Popular Capital Trust II PFD GTD 6.125%

Second quarter net income was $278 million and earnings per share was $4.35, up $0.57 per share, or 15%, from Q1 and up 41% year over year. ROTCE improved to 17% from 15.5% in the first quarter and 13.3% a year ago. Net interest income increased $23 million to $693 million; GAAP net interest margin was 3.66% and taxable-equivalent NIM was 4.17%. Noninterest income was $181 million, up $15 million, and operating expenses were $484 million, up about $17 million. Loans held in portfolio increased $460 million and deposits increased $2.6 billion to $70.2 billion. Nonperforming loans declined $45 million to $413 million, the NPL ratio improved to 1.04%, and net charge-offs were $104 million, or 1.05%, versus $60 million, or 61 basis points, in Q1. Tangible book value per share increased to $87.94 and CET1 rose to 16.1%. For the full year, management now expects NII to increase 8% to 9%, noninterest income to be $165 million to $170 million per quarter, expense growth to be about 2% to 3%, the effective tax rate to be 14% to 15%, and net charge-offs to be 65 to 80 basis points. Loan growth guidance remained at the low end of 3% to 4%, public deposits are expected to stay in the $20 billion to $22 billion range, and NIM is expected to remain generally stable for the rest of the year.

Javier Ferrer-Fernández framed the quarter as a strong result built on earnings growth, balance-sheet expansion, and capital return, while also using the call to announce his retirement at the end of August. He emphasized that Popular is in strong hands, highlighted the succession plan, and pointed to ongoing investment in digital and physical channels, targeted customer segments, and the branded campaign around supporting customer growth. His tone was upbeat and confident, and he repeatedly said the franchise is still early in its transformation journey.

Jorge García highlighted that Popular outperformed expectations across nearly all categories, with better net interest income, stronger fees, expense discipline, and lower provision expense. He cited NII of $693 million, NIM of 3.66% GAAP, $181 million of noninterest income, $484 million of expenses, a 14% tax rate, TBVPS of $87.94, and CET1 of 16.1%. On capital, he noted $174 million returned to shareholders in the quarter, $280 million repurchased year to date, a completed use of the prior $500 million authorization, a new $1 billion authorization, and expected additional buybacks of $300 million to $400 million in the remainder of 2026. He also said the dividend increase to $0.90 begins in the fourth quarter, subject to board approval.

Analysts focused on capital management, loan growth, margin direction, expenses, and credit. Management said the new $1 billion buyback authorization has no time limit, that capital optimization could involve issuing preferreds and using proceeds to reduce CET1, and that the company is still open to optimizing its capital stack but is not pursuing AT1 issuance at current rates. On loan growth, management said the low end of the 3% to 4% guide still reflects timing headwinds in U.S. construction payoffs, fewer large-ticket opportunities in Puerto Rico, and the resolution of the $155 million loan. On credit, they said the two new C&I inflows were borrower-specific, not broad deterioration, and that reserves were adequate based on current information.