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POPULAR INC

For the period ended Mar 31, 2024. Filed May 10, 2024.

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About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Mar 31, 2024 · Filed May 10, 2024

BPOP$157.78+0.8%Stored close · as of Nov 9, 2026

Extracted filing text, with the paragraph anchors used by the comparison.

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Item 2. results of operations

All statements

contained herein

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.

Various factors, some of which

are beyond Popular’s control, could cause actual results to differ materially from those expressed in,

or implied by, such forward-looking statements. Factors that might cause such a

difference include, but are not limited to:

the

rate

of

growth

or

decline

in

the

economy

and

employment

levels,

as

well

as

general

and

conditions

in

the

geographic

areas

we

serve

and,

in

particular,

in

the

Commonwealth

of

Puerto

Rico

(the

“Commonwealth” or “Puerto Rico”), where a significant

portion of our business is concentrated;

adverse

economic conditions,

including high

levels

of

inflation, that

adversely affect

housing

prices, the

job

market,

consumer confidence

and spending

habits which

may affect

in turn,

among other

things, our

assets, charge-offs and provision expense;

changes in interest rates and market liquidity,

which may reduce interest margins, impact funding sources, reduce loan

originations, affect

our ability

to originate

and distribute

financial products

in the

primary and

secondary markets

and

impact the value of our investment portfolio and

our ability to return capital to our shareholders;

the

impact

of

bank

failures

or

adverse

developments

at

other

banks

and

related

media

coverage

of

the

banking industry in general on investor and depositor

sentiment regarding the stability and liquidity of

banks;

the impact of the current fiscal and economic challenges of Puerto Rico and

the measures taken and to be taken by the

Puerto

Rico

and

the

Federally-appointed

oversight

board

on

the

economy,

our

and

our

business;

the impact of the pending debt

restructuring proceedings under Title III of the

Puerto Rico Oversight, Management and

Economic

Stability

Act

(“PROMESA”)

and

of

other

actions

taken

or

to

be

taken

to

address

Puerto

fiscal

challenges on the value of our portfolio of Puerto Rico government securities and

loans to governmental entities and of

our

commercial,

and

loan

where

private

could

be

directly

by

governmental action;

the

deposits held

at

the Corporation,

whose future

balances are

uncertain and

difficult

to

predict

and

may

be

by

factors

such

as

the

amount

of

Federal

funds

by

the

P.R.

and

the

rate

of

expenditure

of

such

funds,

as

well

as

the

condition,

and

cash

management practices of the Puerto Rico Government

and its instrumentalities;

unforeseen

or

catastrophic

events,

extreme

weather

events,

hurricanes,

other

natural

disasters,

man-made disasters, acts of violence or war or pandemics,

epidemics and other health-related crises,

or the fear of any

such event

occurring, any of

which could cause

adverse consequences for

our business, including,

but not

limited to,

disruptions in our operations;

our ability to

achieve the expected

benefits from our

transformation initiative, including

our ability to

achieve projected

earnings, efficiencies and our targeted sustainable return on

tangible common equity of 14% by the end of 2025;

risks related to Popular’s acquisition of certain information technology and related assets formerly used by Evertec, Inc.

to

service certain

of Banco

Popular de

Puerto Rico’s

key channels,

as well

as the

entry into

amended and

restated

commercial agreements (the “Evertec Business Acquisition

Transaction”);

the fiscal and monetary policies of the federal government

and its agencies;

federal

bank regulatory

and supervisory

policies, including

required levels

of

capital, liquidity,

resolution-

related requirements and the impact of other proposed

capital standards on our capital ratios;

additional Federal Deposit Insurance Corporation (“FDIC”) assessments,

such as the special assessment

implemented

by the FDIC to recover the losses to the deposit insurance fund (“DIF”)

resulting from the receiverships of Silicon Valley

Bank and Signature Bank;

regulatory approvals

that may

be necessary

to undertake

certain actions

or consummate

strategic transactions,

such

as acquisitions and dispositions;

the

relative strength

or

weakness

of

the

consumer and

commercial credit

sectors

and

of

the

real

estate markets

in

Puerto Rico and the other markets in which

our borrowers are located;

a deterioration in the credit quality of our

clients, customers and counterparties;

the performance of the stock and bond markets;

competition in the financial services industry;

possible legislative, tax or regulatory changes;

a failure

in or

breach of

our operational

or security

systems or

infrastructure or

those of

Evertec, Inc.,

our provider

of

core financial

transaction processing and

information technology services,

or of

third parties

providing services

to us,

as

a

result

of

cyberattacks,

e-fraud,

denial-of-services

and

computer

intrusion,

resulting

in,

among

other

things, loss or breach of customer data, disruption

of services, reputational damage or additional

costs to Popular;

changes in market rates and prices which may

adversely impact the value of financial assets

and liabilities;

potential judgments,

claims, damages,

penalties, fines,

enforcement actions

and

reputational damage

resulting from

pending or future litigation and regulatory or government

investigations or actions;

changes in accounting standards, rules and interpretations;

our ability to grow our core businesses;

decisions to downsize, sell or close branches or business

units or otherwise change our business mix;

and

management’s ability to identify and manage these and

other risks.

Moreover,

the

outcome

of

legal

and

proceedings,

as

discussed

in

“Part

II,

Item

Legal

Proceedings,”

is

inherently

uncertain and depends on judicial interpretations of law and the findings of regulators, judges and/or juries. Investors should refer to

the Corporation’s Annual

Report on Form

10-K for the

year ended December 31,

2023 (the “2023

Form 10-K”), as

well as “Part

II,

Item 1A” of this report for a discussion of

such factors and certain risks and uncertainties to which

the Corporation is subject.

All forward-looking

statements included

in this

Form 10-Q

are based

upon information

available to

Popular as

of the

date of

this

Form 10-Q, and other than as

required by law, including the

requirements of applicable securities laws, we assume no

obligation to

update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date

of such statements.

OF FINANCIAL CONDITION

[UNAUDITED]

(In thousands, except share information)

Assets:

$

320,486

$

420,462

Money market investments:

Time deposits with other banks

Total money market investments

Trading account debt securities, at fair value:

Other trading account debt securities

27,308

31,568

Debt securities available-for-sale, at fair

value:

Pledged securities with creditors’ right to repledge

41,261

72,827

Other debt securities available-for-sale

17,976,663

16,656,217

18,017,924

Less – Allowance for credit losses

Debt securities available-for-sale, net

Debt securities held-to-maturity, at amortized cost:

Pledged securities with creditors’ right to repledge

27,372

27,083

Other debt securities held-to-maturity

8,055,788

8,167,252

Debt securities held-to-maturity (fair

value 2024 - $

; 2023 - $

)

8,083,160

8,194,335

Less – Allowance for credit losses

5,731

5,780

Debt securities held-to-maturity, net

Equity securities (realizable value 2024 -

$

196,324

; 2023 - $

194,641

)

195,747

193,726

Loans held-for-sale, at fair value

5,352

4,301

35,486,161

35,420,879

Less – Unearned income

367,423

355,908

739,544

729,341

Total loans held-in-portfolio, net

34,379,194

34,335,630

Premises and equipment, net

588,708

565,284

Other real estate

80,542

80,416

Accrued income receivable

266,908

263,433

Mortgage servicing rights, at fair value

114,964

118,109

2,120,902

2,014,564

Goodwill

804,428

804,428

Other intangible assets

8,969

9,764

$

$

Liabilities and Stockholders’ Equity

Liabilities:

Non-interest bearing

$

15,492,050

$

15,419,624

Interest bearing

48,316,734

48,198,619

66,090

91,384

966,303

986,948

918,448

914,627

Total liabilities

65,759,625

65,611,202

Commitments and contingencies (Refer

to Note 20)

Stockholders’ equity:

Preferred stock,

30,000,000

shares authorized;

885,726

shares issued and outstanding (2023 -

885,726

)

22,143

22,143

Common stock, $

0.01

par value;

170,000,000

shares authorized;

104,790,485

shares issued (2023 -

104,767,348

) and

shares outstanding (2023 -

72,153,621

)

1,048

1,048

Surplus

4,847,466

4,843,399

Retained earnings

4,253,030

4,194,851

Treasury stock - at cost,

32,505,610

shares (2023 -

32,613,727

)

(2,013,187)

(2,018,957)

Accumulated other comprehensive loss, net

of tax

(1,895,531)

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

OF OPERATIONS

Interest income:

Loans

$

638,730

$

541,210

88,516

65,724

166,895

132,088

Total interest income

894,141

739,022

Interest expense:

329,496

193,215

Short-term borrowings

1,192

2,885

Long-term debt

12,709

11,266

Total interest expense

343,397

207,366

550,744

531,656

72,598

47,637

Net interest income after provision for credit losses

478,146

484,019

Non-interest income:

37,442

34,678

Other service fees

94,272

90,076

Mortgage banking activities (Refer to Note 9)

4,360

7,400

Net gain, including impairment on equity securities

1,103

1,100

Net gain on trading account debt securities

Adjustments to indemnity reserves on loans sold

(237)

Other operating income

26,517

27,717

Total non-interest income

163,818

161,961

Operating expenses:

Personnel costs

215,377

198,760

Net occupancy expenses

28,041

26,039

Equipment expenses

9,567

8,412

Other taxes

14,375

16,291

Professional fees

28,918

33,431

Technology and software expenses

79,462

68,559

Processing and transactional services

34,194

33,909

Communications

4,557

4,088

Business promotion

20,989

18,871

Deposit insurance

23,887

8,865

Other real estate owned (OREO) income

(5,321)

(1,694)

28,272

24,361

Total operating expenses

483,113

440,687

Income before income tax

158,851

205,293

55,568

46,314

Net Income

$

103,283

$

158,979

Net Income Applicable to Common Stock

$

102,930

$

158,626

Net Income per Common Share - Basic

$

1.43

$

2.22

Net Income per Common Share - Diluted

$

1.43

$

2.22

OF COMPREHENSIVE (LOSS) INCOME

$

103,283

$

158,979

Other comprehensive (loss) income before tax:

Foreign currency translation adjustment

(4,020)

(5,245)

Amortization of net losses of pension and

3,618

4,813

Unrealized holding (losses) gains on debt securities arising

during the period

(73,030)

213,318

Amortization of unrealized losses of debt securities

transfer from available-for-sale to held-to-

44,009

42,040

Unrealized net gains (losses) on cash flow hedges

(30)

Reclassification adjustment for net gains included

in net income

(41)

Other comprehensive (loss) income before tax

(29,423)

254,855

(8,232)

(31,752)

Total other comprehensive (loss) income, net of tax

223,103

Comprehensive income, net of tax

$

65,628

$

382,082

Tax effect allocated to each component of other comprehensive income

(loss):

Amortization of net losses of pension and

(1,356)

(1,805)

Unrealized holding (losses) gains on debt securities arising

during the period

1,926

(21,566)

Amortization of unrealized losses of debt securities

transfer from available-for-sale to held-to-

(8,802)

(8,407)

Unrealized net gains (losses) on cash flow hedges

Reclassification adjustment for net gains included

in net income

$

(8,232)

$

(31,752)

OF CHANGES IN STOCKHOLDERS’ EQUITY

other

Common

Preferred

Retained

comprehensive

stock

stock

Surplus

stock

(loss) Income

Total

Balance at December 31, 2022

$

1,047

$

22,143

$

4,790,993

$

3,834,348

$

(2,030,178)

$

(2,524,928)

$

4,093,425

Cumulative effect of accounting change

28,752

28,752

158,979

158,979

1,567

1,567

Dividends declared:

Common stock

[1]

(39,586)

(39,586)

(353)

(353)

Common stock purchases

(2,970)

(2,970)

Stock based compensation

7,749

7,808

Other comprehensive income, net of tax

223,103

223,103

Balance at March 31, 2023

$

1,047

$

22,143

$

4,792,619

$

3,982,140

$

(2,025,399)

$

(2,301,825)

$

4,470,725

Balance at December 31, 2023

$

1,048

$

22,143

$

4,843,399

$

4,194,851

$

(2,018,957)

$

(1,895,531)

$

103,283

103,283

1,799

1,799

Dividends declared:

Common stock

[1]

(44,751)

(44,751)

(353)

(353)

Common stock purchases

(3,576)

(3,576)

Stock based compensation

2,268

9,346

11,614

Other comprehensive loss, net of tax

Balance at March 31, 2024

$

1,048

$

22,143

$

4,847,466

$

4,253,030

$

(2,013,187)

$

$

[1]

Dividends declared per common share during the quarter

ended March 31, 2024 - $

0.62

(2023 - $

0.55

).

OF CHANGES IN STOCKHOLDERS’ EQUITY

For the quarter ended

Disclosure of changes in number of shares:

Preferred Stock:

Balance at beginning and end of period

885,726

885,726

Common Stock – Issued:

104,767,348

104,657,522

23,137

25,488

Balance at end of period

104,790,485

104,683,010

Treasury stock

(32,505,610)

(32,717,026)

Common Stock – Outstanding

71,965,984

The accompanying notes are an integral part of these Consolidated

OF CASH FLOWS

Cash flows from operating activities:

$

103,283

$

158,979

Adjustments to reconcile net income to net cash provided

by operating activities:

72,598

47,637

Depreciation and amortization of premises and equipment

15,361

13,842

Net accretion of discounts and amortization of premiums and

deferred fees

(51,360)

(2,276)

Interest capitalized on loans subject to the temporary payment

moratorium or loss mitigation alternatives

(1,641)

(2,876)

Share-based compensation

11,479

7,873

Fair value adjustments on mortgage servicing rights

3,439

1,376

Adjustments to indemnity reserves on loans sold

(612)

Earnings from investments under the equity method, net

of dividends or distributions

(11,792)

(8,621)

Deferred income tax expense (benefit)

9,513

(2,064)

Gain on:

Disposition of premises and equipment and other productive

assets

(3,412)

(2,423)

Sale of loans, including valuation adjustments on loans

held-for-sale and mortgage banking activities

(74)

(264)

Sale of foreclosed assets, including write-downs

(4,447)

(5,228)

Acquisitions of loans held-for-sale

(324)

(2,861)

Proceeds from sale of loans held-for-sale

8,283

9,148

Net originations on loans held-for-sale

(11,056)

(21,790)

Net decrease (increase) in:

Trading debt securities

6,465

(1,055)

(1,995)

(3,731)

Accrued income receivable

(22,719)

38,702

25,072

Net (decrease) increase in:

Interest payable

(10,799)

(2,846)

Pension and other postretirement benefits obligation

4,038

10,111

(59,381)

Total adjustments

58,280

(5,933)

Net cash provided by operating activities

161,563

153,046

Cash flows from investing activities:

Net decrease (increase) in money market investments

1,070,973

(483,178)

Purchases of investment securities:

Available-for-sale

(8,161,525)

(3,960,443)

Equity

(971)

(11,927)

Proceeds from calls, paydowns, maturities and redemptions

of investment securities:

Available-for-sale

6,728,665

4,909,334

Held-to-maturity

154,009

3,818

Proceeds from sale of investment securities:

Equity

25,595

Net repayments (disbursements) on loans

2,354

(155,538)

Proceeds from sale of loans

15,356

3,276

Acquisition of loan portfolios

(141,730)

(145,735)

Return of capital from equity method investments

Acquisition of premises and equipment and other productive

assets

(53,889)

(36,062)

Proceeds from sale of:

Premises and equipment and other productive assets

1,632

1,972

Foreclosed assets

26,773

21,417

Net cash (used in) provided by investing activities

(357,408)

172,778

Cash flows from financing activities:

Net increase (decrease) in:

190,477

(293,780)

(25,294)

(25,110)

Other short-term borrowings

(365,000)

Payments of notes payable

(21,000)

(1,000)

Principal payments of finance leases

(881)

(804)

Proceeds from issuance of notes payable

394,178

Proceeds from issuance of common stock

1,799

1,567

Dividends paid

(44,976)

(39,878)

Net payments for repurchase of common stock

(314)

(282)

Payments related to tax withholding for share-based compensation

(3,262)

(2,688)

Net cash provided by (used in) financing activities

96,549

(332,797)

Net decrease in cash and due from banks, and restricted

cash

(99,296)

(6,973)

Cash and due from banks, and restricted cash at beginning

of period

427,575

476,159

Cash and due from banks, and restricted cash at the end of

the period

$

328,279

$

469,186

The accompanying notes are an integral part of these Consolidated

Notes to Consolidated Financial

(Unaudited)

Note 1 -

Nature of operations

Note 2 -

Basis of presentation

Note 3 -

New accounting pronouncements

Note 4 -

Restrictions on cash and due from banks and

certain securities

Note 5 -

Note 6 -

Debt securities held-to-maturity

Note 7 -

Loans

Note 8 -

Allowance for credit losses – loans held-in-

Note 9 -

Note 10 -

Transfers of financial assets and mortgage

servicing assets

Note 11 -

Note 12 -

Note 13 -

Goodwill and other intangible assets

Note 14 -

Note 15 -

Note 16 -

Note 17 -

Note 18 -

Other comprehensive income (loss)

Note 19 -

Guarantees

Note 20 -

Commitments and contingencies

Note 21-

Non-consolidated variable interest entities

Note 22 -

Related party transactions

Note 23 -

Fair value measurement

Note 24 -

Fair value of financial instruments

Note 25 -

Net income per common share

Note 26 -

Revenue from contracts with customers

Note 27 -

Leases

Note 28 -

Pension and postretirement benefits

Note 29 -

Stock-based compensation

Note 30 -

Income taxes

Note 31 -

Supplemental disclosure on the consolidated

statements of cash flows

Note 32 -

Segment reporting

Note 1 – Nature of Operations

Inc. (the

“Corporation” or

“Popular”) is

a diversified,

publicly-owned financial

holding company

the supervision

and

regulation

of

the

Board

of

Governors

of

the

Federal

Reserve

System.

The

has

in

Puerto

Rico,

the

mainland United

States (“U.S.”)

and the

U.S. and

British Virgin

Islands. In

provides retail,

mortgage,

and

banking

services,

through

its

banking

Banco

Popular

de

Puerto

Rico

(“BPPR”),

as

well

as

banking,

broker-dealer,

auto

and

leasing

and

and

through

specialized

subsidiaries. In

mainland, the

Corporation provides

retail, mortgage,

commercial banking

services, as

well as

leasing

and

through

its

New

York-chartered

banking

Popular

Bank

(“PB”

or

“Popular

U.S.”),

which

has

branches located in New York, New Jersey, and Florida.

Note 2 – Basis of Presentation

Basis of Presentation

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

for the

periods reported

and include

all necessary

adjustments, all

of a

normal recurring

nature, for

a fair

statement of

such results.

The

consolidated statement of financial

condition presented as of

December 31, 2023 was

derived from audited Consolidated Financial

Statements of the Corporation for the year ended

December 31, 2023.

Certain

and

notes

to

the

which

would

normally

be

in

prepared in

accordance

with Accounting

Principles

Generally Accepted

in

the

United

States

of

America

(US

GAAP), have

been

condensed or omitted from the unaudited financial statements pursuant

to the rules and regulations of the

Securities and Exchange

Commission.

Accordingly,

these

should

be

read

in

conjunction

with

the

audited

Statements of

for the

year ended

2023,

included in

Form 10-K.

Operating results

for the

interim periods disclosed herein are not necessarily

indicative of the results that may be expected

for a full year or any future period.

Tax impact on Intercompany Distributions

The net

income for

included $

22.9

expenses, of

which $

16.5

million is

income tax expense and $

6.4

million is reflected in other operating expenses, related to an out-of-period adjustment associated with

the Corporation’s U.S. subsidiary’s non-payment of taxes on certain intercompany distributions

to the Bank Holding Company (BHC)

Rico, a

foreign corporation

for U.S.

tax purposes.

The adjustment

corrected errors

for income

that should

have been recognized of $

5.5

5.4

million in the years 2023 and 2022, respectively,

and an aggregate of $

5.6

million, in

the years prior to 2022. The $

6.4

million recognized as other operating expense corresponded to interest due

up to March 31, 2024

on the related late payment of the withholding tax, of which approximately $

3.0

million correspond to years prior to 2022. As a result

of

this

adjustment, the

asset related

to

NOL of

the BHC

and

its

related valuation

allowance was

reduced by

$

53.7

million. The

Corporation evaluated the

impact of

the out-of-period

adjustment and

concluded it

was not

material to

any previously

issued

interim or

annual consolidated

financial statements

and the

adjustment is

not expected

to

be material

to

the year

ending

December 31, 2024.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial

statements in conformity with

accounting principles generally accepted in

the United States

of America

requires management to make

estimates and assumptions that

affect the reported

amounts of assets and

liabilities and contingent

assets

and

at

the

date

of

the

statements,

and

the

amounts

of

and

during

the

reporting period. Actual results could differ from those estimates.

Note 3 - New accounting pronouncements

Recently Adopted Accounting Standards Updates

FASB ASU 2023-02,

Investments—Equity

Method and Joint

Ventures (Topic 323) -

Accounting for

Investments in Tax Credit

Structures Using the

Proportional Amortization

Method

The

Financial Accounting

Standards Board

("FASB")

issued

Accounting

Update ("ASU") 2023-02 in March

2023, which

amends Accounting Standards

Codification ("ASC") Topic 323 by

permitting the election to apply the

proportional amortization method to account

for tax equity investments that generate

income tax credits through investment in

low-income-housing tax credit (LIHTC)

structures and other tax credit programs if

certain conditions are met. The ASU also

eliminates the application of the ASC

Subtopic 323-740 to LIHTC investments not

accounted for using the proportional

amortization method and instead requires

the use of other guidance.

The

was

not

by

the

adoption of

this

ASU

since

it does

not

hold

in

tax

equity

investments.

FASB ASU 2023-01,

Leases (Topic 842) -

Common Control

Arrangements

The FASB issued ASU 2023-01 in March

2023, which amends ASC Topic 842 and

requires the amortization leasehold

improvements associated with common

control leases over the useful life of the

leasehold improvements to the common

control group as long as the lessee controls

the use of the underlying assets through a

lease. In addition, the ASU requires

companies to account for leasehold

improvements associated with common

control leases as a transfer between entities

under common control through an

adjustments to equity if, and when, the

lessee no longer controls the use

of the

underlying asset.

The

was

not

by

the

adoption of

this

ASU

since

it does

not

hold

common

control

leasehold

improvements, however, it

will consider

this

to

determine

the

amortization

period for

and

treatment

of

leasehold

improvements

associated with common control

leases

acquired on or after the effective date.

FASB ASU 2022-03, Fair

Value Measurement

(Topic 820) - Fair Value

Measurement of Equity

Securities Subject to

Contractual Sale

Restriction

The FASB issued ASU 2022-03 in June

2022, which clarifies that a contractual

restriction that prohibits the sale of an equity

security is not considered part of the unit of

account of the equity security, therefore, is

not considered in measuring its fair value.

The ASU also provides enhanced

disclosures for equity securities subject to a

contractual sale restriction.

The

was

not

by

the

of

this

pronouncement

since

it

does

not

hold

equity securities measured at

with sale restrictions.

Accounting Standards Updates Not Yet Adopted

FASB ASU 2024-02,

Improvements—

Amendments to Remove

References to the

Concepts Statements

The

FASB

issued

ASU

2024-02

in

March

2024, which

removes various

references to

concept

from

the

FASB

Accounting

Standards

Codification.

The

ASU

intends

to

simplify

the

and

distinguish

between

nonauthoritative

and authoritative guidance.

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2024-01,

Compensation - Stock

Compensation (Topic 718)

  • Scope Application of

Profits Interest and Similar

Awards

The FASB issued ASU 2024-01 in March

2024, which amends ASC Topic 718 by

including an illustrative example to

demonstrate how an entity would apply the

scope guidance in paragraph 718-10-15-3

to determine whether profits interest awards

should be accounted for in accordance with

ASC

Topic

The

ASU

is

intended

to

reduce complexity and diversity in practice.

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2023-09,

Income Tax ( Topic

Improvements to Income

Tax Disclosures

The

FASB

issued

ASU

2023-09

in

December 2023,

which amends

ASC Topic

by

enhancing

regarding

rate

reconciliation

and

the

disclosure of

income taxes paid, income (or

loss)

from

before

income

tax

expense

and

income

tax

expense

disaggregated

by

national,

state

and foreign level. Disclosures that no longer

were considered

cost

beneficial or

relevant

were removed from ASC Topic 740.

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2023-08,

Intangibles - Goodwill and

Other - Crypto Assets

(Subtopic 350-60) -

Accounting for and

Disclosure of Crypto

Assets

The

FASB

issued

ASU

2023-08

in

2023,

which

amends

ASC

Subtopic

350-60

by

that

crypto

assets

are

measured

at

fair

value

in

the

statement

of

each

reporting

period

with

changes

from

remeasurement

being

in

net

income.

The

ASU

also

requires

enhanced

for

both

annual

and

interim

reporting

periods

to

provide

investors

with

relevant information

to

analyze and

assess

the

and

risk

of

individual crypto asset holdings.

The Corporation does not expect to be

impacted by the adoption of this ASU

since it

hold crypto-assets

for

its platform users.

FASB ASU 2023-07,

Segment Reporting (Topic

    • Improvements to

Reportable Segment

Disclosures

The

FASB

issued

ASU

2023-07

in

November 2023,

which amends

ASC Topic

by

about significant segment expenses.

For fiscal years

beginning on

For interim periods

within fiscal years

beginning after

any

impact

that

the

of

this

will

have

on

its

and

and

Accounting Standards Updates Not Yet Adopted

FASB ASU 2023-06,

Disclosure Improvements -

Codification Amendments

in Response to the SEC’s

Disclosure Update and

Simplification Initiative

The FASB

issued ASU

2023-06 in

October

which

modifies

the

disclosure

or

of

various

subtopics

in

the

with

the

purpose

of

aligning

U.S.

GAAP

with

those

of

the

SEC

under

Regulation S-X and S-K.

The date on which

the SEC removes

related disclosure

requirements from

Regulation S-X or

Regulation S-K. If by

June 30, 2027, the

SEC has not

removed the

requirements from

Regulation S-X or

Regulation S-K, the

pending content of

the related

amendment will be

removed from the

Codification and will

not become

effective for any

entity.

expect to

be

by

the

of

this

ASU

since

it

is

subject

to

SEC's

current

disclosure

and

requirements under Regulation S-X and

S-K.

FASB ASU 2023-05,

Business Combinations -

Joint Venture Formations

(Subtopic 805-60) -

Recognition and initial

measurement

The

FASB

issued

ASU

2023-05

in

August

2023, which

amends ASC

Subtopic 805-60

to include specific

guidance about how

joint

ventures

should

recognize

and

initially

measure

assets

contributed

and

assumed.

The

amendments

require

that

a

joint venture, upon formation, recognize and

initially

measure

its

assets

and

liabilities at

fair value.

Upon

of

this

ASU,

the

Corporation will

consider this

for

the

initial

measure

of

assets

and

of

newly

created

joint

ventures.

Note 4 - Restrictions on cash and due from

banks and certain securities

BPPR is

required by

regulatory agencies

to maintain

average reserve

balances with

Reserve Bank

of New

York

(the

“Fed”) or other banks.

Those required average reserve balances amounted

to $

2.8

billion at March 31, 2024

$

2.7

billion). Cash

and due

from banks,

as well

as other

highly liquid

securities, are

used to

cover the

required average

reserve

balances.

held $

million in restricted

assets in the

form of funds

deposited in money

market accounts,

debt

for

sale

and

equity

31,

$

The

assets

held

in

debt

securities available for sale and equity securities consist primarily of assets

held for the Corporation’s non-qualified retirement plans

and fund deposits guaranteeing possible liens or encumbrances

over the title of insured properties.

Note 5 – Debt securities available-for-sale

The following tables present

the amortized cost, gross

unrealized gains and losses,

approximate fair value, weighted average

yield

and contractual maturities of debt securities available-for-sale

at March 31, 2024 and December 31, 2023.

Gross

Gross

Fair

average

cost

losses

gains

losses

value

yield

$

9,394,716

$

$

60,864

$

9,333,920

3.90

%

2,825,336

140,775

2,684,561

1.32

307,174

36,444

270,730

1.63

12,527,226

238,083

12,289,211

3.26

15,883

15,070

1.54

19,189

1,337

17,852

2.29

104,671

10,006

94,686

2.55

mortgage obligations - federal agencies

139,743

12,156

127,608

2.40

Mortgage-backed securities - federal agencies

2.06

78,628

3,683

74,951

2.36

817,332

56,576

760,937

2.33

5,897,090

1,135,279

4,762,260

1.65

securities - federal agencies

6,793,507

1,195,543

5,598,600

1.74

Other

1,005

4.00

1,500

1,500

8.50

Total other

2,505

2,005

6.69

[1]

$

19,462,981

$

$

1,445,782

$

2.72

%

[1]

11.8

billion pledged to secure government and trust deposits, assets

sold under agreements to repurchase, credit facilities

and loan servicing

agreements that the secured parties are not permitted

to sell or repledge the collateral, of which $

.0 billion serve as collateral for public funds.

The

Corporation had unpledged Available for Sale securities

with a fair value of

$

6.2

billion that could be used to increase its borrowing

facilities.

Gross

Gross

Fair

average

cost

gains

losses

value

yield

$

7,103,518

$

$

59,415

$

7,044,629

3.51

%

3,598,209

170,209

3,428,084

1.35

307,512

33,164

274,348

1.63

11,009,239

262,788

10,747,061

2.75

17,899

17,061

1.55

20,503

1,321

19,184

2.28

108,280

9,868

98,441

2.54

mortgage obligations - federal agencies

146,682

12,027

134,686

2.38

Mortgage-backed securities - federal agencies

3.72

82,310

3,536

78,785

2.34

792,431

48,250

744,256

2.28

6,067,353

1,046,909

5,021,111

1.64

securities - federal agencies

6,942,731

1,098,698

5,844,786

1.72

Other

1,011

1,011

4.00

1,500

1,500

8.50

Total other

2,511

2,511

6.69

[1]

$

18,101,163

$

1,394

$

1,373,513

$

2.35

%

[1]

billion pledged to secure government and trust deposits,

assets sold under agreements to repurchase, credit facilities

and loan

servicing agreements that the secured parties are not permitted

to sell or repledge the collateral, of which $

11.1

billion serve as collateral for

public funds. The Corporation had unpledged Available

for Sale securities with a fair value of

$

4.6

billion that could be used to increase its

borrowing facilities.

The weighted

average yield

on debt

securities available-for-sale

is based

on amortized

cost; therefore,

it

give

effect to

changes in fair value.

Debt

not

due

on

a

single

date,

such

as

and

obligations, are classified

in the period

of final contractual

maturity. The

expected maturities of

collateralized mortgage obligations,

mortgage-backed securities and certain other securities may

differ from their contractual maturities

because they may be subject to

prepayments or may be called by the issuer.

At March 31, 2024, the Corporation did not intend

to sell or believed it was more

likely than not that it would be

required to sell debt

securities classified as available-for-sale. There were

no

debt securities sold during the quarters ended March 31,

2024 and 2023.

The

tables

present

the

fair

value

and

gross

losses

of

debt

available-for-sale,

aggregated by investment category and length of

time that individual securities have been in a continuous

unrealized loss position at

Less than 12 months

12 months or more

Total

Gross

Gross

Gross

Fair

Fair

Fair

value

losses

value

losses

value

losses

$

4,845,109

$

3,713

$

5,809,606

$

234,370

$

10,654,715

$

238,083

2,127

123,238

12,154

125,365

12,156

45,988

5,523,133

1,195,115

5,569,121

1,195,543

available-for-sale in an unrealized loss position

$

4,893,224

$

4,143

$

11,455,977

$

1,441,639

$

16,349,201

$

1,445,782

Less than 12 months

12 months or more

Total

Gross

Gross

Gross

Fair

Fair

Fair

value

losses

value

losses

value

losses

$

244,925

$

5,126

$

6,550,941

$

257,662

$

6,795,866

$

262,788

5,234

124,930

11,992

130,164

12,027

37,118

5,779,260

1,098,293

5,816,378

1,098,698

available-for-sale in an unrealized loss position

$

287,277

$

5,566

$

12,455,131

$

1,367,947

$

12,742,408

$

1,373,513

As of March 31, 2024, the

portfolio of available-for-sale debt securities reflects gross

unrealized losses of $

1.4

billion, driven mainly

by

which

have

been

by

a

decline

in

fair

value

as

a

result

of

the

rising

rate

environment.

The portfolio of

available-for-sale debt securities is comprised

mainly of U.S Treasuries

and obligations from the

U.S.

Government, its

agencies or

government sponsored

entities, including

Federal National

Mortgage Association

(“FNMA”), Federal

Home Loan Mortgage Corporation (“FHLMC”) and Government National Mortgage Association (“GNMA”). As discussed in Note 2 of

Form 10-K,

these securities

carry an

explicit or

implicit guarantee

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 amortized

cost, allowance

losses, gross

unrealized gains

and losses,

approximate fair

value, weighted

average yield

and contractual

held-to-maturity at

Value

Gross

Gross

Book

[1]

for Credit

Net of

Fair

average

cost

Value

Losses

gains

losses

value

yield

$

597,620

$

597,620

$

$

597,620

$

$

7,857

$

589,763

2.61

%

8,030,813

7,416,332

7,416,332

111,295

7,305,037

1.37

8,628,433

119,152

1.46

Obligations of Puerto Rico, States and

3,055

3,055

3,044

3,045

6.23

18,615

18,615

18,480

18,418

3.60

5.80

39,197

39,197

5,557

33,640

2,890

2,636

33,894

1.42

Total obligations of

Puerto Rico, States and

61,712

61,712

5,731

55,981

2,993

2,772

56,202

2.38

1,536

1,536

1,536

1,364

2.87

mortgage obligations -

federal agencies

1,536

1,536

1,536

1,364

2.87

Securities in wholly owned statutory business

trusts

5,960

5,960

5,960

5,960

6.33

Total securities

in wholly owned statutory

business trusts

5,960

5,960

5,960

5,960

6.33

held-to-maturity [2]

$

8,697,641

$

8,083,160

$

5,731

$

$

2,993

$

122,096

$

1.47

%

[1]

Book value includes $

million of net unrealized loss which remains in

Accumulated other comprehensive (loss) income

(AOCI) related to

certain securities previously transferred from available-for-sale

securities portfolio to the held-to-maturity securities portfolio.

[2]

.0 billion pledged to secure public and trust deposits

that the secured parties are not permitted to sell

or repledge the collateral.

The

Corporation had unpledged held-to-maturities securities with

a fair value of $

69.3

million that could be used to increase its borrowing facilities.

Value

Gross

Gross

Book

[1]

for Credit

Net of

Fair

average

cost

Value

Losses

gains

losses

value

yield

$

597,768

$

597,768

$

$

597,768

$

$

7,526

$

590,242

2.58

%

7,971,072

7,335,159

7,335,159

21,996

7,313,800

1.39

211,061

188,484

188,484

188,297

1.50

8,779,901

29,709

1.47

Obligations of Puerto Rico, States and

`

4,820

4,820

4,811

4,814

6.17

%

20,171

20,171

20,024

19,995

3.80

5.80

39,572

39,572

5,596

33,976

2,814

2,766

34,024

1.41

Total obligations of

Puerto Rico, States and

65,408

65,408

5,780

59,628

2,941

2,891

59,678

2.55

6.44

1,543

1,543

1,543

1,395

2.87

mortgage obligations -

federal agencies

1,556

1,556

1,556

1,408

2.90

Securities in wholly owned statutory business

trusts

5,960

5,960

5,960

5,960

6.33

Total securities

in wholly owned statutory

business trusts

5,960

5,960

5,960

5,960

6.33

held-to-maturity [2]

$

8,852,825

$

8,194,335

$

5,780

$

$

3,578

$

32,748

$

1.48

%

[1]

Book value includes $

million of net unrealized loss which remains in Accumulated

other comprehensive (loss) income (AOCI)

related to certain

securities transferred from available-for-sale securities

portfolio to the held-to-maturity securities portfolio as discussed

in Note 6 of the 2023 Form

10-K.

[2]

8.1

billion pledged to secure public and trust deposits that

the secured parties are not permitted to sell or repledge

the collateral. The

Corporation had unpledged held-to-maturities securities with

a fair value of

$

67.3

million that could be used to increase its

borrowing facilities.

Debt securities not due on a single contractual maturity date,

such as collateralized mortgage obligations, are classified in the period

of final

contractual maturity.

The expected

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

of

2023 Form

10-K,

carry

an

explicit

guarantee from

the

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.

and December 31, 2023, the

“Obligations of Puerto Rico, States and

political subdivisions” classified as held-to-

maturity,

issued by

of

Puerto

Rico

that

are

generally

not

rated

by

a

credit

rating

agency.

This

includes $

million of general and special obligation bonds issued by three municipalities of Puerto Rico, that

are payable primarily

from

certain

property

taxes

imposed

by

the

issuing

31,

$

In

the

case

of

general

obligations, they

also benefit

from a

pledge of

the full

faith, credit

and unlimited

taxing power

of the

issuing municipality,

which is

required by law to levy property taxes in an amount sufficient for the payment of

debt service on such general obligation bonds. The

Corporation performs periodic credit quality

reviews of these securities and

internally assigns standardized credit risk ratings based

on its evaluation. The

Corporation considers these ratings in

its estimate to develop the

allowance for credit losses

these

For

the

definitions

of

the

obligor

risk

ratings,

refer

to

the

Credit

Quality

section

of

Note

to

the

The

the

amortized

cost

basis

of

held

by

the

issued

by

of

Puerto

Rico

aggregated by the internally assigned standardized

credit risk rating:

Securities issued by Puerto Rico municipalities

Watch

$

2,255

$

2,255

Pass

13,265

16,565

Total

$

15,520

$

18,820

At

March

31,

2024,

the

of

“Obligations

of

Puerto

Rico,

States

and

subdivisions”

also

$

million

in

issued

by

the

Puerto

Rico

Housing

Finance

(“HFA”),

a

instrumentality,

for

which

the

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

$

million). These

securities are not rated by a credit rating agency.

The

assesses

the

credit

risk

with

these

by

the

refreshed

FICO

scores

of

a

representative

sample

of

the

borrowers.

As

of

March

31,

2024,

the

average

refreshed

FICO

score

for

the

sample,

of

%

of

the

nominal

value

of

the

used

for

the

loss

was

of

(compared

to

%

and

,

respectively, at

December 31, 2023).

The loss estimates

for this portfolio

was based on

the methodology established

under CECL

for

similar

loan

obligations.

The

does

not

the

when

estimating

the

credit

losses

associated with this portfolio.

A

deterioration of

or

of

the fiscal

health of

the

Government of

Puerto

Rico

and/or

its

(including if any

of the issuing municipalities

become subject to a

debt restructuring proceeding under

PROMESA) could adversely

affect the value of these securities, resulting in losses to

the Corporation.

Note 20

to the

Rico Government.

At

March

31,

and

2023,

the

of

“Obligations

of

Puerto

Rico,

States

and

subdivisions”

also

$

million

in securities

issued

by the

HFA

for

which the

underlying source

of

payment

is U.S.

The

Corporation applies a

zero

-credit loss assumption for

these securities, and no

ACL has been

established for these securities

given

that U.S. Treasury

securities carry an

explicit guarantee from the

U.S. Government, are

highly rated by

major rating agencies,

and

have a long history of no credit losses. Refer

to Note 2 of 2023 Form 10-K for further details.

Delinquency status

At March 31, 2024 and December 31, 2023, there were

no

securities held-to-maturity in past due or non-performing

status.

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

The following table provides the

activity in the allowance for

credit losses related to debt securities

held-to-maturity by security type

at March 31, 2024 and March 31, 2023:

For the quarters ended March 31,

Obligations of Puerto Rico, States and political subdivisions

Allowance for credit losses:

Beginning balance

$

5,780

$

6,911

(49)

(119)

Securities charged-off

$

5,731

$

6,792

The

for

credit

losses

for

the

Obligations

of

Puerto

Rico,

States

and

$

0.2

million

for

securities issued by municipalities of

Puerto Rico, and $

5.6

million for bonds issued by

the Puerto Rico HFA,

which are secured by

second mortgage loans on

Puerto Rico residential properties (compared to

$

0.2

5.6

million, respectively, at

31, 2023).

Note 7 – Loans

For

a

summary

of the

accounting policies

loans, interest

recognition

and

allowance for

credit

losses

refer to

Note

Summary of Significant Accounting Policies of the 2023

Form 10-K.

Corporation recorded purchases

(including repurchases)

of mortgage

loans of

$

and

loans

of

$

million;

to

(including

repurchases)

of

loans

of

$

consumer loans of $

million, and commercial loans of $

million during the quarter ended March 31, 2023.

performed whole-loan

sales involving

residential mortgage loans,

and $

commercial and construction loans

during the quarter ended

March 31, 2024 (March

$

million of residential mortgage

loans

and

$

million

of

and

construction

loans).

Also,

during

the

quarter

ended

March

31,

2024,

the

securitized approximately $

million of mortgage loans into GNMA mortgage-backed

securities and $

million of mortgage loans into

FNMA mortgage-backed securities, compared to $

million, respectively, during the quarter ended March 31, 2023.

Delinquency status

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

BPPR

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

19,384

$

2,027

$

$

21,517

$

282,134

$

303,651

$

$

2,378

3,278

7,922

13,578

2,982,907

2,996,485

7,922

6,628

26,124

33,184

1,392,908

1,426,092

26,124

3,020

8,552

33,741

45,313

4,699,810

4,745,123

29,171

4,570

162,724

162,724

254,008

107,224

385,062

746,294

5,737,257

6,483,551

166,473

218,589

Leasing

19,936

4,752

7,267

31,955

1,733,458

7,267

13,034

9,528

23,858

46,420

1,095,716

23,858

2,336

2,569

19,822

12,169

19,092

51,083

1,695,410

1,746,493

19,092

Auto

82,957

18,420

41,807

143,184

3,563,670

41,807

Other

1,022

2,111

151,567

153,678

Total

$

422,189

$

166,758

$

545,925

$

1,134,872

$

23,499,897

$

24,634,769

$

298,594

$

247,331

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

3,434

$

$

8,700

$

12,134

$

2,068,850

$

2,080,984

$

8,700

$

1,364

2,407

4,511

2,056,063

2,060,574

2,407

6,107

19,009

3,877

28,993

1,662,759

1,691,752

3,877

9,961

6,634

17,223

2,263,137

2,280,360

6,423

8,825

8,825

837,754

846,579

25,558

28,071

54,162

1,245,949

1,300,111

28,071

Home equity lines of

credit

3,986

5,222

58,926

64,148

3,986

2,142

1,695

2,068

5,905

144,612

150,517

2,068

Other

8,926

8,927

Total

$

57,613

$

23,619

$

55,744

$

136,976

$

10,346,993

$

10,483,969

$

55,533

$

30-59

60-89

90 days

Total

days

days

or more

Current

[2] [3]

loans

loans

$

22,818

$

2,027

$

8,806

$

33,651

$

2,350,984

$

$

8,806

$

3,118

4,642

10,329

18,089

5,038,970

10,329

12,735

19,441

30,001

62,177

3,055,667

30,001

12,981

9,180

40,375

62,536

6,962,947

35,594

4,781

8,825

8,825

1,000,478

[1]

279,566

107,757

413,133

800,456

6,983,206

194,544

218,589

Leasing

19,936

4,752

7,267

31,955

1,733,458

7,267

13,034

9,528

23,858

46,420

1,095,733

23,858

3,993

5,455

61,262

66,717

3,986

21,964

13,864

21,160

56,988

1,840,022

21,160

Auto

82,957

18,420

41,807

143,184

3,563,670

41,807

Other

1,022

2,112

160,493

162,605

Total

$

479,802

$

190,377

$

601,669

$

1,271,848

$

33,846,890

$

$

354,127

$

247,542

[1]

It is the Corporation’s policy to report delinquent residential

mortgage loans insured by Federal Housing Administration

(“FHA”) or guaranteed by

the U.S. Department of Veterans Affairs

(“VA”) as accruing loans past

due 90 days or more as opposed to non-performing

since the principal

repayment is insured.

These balances include $

million of residential mortgage loans insured by FHA

or guaranteed by the VA

that are no

longer accruing interest as of March 31, 2024. Furthermore, as

of March 31, 2024, the Corporation had approximately

$

million in reverse

mortgage loans which are guaranteed by FHA, but which

are currently not accruing interest. Due to the guaranteed

nature of the loans, it is the

Corporation’s policy to exclude these balances from

non-performing assets.

[2]

Loans held-in-portfolio are net of $

million in unearned income and exclude $

million in loans held-for-sale.

[3]

billion pledged to secure credit facilities and public

funds that the secured parties are not permitted to sell

or repledge the collateral,

of which $

7.0

billion were pledged at the Federal Home Loan Bank

("FHLB") as collateral for borrowings and $

billion at the Federal Reserve

Bank ("FRB") for discount window borrowings. As of

March 31, 2024, the Corporation had an available borrowing

facility with the FHLB and the

discount window of Federal Reserve Bank of New York

of $

3.8

4.6

billion, respectively.

BPPR

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

$

$

1,991

$

2,515

$

289,427

$

291,942

$

1,991

$

5,510

8,745

14,332

2,990,922

3,005,254

8,745

2,726

29,430

32,405

1,365,978

1,398,383

29,430

6,998

3,352

36,210

46,560

4,749,666

4,796,226

32,826

3,384

6,378

6,378

163,479

169,857

6,378

260,897

114,282

416,528

791,707

5,600,117

6,391,824

175,106

241,422

Leasing

20,140

6,719

8,632

35,491

1,696,318

8,632

13,243

9,912

23,281

46,436

1,089,292

23,281

2,392

2,648

19,065

14,611

19,031

52,707

1,723,603

1,776,310

19,031

Auto

100,061

27,443

45,615

173,119

3,487,661

45,615

Other

1,641

1,213

3,058

147,104

150,162

Total

$

431,035

$

176,849

$

597,080

$

1,204,964

$

23,305,959

$

24,510,923

$

328,718

$

268,362

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

9,141

$

2,001

$

$

11,142

$

2,112,536

$

2,123,678

$

$

1,036

1,117

2,719

2,079,448

2,082,167

1,117

30,560

6,274

36,834

1,645,418

1,682,252

6,274

7,815

3,881

12,393

2,317,502

2,329,895

3,772

789,423

789,423

48,818

7,821

11,191

67,830

1,236,263

1,304,093

11,191

1,472

3,733

5,209

58,096

63,305

3,733

2,222

1,948

2,805

6,975

161,962

168,937

2,805

Other

10,274

10,279

Total

$

100,598

$

13,507

$

29,002

$

143,107

$

10,410,941

$

10,554,048

$

28,893

$

30-59

60-89

90 days

Total

days

days

or more

Current

[2]

[3]

loans

loans

$

9,665

$

2,001

$

1,991

$

13,657

$

2,401,963

$

$

1,991

$

6,076

1,113

9,862

17,051

5,070,370

9,862

33,286

35,704

69,239

3,011,396

35,704

14,813

4,049

40,091

58,953

7,067,168

36,598

3,493

6,378

6,378

952,902

959,280

6,378

[1]

309,715

122,103

427,719

859,537

6,836,380

186,297

241,422

Leasing

20,140

6,719

8,632

35,491

1,696,318

8,632

13,243

9,912

23,281

46,436

1,089,311

23,281

1,702

3,759

5,465

60,488

65,953

3,733

21,287

16,559

21,836

59,682

1,885,565

21,836

Auto

100,061

27,443

45,615

173,119

3,487,661

45,615

Other

1,645

1,214

3,063

157,378

160,441

Total

$

531,633

$

190,356

$

626,082

$

1,348,071

$

33,716,900

$

$

357,611

$

268,471

[1]

It is the Corporation’s policy to report delinquent residential

mortgage loans insured by FHA or guaranteed

by the VA as accruing loans

90 days or more as opposed to non-performing since

the principal repayment is insured.

These balances include $

million of residential

mortgage loans insured by FHA or guaranteed by the VA

that are no longer accruing interest as of December

31, 2023. Furthermore, as of

December 31, 2023, the Corporation had approximately

$

million in reverse mortgage loans which are guaranteed

by FHA, but which are

currently not accruing interest. Due to the guaranteed nature

of the loans, it is the Corporation’s policy to exclude

these balances from non-

performing assets.

[2]

Loans held-in-portfolio are net of $

million in unearned income and exclude $

million in loans held-for-sale.

[3]

14.2

billion pledged to secure credit facilities and public funds

that the secured parties are not permitted to sell or repledge

the collateral,

of which $

7.0

billion were pledged at the Federal Home Loan Bank

(FHLB) as collateral for borrowings and $

7.2

billion at the Federal Reserve

Bank (FRB) for discount window borrowings. As of December

31, 2023, the Corporation had an available borrowing

facility with the FHLB and the

discount window of Federal Reserve Bank of New York

of $

3.5

4.4

billion, respectively.

Recognition of interest income on mortgage loans is generally discontinued when loans are 90 days or more in arrears on payments

of principal or interest. The Corporation discontinues the recognition of interest income on residential mortgage loans insured by the

FHA or guaranteed by the VA when 15 months

delinquent as to principal or interest, since the principal repayment on these loans is

insured.

31, 2024, mortgage

loans held-in-portfolio include

$

2.3

billion (December 31,

2023 -

$

2.2

billion) of loans

insured by the

FHA, or

guaranteed by

the VA

$

218.7

million (December

  • $

241.6

million) are

90 days

or more

past due.

The

portfolio of guaranteed loans includes $

million of residential mortgage loans in Puerto Rico

that are no longer accruing interest as

of March 31, 2024 (December 31, 2023 - $

million). The Corporation has approximately $

million in reverse mortgage loans in

which are guaranteed

by FHA,

but which

are currently not

accruing interest at

2024 (December 31,

2023 -

$

Loans with a delinquency status of 90 days past due as of March 31, 2024 include $

million in loans previously pooled into GNMA

31,

$

Under

the

GNMA

program,

issuers

such

as

BPPR

have

the

option

but

not

the

obligation to repurchase loans

that are 90

past due. For

accounting purposes, these loans

subject to the

option

are

be

reflected on

the

financial statements

of BPPR

with

an

offsetting

liability.

Loans

in

our

GNMA

portfolio benefit

from payment

forbearance programs

but continue

to reflect

the contractual

delinquency until

the borrower

repays

deferred payments or completes a payment deferral

modification or other borrower assistance alternative.

The following tables present the amortized cost basis

of non-accrual loans as of March 31, 2024

and December 31, 2023 by class of

loans:

BPPR

with no

with

with no

with

with no

with

$

$

$

8,700

$

$

8,700

$

3,635

4,287

1,344

1,063

4,979

5,350

17,541

8,583

3,877

21,418

8,583

18,914

10,257

6,423

18,914

16,680

82,843

83,630

27,881

83,033

111,511

Leasing

6,814

6,814

HELOCs

3,986

3,986

3,458

15,634

2,068

3,458

17,702

Auto

1,809

39,998

1,809

39,998

Other

Total

$

128,916

$

169,678

$

14,111

$

41,422

$

143,027

$

211,100

BPPR

with no

with

with no

with

with no

with

$

$

1,991

$

$

$

$

1,991

3,695

5,050

1,117

3,695

6,167

20,432

8,998

3,877

2,397

24,309

11,395

6,991

25,835

3,772

6,991

29,607

6,378

6,378

84,677

90,429

11,071

84,797

101,500

Leasing

8,151

8,151

HELOCs

3,733

3,733

3,589

15,442

2,805

3,589

18,247

Auto

1,833

43,782

1,833

43,782

Other

Total

$

121,961

$

206,757

$

3,997

$

24,896

$

125,958

$

231,653

The Corporation has

designated loans classified as

collateral dependent for

which the ACL

is measured based

on the fair

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

the collateral

is based

on

appraisals, which may be

adjusted due to their

age, and the

type, location, and condition

of the property

or area or general

market

conditions to reflect the expected change in value between the effective date

of the appraisal and the measurement date. Appraisals

are updated every one to two years depending on

the type of loan and the total exposure of

the borrower.

Loans in non-accrual status with

no allowance at March 31,

2024 include $

million in collateral dependent loans

million). The Corporation recognized $

million in interest income on non-accrual loans during the quarter ended March

31, 2024 (March 31, 2023 - $

The following tables present the amortized cost basis

of collateral-dependent loans, for which the ACL was measured

based on the

fair value of the collateral less cost to sell, by class

of loans and type of collateral as of March

31, 2024 and December 31, 2023:

Real Estate

Auto

Equipment

Accounts

Receivables

Other

Total

BPPR

$

1,325

$

$

$

$

1,325

159,712

159,712

22,840

22,840

1,130

2,172

23,693

26,995

80,487

80,487

Leasing

1,257

1,257

3,708

3,708

Auto

13,910

13,910

Other

$

269,202

$

15,167

$

$

2,172

23,996

$

310,537

$

8,700

$

$

$

$

8,700

1,344

$

1,344

3,877

$

3,877

2,297

2,367

1,040

1,040

$

14,961

$

$

$

2,297

$

17,328

$

10,025

$

$

$

$

10,025

161,056

161,056

26,717

26,717

1,130

2,172

25,990

29,362

81,527

81,527

Leasing

1,257

1,257

3,708

3,708

Auto

13,910

13,910

Other

Inc.

$

284,163

$

15,167

$

$

2,172

26,293

$

327,865

Real Estate

Auto

Equipment

Other

Total

BPPR

$

1,339

$

$

$

$

1,339

160,555

160,555

25,848

25,848

1,103

30,287

31,390

6,378

6,378

85,113

85,113

Leasing

1,373

1,373

4,338

4,338

Auto

12,965

12,965

Other

$

284,674

$

14,338

$

$

30,592

$

329,604

3,877

3,877

5,990

5,990

1,303

1,303

$

11,170

$

$

$

$

11,675

$

1,339

$

$

$

$

1,339

160,555

160,555

29,725

29,725

1,103

30,687

31,895

12,368

12,368

86,416

86,416

Leasing

1,373

1,373

4,338

4,338

Auto

12,965

12,965

Other

Inc.

$

295,844

$

14,338

$

$

30,992

$

341,279

Purchased Credit Deteriorated (PCD) Loans

The Corporation has purchased loans during

the quarter for which there was, at acquisition, evidence

of more than insignificant

deterioration of credit quality since origination. The

carrying amount of those loans is as follows:

Purchase price of loans at acquisition

$

$

Allowance for credit losses at acquisition

Non-credit discount / (premium) at acquisition

Par value of acquired loans at acquisition

$

$

Note 8 – Allowance for credit losses – loans

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

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

assets be

recorded as

an

increase to

the

purchase price,

with subsequent

changes to

the

as

a

credit

loss

expense.

The

for

credit

losses

in

current

is

based

on

this

methodology.

Loan losses

are charged,

and recoveries

are credited

to the

ACL. The

Corporation’s modeling

framework includes

competing risk

models that

generate lifetime

default and

prepayment estimates as

well as

other loan

level techniques

to estimate

loss

severity.

These

models

combine

credit

risk

factors,

which

include

the

impact

of

loan

modifications,

with

macroeconomic

expectations to derive the lifetime expected loss.

31,2024, the

Corporation estimated

the ACL

by weighting

the outputs

of optimistic,

baseline, and

pessimistic scenarios.

Among the

three scenarios used

to estimate

the ACL, the

baseline is

assigned the highest

probability,

followed by the

pessimistic

scenario given the

uncertainties in the

economic outlook and

downside risk. The

weightings applied are

evaluation on a

quarterly basis as

part of the

ACL’s governance

process. The Corporation evaluates,

at least on

an annual basis, the

tied to the CECL accounting framework. These

include the reasonable and supportable period

as well as the reversion window.

The

annualized GDP

the

improved to

2.0%

and

2.3%

for

Puerto

Rico

and

the

United

States,

respectively, compared to 1.2% and 1.7%

in the previous quarter. The 2024 forecasted average unemployment rate for

and the United States remained stable at 6.5%

and 3.9%, respectively, compared to 6.8% and 4.0% in previous forecast.

the changes

in the

ACL of

loans held-in-portfolio

and unfunded

commitments for

ended

March 31, 2024 and 2023.

BPPR

Ending

Balance

Balances

$

3,614

$

(48)

$

$

$

$

3,567

53,754

(413)

53,666

40,637

5,147

(2,785)

43,537

107,577

(6,669)

1,560

102,844

205,582

5,062

(9,454)

2,424

203,614

5,294

(2,180)

3,114

72,440

(319)

(765)

5,191

76,564

Leasing

9,708

2,968

(4,850)

1,165

8,991

80,487

21,640

(16,396)

2,438

88,169

(197)

101,181

20,263

(24,349)

2,409

99,504

Auto

157,931

13,371

(20,167)

6,321

157,456

Other

7,132

(664)

6,808

346,834

55,477

(61,773)

11,501

352,039

$

639,858

$

61,008

$

$

(76,842)

$

20,281

$

644,322

$

5,062

$

(120)

$

$

$

$

4,942

1,618

(177)

1,441

$

6,680

$

(297)

$

$

$

$

6,383

[1] Allowance for credit losses of unfunded commitments

is presented as part of Other Liabilities in the Consolidated

Ending

Balance

Balance

$

10,126

$

(510)

$

(441)

$

$

9,176

11,699

11,958

16,227

4,019

20,270

14,779

3,203

(564)

17,574

52,831

6,907

(1,005)

58,978

7,392

8,025

10,774

(925)

9,874

1,875

(253)

(7)

1,770

16,609

4,991

(5,712)

16,573

Other

(31)

18,486

4,763

(5,750)

18,345

$

89,483

$

11,378

$

(6,755)

$

1,116

$

95,222

$

1,851

$

$

$

$

2,542

8,446

(609)

7,837

(24)

$

10,326

$

$

$

$

10,384

[1]

for

Ending

Balance

Balance

$

13,740

$

(558)

$

$

(441)

$

$

12,743

65,453

(218)

65,624

56,864

9,166

(2,785)

63,807

122,356

3,579

(7,233)

1,716

120,418

258,413

11,969

(10,459)

2,669

262,592

12,686

(1,547)

11,139

83,214

(1,244)

(765)

5,216

86,438

Leasing

9,708

2,968

(4,850)

1,165

8,991

80,487

21,640

(16,396)

2,438

88,169

1,978

(150)

(204)

1,872

117,790

25,254

(30,061)

3,094

116,077

Auto

157,931

13,371

(20,167)

6,321

157,456

Other

7,134

(695)

6,810

365,320

60,240

(67,523)

12,347

370,384

$

729,341

$

72,386

$

$

(83,597)

$

21,397

$

739,544

$

6,913

$

$

$

$

$

7,484

10,064

(786)

9,278

(24)

$

17,006

$

(239)

$

$

$

$

16,767

[1]

BPPR

Ending

Balance

Balance

$

5,210

$

$

(454)

$

$

$

$

4,756

52,475

1,284

53,894

48,393

(1,161)

(2,730)

(3)

1,510

46,009

68,217

(552)

9,819

(1,607)

1,165

77,042

174,295

(1,713)

7,919

(1,610)

2,810

181,701

2,978

3,072

117,344

(33,556)

1,267

(846)

4,800

89,077

Leasing

20,618

(35)

(1,417)

1,090

20,990

58,670

15,570

(8,676)

2,389

67,953

(39)

(33)

96,369

(7,020)

11,104

(13,580)

1,535

88,408

Auto

129,735

(21)

8,319

(12,118)

4,914

130,829

Other

15,433

(11,007)

4,877

300,310

(7,041)

35,189

(45,414)

9,123

292,167

$

615,545

$

(42,345)

$

45,203

$

$

(49,287)

$

17,823

$

587,007

$

4,336

$

$

$

$

$

$

4,900

2,022

(76)

1,946

$

6,358

$

$

$

$

$

$

6,846

[1]

Ending

Balance

Balance

$

21,101

$

$

(493)

$

$

$

20,610

19,065

(2,961)

1,852

17,956

8,688

(224)

8,488

12,227

2,528

(499)

15,224

61,081

(1,150)

(499)

2,846

62,278

1,268

(10)

1,258

17,910

(2,098)

(426)

15,400

(1)

2,439

(712)

(143)

1,853

22,057

(1,140)

4,191

(4,170)

21,321

Other

(53)

24,498

(1,140)

3,529

(4,367)

23,177

$

104,757

$

(3,238)

$

1,943

$

(4,866)

$

3,517

$

102,113

$

1,175

$

$

$

$

$

1,229

1,184

1,278

(26)

$

2,447

$

$

$

$

$

2,569

[1]

Ending

Balance

Balance

$

26,311

$

$

(947)

$

$

$

$

25,366

71,540

(1,677)

1,987

71,850

57,081

(1,161)

(2,954)

(3)

1,534

54,497

80,444

(552)

12,347

(2,106)

2,133

92,266

235,376

(1,713)

6,769

(2,109)

5,656

243,979

4,246

4,330

135,254

(35,654)

(846)

4,814

104,477

Leasing

20,618

(35)

(1,417)

1,090

20,990

58,670

15,571

(8,677)

2,389

67,953

2,542

(751)

(176)

1,953

118,426

(8,160)

15,295

(17,750)

1,918

109,729

Auto

129,735

(21)

8,319

(12,118)

4,914

130,829

Other

15,435

(11,060)

4,880

324,808

(8,181)

38,718

(49,781)

9,780

315,344

$

720,302

$

(45,583)

$

47,146

$

$

(54,153)

$

21,340

$

689,120

$

5,511

$

$

$

$

$

$

6,129

3,206

3,224

(26)

$

8,805

$

$

$

$

$

$

9,415

[1]

Modifications

A

modification

constitutes

a

change

in

loan

terms

in

the

form

of

forgiveness,

an

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

31,

and

March

31,

to

$

4.2

million

and

$

7.0

respectively, related to the commercial loan portfolios.

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

the reporting period disaggregated by class of financing receivable

and type of concession granted for the quarters ended March

31,

and

March

31,

Loans

to

under

difficulties

that

were

fully

paid

down,

charged-off

or

foreclosed upon by period end are not reported.

Loan Modifications Made to Borrowers Experiencing Financial

Difficulty for the quarter ended March 31,2024

Interest Rate Reduction

BPPR

31,2024

31,2024

31,2024

$

0.01

%

$

%

$

0.01

%

0.01

%

%

0.01

%

0.01

%

%

0.01

%

Total

$

%

$

%

$

%

Term Extension

BPPR

31,2024

31,2024

31,2024

$

36,718

1.23

%

$

%

$

36,718

0.73

%

16,366

1.15

%

%

16,366

0.52

%

2,494

0.05

%

%

2,494

0.04

%

12,979

0.20

%

%

12,979

0.17

%

0.01

%

%

0.01

%

Total

$

68,756

0.28

%

$

%

$

68,761

0.20

%

Other-Than-Insignificant Payment Delays

BPPR

31,2024

31,2024

31,2024

$

10,312

0.72

%

$

%

$

10,312

0.33

%

5,920

0.12

%

%

5,920

0.08

%

Total

$

16,232

0.07

%

$

%

$

16,232

0.05

%

Combination - Term extension

and Interest Rate Reduction

BPPR

31,2024

31,2024

31,2024

$

0.03

%

$

%

$

0.02

%

%

%

%

3,422

0.05

%

%

3,460

0.04

%

1,056

0.06

%

0.10

%

1,201

0.06

%

Total

$

5,470

0.02

%

$

%

$

5,653

0.02

%

Combination -

Other-Than-Insignificant Payment Delays and Interest Rate

Reduction

31,2024

31,2024

31,2024

$

%

$

%

$

%

0.03

%

%

0.03

%

Total

$

%

$

%

$

%

Loan Modifications Made to Borrowers Experiencing Financial

Difficulty for the quarter ended March 31,2023

Interest Rate Reduction

BPPR

31,2023

31,2023

31,2023

$

%

$

%

$

%

0.05

%

%

0.05

%

0.01

%

%

0.01

%

Other

%

%

%

Total

$

%

$

%

$

%

Term Extension

BPPR

31,2023

31,2023

31,2023

$

1,754

0.12

%

$

%

$

1,754

0.06

%

3,705

0.09

%

%

3,705

0.06

%

%

3,518

0.65

%

3,518

0.50

%

14,521

0.24

%

1,853

0.14

%

16,374

0.22

%

%

0.02

%

%

Total

$

20,006

0.09

%

$

5,425

0.06

%

$

25,431

0.08

%

Other-Than-Insignificant Payment Delays

BPPR

31,2023

31,2023

31,2023

$

1,751

0.06

%

$

%

$

1,751

0.04

%

13,156

0.88

%

13,744

0.90

%

26,900

0.89

%

1,411

0.04

%

0.04

%

2,275

0.04

%

Other

0.03

%

%

0.02

%

Total

$

16,351

0.07

%

$

14,608

0.15

%

$

30,959

0.10

%

Combination - Term extension

and Interest Rate Reduction

BPPR

31,2023

31,2023

31,2023

$

0.01

%

$

%

$

%

10,473

0.17

%

0.03

%

10,801

0.15

%

0.03

%

%

0.02

%

Auto

%

%

%

Total

$

11,025

0.05

%

$

%

$

11,353

0.04

%

The following tables describe the financial effect of the

modifications made to borrowers experiencing

financial difficulties:

Interest rate reduction

10.13

% to

8.25

%.

25.53

% to

9.83

%.

5.88

% to

4.5

0%.

21.05

% to

6.23

%.

18.06

% to

9.68

%.

Term extension

year to the life of loans.

Other than insignificant payment delay

Interest rate reduction

6.00

% to

5.25

%.

5.69

% to

4.17

%.

17.76

% to

4.47

%.

16.97

% to

9.11

%.

Auto

12.64

% to

12.62

%.

Other

17.99

% to

%.

Term extension

Auto

Other than insignificant payment delay

Other

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

31,

The

past

due

days

or

more

categories

all

loans

as

non-accruing

at

the

time

of

the

modification. These

loans will

continue in

non-accrual status,

and presented

as past

due 90

days or

more, until

the borrower

has

demonstrated a willingness and

ability to make

the restructured loan payments

(at least six

months of sustained

performance after

the modification

or one

year for

loans providing

for quarterly

or semi-annual

payments) and

management has

concluded that

it is

probable that the borrower would not be in payment

default in the foreseeable future.

BPPR

due

Current

Total

Default

Without

$

$

$

$

$

$

$

$

3,278

2,918

6,375

60,491

66,866

2,918

1,969

2,780

189,327

192,107

1,432

16,492

17,118

32,511

49,629

2,774

13,718

5,970

3,954

23,151

33,075

49,225

82,300

3,525

19,626

1,017

1,397

1,058

1,205

3,071

4,276

1,007

Auto

Other

Total

$

7,754

$

7,368

$

45,889

$

61,011

$

335,716

$

396,727

$

7,046

$

38,843

due

Current

Total

Default

Without

$

$

$

$

$

57,550

$

57,550

$

$

3,403

3,727

Total

$

$

$

$

$

61,077

$

61,561

$

$

due

Current

Total

Default

Without

$

$

$

$

$

$

$

$

3,278

2,918

6,375

60,491

66,866

2,918

1,969

2,780

246,877

249,657

1,432

16,492

17,118

32,511

49,629

2,774

13,718

5,970

3,954

23,475

33,399

52,628

86,027

3,525

19,950

1,017

1,397

1,218

1,365

3,195

4,560

1,167

Auto

Other

Total

$

7,754

$

7,368

$

46,373

$

61,495

$

396,793

$

458,288

$

7,046

$

39,327

to make the restructured loan payments.

Payment default is defined as a restructured loan becoming

90 days past due after being modified, foreclosed

or

charged-off, whichever occurs first. The recorded inve

stment as of period end is inclusive of all partial

paydowns and charge-offs since the modification

The following tables present, by class, the performance

of loans that have been modified during the quarter

ended March 31, 2023.

BPPR

due

Current

Total

Default

Without

$

$

$

$

$

1,751

$

1,751

$

$

1,803

1,803

13,208

15,011

1,594

4,974

5,116

1,202

7,518

8,900

16,321

25,221

7,518

Auto

Other

Total

$

1,229

$

$

9,824

$

11,279

$

37,002

$

48,281

$

$

9,491

due

Current

Total

Default

Without

$

$

$

$

$

13,744

$

13,744

$

$

3,518

3,518

2,077

2,181

Total

$

$

$

$

$

20,203

$

20,361

$

$

due

Current

Total

Default

Without

$

$

$

$

$

1,751

$

1,751

$

$

1,803

1,803

26,952

28,755

1,594

5,838

5,980

3,518

3,518

1,202

7,622

9,004

18,398

27,402

7,622

Auto

Other

Total

$

1,229

$

$

9,982

$

11,437

$

57,205

$

68,642

$

$

9,649

to make the restructured loan payments.

Payment default is defined as a restructured loan becoming

90 days past due after being modified, foreclosed

or

charged-off, whichever occurs first. The recorded inve

stment as of period end is inclusive of all partial

paydowns and charge-offs since the modification

Payment

default

is

defined

as

a

restructured

loan

becoming

days

past

due

after

being

modified,

foreclosed

or

charged-off,

whichever occurs

first. During

31,2024, the

of

loans modified

for borrowers

under

financial difficulties that were subject to payment default and that had been modified during the

twelve months preceding the default

date was $

million. The amount was not considered material

for the quarter ended March 31, 2023.

For the quarter ended March 31,2024, extension of maturity and the combination of interest rate reduction and extension of maturity

to

$

million

and

$

of

the

of

loans modified

for borrowers

under financial

difficulties that were subject to payment default during

the year preceding the default date.

Credit Quality

The risk

rating system

provides for

the assignment

of ratings

at the

obligor level

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

status at the end of the reporting period.

The following tables present the amortized cost basis, net of unearned income, of

loans held-in-portfolio based on the Corporation’s

assignment

of

obligor

risk

ratings

as

defined

at

March

31,

and

31,

and

the

gross

by

vintage year. For

the definitions of the obligor risk ratings,

refer to the Credit Quality section of

Note 9 to the Consolidated Financial

Statements included in the 2023 Form 10-K:

Loans

Loans

Prior

Years

Total

BPPR

Pass

$

41,585

$

37,808

$

138,013

$

21,271

$

20,401

$

28,387

$

$

$

287,465

Watch

6,112

6,112

4,743

5,297

4,777

4,777

$

41,585

$

37,808

$

138,567

$

21,271

$

20,401

$

44,019

$

$

$

303,651

Pass

$

24,000

$

308,584

$

854,075

$

558,216

$

356,421

$

594,172

$

3,896

$

$

2,699,364

Watch

2,590

5,144

21,840

39,832

70,133

42,111

6,879

24,626

73,034

146,650

1,011

1,260

2,164

71,074

4,650

80,338

$

24,000

$

354,296

$

862,941

$

588,165

$

380,425

$

778,112

$

8,546

$

$

2,996,485

Pass

$

56,699

$

94,564

$

154,134

$

224,909

$

49,919

$

369,657

$

8,083

$

$

957,965

Watch

1,965

44,450

9,048

4,556

61,509

1,003

122,780

21,683

20,611

1,101

41,356

85,693

1,238

15,848

4,962

142,903

80,416

14,017

259,545

$

57,109

$

98,709

$

236,115

$

259,530

$

198,479

$

553,047

$

23,103

$

$

1,426,092

$

$

$

$

$

$

2,785

$

$

$

2,785

Pass

$

142,966

$

975,917

$

627,072

$

339,891

$

236,641

$

368,158

$

1,202,822

$

$

3,893,467

Watch

4,012

66,951

55,844

162,005

3,730

77,782

216,159

586,483

5,472

36,829

2,867

41,837

73,721

161,409

1,051

2,182

8,570

15,962

31,756

43,282

103,221

Loss

$

147,819

$

1,049,391

$

721,927

$

510,726

$

259,254

$

519,565

$

1,536,441

$

$

4,745,123

$

$

$

$

$

$

5,131

$

1,332

$

$

6,669

Pass

$

$

29,488

$

24,618

$

19,243

$

10,696

$

1,766

$

37,970

$

$

123,781

Watch

17,187

11,801

$

8,917

37,905

1,038

1,038

$

$

29,488

$

41,805

$

32,082

$

10,696

$

1,766

$

46,887

$

$

162,724

Pass

$

192,679

$

759,057

$

432,327

$

415,791

$

255,350

$

4,355,912

$

$

$

6,411,116

1,181

70,206

72,435

$

192,679

$

760,238

$

432,646

$

416,170

$

255,700

$

4,426,118

$

$

$

6,483,551

$

$

$

$

$

$

$

$

$

Loans

Loans

Prior

Years

Total

BPPR

Leasing

Pass

$

210,843

$

570,183

$

456,718

$

287,444

$

148,154

$

84,804

$

$

$

1,758,146

1,980

2,580

1,129

7,169

Loss

$

210,843

$

571,166

$

458,698

$

290,024

$

148,732

$

85,950

$

$

$

$

$

1,071

$

1,966

$

1,082

$

$

$

$

$

4,850

Pass

$

$

$

$

$

$

$

1,118,278

$

$

1,118,278

23,837

23,837

Loss

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

16,396

$

$

16,396

HELOCs

Pass

$

$

$

$

$

$

$

2,562

$

$

2,562

$

$

$

$

$

$

$

2,569

$

$

2,569

$

$

$

$

$

$

$

$

$

Pass

$

200,218

$

745,798

$

417,333

$

158,860

$

48,662

$

134,930

$

$

21,077

$

1,726,878

2,864

4,243

1,551

9,452

1,033

19,615

$

200,218

$

748,662

$

421,576

$

160,411

$

49,134

$

144,382

$

$

22,110

$

1,746,493

$

$

6,810

$

11,488

$

3,295

$

$

1,403

$

$

$

24,349

Auto

Pass

$

342,983

$

1,145,262

$

840,316

$

654,624

$

366,598

$

307,952

$

$

$

3,657,735

9,989

12,762

10,704

7,415

8,008

48,997

Loss

$

343,102

$

1,155,319

$

853,105

$

665,347

$

374,013

$

315,968

$

$

$

$

$

9,028

$

5,738

$

3,008

$

1,521

$

$

$

$

20,167

Pass

$

8,302

$

35,338

$

22,941

$

13,787

$

5,252

$

5,716

$

61,379

$

$

152,715

Loss

$

8,302

$

35,582

$

22,965

$

13,787

$

5,296

$

6,060

$

61,686

$

$

153,678

$

$

$

$

$

$

$

$

$

$

1,225,657

$

4,840,659

$

4,190,345

$

2,957,513

$

1,702,130

$

6,874,987

$

2,821,368

$

22,110

$

24,634,769

Loans

Loans

Prior

Years

Total

Pass

$

$

165,837

$

436,312

$

341,089

$

165,978

$

592,171

$

5,334

$

$

1,706,755

Watch

101,958

19,914

67,303

149,375

338,550

2,192

3,050

32,629

32,629

$

$

165,837

$

538,270

$

361,861

$

233,281

$

776,367

$

5,334

$

$

2,080,984

$

$

$

$

$

$

$

$

$

Pass

$

6,741

$

396,376

$

493,557

$

168,986

$

214,339

$

503,436

$

11,254

$

$

1,794,689

Watch

17,023

33,260

29,093

94,339

173,715

2,406

64,664

67,070

2,708

2,790

7,995

11,607

25,100

$

6,741

$

396,376

$

513,288

$

207,442

$

251,427

$

674,046

$

11,254

$

$

2,060,574

Pass

$

36,651

$

302,989

$

245,911

$

225,998

$

57,688

$

250,846

$

4,951

$

$

1,125,034

Watch

38,795

27,687

51,281

102,480

3,972

224,215

34,633

131,309

4,922

11,152

182,016

28,593

2,413

129,481

160,487

$

36,651

$

302,989

$

347,932

$

387,407

$

113,891

$

493,959

$

8,923

$

$

1,691,752

Pass

$

41,163

$

218,204

$

301,833

$

337,350

$

249,043

$

511,963

$

310,873

$

$

1,970,429

Watch

39,927

46,133

57,607

112,073

20,338

276,287

6,065

14,865

22,482

1,057

2,779

2,214

3,639

11,162

$

42,102

$

219,641

$

348,252

$

384,517

$

309,450

$

626,683

$

349,715

$

$

2,280,360

$

$

$

$

$

$

$

$

$

Pass

$

17,234

$

348,577

$

230,756

$

82,615

$

$

38,754

$

15,733

$

$

733,669

Watch

31,690

14,210

8,118

54,018

2,168

13,466

15,634

8,825

34,433

43,258

$

17,234

$

350,745

$

275,912

$

105,650

$

$

46,872

$

50,166

$

$

846,579

Pass

$

23,480

$

93,943

$

225,010

$

283,981

$

230,999

$

414,626

$

$

$

1,272,039

27,192

28,072

$

23,480

$

93,943

$

225,245

$

283,981

$

231,644

$

441,818

$

$

$

1,300,111

Loans

Loans

Prior

Years

Total

Pass

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

HELOCs

Pass

$

$

$

$

$

$

6,878

$

40,955

$

12,329

$

60,162

1,816

1,280

3,096

Loss

$

$

$

$

$

$

8,793

$

40,955

$

14,400

$

64,148

$

$

$

$

$

$

$

$

$

Pass

$

8,545

$

36,778

$

78,649

$

18,867

$

2,167

$

3,441

$

$

$

148,447

2,069

Loss

$

8,545

$

37,284

$

79,605

$

19,068

$

2,207

$

3,808

$

$

$

150,517

$

$

$

3,701

$

$

$

$

$

$

5,712

Pass

$

$

$

$

$

$

$

8,908

$

$

8,926

Loss

$

$

$

$

$

$

$

8,909

$

$

8,927

$

$

$

$

$

$

$

$

$

$

134,805

$

1,566,815

$

2,328,504

$

1,749,926

$

1,141,900

$

3,072,346

$

475,273

$

14,400

$

10,483,969

Loans

Loans

Prior

Years

Total

Pass

$

41,619

$

203,645

$

574,325

$

362,360

$

186,379

$

620,558

$

5,334

$

$

1,994,220

Watch

101,958

19,914

67,303

155,487

344,662

6,935

8,347

37,406

37,406

$

41,619

$

203,645

$

676,837

$

383,132

$

253,682

$

820,386

$

5,334

$

$

$

$

$

$

$

$

$

$

$

Pass

$

30,741

$

704,960

$

1,347,632

$

727,202

$

570,760

$

1,097,608

$

15,150

$

$

4,494,053

Watch

2,590

17,750

38,404

50,933

134,171

243,848

42,111

6,879

27,032

137,698

213,720

1,011

3,968

2,969

10,159

82,681

4,650

105,438

$

30,741

$

750,672

$

1,376,229

$

795,607

$

631,852

$

1,452,158

$

19,800

$

$

Pass

$

93,350

$

397,553

$

400,045

$

450,907

$

107,607

$

620,503

$

13,034

$

$

2,082,999

Watch

1,965

83,245

36,735

55,837

163,989

4,975

346,995

56,316

151,920

6,023

52,508

267,709

1,238

44,441

7,375

142,903

209,897

14,017

420,032

$

93,760

$

401,698

$

584,047

$

646,937

$

312,370

$

1,047,006

$

32,026

$

$

$

$

$

$

$

$

2,785

$

$

$

2,785

Pass

$

184,129

$

1,194,121

$

928,905

$

677,241

$

485,684

$

880,121

$

1,513,695

$

$

5,863,896

Watch

4,037

67,135

95,771

$

208,138

$

61,337

$

189,855

$

236,497

$

$

862,770

5,668

42,894

1,162

2,888

42,270

88,586

183,891

1,332

2,108

2,609

8,702

18,741

33,970

46,921

114,383

Loss

$

189,921

$

1,269,032

$

1,070,179

$

895,243

$

568,704

$

1,146,248

$

1,886,156

$

$

$

$

$

$

$

$

5,175

$

1,385

$

$

7,233

Loans

Loans

Prior

Years

Total

Pass

$

17,234

$

378,065

$

255,374

$

101,858

$

10,696

$

40,520

$

53,703

$

$

857,450

Watch

48,877

26,011

8,118

8,917

91,923

2,168

13,466

1,038

16,672

8,825

34,433

43,258

$

17,234

$

380,233

$

317,717

$

137,732

$

10,696

$

48,638

$

97,053

$

$

Pass

$

216,159

$

853,000

$

657,337

$

699,772

$

486,349

$

4,770,538

$

$

$

7,683,155

1,181

97,398

100,507

$

216,159

$

854,181

$

657,891

$

700,151

$

487,344

$

4,867,936

$

$

$

$

$

$

$

$

$

$

$

$

Leasing

Pass

$

210,843

$

570,183

$

456,718

$

287,444

$

148,154

$

84,804

$

$

$

1,758,146

1,980

2,580

1,129

7,169

Loss

$

210,843

$

571,166

$

458,698

$

290,024

$

148,732

$

85,950

$

$

$

$

$

1,071

$

1,966

$

1,082

$

$

$

$

$

4,850

Loans

Loans

Prior

Years

Total

Pass

$

$

$

$

$

$

$

1,118,295

$

$

1,118,295

23,837

23,837

Loss

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

16,396

$

$

16,396

HELOCs

Pass

$

$

$

$

$

$

6,878

$

43,517

$

12,329

$

62,724

1,816

1,280

3,103

Loss

$

$

$

$

$

$

8,793

$

43,524

$

14,400

$

66,717

$

$

$

$

$

$

$

$

$

Pass

$

208,763

$

782,576

$

495,982

$

177,727

$

50,829

$

138,371

$

$

21,077

$

1,875,325

3,370

5,199

1,752

9,818

1,033

21,684

Loss

$

208,763

$

785,946

$

501,181

$

179,479

$

51,341

$

148,190

$

$

22,110

$

$

$

7,355

$

15,189

$

4,168

$

$

1,934

$

$

$

30,061

Auto

Pass

$

342,983

$

1,145,262

$

840,316

$

654,624

$

366,598

$

307,952

$

$

$

3,657,735

9,989

12,762

10,704

7,415

8,008

48,997

Loss

$

343,102

$

1,155,319

$

853,105

$

665,347

$

374,013

$

315,968

$

$

$

$

$

9,028

$

5,738

$

3,008

$

1,521

$

$

$

$

20,167

Pass

$

8,320

$

35,338

$

22,941

$

13,787

$

5,252

$

5,716

$

70,287

$

$

161,641

Loss

$

8,320

$

35,582

$

22,965

$

13,787

$

5,296

$

6,060

$

70,595

$

$

162,605

$

$

$

$

$

$

$

$

$

Total Popular Inc.

$

1,360,462

$

6,407,474

$

6,518,849

$

4,707,439

$

2,844,030

$

9,947,333

$

3,296,641

$

36,510

$

Loans

Loans

Prior

Years

Total

BPPR

Pass

$

37,976

$

138,619

$

21,334

$

20,487

$

32,554

$

24,248

$

$

$

275,524

Watch

1,068

5,179

6,247

4,780

5,339

4,832

4,832

$

37,976

$

139,178

$

21,334

$

20,487

$

33,622

$

39,039

$

$

$

291,942

Pass

$

305,243

$

871,191

$

560,785

$

359,853

$

41,262

$

563,794

$

7,042

$

$

2,709,170

Watch

1,959

5,205

22,211

5,938

27,015

63,210

43,020

5,413

24,730

15,843

68,368

157,374

1,016

1,307

2,231

53,729

12,968

4,069

75,500

$

351,238

$

878,793

$

590,900

$

384,295

$

116,772

$

672,145

$

11,111

$

$

3,005,254

$

$

$

$

$

$

$

$

$

1,130

Pass

$

92,234

$

155,819

$

227,246

$

51,038

$

24,184

$

357,429

$

9,146

$

$

917,096

Watch

2,947

45,106

9,913

4,285

5,017

62,217

1,000

130,485

16,860

20,741

1,462

44,069

84,019

1,316

15,710

5,080

143,696

87,383

12,617

266,647

$

96,497

$

233,495

$

262,980

$

200,481

$

30,933

$

551,234

$

22,763

$

$

1,398,383

$

$

$

$

$

$

4,432

$

$

$

4,437

Pass

$

1,109,898

$

634,401

$

511,912

$

241,452

$

123,458

$

258,872

$

1,343,885

$

$

4,223,878

Watch

28,841

95,785

6,111

4,043

15,560

65,360

182,756

398,456

6,401

3,269

3,200

2,088

41,289

9,410

65,933

1,760

8,644

22,065

1,922

32,087

40,670

107,879

$

1,145,871

$

735,215

$

526,943

$

270,814

$

143,028

$

397,634

$

1,576,721

$

$

4,796,226

$

$

$

$

$

$

1,086

$

4,468

$

$

7,739

Pass

$

26,662

$

24,462

$

27,364

$

10,758

$

1,944

$

1,049

$

38,720

$

$

130,959

Watch

16,546

5,458

9,506

31,510

1,009

1,010

6,378

6,378

$

26,662

$

47,386

$

33,831

$

10,758

$

1,944

$

1,049

$

48,227

$

$

169,857

$

$

2,611

$

$

$

$

$

$

$

2,611

Pass

$

751,532

$

439,373

$

421,297

$

259,412

$

164,438

$

4,280,509

$

$

$

6,316,561

$

$

$

$

$

2,606

$

71,893

$

$

$

75,263

$

751,628

$

439,534

$

421,459

$

259,757

$

167,044

$

4,352,402

$

$

$

6,391,824

$

$

$

$

$

$

1,638

$

$

$

1,638

Loans

Loans

Prior

Years

Total

BPPR

Leasing

Pass

$

647,659

$

488,506

$

313,133

$

163,189

$

88,983

$

21,706

$

$

$

1,723,176

2,516

3,053

8,616

Loss

$

648,465

$

491,022

$

316,186

$

164,095

$

89,801

$

22,240

$

$

$

$

1,065

$

4,424

$

2,878

$

$

$

$

$

$

10,879

Pass

$

$

$

$

$

$

$

1,112,447

$

$

1,112,447

23,259

23,259

Loss

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

41,007

$

$

41,007

HELOCs

Pass

$

$

$

$

$

$

$

2,622

$

$

2,622

$

$

$

$

$

$

$

2,648

$

$

2,648

$

$

$

$

$

$

$

$

$

Pass

$

859,434

$

480,771

$

181,483

$

57,227

$

58,849

$

96,956

$

$

22,034

$

1,756,754

1,815

4,985

1,939

8,322

1,006

19,493

Loss

$

861,249

$

485,756

$

183,436

$

57,720

$

59,794

$

105,315

$

$

23,040

$

1,776,310

$

4,458

$

35,915

$

18,076

$

4,210

$

4,891

$

2,952

$

$

1,475

$

71,977

Auto

Pass

$

1,210,622

$

899,797

$

711,439

$

405,768

$

260,355

$

120,318

$

$

$

3,608,299

6,980

14,049

11,916

9,157

7,051

3,199

52,352

Loss

$

1,217,611

$

913,890

$

723,400

$

414,941

$

267,415

$

123,523

$

$

$

$

10,170

$

23,849

$

11,820

$

5,914

$

3,553

$

$

$

$

55,306

Pass

$

36,144

$

24,238

$

14,942

$

5,618

$

3,433

$

2,753

$

61,796

$

$

148,924

Loss

$

36,388

$

24,263

$

15,079

$

5,691

$

3,449

$

3,247

$

62,045

$

$

150,162

$

$

$

$

$

$

11,876

$

$

$

12,454

$

5,173,585

$

4,388,532

$

3,095,548

$

1,789,039

$

913,802

$

6,267,828

$

2,859,549

$

23,040

$

24,510,923

Loans

Loans

Prior

Years

Total

Pass

$

166,410

$

417,169

$

326,047

$

164,887

$

182,528

$

410,836

$

5,112

$

$

1,672,989

Watch

116,794

39,319

71,237

93,239

98,365

418,954

1,171

3,377

5,410

5,545

20,780

26,325

$

166,410

$

533,963

$

366,228

$

237,295

$

281,312

$

533,358

$

5,112

$

$

2,123,678

Pass

$

396,712

$

490,316

$

170,074

$

201,225

$

86,595

$

394,455

$

6,086

$

$

1,745,463

Watch

39,721

38,713

43,705

39,908

91,922

4,557

258,526

1,327

63,365

64,692

8,054

1,702

3,730

13,486

$

396,712

$

530,037

$

208,787

$

252,984

$

129,532

$

553,472

$

10,643

$

$

2,082,167

$

$

$

$

$

$

$

$

$

Pass

$

303,202

$

278,380

$

226,289

$

58,505

$

47,083

$

204,888

$

9,753

$

$

1,128,100

Watch

69,894

84,218

53,066

14,057

98,502

1,905

321,642

77,912

4,955

6,074

11,224

100,165

2,430

21,763

107,675

132,345

$

303,202

$

348,751

$

390,849

$

116,526

$

88,977

$

422,289

$

11,658

$

$

1,682,252

$

$

$

$

$

$

1,395

$

$

$

1,395

Loans

Loans

Prior

Years

Total

Pass

$

196,959

$

278,238

$

346,428

$

268,835

$

148,502

$

379,635

$

414,883

$

$

2,033,480

Watch

37,022

47,299

44,939

23,493

93,299

32,497

278,747

1,021

8,674

11,012

1,152

1,841

1,517

6,656

$

198,001

$

316,777

$

394,900

$

314,956

$

172,876

$

474,814

$

457,571

$

$

2,329,895

$

$

$

1,994

$

$

1,320

$

$

$

$

3,875

Pass

$

280,188

$

251,627

$

89,450

$

14,733

$

25,254

$

$

$

$

661,252

Watch

22,867

12,869

21,896

58,414

2,120

13,151

15,271

13,997

3,895

36,593

54,486

$

282,308

$

287,646

$

116,316

$

18,628

$

47,150

$

37,375

$

$

$

789,423

Pass

$

99,296

$

229,720

$

288,767

$

233,805

$

177,245

$

264,069

$

$

$

1,292,902

2,102

8,208

11,191

$

99,296

$

229,955

$

288,767

$

234,451

$

179,347

$

272,277

$

$

$

1,304,093

Loans

Loans

Prior

Years

Total

Pass

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

HELOCs

Pass

$

$

$

$

$

$

7,394

$

39,925

$

12,253

$

59,572

1,849

2,815

Loss

$

$

$

$

$

$

9,342

$

39,925

$

14,038

$

63,305

$

$

$

$

$

$

$

$

$

Pass

$

41,016

$

93,759

$

23,325

$

2,993

$

3,597

$

1,441

$

$

$

166,131

1,630

2,675

Loss

$

41,349

$

95,389

$

23,650

$

3,043

$

3,724

$

1,782

$

$

$

168,937

$

$

13,136

$

4,450

$

$

$

$

$

$

19,971

Pass

$

$

$

$

$

$

$

10,259

$

$

10,278

$

$

$

$

$

$

$

10,260

$

$

10,279

$

$

$

$

$

$

$

$

$

$

1,487,297

$

2,342,518

$

1,789,497

$

1,177,883

$

902,918

$

2,304,709

$

535,188

$

14,038

$

10,554,048

Loans

Loans

Prior

Years

Total

Pass

$

204,386

$

555,788

$

347,381

$

185,374

$

215,082

$

435,084

$

5,418

$

$

1,948,513

Watch

116,794

39,319

71,237

94,307

103,544

425,201

1,171

8,157

10,749

5,545

25,612

31,157

$

204,386

$

673,141

$

387,562

$

257,782

$

314,934

$

572,397

$

5,418

$

$

Pass

$

701,955

$

1,361,507

$

730,859

$

561,078

$

127,857

$

958,249

$

13,128

$

$

4,454,633

Watch

1,959

40,603

43,918

65,916

45,846

118,937

4,557

321,736

43,020

5,413

24,730

17,170

131,733

222,066

1,016

1,307

10,285

55,431

16,698

4,069

88,986

$

747,950

$

1,408,830

$

799,687

$

637,279

$

246,304

$

1,225,617

$

21,754

$

$

$

$

$

$

$

$

$

$

$

1,323

Pass

$

395,436

$

434,199

$

453,535

$

109,543

$

71,267

$

562,317

$

18,899

$

$

2,045,196

Watch

2,947

115,000

94,131

57,351

19,074

160,719

2,905

452,127

16,860

98,653

6,417

6,961

55,293

184,184

1,316

16,187

7,510

143,696

22,608

195,058

12,617

398,992

$

399,699

$

582,246

$

653,829

$

317,007

$

119,910

$

973,523

$

34,421

$

$

$

$

$

$

$

$

5,827

$

$

$

5,832

Pass

$

1,306,857

$

912,639

$

858,340

$

510,287

$

271,960

$

638,507

$

1,758,768

$

$

6,257,358

Watch

29,039

132,807

53,410

48,982

39,053

158,659

215,253

677,203

6,609

4,158

1,297

3,230

2,239

41,328

18,084

76,945

1,367

2,388

8,796

23,217

2,652

33,928

42,187

114,535

$

1,343,872

$

1,051,992

$

921,843

$

585,770

$

315,904

$

872,448

$

2,034,292

$

$

$

1,143

$

$

2,209

$

$

1,875

$

1,086

$

4,517

$

$

11,614

Loans

Loans

Prior

Years

Total

Pass

$

306,850

$

276,089

$

116,814

$

25,491

$

27,198

$

1,049

$

38,720

$

$

792,211

Watch

39,413

18,327

21,896

9,506

89,924

2,120

13,151

1,009

16,281

6,379

13,997

3,895

36,593

60,864

$

308,970

$

335,032

$

150,147

$

29,386

$

49,094

$

38,424

$

48,227

$

$

959,280

$

$

2,611

$

$

$

$

$

$

$

2,611

Pass

$

850,828

$

669,093

$

710,064

$

493,217

$

341,683

$

4,544,578

$

$

$

7,609,463

4,708

80,101

86,454

$

850,924

$

669,489

$

710,226

$

494,208

$

346,391

$

4,624,679

$

$

$

$

$

$

$

$

$

1,638

$

$

$

1,638

Leasing

Pass

$

647,659

$

488,506

$

313,133

$

163,189

$

88,983

$

21,706

$

$

$

1,723,176

2,516

3,053

8,616

Loss

$

648,465

$

491,022

$

316,186

$

164,095

$

89,801

$

22,240

$

$

$

$

1,065

$

4,424

$

2,878

$

$

$

$

$

$

10,879

Loans

Loans

Prior

Years

Total

Pass

$

$

$

$

$

$

$

1,112,466

$

$

1,112,466

23,259

23,259

Loss

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

41,008

$

$

41,008

HELOCs

Pass

$

$

$

$

$

$

7,394

$

42,547

$

12,253

$

62,194

1,849

2,841

Loss

$

$

$

$

$

$

9,342

$

42,573

$

14,038

$

65,953

$

$

$

$

$

$

$

$

$

Pass

$

900,450

$

574,530

$

204,808

$

60,220

$

62,446

$

98,397

$

$

22,034

$

1,922,885

2,148

6,615

2,264

1,059

8,533

1,006

22,168

Loss

$

$

$

$

$

$

$

$

$

$

902,598

$

581,145

$

207,086

$

60,763

$

63,518

$

107,097

$

$

23,040

$

$

5,193

$

49,051

$

22,526

$

4,828

$

5,763

$

3,112

$

$

1,475

$

91,948

Auto

Pass

$

1,210,622

$

899,797

$

711,439

$

405,768

$

260,355

$

120,318

$

$

$

3,608,299

6,980

14,049

11,916

9,157

7,051

3,199

52,352

Loss

$

1,217,611

$

913,890

$

723,400

$

414,941

$

267,415

$

123,523

$

$

$

$

10,170

$

23,849

$

11,820

$

5,914

$

3,553

$

$

$

$

55,306

Pass

$

36,163

$

24,238

$

14,942

$

5,618

$

3,433

$

2,753

$

72,055

$

$

159,202

Loss

$

36,407

$

24,263

$

15,079

$

5,691

$

3,449

$

3,247

$

72,305

$

$

160,441

$

$

$

$

$

$

11,876

$

$

$

12,625

Total Popular Inc.

$

6,660,882

$

6,731,050

$

4,885,045

$

2,966,922

$

1,816,720

$

8,572,537

$

3,394,737

$

37,078

$

Note 9 – Mortgage banking activities

Income

from

banking

fees

earned

in

with

administering

loans

and

on

rights.

It

also

gain

on

sales

and

securitizations

of

loans, losses

on repurchased

loans, including

interest advances,

and trading

gains and

losses on

derivative

used

to

hedge

the

securitization

activities.

In

fair

value

to

mortgage loans held for sale, if any, are recorded as part of the mortgage

banking activities.

The following table presents the components of mortgage

banking activities:

Mortgage servicing fees, net of fair value adjustments:

Mortgage servicing fees

$

7,751

$

8,689

Mortgage servicing rights fair value adjustments

(3,439)

(1,376)

servicing fees, net of fair value adjustments

4,312

7,313

Net gain on sale of loans, including valuation on loans

held-for-sale

Trading account profit (loss):

Unrealized gains (loss) on outstanding derivative positions

(131)

Realized gains on closed derivative positions

profit (loss)

(75)

Losses on repurchased loans, including interest advances

(130)

(101)

banking activities

$

4,360

$

7,400

Note 10 – Transfers of financial assets and mortgage servicing assets

The

typically

conforming

loans

in

conjunction

with

GNMA,

FNMA

and

FHLMC

securitization transactions

whereby the

loans are

exchanged for

cash or

securities and

servicing rights.

As seller,

has made

certain representations

and warranties

with respect

to the

originally transferred

loans and,

in the

past,

has sold

certain

loans

with

credit

to

a

government-sponsored

entity,

namely

FNMA.

Refer

to

Note

to

the

Statements for a description of such arrangements.

No

liabilities were incurred as a result of these securitizations during the quarters ended March 31, 2024 and 2023 because they did

not contain

any credit

recourse arrangements. The

securitizations completed by

quarters ended

March

31, 2024 and 2023 were completed without credit

recourse.

The

following tables

present the

initial fair

the

assets obtained

as

loans securitized

during the quarters ended March 31, 2024 and

2023:

Proceeds Obtained During the Quarter Ended March

Level 1

Level 2

Level 3

Initial Fair Value

Assets

Trading account debt securities:

Mortgage-backed securities - GNMA

$

$

1,100

$

$

1,100

Mortgage-backed securities - FNMA

1,105

1,105

$

$

2,205

$

$

2,205

$

$

$

$

Total

$

$

2,205

$

$

2,250

Proceeds Obtained During the Quarter Ended March

Level 1

Level 2

Level 3

Initial Fair Value

Assets

Trading account debt securities:

Mortgage-backed securities - GNMA

$

$

1,067

$

$

1,067

Mortgage-backed securities - FNMA

9,899

9,899

$

$

10,966

$

$

10,966

$

$

$

$

Total

$

$

10,966

$

$

11,244

During the quarter ended March 31, 2024, the Corporation retained servicing rights on whole loan sales involving approximately $

million in principal

balance outstanding (March 31,

million), with net

realized gains of approximately

$

0.2

gains of $

0.2

million). All loan

sales performed during the

quarters ended March 31,

2024 and 2023

were without credit

recourse agreements.

The Corporation recognizes as assets the rights to service loans for others,

whether these rights are purchased or result from asset

transfers such as sales and securitizations. These mortgage

servicing rights (“MSRs”) are measured at fair

value.

The

uses

a

discounted

cash

flow

model

to

the

fair

value

of

MSRs.

The

discounted

cash

flow

model

incorporates

that

market

participants

would

use

in

estimating

future

net

income,

estimates

of

prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, prepayment and late

fees, among other considerations. Prepayment speeds are

adjusted for the loans’ characteristics and portfolio behavior.

the changes

in MSRs

measured using

value method

for the

quarters ended

Residential MSRs

Fair value at beginning of period

$

118,109

$

128,350

Changes due to payments on loans

[1]

(2,100)

(2,422)

Reduction due to loan repurchases

(137)

(240)

Changes in fair value due to changes in valuation model inputs

or assumptions

(1,202)

1,286

Fair value at end of period

[2]

$

114,964

$

127,475

[1] Represents changes due to collection / realization of expected cash flows over time.

[2] At March 31, 2024, PB had MSRs amounting to $

.0 million (March 31, 2023 - $

2.0

Residential mortgage loans serviced for others were

$

9.7

billion at March 31, 2024 (December 31, 2023

  • $

9.9

Net mortgage servicing fees, a component of mortgage banking activities in the Consolidated Statements of Operations, include the

changes from period to period in the fair value of the MSRs, including changes due to collection / realization of expected cash flows.

subsidiaries receive servicing

fees based

on a

percentage of the

outstanding loan balance.

These servicing fees

are

credited to income

when they are

collected. As of

weighted average mortgage

servicing fees were

0.32

% (March

0.31

%). Under these servicing agreements, the banking

subsidiaries do not generally earn significant prepayment

penalty

fees on the underlying loans serviced.

The section

below includes

assumptions used

in the

valuation model

of the

MSRs, originated

and purchased.

Key

economic assumptions used

in measuring the

servicing rights derived

from loans securitized

or sold by

the Corporation during

the

quarters ended March 31, 2024 and 2023 were

as follows:

BPPR

PB

BPPR

PB

6.1

%

6.0

%

6.7

%

7.3

%

Weighted average life (in years)

9.6

8.8

8.9

8.0

Discount rate (annual rate)

9.5

%

12.5

%

9.5

%

10.5

%

Key

used

to

the

fair

value

of

MSRs

derived

from

sales

and

securitizations

of

loans

performed

by

the

banking

and

rights

purchased

from

other

institutions,

and

the

sensitivity

to

immediate changes in those assumptions, were as follows

as of the end of the periods reported:

Originated MSRs

Purchased MSRs

Fair value of servicing rights

$

38,660

$

39,757

$

76,304

$

78,352

Weighted average life (in years)

6.5

6.6

6.7

6.8

Weighted average prepayment speed (annual

rate)

5.7

%

5.9

%

6.8

%

7.0

%

Impact on fair value of 10% adverse change

$

(721)

$

(696)

$

(1,410)

$

(1,440)

Impact on fair value of 20% adverse change

$

(1,416)

$

(1,365)

$

(2,767)

$

(2,827)

Weighted average discount rate (annual rate)

11.3

%

11.3

%

10.9

%

10.9

%

Impact on fair value of 10% adverse change

$

(1,438)

$

(1,387)

$

(2,783)

$

(2,871)

Impact on fair value of 20% adverse change

$

(2,782)

$

(2,686)

$

(5,391)

$

(5,562)

The sensitivity analyses presented in the table above for servicing rights are hypothetical and should be used with caution. As the

figures indicate, changes in fair value based on a 10 and 20 percent variation in assumptions generally cannot be extrapolated

because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the sensitivity tables

included herein, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without

changing any other assumption. In reality, changes in one factor may result in changes in another (for example, increases in market

interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

At

March

31,

2024,

the

$

million

in

loans

with

credit

to

the

(December 31, 2023

  • $

million). Also refer

to Note

19 to

Statements for information

on changes in

the Corporation’s liability of estimated losses related to

loans serviced with credit recourse.

Under the GNMA

securitizations, the Corporation, as

servicer, has

the right to

repurchase (but not the

obligation), at its

option and

without

GNMA’s

prior

authorization,

any

loan

that

is

for

a

GNMA

security

when

certain

criteria

are

met.

At

the

time

that

loans

meet

GNMA’s

specified

criteria

and

are

eligible

for

repurchase, the Corporation is deemed to have regained effective control over these loans if the Corporation was the pool issuer. At

March 31, 2024, the Corporation had

recorded $

million in mortgage loans on its

Consolidated Statements of Financial Condition

related

to

this

buy-back

option

program

31,

$

Loans

in

our

GNMA

benefit from

payment forbearance programs

but continue to

reflect the contractual

delinquency until the

borrower repays deferred

payments or

completes a payment deferral modification or other borrower assistance alternative. As long as the Corporation continues to service

the

loans

that

continue

to

be

in

a

GNMA

security,

the

MSR

is

by

the

2024, the Corporation repurchased approximately $

million (March 31, 2023 -

$

million) of

loans

from

its

GNMA

portfolio.

The

determination

to

these

loans

was

based

on

the

benefits of the

transaction, which results in

a reduction of

the servicing costs

for these severely

delinquent loans, mainly

principal and interest advances. The risk associated with

the loans is reduced due to their

guaranteed nature. The Corporation may

place these loans under modification programs offered by FHA, VA or United States Department of Agriculture (USDA)

or other loss

mitigation programs offered by the Corporation, and once brought back to current status, these may be either retained in portfolio or

re-sold in the secondary market.

Note 11 – Other real estate owned

activity related to Other Real Estate

Owned (“OREO”),

for the quarters

ended March 31, 2024 and

OREO

OREO

Commercial/Construction

Total

$

11,189

$

69,227

$

80,416

Write-downs in value

(25)

(284)

(309)

5,344

12,636

17,980

Sales

(546)

(16,934)

(17,480)

Other adjustments

(65)

(65)

$

15,962

$

64,580

$

80,542

OREO

OREO

Commercial/Construction

Total

$

12,500

$

76,626

$

89,126

Write-downs in value

(194)

(751)

(945)

1,023

18,675

19,698

Sales

(941)

(15,099)

(16,040)

Other adjustments

(118)

(118)

$

12,388

$

79,333

$

91,721

Note 12 − Other assets

The caption of other assets in the consolidated

statements of financial condition consists of the following

major categories:

Net deferred tax assets (net of valuation allowance)

$

1,001,093

$

1,009,068

Investments under the equity method

244,165

236,485

Prepaid taxes

32,146

39,052

Other prepaid expenses

26,332

29,338

Capitalized software costs

102,716

93,404

Derivative assets

24,040

24,419

Trades receivable from brokers and counterparties

23,477

23,102

Receivables from investments maturities

301,000

176,000

Principal, interest and escrow servicing advances

47,594

48,557

Guaranteed mortgage loan claims receivable

27,722

29,648

Operating ROU assets (Note 27)

110,712

116,106

Finance ROU assets (Note 27)

20,344

21,093

Assets for pension benefit

24,406

23,404

Others

135,155

144,888

Total other assets

$

2,120,902

$

2,014,564

The Corporation regularly incurs in

capitalizable costs associated with software development or

licensing which are recorded within

the Other Assets line item in the accompanying Consolidated Statements of Financial Condition.

In addition, the Corporation incurs

costs

with

hosting

arrangements

that

are

service

that

are

also

within

Other

Assets.

The

hosting

arrangements can

include capitalizable

implementation costs

amortized during

the term

of the

hosting arrangement.

The

table

summarizes

the

composition

of

acquired

or

developed

software

costs

as

well

as

costs

related

to

hosting

arrangements:

Gross Carrying

Net

Amount

Amortization

Value

Software development costs

$

75,489

$

23,983

$

51,506

Software license costs

47,950

23,658

24,292

37,240

10,322

26,918

Total Capitalized

software costs [1] [2]

$

160,679

$

57,963

$

102,716

Software development costs

$

76,497

$

22,086

$

54,411

Software license costs

42,868

18,048

24,820

23,623

9,450

14,173

Total Capitalized

software costs [1] [2]

$

142,988

$

49,584

$

93,404

[1]

Software intangible assets are presented as part of Other

Assets in the Consolidated Statements of Financial Condition.

[2]

The tables above excludes assets that have been fully

amortized.

Total

amortization expense for

all capitalized software

and hosting arrangement

cost, reflected as

part of

technology and software

expenses in the consolidated statement of operations,

is as follows:

Software development and license costs

$

17,701

$

14,991

Total amortization

expense

$

18,573

$

15,975

Note 13 – Goodwill and other intangible assets

Goodwill

no

changes in the carrying amount of goodwill for

the quarters ended March 31, 2024 and 2023.

The following tables present the gross amount of

goodwill and accumulated impairment losses by

reportable segments:

impairment

(gross amounts)

losses

(net amounts)

$

440,184

$

3,801

$

436,383

564,456

196,411

368,045

Inc.

$

1,004,640

$

200,212

$

804,428

impairment

(gross amounts)

losses

(net amounts)

$

440,184

$

3,801

$

436,383

564,456

196,411

368,045

Inc.

$

1,004,640

$

200,212

$

804,428

Other Intangible Assets

The following table reflects the components of

other intangible assets subject to amortization:

Gross Carrying

Net

Amount

Amortization

Value

Core deposits

$

12,810

$

11,636

$

1,174

Other customer relationships

14,286

7,251

7,035

Total other intangible

assets

$

27,096

$

18,887

$

8,209

Core deposits

$

12,810

$

11,315

$

1,495

Other customer relationships

14,286

6,777

7,509

Total other intangible

assets

$

27,096

$

18,092

$

9,004

2024,

the

Corporation recognized

$

0.8

million

in

amortization expense

intangible

assets with definite useful lives (March 31, 2023

  • $

0.8

the estimated

amortization of

the intangible

assets with

definite useful

lives for

each of

the following

periods:

Remaining 2024

$

2,143

Year 2025

1,750

Year 2026

1,440

Year 2027

Year 2028

Note 14 – Deposits

Total deposits as of the end of the periods presented consisted of:

Savings accounts

$

14,797,976

$

14,602,411

NOW, money market and other interest

bearing demand deposits

24,763,686

25,094,316

Total savings, NOW,

money market and other interest bearing demand

39,561,662

39,696,727

Certificates of deposit:

Under $250,000

5,420,905

5,443,062

$250,000 and over

3,334,167

3,058,830

Total certificates

of deposit

8,501,892

$

48,316,734

$

48,198,619

Non- interest bearing deposits

$

15,492,050

$

15,419,624

$

$

A summary of certificates of deposits by maturity at

March 31, 2024 follows:

$

4,649,279

1,915,324

838,041

470,438

625,629

2029 and thereafter

256,361

Total certificates of

deposit

$

At March 31, 2024, the Corporation had brokered

deposits amounting to $

1.6

billion (December 31, 2023 - $

1.7

The aggregate amount of overdrafts in demand deposit accounts

that were reclassified to loans was $

12.2

million at March 31, 2024

9.1

deposits amounted

to

$

18.0

billion. Puerto

Rico public

sector deposits

are interest

bearing accounts. These

public sector deposits

are indexed to

short-term market rates

and fluctuate in

cost with changes

in those

rates, in

accordance with contractual

terms. Public

deposit balances are

difficult to

predict. For example,

the receipt

by the Puerto

Rico

of

hurricane

recovery

related

Federal

assistance

and

seasonal

tax

collections

could

public

deposit

balances at BPPR.

On the other hand,

the amount and

timing of reductions

in balances are

likely to be

impacted by,

the speed at

which federal assistance

is distributed,

the financial condition,

liquidity and cash

management practices of the

Puerto

Rico

and

its

and

the

implementation

of

fiscal

and

debt

adjustment

plans

pursuant

to

PROMESA or

other

actions

mandated by

the

Fiscal

Oversight and

Management Board

for Puerto

Rico

(the

“Oversight Board”).

Generally, these deposits require that

the bank pledge high credit quality securities as collateral, therefore,

liquidity risk arising from

public sector deposit outflows are lower.

Note 15 – Borrowings

Assets sold under agreements to repurchase amounted

to $

million at March 31, 2024 and $

million at December 31, 2023.

repurchase transactions are

overcollateralized with the

securities detailed in

the table

below.

have

a

right

of

set-off

with

the

respective

counterparty

under

the

supplemental

terms

of

the

master

repurchase agreements.

In an

event of

default,

each party

has a

right of

set-off

against the

other party

for amounts

owed in

the

related

and

any

other

amount

or

owed

in

respect

of

any

other

or

transaction

between

them.

Pursuant to the

Corporation’s accounting policy,

the repurchase agreements

are not offset

with other repurchase

agreements held

with the same counterparty.

presents information related to

the Corporation’s repurchase

transactions accounted for as

secured borrowings

that are collateralized with

debt securities available-for-sale, debt securities

held-to-maturity, other assets

held-for-trading purposes

or which have been obtained under agreements to resell.

It is the Corporation’s policy to maintain effective control over assets

sold

under agreements

to repurchase;

accordingly,

such securities

be carried

on the

Consolidated Statements

of Financial

Condition.

Repurchase agreements accounted for as secured borrowings

Repurchase

Repurchase

$

30,581

$

16,931

After 30 to 90 days

18,504

18,369

After 90 days

8,292

49,085

43,592

11,550

27,171

After 30 to 90 days

5,228

20,394

16,778

47,565

mortgage obligations

Total

$

66,090

$

91,384

Repurchase agreements in this portfolio

are generally short-term, often overnight.

As such our risk

is very limited.

We manage the

liquidity risks arising from secured

funding by sourcing funding globally from

a diverse group of counterparties, providing

a range of

securities collateral and pursuing longer durations,

when appropriate.

Other short-term borrowings

no

other short-term borrowings outstanding at March 31,

2024 and December 31, 2023.

Notes Payable

The following table presents the composition of notes

payable at March 31, 2024 and December

Advances with the FHLB with maturities ranging from

through

paying interest at

monthly

fixed rates ranging from

0.44

% to

5.26

%

$

373,665

$

394,665

Unsecured senior debt securities maturing on

paying interest

semiannually

at a fixed rate of

7.25

%, net of debt issuance costs of $

5,715

[1]

394,285

393,937

Junior subordinated deferrable interest debentures (related to

trust preferred securities) maturing on

with fixed interest rates ranging from

6.125

% to

6.564

%, net of debt issuance costs of $

198,353

198,346

$

966,303

$

986,948

Note: Refer to the 2023 Form 10-K for rates information

at December 31, 2023.

[1] On March 13, 2023, the Corporation issued $

million aggregate principal amount of

7.25

% Senior Notes due

(the “2028 Notes”) in an

underwritten public offering. The Corporation used a

portion of the net proceeds of the 2028 Notes offering

to redeem, on August 14, 2023, the

outstanding $

million aggregate principal amount of its

6.125

% Senior Notes which were due on September

. The redemption price was

equal to

% of the principal amount plus accrued and unpaid

interest through the redemption date.

A breakdown of borrowings by contractual maturities

at March 31, 2024 is included in the table

below.

Assets sold under

agreements to

Total

$

66,090

$

70,943

$

137,033

144,214

144,214

74,500

74,500

438,636

438,636

238,010

238,010

Total borrowings

$

66,090

$

966,303

$

1,032,393

and December 31,

2023, the

Corporation had FHLB

borrowing facilities whereby

the Corporation could

borrow

up to $

4.4

4.2

billion, respectively, of which $

0.4

billion were used. In addition, at each of March 31,

2024 and December

31, 2023,

had placed

$

0.3

billion of

the available

FHLB credit

facility as

collateral for

municipal letters

of credit

to

secure

The

FHLB

are

with

and

loans

held-in-portfolio,

and

do

not

have

restrictive covenants or callable features.

Also, at March 31,

2024, the Corporation had borrowing

facilities at the discount window

of the Federal Reserve Bank

of New York

amounting to

$

4.6

billion (December 31,

2023 -

$

4.4

billion), which remained

unused at March

The facilities are a collateralized source of credit

that is highly reliable even under difficult market

conditions.

Note 16 − Other liabilities

The caption of other liabilities in the consolidated

statements of financial condition consists of the following

major categories:

Accrued expenses

$

361,839

$

337,695

Accrued interest payable

48,302

59,102

Accounts payable

92,715

89,339

Dividends payable

44,869

44,741

Trades payable

Liability for GNMA loans sold with an option to repurchase

9,538

10,960

Reserves for loan indemnifications

4,542

4,408

Reserve for operational losses

25,209

27,994

Operating lease liabilities (Note 27)

121,333

126,946

Finance lease liabilities (Note 27)

24,897

25,778

Pension benefit obligation

6,696

6,772

Postretirement benefit obligation

115,421

117,045

Others

63,042

63,816

Total other liabilities

$

918,448

$

914,627

Note 17 – Stockholders’ equity

As of March 31,

2024, stockholders’ equity totaled $

5.2

billion. During the quarter

ended March 31, 2024, the

Corporation declared

cash dividends of $

0.62

(2023 - $

0.55

) per common share amounting to

$

44.8

million (2023 - $

39.6

million). The quarterly dividend

declared to stockholders

of record as

of the close

of business on

March 14, 2024

was paid on

April 1, 2024

. On May

9, 2024, the

Corporation’s Board of

Directors approved a

quarterly cash dividend

of $

0.62

per share on

its outstanding common stock,

payable

on

July 1, 2024

to stockholders of record at the close of business on

May 30, 2024

.

Note 18 – Other comprehensive income (loss)

The

table

changes

in

accumulated

other

comprehensive

income

(loss)

by

component

for

the

ended

March 31, 2024 and, 2023.

Changes in Accumulated Other Comprehensive Income

(Loss) by Component [1]

Foreign currency translation

$

(64,528)

$

(56,735)

Other comprehensive loss

(4,020)

(5,245)

(4,020)

(5,245)

$

(68,548)

$

(61,980)

Adjustment of pension and

$

(117,894)

$

(144,335)

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other comprehensive loss

for

amortization of net losses

2,262

3,008

2,262

3,008

$

(115,632)

$

(141,327)

Unrealized net holding losses on

$

(1,713,109)

$

(2,323,903)

Other comprehensive income (loss) before reclassifications

(71,104)

191,752

Amounts reclassified from accumulated other comprehensive loss

for

amortization of net unrealized losses of debt securities

transferred from

available-for-sale to held-to-maturity

35,207

33,633

(35,897)

225,385

$

(1,749,006)

$

(2,098,518)

Unrealized net gains on cash

flow hedges

$

$

Other comprehensive (loss) income before reclassifications

(19)

Amounts reclassified from accumulated other comprehensive

gains

(26)

(45)

$

$

Total

$

$

(2,301,825)

[1] All amounts presented are net of tax.

presents the amounts

reclassified out of

each component of

accumulated other comprehensive loss

quarters ended March 31, 2024 and 2023.

Reclassifications Out of Accumulated Other Comprehensive

Loss

Affected Line Item in the

Consolidated Statements of Operations

Adjustment of pension and postretirement benefit plans

Amortization of net losses

$

(3,618)

$

(4,813)

(3,618)

(4,813)

Income tax benefit

1,356

1,805

$

(2,262)

$

(3,008)

Unrealized holding losses on debts securities

Amortization of unrealized net losses of debt

securities transferred to held-to-maturity

$

(44,009)

$

(42,040)

(44,009)

(42,040)

Income tax benefit

8,802

8,407

$

(35,207)

$

(33,633)

Unrealized net gains on cash flow hedges

Forward contracts

$

$

(15)

$

$

Total reclassification

adjustments, net of tax

$

(37,469)

$

(36,615)

Note 19 – Guarantees

At March 31, 2024, the

Corporation had a liability of $

million (December 31, 2023 -

$

million), which represents the unamortized

balance of the obligations undertaken in issuing the guarantees under the standby letters of credit. Management does not anticipate

any material losses related to these instruments.

From time to time, the Corporation securitized mortgage loans into guaranteed mortgage-backed securities subject to limited, and in

certain instances, lifetime credit

recourse on the loans

that serve as

collateral for the

mortgage-backed securities. The Corporation

has not

sold any

credit recourse since

  1. At

Corporation serviced

$

million

$

million) in residential mortgage

loans subject to credit

recourse provisions, principally loans associated

with FNMA

and FHLMC

loan securitization

programs. In

of any

customer default,

pursuant to

the

credit recourse

provided, the

repurchase the

loan or

reimburse the

third party

investor for

the incurred

loss.

The

maximum

amount

of

future

payments

that

the

would

be

to

make

under

the

arrangements

in

the

event

of

nonperformance by

the

is

equivalent

to

the

total

balance

of

the

loans

with

and

interest,

if

applicable.

During

the

quarter

ended

March

31,

2024,

the

repurchased

$

0.6

million

of

unpaid

balance

in

loans

subject

to

the

credit

provisions

(March 31, 2023

$

million). In the event of nonperformance by the borrower, the Corporation has rights

to the underlying collateral

securing the

mortgage loan. The

Corporation suffers

ultimate losses on

these loans when

the proceeds from

a foreclosure sale

of

the property underlying

a defaulted mortgage

loan are less

than the outstanding

principal balance of

the loan plus

any uncollected

advanced

and

the

costs

of

holding

and

disposing

the

related

property.

At

March

31,

2024,

the

established to cover the estimated credit loss exposure related to loans sold

or serviced with credit recourse amounted to $

million

The following table shows the changes in the Corporation’s liability of estimated losses related to loans serviced with credit recourse

provisions during the quarters ended March 31, 2024

Balance as of beginning of period

$

4,211

$

6,897

Provision (benefit) for recourse liability

(654)

Net charge-offs

(102)

(379)

Balance as of end of period

$

4,353

$

5,864

From time

to

time, the

Corporation sells

loans and

agrees to

indemnify the

purchaser for

credit

losses or

any

breach of

certain

representations and warranties made in connection

with the sale.

Servicing agreements

relating to

the mortgage-backed

securities programs

of FNMA,

FHLMC and

GNMA, and

to mortgage

loans

sold or serviced to certain other investors, including FHLMC,

require the Corporation to advance funds to

make scheduled payments

of principal,

interest, taxes

and insurance,

if such

payments have

not been

received from

the borrowers.

the

Corporation serviced $

9.7

billion in mortgage loans for third-parties, including the loans serviced with credit recourse (December 31,

9.9

billion). The Corporation generally recovers funds advanced pursuant to these arrangements from

the mortgage owner,

from liquidation proceeds when the mortgage

loan is foreclosed or,

in the case of FHA/VA

loans, under the applicable FHA

and

VA

and guarantees

programs. However,

in

the meantime,

must absorb

the cost

of the

funds

it

advances

time the

advance is

outstanding. The

Corporation must

also bear

the costs

of attempting

to collect

on delinquent

and

defaulted

loans.

In

if

a

defaulted

loan

is

not

cured,

the

loan

would

be

canceled

as

part

of

the

foreclosure proceedings and the

Corporation would not

receive any future servicing

income

with respect to

that loan. At

2024,

the

balance

of

funds

advanced

by

the

under

such

loan

was

$

million

31,

$

To

the

extent

the

loans

the

servicing portfolio experience

increased delinquencies, the Corporation

would be required

to dedicate additional

cash resources to

comply with its obligation to advance funds as well

as incur additional administrative costs related

to increases in collection efforts.

Inc. Holding

Company (“PIHC”) fully

and unconditionally guarantees

certain borrowing

obligations issued by

certain of

its

%

owned

consolidated

amounting

to

$

million

at

March

31,

and

31,

2023,

In

addition, at both March 31, 2024 and

December 31, 2023, PIHC fully and unconditionally guaranteed on

a subordinated basis $

million

of

capital

(trust

securities)

issued

by

wholly-owned issuing

trust

entities to

the

extent

set

forth

in

the

agreement.

Refer

to

Note

to

the

in

the

Form

10-K

for

further

information on the trust preferred securities.

Note 20 – Commitments and contingencies

Off-balance sheet risk

is a

party to

financial instruments

with off-balance

sheet credit

risk in

the normal

course of

business to

meet the

financial needs of its customers. These financial instruments

include loan commitments, letters of credit and standby

letters of credit.

These instruments involve,

to varying

degrees, elements of

credit and

risk in

excess of

the amount

recognized in

the

consolidated statements of financial condition.

The

to

credit

loss

in

the

event

of

nonperformance

by

the

other

party

to

the

instrument

for

commitments to extend credit, standby

letters of credit and financial

guarantees is represented by the

contractual notional amounts

of those instruments. The

Corporation uses the same

credit policies in

making these commitments and conditional

obligations as it

does for those reflected on the consolidated statements

of financial condition.

Financial instruments with

off-balance sheet credit

risk, whose contract

amounts represent potential credit

risk as of

the end of

the

periods presented were as follows:

Commitments to extend credit:

Credit card lines

$

6,130,148

$

6,108,939

Commercial lines of credit

3,661,556

3,626,269

Construction lines of credit

1,212,596

1,287,679

Other consumer unused credit commitments

257,059

256,610

Commercial letters of credit

1,234

1,404

Standby letters of credit

115,808

80,889

Commitments to originate or fund mortgage loans

29,524

32,968

and December 31,

2023, the

Corporation maintained a

reserve of

16.8

$

respectively, for potential losses associated with unfunded loan commitments

related to commercial

and construction lines of credit.

Other commitments

2024 and December 31,

2023, the Corporation also

maintained other non-credit commitments for

3.3

million, primarily for the acquisition of other investments.

Business concentration

Since the Corporation’s business activities are concentrated primarily in Puerto Rico, its results of operations and financial condition

are dependent

upon the

general trends

of the

economy and,

in particular,

the residential

and commercial

real estate

markets. The concentration

of the Corporation’s

operations in Puerto Rico

exposes it to

greater risk than other

banking companies

with a wider geographic base. Its

asset and revenue composition by geographical area

is presented in Note 32

to the Consolidated

Puerto

Rico

has

faced

fiscal

and

challenges

for

over

a

decade.

In

response

to

such

challenges,

the

U.S.

Congress enacted the

Puerto Rico Oversight

Management and Economic Stability

Act (“PROMESA”) in

2016, which, among

other

things,

established

the

Board

and

a

framework

for

the

of

the

debts

of

the

Commonwealth,

its

instrumentalities and

municipalities.

The

Commonwealth and

several

of

its

instrumentalities have

commenced

debt

proceedings under

PROMESA. As

of the

date of

this report,

while municipalities

have been

designated as

covered entities

under

PROMESA,

no

has

commenced,

or

has

been

by

the

Board

to

commence,

any

such

debt

restructuring proceeding under PROMESA.

At

Corporation’s direct

Rico

government and

its

instrumentalities and

totaled $

million, of which

$

million were outstanding

($

million at December

31, 2023). Of

the amount

outstanding,

$

million

of

loans

and

$

million

are

($

million

and

$

million

at

2023).

Substantially all

of the

amount outstanding

were obligations from

various Puerto

Rico

municipalities. In most cases, these were “general obligations” of a municipality, to which

the applicable municipality has pledged its

good

faith,

credit

and

unlimited taxing

power,

or

“special

obligations”

of

a

municipality,

to

which

the

has

pledged other revenues. At March 31, 2024,

% of the Corporation’s exposure to municipal loans and securities

was concentrated

in the municipalities of San Juan, Guaynabo, Carolina

and Caguas.

The following table details the loans and investments representing the Corporation’s direct exposure to

the Puerto Rico government

according to their maturities as of March 31, 2024:

Investment

Portfolio

Loans

Total Outstanding

Total Exposure

Central Government

$

$

$

$

Total Central

Municipalities

3,055

13,218

16,273

41,273

11,620

141,519

153,139

153,139

145,965

146,810

146,810

46,823

46,823

46,823

Total Municipalities

15,520

347,525

363,045

388,045

Total Direct Government

Exposure

$

15,566

$

347,525

$

363,091

$

388,091

In addition, at March

31, 2024, the Corporation had

$

million in loans insured

or securities issued by

Puerto Rico governmental

entities but for

which the principal

repayment is non-governmental

($

million at December

31, 2023). These

$

million

in

loans

insured

by

the

Puerto

Rico

Housing

Finance

(“HFA”),

a

governmental

instrumentality

that

has

been

designated

as

a

covered

entity

under

PROMESA

31,

$

These

are secured

by first

mortgages on

residential properties

and the

HFA

insurance covers

losses in

the

event of a

borrower default and upon the

satisfaction of certain other

conditions. The Corporation also

had at March

31, 2024, $

bonds issued by

HFA which

are secured by

second mortgage loans

on Puerto Rico

residential properties, and

for which

HFA also provides

insurance to cover losses in the

event of a borrower default and

upon the satisfaction of certain other

conditions

2023 -

$

million). In

insured by

HFA

and held

by the

Corporation directly

or

those serving

as collateral

for the

HFA

bonds default

and the

collateral is

satisfy the

of these

loans,

HFA’s

ability

to

honor

its

will

depend, among

other factors,

on

the

of

HFA

at

the

time

such

become

due

and

payable. The

Corporation does

not consider

the

government guarantee

when

estimating the

credit

losses

with

this

portfolio.

Although

the

Governor

is

by

local

legislation

to

impose

a

temporary

moratorium on the financial obligations of the HFA, a moratorium on

such obligations has not been imposed as of

the date hereof.

commercial loan

portfolio also

includes loans

to

private borrowers

who

are service

providers, lessors,

suppliers or

have

other relationships with the government. These

borrowers could be negatively affected by

the Commonwealth’s fiscal crisis and

the

ongoing

Title

III

proceedings

under

PROMESA.

Similarly,

and

loan

include

loans

to

and

retirees,

which

could

also

be

by

fiscal

such

as

employee

layoffs

or

furloughs or reductions in pension benefits.

In

$

1.9

billion

of

mortgages

and

$

92.4

million

loans

were

insured

or

by

the

U.S.

Government or

its agencies

(compared to

$

1.9

$

89.2

31, 2023).

The Corporation also had

U.S. Treasury and

obligations from the U.S.

Government, its agencies or

government sponsored entities

within the

portfolio of

available-for-sale and

held-to-maturity securities as

described in

Note 5

and 6

to the

At

March

31,

2024,

the

Corporation had

in

the

Virgin

Islands

(the

“USVI”) and

has

million

in

direct

to

USVI

31,

$

The

USVI

has

been

experiencing

a

number of

fiscal and

economic challenges

that could

adversely affect

the ability

of its

public corporations

and instrumentalities

to

service their outstanding debt obligations.

At March 31, 2024, the Corporation had operations in the British Virgin Islands (“BVI”), which

islands were negatively affected by the

COVID-19 pandemic, particularly due to a reduction in

the tourism activity which accounts for a significant

portion of their economy.

Although the

no significant

a single

borrower in

the BVI,

at

2024,

it

had a

amounting to

million comprised

of various

retail and

commercial clients,

a loan

portfolio of

$

million at December 31, 2023.

FDIC Special Assessment

On

November

16,

2023,

the

Federal

Deposit

a

final

rule

that

imposes

a

special

in

March 2023,

of the systemic

risk exception to

the least-cost resolution

test under the

Federal Deposit Insurance

Act in

receiverships of

several failed

banks. In

this assessment,

recorded an

$

71.4

million, $

45.3

million net of tax, in the fourth quarter

of 2023, representing the full amount of the

During the quarter ended March 31, 2024, the Corporation

recorded an additional expense of $

14.3

million, $

9.1

million net of tax, to

FDIC's higher loss

estimate which increased

from $

16.3

billion, when

approved, to

$

20.4

billion during

The

special assessment

collection period

may change

as the

estimated loss

is periodically

adjusted or

if the

collected varies.

Legal Proceedings

The

nature

of

Popular’s

ordinarily

generates

claims,

litigation,

investigations,

and

legal

and

administrative

cases

and

proceedings

(collectively,

“Legal Proceedings”).

When the

Corporation determines

that

it

has

meritorious

defenses to

the

claims

asserted, it vigorously defends itself. The Corporation will consider the settlement of cases (including cases where it has meritorious

defenses) when, in management’s judgment, it

is in the best

interest of the Corporation and

its stockholders to do so.

On at least a

quarterly basis, Popular assesses its liabilities and contingencies relating

to outstanding Legal Proceedings utilizing the most current

available.

For

matters

where

it

is

probable

that

the

will

incur

a

loss

and

the

amount

can

be

reasonably estimated,

establishes an

accrual for

the loss.

Once established,

the accrual

is adjusted

on at

least a

quarterly

basis

to

reflect

any

relevant

developments,

as

appropriate.

For

matters

where

a

loss

is

not

probable,

or

the

amount of the loss cannot be reasonably estimated,

no accrual is established.

In certain cases,

exposure to loss

exists in

excess of any

accrual to the

extent such loss

is reasonably possible,

but not

probable.

Management believes and

estimates that the

range of reasonably

possible losses (with

respect to those

matters where such

limits

may be determined, in excess of amounts accrued)

for current Legal Proceedings ranged from $

to approximately $

15.8

million as

  1. In certain cases,

management cannot reasonably estimate the

possible loss at this

time. Any estimate involves

judgment,

given

the

varying

stages

of

the

Legal

Proceedings

(including

the

fact

that

many

of

them

are

in

preliminary stages), the existence of multiple defendants in several of the current Legal Proceedings whose share of liability has yet

to be

determined, the

numerous unresolved issues

in many

of the

Legal Proceedings,

and the

inherent uncertainty

of the

various

outcomes

of

such

Legal

Proceedings.

Accordingly,

will

change

from

time-to-time,

and

actual

losses may be more or less than the current estimate.

While the

outcome of

Legal Proceedings

is inherently

uncertain, based

on information

currently available,

advice of

counsel, and

coverage,

that

the

amount

it

has

already

accrued

is

adequate

and

any

incremental

liability arising from

the Legal Proceedings

in matters in

which a loss

amount can be

reasonably estimated will not

have a material

adverse effect

on the Corporation’s

consolidated financial position.

However, in

of unexpected future

developments, it is

possible that

the ultimate

resolution of

these matters

in a

reporting period, if

unfavorable, could have

a material

adverse effect

on

the Corporation’s consolidated financial position for that period.

Set forth below is a description of the Corporation’s

significant Legal Proceedings.

Insufficient Funds and Overdraft Fees Class Actions

Popular, Inc. was

named as a defendant on a

putative class action complaint captioned Golden v.

Popular, Inc. filed

in March 2020

before

the

U.S.

Court

for

the

Southern

of

New

York,

seeking

damages,

restitution

and

injunctive

relief.

alleged breach

of contract,

violation

of

the covenant

of

good faith

and

fair

dealing, unjust

enrichment and

violation

of

protection law

due

to

Popular’s purported

practice of

charging

overdraft fees

(“OD

Fees”) on

transactions that,

under

plaintiffs’ theory,

do not

overdraw the

account. Plaintiff

described Popular’s purported

practice of

charging OD

Fees as

“Authorize

Positive,

Purportedly

Settle

Negative”

(“APPSN”)

and

alleged

that

Popular

assesses

OD

Fees

over

for

which

funds

are

held

for

settlement.

In

August

2020,

Popular

filed

a

Motion

to

Dismiss

on

several

grounds,

failure

to

state

a

claim

against

Inc.

and

improper

venue.

In

October

2020,

filed

a

Notice

of

Voluntary

Dismissal

before

the

U.S.

Court

for

the

Southern

of

New

York

and,

simultaneously,

filed

an

identical

complaint in

District Court for

the District

of the

Virgin Islands

against Popular,

Inc., Popular Bank

and Banco Popular

de

Puerto

Rico

(“BPPR”). In

November 2020,

filed

a

Notice of

Voluntary

Dismissal against

Inc.

and Popular

Bank

following a Motion to

Dismiss filed on behalf

of such entities, which argued

failure to state

a claim and lack

of minimum contacts of

such parties with the U.S.V.I.

district court jurisdiction. BPPR, the only defendant remaining in

the case, was served with process in

November 2020 and filed a Motion to Dismiss

in January 2021.

In October 2022, the parties reached a settlement in principle on a class-wide basis subject to final court approval. In January 2023,

the parties filed

before the Court a

motion for preliminary approval

of the settlement

agreement and, on March

31, 2023, the Court

issued

an

order

granting

preliminary

of

the

agreement.

The

Court

scheduled

the

final

hearing

for

September 8, 2023.

On

September

8,

2023,

the

Court

held

a

hearing

to

the

final

of

the

class

agreement,

and,

on

September 29, 2023, the Court issued an Opinion and Order granting final approval

to the settlement agreement.

On December 19,

2023, the Court

issued an Order staying

all deadlines in the

settlement agreement regarding payment

of benefit until further

notice

after

the

parties

informed

the

Court

that

the

administrator

had

mistakenly

failed

to

send

the

notice

to

3,000

class

members.

On

February

20,

2024,

the

parties

filed

a

Joint

Motion

for

Supplemental

Notice

that

was

approved by the Court on February 20, 2024.

The Court scheduled a supplemental fairness hearing

for July 8, 2024.

On January

31, 2022,

Popular was

also named

as a

defendant on a

putative class

action complaint captioned

Lipsett v.

Inc. d/b/a Banco Popular, filed before the U.S. District Court for the Southern District

of New York, seeking damages, restitution and

injunctive relief. Similar to the claims set forth in the

aforementioned Golden complaint, Plaintiff alleges breach of contract, including

violations of the covenant of good faith and

fair dealing, as a result of Popular’s purported practice

of charging OD Fees for APPSN

transactions. The complaint

further alleged that

Popular assesses OD

Fees over

authorized transactions for

which sufficient funds

are held for settlement. Popular waived service of process

and filed a Motion to Compel Arbitration. In response to Popular’s

motion,

Plaintiff filed a Notice of Voluntary Dismissal in April 2022.

On May

13, 2022,

Plaintiff in

the Lipsett

complaint filed

a new

complaint captioned

Lipsett v.

Banco Popular

North America

d/b/a

Popular Community

Bank with

allegations of

his previous

complaint against

Popular.

In September

2022, after

serving

with a

written notice

of

election to

arbitrate the

claims

asserted in

the complaint

which went

unanswered, Popular

Bank

(“PB”) filed a new Motion to Compel Arbitration.

On December 9, 2022, the

Court issued a Decision and

Order denying PB’s Motion to

Compel Arbitration. On December 20, 2022,

PB filed a Notice of Appeal with the United

States Court of Appeals for the Second Circuit.

On January

10, 2024,

the Court

of

Appeals entered

judgment affirming

the trial

court’s

decision denying

PB’s

Motion to

Compel

Arbitration. After remand to the U.S. District Court, on March 19, 2024, the court issued an Order adjourning all dates and deadlines

including the

initial pretrial conference

after the

parties informed that

they have agreed

to mediate

the matter.

During a mediation

hearing held on May 2, 2024, the parties reached

a settlement in principle on a class-wide basis

subject to final court approval.

Note 21 – Non-consolidated variable interest

The Corporation is

involved with

three

statutory trusts which

it created to

issue trust preferred

securities to the

public. These trusts

are deemed to be variable interest entities (“VIEs”) since the equity investors at risk have no substantial decision-making rights. The

Corporation does not

hold any variable

interest in the

trusts, and therefore,

cannot be the

trusts’ primary beneficiary.

the

Corporation concluded

that

it did

not

hold

a

controlling financial

in

these

trusts

since the

decisions

of

the

trusts

are

predetermined through

the trust

documents and the

guarantee of

the trust

preferred securities is

irrelevant since

in substance

the

sponsor is guaranteeing its own debt.

Also, the

involved with

various special

purpose entities

mainly in

guaranteed mortgage

securitization transactions,

GNMA

and

FNMA.

The

has

also

engaged

in

securitization

with

FHLMC,

but

considers

its

in

the

form

of

fees

and

advances

not

to

be

at

March

31,

.

These

special

purpose

are

deemed

to

be

VIEs

since

they

lack

equity

at

risk.

The

involvement

in

these

guaranteed loan

securitizations includes

owning certain

beneficial interests in

the form

of securities as

well as

rights

retained. The Corporation is not required to provide additional financial support to

any of the variable interest entities to which it has

transferred

the

assets.

The

to

the

extent

retained,

are

in

the

of

Condition

as

or

trading

The

that,

essentially,

these

(FNMA

and

GNMA)

control

the

design

of

their

respective

VIEs,

dictate

the

quality

and

nature

of

the

collateral, require

the underlying

insurance, set

standards via

guides and

can change

them at

will, and

can remove a

primary servicer with cause,

and without cause in

the case of

FNMA. Moreover, through

their guarantee obligations,

agencies (FNMA and GNMA) have the obligation

to absorb losses that could be potentially significant

to the VIE.

The

holds

interests

in

these

VIEs

in

the

form

of

agency

and

mortgage obligations, including those securities originated by the Corporation and those acquired from

third parties. Additionally, the

Corporation holds agency mortgage-backed securities

and agency collateralized mortgage obligations

issued by third party

VIEs in

which

it

has

no

other

form

of

involvement. Refer

to

Note

to

the

for

information on the debt securities outstanding at March 31,

2024 and December 31, 2023, which are classified

as available-for-sale

and

trading

in

the

of

Condition.

In

the

holds

interests

in

the

form

of

fees,

since

it

retains

the

right

to

service

the

transferred

loans

in

those

government-

sponsored special purpose entities (“SPEs”) and may also purchase the right to service loans in other government-sponsored SPEs

that were transferred to those SPEs by a third-party.

the carrying

classification of

the assets

variable interests

in

non-consolidated VIEs

and the

maximum exposure

to loss

as a

result of

involvement as

servicer of

GNMA and

FNMA loans at March 31, 2024 and December

March 31,2024

Assets

Servicing assets:

$

90,254

$

92,999

Total servicing

assets

$

90,254

$

92,999

Other assets:

Servicing advances

$

6,993

$

6,291

Total other assets

$

6,993

$

6,291

$

97,247

$

99,290

Maximum exposure to loss

$

97,247

$

99,290

The size of

the non-consolidated VIEs,

in which the

Corporation has a

variable interest in

the form

of servicing fees,

measured as

the total unpaid principal balance of the loans,

amounted to $

7.0

billion at March 31, 2024 (December 31, 2023 - $

7.2

determined that

the maximum

loss includes

the MSRs

and the

assumption that

the

servicing advances at March

31, 2024 and December

31, 2023, will not

be recovered. The agency

debt securities are not

as part of the maximum exposure to loss since

they are guaranteed by the related agencies.

ASU 2009-17 requires that an ongoing primary beneficiary assessment should be made to determine whether the Corporation is the

primary beneficiary of any of the VIEs it is

involved with. The conclusion on the assessment of these non-consolidated VIEs has not

changed

since

their

initial

evaluation.

The

that

it

is

still

not

the

primary

beneficiary

of

these

VIEs,

and

therefore, these VIEs are not required to be consolidated

in the Corporation’s financial statements at March 31, 2024.

Note 22 – Related party transactions

Centro Financiero BHD, S.A.

At March 31, 2024, the Corporation had a

15.84

% equity interest in Centro Financiero BHD, S.A. (“BHD”),

one of the largest banking

and financial services groups

in the Dominican Republic.

During the quarter ended

March 31, 2024, the

Corporation recorded $

7.3

million in equity pickup from its investment in BHD (March 31,

9.1

million), which had a carrying amount of $

233.2

March 31, 2024 (December

225.9

million). There were

no

dividends received by the

Corporation from its investment in

BHD León during the quarters ended March 31, 2024

Investment Companies

The Corporation,

through its subsidiary Popular

Asset Management LLC (“PAM”),

provides advisory services to several

companies registered

Investment Company

Act of

1940 in

exchange for

a fee.

The Corporation,

through its

subsidiary

BPPR, also

provides transfer

agency services to

these investment companies.

These fees

are calculated

at an

annual rate

of the

average net

assets of the

investment company,

as defined in

each agreement. Due

to its

advisory role, the

Corporation considers

these investment companies as related parties.

For the quarter ended March 31, 2024, administrative fees charged to these investment companies amounted to $

0.6

0.6

million) and waived fees amounted to $

0.2

0.2

million), for a net fee of $

0.4

0.4

Note 23 – Fair value measurement

ASC Subtopic

820-10 “Fair

Value

Measurements and

Disclosures” establishes

a fair

value hierarchy

that prioritizes

the inputs

to

valuation techniques

used to

measure fair

value into

three levels

in order

to increase

consistency and

comparability in

measurements and disclosures. The hierarchy is broken

down into three levels based on the reliability

of inputs as follows:

Level 1

  • Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to

access at

the measurement date.

Valuation

on these

instruments does not

necessitate a

significant degree of

judgment

since valuations are based on quoted prices that

are readily

available in an active market.

Level 2

  • Quoted prices other than those included in Level 1 that are observable either directly or indirectly.

Level 2 inputs

include

quoted

prices

for

similar

assets

or

in

active

markets,

quoted

prices

for

identical

or

similar

assets

or

liabilities in

markets that

are

not active,

inputs that

are

observable or

that can

be corroborated

by

observable

market data for substantially the full term of the

financial instrument.

Level

Inputs

are

unobservable

and

to

the

fair

value

measurement.

Unobservable

inputs

reflect

the

Corporation’s own judgements about assumptions that

market participants would use in pricing the asset

or liability.

The

maximizes

the

use

of

observable

inputs

and

minimizes

the

use

of

unobservable

inputs

by

that

the

observable inputs be used when

available. Fair value is

based upon quoted market prices

when available. If listed prices

or quotes

are

not

available,

the

employs

internally-developed

models

that

use

market-based

inputs

yield

curves, interest rates,

volatilities, and credit

curves, among others.

Valuation

adjustments are limited

to those necessary

to ensure

that the financial instrument’s

fair value is adequately representative of

the price that would

be received or paid

in the marketplace.

These adjustments include amounts that reflect counterparty credit quality,

the Corporation’s credit standing, constraints on liquidity

and unobservable parameters that are applied consistently.

There have been no changes in the

Corporation’s methodologies used

to estimate the fair value of assets and liabilities from

those disclosed in the 2023 Form 10-K.

The estimated fair

value may

be subjective in

nature and may

involve uncertainties and

matters of

significant judgment for

certain

financial instruments. Changes in the underlying assumptions

used in calculating fair value could significantly

affect the results.

Fair Value on a Recurring and Nonrecurring Basis

The following fair value hierarchy tables

present information about the Corporation’s assets

and liabilities measured at fair value

on

a recurring basis at March 31, 2024 and December

31, 2023:

Level 1

Level 2

Level 3

Measured at NAV

Total

RECURRING FAIR VALUE

Assets

Debt securities available-for-sale:

$

$

6,026,731

$

$

$

12,289,211

127,608

127,608

5,597,993

5,598,600

Other

2,000

2,005

$

$

11,752,337

$

2,607

$

$

derivatives:

$

8,316

$

$

$

$

8,316

18,587

18,671

Other

debt securities, excluding

$

8,316

$

18,737

$

$

$

27,303

$

$

40,933

$

$

$

41,269

114,964

114,964

5,352

5,352

24,045

24,045

$

6,270,796

$

11,841,404

$

117,821

$

$

18,230,357

$

$

$

$

$

Total liabilities measured

$

$

$

$

$

Level 1

Level 2

Level 3

Measured at NAV

Total

RECURRING FAIR VALUE

Assets

Debt securities available-for-sale:

$

$

6,811,025

$

$

$

10,747,061

134,686

134,686

5,844,180

5,844,786

Other

2,500

2,511

$

$

12,789,902

$

3,106

$

$

derivatives:

$

16,859

$

$

$

$

16,859

14,261

14,373

Other

debt securities, excluding

$

16,859

$

14,425

$

$

$

31,568

$

$

37,965

$

$

$

38,275

118,109

118,109

3,239

3,239

24,419

24,419

$

3,952,895

$

12,869,950

$

121,499

$

$

16,944,654

$

$

$

$

$

Total liabilities measured

$

$

$

$

$

Beginning in the first quarter of 2023, the Corporation has elected the fair value option for

newly originated mortgage loans held-for-

sale. This election better aligns with the management

of the portfolio from a business perspective.

Loans held-for-sale measured at fair value

Loans held-for-sale measured at fair value were priced

based on secondary market prices. These loans

are classified as Level 2.

The

tables summarize

the difference

between the

aggregate fair

value

and the

aggregate unpaid

balance

for

mortgage loans originated as held-for-sale measured

at fair value as of March 31, 2024 and December

Aggregate Unpaid

Fair Value

Principal Balance

Difference

Loans held for sale

$

5,352

$

5,285

$

Aggregate Unpaid

Fair Value

Principal Balance

Difference

Loans held for sale

$

3,239

$

3,202

$

No

loans held-for-sale were 90 or more days past

due or on nonaccrual status as of March 31,

2024 and December 31, 2023.

ended March 31, 2024,

changes in the

fair value of

mortgage loans held-for-sale for

which the Corporation

elected

the fair value option, were not considered material.

The fair value information included in the following

tables is not as of period end, but as

of the date that the fair value measurement

was recorded during the quarters ended March 31,

2024 and 2023 and excludes nonrecurring

fair value measurements of assets no

longer outstanding as of the reporting date.

Level 1

Level 2

Level 3

Total

NONRECURRING FAIR VALUE

Assets

Write-downs

Loans

[1]

$

$

$

$

$

(2,172)

[2]

1,416

1,416

(224)

Other foreclosed assets

[2]

(41)

at fair value on a nonrecurring basis

$

$

$

1,631

$

1,631

$

(2,437)

[1] Relates mainly to certain impaired collateral dependent loans.

The impairment was measured based on the fair value

of the collateral, which is

derived from appraisals that take into consideration prices

in observed transactions involving similar assets in similar

locations. Costs to sell are

[2] Represents the fair value of foreclosed real estate and

other collateral owned that were written down to their fair

value. Costs to sell are

Level 1

Level 2

Level 3

Total

NONRECURRING FAIR VALUE

Assets

Write-downs

Loans

[1]

$

$

$

1,629

$

1,629

$

(3)

[2]

2,330

2,330

(628)

Other foreclosed assets

[2]

(4)

at fair value on a nonrecurring basis

$

$

$

3,974

$

3,974

$

(635)

[1] Relates mainly to certain impaired collateral dependent loans.

The impairment was measured based on the fair value

of the collateral, which is

derived from appraisals that take into consideration prices

in observed transactions involving similar assets in similar

locations. Costs to sell are

[2] Represents the fair value of foreclosed real estate and

other collateral owned that were written down to their fair

value. Costs to sell are

The following tables present the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarters

ended March 31, 2024 and 2023.

MBS

Other

CMOs

MBS

Other

as debt

classified as

account

account

debt

debt

Total

rights

assets

Balance at December 31, 2023

$

$

2,500

$

$

$

$

118,109

$

121,499

Gains (losses) included in earnings

(500)

(1)

(3,439)

(3,940)

Gains (losses) included in OCI

Settlements

(5)

(28)

(33)

Balance at March 31, 2024

$

$

2,000

$

$

$

$

114,964

$

117,821

Changes in unrealized gains (losses) included

in earnings relating to assets still held at March

$

$

(500)

$

$

$

$

(1,202)

$

(1,700)

MBS

Other

Other

CMOs

MBS

as debt

classified as

Total

rights

assets

Balance at December 31, 2022

$

$

1,000

$

$

$

$

128,350

$

130,596

Gains (losses) included in earnings

(1)

(8)

(1,376)

(1,385)

Gains (losses) included in OCI

(6)

(6)

Settlements

(50)

(25)

(26)

(101)

Balance at March 31, 2023

$

$

1,000

$

$

$

$

127,475

$

129,605

Changes in unrealized gains (losses)

included in earnings relating to assets

still held at March 31, 2023

$

$

$

$

$

$

1,286

$

1,295

Gains and losses (realized and unrealized) included in earnings for the quarters ended March 31, 2024 and 2023 for

Level 3 assets

and liabilities included in the previous tables

are reported in the consolidated statements of

operations as follows:

Changes in unrealized

Changes in unrealized

Total gains

gains (losses) relating to

Total gains

gains (losses) relating to

(losses) included

assets still held at

(losses) included

assets still held at

in earnings

reporting date

in earnings

reporting date

$

(3,439)

$

(1,202)

$

(1,376)

$

1,286

Trading account (loss) profit

(1)

(9)

(500)

(500)

Total

$

(3,940)

$

(1,700)

$

(1,385)

$

1,295

tables include

quantitative information

about significant

unobservable inputs

used to

derive the

of Level

instruments, excluding those instruments

for which the

unobservable inputs were not

developed by the

Corporation such as

prices

of prior transactions and/or unadjusted third-party pricing

sources at March 31, 2024 and 2023.

Fair value at

Valuation technique

Unobservable inputs

Weighted average (range) [1]

Other - trading

$

2.3

years

Yield

12.0%

10.8%

$

[2]

External appraisal

Haircut applied on

external appraisals

10.0%

[1]

Weighted average of significant unobservable inputs

used to develop Level 3 fair value measurements

were calculated by relative fair value.

[2]

Loans held-in-portfolio in which haircuts were not applied

to external appraisals were excluded from this table.

Fair value at

Valuation technique

Unobservable inputs

Weighted average (range) [1]

CMO's - trading

$

0.3

years (

0.1

0.5

years)

Yield

4.9

% (

4.9

% -

5.4

%)

9.2

% (

8.3

% -

27.8

%)

Other - trading

$

2.5

years

Yield

12.0%

10.8%

$

1,560

[2]

External appraisal

Haircut applied on

external appraisals

.0%

[1]

Weighted average of significant unobservable inputs

used to develop Level 3 fair value measurements

were calculated by relative fair value.

[2]

Loans held-in-portfolio in which haircuts were not applied

to external appraisals were excluded from this table.

Note 24 – Fair value of financial instruments

The fair

financial instruments

is the

amount at

which an

asset or

obligation could

be exchanged

in a

current transaction

between

willing

parties,

other

than

in

a

forced

or

liquidation

sale.

For

those

instruments

with

no

quoted

market

prices

available, fair values have been estimated using present

value calculations or other valuation techniques, as well

as management’s

best judgment with respect to current economic conditions, including discount rates, estimates of future cash flows, and prepayment

assumptions. Many of these

estimates involve various assumptions and

may vary significantly from

amounts that could be

realized

in actual transactions.

The fair values

reflected herein have been

determined based on the

prevailing rate environment at

31, 2023, as applicable. In different interest rate environments,

fair value estimates can differ significantly, especially for certain fixed

rate

instruments.

In

the

fair

values

presented

do

not

attempt

to

the

value

of

the

fee

generating businesses

and anticipated

future business

activities, that

is, they

do not

represent the

Corporation’s value

as a

going

concern. There have been

no changes in the

Corporation’s valuation methodologies and inputs

used to estimate the

fair values for

each class of financial assets and liabilities not measured at

fair value.

carrying amount and estimated fair

values of financial instruments with their

corresponding level in

value hierarchy.

The aggregate

amounts of

instruments disclosed

do not

represent management’s

estimate of the underlying value of the Corporation.

amount

Level 1

Level 2

Level 3

at NAV

Financial Assets:

$

320,486

$

320,486

$

$

$

$

320,486

5,920,785

7,793

[1]

27,303

8,316

18,737

27,303

[1]

11,752,337

2,607

Debt securities held-to-maturity:

$

$

$

$

$

$

55,981

6,918

49,284

56,202

Collateralized mortgage obligation-federal agency

1,536

1,364

1,364

Securities in wholly owned statutory business trusts

5,960

5,960

5,960

$

$

$

7,909,042

$

49,284

$

$

Equity securities:

FHLB stock

$

48,604

$

$

48,604

$

$

$

48,604

FRB stock

99,920

99,920

99,920

Other investments

47,223

40,933

6,531

47,800

Total equity securities

$

195,747

$

$

189,457

$

6,531

$

$

196,324

$

5,352

$

$

5,532

$

$

$

5,532

34,379,194

33,249,195

33,249,195

114,964

114,964

114,964

24,045

24,045

24,045

amount

Level 1

Level 2

Level 3

at NAV

Financial Liabilities:

$

$

$

$

$

$

8,430,548

8,430,548

$

$

$

63,484,260

$

$

$

63,484,260

$

66,090

$

$

66,088

$

$

$

66,088

Notes payable:

FHLB advances

$

373,665

$

$

358,046

$

$

$

358,046

Unsecured senior debt securities

394,285

410,228

410,228

Junior subordinated deferrable interest debentures

(related to trust preferred securities)

198,353

187,383

187,383

$

966,303

$

$

955,657

$

$

$

955,657

$

21,784

$

$

21,784

$

$

$

21,784

[1]

Refer to Note 23 to the Consolidated Financial Statements

for the fair value by class of financial asset and its hierarchy

level.

amount

Level 1

Level 2

Level 3

at NAV

Financial Assets:

$

420,462

$

420,462

$

$

$

$

420,462

6,991,758

7,113

[1]

31,568

16,859

14,425

31,568

[1]

12,789,902

3,106

Debt securities held-to-maturity:

$

$

$

$

$

$

59,628

7,007

52,671

59,678

Collateralized mortgage

obligation-federal agency

1,556

1,395

1,408

Securities in wholly owned statutory business trusts

5,960

5,960

5,960

$

$

$

8,106,701

$

52,684

$

$

Equity securities:

FHLB stock

$

49,549

$

$

49,549

$

$

$

49,549

FRB stock

98,948

98,948

98,948

Other investments

45,229

37,965

7,869

46,144

Total equity securities

$

193,726

$

$

186,462

$

7,869

$

$

194,641

$

4,301

$

$

4,328

$

$

$

4,328

34,335,630

33,376,255

33,376,255

118,109

118,109

118,109

24,419

24,419

24,419

amount

Level 1

Level 2

Level 3

at NAV

Financial Liabilities:

$

$

$

$

$

$

8,501,892

8,154,823

8,154,823

$

$

$

63,271,174

$

$

$

63,271,174

$

91,384

$

$

91,386

$

$

$

91,386

Notes payable:

FHLB advances

$

394,665

$

$

377,851

$

$

$

377,851

Unsecured senior debt securities

393,937

400,848

400,848

Junior subordinated deferrable interest debentures

(related to trust preferred securities)

198,346

180,076

180,076

$

986,948

$

$

958,775

$

$

$

958,775

$

21,103

$

$

21,103

$

$

$

21,103

[1]

Refer to Note 23 to the Consolidated Financial Statements

for the fair value by class of financial asset and its hierarchy

level.

The notional

commitments to

extend credit

was $

$

billion,

respectively, and

represented the unused portion of credit

facilities granted to customers. The

notional amount of letters of

credit at

2023 was

$

$

and represented

the contractual

amount

that is required to be paid in the event of nonperformance. The fair

value of commitments to extend credit and letters of credit, which

are based on the fees charged to enter into those

agreements, are not material to Popular’s

financial statements.

Note 25 – Net income per common share

sets forth the

computation of net

income per common

share (“EPS”), basic

and diluted, for

ended

March 31, 2024 and 2023

:

$

103,283

$

158,979

Preferred stock dividends

(353)

(353)

Net income applicable to common stock

$

102,930

$

158,626

Average common shares outstanding

71,869,735

71,541,778

Average potential dilutive common shares

97,068

64,418

Average common shares outstanding - assuming dilution

71,966,803

71,606,196

Basic EPS

$

1.43

$

2.22

Diluted EPS

$

1.43

$

2.22

For the quarters

ended March 31, 2024 and

2023, the Corporation calculated the impact

of potential dilutive common shares under

the

treasury

stock

method,

consistent

with

the

method

used

for

the

preparation

of

the

for

the

year

ended

31,

For

a

of

the

calculation

under

the

treasury

stock

method,

refer

to

Note

of

the

Financial Statements included in the 2023 Form 10-K.

Note 26 – Revenue from contracts with customers

The

table

the

revenue

streams

from

with

by

segment

for

the

quarters ended March 31, 2024 and 2023

.

BPPR

BPPR

$

35,016

$

2,426

$

32,152

$

2,526

Other service fees:

Debit card fees

14,049

12,948

Insurance fees, excluding reinsurance

10,556

1,846

10,798

1,307

Credit card fees, excluding late fees and membership

fees

35,800

36,174

Sale and administration of investment products

7,427

6,558

6,985

5,896

Total revenue from

contracts with customers

[1]

$

109,833

$

4,929

$

104,526

$

4,630

[1] The amounts include intersegment transactions of $

0.6

1.6

million, respectively, for the

quarters ended March 31, 2024 and 2023.

Revenue from contracts with

customers is recognized when,

or as, the performance

obligations are satisfied by

the Corporation by

transferring the

promised services

to

the customers.

A

service is

transferred to

the customer

when, or

as, the

customer obtains

control

of

that

service.

A

performance obligation

may

be

satisfied over

time

or

at

a

point

in

time.

Revenue from

a

obligation satisfied

over time

is recognized

the services

been rendered

to date.

Revenue from

a performance

obligation satisfied at a point in time

is recognized when the customer obtains control over the

service. The transaction price, or the

amount of revenue

recognized, reflects the

consideration the Corporation expects

to be entitled

to in exchange

for those promised

services. In determining the transaction price, the Corporation considers the effects of variable consideration. Variable consideration

is included

in the

transaction price

only to

the extent

it is

probable that a

significant reversal

in the

cumulative revenue

recognized will

not occur.

is the

principal in

a transaction

if it

obtains control

of the

specified goods

or services

before they

are transferred

to

the customer.

If the

Corporation acts

as principal,

revenues are

the gross

consideration to which it expects to

be entitled and are not

netted with any related expenses. On the

other hand, the Corporation is

an agent if it does not control

the specified goods or services before they are transferred

to the customer. If

the Corporation acts as

an agent, revenues are presented in the amount

of consideration to which it expects to be entitled,

net of related expenses.

Following is a description of the nature and timing

of revenue streams from contracts with customers:

Service

charges

on

deposit

accounts

are

earned

on

retail

and

deposit

and

include,

but

are

not

limited

to,

nonsufficient fund

fees, overdraft

fees and

checks stop

payment fees.

These transaction-based

fees are

recognized at

a point

in

time,

upon

occurrence

of

an

or

event

or

upon

the

occurrence

of

a

which

triggers

the

fee

The

Corporation is acting as principal in these transactions.

Debit card fees

Debit card fees include, but are not limited to, interchange

fees, surcharging income and foreign transaction

fees.

These transaction-

based fees

are recognized at

a point in

time, upon

occurrence of an

activity or

event or upon

the occurrence of

a condition which

triggers

the

fee

Interchange

fees

are

upon

of

the

debit

card

payment

transactions.

The

Corporation is acting as principal in these transactions.

Insurance fees

Insurance fees

include, but

are

to, commissions

and contingent

commissions.

Commissions and

fees

are

when related

policies are effective

since the Corporation

have an enforceable

right to

payment for services

completed to

date.

An

is

created

for

to

commissions

earned

related

to

policy

cancellations.

Contingent

commissions

are

on

an

accrual

basis

when

the

amount

to

be

is

notified

by

the

company.

The

Corporation is acting

as an

agent since it

arranges for the

sale of

the policies and

receives commissions if,

and when, it

achieves

the sale.

Credit card fees

Credit card

fees include,

but are

to, interchange

fees, additional

card fees,

cash advance

fees, balance

transfer fees,

foreign transaction fees, and returned payments

fees. Credit card fees are

recognized at a point in

time, upon the occurrence of

an

activity or

an event.

Interchange fees

are recognized

upon settlement

of the

credit card

payment transactions. The

acting as principal in these transactions.

Sale and administration of investment products

Fees from

the sale

and administration

of investment

products include,

but are

to, commission

the sale

of

investment products, asset management fees, underwriting

fees, and mutual fund fees.

Commission income from investment products is recognized on the trade date since clearing, trade execution, and custody services

are satisfied when

the customer acquires

or disposes of

the rights to

obtain the economic

benefits of the

investment products and

brokerage contracts have no fixed duration and

are terminable at will by

either party. The

Corporation is acting as principal in these

transactions since it

performs the service

of providing the

customer with the

ability to acquire

or dispose of

the rights to

obtain the

economic benefits of investment products.

Asset

fees

are

over

time

and

are

in

arrears.

At

contract

inception,

the

of

the

asset

management fee

is constrained

inclusion in

the transaction

price since

the promised

consideration is

dependent on

the

market and thus

is highly susceptible

to factors

outside the manager’s

influence. As advisor,

the broker-dealer subsidiary

is acting

as principal.

Underwriting fees are

recognized at a point

in time, when

the investment products

are sold in

the open market at

a markup. When

the broker-dealer subsidiary is lead

underwriter, it is

acting as an agent. In

turn, when it is

a participating underwriter, it

is acting as

principal.

Mutual fund fees,

such as distribution fees,

are considered variable consideration

and are recognized over

time, as the

uncertainty

of the fees to be

received is resolved as NAV

is determined and investor activity occurs. The

promise to provide distribution-related

is

a

single

as

it

requires

the

of

a

series

of

distinct

that

are

substantially the same and have the same pattern of

transfer. When the broker-dealer subsidiary is acting as a distributor, it is acting

as principal. In turn, when it acts as third-party dealer, it is acting

as an agent.

are recognized from

retirement plan, mutual fund

administration, investment management, trustee, escrow,

and custody

and

safekeeping services.

These

asset

management services

are

a

single

performance obligation

as

it

requires the

provision of

a series

of distinct

services that

are substantially

and have

pattern of

transfer.

The performance

is

over

time,

except

for

optional

and

certain

other

that

are

at

a

point

in

time.

Revenues are recognized in

arrears,

when, or as,

the services are rendered.

The Corporation is

acting as principal since,

as asset

manager, it has the obligation to provide the specified service to the customer and

has the ultimate discretion in establishing the fee

paid by the customer for the specified services.

Note 27 – Leases

The

Corporation enters

in

the

of

into

operating and

finance

leases

for

land,

buildings

and

equipment.

These contracts generally do

not include purchase options

or residual value guarantees.

The remaining lease terms

of

0.1

to

30.8

years

considers options

to

extend the

leases for

up

to

years. The

Corporation identifies

leases when

it

has

both the

right to

obtain substantially all of the economic benefits from

the use of the asset and the right to direct

the use of the asset.

recognizes right-of-use

assets (“ROU

assets”) and

lease liabilities

operating and

finance leases

in its

Consolidated Statements of Financial Condition under the caption of other assets and other liabilities, respectively. Refer to Note 12

and

Note

to

the

Statements,

for

on

the

balances of

these

lease

assets

and

The Corporation uses the

incremental borrowing rate for

purposes of discounting lease payments

for operating and finance leases,

since it

does not have

enough information to

determine the rates

implicit in the

leases. The discount

rates are based

on fixed-rate

and

fully

amortizing

of

its

banking

that

are

collateralized.

For

leases

held

by

subsidiaries, a credit spread is added to this rate

based on financing transactions with a similar

credit risk profile.

The following table presents the undiscounted

cash flows of operating and finance leases for

each of the following periods:

Remaining

Later

Years

Total Lease

Payments

Less: Imputed

Total

Operating Leases

$

23,167

$

28,327

$

19,932

$

14,531

$

12,074

40,740

$

138,771

$

(17,438)

$

121,333

Finance Leases

3,380

4,605

4,374

3,017

2,344

10,434

28,154

(3,257)

24,897

The following table presents the lease cost recognized

by the Corporation in the Consolidated

Statements of Operations as follows:

Finance lease cost:

Amortization of ROU assets

$

$

Interest on lease liabilities

Operating lease cost

7,688

7,854

Short-term lease cost

Variable lease cost

Sublease income

(20)

(9)

Total lease cost

[1]

$

8,838

$

9,094

[1]

Total lease cost

is recognized as part of net occupancy expense.

The

table

supplemental

cash

flow

and

other

related

related

to

and

finance

leases.

Cash paid for amounts included in the measurement of

lease liabilities:

Operating cash flows from operating leases

$

7,771

$

7,754

Operating cash flows from finance leases

Financing cash flows from finance leases

ROU assets obtained in exchange for new lease obligations:

$

1,127

$

1,796

Weighted-average remaining lease term:

7.2

years

7.3

years

8.2

years

8.2

years

Weighted-average discount rate:

3.3

%

3.0

%

3.8

%

4.1

%

As of March 31, 2024, the Corporation had additional

operating leases contracts that have not yet commenced

with an undiscounted

contract amount of $

3.9

million, which will have lease terms ranging

from

to

years.

Note 28 – Pension and postretirement benefits

The

has

a

non-contributory

defined

benefit

pension

plan

and

supplementary

pension

benefit

restoration

plans

for

regular employees of

certain of its

subsidiaries (the “Pension

Plans”). The accrual

of benefits under

the Pension Plans

is frozen to

all

participants.

The

also

certain

postretirement

health

care

benefits

for

retired

of

certain

subsidiaries (the “OPEB Plan”).

The components of net periodic cost for the

Pension Plans and the OPEB Plan for the periods presented

were as follows:

Pension Plans

OPEB Plan

Personnel Cost:

Service cost

$

$

$

$

Other operating expenses:

Interest cost

7,558

7,887

1,421

1,520

Expected return on plan assets

(8,594)

(8,591)

Amortization of prior service cost/(credit)

Amortization of net loss

4,166

5,366

(548)

(553)

Total net periodic

pension cost

$

3,130

$

4,662

$

$

1,015

The Corporation paid the following contributions to the plans for the quarter

ended March 31, 2024 and expects to pay the following

contributions for the year ending December 31, 2024.

For the quarter ended

For the year ending

December 31, 2024

Pension Plans

$

$

OPEB Plan

$

1,597

$

5,744

Note 29 - Stock-based compensation

On May 12,

2020, the stockholders of

the Corporation approved the

2020 Omnibus Incentive Plan,

which permits the

Corporation to

issue several

types of

stock-based compensation

to employees

and directors

of the

Corporation and/or

any of

its

subsidiaries (the

“2020 Incentive

Plan”). The

2020 Incentive

Plan replaced

the Popular,

Inc. 2004

Omnibus Incentive

Plan, which

was in effect

prior to the adoption of

the 2020 Incentive Plan (the

“2004 Incentive Plan” and, together

with the 2020 Incentive

Plan,

the “Incentive Plan”). Participants under the Incentive Plan are designated by the Talent and Compensation Committee of the Board

of Directors (or its delegate, as determined by the Board). Under the Incentive Plan, the Corporation has issued restricted stock and

performance shares to its employees and restricted

stock and restricted stock units (“RSUs”)

to its directors.

The restricted

stock granted

Incentive Plan

to employees

becomes vested

the employees’

continued service

with

Popular.

Unless otherwise stated in an agreement, the compensation cost associated with the shares of restricted stock

granted prior to 2021 was determined based on a two-prong vesting schedule. The first part is vested ratably over five or four years

commencing at the date of grant (“the graduated vesting portion”) and the second part is vested at termination of employment after

attainment of 55 years of age and 10 years of service or 60 years of age and 5 years of service (“the retirement vesting portion”).

The graduated vesting portion is accelerated at termination of employment after attaining the earlier of 55 years of age and 10 years

of service or 60 years of age and 5 years of service. Restricted stock granted on or after 2021 will vest ratably in equal annual

installments over a period of 4 years or 3 years, depending on the classification of the employee. The vesting schedule is

accelerated at termination of employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age

and 5 years of service.

The

performance share

awards

granted

under

the

Incentive

Plan

consist

of

the

opportunity

to

receive

shares

of

Inc.’s

common stock provided that the Corporation achieves certain goals during a three-year performance cycle.

The goals will be based

on

two

metrics

weighted

equally:

the

Relative

Total

Shareholder

Return

(“TSR”)

and

the

Absolute

Return

on

Average

Common Equity

(“ROATCE”).

The TSR metric

is considered to

be a

market condition under

ASC 718.

For equity settled

awards

based

on a

market condition,

the

is

determined as

of the

and

is not

subsequently revised

actual

performance.

The

ROATCE

metric

is

to

be

a

performance condition

under ASC

The

is

determined

the probability

of achieving

the ROATCE

goal as

of each

reporting period.

The TSR

and ROATCE

metrics are

equally

weighted and

work independently.

The number of shares that will ultimately vest ranges from 50% to a 150% of target based on

both market (TSR) and performance (ROATCE) conditions. The performance shares vest at the end of the three-year performance

cycle. If a participant terminates employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age

and 5 years of service, the performance shares shall continue outstanding and vest at the end of the performance cycle.

The

table

summarizes

the

stock

and

shares

under

the

Incentive

Plan

for

members

of

management.

(Not in thousands)

Shares

Weighted-Average

Grant Date Fair

Value

Non-vested at December 31, 2022

281,963

$

56.50

Granted

257,757

66.01

Performance Shares Quantity Adjustment

19,753

75.32

Vested

(243,133)

66.31

(16,444)

55.82

Non-vested at December 31, 2023

299,896

$

58.20

Granted

143,084

85.57

Performance Shares Quantity Adjustment

33,858

88.92

Vested

(185,177)

79.81

69.92

Non-vested at March 31, 2024

292,072

$

61.48

2024,

77,859

shares of

(March 31,

2023 -

69,488

) and

65,225

shares (March 31, 2023 -

57,715

) were awarded to management under the

Incentive Plan.

During

the

quarter

ended

March

31,

2024,

the

$

6.4

million

of

stock

expense

related

to

management incentive awards, with a tax benefit of $

0.6

4.4

million, with a tax benefit of $

0.3

million). For

the fair market

value of the

restricted stock and performance

shares vested was

$

9.5

and $

13.2

vesting date.

This excess

requires the

recognition of

a windfall

tax benefit

of $

1.4

million that

was

recorded as a

reduction in income

tax expense. For

the Corporation recognized

$

5.0

performance shares expense, with a tax benefit of $

0.3

3.6

million, with a tax benefit of $

0.1

million). The

total

unrecognized

compensation

cost

related

to

non-vested

stock

awards

and

shares

to

members

of

management at March 31, 2024 was $

11.4

million and is expected to be recognized over

a weighted-average period of

1.79

years.

The following table summarizes the restricted stock

activity under the Incentive Plan for members of

the Board of Directors:

(Not in thousands)

RSUs / Unrestricted stock

Weighted-Average

Grant

Date Fair Value per Unit

Non-vested at December 31, 2022

$

Granted

39,104

55.30

Vested

(39,104)

55.30

Non-vested at December 31, 2023

$

Granted

1,195

82.08

Vested

(1,195)

82.08

Non-vested at March 31, 2024

$

The

equity

awards

granted

to

members

of

the

Board

of

Directors

of

Inc.

(the

“Directors”)

will

vest

and

become

non-

forfeitable on the

of such

award. Effective in

May 2019 all

equity awards granted

to the

Directors may be

paid in

either

common stock or RSUs, at the Directors’ election. If RSUs are elected

the Directors may defer the delivery of the shares of common

stock underlying the RSUs award after their retirement.

To

the extent that cash dividends are paid

on the Corporation’s outstanding

common stock, the Directors

will receive an additional number of RSUs

that reflect reinvested dividend equivalent.

2024,

1,195

RSUs were granted to the

Directors (March 31, 2023 -

1,029

).

During this period,

recognized $

thousand of

expense related

to

these RSUs,

with a

tax

benefit of

$

thousand

(March 31, 2023

  • $

thousand, with a

tax benefit of

$

thousand). The fair

value at vesting

date of the

RSUs vested during the

quarter ended March 31, 2024 for Directors was

$

thousand

.

Note 30 – Income taxes

The reason for the difference between the income

tax expense applicable to income before provision

for income taxes and the

amount computed by applying the statutory tax rate

in Puerto Rico, were as follows:

Amount

% of pre-tax

income

Amount

% of pre-tax

income

Computed income tax expense at statutory rates

$

59,569

%

$

76,985

%

Net benefit of tax exempt interest income

(28,759)

(18)

(21,902)

(11)

Effect of income subject to preferential tax rate

(1,420)

(1)

(855)

Deferred tax asset valuation allowance

2,563

(4,565)

(2)

Difference in tax rates due to multiple jurisdictions

(673)

(5,169)

(3)

Tax on intercompany

distributions

[1]

24,325

U.S., States, and local taxes

1,036

3,355

Others

(1,073)

(1)

(1,535)

(1)

$

55,568

%

$

46,314

%

[1]

16.5

million of out-of-period adjustment.

For the quarter ended March 31, 2024,

the Corporation recorded an income tax expense

of $

55.6

million compared to $

46.3

million

for the

quarter ended March

31, 2023. As

discussed in Note

2, the tax

expense for the

first quarter of

2024 includes $

23.0

related

to

intercompany distributions,

out

of

which

$

16.5

million

were related

to

an

out-of-period adjustment

the

Corporation’s U.S. subsidiary’s non-payment of

taxes on certain intercompany distributions

to the Bank Holding

Company (BHC) in

a foreign

corporation for

U.S. tax

purposes. During

years 2023

and 2022,

$

5.5

$

5.4

should have been

recognized as additional income

tax expense, and

an aggregate of

$

5.6

years prior to

As a

result of

this adjustment,

the deferred

NOL of

the BHC

and its

related valuation

allowance was

reduced by

$

53.7

million. The

Corporation also

recognized $

6.5

expense during

to

reflect the U.S. federal tax withholding liability and estimated related Puerto Rico income tax arising from a $

million dividend paid

during the quarter.

2023, the Corporation reported a reversal of

a valuation allowance on a tax

credit expected to be realized on the U.S. operations.

The following table presents a breakdown of the

significant components of the Corporation’s deferred tax assets

and liabilities.

PR

US

Total

Deferred tax assets:

Tax credits available

for carryforward

$

$

10,749

$

11,012

Net operating loss and other carryforward available

53,852

619,457

673,309

Postretirement and pension benefits

37,314

37,314

246,566

29,866

276,432

Depreciation

6,774

6,651

13,425

FDIC-assisted transaction

152,665

152,665

Lease liability

28,280

19,272

47,552

Unrealized net loss on investment securities

309,191

20,406

329,597

Difference in outside basis from pass-through entities

44,008

44,008

Mortgage Servicing Rights

14,378

14,378

49,600

10,041

59,641

942,891

716,442

1,659,333

Deferred tax liabilities:

Intangibles

85,564

52,715

138,279

Right of use assets

25,839

16,940

42,779

Deferred loan origination fees/cost

(823)

2,085

1,262

Loans acquired

19,703

19,703

6,854

7,276

137,137

72,162

209,299

Valuation allowance

71,380

378,910

450,290

Net deferred tax asset

$

734,374

$

265,370

$

999,744

PR

US

Total

Deferred tax assets:

Tax credits available

for carryforward

$

$

10,281

$

10,544

Net operating loss and other carryforward available

122,634

620,982

743,616

Postretirement and pension benefits

38,121

38,121

244,956

28,222

273,178

Depreciation

6,774

6,578

13,352

FDIC-assisted transaction

152,665

152,665

Lease liability

29,070

20,492

49,562

Unrealized net loss on investment securities

312,583

19,037

331,620

Difference in outside basis from pass-through entities

46,056

46,056

Mortgage Servicing Rights

14,085

14,085

47,679

9,625

57,304

1,014,886

715,217

1,730,103

Deferred tax liabilities:

Intangibles

84,635

51,944

136,579

Right of use assets

26,648

18,030

44,678

Deferred loan origination fees/cost

(1,056)

1,486

Loans acquired

20,430

20,430

6,402

6,824

137,059

71,882

208,941

Valuation allowance

139,347

374,035

513,382

Net deferred tax asset

$

738,480

$

269,300

$

1,007,780

The net

assets

shown in

the table

above at

2024, is

the consolidated

statements of

condition as $

1.0

billion in net deferred tax assets in the

“Other assets” caption (December 31, 2023 - $

1.0

billion) and $

1.3

tax

in

the

“Other

liabilities”

caption

$

1.3

million),

reflecting

the

tax

assets

or

of

tax-paying subsidiaries

of

the

in

their

respective tax

jurisdiction, Puerto

Rico

or

the

United States.

At

March

31,

2024,

the

net

tax

assets

of

the

U.S.

to

$

million

with

a

of

million, for

net deferred

tax

assets after

valuation allowance

of

The

evaluates the

realization of

the deferred

tax

assets on

a quarterly

basis by

taxing

jurisdiction. The

U.S.

operation has

sustained

profitability

for

the

last

three

calendar

years

and

for

the

quarter

ended

March

31,

These

historical

results

are

objectively verifiable positive evidence, evaluated together with

the positive evidence of stable credit metrics, in combination with the

length of

the expiration

of the

NOLs. On

the other

hand, the

Corporation evaluated

the negative

evidence accumulated

years, including

financial results

lower than

expectations and

challenges to

the economy

due to

inflationary pressures

and global

geopolitical uncertainty that have resulted in

a trend of reduction of pre-tax

income over the last three years.

As of March 31, 2024,

after weighting all positive

and negative evidence, the

Corporation concluded that it is

more likely than not

that approximately $

million

of

the

tax

assets

from

the

U.S.

operations,

mainly

of

net

losses,

will

be

realized.

The

based

this

determination

on

its

estimated

to

realize

the

tax

assets

for

the

remaining

carryforward period, together with the historical level

of book income adjusted by permanent

differences. Management will continue

to

monitor

and

review

the

U.S.

operation’s

results,

recent

trends,

the

pre-tax

forecast,

any

new

tax

initiative,

and

other

factors,

net

income

versus

forecast,

targeted

loan

growth,

net

income

margin,

changes

in

deposit

costs,

for

credit

losses,

charge

offs,

NPLs

inflows

and

NPA

balances.

Significant

adverse

changes

or

a

combination of changes in these factors could impact

the future realization of the deferred tax assets.

Corporation’s net

deferred tax assets

related to its

operations amounted to

$

The

Corporation’s Puerto Rico

Banking operation has

a historical record

of profitability.

This is considered

a strong piece

of objectively

verifiable positive evidence that outweighs any

negative evidence considered by Management in

the evaluation of the realization

of

the

tax

assets.

Based

on

this

evidence

and

of

future

taxable

income,

the

has

concluded that it is more likely than not that such net

deferred tax assets of the Puerto Rico Banking

operations will be realized.

The Holding Company operation has been in a cumulative

loss position in recent years.

Management expects these losses will be a

trend

in

future

years.

This

objectively

verifiable

evidence is

by

Management strong

evidence that

suggests that

income in

future years

will be

support the

realization of

all deferred

tax assets.

After weighting

of all

positive

and

negative evidence

Management concluded,

as

of

the reporting

date,

that

it

is

more

likely

than

not that

the

Holding

Company will not be

able to realize any

portion of the deferred tax

assets. Accordingly, the

Corporation has maintained a valuation

allowance on the deferred tax assets of $

million as of March 31, 2024.

The reconciliation of unrecognized tax benefits, excluding

interest, was as follows:

Balance at January 1

$

1.5

$

2.5

Balance at March 31

$

1.5

$

2.5

2024, the total amount

of accrued interest recognized

in the statement

of financial condition amounted

to $

2.3

million

2.3

million). The total interest expense recognized

at March 31, 2024 was

$

thousand, (March 31, 2023–

$

thousand). Management

determined that

at

March

31,

2023, there

was

no

need

to

accrue for

the

payment of penalties. The Corporation’s policy is to report interest related to unrecognized tax benefits in income tax expense, while

the penalties, if any, are reported in other operating expenses in the

consolidated statements of operations.

After consideration

of the

effect on

U.S. federal

tax of

unrecognized U.S.

state tax

benefits, the

of unrecognized

tax

benefits, including U.S. and Puerto Rico, that if recognized, would affect the Corporation’s effective tax rate, was approximately $

2.9

million at March 31, 2024 (December 31, 2023 - $

2.9

The amount of

unrecognized tax benefits

may increase or

decrease in the

future for various

reasons including adding amounts

for

current

tax

year

positions,

expiration

of

open

income

tax

returns

due

to

the

statutes

of

limitation,

changes

in

Management’s

judgment about

of uncertainty,

status of

examinations, litigation

and legislative

activity and

the addition

or elimination

of

uncertain tax positions.

The Corporation does not

anticipate a reduction

in the total

amount of unrecognized tax

benefits within the

next 12 months.

The

Corporation and

its subsidiaries

file

returns in

Puerto

Rico, the

U.S. federal

jurisdiction, various

U.S. states

and

political subdivisions,

and foreign

jurisdictions. At

following years

remain subject

to

examination in

Federal jurisdiction: 2020 and thereafter; and

in the Puerto Rico jurisdiction, 2018 and thereafter.

Note 31 – Supplemental disclosure on the consolidated

statements of cash flows

Additional disclosures on cash flow information and non-cash

activities for the quarters ended March 31,

2024 and March 31, 2023

are listed in the following table:

Non-cash activities:

Loans transferred to other real estate

$

16,133

$

18,367

Loans transferred to other property

20,224

17,343

Total loans transferred

to foreclosed assets

36,357

35,710

Loans transferred to other assets

13,464

2,778

Financed sales of other real estate assets

2,725

3,203

Financed sales of other foreclosed assets

13,689

13,232

Total financed sales

of foreclosed assets

16,414

16,435

Financed sale of premises and equipment

22,495

14,105

Transfers from loans held-in-portfolio to

loans held-for-sale

2,763

2,475

Transfers from loans held-for-sale to loans

1,722

1,500

Loans securitized into investment securities

[1]

2,205

10,966

Trades receivable from brokers and counterparties

10,307

Trades payable to brokers and counterparties

Net change in receivables from investments maturities

125,000

99,620

Recognition of mortgage servicing rights on securitizations

or asset transfers

Loans booked under the GNMA buy-back option

2,181

Capitalization of lease right of use asset

1,152

2,699

[1]

Includes loans securitized into trading securities and subsequently

sold before quarter end.

The following table provides a reconciliation of

cash and due from banks, and restricted cash

reported within the Consolidated

Statement of Financial Condition that sum to the total of

the same such amounts shown in the Consolidated

Statement of Cash

Flows.

$

305,869

$

427,160

Restricted cash and due from banks

14,617

34,853

Restricted cash in money market investments

7,793

7,173

Total cash and due

from banks, and restricted cash

[2]

$

328,279

$

469,186

[2]

Refer to Note 4 - Restrictions on cash and due from banks

and certain securities for nature of restrictions.

Note 32 – Segment reporting

The

corporate

structure

of

two

segments

–

Banco Popular de Puerto Rico and Popular U.S.

Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess

where to allocate resources.

The segments were

determined based on the

organizational structure, which focuses

primarily on the

markets the segments serve, as well as on the products

and services offered by the segments.

Banco Popular de Puerto Rico:

The Banco Popular de

Puerto Rico reportable segment

includes commercial, consumer and retail

banking operations conducted at

BPPR, including

U.S. based

activities conducted

through its

Branch. It

also includes

the lending

operations of

Popular

Auto

and

Popular

Mortgage.

Other

within

the

BPPR

segment

include

the

trust

service

units

of

BPPR,

asset

management services of Popular Asset

Management, the brokerage and investment

banking operations of Popular

Securities, and

the insurance agency and reinsurance businesses

of Popular Insurance, Popular Risk Services, Popular

Life Re, and Popular Re.

Popular U.S.:

Popular U.S. reportable segment

consists of the

banking operations of Popular

Bank (PB), Popular Insurance

Agency, U.S.A.,

and

PEF.

PB

operates through

a retail

branch network

in the

U.S. mainland

name of

and equipment

leasing and

financing services through PEF.

Popular Insurance Agency,

U.S.A. offers investment and insurance

services across the PB

branch

network.

The Corporate group

consists primarily of

the holding companies

Popular, Inc.,

Popular North America,

Popular International Bank

and certain of the Corporation’s investments accounted for under

the equity method, including Centro Financiero BHD, León.

The

of

the

segments

are

the

same

as

those

of

the

Transactions

between

reportable segments are primarily conducted at market rates, resulting

in profits that are eliminated for reporting consolidated results

of operations.

The tables that follow present the results of operations

and total assets by reportable segments:

Intersegment

BPPR

$

472,841

$

84,853

$

60,680

11,435

145,669

7,120

(56)

13,009

1,943

393,805

67,788

(56)

29,206

3,456

$

121,326

$

7,040

$

$

57,250,662

$

13,686,037

$

(359,383)

Reportable

Segments

Inc.

Net interest income (expense)

$

557,694

$

(6,950)

$

$

550,744

72,115

72,598

152,733

11,722

(637)

163,818

14,952

15,361

461,537

6,611

(1,191)

466,957

32,662

22,676

55,568

Net income (loss)

$

128,366

$

(25,407)

$

$

103,283

$

70,577,316

$

5,723,198

$

(5,363,575)

$

Intersegment

BPPR

$

449,820

$

90,086

$

45,708

2,065

147,471

6,384

(136)

11,669

1,814

363,715

63,317

(136)

42,832

3,976

$

132,883

$

24,987

$

$

55,770,442

$

12,147,556

$

(541,534)

Reportable

Segments

Inc.

Net interest income (expense)

$

539,907

$

(8,251)

$

$

531,656

47,773

(136)

47,637

153,719

9,714

(1,472)

161,961

13,483

13,842

426,896

(1,076)

426,050

Income tax expense (benefit)

46,808

(321)

(173)

46,314

$

157,871

$

1,331

$

(223)

$

158,979

$

67,376,464

$

5,803,751

$

(5,504,456)

$

67,675,759

Geographic Information

The following information presents selected

financial information based on the

geographic location where the Corporation conducts

its business. The

banking operations of BPPR

are primarily based in

Puerto Rico, where it

has the largest retail

banking franchise.

BPPR

also

conducts

banking

in

the

U.S.

Virgin

Islands,

the

British

Virgin

Islands

and

New

York.

banking

operations in

the mainland

include commercial

lending activities.

BPPR’s commercial

lending activities

in the

U.S.,

through its New York

Branch, include periodic loan participations with PB.

During the quarter ended March

31, 2024, BPPR did

no

t

participate in loans originated

by PB (March 31,

million). Total

assets for the BPPR

segment related to its

operations in

the United States amounted to $

1.5

billion (December 31, 2023 - $

1.5

billion), including $

million in multifamily loans (December

million), $

million in commercial real estate loans (December 31, 2023 -

$

million), $

million in C&I loans

(December 31, 2023

  • $

million), and $

million in unsecured personal

loans (December 31, 2023

  • $

million). During the

quarter

ended

March

31,

2024,

the

BPPR

segment

generated

$

29.8

million

(March

31,

$

25.4

million)

in

revenues from

its operations

in the

United States,

including net

service fees.

In the

Virgin Islands,

the

BPPR

segment

offers

banking

products, including

loans

and

deposits. The

BPPR segment

generated $

10.6

million

in

during the first quarter of 2024 (March 31,

11.6

million) from its operations in the U.S. and

British Virgin Islands.

Geographic Information

Quarter ended

Revenues:

[1]

$

565,744

$

547,903

126,741

125,045

Other

22,077

20,669

Total consolidated

$

714,562

$

693,617

[1]

Total revenues include

net interest income, service charges on deposit accounts,

other service fees, mortgage banking activities, net

gain,

including impairment on equity securities, net gain on trading

account debt securities, adjustments to indemnity reserves

on loans sold and

other operating income.

Selected Balance Sheet Information:

$

54,507,722

$

54,181,300

Loans

22,649,624

22,519,961

51,350,879

51,282,007

$

15,186,839

$

15,343,156

Loans

11,931,955

12,006,012

10,716,008

10,643,602

Other

$

1,242,378

$

1,233,699

Loans

542,511

543,299

[1]

1,741,897

1,692,634

[1]

Represents deposits from BPPR operations located in the

U.S. and British Virgin Islands.

AND RESULTS OF OPERATIONS

This

report

and

analysis

(“MD&A”)

of

the

consolidated

and

of

Inc.

(the

“Corporation”

or

“Popular”). All

accompanying

tables,

and

notes

elsewhere in this report should be considered an

integral part of this analysis.

The Corporation is a

diversified, publicly-owned financial holding company subject to the

supervision and regulation of the Board

of

Governors of the Federal Reserve System. The Corporation has

operations in Puerto Rico, the United States (“U.S.”) mainland and

the

U.S.

and

British

Virgin

Islands.

In

Puerto

Rico,

the

retail,

and

banking

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

banking, broker-dealer, auto

and

leasing

and

and

through

specialized

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

Popular

Bank

(“PB”

or

“Popular U.S.”),

which

has

branches

located

in

New

York,

New

Jersey

and

Florida.

Note

to

the

about

the

segments.

SIGNIFICANT EVENTS

FDIC Special Assessment Increase in Estimate

On

November 16,

2023,

the

Federal

Deposit

a

final

rule

that

imposes

a

special

in

March 2023,

of the systemic

risk exception to

the least-cost resolution

test under the

Federal Deposit Insurance

Act in

with

the

receiverships

of

several

failed

banks.

In

with

this

assessment,

the

an

expense

of

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

time.

During the quarter ended March 31, 2024, the Corporation

recorded an additional expense of $14.3 million, $9.1

million net of tax, to

FDIC's higher loss

estimate which increased

from $16.3 billion,

when approved, to

$20.4 billion during

The

special assessment

collection period

may change

as the

estimated loss

is periodically

adjusted or

if the

collected varies.

Tax impact on Intercompany Distributions

The

net

income

for

the

quarter

2024,

$22.9 million of

expenses,

of

which

$16.5 million

is

in

expense

and $6.4

million is

other operating

expenses,

an out-of-period

adjustment associated

Corporation’s U.S. subsidiary’s

non-payment of taxes

on certain intercompany

distributions to the

Bank Holding Company

(BHC) in

a foreign

corporation for

U.S. tax

purposes. The

adjustment corrected

errors for

expense that

should have

been recognized

of $5.5

$5.4 million

in the

years 2023

and 2022,

and an

aggregate of

$5.6

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

31, 2024 on

the related late

payment of the

withholding tax, of which

approximately $3.0 million correspond

to years prior

to 2022.

As a result of this adjustment, the deferred

tax asset related to NOL of the BHC

and its related valuation allowance was reduced by

$53.7

The

evaluated

the

impact

of

the

out-of-period

adjustment

and

it

was

not

to

any

previously issued interim or

annual consolidated financial statements and

the adjustment is

not expected to be

material to the year

ending December 31, 2024.

also recognized

$6.5 million

in income

2024 to

U.S.

federal

tax withholding

liability and

estimated related

arising from

a $50

million dividend

paid during

the

Dividends from

subsidiaries to

the BHC

are subject

to a

Federal 10%

withholding tax

and ordinary

Rico, subject

to

foreign tax

credits,

use of

available net

operating losses

and certain

other limitations.

does

not

anticipate the tax treatment of U.S. sourced dividends

to the BHC to impact BHC liquidity or future

capital actions.

OVERVIEW

Table 1 provides selected financial data and performance indicators for the quarters ended

March 31, 2024 and 2023.

Table 1 - Financial highlights

Financial Condition Highlights

Ending Balances at

Average for the quarter ended

$

$

$

(1,070,293)

$

6,483,615

$

5,736,352

$

747,263

26,324,139

25,148,673

1,175,466

27,698,252

28,076,090

(377,838)

Loans

54,818

35,059,391

32,048,055

3,011,336

Earning assets

67,376,807

67,216,816

159,991

69,241,258

65,860,497

3,380,761

178,784

72,294,855

68,843,309

3,451,546

190,541

64,032,945

61,145,654

2,887,291

1,032,393

1,078,332

(45,939)

1,056,673

1,167,845

(111,172)

Total liabilities

65,759,625

65,611,202

148,423

66,096,115

63,202,001

2,894,114

30,361

6,198,740

5,641,308

557,432

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

Operating Highlights

$

550,744

$

531,656

$

19,088

72,598

47,637

24,961

163,818

161,961

1,857

Operating expenses

483,113

440,687

42,426

Income before income tax

158,851

205,293

(46,442)

55,568

46,314

9,254

$

103,283

$

158,979

$

(55,696)

Net income applicable to common stock

$

102,930

$

158,626

$

(55,696)

Net income per common share - basic

$

1.43

$

2.22

$

(0.79)

Net income per common share - diluted

$

1.43

$

2.22

$

(0.79)

Dividends declared per common share

$

0.62

$

0.55

$

0.07

Selected Statistical Information

Common Stock Data

End market price

$

88.09

$

57.41

Book value per common share at period end

71.32

61.82

Profitability Ratios

Return on assets

0.57

%

0.93

%

Return on common equity

6.07

10.00

2.38

2.68

Net interest spread (taxable equivalent) - Non-GAAP

2.60

2.92

Net interest margin

3.16

3.22

Net interest margin (taxable equivalent) - Non-GAAP

3.38

3.46

Capitalization Ratios

Average equity to average assets

8.57

%

8.19

%

Common equity Tier 1 capital

16.36

16.73

Tier I capital

16.42

16.79

Total capital

18.19

18.61

Tier 1 leverage

8.45

8.37

Non-GAAP Financial Measures

This Form 10-Q

contains financial information

prepared under accounting

principles generally accepted in

the United

States (“U.S.

GAAP”) and

non-GAAP financial

measures. Management

uses non-GAAP

financial measures

when it

has

determined

that

these

provide

meaningful

about

the

of

the

Corporation’s ongoing operations.

Non-GAAP financial measures used by the

Corporation may not be comparable

to

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

Adjusted net income - Non-GAAP Financial Measure

In

addition

to

analyzing

the

results

on

a

basis,

monitors

the

“Adjusted

net

income”

of

the

and

excludes

the

impact

of

certain

on

the

results

of

its

operations.

Management

that

the

“Adjusted

net

income”

meaningful

about

the

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

the Adjusted

net income

for the

of March

no non-

GAAP adjustments for the quarter ended March 31, 2023.

Table 2 - Adjusted Net Income

for the Quarter Ended March 31, 2024 (Non-GAAP)

(Unaudited)

Income before

Income tax

expense

Total

U.S. GAAP Net income

$158,851

$55,568

$103,283

Non-GAAP Adjustments:

FDIC Special Assessment [1]

14,287

(5,234)

9,053

Adjustments related to intercompany distributions [1]

6,400

16,483

22,883

Adjusted net income (Non-GAAP)

$179,538

$44,319

$135,219

[1] Refer to the Overview section of Management’s Discussion

and Analysis included in this Form 10-Q for a description

of this item.

Net interest income on a taxable equivalent basis

– Non-GAAP Financial Measure

income on

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.

interest earning

assets include

investment securities

and loans

exempt from

income tax,

principally in

Puerto

Rico. The

main sources

of tax-exempt

are certain

investments in

obligations of

the

U.S. Government,

its

agencies and

sponsored entities,

certain obligations

of the

Commonwealth of

and/or its

agencies and

municipalities,

and assets

held by the

Corporation’s international banking

entities. To

facilitate the comparison

of interest related

to these

assets,

the

has

been

converted

to

a

taxable

equivalent

basis,

using

the

income

tax

rates

for

each

period.

According to the

Puerto Rico tax

law, a

portion of interest

cost, based on

an equal proportion

of tax-exempt assets to

total assets,

and an

allocation of

general and

administrative expenses

should be

attributed to

exempt income,

reducing the

benefit of

the tax

exempt income, and as such

the disallowance of such

deduction is considered in the

taxable equivalent computation. The effective

yield, on

equivalent basis, will

vary depending on

of these

expenses that are

attributed to the

available exempt

income.

Net interest income on

a taxable equivalent basis,

with its different components,

along with the reconciliation to

net interest income

(GAAP),

for

the

quarter

ended

March

31,

as

with

the

same

period

in

2023,

segregated by

major

categories

of

interest earning assets and interest-bearing

liabilities are included in Table 3 of the Operating Results Analysis section below.

Tangible Common Equity and Tangible Assets

common equity,

tangible common equity ratio, tangible

assets and tangible book

value per common share

are non-GAAP

financial measures.

ratio and

tangible book

value per

common share

in conjunction

with more

traditional

bank

capital

ratios

are

commonly

used

by

banks

and

analysts

to

compare

the

capital

adequacy

of

banking

organizations

with

significant amounts

of goodwill

intangible assets,

typically stemming

use of

the purchase

accounting method

for

mergers and acquisitions.

common equity,

tangible assets and

other related measures

should not be

used in

isolation or

as

a

substitute

for

stockholders'

equity,

total

assets

or

any

other

measure

calculated

in

accordance

with

GAAP.

Moreover,

the

manner in which the Corporation calculates its tangible common

equity, tangible assets and

other related measures may differ from

that of other companies reporting measures with

similar names.

Table

9 provides

of total

stockholders’ equity

to tangible

and total

assets to

tangible assets

as of

March 31, 2024, and December 31, 2023.

Financial highlights for the quarter ended March 31, 2024

For the

quarter ended March

Corporation recorded net

income of $

103.3 million, compared

to net

income of $

159.0 million for the same quarter of the

previous year. Net interest margin for the first

quarter of 2024 was 3.16%, a decrease

of 6 basis

points when compared to

3.22% for the same

quarter of the previous

year. The

decrease was mainly due

deposit costs, principally from

the Puerto Rico

public sector and from

online deposits in the

U.S., which was partially

offset by

higher yield

from money

market investments

and

loans. On

equivalent basis,

the net

interest margin

was 3.38%,

compared to 3.46% for the same quarter of

the previous year.

For the

losses of

$72.6 million,

$47.6 million for the same

quarter of the previous year.

The higher provision for credit losses

was driven by higher reserves in

our commercial

and consumer

portfolios mostly

due to

higher loan

volumes and

ratings and

quality of the US commercial portfolio and the

BPPR consumer portfolio.

Non-interest income was $163.8 million for the quarter,

an increase of $1.9 million when compared to the quarter ended March

31, 2023,

service charges

on deposit

accounts and

other service

fees,

partially offset

by lower

income

from mortgage banking activities resulting from the fair

value adjustments of mortgage servicing rights.

Operating expenses for the quarter were higher by

$42.4 million when compared to the quarter ended

March 31, 2023. Higher

operating expenses were driven mainly

by the effect

of the increase in

loss estimate related to

the FDIC Special Assessment,

higher personnel costs and higher technology and

software expenses.

Income tax

quarter was

higher by

$9.3 million

due to

the impact

of the

recognized on

distributions from previous

periods. Compared to

the same quarter

in the

previous year,

income tax expense

was also higher

as the results of

the first quarter of 2023 included

the effect of the

reversal of a valuation allowance of

a tax credit expected to

be realized on the U. S. Operations.

Total

assets at March 31, 2024 amounted to $70.9 billion, compared to

$70.8 billion, at December 31, 2023. The increase was

driven by an

increase in available-for-sale (“AFS”) investment securities,

mainly due to purchases

of U.S. Treasury Securities,

and

loan

growth,

mainly

in

the

and

in

auto

loans,

partially

offset

by

a

net

decrease

in cash

and

money

market investments due to the investments in the

debt securities portfolio and loan originations.

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

to

higher retail

deposits, time deposits

and deposits in

trust in

BPPR, partially offset

by a

decrease in Puerto

Rico public

sector

Stockholders’ equity as

2024 increased by $30.4

million from the

December 31, 2023, mainly

due to net

income

for

the

$103.3 million

and

the

amortization of

unrealized losses

from

previously reclassified

to

held-to-

maturity (“HTM”) of $35.2 million, net of

taxes, partially offset by the after-tax

impact of the increase in net

unrealized losses in

the portfolio of

AFS securities of

$71.1 million and

common and preferred

dividends declared during

As of March

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

due mainly to the increase in stockholders’ equity

during the period.

Regulatory

capital

ratios

remained strong.

As

of

March

31,

2024,

the

common

equity

tier

capital

ratio

was

16.36%, the tier 1 leverage ratio was 8.45%, and

the total capital ratio was 18.19%. Refer to

Table 8 for capital ratios.

the Operating

Results Analysis

and Financial

Condition Analysis

within this

MD&A for

additional discussion

of significant

quarterly variances and items impacting the financial performance

of the Corporation.

As a financial services company,

the Corporation’s earnings are significantly affected

by general business and economic conditions

in the

markets which

we serve.

Lending and

deposit activities

and fee

income generation

are influenced

by the

spending and

investment, consumer

income, spending

and savings,

capital market

activities, competition,

customer preferences,

interest rate conditions and prevailing market rates

on competing products.

operates in

a highly

regulated environment

and may

be adversely

affected by

federal and

local laws

and

regulations.

Also,

competition

with

other

institutions,

as

well

as

with

non-traditional financial

service

providers

and

technology

companies

that

provide

electronic

and

internet-based

solutions

and

services,

could

affect

its

profitability.

The

continuously

monitors

general

and

conditions,

industry-related

indicators

and

trends,

competition, interest rate volatility, credit

quality indicators, loan and deposit demand, operational and systems efficiencies,

revenue

enhancements and changes in the regulation of financial

services companies.

The description of the Corporation’s business contained in

discusses additional

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

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

beyond the

Corporation’s control that, in addition to the other information in

this Form 10-Q, readers should consider.

The Corporation’s common stock is traded on the NASDAQ

Global Select Market under the symbol BPOP.

CRITICAL ACCOUNTING POLICIES / ESTIMATES

The accounting

and reporting

policies followed

by the

Corporation and

its subsidiaries

conform to

generally accepted

principles

in

the

United

States

of

America

and

general

practices

within

the

industry.

Various

elements

of

the

Corporation’s accounting policies, by

their nature, are

inherently subject to

estimation techniques, valuation assumptions and

other

subjective assessments.

These estimates

are made

under facts

and circumstances

at a

point in

time and

those facts

and circumstances could produce actual results that

differ from those estimates.

Management has discussed

the development and

selection of the

critical accounting policies

and estimates with

Audit

Committee.

The

has

identified

as

critical

those

related

to:

(i)

Fair

Value

Measurement

of

Financial Instruments; (ii) Loans

and Allowance for Credit

Losses; (iii) Loans Acquired

with Deteriorated Credit Quality;

(iv) Income

Taxes;

(v) Goodwill and

Other Intangible Assets; and

(vi) Pension and Postretirement

Benefit Obligations. For a

summary of these

critical accounting policies and estimates, refer to that particular section in

the MD&A included in the 2023 Form

10-K. Also, refer to

Note 2

to

Financial Statements

included in

Form 10-K

for a

summary of

accounting policies and

to Note

3 to

Statements included in

this Form

10-Q for information

on recently

adopted accounting standard updates.

OPERATING RESULTS ANALYSIS

NET INTEREST INCOME

income for

was $550.7

million, compared

to $531.7

2023, an increase of $19.1 million. Net

interest income on a taxable equivalent basis for

the first quarter of 2024 was

$589.6 million

compared to $570.4 million in the first quarter of

2023, an increase of $19.2 million.

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

taxable equivalent basis,

net interest margin

for the

of 2024 was

3.38%, compared to

3.46% for

quarter the

prior year. The main variances in net interest income on a taxable

equivalent basis were:

money market,

investments, and

trading securities

by $55.0

higher

average yield by 60 basis points. The increase in

yield was driven by a higher interest rate environment and reinvestment

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

higher interest income

from loans

by $100.2 million

resulting from an

average loans by

$3.0 billion

reflecting

loan

increases

in

both

PB

and

BPPR

and

across

most

and

higher

yield

on

loans

by

basis

points

when

compared to the same quarter of 2023 due to origination of loans in a higher

interest rate environment and the repricing of

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

in interest

income, or

52 basis

points, consumer

loans with

an increase

of

$15.8 million

or 105

basis points,

and auto

loans which increased $10.6 million or 63 basis

points.

Partially offset by:

higher interest expense on deposits by $136.3 million driven by higher

cost of deposits by 99 basis points driven by higher

average volume

and higher

cost of

market linked

P.R.

public deposits

by $2.7

higher volume

of U.S.

online

Net interest income for the BPPR segment amounted to $472.8

million for the first quarter of 2024, compared

to $449.8 million in the

of 2023.

margin increased

to 3.33%

3.24% in

the first

  1. The

net

interest income of $23.0 million

was driven by higher yield

and volume on earning

assets partially offset by

the increase in the

cost

of deposits, mainly from the P.R. public sector.

The cost of interest-bearing deposits increased 83 basis points to 2.44% from 1.61%

in the same quarter of 2023. Total

deposit costs for the quarter increased by 63 basis points, from

1.18% in the first quarter of 2023

to 1.81%.

Net interest income for PB was $84.9 million

for the quarter ended March 31, 2024, compared

to $90.1 million during the first

quarter of 2023, a decrease of $5.2 million.

Net interest margin decreased 75 basis

points to 2.59% when compared to 3.34%

during the first quarter of 2023. The decrease

in net interest margin was mostly driven

by a higher cost of deposits in all categories,

partially offset by the increase in loan volume and the repricing

of adjustable-rate loans driven by the changes

in interest rates. The

cost of interest-bearing deposits was 3.86% compared

to 2.47% in the first quarter of 2023, or an

increase of 139 basis points, while

total deposit cost was 3.40% compared to 2.01%

in the first quarter of 2023.

Table 3 - Analysis of Levels & Yields

on a Taxable Equivalent Basis

(Non-GAAP)

Average Volume

Average Yields / Costs

Attributable to

Rate

Volume

$

6,484

$

5,736

$

5.49

%

4.65

%

0.84

%

$

88,516

$

65,724

$

22,792

$

13,566

$

9,226

28,308

28,862

(554)

2.71

2.22

0.49

Investment securities [1]

191,103

158,914

32,189

35,317

(3,128)

3.75

4.47

(0.72)

Trading securities

(27)

(55)

Total money market,

investment and trading

34,825

34,629

3.23

2.63

0.60

279,930

224,976

54,954

48,828

6,126

Loans:

17,613

15,761

1,852

6.84

6.32

0.52

299,504

245,469

54,035

23,691

30,344

8.96

8.40

0.56

22,100

15,155

6,945

1,215

5,730

1,742

1,588

6.74

6.12

0.62

Leasing

29,353

24,282

5,071

2,595

2,476

7,723

7,388

5.62

5.46

0.16

108,543

100,773

7,770

3,113

4,657

3,227

3,020

13.90

12.85

1.05

111,490

95,715

15,775

8,441

7,334

3,763

3,559

8.77

8.14

0.63

Auto

82,054

71,407

10,647

6,421

4,226

35,060

32,048

3,012

7.48

6.97

0.51

653,044

552,801

100,243

45,476

54,767

$

69,885

$

66,677

$

3,208

5.36

%

4.72

%

0.64

%

Total earning assets

$

932,974

$

777,777

$

155,197

$

94,304

$

60,893

Interest bearing deposits:

$

25,703

$

23,313

$

2,390

3.63

%

2.52

%

1.11

%

NOW and money market [2]

$

232,129

$

144,970

$

87,159

$

70,094

$

17,065

14,700

15,029

(329)

0.93

0.47

0.46

Savings

34,171

17,443

16,728

16,240

8,547

7,099

1,448

2.97

1.76

1.21

63,196

30,802

32,394

21,831

10,563

48,950

45,441

3,509

2.71

1.72

0.99

329,496

193,215

136,281

108,165

28,116

15,083

15,704

(621)

Non-interest bearing demand

64,033

61,145

2,888

2.07

1.28

0.78

329,496

193,215

136,281

108,165

28,116

(163)

5.70

4.74

0.96

Short-term borrowings

1,192

2,885

(1,693)

(2,002)

Other medium and

5.13

4.78

0.35

long-term debt

12,709

11,266

1,443

1,044

50,032

46,635

3,397

2.76

1.80

0.96

liabilities (excluding demand

deposits)

343,397

207,366

136,031

108,873

27,158

4,770

4,338

Other sources of funds

$

69,885

$

66,677

$

3,208

1.98

%

1.26

%

0.72

%

Total source of funds

343,397

207,366

136,031

108,873

27,158

Net interest margin/

3.38

%

3.46

%

(0.08)

%

income on a taxable

equivalent basis (Non-

GAAP)

589,577

570,411

19,166

$

(14,569)

$

33,735

2.60

%

2.92

%

(0.32)

%

38,833

38,755

Net interest margin/ income

3.16

%

3.22

%

(0.06)

%

non-taxable equivalent basis

(GAAP)

$

550,744

$

531,656

$

19,088

Note: The changes that are not due solely to volume or

rate are allocated to volume and rate based on the

proportion of the change in each category.

[1] Average balances exclude unrealized gains or losses

on debt securities available-for-sale and the unrealized

loss related to certain securities transferred from

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

[2] Includes interest bearing demand deposits corresponding

to certain government entities in Puerto Rico.

Provision for Credit Losses - Loans Held-in-Portfolio

and Unfunded Commitments

For the

$72.1 million

losses related

to

loans held-in-portfolio and

unfunded commitments. The provision

for credit loss

related to the

loans-held-in-portfolio for the

quarter

2024 was $72.4

million, compared to a

provision expense of $47.1

million for the

The increase

in provision

expense was

the commercial

and consumer

portfolio, mainly

personal loans

and credit

cards.

Higher

loan

volumes

and

changes

in

credit

quality

in

these

contributed

to

the

higher

expense.

The

reserve

release related

to unfunded

commitments for

the first

2024 was

$0.2 million,

$0.6

million for the same period of 2023.

For the quarter ended March 31, 2024,

the Corporation recorded $61.0 million in

provision expense for loans-held-in-portfolio in the

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

a

provision expense

of

$11.4

million

for

the

quarter

31,

2024, compared

to

a

provision expense

of

$1.9

million for the same quarter in 2023.

2024, the total

allowance for credit

losses for loans

held-in-portfolio amounted to

$739.5 million, compared

to $729.3

million as of December 31, 2023. The ratio of the allowance for credit losses

to loans held-in-portfolio was 2.11% at March 31, 2024,

to

2.08%

at

As

discussed

in

Note

to

the

Financial Statements,

the

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

scenarios to

estimate the

ACL. The

is assigned

the highest

probability,

followed by

the pessimistic

scenario to

account for

uncertainties in

the macro-economic

outlook and

any downside

risk. The

weight assigned

to the

pessimistic scenario

decreased this quarter in

response to the positive

momentum in the economy

as expectations for the

Federal Reserve achieving a

soft

landing

have

improved.

Refer

to

Note

to

the

Statements,

for

on

the

Corporation’s methodology to estimate

its ACL. Refer to

the Credit Risk section

of this MD&A for

a detailed analysis of

net charge-

offs, non-performing assets, the allowance for credit losses and

selected loan losses statistics.

Provision for Credit Losses – Investment Securities

The

for

credit

losses

related

to

its

is

related

to

the

of

obligations from the

Government of Puerto

Rico, states and

political subdivisions. At March

total allowance for

credit

losses

for

this

to

$5.7

to

$5.8

million

as

of

31,

Refer

to

Note

to

Consolidated Financial Statements

for additional information on the ACL for this portfolio.

During the quarter

ended March 31.

recognized a provision

of $0.5 million

related to a

single security within

the “Other” portfolio in its

debt securities available-for-sale, that after evaluation was determined to

be impaired and as a

result was

fully reserved. Refer to Note 5 to Consolidated

Financial Statements for additional information on

the ACL for this portfolio.

Non-Interest Income

Non-interest

income

was

$163.8 million

for

the

first

2024,

an

of

$1.9

million

with

the

same

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

driven by:

higher other

service fees

by

$4.2 million

mainly

due to

higher credit

card

fees, mainly

from commercial

clients,

higher

debit

card

fees

as

a

result

of

higher interchange

transactional volumes,

and

higher investment

management and

trust

fees;

higher service charges on deposit accounts by $2.8

million mainly due to higher non balance compensation,

mainly from

commercial accounts;

partially offset by:

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

fair value adjustment of mortgage servicing rights (“MSR”)

and lower mortgage servicing fees.

Operating Expenses

Operating expenses

for the

$42.4 million

same

  1. Excluding

the $6.4

interest accrued

prior period

taxes and

the $14.3

million impact

of the

FDIC Special

Assessment total expenses for the

first quarter of 2024

were $462.4 million, compared to

$440.7 million in the first

quarter of 2023.

The other factors that contributed to the variance in operating

expenses were:

higher personnel cost

by $16.6 million

mainly due to

higher salaries expense

by $4.0 million

as a result

of annual salary

revisions

that

occur

after the

first

quarter,

an

in

headcount throughout

2023,

an

health

costs

by

$2.0

higher

annual

incentive

awards

of

and

shares

related

by

$3.4

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

expenses by $3.2 million;

higher technology

and software

expenses by

$10.9 million

software amortization

expense by

$3.3

million, an increase of $3.5 million from

network management services, and higher IT professional and consulting fees by

$3.1 million;

higher business

promotion expenses

by

$2.1 million

mainly

due to

higher customer

rewards programs

expense in

our

credit card business; and

higher net occupancy

expenses by $2.0

million mainly due

to higher cleaning

costs and higher

amortization of buildings’

insurance premiums;

partially offset by:

higher other real estate owned (OREO) benefit by

$3.6 million mainly due to higher gain on

sale of mortgage properties;

lower professional fees by $4.5 million mainly due

to lower advisory expenses related to corporate

initiatives;

lower operational losses by $3.2 million mainly related

to legal settlements reserves; and

lower other

taxes expense

by $1.9

due to

lower accruals

in the

of 2024

examination expenses.

Table 4 - Operating Expenses

Personnel costs:

Salaries

$

129,384

$

125,393

$

3,991

Commissions, incentives and other bonuses

38,611

31,162

7,449

Pension, postretirement and medical insurance

17,385

15,378

2,007

Other personnel costs, including payroll taxes

29,997

26,827

3,170

Total personnel

costs

215,377

198,760

16,617

Net occupancy expenses

28,041

26,039

2,002

Equipment expenses

9,567

8,412

1,155

Other taxes

14,375

16,291

(1,916)

Professional fees

28,918

33,431

(4,513)

Technology and

software expenses

79,462

68,559

10,903

Processing and transactional services:

Credit and debit cards

12,144

12,550

(406)

Other processing and transactional services

22,050

21,359

Total processing

and transactional services

34,194

33,909

Communications

4,557

4,088

Business promotion:

Rewards and customer loyalty programs

14,056

12,348

1,708

Other business promotion

6,933

6,523

Total business

promotion

20,989

18,871

2,118

FDIC deposit insurance

23,887

8,865

15,022

Other real estate owned (OREO) income

(5,321)

(1,694)

(3,627)

Other operating expenses:

Operational losses

3,561

6,800

(3,239)

All other

24,711

17,561

7,150

Total other operating

28,272

24,361

3,911

Total operating

$

483,113

$

440,687

$

42,426

Income Taxes

recorded an income

tax expense of

$55.6 million with

an effective tax

rate

(ETR) of 35%,

compared to $46.3 million with an ETR of 23% for the same period of 2023.

As discussed in Note 30, the income tax

expense for

includes $23.0

million related

to withholding

for certain

distributions,

out

of

which $16.5

million

was

related

to

distributions

between years

2014-2023

and

$6.5

million

was

related

to

a

distribution completed during

  1. This variance

was partially offset

due to lower

pre-tax income for

the quarter ended March

Also, for the

2023, the Corporation reported a

reversal of a

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

GAAP Financial Measures section of this

MD&A, the ETR for the

quarter ended March 31, 2024,

would have been 24.7%. Refer to

the Significant Events section in this MD&A for more

details on Significant Events and Non-GAAP

Financial Measures.

At

Corporation had

a net

asset amounting

to

$1.0 billion,

net of

a valuation

allowance of

$0.5

billion. The net deferred tax asset related to the U.S.

operations was $0.3 billion, net of a valuation

allowance of $0.4 billion.

Note 30

to the

of the

statutory income

tax rate

to the

effective tax

rate and additional information on the income tax

expense and deferred tax asset balances.

REPORTABLE SEGMENT RESULTS

reportable segments

for managerial

reporting purposes

consist of

Banco Popular

de Puerto

Rico and

Popular

U.S. A Corporate group

has also been defined to support the reportable

segments.

For

a

description

of

the

segments,

and

the

management accounting process, refer to Note 32

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

$1.3

million for

year.

The negative

variance was

mainly attributed

to the

$22.9 million

adjustment to

recognize the

tax impact

prior period

intercompany distributions

and the

additional $6.5

million recognized

for the

tax impact related to intercompany distributions paid

during the first quarter of 2024.

Highlights on the earnings results for the reportable

segments are discussed below:

The Banco

Popular de

reportable segment’s

net income

$121.3 million

for the

2024, compared

with net

income of

$132.9 million

for the

same quarter

of

year.

The factors

that contributed

to the

variance in the financial results included the following:

Higher net interest income by $23.0 million mainly

due to:

higher interest income from money market and investment

securities by $38.7 million due to higher yields driven

by

the

in

rates

by

the

Federal

Reserve

and

higher

average

of

U.S.

higher interest income from loans by $71.2 million mainly

due to higher average balances from commercial and

consumer loans, mainly from auto and consumer loans,

expense on deposits

by $86.8 million

mainly due to

higher costs on

the market-indexed Puerto

Rico

deposits, and

the

rate

environment’s

impact on

the cost

of

NOW accounts,

time deposits, and savings deposits.

The net

interest margin

for the

March

was 3.33%

3.28% for

quarter in

the

previous year.

The increase in

net interest margin

is driven by

the earnings assets

mix and the

higher yields from

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

higher cost of

A provision

for loan

losses expense of

$60.7 million, compared

to a

provision expense of

$45.7 million in

March

31,

2023,

or

an

unfavorable variance

of

$15.0

million

mainly

driven

by

changes

in

credit

quality

mostly

due

to

consumer portfolios and higher volumes;

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

to:

lower

other

income

by

$3.4

million

mostly

due

to

an

insurance policy

reimbursement gain

of

$7.0

million recorded during the quarter ended March

31,2023;

lower income

from mortgage

banking activities

by $3.1

due to

an unfavorable

variance of

$2.1

million in the fair value adjustment of mortgage service

rights.

Higher service charges on deposit accounts by $2.9

million mainly due to higher ACH fees.

Higher

other

service fees

by

$2.6

million

mainly

due

to

higher credit

card

fees

of

$1.1 million

as a

result

of

higher interchange transactional volumes and an increase

of $1.1 million on trust fees; and

Higher operating expenses by $31.4 million mostly due

to:

higher deposit insurance expense by $12.1

million mostly due to the FDIC

Special Assessment recorded in the

first quarter of 2024;

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

and increase in headcount;

higher

technology

and

software

by

$7.6

million

mainly

due

to

higher

network

fees,

amortization of software costs and higher IT consulting

fees.

higher

promotions

by

$2.2

million

due

to

higher

customer

rewards

expense

from

our

credit

cards

portfolio related to higher transactional volumes;

higher net recoveries from OREO by $3.7 million

mainly due to higher gain on sale of mortgage

properties; and

lower other operating taxes by $2.1

million mainly due to regulatory examination fees;

Lower income tax expense by $13.6 million is mainly

due to a lower income before tax.

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

a net income

of $25.0 million for

the same quarter of

the previous year.

The factors that contributed

to the variance

in the financial

results included the following:

Lower

net interest income by $5.2 million due to:

expense on

deposits by

$51.3 million

mainly

due

to

rates

and

higher average

balance of time deposits gathered through online

channels,

loans by

$26.4 million,

mainly from

the commercial

portfolio as

well as

higher yields due to increase in rates;

and

higher interest income from money market and investment securities by $18.1

million due to higher volume and

yields due to the increase in market rates.

The net interest

margin for the

2024 was 2.59% compared

to 3.34% for

the same quarter in

year driven by the higher cost of deposits.

An

unfavorable

variance

of

$9.4

million

on

the

for

loan

losses

and

unfunded

commitments

mainly

due

to

changes in internal credit risk ratings in the commercial

loan portfolio;

Higher operating expenses by $4.6 million mostly

due to:

higher deposit insurance expense by $2.8 million

mostly due to FDIC Special Assessment adjustment;

higher other

operating expense

by

$1.6 million

due to

higher charges

allocated from

the

Corporate segment

group by $1.8 million mainly from higher personnel

costs.

FINANCIAL CONDITION ANALYSIS

Assets

The Corporation’s total

assets were $70.9 billion

2024, compared to $70.8

billion at December 31,

  1. Refer to the

Consolidated Statements of Financial Condition included

in this report for additional information.

Money market investments and debt securities available-for-sale

Money market investments decreased by $1.1 billion as

of March 31, 2024, when compared to

December 31, 2023, as these funds

were used in

part for the

purchase of debt securities

and loan originations.

Debt securities available-for-sale increased

$1.3 billion,

to purchases

of U.S.

Treasury Securities,

while debt

securities held-to-maturity

decreased by

$111.1

million driven

by

securities, partially

offset by

the amortization

of $44.0

the discount

securities previously reclassified from the

AFS to HTM. Refer

to Note 5 and

to Note 6 to

the Consolidated Financial Statements for

additional information with respect to the Corporation’s debt

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

Loans

Refer to Table

5 for a

breakdown of the Corporation’s

loan portfolio. Also, refer

to Note 7 in

the Consolidated Financial Statements

for detailed information about the Corporation’s loan portfolio

composition and loan purchases and sales.

$53.8 million

to $35.1

billion as

of March

loans held-in-portfolio

as of

December 31, 2023. During the quarter ended March 31, 2024,

the BPPR portfolio increased by $123.8 million, driven by

the growth

in

the mortgage

and

auto loans

and the

PB

decreased by

$70.1 million,

due in

part by

commercial loans

payoffs, offset by growth in the construction loans portfolio.

$5.1 billion

non-owner occupied commercial

real estate

portfolio is comprised

of $3.0

and

$2.1 billion in the U.S. and is

well diversified across a number of tenants in different industries

and segments with exposure to retail

(35%

of

non-owner

CRE),

hotels

(19%)

and

office

space

(12%)

for

two

thirds

of

the

total

exposure.

The

approximate $633 million office space

exposure represents only 1.8% of

the total loan portfolio

and is comprised mainly of

mid-rise

properties with diversified tenants with average loan

size of $2 million across both the U.S. and

Puerto Rico.

Popular’s $2.4 billion commercial multi-family

portfolio represents approximately 7% of

total loans and is

concentrated in New York

Metro ($1.4 billion), South Florida

($734 million) and Puerto Rico

($197 million). In the New

York Metro

region, the Corporation has

no

to

rent

controlled

buildings.

The

majority

of

our

loans

in

that

region

are

by

buildings that count on a mix

of units subject to rent stabilized (subject

to annual capped rent increases) and market-rate

units. The

rent stabilized units represent less than 40% of the

total units in the loan portfolio with the

majority originated after 2019. The mix of

units within

a building

is common

across the

Metro region

due to

tax incentives

awarded to

developers based

on rent

stabilized

units.

In

2024,

there

are

approximately $198

million

in multi-family

loans

in

our

New

York

Metro

portfolio expected

to

reprice.

Table 5 - Loans Ending Balances

Loans held-in-portfolio:

$

$

(30,985)

(30,362)

37,209

(100,638)

(124,776)

959,280

50,023

Leasing

33,604

87,745

6,406

66,717

65,953

(48,237)

Auto

46,074

Other

162,605

160,441

2,164

7,171

Total loans held-in

-portfolio

$

$

53,767

Loans held-for-sale:

$

5,352

$

4,301

1,051

Total loans held-for-sale

$

5,352

$

4,301

1,051

$

$

54,818

amounted to $2.1

billion at March

31, 2024, compared

to $2.0

billion at December

31, 2023. Refer

to Note

12 to the

a breakdown

of the

principal categories

that comprise

the caption

of “Other

Assets” in

the

Consolidated Statements of Financial Condition at

The Corporation’s total

liabilities were $65.8 billion

2024, an increase of

$148.4 million, when compared to

31, 2023, mainly due to an increase in deposits

as discussed below.

Deposits and Borrowings

The composition of the Corporation’s financing to total assets

at March 31, 2024 and December 31, 2023

is included in Table 6.

Table 6 - Financing to Total

Assets

% increase (decrease)

% of total assets

from 2023 to 2024

Non-interest bearing deposits

$

15,492

$

15,420

0.5

%

21.8

%

21.8

%

Interest-bearing core deposits

43,463

43,571

(0.3)

61.3

61.6

Other interest-bearing deposits

4,854

4,627

4.9

6.8

6.5

Repurchase agreements

(27.5)

0.1

0.1

(2.1)

1.4

1.4

0.4

1.3

1.3

5,177

5,147

0.6

7.3

7.3

Total Deposits

The Corporation’s deposits totaled $63.8 billion as of

March 31, 2024, compared to $63.6 billion as

of December 31, 2023. The

increase in the retail demand deposits, time deposits

and deposits in trust in BPPR, offset in part by

the decrease in P.R. public

sector accounts were the main drivers of the $190.5

million increase during the period.

P.R.

Public Sector Deposits

As of March

31, 2024, the Puerto

Rico public sector

deposits amounted to $18.0

billion, compared to $18.1

billion as of

Approximately 28%

of the

Corporation’s deposits

as of

2024 are

public fund

deposits from

the Government

of Puerto

Rico, municipalities

and government instrumentalities

and corporations. P.R

public sector deposit

costs are

indexed to changes

in

short-term market

rates with

a one-quarter

lag, in

accordance with

contractual terms.

As a

result, these

costs may

lag in

asset

repricing.

These

require

that

the

bank

pledge

high

credit

quality

as

collateral;

therefore,

risks

arising from

deposit outflows

are lower.

the Liquidity

section in

this MD&A

the

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

could

impact public

sector deposit

balances at

any given

period, include,

but are

to the

receipt of

funds by

Rico

of

from

federal

disaster

funding

assistance

(i.e.

hurricane

or

pandemic

related

funds)

and

other

events

such

as

seasonal tax collections which may result in increases of

public sector deposit balances at BPPR in the near

term. The amount and

timing

of

reductions

in

public

sector

deposit

balances,

depend

on

actions

such

as,

the

speed

at

which

federal

assistance is

distributed, the

liquidity and

cash management

practices of

Rico Government

and its

instrumentalities, and/or the

implementation of fiscal

and debt

adjustment plans approved

pursuant to PROMESA

actions

mandated by the Fiscal Oversight and Management

Board for Puerto Rico (the “Oversight Board”).

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

Table 7 - Deposits Ending Balances

[1]

$

26,473,367

$

27,579,054

$

(1,105,687)

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

27,852,551

26,817,844

1,034,707

Savings, NOW and money market deposits (brokered)

727,794

719,453

8,341

Time deposits (non-brokered)

7,850,459

7,546,138

304,321

Time deposits (brokered CDs)

904,613

955,754

(51,141)

$

$

$

190,541

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

The Corporation’s borrowings

totaled $1.0 billion

2024 compared to

$1.1 billion at

December 31, 2023. Refer

to Note

15 to

Financial Statements

for detailed

borrowings. Also,

refer to

the Liquidity

section in this MD&A for additional information

on the Corporation’s funding sources.

Stockholders’ Equity

totaled $5.2

billion at

2024, an

increase of

$30.4 million

to

2023,

principally due to net income for

the quarter ended March 31, 2024 of

$103.3 million and the amortization of

unrealized losses from

securities previously reclassified

to HTM

of $35.2 million,

net of

taxes, partially offset

by the

after-tax impact of

the increase in

net

losses

in

the

of

AFS

of

$71.1

million

and

common

and

declared

during

the

Refer

to

the

Consolidated Statements

of

Condition,

Comprehensive Income

and

of

Changes

in

Stockholders’

Equity for information on the composition of

stockholders’ equity.

REGULATORY CAPITAL

The Corporation, BPPR and PB

are subject to regulatory capital

requirements established by the Federal Reserve Board.

The risk-

based

capital

standards

to

the

Corporation,

BPPR

and

PB

(“Basel

III

capital

rules”)

are

based

on

the

final

capital

framework for strengthening international capital standards, known

as Basel III, of the Basel Committee on Banking Supervision.

As

of March 31, 2024, the Corporation’s, BPPR’s and

PB’s capital ratios continue to exceed the minimum requirements for being

“well-

capitalized” under the Basel III capital rules.

The risk-based

capital ratios

Table

8,

which include

tier 1,

Tier

1 capital,

total capital

and leverage

capital as of March 31, 2024 and December 31,

Table 8 - Capital Adequacy

Data

Common equity tier 1 capital:

Common stockholders equity - GAAP basis

$

5,155,171

$

5,124,810

CECL transitional amount

[1]

42,376

84,751

AOCI related adjustments due to opt-out election

1,864,638

1,831,003

Goodwill, net of associated deferred tax liability (DTL)

(664,799)

(666,538)

Intangible assets, net of associated DTLs

(8,969)

(9,764)

Deferred tax assets and other deductions

(306,179)

(310,947)

Common equity tier 1 capital

$

6,082,238

$

6,053,315

Additional tier 1 capital:

22,143

22,143

Additional tier 1 capital

$

22,143

$

22,143

Tier 1 capital

$

6,104,381

$

6,075,458

Tier 2 capital:

Trust preferred securities subject to phase in as

tier 2

192,674

192,674

Other inclusions (deductions), net

467,158

465,833

Tier 2 capital

$

659,832

$

658,507

Total risk-based capital

$

6,764,213

$

6,733,965

Minimum total capital requirement to be well capitalized

$

3,717,730

$

3,714,633

Excess total capital over minimum well capitalized

$

3,046,483

$

3,019,332

Total risk-weighted

assets

$

37,177,300

$

37,146,330

Total assets for leverage

ratio

$

72,264,347

$

71,353,184

Risk-based capital ratios:

Common equity tier 1 capital

16.36

%

16.30

%

Tier 1 capital

16.42

16.36

Total capital

18.19

18.13

Tier 1 leverage

8.45

8.51

[1] The CECL transitional amount includes the impact

of Popular's adoption of the new CECL accounting standard

on January 1, 2020.

The Basel

III capital rules

provide that a

depository institution is

deemed to be

well capitalized if

it maintains a

leverage ratio of

at

least 5%,

a common equity

Tier 1

ratio of

at least 6.5%,

a Tier

1 capital ratio

of at least

8% and a

total risk-based

ratio of at

least

10%. The

Corporation, BPPR and

PB leverage

ratio, common equity

Tier 1

ratio and

Tier 1

capital ratio,

respectively as of

March

31, 2024, continue to exceed the minimum requirements

for being “well-capitalized” under the Basel III

capital rules.

Pursuant

to

the

of

the

CECL

standard

on

January

1,

2020,

the

elected

to

use

the

five-year

transition

period option

as

provided in

the

final

interim

regulatory capital

rules effective

The

five-year

transition

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

to

phase

out

the

amount

of

the

capital

benefit

provided

during

the

initial

two-year

delay.

As

of

March

31,

2024,

the

Corporation had phased-in 75% of

the cumulative CECL deferral with

the remaining impact to

be recognized over the

remainder of

the three-year transition period.

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

31, 2024 as compared to

December 31, 2023 was

mainly due to the

three months period earnings. The

decrease in leverage capital ratio

was mainly due to

higher average

assets which are

impacted by zero-risk

weighted assets that

do not

have a significant

impact on

the risk-weighted

assets, partially offset by the period earnings.

Reconciliation to Tangible Common Equity and Tangible Assets

Table

9 provides

of total

stockholders’ equity

to tangible

and total

assets to

tangible assets

as of

March 31, 2024, and December 31, 2023.

Table 9 - Reconciliation of Tangible

Common Equity and Tangible

Assets

(In thousands, except share or per share information)

Total stockholders’

equity

$

$

Less: Preferred stock

(8,969)

(9,764)

Total tangible common

equity

$

4,341,774

$

4,310,618

$

$

(8,969)

(9,764)

Total tangible assets

$

70,123,542

$

69,943,963

Tangible common

equity to tangible assets

6.19

%

6.16

%

Common shares outstanding at end of period

72,153,621

Tangible book value

per common share

$

60.06

$

59.74

Quarterly average

Total stockholders’

equity [1]

$

6,198,740

$

6,072,871

Average unrealized (gains) losses on AFS securities

transferred to HTM

639,226

683,077

Adjusted total stockholder's equity

6,837,966

6,755,948

Less: Preferred Stock

(804,427)

(804,427)

(9,490)

(10,286)

Total tangible common

equity

$

6,001,906

$

5,919,092

Return on average tangible common equity

6.90

%

6.32

%

[1]

Average

exclude

gains

or

losses

on

debt

and

the

loss

related

to

certain

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

RISK MANAGEMENT

Market / Interest Rate Risk

The financial results and capital levels of the

Corporation are constantly exposed to market, interest

rate and liquidity risks.

Market risk

refers to the

risk of a

reduction in the

Corporation’s capital due

to changes in

the market valuation

of its assets

and/or

Most of the assets

subject to market valuation risk

are debt securities classified as

available-for-sale. Refer to Notes 5

and 6 to the

further information

on the

debt

securities available-for-sale

and

held-to-maturity portfolios.

Debt securities classified

as available-for-sale amounted to

$18.0 billion as

  1. Other assets

subject to market

risk

include loans held-for-sale, which amounted

to $5 million, mortgage

servicing rights (“MSRs”) which

amounted to $115

million, and

securities classified as “trading”, which amounted to $27

million, as of March 31, 2024.

Interest Rate Risk (“IRR”)

The Corporation’s net interest income is subject

to various categories of interest rate risk,

including repricing, basis, yield curve and

option risks.

In managing

risk, management may

alter the

mix of

floating and

fixed rate

assets and

liabilities, change

pricing

schedules,

adjust

maturities

through

sales

and

of

and

enter

into

derivative

contracts,

among other alternatives.

rate

risk

is

an

active

process

that

encompasses

monitoring

loan

and

deposit

flows

complemented

by

investment and funding

activities. Effective management of

interest rate risk begins

with understanding the dynamic

characteristics

of assets and

liabilities and determining the

appropriate rate risk position

given line of

business forecasts, management objectives,

market expectations and policy constraints.

Management utilizes various tools to assess IRR, including Net Interest

Income (“NII”) simulation modeling, static gap analysis, and

Economic Value

of Equity

(“EVE”). The

three methodologies

complement each

other and

are used

jointly in

the evaluation

of the

Corporation’s IRR. NII

simulation modeling is

prepared for a

five-year period, which

in conjunction with

the EVE analysis,

management a better view of long-term IRR.

income simulation analysis

performed by legal

entity and on

a consolidated basis

is a

tool used

by the

Corporation in

estimating the

potential change

in net

resulting from

hypothetical changes

in interest

rates. Sensitivity

analysis is

calculated using a simulation model which incorporates

actual balance sheet figures detailed by maturity

and interest yields or costs.

Management assesses

risk by

comparing various

NII simulations

under different

scenarios that

differ in

direction of interest

rate changes, the

degree of change

and the projected

shape of the

yield curve. For

example, the types

of rate

scenarios processed during the

quarter include flat

rates, implied forwards, and

parallel and non-parallel rate

shocks. Management

also performs analyses to isolate and measure basis

and prepayment risk exposures.

The asset

and liability

management group

performs validation

procedures on

various assumptions

used as

part of

the simulation

analyses as well as validations

of results on a

monthly basis. In addition, the

model and processes used to

assess IRR are subject

to independent validations according to the guidelines

established in the Model Governance and

Validation policy.

The Corporation processes NII

simulations under interest rate

scenarios in which the

yield curve is assumed

to rise and

decline by

the same magnitude

(parallel shifts). The

rate scenarios considered in

these market risk

simulations include instantaneous parallel

changes of -100, -200,

+100, and +200 basis points

during the succeeding twelve-month period. Simulation analyses

are based on

many assumptions,

including that

the balance

sheet remains

flat, the

relative levels

of market

interest rates

across all

yield curve

points

and

indexes,

rate

spreads,

loan

and

deposit

elasticity.

Thus,

they

should

not

be

relied

upon

as

indicative of actual results. Further, the estimates do not

contemplate actions that management could take to respond to changes in

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

using different

rate indexes

for the

repricing of

assets and

liabilities, as

well as

the effect

of pricing

lags which

may be

or

due to

historical differences

in the

timing

of

management responses

to

the rate

environment. By

their

nature, these forward-looking computations are only estimates and may be different from

what may actually occur in the future. The

following table presents the

results of the simulations

at March 31, 2024

and December 31, 2023,

assuming a static balance

sheet

and parallel changes over flat spot rates over

a one-year time horizon:

Table 10 - Net Interest Income

Sensitivity (One Year Projection)

Amount Change

Percent Change

Amount Change

Percent Change

Change in interest rate

+200 basis points

41,091

1.81

20,822

0.92

+100 basis points

22,529

0.99

11,496

0.51

-100 basis points

7,789

0.34

19,589

0.87

-200 basis points

(6,355)

(0.28)

16,971

0.75

As of

2024, NII

simulations show

maintains a

neutral to

slightly asset

sensitive position that

marginally

increased as compared to

the results as

of December 31,

  1. The primary

reasons for the

variation in sensitivity

are changes in

balance sheet composition driven by an increase in short-term

U.S Treasury Bills (“T-

Bills”) partly offset by a reduction in

overnight

Fed Funds and U.S

Treasury Notes (“T-

Notes”) on the asset side, combined

with a decrease in Puerto

Rico public sector deposits

which

are

indexed

to

market

rates

and

slightly

higher

non-interest

bearing

These

results suggest

that

changes

in

the

Corporation’s net

interest income sensitivity

are driven by

changes in the

composition of the

investment portfolio as

the term

bond

continues

to

run

off

and

get

reinvested,

together

with

excess

reserves,

in

short-term

such

as

T-Bills.

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

deposits as of March 31,

2024, as well as changes

in the composition and mix

of deposits, also impact the sensitivity

profile. In the

more extreme declining rate scenarios

net interest income would be

affected as the repricing

of short-term assets and variable rate

loans slightly exceeds

the benefit in

cost reduction of

these deposits. In

rising rate scenarios, Popular’s

net interest income

is also

impacted by its large proportion

of Puerto Rico public sector

deposit, however the repricing of assets

as they either reset

or mature

lead to an increase in net interest income.

loan and

investment portfolios

are subject

to

prepayment risk,

which results

ability of

a third-party

to

repay debt

obligations prior

to maturity.

Prepayment risk

also could

have a

significant impact

on the

duration of

and

since

could

shorten

(or

lower

could

extend)

the

weighted average life of these portfolios.

Trading

engages in

trading activities

in the

of business

at its

subsidiaries, BPPR

and Popular

Securities.

Popular Securities’

trading activities

consist primarily

of market-making

activities to

meet expected

customers’ needs

its

retail brokerage business,

and purchases and sales of U.S. Government and

government sponsored securities with the objective of

realizing gains

from expected

short-term price

movements. BPPR’s

trading activities consist

primarily of

holding U.S.

mortgage-backed securities

as

“trading” and

hedging

the

related

market

risk

with

“TBA”

(to-be-announced)

market

transactions.

The

objective

is

to

derive

spread

income

from

the

and

not

to

benefit

from

short-term

market

movements. In

addition, BPPR

uses forward

contracts or

TBAs to

hedge its

securitization pipeline.

Risks related

to variations

in

interest rates

and market volatility

are hedged

with TBAs

characteristics similar to

that of

the forecasted security

and its

conversion timeline.

2024, the Corporation held trading

securities with a fair

value of $27

million, representing approximately 0.04% of

the

Corporation’s total

assets, compared

with $32

0.05%, respectively,

As shown

11,

the

trading portfolio consists

principally of mortgage-backed

securities and U.S.

Treasuries, which

31, 2024 were

grade securities.

Table 11

  • Trading Portfolio

Amount

Average Yield

[1]

Amount

Average Yield

[1]

$

18,671

5.69

%

$

14,373

5.69

%

8,316

4.05

16,859

4.29

5.12

5.21

Puerto Rico government obligations

0.60

0.91

Interest-only strips

12.00

12.00

Other (includes related trading derivatives)

6.10

Total

$

27,308

5.22

%

$

31,568

4.96

%

[1] Not on a taxable equivalent basis.

The Corporation’s trading activities are

limited by internal policies. For each

of the two subsidiaries, the

market risk assumed under

trading

is

measured

by

the

5-day

net

value-at-risk

(“VAR”),

with

a

confidence

level

of

99%.

The

VAR

the

maximum estimated loss that may occur over a

5-day holding period, given a 99% probability.

trading portfolio

had a

5-day VAR

of approximately

$0.4 million

for the

last week

in March

  1. VAR

models

include

assumptions and

estimates thus

actual

results could

differ

from

the

outputs from

these

models

and

assumptions. Back-

testing is performed on model

results to compare actual results

against maximum estimated losses, in order

to evaluate model and

assumptions accuracy.

In the opinion of management, the size and composition

of the trading portfolio does not represent

a significant source of market risk

for the Corporation.

Liquidity

The objective

of effective

liquidity management

is to

ensure that

has sufficient

liquidity to

meet all

of its

obligations, finance

expected future

growth,

fund

planned capital

distributions and

maintain a

reasonable safety

margin for

cash

needs under

both normal

and stressed market

conditions. The Board

of Directors

is responsible

for establishing the

tolerance for liquidity risk,

including approving relevant risk limits and

policies. The Board of

Directors has delegated the monitoring

of

these risks

to

the Board’s

Risk Management

Committee and

the Asset/Liability

Management Committee.

The management

of

risk,

on

a

long-term

and

day-to-day

basis,

is

the

responsibility

of

the

Division.

The

Treasurer

is

responsible

for

implementing

the

and

procedures

by

the

Board

of

Directors

and

for

monitoring

the

on

an

ongoing

basis.

Also,

the

Division coordinates

corporate

wide

strategies

and

with

the

segments,

oversees

policy

breaches

and

manages

the

escalation process.

The

Financial and

Operational Risk

Management Division

is

responsible for

the independent

monitoring and

reporting of adherence with established policies.

An

institution’s liquidity

may be

pressured if,

it experiences

a sudden

and unexpected

substantial cash

outflow due

deposit

outflows,

whether due

to

a

loss

of confidence

by

depositors, or

other

reasons, including

exogenous events

such

as

the

COVID-19 pandemic,

a downgrading

of its

credit rating,

or some

other event

that causes

counterparties to

avoid exposure

to the

institution. Factors

Corporation does

not control,

such

as the

economic outlook,

adverse ratings

of its

principal markets,

perceptions of the financial services industry and regulatory

changes, could also affect its ability to obtain

funding.

has adopted

policies and

limits to

monitor the

Corporation’s liquidity

position and

that of

its banking

Additionally, contingency funding

plans are used to

model various stress events

of different magnitudes and

affecting different time

horizons that assist

management in evaluating

the size of

the liquidity buffers

needed if those

stress events

occur. However,

such

models

may

not

predict

accurately

how

the

market

and

might

react

to

every

event,

and

are

dependent

on

many

assumptions.

Deposits, including

customer deposits,

brokered deposits

and public

funds deposits,

be the

most significant

funds for the

Corporation, funding

90% of the

Corporation’s total assets

2024 and December

The ratio of

total

ending

loans

to

was

55%

at

March

31,

and

31,

In

addition

to

traditional

the

Corporation maintains borrowing arrangements, which amounted to approximately $1.0 billion in

outstanding balances at March 31,

2024 (December 31, 2023 -

$1.1 billion). A detailed description of

the Corporation’s borrowings, including their

terms, is included in

Note

to

the

Also,

the

of

Cash

Flows

in

the

accompanying

Consolidated Financial Statements provide information

on the Corporation’s cash inflows and outflows.

The

sections

provide

further

on

the

major

funding

and

needs,

as

well

as

the

risks

involved in these activities.

Banking Subsidiaries

Primary

funding

for the

banking subsidiaries

(BPPR and

PB

or,

collectively,

“the banking

subsidiaries”)

include

retail,

and

public

sector

brokered

loan

securitization and, to a lesser extent, loan sales.

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

from a large base of

consumer, corporate and

public sector customers. Core deposits

include certificates of deposit

under $250,000, all interest-bearing

transactional deposit accounts,

non-interest bearing deposits,

and savings deposits.

Core deposits exclude

brokered deposits and

certificates

of

deposit

over

$250,000.

Core

excluding

P.R.

public

funds

that

are

fully

collateralized,

have

historically

provided

the

Corporation with

a sizable

source

of

relatively stable

and

low-cost

funds.

P.R.

public funds,

while

linked to

market

interest rates,

provide a stable

funding with an

attractive earnings spread.

Core deposits totaled

$59.0 billion, or

92% of

total

at

March

31,

2024,

with

$59.0

billion,

or

93%

of

total

at

31,

Core

financed 88% of the Corporation’s earning assets at March

31, 2024 and December 31, 2023.

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

New York (the “FRB”) and has a considerable amount of collateral pledged

that can be used to raise funds under these

facilities.

During the first quarter of 2024 the Corporation had

no material incremental use of its available liquidity sources. At

March 31,2024,

the Corporation’s available liquidity

increased to $20.4 billion

from $19.5 billion on

December 31, 2023. The liquidity

sources of the

Corporation at March 31, 2024 are presented

in Table 12 below:

Table 12 - Liquidity Sources

BPPR

Total

BPPR

Total

Unpledged securities and unused funding

sources:

Money market (excess funds at the

Federal Reserve Bank)

$

4,473,620

$

1,447,189

$

5,920,809

$

5,516,636

$

1,475,143

$

6,991,779

Unpledged securities

5,749,794

375,470

6,125,264

4,212,480

347,791

4,560,271

FHLB borrowing capacity

2,400,630

1,358,639

3,759,269

2,157,685

1,341,329

3,499,014

Discount window of the Federal Reserve

Bank borrowing capacity

2,674,719

1,917,123

4,591,842

2,605,674

1,818,946

4,424,620

Total available liquidity

$

15,298,763

$

5,098,421

$

20,397,184

$

14,492,475

$

4,983,209

$

19,475,684

Refer

to

Note

to

the

for

of

the

available through its banking subsidiaries.

The principal

uses of

funds for

subsidiaries include

loan originations,

investment portfolio

purchases, loan

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

expenses. Also, the

banking subsidiaries assume liquidity

risk related to collateral

posting requirements for certain

activities mainly

in

with

commitments,

provisions,

advances,

and

credit

card

licensing

agreements.

subsidiaries maintain

sufficient funding

capacity to

address large

increases in

funding requirements

such as

deposit

outflows.

The

established

guidelines

that

require

the

banking

to

have

to

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

The Corporation’s ability to compete

successfully in the marketplace for

deposits, excluding brokered deposits, depends on various

factors, including pricing, service, convenience

and financial stability as

reflected by operating results and

financial condition, credit

ratings (by

nationally recognized credit

rating agencies), customer

confidence, and

importantly,

FDIC deposit

insurance coverage.

Deposits at all of the Corporation’s banking subsidiaries are federally insured

(subject to FDIC limits) and this is expected to mitigate

the potential effect of the aforementioned risks.

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

table that follows:

Table 13 - Distribution by

Maturity of Certificates of Deposit of $250,000 and Over

3 months or less

$

2,137,053

Over 3 to 12 months

766,629

Over 1 year to 3 years

245,638

Over 3 years

184,847

Total

$

3,334,167

The

had

$1.6

brokered

at

March

31,

2024,

which

financed

2%

of

its

total

assets

$1.7 billion and 2%,

respectively).

In the event that

any of the Corporation’s

banking subsidiaries’ regulatory

capital

ratios fall

below those

required by

a

well-capitalized institution

or

are

subject

to

capital

restrictions by

the

regulators, the

Corporation would be

at risk that

such banking subsidiary

would not be

able to raise

or maintain brokered deposits

and could also

face limitations

on the

rate paid

on deposits,

which may

hinder the

Corporation’s ability

to effectively

compete in

its retail

markets

and could affect its deposit raising efforts.

Deposits from the public sector represent an

important source of funds for the Corporation.

As of March 31, 2024, total

deposits were

$18.0 billion,

$18.1 billion

These deposits

require that

the bank

pledges

high credit quality securities as collateral; therefore, liquidity risks arising from public

sector deposit outflows are lower given

that the bank

receives its collateral

in return. This,

now unpledged, collateral

can either be

financed via repurchase

agreements or

sold

for

cash.

However,

timing

differences

between

the

time

the

deposit

outflow

and

when

the

bank

receives

its

may

occur.

Additionally,

uses fixed-rate

as collateral

limited credit

risk, but

are

nonetheless subject to market value risk based on

changes in the interest rate environment.

When interest rates increase, the value

of this

collateral decreases and

could result in

the Corporation having

to provide additional

collateral to cover

the same amount

of

deposit

This

could

reduce

otherwise

as

sources

to

the

As of

2024, management believes

banking subsidiaries had

sufficient current

and projected liquidity

sources to

meet their anticipated cash flow obligations,

as well as special needs

and off-balance sheet commitments, in the

ordinary course of

business.

Management

also

that

as

of

March

31,

its

banking

have

current

and

projected resources

to address

a stress

event. Although

subsidiaries have

historically been

able to

replace maturing

deposits and advances, no assurance can

be given that they would

be able to replace those

funds in the future if

financial condition or general market conditions were

to deteriorate. The Corporation’s financial flexibility will be severely

constrained

if the banking subsidiaries are unable to

maintain access to funding or if

adequate financing is not available to

accommodate future

financing

needs

at

acceptable

rates.

The

banking

have

to

meet

margin

on

and

other

that

include

certain

levels

of

cash

and

qualifying

To

the

extent

that

the

value

of

previously

pledged

as

declines

below

such

amounts

because

of

market

changes,

the

is

to

deposit

cash

or

to

meet

its

margin

requirements, thereby adversely

affecting its

liquidity.

Finally,

to the

extent the

Corporation relies more

heavily on

more expensive

funding sources in order to meet its future growth, revenues

may not increase in a manner that is proportionate to cover these

costs.

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

effected.

monitors uninsured

deposits under

applicable FDIC

regulations.

Additionally,

monitors accounts

with balances over $250,000.

While the Corporation has a

diverse deposit base from retail, commercial,

corporate and government

clients,

as

well

as

wholesale funding

sources such

as

brokered deposits,

it

considers

balance

in

excess

of

$250,000 to

have a

higher

risk.

Table

reflects

the

balance

in

deposit

accounts

in

excess

of

$250,000,

collateralized public funds and deposits outside of the

U.S. and its territories.

Collateralized public funds, as presented in Table

14,

represent public

deposit balances

from governmental

entities in

and its

territories, including

and the

United

States Virgin Islands, collateralized based on such jurisdictions’

applicable collateral requirements.

On March 31,

2024, deposits with balances

in excess of

$250,000, excluding foreign deposits

(mainly deposits in

the British Virgin

Islands) intercompany

deposits and

collateralized public

funds, were

$ 10.3

billion or

19% at

BPPR and

$ 2.5

billion or

22% at

Popular U.S., compared to available liquidity sources

of $ 15.3 billion at BPPR and $ 5.1 billion

at Popular U.S.

Table 14 - Deposits

31-Mar-24

BPPR

(Consolidated)

Deposits balances under $250,000 [1]

$

24,111,245

%

$

7,912,597

%

$

32,023,842

%

Transactional deposits balances over

$250,000

8,119,072

%

2,093,183

%

10,212,255

%

Time deposits balances over $250,000

2,134,917

%

416,911

%

2,551,828

%

Uninsured foreign deposits

419,147

%

%

419,147

%

Collateralized public funds

18,307,794

%

293,918

%

18,601,712

%

Intercompany deposits

312,107

%

556,450

%

%

$

53,404,282

%

$

11,273,059

%

$

%

[1] Includes the first $250,000 in balances of transactional

and time deposit accounts with balances in excess

of $250,000.

31-Dec-23

BPPR

(Consolidated)

Deposits balances under $250,000 [1]

$

23,683,475

%

$

7,760,363

%

$

31,443,838

%

Transactional deposits balances over

$250,000

8,632,491

%

2,230,978

%

10,863,469

%

Time deposits balances over $250,000

1,926,005

%

361,315

%

2,287,320

%

Uninsured foreign deposits

418,334

%

%

418,334

%

Collateralized public funds

18,313,612

%

291,670

%

18,605,282

%

Intercompany deposits

159,163

%

626,312

%

%

$

53,133,080

%

$

11,270,638

%

$

%

[1] Includes the first $250,000 in balances of transactional

and time deposit accounts with balances in excess

of $250,000.

Bank Holding Companies

The principal

funding for

the BHCs,

which are

Inc.

(holding company

only) and

PNA, include

cash on

hand,

received from

banking

and

non-banking subsidiaries,

asset sales,

credit

available from

affiliate banking subsidiaries and proceeds from potential securities offerings.

Dividends from banking and non-banking subsidiaries

are subject to various regulatory limits

and authorization requirements that are further described

below and that may limit the

ability

of those subsidiaries to act as a source of

funding to the BHCs.

The

uses

of

these

funds

include

the

repayment

of

debt,

and

payments

to

holders

of

senior

debt

and

junior

deferrable

(related

to

trust

securities),

the

payment

of

to

common

stockholders,

repurchases of the Corporation’s securities and capitalizing its

banking subsidiaries.

The outstanding balance of notes

payable at the BHCs

amounted to $593 million at

March 31, 2024 and

$592 million at December

The contractual maturities of the BHCs notes payable

at March 31, 2024 are presented in Table 15.

Table 15

  • Distribution of BHC's Notes Payable by Contractual

Maturity

Year

$

394,285

198,353

Total

$

592,638

As of

BHCs had

cash and

money markets

investments totaling

$541 million

and borrowing

potential of

$228

million

from

its

secured

facility

with

BPPR.

The

BHCs’

continues

to

be

adequate

with

cash

on

hand,

investments and

other sources of

liquidity that are

expected to be

sufficient to

meet all

interest payments and

dividend obligations

for the

foreseeable future.

As indicated

15 above, the

BHC outstanding notes

payable relate to

$400 million in

7.25% Senior

Notes

due

(the “Notes”)

issued in

an

underwritten public

offering during

March

of

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

$45 million per quarter.

The BHCs have in

the past borrowed in the

corporate debt market primarily to finance

their non-banking subsidiaries and refinance

debt obligations. The issuance of corporate debt as

a source of funding is likely more

costly due to the fact that

two out of the three

principal credit

rating agencies

rate the

Corporation below

“investment grade”,

which affects

cost

and ability

to

raise

funds

in

the

capital

markets.

Factors

that

the

does

not

control,

such

as

the

outlook,

rate

volatility,

inflation, disruptions in

the debt market,

among others, could

also affect

its ability to

obtain funding. The

an

automatic

shelf

registration

statement

filed

and

effective

with

the

Securities

and

Exchange

Commission,

which

permits

the

Corporation to issue an unspecified amount of debt

or equity securities.

Non-Banking Subsidiaries

The

sources

of

funding

for

the

include

internally

generated

cash

flows

from

operations,

loan

sales, repurchase agreements, capital

injections and borrowed funds

from their direct

parent companies or the

holding companies.

The principal uses of funds for the non-banking

subsidiaries include repayment of maturing debt,

operational expenses and payment

of dividends to the

BHCs. The liquidity needs

of the non-banking subsidiaries

are minimal since most

of them are

funded internally

from operating cash flows or from intercompany borrowings

or capital contributions from their holding companies.

Dividends

2024, the Corporation declared cash dividends of

$0.62 per common share outstanding ($44.8

aggregate). The dividends for the

Corporation’s Series A preferred

stock amounted to $0.4

million. During the quarter

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

$6 million from Popular Securities and $7 million from its

non-banking subsidiaries.

Other Funding Sources and Capital

In addition

to cash

reserves held

at the

FRB that

totaled $

5.9 billion

the debt

securities portfolio

provides an

source

of

liquidity,

which

may

be

realized

through

either

sales,

borrowings

or

agreements.

The

debt

of

liquid

U.S.

debt

U.S.

agency

debt

U.S.

agency

and

U.S.

agency

that

can

be

used

to

raise

funds

in

the

repo

markets.

The

availability

of

the

would

be

subject

to

having

at

the

time

the

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

an

approved counterparty

in the

Federal Reserve’s

Standing Repo

Facility.

This

allows approved

counterparties to

participate in

daily auctions

Standing Repo

Facility for

up to

$500 billion

in aggregate

of overnight financing

using U.S.

Treasuries and

Agency MBS as collateral. The Corporation’s unpledged debt securities amounted

to $ 6.1 billion at March 31, 2024 and $ 4.6 billion

at December 31, 2023. A

substantial portion of these debt securities

could be used to

raise financing in the U.S.

money markets or

from secured lending sources, subject to changes in

their fair market value and customary adjustments (haircuts).

Additional liquidity may

be provided through

loan maturities, prepayments

and sales. The

loan portfolio can

also be used

to obtain

funding in the capital markets. In particular,

mortgage loans and some types of consumer loans, have

secondary markets which the

Corporation could use.

Off-Balance Sheet Arrangements and Other Commitments

In the ordinary course

of business, the Corporation

engages in financial transactions that

are not recorded on

the balance sheet or

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

provider of

financial services,

routinely enters

into commitments

with off-balance

sheet risk

to meet

needs of

its customers. These

commitments may include

loan commitments and

standby letters of

credit. These commitments

are

subject

to

the

same

credit

and

process

used

for

on-balance

sheet

instruments.

These

instruments

involve,

to

varying degrees, elements

of credit and

interest rate risk

in excess of

the amount recognized

in the statement

of financial position.

Note 20

to the

commitments to

extent credit

and

other non-credit commitments.

Other types

of off-balance

sheet arrangements

Corporation enters

in the

of business

include derivatives,

leases

and

of

guarantees,

indemnifications,

and

representation

and

warranties.

Refer

to

Note

to

the

Consolidated Financial Statements for information on operating leases and

to Note 19 to the

Consolidated Financial Statements for

a

detailed

related

to

the

under

credit

and

representation

and

warranties

arrangements.

The Corporation monitors its cash requirements, including

its contractual obligations and debt commitments.

FDIC Special Assessments

On

November

16,

2023,

the

Federal

Deposit

a

final

rule

that

imposes

a

special

in

March

2023,

of

the

systemic

risk

exception. In

this assessment,

the

an

$71.4

million, $45.3 million net of tax,

in the fourth quarter of 2023,

representing the full amount of the

estimated assessment at that time.

The

special

assessment

amount

and

collection

period

may

change

as

the

estimated

loss

is

periodically

adjusted

or

if

the

total

amount collected varies. As

a result, the Corporation

recorded an additional expense

of $14.3 million, $9.1

million net of tax,

in the

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

included in this Form 10-Q for additional information

of the FDIC Special Assessment.

Financial Information of Guarantor and Issuers of Registered

Guaranteed Securities

The Corporation (not

including any of

its subsidiaries, “PIHC”)

is the parent

holding company of

Popular North America

“PNA” and

has other subsidiaries through which it

conducts its financial services operations. PNA is

an operating, 100% subsidiary of Popular,

Inc.

Holding Company

(“PIHC”) and

is the

holding company

of its

wholly-owned subsidiaries:

Equity One,

Inc.

and PB,

PB’s wholly-owned subsidiaries Popular Equipment Finance,

LLC, Popular Insurance Agency, U.S.A., and E-LOAN, Inc.

PNA

has

issued

junior

by

PIHC

(together

with

PNA,

the

“obligor

group”)

purchased

by

statutory trusts

established by

the Corporation.

These debentures

were purchased

by the

statutory trust

using the

trust preferred securities issued to the public (referred to as

“capital securities”), together with the proceeds of the related issuances

of common securities of the trusts.

PIHC

fully

and

unconditionally

guarantees

the

junior

issued

by

PNA.

PIHC’s

to

make

a

guarantee payment may be satisfied by direct

payment of the required amounts to the

holders of the applicable capital securities or

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

by

the

trust

except

to

the

extent

such

trust

has

funds

for

such

payments.

If

PIHC

does

not

make

payments on the

debentures held by such

trust, such trust

will not pay

distributions on the applicable

capital securities and

will not

have

funds

for

such

payments.

PIHC’s

of

PNA’s

junior

is

unsecured

and

ranks

subordinate and junior in

right of payment to

all the PIHC’s other

liabilities in the same manner

as the applicable debentures as

set

forth in the applicable indentures; and equally with all other guarantees

that the PIHC issues. The guarantee constitutes a guarantee

of

payment

and

not

of

collection,

which means

that

the

guaranteed party

may

sue

the

guarantor to

enforce its

rights

respective guarantee without suing any other person

or entity.

The

sources

of

funding

for

PIHC

and

PNA

have

from

their

banking

and

subsidiaries, asset

sales and

the issuance

of debt

and equity.

As further

described below,

in the

Risk to

Liquidity

section, various statutory

provisions limit the

amount of dividends

an insured depository

institution may pay

to its holding

company

without regulatory approval.

summarized financial information

presents the financial

position of

the obligor

group, on a

combined basis

31, 2024 and

December 31, 2023,

and the results

of their operations

for the quarters

2024 and March

Investments in and

equity in the

earnings from the

other subsidiaries and

affiliates that are

not members of

the obligor group

have

been excluded.

The

summarized

of

the

obligor

group

is

presented

on

a

combined

basis

with

and

between

in

the

obligor

group

eliminated.

The

obligor

group's

amounts

due

from,

amounts

due

to

and

with subsidiaries

and

affiliates

have

been

separate

line

items,

if

they

are

material.

In

related

parties transactions are presented separately.

Table 16 - Summarized Statement

of Condition

Assets

Cash and money market investments

$

541,400

$

388,025

32,470

29,973

Accounts receivables from non-obligor subsidiaries

15,466

14,469

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

  • $51))

26,603

26,906

Investment in equity method investees

5,267

5,265

54,272

51,315

$

675,478

$

515,953

Liabilities and Stockholders' deficit

Accounts payable to non-obligor subsidiaries

$

7,953

$

7,023

592,638

592,283

130,379

114,660

Stockholders' deficit

(55,492)

(198,013)

Total liabilities and

stockholders' deficit

$

675,478

$

515,953

Table 17 - Summarized Statement

of Operations

For the quarters ended

Income:

Dividends from non-obligor subsidiaries

$

163,000

$

50,000

Interest income from non-obligor subsidiaries and affiliates

3,289

Earnings from investments in equity method investees

Other operating income

1,787

1,146

Total income

$

168,078

$

51,956

Expenses:

Services provided by non-obligor subsidiaries and affiliates

(net of

reimbursement by subsidiaries for services provided by parent

of

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

$

3,204

$

4,989

Other expenses

37,010

4,486

Total expenses

$

40,214

$

9,475

$

127,864

$

42,481

During the quarter ended March 31, 2024, the obligor

group recorded a $50.0 million of dividend

distributions from a non-

obligor subsidiary wich was recorded as a

reduction to the investment.

Risks to Liquidity

Total lines of credit outstanding, or available borrowing capacity under lines of credit are not necessarily

a measure of the total credit

on

a

basis.

These

lines

may

be

subject

to

requirements,

changes

to

the

value

of

the

collateral,

standards of

creditworthiness, leverage ratios

regulatory requirements, among

other factors.

Derivatives, such

as those

embedded

in

long-term

or

rate

swaps,

and

off-balance

sheet

exposures,

such

as

recourse,

performance bonds or

credit card

arrangements, are subject

to collateral requirements.

As their

increases, the collateral

requirements may increase, thereby reducing the

balance of unpledged securities.

The importance of

the Puerto Rico

market for the

Corporation is an

additional risk factor

that could affect

its financing activities.

In

the case

of a

deterioration in

the outlook

and/or credit

ratings of

its principal

markets and/or

due to

regulatory changes

and fiscal

conditions in

outside the

control of

the Corporation,

quality of

could be

affected and result in higher credit costs. These adverse events

could also affect the Corporation’s ability to obtain funding.

To

plan for the possibility of

such a scenario, management adopted contingency

plans to address events that could

limit or partially

limit important

funds that

are usually

fully available

for use.

These plans

call for

using alternate

funding mechanisms,

such as the

pledging of certain

asset classes and accessing

secured credit lines

and loan facilities

put in place

with the FHLB

and

the

FRB.

is subject

to

positive tangible

capital

requirements to

utilize secured

loan facilities

FHLB that

could

result

in

a

limitation

of

amounts

or

terms,

even

if

the

exceeds

well-capitalized

capital levels.

The credit

ratings of

Popular’s debt

obligations are

a relevant

factor for

liquidity because

they impact

ability to

borrow

in

the

capital

markets,

its

cost

and

access

to

funding

sources.

Credit

ratings

are

based

on

the

strength,

credit

quality and

concentrations in

the loan

portfolio, the

level and

volatility of

earnings, capital

adequacy,

the quality

of management,

geographic concentration

Rico, the

liquidity of

the balance

sheet, the

availability of

a significant

base of

core retail

and

commercial deposits, and the Corporation’s ability to access

a broad array of wholesale funding sources,

among other factors.

various

provisions

limit

the

amount

of

an

insured

depository

institution

may

pay

to

its

holding

company without

regulatory approval. A

member bank must

obtain the

approval of

Reserve Board

for any

dividend, if

the total of all dividends declared by the member

bank during the calendar year would exceed

the combined net income for that year

and the retained net income for

the preceding two years, net of

those years’ dividend activity,

less any required transfers to surplus

or to a

fund for the

retirement of any

preferred stock. In

addition, a member

bank may not

declare or pay

a dividend in

an amount

greater

than

its

undivided

profits

as

in

its

Report

of

Income,

unless

the

member

bank

has

the

approval of

Reserve Board. A

member bank also

may not permit

any portion of

its permanent capital

to be

withdrawn

unless the withdrawal has been approved by

the Federal Reserve Board. The ability of

a bank subsidiary to up-stream dividends to

its BHC

could thus

be impacted

by its

financial performance

and capital,

including tangible

and regulatory

capital, thus

potentially

limiting the

cash moving

up to

the BHCs

from

subsidiaries. This

could,

in turn,

affect

the BHCs

ability to

declare

on

its

common

and

stock,

its

or

meet

its

debt

obligations,

for

example.

During the quarter ended March 31, 2024, BPPR declared cash dividends

of $150 million to PIHC. As of March 31, 2024, BPPR can

declare a

dividend of

approximately $410

million without

prior approval

of the

Federal Reserve

Board due

to its

retained income,

declared

dividend

and

to

reserves

measurement

period.

Pursuant

to

the

listed

above, PB

may

not declare

or

pay

a dividend

without the

prior approval

of the

Federal Reserve

Board and

the

State

Department of Financial Services.

The Corporation’s banking subsidiaries have historically not

used unsecured capital market borrowings to finance its operations,

and

therefore are less sensitive to the level and

changes in the Corporation’s overall credit ratings.

Refer to the

Geographic and Government Risk section

of this MD&A for

some highlights on the

status of the Puerto

and the ongoing fiscal crisis.

Obligations Subject to Rating Triggers or Collateral Requirements

The

banking

do

not

issue

unsecured

senior

debt,

as

these

banking

are

funded

primarily with

deposits and

secured borrowings.

subsidiaries had

$7.8 million

in deposits

subject to rating triggers.

In addition,

certain mortgage servicing

and custodial agreements

that BPPR

has with

third parties

include rating covenants.

In the

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

escrow deposits and/or increase collateral levels

securing the recourse obligations.

As discussed

in Note

19 to

Statements, the Corporation

services residential mortgage

loans subject

to

credit

provisions.

Certain

require

the

to

post

to

secure

such

obligations if

the institution’s

required credit

ratings are

not maintained.

Collateral pledged

by the

Corporation to

secure recourse

to

$25.2

million

at

March

31,

The

could

be

to

post

collateral under the

agreements. Management expects that

it would be

able to meet

additional collateral requirements if

and when

needed. The requirements to post collateral under certain agreements or the loss of escrow deposits could reduce the Corporation’s

liquidity resources and impact its operating results.

Credit Risk

Geographic and Government Risk

The Corporation is exposed to geographic and government risk.

The Corporation’s assets and revenue composition by geographical

area and by business segment reporting are presented

in Note 32 to the Consolidated Financial Statements.

Commonwealth of Puerto Rico

A

significant portion

of

our financial

activities and

credit

exposure is

concentrated in

the

Commonwealth of

(“Puerto

Rico”), which has faced severe economic and fiscal

challenges in the past and may face additional

challenges in the future.

Economic Performance.

Puerto

economy suffered

a

severe and

prolonged recession

from

to

2017,

with real

gross national

product (“GNP”)

contracting approximately 15%

during this period.

In 2017, Hurricane

María caused significant

damage and destruction

across the

island, resulting in further economic contraction. Puerto Rico’s

economy has been gradually recovering since 2018, in

part aided by

the large amount

of federal disaster

relief and recovery

assistance funds injected

into the Puerto

Rico economy in

Hurricane María

recent natural

disasters. This

growth was

interrupted by

the economic

shock caused

by the

COVID-19

pandemic in 2020, but has since resumed, in part

aided by additional federal assistance from

pandemic-related stimulus measures.

The

latest

Puerto

Rico

Economic Activity

Index,

published

by

the

Economic

Development Bank

for

Puerto

Rico

(the

“Economic

Activity

Index”),

a

0.8%

year-over-year

decline

in

March

2024,

to

March

2023,

and

essentially

remained

unchanged from February

2024 to March

  1. The Economic

Activity Index is

a coincident indicator

of ongoing economic

but

not

a

direct

measurement of

real

GNP.

The

Puerto

Rico

Planning Board

estimates that

Puerto

real

GNP

grew

0.7%

during fiscal year 2023 (July 2022-June 2023)

and projects 2.8% real GNP growth for fiscal

year 2024 (July 2023-June-2024).

While the

economy has

not directly

tracked the

economy in

recent years,

many of

the external

factors

that impact

are affected

by the

policies and performance

of the

economy.

These external

factors include

of interest

rates and

the rate

of inflation.

Inflation in

the United

States, as

measured by the

Consumer Price Index (published by the U.S.

Bureau of Labor Statistics), increased 3.5% during

the 12-month period ended March

Inflation in Puerto Rico,

as measured by the

Puerto Rico Consumer Price

Index (published by the

Department of Labor and

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

decreased from a mid-2022 peak, as the Federal Reserve

implemented a series of benchmark interest

rate increases.

Fiscal Challenges.

As the

economy contracted, the

government’s public

debt rose

rapidly,

in part

from borrowing to

cover deficits

to pay

debt service,

pension benefits and

other government expenditures.

By 2016,

Rico government had

over $120

combined debt and unfunded pension liabilities, had

lost access to the capital markets, and was in

the midst of a fiscal crisis.

Puerto

escalating fiscal

and economic

challenges

and imminent

widespread defaults

in

its

public debt

prompted the

U.S.

Congress to

enact the

Oversight, Management,

and Economic

Stability Act

(“PROMESA”) in

June 2016.

PROMESA

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

instrumentalities and municipalities (collectively,

“PR Government Entities”). Pursuant

to PROMESA, the

Oversight Board will be

in

place

until

market

access

is

restored

and

balanced

budgets

are

produced

for

at

least

four

consecutive

years.

PROMESA

also

established two

mechanisms for

the restructuring

of the

obligations of

PR Government

Entities: (a)

Title III,

which provides

an in-

court process that incorporates many of the

powers and provisions of the U.S. Bankruptcy Code

and permits adjustment of a broad

range of obligations, and

(b) Title VI,

which provides for a

largely out-of-court process through which

modifications to financial debt

can be accepted by a supermajority of creditors

and bind holdouts.

Since 2017, Puerto Rico and several

of its instrumentalities have availed themselves

of the debt restructuring mechanisms of Titles

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

Development

Bank

for

Puerto

Rico,

the

Puerto

Rico

Sales

Tax

Corporation,

the

Puerto

Rico

Highways

and

Transportation

Authority,

and

the

Puerto

Rico

Industrial

Development

Company,

have

also

completed

debt

restructurings

under

Titles

III

or

VI

of

PROMESA.

While

the

majority

of

the

debt

has

already

been

restructured,

some

PR

Entities

still

face

fiscal

challenges.

For

example,

the

Puerto

Rico

Electric

Power

is

still

in

the

process of restructuring its debts under Title III of PROMESA.

Municipalities.

Puerto Rico’s fiscal and economic challenges have

also adversely impacted its municipalities. Budgetary subsidies to municipalities

have

gradually declined

in recent

years

and

were scheduled

to

be ultimately

eliminated by

fiscal year

as

part

of the

fiscal

measures required

by

the Oversight

Board. However,

past

years, the

Oversight Board

has

authorized and

funded

new

appropriations

and

to

offset

the

decline

in

intergovernmental

to

municipalities.

Beyond

those

sources

of

alternate funding, municipalities have

also received significant federal

disaster and COVID-relief funding in

recent years. According

to the

latest Puerto

Rico fiscal

plan certified

by the

Oversight Board,

taken together,

the funding

available to

municipalities in

the

near-term is substantial. The fiscal

plan notes, however, that

the desired progress to achieve

fiscal discipline and implement critical

reforms has not been achieved,

and that municipalities must work with

the Executive branch to analyze

the financial needs of

each

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

and other municipal and government

initiatives. Pursuant to

the fiscal plan,

once the transformational measures

and milestones related to

these initiatives are

achieved,

additional funding from the central government may be

made available to municipalities to improve fiscal

sustainability.

Municipalities

are

subject

to

PROMESA

and,

at

the

Board’s

request,

are

to

submit

fiscal

plans

and

annual

budgets

to

the

Board

for

its

review

and

approval.

They

are

also

seek

Board

to

issue,

or

modify

their

debts

and

to

enter

into

with an

value

of

$10

million

or

more.

With

the

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

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

restructuring process.

Exposure of the Corporation

The credit

quality of BPPR’s

reflects, among other

things, the

general economic conditions

Rico and

other

adverse conditions affecting Puerto

Rico consumers and businesses.

Deterioration in the Puerto

Rico economy has resulted

in the

past, and could

result in the future,

in higher delinquencies, greater

charge-offs and increased losses,

which could materially affect

our financial condition and results of operations.

direct exposure

to PR

Government Entities

totaled $388

million, of

which $363

million were

outstanding, compared

to

$362 million

at

2023, of

which $333

million

were outstanding.

A

deterioration in

Puerto

Rico’s fiscal and

economic situation could adversely

affect the value

of our Puerto

Rico government obligations, resulting

in losses

to

us.

Of

the

amount

outstanding,

$348

million

of

loans

and

$16

million

are

($314

million

and

$19

at

31,

2023).

Substantially

all

of

the

direct

outstanding at

March

31,

were

obligations from various

Puerto Rico municipalities.

In most

cases, these were

“general obligations” of

a municipality,

to which

the

applicable municipality

has

pledged its

good faith,

credit

and unlimited

taxing

power,

or “special

obligations” of

a municipality,

to

which the applicable municipality has pledged basic

property tax or sales tax revenues. At March 31, 2024,

78% of the Corporation’s

municipal loans

and securities

was concentrated

in the

municipalities of

San Juan,

Guaynabo, Carolina

and Caguas.

For

of

the

direct

to

the

Puerto

Rico

and

its

and

municipalities, refer to Note 20 – Commitments and

Contingencies to the Consolidated Financial

In addition, at March

31, 2024, the Corporation had

$233 million in loans

insured or securities issued by

Puerto Rico governmental

entities, but for

which the principal source

of repayment is

non-governmental ($238 million at December 31, 2023).

These included

$187 million in

residential mortgage loans insured

by the Puerto

Rico Housing Finance Authority

(“HFA”), a

PR Government Entity

(December 31, 2023 - $191 million). These mortgage loans are secured

by first mortgages on Puerto Rico residential properties and

the

HFA

covers

losses

in

the

event

of

a

borrower

default

and

upon

the

satisfaction

of

certain

other

conditions.

The

Corporation also

had

at

March

$39

million

in bonds

issued by

HFA

which

are secured

by

second

loans on

Puerto Rico residential properties, and for which HFA also provides insurance to

cover losses in the event of a borrower default, and

upon the satisfaction of certain

other conditions (December 31, 2023 - $40

million). In the event that

the mortgage loans insured by

HFA and held

by the Corporation directly or those serving

as collateral for the HFA

bonds default and the collateral is

satisfy the outstanding balance of these loans, HFA’s

ability to honor its insurance will depend, among other factors, on the financial

of

HFA

at

the

time

such

become

due

and

payable.

The

does

not

the

guarantee when estimating the credit losses associated

with this portfolio.

commercial loan

portfolio also

includes loans

to

private borrowers

who

are service

providers, lessors,

suppliers or

have

other relationships with the government. These borrowers could be negatively

affected by a deterioration in the fiscal and

situation

of

PR

Entities.

Similarly,

and

loan

include

loans

to

and

retirees,

which

could

also

be

by

fiscal

measures,

such

as

employee

layoffs

or

furloughs

or

reductions in pension benefits, if the fiscal and economic

situation deteriorates.

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

The

rate

at

which

public

deposit

may

decline is

uncertain and

difficult

to

predict.

The

amount

and

timing

of

any

such

reduction is

likely to

be impacted

by,

the speed

at which

federal assistance

is distributed

and the

liquidity and cash management practices of such entities,

as well as on the ability of BPPR to

maintain these customer relationships.

The

Corporation may

also have

direct

exposure with

regards to

avoidance and

other causes

of

action initiated

by the

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

United States Virgin Islands

The

has

in

the

United

States

Virgin

Islands

(the

“USVI”)

and

has

credit

to

USVI

entities.

The USVI has

been experiencing a

number of fiscal

and economic challenges,

which could adversely

affect the

ability of its

public

corporations and instrumentalities to service their outstanding

debt obligations. PROMESA does not apply to the USVI

and, as such,

there

is

no

federal

legislation

permitting

the

of

the

debts

of

the

USVI

and

its

public

corporations

and

instrumentalities.

To

the extent that

the fiscal condition

of the USVI

continues to deteriorate, the

U.S. Congress or the

Government of the

USVI may

enact legislation allowing for the restructuring of the

financial obligations of USVI government entities or imposing a

stay on creditor

remedies, including by making PROMESA applicable

to the USVI.

had approximately

$28 million

in direct

USVI government

entities (December 31,

2023 - $28 million).

British Virgin Islands

The

in

the

British Virgin

Islands

(“BVI”),

which

was

affected by

the

COVID-19

pandemic,

particularly as

a reduction

in the

tourism activity

which accounts

for a

significant portion

of its

economy.

Although the

has no

significant exposure to

a single

borrower in the

BVI, at

2024, it

has a

loan portfolio amounting

to approximately

$208 million comprised of various retail and commercial

clients, compared to a loan portfolio of $205 million

at December 31, 2023.

As further detailed in Notes

5 and 6 to the

Consolidated Financial Statements, a substantial portion of the

Corporation’s investment

represented exposure

to

the

U.S.

Government in

the

form

of

sponsored entities,

as

well

as

agency

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

were insured or guaranteed by

the U.S. Government or its

agencies at March 31, 2024

(compared to $1.9 billion and

$89.2 million,

respectively, at December 31, 2023).

Non-Performing Assets

Non-performing assets (“NPAs”)

include primarily past-due

loans that

are no

longer accruing interest,

renegotiated loans, and

real

estate property acquired through foreclosure. A summary, including certain credit

quality metrics, is presented in Table 18.

During

the

first

quarter

of

2024,

the

stable

credit

quality

when

to

the

previous

Non-

(“NPLs”) and

net charge

offs (“NCOs”)

remained below

historical averages

and delinquencies

improved in

most

loan categories from the prior quarter.

We continue to closely monitor changes in the macroeconomic environment and on borrower

given

higher

rates

and

inflationary

pressures.

However,

management believes

that

the

improvements over

recent years

in risk

management practices

and the

risk profile

of the

Corporation’s loan

portfolios position

Popular to

operate successfully under the current challenging

environment.

Total

NPAs

as of

2024 decreased

by $3

million when

compared with

  1. Total

non-performing loans

(“NPLs”)

by

$3

million

from

31,

NPLs

by

$30

broadly

across most

loan categories.

The commercial

NPLs decrease

includes a

$5.1 million

charge-off

a

previously

reserved $18

million relationship. Popular

US NPLs

$27 million,

a $17

million increase

in mortgage

NPLs,

impacted by a single loan. The Corporation has no

other credit exposure to this borrower.

On March 31,

2024 , the

ratio of NPLs

to total loans

held-in-portfolio was 1.0%,

flat when compared

to December 31,

  1. Other

real

estate

owned

loans

(“OREOs”)

remained

flat

from

On

March

31,

2024,

NPLs

secured

by

real

estate

amounted to $211 million in

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

respectively, on December 31, 2023.

The Corporation’s commercial loan

portfolio secured by real

estate (“CRE”) amounted to

$10.6 billion on

$3.1 billion was secured with owner occupied properties,

compared with $10.6 billion and $3.1 billion, respectively, on December 31,

  1. Office space

leasing exposure in

our non-owner occupied

CRE portfolio is

limited, representing only

1.8% or $633

our total loan portfolio.

The exposure is mainly comprised of low- to mid- rise properties with average

loan size of $2.0 million and is

well diversified across tenant type.

CRE NPLs amounted to $49 million on March 31,

2024, compared with $48 million on December 31, 2023. The CRE NPL

ratios for

the BPPR and Popular U.S.

segments were 0.72% and 0.26%,

respectively, on March

31, 2024, compared with 0.86% and

0.13%,

respectively, on December 31, 2023.

In addition

to the

NPLs included

18, on

2024, there were

$513 million

of performing

loans, mostly

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

  • $510 million).

2024, total inflows

of NPLs held-in-portfolio,

excluding consumer loans,

increased by $10

when compared to the inflows for the same period

in 2023. Inflows of NPLs held-in-portfolio at the

BPPR segment decreased by $17

to

the

same

period

in

2023,

mainly

driven

by

lower

and

inflows

by

$12

million

and

$5

million, respectively. Inflows of

NPLs held-in-portfolio at the Popular U.S. segment increased by $27 million

from the same period in

2023, mainly driven by higher mortgage and

commercial inflows by $17 million and $9

million, respectively.

Table 18 - Non-Performing

Assets

BPPR

Popular

U.S.

Inc.

As a % of

loans HIP

by

category

BPPR

Popular

U.S.

Inc.

As a % of

loans HIP

by

category

$

$

8,700

$

8,806

0.4

%

$

1,991

$

$

1,991

0.1

%

Commercial real estate non-owner

7,922

2,407

10,329

0.2

8,745

1,117

9,862

0.2

Commercial real estate owner

26,124

3,877

30,001

1.0

29,430

6,274

35,704

1.2

29,171

6,423

35,594

0.5

32,826

3,772

36,598

0.5

63,323

21,407

84,730

0.5

72,992

11,163

84,155

0.5

6,378

6,378

0.7

Leasing

7,267

7,267

0.4

8,632

8,632

0.5

166,473

28,071

194,544

2.5

175,106

11,191

186,297

2.4

3,986

3,986

6.0

3,733

3,733

5.7

19,092

2,068

21,160

1.1

19,031

2,805

21,836

1.1

Auto

41,807

41,807

1.1

45,615

45,615

1.2

0.4

0.6

61,531

6,055

67,586

1.0

65,610

6,539

72,149

1.0

Total non-performing

loans held-in-

298,594

55,533

354,127

1.0

%

328,718

28,893

357,611

1.0

%

Other real estate owned (“OREO”)

80,218

80,542

80,176

80,416

Total non-performing

assets

[1]

$

378,812

$

55,857

$

434,669

$

408,894

$

29,133

$

438,027

Accruing loans past due 90 days or

more

[2]

$

247,330

$

$

247,542

$

268,362

$

$

268,471

Ratios:

Non-performing assets to total assets

0.68

%

0.37

%

0.61

%

0.74

%

0.19

%

0.62

%

Non-performing loans held-in-portfolio

to loans held-in-portfolio

1.21

0.53

1.01

1.34

0.27

1.02

Allowance for credit losses to loans

2.62

0.91

2.11

2.61

0.85

2.08

Allowance for credit losses to non-

performing loans, excluding held-for-

sale

215.79

171.47

208.84

194.65

309.70

203.95

[1] There were no non-performing loans held-for-sale

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

[2] It is the Corporation’s policy to report delinquent

residential mortgage loans insured by FHA or guaranteed

by the VA as accruing

loans past due 90

days or

more as

opposed to

since the

principal repayment

is insured.

These balances

include $93

loans

insured

by

FHA

or

by

the

VA

that

are

no

longer

accruing

as

of

March

31,

31,

$106

has approximately

$37 million

in reverse

loans which

are guaranteed

by

FHA, but

which are

not

accruing

interest.

Due

to

the guaranteed

nature

of

the loans,

it is

policy

to

exclude

these

from

assets

(December 31, 2023 - $38 million).

Table 19 - Activity in Non

-Performing Loans Held-in-Portfolio (Excluding Consumer

Loans)

BPPR

$

254,476

$

22,354

$

276,830

Plus:

33,503

35,373

68,876

Less:

(4,109)

(4,109)

(8,309)

(950)

(9,259)

(45,765)

(7,321)

(53,086)

Ending balance -

NPLs

$

229,796

$

49,478

$

279,274

Table 20 - Activity in Non

-Performing Loans Held-in-Portfolio (Excluding Consumer

Loans)

BPPR

$

324,562

$

31,356

$

355,918

Plus:

50,613

8,531

59,144

Less:

(10,873)

(58)

(10,931)

(1,176)

(216)

(1,392)

(48,099)

(13,911)

(62,010)

Ending balance -

NPLs

$

315,027

$

25,767

$

340,794

Table 21 - Activity in Non

-Performing Commercial Loans Held-In-Portfolio

BPPR

$

72,992

$

11,163

$

84,155

Plus:

4,343

15,039

19,382

Less:

(7,999)

(950)

(8,949)

(6,013)

(3,865)

(9,878)

$

63,323

$

21,407

$

84,730

Table 22 - Activity in Non

-Performing Commercial Loans Held-In-Portfolio

BPPR

$

82,171

$

10,868

$

93,039

Plus:

16,594

5,719

22,313

Less:

(287)

(287)

(673)

(216)

(889)

(6,853)

(5,349)

(12,202)

$

90,952

$

11,048

$

102,000

Table

23 - Activity in Non-Performing Construction

Loans Held-In-Portfolio

BPPR

$

6,378

$

$

6,378

Less:

(6,378)

(6,378)

$

$

$

Table 24 - Activity in Non

-Performing Mortgage Loans Held-in-Portfolio

BPPR

$

175,106

$

11,191

$

186,297

Plus:

29,160

20,334

49,494

Less:

(4,109)

(4,109)

(310)

(310)

(33,374)

(3,456)

(36,830)

$

166,473

$

28,071

$

194,544

Table 25 - Activity in Non

-Performing Mortgage Loans Held-in-Portfolio

BPPR

$

242,391

$

20,488

$

262,879

Plus:

34,019

2,812

36,831

Less:

(10,586)

(58)

(10,644)

(503)

(503)

(41,246)

(8,562)

(49,808)

$

224,075

$

14,719

$

238,794

Loan Delinquencies

Another key measure used to evaluate and

monitor the Corporation’s asset quality is loan

delinquencies. Loans delinquent 30 days

or more, as a percentage of their related portfolio

category on March 31, 2024 and December 31, 2023,

are presented below.

Table 26 - Loan Delinquencies

Loans delinquent

30 days or more

Total delinquencies

as a percentage

of total loans

Loans delinquent

30 days or more

Total delinquencies

as a percentage

of total loans

$

33,651

$

1.41

%

$

13,657

$

0.57

%

Commercial real estate

non-owner occupied

18,089

0.36

17,051

0.34

Commercial real estate

62,177

1.99

69,239

2.25

62,536

0.89

58,953

0.83

176,453

1.00

158,900

0.90

8,825

0.87

6,378

959,280

0.66

Leasing

31,955

1.81

35,491

2.05

[1]

800,456

10.28

859,537

11.17

46,420

4.06

46,436

4.09

5,455

66,717

8.18

5,465

65,953

8.29

56,988

3.00

59,682

3.07

Auto

143,184

3.86

173,119

4.73

Other

2,112

162,605

1.30

3,063

160,441

1.91

254,159

3.64

287,765

4.13

5,352

4,301

Total

$

1,271,848

$

3.62

%

$

1,348,071

$

3.84

%

[1]

Loans delinquent 30 days or more includes $0.4 billion

of residential mortgage loans insured by FHA or guaranteed

by the VA as of March

31,

2024 (December 31, 2023 - $0.5 billion). Refer to Note

7 to the Consolidated Financial Statements for additional

information of guaranteed loans.

Allowance for Credit Losses Loans Held-in-Portfolio

The ACL,

represents management’s

estimate of

expected credit

losses through

the remaining

contractual life

of the

different loan

segments, impacted by expected prepayments. The ACL

is maintained at a sufficient

level to provide for estimated credit

losses

on

collateral dependent loans as well as loans modified

for borrowers with financial difficulties separately from the remainder

of the loan

portfolio. The Corporation’s

management evaluates the adequacy

of the ACL

on a quarterly

basis. In this

evaluation, management

considers current

conditions, macroeconomic

economic expectations through

a reasonable

and supportable

period, historical

loss

experience,

portfolio composition

by

loan

type

and

risk

characteristics,

results

of

periodic credit

reviews

of

loans,

and

regulatory requirements, amongst other factors.

The Corporation must rely on

estimates and exercise judgment regarding matters where

the ultimate outcome is unknown,

such as

economic developments affecting specific

customers, industries, or markets.

Other factors that can

affect management’s estimates

are

recalibration

of

statistical

models

used

to

calculate

lifetime

losses,

changes

in

underwriting

standards,

accounting standards and loan impairment measurements,

among others. Changes in the financial condition

of individual borrowers,

in economic

conditions, and

in the

condition of

the various

markets in

which collateral

may be

sold, may

also affect

the required

the allowance

losses. Consequently,

the business

liquidity,

capital, and

results of

could also be affected.

On March 31, 2024, the ACL increased by $10 million from December

31, 2023, to $740 million. The ACL for BPPR increased by $4

driven

by

higher

reserves

for

the

attributable

to

changes

in

credit

quality.

In

PB,

the

ACL

increased by $6 million, when compared to December 31, 2023, mainly

driven by higher reserves for the commercial portfolio due to

changes

in

credit

risk

ratings.

The

ratio

of

the

allowance for

credit

losses

to

loans

held-in-portfolio was

2.11%

on

2024, compared to

2.08% on December

The ratio

of the

allowance for credit

losses to

NPLs held-in-portfolio

stood at 208.8%, compared to 204.0% on December

Given that any one

economic outlook is inherently uncertain, the

Corporation leverages multiple scenarios to estimate

its ACL. The

baseline scenario continues to be assigned the highest probability,

followed by the pessimistic scenario. The weight assigned to the

pessimistic

scenario

during

the

first

quarter

of

in

response

to

the

positive

momentum

in

the

economy

as

expectations for

Reserve achieving

a soft

landing have

improved. The

Corporation evaluates,

at least

on an

annual

basis, the assumptions tied to the CECL accounting framework. These include

the reasonable and supportable period as well as the

reversion window.

The

annualized GDP

the

improved to

2.0%

and

2.3%

for

Puerto

Rico

and

the

United

States,

respectively, compared to 1.2% and 1.7%

in the previous quarter. The 2024 forecasted average unemployment rate for

and the United States remained stable at 6.5%

and 3.9%, respectively, compared to 6.8% and 4.0% in previous forecast.

The provision for credit losses for the period ended March 31,

2024, was $72.4 million, compared to an expense of $47.1 million

for

the period

2023, mostly related

NCOs due to

credit normalization. Refer

to Note

8 to

Financial Statements, and to the Provision for Credit

Losses section of this MD&A for additional information.

Table 27 - Allowance for Credit

Losses - Loan Portfolios

Total ACL

Total loans held-

ACL to loans held-

Total non-

ACL to non-

$

12,743

$

0.53

%

8,806

144.71

%

65,624

1.30

%

10,329

635.34

%

63,807

2.05

%

30,001

212.68

%

120,418

1.71

%

35,594

338.31

%

$

262,592

$

1.49

%

84,730

309.92

%

11,139

1.10

%

N.M.

Leasing

8,991

0.51

%

7,267

123.72

%

86,438

1.11

%

194,544

44.43

%

88,169

7.72

%

N.M.

1,872

66,717

2.81

%

3,986

46.96

%

116,077

6.12

%

21,160

548.57

%

Auto

157,456

4.25

%

41,807

376.63

%

6,810

162,605

4.19

%

1,075.83

%

$

370,384

$

5.31

%

67,586

548.02

%

Total

$

739,544

$

2.11

%

354,127

208.84

%

N.M - Not meaningful.

Table 28 - Allowance for Credit

Losses - Loan Portfolios

Total ACL

Total loans held-

ACL to loans held-

Total non-

ACL to non-

$

13,740

$

0.57

%

1,991

690.11

%

65,453

1.29

%

9,862

663.69

%

56,864

1.85

%

35,704

159.27

%

122,356

1.72

%

36,598

334.32

%

$

258,413

$

1.46

%

84,155

307.07

%

12,686

959,280

1.32

%

6,378

198.90

%

Leasing

9,708

0.56

%

8,632

112.47

%

83,214

1.08

%

186,297

44.67

%

80,487

7.09

%

N.M.

1,978

65,953

3.00

%

3,733

52.99

%

117,790

6.06

%

21,836

539.43

%

Auto

157,931

4.31

%

45,615

346.23

%

7,134

160,441

4.45

%

739.27

%

$

365,320

$

5.24

%

72,149

506.34

%

Total

$

729,341

$

2.08

%

357,611

203.95

%

N.M - Not meaningful.

Annualized net charge-offs (recoveries)

annualized net charge-offs

(recoveries) to average

loans held-in-portfolio (“HIP”)

by loan

category for

the quarters ended March 31, 2024 and 2023.

Table 29

  • Annualized Net Charge-offs (Recoveries) to

Average Loans Held-in-Portfolio

BPPR

BPPR

0.30

%

0.04

%

0.18

%

(0.06)

%

(0.13)

%

(0.09)

%

(0.28)

(0.01)

(0.23)

(0.26)

―

(0.22)

Leasing

0.85

―

0.85

0.08

―

0.08

2.98

8.43

3.16

2.31

4.81

2.43

Total annualized

net charge-offs to

average loans held-in-portfolio

0.92

%

0.21

%

0.71

%

0.56

%

0.06

%

0.41

%

NCOs for the quarter ended March 31, 2024, amounted to $62 million, increasing by $29 million when compared to the same period

in 2023. The BPPR

segment increased by $25

million mainly driven by

higher consumer and commercial NCOs

by $14 million and

$8

NCOs

is

reflective

of

post-pandemic

credit

normalization

The

PB

segment

NCOs

increased by $4 million, mainly driven by higher

commercial NCOs by $3 million.

Loan Modifications

For the

2024, modified

loans to

borrowers with

financial difficulty

$92 million,

$83

million were

in accruing

status. The

BPPR segment’s

modifications to

borrowers with

financial difficulty

$92 million,

mainly

of

and

loans

of

$73

million

and

$16

A

total

of

$11

million

of

the

mortgage modifications were related to

government guaranteed loans. The Popular

U.S. segment’s modifications to borrowers

with

financial difficulty amounted to $188 thousand, mostly

comprised of personal loans.

Refer

to

Note

to

the

for

on

modifications

made

to

experiencing financial difficulties.

ADOPTION OF NEW ACCOUNTING STANDARDS AND ISSUED BUT NOT

YET EFFECTIVE ACCOUNTING STANDARDS

Refer to Note 3, “New Accounting Pronouncements”

Market Risk

Quantitative and qualitative disclosures for the current

period can be found in the Market Risk

section of this report, which includes

changes in market risk exposures from disclosures

presented in the 2023 Form 10-K.

Disclosure Controls and Procedures

The Corporation’s management,

participation of the

Corporation’s Chief Executive

Officer and Chief

Financial Officer,

has

evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and

15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based

on such evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that,

as of the end of such

period, the Corporation’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a

timely basis,

information required to

be disclosed

by the

Corporation in

the reports

that it

files or

submits under

the Exchange Act

and

such

is

accumulated

and

communicated

to

management,

as

appropriate,

to

allow

timely

decisions

regarding

required disclosures.

Internal Control Over Financial Reporting

There have been no changes in the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a-15(f)

and 15d-15(f) under the Exchange Act)

that occurred during the quarter ended March

31, 2024 that have materially affected,

or are

reasonably likely to materially affect, the Corporation’s internal control

over financial reporting.

Part II - Other Information

For a discussion of Legal Proceedings, see Note 20

In addition to the other information set forth in

this report, you should carefully consider the risk

factors discussed under “Part I - Item

1A - Risk Factors” in our 2023 Form

10-K. These factors could materially adversely affect our business, financial condition, liquidity,

results of

operations and

capital position,

and could

cause our

actual results

to

differ

materially from

our historical

results or

the

results contemplated

by the

forward-looking statements

contained in

this report.

Also refer

to the

discussion in

“Part I

  • Item

2 –

Management’s Discussion

and Analysis

of Financial

Results of

Operations” in

this report

that may supplement or update the discussion

of risk factors below and in our 2023 Form 10-K.

There have been no material changes to the risk

factors previously disclosed under Item 1A of the

Corporation’s 2023 Form 10-K.

The risks described

in our 2023 Form

10-K and in

this report are not

the only risks

facing us. Additional risks

and uncertainties not

known

to

us

or

that

we

deem

to

be

immaterial

also

may

materially

affect

our

business,

condition, liquidity, results of operations and capital position.

Unregistered Sales of Equity Securities and

Use of Proceeds

The Corporation did not have any unregistered

sales of equity securities during the quarter ended March

Issuer Purchases of Equity Securities

table sets

forth the

details of

purchases of

Common Stock

by the

Corporation during

31,

2024:

Issuer Purchases of Equity Securities

Not in thousands

Period

Total Number of

Shares Purchased [1]

Average Price Paid per

Share

Total Number of

Shares

Purchased as Part of Publicly

Announced Plans or Programs

Approximate Dollar Value of

Shares that May Yet be

Purchased Under the Plans or

Programs

January 1 - January 31

$

$-

February 1 - February 29

83.46

March 1 - March 31

42,092

83.47

Total

42,651

$

83.47

[1]

Includes

and

42,092

shares

of

the

common

stock

acquired

by

the

during

February

and

March

2024,

in connection

satisfaction of

tax withholding

obligations on

vested awards

of restricted

stock or

units granted

to

directors and certain

employees under

Omnibus Incentive

Plan. The acquired

shares of common

stock were added

back to treasury

stock.

Defaults Upon Senior Securities

None.

Mine Safety Disclosures

Not applicable.

Rule 10b5-1 Trading Plans or Other Preplanned Trading Arrangements

Certain of our

officers or directors have

made, and may from

time to time make,

elections to

participate in

, and are

participating in,

our dividend reinvestment and purchase plan, the

Company stock fund associated with our 401(k)

plans and/or the Company stock

fund associated with

our non-qualified deferred compensation

plans and have shares

withheld to cover

withholding taxes upon the

vesting of

equity awards, which

may be

designed to satisfy

the affirmative defense

conditions of

Rule 10b5-1 under

the Exchange

Act or may constitute non-Rule 10b5–1

trading arrangements

(as defined in Item 408(c) of Regulation

S-K).

Exhibits

Exhibit Index

Exhibit No

Exhibit Description

10.1

Form of Popular, Inc. 2024 Long-Term Equity Incentive Award and Agreement

(1)

22.1

Issuers of Guaranteed Securities (Incorporated by reference to Exhibit 22.1 of Popular, Inc.’s Annual

Report on Form 10-K for the year ended December 31, 2023)

31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(1)

31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(1)

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002

(1)

32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002

(1)

  1. INS

XBRL Instance Document – the instance document does not

appear in the Interactive Data File because

its XBRL tags are embedded within the Inline Document.

101.SCH

Inline Taxonomy Extension Schema Document

(1)

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

(1)

101.DEF

Inline XBRL Taxonomy Extension Definitions Linkbase Document

(1)

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

(1)

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

(1)

The cover page of Popular, Inc. Quarterly Report on Form 10-Q for the

quarter ended March 31, 2024,

formatted in Inline XBRL (included within the Exhibit

101 attachments)

(1)

(1)

Included herewith

Popular, Inc. has not filed as exhibits certain instruments defining

the rights of holders of debt of Popular, Inc. not

exceeding 10% of the total assets of Popular, Inc. and its consolidated

subsidiaries. Popular, Inc. hereby agrees to

furnish upon request to the Commission a copy of

each instrument defining the rights of holders

of senior and

subordinated debt of Popular, Inc., or of any of its consolidated

SIGNATURES

Pursuant to the

requirements of the Securities Exchange

Act of 1934, the

registrant has duly caused this

report to be signed

on its

behalf by the undersigned thereunto duly authorized.

(Registrant)

Date: May 10, 2024

By: /s/ Jorge J. García

Jorge J. García

Executive Vice President &

Chief Financial Officer

Date: May 10, 2024

By: /s/ Denissa M. Rodríguez

Denissa M. Rodríguez

Senior Vice President & Corporate Comptroller

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