POPULAR, INC. (BPOP) Business

Verbatim Item 1 Business section from POPULAR, INC.'s latest 10-K. Filing date: 2026-03-02. Accession: 0001193125-26-085756.

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ITEM 1. BUSINESS

General:

is

a diversified,

publicly-owned financial

holding company,

registered under

the Bank

Holding Company

Act

of

1956, as

amended (the “BHC Act”), and subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the

“Federal Reserve Board”). Popular was incorporated in 1984 under the laws of the Commonwealth of Puerto Rico and is the

largest

financial institution

based in Puerto

Rico, with

consolidated assets of

$75.3 billion, total

deposits of

$66.2 billion

and stockholders’

equity of $6.2 billion at

December 31, 2025. At December 31,

2025, we ranked among the

50 largest U.S. bank holding companies

based on total assets according to information gathered

and disclosed by the Federal Reserve Board.

We operate in two principal markets:

●

Puerto

Rico:

We

provide

retail,

mortgage

and

commercial

banking

services,

as

well

as

auto

and

equipment

leasing

and

financing through

our principal

banking subsidiary,

Banco Popular

de Puerto

Rico (“Banco

Popular” or

“BPPR”), and

broker-

dealer

and

insurance

services

through

specialized

subsidiaries.

BPPR’s

deposits

are

insured

under

the

Deposit

Insurance

Fund (“DIF”)

of the

Federal Deposit

Insurance Corporation

(“FDIC”). The

banking operations

of BPPR

are primarily

based in

Puerto Rico, where BPPR has the largest retail banking

franchise.

●

Mainland

United

States:

We

provide

retail

and

commercial

banking

services,

as

well

as

equipment

leasing

and

financing,

through our New York

-chartered banking subsidiary,

Popular Bank (“PB” or

“Popular U.S.”), which has branches

in New York,

New Jersey,

and Florida. PB’s deposits are insured under the DIF

of the FDIC.

●

BPPR

also

conducts

banking

operations

in

the

U.S.

Virgin

Islands,

the

British

Virgin

Islands

and

New

York.

In

addition

to

BPPR’s commercial

banking operations

in New

York

that include

direct loan

origination and

participating loans

originated by

PB,

BPPR

offers

or

holds

financial

products

on

a

national

scale

in

the

U.S.

market,

including

personal

loans

previously

originated under

the E-Loan

brand, purchased

personal loans

originated by

third parties,

and

gathering insured

institutional

deposits via online deposit gathering platforms. In the U.S. and British

Virgin Islands, BPPR offers a range of banking products,

including loans and deposits to both retail and

commercial customers.

For further information about the Corporation’s results segregated by

its reportable segments, see “Reportable Segment Results” in

the Management’s Discussion

and Analysis of

Financial Condition and Results

of Operations section (“MD&A”)

and Note 36

to the

Consolidated Financial Statements included in this

Form 10-K.

Lending Activities

We concentrate our lending activities in the following areas:

(1) Commercial. Commercial loans are comprised of (i) commercial and industrial (“C&I”) loans and leases to commercial

customers

for use in normal

business operations and to finance

working capital needs, equipment purchases or

other projects, (ii) commercial

real

estate

(“CRE”)

loans

(excluding

construction

loans)

for

income-producing real

estate

properties

as

well

as

owner-occupied

properties, and

(iii) multifamily loans

with residential buildings

with five

or more living

units. C&I loans

are underwritten individually

and usually secured with the assets of the company and

the personal guarantee of the business owners. CRE

loans consist of loans

for income-producing

real estate

properties and

the financing

of owner-occupied

facilities if

there is

real estate

as collateral.

Non-

owner-occupied CRE

loans are

generally made

to finance

office and

industrial buildings,

healthcare facilities,

and retail

shopping

centers and are

repaid through cash

flows related to

the operation, sale

or refinancing of

the property.

Multifamily loans, in

certain

cases, result from the conversion of the

Bank’s construction financing to permanent financing and are repaid

through the cash flow,

sale or refinance of the properties.

(2) Mortgage. Mortgage

loans include residential

mortgage loans to

consumers for the

purchase or refinancing

of a

residence and

also include residential construction loans made

to individuals for the construction of refurbishment

of their residence.

(3) Consumer.

Consumer loans

are mainly

comprised of

unsecured personal

loans, credit

cards, and

automobile loans,

and to

a

lesser extent home equity lines of credit (“HELOCs”)

and other loans made by banks to individual

borrowers.

(4)

Construction.

Construction

loans

are

CRE

loans

to

companies

or

developers

used

for

the

construction

of

a

commercial

or

residential property for which repayment will be generated by the sale

or permanent financing of the property.

Our construction loan

portfolio primarily consists of residential land development,

multifamily housing, and condominium projects.

(5) Lease Financings. Lease financings are offered by

BPPR and are primarily comprised of automobile loans/leases made through

automotive dealerships.

Business Concentration

Since our

business activities

are currently concentrated

primarily in

Puerto Rico,

our results

of operations

and financial

condition are dependent upon the general trends of

the Puerto Rico economy and, in particular,

the residential and commercial real

estate markets. The concentration of our

operations in Puerto Rico exposes us

to greater risk than other

banking companies with a

wider

geographic

base.

Our

asset

and

revenue

composition

by

geographical

area

is

presented

in

Note

to

the

Consolidated

Financial Statements included in this Form 10-K.

Our loan portfolio is diversified by loan category.

However, 52% of our loan portfolio at

December 31, 2025 consisted of real estate-

related loans,

including residential

mortgage loans,

construction loans

and commercial

loans secured

by commercial

real estate.

The table below presents the distribution of

our loan portfolio by loan category at December

31, 2025.

Loan category

(Dollars in millions)

BPPR

PB

Commercial multi-family

$303

$2,152

$2,455

Commercial real estate:

Non-owner occupied

3,395

2,148

5,543

Owner occupied

1,197

1,957

3,154

Commercial and industrial

5,970

2,637

8,607

Construction

358

1,317

1,675

Mortgage

7,348

1,301

8,649

Leasing

2,001

Consumer:

Credit cards

1,257

Home equity lines of credit

Personal

1,836

1,906

Auto

3,820

Other

172

181

Total

$27,659

100

$11,668

100

$39,327

100

Except for the Corporation’s exposure to the Puerto Rico and U.S. Governments, no individual or single group of related accounts is

considered material

in relation

to our

total assets

or deposits,

or in

relation to

our overall

business.

For a

discussion of

our loan,

investment,

and

deposits

portfolios

and

our

exposure

to

the

Government

of

Puerto

Rico,

see

“Financial

Condition

–

Loans”,

“Financial Condition – Deposits” and “Credit Risk – Geographical and Government Risk” in the MD&A and to Note 23 - Commitment

and Contingencies to the Consolidated Financial Statements

included in this Form 10-K.

Credit

Administration

and

Credit

Policies

Interest

from our

loan portfolios

is our

principal source

of revenue.

Whenever we

make loans,

we expose

ourselves

to

credit

risk.

Credit

risk

is

controlled

and

monitored

through

active

asset

quality

management,

including

the

use

of

lending

standards,

thorough

review

of

potential

borrowers

and through

active

asset quality

administration.

Business

activities

that

expose

us to

credit

risk are

managed

within

the

Board

of Director’s

Risk Management policy,

and the Credit Risk Tolerance

Limits policy,

which establishes

limits

that

consider

factors

such

as maintainin

g

a prudent

balance

of risk-taking

across

diversified

risk types

and business

units,

compliance

with regulator

y

guidance,

and

controlling

the

exposure

to lower

credit

quality

assets.

We maintain

comprehensive

credit policies

for all lines of

business in order

to mitigate credit

risk. Our credit

policies

are

approved by

our Board

of Directors.

These policies set

forth,

among

other

things,

the objectives, scope and

responsibilities of the

credit

management cycle.

Our

internal

written

procedures

establish

underwriting

standards

and

procedures

for

monitoring

and

evaluating

loan

portfolio

quality

and

require

prompt

identificatio

n

and

quantificatio

n

of

asset

quality

deterioration

or

potential

loss

to provide for the adequacy of the allowance for credit losses. These written procedures establish various approval and lending

limit levels,

ranging

from

bank

branch

or departmen

t

officers

to managerial

and senior

management

levels.

Approval

levels

are

primarily

determined

by the

amount, type

of loan and

risk characteristics

of the credit

facility.

Our

credit

policies

and

procedures

establish

documentation

requirements

for

each

loan

and

collateral

type,

when

applicable,

during

the

underwriting,

closing

and

monitoring

phases.

For

commercial

and

construction

loans,

during

the

initial

loan

underwriting

process,

the

credit

policies

require,

at

a

minimum,

historical

financial

statements

or

tax

returns

of

the

borrower,

an analysis

of financial

information

contained

in

a

credit

approval

package,

a

risk

rating

determination

and

reports

from

credit

agencies

and appraisal

s

for

real

estate-related

loans when applicable

The credit

policies

also

set

forth

the

required

closing

documentation

depending

on the

loan

and the

collateral

type.

Although

we originate

most

of our

loans

internally

in both

the Puerto

Rico

and mainland

United

States

markets,

we

occasionally

purchase

or participate

in loans

originated

by other

financial

institutions.

When we

purchase

or participate

in loans

originated by

others, we ensure

that those loans

meet our underwriting

standards and

are consistent

with our risk

appetite.

Refer

to

the

Credit

Risk

section

of

the

MD&A

included

in

this

Form

10-K

for

information

to

management

committees and divisions with responsibilities for establishing

policies and monitoring the Corporation’s credit risk.

Loan

extensions

renewals

and restructurings

Loans with

satisfactory

credit profiles

can be

extended, renewed

or restructured

Some commercia

l

loan facilities

are

structured

as lines

of credit, which

are mainly

one year

in term

and therefore

are required

to be renewed

annually.

Other

facilities

may be restructure

d

or extended

from time

to time based

upon changes

in the

borrower’s

business

needs,

use

of

funds,

timing

of

completion

of

projects

and

other

factors.

If

the

borrower

is

not

deemed

to

have

financial

difficulties

extensions,

renewals

and restructurings

are done

in the

normal

course

of busines

s

and the

loans

continue

to be recorde

d

as performing.

We

evaluate

various

factors

to

determine

if

a

borrower

is

experiencing

financial

difficulties.

Indicators

that

the

borrower

is

experiencing

financial difficultie

s

include,

for example:

(i)

the borrower

is currently

in default on any

of its debt

or it is

probable tha

t

the borrower

would be

in payment

default on

any of

its debt

in th

e

foreseeable

future

without

the modification

;

(ii)

the

borrower

has declare

d

or is in

the

process

of declarin

g

bankruptcy;

(iii)

there

is significan

t

doubt

as to whether

the

borrower

will

continue

to

be

a

going

concern;

(iv)

the

borrower

has

securities

that

have

been

delisted,

are

in

the

process

of

being

delisted,

or

are

under threa

t

of bein

g

delisted

from

an exchange

;

(v) based

on estimates

and projection

s

that

only

encompass

the

current

business

capabilities

the

borrower

forecasts

that

its

entity-specifi

c

cash

flows

will

be

insufficien

t

to

service

the

debt

(both

interest

and

principal)

in

accordance

with

the

contractual

terms

of

the

existing

agreement

through

maturity;

and

(vi)

absent

the

current

modification,

the

borrower

cannot

obtain

funds

from

sources

other

than

the

existing

creditors

at

an

effective

interest

rate

equal to the current market

interest

rate for similar

debt for a non-troubled

debtor.

We

have

specialized

workout

officers

who

handle

the majority

of

commercial

loans

that

are

past

due

days

and

over,

borrowers

experiencing

financial

difficulties

and loans

that

are considered

problem loans

based on

their risk

profile. As

a

general

policy,

we

do

not

advance

additional

money

to

borrowers

who

have

loans

that

are

days

past

due

or

over.

In

commercial

and

construction

loans,

certain

exceptions

may

be approved

under

certain

circumstances,

including

(i) when

past

due

status

is administrativ

e

in nature,

such

as expiration

of a loan

facility

before

the

new documentatio

n

is executed,

and not as

a result

of paymen

t

or credit

issues;

(ii) to

improve

our collateral

position

or

otherwise

maximize

recovery

or

mitigate

potential

future

losses;

and

(iii)

with

respect

to

certain

entities

that,

although

through

common

ownership,

are

not

cross

defaulted

nor

cross-collateralized

and

are

performing

satisfactorily

under

their

respective

loan

facilities.

Such

advances

are

underwritten

and

approved

following

our

credit

policy

guidelines

and

limits,

which

are

dependent

on

the

borrower’s

financial

condition,

collateral

and guarantee,

among

others.

In addition

to the legal

lending limit

established under

applicable

state banking

law, discusse

d

in detail

below,

business

activities

that

expose the

Corporation to

credit

risk

are managed

within

guidelines described

in the

Credit

Risk Tolerance

Limits

policy.

Limits are defined for

loss and credit

performance metrics, portfolio composition and

concentration, and industry and

name-

level,

which

monitors

lending

concentration

to

a

single

borrower

or

a

group

of

borrowers,

including

specific

lending

limits

based

on industr

y

or other

criteria,

such

as a percentage

of the

banks’

capital.

Refer to Note 2 and Note 8 to the Consolidated Financial Statements included

in this Form 10-K, for additional information

on loan modifications to borrowers with financial difficulties.

Competition

The

financial

services

industry

in

which

we

operate

is

highly

competitive.

In

Puerto

Rico,

our

primary

market,

the

banking

business

is

highly

competitive

with

respect

to

originatin

g

loans,

acquiring

deposits

and

providing

other

banking

services.

Most

of

our

direct

competitio

n

for

our

products

and

services

comes

from

commercial

banks and

credit unions.

The

principal

competitors

for

BPPR

include

locally

based

commercial

banks

and

a

few

large

U.S.

and

foreign

banks

with

operations in Puerto Rico.

We

also

compete

with

specialized

players

in th

e

local

financial

industry

that

are

not

subject

to

the

same

regulatory

restrictions

as domestic

banks

and bank holdin

g

companies.

Those

competitors

include

brokerage

firms,

mortgage

companies,

insurance

companies,

automobile

and

equipment

finance

companies,

local

and

federal

credit

unions

(locally

known

as

“cooperativas”),

credit car

d

companies,

consumer

finance

companies,

institutional

lenders,

and other

financial

and non-financia

l

institutions

and entities.

Credit

unions

generally

provide

basic consume

r

financial

services and collectively

represent a

significant

portion of the

market with

a lower cost structure

and fewer regulatory

constraints.

While our main competition continues to come from other Puerto Rico banks and financial institutions, we face increased

competition from non-Puerto

Rico institutions, as

emerging technologies and

the growth

of e-commerce have

significantly reduced

geographic barriers. These technologies have

also made it easier

for non-depositary institutions to

offer products and

services that

were

traditionally

considered

banking

products

and

have

allowed

non-traditional

financial

service

providers

and

technology

companies

to

provide

electronic

and

internet-based

financial

solutions

and

services.

In

addition,

nonbank

firms

may

have

a

competitive advantage over

traditional banks

and bank

holding companies,

such as

Popular,

due to factors

such as

differences in

regulation, funding models and tax treatment.

In

the

United

States

we

continue

to

face

substantial

competitive

pressure

as

our

footprint

resides

in

the

two

large

metropolitan markets of

New York

City /

Northern New Jersey

and the

greater Miami area.

There are a

large number

of banks in

both markets, including community, regional, and national ones, most of which

have more resources than us.

In both

Puerto Rico

and the

United States,

the primary

factors in

competing

for business

include

pricing,

convenience

of branch

locations

and other

delivery

methods,

range of

products offered,

and the

level of

service delivered.

We must

compete

effectively

along

all

these

parameters

to

be

successful.

We

experience

pricing

pressure

as

some

of

our

competitors

seek

to

increase

market

by

reducing

prices

for

services

or

the

rates

charged

on

loans,

increasing

the

interest

rates

offered

on

deposits

or offering

more flexible

terms. Increased

competition

could require

that we

increase

the rates

offered

on deposits

and

lower the rates

charged on loans,

which could adversely

affect our profitability.

Economic

factors,

along

with

legislative

and

technological

changes,

have

an

ongoing

impact

on

the

competitive

environment

within

the financia

l

services

industry.

We work

to anticipat

e

and adap

t

to dynamic

competitive

conditions

whether

through developing

and marketing

innovative

products

and services,

adopting

or developin

g

new technologie

s

that

differentiat

e

our products

and

services,

cross-marketing,

or

providing

personalized

banking

services.

We

strive

to

distinguish

ourselves

from

other

banks

and

financial

services

providers

in our

marketplace

by providin

g

a high

level

of service

to enhance

customer

loyalty

and to attrac

t

and retain

business.

However,

we can

provide

no assurance

as

to

the

effectiveness

of

these

efforts

on

our

future

business

or

results

of

operations,

and

as

to

our

continued

ability

to

anticipate

and

adapt

to

changing

conditions,

and

to

sufficientl

y

improve

our

services

and/or

banking

products,

in

order

to

successfully

compete

in

our

primary

service

areas.

Transformation Initiatives

The Corporation

continues

its broad-based

multi-year,

technological

and business

process transformation,

which was

launched

in

2022.

As

part

of

this

transformation,

we

are

making

significant

investments

in

technology,

talent

and

new

digital

and

data

capabilities

in order

to provide

our customers

with more

personalized

and accessible

services,

increase

employee

performance

and satisfaction

with more agile

work processes,

and generate sustainable

profitable growth

and value for our

shareholders.

During

2025,

the

Corporation

continued

to

make

meaningful

progress

in

the

modernization

of

our

customer

channels

and

enhancement

of our customers'

experience.

For example,

we started

the rollout

of a commercial

cash management

solution

and

deployed

a new

consumer

credit

origination

platform

in Puerto

Rico

and the

Virgin

Islands.

We

also

continued

to

invest

in our

physical

retail

network

and

executed

a series

of

efficiency

initiatives,

including

exiting

our

U.S.

mortgage

business,

optimizing

mortgage

servicing

operations

in Puerto

Rico,

and transforming

our Enterprise

Resource

Planning

(ERP)

platform

to a

modern

cloud-based solution

implemented

in January 2026

In

connection

with

the

Corporation’s

transformation

initiatives,

the

Corporation

is

working

to

achieve

a

sustainable

return

on

tangible

common

equity

(“ROTCE”)

of

14%

over

the

long

term.

The

Corporation

made

progress

towards

this

goal

in

2025,

achieving 13%

ROTCE for the full

year.

Refer

to

the

Overview

section

of

Management’s

Discussion

and

Analysis

included

in this

Form

10-K

for

information

on

recent

significant

events that have

impacted or

will impact

our current and

future operations.

Human Capital Management

Popular seeks

to embody our

values and

behaviors throughout

our human capital

management practices.

Attracting,

developing,

and retaining

top talent

in an

environment

that promotes

wellness, inclusion,

respect, continuous

learning,

and transparency

are

fundamental

pillars of

the Corporation’s

long-term strategy.

As of December

31, 2025, Popular

employed 9,427

individuals,

none

of whom were

represented

by a collective

bargaining group.

Nurturing Well

-Being: Employee

Health & Financial

Security

believes

that the

health and

financial

wellness

of our

employees

is fundamental

to delivering

high-quality

service

to our

customers

and

contributing

positively

to

the

communities

in

which

we

operate.

Accordingly,

the

Corporation

offers

a

comprehensive

health and

wellness program

that includes

medical, pharmacy,

vision, and

dental insurance,

as well as additional

wellness initiatives.

Our programs

are designed

to ensure that

healthcare is

both accessible

and affordable

for our employees,

with Popular covering

up to 78%

of health

insurance premiums,

a figure that

surpasses regional

benchmarks.

In 2025,

we strengthened

our health

and

wellness

offerings

by opening

a state-of-the-art

fitness center

in our San

Juan, Puerto

Rico campus,

to encourage

an active

and

balanced

lifestyle.

As of

December

2025,

the fitness

center

had

a total

of 2,030

members,

including

active

employees,

eligible

family members

and retirees.

Additionally,

the

Corporation

promotes

employee

health

and

well-being

by

encouraging

annual

physical

examinations

and

operating

a comprehensive

health and

wellness center

at its Puerto

Rico corporate

offices, staffed

with healthcare

providers and

enhanced

by

the

addition

of

an

on-site

psychologist

to

provide

mental

health

support.

The

center

received

over

15,000

visits

from employees

during 2025.

also seeks

to foster

work-life

balance

by offering

paid time

off

benefits

to our

employees,

including

community

service

leave,

paid

parental

leave,

and

flexible

work

arrangements.

Our

hybrid

work

model,

available

to

approximately

half

of

our

workforce,

is

designed

to

strike

an

appropriate

balance

between

employee

flexibility

and

business

needs,

reinforcing

our

commitment

to

a flexible

and

productive

work

environment.

In

addition,

we regularly

offer

activities

and

workshops

focused

on

physical fitness

and personal financial

management.

further

offers

a 401(k)

savings

and

investment

plan,

in

which

98%

of

employees

participate.

Under

the

plan,

matches

$0.50 for

every

dollar

contributed

by an

employee,

up to

8% of

the employee’s

salary.

Moreover,

maintains

a

profit-sharing

plan, contingent

upon the

achievement

of pre-established

financial

goals, to

further

align employee

compensation

with

the

Corporation’s

overall

performance.

Under

the

profit-sharing

plan,

employees

may

receive

up

to

of

their

eligible

compensation

(capped

at $70,000),

with the

first

4% paid

in cash

and any

amount

above that

threshold

paid to

the employee’s

savings

and

investment

plan

account.

Additionally,

regularly

reviews

employees’

base

compensation

to

remain

competitive

with market salaries

for comparable

positions.

Empowering Growth:

Our Commitment

to Talent

Developmen

t

We

are committed

to fostering

the continuous

development

and upskilling

of our

employees

and

believe

this

is fundamental

to

maintaining

our competitive

advantage.

Towards

that end,

offers

development

opportunities

designed

to strengthen

our

employees’

knowledge,

capabilities

and

skills,

supporting

their

personal

growth

while

enhancing

Popular’s

business

strategies

and organizational

effectiveness.

Our 40,000

square foot

development

center in

San Juan,

Puerto Rico,

and our satellite

facilities

in New York,

South Florida,

and

the

Virgin

Islands,

offer

year-round

training

sessions,

activities

and

workshops.

In

2025,

there

were

approximately

6,700

registered

participations

in corporate

academy

voluntary

courses,

new

employee

orientations,

health

coordinator

certifications,

and

manager

onboarding

programs—an

increase

of

approximately

2,500

compared

to

the

participation

levels

in

2024.

These

courses

offer

instructor-led

training

experiences

for

employees

to

develop

and

apply

critical

core

and

technical

skills.

Our

commitment

to

continuous

learning

is

further

supported

through

employee

access

to

Learning,

which

provides

an

extensive

library

of

over

16,000

e-learning

courses,

enabling

employees

to

pursue

self-directed

learning

aligned

with

both

professional

development goals

and business

needs.

Our

focus

on

training

and

development

has

provided

internal

growth

opportunities

for

our

workforce.

As

a

result,

the

Corporation’s

internal

mobility

rate in

2025 was

47%, reflecting

employees

who applied

for or

were selected

for open

positions,

received

promotions,

or made

lateral

moves

within

the

organization.

Additionally,

we continued

strengthening

key skills

across

accelerated

development

programs

focused

on

data

science,

agile

methodologies,

analytics,

process

efficiency,

and

product

management.

During

2025,

approximately

400

employees

participated

in these

programs,

further

enhancing

the

organization’s

talent.

During

2025,

successfully

implemented

the Executive

Development

Program,

engaging

over

80 executive

leaders

in a

comprehensive

initiative

focused

on strengthening

key

behaviors,

including

agility,

accountability,

collaboration,

and leadership

mindset,

aligned

with

our

company

values.

In

addition,

we

introduced

the

Middle

Management

Development

Program,

a two-

year

development

journey

for

over

1,700

leaders

designed

to

reinforce

alignment

with

the

Corporation’s

values

and

expected

behaviors

while

fostering

sustainable

organizational

transformation.

Furthermore,

we provided

our

leaders

with

advanced

tools

to support more

effective and

impactful performance

discussions.

Our

organizational

effectiveness

strategy

was

crucial

in

advancing

organizational

development

through

targeted

initiatives,

including

assessments,

team

integration

activities,

new

manager

integration

facilitations,

and

team

alignment

sessions.

These

efforts

are

designed

to

foster

a

cohesive,

agile,

and

adaptable

workforce

capable

of

supporting

the

Corporation’s

evolving

business objectives.

Enhancing Leadership

Continuity through

Strategic Succession

Planning

Popular’s

business

strategy

integrates

succession

planning

to

ensure

effective

and

orderly

leadership

transitions.

Succession

plans

for senior

management

are

developed

by the

Chief

Executive

Officer

and

presented

to the

Board

of Directors.

Popular’s

succession

planning

also

leverages

our

Executive

Talent

Management

Program

to

identify

high-potential

and

high-performing

managers,

providing

them

with

targeted

learning

opportunities

to

enhance

their

skills

and

prepare

them

for

future

senior

management positions.

Employee Experience

is

committed

to

providing

an

exceptional

employee

experience

that

inspires

our

employees

to

deliver

outstanding

service

to

our

customers

and

communities.

We

recognize

the

evolving

nature

of

our

employees’

needs

and

expectations

and

have

a

robust

approach

to

measuring

and

understanding

their

journey.

Our

employee

engagement

and

experience

survey

program

includes

biannual

pulse surveys,

an annual

enterprise-wide

survey,

and additional

surveys

that assess

the end

-to-end

employee

journey.

We believe

that these

insights

contributed

to our

ability

to maintain

a stable

employee

turnover

rate of

8.5%

as

of

the

end

of

2025.

Furthermore,

our

employee-experience

efforts

are

reflected

in

record

participation

rate

of

77%

and

a

sustained

employee-loyalty

score of

81%, positioning

us above

the 50th

percentile

of the Qualtrics

global benchmark

and above

the financial

services industry

average benchmark.

Board Oversight

in Human Capital

The

Talent

and

Compensation

Committee

of

the

Corporation’s

Board

of

Directors

has

oversight

responsibility

for

the

Corporation’s

human

capital

management

practices.

As

part

of

its

responsibilities,

the

Talent

and

Compensation

Committee

reviews

and

advises

management

on

the

Corporation’s

overall

compensation

philosophy,

programs

and

policies,

and

on

the

Corporation’s

talent

acquisition

and

development,

workforce

engagement,

succession

planning,

and

corporate

culture,

among

other human capital

matters.

We

encourage

you

to

review

our Corporate

Sustainability

Report

published

on www.popular.com

for more

detailed

information

regarding

the Corporation’s

human capital

management

programs

and initiatives.

The information

on the

Corporation’s

website,

including

the

Corporation’s

Corporate

Sustainability

Report,

is

not,

and

will

not

be

deemed

to

be,

a

part

of

this

Form

10-K

or

incorporated

into any of the

Corporation’s

filings with

the SEC.

Regulation and Supervision

Described below are the material elements of selected laws and regulations applicable to Popular, Popular North America

(“PNA”)

and

their

respective

subsidiaries.

Such

laws

and

regulations

are

continually

under

review

by

Congress

and

state

legislatures

and

federal

and

state

regulatory

agencies.

Any

change

in

the

laws

and

regulations

applicable

to

and

its

subsidiaries could have a material effect on the

business of Popular and its subsidiaries. We will continue to

assess our businesses

and risk management and compliance practices

to conform to developments in the regulatory

environment.

General

Popular and PNA are bank holding companies subject to consolidated supervision and

regulation by the Federal Reserve

Board under

the Bank

Holding Company Act

of 1956

(as amended, the

“BHC Act”). BPPR

and PB

are subject to

supervision and

examination by applicable

federal and state

banking agencies including,

in the

case of BPPR,

the Federal Reserve

Board and the

Office of

the Commissioner

of Financial

Institutions of

Puerto Rico

(the “Office

of the

Commissioner”), and, in

the case

of PB,

the

Federal

Reserve

Board

and

the

New

York

State

Department

of

Financial

Services

(the

“NYSDFS”).

Popular’s

broker-dealer

investment adviser

subsidiary,

Popular Securities,

LLC (“PS”)

and investment

adviser subsidiary

Popular Asset

Management LLC

(“PAM”)

are subject

to

regulation by

the SEC,

the Financial

Industry

Regulatory Authority

(“FINRA”), and

the Securities

Investor

Protection Corporation, among others. Other of our non-bank subsidiaries conduct reinsurance and

insurance producer and agency

activities, which are

subject to other

federal, state and

Puerto Rico laws

and regulations as

well as licensing

and regulation by

the

Puerto Rico Office of the Commissioner of Insurance and,

for one insurance agency subsidiary, the NYSDFS.

Enhanced Prudential Standards

Under

the

Dodd-Frank

Wall

Street

Reform

and

Consumer

Protection

Act

(the

“Dodd-Frank

Act”),

as

modified

by

the

Economic

Growth,

Regulatory

Relief,

and

Consumer

Protection

Act

and

the

federal

banking

regulators’

2019

“Tailoring

Rules,”

banking

organizations are

categorized based

on status

as

a U.S.

G-SIB,

size

and four

other risk-based

indicators. Among

bank

holding companies with $100

billion or more in

total consolidated assets, the

most stringent standards apply

to U.S. G-SIBs,

which

are subject to Category I standards,

and the least stringent standards apply to Category IV organizations, which have between $100

billion and $250 billion in total consolidated assets and less than $75 billion in all four other risk-based indicators and

which are also

not U.S. G-SIBs. Bank holding companies with total consolidated assets of $50 billion or more are subject to risk committee and risk

management requirements. As of December 31, 2025,

Popular had total consolidated assets of $75.3 billion.

Transactions with Affiliates

BPPR

and

PB

are

subject

to

restrictions

that

limit

the

amount

of

extensions

of

credit

and

certain

other

“covered

transactions” (as defined in Section

23A of the Federal

Reserve Act) between BPPR or

PB, on the

one hand, and Popular,

PNA or

any

of

our

other

non-banking

subsidiaries,

on

the

other

hand,

and

that

impose

collateralization

requirements

on

such

credit

extensions. A bank may not engage in any covered transaction if the aggregate amount of the bank’s covered transactions with that

affiliate would exceed 10% of

the bank’s capital stock and

surplus or the aggregate amount of

the bank’s covered transactions with

all non-bank affiliates would exceed 20%

of the bank’s capital stock and

surplus. In addition, any transaction between BPPR

or PB,

on the one

hand, and Popular,

PNA or any

of our other

non-banking subsidiaries, on

the other,

is required to

be carried out

on an

arm’s length basis.

Source of Financial Strength

The

Dodd-Frank Act

requires bank

holding companies,

such

as Popular

and

PNA, to

act

as

a source

of

financial

and

managerial strength to their subsidiary banks. Popular

and PNA are expected to commit resources

to support their subsidiary banks,

including at times when Popular

and PNA may not be

in a financial position to

provide such resources. Any capital loans

by a bank

holding company

to any

of its

subsidiary depository

institutions are

subordinated in

right of

payment to

depositors and

to certain

other indebtedness of such subsidiary depository institution. In the

event of a bank holding company’s bankruptcy,

any commitment

by

the

bank

holding

company

to

a

federal

banking

agency

to

maintain

the

capital

of

a

subsidiary

depository

institution

will

be

assumed by

the bankruptcy

trustee and

entitled to

a priority

of payment.

BPPR and

PB are

currently the

only insured

depository

institution subsidiaries of Popular and PNA.

Resolution Planning and Resolution-Related Requirements

A

bank holding

company with

$250 billion

or more

in total

consolidated assets

(or that

is a

Category III

firm based

on

certain risk-based indicators described in the Tailoring

Rules) is required to report periodically to the FDIC

and the Federal Reserve

Board

such

company’s

plan

for

its

rapid

and

orderly

resolution

in

the

event

of

material

financial

distress

or

failure.

In

addition,

insured depository institutions with total

assets of $50 billion or

more are required to

submit to the FDIC

periodic contingency plans

for

resolution

in

the

event

of

the

institution’s

failure.

In

June

2024,

the

FDIC

finalized

amendments

to

the

resolution

planning

requirements for insured depository institutions with

$50 billion or more in

total assets. The amendments require insured

depository

institutions with

between $50

billion and $100

billion in

assets to submit

informational filings on

a three-year cycle,

with an

interim

supplement updating key information submitted in the off years. These amendments

became effective October 1, 2024, and BPPR’s

first submission under the new rule is due by

April 1, 2026.

On August

29, 2023,

the Federal

Reserve Board,

FDIC and

Office of

the Comptroller

of the

Currency (“OCC”)

issued a

proposed

rule

that

would

require

bank

holding

companies

and

insured

depository

institutions

with

$100

billion

or

in

consolidated assets (as well as their insured depository institution affiliates) to maintain minimum

amounts of eligible long-term debt

(generally, debt

that is unsecured, has

a maturity greater than one

year from issuance and satisfies

additional criteria), subject to a

three-year phase-in

period. The

proposal would

also apply

“clean holding

company” requirements

to Category

II through

IV bank

holding companies,

which would,

among other

things, prohibit

those holding

companies from

entering into

derivatives and

certain

other financial

contracts with

third parties.

As of

December 31,

2025, Popular,

PNA, BPPR

and PB’s

total assets

were below

the

thresholds for applicability

of these rules,

except that BPPR

is subject to

the FDIC’s resolution

planning requirements applicable to

insured depository institutions with more than $50

billion but less than $100 billion in assets.

FDIC Insurance

Substantially all the deposits of BPPR and PB are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of

the

FDIC,

and

BPPR

and

PB

are

subject

to

FDIC

deposit

insurance

assessments

to

maintain

the

DIF.

Deposit

insurance

assessments are

based on

the average

consolidated total

assets of

the insured

depository institution

minus the

average tangible

equity of the institution during the assessment period. For larger

depository institutions with over $10 billion in assets,

such as BPPR

and PB, the FDIC uses a “scorecard” methodology, which considers CAMELS ratings, among

other measures, that seeks to capture

both the probability that an individual large institution will

fail and the magnitude of the impact on the DIF

if such a failure occurs. The

FDIC has the ability

to make discretionary adjustments to the

total score based upon significant

risk factors that are not

adequately

captured in the calculations. The initial base deposit insurance assessment rate for larger depository institutions ranges from 3 to 30

basis

points

on

an

annualized

basis.

Taking

into

account the

adjustments the

FDIC

may

make

to

the

base

rate,

the

total

base

assessment rate could range from 1.5 to 40 basis points

on an annualized basis.

In

October

2022,

the

FDIC

finalized

a

rule

that

increased

initial

base

deposit

insurance

assessment

rates

by

basis

points, beginning with the first quarterly assessment period of 2023. The FDIC, as required under the Federal Deposit Insurance Act

(“FDIA”), established

a plan

in September

2020 to

restore the

DIF reserve

ratio to

meet or

exceed the

statutory minimum

of 1.35

percent within

eight years. The

increased assessment is

intended to improve

the likelihood that

the DIF

reserve ratio would

reach

the required minimum by the statutory deadline

of September 30, 2028.

As of December 31, 2025, BPPR and

PB had a DIF average total asset

less average tangible equity assessment base of

$69 billion.

On

November 16,

2023,

the

FDIC finalized

a

rule

that

imposes

a special

assessment to

recover the

costs to

the

DIF

resulting

from

the

FDIC’s

use,

in

March

2023,

of

the systemic

risk

exception to

the

least-cost resolution

test

under the

FDIA

in

connection with the

receiverships of Silicon

Valley Bank

and Signature Bank.

The FDIC estimated

in approving the

rule that those

assessed losses total $16.3 billion. The rule provides

that this loss estimate will be periodically adjusted,

which will affect the amount

of

the special

assessment. Under

the rule,

the assessment

base is

the

estimated uninsured

deposits that

an insured

depository

institution reported in its Consolidated Reports of Condition and Income (“Call Report”) at December 31, 2022,

excluding the first $5

billion

in estimated

uninsured deposits.

For

a holding

company

that

has

more than

one

insured depository

institution subsidiary,

such as Popular,

the $5 billion

exclusion is allocated

among the company’s

insured depository institution subsidiaries

in proportion

to each

insured depository

institution’s estimated

uninsured deposits.

The special

assessments were

to be

collected at

an annual

rate of approximately 13.4 basis points per

year (3.36 basis points per quarter) over

eight quarters,

with the first assessment period

having begun

January 1,

2024. In

June 2024,

due to

the increase

in the

estimate of

losses, the

FDIC announced that

it projected

that the special

assessment would be collected

for an additional

two quarters beyond the

initial eight quarter collection

period, at a

lower rate.

In December

2025, the

FDIC reduced

the rate

at which

the assessment

is collected,

with an

invoice payment

date of

March 30, 2026, from 3.36 basis points to

2.97 basis points,

and also reduced the collection period back

to eight quarters.

Brokered Deposits

The FDIA

and regulations

adopted thereunder

restrict the

use of

brokered deposits

and the

rate of

interest payable

on

deposits for institutions

that are less

than well capitalized.

Popular does not

believe the brokered

deposits regulations have

had or

will have a material effect on the funding or liquidity

of BPPR and PB.

Capital Adequacy

Popular, PNA,

BPPR and PB are

each required to comply

with applicable capital adequacy standards

established by the

federal

banking

agencies

(the

“Capital

Rules”),

which

implement

the

Basel

III

framework

set

forth

by

the

Basel

Committee

on

Banking Supervision (the “Basel Committee”) as

well as certain provisions of the Dodd-Frank

Act.

Among other

matters, the

Capital Rules:

(i) impose

a capital

measure called

“Common Equity

Tier

1” (“CET1”)

and the

related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1

capital” instruments meeting

certain revised requirements;

and (iii) mandate

that most deductions/adjustments to

regulatory capital

measures be made

to CET1

and not to

the other components

of capital.

Under the Capital

Rules, for most

banking organizations,

including

Popular,

the

most

common

form

of

Additional

Tier

capital

is

non-cumulative

perpetual preferred

stock

and

the

most

common form of Tier

2 capital is subordinated notes and

a portion of the

allocation for loan and lease losses,

in each case, subject

to the Capital Rules’ specific requirements.

Pursuant to the Capital Rules, the minimum

capital ratios are:

4.5% CET1 to risk-weighted assets;

6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted

assets;

8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

4% Tier 1 capital to average consolidated assets as reported

on consolidated financial statements (known

as the

“leverage ratio”).

The Capital Rules also impose

a “capital conservation buffer,”

composed entirely of CET1, on top

of these minimum risk-

weighted

asset

ratios. The

capital

conservation

buffer

is

designed

to

absorb

losses

during

periods

of

economic stress.

Banking

institutions

with

a

ratio

of

CET1

to

risk-weighted

assets

above

the

minimum

but

below

the

capital

conservation

buffer

will

face

constraints on

dividends, equity repurchases

and compensation based

on the

amount of

the shortfall and

eligible retained

income

(that is, four

quarter trailing net income, net

of distributions and tax effects

not reflected in net

income). Popular, BPPR

and PB are

therefore required to maintain such additional capital

conservation buffer of 2.5% of CET1,

effectively resulting in minimum ratios of

(i) CET1

to risk-weighted

assets of

at least

7%, (ii)

Tier

1 capital

to risk-weighted

assets of

at least

8.5%, and

(iii) Total

capital to

risk-weighted assets of at least 10.5%.

Pursuant

to

the

Capital

Rules,

the

effects

of

certain

accumulated other

comprehensive income

or

loss

(“AOCI”)

items

included in stockholders’ equity

(for example, marks-to-market of securities

held in the available

for sale portfolio) are

not excluded

from

regulatory

capital

ratios;

however,

banking

organizations

that

are

not

subject

to

I

or

II

standards

under

the

framework for

banking organizations

with $100

billion or

assets, including

Popular,

BPPR and

PB, may

make a

one-time

permanent election to continue to

exclude these items. Popular,

BPPR and PB have

made this election in order

to avoid significant

variations in

the level

of capital

depending upon

the impact

of interest

rate fluctuations

on the

fair value

of their

available for

sale

securities portfolios.

On July

27, 2023,

the federal

banking regulators

proposed revisions

to the

Capital Rules

to implement

the

Basel Committee’s 2017 standards, described

below, and make

other changes to the

Capital Rules, including the ability

of banking

organizations in Categories III and IV to elect not to recognize most elements of AOCI in regulatory capital. The proposal introduces

revised credit risk, equity risk, operational risk, credit valuation adjustment risk and market risk requirements, among other changes.

However, the

revised capital requirements

of the

proposed rule would

not apply

to Popular,

BPPR, or

PB because

they have

less

than $100 billion in total consolidated assets and trading

assets and liabilities below the threshold for market risk requirements. The

federal

banking

regulators have

subsequently indicated

that

they

expect to

issue

a

revised

proposal, the

timing

and contents

of

which are uncertain.

The

Capital

Rules

preclude certain

hybrid

securities, such

as

trust

preferred

securities, from

inclusion

in

bank

holding

companies’

Tier

capital.

Trust

preferred

securities

not

included

in

Popular’s

Tier

capital

may

nonetheless

be

included

as

a

component of

Tier 2 capital.

Popular has

not issued

any trust

preferred securities since

May 19,

2010. As

of December

31, 2025,

Popular has

$193 million

of trust

preferred securities

outstanding which

no longer

qualify for

Tier

1 capital

treatment, but

instead

qualify for Tier 2 capital treatment.

The Capital Rules also provide for a number of deductions

from and adjustments to CET1.

Banking organizations that are

not subject to Category

I or II standards

are subject to rules that

provide for simplified capital requirements relating

to the threshold

deductions

for

certain

mortgage

servicing

assets,

deferred

tax

assets,

investments

in

the

capital

of

unconsolidated

financial

institutions and inclusion of minority interests

in regulatory capital.

Failure

to

meet

capital

guidelines

could

subject

and

its

depository

institution

subsidiaries

to

a

variety

of

enforcement remedies, including the termination of deposit insurance by the FDIC

and to certain restrictions on our business. Refer

to “Prompt Corrective Action” below for further

discussion.

In

December 2017,

the Basel

Committee published

standards that

it

described as

the finalization

of the

Basel III

post-

crisis regulatory

reforms. Among other

things, these

standards revise

the Basel

Committee’s standardized approach

for credit

risk

(including

by

recalibrating

risk

weights

and

introducing

new

capital

requirements

for

certain

“unconditionally

cancellable

commitments,” such

as

unused credit

card

lines of

credit) and

provide

a new

standardized approach

for operational

risk capital.

Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to Category I and Category II

banking organizations and not to Popular, BPPR and PB.

In 2020, federal bank regulators adopted a rule

that allowed banking organizations to elect to delay

temporarily the

estimated effects of adopting the Current Expected Credit

Loss (“CECL”) model of ASU 2016-13 on regulatory

capital until January

2022 and subsequently to phase in the effects through

January 2025. The Corporation’s capital ratios

at December 31, 2025 reflect

the full phased in impact from the adoption of CECL.

Refer to

the Consolidated

Financial Statements

in this

Form 10-K.,

Note 20

and Table

10 of

Management’s Discussion

and Analysis for the

capital ratios of Popular,

BPPR and PB

under Basel III. Refer

to the Consolidated Financial Statements

in this

Form 10-K Note 2 for more information regarding

CECL.

Prompt Corrective Action

The

FDIA

requires,

among

other

things,

the

federal

banking

agencies

to

take

prompt

corrective

action

in

respect

of

insured

depository

institutions

that

do

not

meet

minimum

capital

requirements.

The

FDIA

establishes

five

capital

tiers:

“well

capitalized,”

“adequately

capitalized,”

“undercapitalized,”

“significantly

undercapitalized,”

and

“critically

undercapitalized”.

A

depository institution’s capital tier will depend upon how its

capital levels compare with various relevant capital

measures and certain

other factors.

An insured

depository institution will

be deemed

to be

(i) “well

capitalized” if

the institution

has a

total risk-based

capital

ratio of 10.0% or greater, a CET1 capital ratio of 6.5%

or greater, a Tier 1

risk-based capital ratio of 8.0% or greater, and a leverage

ratio of 5.0% or

greater, and is

not subject to any order

or written directive by

any such regulatory authority to

meet and maintain a

specific capital level for any capital

measure; (ii) “adequately capitalized” if the institution

has a total risk-based capital ratio

of 8.0%

or greater, a

CET1 capital ratio of 4.5%

or greater, a

Tier 1 risk-based capital

ratio of 6.0% or greater,

and a leverage ratio of

4.0%

or greater

and is

not “well

capitalized”; (iii)

“undercapitalized” if

the institution

has a

total risk-based

capital ratio

that is

less than

8.0%, a CET1 capital

ratio less than 4.5%,

a Tier 1

risk-based capital ratio of

less than 6.0% or

a leverage ratio of

less than 4.0%;

(iv) “significantly

undercapitalized” if

the institution

has a

total risk-based

capital ratio

of less

than 6.0%,

a CET1

capital ratio

less

than 3%, a Tier

1 risk-based capital ratio of less than 4.0% or

a leverage ratio of less than 3.0%;

and (v) “critically undercapitalized”

if

the

institution’s

tangible

equity

is

equal

to

or

less

than

2.0%

of

average

quarterly

tangible

assets.

An

institution

may

be

downgraded to, or deemed

to be in, a

capital category that is

lower than indicated by

its capital ratios if

it is determined to

be in an

unsafe

or

unsound

condition

or

if

it

receives

an

unsatisfactory

examination

rating

with

respect

to

certain

matters.

An

insured

depository institution’s capital category is determined solely for the purpose of applying prompt corrective action

regulations, and the

capital category

may not

constitute an

accurate representation

of the

institution’s overall

financial condition

or prospects

for other

purposes.

The FDIA generally prohibits an insured depository institution from making any capital

distribution (including payment of a

dividend) or

paying any

management fee to

its holding

company, if

the depository

institution would thereafter

be undercapitalized.

Undercapitalized

depository

institutions

are

subject

to

restrictions

on

borrowing

from

the

Federal

Reserve

System.

In

addition,

undercapitalized

depository

institutions

are

subject

to

growth

limitations

and

are

required

to

submit

capital

restoration

plans.

A

depository institution’s

holding company must

guarantee the capital

restoration plan, up

to an

amount equal to

the lesser

of 5%

of

the

depository

institution’s

assets

at

the

time

it

becomes

undercapitalized

or

the

amount

of

the

capital

deficiency,

when

the

institution fails to comply with the

plan. The federal banking agencies may not

accept a capital restoration plan without determining,

among other things,

that the plan

is based

on realistic assumptions

and is

likely to succeed

in restoring the

depository institution’s

capital. If a depository institution fails to submit an

acceptable plan, it is treated as if it is

significantly undercapitalized.

Significantly

undercapitalized

depository

institutions

may

be

subject

to

a

number

of

requirements

and

restrictions,

including orders to

sell sufficient voting

stock to become

adequately capitalized, requirements to

reduce total assets

and cessation

of receipt

of deposits

from correspondent

banks. Critically

undercapitalized depository

institutions are

subject to

appointment of

a

receiver or conservator.

The capital-based prompt

corrective action provisions

of the FDIA

apply to

the FDIC-insured depository

institutions such

as

BPPR

and

PB,

but

they

are

not

directly

applicable

to

holding

companies

such

as

and

PNA,

which

control

such

institutions. As of December 31, 2025,

both BPPR and PB met the quantitative requirements

for ‘well capitalized’ status.

Restrictions on Dividends and Repurchases

The

principal

sources

of

funding

for

and

PNA

have

included

dividends

received

from

their

banking

and

non-

banking subsidiaries, asset sales

and proceeds from

the issuance of

debt and equity.

Various statutory

provisions limit the amount

of

dividends an

insured depository

institution may

pay to

its

holding company

without regulatory

approval. A

member bank

must

obtain the approval of the

Federal Reserve Board for any

dividend, if the total of

all dividends declared by the

member bank during

the calendar year would exceed the total of its net income for that year,

combined with its retained net income for the preceding two

years, after

considering those

years’ dividend

activity,

less any

required transfers to

surplus or

to a

fund for

the retirement

of any

preferred stock. During the year

ended December 31, 2025, BPPR declared

cash dividends of $575

million, a portion of

which was

used by Popular for the payments of the cash dividends on its

outstanding common stock. At December 31, 2025, BPPR needed to

obtain prior approval of the Federal Reserve Board before declaring a dividend

in excess of $191 million due to its

retained income,

declared dividend activity and transfers to statutory reserves over the three years ended December 31, 2025. In addition, a member

bank may

not declare

or pay

a dividend

in an

amount greater

than its

undivided profits

as reported

in its

Report of

Condition and

Income, unless the member bank has received the approval of

the Federal Reserve Board. A member bank also may not permit

any

portion of its permanent capital to

be withdrawn unless the withdrawal has

been approved by the Federal Reserve Board.

Pursuant

to

these

requirements, PB

may

not

declare

or

pay

a

dividend without

the

prior

approval

of

the

Federal

Reserve

Board

and

the

NYSDFS.

During the

year ended

December 31,

2025, Popular

received cash

dividends of

$23 million

from Popular

International

Bank, Inc. (“PIBI”) and $22 million from its other

non-banking subsidiaries.

It is Federal Reserve Board policy that bank holding companies generally should pay dividends on common

stock only out

of net

income available to

common shareholders

over the past

year and

only if

the prospective rate

of earnings retention

appears

consistent with the organization’s current and

expected future capital needs, asset quality

and overall financial condition. Moreover,

under Federal Reserve Board policy, a bank

holding company should not maintain dividend levels that place undue pressure on the

capital of depository

institution subsidiaries or that

may undermine the bank

holding company’s ability to

be a source

of strength to

its

banking subsidiaries.

Federal Reserve

policy

also

provides that

a

bank

holding company

should

inform

the

Federal

Reserve

reasonably in advance of declaring or paying a dividend that

exceeds earnings for the period for which the dividend is

being paid or

that could result in a material adverse change

to the bank holding company’s capital structure.

The

Federal Reserve

Board

also restricts

the

ability of

banking

organizations to

conduct stock

repurchases. In

certain

circumstances, a banking organization’s repurchases

of its common stock may

be subject to a

prior approval or notice requirement

under other regulations or policies of the Federal Reserve. Any redemption or

repurchase of preferred stock or subordinated debt is

subject to the prior approval of the Federal Reserve.

Subject to compliance with certain conditions, distributions of U.S. sourced dividends to a corporation

organized under the

laws

of the

Commonwealth of

Puerto Rico

are subject

to

a withholding

tax

of 10%

instead of

the 30%

applied to

other “foreign”

corporations. Accordingly, dividends from current or accumulated earnings and profits

paid by PNA to Popular, Inc. sourced from the

U.S. operations of PB are subject to a 10% tax withholding.

A corporation organized under the laws of the Commonwealth of Puerto

Rico that is engaged in a U.S. trade or business is generally subject to a branch profits tax of 30% on its earnings and profits

for the

taxable year that are “effectively connected” with

such U.S. trade or business, adjusted as

provided by U.S. federal income tax law.

Accordingly,

to

the extent

BPPR’s

U.S. operations

generate effectively

connected earnings

and profits

that

are not

reinvested in

such U.S. operations

(and that are

not otherwise adjusted

as provided by

U.S. federal income tax

law), such effectively

connected

earnings and profits will generally be subject

to a branch profits tax of 30%.

Refer to

Part II,

Item 5,

“Market for

Registrant’s Common

Equity,

Related Stockholder

Matters and

Issuer Purchases

of

Equity Securities” for further information on Popular’s

distribution of dividends and repurchases of equity

securities.

See

“Puerto

Rico

Regulation”

below

for

a

description

of

certain

restrictions

on

BPPR’s

ability

to

pay

dividends

under

Puerto Rico law.

Interstate Branching

The Dodd-Frank

Act amended

the Riegle-Neal

Interstate Banking

and Branching

Efficiency Act

of 1994

(the “Interstate

Banking

Act”)

to

authorize

national

banks

and

state

banks

to

branch

interstate

through

de

novo

branches. For

purposes

of

the

Interstate Banking Act, BPPR is treated as a state bank and is subject to the same restrictions on interstate branching as other state

banks.

Activities and Acquisitions

In general, the BHC Act limits the activities

permissible for bank holding companies to the business of banking, managing

or controlling banks and such other activities as the Federal Reserve Board has determined to be so closely related to banking as to

be

properly

incidental

thereto.

A

company

that

meets

management

and

capital

standards

and

whose

subsidiary

depository

institutions meet management,

capital and

Community Reinvestment Act

(“CRA”) standards may

elect to

be treated

as a

financial

holding company

and engage

in a

substantially broader

range of

nonbanking financial

activities, including

securities underwriting

and dealing, insurance underwriting and making

merchant banking investments in nonfinancial

companies.

In order for a bank holding company to elect to be treated as a financial

holding company, (i) all of its depository institution

subsidiaries

must

be

well capitalized

(as described

above)

and

well managed

and

(ii)

it

must

file a

declaration with

the Federal

Reserve Board that it elects to be a “financial holding

company.” As noted above, a bank

holding company electing to be a financial

holding company must itself be and remain

well capitalized and well managed. The Federal Reserve Board’s

regulations applicable

to bank holding companies separately define

“well capitalized” for bank holding companies,

such as Popular,

to require maintaining

a tier 1 capital

ratio of at least

6% and a total capital

ratio of at least 10%.

Popular and PNA have elected

to be treated as

financial

holding

companies.

A

depository

institution

is

deemed

to

be

“well

managed”

if,

at

its

most

recent

inspection,

examination

or

subsequent review

by the

appropriate federal banking

agency (or

the appropriate state

banking agency), the

depository institution

received

at

least

a

“satisfactory”

composite

rating

and

at

least

a

“satisfactory”

rating

for

the

management

component

of

the

composite

rating.

If,

after

becoming

a

financial

holding

company,

the

company

fails

to

continue

to

meet

any

of

the

capital

or

management requirements

for financial

holding company

status, the

company

must

enter into

a confidential

agreement with

the

Federal

Reserve

Board

to

comply

with

all

applicable capital

and

management

requirements.

If

the

company

does

not

return

to

compliance

within

180

days,

the

Federal

Reserve

Board

may

extend

the

agreement

or

may

order

the

company

to

divest

its

subsidiary banks or the

company may discontinue, or

divest investments in companies

engaged in, activities permissible only

for a

bank holding company that has elected to be treated as a financial

holding company. In addition, if a depository institution subsidiary

controlled by a financial holding company does not

maintain a CRA rating of at least “satisfactory,” the financial holding company

will

be subject to restrictions on certain new activities

and acquisitions.

The Federal Reserve Board

may in certain circumstances limit

our ability to conduct

activities and make acquisitions that

would otherwise be permissible for

a financial holding company.

Furthermore, a financial holding company must obtain

prior written

approval from the Federal Reserve Board before acquiring a nonbank company with $10 billion or more in total consolidated assets.

In addition, we

are required to

obtain prior Federal

Reserve Board approval

before engaging in

certain banking and

other financial

activities both in the United States and abroad.

The “Volcker

Rule” adopted

as part

of the

Dodd-Frank Act

restricts the

ability of

Popular and

its subsidiaries,

including

BPPR and PB as

well as non-banking subsidiaries, to

sponsor or invest in

“covered funds,” including private funds,

or to engage in

certain types

of proprietary

trading. Popular

and its

subsidiaries generally

do not

engage in

the businesses

subject to

the Volcker

Rule; therefore, the Volcker Rule does not have a material effect on our

operations.

Anti-Money Laundering Initiative and the USA PATRIOT Act

A major focus of governmental policy relating to financial institutions in

recent years has been aimed at combating money

laundering and

terrorist financing.

The USA

PATRIOT

Act of

2001 (the

“USA PATRIOT

Act”) strengthened

the ability

of the

U.S.

government to help prevent, detect and prosecute international money

laundering and the financing of terrorism. Title

III of the USA

PATRIOT

Act imposed

significant compliance

and due

diligence obligations,

created new

crimes and

penalties and

expanded the

extra-territorial jurisdiction of the United States. Failure of a financial institution to comply with the USA PATRIOT Act’s requirements

could have serious legal and reputational consequences

for the institution.

The

Anti-Money

Laundering

Act

of

2020

(“AMLA”),

which

amended

the

Bank

Secrecy

Act

(the

“BSA”),

is

intended

to

comprehensively

reform

and

modernize

U.S.

anti-money

laundering

laws.

Among

other

things,

the

AMLA

codifies

a

risk-based

approach to anti-money laundering compliance for financial institutions; requires the U.S. Department of the Treasury to

promulgate

priorities

for

anti-money

laundering

and

countering

the

financing

of

terrorism

policy;

requires

the

development

of

standards

for

testing technology and

internal processes for BSA

compliance; expands enforcement-

and investigation-related authority,

including

a

significant

expansion

in

the

available

sanctions

for

certain

BSA

violations;

and

expands

BSA

whistleblower

incentives

and

protections.

Many

of

the

statutory

provisions

in

the

AMLA

require

additional

rulemakings,

reports

and

other

measures,

and

the

impact

of

the

AMLA

will

depend on,

among

other

things,

rulemaking and

implementation guidance.

In

June

2021,

the

Financial

Crimes Enforcement Network, a bureau of

the U.S. Department of the

Treasury,

issued the priorities for anti-money laundering

and

countering the

financing of

terrorism policy

required under AMLA.

The priorities

include: corruption, cybercrime,

terrorist financing,

fraud, transnational crime, drug trafficking, human trafficking and

proliferation financing.

Federal regulators

regularly examine BSA/Anti-Money

Laundering and sanctions

compliance to

enhance their

adequacy

and effectiveness, and the frequency and extent of such examinations

and related remedial actions have been

increasing.

Community Reinvestment Act

The

CRA

requires

banks

to

help

serve

the

credit

needs

of

their

communities,

including

extending

credit

to

low-

and

moderate-income individuals

and geographies.

Should

or our

bank

subsidiaries

fail

to

serve

adequately

the community,

potential penalties may include regulatory denials of applications to expand branches, relocate offices or branches, add subsidiaries

and affiliates, expand into new financial activities and merge

with or purchase other financial institutions.

Interchange Fees Regulation

The Federal Reserve Board

has established standards for

debit card interchange fees

and prohibited network exclusivity

arrangements and routing restrictions. The

maximum permissible interchange fee that

an issuer may receive

for an electronic debit

transaction is

the sum

of

21 cents

per transaction

and 5

basis points

multiplied by

the value

of

the transaction.

Additionally,

the

Federal Reserve

Board allows

for an

upward adjustment

of

no more

than 1

cent

to

an issuer’s

debit card

interchange fee

if the

issuer develops and implements policies and procedures

reasonably designed to achieve certain fraud-prevention

standards.

In

October

2023,

the

Federal

Reserve

Board

proposed

amendments

to

its

rules

on

interchange

fees.

If

adopted,

the

proposed changes

would establish

a maximum

permissible interchange

fee of

no more

than 14.4

cents per

transaction plus

four

basis

points

multiplied

by

the

value

of

the

transaction.

The

fraud

prevention

adjustment

would

be

increased

to

1.3

cents

per

transaction. The proposed changes would also establish an automatic update of

the interchange fee cap every other year based on

a survey of debit card issuers.

Consumer Financial Protection Act of 2010

The Consumer

Financial Protection

Bureau (the

“CFPB”) supervises

“covered persons”

(broadly defined

to include

any

person offering or

providing a consumer financial

product or service and

any affiliated service

provider) for compliance with

federal

consumer financial laws. The CFPB

also has the broad power

to prescribe rules applicable to

a covered person or service

provider

identifying

as

unlawful,

unfair,

deceptive,

or

abusive

acts

or

practices

in

connection

with

any

transaction

with

a

consumer

for

a

consumer financial product or service, or the offering of

a consumer financial product or service. We are subject to examination and

regulation by the CFPB. During 2025, the CFPB reduced its staff by over 80%. The

reduction in force is the subject of litigation, and

the

staffing

cuts

are

currently

stayed

pending

the

federal

circuit

court’s

en

banc

rehearing

of

the

case.

The

impact

of

these

developments

on

banking

organizations

subject

to

CFPB

regulation

and

supervision,

including

us,

is

uncertain.

The

Consumer

Financial Protection Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted

at

the federal

level and,

in certain

circumstances, permits

state attorneys

general to

enforce compliance

with both

the state

and

federal laws and regulations. States and state attorneys general

may increase regulatory, investigative and enforcement activity with

respect to consumer protection, in

response to changes in regulation, supervision

and enforcement of consumer protection laws

by

federal regulators.

On October 22, 2024, the CFPB finalized a new rule to implement Section 1033 of the Consumer Financial Protection Act

that

requires

a

provider

of

payment

accounts

or

products,

such

as

a

bank,

to

make

data

available

to

consumers

upon

request

regarding the

products or

services they

obtain from

the provider.

Any such

data provider

also has

to make

such data

available to

third parties, with the consumer’s express authorization and

through an interface that satisfies formatting, performance

and security

standards,

for

the

purpose

of

such

third

parties

providing

the

consumer

with

financial

products

or

services

requested

by

the

consumer. Data required to be made available under the rule includes

transaction information, account balance, account and routing

numbers,

terms

and

conditions,

upcoming

bill

information,

and

certain

account

verification

data.

The

rule

is

intended

to

give

consumers

control

over

their

financial

data,

including

with

whom

it

is

shared,

and

encourage

competition

in

the

provision

of

consumer financial

products or

services. For

banks with

at least

$10 billion

and less

than $250

billion in

total assets,

compliance

with the rule’s requirements is required beginning on

April 1, 2027. The rule is the subject of litigation,

which is currently stayed while

the CFPB considers revisions to the rule.

Office of Foreign Assets Control Regulation

The

U.S.

Treasury

Department

Office

of

Foreign

Assets

Control

(“OFAC”)

administers

economic

sanctions

that

affect

transactions

with

designated

foreign

countries,

nationals

and

others.

The

OFAC-administered

sanctions

targeting

countries

take

many

different

forms.

Generally,

however,

they

contain

one

or

of

the

following

elements:

(i)

restrictions

on

trade

with

or

investment in a sanctioned country; and (ii) a blocking

of assets in which the government of the

sanctioned country or other specially

designated nationals have an interest, by prohibiting

transfers of property subject to U.S. jurisdiction (including

property in the United

States or the possession or control of U.S.

persons outside of the United States). Blocked assets (e.g., property

and bank deposits)

cannot

be

paid

out,

withdrawn, set

off

or

transferred

in

any

manner without

a

license

from

OFAC.

Failure

to

comply

with these

sanctions

could

have

serious

legal

and

reputational

consequences,

including

denial

by

federal

regulators

of

proposed

merger,

acquisition, restructuring, or other expansionary activity.

Protection of Customer Personal Information and

Cybersecurity

The privacy

provisions of

the Gramm-Leach-Bliley Act

of 1999

generally prohibit financial

institutions, including

us, from

disclosing nonpublic personal financial information of consumer customers to third

parties for certain purposes (primarily marketing)

unless

customers

have

the

opportunity

to

opt

out

of

the

disclosure.

The

Fair

Credit

Reporting

Act

restricts

information

sharing

among affiliates for marketing purposes and governs

the use and provision of information to consumer

reporting agencies.

The federal banking regulators have also issued guidance and rules regarding cybersecurity that are intended to enhance

cyber risk management standards among financial institutions. A financial institution is expected to establish lines

of defense and to

maintain risk management processes that are designed to address the risk posed by compromised customer credentials. A financial

institution’s

management

is

expected

to

maintain

sufficient

business

continuity

planning

processes

for

the

rapid

recovery,

resumption and maintenance of

the institution’s operations

after a cyber-attack involving

destructive malware. A financial

institution

is

also

expected

to

develop

appropriate

processes

to

enable

recovery

of

data

and

business

operations

and

address

rebuilding

network capabilities and restoring data if the institution or its critical service

providers fall victim to this type of cyber-attack. If we

fail

to observe the

regulatory guidance, we could

be subject to various

regulatory sanctions, including financial

penalties. In November

2021, the U.S.

federal bank regulatory agencies

issued a final

rule requiring banking organizations,

including Popular,

PNA, BPPR

and PB, to notify

their primary federal banking regulator

within 36 hours of determining

that a “notification incident” has

occurred. A

notification incident

is a

“computer-security incident” that

has materially

disrupted or degraded,

or is

reasonably likely to

materially

disrupt or

degrade, the

banking organization’s

ability to

deliver services

to a

material portion

of its

customer base,

jeopardize the

viability

of

key

operations

of

the

banking

organization,

or

impact

the

stability

of

the

financial

sector.

The

final

rule

also

requires

specific and immediate notifications by bank

service providers that become aware of similar

incidents.

State and foreign regulators

have also been increasingly active

in implementing privacy and cybersecurity

standards and

regulations. Several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and

providing detailed requirements with respect to these

programs, including data encryption requirements. In New York,

the NYSDFS

requires

financial

institutions

regulated

by

the

NYSDFS,

including

PB,

to,

among

other

things,

(i)

establish

and

maintain

a

cybersecurity program designed

to enhance the

confidentiality, integrity

and availability of

their information systems;

(ii) implement

and maintain a written

cyber security policy setting forth

policies and procedures for the

protection of their information systems

and

nonpublic

information;

and

(iii)

designate

a

Chief

Information

Security

Officer.

On

November

2023,

the

NYSDFS

adopted

amendments to

its

cybersecurity regulations

that

represent

a

significant

update

to

the

regulation of

cybersecurity practices.

The

amendments

generally

fall

within

the

following

five

categories:

(i)

increased

mandatory

controls

associated

with

common

attack

vectors,

(ii)

enhanced

requirements

for

privileged

accounts,

(iii)

enhanced

notification

obligations,

(iv)

expansion

of

cyber

governance practices and (v) additional cybersecurity

requirements for larger companies.

On

July

2023,

the

SEC

adopted

new

rules

that

would

require

registrants,

such

as

Popular,

to

(i)

report

material

cybersecurity incidents

on Form

8-K and,

(ii) disclose

in Annual

Report on

Form 10-K

cybersecurity policies

and procedures

and

governance practices, including at the board and

management levels.

Many states and foreign

governments have also recently implemented or

modified their data breach notification

and data

privacy

requirements. The

California Consumer

Privacy Act

(“CCPA”)

imposes privacy

compliance obligations

with regard

to

the

collection,

use

and

disclosure of

personal

information of

California residents,

and the

November 2020

amendment to

the

CCPA

creates the California Privacy Protection Agency, a watchdog privacy agency, and further expands the scope of businesses covered

by the law

and certain rights relating

to personal information. The

substantive obligations under the

2020 amendment to the

CCPA

became effective on January 1, 2023. In the European Union, the General Data Protection Regulation heightens privacy compliance

obligations and

imposes strict

standards for

reporting data

breaches. We

continue to

monitor these

developments to

comply with

applicable requirements.

See

“Puerto

Rico

Regulation”

below

for

a

description

of

legislations

and

regulations

on

information

privacy

and

cybersecurity in Puerto Rico.

Climate-Related and ESG Developments

In recent years, certain lawmakers and regulators in and outside the United States have increased their focus on financial

institutions’

and

other

companies’

risk

oversight,

disclosures

and

practices

in

connection

with

climate

change

and

other

environmental,

social

and

governance (“ESG”)

matters.

For

example,

in

2023,

the

NYSDFS

issued

guidance

on

climate-related

financial

risk

management

applicable

to

NYSDFS-regulated

banking

and

mortgage

organizations,

including

PB.

The

guidance

addresses material

financial

risks related

to

climate change

faced by

these

organizations in

the context

of

risk assessment,

risk

management,

and

risk

appetite

setting.

In

2023,

California

enacted

climate-related

disclosure

laws

requiring

certain

companies

doing business in

California to make

certain climate-related disclosures

beginning in 2026,

including but not

limited to greenhouse

gas

emissions data

and climate-related

risks. On

the other

hand, certain

states

have enacted,

or have

proposed to

enact, “anti-

ESG”

statutes,

regulations

or

policies, including

statutes

that

prohibit

financial

institutions from

denying or

canceling products

or

services to

a person,

or otherwise discriminating

against a

person in making

available products or

services, on

the basis

of social

credit scores and certain other factors. Additionally, in August 2025, President Trump signed Executive Order 14331, “Guaranteeing

Fair Banking

Access for

All Americans,”

which states

that it

is the

policy of

the United

States that

no American

should be

denied

access

to

financial

services

because

of

their

constitutionally

or

statutorily

protected

beliefs,

affiliations,

or

political

views.

The

Executive

Order

directs

the

Treasury

Secretary

and

federal

banking

regulators

to

address

politicized

or

unlawful

debanking

activities.

Incentive Compensation

The Federal Reserve Board reviews, as

part of its regular,

risk-focused examination process, the incentive compensation

arrangements of

banking organizations, such

as Popular,

that are

not “large,

complex banking

organizations.” Deficiencies will

be

incorporated into

the

organization’s supervisory

ratings, which

can

affect

the

organization’s ability

to

make

acquisitions and

take

other

actions. Enforcement

actions may

be taken

against

a

banking

organization if

its

incentive compensation

arrangements, or

risk-management

control

or

governance

processes,

pose

a

risk

to

the

organization’s

safety

and

soundness

and

the

organization is not taking prompt and effective measures

to correct the deficiencies.

The

Federal

Reserve

Board,

OCC

and

FDIC

have

issued

comprehensive

final

guidance

on

incentive

compensation

policies intended to discourage excessive risk-taking in

the incentive compensation policies of banking organizations

in order to not

undermine

the

safety

and

soundness

of

such

organizations.

The

guidance,

which

covers

all

employees

that

have

the

ability

to

materially affect

the risk

profile of an

organization, either individually

or as

part of

a group,

is based

upon the key

principles that

a

banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond

the

organization’s

ability

to

effectively

identify

and

manage

risks,

(ii)

be

compatible

with

effective

internal

controls

and

risk

management, and (iii)

be supported by

strong corporate governance,

including active and

effective oversight

by the

organization’s

board of directors.

The Dodd-Frank Act requires the U.S. financial regulators, including the Federal Reserve Board, the other federal banking

agencies

and

the

SEC,

to

adopt

rules

prohibiting

incentive-based

payment

arrangements that

encourage

inappropriate

risks

by

providing excessive

compensation or

that could

lead to

a material

financial loss

at specified

regulated entities

having at

least $1

billion in total

assets (including Popular,

PNA, BPPR and

PB). The U.S.

financial regulators proposed revised

rules in 2016,

which

have not been finalized.

In October

2022, the SEC

adopted a final

rule requiring securities

exchanges to adopt

rules mandating, in

the case of

a

restatement, the

recovery or

“clawback” of

excess incentive-based

compensation paid

to current

or former

executive officers

and

requiring listed

issuers to

disclose any

recovery analysis where

recovery is

triggered by

a restatement.

The excess

compensation

would be based

on the amount

the executive officer

would have received

had the incentive-based

compensation been determined

using the restated

financials. The Nasdaq

Stock Market’s listing

standards pursuant to the

SEC’s rule became

effective October 2,

2023. Popular’s clawback policy adopted in accordance

with these listing standards is included as

Exhibit 97.1.

Regulation of Broker-Dealers

Our subsidiary,

PS, is a

registered broker-dealer with the

SEC and subject to

regulation and examination by

the SEC as

well

as

FINRA

and

other

self-regulatory

organizations.

These

regulations

cover

a

broad

range

of

issues,

including

capital

requirements;

sales

and

trading

practices;

use

of

client

funds

and

securities;

the

conduct

of

directors,

officers

and

employees;

record-keeping and recording;

supervisory procedures to

prevent improper trading

on material

non-public information; qualification

and

licensing

of

sales

personnel;

and

limitations

on

the

extension

of

credit

in

securities

transactions.

In

addition

to

federal

registration, state securities

commissions require the

registration of certain

broker-dealers. PS is

registered with 35

U.S. state and

territory securities commissions.

Regulation of Reinsurers, Insurance Producers and

Agents

Popular’s subsidiaries that are engaged in

insurance agency and producer activities are

subject to regulatory supervision

by the Puerto

Rico Office of

the Commissioner of Insurance

and to insurance laws

and regulations requiring licensing

of insurance

producers and

agents. Popular’s

reinsurance subsidiaries

are subject

to

licensure and

regulatory supervision

by the

Puerto Rico

Office of the Commissioner of Insurance and

to insurance laws and regulations requiring, among

other things, minimum capital and

solvency standards, financial reporting, restrictions on

the amount of dividends payable, record

keeping and examinations.

Puerto Rico Regulation

As

a

commercial

bank

organized

under

the

laws

of

Puerto

Rico,

BPPR

is

subject

to

supervision,

examination

and

regulation by the Office of the Commissioner of Financial Institutions, pursuant to the Puerto Rico Banking Act of 1933, as amended

(the “Banking Law”).

Section 27 of the Banking Law requires that at least ten percent (10%) of BPPR’s annual retained earnings be transferred

annually to a statutory reserve fund. The

apportionment must be done every year until the

reserve fund is equal to the

total of paid-

in capital on common and preferred stock. Under Regulation 9680 of the Puerto Rico Banking Law, dated July 22, 2025, Banks may

be exempted from

the requirement to transfer

such funds to

the statutory reserve

fund if they

are well capitalized,

have obtained a

rating of

1 or

2 in

the last

examination performed by

the Office

of the

Commissioner or an

applicable regulatory agency

and have

accumulated at least 50% of the paid in

capital for their common and preferred stock in

their reserve fund.

Section

of

the

Banking

Law

also

provides that

when

the

expenditures

of

a

bank

are

greater

than

its

receipts, the

excess of the

former over the latter

must be charged against

the undistributed profits of

the bank, and the

balance, if any,

must be

charged against the statutory reserve fund. If

the statutory reserve fund is not sufficient to cover such balance

in whole or in part, the

outstanding amount must be charged against the capital account and

no dividend may be declared until capital has been restored to

its original amount and the statutory reserve fund to

20% of the original capital.

Section 16 of the

Banking Law requires every

bank to maintain a

legal reserve that, except

as otherwise provided by

the

Office of

the Commissioner,

may not be

less than 20%

of its

demand liabilities, excluding

government deposits (federal,

state and

municipal) that

are secured

by collateral.

If a

bank is

authorized to

establish one

or more

bank branches

in a

state of

the United

States or in a foreign country, where such branches are subject to the reserve requirements of that state

or country, the Office of the

Commissioner

may

exempt

said

branch

or

branches

from

the

reserve

requirements

of

Section

16.

Pursuant

to

an

order

of

the

Federal

Reserve

Board

dated

November

24,

1982,

BPPR

has

been

exempted

from

the

reserve

requirements

of

the

Federal

Reserve

System

with

respect

to

deposits

payable

in

Puerto

Rico.

Accordingly,

BPPR

is

subject

to

the

reserve

requirement

prescribed by Section 16 of the Banking Law. During 2025, BPPR was

in compliance with the legal reserve requirement.

Section 17 of the Banking Law permits a bank to make loans to

any one person, firm, partnership or corporation, up to an

aggregate

amount

of

fifteen

percent

(15%)

of

the

paid-in

capital

and

reserve

fund

of

the

bank.

In

the

case

of

loans

which

are

secured by collateral worth at

least 25% more than the

amount of the loan, the

maximum aggregate amount of such secured

loans

is increased to one

third of the paid-in capital

of the bank and

its reserve fund. In no

event may the total of

unsecured and secured

loans to any one person, firm, partnership or corporation exceed an aggregate amount of

33 1/3% of the paid-in capital and reserve

fund of the bank. If the institution is well capitalized and had been rated 1 or

2 in the last examination performed by the Office of the

Commissioner or an applicable

regulatory agency,

its legal lending

limit shall also

include 15% of 100%

of its undivided

profits and

for loans

secured by

collateral worth

at least

25% more

than the

amount of

the loan,

the capital

of the

bank shall

also include

1/3% of 100% of

its undivided profits. Institutions rated

3 in their last

regulatory examination may include this

additional component

in their

legal lending

limit only

with the

previous authorization

of the

Office

of the

Commissioner.

There are

no restrictions

under

Section

on

the

amount

of

loans

that

are

wholly

secured

by

bonds,

securities

and

other

evidence

of

indebtedness

of

the

Government of

the United

States or

Puerto Rico,

or by

current debt

bonds, not

in default,

of municipalities

or instrumentalities

of

Puerto Rico. As

of December 31, 2025,

the legal lending

limit for BPPR

under this provision

was $723 million.

During 2025, BPPR

was in compliance with the lending limit requirements

of Section 17 of the Banking Law.

Section

of

the

Banking

Law

authorizes

a

bank

to

conduct

certain

financial

and

activities,

including

finance

leasing

of

personal

property

and

originating

and

servicing

mortgage

loans,

directly

or

through

subsidiaries.

BPPR

engages

in

finance

leasing

and

conducts

the

origination

and

servicing

of

mortgage

loans

through

its

Auto

and

Mortgage

divisions, respectively.

With

respect to

information privacy,

Puerto

Rico

law

requires businesses

to

implement information

security

controls to

protect consumers’

personal information from

breaches, as

well as to

provide notice of

any breach to

affected customers. In

2024

Puerto

Rico

enacted the

Cybersecurity Act

of

the

Commonwealth of

Puerto

Rico,

which

establishes cybersecurity

standards for

government entities

and their

contractors, including

certain reporting

and certification

obligations. As

a depositary

of government

funds, BPPR

could be

considered a

“contractor” under

the statute;

however,

the Puerto

Rico Innovation

and Technology

Service

has

not

yet

adopted

implementing

regulation

which

we

expect

to

address

applicability

and

any

exceptions

to

the

statute’s

requirements.

In addition,

as noted

above in

“Regulation of

Reinsurers, Insurance

Producers and

Agents,” Popular’s reinsurance

subsidiaries are subject to

licensure and regulatory supervision

by the Puerto Rico

Office of the

Commissioner of Insurance and

to

insurance laws and regulations.

Available Information

We maintain an

Internet website at www.popular.com.

Via the “Investor

Relations” link at our

website, our annual reports

on

Form 10-K,

quarterly reports

on

Form 10-Q,

current

reports on

Form 8-K

and amendments

to

such

reports filed

or furnished

pursuant to Section 13(a) or

15(d) of the Securities Exchange Act

of 1934, as amended (the

“Exchange Act”), are available, free

of

charge, as

soon as

reasonably practicable

after such

forms are

electronically filed

with, or

furnished to,

the SEC.

The SEC

also

maintains an

internet website at

http://www.sec.gov that

contains reports, proxy

and information statements,

and other information

regarding issuers that file electronically with the

SEC. You may obtain copies of our filings on the SEC site.

We have

adopted a

written code

of ethics

that applies

to all

directors, officers

and employees

of Popular,

including our

principal executive officer

and senior financial

officers, in accordance

with Section 406

of the Sarbanes-Oxley

Act of 2002

and the

rules

of

the

SEC

promulgated

thereunder.

Our

Code

of

Ethics

is

available

on

our

corporate

website,

www.popular.com,

in

the

section entitled “Corporate Governance.” In the event that we make changes to, or provide waivers from, the provisions of this Code

of Ethics that

the SEC requires

us to disclose,

we intend to

disclose these events

on our corporate

website in such

section. In

the

Corporate Governance

section

of our

corporate

website,

we

have also

posted the

charters

for

our Audit

Committee, Talent

and

Compensation

Committee,

Risk

Management

Committee,

Corporate

Governance

and

Nominating

Committee

and

Technology

Committee, as well as our Corporate Governance Guidelines. In addition, information concerning