Popular (PP4A) Risk Analysis

We could experience unexpected losses if the estimates or assumptions we use in preparing our financial statements are

condition and results of operations. As of December 31, 2025, we had $790 million, $814 million and $188 million, respectively, of goodwill, net deferred tax assets and amortizable intangible assets, including capitalized software costs, recorded on our balance sheet. Under GAAP, goodwill is tested for impairment at least annually and amortizable intangible assets are tested for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances, indicating that the carrying value of the goodwill or amortizable intangible assets may not be recoverable, include a decline in Popular's stock price related to a deterioration in global or local economic conditions, declines in our market capitalization, reduced future earnings estimates, and interest rate changes. The goodwill impairment evaluation process requires us to make estimates and assumptions with regards to the fair value of our reporting units. Actual values may differ significantly from these estimates. Such differences could result in future impairment of goodwill that would, in turn, negatively impact our results of operations and the reporting unit where the goodwill is recorded. The determination of whether a deferred tax asset is realizable is based on weighting all available evidence. The realization of deferred tax assets, including carryforwards and deductible temporary differences, depends upon the existence of sufficient taxable income of the same character during the carryback or carryforward period. The analysis considers all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing taxable temporary differences,future taxable income exclusive of reversing temporary differences and carryforwards, taxable income in prior carryback years and tax-planning strategies. Changes in these factors may affect the realizability of our deferred tax assets in our Puerto Rico and U.S. operations. If our goodwill, deferred tax assets or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings, which could adversely affect our financial condition and results of operations.

An impairment of our goodwill, deferred tax assets or amortizable intangible assets could adversely affect our financial

As a bank holding company, we depend on dividends and distributions from our subsidiaries for liquidity. As a bank holding company, we depend primarily on dividends from our banking and other operating subsidiaries to fund our cash needs, including to capitalize our subsidiaries. Our banking subsidiaries, BPPR and PB, are limited by law in their ability to make dividend payments and other distributions to us based on their earnings, dividend history, and capital position. Based on its current financial condition, PB may not declare or pay a dividend without the prior approval of the Federal Reserve Board and the NYSDFS. A failure by our banking subsidiaries to generate sufficient income and free cash flow to make dividend payments to us may affect our ability to fund our cash needs, which could have a negative impact on our financial condition, liquidity, results of operation or capital position. Such failure could also affect our ability to pay dividends to our stockholders and to repurchase shares of our common stock. We have in the past suspended dividend payments on our common stock and preferred stock during times of economic uncertainty, and there can be no assurance that we will be able to continue to declare dividends to our stockholders in any future periods. An impact on the tangible capital levels of our operating subsidiaries, could also limit the amount of capital we may upstream to the holding company. Tangible capital levels have in the past been, and may in the future be, adversely affected by the impact of rapidly rising interest rates on investment securities in our available-for-sale portfolio. For a discussion of risks related to changes in interest rates, see "Changes in interest rates and credit spreads can adversely impact our financial condition, including our investment portfolio, since a significant portion of our business involves borrowing and lending money, and investing in financial instruments" in Item 1A of this Form 10-K. We also depend on dividends from our banking and other operating subsidiaries to pay debt service on outstanding debt and to repay maturing debt. Our ability to declare such dividends would be subject to regulatory requirements and could require the prior approval of the Federal Reserve Board.

income may decrease. We rely primarily on bank deposits as a low cost and stable source of funding for our lending and investment activities and the operation of our business. Therefore, our funding costs are largely dependent on our ability to maintain and grow our deposits. As our competitors have raised the interest rates they pay on deposits, our funding costs have increased, as we have had to increase the rates we pay to our depositors to avoid losing deposits and to procure new ones. Rising interest rates have also led customers to move their funds to other financial institutions or to alternative investments that pay higher interest rates. Additionally,periods of market stress or lack of market or customer confidence in financial institutions may result in a loss of customer deposits,especially to the extent those deposits are in excess of the FDIC-insured limit of $250,000. As of December 31, 2025, we had $14 billion of total deposits (other than collateralized public funds, which represent public deposit balances from governmental entities in the U.S. and its territories, including Puerto Rico and the United States Virgin Islands, that are collateralized based on such jurisdictions' applicable collateral requirements) in excess of the FDIC-insured limit. If deposits decrease, we may need to rely on more expensive sources of funding, which would negatively impact our interest rate margin and net interest income. In addition, a reduction in our deposits would decrease our earning assets, which would also negatively affect our net interest income. We have a significant amount of deposits from the Puerto Rico government, its instrumentalities and municipalities ($19.4 billion, or 29% of our total deposits, as of December 31, 2025), and the amount of these deposits may fluctuate depending on the financial condition and liquidity of these entities, as well as on our ability to maintain these customer relationships. Under the terms of BPPR's deposit pricing agreement with the Puerto Rico government, most public fund deposit rates are market linked with a lag minus a specified spread. Therefore, as market rates rise, we are required to sequentially increase the rates we pay our public deposits. If the mix of our deposits shifts towards a higher proportion of higher-cost deposits for any reason, our funding costs would increase and our net interest income would be expected to decrease.