 
the
 
COVID-19
 
pandemic,
particularly as
 
a reduction
 
in the
 
tourism activity
 
which accounts
 
for a
 
significant portion
 
of its
 
economy.
 
Although the
 
Corporation
has
 
no
 
significant
 
exposure
 
to
 
a
 
single
 
borrower
 
in
 
the
 
BVI,
 
at
 
September
 
30,
 
2024,
 
it
 
has
 
a
 
loan
 
portfolio
 
amounting
 
to
approximately
 
$200
 
million
 
comprised
 
of
 
various
 
retail
 
and
 
commercial
 
clients,
 
compared
 
to
 
a
 
loan
 
portfolio
 
of
 
$205
 
million
 
at
December 31, 2023.
U.S. Government
As further detailed in Notes
 
5 and 6 to the
 
Consolidated Financial Statements, a substantial portion of the
 
Corporation’s investment
securities
 
represented exposure
 
to
 
the
 
U.S.
 
Government in
 
the
 
form
 
of
 
U.S. Government
 
sponsored entities,
 
as
 
well
 
as
 
agency
mortgage-backed and U.S. Treasury securities. In
 
addition, $2.0 billion of residential mortgages and $88.4 million commercial
 
loans
were insured
 
or guaranteed
 
by the
 
U.S. Government
 
or its
 
agencies at
 
September 30,
 
2024 (compared
 
to $1.9
 
billion and
 
$89.2
million, respectively, at December 31, 2023).
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 19.
During the third
 
quarter of 2024,
 
the Corporation continued
 
to reflect stable
 
credit quality metrics
 
in the third
 
quarter of 2024
 
when
compared to
 
the previous
 
quarter.
 
While non-performing
 
loans (“NPLs”),
 
net charge
 
offs (“NCOs”)
 
and inflows
 
to NPLs
 
remained
below historical averages, consumer portfolios
 
reflected increased delinquencies and NCOs
 
for the quarter primarily
 
driven by auto
loans. The
 
mortgage and
 
commercial portfolios
 
continue to
 
operate with
 
low levels
 
of delinquencies
 
and NCOs.
 
The Corporation
continues to closely monitor changes in the macroeconomic
 
environment and borrower performance given higher interest rates and
inflationary pressures. Management believes that the improvements over recent years in risk management practices and the overall
risk profile of the Corporation’s loan portfolios position
 
Popular to continue to operate successfully under
 
the current environment.
Total
 
NPAs
 
as of
 
September 30,
 
2024 decreased
 
by $14
 
million when
 
compared with
 
December 31,
 
2023. Total
 
non-performing
loans held-in-portfolio
 
(“NPLs”) increased
 
by $4
 
million from
 
December 31,
 
2023. BPPR’s
 
NPLs decreased
 
by $40
 
million, across
most loan
 
categories, except
 
consumer NPLs
 
which reflected
 
an increase
 
of $4
 
million. The
 
increase in
 
the consumer
 
NPLs was
mostly driven by auto
 
loans. Popular U.S. NPLs increased
 
by $44 million, driven
 
by higher commercial and mortgage
 
NPLs by $27
million and $17 million, respectively, each impacted by single loans amounting
 
to $17 million.
 
On September
 
30, 2024,
 
the ratio
 
of NPLs
 
to total
 
loans held-in-portfolio
 
was 1.0%,
 
flat when
 
compared to
 
December 31,
 
2023.
Other real estate owned loans (“OREOs”) decreased by $17
 
million from December 31, 2023. The decrease in OREO
 
was driven by
the sale of
 
a commercial property in
 
BPPR, coupled with the
 
sale of residential properties.
 
On September 30, 2024,
 
NPLs secured
by real
 
estate amounted to
 
$202 million in
 
the Puerto Rico
 
operations and $67
 
million in Popular
 
U.S, compared with
 
$231 million
and $24 million, respectively, on December 31, 2023.
The Corporation’s
 
commercial loan
 
portfolio secured
 
by real
 
estate (“CRE”)
 
amounted to
 
$10.7 billion
 
on September
 
30, 2024,
 
of
which
 
$3.1
 
billion
 
was
 
secured
 
with
 
owner
 
occupied
 
properties,
 
compared
 
with
 
$10.6
 
billion
 
and
 
$3.1
 
billion,
 
respectively,
 
on
December 31,
 
2023. Office
 
space leasing exposure
 
in our
 
non-owner occupied CRE
 
portfolio is limited,
 
representing only 2.0%
 
or
$708 million of our total loan portfolio. The
 
exposure is mainly comprised of low- to mid- rise properties with an
 
average loan size of
$2.3 million and is well diversified across tenant
 
type.
CRE NPLs amounted to $67 million on September 30, 2024, compared with $48 million on December 31, 2023, driven by the single
$17
 
million
 
loan
 
mentioned
 
above.
 
The
 
CRE
 
NPL
 
ratios
 
for
 
the
 
BPPR
 
and
 
Popular
 
U.S.
 
segments
 
were
 
0.70%
 
and
 
0.57%,
respectively, on September 30, 2024, compared with 0.86% and 0.13%,
 
respectively, on December 31, 2023.
176
In
 
addition
 
to
 
the
 
NPLs
 
included
 
in
 
Table
 
19,
 
on
 
September
 
30,
 
2024,
 
there
 
were
 
$587
 
million
 
of
 
performing
 
loans,
 
mostly
commercial
 
loans,
 
which
 
in
 
management’s
 
opinion,
 
are
 
currently
 
subject
 
to
 
potential
 
future
 
classification
 
as
 
non-performing
(December 31, 2023 - $510 million).
For
 
the
 
quarter ended
 
September 30,
 
2024,
 
total
 
inflows
 
of
 
NPLs held-in-portfolio,
 
excluding consumer
 
loans,
 
increased by
 
$16
million, when compared to the inflows for the same period in 2023. Inflows of NPLs held-in-portfolio at the
 
BPPR segment remained
flat, compared
 
to the
 
same period
 
in 2023.
 
Inflows of
 
NPLs held-in-portfolio at
 
the Popular
 
U.S. segment increased
 
by $17 million
from the same period in 2023, mainly driven by higher
 
mortgage inflows by $16 million driven by abovementioned
 
$17 million loan.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
177
Table 19 - Non-Performing
 
Assets
September 30, 2024
December 31, 2023
(Dollars in thousands)
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
BPPR
Popular
U.S.
Popular,
Inc.
As a % of
loans HIP
by
category
Commercial
Commercial multi-family
$
87
$
8,700
$
8,787
0.4
%
$
1,991
$
-
$
1,991
0.1
%
Commercial real estate non-owner
occupied
7,493
2,282
9,775
0.2
8,745
1,117
9,862
0.2
Commercial real estate owner
occupied
26,600
22,248
48,848
1.6
29,430
6,274
35,704
1.2
Commercial and industrial
 
19,639
5,246
24,885
0.3
32,826
3,772
36,598
0.5
Total Commercial
 
53,819
38,476
92,295
0.5
72,992
11,163
84,155
0.5
Construction
-
-
-
-
6,378
-
6,378
0.7
Leasing
7,367
-
7,367
0.4
8,632
-
8,632
0.5
Mortgage
157,920
28,434
186,354
2.3
175,106
11,191
186,297
2.4
Consumer
 
 
Home equity lines of credit
-
3,834
3,834
5.5
-
3,733
3,733
5.7
 
Personal
 
20,992
1,837
22,829
1.2
19,031
2,805
21,836
1.1
 
Auto
47,828
-
47,828
1.3
45,615
-
45,615
1.2
 
Other Consumer
 
889
2
891
0.5
964
1
965
0.6
Total Consumer
 
69,709
5,673
75,382
1.1
65,610
6,539
72,149
1.0
Total non-performing
 
loans held-in-
portfolio
288,815
72,583
361,398
1.0
%
328,718
28,893
357,611
1.0
%
Other real estate owned (“OREO”)
62,940
88
63,028
80,176
240
80,416
Total non-performing
 
assets
[1]
$
351,755
$
72,671
$
424,426
$
408,894
$
29,133
$
438,027
Accruing loans past due 90 days or
more
[2]
$
233,774
$
197
$
233,971
$
268,362
$
109
$
268,471
Ratios:
Non-performing assets to total assets
0.63
%
0.46
%
0.60
%
0.74
%
0.19
%
0.62
%
Non-performing loans held-in-portfolio
to loans held-in-portfolio
 
1.12
0.69
1.00
1.34
0.27
1.02
Allowance for credit losses to loans
held-in-portfolio
2.59
0.75
2.06
2.61
0.85
2.08
Allowance for credit losses to non-
performing loans, excluding held-for-
sale
230.66
107.66
205.96
194.65
309.70
203.95
[1] There were no non-performing loans held-for-sale
 
as of September 30, 2024 and December 31, 2023.
[2] It is the Corporation’s policy to report delinquent
 
residential mortgage loans insured by FHA or guaranteed
 
by the VA as accruing
 
loans past due 90
days or
 
more as
 
opposed to
 
non-performing
 
since the
 
principal repayment
 
is insured.
 
These balances
 
include $70
 
million of
 
residential
 
mortgage
loans insured
 
by FHA
 
or guaranteed
 
by the
 
VA
 
that are
 
no longer
 
accruing interest
 
as of
 
September 30,
 
2024 (December
 
31, 2023
 
- $106
 
million).
Furthermore,
 
the Corporation
 
has approximately
 
$32 million
 
in reverse
 
mortgage
 
loans which
 
are guaranteed
 
by
 
FHA, but
 
which are
 
currently
 
not
accruing
 
interest.
 
Due
 
to
 
the guaranteed
 
nature
 
of
 
the loans,
 
it is
 
the Corporation’s
 
policy
 
to
 
exclude
 
these
 
balances
 
from
 
non-performing
 
assets
(December 31, 2023 - $38 million).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
178
Table 20 - Activity in Non
 
-Performing Loans Held-in-Portfolio (Excluding Consumer
 
Loans)
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
219,960
$
49,317
$
269,277
$
254,476
$
22,354
$
276,830
Plus:
New non-performing loans
36,585
22,968
59,553
111,128
84,248
195,376
Advances on existing non-performing loans
-
32
32
-
352
352
Less:
Non-performing loans transferred to OREO
(4,016)
-
(4,016)
(12,665)
(24)
(12,689)
Non-performing loans charged-off
(4,031)
(82)
(4,113)
(17,930)
(1,050)
(18,980)
Loans returned to accrual status / loan collections
(36,759)
(5,325)
(42,084)
(123,270)
(38,970)
(162,240)
Ending balance NPLs
$
211,739
$
66,910
$
278,649
$
211,739
$
66,910
$
278,649
Table 21 - Activity in Non
 
-Performing Loans Held-in-Portfolio (Excluding Consumer
 
Loans)
For the quarter ended September 30, 2023
For the nine months ended September 30, 2023
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
BPPR
Popular U.S.
Popular, Inc.
Beginning balance
$
292,219
$
26,187
$
318,406
$
324,562
$
31,356
$
355,918
Plus:
New non-performing loans
37,393
5,827
43,220
128,011
23,446
151,457
Advances on existing non-performing loans
-
12
12
-
155
155
Less:
Non-performing loans transferred to OREO
(5,657)
-
(5,657)
(25,777)
(58)
(25,835)
Non-performing loans charged-off
(3,354)
(2,446)
(5,800)
(4,854)
(4,837)
(9,691)
Loans returned to accrual status / loan collections
(54,353)
(9,006)
(63,359)
(155,694)
(29,488)
(185,182)
Ending balance NPLs
$
266,248
$
20,574
$
286,822
$
266,248
$
20,574
$
286,822
Table 22 - Activity in Non
 
-Performing Commercial Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
 
BPPR
Popular U.S.
Popular, Inc.
 
Beginning balance
$
56,170
$
37,763
$
93,933
$
72,992
$
11,163
$
84,155
Plus:
New non-performing loans
4,460
2,582
7,042
12,834
39,561
52,395
Advances on existing non-performing loans
-
3
3
-
305
305
Less:
Non-performing loans transferred to OREO
-
-
-
(280)
-
(280)
Non-performing loans charged-off
(4,085)
(82)
(4,167)
(17,784)
(1,032)
(18,816)
Loans returned to accrual status / loan
collections
(2,726)
(1,790)
(4,516)
(13,943)
(11,521)
(25,464)
Ending balance NPLs
$
53,819
$
38,476
$
92,295
$
53,819
$
38,476
$
92,295
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
179
Table 23 - Activity in Non
 
-Performing Commercial Loans Held-in-Portfolio
For the quarter ended September 30, 2023
For the nine months ended September 30, 2023
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
 
BPPR
Popular U.S.
Popular, Inc.
 
Beginning balance
$
88,716
$
11,610
$
100,326
$
82,171
$
10,868
$
93,039
Plus:
New non-performing loans
2,736
1,324
4,060
22,533
11,674
34,207
Advances on existing non-performing loans
-
7
7
-
35
35
Less:
Non-performing loans transferred to OREO
(138)
-
(138)
(446)
-
(446)
Non-performing loans charged-off
(969)
(2,446)
(3,415)
(2,237)
(4,837)
(7,074)
Loans returned to accrual status / loan collections
(18,118)
(1,901)
(20,019)
(29,794)
(9,146)
(38,940)
Ending balance NPLs
$
72,227
$
8,594
$
80,821
$
72,227
$
8,594
$
80,821
Table 24 - Activity in Non
 
-Performing Construction Loans Held-in-Portfolio
 
For the quarter ended September 30, 2024
For the nine months ended September 30, 2024
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
 
BPPR
Popular U.S.
Popular, Inc.
 
Beginning balance
$
-
$
-
$
-
$
6,378
$
-
$
6,378
Less:
Loans returned to accrual status / loan collections
-
-
-
(6,378)
-
(6,378)
Ending balance NPLs
$
-
$
-
$
-
$
-
$
-
$
-
Table 25 - Activity in Non
 
-Performing Construction Loans Held-in-Portfolio
For the quarter ended September 30, 2023
For the nine months ended September 30, 2023
(Dollars in thousands)
BPPR
Popular U.S.
Popular, Inc.
 
BPPR
Popular U.S.
Popular, Inc.
 
Beginning balance
$
9,284
$
-
$
9,284
$
-
$
-
$
-
Plus:
New non-performing loans
-
-
-
9,284
-
9,284
Less:
Non-performing loans charged-off
(2,537)
-
(2,537)
(2,537)
-
(2,537)
Loans returned to accrual status / loan collections
(169)
-
(169)
(169)
-
(169)
Ending balance NPLs
$
6,578
$
-
$
6,578
$
6,578
$
-
$
6,578
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
180
Table 26 - Activity in Non
 
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2024
For the nine months ended
 
September 30,
2024
(Dollars in thousands)
BPPR
Popular
U.S.
Popular, Inc.
 
BPPR
Popular U.S.
Popular, Inc.
 
Beginning balance
$
163,790
$
11,554
$
175,344
$
175,106
$
11,191
$
186,297
Plus:
New non-performing loans
32,125
20,386
52,511
98,294
44,687
142,981
Advances on existing non-performing loans
-
29
29
-
47
47
Less:
Non-performing loans transferred to OREO
(4,016)
-
(4,016)
(12,385)
(24)
(12,409)
Non-performing loans charged-off
54
-
54
(146)
(18)
(164)
Loans returned to accrual status / loan
collections
(34,033)
(3,535)
(37,568)
(102,949)
(27,449)
(130,398)
Ending balance NPLs
$
157,920
$
28,434
$
186,354
$
157,920
$
28,434
$
186,354
Table 27 - Activity in Non
 
-Performing Mortgage Loans Held-in-Portfolio
For the quarter ended September 30, 2023
For the nine months ended September 30, 2023
(Dollars in thousands)
BPPR
Popular
U.S.
Popular, Inc.
 
BPPR
Popular U.S.
Popular, Inc.
 
Beginning balance
$
194,219
$
14,577
$
208,796
$
242,391
$
20,488
$
262,879
Plus:
New non-performing loans
34,657
4,503
39,160
96,194
11,772
107,966
Advances on existing non-performing loans
-
5
5
-
120
120
Less:
Non-performing loans transferred to OREO
(5,519)
-
(5,519)
(25,331)
(58)
(25,389)
Non-performing loans charged-off
152
-
152
(80)
-
(80)
Loans returned to accrual status / loan collections
(36,066)
(7,105)
(43,171)
(125,731)
(20,342)
(146,073)
Ending balance NPLs
$
187,443
$
11,980
$
199,423
$
187,443
$
11,980
$
199,423
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
181
Loan Delinquencies
Another key measure used to evaluate and
 
monitor the Corporation’s asset quality is loan
 
delinquencies. Loans delinquent 30 days
or more, as a percentage of their related portfolio
 
category on September 30, 2024 and December 31,
 
2023, are presented below.
Table 28 - Loan Delinquencies
(Dollars in thousands)
September 30, 2024
December 31, 2023
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
$
11,713
$
2,405,302
0.49
%
$
13,657
$
2,415,620
0.57
%
Commercial real estate
non-owner occupied
23,462
5,185,381
0.45
17,051
5,087,421
0.34
Commercial real estate
owner occupied
54,148
3,092,393
1.75
69,239
3,080,635
2.25
Commercial and industrial
68,820
7,400,553
0.93
58,953
7,126,121
0.83
Total Commercial
 
158,143
18,083,629
0.87
158,900
17,709,797
0.90
Construction
 
34,349
1,113,307
3.09
6,378
959,280
0.66
Leasing
31,868
1,887,052
1.69
35,491
1,731,809
2.05
Mortgage
[1]
761,771
7,993,348
9.53
859,537
7,695,917
11.17
Consumer
 
Credit cards
 
54,839
1,186,893
4.62
46,436
1,135,747
4.09
Home equity lines of credit
4,892
69,691
7.02
5,465
65,953
8.29
Personal
 
61,434
1,873,175
3.28
59,682
1,945,247
3.07
Auto
 
178,281
3,818,607
4.67
173,119
3,660,780
4.73
Other
2,935
169,265
1.73
3,063
160,441
1.91
Total Consumer
 
302,381
7,117,631
4.25
287,765
6,968,168
4.13
Loans held-for-sale
-
5,509
-
-
4,301
-
Total
 
$
1,288,512
$
36,200,476
3.56
%
$
1,348,071
$
35,069,272
3.84
%
[1]
 
Loans delinquent 30 days or more includes $0.4 billion
 
of residential mortgage loans insured by FHA or guaranteed
 
by the VA as of September
30, 2024 (December 31, 2023 - $0.5 billion). Refer to Note
 
7 to the Consolidated Financial Statements for additional information
 
of guaranteed loans.
Allowance for Credit Losses Loans Held-in-Portfolio
The ACL,
 
represents management’s
 
estimate of
 
expected credit
 
losses through
 
the remaining
 
contractual life
 
of the
 
different loan
segments, impacted by expected prepayments. The ACL
 
is maintained at a sufficient
 
level to provide for estimated credit
 
losses on
collateral dependent loans as well as loans modified
 
for borrowers with financial difficulties separately from the remainder
 
of the loan
portfolio. The Corporation’s
 
management evaluates the adequacy
 
of the ACL
 
on a quarterly
 
basis. In this
 
evaluation, management
considers current
 
conditions, macroeconomic
 
economic expectations through
 
a reasonable
 
and supportable
 
period, historical
 
loss
experience,
 
portfolio composition
 
by
 
loan
 
type
 
and
 
risk
 
characteristics,
 
results
 
of
 
periodic credit
 
reviews
 
of
 
individual loans,
 
and
regulatory requirements, amongst other factors.
The Corporation must rely on
 
estimates and exercise judgment regarding matters where
 
the ultimate outcome is unknown, such
 
as
economic developments affecting specific
 
customers, industries, or markets.
 
Other factors that can
 
affect management’s estimates
are
 
recalibration
 
of
 
statistical
 
models
 
used
 
to
 
calculate
 
lifetime
 
expected
 
losses,
 
changes
 
in
 
underwriting
 
standards,
 
financial
accounting standards and loan impairment measurements,
 
among others. Changes in the financial condition
 
of individual borrowers,
in economic
 
conditions, and
 
in the
 
condition of
 
the various
 
markets in
 
which collateral
 
may be
 
sold, may
 
also affect
 
the required
level of
 
the allowance
 
for credit
 
losses. Consequently,
 
the business
 
financial condition,
 
liquidity,
 
capital, and
 
results of
 
operations
could also be affected.
182
On September 30, 2024,
 
the ACL increased by
 
$15 million from December
 
31, 2023 to $744
 
million. The ACL for
 
BPPR increased
by
 
$26
 
million,
 
driven
 
by
 
an
 
increase
 
of
 
$16
 
million
 
in
 
reserves
 
for
 
commercial
 
loans
 
and
 
a
 
combined
 
$12
 
million
 
increase
 
in
reserves for
 
the consumer
 
and lease
 
portfolios. These
 
increases were
 
mainly
 
due to
 
a combination
 
of
 
growth in
 
the commercial
portfolio and changes in credit quality trends for the auto and credit cards portfolios. In PB, the ACL decreased by $11
 
million, when
compared
 
to
 
December
 
31,
 
2023,
 
mainly
 
driven
 
by
 
lower
 
reserves
 
for
 
the
 
commercial
 
and
 
construction
 
portfolios
 
due
 
to
improvements
 
in
 
credit
 
quality
 
and
 
lower
 
balances.
 
The
 
Corporation’s
 
ratio
 
of
 
the
 
allowance
 
for
 
credit
 
losses
 
to
 
loans
 
held-in-
portfolio was 2.06% on September 30, 2024, compared to
 
2.08% on December 31, 2023. The ratio of the
 
allowance for credit losses
to NPLs held-in-portfolio stood at 206.0%, compared
 
to 204.0% on December 31, 2023.
Given that any one
 
economic outlook is inherently uncertain, the
 
Corporation leverages multiple scenarios to estimate
 
its ACL. The
baseline scenario continues to be assigned the highest probability,
 
followed by the pessimistic scenario. The weight assigned to the
pessimistic
 
scenario
 
decreased
 
during
 
the
 
first
 
quarter
 
of
 
2024
 
in
 
response
 
to
 
the
 
positive
 
momentum
 
in
 
the
 
economy
 
as
expectations for
 
the Federal
 
Reserve achieving
 
a soft
 
landing have
 
improved. The
 
Corporation evaluates,
 
at least
 
on an
 
annual
basis, the assumptions tied to the CECL accounting framework. These include
 
the reasonable and supportable period as well as the
reversion window.
The provision
 
for credit
 
losses related
 
to the
 
loans held-in-portfolio
 
for the
 
quarter ended
 
September 30,
 
2024, was
 
$72.8
 
million,
compared to $43.5
 
million for the
 
quarter ended September
 
30, 2023, largely
 
driven by higher
 
NCOs due to
 
credit quality changes
and commercial loan growth. The provision
 
expense related to the loans-held-in-portfolio for the
 
nine months ended September 30,
2024
 
was
 
$189.3 million,
 
compared to
 
the
 
provision expense
 
of
 
$126.3 million
 
for
 
the
 
nine months
 
ended September
 
30, 2023.
Refer to Note 8 to the Consolidated Financial Statements, and to the Provision for Credit Losses section of this MD&A for additional
information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
183
Table 29 - Allowance for Credit
 
Losses - Loan Portfolios
September 30, 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
$
9,642
$
2,405,302
0.40
%
$
8,787
109.73
%
 
Commercial real estate non-owner occupied
67,630
5,185,381
1.30
%
9,775
691.87
%
 
Commercial real estate owner occupied
52,915
3,092,393
1.71
%
48,848
108.33
%
 
Commercial and industrial
 
136,361
7,400,553
1.84
%
24,885
547.96
%
Total Commercial
 
$
266,548
$
18,083,629
1.47
%
$
92,295
288.80
%
Construction
13,214
1,113,307
1.19
%
-
N.M.
Leasing
15,854
1,887,052
0.84
%
7,367
215.20
%
Mortgage
81,650
7,993,348
1.02
%
186,354
43.81
%
Consumer
 
 
Credit cards
92,694
1,186,893
7.81
%
-
N.M.
 
Home equity lines of credit
1,854
69,691
2.66
%
3,834
48.36
%
 
Personal
 
104,542
1,873,175
5.58
%
22,829
457.94
%
 
Auto
161,313
3,818,607
4.22
%
47,828
337.28
%
 
Other Consumer
 
6,651
169,265
3.93
%
891
746.46
%
Total Consumer
 
$
367,054
$
7,117,631
5.16
%
$
75,382
486.93
%
Total
$
744,320
$
36,194,967
2.06
%
$
361,398
205.96
%
N.M. - Not meaningful.
Table 30 - Allowance for Credit
 
Losses - Loan Portfolios
December 31, 2023
(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
$
13,740
$
2,415,620
0.57
%
$
1,991
690.11
%
 
Commercial real estate non-owner occupied
65,453
5,087,421
1.29
%
9,862
663.69
%
 
Commercial real estate owner occupied
56,864
3,080,635
1.85
%
35,704
159.27
%
 
Commercial and industrial
 
122,356
7,126,121
1.72
%
36,598
334.32
%
Total Commercial
 
$
258,413
$
17,709,797
1.46
%
$
84,155
307.07
%
Construction
12,686
959,280
1.32
%
6,378
198.90
%
Leasing
9,708
1,731,809
0.56
%
8,632
112.47
%
Mortgage
83,214
7,695,917
1.08
%
186,297
44.67
%
Consumer
 
 
Credit cards
80,487
1,135,747
7.09
%
-
N.M.
 
Home equity lines of credit
1,978
65,953
3.00
%
3,733
52.99
%
 
Personal
 
117,790
1,945,247
6.06
%
21,836
539.43
%
 
Auto
157,931
3,660,780
4.31
%
45,615
346.23
%
 
Other Consumer
 
7,134
160,441
4.45
%
965
739.27
%
Total Consumer
 
$
365,320
$
6,968,168
5.24
%
$
72,149
506.34
%
Total
$
729,341
$
35,064,971
2.08
%
$
357,611
203.95
%
N.M. - Not meaningful.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
184
Annualized net charge-offs (recoveries)
The following
 
tables present
 
annualized net charge-offs
 
(recoveries) to average
 
loans held-in-portfolio (“HIP”)
 
by loan
 
category for
the quarters and nine months ended September 30, 2024
 
and 2023.
Table 31 - Annualized Net Charge
 
-offs (Recoveries) to Average Loans
 
Held-in-Portfolio
Quarters ended
September 30, 2024
September 30, 2023
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
 
0.13
%
0.02
%
0.08
%
(0.48)
%
0.10
%
(0.21)
%
Construction
(2.33)
(0.37)
6.11
1.21
Mortgage
(0.24)
(0.01)
(0.20)
(0.25)
(0.02)
(0.21)
Leasing
0.49
0.49
0.35
0.35
Consumer
3.14
7.17
3.26
2.20
7.42
2.41
Total annualized
 
net charge-offs
(recoveries) to average loans held-in-
portfolio
0.86
%
0.15
%
0.65
%
0.44
%
0.28
%
0.39
%
Nine months ended
September 30, 2024
September 30, 2023
BPPR
Popular U.S.
Popular Inc.
BPPR
Popular U.S.
Popular Inc.
Commercial
 
0.21
%
0.03
%
0.13
%
(0.20)
%
0.03
%
(0.10)
%
Construction
(0.82)
(0.01)
(0.14)
2.14
0.45
Mortgage
(0.25)
(0.01)
(0.21)
(0.24)
(0.02)
(0.20)
Leasing
0.64
0.64
0.28
0.28
Consumer
2.93
7.43
3.07
1.96
5.65
2.12
Total annualized
 
net charge-offs
(recoveries) to average loans held-in-
portfolio
0.86
%
0.18
%
0.66
%
0.44
%
0.19
%
0.36
%
NCOs for the quarter ended September 30, 2024,
 
amounted to $58.5 million, increasing by $25.9
 
million when compared to the
same period in 2023. The BPPR segment increased by
 
$29.0 million mainly driven by higher consumer
 
and commercial NCOs by
$18.2 million and $13.7 million, respectively. The consumer NCOs continue
 
to gradually increase mainly due to credit quality
changes. The PB segment NCOs decreased by $3.1
 
million, mainly driven by lower commercial and
 
consumer NCOs.
NCOs for the nine months ended September 30,
 
2024, amounted to $174.4 million, increasing
 
by $84.9 million when compared to
the same period in 2023. The BPPR segment increased
 
by $84.7 million mainly driven by higher
 
consumer and commercial NCOs
by $55.9 million and $28.1 million, respectively. The consumer NCOs increase
 
was mainly due to credit quality changes,
 
as
mentioned above. The PB segment NCOs remained
 
flat.
Loan Modifications
For the quarter
 
ended September 30, 2024,
 
modified loans to
 
borrowers with financial difficulty
 
amounted to $146
 
million, of which
$138
 
million
 
were in
 
accruing status.
 
The BPPR
 
segment’s modifications
 
to
 
borrowers with
 
financial
 
difficulty
 
amounted to
 
$135
million, mainly comprised
 
of commercial and
 
mortgage loans of
 
$113 million
 
and $17 million,
 
respectively. A
 
total of
 
$11
 
million of
the mortgage modifications
 
were related to
 
government guaranteed loans.
 
The Popular U.S.
 
segment’s modifications to
 
borrowers
with financial difficulty amounted to $11 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.
 
 
 
 
 
185
ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT
 
YET EFFECTIVE ACCOUNTING STANDARDS
Refer to Note 3, “New Accounting Pronouncements”
 
to the Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About
 
Market Risk
Quantitative and qualitative disclosures for the current
 
period can be found in the Market Risk
 
section of this report, which includes
changes in market risk exposures from disclosures presented
 
in the 2023 Form 10-K.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Corporation’s management,
 
with the
 
participation of the
 
Corporation’s Chief Executive
 
Officer and Chief
 
Financial Officer,
 
has
evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based
on such evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that,
 
as of the end of such
period, the Corporation’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a
timely basis,
 
information required to
 
be disclosed
 
by the
 
Corporation in
 
the reports
 
that it
 
files or
 
submits under
 
the Exchange Act
and
 
such
 
information
 
is
 
accumulated
 
and
 
communicated
 
to
 
management,
 
as
 
appropriate,
 
to
 
allow
 
timely
 
decisions
 
regarding
required disclosures.
Internal Control Over Financial Reporting
 
There have been no changes in the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024 that have materially affected, or
are reasonably likely to materially affect, the Corporation’s internal
 
control over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
 
For a discussion of Legal Proceedings, see Note 20
 
to the Consolidated Financial Statements.
Item 1A. Risk Factors
In addition to the other information set forth in
 
this report, you should carefully consider the risk
 
factors discussed under “Part I - Item
1A - Risk Factors” in our 2023 Form
 
10-K. These factors could materially adversely affect our business, financial condition, liquidity,
results of
 
operations and
 
capital position,
 
and could
 
cause our
 
actual results
 
to
 
differ
 
materially from
 
our historical
 
results or
 
the
results contemplated
 
by the
 
forward-looking statements
 
contained in
 
this report.
 
Also refer
 
to the
 
discussion in
 
“Part I
 
- Item
 
2 –
Management’s Discussion
 
and Analysis
 
of Financial
 
Condition and
 
Results of
 
Operations” in
 
this report
 
for additional
 
information
that may supplement or update the discussion
 
of risk factors below and in our 2023 Form 10-K.
There have been no material changes to the risk
 
factors previously disclosed under Item 1A of the
 
Corporation’s 2023 Form 10-K.
The risks described
 
in our 2023 Form
 
10-K and in
 
this report are not
 
the only risks
 
facing us. Additional risks
 
and uncertainties not
currently
 
known
 
to
 
us
 
or
 
that
 
we
 
currently
 
deem
 
to
 
be
 
immaterial
 
also
 
may
 
materially
 
adversely
 
affect
 
our
 
business,
 
financial
condition, liquidity, results of operations and capital position.
Item 2.
 
Unregistered Sales of Equity Securities and
 
Use of Proceeds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
186
The Corporation did not have any unregistered
 
sales of equity securities during the quarter ended September
 
30, 2024.
Issuer Purchases of Equity Securities
The following table
 
sets forth the
 
details of
 
purchases of common
 
stock by
 
the Corporation and
 
its affiliated
 
purchasers during the
quarter ended September 30, 2024:
Issuer Purchases of Equity Securities
Not in thousands
Period
Total Number of
Shares Purchased [1]
Average Price Paid per
Share
Total Number of
 
Shares
Purchased as Part of Publicly
Announced Plans or Programs [2]
Approximate Dollar Value of
Shares that May Yet be
Purchased Under the Plans or
Programs [2]
July 1 - July 31
2,668
$
87.72
-
$500,000,000
August 1 - August 31
303,638
97.14
303,202
470,550,231
September 1 - September 30
296,145
99.11
295,894
441,224,007
Total
 
602,451
$
98.06
599,096
$441,224,007
[1] Includes
 
2,668,
 
436
 
and 251
 
shares
 
of
 
the Corporation’s
 
common
 
stock
 
acquired
 
by the
 
Corporation
 
during
 
July,
 
August
 
and
 
September
 
2024,
respectively,
 
in connection
 
with the
 
satisfaction of
 
tax withholding
 
obligations on
 
vested awards
 
of restricted
 
stock or
 
restricted stock
 
units granted
 
to
directors and certain
 
employees under
 
the Corporation’s
 
Omnibus Incentive
 
Plan. The acquired
 
shares of common
 
stock were added
 
back to treasury
stock.
 
[2] As part of its capital
 
plan, in July 2024,
 
the Corporation announced plans
 
to repurchase up to
 
$500 million in common
 
stock and repurchases
 
began
in August
 
2024.
 
As of
 
September
 
30, 2024,
 
the Corporation
 
completed the
 
repurchase of
 
599,096 shares
 
of common
 
stock for
 
$58.8
 
million
 
at an
average price of $98.11 per share,
 
under the previously announced share repurchase authorization.
Item 3.
 
Defaults Upon Senior Securities
None.
 
Item 4.
 
Mine Safety Disclosures
Not applicable.
 
Item 5. Other Information
Rule 10b5-1 Trading Plans or Other Preplanned Trading Arrangements
Certain of our
 
officers or directors have
 
made, and may from
 
time to time make,
 
elections to participate in,
 
and are
participating in
,
our dividend reinvestment and purchase plan, the
 
Company stock fund associated with our 401(k)
 
plans and/or the Company stock
fund associated with
 
our non-qualified deferred compensation
 
plans and have shares
 
withheld to cover
 
withholding taxes upon the
vesting of
 
equity awards, which
 
may be
 
designed to satisfy
 
the affirmative defense
 
conditions of Rule
 
10b5-1 under the
 
Exchange
Act or may constitute non-Rule 10b5–1
trading arrangements
 
(as defined in Item 408(c) of Regulation
 
S-K).
 
 
 
187
Item 6.
 
Exhibits
 
Exhibit Index
Exhibit No
Exhibit Description
22.1
31.1
31.2
32.1
32.2
101. INS
XBRL Instance Document – the instance document
 
does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline Document.
101.SCH
Inline Taxonomy Extension Schema Document
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101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document
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101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
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104
The cover page of Popular, Inc. Quarterly Report on Form 10-Q for the
 
quarter ended September 30,
2024, formatted in Inline XBRL (included within the Exhibit
 
101 attachments)
(1)
(1)
 
Included herewith
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.
 
 
 
188
SIGNATURES
Pursuant to the
 
requirements of the Securities Exchange
 
Act of 1934, the
 
registrant has duly caused this
 
report to be signed
 
on its
behalf by the undersigned thereunto duly authorized.
POPULAR, INC.
(Registrant)
Date: November 12, 2024
By: /s/ Jorge J. García
Jorge J. García
Executive Vice President &
Chief Financial Officer
Date: November 12, 2024
By: /s/ Denissa M. Rodríguez
Denissa M. Rodríguez
Senior Vice President & Corporate Comptroller