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    BPOP
    Earnings call· Jun 2026(Q2 FY26)

    POPULAR, INC. BPOP

    Jul 23, 2026 Source

    Executive summary

    Popular, Inc. Q2 FY26 — Strong Earnings Growth and Increased Capital Returns

    Popular, Inc. delivered a very strong second quarter, marked by robust earnings growth and significant capital returns to shareholders, including a new $1 billion share repurchase authorization and a 20% dividend increase. The quarter also saw a planned leadership transition, with Javier Ferrer announcing his retirement and Jorge Garcia stepping into the CEO role. The company continues to advance strategic initiatives, leveraging a stable Puerto Rico economic environment and disciplined expense management, while navigating specific commercial credit events and competitive pressures in deposit markets.

    Highlights

    5

    • Reported net income of $278 million and earnings per share of $4.35, an increase of 15% QoQ and 41% YoY.

    • Return on Tangible Common Equity (ROTCE) improved to 17% during the quarter.

    • Loans held in portfolio increased by $460 million, driven by commercial, construction, and mortgage lending.

    • Total deposits increased by $2.6 billion, primarily reflecting higher Puerto Rico public deposits.

    • Announced a 20% increase in quarterly dividend to $0.90 per share and a new $1 billion share repurchase authorization.

    Concerns

    3

    • Resolution of a $155 million nonperforming commercial loan resulted in a $71 million charge-off.

    • Two unrelated commercial and industrial relationships totaling approximately $129 million were placed on nonaccrual status.

    • Customer deposits, excluding Puerto Rico public funds, declined by approximately $400 million QoQ.

    Guidance & targets

    10
    CategoryTargetConfidence
    Loan growth
    low end of the 3% to 4% range
    medium materiality
    Medium
    Public deposits
    $20 billion to $22 billion
    medium materiality
    Medium
    Net interest income (NII) growth
    between 8% and 9%
    high materiality
    Medium
    Net interest margin (NIM)
    remain generally stable
    high materiality
    Medium
    Quarterly noninterest income
    $165 million to $170 million
    medium materiality
    Medium
    Full year expense growth
    approximately 2% to 3%
    high materiality
    Medium
    Effective tax rate
    between 14% and 15%
    medium materiality
    Medium
    Common stock repurchases
    $300 million to $400 million
    high materiality
    High
    Net charge-offs (NCOs)
    65 to 80 basis points
    high materiality
    Medium
    Annual ROTCE objective
    14% to 17%
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Banco Popular de Puerto Rico (BPPR)
    Deposit costs increased by 1 basis point, driven by a 2 basis point increase in nonpublic customer deposits as a result of targeted retention strategies, while public deposit costs decreased by 5 basis points.
    NPLs decreased by $52 million
    		————
    Popular Bank (U.S.)
    Deposit costs increased by 4 basis points, reflecting competitive conditions in our markets and online deposit space.
    NPLs increased by $8 million
    		————

    Operational metrics

    29
    Return on Tangible Common Equity (ROTCE)
    17%up from 15.5% in Q1 FY26 and 13.3% in Q2 FY25
    Q2 FY26

    Improved due to strong financial results.

    Total deposits
    $20.2 billionup $2.6 billion QoQ
    Q2 FY26

    Primarily reflecting higher balances of Puerto Rico public deposits.

    Puerto Rico public deposits
    $22.7 billionup $3 billion QoQ
    Q2 FY26

    A large part of the increase was driven by estimated tax payments from pharmaceuticals and manufacturing companies.

    Customer deposits (excluding public funds)
    $400 milliondeclined QoQ
    Q2 FY26

    Consistent with historical seasonality as clients spent tax refunds.

    Average total deposits
    $1.9 billionincreased QoQ
    Q2 FY26

    Reflects seasonal trends.

    Average total deposits (excluding Puerto Rico public deposits)
    $800 millionincreased QoQ
    Q2 FY26

    Reflects seasonal trends.

    Total deposit costs
    1.57%up 1 bps QoQ
    Q2 FY26

    Demonstrates continued stability of the funding base.

    Noninterest income
    $181 millionup $15 million QoQ, up 7% YoY
    Q2 FY26

    Above guidance range, driven by growth in debit and credit card fees and asset management/insurance fees.

    Debit card fees growth
    13%YoY
    Q2 FY26

    Reflects increased customer activity.

    Credit card fees growth
    7%YoY
    Q2 FY26

    Reflects increased customer activity.

    Asset management and insurance fees growth
    7%YoY
    Q2 FY26

    Demonstrates ability to benefit from breadth of product offerings.

    Operating expenses
    $484 millionup $17 million QoQ
    Q2 FY26

    Primarily related to higher personnel costs, including profit sharing and performance-based compensation, and business promotion expenses.

    Effective tax rate
    14%
    Q2 FY26

    Driven by higher tax-exempt income.

    Tangible book value per share
    $87.94up $2.96 QoQ
    Q2 FY26

    Reflects strong internal capital generation.

    Common stock repurchases
    $125 million
    Q2 FY26

    Fully utilized the prior $500 million authorization approved in 2025.

    Year-to-date common stock repurchases
    $280 million
    YTD FY26

    Reflects capital return strategy.

    Dividend per share
    $0.75
    Q2 FY26

    Quarterly dividend paid.

    Total capital returned to shareholders
    $174 million
    Q2 FY26

    Includes common stock repurchases and dividends.

    Puerto Rico unemployment rate
    5.8%
    June

    Indicates a healthy labor market.

    Popular's debit and credit card sales volume growth
    >7%YoY
    Q2 FY26

    Demonstrates continued activity across the customer base.

    Puerto Rico hotel demand
    2 million room nightsup 7% YoY
    Jan-May

    Tourism continues to be a major source of strength.

    Puerto Rico cruise passenger arrivals growth
    45%YoY
    through May

    Strong tourism activity.

    Luis Manuel Lending Airport air passenger traffic decline
    4%YoY
    Q2 FY26

    Moderated a bit from record levels, but new routes announced by airlines should support future visitation.

    Manufacturing investment in Puerto Rico
    $2.3 billion
    since 2025

    Across pharmaceutical, aerospace, logistics, technology, and advanced manufacturing sectors.

    NPL inflows (excluding consumer loans)
    $137 million
    Q2 FY26

    Primarily reflecting two C&I relationships placed on nonaccrual status.

    Allowance for Credit Losses (ACL) to total loans ratio
    1.97%
    Q2 FY26

    Allowance coverage remained strong.

    Allowance for Credit Losses (ACL) to NPL ratio
    190%up from 180% in Q1 FY26
    Q2 FY26

    Allowance coverage remained strong.

    Investment portfolio purchases
    $1.1 billion
    Q2 FY26

    Reinvesting proceeds from bond maturities into U.S. treasury notes and bills.

    Efficiency efforts savings
    $50 million
    FY26

    Expected savings across the organization from operational excellence initiatives.

    Industry KPIs

    13
    MetricValueDetails
    Loans$460 millionUSD
    Deposits$20.2 billionUSD
    Rotce ROE17%%
    Cet1 ratio16.1%%
    Capital returns$1 billionUSD
    Fee income lines—
    Allowance reserves1.97%%
    Net interest income$693 millionUSD
    Net interest margin3.66%%
    Net charge offs npls1.04%%
    Total operating expenses$484 millionUSD
    Provision for credit losses—
    Efficiency ratio operating leverage—

    Product announcements

    2
    ProductTypeDetails
    Corporate Credit Card Solutionslaunch
    Mi Créditolaunch

    Risks & headwinds

    5
    Mortgage affordability constraints

    not quantified

    Competitive conditions in U.S. markets and online deposit space

    not quantified

    Mitigation: Targeted retention strategies for deposits.

    Higher cost of public depositsrest of the year

    expected to temper some of the benefit to margin

    Headwinds in construction portfolio

    not quantified

    Mitigation: Monitoring timing of payoffs as construction loans term out versus pipeline speed.

    New C&I nonaccrual loansQ2 FY26

    $129 million

    Mitigation: Viewed as borrower-specific situations, not indicative of broader deterioration; adequately reserved.

    What to watch in Q3 FY26

    5

    Loan growth

    next quarter
    Currentlow end of 3% to 4% range (FY26 guidance)
    Targetconsistency with guidance or upward revision

    Why it matters

    Loan growth is a key driver of NII and overall bank profitability, indicating economic activity and lending opportunities.

    Our loan growth guidance remains consistent from last quarter at the low end of the 3% to 4% range.

    Q&A highlights

    10

    Has the underlying expectation for optimal capital levels changed, and is the $1 billion buyback authorization a 12-month goal?

    The $1 billion authorization has no time limit. The company expects to repurchase $300-$400 million in common stock for the remainder of 2026, which combined with dividends, covers around 100% of 2025 net income. They are open to optimizing the capital stack with additional Tier 1 capital but market rates are not favorable now.

    “So first, the authorization does not have a time limit. So I want to clarify that it is not a 12-month deadline or anything like that. We did say that we would be executing buybacks for the rest of the year in the $300 million to $400 million range.”

    asked by Jared David Shaw · answered by Jorge Garcia

    2 min read5 chapters

    Detailed Narrative

    01

    Leadership Transition and Succession

    Javier Ferrer-Fernández announced his retirement as President and CEO, effective end of August, citing health reasons. Jorge Garcia, current CFO, will succeed him as CEO, and Lidio Soriano, current CRO, will become CFO. Luis Sousa will take over as CRO. This transition reflects a thoughtful succession process and the depth of internal talent, ensuring continuity and confidence in the organization's future leadership.

    02

    Puerto Rico Economic Environment

    Business activity in Puerto Rico remained stable in Q2 FY26, supported by a healthy labor market with unemployment at 5.8% in June. Strong tourism activity, including a 7% year-over-year increase in hotel demand and a 45% increase in cruise passenger arrivals, continues to drive growth. Ongoing infrastructure investment and approximately $2.3 billion in manufacturing investments since 2025 further bolster the economy, despite a slight moderation in air passenger traffic.

    03

    Strategic Focus and Digital Transformation

    Popular continues to execute its strategic framework focused on being the #1 bank, simple and efficient, and a top-performing institution. Investments in physical and digital channels include upgrading over half of Banco Popular de Puerto Rico's branches and enhancing technological capabilities. The company is also leveraging digital tools for retail customers, modernizing its cash management platform for commercial clients, and expanding targeted segment strategies in healthcare and Community Association Banking.

    04

    Capital Management and Shareholder Returns

    The company demonstrated strong capital generation, with CET1 increasing 16 basis points to 16.1%. Popular returned $174 million to shareholders in Q2, including $125 million in common stock repurchases, fully utilizing the prior $500 million authorization. A new $1 billion share repurchase authorization was announced, alongside a 20% increase in the quarterly dividend to $0.90 per share, reflecting a balanced approach to capital allocation.

    05

    Credit Quality Trends

    Overall credit quality remained stable, with continued improvement in consumer credit performance and strong mortgage trends. The company resolved its largest nonperforming commercial relationship, a $155 million loan, which resulted in a $71 million charge-off. However, two unrelated commercial and industrial relationships totaling $129 million were placed on nonaccrual status, though management views these as isolated incidents not indicative of broader portfolio deterioration. Allowance coverage remains strong at 1.97% of loans.

    AI-generated summary of the company’s earnings call. Not investment advice.