Popular, Inc.: Form 10-Q for the period ended Mar 31, 2024

This report includes management’s discussion and analysis (“MD&A”) of the consolidated financial position and financial

performance of Popular, Inc. (the “Corporation” or “Popular”). All accompanying tables, financial statements and notes included

elsewhere in this report should be considered an integral part of this analysis.

The Corporation is a diversified, publicly-owned financial holding company subject to the supervision and regulation of the Board of

Governors of the Federal Reserve System. The Corporation has operations in Puerto Rico, the United States (“U.S.”) mainland and

the U.S. and British Virgin Islands. In Puerto Rico, the Corporation provides retail, mortgage and commercial banking services

through its principal banking subsidiary, Banco Popular de Puerto Rico (“BPPR”), as well as investment banking, broker-dealer, auto

and equipment leasing and financing, and insurance services through specialized subsidiaries. In the U.S. mainland, the

Corporation provides retail, mortgage and commercial banking services, as well as equipment leasing and financing, through its

New York-chartered banking subsidiary, Popular Bank (“PB” or “Popular U.S.”), which has branches located in New York, New

Jersey and Florida. Note 32 to the Consolidated Financial Statements presents information about the Corporation’s business

segments.

SIGNIFICANT EVENTS

FDIC Special Assessment Increase in Estimate

On November 16, 2023, the Federal Deposit Insurance Corporation (“FDIC”) approved a final rule that imposes a special

assessment (the “FDIC Special Assessment”) to recover the losses to the deposit insurance fund resulting from the FDIC’s use, in

March 2023, of the systemic risk exception to the least-cost resolution test under the Federal Deposit Insurance Act in connection

with the receiverships of several failed banks. In connection with this assessment, the Corporation recorded an expense of

$71.4 million, $45.3 million net of tax, in the fourth quarter of 2023, representing the full amount of the estimated assessment at that

time.

During the quarter ended March 31, 2024, the Corporation recorded an additional expense of $14.3 million, $9.1 million net of tax, to

reflect the FDIC's higher loss estimate which increased from $16.3 billion, when approved, to $20.4 billion during the quarter. The

special assessment amount and collection period may change as the estimated loss is periodically adjusted or if the total amount

collected varies.

Tax impact on Intercompany Distributions

The net income for the quarter ended March 31, 2024, included $22.9 million of expenses, of which $16.5 million is reflected in

income tax expense and $6.4 million is reflected in other operating expenses, related to an out-of-period adjustment associated

with the Corporation’s U.S. subsidiary’s non-payment of taxes on certain intercompany distributions to the Bank Holding Company

(BHC) in Puerto Rico, a foreign corporation for U.S. tax purposes. The adjustment corrected errors for income tax expense that

should have been recognized of $5.5 million and $5.4 million in the years 2023 and 2022, respectively, and an aggregate of $5.6

million, in the years prior to 2022. The $6.4 million recognized as other operating expense corresponded to interest due up to March

31, 2024 on the related late payment of the withholding tax, of which approximately $3.0 million correspond to years prior to 2022.

As a result of this adjustment, the deferred tax asset related to NOL of the BHC and its related valuation allowance was reduced by

$53.7 million. The Corporation evaluated the impact of the out-of-period adjustment and concluded it was not material to any

previously issued interim or annual consolidated financial statements and the adjustment is not expected to be material to the year

ending December 31, 2024.

The Corporation also recognized $6.5 million in income tax expense during the quarter ended March 31, 2024 to reflect the U.S.

federal tax withholding liability and estimated related Puerto Rico income tax arising from a $50 million dividend paid during the

quarter.

Dividends from the U.S. subsidiaries to the BHC are subject to a Federal 10% withholding tax and ordinary income tax in Puerto

Rico, subject to foreign tax credits, use of available net operating losses and certain other limitations. The Corporation does not

anticipate the tax treatment of U.S. sourced dividends to the BHC to impact BHC liquidity or future capital actions.

OVERVIEW

Table 1 provides selected financial data and performance indicators for the quarters ended March 31, 2024 and 2023.

Table 1 - Financial highlights

Financial Condition Highlights

Ending Balances at

Average for the quarter ended

(In thousands)

March 31,

2024

December 31,

2023

Variance

March 31,

2024

March 31,

2023

Variance

Money market investments

5,928,578

6,998,871

(1,070,293)

6,483,615

5,736,352

747,263

Investment securities

26,324,139

25,148,673

1,175,466

27,698,252

28,076,090

(377,838)

Loans

35,124,090

35,069,272

54,818

35,059,391

32,048,055

3,011,336

Earning assets

67,376,807

67,216,816

159,991

69,241,258

65,860,497

3,380,761

Total assets

70,936,939

70,758,155

178,784

72,294,855

68,843,309

3,451,546

Deposits

63,808,784

63,618,243

190,541

64,032,945

61,145,654

2,887,291

Borrowings

1,032,393

1,078,332

(45,939)

1,056,673

1,167,845

(111,172)

Total liabilities

65,759,625

65,611,202

148,423

66,096,115

63,202,001

2,894,114

Stockholders’ equity

5,177,314

5,146,953

30,361

6,198,740

5,641,308

557,432

Note: Average balances exclude unrealized gains or losses on debt securities available-for-sale.

Operating Highlights

Quarter ended March 31,

(In thousands, except per share information)

2024

2023

Variance

Net interest income

550,744

531,656

19,088

Provision for credit losses (benefit)

72,598

47,637

24,961

Non-interest income

163,818

161,961

1,857

Operating expenses

483,113

440,687

42,426

Income before income tax

158,851

205,293

(46,442)

Income tax expense

55,568

46,314

9,254

Net income

103,283

158,979

(55,696)

Net income applicable to common stock

102,930

158,626

(55,696)

Net income per common share - basic

1.43

2.22

(0.79)

Net income per common share - diluted

1.43

2.22

(0.79)

Dividends declared per common share

0.62

0.55

0.07

Quarter ended March 31,

Selected Statistical Information

2024

2023

Common Stock Data

End market price

88.09

57.41

Book value per common share at period end

71.32

61.82

Profitability Ratios

Return on assets

0.57

0.93

Return on common equity

6.07

10.00

Net interest spread

2.38

2.68

Net interest spread (taxable equivalent) - Non-GAAP

2.60

2.92

Net interest margin

3.16

3.22

Net interest margin (taxable equivalent) - Non-GAAP

3.38

3.46

Capitalization Ratios

Average equity to average assets

8.57

8.19

Common equity Tier 1 capital

16.36

16.73

Tier I capital

16.42

16.79

Total capital

18.19

18.61

Tier 1 leverage

8.45

8.37

Non-GAAP Financial Measures

This Form 10-Q contains financial information prepared under accounting principles generally accepted in the United

States (“U.S. GAAP”) and non-GAAP financial measures. Management uses non-GAAP financial measures when it

has determined that these measures provide meaningful information about the underlying performance of the

Corporation’s ongoing operations. Non-GAAP financial measures used by the Corporation may not be comparable to

similarly named non-GAAP financial measures used by other companies.

Adjusted net income - Non-GAAP Financial Measure

In addition to analyzing the Corporation’s results on a reported basis, management monitors the “Adjusted net

income” of the Corporation and excludes the impact of certain transactions on the results of its operations.

Management believes that the “Adjusted net income” provides meaningful information about the underlying

performance of the Corporation’s ongoing operations. The “Adjusted net income” is a non-GAAP financial measure.

The following table presents the Adjusted net income for the quarter ended of March 31, 2024. There were no non-

GAAP adjustments for the quarter ended March 31, 2023.

Table 2 - Adjusted Net Income for the Quarter Ended March 31, 2024 (Non-GAAP)

(Unaudited)

(In thousands)

Income before

income tax

Income tax

expense

(benefit)

Total

U.S. GAAP Net income

$158,851

$55,568

$103,283

Non-GAAP Adjustments:

FDIC Special Assessment [1]

14,287

(5,234)

9,053

Adjustments related to intercompany distributions [1]

6,400

16,483

22,883

Adjusted net income (Non-GAAP)

$179,538

$44,319

$135,219

[1] Refer to the Overview section of Management’s Discussion and Analysis included in this Form 10-Q for a description of this item.

Net interest income on a taxable equivalent basis – Non-GAAP Financial Measure

Net interest income on a taxable equivalent basis is a non-GAAP financial measure. Management believes that this presentation

provides meaningful information since it facilitates the comparison of revenues arising from taxable and tax-exempt sources.

The Corporation’s interest earning assets include investment securities and loans that are exempt from income tax, principally in

Puerto Rico. The main sources of tax-exempt interest income are certain investments in obligations of the U.S. Government, its

agencies and sponsored entities, certain obligations of the Commonwealth of Puerto Rico and/or its agencies and municipalities,

and assets held by the Corporation’s international banking entities. To facilitate the comparison of interest related to these assets,

the interest has been converted to a taxable equivalent basis, using the applicable statutory income tax rates for each period.

According to the Puerto Rico tax law, a portion of interest cost, based on an equal proportion of tax-exempt assets to total assets,

and an allocation of general and administrative expenses should be attributed to exempt income, reducing the benefit of the tax

exempt income, and as such the disallowance of such deduction is considered in the taxable equivalent computation. The effective

yield, on a taxable equivalent basis, will vary depending on the level of these expenses that are attributed to the available exempt

income.

Net interest income on a taxable equivalent basis, with its different components, along with the reconciliation to net interest income

(GAAP), for the quarter ended March 31, 2024 as compared with the same period in 2023, segregated by major categories of

interest earning assets and interest-bearing liabilities are included in Table 3 of the Operating Results Analysis section below.

Tangible Common Equity and Tangible Assets

Tangible common equity, tangible common equity ratio, tangible assets and tangible book value per common share are non-GAAP

financial measures. Tangible common equity ratio and tangible book value per common share in conjunction with more traditional

bank capital ratios are commonly used by banks and analysts to compare the capital adequacy of banking organizations with

significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method for

mergers and acquisitions. Tangible common equity, tangible assets and other related measures should not be used in isolation or

as a substitute for stockholders' equity, total assets or any other measure calculated in accordance with GAAP. Moreover, the

manner in which the Corporation calculates its tangible common equity, tangible assets and other related measures may differ from

that of other companies reporting measures with similar names.

Table 9 provides a reconciliation of total stockholders’ equity to tangible common equity and total assets to tangible assets as of

March 31, 2024, and December 31, 2023.

Financial highlights for the quarter ended March 31, 2024

For the quarter ended March 31, 2024, the Corporation recorded net income of $ 103.3 million, compared to net income of $

159.0 million for the same quarter of the previous year. Net interest margin for the first quarter of 2024 was 3.16%, a decrease

of 6 basis points when compared to 3.22% for the same quarter of the previous year. The decrease was mainly due to higher

deposit costs, principally from the Puerto Rico public sector and from online deposits in the U.S., which was partially offset by

higher yield from money market investments and loans. On a taxable equivalent basis, the net interest margin was 3.38%,

compared to 3.46% for the same quarter of the previous year.

For the quarter ended March 31, 2024, the Corporation recorded a provision for credit losses of $72.6 million, compared to

$47.6 million for the same quarter of the previous year. The higher provision for credit losses was driven by higher reserves in

our commercial and consumer portfolios mostly due to higher loan volumes and changes in the credit ratings and the credit

quality of the US commercial portfolio and the BPPR consumer portfolio.

Non-interest income was $163.8 million for the quarter, an increase of $1.9 million when compared to the quarter ended March

31, 2023, mainly due to higher service charges on deposit accounts and other service fees, partially offset by lower income

from mortgage banking activities resulting from the fair value adjustments of mortgage servicing rights.

Operating expenses for the quarter were higher by $42.4 million when compared to the quarter ended March 31, 2023. Higher

operating expenses were driven mainly by the effect of the increase in loss estimate related to the FDIC Special Assessment, higher personnel costs and higher technology and software expenses.

Income tax during the quarter was higher by $9.3 million due to the impact of the tax expense recognized on intercompany

distributions from previous periods. Compared to the same quarter in the previous year, income tax expense was also higher

as the results of the first quarter of 2023 included the effect of the reversal of a valuation allowance of a tax credit expected to

be realized on the U. S. Operations.

Total assets at March 31, 2024 amounted to $70.9 billion, compared to $70.8 billion, at December 31, 2023. The increase was

driven by an increase in available-for-sale (“AFS”) investment securities, mainly due to purchases of U.S. Treasury Securities,

and loan growth, mainly in the mortgage portfolio and in auto loans, partially offset by a net decrease in cash and money

market investments due to the investments in the debt securities portfolio and loan originations.

Total deposits at March 31, 2024 increased by $190.5 million when compared to deposits at December 31, 2023, mainly due to

higher retail deposits, time deposits and deposits in trust in BPPR, partially offset by a decrease in Puerto Rico public sector

deposits.

Stockholders’ equity as of March 31, 2024 increased by $30.4 million from the December 31, 2023, mainly due to net income

for the quarter of $103.3 million and the amortization of unrealized losses from securities previously reclassified to held-to-

maturity (“HTM”) of $35.2 million, net of taxes, partially offset by the after-tax impact of the increase in net unrealized losses in

the portfolio of AFS securities of $71.1 million and common and preferred dividends declared during the quarter. As of March

31, 2024, the Corporation’s tangible book value per common share was $60.06, an increase of $0.32 from December 31, 2023

due mainly to the increase in stockholders’ equity during the period.

Regulatory capital ratios remained strong. As of March 31, 2024, the Corporation’s common equity tier 1 capital ratio was

16.36%, the tier 1 leverage ratio was 8.45%, and the total capital ratio was 18.19%. Refer to Table 8 for capital ratios.

Refer to the Operating Results Analysis and Financial Condition Analysis within this MD&A for additional discussion of significant

quarterly variances and items impacting the financial performance of the Corporation.

As a financial services company, the Corporation’s earnings are significantly affected by general business and economic conditions

in the markets which we serve. Lending and deposit activities and fee income generation are influenced by the level of business

spending and investment, consumer income, spending and savings, capital market activities, competition, customer preferences,

interest rate conditions and prevailing market rates on competing products.

The Corporation operates in a highly regulated environment and may be adversely affected by changes in federal and local laws

and regulations. Also, competition with other financial institutions, as well as with non-traditional financial service providers and

technology companies that provide electronic and internet-based financial solutions and services, could adversely affect its

profitability.

The Corporation continuously monitors general business and economic conditions, industry-related indicators and trends,

competition, interest rate volatility, credit quality indicators, loan and deposit demand, operational and systems efficiencies, revenue

enhancements and changes in the regulation of financial services companies.

The description of the Corporation’s business contained in Item 1 of the 2023 Form 10-K, while not all inclusive, discusses additional

information about the business of the Corporation. Readers should also refer to “Part I - Item 1A” of the 2023 Form 10-K and “Part II

- Item 1A” of this Form 10-Q for a discussion of certain risks and uncertainties to which the Corporation is subject, many beyond the

Corporation’s control that, in addition to the other information in this Form 10-Q, readers should consider.

The Corporation’s common stock is traded on the NASDAQ Global Select Market under the symbol BPOP.

CRITICAL ACCOUNTING POLICIES / ESTIMATES

The accounting and reporting policies followed by the Corporation and its subsidiaries conform to generally accepted accounting

principles in the United States of America and general practices within the financial services industry. Various elements of the

Corporation’s accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other

subjective assessments. These estimates are made under facts and circumstances at a point in time and changes in those facts

and circumstances could produce actual results that differ from those estimates.

Management has discussed the development and selection of the critical accounting policies and estimates with the Corporation’s

Audit Committee. The Corporation has identified as critical accounting policies those related to: (i) Fair Value Measurement of

Financial Instruments; (ii) Loans and Allowance for Credit Losses; (iii) Loans Acquired with Deteriorated Credit Quality; (iv) Income

Taxes; (v) Goodwill and Other Intangible Assets; and (vi) Pension and Postretirement Benefit Obligations. For a summary of these

critical accounting policies and estimates, refer to that particular section in the MD&A included in the 2023 Form 10-K. Also, refer to

Note 2 to the Consolidated Financial Statements included in the 2023 Form 10-K for a summary of the Corporation’s significant

accounting policies and to Note 3 to the Consolidated Financial Statements included in this Form 10-Q for information on recently

adopted accounting standard updates.

OPERATING RESULTS ANALYSIS

NET INTEREST INCOME

Net interest income for the quarter ended March 31, 2024 was $550.7 million, compared to $531.7 million in the same quarter of

2023, an increase of $19.1 million. Net interest income on a taxable equivalent basis for the first quarter of 2024 was $589.6 million

compared to $570.4 million in the first quarter of 2023, an increase of $19.2 million.

Net interest margin for the quarter was 3.16% compared to 3.22% in the first quarter of 2023 or a decrease of six basis points. On a

taxable equivalent basis, net interest margin for the first quarter of 2024 was 3.38%, compared to 3.46% for the same quarter the

prior year. The main variances in net interest income on a taxable equivalent basis were:

higher interest income from money market, investments, and trading securities by $55.0 million mainly driven by higher

average yield by 60 basis points. The increase in yield was driven by a higher interest rate environment and reinvestment

of investment maturities in higher yielding U.S. Treasury bills;

higher interest income from loans by $100.2 million resulting from an increase in average loans by $3.0 billion reflecting

loan increases in both PB and BPPR and across most portfolios and higher yield on loans by 51 basis points when

compared to the same quarter of 2023 due to origination of loans in a higher interest rate environment and the repricing of

adjustable-rate loans. The portfolio with the highest variances included commercial loans with an increase of $54.0 million

in interest income, or 52 basis points, consumer loans with an increase of $15.8 million or 105 basis points, and auto

loans which increased $10.6 million or 63 basis points.

Partially offset by:

higher interest expense on deposits by $136.3 million driven by higher cost of deposits by 99 basis points driven by higher

average volume and higher cost of market linked P.R. public deposits by $2.7 billion and higher volume of U.S. online

deposits.

Net interest income for the BPPR segment amounted to $472.8 million for the first quarter of 2024, compared to $449.8 million in the

first quarter of 2023. Net interest margin increased to 3.33% compared to 3.24% in the first quarter of 2023. The increase in net

interest income of $23.0 million was driven by higher yield and volume on earning assets partially offset by the increase in the cost

of deposits, mainly from the P.R. public sector. The cost of interest-bearing deposits increased 83 basis points to 2.44% from 1.61%

in the same quarter of 2023. Total deposit costs for the quarter increased by 63 basis points, from 1.18% in the first quarter of 2023

to 1.81%.

Net interest income for PB was $84.9 million for the quarter ended March 31, 2024, compared to $90.1 million during the first

quarter of 2023, a decrease of $5.2 million. Net interest margin decreased 75 basis points to 2.59% when compared to 3.34% during the first quarter of 2023. The decrease in net interest margin was mostly driven by a higher cost of deposits in all categories, partially offset by the increase in loan volume and the repricing of adjustable-rate loans driven by the changes in interest rates. The cost of interest-bearing deposits was 3.86% compared to 2.47% in the first quarter of 2023, or an increase of 139 basis points, while total deposit cost was 3.40% compared to 2.01% in the first quarter of 2023.

Table 3 - Analysis of Levels & Yields on a Taxable Equivalent Basis (Non-GAAP)

Quarter ended March 31,

Variance

Average Volume

Average Yields / Costs

Interest

Attributable to

2024

2023

Variance

2024

2023

Variance

2024

2023

Variance

Rate

Volume

(In millions)

(In thousands)

6,484

5,736

748

5.49

4.65

0.84

Money market investments

88,516

65,724

22,792

13,566

9,226

28,308

28,862

(554)

2.71

2.22

0.49

Investment securities [1]

191,103

158,914

32,189

35,317

(3,128)

33

31

2

3.75

4.47

(0.72)

Trading securities

311

338

(27)

(55)

28

Total money market,

investment and trading

34,825

34,629

196

3.23

2.63

0.60

securities

279,930

224,976

54,954

48,828

6,126

Loans:

17,613

15,761

1,852

6.84

6.32

0.52

Commercial

299,504

245,469

54,035

23,691

30,344

992

732

260

8.96

8.40

0.56

Construction

22,100

15,155

6,945

1,215

5,730

1,742

1,588

154

6.74

6.12

0.62

Leasing

29,353

24,282

5,071

2,595

2,476

7,723

7,388

335

5.62

5.46

0.16

Mortgage

108,543

100,773

7,770

3,113

4,657

3,227

3,020

207

13.90

12.85

1.05

Consumer

111,490

95,715

15,775

8,441

7,334

3,763

3,559

204

8.77

8.14

0.63

Auto

82,054

71,407

10,647

6,421

4,226

35,060

32,048

3,012

7.48

6.97

0.51

Total loans

653,044

552,801

100,243

45,476

54,767

69,885

66,677

3,208

5.36

4.72

0.64

Total earning assets

932,974

777,777

155,197

94,304

60,893

Interest bearing deposits:

25,703

23,313

2,390

3.63

2.52

1.11

NOW and money market [2]

232,129

144,970

87,159

70,094

17,065

14,700

15,029

(329)

0.93

0.47

0.46

Savings

34,171

17,443

16,728

16,240

488

8,547

7,099

1,448

2.97

1.76

1.21

Time deposits

63,196

30,802

32,394

21,831

10,563

48,950

45,441

3,509

2.71

1.72

0.99

Total interest bearing deposits

329,496

193,215

136,281

108,165

28,116

15,083

15,704

(621)

Non-interest bearing demand

deposits

64,033

61,145

2,888

2.07

1.28

0.78

Total deposits

329,496

193,215

136,281

108,165

28,116

84

247

(163)

5.70

4.74

0.96

Short-term borrowings

1,192

2,885

(1,693)

309

(2,002)

Other medium and

998

947

51

5.13

4.78

0.35

long-term debt

12,709

11,266

1,443

399

1,044

Total interest bearing

50,032

46,635

3,397

2.76

1.80

0.96

liabilities (excluding demand

deposits)

343,397

207,366

136,031

108,873

27,158

4,770

4,338

432

Other sources of funds

69,885

66,677

3,208

1.98

1.26

0.72

Total source of funds

343,397

207,366

136,031

108,873

27,158

Net interest margin/

3.38

3.46

(0.08)

income on a taxable

equivalent basis (Non-

GAAP)

589,577

570,411

19,166

(14,569)

33,735

2.60

2.92

(0.32)

Net interest spread

Net interest spread

38,833

38,755

78

Net interest margin/ income

3.16

3.22

(0.06)

non-taxable equivalent basis

(GAAP)

550,744

531,656

19,088

Note: The changes that are not due solely to volume or rate are allocated to volume and rate based on the proportion of the change in each category.

[1] Average balances exclude unrealized gains or losses on debt securities available-for-sale and the unrealized loss related to certain securities transferred from

available-for-sale to held-to-maturity.

[2] Includes interest bearing demand deposits corresponding to certain government entities in Puerto Rico.

Provision for Credit Losses - Loans Held-in-Portfolio and Unfunded Commitments

For the quarter ended March 31, 2024, the Corporation recorded a provision expense of $72.1 million for credit losses related to

loans held-in-portfolio and unfunded commitments. The provision for credit loss related to the loans-held-in-portfolio for the quarter

ended March 31, 2024 was $72.4 million, compared to a provision expense of $47.1 million for the quarter ended March 31, 2023.

The increase in provision expense was driven by the commercial and consumer portfolio, mainly personal loans and credit cards.

Higher loan volumes and changes in credit quality in these portfolios contributed to the higher provision expense. The reserve

release related to unfunded commitments for the first quarter of 2024 was $0.2 million, compared to a provision expense of $0.6

million for the same period of 2023.

For the quarter ended March 31, 2024, the Corporation recorded $61.0 million in provision expense for loans-held-in-portfolio in the

BPPR segment, compared to a provision expense of $45.2 million for the quarter ended March 31, 2023. The Popular U.S. segment

recorded a provision expense of $11.4 million for the quarter ended March 31, 2024, compared to a provision expense of $1.9

million for the same quarter in 2023.

At March 31, 2024, the total allowance for credit losses for loans held-in-portfolio amounted to $739.5 million, compared to $729.3

million as of December 31, 2023. The ratio of the allowance for credit losses to loans held-in-portfolio was 2.11% at March 31, 2024,

compared to 2.08% at December 31, 2023. As discussed in Note 8 to the Consolidated Financial Statements, the Corporation

applies probability weightings to the outcomes of simulations using Moody’s Analytics’ Baseline, S3 (pessimistic) and S1 (optimistic)

scenarios to estimate the ACL. The baseline scenario is assigned the highest probability, followed by the pessimistic scenario to

account for uncertainties in the macro-economic outlook and any downside risk. The weight assigned to the pessimistic scenario

decreased this quarter in response to the positive momentum in the economy as expectations for the Federal Reserve achieving a

soft landing have improved. Refer to Note 8 to the Consolidated Financial Statements, for additional information on the

Corporation’s methodology to estimate its ACL. Refer to the Credit Risk section of this MD&A for a detailed analysis of net charge-

offs, non-performing assets, the allowance for credit losses and selected loan losses statistics.

Provision for Credit Losses – Investment Securities

The Corporation’s provision for credit losses related to its investment securities held-to-maturity is related to the portfolio of

obligations from the Government of Puerto Rico, states and political subdivisions. At March 31, 2024, the total allowance for credit

losses for this portfolio amounted to $5.7 million, compared to $5.8 million as of December 31, 2023. Refer to Note 6

to

Consolidated Financial Statements

for additional information on the ACL for this portfolio.

During the quarter ended March 31. 2024, the Corporation recognized a provision of $0.5 million related to a single security within

the “Other” portfolio in its debt securities available-for-sale, that after evaluation was determined to be impaired and as a result was

fully reserved. Refer to Note 5 to Consolidated Financial Statements for additional information on the ACL for this portfolio.

Non-Interest Income

Non-interest income was $163.8 million for the first quarter of 2024, an increase of $1.9 million when compared with the same

quarter of the previous year. The increase in non-interest income was primarily driven by:

higher other service fees by $4.2 million mainly due to higher credit card fees, mainly from commercial clients, higher

debit card fees as a result of higher interchange transactional volumes, and higher investment management and trust

fees;

higher service charges on deposit accounts by $2.8 million mainly due to higher non balance compensation, mainly from

commercial accounts;

partially offset by:

lower income from mortgage banking activities by $3.0 million mainly due to an unfavorable variance of $2.1 million in the

fair value adjustment of mortgage servicing rights (“MSR”) and lower mortgage servicing fees.

Operating Expenses

Operating expenses for the quarter ended March 31, 2024 increased by $42.4 million when compared with the same quarter of

2023. Excluding the $6.4 million of interest accrued related to prior period taxes and the $14.3 million impact of the FDIC Special

Assessment total expenses for the first quarter of 2024 were $462.4 million, compared to $440.7 million in the first quarter of 2023.

The other factors that contributed to the variance in operating expenses were:

higher personnel cost by $16.6 million mainly due to higher salaries expense by $4.0 million as a result of annual salary

revisions that occur after the first quarter, an increase in headcount throughout 2023, an increase in health insurance

costs by $2.0 million, higher annual incentive awards of performance and restricted shares related expenses by $3.4

million, higher commissions and incentive compensation by $3.8 million, and higher payroll taxes and other compensation

expenses by $3.2 million;

higher technology and software expenses by $10.9 million mainly due to higher software amortization expense by $3.3

million, an increase of $3.5 million from network management services, and higher IT professional and consulting fees by

$3.1 million;

higher business promotion expenses by $2.1 million mainly due to higher customer rewards programs expense in our

credit card business; and

higher net occupancy expenses by $2.0 million mainly due to higher cleaning costs and higher amortization of buildings’

insurance premiums;

partially offset by:

higher other real estate owned (OREO) benefit by $3.6 million mainly due to higher gain on sale of mortgage properties;

lower professional fees by $4.5 million mainly due to lower advisory expenses related to corporate initiatives;

lower operational losses by $3.2 million mainly related to legal settlements reserves; and

lower other taxes expense by $1.9 million mainly due to lower accruals in the first quarter of 2024 related to regulatory

examination expenses.

Table 4 - Operating Expenses

Quarters ended March 31,

(In thousands)

2024

2023

Variance

Personnel costs:

Salaries

129,384

125,393

3,991

Commissions, incentives and other bonuses

38,611

31,162

7,449

Pension, postretirement and medical insurance

17,385

15,378

2,007

Other personnel costs, including payroll taxes

29,997

26,827

3,170

Total personnel costs

215,377

198,760

16,617

Net occupancy expenses

28,041

26,039

2,002

Equipment expenses

9,567

8,412

1,155

Other taxes

14,375

16,291

(1,916)

Professional fees

28,918

33,431

(4,513)

Technology and software expenses

79,462

68,559

10,903

Processing and transactional services:

Credit and debit cards

12,144

12,550

(406)

Other processing and transactional services

22,050

21,359

691

Total processing and transactional services

34,194

33,909

285

Communications

4,557

4,088

469

Business promotion:

Rewards and customer loyalty programs

14,056

12,348

1,708

Other business promotion

6,933

6,523

410

Total business promotion

20,989

18,871

2,118

FDIC deposit insurance

23,887

8,865

15,022

Other real estate owned (OREO) income

(5,321)

(1,694)

(3,627)

Other operating expenses:

Operational losses

3,561

6,800

(3,239)

All other

24,711

17,561

7,150

Total other operating expenses

28,272

24,361

3,911

Amortization of intangibles

795

795

Total operating expenses

483,113

440,687

42,426

Income Taxes

For the quarter ended March 31, 2024, the Corporation recorded an income tax expense of $55.6 million with an effective tax rate

(ETR) of 35%, compared to $46.3 million with an ETR of 23% for the same period of 2023. As discussed in Note 30, the income tax

expense for the quarter ended March 31, 2024 includes $23.0 million related to withholding tax liabilities for certain intercompany

distributions, out of which $16.5 million was related to distributions between years 2014-2023 and $6.5 million was related to a

distribution completed during the quarter ended March 31, 2024. This variance was partially offset due to lower pre-tax income for

the quarter ended March 31, 2024. Also, for the quarter ended March 31, 2023, the Corporation reported a reversal of a valuation

allowance on a tax credit expected to be realized in the U. S. operations. Based on the Adjusted Net Income, as defined in the Non-

GAAP Financial Measures section of this MD&A, the ETR for the quarter ended March 31, 2024, would have been 24.7%. Refer to

the Significant Events section in this MD&A for more details on Significant Events and Non-GAAP Financial Measures.

At March 31, 2024, the Corporation had a net deferred tax asset amounting to $1.0 billion, net of a valuation allowance of $0.5

billion. The net deferred tax asset related to the U.S. operations was $0.3 billion, net of a valuation allowance of $0.4 billion.

Refer to Note 30 to the Consolidated Financial Statements for a reconciliation of the statutory income tax rate to the effective tax

rate and additional information on the income tax expense and deferred tax asset balances.

REPORTABLE SEGMENT RESULTS

The Corporation’s reportable segments for managerial reporting purposes consist of Banco Popular de Puerto Rico and Popular

U.S. A Corporate group has also been defined to support the reportable segments.

For a description of the Corporation’s reportable segments, including additional financial information and the underlying

management accounting process, refer to Note 32 to the Consolidated Financial Statements.

The Corporate group reported a net loss of $25.4 million for the quarter ended March 31, 2024, compared with a net income of $1.3

million for the same quarter of the previous year. The negative variance was mainly attributed to the $22.9 million adjustment to

recognize the tax impact associated with prior period intercompany distributions and the additional $6.5 million recognized for the

tax impact related to intercompany distributions paid during the first quarter of 2024.

Highlights on the earnings results for the reportable segments are discussed below:

Banco Popular de Puerto Rico

The Banco Popular de Puerto Rico reportable segment’s net income amounted to $121.3 million for the quarter ended March 31,

2024, compared with net income of $132.9 million for the same quarter of the previous year. The factors that contributed to the

variance in the financial results included the following:

Higher net interest income by $23.0 million mainly due to:

higher interest income from money market and investment securities by $38.7 million due to higher yields driven

by the increase in interest rates by the Federal Reserve and higher average balances of U.S. Treasury

securities.

higher interest income from loans by $71.2 million mainly due to higher average balances from commercial and

consumer loans, mainly from auto and consumer loans,

partially offset by

higher interest expense on deposits by $86.8 million mainly due to higher costs on the market-indexed Puerto

Rico government deposits, and the higher interest rate environment’s impact on the cost of NOW accounts,

time deposits, and savings deposits.

The net interest margin for the quarter ended March 31, 2024 was 3.33% compared to 3.28% for the same quarter in the

previous year. The increase in net interest margin is driven by the earnings assets mix and the higher yields from investment

securities and loans, particularly commercial and consumer loans, due to the increase in rates; partially offset by higher cost of

deposits.

A provision for loan losses expense of $60.7 million, compared to a provision expense of $45.7 million in quarter ended

March 31, 2023, or an unfavorable variance of $15.0 million mainly driven by changes in credit quality mostly due to

consumer portfolios and higher volumes;

Non-interest income was lower by $1.8 million mainly due to:

lower other operating income by $3.4 million mostly due to an insurance policy reimbursement gain of $7.0

million recorded during the quarter ended March 31,2023;

lower income from mortgage banking activities by $3.1 million mainly due to an unfavorable variance of $2.1

million in the fair value adjustment of mortgage service rights.

partially offset by

Higher service charges on deposit accounts by $2.9 million mainly due to higher ACH fees.

Higher other service fees by $2.6 million mainly due to higher credit card fees of $1.1 million as a result of

higher interchange transactional volumes and an increase of $1.1 million on trust fees; and

Higher operating expenses by $31.4 million mostly due to:

higher deposit insurance expense by $12.1 million mostly due to the FDIC Special Assessment recorded in the

first quarter of 2024;

higher personnel costs by $11.4 million driven by higher compensations and incentives, annual salary revisions,

and increase in headcount;

higher technology and software expenses by $7.6 million mainly due to higher network management fees,

amortization of software costs and higher IT consulting fees.

higher business promotions by $2.2 million due to higher customer rewards expense from our credit cards

portfolio related to higher transactional volumes;

partially offset by

higher net recoveries from OREO by $3.7 million mainly due to higher gain on sale of mortgage properties; and

lower other operating taxes by $2.1 million mainly due to regulatory examination fees;

Lower income tax expense by $13.6 million is mainly due to a lower income before tax.

Popular U.S.

For the quarter ended March 31, 2024, the reportable segment of Popular U.S. reported a net income of $7.0 million, compared with

a net income of $25.0 million for the same quarter of the previous year. The factors that contributed to the variance in the financial

results included the following:

Lower net interest income by $5.2 million due to:

higher interest expense on deposits by $51.3 million mainly due to higher interest rates and higher average

balance of time deposits gathered through online channels,

partially offset by

higher interest income from loans by $26.4 million, mainly from growth in the commercial portfolio as well as

higher yields due to increase in rates; and

higher interest income from money market and investment securities by $18.1 million due to higher volume and

yields due to the increase in market rates.

The net interest margin for the quarter ended March 31, 2024 was 2.59% compared to 3.34% for the same quarter in the previous

year driven by the higher cost of deposits.

An unfavorable variance of $9.4 million on the provision for loan losses and unfunded commitments mainly due to

changes in internal credit risk ratings in the commercial loan portfolio;

Higher operating expenses by $4.6 million mostly due to:

higher deposit insurance expense by $2.8 million mostly due to FDIC Special Assessment adjustment;

higher other operating expense by $1.6 million due to higher charges allocated from the Corporate segment

group by $1.8 million mainly from higher personnel costs.

FINANCIAL CONDITION ANALYSIS

Assets

The Corporation’s total assets were $70.9 billion at March 31, 2024, compared to $70.8 billion at December 31, 2023. Refer to the

Consolidated Statements of Financial Condition included in this report for additional information.

Money market investments and debt securities available-for-sale

Money market investments decreased by $1.1 billion as of March 31, 2024, when compared to December 31, 2023, as these funds

were used in part for the purchase of debt securities and loan originations. Debt securities available-for-sale increased $1.3 billion,

mainly due to purchases of U.S. Treasury Securities, while debt securities held-to-maturity decreased by $111.1 million driven by

maturities of U.S. Treasury securities, partially offset by the amortization of $44.0 million of the discount related to U.S. Treasury

securities previously reclassified from the AFS to HTM. Refer to Note 5 and to Note 6 to the Consolidated Financial Statements for

additional information with respect to the Corporation’s debt securities available-for-sale and held-to-maturity.

Loans

Refer to Table 5 for a breakdown of the Corporation’s loan portfolio. Also, refer to Note 7 in the Consolidated Financial Statements

for detailed information about the Corporation’s loan portfolio composition and loan purchases and sales.

Loans held-in-portfolio increased by $53.8 million to $35.1 billion as of March 31, 2024, compared to loans held-in-portfolio as of

December 31, 2023. During the quarter ended March 31, 2024, the BPPR portfolio increased by $123.8 million, driven by the growth

in the mortgage and auto loans portfolio and the PB loan portfolio decreased by $70.1 million, due in part by commercial loans

payoffs, offset by growth in the construction loans portfolio.

The Corporation’s $5.1 billion non-owner occupied commercial real estate portfolio is comprised of $3.0 billion in Puerto Rico and

$2.1 billion in the U.S. and is well diversified across a number of tenants in different industries and segments with exposure to retail

(35% of non-owner occupied CRE), hotels (19%) and office space (12%) accounting for two thirds of the total exposure. The

approximate $633 million office space exposure represents only 1.8% of the total loan portfolio and is comprised mainly of mid-rise

properties with diversified tenants with average loan size of $2 million across both the U.S. and Puerto Rico.

Popular’s $2.4 billion commercial multi-family portfolio represents approximately 7% of total loans and is concentrated in New York

Metro ($1.4 billion), South Florida ($734 million) and Puerto Rico ($197 million). In the New York Metro region, the Corporation has

no exposure to rent controlled buildings. The majority of our multi-family loans in that region are collateralized by underlying

buildings that count on a mix of units subject to rent stabilized (subject to annual capped rent increases) and market-rate units. The

rent stabilized units represent less than 40% of the total units in the loan portfolio with the majority originated after 2019. The mix of

units within a building is common across the New York Metro region due to tax incentives awarded to developers based on rent

stabilized units. In 2024, there are approximately $198 million in multi-family loans in our New York Metro portfolio expected to

reprice.

Table 5 - Loans Ending Balances

(In thousands)

March 31, 2024

December 31, 2023

Variance

Loans held-in-portfolio:

Commercial

Commercial multi-family

2,384,635

2,415,620

(30,985)

Commercial real estate non-owner occupied

5,057,059

5,087,421

(30,362)

Commercial real estate owner occupied

3,117,844

3,080,635

37,209

Commercial and industrial

7,025,483

7,126,121

(100,638)

Total Commercial

17,585,021

17,709,797

(124,776)

Construction

1,009,303

959,280

50,023

Leasing

1,765,413

1,731,809

33,604

Mortgage

7,783,662

7,695,917

87,745

Consumer

Credit cards

1,142,153

1,135,747

6,406

Home equity lines of credit

66,717

65,953

764

Personal

1,897,010

1,945,247

(48,237)

Auto

3,706,854

3,660,780

46,074

Other

162,605

160,441

2,164

Total Consumer

6,975,339

6,968,168

7,171

Total loans held-in -portfolio

35,118,738

35,064,971

53,767

Loans held-for-sale:

Mortgage

5,352

4,301

1,051

Total loans held-for-sale

5,352

4,301

1,051

Total loans

35,124,090

35,069,272

54,818

Other assets

Other assets amounted to $2.1 billion at March 31, 2024, compared to $2.0 billion at December 31, 2023. Refer to Note 12 to the

Consolidated Financial Statements for a breakdown of the principal categories that comprise the caption of “Other Assets” in the

Consolidated Statements of Financial Condition at March 31, 2024 and December 31, 2023.

Liabilities

The Corporation’s total liabilities were $65.8 billion at March 31, 2024, an increase of $148.4 million, when compared to December

31, 2023, mainly due to an increase in deposits as discussed below.

Deposits and Borrowings

The composition of the Corporation’s financing to total assets at March 31, 2024 and December 31, 2023 is included in Table 6.

Table 6 - Financing to Total Assets

March 31,

December 31,

% increase (decrease)

% of total assets

(In millions)

2024

2023

from 2023 to 2024

2024

2023

Non-interest bearing deposits

15,492

15,420

0.5

21.8

21.8

Interest-bearing core deposits

43,463

43,571

(0.3)

61.3

61.6

Other interest-bearing deposits

4,854

4,627

4.9

6.8

6.5

Repurchase agreements

66

91

(27.5)

0.1

0.1

Notes payable

966

987

(2.1)

1.4

1.4

Other liabilities

919

915

0.4

1.3

1.3

Stockholders’ equity

5,177

5,147

0.6

7.3

7.3

Total Deposits

The Corporation’s deposits totaled $63.8 billion as of March 31, 2024, compared to $63.6 billion as of December 31, 2023. The

increase in the retail demand deposits, time deposits and deposits in trust in BPPR, offset in part by the decrease in P.R. public

sector accounts were the main drivers of the $190.5 million increase during the period.

P.R. Public Sector Deposits

As of March 31, 2024, the Puerto Rico public sector deposits amounted to $18.0 billion, compared to $18.1 billion as of December

31, 2023.

Approximately 28% of the Corporation’s deposits as of March 31, 2024 are public fund deposits from the Government of Puerto

Rico, municipalities and government instrumentalities and corporations. P.R public sector deposit costs are indexed to changes in

short-term market rates with a one-quarter lag, in accordance with contractual terms. As a result, these costs may lag in variable

asset repricing. These deposits require that the bank pledge high credit quality securities as collateral; therefore, liquidity risks

arising from public sector deposit outflows are lower. Refer to the Liquidity section in this MD&A for additional information on the

Corporation’s funding sources. Fluctuations of public sector deposit balances are uncertain and difficult to predict. Factors that could

impact public sector deposit balances at any given period, include, but are not limited to the receipt of funds by the Puerto Rico

Government of from federal disaster funding assistance (i.e. hurricane or pandemic related funds) and other events such as

seasonal tax collections which may result in increases of public sector deposit balances at BPPR in the near term. The amount and

timing of reductions in public sector deposit balances, depend on government actions such as, the speed at which federal

assistance is distributed, the financial condition, liquidity and cash management practices of the Puerto Rico Government and its

instrumentalities, and/or the implementation of fiscal and debt adjustment plans approved pursuant to PROMESA or other actions

mandated by the Fiscal Oversight and Management Board for Puerto Rico (the “Oversight Board”).

Refer to Table 7 for a breakdown of the Corporation’s deposits at March 31, 2024 and December 31, 2023.

Table 7 - Deposits Ending Balances

(In thousands)

March 31, 2024

December 31, 2023

Variance

Demand deposits

[1]

26,473,367

27,579,054

(1,105,687)

Savings, NOW and money market deposits (non-brokered)

27,852,551

26,817,844

1,034,707

Savings, NOW and money market deposits (brokered)

727,794

719,453

8,341

Time deposits (non-brokered)

7,850,459

7,546,138

304,321

Time deposits (brokered CDs)

904,613

955,754

(51,141)

Total deposits

63,808,784

63,618,243

190,541

[1] Includes interest and non-interest bearing demand deposits.

Borrowings

The Corporation’s borrowings totaled $1.0 billion at March 31, 2024 compared to $1.1 billion at December 31, 2023. Refer to Note

15 to the Consolidated Financial Statements for detailed information on the Corporation’s borrowings. Also, refer to the Liquidity

section in this MD&A for additional information on the Corporation’s funding sources.

Stockholders’ Equity

Stockholders’ equity totaled $5.2 billion at March 31, 2024, an increase of $30.4 million when compared to December 31, 2023,

principally due to net income for the quarter ended March 31, 2024 of $103.3 million and the amortization of unrealized losses from

securities previously reclassified to HTM of $35.2 million, net of taxes, partially offset by the after-tax impact of the increase in net

unrealized losses in the portfolio of AFS securities of $71.1 million and common and preferred dividends declared during the

quarter. Refer to the Consolidated Statements of Financial Condition, Comprehensive Income and of Changes in Stockholders’

Equity for information on the composition of stockholders’ equity.

REGULATORY CAPITAL

The Corporation, BPPR and PB are subject to regulatory capital requirements established by the Federal Reserve Board. The risk-

based capital standards applicable to the Corporation, BPPR and PB (“Basel III capital rules”) are based on the final capital

framework for strengthening international capital standards, known as Basel III, of the Basel Committee on Banking Supervision. As

of March 31, 2024, the Corporation’s, BPPR’s and PB’s capital ratios continue to exceed the minimum requirements for being “well-

capitalized” under the Basel III capital rules.

The risk-based capital ratios presented in Table 8, which include common equity tier 1, Tier 1 capital, total capital and leverage

capital as of March 31, 2024 and December 31, 2023.

Table 8 - Capital Adequacy Data

(Dollars in thousands)

March 31, 2024

December 31, 2023

Common equity tier 1 capital:

Common stockholders equity - GAAP basis

5,155,171

5,124,810

CECL transitional amount

[1]

42,376

84,751

AOCI related adjustments due to opt-out election

1,864,638

1,831,003

Goodwill, net of associated deferred tax liability (DTL)

(664,799)

(666,538)

Intangible assets, net of associated DTLs

(8,969)

(9,764)

Deferred tax assets and other deductions

(306,179)

(310,947)

Common equity tier 1 capital

6,082,238

6,053,315

Additional tier 1 capital:

Preferred stock

22,143

22,143

Additional tier 1 capital

22,143

22,143

Tier 1 capital

6,104,381

6,075,458

Tier 2 capital:

Trust preferred securities subject to phase in as tier 2

192,674

192,674

Other inclusions (deductions), net

467,158

465,833

Tier 2 capital

659,832

658,507

Total risk-based capital

6,764,213

6,733,965

Minimum total capital requirement to be well capitalized

3,717,730

3,714,633

Excess total capital over minimum well capitalized

3,046,483

3,019,332

Total risk-weighted assets

37,177,300

37,146,330

Total assets for leverage ratio

72,264,347

71,353,184

Risk-based capital ratios:

Common equity tier 1 capital

16.36

16.30

Tier 1 capital

16.42

16.36

Total capital

18.19

18.13

Tier 1 leverage

8.45

8.51

[1] The CECL transitional amount includes the impact of Popular's adoption of the new CECL accounting standard on January 1, 2020.

The Basel III capital rules provide that a depository institution is deemed to be well capitalized if it maintains a leverage ratio of at

least 5%, a common equity Tier 1 ratio of at least 6.5%, a Tier 1 capital ratio of at least 8% and a total risk-based ratio of at least

10%. The Corporation, BPPR and PB leverage ratio, common equity Tier 1 ratio and Tier 1 capital ratio, respectively as of March

31, 2024, continue to exceed the minimum requirements for being “well-capitalized” under the Basel III capital rules.

Pursuant to the adoption of the CECL accounting standard on January 1, 2020, the Corporation elected to use the five-year

transition period option as provided in the final interim regulatory capital rules effective March 31, 2020. The five-year transition

period provision delayed for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period

to phase out the aggregate amount of the capital benefit provided during the initial two-year delay. As of March 31, 2024, the

Corporation had phased-in 75% of the cumulative CECL deferral with the remaining impact to be recognized over the remainder of

the three-year transition period.

The increase in the common equity Tier I capital ratio, Tier I capital ratio, and total capital ratio as of March 31, 2024 as compared to

December 31, 2023 was mainly due to the three months period earnings. The decrease in leverage capital ratio was mainly due to

higher average assets which are impacted by zero-risk weighted assets that do not have a significant impact on the risk-weighted

assets, partially offset by the period earnings.

Reconciliation to Tangible Common Equity and Tangible Assets

Table 9 provides a reconciliation of total stockholders’ equity to tangible common equity and total assets to tangible assets as of

March 31, 2024, and December 31, 2023.

Table 9 - Reconciliation of Tangible Common Equity and Tangible Assets

(In thousands, except share or per share information)

March 31, 2024

December 31, 2023

Total stockholders’ equity

5,177,314

5,146,953

Less: Preferred stock

(22,143)

(22,143)

Less: Goodwill

(804,428)

(804,428)

Less: Other intangibles

(8,969)

(9,764)

Total tangible common equity

4,341,774

4,310,618

Total assets

70,936,939

70,758,155

Less: Goodwill

(804,428)

(804,428)

Less: Other intangibles

(8,969)

(9,764)

Total tangible assets

70,123,542

69,943,963

Tangible common equity to tangible assets

6.19

6.16

Common shares outstanding at end of period

72,284,875

72,153,621

Tangible book value per common share

60.06

59.74

Quarterly average

Total stockholders’ equity [1]

6,198,740

6,072,871

Average unrealized (gains) losses on AFS securities transferred to HTM

639,226

683,077

Adjusted total stockholder's equity

6,837,966

6,755,948

Less: Preferred Stock

(22,143)

(22,143)

Less: Goodwill

(804,427)

(804,427)

Less: Other intangibles

(9,490)

(10,286)

Total tangible common equity

6,001,906

5,919,092

Return on average tangible common equity

6.90

6.32

[1] Average balances exclude unrealized gains or losses on debt securities available-for-sale and the unrealized loss related to certain securities

transferred from available-for-sale to held-to-maturity.

RISK MANAGEMENT

Market / Interest Rate Risk

The financial results and capital levels of the Corporation are constantly exposed to market, interest rate and liquidity risks.

Market risk refers to the risk of a reduction in the Corporation’s capital due to changes in the market valuation of its assets and/or

liabilities.

Most of the assets subject to market valuation risk are debt securities classified as available-for-sale. Refer to Notes 5 and 6 to the

Consolidated Financial Statements for further information on the debt securities available-for-sale and held-to-maturity portfolios.

Debt securities classified as available-for-sale amounted to $18.0 billion as of March 31, 2024. Other assets subject to market risk

include loans held-for-sale, which amounted to $5 million, mortgage servicing rights (“MSRs”) which amounted to $115 million, and

securities classified as “trading”, which amounted to $27 million, as of March 31, 2024.

Interest Rate Risk (“IRR”)

The Corporation’s net interest income is subject to various categories of interest rate risk, including repricing, basis, yield curve and

option risks. In managing interest rate risk, management may alter the mix of floating and fixed rate assets and liabilities, change

pricing schedules, adjust maturities through sales and purchases of investment securities, and enter into derivative contracts,

among other alternatives.

Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by

investment and funding activities. Effective management of interest rate risk begins with understanding the dynamic characteristics

of assets and liabilities and determining the appropriate rate risk position given line of business forecasts, management objectives,

market expectations and policy constraints.

Management utilizes various tools to assess IRR, including Net Interest Income (“NII”) simulation modeling, static gap analysis, and

Economic Value of Equity (“EVE”). The three methodologies complement each other and are used jointly in the evaluation of the

Corporation’s IRR. NII simulation modeling is prepared for a five-year period, which in conjunction with the EVE analysis, provides

management a better view of long-term IRR.

Net interest income simulation analysis performed by legal entity and on a consolidated basis is a tool used by the Corporation in

estimating the potential change in net interest income resulting from hypothetical changes in interest rates. Sensitivity analysis is

calculated using a simulation model which incorporates actual balance sheet figures detailed by maturity and interest yields or costs.

Management assesses interest rate risk by comparing various NII simulations under different interest rate scenarios that differ in

direction of interest rate changes, the degree of change and the projected shape of the yield curve. For example, the types of rate

scenarios processed during the quarter include flat rates, implied forwards, and parallel and non-parallel rate shocks. Management

also performs analyses to isolate and measure basis and prepayment risk exposures.

The asset and liability management group performs validation procedures on various assumptions used as part of the simulation

analyses as well as validations of results on a monthly basis. In addition, the model and processes used to assess IRR are subject

to independent validations according to the guidelines established in the Model Governance and Validation policy.

The Corporation processes NII simulations under interest rate scenarios in which the yield curve is assumed to rise and decline by

the same magnitude (parallel shifts). The rate scenarios considered in these market risk simulations include instantaneous parallel

changes of -100, -200, +100, and +200 basis points during the succeeding twelve-month period. Simulation analyses are based on

many assumptions, including that the balance sheet remains flat, the relative levels of market interest rates across all yield curve

points and indexes, interest rate spreads, loan prepayments and deposit elasticity. Thus, they should not be relied upon as

indicative of actual results. Further, the estimates do not contemplate actions that management could take to respond to changes in

interest rates. Additionally, the Corporation is also subject to basis risk in the repricing of its assets and liabilities, including the basis

related to using different rate indexes for the repricing of assets and liabilities, as well as the effect of pricing lags which may be

contractual or due to historical differences in the timing of management responses to changes in the rate environment. By their

nature, these forward-looking computations are only estimates and may be different from what may actually occur in the future. The

following table presents the results of the simulations at March 31, 2024 and December 31, 2023, assuming a static balance sheet

and parallel changes over flat spot rates over a one-year time horizon:

Table 10 - Net Interest Income Sensitivity (One Year Projection)

March 31, 2024

December 31, 2023

(Dollars in thousands)

Amount Change

Percent Change

Amount Change

Percent Change

Change in interest rate

+200 basis points

41,091

1.81

20,822

0.92

+100 basis points

22,529

0.99

11,496

0.51

-100 basis points

7,789

0.34

19,589

0.87

-200 basis points

(6,355)

(0.28)

16,971

0.75

As of March 31, 2024, NII simulations show the Corporation maintains a neutral to slightly asset sensitive position that marginally

increased as compared to the results as of December 31, 2023. The primary reasons for the variation in sensitivity are changes in

balance sheet composition driven by an increase in short-term U.S Treasury Bills (“T- Bills”) partly offset by a reduction in overnight

Fed Funds and U.S Treasury Notes (“T- Notes”) on the asset side, combined with a decrease in Puerto Rico public sector deposits

which are indexed to market rates and slightly higher non-interest bearing deposits. These results suggest that changes in the

Corporation’s net interest income sensitivity are driven by changes in the composition of the investment portfolio as the term bond

portfolio continues to run off and get reinvested, together with excess reserves, in short-term investments such as T-Bills.

Additionally, variations in liability cost, primarily driven by Puerto Rico public sector deposits that represented $18.0 billion or 28% of

deposits as of March 31, 2024, as well as changes in the composition and mix of deposits, also impact the sensitivity profile. In the

more extreme declining rate scenarios net interest income would be affected as the repricing of short-term assets and variable rate

loans slightly exceeds the benefit in cost reduction of these deposits. In rising rate scenarios, Popular’s net interest income is also

impacted by its large proportion of Puerto Rico public sector deposit, however the repricing of assets as they either reset or mature

lead to an increase in net interest income.

The Corporation’s loan and investment portfolios are subject to prepayment risk, which results from the ability of a third-party to

repay debt obligations prior to maturity. Prepayment risk also could have a significant impact on the duration of mortgage-backed

securities and collateralized mortgage obligations since prepayments could shorten (or lower prepayments could extend) the

weighted average life of these portfolios.

Trading

The Corporation engages in trading activities in the ordinary course of business at its subsidiaries, BPPR and Popular Securities.

Popular Securities’ trading activities consist primarily of market-making activities to meet expected customers’ needs related to its

retail brokerage business, and purchases and sales of U.S. Government and government sponsored securities with the objective of

realizing gains from expected short-term price movements. BPPR’s trading activities consist primarily of holding U.S. Government

sponsored mortgage-backed securities classified as “trading” and hedging the related market risk with “TBA” (to-be-announced)

market transactions. The objective is to derive spread income from the portfolio and not to benefit from short-term market

movements. In addition, BPPR uses forward contracts or TBAs to hedge its securitization pipeline. Risks related to variations in

interest rates and market volatility are hedged with TBAs that have characteristics similar to that of the forecasted security and its

conversion timeline.

At March 31, 2024, the Corporation held trading securities with a fair value of $27 million, representing approximately 0.04% of the

Corporation’s total assets, compared with $32 million and 0.05%, respectively, at December 31, 2023. As shown in Table 11, the

trading portfolio consists principally of mortgage-backed securities and U.S. Treasuries, which at March 31, 2024 were investment

grade securities.

Table 11 - Trading Portfolio

March 31, 2024

December 31, 2023

(Dollars in thousands)

Amount

Weighted

Average Yield

[1]

Amount

Weighted

Average Yield

[1]

Mortgage-backed securities

18,671

5.69

14,373

5.69

U.S. Treasury securities

8,316

4.05

16,859

4.29

Collateralized mortgage obligations

90

5.12

98

5.21

Puerto Rico government obligations

60

0.60

71

0.91

Interest-only strips

166

12.00

167

12.00

Other (includes related trading derivatives)

5

6.10

Total

27,308

5.22

31,568

4.96

[1] Not on a taxable equivalent basis.

The Corporation’s trading activities are limited by internal policies. For each of the two subsidiaries, the market risk assumed under

trading activities is measured by the 5-day net value-at-risk (“VAR”), with a confidence level of 99%. The VAR measures the

maximum estimated loss that may occur over a 5-day holding period, given a 99% probability.

The Corporation’s trading portfolio had a 5-day VAR of approximately $0.4 million for the last week in March 2024. VAR models

include assumptions and estimates thus actual results could differ from the outputs from these models and assumptions. Back-

testing is performed on model results to compare actual results against maximum estimated losses, in order to evaluate model and

assumptions accuracy.

In the opinion of management, the size and composition of the trading portfolio does not represent a significant source of market risk

for the Corporation.

Liquidity

The objective of effective liquidity management is to ensure that the Corporation has sufficient liquidity to meet all of its financial

obligations, finance expected future growth, fund planned capital distributions and maintain a reasonable safety margin for cash

needs under both normal and stressed market conditions. The Board of Directors is responsible for establishing the Corporation’s

tolerance for liquidity risk, including approving relevant risk limits and policies. The Board of Directors has delegated the monitoring

of these risks to the Board’s Risk Management Committee and the Asset/Liability Management Committee. The management of

liquidity risk, on a long-term and day-to-day basis, is the responsibility of the Corporate Treasury Division. The Corporation’s

Corporate Treasurer is responsible for implementing the policies and procedures approved by the Board of Directors and for

monitoring the Corporation’s liquidity position on an ongoing basis. Also, the Corporate Treasury Division coordinates corporate

wide liquidity management strategies and activities with the reportable segments, oversees policy breaches and manages the

escalation process. The Financial and Operational Risk Management Division is responsible for the independent monitoring and

reporting of adherence with established policies.

An institution’s liquidity may be pressured if, for example, it experiences a sudden and unexpected substantial cash outflow due

deposit outflows, whether due to a loss of confidence by depositors, or other reasons, including exogenous events such as the

COVID-19 pandemic, a downgrading of its credit rating, or some other event that causes counterparties to avoid exposure to the

institution. Factors that the Corporation does not control, such as the economic outlook, adverse ratings of its principal markets,

perceptions of the financial services industry and regulatory changes, could also affect its ability to obtain funding.

The Corporation has adopted policies and limits to monitor the Corporation’s liquidity position and that of its banking subsidiaries.

Additionally, contingency funding plans are used to model various stress events of different magnitudes and affecting different time

horizons that assist management in evaluating the size of the liquidity buffers needed if those stress events occur. However, such

models may not predict accurately how the market and customers might react to every event, and are dependent on many

assumptions.

Deposits, including customer deposits, brokered deposits and public funds deposits, continue to be the most significant source of

funds for the Corporation, funding 90% of the Corporation’s total assets at March 31, 2024 and December 31, 2023. The ratio of

total ending loans to deposits was 55% at March 31, 2024 and December 31, 2023. In addition to traditional deposits, the

Corporation maintains borrowing arrangements, which amounted to approximately $1.0 billion in outstanding balances at March 31,

2024 (December 31, 2023 - $1.1 billion). A detailed description of the Corporation’s borrowings, including their terms, is included in

Note 15 to the Consolidated Financial Statements. Also, the Consolidated Statements of Cash Flows in the accompanying

Consolidated Financial Statements provide information on the Corporation’s cash inflows and outflows.

The following sections provide further information on the Corporation’s major funding activities and needs, as well as the risks

involved in these activities.

Banking Subsidiaries

Primary sources of funding for the Corporation’s banking subsidiaries (BPPR and PB or, collectively, “the banking subsidiaries”)

include retail, commercial and public sector deposits, brokered deposits, unpledged investment securities, mortgage loan

securitization and, to a lesser extent, loan sales.

Refer to Table 7 in this MD&A section for a breakdown of deposits by major types. Core deposits are generated from a large base of

consumer, corporate and public sector customers. Core deposits include certificates of deposit under $250,000, all interest-bearing

transactional deposit accounts, non-interest bearing deposits, and savings deposits. Core deposits exclude brokered deposits and

certificates of deposit over $250,000. Core deposits, excluding P.R. public funds that are fully collateralized, have historically

provided the Corporation with a sizable source of relatively stable and low-cost funds. P.R. public funds, while linked to market

interest rates, provide a stable source of funding with an attractive earnings spread. Core deposits totaled $59.0 billion, or 92% of

total deposits, at March 31, 2024, compared with $59.0 billion, or 93% of total deposits, at December 31, 2023. Core deposits

financed 88% of the Corporation’s earning assets at March 31, 2024 and December 31, 2023.

In addition, the Corporation maintains borrowing facilities with the FHLB and at the discount window of the Federal Reserve Bank of

New York (the “FRB”) and has a considerable amount of collateral pledged that can be used to raise funds under these facilities.

During the first quarter of 2024 the Corporation had no material incremental use of its available liquidity sources. At March 31,2024,

the Corporation’s available liquidity increased to $20.4 billion from $19.5 billion on December 31, 2023. The liquidity sources of the

Corporation at March 31, 2024 are presented in Table 12 below:

Table 12 - Liquidity Sources

March 31, 2024

December 31, 2023

(In thousands)

BPPR

Popular U.S.

Total

BPPR

Popular U.S.

Total

Unpledged securities and unused funding

sources:

Money market (excess funds at the

Federal Reserve Bank)

4,473,620

1,447,189

5,920,809

5,516,636

1,475,143

6,991,779

Unpledged securities

5,749,794

375,470

6,125,264

4,212,480

347,791

4,560,271

FHLB borrowing capacity

2,400,630

1,358,639

3,759,269

2,157,685

1,341,329

3,499,014

Discount window of the Federal Reserve

Bank borrowing capacity

2,674,719

1,917,123

4,591,842

2,605,674

1,818,946

4,424,620

Total available liquidity

15,298,763

5,098,421

20,397,184

14,492,475

4,983,209

19,475,684

Refer to Note 15 to the Consolidated Financial Statements for additional information of the Corporation’s borrowing facilities

available through its banking subsidiaries.

The principal uses of funds for the banking subsidiaries include loan originations, investment portfolio purchases, loan purchases

and repurchases, repayment of outstanding obligations (including deposits), advances on certain serviced portfolios and operational

expenses. Also, the banking subsidiaries assume liquidity risk related to collateral posting requirements for certain activities mainly

in connection with contractual commitments, recourse provisions, servicing advances, derivatives and credit card licensing

agreements.

The banking subsidiaries maintain sufficient funding capacity to address large increases in funding requirements such as deposit

outflows. The Corporation has established liquidity guidelines that require the banking subsidiaries to have sufficient liquidity to

cover all short-term borrowings and a portion of deposits.

The Corporation’s ability to compete successfully in the marketplace for deposits, excluding brokered deposits, depends on various

factors, including pricing, service, convenience and financial stability as reflected by operating results and financial condition, credit

ratings (by nationally recognized credit rating agencies), customer confidence, and importantly, FDIC deposit insurance coverage.

Deposits at all of the Corporation’s banking subsidiaries are federally insured (subject to FDIC limits) and this is expected to mitigate

the potential effect of the aforementioned risks.

The distribution by maturity of certificates of deposit with denominations of $250,000 and over at March 31, 2024 is presented in the

table that follows:

Table 13 - Distribution by Maturity of Certificates of Deposit of $250,000 and Over

(In thousands)

3 months or less

2,137,053

Over 3 to 12 months

766,629

Over 1 year to 3 years

245,638

Over 3 years

184,847

Total

3,334,167

The Corporation had $1.6 billion in brokered deposits at March 31, 2024, which financed approximately 2% of its total assets

(December 31, 2023 - $1.7 billion and 2%, respectively). In the event that any of the Corporation’s banking subsidiaries’ regulatory

capital ratios fall below those required by a well-capitalized institution or are subject to capital restrictions by the regulators, the

Corporation would be at risk that such banking subsidiary would not be able to raise or maintain brokered deposits and could also

face limitations on the rate paid on deposits, which may hinder the Corporation’s ability to effectively compete in its retail markets

and could affect its deposit raising efforts.

Deposits from the public sector represent an important source of funds for the Corporation. As of March 31, 2024, total Puerto Rico

public sector deposits were $18.0 billion, compared to $18.1 billion at December 31, 2023. These deposits require that the bank

pledges high credit quality securities as collateral; therefore, liquidity risks arising from public sector deposit outflows are lower given

that the bank receives its collateral in return. This, now unpledged, collateral can either be financed via repurchase agreements or

sold for cash. However, timing differences between the time the deposit outflow and when the bank receives its collateral may

occur. Additionally, the Corporation uses fixed-rate U.S. Treasury debt securities as collateral that have limited credit risk, but are

nonetheless subject to market value risk based on changes in the interest rate environment. When interest rates increase, the value

of this collateral decreases and could result in the Corporation having to provide additional collateral to cover the same amount of

deposit liabilities. This additional collateral could reduce unpledged securities otherwise available as liquidity sources to the

Corporation.

As of March 31, 2024, management believes that the banking subsidiaries had sufficient current and projected liquidity sources to

meet their anticipated cash flow obligations, as well as special needs and off-balance sheet commitments, in the ordinary course of

business. Management also believes that as of March 31, 2024 its banking subsidiaries have sufficient liquidity current and

projected resources to address a stress event. Although the banking subsidiaries have historically been able to replace maturing

deposits and advances, no assurance can be given that they would be able to replace those funds in the future if the Corporation’s

financial condition or general market conditions were to deteriorate. The Corporation’s financial flexibility will be severely constrained

if the banking subsidiaries are unable to maintain access to funding or if adequate financing is not available to accommodate future

financing needs at acceptable interest rates. The Corporation’s banking subsidiaries have to meet margin requirements on

repurchase agreements and other collateralized borrowing facilities that include certain required levels of cash deposits and

qualifying securities. To the extent that the value of securities previously pledged as collateral declines below such required

amounts because of market changes, the Corporation is required to deposit additional cash or securities to meet its margin

requirements, thereby adversely affecting its liquidity. Finally, to the extent the Corporation relies more heavily on more expensive

funding sources in order to meet its future growth, revenues may not increase in a manner that is proportionate to cover these costs.

In this case, the Corporation’s profitability would be adversely effected.

The Corporation monitors uninsured deposits under applicable FDIC regulations. Additionally, the Corporation monitors accounts

with balances over $250,000. While the Corporation has a diverse deposit base from retail, commercial, corporate and government

clients, as well as wholesale funding sources such as brokered deposits, it considers balance in excess of $250,000 to have a

higher potential liquidity risk. Table 14 reflects the aggregate balance in deposit accounts in excess of $250,000, including

collateralized public funds and deposits outside of the U.S. and its territories. Collateralized public funds, as presented in Table 14,

represent public deposit balances from governmental entities in the U.S. and its territories, including Puerto Rico and the United

States Virgin Islands, collateralized based on such jurisdictions’ applicable collateral requirements.

On March 31, 2024, deposits with balances in excess of $250,000, excluding foreign deposits (mainly deposits in the British Virgin

Islands) intercompany deposits and collateralized public funds, were $ 10.3 billion or 19% at BPPR and $ 2.5 billion or 22% at

Popular U.S., compared to available liquidity sources of $ 15.3 billion at BPPR and $ 5.1 billion at Popular U.S.

Table 14 - Deposits

31-Mar-24

Popular, Inc.

(Dollars in thousands)

BPPR

% of Total

Popular U.S.

% of Total

(Consolidated)

% of Total

Deposits:

Deposits balances under $250,000 [1]

24,111,245

45

7,912,597

70

32,023,842

50

Transactional deposits balances over

$250,000

8,119,072

15

2,093,183

18

10,212,255

16

Time deposits balances over $250,000

2,134,917

4

416,911

4

2,551,828

4

Uninsured foreign deposits

419,147

1

419,147

1

Collateralized public funds

18,307,794

34

293,918

3

18,601,712

29

Intercompany deposits

312,107

1

556,450

5

Total deposits

53,404,282

100

11,273,059

100

63,808,784

100

[1] Includes the first $250,000 in balances of transactional and time deposit accounts with balances in excess of $250,000.

31-Dec-23

Popular, Inc.

(Dollars in thousands)

BPPR

% of Total

Popular U.S.

% of Total

(Consolidated)

% of Total

Deposits

Deposits balances under $250,000 [1]

23,683,475

45

7,760,363

69

31,443,838

49

Transactional deposits balances over

$250,000

8,632,491

16

2,230,978

20

10,863,469

17

Time deposits balances over $250,000

1,926,005

4

361,315

3

2,287,320

4

Uninsured foreign deposits

418,334

1

418,334

1

Collateralized public funds

18,313,612

34

291,670

3

18,605,282

29

Intercompany deposits

159,163

626,312

6

Total deposits

53,133,080

100

11,270,638

100

63,618,243

100

[1] Includes the first $250,000 in balances of transactional and time deposit accounts with balances in excess of $250,000.

Bank Holding Companies

The principal sources of funding for the BHCs, which are Popular, Inc. (holding company only) and PNA, include cash on hand,

investment securities, dividends received from banking and non-banking subsidiaries, asset sales, credit facilities available from

affiliate banking subsidiaries and proceeds from potential securities offerings. Dividends from banking and non-banking subsidiaries

are subject to various regulatory limits and authorization requirements that are further described below and that may limit the ability

of those subsidiaries to act as a source of funding to the BHCs.

The principal uses of these funds include the repayment of debt, and interest payments to holders of senior debt and junior

subordinated deferrable interest (related to trust preferred securities), the payment of dividends to common stockholders,

repurchases of the Corporation’s securities and capitalizing its banking subsidiaries.

The outstanding balance of notes payable at the BHCs amounted to $593 million at March 31, 2024 and $592 million at December

31, 2023.

The contractual maturities of the BHCs notes payable at March 31, 2024 are presented in Table 15.

Table 15 - Distribution of BHC's Notes Payable by Contractual Maturity

Year

(In thousands)

2028

394,285

Later years

198,353

Total

592,638

As of March 31, 2024, the BHCs had cash and money markets investments totaling $541 million and borrowing potential of $228

million from its secured facility with BPPR. The BHCs’ liquidity position continues to be adequate with sufficient cash on hand,

investments and other sources of liquidity that are expected to be sufficient to meet all interest payments and dividend obligations

for the foreseeable future. As indicated in Table 15 above, the BHC outstanding notes payable relate to $400 million in aggregate

principal amount of 7.25% Senior Notes due 2028 (the “Notes”) issued in an underwritten public offering during March of 2023.

Additionally, the Corporation’s latest quarterly dividend was $0.62 per share or approximately $45 million per quarter.

The BHCs have in the past borrowed in the corporate debt market primarily to finance their non-banking subsidiaries and refinance

debt obligations. The issuance of corporate debt as a source of funding is likely more costly due to the fact that two out of the three

principal credit rating agencies rate the Corporation below “investment grade”, which affects the Corporation’s cost and ability to

raise funds in the capital markets. Factors that the Corporation does not control, such as the economic outlook, interest rate

volatility, inflation, disruptions in the debt market, among others, could also affect its ability to obtain funding. The Corporation has

an automatic shelf registration statement filed and effective with the Securities and Exchange Commission, which permits the

Corporation to issue an unspecified amount of debt or equity securities.

Non-Banking Subsidiaries

The principal sources of funding for the non-banking subsidiaries include internally generated cash flows from operations, loan

sales, repurchase agreements, capital injections and borrowed funds from their direct parent companies or the holding companies.

The principal uses of funds for the non-banking subsidiaries include repayment of maturing debt, operational expenses and payment

of dividends to the BHCs. The liquidity needs of the non-banking subsidiaries are minimal since most of them are funded internally

from operating cash flows or from intercompany borrowings or capital contributions from their holding companies.

Dividends

During the quarter ended March 31, 2024, the Corporation declared cash dividends of $0.62 per common share outstanding ($44.8

million in the aggregate). The dividends for the Corporation’s Series A preferred stock amounted to $0.4 million. During the quarter

ended March 31, 2024, the BHCs received dividends and distributions amounting to $150 million from BPPR, $50 million from PNA,

$6 million from Popular Securities and $7 million from its non-banking subsidiaries.

Other Funding Sources and Capital

In addition to cash reserves held at the FRB that totaled $ 5.9 billion at March 31, 2024, the debt securities portfolio provides an

additional source of liquidity, which may be realized through either securities sales, collateralized borrowings or repurchase

agreements. The Corporation’s debt securities portfolio consists primarily of liquid U.S. government debt securities, U.S.

government sponsored agency debt securities, U.S. government sponsored agency mortgage-backed securities, and U.S.

government sponsored agency collateralized mortgage obligations that can be used to raise funds in the repo markets. The

availability of the repurchase agreement would be subject to having sufficient unpledged collateral available at the time the

transactions are consummated, in addition to overall liquidity and risk appetite of the various counterparties. In 2023, BPPR became

an approved counterparty in the Federal Reserve’s Standing Repo Facility. This allows approved counterparties to participate in

daily auctions with the Standing Repo Facility for up to $500 billion in aggregate of overnight financing using U.S. Treasuries and

Agency MBS as collateral. The Corporation’s unpledged debt securities amounted to $ 6.1 billion at March 31, 2024 and $ 4.6 billion

at December 31, 2023. A substantial portion of these debt securities could be used to raise financing in the U.S. money markets or

from secured lending sources, subject to changes in their fair market value and customary adjustments (haircuts).

Additional liquidity may be provided through loan maturities, prepayments and sales. The loan portfolio can also be used to obtain

funding in the capital markets. In particular, mortgage loans and some types of consumer loans, have secondary markets which the

Corporation could use.

Off-Balance Sheet Arrangements and Other Commitments

In the ordinary course of business, the Corporation engages in financial transactions that are not recorded on the balance sheet or

may be recorded on the balance sheet in amounts that are different than the full contract or notional amount of the transaction. As a

provider of financial services, the Corporation routinely enters into commitments with off-balance sheet risk to meet the financial

needs of its customers. These commitments may include loan commitments and standby letters of credit. These commitments are

subject to the same credit policies and approval process used for on-balance sheet instruments. These instruments involve, to

varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position.

Refer to Note 20 to the Consolidated Financial Statements for information on the Corporation’s commitments to extent credit and

other non-credit commitments.

Other types of off-balance sheet arrangements that the Corporation enters in the ordinary course of business include derivatives,

operating leases and provision of guarantees, indemnifications, and representation and warranties. Refer to Note 27 to the

Consolidated Financial Statements for information on operating leases and to Note 19 to the Consolidated Financial Statements for

a detailed discussion related to the Corporation’s obligations under credit recourse and representation and warranties

arrangements.

The Corporation monitors its cash requirements, including its contractual obligations and debt commitments.

FDIC Special Assessments

On November 16, 2023, the Federal Deposit Insurance Corporation (“FDIC”) approved a final rule that imposes a special

assessment (the “FDIC Special Assessment”) to recover the losses to the deposit insurance fund resulting from the FDIC’s use, in

March 2023, of the systemic risk exception. In connection with this assessment, the Corporation recorded an expense of $71.4

million, $45.3 million net of tax, in the fourth quarter of 2023, representing the full amount of the estimated assessment at that time.

The special assessment amount and collection period may change as the estimated loss is periodically adjusted or if the total

amount collected varies. As a result, the Corporation recorded an additional expense of $14.3 million, $9.1 million net of tax, in the

first quarter of 2024, based on the updated loss estimates. Refer to the Overview section of Management’s Discussion and Analysis

included in this Form 10-Q for additional information of the FDIC Special Assessment.

Financial Information of Guarantor and Issuers of Registered Guaranteed Securities

The Corporation (not including any of its subsidiaries, “PIHC”) is the parent holding company of Popular North America “PNA” and

has other subsidiaries through which it conducts its financial services operations. PNA is an operating, 100% subsidiary of Popular,

Inc. Holding Company (“PIHC”) and is the holding company of its wholly-owned subsidiaries: Equity One, Inc. and PB, including

PB’s wholly-owned subsidiaries Popular Equipment Finance, LLC, Popular Insurance Agency, U.S.A., and E-LOAN, Inc.

PNA has issued junior subordinated debentures guaranteed by PIHC (together with PNA, the “obligor group”) purchased by

statutory trusts established by the Corporation. These debentures were purchased by the statutory trust using the proceeds from

trust preferred securities issued to the public (referred to as “capital securities”), together with the proceeds of the related issuances

of common securities of the trusts.

PIHC fully and unconditionally guarantees the junior subordinated debentures issued by PNA. PIHC’s obligation to make a

guarantee payment may be satisfied by direct payment of the required amounts to the holders of the applicable capital securities or

by causing the applicable trust to pay such amounts to such holders. Each guarantee does not apply to any payment of distributions

by the applicable trust except to the extent such trust has funds available for such payments. If PIHC does not make interest

payments on the debentures held by such trust, such trust will not pay distributions on the applicable capital securities and will not

have funds available for such payments. PIHC’s guarantee of PNA’s junior subordinated debentures is unsecured and ranks

subordinate and junior in right of payment to all the PIHC’s other liabilities in the same manner as the applicable debentures as set

forth in the applicable indentures; and equally with all other guarantees that the PIHC issues. The guarantee constitutes a guarantee

of payment and not of collection, which means that the guaranteed party may sue the guarantor to enforce its rights under the

respective guarantee without suing any other person or entity.

The principal sources of funding for PIHC and PNA have included dividends received from their banking and non-banking

subsidiaries, asset sales and proceeds from the issuance of debt and equity. As further described below, in the Risk to Liquidity

section, various statutory provisions limit the amount of dividends an insured depository institution may pay to its holding company

without regulatory approval.

The following summarized financial information presents the financial position of the obligor group, on a combined basis at March

31, 2024 and December 31, 2023, and the results of their operations for the quarters ended March 31, 2024 and March 31, 2023.

Investments in and equity in the earnings from the other subsidiaries and affiliates that are not members of the obligor group have

been excluded.

The summarized financial information of the obligor group is presented on a combined basis with intercompany balances and

transactions between entities in the obligor group eliminated. The obligor group's amounts due from, amounts due to and

transactions with subsidiaries and affiliates have been presented in separate line items, if they are material. In addition, related

parties transactions are presented separately.

Table 16 - Summarized Statement of Condition

(In thousands)

March 31, 2024

December 31, 2023

Assets

Cash and money market investments

541,400

388,025

Investment securities

32,470

29,973

Accounts receivables from non-obligor subsidiaries

15,466

14,469

Other loans (net of allowance for credit losses of $34 (2023 - $51))

26,603

26,906

Investment in equity method investees

5,267

5,265

Other assets

54,272

51,315

Total assets

675,478

515,953

Liabilities and Stockholders' deficit

Accounts payable to non-obligor subsidiaries

7,953

7,023

Notes payable

592,638

592,283

Other liabilities

130,379

114,660

Stockholders' deficit

(55,492)

(198,013)

Total liabilities and stockholders' deficit

675,478

515,953

Table 17 - Summarized Statement of Operations

For the quarters ended

(In thousands)

March 31, 2024

March 31, 2023

Income:

Dividends from non-obligor subsidiaries

163,000

50,000

Interest income from non-obligor subsidiaries and affiliates

3,289

810

Earnings from investments in equity method investees

2

Other operating income

1,787

1,146

Total income

168,078

51,956

Expenses:

Services provided by non-obligor subsidiaries and affiliates (net of

reimbursement by subsidiaries for services provided by parent of

$60,996 (2023 - $56,071))

3,204

4,989

Other expenses

37,010

4,486

Total expenses

40,214

9,475

Net income

127,864

42,481

During the quarter ended March 31, 2024, the obligor group recorded a $50.0 million of dividend distributions from a non-

obligor subsidiary wich was recorded as a reduction to the investment.

Risks to Liquidity

Total lines of credit outstanding, or available borrowing capacity under lines of credit are not necessarily a measure of the total credit

available on a continuing basis. These lines may be subject to collateral requirements, changes to the value of the collateral,

standards of creditworthiness, leverage ratios and other regulatory requirements, among other factors. Derivatives, such as those

embedded in long-term repurchase transactions or interest rate swaps, and off-balance sheet exposures, such as recourse, performance bonds or credit card arrangements, are subject to collateral requirements. As their fair value increases, the collateral requirements may increase, thereby reducing the balance of unpledged securities.

The importance of the Puerto Rico market for the Corporation is an additional risk factor that could affect its financing activities. In

the case of a deterioration in the outlook and/or credit ratings of its principal markets and/or due to regulatory changes and fiscal

conditions in Puerto Rico that are outside the control of the Corporation, the credit quality of the Corporation could be adversely

affected and result in higher credit costs. These adverse events could also affect the Corporation’s ability to obtain funding.

To plan for the possibility of such a scenario, management adopted contingency plans to address events that could limit or partially

limit important sources of funds that are usually fully available for use. These plans call for using alternate funding mechanisms,

such as the pledging of certain asset classes and accessing secured credit lines and loan facilities put in place with the FHLB and

the FRB. The Corporation is subject to positive tangible capital requirements to utilize secured loan facilities with the FHLB that

could result in a limitation of borrowing amounts or maturity terms, even if the Corporation exceeds well-capitalized regulatory

capital levels.

The credit ratings of Popular’s debt obligations are a relevant factor for liquidity because they impact the Corporation’s ability to

borrow in the capital markets, its cost and access to funding sources. Credit ratings are based on the financial strength, credit

quality and concentrations in the loan portfolio, the level and volatility of earnings, capital adequacy, the quality of management,

geographic concentration in Puerto Rico, the liquidity of the balance sheet, the availability of a significant base of core retail and

commercial deposits, and the Corporation’s ability to access a broad array of wholesale funding sources, among other factors.

Furthermore, various statutory provisions limit the amount of dividends an insured depository institution may pay to its holding

company without regulatory approval. A member bank must obtain the approval of the Federal Reserve Board for any dividend, if

the total of all dividends declared by the member bank during the calendar year would exceed the combined net income for that year

and the retained net income for the preceding two years, net of those years’ dividend activity, less any required transfers to surplus

or to a fund for the retirement of any preferred stock. In addition, a member bank may not declare or pay a dividend in an amount

greater than its undivided profits as reported in its Report of Condition and Income, unless the member bank has received the

approval of the Federal Reserve Board. A member bank also may not permit any portion of its permanent capital to be withdrawn

unless the withdrawal has been approved by the Federal Reserve Board. The ability of a bank subsidiary to up-stream dividends to

its BHC could thus be impacted by its financial performance and capital, including tangible and regulatory capital, thus potentially

limiting the amount of cash moving up to the BHCs from the banking subsidiaries. This could, in turn, affect the BHCs ability to

declare dividends on its outstanding common and preferred stock, repurchase its securities or meet its debt obligations, for

example.

During the quarter ended March 31, 2024, BPPR declared cash dividends of $150 million to PIHC. As of March 31, 2024, BPPR can

declare a dividend of approximately $410 million without prior approval of the Federal Reserve Board due to its retained income,

declared dividend activity and transfers to statutory reserves over the measurement period. Pursuant to the requirements listed

above, PB may not declare or pay a dividend without the prior approval of the Federal Reserve Board and the New York State

Department of Financial Services.

The Corporation’s banking subsidiaries have historically not used unsecured capital market borrowings to finance its operations, and

therefore are less sensitive to the level and changes in the Corporation’s overall credit ratings.

Refer to the Geographic and Government Risk section of this MD&A for some highlights on the status of the Puerto Rico economy

and the ongoing fiscal crisis.

Obligations Subject to Rating Triggers or Collateral Requirements

The Corporation’s banking subsidiaries currently do not issue unsecured senior debt, as these banking subsidiaries are funded

primarily with deposits and secured borrowings. The banking subsidiaries had $7.8 million in deposits at March 31, 2024 that are

subject to rating triggers.

In addition, certain mortgage servicing and custodial agreements that BPPR has with third parties include rating covenants. In the

event of a credit rating downgrade, the third parties have the right to require the institution to engage a substitute cash custodian for

escrow deposits and/or increase collateral levels securing the recourse obligations.

As discussed in Note 19 to the Consolidated Financial Statements, the Corporation services residential mortgage loans subject to

credit recourse provisions. Certain contractual agreements require the Corporation to post collateral to secure such recourse

obligations if the institution’s required credit ratings are not maintained. Collateral pledged by the Corporation to secure recourse obligations amounted to approximately $25.2 million at March 31, 2024. The Corporation could be required to post additional collateral under the agreements. Management expects that it would be able to meet additional collateral requirements if and when needed. The requirements to post collateral under certain agreements or the loss of escrow deposits could reduce the Corporation’s liquidity resources and impact its operating results.

Credit Risk

Geographic and Government Risk

The Corporation is exposed to geographic and government risk. The Corporation’s assets and revenue composition by geographical

area and by business segment reporting are presented in Note 32 to the Consolidated Financial Statements.

Commonwealth of Puerto Rico

A significant portion of our financial activities and credit exposure is concentrated in the Commonwealth of Puerto Rico (“Puerto

Rico”), which has faced severe economic and fiscal challenges in the past and may face additional challenges in the future.

Economic Performance.

Puerto Rico’s economy suffered a severe and prolonged recession from 2007 to 2017, with real gross national product (“GNP”)

contracting approximately 15% during this period. In 2017, Hurricane María caused significant damage and destruction across the

island, resulting in further economic contraction. Puerto Rico’s economy has been gradually recovering since 2018, in part aided by

the large amount of federal disaster relief and recovery assistance funds injected into the Puerto Rico economy in connection with

Hurricane María and other recent natural disasters. This growth was interrupted by the economic shock caused by the COVID-19

pandemic in 2020, but has since resumed, in part aided by additional federal assistance from pandemic-related stimulus measures.

The latest Puerto Rico Economic Activity Index, published by the Economic Development Bank for Puerto Rico (the “Economic

Activity Index”), reflected a 0.8% year-over-year decline in March 2024, compared to March 2023, and essentially remained

unchanged from February 2024 to March 2024. The Economic Activity Index is a coincident indicator of ongoing economic activity

but not a direct measurement of real GNP. The Puerto Rico Planning Board estimates that Puerto Rico’s real GNP grew 0.7%

during fiscal year 2023 (July 2022-June 2023) and projects 2.8% real GNP growth for fiscal year 2024 (July 2023-June-2024).

While the Puerto Rico economy has not directly tracked the United States economy in recent years, many of the external factors

that impact the Puerto Rico economy are affected by the policies and performance of the United States economy. These external

factors include the level of interest rates and the rate of inflation. Inflation in the United States, as measured by the United States

Consumer Price Index (published by the U.S. Bureau of Labor Statistics), increased 3.5% during the 12-month period ended March

2024. Inflation in Puerto Rico, as measured by the Puerto Rico Consumer Price Index (published by the Department of Labor and

Human Resources of Puerto Rico), increased 1.9% during the 12-month period ended February 2024. The rate of inflation gradually

decreased from a mid-2022 peak, as the Federal Reserve implemented a series of benchmark interest rate increases.

Fiscal Challenges.

As the Puerto Rico economy contracted, the government’s public debt rose rapidly, in part from borrowing to cover deficits to pay

debt service, pension benefits and other government expenditures. By 2016, the Puerto Rico government had over $120 billion in

combined debt and unfunded pension liabilities, had lost access to the capital markets, and was in the midst of a fiscal crisis.

Puerto Rico’s escalating fiscal and economic challenges and imminent widespread defaults in its public debt prompted the U.S.

Congress to enact the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) in June 2016. PROMESA

created the “Oversight Board” with ample powers over Puerto Rico’s fiscal and economic affairs and those of its public corporations,

instrumentalities and municipalities (collectively, “PR Government Entities”). Pursuant to PROMESA, the Oversight Board will be in

place until market access is restored and balanced budgets are produced for at least four consecutive years. PROMESA also

established two mechanisms for the restructuring of the obligations of PR Government Entities: (a) Title III, which provides an in-

court process that incorporates many of the powers and provisions of the U.S. Bankruptcy Code and permits adjustment of a broad range of obligations, and (b) Title VI, which provides for a largely out-of-court process through which modifications to financial debt can be accepted by a supermajority of creditors and bind holdouts.

Since 2017, Puerto Rico and several of its instrumentalities have availed themselves of the debt restructuring mechanisms of Titles

III and VI of PROMESA. The Puerto Rico government emerged from Title III of PROMESA in March 2022. Several instrumentalities,

including Government Development Bank for Puerto Rico, the Puerto Rico Sales Tax Financing Corporation, the Puerto Rico

Highways and Transportation Authority, and the Puerto Rico Industrial Development Company, have also completed debt

restructurings under Titles III or VI of PROMESA. While the majority of the debt has already been restructured, some PR

Government Entities still face significant fiscal challenges. For example, the Puerto Rico Electric Power Authority is still in the

process of restructuring its debts under Title III of PROMESA.

Municipalities.

Puerto Rico’s fiscal and economic challenges have also adversely impacted its municipalities. Budgetary subsidies to municipalities

have gradually declined in recent years and were scheduled to be ultimately eliminated by fiscal year 2025 as part of the fiscal

measures required by the Oversight Board. However, over the past years, the Oversight Board has authorized and funded new

appropriations and investments to offset the decline in intergovernmental transfers to municipalities. Beyond those sources of

alternate funding, municipalities have also received significant federal disaster and COVID-relief funding in recent years. According

to the latest Puerto Rico fiscal plan certified by the Oversight Board, taken together, the funding available to municipalities in the

near-term is substantial. The fiscal plan notes, however, that the desired progress to achieve fiscal discipline and implement critical

reforms has not been achieved, and that municipalities must work with the Executive branch to analyze the financial needs of each

individual municipality and focus on the necessary enhancements in municipal shared services and other municipal and government

initiatives. Pursuant to the fiscal plan, once the transformational measures and milestones related to these initiatives are achieved,

additional funding from the central government may be made available to municipalities to improve fiscal sustainability.

Municipalities are subject to PROMESA and, at the Oversight Board’s request, are required to submit fiscal plans and annual

budgets to the Oversight Board for its review and approval. They are also required to seek Oversight Board approval to issue,

guarantee or modify their debts and to enter into contracts with an aggregate value of $10 million or more. With the Oversight

Board’s approval, municipalities are also eligible to avail themselves of the debt restructuring processes provided by PROMESA. To

date, however, no municipality has been subject to any such debt restructuring process.

Exposure of the Corporation

The credit quality of BPPR’s loan portfolio reflects, among other things, the general economic conditions in Puerto Rico and other

adverse conditions affecting Puerto Rico consumers and businesses. Deterioration in the Puerto Rico economy has resulted in the

past, and could result in the future, in higher delinquencies, greater charge-offs and increased losses, which could materially affect

our financial condition and results of operations.

At March 31, 2024, the Corporation’s direct exposure to PR Government Entities totaled $388 million, of which $363 million were

outstanding, compared to $362 million at December 31, 2023, of which $333 million were outstanding. A deterioration in Puerto

Rico’s fiscal and economic situation could adversely affect the value of our Puerto Rico government obligations, resulting in losses

to us. Of the amount outstanding, $348 million consists of loans and $16 million are securities ($314 million and $19 million,

respectively, at December 31, 2023). Substantially all of the Corporation’s direct exposure outstanding at March 31, 2024 were

obligations from various Puerto Rico municipalities. In most cases, these were “general obligations” of a municipality, to which the

applicable municipality has pledged its good faith, credit and unlimited taxing power, or “special obligations” of a municipality, to

which the applicable municipality has pledged basic property tax or sales tax revenues. At March 31, 2024, 78% of the Corporation’s

exposure to municipal loans and securities was concentrated in the municipalities of San Juan, Guaynabo, Carolina and Caguas.

For additional discussion of the Corporation’s direct exposure to the Puerto Rico government and its instrumentalities and

municipalities, refer to Note 20 – Commitments and Contingencies to the Consolidated Financial Statements.

In addition, at March 31, 2024, the Corporation had $233 million in loans insured or securities issued by Puerto Rico governmental

entities, but for which the principal source of repayment is non-governmental ($238 million at December 31, 2023). These included

$187 million in residential mortgage loans insured by the Puerto Rico Housing Finance Authority (“HFA”), a PR Government Entity

(December 31, 2023 - $191 million). These mortgage loans are secured by first mortgages on Puerto Rico residential properties and

the HFA insurance covers losses in the event of a borrower default and upon the satisfaction of certain other conditions. The

Corporation also had at March 31, 2024, $39 million in bonds issued by HFA which are secured by second mortgage loans on

Puerto Rico residential properties, and for which HFA also provides insurance to cover losses in the event of a borrower default, and

upon the satisfaction of certain other conditions (December 31, 2023 - $40 million). In the event that the mortgage loans insured by

HFA and held by the Corporation directly or those serving as collateral for the HFA bonds default and the collateral is insufficient to

satisfy the outstanding balance of these loans, HFA’s ability to honor its insurance will depend, among other factors, on the financial

condition of HFA at the time such obligations become due and payable. The Corporation does not consider the government

guarantee when estimating the credit losses associated with this portfolio.

BPPR’s commercial loan portfolio also includes loans to private borrowers who are service providers, lessors, suppliers or have

other relationships with the government. These borrowers could be negatively affected by a deterioration in the fiscal and economic

situation of PR Government Entities. Similarly, BPPR’s mortgage and consumer loan portfolios include loans to government

employees and retirees, which could also be negatively affected by fiscal measures, such as employee layoffs or furloughs or

reductions in pension benefits, if the fiscal and economic situation deteriorates.

As of March 31, 2024, BPPR had $18.0 billion in deposits from the Puerto Rico government, its instrumentalities, and municipalities.

The rate at which public deposit balances may decline is uncertain and difficult to predict. The amount and timing of any such

reduction is likely to be impacted by, for example, the speed at which federal assistance is distributed and the financial condition,

liquidity and cash management practices of such entities, as well as on the ability of BPPR to maintain these customer relationships.

The Corporation may also have direct exposure with regards to avoidance and other causes of action initiated by the Oversight

Board on behalf of the Commonwealth or other Title III debtors. For additional information regarding such exposure, refer to Note 20

to the Consolidated Financial Statements.

United States Virgin Islands

The Corporation has operations in the United States Virgin Islands (the “USVI”) and has credit exposure to USVI government

entities.

The USVI has been experiencing a number of fiscal and economic challenges, which could adversely affect the ability of its public

corporations and instrumentalities to service their outstanding debt obligations. PROMESA does not apply to the USVI and, as such,

there is currently no federal legislation permitting the restructuring of the debts of the USVI and its public corporations and

instrumentalities.

To the extent that the fiscal condition of the USVI continues to deteriorate, the U.S. Congress or the Government of the USVI may

enact legislation allowing for the restructuring of the financial obligations of USVI government entities or imposing a stay on creditor

remedies, including by making PROMESA applicable to the USVI.

At March 31, 2024, the Corporation had approximately $28 million in direct exposure to USVI government entities (December 31,

2023 - $28 million).

British Virgin Islands

The Corporation has operations in the British Virgin Islands (“BVI”), which was negatively affected by the COVID-19 pandemic,

particularly as a reduction in the tourism activity which accounts for a significant portion of its economy. Although the Corporation

has no significant exposure to a single borrower in the BVI, at March 31, 2024, it has a loan portfolio amounting to approximately

$208 million comprised of various retail and commercial clients, compared to a loan portfolio of $205 million at December 31, 2023.

U.S. Government

As further detailed in Notes 5 and 6 to the Consolidated Financial Statements, a substantial portion of the Corporation’s investment

securities represented exposure to the U.S. Government in the form of U.S. Government sponsored entities, as well as agency

mortgage-backed and U.S. Treasury securities. In addition, $1.9 billion of residential mortgages, and $92.4 million commercial loans

were insured or guaranteed by the U.S. Government or its agencies at March 31, 2024 (compared to $1.9 billion and $89.2 million,

respectively, at December 31, 2023).

Non-Performing Assets

Non-performing assets (“NPAs”) include primarily past-due loans that are no longer accruing interest, renegotiated loans, and real

estate property acquired through foreclosure. A summary, including certain credit quality metrics, is presented in Table 18.

During the first quarter of 2024, the Corporation reflected stable credit quality when compared to the previous quarter. Non-

performing loans (“NPLs”) and net charge offs (“NCOs”) remained below historical averages and delinquencies improved in most

loan categories from the prior quarter. We continue to closely monitor changes in the macroeconomic environment and on borrower

performance given higher interest rates and inflationary pressures. However, management believes that the improvements over

recent years in risk management practices and the risk profile of the Corporation’s loan portfolios position Popular to continue to

operate successfully under the current challenging environment.

Total NPAs as of March 31, 2024 decreased by $3 million when compared with December 31, 2023. Total non-performing loans

held-in-portfolio (“NPLs”) decreased by $3 million from December 31, 2023. BPPR’s NPLs decreased by $30 million, broadly

reflected across most loan categories. The commercial NPLs decrease includes a $5.1 million charge-off related to a previously

reserved $18 million relationship. Popular US NPLs increased by $27 million, driven by a $17 million increase in mortgage NPLs,

impacted by a single loan. The Corporation has no other credit exposure to this borrower.

On March 31, 2024 , the ratio of NPLs to total loans held-in-portfolio was 1.0%, flat when compared to December 31, 2023. Other

real estate owned loans (“OREOs”) remained flat from December 31, 2023. On March 31, 2024, NPLs secured by real estate

amounted to $211 million in the Puerto Rico operations and $49 million in Popular U.S, compared with $231 million and $24 million,

respectively, on December 31, 2023.

The Corporation’s commercial loan portfolio secured by real estate (“CRE”) amounted to $10.6 billion on March 31, 2024, of which

$3.1 billion was secured with owner occupied properties, compared with $10.6 billion and $3.1 billion, respectively, on December 31,

2023. Office space leasing exposure in our non-owner occupied CRE portfolio is limited, representing only 1.8% or $633 million of

our total loan portfolio. The exposure is mainly comprised of low- to mid- rise properties with average loan size of $2.0 million and is

well diversified across tenant type.

CRE NPLs amounted to $49 million on March 31, 2024, compared with $48 million on December 31, 2023. The CRE NPL ratios for

the BPPR and Popular U.S. segments were 0.72% and 0.26%, respectively, on March 31, 2024, compared with 0.86% and 0.13%,

respectively, on December 31, 2023.

In addition to the NPLs included in Table 18, on March 31, 2024, there were $513 million of performing loans, mostly commercial

loans, which in management’s opinion, are currently subject to potential future classification as non-performing (December 31, 2023

- $510 million).

For the quarter ended March 31, 2024, total inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $10 million,

when compared to the inflows for the same period in 2023. Inflows of NPLs held-in-portfolio at the BPPR segment decreased by $17

million, compared to the same period in 2023, mainly driven by lower commercial and mortgage inflows by $12 million and $5

million, respectively. Inflows of NPLs held-in-portfolio at the Popular U.S. segment increased by $27 million from the same period in

2023, mainly driven by higher mortgage and commercial inflows by $17 million and $9 million, respectively.

Table 18 - Non-Performing Assets

March 31, 2024

December 31, 2023

(Dollars in thousands)

BPPR

Popular

U.S.

Popular,

Inc.

As a % of

loans HIP

by

category

BPPR

Popular

U.S.

Popular,

Inc.

As a % of

loans HIP

by

category

Commercial

Commercial multi-family

106

8,700

8,806

0.4

1,991

1,991

0.1

Commercial real estate non-owner

occupied

7,922

2,407

10,329

0.2

8,745

1,117

9,862

0.2

Commercial real estate owner

occupied

26,124

3,877

30,001

1.0

29,430

6,274

35,704

1.2

Commercial and industrial

29,171

6,423

35,594

0.5

32,826

3,772

36,598

0.5

Total Commercial

63,323

21,407

84,730

0.5

72,992

11,163

84,155

0.5

Construction

6,378

6,378

0.7

Leasing

7,267

7,267

0.4

8,632

8,632

0.5

Mortgage

166,473

28,071

194,544

2.5

175,106

11,191

186,297

2.4

Consumer

Home equity lines of credit

3,986

3,986

6.0

3,733

3,733

5.7

Personal

19,092

2,068

21,160

1.1

19,031

2,805

21,836

1.1

Auto

41,807

41,807

1.1

45,615

45,615

1.2

Other Consumer

632

1

633

0.4

964

1

965

0.6

Total Consumer

61,531

6,055

67,586

1.0

65,610

6,539

72,149

1.0

Total non-performing loans held-in-

portfolio

298,594

55,533

354,127

1.0

328,718

28,893

357,611

1.0

Other real estate owned (“OREO”)

80,218

324

80,542

80,176

240

80,416

Total non-performing assets

[1]

378,812

55,857

434,669

408,894

29,133

438,027

Accruing loans past due 90 days or

more

[2]

247,330

212

247,542

268,362

109

268,471

Ratios:

Non-performing assets to total assets

0.68

0.37

0.61

0.74

0.19

0.62

Non-performing loans held-in-portfolio

to loans held-in-portfolio

1.21

0.53

1.01

1.34

0.27

1.02

Allowance for credit losses to loans

held-in-portfolio

2.62

0.91

2.11

2.61

0.85

2.08

Allowance for credit losses to non-

performing loans, excluding held-for-

sale

215.79

171.47

208.84

194.65

309.70

203.95

[1] There were no non-performing loans held-for-sale as of March 31, 2024 and December 31, 2023.

[2] It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90

days or more as opposed to non-performing since the principal repayment is insured. These balances include $93 million of residential mortgage

loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of March 31, 2024 (December 31, 2023 - $106 million).

Furthermore, the Corporation has approximately $37 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not

accruing interest. Due to the guaranteed nature of the loans, it is the Corporation’s policy to exclude these balances from non-performing assets

(December 31, 2023 - $38 million).

Table 19 - Activity in Non -Performing Loans Held-in-Portfolio (Excluding Consumer Loans)

For the quarter ended March 31, 2024

(Dollars in thousands)

BPPR

Popular U.S.

Popular, Inc.

Beginning balance - NPLs

254,476

22,354

276,830

Plus:

New non-performing loans

33,503

35,373

68,876

Advances on existing non-performing loans

22

22

Less:

Non-performing loans transferred to OREO

(4,109)

(4,109)

Non-performing loans charged-off

(8,309)

(950)

(9,259)

Loans returned to accrual status / loan collections

(45,765)

(7,321)

(53,086)

Ending balance - NPLs

229,796

49,478

279,274

Table 20 - Activity in Non -Performing Loans Held-in-Portfolio (Excluding Consumer Loans)

For the quarter ended March 31, 2023

(Dollars in thousands)

BPPR

Popular U.S.

Popular, Inc.

Beginning balance - NPLs

324,562

31,356

355,918

Plus:

New non-performing loans

50,613

8,531

59,144

Advances on existing non-performing loans

65

65

Less:

Non-performing loans transferred to OREO

(10,873)

(58)

(10,931)

Non-performing loans charged-off

(1,176)

(216)

(1,392)

Loans returned to accrual status / loan collections

(48,099)

(13,911)

(62,010)

Ending balance - NPLs

315,027

25,767

340,794

Table 21 - Activity in Non -Performing Commercial Loans Held-In-Portfolio

For the quarter ended March 31, 2024

(In thousands)

BPPR

Popular U.S.

Popular, Inc.

Beginning balance - NPLs

72,992

11,163

84,155

Plus:

New non-performing loans

4,343

15,039

19,382

Advances on existing non-performing loans

20

20

Less:

Non-performing loans charged-off

(7,999)

(950)

(8,949)

Loans returned to accrual status / loan collections

(6,013)

(3,865)

(9,878)

Ending balance - NPLs

63,323

21,407

84,730

Table 22 - Activity in Non -Performing Commercial Loans Held-In-Portfolio

For the quarter ended March 31, 2023

(In thousands)

BPPR

Popular U.S.

Popular, Inc.

Beginning balance - NPLs

82,171

10,868

93,039

Plus:

New non-performing loans

16,594

5,719

22,313

Advances on existing non-performing loans

26

26

Less:

Non-performing loans transferred to OREO

(287)

(287)

Non-performing loans charged-off

(673)

(216)

(889)

Loans returned to accrual status / loan collections

(6,853)

(5,349)

(12,202)

Ending balance - NPLs

90,952

11,048

102,000

Table 23 - Activity in Non-Performing Construction Loans Held-In-Portfolio

For the quarter ended March 31, 2024

(In thousands)

BPPR

Popular U.S.

Popular, Inc.

Beginning balance - NPLs

6,378

6,378

Less:

Loans returned to accrual status / loan collections

(6,378)

(6,378)

Ending balance - NPLs

Table 24 - Activity in Non -Performing Mortgage Loans Held-in-Portfolio

For the quarter ended March 31, 2024

(Dollars in thousands)

BPPR

Popular U.S.

Popular, Inc.

Beginning balance - NPLs

175,106

11,191

186,297

Plus:

New non-performing loans

29,160

20,334

49,494

Advances on existing non-performing loans

2

2

Less:

Non-performing loans transferred to OREO

(4,109)

(4,109)

Non-performing loans charged-off

(310)

(310)

Loans returned to accrual status / loan collections

(33,374)

(3,456)

(36,830)

Ending balance - NPLs

166,473

28,071

194,544

Table 25 - Activity in Non -Performing Mortgage Loans Held-in-Portfolio

For the quarter ended March 31, 2023

(Dollars in thousands)

BPPR

Popular U.S.

Popular, Inc.

Beginning balance - NPLs

242,391

20,488

262,879

Plus:

New non-performing loans

34,019

2,812

36,831

Advances on existing non-performing loans

39

39

Less:

Non-performing loans transferred to OREO

(10,586)

(58)

(10,644)

Non-performing loans charged-off

(503)

(503)

Loans returned to accrual status / loan collections

(41,246)

(8,562)

(49,808)

Ending balance - NPLs

224,075

14,719

238,794

Loan Delinquencies

Another key measure used to evaluate and monitor the Corporation’s asset quality is loan delinquencies. Loans delinquent 30 days

or more, as a percentage of their related portfolio category on March 31, 2024 and December 31, 2023, are presented below.

Table 26 - Loan Delinquencies

(Dollars in thousands)

March 31, 2024

December 31, 2023

Loans delinquent

30 days or more

Total loans

Total delinquencies

as a percentage

of total loans

Loans delinquent

30 days or more

Total loans

Total delinquencies

as a percentage

of total loans

Commercial

Commercial multi-family

33,651

2,384,635

1.41

13,657

2,415,620

0.57

Commercial real estate

non-owner occupied

18,089

5,057,059

0.36

17,051

5,087,421

0.34

Commercial real estate

owner occupied

62,177

3,117,844

1.99

69,239

3,080,635

2.25

Commercial and industrial

62,536

7,025,483

0.89

58,953

7,126,121

0.83

Total Commercial

176,453

17,585,021

1.00

158,900

17,709,797

0.90

Construction

8,825

1,009,303

0.87

6,378

959,280

0.66

Leasing

31,955

1,765,413

1.81

35,491

1,731,809

2.05

Mortgage

[1]

800,456

7,783,662

10.28

859,537

7,695,917

11.17

Consumer

Credit cards

46,420

1,142,153

4.06

46,436

1,135,747

4.09

Home equity lines of credit

5,455

66,717

8.18

5,465

65,953

8.29

Personal

56,988

1,897,010

3.00

59,682

1,945,247

3.07

Auto

143,184

3,706,854

3.86

173,119

3,660,780

4.73

Other

2,112

162,605

1.30

3,063

160,441

1.91

Total Consumer

254,159

6,975,339

3.64

287,765

6,968,168

4.13

Loans held-for-sale

5,352

4,301

Total

1,271,848

35,124,090

3.62

1,348,071

35,069,272

3.84

[1] Loans delinquent 30 days or more includes $0.4 billion of residential mortgage loans insured by FHA or guaranteed by the VA as of March 31,

2024 (December 31, 2023 - $0.5 billion). Refer to Note 7 to the Consolidated Financial Statements for additional information of guaranteed loans.

Allowance for Credit Losses Loans Held-in-Portfolio

The ACL, represents management’s estimate of expected credit losses through the remaining contractual life of the different loan

segments, impacted by expected prepayments. The ACL is maintained at a sufficient level to provide for estimated credit losses on

collateral dependent loans as well as loans modified for borrowers with financial difficulties separately from the remainder of the loan

portfolio. The Corporation’s management evaluates the adequacy of the ACL on a quarterly basis. In this evaluation, management

considers current conditions, macroeconomic economic expectations through a reasonable and supportable period, historical loss

experience, portfolio composition by loan type and risk characteristics, results of periodic credit reviews of individual loans, and

regulatory requirements, amongst other factors.

The Corporation must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown, such as

economic developments affecting specific customers, industries, or markets. Other factors that can affect management’s estimates

are recalibration of statistical models used to calculate lifetime expected losses, changes in underwriting standards, financial

accounting standards and loan impairment measurements, among others. Changes in the financial condition of individual borrowers,

in economic conditions, and in the condition of the various markets in which collateral may be sold, may also affect the required

level of the allowance for credit losses. Consequently, the business financial condition, liquidity, capital, and results of operations

could also be affected.

On March 31, 2024, the ACL increased by $10 million from December 31, 2023, to $740 million. The ACL for BPPR increased by $4

million, primarily driven by higher reserves for the consumer portfolios attributable to changes in credit quality. In PB, the ACL

increased by $6 million, when compared to December 31, 2023, mainly driven by higher reserves for the commercial portfolio due to

changes in credit risk ratings. The Corporation’s ratio of the allowance for credit losses to loans held-in-portfolio was 2.11% on

March 31, 2024, compared to 2.08% on December 31, 2023. The ratio of the allowance for credit losses to NPLs held-in-portfolio

stood at 208.8%, compared to 204.0% on December 31, 2023.

Given that any one economic outlook is inherently uncertain, the Corporation leverages multiple scenarios to estimate its ACL. The

baseline scenario continues to be assigned the highest probability, followed by the pessimistic scenario. The weight assigned to the

pessimistic scenario decreased during the first quarter of 2024 in response to the positive momentum in the economy as

expectations for the Federal Reserve achieving a soft landing have improved. The Corporation evaluates, at least on an annual

basis, the assumptions tied to the CECL accounting framework. These include the reasonable and supportable period as well as the

reversion window.

The 2024 annualized GDP growth in the baseline scenario improved to 2.0% and 2.3% for Puerto Rico and the United States,

respectively, compared to 1.2% and 1.7% in the previous quarter. The 2024 forecasted average unemployment rate for Puerto Rico

and the United States remained stable at 6.5% and 3.9%, respectively, compared to 6.8% and 4.0% in previous forecast.

The provision for credit losses for the period ended March 31, 2024, was $72.4 million, compared to an expense of $47.1 million for

the period ended March 31, 2023, mostly related to higher NCOs due to credit normalization. Refer to Note 8 to the Consolidated

Financial Statements, and to the Provision for Credit Losses section of this MD&A for additional information.

Table 27 - Allowance for Credit Losses - Loan Portfolios

March 31, 2024

(Dollars in thousands)

Total ACL

Total loans held-

in-portfolio

ACL to loans held-

in-portfolio

Total non-

performing loans

held-in-portfolio

ACL to non-

performing loans

held-in-portfolio

Commercial

Commercial multi-family

12,743

2,384,635

0.53

8,806

144.71

Commercial real estate non-owner occupied

65,624

5,057,059

1.30

10,329

635.34

Commercial real estate owner occupied

63,807

3,117,844

2.05

30,001

212.68

Commercial and industrial

120,418

7,025,483

1.71

35,594

338.31

Total Commercial

262,592

17,585,021

1.49

84,730

309.92

Construction

11,139

1,009,303

1.10

N.M.

Leasing

8,991

1,765,413

0.51

7,267

123.72

Mortgage

86,438

7,783,662

1.11

194,544

44.43

Consumer

Credit cards

88,169

1,142,153

7.72

N.M.

Home equity lines of credit

1,872

66,717

2.81

3,986

46.96

Personal

116,077

1,897,010

6.12

21,160

548.57

Auto

157,456

3,706,854

4.25

41,807

376.63

Other Consumer

6,810

162,605

4.19

633

1,075.83

Total Consumer

370,384

6,975,339

5.31

67,586

548.02

Total

739,544

35,118,738

2.11

354,127

208.84

N.M - Not meaningful.

Table 28 - Allowance for Credit Losses - Loan Portfolios

December 31, 2023

(Dollars in thousands)

Total ACL

Total loans held-

in-portfolio

ACL to loans held-

in-portfolio

Total non-

performing loans

held-in-portfolio

ACL to non-

performing loans

held-in-portfolio

Commercial

Commercial multi-family

13,740

2,415,620

0.57

1,991

690.11

Commercial real estate non-owner occupied

65,453

5,087,421

1.29

9,862

663.69

Commercial real estate owner occupied

56,864

3,080,635

1.85

35,704

159.27

Commercial and industrial

122,356

7,126,121

1.72

36,598

334.32

Total Commercial

258,413

17,709,797

1.46

84,155

307.07

Construction

12,686

959,280

1.32

6,378

198.90

Leasing

9,708

1,731,809

0.56

8,632

112.47

Mortgage

83,214

7,695,917

1.08

186,297

44.67

Consumer

Credit cards

80,487

1,135,747

7.09

N.M.

Home equity lines of credit

1,978

65,953

3.00

3,733

52.99

Personal

117,790

1,945,247

6.06

21,836

539.43

Auto

157,931

3,660,780

4.31

45,615

346.23

Other Consumer

7,134

160,441

4.45

965

739.27

Total Consumer

365,320

6,968,168

5.24

72,149

506.34

Total

729,341

35,064,971

2.08

357,611

203.95

N.M - Not meaningful.

Annualized net charge-offs (recoveries)

The following tables present annualized net charge-offs (recoveries) to average loans held-in-portfolio (“HIP”) by loan category for

the quarters ended March 31, 2024 and 2023.

Table 29 - Annualized Net Charge-offs (Recoveries) to Average Loans Held-in-Portfolio

Quarter ended March 31, 2024

Quarter ended March 31, 2023

BPPR

Popular U.S.

Popular, Inc.

BPPR

Popular U.S.

Popular, Inc.

Commercial

0.30

0.04

0.18

(0.06)

(0.13)

(0.09)

Mortgage

(0.28)

(0.01)

(0.23)

(0.26)

(0.22)

Leasing

0.85

0.85

0.08

0.08

Consumer

2.98

8.43

3.16

2.31

4.81

2.43

Total annualized net charge-offs to

average loans held-in-portfolio

0.92

0.21

0.71

0.56

0.06

0.41

NCOs for the quarter ended March 31, 2024, amounted to $62 million, increasing by $29 million when compared to the same period

in 2023. The BPPR segment increased by $25 million mainly driven by higher consumer and commercial NCOs by $14 million and

$8 million, respectively. Consumer NCOs increase is reflective of post-pandemic credit normalization The PB segment NCOs

increased by $4 million, mainly driven by higher commercial NCOs by $3 million.

Loan Modifications

For the quarter ended March 31, 2024, modified loans to borrowers with financial difficulty amounted to $92 million, of which $83

million were in accruing status. The BPPR segment’s modifications to borrowers with financial difficulty amounted to $92 million,

mainly comprised of commercial and mortgage loans of $73 million and $16 million, respectively. A total of $11 million of the

mortgage modifications were related to government guaranteed loans. The Popular U.S. segment’s modifications to borrowers with

financial difficulty amounted to $188 thousand, mostly comprised of personal loans.

Refer to Note 8 to the Consolidated Financial Statements for additional information on modifications made to borrowers

experiencing financial difficulties.

ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT YET EFFECTIVE ACCOUNTING STANDARDS

Refer to Note 3, “New Accounting Pronouncements” to the Consolidated Financial Statements.

Quantitative and qualitative disclosures for the current period can be found in the Market Risk section of this report, which includes

changes in market risk exposures from disclosures presented in the 2023 Form 10-K.

Disclosure Controls and Procedures

The Corporation’s management, with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, has

evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and

15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based

on such evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Corporation’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Corporation in the reports that it files or submits under the Exchange Act and such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosures.

Internal Control Over Financial Reporting

There have been no changes in the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a-15(f)

and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2024 that have materially affected, or are

reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

All forward-looking statements included in this Form 10-Q are based upon information available to Popular as of the date of this

Form 10-Q, and other than as required by law, including the requirements of applicable securities laws, we assume no obligation to

update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date

of such statements.

POPULAR, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

[UNAUDITED]

March 31,

December 31,

(In thousands, except share information)

2024

2023

Assets:

Cash and due from banks

320,486

420,462

Money market investments:

Time deposits with other banks

5,928,578

6,998,871

Total money market investments

5,928,578

6,998,871

Trading account debt securities, at fair value:

Other trading account debt securities

27,308

31,568

Debt securities available-for-sale, at fair value:

Pledged securities with creditors’ right to repledge

41,261

72,827

Other debt securities available-for-sale

17,976,663

16,656,217

Debt securities available-for-sale

18,017,924

16,729,044

Less – Allowance for credit losses

500

Debt securities available-for-sale, net

18,017,424

16,729,044

Debt securities held-to-maturity, at amortized cost:

Pledged securities with creditors’ right to repledge

27,372

27,083

Other debt securities held-to-maturity

8,055,788

8,167,252

Debt securities held-to-maturity (fair value 2024 - $

7,958,326

; 2023 - $

8,159,385

8,083,160

8,194,335

Less – Allowance for credit losses

5,731

5,780

Debt securities held-to-maturity, net

8,077,429

8,188,555

Equity securities (realizable value 2024 - $

196,324

; 2023 - $

194,641

195,747

193,726

Loans held-for-sale, at fair value

5,352

4,301

Loans held-in-portfolio

35,486,161

35,420,879

Less – Unearned income

367,423

355,908

Allowance for credit losses

739,544

729,341

Total loans held-in-portfolio, net

34,379,194

34,335,630

Premises and equipment, net

588,708

565,284

Other real estate

80,542

80,416

Accrued income receivable

266,908

263,433

Mortgage servicing rights, at fair value

114,964

118,109

Other assets

2,120,902

2,014,564

Goodwill

804,428

804,428

Other intangible assets

8,969

9,764

Total assets

70,936,939

70,758,155

Liabilities and Stockholders’ Equity

Liabilities:

Deposits:

Non-interest bearing

15,492,050

15,419,624

Interest bearing

48,316,734

48,198,619

Total deposits

63,808,784

63,618,243

Assets sold under agreements to repurchase

66,090

91,384

Notes payable

966,303

986,948

Other liabilities

918,448

914,627

Total liabilities

65,759,625

65,611,202

Commitments and contingencies (Refer to Note 20)

Stockholders’ equity:

Preferred stock,

30,000,000

shares authorized;

885,726

shares issued and outstanding (2023 -

885,726

22,143

22,143

Common stock, $

0.01

par value;

170,000,000

shares authorized;

104,790,485

shares issued (2023 -

104,767,348

) and

72,284,875

shares outstanding (2023 -

72,153,621

1,048

1,048

Surplus

4,847,466

4,843,399

Retained earnings

4,253,030

4,194,851

Treasury stock - at cost,

32,505,610

shares (2023 -

32,613,727

(2,013,187)

(2,018,957)

Accumulated other comprehensive loss, net of tax

(1,933,186)

(1,895,531)

Total stockholders’ equity

5,177,314

5,146,953

Total liabilities and stockholders’ equity

70,936,939

70,758,155

POPULAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Quarters ended March 31,

(In thousands, except per share information)

2024

2023

Interest income:

Loans

638,730

541,210

Money market investments

88,516

65,724

Investment securities

166,895

132,088

Total interest income

894,141

739,022

Interest expense:

Deposits

329,496

193,215

Short-term borrowings

1,192

2,885

Long-term debt

12,709

11,266

Total interest expense

343,397

207,366

Net interest income

550,744

531,656

Provision for credit losses

72,598

47,637

Net interest income after provision for credit losses

478,146

484,019

Non-interest income:

Service charges on deposit accounts

37,442

34,678

Other service fees

94,272

90,076

Mortgage banking activities (Refer to Note 9)

4,360

7,400

Net gain, including impairment on equity securities

1,103

1,100

Net gain on trading account debt securities

361

378

Adjustments to indemnity reserves on loans sold

(237)

612

Other operating income

26,517

27,717

Total non-interest income

163,818

161,961

Operating expenses:

Personnel costs

215,377

198,760

Net occupancy expenses

28,041

26,039

Equipment expenses

9,567

8,412

Other taxes

14,375

16,291

Professional fees

28,918

33,431

Technology and software expenses

79,462

68,559

Processing and transactional services

34,194

33,909

Communications

4,557

4,088

Business promotion

20,989

18,871

Deposit insurance

23,887

8,865

Other real estate owned (OREO) income

(5,321)

(1,694)

Other operating expenses

28,272

24,361

Amortization of intangibles

795

795

Total operating expenses

483,113

440,687

Income before income tax

158,851

205,293

Income tax expense

55,568

46,314

Net Income

103,283

158,979

Net Income Applicable to Common Stock

102,930

158,626

Net Income per Common Share - Basic

1.43

2.22

Net Income per Common Share - Diluted

1.43

2.22

POPULAR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Quarters ended March 31,

(In thousands)

2024

2023

Net income

103,283

158,979

Other comprehensive (loss) income before tax:

Foreign currency translation adjustment

(4,020)

(5,245)

Amortization of net losses of pension and postretirement benefit plans

3,618

4,813

Unrealized holding (losses) gains on debt securities arising during the period

(73,030)

213,318

Amortization of unrealized losses of debt securities transfer from available-for-sale to held-to-

maturity

44,009

42,040

Unrealized net gains (losses) on cash flow hedges

(30)

Reclassification adjustment for net gains included in net income

(41)

Other comprehensive (loss) income before tax

(29,423)

254,855

Income tax expense

(8,232)

(31,752)

Total other comprehensive (loss) income, net of tax

(37,655)

223,103

Comprehensive income, net of tax

65,628

382,082

Tax effect allocated to each component of other comprehensive income (loss):

Quarters ended March 31,

(In thousands)

2024

2023

Amortization of net losses of pension and postretirement benefit plans

(1,356)

(1,805)

Unrealized holding (losses) gains on debt securities arising during the period

1,926

(21,566)

Amortization of unrealized losses of debt securities transfer from available-for-sale to held-to-

maturity

(8,802)

(8,407)

Unrealized net gains (losses) on cash flow hedges

11

Reclassification adjustment for net gains included in net income

15

Income tax expense

(8,232)

(31,752)

POPULAR, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Accumulated

other

Common

Preferred

Retained

Treasury

comprehensive

(In thousands)

stock

stock

Surplus

earnings

stock

(loss) Income

Total

Balance at December 31, 2022

1,047

22,143

4,790,993

3,834,348

(2,030,178)

(2,524,928)

4,093,425

Cumulative effect of accounting change

28,752

28,752

Net income

158,979

158,979

Issuance of stock

1,567

1,567

Dividends declared:

Common stock

[1]

(39,586)

(39,586)

Preferred stock

(353)

(353)

Common stock purchases

(2,970)

(2,970)

Stock based compensation

59

7,749

7,808

Other comprehensive income, net of tax

223,103

223,103

Balance at March 31, 2023

1,047

22,143

4,792,619

3,982,140

(2,025,399)

(2,301,825)

4,470,725

Balance at December 31, 2023

1,048

22,143

4,843,399

4,194,851

(2,018,957)

(1,895,531)

5,146,953

Net income

103,283

103,283

Issuance of stock

1,799

1,799

Dividends declared:

Common stock

[1]

(44,751)

(44,751)

Preferred stock

(353)

(353)

Common stock purchases

(3,576)

(3,576)

Stock based compensation

2,268

9,346

11,614

Other comprehensive loss, net of tax

(37,655)

(37,655)

Balance at March 31, 2024

1,048

22,143

4,847,466

4,253,030

(2,013,187)

(1,933,186)

5,177,314

[1]

Dividends declared per common share during the quarter ended March 31, 2024 - $

0.62

(2023 - $

0.55

POPULAR, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the quarter ended

March 31,

March 31,

Disclosure of changes in number of shares:

2024

2023

Preferred Stock:

Balance at beginning and end of period

885,726

885,726

Common Stock – Issued:

Balance at beginning of period

104,767,348

104,657,522

Issuance of stock

23,137

25,488

Balance at end of period

104,790,485

104,683,010

Treasury stock

(32,505,610)

(32,717,026)

Common Stock – Outstanding

72,284,875

71,965,984

POPULAR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarters ended March 31,

(In thousands)

2024

2023

Cash flows from operating activities:

Net income

103,283

158,979

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

72,598

47,637

Amortization of intangibles

795

795

Depreciation and amortization of premises and equipment

15,361

13,842

Net accretion of discounts and amortization of premiums and deferred fees

(51,360)

(2,276)

Interest capitalized on loans subject to the temporary payment moratorium or loss mitigation alternatives

(1,641)

(2,876)

Share-based compensation

11,479

7,873

Fair value adjustments on mortgage servicing rights

3,439

1,376

Adjustments to indemnity reserves on loans sold

237

(612)

Earnings from investments under the equity method, net of dividends or distributions

(11,792)

(8,621)

Deferred income tax expense (benefit)

9,513

(2,064)

Gain on:

Disposition of premises and equipment and other productive assets

(3,412)

(2,423)

Sale of loans, including valuation adjustments on loans held-for-sale and mortgage banking activities

(74)

(264)

Sale of foreclosed assets, including write-downs

(4,447)

(5,228)

Acquisitions of loans held-for-sale

(324)

(2,861)

Proceeds from sale of loans held-for-sale

8,283

9,148

Net originations on loans held-for-sale

(11,056)

(21,790)

Net decrease (increase) in:

Trading debt securities

6,465

(1,055)

Equity securities

(1,995)

(3,731)

Accrued income receivable

(22,719)

314

Other assets

38,702

25,072

Net (decrease) increase in:

Interest payable

(10,799)

(2,846)

Pension and other postretirement benefits obligation

916

4,038

Other liabilities

10,111

(59,381)

Total adjustments

58,280

(5,933)

Net cash provided by operating activities

161,563

153,046

Cash flows from investing activities:

Net decrease (increase) in money market investments

1,070,973

(483,178)

Purchases of investment securities:

Available-for-sale

(8,161,525)

(3,960,443)

Equity

(971)

(11,927)

Proceeds from calls, paydowns, maturities and redemptions of investment securities:

Available-for-sale

6,728,665

4,909,334

Held-to-maturity

154,009

3,818

Proceeds from sale of investment securities:

Equity

945

25,595

Net repayments (disbursements) on loans

2,354

(155,538)

Proceeds from sale of loans

15,356

3,276

Acquisition of loan portfolios

(141,730)

(145,735)

Return of capital from equity method investments

249

Acquisition of premises and equipment and other productive assets

(53,889)

(36,062)

Proceeds from sale of:

Premises and equipment and other productive assets

1,632

1,972

Foreclosed assets

26,773

21,417

Net cash (used in) provided by investing activities

(357,408)

172,778

Cash flows from financing activities:

Net increase (decrease) in:

Deposits

190,477

(293,780)

Assets sold under agreements to repurchase

(25,294)

(25,110)

Other short-term borrowings

(365,000)

Payments of notes payable

(21,000)

(1,000)

Principal payments of finance leases

(881)

(804)

Proceeds from issuance of notes payable

394,178

Proceeds from issuance of common stock

1,799

1,567

Dividends paid

(44,976)

(39,878)

Net payments for repurchase of common stock

(314)

(282)

Payments related to tax withholding for share-based compensation

(3,262)

(2,688)

Net cash provided by (used in) financing activities

96,549

(332,797)

Net decrease in cash and due from banks, and restricted cash

(99,296)

(6,973)

Cash and due from banks, and restricted cash at beginning of period

427,575

476,159

Cash and due from banks, and restricted cash at the end of the period

328,279

469,186

Notes to Consolidated Financial

Statements (Unaudited)

Note 1 -

Nature of operations

14

Note 2 -

Basis of presentation

15

Note 3 -

New accounting pronouncements

16

Note 4 -

Restrictions on cash and due from banks and

certain securities

19

Note 5 -

Debt securities available-for-sale

20

Note 6 -

Debt securities held-to-maturity

23

Note 7 -

Loans

27

Note 8 -

Allowance for credit losses – loans held-in-

portfolio

36

Note 9 -

Mortgage banking activities

66

Note 10 -

Transfers of financial assets and mortgage

servicing assets

67

Note 11 -

Other real estate owned

70

Note 12 -

Other assets

71

Note 13 -

Goodwill and other intangible assets

72

Note 14 -

Deposits

74

Note 15 -

Borrowings

75

Note 16 -

Other liabilities

77

Note 17 -

Stockholders’ equity

78

Note 18 -

Other comprehensive income (loss)

79

Note 19 -

Guarantees

81

Note 20 -

Commitments and contingencies

83

Note 21-

Non-consolidated variable interest entities

87

Note 22 -

Related party transactions

89

Note 23 -

Fair value measurement

90

Note 24 -

Fair value of financial instruments

95

Note 25 -

Net income per common share

98

Note 26 -

Revenue from contracts with customers

99

Note 27 -

Leases

101

Note 28 -

Pension and postretirement benefits

103

Note 29 -

Stock-based compensation

104

Note 30 -

Income taxes

106

Note 31 -

Supplemental disclosure on the consolidated

statements of cash flows

110

Note 32 -

Segment reporting

Note 1 – Nature of Operations

Popular, Inc. (the “Corporation” or “Popular”) is a diversified, publicly-owned financial holding company subject to the supervision

and regulation of the Board of Governors of the Federal Reserve System. The Corporation has operations in Puerto Rico, the

mainland United States (“U.S.”) and the U.S. and British Virgin Islands. In Puerto Rico, the Corporation provides retail, mortgage,

and commercial banking services, through its principal banking subsidiary, Banco Popular de Puerto Rico (“BPPR”), as well as

investment banking, broker-dealer, auto and equipment leasing and financing, and insurance services through specialized

subsidiaries. In the U.S. mainland, the Corporation provides retail, mortgage, commercial banking services, as well as equipment

leasing and financing, through its New York-chartered banking subsidiary, Popular Bank (“PB” or “Popular U.S.”), which has

branches located in New York, New Jersey, and Florida.

Note 2 – Basis of Presentation

Basis of Presentation

The (unaudited) interim Consolidated Financial Statements are, in the opinion of management, a fair statement of the results for the

periods reported and include all necessary adjustments, all of a normal recurring nature, for a fair statement of such results. The

consolidated statement of financial condition presented as of December 31, 2023 was derived from audited Consolidated Financial

Statements of the Corporation for the year ended December 31, 2023.

Certain information and notes to the financial statements disclosures which would normally be included in financial statements

prepared in accordance with Accounting Principles Generally Accepted in the United States of America (US GAAP), have been

condensed or omitted from the unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange

Commission. Accordingly, these financial statements should be read in conjunction with the audited Consolidated Financial

Statements of the Corporation for the year ended December 31, 2023, included in the 2023 Form 10-K. Operating results for the

interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

Tax impact on Intercompany Distributions

The net income for the quarter ended March 31, 2024, included $

22.9

million of expenses, of which $

16.5

million is reflected in

income tax expense and $

6.4

million is reflected in other operating expenses, related to an out-of-period adjustment associated with

the Corporation’s U.S. subsidiary’s non-payment of taxes on certain intercompany distributions to the Bank Holding Company (BHC)

in Puerto Rico, a foreign corporation for U.S. tax purposes. The adjustment corrected errors for income tax expense that should

have been recognized of $

5.5

million and $

5.4

million in the years 2023 and 2022, respectively, and an aggregate of $

5.6

million, in

the years prior to 2022. The $

6.4

million recognized as other operating expense corresponded to interest due up to March 31, 2024

on the related late payment of the withholding tax, of which approximately $

3.0

million correspond to years prior to 2022. As a result

of this adjustment, the deferred tax asset related to NOL of the BHC and its related valuation allowance was reduced by $

53.7

million. The Corporation evaluated the impact of the out-of-period adjustment and concluded it was not material to any previously

issued interim or annual consolidated financial statements and the adjustment is not expected to be material to the year ending

December 31, 2024.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent

assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the

reporting period. Actual results could differ from those estimates.

Note 3 - New accounting pronouncements

Recently Adopted Accounting Standards Updates

Standard

Description

Date of adoption

Effect on the financial statements

FASB ASU 2023-02,

Investments—Equity

Method and Joint

Ventures (Topic 323) -

Accounting for

Investments in Tax Credit

Structures Using the

Proportional Amortization

Method

The Financial Accounting Standards Board

("FASB") issued Accounting Standard

Update ("ASU") 2023-02 in March

2023, which amends Accounting Standards

Codification ("ASC") Topic 323 by

permitting the election to apply the

proportional amortization method to account

for tax equity investments that generate

income tax credits through investment in

low-income-housing tax credit (LIHTC)

structures and other tax credit programs if

certain conditions are met. The ASU also

eliminates the application of the ASC

Subtopic 323-740 to LIHTC investments not

accounted for using the proportional

amortization method and instead requires

the use of other guidance.

January 1, 2024

The Corporation was not impacted by

the adoption of this ASU since it does

not hold investments in tax equity

investments.

FASB ASU 2023-01,

Leases (Topic 842) -

Common Control

Arrangements

The FASB issued ASU 2023-01 in March

2023, which amends ASC Topic 842 and

requires the amortization leasehold

improvements associated with common

control leases over the useful life of the

leasehold improvements to the common

control group as long as the lessee controls

the use of the underlying assets through a

lease. In addition, the ASU requires

companies to account for leasehold

improvements associated with common

control leases as a transfer between entities

under common control through an

adjustments to equity if, and when, the

lessee no longer controls the use of the

underlying asset.

January 1, 2024

The Corporation was not impacted by

the adoption of this ASU since it does

not hold common control leasehold

improvements, however, it will consider

this guidance to determine the

amortization period for and accounting

treatment of leasehold improvements

associated with common control leases

acquired on or after the effective date.

FASB ASU 2022-03, Fair

Value Measurement

(Topic 820) - Fair Value

Measurement of Equity

Securities Subject to

Contractual Sale

Restriction

The FASB issued ASU 2022-03 in June

2022, which clarifies that a contractual

restriction that prohibits the sale of an equity

security is not considered part of the unit of

account of the equity security, therefore, is

not considered in measuring its fair value.

The ASU also provides enhanced

disclosures for equity securities subject to a

contractual sale restriction.

January 1, 2024

The Corporation was not impacted by

the adoption of this accounting

pronouncement since it does not hold

equity securities measured at fair value

with sale restrictions.

Accounting Standards Updates Not Yet Adopted

Standard

Description

Date of adoption

Effect on the financial statements

FASB ASU 2024-02,

Codification

Improvements—

Amendments to Remove

References to the

Concepts Statements

The FASB issued ASU 2024-02 in March

2024, which removes various references to

concept statements from the FASB

Accounting Standards Codification. The

ASU intends to simplify the Codification

and distinguish between nonauthoritative

and authoritative guidance.

January 1, 2025

The Corporation is currently evaluating

any impact that the adoption of this

guidance will have on its financial

statements and presentation and

disclosures.

FASB ASU 2024-01,

Compensation - Stock

Compensation (Topic 718)

- Scope Application of

Profits Interest and Similar

Awards

The FASB issued ASU 2024-01 in March

2024, which amends ASC Topic 718 by

including an illustrative example to

demonstrate how an entity would apply the

scope guidance in paragraph 718-10-15-3

to determine whether profits interest awards

should be accounted for in accordance with

ASC Topic 718. The ASU is intended to

reduce complexity and diversity in practice.

January 1, 2025

The Corporation is currently evaluating

any impact that the adoption of this

guidance will have on its financial

statements and presentation and

disclosures.

FASB ASU 2023-09,

Income Tax ( Topic 740) -

Improvements to Income

Tax Disclosures

The FASB issued ASU 2023-09 in

December 2023, which amends ASC Topic

740 by enhancing disclosures regarding

rate reconciliation and requiring the

disclosure of income taxes paid, income (or

loss) from continuing operations before

income tax expense and income tax

expense disaggregated by national, state

and foreign level. Disclosures that no longer

were considered cost beneficial or relevant

were removed from ASC Topic 740.

January 1, 2025

The Corporation is currently evaluating

any impact that the adoption of this

guidance will have on its financial

statements and presentation and

disclosures.

FASB ASU 2023-08,

Intangibles - Goodwill and

Other - Crypto Assets

(Subtopic 350-60) -

Accounting for and

Disclosure of Crypto

Assets

The FASB issued ASU 2023-08 in

December 2023, which amends ASC

Subtopic 350-60 by requiring that crypto

assets are measured at fair value in the

statement of financial position each

reporting period with changes from

remeasurement being recognized in net

income. The ASU also requires enhanced

disclosures for both annual and interim

reporting periods to provide investors with

relevant information to analyze and assess

the exposure and risk of significant

individual crypto asset holdings.

January 1, 2025

The Corporation does not expect to be

impacted by the adoption of this ASU

since it does not hold crypto-assets for

its platform users.

FASB ASU 2023-07,

Segment Reporting (Topic

280) - Improvements to

Reportable Segment

Disclosures

The FASB issued ASU 2023-07 in

November 2023, which amends ASC Topic

280 by requiring additional disclosures

about significant segment expenses.

For fiscal years

beginning on

January 1, 2024

For interim periods

within fiscal years

beginning after

January 1, 2025

The Corporation is currently evaluating

any impact that the adoption of this

guidance will have on its financial

statements and presentation and

disclosures.

Accounting Standards Updates Not Yet Adopted

Standard

Description

Date of adoption

Effect on the financial statements

FASB ASU 2023-06,

Disclosure Improvements -

Codification Amendments

in Response to the SEC’s

Disclosure Update and

Simplification Initiative

The FASB issued ASU 2023-06 in October

2023 which modifies the disclosure or

presentation requirements of various

subtopics in the Codification with the

purpose of aligning U.S. GAAP

requirements with those of the SEC under

Regulation S-X and S-K.

The date on which

the SEC removes

related disclosure

requirements from

Regulation S-X or

Regulation S-K. If by

June 30, 2027, the

SEC has not

removed the

applicable

requirements from

Regulation S-X or

Regulation S-K, the

pending content of

the related

amendment will be

removed from the

Codification and will

not become

effective for any

entity.

The Corporation does not expect to be

impacted by the adoption of this ASU

since it is currently subject to SEC's

current disclosure and presentation

requirements under Regulation S-X and

S-K.

FASB ASU 2023-05,

Business Combinations -

Joint Venture Formations

(Subtopic 805-60) -

Recognition and initial

measurement

The FASB issued ASU 2023-05 in August

2023, which amends ASC Subtopic 805-60

to include specific guidance about how joint

ventures should recognize and initially

measure assets contributed and liabilities

assumed. The amendments require that a

joint venture, upon formation, recognize and

initially measure its assets and liabilities at

fair value.

January 1, 2025

Upon adoption of this ASU, the

Corporation will consider this guidance

for the initial measure of assets and

liabilities of newly created joint

ventures.

Note 4 - Restrictions on cash and due from banks and certain securities

BPPR is required by regulatory agencies to maintain average reserve balances with the Federal Reserve Bank of New York (the

“Fed”) or other banks. Those required average reserve balances amounted to $

2.8

billion at March 31, 2024 (December 31, 2023 -

2.7

billion). Cash and due from banks, as well as other highly liquid securities, are used to cover the required average reserve

balances.

At March 31, 2024, the Corporation held $

61

million in restricted assets in the form of funds deposited in money market accounts,

debt securities available for sale and equity securities (December 31, 2023 - $

78

million). The restricted assets held in debt

securities available for sale and equity securities consist primarily of assets held for the Corporation’s non-qualified retirement plans

and fund deposits guaranteeing possible liens or encumbrances over the title of insured properties.

Note 5 – Debt securities available-for-sale

The following tables present the amortized cost, gross unrealized gains and losses, approximate fair value, weighted average yield

and contractual maturities of debt securities available-for-sale at March 31, 2024 and December 31, 2023.

At March 31, 2024

Allowance

Gross

Gross

Weighted

Amortized

for credit

unrealized

unrealized

Fair

average

(In thousands)

cost

losses

gains

losses

value

yield

U.S. Treasury securities

Within 1 year

9,394,716

68

60,864

9,333,920

3.90

After 1 to 5 years

2,825,336

140,775

2,684,561

1.32

After 5 to 10 years

307,174

36,444

270,730

1.63

Total U.S. Treasury securities

12,527,226

68

238,083

12,289,211

3.26

Collateralized mortgage obligations - federal agencies

After 1 to 5 years

15,883

813

15,070

1.54

After 5 to 10 years

19,189

1,337

17,852

2.29

After 10 years

104,671

21

10,006

94,686

2.55

Total collateralized mortgage obligations - federal agencies

139,743

21

12,156

127,608

2.40

Mortgage-backed securities - federal agencies

Within 1 year

457

5

452

2.06

After 1 to 5 years

78,628

6

3,683

74,951

2.36

After 5 to 10 years

817,332

181

56,576

760,937

2.33

After 10 years

5,897,090

449

1,135,279

4,762,260

1.65

Total mortgage-backed securities - federal agencies

6,793,507

636

1,195,543

5,598,600

1.74

Other

Within 1 year

1,005

500

505

4.00

After 1 to 5 years

1,500

1,500

8.50

Total other

2,505

500

2,005

6.69

Total debt securities available-for-sale

[1]

19,462,981

500

725

1,445,782

18,017,424

2.72

[1]

Includes $

11.8

billion pledged to secure government and trust deposits, assets sold under agreements to repurchase, credit facilities and loan servicing

agreements that the secured parties are not permitted to sell or repledge the collateral, of which $

11

.0 billion serve as collateral for public funds. The

Corporation had unpledged Available for Sale securities with a fair value of $

6.2

billion that could be used to increase its borrowing facilities.

At December 31, 2023

Gross

Gross

Weighted

Amortized

unrealized

unrealized

Fair

average

(In thousands)

cost

gains

losses

value

yield

U.S. Treasury securities

Within 1 year

7,103,518

526

59,415

7,044,629

3.51

After 1 to 5 years

3,598,209

84

170,209

3,428,084

1.35

After 5 to 10 years

307,512

33,164

274,348

1.63

Total U.S. Treasury securities

11,009,239

610

262,788

10,747,061

2.75

Collateralized mortgage obligations - federal agencies

After 1 to 5 years

17,899

838

17,061

1.55

After 5 to 10 years

20,503

2

1,321

19,184

2.28

After 10 years

108,280

29

9,868

98,441

2.54

Total collateralized mortgage obligations - federal agencies

146,682

31

12,027

134,686

2.38

Mortgage-backed securities - federal agencies

Within 1 year

637

3

634

3.72

After 1 to 5 years

82,310

11

3,536

78,785

2.34

After 5 to 10 years

792,431

75

48,250

744,256

2.28

After 10 years

6,067,353

667

1,046,909

5,021,111

1.64

Total mortgage-backed securities - federal agencies

6,942,731

753

1,098,698

5,844,786

1.72

Other

Within 1 year

1,011

1,011

4.00

After 1 to 5 years

1,500

1,500

8.50

Total other

2,511

2,511

6.69

Total debt securities available-for-sale

[1]

18,101,163

1,394

1,373,513

16,729,044

2.35

[1]

Includes $

12

billion pledged to secure government and trust deposits, assets sold under agreements to repurchase, credit facilities and loan

servicing agreements that the secured parties are not permitted to sell or repledge the collateral, of which $

11.1

billion serve as collateral for

public funds. The Corporation had unpledged Available for Sale securities with a fair value of $

4.6

billion that could be used to increase its

borrowing facilities.

The weighted average yield on debt securities available-for-sale is based on amortized cost; therefore, it does not give effect to

changes in fair value.

Debt securities not due on a single contractual maturity date, such as mortgage-backed securities and collateralized mortgage

obligations, are classified in the period of final contractual maturity. The expected maturities of collateralized mortgage obligations,

mortgage-backed securities and certain other securities may differ from their contractual maturities because they may be subject to

prepayments or may be called by the issuer.

At March 31, 2024, the Corporation did not intend to sell or believed it was more likely than not that it would be required to sell debt

securities classified as available-for-sale. There were

no

debt securities sold during the quarters ended March 31, 2024 and 2023.

The following tables present the Corporation’s fair value and gross unrealized losses of debt securities available-for-sale,

aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at

March 31, 2024 and December 31, 2023.

At March 31, 2024

Less than 12 months

12 months or more

Total

Gross

Gross

Gross

Fair

unrealized

Fair

unrealized

Fair

unrealized

(In thousands)

value

losses

value

losses

value

losses

U.S. Treasury securities

4,845,109

3,713

5,809,606

234,370

10,654,715

238,083

Collateralized mortgage obligations - federal agencies

2,127

2

123,238

12,154

125,365

12,156

Mortgage-backed securities

45,988

428

5,523,133

1,195,115

5,569,121

1,195,543

Total debt securities available-for-sale in an unrealized loss position

4,893,224

4,143

11,455,977

1,441,639

16,349,201

1,445,782

At December 31, 2023

Less than 12 months

12 months or more

Total

Gross

Gross

Gross

Fair

unrealized

Fair

unrealized

Fair

unrealized

(In thousands)

value

losses

value

losses

value

losses

U.S. Treasury securities

244,925

5,126

6,550,941

257,662

6,795,866

262,788

Collateralized mortgage obligations - federal agencies

5,234

35

124,930

11,992

130,164

12,027

Mortgage-backed securities

37,118

405

5,779,260

1,098,293

5,816,378

1,098,698

Total debt securities available-for-sale in an unrealized loss position

287,277

5,566

12,455,131

1,367,947

12,742,408

1,373,513

As of March 31, 2024, the portfolio of available-for-sale debt securities reflects gross unrealized losses of $

1.4

billion, driven mainly

by mortgage-backed securities, which have been impacted by a decline in fair value as a result of the rising interest rate

environment. The portfolio of available-for-sale debt securities is comprised mainly of U.S Treasuries and obligations from the U.S.

Government, its agencies or government sponsored entities, including Federal National Mortgage Association (“FNMA”), Federal

Home Loan Mortgage Corporation (“FHLMC”) and Government National Mortgage Association (“GNMA”). As discussed in Note 2 of

the 2023 Form 10-K, these securities carry an explicit or implicit guarantee from the U.S. Government, are highly rated by major

rating agencies, and have a long history of no credit losses. Accordingly, the Corporation applies a zero-credit loss assumption.

Note 6 –Debt securities held-to-maturity

The following tables present the amortized cost, allowance for credit losses, gross unrealized gains and losses, approximate fair

value, weighted average yield and contractual maturities of debt securities held-to-maturity at March 31, 2024 and December 31,

At March 31, 2024

Allowance

Carrying

Value

Gross

Gross

Weighted

Amortized

Book

[1]

for Credit

Net of

unrealized

unrealized

Fair

average

(In thousands)

cost

Value

Losses

Allowance

gains

losses

value

yield

U.S. Treasury securities

Within 1 year

597,620

597,620

597,620

7,857

589,763

2.61

After 1 to 5 years

8,030,813

7,416,332

7,416,332

111,295

7,305,037

1.37

Total U.S. Treasury securities

8,628,433

8,013,952

8,013,952

119,152

7,894,800

1.46

Obligations of Puerto Rico, States and

political subdivisions

Within 1 year

3,055

3,055

11

3,044

7

6

3,045

6.23

After 1 to 5 years

18,615

18,615

135

18,480

68

130

18,418

3.60

After 5 to 10 years

845

845

28

817

28

845

5.80

After 10 years

39,197

39,197

5,557

33,640

2,890

2,636

33,894

1.42

Total obligations of Puerto Rico, States and

political subdivisions

61,712

61,712

5,731

55,981

2,993

2,772

56,202

2.38

Collateralized mortgage obligations - federal

agencies

After 10 years

1,536

1,536

1,536

172

1,364

2.87

Total collateralized mortgage obligations -

federal agencies

1,536

1,536

1,536

172

1,364

2.87

Securities in wholly owned statutory business

trusts

After 10 years

5,960

5,960

5,960

5,960

6.33

Total securities in wholly owned statutory

business trusts

5,960

5,960

5,960

5,960

6.33

Total debt securities held-to-maturity [2]

8,697,641

8,083,160

5,731

8,077,429

2,993

122,096

7,958,326

1.47

[1]

Book value includes $

614

million of net unrealized loss which remains in Accumulated other comprehensive (loss) income (AOCI) related to

certain securities previously transferred from available-for-sale securities portfolio to the held-to-maturity securities portfolio.

[2]

Includes $

8

.0 billion pledged to secure public and trust deposits that the secured parties are not permitted to sell or repledge the collateral. The

Corporation had unpledged held-to-maturities securities with a fair value of $

69.3

million that could be used to increase its borrowing facilities.

At December 31, 2023

Allowance

Carrying

Value

Gross

Gross

Weighted

Amortized

Book

[1]

for Credit

Net of

unrealized

unrealized

Fair

average

(In thousands)

cost

Value

Losses

Allowance

gains

losses

value

yield

U.S. Treasury securities

Within 1 year

597,768

597,768

597,768

7,526

590,242

2.58

After 1 to 5 years

7,971,072

7,335,159

7,335,159

637

21,996

7,313,800

1.39

After 5 to 10 years

211,061

188,484

188,484

187

188,297

1.50

Total U.S. Treasury securities

8,779,901

8,121,411

8,121,411

637

29,709

8,092,339

1.47

Obligations of Puerto Rico, States and

political subdivisions

Within 1 year

4,820

4,820

9

4,811

3

4,814

6.17

After 1 to 5 years

20,171

20,171

147

20,024

96

125

19,995

3.80

After 5 to 10 years

845

845

28

817

28

845

5.80

After 10 years

39,572

39,572

5,596

33,976

2,814

2,766

34,024

1.41

Total obligations of Puerto Rico, States and

political subdivisions

65,408

65,408

5,780

59,628

2,941

2,891

59,678

2.55

Collateralized mortgage obligations - federal

agencies

Within 1 year

13

13

13

13

6.44

After 10 years

1,543

1,543

1,543

148

1,395

2.87

Total collateralized mortgage obligations -

federal agencies

1,556

1,556

1,556

148

1,408

2.90

Securities in wholly owned statutory business

trusts

After 10 years

5,960

5,960

5,960

5,960

6.33

Total securities in wholly owned statutory

business trusts

5,960

5,960

5,960

5,960

6.33

Total debt securities held-to-maturity [2]

8,852,825

8,194,335

5,780

8,188,555

3,578

32,748

8,159,385

1.48

[1]

Book value includes $

658

million of net unrealized loss which remains in Accumulated other comprehensive (loss) income (AOCI) related to certain

securities transferred from available-for-sale securities portfolio to the held-to-maturity securities portfolio as discussed in Note 6 of the 2023 Form

10-K.

[2]

Includes $

8.1

billion pledged to secure public and trust deposits that the secured parties are not permitted to sell or repledge the collateral. The

Corporation had unpledged held-to-maturities securities with a fair value of $

67.3

million that could be used to increase its borrowing facilities.

Debt securities not due on a single contractual maturity date, such as collateralized mortgage obligations, are classified in the period

of final contractual maturity. The expected maturities of collateralized mortgage obligations and certain other securities may differ

from their contractual maturities because they may be subject to prepayments or may be called by the issuer.

Credit Quality Indicators

The following describes the credit quality indicators by major security type that the Corporation considers to develop the estimate of

the allowance for credit losses for investment securities held-to-maturity.

As discussed in Note 2 of 2023 Form 10-K, U.S. Treasury securities carry an explicit guarantee from the U.S. Government are

highly rated by major rating agencies and have a long history of no credit losses. Accordingly, the Corporation applies a zero-credit

loss assumption and no allowance for credit losses (“ACL”) for these securities has been established.

At March 31, 2024 and December 31, 2023, the “Obligations of Puerto Rico, States and political subdivisions” classified as held-to-

maturity, includes securities issued by municipalities of Puerto Rico that are generally not rated by a credit rating agency. This

includes $

16

million of general and special obligation bonds issued by three municipalities of Puerto Rico, that are payable primarily

from certain property taxes imposed by the issuing municipality (December 31, 2023 - $

19

million). In the case of general

obligations, they also benefit from a pledge of the full faith, credit and unlimited taxing power of the issuing municipality, which is

required by law to levy property taxes in an amount sufficient for the payment of debt service on such general obligation bonds. The

Corporation performs periodic credit quality reviews of these securities and internally assigns standardized credit risk ratings based

on its evaluation. The Corporation considers these ratings in its estimate to develop the allowance for credit losses associated with

these securities. For the definitions of the obligor risk ratings, refer to the Credit Quality section of Note 8 to the Consolidated

Financial Statements.

The following presents the amortized cost basis of securities held by the Corporation issued by municipalities of Puerto Rico

aggregated by the internally assigned standardized credit risk rating:

At March 31, 2024

At December 31, 2023

(In thousands)

Securities issued by Puerto Rico municipalities

Watch

2,255

2,255

Pass

13,265

16,565

Total

15,520

18,820

At March 31, 2024, the portfolio of “Obligations of Puerto Rico, States and political subdivisions” also includes $

39

million in

securities issued by the Puerto Rico Housing Finance Authority (“HFA”), a government instrumentality, for which the underlying

source of payment is second mortgage loans in Puerto Rico residential properties (not the government), but for which HFA, provides

a guarantee in the event of default and upon the satisfaction of certain other conditions (December 31, 2023 - $

40

million). These

securities are not rated by a credit rating agency.

The Corporation assesses the credit risk associated with these securities by evaluating the refreshed FICO scores of a

representative sample of the underlying borrowers. As of March 31, 2024, the average refreshed FICO score for the sample,

comprised of

68

% of the nominal value of the securities, used for the loss estimate was of

708

(compared to

67

% and

708

respectively, at December 31, 2023). The loss estimates for this portfolio was based on the methodology established under CECL

for similar loan obligations. The Corporation does not consider the government guarantee when estimating the credit losses

associated with this portfolio.

A

deterioration of the Puerto Rico economy or of the fiscal health of the Government of Puerto Rico and/or its instrumentalities

(including if any of the issuing municipalities become subject to a debt restructuring proceeding under PROMESA) could adversely

affect the value of these securities, resulting in losses to the Corporation.

Refer to Note 20

to the Consolidated Financial Statements

for additional information on the Corporation’s exposure to the Puerto

Rico Government.

At March 31, 2024 and December 31, 2023, the portfolio of “Obligations of Puerto Rico, States and political subdivisions” also

includes $

7

million in securities issued by the HFA for which the underlying source of payment is U.S. Treasury securities. The

Corporation applies a

zero

-credit loss assumption for these securities, and no ACL has been established for these securities given

that U.S. Treasury securities carry an explicit guarantee from the U.S. Government, are highly rated by major rating agencies, and

have a long history of no credit losses. Refer to Note 2 of 2023 Form 10-K for further details.

Delinquency status

At March 31, 2024 and December 31, 2023, there were

no

securities held-to-maturity in past due or non-performing status.

Allowance for credit losses on debt securities held-to-maturity

The following table provides the activity in the allowance for credit losses related to debt securities held-to-maturity by security type

at March 31, 2024 and March 31, 2023:

For the quarters ended March 31,

2024

2023

(In thousands)

Obligations of Puerto Rico, States and political subdivisions

Allowance for credit losses:

Beginning balance

5,780

6,911

Provision for credit losses (benefit)

(49)

(119)

Securities charged-off

Recoveries

Ending balance

5,731

6,792

The allowance for credit losses for the Obligations of Puerto Rico, States and political subdivisions includes $

0.2

million for

securities issued by municipalities of Puerto Rico, and $

5.6

million for bonds issued by the Puerto Rico HFA, which are secured by

second mortgage loans on Puerto Rico residential properties (compared to $

0.2

million and $

5.6

million, respectively, at December

31, 2023).

Note 7 – Loans

For a summary of the accounting policies related to loans, interest recognition and allowance for credit losses refer to Note 2 -

Summary of Significant Accounting Policies of the 2023 Form 10-K.

During the quarter ended March 31, 2024, the Corporation recorded purchases (including repurchases) of mortgage loans of $

86

million, and commercial loans of $

56

million; compared to purchases (including repurchases) of mortgage loans of $

76

million,

consumer loans of $

27

million, and commercial loans of $

45

million during the quarter ended March 31, 2023.

The Corporation performed whole-loan sales involving approximately $

11

million of residential mortgage loans, and $

12

million of

commercial and construction loans during the quarter ended March 31, 2024 (March 31, 2023 - $

10

million of residential mortgage

loans and $

2

million of commercial and construction loans). Also, during the quarter ended March 31, 2024, the Corporation

securitized approximately $

1

million of mortgage loans into GNMA mortgage-backed securities and $

1

million of mortgage loans into

FNMA mortgage-backed securities, compared to $

1

million and $

10

million, respectively, during the quarter ended March 31, 2023.

Delinquency status

The following tables present the amortized cost basis of loans held-in-portfolio (“HIP”), net of unearned income, by past due status,

and by loan class including those that are in non-performing status or that are accruing interest but are past due 90 days or more at

March 31, 2024 and December 31, 2023.

March 31, 2024

BPPR

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

19,384

2,027

106

21,517

282,134

303,651

106

Commercial real estate:

Non-owner occupied

2,378

3,278

7,922

13,578

2,982,907

2,996,485

7,922

Owner occupied

6,628

432

26,124

33,184

1,392,908

1,426,092

26,124

Commercial and industrial

3,020

8,552

33,741

45,313

4,699,810

4,745,123

29,171

4,570

Construction

162,724

162,724

Mortgage

254,008

107,224

385,062

746,294

5,737,257

6,483,551

166,473

218,589

Leasing

19,936

4,752

7,267

31,955

1,733,458

1,765,413

7,267

Consumer:

Credit cards

13,034

9,528

23,858

46,420

1,095,716

1,142,136

23,858

Home equity lines of credit

226

7

233

2,336

2,569

7

Personal

19,822

12,169

19,092

51,083

1,695,410

1,746,493

19,092

Auto

82,957

18,420

41,807

143,184

3,563,670

3,706,854

41,807

Other

1,022

150

939

2,111

151,567

153,678

632

307

Total

422,189

166,758

545,925

1,134,872

23,499,897

24,634,769

298,594

247,331

March 31, 2024

Popular U.S.

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

3,434

8,700

12,134

2,068,850

2,080,984

8,700

Commercial real estate:

Non-owner occupied

740

1,364

2,407

4,511

2,056,063

2,060,574

2,407

Owner occupied

6,107

19,009

3,877

28,993

1,662,759

1,691,752

3,877

Commercial and industrial

9,961

628

6,634

17,223

2,263,137

2,280,360

6,423

211

Construction

8,825

8,825

837,754

846,579

Mortgage

25,558

533

28,071

54,162

1,245,949

1,300,111

28,071

Consumer:

Credit cards

17

17

Home equity lines of

credit

846

390

3,986

5,222

58,926

64,148

3,986

Personal

2,142

1,695

2,068

5,905

144,612

150,517

2,068

Other

1

1

8,926

8,927

1

Total

57,613

23,619

55,744

136,976

10,346,993

10,483,969

55,533

March 31, 2024

Popular, Inc.

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

[2] [3]

loans

loans

Commercial multi-family

22,818

2,027

8,806

33,651

2,350,984

2,384,635

8,806

Commercial real estate:

Non-owner occupied

3,118

4,642

10,329

18,089

5,038,970

5,057,059

10,329

Owner occupied

12,735

19,441

30,001

62,177

3,055,667

3,117,844

30,001

Commercial and industrial

12,981

9,180

40,375

62,536

6,962,947

7,025,483

35,594

4,781

Construction

8,825

8,825

1,000,478

1,009,303

Mortgage

[1]

279,566

107,757

413,133

800,456

6,983,206

7,783,662

194,544

218,589

Leasing

19,936

4,752

7,267

31,955

1,733,458

1,765,413

7,267

Consumer:

Credit cards

13,034

9,528

23,858

46,420

1,095,733

1,142,153

23,858

Home equity lines of credit

846

616

3,993

5,455

61,262

66,717

3,986

7

Personal

21,964

13,864

21,160

56,988

1,840,022

1,897,010

21,160

Auto

82,957

18,420

41,807

143,184

3,563,670

3,706,854

41,807

Other

1,022

150

940

2,112

160,493

162,605

633

307

Total

479,802

190,377

601,669

1,271,848

33,846,890

35,118,738

354,127

247,542

[1]

It is the Corporation’s policy to report delinquent residential mortgage loans insured by Federal Housing Administration (“FHA”) or guaranteed by

the U.S. Department of Veterans Affairs (“VA”) as accruing loans past due 90 days or more as opposed to non-performing since the principal

repayment is insured. These balances include $

93

million of residential mortgage loans insured by FHA or guaranteed by the VA that are no

longer accruing interest as of March 31, 2024. Furthermore, as of March 31, 2024, the Corporation had approximately $

37

million in reverse

mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the

Corporation’s policy to exclude these balances from non-performing assets.

[2]

Loans held-in-portfolio are net of $

367

million in unearned income and exclude $

5

million in loans held-for-sale.

[3]

Includes $

14

billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral,

of which $

7.0

billion were pledged at the Federal Home Loan Bank ("FHLB") as collateral for borrowings and $

7

billion at the Federal Reserve

Bank ("FRB") for discount window borrowings. As of March 31, 2024, the Corporation had an available borrowing facility with the FHLB and the

discount window of Federal Reserve Bank of New York of $

3.8

billion and $

4.6

billion, respectively.

December 31, 2023

BPPR

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

524

1,991

2,515

289,427

291,942

1,991

Commercial real estate:

Non-owner occupied

5,510

77

8,745

14,332

2,990,922

3,005,254

8,745

Owner occupied

2,726

249

29,430

32,405

1,365,978

1,398,383

29,430

Commercial and industrial

6,998

3,352

36,210

46,560

4,749,666

4,796,226

32,826

3,384

Construction

6,378

6,378

163,479

169,857

6,378

Mortgage

260,897

114,282

416,528

791,707

5,600,117

6,391,824

175,106

241,422

Leasing

20,140

6,719

8,632

35,491

1,696,318

1,731,809

8,632

Consumer:

Credit cards

13,243

9,912

23,281

46,436

1,089,292

1,135,728

23,281

Home equity lines of credit

230

26

256

2,392

2,648

26

Personal

19,065

14,611

19,031

52,707

1,723,603

1,776,310

19,031

Auto

100,061

27,443

45,615

173,119

3,487,661

3,660,780

45,615

Other

1,641

204

1,213

3,058

147,104

150,162

964

249

Total

431,035

176,849

597,080

1,204,964

23,305,959

24,510,923

328,718

268,362

December 31, 2023

Popular U.S.

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

9,141

2,001

11,142

2,112,536

2,123,678

Commercial real estate:

Non-owner occupied

566

1,036

1,117

2,719

2,079,448

2,082,167

1,117

Owner occupied

30,560

6,274

36,834

1,645,418

1,682,252

6,274

Commercial and industrial

7,815

697

3,881

12,393

2,317,502

2,329,895

3,772

109

Construction

789,423

789,423

Mortgage

48,818

7,821

11,191

67,830

1,236,263

1,304,093

11,191

Consumer:

Credit cards

19

19

Home equity lines of credit

1,472

4

3,733

5,209

58,096

63,305

3,733

Personal

2,222

1,948

2,805

6,975

161,962

168,937

2,805

Other

4

1

5

10,274

10,279

1

Total

100,598

13,507

29,002

143,107

10,410,941

10,554,048

28,893

December 31, 2023

Popular, Inc.

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

[2]

[3]

loans

loans

Commercial multi-family

9,665

2,001

1,991

13,657

2,401,963

2,415,620

1,991

Commercial real estate:

Non-owner occupied

6,076

1,113

9,862

17,051

5,070,370

5,087,421

9,862

Owner occupied

33,286

249

35,704

69,239

3,011,396

3,080,635

35,704

Commercial and industrial

14,813

4,049

40,091

58,953

7,067,168

7,126,121

36,598

3,493

Construction

6,378

6,378

952,902

959,280

6,378

Mortgage

[1]

309,715

122,103

427,719

859,537

6,836,380

7,695,917

186,297

241,422

Leasing

20,140

6,719

8,632

35,491

1,696,318

1,731,809

8,632

Consumer:

Credit cards

13,243

9,912

23,281

46,436

1,089,311

1,135,747

23,281

Home equity lines of credit

1,702

4

3,759

5,465

60,488

65,953

3,733

26

Personal

21,287

16,559

21,836

59,682

1,885,565

1,945,247

21,836

Auto

100,061

27,443

45,615

173,119

3,487,661

3,660,780

45,615

Other

1,645

204

1,214

3,063

157,378

160,441

965

249

Total

531,633

190,356

626,082

1,348,071

33,716,900

35,064,971

357,611

268,471

[1]

It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due

90 days or more as opposed to non-performing since the principal repayment is insured. These balances include $

106

million of residential

mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2023. Furthermore, as of

December 31, 2023, the Corporation had approximately $

38

million in reverse mortgage loans which are guaranteed by FHA, but which are

currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation’s policy to exclude these balances from non-

performing assets.

[2]

Loans held-in-portfolio are net of $

356

million in unearned income and exclude $

4

million in loans held-for-sale.

[3]

Includes $

14.2

billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral,

of which $

7.0

billion were pledged at the Federal Home Loan Bank (FHLB) as collateral for borrowings and $

7.2

billion at the Federal Reserve

Bank (FRB) for discount window borrowings. As of December 31, 2023, the Corporation had an available borrowing facility with the FHLB and the

discount window of Federal Reserve Bank of New York of $

3.5

billion and $

4.4

billion, respectively.

Recognition of interest income on mortgage loans is generally discontinued when loans are 90 days or more in arrears on payments

of principal or interest. The Corporation discontinues the recognition of interest income on residential mortgage loans insured by the

FHA or guaranteed by the VA when 15 months delinquent as to principal or interest, since the principal repayment on these loans is

insured.

At March 31, 2024, mortgage loans held-in-portfolio include $

2.3

billion (December 31, 2023 - $

2.2

billion) of loans insured by the

FHA, or guaranteed by the VA of which $

218.7

million (December 31, 2023 - $

241.6

million) are 90 days or more past due. The

portfolio of guaranteed loans includes $

93

million of residential mortgage loans in Puerto Rico that are no longer accruing interest as

of March 31, 2024 (December 31, 2023 - $

106

million). The Corporation has approximately $

37

million in reverse mortgage loans in

Puerto Rico which are guaranteed by FHA, but which are currently not accruing interest at March 31, 2024 (December 31, 2023 -

38

million).

Loans with a delinquency status of 90 days past due as of March 31, 2024 include $

10

million in loans previously pooled into GNMA

securities (December 31, 2023 - $

11

million). Under the GNMA program, issuers such as BPPR have the option but not the

obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase

option are required to be reflected on the financial statements of BPPR with an offsetting liability. Loans in our serviced GNMA

portfolio benefit from payment forbearance programs but continue to reflect the contractual delinquency until the borrower repays

deferred payments or completes a payment deferral modification or other borrower assistance alternative.

The following tables present the amortized cost basis of non-accrual loans as of March 31, 2024 and December 31, 2023 by class of

loans:

March 31, 2024

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Non-accrual

with no

allowance

Non-accrual

with

allowance

Non-accrual

with no

allowance

Non-accrual

with

allowance

Non-accrual

with no

allowance

Non-accrual

with

allowance

Commercial multi-family

106

8,700

8,700

106

Commercial real estate non-owner occupied

3,635

4,287

1,344

1,063

4,979

5,350

Commercial real estate owner occupied

17,541

8,583

3,877

21,418

8,583

Commercial and industrial

18,914

10,257

6,423

18,914

16,680

Mortgage

82,843

83,630

190

27,881

83,033

111,511

Leasing

453

6,814

453

6,814

Consumer:

HELOCs

3,986

3,986

Personal

3,458

15,634

2,068

3,458

17,702

Auto

1,809

39,998

1,809

39,998

Other

263

369

1

263

370

Total

128,916

169,678

14,111

41,422

143,027

211,100

December 31, 2023

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Non-accrual

with no

allowance

Non-accrual

with

allowance

Non-accrual

with no

allowance

Non-accrual

with

allowance

Non-accrual

with no

allowance

Non-accrual

with

allowance

Commercial multi-family

1,991

1,991

Commercial real estate non-owner occupied

3,695

5,050

1,117

3,695

6,167

Commercial real estate owner occupied

20,432

8,998

3,877

2,397

24,309

11,395

Commercial and industrial

6,991

25,835

3,772

6,991

29,607

Construction

6,378

6,378

Mortgage

84,677

90,429

120

11,071

84,797

101,500

Leasing

481

8,151

481

8,151

Consumer:

HELOCs

3,733

3,733

Personal

3,589

15,442

2,805

3,589

18,247

Auto

1,833

43,782

1,833

43,782

Other

263

701

1

263

702

Total

121,961

206,757

3,997

24,896

125,958

231,653

The Corporation has designated loans classified as collateral dependent for which the ACL is measured based on the fair value of

the collateral less cost to sell, when foreclosure is probable or when the repayment is expected to be provided substantially by the

sale or operation of the collateral and the borrower is experiencing financial difficulty. The fair value of the collateral is based on

appraisals, which may be adjusted due to their age, and the type, location, and condition of the property or area or general market

conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date. Appraisals

are updated every one to two years depending on the type of loan and the total exposure of the borrower.

Loans in non-accrual status with no allowance at March 31, 2024 include $

143

million in collateral dependent loans (December 31,

2023 - $

126

million). The Corporation recognized $

3

million in interest income on non-accrual loans during the quarter ended March

31, 2024 (March 31, 2023 - $

4

million).

The following tables present the amortized cost basis of collateral-dependent loans, for which the ACL was measured based on the

fair value of the collateral less cost to sell, by class of loans and type of collateral as of March 31, 2024 and December 31, 2023:

March 31, 2024

(In thousands)

Real Estate

Auto

Equipment

Accounts

Receivables

Other

Total

BPPR

Commercial multi-family

1,325

1,325

Commercial real estate:

Non-owner occupied

159,712

159,712

Owner occupied

22,840

22,840

Commercial and industrial

1,130

2,172

23,693

26,995

Mortgage

80,487

80,487

Leasing

1,257

1,257

Consumer:

Personal

3,708

3,708

Auto

13,910

13,910

Other

303

303

Total BPPR

269,202

15,167

2,172

23,996

310,537

Popular U.S.

Commercial multi-family

8,700

8,700

Commercial real estate:

Non-owner occupied

1,344

1,344

Owner occupied

3,877

3,877

Commercial and industrial

70

2,297

2,367

Mortgage

1,040

1,040

Total Popular U.S.

14,961

70

2,297

17,328

Popular, Inc.

Commercial multi-family

10,025

10,025

Commercial real estate:

Non-owner occupied

161,056

161,056

Owner occupied

26,717

26,717

Commercial and industrial

1,130

70

2,172

25,990

29,362

Mortgage

81,527

81,527

Leasing

1,257

1,257

Consumer:

Personal

3,708

3,708

Auto

13,910

13,910

Other

303

303

Total Popular, Inc.

284,163

15,167

70

2,172

26,293

327,865

December 31, 2023

(In thousands)

Real Estate

Auto

Equipment

Other

Total

BPPR

Commercial multi-family

1,339

1,339

Commercial real estate:

Non-owner occupied

160,555

160,555

Owner occupied

25,848

25,848

Commercial and industrial

1,103

30,287

31,390

Construction

6,378

6,378

Mortgage

85,113

85,113

Leasing

1,373

1,373

Consumer:

Personal

4,338

4,338

Auto

12,965

12,965

Other

305

305

Total BPPR

284,674

14,338

30,592

329,604

Popular U.S.

Commercial real estate:

Owner occupied

3,877

3,877

Commercial and industrial

105

400

505

Construction

5,990

5,990

Mortgage

1,303

1,303

Total Popular U.S.

11,170

105

400

11,675

Popular, Inc.

Commercial multi-family

1,339

1,339

Commercial real estate:

Non-owner occupied

160,555

160,555

Owner occupied

29,725

29,725

Commercial and industrial

1,103

105

30,687

31,895

Construction

12,368

12,368

Mortgage

86,416

86,416

Leasing

1,373

1,373

Consumer:

Personal

4,338

4,338

Auto

12,965

12,965

Other

305

305

Total Popular, Inc.

295,844

14,338

105

30,992

341,279

Purchased Credit Deteriorated (PCD) Loans

The Corporation has purchased loans during the quarter for which there was, at acquisition, evidence of more than insignificant

deterioration of credit quality since origination. The carrying amount of those loans is as follows:

(In thousands)

March 31, 2024

March 31, 2023

Purchase price of loans at acquisition

426

255

Allowance for credit losses at acquisition

17

68

Non-credit discount / (premium) at acquisition

9

Par value of acquired loans at acquisition

443

Note 8 – Allowance for credit losses – loans held-in-portfolio

The

Corporation follows the current expected credit loss (“CECL”) model, to establish and evaluate the adequacy of the ACL to

provide for expected losses in the loan portfolio. This model establishes a forward-looking methodology that reflects the expected

credit losses over the lives of financial assets, starting when such assets are first acquired or originated. In addition, CECL provides

that the initial ACL on PCD financial assets be recorded as an increase to the purchase price, with subsequent changes to the

allowance recorded as a credit loss expense. The provision for credit losses recorded in current operations is based on this

methodology. Loan losses are charged, and recoveries are credited to the ACL. The Corporation’s modeling framework includes

competing risk models that generate lifetime default and prepayment estimates as well as other loan level techniques to estimate

loss severity. These models combine credit risk factors, which include the impact of loan modifications, with macroeconomic

expectations to derive the lifetime expected loss.

At March 31,2024, the Corporation estimated the ACL by weighting the outputs of optimistic, baseline, and pessimistic scenarios.

Among the three scenarios used to estimate the ACL, the baseline is assigned the highest probability, followed by the pessimistic

scenario given the uncertainties in the economic outlook and downside risk. The weightings applied are subject to evaluation on a

quarterly basis as part of the ACL’s governance process. The Corporation evaluates, at least on an annual basis, the assumptions

tied to the CECL accounting framework. These include the reasonable and supportable period as well as the reversion window.

The 2024 annualized GDP growth in the baseline scenario improved to 2.0% and 2.3% for Puerto Rico and the United States,

respectively, compared to 1.2% and 1.7% in the previous quarter. The 2024 forecasted average unemployment rate for Puerto Rico

and the United States remained stable at 6.5% and 3.9%, respectively, compared to 6.8% and 4.0% in previous forecast.

The following tables present the changes in the ACL of loans held-in-portfolio and unfunded commitments for the quarters ended

March 31, 2024 and 2023.

For the quarter ended March 31, 2024

BPPR

Provision for

Allowance for

Beginning

credit losses

credit losses -

Ending

(In thousands)

Balance

(benefit)

PCD Loans

Charge-offs

Recoveries

Balances

Allowance for credit losses - loans:

Commercial

Commercial multi-family

3,614

(48)

1

3,567

Commercial real estate non-owner occupied

53,754

(413)

325

53,666

Commercial real estate owner occupied

40,637

5,147

(2,785)

538

43,537

Commercial and industrial

107,577

376

(6,669)

1,560

102,844

Total Commercial

205,582

5,062

(9,454)

2,424

203,614

Construction

5,294

(2,180)

3,114

Mortgage

72,440

(319)

17

(765)

5,191

76,564

Leasing

9,708

2,968

(4,850)

1,165

8,991

Consumer

Credit cards

80,487

21,640

(16,396)

2,438

88,169

Home equity lines of credit

103

103

(197)

93

102

Personal

101,181

20,263

(24,349)

2,409

99,504

Auto

157,931

13,371

(20,167)

6,321

157,456

Other

7,132

100

(664)

240

6,808

Total Consumer

346,834

55,477

(61,773)

11,501

352,039

Total - Loans

639,858

61,008

17

(76,842)

20,281

644,322

Allowance for credit losses - unfunded commitments:

Commercial

5,062

(120)

4,942

Construction

1,618

(177)

1,441

Ending balance - unfunded commitments [1]

6,680

(297)

6,383

[1] Allowance for credit losses of unfunded commitments is presented as part of Other Liabilities in the Consolidated Statements of Financial Condition.

For the quarter ended March 31, 2024

Popular U.S.

Provision for

Beginning

credit losses -

Ending

(In thousands)

Balance

(benefit)

Charge-offs

Recoveries

Balance

Allowance for credit losses - loans:

Commercial

Commercial multi-family

10,126

(510)

(441)

1

9,176

Commercial real estate non-owner occupied

11,699

195

64

11,958

Commercial real estate owner occupied

16,227

4,019

24

20,270

Commercial and industrial

14,779

3,203

(564)

156

17,574

Total Commercial

52,831

6,907

(1,005)

245

58,978

Construction

7,392

633

8,025

Mortgage

10,774

(925)

25

9,874

Consumer

Home equity lines of credit

1,875

(253)

(7)

155

1,770

Personal

16,609

4,991

(5,712)

685

16,573

Other

2

25

(31)

6

2

Total Consumer

18,486

4,763

(5,750)

846

18,345

Total - Loans

89,483

11,378

(6,755)

1,116

95,222

Allowance for credit losses - unfunded commitments:

Commercial

1,851

691

2,542

Construction

8,446

(609)

7,837

Consumer

29

(24)

5

Ending balance - unfunded commitments [1]

10,326

58

10,384

[1]

Allowance for credit losses of unfunded commitments is presented as part of Other Liabilities in the Consolidated Statements of Financial Condition.

For the quarter ended March 31, 2024

Popular Inc.

Provision for

Allowance

for

Beginning

credit losses

credit losses -

Ending

(In thousands)

Balance

(benefit)

PCD Loans

Charge-offs

Recoveries

Balance

Allowance for credit losses - loans:

Commercial

Commercial multi-family

13,740

(558)

(441)

2

12,743

Commercial real estate non-owner occupied

65,453

(218)

389

65,624

Commercial real estate owner occupied

56,864

9,166

(2,785)

562

63,807

Commercial and industrial

122,356

3,579

(7,233)

1,716

120,418

Total Commercial

258,413

11,969

(10,459)

2,669

262,592

Construction

12,686

(1,547)

11,139

Mortgage

83,214

(1,244)

17

(765)

5,216

86,438

Leasing

9,708

2,968

(4,850)

1,165

8,991

Consumer

Credit cards

80,487

21,640

(16,396)

2,438

88,169

Home equity lines of credit

1,978

(150)

(204)

248

1,872

Personal

117,790

25,254

(30,061)

3,094

116,077

Auto

157,931

13,371

(20,167)

6,321

157,456

Other

7,134

125

(695)

246

6,810

Total Consumer

365,320

60,240

(67,523)

12,347

370,384

Total - Loans

729,341

72,386

17

(83,597)

21,397

739,544

Allowance for credit losses - unfunded commitments:

Commercial

6,913

571

7,484

Construction

10,064

(786)

9,278

Consumer

29

(24)

5

Ending balance - unfunded commitments [1]

17,006

(239)

16,767

[1]

Allowance for credit losses of unfunded commitments is presented as part of Other Liabilities in the Consolidated Statements of Financial Condition.

For the quarter ended March 31, 2023

BPPR

Impact of

Provision for

Allowance for

Beginning

Adopting

credit losses

credit losses -

Ending

(In thousands)

Balance

ASU 2022-02

(benefit)

PCD Loans

Charge-offs

Recoveries

Balance

Allowance for credit losses - loans:

Commercial

Commercial multi-family

5,210

(454)

4,756

Commercial real estate non-owner occupied

52,475

1,284

135

53,894

Commercial real estate owner occupied

48,393

(1,161)

(2,730)

(3)

1,510

46,009

Commercial and industrial

68,217

(552)

9,819

(1,607)

1,165

77,042

Total Commercial

174,295

(1,713)

7,919

(1,610)

2,810

181,701

Construction

2,978

94

3,072

Mortgage

117,344

(33,556)

1,267

68

(846)

4,800

89,077

Leasing

20,618

(35)

734

(1,417)

1,090

20,990

Consumer

Credit cards

58,670

15,570

(8,676)

2,389

67,953

Home equity lines of credit

103

(39)

(33)

69

100

Personal

96,369

(7,020)

11,104

(13,580)

1,535

88,408

Auto

129,735

(21)

8,319

(12,118)

4,914

130,829

Other

15,433

235

(11,007)

216

4,877

Total Consumer

300,310

(7,041)

35,189

(45,414)

9,123

292,167

Total - Loans

615,545

(42,345)

45,203

68

(49,287)

17,823

587,007

Allowance for credit losses - unfunded commitments:

Commercial

4,336

564

4,900

Construction

2,022

(76)

1,946

Ending balance - unfunded commitments [1]

6,358

488

6,846

[1]

Allowance for credit losses of unfunded commitments is presented as part of Other Liabilities in the Consolidated Statements of Financial Condition.

For the quarter ended March 31, 2023

Popular U.S.

Impact of

Provision for

Beginning

Adopting

credit losses

Ending

(In thousands)

Balance

ASU 2022-02

(benefit)

Charge-offs

Recoveries

Balance

Allowance for credit losses - loans:

Commercial

Commercial multi-family

21,101

(493)

2

20,610

Commercial real estate non-owner occupied

19,065

(2,961)

1,852

17,956

Commercial real estate owner occupied

8,688

(224)

24

8,488

Commercial and industrial

12,227

2,528

(499)

968

15,224

Total Commercial

61,081

(1,150)

(499)

2,846

62,278

Construction

1,268

(10)

1,258

Mortgage

17,910

(2,098)

(426)

14

15,400

Consumer

Credit cards

1

(1)

Home equity lines of credit

2,439

(712)

(143)

269

1,853

Personal

22,057

(1,140)

4,191

(4,170)

383

21,321

Other

2

49

(53)

5

3

Total Consumer

24,498

(1,140)

3,529

(4,367)

657

23,177

Total - Loans

104,757

(3,238)

1,943

(4,866)

3,517

102,113

Allowance for credit losses - unfunded commitments:

Commercial

1,175

54

1,229

Construction

1,184

94

1,278

Consumer

88

(26)

62

Ending balance - unfunded commitments [1]

2,447

122

2,569

[1]

Allowance for credit losses of unfunded commitments is presented as part of Other Liabilities in the Consolidated Statements of Financial Condition.

For the quarter ended March 31, 2023

Popular Inc.

Impact of

Provision for

Allowance for

Beginning

Adopting

credit losses

credit losses -

Ending

(In thousands)

Balance

ASU 2022-02

(benefit)

PCD Loans

Charge-offs

Recoveries

Balance

Allowance for credit losses - loans:

Commercial

Commercial multi-family

26,311

(947)

2

25,366

Commercial real estate non-owner occupied

71,540

(1,677)

1,987

71,850

Commercial real estate owner occupied

57,081

(1,161)

(2,954)

(3)

1,534

54,497

Commercial and industrial

80,444

(552)

12,347

(2,106)

2,133

92,266

Total Commercial

235,376

(1,713)

6,769

(2,109)

5,656

243,979

Construction

4,246

84

4,330

Mortgage

135,254

(35,654)

841

68

(846)

4,814

104,477

Leasing

20,618

(35)

734

(1,417)

1,090

20,990

Consumer

Credit cards

58,670

15,571

(8,677)

2,389

67,953

Home equity lines of credit

2,542

(751)

(176)

338

1,953

Personal

118,426

(8,160)

15,295

(17,750)

1,918

109,729

Auto

129,735

(21)

8,319

(12,118)

4,914

130,829

Other

15,435

284

(11,060)

221

4,880

Total Consumer

324,808

(8,181)

38,718

(49,781)

9,780

315,344

Total - Loans

720,302

(45,583)

47,146

68

(54,153)

21,340

689,120

Allowance for credit losses - unfunded commitments:

Commercial

5,511

618

6,129

Construction

3,206

18

3,224

Consumer

88

(26)

62

Ending balance - unfunded commitments [1]

8,805

610

9,415

[1]

Allowance for credit losses of unfunded commitments is presented as part of Other Liabilities in the Consolidated Statements of Financial Condition.

Modifications

A modification constitutes a change in loan terms in the form of principal forgiveness, an interest rate reduction, other than-

insignificant payment delay, term extension or combination of the above made to a borrower experiencing financial difficulty.

The amount of outstanding commitments to lend additional funds to debtors with financial difficulties owing receivables whose terms

have been modified during the quarters ended March 31, 2024 and March 31, 2023 amounted to $

4.2

million and $

7.0

million,

respectively, related to the commercial loan portfolios.

The following tables show the amortized cost basis of the loans modified to borrowers experiencing financial difficulties at the end of

the reporting period disaggregated by class of financing receivable and type of concession granted for the quarters ended March 31,

2024 and March 31, 2023. Loans modified to borrowers under financial difficulties that were fully paid down, charged-off or

foreclosed upon by period end are not reported.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty for the quarter ended March 31,2024

Interest Rate Reduction

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2024

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

Commercial and industrial

387

0.01

387

0.01

Consumer:

Credit cards

129

0.01

129

0.01

Personal

243

0.01

243

0.01

Total

759

759

Term Extension

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2024

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

CRE non-owner occupied

36,718

1.23

36,718

0.73

CRE owner occupied

16,366

1.15

16,366

0.52

Commercial and industrial

2,494

0.05

2,494

0.04

Mortgage

12,979

0.20

12,979

0.17

Consumer:

Personal

199

0.01

5

204

0.01

Total

68,756

0.28

5

68,761

0.20

Other-Than-Insignificant Payment Delays

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2024

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

CRE owner occupied

10,312

0.72

10,312

0.33

Commercial and industrial

5,920

0.12

5,920

0.08

Total

16,232

0.07

16,232

0.05

Combination - Term extension and Interest Rate Reduction

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2024

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

CRE non-owner occupied

891

0.03

891

0.02

Commercial and industrial

101

101

Mortgage

3,422

0.05

38

3,460

0.04

Consumer:

Personal

1,056

0.06

145

0.10

1,201

0.06

Total

5,470

0.02

183

5,653

0.02

Combination - Other-Than-Insignificant Payment Delays and Interest Rate Reduction

Puerto Rico

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2024

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2024

% of total class of

Financing

Receivable

Commercial and industrial

16

16

Consumer:

Credit cards

315

0.03

315

0.03

Total

331

331

Loan Modifications Made to Borrowers Experiencing Financial Difficulty for the quarter ended March 31,2023

Interest Rate Reduction

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2023

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

Mortgage

227

227

Consumer:

Credit cards

497

0.05

497

0.05

Personal

172

0.01

172

0.01

Other

3

3

Total

899

899

Term Extension

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2023

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

CRE owner occupied

1,754

0.12

1,754

0.06

Commercial and industrial

3,705

0.09

3,705

0.06

Construction

3,518

0.65

3,518

0.50

Mortgage

14,521

0.24

1,853

0.14

16,374

0.22

Consumer:

Personal

26

54

0.02

80

Total

20,006

0.09

5,425

0.06

25,431

0.08

Other-Than-Insignificant Payment Delays

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2023

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

CRE non-owner occupied

1,751

0.06

1,751

0.04

CRE owner occupied

13,156

0.88

13,744

0.90

26,900

0.89

Commercial and industrial

1,411

0.04

864

0.04

2,275

0.04

Consumer:

Other

33

0.03

33

0.02

Total

16,351

0.07

14,608

0.15

30,959

0.10

Combination - Term extension and Interest Rate Reduction

BPPR

Popular U.S.

Popular, Inc.

(In thousands)

Amortized Cost

Basis at March

31,2023

% of total class

of Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

Amortized Cost

Basis at March

31,2023

% of total class of

Financing

Receivable

CRE owner occupied

101

0.01

101

Mortgage

10,473

0.17

328

0.03

10,801

0.15

Consumer:

Personal

422

0.03

422

0.02

Auto

29

29

Total

11,025

0.05

328

11,353

0.04

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulties:

For the quarter ended March 31, 2024

Interest rate reduction

Loan Type

Financial Effect

CRE Non-owner occupied

Reduced weighted-average contractual interest rate from

10.13

% to

8.25

Commercial and industrial

Reduced weighted-average contractual interest rate from

25.53

% to

9.83

Mortgage

Reduced weighted-average contractual interest rate from

5.88

% to

4.5

0%.

Consumer:

Credit cards

Reduced weighted-average contractual interest rate from

21.05

% to

6.23

Personal

Reduced weighted-average contractual interest rate from

18.06

% to

9.68

Term extension

Loan Type

Financial Effect

CRE Non-owner occupied

Added a weighted-average of

1

year to the life of loans.

CRE Owner occupied

Added a weighted-average of

6

months to the life of loans.

Commercial and industrial

Added a weighted-average of

9

months to the life of loans.

Mortgage

Added a weighted-average of

12

years to the life of loans.

Consumer:

Personal

Added a weighted-average of

11

years to the life of loans.

Other than insignificant payment delay

Loan Type

Financial Effect

CRE Owner occupied

Added a weighted-average of

12

months to the life of loans.

Commercial and industrial

Added a weighted-average of

8

months to the life of loans.

Consumer:

Credit cards

Added a weighted-average of

months to the life of loans.

For the quarter ended March 31, 2023

Interest rate reduction

Loan Type

Financial Effect

CRE Owner occupied

Reduced weighted-average contractual interest rate from

6.00

% to

5.25

Mortgage

Reduced weighted-average contractual interest rate from

5.69

% to

4.17

Consumer:

Credit cards

Reduced weighted-average contractual interest rate from

17.76

% to

4.47

Personal

Reduced weighted-average contractual interest rate from

16.97

% to

9.11

Auto

Reduced weighted-average contractual interest rate from

12.64

% to

12.62

Other

Reduced weighted-average contractual interest rate from

17.99

% to

0

Term extension

Loan Type

Financial Effect

CRE Owner occupied

Added a weighted-average of

2

years to the life of loans.

Commercial and industrial

Added a weighted-average of

5

months to the life of loans.

Construction

Added a weighted-average of

6

months to the life of loans.

Mortgage

Added a weighted-average of

10

years to the life of loans.

Consumer:

Personal

Added a weighted-average of

6

years to the life of loans.

Auto

Added a weighted-average of

2

years to the life of loans.

Other than insignificant payment delay

Loan Type

Financial Effect

CRE Non-owner occupied

Added a weighted-average of

12

months to the life of loans.

CRE Owner occupied

Added a weighted-average of

7

months to the life of loans.

Commercial and industrial

Added a weighted-average of

9

months to the life of loans.

Consumer:

Other

Added a weighted-average of

months to the life of loans.

The following tables present, by class, the performance of loans that have been modified during the twelve months preceding March

31, 2024.

The past due 90 days or more categories includes all loans modified classified as non-accruing at the time of the

modification. These loans will continue in non-accrual status, and presented as past due 90 days or more, until the borrower has

demonstrated a willingness and ability to make the restructured loan payments (at least six months of sustained performance after

the modification or one year for loans providing for quarterly or semi-annual payments) and management has concluded that it is

probable that the borrower would not be in payment default in the foreseeable future.

BPPR

March 31, 2024

Past Due 90 days or more [1]

(In thousands)

30-59 days

60-89 days

Past due 90

days or more

Total past

due

Current

Total

With Payment

Default

Without

Payment Default

Commercial multi-family

65

65

65

65

CRE non-owner occupied

179

3,278

2,918

6,375

60,491

66,866

2,918

CRE owner occupied

811

1,969

2,780

189,327

192,107

537

1,432

Commercial and industrial

626

16,492

17,118

32,511

49,629

2,774

13,718

Mortgage

5,970

3,954

23,151

33,075

49,225

82,300

3,525

19,626

Consumer:

Credit cards

126

31

223

380

1,017

1,397

159

64

Personal

42

105

1,058

1,205

3,071

4,276

51

1,007

Auto

13

13

71

84

13

Other

3

3

Total

7,754

7,368

45,889

61,011

335,716

396,727

7,046

38,843

[1] Loans that were in non-accrual status at the time of modification are presented as past due until the borrower has demonstrated a willingness and ability

to make the restructured loan payments. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or

charged-off, whichever occurs first. The recorded investment as of period end is inclusive of all partial paydowns and charge-offs since the modification

date. Loans modified with financial difficulty that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Popular U.S.

March 31, 2024

Past Due 90 days or more [1]

(In thousands)

30-59 days

60-89 days

Past due 90

days or more

Total past

due

Current

Total

With Payment

Default

Without

Payment Default

CRE owner occupied

57,550

57,550

Mortgage

324

324

3,403

3,727

324

Consumer:

Personal

160

160

124

284

160

Total

484

484

61,077

61,561

484

[1] Loans that were in non-accrual status at the time of modification are presented as past due until the borrower has demonstrated a willingness and ability

to make the restructured loan payments. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or

charged-off, whichever occurs first. The recorded investment as of period end is inclusive of all partial paydowns and charge-offs since the modification

date. Loans modified with financial difficulty that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Popular Inc.

March 31, 2024

Past Due 90 days or more [1]

(In thousands)

30-59 days

60-89 days

Past due 90

days or more

Total past

due

Current

Total

With Payment

Default

Without

Payment Default

Commercial multi-family

65

65

65

65

CRE non-owner occupied

179

3,278

2,918

6,375

60,491

66,866

2,918

CRE owner occupied

811

1,969

2,780

246,877

249,657

537

1,432

Commercial and industrial

626

16,492

17,118

32,511

49,629

2,774

13,718

Mortgage

5,970

3,954

23,475

33,399

52,628

86,027

3,525

19,950

Consumer:

Credit cards

126

31

223

380

1,017

1,397

159

64

Personal

42

105

1,218

1,365

3,195

4,560

51

1,167

Auto

13

13

71

84

13

Other

3

3

Total

7,754

7,368

46,373

61,495

396,793

458,288

7,046

39,327

[1] Loans that were in non-accrual status at the time of modification are presented as past due until the borrower has demonstrated a willingness and ability

to make the restructured loan payments. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or

charged-off, whichever occurs first. The recorded inve stment as of period end is inclusive of all partial paydowns and charge-offs since the modification

date. Loans modified with financial difficulty that were fully paid down, charged-off or foreclosed upon by period end are not reported.

The following tables present, by class, the performance of loans that have been modified during the quarter ended March 31, 2023.

BPPR

March 31, 2023

Past Due 90 days or more [1]

(In thousands)

30-59 days

60-89 days

Past due 90

days or more

Total past

due

Current

Total

With Payment

Default

Without

Payment Default

CRE non-owner occupied

1,751

1,751

CRE owner occupied

1,803

1,803

13,208

15,011

209

1,594

Commercial and industrial

142

142

4,974

5,116

28

114

Mortgage

1,202

180

7,518

8,900

16,321

25,221

7,518

Consumer:

Credit cards

21

46

96

163

334

497

96

Personal

6

232

238

382

620

232

Auto

29

29

Other

33

33

3

36

33

Total

1,229

226

9,824

11,279

37,002

48,281

333

9,491

[1] Loans that were in non-accrual status at the time of modification are presented as past due until the borrower has demonstrated a willingness and ability

to make the restructured loan payments. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or

charged-off, whichever occurs first. The recorded investment as of period end is inclusive of all partial paydowns and charge-offs since the modification

date. Loans modified with financial difficulty that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Popular U.S.

March 31, 2023

Past Due 90 days or more [1]

(In thousands)

30-59 days

60-89 days

Past due 90

days or more

Total past

due

Current

Total

With Payment

Default

Without

Payment Default

CRE owner occupied

13,744

13,744

Commercial and industrial

864

864

Construction

3,518

3,518

Mortgage

104

104

2,077

2,181

104

Consumer:

Personal

54

54

54

54

Total

158

158

20,203

20,361

158

[1] Loans that were in non-accrual status at the time of modification are presented as past due until the borrower has demonstrated a willingness and ability

to make the restructured loan payments. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or

charged-off, whichever occurs first. The recorded investment as of period end is inclusive of all partial paydowns and charge-offs since the modification

date. Loans modified with financial difficulty that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Popular Inc.

March 31, 2023

Past Due 90 days or more [1]

(In thousands)

30-59 days

60-89 days

Past due 90

days or more

Total past

due

Current

Total

With Payment

Default

Without

Payment Default

CRE non-owner occupied

1,751

1,751

CRE owner occupied

1,803

1,803

26,952

28,755

209

1,594

Commercial and industrial

142

142

5,838

5,980

28

114

Construction

3,518

3,518

Mortgage

1,202

180

7,622

9,004

18,398

27,402

7,622

Consumer:

Credit cards

21

46

96

163

334

497

96

Personal

6

286

292

382

674

286

Auto

29

29

Other

33

33

3

36

33

Total

1,229

226

9,982

11,437

57,205

68,642

333

9,649

[1] Loans that were in non-accrual status at the time of modification are presented as past due until the borrower has demonstrated a willingness and ability

to make the restructured loan payments. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or

charged-off, whichever occurs first. The recorded inve stment as of period end is inclusive of all partial paydowns and charge-offs since the modification

date. Loans modified with financial difficulty that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or charged-off,

whichever occurs first. During the quarter ended March 31,2024, the outstanding balance of loans modified for borrowers under

financial difficulties that were subject to payment default and that had been modified during the twelve months preceding the default

date was $

21

million. The amount was not considered material for the quarter ended March 31, 2023.

For the quarter ended March 31,2024, extension of maturity and the combination of interest rate reduction and extension of maturity

amounted to $

20

million and $

1

million, respectively, of the outstanding balance of loans modified for borrowers under financial

difficulties that were subject to payment default during the year preceding the default date.

Credit Quality

The risk rating system provides for the assignment of ratings at the obligor level based on the financial condition of the borrower.

The risk rating analysis process is performed at least once a year or more frequently if events or conditions change which may

deteriorate the credit quality. In the case of consumer and mortgage loans, these loans are classified considering their delinquency

status at the end of the reporting period.

The following tables present the amortized cost basis, net of unearned income, of loans held-in-portfolio based on the Corporation’s

assignment of obligor risk ratings as defined at March 31, 2024 and December 31, 2023 and the gross write-offs recorded by

vintage year. For the definitions of the obligor risk ratings, refer to the Credit Quality section of Note 9 to the Consolidated Financial

Statements included in the 2023 Form 10-K:

March 31, 2024

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2024

2023

2022

2021

2020

Prior

Years

Total

BPPR

Commercial:

Commercial multi-family

Pass

41,585

37,808

138,013

21,271

20,401

28,387

287,465

Watch

6,112

6,112

Special Mention

554

4,743

5,297

Substandard

4,777

4,777

Total commercial

multi-family

41,585

37,808

138,567

21,271

20,401

44,019

303,651

Commercial real estate non-owner occupied

Pass

24,000

308,584

854,075

558,216

356,421

594,172

3,896

2,699,364

Watch

2,590

727

5,144

21,840

39,832

70,133

Special Mention

42,111

6,879

24,626

73,034

146,650

Substandard

1,011

1,260

179

2,164

71,074

4,650

80,338

Total commercial

real estate non-

owner occupied

24,000

354,296

862,941

588,165

380,425

778,112

8,546

2,996,485

Commercial real estate owner occupied

Pass

56,699

94,564

154,134

224,909

49,919

369,657

8,083

957,965

Watch

249

1,965

44,450

9,048

4,556

61,509

1,003

122,780

Special Mention

942

21,683

20,611

1,101

41,356

85,693

Substandard

161

1,238

15,848

4,962

142,903

80,416

14,017

259,545

Doubtful

109

109

Total commercial

real estate owner

occupied

57,109

98,709

236,115

259,530

198,479

553,047

23,103

1,426,092

Year-to-Date gross

write-offs

2,785

2,785

Commercial and industrial

Pass

142,966

975,917

627,072

339,891

236,641

368,158

1,202,822

3,893,467

Watch

4,012

66,951

55,844

162,005

3,730

77,782

216,159

586,483

Special Mention

423

5,472

36,829

260

2,867

41,837

73,721

161,409

Substandard

418

1,051

2,182

8,570

15,962

31,756

43,282

103,221

Doubtful

54

32

86

Loss

457

457

Total commercial

and industrial

147,819

1,049,391

721,927

510,726

259,254

519,565

1,536,441

4,745,123

Year-to-Date gross

write-offs

124

58

24

5,131

1,332

6,669

Construction

Pass

29,488

24,618

19,243

10,696

1,766

37,970

123,781

Watch

17,187

11,801

8,917

37,905

Special Mention

1,038

1,038

Total construction

29,488

41,805

32,082

10,696

1,766

46,887

162,724

Mortgage

Pass

192,679

759,057

432,327

415,791

255,350

4,355,912

6,411,116

Substandard

1,181

319

379

350

70,206

72,435

Total mortgage

192,679

760,238

432,646

416,170

255,700

4,426,118

6,483,551

Year-to-Date gross

write-offs

765

March 31, 2024

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2024

2023

2022

2021

2020

Prior

Years

Total

BPPR

Leasing

Pass

210,843

570,183

456,718

287,444

148,154

84,804

1,758,146

Substandard

902

1,980

2,580

578

1,129

7,169

Loss

81

17

98

Total leasing

210,843

571,166

458,698

290,024

148,732

85,950

1,765,413

Year-to-Date gross

write-offs

42

1,071

1,966

1,082

238

451

4,850

Consumer:

Credit cards

Pass

1,118,278

1,118,278

Substandard

23,837

23,837

Loss

21

21

Total credit cards

1,142,136

1,142,136

Year-to-Date gross

write-offs

16,396

16,396

HELOCs

Pass

2,562

2,562

Substandard

7

7

Total HELOCs

2,569

2,569

Year-to-Date gross

write-offs

197

197

Personal

Pass

200,218

745,798

417,333

158,860

48,662

134,930

21,077

1,726,878

Substandard

2,864

4,243

1,551

472

9,452

1,033

19,615

Total Personal

200,218

748,662

421,576

160,411

49,134

144,382

22,110

1,746,493

Year-to-Date gross

write-offs

6,810

11,488

3,295

880

1,403

473

24,349

Auto

Pass

342,983

1,145,262

840,316

654,624

366,598

307,952

3,657,735

Substandard

119

9,989

12,762

10,704

7,415

8,008

48,997

Loss

68

27

19

8

122

Total Auto

343,102

1,155,319

853,105

665,347

374,013

315,968

3,706,854

Year-to-Date gross

write-offs

114

9,028

5,738

3,008

1,521

758

20,167

Other consumer

Pass

8,302

35,338

22,941

13,787

5,252

5,716

61,379

152,715

Substandard

244

24

44

81

307

700

Loss

263

263

Total Other

consumer

8,302

35,582

22,965

13,787

5,296

6,060

61,686

153,678

Year-to-Date gross

write-offs

34

50

29

93

458

664

Total BPPR

1,225,657

4,840,659

4,190,345

2,957,513

1,702,130

6,874,987

2,821,368

22,110

24,634,769

March 31, 2024

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2024

2023

2022

2021

2020

Prior

Years

Total

Popular U.S.

Commercial:

Commercial multi-family

Pass

34

165,837

436,312

341,089

165,978

592,171

5,334

1,706,755

Watch

101,958

19,914

67,303

149,375

338,550

Special Mention

858

2,192

3,050

Substandard

32,629

32,629

Total commercial

multi-family

34

165,837

538,270

361,861

233,281

776,367

5,334

2,080,984

Year-to-Date gross

write-offs

441

441

Commercial real estate non-owner occupied

Pass

6,741

396,376

493,557

168,986

214,339

503,436

11,254

1,794,689

Watch

17,023

33,260

29,093

94,339

173,715

Special Mention

2,406

64,664

67,070

Substandard

2,708

2,790

7,995

11,607

25,100

Total commercial

real estate non-

owner occupied

6,741

396,376

513,288

207,442

251,427

674,046

11,254

2,060,574

Commercial real estate owner occupied

Pass

36,651

302,989

245,911

225,998

57,688

250,846

4,951

1,125,034

Watch

38,795

27,687

51,281

102,480

3,972

224,215

Special Mention

34,633

131,309

4,922

11,152

182,016

Substandard

28,593

2,413

129,481

160,487

Total commercial

real estate owner

occupied

36,651

302,989

347,932

387,407

113,891

493,959

8,923

1,691,752

Commercial and industrial

Pass

41,163

218,204

301,833

337,350

249,043

511,963

310,873

1,970,429

Watch

25

184

39,927

46,133

57,607

112,073

20,338

276,287

Special Mention

196

6,065

902

21

433

14,865

22,482

Substandard

914

1,057

427

132

2,779

2,214

3,639

11,162

Total commercial

and industrial

42,102

219,641

348,252

384,517

309,450

626,683

349,715

2,280,360

Year-to-Date gross

write-offs

190

272

5

44

53

564

Construction

Pass

17,234

348,577

230,756

82,615

38,754

15,733

733,669

Watch

31,690

14,210

8,118

54,018

Special Mention

2,168

13,466

15,634

Substandard

8,825

34,433

43,258

Total construction

17,234

350,745

275,912

105,650

46,872

50,166

846,579

Mortgage

Pass

23,480

93,943

225,010

283,981

230,999

414,626

1,272,039

Substandard

235

645

27,192

28,072

Total mortgage

23,480

93,943

225,245

283,981

231,644

441,818

1,300,111

March 31, 2024

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2024

2023

2022

2021

2020

Prior

Years

Total

Popular U.S.

Consumer:

Credit cards

Pass

17

17

Total credit cards

17

17

HELOCs

Pass

6,878

40,955

12,329

60,162

Substandard

1,816

1,280

3,096

Loss

99

791

890

Total HELOCs

8,793

40,955

14,400

64,148

Year-to-Date gross

write-offs

7

7

Personal

Pass

8,545

36,778

78,649

18,867

2,167

3,441

148,447

Substandard

506

956

201

40

366

2,069

Loss

1

1

Total Personal

8,545

37,284

79,605

19,068

2,207

3,808

150,517

Year-to-Date gross

write-offs

545

3,701

873

62

531

5,712

Other consumer

Pass

18

8,908

8,926

Loss

1

1

Total Other

consumer

18

8,909

8,927

Year-to-Date gross

write-offs

31

31

Total Popular U.S.

134,805

1,566,815

2,328,504

1,749,926

1,141,900

3,072,346

475,273

14,400

10,483,969

March 31, 2024

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2024

2023

2022

2021

2020

Prior

Years

Total

Popular, Inc.

Commercial:

Commercial multi-family

Pass

41,619

203,645

574,325

362,360

186,379

620,558

5,334

1,994,220

Watch

101,958

19,914

67,303

155,487

344,662

Special Mention

554

858

6,935

8,347

Substandard

37,406

37,406

Total commercial

multi-family

41,619

203,645

676,837

383,132

253,682

820,386

5,334

2,384,635

Year-to-Date gross

write-offs

441

441

Commercial real estate non-owner occupied

Pass

30,741

704,960

1,347,632

727,202

570,760

1,097,608

15,150

4,494,053

Watch

2,590

17,750

38,404

50,933

134,171

243,848

Special Mention

42,111

6,879

27,032

137,698

213,720

Substandard

1,011

3,968

2,969

10,159

82,681

4,650

105,438

Total commercial

real estate non-

owner occupied

30,741

750,672

1,376,229

795,607

631,852

1,452,158

19,800

5,057,059

Commercial real estate owner occupied

Pass

93,350

397,553

400,045

450,907

107,607

620,503

13,034

2,082,999

Watch

249

1,965

83,245

36,735

55,837

163,989

4,975

346,995

Special Mention

942

56,316

151,920

6,023

52,508

267,709

Substandard

161

1,238

44,441

7,375

142,903

209,897

14,017

420,032

Doubtful

109

109

Total commercial

real estate owner

occupied

93,760

401,698

584,047

646,937

312,370

1,047,006

32,026

3,117,844

Year-to-Date gross

write-offs

2,785

2,785

Commercial and industrial

Pass

184,129

1,194,121

928,905

677,241

485,684

880,121

1,513,695

5,863,896

Watch

4,037

67,135

95,771

208,138

61,337

189,855

236,497

862,770

Special Mention

423

5,668

42,894

1,162

2,888

42,270

88,586

183,891

Substandard

1,332

2,108

2,609

8,702

18,741

33,970

46,921

114,383

Doubtful

54

32

86

Loss

457

457

Total commercial

and industrial

189,921

1,269,032

1,070,179

895,243

568,704

1,146,248

1,886,156

7,025,483

Year-to-Date gross

write-offs

124

248

272

29

5,175

1,385

7,233

March 31, 2024

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2024

2023

2022

2021

2020

Prior

Years

Total

Popular, Inc.

Construction

Pass

17,234

378,065

255,374

101,858

10,696

40,520

53,703

857,450

Watch

48,877

26,011

8,118

8,917

91,923

Special Mention

2,168

13,466

1,038

16,672

Substandard

8,825

34,433

43,258

Total construction

17,234

380,233

317,717

137,732

10,696

48,638

97,053

1,009,303

Mortgage

Pass

216,159

853,000

657,337

699,772

486,349

4,770,538

7,683,155

Substandard

1,181

554

379

995

97,398

100,507

Total mortgage

216,159

854,181

657,891

700,151

487,344

4,867,936

7,783,662

Year-to-Date gross

write-offs

765

765

Leasing

Pass

210,843

570,183

456,718

287,444

148,154

84,804

1,758,146

Substandard

902

1,980

2,580

578

1,129

7,169

Loss

81

17

98

Total leasing

210,843

571,166

458,698

290,024

148,732

85,950

1,765,413

Year-to-Date gross

write-offs

42

1,071

1,966

1,082

238

451

4,850

March 31, 2024

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2024

2023

2022

2021

2020

Prior

Years

Total

Popular, Inc.

Consumer:

Credit cards

Pass

1,118,295

1,118,295

Substandard

23,837

23,837

Loss

21

21

Total credit cards

1,142,153

1,142,153

Year-to-Date gross

write-offs

16,396

16,396

HELOCs

Pass

6,878

43,517

12,329

62,724

Substandard

1,816

7

1,280

3,103

Loss

99

791

890

Total HELOCs

8,793

43,524

14,400

66,717

Year-to-Date gross

write-offs

7

197

204

Personal

Pass

208,763

782,576

495,982

177,727

50,829

138,371

21,077

1,875,325

Substandard

3,370

5,199

1,752

512

9,818

1,033

21,684

Loss

1

1

Total Personal

208,763

785,946

501,181

179,479

51,341

148,190

22,110

1,897,010

Year-to-Date gross

write-offs

7,355

15,189

4,168

942

1,934

473

30,061

Auto

Pass

342,983

1,145,262

840,316

654,624

366,598

307,952

3,657,735

Substandard

119

9,989

12,762

10,704

7,415

8,008

48,997

Loss

68

27

19

8

122

Total Auto

343,102

1,155,319

853,105

665,347

374,013

315,968

3,706,854

Year-to-Date gross

write-offs

114

9,028

5,738

3,008

1,521

758

20,167

Other consumer

Pass

8,320

35,338

22,941

13,787

5,252

5,716

70,287

161,641

Substandard

244

24

44

81

307

700

Loss

263

1

264

Total Other

consumer

8,320

35,582

22,965

13,787

5,296

6,060

70,595

162,605

Year-to-Date gross

write-offs

34

50

29

93

458

31

695

Total Popular Inc.

1,360,462

6,407,474

6,518,849

4,707,439

2,844,030

9,947,333

3,296,641

36,510

35,118,738

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

BPPR

Commercial:

Commercial multi-family

Pass

37,976

138,619

21,334

20,487

32,554

24,248

306

275,524

Watch

1,068

5,179

6,247

Special Mention

559

4,780

5,339

Substandard

4,832

4,832

Total commercial

multi-family

37,976

139,178

21,334

20,487

33,622

39,039

306

291,942

Commercial real estate non-owner occupied

Pass

305,243

871,191

560,785

359,853

41,262

563,794

7,042

2,709,170

Watch

1,959

882

5,205

22,211

5,938

27,015

63,210

Special Mention

43,020

5,413

24,730

15,843

68,368

157,374

Substandard

1,016

1,307

180

2,231

53,729

12,968

4,069

75,500

Total commercial

real estate non-

owner occupied

351,238

878,793

590,900

384,295

116,772

672,145

11,111

3,005,254

Year-to-Date gross

write-offs

609

521

1,130

Commercial real estate owner occupied

Pass

92,234

155,819

227,246

51,038

24,184

357,429

9,146

917,096

Watch

2,947

45,106

9,913

4,285

5,017

62,217

1,000

130,485

Special Mention

16,860

20,741

1,462

887

44,069

84,019

Substandard

1,316

15,710

5,080

143,696

845

87,383

12,617

266,647

Doubtful

136

136

Total commercial

real estate owner

occupied

96,497

233,495

262,980

200,481

30,933

551,234

22,763

1,398,383

Year-to-Date gross

write-offs

4

1

4,432

4,437

Commercial and industrial

Pass

1,109,898

634,401

511,912

241,452

123,458

258,872

1,343,885

4,223,878

Watch

28,841

95,785

6,111

4,043

15,560

65,360

182,756

398,456

Special Mention

6,401

3,269

276

3,200

2,088

41,289

9,410

65,933

Substandard

731

1,760

8,644

22,065

1,922

32,087

40,670

107,879

Doubtful

54

26

80

Total commercial

and industrial

1,145,871

735,215

526,943

270,814

143,028

397,634

1,576,721

4,796,226

Year-to-Date gross

write-offs

896

184

215

335

555

1,086

4,468

7,739

Construction

Pass

26,662

24,462

27,364

10,758

1,944

1,049

38,720

130,959

Watch

16,546

5,458

9,506

31,510

Special Mention

1,009

1

1,010

Substandard

6,378

6,378

Total construction

26,662

47,386

33,831

10,758

1,944

1,049

48,227

169,857

Year-to-Date gross

write-offs

2,611

2,611

Mortgage

Pass

751,532

439,373

421,297

259,412

164,438

4,280,509

6,316,561

Substandard

96

161

162

345

2,606

71,893

75,263

Total mortgage

751,628

439,534

421,459

259,757

167,044

4,352,402

6,391,824

Year-to-Date gross

write-offs

1,638

1,638

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

BPPR

Leasing

Pass

647,659

488,506

313,133

163,189

88,983

21,706

1,723,176

Substandard

806

2,516

3,053

906

818

517

8,616

Loss

17

17

Total leasing

648,465

491,022

316,186

164,095

89,801

22,240

1,731,809

Year-to-Date gross

write-offs

1,065

4,424

2,878

849

976

687

10,879

Consumer:

Credit cards

Pass

1,112,447

1,112,447

Substandard

23,259

23,259

Loss

22

22

Total credit cards

1,135,728

1,135,728

Year-to-Date gross

write-offs

41,007

41,007

HELOCs

Pass

2,622

2,622

Substandard

26

26

Total HELOCs

2,648

2,648

Year-to-Date gross

write-offs

213

213

Personal

Pass

859,434

480,771

181,483

57,227

58,849

96,956

22,034

1,756,754

Substandard

1,815

4,985

1,939

493

933

8,322

1,006

19,493

Loss

14

12

37

63

Total Personal

861,249

485,756

183,436

57,720

59,794

105,315

23,040

1,776,310

Year-to-Date gross

write-offs

4,458

35,915

18,076

4,210

4,891

2,952

1,475

71,977

Auto

Pass

1,210,622

899,797

711,439

405,768

260,355

120,318

3,608,299

Substandard

6,980

14,049

11,916

9,157

7,051

3,199

52,352

Loss

9

44

45

16

9

6

129

Total Auto

1,217,611

913,890

723,400

414,941

267,415

123,523

3,660,780

Year-to-Date gross

write-offs

10,170

23,849

11,820

5,914

3,553

55,306

Other consumer

Pass

36,144

24,238

14,942

5,618

3,433

2,753

61,796

148,924

Substandard

244

25

73

16

131

249

738

Loss

137

363

500

Total Other

consumer

36,388

24,263

15,079

5,691

3,449

3,247

62,045

150,162

Year-to-Date gross

write-offs

47

154

125

164

88

11,876

12,454

Total BPPR

5,173,585

4,388,532

3,095,548

1,789,039

913,802

6,267,828

2,859,549

23,040

24,510,923

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

Popular U.S.

Commercial:

Commercial multi-family

Pass

166,410

417,169

326,047

164,887

182,528

410,836

5,112

1,672,989

Watch

116,794

39,319

71,237

93,239

98,365

418,954

Special Mention

862

1,171

3,377

5,410

Substandard

5,545

20,780

26,325

Total commercial

multi-family

166,410

533,963

366,228

237,295

281,312

533,358

5,112

2,123,678

Commercial real estate non-owner occupied

Pass

396,712

490,316

170,074

201,225

86,595

394,455

6,086

1,745,463

Watch

39,721

38,713

43,705

39,908

91,922

4,557

258,526

Special Mention

1,327

63,365

64,692

Substandard

8,054

1,702

3,730

13,486

Total commercial

real estate non-

owner occupied

396,712

530,037

208,787

252,984

129,532

553,472

10,643

2,082,167

Year-to-Date gross

write-offs

193

193

Commercial real estate owner occupied

Pass

303,202

278,380

226,289

58,505

47,083

204,888

9,753

1,128,100

Watch

69,894

84,218

53,066

14,057

98,502

1,905

321,642

Special Mention

77,912

4,955

6,074

11,224

100,165

Substandard

477

2,430

21,763

107,675

132,345

Total commercial

real estate owner

occupied

303,202

348,751

390,849

116,526

88,977

422,289

11,658

1,682,252

Year-to-Date gross

write-offs

1,395

1,395

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

Popular U.S.

Commercial and industrial

Pass

196,959

278,238

346,428

268,835

148,502

379,635

414,883

2,033,480

Watch

198

37,022

47,299

44,939

23,493

93,299

32,497

278,747

Special Mention

208

889

1,021

30

151

39

8,674

11,012

Substandard

636

628

152

1,152

730

1,841

1,517

6,656

Total commercial

and industrial

198,001

316,777

394,900

314,956

172,876

474,814

457,571

2,329,895

Year-to-Date gross

write-offs

247

221

1,994

44

1,320

49

3,875

Construction

Pass

280,188

251,627

89,450

14,733

25,254

661,252

Watch

22,867

12,869

21,896

782

58,414

Special Mention

2,120

13,151

15,271

Substandard

1

13,997

3,895

36,593

54,486

Total construction

282,308

287,646

116,316

18,628

47,150

37,375

789,423

Mortgage

Pass

99,296

229,720

288,767

233,805

177,245

264,069

1,292,902

Substandard

235

646

2,102

8,208

11,191

Total mortgage

99,296

229,955

288,767

234,451

179,347

272,277

1,304,093

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

Popular U.S.

Consumer:

Credit cards

Pass

19

19

Total credit cards

19

19

Year-to-Date gross

write-offs

1

1

HELOCs

Pass

7,394

39,925

12,253

59,572

Substandard

1,849

966

2,815

Loss

99

819

918

Total HELOCs

9,342

39,925

14,038

63,305

Year-to-Date gross

write-offs

471

471

Personal

Pass

41,016

93,759

23,325

2,993

3,597

1,441

166,131

Substandard

333

1,630

325

50

126

211

2,675

Loss

1

130

131

Total Personal

41,349

95,389

23,650

3,043

3,724

1,782

168,937

Year-to-Date gross

write-offs

735

13,136

4,450

618

872

160

19,971

Other consumer

Pass

19

10,259

10,278

Substandard

1

1

Total Other

consumer

19

10,260

10,279

Year-to-Date gross

write-offs

171

171

Total Popular U.S.

1,487,297

2,342,518

1,789,497

1,177,883

902,918

2,304,709

535,188

14,038

10,554,048

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

Popular, Inc.

Commercial:

Commercial multi-family

Pass

204,386

555,788

347,381

185,374

215,082

435,084

5,418

1,948,513

Watch

116,794

39,319

71,237

94,307

103,544

425,201

Special Mention

559

862

1,171

8,157

10,749

Substandard

5,545

25,612

31,157

Total commercial

multi-family

204,386

673,141

387,562

257,782

314,934

572,397

5,418

2,415,620

Commercial real estate non-owner occupied

Pass

701,955

1,361,507

730,859

561,078

127,857

958,249

13,128

4,454,633

Watch

1,959

40,603

43,918

65,916

45,846

118,937

4,557

321,736

Special Mention

43,020

5,413

24,730

17,170

131,733

222,066

Substandard

1,016

1,307

180

10,285

55,431

16,698

4,069

88,986

Total commercial

real estate non-

owner occupied

747,950

1,408,830

799,687

637,279

246,304

1,225,617

21,754

5,087,421

Year-to-Date gross

write-offs

609

714

1,323

Commercial real estate owner occupied

Pass

395,436

434,199

453,535

109,543

71,267

562,317

18,899

2,045,196

Watch

2,947

115,000

94,131

57,351

19,074

160,719

2,905

452,127

Special Mention

16,860

98,653

6,417

6,961

55,293

184,184

Substandard

1,316

16,187

7,510

143,696

22,608

195,058

12,617

398,992

Doubtful

136

136

Total commercial

real estate owner

occupied

399,699

582,246

653,829

317,007

119,910

973,523

34,421

3,080,635

Year-to-Date gross

write-offs

4

1

5,827

5,832

Commercial and industrial

Pass

1,306,857

912,639

858,340

510,287

271,960

638,507

1,758,768

6,257,358

Watch

29,039

132,807

53,410

48,982

39,053

158,659

215,253

677,203

Special Mention

6,609

4,158

1,297

3,230

2,239

41,328

18,084

76,945

Substandard

1,367

2,388

8,796

23,217

2,652

33,928

42,187

114,535

Doubtful

54

26

80

Total commercial

and industrial

1,343,872

1,051,992

921,843

585,770

315,904

872,448

2,034,292

7,126,121

Year-to-Date gross

write-offs

1,143

405

2,209

379

1,875

1,086

4,517

11,614

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

Popular, Inc.

Construction

Pass

306,850

276,089

116,814

25,491

27,198

1,049

38,720

792,211

Watch

39,413

18,327

21,896

782

9,506

89,924

Special Mention

2,120

13,151

1,009

1

16,281

Substandard

6,379

13,997

3,895

36,593

60,864

Total construction

308,970

335,032

150,147

29,386

49,094

38,424

48,227

959,280

Year-to-Date gross

write-offs

2,611

2,611

Mortgage

Pass

850,828

669,093

710,064

493,217

341,683

4,544,578

7,609,463

Substandard

96

396

162

991

4,708

80,101

86,454

Total mortgage

850,924

669,489

710,226

494,208

346,391

4,624,679

7,695,917

Year-to-Date gross

write-offs

1,638

1,638

Leasing

Pass

647,659

488,506

313,133

163,189

88,983

21,706

1,723,176

Substandard

806

2,516

3,053

906

818

517

8,616

Loss

17

17

Total leasing

648,465

491,022

316,186

164,095

89,801

22,240

1,731,809

Year-to-Date gross

write-offs

1,065

4,424

2,878

849

976

687

10,879

December 31, 2023

Term Loans

Revolving

Loans

Amortized

Cost Basis

Revolving

Loans

Converted to

Term Loans

Amortized

Cost Basis

Amortized Cost Basis by Origination Year

(In thousands)

2023

2022

2021

2020

2019

Prior

Years

Total

Popular, Inc.

Consumer:

Credit cards

Pass

1,112,466

1,112,466

Substandard

23,259

23,259

Loss

22

22

Total credit cards

1,135,747

1,135,747

Year-to-Date gross

write-offs

41,008

41,008

HELOCs

Pass

7,394

42,547

12,253

62,194

Substandard

1,849

26

966

2,841

Loss

99

819

918

Total HELOCs

9,342

42,573

14,038

65,953

Year-to-Date gross

write-offs

471

213

684

Personal

Pass

900,450

574,530

204,808

60,220

62,446

98,397

22,034

1,922,885

Substandard

2,148

6,615

2,264

543

1,059

8,533

1,006

22,168

Loss

14

13

167

194

Total Personal

902,598

581,145

207,086

60,763

63,518

107,097

23,040

1,945,247

Year-to-Date gross

write-offs

5,193

49,051

22,526

4,828

5,763

3,112

1,475

91,948

Auto

Pass

1,210,622

899,797

711,439

405,768

260,355

120,318

3,608,299

Substandard

6,980

14,049

11,916

9,157

7,051

3,199

52,352

Loss

9

44

45

16

9

6

129

Total Auto

1,217,611

913,890

723,400

414,941

267,415

123,523

3,660,780

Year-to-Date gross

write-offs

10,170

23,849

11,820

5,914

3,553

55,306

Other consumer

Pass

36,163

24,238

14,942

5,618

3,433

2,753

72,055

159,202

Substandard

244

25

73

16

131

250

739

Loss

137

363

500

Total Other

consumer

36,407

24,263

15,079

5,691

3,449

3,247

72,305

160,441

Year-to-Date gross

write-offs

47

154

125

164

88

11,876

171

12,625

Total Popular Inc.

6,660,882

6,731,050

4,885,045

2,966,922

1,816,720

8,572,537

3,394,737

37,078

35,064,971

Note 9 – Mortgage banking activities

Income from mortgage banking activities includes mortgage servicing fees earned in connection with administering residential

mortgage loans and valuation adjustments on mortgage servicing rights. It also includes gain on sales and securitizations of

residential mortgage loans, losses on repurchased loans, including interest advances, and trading gains and losses on derivative

contracts used to hedge the Corporation’s securitization activities. In addition, fair value valuation adjustments to residential

mortgage loans held for sale, if any, are recorded as part of the mortgage banking activities.

The following table presents the components of mortgage banking activities:

Quarters ended March 31,

(In thousands)

2024

2023

Mortgage servicing fees, net of fair value adjustments:

Mortgage servicing fees

7,751

8,689

Mortgage servicing rights fair value adjustments

(3,439)

(1,376)

Total mortgage servicing fees, net of fair value adjustments

4,312

7,313

Net gain on sale of loans, including valuation on loans held-for-sale

74

263

Trading account profit (loss):

Unrealized gains (loss) on outstanding derivative positions

101

(131)

Realized gains on closed derivative positions

3

56

Total trading account profit (loss)

104

(75)

Losses on repurchased loans, including interest advances

(130)

(101)

Total mortgage banking activities

4,360

7,400

Note 10 – Transfers of financial assets and mortgage servicing assets

The Corporation typically transfers conforming residential mortgage loans in conjunction with GNMA, FNMA and FHLMC

securitization transactions whereby the loans are exchanged for cash or securities and servicing rights. As seller, the Corporation

has made certain representations and warranties with respect to the originally transferred loans and, in the past, has sold certain

loans with credit recourse to a government-sponsored entity, namely FNMA. Refer to Note 19 to the Consolidated Financial

Statements for a description of such arrangements.

No

liabilities were incurred as a result of these securitizations during the quarters ended March 31, 2024 and 2023 because they did

not contain any credit recourse arrangements. The securitizations completed by the Corporation during the quarters ended March

31, 2024 and 2023 were completed without credit recourse.

The following tables present the initial fair value of the assets obtained as proceeds from residential mortgage loans securitized

during the quarters ended March 31, 2024 and 2023:

Proceeds Obtained During the Quarter Ended March 31, 2024

(In thousands)

Level 1

Level 2

Level 3

Initial Fair Value

Assets

Trading account debt securities:

Mortgage-backed securities - GNMA

1,100

1,100

Mortgage-backed securities - FNMA

1,105

1,105

Total trading account debt securities

2,205

2,205

Mortgage servicing rights

45

45

Total

2,205

45

2,250

Proceeds Obtained During the Quarter Ended March 31, 2023

(In thousands)

Level 1

Level 2

Level 3

Initial Fair Value

Assets

Trading account debt securities:

Mortgage-backed securities - GNMA

1,067

1,067

Mortgage-backed securities - FNMA

9,899

9,899

Total trading account debt securities

10,966

10,966

Mortgage servicing rights

278

278

Total

10,966

278

11,244

During the quarter ended March 31, 2024, the Corporation retained servicing rights on whole loan sales involving approximately $

11

million in principal balance outstanding (March 31, 2023 - $

10

million), with net realized gains of approximately $

0.2

million (March

31, 2023 - gains of $

0.2

million). All loan sales performed during the quarters ended March 31, 2024 and 2023 were without credit

recourse agreements.

The Corporation recognizes as assets the rights to service loans for others, whether these rights are purchased or result from asset

transfers such as sales and securitizations. These mortgage servicing rights (“MSRs”) are measured at fair value.

The Corporation uses a discounted cash flow model to estimate the fair value of MSRs. The discounted cash flow model

incorporates assumptions that market participants would use in estimating future net servicing income, including estimates of

prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, prepayment and late

fees, among other considerations. Prepayment speeds are adjusted for the loans’ characteristics and portfolio behavior.

The following table presents the changes in MSRs measured using the fair value method for the quarters ended March 31, 2024

and 2023.

Residential MSRs

(In thousands)

March 31, 2024

March 31, 2023

Fair value at beginning of period

118,109

128,350

Additions

294

501

Changes due to payments on loans

[1]

(2,100)

(2,422)

Reduction due to loan repurchases

(137)

(240)

Changes in fair value due to changes in valuation model inputs or assumptions

(1,202)

1,286

Fair value at end of period

[2]

114,964

127,475

[1] Represents changes due to collection / realization of expected cash flows over time.

[2] At March 31, 2024, PB had MSRs amounting to $

2

.0 million (March 31, 2023 - $

2.0

million).

Residential mortgage loans serviced for others were $

9.7

billion at March 31, 2024 (December 31, 2023 - $

9.9

billion).

Net mortgage servicing fees, a component of mortgage banking activities in the Consolidated Statements of Operations, include the

changes from period to period in the fair value of the MSRs, including changes due to collection / realization of expected cash flows.

The banking subsidiaries receive servicing fees based on a percentage of the outstanding loan balance. These servicing fees are

credited to income when they are collected. As of March 31, 2024, weighted average mortgage servicing fees were

0.32

% (March

31, 2023 -

0.31

%). Under these servicing agreements, the banking subsidiaries do not generally earn significant prepayment penalty

fees on the underlying loans serviced.

The section below includes information on assumptions used in the valuation model of the MSRs, originated and purchased. Key

economic assumptions used in measuring the servicing rights derived from loans securitized or sold by the Corporation during the

quarters ended March 31, 2024 and 2023 were as follows:

Quarters ended

March 31, 2024

March 31, 2023

BPPR

PB

BPPR

PB

Prepayment speed

6.1

6.0

6.7

7.3

Weighted average life (in years)

9.6

8.8

8.9

8.0

Discount rate (annual rate)

9.5

12.5

9.5

10.5

Key economic assumptions used to estimate the fair value of MSRs derived from sales and securitizations of mortgage loans

performed by the banking subsidiaries and servicing rights purchased from other financial institutions, and the sensitivity to

immediate changes in those assumptions, were as follows as of the end of the periods reported:

Originated MSRs

Purchased MSRs

March 31,

December 31,

March 31,

December 31,

(In thousands)

2024

2023

2024

2023

Fair value of servicing rights

38,660

39,757

76,304

78,352

Weighted average life (in years)

6.5

6.6

6.7

6.8

Weighted average prepayment speed (annual rate)

5.7

5.9

6.8

7.0

Impact on fair value of 10% adverse change

(721)

(696)

(1,410)

(1,440)

Impact on fair value of 20% adverse change

(1,416)

(1,365)

(2,767)

(2,827)

Weighted average discount rate (annual rate)

11.3

11.3

10.9

10.9

Impact on fair value of 10% adverse change

(1,438)

(1,387)

(2,783)

(2,871)

Impact on fair value of 20% adverse change

(2,782)

(2,686)

(5,391)

(5,562)

The sensitivity analyses presented in the table above for servicing rights are hypothetical and should be used with caution. As the

figures indicate, changes in fair value based on a 10 and 20 percent variation in assumptions generally cannot be extrapolated

because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the sensitivity tables

included herein, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without

changing any other assumption. In reality, changes in one factor may result in changes in another (for example, increases in market

interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

At March 31, 2024, the Corporation serviced $

544

million in residential mortgage loans with credit recourse to the Corporation

(December 31, 2023 - $

561

million). Also refer to Note 19 to the Consolidated Financial Statements for information on changes in

the Corporation’s liability of estimated losses related to loans serviced with credit recourse.

Under the GNMA securitizations, the Corporation, as servicer, has the right to repurchase (but not the obligation), at its option and

without GNMA’s prior authorization, any loan that is collateral for a GNMA guaranteed mortgage-backed security when certain

delinquency criteria are met. At the time that individual loans meet GNMA’s specified delinquency criteria and are eligible for

repurchase, the Corporation is deemed to have regained effective control over these loans if the Corporation was the pool issuer. At

March 31, 2024, the Corporation had recorded $

10

million in mortgage loans on its Consolidated Statements of Financial Condition

related to this buy-back option program (December 31, 2023 - $

11

million). Loans in our serviced GNMA portfolio benefit from

payment forbearance programs but continue to reflect the contractual delinquency until the borrower repays deferred payments or

completes a payment deferral modification or other borrower assistance alternative. As long as the Corporation continues to service

the loans that continue to be collateral in a GNMA guaranteed mortgage-backed security, the MSR is recognized by the

Corporation.

During the quarter ended March 31, 2024, the Corporation repurchased approximately $

10

million (March 31, 2023 - $

18

million) of

mortgage loans from its GNMA servicing portfolio. The determination to repurchase these loans was based on the economic

benefits of the transaction, which results in a reduction of the servicing costs for these severely delinquent loans, mainly related to

principal and interest advances. The risk associated with the loans is reduced due to their guaranteed nature. The Corporation may

place these loans under modification programs offered by FHA, VA or United States Department of Agriculture (USDA) or other loss

mitigation programs offered by the Corporation, and once brought back to current status, these may be either retained in portfolio or

re-sold in the secondary market.

Note 11 – Other real estate owned

The following tables present the activity related to Other Real Estate Owned (“OREO”), for the quarters ended March 31, 2024 and

For the quarter ended March 31, 2024

OREO

OREO

(In thousands)

Commercial/Construction

Mortgage

Total

Balance at beginning of period

11,189

69,227

80,416

Write-downs in value

(25)

(284)

(309)

Additions

5,344

12,636

17,980

Sales

(546)

(16,934)

(17,480)

Other adjustments

(65)

(65)

Ending balance

15,962

64,580

80,542

For the quarter ended March 31, 2023

OREO

OREO

(In thousands)

Commercial/Construction

Mortgage

Total

Balance at beginning of period

12,500

76,626

89,126

Write-downs in value

(194)

(751)

(945)

Additions

1,023

18,675

19,698

Sales

(941)

(15,099)

(16,040)

Other adjustments

(118)

(118)

Ending balance

12,388

79,333

91,721

Note 12 − Other assets

The caption of other assets in the consolidated statements of financial condition consists of the following major categories:

(In thousands)

March 31, 2024

December 31, 2023

Net deferred tax assets (net of valuation allowance)

1,001,093

1,009,068

Investments under the equity method

244,165

236,485

Prepaid taxes

32,146

39,052

Other prepaid expenses

26,332

29,338

Capitalized software costs

102,716

93,404

Derivative assets

24,040

24,419

Trades receivable from brokers and counterparties

23,477

23,102

Receivables from investments maturities

301,000

176,000

Principal, interest and escrow servicing advances

47,594

48,557

Guaranteed mortgage loan claims receivable

27,722

29,648

Operating ROU assets (Note 27)

110,712

116,106

Finance ROU assets (Note 27)

20,344

21,093

Assets for pension benefit

24,406

23,404

Others

135,155

144,888

Total other assets

2,120,902

2,014,564

The Corporation regularly incurs in capitalizable costs associated with software development or licensing which are recorded within

the Other Assets line item in the accompanying Consolidated Statements of Financial Condition. In addition, the Corporation incurs

costs associated with hosting arrangements that are service contracts that are also recorded within Other Assets. The hosting

arrangements can include capitalizable implementation costs that are amortized during the term of the hosting arrangement.

The

following table summarizes the composition of acquired or developed software costs as well as costs related to hosting

arrangements:

Gross Carrying

Accumulated

Net

Carrying

(In thousands)

Amount

Amortization

Value

March 31, 2024

Software development costs

75,489

23,983

51,506

Software license costs

47,950

23,658

24,292

Cloud computing arrangements

37,240

10,322

26,918

Total Capitalized software costs [1] [2]

160,679

57,963

102,716

December 31, 2023

Software development costs

76,497

22,086

54,411

Software license costs

42,868

18,048

24,820

Cloud computing arrangements

23,623

9,450

14,173

Total Capitalized software costs [1] [2]

142,988

49,584

93,404

[1]

Software intangible assets are presented as part of Other Assets in the Consolidated Statements of Financial Condition.

[2]

The tables above excludes assets that have been fully amortized.

Total amortization expense for all capitalized software and hosting arrangement cost, reflected as part of technology and software

expenses in the consolidated statement of operations, is as follows:

Quarters ended March 31,

(In thousands)

2024

2023

Software development and license costs

17,701

14,991

Cloud computing arrangements

872

984

Total amortization expense

18,573

15,975

Note 13 – Goodwill and other intangible assets

Goodwill

There were

no

changes in the carrying amount of goodwill for the quarters ended March 31, 2024 and 2023.

The following tables present the gross amount of goodwill and accumulated impairment losses by reportable segments:

March 31, 2024

Balance at

Balance at

March 31,

Accumulated

March 31,

2024

impairment

2024

(In thousands)

(gross amounts)

losses

(net amounts)

Banco Popular de Puerto Rico

440,184

3,801

436,383

Popular U.S.

564,456

196,411

368,045

Total Popular, Inc.

1,004,640

200,212

804,428

December 31, 2023

Balance at

Balance at

December 31,

Accumulated

December 31,

2023

impairment

2023

(In thousands)

(gross amounts)

losses

(net amounts)

Banco Popular de Puerto Rico

440,184

3,801

436,383

Popular U.S.

564,456

196,411

368,045

Total Popular, Inc.

1,004,640

200,212

804,428

Other Intangible Assets

The following table reflects the components of other intangible assets subject to amortization:

Gross Carrying

Accumulated

Net

Carrying

(In thousands)

Amount

Amortization

Value

March 31, 2024

Core deposits

12,810

11,636

1,174

Other customer relationships

14,286

7,251

7,035

Total other intangible assets

27,096

18,887

8,209

December 31, 2023

Core deposits

12,810

11,315

1,495

Other customer relationships

14,286

6,777

7,509

Total other intangible assets

27,096

18,092

9,004

During the quarter ended March 31, 2024, the Corporation recognized $

0.8

million in amortization expense related to intangible

assets with definite useful lives (March 31, 2023 - $

0.8

million).

The following table presents the estimated amortization of the intangible assets with definite useful lives for each of the following

periods:

(In thousands)

Remaining 2024

2,143

Year 2025

1,750

Year 2026

1,440

Year 2027

959

Year 2028

959

Later years

Note 14 – Deposits

Total deposits as of the end of the periods presented consisted of:

(In thousands)

March 31, 2024

December 31, 2023

Savings accounts

14,797,976

14,602,411

NOW, money market and other interest bearing demand deposits

24,763,686

25,094,316

Total savings, NOW, money market and other interest bearing demand deposits

39,561,662

39,696,727

Certificates of deposit:

Under $250,000

5,420,905

5,443,062

$250,000 and over

3,334,167

3,058,830

Total certificates of deposit

8,755,072

8,501,892

Total interest bearing deposits

48,316,734

48,198,619

Non- interest bearing deposits

15,492,050

15,419,624

Total deposits

63,808,784

63,618,243

A summary of certificates of deposits by maturity at March 31, 2024 follows:

(In thousands)

2024

4,649,279

2025

1,915,324

2026

838,041

2027

470,438

2028

625,629

2029 and thereafter

256,361

Total certificates of deposit

8,755,072

At March 31, 2024, the Corporation had brokered deposits amounting to $

1.6

billion (December 31, 2023 - $

1.7

billion).

The aggregate amount of overdrafts in demand deposit accounts that were reclassified to loans was $

12.2

million at March 31, 2024

(December 31, 2023 - $

9.1

million).

At March 31, 2024, Puerto Rico public sector deposits amounted to $

18.0

billion. Puerto Rico public sector deposits are interest

bearing accounts. These public sector deposits are indexed to short-term market rates and fluctuate in cost with changes in those

rates, in accordance with contractual terms. Public deposit balances are difficult to predict. For example, the receipt by the Puerto

Rico Government of hurricane recovery related Federal assistance and seasonal tax collections could increase public deposit

balances at BPPR. On the other hand, the amount and timing of reductions in balances are likely to be impacted by, for example,

the speed at which federal assistance is distributed, the financial condition, liquidity and cash management practices of the Puerto

Rico Government and its instrumentalities and the implementation of fiscal and debt adjustment plans approved pursuant to

PROMESA or other actions mandated by the Fiscal Oversight and Management Board for Puerto Rico (the “Oversight Board”).

Generally, these deposits require that the bank pledge high credit quality securities as collateral, therefore, liquidity risk arising from

public sector deposit outflows are lower.

Note 15 – Borrowings

Assets sold under agreements to repurchase

Assets sold under agreements to repurchase amounted to $

66

million at March 31, 2024 and $

91

million at December 31, 2023.

The Corporation’s repurchase transactions are overcollateralized with the securities detailed in the table below. The Corporation’s

repurchase agreements have a right of set-off with the respective counterparty under the supplemental terms of the master

repurchase agreements. In an event of default, each party has a right of set-off against the other party for amounts owed in the

related agreement and any other amount or obligation owed in respect of any other agreement or transaction between them.

Pursuant to the Corporation’s accounting policy, the repurchase agreements are not offset with other repurchase agreements held

with the same counterparty.

The following table presents information related to the Corporation’s repurchase transactions accounted for as secured borrowings

that are collateralized with debt securities available-for-sale, debt securities held-to-maturity, other assets held-for-trading purposes

or which have been obtained under agreements to resell. It is the Corporation’s policy to maintain effective control over assets sold

under agreements to repurchase; accordingly, such securities continue to be carried on the Consolidated Statements of Financial

Condition.

Repurchase agreements accounted for as secured borrowings

March 31, 2024

December 31, 2023

Repurchase

Repurchase

(In thousands)

liability

liability

U.S. Treasury securities

Within 30 days

30,581

16,931

After 30 to 90 days

18,504

18,369

After 90 days

8,292

Total U.S. Treasury securities

49,085

43,592

Mortgage-backed securities

Within 30 days

11,550

27,171

After 30 to 90 days

5,228

20,394

Total mortgage-backed securities

16,778

47,565

Collateralized mortgage obligations

Within 30 days

227

227

Total collateralized mortgage obligations

227

227

Total

66,090

91,384

Repurchase agreements in this portfolio are generally short-term, often overnight. As such our risk is very limited. We manage the

liquidity risks arising from secured funding by sourcing funding globally from a diverse group of counterparties, providing a range of

securities collateral and pursuing longer durations, when appropriate.

Other short-term borrowings

There were

no

other short-term borrowings outstanding at March 31, 2024 and December 31, 2023.

Notes Payable

The following table presents the composition of notes payable at March 31, 2024 and December 31, 2023.

(In thousands)

March 31, 2024

December 31, 2023

Advances with the FHLB with maturities ranging from

2024

through

2029

paying interest at

monthly

fixed rates ranging from

0.44

% to

5.26

373,665

394,665

Unsecured senior debt securities maturing on

2028

paying interest

semiannually

at a fixed rate of

7.25

%, net of debt issuance costs of $

5,715

[1]

394,285

393,937

Junior subordinated deferrable interest debentures (related to trust preferred securities) maturing on

2034

with fixed interest rates ranging from

6.125

% to

6.564

%, net of debt issuance costs of $

281

198,353

198,346

Total notes payable

966,303

986,948

Note: Refer to the 2023 Form 10-K for rates information at December 31, 2023.

[1] On March 13, 2023, the Corporation issued $

400

million aggregate principal amount of

7.25

% Senior Notes due

2028

(the “2028 Notes”) in an

underwritten public offering. The Corporation used a portion of the net proceeds of the 2028 Notes offering to redeem, on August 14, 2023, the

outstanding $

300

million aggregate principal amount of its

6.125

% Senior Notes which were due on September

2023

. The redemption price was

equal to

100

% of the principal amount plus accrued and unpaid interest through the redemption date.

A breakdown of borrowings by contractual maturities at March 31, 2024 is included in the table below.

Assets sold under

(In thousands)

agreements to

repurchase

Notes payable

Total

2024

66,090

70,943

137,033

2025

144,214

144,214

2026

74,500

74,500

2028

438,636

438,636

Later years

238,010

238,010

Total borrowings

66,090

966,303

1,032,393

At March 31, 2024 and December 31, 2023, the Corporation had FHLB borrowing facilities whereby the Corporation could borrow

up to $

4.4

billion and $

4.2

billion, respectively, of which $

0.4

billion were used. In addition, at each of March 31, 2024 and December

31, 2023, the Corporation had placed $

0.3

billion of the available FHLB credit facility as collateral for municipal letters of credit to

secure deposits. The FHLB borrowing facilities are collateralized with securities and loans held-in-portfolio, and do not have

restrictive covenants or callable features.

Also, at March 31, 2024, the Corporation had borrowing facilities at the discount window of the Federal Reserve Bank of New York

amounting to $

4.6

billion (December 31, 2023 - $

4.4

billion), which remained unused at March 31, 2024 and December 31, 2023.

The facilities are a collateralized source of credit that is highly reliable even under difficult market conditions.

Note 16 − Other liabilities

The caption of other liabilities in the consolidated statements of financial condition consists of the following major categories:

(In thousands)

March 31, 2024

December 31, 2023

Accrued expenses

361,839

337,695

Accrued interest payable

48,302

59,102

Accounts payable

92,715

89,339

Dividends payable

44,869

44,741

Trades payable

45

31

Liability for GNMA loans sold with an option to repurchase

9,538

10,960

Reserves for loan indemnifications

4,542

4,408

Reserve for operational losses

25,209

27,994

Operating lease liabilities (Note 27)

121,333

126,946

Finance lease liabilities (Note 27)

24,897

25,778

Pension benefit obligation

6,696

6,772

Postretirement benefit obligation

115,421

117,045

Others

63,042

63,816

Total other liabilities

918,448

914,627

Note 17 – Stockholders’ equity

As of March 31, 2024, stockholders’ equity totaled $

5.2

billion. During the quarter ended March 31, 2024, the Corporation declared

cash dividends of $

0.62

(2023 - $

0.55

) per common share amounting to $

44.8

million (2023 - $

39.6

million). The quarterly dividend

declared to stockholders of record as of the close of business on

March 14, 2024

was paid on

April 1, 2024

. On May 9, 2024, the

Corporation’s Board of Directors approved a quarterly cash dividend of $

0.62

per share on its outstanding common stock, payable

on

July 1, 2024

to stockholders of record at the close of business on

May 30, 2024

Note 18 – Other comprehensive income (loss)

The following table presents changes in accumulated other comprehensive income (loss) by component for the quarters ended

March 31, 2024 and, 2023.

Changes in Accumulated Other Comprehensive Income (Loss) by Component [1]

Quarters ended March 31,

(In thousands)

2024

2023

Foreign currency translation

Beginning Balance

(64,528)

(56,735)

Other comprehensive loss

(4,020)

(5,245)

Net change

(4,020)

(5,245)

Ending balance

(68,548)

(61,980)

Adjustment of pension and

postretirement benefit plans

Beginning Balance

(117,894)

(144,335)

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other comprehensive loss for

amortization of net losses

2,262

3,008

Net change

2,262

3,008

Ending balance

(115,632)

(141,327)

Unrealized net holding losses on

debt securities

Beginning Balance

(1,713,109)

(2,323,903)

Other comprehensive income (loss) before reclassifications

(71,104)

191,752

Amounts reclassified from accumulated other comprehensive loss for

amortization of net unrealized losses of debt securities transferred from

available-for-sale to held-to-maturity

35,207

33,633

Net change

(35,897)

225,385

Ending balance

(1,749,006)

(2,098,518)

Unrealized net gains on cash

flow hedges

Beginning Balance

45

Other comprehensive (loss) income before reclassifications

(19)

Amounts reclassified from accumulated other comprehensive gains

(26)

Net change

(45)

Ending balance

Total

(1,933,186)

(2,301,825)

[1] All amounts presented are net of tax.

The following table presents the amounts reclassified out of each component of accumulated other comprehensive loss during the

quarters ended March 31, 2024 and 2023.

Reclassifications Out of Accumulated Other Comprehensive Loss

Affected Line Item in the

Quarters ended March 31,

(In thousands)

Consolidated Statements of Operations

2024

2023

Adjustment of pension and postretirement benefit plans

Amortization of net losses

Other operating expenses

(3,618)

(4,813)

Total before tax

(3,618)

(4,813)

Income tax benefit

1,356

1,805

Total net of tax

(2,262)

(3,008)

Unrealized holding losses on debts securities

Amortization of unrealized net losses of debt

securities transferred to held-to-maturity

Investment securities

(44,009)

(42,040)

Total before tax

(44,009)

(42,040)

Income tax benefit

8,802

8,407

Total net of tax

(35,207)

(33,633)

Unrealized net gains on cash flow hedges

Forward contracts

Mortgage banking activities

41

Total before tax

41

Income tax expense

(15)

Total net of tax

26

Total reclassification adjustments, net of tax

(37,469)

(36,615)

Note 19 – Guarantees

At March 31, 2024, the Corporation had a liability of $

1

million (December 31, 2023 - $

1

million), which represents the unamortized

balance of the obligations undertaken in issuing the guarantees under the standby letters of credit. Management does not anticipate

any material losses related to these instruments.

From time to time, the Corporation securitized mortgage loans into guaranteed mortgage-backed securities subject to limited, and in

certain instances, lifetime credit recourse on the loans that serve as collateral for the mortgage-backed securities. The Corporation

has not sold any mortgage loans subject to credit recourse since 2009. At March 31, 2024, the Corporation serviced $

544

million

(December 31, 2023 - $

561

million) in residential mortgage loans subject to credit recourse provisions, principally loans associated

with FNMA and FHLMC residential mortgage loan securitization programs. In the event of any customer default, pursuant to the

credit recourse provided, the Corporation is required to repurchase the loan or reimburse the third party investor for the incurred

loss. The maximum potential amount of future payments that the Corporation would be required to make under the recourse

arrangements in the event of nonperformance by the borrowers is equivalent to the total outstanding balance of the residential

mortgage loans serviced with recourse and interest, if applicable. During the quarter ended March 31, 2024, the Corporation

repurchased approximately $

0.6

million of unpaid principal balance in mortgage loans subject to the credit recourse provisions

(March 31, 2023

1

million). In the event of nonperformance by the borrower, the Corporation has rights to the underlying collateral

securing the mortgage loan. The Corporation suffers ultimate losses on these loans when the proceeds from a foreclosure sale of

the property underlying a defaulted mortgage loan are less than the outstanding principal balance of the loan plus any uncollected

interest advanced and the costs of holding and disposing the related property. At March 31, 2024, the Corporation’s liability

established to cover the estimated credit loss exposure related to loans sold or serviced with credit recourse amounted to $

4

million

(December 31, 2023 - $

4

million).

The following table shows the changes in the Corporation’s liability of estimated losses related to loans serviced with credit recourse

provisions during the quarters ended March 31, 2024 and 2023.

Quarters ended

March 31,

(In thousands)

2024

2023

Balance as of beginning of period

4,211

6,897

Provision (benefit) for recourse liability

244

(654)

Net charge-offs

(102)

(379)

Balance as of end of period

4,353

5,864

From time to time, the Corporation sells loans and agrees to indemnify the purchaser for credit losses or any breach of certain

representations and warranties made in connection with the sale.

Servicing agreements relating to the mortgage-backed securities programs of FNMA, FHLMC and GNMA, and to mortgage loans

sold or serviced to certain other investors, including FHLMC, require the Corporation to advance funds to make scheduled payments

of principal, interest, taxes and insurance, if such payments have not been received from the borrowers. At March 31, 2024, the

Corporation serviced $

9.7

billion in mortgage loans for third-parties, including the loans serviced with credit recourse (December 31,

2023 - $

9.9

billion). The Corporation generally recovers funds advanced pursuant to these arrangements from the mortgage owner,

from liquidation proceeds when the mortgage loan is foreclosed or, in the case of FHA/VA loans, under the applicable FHA and

VA

insurance and guarantees programs. However, in the meantime, the Corporation must absorb the cost of the funds it advances

during the time the advance is outstanding. The Corporation must also bear the costs of attempting to collect on delinquent and

defaulted mortgage loans. In addition, if a defaulted loan is not cured, the mortgage loan would be canceled as part of the

foreclosure proceedings and the Corporation would not receive any future servicing income with respect to that loan. At March 31,

2024, the outstanding balance of funds advanced by the Corporation under such mortgage loan servicing agreements was

approximately $

48

million (December 31, 2023 - $

49

million). To the extent the mortgage loans underlying the Corporation’s

servicing portfolio experience increased delinquencies, the Corporation would be required to dedicate additional cash resources to

comply with its obligation to advance funds as well as incur additional administrative costs related to increases in collection efforts.

Popular, Inc. Holding Company (“PIHC”) fully and unconditionally guarantees certain borrowing obligations issued by certain of its

100

% owned consolidated subsidiaries amounting to $

94

million at March 31, 2024 and December 31, 2023, respectively. In

addition, at both March 31, 2024 and December 31, 2023, PIHC fully and unconditionally guaranteed on a subordinated basis $ million of capital securities (trust preferred securities) issued by wholly-owned issuing trust entities to the extent set forth in the applicable guarantee agreement. Refer to Note 18 to the Consolidated Financial Statements in the 2023 Form 10-K for further information on the trust preferred securities.

Note 20 – Commitments and contingencies

Off-balance sheet risk

The Corporation is a party to financial instruments with off-balance sheet credit risk in the normal course of business to meet the

financial needs of its customers. These financial instruments include loan commitments, letters of credit and standby letters of credit.

These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the

consolidated statements of financial condition.

The Corporation’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for

commitments to extend credit, standby letters of credit and financial guarantees is represented by the contractual notional amounts

of those instruments. The Corporation uses the same credit policies in making these commitments and conditional obligations as it

does for those reflected on the consolidated statements of financial condition.

Financial instruments with off-balance sheet credit risk, whose contract amounts represent potential credit risk as of the end of the

periods presented were as follows:

(In thousands)

March 31, 2024

December 31, 2023

Commitments to extend credit:

Credit card lines

6,130,148

6,108,939

Commercial lines of credit

3,661,556

3,626,269

Construction lines of credit

1,212,596

1,287,679

Other consumer unused credit commitments

257,059

256,610

Commercial letters of credit

1,234

1,404

Standby letters of credit

115,808

80,889

Commitments to originate or fund mortgage loans

29,524

32,968

At March 31, 2024 and December 31, 2023, the Corporation maintained a reserve of approximately $

16.8

million and $

17

million,

respectively, for potential losses associated with unfunded loan commitments related to commercial and construction lines of credit.

Other commitments

At March 31, 2024 and December 31, 2023, the Corporation also maintained other non-credit commitments for approximately $

3.3

million, primarily for the acquisition of other investments.

Business concentration

Since the Corporation’s business activities are concentrated primarily in Puerto Rico, its results of operations and financial condition

are dependent upon the general trends of the Puerto Rico economy and, in particular, the residential and commercial real estate

markets. The concentration of the Corporation’s operations in Puerto Rico exposes it to greater risk than other banking companies

with a wider geographic base. Its asset and revenue composition by geographical area is presented in Note 32 to the Consolidated

Financial Statements.

Puerto Rico has faced significant fiscal and economic challenges for over a decade. In response to such challenges, the U.S.

Congress enacted the Puerto Rico Oversight Management and Economic Stability Act (“PROMESA”) in 2016, which, among other

things, established the Oversight Board and a framework for the restructuring of the debts of the Commonwealth, its

instrumentalities and municipalities. The Commonwealth and several of its instrumentalities have commenced debt restructuring

proceedings under PROMESA. As of the date of this report, while municipalities have been designated as covered entities under

PROMESA, no municipality has commenced, or has been authorized by the Oversight Board to commence, any such debt

restructuring proceeding under PROMESA.

At March 31, 2024, the Corporation’s direct exposure to the Puerto Rico government and its instrumentalities and municipalities

totaled $

388

million, of which $

363

million were outstanding ($

362

million and $

333

million at December 31, 2023). Of the amount

outstanding, $

348

million consists of loans and $

16

million are securities ($

314

million and $

19

million at December 31, 2023).

Substantially all of the amount outstanding at March 31, 2024 and December 31, 2023 were obligations from various Puerto Rico

municipalities. In most cases, these were “general obligations” of a municipality, to which the applicable municipality has pledged its

good faith, credit and unlimited taxing power, or “special obligations” of a municipality, to which the applicable municipality has

pledged other revenues. At March 31, 2024,

78

% of the Corporation’s exposure to municipal loans and securities was concentrated

in the municipalities of San Juan, Guaynabo, Carolina and Caguas.

The following table details the loans and investments representing the Corporation’s direct exposure to the Puerto Rico government

according to their maturities as of March 31, 2024:

(In thousands)

Investment

Portfolio

Loans

Total Outstanding

Total Exposure

Central Government

After 1 to 5 years

3

3

3

After 5 to 10 years

1

1

1

After 10 years

42

42

42

Total Central Government

46

46

46

Municipalities

Within 1 year

3,055

13,218

16,273

41,273

After 1 to 5 years

11,620

141,519

153,139

153,139

After 5 to 10 years

845

145,965

146,810

146,810

After 10 years

46,823

46,823

46,823

Total Municipalities

15,520

347,525

363,045

388,045

Total Direct Government Exposure

15,566

347,525

363,091

388,091

In addition, at March 31, 2024, the Corporation had $

233

million in loans insured or securities issued by Puerto Rico governmental

entities but for which the principal source of repayment is non-governmental ($

238

million at December 31, 2023). These included

187

million in residential mortgage loans insured by the Puerto Rico Housing Finance Authority (“HFA”), a governmental

instrumentality that has been designated as a covered entity under PROMESA (December 31, 2023 - $

191

million). These

mortgage loans are secured by first mortgages on Puerto Rico residential properties and the HFA insurance covers losses in the

event of a borrower default and upon the satisfaction of certain other conditions. The Corporation also had at March 31, 2024, $

39

million in bonds issued by HFA which are secured by second mortgage loans on Puerto Rico residential properties, and for which

HFA also provides insurance to cover losses in the event of a borrower default and upon the satisfaction of certain other conditions

(December 31, 2023 - $

40

million). In the event that the mortgage loans insured by HFA and held by the Corporation directly or

those serving as collateral for the HFA bonds default and the collateral is insufficient to satisfy the outstanding balance of these

loans, HFA’s ability to honor its insurance will depend, among other factors, on the financial condition of HFA at the time such

obligations become due and payable. The Corporation does not consider the government guarantee when estimating the credit

losses associated with this portfolio. Although the Governor is currently authorized by local legislation to impose a temporary

moratorium on the financial obligations of the HFA, a moratorium on such obligations has not been imposed as of the date hereof.

BPPR’s commercial loan portfolio also includes loans to private borrowers who are service providers, lessors, suppliers or have

other relationships with the government. These borrowers could be negatively affected by the Commonwealth’s fiscal crisis and the

ongoing Title III proceedings under PROMESA. Similarly, BPPR’s mortgage and consumer loan portfolios include loans to

government employees and retirees, which could also be negatively affected by fiscal measures such as employee layoffs or

furloughs or reductions in pension benefits.

In addition, $

1.9

billion of residential mortgages and $

92.4

million commercial loans were insured or guaranteed by the U.S.

Government or its agencies at March 31, 2024 (compared to $

1.9

billion and $

89.2

million, respectively, at December 31, 2023).

The Corporation also had U.S. Treasury and obligations from the U.S. Government, its agencies or government sponsored entities

within the portfolio of available-for-sale and held-to-maturity securities as described in Note 5 and 6 to the Consolidated Financial

Statements.

At March 31, 2024, the Corporation had operations in the United States Virgin Islands (the “USVI”) and has approximately $

28

million in direct exposure to USVI government entities (December 31, 2023 - $

28

million). The USVI has been experiencing a

number of fiscal and economic challenges that could adversely affect the ability of its public corporations and instrumentalities to

service their outstanding debt obligations.

At March 31, 2024, the Corporation had operations in the British Virgin Islands (“BVI”), which islands were negatively affected by the

COVID-19 pandemic, particularly due to a reduction in the tourism activity which accounts for a significant portion of their economy.

Although the Corporation has no significant exposure to a single borrower in the BVI, at March 31, 2024, it had a loan portfolio amounting to approximately $

208

million comprised of various retail and commercial clients, compared to a loan portfolio of $

205

million at December 31, 2023.

FDIC Special Assessment

On November 16, 2023, the Federal Deposit Insurance Corporation (“FDIC”) approved a final rule that imposes a special

assessment (the “FDIC Special Assessment”) to recover the losses to the deposit insurance fund resulting from the FDIC’s use, in

March 2023, of the systemic risk exception to the least-cost resolution test under the Federal Deposit Insurance Act in connection

with the receiverships of several failed banks. In connection with this assessment, the Corporation recorded an expense of $

71.4

million, $

45.3

million net of tax, in the fourth quarter of 2023, representing the full amount of the assessment.

During the quarter ended March 31, 2024, the Corporation recorded an additional expense of $

14.3

million, $

9.1

million net of tax, to

reflect the FDIC's higher loss estimate which increased from $

16.3

billion, when approved, to $

20.4

billion during the quarter. The

special assessment amount and collection period may change as the estimated loss is periodically adjusted or if the total amount

collected varies.

Legal Proceedings

The nature of Popular’s business ordinarily generates claims, litigation, investigations, and legal and administrative cases and

proceedings (collectively, “Legal Proceedings”). When the Corporation determines that it has meritorious defenses to the claims

asserted, it vigorously defends itself. The Corporation will consider the settlement of cases (including cases where it has meritorious

defenses) when, in management’s judgment, it is in the best interest of the Corporation and its stockholders to do so. On at least a

quarterly basis, Popular assesses its liabilities and contingencies relating to outstanding Legal Proceedings utilizing the most current

information available. For matters where it is probable that the Corporation will incur a material loss and the amount can be

reasonably estimated, the Corporation establishes an accrual for the loss. Once established, the accrual is adjusted on at least a

quarterly basis to reflect any relevant developments, as appropriate. For matters where a material loss is not probable, or the

amount of the loss cannot be reasonably estimated, no accrual is established.

In certain cases, exposure to loss exists in excess of any accrual to the extent such loss is reasonably possible, but not probable.

Management believes and estimates that the range of reasonably possible losses (with respect to those matters where such limits

may be determined, in excess of amounts accrued) for current Legal Proceedings ranged from $

0

to approximately $

15.8

million as

of March 31, 2024. In certain cases, management cannot reasonably estimate the possible loss at this time. Any estimate involves

significant judgment, given the varying stages of the Legal Proceedings (including the fact that many of them are currently in

preliminary stages), the existence of multiple defendants in several of the current Legal Proceedings whose share of liability has yet

to be determined, the numerous unresolved issues in many of the Legal Proceedings, and the inherent uncertainty of the various

potential outcomes of such Legal Proceedings. Accordingly, management’s estimate will change from time-to-time, and actual

losses may be more or less than the current estimate.

While the outcome of Legal Proceedings is inherently uncertain, based on information currently available, advice of counsel, and

available insurance coverage, management believes that the amount it has already accrued is adequate and any incremental

liability arising from the Legal Proceedings in matters in which a loss amount can be reasonably estimated will not have a material

adverse effect on the Corporation’s consolidated financial position. However, in the event of unexpected future developments, it is

possible that the ultimate resolution of these matters in a reporting period, if unfavorable, could have a material adverse effect on

the Corporation’s consolidated financial position for that period.

Set forth below is a description of the Corporation’s significant Legal Proceedings.

Insufficient Funds and Overdraft Fees Class Actions

Popular, Inc. was named as a defendant on a putative class action complaint captioned Golden v. Popular, Inc. filed in March 2020

before the U.S. District Court for the Southern District of New York, seeking damages, restitution and injunctive relief. Plaintiff

alleged breach of contract, violation of the covenant of good faith and fair dealing, unjust enrichment and violation of New York

consumer protection law due to Popular’s purported practice of charging overdraft fees (“OD Fees”) on transactions that, under plaintiffs’ theory, do not overdraw the account. Plaintiff described Popular’s purported practice of charging OD Fees as “Authorize

Positive, Purportedly Settle Negative” (“APPSN”) transactions and alleged that Popular assesses OD Fees over authorized

transactions for which sufficient funds are held for settlement. In August 2020, Popular filed a Motion to Dismiss on several

grounds, including failure to state a claim against Popular, Inc. and improper venue. In October 2020, Plaintiff filed a Notice of

Voluntary Dismissal before the U.S. District Court for the Southern District of New York and, simultaneously, filed an identical

complaint in the U.S. District Court for the District of the Virgin Islands against Popular, Inc., Popular Bank and Banco Popular de

Puerto Rico (“BPPR”). In November 2020, Plaintiff filed a Notice of Voluntary Dismissal against Popular, Inc. and Popular Bank

following a Motion to Dismiss filed on behalf of such entities, which argued failure to state a claim and lack of minimum contacts of

such parties with the U.S.V.I. district court jurisdiction. BPPR, the only defendant remaining in the case, was served with process in

November 2020 and filed a Motion to Dismiss in January 2021.

In October 2022, the parties reached a settlement in principle on a class-wide basis subject to final court approval. In January 2023,

the parties filed before the Court a motion for preliminary approval of the settlement agreement and, on March 31, 2023, the Court

issued an order granting preliminary approval of the settlement agreement. The Court scheduled the final approval hearing for

September 8, 2023.

On September 8, 2023, the Court held a hearing to consider the final approval of the class settlement agreement, and, on

September 29, 2023, the Court issued an Opinion and Order granting final approval to the settlement agreement. On December 19,

2023, the Court issued an Order staying all deadlines in the settlement agreement regarding payment of benefit until further notice

after the parties informed the Court that the settlement administrator had mistakenly failed to send the settlement notice to

approximately 3,000 class members. On February 20, 2024, the parties filed a Joint Motion for Supplemental Notice that was

approved by the Court on February 20, 2024. The Court scheduled a supplemental fairness hearing for July 8, 2024.

On January 31, 2022, Popular was also named as a defendant on a putative class action complaint captioned Lipsett v. Popular,

Inc. d/b/a Banco Popular, filed before the U.S. District Court for the Southern District of New York, seeking damages, restitution and

injunctive relief. Similar to the claims set forth in the aforementioned Golden complaint, Plaintiff alleges breach of contract, including

violations of the covenant of good faith and fair dealing, as a result of Popular’s purported practice of charging OD Fees for APPSN

transactions. The complaint further alleged that Popular assesses OD Fees over authorized transactions for which sufficient funds

are held for settlement. Popular waived service of process and filed a Motion to Compel Arbitration. In response to Popular’s motion,

Plaintiff filed a Notice of Voluntary Dismissal in April 2022.

On May 13, 2022, Plaintiff in the Lipsett complaint filed a new complaint captioned Lipsett v. Banco Popular North America d/b/a

Popular Community Bank with the same allegations of his previous complaint against Popular. In September 2022, after serving

Plaintiff with a written notice of election to arbitrate the claims asserted in the complaint which went unanswered, Popular Bank

(“PB”) filed a new Motion to Compel Arbitration.

On December 9, 2022, the Court issued a Decision and Order denying PB’s Motion to Compel Arbitration. On December 20, 2022,

PB filed a Notice of Appeal with the United States Court of Appeals for the Second Circuit.

On January 10, 2024, the Court of Appeals entered judgment affirming the trial court’s decision denying PB’s Motion to Compel

Arbitration. After remand to the U.S. District Court, on March 19, 2024, the court issued an Order adjourning all dates and deadlines

including the initial pretrial conference after the parties informed that they have agreed to mediate the matter. During a mediation

hearing held on May 2, 2024, the parties reached a settlement in principle on a class-wide basis subject to final court approval.

Note 21 – Non-consolidated variable interest entities

The Corporation is involved with

three

statutory trusts which it created to issue trust preferred securities to the public. These trusts

are deemed to be variable interest entities (“VIEs”) since the equity investors at risk have no substantial decision-making rights. The

Corporation does not hold any variable interest in the trusts, and therefore, cannot be the trusts’ primary beneficiary. Furthermore,

the Corporation concluded that it did not hold a controlling financial interest in these trusts since the decisions of the trusts are

predetermined through the trust documents and the guarantee of the trust preferred securities is irrelevant since in substance the

sponsor is guaranteeing its own debt.

Also, the Corporation is involved with various special purpose entities mainly in guaranteed mortgage securitization transactions,

including GNMA and FNMA.

The Corporation has also engaged in securitization transactions with FHLMC, but considers its

exposure in the form of servicing fees and servicing advances not to be significant

at March 31, 2024

These special purpose

entities are deemed to be VIEs since they lack equity investments at risk. The Corporation’s continuing involvement in these

guaranteed loan securitizations includes owning certain beneficial interests in the form of securities as well as the servicing rights

retained. The Corporation is not required to provide additional financial support to any of the variable interest entities to which it has

transferred the financial assets. The mortgage-backed securities, to the extent retained, are classified in the Corporation’s

Consolidated Statements of Financial Condition as available-for-sale or trading securities. The Corporation concluded that,

essentially, these entities (FNMA and GNMA) control the design of their respective VIEs, dictate the quality and nature of the

collateral, require the underlying insurance, set the servicing standards via the servicing guides and can change them at will, and

can remove a primary servicer with cause, and without cause in the case of FNMA. Moreover, through their guarantee obligations,

agencies (FNMA and GNMA) have the obligation to absorb losses that could be potentially significant to the VIE.

The Corporation holds variable interests in these VIEs in the form of agency mortgage-backed securities and collateralized

mortgage obligations, including those securities originated by the Corporation and those acquired from third parties. Additionally, the

Corporation holds agency mortgage-backed securities and agency collateralized mortgage obligations issued by third party VIEs in

which it has no other form of continuing involvement. Refer to Note 23 to the Consolidated Financial Statements for additional

information on the debt securities outstanding at March 31, 2024 and December 31, 2023, which are classified as available-for-sale

and trading securities in the Corporation’s Consolidated Statements of Financial Condition. In addition, the Corporation holds

variable interests in the form of servicing fees, since it retains the right to service the transferred loans in those government-

sponsored special purpose entities (“SPEs”) and may also purchase the right to service loans in other government-sponsored SPEs

that were transferred to those SPEs by a third-party.

The following table presents the carrying amount and classification of the assets related to the Corporation’s variable interests in

non-consolidated VIEs and the maximum exposure to loss as a result of the Corporation’s involvement as servicer of GNMA and

FNMA loans at March 31, 2024 and December 31, 2023.

(In thousands)

March 31,2024

December 31, 2023

Assets

Servicing assets:

Mortgage servicing rights

90,254

92,999

Total servicing assets

90,254

92,999

Other assets:

Servicing advances

6,993

6,291

Total other assets

6,993

6,291

Total assets

97,247

99,290

Maximum exposure to loss

97,247

99,290

The size of the non-consolidated VIEs, in which the Corporation has a variable interest in the form of servicing fees, measured as

the total unpaid principal balance of the loans, amounted to $

7.0

billion at March 31, 2024 (December 31, 2023 - $

7.2

billion).

The Corporation determined that the maximum exposure to loss includes the fair value of the MSRs and the assumption that the

servicing advances at March 31, 2024 and December 31, 2023, will not be recovered. The agency debt securities are not included

as part of the maximum exposure to loss since they are guaranteed by the related agencies.

ASU 2009-17 requires that an ongoing primary beneficiary assessment should be made to determine whether the Corporation is the

primary beneficiary of any of the VIEs it is involved with. The conclusion on the assessment of these non-consolidated VIEs has not

changed since their initial evaluation. The Corporation concluded that it is still not the primary beneficiary of these VIEs, and

therefore, these VIEs are not required to be consolidated in the Corporation’s financial statements at March 31, 2024.

Note 22 – Related party transactions

Centro Financiero BHD, S.A.

At March 31, 2024, the Corporation had a

15.84

% equity interest in Centro Financiero BHD, S.A. (“BHD”), one of the largest banking

and financial services groups in the Dominican Republic. During the quarter ended March 31, 2024, the Corporation recorded $

7.3

million in equity pickup from its investment in BHD (March 31, 2023 - $

9.1

million), which had a carrying amount of $

233.2

million at

March 31, 2024 (December 31, 2023 - $

225.9

million). There were

no

dividends received by the Corporation from its investment in

BHD León during the quarters ended March 31, 2024 and 2023.

Investment Companies

The Corporation, through its subsidiary Popular Asset Management LLC (“PAM”), provides advisory services to several investment

companies registered under the Investment Company Act of 1940 in exchange for a fee. The Corporation, through its subsidiary

BPPR, also provides transfer agency services to these investment companies. These fees are calculated at an annual rate of the

average net assets of the investment company, as defined in each agreement. Due to its advisory role, the Corporation considers

these investment companies as related parties.

For the quarter ended March 31, 2024, administrative fees charged to these investment companies amounted to $

0.6

million (March

31, 2023 -

0.6

million) and waived fees amounted to $

0.2

million (March 31, 2023 - $

0.2

million), for a net fee of $

0.4

million (March

31, 2023 - $

0.4

million).

Note 23 – Fair value measurement

ASC Subtopic 820-10 “Fair Value Measurements and Disclosures” establishes a fair value hierarchy that prioritizes the inputs to

valuation techniques used to measure fair value into three levels in order to increase consistency and comparability in fair value

measurements and disclosures. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1

- Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to

access at the measurement date. Valuation on these instruments does not necessitate a significant degree of judgment

since valuations are based on quoted prices that are readily available in an active market.

Level 2

- Quoted prices other than those included in Level 1 that are observable either directly or indirectly. Level 2 inputs

include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or

liabilities in markets that are not active, or other inputs that are observable or that can be corroborated by observable

market data for substantially the full term of the financial instrument.

Level 3

• Inputs are unobservable and significant to the fair value measurement. Unobservable inputs reflect the

Corporation’s own judgements about assumptions that market participants would use in pricing the asset or liability.

The Corporation maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the

observable inputs be used when available. Fair value is based upon quoted market prices when available. If listed prices or quotes

are not available, the Corporation employs internally-developed models that primarily use market-based inputs including yield

curves, interest rates, volatilities, and credit curves, among others. Valuation adjustments are limited to those necessary to ensure

that the financial instrument’s fair value is adequately representative of the price that would be received or paid in the marketplace.

These adjustments include amounts that reflect counterparty credit quality, the Corporation’s credit standing, constraints on liquidity

and unobservable parameters that are applied consistently. There have been no changes in the Corporation’s methodologies used

to estimate the fair value of assets and liabilities from those disclosed in the 2023 Form 10-K.

The estimated fair value may be subjective in nature and may involve uncertainties and matters of significant judgment for certain

financial instruments. Changes in the underlying assumptions used in calculating fair value could significantly affect the results.

Fair Value on a Recurring and Nonrecurring Basis

The following fair value hierarchy tables present information about the Corporation’s assets and liabilities measured at fair value on

a recurring basis at March 31, 2024 and December 31, 2023:

At March 31, 2024

(In thousands)

Level 1

Level 2

Level 3

Measured at NAV

Total

RECURRING FAIR VALUE MEASUREMENTS

Assets

Debt securities available-for-sale:

U.S. Treasury securities

6,262,480

6,026,731

12,289,211

Collateralized mortgage obligations - federal

agencies

127,608

127,608

Mortgage-backed securities

5,597,993

607

5,598,600

Other

5

2,000

2,005

Total debt securities available-for-sale

6,262,480

11,752,337

2,607

18,017,424

Trading account debt securities, excluding

derivatives:

U.S. Treasury securities

8,316

8,316

Obligations of Puerto Rico, States and political

subdivisions

60

60

Collateralized mortgage obligations

90

90

Mortgage-backed securities

18,587

84

18,671

Other

166

166

Total trading account debt securities, excluding

derivatives

8,316

18,737

250

27,303

Equity securities

40,933

336

41,269

Mortgage servicing rights

114,964

114,964

Loans held-for-sale

5,352

5,352

Derivatives

24,045

24,045

Total assets measured at fair value on a

recurring basis

6,270,796

11,841,404

117,821

336

18,230,357

Liabilities

Derivatives

(21,784)

(21,784)

Total liabilities measured at fair value on a

recurring basis

(21,784)

(21,784)

At December 31, 2023

(In thousands)

Level 1

Level 2

Level 3

Measured at NAV

Total

RECURRING FAIR VALUE MEASUREMENTS

Assets

Debt securities available-for-sale:

U.S. Treasury securities

3,936,036

6,811,025

10,747,061

Collateralized mortgage obligations - federal

agencies

134,686

134,686

Mortgage-backed securities

5,844,180

606

5,844,786

Other

11

2,500

2,511

Total debt securities available-for-sale

3,936,036

12,789,902

3,106

16,729,044

Trading account debt securities, excluding

derivatives:

U.S. Treasury securities

16,859

16,859

Obligations of Puerto Rico, States and political

subdivisions

71

71

Collateralized mortgage obligations

93

5

98

Mortgage-backed securities

14,261

112

14,373

Other

167

167

Total trading account debt securities, excluding

derivatives

16,859

14,425

284

31,568

Equity securities

37,965

310

38,275

Mortgage servicing rights

118,109

118,109

Loans held-for-sale

3,239

3,239

Derivatives

24,419

24,419

Total assets measured at fair value on a

recurring basis

3,952,895

12,869,950

121,499

310

16,944,654

Liabilities

Derivatives

(21,103)

(21,103)

Total liabilities measured at fair value on a

recurring basis

(21,103)

(21,103)

Beginning in the first quarter of 2023, the Corporation has elected the fair value option for newly originated mortgage loans held-for-

sale. This election better aligns with the management of the portfolio from a business perspective.

Loans held-for-sale measured at fair value

Loans held-for-sale measured at fair value were priced based on secondary market prices. These loans are classified as Level 2.

The following tables summarize the difference between the aggregate fair value and the aggregate unpaid principal balance for

mortgage loans originated as held-for-sale measured at fair value as of March 31, 2024 and December 31, 2023.

(In thousands)

March 31, 2024

Aggregate Unpaid

Fair Value

Principal Balance

Difference

Loans held for sale

5,352

5,285

67

(In thousands)

December 31, 2023

Aggregate Unpaid

Fair Value

Principal Balance

Difference

Loans held for sale

3,239

3,202

37

No

loans held-for-sale were 90 or more days past due or on nonaccrual status as of March 31, 2024 and December 31, 2023.

For the quarter ended March 31, 2024, changes in the fair value of mortgage loans held-for-sale for which the Corporation elected

the fair value option, were not considered material.

The fair value information included in the following tables is not as of period end, but as of the date that the fair value measurement

was recorded during the quarters ended March 31, 2024 and 2023 and excludes nonrecurring fair value measurements of assets no

longer outstanding as of the reporting date.

Quarter ended March 31, 2024

(In thousands)

Level 1

Level 2

Level 3

Total

NONRECURRING FAIR VALUE MEASUREMENTS

Assets

Write-downs

Loans

[1]

110

110

(2,172)

Other real estate owned

[2]

1,416

1,416

(224)

Other foreclosed assets

[2]

105

105

(41)

Total assets measured at fair value on a nonrecurring basis

1,631

1,631

(2,437)

[1] Relates mainly to certain impaired collateral dependent loans. The impairment was measured based on the fair value of the collateral, which is

derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations. Costs to sell are

excluded from the reported fair value amount.

[2] Represents the fair value of foreclosed real estate and other collateral owned that were written down to their fair value. Costs to sell are

excluded from the reported fair value amount.

Quarter ended March 31, 2023

(In thousands)

Level 1

Level 2

Level 3

Total

NONRECURRING FAIR VALUE MEASUREMENTS

Assets

Write-downs

Loans

[1]

1,629

1,629

(3)

Other real estate owned

[2]

2,330

2,330

(628)

Other foreclosed assets

[2]

15

15

(4)

Total assets measured at fair value on a nonrecurring basis

3,974

3,974

(635)

[1] Relates mainly to certain impaired collateral dependent loans. The impairment was measured based on the fair value of the collateral, which is

derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations. Costs to sell are

excluded from the reported fair value amount.

[2] Represents the fair value of foreclosed real estate and other collateral owned that were written down to their fair value. Costs to sell are

excluded from the reported fair value amount.

The following tables present the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarters

ended March 31, 2024 and 2023.

Quarter ended March 31, 2024

MBS

Other

CMOs

MBS

Other

classified

securities

classified

classified

securities

as debt

classified as

as trading

as trading

classified

securities

debt securities

account

account

as trading

Mortgage

available-

available-

debt

debt

account debt

servicing

Total

(In thousands)

for-sale

for-sale

securities

securities

securities

rights

assets

Balance at December 31, 2023

606

2,500

5

112

167

118,109

121,499

Gains (losses) included in earnings

(500)

(1)

(3,439)

(3,940)

Gains (losses) included in OCI

1

1

Additions

294

294

Settlements

(5)

(28)

(33)

Balance at March 31, 2024

607

2,000

84

166

114,964

117,821

Changes in unrealized gains (losses) included

in earnings relating to assets still held at March

31, 2024

(500)

2

(1,202)

(1,700)

Quarter ended March 31, 2023

MBS

Other

Other

classified

securities

CMOs

MBS

securities

as debt

classified as

classified

classified

classified

securities

debt securities

as trading

as trading

as trading

Mortgage

available-

available-

account debt

account debt

account debt

servicing

Total

(In thousands)

for-sale

for-sale

securities

securities

securities

rights

assets

Balance at December 31, 2022

711

1,000

113

215

207

128,350

130,596

Gains (losses) included in earnings

(1)

(8)

(1,376)

(1,385)

Gains (losses) included in OCI

(6)

(6)

Additions

501

501

Settlements

(50)

(25)

(26)

(101)

Balance at March 31, 2023

655

1,000

88

188

199

127,475

129,605

Changes in unrealized gains (losses)

included in earnings relating to assets

still held at March 31, 2023

9

1,286

1,295

Gains and losses (realized and unrealized) included in earnings for the quarters ended March 31, 2024 and 2023 for Level 3 assets

and liabilities included in the previous tables are reported in the consolidated statements of operations as follows:

Quarter ended March 31, 2024

Quarter ended March 31, 2023

Changes in unrealized

Changes in unrealized

Total gains

gains (losses) relating to

Total gains

gains (losses) relating to

(losses) included

assets still held at

(losses) included

assets still held at

(In thousands)

in earnings

reporting date

in earnings

reporting date

Mortgage banking activities

(3,439)

(1,202)

(1,376)

1,286

Trading account (loss) profit

(1)

2

(9)

9

Provision for credit losses

(500)

(500)

Total

(3,940)

(1,700)

(1,385)

1,295

The following tables include quantitative information about significant unobservable inputs used to derive the fair value of Level 3

instruments, excluding those instruments for which the unobservable inputs were not developed by the Corporation such as prices

of prior transactions and/or unadjusted third-party pricing sources at March 31, 2024 and 2023.

Fair value at

March 31,

(In thousands)

2024

Valuation technique

Unobservable inputs

Weighted average (range) [1]

Other - trading

166

Discounted cash flow model

Weighted average life

2.3

years

Yield

12.0%

Prepayment speed

10.8%

Loans held-in-portfolio

110

[2]

External appraisal

Haircut applied on

external appraisals

10.0%

[1]

Weighted average of significant unobservable inputs used to develop Level 3 fair value measurements were calculated by relative fair value.

[2]

Loans held-in-portfolio in which haircuts were not applied to external appraisals were excluded from this table.

Fair value at

March 31,

(In thousands)

2023

Valuation technique

Unobservable inputs

Weighted average (range) [1]

CMO's - trading

88

Discounted cash flow model

Weighted average life

0.3

years (

0.1

0.5

years)

Yield

4.9

4.9

5.4

Prepayment speed

9.2

8.3

27.8

Other - trading

199

Discounted cash flow model

Weighted average life

2.5

years

Yield

12.0%

Prepayment speed

10.8%

Loans held-in-portfolio

1,560

[2]

External appraisal

Haircut applied on

external appraisals

35

.0%

[1]

Weighted average of significant unobservable inputs used to develop Level 3 fair value measurements were calculated by relative fair value.

[2]

Loans held-in-portfolio in which haircuts were not applied to external appraisals were excluded from this table.

Note 24 – Fair value of financial instruments

The fair value of financial instruments is the amount at which an asset or obligation could be exchanged in a current transaction

between willing parties, other than in a forced or liquidation sale. For those financial instruments with no quoted market prices

available, fair values have been estimated using present value calculations or other valuation techniques, as well as management’s

best judgment with respect to current economic conditions, including discount rates, estimates of future cash flows, and prepayment

assumptions. Many of these estimates involve various assumptions and may vary significantly from amounts that could be realized

in actual transactions.

The fair values reflected herein have been determined based on the prevailing rate environment at March 31, 2024 and December

31, 2023, as applicable. In different interest rate environments, fair value estimates can differ significantly, especially for certain fixed

rate financial instruments. In addition, the fair values presented do not attempt to estimate the value of the Corporation’s fee

generating businesses and anticipated future business activities, that is, they do not represent the Corporation’s value as a going

concern. There have been no changes in the Corporation’s valuation methodologies and inputs used to estimate the fair values for

each class of financial assets and liabilities not measured at fair value.

The following tables present the carrying amount and estimated fair values of financial instruments with their corresponding level in

the fair value hierarchy. The aggregate fair value amounts of the financial instruments disclosed do not represent management’s

estimate of the underlying value of the Corporation.

March 31, 2024

Carrying

Measured

(In thousands)

amount

Level 1

Level 2

Level 3

at NAV

Fair value

Financial Assets:

Cash and due from banks

320,486

320,486

320,486

Money market investments

5,928,578

5,920,785

7,793

5,928,578

Trading account debt securities, excluding derivatives

[1]

27,303

8,316

18,737

250

27,303

Debt securities available-for-sale

[1]

18,017,424

6,262,480

11,752,337

2,607

18,017,424

Debt securities held-to-maturity:

U.S. Treasury securities

8,013,952

7,894,800

7,894,800

Obligations of Puerto Rico, States and political

subdivisions

55,981

6,918

49,284

56,202

Collateralized mortgage obligation-federal agency

1,536

1,364

1,364

Securities in wholly owned statutory business trusts

5,960

5,960

5,960

Total debt securities held-to-maturity

8,077,429

7,909,042

49,284

7,958,326

Equity securities:

FHLB stock

48,604

48,604

48,604

FRB stock

99,920

99,920

99,920

Other investments

47,223

40,933

6,531

336

47,800

Total equity securities

195,747

189,457

6,531

336

196,324

Loans held-for-sale

5,352

5,532

5,532

Loans held-in-portfolio

34,379,194

33,249,195

33,249,195

Mortgage servicing rights

114,964

114,964

114,964

Derivatives

24,045

24,045

24,045

March 31, 2024

Carrying

Measured

(In thousands)

amount

Level 1

Level 2

Level 3

at NAV

Fair value

Financial Liabilities:

Deposits:

Demand deposits

55,053,712

55,053,712

55,053,712

Time deposits

8,755,072

8,430,548

8,430,548

Total deposits

63,808,784

63,484,260

63,484,260

Assets sold under agreements to repurchase

66,090

66,088

66,088

Notes payable:

FHLB advances

373,665

358,046

358,046

Unsecured senior debt securities

394,285

410,228

410,228

Junior subordinated deferrable interest debentures

(related to trust preferred securities)

198,353

187,383

187,383

Total notes payable

966,303

955,657

955,657

Derivatives

21,784

21,784

21,784

[1]

Refer to Note 23 to the Consolidated Financial Statements for the fair value by class of financial asset and its hierarchy level.

December 31, 2023

Carrying

Measured

(In thousands)

amount

Level 1

Level 2

Level 3

at NAV

Fair value

Financial Assets:

Cash and due from banks

420,462

420,462

420,462

Money market investments

6,998,871

6,991,758

7,113

6,998,871

Trading account debt securities, excluding derivatives

[1]

31,568

16,859

14,425

284

31,568

Debt securities available-for-sale

[1]

16,729,044

3,936,036

12,789,902

3,106

16,729,044

Debt securities held-to-maturity:

U.S. Treasury securities

8,121,411

8,092,339

8,092,339

Obligations of Puerto Rico, States and political

subdivisions

59,628

7,007

52,671

59,678

Collateralized mortgage obligation-federal agency

1,556

1,395

13

1,408

Securities in wholly owned statutory business trusts

5,960

5,960

5,960

Total debt securities held-to-maturity

8,188,555

8,106,701

52,684

8,159,385

Equity securities:

FHLB stock

49,549

49,549

49,549

FRB stock

98,948

98,948

98,948

Other investments

45,229

37,965

7,869

310

46,144

Total equity securities

193,726

186,462

7,869

310

194,641

Loans held-for-sale

4,301

4,328

4,328

Loans held-in-portfolio

34,335,630

33,376,255

33,376,255

Mortgage servicing rights

118,109

118,109

118,109

Derivatives

24,419

24,419

24,419

December 31, 2023

Carrying

Measured

(In thousands)

amount

Level 1

Level 2

Level 3

at NAV

Fair value

Financial Liabilities:

Deposits:

Demand deposits

55,116,351

55,116,351

55,116,351

Time deposits

8,501,892

8,154,823

8,154,823

Total deposits

63,618,243

63,271,174

63,271,174

Assets sold under agreements to repurchase

91,384

91,386

91,386

Notes payable:

FHLB advances

394,665

377,851

377,851

Unsecured senior debt securities

393,937

400,848

400,848

Junior subordinated deferrable interest debentures

(related to trust preferred securities)

198,346

180,076

180,076

Total notes payable

986,948

958,775

958,775

Derivatives

21,103

21,103

21,103

[1]

Refer to Note 23 to the Consolidated Financial Statements for the fair value by class of financial asset and its hierarchy level.

The notional amount of commitments to extend credit at March 31, 2024 and December 31, 2023 was $

11

billion and $

10

billion,

respectively, and represented the unused portion of credit facilities granted to customers. The notional amount of letters of credit at

March 31, 2024 and December 31, 2023 was $

117

million and $

82

million, respectively, and represented the contractual amount

that is required to be paid in the event of nonperformance. The fair value of commitments to extend credit and letters of credit, which

are based on the fees charged to enter into those agreements, are not material to Popular’s financial statements.

Note 25 – Net income per common share

The following table sets forth the computation of net income per common share (“EPS”), basic and diluted, for the quarters ended

March 31, 2024 and 2023

Quarters ended March 31,

(In thousands, except per share information)

2024

2023

Net income

103,283

158,979

Preferred stock dividends

(353)

(353)

Net income applicable to common stock

102,930

158,626

Average common shares outstanding

71,869,735

71,541,778

Average potential dilutive common shares

97,068

64,418

Average common shares outstanding - assuming dilution

71,966,803

71,606,196

Basic EPS

1.43

2.22

Diluted EPS

1.43

2.22

For the quarters ended March 31, 2024 and 2023, the Corporation calculated the impact of potential dilutive common shares under

the treasury stock method, consistent with the method used for the preparation of the financial statements for the year ended

December 31, 2023. For a discussion of the calculation under the treasury stock method, refer to Note 31 of the Consolidated

Financial Statements included in the 2023 Form 10-K.

Note 26 – Revenue from contracts with customers

The following table presents the Corporation’s revenue streams from contracts with customers by reportable segment for the

quarters ended March 31, 2024 and 2023

Quarters ended March 31,

(In thousands)

2024

2023

BPPR

Popular U.S.

BPPR

Popular U.S.

Service charges on deposit accounts

35,016

2,426

32,152

2,526

Other service fees:

Debit card fees

14,049

199

12,948

218

Insurance fees, excluding reinsurance

10,556

1,846

10,798

1,307

Credit card fees, excluding late fees and membership fees

35,800

458

36,174

579

Sale and administration of investment products

7,427

6,558

Trust fees

6,985

5,896

Total revenue from contracts with customers

[1]

109,833

4,929

104,526

4,630

[1] The amounts include intersegment transactions of $

0.6

million and $

1.6

million, respectively, for the quarters ended March 31, 2024 and 2023.

Revenue from contracts with customers is recognized when, or as, the performance obligations are satisfied by the Corporation by

transferring the promised services to the customers. A service is transferred to the customer when, or as, the customer obtains

control of that service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance

obligation satisfied over time is recognized based on the services that have been rendered to date. Revenue from a performance

obligation satisfied at a point in time is recognized when the customer obtains control over the service. The transaction price, or the

amount of revenue recognized, reflects the consideration the Corporation expects to be entitled to in exchange for those promised

services. In determining the transaction price, the Corporation considers the effects of variable consideration. Variable consideration

is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue

recognized will not occur. The Corporation is the principal in a transaction if it obtains control of the specified goods or services

before they are transferred to the customer. If the Corporation acts as principal, revenues are presented in the gross amount of

consideration to which it expects to be entitled and are not netted with any related expenses. On the other hand, the Corporation is

an agent if it does not control the specified goods or services before they are transferred to the customer. If the Corporation acts as

an agent, revenues are presented in the amount of consideration to which it expects to be entitled, net of related expenses.

Following is a description of the nature and timing of revenue streams from contracts with customers:

Service charges on deposit accounts

Service charges on deposit accounts are earned on retail and commercial deposit activities and include, but are not limited to,

nonsufficient fund fees, overdraft fees and checks stop payment fees. These transaction-based fees are recognized at a point in

time, upon occurrence of an activity or event or upon the occurrence of a condition which triggers the fee assessment. The

Corporation is acting as principal in these transactions.

Debit card fees

Debit card fees include, but are not limited to, interchange fees, surcharging income and foreign transaction fees. These transaction-

based fees are recognized at a point in time, upon occurrence of an activity or event or upon the occurrence of a condition which

triggers the fee assessment. Interchange fees are recognized upon settlement of the debit card payment transactions. The

Corporation is acting as principal in these transactions.

Insurance fees

Insurance fees include, but are not limited to, commissions and contingent commissions. Commissions and fees are recognized

when related policies are effective since the Corporation does not have an enforceable right to payment for services completed to

date. An allowance is created for expected adjustments to commissions earned related to policy cancellations. Contingent

commissions are recorded on an accrual basis when the amount to be received is notified by the insurance company. The

Corporation is acting as an agent since it arranges for the sale of the policies and receives commissions if, and when, it achieves

the sale.

Credit card fees

Credit card fees include, but are not limited to, interchange fees, additional card fees, cash advance fees, balance transfer fees,

foreign transaction fees, and returned payments fees. Credit card fees are recognized at a point in time, upon the occurrence of an

activity or an event. Interchange fees are recognized upon settlement of the credit card payment transactions. The Corporation is

acting as principal in these transactions.

Sale and administration of investment products

Fees from the sale and administration of investment products include, but are not limited to, commission income from the sale of

investment products, asset management fees, underwriting fees, and mutual fund fees.

Commission income from investment products is recognized on the trade date since clearing, trade execution, and custody services

are satisfied when the customer acquires or disposes of the rights to obtain the economic benefits of the investment products and

brokerage contracts have no fixed duration and are terminable at will by either party. The Corporation is acting as principal in these

transactions since it performs the service of providing the customer with the ability to acquire or dispose of the rights to obtain the

economic benefits of investment products.

Asset management fees are satisfied over time and are recognized in arrears. At contract inception, the estimate of the asset

management fee is constrained from the inclusion in the transaction price since the promised consideration is dependent on the

market and thus is highly susceptible to factors outside the manager’s influence. As advisor, the broker-dealer subsidiary is acting

as principal.

Underwriting fees are recognized at a point in time, when the investment products are sold in the open market at a markup. When

the broker-dealer subsidiary is lead underwriter, it is acting as an agent. In turn, when it is a participating underwriter, it is acting as

principal.

Mutual fund fees, such as distribution fees, are considered variable consideration and are recognized over time, as the uncertainty

of the fees to be received is resolved as NAV is determined and investor activity occurs. The promise to provide distribution-related

services is considered a single performance obligation as it requires the provision of a series of distinct services that are

substantially the same and have the same pattern of transfer. When the broker-dealer subsidiary is acting as a distributor, it is acting

as principal. In turn, when it acts as third-party dealer, it is acting as an agent.

Trust fees

Trust fees are recognized from retirement plan, mutual fund administration, investment management, trustee, escrow, and custody

and safekeeping services. These asset management services are considered a single performance obligation as it requires the

provision of a series of distinct services that are substantially the same and have the same pattern of transfer. The performance

obligation is satisfied over time, except for optional services and certain other services that are satisfied at a point in time.

Revenues are recognized in arrears, when, or as, the services are rendered. The Corporation is acting as principal since, as asset

manager, it has the obligation to provide the specified service to the customer and has the ultimate discretion in establishing the fee

paid by the customer for the specified services.

Note 27 – Leases

The Corporation enters in the ordinary course of business into operating and finance leases for land, buildings and equipment.

These contracts generally do not include purchase options or residual value guarantees. The remaining lease terms of

0.1

to

30.8

years considers options to extend the leases for up to

20

years. The Corporation identifies leases when it has both the right to

obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

The Corporation recognizes right-of-use assets (“ROU assets”) and lease liabilities related to operating and finance leases in its

Consolidated Statements of Financial Condition under the caption of other assets and other liabilities, respectively. Refer to Note 12

and Note 16 to the Consolidated Financial Statements, respectively, for information on the balances of these lease assets and

liabilities.

The Corporation uses the incremental borrowing rate for purposes of discounting lease payments for operating and finance leases,

since it does not have enough information to determine the rates implicit in the leases. The discount rates are based on fixed-rate

and fully amortizing borrowing facilities of its banking subsidiaries that are collateralized. For leases held by non-banking

subsidiaries, a credit spread is added to this rate based on financing transactions with a similar credit risk profile.

The following table presents the undiscounted cash flows of operating and finance leases for each of the following periods:

March 31, 2024

(In thousands)

Remaining

2024

2025

2026

2027

2028

Later

Years

Total Lease

Payments

Less: Imputed

Interest

Total

Operating Leases

23,167

28,327

19,932

14,531

12,074

40,740

138,771

(17,438)

121,333

Finance Leases

3,380

4,605

4,374

3,017

2,344

10,434

28,154

(3,257)

24,897

The following table presents the lease cost recognized by the Corporation in the Consolidated Statements of Operations as follows:

Quarters ended March 31,

(In thousands)

2024

2023

Finance lease cost:

Amortization of ROU assets

748

824

Interest on lease liabilities

237

296

Operating lease cost

7,688

7,854

Short-term lease cost

116

73

Variable lease cost

69

56

Sublease income

(20)

(9)

Total lease cost

[1]

8,838

9,094

[1]

Total lease cost is recognized as part of net occupancy expense.

The following table presents supplemental cash flow information and other related information related to operating and finance

leases.

Quarters ended March 31,

(Dollars in thousands)

2024

2023

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

7,771

7,754

Operating cash flows from finance leases

237

296

Financing cash flows from finance leases

881

804

ROU assets obtained in exchange for new lease obligations:

Operating leases

1,127

967

Finance leases

1,796

Weighted-average remaining lease term:

Operating leases

7.2

years

7.3

years

Finance leases

8.2

years

8.2

years

Weighted-average discount rate:

Operating leases

3.3

3.0

Finance leases

3.8

4.1

As of March 31, 2024, the Corporation had additional operating leases contracts that have not yet commenced with an undiscounted

contract amount of $

3.9

million, which will have lease terms ranging from

10

to

years.

Note 28 – Pension and postretirement benefits

The Corporation has a non-contributory defined benefit pension plan and supplementary pension benefit restoration plans for

regular employees of certain of its subsidiaries (the “Pension Plans”). The accrual of benefits under the Pension Plans is frozen to

all participants. The Corporation also provides certain postretirement health care benefits for retired employees of certain

subsidiaries (the “OPEB Plan”).

The components of net periodic cost for the Pension Plans and the OPEB Plan for the periods presented were as follows:

Pension Plans

OPEB Plan

Quarter ended March 31,

Quarter ended March 31,

(In thousands)

2024

2023

2024

2023

Personnel Cost:

Service cost

32

48

Other operating expenses:

Interest cost

7,558

7,887

1,421

1,520

Expected return on plan assets

(8,594)

(8,591)

Amortization of prior service cost/(credit)

Amortization of net loss

4,166

5,366

(548)

(553)

Total net periodic pension cost

3,130

4,662

905

1,015

The Corporation paid the following contributions to the plans for the quarter ended March 31, 2024 and expects to pay the following

contributions for the year ending December 31, 2024.

For the quarter ended

For the year ending

(In thousands)

March 31, 2024

December 31, 2024

Pension Plans

57

228

OPEB Plan

1,597

5,744

Note 29 - Stock-based compensation

On May 12, 2020, the stockholders of the Corporation approved the Popular, Inc. 2020 Omnibus Incentive Plan, which permits the

Corporation to issue several types of stock-based compensation to employees and directors of the Corporation and/or any of its

subsidiaries (the “2020 Incentive Plan”). The 2020 Incentive Plan replaced the Popular, Inc. 2004 Omnibus Incentive Plan, which

was in effect prior to the adoption of the 2020 Incentive Plan (the “2004 Incentive Plan” and, together with the 2020 Incentive Plan,

the “Incentive Plan”). Participants under the Incentive Plan are designated by the Talent and Compensation Committee of the Board

of Directors (or its delegate, as determined by the Board). Under the Incentive Plan, the Corporation has issued restricted stock and

performance shares to its employees and restricted stock and restricted stock units (“RSUs”) to its directors.

The restricted stock granted under the Incentive Plan to employees becomes vested based on the employees’ continued service

with Popular.

Unless otherwise stated in an agreement, the compensation cost associated with the shares of restricted stock

granted prior to 2021 was determined based on a two-prong vesting schedule. The first part is vested ratably over five or four years

commencing at the date of grant (“the graduated vesting portion”) and the second part is vested at termination of employment after

attainment of 55 years of age and 10 years of service or 60 years of age and 5 years of service (“the retirement vesting portion”).

The graduated vesting portion is accelerated at termination of employment after attaining the earlier of 55 years of age and 10 years

of service or 60 years of age and 5 years of service. Restricted stock granted on or after 2021 will vest ratably in equal annual

installments over a period of 4 years or 3 years, depending on the classification of the employee. The vesting schedule is

accelerated at termination of employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age

and 5 years of service.

The performance share awards granted under the Incentive Plan consist of the opportunity to receive shares of Popular, Inc.’s

common stock provided that the Corporation achieves certain goals during a three-year performance cycle. The goals will be based

on two metrics weighted equally: the Relative Total Shareholder Return (“TSR”) and the Absolute Return on Average Tangible

Common Equity (“ROATCE”). The TSR metric is considered to be a market condition under ASC 718. For equity settled awards

based on a market condition, the fair value is determined as of the grant date and is not subsequently revised based on actual

performance. The ROATCE metric is considered to be a performance condition under ASC 718. The fair value is determined

based on the probability of achieving the ROATCE goal as of each reporting period. The TSR and ROATCE metrics are equally

weighted and work independently.

The number of shares that will ultimately vest ranges from 50% to a 150% of target based on

both market (TSR) and performance (ROATCE) conditions. The performance shares vest at the end of the three-year performance

cycle. If a participant terminates employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age

and 5 years of service, the performance shares shall continue outstanding and vest at the end of the performance cycle.

The following table summarizes the restricted stock and performance shares activity under the Incentive Plan for members of

management.

(Not in thousands)

Shares

Weighted-Average

Grant Date Fair

Value

Non-vested at December 31, 2022

281,963

56.50

Granted

257,757

66.01

Performance Shares Quantity Adjustment

19,753

75.32

Vested

(243,133)

66.31

Forfeited

(16,444)

55.82

Non-vested at December 31, 2023

299,896

58.20

Granted

143,084

85.57

Performance Shares Quantity Adjustment

33,858

88.92

Vested

(185,177)

79.81

Forfeited

411

69.92

Non-vested at March 31, 2024

292,072

61.48

During the quarter ended March 31, 2024,

77,859

shares of restricted stock (March 31, 2023 -

69,488

) and

65,225

performance

shares (March 31, 2023 -

57,715

) were awarded to management under the Incentive Plan.

During the quarter ended March 31, 2024, the Corporation recognized $

6.4

million of restricted stock expense related to

management incentive awards, with a tax benefit of $

0.6

million (March 31, 2023 - $

4.4

million, with a tax benefit of $

0.3

million). For

the quarter ended March 31, 2024, the fair market value of the restricted stock and performance shares vested was $

9.5

million at

grant date and $

13.2

million at vesting date. This excess requires the recognition of a windfall tax benefit of $

1.4

million that was

recorded as a reduction in income tax expense. For the quarter ended March 31, 2024, the Corporation recognized $

5.0

million of

performance shares expense, with a tax benefit of $

0.3

million (March 31, 2023 - $

3.6

million, with a tax benefit of $

0.1

million). The

total unrecognized compensation cost related to non-vested restricted stock awards and performance shares to members of

management at March 31, 2024 was $

11.4

million and is expected to be recognized over a weighted-average period of

1.79

years.

The following table summarizes the restricted stock activity under the Incentive Plan for members of the Board of Directors:

(Not in thousands)

RSUs / Unrestricted stock

Weighted-Average Grant

Date Fair Value per Unit

Non-vested at December 31, 2022

Granted

39,104

55.30

Vested

(39,104)

55.30

Forfeited

Non-vested at December 31, 2023

Granted

1,195

82.08

Vested

(1,195)

82.08

Forfeited

Non-vested at March 31, 2024

The equity awards granted to members of the Board of Directors of Popular, Inc. (the “Directors”) will vest and become non-

forfeitable on the grant date of such award. Effective in May 2019 all equity awards granted to the Directors may be paid in either

common stock or RSUs, at the Directors’ election. If RSUs are elected the Directors may defer the delivery of the shares of common

stock underlying the RSUs award after their retirement. To the extent that cash dividends are paid on the Corporation’s outstanding

common stock, the Directors will receive an additional number of RSUs that reflect reinvested dividend equivalent.

During the quarter ended March 31, 2024,

1,195

RSUs were granted to the Directors (March 31, 2023 -

1,029

). During this period,

the Corporation recognized $

98

thousand of restricted stock expense related to these RSUs, with a tax benefit of $

18

thousand

(March 31, 2023 - $

67

thousand, with a tax benefit of $

13

thousand). The fair value at vesting date of the RSUs vested during the

quarter ended March 31, 2024 for Directors was $

98

thousand

Note 30 – Income taxes

The reason for the difference between the income tax expense applicable to income before provision for income taxes and the

amount computed by applying the statutory tax rate in Puerto Rico, were as follows:

Quarters ended

March 31, 2024

March 31, 2023

(In thousands)

Amount

% of pre-tax

income

Amount

% of pre-tax

income

Computed income tax expense at statutory rates

59,569

38

76,985

38

Net benefit of tax exempt interest income

(28,759)

(18)

(21,902)

(11)

Effect of income subject to preferential tax rate

(1,420)

(1)

(855)

Deferred tax asset valuation allowance

2,563

1

(4,565)

(2)

Difference in tax rates due to multiple jurisdictions

(673)

(5,169)

(3)

Tax on intercompany distributions

[1]

24,325

16

U.S., States, and local taxes

1,036

3,355

2

Others

(1,073)

(1)

(1,535)

(1)

Income tax expense

55,568

35

46,314

23

[1]

Includes $

16.5

million of out-of-period adjustment.

For the quarter ended March 31, 2024, the Corporation recorded an income tax expense of $

55.6

million compared to $

46.3

million

for the quarter ended March 31, 2023. As discussed in Note 2, the tax expense for the first quarter of 2024 includes $

23.0

million,

related to intercompany distributions, out of which $

16.5

million were related to an out-of-period adjustment associated with the

Corporation’s U.S. subsidiary’s non-payment of taxes on certain intercompany distributions to the Bank Holding Company (BHC) in

Puerto Rico, a foreign corporation for U.S. tax purposes. During years 2023 and 2022, $

5.5

million and $

5.4

million, respectively,

should have been recognized as additional income tax expense, and an aggregate of $

5.6

million in the years prior to 2022. As a

result of this adjustment, the deferred tax assets related to NOL of the BHC and its related valuation allowance was reduced by

53.7

million. The Corporation also recognized $

6.5

million in income tax expense during the quarter ended March 31, 2024, to

reflect the U.S. federal tax withholding liability and estimated related Puerto Rico income tax arising from a $

50

million dividend paid

during the quarter. During the quarter ended March 31, 2023, the Corporation reported a reversal of a valuation allowance on a tax

credit expected to be realized on the U.S. operations.

The following table presents a breakdown of the significant components of the Corporation’s deferred tax assets and liabilities.

March 31, 2024

(In thousands)

PR

US

Total

Deferred tax assets:

Tax credits available for carryforward

263

10,749

11,012

Net operating loss and other carryforward available

53,852

619,457

673,309

Postretirement and pension benefits

37,314

37,314

Allowance for credit losses

246,566

29,866

276,432

Depreciation

6,774

6,651

13,425

FDIC-assisted transaction

152,665

152,665

Lease liability

28,280

19,272

47,552

Unrealized net loss on investment securities

309,191

20,406

329,597

Difference in outside basis from pass-through entities

44,008

44,008

Mortgage Servicing Rights

14,378

14,378

Other temporary differences

49,600

10,041

59,641

Total gross deferred tax assets

942,891

716,442

1,659,333

Deferred tax liabilities:

Intangibles

85,564

52,715

138,279

Right of use assets

25,839

16,940

42,779

Deferred loan origination fees/cost

(823)

2,085

1,262

Loans acquired

19,703

19,703

Other temporary differences

6,854

422

7,276

Total gross deferred tax liabilities

137,137

72,162

209,299

Valuation allowance

71,380

378,910

450,290

Net deferred tax asset

734,374

265,370

999,744

December 31, 2023

(In thousands)

PR

US

Total

Deferred tax assets:

Tax credits available for carryforward

263

10,281

10,544

Net operating loss and other carryforward available

122,634

620,982

743,616

Postretirement and pension benefits

38,121

38,121

Allowance for credit losses

244,956

28,222

273,178

Depreciation

6,774

6,578

13,352

FDIC-assisted transaction

152,665

152,665

Lease liability

29,070

20,492

49,562

Unrealized net loss on investment securities

312,583

19,037

331,620

Difference in outside basis from pass-through entities

46,056

46,056

Mortgage Servicing Rights

14,085

14,085

Other temporary differences

47,679

9,625

57,304

Total gross deferred tax assets

1,014,886

715,217

1,730,103

Deferred tax liabilities:

Intangibles

84,635

51,944

136,579

Right of use assets

26,648

18,030

44,678

Deferred loan origination fees/cost

(1,056)

1,486

430

Loans acquired

20,430

20,430

Other temporary differences

6,402

422

6,824

Total gross deferred tax liabilities

137,059

71,882

208,941

Valuation allowance

139,347

374,035

513,382

Net deferred tax asset

738,480

269,300

1,007,780

The net deferred tax assets shown in the table above at March 31, 2024, is reflected in the consolidated statements of financial

condition as $

1.0

billion in net deferred tax assets in the “Other assets” caption (December 31, 2023 - $

1.0

billion) and $

1.3

million in

deferred tax liabilities in the “Other liabilities” caption (December 31, 2023 - $

1.3

million), reflecting the aggregate deferred tax

assets or liabilities of individual tax-paying subsidiaries of the Corporation in their respective tax jurisdiction, Puerto Rico or the

United States.

At March 31, 2024, the net deferred tax assets of the U.S. operations amounted to $

644

million with a valuation allowance of

approximately $

379

million, for net deferred tax assets after valuation allowance of approximately $

265

million. The Corporation

evaluates the realization of the deferred tax assets on a quarterly basis by taxing jurisdiction. The U.S. operation has sustained

profitability for the last three calendar years and for the quarter ended March 31, 2024. These historical financial results are

objectively verifiable positive evidence, evaluated together with the positive evidence of stable credit metrics, in combination with the

length of the expiration of the NOLs. On the other hand, the Corporation evaluated the negative evidence accumulated over the

years, including financial results lower than expectations and challenges to the economy due to inflationary pressures and global

geopolitical uncertainty that have resulted in a trend of reduction of pre-tax income over the last three years. As of March 31, 2024,

after weighting all positive and negative evidence, the Corporation concluded that it is more likely than not that approximately $

265

million of the deferred tax assets from the U.S. operations, comprised mainly of net operating losses, will be realized. The

Corporation based this determination on its estimated earnings available to realize the deferred tax assets for the remaining

carryforward period, together with the historical level of book income adjusted by permanent differences. Management will continue

to monitor and review the U.S. operation’s results, including recent earnings trends, the pre-tax earnings forecast, any new tax

initiative, and other factors, including net income versus forecast, targeted loan growth, net interest income margin, changes in

deposit costs, allowance for credit losses, charge offs, NPLs inflows and NPA balances. Significant adverse changes or a

combination of changes in these factors could impact the future realization of the deferred tax assets.

At March 31, 2024, the Corporation’s net deferred tax assets related to its Puerto Rico operations amounted to $

734

million. The

Corporation’s Puerto Rico Banking operation has a historical record of profitability. This is considered a strong piece of objectively

verifiable positive evidence that outweighs any negative evidence considered by Management in the evaluation of the realization of

the deferred tax assets. Based on this evidence and management’s estimate of future taxable income, the Corporation has

concluded that it is more likely than not that such net deferred tax assets of the Puerto Rico Banking operations will be realized.

The Holding Company operation has been in a cumulative loss position in recent years. Management expects these losses will be a

trend in future years. This objectively verifiable negative evidence is considered by Management strong negative evidence that

suggests that income in future years will be insufficient to support the realization of all deferred tax assets. After weighting of all

positive and negative evidence Management concluded, as of the reporting date, that it is more likely than not that the Holding

Company will not be able to realize any portion of the deferred tax assets. Accordingly, the Corporation has maintained a valuation

allowance on the deferred tax assets of $

71

million as of March 31, 2024.

The reconciliation of unrecognized tax benefits, excluding interest, was as follows:

(In millions)

2024

2023

Balance at January 1

1.5

2.5

Balance at March 31

1.5

2.5

At March 31, 2024, the total amount of accrued interest recognized in the statement of financial condition amounted to $

2.3

million

(December 31, 2023 - $

2.3

million). The total interest expense recognized at March 31, 2024 was $

30

thousand, (March 31, 2023–

56

thousand). Management determined that at March 31, 2024 and December 31, 2023, there was

no

need to accrue for the

payment of penalties. The Corporation’s policy is to report interest related to unrecognized tax benefits in income tax expense, while

the penalties, if any, are reported in other operating expenses in the consolidated statements of operations.

After consideration of the effect on U.S. federal tax of unrecognized U.S. state tax benefits, the total amount of unrecognized tax

benefits, including U.S. and Puerto Rico, that if recognized, would affect the Corporation’s effective tax rate, was approximately $

2.9

million at March 31, 2024 (December 31, 2023 - $

2.9

million).

The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for

current tax year positions, expiration of open income tax returns due to the statutes of limitation, changes in Management’s

judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the addition or elimination of

uncertain tax positions. The Corporation does not anticipate a reduction in the total amount of unrecognized tax benefits within the

next 12 months.

The Corporation and its subsidiaries file income tax returns in Puerto Rico, the U.S. federal jurisdiction, various U.S. states and

political subdivisions, and foreign jurisdictions. At March 31, 2024, the following years remain subject to examination in the U.S.

Federal jurisdiction: 2020 and thereafter; and in the Puerto Rico jurisdiction, 2018 and thereafter.

Note 31 – Supplemental disclosure on the consolidated statements of cash flows

Additional disclosures on cash flow information and non-cash activities for the quarters ended March 31, 2024 and March 31, 2023

are listed in the following table:

(In thousands)

March 31, 2024

March 31, 2023

Non-cash activities:

Loans transferred to other real estate

16,133

18,367

Loans transferred to other property

20,224

17,343

Total loans transferred to foreclosed assets

36,357

35,710

Loans transferred to other assets

13,464

2,778

Financed sales of other real estate assets

2,725

3,203

Financed sales of other foreclosed assets

13,689

13,232

Total financed sales of foreclosed assets

16,414

16,435

Financed sale of premises and equipment

22,495

14,105

Transfers from loans held-in-portfolio to loans held-for-sale

2,763

2,475

Transfers from loans held-for-sale to loans held-in-portfolio

1,722

1,500

Loans securitized into investment securities

[1]

2,205

10,966

Trades receivable from brokers and counterparties

45

10,307

Trades payable to brokers and counterparties

45

402

Net change in receivables from investments maturities

125,000

99,620

Recognition of mortgage servicing rights on securitizations or asset transfers

294

501

Loans booked under the GNMA buy-back option

2,181

855

Capitalization of lease right of use asset

1,152

2,699

[1]

Includes loans securitized into trading securities and subsequently sold before quarter end.

The following table provides a reconciliation of cash and due from banks, and restricted cash reported within the Consolidated

Statement of Financial Condition that sum to the total of the same such amounts shown in the Consolidated Statement of Cash

Flows.

(In thousands)

March 31, 2024

March 31, 2023

Cash and due from banks

305,869

427,160

Restricted cash and due from banks

14,617

34,853

Restricted cash in money market investments

7,793

7,173

Total cash and due from banks, and restricted cash

[2]

328,279

469,186

[2]

Refer to Note 4 - Restrictions on cash and due from banks and certain securities for nature of restrictions.

Note 32 – Segment reporting

The Corporation’s corporate structure consists of

two

reportable segments –

Banco Popular de Puerto Rico and Popular U.S.

Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess

where to allocate resources.

The segments were determined based on the organizational structure, which focuses primarily on the

markets the segments serve, as well as on the products and services offered by the segments.

Banco Popular de Puerto Rico:

The Banco Popular de Puerto Rico reportable segment includes commercial, consumer and retail banking operations conducted at

BPPR, including U.S. based activities conducted through its New York Branch. It also includes the lending operations of Popular

Auto and Popular Mortgage. Other financial services within the BPPR segment include the trust service units of BPPR, asset

management services of Popular Asset Management, the brokerage and investment banking operations of Popular Securities, and

the insurance agency and reinsurance businesses of Popular Insurance, Popular Risk Services, Popular Life Re, and Popular Re.

Popular U.S.:

Popular U.S. reportable segment consists of the banking operations of Popular Bank (PB), Popular Insurance Agency, U.S.A., and

PEF. PB operates through a retail branch network in the U.S. mainland under the name of Popular, and equipment leasing and

financing services through PEF. Popular Insurance Agency, U.S.A. offers investment and insurance services across the PB branch

network.

The Corporate group consists primarily of the holding companies Popular, Inc., Popular North America, Popular International Bank

and certain of the Corporation’s investments accounted for under the equity method, including Centro Financiero BHD, León.

The accounting policies of the individual operating segments are the same as those of the Corporation. Transactions between

reportable segments are primarily conducted at market rates, resulting in profits that are eliminated for reporting consolidated results

of operations.

The tables that follow present the results of operations and total assets by reportable segments:

2024

For the quarter ended March 31, 2024

Intersegment

(In thousands)

BPPR

Popular U.S.

Eliminations

Net interest income

472,841

84,853

Provision for credit losses

(benefit)

60,680

11,435

Non-interest income

145,669

7,120

(56)

Amortization of intangibles

484

311

Depreciation expense

13,009

1,943

Other operating expenses

393,805

67,788

(56)

Income tax expense

29,206

3,456

Net income

121,326

7,040

Segment assets

57,250,662

13,686,037

(359,383)

For the quarter ended March 31, 2024

Reportable

(In thousands)

Segments

Corporate

Eliminations

Total Popular, Inc.

Net interest income (expense)

557,694

(6,950)

550,744

Provision for credit losses

72,115

483

72,598

Non-interest income

152,733

11,722

(637)

163,818

Amortization of intangibles

795

795

Depreciation expense

14,952

409

15,361

Other operating expenses

461,537

6,611

(1,191)

466,957

Income tax expense

32,662

22,676

230

55,568

Net income (loss)

128,366

(25,407)

324

103,283

Segment assets

70,577,316

5,723,198

(5,363,575)

70,936,939

2023

For the quarter ended March 31, 2023

Intersegment

(In thousands)

BPPR

Popular U.S.

Eliminations

Net interest income

449,820

90,086

1

Provision for credit losses

45,708

2,065

Non-interest income

147,471

6,384

(136)

Amortization of intangibles

484

311

Depreciation expense

11,669

1,814

Other operating expenses

363,715

63,317

(136)

Income tax expense

42,832

3,976

Net income

132,883

24,987

1

Segment assets

55,770,442

12,147,556

(541,534)

For the quarter ended March 31, 2023

Reportable

(In thousands)

Segments

Corporate

Eliminations

Total Popular, Inc.

Net interest income (expense)

539,907

(8,251)

531,656

Provision for credit losses (benefit)

47,773

(136)

47,637

Non-interest income

153,719

9,714

(1,472)

161,961

Amortization of intangibles

795

795

Depreciation expense

13,483

359

13,842

Other operating expenses

426,896

230

(1,076)

426,050

Income tax expense (benefit)

46,808

(321)

(173)

46,314

Net income

157,871

1,331

(223)

158,979

Segment assets

67,376,464

5,803,751

(5,504,456)

67,675,759

Geographic Information

The following information presents selected financial information based on the geographic location where the Corporation conducts

its business. The banking operations of BPPR are primarily based in Puerto Rico, where it has the largest retail banking franchise.

BPPR also conducts banking operations in the U.S. Virgin Islands, the British Virgin Islands and New York. BPPR’s banking

operations in the mainland United States include commercial lending activities. BPPR’s commercial lending activities in the U.S.,

through its New York Branch, include periodic loan participations with PB. During the quarter ended March 31, 2024, BPPR did

no

t

participate in loans originated by PB (March 31, 2023 - $

23

million). Total assets for the BPPR segment related to its operations in

the United States amounted to $

1.5

billion (December 31, 2023 - $

1.5

billion), including $

106

million in multifamily loans (December

31, 2023 - $

106

million), $

526

million in commercial real estate loans (December 31, 2023 - $

528

million), $

592

million in C&I loans

(December 31, 2023 - $

557

million), and $

198

million in unsecured personal loans (December 31, 2023 - $

229

million). During the

quarter ended March 31, 2024, the BPPR segment generated approximately $

29.8

million (March 31, 2023 - $

25.4

million) in

revenues from its operations in the United States, including net interest income and other service fees. In the Virgin Islands, the

BPPR segment offers banking products, including loans and deposits. The BPPR segment generated $

10.6

million in revenues

during the first quarter of 2024 (March 31, 2023 - $

11.6

million) from its operations in the U.S. and British Virgin Islands.

Geographic Information

Quarter ended

(In thousands)

March 31, 2024

March 31, 2023

Revenues:

[1]

Puerto Rico

565,744

547,903

United States

126,741

125,045

Other

22,077

20,669

Total consolidated revenues

714,562

693,617

[1]

Total revenues include net interest income, service charges on deposit accounts, other service fees, mortgage banking activities, net gain,

including impairment on equity securities, net gain on trading account debt securities, adjustments to indemnity reserves on loans sold and

other operating income.

Selected Balance Sheet Information:

(In thousands)

March 31, 2024

December 31, 2023

Puerto Rico

Total assets

54,507,722

54,181,300

Loans

22,649,624

22,519,961

Deposits

51,350,879

51,282,007

United States

Total assets

15,186,839

15,343,156

Loans

11,931,955

12,006,012

Deposits

10,716,008

10,643,602

Other

Total assets

1,242,378

1,233,699

Loans

542,511

543,299

Deposits

[1]

1,741,897

1,692,634

[1]

Represents deposits from BPPR operations located in the U.S. and British Virgin Islands.