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Loans

9 Months Ended

Sep. 30, 2022

Note 8 – Loans

For a summary of the accounting policies related to loans, interest recognition and allowance for credit losses refer to Note 2 - Summary of significant accounting policies of the 2021 Form 10-K.

During the quarter and nine months ended September 30, 2022, the Corporation recorded purchases (including repurchases) of mortgage loans amounting to $66 million and $219 million, respectively, including $0.3 million and $4 million in PCD loans, respectively, and consumer loans of $135 million and $349 million, respectively. During the quarter and nine months ended September 30, 2022, the Corporation recorded purchases of $106 million and $129 million, respectively in commercial loans.

During the quarter and nine months ended September 30, 2021, the Corporation recorded purchases (including repurchases) of mortgage loans amounting to $90 million and $310 million, respectively, including $1 million and $13 million in PCD loans, respectively, and commercial loans of $41 million and $90 million, respectively.

The Corporation performed whole-loan sales involving approximately $17 million and $50 million of residential mortgage loans during the quarter and nine months ended September 30, 2022, respectively (September 30, 2021 - $31 million and $116 million, respectively). During the quarter and nine months ended September 30, 2022, the Corporation performed sales of commercial loans, including loan participations amounting to $11 million and $54 million, respectively (September 30, 2021 - $35 million and $44 million, respectively).

Also, the Corporation securitized approximately $14 million and $169 million of mortgage loans into Government National Mortgage Association (“GNMA”) mortgage-backed securities during the quarter and nine months ended September 30, 2022, respectively (September 30, 2021 - $85 million and $294 million, respectively). Furthermore, the Corporation securitized approximately $22 million and $117 million of mortgage loans into Federal National Mortgage Association (“FNMA”) mortgage-backed securities during the quarter and nine months ended September 30, 2022, respectively (September 30, 2021 - $76 million and $235 million, respectively). Also, the Corporation securitized approximately $9 million of mortgage loans into Federal Home Loan Mortgage Corporation (“FHLMC”) mortgage-backed securities during the nine months ended September 30, 2022 (September 30, 2021 - $4 million and $18 million for the quarter and nine months ended).

Delinquency status

The following tables present the amortized cost basis of loans held-in-portfolio (“HIP”), net of unearned income, by past due status, and by loan class including those that are in non-performing status or that are accruing interest but are past due 90 days or more at September 30, 2022 and December 31, 2021.

September 30, 2022
Puerto Rico

			Past due											Past due 90 days or more
		30-59		60-89		90 days		Total						Non-accrual			Accruing
(In thousands)		days		days		or more		past due		Current		Loans HIP		loans		loans
Commercial multi-family		$	546	$	-	$	251	$	797	$	276,521	$	277,318	$	251	$	-
Commercial real estate:
	Non-owner occupied		3,005		789		21,443		25,237		2,820,803		2,846,040		21,443		-
	Owner occupied		10,992		7,834		28,379		47,205		1,540,932		1,588,137		28,379		-
Commercial and industrial			7,105		1,139		38,003		46,247		3,547,841		3,594,088		37,375		628
Construction			-		1,087		-		1,087		210,480		211,567		-		-
Mortgage			237,316		89,802		581,378		908,496		5,147,347		6,055,843		252,773		328,605
Leasing			14,487		2,740		5,697		22,924		1,515,580		1,538,504		5,697		-
Consumer:
	Credit cards		7,268		4,481		10,361		22,110		966,406		988,516		-		10,361
	Home equity lines of credit		-		-		-		-		2,957		2,957		-		-
	Personal		13,725		7,348		18,137		39,210		1,478,746		1,517,956		18,117		20
	Auto		71,230		21,852		34,432		127,514		3,401,390		3,528,904		34,432		-
	Other		708		768		12,025		13,501		124,950		138,451		11,748		277
Total		$	366,382	$	137,840	$	750,106	$	1,254,328	$	21,033,953	$	22,288,281	$	410,215	$	339,891

September 30, 2022
Popular U.S.

			Past due											Past due 90 days or more
		30-59		60-89		90 days		Total						Non-accrual			Accruing
(In thousands)		days		days		or more		past due		Current		Loans HIP		loans		loans
Commercial multi-family		$	-	$	-	$	-	$	-	$	1,926,791	$	1,926,791	$	-	$	-
Commercial real estate:
	Non-owner occupied		-		136		10,631		10,767		1,660,668		1,671,435		10,631		-
	Owner occupied		-		5,106		606		5,712		1,472,699		1,478,411		606		-
Commercial and industrial			924		2,144		5,803		8,871		1,975,768		1,984,639		5,191		612
Construction			-		-		-		-		604,723		604,723		-		-
Mortgage			1,501		4,558		21,533		27,592		1,228,278		1,255,870		21,533		-
Consumer:
	Credit cards		-		-		-		-		34		34		-		-
	Home equity lines of credit		256		577		3,970		4,803		65,036		69,839		3,970		-
	Personal		1,495		1,529		1,261		4,285		233,780		238,065		1,261		-
	Other		704		-		12		716		4,384		5,100		12		-
Total		$	4,880	$	14,050	$	43,816	$	62,746	$	9,172,161	$	9,234,907	$	43,204	$	612

September 30, 2022
Popular, Inc.

			Past due											Past due 90 days or more
		30-59		60-89		90 days		Total						Non-accrual			Accruing
(In thousands)		days		days		or more		past due		Current		Loans HIP^{[2] [3]}		loans		loans
Commercial multi-family		$	546	$	-	$	251	$	797	$	2,203,312	$	2,204,109	$	251	$	-
Commercial real estate:
	Non-owner occupied		3,005		925		32,074		36,004		4,481,471		4,517,475		32,074		-
	Owner occupied		10,992		12,940		28,985		52,917		3,013,631		3,066,548		28,985		-
Commercial and industrial			8,029		3,283		43,806		55,118		5,523,609		5,578,727		42,566		1,240
Construction			-		1,087		-		1,087		815,203		816,290		-		-
Mortgage^[1]			238,817		94,360		602,911		936,088		6,375,625		7,311,713		274,306		328,605
Leasing			14,487		2,740		5,697		22,924		1,515,580		1,538,504		5,697		-
Consumer:
	Credit cards		7,268		4,481		10,361		22,110		966,440		988,550		-		10,361
	Home equity lines of credit		256		577		3,970		4,803		67,993		72,796		3,970		-
	Personal		15,220		8,877		19,398		43,495		1,712,526		1,756,021		19,378		20
	Auto		71,230		21,852		34,432		127,514		3,401,390		3,528,904		34,432		-
	Other		1,412		768		12,037		14,217		129,334		143,551		11,760		277
Total		$	371,262	$	151,890	$	793,922	$	1,317,074	$	30,206,114	$	31,523,188	$	453,419	$	340,503

[1]	It is the Corporation’s policy to report delinquent residential mortgage loans insured by Federal Housing Administration (“FHA”) or guaranteed by the U.S. Department of Veterans Affairs (“VA”) as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. The balance of these loans includes $9 million at September 30, 2022 related to the rebooking of loans previously pooled into GNMA securities, in which the Corporation had a buy-back option as further described below. Under the GNMA program, issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to repurchases option are required to be reflected (rebooked) on the financial statements of BPPR with an offsetting liability. These balances include $198 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of September 30, 2022. Furthermore, the Corporation has approximately $42 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation’s policy to exclude these balances from non-performing assets.
[2]	Loans held-in-portfolio are net of $283 million in unearned income and exclude $8 million in loans held-for-sale.
[3]	Includes $7.2 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $3.0 billion were pledged at the Federal Home Loan Bank ("FHLB") as collateral for borrowings and $1.9 billion at the Federal Reserve Bank ("FRB") for discount window borrowings and $2.3 billion serve as collateral for public funds.

December 31, 2021
Puerto Rico

			Past due											Past due 90 days or more
			30-59		60-89		90 days	Total						Non-accrual			Accruing
(In thousands)			days		days		or more	past due		Current		Loans HIP		loans		loans
Commercial multi-family		$	314	$	-	$	272	$	586	$	154,183	$	154,769	$	272	$	-
Commercial real estate:
	Non-owner occupied		2,399		136		20,716		23,251		2,266,672		2,289,923		20,716		-
	Owner occupied		3,329		278		54,335		57,942		1,365,787		1,423,729		54,335		-
Commercial and industrial			3,438		1,727		45,242		50,407		3,478,041		3,528,448		44,724		518
Construction			-		-		485		485		86,626		87,111		485		-
Mortgage			217,830		81,754		805,245		1,104,829		5,147,037		6,251,866		333,887		471,358
Leasing			9,240		2,037		3,102		14,379		1,366,940		1,381,319		3,102		-
Consumer:
	Credit cards		5,768		3,520		8,577		17,865		901,986		919,851		-		8,577
	Home equity lines of credit		46		-		23		69		3,502		3,571		-		23
	Personal		10,027		6,072		21,235		37,334		1,250,726		1,288,060		21,235		-
	Auto		59,128		15,019		23,085		97,232		3,314,955		3,412,187		23,085		-
	Other		432		714		12,621		13,767		110,781		124,548		12,448		173
Total		$	311,951	$	111,257	$	994,938	$	1,418,146	$	19,447,236	$	20,865,382	$	514,289	$	480,649

December 31, 2021
Popular U.S.

			Past due											Past due 90 days or more
			30-59		60-89		90 days		Total					Non-accrual			Accruing
(In thousands)			days		days		or more		past due		Current		Loans HIP	loans		loans
Commercial multi-family		$	3,826	$	-	$	-	$	3,826	$	1,804,035	$	1,807,861	$	-	$	-
Commercial real estate:
	Non-owner occupied		5,721		683		622		7,026		2,316,441		2,323,467		622		-
	Owner occupied		1,095		-		1,013		2,108		392,265		394,373		1,013		-
Commercial and industrial			9,410		2,680		4,015		16,105		1,794,026		1,810,131		3,897		118
Construction			-		-		-		-		629,109		629,109		-		-
Mortgage			11,711		2,573		21,969		36,253		1,139,077		1,175,330		21,969		-
Consumer:
	Credit cards		-		-		-		-		10		10		-		-
	Home equity lines of credit		71		34		5,406		5,511		69,780		75,291		5,406		-
	Personal		863		574		681		2,118		152,827		154,945		681		-
	Other		-		-		-		-		4,658		4,658		-		-
Total		$	32,697	$	6,544	$	33,706	$	72,947	$	8,302,228	$	8,375,175	$	33,588	$	118

December 31, 2021
Popular, Inc.

			Past due											Past due 90 days or more
			30-59		60-89		90 days		Total					Non-accrual			Accruing
(In thousands)			days		days		or more		past due	Current		Loans HIP^{[2] [3]}		loans		loans
Commercial multi-family		$	4,140	$	-	$	272	$	4,412	$	1,958,218	$	1,962,630	$	272	$	-
Commercial real estate:
	Non-owner occupied		8,120		819		21,338		30,277		4,583,113		4,613,390		21,338		-
	Owner occupied		4,424		278		55,348		60,050		1,758,052		1,818,102		55,348		-
Commercial and industrial			12,848		4,407		49,257		66,512		5,272,067		5,338,579		48,621		636
Construction			-		-		485		485		715,735		716,220		485		-
Mortgage^[1]			229,541		84,327		827,214		1,141,082		6,286,114		7,427,196		355,856		471,358
Leasing			9,240		2,037		3,102		14,379		1,366,940		1,381,319		3,102		-
Consumer:
	Credit cards		5,768		3,520		8,577		17,865		901,996		919,861		-		8,577
	Home equity lines of credit		117		34		5,429		5,580		73,282		78,862		5,406		23
	Personal		10,890		6,646		21,916		39,452		1,403,553		1,443,005		21,916		-
	Auto		59,128		15,019		23,085		97,232		3,314,955		3,412,187		23,085		-
	Other		432		714		12,621		13,767		115,439		129,206		12,448		173
Total		$	344,648	$	117,801	$	1,028,644	$	1,491,093	$	27,749,464	$	29,240,557	$	547,877	$	480,767

[1]	It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. The balance of these loans includes $13 million at December 31, 2021 related to the rebooking of loans previously pooled into GNMA securities, in which the Corporation had a buy-back option as further described below. Under the GNMA program, issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to repurchases option are required to be reflected (rebooked) on the financial statements of BPPR with an offsetting liability. These balances include $304 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2021. Furthermore, the Corporation has approximately $50 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation’s policy to exclude these balances from non-performing assets.
[2]	Loans held-in-portfolio are net of $266 million in unearned income and exclude $59 million in loans held-for-sale.
[3]	Includes $6.6 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $3.2 billion were pledged at the FHLB as collateral for borrowings and $1.7 billion at the FRB for discount window borrowings and $1.7 billion serve as collateral for public funds.

Recognition of interest income on mortgage loans is generally discontinued when loans are 90 days or more in arrears on payments of principal or interest. The Corporation discontinues the recognition of interest income on residential mortgage loans insured by the FHA or guaranteed by VA when 15 months delinquent as to principal or interest, since the principal repayment on these loans is insured.

At September 30, 2022, mortgage loans held-in-portfolio include $1.9 billion (December 31, 2021 - $1.9 billion) of loans insured by the FHA, or guaranteed by the VA of which $0.3 billion (December 31, 2021 - $0.5 billion) are 90 days or more past due. These balances include $725 million in loans modified under a TDR (December 31, 2021 - $716 million), that are presented as accruing loans. The portfolio of guaranteed loans includes $198 million of residential mortgage loans in Puerto Rico that are no longer accruing interest as of September 30, 2022 (December 31, 2021 - $304 million). The Corporation has approximately $42 million in reverse mortgage loans in Puerto Rico which are guaranteed by FHA, but which are currently not accruing interest at September 30, 2022 (December 31, 2021 - $50 million).

Loans with a delinquency status of 90 days past due as of September 30, 2022 include $9 million in loans previously pooled into GNMA securities (December 31, 2021 - $13 million). Under the GNMA program, issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements of BPPR with an offsetting liability. Loans in our serviced GNMA portfolio benefit from payment forbearance programs but continue to reflect the contractual delinquency until the borrower repays deferred payments or completes a payment deferral modification or other borrower assistance alternative.

The following tables present the amortized cost basis of non-accrual loans as of September 30, 2022 and December 31, 2021 by class of loans:

September 30, 2022
	Puerto Rico				Popular U.S.				Popular, Inc.
(In thousands)	Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance
Commercial multi-family	$	-	$	251	$	-	$	-	$	-	$	251
Commercial real estate non-owner occupied		16,931		4,512		-		10,631		16,931		15,143
Commercial real estate owner occupied		11,247		17,132		-		606		11,247		17,738
Commercial and industrial		22,844		14,531		-		5,191		22,844		19,722
Mortgage		132,300		120,473		-		21,533		132,300		142,006
Leasing		218		5,479		-		-		218		5,479
Consumer:
HELOCs		-		-		-		3,970		-		3,970
Personal		5,560		12,557		-		1,261		5,560		13,818
Auto		1,067		33,365		-		-		1,067		33,365
Other		263		11,485		-		12		263		11,497
Total	$	190,430	$	219,785	$	-	$	43,204	$	190,430	$	262,989

December 31, 2021
	Puerto Rico				Popular U.S.				Popular, Inc.
(In thousands)	Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance
Commercial multi-family	$	-	$	272	$	-	$	-	$	-	$	272
Commercial real estate non-owner occupied		15,819		4,897		-		622		15,819		5,519
Commercial real estate owner occupied		13,491		40,844		-		1,013		13,491		41,857
Commercial and industrial		30,177		14,547		-		3,897		30,177		18,444
Construction		-		485		-		-		-		485
Mortgage		169,827		164,060		29		21,940		169,856		186,000
Leasing		276		2,826		-		-		276		2,826
Consumer:
HELOCs		-		-		-		5,406		-		5,406
Personal		6,279		14,956		81		600		6,360		15,556
Auto		879		22,206		-		-		879		22,206
Other		-		12,448		-		-		-		12,448
Total	$	236,748	$	277,541	$	110	$	33,478	$	236,858	$	311,019

Loans in non-accrual status with no allowance at September 30, 2022 include $190 million in collateral dependent loans (December 31, 2021 - $237 million). The Corporation recognized $3 million in interest income on non-accrual loans during the nine months ended September 30, 2022 (September 30, 2021 - $4 million).

The Corporation has designated loans classified as collateral dependent for which the ACL is measured based on the fair value of the collateral less cost to sell, when foreclosure is probable or when the repayment is expected to be provided substantially by the sale or operation of the collateral and the borrower is experiencing financial difficulty. The fair value of the collateral is based on appraisals, which may be adjusted due to their age, and the type, location, and condition of the property or area or general market conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date. Appraisals are updated every one to two years depending on the type of loan and the total exposure of the borrower.

The following tables present the amortized cost basis of collateral-dependent loans, for which the ACL was measured based on the fair value of the collateral less cost to sell, by class of loans and type of collateral as of September 30, 2022 and December 31, 2021:

		September 30, 2022
(In thousands)			Real Estate		Auto		Equipment		Accounts Receivables		Other		Total
Puerto Rico
Commercial multi-family		$	1,342	$	-	$	-	$	-	$	-	$	1,342
Commercial real estate:
	Non-owner occupied		204,407		-		-		-		-		204,407
	Owner occupied		21,571		-		-		-		-		21,571
Commercial and industrial			1,425		-		32		9,777		23,811		35,045
Mortgage			142,473		-		-		-		-		142,473
Leasing			-		814		3		-		-		817
Consumer:
	Personal		5,642		-		-		-		-		5,642
	Auto		-		9,280		-		-		-		9,280
	Other		-		-		-		-		263		263
Total Puerto Rico		$	376,860	$	10,094	$	35	$	9,777	$	24,074	$	420,840
Popular U.S.
Commercial real estate:
	Non-owner occupied		10,631		-		-		-		-		10,631
Mortgage		$	853	$	-	$	-	$	-	$	-	$	853
Total Popular U.S.		$	11,484	$	-	$	-	$	-	$	-	$	11,484
Popular, Inc.
Commercial multi-family		$	1,342	$	-	$	-	$	-	$	-	$	1,342
Commercial real estate:
	Non-owner occupied		215,038		-		-		-		-		215,038
	Owner occupied		21,571		-		-		-		-		21,571
Commercial and industrial			1,425		-		32		9,777		23,811		35,045
Mortgage			143,326		-		-		-		-		143,326
Leasing			-		814		3		-		-		817
Consumer:
	Personal		5,642		-		-		-		-		5,642
	Auto		-		9,280		-		-		-		9,280
	Other		-		-		-		-		263		263
Total Popular, Inc.		$	388,344	$	10,094	$	35	$	9,777	$	24,074	$	432,324

		December 31, 2021
(In thousands)			Real Estate		Auto		Equipment		Accounts Receivables		Other		Total
Puerto Rico
Commercial multi-family		$	1,374	$	-	$	-	$	-	$	-	$	1,374
Commercial real estate:
	Non-owner occupied		211,026		-		-		-		-		211,026
	Owner occupied		47,268		-		-		-		-		47,268
Commercial and industrial			2,650		-		680		10,675		27,893		41,898
Mortgage			179,774		-		-		-		-		179,774
Leasing			-		574		-		-		-		574
Consumer:
	Personal		6,165		-		-		-		-		6,165
	Auto		-		8,983		-		-		-		8,983
Total Puerto Rico		$	448,257	$	9,557	$	680	$	10,675	$	27,893	$	497,062
Popular U.S.
Mortgage		$	926	$	-	$	-	$	-	$	-	$	926
Total Popular U.S.		$	926	$	-	$	-	$	-	$	-	$	926
Popular, Inc.
Commercial multi-family		$	1,374	$	-	$	-	$	-	$	-	$	1,374
Commercial real estate:
	Non-owner occupied		211,026		-		-		-		-		211,026
	Owner occupied		47,268		-		-		-		-		47,268
Commercial and industrial			2,650		-		680		10,675		27,893		41,898
Mortgage			180,700		-		-		-		-		180,700
Leasing			-		574		-		-		-		574
Consumer:
	Personal		6,165		-		-		-		-		6,165
	Auto		-		8,983		-		-		-		8,983
Total Popular, Inc.		$	449,183	$	9,557	$	680	$	10,675	$	27,893	$	497,988

Purchased Credit Deteriorated (PCD) Loans

The Corporation has purchased loans during the quarter and nine months ended September 30, 2022 and 2021, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:


(In thousands)		For the quarter ended September 30, 2022		For the nine months ended September 30, 2022
Purchase price of loans at acquisition	$	247	$	2,840
Allowance for credit losses at acquisition		59		841
Non-credit discount / (premium) at acquisition		6		131
Par value of acquired loans at acquisition	$	312	$	3,812


(In thousands)		For the quarter ended September 30, 2021		For the nine months ended September 30, 2021
Purchase price of loans at acquisition	$	1,060	$	10,044
Allowance for credit losses at acquisition		253		2,811
Non-credit discount / (premium) at acquisition		54		389
Par value of acquired loans at acquisition	$	1,367	$	13,244