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Allowance for loan losses

9 Months Ended

Sep. 30, 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 the 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 36-month historical loss window for the commercial, construction and legacy 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 is described in the paragraphs below. The net effect of these changes amounted to a $24.8 million reduction in the Corporation's allowance for loan losses, resulting from a reduction of $40.5 million due to the enhancements to the allowance for loan losses methodology, offset in part by a $15.7 million increase in environmental factor reserves due to the Corporation's decision to monitor recent trends in its commercial loan portfolio at the BPPR reportable segment that although improving, continue to warrant additional scrutiny.

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 economic indicators. 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, construction and legacy 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.

The following tables present the activity in the allowance for loan losses by portfolio segment for the quarters and nine months ended September 30, 2012 and 2011.

For the quarter ended September 30, 2012
Puerto Rico - Non-covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	203,846	$	7,464	$	120,339	$	2,957	$	111,951	$	446,557
	Provision (reversal of provision)		34,597		(592)		17,182		(111)		18,662		69,738
	Charge-offs		(47,572)		(1,733)		(12,468)		(1,292)		(29,307)		(92,372)
	Recoveries		10,553		2,260		37		1,027		7,454		21,331
Ending balance		$	201,424	$	7,399	$	125,090	$	2,581	$	108,760	$	445,254

For the quarter ended September 30, 2012
Puerto Rico - Covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	75,592	$	23,628	$	11,617	$	-	$	6,658	$	117,495
	Provision (reversal of provision)		11,041		11,078		2,005		-		(1,505)		22,619
	Charge-offs		(7,013)		(7,483)		(736)		-		(9)		(15,241)
	Recoveries		-		-		-		-		-		-
Ending balance		$	79,620	$	27,223	$	12,886	$	-	$	5,144	$	124,873

For the quarter ended September 30, 2012
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	92,918	$	1,678	$	29,483	$	44,011	$	33,888	$	201,978
	Provision (reversal of provision)		1,311		59		3,800		(188)		8,869		13,851
	Charge-offs		(15,809)		-		(3,757)		(8,502)		(8,642)		(36,710)
	Recoveries		6,198		-		216		4,550		996		11,960
	Net (write-down) recovery related to loans transferred to LHFS		(34)		-		-		-		-		(34)
Ending balance		$	84,584	$	1,737	$	29,742	$	39,871	$	35,111	$	191,045

For the quarter ended September 30, 2012
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	372,356	$	32,770	$	161,439	$	44,011	$	2,957	$	152,497	$	766,030
	Provision (reversal of provision)		46,949		10,545		22,987		(188)		(111)		26,026		106,208
	Charge-offs		(70,394)		(9,216)		(16,961)		(8,502)		(1,292)		(37,958)		(144,323)
	Recoveries		16,751		2,260		253		4,550		1,027		8,450		33,291
	Net (write-down) recovery related to loans transferred to LHFS		(34)		-		-		-		-		-		(34)
Ending balance		$	365,628	$	36,359	$	167,718	$	39,871	$	2,581	$	149,015	$	761,172

For the nine months ended September 30, 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 (reversal of provision)		49,070		1,636		92,235		(1,643)		62,673		203,971
	Charge-offs		(134,339)		(3,046)		(41,438)		(3,418)		(92,020)		(274,261)
	Recoveries		31,240		2,959		1,971		2,991		22,981		62,142
Ending balance		$	201,424	$	7,399	$	125,090	$	2,581	$	108,760	$	445,254

For the nine months ended September 30, 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		30,915		29,722		12,600		-		5,047		78,284
	Charge-offs		(45,767)		(22,934)		(5,024)		-		(4,631)		(78,356)
	Recoveries		-		-		-		-		-		-
Ending balance		$	79,620	$	27,223	$	12,886	$	-	$	5,144	$	124,873

For the nine months ended September 30, 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)		8,249		(732)		11,943		6,612		17,803		43,875
	Charge-offs		(53,180)		(1,396)		(12,763)		(28,168)		(30,883)		(126,390)
	Recoveries		15,570		1,234		623		15,199		4,007		36,633
	Net (write-down) recovery related to loans transferred to LHFS		(34)		-		-		-		-		(34)
Ending balance		$	84,584	$	1,737	$	29,742	$	39,871	$	35,111	$	191,045

For the nine months ended September 30, 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)		88,234		30,626		116,778		6,612		(1,643)		85,523		326,130
	Charge-offs		(233,286)		(27,376)		(59,225)		(28,168)		(3,418)		(127,534)		(479,007)
	Recoveries		46,810		4,193		2,594		15,199		2,991		26,988		98,775
	Net (write-down) recovery related to loans transferred to LHFS		(34)		-		-		-		-		-		(34)
Ending balance		$	365,628	$	36,359	$	167,718	$	39,871	$	2,581	$	149,015	$	761,172

For the quarter ended September 30, 2011
Puerto Rico - Non-covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	227,133	$	7,073	$	55,140	$	5,045	$	120,512	$	414,903
	Provision (reversal of provision)		89,830		(2,147)		17,850		(740)		26,267		131,060
	Charge-offs		(65,800)		(1,696)		(8,557)		(1,096)		(30,378)		(107,527)
	Recoveries		7,290		1,777		997		695		7,101		17,860
	Net (write-down) recovery related to loans transferred to LHFS		(12,706)		-		-		-		-		(12,706)
Ending balance		$	245,747	$	5,007	$	65,430	$	3,904	$	123,502	$	443,590

For the quarter ended September 30, 2011
Puerto Rico - Covered Loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	47,829	$	9,291	$	35	$	-	$	14	$	57,169
	Provision (reversal of provision)		16,923		(865)		2,325		-		7,188		25,571
	Charge-offs		(1,277)		-		(65)		-		(2,479)		(3,821)
	Recoveries		-		1,500		-		-		-		1,500
Ending balance		$	63,475	$	9,926	$	2,295	$	-	$	4,723	$	80,419

For the quarter ended September 30, 2011
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	116,812	$	7,712	$	22,832	$	73,545	$	53,874	$	274,775
	Provision (reversal of provision)		(920)		(984)		13,706		888		6,955		19,645
	Charge-offs		(26,916)		(1,535)		(6,244)		(16,160)		(14,433)		(65,288)
	Recoveries		9,801		949		158		7,280		1,592		19,780
Ending balance		$	98,777	$	6,142	$	30,452	$	65,553	$	47,988	$	248,912

For the quarter ended September 30, 2011
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	391,774	$	24,076	$	78,007	$	73,545	$	5,045	$	174,400	$	746,847
	Provision (reversal of provision)		105,833		(3,996)		33,881		888		(740)		40,410		176,276
	Charge-offs		(93,993)		(3,231)		(14,866)		(16,160)		(1,096)		(47,290)		(176,636)
	Recoveries		17,091		4,226		1,155		7,280		695		8,693		39,140
	Net (write-down) recovery related to loans transferred to LHFS		(12,706)		-		-		-		-		-		(12,706)
Ending balance		$	407,999	$	21,075	$	98,177	$	65,553	$	3,904	$	176,213	$	772,921

For the nine months ended September 30, 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 (reversal of provision)		148,770		(9,072)		45,789		(1,038)		69,025		253,474
	Charge-offs		(168,858)		(11,732)		(23,927)		(4,552)		(99,998)		(309,067)
	Recoveries		21,898		9,737		1,539		2,340		20,944		56,458
	Net (write-down) recovery related to loans transferred to LHFS		(12,706)		-		-		-		-		(12,706)
Ending balance		$	245,747	$	5,007	$	65,430	$	3,904	$	123,502	$	443,590

For the nine months ended September 30, 2011
Puerto Rico - Covered Loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	-	$	-	$	-	$	-	$	-	$	-
	Provision (reversal of provision)		66,723		12,772		2,360		-		7,880		89,735
	Charge-offs		(3,248)		(4,346)		(65)		-		(3,157)		(10,816)
	Recoveries		-		1,500		-		-		-		1,500
Ending balance		$	63,475	$	9,926	$	2,295	$	-	$	4,723	$	80,419

For the nine months ended September 30, 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)		8,950		(15,727)		(1,508)		35,648		25,340		52,703
	Charge-offs		(72,554)		(3,169)		(12,598)		(63,774)		(47,608)		(199,703)
	Recoveries		19,100		1,327		1,912		17,274		4,698		44,311
	Net (write-down) recovery related to loans transferred to LHFS		-		-		13,807		-		-		13,807
Ending balance		$	98,777	$	6,142	$	30,452	$	65,553	$	47,988	$	248,912

For the nine months ended September 30, 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 (reversal of provision)		224,443		(12,027)		46,641		35,648		(1,038)		102,245		395,912
	Charge-offs		(244,660)		(19,247)		(36,590)		(63,774)		(4,552)		(150,763)		(519,586)
	Recoveries		40,998		12,564		3,451		17,274		2,340		25,642		102,269
	Net (write-down) recovery related to loans transferred to LHFS		(12,706)		-		13,807		-		-		-		1,101
Ending balance		$	407,999	$	21,075	$	98,177	$	65,553	$	3,904	$	176,213	$	772,921

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
	For the quarters ended				For the nine months ended
(In thousands)	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Balance at beginning of period	$	93,971	$	48,257	$	83,477	$	-
Provision for loan losses		17,881		15,920		57,472		68,602
Net charge-offs		(8,305)		(1,731)		(37,402)		(6,156)
Balance at end of period	$	103,547	$	62,446	$	103,547	$	62,446

The following tables present information at September 30, 2012 and December 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 September 30, 2012
Puerto Rico


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	21,246	$	191	$	47,523	$	978	$	21,070	$	91,008
General ALLL non-covered loans			180,178		7,208		77,567		1,603		87,690		354,246
ALLL - non-covered loans			201,424		7,399		125,090		2,581		108,760		445,254
Specific ALLL covered loans			15,294		-		-		-		-		15,294
General ALLL covered loans			64,326		27,223		12,886		-		5,144		109,579
ALLL - covered loans			79,620		27,223		12,886		-		5,144		124,873
Total ALLL		$	281,044	$	34,622	$	137,976	$	2,581	$	113,904	$	570,127

Loans held-in-portfolio:
Impaired non-covered loans		$	404,375	$	35,757	$	506,723	$	4,933	$	132,472	$	1,084,260
Non-covered loans held-in-portfolio
	excluding impaired loans		5,779,440		174,999		4,412,162		533,081		3,059,817		13,959,499
Non-covered loans held-in-portfolio			6,183,815		210,756		4,918,885		538,014		3,192,289		15,043,759
Impaired covered loans			120,510		-		-		-		-		120,510
Covered loans held-in-portfolio
	excluding impaired loans		2,203,852		393,101		1,106,851		-		79,553		3,783,357
Covered loans held-in-portfolio			2,324,362		393,101		1,106,851		-		79,553		3,903,867
Total loans held-in-portfolio		$	8,508,177	$	603,857	$	6,025,736	$	538,014	$	3,271,842	$	18,947,626

At September 30, 2012
U.S. Mainland


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Specific ALLL		$	993	$	-	$	15,300	$	-	$	123	$	16,416
General ALLL			83,591		1,737		14,442		39,871		34,988		174,629
Total ALLL		$	84,584	$	1,737	$	29,742	$	39,871	$	35,111	$	191,045

Loans held-in-portfolio:
Impaired loans		$	92,849	$	12,140	$	53,718	$	24,276	$	2,732	$	185,715
Loans held-in-portfolio,
	excluding impaired loans		3,351,967		35,557		1,049,819		441,572		645,464		5,524,379
Total loans held-in-portfolio		$	3,444,816	$	47,697	$	1,103,537	$	465,848	$	648,196	$	5,710,094

At September 30, 2012
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Specific ALLL non-covered loans		$	22,239	$	191	$	62,823	$	-	$	978	$	21,193	$	107,424
General ALLL non-covered loans			263,769		8,945		92,009		39,871		1,603		122,678		528,875
ALLL - non-covered loans			286,008		9,136		154,832		39,871		2,581		143,871		636,299
Specific ALLL covered loans			15,294		-		-		-		-		-		15,294
General ALLL covered loans			64,326		27,223		12,886		-		-		5,144		109,579
ALLL - covered loans			79,620		27,223		12,886		-		-		5,144		124,873
Total ALLL		$	365,628	$	36,359	$	167,718	$	39,871	$	2,581	$	149,015	$	761,172

Loans held-in-portfolio:
Impaired non-covered loans		$	497,224	$	47,897	$	560,441	$	24,276	$	4,933	$	135,204	$	1,269,975
Non-covered loans held-in-portfolio
	excluding impaired loans		9,131,407		210,556		5,461,981		441,572		533,081		3,705,281		19,483,878
Non-covered loans held-in-portfolio			9,628,631		258,453		6,022,422		465,848		538,014		3,840,485		20,753,853
Impaired covered loans			120,510		-		-		-		-		-		120,510
Covered loans held-in-portfolio
	excluding impaired loans		2,203,852		393,101		1,106,851		-		-		79,553		3,783,357
Covered loans held-in-portfolio			2,324,362		393,101		1,106,851		-		-		79,553		3,903,867
Total loans held-in-portfolio		$	11,952,993	$	651,554	$	7,129,273	$	465,848	$	538,014	$	3,920,038	$	24,657,720

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

Impaired loans

The following tables present loans individually evaluated for impairment at September 30, 2012 and December 31, 2011.

September 30, 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-family	$	-	$	-	$	-	$	20,725	$	25,528	$	20,725	$	25,528	$	-
Commercial real estate non-owner occupied		10,058		12,477		1,122		59,469		64,736		69,527		77,213		1,122
Commercial real estate owner occupied		61,792		83,318		12,650		135,006		176,760		196,798		260,078		12,650
Commercial and industrial		34,322		43,751		7,474		83,003		112,891		117,325		156,642		7,474
Construction		1,617		2,712		191		34,140		69,048		35,757		71,760		191
Mortgage		469,786		486,509		47,523		36,937		39,418		506,723		525,927		47,523
Leasing		4,933		4,933		978		-		-		4,933		4,933		978
Consumer:
Credit cards		39,347		39,347		1,674		-		-		39,347		39,347		1,674
Personal		92,379		92,379		19,348		-		-		92,379		92,379		19,348
Auto		333		333		34		-		-		333		333		34
Other		413		413		14		-		-		413		413		14
Covered loans		61,084		61,084		15,294		59,426		59,426		120,510		120,510		15,294
Total Puerto Rico	$	776,064	$	827,256	$	106,302	$	428,706	$	547,807	$	1,204,770	$	1,375,063	$	106,302

September 30, 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	$	-	$	-	$	-	$	5,967	$	8,937	$	5,967	$	8,937	$	-
Commercial real estate non-owner occupied		1,916		1,916		993		54,265		80,169		56,181		82,085		993
Commercial real estate owner occupied		-		-		-		24,679		30,630		24,679		30,630		-
Commercial and industrial		-		-		-		6,022		7,990		6,022		7,990		-
Construction		-		-		-		12,140		14,080		12,140		14,080		-
Mortgage		48,707		49,432		15,300		5,011		5,044		53,718		54,476		15,300
Legacy		-		-		-		24,276		37,968		24,276		37,968		-
Consumer:
Helocs		202		202		13		-		-		202		202		13
Auto		91		91		9		-		-		91		91		9
Other		2,439		2,439		101		-		-		2,439		2,439		101
Total U.S. mainland	$	53,355	$	54,080	$	16,416	$	132,360	$	184,818	$	185,715	$	238,898	$	16,416

September 30, 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	$	-	$	-	$	-	$	26,692	$	34,465	$	26,692	$	34,465	$	-
Commercial real estate non-owner occupied		11,974		14,393		2,115		113,734		144,905		125,708		159,298		2,115
Commercial real estate owner occupied		61,792		83,318		12,650		159,685		207,390		221,477		290,708		12,650
Commercial and industrial		34,322		43,751		7,474		89,025		120,881		123,347		164,632		7,474
Construction		1,617		2,712		191		46,280		83,128		47,897		85,840		191
Mortgage		518,493		535,941		62,823		41,948		44,462		560,441		580,403		62,823
Legacy		-		-		-		24,276		37,968		24,276		37,968		-
Leasing		4,933		4,933		978		-		-		4,933		4,933		978
Consumer:
Credit cards		39,347		39,347		1,674		-		-		39,347		39,347		1,674
Helocs		202		202		13		-		-		202		202		13
Personal		92,379		92,379		19,348		-		-		92,379		92,379		19,348
Auto		424		424		43		-		-		424		424		43
Other		2,852		2,852		115		-		-		2,852		2,852		115
Covered loans		61,084		61,084		15,294		59,426		59,426		120,510		120,510		15,294
Total Popular, Inc.	$	829,419	$	881,336	$	122,718	$	561,066	$	732,625	$	1,390,485	$	1,613,961	$	122,718

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		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-family	$	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 quarter and nine months ended September 30, 2012 and 2011.

For the quarter ended September 30, 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-family	$	14,446	$	-	$	8,522	$	-	$	22,968	$	-
Commercial real estate non-owner occupied		64,968		240		59,932		151		124,900		391
Commercial real estate owner occupied		194,126		597		26,302		81		220,428		678
Commercial and industrial		117,979		499		9,855		-		127,834		499
Construction		42,380		98		12,072		-		54,452		98
Mortgage		482,041		6,911		53,509		515		535,550		7,426
Legacy		-		-		26,783		14		26,783		14
Leasing		5,231		-		-		-		5,231		-
Consumer:
Credit cards		38,718		-		-		-		38,718		-
Helocs		-		-		101		-		101		-
Personal		91,030		-		-		-		91,030		-
Auto		252		-		92		-		344		-
Other		1,984		-		2,355		-		4,339		-
Covered loans		98,603		949		-		-		98,603		949
Total Popular, Inc.	$	1,151,758	$	9,294	$	199,523	$	761	$	1,351,281	$	10,055

For the quarter ended September 30, 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-family	$	9,399	$	-	$	4,349	$	-	$	13,748	$	-
Commercial real estate non-owner occupied		50,687		283		78,724		71		129,411		354
Commercial real estate owner occupied		193,918		694		22,490		23		216,408		717
Commercial and industrial		108,533		288		20,009		3		128,542		291
Construction		63,818		-		58,233		-		122,051		-
Mortgage		239,026		2,974		20,826		391		259,852		3,365
Legacy		-		-		83,065		154		83,065		154
Leasing		3,284		-		-		-		3,284		-
Consumer:
Credit cards		20,622		-		-		-		20,622		-
Helocs		-		-		947		-		947		-
Personal		50,282		-		-		-		50,282		-
Auto		32		-		-		-		32		-
Other		283		-		1,361		-		1,644		-
Covered loans		3,151		76		-		-		3,151		76
Total Popular, Inc.	$	743,035	$	4,315	$	290,004	$	642	$	1,033,039	$	4,957

For the nine months ended September 30, 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-family	$	15,083	$	-	$	9,354	$	101	$	24,437	$	101
Commercial real estate non-owner occupied		60,972		597		61,907		965		122,879		1,562
Commercial real estate owner occupied		197,938		1,370		35,453		81		233,391		1,451
Commercial and industrial		123,062		1,119		21,416		37		144,478		1,156
Construction		46,383		205		19,808		-		66,191		205
Mortgage		423,571		18,751		52,613		1,492		476,184		20,243
Legacy		-		-		37,547		79		37,547		79
Leasing		5,494		-		-		-		5,494		-
Consumer:
Credit cards		38,839		-		-		-		38,839		-
Helocs		-		-		51		-		51		-
Personal		91,966		-		-		-		91,966		-
Auto		126		-		69		-		195		-
Other		3,394		-		2,399		-		5,793		-
Covered loans		89,965		2,849		-		-		89,965		2,849
Total Popular, Inc.	$	1,096,793	$	24,891	$	240,617	$	2,755	$	1,337,410	$	27,646

For the nine months ended September 30, 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-family	$	12,071	$	-	$	5,165	$	-	$	17,236	$	-
Commercial real estate non-owner occupied		39,115		672		85,654		406		124,769		1,078
Commercial real estate owner occupied		188,945		1,599		18,508		221		207,453		1,820
Commercial and industrial		100,052		866		15,209		214		115,261		1,080
Construction		62,485		49		87,577		124		150,062		173
Mortgage		185,270		6,980		11,715		620		196,985		7,600
Legacy		-		-		70,634		186		70,634		186
Leasing		1,642		-		-		-		1,642		-
Consumer:
Credit cards		10,311		-		-		-		10,311		-
Helocs		-		-		473		-		473		-
Personal		25,141		-		-		-		25,141		-
Auto		16		-		-		-		16		-
Other		142		-		681		-		823		-
Covered loans		1,575		76		-		-		1,575		76
Total Popular, Inc.	$	626,765	$	10,242	$	295,616	$	1,771	$	922,381	$	12,013

Modifications

Troubled debt restructurings related to non-covered loan portfolios amounted to $1.0 billion at September 30, 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 $21 thousand related to the construction loan portfolio and $3 million related to the commercial loan portfolio at September 30, 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 following tables present the loan count by type of modification for those loans modified in a TDR during the quarter and nine months ended September 30, 2012 and 2011.

	Puerto Rico
	For the quarter ended September 30, 2012				For the nine months ended September 30, 2012
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial real estate non-owner occupied	2	-	-	-	5	4	-	-
Commercial real estate owner occupied	1	5	-	-	7	20	-	-
Commercial and industrial	1	8	-	-	27	61	-	-
Construction	7	-	-	-	8	1	-	-
Mortgage	272	42	406	40	433	125	1,200	150
Leasing	-	16	-	-	-	49	28	-
Consumer:
Credit cards	311	-	-	268	1,268	-	-	942
Personal	231	4	-	-	901	25	-	-
Auto	-	2	1	-	-	3	3	-
Other	14	-	-	-	39	-	-	-
Total	839	77	407	308	2,688	288	1,231	1,092

	U.S. Mainland
	For the quarter ended September 30, 2012				For the nine months ended September 30, 2012
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial real estate non-owner occupied	-	2	-	-	1	2	-	1
Commercial real estate owner occupied	-	-	-	1	-	-	-	1
Construction	-	-	-	-	-	-	-	1
Mortgage	1	1	16	-	4	1	64	-
Legacy	-	-	-	-	1	-	-	2
Consumer:
HELOCs	1	-	1	-	1	-	2	-
Total	2	3	17	1	7	3	66	5

	Popular, Inc.
	For the quarter ended September 30, 2012				For the nine months ended September 30, 2012
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial real estate non-owner occupied	2	2	-	-	6	6	-	1
Commercial real estate owner occupied	1	5	-	1	7	20	-	1
Commercial and industrial	1	8	-	-	27	61	-	-
Construction	7	-	-	-	8	1	-	1
Mortgage	273	43	422	40	437	126	1,264	150
Legacy	-	-	-	-	1	-	-	2
Leasing	-	16	-	-	-	49	28	-
Consumer:
Credit cards	311	-	-	268	1,268	-	-	942
HELOCs	1	-	1	-	1	-	2	-
Personal	231	4	-	-	901	25	-	-
Auto	-	2	1	-	-	3	3	-
Other	14	-	-	-	39	-	-	-
Total	841	80	424	309	2,695	291	1,297	1,097

	Puerto Rico
	For the quarter ended September 30, 2011				For the nine months ended September 30, 2011
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial multi-family	-	-	-	-	1	-	-	-
Commercial real estate non-owner occupied	1	-	-	-	5	2	-	-
Commercial real estate owner occupied	16	3	-	-	48	4	-	-
Commercial and industrial	21	11	-	-	83	16	-	-
Construction	1	-	-	-	2	-	-	-
Mortgage	9	106	366	13	35	340	1,220	36
Leasing	-	41	5	-	-	136	16	-
Consumer:
Credit cards	420	-	-	358	1,149	-	-	959
Personal	607	28	-	-	1,775	52	-	-
Auto	-	-	2	-	-	-	7	-
Other	21	-	-	-	50	-	-	-
Total	1,096	189	373	371	3,148	550	1,243	995

	U.S. Mainland
	For the quarter ended September 30, 2011				For the nine months ended September 30, 2011
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial real estate non-owner occupied	-	-	-	1	-	-	-	1
Commercial real estate owner occupied	-	-	-	-	-	-	-	2
Commercial and industrial	-	-	-	-	-	1	-	1
Construction	-	-	-	1	-	-	-	4
Mortgage	13	3	183	3	14	4	254	3
Legacy	-	-	-	-	-	-	-	4
Consumer:
Other	-	-	1	-	-	-	1	-
Total	13	3	184	5	14	5	255	15

	Popular, Inc.
	For the quarter ended September 30, 2011				For the nine months ended September 30, 2011
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial multi-family	-	-	-	-	1	-	-	-
Commercial real estate non-owner occupied	1	-	-	1	5	2	-	1
Commercial real estate owner occupied	16	3	-	-	48	4	-	2
Commercial and industrial	21	11	-	-	83	17	-	1
Construction	1	-	-	1	2	-	-	4
Mortgage	22	109	549	16	49	344	1,474	39
Legacy	-	-	-	-	-	-	-	4
Leasing	-	41	5	-	-	136	16	-
Consumer:
Credit cards	420	-	-	358	1,149	-	-	959
Personal	607	28	-	-	1,775	52	-	-
Auto	-	-	2	-	-	-	7	-
Other	21	-	1	-	50	-	1	-
Total	1,109	192	557	376	3,162	555	1,498	1,010

The following tables present by class, quantitative information related to loans modified as TDRs during the quarter and nine months ended September 30, 2012 and 2011.

Puerto Rico
For the quarter ended September 30, 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 real estate non-owner occupied	2	$	4,813	$	4,813	$	368
Commercial real estate owner occupied	6		1,626		1,619		(6)
Commercial and industrial	9		13,692		3,873		(6,596)
Construction	7		5,025		4,230		(263)
Mortgage	760		98,555		116,854		5,775
Leasing	16		256		241		29
Consumer:
Credit cards	579		5,100		6,000		20
Personal	235		4,054		4,083		663
Auto	2		20		23		2
Other	14		54		54		-
Total	1,630	$	133,195	$	141,790	$	(8)

U.S. Mainland
For the quarter ended September 30, 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 real estate non-owner occupied	2	$	3,968	$	3,921	$	-
Commercial real estate owner occupied	1		2,246		1,750		(106)
Mortgage	18		1,765		1,823		298
Consumer:
HELOCs	2		281		275		3
Total	23	$	8,260	$	7,769	$	195

Popular, Inc.
For the quarter ended September 30, 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 real estate non-owner occupied	4	$	8,781	$	8,734	$	368
Commercial real estate owner occupied	7		3,872		3,369		(112)
Commercial and industrial	9		13,692		3,873		(6,596)
Construction	7		5,025		4,230		(263)
Mortgage	778		100,320		118,677		6,073
Leasing	16		256		241		29
Consumer:
Credit cards	579		5,100		6,000		20
HELOCs	2		281		275		3
Personal	235		4,054		4,083		663
Auto	2		20		23		2
Other	14		54		54		-
Total	1,653	$	141,455	$	149,559	$	187

Puerto Rico
For the quarter ended September 30, 2011
(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 real estate non-owner occupied	1	$	1,180	$	1,180	$	(43)
Commercial real estate owner occupied	19		30,256		30,256		(1,052)
Commercial and industrial	32		28,622		28,622		2,518
Construction	1		1,341		1,341		187
Mortgage	494		65,849		68,279		3,122
Leasing	46		1,092		1,059		-
Consumer:
Credit cards	778		6,820		7,622		47
Personal	635		7,525		7,522		-
Auto	2		18		19		-
Other	21		106		105		-
Total	2,029	$	142,809	$	146,005	$	4,779

U.S. Mainland
For the quarter ended September 30, 2011
(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 real estate non-owner occupied	1	$	2,043	$	2,032	$	-
Construction	1		5,715		5,740		(189)
Mortgage	202		20,390		21,606		7,707
Consumer:
Other	1		1,079		1,135		1
Total	205	$	29,227	$	30,513	$	7,519

Popular, Inc.
For the quarter ended September 30, 2011
(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 real estate non-owner occupied	2	$	3,223	$	3,212	$	(43)
Commercial real estate owner occupied	19		30,256		30,256		(1,052)
Commercial and industrial	32		28,622		28,622		2,518
Construction	2		7,056		7,081		(2)
Mortgage	696		86,239		89,885		10,829
Leasing	46		1,092		1,059		-
Consumer:
Credit cards	778		6,820		7,622		47
Personal	635		7,525		7,522		-
Auto	2		18		19		-
Other	22		1,185		1,240		1
Total	2,234	$	172,036	$	176,518	$	12,298

Puerto Rico
For the nine months ended September 30, 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 real estate non-owner occupied	8	$	8,754	$	7,810	$	(606)
Commercial real estate owner occupied	27		9,319		8,901		(42)
Commercial and industrial	87		38,549		28,306		(6,352)
Construction	9		6,122		5,327		(211)
Mortgage	1,908		251,763		274,045		17,150
Leasing	78		1,265		1,208		132
Consumer:
Credit cards	2,210		18,621		21,347		64
Personal	926		13,132		13,162		2,165
Auto	5		68		50		1
Other	39		129		128		-
Total	5,297	$	347,722	$	360,284	$	12,301

U.S. mainland
For the nine months ended September 30, 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 real estate non-owner occupied	4	$	9,765	$	9,457	$	184
Commercial real estate owner occupied	1		2,246		1,750		(106)
Construction	1		1,573		1,573		-
Mortgage	69		7,168		7,248		1,133
Legacy	3		1,272		1,267		(3)
Consumer:
HELOCs	3		431		409		3
Total	81	$	22,455	$	21,704	$	1,211

Popular, Inc.
For the nine months ended September 30, 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 real estate non-owner occupied	12	$	18,519	$	17,267	$	(422)
Commercial real estate owner occupied	28		11,565		10,651		(148)
Commercial and industrial	87		38,549		28,306		(6,352)
Construction	10		7,695		6,900		(211)
Mortgage	1,977		258,931		281,293		18,283
Legacy	3		1,272		1,267		(3)
Leasing	78		1,265		1,208		132
Consumer:
Credit cards	2,210		18,621		21,347		64
HELOCs	3		431		409		3
Personal	926		13,132		13,162		2,165
Auto	5		68		50		1
Other	39		129		128		-
Total	5,378	$	370,177	$	381,988	$	13,512

Puerto Rico
For the nine months ended September 30, 2011
(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	1	$	143	$	143	$	(4)
Commercial real estate non-owner occupied	7		7,940		7,940		(216)
Commercial real estate owner occupied	52		36,507		36,507		(990)
Commercial and industrial	99		39,011		39,011		1,693
Construction	2		2,224		2,224		165
Mortgage	1,631		224,027		242,416		6,092
Leasing	152		3,451		3,301		(1)
Consumer:
Credit cards	2,108		19,438		21,792		143
Personal	1,827		22,459		22,443		(1)
Auto	7		64		67		-
Other	50		210		207		-
Total	5,936	$	355,474	$	376,051	$	6,881

U.S. mainland
For the nine months ended September 30, 2011
(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 real estate non-owner occupied	1	$	2,043	$	2,032	$	-
Commercial real estate owner occupied	2		10,590		7,323		(420)
Commercial and industrial	2		11,878		9,742		(421)
Construction	4		13,173		7,595		(189)
Mortgage	275		27,486		28,927		10,405
Legacy	4		3,016		3,097		(125)
Consumer:
Other	1		1,079		1,135		1
Total	289	$	69,265	$	59,851	$	9,251

Popular, Inc.
For the nine months ended September 30, 2011
(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	1		143		143		(4)
Commercial real estate non-owner occupied	8	$	9,983		9,972	$	(216)
Commercial real estate owner occupied	54		47,097		43,830		(1,410)
Commercial and industrial	101		50,889		48,753		1,272
Construction	6		15,397		9,819		(24)
Mortgage	1,906		251,513		271,343		16,497
Legacy	4		3,016		3,097		(125)
Leasing	152		3,451		3,301		(1)
Consumer:
Credit cards	2,108		19,438		21,792		143
Personal	1,827		22,459		22,443		(1)
Auto	7		64		67		-
Other	51		1,289		1,342		1
Total	6,225	$	424,739	$	435,902	$	16,132

Four loans comprising a recorded investment of approximately $27 million were restructured into multiple notes (“Note A / B split”) during the quarter ended September 30, 2012. The Corporation recorded approximately $7.0 million in loan charge-offs as part of the loan restructurings. The renegotiations of these loans were made after analyzing the borrowers' capacity to repay the debt, collateral and ability to perform under the modified terms. The recorded investment on these commercial TDRs amounted to approximately $21 million at September 30, 2012 with a related allowance for loan losses amounting to approximately $357 thousand.

The following tables present by class, TDRs that were subject to payment default 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 September 30, 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 September 30, 2012			Defaulted during the nine months ended September 30, 2012
(Dollars In thousands)	Loan count	Recorded investment as of first default date		Loan count	Recorded investment as of first default date
Commercial real estate non-owner occupied	-	$	-	2	$	1,897
Commercial real estate owner occupied	7		3,274	20		8,206
Commercial and industrial	5		2,310	15		7,202
Mortgage	203		26,780	542		77,707
Leasing	9		163	26		440
Consumer
Credit cards	282		2,413	332		2,930
Personal	77		547	111		990
Auto	2		32	3		48
Other	-		-	1		1
Total	585	$	35,519	1,052	$	99,421

U.S. Mainland
	Defaulted during the quarter ended September 30, 2012			Defaulted during the nine months ended September 30, 2012
(Dollars In thousands)	Loan count	Recorded investment as of first default date		Loan count	Recorded investment as of first default date
Commercial real estate non-owner occupied	-		-	1	$	1,935
Mortgage	3	$	336	6		415
Total	3	$	336	7	$	2,350

Popular, Inc.
	Defaulted during the quarter ended September 30, 2012				Defaulted during the nine months ended September 30, 2012
(Dollars In thousands)	Loan count		Recorded investment as of first default date		Loan count		Recorded investment as of first default date
Commercial real estate non-owner occupied	-	$	-		3	$	3,832
Commercial real estate owner occupied	7		3,274		20		8,206
Commercial and industrial	5		2,310		15		7,202
Mortgage	206		27,116	-	548		78,122
Legacy	9		163		26		440
Consumer:
Credit cards	282		2,413		332		2,930
Personal	77		547		111		990
Auto	2		32		3		48
Other	-		-		1		1
Total	588	$	35,855		1,059	$	101,771

Puerto Rico
	Defaulted during the quarter ended September 30, 2011			Defaulted during the nine months ended September 30, 2011
(Dollars In thousands)	Loan count	Recorded investment as of first default date		Loan count	Recorded investment as of first default date
Commercial multi-family	1	$	143	1	$	143
Commercial real estate non-owner occupied	1		710	1		710
Commercial real estate owner occupied	4		1,736	5		4,986
Commercial and industrial	15		1,568	15		1,568
Construction	-		-	1		889
Mortgage	116		16,032	280		42,956
Leasing	17		209	32		623
Consumer:
Credit cards	137		1,117	308		3,066
Personal	150		1,094	217		986
Auto	-		-	1		5
Other	1		1	3		29
Total	442	$	22,610	864	$	55,961

U.S. Mainland
	Defaulted during the quarter ended September 30, 2011			Defaulted during the nine months ended September 30, 2011
(Dollars In thousands)	Loan count	Recorded investment as of first default date		Loan count	Recorded investment as of first default date
Commercial and industrial	1	$	6,492	2	$	6,854
Construction	1		5,740	4		13,335
Mortgage	11		1,491	17		1,936
Legacy	-		-	6		3,817
Consumer:
Total	13	$	13,723	29	$	25,942

Popular, Inc.
	Defaulted during the quarter ended September 30, 2011			Defaulted during the nine months ended September 30, 2011
(Dollars In thousands)	Loan count		Recorded investment as of first default date	Loan count		Recorded investment as of first default date
Commercial multi-family	1		143	1		143
Commercial real estate non-owner occupied	1	$	710	1	$	710
Commercial real estate owner occupied	4		1,736	5		4,986
Commercial and industrial	16		8,060	17		8,422
Construction	1		5,740	5		14,224
Mortgage	127		17,523	297		44,892
Legacy	-		-	6		3,817
Leasing	17		209	32		623
Consumer:
Credit cards	137		1,117	308		3,066
Personal	150		1,094	217		986
Auto	-		-	1		5
Other	1		1	3		29
Total	455	$	36,333	893	$	81,903

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 September 30, 2012 and December 31, 2011.

September 30, 2012
				Special										Pass/
(In thousands)		Watch		Mention		Substandard		Doubtful		Loss		Sub-total		Unrated		Total
Puerto Rico^[1]
Commercial multi-family		$	991	$	263	$	25,070	$	-	$	-	$	26,324	$	92,963	$	119,287
Commercial real estate non-owner occupied			119,520		191,184		244,175		331		-		555,210		784,394		1,339,604
Commercial real estate owner occupied			201,360		187,835		671,808		1,245		-		1,062,248		1,038,391		2,100,639
Commercial and industrial			436,704		209,061		436,087		4,760		710		1,087,322		1,536,963		2,624,285
	Total Commercial		758,575		588,343		1,377,140		6,336		710		2,731,104		3,452,711		6,183,815
Construction			1,793		31,581		48,494		-		-		81,868		128,888		210,756
Mortgage			-		-		571,364		-		-		571,364		4,347,521		4,918,885
Leasing			-		-		2,991		-		1,846		4,837		533,177		538,014
Consumer:
	Credit cards		-		-		22,364		-		-		22,364		1,158,441		1,180,805
	Home equity lines of credit		-		-		1,271		-		3,311		4,582		12,664		17,246
	Personal		-		-		8,938		-		181		9,119		1,205,981		1,215,100
	Auto		-		-		7,731		-		-		7,731		537,791		545,522
	Other		-		-		2,379		-		-		2,379		231,237		233,616
	Total Consumer		-		-		42,683		-		3,492		46,175		3,146,114		3,192,289
Total Puerto Rico		$	760,368	$	619,924	$	2,042,672	$	6,336	$	6,048	$	3,435,348	$	11,608,411	$	15,043,759
U.S. mainland
Commercial multi-family		$	74,179	$	20,540	$	70,770	$	-	$	-	$	165,489	$	647,658	$	813,147
Commercial real estate non-owner occupied			119,215		56,784		215,576		-		-		391,575		912,354		1,303,929
Commercial real estate owner occupied			21,226		9,829		127,720		-		-		158,775		380,660		539,435
Commercial and industrial			23,235		24,446		68,510		-		-		116,191		672,114		788,305
	Total Commercial		237,855		111,599		482,576		-		-		832,030		2,612,786		3,444,816
Construction			1,515		-		31,936		-		-		33,451		14,246		47,697
Mortgage			-		-		35,634		-		-		35,634		1,067,903		1,103,537
Legacy			23,577		15,442		129,284		-		-		168,303		297,545		465,848
Consumer
	Credit cards		-		-		478		-		5		483		14,125		14,608
	Home equity lines of credit		-		-		5,887		-		4,549		10,436		478,524		488,960
	Personal		-		-		1,064		-		599		1,663		140,678		142,341
	Auto		-		-		-		-		8		8		951		959
	Other		-		-		36		-		-		36		1,292		1,328
	Total Consumer		-		-		7,465		-		5,161		12,626		635,570		648,196
Total U.S. mainland		$	262,947	$	127,041	$	686,895	$	-	$	5,161	$	1,082,044	$	4,628,050	$	5,710,094
Popular, Inc.
Commercial multi-family		$	75,170	$	20,803	$	95,840	$	-	$	-	$	191,813	$	740,621	$	932,434
Commercial real estate non-owner occupied			238,735		247,968		459,751		331		-		946,785		1,696,748		2,643,533
Commercial real estate owner occupied			222,586		197,664		799,528		1,245		-		1,221,023		1,419,051		2,640,074
Commercial and industrial			459,939		233,507		504,597		4,760		710		1,203,513		2,209,077		3,412,590
	Total Commercial		996,430		699,942		1,859,716		6,336		710		3,563,134		6,065,497		9,628,631
Construction			3,308		31,581		80,430		-		-		115,319		143,134		258,453
Mortgage			-		-		606,998		-		-		606,998		5,415,424		6,022,422
Legacy			23,577		15,442		129,284		-		-		168,303		297,545		465,848
Leasing			-		-		2,991		-		1,846		4,837		533,177		538,014
Consumer
	Credit cards		-		-		22,842		-		5		22,847		1,172,566		1,195,413
	Home equity lines of credit		-		-		7,158		-		7,860		15,018		491,188		506,206
	Personal		-		-		10,002		-		780		10,782		1,346,659		1,357,441
	Auto		-		-		7,731		-		8		7,739		538,742		546,481
	Other		-		-		2,415		-		-		2,415		232,529		234,944
	Total Consumer		-		-		50,148		-		8,653		58,801		3,781,684		3,840,485
Total Popular, Inc.		$	1,023,315	$	746,965	$	2,729,567	$	6,336	$	11,209	$	4,517,392	$	16,236,461	$	20,753,853

The following table presents the weighted average obligor risk rating at September 30, 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							11.96								5.61
Commercial real estate non-owner occupied							11.30								6.98
Commercial real estate owner occupied							11.55								6.94
Commercial and industrial							11.36								6.60
	Total Commercial						11.45								6.78
Construction							11.84								7.86

U.S. mainland:						Substandard									Pass
Commercial multi-family							11.25								7.17
Commercial real estate non-owner occupied							11.41								7.02
Commercial real estate owner occupied							11.30								6.95
Commercial and industrial							11.21								6.79
	Total Commercial						11.33								6.78
Construction							11.38								7.24
Legacy							11.31								7.50

[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
	Credit cards		-		-		26,373		-		-		26,373		1,189,447		1,215,820
	Home equity lines of credit		-		-		1,757		-		3,456		5,213		14,838		20,051
	Personal		-		-		8,523		-		559		9,082		974,106		983,188
	Auto		-		-		6,830		-		-		6,830		509,434		516,264
	Other		-		-		10,165		-		-		10,165		224,939		235,104
	Total 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
	Credit cards		-		-		735		-		-		735		13,474		14,209
	Home equity lines of credit		-		-		4,774		-		6,590		11,364		526,479		537,843
	Personal		-		-		128		-		93		221		147,184		147,405
	Auto		-		-		6		-		28		34		2,178		2,212
	Other		-		-		24		-		-		24		1,635		1,659
	Total 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
	Credit cards		-		-		27,108		-		-		27,108		1,202,921		1,230,029
	Home equity lines of credit		-		-		6,531		-		10,046		16,577		541,317		557,894
	Personal		-		-		8,651		-		652		9,303		1,121,290		1,130,593
	Auto		-		-		6,836		-		28		6,864		511,612		518,476
	Other		-		-		10,189		-		-		10,189		226,574		236,763
	Total 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							11.38								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.