8-K
Popular, Inc. (BPOP)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 20, 2021
POPULAR, INC.
(Exact name of registrant as specified in its charter)
| Puerto Rico | 001-34084 | 66-0667416 |
|---|---|---|
| (State or other jurisdiction of<br> <br>incorporation or organization) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification Number) |
| 209 Muñoz Rivera Avenue<br> <br>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)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock ($0.01 par value) | BPOP | The NASDAQ Stock Market |
| 6.70% Cumulative Monthly Income Trust Preferred Securities | BPOPN | The NASDAQ Stock Market |
| 6.125% Cumulative Monthly Income Trust Preferred Securities | BPOPM | The NASDAQ Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 20, 2021, Popular, Inc. (the “Corporation”) issued a press release announcing its unaudited financial results for the quarter ended September 30, 2021, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished pursuant to this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any of the Corporation’s filings under the Securities Act of 1933, as amended, unless otherwise expressly stated in such filing.
Item 7.01. Regulation FD Disclosure.
The Corporation is furnishing information regarding its conference call to discuss its financial results for the quarter ended September 30, 2021. A copy of the presentation to be used by the Corporation on the conference call is attached hereto as Exhibit 99.2.
The information furnished pursuant to this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any of the Corporation’s filings under the Securities Act of 1933, as amended, unless otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.
| 99.1 | Press Release dated October 20, 2021 – Third Quarter 2021 Financial Results. |
|---|---|
| 99.2 | Popular, Inc. Conference Call Presentation – Third Quarter 2021 Financial Results. |
| 101 | Pursuant to Rule 406 of Regulation S-T, the cover page is formatted in Inline XBRL (Inline eXtensible Business Reporting Language). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| POPULAR, INC. | ||
|---|---|---|
| (Registrant) | ||
| Date: October 20, 2021 | By: | /s/ Jorge J. García |
| Jorge J. García | ||
| Senior Vice President and Corporate Comptroller |
EX-99.1
Exhibit 99.1
Popular, Inc. Announces Third Quarter 2021 Financial Results
| • | Net income of $248.1 million in Q3 2021, compared to net income of $218.1 million in Q2 2021. |
|---|---|
| • | Net interest margin of 2.77% in Q3 2021, compared to 2.91% in Q2 2021; net interest margin on a taxableequivalent basis of 3.04% in Q3 2021, compared to 3.22% in Q2 2021. |
| --- | --- |
| • | Credit Quality: |
| --- | --- |
| • | Non-performing loans held-in-portfolio (“NPLs”) decreased by $52.3 million from Q2 2021; NPLs to loans ratio at 2.2% vs. 2.4% in Q2 2021; |
| --- | --- |
| • | Net charge-offs (“NCOs”) increased by $10.1 million from Q2 2021; NCOs at 0.12% of averageloans held-in-portfolio vs. (0.02%) in Q2 2021; |
| --- | --- |
| • | Allowance for credit losses (“ACL”) to loans held-in-portfolio at 2.49% vs. 2.70% in Q2 2021; and |
| --- | --- |
| • | ACL to NPLs at 113.6% vs. 114.7% in Q2 2021. |
| --- | --- |
| • | Common Equity Tier 1 ratio of 17.36%, Common Equity per Share of $74.66 and Tangible Book Value per Share of$66.01 at September 30, 2021. |
| --- | --- |
SAN JUAN, Puerto Rico — (BUSINESS WIRE) — Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported net income of $248.1 million for the quarter ended September 30, 2021, compared to net income of $218.1 million for the quarter ended June 30, 2021.
Ignacio Alvarez, President and Chief Executive Officer, said: “The third quarter was another strong quarter. We achieved net income of $248.1 million, driven by a reserve release of $61 million. The release reflects strong credit quality performance as well as a positive economic outlook. We continued to see higher credit and debit card spending, strong auto and mortgage originations as well as higher deposits. During the quarter we also continued to return capital to our shareholders, completing our $350 million accelerated repurchase program and announcing the redemption of $187 million in high-cost trust preferred securities. On October 15, 2021 we also completed a bolt-on acquisition of a national equipment leasing platform that complements our existing healthcare lending vertical. I am extremely proud of the work our team has accomplished during 2021 as we continue to serve our clients and communities.”
1
Significant Events
Financial Highlights
For the third quarter of 2021, the Corporation recorded net income of $248.1 million, compared to a net income of $218.1 million for the previous quarter. The third quarter’s results include a release in the allowance for credit losses of $61.2 million driven by improving credit quality and the improved macroeconomic outlook. Net Interest income was $489.4 million, an increase of $1.6 million compared to the previous quarter, mainly due to higher average earning assets and higher income from the loans issued under the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), offset in part by a lower discount amortization of purchased credit deteriorated (“PCD”) loans. Net interest margin decreased 14 basis points to 2.77%. Total assets grew by $1.5 billion from the previous quarter, reflecting an increase in deposits across various sectors, principally from the Puerto Rico public sector.
Acquisition of K2 Capital Group LLC
On October 15, 2021, Popular Equipment Finance, LLC (“PEF”), a newly-formed wholly-owned subsidiary of Popular Bank (“PB”), completed the acquisition of certain assets and the assumption of certain liabilities of Minnesota-based K2 Capital Group LLC’s (“K2”) equipment leasing and financing business (the “Acquired Business”). PEF made a payment to K2 at closing of approximately $159 million in cash, representing a premium of approximately $40 million over the book value of K2’s net assets. An additional approximately $29 million in earnout payments could be payable to K2 over the next three years, contingent upon the achievement of certain agreed-upon financial targets during such period.
Specializing in the healthcare industry, the Acquired Business provides a variety of lease products, including operating and capital leases, and also offers private label vendor finance programs to equipment manufacturers and healthcare organizations. The acquisition provides PB with a national equipment leasing platform that complements its existing healthcare lending business.
As part of the transaction, PEF acquired approximately $119 million in net assets that consisted mainly of capital leases. All of K2’s former employees, including its management team, became PEF employees at the closing of the transaction. The transaction will be accounted for as a business combination.
Capital Actions
Accelerated Share Repurchase
On September 9, 2021, the Corporation completed its previously announced accelerated share repurchase program for the repurchase of an aggregate $350 million of Popular’s common stock. Under the terms of the accelerated share repurchase agreement (the “ASR Agreement”), on May 4, 2021, the Corporation made an initial payment of $350 million and received an initial delivery of 3,785,831 shares of Popular’s Common Stock (the “Initial Shares”). The transaction was accounted for as a treasury stock transaction. As a result of the receipt of the Initial Shares, the Corporation recognized in shareholders’ equity approximately $280 million in treasury stock and $70 million as a reduction in capital surplus. Upon the final settlement of the ASR Agreement, the Corporation received an additional 828,965 shares and recognized $61 million as treasury stock with a corresponding increase in its capital surplus account. The Corporation repurchased a total of 4,614,796 shares at an average purchase price of $75.84 under the ASR Agreement.
Redemption of Trust Preferred Securities
On September 30, 2021, the Corporation announced that it had sent a redemption notice to The Bank of New York Mellon, the Property Trustee for Popular Capital Trust I (the “Trust”), to redeem, on November 1, 2021, all outstanding 6.70% Cumulative Monthly Income Trust Preferred Securities (the “Capital Securities”) issued by the Trust (liquidation amount of $25 per security and amounting to $186,663,800 (or $181,063,250 after excluding Popular’s participation in the Trust of $5,600,550) in the aggregate). The redemption price for the Capital Securities will be equal to $25 per security plus accrued and unpaid distributions up to and excluding the redemption date in the amount of $0.139583 per security, for a total payment per security in the amount of $25.139583. Upon redemption, Popular intends to apply for delisting of the Popular Capital Trust I (NASDAQ: BPOPN) from the Nasdaq Global Select Market
2
Earnings Highlights
| (Unaudited) | Quarters ended | Nine months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share information) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | 30-Sep-21 | 30-Sep-20 | ||||||||
| Net interest income | $ | 489,393 | $ | 487,802 | $ | 461,021 | $ | 1,456,307 | $ | 1,384,997 | |||
| Provision for credit losses (benefit) | (61,173 | ) | (17,015 | ) | 19,138 | (160,414 | ) | 271,318 | |||||
| Net interest income after provision for credit losses (benefit) | 550,566 | 504,817 | 441,883 | 1,616,721 | 1,113,679 | ||||||||
| Other non-interest income | 169,258 | 154,540 | 128,767 | 477,451 | 367,465 | ||||||||
| Operating expenses | 388,168 | 368,185 | 361,066 | 1,131,881 | 1,081,905 | ||||||||
| Income before income tax | 331,656 | 291,172 | 209,584 | 962,291 | 399,239 | ||||||||
| Income tax expense | 83,542 | 73,093 | 41,168 | 233,466 | 68,893 | ||||||||
| Net income | $ | 248,114 | $ | 218,079 | $ | 168,416 | $ | 728,825 | $ | 330,346 | |||
| Net income applicable to common stock | $ | 247,761 | $ | 217,726 | $ | 168,064 | $ | 727,766 | $ | 328,941 | |||
| Net income per common share-basic | $ | 3.09 | $ | 2.67 | $ | 2.01 | $ | 8.89 | $ | 3.80 | |||
| Net income per common share-diluted | $ | 3.09 | $ | 2.66 | $ | 2.00 | $ | 8.87 | $ | 3.80 |
Net interest income on a taxable equivalent basis – Non-GAAP financialmeasure
Net interest income, on a taxable equivalent basis, is presented with its different components in Table D and E for the quarter and nine months ended September 30, 2021, and comparable periods. 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.
Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.
Net interest income for the quarter ended September 30, 2021 was $489.4 million compared to $487.8 million in the previous quarter, an increase of $1.6 million. The total net impact on net interest income of the third quarter having one more day than the second quarter of 2021 is estimated at $3.8 million. Net interest income, on a taxable equivalent basis, for the third quarter of 2021 was $536.3 million, a decrease of $4.9 million when compared to $541.2 million in the second quarter of 2021. The decrease in net interest income on a taxable equivalent is related to lower exempt income mainly from mortgage-backed securities. On a taxable equivalent basis, the total net impact on net interest income of the third quarter having of one more day than the second quarter of 2021 is estimated at $4.1 million.
The net interest margin decreased 14 basis points to 2.77% compared to 2.91% in the previous quarter. The decrease in the net interest margin is due to a higher proportion of money market and investment securities, which carry a low yield, resulting from a higher volume of deposits in the quarter, lower discount amortization of PCD loans, partially offset by higher loan fees related to loans issued under the SBA PPP and a lower cost of deposits. On a taxable equivalent basis, net interest margin for the third quarter of 2021 was 3.04% compared to 3.22% in the second quarter of 2021, a decrease of 18 basis points. The main variances in net interest income on a taxable equivalent basis were:
| • | Lower interest income from money market investments, trading and investment securities by $7.7 million due<br>to lower volume and yield of mortgage-backed securities, partially offset by a higher volume of lower yielding U.S. Treasury notes |
|---|
Partially offset by:
| • | Higher interest income from loans by $1.5 million mainly due to the following: |
|---|---|
| • | Higher interest income from commercial loans driven by higher interest income and fees from PPP loans by<br>$8.1 million and the impact of one more day in the quarter or $1.9 million, offset in part by a lower discount amortization on PCD loans of approximately $9.3 million; and |
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3
| • | auto and lease financing continuing its positive trend increasing $147 million in average loan balances and<br>reflecting an increase in interest income of $1.8 million. The decrease in yield of the portfolio is driven by lower amortization on a previously purchased auto loans portfolio Partially offset by: |
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| • | Lower interest income from mortgage loans due to lower average volume resulting from continued amortization of<br>the portfolio at Banco Popular de Puerto Rico (“BPPR”); and |
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| • | lower interest income from consumer loans, mainly credit cards, due to the reversal last quarter of<br>$1.6 million from the reserve for uncollectible interest. |
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| • | Lower interest expense on deposits by $1.1 million resulting from a lower cost by 3 basis points driven by a<br>higher volume of low yielding deposits, reduction of costs in several non-maturity deposit products and renewals of time deposits in a lower interest rate environment. These positive variances in deposit cost<br>were partially offset by higher volume of interest-bearing deposits by $2.8 billion. |
| --- | --- |
The Corporation recognized income of $22.0 million related to loans issued under the SBA PPP program during the third quarter, compared to $13.9 million in the previous quarter. These loans carried a yield of approximately 10.10% during this quarter, including the amortization of fee income received under the SBA PPP program, compared to 4.45% last quarter. At September 30, 2021, the Corporation had unamortized fee income related to the SBA PPP program of $40.0 million and outstanding loan balances of $669.8 million.
Net interest income for the BPPR segment amounted to $419.2 million for the quarter ended September 30, 2021, flat quarter over quarter. The net interest margin for the third quarter of 2021 was 2.75%, a decrease of 16 basis points when compared to 2.91% for the previous quarter. As discussed above, net interest margin was negatively impacted by a higher volume of money market and investment securities, lower amortization of discount on PCD loans, partially offset by higher fees resulting from the forgiveness and amortization of SBA PPP loans of approximately $8.1 million and lower deposit cost. The cost of interest-bearing deposits was 0.17%, compared to 0.18% reported in the second quarter. Total cost of deposits for the quarter was 0.13%, compared to 0.14% reported in the second quarter of 2021.
Net interest income for the PB segment was $80.0 million for the quarter ended September 30, 2021, compared to $78.7 million during the previous quarter. Net interest margin for the quarter was 3.36% higher than the 3.33% the previous quarter. The cost of interest-bearing deposits was 0.56%, compared to 0.60% in the previous quarter, decreasing for the eighth consecutive quarter. Total cost of deposits for the quarter, including demand deposits, was 0.43%, compared to 0.47% reported in the second quarter of 2021.
Non-interest income
Non-interest income increased by $14.8 million to $169.3 million for the quarter ended September 30, 2021, compared to $154.5 million for the quarter ended June 30, 2021. The variance in non-interest income was primarily driven by:
| • | higher other service fees by $4.1 million mainly due to higher insurance fees by $1.6 million, higher<br>other fees by $1.5 million mostly related to loan syndication activities and higher credit card fees by $0.7 million mainly in interchange income and late fees; and |
|---|---|
| • | higher other operating income by $10.0 million mostly due to a gain of $7.0 million recognized by BPPR<br>as a result of the sale and partial leaseback of two corporate office buildings and higher net earnings from the combined portfolio of investments under the equity method by $3.0 million. |
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Refer to Table B for further details.
4
Operating expenses
Operating expenses for the third quarter of 2021 totaled $388.2 million, an increase of $20.0 million from the second quarter of 2021. The variance in operating expenses was driven primarily by:
| • | higher personnel cost by $3.4 million due to higher salaries as a result of salary and annual merit<br>increases granted during the quarter; |
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| • | higher professional fees by $3.6 million mainly due to higher advisory expenses related to corporate<br>initiatives; |
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| • | higher business promotion expense by $1.6 million mainly due to promotional events during the quarter;<br> |
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| • | higher FDIC deposit insurance expense by $1.4 million mainly due to higher average total assets;<br> |
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| • | lower other real estate owned (OREO) net benefit by $2.6 million mainly due to lower gain on sale of<br>mortgage properties; |
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| • | higher credit and debit card processing, volume, interchange and other expenses by $2.0 million mainly due<br>to higher volume of transactions; and |
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| • | higher other operating expenses by $4.3 million due to higher printing and supplies cost by<br>$1.1 million and lower gain on sale of repossessed auto units by $1.4 million. |
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Full-time equivalent employees were 8,342 as of September 30, 2021, compared to 8,439 as of June 30, 2021.
For a breakdown of operating expenses by category refer to Table B.
Income taxes
For the quarter ended September 30, 2021, the Corporation recorded an income tax expense of $83.5 million, compared to $73.1 million for the previous quarter. The increase in income tax expense was mainly attributable to higher income before tax during the third quarter of 2021 and lower exempt income. The effective tax rate (“ETR”) for the third quarter of 2021 was 25%, flat when compared with the previous quarter. The ETR of the Corporation is impacted by the composition and source of its taxable income.
Credit Quality
During the third quarter of 2021, the Corporation continued to exhibit favorable credit quality and low credit costs. Early delinquencies and NCOs, remained at relatively low levels when compared to the trend for the past 10-years, although higher than the prior quarter. We will continue to closely monitor COVID-19 pandemic related risks and the effects of the receding stimulus on economic conditions and on borrower performance. However, management believes that the improvement over the last few years in the risk profile of the Corporation’s loan portfolios positions Popular to operate successfully under the current environment.
The following presents credit quality results for the third quarter of 2021:
| • | At September 30, 2021, total non-performing loans held-in-portfolio decreased by $52.3 million from June 30, 2021. BPPR’s NPLs decreased by $47.9 million, driven by lower commercial and mortgage NPLs by<br>$34.3 million and $16.1 million, respectively. The commercial NPLs decrease was mainly due to repayment activity, coupled with charge-offs of $7.6 million related to certain collateral dependent loans, while the mortgage NPLs decrease<br>was due to lower inflows for the quarter. PB’s NPLs decreased by $4.4 million, mostly related to a $5.9 million commercial loan pay-off. At September 30, 2021, the ratio of NPLs to total<br>loans held-in-portfolio was 2.2%, compared to 2.4% in the second quarter of 2021. |
|---|---|
| • | Inflows of NPLs<br>held-in-portfolio, excluding consumer loans, decreased by $43.7 million quarter-over-quarter. In BPPR, total inflows decreased by $37.0 million, mostly driven<br>by lower commercial inflows of $32.2 million, as the prior quarter included the inflow of a single $32.4 million relationship. Mortgage inflows decreased by $4.8 million from the prior quarter, as inflows continue trending lower than pre-pandemic levels. NPL inflows at PB decreased by $6.6 million during the quarter, mostly due to lower commercial inflows. |
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5
| • | NCOs experienced a negative variance of $10.1 million from a net recovery of $1.3 million in the second<br>quarter of 2021 to charge-offs of $8.8 million this quarter. BPPR ‘s NCOs increased by $10.8 million, primarily driven by higher commercial NCOs by $14.2 million partially offset by lower mortgage NCOs by $3.0 million. The<br>increase reflected in the commercial NCOs was mostly driven by two commercial loans with aggregate charge-offs of $7.6 million, combined with the effect of recoveries of $7.9 million in the prior period from the resolution of a non-performing relationship. During the third quarter of 2021, the Corporation’s ratio of annualized net charge-offs to average loans<br>held-in-portfolio was 0.12%, compared to (0.02)% in the second quarter of 2021. Refer to Table M for further information on net charge-offs and related ratios.<br> |
|---|---|
| • | At September 30, 2021, the allowance for credit losses (“ACL”) decreased by $67.2 million, or<br>8.6%, from the second quarter of 2021 to $718.6 million. The ACL incorporated updated macroeconomic scenarios for Puerto Rico and the United States, which continued to show a positive outlook for the economy. In BPPR, the ACL decreased by<br>$45.1 million mainly driven by changes in the macroeconomic scenarios, particularly certain income-related variables, and credit quality. The allowance for the PB segment decreased by $22.1 million mainly driven by a reduction in the<br>qualitative reserve for commercial real estate loans, also influenced by the changes in the macroeconomic scenarios. The ratio of the allowance for credit losses to loans<br>held-in-portfolio was 2.49% in the third quarter of 2021, compared to 2.70% in the previous quarter. The ratio of the allowance for credit losses to NPLs held-in-portfolio stood at 113.6%, compared to 114.7% in the previous quarter. |
| --- | --- |
| • | Given that any one economic outlook is inherently uncertain, the Corporation leverages multiple scenarios to<br>estimate its ACL. The ACL is estimated 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<br>scenario given the uncertainties in the economic outlook and downside risk. The current baseline forecast continues to show a favorable economic scenario. The 2021 forecasted GDP growth is at 6.4% for U.S. and 3.8% for P.R., consistent with the<br>previous 2021 forecast of 6.8% and 3.8%, respectively. The forecasted U.S. unemployment rate average for 2021 of 5.5% remained consistent with the previous estimate of 5.4%. In the case of P.R., the forecasted unemployment rate average for 2021 of<br>8.2% showed a slight improvement when compared to the previous forecast of 8.4%. Average unemployment rate in P.R. is expected to continue declining through 2022, which is now forecasted at 7.2%, improving from the previous forecast of 7.3%.<br> |
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| • | The provision for credit losses for the loan portfolios for the third quarter of 2021 reflected a benefit of<br>$58.6 million, compared to a benefit of $17.5 million in the previous quarter, reflecting changes in the macroeconomic outlook, as well as credit quality trend. The provision for the BPPR segment was a benefit of $36.0 million, a<br>favorable variance of $13.5 million compared to the previous quarter, while the provision expense for the PB segment was a benefit of $22.7 million, a favorable variance of $27.6 million from the previous quarter.<br> |
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| • | The provision for unfunded commitments for the third quarter of 2021 reflected a benefit of $1.5 million,<br>compared to an expense of $0.4 million during the previous quarter. The provision for credit losses in our investment portfolio was a benefit of $1.0 million, compared to an expense of $0.1 million in the second quarter of 2021. The<br>provision for unfunded loan commitments, provision for credit losses on our loan and lease portfolios and provision for credit losses on our investment portfolio are aggregated and presented in the provision for credit losses caption in our<br>Statement of Operations. |
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6
Non-Performing Assets
| (Unaudited) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | ||||||
| Non-performing loans held-in-portfolio | $ | 632,835 | $ | 685,183 | $ | 734,368 | |||
| Non-performing loans held-for-sale | — | 8,700 | 4,070 | ||||||
| Other real estate owned (“OREO”) | 76,828 | 73,272 | 100,592 | ||||||
| Total non-performing assets | $ | 709,663 | $ | 767,155 | $ | 839,030 | |||
| Net charge-offs (recoveries) for the quarter | $ | 8,823 | $ | (1,291 | ) | $ | 16,859 | ||
| Ratios: | |||||||||
| Loans<br>held-in-portfolio | $ | 28,855,372 | $ | 29,062,617 | $ | 29,392,510 | |||
| Non-performing loans held-in-portfolio to loans held-in-portfolio | 2.19 | % | 2.36 | % | 2.50 | % | |||
| Allowance for credit losses to loans held-in-portfolio | 2.49 | 2.70 | 3.15 | ||||||
| Allowance for credit losses to non-performing loans,<br>excluding loans held-for-sale | 113.55 | 114.68 | 126.07 |
Refer to Table K for additional information.
Provision for Credit Losses (Benefit) - Loan Portfolios
| (Unaudited) | Quarters ended | Nine months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | 30-Sep-21 | 30-Sep-20 | ||||||||
| Provision for credit losses (benefit) - loan portfolios: | |||||||||||||
| BPPR | $ | (35,992 | ) | $ | (22,488 | ) | $ | 7,682 | $ | (98,456 | ) | $ | 181,109 |
| Popular U.S. | (22,653 | ) | 4,988 | 11,770 | (53,468 | ) | 90,442 | ||||||
| Total provision for credit losses (benefit) - loan portfolios | $ | (58,645 | ) | $ | (17,500 | ) | $ | 19,452 | $ | (151,924 | ) | $ | 271,551 |
Credit Quality by Segment
| (Unaudited) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | Quarters ended | ||||||||
| BPPR | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | ||||||
| Provision for credit losses (benefit) - loan portfolios | $ | (35,992 | ) | $ | (22,488 | ) | $ | 7,682 | |
| Net charge-offs (recoveries) | 9,336 | (1,483 | ) | 13,769 | |||||
| Total non-performing loans<br>held-in-portfolio | 608,871 | 656,789 | 693,676 | ||||||
| Allowance / loans<br>held-in-portfolio | 2.92 | % | 3.13 | % | 3.48 | % | |||
| Quarters ended | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Popular U.S. | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | ||||||
| Provision for credit losses (benefit) - loan portfolios | $ | (22,653 | ) | $ | 4,988 | $ | 11,770 | ||
| Net charge-offs (recoveries) | (513 | ) | 192 | 3,090 | |||||
| Total non-performing loans<br>held-in-portfolio | 23,964 | 28,394 | 40,692 | ||||||
| Allowance / loans<br>held-in-portfolio | 1.32 | % | 1.57 | % | 2.22 | % |
7
Financial Condition Highlights
| (Unaudited) | ||||||
|---|---|---|---|---|---|---|
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | |||
| Cash and money market investments | $ | 18,065,211 | $ | 18,333,650 | $ | 12,425,126 |
| Investment securities | 24,697,876 | 22,647,401 | 21,478,048 | |||
| Loans | 28,855,372 | 29,062,617 | 29,392,510 | |||
| Total assets | 74,189,163 | 72,657,293 | 65,910,369 | |||
| Deposits | 66,013,561 | 64,641,776 | 56,021,983 | |||
| Borrowings | 1,263,413 | 1,267,545 | 1,407,424 | |||
| Total liabilities | 68,206,192 | 66,842,679 | 59,998,284 | |||
| Stockholders’ equity | 5,982,971 | 5,814,614 | 5,912,085 |
Total assets increased by $1.5 billion from the second quarter of 2021, driven by:
| • | an increase of $2.1 billion in debt securities available-for-sale, mainly due to purchases of U.S. treasury securities, partially offset by paydowns of agency mortgage-backed securities; |
|---|
partially offset by:
| • | a decrease of $0.3 billion in cash and money market investments due to purchases of debt securities available-for-sale; and |
|---|---|
| • | a decrease in loans<br>held-in-portfolio by $0.2 billion mainly due to the forgiveness of approximately $0.4 billion in PPP loans during the quarter. Excluding the decrease in the<br>PPP portfolio, loan balances increased by approximately $0.2 billion mainly in the commercial and auto loan portfolios in BPPR. |
| --- | --- |
Total liabilities increased by $1.4 billion from the second quarter of 2021, mainly due to higher Puerto Rico public sector deposits by $0.7 billion and higher retail and commercial demand deposits by $0.5 billion at BPPR.
Stockholders’ equity increased by approximately $168.4 million from the second quarter of 2021, principally due to net income for the quarter of $248.1 million, partially offset by declared dividends of $36.3 million on common stock, $0.3 million in dividends on preferred stock and lower accumulated unrealized gains on debt securities available-for-sale by $47.0 million.
Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 17.36%, $74.66 and $66.01, respectively, at September 30, 2021, compared to 16.55%, $71.82 and $63.24 at June 30, 2021. Refer to Table A for capital ratios.
8
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s 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 market conditions, capital adequacy and liquidity, the effect of legal and regulatory proceedings (including as a result of any participation in and execution of government programs related to the COVID-19 pandemic), new accounting standards on the Corporation’s financial condition and results of operations, the scope and duration of the COVID-19 pandemic (including the appearance of new strains of the virus), actions taken by governmental authorities in response thereto, and the direct and indirect impact of the pandemic on Popular, our customers, service providers and third parties. 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.
More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2020, in our Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, and in our Form 10-Q for the quarter ended September 30, 2021 to be filed with the Securities and Exchange Commission. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.
About Popular, Inc.
Popular, Inc. (NASDAQ: BPOP) is the leading financial institution in Puerto Rico, by both assets and deposits, and ranks among the top 50 U.S. bank holding companies by assets. Founded in 1893, Banco Popular de Puerto Rico, Popular’s principal subsidiary, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. Popular also offers in Puerto Rico auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the mainland United States, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.
Conference Call
Popular will hold a conference call to discuss its financial results today Wednesday, October 20, 2021 at 11:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.
Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through the dial-in telephone number 1-844-200-6205 (Toll Free) or 1-646-904-5544 (Local).
A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Wednesday, November 17, 2021. The replay dial-in is: 1-866-813-9403 or 1-929-458-6194. The replay passcode is 928924.
An electronic version of this press release can be found at the Corporation’s website: www.popular.com.
9
| Popular, Inc. |
|---|
| Financial Supplement to Third Quarter 2021 Earnings Release |
| Table A - Selected Ratios and Other Information |
| Table B - Consolidated Statement of Operations |
| Table C - Consolidated Statement of Financial Condition |
| Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER |
| Table E - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - YEAR-TO-DATE |
| Table F - Mortgage Banking Activities and Other Service Fees |
| Table G - Loans and Deposits |
| Table H - Loan Delinquency - PUERTO RICO OPERATIONS |
| Table I - Loan Delinquency - POPULAR U.S. OPERATIONS |
| Table J - Loan Delinquency - CONSOLIDATED |
| Table K - Non-Performing Assets |
| Table L - Activity in Non-Performing Loans |
| Table M - Allowance for Credit Losses, Net Charge-offs and Related Ratios |
| Table N - Allowance for Credit Losses - Loan Portfolios - CONSOLIDATED |
| Table O - Allowance for Credit Losses - Loan Portfolios - PUERTO RICO OPERATIONS |
| Table P - Allowance for Credit Losses - Loan Portfolios - POPULAR U.S. OPERATIONS |
| Table Q - Reconciliation to GAAP Financial Measures |
10
POPULAR, INC.
Financial Supplement to Third Quarter 2021 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
| Quarters ended | Nine months ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | 30-Sep-21 | 30-Sep-20 | |||||||||||
| Basic EPS | $ | 3.09 | $ | 2.67 | $ | 2.01 | $ | 8.89 | $ | 3.80 | |||||
| Diluted EPS | $ | 3.09 | $ | 2.66 | $ | 2.00 | $ | 8.87 | $ | 3.80 | |||||
| Average common shares outstanding | 80,126,166 | 81,609,435 | 83,809,272 | 81,864,634 | 86,567,680 | ||||||||||
| Average common shares outstanding - assuming dilution | 80,274,942 | 81,772,789 | 83,836,151 | 82,014,113 | 86,645,691 | ||||||||||
| Common shares outstanding at end of period | 79,841,564 | 80,656,480 | 84,219,464 | 79,841,564 | 84,219,464 | ||||||||||
| Market value per common share | $ | 77.67 | $ | 75.05 | $ | 36.27 | $ | 77.67 | $ | 36.27 | |||||
| Market capitalization - (In millions) | $ | 6,201 | $ | 6,053 | $ | 3,055 | $ | 6,201 | $ | 3,055 | |||||
| Return on average assets | 1.34 | % | 1.24 | % | 1.06 | % | 1.39 | % | 0.76 | % | |||||
| Return on average common equity | 17.10 | % | 15.43 | % | 12.46 | % | 17.09 | % | 8.21 | % | |||||
| Net interest margin (non-taxable equivalent<br>basis) | 2.77 | % | 2.91 | % | 3.06 | % | 2.92 | % | 3.39 | % | |||||
| Net interest margin (taxable equivalent basis) -non-GAAP | 3.04 | % | 3.22 | % | 3.37 | % | 3.23 | % | 3.72 | % | |||||
| Common equity per share | $ | 74.66 | $ | 71.82 | $ | 69.94 | $ | 74.66 | $ | 69.94 | |||||
| Tangible common book value per common share (non-GAAP)<br>[1] | $ | 66.01 | $ | 63.24 | $ | 61.69 | $ | 66.01 | $ | 61.69 | |||||
| Tangible common equity to tangible assets<br>(non-GAAP) [1] | 7.17 | % | 7.09 | % | 7.97 | % | 7.17 | % | 7.97 | % | |||||
| Return on average tangible common equity [1] | 19.44 | % | 17.58 | % | 14.32 | % | 19.46 | % | 9.44 | % | |||||
| Tier 1 capital | 17.43 | % | 16.62 | % | 16.01 | % | 17.43 | % | 16.01 | % | |||||
| Total capital | 19.90 | % | 19.09 | % | 18.49 | % | 19.90 | % | 18.49 | % | |||||
| Tier 1 leverage | 7.38 | % | 7.34 | % | 7.80 | % | 7.38 | % | 7.80 | % | |||||
| Common Equity Tier 1 capital | 17.36 | % | 16.55 | % | 15.93 | % | 17.36 | % | 15.93 | % | |||||
| [1] | Refer to Table Q for reconciliation to GAAP financial measures. | ||||||||||||||
| --- | --- |
11
POPULAR, INC.
Financial Supplement to Third Quarter 2021 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
| Quarters ended | Variance | Quarter ended | Variance | Nine months ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 2021 | Q3 2021 | ||||||||||||||||||||
| (In thousands, except per share information) | 30-Sep-21 | 30-Jun-21 | vs. Q2 2021 | 30-Sep-20 | vs. Q3 2020 | 30-Sep-21 | 30-Sep-20 | ||||||||||||||
| Interest income: | |||||||||||||||||||||
| Loans | $ | 435,296 | $ | 433,781 | $ | 1,515 | $ | 431,286 | $ | 4,010 | $ | 1,303,726 | $ | 1,311,402 | |||||||
| Money market investments | 6,914 | 4,274 | 2,640 | 2,773 | 4,141 | 14,300 | 16,788 | ||||||||||||||
| Investment securities | 87,952 | 91,706 | (3,754 | ) | 79,142 | 8,810 | 265,348 | 243,938 | |||||||||||||
| Total interest income | 530,162 | 529,761 | 401 | 513,201 | 16,961 | 1,583,374 | 1,572,128 | ||||||||||||||
| Interest expense: | |||||||||||||||||||||
| Deposits | 27,029 | 28,060 | (1,031 | ) | 37,554 | (10,525 | ) | 85,290 | 142,435 | ||||||||||||
| Short-term borrowings | 54 | 62 | (8 | ) | 416 | (362 | ) | 259 | 2,109 | ||||||||||||
| Long-term debt | 13,686 | 13,837 | (151 | ) | 14,210 | (524 | ) | 41,518 | 42,587 | ||||||||||||
| Total interest expense | 40,769 | 41,959 | (1,190 | ) | 52,180 | (11,411 | ) | 127,067 | 187,131 | ||||||||||||
| Net interest income | 489,393 | 487,802 | 1,591 | 461,021 | 28,372 | 1,456,307 | 1,384,997 | ||||||||||||||
| Provision for credit losses (benefit) | (61,173 | ) | (17,015 | ) | (44,158 | ) | 19,138 | (80,311 | ) | (160,414 | ) | 271,318 | |||||||||
| Net interest income after provision for credit losses (benefit) | 550,566 | 504,817 | 45,749 | 441,883 | 108,683 | 1,616,721 | 1,113,679 | ||||||||||||||
| Service charges on deposit accounts | 41,312 | 40,153 | 1,159 | 36,849 | 4,463 | 121,085 | 108,671 | ||||||||||||||
| Other service fees | 80,445 | 76,382 | 4,063 | 69,879 | 10,566 | 227,455 | 186,736 | ||||||||||||||
| Mortgage banking activities | 8,307 | 7,448 | 859 | (9,526 | ) | 17,833 | 33,098 | 671 | |||||||||||||
| Net gain on sale of debt securities | 23 | — | 23 | 41 | (18 | ) | 23 | 41 | |||||||||||||
| Net (loss) gain, including impairment, on equity securities | (401 | ) | 1,565 | (1,966 | ) | 5,150 | (5,551 | ) | 1,585 | 4,869 | |||||||||||
| Net profit (loss) on trading account debt securities | 58 | (47 | ) | 105 | 20 | 38 | (34 | ) | 593 | ||||||||||||
| Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale | — | (73 | ) | 73 | (2,198 | ) | 2,198 | (73 | ) | 981 | |||||||||||
| Adjustments (expense) to indemnity reserves on loans sold | 2,038 | 1,668 | 370 | 4,183 | (2,145 | ) | 3,008 | (1,770 | ) | ||||||||||||
| Other operating income | 37,476 | 27,444 | 10,032 | 24,369 | 13,107 | 91,304 | 66,673 | ||||||||||||||
| Total non-interest income | 169,258 | 154,540 | 14,718 | 128,767 | 40,491 | 477,451 | 367,465 | ||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Personnel costs | |||||||||||||||||||||
| Salaries | 95,185 | 90,294 | 4,891 | 91,891 | 3,294 | 274,814 | 278,116 | ||||||||||||||
| Commissions, incentives and other bonuses | 25,892 | 26,374 | (482 | ) | 17,849 | 8,043 | 85,484 | 59,183 | |||||||||||||
| Pension, postretirement and medical insurance | 13,893 | 13,289 | 604 | 10,639 | 3,254 | 38,106 | 31,669 | ||||||||||||||
| Other personnel costs, including payroll taxes | 22,677 | 24,247 | (1,570 | ) | 15,562 | 7,115 | 72,926 | 52,970 | |||||||||||||
| Total personnel costs | 157,647 | 154,204 | 3,443 | 135,941 | 21,706 | 471,330 | 421,938 | ||||||||||||||
| Net occupancy expenses | 24,896 | 24,562 | 334 | 25,907 | (1,011 | ) | 75,471 | 76,552 | |||||||||||||
| Equipment expenses | 22,537 | 22,805 | (268 | ) | 24,088 | (1,551 | ) | 66,917 | 66,537 | ||||||||||||
| Other taxes | 14,459 | 13,205 | 1,254 | 13,918 | 541 | 41,623 | 40,922 | ||||||||||||||
| Professional fees | |||||||||||||||||||||
| Collections, appraisals and other credit related fees | 3,166 | 3,486 | (320 | ) | 2,862 | 304 | 9,972 | 9,640 | |||||||||||||
| Programming, processing and other technology services | 69,221 | 67,152 | 2,069 | 64,876 | 4,345 | 202,739 | 187,082 | ||||||||||||||
| Legal fees, excluding collections | 2,535 | 2,367 | 168 | 2,707 | (172 | ) | 7,267 | 7,877 | |||||||||||||
| Other professional fees | 29,787 | 28,148 | 1,639 | 26,029 | 3,758 | 85,832 | 85,493 | ||||||||||||||
| Total professional fees | 104,709 | 101,153 | 3,556 | 96,474 | 8,235 | 305,810 | 290,092 | ||||||||||||||
| Communications | 6,133 | 6,005 | 128 | 5,694 | 439 | 18,971 | 17,222 | ||||||||||||||
| Business promotion | 18,116 | 16,511 | 1,605 | 14,664 | 3,452 | 47,148 | 41,142 | ||||||||||||||
| FDIC deposit insurance | 7,181 | 5,742 | 1,439 | 6,568 | 613 | 18,891 | 16,988 | ||||||||||||||
| Other real estate owned (OREO) (income) expenses | (1,722 | ) | (4,299 | ) | 2,577 | (1,615 | ) | (107 | ) | (10,554 | ) | 520 | |||||||||
| Credit and debit card processing, volume, interchange and other expenses | 12,960 | 10,917 | 2,043 | 11,744 | 1,216 | 36,331 | 31,899 | ||||||||||||||
| Other operating expenses |
12
| Operational losses | 7,147 | 6,528 | 619 | 8,837 | (1,690 | ) | 21,571 | 21,339 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| All other | 13,322 | 9,597 | 3,725 | 17,770 | (4,448 | ) | 35,283 | 51,409 | ||||||||
| Total other operating expenses | 20,469 | 16,125 | 4,344 | 26,607 | (6,138 | ) | 56,854 | 72,748 | ||||||||
| Amortization of intangibles | 783 | 1,255 | (472 | ) | 1,076 | (293 | ) | 3,089 | 5,345 | |||||||
| Total operating expenses | 388,168 | 368,185 | 19,983 | 361,066 | 27,102 | 1,131,881 | 1,081,905 | |||||||||
| Income before income tax | 331,656 | 291,172 | 40,484 | 209,584 | 122,072 | 962,291 | 399,239 | |||||||||
| Income tax expense | 83,542 | 73,093 | 10,449 | 41,168 | 42,374 | 233,466 | 68,893 | |||||||||
| Net income | $ | 248,114 | $ | 218,079 | $ | 30,035 | $ | 168,416 | $ | 79,698 | $ | 728,825 | $ | 330,346 | ||
| Net income applicable to common stock | $ | 247,761 | $ | 217,726 | $ | 30,035 | $ | 168,064 | $ | 79,697 | $ | 727,766 | $ | 328,941 | ||
| Net income per common share - basic | $ | 3.09 | $ | 2.67 | $ | 0.42 | $ | 2.01 | $ | 1.08 | $ | 8.89 | $ | 3.80 | ||
| Net income per common share - diluted | $ | 3.09 | $ | 2.66 | $ | 0.43 | $ | 2.00 | $ | 1.09 | $ | 8.87 | $ | 3.80 | ||
| Dividends Declared per Common Share | $ | 0.45 | $ | 0.45 | $ | — | $ | 0.40 | $ | 0.05 | $ | 1.30 | $ | 1.20 |
13
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
| Variance | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 2021 vs. | ||||||||||||
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | Q2 2021 | ||||||||
| Assets: | ||||||||||||
| Cash and due from banks | $ | 538,973 | $ | 530,849 | $ | 565,202 | $ | 8,124 | ||||
| Money market investments | 17,526,238 | 17,802,801 | 11,859,924 | (276,563 | ) | |||||||
| Trading account debt securities, at fair value | 36,064 | 35,931 | 33,053 | 133 | ||||||||
| Debt securities<br>available-for-sale, at fair value | 24,391,226 | 22,335,167 | 21,177,839 | 2,056,059 | ||||||||
| Debt securities<br>held-to-maturity, at amortized cost | 85,655 | 88,801 | 93,163 | (3,146 | ) | |||||||
| Less: Allowance for credit losses | 9,222 | 10,214 | 12,421 | (992 | ) | |||||||
| Total debt securities<br>held-to-maturity, net | 76,433 | 78,587 | 80,742 | (2,154 | ) | |||||||
| Equity securities | 184,931 | 187,502 | 173,993 | (2,571 | ) | |||||||
| Loans<br>held-for-sale, at lower of cost or fair value | 91,313 | 85,315 | 102,760 | 5,998 | ||||||||
| Loans<br>held-in-portfolio | 29,089,241 | 29,286,225 | 29,586,348 | (196,984 | ) | |||||||
| Less: Unearned income | 233,869 | 223,608 | 193,838 | 10,261 | ||||||||
| Allowance for credit losses | 718,575 | 785,790 | 925,850 | (67,215 | ) | |||||||
| Total loans<br>held-in-portfolio, net | 28,136,797 | 28,276,827 | 28,466,660 | (140,030 | ) | |||||||
| Premises and equipment, net | 487,526 | 486,443 | 510,473 | 1,083 | ||||||||
| Other real estate | 76,828 | 73,272 | 100,592 | 3,556 | ||||||||
| Accrued income receivable | 200,649 | 203,419 | 204,233 | (2,770 | ) | |||||||
| Mortgage servicing rights, at fair value | 116,567 | 119,467 | 123,552 | (2,900 | ) | |||||||
| Other assets | 1,634,839 | 1,750,151 | 1,816,706 | (115,312 | ) | |||||||
| Goodwill | 671,122 | 671,122 | 671,122 | — | ||||||||
| Other intangible assets | 19,657 | 20,440 | 23,518 | (783 | ) | |||||||
| Total assets | $ | 74,189,163 | $ | 72,657,293 | $ | 65,910,369 | $ | 1,531,870 | ||||
| Liabilities and Stockholders’ Equity: | ||||||||||||
| Liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Non-interest bearing | $ | 15,147,567 | $ | 14,920,887 | $ | 13,546,432 | $ | 226,680 | ||||
| Interest bearing | 50,865,994 | 49,720,889 | 42,475,551 | 1,145,105 | ||||||||
| Total deposits | 66,013,561 | 64,641,776 | 56,021,983 | 1,371,785 | ||||||||
| Assets sold under agreements to repurchase | 86,470 | 90,925 | 106,028 | (4,455 | ) | |||||||
| Other short-term borrowings | — | — | 100,000 | — | ||||||||
| Notes payable | 1,176,943 | 1,176,620 | 1,201,396 | 323 | ||||||||
| Other liabilities | 929,218 | 933,358 | 2,568,877 | (4,140 | ) | |||||||
| Total liabilities | 68,206,192 | 66,842,679 | 59,998,284 | 1,363,513 | ||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred stock | 22,143 | 22,143 | 22,143 | — | ||||||||
| Common stock | 1,046 | 1,045 | 1,045 | 1 | ||||||||
| Surplus | 4,569,641 | 4,506,659 | 4,521,689 | 62,982 | ||||||||
| Retained earnings | 2,882,340 | 2,670,885 | 2,168,153 | 211,455 | ||||||||
| Treasury stock | (1,352,104 | ) | (1,290,427 | ) | (1,016,361 | ) | (61,677 | ) | ||||
| Accumulated other comprehensive (loss) income, net of tax | (140,095 | ) | (95,691 | ) | 215,416 | (44,404 | ) | |||||
| Total stockholders’ equity | 5,982,971 | 5,814,614 | 5,912,085 | 168,357 | ||||||||
| Total liabilities and stockholders’ equity | $ | 74,189,163 | $ | 72,657,293 | $ | 65,910,369 | $ | 1,531,870 |
14
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER
(Unaudited)
| Quarters ended | Variance | |||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | Q3 2021 vs. Q2 2021 | Q3 2021 vs. Q3 2020 | ||||||||||||||||||||||||||||||||||||||
| ($ amounts in millions) | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | |||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||||||||||||||||||||
| Money market, trading and investment securities | $ | 41,279 | $ | 129.8 | 1.25 | % | $ | 38,136 | $ | 137.5 | 1.44 | % | $ | 31,337 | $ | 117.5 | 1.49 | % | $ | 3,143 | ($ | 7.7 | ) | (0.19 | )% | $ | 9,942 | $ | 12.3 | (0.24 | )% | |||||||||||
| Loans: | ||||||||||||||||||||||||||||||||||||||||||
| Commercial | 13,265 | 179.2 | 5.36 | 13,539 | 176.9 | 5.24 | 13,669 | 170.1 | 4.95 | (274 | ) | 2.3 | 0.12 | (404 | ) | 9.1 | 0.41 | |||||||||||||||||||||||||
| Construction | 854 | 11.6 | 5.40 | 858 | 11.6 | 5.43 | 930 | 13.3 | 5.67 | (4 | ) | — | (0.03 | ) | (76 | ) | (1.7 | ) | (0.27 | ) | ||||||||||||||||||||||
| Mortgage | 7,652 | 97.8 | 5.11 | 7,765 | 99.4 | 5.12 | 7,094 | 95.8 | 5.40 | (113 | ) | (1.6 | ) | (0.01 | ) | 558 | 2.0 | (0.29 | ) | |||||||||||||||||||||||
| Consumer | 2,435 | 67.7 | 11.03 | 2,431 | 68.7 | 11.34 | 2,722 | 76.7 | 11.21 | 4 | (1.0 | ) | (0.31 | ) | (287 | ) | (9.0 | ) | (0.18 | ) | ||||||||||||||||||||||
| Auto | 3,372 | 71.2 | 8.37 | 3,280 | 70.1 | 8.58 | 3,006 | 68.6 | 9.08 | 92 | 1.1 | (0.21 | ) | 366 | 2.6 | (0.71 | ) | |||||||||||||||||||||||||
| Lease financing | 1,317 | 19.7 | 5.99 | 1,262 | 19.0 | 6.01 | 1,122 | 17.1 | 6.08 | 55 | 0.7 | (0.02 | ) | 195 | 2.6 | (0.09 | ) | |||||||||||||||||||||||||
| Total loans | 28,895 | 447.2 | 6.15 | 29,135 | 445.7 | 6.13 | 28,543 | 441.6 | 6.16 | (240 | ) | 1.5 | 0.02 | 352 | 5.6 | (0.01 | ) | |||||||||||||||||||||||||
| Total interest earning assets | $ | 70,174 | $ | 577.0 | 3.27 | % | $ | 67,271 | $ | 583.2 | 3.47 | % | $ | 59,880 | $ | 559.1 | 3.72 | % | $ | 2,903 | $ | (6.2 | ) | (0.20 | )% | $ | 10,294 | $ | 17.9 | (0.45 | )% | |||||||||||
| Allowance for credit losses - loan portfolio | (778 | ) | (801 | ) | (923 | ) | 23 | 145 | ||||||||||||||||||||||||||||||||||
| Allowance for credit losses - investment securities | (10 | ) | (10 | ) | (13 | ) | — | 3 | ||||||||||||||||||||||||||||||||||
| Other non-interest earning assets | 3,901 | 3,906 | 4,176 | (5 | ) | (275 | ) | |||||||||||||||||||||||||||||||||||
| Total average assets | $ | 73,287 | $ | 70,366 | $ | 63,120 | $ | 2,921 | $ | 10,167 | ||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | ||||||||||||||||||||||||||||||||||||||||||
| Interest bearing deposits: | ||||||||||||||||||||||||||||||||||||||||||
| NOW and money market | $ | 27,773 | $ | 7.9 | 0.11 | % | $ | 25,102 | $ | 8.0 | 0.13 | % | $ | 21,225 | $ | 9.1 | 0.17 | % | $ | 2,671 | $ | (0.1 | ) | (0.02 | )% | $ | 6,548 | $ | (1.2 | ) | (0.06 | )% | ||||||||||
| Savings | 15,621 | 6.4 | 0.16 | 15,384 | 6.9 | 0.18 | 13,103 | 8.3 | 0.25 | 237 | (0.5 | ) | (0.02 | ) | 2,518 | (1.9 | ) | (0.09 | ) | |||||||||||||||||||||||
| Time deposits | 6,957 | 12.7 | 0.73 | 7,104 | 13.2 | 0.74 | 7,810 | 20.2 | 1.03 | (147 | ) | (0.5 | ) | (0.01 | ) | (853 | ) | (7.5 | ) | (0.30 | ) | |||||||||||||||||||||
| Total interest-bearing deposits | 50,351 | 27.0 | 0.21 | 47,590 | 28.1 | 0.24 | 42,138 | 37.6 | 0.35 | 2,761 | (1.1 | ) | (0.03 | ) | 8,213 | (10.6 | ) | (0.14 | ) | |||||||||||||||||||||||
| Borrowings | 1,284 | 13.7 | 4.28 | 1,316 | 13.9 | 4.24 | 1,358 | 14.6 | 4.31 | (32 | ) | (0.2 | ) | 0.04 | (74 | ) | (0.9 | ) | (0.03 | ) | ||||||||||||||||||||||
| Total interest-bearing liabilities | 51,635 | 40.7 | 0.31 | 48,906 | 42.0 | 0.34 | 43,496 | 52.2 | 0.48 | 2,729 | (1.3 | ) | (0.03 | ) | 8,139 | (11.5 | ) | (0.17 | ) | |||||||||||||||||||||||
| Net interest spread | 2.96 | % | 3.13 | % | 3.24 | % | (0.17 | )% | (0.28 | )% | ||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 14,955 | 14,920 | 12,806 | 35 | 2,149 | |||||||||||||||||||||||||||||||||||||
| Other liabilities | 927 | 857 | 1,435 | 70 | (508 | ) | ||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 5,770 | 5,683 | 5,383 | 87 | 387 | |||||||||||||||||||||||||||||||||||||
| Total average liabilities and stockholders’ equity | $ | 73,287 | $ | 70,366 | $ | 63,120 | $ | 2,921 | $ | 10,167 | ||||||||||||||||||||||||||||||||
| Net interest income / margin on a taxable equivalent basis (Non-GAAP) | $ | 536.3 | 3.04 | % | $ | 541.2 | 3.22 | % | $ | 506.9 | 3.37 | % | ($ | 4.9 | ) | (0.18 | )% | $ | 29.4 | (0.33 | )% | |||||||||||||||||||||
| Taxable equivalent adjustment | 46.9 | 53.4 | 45.8 | (6.5 | ) | 1.1 | ||||||||||||||||||||||||||||||||||||
| Net interest income / margin non-taxable<br>equivalent basis (GAAP) | $ | 489.4 | 2.77 | % | $ | 487.8 | 2.91 | % | $ | 461.0 | 3.06 | % | $ | 1.6 | (0.14 | )% | $ | 28.3 | (0.29 | )% |
15
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table E - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - YEAR-TO-DATE
(Unaudited)
| Nine months ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 30-Sep-21 | 30-Sep-20 | Variance | |||||||||||||||||||||||
| ($ amounts in millions) | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | Average<br>balance | Income /<br>Expense | Yield /<br>Rate | ||||||||||||||||
| Assets: | |||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||
| Money market, trading and investment securities | $ | 37,751 | $ | 399.8 | 1.42 | % | $ | 26,497 | $ | 364.7 | 1.84 | % | $ | 11,254 | $ | 35.1 | (0.42 | )% | |||||||
| Loans: | |||||||||||||||||||||||||
| Commercial | 13,475 | 535.1 | 5.32 | 13,122 | 522.1 | 5.31 | 353 | 13.0 | 0.01 | ||||||||||||||||
| Construction | 874 | 35.1 | 5.39 | 909 | 39.6 | 5.83 | (35 | ) | (4.5 | ) | (0.44 | ) | |||||||||||||
| Mortgage | 7,761 | 295.6 | 5.08 | 7,054 | 281.2 | 5.32 | 707 | 14.4 | (0.24 | ) | |||||||||||||||
| Consumer | 2,460 | 206.9 | 11.24 | 2,916 | 248.9 | 11.43 | (456 | ) | (42.0 | ) | (0.19 | ) | |||||||||||||
| Auto | 3,285 | 209.5 | 8.55 | 2,985 | 202.4 | 9.06 | 300 | 7.1 | (0.51 | ) | |||||||||||||||
| Lease financing | 1,265 | 57.1 | 6.01 | 1,092 | 49.5 | 6.04 | 173 | 7.6 | (0.03 | ) | |||||||||||||||
| Total loans | 29,120 | 1,339.3 | 6.16 | 28,078 | 1,343.7 | 6.39 | 1,042 | (4.4 | ) | (0.23 | ) | ||||||||||||||
| Total interest earning assets | $ | 66,871 | $ | 1,739.1 | 3.48 | % | $ | 54,575 | $ | 1,708.4 | 4.18 | % | $ | 12,296 | $ | 30.7 | (0.70 | )% | |||||||
| Allowance for credit losses - loan portfolio | (822 | ) | (886 | ) | 64 | ||||||||||||||||||||
| Allowance for credit losses - investment securities | (10 | ) | (13 | ) | 3 | ||||||||||||||||||||
| Other non-interest earning assets | 3,900 | 4,100 | (200 | ) | |||||||||||||||||||||
| Total average assets | $ | 69,939 | $ | 57,776 | $ | 12,163 | |||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||||||||||
| NOW and money market | $ | 25,201 | $ | 24.2 | 0.13 | % | $ | 18,956 | $ | 45.9 | 0.32 | % | $ | 6,245 | ($ | 21.7 | ) | (0.19 | )% | ||||||
| Savings | 15,127 | 20.3 | 0.18 | 11,899 | 30.2 | 0.34 | 3,228 | (9.9 | ) | (0.16 | ) | ||||||||||||||
| Time deposits | 7,108 | 40.8 | 0.77 | 8,076 | 66.3 | 1.10 | (968 | ) | (25.5 | ) | (0.33 | ) | |||||||||||||
| Total interest-bearing deposits | 47,436 | 85.3 | 0.24 | 38,931 | 142.4 | 0.49 | 8,505 | (57.1 | ) | (0.25 | ) | ||||||||||||||
| Borrowings | 1,315 | 41.8 | 4.25 | 1,340 | 44.7 | 4.45 | (25 | ) | (2.9 | ) | (0.20 | ) | |||||||||||||
| Total interest-bearing liabilities | 48,751 | 127.1 | 0.35 | 40,271 | 187.1 | 0.62 | 8,480 | (60.0 | ) | (0.27 | ) | ||||||||||||||
| Net interest spread | 3.13 | % | 3.56 | % | (0.43 | )% | |||||||||||||||||||
| Non-interest bearing deposits | 14,428 | 10,945 | 3,483 | ||||||||||||||||||||||
| Other liabilities | 1,044 | 1,180 | (136 | ) | |||||||||||||||||||||
| Stockholders’ equity | 5,716 | 5,380 | 336 | ||||||||||||||||||||||
| Total average liabilities and stockholders’ equity | $ | 69,939 | $ | 57,776 | $ | 12,163 | |||||||||||||||||||
| Net interest income / margin on a taxable equivalent basis<br>(Non-GAAP) | $ | 1,612.0 | 3.23 | % | $ | 1,521.3 | 3.72 | % | $ | 90.7 | (0.49 | )% | |||||||||||||
| Taxable equivalent adjustment | 155.7 | 136.3 | 19.4 | ||||||||||||||||||||||
| Net interest income / margin non-taxable equivalent basis<br>(GAAP) | $ | 1,456.3 | 2.92 | % | $ | 1,385.0 | 3.39 | % | $ | 71.3 | (0.47 | )% |
16
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
Mortgage Banking Activities
| Quarters ended | Variance | Nine months ended | Variance | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | Q3 2021<br>vs.Q2 2021 | Q3 2021<br>vs.Q3 2020 | 30-Sep-21 | 30-Sep-20 | 2021 vs.<br>2020 | ||||||||||||||||
| Mortgage servicing fees, net of fair value adjustments: | ||||||||||||||||||||||||
| Mortgage servicing fees | $ | 9,376 | $ | 9,522 | $ | 12,966 | $ | (146 | ) | $ | (3,590 | ) | $ | 28,613 | $ | 32,992 | $ | (4,379 | ) | |||||
| Mortgage servicing rights fair value adjustments | (5,979 | ) | (6,239 | ) | (20,491 | ) | 260 | 14,512 | (11,706 | ) | (33,360 | ) | 21,654 | |||||||||||
| Total mortgage servicing fees, net of fair value adjustments | 3,397 | 3,283 | (7,525 | ) | 114 | 10,922 | 16,907 | (368 | ) | 17,275 | ||||||||||||||
| Net gain on sale of loans, including valuation on loans held-for-sale | 6,084 | 5,197 | 10,916 | 887 | (4,832 | ) | 16,256 | 20,389 | (4,133 | ) | ||||||||||||||
| Trading account (loss) profit: | ||||||||||||||||||||||||
| Unrealized losses on outstanding derivative positions | — | — | (4 | ) | — | 4 | — | (4 | ) | 4 | ||||||||||||||
| Realized (losses) gains on closed derivative positions | (1,004 | ) | (866 | ) | (1,958 | ) | (138 | ) | 954 | 632 | (8,391 | ) | 9,023 | |||||||||||
| Total trading account (loss) profit | (1,004 | ) | (866 | ) | (1,962 | ) | (138 | ) | 958 | 632 | (8,395 | ) | 9,027 | |||||||||||
| Losses on repurchased loans, including interest advances | (170 | ) | (166 | ) | (10,955 | ) | (4 | ) | 10,785 | (697 | ) | (10,955 | ) | 10,258 | ||||||||||
| Total mortgage banking activities | $ | 8,307 | $ | 7,448 | $ | (9,526 | ) | $ | 859 | $ | 17,833 | $ | 33,098 | $ | 671 | $ | 32,427 |
Other Service Fees
| Quarters ended | Variance | Nine months ended | Variance | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | Q3 2021<br>vs.Q2 2021 | Q3 2021<br>vs.Q3 2020 | 30-Sep-21 | 30-Sep-20 | 2021 vs.<br>2020 | |||||||||
| Other service fees: | |||||||||||||||||
| Debit card fees | $ | 12,210 | $ | 12,458 | $ | 11,123 | $ | (248 | ) | $ | 1,087 | $ | 36,245 | $ | 28,442 | $ | 7,803 |
| Insurance fees | 14,385 | 12,773 | 13,941 | 1,612 | 444 | 39,986 | 38,211 | 1,775 | |||||||||
| Credit card fees | 33,409 | 32,726 | 27,077 | 683 | 6,332 | 94,826 | 68,025 | 26,801 | |||||||||
| Sale and administration of investment products | 6,216 | 5,970 | 5,094 | 246 | 1,122 | 17,726 | 16,267 | 1,459 | |||||||||
| Trust fees | 6,453 | 6,165 | 4,886 | 288 | 1,567 | 18,460 | 15,692 | 2,768 | |||||||||
| Other fees | 7,772 | 6,290 | 7,758 | 1,482 | 14 | 20,212 | 20,099 | 113 | |||||||||
| Total other service fees | $ | 80,445 | $ | 76,382 | $ | 69,879 | $ | 4,063 | $ | 10,566 | $ | 227,455 | $ | 186,736 | $ | 40,719 |
17
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table G - Loans and Deposits
(Unaudited)
Loans - Ending Balances
| Variance | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | Q3 2021<br>vs.Q2 2021 | Q3 2021<br>vs.Q3 2020 | |||||||
| Loans<br>held-in-portfolio: | ||||||||||||
| Commercial | $ | 13,303,671 | $ | 13,437,932 | $ | 13,620,069 | $ | (134,261 | ) | $ | (316,398 | ) |
| Construction | 801,040 | 865,113 | 943,747 | (64,073 | ) | (142,707 | ) | |||||
| Lease financing | 1,348,679 | 1,297,928 | 1,153,108 | 50,751 | 195,571 | |||||||
| Mortgage | 7,539,152 | 7,678,478 | 7,924,441 | (139,326 | ) | (385,289 | ) | |||||
| Auto | 3,376,694 | 3,289,027 | 3,045,453 | 87,667 | 331,241 | |||||||
| Consumer | 2,486,136 | 2,494,139 | 2,705,692 | (8,003 | ) | (219,556 | ) | |||||
| Total loans<br>held-in-portfolio | $ | 28,855,372 | $ | 29,062,617 | $ | 29,392,510 | $ | (207,245 | ) | $ | (537,138 | ) |
| Loans<br>held-for-sale: | ||||||||||||
| Commercial | $ | — | $ | 1,700 | $ | 4,070 | $ | (1,700 | ) | $ | (4,070 | ) |
| Construction | — | 7,000 | — | (7,000 | ) | — | ||||||
| Mortgage | 91,313 | 76,615 | 98,690 | 14,698 | (7,377 | ) | ||||||
| Total loans<br>held-for-sale | $ | 91,313 | $ | 85,315 | $ | 102,760 | $ | 5,998 | $ | (11,447 | ) | |
| Total loans | $ | 28,946,685 | $ | 29,147,932 | $ | 29,495,270 | $ | (201,247 | ) | $ | (548,585 | ) |
Deposits - Ending Balances
| Variance | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | Q3 2021 vs. Q2<br>2021 | Q3 2021 vs. Q3<br>2020 | |||||||
| Demand deposits [1] | $ | 25,495,481 | $ | 24,497,918 | $ | 22,929,040 | $ | 997,563 | $ | 2,566,441 | ||
| Savings, NOW and money market deposits<br>(non-brokered) | 32,867,805 | 32,452,829 | 24,696,244 | 414,976 | 8,171,561 | |||||||
| Savings, NOW and money market deposits (brokered) | 718,155 | 683,021 | 551,770 | 35,134 | 166,385 | |||||||
| Time deposits (non-brokered) | 6,906,509 | 6,979,349 | 7,664,361 | (72,840 | ) | (757,852 | ) | |||||
| Time deposits (brokered CDs) | 25,611 | 28,659 | 180,568 | (3,048 | ) | (154,957 | ) | |||||
| Total deposits | $ | 66,013,561 | $ | 64,641,776 | $ | 56,021,983 | $ | 1,371,785 | $ | 9,991,578 | ||
| [1] | Includes interest and non-interest bearing demand deposits.<br> | |||||||||||
| --- | --- |
18
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table H - Loan Delinquency - Puerto Rico Operations
(Unaudited)
| 30-Sep-21 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Puerto Rico | ||||||||||||||||
| 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 | $ | 392 | $ | — | $ | 396 | $ | 788 | $ | 149,639 | $ | 150,427 | $ | 396 | $ | — |
| Commercial real estate: | ||||||||||||||||
| Non-owner occupied | 661 | 17,383 | 60,143 | 78,187 | 2,268,441 | 2,346,628 | 60,143 | — | ||||||||
| Owner occupied | 2,719 | 614 | 71,863 | 75,196 | 1,394,503 | 1,469,699 | 71,863 | — | ||||||||
| Commercial and industrial | 1,641 | 576 | 51,456 | 53,673 | 3,618,266 | 3,671,939 | 50,992 | 464 | ||||||||
| Construction | — | — | 14,877 | 14,877 | 112,602 | 127,479 | 14,877 | — | ||||||||
| Mortgage | 197,955 | 76,345 | 896,208 | 1,170,508 | 5,204,541 | 6,375,049 | 354,555 | 541,653 | ||||||||
| Leasing | 8,193 | 1,969 | 2,542 | 12,704 | 1,335,975 | 1,348,679 | 2,542 | — | ||||||||
| Consumer: | ||||||||||||||||
| Credit cards | 5,211 | 3,667 | 7,558 | 16,436 | 870,139 | 886,575 | — | 7,558 | ||||||||
| Home equity lines of credit | 46 | — | — | 46 | 3,507 | 3,553 | — | — | ||||||||
| Personal | 9,329 | 5,954 | 21,646 | 36,929 | 1,238,448 | 1,275,377 | 21,646 | — | ||||||||
| Auto | 52,486 | 11,663 | 17,345 | 81,494 | 3,295,200 | 3,376,694 | 17,345 | — | ||||||||
| Other | 393 | 76 | 14,621 | 15,090 | 108,492 | 123,582 | 14,512 | 109 | ||||||||
| Total | $ | 279,026 | $ | 118,247 | $ | 1,158,655 | $ | 1,555,928 | $ | 19,599,753 | $ | 21,155,681 | $ | 608,871 | $ | 549,784 |
| 30-Jun-21 | ||||||||||||||||
| Puerto Rico | ||||||||||||||||
| 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 | $ | 128 | $ | — | $ | 397 | $ | 525 | $ | 151,258 | $ | 151,783 | $ | 397 | $ | — |
| Commercial real estate: | ||||||||||||||||
| Non-owner occupied | 32,749 | — | 72,378 | 105,127 | 1,888,302 | 1,993,429 | 72,378 | — | ||||||||
| Owner occupied | 3,995 | 604 | 79,808 | 84,407 | 1,380,022 | 1,464,429 | 79,808 | — | ||||||||
| Commercial and industrial | 2,314 | 682 | 65,727 | 68,723 | 3,952,675 | 4,021,398 | 65,120 | 607 | ||||||||
| Construction | — | 3,080 | 14,877 | 17,957 | 124,990 | 142,947 | 14,877 | — | ||||||||
| Mortgage | 164,779 | 73,492 | 995,175 | 1,233,446 | 5,281,711 | 6,515,157 | 370,653 | 624,522 | ||||||||
| Leasing | 6,054 | 2,103 | 2,286 | 10,443 | 1,287,485 | 1,297,928 | 2,286 | — | ||||||||
| Consumer: | ||||||||||||||||
| Credit cards | 4,371 | 2,826 | 8,021 | 15,218 | 864,912 | 880,130 | — | 8,021 | ||||||||
| Home equity lines of credit | — | — | — | — | 3,489 | 3,489 | — | — | ||||||||
| Personal | 9,405 | 4,444 | 23,861 | 37,710 | 1,227,582 | 1,265,292 | 23,861 | — | ||||||||
| Auto | 39,032 | 7,405 | 13,286 | 59,723 | 3,229,304 | 3,289,027 | 13,286 | — | ||||||||
| Other | 214 | 97 | 14,288 | 14,599 | 108,427 | 123,026 | 14,123 | 165 | ||||||||
| Total | $ | 263,041 | $ | 94,733 | $ | 1,290,104 | $ | 1,647,878 | $ | 19,500,157 | $ | 21,148,035 | $ | 656,789 | $ | 633,315 |
19
| Variance | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | $ | 264 | $ | — | $ | (1 | ) | $ | 263 | $ | (1,619 | ) | $ | (1,356 | ) | $ | (1 | ) | $ | — | ||||
| Commercial real estate: | ||||||||||||||||||||||||
| Non-owner occupied | (32,088 | ) | 17,383 | (12,235 | ) | (26,940 | ) | 380,139 | 353,199 | (12,235 | ) | — | ||||||||||||
| Owner occupied | (1,276 | ) | 10 | (7,945 | ) | (9,211 | ) | 14,481 | 5,270 | (7,945 | ) | — | ||||||||||||
| Commercial and industrial | (673 | ) | (106 | ) | (14,271 | ) | (15,050 | ) | (334,409 | ) | (349,459 | ) | (14,128 | ) | (143 | ) | ||||||||
| Construction | — | (3,080 | ) | — | (3,080 | ) | (12,388 | ) | (15,468 | ) | — | — | ||||||||||||
| Mortgage | 33,176 | 2,853 | (98,967 | ) | (62,938 | ) | (77,170 | ) | (140,108 | ) | (16,098 | ) | (82,869 | ) | ||||||||||
| Leasing | 2,139 | (134 | ) | 256 | 2,261 | 48,490 | 50,751 | 256 | — | |||||||||||||||
| Consumer: | ||||||||||||||||||||||||
| Credit cards | 840 | 841 | (463 | ) | 1,218 | 5,227 | 6,445 | — | (463 | ) | ||||||||||||||
| Home equity lines of credit | 46 | — | — | 46 | 18 | 64 | — | — | ||||||||||||||||
| Personal | (76 | ) | 1,510 | (2,215 | ) | (781 | ) | 10,866 | 10,085 | (2,215 | ) | — | ||||||||||||
| Auto | 13,454 | 4,258 | 4,059 | 21,771 | 65,896 | 87,667 | 4,059 | — | ||||||||||||||||
| Other | 179 | (21 | ) | 333 | 491 | 65 | 556 | 389 | (56 | ) | ||||||||||||||
| Total | $ | 15,985 | $ | 23,514 | $ | (131,449 | ) | $ | (91,950 | ) | $ | 99,596 | $ | 7,646 | $ | (47,918 | ) | $ | (83,531 | ) |
20
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table I - Loan Delinquency - Popular U.S. Operations
(Unaudited)
| September 30, 2021 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | $ | — | $ | 22,171 | $ | — | $ | 22,171 | $ | 1,709,508 | $ | 1,731,679 | $ | — | $ | — |
| Commercial real estate: | ||||||||||||||||
| Non-owner occupied | 2,569 | 4,632 | 374 | 7,575 | 2,029,514 | 2,037,089 | 374 | — | ||||||||
| Owner occupied | 1,158 | — | 986 | 2,144 | 343,430 | 345,574 | 986 | — | ||||||||
| Commercial and industrial | 804 | 1 | 1,428 | 2,233 | 1,548,403 | 1,550,636 | 1,427 | 1 | ||||||||
| Construction | 14,978 | — | — | 14,978 | 658,583 | 673,561 | — | — | ||||||||
| Mortgage | 1,369 | 2,833 | 14,488 | 18,690 | 1,145,413 | 1,164,103 | 14,488 | — | ||||||||
| Consumer: | ||||||||||||||||
| Credit cards | — | — | — | — | 26 | 26 | — | — | ||||||||
| Home equity lines of credit | 690 | 76 | 5,941 | 6,707 | 73,042 | 79,749 | 5,941 | — | ||||||||
| Personal | 588 | 544 | 748 | 1,880 | 111,598 | 113,478 | 748 | — | ||||||||
| Other | 16 | — | — | 16 | 3,780 | 3,796 | — | — | ||||||||
| Total | $ | 22,172 | $ | 30,257 | $ | 23,965 | $ | 76,394 | $ | 7,623,297 | $ | 7,699,691 | $ | 23,964 | $ | 1 |
| June 30, 2021 | ||||||||||||||||
| Popular U.S. | ||||||||||||||||
| Past due | Past due 90 days or more | |||||||||||||||
| 30-59 | 60-89 | 90 days | Total | Non-accrual | Accruing | |||||||||||
| (In thousands) | days | days | or more | past due | Current | Loans HIP | loans | loans | ||||||||
| Commercial multi-family | $ | — | $ | — | $ | 5,949 | $ | 5,949 | $ | 1,733,104 | $ | 1,739,053 | $ | 5,949 | $ | — |
| Commercial real estate: | ||||||||||||||||
| Non-owner occupied | — | — | 374 | 374 | 2,131,860 | 2,132,234 | 374 | — | ||||||||
| Owner occupied | 907 | 639 | 193 | 1,739 | 338,445 | 340,184 | 193 | — | ||||||||
| Commercial and industrial | 3,070 | 509 | 1,346 | 4,925 | 1,590,497 | 1,595,422 | 1,346 | — | ||||||||
| Construction | — | — | — | — | 722,166 | 722,166 | — | — | ||||||||
| Mortgage | 2,498 | 5,005 | 13,323 | 20,826 | 1,142,495 | 1,163,321 | 13,323 | — | ||||||||
| Consumer: | ||||||||||||||||
| Credit cards | — | — | — | — | 31 | 31 | — | — | ||||||||
| Home equity lines of credit | 501 | 210 | 6,377 | 7,088 | 74,850 | 81,938 | 6,377 | — | ||||||||
| Personal | 572 | 579 | 832 | 1,983 | 135,014 | 136,997 | 832 | — | ||||||||
| Other | — | — | — | — | 3,236 | 3,236 | — | — | ||||||||
| Total | $ | 7,548 | $ | 6,942 | $ | 28,394 | $ | 42,884 | $ | 7,871,698 | $ | 7,914,582 | $ | 28,394 | $ | — |
21
| Variance | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | $ | — | $ | 22,171 | $ | (5,949 | ) | $ | 16,222 | $ | (23,596 | ) | $ | (7,374 | ) | $ | (5,949 | ) | $ | — | |||
| Commercial real estate: | |||||||||||||||||||||||
| Non-owner occupied | 2,569 | 4,632 | — | 7,201 | (102,346 | ) | (95,145 | ) | — | — | |||||||||||||
| Owner occupied | 251 | (639 | ) | 793 | 405 | 4,985 | 5,390 | 793 | — | ||||||||||||||
| Commercial and industrial | (2,266 | ) | (508 | ) | 82 | (2,692 | ) | (42,094 | ) | (44,786 | ) | 81 | 1 | ||||||||||
| Construction | 14,978 | — | — | 14,978 | (63,583 | ) | (48,605 | ) | — | — | |||||||||||||
| Mortgage | (1,129 | ) | (2,172 | ) | 1,165 | (2,136 | ) | 2,918 | 782 | 1,165 | — | ||||||||||||
| Consumer: | |||||||||||||||||||||||
| Credit cards | — | — | — | — | (5 | ) | (5 | ) | — | — | |||||||||||||
| Home equity lines of credit | 189 | (134 | ) | (436 | ) | (381 | ) | (1,808 | ) | (2,189 | ) | (436 | ) | — | |||||||||
| Personal | 16 | (35 | ) | (84 | ) | (103 | ) | (23,416 | ) | (23,519 | ) | (84 | ) | — | |||||||||
| Other | 16 | — | — | 16 | 544 | 560 | — | — | |||||||||||||||
| Total | $ | 14,624 | $ | 23,315 | $ | (4,429 | ) | $ | 33,510 | $ | (248,401 | ) | $ | (214,891 | ) | $ | (4,430 | ) | $ | 1 |
22
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table J - Loan Delinquency - Consolidated
(Unaudited)
| 30-Sep-21 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | loans | loans | ||||||||
| Commercial multi-family | $ | 392 | $ | 22,171 | $ | 396 | $ | 22,959 | $ | 1,859,147 | $ | 1,882,106 | $ | 396 | $ | — |
| Commercial real estate: | ||||||||||||||||
| Non-owner occupied | 3,230 | 22,015 | 60,517 | 85,762 | 4,297,955 | 4,383,717 | 60,517 | — | ||||||||
| Owner occupied | 3,877 | 614 | 72,849 | 77,340 | 1,737,933 | 1,815,273 | 72,849 | — | ||||||||
| Commercial and industrial | 2,445 | 577 | 52,884 | 55,906 | 5,166,669 | 5,222,575 | 52,419 | 465 | ||||||||
| Construction | 14,978 | — | 14,877 | 29,855 | 771,185 | 801,040 | 14,877 | — | ||||||||
| Mortgage | 199,324 | 79,178 | 910,696 | 1,189,198 | 6,349,954 | 7,539,152 | 369,043 | 541,653 | ||||||||
| Leasing | 8,193 | 1,969 | 2,542 | 12,704 | 1,335,975 | 1,348,679 | 2,542 | — | ||||||||
| Consumer: | ||||||||||||||||
| Credit cards | 5,211 | 3,667 | 7,558 | 16,436 | 870,165 | 886,601 | — | 7,558 | ||||||||
| Home equity lines of credit | 736 | 76 | 5,941 | 6,753 | 76,549 | 83,302 | 5,941 | — | ||||||||
| Personal | 9,917 | 6,498 | 22,394 | 38,809 | 1,350,046 | 1,388,855 | 22,394 | — | ||||||||
| Auto | 52,486 | 11,663 | 17,345 | 81,494 | 3,295,200 | 3,376,694 | 17,345 | — | ||||||||
| Other | 409 | 76 | 14,621 | 15,106 | 112,272 | 127,378 | 14,512 | 109 | ||||||||
| Total | $ | 301,198 | $ | 148,504 | $ | 1,182,620 | $ | 1,632,322 | $ | 27,223,050 | $ | 28,855,372 | $ | 632,835 | $ | 549,785 |
| 30-Jun-21 | ||||||||||||||||
| 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 | loans | loans | ||||||||
| Commercial multi-family | $ | 128 | $ | — | $ | 6,346 | $ | 6,474 | $ | 1,884,362 | $ | 1,890,836 | $ | 6,346 | $ | — |
| Commercial real estate: | ||||||||||||||||
| Non-owner occupied | 32,749 | — | 72,752 | 105,501 | 4,020,162 | 4,125,663 | 72,752 | — | ||||||||
| Owner occupied | 4,902 | 1,243 | 80,001 | 86,146 | 1,718,467 | 1,804,613 | 80,001 | — | ||||||||
| Commercial and industrial | 5,384 | 1,191 | 67,073 | 73,648 | 5,543,172 | 5,616,820 | 66,466 | 607 | ||||||||
| Construction | — | 3,080 | 14,877 | 17,957 | 847,156 | 865,113 | 14,877 | — | ||||||||
| Mortgage | 167,277 | 78,497 | 1,008,498 | 1,254,272 | 6,424,206 | 7,678,478 | 383,976 | 624,522 | ||||||||
| Leasing | 6,054 | 2,103 | 2,286 | 10,443 | 1,287,485 | 1,297,928 | 2,286 | — | ||||||||
| Consumer: | ||||||||||||||||
| Credit cards | 4,371 | 2,826 | 8,021 | 15,218 | 864,943 | 880,161 | — | 8,021 | ||||||||
| Home equity lines of credit | 501 | 210 | 6,377 | 7,088 | 78,339 | 85,427 | 6,377 | — | ||||||||
| Personal | 9,977 | 5,023 | 24,693 | 39,693 | 1,362,596 | 1,402,289 | 24,693 | — | ||||||||
| Auto | 39,032 | 7,405 | 13,286 | 59,723 | 3,229,304 | 3,289,027 | 13,286 | — | ||||||||
| Other | 214 | 97 | 14,288 | 14,599 | 111,663 | 126,262 | 14,123 | 165 | ||||||||
| Total | $ | 270,589 | $ | 101,675 | $ | 1,318,498 | $ | 1,690,762 | $ | 27,371,855 | $ | 29,062,617 | $ | 685,183 | $ | 633,315 |
23
| Variance | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | $ | 264 | $ | 22,171 | $ | (5,950 | ) | $ | 16,485 | $ | (25,215 | ) | $ | (8,730 | ) | $ | (5,950 | ) | $ | — | ||||
| Commercial real estate: | ||||||||||||||||||||||||
| Non-owner occupied | (29,519 | ) | 22,015 | (12,235 | ) | (19,739 | ) | 277,793 | 258,054 | (12,235 | ) | — | ||||||||||||
| Owner occupied | (1,025 | ) | (629 | ) | (7,152 | ) | (8,806 | ) | 19,466 | 10,660 | (7,152 | ) | — | |||||||||||
| Commercial and industrial | (2,939 | ) | (614 | ) | (14,189 | ) | (17,742 | ) | (376,503 | ) | (394,245 | ) | (14,047 | ) | (142 | ) | ||||||||
| Construction | 14,978 | (3,080 | ) | — | 11,898 | (75,971 | ) | (64,073 | ) | — | — | |||||||||||||
| Mortgage | 32,047 | 681 | (97,802 | ) | (65,074 | ) | (74,252 | ) | (139,326 | ) | (14,933 | ) | (82,869 | ) | ||||||||||
| Leasing | 2,139 | (134 | ) | 256 | 2,261 | 48,490 | 50,751 | 256 | — | |||||||||||||||
| Consumer: | ||||||||||||||||||||||||
| Credit cards | 840 | 841 | (463 | ) | 1,218 | 5,222 | 6,440 | — | (463 | ) | ||||||||||||||
| Home equity lines of credit | 235 | (134 | ) | (436 | ) | (335 | ) | (1,790 | ) | (2,125 | ) | (436 | ) | — | ||||||||||
| Personal | (60 | ) | 1,475 | (2,299 | ) | (884 | ) | (12,550 | ) | (13,434 | ) | (2,299 | ) | — | ||||||||||
| Auto | 13,454 | 4,258 | 4,059 | 21,771 | 65,896 | 87,667 | 4,059 | — | ||||||||||||||||
| Other | 195 | (21 | ) | 333 | 507 | 609 | 1,116 | 389 | (56 | ) | ||||||||||||||
| Total | $ | 30,609 | $ | 46,829 | $ | (135,878 | ) | $ | (58,440 | ) | $ | (148,805 | ) | $ | (207,245 | ) | $ | (52,348 | ) | $ | (83,530 | ) |
24
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table K - Non-Performing Assets
(Unaudited)
| Variance | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | 30-Sep-21 | As a % of<br>loans HIP by<br>category | 30-Jun-21 | As a % of<br>loans HIP by<br>category | 30-Sep-20 | As a % of<br>loans HIP by<br>category | Q3 2021 vs.<br>Q2 2021 | Q3 2021 vs.<br>Q3 2020 | ||||||||||||||||
| Non-accrual loans: | ||||||||||||||||||||||||
| Commercial | $ | 186,181 | 1.4 | % | $ | 225,565 | 1.7 | % | $ | 249,738 | 1.8 | % | $ | (39,384 | ) | $ | (63,557 | ) | ||||||
| Construction | 14,877 | 1.9 | 14,877 | 1.7 | 30,583 | 3.2 | — | (15,706 | ) | |||||||||||||||
| Lease financing | 2,542 | 0.2 | 2,286 | 0.2 | 3,217 | 0.3 | 256 | (675 | ) | |||||||||||||||
| Mortgage | 369,043 | 4.9 | 383,976 | 5.0 | 384,544 | 4.9 | (14,933 | ) | (15,501 | ) | ||||||||||||||
| Auto | 17,345 | 0.5 | 13,286 | 0.4 | 13,454 | 0.4 | 4,059 | 3,891 | ||||||||||||||||
| Consumer | 42,847 | 1.7 | 45,193 | 1.8 | 52,832 | 2.0 | (2,346 | ) | (9,985 | ) | ||||||||||||||
| Total non-performing loans<br>held-in-portfolio | 632,835 | 2.2 | % | 685,183 | 2.4 | % | 734,368 | 2.5 | % | (52,348 | ) | (101,533 | ) | |||||||||||
| Non-performing loans held-for-sale [1] | — | 8,700 | 4,070 | (8,700 | ) | (4,070 | ) | |||||||||||||||||
| Other real estate owned (“OREO”) | 76,828 | 73,272 | 100,592 | 3,556 | (23,764 | ) | ||||||||||||||||||
| Total non-performing assets | $ | 709,663 | $ | 767,155 | $ | 839,030 | $ | (57,492 | ) | $ | (129,367 | ) | ||||||||||||
| Accruing loans past due 90 days or more [2] | $ | 549,785 | $ | 633,315 | $ | 1,212,947 | $ | (83,530 | ) | $ | (663,162 | ) | ||||||||||||
| Ratios: | ||||||||||||||||||||||||
| Non-performing assets to total assets | 0.96 | % | 1.06 | % | 1.27 | % | ||||||||||||||||||
| Non-performing loans held-in-portfolio to loans held-in-portfolio | 2.19 | 2.36 | 2.50 | |||||||||||||||||||||
| Allowance for credit losses to loans held-in-portfolio | 2.49 | 2.70 | 3.15 | |||||||||||||||||||||
| Allowance for credit losses to non-performing loans,<br>excluding loans held-for-sale | 113.55 | 114.68 | 126.07 | |||||||||||||||||||||
| [1] | There were no non-performing loans held-for-sale as of September 30, 2021 (June 30, 2021 - $7 million in construction loans and $2 million commercial loans; September 30, 2020 - $4 million in commercial loans).<br> | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| [2] | It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or<br>guaranteed by the VA as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. The balance of these loans includes $12 million at September 30,<br>2021, related to the rebooking of loans previously pooled into GNMA securities, in which the Corporation had a buy-back option as further described below (June 30, 2021 - $15 million; September 30,<br>2020 - $161 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<br>reflected (rebooked) on the financial statements of BPPR with an offsetting liability. While the borrowers for our serviced GNMA portfolio benefited from the moratorium, the delinquency status of these loans continued to be reported to GNMA without<br>considering the moratorium. These balances include $350 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of September 30, 2021 (June 30, 2021 - $363 million;<br>September 30, 2020 - $318 million). Furthermore, the Corporation has approximately $53 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,<br>it is the Corporation’s policy to exclude these balances from non-performing assets (June 30, 2021 - $56 million; September 30, 2020 - $60 million). | |||||||||||||||||||||||
| --- | --- |
25
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table L - Activity in Non-Performing Loans
(Unaudited)
Commercial loans held-in-portfolio:
| Quarter ended<br>30-Sep-21 | Quarter ended<br>30-Jun-21 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | ||||||||||||
| Beginning balance NPLs | $ | 217,703 | $ | 7,862 | $ | 225,565 | $ | 200,863 | $ | 1,907 | $ | 202,770 | ||||||
| Plus: | ||||||||||||||||||
| New non-performing loans | 7,454 | 1,039 | 8,493 | 39,657 | 7,570 | 47,227 | ||||||||||||
| Advances on existing non-performing loans | — | 10 | 10 | — | 1 | 1 | ||||||||||||
| Less: | ||||||||||||||||||
| Non-performing loans transferred to OREO | (2,069 | ) | — | (2,069 | ) | (2,346 | ) | — | (2,346 | ) | ||||||||
| Non-performing loans<br>charged-off | (8,617 | ) | — | (8,617 | ) | (1,515 | ) | (624 | ) | (2,139 | ) | |||||||
| Loans returned to accrual status / loan collections | (31,077 | ) | (6,124 | ) | (37,201 | ) | (18,956 | ) | (992 | ) | (19,948 | ) | ||||||
| Ending balance NPLs | $ | 183,394 | $ | 2,787 | $ | 186,181 | $ | 217,703 | $ | 7,862 | $ | 225,565 | ||||||
| Construction loans held-in-portfolio: | **** | |||||||||||||||||
| Quarter ended<br>30-Sep-21 | Quarter ended<br>30-Jun-21 | |||||||||||||||||
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | ||||||||||||
| Beginning balance NPLs | $ | 14,877 | $ | — | $ | 14,877 | $ | 14,877 | $ | 7,523 | $ | 22,400 | ||||||
| Less: | ||||||||||||||||||
| Non-performing loans<br>charged-off | — | — | — | — | (523 | ) | (523 | ) | ||||||||||
| Loans transferred to<br>held-for-sale | — | — | — | — | (7,000 | ) | (7,000 | ) | ||||||||||
| Ending balance NPLs | $ | 14,877 | $ | — | $ | 14,877 | $ | 14,877 | $ | — | $ | 14,877 | ||||||
| Mortgage loans held-in-portfolio: | **** | |||||||||||||||||
| Quarter ended<br>30-Sep-21 | Quarter ended<br>30-Jun-21 | |||||||||||||||||
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | ||||||||||||
| Beginning balance NPLs | $ | 370,653 | $ | 13,323 | $ | 383,976 | $ | 390,781 | $ | 14,793 | $ | 405,574 | ||||||
| Plus: | ||||||||||||||||||
| New non-performing loans | 38,606 | 4,662 | 43,268 | 43,432 | 4,774 | 48,206 | ||||||||||||
| Advances on existing non-performing loans | — | 2 | 2 | — | 11 | 11 | ||||||||||||
| Less: | ||||||||||||||||||
| Non-performing loans transferred to OREO | (8,984 | ) | — | (8,984 | ) | (8,257 | ) | — | (8,257 | ) | ||||||||
| Non-performing loans<br>charged-off | (1,023 | ) | — | (1,023 | ) | (4,297 | ) | — | (4,297 | ) | ||||||||
| Loans returned to accrual status / loan collections | (44,697 | ) | (3,499 | ) | (48,196 | ) | (51,006 | ) | (6,255 | ) | (57,261 | ) | ||||||
| Ending balance NPLs | $ | 354,555 | $ | 14,488 | $ | 369,043 | $ | 370,653 | $ | 13,323 | $ | 383,976 |
26
Total non-performing loans held-in-portfolio (excluding consumer):
| Quarter ended<br>30-Sep-21 | Quarter ended<br>30-Jun-21 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | ||||||||||||
| Beginning balance NPLs | $ | 603,233 | $ | 21,185 | $ | 624,418 | $ | 606,521 | $ | 24,223 | $ | 630,744 | ||||||
| Plus: | ||||||||||||||||||
| New non-performing loans | 46,060 | 5,701 | 51,761 | 83,089 | 12,344 | 95,433 | ||||||||||||
| Advances on existing non-performing loans | — | 12 | 12 | — | 12 | 12 | ||||||||||||
| Less: | ||||||||||||||||||
| Non-performing loans transferred to OREO | (11,053 | ) | — | (11,053 | ) | (10,603 | ) | — | (10,603 | ) | ||||||||
| Non-performing loans<br>charged-off | (9,640 | ) | — | (9,640 | ) | (5,812 | ) | (1,147 | ) | (6,959 | ) | |||||||
| Loans returned to accrual status / loan collections | (75,774 | ) | (9,623 | ) | (85,397 | ) | (69,962 | ) | (7,247 | ) | (77,209 | ) | ||||||
| Loans transferred to<br>held-for-sale | — | — | — | — | (7,000 | ) | (7,000 | ) | ||||||||||
| Ending balance NPLs | $ | 552,826 | $ | 17,275 | $ | 570,101 | $ | 603,233 | $ | 21,185 | $ | 624,418 |
27
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table M - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
| Quarters ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | ||||||
| Balance at beginning of period - loans held-in-portfolio | $ | 785,790 | $ | 800,797 | $ | 918,434 | |||
| Provision for credit losses (benefit) | (58,645 | ) | (17,500 | ) | 19,452 | ||||
| Initial allowance for credit losses - PCD Loans | 253 | 1,202 | 4,823 | ||||||
| 727,398 | 784,499 | 942,709 | |||||||
| Net loans charged-off (recovered): | |||||||||
| BPPR | |||||||||
| Commercial | 4,357 | (9,877 | ) | (1,959 | ) | ||||
| Construction | (2,223 | ) | (479 | ) | (156 | ) | |||
| Lease financing | 304 | 393 | (329 | ) | |||||
| Mortgage | (2,111 | ) | 935 | 1,964 | |||||
| Consumer | 9,009 | 7,545 | 14,249 | ||||||
| Total BPPR | 9,336 | (1,483 | ) | 13,769 | |||||
| Popular U.S. | |||||||||
| Commercial | (463 | ) | (413 | ) | 309 | ||||
| Construction | — | 93 | — | ||||||
| Mortgage | (48 | ) | (423 | ) | (5 | ) | |||
| Consumer | (2 | ) | 935 | 2,786 | |||||
| Total Popular U.S. | (513 | ) | 192 | 3,090 | |||||
| Total loans charged-off (recovered) - Popular,<br>Inc. | 8,823 | (1,291 | ) | 16,859 | |||||
| Balance at end of period - loans<br>held-in-portfolio | $ | 718,575 | $ | 785,790 | $ | 925,850 | |||
| Balance at beginning of period - unfunded commitments | $ | 9,936 | $ | 9,569 | $ | 6,717 | |||
| Provision for credit losses (benefit) | (1,536 | ) | 367 | 6,578 | |||||
| Balance at end of period - unfunded commitments [1] | $ | 8,400 | $ | 9,936 | $ | 13,295 | |||
| POPULAR, INC. | |||||||||
| Annualized net charge-offs (recoveries) to average loans held-in-portfolio | 0.12 | % | (0.02 | )% | 0.24 | % | |||
| Provision for credit losses (benefit) - loan portfolios to net charge-offs | N.M. | N.M. | 115.38 | % | |||||
| BPPR | |||||||||
| Annualized net charge-offs (recoveries) to average loans held-in-portfolio | 0.18 | % | (0.03 | )% | 0.26 | % | |||
| Provision for credit losses (benefit) - loan portfolios to net charge-offs | N.M. | N.M. | 55.79 | % | |||||
| Popular U.S. | |||||||||
| Annualized net charge-offs to average loans held-in-portfolio | (0.03 | )% | 0.01 | % | 0.16 | % | |||
| Provision for credit losses (benefit) - loan portfolios to net charge-offs | N.M. | N.M. | 380.91 | % |
N.M. - Not meaningful.
| [1] | Allowance for credit losses of unfunded commitments is presented as part of Other Liabilities in the<br>Consolidated Statements of Financial Condition. |
|---|
28
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table N - Allowance for Credit Losses “ACL”- Loan Portfolios - CONSOLIDATED
(Unaudited)
| 30-Sep-21 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | Commercial | Construction | Mortgage | Lease<br>financing | Consumer | Total | ||||||||||||
| Total ACL | $ | 234,814 | $ | 9,850 | $ | 170,378 | $ | 11,634 | $ | 291,899 | $ | 718,575 | ||||||
| Total loans<br>held-in-portfolio | $ | 13,303,671 | $ | 801,040 | $ | 7,539,152 | $ | 1,348,679 | $ | 5,862,830 | $ | 28,855,372 | ||||||
| ACL to loans<br>held-in-portfolio | 1.77 | % | 1.23 | % | 2.26 | % | 0.86 | % | 4.98 | % | 2.49 | % | ||||||
| 30-Jun-21 | ||||||||||||||||||
| (Dollars in thousands) | Commercial | Construction | Mortgage | Lease<br>financing | Consumer | Total | ||||||||||||
| Total ACL | $ | 271,144 | $ | 11,256 | $ | 182,619 | $ | 17,551 | $ | 303,220 | $ | 785,790 | ||||||
| Total loans<br>held-in-portfolio | $ | 13,437,932 | $ | 865,113 | $ | 7,678,478 | $ | 1,297,928 | $ | 5,783,166 | $ | 29,062,617 | ||||||
| ACL to loans<br>held-in-portfolio | 2.02 | % | 1.30 | % | 2.38 | % | 1.35 | % | 5.24 | % | 2.70 | % | ||||||
| Variance | ||||||||||||||||||
| (Dollars in thousands) | Commercial | Construction | Mortgage | Lease<br>financing | Consumer | Total | ||||||||||||
| Total ACL | $ | (36,330 | ) | $ | (1,406 | ) | $ | (12,241 | ) | $ | (5,917 | ) | $ | (11,321 | ) | $ | (67,215 | ) |
| Total loans<br>held-in-portfolio | $ | (134,261 | ) | $ | (64,073 | ) | $ | (139,326 | ) | $ | 50,751 | $ | 79,664 | $ | (207,245 | ) |
29
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table O - Allowance for Credit Losses “ACL”- Loan Portfolios - PUERTO RICO OPERATIONS
(Unaudited)
| 30-Sep-21 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Puerto Rico | ||||||||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Lease financing | Consumer | Total | ||||||||||||
| ACL | $ | 168,504 | $ | 1,911 | $ | 155,062 | $ | 11,634 | $ | 279,667 | $ | 616,778 | ||||||
| Loans<br>held-in-portfolio | $ | 7,638,693 | $ | 127,479 | $ | 6,375,049 | $ | 1,348,679 | $ | 5,665,781 | $ | 21,155,681 | ||||||
| ACL to loans<br>held-in-portfolio | 2.21 | % | 1.50 | % | 2.43 | % | 0.86 | % | 4.94 | % | 2.92 | % | ||||||
| 30-Jun-21 | ||||||||||||||||||
| Puerto Rico | ||||||||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Lease financing | Consumer | Total | ||||||||||||
| ACL | $ | 186,784 | $ | 1,220 | $ | 166,808 | $ | 17,551 | $ | 289,490 | $ | 661,853 | ||||||
| Loans<br>held-in-portfolio | $ | 7,631,039 | $ | 142,947 | $ | 6,515,157 | $ | 1,297,928 | $ | 5,560,964 | $ | 21,148,035 | ||||||
| ACL to loans<br>held-in-portfolio | 2.45 | % | 0.85 | % | 2.56 | % | 1.35 | % | 5.21 | % | 3.13 | % | ||||||
| Variance | ||||||||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Lease financing | Consumer | Total | ||||||||||||
| ACL | $ | (18,280 | ) | $ | 691 | $ | (11,746 | ) | $ | (5,917 | ) | $ | (9,823 | ) | $ | (45,075 | ) | |
| Loans<br>held-in-portfolio | $ | 7,654 | $ | (15,468 | ) | $ | (140,108 | ) | $ | 50,751 | $ | 104,817 | $ | 7,646 |
30
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table P - Allowance for Credit Losses “ACL”- Loan Portfolios - POPULAR U.S. OPERATIONS
(Unaudited)
| 30-Sep-21 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Popular U.S. | |||||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Consumer | Total | ||||||||||
| ACL | $ | 66,310 | $ | 7,939 | $ | 15,316 | $ | 12,232 | $ | 101,797 | |||||
| Loans<br>held-in-portfolio | $ | 5,664,978 | $ | 673,561 | $ | 1,164,103 | $ | 197,049 | $ | 7,699,691 | |||||
| ACL to loans<br>held-in-portfolio | 1.17 | % | 1.18 | % | 1.32 | % | 6.21 | % | 1.32 | % | |||||
| 30-Jun-21 | |||||||||||||||
| Popular U.S. | |||||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Consumer | Total | ||||||||||
| ACL | $ | 84,360 | $ | 10,036 | $ | 15,811 | $ | 13,730 | $ | 123,937 | |||||
| Loans<br>held-in-portfolio | $ | 5,806,893 | $ | 722,166 | $ | 1,163,321 | $ | 222,202 | $ | 7,914,582 | |||||
| ACL to loans<br>held-in-portfolio | 1.45 | % | 1.39 | % | 1.36 | % | 6.18 | % | 1.57 | % | |||||
| Variance | |||||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Consumer | Total | ||||||||||
| ACL | $ | (18,050 | ) | $ | (2,097 | ) | $ | (495 | ) | $ | (1,498 | ) | $ | (22,140 | ) |
| Loans<br>held-in-portfolio | $ | (141,915 | ) | $ | (48,605 | ) | $ | 782 | $ | (25,153 | ) | $ | (214,891 | ) |
31
Popular, Inc.
Financial Supplement to Third Quarter 2021 Earnings Release
Table Q - Reconciliation to GAAP Financial Measures
(Unaudited)
| (In thousands, except share or per share information) | 30-Sep-21 | 30-Jun-21 | 30-Sep-20 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Total stockholders’ equity | $ | 5,982,971 | $ | 5,814,614 | $ | 5,912,085 | |||
| Less: Preferred stock | (22,143 | ) | (22,143 | ) | (22,143 | ) | |||
| Less: Goodwill | (671,122 | ) | (671,122 | ) | (671,122 | ) | |||
| Less: Other intangibles | (19,657 | ) | (20,440 | ) | (23,518 | ) | |||
| Total tangible common equity | $ | 5,270,049 | $ | 5,100,909 | $ | 5,195,302 | |||
| Total assets | $ | 74,189,163 | $ | 72,657,293 | $ | 65,910,369 | |||
| Less: Goodwill | (671,122 | ) | (671,122 | ) | (671,122 | ) | |||
| Less: Other intangibles | (19,657 | ) | (20,440 | ) | (23,518 | ) | |||
| Total tangible assets | $ | 73,498,384 | $ | 71,965,731 | $ | 65,215,729 | |||
| Tangible common equity to tangible assets | 7.17 | % | 7.09 | % | 7.97 | % | |||
| Common shares outstanding at end of period | 79,841,564 | 80,656,480 | 84,219,464 | ||||||
| Tangible book value per common share | $ | 66.01 | $ | 63.24 | $ | 61.69 | |||
| Quarterly average | |||||||||
| Total stockholders’ equity [1] | $ | 5,769,545 | $ | 5,683,325 | $ | 5,383,126 | |||
| Less: Preferred Stock | (22,143 | ) | (22,143 | ) | (22,143 | ) | |||
| Less: Goodwill | (671,121 | ) | (671,121 | ) | (671,121 | ) | |||
| Less: Other intangibles | (20,132 | ) | (21,350 | ) | (24,161 | ) | |||
| Total tangible equity | $ | 5,056,149 | $ | 4,968,711 | $ | 4,665,701 | |||
| Return on average tangible common equity | 19.44 | % | 17.58 | % | 14.32 | % | |||
| [1] | Average balances exclude unrealized gains or losses on debt securities available-for-sale. | ||||||||
| --- | --- |
CONTACTS:
Popular, Inc.
Investor Relations:
Paul J. Cardillo, 212-417-6721
Investor Relations Officer
pcardillo@popular.com
or
Media Relations:
MC González Noguera, 917-804-5253
Executive Vice President and Chief Communications & Public Affairs Officer
mc.gonzalez@popular.com
32
EX-99.2
INVESTOR PRESENTATION Third Quarter 2021 Exhibit 99.2
Cautionary Note Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, are based on the current expectations of Popular, Inc.’s (the “Corporation”) management 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. Such factors include, but are not limited to, the scope and duration of the COVID-19 pandemic (including the appearance of new strains of the virus), actions taken by governmental authorities in response thereto, and the direct and indirect impact of the pandemic on the Corporation, our customers, service providers and third parties. More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2020, in our Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, and in our Form 10-Q for the quarter ended September 30, 2021 to be filed with the Securities and Exchange Commission. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements which speak as of their respective dates.
NPLs decreased $52.3 million QoQ; ratio at 2.2%, from 2.4% the prior quarter NCO ratio at 0.12% compared to (0.02%) the previous quarter ACL to loans of 2.49% compared to 2.70% in Q2 2021 Credit Metrics Net income of $248.1 million Net interest margin: Popular, Inc. 2.77%, BPPR 2.75% Provision for credit losses resulted in a benefit of $61.2 million Earnings Common Equity Tier 1 Capital ratio of 17.4% Tangible book value per share of $66.01 up $2.77 from Q2 2021 Capital Q3 2021 Highlights Completed $350 million Accelerated Share Repurchase program; repurchased 4.6 million shares at an average price of $75.84 Announced the redemption of outstanding $187 million 6.70% Trust Preferred Securities, to be completed in Q4 Quarter Events
Business Highlights BPPR Business Metrics Issued $2.1 billion or 49,700 loans ($1.4 billion in Round 1 and $678 million in Round 2) As of September 30, 2021: Outstanding loans: $129 million from Round 1 and $541 million from Round 2 Recognized $59 million YTD in income from program $40 million unamortized fee income remaining Mortgage originations were lower than Q3 2020 by 3%; up 51% from Q3 2019 Auto loans and lease originations decreased 3% compared to Q3 2020; 26% higher than Q3 2019 Credit and debit card sales (in dollars) 5% higher versus Q3 2020; up 34% from Q3 2019 Deposits, excluding P.R. public funds, increased 12% from Q3 2020; 50% higher than Q3 2019 Paycheck Protection Program (PPP) 1 Customers who have logged on to Popular’s web and/or mobile platform in the past 30 days Popular Bank On October 15, 2021, acquired healthcare leasing business with $119 million in net assets for $159 million in cash National leasing platform complements our existing healthcare lending niche business BPPR Customer Engagement 1.9 million customers as of September 2021 (increased by 141,000 since March 2020 and 12,000 QoQ) 18% growth in active online users1 since March 2020 Captured 66% of Q3 2021 deposits through digital channels, compared to 56% in Q1 2020
Puerto Rico – Key Indicators Economy 1 Source: United Automobile Importers Group (based on units) as of September 2021; 2 Source: Puerto Rico Economic Development Bank, Q3 2021 estimated based on July and August 2021 Actuals; 3 Source: U.S. Bureau of Labor Statistics (Seasonally Adjusted) as of August 2021 ; 4 Credit and debit card sales pertain to BPPR customers only as of September 2021 New auto sales continue to demonstrate strong consumer demand Credit and debit card volumes remain above pre-pandemic levels Total employment is still below pre-pandemic levels 1 2 3 4
Financial Summary 6
Net Interest Margin Dynamics Q3 2021 net interest margin at 2.77%; FTE1 net interest margin at 3.04% Money market and investment securities to earning assets ratio at 59% FTE loan yield increased 2 basis points QoQ to 6.15%, driven by PPP income Total deposit cost for the quarter down 2 basis points to 0.16%; decreased 4 basis points in the U.S. and 1 basis point in P.R. ¹ FTE stands for fully taxable-equivalent basis. Represents a non-GAAP financial measure. See the Corporation’s earnings press release, Form 10Q and Form 10K filed with the Securities and Exchange Commission for the applicable periods, for a GAAP to non-GAAP reconciliation 2 Balances are at end of period Differences due to rounding
Capital Robust capital levels; Common Equity Tier 1 of 17.4% Leverage ratio of 7.4% impacted by the high proportion of zero-risk weighted assets on the balance sheet, which represented 46% of total assets Tangible book value per share of $66.01 up $2.77 from Q2 2021 Capital actions: Completed $350 million Accelerated Share Repurchase program; repurchased 4.6 million shares at an average price of $75.84 Announced the redemption of outstanding $187 million 6.70% Trust Preferred Securities, to be completed in Q4 Capital Ratios (%) Note: Estimated for the current period
Non-Performing Assets ($ in millions) Non-Performing Assets NPAs decreased by $57 million QoQ NPLs decreased by $52 million QoQ P.R. NPLs at $609 million, or 2.9% of loans, down by $48 million, driven by: Lower commercial NPLs by $34 million, mainly due to payment activity Lower mortgage NPLs by $16 million, driven by lower inflows U.S. NPLs at $24 million, or 0.3% of loans, down by $4 million, mostly related to a commercial loan pay-off during the quarter Held for sale NPLs decreased by $9 million QoQ Differences due to rounding Non-Performing Loans ($ in millions)
NPL Inflows Total NPL Inflows ($ in millions) Mortgage NPL Inflows ($ in millions) Differences due to rounding Total NPL inflows decreased by $43 million QoQ P.R. inflows decreased by $37 million QoQ, as the prior quarter included a $32 million commercial relationship U.S. inflows decreased by $7 million QoQ, driven by lower commercial inflows Commercial and Construction NPL Inflows ($ in millions)
NCOs and NCO-to-Loan Ratio ($ in millions) NCOs and Allowance for Credit Losses Differences due to rounding NCOs increased by $10 million QoQ, mostly driven by: Higher commercial NCOs by $14 million, mostly due to the effect of recoveries of $8 million in Q2 2021 from an NPL resolution Lower mortgage NCOs by $3 million NCO ratio at 0.12% vs. (0.02%) in Q2 2021 ACL decreased by $67 million QoQ, driven by changes in the economic scenarios and credit quality ACL-to-Loans ratio at 2.49% vs. 2.70% in Q2 2021 ACL-to-NPLs at 114% vs. 115% in Q2 2021 1
Allowance for Credit Losses – Q3 2021 Movement Differences due to rounding ACL Movement: Moody’s August vintage continues to show a favorable economic scenario. Changes in the forecast of income-based variables contributed to the reduction in ACL Stability in the economic outlook and borrower performance contributed to the reductions in qualitative reserves Portfolio changes include changes in credit quality and volume mix Economic Scenario: Probability weighted Moody’s scenarios Baseline scenario is assigned the highest probability, followed by the S3 scenario P.R. and U.S. Baseline forecast for GDP growth remained consistent QoQ The unemployment rate in U.S. and P.R. shows improvement through 2022 $786 $(9) $(19) $(15) $(24) $719
Driving Value Capital Completed $350 million Accelerated Share Repurchase program; repurchased 4.6 million shares at an average price of $75.84 Announced the redemption of outstanding $187 million 6.70% Trust Preferred Securities, to be completed in Q4 Franchise Additional Value Investments in Evertec and Banco BHD León Market leader in Puerto Rico Well-positioned to take advantage of economic recovery Focus on customer service supported by broad branch network Differentiated digital offering for retail and commercial customers Diversified fee income driven by unmatched product breadth Strong risk-adjusted loan margins driven by a well-diversified portfolio Substantial liquidity with low deposit beta Mainland U.S. banking operation provides geographic diversification Commercial led strategy focused on small and medium-sized businesses Branch footprint in South Florida and New York Metro National niche banking focus in homeowners’ associations, healthcare and non-profit organizations Acquired a leasing business that complements existing healthcare lending focus
INVESTOR PRESENTATION Appendix Third Quarter 2021
Franchise Summary Corporate Structure Assets = $63 billion Assets = $10 billion Puerto Rico Operations United States Operations Assets = $74 billion Information as of September 30, 2021 ¹ Doing business as Popular Selected equity investments EVERTEC and Banco BHD León under Corporate segment Transaction processing, business processes outsourcing 16.19% stake Adjusted EBITDA of $80 million for the quarter ended June 30, 2021 Dominican Republic bank 15.84% stake 2020 net income of $163 million Industry Financial services Headquarters San Juan, Puerto Rico Assets $74 billion (among top 50 BHCs in the U.S.) Loans $29 billion Deposits $66 billion Banking branches 159 in Puerto Rico, 39 in the U.S. (28 in New York and New Jersey and 11 in Florida) and 10 in the U.S. and British Virgin Islands NASDAQ ticker symbol BPOP Market Cap $6 billion Corporate Structure – Popular, Inc. Banco Popular de Puerto Rico Popular’s Insurance Subsidaries Popular North America, Inc. Popular Securities LLC Holding Companies (Including Equity Investments) Popular Bank 1 Popular Auto, LLC
Differences due to rounding Business Segments
Municipalities Obligations of municipalities are backed by real and personal property taxes, municipal excise taxes, and/or a percentage of the sales and use tax Indirect exposure includes loans or securities that are payable by non-governmental entities, but which carry a government guarantee to cover any shortfall in collateral in the event of borrower default. Majority are single-family mortgage related Indirect Exposure The Corporation does not own any loans issued by the P.R. central government or its public corporations. As of September 30, 2021, our direct exposure to P.R. municipalities was $346 million, down by $29 million QoQ P.R. Public Sector Exposure
FICO Mix of Consumer Originations
Popular, Inc. Credit Ratings Senior Unsecured Ratings Moody’s Ba3 Stable Outlook Fitch BBB- Stable Outlook S&P BB- Positive Outlook February Moody’s changes outlook to Positive from Negative April S&P upgrades to BB- from B+ revised outlook to Positive 2017 October Fitch and S&P change outlook to Negative from Positive 2018 May Fitch revised outlook to Positive 2019 April Moody's upgrades to B1 from B2 S&P revised outlook to Positive May Fitch upgrades to BB from BB- 2020 March S&P lowers outlook to Stable 2021 March Moody’s revised outlook to Positive April Moody’s upgrades to Ba3 from B1 Fitch and S&P revised outlook to Positive June Fitch upgrades to BBB- from BB, revised outlook to Stable
INVESTOR PRESENTATION Third Quarter 2021