Popular (BPOP) Up 7.4% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Popular's recent earnings report shows strong performance with adjusted earnings per share surpassing estimates, driven by growth in net interest income and fee income, despite challenges from lower deposit balances and higher operating expenses [2][3]. Financial Performance - Q4 2025 adjusted earnings per share reached $3.40, exceeding the Zacks Consensus Estimate of $3.02, and up from $2.51 in the same quarter last year [2]. - Total revenues for Q4 2025 were $823.8 million, a 9.1% increase year-over-year, and above the Zacks Consensus Estimate of $814.9 million [4]. - For the full year 2025, adjusted earnings per share were $12.18, beating the consensus estimate of $11.81, and reflecting a 35% increase from the previous year [3]. Income and Expenses - Net interest income (NII) for Q4 2025 was $657.6 million, an 11.3% increase year-over-year, with net interest margin expanding to 3.61% [4]. - Non-interest income rose 1% to $166.3 million, driven by service charges and trading gains [5]. - Total operating expenses increased by 1.2% to $473.2 million, primarily due to higher personnel and processing costs [5]. Loan and Deposit Trends - Total loans held-in-portfolio increased by 1.6% sequentially to $38.5 billion, while total deposits decreased slightly to $66.2 billion [6]. Credit Quality - A provision for credit losses of $71.4 million was recorded, up 3.3% year-over-year, with non-performing assets increasing by 32.5% to $540.8 million [7]. Capital Ratios - As of December 31, 2025, the Common Equity Tier 1 capital ratio was 15.72%, down from 16.03% a year ago [8]. Share Repurchase - The company repurchased 1.25 million shares of common stock for $147.8 million during the reported quarter [9]. Future Outlook - For 2026, total loans are expected to grow by 3-4%, with NII projected to increase by 5-7% year-over-year [10]. - Non-interest income is anticipated to remain in the range of $160–$165 million per quarter [10]. - Total GAAP operating expenses are projected to rise approximately 3% year-over-year [11]. Estimate Revisions - There has been a 7.79% upward trend in estimates revisions over the past month, indicating positive sentiment [12]. VGM Scores - Popular has a subpar Growth Score of D, a Momentum Score of C, and a Value Score of B, resulting in an aggregate VGM Score of C [13]. Industry Comparison - Popular belongs to the Zacks Banks - Southeast industry, with peer SouthState reporting a significant revenue increase of 52.5% year-over-year [15].