Popular, Inc.

What they do

Popular provides retail, mortgage, and commercial banking services, as well as auto and equipment leasing and financing, through its principal banking subsidiary, Banco Popular de Puerto Rico (BPPR), and its New York-chartered subsidiary, Popular Bank (PB), which operates branches in New York, New Jersey, and Florida. BPPR also conducts banking operations in the U.S. Virgin Islands, British Virgin Islands, and New York, and offers personal loans and gathers insured institutional deposits on a national scale. The company concentrates lending in commercial, mortgage, consumer, and construction loans.

Revenue drivers

• Commercial lending — Includes commercial and industrial loans and leases, commercial real estate loans, and multifamily loans; underwritten individually and secured by company assets and personal guarantees.
• Mortgage lending — Residential mortgage loans for purchase or refinancing, plus residential construction loans; a key component of the Puerto Rico retail franchise.
• Consumer lending — Unsecured personal loans, credit cards, automobile loans, and to a lesser extent, home equity lines of credit (HELOCs) and other individual borrower loans.
• Deposit gathering and fee income — Generates net interest income from a large deposit base ($70.2 billion at June 30, 2026) and fee income from service charges and other services; net interest margin (FTE) was 4.17% in Q2 2026.

Recent performance

For Q2 2026, Popular reported net income of $278 million, up 13% from Q1 2026 ($246 million) and 32% from Q2 2025 ($210 million). Diluted EPS was $4.35 in Q2 2026, versus $3.78 in Q1 2026 and $3.09 a year earlier. Total assets grew to $78.97 billion at June 30, 2026, from $76.13 billion at March 31, 2026, and deposits increased to $70.23 billion. Net interest margin (FTE) improved to 4.17% from 3.85% a year ago, and ROTCE rose to 17.02% from 13.26% in Q2 2025. Credit metrics softened: non-performing loans rose to $413 million (NPL ratio 1.04%) and net charge-off ratio increased to 1.05% from 0.45% year-over-year.

Strategy

Management states strategic priorities are to be the number one bank for customers, to be simple and efficient, and to be a top-performing bank. They are focused on delivering sustainable, through-the-cycle shareholder returns, as evidenced by a 20% increase in the quarterly dividend to $0.90 per share (subject to Board approval) and a new $1.0 billion share repurchase authorization. The company repurchased $125 million of common stock in Q2 2026, exhausting a previous $500 million authorization. Management cites balance sheet growth, higher net interest income, solid fee generation, and strong capital generation as drivers of recent results.

Risks

• Credit quality deterioration — Non-performing loans rose to $413 million at June 30, 2026 (NPL ratio 1.04%), and net charge-offs increased to 1.05% of average loans, up from 0.45% a year ago.
• Economic concentration in Puerto Rico — As the largest financial institution based in Puerto Rico, results are heavily dependent on the local economy, which has historically experienced volatility.
• Interest rate and margin pressure — Net interest margin improved to 3.66% (GAAP) in Q2 2026, but changes in interest rates could compress margins; deposit costs were 1.57% and could rise.
• Regulatory and compliance risk — Popular is subject to supervision by the Federal Reserve Board and FDIC, with potential for increased regulatory scrutiny or capital requirements.

Outlook

Management expects continued momentum from strategic initiatives, with a focus on balance sheet growth and efficiency. The company announced a 20% increase in the quarterly dividend to $0.90 per share and a new $1.0 billion share repurchase authorization, indicating confidence in future cash generation. CEO Javier D. Ferrer announced his retirement effective August 31, 2026, which could introduce leadership transition risk. The company aims to maintain strong capital ratios (CET1 of 16.08%) and improve shareholder returns.