Story and photos by Michael Hooper
VIEQUES, PR -- In the investment world, smart investors always pay attention to what they see in the real world, on the street, in the store, at the bank, in the coffee shop. They also look hard at financial statements. I've looked at both with Banco Popular and I'm impressed, I recently bought stock in the company (BPOP).
When I go to the Banco Popular branch office in Isabel, Vieques, PR., where I opened an account in October 2025, I often see lines of people inside the office waiting to see customer service agents. I also see customers using the ATM outside the office.
A real estate investor told me Banco Popular could use some competition in Vieques, because it's the only game in town and it's customer service is slow. Banking services here are in demand. I think the busy Vieques branch is a microcosm of the entire Banco Popular business in Puerto Rico. The recent financial statements for the fourth quarter and the year show the company's profitability is growing.
Banco Popular's fourth quarter net income of $233.9 million was up 10% compared to net income of $211.3 million in third quarter 2025. Earnings per share of $3.53 in fourth quarter 2025 was up 12% over $3.15 in third quarter 2025.
The company's net income for 2025 was $833.2 million, up 35% over net income of $614.2 million in 2024.
Banco Popular, founded in 1893, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. and British Virgin Islands, as well as auto and equipment leasing and financing in Puerto Rico.
Banco Popular also offers broker-dealer and insurance services in Puerto Rico through specialized subsidiaries. In the mainland United States, Banco Popular provides retail and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.
Banco Popular has 9,200 employees with 153 branch offices in Puerto Rico, 39 offices in the United States and nine in the Virgin Islands.
I've been coming to Puerto Rico since I was a little boy. My mother grew up in Guayama, PR. For many years I didn't come back (during college and early married life in Nebraska and Kansas) but I returned with my parents and my wife and children in 2006, reuniting with cousins, aunts and uncles. Since then my wife and I have come here many times, finding a great deal of happiness on the island of Vieques, which is about six miles east of mainland PR.
I see a lot of pride in Puerto Rico, a pride in its history, its music, food, culture and its exemplary Caribbean lifestyle, with some of the finest beaches in the world.
Bad Bunny's 30 concerts in San Juan in summer 2025 generated about $300 million in economic activity. People from all over the world descended on PR to attend the concerts.
When Bad Bunny performed the 2026 half-time show in the Super Bowl, there was a lot of excitement. Puerto Ricans are proud that one of their own celebrated their culture on the biggest stage in the world. Bad Bunny showed us the strength of his people, from the struggles making sugarcane to the power outages, and the people playing dominoes. There were so many cultural icons in his show, including sugar cane fields, coco frio, bananas, jibaros (PR hillbillies), Ford F150 pickup, boxing, the electric poles, the little casita. Hundreds of people worked on his show. There were some people like President Trump who disapproved of the NFL's choice, but a record 135 million viewers watched Bad Bunny's halftime performance.
Now I see continued resurgence in Puerto Rican culture. I've met several people with Puerto Rican blood who grew up in the states but found their way back here, like me. One Puerto Rican author of children's books told me Puerto Ricans sold their soul for money, they left the island to pursue higher paying jobs in the United States. But some of these Puerto Ricans are coming back here, and they are buying houses and fixing them up. That is why we can relate to Bad Bunny's lyrics, "No Me Quiero Ir de Aquí" (I don't want to go from here).
There is also a large expat community of Americans who fell in love with the island and purchased property here. The number of Airbnbs have exploded in Vieques and mainland PR. I recently picked up a hitchhiker, a native of Puerto Rico, who said Airbnb people are taking away valuable housing opportunities on the island. Rents have gone up, housing prices have gone up, squeezing out low-income and middle-income earners.
Housing needs create opportunities for investors. Banco Popular makes money on loans to homeowners.
I recently spoke with David Tangeman, a Houston accountant and banking expert, who reviewed the financial statements of Banco Popular. He was impressed with the bank's 35% increase in earnings in 2025 over 2024.
Stock in Banco Popular is up 133% over the past five years, up 34% in 2025 and up 17% already this year. One of the reasons the stock is up is the company has been aggressively buying its stock back in the open market. Last year the company made $833.2 million in earnings but spent about $500 million buying back stock. Such aggressive buying by the company reduces the risk of a downturn in the stock.
Banks, in general, have benefited from a higher risk-free rate of return on US government bonds. By paying a lower return for savings accounts, banks generate a healthy net interest margin between what they earn on their bonds and what they pay on savings accounts. This could change when the Fed lowers interest rates. Banks will have to lower their interest rates on savings accounts in order to accommodate lower earnings on bonds.
The stock in Banco Popular is trading at 1.55 times book value, which is a low valuation considering a lot of major banks, like JP Morgan Chase (JPM) are trading at over 2 times book value.
Banco Popular's price/earnings ratio is 11.98, which is below its peer group.
"The stock is high but obviously they are performing very well," said Tangeman.
Most US banks don't have operations in Puerto Rico.
"I don't think they have much competition," he said.
One disturbing trend at Banco Popular is that while the bank has grown to $75 billion in assets, the bank's nonperforming loans have also grown to $498 million. The bank has more than enough reserves -- $808 million -- to cover problem loans.
"It's a fairly well run bank. They have a nice franchise, they dominate the local market," Tangeman said.
Conclusion
I believe Banco Popular is still trading below the metrics of its banking peers in United States, representing some value here. Banco Popular has been growing its earnings, but does not have much competition. Risks include a possible downturn in the economy such as through a hurricane. Because this stock has run up quite a bit recently, I would recommend buying a few shares to start a position, and then waiting for dips to add to your position. I have watched this stock for years, I remember when it was $65 per share in 2023, I thought about buying a few shares then, but stupidly sat on my thumbs and waited. I'm waiting no longer.
Editor's note: Michael Hooper owns shares in Banco Popular (BPOP).
