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 risks on loans acquired in the FDIC-assisted transaction are significantly different from the risks on 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 the consolidated financial statements included in the 2011 Annual Report. Also, refer to Note 8 for a description of enhancements done to the Corporation's methodology for determining the allowance for loan losses which were effective on March 31, 2012.

The following table presents the composition of non-covered loans held-in-portfolio (“HIP”), net of unearned income, at March 31, 2012 and December 31, 2011.

		Non-covered loans		Non-covered loans
(In thousands)		HIP at March 31, 2012		HIP at December 31, 2011
Commercial multi-family		$	802,286	$	808,933
Commercial real estate non-owner occupied			2,641,361		2,665,499
Commercial real estate owner occupied			2,665,551		2,817,266
Commercial and industrial			3,759,044		3,681,629
Construction			236,579		239,939
Mortgage			5,591,745		5,518,460
Leasing			543,314		548,706
Legacy^[2]			603,874		648,409
Consumer:
	Credit cards		1,204,551		1,230,029
	Home equity lines of credit		542,249		557,894
	Personal		1,119,335		1,130,593
	Auto		533,575		518,476
	Other		235,210		236,763
Total loans held-in-portfolio^[1]		$	20,478,674	$	20,602,596

[1]	Non-covered loans held-in-portfolio at March 31, 2012 are net of $99 million in unearned income and exclude $362 million in loans held-for-sale.
	(December 31, 2011 - $101 million in unearned income and $363 million in loans held-for-sale.)
[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 BPNA reportable segment.

The following table presents the composition of covered loans at March 31, 2012 and December 31, 2011.

	Covered loans at		Covered loans at
(In thousands)	March 31, 2012		December 31, 2011
Commercial real estate	$	2,202,860	$	2,271,295
Commercial and industrial		228,841		241,447
Construction		532,433		546,826
Mortgage		1,150,996		1,172,954
Consumer		106,658		116,181
Total loans held-in-portfolio	$	4,221,788	$	4,348,703

The following table provides a breakdown of loans held-for-sale (“LHFS”) at March 31, 2012 and December 31, 2011 by main categories.

During the quarter ended March 31, 2012, the Corporation recorded purchases of mortgage loans amounting to $215 million (March 31, 2011 - $439 million). In addition, during the quarter ended March 31, 2012, the Corporation recorded purchases of construction loans amounting to $1 million (no construction loans were purchased during the quarter ended March 31, 2011). There were no significant purchases of commercial loans during the quarters ended March 31, 2012 and 2011.

The Corporation performed whole-loan sales involving approximately $50 million of residential mortgage loans during the quarter ended March 31, 2012 (March 31, 2011 - $235 million). Also, the Corporation securitized approximately $190 million of mortgage loans into Government National Mortgage Association (“GNMA”) mortgage-backed securities during the quarter ended March 31, 2012 (March 31, 2011 - $256 million). Furthermore, the Corporation securitized approximately $60 million of mortgage loans into Federal National Mortgage Association (“FNMA”) mortgage-backed securities during the quarter ended March 31, 2012 (March 31, 2011 - $73 million). The Corporation sold commercial and construction loans with a book value of approximately $20 million during the quarter ended March 31, 2012 (March 31, 2011 - $2 million).

The following tables present non-covered loans held-in-portfolio by loan class that are in non-performing status or are accruing interest but are past due 90 days or more at March 31, 2012 and December 31, 2011. Accruing loans past due 90 days or more consist primarily of credit cards, FHA / VA and other insured mortgage loans, and delinquent mortgage loans which are 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 another financial institution that, although delinquent, the Corporation has received timely payment from the seller / servicer, and, in some instances, have partial guarantees under recourse agreements. However, residential conventional loans purchased from another financial institution, which are in the process of foreclosure, are classified as non-performing mortgage loans.

At March 31, 2012
			Puerto Rico				U.S. mainland				Popular, Inc.
			Non-covered loans
				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 multi-family		$	14,666	$	-	$	16,860	$	-	$	31,526	$	-
Commercial real estate non-owner occupied			62,155		-		86,448		-		148,603		-
Commercial real estate owner occupied			377,623		-		52,979		-		430,602		-
Commercial and industrial			166,472		671		41,475		-		207,947		671
Construction			56,247		-		13,223		-		69,470		-
Mortgage			633,517		293,805		33,700		-		667,217		293,805
Leasing			5,673		-		-		-		5,673		-
Legacy			-		-		79,077		-		79,077		-
Consumer:
	Credit cards		-		24,478		623		-		623		24,478
	Home equity lines of credit		-		439		12,212		-		12,212		439
	Personal		17,630		-		1,639		-		19,269		-
	Auto		6,527		-		38		-		6,565		-
	Other		2,971		695		48		-		3,019		695
Total^[1]		$	1,343,481	$	320,088	$	338,322	$	-	$	1,681,803	$	320,088

[1] For purposes of this table non-performing loans exclude $ 232 million in non-performing loans held-for-sale.

At December 31, 2011
			Puerto Rico				U.S. mainland				Popular, Inc.
		Non-covered loans
				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 multi-family		$	15,396	$	-	$	13,935	$	-	$	29,331	$	-
Commercial real estate non-owner occupied			51,013		-		80,820		-		131,833		-
Commercial real estate owner occupied			385,303		-		59,726		-		445,029		-
Commercial and industrial			179,459		675		44,440		-		223,899		675
Construction			53,859		-		42,427		-		96,286		-
Mortgage			649,279		280,912		37,223		-		686,502		280,912
Leasing			5,642		-		-		-		5,642		-
Legacy			-		-		75,660		-		75,660		-
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.

The following tables present loans by past due status at March 31, 2012 and December 31, 2011 for non-covered loans held-in-portfolio (net of unearned income).

March 31, 2012
Puerto Rico
Non- covered loans
			Past due									Non - covered
		30-59		60-89		90 days		Total				loans HIP
(In thousands)		days		days		or more		past due		Current		Puerto Rico
Commercial multi-family		$	409	$	-	$	14,666	$	15,075	$	94,503	$	109,578
Commercial real estate non-owner occupied			6,708		230		62,155		69,093		1,209,572		1,278,665
Commercial real estate owner occupied			51,307		10,426		377,623		439,356		1,648,609		2,087,965
Commercial and industrial			58,769		8,000		167,143		233,912		2,719,549		2,953,461
Construction			12,360		-		56,247		68,607		107,161		175,768
Mortgage			261,859		45,756		927,322		1,234,937		3,525,408		4,760,345
Leasing			9,203		1,448		5,673		16,324		526,990		543,314
Consumer:
	Credit cards		15,323		11,016		24,478		50,817		1,140,363		1,191,180
	Home equity lines of credit		205		340		439		984		18,693		19,677
	Personal		15,471		9,360		17,630		42,461		932,538		974,999
	Auto		21,213		5,817		6,527		33,557		498,360		531,917
	Other		678		651		3,666		4,995		228,735		233,730
Total		$	453,505	$	93,044	$	1,663,569	$	2,210,118	$	12,650,481	$	14,860,599

March 31, 2012
U.S. mainland
			Past due
		30-59		60-89		90 days		Total				Loans HIP
(In thousands)		days		days		or more		past due		Current		U.S. mainland
Commercial multi-family		$	4,107	$	-	$	16,860	$	20,967	$	671,741	$	692,708
Commercial real estate non-owner occupied			31,834		169		86,448		118,451		1,244,245		1,362,696
Commercial real estate owner occupied			14,371		237		52,979		67,587		509,999		577,586
Commercial and industrial			8,159		605		41,475		50,239		755,344		805,583
Construction			681		-		13,223		13,904		46,907		60,811
Mortgage			32,232		4,798		33,700		70,730		760,670		831,400
Legacy			18,752		1,806		79,077		99,635		504,239		603,874
Consumer:
	Credit cards		178		169		623		970		12,401		13,371
	Home equity lines of credit		4,804		1,938		12,212		18,954		503,618		522,572
	Personal		5,082		98		1,639		6,819		137,517		144,336
	Auto		31		5		38		74		1,584		1,658
	Other		11		18		48		77		1,403		1,480
Total		$	120,242	$	9,843	$	338,322	$	468,407	$	5,149,668	$	5,618,075

March 31, 2012
Popular, Inc.
Non-covered loans
			Past due									Non-covered
		30-59		60-89		90 days		Total					loans HIP
(In thousands)		days		days		or more		past due		Current			Popular, Inc.
Commercial multi-family		$	4,516	$	-	$	31,526	$	36,042	$	766,244	$	802,286
Commercial real estate non-owner occupied			38,542		399		148,603		187,544		2,453,817		2,641,361
Commercial real estate owner occupied			65,678		10,663		430,602		506,943		2,158,608		2,665,551
Commercial and industrial			66,928		8,605		208,618		284,151		3,474,893		3,759,044
Construction			13,041		-		69,470		82,511		154,068		236,579
Mortgage			294,091		50,554		961,022		1,305,667		4,286,078		5,591,745
Leasing			9,203		1,448		5,673		16,324		526,990		543,314
Legacy			18,752		1,806		79,077		99,635		504,239		603,874
Consumer:
	Credit cards		15,501		11,185		25,101		51,787		1,152,764		1,204,551
	Home equity lines of credit		5,009		2,278		12,651		19,938		522,311		542,249
	Personal		20,553		9,458		19,269		49,280		1,070,055		1,119,335
	Auto		21,244		5,822		6,565		33,631		499,944		533,575
	Other		689		669		3,714		5,072		230,138		235,210
Total		$	573,747	$	102,887	$	2,001,891	$	2,678,525	$	17,800,149	$	20,478,674

December 31, 2011
Puerto Rico
Non-covered loans
			Past due									Non-covered
			30-59		60-89		90 days	Total				loans HIP
(In thousands)			days		days		or more	past due		Current		Puerto Rico
Commercial multi-family		$	435	$	121	$	15,396	$	15,952	$	107,164	$	123,116
Commercial real estate non-owner occupied			16,584		462		51,013		68,059		1,193,447		1,261,506
Commercial real estate owner occupied			39,578		21,003		385,303		445,884		1,785,542		2,231,426
Commercial and industrial			46,013		17,233		180,134		243,380		2,611,154		2,854,534
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
			30-59		60-89		90 days		Total				Loans HIP
(In thousands)			days		days		or more		past due		Current		U.S. mainland
Commercial multi-family		$	14,582	$	-	$	13,935	$	28,517	$	657,300	$	685,817
Commercial real estate non-owner occupied			15,794		3,168		80,820		99,782		1,304,211		1,403,993
Commercial real estate owner occupied			14,004		449		59,726		74,179		511,661		585,840
Commercial and industrial			22,545		3,791		44,440		70,776		756,319		827,095
Construction			-		-		42,427		42,427		36,571		78,998
Mortgage			30,594		13,190		37,223		81,007		747,970		828,977
Legacy			30,712		7,536		75,660		113,908		534,501		648,409
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.
Non-covered loans
			Past due									Non-covered
			30-59		60-89		90 days		Total			loans HIP
(In thousands)			days		days		or more		past due	Current		Popular, Inc.
Commercial multi-family		$	15,017	$	121	$	29,331	$	44,469	$	764,464	$	808,933
Commercial real estate non-owner occupied			32,378		3,630		131,833		167,841		2,497,658		2,665,499
Commercial real estate owner occupied			53,582		21,452		445,029		520,063		2,297,203		2,817,266
Commercial and industrial			68,558		21,024		224,574		314,156		3,367,473		3,681,629
Construction			608		21,055		96,286		117,949		121,990		239,939
Mortgage			232,666		111,755		967,414		1,311,835		4,206,625		5,518,460
Leasing			7,927		2,301		5,642		15,870		532,836		548,706
Legacy			30,712		7,536		75,660		113,908		534,501		648,409
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

The following table provides a breakdown of loans held-for-sale (“LHFS”) in non-performing status at March 31, 2012 and December 31, 2011 by main categories.

The following table presents covered loans in non-performing status and accruing loans past-due 90 days or more by loan class at March 31, 2012 and December 31, 2011.

	March 31, 2012				December 31, 2011
Covered loans
	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	$	24,924	$	-	$	14,241	$	125
Commercial and industrial		62,324		463		63,858		1,392
Construction		4,541		6,172		4,598		5,677
Mortgage		423		113		423		113
Consumer		483		625		516		377
Total^[1]	$	92,695	$	7,373	$	83,636	$	7,684

[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 March 31, 2012 and December 31, 2011 for covered loans held-in-portfolio. The information considers covered loans accounted for under ASC Subtopic 310-20 and ASC Subtopic 310-30.

March 31, 2012
Covered loans
		Past due
	30-59		60-89		90 days		Total				Covered
(In thousands)	days		days		or more		past due		Current		loans HIP
Commercial real estate	$	53,879	$	20,695	$	537,549	$	612,123	$	1,590,737	$	2,202,860
Commercial and industrial		5,483		4,708		93,658		103,849		124,992		228,841
Construction		2,411		480		415,960		418,851		113,582		532,433
Mortgage		58,408		6,532		187,719		252,659		898,337		1,150,996
Consumer		5,018		1,939		14,701		21,658		85,000		106,658
Total covered loans	$	125,199	$	34,354	$	1,249,587	$	1,409,140	$	2,812,648	$	4,221,788

December 31, 2011
Covered loans
		Past due
		30-59	60-89		90 days		Total				Covered
(In thousands)		days	days		or more		past due		Current		loans HIP
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

The carrying amount of the covered loans 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 table.

	March 31, 2012						December 31, 2011
	Covered loans ASC 310-30
	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	$	1,853,679	$	215,758	$	2,069,437	$	1,920,141	$	215,560	$	2,135,701
Commercial and industrial		79,335		3,482		82,817		85,859		4,621		90,480
Construction		199,724		309,418		509,142		279,561		260,208		539,769
Mortgage		1,125,643		13,288		1,138,931		1,065,842		102,027		1,167,869
Consumer		86,930		7,648		94,578		95,048		7,604		102,652
Carrying amount		3,345,311		549,594		3,894,905		3,446,451		590,020		4,036,471
Allowance for loan losses		(63,240)		(31,319)		(94,559)		(62,951)		(20,526)		(83,477)
Carrying amount, net of allowance	$	3,282,071	$	518,275	$	3,800,346	$	3,383,500	$	569,494	$	3,952,994

The outstanding principal balance of covered loans accounted pursuant to ASC Subtopic 310-30, including amounts charged off by the Corporation, amounted to $5.8 billion at March 31, 2012 (December 31, 2011 - $6.0 billion). At March 31, 2012, 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 covered loans accounted pursuant to the ASC Subtopic 310-30, for the quarters ended March 31, 2012 and 2011, were as follows:

	Activity in the accretable discount
	Covered loans ASC 310-30
	For the quarters ended
	March 31, 2012						March 31, 2011
		Non-credit		Credit				Non-credit		Credit
		impaired		impaired				impaired		impaired
(In thousands)		loans		loans		Total		loans		loans		Total
Beginning balance	$	1,428,764	$	41,495	$	1,470,259	$	1,307,927	$	23,181	$	1,331,108
Accretion		(62,467)		(6,870)		(69,337)		(63,418)		(9,514)		(72,932)
Change in expected cash flows		148,422		(6,825)		141,597		-		-		-
Ending balance	$	1,514,719	$	27,800	$	1,542,519	$	1,244,509	$	13,667	$	1,258,176

		Carrying amount of covered loans accounted for pursuant to ASC 310-30
		For the quarters ended
		March 31, 2012						March 31, 2011
			Non-credit		Credit				Non-credit		Credit
			impaired		impaired				impaired		impaired
(In thousands)			loans		loans		Total		loans		loans		Total
Beginning balance		$	3,383,500	$	569,494	$	3,952,994	$	3,894,379	$	645,549	$	4,539,928
Accretion			62,467		6,870		69,337		63,418		9,514		72,932
Collections			(100,656)		(26,770)		(127,426)		(169,147)		(20,217)		(189,364)
Ending balance		$	3,345,311	$	549,594	$	3,894,905	$	3,788,650	$	634,846	$	4,423,496
	Allowance for loan losses
	ASC 310-30 covered loans		(63,240)		(31,319)		(94,559)		-		(5,297)		(5,297)
		$	3,282,071	$	518,275	$	3,800,346	$	3,788,650	$	629,549	$	4,418,199

The following table provides the activity in the allowance for loan losses related to covered loans accounted for pursuant to ASC Subtopic 310-30.

	ASC 310-30 Covered loans
(In thousands)	March 31, 2012		March 31, 2011
Balance at beginning of period	$	83,477	$	-
Provision for loan losses		11,370		9,127
Net charge-offs		(288)		(3,830)
Balance at end of period	$	94,559	$	5,297

The Corporation accounts for lines of credit with revolving privileges under the accounting guidance of ASC Subtopic 310-20. Covered loans accounted for under ASC Subtopic 310-20 amounted to $0.3 billion at March 31, 2012 and 2011.