POPULAR, INC.

Popular, Inc. (BPOP) is a diversified financial holding company, incorporated in Puerto Rico in 1984, and is currently the largest financial institution based in Puerto Rico. As of December 31, 2025, the company reported consolidated assets of $75.3 billion ¹, total deposits of $66.2 billion ², and stockholders' equity of $6.2 billion ³. Popular, Inc. ranks among the 50 largest U.S. bank holding companies based on total assets ⁴. The company's core business model revolves around providing retail, mortgage, and commercial banking services, as well as auto and equipment leasing and financing. Revenue is primarily generated from interest on its loan portfolios ⁵. The company operates in two principal markets: Puerto Rico and the Mainland United States, with a significant concentration in Puerto Rico, which accounted for 77% of its assets ⁶, 79% of its deposits ⁷, and 80% of its revenues ⁸ as of December 31, 2025.

The company's operations are segmented into Banco Popular de Puerto Rico (BPPR) and Popular Bank (PB, or Popular U.S.). BPPR provides retail, mortgage, and commercial banking services, along with auto and equipment leasing and financing, and broker-dealer and insurance services through specialized subsidiaries in Puerto Rico. BPPR also conducts banking operations in the U.S. Virgin Islands, the British Virgin Islands, and New York, offering financial products on a national scale in the U.S. market, including personal loans and gathering insured institutional deposits via online platforms. Popular Bank, a New York-chartered banking subsidiary, offers retail and commercial banking services, as well as equipment leasing and financing, with branches in New York, New Jersey, and Florida.

Lending activities are concentrated in five main areas. Commercial loans, comprising 22% of the total loan portfolio ⁹, include commercial and industrial (C&I) loans and leases, commercial real estate (CRE) loans (non-owner occupied at 14% ¹⁰ and owner-occupied at 8% ¹¹), and multifamily loans (6% ¹²). Mortgage loans, representing 22% of the total loan portfolio ¹³, include residential mortgage loans and residential construction loans. Consumer loans, accounting for 18% of the total loan portfolio ¹⁴, consist mainly of unsecured personal loans (5% ¹⁵), credit cards (3% ¹⁶), and automobile loans (10% ¹⁷), with a lesser extent of home equity lines of credit (HELOCs) (less than 1% ¹⁸) and other loans (1% ¹⁹). Construction loans, at 4% of the total loan portfolio ²⁰, are CRE loans for commercial or residential property construction. Lease financings, representing 5% of the total loan portfolio ²¹, are primarily automobile loans/leases offered by BPPR. As of December 31, 2025, 52% of the loan portfolio consisted of real estate-related loans ²².

For the year ended December 31, 2025, Popular, Inc. achieved a Return on Tangible Common Equity (ROTCE) of 13% ²³. During the same period, BPPR declared cash dividends of $575 million ²⁴, a portion of which was utilized by Popular for common stock cash dividends. Popular also received cash dividends of $23 million ²⁵ from Popular International Bank, Inc. (PIBI) and $22 million ²⁶ from its other non-banking subsidiaries. The company employed 9,427 individuals as of December 31, 2025 ²⁷.

Management is focused on achieving a sustainable Return on Tangible Common Equity (ROTCE) of 14% over the long term ²⁸, having made progress in 2025 by reaching 13% ROTCE ²⁹. The company's growth strategy is centered on a broad-based, multi-year technological and business process transformation, which commenced in 2022 ³⁰. This transformation involves significant investments in technology, talent, and new digital and data capabilities ³¹.

A key growth area is the modernization of customer channels and enhancement of the customer experience. In 2025, the company initiated the rollout of a commercial cash management solution and deployed a new consumer credit origination platform in Puerto Rico and the Virgin Islands ³². These initiatives aim to provide more personalized and accessible services to customers ³³.

Operationally, the company is investing in its physical retail network and implementing efficiency initiatives ³⁴. This includes exiting its U.S. mortgage business, optimizing mortgage servicing operations in Puerto Rico, and transforming its Enterprise Resource Planning (ERP) platform to a modern cloud-based solution, which was implemented in January 2026 ³⁵. These efforts are designed to increase employee performance and satisfaction through more agile work processes, and to generate sustainable profitable growth ³⁶.

Planned capital allocation includes a 401(k) savings and investment plan where Popular matches $0.50 for every dollar contributed by an employee, up to 8% of the employee’s salary ³⁷. Additionally, a profit-sharing plan is in place, contingent on achieving pre-established financial goals, allowing employees to receive up to 8% of their eligible compensation (capped at $70,000) ³⁸. The first 4% is paid in cash, with any amount above that threshold paid to the employee’s savings and investment plan account ³⁹.

Management explicitly flagged several structural headwinds and execution risks to its growth plan. The company's significant concentration in Puerto Rico exposes it to greater risk than banking companies with a wider geographic base, as its financial condition and results are highly dependent on the general trends of the Puerto Rico economy ⁴⁰. Reductions in federal funding to programs benefiting the Puerto Rico economy or delays in disbursements could significantly impact the economy and hinder reconstruction efforts ⁴¹. Furthermore, annual Medicaid funding for Puerto Rico is projected to drop significantly during the 2027-2028 fiscal year, absent federal legislative action, which would require the Puerto Rico government to cover substantial program costs and potentially strain its finances ⁴². The company is also exposed to risks related to the state of local economies in other markets like New York and Florida, as well as the global and U.S. economy and financial markets ⁴³. Evolving geopolitical tensions, tariffs, inflationary pressures, and other political or economic shifts may lead to increased market volatility and disruption ⁴⁴.

The most material risks disclosed in the filing include the company's significant concentration in Puerto Rico, which accounted for 77% of its assets ⁴⁵, 79% of its deposits ⁴⁶, and 80% of its revenues ⁴⁷ as of December 31, 2025, making its financial performance highly dependent on the Puerto Rico economy. This concentration exposes the company to greater risk than more geographically diversified banking companies ⁴⁸. Changes in interest rates and credit spreads can adversely impact the investment portfolio and overall financial condition, as a rapid rise in interest rates in 2022 resulted in $2.5 billion ⁴⁹ in unrealized mark-to-market losses on available-for-sale securities, although this was reduced to $0.9 billion ⁵⁰ by December 31, 2025. The company also faces credit risk from its loan portfolios, with 55% ⁵¹ of the loan portfolio secured by real estate collateral as of December 31, 2025, making it vulnerable to declines in real property values ⁵². A significant amount of deposits from the Puerto Rico government, its instrumentalities, and municipalities, totaling $19.4 billion ⁵³ or 29% ⁵⁴ of total deposits as of December 31, 2025, presents a risk due to potential fluctuations based on the financial condition and liquidity of these entities ⁵⁵. Operational risks are heightened by reliance on third-party providers for critical functions, particularly Evertec, which exposes the company to system breakdowns, cyber events, and obsolescence in hardware and software ⁵⁶. The transition away from Evertec for certain services is expected to be lengthy and complex, carrying business and financial risks ⁵⁷. Furthermore, the company is subject to cyber-attacks, which are increasing in sophistication and volume, and could lead to disruptions, data exposure, and significant financial and reputational harm ⁵⁸.

Management's message to shareholders emphasizes a commitment to a broad-based, multi-year technological and business process transformation, initiated in 2022, with significant investments in technology, talent, and new digital and data capabilities ⁵⁹. The strategic priorities for the period ahead include enhancing customer experience through modernizing customer channels, such as the rollout of a commercial cash management solution and a new consumer credit origination platform in Puerto Rico and the Virgin Islands ⁶⁰. Another key priority is operational efficiency, evidenced by investments in the physical retail network, exiting the U.S. mortgage business, optimizing Puerto Rico mortgage servicing operations, and transitioning the ERP platform to a cloud-based solution by January 2026 ⁶¹. Management is also focused on human capital, aiming to attract, develop, and retain top talent in an environment that promotes wellness, inclusion, respect, continuous learning, and transparency ⁶². The company is working towards achieving a sustainable Return on Tangible Common Equity (ROTCE) of 14% over the long term ⁶³, having achieved 13% ROTCE for the full year 2025 ⁶⁴.