Breaking Down Popular, Inc. (BPOP) Financial Health: Key Insights for Investors

You're looking at Popular, Inc. (BPOP) right now and wondering if the strong headline numbers tell the whole story, which is defintely the right question to ask in this market. The direct takeaway is that their core profitability is solid, but you need to map the credit quality trend immediately. For the third quarter of 2025, Popular, Inc. delivered a net income of $211.3 million on revenue (net of interest expense) of $817.7 million, translating to an Earnings Per Share of $3.14, which shows their net interest margin (NIM) expanding nicely to 3.51%. But, honestly, a seasoned analyst like me focuses on the fine print: while the bank's total assets stood robustly at $75.066 billion, non-performing loans (NPLs) spiked by $190.6 million, pushing the NPL ratio up to 1.30%, largely driven by just two commercial exposures. This isn't systemic, but it is a clear near-term risk that demands a deeper dive into their loan portfolio's resilience, especially as their Common Equity Tier 1 ratio remains strong at 15.79%.

Revenue Analysis

You need to know where the money is coming from to truly understand Popular, Inc.'s (BPOP) risk and opportunity profile. The direct takeaway from the Q3 2025 results is that the company's core lending business is strong, driving an 11% year-over-year revenue jump. That's a solid beat.

For the third quarter of 2025, Popular, Inc. reported total revenue (net of interest expense) of $817.7 million. This growth is defintely rooted in their traditional banking model, which relies on two primary revenue streams. You need to focus on the split between what they earn from lending and what they earn from fees.

• Net Interest Income (NII): This is the profit from lending, calculated as the difference between interest earned on loans and investments and interest paid on deposits. It is the cornerstone of any bank's revenue.
• Non-Interest Income: This covers all the fee-based services, like banking fees, credit and debit card transactions, wealth management, and other service charges.

The Dominance of Net Interest Income

Popular, Inc. is fundamentally a lending institution, and the Q3 2025 numbers prove it. Net Interest Income (NII) came in at $646.5 million for the quarter, which means lending activities contributed roughly 79.06% of the total revenue of $817.7 million. The remaining revenue, $171.2 million, came from Non-Interest Income (fee-based services), accounting for about 20.94%.

Here's the quick math on the Q3 2025 revenue breakdown:

The 11% year-over-year revenue growth in Q3 2025 is a clear signal that the company is effectively navigating the current interest rate environment, expanding its Net Interest Margin (NIM) to 3.51%. That's a good sign for future NII stability.

Segment Performance and Near-Term Trends

The revenue story is also a geographic and business segment story. Popular, Inc.'s operations are primarily split between Banco Popular de Puerto Rico (BPPR) and Popular Bank (PB) in the mainland U.S. While the full Q3 2025 segment breakdown isn't as granular, we know from Q2 2025 data that BPPR's Net Interest Income was $538.5 million, dwarfing the PB segment's NII of $102.2 million. Puerto Rico remains the core market, contributing the vast majority of the company's revenue.

What this estimate hides is the risk of rising credit losses. The increase in NII is great, but you must watch the credit quality metrics, as non-performing loans did increase by $190.6 million in Q3 2025, primarily due to two large commercial loans. That's a significant change that could eat into future NII. The growth is there, but the risks are also higher.

If you want to dig deeper into who is betting on this performance, you should be Exploring Popular, Inc. (BPOP) Investor Profile: Who's Buying and Why?

Profitability Metrics

You're looking for a clear-eyed view of Popular, Inc. (BPOP)'s financial engine, and the Q3 2025 results give us a solid picture: the bank is demonstrating strong core profitability, with margins that outperform the broader US banking industry average.

The key takeaway is that their strategic focus on net interest income (NII), the bank's primary revenue, is paying off, even as credit quality shows a few specific, manageable cracks. You need to focus on the spread they earn and the efficiency of their operations.

Decoding Popular, Inc.'s Margins (Q3 2025)

For a bank, 'Gross Profit' is best viewed through the lens of Net Interest Income (NII) and the resulting Net Interest Margin (NIM). This is the core spread between what they earn on loans and investments and what they pay on deposits.

Here's the quick math for Q3 2025, based on their total revenue (NII plus non-interest income) of $817.7 million:

• Net Profit Margin: The net income of $211.3 million on total revenue of $817.7 million translates to a Net Profit Margin of approximately 25.84%.
• Operating Profit (Pre-Provision Net Revenue - PPNR): This is the profit before accounting for loan losses and taxes, a great measure of operational strength. With operating expenses at $495.3 million, the PPNR was $322.4 million ($817.7M - $495.3M), giving an Operating Profit Margin of about 39.43%.

This is a healthy margin profile, defintely indicating effective pricing and cost control. You can see their commitment to their core business in their Mission Statement, Vision, & Core Values of Popular, Inc. (BPOP).

Profitability Trends and Industry Comparison

The trend throughout 2025 has been one of margin expansion, which is a significant positive in a dynamic rate environment. Popular, Inc. has managed to increase its Net Interest Margin (NIM) consistently, a sign of effective asset-liability management (ALM).

See the clear upward trajectory in their core profitability metric for 2025:

Comparing Popular, Inc. to the industry confirms its strong standing. Their NIM of 3.51% in Q3 2025 is notably above the overall US banking industry average of 3.26% reported for Q2 2025. It even sits favorably against the Community Bank average NIM of 3.62%, which is typically the highest-margin segment. Popular, Inc. is operating at the high end of regional bank profitability.

Operational Efficiency and Cost Management

Operational efficiency is where the rubber meets the road. Popular, Inc.'s management has highlighted their 'disciplined expense management', which is crucial when facing rising funding costs. While operating expenses did rise slightly to $495.3 million in Q3 2025 from $492.8 million in Q2 2025, this increase is often tied to necessary investments in technology and compliance.

The key is that revenue growth is outpacing expense growth, leading to positive operating leverage. The bank is investing to maintain its competitive edge-digital transformation is a cost now, but it's an efficiency driver later. What this estimate hides, however, is the rising credit risk: non-performing loans (NPLs) increased by $190.6 million in Q3 2025, primarily due to two specific commercial exposures. This is a clear near-term risk that could pressure future provision for credit losses, even with strong operational margins.

Debt vs. Equity Structure

The core takeaway on Popular, Inc.'s (BPOP) financing mix is simple: the company operates with a very conservative, equity-heavy structure, which is a sign of financial strength and stability. For the third quarter of the 2025 fiscal year, the company's reported debt-to-equity (D/E) ratio stood at a remarkably low 0.25. This means for every dollar of shareholder equity, Popular, Inc. uses only 25 cents of external debt financing.

This capital structure is defintely a source of comfort for investors. While the average Debt-to-Equity ratio for a general US company is often around 0.83, banks use a different capital mix where customer deposits are the primary liability, not traditional debt. Popular, Inc.'s low D/E ratio confirms its capital strength, a point further underscored by its Common Equity Tier 1 (CET1) capital ratio of 15.79% as of September 30, 2025, which is well above regulatory minimums.

Overview of Debt and Equity Levels (Q3 2025)

Looking at the balance sheet for the quarter ending September 30, 2025, we can map out the components of this conservative structure. The company's total debt, comprised of long-term and short-term borrowings (excluding customer deposits), is quite manageable relative to its equity base.

Here's the quick math on the non-deposit liabilities:

• Long-Term Debt: Approximately $12.1 billion (based on $12,096 million).
• Short-Term Debt: Approximately $400 million.
• Total Stockholders' Equity: Approximately $6.1 billion.

What this estimate hides is the nature of bank liabilities; deposits-which total around $66.5 billion as of Q3 2025-are the largest liability, but they aren't counted in the D/E ratio that analysts use to gauge solvency risk.

Debt Management and Capital Allocation

The company's approach to financing growth leans heavily on retained earnings and a strategic management of its equity base, rather than aggressive debt issuance. This is evident in the recent capital actions, which focus on returning capital to shareholders.

In the third quarter of 2025 alone, Popular, Inc. repurchased 1,000,862 shares of common stock for $119.4 million, at an average price of $119.33 per share. This use of capital for buybacks, alongside an increased quarterly dividend of $0.75 per share, signals that management views its own stock as a compelling investment and has excess capital beyond its operational and regulatory needs.

The company's credit ratings reflect this stability. Its Senior Unsecured debt is rated BB+ by S&P, Ba1 by Moody's, and BBB- by Fitch. [cite: 15 in previous search] These ratings are generally considered investment-grade or near-investment-grade, indicating a low risk of default. The balance between debt and equity is clearly skewed toward equity, giving the company a significant buffer against economic shocks. You can read more about their strategic direction here: Mission Statement, Vision, & Core Values of Popular, Inc. (BPOP).

The key takeaway for you is that Popular, Inc. is not overleveraged. This conservative stance provides flexibility to weather credit cycle downturns, even with the isolated credit quality issues noted in Q3 2025 related to two commercial loans. [cite: 13 in previous search]

Liquidity and Solvency

You're looking at Popular, Inc. (BPOP) and wondering if the cash is there to cover the near-term obligations, which is the core of liquidity analysis. For a bank, traditional liquidity ratios like the Current Ratio are often misleading, but we still track them. The real story is in the deposit base and capital buffer.

Popular, Inc.'s balance sheet shows a strong capital position, but the deposit trends require attention. The Common Equity Tier 1 (CET1) ratio, a key measure of a bank's ability to absorb losses, stood at a robust 15.79% as of the end of Q3 2025, which is defintely well above regulatory minimums. That's a powerful solvency strength.

Current and Quick Ratios: A Bank's Unique View

When you look at a bank, the Current Ratio (current assets divided by current liabilities) often looks low because customer deposits are technically current liabilities, but loans are long-term assets. This mismatch makes the ratio less useful than for a manufacturer.

For Popular, Inc., one reported Current Ratio (a measure of short-term liquidity) was as low as 0.12 in the latest available data, while another model showed it at 11.88 for the TTM period ending in Q3 2025. The Quick Ratio is not a primary metric for BPOP and is often not reported directly. Honestly, the wide range shows why you must look deeper than just these two numbers for a financial institution; they just don't tell the whole story.

Working Capital and Deposit Trends

Working capital for a bank is essentially the stability and cost of its funding sources. The recent trend shows a contraction in the deposit base, which is a key current liability. In Q3 2025, total deposits decreased by $704.1 million to $66.5 billion.

Here's the quick math on what drove that shift:

• A significant portion of the decline, $841.9 million, came from a reduction in Puerto Rico public deposits.
• This deposit outflow was partially offset by a concurrent increase in the loan portfolio, which grew by $502.0 million to a total of $38.7 billion.
• Also, the bank's highly liquid assets-money market and investment securities-decreased by $1.5 billion from the prior quarter, which is a draw-down on their immediate liquidity buffer.

The core challenge here is managing the cost of the remaining deposits and attracting new, stable funding. You can find more on their strategic focus here: Mission Statement, Vision, & Core Values of Popular, Inc. (BPOP).

Cash Flow Statements Overview

A look at the cash flow statement shows how the bank is deploying capital. Over the trailing twelve months (TTM) leading up to Q3 2025, the trends are clear:

The Investing outflow is normal for a bank that is growing its loan book. The Financing activities also show a commitment to shareholders, with the bank repurchasing over 1 million shares for $119.4 million and increasing the quarterly common stock dividend to $0.75 per share in Q3 2025.

Potential Liquidity Concerns and Strengths

The primary liquidity strength is the high Common Equity Tier 1 ratio of 15.79%. This capital cushion provides a substantial buffer against unexpected losses and market stress. Still, you need to watch the credit quality. Non-performing loans (NPLs) jumped by $190.6 million in Q3 2025, driven by two large commercial exposures, pushing the NPL ratio to 1.30% from 0.82% in the prior quarter. This is a credit risk, not an immediate liquidity crisis, but it does tie up capital and could impact future cash flow from operations if the trend broadens.

Valuation Analysis

You're looking at Popular, Inc. (BPOP) and wondering if the market is giving you a fair shake on its price. The short answer is that, based on key metrics for the 2025 fiscal year, the stock appears to be undervalued compared to its historical performance and forward earnings potential, which aligns with the strong analyst consensus.

As a seasoned financial analyst, I look past the headlines and focus on the core valuation multiples. For a bank like Popular, Inc., the Price-to-Earnings (P/E) and Price-to-Book (P/B) ratios are your most critical tools. Here's the quick math on where BPOP stands right now, using data as of November 2025:

• Price-to-Earnings (P/E) Ratio: The trailing twelve-month (TTM) P/E ratio is approximately 9.75. This is notably low, especially when compared to the broader market, suggesting the stock is inexpensive relative to its earnings power.
• Price-to-Book (P/B) Ratio: The P/B ratio sits at about 1.21. For a regional bank, a P/B slightly above 1.0 is often seen as a healthy sign of value, indicating the market is pricing the company only slightly above its net asset value (book value per share is roughly $91.00).
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric is less relevant for banks, which focus on Net Interest Income (NII) rather than EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Banks are valued on P/E and P/B, so we cut this metric out of the analysis.

The current valuation multiples defintely point to a value opportunity.

Stock Price Performance and Analyst Consensus

The market has already started to recognize this value, but there's still room to run. Over the last 12 months leading up to November 2025, Popular, Inc.'s stock price has climbed by a solid 20.14%. This is a strong return, but the stock is still trading well below its 52-week high of $129.32, with a recent closing price around $115.44.

Wall Street analysts are overwhelmingly bullish on the stock. The consensus rating from 11 analysts is a clear Buy. The average price target is set at $133.56, which suggests an upside of over 15% from the current price. This consensus is a strong signal that the market's current pricing has not fully captured the company's anticipated 2025 earnings growth.

Here's a snapshot of the analyst sentiment:

If you're looking for a deeper dive into the company's operational strength, you can read the full post: Breaking Down Popular, Inc. (BPOP) Financial Health: Key Insights for Investors.

Dividend Strength and Payout Sustainability

Beyond capital appreciation, Popular, Inc. offers a compelling dividend profile. The current annualized dividend is $3.00 per share, which translates to a competitive dividend yield of about 2.62%. For a bank stock, this is a respectable yield, especially when coupled with its safety.

The dividend payout ratio is a low and highly sustainable 27.6% of earnings. This means that for every dollar the company earns, it pays out less than thirty cents as a dividend, leaving ample capital for growth, share buybacks, and a strong buffer against economic downturns. This low payout ratio is a clear sign of financial stability, plus it gives the company plenty of room to continue its seven-year streak of dividend increases.

Risk Factors

You're looking at Popular, Inc. (BPOP) and seeing solid 2025 numbers, like the consensus full-year Earnings Per Share (EPS) forecast of $11.78, but a seasoned analyst knows to map the risks before committing capital. The bank faces a unique mix of external and internal pressures that could defintely slow its momentum.

The biggest external risk is geographic concentration. Popular, Inc. is the leading financial institution in Puerto Rico, which ties its fate closely to the island's economy. This means any major shift in U.S. federal policy or a reduction in the approximately $45 billion in federal funds allocated for reconstruction could indirectly impact their asset quality and loan demand. That's a huge dependency.

Credit Quality and Concentration Risk

While management is guiding for a stable credit environment with full-year Net Charge-Offs (NCOs) anticipated to range between 45-65 basis points, the third quarter of 2025 showed a spike that warrants attention. Honestly, this is where the rubber meets the road.

The annualized NCOs to average loans ratio jumped to 0.60% in Q3 2025, up from 0.45% in Q2 2025. This increase was mostly due to a single, isolated credit quality issue: a $13.5 million charge-off related to a commercial non-performing loan (NPL) inflow in the Banco Popular de Puerto Rico segment. This highlights a concentration risk in their commercial portfolio-a single loan can move the needle.

• Watch NCO trends closely; a sustained rise above 0.60% would signal a systemic issue.
• Monitor commercial real estate exposure, especially in a volatile rate environment.

Market and Operational Headwinds

Like all banks, Popular, Inc. is exposed to interest rate risk and competition for deposits. The cost of funding is a constant battle. In Q3 2025, total deposits decreased by $704.1 million from the prior quarter, including a drop in public deposits, which is a key metric to watch for stability. Still, the company is actively mitigating this risk.

Here's the quick math on their rate defense: in Q1 2025, they reinvested approximately $900 million of their U.S. treasury note portfolio at an average yield of around 4.2%. This strategy helps lessen their sensitivity to lower rates down the road. Plus, on the operational side, they are focusing on efficiency, including the strategic move to discontinue U.S. residential mortgage originations at the end of Q3 2025. That's a clean cut to a non-core, high-competition business.

The table below summarizes key 2025 financial metrics to provide context for the risks discussed in this Breaking Down Popular, Inc. (BPOP) Financial Health: Key Insights for Investors chapter.

The bank's Common Equity Tier 1 (CET1) ratio of 15.79% in Q3 2025 is a massive capital buffer, which is a powerful mitigation against the aforementioned risks. They are also executing on their share repurchase authorization, having bought back approximately $122 million in shares in Q1 2025 alone, with $160 million remaining on the existing $500 million program as of March 2025. That's a clear action to boost shareholder value while managing capital.

Growth Opportunities

You're looking for clarity on where Popular, Inc. (BPOP) will find its next leg of growth, and the answer is a pragmatic mix of domestic expansion and operational efficiency. The company isn't chasing risky acquisitions; instead, it's doubling down on its core strengths and the economic recovery in its home market. This is a trend-aware, realist approach, so you should expect steady, not explosive, growth.

The core of Popular, Inc.'s strategy rests on two pillars: leveraging its dominant market position in Puerto Rico and strategically expanding its U.S. banking operations. This expansion is defintely the key to diversifying revenue, reducing reliance on the Puerto Rican economy, and capturing new customer segments. The U.S. segment is actively pursuing niche lending, specifically targeting community association lending in Florida, healthcare lending in the Northeast, and construction lending in New York.

Here's the quick math on what analysts are projecting for the 2025 fiscal year, which just wrapped up with their Q3 earnings release in October 2025:

The company is projecting a Return on Tangible Common Equity (ROTCE) of at least 12% by the fourth quarter of 2025, which shows a commitment to shareholder returns. A big part of this efficiency comes from their digital transformation investments, which enhance customer experience while streamlining internal processes.

The competitive advantages for Popular, Inc. are clear and tangible. They hold a dominant market leadership position in Puerto Rico, which provides a stable customer base and significant brand recognition. Plus, their strong balance sheet, with total assets amounting to $75.07 billion as of September 30, 2025, gives them a solid foundation to navigate any market volatility. Their strategic initiatives are focused on capital allocation, too, with ongoing share repurchases being a key action to reduce the excess capital buffer and boost earnings per share.

The growth drivers are a mix of strategic action and macroeconomic tailwinds:

• Product Innovations: Focus on digital platforms to improve customer experience and drive operational efficiency.
• Market Expansions: Targeted growth in the U.S. mainland, specifically in Florida and the Northeast, through niche commercial and construction lending.
• Strategic Initiatives: Actively managing capital through share repurchases and aiming for a long-term ROTCE target of 14%.
• Economic Boost: Benefiting from the ongoing flow of federal disaster recovery funds into Puerto Rico, which bolsters local economic activity and loan demand.

What this estimate hides is the inherent risk from their concentration in Puerto Rico, but the U.S. expansion is the clear hedge against that. If you want to dig deeper into the company's long-term vision, you should review their Mission Statement, Vision, & Core Values of Popular, Inc. (BPOP). Finance: Monitor the NII growth rate in the next quarterly report to confirm they are on track to hit the 10-11% target.