8-K: Popular, Inc. Reports Strong Q4 2025 Earnings

Popular, Inc. announced a significant increase in net income and EPS for Q4 2025 and the full year, driven by higher net interest income and disciplined expense management.

Summary

• Net income for Q4 2025 was $233.9 million, an increase from $211.3 million in Q3 2025.
• Excluding the partial reversal of the FDIC special assessment reserve, adjusted net income for Q4 2025 was $224.2 million.
• Earnings per share (EPS) for Q4 2025 was $3.53, up from $3.15 in Q3 2025.
• Net income for the full year 2025 was $833.2 million, a 36% growth compared to $614.2 million in 2024.
• Net interest income for Q4 2025 increased by $11.0 million to $657.6 million compared to Q3 2025.
• Net interest margin (NIM) for Q4 2025 was 3.61%, an increase from 3.51% in Q3 2025.
• Operating expenses amounted to $473.2 million in Q4 2025, a decrease of $22.1 million from Q3 2025, partly due to a $15.3 million partial reversal of the FDIC special assessment reserve.
• Loans held-in-portfolio increased by $640.4 million from Q3 2025 to $39.3 billion.
• Total deposits decreased by $323.3 million from Q3 2025 to $66.2 billion, including a $662.3 million decrease in P.R. public deposits, offset by a $339.0 million increase in other deposits.
• Non-performing loans (NPLs) decreased by $3.9 million from Q3 2025, with the NPLs to loans ratio decreasing to 1.27% from 1.30%.
• Net charge-offs (NCOs) decreased by $8.2 million from Q3 2025 to $49.6 million.
• The Allowance for Credit Losses (ACL) to NPLs ratio increased to 162.2% from 156.6% in Q3 2025.
• Common Equity Tier 1 ratio was 15.72% and Tangible Book Value per share was $82.65 at December 31, 2025.
• The Corporation repurchased 1,252,303 shares of common stock for $147.8 million in Q4 2025 and declared a quarterly common stock dividend of $0.75 per share.
• Return on average tangible common equity (ROTCE) for Q4 2025 was 14.39%, exceeding the 14% objective, and 13.04% for the full year 2025.

Sentiment

Score: 8

Explanation: The filing reports strong financial performance for both the quarter and the full year, with significant increases in net income and EPS, expanded net interest margin, and improved credit quality. The company also demonstrated effective capital management through share repurchases and increased dividends, and provided positive guidance for 2026. While there was a decrease in non-interest income and overall deposits, the underlying trends in core deposits and loan growth are positive.

Positives

• Net income for Q4 2025 increased to $233.9 million from $211.3 million in Q3 2025.
• Full year 2025 net income grew by 36% to $833.2 million compared to $614.2 million in 2024.
• EPS increased to $3.53 in Q4 2025 and $12.31 for the full year 2025.
• Net interest income increased by $11.0 million in Q4 2025, driven by lower interest expense on deposits.
• Net interest margin expanded to 3.61% in Q4 2025, up 10 basis points from Q3 2025.
• Operating expenses decreased by $22.1 million in Q4 2025, partly due to a $15.3 million partial reversal of the FDIC special assessment reserve.
• Loans held-in-portfolio increased by $640.4 million, driven by commercial, construction, and mortgage portfolios.
• Credit quality metrics improved with non-performing loans (NPLs) decreasing by $3.9 million and the NPLs to loans ratio decreasing to 1.27%.
• Net charge-offs (NCOs) decreased by $8.2 million, and the annualized NCOs to average loans ratio decreased to 0.51%.
• Allowance for credit losses (ACL) to NPLs increased to 162.2% from 156.6% in Q3 2025.
• Tangible Book Value per share increased by $3.53 to $82.65 in Q4 2025.
• Return on average tangible common equity (ROTCE) for Q4 2025 was 14.39%, exceeding the 14% objective, and 13.04% for the full year 2025.
• The Corporation continued returning capital to shareholders through repurchases of 1,252,303 common shares for $147.8 million and an increased quarterly common stock dividend of $0.75 per share.
• Excluding P.R. public deposits, total deposits increased by $339.0 million in Q4 2025.
• Moodys baseline forecast shows stronger 2026 U.S. economic growth (2.05% GDP) and stable low unemployment (4.64%).
• P.R. baseline forecast shows increased 2026 GDP growth (0.58%) and stable low unemployment (6.06%).
• Banco Popular de Puerto Rico was named Bank of the Year Puerto Rico for the 13th time by The Banker, a publication by The Financial Times.
• Credit ratings from Fitch (BBBStable), S&P (BB+ Positive), and Moodys (Ba1 Positive) indicate a solid credit profile.

Negatives

• Non-interest income decreased by $4.9 million in Q4 2025, mainly due to lower other operating income and an unfavorable variance in equity securities income.
• Money market and investment securities decreased by $330.6 million from Q3 2025.
• Total deposits decreased by $323.3 million from Q3 2025, primarily driven by a $662.3 million decrease in P.R. public deposits.
• Common Equity Tier 1 ratio slightly decreased from 15.79% in Q3 2025 to 15.72% in Q4 2025.
• A non-cash goodwill impairment of $13.0 million was recorded in the U.S. based equipment leasing subsidiary during Q3 2025.
• NPLs increased $147 million year-over-year to $498 million, driven in part by two unrelated commercial exposures totaling $188.4 million in BPPR entering NPL status in the prior quarter.
• The ACL to NPLs ratio decreased from 213% in 2024 to 162.2% in 2025.
• NCO levels for the P.R. Personal Loan Portfolio remained above the historical average benchmark, despite an overall improvement in 2025.
• Credit Card Portfolio delinquency and NCOs continue above the historical benchmark.

Risks

• The effect of competitive and economic factors, and the Corporation's reaction to those factors.
• The adequacy of the allowance for loan losses and delinquency trends.
• Market risk and the impact of interest rate changes, including on the cost of deposits.
• The Corporation's ability to attract deposits and grow its loan portfolio.
• Capital market conditions, capital adequacy, and liquidity.
• The effect of legal and regulatory proceedings, new regulatory requirements, or accounting standards on the Corporation's financial condition and results of operations.
• The occurrence of unforeseen or catastrophic events, such as extreme weather events, pandemics, man-made disasters, or acts of violence or war, and actions taken by governmental authorities in response thereto.
• The Corporation's ability to successfully execute its transformation initiative, including achieving projected earnings, efficiencies, and return on tangible common equity and accurately anticipating costs and expenses.
• The Corporation's ability to execute capital actions, including with respect to share repurchases and dividends.
• The imposition of additional or special FDIC assessments, or increases thereto.
• Changes to regulatory capital, liquidity, and resolution-related requirements applicable to financial institutions in response to recent developments affecting the banking sector.
• The impact of bank failures or adverse developments at other banks and related negative media coverage of the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks.
• The impact of any future U.S. government shutdown and changes in and uncertainty regarding federal funding, tax, and trade policies, and rulemaking, supervision, examination, and enforcement priorities of the federal administration.

Future Outlook

For 2026, Popular, Inc. expects a 5%-7% increase in Net Interest Income, non-interest income between $160 million and $165 million per quarter, annualized Net Charge-Offs between 55 bps and 70 bps, a 3% increase in operating expenses, an effective tax rate of 15%-17%, and loan growth of 3%-4% led by commercial loans. Moodys baseline forecast shows stronger 2026 U.S. economic growth at 2.05% GDP and 4.64% unemployment, while P.R. is expected to see 0.58% GDP growth and 6.06% unemployment.

Management Comments

• "We closed out a strong fourth quarter and an excellent year for Popular, reflecting the discipline and focus of our team across the organization."
• "In 2025, we delivered 36% growth in net income, achieved strong loan growth, maintained stable credit quality, and continued returning capital to our shareholders."
• "Fourth quarter performance was driven by higher net interest income and continued expense discipline."
• "We demonstrated significant progress in our efforts to improve our sustainable returns towards our 14% objective. We are very pleased to have exceeded a 14% ROTCE for the fourth quarter and a 13% ROTCE for the full year."
• "We are moving full speed ahead with the execution of our new strategic framework, determined to be the #1 bank for our customers by strengthening relationships and delivering exceptional service."
• "We are also focused on providing solutions faster, improving productivity, and reducing costs."
• "Ultimately, our goal is to be a top-performing bank that attracts and retains top talent and generates profitable growth and long-term shareholder value."
• "I want to thank our employees for their continued commitment, dedication, and performance. We look forward to building on the positive momentum generated last year and are optimistic about what we can achieve in 2026."

Industry Context

The banking sector continues to navigate a dynamic interest rate environment, with Popular, Inc. benefiting from lower interest expense on deposits, particularly P.R. public deposits, and strategic reallocation of funds. The company's focus on loan growth, especially in commercial and construction, aligns with broader economic recovery trends, while stable credit quality metrics are crucial amidst ongoing economic uncertainty. The partial reversal of the FDIC special assessment reserve reflects regulatory adjustments impacting the industry, and the company's low beta retail and commercial accounts suggest a more stable funding cost structure compared to higher beta products in the market.

Comparison to Industry Standards

• Popular, Inc. ranks among the top 50 U.S. bank holding companies by assets ($75 billion).
• Banco Popular de Puerto Rico was named Bank of the Year Puerto Rico for the 13th time by The Banker, a publication by The Financial Times, indicating strong regional performance.
• The company's ROTCE of 14.39% for Q4 2025 and 13.04% for the full year 2025 demonstrates strong profitability compared to its stated objective of 14%.
• The company's credit ratings (Fitch BBBStable, S&P BB+ Positive, Moodys Ba1 Positive) indicate a solid credit profile within the financial services industry.
• The company's deposit beta for retail and commercial accounts is noted as low, suggesting a more stable funding cost structure compared to higher beta products in the market.

Stakeholder Impact

• Shareholders benefited from increased net income, EPS, higher tangible book value per share ($82.65), share repurchases ($147.8 million in Q4 2025), and an increased quarterly common stock dividend ($0.75 per share).
• Customers are targeted by the company's strategic framework to be the #1 bank, focusing on strengthening relationships, delivering exceptional service, and providing faster solutions.
• Employees were thanked by management for their continued commitment, dedication, and performance, with the strategic framework aiming to attract and retain top talent.
• The Government of Puerto Rico experienced a decrease in P.R. public deposits by $662.3 million due to expected outflows to fulfill scheduled obligations and operational needs.

Next Steps

• Execute the new strategic framework to be the #1 bank for customers by strengthening relationships and delivering exceptional service.
• Focus on providing solutions faster, improving productivity, and reducing costs.
• Build on the positive momentum generated in 2025 for continued success in 2026.
• File the Annual Report on Form 10-K for the year ended December 31, 2025, with the Securities and Exchange Commission.

Key Dates

Recommendation

Popular, Inc. delivered exceptional Q4 and full-year 2025 results, significantly exceeding expectations with a 36% increase in annual net income and a Q4 ROTCE of 14.39%, surpassing its stated objective. The company demonstrated robust loan growth, disciplined expense management, and strong capital return to shareholders through increased dividends and substantial share repurchases. Despite a slight dip in overall deposits due to P.R. public deposit outflows, core customer deposits showed growth, and credit quality metrics improved. The positive 2026 guidance, coupled with favorable credit rating outlooks, indicates continued strong performance and value creation potential, making it a compelling 'strong buy' for investors.

Keywords

Popular Inc., BPOP, financial results, Q4 2025, full year 2025, net income, EPS, net interest income, net interest margin, NIM, loans, deposits, credit quality, non-performing loans, NPLs, net charge-offs, NCOs, allowance for credit losses, ACL, capital ratios, Common Equity Tier 1, CET1, tangible book value, ROTCE, share repurchase, dividends, banking, Puerto Rico, Popular Bank, FDIC special assessment, financial services, investor presentation, earnings report