Fair value measurement (Tables)

6 Months Ended

Jun. 30, 2026

Schedule of Corporation’s Assets and Liabilities Measured at Fair Value on a Recurring 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)

Schedule of Loans Held-For-Sale Measured at Fair Value

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

Schedule of Nonrecurring Fair Value Measurements

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.

Schedule of Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

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)

Schedule of Gains and Losses (Realized and Unrealized) Included in Earnings

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)

Schedule of Significant Unobservable Inputs used to Derive the Fair Value of Level 3 Instruments

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.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details