Popular, Inc.

Popular reported second-quarter net income of $278 million and EPS of $4.35, up $0.57 per share, or 15%, from Q1 and 41% versus the second quarter of last year. Net interest income increased $23 million to $693 million; GAAP NIM 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 grew $460 million and deposits rose $2.6 billion to $70.2 billion. Credit metrics were mixed: nonperforming loans fell $45 million to $413 million and the NPL ratio improved to 1.04%, while net charge-offs were $104 million, or an annualized 1.05%, versus $60 million, or 61 basis points, in Q1. Management kept full-year loan growth guidance at the low end of 3% to 4%, raised NII growth guidance to 8% to 9%, expects quarterly noninterest income of $165 million to $170 million, full-year expense growth of about 2% to 3%, an effective tax rate of 14% to 15%, and net charge-offs of 65 to 80 basis points. Public deposits are expected to remain in the $20 billion to $22 billion range for the rest of the year, and NIM is expected to stay generally stable.

Javier Ferrer-Fernández framed the quarter as evidence that Popular is executing well on its strategy, with strong earnings, balance-sheet growth, and higher capital returns. He spent significant time on the planned retirement announcement and emphasized that the succession plan shows the depth of the management team, especially Jorge García, Lidio Soriano, and Luis Sosa. Strategically, he said Popular remains focused on being the #1 bank for customers, being simple and efficient, and becoming a top-performing bank, while continuing investments in branches, digital tools, and targeted segments.

Jorge García highlighted broad outperformance versus expectations, with higher net interest income, stronger fee income, expense discipline, and lower provision expense. He cited NII of $693 million, deposit balances of $70.2 billion, CET1 of 16.1%, tangible book value per share of $87.94, and a quarterly return of $174 million to shareholders, including $125 million of buybacks. He said the company expects NII to grow 8% to 9% for the year, NIM to remain generally stable, noninterest income to run at $165 million to $170 million quarterly, expenses to grow about 2% to 3%, and the tax rate to be 14% to 15%; he also said the new $1 billion buyback authorization has no time limit and that $300 million to $400 million of repurchases are expected during the remainder of 2026.

Analysts focused on capital allocation, loan growth, deposits, expenses, credit, and M&A. Management said the new $1 billion buyback authorization is not a 12-month target, and if the company optimizes its capital stack by issuing preferreds or similar instruments, the proceeds would be used to reduce CET1 promptly. On loan growth, management said the low end of the 3% to 4% range reflects fewer large-ticket opportunities in Puerto Rico, some timing headwinds in U.S. construction payoffs, and the impact of resolving the $155 million commercial loan. On credit, management said the two newly disclosed C&I inflows were borrower-specific, not indicative of broad deterioration, and that reserves appear adequate based on current information. On M&A, management said whole-bank deals are not a priority and any transaction would need to meet strict criteria, including lower-cost core deposits, commercial focus, geographic fit, and strong cultural alignment.