BPOP — Popular, Inc.

Summary of BPOP Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Net Income: $211 million, up $1 million year-over-year.
• Earnings Per Share (EPS): $3.15, an increase of $0.06.
• Net Interest Income (NII): $647 million, up $15 million, driven by higher deposit balances and fixed-rate asset repricing.
• Net Interest Margin (NIM): Expanded by 2 basis points (GAAP) and 5 basis points (tax equivalent).
• Loan Growth: Increased by $502 million, with contributions from both Banco Popular de Puerto Rico (BPPR) and Popular Bank.
• Total Operating Expenses: $495 million, a slight increase of $3 million, impacted by a $13 million noncash goodwill impairment.
• Credit Quality Metrics: NPL ratio increased to 1.3% due to two large commercial loans; net charge-offs rose to $58 million (60 basis points).

2. Strategic Updates and Business Highlights:

• Economic Environment: Positive trends in Puerto Rico's economy, including a low unemployment rate (5.6%) and increased consumer spending.
• Strategic Framework: Focus on being the #1 bank for customers, simplifying operations, and enhancing performance to achieve a sustainable 14% ROTCE.
• Digital Initiatives: Launch of online personal and credit card loan origination processes and expansion of digital deposit products.
• Transformation Progress: Ongoing investments in technology and operational efficiencies, with over 80 projects in progress.

3. Forward Guidance and Outlook:

• Loan Growth Expectation: Consolidated loan growth for 2025 revised to 4%-5%, up from 3%-5%.
• NII Growth Guidance: Expected to grow by 10%-11% in 2025.
• Noninterest Income Guidance: Q4 expected to be between $160 million and $165 million, leading to a total of $650 million to $655 million for the year.
• ROTC Guidance: Continued expectation for at least 12% ROTCE in Q4 and for the full year, with a long-term goal of 14%.

4. Bad News, Challenges, or Points of Concern:

• Credit Quality Concerns: The increase in NPLs and net charge-offs due to two specific commercial loans, which management insists are isolated incidents.
• Deposit Balances: Ending deposit balances decreased by $704 million, though average balances grew by $793 million, indicating potential pressures on deposit retention.
• Competitive Pressures: Increased competition in the deposit market, particularly for government deposits, though management remains confident in their positioning.

5. Notable Q&A Insights:

• Margin and Asset Yields: Management expects NIM to continue expanding despite potential rate cuts, supported by fixed asset repricing and deposit pricing discipline.
• Credit Trends: Management remains optimistic about consumer credit performance, citing stable delinquency rates in the auto loan portfolio.
• Investment Strategy: The bank is focused on maintaining rigorous underwriting standards despite competitive pressures in loan origination.
• Expense Management: Ongoing initiatives to improve cost efficiencies while investing in transformation, with a focus on sustainable growth rather than one-off savings.

Overall, BPOP reported solid financial performance in Q3 2025, with strong loan growth and a stable economic environment in Puerto Rico, although there are concerns regarding credit quality and competitive pressures in the deposit market. The bank remains committed to its strategic objectives and maintaining a robust return on tangible common equity.