Popular, Inc. Announces Second Quarter 2018 Financial Results

Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported a net income of $279.8 million and an adjusted net income of $121.3 million for the second quarter ended June 30, 2018, compared to a net income of $91.3 million for the quarter ended March 31, 2018.

Ignacio Alvarez, President and Chief Executive Officer, said: “We are very pleased with the results for the second quarter. In addition to achieving a successful termination of our shared-loss agreements with the FDIC, we produced excellent financial results. These results were primarily driven by strong top line revenue growth in our Puerto Rico franchise, where the economy continues to recover from the impact of Hurricane Maria. We look forward to closing the acquisition of Wells Fargo’s auto loan business in Puerto Rico in the third quarter, which will contribute favorably to our earnings in the second half of the year.”

Significant Events

Early Termination of FDIC Shared-Loss Agreements

On May 22, 2018, Banco Popular de Puerto Rico, (“Banco Popular” or “BPPR”), Popular’s Puerto Rico banking subsidiary, entered into a Termination Agreement (the “Termination Agreement”) with the Federal Deposit Insurance Corporation (the “FDIC”) to terminate all Shared-Loss Agreements in connection with the acquisition of certain assets and assumption of certain liabilities of Westernbank Puerto Rico through an FDIC-assisted transaction in 2010 (the “FDIC Transaction”).

As a result of the Termination Agreement, assets that were covered by the Shared-Loss Agreements, including covered loans in the amount of approximately $514.6 million and covered real estate owned assets in the amount of approximately $15.3 million as of March 31, 2018, were reclassified as non-covered. Banco Popular now recognizes entirely all credit losses, expenses, gains, and recoveries related to the formerly covered assets with no offset due to or from the FDIC.

As of March 31, 2018, the Corporation had an FDIC Loss Share Asset in its financial statements of $44.5 million related to the covered assets. Additionally, as part of the Shared-Loss Agreements, Banco Popular also had agreed to make a true-up payment to the FDIC on the date that is 45 days following the last day of the final shared-loss month, or upon the final disposition of all covered assets under the Shared-Loss Agreements, in the event losses on the Shared-Loss Agreements failed to reach expected levels. The estimated fair value of such true-up payment obligation at March 31, 2018 was approximately $171.0 million.

Under the terms of the Termination Agreement, Banco Popular made a payment of approximately $23.7 million, (the “Termination Payment”) to the FDIC as consideration for the termination of the Shared-Loss Agreements. Popular recorded a pre-tax gain of approximately $94.6 million, calculated based on the difference between the Termination Payment and the net amount of the true-up payment obligation and the FDIC Loss Share Asset, less related professional and advisory fees associated with the Termination Agreement. Net of income tax expense of $45.0 million, the Termination Agreement contributed $49.6 million to net income.

In June 2012, the Puerto Rico Department of the Treasury and the Corporation entered into a Tax Closing Agreement (the “Tax Closing Agreement”) to clarify the tax treatment related to the loans acquired in the FDIC Transaction in accordance with the provisions of the Puerto Rico Tax Code. The Tax Closing Agreement provides that these loans are capital assets and any principal amount collected in excess of the amount paid for such loans will be taxed as a capital gain. The Tax Closing Agreement further provides that the Corporation’s tax liability upon the termination of the Shared-Loss Agreements be calculated based on the “deemed sale” of the underlying loans. As a result, the Corporation recognized an income tax benefit of $108.9 million during the second quarter of 2018. This income tax benefit is composed of an increase in the deferred tax asset balance of $158.7 million related to the increase in tax basis as a result of the “deemed sale”, net of the additional income tax expense of $49.8 million associated with the “deemed sale” incremental tax liability at the capital gains rate per the Tax Closing Agreement.

The combined effect of the Termination Agreement and the Tax Closing Agreement was a contribution of $158.5 million to net income for the quarter ended June 30, 2018.

Acquisition of Wells Fargo’s Auto Finance Business in Puerto Rico

On February 14, 2018, Popular announced that Banco Popular agreed to acquire certain assets and liabilities related to Wells Fargo’s auto finance business in Puerto Rico. On May 31, 2018 Popular filed a notice with the Board of Governors of the Federal Reserve System in order for Popular Auto, LLC, BPPR’s direct, wholly-owned subsidiary, to be permitted to consummate the transaction. On July 5, 2018, Popular announced the completion of such regulatory clearance process. Popular also announced that the parties have agreed to close the transaction on August 1, 2018, subject to the satisfaction or waiver of customary closing conditions.

Earnings Highlights
(Unaudited)		Quarters ended												Six months ended
(Dollars in thousands, except per share information)		30-Jun-18				31-Mar-18				30-Jun-17				30-Jun-18				30-Jun-17
Net interest income		$414,136				$393,047				$	374,479			$	807,183			$	736,577
Provision for loan losses		60,054				69,333					49,965				129,387				92,022
Provision for loan losses - covered loans [1]		-				1,730					2,514				1,730				1,155
Net interest income after provision for loan losses		354,082				321,984					322,000				676,066				643,400
FDIC loss-share income (expense)		102,752				(8,027		)			(475	)			94,725				(8,732	)
Other non-interest income		132,057				121,524					117,268				253,581				241,394
Operating expenses		337,668				322,002					306,835				659,670				618,153
Income before income tax		251,223				113,479					131,958				364,702				257,909
Income tax (benefit) expense		(28,560		)		22,155					35,732				(6,405	)			68,738
Net income		$279,783				$91,324				$	96,226			$	371,107			$	189,171
Net income applicable to common stock		$278,852				$90,393				$	95,295			$	369,245			$	187,309
Net income per common share - Basic		$2.74				$0.89				$	0.94			$	3.63			$	1.83
Net income per common share - Diluted		$2.73				$0.89				$	0.94			$	3.62			$	1.83
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that were covered under the FDIC loss-sharing agreements, terminated on May 22, 2018.

Adjusted results – Non-GAAP

The Corporation prepared its Consolidated Financial Statement using accounting principles generally accepted in the U.S. (“U.S. GAAP” or the “reported basis”). In addition to analyzing the Corporation’s results on the reported basis, management monitors the “Adjusted net income” of the Corporation and excludes the impact of certain transactions on the results of its operations. Management believes that “Adjusted net income” provides meaningful information to investors about the underlying performance of the Corporation’s ongoing operations. “Adjusted net income” is a non-GAAP financial measure.

No adjustments are reflected for the first quarter of 2018.

(Unaudited)
(In thousands)		30-Jun-18
		Pre-tax			Income tax effect			Impact on net income
U.S. GAAP Net income								$	279,783
Non-GAAP Adjustments:
Termination of FDIC Shared-Loss Agreements[1]		(94,633	)		45,059				(49,574	)
Tax Closing Agreement[1]		-			(108,946	)			(108,946	)
Adjusted net income (Non-GAAP)								$	121,263
[1]Refer to the Significant Events section above for additional information.

Net interest income

Net interest income for the quarter ended June 30, 2018 was $414.1 million, compared to $393.0 million for the previous quarter. Net interest margin was 3.81% for the quarter compared to 3.89% for the previous quarter. The presentation of net interest income has been adjusted for the second quarter of 2018 to present the income from the loans acquired from Westernbank (“WB Loans”) in their respective loan segments. Previously, the Corporation presented the income associated with the WB Loans aggregated into a single line in its analysis of average balances and yields (Tables D and E). The presentation for prior periods has been adjusted accordingly, for comparative purposes.

The increase of $21.1 million in net interest income was mainly the result of the following:

Positive variances:

• Higher income from money market, trading and investments by $15.1 million due to a higher average volume of funds available to invest as a result of higher balance of deposits at BPPR, from public, retail and commercial depositors, and a higher yield by 6 basis points as a result of the increase in interest rates by 25 basis points late in the first quarter and in mid-June 2018
• higher income from commercial loans by $4.7 million, or 6 basis points, due to higher yields, mostly in variable rate loans, as a result of increases in market interest rates, loan growth in Popular Bank (“Popular U.S.”) in a higher interest rate environment and one additional day in the quarter
• higher income from mortgage loans by $1.9 million, or 8 basis points, due mainly to higher yields related to fees collected on delayed loans payments that had been forgiven last quarter due to the moratorium granted as part of the Corporation’s hurricane relief efforts; and
• higher income from consumer loans by $5.0 million, or 42 basis points, due to the reserve for uncollectible interest and fees of $3.5 million recorded for credit cards during the first quarter and higher average balances and yields in the auto loan portfolio.

Negative variance:

• higher cost of interest-bearing deposits by $6.5 million, or 4 basis points, due mainly to higher average balances in NOW and money market and savings accounts, impacted primarily by public sector deposits and U.S. deposits to fund loan growth, partially offset by lower cost of time deposits.

BPPR’s net interest income amounted to $352.7 million for the quarter ended June 30, 2018, compared to $332.3 million in the previous quarter. The increase of $20.4 million in net interest income was mainly due to higher income from money market, trading and investment securities resulting from higher volumes and yields, as previously stated. Higher yields on the commercial and mortgage loan portfolios were mostly due to the increase in market rates and the end of the moratorium period during the first quarter. Higher income from the credit cards portfolio, due to the reserve for uncollectible interests and fees recorded in the first quarter, also contributed to the increase. These positive results were partially offset by higher interest expense on deposits. The net interest margin for the second quarter of 2018 was 4.07%, a decline of 7 basis points when compared to 4.14% for the previous quarter. The decrease in net interest margin was due to the composition of earning assets, which has shifted towards lower yielding assets as a result of higher balances of Fed Funds and investment securities. BPPR’s earning assets yielded 4.43%, compared to 4.49% in the previous quarter, while the cost of interest bearing deposits was 0.49%, or two basis points higher than the 0.47% reported in the previous quarter.

Net interest income for Popular U.S. was $75.5 million, for the quarter ended June 30, 2018, compared to $75.0 million during the previous quarter. The increase of $0.5 million in net interest income was mainly due to higher volume and yields on commercial and construction loans, partially offset by the related funding costs. Net interest margin for the quarter decreased 14 basis points to 3.47%, compared to 3.61% for the previous quarter. The decrease in net interest margin was mostly due to higher cost of deposits by $3.5 million, or 17 basis points as a result of an increase in deposits mostly raised through the U.S. online deposit platform. Popular U.S. earning assets yielded 4.44%, compared to 4.45% in the previous quarter, while the cost of interest bearing deposits was 1.17%, compared to 1.00% in the previous quarter.

Non-interest income

Non-interest income amounted to $234.8 million for the quarter ended June 30, 2018, compared to $113.5 million for the previous quarter. The increase of $121.3 million was mainly due to the gain of $102.8 million recorded during the second quarter as a result of the Termination Agreement with the FDIC. Excluding the favorable variance on the FDIC loss-share income (expense) of $110.8 million, non-interest income increased by $10.5 million primarily driven by:

• Higher other service fees by $2.3 million, mainly at BPPR, resulting from higher credit card interchange income due to higher transactional volumes and higher insurance fees due to policy renewals;
• favorable variance in adjustments to indemnity reserves of $2.4 million related to loans previously sold with credit recourse at BPPR; and
• higher other operating income by $6.1 million mainly due to modification fees received from FNMA for the successful completion of loss mitigation alternatives related to hurricane relief measures of $2.7 million and higher net earnings from the portfolio of investments under the equity method by $3.3 million.

These positive variances were partially offset by:

• Lower income on mortgage banking activities by $2.0 million mainly due to lower realized gains on closed derivatives positions by $3.3 million, partially offset by higher gains on securitization transactions by $1.4 million.

Refer to Table B for further details.

Operating expenses

Operating expenses amounted to $337.7 million for the second quarter of 2018, an increase of $15.7 million when compared to the first quarter of 2018. The most notable variances within operating expenses were the following:

• Higher professional fees by $10.9 million mainly due to professional and advisory expenses associated with the Termination Agreement with the FDIC of $8.1 million;
• higher business promotions by $4.8 million due to higher customer reward program expense and higher advertising costs at BPPR; and
• higher credit and debit card processing, volume, interchange and other expenses by $5.0 million as a result of a contingent incentive payment received by BPPR during the first quarter of 2018 for exceeding volume targets.

These increases were partially offset by:

• Lower personnel cost by $1.5 million due to lower commission, incentives and other bonuses; and
• lower other operating expenses by $4.1 million mainly due to lower provision for unused commitments by $2.6 million and lower sundry losses.

Full-time equivalent employees were 7,958 as of June 30, 2018, compared to 7,808 as of March 31, 2018. Increase in FTEs mainly related to summer internship programs, post-hurricane loan modification support and retail banking units.

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

Income taxes

For the quarter ended June 30, 2018, the Corporation recorded an income tax benefit of $28.6 million, compared to an income tax expense of $22.2 million for the previous quarter. As previously mentioned, the results for the second quarter include a pre-tax gain of $94.6 million resulting from the Termination Agreement with the FDIC and the related income tax expense of $45.0 million. The results also include an income tax benefit of $108.9 million related to the Tax Closing Agreement entered into in connection with the FDIC Transaction. Excluding the combined impact of these items, the income tax expense for the second quarter was $35.3 million, an effective tax rate of 23%, and an increase of approximately $13.0 million when compared to the first quarter of 2018, mainly due to higher taxable income.

The effective tax rate of the Corporation is impacted by the composition and source of its taxable income. For the year 2018, the Corporation expects its consolidated effective tax rate to be approximately 22%.

Credit Quality

The P.R. market continues to show signs of recovery after the devastation caused by Hurricanes Irma and María approximately 10 months ago. The second quarter results reflect some normalization, with some of the metrics near or better than pre-hurricane levels. Nonetheless, the Corporation continues to closely monitor its loan portfolios and related credit metrics, since uncertainties remain regarding Puerto Rico’s fiscal and economic outlook and the full effect of the hurricanes. The U.S. operation continued to reflect strong growth and favorable credit quality metrics, except for the U.S. taxi medallion portfolio acquired from the FDIC in the assisted sale of Doral Bank, which continues to reflect the pressure on medallion collateral values, particularly in the New York City metro area.

The following presents asset quality results for the second quarter of 2018. These results include the impact of the loans previously classified as “covered” as a result of the Shared-Loss Agreements entered into in connection with the FDIC Transaction and recently terminated pursuant to the Termination Agreement.

• Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $50.8 million quarter-over-quarter, mainly driven by higher inflows in the P.R. commercial and U.S. construction portfolios of $39.3 million and $17.9 million, respectively. The increase in the P.R. commercial portfolio was driven by two borrowers with an aggregate amount of $45.5 million. P.R. mortgage inflows remained stable after experiencing a significant increase in the previous quarter, prompted by the end of the payment moratorium. The increase in the U.S. construction portfolio was driven by a single borrower.
• Total non-performing loans held-in-portfolio increased by $36.4 million from the first quarter of 2018, driven by higher U.S. construction and P.R. mortgage NPLs of $17.9 million and $15.3 million, respectively. The U.S. construction NPL increase was driven by a single borrower. The P.R. mortgage NPLs increase was driven by loans which failed to make a payment after the end of the moratorium. The P.R. mortgage NPLs quarter-over-quarter increase includes $3.4 million related to loans previously classified as covered. At June 30, 2018, the ratio of NPLs to total loans held-in-portfolio was 2.6%, compared to 2.5% in the first quarter of 2018.
• Net charge-offs increased by $5.1 million from the first quarter of 2018, driven by higher P.R. commercial NCOs, mostly related to loans reserved in prior quarters. The Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was at 0.95%, compared to 0.90% in the first quarter of 2018. Refer to Table J for further information on net charge-offs and related ratios.
• The allowance for loan losses increased by $36.1 million from the first quarter of 2018 to $643.0 million. The P.R. segment ALLL increased by $33.6 million, principally driven by the reclassification of the allowance from loans previously classified as covered. The U.S. segment ALLL increased by $2.5 million when compared to the previous quarter, primarily related to the U.S. taxi medallions portfolio.
• The general and specific reserves totaled $523.7 million and $119.3 million, respectively, at quarter-end, compared with $490.0 million and $117.0 million, respectively, as of March 31, 2018. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.61% in the second quarter of 2018, compared to 2.52% from the previous quarter. The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 100.0%.
• The provision for loan losses for the second quarter of 2018 decreased by $9.3 million. The P.R. provision decreased by $12.3 million, which includes a downward adjustment of $8.6 million to the environmental reserves associated with Hurricane Maria. The U.S. provision increased by $3.0 million from the previous quarter driven by the abovementioned incremental reserve for the U.S. taxi medallion portfolio. The provision to net charge-offs ratio was 104.2% in the second quarter of 2018, compared to 131.9% in the previous quarter.

Non-Performing Assets
(Unaudited)
(In thousands)		30-Jun-18				31-Mar-18				30-Jun-17
Total non-performing loans held-in-portfolio, excluding covered loans		$	643,199			$	606,796			$	547,129
Other real estate owned (“OREO”), excluding covered OREO			142,063				153,061				181,096
Total non-performing assets, excluding covered assets			785,262				759,857				728,225
Covered loans and OREO			-				18,928				29,376
Total non-performing assets		$	785,262			$	778,785			$	757,601
Net charge-offs for the quarter (excluding covered loans)		$	57,614			$	52,547			$	57,484
Ratios (excluding covered loans):
Non-covered loans held-in-portfolio		$	24,608,516			$	24,087,937			$	22,918,271
Non-performing loans held-in-portfolio to loans held-in-portfolio			2.61	%			2.52	%			2.39	%
Allowance for loan losses to loans held-in-portfolio			2.61				2.52				2.22
Allowance for loan losses to non-performing loans, excluding loans held-for-sale			99.97				100.03				93.07
Refer to Table H for additional information.

Provision for Loan Losses
(Unaudited)		Quarters ended									Six months ended
(In thousands)		30-Jun-18			31-Mar-18			30-Jun-17			30-Jun-18		30-Jun-17
Provision for loan losses:
BPPR		$	44,405		$	56,718		$	42,173		$	101,123	$	73,651
Popular U.S.			15,649			12,615			7,792			28,264		18,371
Total provision for loan losses - non-covered loans		$	60,054		$	69,333		$	49,965		$	129,387	$	92,022
Provision for loan losses - covered loans			-			1,730			2,514			1,730		1,155
Total provision for loan losses		$	60,054		$	71,063		$	52,479		$	131,117	$	93,177

Credit Quality by Segment
(Unaudited)
(In thousands)		Quarters ended
BPPR		30-Jun-18				31-Mar-18				30-Jun-17
Provision for loan losses		$	44,405			$	56,718			$	42,173
Net charge-offs			44,465				41,227				54,255
Total non-performing loans held-in-portfolio, excluding covered loans			589,838				573,516				517,382
Allowance / non-covered loans held-in-portfolio			3.14	%			3.01	%			2.66	%
		Quarters ended
Popular U.S.		30-Jun-18				31-Mar-18				30-Jun-17
Provision for loan losses		$	15,649			$	12,615			$	7,792
Net charge-offs			13,149				11,320				3,229
Total non-performing loans held-in-portfolio			53,361				33,280				29,747
Allowance / non-covered loans held-in-portfolio			1.16	%			1.16	%			0.94	%

Financial Condition Highlights
(Unaudited)
(In thousands)				30-Jun-18			31-Mar-18			30-Jun-17
Cash and money market investments				$	9,029,010		$	7,264,086		$	4,625,318
Investment securities					10,847,601			10,733,010			9,726,158
Loans not covered under loss-sharing agreements with the FDIC					24,608,516			24,087,937			22,918,271
Loans covered under loss-sharing agreements with the FDIC					-			514,611			536,341
Total assets					47,535,177			45,756,761			41,242,669
Deposits					39,377,561			37,134,093			33,122,033
Borrowings					1,869,774			2,130,465			1,968,419
Total liabilities					42,245,516			40,691,852			35,964,624
Stockholders’ equity					5,289,661			5,064,909			5,278,045

Total assets increased by $1.8 billion from the first quarter of 2018, driven by:

• A net increase of $1.8 billion in cash and money market investments at BPPR, mainly due to an increase in government demand and commercial checking deposits; and

Total liabilities increased by $1.6 billion from the first quarter of 2018, principally driven by:

• An increase of $2.2 billion in deposits mainly due to an increase in public demand and commercial checking deposits at BPPR. Refer to Table G for additional information on deposits.

Partially offset by:

• A decrease of $0.4 billion in other liabilities at BPPR, mainly due to a decrease in the liability for GNMA loans sold with an option to repurchase by $0.2 billion and the elimination of the true-up payment obligation with the FDIC of $0.2 billion as a result of the Termination Agreement with the FDIC, as previously stated.

Stockholders’ equity increased by approximately $224.8 million from the first quarter of 2018, principally due to net income for the quarter of $279.8 million, partially offset by higher unrealized losses on debt securities available-for-sale by $33.2 million, declared dividends of $25.6 million on common stock and $0.9 million in dividends on preferred stock.

Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 17.46%, $51.22 and $44.78, respectively, at June 30, 2018, compared to 16.80%, $49.07 and $42.61 at March 31, 2018. Refer to Table A for capital ratios.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s business, financial condition, results of operations, plans, objectives, and future performance. These statements are not guarantees of future performance, are based on management’s current expectations and, by their nature, involve risks, uncertainties, estimates and assumptions. Potential factors, some of which are beyond the Corporation’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect of competitive and economic factors, and our reaction to those factors, the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital market conditions, capital adequacy and liquidity, the effect of legal proceedings and new accounting standards on the Corporation’s financial condition and results of operations, the impact of Hurricanes Irma and Maria on us, our ability to timely and effectively consummate our acquisition and assumption of certain assets and liabilities related to Wells Fargo’s auto finance business in Puerto Rico, as well as the ability to successfully transition and integrate the business, unexpected costs, including, without limitation, costs due to exposure to any unrecorded liabilities or issues not identified during due diligence investigation of the business or that are not subject to indemnification or reimbursement, and risks that the business may suffer as a result of the transaction, including due to adverse effects on relationships with customers, employees and service providers. All statements contained herein that are not clearly historical in nature, are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions, and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, are generally intended to identify forward-looking statements.

More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2017, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and in our Form 10-Q for the quarter ended June 30, 2018 to be filed with the SEC. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.

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

Conference Call

Popular will hold a conference call to discuss its financial results today Monday, July 23, 2018 at 11:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet, and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.

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

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Thursday, August 23, 2018. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10121650.

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

Popular, Inc.

Financial Supplement to Second Quarter 2018 Earnings Release

Table A - Selected Ratios and Other Information

Table B - Consolidated Statement of Operations

Table C - Consolidated Statement of Financial Condition

Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER

Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE

Table F - Mortgage Banking Activities and Other Service Fees

Table G - Loans and Deposits

Table H - Non-Performing Assets

Table I - Activity in Non-Performing Loans

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

Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED

Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS

Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS

Table N - Reconciliation to GAAP Financial Measures

POPULAR, INC.
Financial Supplement to Second Quarter 2018 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
		Quarters ended						Six months ended
		30-Jun-18		31-Mar-18		30-Jun-17		30-Jun-18		30-Jun-17
Basic EPS		$2.74		$0.89		$0.94		$3.63		$1.83
Diluted EPS		$2.73		$0.89		$0.94		$3.62		$1.83
Average common shares outstanding		101,892,402		101,696,343		101,601,552		101,794,914		102,263,593
Average common shares outstanding - assuming dilution		102,031,955		101,837,212		101,708,703		101,932,477		102,387,246
Common shares outstanding at end of period		102,296,440		102,189,914		101,986,758		102,296,440		101,986,758
Market value per common share		$45.21		$41.62		$41.71		$45.21		$41.71
Market capitalization - (In millions)		$4,625		$4,253		$4,254		$4,625		$4,254
Return on average assets		2.40%		0.84%		0.94%		1.64%		0.95%
		.		.
Return on average common equity		20.84%		7.06%		7.24%		14.10%		7.19%
Net interest margin		3.81%		3.89%		4.02%		3.85%		4.05%
Common equity per share		$51.22		$49.07		$51.26		$51.22		$51.26
Tangible common book value per common share (non-GAAP) [1]		$44.78		$42.61		$44.71		$44.78		$44.71
Tangible common equity to tangible assets (non-GAAP) [1]		9.77%		9.66%		11.24%		9.77%		11.24%
Tier 1 capital		17.46%		16.80%		16.68%		17.46%		16.68%
Total capital		20.41%		19.74%		19.66%		20.41%		19.66%
Tier 1 leverage		9.82%		9.98%		10.48%		9.82%		10.48%
Common Equity Tier 1 capital		17.46%		16.80%		16.68%		17.46%		16.68%
[1] Refer to Table N for reconciliation to GAAP financial measures.

POPULAR, INC.
Financial Supplement to Second Quarter 2018 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
		Quarters ended				Variance		Quarter ended		Variance		Six months ended
(In thousands, except per share information)		30-Jun-18		31-Mar-18		Q2 2018 vs. Q1 2018		30-Jun-17		Q2 2018 vs. Q2 2017		30-Jun-18		30-Jun-17
Interest income:
Loans		$386,277		$373,584		$12,693		$367,669		$18,608		$759,861		$730,805
Money market investments		36,392		22,285		14,107		11,131		25,261		58,677		17,704
Investment securities		58,181		57,209		972		49,933		8,248		115,390		96,219
Total interest income		480,850		453,078		27,772		428,733		52,117		933,928		844,728
Interest expense:
Deposits		45,228		38,688		6,540		34,092		11,136		83,916		67,849
Short-term borrowings		1,752		2,013		(261)		1,115		637		3,765		2,210
Long-term debt		19,734		19,330		404		19,047		687		39,064		38,092
Total interest expense		66,714		60,031		6,683		54,254		12,460		126,745		108,151
Net interest income		414,136		393,047		21,089		374,479		39,657		807,183		736,577
Provision for loan losses - non-covered loans		60,054		69,333		(9,279)		49,965		10,089		129,387		92,022
Provision for loan losses - covered loans		-		1,730		(1,730)		2,514		(2,514)		1,730		1,155
Net interest income after provision for loan losses		354,082		321,984		32,098		322,000		32,082		676,066		643,400
Service charges on deposit accounts		37,102		36,455		647		41,073		(3,971)		73,557		80,609
Other service fees		62,876		60,602		2,274		59,168		3,708		123,478		115,343
Mortgage banking activities		10,071		12,068		(1,997)		10,741		(670)		22,139		22,110
Other-than-temporary impairment losses on debt securities		-		-		-		(8,299)		8,299		-		(8,299)
Net gain (loss), including impairment, on equity securities		234		(646)		880		19		215		(412)		181
Net profit (loss) on trading account debt securities		21		(198)		219		(655)		676		(177)		(933)
Adjustments (expense) to indemnity reserves on loans sold		(527)		(2,926)		2,399		(2,930)		2,403		(3,453)		(4,896)
FDIC loss-share income (expense)		102,752		(8,027)		110,779		(475)		103,227		94,725		(8,732)
Other operating income		22,280		16,169		6,111		18,151		4,129		38,449		37,279
Total non-interest income		234,809		113,497		121,312		116,793		118,016		348,306		232,662
Operating expenses:
Personnel costs
Salaries		78,008		78,397		(389)		77,703		305		156,405		156,079
Commissions, incentives and other bonuses		20,004		21,316		(1,312)		18,295		1,709		41,320		38,373
Pension, postretirement and medical insurance		9,363		9,929		(566)		10,723		(1,360)		19,292		20,100
Other personnel costs, including payroll taxes		16,957		16,210		747		10,227		6,730		33,167		26,136
Total personnel costs		124,332		125,852		(1,520)		116,948		7,384		250,184		240,688
Net occupancy expenses		22,425		22,802		(377)		22,265		160		45,227		43,041
Equipment expenses		17,775		17,206		569		16,250		1,525		34,981		32,220
Other taxes		10,876		10,902		(26)		10,740		136		21,778		21,709
Professional fees
Collections, appraisals and other credit related fees		4,228		3,058		1,170		3,779		449		7,286		7,602
Programming, processing and other technology services		54,547		51,305		3,242		51,569		2,978		105,852		99,660
Legal fees, excluding collections		4,907		5,763		(856)		2,314		2,593		10,670		5,610
Other professional fees		30,221		22,859		7,362		15,272		14,949		53,080		29,312
Total professional fees		93,903		82,985		10,918		72,934		20,969		176,888		142,184
Communications		5,382		5,906		(524)		5,899		(517)		11,288		11,848
Business promotion		16,778		12,009		4,769		13,366		3,412		28,787		24,942
FDIC deposit insurance		7,004		6,920		84		6,172		832		13,924		12,665
Other real estate owned (OREO) expenses		6,947		6,131		816		16,670		(9,723)		13,078		29,488
Credit and debit card processing, volume, interchange and other expenses		9,635		4,608		5,027		6,441		3,194		14,243		11,973
Other operating expenses
Operational losses		9,001		9,924		(923)		7,215		1,786		18,925		14,751
All other		11,286		14,432		(3,146)		9,591		1,695		25,718		27,955
Total other operating expenses		20,287		24,356		(4,069)		16,806		3,481		44,643		42,706
Amortization of intangibles		2,324		2,325		(1)		2,344		(20)		4,649		4,689
Total operating expenses		337,668		322,002		15,666		306,835		30,833		659,670		618,153
Income before income tax		251,223		113,479		137,744		131,958		119,265		364,702		257,909
Income tax (benefit) expense		(28,560)		22,155		(50,715)		35,732		(64,292)		(6,405)		68,738
Net income		$279,783		$91,324		$188,459		$96,226		$183,557		$371,107		$189,171
Net income applicable to common stock		$278,852		$90,393		$188,459		$95,295		$183,557		$369,245		$187,309
Net income per common share - basic		$2.74		$0.89		$1.85		$0.94		$1.80		$3.63		$1.83
Net income per common share - diluted		$2.73		$0.89		$1.84		$0.94		$1.79		$3.62		$1.83
Dividends Declared per Common Share		$0.25		$0.25		$-		$0.25		$-		$0.50		$0.50

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
								Variance
								Q2 2018 vs.
(In thousands)		30-Jun-18		31-Mar-18		30-Jun-17		Q1 2018
Assets:
Cash and due from banks		$400,568		$280,077		$405,688		$120,491
Money market investments		8,628,442		6,984,009		4,219,630		1,644,433
Trading account debt securities, at fair value		41,637		42,386		42,205		(749)
Debt securities available-for-sale, at fair value		10,542,010		10,420,589		9,407,534		121,421
Debt securities held-to-maturity, at amortized cost		104,937		104,817		109,484		120
Equity securities		159,017		165,218		166,935		(6,201)
Loans held-for-sale, at lower of cost or fair value		73,859		77,701		69,797		(3,842)
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC		24,752,700		24,224,793		23,046,078		527,907
Loans covered under loss-sharing agreements with the FDIC		-		514,611		536,341		(514,611)
Less: Unearned income		144,184		136,856		127,807		7,328
Allowance for loan losses		643,018		640,578		540,014		2,440
Total loans held-in-portfolio, net		23,965,498		23,961,970		22,914,598		3,528
FDIC loss-share asset		-		44,469		52,583		(44,469)
Premises and equipment, net		548,432		544,109		546,986		4,323
Other real estate not covered under loss-sharing agreements with the FDIC		142,063		153,061		181,096		(10,998)
Other real estate covered under loss-sharing agreements with the FDIC		-		15,333		25,350		(15,333)
Accrued income receivable		165,592		157,340		136,104		8,252
Mortgage servicing assets, at fair value		164,025		166,281		188,728		(2,256)
Other assets		1,940,780		1,978,760		2,108,296		(37,980)
Goodwill		627,294		627,294		627,294		-
Other intangible assets		31,023		33,347		40,361		(2,324)
Total assets		$47,535,177		$45,756,761		$41,242,669		$1,778,416
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing		$9,392,263		$8,698,610		$7,481,732		$693,653
Interest bearing		29,985,298		28,435,483		25,640,301		1,549,815
Total deposits		39,377,561		37,134,093		33,122,033		2,243,468
Assets sold under agreements to repurchase		306,911		380,061		406,385		(73,150)
Other short-term borrowings		1,200		186,200		1,200		(185,000)
Notes payable		1,561,663		1,564,204		1,560,834		(2,541)
Other liabilities		998,181		1,427,294		874,172		(429,113)
Total liabilities		42,245,516		40,691,852		35,964,624		1,553,664
Stockholders’ equity:
Preferred stock		50,160		50,160		50,160		-
Common stock		1,043		1,043		1,041		-
Surplus		4,302,946		4,300,936		4,263,370		2,010
Retained earnings		1,515,058		1,261,775		1,356,504		253,283
Treasury stock		(82,754)		(86,167)		(90,087)		3,413
Accumulated other comprehensive loss, net of tax		(496,792)		(462,838)		(302,943)		(33,954)
Total stockholders’ equity		5,289,661		5,064,909		5,278,045		224,752
Total liabilities and stockholders’ equity		$47,535,177		$45,756,761		$41,242,669		$1,778,416

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
				Quarter ended							Quarter ended							Quarter ended							Variance							Variance
				30-Jun-18							31-Mar-18							30-Jun-17							Q2 2018 vs. Q1 2018							Q2 2018 vs. Q2 2017
($ amounts in millions; yields not on a taxable equivalent basis)				Average balance		Income / Expense		Yield / Rate			Average balance		Income / Expense		Yield / Rate			Average balance		Income / Expense		Yield / Rate			Average balance		Income / Expense		Yield / Rate			Average balance		Income / Expense		Yield / Rate
Assets:
Interest earning assets:
	Money market, trading and investment securities			$19,257		$94.6		1.97	%		$16,748		$79.5		1.91	%		$14,018		$61.1		1.74	%		$2,509		$15.1		0.06	%		$5,239		$33.5		0.23	%
	Loans not covered under loss-sharing agreements with the FDIC:
		Commercial		11,537		166.0		5.77			11,469		161.5		5.71			10,916		150.9		5.54			68		4.5		0.06			621		15.1		0.23
		Construction		918		14.3		6.28			905		13.6		6.08			813		11.2		5.53			13		0.7		0.20			105		3.1		0.75
		Mortgage		7,109		91.0		5.12			7,073		89.0		5.04			7,128		94.2		5.29			36		2.0		0.08			(19)		(3.2)		(0.17)
		Consumer		3,805		102.2		10.77			3,807		97.1		10.35			3,724		99.6		10.73			(2)		5.1		0.42			81		2.6		0.04
		Lease financing		850		12.7		5.99			819		12.3		5.99			727		11.8		6.48			31		0.4		-			123		0.9		(0.49)
		Total loans		24,219		386.2		6.39			24,073		373.5		6.27			23,308		367.7		6.32			146		12.7		0.12			911		18.5		0.07
	Total interest earning assets			$43,476		$480.8		4.43	%		$40,821		$453.0		4.48	%		$37,326		$428.8		4.60	%		$2,655		$27.8		(0.05)	%		$6,150		$52.0		(0.17)	%
		Allowance for loan losses		(645)							(634)							(537)							(11)							(108)
		Other non-interest earning assets		4,019							4,063							4,282							(44)							(263)
	Total average assets			$46,850							$44,250							$41,071							$2,600							$5,779
Liabilities and Stockholders' Equity:
	Interest bearing deposits:
		NOW and money market		$12,476		$15.7		0.51	%		$11,194		$11.5		0.42	%		$9,941		$8.9		0.36	%		$1,282		$4.2		0.09	%		$2,535		$6.8		0.15	%
		Savings		9,472		7.8		0.33			8,744		5.2		0.24			8,134		5.0		0.24			728		2.6		0.09			1,338		2.8		0.09
		Time deposits		7,749		21.7		1.12			7,697		22.0		1.16			7,661		20.2		1.06			52		(0.3)		(0.04)			88		1.5		0.06
		Total interest-bearing deposits		29,697		45.2		0.61			27,635		38.7		0.57			25,736		34.1		0.53			2,062		6.5		0.04			3,961		11.1		0.08
	Borrowings			1,962		21.5		4.39			2,041		21.3		4.21			1,936		20.2		4.18			(79)		0.2		0.18			26		1.3		0.21
		Total interest-bearing liabilities		31,659		66.7		0.85			29,676		60.0		0.82			27,672		54.3		0.79			1,983		6.7		0.03			3,987		12.4		0.06
		Net interest spread						3.58	%						3.66	%						3.81	%						(0.08)	%						(0.23)	%
	Non-interest bearing deposits			8,966							8,434							7,204							532							1,762
	Other liabilities			811							898							869							(87)							(58)
	Stockholders' equity			5,414							5,242							5,326							172							88
		Total average liabilities and stockholders' equity		$46,850							$44,250							$41,071							$2,600							$5,779
Net interest income / margin non-taxable equivalent basis						$414.1		3.81	%				$393.0		3.89	%				$374.5		4.02	%				$21.1		(0.08)	%				$39.6		(0.21)	%

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
		Six months ended							Six months ended
		30-Jun-18							30-Jun-17							Variance
		Average		Income /		Yield /			Average		Income /		Yield /			Average		Income /		Yield /
($ amounts in millions; yields not on a taxable equivalent basis)		balance		Expense		Rate			balance		Expense		Rate			balance		Expense		Rate
Assets:
Interest earning assets:
Money market, trading and investment securities		$18,010		$174.1		1.94	%		$13,225		$113.9		1.73	%		$4,785		$60.2		0.21	%
Loans not covered under loss-sharing agreements with the FDIC:
Commercial		11,503		327.5		5.74			10,885		298.5		5.53			618		29.0		0.21
Construction		911		27.9		6.18			818		22.0		5.44			93		5.9		0.74
Mortgage		7,091		180.0		5.08			7,182		189.4		5.27			(91)		(9.4)		(0.19)
Consumer		3,806		199.4		10.56			3,727		197.5		10.69			79		1.9		(0.13)
Lease financing		835		25.0		5.99			718		23.4		6.51			117		1.6		(0.52)
Total loans		24,146		759.8		6.33			23,330		730.8		6.30			816		29.0		0.03	-
Total interest earning assets		$42,156		$933.9		4.46	%		$36,555		$844.7		4.65	%		$5,601		$89.2		(0.19)	%
Allowance for loan losses		(640)							(539)							(101)
Other non-interest earning assets		4,041							4,297							(256)
Total average assets		$45,557							$40,313							$5,244
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market		$11,838		$27.2		0.46	%		$9,392		$17.4		0.38	%		$2,446		$9.8		0.08	%
Savings		9,110		13.0		0.29			7,928		9.9		0.25			1,182		3.1		0.04
Time deposits		7,723		43.7		1.14			7,708		40.5		1.06			15		3.2		0.08
Total interest-bearing deposits		28,671		83.9		0.59			25,028		67.8		0.55			3,643		16.1		0.04
Borrowings		2,001		42.8		4.30			1,980		40.3		4.09			21		2.5		0.21
Total interest-bearing liabilities		30,672		126.7		0.83			27,008		108.1		0.81			3,664		18.6		0.02
Net interest spread						3.63	%						3.84	%						(0.21)	%
Non-interest bearing deposits		8,702							7,116							1,586
Other liabilities		855							883							(28)
Stockholders' equity		5,328							5,306							22
Total average liabilities and stockholders' equity		$45,557							$40,313							$5,244
Net interest income / margin non-taxable equivalent basis				$807.2		3.85	%				$736.6		4.05	%				$70.6		(0.20)	%

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
Mortgage Banking Activities
		Quarters ended						Variance				Six months ended				Variance
(In thousands)		30-Jun-18		31-Mar-18		30-Jun-17		Q2 2018 vs.Q1 2018		Q2 2018 vs.Q2 2017		30-Jun-18		30-Jun-17		2018 vs. 2017
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees		$12,425		$12,456		$13,021		$(31)		$(596)		$24,881		$26,473		$(1,592)
Mortgage servicing rights fair value adjustments		(4,622)		(4,307)		(8,046)		(315)		3,424		(8,929)		(14,000)		5,071
Total mortgage servicing fees, net of fair value adjustments		7,803		8,149		4,975		(346)		2,828		15,952		12,473		3,479
Net gain on sale of loans, including valuation on loans held-for-sale		2,460		1,057		7,250		1,403		(4,790)		3,517		12,631		(9,114)
Trading account (loss) profit:
Unrealized gains (losses) on outstanding derivative positions		45		(221)		83		266		(38)		(176)		43		(219)
Realized (losses) gains on closed derivative positions		(237)		3,083		(1,567)		(3,320)		1,330		2,846		(3,037)		5,883
Total trading account (loss) profit		(192)		2,862		(1,484)		(3,054)		1,292		2,670		(2,994)		5,664
Total mortgage banking activities		$10,071		$12,068		$10,741		$(1,997)		$(670)		$22,139		$22,110		$29

Other Service Fees
		Quarters ended						Variance				Six months ended				Variance
(In thousands)		30-Jun-18		31-Mar-18		30-Jun-17		Q2 2018 vs.Q1 2018		Q2 2018 vs.Q2 2017		30-Jun-18		30-Jun-17		2018 vs. 2017
Other service fees:
Debit card fees		$11,684		$11,638		$11,576		$46		$108		$23,322		$23,119		$203
Insurance fees		13,027		12,599		13,529		428		(502)		25,626		26,334		(708)
Credit card fees		22,658		21,683		19,305		975		3,353		44,341		37,581		6,760
Sale and administration of investment products		5,020		5,355		5,799		(335)		(779)		10,375		10,881		(506)
Trust fees		5,139		5,097		4,903		42		236		10,236		9,858		378
Other fees		5,348		4,230		4,056		1,118		1,292		9,578		7,570		2,008
Total other service fees		$62,876		$60,602		$59,168		$2,274		$3,708		$123,478		$115,343		$8,135

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table G - Loans and Deposits
(Unaudited)
Loans - Ending Balances
								Variance
(In thousands)		30-Jun-18		31-Mar-18		30-Jun-17		Q2 2018 vs. Q1 2018		Q2 2018 vs. Q2 2017
Loans not covered under FDIC loss-sharing agreements:
Commercial		$11,589,993		$11,468,507		$11,047,359		$121,486		$542,634
Construction		899,323		893,391		784,389		5,932		114,934
Legacy [1]		29,250		31,167		39,067		(1,917)		(9,817)
Lease financing		872,098		838,383		743,603		33,715		128,495
Mortgage		7,376,711		7,064,644		6,552,796		312,067		823,915
Consumer		3,841,141		3,791,845		3,751,057		49,296		90,084
Total non-covered loans held-in-portfolio		$24,608,516		$24,087,937		$22,918,271		$520,579		$1,690,245
Loans covered under FDIC loss-sharing agreements		-		514,611		536,341		(514,611)		(536,341)
Total loans held-in-portfolio		$24,608,516		$24,602,548		$23,454,612		$5,968		$1,153,904
Loans held-for-sale:
Mortgage		73,859		77,701		69,797		(3,842)		4,062
Total loans held-for-sale		$73,859		$77,701		$69,797		$(3,842)		$4,062
Total loans		$24,682,375		$24,680,249		$23,524,409		$2,126		$1,157,966
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.
Deposits - Ending Balances
								Variance
(In thousands)		30-Jun-18		31-Mar-18		30-Jun-17		Q2 2018 vs. Q1 2018		Q2 2018 vs. Q2 2017
Demand deposits [1]		$15,813,188		$12,698,538		$11,194,860		$3,114,650		$4,618,328
Savings, NOW and money market deposits (non-brokered)		15,751,376		16,225,871		13,946,680		(474,495)		1,804,696
Savings, NOW and money market deposits (brokered)		389,912		414,441		424,303		(24,529)		(34,391)
Time deposits (non-brokered)		7,284,697		7,655,903		7,361,587		(371,206)		(76,890)
Time deposits (brokered CDs)		138,388		139,340		194,603		(952)		(56,215)
Total deposits		$39,377,561		$37,134,093		$33,122,033		$2,243,468		$6,255,528
[1] Includes interest and non-interest bearing demand deposits.

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
																				Variance
(Dollars in thousands)		30-Jun-18			As a % of loans HIP by category			31-Mar-18			As a % of loans HIP by category			30-Jun-17			As a % of loans HIP by category			Q2 2018 vs. Q1 2018		Q2 2018 vs. Q2 2017
Non-accrual loans:
Commercial		$164,949			1.4	%		$158,279			1.4	%		$166,864			1.5	%		$6,670		$(1,915)
Construction		20,460			2.3			4,293			0.5			-			-			16,167		20,460
Legacy [1]		3,663			12.5			3,137			10.1			3,360			8.6			526		303
Lease financing		3,696			0.4			3,957			0.5			2,065			0.3			(261)		1,631
Mortgage		384,655			5.2			369,614			5.2			318,922			4.9			15,041		65,733
Consumer		65,776			1.7			67,516			1.8			55,918			1.5			(1,740)		9,858
Total non-performing loans held-in-portfolio, excluding covered loans		643,199			2.6	%		606,796			2.5	%		547,129			2.4	%		36,403		96,070
Other real estate owned (“OREO”), excluding covered OREO		142,063						153,061						181,096						(10,998)		(39,033)
Total non-performing assets, excluding covered assets		785,262						759,857						728,225						25,405		57,037
Covered loans and OREO		-						18,928						29,376						(18,928)		(29,376)
Total non-performing assets [2]		$785,262						$778,785						$757,601						$6,477		$27,661
Accruing loans past due 90 days or more [3]		$901,473						$1,129,792						$391,569						$(228,319)		$509,904
Ratios excluding covered loans:
Non-performing loans held-in-portfolio to loans held-in-portfolio		2.61	%					2.52	%					2.39	%
Allowance for loan losses to loans held-in-portfolio		2.61						2.52						2.22
Allowance for loan losses to non-performing loans, excluding loans held-for-sale		99.97						100.03						93.07
Ratios including covered loans:
Non-performing assets to total assets		1.65	%					1.70	%					1.84	%
Non-performing loans held-in-portfolio to loans held-in-portfolio		2.61						2.48						2.35
Allowance for loan losses to loans held-in-portfolio		2.61						2.60						2.30
Allowance for loan losses to non-performing loans, excluding loans held-for-sale		99.97						104.95						97.98
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.
[2] There were no non-performing loans held-for-sale as of June 30, 2018, March 31, 2018 and June 30, 2017.
[3] It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. These include loans rebooked, which were previously pooled into GNMA securities amounting to $298 million (March 31, 2018 - $535 million; June 30, 2017 - $48 million). Under the GNMA program, issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements of BPPR with an offsetting liability. While the borrowers for our serviced GNMA portfolio benefited from the loan payment moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium. These balances include $216 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of June 30, 2018 (March 31, 2018 - $194 million; June 30, 2017 - $160 million). Furthermore, the Corporation has approximately $66 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 (March 31, 2018 - $57 million; June 30, 2017 - $57 million).

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
Commercial loans held-in-portfolio:
		Quarter ended						Quarter ended
		30-Jun-18						31-Mar-18
(In thousands)		BPPR		Popular U.S.		Popular, Inc.		BPPR		Popular U.S.		Popular, Inc.
Beginning balance NPLs		$157,132		$1,147		$158,279		$161,226		$3,839		$165,065
Plus:
New non-performing loans		53,794		1,294		55,088		15,179		680		15,859
Advances on existing non-performing loans		647		-		647		-		-		-
Less:
Non-performing loans transferred to OREO		(1,831)		-		(1,831)		(2,674)		-		(2,674)
Non-performing loans charged-off		(9,758)		-		(9,758)		(4,789)		(231)		(5,020)
Loans returned to accrual status / loan collections		(37,203)		(273)		(37,476)		(11,810)		(3,141)		(14,951)
Ending balance NPLs		$162,781		$2,168		$164,949		$157,132		$1,147		$158,279
Construction loans held-in-portfolio:
		Quarter ended						Quarter ended
		30-Jun-18						31-Mar-18
(In thousands)		BPPR		Popular U.S.		Popular, Inc.		BPPR		Popular U.S.		Popular, Inc.
Beginning balance NPLs		$4,293		$-		$4,293		$-		$-		$-
Plus:
New non-performing loans		-		17,901		17,901		4,177		-		4,177
Advances on existing non-performing loans		-		-		-		116		-		116
Less:
Loans returned to accrual status / loan collections		(1,734)		-		(1,734)		-		-		-
Ending balance NPLs		$2,559		$17,901		$20,460		$4,293		$-		$4,293
Mortgage loans held-in-portfolio:
		Quarter ended						Quarter ended
		30-Jun-18						31-Mar-18
(In thousands)		BPPR		Popular U.S.		Popular, Inc.		BPPR		Popular U.S.		Popular, Inc.
Beginning balance NPLs		$357,967		$11,647		$369,614		$306,697		$14,852		$321,549
Plus:
New non-performing loans		103,844		3,658		107,502		108,075		2,955		111,030
Reclassification from covered loans		3,413		-		3,413		-		-		-
Less:
Non-performing loans transferred to OREO		(1,095)		-		(1,095)		(2,512)		-		(2,512)
Non-performing loans charged-off		(8,635)		(49)		(8,684)		(11,474)		(33)		(11,507)
Loans returned to accrual status / loan collections		(82,237)		(3,858)		(86,095)		(42,819)		(6,127)		(48,946)
Ending balance NPLs		$373,257		$11,398		$384,655		$357,967		$11,647		$369,614
Total non-performing loans held-in-portfolio (excluding consumer and covered loans):
		Quarter ended						Quarter ended
		30-Jun-18						31-Mar-18
(In thousands)		BPPR		Popular U.S.		Popular, Inc.		BPPR		Popular U.S.		Popular, Inc.
Beginning balance NPLs		$519,392		$15,931		$535,323		$467,923		$21,730		$489,653
Plus:
New non-performing loans		157,638		23,797		181,435		127,431		3,763		131,194
Advances on existing non-performing loans		647		2		649		116		4		120
Reclassification from covered loans		3,413		-		3,413		-		-		-
Less:
Non-performing loans transferred to OREO		(2,926)		-		(2,926)		(5,186)		-		(5,186)
Non-performing loans charged-off		(18,393)		(49)		(18,442)		(16,263)		(264)		(16,527)
Loans returned to accrual status / loan collections		(121,174)		(4,551)		(125,725)		(54,629)		(9,302)		(63,931)
Ending balance NPLs		$538,597		$35,130		$573,727		$519,392		$15,931		$535,323

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
		Quarter ended								Quarter ended								Quarter ended
		30-Jun-18								31-Mar-18								30-Jun-17
(Dollars in thousands)		Non-covered loans			Covered loans		Total			Non-covered loans			Covered loans		Total			Non-covered loans			Covered loans		Total
Balance at beginning of period		$606,968			$33,610		$640,578			$590,182			$33,244		$623,426			$516,725			$27,771		$544,496
Provision for loan losses		60,054			-		60,054			69,333			1,730		71,063			49,965			2,514		52,479
		667,022			33,610		700,632			659,515			34,974		694,489			566,690			30,285		596,975
Net loans charged-off (recovered):
BPPR
Commercial		7,960			-		7,960			3,943			-		3,943			11,745			-		11,745
Construction		(301)			-		(301)			(208)			-		(208)			(2,370)			-		(2,370)
Lease financing		1,157			-		1,157			1,993			-		1,993			1,438			-		1,438
Mortgage		11,575			-		11,575			13,244			1,364		14,608			20,753			(538)		20,215
Consumer		24,074			-		24,074			22,255			-		22,255			22,689			15		22,704
Total BPPR		44,465			-		44,465			41,227			1,364		42,591			54,255			(523)		53,732
Popular U.S.
Commercial		10,132			-		10,132			6,830			-		6,830			(643)			-		(643)
Legacy [1]		(277)			-		(277)			(331)			-		(331)			(298)			-		(298)
Mortgage		18			-		18			(304)			-		(304)			462			-		462
Consumer		3,276			-		3,276			5,125			-		5,125			3,708			-		3,708
Total Popular U.S.		13,149			-		13,149			11,320			-		11,320			3,229			-		3,229
Total loans charged-off (recovered) - Popular, Inc.		57,614			-		57,614			52,547			1,364		53,911			57,484			(523)		56,961
Allowance transferred from covered to non-covered loans [2]		33,610			(33,610)		-			-			-		-			-			-		-
Balance at end of period		$643,018			$-		$643,018			$606,968			$33,610		$640,578			$509,206			$30,808		$540,014
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio		0.95	%				0.95	%		0.90	%				0.90	%		1.01	%				0.98	%
Provision for loan losses to net charge-offs		1.04	x				1.04	x		1.32	x				1.32	x		0.87	x				0.92	x
BPPR
Annualized net charge-offs to average loans held-in-portfolio		1.01	%				1.01	%		0.96	%				0.96	%		1.28	%				1.23	%
Provision for loan losses to net charge-offs		1.00	x				1.00	x		1.38	x				1.37	x		0.78	x				0.83	x
Popular U.S.
Annualized net charge-offs to average loans held-in-portfolio							0.81	%							0.72	%							0.22	%
Provision for loan losses to net charge-offs							1.19	x							1.11	x							2.41	x
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.
[2] Represents the allowance transferred from covered to non-covered loans at June 30, 2018, due to the Termination Agreement with the FDIC.

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
30-Jun-18
(Dollars in thousands)			Commercial			Construction			Legacy [1]			Mortgage			Lease financing			Consumer			Total
Specific ALLL			$46,626			$-			$-			$47,515			$362			$24,836			$119,339
Impaired loans			$359,447			$20,460			$-			$517,308			$1,130			$112,485			$1,010,830
Specific ALLL to impaired loans			12.97	%		-	%		-	%		9.19	%		32.04	%		22.08	%		11.81	%
General ALLL			$195,220			$7,702			$700			$138,951			$13,923			$167,183			$523,679
Loans held-in-portfolio, excluding impaired loans			$11,230,546			$878,863			$29,250			$6,859,403			$870,968			$3,728,656			$23,597,686
General ALLL to loans held-in-portfolio, excluding impaired loans			1.74	%		0.88	%		2.39	%		2.03	%		1.60	%		4.48	%		2.22	%
Total ALLL			$241,846			$7,702			$700			$186,466			$14,285			$192,019			$643,018
Total non-covered loans held-in-portfolio			$11,589,993			$899,323			$29,250			$7,376,711			$872,098			$3,841,141			$24,608,516
ALLL to loans held-in-portfolio			2.09	%		0.86	%		2.39	%		2.53	%		1.64	%		5.00	%		2.61	%
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. reportable segment.
31-Mar-18
(Dollars in thousands)			Commercial			Construction			Legacy [2]			Mortgage			Lease financing			Consumer			Total
Specific ALLL			$45,028			$474			$-			$46,915			$448			$24,150			$117,015
Impaired loans	[1]		$352,064			$4,293			$-			$519,922			$1,361			$103,583			$981,223
Specific ALLL to impaired loans	[1]		12.79	%		11.04	%		-	%		9.02	%		32.92	%		23.31	%		11.93	%
General ALLL			$191,353			$9,275			$652			$111,113			$12,464			$165,096			$489,953
Loans held-in-portfolio, excluding impaired loans	[1]		$11,116,443			$889,098			$31,167			$6,544,722			$837,022			$3,688,262			$23,106,714
General ALLL to loans held-in-portfolio, excluding impaired loans	[1]		1.72	%		1.04	%		2.09	%		1.70	%		1.49	%		4.48	%		2.12	%
Total ALLL			$236,381			$9,749			$652			$158,028			$12,912			$189,246			$606,968
Total non-covered loans held-in-portfolio	[1]		$11,468,507			$893,391			$31,167			$7,064,644			$838,383			$3,791,845			$24,087,937
ALLL to loans held-in-portfolio	[1]		2.06	%		1.09	%		2.09	%		2.24	%		1.54	%		4.99	%		2.52	%
[1] Excludes covered loans acquired in the Westernbank FDIC-assisted transaction.
[2] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. reportable segment.
Variance
(Dollars in thousands)			Commercial			Construction			Legacy			Mortgage			Lease financing			Consumer			Total
Specific ALLL			$1,598			$(474)			$-			$600			$(86)			$686			$2,324
Impaired loans			$7,383			$16,167			$-			$(2,614)			$(231)			$8,902			$29,607
General ALLL			$3,867			$(1,573)			$48			$27,838			$1,459			$2,087			$33,726
Loans held-in-portfolio, excluding impaired loans			$114,103			$(10,235)			$(1,917)			$314,681			$33,946			$40,394			$490,972
Total ALLL			$5,465			$(2,047)			$48			$28,438			$1,373			$2,773			$36,050
Total non-covered loans held-in-portfolio			$121,486			$5,932			$(1,917)			$312,067			$33,715			$49,296			$520,579

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
30-Jun-18
Puerto Rico
(In thousands)		Commercial		Construction		Mortgage		Lease financing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$46,626		$-		$45,039		$362		$23,553		$115,580
General ALLL non-covered loans		144,300		765		137,064		13,923		155,513		451,565
ALLL - non-covered loans		190,926		765		182,103		14,285		179,066		567,145
Specific ALLL covered loans		-		-		-		-		-		-
General ALLL covered loans		-		-		-		-		-		-
ALLL - covered loans		-		-		-		-		-		-
Total ALLL		$190,926		$765		$182,103		$14,285		$179,066		$567,145
Loans held-in-portfolio:
Impaired non-covered loans		$359,447		$2,559		$507,580		$1,130		$105,922		$976,638
Non-covered loans held-in-portfolio, excluding impaired loans		6,688,151		94,616		6,135,546		870,968		3,281,198		17,070,479
Non-covered loans held-in-portfolio		7,047,598		97,175		6,643,126		872,098		3,387,120		18,047,117
Impaired covered loans		-		-		-		-		-		-
Covered loans held-in-portfolio, excluding impaired loans		-		-		-		-		-		-
Covered loans held-in-portfolio		-		-		-		-		-		-
Total loans held-in-portfolio		$7,047,598		$97,175		$6,643,126		$872,098		$3,387,120		$18,047,117
31-Mar-18
Puerto Rico
(In thousands)		Commercial		Construction		Mortgage		Lease financing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$45,028		$474		$44,419		$448		$22,955		$113,324
General ALLL non-covered loans		143,494		2,183		108,882		12,464		153,248		420,271
ALLL - non-covered loans		188,522		2,657		153,301		12,912		176,203		533,595
Specific ALLL covered loans		-		-		-		-		-		-
General ALLL covered loans		-		-		33,422		-		188		33,610
ALLL - covered loans		-		-		33,422		-		188		33,610
Total ALLL		$188,522		$2,657		$186,723		$12,912		$176,391		$567,205
Loans held-in-portfolio:
Impaired non-covered loans		$352,064		$4,293		$510,849		$1,361		$97,730		$966,297
Non-covered loans held-in-portfolio, excluding impaired loans		6,770,732		89,565		5,844,857		837,022		3,231,207		16,773,383
Non-covered loans held-in-portfolio		7,122,796		93,858		6,355,706		838,383		3,328,937		17,739,680
Impaired covered loans		-		-		-		-		-		-
Covered loans held-in-portfolio, excluding impaired loans		-		-		500,683		-		13,928		514,611
Covered loans held-in-portfolio		-		-		500,683		-		13,928		514,611
Total loans held-in-portfolio		$7,122,796		$93,858		$6,856,389		$838,383		$3,342,865		$18,254,291
Variance
(In thousands)		Commercial		Construction		Mortgage		Lease financing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$1,598		$(474)		$620		$(86)		$598		$2,256
General ALLL non-covered loans		806		(1,418)		28,182		1,459		2,265		31,294
ALLL - non-covered loans		2,404		(1,892)		28,802		1,373		2,863		33,550
Specific ALLL covered loans		-		-		-		-		-		-
General ALLL covered loans		-		-		(33,422)		-		(188)		(33,610)
ALLL - covered loans		-		-		(33,422)		-		(188)		(33,610)
Total ALLL		$2,404		$(1,892)		$(4,620)		$1,373		$2,675		$(60)
Loans held-in-portfolio:
Impaired non-covered loans		$7,383		$(1,734)		$(3,269)		$(231)		$8,192		$10,341
Non-covered loans held-in-portfolio, excluding impaired loans		(82,581)		5,051		290,689		33,946		49,991		297,096
Non-covered loans held-in-portfolio		(75,198)		3,317		287,420		33,715		58,183		307,437
Impaired covered loans		-		-		-		-		-		-
Covered loans held-in-portfolio, excluding impaired loans		-		-		(500,683)		-		(13,928)		(514,611)
Covered loans held-in-portfolio		-		-		(500,683)		-		(13,928)		(514,611)
Total loans held-in-portfolio		$(75,198)		$3,317		$(213,263)		$33,715		$44,255		$(207,174)

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - POPULAR U.S. OPERATIONS
(Unaudited)
30-Jun-18
Popular U.S.
(In thousands)		Commercial		Construction		Legacy		Mortgage		Consumer		Total
Allowance for credit losses:
Specific ALLL		$-		$-		$-		$2,476		$1,283		$3,759
General ALLL		50,920		6,937		700		1,887		11,670		72,114
Total ALLL		$50,920		$6,937		$700		$4,363		$12,953		$75,873
Loans held-in-portfolio:
Impaired loans		$-		$17,901		$-		$9,728		$6,563		$34,192
Loans held-in-portfolio, excluding impaired loans		4,542,395		784,247		29,250		723,857		447,458		6,527,207
Total loans held-in-portfolio		$4,542,395		$802,148		$29,250		$733,585		$454,021		$6,561,399
31-Mar-18
Popular U.S.
(In thousands)		Commercial		Construction		Legacy		Mortgage		Consumer		Total
Allowance for credit losses:
Specific ALLL		$-		$-		$-		$2,496		$1,195		$3,691
General ALLL		47,859		7,092		652		2,231		11,848		69,682
Total ALLL		$47,859		$7,092		$652		$4,727		$13,043		$73,373
Loans held-in-portfolio:
Impaired loans		$-		$-		$-		$9,073		$5,853		$14,926
Loans held-in-portfolio, excluding impaired loans		4,345,711		799,533		31,167		699,865		457,055		6,333,331
Total loans held-in-portfolio		$4,345,711		$799,533		$31,167		$708,938		$462,908		$6,348,257
Variance
(In thousands)		Commercial		Construction		Legacy		Mortgage		Consumer		Total
Allowance for credit losses:
Specific ALLL		$-		$-		$-		$(20)		$88		$68
General ALLL		3,061		(155)		48		(344)		(178)		2,432
Total ALLL		$3,061		$(155)		$48		$(364)		$(90)		$2,500
Loans held-in-portfolio:
Impaired loans		$-		$17,901		$-		$655		$710		$19,266
Loans held-in-portfolio, excluding impaired loans		196,684		(15,286)		(1,917)		23,992		(9,597)		193,876
Total loans held-in-portfolio		$196,684		$2,615		$(1,917)		$24,647		$(8,887)		$213,142

Popular, Inc.
Financial Supplement to Second Quarter 2018 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
(In thousands, except share or per share information)		30-Jun-18		31-Mar-18		30-Jun-17
Total stockholders’ equity		$5,289,661		$5,064,909		$5,278,045
Less: Preferred stock		(50,160)		(50,160)		(50,160)
Less: Goodwill		(627,294)		(627,294)		(627,294)
Less: Other intangibles		(31,023)		(33,347)		(40,361)
Total tangible common equity		$4,581,184		$4,354,108		$4,560,230
Total assets		$47,535,177		$45,756,761		$41,242,669
Less: Goodwill		(627,294)		(627,294)		(627,294)
Less: Other intangibles		(31,023)		(33,347)		(40,361)
Total tangible assets		$46,876,860		$45,096,120		$40,575,014
Tangible common equity to tangible assets		9.77	%	9.66	%	11.24	%
Common shares outstanding at end of period		102,296,440		102,189,914		101,986,758
Tangible book value per common share		$44.78		$42.61		$44.71

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