Allowance for loan losses

9 Months Ended

Sep. 30, 2018

Note 9 – Allowance for loan losses

The Corporation follows a systematic methodology to establish and evaluate the adequacy of the allowance for loan losses (“ALLL”) to provide for inherent losses in the loan portfolio. This methodology includes the consideration of factors such as current economic conditions, portfolio risk characteristics, prior loss experience and results of periodic credit reviews of individual loans. The provision for loan losses charged to current operations is based on this methodology. Loan losses are charged and recoveries are credited to the ALLL.

The Corporation’s assessment of the ALLL is determined in accordance with the guidance of loss contingencies in ASC Subtopic 450-20 and loan impairment guidance in ASC Section 310-10-35. Also, the Corporation determines the ALLL on purchased impaired loans and purchased loans accounted for under ASC Subtopic 310-30, by evaluating decreases in expected cash flows after the acquisition date.

The accounting guidance provides for the recognition of a loss allowance for groups of homogeneous loans. The determination of the general ALLL includes the following principal factors:

Base net loss rates, which are based on the moving average of annualized net loss rates computed over a 5-year historical loss period for the commercial and construction loan portfolios, and an 18-month period for the consumer and mortgage loan portfolios. The base net loss rates are applied by loan type and by legal entity.
Recent loss trend adjustment, which replaces the base loss rate with a 12-month average loss rate, when these trends are higher than the respective base loss rates. The objective of this adjustment is to allow for a more recent loss trend to be captured and reflected in the ALLL estimation process.

For the period ended September 30, 2018, 80% (September 30, 2017 - 45%) of the ALLL for the BPPR segment loan portfolios utilized the recent loss trend adjustment instead of the base loss. The recent loss trends were impacted by charge-off activity related to the impact of Hurricanes Irma and Maria. The effect of replacing the base loss with the recent loss trend adjustment was mainly concentrated in the mortgage, leasing and overall consumer portfolios for 2018 and in the leasing, credit cards, personal, auto and other consumer loans for 2017.

For the period ended September 30, 2018, 6% (September 30, 2017 - 5 %) of the Popular U.S. segment loan portfolios utilized the recent loss trend adjustment instead of the base loss. The effect of replacing the base loss with the recent loss trend adjustment was concentrated in the consumer portfolio for 2018 and 2017.

Environmental factors, which include credit and macroeconomic indicators such as unemployment rate, economic activity index and delinquency rates, adopted to account for current market conditions that are likely to cause estimated credit losses to differ from historical losses. The Corporation reflects the effect of these environmental factors on each loan group as an adjustment that, as appropriate, increases the historical loss rate applied to each group. Environmental factors provide updated perspective on credit and economic conditions. Regression analysis is used to select these indicators and quantify the effect on the general ALLL.

During the third quarter of 2018, management completed the annual review of the components of the ALLL models. As part of this review, management updated core metrics related to the estimation process for evaluating the adequacy of the general ALLL. These updates to the ALLL models, which are described in the paragraph below, were implemented as of September 30, 2018 and resulted in a net decrease to the ALLL of $6.1 million.

Management made the following revisions to the ALLL models during the third quarter of 2018:

Annual review and recalibration of the environmental factors adjustments. The environmental factors adjustments are developed by performing regression analyses on selected credit and economic indicators for each applicable loan segment. During the third quarter of 2018, the environmental factor models used to account for changes in current credit and macroeconomic conditions were reviewed and recalibrated based on the latest applicable trends.

The effect of the recalibration to the environmental factors adjustments resulted in a decrease to the ALLL of $5.9 million and $0.2 million at the BPPR and Popular U.S. segments, respectively.

The following tables present the changes in the allowance for loan losses, loan ending balances and whether such loans and the allowance pertain to loans individually or collectively evaluated for impairment for the quarters and nine months ended September 30, 2018 and 2017.

For the quarter ended September 30, 2018
Puerto Rico


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	190,926	$	765	$	182,103	$	14,285	$	179,066	$	567,145
	Provision (reversal of provision)		21,548		(12)		10,145		(422)		20,618		51,877
	Charge-offs		(7,335)		(21)		(23,526)		(2,088)		(42,180)		(75,150)
	Recoveries		4,966		146		1,564		531		9,097		16,304
Ending balance		$	210,105	$	878	$	170,286	$	12,306	$	166,601	$	560,176
Specific ALLL		$	52,250	$	-	$	43,841	$	297	$	24,906	$	121,294
General ALLL		$	157,855	$	878	$	126,445	$	12,009	$	141,695	$	438,882
Loans held-in-portfolio:
Impaired non-covered loans		$	356,007	$	1,829	$	508,258	$	931	$	107,184	$	974,209
Non-covered loans held-in-portfolio
	excluding impaired loans		7,051,469		75,964		6,023,018		902,609		4,796,084		18,849,144
Total non-covered loans held-in-portfolio		$	7,407,476	$	77,793	$	6,531,276	$	903,540	$	4,903,268	$	19,823,353

For the quarter ended September 30, 2018
Popular U.S.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	50,920	$	6,937	$	4,363	$	700	$	12,953	$	75,873
	Provision (reversal of provision)		(14,744)		7,305		(65)		(1,008)		11,022		2,510
	Charge-offs		(2,792)		-		(17)		(81)		(5,015)		(7,905)
	Recoveries		1,051		-		20		766		1,227		3,064
Ending balance		$	34,435	$	14,242	$	4,301	$	377	$	20,187	$	73,542
Specific ALLL		$	-	$	5,530	$	2,364	$	-	$	1,349	$	9,243
General ALLL		$	34,435	$	8,712	$	1,937	$	377	$	18,838	$	64,299
Loans held-in-portfolio:
Impaired loans		$	-	$	17,866	$	8,825	$	-	$	7,388	$	34,079
Loans held-in-portfolio
	excluding impaired loans		4,586,231		847,706		764,069		27,566		429,164		6,654,736
Total loans held-in-portfolio		$	4,586,231	$	865,572	$	772,894	$	27,566	$	436,552	$	6,688,815

For the quarter ended September 30, 2018
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	241,846	$	7,702	$	186,466	$	700	$	14,285	$	192,019	$	643,018
	Provision (reversal of provision)		6,804		7,293		10,080		(1,008)		(422)		31,640		54,387
	Charge-offs		(10,127)		(21)		(23,543)		(81)		(2,088)		(47,195)		(83,055)
	Recoveries		6,017		146		1,584		766		531		10,324		19,368
Ending balance		$	244,540	$	15,120	$	174,587	$	377	$	12,306	$	186,788	$	633,718
Specific ALLL		$	52,250	$	5,530	$	46,205	$	-	$	297	$	26,255	$	130,537
General ALLL		$	192,290	$	9,590	$	128,382	$	377	$	12,009	$	160,533	$	503,181
Loans held-in-portfolio:
Impaired loans		$	356,007	$	19,695	$	517,083	$	-	$	931	$	114,572	$	1,008,288
Loans held-in-portfolio
	excluding impaired loans		11,637,700		923,670		6,787,087		27,566		902,609		5,225,248		25,503,880
Total loans held-in-portfolio		$	11,993,707	$	943,365	$	7,304,170	$	27,566	$	903,540	$	5,339,820	$	26,512,168

For the nine months ended September 30, 2018
Puerto Rico - Non-covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	171,531	$	1,286	$	159,081	$	11,991	$	174,215	$	518,104
	Provision (reversal of provision)		52,846		(1,042)		24,564		5,022		71,610		153,000
	Charge-offs		(25,626)		9		(50,164)		(6,404)		(101,703)		(183,888)
	Recoveries		11,354		625		3,383		1,697		22,291		39,350
	Allowance transferred from covered loans ^[1]		-		-		33,422		-		188		33,610
Ending balance		$	210,105	$	878	$	170,286	$	12,306	$	166,601	$	560,176
Specific ALLL		$	52,250	$	-	$	43,841	$	297	$	24,906	$	121,294
General ALLL		$	157,855	$	878	$	126,445	$	12,009	$	141,695	$	438,882
Loans held-in-portfolio:
Impaired non-covered loans		$	356,007	$	1,829	$	508,258	$	931	$	107,184	$	974,209
Non-covered loans held-in-portfolio
	excluding impaired loans		7,051,469		75,964		6,023,018		902,609		4,796,084		18,849,144
Total non-covered loans held-in-portfolio		$	7,407,476	$	77,793	$	6,531,276	$	903,540	$	4,903,268	$	19,823,353
[1] Represents the allowance transferred from covered to non-covered loans at June 30, 2018, due to the Termination Agreement with the FDIC.

For the nine months ended September 30, 2018
Puerto Rico - Covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	-	$	-	$	32,521	$	-	$	723	$	33,244
	Provision (reversal of provision)		-		-		2,265		-		(535)		1,730
	Charge-offs		-		-		(1,446)		-		(2)		(1,448)
	Recoveries		-		-		82		-		2		84
	Allowance transferred to non-covered loans		-		-		(33,422)		-		(188)		(33,610)
Ending balance		$	-	$	-	$	-	$	-	$	-	$	-
Specific ALLL		$	-	$	-	$	-	$	-	$	-	$	-
General ALLL		$	-	$	-	$	-	$	-	$	-	$	-
Loans held-in-portfolio:
Impaired covered loans		$	-	$	-	$	-	$	-	$	-	$	-
Covered loans held-in-portfolio
	excluding impaired loans		-		-		-		-		-		-
Total covered loans held-in-portfolio		$	-	$	-	$	-	$	-	$	-	$	-

For the nine months ended September 30, 2018
Popular U.S.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	44,134	$	7,076	$	4,541	$	798	$	15,529	$	72,078
	Provision (reversal of provision)		9,004		7,166		(529)		(1,714)		16,847		30,774
	Charge-offs		(22,435)		-		(160)		(252)		(16,329)		(39,176)
	Recoveries		3,732		-		449		1,545		4,140		9,866
Ending balance		$	34,435	$	14,242	$	4,301	$	377	$	20,187	$	73,542
Specific ALLL		$	-	$	5,530	$	2,364	$	-	$	1,349	$	9,243
General ALLL		$	34,435	$	8,712	$	1,937	$	377	$	18,838	$	64,299
Loans held-in-portfolio:
Impaired loans		$	-	$	17,866	$	8,825	$	-	$	7,388	$	34,079
Loans held-in-portfolio
	excluding impaired loans		4,586,231		847,706		764,069		27,566		429,164		6,654,736
Total loans held-in-portfolio		$	4,586,231	$	865,572	$	772,894	$	27,566	$	436,552	$	6,688,815

For the nine months ended September 30, 2018
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	215,665	$	8,362	$	196,143	$	798	$	11,991	$	190,467	$	623,426
	Provision (reversal of provision)		61,850		6,124		26,300		(1,714)		5,022		87,922		185,504
	Charge-offs		(48,061)		9		(51,770)		(252)		(6,404)		(118,034)		(224,512)
	Recoveries		15,086		625		3,914		1,545		1,697		26,433		49,300
Ending balance		$	244,540	$	15,120	$	174,587	$	377	$	12,306	$	186,788	$	633,718
Specific ALLL		$	52,250	$	5,530	$	46,205	$	-	$	297	$	26,255	$	130,537
General ALLL		$	192,290	$	9,590	$	128,382	$	377	$	12,009	$	160,533	$	503,181
Loans held-in-portfolio:
Impaired loans		$	356,007	$	19,695	$	517,083	$	-	$	931	$	114,572	$	1,008,288
Loans held-in-portfolio
	excluding impaired loans		11,637,700		923,670		6,787,087		27,566		902,609		5,225,248		25,503,880
Total loans held-in-portfolio		$	11,993,707	$	943,365	$	7,304,170	$	27,566	$	903,540	$	5,339,820	$	26,512,168

For the quarter ended September 30, 2017
Puerto Rico - Non-covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	174,189	$	1,473	$	147,866	$	8,003	$	122,904	$	454,435
	Provision		31,059		176		38,838		3,924		41,118		115,115
	Charge-offs		(5,573)		9		(17,460)		(1,733)		(31,793)		(56,550)
	Recoveries		6,011		41		389		238		4,570		11,249
Ending balance		$	205,686	$	1,699	$	169,633	$	10,432	$	136,799	$	524,249
Specific ALLL		$	40,863	$	-	$	49,129	$	450	$	21,730	$	112,172
General ALLL		$	164,823	$	1,699	$	120,504	$	9,982	$	115,069	$	412,077
Loans held-in-portfolio:
Impaired non-covered loans		$	328,704	$	-	$	510,134	$	1,468	$	101,948	$	942,254
Non-covered loans held-in-portfolio
	excluding impaired loans		6,840,907		87,705		5,305,371		753,413		3,188,422		16,175,818
Total non-covered loans held-in-portfolio		$	7,169,611	$	87,705	$	5,815,505	$	754,881	$	3,290,370	$	17,118,072

For the quarter ended September 30, 2017
Puerto Rico - Covered Loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	-	$	-	$	30,284	$	-	$	524	$	30,808
	Provision		-		-		2,538		-		562		3,100
	Charge-offs		-		-		(863)		-		(24)		(887)
	Recoveries		-		-		32		-		4		36
Ending balance		$	-	$	-	$	31,991	$	-	$	1,066	$	33,057
Specific ALLL		$	-	$	-	$	-	$	-	$	-	$	-
General ALLL		$	-	$	-	$	31,991	$	-	$	1,066	$	33,057
Loans held-in-portfolio:
Impaired covered loans		$	-	$	-	$	-	$	-	$	-	$	-
Covered loans held-in-portfolio
	excluding impaired loans		-		-		510,211		-		14,643		524,854
Total covered loans held-in-portfolio		$	-	$	-	$	510,211	$	-	$	14,643	$	524,854

For the quarter ended September 30, 2017
Popular U.S.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	28,319	$	6,528	$	4,122	$	993	$	14,809	$	54,771
	Provision (reversal of provision)		39,246		595		(39)		(418)		3,160		42,544
	Charge-offs		(4,553)		-		(113)		(86)		(4,957)		(9,709)
	Recoveries		271		-		287		383		1,060		2,001
Ending balance		$	63,283	$	7,123	$	4,257	$	872	$	14,072	$	89,607
Specific ALLL		$	-	$	-	$	2,292	$	-	$	727	$	3,019
General ALLL		$	63,283	$	7,123	$	1,965	$	872	$	13,345	$	86,588
Loans held-in-portfolio:
Impaired loans		$	-	$	-	$	9,094	$	-	$	3,439	$	12,533
Loans held-in-portfolio
	excluding impaired loans		4,057,484		735,620		704,636		37,508		507,597		6,042,845
Total loans held-in-portfolio		$	4,057,484	$	735,620	$	713,730	$	37,508	$	511,036	$	6,055,378

For the quarter ended September 30, 2017
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	202,508	$	8,001	$	182,272	$	993	$	8,003	$	138,237	$	540,014
	Provision (reversal of provision)		70,305		771		41,337		(418)		3,924		44,840		160,759
	Charge-offs		(10,126)		9		(18,436)		(86)		(1,733)		(36,774)		(67,146)
	Recoveries		6,282		41		708		383		238		5,634		13,286
Ending balance		$	268,969	$	8,822	$	205,881	$	872	$	10,432	$	151,937	$	646,913
Specific ALLL		$	40,863	$	-	$	51,421	$	-	$	450	$	22,457	$	115,191
General ALLL		$	228,106	$	8,822	$	154,460	$	872	$	9,982	$	129,480	$	531,722
Loans held-in-portfolio:
Impaired loans		$	328,704	$	-	$	519,228	$	-	$	1,468	$	105,387	$	954,787
Loans held-in-portfolio
	excluding impaired loans		10,898,391		823,325		6,520,218		37,508		753,413		3,710,662		22,743,517
Total loans held-in-portfolio		$	11,227,095	$	823,325	$	7,039,446	$	37,508	$	754,881	$	3,816,049	$	23,698,304

For the nine months ended September 30, 2017
Puerto Rico - Non-covered loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	189,686	$	1,353	$	143,320	$	7,662	$	125,963	$	467,984
	Provision (reversal of provision)		29,945		(2,218)		77,692		6,516		76,831		188,766
	Charge-offs		(38,219)		(3,646)		(53,936)		(5,030)		(81,607)		(182,438)
	Recoveries		24,274		6,210		2,557		1,284		15,612		49,937
Ending balance		$	205,686	$	1,699	$	169,633	$	10,432	$	136,799	$	524,249
Specific ALLL		$	40,863	$	-	$	49,129	$	450	$	21,730	$	112,172
General ALLL		$	164,823	$	1,699	$	120,504	$	9,982	$	115,069	$	412,077
Loans held-in-portfolio:
Impaired non-covered loans		$	328,704	$	-	$	510,134	$	1,468	$	101,948	$	942,254
Non-covered loans held-in-portfolio
	excluding impaired loans		6,840,907		87,705		5,305,371		753,413		3,188,422		16,175,818
Total non-covered loans held-in-portfolio		$	7,169,611	$	87,705	$	5,815,505	$	754,881	$	3,290,370	$	17,118,072

For the nine months ended September 30, 2017
Puerto Rico - Covered Loans


(In thousands)		Commercial		Construction		Mortgage		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	-	$	-	$	30,159	$	-	$	191	$	30,350
	Provision		-		-		3,253		-		1,002		4,255
	Charge-offs		-		-		(2,700)		-		(134)		(2,834)
	Recoveries		-		-		1,279		-		7		1,286
Ending balance		$	-	$	-	$	31,991	$	-	$	1,066	$	33,057
Specific ALLL		$	-	$	-	$	-	$	-	$	-	$	-
General ALLL		$	-	$	-	$	31,991	$	-	$	1,066	$	33,057
Loans held-in-portfolio:
Impaired covered loans		$	-	$	-	$	-	$	-	$	-	$	-
Covered loans held-in-portfolio
	excluding impaired loans		-		-		510,211		-		14,643		524,854
Total covered loans held-in-portfolio		$	-	$	-	$	510,211	$	-	$	14,643	$	524,854

For the nine months ended September 30, 2017
Popular U.S.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Consumer		Total
Allowance for credit losses:
Beginning balance		$	12,968	$	8,172	$	4,614	$	1,343	$	15,220	$	42,317
	Provision (reversal of provision)		53,491		(1,049)		(173)		(1,554)		10,200		60,915
	Charge-offs		(4,774)		-		(1,064)		(669)		(14,476)		(20,983)
	Recoveries		1,598		-		880		1,752		3,128		7,358
Ending balance		$	63,283	$	7,123	$	4,257	$	872	$	14,072	$	89,607
Specific ALLL		$	-	$	-	$	2,292	$	-	$	727	$	3,019
General ALLL		$	63,283	$	7,123	$	1,965	$	872	$	13,345	$	86,588
Loans held-in-portfolio:
Impaired loans		$	-	$	-	$	9,094	$	-	$	3,439	$	12,533
Loans held-in-portfolio
	excluding impaired loans		4,057,484		735,620		704,636		37,508		507,597		6,042,845
Total loans held-in-portfolio		$	4,057,484	$	735,620	$	713,730	$	37,508	$	511,036	$	6,055,378

For the nine months ended September 30, 2017
Popular, Inc.


(In thousands)		Commercial		Construction		Mortgage		Legacy		Leasing		Consumer		Total
Allowance for credit losses:
Beginning balance		$	202,654	$	9,525	$	178,093	$	1,343	$	7,662	$	141,374	$	540,651
	Provision (reversal of provision)		83,436		(3,267)		80,772		(1,554)		6,516		88,033		253,936
	Charge-offs		(42,993)		(3,646)		(57,700)		(669)		(5,030)		(96,217)		(206,255)
	Recoveries		25,872		6,210		4,716		1,752		1,284		18,747		58,581
Ending balance		$	268,969	$	8,822	$	205,881	$	872	$	10,432	$	151,937	$	646,913
Specific ALLL		$	40,863	$	-	$	51,421	$	-	$	450	$	22,457	$	115,191
General ALLL		$	228,106	$	8,822	$	154,460	$	872	$	9,982	$	129,480	$	531,722
Loans held-in-portfolio:
Impaired loans		$	328,704	$	-	$	519,228	$	-	$	1,468	$	105,387	$	954,787
Loans held-in-portfolio
	excluding impaired loans		10,898,391		823,325		6,520,218		37,508		753,413		3,710,662		22,743,517
Total loans held-in-portfolio		$	11,227,095	$	823,325	$	7,039,446	$	37,508	$	754,881	$	3,816,049	$	23,698,304

The following table provides the activity in the allowance for loan losses related to loans accounted for pursuant to ASC Subtopic 310-30.

	ASC 310-30
	For the quarters ended				For the nine months ended
(In thousands)	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Balance at beginning of period	$	156,328	$	103,597	$	119,505	$	91,308
Provision		17,854		41,683		78,317		64,336
Net charge-offs		(5,623)		(7,250)		(29,263)		(17,614)
Balance at end of period	$	168,559	$	138,030	$	168,559	$	138,030

Impaired loans

The following tables present loans individually evaluated for impairment at September 30, 2018 and December 31, 2017.

September 30, 2018
Puerto Rico
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal			Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance			allowance
Commercial multi-family	$	1,501	$	1,501	$	13	$	-	$	-	$	1,501	$	1,501	$	13
Commercial real estate non-owner occupied		85,259		86,091		27,582		48,690		61,520		133,949		147,611		27,582
Commercial real estate owner occupied		116,746		138,880		8,489		29,740		63,750		146,486		202,630		8,489
Commercial and industrial		64,437		66,344		16,166		9,634		19,878		74,071		86,222		16,166
Construction		-		-		-		1,829		1,829		1,829		1,829		-
Mortgage		444,980		506,941		43,841		63,278		84,504		508,258		591,445		43,841
Leasing		931		931		297		-		-		931		931		297
Consumer:
Credit cards		30,674		30,674		5,193		-		-		30,674		30,674		5,193
Personal		74,114		74,114		19,296		-		-		74,114		74,114		19,296
Auto		1,099		1,099		225		-		-		1,099		1,099		225
Other		1,297		1,297		192		-		-		1,297		1,297		192
Total Puerto Rico	$	821,038	$	907,872	$	121,294	$	153,171	$	231,481	$	974,209	$	1,139,353	$	121,294

September 30, 2018
Popular U.S.
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Construction	$	17,866	$	18,128	$	5,530	$	-	$	-	$	17,866	$	18,128	$	5,530
Mortgage		6,629		8,231		2,364		2,196		3,137		8,825		11,368		2,364
Consumer:
HELOCs		5,335		5,366		1,102		1,288		1,354		6,623	$	6,720	$	1,102
Personal		633		633		247		132		132		765	$	765	$	247
Total Popular U.S.	$	30,463	$	32,358	$	9,243	$	3,616	$	4,623	$	34,079	$	36,981	$	9,243

September 30, 2018
Popular, Inc.
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Commercial multi-family	$	1,501	$	1,501	$	13	$	-	$	-	$	1,501	$	1,501	$	13
Commercial real estate non-owner occupied		85,259		86,091		27,582		48,690		61,520		133,949		147,611		27,582
Commercial real estate owner occupied		116,746		138,880		8,489		29,740		63,750		146,486		202,630		8,489
Commercial and industrial		64,437		66,344		16,166		9,634		19,878		74,071		86,222		16,166
Construction		17,866		18,128		5,530		1,829		1,829		19,695		19,957		5,530
Mortgage		451,609		515,172		46,205		65,474		87,641		517,083		602,813		46,205
Leasing		931		931		297		-		-		931		931		297
Consumer:
Credit Cards		30,674		30,674		5,193		-		-		30,674		30,674		5,193
HELOCs		5,335		5,366		1,102		1,288		1,354		6,623		6,720		1,102
Personal		74,747		74,747		19,543		132		132		74,879		74,879		19,543
Auto		1,099		1,099		225		-		-		1,099		1,099		225
Other		1,297		1,297		192		-		-		1,297		1,297		192
Total Popular, Inc.	$	851,501	$	940,230	$	130,537	$	156,787	$	236,104	$	1,008,288	$	1,176,334	$	130,537

December 31, 2017
Puerto Rico
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal			Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance			allowance
Commercial multi-family	$	206	$	206	$	32	$	-	$	-	$	206	$	206	$	32
Commercial real estate non-owner occupied		101,485		102,262		23,744		11,454		27,522		112,939		129,784		23,744
Commercial real estate owner occupied		127,634		153,495		10,221		24,634		57,219		152,268		210,714		10,221
Commercial and industrial		43,493		46,918		2,985		14,549		23,977		58,042		70,895		2,985
Mortgage		450,226		504,006		46,354		58,807		75,228		509,033		579,234		46,354
Leasing		1,456		1,456		475		-		-		1,456		1,456		475
Consumer:
Credit cards		33,676		33,676		5,569		-		-		33,676		33,676		5,569
Personal		62,488		62,488		15,690		-		-		62,488		62,488		15,690
Auto		2,007		2,007		425		-		-		2,007		2,007		425
Other		1,009		1,009		165		-		-		1,009		1,009		165
Total Puerto Rico	$	823,680	$	907,523	$	105,660	$	109,444	$	183,946	$	933,124	$	1,091,469	$	105,660

December 31, 2017
Popular U.S.
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Mortgage	$	6,774	$	8,439	$	2,478	$	2,468	$	3,397	$	9,242	$	11,836	$	2,478
Consumer:
HELOCs		3,530		3,542		722		761		780		4,291		4,322		722
Personal		542		542		231		224		224		766		766		231
Total Popular U.S.	$	10,846	$	12,523	$	3,431	$	3,453	$	4,401	$	14,299	$	16,924	$	3,431

December 31, 2017
Popular, Inc.
	Impaired Loans – With an						Impaired Loans
	Allowance						With No Allowance				Impaired Loans - Total
			Unpaid						Unpaid				Unpaid
	Recorded		principal		Related		Recorded		principal		Recorded		principal		Related
(In thousands)	investment		balance		allowance		investment		balance		investment		balance		allowance
Commercial multi-family	$	206	$	206	$	32	$	-	$	-	$	206	$	206	$	32
Commercial real estate non-owner occupied		101,485		102,262		23,744		11,454		27,522		112,939		129,784		23,744
Commercial real estate owner occupied		127,634		153,495		10,221		24,634		57,219		152,268		210,714		10,221
Commercial and industrial		43,493		46,918		2,985		14,549		23,977		58,042		70,895		2,985
Mortgage		457,000		512,445		48,832		61,275		78,625		518,275		591,070		48,832
Leasing		1,456		1,456		475		-		-		1,456		1,456		475
Consumer:
Credit Cards		33,676		33,676		5,569		-		-		33,676		33,676		5,569
HELOCs		3,530		3,542		722		761		780		4,291		4,322		722
Personal		63,030		63,030		15,921		224		224		63,254		63,254		15,921
Auto		2,007		2,007		425		-		-		2,007		2,007		425
Other		1,009		1,009		165		-		-		1,009		1,009		165
Total Popular, Inc.	$	834,526	$	920,046	$	109,091	$	112,897	$	188,347	$	947,423	$	1,108,393	$	109,091

The following tables present the average recorded investment and interest income recognized on impaired loans for the quarters and nine months ended September 30, 2018 and 2017.

For the quarter ended September 30, 2018
	Puerto Rico				Popular U.S.				Popular, Inc.
	Average		Interest		Average		Interest		Average		Interest
	recorded		income		recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized		investment		recognized
Commercial multi-family	$	1,100	$	9	$	-	$	-	$	1,100	$	9
Commercial real estate non-owner occupied		132,927		1,371		-		-		132,927		1,371
Commercial real estate owner occupied		148,931		1,636		-		-		148,931		1,636
Commercial and industrial		74,770		1,053		-		-		74,770		1,053
Construction		2,194		-		17,884		-		20,078		-
Mortgage		507,919		3,561		9,277		43		517,196		3,604
Leasing		1,031		-		-		-		1,031		-
Consumer:
Credit cards		31,998		-		-		-		31,998		-
HELOCs		-		-		6,208		-		6,208		-
Personal		72,353		65		768		-		73,121		65
Auto		1,067		-		-		-		1,067		-
Other		1,136		-		-		-		1,136		-
Total Popular, Inc.	$	975,426	$	7,695	$	34,137	$	43	$	1,009,563	$	7,738

For the quarter ended September 30, 2017
	Puerto Rico				Popular U.S.				Popular, Inc.
	Average		Interest		Average		Interest		Average		Interest
	recorded		income		recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized		investment		recognized
Commercial multi-family	$	141	$	1	$	-	$	-	$	141	$	1
Commercial real estate non-owner occupied		117,650		1,272		-		-		117,650		1,272
Commercial real estate owner occupied		151,580		1,413		-		-		151,580		1,413
Commercial and industrial		61,950		531		-		-		61,950		531
Mortgage		507,689		3,211		8,995		60		516,684		3,271
Leasing		1,568		-		-		-		1,568		-
Consumer:
Credit cards		35,727		-		-		-		35,727		-
HELOCs		-		-		2,572		-		2,572		-
Personal		64,091		-		763		-		64,854		-
Auto		2,065		-		-		-		2,065		-
Other		991		-		-		-		991		-
Total Popular, Inc.	$	943,452	$	6,428	$	12,330	$	60	$	955,782	$	6,488

For the nine months ended September 30, 2018
	Puerto Rico				Popular U.S.				Popular, Inc.
	Average		Interest		Average		Interest		Average		Interest
	recorded		income		recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized		investment		recognized
Commercial multi-family	$	634	$	28	$	-	$	-	$	634	$	28
Commercial real estate non-owner occupied		128,143		4,278		-		-		128,143		4,278
Commercial real estate owner occupied		151,192		4,786		-		-		151,192		4,786
Commercial and industrial		67,775		2,793		-		-		67,775		2,793
Construction		2,170		25		8,942		-		11,112		25
Mortgage		508,930		13,790		9,217		130		518,147		13,920
Leasing		1,220		-		-		-		1,220		-
Consumer:
Credit cards		32,734		-		-		-		32,734		-
HELOCs		-		-		5,446		-		5,446		-
Personal		67,049		320		769		-		67,818		320
Auto		1,476		-		-		-		1,476		-
Other		1,246		-		-		-		1,246		-
Total Popular, Inc.	$	962,569	$	26,020	$	24,374	$	130	$	986,943	$	26,150

For the nine months ended September 30, 2017
	Puerto Rico				Popular U.S.				Popular, Inc.
	Average		Interest		Average		Interest		Average		Interest
	recorded		income		recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized		investment		recognized
Commercial multi-family	$	111	$	4	$	-	$	-	$	111	$	4
Commercial real estate non-owner occupied		118,243		3,997		-		-		118,243		3,997
Commercial real estate owner occupied		158,046		4,640		-		-		158,046		4,640
Commercial and industrial		61,072		1,682		-		-		61,072		1,682
Mortgage		503,628		11,394		8,947		156		512,575		11,550
Leasing		1,689		-		-		-		1,689		-
Consumer:
Credit cards		36,718		-		-		-		36,718		-
HELOCs		-		-		2,632		-		2,632		-
Personal		64,962		-		440		-		65,402		-
Auto		2,079		-		-		-		2,079		-
Other		891		-		-		-		891		-
Total Popular, Inc.	$	947,439	$	21,717	$	12,019	$	156	$	959,458	$	21,873

Modifications

A modification of a loan constitutes a troubled debt restructuring when a borrower is experiencing financial difficulty and the modification constitutes a concession. For a summary of the accounting policy related to troubled debt restructurings (“TDRs’), refer to the Summary of Significant Accounting Policies included in Note 3 to the 2017 Form 10-K.

TDRs amounted to $1.4 billion at September 30, 2018 (December 31, 2017 - $1.3 billion). The amount of outstanding commitments to lend additional funds to debtors owing receivables whose terms have been modified in TDRs amounted to $17 million related to the commercial loan portfolio at September 30, 2018 (December 31, 2017 - $8 million).

At September 30, 2018, the mortgage loan TDRs include $503 million guaranteed by U.S. sponsored entities at BPPR, compared to $449 million at December 31, 2017.

The following table presents the non-covered and covered loans classified as TDRs according to their accruing status and the related allowance at September 30, 2018 and December 31, 2017.

	Popular, Inc.
	September 30, 2018								December 31, 2017
(In thousands)		Accruing		Non-Accruing		Total		Related Allowance		Accruing		Non-Accruing		Total		Related Allowance
Non-covered loans held-in-portfolio:
Commercial	$	200,196	$	119,250	$	319,446	$	46,694	$	161,220	$	59,626	$	220,846	$	32,472
Construction		-		1,829		1,829		5,530		-		-		-		-
Mortgage		863,654		133,708		997,362		46,205		803,278		126,798		930,076		48,832
Leases		772		220		992		297		863		393		1,256		475
Consumer		96,279		15,104		111,383		25,354		93,916		12,233		106,149		22,802
Non-covered loans held-in-portfolio		1,160,901	$	270,111	$	1,431,012	$	124,080	$	1,059,277	$	199,050	$	1,258,327	$	104,581
Covered loans held-in-portfolio:
Mortgage	$	-	$	-	$	-	$	-	$	2,658	$	3,227	$	5,885	$	-
Covered loans held-in-portfolio	$	-	$	-	$	-	$	-	$	2,658	$	3,227	$	5,885	$	-

The following tables present the loan count by type of modification for those loans modified in a TDR during the quarters and nine months ended September 30, 2018 and 2017. Loans modified as TDRs for the U.S. operations are considered insignificant to the Corporation.

	Popular, Inc.
	For the quarter ended September 30, 2018				For the nine months ended September 30, 2018
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial multi-family	-	1	-	-	-	2	-	-
Commercial real estate non-owner occupied	1	3	-	-	3	14	-	-
Commercial real estate owner occupied	1	12	-	-	4	54	-	-
Commercial and industrial	2	25	-	-	6	75	-	-
Construction	-	-	-	-	1	-	-	-
Mortgage	28	7	70	11	73	17	173	56
Leasing	-	-	3	-	-	-	4	-
Consumer:
Credit cards	115	-	-	72	426	-	3	382
HELOCs	-	8	1	1	-	20	8	1
Personal	511	1	-	-	1,139	4	-	-
Auto	-	4	1	-	-	6	2	-
Other	1	-	1	-	21	-	2	-
Total	659	61	76	84	1,673	192	192	439

	Popular, Inc.
	For the quarter ended September 30, 2017				For the nine months ended September 30, 2017
	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other	Reduction in interest rate	Extension of maturity date	Combination of reduction in interest rate and extension of maturity date	Other
Commercial real estate non-owner occupied	-	-	-	-	4	1	-	-
Commercial real estate owner occupied	-	3	-	-	3	12	-	-
Commercial and industrial	1	15	-	-	3	36	-	-
Mortgage	13	14	83	16	45	35	301	116
Leasing	-	-	1	-	-	1	6	-
Consumer:
Credit cards	140	-	4	114	425	-	5	424
HELOCs	-	-	2	-	-	1	3	-
Personal	187	2	1	2	699	6	1	3
Auto	-	1	2	-	-	5	4	1
Other	11	-	-	-	27	1	-	1
Total	352	35	93	132	1,206	98	320	545

The following tables present by class, quantitative information related to loans modified as TDRs during the quarters and nine months ended September 30, 2018 and 2017.

Popular, Inc.
For the quarter ended September 30, 2018
(Dollars in thousands)	Loan count	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Increase (decrease) in the allowance for loan losses as a result of modification
Commercial multi-family	1	$	810	$	808	$	63
Commercial real estate non-owner occupied	4		1,523		1,521		100
Commercial real estate owner occupied	13		7,578		7,525		160
Commercial and industrial	27		2,411		2,388		139
Mortgage	116		15,143		13,507		640
Leasing	3		75		73		23
Consumer:
Credit cards	187		1,693		1,838		234
HELOCs	10		913		906		66
Personal	512		8,026		8,025		2,660
Auto	5		63		63		11
Other	2		392		392		67
Total	880	$	38,627	$	37,046	$	4,163

Popular, Inc.
For the quarter ended September 30, 2017
(Dollars in thousands)	Loan count	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Increase (decrease) in the allowance for loan losses as a result of modification
Commercial real estate owner occupied	3	$	272	$	269	$	29
Commercial and industrial	16		1,022		1,044		111
Mortgage	126		17,692		16,633		1,103
Leasing	1		27		27		8
Consumer:
Credit cards	258		2,881		3,114		375
HELOCs	2		203		203		23
Personal	192		2,945		2,944		673
Auto	3		42		42		8
Other	11		46		46		6
Total	612	$	25,130	$	24,322	$	2,336

Popular, Inc.
For the nine months ended September 30, 2018
(Dollars in thousands)	Loan count	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Increase (decrease) in the allowance for loan losses as a result of modification
Commercial multi-family	2	$	1,377	$	1,375	$	106
Commercial real estate non-owner occupied	17		28,969		28,908		6,854
Commercial real estate owner occupied	58		27,648		26,433		1,143
Commercial and industrial	81		49,633		48,882		13,963
Construction	1		4,210		4,293		474
Mortgage	319		40,741		36,442		1,874
Leasing	4		98		96		30
Consumer:
Credit cards	811		8,097		8,642		1,086
HELOCs	29		2,638		2,579		440
Personal	1,143		18,351		18,346		5,390
Auto	8		139		122		21
Other	23		595		593		98
Total	2,496	$	182,496	$	176,711	$	31,479

Popular, Inc.
For the nine months ended September 30, 2017
(Dollars in thousands)	Loan count	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Increase (decrease) in the allowance for loan losses as a result of modification
Commercial real estate non-owner occupied	5	$	2,069	$	1,901	$	145
Commercial real estate owner occupied	15		2,975		2,951		172
Commercial and industrial	39		1,850		3,967		579
Mortgage	497		58,777		54,965		3,343
Leasing	7		263		262		74
Consumer:
Credit cards	854		7,785		8,514		1,019
HELOCs	4		689		686		36
Personal	709		11,979		11,982		2,704
Auto	10		2,043		1,999		362
Other	29		2,002		2,002		70
Total	2,169	$	90,432	$	89,229	$	8,504

The following tables present by class, TDRs that were subject to payment default and that had been modified as a TDR during the twelve months preceding the default date. Payment default is defined as a restructured loan becoming 90 days past due after being modified, foreclosed or charged-off, whichever occurs first. The recorded investment at September 30, 2018 is inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Popular, Inc.
	Defaulted during the quarter ended September 30, 2018			Defaulted during the nine months ended September 30, 2018
(Dollars in thousands)	Loan count		Recorded investment as of first default date	Loan count		Recorded investment as of first default date
Commercial real estate non-owner occupied	-	$	-	1	$	17
Commercial real estate owner occupied	1		255	4		392
Commercial and industrial	1		5	7		81
Mortgage	42		5,280	74		9,520
Consumer:
Credit cards	86		707	150		2,301
HELOCs	1		144	1		144
Personal	27		362	67		1,656
Auto	-		-	3		79
Other	1		3	2		10
Total	159	$	6,756	309	$	14,200

Popular, Inc.
	Defaulted during the quarter ended September 30, 2017			Defaulted during the nine months ended September 30, 2017
(Dollars in thousands)	Loan count		Recorded investment as of first default date	Loan count		Recorded investment as of first default date
Commercial real estate non-owner occupied	-	$	-	2	$	457
Commercial real estate owner occupied	-		-	3		1,749
Commercial and industrial	1		36	4		601
Mortgage	48		4,216	110		10,112
Consumer:
Credit cards	135		1,212	274		2,661
HELOCs	-		-	1		97
Personal	67		1,222	138		3,230
Auto	1		19	5		99
Other	-		-	1		9
Total	252	$	6,705	538	$	19,015

Commercial, consumer and mortgage loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Corporation evaluates the loan for possible further impairment. The allowance for loan losses may be increased or partial charge-offs may be taken to further write-down the carrying value of the loan.

Credit Quality

The following table presents the outstanding balance, net of unearned income, of loans held-in-portfolio based on the Corporation’s assignment of obligor risk ratings as defined at September 30, 2018 and December 31, 2017. For the definitions of the obligor risk ratings, refer to the Credit Quality section of note 10 to the Consolidated Financial Statements included in the Corporation’s Form 10K for the year ended December 31, 2017.

September 30, 2018
				Special										Pass/
(In thousands)		Watch		Mention		Substandard		Doubtful		Loss		Sub-total		Unrated		Total
Puerto Rico
Commercial multi-family		$	2,137	$	4,605	$	4,223	$	-	$	-	$	10,965	$	137,263	$	148,228
Commercial real estate non-owner occupied			494,377		237,756		413,077		-		-		1,145,210		1,212,121		2,357,331
Commercial real estate owner occupied			323,248		129,932		381,435		2,192		-		836,807		898,698		1,735,505
Commercial and industrial			787,901		145,193		178,806		198		157		1,112,255		2,054,157		3,166,412
	Total Commercial		1,607,663		517,486		977,541		2,390		157		3,105,237		4,302,239		7,407,476
Construction			-		889		1,829		-		-		2,718		75,075		77,793
Mortgage			3,475		1,994		169,236		-		-		174,705		6,356,571		6,531,276
Leasing			-		-		2,928		-		81		3,009		900,531		903,540
Consumer:
	Credit cards		-		-		16,768		-		-		16,768		1,021,065		1,037,833
	HELOCs		-		-		108		-		-		108		5,373		5,481
	Personal		636		160		19,854		-		-		20,650		1,222,746		1,243,396
	Auto		-		-		22,003		-		162		22,165		2,446,445		2,468,610
	Other		102		-		15,222		-		158		15,482		132,466		147,948
	Total Consumer		738		160		73,955		-		320		75,173		4,828,095		4,903,268
Total Puerto Rico		$	1,611,876	$	520,529	$	1,225,489	$	2,390	$	558	$	3,360,842	$	16,462,511	$	19,823,353
Popular U.S.
Commercial multi-family		$	52,062	$	8,010	$	6,048	$	-	$	-	$	66,120	$	1,262,452	$	1,328,572
Commercial real estate non-owner occupied			79,381		9,027		36,692		-		-		125,100		1,774,293		1,899,393
Commercial real estate owner occupied			46,366		7,624		8,955		-		-		62,945		225,460		288,405
Commercial and industrial			5,437		117		89,879		-		-		95,433		974,428		1,069,861
	Total Commercial		183,246		24,778		141,574		-		-		349,598		4,236,633		4,586,231
Construction			69,547		15,698		64,493		-		-		149,738		715,834		865,572
Mortgage			-		-		12,306		-		-		12,306		760,588		772,894
Legacy			565		228		2,495		-		-		3,288		24,278		27,566
Consumer:
	Credit cards		-		-		4		-		-		4		59		63
	HELOCs		-		-		2,049		-		11,889		13,938		131,607		145,545
	Personal		-		-		1,864		-		888		2,752		287,909		290,661
	Other		-		-		-		-		-		-		283		283
	Total Consumer		-		-		3,917		-		12,777		16,694		419,858		436,552
Total Popular U.S.		$	253,358	$	40,704	$	224,785	$	-	$	12,777	$	531,624	$	6,157,191	$	6,688,815
Popular, Inc.
Commercial multi-family		$	54,199	$	12,615	$	10,271	$	-	$	-	$	77,085	$	1,399,715	$	1,476,800
Commercial real estate non-owner occupied			573,758		246,783		449,769		-		-		1,270,310		2,986,414		4,256,724
Commercial real estate owner occupied			369,614		137,556		390,390		2,192		-		899,752		1,124,158		2,023,910
Commercial and industrial			793,338		145,310		268,685		198		157		1,207,688		3,028,585		4,236,273
	Total Commercial		1,790,909		542,264		1,119,115		2,390		157		3,454,835		8,538,872		11,993,707
Construction			69,547		16,587		66,322		-		-		152,456		790,909		943,365
Mortgage			3,475		1,994		181,542		-		-		187,011		7,117,159		7,304,170
Legacy			565		228		2,495		-		-		3,288		24,278		27,566
Leasing			-		-		2,928		-		81		3,009		900,531		903,540
Consumer:
	Credit cards		-		-		16,772		-		-		16,772		1,021,124		1,037,896
	HELOCs		-		-		2,157		-		11,889		14,046		136,980		151,026
	Personal		636		160		21,718		-		888		23,402		1,510,655		1,534,057
	Auto		-		-		22,003		-		162		22,165		2,446,445		2,468,610
	Other		102		-		15,222		-		158		15,482		132,749		148,231
	Total Consumer		738		160		77,872		-		13,097		91,867		5,247,953		5,339,820
Total Popular, Inc.		$	1,865,234	$	561,233	$	1,450,274	$	2,390	$	13,335	$	3,892,466	$	22,619,702	$	26,512,168

The following table presents the weighted average obligor risk rating at September 30, 2018 for those classifications that consider a range of rating scales.

Weighted average obligor risk rating					(Scales 11 and 12)								(Scales 1 through 8)
Puerto Rico:						Substandard									Pass
Commercial multi-family							11.18								5.73
Commercial real estate non-owner occupied							11.07								6.91
Commercial real estate owner occupied							11.23								7.16
Commercial and industrial							11.27								7.05
	Total Commercial						11.17								7.01
Construction							12.00								7.55

Popular U.S. :						Substandard									Pass
Commercial multi-family							11.00								7.35
Commercial real estate non-owner occupied							11.01								6.77
Commercial real estate owner occupied							11.04								7.50
Commercial and industrial							11.97								6.49
	Total Commercial						11.62								6.91
Construction							11.28								7.77
Legacy							11.16								7.94

December 31, 2017
				Special										Pass/
(In thousands)		Watch		Mention		Substandard		Doubtful		Loss		Sub-total		Unrated		Total
Puerto Rico^[1]
Commercial multi-family		$	1,387	$	1,708	$	6,831	$	-	$	-	$	9,926	$	136,473	$	146,399
Commercial real estate non-owner occupied			327,811		335,011		307,579		-		-		970,401		1,434,158		2,404,559
Commercial real estate owner occupied			243,966		215,652		354,990		2,124		-		816,732		1,006,882		1,823,614
Commercial and industrial			453,546		108,554		241,695		471		126		804,392		2,086,935		2,891,327
	Total Commercial		1,026,710		660,925		911,095		2,595		126		2,601,451		4,664,448		7,265,899
Construction			110		4,122		1,545		-		-		5,777		89,592		95,369
Mortgage			2,748		3,564		155,074		-		-		161,386		6,415,393		6,576,779
Leasing			-		-		1,926		-		1,048		2,974		807,016		809,990
Consumer:
	Credit cards		-		-		18,227		-		-		18,227		1,074,994		1,093,221
	HELOCs		-		-		257		-		-		257		5,830		6,087
	Personal		429		659		20,790		-		-		21,878		1,200,434		1,222,312
	Auto		-		-		5,446		-		20		5,466		845,347		850,813
	Other		-		-		16,324		-		440		16,764		140,824		157,588
	Total Consumer		429		659		61,044		-		460		62,592		3,267,429		3,330,021
Total Puerto Rico		$	1,029,997	$	669,270	$	1,130,684	$	2,595	$	1,634	$	2,834,180	$	15,243,878	$	18,078,058
Popular U.S.
Commercial multi-family		$	11,808	$	6,345	$	7,936	$	-	$	-	$	26,089	$	1,184,604	$	1,210,693
Commercial real estate non-owner occupied			46,523		16,561		37,178		-		-		100,262		1,588,049		1,688,311
Commercial real estate owner occupied			28,183		30,893		8,590		-		-		67,666		251,309		318,975
Commercial and industrial			4,019		603		123,935		-		-		128,557		876,426		1,004,983
	Total Commercial		90,533		54,402		177,639		-		-		322,574		3,900,388		4,222,962
Construction			36,858		8,294		54,276		-		-		99,428		685,232		784,660
Mortgage			-		-		14,852		-		-		14,852		678,776		693,628
Legacy			688		426		3,302		-		-		4,416		28,564		32,980
Consumer:
	Credit cards		-		-		11		-		-		11		89		100
	HELOCs		-		-		6,084		-		8,914		14,998		167,087		182,085
	Personal		-		-		2,069		-		704		2,773		295,229		298,002
	Other		-		-		-		-		-		-		319		319
	Total Consumer		-		-		8,164		-		9,618		17,782		462,724		480,506
Total Popular U.S.		$	128,079	$	63,122	$	258,233	$	-	$	9,618	$	459,052	$	5,755,684	$	6,214,736
Popular, Inc.
Commercial multi-family		$	13,195	$	8,053	$	14,767	$	-	$	-	$	36,015	$	1,321,077	$	1,357,092
Commercial real estate non-owner occupied			374,334		351,572		344,757		-		-		1,070,663		3,022,207		4,092,870
Commercial real estate owner occupied			272,149		246,545		363,580		2,124		-		884,398		1,258,191		2,142,589
Commercial and industrial			457,565		109,157		365,630		471		126		932,949		2,963,361		3,896,310
	Total Commercial		1,117,243		715,327		1,088,734		2,595		126		2,924,025		8,564,836		11,488,861
Construction			36,968		12,416		55,821		-		-		105,205		774,824		880,029
Mortgage			2,748		3,564		169,926		-		-		176,238		7,094,169		7,270,407
Legacy			688		426		3,302		-		-		4,416		28,564		32,980
Leasing			-		-		1,926		-		1,048		2,974		807,016		809,990
Consumer:
	Credit cards		-		-		18,238		-		-		18,238		1,075,083		1,093,321
	HELOCs		-		-		6,341		-		8,914		15,255		172,917		188,172
	Personal		429		659		22,859		-		704		24,651		1,495,663		1,520,314
	Auto		-		-		5,446		-		20		5,466		845,347		850,813
	Other		-		-		16,324		-		440		16,764		141,143		157,907
	Total Consumer		429		659		69,208		-		10,078		80,374		3,730,153		3,810,527
Total Popular, Inc.		$	1,158,076	$	732,392	$	1,388,917	$	2,595	$	11,252	$	3,293,232	$	20,999,562	$	24,292,794

The following table presents the weighted average obligor risk rating at December 31, 2017 for those classifications that consider a range of rating scales.

Weighted average obligor risk rating					(Scales 11 and 12)								(Scales 1 through 8)
Puerto Rico:^[1]						Substandard									Pass
Commercial multi-family							11.16								5.89
Commercial real estate non-owner occupied							11.06								6.99
Commercial real estate owner occupied							11.28								7.14
Commercial and industrial							11.16								7.11
	Total Commercial						11.17								7.06
Construction							11.00								7.76

Popular U.S.:						Substandard									Pass
Commercial multi-family							11.00								7.28
Commercial real estate non-owner occupied							11.04								6.74
Commercial real estate owner occupied							11.10								7.14
Commercial and industrial							11.82								6.17
	Total Commercial						11.59								6.80
Construction							11.00								7.70
Legacy							11.11								7.93

[1]

Excludes covered loans acquired in the Westernbank FDIC-assisted transaction.

The increase in the Watch category for Puerto Rico commercial loans of $581 million, from December 31, 2017, is impacted by the $341 million auto-related commercial loan portfolio acquired as part of the Reliable Transaction. These loans were placed in Watch status until the Corporation completes its internal review process.