POPULAR, INC.

Signatures

Forward-Looking Statements

This

Form 10-Q

contains “forward-looking

statements” within

the meaning

of the

U.S. Private

Securities Litigation

Reform Act

of

1995,

including,

without

limitation,

about

Inc.’s

(the

“Corporation,”

“Popular,”

“we,”

“us,”

“our”)

business,

financial condition, results

of operations, plans,

objectives and future

performance. These statements

are not

guarantees of future

performance,

are

based

on

current

expectations

and,

by

their

nature,

involve

risks,

uncertainties,

and

assumptions. Potential

factors, some

of which

are beyond

control, could

cause actual

results to

differ materially

from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect

of competitive and

economic factors, and our

reaction to those factors,

the adequacy of

the allowance for loan

losses, delinquency

trends, market

risk and

the impact

of interest

rate changes

(including on

our cost

of deposits),

capital markets

conditions, capital

adequacy

and

and

the

effect

of

legal

and

regulatory

and

new

standards

on

the

financial condition

and results

of operations.

All statements

contained herein

that

are not

clearly

historical in

nature are

forward-

looking, and the words “anticipate,” “believe,” “continues,”

“expect,” “estimate,” “intend,” “project” and similar expressions

and future

or conditional verbs

such as

“will,” “would,” “should,”

“could,” “might,” “can,”

“may” or similar

expressions are

generally intended to

identify forward-looking statements.

Various factors, some of which

are beyond Popular’s control, could cause actual results to differ materially from those expressed in,

or implied by, such forward-looking statements. Factors that might cause such a

difference include, but are not limited to:

●

the

rate

of

growth

or

decline

in

the

economy

and

employment

levels,

as

well

as

general

and

in

the

geographic

areas

we

serve

and,

in

particular,

in

the

Commonwealth

of

Puerto

Rico

(the

“Commonwealth” or “Puerto Rico”), where a significant

portion of our business is concentrated;

●

adverse economic conditions, including high levels of inflation, and geopolitical conditions, including wars and conflicts,

that

adversely affect

housing prices,

the

job market,

consumer confidence

and spending

habits which

may

affect

in

turn, among other things, our level of non-performing

assets, charge-offs and provision expense;

●

changes in interest rates and market liquidity,

which may reduce interest margins, impact funding sources, reduce loan

originations, affect

our ability

to originate

and distribute

financial products

in the

primary and

secondary markets

and

impact the value of our investment portfolio and

our ability to return capital to our shareholders;

●

the

impact

of

bank

failures

or

adverse

developments

at

other

banks

and

related

media

coverage

of

the

banking industry in general on investor and depositor

sentiment regarding the stability and liquidity of

banks;

●

the impact of the current fiscal and economic challenges of Puerto Rico and

the measures taken and to be taken by the

Puerto

Rico

and

the

Federally-appointed

oversight

board

on

the

economy,

our

customers

and

our

business;

●

the

public sector

deposits held

at

the Corporation,

whose future

balances are

uncertain and

difficult

to

predict

and

may

be

by

factors

such

as

the

amount

of

Federal

funds

by

the

P.R.

and

the

rate

of

expenditure

of

such

funds,

as

well

as

the

condition,

and

cash

management practices of the Puerto Rico Government

and its instrumentalities;

●

unforeseen or

catastrophic events,

including extreme

weather events

such as

hurricanes and

other natural

disasters,

man-made disasters, acts of violence, war

or conflicts,

or pandemics, epidemics and other health-related crises, or

the

fear of any such

event occurring, any of

which could cause adverse consequences for

our business, including, but

not

limited to, disruptions in our operations;

●

our ability to achieve the

expected benefits from our transformation initiatives, including our

ability to achieve projected

earnings, efficiencies and

return on tangible

common equity and

accurately anticipate costs

and expenses associated

therewith;

●

our ability to execute capital actions, including with

respect to share repurchases and dividends;

●

the fiscal and monetary policies of the federal government

and its agencies;

●

federal

bank regulatory

and supervisory

policies, including

required levels

of

capital, liquidity,

resolution-

related requirements and the impact of other proposed

capital standards on our capital ratios;

●

the impact of any future U.S. government

shutdown;

●

changes

in

and

uncertainty

regarding

federal

funding,

tax

and

trade

policies,

and

federal

rulemaking,

supervision,

examination and enforcement priorities;

●

adjustments to or additional Federal Deposit Insurance

Corporation (“FDIC”) assessments;

●

regulatory approvals

that may

be necessary

to undertake

certain actions

or consummate

strategic transactions,

such

as acquisitions and dispositions;

●

the

relative strength

or

weakness

of

the

consumer and

commercial credit

sectors

and

of

the

real

estate markets

in

Puerto Rico and the other markets in which

our borrowers are located;

●

a deterioration in the credit quality of our

clients, customers and counterparties;

●

the performance of the stock and bond markets;

●

competition in the financial services industry;

●

possible legislative, tax or regulatory changes;

●

a failure

in or

breach of

our operational

or security

systems or

infrastructure or

those of

Evertec, Inc.,

our provider

of

core financial

transaction processing and

information technology services,

or of

third parties

providing services

to us,

as

a

result

of

cyberattacks, e-fraud,

denial-of-services and

computer intrusion,

that

might result

in,

among

other

things,

loss

or

breach

of

customer

data,

disruption

of

reputational

damage

or

costs

to

Popular;

●

changes in market rates and prices which may

adversely impact the value of financial assets

and liabilities;

●

potential judgments,

claims, damages,

penalties, fines,

enforcement actions

and

reputational damage

resulting from

pending or future litigation and regulatory or government

investigations or actions;

●

changes in accounting standards, rules and interpretations;

●

our ability to grow our core businesses;

●

decisions to downsize, sell or close branches or business

units or otherwise change our business mix;

and

●

management’s ability to identify and manage these and

other risks.

Moreover, the

outcome of any

legal and

regulatory proceedings, as

discussed in “Part

II, Item

1. Legal Proceedings,”

is inherently

uncertain and depends on judicial interpretations of law and the findings of regulators, judges and/or juries. Investors should refer to

the Corporation’s Annual

Report on Form

10-K for the

year ended December 31,

2025 (the “2025

Form 10-K”), as

well as “Part

II,

Item 1A” of our Quarterly

Report on this Form 10-Q for

a discussion of such factors and

certain risks and uncertainties to which the

Corporation is subject.

All forward-looking

statements included

in this

Form 10-Q

are based

upon information

available to

Popular as

of the

date of

this

Form 10-Q, and other than as

required by law, including the

requirements of applicable securities laws, we assume no

obligation to

update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date

of such statements.

OF FINANCIAL CONDITION

[UNAUDITED]

(In thousands, except share information)

Assets:

$

384,922

$

402,755

Money market investments:

Time deposits with other banks

Total money market investments

Trading account debt securities, at fair value

30,449

36,569

Debt securities available-for-sale, at fair

value:

Pledged securities with creditors’ right to repledge

30,289

30,687

Other debt securities available-for-sale

21,702,980

20,544,285

Debt securities held-to-maturity, at amortized cost:

Pledged securities with creditors’ right to repledge

4,705

9,298

Other debt securities held-to-maturity

6,957,954

7,318,231

Debt securities held-to-maturity (fair

value 2026 - $

; 2025 - $

)

6,962,659

7,327,529

Less – Allowance for credit losses

5,900

5,812

Debt securities held-to-maturity, net

Equity securities (realizable value 2026 -

$

217,696

; 2025 - $

230,388

)

217,167

229,848

Loans held-for-sale, at fair value

5,603

9,998

39,703,844

39,749,142

Less – Unearned income

414,142

421,624

823,729

808,056

Total loans held-in-portfolio, net

38,465,973

38,519,462

Premises and equipment, net

706,233

685,820

Other real estate

45,680

42,433

Accrued income receivable

308,617

300,824

Mortgage servicing rights, at fair value

94,232

96,356

1,731,769

1,705,977

789,954

789,954

Other intangible assets

4,692

5,076

$

$

Liabilities and Stockholders’ Equity

Liabilities:

Non-interest bearing

$

15,785,788

$

15,304,209

Interest bearing

51,825,528

50,885,884

34,576

39,001

350,000

650,000

734,981

759,577

1,089,059

1,460,517

Total liabilities

69,819,932

69,099,188

Commitments and contingencies (Refer

to Note 18)

Stockholders’ equity:

Preferred stock,

30,000,000

shares authorized;

885,726

shares issued and outstanding (2025

885,726

)

22,143

22,143

Common stock, $

0.01

par value;

170,000,000

shares authorized;

104,936,510

shares issued (2025 -

104,921,229

) and

shares outstanding (2025 -

65,719,385

)

1,049

1,049

Surplus

4,928,636

4,924,296

Retained earnings

5,403,176

5,206,497

Treasury stock - at cost,

40,281,722

shares (2025 -

39,201,844

)

(2,875,230)

(2,722,819)

Accumulated other comprehensive loss, net

of tax

(1,182,087)

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

OF OPERATIONS

Interest income:

Loans

$

702,149

$

666,673

44,240

70,166

200,827

180,159

Total interest income

947,216

916,998

Interest expense:

259,418

297,863

Short-term borrowings

5,703

1,426

Long-term debt

11,915

12,112

Total interest expense

277,036

311,401

670,180

605,597

75,886

64,081

Net interest income after provision for credit losses

594,294

541,516

Non-interest income:

Service charges on deposit accounts

38,766

39,054

Other service fees

102,921

94,508

Mortgage banking activities

4,213

3,689

Net gain (loss), including impairment on equity securities

1,029

(414)

Net gain on trading account debt securities

Adjustments to indemnity reserves on loans sold

Other operating income

18,401

14,531

Total non-interest income

165,626

152,061

Operating expenses:

216,069

212,713

Net occupancy expenses

27,299

27,218

Equipment expenses

5,229

5,302

Other taxes

17,677

18,725

25,553

26,825

Technology and software expenses

89,139

83,668

39,087

37,781

Communications

4,509

4,904

Business promotion

22,860

23,675

Deposit insurance

9,917

10,035

Other real estate owned (OREO) expense (income)

(4,618)

(3,330)

14,205

22,899

Total operating expenses

467,310

471,012

292,610

222,565

46,936

45,063

Net Income

$

245,674

$

177,502

Net Income Applicable to Common Stock

$

245,321

$

177,149

Net Income per Common Share - Basic

$

3.78

$

2.56

Net Income per Common Share - Diluted

$

3.78

$

2.56

OF COMPREHENSIVE INCOME

$

245,674

$

177,502

Other comprehensive income before tax:

Foreign currency translation adjustment

(256)

(6,646)

Amortization of net losses of pension and

postretirement benefit plans

2,258

2,273

Unrealized holding (losses) gains on debt securities arising

during the period

(33,096)

165,984

Amortization of unrealized losses of debt securities transfer

from available-for-sale to held-to-

46,876

45,311

Other comprehensive income before tax

15,782

206,922

(2,383)

(35,669)

Total other comprehensive income, net of tax

13,399

171,253

Comprehensive income, net of tax

$

259,073

$

348,755

Tax effect allocated to each component of other comprehensive income:

Amortization of net losses of pension and postretirement

benefit plans

(847)

(852)

Unrealized holding (losses) gains on debt securities arising

during the period

7,839

(25,755)

Amortization of unrealized losses of debt securities

transfer from available-for-sale to held-to-

(9,375)

(9,062)

$

(2,383)

$

(35,669)

OF CHANGES IN STOCKHOLDERS’ EQUITY

other

Common

Preferred

Retained

comprehensive

stock

stock

Surplus

earnings

stock

loss

Total

Balance at December 31, 2024

$

1,048

$

22,143

$

4,908,693

$

4,570,957

$

(2,228,535)

$

(1,661,240)

$

5,613,066

177,502

177,502

1,769

1,770

Dividends declared:

Common stock

[1]

(48,409)

(48,409)

(353)

(353)

Common stock purchases

[2]

(125,980)

(125,980)

Stock based compensation

2,424

8,422

10,846

Other comprehensive income, net of tax

171,253

171,253

Balance at March 31, 2025

$

1,049

$

22,143

$

4,912,886

$

4,699,697

$

(2,346,093)

$

(1,489,987)

$

5,799,695

Balance at December 31, 2025

$

1,049

$

22,143

$

4,924,296

$

5,206,497

$

(2,722,819)

$

(1,182,087)

$

245,674

245,674

1,824

1,824

Dividends declared:

Common stock

[1]

(48,665)

(48,665)

(353)

(353)

Common stock purchases

[3]

(160,228)

(160,228)

Stock based compensation

2,516

7,817

10,333

Other comprehensive income, net of tax

13,399

13,399

Balance at March 31, 2026

$

1,049

$

22,143

$

4,928,636

$

5,403,176

$

(2,875,230)

$

$

[1]

Dividends declared per common share during the quarter

ended March 31, 2026 - $

0.75

(2025 - $

0.70

).

[2]

Includes common

stock repurchases

of $

122.3

million as

part of

the 2024

Note 15

[3]

Includes common

stock repurchases

of $

155.2

million as

part of

Note 15

OF CHANGES IN STOCKHOLDERS’ EQUITY

For the period ended

Disclosure of changes in number of shares:

Preferred Stock:

Balance at beginning and end of period

885,726

885,726

Common Stock – Issued:

104,921,229

104,849,460

15,281

19,729

Balance at end of period

104,936,510

104,869,189

Treasury stock

(40,281,722)

(35,885,041)

Common Stock – Outstanding

68,984,148

The accompanying notes are an integral part of these Consolidated

OF CASH FLOWS

Cash flows from operating activities:

$

245,674

$

177,502

Adjustments to reconcile net income to net cash provided

by operating activities:

75,886

64,081

Depreciation and amortization of premises and equipment

13,538

12,280

Net accretion of discounts and amortization of premiums and

deferred fees

(57,477)

(68,861)

Interest capitalized on loans subject to the temporary payment

moratorium or loss mitigation alternatives

(1,238)

(1,357)

Share-based compensation

16,228

11,028

Fair value adjustments on mortgage servicing rights

2,640

3,570

Adjustments to indemnity reserves on loans sold

(35)

(173)

Earnings from investments under the equity method, net

of dividends or distributions

(12,968)

(8,621)

Deferred income tax (benefit) expense

(564)

8,109

Loss (gain) on:

Disposition of premises and equipment and other productive

assets

(42)

Sale of loans, including valuation adjustments on loans

held-for-sale and mortgage banking activities

(317)

(194)

Sale of foreclosed assets, including write-downs

(2,309)

(1,033)

Acquisitions of loans held-for-sale

(3,583)

(810)

Proceeds from sale of loans held-for-sale

11,057

7,098

Net originations on loans held-for-sale

(10,194)

(6,741)

Net decrease (increase) in:

Trading debt securities

17,573

6,071

(849)

Accrued income receivable

(7,770)

(2,087)

12,864

Net (decrease) increase in:

Interest payable

(7,280)

(7,370)

Pension and other postretirement benefits obligation

1,306

1,079

(86,060)

(38,252)

Total adjustments

(54,060)

(5,444)

Net cash provided by operating activities

191,614

172,058

Cash flows from investing activities:

Net (increase) decrease in money market investments

(29,624)

186,609

Purchases of investment securities:

Available-for-sale

(10,385,670)

(9,425,086)

Equity

(10,139)

(9,224)

Proceeds from calls, paydowns, maturities and redemptions

of investment securities:

Available-for-sale

8,954,537

8,429,813

Held-to-maturity

409,096

152,441

Proceeds from sale of investment securities:

Equity

23,670

13,361

Net repayments (disbursements)

on loans

107,425

(118,418)

Proceeds from sale of loans

14,706

39,055

Acquisition of loan portfolios

(160,670)

(127,291)

Payments to acquire equity method investments

(1,000)

Acquisition of premises and equipment and other productive

assets

(36,680)

(51,526)

Proceeds from sale of:

Premises and equipment and other productive assets

Foreclosed assets

17,602

23,155

Net cash used in investing activities

(1,096,470)

(886,914)

Cash flows from financing activities:

Net increase (decrease) in:

1,425,562

939,913

(4,424)

2,435

(300,000)

(25,000)

Payments of notes payable

(25,000)

(63,522)

Principal payments of finance leases

(2,030)

(908)

Proceeds from issuances of common stock

1,823

1,770

Dividends paid

(49,949)

(49,899)

Net payments for repurchase of common stock

(154,742)

(125,341)

Payments related to tax withholding for share-based compensation

(4,648)

(3,376)

Net cash provided by financing activities

886,592

676,072

Net decrease in cash and due from banks, and restricted

cash

(18,264)

(38,784)

Cash and due from banks, and restricted cash at beginning

of period

412,989

429,406

Cash and due from banks, and restricted cash at the end of

the period

$

394,725

$

390,622

The accompanying notes are an integral part of these Consolidated

Notes to Consolidated Financial

(Unaudited)

Note 1 -

Nature of operations

Note 2 -

Basis of presentation

Note 3 -

New accounting pronouncements

Note 4 -

Restrictions on cash and due from banks and

certain securities

Note 5 -

Note 6 -

Debt securities held-to-maturity

Note 7 -

Loans

Note 8

Allowance for credit losses – loans held-in-

Note 9 -

Note 10 -

Note 11 -

Goodwill and other intangible assets

Note 12 -

Note 13 -

Note 14 -

Note 15 -

Note 16 -

Other comprehensive income (loss)

Note 17 -

Guarantees

Note 18 -

Commitments and contingencies

Note 19-

Non-consolidated variable interest entities

Note 20 -

Related party transactions

Note 21 -

Fair value measurement

Note 22 -

Fair value of financial instruments

Note 23 -

Net income per common share

Note 24 -

Revenue from contracts with customers

Note 25 -

Stock-based compensation

Note 26 -

Income taxes

Note 27 -

Supplemental disclosure on the consolidated

statements of cash flows

Note 28 -

Segment reporting

Note 1 – Nature of Operations

Inc. (the

“Corporation” or

“Popular”) is

a diversified,

publicly owned

financial holding

company subject

to the

supervision

and

regulation

of

the

Board

of

Governors

of

the

Federal

Reserve

System.

The

has

in

Puerto

Rico,

the

mainland United

States (“U.S.”)

and the

U.S. and

British Virgin

Islands. In

Puerto Rico,

provides retail,

mortgage,

and

commercial banking

as well

as

auto and

equipment leasing

and financing

through its

principal banking

subsidiary,

Banco Popular

de Puerto

Rico (“BPPR”),

as well

as broker-dealer

and insurance

services through

specialized subsidiaries.

In the

U.S.

mainland,

the

retail

and

banking

as

well

as

equipment

leasing

and

financing,

through

its

New

York-chartered

banking subsidiary,

Popular

Bank

(“PB”

or

“Popular

U.S.”),

which

has

branches

located

in

New

York, New Jersey, and Florida.

Note 2 – Basis of Presentation

Basis of Presentation

The (unaudited) interim Consolidated Financial Statements are, in the opinion of management, a fair statement of the results

for the

periods reported.

The consolidated statement

of financial condition

presented as

of December 31,

2025 was

derived from

audited

Consolidated Financial Statements of the Corporation

for the year ended December 31, 2025.

Certain

and

notes

to

the

disclosures

which

would

normally

be

in

prepared in

accordance with

Accounting Principles

Generally Accepted

in the

of America

(U.S. GAAP),

have been

condensed or omitted from the unaudited financial statements pursuant

to the rules and regulations of the

Securities and Exchange

Commission.

Accordingly,

these

should

be

read

in

conjunction

with

the

audited

Statements of

for the

year ended

2025,

Form 10-K.

Operating results

for the

interim periods disclosed herein are not necessarily

indicative of the results that may be expected

for a full year or any future period.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial

statements in conformity with

accounting principles generally accepted in

the United States

of America

requires management to make

estimates and assumptions that

affect the reported

amounts of assets and

liabilities and contingent

assets

and

at

the

date

of

the

statements,

and

the

reported

amounts

of

revenues

and

during

the

reporting period. Actual results could differ from those estimates.

Note 3 - New accounting pronouncements

Recently Adopted Accounting Standards Updates

FASB ASU 2025-05,

Financial Instruments -

Credit Losses (Topic 326)

• Measurement of Credit

Losses for Accounts

Receivables and Contract

Assets

The

Financial Accounting

Standards Board

("FASB")

issued

Accounting

Standards

Update

("ASU")

2025-05

in

July

2025,

which

permits

to

elect

a

expedient

when

for

current

accounts

receivable

and

current

contract

assets

arising from

transactions accounted

for under Accounting Standards Codification

("ASC") Topic

606, Revenue from Contracts

with

Customers.

This

expedient

that,

in

developing

reasonable

and

supportable

forecasts

as

part

of

estimating

credit

losses,

assume

that

current

as

of

the

balance

sheet

date

do

not

change

for

the

remaining life of the asset.

January 1, 2026

The

was

not

by

the

of

this

ASU

since

the

update

does

not

require

changes

or

new

or

disclosure

requirements.

The

expedient was not applied.

FASB ASU 2024-04, Debt

• Debt with Conversion

and Other Options

(Subtopic 470- 20) -

Induced Conversions of

Convertible Debt

Instruments

The

FASB

issued

ASU

2024-04

in

November

2024,

which

the

for

determining

whether

certain

settlements

of

convertible

debt

instruments should

be accounted

for as

an

induced

conversion.

Also

it

makes

clarifications

to

assist

stakeholders in

applying the

guidance. The

ASU

that

the

incorporation,

elimination,

or

modification

of

a

volume-

average

price

("VWAP")

formula

does

not

automatically

cause

a

settlement

to

be

accounted

for

as

an

extinguishment

and

that

the

induced

conversion

applies to a convertible debt

instrument that

is not currently convertible

as long as

it had

a substantive

conversion feature as

of both

its

issuance

date

and

the

date

the

inducement offer is accepted.

January 1, 2026

The

was

not

by

the

of

this

ASU,

but

it

will

prospectively consider this guidance for

any

future

involving

induced conversions.

FASB ASU 2026-01,

Equity (Topic 505) - Initial

Measurement of Paid-in-

Kind Dividends

on Equity-Classified

Preferred Stock

The

FASB

issued

ASU

‑

in

April

2026,

which

authoritative

on

the

initial

measurement

of

paid

‑

in

‑

kind

(PIK)

on

equity

‑

stock.

The

update

a

consistent

measurement requirement for PIK dividends

but does

not address

when such

should

be

recognized.

It

requires

PIK

dividends to

be initially

measured using

the

stated

PIK

dividend

rate

in

the

stock

agreement,

generally

applied

to

the

liquidation preference of the preferred stock.

any

impact

that

the

of

this

will

have

on

its

and

and

This

ASU

is

not

to have a material impact.

FASB ASU 2025-10,

Government Grants (Topic

832. • Accounting for

Government Grants

Received by Business

Entities

The

FASB

issued

ASU

2025-10

in

2025,

which

the

for

grants

by

a

entity.

The

update

recognition,

measurement,

and

disclosure

for

grants.

It

allows

asset

related

grants to

be

recognized either

as deferred

income or

as

an adjustment

to the

cost basis

of an

asset

and

income-related

grants

as

income.

January 1, 2029

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2025-09,

Derivatives and Hedging

(Topic 815) - Hedge

Accounting Improvements

The

FASB

issued

ASU

2025-09

in

November 2025, which aims to improve and

broaden

hedge

under

ASC

Topic

by

allowing

to

group

forecasted

transaction

with

similar

risk

exposures,

a

model

for

hedging

choose-your

rate

debt,

expands

hedge

for

forecasted

and

sales of non

financial assets, eliminates net

written

option

limitations

for

certain

compound

derivatives,

and

resolves

recognition

mismatches

in

dual

hedging

strategies

involving

foreign

‑

currency

‑

denominated debt.

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2025-08,

Financial Instruments -

Credit Losses (Topic 326)

• Purchased Loans

The

FASB

issued

ASU

2025-08

in

November 2025, which aims

to simplify and

reduce the

complexity of

the accounting

for

purchased loans under ASC Topic

326. The

update

expands

the

population

of

loans

the gross-up

approach to

include

purchased

seasoned

loans,

regardless

whether they had credit deterioration.

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2025-07,

Derivatives and Hedging

(Topic 815) and Revenue

from Contracts with

Customers (Topic 606) -

Derivatives Scope

Refinements and Scope

Clarification for Share-

Based Noncash

Consideration from a

Customer in a Revenue

Contract

The

FASB

issued

ASU

2025-07

in

September 2025, which refines the scope of

derivative accounting under

ASC Topic

and

the

treatment

of

noncash

under

ASC

Topic

The

update

reduces

complexity

and

diversity

in

application.

Narrows

the

scope

of derivative

accounting under

ASC 815

for

certain

whose

underlyings

are

based

on

a

party’s

own

or

activities;

and

that

ASC

governs

share

‑

based

noncash

from

a

customer

until

the

entity’s

right

becomes

unconditional.

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2025-06,

Intangibles - Goodwill and

Other - Internal-Use

Software (Subtopic 350-

40. • Targeted

Improvements to the

Accounting for Internal-

Use Software

The

FASB

issued

ASU

2025-06

in

September 2025, which seeks to modernize

the

for

internal-use

under

ASC

Subtopic

350-40,

Intangibles—

Goodwill and Other—Internal-Use Software.

The

update

replaces

the

traditional

stage-

based

model

(preliminary,

development,

post-implementation)

with

a

principles-

based framework that better

reflects current

practices,

agile and cloud-based approaches.

January 1, 2028

the

impact

that

the

of

this

will

have

on

our

for

internal

use

considering

our

practices

which

may

include

agile

and

cloud-based

approaches.

FASB ASU 2025-04,

Compensation - Stock

Compensation (Topic 718)

and Revenue from

Contracts with Customers

(Topic 606) - Clarifications

to Share-Based

Consideration Payable to

a Customer

The

FASB

issued

ASU

2025-04

in

May

2025,

which

the

for

awards

granted

as

payable

to

a

customer.

The

ASU expands

the definition

of performance

for

under ASC 718 and eliminates the forfeiture

policy election for

service conditions. It

also

confirms

that

the

variable

constraint

in

ASC

does

not

apply

to

such awards.

does not

expect to

be

by

the

of

this

ASU

since

it

does

not

grant

payment awards to customers.

FASB ASU 2025-03,

Business Combinations

(Topic 805) and

Consolidation (Topic 810)

• Determining the

Accounting Acquirer in the

Acquisition of a Variable

Interest Entity

The

FASB

issued

ASU

2025-03

in

May

2025 which

requires that

an entity

consider

the

factors

in

paragraphs

805-10-55-12

through

55-15

when

it

is

involved

in

an

acquisition transaction

effected primarily

by

exchanging

equity

interests when

the

legal

acquiree is

a variable

interest entity

("VIE")

that

meets

the

definition

of

a

to

determine

which

entity

is

the

acquirer.

This

replaces

the

previous

requirement

that

the

primary

beneficiary

always is the acquirer.

any

impact

that

the

of

this

will

have

on

its

and

and

FASB ASU 2024-03,

Income Statement -

Reporting Comprehensive

Income - Expense

Disaggregation

Disclosures (Subtopic

220-40) - Disaggregation

of Income Statement

Expenses (As updated by

ASU 2025-01)

The

FASB

issued

ASU

2024-03

in

November

2024,

which

requires

public

to

disclose

about

expense

in

the

notes to

financial statements

at interim

and

annual

reporting

periods

to

improve

financial transparency.

For fiscal years

beginning on

For interim periods

within fiscal years

beginning after

January 1, 2028

the

impact

that

the

of

this

will

have

on

its

and

and

Note 4 - Restrictions on cash and due

from banks and certain securities

BPPR is

required by

regulatory agencies

to maintain

average reserve

balances with

the Federal

Reserve Bank

of New

York

(the

“Fed”) or other banks. Required average reserve balances

in BPPR amounted to $

2.8

billion at March 31, 2026 (December 31, 2025

$

2.7

Cash

and

due

from

banks,

as

well

as

other

highly

liquid

are

used

to

cover

these

average

reserves.

2026, the Corporation

held $

million in restricted

assets in the

form of funds

deposited in money

market accounts,

debt

for

sale

and

equity

31,

$

The

restricted

assets

held

in

debt

securities available for sale and equity securities consist primarily of assets

held for the Corporation’s non-qualified retirement plans

and fund deposits guaranteeing possible liens or encumbrances

over the title of insured properties.

Note 5 – Debt securities available-for-sale

The

tables

present

the

amortized

cost,

gross

gains

and

losses,

fair

value,

average

yield

and

contractual maturities of debt securities available-for-sale

at March 31, 2026 and December 31,

Gross

Gross

Fair

average

cost

gains

losses

value

yield

$

10,459,758

$

1,286

$

1,727

$

10,459,317

3.52

%

6,603,717

10,645

35,638

6,578,724

3.69

17,063,475

11,931

37,365

17,038,041

3.59

1.71

3,866

3,797

1.48

10,575

10,094

2.46

87,224

6,211

81,138

2.93

mortgage obligations - federal agencies

101,758

6,761

95,122

2.82

2.04

87,724

2,689

85,050

2.22

1,093,830

83,023

1,010,969

1.75

4,289,433

787,666

3,502,475

1.77

Total mortgage-backed

securities - federal agencies

5,471,856

873,385

4,599,356

1.77

Other

4.39

Total other

4.39

[1]

$

22,637,839

$

12,941

$

917,511

$

3.15

%

[1]

15.1

billion pledged to secure government and trust

deposits, credit facilities and loan servicing agreements that

the secured parties

are not permitted to sell or repledge the collateral, of which

$

13.9

billion serve as collateral for public funds.

The Corporation had unpledged

Available for Sale securities with a fair value of

$

6.6

billion that could be used to increase its borrowing

facilities.

Gross

Gross

Fair

average

cost

gains

losses

value

yield

$

10,154,698

$

4,716

$

1,528

$

10,157,886

3.44

%

5,555,079

29,795

19,306

5,565,568

3.70

15,709,777

34,511

20,834

15,723,454

3.53

1.97

4,879

4,791

1.49

11,524

11,042

2.45

90,018

5,941

84,257

2.92

mortgage obligations - federal agencies

106,573

6,512

100,241

2.80

2.08

65,843

1,530

64,324

2.35

1,030,661

67,116

963,801

1.85

4,527,032

806,466

3,721,447

1.75

Total mortgage-backed

securities - federal agencies

5,624,499

1,149

875,121

4,750,527

1.78

Other

4.43

Total other

4.43

[1]

$

21,441,599

$

35,840

$

902,467

$

3.07

%

[1]

14.3

billion pledged to secure government and trust deposits,

assets sold under agreements to repurchase, credit facilities

and loan

servicing agreements that the secured parties are not permitted

to sell or repledge the collateral, of which $

13.2

billion serve as collateral for public

funds. The Corporation had unpledged Available for Sale

securities with a fair value of $

6.3

billion that could be used to increase its borrowing

facilities.

The weighted

average yield

on debt

securities available-for-sale

is based

on amortized

cost; therefore,

it

does not

give

effect to

changes in fair value.

Debt

not

due

on

a

single

date,

such

as

and

obligations, are classified

in the period

of final contractual

maturity. The

expected maturities of

collateralized mortgage obligations,

mortgage-backed securities and certain other securities may

differ from their contractual maturities

because they may be subject to

prepayments or may be called by the issuer.

At March 31, 2026, the Corporation did not intend

to sell or believed it was more

likely than not that it would be

required to sell debt

securities classified as available-for-sale. There were

no debt securities sold during the quarters ended

The

tables

present

the

fair

value

and

gross

losses

of

debt

available-for-sale,

aggregated by investment category and length of

time that individual securities have been in a continuous

unrealized loss position at

Less than 12 months

12 months or more

Total

Gross

Gross

Gross

Fair

Fair

Fair

value

losses

value

losses

value

losses

$

11,616,601

$

17,111

$

442,317

$

20,254

$

12,058,918

$

37,365

4,568

75,409

6,716

79,977

6,761

Mortgage-backed securities -federal agencies

212,099

9,678

4,335,138

863,707

4,547,237

873,385

available-for-sale in an unrealized loss position

$

11,833,268

$

26,834

$

4,852,864

$

890,677

$

16,686,132

$

917,511

Less than 12 months

12 months or more

Total

Gross

Gross

Gross

Fair

Fair

Fair

value

losses

value

losses

value

losses

$

992,083

$

$

943,699

$

20,752

$

1,935,782

$

20,834

1,481

83,266

6,509

84,747

6,512

222,333

9,975

4,469,097

865,146

4,691,430

875,121

available-for-sale in an unrealized loss position

$

1,215,897

$

10,060

$

5,496,062

$

892,407

$

6,711,959

$

902,467

in a continuous

unrealized loss position

for

less than twelve

months of $

11.8

billion as of

March

31, 2026, compared to $

1.2

billion on December 31, 2025, primarily driven by an increase market rates, which resulted in a

decline

in the fair value of fixed-rate securities including U.S.

Treasury securities and mortgage-backed securities.

As of March 31, 2026, the portfolio of available-for-sale debt securities reflects gross unrealized losses of $

0.9

billion (December 31,

$

0.9

billion),

driven

mainly

by

by

the

higher-interest

rate

environment

and

the

portfolio’s longer

duration. The

available-for-sale debt securities

is comprised mainly

of U.S

Treasuries and

from

the

U.S.

Government,

its

or

sponsored

entities,

Federal

National

Association

(“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”) and Government National Mortgage Association (“GNMA”). These

securities carry

an explicit

or implicit

guarantee from the

U.S. Government,

are highly

rated by

major rating

agencies, and

have a

long history of no credit losses. Accordingly, the Corporation applies a zero-credit

loss assumption.

Note 6 –Debt securities held-to-maturity

tables present

the amortized

cost, allowance

losses, gross

unrealized gains

and losses,

approximate fair

value, weighted

average yield

and contractual

maturities of

held-to-maturity at

Value

Gross

Gross

Book

[1]

for Credit

Net of

Fair

average

cost

Value

Losses

gains

losses

value

yield

$

2,755,510

$

2,717,438

$

$

2,717,438

$

1,757

$

$

2,719,056

1.15

%

4,403,161

4,195,564

4,195,564

4,137

4,199,701

1.30

7,158,671

5,894

1.24

Obligations of Puerto Rico, States and

2,720

2,720

2,707

2,718

6.45

3,910

3,910

3,883

3,887

1.84

5.81

35,126

35,126

5,846

29,280

2,672

1,795

30,157

1.43

Total obligations of

Puerto Rico, States and

42,206

42,206

5,900

36,306

2,702

1,803

37,205

1.83

1,491

1,491

1,491

1,301

2.87

mortgage obligations -

federal agencies

1,491

1,491

1,491

1,301

2.87

Securities in wholly owned statutory business

trusts

5,960

5,960

5,960

5,960

6.33

Total securities

in wholly owned statutory

business trusts

5,960

5,960

5,960

5,960

6.33

held-to-maturity [2]

$

7,208,328

$

6,962,659

$

5,900

$

$

8,596

$

2,132

$

1.25

%

[1]

Book value includes $

million of unrealized loss which remains in Accumulated

other comprehensive (loss) income (AOCI) related

to certain

securities previously transferred from available-for-sale securities

portfolio to the held-to-maturity securities portfolio.

[2]

6.9

billion pledged to secure public and trust deposits that

the secured parties are not permitted to sell or repledge

the collateral.

The

Corporation had unpledged held-to-maturities securities with

a fair value of $

94.9

million that could be used to increase its borrowing facilities.

Value

Gross

Gross

Book

[1]

for Credit

Net of

Fair

average

cost

Value

Losses

gains

losses

value

yield

$

2,558,293

$

2,519,071

$

$

2,519,071

$

5,224

$

$

2,524,185

1.31

%

5,003,219

4,749,896

4,749,896

35,910

4,785,806

1.27

7,561,512

41,134

1.28

Obligations of Puerto Rico, States and

`

2,605

2,605

2,600

2,604

6.43

12,508

12,508

12,469

12,406

3.49

5.81

35,544

35,544

5,753

29,791

2,908

1,829

30,870

1.43

Total obligations of

Puerto Rico, States and

51,107

51,107

5,812

45,295

2,951

1,916

46,330

2.22

1,495

1,495

1,495

1,306

2.87

mortgage obligations -

federal agencies

1,495

1,495

1,495

1,306

2.87

Securities in wholly owned statutory business

trusts

5,960

5,960

5,960

5,960

6.33

Total securities

in wholly owned statutory

business trusts

5,960

5,960

5,960

5,960

6.33

held-to-maturity [2]

$

7,620,074

$

7,327,529

$

5,812

$

$

44,085

$

2,215

$

1.29

%

[1]

Book value includes $

million of unrealized loss which remains in Accumulated

other comprehensive (loss) income (AOCI) related

to certain securities

previously transferred from available-for-sale securities portfolio

to the held-to-maturity securities portfolio.

[2]

7.3

billion pledged to secure public and trust deposits that

the secured parties are not permitted to sell or repledge

the collateral. The

Corporation had unpledged held-to-maturities securities with

a fair value of $

98.8

million that could be used to increase its borrowing facilities.

Debt securities not due on a single contractual maturity date,

such as collateralized mortgage obligations, are classified in the period

of final

contractual maturity.

The expected

maturities of

collateralized mortgage

obligations and

certain other

securities may

differ

from their contractual maturities because they may be

subject to prepayments or may be called

by the issuer.

Credit Quality Indicators

describes the

credit quality

indicators by

major security

type that

takes into

account to

develop the

estimate of the allowance for credit losses for investment

securities held-to-maturity.

As discussed in

Note 2 of

the 2025 Form

10-K, U.S. Treasury

securities carry an explicit

guarantee from the U.S.

Government are

highly rated by major rating

agencies and have a long

history of no credit losses. Accordingly,

the Corporation applies a zero-credit

loss assumption and no allowance for credit losses

(“ACL”) for these securities has been established.

and December 31, 2025, the

“Obligations of Puerto Rico, States and

political subdivisions” classified as held-to-

maturity,

issued

by

of

Puerto

Rico

that

are

generally

not

rated

by

a

credit

rating

agency.

The

Corporation performs periodic credit quality

reviews of these securities and internally

assigns standardized credit risk ratings based

on

its

evaluation. For

the

definitions

of

the

obligor

risk

ratings, refer

to

the

Credit

Quality section

of

Note

to

the

This

an

amortized

cost

of

$

7.1

million

of

general

and

special

obligation

bonds

issued

by

three

of

Puerto

Rico,

of

which

$

6.3

million

have

a

“Pass”

rating,

that

are

payable

from

certain

property

taxes

imposed by the issuing municipality (compared to $

8.7

7.9

million, respectively, at December 31, 2025).

At

March

31,

2026,

the

of

“Obligations

of

Puerto

Rico,

States

and

political

subdivisions”

also

$

35.1

million

in

issued

by

the

Puerto

Rico

Housing

Finance

Authority

(“HFA”),

a

instrumentality,

for

which

the

source of payment is second mortgage loans in Puerto Rico

residential properties (not the government), but for which HFA, provides

a guarantee

in the

event of default

and upon the

satisfaction of certain

other conditions (December

31, 2025 -

$

million). These

are

not

rated

by

a

credit

rating

agency.

Refer

to

Note

to

the

for

information on the Corporation’s exposure to the Puerto

Rico Government.

A

deterioration of

Rico economy

or

of

the fiscal

health of

the

Government of

and/or

its

(including if

any of

the issuing

municipalities become

a debt

restructuring proceeding

Management and Economic Stability Act (“PROMESA”) could

adversely affect the value of these securities, resulting in losses

to the

the portfolio

of “Obligations

of Puerto

Rico, States

and political

subdivisions” had

no

securities issued

by the

HFA

for which

the underlying

payment is

U.S. Treasury

securities (December

• $

6.8

million). These

were fully redeemed during this quarter. The Corporation applies a zero-credit loss assumption for these securities, and no ACL has

been established for these securities

given that U.S. Treasury

securities carry an explicit guarantee from

the U.S. Government, are

highly rated by major rating agencies, and have

a long history of no credit losses.

Delinquency status

At March 31, 2026 and December 31, 2025, there were

no

securities held-to-maturity in past due or non-performing

status.

Allowance for credit losses on debt securities held-to-maturity

The

for

credit

losses

related

to

the

Obligations

of

Puerto

Rico

and

the

States

and

Political

at

March 31, 2026 was $

5.9

million (December 31, 2025 - $

5.8

Note 7 – 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 the 2025

Form 10-K.

presents the Corporation's

loan purchases (including

repurchases) for the

quarters ended March

and

2025 by class of loans:

For the quarters ended March 31,

$

55,006

$

7,160

109,208

120,907

$

164,214

$

128,067

The following table presents the Corporation’s whole-loan

sales for the quarters ended March 31, 2026 and

2025 by class of loans:

For the quarters ended March 31,

$

14,191

$

26,349

9,338

11,035

6,937

$

25,226

$

42,624

Delinquency status

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

BPPR

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

2,717

$

7,927

$

$

10,644

$

332,447

$

343,091

$

$

3,123

26,457

29,580

3,362,611

3,392,191

26,457

2,114

14,192

16,970

1,131,241

1,148,211

14,192

5,792

2,240

190,205

198,237

5,742,028

5,940,265

185,993

4,212

13,635

13,635

399,144

412,779

218,044

102,818

325,321

646,183

6,789,562

7,435,745

129,367

195,954

Leasing

21,261

3,938

8,892

34,091

1,952,074

8,892

12,351

8,721

25,395

46,467

1,167,725

25,395

1,778

1,898

18,601

11,212

15,976

45,789

1,805,275

1,851,064

15,755

Auto

81,112

13,038

35,390

129,540

3,654,364

35,390

Other

4,663

5,372

162,036

167,408

4,227

Total

$

379,324

$

150,813

$

646,491

$

1,176,628

$

26,500,285

$

27,676,913

$

420,273

$

226,218

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

5,733

$

$

10,962

$

16,695

$

2,067,509

$

2,084,204

$

10,962

$

10,282

1,930

6,987

19,199

2,132,061

2,151,260

6,987

21,202

1,610

22,812

2,041,333

2,064,145

11,660

4,404

6,693

22,757

2,602,537

2,625,294

6,524

6,903

6,903

1,254,511

1,261,414

25,877

1,552

9,700

37,129

1,239,487

1,276,616

9,700

Home equity lines of

credit

2,766

3,678

74,188

77,866

2,766

1,062

2,490

59,727

62,217

Other

9,764

9,766

Total

$

83,381

$

10,271

$

38,013

$

131,665

$

11,481,124

$

11,612,789

$

37,844

$

30-59

60-89

90 days

Total

days

days

or more

Current

[2] [3]

loans

loans

$

8,450

$

7,927

$

10,962

$

27,339

$

2,399,956

$

$

10,962

$

13,405

1,930

33,444

48,779

5,494,672

33,444

23,316

2,274

14,192

39,782

3,172,574

14,192

17,452

6,644

196,898

220,994

8,344,565

192,517

4,381

20,538

20,538

1,653,655

[1]

243,921

104,370

335,021

683,312

8,029,049

139,067

195,954

Leasing

21,261

3,938

8,892

34,091

1,952,074

8,892

12,351

8,721

25,395

46,467

1,167,732

25,395

2,766

3,798

75,966

79,764

2,766

19,663

11,735

16,881

48,279

1,865,002

16,660

Auto

81,112

13,038

35,390

129,540

3,654,364

35,390

Other

4,663

5,374

171,800

177,174

4,227

Total

$

462,705

$

161,084

$

684,504

$

1,308,293

$

37,981,409

$

$

458,117

$

226,387

[1]

At March 31, 2026, mortgage loans held-in-portfolio include

$

3.3

billion of loans that carry certain guarantees from the

FHA or the VA, for which

the Corporation’s policy is to exclude them from

non-performing status, of which $

million are 90 days or more past due. The portfolio of

guaranteed loans includes $

million of residential mortgage loans in Puerto Rico that

are no longer accruing interest as of March 31, 2026.

The

Corporation has $

million in reverse mortgage loans in Puerto Rico which

are guaranteed by FHA, but which are currently not

accruing interest

at March 31, 2026.

[2]

Loans held-in-portfolio are net of $

million in unearned income and exclude $

million in loans held-for-sale.

[3]

22.9

billion pledged to secure credit facilities and public funds

that the secured parties are not permitted to sell or repledge

the collateral,

7.4

billion were pledged at the Federal Home Loan Bank

("FHLB") as collateral for borrowings and $

15.5

billion at the Federal Reserve

Bank ("FRB") for discount window borrowings. As of

March 31, 2026, the Corporation had an available borrowing

facility with the FHLB and the

discount window of FRB of $

4.2

12.2

billion, respectively.

BPPR

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

6,579

$

$

$

6,846

$

296,502

$

303,348

$

$

2,457

35,692

38,448

3,356,682

3,395,130

35,692

2,760

24,567

28,008

1,168,585

1,196,593

24,567

8,864

3,760

187,222

199,846

5,770,227

5,970,073

183,914

3,308

17,283

17,283

340,258

357,541

261,145

133,124

329,613

723,882

6,624,085

7,347,967

132,373

197,240

Leasing

23,748

4,640

9,179

37,567

1,963,798

9,179

13,700

10,617

27,529

51,846

1,204,885

27,529

1,908

1,908

19,608

11,894

19,082

50,584

1,785,818

1,836,402

18,863

Auto

109,103

25,495

52,200

186,798

3,633,014

52,200

Other

2,688

2,285

5,900

165,858

171,758

1,809

Total

$

466,174

$

193,353

$

687,481

$

1,347,008

$

26,311,620

$

27,658,628

$

458,709

$

228,772

30-59

60-89

90 days

Total

days

days

or more

Current

loans

loans

$

9,500

$

$

8,636

$

18,136

$

2,134,306

$

2,152,442

$

8,636

$

1,600

7,020

8,620

2,139,534

2,148,154

7,020

7,608

6,686

15,222

2,622,117

2,637,339

6,498

15,596

6,400

13,422

35,418

1,266,055

1,301,473

13,422

(14)

(14)

1,282

2,796

4,160

72,624

76,784

2,796

1,233

3,048

66,778

69,826

1,233

Other

9,012

9,041

Total

$

34,969

$

9,842

$

39,822

$

84,633

$

11,584,257

$

11,668,890

$

39,634

$

30-59

60-89

90 days

Total

days

days

or more

Current

[2] [3]

loans

loans

$

16,079

$

$

8,748

$

24,982

$

2,430,808

$

$

8,748

$

2,457

1,899

42,712

47,068

5,496,216

42,712

2,760

24,567

28,008

3,125,072

24,567

16,472

4,688

193,908

215,068

8,392,344

190,412

3,496

17,283

17,283

1,657,616

[1]

276,741

139,524

343,035

759,300

7,890,140

145,795

197,240

Leasing

23,748

4,640

9,179

37,567

1,963,798

9,179

13,700

10,617

27,529

51,846

1,204,871

27,529

1,282

2,796

4,160

74,532

78,692

2,796

20,591

12,726

20,315

53,632

1,852,596

20,096

Auto

109,103

25,495

52,200

186,798

3,633,014

52,200

Other

2,688

2,314

5,929

174,870

180,799

1,838

Total

$

501,143

$

203,195

$

727,303

$

1,431,641

$

37,895,877

$

$

498,343

$

228,960

[1]

At December 31, 2025 mortgage loans held-in-portfolio include

$

3.2

billion of loans that carry certain guarantees from the FHA

or the VA, for

which the Corporation’s policy is to exclude them

from non-performing status, of which $

million are 90 days or more past due. The portfolio

of

guaranteed loans includes $

million of residential mortgage loans in Puerto Rico that

are no longer accruing interest as of December 31,

The Corporation has $

million in reverse mortgage loans in Puerto Rico which

are guaranteed by FHA, but which are currently not accruing

interest at December 31, 2025.

[2]

Loans held-in-portfolio are net of $

million in unearned income and exclude $

million in loans held-for-sale.

[3]

22.7

billion pledged to secure credit facilities and public funds

that the secured parties are not permitted to sell or repledge

the collateral,

7.5

billion were pledged at the FHLB as collateral for borrowings

and $

15.2

billion at the FRB for discount window borrowings.

As of

December 31, 2025, the Corporation had an available borrowing

facility with the FHLB and the discount window

of FRB of $

.0 billion and $

12.1

billion, respectively.

The following tables present the amortized cost basis

of non-accrual loans as of March 31, 2026

and December 31, 2025 by class of

loans:

BPPR

with no

with

with no

with

with no

with

$

$

$

10,632

$

$

10,632

$

22,240

4,217

6,957

29,197

4,247

6,617

7,575

6,617

7,575

6,203

179,790

5,975

12,178

180,339

59,937

69,430

8,940

60,697

78,370

Leasing

8,350

8,350

HELOCs

2,766

2,766

3,484

12,271

3,484

13,176

Auto

2,313

33,077

2,313

33,077

Other

3,864

3,864

Total

$

101,699

$

318,574

$

24,324

$

13,520

$

126,023

$

332,094

BPPR

with no

with

with no

with

with no

with

$

$

$

8,137

$

$

8,137

$

31,408

4,284

6,979

38,387

4,325

16,576

7,991

16,576

7,991

6,245

177,669

5,985

12,230

178,182

59,302

73,071

12,690

60,034

85,761

Leasing

8,408

8,408

HELOCs

2,796

2,796

3,314

15,549

1,233

3,314

16,782

Auto

2,252

49,948

2,252

49,948

Other

1,431

1,460

Total

$

120,246

$

338,463

$

21,833

$

17,801

$

142,079

$

356,264

The Corporation has

designated loans classified as

collateral dependent for

which the ACL

is measured based

on the fair

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

the collateral

is based

on

appraisals,

which

may

be

adjusted

due

to

their

age,

type,

location,

and

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.

Loans in non-accrual status with

no allowance at March 31,

2026 include $

million in collateral dependent loans

million). The Corporation recognized $

million in interest income on non-accrual loans during the quarter ended March

31, 2026 (March 31, 2025 - $

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 March

31, 2026 and December 31, 2025:

Real Estate

Auto

Equipment

Other

Total

BPPR

$

1,189

$

$

$

$

1,189

97,743

97,743

12,891

12,891

2,355

4,433

2,578

9,366

50,344

50,344

Leasing

1,652

1,652

3,316

3,316

Auto

16,905

16,905

Other

$

167,838

$

18,571

$

4,433

$

2,941

$

193,783

$

16,379

$

$

$

$

16,379

65,608

65,608

4,177

1,798

5,975

1,082

1,082

$

87,246

$

$

$

1,798

$

89,044

$

17,568

$

$

$

$

17,568

163,351

163,351

12,891

12,891

6,532

4,433

4,376

15,341

51,426

51,426

Leasing

1,652

1,652

3,316

3,316

Auto

16,905

16,905

Other

Inc.

$

255,084

$

18,571

$

4,433

$

4,739

$

282,827

Real Estate

Auto

Equipment

Other

Total

BPPR

$

1,206

$

$

$

$

1,206

127,031

127,031

23,014

23,014

2,378

4,476

7,151

67,380

67,380

Leasing

1,925

1,925

3,402

3,402

Auto

16,512

16,512

Other

$

224,411

$

18,468

$

4,476

$

$

248,015

$

16,395

$

$

$

$

16,395

65,630

65,630

4,187

1,798

5,985

1,398

1,398

$

87,610

$

$

$

1,798

$

89,408

$

17,601

$

$

$

$

17,601

192,661

192,661

23,014

23,014

6,565

4,476

2,095

13,136

68,778

68,778

Leasing

1,925

1,925

3,402

3,402

Auto

16,512

16,512

Other

Inc.

$

312,021

$

18,468

$

4,476

$

2,458

$

337,423

Note 8 – Allowance for credit losses – loans

The

Corporation follows

the current

expected credit

loss

(“CECL”) model

to

establish and

evaluate the

adequacy of

the ACL

to

provide for

expected losses

in the

loan portfolio.

This model

establishes a forward-looking

methodology that

reflects the

credit losses over the lives

of financial assets starting when such

assets are first acquired or originated.

In addition, CECL provides

that

the

initial ACL

on PCD

assets be

recorded as

an

increase to

the

purchase price,

with subsequent

changes to

the

as

a

credit

loss

expense.

The

for

credit

losses

in

current

is

based

on

this

methodology.

Loan losses

are charged

and

recoveries are

credited to

the ACL.

The

Corporation’s modeling

framework includes

internally

developed

quantitative

models

that

generate

lifetime

default

and

prepayment

as

well

as

other

loan

level

techniques to estimate

loss severity.

These models combine credit

risk factors which

include the impact

of loan modifications,

with

macroeconomic expectations to derive the lifetime

expected loss.

31, 2026, the

Corporation estimated

the ACL by

weighting the outputs

of optimistic, baseline,

and pessimistic scenarios.

The

weightings applied

are subject

to

evaluation on

a

quarterly basis

as

part

of

the ACL’s

governance process.

first

quarter

of

2026,

among

the

three

scenarios

evaluated

to

the

ACL,

the

baseline

scenario

was

assigned

the

highest

probability, followed by the pessimistic scenario,

where weight was increased during 2025 in response

to ongoing uncertainties.

At March 31,2026, the ACL increased by $

15.6

million from December 31, 2025 to $

823.7

tables present

the changes

in the

ACL of

loans held-in-portfolio

and unfunded

commitments for

ended

BPPR

Ending

Balance

Balance

$

3,871

$

$

$

$

$

4,704

44,149

15,847

(11,131)

48,881

34,722

(91)

35,403

163,877

16,834

(2,618)

1,887

179,980

246,619

33,838

(13,840)

2,351

268,968

4,488

1,268

5,767

70,674

(483)

2,799

73,761

Leasing

18,620

2,537

(4,085)

1,516

18,588

91,124

14,305

(19,235)

3,182

89,376

(82)

97,804

17,602

(20,744)

2,795

97,457

Auto

180,364

3,006

(21,150)

8,324

170,544

Other

8,169

(747)

7,707

377,519

34,891

(61,876)

14,617

365,151

$

717,920

$

73,298

$

$

(80,284)

$

21,294

$

732,235

$

5,993

$

(603)

$

$

$

$

5,390

2,570

3,291

$

8,563

$

$

$

$

$

8,681

[1] Allowance for credit losses of unfunded commitments

is presented as part of Other Liabilities in the Consolidated

Ending

Balance

Balance

$

15,474

$

(109)

$

$

$

15,365

14,568

15,265

13,729

1,869

15,713

17,057

(29)

17,496

60,828

2,881

(29)

63,839

9,338

9,393

9,880

(45)

(19)

9,863

1,277

(400)

1,111

8,808

(104)

(1,818)

7,282

Other

(13)

10,090

(500)

(1,831)

8,399

$

90,136

$

2,391

$

(1,879)

$

$

91,494

$

1,570

$

$

$

$

1,802

4,161

(222)

3,939

(19)

$

5,875

$

(9)

$

$

$

5,866

[1]

Ending

Balance

Balance

$

19,345

$

$

$

$

$

20,069

58,717

16,544

(11,131)

64,146

48,451

2,195

(91)

51,116

180,934

17,258

(2,647)

1,931

197,476

307,447

36,719

(13,869)

2,510

332,807

13,826

1,323

15,160

80,554

(502)

2,846

83,624

Leasing

18,620

2,537

(4,085)

1,516

18,588

91,124

14,305

(19,235)

3,182

89,376

1,335

(482)

1,178

106,612

17,498

(22,562)

3,191

104,739

Auto

180,364

3,006

(21,150)

8,324

170,544

Other

8,174

(760)

7,713

387,609

34,391

(63,707)

15,257

373,550

$

808,056

$

75,689

$

$

(82,163)

$

22,140

$

823,729

$

7,563

$

(371)

$

$

$

$

7,192

6,731

7,230

(19)

$

14,438

$

$

$

$

$

14,547

[1]

BPPR

Ending

Balance

Balance

$

2,783

$

$

$

$

$

3,420

44,852

(2,599)

(65)

42,848

37,355

(1,742)

(89)

36,019

130,136

(257)

(3,312)

4,840

131,407

215,126

(3,963)

(3,466)

5,997

213,694

2,743

(24)

2,719

72,901

(1,118)

(435)

2,932

74,289

Leasing

16,419

7,059

(4,544)

1,272

20,206

99,130

13,822

(18,865)

2,436

96,523

(108)

(25)

91,296

16,828

(21,953)

3,615

89,786

Auto

165,995

19,471

(21,056)

7,569

171,979

Other

7,002

(880)

7,007

363,477

50,736

(62,779)

13,921

365,355

$

670,666

$

52,690

$

$

(71,224)

$

24,122

$

676,263

$

6,725

$

$

$

$

$

7,445

1,663

(103)

1,560

$

8,388

$

$

$

$

$

9,005

[1]

Ending

Balance

Balance

$

6,453

$

3,627

$

$

$

10,081

9,642

5,811

15,453

12,473

1,209

(12)

14,193

15,870

1,477

(1,147)

16,422

44,438

12,124

(1,159)

56,149

8,521

(1,728)

6,793

9,508

9,740

1,449

(136)

(30)

1,550

11,440

2,200

(2,626)

11,651

Other

(29)

12,891

2,085

(2,685)

13,203

$

75,358

$

12,528

$

(3,844)

$

1,843

$

85,885

$

1,662

$

(32)

$

$

$

1,630

5,409

(1,917)

3,492

$

7,082

$

(1,918)

$

$

$

5,164

[1]

Ending

Balance

Balance

$

9,236

$

4,262

$

$

$

$

13,501

54,494

3,212

(65)

58,301

49,828

(533)

(101)

1,018

50,212

146,006

1,220

(4,459)

5,062

147,829

259,564

8,161

(4,625)

6,743

269,843

11,264

(1,752)

9,512

82,409

(1,071)

(435)

3,117

84,029

Leasing

16,419

7,059

(4,544)

1,272

20,206

99,130

13,822

(18,865)

2,436

96,523

1,503

(244)

(55)

1,610

102,736

19,028

(24,579)

4,252

101,437

Auto

165,995

19,471

(21,056)

7,569

171,979

Other

7,004

(909)

7,009

376,368

52,821

(65,464)

14,833

378,558

$

746,024

$

65,218

$

$

(75,068)

$

25,965

$

762,148

$

8,387

$

$

$

$

$

9,075

7,072

(2,020)

5,052

$

15,470

$

(1,301)

$

$

$

$

14,169

[1]

Modifications

A

modification

constitutes

a

change

in

loan

terms

in

the

form

of

forgiveness,

an

rate

reduction,

other

than-

insignificant payment delay, term extension or combination of the above made

to a borrower experiencing financial difficulty.

The amount of outstanding commitments to lend additional funds to debtors with financial difficulties owing receivables whose terms

have been modified during the quarter ended March 31, 2026 amounted to $

million (during the year ended December 31, 2025 -

$

million), related to the commercial loan portfolios.

The following tables show the amortized cost basis of the loans modified to borrowers experiencing financial difficulties at the end of

the reporting period disaggregated by class of financing receivable

and type of concession granted for the quarters ended March

31,

2026 and 2025.

Loans modified to

borrowers experiencing financial

difficulties that

were fully paid

down, charged-off or

foreclosed

upon by period end are not reported.

Loan Modifications Made to Borrowers Experiencing Financial

Difficulty for the quarter ended March 31,

Interest Rate Reduction

BPPR

$

0.01

%

$

%

$

0.01

%

%

%

%

0.01

%

%

0.01

%

0.03

%

%

0.03

%

Total

$

1,413

0.01

%

$

%

$

1,413

%

BPPR

$

1,856

0.05

%

$

%

$

1,856

0.03

%

1,321

0.12

%

%

1,321

0.04

%

56,240

0.95

%

%

56,240

0.66

%

6,309

0.08

%

%

6,309

0.07

%

0.01

%

0.02

%

0.01

%

Auto

%

%

%

Total

$

65,881

0.24

%

$

%

$

65,892

0.17

%

Other-Than-Insignificant Payment Delays

BPPR

$

17,425

1.52

%

$

%

$

17,425

0.54

%

155,817

2.62

%

%

155,817

1.82

%

Total

$

173,242

0.63

%

$

%

$

173,242

0.44

%

Combination - Term Extension

and Interest Rate Reduction

BPPR

$

%

$

%

$

%

2,195

0.03

%

%

2,195

0.03

%

2,838

0.15

%

%

2,838

0.15

%

Auto

%

%

%

Total

$

5,238

0.02

%

$

%

$

5,238

0.01

%

Combination -

Other-Than-Insignificant Payment Delays and Interest Rate

BPPR

$

%

$

%

$

%

2,447

0.20

%

%

2,447

0.20

%

Total

$

2,635

0.01

%

$

%

$

2,635

0.01

%

Loan Modifications Made to Borrowers Experiencing Financial

Difficulty for the quarter ended March 31,

Interest Rate Reduction

BPPR

$

1,272

0.02

%

$

%

$

1,272

0.02

%

0.02

%

%

0.02

%

1,215

0.07

%

%

1,215

0.07

%

Other

%

%

%

Total

$

2,727

0.01

%

$

%

$

2,727

0.01

%

BPPR

$

1,005

0.03

%

$

%

$

1,005

0.02

%

0.04

%

%

0.02

%

9,372

0.18

%

%

9,372

0.12

%

9,971

0.14

%

%

9,971

0.12

%

0.01

%

%

0.01

%

Auto

%

%

%

Total

$

21,139

0.08

%

$

%

$

21,141

0.06

%

Other-Than-Insignificant Payment Delays

BPPR

$

4,454

0.13

%

$

%

$

4,454

0.08

%

24,686

2.05

%

%

24,686

0.83

%

96,529

1.84

%

%

96,529

1.25

%

Total

$

125,669

0.48

%

$

%

$

125,669

0.34

%

Combination - Term Extension

and Interest Rate Reduction

BPPR

$

3,132

0.05

%

$

%

$

3,132

0.04

%

3,209

0.18

%

0.05

%

3,252

0.18

%

Total

$

6,341

0.02

%

$

0.05

%

$

6,384

0.02

%

Combination -

Other-Than-Insignificant Payment Delays and Interest Rate

BPPR

$

0.01

%

$

%

$

0.01

%

2,751

0.23

%

%

2,751

0.23

%

Total

$

3,318

0.01

%

$

%

$

3,318

0.01

%

The following tables describe the financial effect of the

modifications made to borrowers experiencing

financial difficulties:

Interest rate reduction

22.6

% to

9.9

%.

7.3

% to

5.4

%.

21.2

% to

8.8

%.

19.9

% to

12.1

%.

Auto

8.9

% to

8.7

%.

Term extension

Auto

Other than insignificant payment delays

Interest rate reduction

25.4

% to

9.6

%.

6.5

% to

5.6

%.

21.3

% to

8.2

%.

21.6

% to

11.7

%.

Other

.0% to

.0%.

Term extension

year to the life of loans.

Auto

Other than insignificant payment delay

The following tables present, by class, the performance of loans that have been modified during the twelve months preceding March

31,

The

past

due

days

or

more

include

all

loans

modified

as

non-accruing

at

the

time

of

the

modification. These

loans will

continue in

non-accrual status,

and presented

as past

due 90

days or

more, until

the borrower

has

demonstrated a willingness and

ability to make

the restructured loan payments

(at least six

months of sustained

performance after

the modification

or one

year for

loans providing

for quarterly

or semi-annual

payments) and

management has

concluded that

it is

probable that the borrower would not be in payment

default in the foreseeable future.

BPPR

due

Current

Total

Default

Without

$

$

$

2,115

$

2,115

$

1,726

$

3,841

$

$

2,115

2,741

3,226

58,227

61,453

2,741

4,369

5,254

304,683

309,937

4,028

4,082

1,615

20,668

26,365

24,524

50,889

7,338

13,330

1,139

2,344

6,755

9,099

1,328

2,220

12,195

14,415

1,268

Auto

Total

$

6,822

$

2,342

$

32,360

$

41,524

$

408,568

$

450,092

$

8,608

$

23,752

due

Current

Total

Default

Without

$

$

$

$

$

58,652

$

58,652

$

$

1,120

1,120

Total

$

$

$

$

$

60,761

$

60,794

$

$

due

Current

Total

Default

Without

$

$

$

2,115

$

2,115

$

60,378

$

62,493

$

$

2,115

2,741

3,226

58,227

61,453

2,741

4,369

5,254

305,597

310,851

4,028

4,082

1,615

20,668

26,365

25,644

52,009

7,338

13,330

1,139

2,344

6,755

9,099

1,361

2,253

12,270

14,523

1,268

Auto

Total

$

6,822

$

2,342

$

32,393

$

41,557

$

469,329

$

510,886

$

8,641

$

23,752

to make the restructured loan payments.

Payment default is defined as a restructured loan becoming

90 days past due after being modified, foreclosed

or

The following tables present, by class, the performance of loans that have been modified during the twelve months preceding March

BPPR

due

Current

Total

Default

Without

$

$

$

$

$

8,571

$

9,022

$

$

2,137

2,335

45,631

47,966

1,880

4,856

5,323

167,950

173,273

4,583

5,072

2,767

17,345

25,184

37,456

62,640

3,256

14,089

2,080

4,690

6,770

1,887

2,407

12,584

14,991

1,751

Auto

Other

Total

$

6,537

$

3,722

$

27,521

$

37,780

$

277,028

$

314,808

$

4,425

$

23,096

due

Current

Total

Default

Without

$

$

$

$

$

5,804

$

5,804

$

$

5,953

5,953

1,495

Total

$

$

$

$

$

13,458

$

14,171

$

$

due

Current

Total

Default

Without

$

$

$

$

$

5,804

$

5,804

$

$

8,571

9,022

2,137

2,335

51,584

53,919

1,880

4,856

5,323

168,634

173,957

4,583

5,072

2,767

18,044

25,883

38,252

64,135

3,901

14,143

2,080

4,690

6,770

1,887

2,421

12,805

15,226

1,751

Auto

Other

Total

$

6,551

$

3,722

$

28,220

$

38,493

$

290,486

$

328,979

$

5,070

$

23,150

to make the restructured loan payments.

Payment default is defined as a restructured loan becoming

90 days past due after being modified, foreclosed

or

Payment

default

is

defined

as

a

restructured

loan

becoming

days

past

due

after

being

modified,

foreclosed

or

charged-off,

whichever

occurs

first.

The

tables

provide

the

balance

of

loans

modified

for

under

difficulties that were subject to payment default and that

had been modified during the twelve months prior

to default.

Amortized Cost Basis of Modified Financing Receivables That

Subsequently Defaulted During the Quarter Ended

Other-Than-

Insignificant

Payment Delays

Combination - Term

Extension and Interest

Rate Reduction

Combination - Other-

Than-Insignificant

Payment Delays and

Total

$

$

$

$

$

$

7,741

8,586

1,133

1,202

Total

$

$

7,781

$

$

1,120

$

1,273

$

10,568

Amortized Cost Basis of Modified Financing Receivables That

Subsequently Defaulted During the Quarter Ended

Other-Than-

Insignificant

Payment Delays

Combination - Term

Extension and Interest

Rate Reduction

Combination - Other-

Than-Insignificant

Payment Delays and

Total

$

$

$

$

$

$

4,820

5,235

Total

$

$

4,984

$

$

$

$

6,737

Credit Quality

The risk

rating system

provides for

the assignment

of ratings

at the

obligor level

condition of

the borrower.

The

risk rating

analysis process

is

performed at

least

once a

year

or more

frequently if

events or

conditions change

which may

deteriorate the credit quality.

In the case of

consumer and mortgage loans, these

loans are classified considering their

delinquency

status at the end of the reporting period.

The following tables present the amortized cost basis, net of unearned income, of

loans held-in-portfolio based on the Corporation’s

assignment of

obligor risk

ratings as

defined at

2025 and

the gross

charge-offs

recorded by

vintage year. For

the definitions of the obligor risk ratings,

refer to the Credit Quality section of

Note 8 to the Consolidated Financial

Statements included in the 2025 Form 10-K:

Loans

Loans

Prior

Years

Total

BPPR

Pass

$

42,608

$

11,093

$

32,748

$

36,284

$

130,510

$

65,455

$

$

$

319,001

Watch

15,710

3,654

19,882

3,795

3,795

$

42,608

$

11,313

$

48,458

$

36,284

$

131,028

$

73,097

$

$

$

343,091

Pass

$

82,203

$

441,363

$

401,447

$

263,210

$

782,917

$

1,136,854

$

5,267

$

$

3,113,261

Watch

22,316

11,821

42,798

4,973

97,718

180,224

1,814

41,114

43,937

8,367

17,435

28,244

54,769

$

82,203

$

465,493

$

413,991

$

315,243

$

805,466

$

1,303,930

$

5,865

$

$

3,392,191

$

$

$

$

$

11,131

$

$

$

$

11,131

Pass

$

17,596

$

153,564

$

111,506

$

48,190

$

69,723

$

422,574

$

22,830

$

$

845,983

Watch

6,194

26,562

6,166

34,427

93,078

1,049

167,476

1,484

2,935

17,345

1,500

23,454

9,312

1,894

1,804

18,232

76,798

1,827

110,854

$

18,773

$

169,143

$

139,962

$

57,644

$

125,537

$

609,946

$

27,206

$

$

1,148,211

$

$

$

$

$

$

$

$

$

Pass

$

68,303

$

1,310,651

$

599,285

$

642,805

$

424,285

$

518,898

$

1,366,545

$

$

4,930,772

Watch

7,479

34,152

93,292

18,274

32,820

17,092

204,257

407,366

1,342

20,675

25,617

9,852

1,791

4,476

22,278

86,031

8,539

36,138

14,964

46,521

94,276

170,270

145,363

516,071

Loss

$

85,663

$

1,401,616

$

733,158

$

717,452

$

553,172

$

710,736

$

1,738,468

$

$

5,940,265

$

$

$

$

$

$

$

1,790

$

$

2,618

Pass

$

8,389

$

34,849

$

114,149

$

77,267

$

$

11,792

$

71,895

$

$

318,341

Watch

45,773

43,224

5,688

(247)

94,438

$

8,389

$

34,849

$

159,922

$

120,491

$

5,688

$

11,792

$

71,648

$

$

412,779

Pass

$

191,448

$

1,006,090

$

855,964

$

668,642

$

382,160

$

4,262,955

$

$

$

7,367,259

2,872

1,922

62,782

68,486

$

191,448

$

1,006,273

$

856,691

$

671,514

$

384,082

$

4,325,737

$

$

$

7,435,745

$

$

$

$

$

$

$

$

$

Loans

Loans

Prior

Years

Total

BPPR

Leasing

Pass

$

202,295

$

598,503

$

498,463

$

324,408

$

225,282

$

128,323

$

$

$

1,977,274

1,825

2,632

2,242

1,538

8,891

$

202,296

$

599,156

$

500,288

$

327,040

$

227,524

$

129,861

$

$

$

$

$

1,064

$

1,026

$

1,082

$

$

$

$

$

4,085

Pass

$

$

$

$

$

$

$

1,188,797

$

$

1,188,797

25,392

25,392

Loss

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

19,235

$

$

19,235

HELOCs

Pass

$

$

$

$

$

$

$

1,898

$

$

1,898

$

$

$

$

$

$

$

1,898

$

$

1,898

Pass

$

238,029

$

755,971

$

361,303

$

223,153

$

111,867

$

113,321

$

$

31,028

$

1,834,672

1,644

2,772

2,475

1,246

6,432

1,800

16,369

Loss

$

238,029

$

757,615

$

364,084

$

225,629

$

113,113

$

119,766

$

$

32,828

$

1,851,064

$

$

2,534

$

3,780

$

4,636

$

1,937

$

7,205

$

$

$

20,744

Auto

Pass

$

286,874

$

1,082,045

$

930,739

$

647,257

$

420,503

$

372,300

$

$

$

3,739,718

4,671

12,133

10,915

8,074

8,326

44,139

Loss

$

286,894

$

1,086,745

$

942,888

$

658,172

$

428,577

$

380,628

$

$

$

$

$

5,175

$

7,130

$

5,400

$

2,516

$

$

$

$

21,150

Pass

$

5,899

$

32,313

$

23,730

$

15,510

$

14,353

$

7,189

$

63,737

$

$

162,731

2,242

2,861

Loss

1,025

1,816

$