Popular, Inc. Announces Fourth Quarter 2020 Financial Results

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  • Net income of $176.3 million in Q4 2020, compared to net income of $168.4 million in Q3 2020.

  • Net income of $506.6 million for the year 2020, compared to net income of $671.1 million for the year 2019.

  • Net interest margin of 3.04% in Q4 2020, compared to 3.06% in Q3 2020; net interest margin on a taxable equivalent basis of 3.35% in Q4 2020, compared to 3.37% in Q3 2020.

  • Credit Quality:

    • Non-performing loans held-in-portfolio ("NPLs") increased by $3.4 million from Q3 2020; NPLs to loans ratio remained flat at 2.5% vs. Q3 2020;

    • Net charge-offs ("NCOs") increased by $25.2 million from Q3 2020; NCOs at 0.58% of average loans held-in-portfolio vs. 0.24% in Q3 2020;

    • Allowance for credit losses ("ACL") to loans held-in-portfolio at 3.05% vs. 3.15% in Q3 2020; and

    • ACL to NPLs at 121.5% vs. 126.1% in Q3 2020.

  • Common Equity Tier 1 ratio of 16.26%, Common Equity per Share of $71.30 and Tangible Book Value per Share of $63.07 at December 31, 2020.

Popular, Inc. (the "Corporation," "Popular," "we," "us," "our") (NASDAQ:BPOP) reported net income of $176.3 million for the quarter ended December 31, 2020, compared to net income of $168.4 million for the quarter ended September 30, 2020.

Ignacio Alvarez, President and Chief Executive Officer, said: "2020 was a challenging year, beginning with a series of devastating earthquakes in Southwest Puerto Rico and followed by the unprecedented global pandemic that significantly impacted our lives and economic activity. Notwithstanding these challenges, we were able to generate $507 million in net income, even after recognizing $293 million in provision for credit losses, largely driven by the impact of the pandemic. These results reflect the strength of our franchise and diversified sources of revenue.

We closed 2020 on a high note, generating net income of $176 million in the fourth quarter, one of our best quarters ever, mainly due to higher net interest income and control of expenses. We ended the year with robust levels of capital and liquidity which will allow us to continue to serve our clients and return capital to shareholders.

I am extremely proud of what we have been able to accomplish in this difficult environment. I am especially proud of our employees for their commitment to serve our customers, whether working on the front lines or adapting quickly to working from home. We are blessed to be part of a team of dedicated colleagues who have met these challenges with courage and resilience. As we continue to witness advances in the medical field, we look forward to 2021 with a renewed sense of commitment and optimism."

Significant Events

Financial Highlights

For the fourth quarter of 2020, the Corporation recorded net income of $176.3 million, compared to a net income of $168.4 million for the previous quarter. The Corporation continues to monitor and be attentive to the impact of the COVID-19 pandemic, on the markets in which it operates and on our financial results.

Net interest income for the quarter increased by $10.6 million, although net interest margin declined by 2 basis points to 3.04% due to an increase in lower yielding assets. The net interest margin continues to reflect the increase in investments in overnight Fed Funds, U.S. Treasury and U.S. Agency debt securities as well as an average balance of $1.4 billion loans issued pursuant to the U.S. Small Business Administration’s ("SBA") Payment Protection Program ("PPP"), which are all lower yielding assets.

Coronavirus (COVID-19) Pandemic

The disruptions related to the COVID-19 pandemic continue to have an impact on the macroeconomic environment and therefore on the financial results of the Corporation. Although certain measures initially imposed in response to the pandemic by the governments of Puerto Rico, the United States and United States Virgin Islands, including lockdowns, business closures, mandatory curfews and limits to public activities, were thereafter gradually relaxed throughout 2020 to allow for the gradual reopening of the economy, certain restrictions remained in place or were reinstated during the fourth quarter of 2020 which resulted in many businesses not being able to operate at their full capacity. The Corporation’s results for the third and fourth quarters of 2020 reflect the benefit of increased economic activity resulting from such reopening and the related improvement in the macroeconomic environment, as well as the impact of the various government stimulus programs launched in response to the pandemic.

As previously disclosed, beginning in March 2020, the Corporation implemented several financial relief programs in response to the pandemic, including loan payment moratoriums, suspensions of foreclosures and other collection activity, as well as waivers of certain fees and service charges. During the third quarter of 2020, the Corporation reinstated the imposition of the fees it elected to waive in connection with such financial relief programs and resumed delinquent loan collection efforts. During 2020, the Corporation had granted loan payment moratoriums to 127,117 eligible retail customers with an aggregate book value of $4.4 billion, and to 5,099 eligible commercial clients with an aggregate book value of $3.9 billion as detailed below. These include loan payment moratoriums of government guaranteed loans that qualified for disaster relief programs as well as other available alternatives. While COVID-19-related moratoriums were offered beginning in March of 2020, certain clients benefitted from loan payment moratoriums offered by the Corporation since mid-January 2020 as a result of seismic activity in the Southern region of the island in January 2020. At December 31, 2020, 127,857 loans with an aggregate book value of $7.8 billion had already completed their payment moratorium period, while 4,359 loans with an aggregate book value of $0.5 billion remained under the moratorium. As of quarter-end, 97% of COVID-19 payment deferrals had expired. After excluding government guaranteed loans, 94% of remaining loans were current on their payments as of December 31, 2020. Loans considered current exclude those loans for which the COVID-19 related modification has expired but have subsequently been subject to other loss mitigation alternatives. The following table presents the moratoriums granted by loan portfolio.

Loan portfolio affected by COVID-19-related moratoriums

Total Moratoriums Granted

Active Moratoriums

Loan count

Book Value

(In thousands)

Percentage by portfolio

Loan count

Book Value

(In thousands)

Percentage by portfolio

Mortgage

24,378

$

2,862,684

36.3

%

4,248

$

442,329

5.6

%

Auto loans

48,819

790,798

25.2

%

-

-

-

%

Lease financing

10,803

365,198

30.5

%

-

-

-

%

Credit cards

19,615

96,045

10.4

%

-

-

-

%

Other consumer loans

23,502

307,746

18.1

%

91

1,077

0.1

%

Commercial

5,099

3,880,818

26.7

%

20

61,634

0.4

%

Total

132,216

$

8,303,289

28.3

%

4,359

$

505,040

1.7

%

The delinquency status of loans subject to the Corporation’s payment moratorium programs remains unaltered during the payment deferral period and the Corporation continues to accrue interest income during such term.

The extent to which the pandemic further impacts our business, results of operations and financial condition (including our regulatory capital, liquidity ratios and realizability of deferred tax assets), as well as the operations of our clients, customers, service providers and suppliers, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the speed and strength of economic recovery and actions taken by governmental authorities and other third parties in response thereto.

Popular Bank’s New York Branches Realignment

As previously disclosed, on October 27, 2020, Popular Bank ("PB"), the United States mainland banking subsidiary of the Corporation, authorized and approved a strategic realignment of its New York Metro branch network that will result in eleven (11) branch closures and related staffing reductions. The branch closures are expected to be completed by January 29, 2021.

This strategic realignment, which will allow PB to reduce its operating expenses, leverage resources to enhance its focus on small and medium size businesses, as well as support changing customer behaviors, was approved after an assessment of PB’s current branch network, including its usage, proximity to its other branches and customer needs. PB will maintain in its New York Metro region its largest regional retail network in the mainland US, with twenty-seven (27) branches located throughout Brooklyn, Bronx, Manhattan and Queens, as well as in northern New Jersey.

During the fourth quarter of 2020, the Corporation recorded a total pre-tax charge of approximately $23.2 million related to the branch realignment. This aggregate pre-tax charge included approximately $2.1 million associated with severance and related benefit costs for the 83 impacted employees and charges of approximately $21.1 million related to the abandonment of real property leases, including the impairment of right-of-use assets. The Corporation expects to incur an additional $2.0 million in expenses during 2021 related to this initiative and anticipates annual operating expense savings of approximately $12.3 million as a result of this strategic realignment.

Earnings Highlights

(Unaudited)

Quarters ended

Years ended

(Dollars in thousands, except per share information)

31-Dec-20

30-Sep-20

31-Dec-19

31-Dec-20

31-Dec-19

Net interest income

$471,616

$461,021

$467,424

$1,856,613

$1,891,694

Provision for credit losses

21,218

19,138

47,224

292,536

165,779

Net interest income after provision for credit losses

450,398

441,883

420,200

1,564,077

1,725,915

Other non-interest income

144,847

128,767

152,415

512,312

569,883

Operating expenses

375,924

361,066

390,572

1,457,829

1,477,482

Income before income tax

219,321

209,584

182,043

618,560

818,316

Income tax expense

43,045

41,168

15,258

111,938

147,181

Net income

$176,276

$168,416

$166,785

$506,622

$671,135

Net income applicable to common stock

$175,923

$168,064

$165,854

$504,864

$667,412

Net income per common share - basic

$2.10

$2.01

$1.72

$5.88

$6.89

Net income per common share - diluted

$2.10

$2.00

$1.72

$5.87

$6.88

Net interest income on a taxable equivalent basis – Non-GAAP financial measure

Net interest income for the quarter ended December 31, 2020 was $471.6 million compared to $461.0 million in the previous quarter, an increase of $10.6 million. Net interest income, on a taxable equivalent basis, for the fourth quarter of 2020 was $520.7 million, an increase of $13.8 million when compared to $506.9 million in the third quarter of 2020.

The net interest margin decreased 2 basis points to 3.04% in the fourth quarter of 2020, compared to 3.06% in the previous quarter. The reduction in the margin reflects an increase in the investments in overnight Fed Funds and in U.S Treasury and U.S. Agency debt securities, partially offset by the decrease in deposit costs. On a taxable equivalent basis, the net interest margin was 3.35 % compared to 3.37% in the third quarter of 2020, a decrease of 2 basis points. The main variances in net interest income on a taxable equivalent basis were:

  • Higher income from money market, trading and investment securities by $9.7 million as maturities from short-term U.S. Treasury securities were reinvested in higher yielding mortgage-backed securities. Investment securities also reflected an increase of $1.2 billion in average volume resulting from the increase in average deposits of $1.7 billion. The change in the composition of the investment portfolio resulted in a higher yield of 7 basis points;

  • interest income from loans remained flat quarter over quarter but reflected the variances in the respective portfolios, as follows:

    • The repurchase of $808 million in mortgage loans at the end of the third quarter of 2020 was the main driver of the increase in mortgage loan interest income of $2.8 million and of the decrease of 38 basis points in the portfolio yield, as the yield on these loans is approximately 3.53%;

    • consumer loans, including credit cards decreased $116 million in average or $3.6 million in interest income; and

    • the combined balance of auto and lease financing increased $172 million but resulted in a lower yield driven by a lower discount amortization of the portfolio acquired from Wells Fargo in 2018 and a higher amortization of deferred loan origination fees.

The above changes in portfolio composition resulted in a reduction of the total loan yield of 16 basis points when compared to the previous quarter. The Corporation recognized income of $11.5 million related to loans issued under the SBA PPP program, compared to $10.3 million in the previous quarter. These loans carry a yield of approximately 3.23%, including the amortization of fees received under the program, that at December 31, 2020 had $33.1 million in unamortized balance; and

  • lower interest expense on deposits by $4.2 million, or 4 basis points, due to lower interest cost, mainly at PB.

Net interest income for the Banco Popular de Puerto Rico ("BPPR") segment amounted to $402.1 million for the quarter ended December 31, 2020, compared to $394.7 million in the previous quarter. Net interest margin for the fourth quarter of 2020 was 3.07%, a decrease of 6 basis points when compared to 3.13% for the previous quarter. As discussed above, the net interest margin was impacted by higher average balances of Fed Funds and other investment securities, which carry a low yield. The cost of interest-bearing deposits for the quarter was 0.22%, compared to 0.24% for the previous quarter. Total cost of deposits for the quarter was 0.17%, compared to 0.18% reported in the third quarter of 2020.

Net interest income for PB was $79.6 million for the quarter ended December 31, 2020, compared to $76.5 million during the previous quarter. The increase of $3.1 million in net interest income was primarily due to lower deposit costs. Net interest margin for the quarter was 3.35%, an increase of 17 basis points when compared to 3.18% reported in the third quarter of 2020, mainly due to a decrease in deposit costs. The cost of interest-bearing deposits was 0.79%, compared to 0.98% in the previous quarter. Total cost of deposits for the quarter, including demand deposits, was 0.65%, compared to 0.81% reported in the third quarter of 2020.

Non-interest income

Non-interest income increased by $16.1 million to $144.9 million for the quarter ended December 31, 2020, compared to $128.8 million for the quarter ended September 30, 2020. The increase in non-interest income was primarily driven by:

  • higher service charges on deposit accounts by $2.3 million, mainly in the BPPR segment, due to higher non-sufficient funds and ACH return fees;

  • higher other service fees by $1.3 million, principally at the BPPR segment, due to higher credit card fees by $0.9 million, mainly in interchange income resulting from higher transactional volumes, and higher trust fees by $0.6 million;

  • higher income from mortgage banking activities by $19.3 million mainly due to the impact during the third quarter of 2020 of the bulk loan repurchase completed by BPPR from its GNMA, FNMA and FHLMC servicing portfolio which resulted in a $8.8 million negative fair value adjustment to its mortgage servicing rights ("MSRs"), a $10.5 million loss in interest advances related to GNMA loans, offset by $3.4 million in fees recognized in connection with the bulk loan repurchase; and

  • a favorable variance in net gain (loss) on sale of loans, including valuation adjustments, of $2.5 million mainly due to a $2.0 million negative adjustment recognized during the third quarter of 2020 on the held-for-sale taxi medallion portfolio at PB;

partially offset by:

  • a decrease in net gain, including impairment, on equity securities of $3.7 million mainly related to a $4.1 million gain on sale of certain equity securities at PB during the third quarter of 2020;

  • an unfavorable variance in adjustments to indemnity reserves on previously sold loans of $2.0 million in part due to a recourse reserve release of $5.1 million related to the bulk loan repurchase from FNMA and FHLMC during the third quarter of 2020; and

  • lower other operating income by $3.8 million mainly due to lower net earnings from the combined portfolio of investments under the equity method by $4.2 million.

Refer to Table B for further details.

Operating expenses

Operating expenses for the fourth quarter of 2020 totaled $375.9 million, an increase of $14.9 million from the third quarter of 2020. The quarter reflected $23.2 million in expenses related to PB’s branch optimization initiative. Additionally, during the quarter the Corporation reclassified $10.0 million of the provision expense for unfunded loan commitments to the provision for credit losses caption. Excluding these two items, the net increase would have been $1.7 million. The increase in operating expenses was driven primarily by:

  • Higher personnel cost by $6.3 million due to $2.1 million in severance expense related to PB’s branch initiative, higher pension and postretirement expense by $1.8 million related mainly to higher retirement savings plan expense due to an additional by-weekly payroll, and seasonal compensation in BPPR and higher incentive compensation accrual of $2.5 million;

  • higher net occupancy expense by $16.9 million due to $19.0 million in costs related to the termination of real property leases associated with PB’s New York branch optimization initiative, including the impairment of the right-of-use assets;

  • higher professional fees by $7.6 million mainly due to higher advisory expenses by $5.0 million related to corporate initiatives and higher processing and technology services by $1.6 million; and

  • higher business promotion expenses by $1.8 million due to higher seasonal advertising expense by $2.2 million.

Partially offset by:

  • Lower other real estate owned expenses by $2.4 million due to higher gain on sale of foreclosed mortgage properties; and

  • lower other operating expenses by $15.6 million mainly due to the reclassification of $10.0 million in provision for unfunded commitments from the other expenses line to the provision for credit losses caption. Additionally, operational losses were lower by $3.8 million due to lower legal reserves partially offset by $2.1 million in impairment losses on leasehold improvements associated with PB’s New York branch optimization initiative.

Full-time equivalent employees were 8,522 as of December 31, 2020, compared to 8,514 as of September 30, 2020.

For a breakdown of operating expenses by category refer to Table B.

Income taxes

For the quarter ended December 31, 2020, the Corporation recorded an income tax expense of $43.0 million, compared to $41.2 million for the previous quarter. The increase in income tax expense was mainly attributable to higher income before tax during the fourth quarter of 2020. The effective tax rate ("ETR") for the fourth quarter of 2020 was of 20%, flat when compared to the previous quarter. The ETR of the Corporation is impacted by the composition and source of its taxable income.

Credit Quality

Overall, the Corporation’s credit quality remained stable during the fourth quarter of 2020. The financial relief granted to eligible borrowers in response to the COVID-19 pandemic, comprised mainly of payment deferrals of up to six months, largely ended during the third quarter of 2020. Management continues to closely follow macroeconomic conditions and although the outlook indicates improvements, the full effects of the pandemic and the pace of the recovery remains uncertain. The improvement over the last few years in the risk profile of the Corporation’s loan portfolios positions Popular to operate successfully under the ongoing challenging environment. We will continue to carefully monitor the exposure of the portfolios to the COVID-19 pandemic related risks, changes in the economic outlook of the regions in which Popular operates and how delinquencies and NCOs evolve.

The following presents credit quality results for the fourth quarter of 2020:

  • At December 31, 2020, total non-performing loans held-in-portfolio increased by $3.4 million from September 30, 2020. BPPR’s NPLs increased by $6.7 million, driven by higher mortgage NPLs by $44.3 million, in part offset by a decrease of $37.9 million in the commercial NPLs. The increase in mortgage NPLs is due to the delinquency progression after the expiration of the payment moratorium. Excluding the increase of $133 million in NPLs related to the adoption of CECL related to purchase credit deteriorated loans, NPLs have decreased by $2.6 million from December 31, 2019, before the impact of the COVID-19 pandemic. Excluding government guaranteed loans, 94% of the COVID-19 residential loans deferrals remain current. The decrease in commercial NPLs was mostly related to impairment charge-offs from previously reserved collateral dependent loans. PB’s NPLs decreased by $3.3 million due to a previously reserved construction loan that was partially charged-off during the quarter. At December 31, 2020, the ratio of NPLs to total loans held-in-portfolio remained flat at 2.5% when compared to the third quarter of 2020.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $1.7 million quarter-over-quarter. In BPPR, total inflows increased by $18.6 million driven by a mortgage inflow increase of $48.9 million, due to delinquency progression at the expiration of the moratorium period. The NPL inflows at PB decreased by $16.9 million mostly due to lower commercial inflows by $12.4 million.

  • NCOs increased by $25.2 million from the third quarter of 2020. BPPR ‘s NCOs increased by $27.4 million, primarily driven by higher commercial NCOs by $19.1 million, mostly related to previously reserved commercial loans. Consumer and mortgage loan NCOs increased by $4.8 million and $2.6 million, respectively, during the fourth quarter of 2020. This quarter, the Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was 0.58%, compared to 0.24% in the third quarter of 2020. Refer to Table M for further information on net charge-offs and related ratios.

  • At December 31, 2020, the allowance for credit losses ("ACL") reflected a decrease of $29.6 million from the third quarter of 2020 to $896.3 million. The ACL incorporates an updated economic outlook based on Moody’s Analytics forecasts for the United States and Puerto Rico. The updated economic outlook is more favorable than previous forecasts. This improvement prompted decreases in reserve levels that were partially offset with qualitative reserves aimed at addressing specific risks. Higher net charge-offs during the quarter also contributed to the reduction in ACL. The allowance for the BPPR and PB segments each decreased by $14.8 million, mostly concentrated in the consumer portfolios influenced by the improvements in the macroeconomic scenarios and lower volumes. The ratio of the allowance for credit losses to loans held-in-portfolio was 3.05% in the fourth quarter of 2020, compared to 3.15% in the previous quarter. The ratio of the allowance for credit losses to NPLs held-in-portfolio stood at 121.5%, compared to 126.1% in the previous quarter.

  • Given that any one economic outlook is inherently uncertain, the Corporation leverages multiple scenarios to estimate its ACL. The ACL is estimated by weighting the outputs of Moody’s Analytics’ S1 (optimistic), Baseline, and S3 (pessimistic) scenarios. Among the three scenarios used to estimate the ACL, the Baseline is assigned the highest probability, followed by the S3 scenario given the uncertainties in the economic outlook and downside risk. The current baseline scenario shows improvement in both 2021 GDP growth and unemployment when compared to previous estimates. The 2021 forecasted GDP growth is now 4.1% for U.S. and mid 2% for PR, with higher growth in 2022. This compares favorably with the previous 2021 forecast of 3.5% for U.S. and 2.1% for PR. The US and PR forecasted unemployment rate average for 2021 is now closer to 7% and 8%, respectively. This is an improvement over the previous estimates of 8.4% for the U.S. and 11.3% for PR.

  • The provision for credit losses for the loans portfolios for the fourth quarter of 2020 decreased by $8.7 million from the prior quarter, mostly due to the improvements in the macroeconomic scenarios. The provision for the BPPR segment increased by $17.1 million, due to higher NCOs during the quarter, while the provision for the PB segment decreased by $25.7 million. The provision to net charge-offs ratio was 25.6% in the fourth quarter of 2020, compared to 115.4% in the previous quarter.

  • During the quarter the Corporation reclassified $10.0 million of the expense for unfunded loan commitments from other operating expenses to the provision for credit loss caption. During the fourth quarter of 2020, we also recognized an additional expense of $2.6 million related to the unfunded loan commitments reserve, compared to $6.6 million during the previous quarter. Additionally, during the fourth quarter of 2020 we recorded a reduction to the reserve for credit losses in our investment portfolio of $2.2 million, compared to $0.3 million in the third quarter of 2020. The provision for unfunded loan commitments, provision for credit losses on our loan and lease portfolios and provision for credit losses on our investment portfolio are aggregated and presented in the provision for credit losses caption in our Statement of Operations.

Non-Performing Assets

(Unaudited)

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

Total non-performing loans held-in-portfolio

$737,774

$734,368

$527,841

Non-performing loans held-for-sale

2,738

4,070

-

Other real estate owned ("OREO")

83,146

100,592

122,072

Total non-performing assets

$823,658

$839,030

$649,913

Net charge-offs for the quarter

$42,078

$16,859

$81,881

Ratios:

Loans held-in-portfolio

$29,385,196

$29,392,510

$27,406,873

Non-performing loans held-in-portfolio to loans held-in-portfolio

2.51%

2.50%

1.93%

Allowance for credit losses to loans held-in-portfolio

3.05

3.15

1.74

Allowance for credit losses to non-performing loans, excluding loans held-for-sale

121.48

126.07

90.50

Refer to Table K for additional information.

Provision for Credit Losses - Loan Portfolios

(Unaudited)

Quarters ended

Years ended

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

31-Dec-20

31-Dec-19

Provision for credit losses - loan portfolios:

BPPR

$24,756

$7,682

$40,843

$205,865

$135,751

Popular U.S.

(13,971)

11,770

6,381

76,471

30,028

Total provision for credit losses - loan portfolios

$10,785

$19,452

$47,224

$282,336

$165,779

Credit Quality by Segment

(Unaudited)

(In thousands)

Quarters ended

BPPR

31-Dec-20

30-Sep-20

31-Dec-19

Provision for credit losses - loan portfolios

$24,756

$7,682

$40,843

Net charge-offs

41,217

13,769

58,962

Total non-performing loans held-in-portfolio

700,377

693,676

499,200

Allowance / loans held-in-portfolio

3.43%

3.48%

2.14%

Quarters ended

Popular U.S.

31-Dec-20

30-Sep-20

31-Dec-19

Provision for credit losses - loan portfolios

$(13,971)

$11,770

$6,381

Net charge-offs

861

3,090

22,919

Total non-performing loans held-in-portfolio

37,397

40,692

28,641

Allowance / loans held-in-portfolio

2.00%

2.22%

0.62%

Financial Condition Highlights

(Unaudited)

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

Cash and money market investments

$12,131,945

$12,425,126

$3,650,597

Investment securities

21,864,184

21,478,048

17,946,343

Loans

29,385,196

29,392,510

27,406,873

Total assets

65,926,000

65,910,369

52,115,324

Deposits

56,866,340

56,021,983

43,758,606

Borrowings

1,346,284

1,407,424

1,294,986

Total liabilities

59,897,313

59,998,284

46,098,545

Stockholders’ equity

6,028,687

5,912,085

6,016,779

Total assets increased by $15.6 million from the third quarter of 2020, driven by:

  • an increase of $383.3 million in debt securities available-for-sale mainly due to purchases of U.S. agency mortgage-backed securities, partially offset by maturities and paydowns of U.S. Treasury securities;

partially offset by:

  • a decrease of $293.2 million in cash and money market investments, mainly due to purchases of debt-securities available-for-sale; and

  • a decrease of $79.7 million in other assets.

Total liabilities decreased by $101.0 million from the third quarter of 2020, mainly due to:

  • a decrease of $884.2 million in other liabilities mainly due to a decrease of $764.2 million in unsettled purchases of debt securities and a reduction in the liability for GNMA loans sold with a repurchase option of $104.2 million; and

  • a decrease in other short-term borrowings by $100.0 million due to maturities of FHLB advances at PB;

partially offset by:

  • an increase of $844.4 million in deposits, of which $494 million are related to Puerto Rico public sector deposits and $534 million are related to retail and commercial demand and savings accounts at BPPR.

Stockholders’ equity increased by approximately $116.6 million from the third quarter of 2020, principally due to net income for the quarter of $176.3 million, partially offset by declared dividends of $33.7 million on common stock, $0.4 million in dividends on preferred stock and lower unrealized gains on debt securities available-for-sale by $22.9 million.

Common equity tier-1 ratio ("CET1"), common equity per share and tangible book value per share were 16.26%, $71.30 and $63.07, respectively, at December 31, 2020, compared to 15.93%, $69.94 and $61.69 at September 30, 2020. Refer to Table A for capital ratios.

Refer to Table C for the Statements of Financial Condition.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s business, financial condition, results of operations, plans, objectives and future performance. These statements are not guarantees of future performance, are based on management’s current expectations and, by their nature, involve risks, uncertainties, estimates and assumptions. Potential factors, some of which are beyond the Corporation’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect of competitive and economic factors, and our reaction to those factors, the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital market conditions, capital adequacy and liquidity, the effect of legal and regulatory proceedings (including as a result of any participation in and execution of government programs related to the COVID-19 pandemic), new accounting standards on the Corporation’s financial condition and results of operations, the scope and duration of the COVID-19 pandemic, actions taken by governmental authorities in response thereto, and the direct and indirect impact of the pandemic on Popular, our customers, service providers and third parties. All statements contained herein that are not clearly historical in nature, are forward-looking, and the words "anticipate," "believe," "continues," "expect," "estimate," "intend," "project" and similar expressions, and future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, are generally intended to identify forward-looking statements.

More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020, and in our Annual Report on Form 10-K for the year ended December 31, 2020 to be filed with the Securities and Exchange Commission. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.

About Popular, Inc.

Popular, Inc. (NASDAQ: BPOP) is the leading financial institution in Puerto Rico, by both assets and deposits, and ranks among the top 50 U.S. bank holding companies by assets. Founded in 1893, Banco Popular de Puerto Rico, Popular’s principal subsidiary, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. Popular also offers in Puerto Rico auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the mainland United States, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.

Conference Call

Popular will hold a conference call to discuss its financial results today Thursday, January 28, 2021 at 10:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.

Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through the dial-in telephone number 1-866-235-1201 or 1-412-902-4127. There is no charge to access the call.

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Sunday, February 28, 2021. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10150838.

An electronic version of this press release can be found at the Corporation’s website: www.popular.com.

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table A - Selected Ratios and Other Information

Table B - Consolidated Statement of Operations

Table C - Consolidated Statement of Financial Condition

Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER

Table E - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - YEAR-TO-DATE

Table F - Mortgage Banking Activities and Other Service Fees

Table G - Loans and Deposits

Table H - Loan Delinquency - PUERTO RICO OPERATIONS

Table I - Loan Delinquency - POPULAR U.S. OPERATIONS

Table J - Loan Delinquency - CONSOLIDATED

Table K - Non-Performing Assets

Table L - Activity in Non-Performing Loans

Table M - Allowance for Credit Losses, Net Charge-offs and Related Ratios

Table N - Allowance for Credit Losses - Loan Portfolios - CONSOLIDATED

Table O - Allowance for Credit Losses - Loan Portfolios - PUERTO RICO OPERATIONS

Table P - Allowance for Credit Losses - Loan Portfolios - POPULAR U.S. OPERATIONS

Table Q - Reconciliation to GAAP Financial Measures

POPULAR, INC.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table A - Selected Ratios and Other Information

(Unaudited)

Quarters ended

Years ended

31-Dec-20

30-Sep-20

31-Dec-19

31-Dec-20

31-Dec-19

Basic EPS

$2.10

$2.01

$1.72

$5.88

$6.89

Diluted EPS

$2.10

$2.00

$1.72

$5.87

$6.88

Average common shares outstanding

83,841,343

83,809,272

96,183,126

85,882,371

96,848,835

Average common shares outstanding - assuming dilution

83,940,412

83,836,151

96,330,785

85,975,259

96,997,800

Common shares outstanding at end of period

84,244,235

84,219,464

95,589,629

84,244,235

95,589,629

Market value per common share

$56.32

$36.27

$58.75

$56.32

$58.75

Market capitalization - (In millions)

$4,745

$3,055

$5,616

$4,745

$5,616

Return on average assets

1.08%

1.06%

1.27%

0.85%

1.33%

Return on average common equity

12.68%

12.46%

11.27%

9.36%

11.78%

Net interest margin (non-taxable equivalent basis)

3.04%

3.06%

3.83%

3.29%

4.03%

Net interest margin (taxable equivalent basis) -non-GAAP

3.35%

3.37%

4.20%

3.62%

4.43%

Common equity per share

$71.30

$69.94

$62.42

$71.30

$62.42

Tangible common book value per common share (non-GAAP) [1]

$63.07

$61.69

$55.10

$63.07

$55.10

Tangible common equity to tangible assets (non-GAAP) [1]

8.14%

7.97%

10.24%

8.14%

10.24%

Return on average tangible common equity [1]

14.50%

14.32%

12.79%

10.75%

13.43%

Tier 1 capital

16.33%

16.01%

17.76%

16.33%

17.76%

Total capital

18.81%

18.49%

20.31%

18.81%

20.31%

Tier 1 leverage

7.80%

7.80%

10.03%

7.80%

10.03%

Common Equity Tier 1 capital

16.26%

15.93%

17.76%

16.26%

17.76%

[1] Refer to Table Q for reconciliation to GAAP financial measures.

POPULAR, INC.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table B - Consolidated Statement of Operations

(Unaudited)

Quarters ended

Variance

Quarter ended

Variance

Years ended

Q4 2020

Q4 2020

(In thousands, except per share information)

31-Dec-20

30-Sep-20

vs. Q3 2020

31-Dec-19

vs. Q4 2019

31-Dec-20

31-Dec-19

Interest income:

Loans

$430,988

$431,286

$(298)

$447,736

$(16,748)

$1,742,390

$1,802,968

Money market investments

2,933

2,773

160

18,950

(16,017)

19,721

89,823

Investment securities

85,502

79,142

6,360

93,183

(7,681)

329,440

368,002

Total interest income

519,423

513,201

6,222

559,869

(40,446)

2,091,551

2,260,793

Interest expense:

Deposits

33,420

37,554

(4,134)

76,823

(43,403)

175,855

304,858

Short-term borrowings

348

416

(68)

1,272

(924)

2,457

6,100

Long-term debt

14,039

14,210

(171)

14,350

(311)

56,626

58,141

Total interest expense

47,807

52,180

(4,373)

92,445

(44,638)

234,938

369,099

Net interest income

471,616

461,021

10,595

467,424

4,192

1,856,613

1,891,694

Provision for credit losses

21,218

19,138

2,080

47,224

(26,006)

292,536

165,779

Net interest income after provision for credit losses

450,398

441,883

8,515

420,200

30,198

1,564,077

1,725,915

Service charges on deposit accounts

39,152

36,849

2,303

41,656

(2,504)

147,823

160,933

Other service fees

71,156

69,879

1,277

75,559

(4,403)

257,892

285,206

Mortgage banking activities

9,730

(9,526)

19,256

13,448

(3,718)

10,401

32,093

Net gain (loss) on sale of debt securities

-

41

(41)

-

-

41

(20)

Net gain, including impairment, on equity securities

1,410

5,150

(3,740)

332

1,078

6,279

2,506

Net profit on trading account debt securities

440

20

420

17

423

1,033

994

Net gain (loss) on sale of loans, including valuation adjustments on loans held-for-sale

253

(2,198)

2,451

-

253

1,234

-

Adjustments (expense) to indemnity reserves on loans sold

2,160

4,183

(2,023)

1,321

839

390

(343)

Other operating income

20,546

24,369

(3,823)

20,082

464

87,219

88,514

Total non-interest income

144,847

128,767

16,080

152,415

(7,568)

512,312

569,883

Operating expenses:

Personnel costs

Salaries

92,063

91,891

172

91,161

902

370,179

351,788

Commissions, incentives and other bonuses

19,399

17,849

1,550

27,007

(7,608)

78,582

97,764

Pension, postretirement and medical insurance

12,454

10,639

1,815

11,281

1,173

44,123

41,804

Other personnel costs, including payroll taxes

18,351

15,562

2,789

28,878

(10,527)

71,321

99,269

Total personnel costs

142,267

135,941

6,326

158,327

(16,060)

564,205

590,625

Net occupancy expenses

42,793

25,907

16,886

24,908

17,885

119,345

96,339

Equipment expenses

22,395

...

24,088

(1,693)

21,591

804

88,932

84,215

Other taxes

13,532

13,918

(386)

13,386

146

54,454

51,653

Professional fees

Collections, appraisals and other credit related fees

2,948

2,862

86

3,704

(756)

12,588

16,300

Programming, processing and other technology services

66,483

64,876

1,607

63,029

3,454

253,565

247,332

Legal fees, excluding collections

2,734

2,707

27

2,527

207

10,611

12,877

Other professional fees

31,865

26,029

5,836

33,876

(2,011)

117,358

107,902

Total professional fees

104,030

96,474

7,556

103,136

894

394,122

384,411

Communications

6,274

5,694

580

5,765

509

23,496

23,450

Business promotion

16,466

14,664

1,802

23,214

(6,748)

57,608

75,372

FDIC deposit insurance

6,880

6,568

312

5,172

1,708

23,868

18,179

Other real estate owned (OREO) (income) expenses

(4,000)

(1,615)

(2,385)

569

(4,569)

(3,480)

4,298

Credit and debit card processing, volume, interchange and other expenses

13,209

11,744

1,465

10,486

2,723

45,108

38,059

Other operating expenses

Operational losses

4,992

8,837

(3,845)

2,916

2,076

26,331

21,414

All other

6,034

17,770

(11,736)

18,814

(12,780)

57,443

80,097

Total other operating expenses

11,026

26,607

(15,581)

21,730

(10,704)

83,774

101,511

Amortization of intangibles

1,052

1,076

(24)

2,288

(1,236)

6,397

9,370

Total operating expenses

375,924

361,066

14,858

390,572

(14,648)

1,457,829

1,477,482

Income before income tax

219,321

209,584

9,737

182,043

37,278

618,560

818,316

Income tax expense

43,045

41,168

1,877

15,258

27,787

111,938

147,181

Net income

$176,276

$168,416

$7,860

$166,785

$9,491

$506,622

$671,135

Net income applicable to common stock

$175,923

$168,064

$7,859

$165,854

$10,069

$504,864

$667,412

Net income per common share - basic

$2.10

$2.01

$0.09

$1.72

$0.38

$5.88

$6.89

Net income per common share - diluted

$2.10

$2.00

$0.10

$1.72

$0.38

$5.87

$6.88

Dividends Declared per Common Share

$0.40

$0.40

$-

$0.30

$0.10

$1.60

$1.20

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table C - Consolidated Statement of Financial Condition

(Unaudited)

Variance

Q4 2020 vs.

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

Q3 2020

Assets:

Cash and due from banks

$491,065

$565,202

$388,311

$(74,137)

Money market investments

11,640,880

11,859,924

3,262,286

(219,044)

Trading account debt securities, at fair value

36,674

33,053

40,321

3,621

Debt securities available-for-sale, at fair value

21,561,152

21,177,839

17,648,473

383,313

Debt securities held-to-maturity, at amortized cost

92,621

93,163

97,662

(542)

Less: Allowance for credit losses

10,261

12,421

-

(2,160)

Total debt securities held-to-maturity, net

82,360

80,742

97,662

1,618

Equity securities

173,737

173,993

159,887

(256)

Loans held-for-sale, at lower of cost or fair value

99,455

102,760

59,203

(3,305)

Loans held-in-portfolio

29,588,430

29,586,348

27,587,856

2,082

Less: Unearned income

203,234

193,838

180,983

9,396

Allowance for credit losses

896,250

925,850

477,708

(29,600)

Total loans held-in-portfolio, net

28,488,946

28,466,660

26,929,165

22,286

Premises and equipment, net

510,241

510,473

556,650

(232)

Other real estate

83,146

100,592

122,072

(17,446)

Accrued income receivable

209,320

204,233

180,871

5,087

Mortgage servicing rights, at fair value

118,395

123,552

150,906

(5,157)

Other assets

1,737,041

1,816,706

1,819,615

(79,665)

Goodwill

671,122

671,122

671,122

-

Other intangible assets

22,466

23,518

28,780

(1,052)

Total assets

$65,926,000

$65,910,369

$52,115,324

$15,631

Liabilities and Stockholders’ Equity:

Liabilities:

Deposits:

Non-interest bearing

$13,128,699

$13,546,432

$9,160,173

$(417,733)

Interest bearing

43,737,641

42,475,551

34,598,433

1,262,090

Total deposits

56,866,340

56,021,983

43,758,606

844,357

Assets sold under agreements to repurchase

121,303

106,028

193,378

15,275

Other short-term borrowings

-

100,000

-

(100,000)

Notes payable

1,224,981

1,201,396

1,101,608

23,585

Other liabilities

1,684,689

2,568,877

1,044,953

(884,188)

Total liabilities

59,897,313

59,998,284

46,098,545

(100,971)

Stockholders’ equity:

Preferred stock

22,143

22,143

50,160

-

Common stock

1,045

1,045

1,044

-

Surplus

4,571,534

4,521,689

4,447,412

49,845

Retained earnings

2,260,928

2,168,153

2,147,915

92,775

Treasury stock

(1,016,954)

(1,016,361)

(459,814)

(593)

Accumulated other comprehensive income (loss), net of tax

189,991

215,416

(169,938)

(25,425)

Total stockholders’ equity

6,028,687

5,912,085

6,016,779

116,602

Total liabilities and stockholders’ equity

$65,926,000

$65,910,369

$52,115,324

$15,631

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER

(Unaudited)

Quarters ended

Variance

31-Dec-20

30-Sep-20

31-Dec-19

Q4 2020 vs. Q3 2020

Q4 2020 vs. Q4 2019

($ amounts in millions)

Average balance

Income / Expense

Yield / Rate

Average balance

Income / Expense

Yield / Rate

Average balance

Income / Expense

Yield / Rate

Average balance

Income / Expense

Yield / Rate

Average balance

Income / Expense

Yield / Rate

Assets:

Interest earning assets:

Money market, trading and investment securities

$32,554

$127.2

1.56

%

$31,337

$117.5

1.49

%

$21,465

$146.3

2.71

%

$1,217

$9.7

0.07

%

$11,089

($19.1)

(1.15)

%

Loans:

Commercial

13,610

170.2

4.98

13,669

170.1

4.95

12,276

181.3

5.86

(59)

0.1

0.03

1,334

(11.1)

(0.88)

Construction

928

12.8

5.48

930

13.3

5.67

781

12.3

6.27

(2)

(0.5)

(0.19)

147

0.5

(0.79)

Mortgage

7,856

98.6

5.02

7,094

95.8

5.40

7,109

95.2

5.36

762

2.8

(0.38)

747

3.4

(0.34)

Consumer

2,606

73.1

11.16

2,722

76.7

11.21

2,942

86.2

11.62

(116)

(3.6)

(0.05)

(336)

(13.1)

(0.46)

Auto

3,130

68.8

8.74

3,006

68.6

9.08

2,935

68.7

9.28

124

0.2

(0.34)

195

0.1

(0.54)

Lease financing

1,170

17.8

6.07

1,122

17.1

6.08

1,038

15.7

6.06

48

0.7

(0.01)

132

2.1

0.01

Total loans

29,300

441.3

6.00

28,543

441.6

6.16

27,081

459.4

6.75

757

(0.3)

(0.16)

2,219

(18.1)

(0.75)

Total interest earning assets

$61,854

$568.5

3.66

%

$59,880

$559.1

3.72

%

$48,546

$605.7

4.96

%

$1,974

$9.4

(0.06)

%

$13,308

$(37.2)

(1.30)

%

Allowance for credit losses - loan portfolio

(930)

(923)

(515)

(7)

(415)

Allowance for credit losses - investment securities

(12)

(13)

-

1

(12)

Other non-interest earning assets

4,054

4,176

3,943

(122)

111

Total average assets

$64,966

$63,120

$51,974

$1,846

$12,992

Liabilities and Stockholders' Equity:

Interest bearing deposits:

NOW and money market

$21,829

$8.7

0.16

%

$21,225

$9.1

0.17

%

$16,312

$36.0

0.88

%

$604

$(0.4)

(0.01)

%

$5,517

$(27.3)

(0.72)

%

Savings

13,890

7.5

0.22

13,103

8.3

0.25

10,830

13.3

0.49

787

(0.8)

(0.03)

3,060

(5.8)

(0.27)

Time deposits

7,656

17.2

0.89

7,810

20.2

1.03

7,749

27.5

1.41

(154)

(3.0)

(0.14)

(93)

(10.3)

(0.52)

Total interest-bearing deposits

43,375

33.4

0.31

42,138

37.6

0.35

34,891

76.8

0.87

1,237

(4.2)

(0.04)

8,484

(43.4)

(0.56)

Borrowings

1,354

14.4

4.26

1,358

14.6

4.31

1,345

15.6

4.65

(4)

(0.2)

(0.05)

9

(1.2)

(0.39)

Total interest-bearing liabilities

44,729

47.8

0.43

43,496

52.2

0.48

36,236

92.4

1.01

1,233

(4.4)

(0.05)

8,493

(44.6)

(0.58)

Net interest spread

3.23

%

3.24

%

3.95

%

(0.01)

%

(0.72)

%

Non-interest bearing deposits

13,303

12,806

8,894

497

4,409

Other liabilities

1,393

1,435

957

(42)

436

Stockholders' equity

5,541

5,383

5,887

158

(346)

Total average liabilities and stockholders' equity

$64,966

$63,120

$51,974

$1,846

$12,992

Net interest income / margin on a taxable equivalent basis (Non-GAAP)

$520.7

3.35

%

$506.9

3.37

%

$513.3

4.20

%

$13.8

(0.02)

%

$7.4

(0.85)

%

Taxable equivalent adjustment

49.1

45.8

45.9

3.3

3.2

Net interest income / margin non-taxable equivalent basis (GAAP)

$471.6

3.04

%

$461.0

3.06

%

$467.4

3.83

%

$10.6

(0.02)

%

$4.2

(0.79)

%

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table E - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - YEAR-TO-DATE

(Unaudited)

Years ended

31-Dec-20

31-Dec-19

Variance

Average

Income /

Yield /

Average

Income /

Yield /

Average

Income /

Yield /

($ amounts in millions)

balance

Expense

Rate

balance

Expense

Rate

balance

Expense

Rate

Assets:

Interest earning assets:

Money market, trading and investment securities

$28,020

$491.9

1.76

%

$20,139

$596.7

2.96

%

$7,881

($104.8)

(1.20)

%

Loans not covered under loss-sharing agreements with the FDIC:

Commercial

13,245

692.4

5.23

12,171

743.7

6.11

1,074

(51.3)

(0.88)

Construction

913

52.4

5.74

801

52.8

6.59

112

(0.4)

(0.85)

Mortgage

7,255

379.8

5.23

7,121

381.5

5.36

134

(1.7)

(0.13)

Consumer

2,839

322.0

11.34

2,885

340.8

11.81

(46)

(18.8)

(0.47)

Auto

3,021

271.2

8.97

2,839

272.2

9.59

182

(1.0)

(0.62)

Lease financing

1,112

67.2

6.05

989

59.9

6.06

123

7.3

(0.01)

Total loans

28,385

1,785.0

6.29

26,806

1,850.9

6.90

1,579

(65.9)

(0.61)

Total interest earning assets

$56,405

$2,276.9

4.04

%

$46,945

$2,447.6

5.21

%

$9,460

($170.7)

(1.17)

%

Allowance for credit losses - loan portfolio

(897)

(544)

(353)

Allowance for credit losses - investment securities

(13)

-

(13)

Other non-interest earning assets

4,089

3,940

149

Total average assets

$59,584

$50,341

$9,243

Liabilities and Stockholders' Equity:

Interest bearing deposits:

NOW and money market

$19,678

$54.7

0.28

%

$15,326

$146.7

0.96

%

$4,352

($92.0)

(0.68)

%

Savings

12,399

37.8

0.30

10,249

45.5

0.44

2,150

(7.7)

(0.14)

Time deposits

7,971

83.4

1.05

7,770

112.7

1.45

201

(29.3)

(0.40)

Total interest-bearing deposits

40,048

175.9

0.44

33,345

304.9

0.91

6,703

(129.0)

(0.47)

Borrowings

1,344

59.1

4.40

1,425

64.2

4.51

(81)

(5.1)

(0.11)

Total interest-bearing liabilities

41,392

235.0

0.57

34,770

369.1

1.06

6,622

(134.1)

(0.49)

Net interest spread

3.47

%

4.15

%

(0.68)

%

Non-interest bearing deposits

11,538

8,873

2,665

Other liabilities

1,234

984

250

Stockholders' equity

5,420

5,714

(294)

Total average liabilities and stockholders' equity

$59,584

$50,341

$9,243

Net interest income / margin on a taxable equivalent basis (Non-GAAP)

$2,041.9

3.62

%

$2,078.5

4.43

%

($36.6)

(0.81)

%

Taxable equivalent adjustment

185.4

186.8

(1.4)

Net interest income / margin non-taxable equivalent basis (GAAP)

$1,856.6

3.29

%

$1,891.7

4.03

%

($35.1)

(0.74)

%

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table F - Mortgage Banking Activities and Other Service Fees

(Unaudited)

Mortgage Banking Activities

Quarters ended

Variance

Years ended

Variance

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

Q4 2020
vs.Q3 2020

Q4 2020
vs.Q4 2019

31-Dec-20

31-Dec-19

2020 vs. 2019

Mortgage servicing fees, net of fair value adjustments:

Mortgage servicing fees

$10,242

$12,966

$11,552

$(2,724)

$(1,310)

$43,234

$46,952

$(3,718)

Mortgage servicing rights fair value adjustments

(8,695)

(20,491)

(1,577)

11,796

(7,118)

(42,055)

(27,430)

(14,625)

Total mortgage servicing fees, net of fair value adjustments

1,547

(7,525)

9,975

9,072

(8,428)

1,179

19,522

(18,343)

Net gain on sale of loans, including valuation on loans held-for-sale

10,826

10,916

4,164

(90)

6,662

31,215

18,817

12,398

Trading account (loss) profit:

Unrealized gains (losses) on outstanding derivative positions

4

(4)

-

8

4

-

-

-

Realized losses on closed derivative positions

(2,195)

(1,958)

(691)

(237)

(1,504)

(10,586)

(6,246)

(4,340)

Total trading account loss

(2,191)

(1,962)

(691)

(229)

(1,500)

(10,586)

(6,246)

(4,340)

Losses on repurchased loans, including interest advances[1]

(452)

(10,955)

-

10,503

(452)

(11,407)

-

(11,407)

Total mortgage banking activities

$9,730

$(9,526)

$13,448

$19,256

$(3,718)

$10,401

$32,093

$(21,692)

[1] The Corporation, from time to time, repurchases delinquent loans from its GNMA servicing portfolio, in compliance with Guarantor guidelines, and may incur in losses related to previously advanced interest on delinquent loans. During the quarter ended September 30, 2020 the Corporation repurchased $687.9 million of GNMA loans and recorded a loss of $10.5 million for previously advanced interest on delinquent loans. Effective for the quarter ended September 30, 2020, the Corporation has determined to present these losses as part of its Mortgage Banking Activities, which were previously presented within the indemnity reserves on loans sold component of non-interest income.

Other Service Fees

Quarters ended

Variance

Years ended

Variance

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

Q4 2020
vs.Q3 2020

Q4 2020
vs.Q4 2019

31-Dec-20

31-Dec-19

2020 vs. 2019

Other service fees:

Debit card fees

$11,210

$11,123

$12,219

$87

$(1,009)

$39,652

$47,142

$(7,490)

Insurance fees

13,803

13,941

17,574

(138)

(3,771)

52,014

62,226

(10,212)

Credit card fees

27,986

27,077

26,155

909

1,831

96,011

98,860

(2,849)

Sale and administration of investment products

5,488

5,094

6,367

394

(879)

21,755

23,072

(1,317)

Trust fees

5,499

4,886

5,263

613

236

21,191

20,694

497

Other fees

7,170

7,758

7,981

(588)

(811)

27,269

33,212

(5,943)

Total other service fees

$71,156

$69,879

$75,559

$1,277

$(4,403)

$257,892

$285,206

$(27,314)

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table G - Loans and Deposits

(Unaudited)

Loans - Ending Balances

Variance

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

Q4 2020
vs.Q3 2020

Q4 2020
vs.Q4 2019

Loans held-in-portfolio:

Commercial

$13,606,280

$13,611,374

$12,312,751

$(5,094)

$1,293,529

Construction

918,765

936,274

831,092

(17,509)

87,673

Legacy [1]

15,473

16,168

22,105

(695)

(6,632)

Lease financing

1,197,661

1,153,108

1,059,507

44,553

138,154

Mortgage

7,890,680

7,924,441

7,183,532

(33,761)

707,148

Auto

3,132,228

3,045,453

2,917,522

86,775

214,706

Consumer

2,624,109

2,705,692

3,080,364

(81,583)

(456,255)

Total loans held-in-portfolio

$29,385,196

$29,392,510

$27,406,873

$(7,314)

$1,978,323

Loans held-for-sale:

Commercial

$2,738

$4,070

$-

$(1,332)

$2,738

Mortgage

96,717

98,690

59,203

(1,973)

37,514

Total loans held-for-sale

$99,455

$102,760

$59,203

$(3,305)

$40,252

Total loans

$29,484,651

$29,495,270

$27,466,076

$(10,619)

$2,018,575

[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.

Deposits - Ending Balances

Variance

(In thousands)

31-Dec-20

30-Sep-20

31-Dec-19

Q4 2020
vs. Q3 2020

Q4 2020
vs.Q4 2019

Demand deposits [1]

$22,532,729

$22,929,040

$16,566,145

$(396,311)

$5,966,584

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

26,390,565

24,696,244

19,169,899

1,694,321

7,220,666

Savings, NOW and money market deposits (brokered)

635,198

551,770

347,765

83,428

287,433

Time deposits (non-brokered)

7,130,749

7,664,361

7,546,621

(533,612)

(415,872)

Time deposits (brokered CDs)

177,099

180,568

128,176

(3,469)

48,923

Total deposits

$56,866,340

$56,021,983

$43,758,606

$844,357

$13,107,734

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

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table H - Loan Delinquency - Puerto Rico Operations

(Unaudited)

31-Dec-20

Puerto Rico

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

$

796

$

-

$

505

$

1,301

$

150,979

$

152,280

$

505

$

-

Commercial real estate:

Non-owner occupied

2,189

3,503

77,137

82,829

1,924,504

2,007,333

77,137

-

Owner occupied

8,270

1,218

92,001

101,489

1,497,406

1,598,895

92,001

-

Commercial and industrial

10,223

775

35,012

46,010

4,183,098

4,229,108

34,449

563

Construction

-

-

21,497

21,497

135,609

157,106

21,497

-

Mortgage

195,602

87,726

1,428,824

1,712,152

5,057,991

6,770,143

414,343

1,014,481

Leasing

9,141

1,427

3,441

14,009

1,183,652

1,197,661

3,441

-

Consumer:

Credit cards

6,550

4,619

12,798

23,967

895,968

919,935

-

12,798

Home equity lines of credit

184

-

48

232

3,947

4,179

-

48

Personal

11,255

8,097

26,387

45,739

1,232,008

1,277,747

26,387

-

Auto

53,186

12,696

15,736

81,618

3,050,610

3,132,228

15,736

-

Other

304

483

15,052

15,839

110,826

126,665

14,881

171

Total

$

297,700

$

120,544

$

1,728,438

$

2,146,682

$

19,426,598

$

21,573,280

$

700,377

$

1,028,061

30-Sep-20

Puerto Rico

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

$

3,480

$

129

$

1,400

$

5,009

$

139,169

$

144,178

$

1,400

$

-

Commercial real estate:

Non-owner occupied

19,523

2,014

98,811

120,348

1,950,794

2,071,142

98,811

-

Owner occupied

10,187

4,223

97,453

111,863

1,458,412

1,570,275

97,453

-

Commercial and industrial

6,809

6,376

45,013

58,198

4,233,554

4,291,752

44,320

693

Construction

4,895

-

21,514

26,409

169,656

196,065

21,514

-

Mortgage

336,824

59,386

1,567,504

1,963,714

4,863,266

6,826,980

370,060

1,197,444

Leasing

8,254

2,450

3,217

13,921

1,139,187

1,153,108

3,217

-

Consumer:

Credit cards

6,125

6,305

14,505

26,935

904,604

931,539

-

14,505

Home equity lines of credit

181

-

58

239

4,075

4,314

-

58

Personal

13,166

7,569

29,343

50,078

1,255,707

1,305,785

29,343

-

Auto

39,887

10,377

13,454

63,718

2,981,735

3,045,453

13,454

-

Other

190

1,224

14,348

15,762

108,290

124,052

14,104

244

Total

$

449,521

$

100,053

$

1,906,620

$

2,456,194

$

19,208,449

$

21,664,643

$

693,676

$

1,212,944

Variance

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

$

(2,684)

$

(129)

$

(895)

$

(3,708)

$

11,810

$

8,102

$

(895)

$

-

Commercial real estate:

Non-owner occupied

(17,334)

1,489

(21,674)

(37,519)

(26,290)

(63,809)

(21,674)

-

Owner occupied

(1,917)

(3,005)

(5,452)

(10,374)

38,994

28,620

(5,452)

-

Commercial and industrial

3,414

(5,601)

(10,001)

(12,188)

(50,456)

(62,644)

(9,871)

(130)

Construction

(4,895)

-

(17)

(4,912)

(34,047)

(38,959)

(17)

-

Mortgage

(141,222)

28,340

(138,680)

(251,562)

194,725

(56,837)

44,283

(182,963)[1]

Leasing

887

(1,023)

224

88

44,465

44,553

224

-

Consumer:

Credit cards

425

(1,686)

(1,707)

(2,968)

(8,636)

(11,604)

-

(1,707)

Home equity lines of credit

3

-

(10)

(7)

(128)

(135)

-

(10)

Personal

(1,911)

528

(2,956)

(4,339)

(23,699)

(28,038)

(2,956)

-

Auto

13,299

2,319

2,282

17,900

68,875

86,775

2,282

-

Other

114

(741)

704

77

2,536

2,613

777

(73)

Total

$

(151,821)

$

20,491

$

(178,182)

$

(309,512)

$

218,149

$

(91,363)

$

6,701

$

(184,883)

[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 include $57 million (September 30, 2020- $161 million) in loans rebooked under the GNMA program, in which issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due.

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table I - Loan Delinquency - Popular U.S. Operations

(Unaudited)

December 31, 2020

Popular U.S.

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

$

5,273

$

-

$

1,894

$

7,167

$

1,736,544

$

1,743,711

$

1,894

$

-

Commercial real estate:

Non-owner occupied

924

3,640

669

5,233

1,988,577

1,993,810

669

-

Owner occupied

191

650

334

1,175

343,205

344,380

334

-

Commercial and industrial

1,112

65

1,580

2,757

1,534,006

1,536,763

1,580

-

Construction

21,312

-

7,560

28,872

732,787

761,659

7,560

-

Mortgage

33,422

15,464

14,864

63,750

1,056,787

1,120,537

14,864

-

Legacy

5

7

1,511

1,523

13,950

15,473

1,511

-

Consumer:

Credit cards

-

-

3

3

28

31

-

3

Home equity lines of credit

236

342

7,491

8,069

86,502

94,571

7,491

-

Personal

1,486

1,342

1,474

4,302

194,936

199,238

1,474

-

Other

-

-

20

20

1,723

1,743

20

-

Total

$

63,961

$

21,510

$

37,400

$

122,871

$

7,689,045

$

7,811,916

$

37,397

$

3

September 30, 2020

Popular U.S.

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

$

-

$

-

$

1,755

$

1,755

$

1,734,982

$

1,736,737

$

1,755

$

-

Commercial real estate:

Non-owner occupied

-

-

396

396

1,938,617

1,939,013

396

-

Owner occupied

653

-

342

995

360,131

361,126

342

-

Commercial and industrial

552

50

3,901

4,503

1,492,648

1,497,151

3,901

-

Construction

-

-

9,069

9,069

731,140

740,209

9,069

-

Mortgage

2,467

6,433

14,484

23,384

1,074,077

1,097,461

14,484

-

Legacy

41

16

1,360

1,417

14,751

16,168

1,360

-

Consumer:

Credit cards

-

3

3

6

25

31

-

3

Home equity lines of credit

1,257

351

7,586

9,194

95,715

104,909

7,586

-

Personal

1,641

1,597

1,770

5,008

228,754

233,762

1,770

-

Other

22

2

29

53

1,247

1,300

29

-

Total

$

6,633

$

8,452

$

40,695

$

55,780

$

7,672,087

$

7,727,867

$

40,692

$

3

Variance

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

$

5,273

$

-

$

139

$

5,412

$

1,562

$

6,974

$

139

$

-

Commercial real estate:

Non-owner occupied

924

3,640

273

4,837

49,960

54,797

273

-

Owner occupied

(462)

650

(8)

180

(16,926)

(16,746)

(8)

-

Commercial and industrial

560

15

(2,321)

(1,746)

41,358

39,612

(2,321)

-

Construction

21,312

-

(1,509)

19,803

1,647

21,450

(1,509)

-

Mortgage

30,955

9,031

380

40,366

(17,290)

23,076

380

-

Legacy

(36)

(9)

151

106

(801)

(695)

151

-

Consumer:

Credit cards

-

(3)

-

(3)

3

-

-

-

Home equity lines of credit

(1,021)

(9)

(95)

(1,125)

(9,213)

(10,338)

(95)

-

Personal

(155)

(255)

(296)

(706)

(33,818)

(34,524)

(296)

-

Other

(22)

(2)

(9)

(33)

476

443

(9)

-

Total

$

57,328

$

13,058

$

(3,295)

$

67,091

$

16,958

$

84,049

$

(3,295)

$

-

Popular, Inc.

Financial Supplement to Fourth Quarter 2020 Earnings Release

Table J - Loan Delinquency - Consolidated

(Unaudited)

31-Dec-20

Popular, Inc.

Past due

Past due 90 days or more

30-59

60-89

90 days

Total

Non-accrual

Accruing

(In thousands)

days

days

or more

past due

Current

Loans HIP

loans

loans

Commercial multi-family

$

6,069

$

-

$

2,399

$

8,468

$

1,887,523

$

1,895,991

$

2,399

$

-

Commercial real estate:

Non-owner occupied

3,113

7,143