Popular, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Popular, Inc. has submitted its 2023 annual report (10-K) detailing its financial performance and operations for the fiscal year ending December 31, 2023.</b>

AI Summary

POPULAR, INC. (BPOPM) filed a Annual Report (10-K) with the SEC on February 29, 2024. Popular, Inc. filed its 2023 annual report on Form 10-K on February 29, 2024. The report covers the fiscal year ending December 31, 2023. The company's central index key is 0000763901. Its standard industrial classification is 'State Commercial Banks' (6022). The filing was made with the SEC under the 1934 Act, with SEC file number 001-34084.

Why It Matters

For investors and stakeholders tracking POPULAR, INC., this filing contains several important signals. This 10-K filing provides a comprehensive overview of Popular, Inc.'s financial health, operational performance, and risk factors for the fiscal year 2023, crucial for investors and stakeholders to assess the company's standing. As a 'State Commercial Bank' (SIC 6022), the detailed financial disclosures in this report are essential for understanding its regulatory compliance and market position within the banking sector, particularly in Puerto Rico.

Risk Assessment

Risk Level: medium — POPULAR, INC. shows moderate risk based on this filing. The company operates in the banking sector, which is subject to significant regulatory oversight and market volatility, as indicated by its SIC code and the nature of a 10-K filing.

Analyst Insight

Investors should review the detailed financial statements and risk factors within the 10-K to understand Popular, Inc.'s performance and outlook for the upcoming fiscal year.

Key Numbers

• 2023-12-31 — Fiscal Year End (CONFORMED PERIOD OF REPORT)
• 2024-02-29 — Filing Date (FILED AS OF DATE)
• 001-34084 — SEC File Number (SEC FILE NUMBER)
• 6022 — SIC Code (STANDARD INDUSTRIAL CLASSIFICATION)

Key Players & Entities

• POPULAR, INC. (company) — COMPANY CONFORMED NAME
• 0000763901 (company) — CENTRAL INDEX KEY
• 6022 (company) — STANDARD INDUSTRIAL CLASSIFICATION
• 7877659800 (dollar_amount) — BUSINESS PHONE
• 001-34084 (company) — SEC FILE NUMBER
• 2023-12-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-02-29 (date) — FILED AS OF DATE
• NASDAQ (company) — Stock Exchange

FAQ

Key Dates

• 2023-12-31: Fiscal Year End — Marks the end of the reporting period for the 10-K.
• 2024-02-29: Filing Date — Date the 10-K was officially submitted to the SEC.

Key Financial Figures

• $0.01 — nge on which registered Common Stock ($0.01 par value) BPOP The Nasdaq Global Se
• $60.52 — ased upon the reported closing price of $60.52 on the Nasdaq Global Select Market on
• $70.8 b — to Rico, with consolidated assets of $70.8 billion, total deposits of $63.6 billio
• $63.6 billion — of $70.8 billion, total deposits of $63.6 billion and stockholders' equity of $5.1 bill
• $5.1 billion — 6 billion and stockholders' equity of $5.1 billion at December 31, 2023. At December 31,
• $4,796 — ions) BPPR % PB % POPULAR % C&I $4,796 20 $2,330 22 $7,126 20 CRE 4,695
• $2,330 — % PB % POPULAR % C&I $4,796 20 $2,330 22 $7,126 20 CRE 4,695 19 5,888
• $7,126 — OPULAR % C&I $4,796 20 $2,330 22 $7,126 20 CRE 4,695 19 5,888 56 10,583
• $24,511 — 6,392 26 1,304 13 7,696 22 Total $24,511 100 $10,554 100 $35,065 100 Excep
• $10,554 — 04 13 7,696 22 Total $24,511 100 $10,554 100 $35,065 100 Except for the Cor
• $35,065 — 22 Total $24,511 100 $10,554 100 $35,065 100 Except for the Corporation's ex

Filing Documents

• d52551d10k.htm (10-K) — 13190KB
• d52551dex410.htm (EX-4.10) — 428KB
• d52551dex1028.htm (EX-10.28) — 97KB
• d52551dex1029.htm (EX-10.29) — 204KB
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• d52551dex221.htm (EX-22.1) — 3KB
• d52551dex231.htm (EX-23.1) — 4KB
• d52551dex311.htm (EX-31.1) — 21KB
• d52551dex312.htm (EX-31.2) — 20KB
• d52551dex321.htm (EX-32.1) — 7KB
• d52551dex322.htm (EX-32.2) — 7KB
• d52551dex971.htm (EX-97.1) — 100KB
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• g52551d52551dex322p1i0.jpg (GRAPHIC) — 2KB
• g52551d52551dex971p1i0.jpg (GRAPHIC) — 6KB
• 0001193125-24-053017.txt (&nbsp;) — 58197KB
• bpop-20231231.xsd (EX-101.SCH) — 359KB
• bpop-20231231_cal.xml (EX-101.CAL) — 261KB
• bpop-20231231_def.xml (EX-101.DEF) — 2020KB
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• d52551d10k_htm.xml (XML) — 14090KB

Forward-Looking Statements

Forward-Looking Statements This Form 10-K contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including, without limitation, about Popular, Inc.'s (the "Corporation," "Popular," "we," "us," "our") 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 markets conditions, capital adequacy and liquidity, and the effect of legal and regulatory proceedings and new accounting standards on the Corporation's financial condition and results of operations. 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

forward-looking statements. Various factors, some of which are beyond Popular's control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Factors that might cause such a difference include, but are not limited to: the rate of growth or decline in the economy and employment levels, as well as general

business

business and economic conditions in the geographic areas we serve and, in particular, in the Commonwealth of Puerto Rico (the "Commonwealth" or "Puerto Rico"), where a significant portion of our business is concentrated; adverse economic conditions, including high levels of inflation, that adversely affect housing prices, the job market, consumer confidence and spending habits which may affect in turn, among other things, our level of non-performing assets, charge-offs and provision expense; changes in interest rates and market liquidity, which may reduce interest margins, impact funding sources, reduce loan originations, affect our ability to originate and distribute financial products in the primary and secondary markets and impact the value of our investment portfolio and our ability to return capital to our shareholders; the impact of bank failures or adverse developments at other banks and related negative media coverage of the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks; the impact of the current fiscal and economic challenges of Puerto Rico and the measures taken and to be taken by the Puerto Rico Government and the Federally-appointed oversight board on the economy, our customers and our business; the impact of pending debt restructuring proceedings under Title III of the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") and of other actions taken or to be taken to address Puerto Rico's fiscal challenges on the value of our portfolio of Puerto Rico government securities and loans to governmental entities and of our commercial, mortgage and consumer loan portfolios where private borrowers could be directly affected by governmental action; the amount of Puerto Rico public sector deposits held at the Corporation, whose f

Business

Business 7 Item 1A

Risk Factors

Risk Factors 24 Item 1B Unresolved Staff Comments 38 Item 1C Cybersecurity 38 Item 2

Properties

Properties 41 Item 3

Legal Proceedings

Legal Proceedings 41 Item 4 Mine Safety Disclosures 41 PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 41 Item 6 [Reserved] 44 Item 7

Management's Discussion and Analysis of Financial Condition

Management's Discussion and Analysis of Financial Condition and Results of Operations 44 Item 7A

Quantitative and Qualitative Disclosures About Market

Quantitative and Qualitative Disclosures About Market Risk 44 Item 8

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 44 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 44 Item 9A

Controls and Procedures

Controls and Procedures 45 Item 9B Other Information 45 Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 45 PART III Item 10 Directors, Executive Officers and Corporate Governance 45 Item 11

Executive Compensation

Executive Compensation 46 Item 12

Security Ownership of Certain Beneficial Owners

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 46 Item 13 Certain Relationships and Related Transactions, and Director Independence 46 Item 14 Principal Accountant Fees and Services 46 PART IV Item 15 Exhibits and Financial Statement Schedules 46 Item 16 Form 10-K Summary 47 7

POPULAR, INC

PART I POPULAR, INC.

BUSINESS

ITEM 1. BUSINESS General Popular is a diversified, publicly-owned financial holding company, registered under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), and subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). Popular was incorporated in 1984 under the laws of the Commonwealth of Puerto Rico and is the largest financial institution based in Puerto Rico, with consolidated assets of $70.8 billion, total deposits of $63.6 billion and stockholders' equity of $5.1 billion at December 31, 2023. At December 31, 2023, we ranked among the 50 largest U.S. bank holding companies based on total assets according to information gathered and disclosed by the Federal Reserve Board. We operate in two principal markets: Puerto Rico: We provide retail, mortgage and commercial banking services through our principal banking subsidiary, Banco Popular de Puerto Rico ("Banco Popular" or "BPPR"), as well as auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. BPPR's deposits are insured under the Deposit Insurance Fund ("DIF") of the Federal Deposit Insurance Corporation ("FDIC"). The banking operations of BPPR are primarily based in Puerto Rico, where BPPR has the largest retail banking franchise. Mainland United We provide retail, mortgage and commercial banking services through our New York-chartered banking subsidiary, Popular Bank ("PB" or "Popular U.S."), which has branches in New York, New Jersey and Florida; as well as investment and insurance services, and commercial direct financing leases through specialized subsidiaries. PB's deposits are insured under the DIF of the FDIC. BPPR also conducts banking operations in the U.S. Virgin Islands, the British Virgin Islands and New

business

business process transformation during the second half of 2022. The needs and expectations of our clients, as well as the competitive landscape, have evolved, compelling us to make important investments in our technological infrastructure and adopt more agile practices. We believe these investments will result in an enhanced digital experience for our clients, as well as better technology and more efficient processes for our employees, and make us a more efficient and profitable company, allowing us to achieve a 14% return on tangible common equity target by the end of 2025. Our technology and business transformation will be a significant priority for the Corporation over the next three years and beyond. Refer to the Overview section of Management's Discussion and Analysis included in this Form 10-K for information on recent significant events that have impacted or will impact our current and future operations. Lending Activities 8 We concentrate our lending activities in the following areas: (1) Commercial. Commercial loans are comprised of (i) commercial and industrial ("C&I") loans and leases to commercial customers for use in normal

business

business operations and to finance working capital needs, equipment purchases or other projects, and (ii) commercial real estate ("CRE") loans (excluding construction loans) for income-producing real estate properties as well as occupied properties. C&I loans are underwritten individually and usually secured with the assets of the company and the personal guarantee of the

business

business loans consist of loans for income-producing real estate properties and the financing of if there is real estate as collateral. Non-owner-occupied CRE loans are generally made to finance office and industrial buildings, healthcare facilities, multifamily buildings and retail shopping centers and are repaid through cash flows related to the operation, sale or refinancing of the property. (2) Mortgage. Mortgage loans include residential mortgage loans to consumers for the purchase or refinancing of a residence and also include residential construction loans made to individuals for the construction of refurbishment of their residence. (3) Consumer. Consumer loans are mainly comprised of unsecured personal loans, credit cards, and automobile loans, and to a lesser extent home equity lines of credit ("HELOCs") and other loans made by banks to individual borrowers. (4) Construction. Construction loans are CRE loans to companies, community or homeowners' associations, or developers used for the construction of a commercial or residential property for which repayment will be generated by the sale or permanent financing of the property. Our construction loan portfolio primarily consists of retail, residential (land and condominiums), office and warehouse product types. (5) Lease Financings. Lease financings are offered by BPPR and are primarily comprised of automobile loans/leases made through automotive dealerships. Business Concentration Since our business activities are currently concentrated primarily in Puerto Rico, our results of operations and financial condition are dependent upon the general trends of the Puerto Rico economy and, in particular, the residential and commercial real estate markets. The concentration of our operations in Puerto Rico exposes us to greater risk than other banking companies with a wider geographic base.

Business

Business activities that expose us to credit risk are managed within the Board of Director's Risk Management policy, and the Credit Risk Tolerance Limits policy, which establishes limits that consider factors such as maintainin g a prudent balance of risk-taking across diversified risk types and business units, compliance with regulator y guidance, and controlling the exposure to lower credit quality assets. We maintain comprehensive credit policies for all lines of business in order to mitigate credit risk. Our credit policies are approved by our Board of Directors. These policies set forth, among other things, the objectives, scope and responsibilities of the credit management cycle. Our internal written procedures establish

underwriting

underwriting standards and procedures for monitoring and evaluating loan portfolio quality and require prompt identificatio n and quantificatio n of asset quality deterioration or potential loss to ensure the adequacy of the allowance for credit losses. These written procedures establish various approval and lending limit levels, ranging from bank branch or department officers to managerial and senior management levels. Approval levels are primarily determined by the amount, type of loan and risk characteristics of the credit facility. Our credit policies and procedures establish documentation requirements for each loan and related collateral type, when applicable, during the underwriting, closing and monitoring phases. For commercial and construction loans, during the initial loan

underwriting

underwriting process, the credit policies require, at a minimum, historical financial or tax returns of the borrower, an analysis of financial information contained in a credit approval package, a risk rating determination and reports from credit agencies and appraisal s for real estate-related loans when applicable . The credit policies also set forth the required closing documentation depending on the loan and the collateral type. Although we originat e most of our loans internally in both the Puerto Rico and mainlan d United markets, we occasionally purchase or participate in loans originated by other financial institutions. When we purchase or participate in loans originated by others, we conduct the same

underwriting

underwriting analysis of the borrower s and apply the same criteria as we do for loans originated by us. This also includes a review of the applicable legal documentation. Refer to the Credit Risk section of the MD&A included in this Form 10-K for information related to management committees and divisions with responsibilities for establishing policies and monitoring the Corporation's credit risk. Loan extensions , renewals and restructurings Loans with satisfactory credit profiles can be extended, renewed or restructured . Some commercia l loan facilities are structured as lines of credit, which are mainly one year in term and therefore are required to be renewed annually. Other facilities may be restructure d or extended from time to time based upon changes in the borrower's

business

business needs, use of funds, timing of completion of projects and other factors. If the borrower is not deemed to have financial difficulties , extensions, renewals and restructurings are done in the normal course of busines s and the loans continue to be recorde d as performing. We evaluate various factors to determine if a borrower is experiencing financial difficulties. Indicators that the borrower is experiencing financial difficultie s include, for example: (i) the borrower is currently in default on any of its debt or it is probable tha t the borrower would be in payment default on any of its debt in th e foreseeable future without the modification ; (ii) the borrower has declare d or is in the process of declarin g bankruptcy; (iii) there is significan t doubt as to whether the borrower will continue to be a going concern; (iv) the borrower has securities that have been delisted, are in the process of being delisted, or are under threa t of bein g delisted from an exchange ; (v) based on estimates and projection s that only encompass the current

business

business capabilities , the borrower forecasts that its entity-specifi c cash flows will be insufficien t to service the debt (both interest and principal) in accordance with the contractual terms of the existing agreement through maturity; and (vi) absent the current modification, the borrower cannot obtain funds from sources other than the existing creditors at an effective interest rate equal to the current market interest rate for similar debt for a non-troubled debtor. 10 We have specialized workout officers who handle the majority of commercial loans that are past due 90 days and over, borrowers experiencing financial difficulties , and loans that are considere d problem loans based on their risk profile . As a general policy, we do not advance additional money to borrowers who have loans that are 90 days past due or over. In commercial and construction loans, certain exceptions may be approve d under certain circumstances, including (i) when past due status is administrativ e in nature, such as expiration of a loan facility before the new documentatio n is executed, and not as a result of paymen t or credit issues; (ii) to improve our collateral position or otherwise maximize recovery or mitigate potential future losses; and (iii) with respect to certain entities that, although related through common are not cross defaulted nor cross-collateralized and are performing satisfactorily under their respective loan facilities. Such advances are underwritten and approved following our credit policy guidelines and limits, which are dependent on the borrower's financial condition, collateral and guarantee, among others. In addition to the legal lending limit established under applicable law, discusse d in detail be

business

business activities that expose the Corporation to credit risk are managed within guidelines described in the Credit Risk Tolerance Limits policy. Limits are defi

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