The risks of the Westernbank FDIC-assisted transaction acquired loans are significantly different from those loans not covered under the FDIC loss sharing agreements because of the loss protection provided by the FDIC. Accordingly, the Corporation presents loans subject to the loss sharing agreements as “covered loans” in the information below and loans that are not subject to the FDIC loss sharing agreements as “non-covered loans”.

For a summary of the accounting policy related to loans, interest recognition and allowance for loan losses refer to the summary of significant accounting policies included in Note 2 to these consolidated financial statements.

The following tables present the composition of loans held-in-portfolio (“HIP”), net of unearned income, at December 31, 2011 and 2010.

		Non-covered loans at		Covered loans at		Total loans HIP at
(In thousands)		December 31, 2011		December 31, 2011		December 31, 2011
Commercial real estate		$	6,689,686	$	2,271,295	$	8,960,981
Commercial and industrial			3,845,200		241,447		4,086,647
Construction			311,628		546,826		858,454
Mortgage			5,518,460		1,172,954		6,691,414
Leasing			563,867		-		563,867
Consumer:
	Credit cards		1,230,029		-		1,230,029
	Home equity lines of credit		557,894		-		557,894
	Personal		1,130,593		-		1,130,593
	Auto		518,476		-		518,476
	Other		236,763		116,181		352,944
Total loans held-in-portfolio^[1]		$	20,602,596	$	4,348,703	$	24,951,299

		Non-covered loans at		Covered loans at		Total loans HIP at
(In thousands)		December 31, 2010		December 31, 2010		December 31, 2010
Commercial real estate		$	7,006,676	$	2,463,549	$	9,470,225
Commercial and industrial			4,386,809		303,632		4,690,441
Construction			500,851		640,492		1,141,343
Mortgage			4,524,722		1,259,459		5,784,181
Leasing			602,993		-		602,993
Consumer:
	Credit cards		1,132,308		-		1,132,308
	Home equity lines of credit		568,353		-		568,353
	Personal		1,236,067		-		1,236,067
	Auto		503,757		-		503,757
	Other		265,499		169,750		435,249
Total loans held-in-portfolio^[1]		$	20,728,035	$	4,836,882	$	25,564,917

The following table provides a breakdown of loans held-for-sale (“LHFS”) at December 31, 2011 and 2010 by main categories.

During the year ended December 31, 2011, the Corporation recorded purchases of mortgage loans amounting to $1.3 billion. In addition, during the year ended December 31, 2011, the Corporation recorded purchases of credit cards relationships with balances of approximately $131 million. There were no significant purchases of commercial and construction loans during 2011.

The Corporation sold approximately $350 million of residential mortgage loans during the year ended December 31, 2011. Also, the Corporation securitized approximately $907 million of mortgage loans to Government National Mortgage Association (“GNMA”) mortgage-backed securities during the year ended December 31, 2011. Furthermore, the Corporation securitized approximately $206 million of mortgage loans in Federal Mortgage Association (“FNMA”) mortgage-backed securities during the year ended December 31, 2011.

During the third quarter of 2011, the Corporation transferred $27 million of commercial and construction loans held-in-portfolio to loans to held-for-sale at a value of $14 million. This resulted in a write-down at the time of transfer of $12.7 million. Also, during the quarter ended September 30, 2011, these loans as well as other construction and commercial loans held-for sale with a combined book value of $128 million were sold to a newly created joint venture in which the Corporation holds a minority interest. Refer to Note 28 to the consolidated financial statements for details of this transaction. Besides this sale, the Corporation sold commercial and construction loans with a book value of approximately $30 million during the year ended December 31, 2011.

The following tables present non-covered loans held-in-portfolio that are in non-performing status and accruing loans past due 90 days or more by loan class at December 31, 2011 and 2010. Accruing loans past due 90 days or more consist primarily of credit cards, FHA / VA and other insured mortgage loans, and delinquent mortgage loans included in the Corporation's financial statements pursuant to GNMA's buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option. Also, accruing loans past due 90 days or more include residential conventional loans purchased from other financial institutions that, although delinquent, the Corporation has received timely payment from the sellers / servicers, and, in some instances, have partial guarantees under recourse agreements. However, residential conventional loans purchased from other financial institutions, which are in the process of foreclosure, are classified as non-performing mortgage loans.

At December 31, 2011
			Puerto Rico				U.S. mainland				Popular, Inc.
				Accruing				Accruing				Accruing
		Non-accrual		loans past-due		Non-accrual		loans past-due			Non-accrual	loans past-due
(In thousands)		loans		90 days or more		loans		90 days or more			loans	90 days or more
Commercial real estate		$	453,879	$	-	$	182,158	$	-	$	636,037	$	-
Commercial and industrial			177,292		675		59,544		-		236,836		675
Construction			53,859		-		75,140		-		128,999		-
Mortgage			649,279		280,912		37,223		-		686,502		280,912
Leasing			5,642		-		166		-		5,808		-
Consumer:
	Credit cards		-		25,748		735		-		735		25,748
	Home equity lines of credit		-		157		10,065		-		10,065		157
	Personal		19,317		-		1,516		-		20,833		-
	Auto		6,830		-		34		-		6,864		-
	Other		5,144		468		27		-		5,171		468
Total^[1]		$	1,371,242	$	307,960	$	366,608	$	-	$	1,737,850	$	307,960

[1] For purposes of this table non-performing loans exclude $ 262 million in non-performing loans held-for-sale.

At December 31, 2010
			Puerto Rico				U.S. mainland				Popular, Inc.
				Accruing				Accruing				Accruing
		Non-accrual		loans past-due		Non-accrual		loans past-due			Non-accrual	loans past-due
(In thousands)		loans		90 days or more		loans		90 days or more			loans	90 days or more
Commercial real estate		$	370,677	$	-	$	182,456	$	-	$	553,133	$	-
Commercial and industrial			114,792		-		57,102		-		171,894		-
Construction			64,678		-		173,876		-		238,554		-
Mortgage			518,446		292,387		23,587		-		542,033		292,387
Leasing			5,674		-		263		-		5,937		-
Consumer:
	Credit cards		-		33,514		-		-		-		33,514
	Home equity lines of credit		-		-		17,562		-		17,562		-
	Personal		22,816		-		5,369		-		28,185		-
	Auto		7,528		-		135		-		7,663		-
	Other		6,892		1,442		-		-		6,892		1,442
Total^[1]		$	1,111,503	$	327,343	$	460,350	$	-	$	1,571,853	$	327,343

[1] For purposes of this table non-performing loans exclude $ 672 million in non-performing loans held-for-sale.

At December 31, 2011 non-covered loans held-in-portfolio on which the accrual of interest income had been discontinued amounted to $1.7 billion (December 31, 2010 - $1.6 billion). Non-accruing loans at December 31, 2011 include $44 million in consumer loans (December 31, 2010 - $60 million).

The following tables present loans by past due status at December 31, 2011 and 2010 for non-covered loans held-in-portfolio (net of unearned income).

December 31, 2011
Puerto Rico
			Past due
												Loans held-
		30-59		60-89		90 days		Total				in-portfolio
(In thousands)		days		days		or more		past due		Current		Puerto Rico
Commercial real estate		$	56,597	$	21,586	$	453,879	$	532,062	$	3,075,090	$	3,607,152
Commercial and industrial			46,013		17,233		177,967		241,213		2,622,217		2,863,430
Construction			608		21,055		53,859		75,522		85,419		160,941
Mortgage			202,072		98,565		930,191		1,230,828		3,458,655		4,689,483
Leasing			7,927		2,301		5,642		15,870		532,836		548,706
Consumer:
	Credit cards		14,507		11,479		25,748		51,734		1,164,086		1,215,820
	Home equity lines of credit		155		395		157		707		19,344		20,051
	Personal		17,583		10,434		19,317		47,334		935,854		983,188
	Auto		22,677		5,883		6,830		35,390		480,874		516,264
	Other		1,740		1,442		5,612		8,794		226,310		235,104
Total		$	369,879	$	190,373	$	1,679,202	$	2,239,454	$	12,600,685	$	14,840,139

December 31, 2011
U.S. mainland
			Past due
												Loans held-
		30-59		60-89		90 days		Total				in-portfolio
(In thousands)		days		days		or more		past due		Current		U.S. mainland
Commercial real estate		$	69,079	$	6,882	$	182,158	$	258,119	$	2,824,415	$	3,082,534
Commercial and industrial			24,436		7,858		59,544		91,838		889,932		981,770
Construction			3,921		-		75,140		79,061		71,626		150,687
Mortgage			30,594		13,190		37,223		81,007		747,970		828,977
Leasing			201		204		166		571		14,590		15,161
Consumer:
	Credit cards		314		229		735		1,278		12,931		14,209
	Home equity lines of credit		7,090		3,587		10,065		20,742		517,101		537,843
	Personal		3,574		2,107		1,516		7,197		140,208		147,405
	Auto		106		37		34		177		2,035		2,212
	Other		29		10		27		66		1,593		1,659
Total		$	139,344	$	34,104	$	366,608	$	540,056	$	5,222,401	$	5,762,457

December 31, 2011
Popular, Inc.
			Past due
													Loans held-
		30-59		60-89		90 days		Total					in-portfolio
(In thousands)		days		days		or more		past due		Current			Popular, Inc.
Commercial real estate		$	125,676	$	28,468	$	636,037	$	790,181	$	5,899,505	$	6,689,686
Commercial and industrial			70,449		25,091		237,511		333,051		3,512,149		3,845,200
Construction			4,529		21,055		128,999		154,583		157,045		311,628
Mortgage			232,666		111,755		967,414		1,311,835		4,206,625		5,518,460
Leasing			8,128		2,505		5,808		16,441		547,426		563,867
Consumer:
	Credit cards		14,821		11,708		26,483		53,012		1,177,017		1,230,029
	Home equity lines of credit		7,245		3,982		10,222		21,449		536,445		557,894
	Personal		21,157		12,541		20,833		54,531		1,076,062		1,130,593
	Auto		22,783		5,920		6,864		35,567		482,909		518,476
	Other		1,769		1,452		5,639		8,860		227,903		236,763
Total		$	509,223	$	224,477	$	2,045,810	$	2,779,510	$	17,823,086	$	20,602,596

December 31, 2010
Puerto Rico
			Past due
												Loans held-
			30-59		60-89		90 days	Total				in-portfolio
(In thousands)			days		days		or more	past due		Current		Puerto Rico
Commercial real estate		$	47,064	$	25,547	$	370,677	$	443,288	$	3,412,310	$	3,855,598
Commercial and industrial			34,703		23,695		114,792		173,190		2,688,228		2,861,418
Construction			6,356		3,000		64,678		74,034		94,322		168,356
Mortgage			188,468		83,789		810,833		1,083,090		2,566,610		3,649,700
Leasing			10,737		2,274		5,674		18,685		554,102		572,787
Consumer:
	Credit cards		16,073		12,758		33,514		62,345		1,054,081		1,116,426
	Personal		21,004		11,830		22,816		55,650		965,610		1,021,260
	Auto		22,076		5,301		7,528		34,905		459,745		494,650
	Other		3,799		1,318		8,334		13,451		252,048		265,499
Total		$	350,280	$	169,512	$	1,438,846	$	1,958,638	$	12,047,056	$	14,005,694

December 31, 2010
U.S. mainland
			Past due
													Loans held-
			30-59		60-89		90 days		Total				in-portfolio
(In thousands)			days		days		or more		past due		Current		U.S. mainland
Commercial real estate		$	68,903	$	10,322	$	182,456	$	261,681	$	2,889,397	$	3,151,078
Commercial and industrial			30,372		15,079		57,102		102,553		1,422,838		1,525,391
Construction			30,105		292		173,876		204,273		128,222		332,495
Mortgage			38,550		12,751		23,587		74,888		800,134		875,022
Leasing			1,008		224		263		1,495		28,711		30,206
Consumer:
	Credit cards		343		357		-		700		15,182		15,882
	Home equity lines of credit		6,116		6,873		17,562		30,551		537,802		568,353
	Personal		5,559		2,689		5,369		13,617		201,190		214,807
	Auto		375		98		135		608		8,499		9,107
Total		$	181,331	$	48,685	$	460,350	$	690,366	$	6,031,975	$	6,722,341

December 31, 2010
Popular, Inc.
			Past due
												Loans held-
			30-59		60-89		90 days		Total			in-portfolio
(In thousands)			days		days		or more		past due	Current		Popular, Inc.
Commercial real estate		$	115,967	$	35,869	$	553,133	$	704,969	$	6,301,707	$	7,006,676
Commercial and industrial			65,075		38,774		171,894		275,743		4,111,066		4,386,809
Construction			36,461		3,292		238,554		278,307		222,544		500,851
Mortgage			227,018		96,540		834,420		1,157,978		3,366,744		4,524,722
Leasing			11,745		2,498		5,937		20,180		582,813		602,993
Consumer:
	Credit cards		16,416		13,115		33,514		63,045		1,069,263		1,132,308
	Home equity lines of credit		6,116		6,873		17,562		30,551		537,802		568,353
	Personal		26,563		14,519		28,185		69,267		1,166,800		1,236,067
	Auto		22,451		5,399		7,663		35,513		468,244		503,757
	Other		3,799		1,318		8,334		13,451		252,048		265,499
Total		$	531,611	$	218,197	$	1,899,196	$	2,649,004	$	18,079,031	$	20,728,035

The following table provides a breakdown of loans held-for-sale (“LHFS”) in non-performing status at December 31, 2011 and 2010 by main categories.

The components of the net financing leases receivable at December 31, 2011 and 2010 were as follows:

(In thousands)			2011		2010
Total minimum lease payments		$	520,226	$	551,000
Estimated residual value of leased property			134,194		147,667
Deferred origination costs, net of fees			6,691		7,109
	Less - Unearned financing income		97,244		102,783
Net minimum lease payments			563,867		602,993
	Less - Allowance for loan losses		4,891		13,153
		$	558,976	$	589,840

At December 31, 2011, future minimum lease payments are expected to be received as follows:

Covered loans acquired in the Westernbank FDIC-assisted transaction, except for lines of credit with revolving privileges, are accounted for by the Corporation in accordance with ASC Subtopic 310-30. Under ASC Subtopic 310-30, the acquired loans were aggregated into pools based on similar characteristics. Each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. The covered loans which are accounted for under ASC Subtopic 310-30 by the Corporation are not considered non-performing and will continue to have an accretable yield as long as there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The Corporation measures additional losses for this portfolio when it is probable the Corporation will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. Lines of credit with revolving privileges that were acquired as part of the Westernbank FDIC-assisted transaction are accounted for under the guidance of ASC Subtopic 310-20, which requires that any differences between the contractually required loan payment receivable in excess of the Corporation's initial investment in the loans be accreted into interest income. Loans accounted for under ASC Subtopic 310-20 are placed in non-accrual status when past due in accordance with the Corporation's non-accruing policy and any accretion of discount is discontinued.

The following table presents covered loans in non-performing status and accruing loans past-due 90 days or more by loan class at December 31, 2011 and 2010.

	December 31, 2011				December 31, 2010
	Non-accrual		Accruing loans past		Non-accrual		Accruing loans past
(In thousands)	loans		due 90 days or more		loans		due 90 days or more
Commercial real estate	$	14,241	$	125	$	14,172	$	-
Commercial and industrial		63,858		1,392		10,635		60
Construction		4,598		5,677		1,168		-
Mortgage		423		113		-		8,648
Consumer		516		377		-		2,308
Total^[1]	$	83,636	$	7,684	$	25,975	$	11,016

[1] Covered loans accounted for under ASC Subtopic 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses.

The following tables present loans by past due status at December 31, 2011 and 2010 for covered loans held-in-portfolio. The information considers covered loans accounted for under ASC Subtopic 310-20 and ASC Subtopic 310-30.

December 31, 2011
Covered loans
		Past due
											Covered loans
	30-59		60-89		90 days		Total				held-in-
(In thousands)	days		days		or more		past due		Current		portfolio
Commercial real estate	$	35,286	$	25,273	$	519,222	$	579,781	$	1,691,514	$	2,271,295
Commercial and industrial		4,438		1,390		99,555		105,383		136,064		241,447
Construction		997		625		434,661		436,283		110,543		546,826
Mortgage		32,371		28,238		196,541		257,150		915,804		1,172,954
Consumer		2,913		3,289		15,551		21,753		94,428		116,181
Total covered loans	$	76,005	$	58,815	$	1,265,530	$	1,400,350	$	2,948,353	$	4,348,703

December 31, 2010
Covered loans
		Past due
											Covered loans
		30-59	60-89		90 days		Total				held-in-
(In thousands)		days	days		or more		past due		Current		portfolio
Commercial real estate	$	108,244	$	89,403	$	434,956	$	632,603	$	1,830,946	$	2,463,549
Commercial and industrial		12,091		5,491		32,585		50,167		253,465		303,632
Construction		23,445		11,906		351,386		386,737		253,755		640,492
Mortgage		80,978		34,897		119,745		235,620		1,023,839		1,259,459
Consumer		8,917		4,483		14,612		28,012		141,738		169,750
Total covered loans	$	233,675	$	146,180	$	953,284	$	1,333,139	$	3,503,743	$	4,836,882

The following table presents loans acquired as part of the Westernbank FDIC-assisted transaction accounted for pursuant to ASC Subtopic 310-30 at the April 30, 2010 acquisition date. The information presented includes loans determined to be impaired at the time of acquisition (“credit impaired loans”), and loans that were considered to be performing at the acquisition date and are accounted for by analogy to ASC Subtopic 310-30 (“non-credit impaired loans”). Refer to Note 2 in these consolidated financial statements for a description of the Corporation's significant accounting policies related to acquired loans and criteria considered by management to apply ASC 310-30 by analogy to non-credit impaired loans.

		April 30, 2010
(In thousands)			Non-credit impaired loans		Credit impaired loans		Total
Contractually-required principal and interest		$	7,855,033	$	1,995,580	$	9,850,613
Non-accretable difference			2,154,542		1,248,365		3,402,907
Cash flows expected to be collected			5,700,491		747,215		6,447,706
Accretable yield			1,487,634		50,425		1,538,059
Fair value of loans accounted for under
	ASC Subtopic 310-30	$	4,212,857	$	696,790	$	4,909,647

The cash flows expected to be collected consider the estimated remaining life of the underlying loans and include the effects of estimated prepayments. The unpaid principal balance of the acquired loans from the Westernbank FDIC-assisted transaction that are accounted for under ASC Subtopic 310-30 amounted to $8.1 billion at the April 30, 2010 transaction date.

The carrying amount of the loans acquired as part of the Westernbank FDIC-assisted transaction at December 31, 2011 and 2010 consisted of loans determined to be impaired at the time of acquisition, which are accounted for in accordance with ASC Subtopic 310-30 (“credit impaired loans”), and loans that were considered to be performing at the acquisition date, accounted for by analogy to ASC Subtopic 310-30 (“non-credit impaired loans”), as detailed in the following tables.

	December 31, 2011						December 31, 2010
	Carrying amount						Carrying amount
(In thousands)		Non-credit impaired loans		Credit impaired loans		Total		Non-credit impaired loans		Credit impaired loans		Total
Commercial real estate	$	1,920,141	$	215,560	$	2,135,701	$	2,133,600	$	247,654	$	2,381,254
Commercial and industrial		85,859		4,621		90,480		117,869		8,257		126,126
Construction		279,561		260,208		539,769		341,866		292,341		634,207
Mortgage		1,065,842		102,027		1,167,869		1,156,879		87,062		1,243,941
Consumer		95,048		7,604		102,652		144,165		10,235		154,400
Carrying amount		3,446,451		590,020		4,036,471		3,894,379		645,549		4,539,928
Allowance for loan losses		(62,951)		(20,526)		(83,477)		-		-		-
Carrying amount, net of allowance	$	3,383,500	$	569,494	$	3,952,994	$	3,894,379	$	645,549	$	4,539,928

The outstanding principal balance of covered loans accounted pursuant to ASC Subtopic 310-30, including amounts charged off by the Corporation, amounted to $6.0 billion at December 31, 2011 (December 31, 2010 - $7.7 billion). At December 31, 2011, none of the acquired loans from the Westernbank FDIC-assisted transaction accounted for under ASC Subtopic 310-30 were considered non-performing loans. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, was recognized on all acquired loans.

Changes in the carrying amount and the accretable yield for the acquired loans in the Westernbank FDIC-assisted transaction, which are accounted pursuant to the ASC Subtopic 310-30, for the years ended December 31, 2011 and 2010, were as follows:

	Accretable yield
	For the year ended
	December 31, 2011						December 31, 2010
		Non-credit		Credit				Non-credit		Credit
		impaired		impaired				impaired		impaired
(In thousands)		loans		loans		Total		loans		loans		Total
Beginning balance	$	1,307,927	$	23,181	$	1,331,108	$	-	$	-	$	-
Additions		-		-		-		1,487,634		50,425		1,538,059
Accretion		(271,760)		(80,641)		(352,401)		(179,707)		(27,244)		(206,951)
Change in expected cash flows		392,597		98,955		491,552		-		-		-
Ending balance	$	1,428,764	$	41,495	$	1,470,259	$	1,307,927	$	23,181	$	1,331,108

		Carrying amount of loans accounted for pursuant to ASC 310-30
		For the year ended
		December 31, 2011						December 31, 2010
			Non-credit		Credit				Non-credit		Credit
			impaired		impaired				impaired		impaired
(In thousands)			loans		loans		Total		loans		loans		Total
Beginning balance		$	3,894,379	$	645,549	$	4,539,928	$	-	$	-	$	-
Additions			-		-		-		4,212,857		696,790		4,909,647
Accretion			271,760		80,641		352,401		179,707		27,244		206,951
Collections			(719,688)		(136,170)		(855,858)		(498,185)		(78,485)		(576,670)
Ending balance		$	3,446,451	$	590,020	$	4,036,471	$	3,894,379	$	645,549	$	4,539,928
Allowance for loan losses
	ASC 310-30 covered loans		(62,951)		(20,526)		(83,477)		-		-		-
		$	3,383,500	$	569,494	$	3,952,994	$	3,894,379	$	645,549	$	4,539,928

During the year ended December 31, 2011, the Corporation recorded an allowance for loan losses related to the acquired covered loans that are accounted for under ASC Subtopic 310-30 as certain pools reflected lower expected cash flows. The following table provides the activity in the allowance for loan losses related to these acquired loans for the year ended December 31, 2011.

	ASC 310-30 loans
(In thousands)	December 31, 2011
Balance at beginning of period	$	-
Provision for loan losses		89,802
Net charge-offs		(6,325)
Balance at end of period	$	83,477

There was no need to record an allowance for loan losses related to the covered loans at December 31, 2010.

The Corporation accounts for lines of credit with revolving privileges under the accounting guidance of ASC Subtopic 310-20, which requires that any differences between the contractually required loan payment receivable in excess of the initial investment in the loans be accreted into interest income over the life of the loan, if the loan is accruing interest. The following table presents acquired loans accounted for under ASC Subtopic 310-20 at the April 30, 2010 acquisition date:

(In thousands)
Fair value of loans accounted under ASC Subtopic 310-20	$	290,810
Gross contractual amounts receivable (principal and interest)	$	457,201
Estimate of contractual cash flows not expected to be collected	$	164,427

The cash flows expected to be collected consider the estimated remaining life of the underlying loans and include the effects of estimated prepayments.

Covered loans accounted for under ASC Subtopic 310-20 amounted to $0.3 billion at December 31, 2011 and 2010.