Slide 1: Investor Presentation Second Quarter 2023
INVESTOR PRESENTATION Second Quarter 2023
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, are based on the current expectations of Popular, I
Slide 3: Q2 2023 Highlights
Q2 2023 Highlights Financial Highlights Quarter Highlights $ in millions, except ratios and EPS Income Statement Q2 2023 Q1 2023 Change Q2 2022 Highlights: Net Income $ 151 $ 159 $ (8) $ 211 • Loans increased $693 million QoQ, net of $46 million Net Interest Margin 3.14% 3.22% (0.08%) 3.09% transfer
Slide 4: Business Highlights
Business Highlights BPPR Business Metrics $ in millions, except ratios Q2 2023 Q1 2023 Change Q2 2022 BPPR: Loans Held in Portfolio $ 23,087 $ 22,773 $ 314 $ 21,447 • Loans increased by $314 million across all business segments P.R. Government Deposits 18,464 15,455 3,009 18,577 • Continued strong o
Slide 5: Financial Summary
Financial Summary (Unaudited) ($ in thousands) Q2 2023 Q1 2023 Variance Net interest income $ 531,668 $ 531,656 $ 12 Service charges on deposits 37,781 34,678 3,103 Other service fees 94,265 90,076 4,189 Mortgage banking activities 2,316 7,400 (5,084) Other non-interest income 26,109 29,807 (3,698)
Slide 6: Net Interest Margin Dynamics
Net Interest Margin Dynamics Total Loans and Deposits ($ in billions)1 • Net interest margin of 3.14%; FTE net interest margin of 3.29%, a decrease of 17 basis points • Money market and investment securities are 51% of earning assets • FTE loan yield increased 18 basis points QoQ to 7.15% • Total de
Slide 7: Deposit Mix and Historical Betas
Deposit Mix and Historical Betas • Total cumulative deposit beta of 31% at period end; total deposit beta at BPPR and PB of 28% and 47%, respectively • High beta public sector deposits now account for 29% of total deposits. P.R. public sector deposit betas are 100% with a quarter lag; expect costs t
Slide 8: Investment Portfolio
Investment Portfolio • Conservative investment portfolio, with $ in millions Q2 2023 Variance to Q1 2023 the majority invested in short to Amortized % of Book Gain / Maturity / Amortized Gain / intermediate U.S. Treasuries, which are Description Cost Portfolio Value (Loss) WAL 1 Cost (Loss) tax exem
Slide 9: Capital
Capital • Robust regulatory capital levels • Common Equity Tier 1 of 16.9% • Leverage ratio of 8.4% impacted by the high proportion of zero-risk weighted assets on the balance sheet, which represented 41% of total assets • TCE ratio1 at 5.3% compared to 5.4% in Q1 2023; BPPR at 3.5% compared to 3.6%
Slide 10: Non-Performing Assets
Non – Performing Assets Q2 2023 vs Q1 2023 variances: Non-Performing Assets • NPAs and NPLs decreased by $32 million and $26 million QoQ, respectively ▪ NPL inflows decreased by $10 million QoQ ▪ P.R. NPLs at $352 million, or 1.5% of loans, down by $27 million, mainly driven by lower mortgage NPLs b
Slide 11: NCOs and Allowance for Credit Losses
NCOs and Allowance for Credit Losses Q2 2023 vs Q1 2023 variances: NCOs and NCO-to-Loan Ratio ($ in millions) • NCOs amounted to $24 million, decreasing by $9 million QoQ $31 $33 0.29% ▪ BPPR’s NCOs at $19 million, decreasing by $13 $24 million QoQ, mainly due to lower consumer $18 NCOs by $14 milli
Slide 12: Allowance for Credit Losses – Q2 2023 Movement
Allowance for Credit Losses – Q2 2023 Movement ACL Movement: • Moody’s May 2023 baseline scenario continues to show an economy with a resilient labor market that manages to avoid a recession • Impact of economic scenarios is driven by the U.S. CRE and P.R. personal loan portfolios, partially offset
Slide 13: Driving Value
Driving Value • Market leader in Puerto Rico ▪ Substantial liquidity with diversified deposit base ▪ Well-positioned to take advantage of ongoing economic growth ▪ Focus on customer service supported by broad branch network ▪ Differentiated digital offering ▪ Diversified fee income driven by unmatch
Slide 14: Appendix
INVESTOR PRESENTATION Second Quarter 2023 Appendix
Slide 15: Corporate Structure
Corporate Structure Franchise Summary Corporate Structure Industry Financial services Headquarters San Juan, Puerto Rico Assets = $71 billion Assets $71 billion (among Holding Popular’s Banco Popular Popular Popular North top 50 BHCs in the de Puerto Rico Securities LLC Insurance America, Inc. Compa
Slide 16: Q2 2023 vs. Q1 2023 Business Segments
Q2 2023 vs. Q1 2023 Business Segments (Unaudited) BPPR Popular U.S. ($ in millions) Financial Results Q2 2023 Q1 2023 Variance Q2 2023 Q1 2023 Variance Net interest income $ 453 $ 450 $ 3 $ 88 $ 90 $ (2) Non-interest income 144 147 (3) 6 6 - Gross revenues 597 597 - 94 96 (2) Provision for credit lo
Slide 17: P.R. Public Sector Exposure
P.R. Public Sector Exposure The Corporation does not own any loans issued by the P.R. central government or its public corporations. As of June 30, 2023, our direct exposure to P.R. municipalities was $351 million, up by $28 million QoQ, mostly driven by a $23 million increase in a single municipali
Slide 18: Liquidity Sources
Liquidity Sources • Available liquidity increased by $1.9 billion in Q2 2023 • On March 13, 2023, issued $400 million aggregate principal amount of 7.25% Senior Notes due 2028. On August 14, 2023, a portion of the net proceeds of the issuance will be used to redeem, at par value, all outstanding $30
Slide 19: Deposit Composition
Deposit Composition • On June 30, 2023, deposits with balances in excess of $250,000, excluding foreign deposits, intercompany deposits and collateralized public funds, were $11.4 billion or 21% at BPPR and $2.3 billion or 23% at Popular U.S. compared to available liquidity sources of $15.9 billion
Slide 20: Non-Owner Occupied CRE
Non-Owner Occupied CRE Highlights: Non-Owner Occupied CRE • Non-Owner Occupied CRE (CRE NOO) properties $ in millions concentrated in retail, hotels and office space $4,651 $4,744 4.0% ▪ Office exposure is limited, representing only 1.8% of total $4,517 $4,500 $4,120 $1,838 loan portfolio and 13% of
Slide 21: Auto Portfolio
Auto Portfolio Highlights: Delinquency Avg. 2011-2019 6/30/2023 ($ in millions) • Auto balances increased during the pandemic, but 6.17% 3.66% $4,000 6.00% $3,529 $3,518 $3,566 growth has moderated during recent quarters $3,500 $3,289 $3,377 $3,412 $3,430 $3,490 $3,513 5.00% • Delinquency flattening
Slide 22: Leases Portfolio
Leases Portfolio Delinquency Avg. 2011-2019 6/30/2023 Highlights: ($ in millions) 2.06% 1.31% $1,800 $1,662 6. $1,586 $1,614 • Auto lease balances have continued to increase since $1,600 $1,381 $1,426 $1,480 $1,539 5. $1,349 the pandemic $1,400 $1,298 • Delinquency steady at below pre-pandemic level
Slide 23: Credit Card Portfolio
Credit Card Portfolio Highlights: Delinquency $1,400 ($ in millions) Avg. 2011-2019 6/30/2023 4.0 • Balances have been gradually increasing due to $1,124 3.74% 2.84% 3.5 $1,200 higher originations and increased usage post 3.4% $1,042 $1,046 $1,057 $967 $989 3.0 pandemic $1,000 $880 $887 $920 $916 2.
Slide 24: FICO Mix of Consumer Originations
FICO Mix of Consumer Originations Auto Loans PR Mortgage Originations (Non-Conforming) FICO Mix of Originations (% of Approved Amount) By Year and Original FICO (% of Mortgage Amount) 715 719 719 723 720 721 729 732 729 736 735 753 736 734 741 759 751 742 100% 4% 3% 4% 6% 7% 6% 5% 7% 7% 700 1% 2% 70
Slide 25: Popular, Inc. Credit Ratings
Popular, Inc. Credit Ratings Senior SeniorUnsecured Ratings Unsecured Ratings Fitch BBB- Stable Outlook S&P BB+ Stable Outlook Moody’s Ba1 Stable Outlook 2018 2019 2020 2021 2022 April April Moody’s June Moody's April September upgrades to Ba3 Fitch upgrades upgrades to B1 S&P upgrades to Moody’s up
Slide 26: Investor Presentation Second Quarter 2023
INVESTOR PRESENTATION Second Quarter 2023