Popular raises 2026 charge-off forecast after borrower bankruptcy
Popular raises its 2026 net charge-off forecast to 90 to 95 basis points and cuts third-quarter diluted EPS to $3.83 from $4.21 after a borrower's Chapter 11 filing.
Key takeaways
- Popular (BPOP) recognized an additional $38 million provision for credit losses for the quarter ended Sept. 30, 2026, after a commercial borrower filed for Chapter 11 bankruptcy. Diluted EPS for the quarter is now $3.83, down from $4.21. The company now expects 2026 net charge-offs of 90 to 95 basis points, up from 80 to 90.
Popular (BPOP) booked an additional $38 million provision for credit losses for the third quarter of 2026 after a commercial borrower in the quick service restaurant industry filed for Chapter 11 bankruptcy. The change lowers third-quarter diluted earnings per share to $3.83 from $4.21. Shares were little changed at 9:41 a.m. ET, from a $156.52 close.
The borrower substantially ceased operations after the quarterly earnings release. The loan had been nonperforming since the second quarter of 2026, and some reserves and charge-offs were already recorded in the third quarter.
The company treated the events as a recognized subsequent event and adjusted its interim financial statements, which had not yet been issued. It expects an additional charge-off on the relationship in the fourth quarter of 2026, and now expects 2026 net charge-offs of 90 to 95 basis points, up from 80 to 90 basis points. The rest of its full-year 2026 outlook is unchanged.
The provision for credit losses is now $96.7 million, up from $58.6 million. Net income is $242.4 million, down from $266.3 million.
The allowance for credit losses is now $808.8 million, up from $770.7 million. Allowance coverage of loans rose to 2.02% from 1.92%.
Tangible book value per share is now $85.92, down from $86.30. Return on average tangible common equity is 14.39%, down from 15.80%.
Common Equity Tier 1 capital stands at 16.01%, against 16.06% before the change.