Popular, Inc. Announces Fourth Quarter 2018 Financial Results

Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported a net income of $106.4 million and an adjusted net income of $134.1 million for the fourth quarter ended December 31, 2018, compared to a net income of $140.6 million for the third quarter ended September 30, 2018.

Ignacio Alvarez, President and Chief Executive Officer, said: “We are very pleased with our performance in the fourth quarter, which allowed us to finish the year on a strong note. These results include the impact of a number of corporate initiatives that increased expenses for the quarter, but continue to reflect strong top line growth, improving margins and the continuing contribution to income from the Reliable transaction. We begin 2019 with enthusiasm as we build on the momentum created in 2018 and leverage the strength of our balance sheet and unique franchise to continue to drive shareholder value.”

Significant Events

Puerto Rico Tax Reform

On December 10, 2018, the Governor of Puerto Rico signed into law Act No. 257 of 2018, which amended the Puerto Rico Internal Revenue Code to, among other things, reduce the Puerto Rico corporate income tax rate from 39% to 37.5%. The Corporation recognized a $27.7 million non-cash income tax expense as a result of a reduction in the Corporation’s net deferred tax asset (“DTA”) related to its Puerto Rico operations, due to the aforementioned reduction in tax rates at which it expects to realize the benefit of the DTA. This adjustment resulted in a reduction to Common Equity Tier 1 Capital and Total Regulatory Capital of approximately 3 bps.

Profit Sharing Plan

In 2016, the Corporation established a broad-based Profit Sharing Plan (the “Plan”) where employees receive incentive compensation if the Corporation’s earnings results exceed targets set by the Board of Directors. As a result of the Corporation’s earnings for the year ended December 31, 2018, eligible employees will receive incentive payments of up to $5,600 per employee, half of which is to be paid in cash and the other half as a contribution to their 401(K) Savings and Investment Plan. The Corporation has recorded $25.5 million in personnel costs for the year ended December 31, 2018 as a result of the Plan, $17.5 million of which were recorded in the fourth quarter.

Voluntary Retirement Program

The Corporation has offered to eligible Puerto Rico, U.S. Virgin Islands and British Virgin Island employees the opportunity to participate in a Voluntary Retirement Program (the “VRP”). The VRP offers such employees monetary and other incentives in exchange for electing to retire, effective February 1, 2019. To qualify for the VRP, eligible employees must have attained 58 years of age and have at least 10 years of service. A total of 313 eligible employees elected to participate in the VRP. Accordingly, during the fourth quarter of 2018, the Corporation recognized $19.5 million in personnel costs related to compensation arrangements for VRP participants. The Corporation expects annual personnel costs savings of approximately $11 million as a result of the VRP.

The Reliable Acquisition

As previously disclosed, on August 1, 2018, Popular Auto, LLC (“Popular Auto”), Banco Popular de Puerto Rico’s auto finance subsidiary, completed the acquisition of approximately $1.6 billion in retail auto loans and $341 million in primarily auto-related commercial loans from Wells Fargo & Company’s (“Wells Fargo”) auto finance business in Puerto Rico (“Reliable”).

During the fourth quarter of 2018, retrospective adjustments were made to the estimated fair values of the loans acquired from Reliable in order to reflect new information obtained during the measurement period of circumstances that existed as of the acquisition date, in accordance with U.S. GAAP (defined below). The adjustments resulted in a higher fair value ascribed to the loan portfolio acquired from Wells Fargo by $16.4 million and a corresponding decrease in goodwill recognized in connection with the transaction. The related cumulative adjustment to the amortization of the fair value discounts for the retail and commercial portfolios offset each other, resulting in an immaterial impact to the Corporation’s results.

For the quarter ended December 31, 2018, the acquisition of Reliable contributed approximately $18.0 million to net income, compared to $11.7 million for the previous quarter, comprised of net interest income of $42.4 million (September 30, 2018 - $30.7 million), $6.4 million (September 30, 2018 - $5.1 million) of operating income, including servicing fees from a portion of the portfolio retained by Wells Fargo and serviced by Popular Auto, and expenses of $11.7 million (September 30, 2018 - $8.6 million, including $3.8 million of transaction related expenses). These net earnings were subject to the marginal statutory corporate tax rate of 39%.

Redemption of Senior Notes

On October 15, 2018, the Corporation redeemed $450 million aggregate principal amount of its outstanding 7.00% Senior Notes due 2019 (the “2019 Notes”). The redemption was funded with available cash and the proceeds from the issuance, on September 11, 2018, of $300 million aggregate principal amount of 6.125% Senior Notes due 2023 (the “ 2023 Notes”) in an underwritten public offering pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission. The Corporation recognized $12.5 million in expenses associated with the accelerated amortization of debt issuance costs and the redemption price of the 2019 Notes.

Common Stock Repurchase Plan

During the fourth quarter of 2018, the Corporation completed a $125 million accelerated share repurchase transaction (“ASR”) with respect to its common stock. In connection therewith, the Corporation had received an initial delivery of 2,000,000 shares of common stock during the third quarter of 2018 and received 438,180 additional shares of common stock during the fourth quarter of 2018. The final number of shares delivered at settlement was based on the average daily volume weighted average price of its common stock, net of a discount, during the term of the ASR, which amounted to $51.27. The Corporation accounted for this as a treasury stock transaction.

Planned Capital Actions for 2019

On January 23, 2019, the Corporation announced the following actions as part of its capital plan for 2019: (i) an increase its quarterly common stock dividend from $0.25 per share to $0.30 per share, beginning in the second quarter of 2019, subject to approval by its Board of Directors, and (ii) up to $250 million in common stock repurchases.

Earnings Highlights
(Unaudited) Quarters ended Years ended
(Dollars in thousands, except per share information) 31-Dec-18 30-Sep-18 31-Dec-17 31-Dec-18 31-Dec-17
Net interest income $476,225 $451,469 $387,216 $1,734,877 $1,501,964
Provision for loan losses 42,568 54,387 70,001 226,342 319,682
Provision for loan losses - covered loans [1] - - 1,487 1,730 5,742
Net interest income after provision for loan losses 433,657 397,082 315,728 1,506,805 1,176,540
FDIC loss-share income (expense) - - 2,614 94,725 (10,066)
Other non-interest income 153,167 151,021 83,517 557,769 429,233
Operating expenses 396,455 365,437 321,955 1,421,562 1,257,196
Income before income tax 190,369 182,666 79,904 737,737 338,511
Income tax expense 83,966 42,018 182,058 119,579 230,830
Net income (loss) $106,403 $140,648 $(102,154) $618,158 $107,681
Net income (loss) applicable to common stock $105,472 $139,718 $(103,085) $614,435 $103,958
Net income (loss) per common share - basic $1.06 $1.38 $(1.01) $6.07 $1.02
Net income (loss) per common share - diluted $1.05 $1.38 $(1.01) $6.06 $1.02
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that were covered under the FDIC Shared-Loss Agreements, terminated on May 22, 2018.

Adjusted results – Non-GAAP

The Corporation prepared its Consolidated Financial Statement using accounting principles generally accepted in the U.S. (“U.S. GAAP” or the “reported basis”). In addition to analyzing the Corporation’s results on the reported basis, management monitors the “Adjusted net income” of the Corporation and excludes from such calculation the impact of certain transactions on the results of its operations. Management believes that “Adjusted net income” provides meaningful information to investors about the underlying performance of the Corporation’s ongoing operations. “Adjusted net income” is a non-GAAP financial measure.

The table below describes adjustments to net income for the quarter ended December 31, 2018. No adjustments are reflected for the third quarter of 2018.

(Unaudited)
(In thousands) 31-Dec-18
Pre-tax Income tax effect Impact on net income
U.S. GAAP Net income $106,403
Non-GAAP Adjustments:
Impact of Law Act No.257[1] - 27,686 27,686
Adjusted net income (Non-GAAP) $134,089
[1]On December 10, 2018, the Governor of Puerto Rico signed into law Act No.257 of 2018, which amended the Puerto Rico Internal Revenue Code, to among other things, reduce the Puerto Rico corporate tax rate from 39% to 37.5%. The resulting adjustments reduced the DTA related to the Corporation's P.R. operations as a result of a lower realizable benefit at the lower tax rate.

Net interest income

Net interest income for the quarter ended December 31, 2018 was $476.2 million, compared to $451.5 million for the previous quarter. Net interest margin was 4.25% for the quarter, compared to 4.07% for the previous quarter. As a result of the May 2018 termination of the loss share agreements (the “FDIC Shared-Loss Agreements”) entered into with the Federal Deposit Insurance Corporation in connection with the acquisition of certain assets and assumption of certain liabilities of Westernbank, the presentation of net interest income has been adjusted since the second quarter of 2018 to present the income from the loans acquired from Westernbank (the “WB Loans”) in their respective loan segments. Previously, the Corporation presented the income associated with the WB Loans aggregated into a single line in its analysis of average balances and yields (Tables D and E). The presentation for prior periods has been adjusted accordingly for comparative purposes.

The increase of $24.7 million in net interest income is mainly the result of the following:

Positive variances:

  • Higher income from money market, trading and investments by $6.6 million, or 17 basis points, as a result of higher yields during the quarter, including the impact of the increase in the Fed Funds rate by 25 basis points at the end of the third quarter and in December 2018 as well as a shift in invested balances from money market investments to higher earning debt securities;
  • Higher income from the consumer loans portfolio by $19.0 million, or 18 basis points, mainly driven by income from the portfolio acquired from Reliable, which impacted the prior quarter for only two months due to the acquisition closing at the beginning of August. Interest income included $16.2 million related to the amortization of the fair value discount recognized in connection with the Reliable transaction, compared to $9.3 million for the previous quarter;
  • Higher income from the commercial loans portfolio by $5.4 million, or 10 basis points, mainly due to the prepayment of a loan accounted for under ASC 310-30 at Banco Popular de Puerto Rico (“BPPR”) which resulted in a positive adjustment to its yield. The impact of higher market rates in the adjustable rate portfolio and growth at Popular Bank (“Popular U.S.”) also contributed to the positive variance; and
  • Lower borrowing costs by $3.7 million, or 30 basis points, due to the repayment of the 2019 Senior Notes and the redemption of $53 million in Trust Preferred Securities during the previous quarter.

Negative variance:

  • Higher cost of interest-bearing deposits by $10.1 million, or 11 basis points, due mainly to higher average balances in NOW and money market and savings accounts, impacted primarily by public sector deposits at BPPR and higher cost of U.S. deposits, mainly from Popular U.S.’s online platform.

BPPR’s net interest income amounted to $408.7 million for the quarter ended December 31, 2018, compared to $388.5 million in the previous quarter. The increase of $20.2 million in net interest income was mainly due to the income from the consumer loan portfolio acquired from Reliable, primarily as a result of a full quarter of results versus only two months in the prior quarter, higher income from money market, trading and investment securities resulting from higher yields and higher income from the commercial loans portfolio as previously stated. These positive results were partially offset by higher interest expense on deposits, mainly from public sector deposits. The net interest margin for the fourth quarter of 2018 was 4.51%, an increase of 16 basis points when compared to 4.35% for the previous quarter. The increase in net interest margin was due to the composition of earning assets, the increase in market rates and the prepayment of a loan accounted for under ASC 310-30, as mentioned above. BPPR’s earning assets yielded 5.04%, compared to 4.81% in the previous quarter, while the cost of interest-bearing deposits was 0.73%, or 11 basis points higher than the 0.62% reported in the previous quarter.

Net interest income for Popular U.S. was $77.9 million, for the quarter ended December 31, 2018, compared to $76.2 million during the previous quarter. The increase of $1.7 million in net interest income was mainly due to higher volume and yields on commercial loans, driven in part by higher loan fees from the early cancellation of loans and higher market rates. These positive variances were partially offset by higher funding costs. Net interest margin for the quarter increased 11 basis points to 3.61%, compared to 3.50% for the previous quarter. The increase in net interest margin was mostly due to higher proportion of earning assets in loans, which carry a higher yield as compared to money market deposits and investments, partially offset by higher cost of deposits mostly raised through Popular U.S.’s online deposit platform. Earning assets yielded 4.74%, compared to 4.54% in the previous quarter, while the cost of interest-bearing deposits was 1.38%, compared to 1.26% in the previous quarter.

Non-interest income

Non-interest income increased by $2.2 million to $153.2 million for the quarter ended December 31, 2018, compared to $151.0 million for the previous quarter. The Corporation recognized as other income $9.5 million in recoveries for hurricane-related claims during each of the third and fourth quarters of 2018. The variance in non-interest income was primarily driven by:

  • Higher other service fees by $5.9 million due to higher credit card late fees by $1.2 million as a result of the previous quarter including a reversal of income related to charged off loans; higher debit and credit card interchange fees due to higher transactional volumes; and higher other fees by $2.6 million in part due to retail auto loan servicing fees received from Wells Fargo; and
  • higher income on mortgage banking activities by $8.1 million mainly due to a favorable fair value adjustment on mortgage servicing rights of $8.8 million recorded during the fourth quarter.

These positive variances were partially offset by:

  • Higher unrealized net losses on equity securities by $2.4 million;
  • unfavorable variance in adjustments to indemnity reserves of $3.4 million related to loans previously sold with credit recourse at BPPR; and
  • lower other operating income by $7.1 million principally due to lower modification fees received for the successful completion of loss mitigation alternatives by $6.8 million as a result of loan modification levels, which had materially increased as a result of the implementation of hurricane relief programs, normalizing.

Refer to Table B for further details.

Operating expenses

Operating expenses of $396.5 million for the fourth quarter of 2018, an increase of $31.0 million when compared to the third quarter of 2018. The increase in operating expenses was driven primarily by:

  • Higher personnel costs by $33.3 million, mainly due to higher other personnel cost by $29.3 million as a result of $17.2 million recognized in connection with the implementation of the VRP and the recognition of $17.5 million (compared to $5.0 million for the previous quarter) related to annual incentives tied to the Corporation’s financial performance; higher pension, postretirement and medical insurance by $3.0 million, also impacted by the benefits provided pursuant to the VRP and higher salaries by $3.0 million. These increases were partially offset by lower commission, incentive and other bonuses by $2.0 million;
  • higher net occupancy expense by $5.9 million due to $3.4 million of recoveries for hurricane-related insurance claims recorded during the third quarter of 2018 and higher rent expense in Popular Bank;
  • higher professional fees by $5.2 million mainly associated with higher consulting, audit and tax fees;
  • higher business promotion expenses by $6.2 million due to higher seasonal advertising costs by $3.1 million and higher donations by $1.4 million; and
  • a loss of $12.5 million resulting from the early extinguishment of the 2019 Senior Notes.

These increases were partially offset by:

  • Lower FDIC deposit insurance by $3.4 million due to the termination of the temporary surcharge assessed by the FDIC to raise its Reserve Ratio;
  • lower OREO expenses by $5.6 million due to $3.3 million in insurance reimbursement related to recoveries for hurricane-related claims and gain on sale of mortgage properties;
  • lower credit and debit card processing, volume, interchange and other expenses by $4.2 million as a result of incentives received for exceeding volume targets; and
  • lower other operating expenses by $19.5 million mainly resulting from a $19.6 million write-down related to the capitalized software cost of a technology project discontinued by the Corporation during the third quarter of 2018.

Full-time equivalent employees were 8,474 as of December 31, 2018, compared to 8,363 as of September 30, 2018.

For a breakdown of operating expenses by category refer to table B.

Income taxes

For the quarter ended December 31, 2018, the Corporation recorded an income tax expense of $84.0 million, compared to $42.0 million for the previous quarter. As previously discussed, as a result of the enactment of Act No. 257 of 2018, which amended the Puerto Rico Internal Revenue Code to, among other things, reduce the corporate income tax rate from 39% to 37.5%, during the fourth quarter the Corporation recognized a non-cash income tax expense of $27.7 million resulting from adjustments to the DTA related to its Puerto Rico operations due to the lower tax rate, which reduces the expected benefit of the DTA . Excluding the impact of this adjustment, the effective tax rate for the fourth quarter of 2018 was 30%, as more income was recognized at the 39% marginal tax rate in Puerto Rico and the debt extinguishment expenses were not subject to a tax benefit.

The effective tax rate of the Corporation is impacted by the composition and source of its taxable income. For the year 2019, the Corporation expects its consolidated effective tax rate to be within a range from 22-25%.

Credit Quality

Overall, the Puerto Rico segment continued to reflect a positive credit quality trend, with metrics better than, or improving to levels equal to, those prevailing prior to the impact of Hurricanes Irma and Maria in September 2017. The Corporation continues to closely monitor its portfolios and related credit metrics given Puerto Rico’s ongoing economic and fiscal challenges. The results of our U.S. operation also remained solid with strong growth and favorable credit quality metrics. The following presents credit quality results for the fourth quarter of 2018.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, remained stable quarter-over-quarter, increasing slightly by $761 thousand. P.R. mortgage inflows for the quarter remained better than pre-hurricane levels, primarily due to lower early delinquencies.
  • Total non-performing loans held-in-portfolio decreased by $21.4 million from the third quarter of 2018, mainly driven by lower P.R. mortgage NPLs of $25.2 million, reflective of lower inflows for the quarter and increased foreclosure activity after the termination of the moratorium period related to the hurricanes. At December 31, 2018, the ratio of NPLs to total loans held-in-portfolio was 2.3%, compared to 2.4% in the third quarter of 2018.
  • Net charge-offs increased by $43.3 million from the third quarter of 2018, primarily driven by higher P.R. commercial NCOs of $49.3 million. This increase was related to charge-offs from two large commercial relationships. This increase was in part offset by lower consumer and mortgage NCOs by $6.9 million and $3.9 million, respectively, as the prior quarter was impacted by post-moratorium effects. The U.S. NCOs increased by $5.6 million mostly due to a previously reserved construction loan. The Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was 1.63%, compared to 1.00% in the third quarter of 2018. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan and lease losses (“ALLL”) decreased by $64.4 million from the third quarter of 2018 to $569.3 million. The P.R. segment ALLL decreased by $53.0 million, principally driven by the abovementioned charge-offs, coupled with improvements in the loss estimates of the purchased credit impaired loans accounted for under ASC 310-30 and improvements in loss trends in our consumer portfolio. The hurricane-related reserve has been substantially eliminated. However, the ALLL balance at December 31, 2018 included $50 million in environmental factors reserves to account for potential losses in our P.R. commercial portfolio not embedded in our historical loss rates. The U.S. segment ALLL decreased by $11.4 million, mostly due to the construction charge-off recorded during the quarter.
  • The general and specific reserves totaled $449.7 million and $119.7 million, respectively, at quarter-end, compared with $503.2 million and $130.5 million, respectively, as of September 30, 2018. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.15% in the fourth quarter of 2018, compared to 2.39% from the previous quarter. The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 93.2% compared to 100.2% in the previous quarter.
  • The provision for loan losses for the fourth quarter of 2018 decreased by $11.8 million, driven by a decrease of $8.4 million in the P.R. expense. The provision to net charge-offs ratio was 39.8% in the fourth quarter of 2018, compared to 85.4% in the previous quarter.

Non-Performing Assets
(Unaudited)
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17
Total non-performing loans held-in-portfolio, excluding covered loans $611,087 $632,488 $550,957
Other real estate owned (“OREO”), excluding covered OREO 136,705 133,780 169,260
Total non-performing assets, excluding covered assets 747,792 766,268 720,217
Covered loans and OREO - - 22,948
Total non-performing assets $747,792 $766,268 $743,165
Net charge-offs for the quarter (excluding covered loans) $106,938 $63,687 $93,675
Ratios (excluding covered loans):
Non-covered loans held-in-portfolio $26,507,889 $26,512,168 $24,292,794
Non-performing loans held-in-portfolio to loans held-in-portfolio 2.31% 2.39% 2.27%
Allowance for loan losses to loans held-in-portfolio 2.15 2.39 2.43
Allowance for loan losses to non-performing loans, excluding loans held-for-sale 93.17 100.19 107.12
Refer to Table H for additional information.
Provision for Loan Losses
(Unaudited) Quarters ended Years ended
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17 31-Dec-18 31-Dec-17
Provision (reversal) for loan losses:
BPPR $43,461 $51,877 $52,973 $196,461 $241,739
Popular U.S. (893) 2,510 17,028 29,881 77,943
Total provision for loan losses - non-covered loans $42,568 $54,387 $70,001 $226,342 $319,682
Provision for loan losses - covered loans - - 1,487 1,730 5,742
Total provision for loan losses $42,568 $54,387 $71,488 $228,072 $325,424

Credit Quality by Segment
(Unaudited)
(In thousands)

Quarters ended

BPPR 31-Dec-18 30-Sep-18 31-Dec-17
Provision for loan losses $43,461 $51,877 $52,973
Net charge-offs 96,479 58,846 59,118
Total non-performing loans held-in-portfolio, excluding covered loans 568,098 580,803 511,440
Allowance / non-covered loans held-in-portfolio 2.55% 2.83% 2.87%

Quarters ended

Popular U.S. 31-Dec-18 30-Sep-18 31-Dec-17
Provision (reversal) for loan losses $(893) $2,510 $17,028
Net charge-offs 10,459 4,841 34,557
Total non-performing loans held-in-portfolio 42,989 51,685 39,517
Allowance / non-covered loans held-in-portfolio 0.94% 1.10% 1.16%
Financial Condition Highlights
(Unaudited)
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17
Cash and money market investments $4,565,083 $5,010,010 $5,657,976
Investment securities 13,595,130 13,344,548 10,482,971
Loans not covered under loss-sharing agreements with the FDIC 26,507,889 26,512,168 24,292,794
Loans covered under loss-sharing agreements with the FDIC - - 517,274
Total assets 47,604,577 47,919,428 44,277,337
Deposits 39,710,039 39,648,827 35,453,508
Borrowings 1,537,673 2,046,003 2,023,485
Total liabilities 42,169,520 42,675,079 39,173,432
Stockholders’ equity 5,435,057 5,244,349 5,103,905

Total assets decreased by $0.3 billion from the third quarter of 2018, driven by:

  • A decrease of $0.4 billion in cash and money market investments, mainly due to the repayment of the 2019 Senior Notes;

Partially offset by:

  • An increase of $0.3 billion in debt securities available-for-sale mainly due to purchases of U.S. Treasury securities at BPPR, partially offset by maturities and calls of U.S. agencies and pay-downs of mortgage-backed securities and collateralized mortgage obligations.

Total liabilities decreased by $0.5 billion from the third quarter of 2018, mainly due to:

  • A decrease of $0.5 billion in notes payable due to the redemption on October 15, 2018 of the 2019 Senior Notes.

Stockholders’ equity increased by approximately $0.2 billion from the third quarter of 2018, principally due to lower unrealized losses on debt securities available-for-sale by $0.1 billion and net income for the quarter of $106.4 million; partially offset by declared dividends of $25.1 million on common stock and $0.9 million in dividends on preferred stock.

Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 16.90%, $53.88 and $46.90, respectively, at December 31, 2018, compared to 16.19%, $51.77 and $44.62 at September 30, 2018. Refer to Table A for capital ratios.

Refer to Table C for the Statements of Financial Condition.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s business, financial condition, results of operations, plans, objectives and future performance. These statements are not guarantees of future performance, are based on management’s current expectations and, by their nature, involve risks, uncertainties, estimates and assumptions. Potential factors, some of which are beyond the Corporation’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect of competitive and economic factors, and our reaction to those factors, the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital market conditions, capital adequacy and liquidity, the effect of legal proceedings and new accounting standards on the Corporation’s financial condition and results of operations, the impact of Hurricanes Irma and Maria on us, our ability to successfully integrate the auto finance business acquired from Wells Fargo, as well as the unexpected costs, including, without limitation, costs due to exposure to any unrecorded liabilities or issues not identified during the due diligence investigation of the business or that are not subject to indemnification or reimbursement, and risks that the business may suffer as a result of the acquisition, including due to adverse effects on relationships with customers, employees and service providers. All statements contained herein that are not clearly historical in nature, are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions, and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, are generally intended to identify forward-looking statements.

More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018 and September 30, 2018, and our Form 10-K for the year 2018 to be filed with the SEC. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.

About Popular, Inc.

Popular, Inc. is the leading financial institution in Puerto Rico, by both assets and deposits, and ranks among the top 50 U.S. bank holding companies by assets. Founded in 1893, Banco Popular de Puerto Rico, Popular’s principal subsidiary, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. Popular also offers auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the mainland United States, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.

Conference Call

Popular will hold a conference call to discuss its financial results today Wednesday, January 23, 2019 at 10:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet, and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.

Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through a dial-in telephone number 1-866-235-1201 or 1-412-902-4127. There is no charge to access the call.

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Saturday, February 23, 2019. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10127730.

An electronic version of this press release can be found at the Corporation’s website: www.popular.com.

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release

Table A -

Selected Ratios and Other Information

Table B -

Consolidated Statement of Operations

Table C -

Consolidated Statement of Financial Condition

Table D -

Consolidated Average Balances and Yield / Rate Analysis - QUARTER

Table E -

Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE

Table F -

Mortgage Banking Activities and Other Service Fees

Table G -

Loans and Deposits

Table H -

Non-Performing Assets

Table I -

Activity in Non-Performing Loans

Table J -

Allowance for Credit Losses, Net Charge-offs and Related Ratios

Table K -

Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED

Table L -

Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS

Table M -

Allowance for Loan Losses - Breakdown of General and Specific Reserves - POPULAR U.S. OPERATIONS

Table N -

Reconciliation to GAAP Financial Measures

Table P -

Adjusted Net Income for the Years Ended December 31, 2018 and 2017 (Non-GAAP)

POPULAR, INC.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
Quarters ended Years ended
31-Dec-18 30-Sep-18 31-Dec-17 31-Dec-18 31-Dec-17
Basic EPS $1.06 $1.38 $(1.01) $6.07 $1.02
Diluted EPS $1.05 $1.38 $(1.01) $6.06 $1.02
Average common shares outstanding 99,933,184 101,067,300 101,695,868 101,142,258 101,966,429
Average common shares outstanding - assuming dilution 100,114,358 101,249,154 101,695,868 101,308,643 102,045,336
Common shares outstanding at end of period 99,942,845 100,336,341 102,068,981 99,942,845 102,068,981
Market value per common share $47.22 $51.25 $35.49 $47.22 $35.49
Market capitalization - (In millions) $4,719 $5,142 $3,622 $4,719 $3,622
Return on average assets 0.88% 1.17% (0.94%) 1.33% 0.26%
. .
Return on average common equity 7.57% 10.10% (7.67%) 11.39% 1.96%
Net interest margin 4.25% 4.07% 3.90% 4.01% 3.99%
Common equity per share $53.88 $51.77 $49.51 $53.88 $49.51
Tangible common book value per common share (non-GAAP) [1] $46.90 $44.62 $43.02 $46.90 $43.02
Tangible common equity to tangible assets (non-GAAP) [1] 9.99% 9.49% 10.07% 9.99% 10.07%
Tier 1 capital 16.90% 16.19% 16.30% 16.90% 16.30%
Total capital 19.54%

18.82%

19.22% 19.54% 19.22%
Tier 1 leverage 9.88% 9.60% 10.02% 9.88% 10.02%
Common Equity Tier 1 capital 16.90% 16.19% 16.30% 16.90% 16.30%
[1] Refer to Table N for reconciliation to GAAP financial measures.

POPULAR, INC.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
Quarters ended Variance Quarter ended Variance Years ended
(In thousands, except per share information) 31-Dec-18 30-Sep-18

Q4 2018
vs. Q3 2018

31-Dec-17

Q4 2018
vs. Q4 2017

31-Dec-18 31-Dec-17
Interest income:
Loans $455,238 $430,637 $24,601 $375,981 $79,257 $1,645,736 $1,478,765
Money market investments 25,030 27,581 (2,551) 18,262 6,768 111,288 51,495
Investment securities 79,287 70,147 9,140 51,090 28,197 264,824 195,684
Total interest income 559,555 528,365 31,190 445,333 114,222 2,021,848 1,725,944
Interest expense:
Deposits 65,215 55,134 10,081 36,957 28,258 204,265 141,864
Short-term borrowings 1,823 1,622 201 1,990 (167) 7,210 5,724
Long-term debt 16,292 20,140 (3,848) 19,170 (2,878) 75,496 76,392
Total interest expense 83,330 76,896 6,434 58,117 25,213 286,971 223,980
Net interest income 476,225 451,469 24,756 387,216 89,009 1,734,877 1,501,964
Provision for loan losses - non-covered loans 42,568 54,387 (11,819) 70,001 (27,433) 226,342 319,682
Provision for loan losses - covered loans - - - 1,487 (1,487) 1,730 5,742
Net interest income after provision for loan losses 433,657 397,082 36,575 315,728 117,929 1,506,805 1,176,540
Service charges on deposit accounts 38,973 38,147 826 33,827 5,146 150,677 153,709
Other service fees 70,226 64,316 5,910 48,443 21,783 258,020 217,267
Mortgage banking activities 19,394 11,269 8,125 (1,853) 21,247 52,802 25,496
Net gain on sale of debt securities - - - - - - 83
Other-than-temporary impairment losses on debt securities - - - - - - (8,299)
Net (loss) gain, including impairment, on equity securities (2,039) 370 (2,409) 50 (2,089) (2,081) 251
Net profit (loss) on trading account debt securities 91 (122) 213 (137) 228 (208) (817)
Net gain (loss) on sale of loans, including valuation adjustments on loans held-for-sale 33 - 33 - 33 33 (420)
Adjustments (expense) to indemnity reserves on loans sold (6,477) (3,029) (3,448) (11,075) 4,598 (12,959) (22,377)
FDIC loss-share income (expense) - - - 2,614 (2,614) 94,725 (10,066)
Other operating income 32,966 40,070 (7,104) 14,262 18,704 111,485 64,340
Total non-interest income 153,167 151,021 2,146 86,131 67,036 652,494 419,167
Operating expenses:
Personnel costs
Salaries 86,569 83,535 3,034 78,339 8,230 326,509 313,394
Commissions, incentives and other bonuses 23,315 25,365 (2,050) 14,847 8,468 90,000 70,099
Pension, postretirement and medical insurance 11,698 8,670 3,028 10,297 1,401 39,660 40,065
Other personnel costs, including payroll taxes 51,465 22,187 29,278 14,822 36,643 106,819 53,204
Total personnel costs 173,047 139,757 33,290 118,305 54,742 562,988 476,762
Net occupancy expenses 24,500 18,602 5,898 23,899 601 88,329 89,194
Equipment expenses 18,504 18,303 201 16,465 2,039 71,788 65,142
Other taxes 12,583 11,923 660 10,815 1,768 46,284 43,382
Professional fees
Collections, appraisals and other credit related fees 4,043 3,371 672 3,254 789 14,700 14,415
Programming, processing and other technology services 55,089 55,187 (98) 50,496 4,593 216,128 199,873
Legal fees, excluding collections 4,118 4,284 (166) 3,225 893 19,072 11,763
Other professional fees 25,846 21,018 4,828 22,557 3,289 99,944 66,437
Total professional fees 89,096 83,860 5,236 79,532 9,564 349,844 292,488
Communications 5,765 6,054 (289) 5,224 541 23,107 22,466
Business promotion 21,653 15,478 6,175 18,287 3,366 65,918 58,445
FDIC deposit insurance 5,223 8,610 (3,387) 7,456 (2,233) 27,757 26,392
Loss on early extinguishment of debt 12,522 - 12,522 - 12,522 12,522 -
Other real estate owned (OREO) expenses 2,310 7,950 (5,640) 7,328 (5,018) 23,338 48,540
Credit and debit card processing, volume, interchange and other expenses 4,790 8,946 (4,156) 6,853 (2,063) 27,979 26,201
Other operating expenses
Operational losses 9,103 7,770 1,333 11,639 (2,536) 35,798 39,612
All other 15,006 35,860 (20,854) 13,808 1,198 76,584 59,194
Total other operating expenses 24,109 43,630 (19,521) 25,447 (1,338) 112,382 98,806
Amortization of intangibles 2,353 2,324 29 2,344 9 9,326 9,378
Total operating expenses 396,455 365,437 31,018 321,955 74,500 1,421,562 1,257,196
Income before income tax 190,369 182,666 7,703 79,904 110,465 737,737 338,511
Income tax expense 83,966 42,018 41,948 182,058 (98,092) 119,579 230,830
Net income (loss) $106,403 $140,648 $(34,245) $(102,154) $208,557 $618,158 $107,681
Net income (loss) applicable to common stock $105,472 $139,718 $(34,246) $(103,085) $208,557 $614,435 $103,958
Net income (loss) per common share - basic $1.06 $1.38 $(0.32) $(1.01) $2.07 $6.07 $1.02
Net income (loss) per common share - diluted $1.05 $1.38 $(0.33) $(1.01) $2.06 $6.06 $1.02
Dividends Declared per Common Share $0.25 $0.25 $- $0.25 $- $1.00 $1.00

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
Variance
Q4 2018 vs.
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17 Q3 2018
Assets:
Cash and due from banks $394,035 $400,949 $402,857 $(6,914)
Money market investments 4,171,048 4,609,061 5,255,119 (438,013)
Trading account debt securities, at fair value 37,787 37,731 33,926 56
Debt securities available-for-sale, at fair value 13,300,184 13,047,617 10,176,923 252,567
Debt securities held-to-maturity, at amortized cost 101,575 101,238 107,019 337
Equity securities 155,584 157,962 165,103 (2,378)
Loans held-for-sale, at lower of cost or fair value 51,422 51,742 132,395 (320)
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC 26,663,713 26,661,951 24,423,427 1,762
Loans covered under loss-sharing agreements with the FDIC - - 517,274 -
Less: Unearned income 155,824 149,783 130,633 6,041
Allowance for loan losses 569,348 633,718 623,426 (64,370)
Total loans held-in-portfolio, net 25,938,541 25,878,450 24,186,642 60,091
FDIC loss-share asset - - 45,192 -
Premises and equipment, net 569,808 557,104 547,142 12,704
Other real estate not covered under loss-sharing agreements with the FDIC 136,705 133,780 169,260 2,925
Other real estate covered under loss-sharing agreements with the FDIC - - 19,595 -
Accrued income receivable 166,022 163,443 213,844 2,579
Mortgage servicing assets, at fair value 169,777 162,779 168,031 6,998
Other assets 1,714,134 1,900,850 1,991,323 (186,716)
Goodwill 671,122 687,536 627,294 (16,414)
Other intangible assets 26,833 29,186 35,672 (2,353)
Total assets $47,604,577 $47,919,428 $44,277,337 $(314,851)
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing $9,149,036 $8,803,752 $8,490,945 $345,284
Interest bearing 30,561,003 30,845,075 26,962,563 (284,072)
Total deposits 39,710,039 39,648,827 35,453,508 61,212
Assets sold under agreements to repurchase 281,529 300,116 390,921 (18,587)
Other short-term borrowings 42 1,200 96,208 (1,158)
Notes payable 1,256,102 1,744,687 1,536,356 (488,585)
Other liabilities 921,808 980,249 1,696,439 (58,441)
Total liabilities 42,169,520 42,675,079 39,173,432 (505,559)
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,043 1,043 1,042 -
Surplus 4,365,606 4,281,515 4,298,503 84,091
Retained earnings 1,651,731 1,629,692 1,194,994 22,039
Treasury stock (205,509) (183,872) (90,142) (21,637)
Accumulated other comprehensive loss, net of tax (427,974) (534,189) (350,652) 106,215
Total stockholders’ equity 5,435,057 5,244,349 5,103,905 190,708
Total liabilities and stockholders’ equity $47,604,577 $47,919,428 $44,277,337 $(314,851)

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
Quarters ended Variance
31-Dec-18 30-Sep-18 31-Dec-17 Q4 2018 vs. Q3 2018 Q4 2018 vs. Q4 2017
($ amounts in millions; yields not on a taxable equivalent basis) Average balance Income / Expense Yield / Rate Average balance Income / Expense Yield / Rate Average balance Income / Expense Yield / Rate Average balance Income / Expense Yield / Rate Average balance Income / Expense Yield / Rate
Assets:
Interest earning assets:
Money market, trading and investment securities $18,278 $104.3 2.27 % $18,547 $97.7 2.10 % $15,666 $69.3 1.76 % ($269) $6.6 0.17 % $2,612 $35.0 0.51 %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 11,967 182.1 6.04 11,814 176.7 5.94 11,351 157.5 5.50 153 5.4 0.10 616 24.6 0.54
Construction 905 15.2 6.65 932 15.2 6.45 859 12.5 5.79 (27) - 0.20 46 2.7 0.86
Mortgage 7,149 90.1 5.04 7,142 90.3 5.06 7,043 89.5 5.08 7 (0.2) (0.02) 106 0.6 (0.04)
Consumer 5,403 154.2 11.32 4,818 135.2 11.14 3,796 104.7 10.95 585 19.0 0.18 1,607 49.5 0.37
Lease financing 913 13.6 5.97 885 13.3 5.99 781 11.8 6.04 28 0.3 (0.02) 132 1.8 (0.07)
Total loans 26,337 455.2 6.87 25,591 430.7 6.69 23,830 376.0 6.27 746 24.5 0.18 2,507 79.2 0.60
Total interest earning assets $44,615 $559.5 4.99 % $44,138 $528.4 4.76 % $39,496 $445.3 4.49 % $477 $31.1 0.23 % $5,119 $114.2 0.50 %
Allowance for loan losses (621) (639) (644) 18 23
Other non-interest earning assets 3,925 3,992 4,400 (67) (475)
Total average assets $47,919 $47,491 $43,252 $428 $4,667
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $13,848 $30.4 0.87 % $13,201 $23.0 0.69 % $11,023 $10.1 0.36 % $647 $7.4 0.18 % $2,825 $20.3 0.51 %
Savings 9,728 9.9 0.40 9,797 9.0 0.37 8,457 5.3 0.25 (69) 0.9 0.03 1,271 4.6 0.15
Time deposits 7,419 24.9 1.33 7,419 23.1 1.24 7,545 21.6 1.13 - 1.8 0.09 (126) 3.3 0.20
Total interest-bearing deposits 30,995 65.2 0.83 30,417 55.1 0.72 27,025 37.0 0.54 578 10.1 0.11 3,970 28.2 0.29
Borrowings 1,658 18.1 4.38 1,861 21.8 4.68 2,060 21.1 4.11 (203) (3.7) (0.30) (402) (3.0) 0.27
Total interest-bearing liabilities 32,653 83.3 1.01 32,278 76.9 0.95 29,085 58.1 0.80 375 6.4 0.06 3,568 25.2 0.21
Net interest spread 3.98 % 3.81 % 3.69 % 0.17 % 0.29 %
Non-interest bearing deposits 8,895 8,860 7,880 35 1,015
Other liabilities 799 816 908 (17) (109)
Stockholders' equity 5,572 5,537 5,379 35 193
Total average liabilities and stockholders' equity $47,919 $47,491 $43,252 $428 $4,667
Net interest income / margin non-taxable equivalent basis $476.2 4.25 % $451.5 4.07 % $387.2 3.90 % $24.7 0.18 % $89.0 0.35 %

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
Years ended
31-Dec-18 31-Dec-17 Variance
Average Income / Yield / Average Income / Yield / Average Income / Yield /
($ amounts in millions; yields not on a taxable equivalent basis) balance Expense Rate balance Expense Rate balance Expense Rate
Assets:
Interest earning assets:
Money market, trading and investment securities $18,212 $376.1 2.07 % $14,158 $247.2 1.75 % $4,054 $128.9 0.32 %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 11,698 686.4 5.87 11,065 611.3 5.52 633 75.1 0.35
Construction 915 58.3 6.37 830 46.6 5.61 85 11.7 0.76
Mortgage 7,119 360.4 5.06 7,110 370.1 5.21 9 (9.7) (0.15)
Consumer 4,464 488.8 10.95 3,764 403.6 10.72 700 85.2 0.23
Lease financing 867 51.9 5.98 742 47.1 6.35 125 4.8 (0.37)
Total loans 25,063 1,645.8 6.57 23,511 1,478.7 6.29 1,552 167.1 0.28
Total interest earning assets $43,275 $2,021.9 4.67 % $37,669 $1,725.9 4.58 % $5,606 $296.0 0.09 %
Allowance for loan losses (635) (573) (62)
Other non-interest earning assets 3,999 4,308 (309)
Total average assets $46,639 $41,404 $5,235
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $12,688 $80.7 0.64 % $10,116 $37.5 0.36 % $2,572 $43.2 0.28 %
Savings 9,439 31.9 0.34 8,103 20.2 0.25 1,336 11.7 0.09
Time deposits 7,570 91.7 1.21 7,625 84.1 1.10 (55) 7.6 0.11
Total interest-bearing deposits 29,697 204.3 0.69 25,844 141.8 0.55 3,853 62.5 0.14
Borrowings 1,879 82.7 4.40 2,001 82.1 4.10 (122) 0.6 0.30
Total interest-bearing liabilities 31,576 287.0 0.91 27,845 223.9 0.80 3,731 63.1 0.11
Net interest spread 3.76 % 3.78 % (0.02) %
Non-interest bearing deposits 8,790 7,339 1,451
Other liabilities 831 875 (44)
Stockholders' equity 5,442 5,345 97
Total average liabilities and stockholders' equity $46,639 $41,404 $5,235
Net interest income / margin non-taxable equivalent basis $1,734.9 4.01 % $1,502.0 3.99 % $232.9 0.02 %

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
Mortgage Banking Activities
Quarters ended Variance Years ended Variance
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17

Q4 2018
vs.Q3 2018

Q4 2018
vs.Q4 2017

31-Dec-18 31-Dec-17

2018 vs.
2017

Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $12,327 $12,324 $9,815 $3 $2,512 $49,532 $48,300 $1,232
Mortgage servicing rights fair value adjustments 4,646 (4,194) (12,257) 8,840 16,903 (8,477) (36,519) 28,042
Total mortgage servicing fees, net of fair value adjustments 16,973 8,130 (2,442) 8,843 19,415 41,055 11,781 29,274
Net gain on sale of loans, including valuation on loans held-for-sale 2,893 3,014 213 (121) 2,680 9,424 17,088 (7,664)
Trading account (loss) profit:
Unrealized (losses) gains on outstanding derivative positions (122) 45 288 (167) (410) (253) 184 (437)
Realized (losses) gains on closed derivative positions (350) 80 88 (430) (438) 2,576 (3,557) 6,133
Total trading account (loss) profit (472) 125 376 (597) (848) 2,323 (3,373) 5,696
Total mortgage banking activities $19,394 $11,269 $(1,853) $8,125 $21,247 $52,802 $25,496 $27,306
Other Service Fees
Quarters ended Variance Years ended Variance
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17

Q4 2018
vs.Q3 2018

Q4 2018
vs.Q4 2017

31-Dec-18 31-Dec-17

2018 vs.
2017

Other service fees:
Debit card fees $11,868 $10,984 $9,243 $884 $2,625 $46,174 $42,721 $3,453
Insurance fees 14,362 14,042 11,538 320 2,824 54,030 50,948 3,082
Credit card fees 23,827 21,525 13,304 2,302 10,523 89,693 67,584 22,109
Sale and administration of investment products 5,824 5,696 5,581 128 243 21,895 21,958 (63)
Trust fees 4,677 4,967 5,297 (290) (620) 19,880 19,972 (92)
Other fees 9,668 7,102 3,480 2,566 6,188 26,348 14,084 12,264
Total other service fees $70,226 $64,316 $48,443 $5,910 $21,783 $258,020 $217,267 $40,753

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table G - Loans and Deposits
(Unaudited)
Loans - Ending Balances
Variance
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17

Q4 2018 vs.
Q3 2018

Q4 2018 vs.
Q4 2017

Loans not covered under FDIC loss-sharing agreements:
Commercial $12,043,019 $11,993,707 $11,488,861 $49,312 $554,158
Construction 779,449 943,365 880,029 (163,916) (100,580)
Legacy [1] 25,949 27,566 32,980 (1,617) (7,031)
Lease financing 934,773 903,540 809,990 31,233 124,783
Mortgage 7,235,258 7,304,170 7,270,407 (68,912) (35,149)
Consumer 5,489,441 5,339,820 3,810,527 149,621 1,678,914
Total non-covered loans held-in-portfolio $26,507,889 $26,512,168 $24,292,794 $(4,279) $2,215,095
Loans covered under FDIC loss-sharing agreements - - 517,274 - (517,274)
Total loans held-in-portfolio $26,507,889 $26,512,168 $24,810,068 $(4,279) $1,697,821
Loans held-for-sale:
Mortgage 51,422 51,742 132,395 (320) (80,973)
Total loans held-for-sale $51,422 $51,742 $132,395 $(320) $(80,973)
Total loans $26,559,311 $26,563,910 $24,942,463 $(4,599) $1,616,848
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.
Deposits - Ending Balances
Variance
(In thousands) 31-Dec-18 30-Sep-18 31-Dec-17 Q4 2018 vs. Q3 2018 Q4 2018 vs.Q4 2017
Demand deposits [1] $16,077,023 $16,120,156 $12,460,081 $(43,133) $3,616,942
Savings, NOW and money market deposits (non-brokered) 15,616,247 15,714,275 15,054,242 (98,028) 562,005
Savings, NOW and money market deposits (brokered) 400,004 402,116 424,307 (2,112) (24,303)
Time deposits (non-brokered) 7,500,544 7,280,854 7,411,140 219,690 89,404
Time deposits (brokered CDs) 116,221 131,426 103,738 (15,205) 12,483
Total deposits $39,710,039 $39,648,827 $35,453,508 $61,212 $4,256,531
[1] Includes interest and non-interest bearing demand deposits.

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
Variance
(Dollars in thousands) 31-Dec-18

As a % of
loans HIP by
category

30-Sep-18

As a % of
loans HIP by
category

31-Dec-17

As a % of
loans HIP by
category

Q4 2018 vs.
Q3 2018

Q4 2018 vs.
Q4 2017

Non-accrual loans:
Commercial $184,026 1.5 % $172,685 1.4 % $165,065 1.4 % $11,341 $18,961
Construction 13,848 1.8 19,695 2.1 - - (5,847) 13,848
Legacy [1] 2,627 10.1 3,403 12.3 3,039 9.2 (776) (412)
Lease financing 3,313 0.4 3,009 0.3 2,974 0.4 304 339
Mortgage 334,598 4.6 361,085 4.9 321,549 4.4 (26,487) 13,049
Consumer 72,675 1.3 72,611 1.4 58,330 1.5 64 14,345

Total non-performing loans held-in-portfolio, excluding covered loans

611,087 2.3 % 632,488 2.4 % 550,957 2.3 % (21,401) 60,130

Other real estate owned (“OREO”), excluding covered OREO

136,705 133,780 169,260 2,925 (32,555)

Total non-performing assets, excluding covered assets

747,792 766,268 720,217 (18,476) 27,575
Covered loans and OREO - - 22,948 - (22,948)
Total non-performing assets [2] $747,792 $766,268 $743,165 $(18,476) $4,627
Accruing loans past due 90 days or more [3] [4] $618,006 $753,074 $1,225,149 $(135,068) $(607,143)
Ratios excluding covered loans:

Non-performing loans held-in-portfolio to loans held-in-portfolio

2.31 % 2.39 % 2.27 %

Allowance for loan losses to loans held-in-portfolio

2.15 2.39 2.43

Allowance for loan losses to non-performing loans, excluding loans held-for-sale

93.17 100.19 107.12
Ratios including covered loans:
Non-performing assets to total assets 1.57 % 1.60 % 1.68 %

Non-performing loans held-in-portfolio to loans held-in-portfolio

2.31 2.39 2.23

Allowance for loan losses to loans held-in-portfolio

2.15 2.39 2.51

Allowance for loan losses to non-performing loans, excluding loans held-for-sale

93.17 100.19 112.47
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.
[2] There were no non-performing loans held-for-sale as of December 31, 2018, September 30, 2018 and December 31, 2017.
[3] 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. These include loans rebooked, which were previously pooled into GNMA securities amounting to $134 million (September 30, 2018 - $195 million; December 31, 2017 - $840 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. While the borrowers for our serviced GNMA portfolio benefited from the loan payment moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium. These balances include $283 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2018 (September 30, 2018 - $238 million; December 31, 2017 - $178 million). Furthermore, the Corporation has approximately $69 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 (September 30, 2018 - $53 million; December 31, 2017 - $58 million).
[4] The carrying value of loans accounted for under ASC Subtopic 310-30 that are contractually 90 days or more past due was $216 million at December 31, 2018 (September 30, 2018 - $304 million; December 31, 2017 - $272 million). This amount is excluded from the above table as the loans’ accretable yield interest recognition is independent from the underlying contractual loan delinquency status.

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-18 30-Sep-18
(In thousands) BPPR Popular U.S. Popular, Inc. BPPR Popular U.S. Popular, Inc.
Beginning balance NPLs $171,271 $1,414 $172,685 $162,781 $2,168 $164,949
Plus:
New non-performing loans 25,366 1,158 26,524 23,894 1,663 25,557
Less:
Non-performing loans transferred to OREO (1,075) - (1,075) (1,480) - (1,480)
Non-performing loans charged-off (3,482) (32) (3,514) (5,179) (3) (5,182)
Loans returned to accrual status / loan collections (9,130) (1,464) (10,594) (8,745) (2,414) (11,159)
Ending balance NPLs $182,950 $1,076 $184,026 $171,271 $1,414 $172,685
Construction loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-18 30-Sep-18
(In thousands) BPPR Popular U.S. Popular, Inc. BPPR Popular U.S. Popular, Inc.
Beginning balance NPLs $1,829 $17,866 $19,695 $2,559 $17,901 $20,460
Less:
Non-performing loans charged-off - (5,806) (5,806) - - -
Loans returned to accrual status / loan collections (41) - (41) (730) (35) (765)
Ending balance NPLs $1,788 $12,060 $13,848 $1,829 $17,866 $19,695
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-18 30-Sep-18
(In thousands) BPPR Popular U.S. Popular, Inc. BPPR Popular U.S. Popular, Inc.
Beginning balance NPLs $348,779 $12,306 $361,085 $373,257 $11,398 $384,655
Plus:
New non-performing loans 46,187 2,352 48,539 44,453 4,406 48,859
Advances on existing non-performing loans - 98 98 - 52 52
Less:
Non-performing loans transferred to OREO (15,258) (503) (15,761) (4,688) (183) (4,871)
Non-performing loans charged-off (9,376) (56) (9,432) (18,590) (14) (18,604)
Loans returned to accrual status / loan collections (46,767) (3,164) (49,931) (45,653) (3,353) (49,006)
Ending balance NPLs $323,565 $11,033 $334,598 $348,779 $12,306 $361,085
Total non-performing loans held-in-portfolio (excluding consumer):
Quarter ended Quarter ended
31-Dec-18 30-Sep-18
(In thousands) BPPR Popular U.S. Popular, Inc. BPPR Popular U.S. Popular, Inc.
Beginning balance NPLs $521,879 $34,989 $556,868 $538,597 $35,130 $573,727
Plus:
New non-performing loans 71,553 3,568 75,121 68,347 6,069 74,416
Advances on existing non-performing loans - 114 114 - 58 58
Less:
Non-performing loans transferred to OREO (16,333) (503) (16,836) (6,168) (183) (6,351)
Non-performing loans charged-off (12,858) (5,881) (18,739) (23,769) (17) (23,786)
Loans returned to accrual status / loan collections (55,938) (5,491) (61,429) (55,128) (6,068) (61,196)
Ending balance NPLs [1] $508,303 $26,796 $535,099 $521,879 $34,989 $556,868
[1] Includes $2.6 million of NPLs related to the legacy portfolio as of December 31, 2018 (September 30, 2018 - $3.4 million).

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
Quarter ended Quarter ended Quarter ended
31-Dec-18 30-Sep-18 31-Dec-17
(Dollars in thousands) Total Total Non-covered loans Covered loans Total
Balance at beginning of period $633,718 $643,018 $613,856 $33,057 $646,913
Provision for loan losses 42,568 54,387 70,001 1,487 71,488
676,286 697,405 683,857 34,544 718,401
Net loans charged-off (recovered):
BPPR
Commercial 51,659 2,369 8,450 - 8,450
Construction (720) (125) (59) - (59)
Lease financing 1,323 1,557 3,024 - 3,024
Mortgage 18,041 21,962 23,565 1,315 24,880
Consumer 26,176 33,083 24,138 (15) 24,123
Total BPPR 96,479 58,846 59,118 1,300 60,418
Popular U.S.
Commercial 1,081 1,741 30,981 - 30,981
Construction 5,806 - (7) - (7)
Legacy [1] (739) (685) (647) - (647)
Mortgage (82) (3) 56 - 56
Consumer 4,393 3,788 4,174 - 4,174
Total Popular U.S. 10,459 4,841 34,557 - 34,557
Total loans charged-off - Popular, Inc. 106,938 63,687 93,675 1,300 94,975
Balance at end of period $569,348 $633,718 $590,182 $33,244 $623,426
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 1.63 % 1.00 % 1.61 % 1.60 %
Provision for loan losses to net charge-offs 39.81 % 85.40 % 74.73 % 75.27 %
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.96 % 1.24 % 1.38 % 1.37 %
Provision for loan losses to net charge-offs 45.05 % 88.16 % 89.61 % 90.14 %
Popular U.S.
Annualized net charge-offs to average loans held-in-portfolio 0.63 % 0.29 % 2.26 %
Provision for loan losses to net charge-offs (8.54) % 51.85 % 49.28 %
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.

Year ended Year ended
(Dollars in thousands) 31-Dec-18 31-Dec-17
Non-covered loans Covered loans Total Non-covered loans Covered loans Total
Balance at beginning of period $590,182 $33,244 $623,426 $510,301 $30,350 $540,651
Provision for loan losses [1] 226,342 1,730 228,072 319,682 5,742 325,424
816,524 34,974 851,498 829,983 36,092 866,075
Net loans charged-off (recovered):
BPPR
Commercial [1] 65,931 - 65,931 22,395 - 22,395
Construction (1,354) - (1,354) (2,623) - (2,623)
Lease financing 6,030 - 6,030 6,770 - 6,770
Mortgage 64,822 1,364 66,186 74,944 2,736 77,680
Consumer 105,588 - 105,588 90,133 112 90,245
Total BPPR 241,017 1,364 242,381 191,619 2,848 194,467
Popular U.S.
Commercial 19,784 - 19,784 34,157 - 34,157
Construction 5,806 - 5,806 (7) - (7)
Legacy [2] (2,032) - (2,032) (1,730) - (1,730)
Mortgage (371) - (371) 240 - 240
Consumer 16,582 - 16,582 15,522 - 15,522
Total Popular U.S. 39,769 - 39,769 48,182 - 48,182
Total loans charged-off - Popular, Inc. 280,786 1,364 282,150 239,801 2,848 242,649
Balance transferred from covered to non-covered loans 33,610 (33,610) - - - -
Balance at end of period $569,348 $- $569,348 $590,182 $33,244 $623,426
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 1.13 % 1.13 % 1.05 % 1.03 %
Provision for loan losses to net charge-offs 80.61 % 80.83 % 133.31 % 134.11 %
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.31 % 1.31 % 1.13 % 1.11 %
Provision for loan losses to net charge-offs 81.51 % 81.77 % 126.16 % 127.26 %
Popular U.S.
Annualized net charge-offs to average loans held-in-portfolio 0.61 % 0.82 %
Provision for loan losses to net charge-offs 75.14 % 161.77 %
[1] For the year ended December 31, 2017, includes the elimination of an incremental $6.0 million provision for loan losses and corresponding charge-off related to the inter-company transfer of a loan between BPPR and Popular, Inc., its bank holding company, the impact of which is eliminated in the consolidated results of the Corporation in accordance with U.S. GAAP.
[2] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. segment.

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
31-Dec-18
(Dollars in thousands) Commercial Construction Legacy [1] Mortgage Lease financing Consumer Total
Specific ALLL $52,190 $56 $- $41,211 $320 $25,893 $119,670
Impaired loans $398,518 $13,848 $- $518,888 $1,099 $112,742 $1,045,095
Specific ALLL to impaired loans 13.10 % 0.40 % - % 7.94 % 29.12 % 22.97 % 11.45 %
General ALLL $186,925 $7,368 $969 $106,201 $11,166 $137,049 $449,678
Loans held-in-portfolio, excluding impaired loans $11,644,501 $765,601 $25,949 $6,716,370 $933,674 $5,376,699 $25,462,794
General ALLL to loans held-in-portfolio, excluding impaired loans 1.61 % 0.96 % 3.73 % 1.58 % 1.20 % 2.55 % 1.77 %
Total ALLL $239,115 $7,424 $969 $147,412 $11,486 $162,942 $569,348
Total loans held-in-portfolio $12,043,019 $779,449 $25,949 $7,235,258 $934,773 $5,489,441 $26,507,889
ALLL to loans held-in-portfolio 1.99 % 0.95 % 3.73 % 2.04 % 1.23 % 2.97 % 2.15 %
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. reportable segment.
30-Sep-18
(Dollars in thousands) Commercial Construction Legacy [1] Mortgage Lease financing Consumer Total
Specific ALLL $52,250 $5,530 $- $46,205 $297 $26,255 $130,537
Impaired loans $356,007 $19,695 $- $517,083 $931 $114,572 $1,008,288
Specific ALLL to impaired loans 14.68 % 28.08 % - % 8.94 % 31.90 % 22.92 % 12.95 %
General ALLL $192,290 $9,590 $377 $128,382 $12,009 $160,533 $503,181
Loans held-in-portfolio, excluding impaired loans $11,637,700 $923,670 $27,566 $6,787,087 $902,609 $5,225,248 $25,503,880
General ALLL to loans held-in-portfolio, excluding impaired loans 1.65 % 1.04 % 1.37 % 1.89 % 1.33 % 3.07 % 1.97 %
Total ALLL $244,540 $15,120 $377 $174,587 $12,306 $186,788 $633,718
Total loans held-in-portfolio $11,993,707 $943,365 $27,566 $7,304,170 $903,540 $5,339,820 $26,512,168
ALLL to loans held-in-portfolio 2.04 % 1.60 % 1.37 % 2.39 % 1.36 % 3.50 % 2.39 %
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the Popular U.S. reportable segment.
Variance
(Dollars in thousands) Commercial Construction Legacy Mortgage Lease financing Consumer Total
Specific ALLL $(60) $(5,474) $- $(4,994) $23 $(362) $(10,867)
Impaired loans $42,511 $(5,847) $- $1,805 $168 $(1,830) $36,807
General ALLL $(5,365) $(2,222) $592 $(22,181) $(843) $(23,484) $(53,503)
Loans held-in-portfolio, excluding impaired loans $6,801 $(158,069) $(1,617) $(70,717) $31,065 $151,451 $(41,086)
Total ALLL $(5,425) $(7,696) $592 $(27,175) $(820) $(23,846) $(64,370)
Total loans held-in-portfolio $49,312 $(163,916) $(1,617) $(68,912) $31,233 $149,621 $(4,279)

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
31-Dec-18
Puerto Rico
(In thousands) Commercial Construction Mortgage Lease financing Consumer Total
Allowance for credit losses:
Specific ALLL $52,190 $56 $38,760 $320 $24,083 $115,409
General ALLL 155,024 830 104,218 11,166 120,511 391,749
Total ALLL $207,214 $886 $142,978 $11,486 $144,594 $507,158
Loans held-in-portfolio:
Impaired loans $398,518 $1,788 $509,468 $1,099 $104,235 $1,015,108
Loans held-in-portfolio, excluding impaired loans 6,974,125 84,167 5,923,855 933,674 4,952,543 18,868,364
Total loans held-in-portfolio $7,372,643 $85,955 $6,433,323 $934,773 $5,056,778 $19,883,472
30-Sep-18
Puerto Rico
(In thousands) Commercial Construction Mortgage Lease financing Consumer Total
Allowance for credit losses:
Specific ALLL $52,250 $- $43,841 $297 $24,906 $121,294
General ALLL 157,855 878 126,445 12,009 141,695 438,882
Total ALLL $210,105 $878 $170,286 $12,306 $166,601 $560,176
Loans held-in-portfolio:
Impaired $356,007 $1,829 $508,258 $931 $107,184 $974,209
Loans held-in-portfolio, excluding impaired loans 7,051,469 75,964 6,023,018 902,609 4,796,084 18,849,144
Total loans held-in-portfolio $7,407,476 $77,793 $6,531,276 $903,540 $4,903,268 $19,823,353
Variance
(In thousands) Commercial Construction Mortgage Lease financing Consumer Total
Allowance for credit losses:
Specific ALLL $(60) $56 $(5,081) $23 $(823) $(5,885)
General ALLL (2,831) (48) (22,227) (843) (21,184) (47,133)
Total ALLL $(2,891) $8 $(27,308) $(820) $(22,007) $(53,018)
Loans held-in-portfolio:
Impaired $42,511 $(41) $1,210 $168 $(2,949) $40,899
Loans held-in-portfolio, excluding impaired loans (77,344) 8,203 (99,163) 31,065 156,459 19,220
Total loans held-in-portfolio $(34,833) $8,162 $(97,953) $31,233 $153,510 $60,119

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - POPULAR U.S. OPERATIONS
(Unaudited)
31-Dec-18
Popular U.S.
(In thousands) Commercial Construction Legacy Mortgage Consumer Total
Allowance for credit losses:
Specific ALLL $- $- $- $2,451 $1,810 $4,261
General ALLL 31,901 6,538 969 1,983 16,538 57,929
Total ALLL $31,901 $6,538 $969 $4,434 $18,348 $62,190
Loans held-in-portfolio:
Impaired loans $- $12,060 $- $9,420 $8,507 $29,987
Loans held-in-portfolio, excluding impaired loans 4,670,376 681,434 25,949 792,515 424,156 6,594,430
Total loans held-in-portfolio $4,670,376 $693,494 $25,949 $801,935 $432,663 $6,624,417
30-Sep-18
Popular U.S.
(In thousands) Commercial Construction Legacy Mortgage Consumer Total
Allowance for credit losses:
Specific ALLL $- $5,530 $- $2,364 $1,349 $9,243
General ALLL 34,435 8,712 377 1,937 18,838 64,299
Total ALLL $34,435 $14,242 $377 $4,301 $20,187 $73,542
Loans held-in-portfolio:
Impaired loans $- $17,866 $- $8,825 $7,388 $34,079
Loans held-in-portfolio, excluding impaired loans 4,586,231 847,706 27,566 764,069 429,164 6,654,736
Total loans held-in-portfolio $4,586,231 $865,572 $27,566 $772,894 $436,552 $6,688,815
Variance
(In thousands) Commercial Construction Legacy Mortgage Consumer Total
Allowance for credit losses:
Specific ALLL $- $(5,530) $- $87 $461 $(4,982)
General ALLL (2,534) (2,174) 592 46 (2,300) (6,370)
Total ALLL $(2,534) $(7,704) $592 $133 $(1,839) $(11,352)
Loans held-in-portfolio:
Impaired loans $- $(5,806) $- $595 $1,119 $(4,092)
Loans held-in-portfolio, excluding impaired loans 84,145 (166,272) (1,617) 28,446 (5,008) (60,306)
Total loans held-in-portfolio $84,145 $(172,078) $(1,617) $29,041 $(3,889) $(64,398)

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
(In thousands, except share or per share information) 31-Dec-18 30-Sep-18 31-Dec-17
Total stockholders’ equity $5,435,057 $5,244,349 $5,103,905
Less: Preferred stock (50,160 ) (50,160 ) (50,160 )
Less: Goodwill (671,122 ) (687,536 ) (627,294 )
Less: Other intangibles (26,833 ) (29,186 ) (35,672 )
Total tangible common equity $4,686,942 $4,477,467 $4,390,779
Total assets $47,604,577 $47,919,428 $44,277,337
Less: Goodwill (671,122 ) (687,536 ) (627,294 )
Less: Other intangibles (26,833 ) (29,186 ) (35,672 )
Total tangible assets $46,906,622 $47,202,706 $43,614,371
Tangible common equity to tangible assets 9.99 % 9.49 % 10.07 %
Common shares outstanding at end of period 99,942,845 100,336,341 102,068,981
Tangible book value per common share $46.90 $44.62 $43.02

Popular, Inc.
Financial Supplement to Fourth Quarter 2018 Earnings Release

Table P - Adjusted Net Income for the Years Ended December 31, 2018 and 2017 (Non-GAAP)

(Unaudited)
31-Dec-18
(In thousands) Pre-tax

Income tax
effect

Impact on net
income

U.S. GAAP Net income $618,158
Non-GAAP Adjustments:
Termination of FDIC Shared-Loss Agreements[1] (94,633) 45,059 (49,574)
Tax Closing Agreement[2] - (108,946) (108,946)
Impact of Law Act No.257[3] - 27,686 27,686
Adjusted net income (Non-GAAP) $487,324
[1]On May 22, 2018, BPPR entered into a Termination Agreement with the FDIC to terminate all Shared-Loss Agreements in connection with the acquisition of certain assets and assumptions of certain liabilities of Westernbank Puerto Rico in 2010. As a result, BPPR recognized a pre-tax gain of $94.6 million, net of the related professional and advisory fees of $8.1 million associated with the Termination Agreement.
[2]Represents the impact of the Termination Agreement on income taxes. In June 2012, the Corporation entered into a Tax Closing Agreement with the Puerto Rico Department of the Treasury to clarify the tax treatment related to the loans acquired in the FDIC Transaction in accordance with the provisions of the Puerto Rico Tax Code. Based on the provisions of this Tax Closing Agreement, the Corporation recognized a net income tax benefit of $108.9 million during the second quarter of 2018.
[3]On December 10, 2018, the Governor of Puerto Rico signed into law Act No.257 of 2018, which amended the Puerto Rico Internal Revenue Code, to among other things, reduce the Puerto Rico corporate tax rate from 39% to 37.5%. The resulting adjustments reduced the DTA related to the Corporation's P.R. operations as a result of a lower realizable benefit at the lower tax rate.
31-Dec-17
(In thousands) Pre-tax

Income tax
effect

Impact on net
income

U.S. GAAP Net income $107,681
Non-GAAP Adjustments:
Impact of the Tax Cuts and Jobs Act[1] - 168,358 168,358
Adjusted net income (Non-GAAP) $276,039
[1]On December 22, 2017, the Tax Cuts and Jobs Act ("the Act") was signed into law by the President of the United States. The Act, among other things, reduced the maximum federal Corporate Tax rate from 35% to 21%. The adjustments reduced the DTA related to the Corporation's U.S. operations as a result of lower realizable benefit at the lower tax rate.

Contacts:

Popular, Inc.
Investor Relations:
Paul Cardillo, 212-417-6721
Senior Vice President, Investor Relations Officer
or
Media Relations:
Teruca Rullán, 787-281-5170 or 917-679-3596 (mobile)
Senior Vice President, Corporate Communications

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