Purchased Financial Assets With Credit Deterioration

Purchased Credit Deteriorated Loans (PCD)

The Corporation has purchased loans during the quarter and six months ended, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:


(In thousands)		For the quarter ended June 30, 2020		For the six months ended June 30, 2020
Purchase price of loans at acquisition	$	1,627	$	4,739
Allowance for credit losses at acquisition		567		996
Non-credit discount/premium at acquisition		74		212
Par value of acquired loans at acquisition	$	2,268	$	5,947

Accounts, Notes, Loans and Financing Receivable

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period

Changes in the carrying amount and the accretable yield for the loans accounted pursuant to the ASC Subtopic 310-30, for the quarter and six months ended June 30, 2019, were as follows:

Carrying amount of acquired loans accounted for pursuant to ASC 310-30
(In thousands)			For the quarter ended June 30, 2019		For the six months ended June 30, 2019
Beginning balance		$	1,831,257	$	1,883,556
Additions			10,528		15,748
Accretion			38,177		75,581
Collections / loan sales / charge-offs			(90,725)		(185,648)
Ending balance^[1]		$	1,789,237	$	1,789,237
Allowance for loan losses			(120,818)		(120,818)
Ending balance, net of ALLL		$	1,668,419	$	1,668,419
[1]	At June 30, 2019, includes $1.3 billion of loans considered non-credit impaired at the acquisition date.

Past due financing receivables

June 30, 2020
Puerto Rico

			Past due											Past due 90 days or more
		30-59		60-89		90 days		Total						Non-accrual			Accruing
(In thousands)		days		days		or more^[1]		past due		Current		Loans HIP		loans		loans
Commercial multi-family		$	1,641	$	2,524	$	1,368	$	5,533	$	142,630	$	148,163	$	1,368	$	-
Commercial real estate:
	Non-owner occupied		24,091		4,120		108,671		136,882		1,940,018		2,076,900		108,671		-
	Owner occupied		19,439		5,471		101,112		126,022		1,554,153		1,680,175		101,112		-
Commercial and industrial			5,422		15,404		43,892		64,718		4,382,221		4,446,939		42,739		1,153
Construction			-		-		-		-		176,612		176,612		-		-
Mortgage			279,498		123,158		1,256,359		1,659,015		4,751,803		6,410,818		397,262		859,097	^[2]
Leasing			11,386		10,355		4,751		26,492		1,071,696		1,098,188		4,751		-
Consumer:
	Credit cards		9,128		15,424		17,849		42,401		934,981		977,382		-		17,849
	Home equity lines of credit		14		262		6		282		4,284		4,566		-		6
	Personal		20,485		13,730		34,834		69,049		1,300,646		1,369,695		34,834		-
	Auto		64,977		29,813		22,111		116,901		2,787,423		2,904,324		22,111		-
	Other		700		344		14,426		15,470		114,971		130,441		13,755		671
Total		$	436,781	$	220,605	$	1,605,379	$	2,262,765	$	19,161,438	$	21,424,203	$	726,603	$	878,776
[1]	Loans included as 90 days or more past due include loans that that are not delinquent in their payment terms but that are reported as non-performing due to other credit quality considerations. As part of the adoption of CECL, at January 1, 2020, the Corporation reclassified to this category $134 million of acquired loans with credit deterioration that were previously accounted for under ASC 310-30 and were excluded from non-performing status. In addition, as part of the CECL transition, an additional $125 million of loans that were 90 days or more past due previously accounted for under ASC 310-30 and excluded from non-performing status are now included as non-performing.
[2]	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 $522 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. Loans in our serviced GNMA portfolio benefit from payment forbearance programs but continue to reflect the contractual delinquency until the borrower repays deferred payments or completes a payment deferral modification or other borrower assistance alternative.

June 30, 2020
Popular U.S.

			Past due											Past due 90 days or more
		30-59		60-89		90 days		Total						Non-accrual			Accruing
(In thousands)		days		days		or more		past due		Current		Loans HIP		loans		loans
Commercial multi-family		$	-	$	366	$	2,097	$	2,463	$	1,637,996	$	1,640,459	$	2,097	$	-
Commercial real estate:
	Non-owner occupied		1,692		5,136		397		7,225		1,945,365		1,952,590		397		-
	Owner occupied		1,010		-		352		1,362		345,412		346,774		352		-
Commercial and industrial			4,441		6,061		4,392		14,894		1,428,188		1,443,082		4,392		-
Construction			23,209		9,600		-		32,809		719,086		751,895		-		-
Mortgage			2,532		4,477		14,144		21,153		1,089,824		1,110,977		14,144		-
Legacy			29		83		2,001		2,113		14,887		17,000		2,001		-
Consumer:
	Credit cards		-		-		-		-		26		26		-		-
	Home equity lines of credit		1,715		655		8,242		10,612		100,095		110,707		8,242		-
	Personal		1,638		1,524		1,976		5,138		266,330		271,468		1,976		-
	Other		-		-		-		-		1,372		1,372		-		-
Total		$	36,266	$	27,902	$	33,601	$	97,769	$	7,548,581	$	7,646,350	$	33,601	$	-

June 30, 2020
Popular, Inc.

			Past due											Past due 90 days or more
		30-59		60-89		90 days		Total						Non-accrual			Accruing
(In thousands)		days		days		or more^[3]		past due		Current		Loans HIP^{[4] [5]}		loans		loans
Commercial multi-family		$	1,641	$	2,890	$	3,465	$	7,996	$	1,780,626	$	1,788,622	$	3,465	$	-
Commercial real estate:
	Non-owner occupied		25,783		9,256		109,068		144,107		3,885,383		4,029,490		109,068		-
	Owner occupied		20,449		5,471		101,464		127,384		1,899,565		2,026,949		101,464		-
Commercial and industrial			9,863		21,465		48,284		79,612		5,810,409		5,890,021		47,131		1,153
Construction			23,209		9,600		-		32,809		895,698		928,507		-		-
Mortgage^[1]			282,030		127,635		1,270,503		1,680,168		5,841,627		7,521,795		411,406		859,097	^[6]
Leasing			11,386		10,355		4,751		26,492		1,071,696		1,098,188		4,751		-
Legacy^[2]			29		83		2,001		2,113		14,887		17,000		2,001		-
Consumer:
	Credit cards		9,128		15,424		17,849		42,401		935,007		977,408		-		17,849
	Home equity lines of credit		1,729		917		8,248		10,894		104,379		115,273		8,242		6
	Personal		22,123		15,254		36,810		74,187		1,566,976		1,641,163		36,810		-
	Auto		64,977		29,813		22,111		116,901		2,787,423		2,904,324		22,111		-
	Other		700		344		14,426		15,470		116,343		131,813		13,755		671
Total		$	473,047	$	248,507	$	1,638,980	$	2,360,534	$	26,710,019	$	29,070,553	$	760,204	$	878,776

[1]	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.
[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.
[3]	Loans included as 90 days or more past due include loans that that are not delinquent in their payment terms but that are reported as non-performing due to other credit quality considerations. As part of the adoption of CECL, at January 1, 2020, the Corporation reclassified to this category $134 million of acquired loans with credit deterioration that were previously accounted for under ASC 310-30 and were excluded from non-performing status. In addition, as part of the CECL transition, an additional $144 million of loans that were 90 days or more past due previously accounted for under ASC 310-30 and excluded from non-performing status are now included as non-performing.
[4]	Loans held-in-portfolio are net of $ 180 million in unearned income and exclude $ 69 million in loans held-for-sale.
[5]	Includes $7.1 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $4.5 billion were pledged at the Federal Home Loan Bank ("FHLB") as collateral for borrowings and $2.6 billion at the Federal Reserve Bank ("FRB") for discount window borrowings.
[6]	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 $522 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. Loans in our serviced GNMA portfolio benefit from payment forbearance programs but continue to reflect the contractual delinquency until the borrower repays deferred payments or completes a payment deferral modification or other borrower assistance alternative.

December 31, 2019
Puerto Rico

			Past due											Past due 90 days or more
			30-59		60-89		90 days	Total						Non-accrual			Accruing
(In thousands)			days		days		or more	past due		Current		Loans HIP		loans		loans^[1]
Commercial multi-family		$	2,941	$	129	$	1,512	$	4,582	$	143,267	$	147,849	$	1,473	$	-
Commercial real estate:
	Non-owner occupied		10,439		5,244		43,664		59,347		2,048,871		2,108,218		39,968		-
	Owner occupied		5,704		3,978		84,537		94,219		1,492,110		1,586,329		69,276		-
Commercial and industrial			8,780		1,646		37,156		47,582		3,371,152		3,418,734		36,538		544
Construction			1,555		-		119		1,674		135,796		137,470		119		-
Mortgage			285,006		146,197		837,651		1,268,854		4,897,894		6,166,748		283,708		439,662
Leasing			12,014		3,053		3,657		18,724		1,040,783		1,059,507		3,657		-
Consumer:
	Credit cards		11,358		7,928		19,461		38,747		1,085,053		1,123,800		-		19,461
	Home equity lines of credit		-		85		-		85		4,953		5,038		-		-
	Personal		13,481		9,352		20,296		43,129		1,325,021		1,368,150		19,529		61
	Auto		81,169		23,182		31,148		135,499		2,782,023		2,917,522		31,148		-
	Other		358		1,418		14,189		15,965		124,902		140,867		13,784		405
Total		$	432,805	$	202,212	$	1,093,390	$	1,728,407	$	18,451,825	$	20,180,232	$	499,200	$	460,133
[1]	Loans HIP of $134 million accounted for under ASC Subtopic 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans would accrete interest income over the remaining life of the loans using estimated cash flow analysis.

December 31, 2019
Popular U.S.

			Past due											Past due 90 days or more
			30-59		60-89		90 days		Total					Non-accrual			Accruing
(In thousands)			days		days		or more		past due		Current		Loans HIP	loans		loans^[1]
Commercial multi-family		$	9	$	-	$	2,097	$	2,106	$	1,645,204	$	1,647,310	$	2,097	$	-
Commercial real estate:
	Non-owner occupied		1,047		-		281		1,328		1,868,968		1,870,296		281		-
	Owner occupied		1,750		-		251		2,001		337,134		339,135		251		-
Commercial and industrial			454		128		19,945		20,527		1,174,353		1,194,880		876		-
Construction			-		-		26		26		693,596		693,622		26		-
Mortgage			15,474		4,024		11,091		30,589		986,195		1,016,784		11,091		-
Legacy			49		8		1,999		2,056		20,049		22,105		1,999		-
Consumer:
	Credit cards		-		-		-		-		36		36		-		-
	Home equity lines of credit		404		267		9,954		10,625		106,718		117,343		9,954		-
	Personal		2,286		1,582		2,066		5,934		318,506		324,440		2,066		-
	Other		3		-		-		3		687		690		-		-
Total		$	21,476	$	6,009	$	47,710	$	75,195	$	7,151,446	$	7,226,641	$	28,641	$	-
[1]	Loans HIP of $ 19 million accounted for under ASC Subtopic 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans would accrete interest income over the remaining life of the loans using estimated cash flow analysis.

December 31, 2019
Popular, Inc.

			Past due											Past due 90 days or more
			30-59		60-89		90 days		Total					Non-accrual			Accruing
(In thousands)			days		days		or more		past due	Current		Loans HIP^{[3] [4]}		loans		loans^[5]
Commercial multi-family		$	2,950	$	129	$	3,609	$	6,688	$	1,788,471	$	1,795,159	$	3,570	$	-
Commercial real estate:
	Non-owner occupied		11,486		5,244		43,945		60,675		3,917,839		3,978,514		40,249		-
	Owner occupied		7,454		3,978		84,788		96,220		1,829,244		1,925,464		69,527		-
Commercial and industrial			9,234		1,774		57,101		68,109		4,545,505		4,613,614		37,414		544
Construction			1,555		-		145		1,700		829,392		831,092		145		-
Mortgage^[1]			300,480		150,221		848,742		1,299,443		5,884,089		7,183,532		294,799		439,662
Leasing			12,014		3,053		3,657		18,724		1,040,783		1,059,507		3,657		-
Legacy^[2]			49		8		1,999		2,056		20,049		22,105		1,999		-
Consumer:
	Credit cards		11,358		7,928		19,461		38,747		1,085,089		1,123,836		-		19,461
	Home equity lines of credit		404		352		9,954		10,710		111,671		122,381		9,954		-
	Personal		15,767		10,934		22,362		49,063		1,643,527		1,692,590		21,595		61
	Auto		81,169		23,182		31,148		135,499		2,782,023		2,917,522		31,148		-
	Other		361		1,418		14,189		15,968		125,589		141,557		13,784		405
Total		$	454,281	$	208,221	$	1,141,100	$	1,803,602	$	25,603,271	$	27,406,873	$	527,841	$	460,133

[1]	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.
[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.
[3]	Loans held-in-portfolio are net of $ 181 million in unearned income and exclude $ 59 million in loans held-for-sale.
[4]	Includes $6.7 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $4.6 billion were pledged at the FHLB as collateral for borrowings and $2.1 billion at the FRB for discount window borrowings.
[5]	Loans HIP of $153 million accounted for under ASC Subtopic 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans would accrete interest income over the remaining life of the loans using estimated cash flow analysis.

Financing receivable non accrual status

June 30, 2020
	Puerto Rico						Popular U.S.						Popular, Inc.
(In thousands)	Non-accrual with no allowance		Non-accrual with allowance		Interest income recognized		Non-accrual with no allowance		Non-accrual with allowance		Interest income recognized		Non-accrual with no allowance		Non-accrual with allowance		Interest income recognized
Commercial multi-family	$	-	$	1,368	$	-	$	-	$	2,097	$	-	$	-	$	3,465	$	-
Commercial real estate non-owner occupied		40,648		68,023		232		-		397		-		40,648		68,420		232
Commercial real estate owner occupied		30,622		70,490		428		-		352		-		30,622		70,842		428
Commercial and industrial		25,403		17,336		196		3,746		646		-		29,149		17,982		196
Mortgage		143,201		254,061		1,218		615		13,529		8		143,816		267,590		1,226
Leasing		30		4,721		1		-		-		-		30		4,721		1
Legacy		-		-		-		-		2,001		-		-		2,001		-
Consumer:
HELOCs		-		-		-		-		8,242		-		-		8,242		-
Personal		5,958		28,876		288		-		1,976		3		5,958		30,852		291
Auto		43		22,068		336		-		-		-		43		22,068		336
Other		-		13,755		119		-		-		-		-		13,755		119
Total	$	245,905	$	480,698	$	2,818	$	4,361	$	29,240	$	11	$	250,266	$	509,938	$	2,829