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Loans

6 Months Ended

Jun. 30, 2021

Note 7 – Loans

For a summary of the accounting policies related to loans, interest recognition and allowance for loan losses refer to Note 2 - Summary of significant accounting policies of the 2020 Form 10-K.

During the quarter and six months ended June 30, 2021, the Corporation recorded purchases (including repurchases) of mortgage loans amounting to $94 million and $220 million, respectively; including $5 million and $12 million in PCD loans, respectively, and commercial loans of $28 million and $49 million, respectively.

During the quarter and six months ended June 30, 2020, the Corporation recorded purchases (including repurchases) of mortgage loans amounting to $57 million and $142 million, respectively; including $2 million and $6 million in PCD loans, respectively; commercial loans of $2 million and $3 million, respectively, and consumer loans of $10 thousand and $56 million, respectively.

The Corporation performed whole-loan sales involving approximately $19 million and $85 million of residential mortgage loans during the quarter and six months ended June 30, 2021, respectively (June 30, 2020 - $29 million and $39 million, respectively). During the quarter and six months ended June 30, 2021, the Corporation performed sales of commercial loans, including loan participations amounting to $2 million and $9 million, respectively (June 30, 2020 - $4 million and $6 million, respectively).

Also, the Corporation securitized approximately $107 million and $209 million of mortgage loans into Government National Mortgage Association (“GNMA”) mortgage-backed securities during the quarter and six months ended June 30, 2021, respectively (June 30, 2020 - $63 million and $114 million, respectively). Furthermore, the Corporation securitized approximately $73 million and $159 million of mortgage loans into Federal National Mortgage Association (“FNMA”) mortgage-backed securities during the quarter and six months ended June 30, 2021, respectively (June 30, 2020 - $6 million and $40 million, respectively). Also, the Corporation securitized approximately $14 million of mortgage loans into Federal Home Loan Mortgage Corporation (“FHLMC”) mortgage-backed securities during the quarter and six months ended June 30, 2021.

Delinquency status

The following tables present the composition of loans held-in-portfolio (“HIP”), net of unearned income, by past due status, and by loan class including those that are in non-performing status or that are accruing interest but are past due 90 days or more at June 30, 2021 and December 31, 2020.

June 30, 2021
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
Commercial multi-family		$	128	$	-	$	397	$	525	$	151,258	$	151,783	$	397	$	-
Commercial real estate:
	Non-owner occupied		32,749		-		72,378		105,127		1,888,302		1,993,429		72,378		-
	Owner occupied		3,995		604		79,808		84,407		1,380,022		1,464,429		79,808		-
Commercial and industrial			2,314		682		65,727		68,723		3,952,675		4,021,398		65,120		607
Construction			-		3,080		14,877		17,957		124,990		142,947		14,877		-
Mortgage^[1]			164,779		73,492		995,175		1,233,446		5,281,711		6,515,157		370,653		624,522
Leasing			6,054		2,103		2,286		10,443		1,287,485		1,297,928		2,286		-
Consumer:
	Credit cards		4,371		2,826		8,021		15,218		864,912		880,130		-		8,021
	Home equity lines of credit		-		-		-		-		3,489		3,489		-		-
	Personal		9,405		4,444		23,861		37,710		1,227,582		1,265,292		23,861		-
	Auto		39,032		7,405		13,286		59,723		3,229,304		3,289,027		13,286		-
	Other		214		97		14,288		14,599		108,427		123,026		14,123		165
Total		$	263,041	$	94,733	$	1,290,104	$	1,647,878	$	19,500,157	$	21,148,035	$	656,789	$	633,315

June 30, 2021
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		$	-	$	-	$	5,949	$	5,949	$	1,733,104	$	1,739,053	$	5,949	$	-
Commercial real estate:
	Non-owner occupied		-		-		374		374		2,131,860		2,132,234		374		-
	Owner occupied		907		639		193		1,739		338,445		340,184		193		-
Commercial and industrial			3,070		509		1,346		4,925		1,590,497		1,595,422		1,346		-
Construction			-		-		-		-		722,166		722,166		-		-
Mortgage			2,498		5,005		13,323		20,826		1,142,495		1,163,321		13,323		-
Consumer:
	Credit cards		-		-		-		-		31		31		-		-
	Home equity lines of credit		501		210		6,377		7,088		74,850		81,938		6,377		-
	Personal		572		579		832		1,983		135,014		136,997		832		-
	Other		-		-		-		-		3,236		3,236		-		-
Total		$	7,548	$	6,942	$	28,394	$	42,884	$	7,871,698	$	7,914,582	$	28,394	$	-

June 30, 2021
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^{[2] [3]}		loans		loans
Commercial multi-family		$	128	$	-	$	6,346	$	6,474	$	1,884,362	$	1,890,836	$	6,346	$	-
Commercial real estate:
	Non-owner occupied		32,749		-		72,752		105,501		4,020,162		4,125,663		72,752		-
	Owner occupied		4,902		1,243		80,001		86,146		1,718,467		1,804,613		80,001		-
Commercial and industrial			5,384		1,191		67,073		73,648		5,543,172		5,616,820		66,466		607
Construction			-		3,080		14,877		17,957		847,156		865,113		14,877		-
Mortgage^[1]			167,277		78,497		1,008,498		1,254,272		6,424,206		7,678,478		383,976		624,522
Leasing			6,054		2,103		2,286		10,443		1,287,485		1,297,928		2,286		-
Consumer:
	Credit cards		4,371		2,826		8,021		15,218		864,943		880,161		-		8,021
	Home equity lines of credit		501		210		6,377		7,088		78,339		85,427		6,377		-
	Personal		9,977		5,023		24,693		39,693		1,362,596		1,402,289		24,693		-
	Auto		39,032		7,405		13,286		59,723		3,229,304		3,289,027		13,286		-
	Other		214		97		14,288		14,599		111,663		126,262		14,123		165
Total		$	270,589	$	101,675	$	1,318,498	$	1,690,762	$	27,371,855	$	29,062,617	$	685,183	$	633,315

[1]	It is the Corporation’s policy to report delinquent residential mortgage loans insured by Federal Housing Administration (“FHA”) or guaranteed by the U.S. Department of Veterans Affairs (“VA”) as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. The balance of these loans includes $15 million at June 30, 2021 related to the rebooking of loans previously pooled into GNMA securities, in which the Corporation had a buy-back option as further described below. 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 repurchases option are required to be reflected (rebooked) on the financial statements of BPPR with an offsetting liability. While the borrowers for our serviced GNMA portfolio benefited from the moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium. These balances include $363 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of June 30, 2021. Furthermore, the Corporation has approximately $56 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation’s policy to exclude these balances from non-performing assets.
[2]	Loans held-in-portfolio are net of $224 million in unearned income and exclude $85 million in loans held-for-sale.
[3]	Includes $6.2 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $3.9 billion were pledged at the Federal Home Loan Bank ("FHLB") as collateral for borrowings and $2.3 billion at the Federal Reserve Bank ("FRB") for discount window borrowings.

December 31, 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	past due^[1]		Current		Loans HIP		loans		loans
Commercial multi-family		$	796	$	-	$	505	$	1,301	$	150,979	$	152,280	$	505	$	-
Commercial real estate:
	Non-owner occupied		2,189		3,503		77,137		82,829		1,924,504		2,007,333		77,137		-
	Owner occupied		8,270		1,218		92,001		101,489		1,497,406		1,598,895		92,001		-
Commercial and industrial			10,223		775		35,012		46,010		4,183,098		4,229,108		34,449		563
Construction			-		-		21,497		21,497		135,609		157,106		21,497		-
Mortgage^[2]			195,602		87,726		1,428,824		1,712,152		5,057,991		6,770,143		414,343		1,014,481
Leasing			9,141		1,427		3,441		14,009		1,183,652		1,197,661		3,441		-
Consumer:
	Credit cards		6,550		4,619		12,798		23,967		895,968		919,935		-		12,798
	Home equity lines of credit		184		-		48		232		3,947		4,179		-		48
	Personal		11,255		8,097		26,387		45,739		1,232,008		1,277,747		26,387		-
	Auto		53,186		12,696		15,736		81,618		3,050,610		3,132,228		15,736		-
	Other		304		483		15,052		15,839		110,826		126,665		14,881		171
Total		$	297,700	$	120,544	$	1,728,438	$	2,146,682	$	19,426,598	$	21,573,280	$	700,377	$	1,028,061
[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 nonperforming 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 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 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 $57 million in loans rebooked under the GNMA program at December 31, 2020, in which issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due.

December 31, 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		$	5,273	$	-	$	1,894	$	7,167	$	1,736,544	$	1,743,711	$	1,894	$	-
Commercial real estate:
	Non-owner occupied		924		3,640		669		5,233		1,988,577		1,993,810		669		-
	Owner occupied		191		650		334		1,175		343,205		344,380		334		-
Commercial and industrial			1,117		72		3,091		4,280		1,540,513		1,544,793		3,091		-
Construction			21,312		-		7,560		28,872		740,230		769,102		7,560		-
Mortgage			33,422		15,464		14,864		63,750		1,056,787		1,120,537		14,864		-
Consumer:
	Credit cards		-		-		3		3		28		31		-		3
	Home equity lines of credit		236		342		7,491		8,069		86,502		94,571		7,491		-
	Personal		1,486		1,342		1,474		4,302		194,936		199,238		1,474		-
	Other		-		-		20		20		1,723		1,743		20		-
Total		$	63,961	$	21,510	$	37,400	$	122,871	$	7,689,045	$	7,811,916	$	37,397	$	3

December 31, 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^[2]		past due	Current		Loans HIP^{[3] [4]}		loans		loans
Commercial multi-family		$	6,069	$	-	$	2,399	$	8,468	$	1,887,523	$	1,895,991	$	2,399	$	-
Commercial real estate:
	Non-owner occupied		3,113		7,143		77,806		88,062		3,913,081		4,001,143		77,806		-
	Owner occupied		8,461		1,868		92,335		102,664		1,840,611		1,943,275		92,335		-
Commercial and industrial			11,340		847		38,103		50,290		5,723,611		5,773,901		37,540		563
Construction			21,312		-		29,057		50,369		875,839		926,208		29,057		-
Mortgage^[1]			229,024		103,190		1,443,688		1,775,902		6,114,778		7,890,680		429,207		1,014,481
Leasing			9,141		1,427		3,441		14,009		1,183,652		1,197,661		3,441		-
Consumer:
	Credit cards		6,550		4,619		12,801		23,970		895,996		919,966		-		12,801
	Home equity lines of credit		420		342		7,539		8,301		90,449		98,750		7,491		48
	Personal		12,741		9,439		27,861		50,041		1,426,944		1,476,985		27,861		-
	Auto		53,186		12,696		15,736		81,618		3,050,610		3,132,228		15,736		-
	Other		304		483		15,072		15,859		112,549		128,408		14,901		171
Total		$	361,661	$	142,054	$	1,765,838	$	2,269,553	$	27,115,643	$	29,385,196	$	737,774	$	1,028,064

[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. The balance of these loans includes $57 million at December 31, 2020 related to the rebooking of loans previously pooled into GNMA securities, in which the Corporation had a buy-back option as further described below. 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 repurchases option are required to be reflected (rebooked) on the financial statements of BPPR with an offsetting liability. While the borrowers for our serviced GNMA portfolio benefited from the moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium. These balances include $329 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2020. Furthermore, the Corporation has approximately $60 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation’s policy to exclude these balances from non-performing assets.
[2]	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 nonperforming 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 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 excluded from non-performing status are now included as non-performing.
[3]	Loans held-in-portfolio are net of $203 million in unearned income and exclude $99 million in loans held-for-sale.
[4]	Includes $6.5 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $4.1 billion were pledged at the FHLB as collateral for borrowings and $2.4 billion at the FRB for discount window borrowings.

Recognition of interest income on mortgage loans is generally discontinued when loans are 90 days or more in arrears on payments of principal or interest. The Corporation discontinues the recognition of interest income on residential mortgage loans insured by the FHA or guaranteed by VA when 15 months delinquent as to principal or interest, since the principal repayment on these loans is insured.

At June 30, 2021, mortgage loans held-in-portfolio include $2.0 billion (December 31, 2020 - $2.1 billion) of loans insured by the FHA, or guaranteed VA of which $0.6 billion (December 31, 2020 - $1.0 billion) are 90 days or more past due. These balances include $691 million in loans modified under a TDR (December 31, 2020 - $655 million), that are presented as accruing loans. The portfolio of U.S. guaranteed loans includes $363 million of residential mortgage loans in Puerto Rico that are no longer accruing interest as of June 30, 2021 (December 31, 2020 - $329 million). The Corporation has approximately $56 million in reverse mortgage loans in Puerto Rico which are guaranteed by FHA, but which are currently not accruing interest at June 30, 2021 (December 31, 2020 - $60 million).

Loans with a delinquency status of 90 days past due as of June 30, 2021 include $15 million in loans previously pooled into GNMA securities (December 31, 2020 - $57 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.

The following tables present the amortized cost basis of non-accrual loans as of June 30, 2021 and December 31, 2020 by class of loans:

June 30, 2021
	Puerto Rico				Popular U.S.				Popular, Inc.
(In thousands)	Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance
Commercial multi-family	$	-	$	397	$	5,949	$	-	$	5,949	$	397
Commercial real estate non-owner occupied		30,253		42,125		-		374		30,253		42,499
Commercial real estate owner occupied		18,338		61,470		-		193		18,338		61,663
Commercial and industrial		19,082		46,038		-		1,346		19,082		47,384
Construction		14,877		-		-		-		14,877		-
Mortgage		184,038		186,615		350		12,973		184,388		199,588
Leasing		123		2,163		-		-		123		2,163
Consumer:
HELOCs		-		-		-		6,377		-		6,377
Personal		6,928		16,933		-		832		6,928		17,765
Auto		533		12,753		-		-		533		12,753
Other		-		14,123		-		-		-		14,123
Total	$	274,172	$	382,617	$	6,299	$	22,095	$	280,471	$	404,712

December 31, 2020
	Puerto Rico				Popular U.S.				Popular, Inc.
(In thousands)	Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance		Non-accrual with no allowance		Non-accrual with allowance
Commercial multi-family	$	-	$	505	$	-	$	1,894	$	-	$	2,399
Commercial real estate non-owner occupied		35,968		41,169		-		669		35,968		41,838
Commercial real estate owner occupied		14,825		77,176		-		334		14,825		77,510
Commercial and industrial		1,148		33,301		-		3,091		1,148		36,392
Construction		-		21,497		-		7,560		-		29,057
Mortgage		141,737		272,606		517		14,347		142,254		286,953
Leasing		-		3,441		-		-		-		3,441
Consumer:
HELOCs		-		-		-		7,491		-		7,491
Personal		9,265		17,122		-		1,474		9,265		18,596
Auto		-		15,736		-		-		-		15,736
Other		-		14,881		-		20		-		14,901
Total	$	202,943	$	497,434	$	517	$	36,880	$	203,460	$	534,314

Loans in non-accrual status with no allowance at June 30, 2021 include $280 million in collateral dependent loans (December 31, 2020 - $203 million). The Corporation recognized $4 million in interest income on non-accrual loans during the six months ended June 30, 2021 (June 30, 2020 - $3 million).

The Corporation has designated loans classified as collateral dependent for which it applies the practical expedient to measure the ACL based on the fair value of the collateral less cost to sell, when the repayment is expected to be provided substantially by the sale or operation of the collateral and the borrower is experiencing financial difficulty. The fair value of the collateral is based on appraisals, which may be adjusted due to their age, and the type, location, and condition of the property or area or general market conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date. Appraisals are updated every one to two years depending on the type of loan and the total exposure of the borrower.

The following tables present the amortized cost basis of collateral-dependent loans by class of loans and type of collateral as of June 30, 2021 and December 31, 2020:

		June 30, 2021
(In thousands)			Real Estate		Auto		Equipment		Taxi Medallions		Accounts Receivables		Other		Total
Puerto Rico
Commercial multi-family		$	1,487	$	-	$	-	$	-	$	-	$	-	$	1,487
Commercial real estate:
	Non-owner occupied		264,062		-		-		-		-		-		264,062
	Owner occupied		70,099		-		-		-		-		-		70,099
Commercial and industrial			6,808		-		982		-		11,117		43,895		62,802
Construction			14,877		-		-		-		-		-		14,877
Mortgage			200,356		-		-		-		-		-		200,356
Consumer:
	Personal		7,097		-		-		-		-		-		7,097
	Auto		-		655		-		-		-		-		655
Total Puerto Rico		$	564,786	$	655	$	982	$	-	$	11,117	$	43,895	$	621,435
Popular U.S.
Commercial multi-family		$	5,949	$	-	$	-	$	-	$	-	$	-	$	5,949
Commercial and industrial			-		-		-		115		-		-		115
Mortgage			447		-		-		-		-		-		447
Total Popular U.S.		$	6,396	$	-	$	-	$	115	$	-	$	-	$	6,511
Popular, Inc.
Commercial multi-family		$	7,436	$	-	$	-	$	-	$	-	$	-	$	7,436
Commercial real estate:
	Non-owner occupied		264,062		-		-		-		-		-		264,062
	Owner occupied		70,099		-		-		-		-		-		70,099
Commercial and industrial			6,808		-		982		115		11,117		43,895		62,917
Construction			14,877		-		-		-		-		-		14,877
Mortgage			200,803		-		-		-		-		-		200,803
Consumer:
	Personal		7,097		-		-		-		-		-		7,097
	Auto		-		655		-		-		-		-		655
Total Popular, Inc.		$	571,182	$	655	$	982	$	115	$	11,117	$	43,895	$	627,946

		December 31, 2020
(In thousands)			Real Estate		Auto		Equipment		Taxi Medallions		Accounts Receivables		Other		Total
Puerto Rico
Commercial multi-family		$	1,301	$	-	$	-	$	-	$	-	$	-	$	1,301
Commercial real estate:
	Non-owner occupied		299,223		-		-		-		-		-		299,223
	Owner occupied		79,769		-		-		-		-		-		79,769
Commercial and industrial			7,577		-		1,438		-		10,989		12,046		32,050
Construction			21,497		-		-		-		-		-		21,497
Mortgage			181,648		-		-		-		-		-		181,648
Consumer:
	Personal		7,414		-		-		-		-		-		7,414
	Auto		-		4		-		-		-		-		4
Total Puerto Rico		$	598,429	$	4	$	1,438	$	-	$	10,989	$	12,046	$	622,906
Popular U.S.
Commercial multi-family		$	1,755	$	-	$	-	$	-	$	-	$	-	$	1,755
Commercial and industrial			-		-		-		1,545		-		-		1,545
Construction			7,560		-		-		-		-		-		7,560
Mortgage			855		-		-		-		-		-		855
Total Popular U.S.		$	10,170	$	-	$	-	$	1,545	$	-	$	-	$	11,715
Popular, Inc.
Commercial multi-family		$	3,056	$	-	$	-	$	-	$	-	$	-	$	3,056
Commercial real estate:
	Non-owner occupied		299,223		-		-		-		-		-		299,223
	Owner occupied		79,769		-		-		-		-		-		79,769
Commercial and industrial			7,577		-		1,438		1,545		10,989		12,046		33,595
Construction			29,057		-		-		-		-		-		29,057
Mortgage			182,503		-		-		-		-		-		182,503
Consumer:
	Personal		7,414		-		-		-		-		-		7,414
	Auto		-		4		-		-		-		-		4
Total Popular, Inc.		$	608,599	$	4	$	1,438	$	1,545	$	10,989	$	12,046	$	634,621

Purchased Credit Deteriorated (PCD) Loans

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, 2021		For the six months ended June 30, 2021
Purchase price of loans at acquisition	$	4,049	$	8,984
Allowance for credit losses at acquisition		1,202		2,558
Non-credit discount / (premium) at acquisition		214		335
Par value of acquired loans at acquisition	$	5,465	$	11,877


(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