POPULAR, INC.

Notes to Consolidated

Financial Statements (Unaudited)

Note 1 -Nature of operations

Popular, Inc. (the “Corporation" or “Popular") is a diversified, publicly owned financial holding company subject to the supervision and

regulation of the Board of Governors of the Federal Reserve System. The Corporation has operations in Puerto Rico, the mainland United

States (“U.S.") and the U.S. and British Virgin Islands. In Puerto Rico, the Corporation provides retail, mortgage and commercial banking

services, as well as auto and equipment leasing and financing through its principal banking subsidiary, Banco Popular de Puerto Rico

(“BPPR"), as well as broker-dealer and insurance services through specialized subsidiaries. In the U.S. mainland, the Corporation provides

retail, mortgage and commercial banking services, as well as equipment leasing and financing, through its New York-chartered banking

subsidiary, Popular Bank (“PB" or “Popular U.S."), which has branches located in New York, New Jersey, and Florida.

Note 2 -Basis of presentation

Basis of Presentation

The (unaudited) interim Consolidated Financial Statements are, in the opinion of management, a fair statement of the results for the periods

reported. The consolidated statement of financial condition presented as of December 31, 2025 was derived from audited Consolidated

Financial Statements of the Corporation for the year ended December 31, 2025.

Certain information and notes to the financial statements disclosures which would normally be included in financial statements prepared in

accordance with Accounting Principles Generally Accepted in the United States of America (U.S. GAAP), have been condensed or omitted

from the unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly,

these financial statements should be read in conjunction with the audited Consolidated Financial Statements of the Corporation for the year

ended December 31, 2025, included in the 2025 Form 10-K. Operating results for the interim periods disclosed herein are not necessarily

indicative of the results that may be expected for a full year or any future period.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and

liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual

results could differ from those estimates.

Note 3 - New accounting pronouncements

Recently Adopted Accounting Standards Updates

Accounting Standards Updates Not Yet Adopted

Note 4 -Restrictions on cash and due from banks and certain securities

BPPR is required by regulatory agencies to maintain average reserve balances with the Federal Reserve Bank of New York (the “Fed") or

other banks. Required average reserve balances in BPPR amounted to$2.6 billion at June 30, 2026 (December 31, 2025 -$2.7 billion).

Cash and due from banks, as well as other highly liquid securities, are used to cover these required average reserve balances.

At June 30, 2026, the Corporation held$68.0 million in restricted assets in the form of funds deposited in money market accounts, debt

securities available for sale and equity securities (December 31, 2025 -$64.0 million). The restricted assets held in debt securities available

for sale and equity securities consist primarily of assets held for the Corporation’s non-qualified retirement plans and fund deposits

guaranteeing possible liens or encumbrances over the title of insured properties.

Note 5 -Debt securities available-for-sale

The following tables present the amortized cost, gross unrealized gains and losses, fair value, weighted average yield and contractual

maturities of debt securities available-for-sale at June 30, 2026 and December 31, 2025.

[1]Includes$18.9 billion pledged to secure government and trust deposits, assets sold under agreements to repurchase, credit facilities and loan servicing

agreements that the secured parties are not permitted to sell or repledge the collateral, of which$17.6 billion serve as collateral for public funds. The

Corporation had unpledged Available for Sale securities with a fair value of$5.7 billion that could be used to increase its borrowing facilities.

[1] Includes$14.3 billion pledged to secure government and trust deposits, assets sold under agreements to repurchase, credit facilities and loan servicing

agreements that the secured parties are not permitted to sell or repledge the collateral, of which$13.2 billion serve as collateral for public funds. The

Corporation had unpledged Available for Sale securities with a fair value of$6.3 billion that could be used to increase its borrowing facilities.

The weighted average yield on debt securities available-for-sale is based on amortized cost; therefore, it does not give effect to changes in

fair value.

Debt securities not due on a single contractual maturity date, such as mortgage-backed securities and collateralized mortgage obligations,

are classified based on the period of final contractual maturity. The expected maturities of collateralized mortgage obligations, mortgage-

backed securities and certain other securities may differ from their contractual maturities because they may be subject to prepayments or

may be called by the issuer.

At June 30, 2026, the Corporation didnot intend to sell or believe it was more likely than not that it would be required to sell debt securities

classified as available-for-sale. There wereno debt securities classified as available-for-sale sold during thesix months ended June 30,

2026 and 2025.

The following tables present the Corporation’s fair value and gross unrealized losses of debt securities available-for-sale, aggregated by

investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2026 and

December 31, 2025.

Debt securities available-for-sale in a continuous unrealized loss position for less than twelve months of$17.3 billion as of June 30, 2026,

compared to$1.2 billion on December 31, 2025, are impacted by changes in market rates.

As of June 30, 2026, the portfolio of available-for-sale debt securities reflects gross unrealized losses of$1.0 billion (December 31, 2025 -

$0.9 billion), driven mainly by mortgage-backed securities, which have been impacted by the interest rate environment and the portfolio’s

longer duration. The portfolio of available-for-sale debt securities is comprised mainly of U.S Treasuries and obligations from the U.S.

Government, its agencies or government sponsored entities, including Federal National Mortgage Association (“FNMA”), Federal Home

Loan Mortgage Corporation (“FHLMC”) and Government National Mortgage Association (“GNMA”). These securities carry an explicit or

implicit guarantee from the U.S. Government, are highly rated by major rating agencies, and have a long history of no credit losses.

Accordingly, the Corporation applies a zero-credit loss assumption.

Note 6 -Debt securities held-to-maturity

The following tables present the amortized cost, allowance for credit losses, gross unrealized gains and losses, approximate fair value,

weighted average yield and contractual maturities of debt securities held-to-maturity at June 30, 2026 and December 31, 2025.

[1]Book value includes$201.8 million of unrealized loss which remains in Accumulated other comprehensive (loss) income (AOCI) related to certain securities

previously transferred from available-for-sale securities portfolio to the held-to-maturity securities portfolio.

[2] Included$6.1 billion pledged to secure public and trust deposits that the secured parties are not permitted to sell or repledge the collateral. The Corporation

had unpledged held-to-maturities securities with a fair value of$99.7 million that could be used to increase its borrowing facilities.

[1]Book value includes$293.0 million of unrealized loss which remains in Accumulated other comprehensive (loss) income (AOCI) related to certain securities

transferred from available-for-sale securities portfolio to the held-to-maturity securities portfolio.

[2] Includes$7.3 billion pledged to secure public and trust deposits that the secured parties are not permitted to sell or repledge the collateral. The Corporation

had unpledged held-to-maturities securities with a fair value of$98.8 million that could be used to increase its borrowing facilities.

Debt securities not due on a single contractual maturity date, such as collateralized mortgage obligations, are classified in the period of final

contractual maturity. The expected maturities of collateralized mortgage obligations and certain other securities may differ from their

contractual maturities because they may be subject to prepayments or may be called by the issuer.

Credit Quality Indicators

The following describes the credit quality indicators by major security type that the Corporation considers to develop the estimate of the

allowance for credit losses for investment securities held-to-maturity.

As discussed in Note 2 of the 2025 Form 10-K, U.S. Treasury securities carry an explicit guarantee from the U.S. Government, are highly

rated by major rating agencies and have a long history of no credit losses. Accordingly, the Corporation applies a zero-credit loss

assumption and no allowance for credit losses (“ACL") for these securities has been established.

At June 30, 2026 and December 31, 2025, the “Obligations of Puerto Rico, States and political subdivisions" classified as held-to-maturity,

included securities issued by municipalities of Puerto Rico that are generally not rated by a credit rating agency. The Corporation performs

periodic credit quality reviews of these securities and internally assigns standardized credit risk ratings based on its evaluation. For the

definitions of the obligor risk ratings, refer to the Credit Quality section of Note 8 to the Consolidated Financial Statements. This includes

$7.1 million of general and special obligation bonds issued by three municipalities of Puerto Rico, of which$6.3 million have a “Pass" rating,

that are payable primarily from certain property taxes imposed by the issuing municipality (compared to$8.7 million and$7.9 million,

respectively, at December 31, 2025).

At June 30, 2026, the portfolio of “Obligations of Puerto Rico, States and political subdivisions" also included$34.8 million in securities

issued by the Puerto Rico Housing Finance Authority (“HFA"), a government instrumentality, for which the underlying source of payment is

second mortgage loans in Puerto Rico residential properties (not the government), but for which HFA provides a guarantee in the event of

default and upon the satisfaction of certain other conditions (December 31, 2025 -$36.0 million). These securities are not rated by a credit

rating agency. Refer to Note 16 to the Consolidated Financial Statements for additional information on the Corporation’s exposure to the

Puerto Rico Government.

A deterioration of the Puerto Rico economy or of the fiscal health of the Government of Puerto Rico and/or its instrumentalities (including if

any of the issuing municipalities become subject to a debt restructuring proceeding under the Puerto Rico Oversight Management and

Economic Stability Act (“PROMESA”)) could adversely affect the value of these securities, resulting in losses to the Corporation.

At June 30, 2026, the portfolio of “Obligations of Puerto Rico, States and political subdivisions” hadno securities issued by the HFA for

which the underlying source of payment is U.S. Treasury securities (December 31, 2025 -$6.8 million), as all such securities were fully

redeemed during the quarter ended on March 31, 2026. Historically, the Corporation has applied a zero-credit loss assumption for these

securities, and no ACL has been established for these securities given that U.S. Treasury securities carry an explicit guarantee from the

U.S. Government, are highly rated by major rating agencies, and have a long history of no credit losses.

Delinquency status

At June 30, 2026 and December 31, 2025, there wereno securities held-to-maturity in past due or non-performing status.

Allowance for credit losses on debt securities held-to-maturity

The allowance for credit losses related to the Obligations of Puerto Rico and the States and Political subdivisions securities at June 30,

2026 was$6.2 million (December 31, 2025 -$5.8 million).

Note 7 -Loans

For a summary of the accounting policies related to loans, interest recognition and allowance for credit losses refer to Note 2 - Summary of

Significant Accounting Policies of the 2025 Form 10-K.

The following table presents the Corporation's loan purchases for the quarters andsix months ended June 30, 2026 and 2025 by class of

loans:

The following table presents the Corporation’s loan sales for the quarters andsix months ended June 30, 2026 and 2025 by class of loans:

Delinquency status

The following tables present the amortized cost basis of loans held-in-portfolio (“HIP’’), net of unearned income, by past due status, and by

loan class including those that are in non-performing status or that are accruing interest but are past due 90 days or more at June 30, 2026

and December 31, 2025.

[1]At June 30, 2026, mortgage loans held-in-portfolio include$6.8 billion of loans that carry certain guarantees from the FHA or the VA, for which the

Corporation’s policy is to exclude them from non-performing status, of which$191.5 million are 90 days or more past due. The portfolio of guaranteed loans

includes$39.8 million of residential mortgage loans in Puerto Rico that areno longer accruing interest as of June 30, 2026. The Corporation has$26.3

million in reverse mortgage loans in Puerto Rico which are guaranteed by FHA, but which are currentlynot accruing interest at June 30, 2026.

[2]Loans held-in-portfolio are net of$406.7 million in unearned income and exclude$88.6 million in loans held-for-sale.

[3]Includes$22.8 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which

$7.4 billion were pledged at the Federal Home Loan Bank ("FHLB") as collateral for borrowings and$15.3 billion at the Federal Reserve Bank ("FRB") for

discount window borrowings. As of June 30, 2026, the Corporation had an available borrowing facility with the FHLB and the discount window of FRB of$4.1

billion and$11.9 billion, respectively.

[1]At December 31, 2025 mortgage loans held-in-portfolio include$3.2 billion of loans that carry certain guarantees from the FHA or the VA, for which the

Corporation’s policy is to exclude them from non-performing status, of which$197 million are 90 days or more past due. The portfolio of guaranteed loans

includes$47 million of residential mortgage loans in Puerto Rico that areno longer accruing interest as of December 31, 2025. The Corporation has$27.0

million in reverse mortgage loans in Puerto Rico which are guaranteed by FHA, but which are currentlynot accruing interest at December 31, 2025.

[2]Loans held-in-portfolio are net of$421.6 million in unearned income and exclude$10.0 million in loans held-for-sale.

[3]Includes$22.7 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which

$7.5 billion were pledged at the FHLB as collateral for borrowings and$15.2 billion at the FRB for discount window borrowings. As of December 31, 2025,

the Corporation had an available borrowing facility with the FHLB and the discount window of FRB of$4.0 billion and$12.1 billion, respectively.

The following tables present the amortized cost basis of non-accrual loans as of June 30, 2026 and December 31, 2025 by class of loans:

The Corporation has designated loans classified as collateral dependent for which the ACL is measured based on the fair value of the

collateral less cost to sell, when foreclosure is probable or when the repayment is expected to be provided substantially by the sale or

operation of the collateral and the borrower is experiencing financial difficulty. The fair value of the collateral is based on appraisals, which

may be adjusted due to their age, type, location, and condition of the property or area or general market conditions to reflect the expected

change in value between the effective date of the appraisal and the measurement date. Appraisals are updated every one to two years

depending on the type of loan and the total exposure of the borrower.

Loans in non-accrual status withno allowance at June 30, 2026 include$106.7 million in collateral dependent loans (December 31, 2025 -

$142.0 million). The Corporation recognized$2.9 million in interest income on non-accrual loans during thesix months ended June 30, 2026

(June 30, 2025 -$3.0 million).

The following tables present the amortized cost basis of collateral-dependent loans, for which the ACL was measured based on the fair

value of the collateral less cost to sell, by class of loans and type of collateral as of June 30, 2026 and December 31, 2025:

Note 8 -Allowance for credit losses – loans held-in-portfolio

The Corporation follows the current expected credit loss (“CECL”) model to establish and evaluate the adequacy of the ACL to provide for

expected losses in the loan portfolio. This model establishes a forward-looking methodology that reflects the expected credit losses over the

lives of financial assets starting when such assets are first acquired or originated. In addition, CECL provides that the initial ACL on PCD

financial assets be recorded as an increase to the purchase price, with subsequent changes to the allowance recorded as a credit loss

expense. The provision for credit losses recorded in current operations is based on this methodology. Loan losses are charged and

recoveries are credited to the ACL. The Corporation’s modeling framework includes internally developed quantitative models that generate

lifetime default and prepayment estimates as well as other loan level techniques to estimate loss severity. These models combine credit risk

factors which include the impact of loan modifications, with macroeconomics expectations to derive the lifetime expected loss.

At June 30, 2026, the Corporation estimated the ACL by weighting the outputs of optimistic, baseline, and pessimistic scenarios. The

weightings applied are subject to evaluation on a quarterly basis as part of the ACL’s governance process. During the first quarter of 2026,

among the three scenarios evaluated to estimate the ACL, the baseline scenario was assigned the highest probability, followed by the

pessimistic scenario, where weight was increased during 2025 in response to ongoing uncertainties. There were no changes to the

probability weights during the second quarter of 2026.

The following tables present the changes in the ACL of loans held-in-portfolio and unfunded commitments for the quarters andsix months

ended June 30, 2026 and 2025.

Modifications

A modification constitutes a change in loan terms in the form of principal forgiveness, an interest rate reduction, other-than-insignificant

payment delay, term extension or combination of the above made to a borrower experiencing financial difficulty.

The amount of outstanding commitments to lend additional funds to debtors with financial difficulties owing receivables whose terms have

been modified during thesix months ended June 30, 2026 amounted to$85.6 million (during the year ended December 31, 2025 -$159.1

million), related to the commercial loan portfolios.

The following tables show the amortized cost basis of the loans modified to borrowers experiencing financial difficulties at the end of the

reporting period disaggregated by class of financing receivable and type of concession granted for the quarters andsix months ended

June 30, 2026 and 2025. Loans modified to borrowers experiencing financial difficulties that were fully paid down, charged-off or foreclosed

upon by period end are not reported.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty for the quarter ended June 30, 2026

Loan Modifications Made to Borrowers Experiencing Financial Difficulty for thesix months ended June 30, 2026

Loan Modifications Made to Borrowers Experiencing Financial Difficulty for the quarter ended June 30, 2025

Loan Modifications Made to Borrowers Experiencing Financial Difficulty for thesix months ended June 30, 2025

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulties:

The following tables present, by class, the performance of loans that have been modified during thetwelve months preceding June 30,

2026. The past due 90 days or more categories include all loans modified classified as non-accruing at the time of the modification. These

loans will continue in non-accrual status, and presented as past due 90 days or more, until the borrower has demonstrated a willingness

and ability to make the restructured loan payments (at leastsix months of sustained performance after the modification orone year for loans

providing for quarterly or semi-annual payments) and management has concluded that it is probable that the borrower would not be in

payment default in the foreseeable future.

The following tables present, by class, the performance of loans that have been modified during the twelve months preceding June 30,

Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or charged-off, whichever

occurs first. The following tables provide the outstanding balance of loans modified for borrowers under financial difficulties that were subject

to payment default and that had been modified during the twelve months prior to default.

Credit Quality

The risk rating system provides for the assignment of ratings at the obligor level based on the financial condition of the borrower. The risk

rating analysis process is performed at least once a year or more frequently if events or conditions change which may deteriorate the credit

quality. In the case of consumer and mortgage loans, these loans are classified considering their delinquency status at the end of the

reporting period.

The following tables present the amortized cost basis, net of unearned income, of loans held-in-portfolio based on the Corporation’s

assignment of obligor risk ratings as defined at June 30, 2026 and December 31, 2025 and the gross write-offs recorded by vintage year.

For the definitions of the obligor risk ratings, refer to the Credit Quality section of Note 8 to the Consolidated Financial Statements included

in the 2025 Form 10-K: