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Fair value of financial instruments | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures |
Fair Value of Financial Instruments | Note 25 – Fair value of financial instruments The fair value of financial instruments is the amount at which an asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. For those financial instruments with no quoted market prices available, fair values have been estimated using present value calculations or other valuation techniques, as well as management’s best judgment with respect to current economic conditions, including discount rates, estimates of future cash flows, and prepayment assumptions. Many of these estimates involve various assumptions and may vary significantly from amounts that could be realized in actual transactions. The fair values reflected herein have been determined based on the prevailing rate environment at September 30, 2023 and December 31, 2022, as applicable. In different interest rate environments, fair value estimates can differ significantly, especially for certain fixed rate financial instruments. In addition, the fair values presented do not attempt to estimate the value of the Corporation’s fee generating businesses and anticipated future business activities, that is, they do not represent the Corporation’s value as a going concern. There have been no changes in the Corporation’s valuation methodologies and inputs used to estimate the fair values for each class of financial assets and liabilities not measured at fair value. The following tables present the carrying amount and estimated fair values of financial instruments with their corresponding level in the fair value hierarchy. The aggregate fair value amounts of the financial instruments disclosed do not represent management’s estimate of the underlying value of the Corporation. September 30, 2023 Carrying Measured (In thousands) amount Level 1 Level 2 Level 3 at NAV Fair value Financial Assets: Cash and due from banks $ 535,335 $ 535,335 $ - $ - $ - $ 535,335 Money market investments 6,389,437 6,383,534 5,903 - - 6,389,437 Trading account debt securities, excluding derivatives [1] 30,825 15,644 14,846 335 - 30,825 Debt securities available-for-sale [1] 17,129,858 3,871,643 13,256,562 1,653 - 17,129,858 Debt securities held-to-maturity: U.S. Treasury securities $ 8,228,758 $ - $ 7,999,065 $ - $ - $ 7,999,065 Obligations of Puerto Rico, States and political subdivisions 59,745 - 6,866 51,865 - 58,731 Collateralized mortgage obligation-federal agency 1,562 - 1,296 15 - 1,311 Securities in wholly owned statutory business trusts 5,960 - 5,960 - - 5,960 Total debt securities held-to-maturity $ 8,296,025 $ - $ 8,013,187 $ 51,880 $ - $ 8,065,067 Equity securities: FHLB stock $ 50,358 $ - $ 50,358 $ - $ - $ 50,358 FRB stock 99,064 - 99,064 - - 99,064 Other investments 41,266 - 35,026 6,871 286 42,183 Total equity securities $ 190,688 $ - $ 184,448 $ 6,871 $ 286 $ 191,605 Loans held-for-sale $ 5,239 $ - $ 5,239 $ - $ - $ 5,239 Loans held-in-portfolio 33,318,245 - - 31,646,073 - 31,646,073 Mortgage servicing rights 119,030 - - 119,030 - 119,030 Derivatives 23,511 - 23,511 - - 23,511 September 30, 2023 Carrying Measured (In thousands) amount Level 1 Level 2 Level 3 at NAV Fair value Financial Liabilities: Deposits: Demand deposits $ 55,129,643 $ - $ 55,129,643 $ - $ - $ 55,129,643 Time deposits 8,207,957 - 7,835,985 - - 7,835,985 Total deposits $ 63,337,600 $ - $ 62,965,628 $ - $ - $ 62,965,628 Assets sold under agreements to repurchase $ 93,071 $ - $ 93,050 $ - $ - $ 93,050 Notes payable: FHLB advances $ 412,632 $ - $ 388,483 $ - $ - $ 388,483 Unsecured senior debt securities 393,678 - 402,324 - - 402,324 Junior subordinated deferrable interest debentures (related to trust preferred securities) 198,339 - 180,183 - - 180,183 Total notes payable $ 1,004,649 $ - $ 970,990 $ - $ - $ 970,990 Derivatives $ 21,747 $ - $ 21,747 $ - $ - $ 21,747 [1] Refer to Note 24 to the Consolidated Financial Statements for the fair value by class of financial asset and its hierarchy level. December 31, 2022 Carrying Measured (In thousands) amount Level 1 Level 2 Level 3 at NAV Fair value Financial Assets: Cash and due from banks $ 469,501 $ 469,501 $ - $ - $ - $ 469,501 Money market investments 5,614,595 5,607,937 6,658 - - 5,614,595 Trading account debt securities, excluding derivatives [1] 27,723 13,069 14,119 535 - 27,723 Debt securities available-for-sale [1] 17,804,374 1,908,589 15,894,074 1,711 - 17,804,374 Debt securities held-to-maturity: U.S. Treasury securities $ 8,453,467 $ - $ 8,372,601 $ - $ - $ 8,372,601 Obligations of Puerto Rico, States and political subdivisions 59,010 - - 61,617 - 61,617 Collateralized mortgage obligation-federal agency 19 - - 19 - 19 Securities in wholly owned statutory business trusts 5,959 - 5,959 - - 5,959 Total debt securities held-to-maturity $ 8,518,455 $ - $ 8,378,560 $ 61,636 $ - $ 8,440,196 Equity securities: FHLB stock $ 65,861 $ - $ 65,861 $ - $ - $ 65,861 FRB stock 96,206 - 96,206 - - 96,206 Other investments 33,787 - 29,302 4,966 330 34,598 Total equity securities $ 195,854 $ - $ 191,369 $ 4,966 $ 330 $ 196,665 Loans held-for-sale $ 5,381 $ - $ - $ 5,404 $ - $ 5,404 Loans held-in-portfolio 31,357,467 - - 29,366,365 - 29,366,365 Mortgage servicing rights 128,350 - - 128,350 - 128,350 Derivatives 19,229 - 19,229 - - 19,229 December 31, 2022 Carrying Measured (In thousands) amount Level 1 Level 2 Level 3 at NAV Fair value Financial Liabilities: Deposits: Demand deposits $ 54,445,825 $ - $ 54,445,825 $ - $ - $ 54,445,825 Time deposits 6,781,402 - 6,464,943 - - 6,464,943 Total deposits $ 61,227,227 $ - $ 60,910,768 $ - $ - $ 60,910,768 Assets sold under agreements to repurchase $ 148,609 $ - $ 148,566 $ - $ - $ 148,566 Other short-term borrowings [2] 365,000 - 365,000 - - 365,000 Notes payable: FHLB advances $ 389,282 $ - $ 361,951 $ - $ - $ 361,951 Unsecured senior debt securities 299,109 - 300,027 - - 300,027 Junior subordinated deferrable interest debentures (related to trust preferred securities) 198,319 - 173,938 - - 173,938 Total notes payable $ 886,710 $ - $ 835,916 $ - $ - $ 835,916 Derivatives $ 17,000 $ - $ 17,000 $ - $ - $ 17,000 [1] Refer to Note 24 to the Consolidated Financial Statements for the fair value by class of financial asset and its hierarchy level. [2] Refer to Note 16 to the Consolidated Financial Statements for the composition of other short-term borrowings. The notional amount of commitments to extend credit at September 30, 2023 and December 31, 2022 is $ 10.3 billion and $ 10.5 billion, respectively, and represents the unused portion of credit facilities granted to customers. The notional amount of letters of credit at September 30, 2023 and December 31, 2022 is $ 56 million and $ 31 million, respectively, and represents the contractual amount that is required to be paid in the event of nonperformance. The fair value of commitments to extend credit and letters of credit, which are based on the fees charged to enter into those agreements, are not material to Popular’s financial statements.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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