Popular's Bold New Era: Leadership Handoff, Bigger Buybacks, and a Raised Bar
The Puerto Rico powerhouse signals confidence with a new CEO, larger capital return, and an upgraded ROTCE target.
BPOP · Earnings Call · 2026-07-23
A Changing of the Guard
Popular, Inc. (BPOP) shocked investors on its second-quarter 2026 call with a leadership transition that feels less like a retirement and more like a passing of the baton to a team already in motion. CEO Javier D. Ferrer-Fernández announced his departure at the end of August, with CFO Jorge José García stepping into the top role and CRO Lidio V. Soriano becoming CFO. The handoff was framed not as a disruption but as a validation of the institution's depth, with Javier emphasizing:
it is not about 1 person. it is about the whole institution and the quality of its people.
The move matters because it comes on the heels of a quarter that beat expectations across nearly every metric. Net income reached $278 million, EPS rose 15% sequentially and 41% year-over-year, and the bank delivered a net income of $278 million that continues a strong upward trend. More tellingly, ROTCE improved to 17% from 15.5% in Q1, prompting management to raise its annual return objective to a range of 14%–17%. As CFO-turned-CEO Jorge García put it: “We are establishing a higher annual ROC objective of 14% to 17%.” — Jorge Jose García, Chief Financial Officer (CFO) · 2026-07-23This is a deliberate escalation from the prior "through the cycle" target of 14%, and it signals that the bank believes its transformation is yielding durable results, not just a cyclical tailwind.
Capital Return: From Cautious to Confident
The most dramatic shift lies in how popular treats its balance sheet. For years, the bank has been criticized for hoarding capital—CET1 sat at 16.1% this quarter—and management had often couched capital return in cautious language. That has changed. The fully utilized $500 million repurchase authorization was replaced with a new $1 billion program, and the quarterly dividend was raised 20% to $0.90 per share. The math is compelling: “We did say that we would be executing buybacks for the rest of the year in the $300 to $400 million range. If you add that to the dividends expected... that will cover around 100% of the 2025 net income.” — Jorge Jose García, Chief Financial Officer (CFO) · 2026-07-23This is a far cry from the cautious tone in prior quarters. When asked in April 2026 about capital levels, an executive responded: “We want them to be lower than they are now, unless we make a lot of money and not. But no, I mean, we really -- we are committed.” — Unknown Executive, Executive · 2026-04-23Now, the bank is not just talking about it—it is executing. The new capital stack optimization, including a possible AT1 issuance, could further accelerate buybacks. The market is taking notice: the stock is within 5% of its all-time high, having risen 16.7% over the past 90 days, and the tape shows a string of gains that suggest investors are rewarding the confidence.
Clearing the Deck
Beyond capital, the credit story this quarter was about cleaning up legacy issues while managing new ones. The bank resolved its largest nonperforming relationship—a $155 million telecom loan—with a $71 million charge-off and the sale of the remaining $84 million. Separately, two C&I relationships totaling ~$129 million moved to nonaccrual, but management was quick to stress these are idiosyncratic: “However, the activity remains isolated to a small number of borrowers.” — Lidio V. Soriano, Chief Risk Officer (CRO) · 2026-07-23Indeed, the underlying credit metrics remain positive: consumer charge-offs improved, mortgage performance is strong with net recoveries, and the allowance coverage ratio actually rose to 190% of NPLs. The manufacturing sector and a healthy public fund deposit base continue to support the Puerto Rican economy. With NCO guidance raised to 65–80 bps (from a prior 55–70 bps) due primarily to the telecom charge-off, the bank is being transparent about the cost of resolution while signaling that the core book is stable.
Puerto Rico's Tailwinds and the Road Ahead
The macro story remains encouraging. Onshoring investment continues to pour in—$2.3 billion of announced projects since 2025—and tourism remains robust, even as air passenger traffic has moderated slightly. The deposit cost increased only modestly, reflecting disciplined retention amid competitive pressures, while loan growth came in at the low end of the 3–4% guidance. With NII guidance raised to 8–9% growth and fee income expected to run at $165–170M per quarter, the bank is positioning for a strong second half.
But the real story is the shift in mindset. The new leadership is unabashedly aiming higher, as evidenced by the raised ROTCE objective and the willingness to deploy capital. This is a far cry from the more conservative posture of previous years, when the bank seemed content to simply "get to 14%." In a prior call, Jorge García had said: “we're not going to stop at 14%.” — Jorge Garcia, Chief Financial Officer (CFO) · 2025-10-23Now, with the stock near highs and the bank consistently beating expectations, that promise looks likely to be fulfilled. The market, which has historically assigned a discount to Puerto Rico-focused banks, is beginning to rerate BPOP as a top-performing regional, and the leadership change only reinforces that momentum.