Popular third-quarter net income falls to $266 million as it updates 2026 outlook
Popular raised its net interest income outlook and cut its effective tax rate guidance to 14%. It also raised its net charge-off range to 80 to 90 basis points.
Key takeaways
- Popular, Inc. (BPOP) reported net income of $266.3 million, or $4.21 per diluted share, for the quarter ended Sept. 30, 2026, down from $278.2 million in the prior quarter. It raised its 2026 net interest income outlook to about an 8.5% increase.
Popular, Inc. (BPOP) said Thursday it earned $266 million, or $4.21 per diluted share, in the quarter ended Sept. 30, 2026, down from $278 million in the second quarter, according to a regulatory filing.
Net income was $211 million a year earlier, when diluted earnings were $3.14 per share.
Here's how the company did:
- Net income: $266.3 million vs. $278.2 million in the second quarter and $211.3 million a year earlier
- Diluted EPS: $4.21 vs. $4.35 in the second quarter and $3.14 a year earlier
- Net interest income: $698.9 million vs. $693.4 million in the second quarter and $646.5 million a year earlier
- Non-interest income: $175.7 million vs. $180.5 million in the second quarter and $171.2 million a year earlier
- Operating expenses: $505.6 million vs. $484.1 million in the second quarter and $495.3 million a year earlier
- Provision for credit losses: $58.6 million vs. $65.9 million in the second quarter and $75.1 million a year earlier
Net interest income increased $6 million from the second quarter. The company said the increase was driven by higher income from investment securities and commercial loans, as well as one additional day in the quarter.
Higher interest expense on deposits partly offset that gain, mainly reflecting higher average balances of public deposits and higher rates on those deposits.
Net interest margin decreased three basis points to 3.63%, compared with 3.51% a year earlier.
Non-interest income of $176 million decreased $5 million, or 3%, from the second quarter. The company said service charges on deposits fell after a new deposit product launched in August offered $0 service fees to clients that meet certain criteria.
Total operating expenses of $506 million increased $21 million, or 4%, from the second quarter. Personnel costs rose $16 million, or 7%, including higher salaries from annual salary and merit increases effective in the third quarter.
Full-time equivalent employees were 9,112 as of Sept. 30, 2026, compared with 9,203 as of June 30, 2026.
Guidance changes
The company updated several 2026 full-year outlook metrics. The table compares the updated figures with the original guidance.
| Metric | Original 2026 guidance | Updated guidance |
|---|---|---|
| Net interest income | 5%-7% increase for the year | ~8.5% increase for the year |
| Non-interest income | $160 million-$165 million per quarter | ~$170 million in Q4 |
| Net charge-offs | 55 bps-70 bps annualized | 80 bps-90 bps annualized |
| Operating expenses | 3% increase for the year | 2% increase for the year |
| Effective tax rate | 15%-17% for the year | 14% for the year |
| Loan growth | 3%-4% increase for the year | 2% increase for the year |
The company said the higher net charge-off range reflects year-to-date charge-offs and non-performing loan inflows in the commercial portfolio. Its operating expense guidance includes the maximum profit sharing contribution.
Credit quality
Net charge-offs were $72.9 million, and the annualized net charge-off ratio was 0.73%, down from 1.05% in the second quarter and up from 0.60% a year earlier.
Non-performing loans held in portfolio rose $52 million to $466 million, and the non-performing loan ratio was 1.16%, compared with 1.04% in the second quarter.
The company said a $74 million commercial and industrial loan moved to non-performing status in the quarter. It described the borrower-specific events as not indicative of broader deterioration in the commercial portfolio.
The allowance for loan losses was $771 million as of Sept. 30, 2026, a decrease of $14 million from the second quarter.
Capital and dividend
Popular repurchased 1,060,241 shares of common stock for $179 million at an average price of $168.40 per share during the quarter. Capital returned to shareholders totaled $236 million.
The company said it declared a 20% increase in its quarterly common stock dividend to $0.90 per share. The company's dividend declared in the second quarter was $0.75 per share.
Return on average tangible common equity, adjusted for unrealized losses on available-for-sale securities, was 15.80%, down from 17.02% in the second quarter and up from 13.06% a year earlier. The company has set an annual target of 14% to 17%.
Tangible book value per common share was $86.30, down from $87.94 in the second quarter. The Common Equity Tier 1 capital ratio was 16.06%, compared with 16.08% in the prior quarter.
President and Chief Executive Officer Jorge J. García said: "Business activity in Puerto Rico remains healthy, supported by a strong labor market. Credit metrics continue to be stable while we remain attentive to economic conditions, given the potential impact of prolonged inflation and higher cost of fuel and energy."
Total deposits were $68.7 billion at the end of the quarter. Puerto Rico public deposits stood at $21.5 billion, or 31% of total deposits, and the company expects them to be in the range of $20 billion to $22 billion for the rest of the year.
Total assets were $77.8 billion, down $1.2 billion from the second quarter. The company said the decrease mainly reflected a $1.5 billion decline in money market and investment securities.
The company will discuss the results on a conference call at 11:00 a.m. Eastern Time on Thursday, Oct. 22, 2026, broadcast live over the internet.