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Loans

12 Months Ended

Dec. 31, 2021

Note 8 – Loans

For a summary of the accounting policies related to loans, interest recognition and allowance for credit losses refer to Note 2 - Summary of Significant Accounting Policies of this Form 10-K.

During the year ended December 31, 2021, the Corporation recorded purchases (including repurchases) of mortgage loans amounting to $393 million including $14 million in Purchased Credit Deteriorated (“PCD”) loans, consumer loans of $61 million and commercial loans of $139 million; compared to purchases (including repurchases) of mortgage loans of $1.3 billion including $160 million in PCD loans, consumer loans of $56 million and commercial loans of $26 million, during the year ended December 31, 2020. During 2020, these mortgage loan repurchases included a bulk repurchase transaction of $688 million in GNMA loans, of which $684 million were 90 days past due at that time, including $324 million which were already included in the Corporation’s ending portfolio balance at June 30, 2020, since due to the delinquency status of the loans the Corporation had the right but not the obligation to repurchase the assets and is required to recognize (rebook) these loans in accordance with U.S. GAAP. The bulk repurchase also included $120 million in loans from the FNMA and FHMLC servicing portfolio, subject to credit recourse which were considered PCD loans.

The Corporation performed whole-loan sales involving approximately $145 million of residential mortgage loans and $131 million of commercial and construction loans during the year ended December 31, 2021 (December 31, 2020 - $150 million of residential mortgage loans and $32 million of commercial loans). Also, during the year ended December 31, 2021, the Corporation securitized approximately $380 million of mortgage loans into Government National Mortgage Association (“GNMA”) mortgage-backed securities $330 million of mortgage loans into Federal National Mortgage Association (“FNMA”) mortgage-backed securities, compared to $332 million and $176 million, respectively, during the year ended December 31, 2020. Also, the Corporation securitized approximately $23 million of mortgage loans into Federal Home Loan Mortgage Corporation (“FHLMC”) mortgage-backed securities during the year ended December 31, 2021.

As previously disclosed in Note 4, on October 15, 2021 Popular Equipment Finance LLC acquired $105 million in commercial finance leases and $14 million in working capital lines as a result of the acquisition of certain assets and the assumption of certain liabilities from the K2 Capital Group LLC. The portfolio of leases and loans from the acquired business is included in the information presented in this note.

Delinquency status

The following tables present the amortized cost basis 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 December 31, 2021 and 2020.

December 31, 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		$	314	$	-	$	272	$	586	$	154,183	$	154,769	$	272	$	-
Commercial real estate:
	Non-owner occupied		2,399		136		20,716		23,251		2,266,672		2,289,923		20,716		-
	Owner occupied		3,329		278		54,335		57,942		1,365,787		1,423,729		54,335		-
Commercial and industrial			3,438		1,727		45,242		50,407		3,478,041		3,528,448		44,724		518
Construction			-		-		485		485		86,626		87,111		485		-
Mortgage			217,830		81,754		805,245		1,104,829		5,147,037		6,251,866		333,887		471,358
Leasing			9,240		2,037		3,102		14,379		1,366,940		1,381,319		3,102		-
Consumer:
	Credit cards		5,768		3,520		8,577		17,865		901,986		919,851		-		8,577
	Home equity lines of credit		46		-		23		69		3,502		3,571		-		23
	Personal		10,027		6,072		21,235		37,334		1,250,726		1,288,060		21,235		-
	Auto		59,128		15,019		23,085		97,232		3,314,955		3,412,187		23,085		-
	Other		432		714		12,621		13,767		110,781		124,548		12,448		173
Total		$	311,951	$	111,257	$	994,938	$	1,418,146	$	19,447,236	$	20,865,382	$	514,289	$	480,649

December 31, 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		$	3,826	$	-	$	-	$	3,826	$	1,804,035	$	1,807,861	$	-	$	-
Commercial real estate:
	Non-owner occupied		5,721		683		622		7,026		2,316,441		2,323,467		622		-
	Owner occupied		1,095		-		1,013		2,108		392,265		394,373		1,013		-
Commercial and industrial			9,410		2,680		4,015		16,105		1,794,026		1,810,131		3,897		118
Construction			-		-		-		-		629,109		629,109		-		-
Mortgage			11,711		2,573		21,969		36,253		1,139,077		1,175,330		21,969		-
Consumer:
	Credit cards		-		-		-		-		10		10		-		-
	Home equity lines of credit		71		34		5,406		5,511		69,780		75,291		5,406		-
	Personal		863		574		681		2,118		152,827		154,945		681		-
	Other		-		-		-		-		4,658		4,658		-		-
Total		$	32,697	$	6,544	$	33,706	$	72,947	$	8,302,228	$	8,375,175	$	33,588	$	118

December 31, 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		$	4,140	$	-	$	272	$	4,412	$	1,958,218	$	1,962,630	$	272	$	-
Commercial real estate:
	Non-owner occupied		8,120		819		21,338		30,277		4,583,113		4,613,390		21,338		-
	Owner occupied		4,424		278		55,348		60,050		1,758,052		1,818,102		55,348		-
Commercial and industrial			12,848		4,407		49,257		66,512		5,272,067		5,338,579		48,621		636
Construction			-		-		485		485		715,735		716,220		485		-
Mortgage^[1]			229,541		84,327		827,214		1,141,082		6,286,114		7,427,196		355,856		471,358
Leasing			9,240		2,037		3,102		14,379		1,366,940		1,381,319		3,102		-
Consumer:
	Credit cards		5,768		3,520		8,577		17,865		901,996		919,861		-		8,577
	Home equity lines of credit		117		34		5,429		5,580		73,282		78,862		5,406		23
	Personal		10,890		6,646		21,916		39,452		1,403,553		1,443,005		21,916		-
	Auto		59,128		15,019		23,085		97,232		3,314,955		3,412,187		23,085		-
	Other		432		714		12,621		13,767		115,439		129,206		12,448		173
Total		$	344,648	$	117,801	$	1,028,644	$	1,491,093	$	27,749,464	$	29,240,557	$	547,877	$	480,767

[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 $13 million at December 31, 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. These balances include $304 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2021. Furthermore, the Corporation has approximately $50 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 $266 million in unearned income and exclude $59 million in loans held-for-sale.
[3]	Includes $6.6 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $3.2 billion were pledged at the Federal Home Loan Bank ("FHLB") as collateral for borrowings and $1.7 billion at the Federal Reserve Bank ("FRB") for discount window borrowings and $1.7 billion serve as collateral for public funds.

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		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^[1]			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]	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		past due	Current		Loans HIP^{[2] [3]}		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. 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 held-in-portfolio are net of $203 million in unearned income and exclude $99 million in loans held-for-sale.
[3]	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 December 31, 2021, mortgage loans held-in-portfolio include $1.9 billion (December 31, 2020 - $2.1 billion) of loans insured by the FHA, or guaranteed VA of which $0.5 billion (December 31, 2020 - $1.0 billion) are 90 days or more past due. These balances include $716 million in loans modified under a TDR (December 31, 2020 - $655 million), that are presented as accruing loans. The portfolio of guaranteed loans includes $304 million of residential mortgage loans in Puerto Rico that are no longer accruing interest as of December 31, 2021 (December 31, 2020 - $329 million). The Corporation has approximately $50 million in reverse mortgage loans in Puerto Rico which are guaranteed by FHA, but which are currently not accruing interest at December 31, 2021 (December 31, 2020 - $60 million).

Loans with a delinquency status of 90 days past due as of December 31, 2021 include $13 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 components of the net financing leases, including finance leases within the C&I category, receivable at December 31, 2021 and 2020 were as follows:

(In thousands)			2021		2020
Total minimum lease payments		$	1,190,545	$	957,367
Estimated residual value of leased property			518,670		419,024
Deferred origination costs, net of fees			21,474		18,141
	Less - Unearned financing income		257,738		196,788
Net minimum lease payments			1,472,951		1,197,744
	Less - Allowance for credit losses		18,581		16,863
Net minimum lease payments, net of allowance for credit losses		$	1,454,370	$	1,180,881

At December 31, 2021, future minimum lease payments are expected to be received as follows:

(In thousands)
2022	$	106,927
2023		123,654
2024		181,405
2025		216,577
2026		369,592
2027 and thereafter		192,390
Total	$	1,190,545

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

December 31, 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	$	-	$	272	$	-	$	-	$	-	$	272
Commercial real estate non-owner occupied		15,819		4,897		-		622		15,819		5,519
Commercial real estate owner occupied		13,491		40,844		-		1,013		13,491		41,857
Commercial and industrial		30,177		14,547		-		3,897		30,177		18,444
Construction		-		485		-		-		-		485
Mortgage		169,827		164,060		29		21,940		169,856		186,000
Leasing		276		2,826		-		-		276		2,826
Consumer:
HELOCs		-		-		-		5,406		-		5,406
Personal		6,279		14,956		81		600		6,360		15,556
Auto		879		22,206		-		-		879		22,206
Other		-		12,448		-		-		-		12,448
Total	$	236,748	$	277,541	$	110	$	33,478	$	236,858	$	311,019

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 December 31, 2021 include $237 million in collateral dependent loans (December 31, 2020 - $203 million). The Corporation recognized $3 million in interest income on non-accrual loans during the year ended December 31, 2021 (December 31, 2020 - $4 million).

The Corporation has designated loans classified as collateral dependent for which the ACL is measured based on the fair value of the collateral less cost to sell, when foreclosure is probable or 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, for which the ACL was measured based on the fair value of the collateral less cost to sell, by class of loans and type of collateral as of December 31, 2021 and 2020:

		December 31, 2021
(In thousands)			Real Estate		Auto		Equipment		Accounts Receivables		Other		Total
Puerto Rico
Commercial multi-family		$	1,374	$	-	$	-	$	-	$	-	$	1,374
Commercial real estate:
	Non-owner occupied		211,026		-		-		-		-		211,026
	Owner occupied		47,268		-		-		-		-		47,268
Commercial and industrial			2,650		-		680		10,675		27,893		41,898
Mortgage			179,774		-		-		-		-		179,774
Leasing			-		574		-		-		-		574
Consumer:
	Personal		6,165		-		-		-		-		6,165
	Auto		-		8,983		-		-		-		8,983
Total Puerto Rico		$	448,257	$	9,557	$	680	$	10,675	$	27,893	$	497,062
Popular U.S.
Mortgage			926		-		-		-		-		926
Total Popular U.S.		$	926	$	-	$	-	$	-	$	-	$	926
Popular, Inc.
Commercial multi-family		$	1,374	$	-	$	-	$	-	$	-	$	1,374
Commercial real estate:
	Non-owner occupied		211,026		-		-		-		-		211,026
	Owner occupied		47,268		-		-		-		-		47,268
Commercial and industrial			2,650		-		680		10,675		27,893		41,898
Mortgage			180,700		-		-		-		-		180,700
Leasing			-		574		-		-		-		574
Consumer:
	Personal		6,165		-		-		-		-		6,165
	Auto		-		8,983		-		-		-		8,983
Total Popular, Inc.		$	449,183	$	9,557	$	680	$	10,675	$	27,893	$	497,988

		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 year 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)		December 31, 2021		December 31, 2020
Purchase price of loans at acquisition	$	10,995	$	152,667
Allowance for credit losses at acquisition		3,142		7,512
Non-credit discount / (premium) at acquisition		446		(6,542)
Par value of acquired loans at acquisition	$	14,583	$	153,637