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Popular, Inc. Announces Third Quarter 2021 Financial Results

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  • BPOP
  • BPOPO
  • Net income of $248.1 million in Q3 2021, compared to net income of $218.1 million in Q2 2021.

  • Net interest margin of 2.77% in Q3 2021, compared to 2.91% in Q2 2021; net interest margin on a taxable equivalent basis of 3.04% in Q3 2021, compared to 3.22% in Q2 2021.

  • Credit Quality:

    • Non-performing loans held-in-portfolio ("NPLs") decreased by $52.3 million from Q2 2021; NPLs to loans ratio at 2.2% vs. 2.4% in Q2 2021;

    • Net charge-offs ("NCOs") increased by $10.1 million from Q2 2021; NCOs at 0.12% of average loans held-in-portfolio vs. (0.02%) in Q2 2021;

    • Allowance for credit losses ("ACL") to loans held-in-portfolio at 2.49% vs. 2.70% in Q2 2021; and

    • ACL to NPLs at 113.6% vs. 114.7% in Q2 2021.

  • Common Equity Tier 1 ratio of 17.36%, Common Equity per Share of $74.66 and Tangible Book Value per Share of $66.01 at September 30, 2021.

SAN JUAN, Puerto Rico, October 20, 2021--(BUSINESS WIRE)--Popular, Inc. (the "Corporation," "Popular," "we," "us," "our") (NASDAQ:BPOP) reported net income of $248.1 million for the quarter ended September 30, 2021, compared to net income of $218.1 million for the quarter ended June 30, 2021.

Ignacio Alvarez, President and Chief Executive Officer, said: "The third quarter was another strong quarter. We achieved net income of $248.1 million, driven by a reserve release of $61 million. The release reflects strong credit quality performance as well as a positive economic outlook. We continued to see higher credit and debit card spending, strong auto and mortgage originations as well as higher deposits. During the quarter we also continued to return capital to our shareholders, completing our $350 million accelerated repurchase program and announcing the redemption of $187 million in high-cost trust preferred securities. On October 15, 2021 we also completed a bolt-on acquisition of a national equipment leasing platform that complements our existing healthcare lending vertical. I am extremely proud of the work our team has accomplished during 2021 as we continue to serve our clients and communities."

Significant Events

Financial Highlights

For the third quarter of 2021, the Corporation recorded net income of $248.1 million, compared to a net income of $218.1 million for the previous quarter. The third quarter’s results include a release in the allowance for credit losses of $61.2 million driven by improving credit quality and the improved macroeconomic outlook. Net Interest income was $489.4 million, an increase of $1.6 million compared to the previous quarter, mainly due to higher average earning assets and higher income from the loans issued under the U.S. Small Business Administration’s ("SBA") Paycheck Protection Program ("PPP"), offset in part by a lower discount amortization of purchased credit deteriorated ("PCD") loans. Net interest margin decreased 14 basis points to 2.77%. Total assets grew by $1.5 billion from the previous quarter, reflecting an increase in deposits across various sectors, principally from the Puerto Rico public sector.

Acquisition of K2 Capital Group LLC

On October 15, 2021, Popular Equipment Finance, LLC ("PEF"), a newly-formed wholly-owned subsidiary of Popular Bank ("PB"), completed the acquisition of certain assets and the assumption of certain liabilities of Minnesota-based K2 Capital Group LLC’s ("K2") equipment leasing and financing business (the "Acquired Business"). PEF made a payment to K2 at closing of approximately $159 million in cash, representing a premium of approximately $40 million over the book value of K2’s net assets. An additional approximately $29 million in earnout payments could be payable to K2 over the next three years, contingent upon the achievement of certain agreed-upon financial targets during such period.

Specializing in the healthcare industry, the Acquired Business provides a variety of lease products, including operating and capital leases, and also offers private label vendor finance programs to equipment manufacturers and healthcare organizations. The acquisition provides PB with a national equipment leasing platform that complements its existing healthcare lending business.

As part of the transaction, PEF acquired approximately $119 million in net assets that consisted mainly of capital leases. All of K2’s former employees, including its management team, became PEF employees at the closing of the transaction. The transaction will be accounted for as a business combination.

Capital Actions

Accelerated Share Repurchase

On September 9, 2021, the Corporation completed its previously announced accelerated share repurchase program for the repurchase of an aggregate $350 million of Popular’s common stock. Under the terms of the accelerated share repurchase agreement (the "ASR Agreement"), on May 4, 2021, the Corporation made an initial payment of $350 million and received an initial delivery of 3,785,831 shares of Popular’s Common Stock (the "Initial Shares"). The transaction was accounted for as a treasury stock transaction. As a result of the receipt of the Initial Shares, the Corporation recognized in shareholders’ equity approximately $280 million in treasury stock and $70 million as a reduction in capital surplus. Upon the final settlement of the ASR Agreement, the Corporation received an additional 828,965 shares and recognized $61 million as treasury stock with a corresponding increase in its capital surplus account. The Corporation repurchased a total of 4,614,796 shares at an average purchase price of $75.84 under the ASR Agreement.

Redemption of Trust Preferred Securities

On September 30, 2021, the Corporation announced that it had sent a redemption notice to The Bank of New York Mellon, the Property Trustee for Popular Capital Trust I (the "Trust"), to redeem, on November 1, 2021, all outstanding 6.70% Cumulative Monthly Income Trust Preferred Securities (the "Capital Securities") issued by the Trust (liquidation amount of $25 per security and amounting to $186,663,800 (or $181,063,250 after excluding Popular’s participation in the Trust of $5,600,550) in the aggregate). The redemption price for the Capital Securities will be equal to $25 per security plus accrued and unpaid distributions up to and excluding the redemption date in the amount of $0.139583 per security, for a total payment per security in the amount of $25.139583. Upon redemption, Popular intends to apply for delisting of the Popular Capital Trust I (NASDAQ: BPOPN) from the Nasdaq Global Select Market.

Earnings Highlights

(Unaudited)

Quarters ended

Nine months ended

(Dollars in thousands, except per share information)

30-Sep-21

30-Jun-21

30-Sep-20

30-Sep-21

30-Sep-20

Net interest income

$489,393

$487,802

$461,021

$1,456,307

$1,384,997

Provision for credit losses (benefit)

(61,173

)

(17,015

)

19,138

(160,414

)

271,318

Net interest income after provision for credit losses (benefit)

550,566

504,817

441,883

1,616,721

1,113,679

Other non-interest income

169,258

154,540

128,767

477,451

367,465

Operating expenses

388,168

368,185

361,066

1,131,881

1,081,905

Income before income tax

331,656

291,172

209,584

962,291

399,239

Income tax expense

83,542

73,093

41,168

233,466

68,893

Net income

$248,114

$218,079

$168,416

$728,825

$330,346

Net income applicable to common stock

$247,761

$217,726

$168,064

$727,766

$328,941

Net income per common share-basic

$3.09

$2.67

$2.01

$8.89

$3.80

Net income per common share-diluted

$3.09

$2.66

$2.00

$8.87

$3.80

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

Net interest income, on a taxable equivalent basis, is presented with its different components in Table D and E for the quarter and nine months ended September 30, 2021, and comparable periods. Net interest income on a taxable equivalent basis is a non-GAAP financial measure. Management believes that this presentation provides meaningful information since it facilitates the comparison of revenues arising from taxable and tax-exempt sources.

Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

Net interest income for the quarter ended September 30, 2021 was $489.4 million compared to $487.8 million in the previous quarter, an increase of $1.6 million. The total net impact on net interest income of the third quarter having one more day than the second quarter of 2021 is estimated at $3.8 million. Net interest income, on a taxable equivalent basis, for the third quarter of 2021 was $536.3 million, a decrease of $4.9 million when compared to $541.2 million in the second quarter of 2021. The decrease in net interest income on a taxable equivalent is related to lower exempt income mainly from mortgage-backed securities. On a taxable equivalent basis, the total net impact on net interest income of the third quarter having of one more day than the second quarter of 2021 is estimated at $4.1 million.

The net interest margin decreased 14 basis points to 2.77% compared to 2.91% in the previous quarter. The decrease in the net interest margin is due to a higher proportion of money market and investment securities, which carry a low yield, resulting from a higher volume of deposits in the quarter, lower discount amortization of PCD loans, partially offset by higher loan fees related to loans issued under the SBA PPP and a lower cost of deposits. On a taxable equivalent basis, net interest margin for the third quarter of 2021 was 3.04% compared to 3.22% in the second quarter of 2021, a decrease of 18 basis points. The main variances in net interest income on a taxable equivalent basis were:

  • Lower interest income from money market investments, trading and investment securities by $7.7 million due to lower volume and yield of mortgage-backed securities, partially offset by a higher volume of lower yielding U.S. Treasury notes

Partially offset by:

  • Higher interest income from loans by $1.5 million mainly due to the following:

    • Higher interest income from commercial loans driven by higher interest income and fees from PPP loans by $8.1 million and the impact of one more day in the quarter or $1.9 million, offset in part by a lower discount amortization on PCD loans of approximately $9.3 million; and

    • auto and lease financing continuing its positive trend increasing $147 million in average loan balances and reflecting an increase in interest income of $1.8 million. The decrease in yield of the portfolio is driven by lower amortization on a previously purchased auto loans portfolio
      Partially offset by:

    • Lower interest income from mortgage loans due to lower average volume resulting from continued amortization of the portfolio at Banco Popular de Puerto Rico ("BPPR"); and

    • lower interest income from consumer loans, mainly credit cards, due to the reversal last quarter of $1.6 million from the reserve for uncollectible interest.

  • Lower interest expense on deposits by $1.1 million resulting from a lower cost by 3 basis points driven by a higher volume of low yielding deposits, reduction of costs in several non-maturity deposit products and renewals of time deposits in a lower interest rate environment. These positive variances in deposit cost were partially offset by higher volume of interest-bearing deposits by $2.8 billion.

The Corporation recognized income of $22.0 million related to loans issued under the SBA PPP program during the third quarter, compared to $13.9 million in the previous quarter. These loans carried a yield of approximately 10.10% during this quarter, including the amortization of fee income received under the SBA PPP program, compared to 4.45% last quarter. At September 30, 2021, the Corporation had unamortized fee income related to the SBA PPP program of $40.0 million and outstanding loan balances of $669.8 million.

Net interest income for the BPPR segment amounted to $419.2 million for the quarter ended September 30, 2021, flat quarter over quarter. The net interest margin for the third quarter of 2021 was 2.75%, a decrease of 16 basis points when compared to 2.91% for the previous quarter. As discussed above, net interest margin was negatively impacted by a higher volume of money market and investment securities, lower amortization of discount on PCD loans, partially offset by higher fees resulting from the forgiveness and amortization of SBA PPP loans of approximately $8.1 million and lower deposit cost. The cost of interest-bearing deposits was 0.17%, compared to 0.18% reported in the second quarter. Total cost of deposits for the quarter was 0.13%, compared to 0.14% reported in the second quarter of 2021.

Net interest income for the PB segment was $80.0 million for the quarter ended September 30, 2021, compared to $78.7 million during the previous quarter. Net interest margin for the quarter was 3.36% higher than the 3.33% the previous quarter. The cost of interest-bearing deposits was 0.56%, compared to 0.60% in the previous quarter, decreasing for the eighth consecutive quarter. Total cost of deposits for the quarter, including demand deposits, was 0.43%, compared to 0.47% reported in the second quarter of 2021.

Non-interest income

Non-interest income increased by $14.8 million to $169.3 million for the quarter ended September 30, 2021, compared to $154.5 million for the quarter ended June 30, 2021. The variance in non-interest income was primarily driven by:

  • higher other service fees by $4.1 million mainly due to higher insurance fees by $1.6 million, higher other fees by $1.5 million mostly related to loan syndication activities and higher credit card fees by $0.7 million mainly in interchange income and late fees; and

  • higher other operating income by $10.0 million mostly due to a gain of $7.0 million recognized by BPPR as a result of the sale and partial leaseback of two corporate office buildings and higher net earnings from the combined portfolio of investments under the equity method by $3.0 million.

Refer to Table B for further details.

Operating expenses

Operating expenses for the third quarter of 2021 totaled $388.2 million, an increase of $20.0 million from the second quarter of 2021. The variance in operating expenses was driven primarily by:

  • higher personnel cost by $3.4 million due to higher salaries as a result of salary and annual merit increases granted during the quarter;

  • higher professional fees by $3.6 million mainly due to higher advisory expenses related to corporate initiatives;

  • higher business promotion expense by $1.6 million mainly due to promotional events during the quarter;

  • higher FDIC deposit insurance expense by $1.4 million mainly due to higher average total assets;

  • lower other real estate owned (OREO) net benefit by $2.6 million mainly due to lower gain on sale of mortgage properties;

  • higher credit and debit card processing, volume, interchange and other expenses by $2.0 million mainly due to higher volume of transactions; and

  • higher other operating expenses by $4.3 million due to higher printing and supplies cost by $1.1 million and lower gain on sale of repossessed auto units by $1.4 million.

Full-time equivalent employees were 8,342 as of September 30, 2021, compared to 8,439 as of June 30, 2021.

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

Income taxes

For the quarter ended September 30, 2021, the Corporation recorded an income tax expense of $83.5 million, compared to $73.1 million for the previous quarter. The increase in income tax expense was mainly attributable to higher income before tax during the third quarter of 2021 and lower exempt income. The effective tax rate ("ETR") for the third quarter of 2021 was 25%, flat when compared with the previous quarter. The ETR of the Corporation is impacted by the composition and source of its taxable income.

Credit Quality

During the third quarter of 2021, the Corporation continued to exhibit favorable credit quality and low credit costs. Early delinquencies and NCOs, remained at relatively low levels when compared to the trend for the past 10-years, although higher than the prior quarter. We will continue to closely monitor COVID-19 pandemic related risks and the effects of the receding stimulus on economic conditions and on borrower performance. However, management believes that the improvement over the last few years in the risk profile of the Corporation’s loan portfolios positions Popular to operate successfully under the current environment.

The following presents credit quality results for the third quarter of 2021:

  • At September 30, 2021, total non-performing loans held-in-portfolio decreased by $52.3 million from June 30, 2021. BPPR’s NPLs decreased by $47.9 million, driven by lower commercial and mortgage NPLs by $34.3 million and $16.1 million, respectively. The commercial NPLs decrease was mainly due to repayment activity, coupled with charge-offs of $7.6 million related to certain collateral dependent loans, while the mortgage NPLs decrease was due to lower inflows for the quarter. PB’s NPLs decreased by $4.4 million, mostly related to a $5.9 million commercial loan pay-off. At September 30, 2021, the ratio of NPLs to total loans held-in-portfolio was 2.2%, compared to 2.4% in the second quarter of 2021.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $43.7 million quarter-over-quarter. In BPPR, total inflows decreased by $37.0 million, mostly driven by lower commercial inflows of $32.2 million, as the prior quarter included the inflow of a single $32.4 million relationship. Mortgage inflows decreased by $4.8 million from the prior quarter, as inflows continue trending lower than pre-pandemic levels. NPL inflows at PB decreased by $6.6 million during the quarter, mostly due to lower commercial inflows.

  • NCOs experienced a negative variance of $10.1 million from a net recovery of $1.3 million in the second quarter of 2021 to charge-offs of $8.8 million this quarter. BPPR ‘s NCOs increased by $10.8 million, primarily driven by higher commercial NCOs by $14.2 million partially offset by lower mortgage NCOs by $3.0 million. The increase reflected in the commercial NCOs was mostly driven by two commercial loans with aggregate charge-offs of $7.6 million, combined with the effect of recoveries of $7.9 million in the prior period from the resolution of a non-performing relationship. During the third quarter of 2021, the Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was 0.12%, compared to (0.02)% in the second quarter of 2021. Refer to Table M for further information on net charge-offs and related ratios.

  • At September 30, 2021, the allowance for credit losses ("ACL") decreased by $67.2 million, or 8.6%, from the second quarter of 2021 to $718.6 million. The ACL incorporated updated macroeconomic scenarios for Puerto Rico and the United States, which continued to show a positive outlook for the economy. In BPPR, the ACL decreased by $45.1 million mainly driven by changes in the macroeconomic scenarios, particularly certain income-related variables, and credit quality. The allowance for the PB segment decreased by $22.1 million mainly driven by a reduction in the qualitative reserve for commercial real estate loans, also influenced by the changes in the macroeconomic scenarios. The ratio of the allowance for credit losses to loans held-in-portfolio was 2.49% in the third quarter of 2021, compared to 2.70% in the previous quarter. The ratio of the allowance for credit losses to NPLs held-in-portfolio stood at 113.6%, compared to 114.7% in the previous quarter.

  • Given that any one economic outlook is inherently uncertain, the Corporation leverages multiple scenarios to estimate its ACL. The ACL is estimated by weighting the outputs of optimistic, baseline and pessimistic scenarios. Among the three scenarios used to estimate the ACL, the baseline is assigned the highest probability, followed by the pessimistic scenario given the uncertainties in the economic outlook and downside risk. The current baseline forecast continues to show a favorable economic scenario. The 2021 forecasted GDP growth is at 6.4% for U.S. and 3.8% for P.R., consistent with the previous 2021 forecast of 6.8% and 3.8%, respectively. The forecasted U.S. unemployment rate average for 2021 of 5.5% remained consistent with the previous estimate of 5.4%. In the case of P.R., the forecasted unemployment rate average for 2021 of 8.2% showed a slight improvement when compared to the previous forecast of 8.4%. Average unemployment rate in P.R. is expected to continue declining through 2022, which is now forecasted at 7.2%, improving from the previous forecast of 7.3%.

  • The provision for credit losses for the loan portfolios for the third quarter of 2021 reflected a benefit of $58.6 million, compared to a benefit of $17.5 million in the previous quarter, reflecting changes in the macroeconomic outlook, as well as credit quality trend. The provision for the BPPR segment was a benefit of $36.0 million, a favorable variance of $13.5 million compared to the previous quarter, while the provision expense for the PB segment was a benefit of $22.7 million, a favorable variance of $27.6 million from the previous quarter.

  • The provision for unfunded commitments for the third quarter of 2021 reflected a benefit of $1.5 million, compared to an expense of $0.4 million during the previous quarter. The provision for credit losses in our investment portfolio was a benefit of $1.0 million, compared to an expense of $0.1 million in the second quarter of 2021. The 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)

30-Sep-21

30-Jun-21

30-Sep-20

Non-performing loans held-in-portfolio

$632,835

$685,183

$734,368

Non-performing loans held-for-sale

-

8,700

4,070

Other real estate owned ("OREO")

76,828

73,272

100,592

Total non-performing assets

$709,663

$767,155

$839,030

Net charge-offs (recoveries) for the quarter

$8,823

$(1,291)

$16,859

Ratios:

Loans held-in-portfolio

$28,855,372

$29,062,617

$29,392,510

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

2.19%

2.36%

2.50%

Allowance for credit losses to loans held-in-portfolio

2.49

2.70

3.15

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

113.55

114.68

126.07

Refer to Table K for additional information.

Provision for Credit Losses (Benefit) - Loan Portfolios

(Unaudited)

Quarters ended

Nine months ended

(In thousands)

30-Sep-21

30-Jun-21

30-Sep-20

30-Sep-21

30-Sep-20

Provision for credit losses (benefit) - loan portfolios:

BPPR

$(35,992

)

$(22,488

)

$7,682

$(98,456

)

$181,109

Popular U.S.

(22,653

)

4,988

11,770

(53,468

)

90,442

Total provision for credit losses (benefit) - loan portfolios

$(58,645

)

$(17,500

)

$19,452

$(151,924

)

$271,551

Credit Quality by Segment

(Unaudited)

(In thousands)

Quarters ended

BPPR

30-Sep-21

30-Jun-21

30-Sep-20

Provision for credit losses (benefit) - loan portfolios

$(35,992

)

$(22,488

)

$7,682

Net charge-offs (recoveries)

9,336

(1,483

)

13,769

Total non-performing loans held-in-portfolio

608,871

656,789

693,676

Allowance / loans held-in-portfolio

2.92

%

3.13

%

3.48

%

Quarters ended

Popular U.S.

30-Sep-21

30-Jun-21

30-Sep-20

Provision for credit losses (benefit) - loan portfolios

$(22,653

)

$4,988

$11,770

Net charge-offs (recoveries)

(513

)

192

3,090

Total non-performing loans held-in-portfolio

23,964

28,394

40,692

Allowance / loans held-in-portfolio

1.32

%

1.57

%

2.22

%

Financial Condition Highlights

(Unaudited)

(In thousands)

30-Sep-21

30-Jun-21

30-Sep-20

Cash and money market investments

$18,065,211

$18,333,650

$12,425,126

Investment securities

24,697,876

22,647,401

21,478,048

Loans

28,855,372

29,062,617

29,392,510

Total assets

74,189,163

72,657,293

65,910,369

Deposits

66,013,561

64,641,776

56,021,983

Borrowings

1,263,413

1,267,545

1,407,424

Total liabilities

68,206,192

66,842,679

59,998,284

Stockholders’ equity

5,982,971

5,814,614

5,912,085

Total assets increased by $1.5 billion from the second quarter of 2021, driven by:

  • an increase of $2.1 billion in debt securities available-for-sale, mainly due to purchases of U.S. treasury securities, partially offset by paydowns of agency mortgage-backed securities;

    partially offset by:

  • a decrease of $0.3 billion in cash and money market investments due to purchases of debt securities available-for-sale; and

  • a decrease in loans held-in-portfolio by $0.2 billion mainly due to the forgiveness of approximately $0.4 billion in PPP loans during the quarter. Excluding the decrease in the PPP portfolio, loan balances increased by approximately $0.2 billion mainly in the commercial and auto loan portfolios in BPPR.

Total liabilities increased by $1.4 billion from the second quarter of 2021, mainly due to higher Puerto Rico public sector deposits by $0.7 billion and higher retail and commercial demand deposits by $0.5 billion at BPPR.

Stockholders’ equity increased by approximately $168.4 million from the second quarter of 2021, principally due to net income for the quarter of $248.1 million, partially offset by declared dividends of $36.3 million on common stock, $0.3 million in dividends on preferred stock and lower accumulated unrealized gains on debt securities available-for-sale by $47.0 million.

Common equity tier-1 ratio ("CET1"), common equity per share and tangible book value per share were 17.36%, $74.66 and $66.01, respectively, at September 30, 2021, compared to 16.55%, $71.82 and $63.24 at June 30, 2021. Refer to Table A for capital ratios.

Cautionary Note Regarding Forward-Looking Statements

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

More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2020, in our Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, and in our Form 10-Q for the quarter ended September 30, 2021 to be filed with the Securities and Exchange Commission. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.

About Popular, Inc.

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

Conference Call

Popular will hold a conference call to discuss its financial results today Wednesday, October 20, 2021 at 11:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.

Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through the dial-in telephone number 1-844-200-6205 (Toll Free) or 1-646-904-5544 (Local).

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Wednesday, November 17, 2021. The replay dial-in is: 1-866-813-9403 or 1-929-458-6194. The replay passcode is 928924.

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

Popular, Inc.

Financial Supplement to Third Quarter 2021 Earnings Release

Table A - Selected Ratios and Other Information

Table B - Consolidated Statement of Operations

Table C - Consolidated Statement of Financial Condition

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

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

Table F - Mortgage Banking Activities and Other Service Fees

Table G - Loans and Deposits

Table H - Loan Delinquency - PUERTO RICO OPERATIONS

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

Table J - Loan Delinquency - CONSOLIDATED

Table K - Non-Performing Assets

Table L - Activity in Non-Performing Loans

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

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

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

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

Table Q - Reconciliation to GAAP Financial Measures

POPULAR, INC.

Financial Supplement to Third Quarter 2021 Earnings Release

Table A - Selected Ratios and Other Information

(Unaudited)

Quarters ended

Nine months ended

30-Sep-21

30-Jun-21

30-Sep-20

30-Sep-21

30-Sep-20

Basic EPS

$3.09

$2.67

$2.01

$8.89

$3.80

Diluted EPS

$3.09

$2.66

$2.00

$8.87

$3.80

Average common shares outstanding

80,126,166

81,609,435

83,809,272

81,864,634

86,567,680

Average common shares outstanding - assuming dilution

80,274,942

81,772,789

83,836,151

82,014,113

86,645,691

Common shares outstanding at end of period

79,841,564

80,656,480

84,219,464

79,841,564

84,219,464

Market value per common share

$77.67

$75.05

$36.27

$77.67

$36.27

Market capitalization - (In millions)

$6,201

$6,053

$3,055

$6,201

$3,055

Return on average assets

1.34%

1.24%

1.06%

1.39%

0.76%

Return on average common equity

17.10%

15.43%

12.46%

17.09%

8.21%

Net interest margin (non-taxable equivalent basis)

2.77%

2.91%

3.06%

2.92%

3.39%

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

3.04%

3.22%

3.37%

3.23%

3.72%

Common equity per share

$74.66

$71.82

$69.94

$74.66

$69.94

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

$66.01

$63.24

$61.69

$66.01

$61.69

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

7.17%

7.09%

7.97%

7.17%

7.97%

Return on average tangible common equity [1]

19.44%

17.58%

14.32%

19.46%

9.44%

Tier 1 capital

17.43%

16.62%

16.01%

17.43%

16.01%

Total capital

19.90%

19.09%

18.49%

19.90%

18.49%

Tier 1 leverage

7.38%

7.34%

7.80%

7.38%

7.80%

Common Equity Tier 1 capital

17.36%

16.55%

15.93%

17.36%

15.93%

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

POPULAR, INC.

Financial Supplement to Third Quarter 2021 Earnings Release

Table B - Consolidated Statement of Operations

(Unaudited)

Quarters ended

Variance

Quarter ended

Variance

Nine months ended

Q3 2021

Q3 2021

(In thousands, except per share information)

30-Sep-21

30-Jun-21

vs. Q2 2021

30-Sep-20

vs. Q3 2020

30-Sep-21

30-Sep-20

Interest income:

Loans

$435,296

$433,781

$1,515

$431,286

$4,010

$1,303,726

$1,311,402

Money market investments

6,914

4,274

2,640

2,773

4,141

14,300

16,788

Investment securities

87,952

91,706

(3,754

)

79,142

8,810

265,348

243,938

Total interest income

530,162

529,761

401

513,201

16,961

1,583,374

1,572,128

Interest expense:

Deposits

27,029

28,060

(1,031

)

37,554

(10,525

)

85,290

142,435

Short-term borrowings

54

62

(8

)

416

(362

)

259

2,109

Long-term debt

13,686

13,837

(151

)

14,210

(524

)

41,518

42,587

Total interest expense

40,769

41,959

(1,190

)

52,180

(11,411

)

127,067

187,131

Net interest income

489,393

487,802

1,591

461,021

28,372

1,456,307

1,384,997

Provision for credit losses (benefit)

(61,173

)

(17,015

)

(44,158

)

19,138

(80,311

)

(160,414

)

271,318

Net interest income after provision for credit losses (benefit)

550,566

504,817

45,749

441,883

108,683

1,616,721

1,113,679

Service charges on deposit accounts

41,312

40,153

1,159

36,849

4,463

121,085

108,671

Other service fees

80,445

76,382

4,063

69,879

10,566

227,455

186,736

Mortgage banking activities

8,307

7,448

859

(9,526

)

17,833

33,098

671

Net gain on sale of debt securities

23

-

23

41

(18

)

23

41

Net (loss) gain, including impairment, on equity securities

(401

)

1,565

(1,966

)

5,150

(5,551

)

1,585

4,869

Net profit (loss) on trading account debt securities

58

(47

)

105

20

38

(34

)

593

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

-

(73

)

73

(2,198

)

2,198

(73

)

981

Adjustments (expense) to indemnity reserves on loans sold

2,038

1,668

370

4,183

(2,145

)

3,008

(1,770

)

Other operating income

37,476

27,444

10,032

24,369

13,107

91,304

66,673

Total non-interest income

169,258

154,540

14,718

128,767

40,491

477,451

367,465

Operating expenses:

...

Personnel costs

Salaries

95,185

90,294

4,891

91,891

3,294

274,814

278,116

Commissions, incentives and other bonuses

25,892

26,374

(482

)

17,849

...