[POPULAR, INC. LOGO]

1st
Quarter Report
March 31, 1998

To Our Stockholders

During 1998, we continue to focus toward accomplishing our strategic
objectives of strengthening our competitive position in Puerto Rico, expanding
our franchise in the Caribbean and the United States, diversifying our financial
services to provide more quality service and alternatives to our clients and
reinforcing our organizational quality as well as preparing all our computer
systems for the year 2000.

During the first quarter of 1998, the net income rose to $54.8 million, for
an increase of $5.3 million or 10.6% from $49.5 million in the same quarter of
1997. For the last quarter of 1997, the Corporation reported net income of $55.3
million. On a per common share basis, net income rose 8.5% to $0.78 for the
first quarter of 1998, compared with $0.72 for the same period in 1997 and $0.78
for the last quarter of 1997.

The Corporation's return on assets (ROA) for the first quarter of 1998
amounted to 1.14% compared with 1.19% for the first quarter of 1997. The return
on common equity (ROE) for the quarter ended March 31, 1998, was 15.36% compared
with 16.32% for the same period a year earlier. For the fourth quarter of 1997,
the Corporation attained an ROA and ROE of 1.11% and 15.56%, respectively.

The increase in net income for the first quarter of 1998, when compared with
the same period a year earlier, was mainly due to a higher net interest income
coupled with a 25.2% growth in other operating income, partially offset by a
higher provision for loan losses and operating expenses.

The rise of 17.7% in net interest income was attributed to a growth of $2.5
billion in average earning assets, primarily a $1.7 billion increase in average
loans. The net interest yield, on a taxable equivalent basis, rose to 5.00% for
the first quarter of 1998, from 4.90% for the same period a year earlier.

The provision for loan losses amounted to $33.6 million for the first quarter
of 1998, from $23.7 million in the same period of 1997, reflecting the growth in
the loan portfolio, net charge-offs and non-performing assets. Net charge-offs
for the quarter ended March 31, 1998, amounted to $27.5 million as compared with
$17.9 million for the quarter ended March 31, 1997, and $25.5 million for the
fourth quarter of 1997. This increase was mostly attributed to higher losses in
consumer loans, principally as a result of the increased level of personal
bankruptcies.

Most of the growth in other operating income resulted from increases of $3.5
million in service charges on deposit accounts, $4.0 million in other service
fees and $3.4 million in other operating income.

The increase of $30.3 million in operating expenses for the three-month
period ended March 31, 1998, was reflected in most expense categories, mainly as
a result of the Corporation's acquisitions and continued expansion. The salary
expense category reflected the highest increase for the quarter ended March 31,
1998, compared with the same quarter last year, partially due to the
acquisitions of Roig Commercial Bank in Puerto Rico, Seminole National Bank in
Florida, National Bancorp, Inc. and CBC Bancorp in Illinois and Houston
Bancorporation in Texas, all performed after March 31, 1997. Also, the first
quarter of 1998, included expenses related to the amortization of the premium
paid on those operations acquired, and expenses related to a marketing program
launched in the United States in order to create higher visibility and brand
awareness of Banco Popular as well as promoting the credit card program.

The Corporation's total assets at March 31, 1998, amounted to $20.0 billion
for an increase of $2.6 billion or 15.0% when compared with $17.4 billion at the
same date in 1997. Loans amounted to $11.5 billion at March 31, 1998, compared
with $9.9 billion a year earlier and $11.4 billion at December 31, 1997. Loan
growth was driven by an increase of $947 million in commercial loans.

At March 31, 1998, the allowance for loan losses was $218 million or 1.89%
of loans, compared with $191 million or 1.94% at March 31, 1997, and $212
million or 1.86% at December 31, 1997. Non-performing assets (NPA) amounted to
$217 million compared with $174 million at the same date last year and $212
million at the end of 1997. The increase in NPA was primarily reflected in the
commercial loan portfolio in which non-performing loans amounted to $109 million
at March 31, 1998, compared with $95 million at the same date last year and $109
million at December 31, 1997. The ratio of NPA to loans increased from 1.76% at
March 31, 1997, to 1.88% a year later. When adjusted to conform to standard
industry practice, NPA were $164 million or 1.42% of loans at the end of this
quarter, compared with $124 million or 1.25% at March 31, 1997.

At March 31, 1998, total deposits were $12.0 billion compared with $10.5
billion at the same date in 1997, principally as a result of the acquisitions
since March 1997, which contributed $1.1 billion in deposits at their respective
acquisition dates. Total deposits amounted to $11.7 billion at December 31,
1997. Borrowings increased to $6.1 billion at the end of the first quarter of
1998, from $5.3 billion a year earlier.

Stockholders' equity increased to $1.55 billion at March 31, 1998, compared
with $1.29 billion a year ago and $1.50 billion as of December 31, 1997. Book
value per common share increased to $21.36 as of March 31, 1998, from $17.96 as
of the same date last year and $20.73 at the end of 1997.

The Corporation's stock market value was $58.69 at the end of the quarter,
representing an appreciation of 65.3% and 18.6% from the market value of $35.50
at March 31, 1997 and $49.50 at December 31, 1997, respectively. The Corporation
had a total market capitalization value of $4.0 billion at March 31, 1998, based
on 67,717,548 common shares outstanding.

Popular, Inc.

At March 31, 1998, the Corporation continued to enjoy solid capital ratios,
with a Tier I ratio of 12.17%, a total capital ratio of 14.54% and a leverage
ratio of 7.11%.

- --------------------------------------------------------------------------------

During this quarter, the Corporation continued its strategic expansion plan
with the opening of one branch in Orlando and the acquisition of another branch
in Wilmington, Los Angeles. Including these two new branches, the Corporation
now operates 65 banking branches in the continental U.S. In addition, during the
three-month period ended March 31, 1998, Equity One opened three new offices for
a total of 120 offices in 30 states.

In an effort to continue improving efficiency and profitability and to better
serve our customers, the Corporation will join the mortgage origination
department of Banco Popular de Puerto Rico with Popular Home Mortgage, its
mortgage banking subsidiary in Puerto Rico. This will create a solid mortgage
origination unit with more flexibility to compete in this very aggressive
market.

The Corporation recently announced a proposed investment in Banco Gerencial &
Fiduciario Dominicano, S.A., one of the four largest banking institutions in the
Dominican Republic with assets of $389 million and equity of over $31 million.
With this investment, the Corporation will become one of its principal
shareholders, while expanding its franchise in the Caribbean.

In April 1998, the Corporation received regulatory approval to acquire the
assets of Florida Exchange, Ltd. and Mirando J Corporation which operate 14
check cashing offices in Florida. These offices will operate under the recently
created subsidiary, Popular Cash Express and will offer services such as check
cashing, money transfers to other countries, money order sales and processing of
payments. This acquisition and the existing plans to open additional offices
during 1998, will facilitate the Corporation's objective of penetrating the
unbanked segment.

/s/ Richard L. Carrion
-----------------------
Richard L. Carrion
Chairman, President and
Chief Executive Officer

4
FINANCIAL HIGHLIGHTS POPULAR, INC.

- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET HIGHLIGHTS AT MARCH 31, AVERAGE FOR THE QUARTER
(In thousands) 1998 1997 Change 1998 1997 Change
- ------------------------------------------------------------------------------------------------------------------------------------

Money market investments $ 634,457 $ 790,187 $ (155,730) $ 700,123 $ 689,891 $ 10,232
Investment and trading securities 6,571,247 5,657,293 913,954 6,174,230 5,388,006 786,224
Loans 11,543,169 9,889,254 1,653,915 11,466,638 9,777,772 1,688,866
Total assets 20,018,220 17,401,458 2,616,762 19,485,912 16,916,854 2,596,058
Deposits 12,005,800 10,465,153 1,540,647 11,805,324 10,476,798 1,328,526
Borrowings 6,106,539 5,308,794 797,745 5,721,602 4,846,718 874,884
Stockholders' equity 1,546,238 1,287,515 258,723 1,492,184 1,279,553 212,631

- ---------------------------------------------------------------------------------
OPERATING HIGHLIGHTS FIRST QUARTER
(In thousands, except per share information) 1998 1997 Change
- ---------------------------------------------------------------------------------

Net interest income $212,704 $180,644 $32,060
Provision for loan losses 33,565 23,687 9,878
Fees and other income 67,951 54,255 13,696
Other expenses 192,295 161,673 30,622
Net income $ 54,795 $ 49,539 $ 5,256
Net income applicable to common stock $ 52,708 $ 47,452 $ 5,256
Earnings per common share 0.78 0.72 0.06
- ---------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------
SELECTED STATISTICAL FIRST QUARTER
INFORMATION 1998 1997
- ----------------------------------------------------------------------------------------------

COMMON STOCK DATA - Market price
High $ 58.69 $ 36.75
Low 46.06 33.06
End 58.69 35.50
Book value at period end 21.36 17.96
Dividends declared 0.22 0.18
Dividend payout ratio 28.25% 25.07%
Price/earnings ratio 19.18X 12.91x
- ----------------------------------------------------------------------------------------------
PROFITABILITY RATIOS - Return on assets 1.14% 1.19%
Return on common equity 15.36 16.32
Net interest spread (taxable equivalent) 4.11 4.09
Net interest yield (taxable equivalent) 5.00 4.90
Effective tax rate 26.66 28.29
Overhead ratio 49.10 48.64
- ----------------------------------------------------------------------------------------------
CAPITALIZATION RATIOS - Equity to assets 7.66% 7.56%
Tangible equity to assets 6.56 6.78
Equity to loans 13.01 13.09
Internal capital generation 10.14 11.11
Tier I capital to risk-adjusted assets 12.17 13.35
Total capital to risk-adjusted assets 14.54 15.90
Leverage ratio 7.11 7.71
- ----------------------------------------------------------------------------------------------
CREDIT QUALITY RATIOS - Allowance for losses to loans 1.89% 1.94%
Allowance to non-performing assets 100.19 109.99
Allowance to non-performing loans 108.85 116.63
Non-performing assets to loans 1.88 1.76
Non-performing assets to total assets 1.09 1.00
Net charge-offs to average loans 0.96 0.73
Provision to net charge-offs 1.22X 1.32x
Net charge-offs earnings coverage 3.94 5.18

5
ADDITIONAL INFORMATION

BOARD OF DIRECTORS

Richard L. Carrion, Chairman
Alfonso F. Ballester, Vice Chairman
Antonio Luis Ferre, Vice Chairman
Juan A. Albors Hernandez *
Salustiano Alvarez Mendez **
Jose A. Bechara Bravo *
Juan J. Bermudez
Esteban D. Bird *
Francisco J. Carreras
David H. Chafey, Jr.
Luis E. Dubon, Jr.
Hector R. Gonzalez
Jorge A. Junquera Diez
Manuel Morales, Jr.
Alberto M. Paracchini
Francisco M. Rexach, Jr.
J. Adalberto Roig, Jr.
Felix J. Serralles Nevares
Julio E. Vizcarrondo, Jr.
Samuel T. Cespedes, Secretary

* Director of Banco Popular de Puerto Rico only
** Director of Popular, Inc. only

EXECUTIVE OFFICERS

Richard L. Carrion, Chairman of the Board,
President and Chief Executive Officer
David H. Chafey, Jr., Senior Executive Vice President
Jorge A. Junquera Diez, Senior Executive Vice President
Maria Isabel Burckhart, Executive Vice President
Roberto R. Herencia, Executive Vice President
Larry Kesler, Executive Vice President
Humberto Martin, Executive Vice President
Emilio E. Pinero, Executive Vice President
Carlos Rom, Jr., Executive Vice President
Carlos J. Vazquez, Executive Vice President

SHAREHOLDER INFORMATION

SHAREHOLDER ASSISTANCE - Shareholders requiring a change of address, records or
information about lost certificates, dividend checks or dividend reinvestment
should contact:

Banco Popular de Puerto Rico
Trust Division (725)
Popular Center Building
4th Floor Suite 400
209 Ponce de Leon Ave.
Hato Rey, Puerto Rico 00918

PUBLICATIONS - For printed material (annual and quarterly reports, 10-K and 10-Q
reports), contact Mr. Amilcar L. Jordan at the Comptroller's Division at (787)
765-9800 ext. 6101.

DIVIDEND REINVESTMENT PLAN - The Corporation has a dividend reinvestment plan
which provides the shareholder a simple, convenient and cost-effective way to
acquire Popular, Inc. common stock.

- - Dividends can be automatically reinvested in additional shares at 95%
of the Average Market Price.

- - Participants may make optional cash payments of at least $25 and not
more than $10,000 per calendar month for investment in additional
shares.

- - No brokerage commissions are charged on purchases under this plan.

- - Participant's funds will be fully invested because the plan permits
fractions of shares to be credited to a participant's account.

If you would like more information on this plan, please contact our Trust
Department at (787) 756-3908, (787) 765-9800 ext. 5637, 5525 and 5897.

6
Consolidated Statements of Condition Popular, Inc.

March 31,
(In thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------

ASSETS
Cash and due from banks ........................................... $ 517,003 $ 447,113
----------- -----------
Money market investments:
Federal funds sold and securities and mortgages
purchased under agreements to resell ........................... 587,579 728,381
Time deposits with other banks ................................... 46,182 59,831
Bankers' acceptances ............................................. 696 1,975
----------- -----------
634,457 790,187
----------- -----------
Investment securities available-for-sale,
at market value .................................................. 5,906,739 3,963,115
Investment securities held-to-maturity, at cost ................... 416,773 1,430,700
Trading account securities, at market value ....................... 247,735 263,478
Loans held-for-sale ............................................... 307,382 249,317
Loans ............................................................. 11,582,940 9,972,694
Less--Unearned income ............................................ 347,153 332,757
Allowance for loan losses ............................. 217,708 191,360
----------- -----------
11,018,079 9,448,577
----------- -----------
Premises and equipment ............................................ 377,189 372,957
Other real estate ................................................. 17,285 6,615
Customers' liabilities on acceptances ............................. 1,397 1,870
Accrued income receivable ......................................... 132,092 108,320
Other assets ...................................................... 213,948 191,912
Intangible assets ................................................. 228,141 127,297
----------- -----------
$20,018,220 $17,401,458
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing ........................................... $ 2,492,547 $ 2,213,435
Interest bearing ............................................... 9,513,253 8,251,718
----------- -----------
12,005,800 10,465,153
Federal funds purchased and securities sold
under agreements to repurchase ................................. 2,959,925 2,344,411
Other short-term borrowings ...................................... 1,567,346 1,535,911
Notes payable .................................................... 1,304,268 1,153,472
Acceptances outstanding .......................................... 1,397 1,870
Other liabilities ................................................ 358,246 338,126
----------- -----------
18,196,982 15,838,943
----------- -----------
Subordinated notes ............................................... 125,000 125,000
----------- -----------
Preferred beneficial interests in Popular North America's junior
subordinated deferrable interest debentures guaranteed by the
Corporation ................................................... 150,000 150,000
----------- -----------
Stockholders' equity:
Preferred stock .................................................. 100,000 100,000
Common stock ..................................................... 412,238 396,731
Surplus .......................................................... 603,445 497,462
Retained earnings ................................................ 433,062 303,268
Treasury stock - at cost ......................................... (39,560)
Unrealized gains (losses) on securities available-for-sale, net of
deferred taxes ................................................. 37,053 (9,946)
----------- -----------
1,546,238 1,287,515
----------- -----------
$20,018,220 $17,401,458
=========== ===========

Consolidated Statements of Income Popular, Inc.

Quarter ended
March 31,

(Dollars in thousands, except per share information) 1998 1997
- ---------------------------------------------------------------------------------

INTEREST INCOME:
Loans ............................................. $293,217 $246,353
Money market investments .......................... 8,827 8,867
Investment securities ............................. 90,259 75,111
Trading account securities ........................ 4,065 3,934
-------- --------
396,368 334,265
-------- --------
INTEREST EXPENSE:
Deposits .......................................... 97,330 86,195
Short-term borrowings ............................. 56,248 47,362
Long-term debt .................................... 30,086 20,064
-------- --------
183,664 153,621
-------- --------
Net interest income ............................... 212,704 180,644
Provision for loan losses ......................... 33,565 23,687
-------- --------
Net interest income after provision for loan losses 179,139 156,957
Service charges on deposit accounts ............... 25,338 21,819
Other service fees ................................ 26,173 22,169
Gain (loss) on sale of securities ................. 867 (1,660)
Trading account profit ............................ 669 433
Other operating income ............................ 14,904 11,494
-------- --------
247,090 211,212
-------- --------
OPERATING EXPENSES:
Personnel costs:
Salaries ........................................ 59,293 48,345
Profit sharing .................................. 5,683 6,440
Pension and other benefits ...................... 18,418 16,700
-------- --------
83,394 71,485
Net occupancy expense ............................. 11,561 9,002
Equipment expenses ................................ 18,028 14,851
Other taxes ....................................... 7,968 6,445
Professional fees ................................. 12,878 9,903
Communications .................................... 8,824 7,581
Business promotion ................................ 8,216 5,957
Printing and supplies ............................. 4,003 3,644
Other operating expenses .......................... 10,724 8,819
Amortization of intangibles ....................... 6,784 4,438
-------- --------
172,380 142,125
-------- --------
Income before taxes ............................... 74,710 69,087
Income tax ........................................ 19,915 19,548
-------- --------
NET INCOME ........................................ $ 54,795 $ 49,539
======== ========
NET INCOME APPLICABLE TO COMMON STOCK ............. $ 52,708 $ 47,452
======== ========
EARNINGS PER COMMON SHARE ......................... $ 0.78 $ 0.72
======== ========

Subsidiaries

CENTRAL OFFICE

Banco Popular Center, Hato Rey
209 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
Telephone: (787) 765-9800

ATH COSTA RICA
Cond. en Oficinas Ofiplaza
del Este
Edif. D- Piso 1, San Pedro,
150 metros Oeste de la
Rotonda de la Bandera
San Jose, Costa Rica
Telephone: (011) 506-280-9796

BANCO POPULAR DE PUERTO RICO

PUERTO RICO OFFICE
Banco Popular Center, Hato Rey
209 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
Telephone: (787) 765-9800

NEW YORK OFFICE
7 West 51st St.
New York, N.Y. 10019
Telephone: (212) 315-2800

VIRGIN ISLANDS OFFICE
80 Kronprindsens Gade
Kronprindsens Quarter
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00802
Telephone: (809) 774-2300

BANCO POPULAR, FSB
500 Bloomfield Avenue
Newark, New Jersey 07107
Telephone: (201) 484-6525

BANCO POPULAR, ILLINOIS
4000 West North Avenue
Chicago, Illinois 60639
Telephone: (773) 772-8600

BANCO POPULAR, N.A. (CALIFORNIA)
6001 E. Washington Blvd.
City of Commerce,
California 90040
Telephone: (213) 724-8800

BANCO POPULAR, N.A. (FLORIDA)
5551 Vanguard Street
Suite 100
Orlando, Florida 32819
Telephone: (407) 370-8000

BANCO POPULAR, N.A. (TEXAS)
1615 Little York Road
Houston, Texas 77093
Telephone: (281) 539-8600

EQUITY ONE, INC.
523 Fellowship Road, Suite 220
Mt. Laurel, New Jersey 08054
Telephone: (609) 273-1119

METROPOLITANA DE PRESTAMOS, INC.
State Road #2 Km. 6.8
Villa Caparra
Guaynabo, Puerto Rico 00966
Telephone: (787) 792-9292

POPULAR FINANCE, INC.
10 Salud Street
El Senorial Condominium,
Suite 613
Ponce, Puerto Rico 00731
Telephone: (787) 844-2860

POPULAR MORTGAGE, INC.
268 Ponce de Leon Avenue
San Juan, Puerto Rico 00918
Telephone: (787) 753-0245

POPULAR LEASING AND RENTAL, INC.
M-1046 Federico Costa St.
Tres Monjitas Industrial
Development
San Juan, Puerto Rico 00903
Telephone: (787) 751-4848

POPULAR SECURITIES INCORPORATED
1020 Popular Center
Hato Rey, Puerto Rico 00918
Telephone: (787) 766-4200

[POPULAR, INC. LOGO]