v3.26.1
Fair value measurement
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair value measurement - Fair value measurement
ASC Subtopic 820-10 “Fair Value Measurements and Disclosures" establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three levels in order to increase consistency and comparability in fair value measurements and
disclosures. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
•Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the
measurement date. Valuation on these instruments does not necessitate a significant degree of judgment since valuations are based
on quoted prices that are readily available in an active market.
•Level 2  - Quoted prices other than those included in Level 1 that are observable either directly or indirectly. Level 2 inputs include
quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that
are not active, or other inputs that are observable or that can be corroborated by observable market data for substantially the full term
of the financial instrument.
•Level 3 - Inputs are unobservable and significant to the fair value measurement. Unobservable inputs reflect the Corporation’s own
judgments about assumptions that market participants would use in pricing the asset or liability.
The Corporation maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable
inputs be used when available. Fair value is based upon quoted market prices when available. If listed prices or quotes are not available,
the Corporation employs internally-developed models that primarily use market-based inputs including yield curves, interest rates,
volatilities, and credit curves, among others. Valuation adjustments are limited to those necessary to ensure that the financial instrument’s
fair value is adequately representative of the price that would be received or paid in the marketplace. These adjustments include amounts
that reflect counterparty credit quality, the Corporation’s credit standing, constraints on liquidity and unobservable parameters that are
applied consistently. There have been no changes in the Corporation’s methodologies used to estimate the fair value of assets and liabilities
from those disclosed in the 2025 Form 10-K.
The estimated fair value may be subjective in nature and may involve uncertainties and matters of significant judgment for certain financial
instruments. Changes in the underlying assumptions used in calculating fair value could significantly affect the results.
Fair Value on a Recurring and Nonrecurring Basis
The following fair value hierarchy tables present information about the Corporation’s assets and liabilities measured at fair value on a
recurring basis at June 30, 2026 and December 31, 2025:
At June 30, 2026
(In thousands)
Level 1
Level 2
Level 3
Measured at NAV
Total
RECURRING FAIR VALUE MEASUREMENTS
Assets
Debt securities available-for-sale:
U.S. Treasury securities
$10,040,663
$10,229,945
$-
$-
$20,270,608
Collateralized mortgage obligations - federal agencies
-
89,533
-
-
89,533
Mortgage-backed securities
-
4,431,815
357
-
4,432,172
Other
-
-
521
-
521
Total debt securities available-for-sale
$10,040,663
$14,751,293
$878
$-
$24,792,834
Trading account debt securities, excluding derivatives:
U.S. Treasury securities
$3,405
$349
$-
$-
$3,754
Obligations of Puerto Rico, States and political subdivisions
-
45
-
-
45
Collateralized mortgage obligations
-
514
-
-
514
Mortgage-backed securities
-
26,684
85
-
26,769
Other
-
-
89
-
89
Total trading account debt securities, excluding derivatives
$3,405
$27,592
$174
$-
$31,171
Equity securities
$-
$56,034
$-
$1,386
$57,420
Mortgage servicing rights
-
-
94,485
-
94,485
Loans held-for-sale
-
4,879
-
-
4,879
Derivatives
-
28,518
-
-
28,518
Total assets measured at fair value on a recurring basis
$10,044,068
$14,868,316
$95,537
$1,386
$25,009,307
Liabilities
Derivatives
$-
$(26,953)
$-
$-
$(26,953)
Total liabilities measured at fair value on a recurring basis
$-
$(26,953)
$-
$-
$(26,953)
At December 31, 2025
(In thousands)
Level 1
Level 2
Level 3
Measured at NAV
Total
RECURRING FAIR VALUE MEASUREMENTS
Assets
Debt securities available-for-sale:
U.S. Treasury securities
$6,576,313
$9,147,141
$-
$-
$15,723,454
Collateralized mortgage obligations - federal agencies
-
100,241
-
-
100,241
Mortgage-backed securities
-
4,750,122
405
-
4,750,527
Other
-
-
750
-
750
Total debt securities available-for-sale
$6,576,313
$13,997,504
$1,155
$-
$20,574,972
Trading account debt securities, excluding derivatives:
U.S. Treasury securities
$12,450
$10
$-
$-
$12,460
Obligations of Puerto Rico, States and political subdivisions
-
45
-
-
45
Collateralized mortgage obligations
-
567
-
-
567
Mortgage-backed securities
-
23,314
84
-
23,398
Other
-
-
99
-
99
Total trading account debt securities, excluding derivatives
$12,450
$23,936
$183
$-
$36,569
Equity securities
$-
$50,632
$-
$852
$51,484
Mortgage servicing rights
-
-
96,356
-
96,356
Loans held-for-sale
-
9,998
-
-
9,998
Derivatives
-
27,913
-
-
27,913
Total assets measured at fair value on a recurring basis
$6,588,763
$14,109,983
$97,694
$852
$20,797,292
Liabilities
Derivatives
$-
$(25,740)
$-
$-
$(25,740)
Total liabilities measured at fair value on a recurring basis
$-
$(25,740)
$-
$-
$(25,740)
Loans held-for-sale measured at fair value
Loans held-for-sale measured at fair value were priced based on secondary market prices. These loans are classified as Level 2.
The following tables summarize the difference between the aggregate fair value and the aggregate unpaid principal balance for loans held-
for-sale measured under the fair value option as of June 30, 2026 and December 31, 2025.
(In thousands)
June 30, 2026
Fair Value
Aggregate Unpaid
Principal Balance
Difference
Loans held for sale
$4,879
$4,867
$12
(In thousands)
December 31, 2025
Fair Value
Aggregate Unpaid
Principal Balance
Difference
Loans held for sale
$9,998
$9,839
$159
No loans held-for-sale under the fair value option were 90 or more days past due or on non-accrual status as of June 30, 2026 and
December 31, 2025.
The fair value information included in the following tables is not as of period end, but as of the date that the fair value measurement was
recorded during the six months ended June 30, 2026 and 2025 and excludes nonrecurring fair value measurements of assets no longer
outstanding as of the reporting date.
Six months ended June 30, 2026
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE MEASUREMENTS
Assets
Write-downs
Loans held-in-porfolio [1]
$-
$-
$17,111
$17,111
$(2,069)
Loans held-for-sale [2]
-
83,700
-
83,700
(71,300)
Other real estate owned [3]
-
-
2,992
2,992
(518)
Other foreclosed assets [3]
-
-
184
184
(36)
Total assets measured at fair value on a nonrecurring basis
$-
$83,700
$20,287
$103,987
$(73,923)
[1]Relates mainly to certain impaired collateral dependent loans. The impairment was measured based on the fair value of the collateral, which is derived from
appraisals that take into consideration prices in observed transactions involving similar assets in similar locations. Costs to sell are excluded from the
reported fair value amount.
[2]Relates to impaired commercial loan for which the Corporation has the intent to sell as of June 30, 2026.
[3]Represents the fair value of foreclosed real estate and other collateral owned that were written down to their fair value. Costs to sell are excluded from the
reported fair value amount.
Six months ended June 30, 2025
(In thousands)
Level 1
Level 2
Level 3
Total
NONRECURRING FAIR VALUE MEASUREMENTS
Assets
Write-downs
Loans[1]
$-
$-
$4,361
$4,361
$(91)
Other real estate owned [2]
-
-
3,919
3,919
(1,573)
Other foreclosed assets [2]
-
-
162
162
(46)
Total assets measured at fair value on a nonrecurring basis
$-
$-
$8,442
$8,442
$(1,710)
[1]Relates mainly to certain impaired collateral dependent loans. The impairment was measured based on the fair value of the collateral, which is derived from
appraisals that take into consideration prices in observed transactions involving similar assets in similar locations. Costs to sell are excluded from the
reported fair value amount.
[2]Represents the fair value of foreclosed real estate and other collateral owned that were written down to their fair value. Costs to sell are excluded from the
reported fair value amount.
The following tables present the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarters and six
months ended June 30, 2026 and 2025.
Quarters ended June 30, 2026
(In thousands)
MBS
classified
as debt
securities
available-
for-sale
Other
securities
classified as
debt securities
available-
for-sale
MBS
classified
as trading
account
debt
securities
Other
securities
classified
as trading
account debt
securities
Mortgage
servicing
rights
Total
assets
Balance at March 31, 2026
$383
$750
$85
$95
$94,232
$95,545
Gains (losses) included in earnings
(1)
-
-
(6)
(232)
(239)
Additions
-
-
-
-
485
485
Settlements
(25)
(229)
-
-
-
(254)
Balance at June 30, 2026
$357
$521
$85
$89
$94,485
$95,537
Changes in unrealized gains (losses) included in
earnings relating to assets still held at June 30,
2026
$-
$-
$-
$-
$2,005
$2,005
Six months ended June 30, 2026
(In thousands)
MBS
classified
as debt
securities
available-
for-sale
Other
securities
classified as
debt securities
available-
for-sale
MBS
classified
as trading
account
debt
securities
Other
securities
classified
as trading
account debt
securities
Mortgage
servicing
rights
Total
assets
Balance at January 1, 2026
$405
$750
$84
$99
$96,356
$97,694
Gains (losses) included in earnings
-
-
1
(10)
(2,871)
(2,880)
Gains (losses) included in OCI
2
-
-
-
-
2
Additions
-
-
-
-
1,000
1,000
Settlements
(50)
(229)
-
-
-
(279)
Balance at June 30, 2026
$357
$521
$85
$89
$94,485
$95,537
Changes in unrealized gains (losses) included in
earnings relating to assets still held at June 30,
2026
$-
$-
$1
$18
$1,532
$1,551
Quarter ended June 30, 2025
(In thousands)
MBS
classified
as debt
securities
available-
for-sale
Other
securities
classified as
debt securities
available-
for-sale
MBS
classified
as trading
account debt
securities
Other
securities
classified
as trading
account debt
securities
Mortgage
servicing
rights
Total
assets
Balance at March 31, 2025
$457
$750
$84
$127
$104,743
$106,161
Gains (losses) included in earnings
-
-
-
(5)
(1,954)
(1,959)
Gains (losses) included in OCI
-
-
-
-
-
-
Additions
-
-
-
-
288
288
Settlements
(25)
-
-
-
-
(25)
Balance at June 30, 2025
$432
$750
$84
$122
$103,077
$104,465
Changes in unrealized gains (losses) included in
earnings relating to assets still held at June 30,
2025
$-
$-
$-
$8
$348
$356
Six months ended June 30, 2025
(In thousands)
MBS
classified
as debt
securities
available-
for-sale
Other
securities
classified as
debt securities
available-
for-sale
CMOs
classified
as trading
account debt
securities
MBS
classified as
trading account
securities
Other
securities
classified
as trading
account debt
securities
Mortgage
servicing
rights
Total
assets
Balance at January 1, 2025
$484
$2,250
$-
$84
$133
$108,103
$111,054
Gains (losses) included in earnings
-
-
-
-
(11)
(5,524)
(5,535)
Gain (losses) included in OCI
(2)
(2)
Additions
-
-
-
-
-
498
498
Settlements
(50)
-
-
-
-
-
(50)
Transfers out of Level 3
$-
$(1,500)
$-
$-
$-
$-
$(1,500)
Balance at June 30, 2025
$432
$750
$-
$84
$122
$103,077
$104,465
Changes in unrealized gains (losses)
included in earnings relating to assets
still held at June 30, 2025
$-
$-
$-
$-
$16
$(977)
$(961)
Gains and losses (realized and unrealized) included in earnings for the quarters and six months ended June 30, 2026 and 2025 for Level 3
assets and liabilities included in the previous tables are reported in the Consolidated Statements of Operations as follows:
Quarter ended June 30, 2026
Six months ended June 30, 2026
(In thousands)
Total gains
(losses) included
in earnings
Changes in
unrealized
gains (losses)
relating to
assets still held at
reporting date
Total gains
(losses) included
in earnings
Changes in
unrealized
gains (losses)
relating to
assets still held at
reporting date
Mortgage banking activities
$(232)
$2,005
$(2,871)
$1,532
Trading account profit (loss)
(6)
-
(9)
19
Total
$(238)
$2,005
$(2,880)
$1,551
Quarter ended June 30, 2025
Six months ended June 30, 2025
(In thousands)
Total gains
(losses) included
in earnings
Changes in
unrealized
gains (losses)
relating to
assets still held at
reporting date
Total gains
(losses) included
in earnings
Changes in
unrealized
gains (losses)
relating to
assets still held at
reporting date
Mortgage banking activities
$(1,954)
$348
$(5,524)
$(977)
Trading account profit (loss)
(5)
8
(11)
16
Provision for credit losses
-
-
-
-
Total
$(1,959)
$356
$(5,535)
$(961)
The following tables include quantitative information about significant unobservable inputs used to derive the fair value of Level 3
instruments, excluding those instruments for which the unobservable inputs were not developed by the Corporation such as prices of prior
transactions and/or unadjusted third-party pricing sources at June 30, 2026 and 2025.
(In thousands)
Fair value at
June 30,
2026
Valuation technique
Unobservable inputs
Weighted average (range) [1]
Other - trading
$89
Discounted cash flow model
Weighted average life
2 years
Yield
12.0%
Prepayment speed
10.8%
Loans held-in-portfolio
$17,111
[2]
External appraisal
Haircut applied on
external appraisals
23.8% (5.0% - 35.0%)
[1]Weighted average of significant unobservable inputs used to develop Level 3 fair value measurements were calculated by relative fair value.
[2]Loans held-in-portfolio in which haircuts were not applied to external appraisals were excluded from this table.
(In thousands)
Fair value at
June 30,
2025
Valuation technique
Unobservable inputs
Weighted average (range) [1]
Other - trading
$122
Discounted cash flow model
Weighted average life
2 years
Yield
12.0%
Prepayment speed
10.8%
Loans held-in-portfolio
$4,361
[2]
External appraisal
Haircut applied on
external appraisals
5.0%
[1]Weighted average of significant unobservable inputs used to develop Level 3 fair value measurements were calculated by relative fair value.
[2]Loans held-in-portfolio in which haircuts were not applied to external appraisals were excluded from this table.