Popular, Inc. Announces Third Quarter 2022 Financial Results

Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported net income of $422.4 million for the quarter ended September 30, 2022, compared to net income of $211.4 million for the quarter ended June 30, 2022. Excluding the effects of the previously announced Evertec Transactions completed during the third quarter, net income was $195.8 million

Ignacio Alvarez, President and Chief Executive Officer, said: “We are pleased with Popular’s performance in the third quarter, which reflected strong loan growth in both the mainland and Puerto Rico, an expansion of our net interest margin, and positive credit quality metrics. We are mindful of the global economic uncertainty and market volatility, but remain optimistic about the future of Puerto Rico, our main market. Consumer activity remains healthy and recovery funds from previous events are expected to provide additional stimulus. With strong fundamentals, prudent management and diversified sources of revenue, we are well-positioned to address the challenges that may lie ahead.

In addition to our financial results, I am extremely proud of our team’s response in the wake of Hurricane Fiona, which impacted Puerto Rico in September. Thanks to their agility and resolve, we mobilized quickly to assist communities in need, serve our customers despite operational challenges and support impacted colleagues. Our colleagues’ performance in events such as this one evidences our unwavering commitment to all the important stakeholders we serve.”

Significant Events

Acquisition of Key Customer Channels and Amendments to Commercial Contracts with Evertec and Subsequent Sale of Remaining Ownership Stake in Evertec

On July 1, 2022, the Corporation’s wholly owned subsidiary, Banco Popular de Puerto Rico (“BPPR”), completed its previously announced acquisition of certain assets from Evertec Group, LLC (“Evertec Group”), a wholly owned subsidiary of Evertec, Inc. (“Evertec”), to service certain BPPR channels (“Business Acquisition Transaction”).

As a result of the closing of the Business Acquisition Transaction, BPPR acquired from Evertec Group certain critical channels, including BPPR’s retail and business digital banking and commercial cash management applications. In connection with the Business Acquisition Transaction, BPPR also entered into amended and restated service agreements with Evertec Group pursuant to which Evertec Group will continue to provide various information technology and transaction processing services to Popular, BPPR and their respective subsidiaries.

Under the amended service agreements, Evertec Group no longer has exclusive rights to provide certain of Popular’s technology services. The amended service agreements include discounted pricing and lowered caps on contractual pricing escalators tied to the Consumer Price Index. As part of the transaction, BPPR and Evertec also entered into a revenue sharing structure for BPPR in connection with its merchant acquiring relationship with Evertec.

As consideration for the Business Acquisitions Transaction, BPPR delivered to Evertec Group 4,589,169 shares of Evertec common stock valued at closing at $169.2 million (based on Evertec’s stock price on June 30, 2022 of $36.88). A total of $144.8 million of the consideration for the transaction was attributed to the acquisition of the critical channels of which $28.7 million were attributed to Software Intangible Assets and $116.1 million were attributed to goodwill. The transaction was accounted for as a business combination. The remaining $24.2 million was attributed to the renegotiation of the Master Services Agreement (“MSA”) with Evertec and was recorded as an expense. The Corporation also recorded a credit of $6.9 million in Evertec billings under the MSA during the third quarter of 2022 as a result of the Business Acquisition Transaction, resulting in a net expense charge for the quarter of $17.3 million.

On August 15, 2022, the Corporation completed the sale of its remaining 7,065,634 shares of common stock of Evertec, Inc. (the “Evertec Stock Sale”, and collectively with the Business Acquisition Transaction, the “Evertec Transactions”). Following the Evertec Stock Sale, Popular no longer owns any Evertec common stock. The impact of the gain on the sale of Evertec shares used as consideration for the Business Acquisition Transaction in exchange for the acquired applications on July 1, 2022 and the net expense associated with the renegotiation of the MSA, together with the Evertec Stock Sale and the related accounting adjustments of the Evertec Transactions, resulted in an aggregate after-tax gain of $226.6 million, recorded during the third quarter of 2022.

Capital Actions

On July 12, 2022, the Corporation completed its previously announced accelerated share repurchase (“ASR”) program for the repurchase of an aggregate $400 million of Popular’s common stock, for which an initial 3,483,942 shares were delivered in March 2022 (the “March ASR Agreement”). Upon the final settlement of the March ASR Agreement, the Corporation received an additional 1,582,922 shares of common stock and recognized approximately $120 million as treasury stock with a corresponding increase in its capital surplus account. The Corporation repurchased a total of 5,066,864 shares at an average purchase price of $78.9443 under the March ASR Agreement.

On August 25, 2022, the Corporation announced that, on August 24, 2022, it entered into another ASR agreement to repurchase an aggregate of $231 million of Popular’s common stock (the “August ASR Agreement”). The $231 million in Popular’s common stock being repurchased pursuant to the August ASR Agreement is equal to the sum of the remaining $100 million in common stock repurchases contemplated as part of the Corporation’s 2022 capital actions, announced on January 12, 2022, and the after-tax gain recognized by the Corporation as a result of the sale of its remaining shares common stock of Evertec, announced on August 15, 2022. Under the terms of the August ASR agreement, on August 26, 2022, the Corporation made an initial payment of $231 million and received an initial delivery of 2,339,241 shares of Popular’s Common Stock (the “Initial Shares”). The transaction was accounted for as a treasury stock transaction. Furthermore, as a result of the receipt of the Initial Shares, the Corporation recognized in shareholders’ equity approximately $185 million in treasury stock and $46 million as a reduction of capital surplus. Upon the final settlement of the August ASR Agreement, the Corporation expects to further adjust its treasury stock and capital surplus accounts to reflect the final delivery or receipt of cash or shares, which will depend on the volume-weighted average price of the Corporation’s common stock during the term of the ASR agreement, less a discount. The final settlement of the August ASR agreement is expected to occur no later than the fourth quarter of 2022.

Hurricanes Fiona and Ian

On September 18, 2022, Hurricane Fiona made landfall in the southwest area of Puerto Rico as a Category 1 hurricane, bringing record rainfall and flooding throughout the island and affecting communities where BPPR does business. Hurricane Fiona’s rain and winds caused a complete blackout on the island and caused considerable damage to certain sectors in the southwest region. President Biden issued a disaster declaration for the island. While the impact to BPPR’s operation was not material, certain customers, highly concentrated in certain municipalities, were impacted by the disaster.

As part of hurricane relief efforts on the island, the Corporation has waived late-payment fees on individual lending products from September 16 through October 31, 2022. Popular also waived, through September 30, withdrawal fees payable by our customers at ATMs outside of the Popular network and fees payable by customers of other banking institutions at Popular’s ATMs. In addition, the Corporation has offered to clients impacted by the hurricane a moratorium of up to three monthly payments, up to December 31, 2022, on personal and commercial credit cards, auto loans, leases and personal loans, subject to certain eligibility requirements. Mortgage clients may also benefit from different payment relief alternatives available, depending on their type of loan. Loan relief options for commercial clients are reviewed on a case-by-case basis.

Separately, on September 28, 2022, Hurricane Ian made a landfall on the west coast of central Florida as a Category 4 hurricane, causing extensive floods and destruction in the impacted areas in Florida. President Biden made a major disaster declaration for certain counties in central Florida. PB and BPPR do not have significant operations in the area but have some limited retail and commercial clients who reside or have business activities in the impacted areas.

For clients impacted by the hurricane that reside in counties in Florida declared as disaster zones by President Biden, Popular has offered a moratorium for up to three payments, up to January 31, 2023, subject to certain eligibility requirements. As in the case of Puerto Rico, relief options for commercial clients are reviewed on a case-by-case basis.

The Corporation is still evaluating the impact of Hurricanes Fiona and Ian. However, given the hurricanes’ limited impact in the markets in which Popular does business and low level of assistance requests received by the Corporation to date, the effect on credit risk should not be significant.

Transfer of Securities from Available-for Sale to Held-To-Maturity

In October 2022, the Corporation transferred U.S. Treasury securities with a fair value of $6.5 billion (par value of $7.4 billion) from its available-for-sale portfolio to its held-to-maturity portfolio. This transaction was accounted for during the fourth quarter of 2022, when management changed its intent to hold these securities to maturity, given the Corporation’s liquidity position and its intention to reduce the impact on accumulated other comprehensive income (“AOCI”) and tangible capital of further increases in interest rates.

The securities were reclassified at fair value at the time of the transfer. At the date of the transfer, these securities had pre-tax unrealized losses of $873.1 million recorded in AOCI. This fair value discount will be accreted to interest income and the unrealized loss remaining in AOCI will be amortized, offsetting each other through the remaining life of the securities. There were no realized gains or losses recorded as a result of this transfer.

While changes in the amount of unrealized gains and losses in AOCI have an impact on the Corporation’s and its wholly-owned banking subsidiaries’ tangible capital ratios, they do not impact regulatory capital ratios, in accordance with the regulatory framework.

Net interest income on a taxable equivalent basis – Non-GAAP financial measure

Net interest income, on a taxable equivalent basis, is presented with its different components in Table D and E for the quarter and year ended September 30, 2022 and comparable periods. Net interest income on a taxable 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.

Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

Net interest income for the quarter ended September 30, 2022 was $579.6 million, compared to $533.9 million in the previous quarter, an increase of $45.7 million. Net interest income on a taxable equivalent basis for the third quarter of 2022 was $646.6 million, compared to $595.5 million in the second quarter of 2022, or an increase of $51.1 million.

Net interest margin for the quarter increased 23 basis points to 3.32% from 3.09% in the second quarter of 2022. On a taxable equivalent basis, net interest margin for the third quarter of 2022 was 3.71%, compared to 3.45% in the prior quarter. The increase in net interest margin is mainly related to higher earning assets yields due to a higher interest rate environment, partially offset by an increase in funding costs. The change in earning asset mix also impacted net interest margin positively, with increases in loan balances and reductions to lower yielding money markets, investments and trading securities. The main variances in net interest income on a taxable equivalent basis were:

• higher interest income from money market, trading and investment securities by $48.7 million, resulting from higher yield of the portfolio by 52 basis points driven mainly by the increase in the interest on excess funds at the Federal Reserve of 135 basis points and investment of U.S. Treasury securities in a higher interest rate environment. Interest income on these securities is exempt for income tax purposes under the Puerto Rico’s Internal Revenue Code;
• quarter-over-quarter, the Corporation’s loan portfolio increased by $832 million, in average, reflecting increases across all major loan segments except mortgages. Furthermore, one more day in the quarter resulted in approximately $3.7 million increase in interest income from loans;
• higher interest income from commercial loans by $22.2 million due to higher average volume of loans by $523 million and higher yield by 36 basis points due to the higher rate environment. Both BPPR and PB experienced growth in commercial loans; and
• higher interest income from consumer loans, mainly driven by higher average volume by $227 million mainly at BPPR, and increase in the yield of the portfolio by 16 basis points;

partially offset by:

• higher interest expense on deposits by $33.1 million due to the increase in rates, mainly from Puerto Rico government deposits and commercial deposits

Net interest income for the BPPR segment amounted to $488.1 million for the third quarter of 2022, compared to $447.8 million in the second quarter of 2022. Net interest margin for the third and second quarters of 2022 was 3.27% and 3.02%, respectively, an improvement of 25 basis points quarter-over-quarter. As discussed above, the net interest margin was impacted by higher volume and yield on investments and loans, partially offset by higher cost of deposits. The cost of interest-bearing deposits was 0.45%, compared to 0.19% in the second quarter of year, led mainly by repricing of public funds and corporate clients. Total deposit cost for the quarter also increased by 20 basis points from 0.14% to 0.34%.

Net interest income for PB was $98.9 million for the quarter ended September 30, 2022, compared to $93.4 million during the previous quarter. Net interest margin for the quarter was 3.84%, an increase of 8 basis points from the 3.76% reported in the second quarter. The increase in net interest income results mostly from a higher volume and yield on commercial loans, partially offset by higher costs on deposit driven by the change in interest rate environment. The cost of interest-bearing deposits was 0.85%, increasing 31 basis points from the 0.54% reported in the second quarter of 2022, while the total cost of deposits, including demand deposits, was 0.67%, an increase of 25 basis points when compared to 0.42% in the previous quarter.

Non-interest income

Non-interest income amounted to $426.5 million for the third quarter of 2022, an increase of $269.1 million compared to $157.4 million in the previous quarter. The results for the third quarter of 2022 included the gain from the Evertec Transactions and the related final equity investment accounting of Popular’s equity investment in Evertec of $257.7 million. Other factors that contributed to the variance in non-interest income were:

• higher other service fees by $5.0 million due to higher merchant acquiring fees by $3.3 million related to the revenue sharing agreement entered into in connection with the Evertec Transactions and higher insurance commission fees, including contingent payments of approximately $500 thousand received during the quarter;
• lower unrealized losses by $2.7 million on the portfolio of equity securities related to benefit plans, which have an offsetting effect as higher personnel costs;
• a favorable adjustment of $9.2 million in the fair value of the contingent consideration related to purchase price adjustments for the acquisition of the K2 Capital Group LLC business in 2021 (‘’K2 Acquisition’’), as the Corporation updated its estimates related to the realizability of the earnings targets for the contingent payment; and
• higher earnings from the portfolio of equity method investments by $2.5 million, excluding Evertec;

partially offset by:

• lower service charges on deposit accounts by $1.8 million due to lower returned ACH fees and the Corporation’s initiative of eliminating insufficient funds fees and modifying overdraft fees during the quarter; and
• lower mortgage banking activities by $4.1 million due to a negative variance in the valuation of mortgage servicing rights by $2.8 million and a negative variance of $2.7 million in realized losses in closed derivative positions.

Refer to Table B for further details.

Operating expenses

Operating expenses for the third quarter of 2022 totaled $476.1 million, an increase of $69.8 million, including a $17.3 million charge in connection with the Evertec Transactions and a $9.0 million impairment of goodwill related to the 2021 K2 Acquisition, when compared to the second quarter of 2022. The variance in operating expenses was driven primarily by:

• higher personnel cost by $25.1 million mainly due to higher salaries as a result of market adjustments and annual salary revisions effective in July 2022. The remaining increase in personnel costs is mainly related to an increase in medical insurance premiums, and higher incentives related to the profit-sharing and other incentive plans that are tied to the Corporation’s financial performance;
• higher other professional fees by $11.8 mainly due to higher advisory expense related to corporate initiatives;
• higher business promotion expenses by $3.0 million mainly due to donations, including hurricane related donations, and promotional events during the quarter;
• lower other real estate owned (OREO) income by $5.4 million mainly due to lower gain on sale of mortgage and commercial properties;
• higher credit and debit card processing, volume, interchange and other expenses by $3.4 million mainly due to lower volume incentives;
• higher other operating expenses by $23.4 million, mainly due to higher legal reserves and the $17.3 million expense related to the Evertec Transactions, net of the $6.9 million in credits received in connection with this transaction; and
• a goodwill impairment charge of $9.0 million due to a decrease in Popular Equipment Finance’s (PEF) projected earnings considered as part of the Corporation’s annual goodwill impairment analysis.

partially offset by:

• lower programming, processing, and other technology services by $13.9 million due to lower application hosting, IT consulting and related expenses and lower merchant processing fees reflecting savings as a result of the Evertec Transactions.

The Corporation is in the process of completing its annual goodwill impairment test, using July 31, 2022 as the evaluation date. The Corporation expects to complete its evaluation prior to the filing of its Form 10-Q for the quarter ended September 30, 2022 with the Securities and Exchange Commission. Any further impairment of goodwill would result in a non-cash expense, net of tax impact. A charge to earnings related to a goodwill impairment would not impact regulatory capital calculations.

Full-time equivalent employees were 8,747 as of September 30, 2022, including 77 employees related to the Evertec Business Acquisition Transaction, compared to 8,615 as of June 30, 2022.

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

Income taxes

For the quarter ended September 30, 2022, the Corporation recorded an income tax expense of $68.0 million, compared to $64.2 million for the previous quarter. The increase in income tax expense was mainly attributable to higher income before tax. The effective tax rate (“ETR”) for the third quarter of 2022 was 14%, compared to 23% for the previous quarter. The ETR of the Corporation is impacted by the composition and source of its taxable income. The reduction in the ETR for the third quarter is mainly attributed to the gain from the Evertec Transactions, which is subject to a preferential tax rate. The Corporation expects its ETR for the year 2022 to be within a range from 17% to 20%.

Credit Quality

During the third quarter of 2022, the Corporation showed stable credit quality trends with low levels of NCOs and decreasing NPLs. We continue to closely monitor changes in the macroeconomic environment and on borrower performance, given inflationary pressures and geopolitical uncertainty. However, management continues to believe that the improvement over recent years in the risk profile of the Corporation’s loan portfolios positions Popular to operate successfully under the current environment. The impact of Hurricanes Fiona and Ian is still being evaluated but given Fiona’s limited impact in the markets that Popular does business and low levels of assistance requests received to date, the effect on credit risk should not be significant.

The following presents credit quality results for the third quarter of 2022:

• At September 30, 2022, total non-performing loans held-in-portfolio decreased by $24.5 million from June 30, 2022. BPPR’s NPLs decreased by $34.6 million, mostly driven by lower mortgage and commercial NPLs by $31.9 million and $9.0 million, respectively, in part offset by higher auto loans NPLs by $6.4 million. The mortgage NPLs decrease was mainly due to the combined effects of collection efforts, increased foreclosure activity and sustained low levels of early delinquency compared with pre-pandemic trends. PB’s NPLs increased by $10.1 million quarter-over-quarter, solely due to a $10.6 million commercial borrower within the healthcare industry that was placed in non-accrual status during the quarter due to financial distress. At September 30, 2022, the ratio of NPLs to total loans held-in-portfolio was 1.4%, compared to 1.6% in the second quarter of 2022.
• Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $5.5 million quarter-over-quarter. In BPPR, total inflows decreased by $3.1 million, mostly driven by lower mortgage inflows of $7.3 million, in part offset by higher commercial inflows by $4.2 million. Mortgage inflows continued trending lower than pre-pandemic levels. NPL inflows at PB increased by $8.5 million quarter-over-quarter, mainly driven the abovementioned commercial healthcare NPL.
• NCOs amounted to $18.2 million, an unfavorable variance of $12.2 million when compared to the second quarter of 2022. BPPR’s NCOs reflected an unfavorable variance of $13.1 million, mainly related to higher consumer, commercial and mortgage NCOs by $7.5 million, $2.3 million, and $2.3 million, respectively. The commercial NCOs was mainly driven by a $4.5 million previously reserved relationship charged-off in September partially offset by higher recoveries. PB’s NCOs remained essentially flat quarter-over-quarter. During the third quarter of 2022, the Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was 0.24%, compared to 0.08% in the second quarter of 2022. Refer to Table M for further information on net charge-offs and related ratios.
• At September 30, 2022, the ACL increased by $21.3 million, or 3.1%, from the second quarter of 2022 to $703.1 million. The ACL incorporated updated macroeconomic scenarios for Puerto Rico and the United States. 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 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. This quarter, as part of its evaluation procedures, the Corporation decided to extend the reversion window from 1 year to 3 years. This change in assumptions contributed to a reduction of $11 million in the ACL. The reasonable and supportable period assumptions remained unchanged.
• The baseline scenario assumes an annualized 2022 GDP growth of 3.1% and 1.6% for Puerto Rico and United States, respectively, compared to 2.8% for both regions in the previous quarter. The improvement in P.R.’s GDP was mainly due to updated fiscal assumptions, which include the potential impact of the Inflation Reduction Act. As for the U.S., the reduction in GDP growth was driven by updated data for the second quarter of 2022, which reflected two consecutive quarters of GDP decline. 2023 annualized GDP growth for P.R. and U.S. of 2.2% and 1.5%, respectively, compared to 2.7% for both regions in the previous quarter. The reduction in 2023 is in part due to tight monetary policy, weaker job growth and persistent inflation.
• The 2022 average unemployment rate remained largely consistent QoQ forecasted at 6.6% and 3.6% for Puerto Rico and United States, respectively, compared to 6.9% and 3.5%, respectively, in the previous forecast. For 2023 the forecasted average unemployment rate for P.R. and U.S. is 7.8% and 3.9%, slightly higher than previous quarter’s 7.6% and 3.4% for P.R. and U.S., respectively.
• In BPPR, the ACL increased by $10.4 million, mostly driven by higher loan volumes and changes in credit quality. The ACL for the PB segment increased by $11.0 million quarter-over-quarter, mainly driven by an $8.4 million reserve recorded for the abovementioned commercial healthcare NPL. The Corporation’s ratio of the allowance for credit losses to loans held-in-portfolio was 2.23% in the third quarter of 2022, compared to 2.24% in the previous quarter. The ratio of the allowance for credit losses to NPLs held-in-portfolio stood at 155.1%, compared to 142.7% in the previous quarter.
• The provision for credit losses for the loan portfolios for the third quarter of 2022 was an expense of $39.5 million, compared to an expense of $9.9 million in the previous quarter, reflecting the previously mentioned changes in the allowance for credit losses. The provision for the BPPR segment was an expense of $28.7 million, compared to an expense of $9.1 million in the previous quarter, while the provision for the PB segment was an expense of $10.8 million, compared to an expense of $0.7 million in the previous quarter.
• The provision for unfunded commitments for the third quarter of 2022 was an expense of $0.4 million, compared to a benefit of $0.2 million in the previous quarter. The provision for credit losses in our investment portfolio was a benefit of $0.3 million, flat quarter-over-quarter. The provision for unfunded loan commitments, provision for credit losses on our loan and lease portfolios and provision for credit losses on our investment portfolio are aggregated and presented in the provision for credit losses caption in our Statement of Operations.

Total assets amounted to $70.7 billion at September 30, 2022, a decrease of $0.8 billion from the second quarter of 2022, driven by:

• A decrease in aggregated cash and money market investments of $4.2 billion due in part to a decrease in deposit balances and the purchase of investment securities and growth in loan portfolios;

partially offset by:

• an increase in debt securities available-for-sale of $2.0 billion. The increase is driven by purchases of 3-month maturity U.S. Treasury securities that currently provide a higher tax-effected yield than overnight fed funds, offset by maturities and paydowns;
• an increase in debt securities held-to-maturity of $290.0 million due to the purchase of U.S. Treasury securities offset by maturities and paydowns; and
• an increase in loans held-in-portfolio of $1.2 billion across all loan categories. The increase was mainly due to commercial loans growth at both BPPR and PB and an increase in consumer loans, mainly at BPPR, including auto loans, credit cards and other consumer loans. BPPR’s commercial loan growth included U.S. region loans of $53.7 million participated between BPPR and PB;
• an increase of $107.1 million in goodwill due to the $116.1 million recorded in connection with the Evertec Business Acquisition Transaction, offset by the impairment of $9.0 million related to the K2 Acquisition.

Total liabilities decreased by $0.2 billion from the second quarter of 2022, driven by:

• a decrease of $0.5 billion in deposits, mainly in Puerto Rico related to time deposits managed through the Corporation’s Fiduciary Services Division, offset by an increase in public sector accounts;

partially offset by:

• an increase in borrowings of $341.5 million, mainly due to advances from the FHLB at PB.

Stockholders' equity decreased by $618.5 million from the second quarter of 2022, principally due to an increase in accumulated unrealized losses on debt securities available-for-sale by $781.9 million due to a decline in the fair value of fixed-rate debt securities as a result of the rising interest rate environment, the net effect of $231 million related to the accelerated share repurchase agreement entered into during August 2022 and to dividends, partially offset by the net income of $422.4 million for the quarter.

Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 16.04%, $50.26 and $38.69, respectively, at September 30, 2022, compared to 16.39%, $55.78 and $46.18 at June 30, 2022. 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 regarding Popular’s acquisition of certain assets and assumption of certain liabilities from Evertec and the transactions described in this press release (the “Transaction”) and 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 and regulatory proceedings, new accounting standards on the Corporation’s financial condition and results of operations, the scope and duration of the COVID-19 pandemic (including the appearance of new strains of the virus), actions taken by governmental authorities in response thereto, and the direct and indirect impact of the pandemic on Popular, our customers, service providers and third parties. Other factors include Popular’s ability to successfully transition and integrate the assets acquired as part of the Transaction, related operations, employees and third party contractors; unexpected costs, including, without limitation, costs due to exposure to any unrecorded liabilities or issues not identified during due diligence investigation of the Transaction or that are not subject to indemnification or reimbursement by Evertec; operational risks that may affect Popular and other risks arising from the acquisition of the acquired assets or by adverse effects on relationships with customers, employees and service providers and business and other risks arising from the extension of Popular’s current commercial agreements with Evertec. 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, 2021, in our Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022 and in our Form 10-Q for the quarter ended September 30, 2022 to be filed with the Securities and Exchange Commission. 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.

About Popular, Inc.

Popular, Inc. (NASDAQ: BPOP) 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 in Puerto Rico 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 Wednesday, October 26, 2022 at 11:00 a.m. Eastern Time. The call will be broadcast 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 1-844-200-6205 (Toll Free) or 1-646-904-5544 (Local). The dial-in access code is 775117.

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, November 24, 2022. The replay dial in is: 1-866-813-9403 or 1-929-458-6194. The replay passcode is 982947.

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