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Allowance for loan losses

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements [Abstract]

Note 8 – Allowance for loan losses

The Corporation's assessment of the allowance for loan losses is determined in accordance with accounting guidance, specifically guidance of loss contingencies in ASC Subtopic 450-20 and loan impairment guidance in ASC Section 310-10-35.

The accounting guidance provides for the recognition of a loss allowance for groups of homogeneous loans. The determination for general reserves of the allowance for loan losses includes the following principal factors:

Historical net loss rates (including losses from impaired loans) by loan type and by legal entity adjusted for recent net charge-off trends and environmental factors. The base net loss rates are based on the moving average of annualized net charge-offs computed over a 3-year historical loss window for the commercial and construction loan portfolios, and an 18-month period for the consumer and mortgage loan portfolios.
Net charge-off trend factors are applied to adjust the base loss rates based on recent loss trends. The Corporation applies a trend factor when base losses are below recent loss trends. Currently, the trend factor is based on the last 12 months of losses for the commercial, construction and legacy loan portfolios and 6 months of losses for the consumer and mortgage loan portfolios. The trend factor accounts for inherent imprecision and the “lagging perspective” in base loss rates. The trend factor replaces the base-loss period when it is higher than base loss up to a determined cap.
Environmental factors, which include credit and macroeconomic indicators such as employment, price index and construction permits, were adopted to account for current market conditions that are likely to cause estimated credit losses to differ from historical losses. The Corporation reflects the effect of these environmental factors on each loan group as an adjustment that, as appropriate, increases or decreases the historical loss rate applied to each group. Environmental factors provide updated perspective on credit and economic conditions. Correlation and regression analyses are used to select and weight these indicators.

During the first quarter of 2012, in order to better reflect current market conditions, management revised the estimation process for evaluating the adequacy of the general reserve component of the allowance for loan losses for the Corporation's commercial and construction loan portfolios. The change in the methodology, which is described in the paragraphs below, was implemented as of March 31, 2012 and resulted in a reduction to the allowance for loan losses of $40.5 million. As part of the analyses performed with the revisions in the allowance for loan losses methodology, the Corporation recorded an increase of $15.7 million related to environmental factor reserves for BPPR's commercial loan portfolio which although improving continues to warrant additional scrutiny. The net impact of the revisions in the allowance methodology and the aforementioned increase due to environmental factors was $24.8 million for the quarter.

Management made the following principal changes to the methodology during the first quarter of 2012:

Established a more granular stratification of the commercial loan portfolios to enhance the homogeneity of the loan classes. Previously, the Corporation used loan groupings for commercial loan portfolios based on business lines and collateral types (secured / unsecured loans). As part of the loan segregation, management evaluated the risk profiles of the loan portfolio, recent and historical credit and loss trends, current and expected portfolio behavior and the economic factors affecting the economy. The revised groupings consider product types (construction, commercial multifamily, commercial & industrial, non-owner occupied commercial real estate (“CRE”) and owner occupied CRE) and business lines for each of the Corporation's reportable segments, BPPR and BPNA. In addition, the Corporation established a legacy portfolio at the BPNA reportable segment, comprised of commercial loans, construction loans and commercial lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years.
The refinement in the loan groupings resulted in a decrease to the allowance for loan losses of $7.9 million at March 31, 2012, which consisted of a $9.7 million reduction related to the BPNA reportable segment, partially offset by an increase of $1.8 million related to the BPPR reportable segment.
Increased the historical look-back period for determining the loss trend factor. The Corporation increased the look-back period for assessing recent trends applicable to the determination of commercial and construction loan net charge-offs from 6 months to 12 months.

Previously, the Corporation used a trend factor based on 6 months of net charge-offs as it aligned the estimation of inherent losses for the Corporation's commercial and construction loan portfolios with deteriorating trends.

Given the current overall commercial and construction credit quality improvements noted on recent periods in terms of loss trends, non-performing loan balances and non-performing loan inflows, management concluded that a 12-month look-back period for the trend factor aligns the Corporation's allowance for loan losses methodology to current credit quality trends.

The increase in the historical look-back period for determining the loss trend factor resulted in a decrease to the allowance for loan losses of $28.1 million at March 31, 2012, of which $24.0 million related to the BPPR reportable segment and $4.1 million to the BPNA reportable segment.

There were additional enhancements to the allowance for loan losses methodology which accounted for a reduction to the allowance for loan losses of $4.5 million at March 31, 2012, of which $3.9 million related to the BPNA reportable segment and $0.6 million to the BPPR reportable segment. This reduction related to loan portfolios with minimal or zero loss history.

There were no changes in the methodology for environmental factor reserves. There were no changes to the allowance for loan losses methodology for the Corporation's consumer and mortgage loan portfolios during the first quarter of 2012.

For the quarter ended March 31, 2012
Puerto Rico - Non-covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	255,453	$	5,850	$	72,322	$	4,651	$	115,126	$	453,402
	Provision		3,394		450		36,411		470		27,067		67,792
	Charge-offs		(47,644)		(280)		(13,491)		(1,217)		(32,238)		(94,870)
	Recoveries		10,126		651		1,265		1,063		8,107		21,212
Ending balance		$	221,329	$	6,671	$	96,507	$	4,967	$	118,062	$	447,536

For the quarter ended March 31, 2012
Puerto Rico - Covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	94,472	$	20,435	$	5,310	$	-	$	4,728	$	124,945
	Provision (reversal of provision)		(300)		9,556		5,410		-		3,543		18,209
	Charge-offs		(4,102)		(264)		(203)		-		(89)		(4,658)
	Recoveries		-		-		-		-		-		-
Ending balance		$	90,070	$	29,727	$	10,517	$	-	$	8,182	$	138,496

For the quarter ended March 31, 2012
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	113,979	$	2,631	$	29,939	$	46,228	$	44,184	$	236,961
	Provision (reversal of provision)		(4,864)		(3)		4,261		12,055		3,273		14,722
	Charge-offs		(19,602)		(1,396)		(5,332)		(8,473)		(10,358)		(45,161)
	Recoveries		2,737		1,230		104		4,915		1,724		10,710
Ending balance		$	92,250	$	2,462	$	28,972	$	54,725	$	38,823	$	217,232

For the quarter ended March 31, 2012
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	463,904	$	28,916	$	107,571	$	46,228	$	4,651	$	164,038	$	815,308
	Provision (reversal of provision)		(1,770)		10,003		46,082		12,055		470		33,883		100,723
	Charge-offs		(71,348)		(1,940)		(19,026)		(8,473)		(1,217)		(42,685)		(144,689)
	Recoveries		12,863		1,881		1,369		4,915		1,063		9,831		31,922
Ending balance		$	403,649	$	38,860	$	135,996	$	54,725	$	4,967	$	165,067	$	803,264

For the quarter ended March 31, 2011
Puerto Rico - Non-covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	256,643	$	16,074	$	42,029	$	7,154	$	133,531	$	455,431
	Provision		1,099		3,385		21,515		633		25,067		51,699
	Charge-offs		(46,032)		(9,754)		(8,204)		(1,946)		(35,477)		(101,413)
	Recoveries		7,504		1,733		527		767		7,063		17,594
Ending balance		$	219,214	$	11,438	$	55,867	$	6,608	$	130,184	$	423,311

For the quarter ended March 31, 2011
Puerto Rico - Covered Loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	-	$	-	$	-	$	-	$	-	$	-
	Provision		3,642		11,279		59		-		577		15,557
	Charge-offs		(1,707)		(4,345)		-		-		(346)		(6,398)
	Recoveries		-		-		-		-		-		-
Ending balance		$	1,935	$	6,934	$	59	$	-	$	231	$	9,159

For the quarter ended March 31, 2011
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	143,281	$	23,711	$	28,839	$	76,405	$	65,558	$	337,794
	Provision (reversal of provision)		2,280		(808)		(17,833)		13,755		10,669		8,063
	Charge-offs		(19,532)		(982)		(1,358)		(23,504)		(17,914)		(63,290)
	Recoveries		2,048		218		788		3,255		1,352		7,661
	Net recovery related to loans transferred to LHFS		-		-		13,807		-		-		13,807
Ending balance		$	128,077	$	22,139	$	24,243	$	69,911	$	59,665	$	304,035

For the quarter ended March 31, 2011
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	399,924	$	39,785	$	70,868	$	76,405	$	7,154	$	199,089	$	793,225
	Provision		7,021		13,856		3,741		13,755		633		36,313		75,319
	Charge-offs		(67,271)		(15,081)		(9,562)		(23,504)		(1,946)		(53,737)		(171,101)
	Recoveries		9,552		1,951		1,315		3,255		767		8,415		25,255
	Net recovery related to loans transferred to LHFS		-		-		13,807		-		-		-		13,807
Ending balance		$	349,226	$	40,511	$	80,169	$	69,911	$	6,608	$	190,080	$	736,505

The following tables present information at March 31, 2012, December 31, 2011 and March 31, 2011 regarding loan ending balances and the allowance for loan losses by portfolio segment and whether such loans and the allowance pertains to loans individually or collectively evaluated for impairment.

At March 31, 2012
Puerto Rico


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	11,115	$	1,013	$	27,096	$	1,344	$	18,887	$	59,455
General ALLL non-covered loans			210,214		5,658		69,411		3,623		99,175		388,081
ALLL - non-covered loans			221,329		6,671		96,507		4,967		118,062		447,536
Specific ALLL covered loans			32,489		-		-		-		-		32,489
General ALLL covered loans			57,581		29,727		10,517		-		8,182		106,007
ALLL - covered loans			90,070		29,727		10,517		-		8,182		138,496
Total ALLL		$	311,399	$	36,398	$	107,024	$	4,967	$	126,244	$	586,032

Loans held-in-portfolio:
Impaired non-covered loans		$	402,097	$	51,023	$	396,854	$	5,412	$	135,745	$	991,131
Non-covered loans held-in-portfolio
	excluding impaired loans		6,027,572		124,745		4,363,491		537,902		2,815,758		13,869,468
Non-covered loans held-in-portfolio			6,429,669		175,768		4,760,345		543,314		2,951,503		14,860,599
Impaired covered loans			85,855		-		-		-		-		85,855
Covered loans held-in-portfolio
	excluding impaired loans		2,345,846		532,433		1,150,996		-		106,658		4,135,933
Covered loans held-in-portfolio			2,431,701		532,433		1,150,996		-		106,658		4,221,788
Total loans held-in-portfolio		$	8,861,370	$	708,201	$	5,911,341	$	543,314	$	3,058,161	$	19,082,387

At March 31, 2012
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Specific ALLL		$	1,883	$	-	$	13,850	$	765	$	103	$	16,601
General ALLL			90,367		2,462		15,122		53,960		38,720		200,631
Total ALLL		$	92,250	$	2,462	$	28,972	$	54,725	$	38,823	$	217,232

Loans held-in-portfolio:
Impaired loans		$	150,055	$	13,126	$	53,900	$	47,731	$	2,455	$	267,267
Loans held-in-portfolio,
	excluding impaired loans		3,288,518		47,685		777,500		556,143		680,962		5,350,808
Total loans held-in-portfolio		$	3,438,573	$	60,811	$	831,400	$	603,874	$	683,417	$	5,618,075

At March 31, 2012
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	12,998	$	1,013	$	40,946	$	765	$	1,344	$	18,990	$	76,056
General ALLL non-covered loans			300,581		8,120		84,533		53,960		3,623		137,895		588,712
ALLL - non-covered loans			313,579		9,133		125,479		54,725		4,967		156,885		664,768
Specific ALLL covered loans			32,489		-		-		-		-		-		32,489
General ALLL covered loans			57,581		29,727		10,517		-		-		8,182		106,007
ALLL - covered loans			90,070		29,727		10,517		-		-		8,182		138,496
Total ALLL		$	403,649	$	38,860	$	135,996	$	54,725	$	4,967	$	165,067	$	803,264

Loans held-in-portfolio:
Impaired non-covered loans		$	552,152	$	64,149	$	450,754	$	47,731	$	5,412	$	138,200	$	1,258,398
Non-covered loans held-in-portfolio
	excluding impaired loans		9,316,090		172,430		5,140,991		556,143		537,902		3,496,720		19,220,276
Non-covered loans held-in-portfolio			9,868,242		236,579		5,591,745		603,874		543,314		3,634,920		20,478,674
Impaired covered loans			85,855		-		-		-		-		-		85,855
Covered loans held-in-portfolio
	excluding impaired loans		2,345,846		532,433		1,150,996		-		-		106,658		4,135,933
Covered loans held-in-portfolio			2,431,701		532,433		1,150,996		-		-		106,658		4,221,788
Total loans held-in-portfolio		$	12,299,943	$	769,012	$	6,742,741	$	603,874	$	543,314	$	3,741,578	$	24,700,462

At December 31, 2011
Puerto Rico


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	10,407	$	289	$	14,944	$	793	$	16,915	$	43,348
General ALLL non-covered loans			245,046		5,561		57,378		3,858		98,211		410,054
ALLL - non-covered loans			255,453		5,850		72,322		4,651		115,126		453,402
Specific ALLL covered loans			27,086		-		-		-		-		27,086
General ALLL covered loans			67,386		20,435		5,310		-		4,728		97,859
ALLL - covered loans			94,472		20,435		5,310		-		4,728		124,945
Total ALLL		$	349,925	$	26,285	$	77,632	$	4,651	$	119,854	$	578,347

Loans held-in-portfolio:
Impaired non-covered loans		$	403,089	$	49,747	$	333,346	$	6,104	$	137,582	$	929,868
Non-covered loans held-in-portfolio
	excluding impaired loans		6,067,493		111,194		4,356,137		542,602		2,832,845		13,910,271
Non-covered loans held-in-portfolio			6,470,582		160,941		4,689,483		548,706		2,970,427		14,840,139
Impaired covered loans			76,798		-		-		-		-		76,798
Covered loans held-in-portfolio
	excluding impaired loans		2,435,944		546,826		1,172,954		-		116,181		4,271,905
Covered loans held-in-portfolio			2,512,742		546,826		1,172,954		-		116,181		4,348,703
Total loans held-in-portfolio		$	8,983,324	$	707,767	$	5,862,437	$	548,706	$	3,086,608	$	19,188,842

At December 31, 2011
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Specific ALLL		$	1,331	$	-	$	14,119	$	57	$	131	$	15,638
General ALLL			112,648		2,631		15,820		46,171		44,053		221,323
Total ALLL		$	113,979	$	2,631	$	29,939	$	46,228	$	44,184	$	236,961

Loans held-in-portfolio:
Impaired loans		$	153,240	$	41,963	$	49,534	$	48,890	$	2,526	$	296,153
Loans held-in-portfolio,
	excluding impaired loans		3,349,505		37,035		779,443		599,519		700,802		5,466,304
Total loans held-in-portfolio		$	3,502,745	$	78,998	$	828,977	$	648,409	$	703,328	$	5,762,457

At December 31, 2011
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	11,738	$	289	$	29,063	$	57	$	793	$	17,046	$	58,986
General ALLL non-covered loans			357,694		8,192		73,198		46,171		3,858		142,264		631,377
ALLL - non-covered loans			369,432		8,481		102,261		46,228		4,651		159,310		690,363
Specific ALLL covered loans			27,086		-		-		-		-		-		27,086
General ALLL covered loans			67,386		20,435		5,310		-		-		4,728		97,859
ALLL - covered loans			94,472		20,435		5,310		-		-		4,728		124,945
Total ALLL		$	463,904	$	28,916	$	107,571	$	46,228	$	4,651	$	164,038	$	815,308

Loans held-in-portfolio:
Impaired non-covered loans		$	556,329	$	91,710	$	382,880	$	48,890	$	6,104	$	140,108	$	1,226,021
Non-covered loans held-in-portfolio
	excluding impaired loans		9,416,998		148,229		5,135,580		599,519		542,602		3,533,647		19,376,575
Non-covered loans held-in-portfolio			9,973,327		239,939		5,518,460		648,409		548,706		3,673,755		20,602,596
Impaired covered loans			76,798		-		-		-		-		-		76,798
Covered loans held-in-portfolio
	excluding impaired loans		2,435,944		546,826		1,172,954		-		-		116,181		4,271,905
Covered loans held-in-portfolio			2,512,742		546,826		1,172,954		-		-		116,181		4,348,703
Total loans held-in-portfolio		$	12,486,069	$	786,765	$	6,691,414	$	648,409	$	548,706	$	3,789,936	$	24,951,299

At March 31, 2011
Puerto Rico


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	8,212	$	-	$	6,883	$	-	$	-	$	15,095
General ALLL non-covered loans			211,002		11,438		48,984		6,608		130,184		408,216
ALLL - non-covered loans			219,214		11,438		55,867		6,608		130,184		423,311
Specific ALLL covered loans			-		-		-		-		-		-
General ALLL covered loans			1,935		6,934		59		-		231		9,159
ALLL - covered loans			1,935		6,934		59		-		231		9,159
Total ALLL		$	221,149	$	18,372	$	55,926	$	6,608	$	130,415	$	432,470

Loans held-in-portfolio:
Impaired non-covered loans		$	325,075	$	56,607	$	141,819	$	-	$	-	$	523,501
Non-covered loans held-in-portfolio
	excluding impaired loans		6,337,511		92,682		3,889,361		565,881		2,852,855		13,738,290
Non-covered loans held-in-portfolio			6,662,586		149,289		4,031,180		565,881		2,852,855		14,261,791
Impaired covered loans			-		-		-		-		-		-
Covered loans held-in-portfolio
	excluding impaired loans		2,709,130		621,187		1,247,476		-		151,757		4,729,550
Covered loans held-in-portfolio			2,709,130		621,187		1,247,476		-		151,757		4,729,550
Total loans held-in-portfolio		$	9,371,716	$	770,476	$	5,278,656	$	565,881	$	3,004,612	$	18,991,341

At March 31, 2011
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Specific ALLL		$	1,514	$	-	$	1,283	$	-	$	-	$	2,797
General ALLL			126,563		22,139		22,960		69,911		59,665		301,238
Total ALLL		$	128,077	$	22,139	$	24,243	$	69,911	$	59,665	$	304,035

Loans held-in-portfolio:
Impaired loans		$	124,004	$	68,217	$	5,207	$	104,017	$	-	$	301,445
Loans held-in-portfolio,
	excluding impaired loans		3,614,695		72,377		859,295		794,755		772,431		6,113,553
Total loans held-in-portfolio		$	3,738,699	$	140,594	$	864,502	$	898,772	$	772,431	$	6,414,998

At March 31, 2011
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	9,726	$	-	$	8,166	$	-	$	-	$	-	$	17,892
General ALLL non-covered loans			337,565		33,577		71,944		69,911		6,608		189,849		709,454
ALLL - non-covered loans			347,291		33,577		80,110		69,911		6,608		189,849		727,346
Specific ALLL covered loans			-		-		-		-		-		-		-
General ALLL covered loans			1,935		6,934		59		-		-		231		9,159
ALLL - covered loans			1,935		6,934		59		-		-		231		9,159
Total ALLL		$	349,226	$	40,511	$	80,169	$	69,911	$	6,608	$	190,080	$	736,505

Loans held-in-portfolio:
Impaired non-covered loans		$	449,079	$	124,824	$	147,026	$	104,017	$	-	$	-	$	824,946
Non-covered loans held-in-portfolio
	excluding impaired loans		9,952,206		165,059		4,748,656		794,755		565,881		3,625,286		19,851,843
Non-covered loans held-in-portfolio			10,401,285		289,883		4,895,682		898,772		565,881		3,625,286		20,676,789
Impaired covered loans			-		-		-		-		-		-		-
Covered loans held-in-portfolio
	excluding impaired loans		2,709,130		621,187		1,247,476		-		-		151,757		4,729,550
Covered loans held-in-portfolio			2,709,130		621,187		1,247,476		-		-		151,757		4,729,550
Total loans held-in-portfolio		$	13,110,415	$	911,070	$	6,143,158	$	898,772	$	565,881	$	3,777,043	$	25,406,339

Impaired loans

The following tables present loans individually evaluated for impairment at March 31, 2012 and December 31, 2011.

March 31, 2012
Puerto Rico
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal			Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance			allowance
Commercial multi-familiy	$	143	$	143	$	-	$	8,629	$	13,035	$	8,772	$	13,178	$	-
Commercial real estate non-owner occupied		23,072		24,403		1,988		39,455		43,338		62,527		67,741		1,988
Commercial real estate owner occupied		37,989		50,338		4,053		162,233		212,474		200,222		262,812		4,053
Commercial and industrial		38,950		43,746		5,074		91,626		128,809		130,576		172,555		5,074
Construction		4,716		9,187		1,013		46,307		96,665		51,023		105,852		1,013
Mortgage		375,863		380,449		27,096		20,991		20,991		396,854		401,440		27,096
Leasing		5,412		5,412		1,344		-		-		5,412		5,412		1,344
Consumer:
Credit cards		39,045		39,045		1,973		-		-		39,045		39,045		1,973
Personal		92,042		92,042		16,208		-		-		92,042		92,042		16,208
Other		4,658		4,658		706		-		-		4,658		4,658		706
Covered loans		81,675		81,675		32,489		4,180		4,180		85,855		85,855		32,489
Total Puerto Rico	$	703,565	$	731,098	$	91,944	$	373,421	$	519,492	$	1,076,986	$	1,250,590	$	91,944

March 31, 2012
U.S. mainland
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Commercial multi-family	$	-	$	-	$	-	$	11,719	$	17,749	$	11,719	$	17,749	$	-
Commercial real estate non-owner occupied		4,364		4,817		1,591		60,981		88,638		65,345		93,455		1,591
Commercial real estate owner occupied		-		-		-		41,565		51,091		41,565		51,091		-
Commercial and industrial		4,151		4,151		292		27,275		33,453		31,426		37,604		292
Construction		-		-		-		13,126		15,066		13,126		15,066		-
Mortgage		49,136		49,823		13,850		4,764		-		53,900		49,823		13,850
Legacy		10,306		10,306		765		37,425		63,016		47,731		73,322		765
Consumer		2,455		2,455		103		-		-		2,455		2,455		103
Total U.S. mainland	$	70,412	$	71,552	$	16,601	$	196,855	$	269,013	$	267,267	$	340,565	$	16,601

March 31, 2012
Popular, Inc.
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Commercial multi-family	$	143	$	143	$	-	$	20,348	$	30,784	$	20,491	$	30,927	$	-
Commercial real estate non-owner occupied		27,436		29,220		3,579		100,436		131,976		127,872		161,196		3,579
Commercial real estate owner occupied		37,989		50,338		4,053		203,798		263,565		241,787		313,903		4,053
Commercial and industrial		43,101		47,897		5,366		118,901		162,262		162,002		210,159		5,366
Construction		4,716		9,187		1,013		59,433		111,731		64,149		120,918		1,013
Mortgage		424,999		430,272		40,946		25,755		20,991		450,754		451,263		40,946
Legacy		10,306		10,306		765		37,425		63,016		47,731		73,322		765
Leasing		5,412		5,412		1,344		-		-		5,412		5,412		1,344
Consumer:
Credit cards		39,045		39,045		1,973		-		-		39,045		39,045		1,973
Personal		92,042		92,042		16,208		-		-		92,042		92,042		16,208
Other		7,113		7,113		809		-		-		7,113		7,113		809
Covered loans		81,675		81,675		32,489		4,180		4,180		85,855		85,855		32,489
Total Popular, Inc.	$	773,977	$	802,650	$	108,545	$	570,276	$	788,505	$	1,344,253	$	1,591,155	$	108,545

December 31, 2011
Puerto Rico
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal			Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance			allowance
Commercial multi-family	$	10,463	$	10,463	$	575	$	12,206	$	21,312	$	22,669	$	31,775	$	575
Commercial real estate non-owner occupied		5,909		7,006		836		45,517		47,439		51,426		54,445		836
Commercial real estate owner occupied		37,534		46,806		2,757		165,745		215,288		203,279		262,094		2,757
Commercial and industrial		42,294		55,180		6,239		83,421		108,224		125,715		163,404		6,239
Construction		1,672		2,369		289		48,075		101,042		49,747		103,411		289
Mortgage		333,346		336,682		14,944		-		-		333,346		336,682		14,944
Leasing		6,104		6,104		793		-		-		6,104		6,104		793
Consumer:
Credit cards		38,874		38,874		2,151		-		-		38,874		38,874		2,151
Personal		93,760		93,760		14,115		-		-		93,760		93,760		14,115
Other		4,948		4,948		649		-		-		4,948		4,948		649
Covered loans		75,798		75,798		27,086		1,000		1,000		76,798		76,798		27,086
Total Puerto Rico	$	650,702	$	677,990	$	70,434	$	355,964	$	494,305	$	1,006,666	$	1,172,295	$	70,434

December 31, 2011
U.S. mainland
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Commercial multi-family	$	-	$	-	$	-	$	8,655	$	12,403	$	8,655	$	12,403	$	-
Commercial real estate non-owner occupied		1,306		1,306		214		61,111		83,938		62,417		85,244		214
Commercial real estate owner occupied		1,239		1,239		455		46,403		56,229		47,642		57,468		455
Commercial and industrial		7,390		7,390		662		27,136		29,870		34,526		37,260		662
Construction		-		-		-		41,963		44,751		41,963		44,751		-
Mortgage		39,570		39,899		14,119		9,964		9,964		49,534		49,863		14,119
Legacy		6,013		6,013		57		42,877		69,221		48,890		75,234		57
Consumer:
Auto		93		93		6		-		-		93		93		6
Other Consumer		2,433		2,433		125		-		-		2,433		2,433		125
Total U.S. mainland	$	58,044	$	58,373	$	15,638	$	238,109	$	306,376	$	296,153	$	364,749	$	15,638

December 31, 2011
Popular, Inc.
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Commercial multi-familiy	$	10,463	$	10,463	$	575	$	20,861	$	33,715	$	31,324	$	44,178	$	575
Commercial real estate non-owner occupied		7,215		8,312		1,050		106,628		131,377		113,843		139,689		1,050
Commercial real estate owner occupied		38,773		48,045		3,212		212,148		271,517		250,921		319,562		3,212
Commercial and industrial		49,684		62,570		6,901		110,557		138,094		160,241		200,664		6,901
Construction		1,672		2,369		289		90,038		145,793		91,710		148,162		289
Mortgage		372,916		376,581		29,063		9,964		9,964		382,880		386,545		29,063
Legacy		6,013		6,013		57		42,877		69,221		48,890		75,234		57
Leasing		6,104		6,104		793		-		-		6,104		6,104		793
Consumer:
Credit cards		38,874		38,874		2,151		-		-		38,874		38,874		2,151
Personal		93,760		93,760		14,115		-		-		93,760		93,760		14,115
Auto		93		93		6		-		-		93		93		6
Other		7,381		7,381		774		-		-		7,381		7,381		774
Covered loans		75,798		75,798		27,086		1,000		1,000		76,798		76,798		27,086
Total Popular, Inc.	$	708,746	$	736,363	$	86,072	$	594,073	$	800,681	$	1,302,819	$	1,537,044	$	86,072

The following table presents the average recorded investment and interest income recognized on impaired loans for the quarters ended March 31, 2012 and 2011.

March 31, 2012
	Puerto Rico				U.S. Mainland				Popular, Inc.
	Average		Interest		Average		Interest		Average		Interest
	recorded		income		recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized		investment		recognized
Commercial multi-familiy	$	15,721	$	-	$	10,187	$	90	$	25,908	$	90
Commercial real estate non-owner occupied		56,977		181		63,881		487		120,858		668
Commercial real estate owner occupied		201,750		576		44,604		-		246,354		576
Commercial and industrial		128,146		483		32,976		37		161,122		520
Construction		50,385		16		27,545		-		77,930		16
Mortgage		365,100		5,573		51,717		482		416,817		6,055
Legacy		-		-		48,311		46		48,311		46
Leasing		5,758		-		-		-		5,758		-
Consumer:
Credit cards		38,959		-		-		-		38,959		-
Personal		92,901		-		-		-		92,901		-
Auto		-		-		46		-		46		-
Other		4,803		-		2,444		-		7,247		-
Covered loans		81,327		-		-		-		81,327		-
Total Popular, Inc.	$	1,041,827	$	6,829	$	281,711	$	1,142	$	1,323,538	$	7,971

March 31, 2011
	Puerto Rico				U.S. Mainland				Popular, Inc.
	Average		Interest		Average		Interest		Average		Interest
	recorded		income		recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized		investment		recognized
Commercial multi-familiy	$	14,744	$	106	$	5,982	$	-	$	20,726	$	106
Commercial real estate non-owner occupied		27,542		117		92,583		114		120,125		231
Commercial real estate owner occupied		183,972		446		14,527		69		198,499		515
Commercial and industrial		91,570		252		10,409		31		101,979		283
Construction		61,153		49		116,921		124		178,074		173
Mortgage		131,514		1,914		2,603		98		134,117		2,012
Legacy		-		-		58,202		28		58,202		28
Consumer:
Total Popular, Inc.	$	510,495	$	2,884	$	301,227	$	464	$	811,722	$	3,348

Modifications

Troubled debt restructurings related to non-covered loan portfolios amounted to $911 million at March 31, 2012 (December 31, 2011 - $881 million). The amount of outstanding commitments to lend additional funds to debtors owing receivables whose terms have been modified in troubled debt restructurings amounted to $445 thousand related to the construction loan portfolio and $3 million related to the commercial loan portfolio at March 31, 2012 (December 31, 2011 - $152 thousand and $3 million, respectively).

A modification of a loan constitutes a troubled debt restructuring (“TDR”) when a borrower is experiencing financial difficulty and the modification constitutes a concession.

Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting evergreen revolving credit lines to long-term loans. Commercial real estate (“CRE”), which includes multifamily, owner-occupied and non-owner occupied CRE, and construction loans modified in a TDR often involve reducing the interest rate for a limited period of time or the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or reductions in the payment plan. Construction loans modified in a TDR may also involve extending the interest-only payment period.

Residential mortgage loans modified in a TDR are primarily comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, normally five years to ten years. After the lowered monthly payment period ends, the borrower reverts back to paying principal and interest per the original terms with the maturity date adjusted accordingly.

Home equity modifications are made infrequently and are not offered if the Corporation also holds the first mortgage. Home equity modifications are uniquely designed to meet the specific needs of each borrower. Automobile loans modified in a TDR are primarily comprised of loans where the Corporation has lowered monthly payments by extending the term. Credit cards modified in a TDR are primarily comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, normally up to 24 months.

Loans modified in a TDR that are not accounted pursuant to ASC 310-30 are typically already in non-accrual status at the time of the modification and partial charge-offs have in some cases already been taken against the outstanding loan balance. The TDR loan continues in non-accrual status until the borrower has demonstrated a willingness and ability to make the restructured loan payments (generally at least six months of sustained performance after the modification (or one year for loans providing for quarterly or semi-annual payments)) and management has concluded that it is probable that the borrower would not be in payment default in the foreseeable future.

Loans modified in a TDR may have the financial effect to the Corporation of increasing the specific allowance for loan losses associated with the loan. Consumer and residential mortgage loans modified under the Corporation's loss mitigation programs that are determined to be TDRs are individually evaluated for impairment based on an analysis of discounted cash flows.

For consumer and mortgage loans that are modified with regard to payment terms and which constitute TDRs, the discounted cash flow value method is used as the impairment valuation is more appropriately calculated based on the ongoing cash flow from the individuals rather than the liquidation of the asset. The computations give consideration to probability of defaults and loss-given-foreclosure on the related estimated cash flows.

Commercial and construction loans that have been modified as part of loss mitigation efforts are evaluated individually for impairment. The vast majority of the Corporation's modified commercial loans are measured for impairment using the estimated fair value of the collateral, as these are normally considered as collateral dependent loans. In very few instances, the Corporation measures modified commercial loans at their estimated realizable values determined by discounting the expected future cash flows. Construction loans that have been modified are also accounted for as collateral dependent loans. The Corporation determines the fair value measurement dependent upon its exit strategy for the particular asset(s) acquired in foreclosure. The discounted cash flows analyses for the commercial and construction TDRs, currently, do not consider a default component. As indicated above, the vast majority of the Corporation's modified commercial and construction loans are measured for impairment using the estimated fair value of the collateral, thus the consideration of the default rates in the evaluation of TDRs in these portfolios is not deemed material.

The following tables present the loan count by type of modification for those loans modified in a TDR during the quarter ended March 31, 2012.

Puerto Rico
For the quarter ended March 31, 2012
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial multi-family	-	-	-	-
Commercial real estate non-owner occupied	1	3	-	-
Commercial real estate owner occupied	2	8	-	-
Commercial and industrial	17	31	-	-
Construction	1	1	-	-
Mortgage	36	41	335	45
Leasing	-	28	-	-
Consumer:
Credit cards	547	-	-	340
HELOCs	-	-	-	-
Personal	388	9	-	-
Auto	-	-	2	-
Other	11	-	-	-
Total	1,003	121	337	385

U.S. mainland
For the quarter ended March 31, 2012
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial multi-family	-	-	-	-
Commercial real estate non-owner occupied	-	-	-	1
Commercial real estate owner occupied	-	-	-	-
Commercial and industrial	-	-	-	-
Construction	-	-	-	1
Mortgage	2	-	25	-
Legacy	-	-	-	2
Consumer:
Credit cards	-	-	-	-
HELOCs	-	-	-	-
Personal	-	-	-	-
Auto	-	-	-	-
Other	-	-	-	-
Total	2	-	25	4

Popular, Inc.
For the quarter ended March 31, 2012
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial multi-family	-	-	-	-
Commercial real estate non-owner occupied	1	3	-	1
Commercial real estate owner occupied	2	8	-	-
Commercial and industrial	17	31	-	-
Construction	1	1	-	1
Mortgage	38	41	360	45
Legacy	-	-	-	2
Leasing	-	28	-	-
Consumer:
Credit cards	547	-	-	340
HELOCs	-	-	-	-
Personal	388	9	-	-
Auto	-	-	2	-
Other	11	-	-	-
Total	1,005	121	362	389

The following tables present by class, quantitative information related to loans modified as TDRs during the quarter ended March 31, 2012.

Puerto Rico
For the quarter ended March 31, 2012
(Dollars in thousands)	Loan count	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Increase (decrease) in the allowance for loan losses as a result of modification
Commercial multi-family	-	$	-	$	-	$	-
Commercial real estate non-owner occupied	4		878		878		(38)
Commercial real estate owner occupied	10		3,212		3,212		(37)
Commercial and industrial	48		6,373		6,373		21
Construction	2		1,097		1,097		52
Mortgage	457		61,916		62,510		4,644
Leasing	28		510		486		50
Consumer:
Credit cards	887		7,225		8,366		40
HELOCs	-		-		-		-
Personal	397		4,782		4,788		720
Auto	2		45		24		(1)
Other	11		41		41		-
Total	1,846	$	86,079	$	87,775	$	5,451

U.S. Mainland
For the quarter ended March 31, 2012
(Dollars in thousands)	Loan count	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Increase (decrease) in the allowance for loan losses as a result of modification
Commercial multi-family	-	$	-	$	-	$	-
Commercial real estate non-owner occupied	1		3,545		3,545		-
Commercial real estate owner occupied	-		-		-		-
Commercial and industrial	-		-		-		-
Construction	1		1,573		1,573		-
Mortgage	27		3,021		3,111		478
Legacy	2		951		951		-
Consumer:
Credit cards	-		-		-		-
HELOCs	-		-		-		-
Personal	-		-		-		-
Auto	-		-		-		-
Other	-		-		-		-
Total	31	$	9,090	$	9,180	$	478

Popular, Inc.
For the quarter ended March 31, 2012
(Dollars in thousands)	Loan count	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Increase (decrease) in the allowance for loan losses as a result of modification
Commercial multi-family	-	$	-	$	-	$	-
Commercial real estate non-owner occupied	5		4,423		4,423		(38)
Commercial real estate owner occupied	10		3,212		3,212		(37)
Commercial and industrial	48		6,373		6,373		21
Construction	3		2,670		2,670		52
Mortgage	484		64,937		65,621		5,122
Legacy	2		951		951		-
Leasing	28		510		486		50
Consumer:
Credit cards	887		7,225		8,366		40
HELOCs	-		-		-		-
Personal	397		4,782		4,788		720
Auto	2		45		24		(1)
Other	11		41		41		-
Total	1,877	$	95,169	$	96,955	$	5,929

The following tables present by class, TDRs that were subject to payment default from January 1, 2012 through March 31, 2012 and that had been modified as a TDR during the twelve months preceding the default date. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or charged-off, whichever occurs first. The recorded investment at March 31, 2012 is inclusive of all partial paydowns and charge-offs since modification date. Loans modified as a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Puerto Rico
Defaulted during the quarter ended March 31, 2012
(Dollars In thousands)	Loan count	Recorded investment as of first default date during the quarter ended March 31, 2012
Commercial multi-family	-	$	-
Commercial real estate non-owner occupied	1		1,770
Commercial real estate owner occupied	7		1,746
Commercial and industrial	7		1,070
Construction	-		-
Mortgage	159		23,088
Leasing	9		369
Consumer:
Credit cards	240		2,046
HELOCs	-		-
Personal	96		739
Auto	-		-
Other	1		1
Total	520	$	30,829

U.S. mainland
Defaulted during the quarter ended March 31, 2012
(Dollars In thousands)	Loan count	Recorded investment as of first default date during the quarter ended March 31, 2012
Commercial multi-family	-	$	-
Commercial real estate non-owner occupied	1		1,935
Commercial real estate owner occupied	-		-
Commercial and industrial	-		-
Construction	-		-
Mortgage	3		413
Legacy	-		-
Consumer:
Credit cards	-		-
HELOCs	-		-
Personal	-		-
Auto	-		-
Other	-		-
Total	4	$	2,348

Popular, Inc.
Defaulted during the quarter ended March 31, 2012
(Dollars In thousands)	Loan count	Recorded investment as of first default date during the quarter ended March 31, 2012
Commercial multi-family	-	$	-
Commercial real estate non-owner occupied	2		3,705
Commercial real estate owner occupied	7		1,746
Commercial and industrial	7		1,070
Construction	-		-
Mortgage	162		23,501
Legacy	-		-
Leasing	9		369
Consumer:
Credit cards	240		2,046
HELOCs	-		-
Personal	96		739
Auto	-		-
Other	1		1
Total	524	$	33,177

Commercial, consumer and mortgage loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Corporation evaluates the loan for possible further impairment. The allowance for loan losses may be increased or partial charge-offs may be taken to further write-down the carrying value of the loan.

Credit Quality

The Corporation has defined a dual risk rating system to assign a rating to all credit exposures, particularly for the commercial and construction loan portfolios. Risk ratings in the aggregate provide the Corporation's management the asset quality profile for the loan portfolio. The dual risk rating system provides for the assignment of ratings at the obligor level based on the financial condition of the borrower, and at the credit facility level based on the collateral supporting the transaction. The Corporation's consumer and mortgage loans are not subject to the dual risk rating system. Consumer and mortgage loans are classified substandard or loss based on their delinquency status. All other consumer and mortgage loans that are not classified as substandard or loss would be considered “unrated”.

The Corporation's obligor risk rating scales range from rating 1 (Excellent) to rating 14 (Loss). The obligor risk rating reflects the risk of payment default of a borrower in the ordinary course of business.

Pass Credit Classifications:

Pass (Scales 1 through 8) – Loans classified as pass have a well defined primary source of repayment very likely to be sufficient, with no apparent risk, strong financial position, minimal operating risk, profitability, liquidity and capitalization better than industry standards.

Watch (Scale 9) – Loans classified as watch have acceptable business credit, but borrower's operations, cash flow or financial condition evidence more than average risk, requires above average levels of supervision and attention from Loan Officers.

Special Mention (Scale 10) - Loans classified as special mention have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation's credit position at some future date.

Adversely Classified Classifications:

Substandard (Scales 11 and 12) - Loans classified as substandard are deemed to be inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans classified as such have well-defined weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful (Scale 13) - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the additional characteristic that the weaknesses make the collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss (Scale 14) - Uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be effected in the future.

Risk ratings scales 10 through 14 conform to regulatory ratings. The assignment of the obligor risk rating is based on relevant information about the ability of borrowers to service their debts such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

The Corporation periodically reviews loans classified as watch list or worse, to evaluate if they are properly classified, and to determine impairment, if any. The frequency of these reviews will depend on the amount of the aggregate outstanding debt, and the risk rating classification of the obligor. In addition, during the renewal process of applicable credit facilities, the Corporation evaluates the corresponding loan grades.

Loans classified as pass credits are excluded from the scope of the review process described above until: (a) they become past due; (b) management becomes aware of deterioration in the creditworthiness of the borrower; or (c) the customer contacts the Corporation for a modification. In these circumstances, the credit facilities are specifically evaluated to assign the appropriate risk rating classification.

The Corporation has a Credit Process Review Group within the Corporate Credit Risk Management Division (“CCRMD”), which performs annual comprehensive credit process reviews of several middle markets, construction, asset-based and corporate banking lending groups in BPPR. This group evaluates the credit risk profile of each originating unit along with each unit's credit administration effectiveness, including the assessment of the risk rating representative of the current credit quality of the loans, and the evaluation of collateral documentation. The monitoring performed by this group contributes to assess compliance with credit policies and underwriting standards, determine the current level of credit risk, evaluate the effectiveness of the credit management process and identify control deficiencies that may arise in the credit-granting process. Based on its findings, the Credit Process Review Group recommends corrective actions, if necessary, that help in maintaining a sound credit process. CCRMD has contracted an outside loan review firm to perform the credit process reviews for the portfolios of commercial and construction loans in the U.S. mainland operations. The CCRMD participates in defining the review plan with the outside loan review firm and actively participates in the discussions of the results of the loan reviews with the business units. The CCRMD may periodically review the work performed by the outside loan review firm. CCRMD reports the results of the credit process reviews to the Risk Management Committee of the Corporation's Board of Directors.

The following table presents the outstanding balance, net of unearned income, of non-covered loans held-in-portfolio based on the Corporation's assignment of obligor risk ratings as defined at March 31, 2012 and December 31, 2011.

March 31, 2012
				Special										Pass/
(In thousands)		Watch		Mention		Substandard		Doubtful		Loss		Sub-total		Unrated		Total
Puerto Rico^[1]
Commercial multi-family		$	411	$	690	$	15,748	$	-	$	-	$	16,849	$	92,729	$	109,578
Commercial real estate non-owner occupied			161,701		128,583		211,376		2,802		-		504,462		774,203		1,278,665
Commercial real estate owner occupied			185,413		188,528		677,087		3,560		-		1,054,588		1,033,377		2,087,965
Commercial and industrial			330,584		268,899		476,301		3,223		1,084		1,080,091		1,873,370		2,953,461
	Total Commercial		678,109		586,700		1,380,512		9,585		1,084		2,655,990		3,773,679		6,429,669
Construction			2,557		31,886		65,463		1,312		-		101,218		74,550		175,768
Mortgage			-		-		610,678		-		-		610,678		4,149,667		4,760,345
Leasing			-		-		3,385		-		2,289		5,674		537,640		543,314
Consumer			-		-		47,022		-		4,020		51,042		2,900,461		2,951,503
Total Puerto Rico		$	680,666	$	618,586	$	2,107,060	$	10,897	$	7,393	$	3,424,602	$	11,435,997	$	14,860,599
U.S. mainland
Commercial multi-family		$	71,457	$	10,546	$	75,719	$	-	$	-	$	157,722	$	534,986	$	692,708
Commercial real estate non-owner occupied			167,425		49,888		242,138		-		-		459,451		903,245		1,362,696
Commercial real estate owner occupied			27,156		13,717		143,120		-		-		183,993		393,593		577,586
Commercial and industrial			24,199		32,386		90,819		-		-		147,404		658,179		805,583
	Total Commercial		290,237		106,537		551,796		-		-		948,570		2,490,003		3,438,573
Construction			1,515		-		35,262		-		-		36,777		24,034		60,811
Mortgage			-		-		33,767		-		-		33,767		797,633		831,400
Legacy			37,138		37,898		141,124		-		-		216,160		387,714		603,874
Consumer			-		-		6,741		-		7,818		14,559		668,858		683,417
Total U.S. mainland		$	328,890	$	144,435	$	768,690	$	-	$	7,818	$	1,249,833	$	4,368,242	$	5,618,075
Popular, Inc.
Commercial multi-family		$	71,868	$	11,236	$	91,467	$	-	$	-	$	174,571	$	627,715	$	802,286
Commercial real estate non-owner occupied			329,126		178,471		453,514		2,802		-		963,913		1,677,448		2,641,361
Commercial real estate owner occupied			212,569		202,245		820,207		3,560		-		1,238,581		1,426,970		2,665,551
Commercial and industrial			354,783		301,285		567,120		3,223		1,084		1,227,495		2,531,549		3,759,044
	Total Commercial		968,346		693,237		1,932,308		9,585		1,084		3,604,560		6,263,682		9,868,242
Construction			4,072		31,886		100,725		1,312		-		137,995		98,584		236,579
Mortgage			-		-		644,445		-		-		644,445		4,947,300		5,591,745
Legacy			37,138		37,898		141,124		-		-		216,160		387,714		603,874
Leasing			-		-		3,385		-		2,289		5,674		537,640		543,314
Consumer			-		-		53,763		-		11,838		65,601		3,569,319		3,634,920
Total Popular, Inc.		$	1,009,556	$	763,021	$	2,875,750	$	10,897	$	15,211	$	4,674,435	$	15,804,239	$	20,478,674

The following table presents the weighted average obligor risk rating at March 31, 2012 for those classifications that consider a range of rating scales.

Weighted average obligor risk rating					(Scales 11 and 12)								(Scales 1 through 8)
Puerto Rico:^[1]						Substandard									Pass
Commercial multi-family							11.93								5.99
Commercial real estate non-owner occupied							11.28								7.08
Commercial real estate owner occupied							11.56								6.83
Commercial and industrial							11.38								6.81
	Total Commercial						11.46								6.87
Construction							11.77								7.93

U.S. mainland:						Substandard									Pass
Commercial multi-family							11.22								7.11
Commercial real estate non-owner occupied							11.36								6.98
Commercial real estate owner occupied							11.37								7.00
Commercial and industrial							11.44								6.88
	Total Commercial						11.36								6.87
Construction							11.37								7.68
Legacy							11.50								7.46

[1]

Excludes covered loans acquired in the Westernbank FDIC-assisted transaction.

December 31, 2011
				Special										Pass/
(In thousands)		Watch		Mention		Substandard		Doubtful		Loss		Sub-total		Unrated		Total
Puerto Rico^[1]
Commercial multi-family		$	420	$	698	$	11,848	$	-	$	-	$	12,966	$	110,150	$	123,116
Commercial real estate non-owner occupied			177,523		134,266		210,596		2,886		-		525,271		736,235		1,261,506
Commercial real estate owner occupied			201,375		192,591		680,912		4,631		-		1,079,509		1,151,917		2,231,426
Commercial and industrial			248,188		282,935		439,853		3,326		1,458		975,760		1,878,774		2,854,534
	Total Commercial		627,506		610,490		1,343,209		10,843		1,458		2,593,506		3,877,076		6,470,582
Construction			2,245		27,820		69,562		1,586		-		101,213		59,728		160,941
Mortgage			-		-		626,771		-		-		626,771		4,062,712		4,689,483
Leasing			-		-		1,365		-		4,277		5,642		543,064		548,706
Consumer			-		-		53,648		-		4,015		57,663		2,912,764		2,970,427
Total Puerto Rico		$	629,751	$	638,310	$	2,094,555	$	12,429	$	9,750	$	3,384,795	$	11,455,344	$	14,840,139
U.S. mainland
Commercial multi-family		$	71,335	$	8,230	$	69,400	$	-	$	-	$	148,965	$	536,852	$	685,817
Commercial real estate non-owner occupied			192,080		48,085		231,266		-		-		471,431		932,562		1,403,993
Commercial real estate owner occupied			21,109		20,859		146,367		-		-		188,335		397,505		585,840
Commercial and industrial			30,020		26,131		102,607		-		-		158,758		668,337		827,095
	Total Commercial		314,544		103,305		549,640		-		-		967,489		2,535,256		3,502,745
Construction			3,202		10,609		54,096		-		-		67,907		11,091		78,998
Mortgage			-		-		37,236		-		-		37,236		791,741		828,977
Legacy			34,233		38,724		148,629		-		-		221,586		426,823		648,409
Consumer			-		-		5,667		-		6,711		12,378		690,950		703,328
Total U.S. mainland		$	351,979	$	152,638	$	795,268	$	-	$	6,711	$	1,306,596	$	4,455,861	$	5,762,457
Popular, Inc.
Commercial multi-family		$	71,755	$	8,928	$	81,248	$	-	$	-	$	161,931	$	647,002	$	808,933
Commercial real estate non-owner occupied			369,603		182,351		441,862		2,886		-		996,702		1,668,797		2,665,499
Commercial real estate owner occupied			222,484		213,450		827,279		4,631		-		1,267,844		1,549,422		2,817,266
Commercial and industrial			278,208		309,066		542,460		3,326		1,458		1,134,518		2,547,111		3,681,629
	Total Commercial		942,050		713,795		1,892,849		10,843		1,458		3,560,995		6,412,332		9,973,327
Construction			5,447		38,429		123,658		1,586		-		169,120		70,819		239,939
Mortgage			-		-		664,007		-		-		664,007		4,854,453		5,518,460
Legacy			34,233		38,724		148,629		-		-		221,586		426,823		648,409
Leasing			-		-		1,365		-		4,277		5,642		543,064		548,706
Consumer			-		-		59,315		-		10,726		70,041		3,603,714		3,673,755
Total Popular, Inc.		$	981,730	$	790,948	$	2,889,823	$	12,429	$	16,461	$	4,691,391	$	15,911,205	$	20,602,596

The following table presents the weighted average obligor risk rating at December 31, 2011 for those classifications that consider a range of rating scales.

Weighted average obligor risk rating					(Scales 11 and 12)								(Scales 1 through 8)
Puerto Rico:^[1]						Substandard									Pass
Commercial multi-family							11.91								5.92
Commercial real estate non-owner occupied							11.23								7.16
Commercial real estate owner occupied							11.56								6.85
Commercial and industrial							11.40								6.62
	Total Commercial						11.46								6.79
Construction							11.76								7.84

U.S. mainland:						Substandard									Pass
Commercial multi-family							11.20								7.09
Commercial real estate non-owner occupied							11.35								7.00
Commercial real estate owner occupied							11.41								7.04
Commercial and industrial							11.39								6.85
	Total Commercial						11.35								6.99
Construction							11.78								7.52
Legacy							11.45								7.47

[1]

Excludes covered loans acquired in the Westernbank FDIC-assisted transaction.