- Net loss of $4.1 million and
Adjusted net income of $88.5 million for the fourth quarter of
2016
- Net income of $216.7 million and
Adjusted net income of $358.1 million for the year 2016
- Net interest margin of 4.02% in Q4
2016, compared to 4.12% in Q3 2016
- Credit Quality (excluding covered
loans):
- Non-performing loans
held-in-portfolio (NPLs) decreased by $21.4 million from Q3 2016;
NPLs to loans ratio stable at 2.5% vs. 2.6% in Q3 2016;
- Net charge-offs (NCOs) increased by
$21.1 million; NCOs at 1.00% of average loans held-in-portfolio vs.
0.63% in Q3 2016;
- Allowance for loan losses of $510.3
million vs. $525.6 million in Q3 2016; Allowance for loan losses to
loans held-in-portfolio at 2.24% vs. 2.33% in Q3 2016;
- Allowance for loan losses to NPLs at
91.5% vs. 90.7% in Q3 2016.
- Common Equity Tier 1 ratio of
16.47%, Book Value per Common Share of $50.08 and Tangible Book
Value per Share of $43.12 at December 31, 2016
Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP)
reported a net loss of $4.1 million for the quarter ended December
31, 2016, compared to net income of $46.8 million for the quarter
ended September 30, 2016. The results for the fourth quarter of
2016 reflect an after-tax charge amounting to $87 million, related
to the unfavorable award under the portfolio sales arbitration with
the FDIC, as receiver.
Mr. Richard L. Carrión, Chairman of the Board and Chief
Executive Officer, said: “Despite the impact of the adverse FDIC
arbitrations, during 2016 we demonstrated the strength of our
franchise by generating strong revenues and improving credit
quality. We also continued to achieve strong loan growth in our
U.S. business. As we announced today, we are pleased
that the progress made during 2016 allowed us to increase our
quarterly common stock dividend from $0.15 to $0.25 and establish a
$75 million common stock repurchase program.”
Significant Events
As previously announced, BPPR has filed statements of claim
requesting that a review board determine certain matters relating
to the loss-share claims under its commercial loss share agreement
with the FDIC, as receiver for Westernbank (the "FDIC"),including
with respect to the FDIC’s refusal to concur in certain of BPPR’s
portfolio sales under the commercial loss share agreement, for
which BPPR was seeking damages in the amount of $88.5 million plus
interest. On December 12, 2016, the review board in the arbitration
described above issued an award denying BPPR’s claim. As a result,
for the quarter ending December 31, 2016, the Corporation
recognized a pre-tax charge of $116.8 million in connection with
unreimbursed losses considered in the arbitration, the related
adjustment to the true-up obligation owed to the FDIC at the end of
the loss-share agreements in 2020 and recoveries previously
incorporated in the net damages claimed in the arbitration.
Earnings Highlights
(Unaudited)
Quarters ended Years ended (Dollars in
thousands, except per share information) 31-Dec-16
30-Sep-16 31-Dec-15 31-Dec-16 31-Dec-15 Net interest
income $355,405 $353,687 $352,500 $1,422,055 $1,408,983 Provision
for loan losses 40,924 42,594 57,711 171,126 217,458 Provision
(reversal) for loan losses - covered loans [1] 441
750 820 (1,110) 24,020 Net interest income after
provision for loan losses 314,040 310,343 293,969 1,252,039
1,167,505 FDIC loss-share (expense) income (130,334) (61,723)
(4,359) (207,779) 20,062 Other non-interest income 130,159 137,701
136,797 505,715 499,479 Goodwill impairment charge - 3,801 - 3,801
- Other operating expenses 320,871 319,871
305,808 1,251,834 1,288,221 (Loss) income from continuing
operations before income tax (7,006) 62,649 120,599 294,340 398,825
Income tax (benefit) expense (1,766) 15,839
(16,827) 78,784 (495,172) (Loss) income from continuing
operations (5,240) 46,810 137,426 215,556
893,997 Income from discontinued operations, net of tax
1,135 - - 1,135 1,347 Net (loss) income
$(4,105) $46,810 $137,426 $216,691
$895,344 Net (loss) income applicable to common stock
$(5,036) $45,880 $136,495 $212,968 $891,621
Net (loss) income per common share from continuing operations -
Basic $(0.06) $0.44 $1.32 $2.05 $8.65
Net (loss) income per common share from continuing operations -
Diluted $(0.06) $0.44 $1.32 $2.05 $8.64
Net income per common share from discontinued operations - Basic
$0.01 $- $- $0.01 $0.01 Net income per
common share from discontinued operations - Diluted $0.01
$- $- $0.01 $0.01 [1] Covered loans represent
loans acquired in the Westernbank FDIC-assisted transaction that
are covered under an FDIC loss-sharing agreement.
Adjusted results – Non-GAAP
The Corporation prepared its Consolidated Financial Statement
using accounting principles generally accepted in the U.S. (“U.S.
GAAP” or the “reported basis”). In addition to analyzing the
Corporation’s results on a reported basis, management monitors the
“Adjusted net income” of the Corporation and excludes the impact of
certain transactions on the results of its operations. Management
believes that the “Adjusted net income” provides meaningful
information about the underlying performance of the Corporation’s
ongoing operations. The “Adjusted net income” is a non-GAAP
financial measure.
The following tables reflect the results of operations for the
fourth and third quarters of 2016, with adjustments to exclude the
impact of certain events during the fourth and third quarters of
2016, to arrive at the adjusted net income.
Adjusted Net Income - Reconciliation to GAAP Financial
Measures
(Unaudited) (In
thousands) 31-Dec-16 Pre-tax
Income tax
effect
Impact on net
income
U.S. GAAP Net loss
$(4,105) Non-GAAP Adjustments: FDIC arbitration
award[1] 116,833
(30,123)
[3]
86,710 Other FDIC - LSA adjustments[2] 9,874
(2,797)
[3]
7,077 Income from discontinued operations[4] (2,015)
880 (1,135)
Adjusted net income (Non-GAAP)
$88,547 [1]Represents the arbitration
decision denying BPPR's request for reimbursement in certain shared
loss claims.
[2]Additional adjustments, including prior
period recoveries, related to restructured commercial loans to
reduce the indemnification asset to its expected realizable
value.
[3]Gains and losses related to assets
acquired from Westernbank as part of the FDIC assisted transaction
are subject to the capital gains tax rate of 20%. Other items
related to the FDIC loss-sharing agreements are subject to the
statutory tax rate of 39%.
[4]Represents income from discontinued
operations associated with the BPNA reorganization.
(Unaudited) (In
thousands) 30-Sep-16 Pre-tax
Income tax
effect
Impact on net
income
U.S. GAAP Net income
$46,810 Non-GAAP Adjustments: FDIC arbitration
award[1] 54,924 (10,985) 43,939 Goodwill impairment charge[2]
3,801 - 3,801
Adjusted Net income (Non-GAAP)
$94,550 [1]Represents the
arbitration decision denying BPPR's request for reimbursement in
certain shared loss claims. Gains and losses related to assets
acquired from Westernbank as part of the FDIC assisted transaction
are subject to the capital gains tax rate of 20%.
[2]Represents goodwill impairment charge
in the Corporation’s securities subsidiary. The securities
subsidiary is a limited liability company with a partnership
election. Accordingly, its earnings flow through Popular, Inc.,
holding company, for income tax purposes. Since Popular, Inc. has a
full valuation allowance on its deferred tax assets, this results
in an effective tax rate of 0%.
Net interest income
Net interest income for the quarter ended December 31, 2016 was
$355.4 million, compared to $353.7 million for the previous
quarter. Net interest margin was 4.02% for the quarter compared to
4.12% for the previous quarter.
The increase in net interest income was mainly related to:
- Higher income from money market,
trading and investment securities by $4.1 million due mainly to
higher average balance of mortgage backed and U.S. Treasury
securities; and
- Higher income from commercial loans by
$2.7 million, or 3 basis points, driven by loan growth in the U.S.
and higher yields at BPPR due to the impact on the variable rate
portfolio of the increase in market rates in the recent
months.
These positive variances were partially offset by:
- Lower income from consumer loans by
$2.0 million, or 1 basis point, driven by lower average balances at
both BPPR and BPNA due to high yield loan portfolio run-offs;
- Lower income from the Westernbank
(“WB”) loan portfolio by $1.3 million, or 9 basis points, due to
normal run-off and as a result of the quarterly recast process;
and
- Higher interest expense on deposits by
$2.4 million, or 1 basis point, mainly related to higher deposits
costs in the U.S. to fund loan growth and an unfavorable adjustment
on equity linked deposits at BPPR. Average balance of deposits
increased by 4% related to increases in government deposits in P.R.
and retail deposits in the U.S.
BPPR’s net interest income amounted to $305.4 million for the
quarter ended December 31, 2016, compared to $303.7 million for the
previous quarter. The increase of $1.7 million in net interest
income was mainly due to higher income from investment securities
and higher yield from commercial loans, partially offset by lower
income from WB loans, consumer loans and an unfavorable adjustment
on equity linked deposits, as mentioned above. The net interest
margin for the fourth quarter was 4.39%, a decline of 10 basis
points when compared to 4.49% for the previous quarter. The change
in the mix of earning assets as higher yielding assets mature,
particularly WB and consumer loans, and the investment portfolio
and cash at the Fed increases, resulted in a negative impact to the
net interest margin.
BPNA’s net interest income was $65.3 million, flat when compared
with the previous quarter. Higher income from investment securities
and commercial loans, were offset by lower income from consumer
loans and higher costs of deposits. Net interest margin decreased
14 basis points to 3.47% compared to 3.61% for the previous quarter
driven by a higher cost of deposits to fund loan growth. U.S.
earning assets yielded 4.21%, compared to 4.32% in the previous
quarter, while the cost of interest bearing liabilities was 0.96%,
compared to 0.94% in the previous quarter. The change in the mix of
earning assets driven by investments in securities and commercial
loans at lower rates as well as higher funding costs had a negative
impact on the net interest margin.
Non-interest (loss) income
The unfavorable variance in non-interest (loss) income of $76.2
million, when compared to the third quarter of 2016, was primarily
driven by:
- Higher FDIC loss-share expense by $68.6
million primarily due to a $116.8 million charge related to the
portfolio sales arbitration decision denying BPPR's claims under
the commercial loss sharing agreement and $9.9 million in
additional adjustments related to restructured commercial loans.
The results for the third quarter included a $54.9 million charge
related to a restructured loan adverse arbitration award;
- Unfavorable variance in net gain on
sale of loans of $8.5 million as a result of the gain on the sale
of a non-accrual public sector loan during the third quarter;
and
- Lower other operating income by $2.9
million mainly due to lower earnings from investments under the
equity method by $2.7 million.
These negative variances were partially offset by:
- Higher other service fees by $6.1
million due to higher insurance commission revenues related to
contingent commissions typically received during the fourth
quarter. Refer to Table F for a breakdown of other service
fees.
Refer to Table B for further details.
Financial Impact of the 2010 FDIC-Assisted Transaction
(Unaudited)
Quarters ended Years ended (In thousands) 31-Dec-16
30-Sep-16 31-Dec-15 31-Dec-16 31-Dec-15
Income
Statement
Interest income on WB loans $39,642 $40,867 $47,870 $175,207
$208,779 Total FDIC loss-share (expense) income (130,334) (61,723)
(4,359) (207,779) 20,062 Provision (reversal) for loan losses- WB
loans (2,292) 6,612 7,817 (3,318)
54,113 Total (expenses) revenues less provision (reversal) for loan
losses $(88,400) $(27,468) $35,694 $(29,254)
$174,728
Balance
Sheet
WB loans $1,861,106 $1,896,099 $2,113,440 FDIC loss-share asset
69,334 152,467 310,221 FDIC true-up payment obligation
153,158 134,487 119,745
See additional details on accounting for the 2010 FDIC-Assisted
transaction in Table O.
Operating expenses
Operating expenses amounted to $320.9 million for the fourth
quarter of 2016, a decrease of $2.8 million when compared to the
third quarter of 2016. The decrease in operating expenses was
driven primarily by:
- Lower other operating expense by $10.9
million mainly due to lower operational losses at BPPR and BPNA as
a result of higher reserves for legal matters, curtailment losses
on insured mortgage claims in our mortgage servicing business and a
higher incidence of credit card fraud losses during the third
quarter; and
- A goodwill impairment charge of $3.8
million at the securities subsidiary during the third quarter of
2016, recorded as part of the Corporation’s annual goodwill
impairment analysis.
These decreases were partially offset by:
- Higher personnel cost by $1.2 million
mainly due to higher training and development, severance and
employee benefit cost, partially offset by lower salaries and
commissions;
- Higher professional fees by $4.4
million mainly due to higher legal fees and other professional fees
related to the FDIC arbitration proceedings, partially offset by
lower collections, appraisals and other credit related fees;
- Higher business promotion by $2.7
million due to seasonally higher advertising expense at BPPR;
- Higher OREO expenses by $2.4 million
mainly due to higher losses and write-downs on mortgage OREO at
BPPR; and
- Higher credit and debit card
processing, volume, interchange and other expenses by $1.2 million
due to earned volume credits during the third quarter.
Non-personnel credit-related costs, which include collections,
appraisals, credit related fees, and OREO expenses, amounted to
$14.8 million for the fourth quarter of 2016, compared to $15.3
million for the third quarter of 2016. The decrease was principally
due to lower collections expense at BPPR.
Full-time equivalent employees were 7,828 as of December 31,
2016, compared to 7,866 as of September 30, 2016.
For a breakdown of operating expenses by category refer to table
B.
Income taxes
For the quarter ended December 31, 2016, the Corporation
recorded an income tax benefit of $1.8 million from its continued
operations, compared to an income tax expense of $15.8 million for
the previous quarter. The decline in the income tax expense is
mainly driven by the operating loss at BPPR for the fourth quarter,
compared to the taxable income for the previous quarter. In the
third quarter BPPR recognized a $4.4 million benefit related to the
reversal of uncertain tax positions reserves associated with
expired statutory provisions.
The effective income tax rate for the fourth quarter was 25%,
remaining flat from the previous quarter. The effective tax rate is
impacted by the composition and source of the taxable income.
Credit Quality
Credit quality trends continued stable when compared to the
third quarter of 2016. The Puerto Rico region experienced a
decrease of NPLs, a decrease of inflows to NPLs, and higher
charge-offs. The U.S. operation continued to reflect positive
results with strong growth and favorable credit quality metrics.
The Corporation continues to be attentive to changes in credit
quality trends given challenging economic conditions in Puerto
Rico.
- Inflows of NPLs held-in-portfolio,
excluding consumer loans, decreased by $9.5 million
quarter-over-quarter, mainly driven by lower mortgage inflows of
$12.9 million.
- Non-performing loans held-in-portfolio
decreased by $21.4 million from the third quarter of 2016, driven
by lower mortgage and commercial NPLs of $15.9 million and $7.2
million, respectively. At December 31, 2016, NPLs to total loans
held-in-portfolio ratio was 2.5%, compared to 2.6% in the third
quarter of 2016.
- Net charge-offs increased by $21.1
million from the third quarter of 2016. Excluding $7.1 million
recovery related to the sale of previously charged-off credit cards
and personal loans in the third quarter of 2016, net charge-offs
increased by $14.0 million quarter over quarter. This increase was
mainly driven by higher commercial and mortgage NCOs in the BPPR
segment by $6.0 million and $5.7 million, respectively. Commercial
NCOs included a $5.9 million charge-off taken on a single borrower
previously reserved. The Corporation’s ratio of annualized net
charge-offs to average non-covered loans held-in-portfolio stood at
1.00%, compared to 0.63% in the third quarter of 2016. The $7.1
million recovery from consumer loans reduced the NCO ratio by 13
bps in the previous quarter. Refer to Table J for further
information on net charge-offs and related ratios.
- The allowance for loan losses decreased
by $15.3 million from the third quarter 2016 to $510.3 million. The
general and specific reserves related to non-covered loans totaled
$398.9 million and $111.4 million, respectively, at quarter-end,
compared with $396.5 million and $129.1 million, respectively, as
of September 30, 2016. The ratio of the allowance for loan losses
to loans held-in-portfolio was 2.24% in the fourth quarter of 2016,
compared to 2.33% from the previous quarter.
- The ratio of the allowance for loan
losses to NPLs held-in-portfolio increased slightly to 91.5%,
compared to 90.7% in the previous quarter.
- The provision for loan losses for the
fourth quarter of 2016 remained flat amounting to $40.9 million.
The third quarter of 2016 included $7.1 million recovery impact
from the sale of the above mentioned consumer loans. The provision
to net charge-offs ratio was 72.8% in the fourth quarter of 2016,
compared to 121.2% in the previous quarter.
Non-Performing Assets (Unaudited)
(In thousands)
31-Dec-16 30-Sep-16 31-Dec-15 Total non-performing
loans held-in-portfolio, excluding covered loans $557,915 $579,325
$601,799 Non-performing loans held-for-sale - - 45,169 Other real
estate owned (“OREO”), excluding covered OREO 180,445
184,828 155,231 Total non-performing assets, excluding
covered assets 738,360 764,153 802,199 Covered loans and OREO
36,044 41,211 40,571 Total non-performing
assets $774,404 $805,364 $842,770 Net
charge-offs for the quarter (excluding covered loans)
$56,216 $35,140 $82,870 Ratios
(excluding covered loans):
Non-covered loans held-in-portfolio $22,773,747 $22,595,972
$22,346,115 Non-performing loans held-in-portfolio to loans
held-in-portfolio 2.45% 2.56% 2.69% Allowance for loan losses to
loans held-in-portfolio 2.24 2.33 2.25 Allowance for loan losses to
non-performing loans, excluding loans held-for-sale 91.47
90.73 83.57 Refer to Table H for additional
information.
Provision for Loan Losses
(Unaudited) Quarters ended Years ended
(In thousands) 31-Dec-16 30-Sep-16 31-Dec-15
31-Dec-16 31-Dec-15 Provision for loan losses: BPPR
$37,357 $36,281 $55,635 $155,860 $216,832 BPNA 3,567
6,313 2,076 15,266 626 Total provision for
loan losses - non-covered loans $40,924 $42,594
$57,711 $171,126 $217,458 Provision (reversal) for
loan losses - covered loans 441 750 820
(1,110) 24,020 Total provision for loan losses $41,365
$43,344 $58,531 $170,016 $241,478
Credit Quality by Segment
(Unaudited) (In thousands) Quarters ended
BPPR
31-Dec-16 30-Sep-16 31-Dec-15 Provision for loan
losses $37,357 $36,281 $55,635 Net charge-offs 53,416 32,959 82,011
Total non-performing loans held-in-portfolio, excluding covered
loans 532,508 551,238 574,834 Allowance / non-covered loans
held-in-portfolio 2.73% 2.80% 2.67%
Quarters ended
BPNA 31-Dec-16 30-Sep-16
31-Dec-15 Provision for loan losses $3,567 $6,313 $2,076 Net
charge-offs 2,800 2,181 859 Total non-performing loans
held-in-portfolio 25,407 28,087 26,965 Allowance / non-covered
loans held-in-portfolio 0.75% 0.78% 0.69%
Financial Condition Highlights
(Unaudited) (In thousands)
31-Dec-16 30-Sep-16
31-Dec-15 Cash and money market investments
$3,252,611 $4,314,040
$2,543,766 Trading and investment securities 8,535,530 7,968,004
6,407,802 Loans not covered under loss-sharing agreements with the
FDIC 22,773,747 22,595,972 22,346,115 Loans covered under
loss-sharing agreements with the FDIC 572,878 588,211 646,115 Total
assets 38,661,609 39,054,296 35,761,733 Deposits 30,496,224
30,327,045 27,209,723 Borrowings 2,055,477 2,364,984 2,425,853
Liabilities from discontinued operations - 1,815 1,815 Total
liabilities 33,463,652 33,673,901 30,656,409 Stockholders’ equity
5,197,957 5,380,395
5,105,324
Total assets decreased by $0.4 billion from the third quarter of
2016 driven by:
- A decrease of $1.1 billion in money
market investments mainly at BPPR due to the deployment of
liquidity into longer termed investment securities; and
- A decrease of $83.1 million in the FDIC
loss-share asset due mainly to the $81.3 million write-down related
to the review board’s denial of BPPR’s claim in connection with
arbitration proceedings with the FDIC during the fourth quarter of
2016. Refer to Table O for further details.
These negative variances were partially offset by:
- An increase of $0.6 billion in
investment securities available-for-sale mainly at BPPR due to
purchases of U.S Treasury securities and mortgage-backed agency
pools; and
- A net increase of $0.2 billion in
non-covered loans held-in-portfolio mainly driven by growth in the
commercial portfolio at BPNA by $0.3 billion, partially offset by
lower balances of consumer, residential mortgage, and commercial
loans at BPPR by $0.1 billion.
Total liabilities decreased by $0.2 billion from the third
quarter of 2016, principally driven by:
- A decrease of $0.3 billion in federal
funds purchased and assets sold under agreements to repurchase
mainly due to a net decrease in repurchase agreements principally
at BPPR; and
- A decrease of $68.1 million in other
liabilities primarily due to a reduction in the liability for GNMA
loans with a repurchase option due to higher repurchase activity
during the fourth quarter, partially offset by the impact on the
true-up payment obligation related to the adverse portfolio sales
arbitration award and other commercial loss share agreement
adjustments and the pre-tax adjustment of pension and
postretirement benefit plans.
These negative variances were partially offset by:
- An increase of $0.2 billion in deposits
mainly due to increases in savings and money market deposits at
BPNA, partially offset by decreases in deposits from the Puerto
Rico public sector at BPPR. Refer to Table G for additional
information on deposits.
Stockholders’ equity decreased by approximately $182.4 million
from the third quarter of 2016, mainly as a result of a net loss
for the quarter of $4.1 million, declared dividends of $15.6
million on common stock and $0.9 million in dividends on preferred
stock, higher net unrealized losses on securities
available-for-sale by $152.6 million, and a $11.4 million after-tax
adjustment of pension and postretirement benefit plans.
Common equity tier-1 ratio (“CET1”), book value per share and
tangible book value per share were 16.47%, $50.08 and $43.12,
respectively at December 31, 2016 compared to 16.64%, $51.85 and
$44.86 at September 30, 2016. Refer to Table A for capital
ratios.
Refer to Table C for the Statements of Financial Condition.
Cautionary Note Regarding
Forward-Looking Statements
The information contained in this press release contains
“forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are not historical facts, but instead represent only
management’s beliefs regarding future events and current
expectations, many of which, by their nature, are inherently
uncertain and outside of the control of the Corporation. It is
possible that the Corporation’s actual results and financial
condition may differ, possibly materially, from the anticipated
results and financial condition indicated or implied in these
forward-looking statements. Please refer to our Annual Report on
Form 10-K for the year ended December 31, 2015, the Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2016, June
30, 2016 and September 30, 2016, and our other filings with the
Securities and Exchange Commission for a discussion of some of the
risks and important factors that could affect the Corporation’s
future results and financial condition. Those filings are available
on the Corporation’s website (www.popular.com) and on the
Securities and Exchange Commission website (www.SEC.gov). The
Corporation does not undertake to update or revise any
forward-looking statement to reflect events or circumstances that
may arise after the date of such statements.
Founded in 1893, Popular, Inc. is the leading banking
institution by both assets and deposits in Puerto Rico and ranks
among the top 50 U.S. banks by assets. Popular provides retail,
mortgage and commercial banking services through its principal
banking subsidiary, Banco Popular de Puerto Rico, as well as auto
and equipment leasing and financing, investment banking,
broker-dealer and insurance services through specialized
subsidiaries. In the United States, Popular has established a
community-banking franchise providing a broad range of financial
services and products with branches in New York, New Jersey and
Florida under the name of Popular Community Bank.
Conference Call
Popular will hold a conference call to discuss its financial
results today Tuesday, January 24, 2017 at 10:00 a.m. Eastern Time.
The call will be open to the public and broadcasted live over the
Internet, and can be accessed through the Investor Relations
section of the Corporation’s website: www.popular.com.
Listeners are recommended to go to the website at least 15
minutes prior to the call to download and install any necessary
audio software. The call may also be accessed through a dial-in
telephone number 1-866-235-1201 or 1-412-902-4127. [There is no
charge to access the call]
A replay of the webcast will be archived in Popular’s website. A
telephone replay will be available one hour after the end of the
conference call through Friday, February 24, 2017. The replay dial
in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is
10098325.
An electronic version of this press release can be found at the
Corporation’s website: www.popular.com.
Popular, Inc. Financial Supplement to Fourth Quarter 2016
Earnings Release Table A - Selected Ratios and Other
Information Table B - Consolidated Statement of Operations
Table C - Consolidated Statement of Financial Condition
Table D - Consolidated Average Balances and Yield / Rate
Analysis - QUARTER Table E - Consolidated Average Balances
and Yield / Rate Analysis - YEAR-TO-DATE Table F - Mortgage
Banking Activities and Other Service Fees Table G - Loans
and Deposits Table H - Non-Performing Assets Table I
- Activity in Non-Performing Loans Table J - Allowance for
Credit Losses, Net Charge-offs and Related Ratios Table K -
Allowance for Loan Losses - Breakdown of General and Specific
Reserves - CONSOLIDATED Table L - Allowance for Loan Losses
- Breakdown of General and Specific Reserves - PUERTO RICO
OPERATIONS Table M - Allowance for Loan Losses - Breakdown
of General and Specific Reserves - U.S. MAINLAND OPERATIONS
Table N - Reconciliation to GAAP Financial Measures Table O
- Financial Information - Westernbank Loans Table P -
Adjusted Net Income for the Years Ended December 31, 2016 and 2015
(Non-GAAP)
POPULAR, INC. Financial
Supplement to Fourth Quarter 2016 Earnings Release Table A -
Selected Ratios and Other Information (Unaudited)
Quarters ended Years ended 31-Dec-16
30-Sep-16 31-Dec-15
31-Dec-16 31-Dec-15 Basic
EPS from continuing operations $(0.06) $0.44 $1.32 $2.05 $8.65
Basic EPS from discontinued operations $0.01 $- $- $0.01
$0.01 Total Basic EPS $(0.05) $0.44 $1.32 $2.06 $8.66
Diluted EPS from continuing operations $(0.06) $0.44 $1.32 $2.05
$8.64 Diluted EPS from discontinued operations $0.01 $- $-
$0.01 $0.01 Total Diluted EPS $(0.05) $0.44 $1.32 $2.06
$8.65 Average common shares outstanding 103,368,820
103,296,443 103,098,249 103,275,264 102,967,186 Average
common shares outstanding - assuming dilution 103,368,820
103,465,385 103,259,503 103,377,283 103,124,309 Common
shares outstanding at end of period 103,790,932 103,762,596
103,618,976 103,790,932 103,618,976 Market value per common
share $43.82 $38.22 $28.34 $43.82 $28.34 Market
capitalization - (In millions) $4,548 $3,966 $2,937 $4,548 $2,937
Return on average assets (0.04%) 0.49% 1.53% 0.58% 2.54% . .
Return on average common equity (0.38%) 3.46% 10.77% 4.07% 19.16%
Net interest margin 4.02% 4.12% 4.42% 4.22% 4.48%
Common equity per share $49.60 $51.37 $48.79 $49.60 $48.79
Book value per share $50.08 $51.85 $49.27 $50.08 $49.27
Tangible common book value per common share (non-GAAP) $43.12
$44.86 $42.18 $43.12 $42.18 Tangible common equity to
tangible assets (non-GAAP) 11.78% 12.13% 12.46% 11.78% 12.46%
Tier 1 capital
16.47%
16.64% 16.21%
16.47%
16.21% Total capital
19.46%
19.65% 18.78%
19.46%
18.78% Tier 1 leverage
10.91%
11.21% 11.82%
10.91%
11.82% Common Equity Tier 1 capital
16.47%
16.64% 16.21%
16.47%
16.21%
POPULAR, INC.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited) Quarters ended Variance
Quarter ended Variance Years ended (In
thousands, except per share information) 31-Dec-16
30-Sep-16
Q4 2016
vs. Q3 2016
31-Dec-15
Q4 2016
vs. Q4 2015
31-Dec-16 31-Dec-15 Interest income:
Loans $363,252 $363,550 $(298) $364,484 $(1,232) $1,459,720
$1,458,706 Money market investments 5,108 4,568 540 1,949 3,159
16,428 7,243 Investment securities 41,283 37,732 3,551 32,795 8,488
152,011 126,064 Trading account securities 1,401
1,449 (48) 2,129 (728) 6,414
11,001 Total interest income 411,044
407,299 3,745 401,357 9,687 1,634,573
1,603,014 Interest expense: Deposits 34,742 32,362 2,380
27,054 7,688 127,577 107,533 Short-term borrowings 1,761 2,132
(371) 1,693 68 7,812 7,512 Long-term debt 19,136
19,118 18 20,110 (974) 77,129
78,986 Total interest expense 55,639
53,612 2,027 48,857 6,782 212,518
194,031 Net interest income 355,405 353,687 1,718 352,500
2,905 1,422,055 1,408,983 Provision for loan losses - non-covered
loans 40,924 42,594 (1,670) 57,711 (16,787) 171,126 217,458
Provision (reversal) for loan losses - covered loans 441
750 (309) 820 (379) (1,110)
24,020 Net interest income after provision for loan losses
314,040 310,343 3,697 293,969
20,071 1,252,039 1,167,505 Service charges on deposit
accounts 39,902 40,776 (874) 39,993 (91) 160,836 160,108 Other
service fees 65,274 59,169 6,105 66,928 (1,654) 234,770 236,090
Mortgage banking activities 14,488 15,272 (784) 23,430 (8,942)
56,538 81,802 Net gain and valuation adjustments on investment
securities 30 349 (319) - 30 1,962 141 Other-than-temporary
impairment losses on investment securities - - - - - (209) (14,445)
Trading account loss (1,627) (113) (1,514) (1,631) 4 (785) (4,723)
Net gain (loss) on sale of loans, including valuation adjustments
on loans held-for-sale - 8,549 (8,549) (60) 60 8,245 542
Adjustments (expense) to indemnity reserves on loans sold (3,051)
(4,390) 1,339 (8,647) 5,596 (17,285) (18,628) FDIC loss-share
(expense) income (130,334) (61,723) (68,611) (4,359) (125,975)
(207,779) 20,062 Other operating income 15,143 18,089
(2,946) 16,784 (1,641) 61,643
58,592 Total non-interest (expense) income (175)
75,978 (76,153) 132,438 (132,613)
297,936 519,541 Operating expenses: Personnel costs
Salaries 77,275 77,770 (495) 77,578 (303) 308,135 304,618
Commissions, incentives and other bonuses 17,405 18,528 (1,123)
18,015 (610) 73,684 79,305 Pension, postretirement and medical
insurance 12,481 13,413 (932) 10,393 2,088 51,284 44,059
Other personnel costs, including payroll taxes 15,292
11,513 3,779 13,235 2,057 54,373
49,537 Total personnel costs 122,453 121,224 1,229 119,221 3,232
487,476 477,519 Net occupancy expenses 21,883 21,626 257 20,616
1,267 85,653 86,888 Equipment expenses 16,494 15,922 572 16,035 459
62,225 60,110 Other taxes 10,615 11,324 (709) 10,159 456 42,304
39,797 Professional fees Collections, appraisals and other credit
related fees 1,128 4,005 (2,877) 4,438 (3,310) 14,607 23,098
Programming, processing and other technology services 53,196 52,174
1,022 48,195 5,001 205,466 191,895 Legal fees, excluding
collections 14,702 11,428 3,274 6,721 7,981 42,393 26,122
Other professional fees 16,667 13,659 3,008
18,500 (1,833) 60,577 67,870 Total
professional fees 85,693 81,266 4,427 77,854 7,839 323,043 308,985
Communications 5,780 5,785 (5) 6,759 (979) 23,897 25,146 Business
promotion 15,473 12,726 2,747 15,162 311 53,014 52,076 FDIC deposit
insurance 5,926 5,854 72 5,386 540 24,512 27,626 Other real estate
owned (OREO) expenses 13,703 11,295 2,408 9,997 3,706 47,119 85,568
Credit and debit card processing, volume, interchange and other
expenses 4,817 3,640 1,177 5,822 (1,005) 20,796 22,854 Other
operating expenses Operational losses 6,579 19,609 (13,030) 5,091
1,488 35,995 20,663 All other 8,619 6,503
2,116 10,180 (1,561) 33,656
51,558 Total other operating expenses 15,198 26,112 (10,914) 15,271
(73) 69,651 72,221 Amortization of intangibles 2,836 3,097 (261)
2,522 314 12,144 11,019 Goodwill impairment charge - 3,801 (3,801)
- - 3,801 - Restructuring costs - - -
1,004 (1,004) - 18,412 Total operating
expenses 320,871 323,672 (2,801)
305,808 15,063 1,255,635 1,288,221 (Loss)
income from continuing operations before income tax (7,006) 62,649
(69,655) 120,599 (127,605) 294,340 398,825 Income tax (benefit)
expense (1,766) 15,839 (17,605)
(16,827) 15,061 78,784 (495,172) (Loss) income
from continuing operations (5,240) 46,810 (52,050) 137,426
(142,666) 215,556 893,997 Income from discontinued operations, net
of tax 1,135 - 1,135 - 1,135
1,135 1,347
Net (loss) income $(4,105)
$46,810 $(50,915) $137,426 $(141,531)
$216,691 $895,344
Net (loss) income applicable to
common stock $(5,036) $45,880 $(50,916)
$136,495 $(141,531) $212,968 $891,621
Net (loss) income per common share - basic: Net (loss)
income from continuing operations $(0.06) $0.44 $(0.50) $1.32
$(1.38) $2.05 $8.65 Net income from discontinued operations
0.01 - 0.01 - 0.01 0.01
0.01 Net (loss) income per common share - basic
$(0.05) $0.44 $(0.49) $1.32
$(1.37) $2.06 $8.66
Net (loss) income per common
share - diluted: Net (loss) income from continuing operations
$(0.06) $0.44 $(0.50) $1.32 $(1.38) $2.05 $8.64 Net income
from discontinued operations 0.01 - 0.01
- 0.01 0.01 0.01 Net (loss)
income per common share - diluted $(0.05) $0.44
$(0.49) $1.32 $(1.37) $2.06
$8.65
Dividends Declared per Common Share $0.15
$0.15 $- $0.15 $- $0.60
$0.30
Popular, Inc. Financial Supplement to Fourth
Quarter 2016 Earnings Release Table C - Consolidated
Statement of Financial Condition (Unaudited)
Variance Q4 2016 vs. (In
thousands) 31-Dec-16 30-Sep-16 31-Dec-15
Q3 2016 Assets: Cash and due from banks $362,394 $350,545
$363,674 $11,849 Money market investments 2,890,217 3,963,495
2,180,092 (1,073,278) Trading account securities, at fair value
59,805 72,584 71,659 (12,779) Investment securities
available-for-sale, at fair value 8,209,806 7,628,656 6,062,992
581,150 Investment securities held-to-maturity, at amortized cost
98,101 97,973 100,903 128 Other investment securities, at lower of
cost or realizable value 167,818 168,791 172,248 (973) Loans
held-for-sale, at lower of cost or fair value 88,821 72,076 137,000
16,745 Loans held-in-portfolio: Loans not covered under
loss-sharing agreements with the FDIC 22,895,172 22,714,358
22,453,813 180,814 Loans covered under loss-sharing agreements with
the FDIC 572,878 588,211 646,115 (15,333) Less: Unearned income
121,425 118,386 107,698 3,039 Allowance for loan
losses 540,651 555,855 537,111 (15,204)
Total loans held-in-portfolio, net 22,805,974
22,628,328 22,455,119 177,646 FDIC loss-share
asset 69,334 152,467 310,221 (83,133) Premises and equipment, net
543,981 537,975 502,611 6,006 Other real estate not covered under
loss-sharing agreements with the FDIC 180,445 184,828 155,231
(4,383) Other real estate covered under loss-sharing agreements
with the FDIC 32,128 37,414 36,685 (5,286) Accrued income
receivable 138,042 119,691 124,234 18,351 Mortgage servicing
assets, at fair value 196,889 200,354 211,405 (3,465) Other assets
2,145,510 2,163,939 2,193,162 (18,429) Goodwill 627,294 627,294
626,388 - Other intangible assets 45,050 47,886
58,109 (2,836) Total assets $38,661,609
$39,054,296 $35,761,733 $(392,687) Liabilities and
Stockholders’ Equity: Liabilities: Deposits: Non-interest bearing
$6,980,443 $6,950,287 $6,401,515 $30,156 Interest
bearing 23,515,781 23,376,758 20,808,208
139,023 Total deposits 30,496,224
30,327,045 27,209,723 169,179 Federal funds
purchased and assets sold under agreements to repurchase 479,425
765,251 762,145 (285,826) Other short-term borrowings 1,200 1,200
1,200 - Notes payable 1,574,852 1,598,533 1,662,508 (23,681) Other
liabilities 911,951 980,057 1,019,018 (68,106) Liabilities from
discontinued operations - 1,815 1,815
(1,815) Total liabilities 33,463,652 33,673,901
30,656,409 (210,249) Stockholders’ equity: Preferred
stock 50,160 50,160 50,160 - Common stock 1,040 1,040 1,038 -
Surplus 4,255,022 4,234,842 4,229,156 20,180 Retained earnings
1,220,307 1,259,295 1,087,957 (38,988) Treasury stock (8,286)
(7,647) (6,101) (639) Accumulated other comprehensive loss
(320,286) (157,295) (256,886) (162,991)
Total stockholders’ equity 5,197,957 5,380,395
5,105,324 (182,438) Total liabilities and
stockholders’ equity $38,661,609 $39,054,296
$35,761,733 $(392,687)
Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate
Analysis - QUARTER (Unaudited)
Quarter ended
Quarter ended Quarter ended Variance Variance 31-Dec-16
30-Sep-16 31-Dec-15 Q4 2016 vs. Q3 2016 Q4 2016 vs. Q4 2015
($ amounts in millions; yields not on a taxable equivalent basis)
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Assets: Interest earning assets: Money market, trading and
investment securities $12,185 $47.8
1.57
%
$11,159 $43.7 1.57 % $8,602 $36.9 1.71
% $1,026 $4.1 - % $3,583 $10.9 (0.14) %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,435 116.5 4.91 9,269 113.8 4.88 8,936 106.1 4.71 166
2.7 0.03 499 10.4 0.20 Construction 737 9.9 5.36 739 10.1 5.44 662
9.8 5.88 (2) (0.2) (0.08) 75 0.1 (0.52) Mortgage 6,598 88.5 5.37
6,637 88.3 5.32 6,947 92.5 5.33 (39) 0.2 0.05 (349) (4.0) 0.04
Consumer 3,774 97.3 10.26 3,847 99.3 10.27 3,819 97.6 10.13 (73)
(2.0) (0.01) (45) (0.3) 0.13 Lease financing 688 11.4
6.64 669 11.2 6.72 611 10.6 6.97 19
0.2 (0.08) 77 0.8 (0.33) Total loans
(excluding WB loans) 21,232 323.6 6.07 21,161 322.7 6.08 20,975
316.6 6.00 71 0.9 (0.01) 257 7.0 0.07 WB loans 1,845 39.6
8.56 1,881 40.9 8.65 2,156 47.9
8.82 (36) (1.3) (0.09) (311) (8.3)
(0.26) Total loans 23,077 363.2 6.27 23,042
363.6 6.29 23,131 364.5 6.27 35 (0.4)
(0.02) (54) (1.3) - Total interest earning
assets 35,262 $411.0 4.65 % 34,201 $407.3
4.75 % 31,733 $401.4 5.03 % 1,061 $3.7
(0.10) % 3,529 $9.6 (0.38) % Allowance for
loan losses (562) (553) (573) (9) 11 Other non-interest earning
assets 4,386 4,443 4,416 (57) (30) Total average assets $39,086
$38,091 $35,576 $995 $3,510 Liabilities and Stockholders'
Equity: Interest bearing deposits: NOW and money market $8,007 $8.3
0.41 % $7,326 $7.0 0.38 % $5,547 $5.1 0.36 % $681 $1.3 0.03 %
$2,460 $3.2 0.05 % Savings 7,796 4.7 0.24 7,550 4.6 0.24 7,119 4.1
0.23 246 0.1 - 677 0.6 0.01 Time deposits 7,858 21.7
1.10 7,859 20.7 1.05 8,192 17.9 0.87
(1) 1.0 0.05 (334) 3.8 0.23 Total
interest bearing deposits 23,661 34.7 0.58 22,735 32.3 0.57 20,858
27.1 0.51 926 2.4 0.01 2,803 7.6 0.07 Borrowings 2,212 20.9
3.78 2,398 21.3 3.55 2,439 21.8
3.57 (186) (0.4) 0.23 (227) (0.9) 0.21
Total interest bearing liabilities 25,873 55.6 0.86
25,133 53.6 0.85 23,297 48.9 0.83 740
2.0 0.01 2,576 6.7 0.03 Net interest
spread 3.79 % 3.90 % 4.20 % (0.11) % (0.41) % Non-interest bearing
deposits 6,976 6,676 6,246 300 730 Other liabilities 901 955 953
(54) (52) Liabilities from discontinued operations 2 2 2 - -
Stockholders' equity 5,334 5,325 5,078 9 256 Total average
liabilities and stockholders' equity $39,086 $38,091 $35,576 $995
$3,510 Net interest income / margin non-taxable equivalent
basis $355.4 4.02 % $353.7 4.12 % $352.5 4.42
% $1.7 (0.10) % $2.9 (0.40) %
Popular,
Inc. Financial Supplement to Fourth Quarter 2016 Earnings
Release Table E - Consolidated Average Balances and Yield /
Rate Analysis - YEAR-TO-DATE (Unaudited)
Year ended Year ended
31-Dec-16 31-Dec-15 Variance Average Income /
Yield / Average Income / Yield / Average Income /
Yield / ($ amounts in millions; yields not on a taxable equivalent
basis) balance Expense Rate balance
Expense Rate balance Expense Rate Assets:
Interest earning assets: Money market, trading and investment
securities $10,651 $174.9 1.64 % $8,406 $144.3
1.72 % $2,245 $30.6 (0.08)
%
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,203 451.8 4.91 8,705 424.6 4.88 498 27.2 0.03
Construction 726 39.0 5.38 616 36.9 6.00 110 2.1 (0.62) Mortgage
6,702 355.4 5.30 6,978 360.4 5.16 (276) (5.0) 0.14 Consumer 3,823
394.0 10.31 3,824 387.2 10.13 (1) 6.8 0.18 Lease financing 660
44.3 6.71 589 40.8 6.91 71 3.5
(0.20) Total loans (excluding WB loans) 21,114 1,284.5 6.08
20,712 1,249.9 6.03 402 34.6 0.05 WB loans 1,949 175.2
8.99 2,333 208.8 8.95 (384) (33.6)
0.04 Total loans 23,063 1,459.7 6.33 23,045
1,458.7 6.33 18 1.0 - Total interest
earning assets 33,714 $1,634.6 4.85 % 31,451
$1,603.0 5.10 % 2,263 $31.6 (0.25)
%
Allowance for loan losses (548) (585) 37 Other non-interest earning
assets 4,448 4,320 128 Total average assets $37,614 $35,186 $2,428
Liabilities and Stockholders' Equity: Interest bearing
deposits: NOW and money market $7,020 $27.6 0.39 % $5,447 $19.0
0.35 % $1,573 $8.6 0.04
%
Savings 7,528 18.0 0.24 7,027 16.2 0.23 501 1.8 0.01 Time deposits
7,910 82.0 1.04 8,158 72.3 0.89 (248)
9.7 0.15 Total interest bearing deposits 22,458 127.6
0.57 20,632 107.5 0.52 1,826 20.1 0.05 Borrowings 2,339 84.9
3.63 2,757 86.5 3.14 (418) (1.6)
0.49 Total interest bearing liabilities 24,797 212.5
0.86 23,389 194.0 0.83 1,408 18.5 0.03
Net interest spread 3.99 % 4.27 % (0.28)
%
Non-interest bearing deposits 6,608 6,147 461 Other liabilities 928
944 (16) Liabilities from discontinued operations 2 2 -
Stockholders' equity 5,279 4,704 575 Total average liabilities and
stockholders' equity $37,614 $35,186 $2,428 Net interest
income / margin non-taxable equivalent basis $1,422.1 4.22 %
$1,409.0 4.48 % $13.1 (0.26)
%
Popular, Inc.
Financial Supplement to Fourth Quarter 2016
Earnings Release Table F - Mortgage Banking Activities and
Other Service Fees (Unaudited) Mortgage
Banking Activities Variance Quarters ended Q4 2016 vs. Q4 2016
vs. Year ended Variance (In thousands) 31-Dec-16
30-Sep-16 31-Dec-15 Q3 2016 Q4 2015
31-Dec-16 31-Dec-15 2016 vs. 2015 Mortgage
servicing fees, net of fair value adjustments: Mortgage servicing
fees $14,211 $14,520 $15,504 $(309) $(1,293) $58,208 $59,461
$(1,253) Mortgage servicing rights fair value adjustments
(6,457) (6,062) (2,096) (395)
(4,361) (25,336) (7,904) (17,432) Total
mortgage servicing fees, net of fair value adjustments 7,754
8,458 13,408 (704) (5,654)
32,872 51,557 (18,685) Net gain on sale of loans,
including valuation on loans held-for-sale 2,535
8,857 10,337 (6,322) (7,802) 26,976
35,336 (8,360) Trading account profit (loss):
Unrealized gains (losses) on outstanding derivative positions 43 95
27 (52) 16 (1) 17 (18) Realized gains (losses) on closed
derivative positions 4,156 (2,138) (342)
6,294 4,498 (3,309) (5,108)
1,799 Total trading account profit (loss) 4,199
(2,043) (315) 6,242 4,514 (3,310)
(5,091) 1,781 Total mortgage banking activities
$14,488 $15,272 $23,430 $(784)
$(8,942) $56,538 $81,802 $(25,264)
Other Service Fees Variance Quarters ended Q4 2016 vs. Q4
2016 vs. Years ended Variance (In thousands)
31-Dec-16 30-Sep-16 31-Dec-15 Q3 2016
Q4 2015 31-Dec-16 31-Dec-15 2016 vs. 2015
Other service fees: Debit card fees $12,088 $11,483 $11,768 $605
$320 $46,241 $46,176 $65 Insurance fees 20,804 15,943 23,813 4,861
(3,009) 63,482 63,976 (494) Credit card fees 18,324 17,644 17,528
680 796 70,526 68,166 2,360 Sale and administration of investment
products 5,652 5,542 5,578 110 74 21,450 23,846 (2,396) Trust fees
4,782 4,968 4,947 (186) (165) 18,811 18,866 (55) Other fees
3,624 3,589 3,294 35 330
14,260 15,060 (800) Total other service fees
$65,274 $59,169 $66,928 $6,105 $(1,654)
$234,770 $236,090 $(1,320)
Popular,
Inc. Financial Supplement
to Fourth Quarter 2016 Earnings Release Table G - Loans and
Deposits (Unaudited) Loans - Ending
Balances Variance (In thousands) 31-Dec-16
30-Sep-16 31-Dec-15
Q4 2016 vs.
Q3 2016
Q4 2016 vs.
Q4 2015
Loans not covered under FDIC loss-sharing agreements: Commercial
$10,798,507 $10,537,191 $10,099,163 $261,316 $699,344 Construction
776,300 731,352 681,106 44,948 95,194 Legacy [1] 45,293 47,914
64,436 (2,621) (19,143) Lease financing 702,893 682,810 627,650
20,083 75,243 Mortgage 6,696,361 6,774,497 7,036,081 (78,136)
(339,720) Consumer 3,754,393 3,822,208
3,837,679 (67,815) (83,286) Total non-covered loans
held-in-portfolio $22,773,747 $22,595,972 $22,346,115 $177,775
$427,632 Loans covered under FDIC loss-sharing agreements
572,878 588,211 646,115 (15,333)
(73,237) Total loans held-in-portfolio $23,346,625
$23,184,183 $22,992,230 $162,442 $354,395
Loans held-for-sale: Commercial $- $- $45,074 $- $(45,074)
Construction - - 95 - (95) Mortgage 88,821 72,076
91,831 16,745 (3,010) Total loans
held-for-sale $88,821 $72,076 $137,000
$16,745 $(48,179) Total loans $23,435,446
$23,256,259 $23,129,230 $179,187 $306,216 [1]
The legacy portfolio is comprised of commercial loans, construction
loans and lease financings related to certain lending products
exited by the Corporation as part of restructuring efforts carried
out in prior years at the BPNA segment.
Deposits - Ending
Balances Variance (In thousands) 31-Dec-16
30-Sep-16 31-Dec-15 Q4 2016 vs. Q3 2016 Q4
2016 vs.Q4 2015 Demand deposits [1] $9,053,897 $9,161,839
$7,221,238 $(107,942) $1,832,659 Savings, NOW and money market
deposits (non-brokered) 13,327,298 12,872,072 11,440,693 455,226
1,886,605 Savings, NOW and money market deposits (brokered) 405,487
391,128 382,424 14,359 23,063 Time deposits (non-brokered)
7,486,717 7,619,232 7,274,157 (132,515) 212,560 Time deposits
(brokered CDs) 222,825 282,774 891,211
(59,949) (668,386) Total deposits $30,496,224
$30,327,045 $27,209,723 $169,179 $3,286,501
[1] Includes interest and non-interest bearing demand deposits.
Popular, Inc. Financial Supplement to Fourth Quarter 2016
Earnings Release Table H - Non-Performing Assets
(Unaudited)
Variance (Dollars in thousands) 31-Dec-16
As a % of
loans HIP by
category
30-Sep-16
As a % of
loans HIP by
category
31-Dec-15
As a % of
loans HIP by
category
Q4 2016 vs.
Q3 2016
Q4 2016 vs.
Q4 2015
Non-accrual loans: Commercial $163,348 1.5 % $170,571 1.6 %
$181,816 1.8 % $(7,223) $(18,468) Construction - - - - 3,550 0.5 -
(3,550) Legacy [1] 3,337 7.4 3,450 7.2 3,649 5.7 (113) (312) Lease
financing 3,062 0.4 2,878 0.4 3,009 0.5 184 53 Mortgage 329,907 4.9
345,776 5.1 351,471 5.0 (15,869) (21,564) Consumer 58,261
1.6 56,650 1.5 58,304
1.5 1,611 (43) Total
non-performing loans held-in- portfolio, excluding covered loans
557,915 2.5 % 579,325 2.6 % 601,799 2.7 % (21,410) (43,884)
Non-performing loans held-for-sale [2] - - 45,169 - (45,169) Other
real estate owned (“OREO”), excluding covered OREO 180,445
184,828
155,231 (4,383) 25,214
Total non-performing assets, excluding covered assets 738,360
764,153 802,199 (25,793) (63,839) Covered loans and OREO
36,044 41,211
40,571 (5,167)
(4,527) Total non-performing assets $774,404
$805,364 $842,770
$(30,960) $(68,366) Accruing
loans past due 90 days or more [3] $426,652
$418,652 $446,725
$8,000 $(20,073)
Ratios
excluding covered loans: Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.45 % 2.56 % 2.69 % Allowance for loan
losses to loans held-in-portfolio 2.24 2.33 2.25 Allowance for loan
losses to non-performing loans, excluding loans held-for-sale
91.47 90.73
83.57
Ratios including covered loans: Non-performing assets
to total assets 2.00 % 2.06 % 2.36 % Non-performing loans
held-in-portfolio to loans held-in-portfolio 2.41 2.52 2.63
Allowance for loan losses to loans held-in-portfolio 2.32 2.40 2.34
Allowance for loan losses to non-performing loans, excluding loans
held-for-sale 96.23 95.32
88.68
[1] The legacy portfolio is comprised of
commercial loans, construction loans and lease financings related
to certain lending products exited by the Corporation as part of
restructuring efforts carried out in prior years at the BPNA
segment. [2] There were no non-performing loans held-for-sale as of
December 31, 2016 (September 30, 2016 - there were no
non-performing loans held-for-sale; December 31, 2015 - $45 million
in commercial loans and $95 thousand in construction loans.) [3] It
is the Corporation’s policy to report delinquent residential
mortgage loans insured by FHA or guaranteed by the VA as accruing
loans past due 90 days or more as opposed to non-performing since
the principal repayment is insured. These balances include $181
million of residential mortgage loans insured by FHA or guaranteed
by the VA that are no longer accruing interest as of December 31,
2016 (September 30, 2016 - $174 million; December 31, 2015 - $164
million). Furthermore, the Corporation has approximately $68
million in reverse mortgage loans which are guaranteed by FHA, but
which are currently not accruing interest. Due to the guaranteed
nature of the loans, it is the Corporation's policy to exclude
these balances from non-performing assets (September 30, 2016 - $72
million; December 31, 2015 - $70 million).
Popular,
Inc. Financial Supplement to Fourth Quarter 2016 Earnings
Release Table I - Activity in Non-Performing Loans
(Unaudited)
Commercial loans held-in-portfolio: Quarter ended Quarter
ended 31-Dec-16 30-Sep-16 (In thousands) BPPR BPNA
Popular, Inc. BPPR BPNA Popular, Inc.
Beginning balance NPLs $167,047 $3,524 $170,571 $172,584 $3,031
$175,615 Plus: New non-performing loans 17,409 1,615 19,024 12,520
1,609 14,129 Advances on existing non-performing loans - 5 5 - 164
164 Reclassification from construction loans to commercial loans -
- - 2,436 - 2,436 Less: Non-performing loans transferred to OREO
(1,559) - (1,559) (2,223) - (2,223) Non-performing loans
charged-off (12,925) (35) (12,960) (7,918) (141) (8,059) Loans
returned to accrual status / loan collections (10,317)
(1,416) (11,733) (10,352) (1,139)
(11,491) Ending balance NPLs $159,655 $3,693
$163,348 $167,047 $3,524 $170,571
Construction loans held-in-portfolio: Quarter ended
Quarter ended 31-Dec-16 30-Sep-16 (In thousands) BPPR
BPNA Popular, Inc. BPPR BPNA Popular,
Inc. Beginning balance NPLs $- $- $- $2,423 $100 $2,523 Plus: New
non-performing loans - - - 1,150 - 1,150 Less: Non-performing loans
charged-off - - - (985) - (985) Loans returned to accrual status /
loan collections - - - (152) (100) (252) Reclassification from
construction loans to commercial loans - - -
(2,436) - (2,436) Ending balance NPLs
$- $- $- $- $- $-
Mortgage loans held-in-portfolio: Quarter ended Quarter
ended 31-Dec-16 30-Sep-16 (In thousands) BPPR BPNA
Popular, Inc. BPPR BPNA Popular, Inc.
Beginning balance NPLs $331,346 $14,430 $345,776 $323,658 $14,390
$338,048 Plus: New non-performing loans 76,278 4,835 81,113 87,340
6,715 94,055 Less: Non-performing loans transferred to OREO (7,791)
(315) (8,106) (14,398) (384) (14,782) Non-performing loans
charged-off (16,404) 240 (16,164) (9,481) (1,994) (11,475) Loans
returned to accrual status / loan collections (65,235)
(7,477) (72,712) (55,773) (4,297)
(60,070) Ending balance NPLs $318,194 $11,713
$329,907 $331,346 $14,430 $345,776
Legacy
loans held-in-portfolio: Quarter ended Quarter ended 31-Dec-16
30-Sep-16 (In thousands) BPPR BPNA
Popular, Inc. BPPR BPNA Popular, Inc.
Beginning balance NPLs $- $3,450 $3,450 $- $3,839 $3,839 Plus: New
non-performing loans - 17 17 - 45 45 Advances on existing
non-performing loans - 7 7 - 135 135 Less: Non-performing loans
transferred to OREO - - - - (44) (44) Non-performing loans
charged-off - (89) (89) - (146) (146) Loans returned to accrual
status / loan collections - (48) (48) -
(379) (379) Ending balance NPLs $-
$3,337 $3,337 $- $3,450 $3,450
Total non-performing loans held-in-portfolio (excluding consumer
and covered loans): Quarter ended Quarter ended 31-Dec-16
30-Sep-16 (In thousands) BPPR BPNA
Popular, Inc. BPPR BPNA Popular, Inc.
Beginning balance NPLs $498,393 $21,404 $519,797 $498,665 $21,360
$520,025 Plus: New non-performing loans 93,687 6,467 100,154
101,010 8,369 109,379 Advances on existing non-performing loans -
12 12 - 299 299 Reclassification from construction loans to
commercial loans - - - 2,436 - 2,436 Less: Non-performing loans
transferred to OREO (9,350) (315) (9,665) (16,621) (428) (17,049)
Non-performing loans charged-off (29,329) 116 (29,213) (18,384)
(2,281) (20,665) Loans returned to accrual status / loan
collections (75,552) (8,941) (84,493) (66,277) (5,915) (72,192)
Reclassification from construction loans to commercial loans
- - - (2,436) - (2,436) Ending
balance NPLs $477,849 $18,743 $496,592
$498,393 $21,404 $519,797
Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and
Related Ratios (Unaudited)
Quarter ended Quarter ended Quarter ended 31-Dec-16
30-Sep-16 31-Dec-15
(Dollars in thousands)
Non-covered
loans
Covered
loans
Total
Non-covered
loans
Covered
loans
Total
Non-covered
loans
Covered
loans
Total Balance at beginning of
period $525,593 $30,262 $555,855 $518,139 $30,581 $548,720 $536,005
$34,509 $570,514 Provision for loan losses 40,924
441 41,365
42,594 750 43,344
57,711 820
58,531 566,517
30,703 597,220 560,733
31,331 592,064
593,716 35,329
629,045 Net loans charged-off (recovered):
BPPR Commercial 9,205 - 9,205 3,199 - 3,199 42,857 - 42,857
Construction 8 - 8 886 - 886 2,966 - 2,966 Lease financing 1,000 -
1,000 816 - 816 667 - 667 Mortgage 20,919 360 21,279 15,237 661
15,898 14,255 1,168 15,423 Consumer 22,284
(7) 22,277 12,821
408 13,229
21,266 (15) 21,251
Total BPPR 53,416 353
53,769 32,959
1,069 34,028 82,011
1,153 83,164 BPNA
Commercial (1,080) - (1,080) (1,173) - (1,173) (525) - (525) Legacy
[1] (253) - (253) (520) - (520) (359) - (359) Mortgage (255) -
(255) 1,942 - 1,942 162 - 162 Consumer 4,388
- 4,388 1,932
- 1,932
1,581 - 1,581
Total BPNA 2,800 -
2,800 2,181
- 2,181 859
- 859 Total loans charged-off -
Popular, Inc. 56,216 353
56,569 35,140
1,069 36,209 82,870
1,153 84,023
Net write-downs [2] - -
- - -
- (7,911)
- (7,911) Balance at end
of period $510,301 $30,350
$540,651 $525,593
$30,262 $555,855
$502,935 $34,176 $537,111
POPULAR, INC. Annualized net charge-offs to
average loans held-in-portfolio 1.00 % 0.98 % 0.63 % 0.63 % 1.48 %
1.46 % Provision for loan losses to net charge-offs [3] 0.73 x 0.73
x 1.21 x 1.20 x 0.70 x 0.70 x BPPR Annualized net
charge-offs to average loans held-in-portfolio 1.25 % 1.22 % 0.77 %
0.77 % 1.86 % 1.82 % Provision for loan losses to net charge-offs
[3] 0.70 x 0.70 x 1.10 x 1.09 x 0.68 x 0.68 x BPNA
Annualized net charge-offs to average loans held-in-portfolio 0.21
% 0.17 % 0.07 % Provision for loan losses to net charge-offs
1.27
x
2.89 x
2.42 x [1] The legacy portfolio is
comprised of commercial loans, construction loans and lease
financings related to certain lending products exited by the
Corporation as part of restructuring efforts carried out in prior
years at the BPNA segment. [2] Net write-downs are related to loans
sold or reclassified to held-for-sale. [3] Excluding provision for
loan losses and net (write-downs) recoveries related to loans sold
or reclassified to held-for-sale. Year ended Year
ended (Dollars in thousands) 31-Dec-16
31-Dec-15
Non-covered
loans
Covered
loans
Total
Non-covered
loans
Covered
loans
Total Balance at beginning of
period $502,935 $34,176 $537,111 $519,719 $82,073 $601,792
Provision (reversal of provision) for loan losses 171,126
(1,110) 170,016
217,458 24,020
241,478 674,061
33,066 707,127
737,177 106,093 843,270
Net loans charged-off (recovered): BPPR Commercial
20,755 - 20,755 73,890 31,432 105,322 Construction (2,021) -
(2,021) (886) 20,386 19,500 Lease financing 3,888 - 3,888 3,303 -
3,303 Mortgage 64,316 2,716 67,032 50,991 5,228 56,219 Consumer
76,306 - 76,306
83,876 11
83,887 Total BPPR 163,244
2,716 165,960
211,174 57,057 268,231
BPNA Commercial (3,313) - (3,313) (3,842) -
(3,842) Legacy [1] (1,913) - (1,913) (2,760) - (2,760) Mortgage
1,933 - 1,933 1,279 - 1,279 Consumer 9,254
- 9,254 5,649
- 5,649
Total BPNA 5,961 -
5,961 326 -
326 Total loans charged-off - Popular, Inc.
169,205 2,716
171,921 211,500 57,057
268,557 Balance transferred from
covered to non-covered loans - -
- 13,037
(13,037) - Net (write-downs)
recoveries [2] 5,445 -
5,445 (35,779)
(1,823) (37,602) Balance at end
of period $510,301 $30,350
$540,651 $502,935
$34,176 $537,111 POPULAR,
INC. Annualized net charge-offs to average loans held-in-portfolio
0.76 % 0.75 % 0.98 % 1.17 % Provision for loan losses to net
charge-offs [3] 1.01 x 0.99 x 1.03 x 0.90 x BPPR Annualized
net charge-offs to average loans held-in-portfolio 0.95 % 0.93 %
1.24 % 1.45 % Provision for loan losses to net charge-offs [3] 0.95
x 0.93 x 1.03 x 0.90 x BPNA Annualized net charge-offs to
average loans held-in-portfolio 0.12 % 0.01 % Provision for loan
losses to net charge-offs
2.56 x
1.92 x [1] The legacy
portfolio is comprised of commercial loans, construction loans and
lease financings related to certain lending products exited by the
Corporation as part of restructuring efforts carried out in prior
years at the BPNA segment. [2] Net (write-downs) recoveries for the
years ended December 31, 2016 and 2015 are related to loans sold or
reclassified to held-for-sale. [3] Excluding provision for loan
losses and net write-down related to loans sold or reclassified to
held-for-sale during the years ended December 31, 2016 and December
31, 2015.
Popular, Inc. Financial Supplement to
Fourth Quarter 2016 Earnings Release Table K - Allowance for
Loan Losses - Breakdown of General and Specific Reserves -
CONSOLIDATED (Unaudited)
31-Dec-16 (Dollars in
thousands) Commercial
Construction Legacy [2]
Mortgage Lease financing
Consumer Total[3] Specific ALLL $42,375 $- $-
$44,610 $535 $23,857 $111,377 Impaired loans [1] $338,422 $- $-
$506,364 $1,817 $109,454 $956,057 Specific ALLL to impaired loans
[1] 12.52 % - % -
% 8.81 % 29.44 % 21.80 %
11.65 % General ALLL $160,279 $9,525 $1,343 $103,324
$7,127 $117,326 $398,924 Loans held-in-portfolio, excluding
impaired loans [1] $10,460,085 $776,300 $45,293 $6,189,997 $701,076
$3,644,939 $21,817,690 General ALLL to loans held-in-portfolio,
excluding impaired loans [1] 1.53 %
1.23 % 2.97 % 1.67 % 1.02
% 3.22 % 1.83 % Total ALLL
$202,654 $9,525 $1,343 $147,934 $7,662 $141,183 $510,301 Total
non-covered loans held-in-portfolio [1] $10,798,507 $776,300
$45,293 $6,696,361 $702,893 $3,754,393 $22,773,747 ALLL to loans
held-in-portfolio [1] 1.88 % 1.23
% 2.97 % 2.21 % 1.09
% 3.76 % 2.24 % [1] Excludes
covered loans acquired on the Westernbank FDIC-assisted
transaction. [2] The legacy portfolio is comprised of commercial
loans, construction loans and lease financings related to certain
lending products exited by the Corporation as part of restructuring
efforts carried out in prior years at the BPNA reportable segment.
[3] Excludes covered loans acquired on the Westernbank
FDIC-assisted transaction. As of December 31, 2016 the general
allowance on the covered loans amounted to $30.4 million.
30-Sep-16 (Dollars in thousands)
Commercial Construction
Legacy [2] Mortgage
Lease financing Consumer
Total[3] Specific ALLL $58,527 $- $- $45,557 $540 $24,433
$129,057 Impaired loans [1] $328,868 $- $- $496,868 $1,899 $110,929
$938,564 Specific ALLL to impaired loans [1] 17.80
% - % - % 9.17 %
28.44 % 22.03 % 13.75 %
General ALLL $165,639 $9,942 $1,682 $93,971 $7,375 $117,927
$396,536 Loans held-in-portfolio, excluding impaired loans [1]
$10,208,312 $731,352 $47,914 $6,277,639 $680,911 $3,711,280
$21,657,408 General ALLL to loans held-in-portfolio, excluding
impaired loans [1] 1.62 % 1.36 %
3.51 % 1.50 % 1.08 %
3.18 % 1.83 % Total ALLL $224,166
$9,942 $1,682 $139,528 $7,915 $142,360 $525,593 Total non-covered
loans held-in-portfolio [1] $10,537,180 $731,352 $47,914 $6,774,507
$682,810 $3,822,209 $22,595,972 ALLL to loans held-in-portfolio
[1] 2.13 % 1.36 % 3.51
% 2.06 % 1.16 % 3.72
% 2.33 % [1] Excludes covered loans acquired
on the Westernbank FDIC-assisted transaction. [2] The legacy
portfolio is comprised of commercial loans, construction loans and
lease financings related to certain lending products exited by the
Corporation as part of restructuring efforts carried out in prior
years at the BPNA reportable segment. [3] Excludes covered loans
acquired on the Westernbank FDIC-assisted transaction. As of
September 30, 2016 the general allowance on the covered loans
amounted to $30.3 million.
Variance
(Dollars in thousands) Commercial
Construction Legacy
Mortgage Lease financing
Consumer Total
Specific ALLL $(16,152) $- $- $(947) $(5) $(576) $(17,680) Impaired
loans $9,554 $-
$- $9,496
$(82) $(1,475) $17,493
General ALLL $(5,360) $(417) $(339) $9,353 $(248)
$(601) $2,388 Loans held-in-portfolio, excluding impaired loans
$251,773 $44,948
$(2,621) $(87,642)
$20,165 $(66,341)
$160,282 Total ALLL $(21,512) $(417) $(339) $8,406
$(253) $(1,177) $(15,292) Total non-covered loans held-in-portfolio
$261,327 $44,948
$(2,621) $(78,146)
$20,083 $(67,816)
$177,775
Popular, Inc. Financial Supplement
to Fourth Quarter 2016 Earnings Release Table L - Allowance
for Loan Losses - Breakdown of General and Specific Reserves -
PUERTO RICO OPERATIONS (Unaudited) 31-Dec-16
Puerto Rico (In thousands) Commercial Construction
Mortgage Lease financing Consumer Total
Allowance for credit losses:
Specific ALLL non-covered loans $42,375 $-
$42,428 $535 $23,185 $108,523 General ALLL non-covered loans
147,311 1,353 100,892 7,127
102,778 359,461 ALLL - non-covered loans 189,686
1,353 143,320 7,662 125,963
467,984 Specific ALLL covered loans - - - - - - General ALLL
covered loans - - 30,159 - 191
30,350 ALLL - covered loans - - 30,159
- 191 30,350 Total ALLL $189,686
$1,353 $173,479 $7,662 $126,154
$498,334
Loans held-in-portfolio: Impaired non-covered loans
$338,422 $- $497,488 $1,817 $106,615 $944,342 Non-covered
loans held-in-portfolio, excluding impaired loans 6,863,795
85,558 5,419,012 701,076 3,154,641
16,224,082 Non-covered loans held-in-portfolio
7,202,217 85,558 5,916,500 702,893
3,261,256 17,168,424 Impaired covered loans - - - - - -
Covered loans held-in-portfolio, excluding impaired loans
- - 556,570 - 16,308
572,878 Covered loans held-in-portfolio - -
556,570 - 16,308 572,878 Total loans
held-in-portfolio $7,202,217 $85,558
$6,473,070 $702,893 $3,277,564 $17,741,302
30-Sep-16 Puerto Rico (In thousands)
Commercial Construction Mortgage Lease
financing Consumer Total
Allowance for credit
losses: Specific ALLL non-covered loans $58,527 $- $43,567 $540
$23,708 $126,342 General ALLL non-covered loans
151,847 2,114 91,761 7,375 104,604
357,701 ALLL - non-covered loans 210,374 2,114
135,328 7,915 128,312 484,043 Specific
ALLL covered loans - - - - - - General ALLL covered loans
- - 30,135 - 127 30,262
ALLL - covered loans - - 30,135 -
127 30,262 Total ALLL $210,374 $2,114
$165,463 $7,915 $128,439 $514,305
Loans held-in-portfolio: Impaired non-covered loans $328,868
$- $487,972 $1,899 $108,341 $927,080 Non-covered loans
held-in-portfolio, excluding impaired loans 6,925,290
81,054 5,476,876 680,911 3,185,490
16,349,621 Non-covered loans held-in-portfolio 7,254,158
81,054 5,964,848 682,810 3,293,831
17,276,701 Impaired covered loans - - - - - - Covered
loans held-in-portfolio, excluding impaired loans - -
571,349 - 16,862 588,211 Covered loans
held-in-portfolio - - 571,349 -
16,862 588,211
Total loans held-in-portfolio
$7,254,158 $81,054 $6,536,197 $682,810
$3,310,693 $17,864,912
Variance (In thousands) Commercial
Construction Mortgage Lease financing Consumer
Total
Allowance for credit losses:
Specific ALLL non-covered loans
$(16,152) $- $(1,139) $(5) $(523) $(17,819) General ALLL
non-covered loans (4,536) (761) 9,131
(248) (1,826) 1,760 ALLL - non-covered loans
(20,688) (761) 7,992 (253) (2,349)
(16,059) Specific ALLL covered loans - - - - - -
General ALLL covered loans - - 24 -
64 88 ALLL - covered loans - -
24 - 64 88 Total ALLL $(20,688)
$(761) $8,016 $(253) $(2,285) $(15,971)
Loans held-in-portfolio: Impaired non-covered loans $9,554
$- $9,516 $(82) $(1,726) $17,262 Non-covered loans
held-in-portfolio, excluding impaired loans (61,495)
4,504 (57,864) 20,165 (30,849)
(125,539) Non-covered loans held-in-portfolio (51,941)
4,504 (48,348) 20,083 (32,575)
(108,277) Impaired covered loans - - - - - - Covered loans
held-in-portfolio, excluding impaired loans - -
(14,779) - (554) (15,333) Covered loans
held-in-portfolio - - (14,779) -
(554) (15,333) Total loans held-in-portfolio
$(51,941) $4,504 $(63,127) $20,083
$(33,129) $(123,610)
Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and
Specific Reserves - U.S. MAINLAND OPERATIONS (Unaudited)
31-Dec-16 U.S. Mainland (In thousands) Commercial
Construction Legacy Mortgage Consumer
Total
Allowance for credit losses:
Specific ALLL $- $- $- $2,182
$672 $2,854 General ALLL 12,968 8,172
1,343 2,432 14,548 39,463 Total ALLL
$12,968 $8,172 $1,343 $4,614 $15,220
$42,317
Loans held-in-portfolio: Impaired loans $- $-
$- $8,876 $2,839 $11,715 Loans held-in-portfolio, excluding
impaired loans 3,596,290 690,742 45,293
770,985 490,298 5,593,608 Total loans
held-in-portfolio $3,596,290 $690,742 $45,293
$779,861 $493,137 $5,605,323
30-Sep-16 U.S. Mainland (In thousands) Commercial
Construction Legacy Mortgage Consumer
Total
Allowance for credit losses: Specific ALLL $- $- $-
$1,990 $725 $2,715 General ALLL 13,792 7,828
1,682 2,210 13,323 38,835 Total ALLL
$13,792 $7,828 $1,682 $4,200
$14,048 $41,550
Loans held-in-portfolio: Impaired
loans $- $- $- $8,896 $2,588 $11,484 Loans
held-in-portfolio, excluding impaired loans 3,283,022
650,298 47,914 800,763 525,790
5,307,787 Total loans held-in-portfolio $3,283,022
$650,298 $47,914 $809,659 $528,378
$5,319,271
Variance (In
thousands) Commercial Construction Legacy
Mortgage Consumer Total
Allowance for
credit losses: Specific ALLL $- $- $- $192 $(53) $139
General ALLL (824) 344 (339) 222
1,225 628 Total ALLL $(824) $344 $(339)
$414 $1,172 $767
Loans
held-in-portfolio: Impaired loans $- $- $- $(20) $251 $231
Loans held-in-portfolio, excluding impaired loans
313,268 40,444 (2,621) (29,778)
(35,492) 285,821 Total loans held-in-portfolio
$313,268 $40,444 $(2,621) $(29,798)
$(35,241) $286,052
Popular, Inc.
Financial Supplement to Fourth
Quarter 2016 Earnings Release Table N - Reconciliation to
GAAP Financial Measures (Unaudited) (In
thousands, except share or per share information) 31-Dec-16
30-Sep-16 31-Dec-15
Total stockholders’ equity $5,197,957 $5,380,395
$5,105,324 Common shares outstanding at end of period 103,790,932
103,762,596 103,618,976 Book value per common share $50.08
$51.85 $49.27
Total stockholders’ equity $5,197,957 $5,380,395 $5,105,324 Less:
Preferred stock (50,160) (50,160) (50,160) Less: Goodwill (627,294)
(627,294) (626,388) Less: Other intangibles (45,050)
(47,886) (58,109)
Total tangible common equity $4,475,453
$4,655,055 $4,370,667 Total
assets $38,661,609 $39,054,296 $35,761,733 Less: Goodwill (627,294)
(627,294) (626,388) Less: Other intangibles (45,050)
(47,886) (58,109)
Total tangible assets $37,989,265
$38,379,116 $35,077,236 Tangible
common equity to tangible assets 11.78 % 12.13 % 12.46 % Common
shares outstanding at end of period 103,790,932 103,762,596
103,618,976 Tangible book value per common share $43.12
$44.86 $42.18
Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table O - Financial Information - Westernbank Loans
(Unaudited) Revenues (Expenses)
Quarters ended (In thousands) 31-Dec-16 30-Sep-16
Variance Interest income on WB loans $39,642
$40,867 $(1,225) FDIC loss-share expense: Amortization of
indemnification asset (864) (1,259) 395 80% mirror accounting on
credit impairment losses (reversal) [1] 720 659 61 80% mirror
accounting on reimbursable expenses 1,395 853 542 80% mirror
accounting on recoveries on covered assets, including rental income
on OREOs, subject to reimbursement to the FDIC (26,215) (522)
(25,693) Change in true-up payment obligation (18,671) (6,611)
(12,060) Arbitration award expense (81,273) (54,924) (26,349) Other
(5,426) 81 (5,507) Total FDIC
loss-share expense (130,334) (61,723) (68,611)
Total expense (90,692) (20,856) (69,836)
Provision (reversal) for loan losses- WB loans (2,292)
6,612 (8,904) Total expense less provision (reversal)
for loan losses $(88,400) $(27,468) $(60,932)
[1]
Reductions in expected cash flows for ASC
310-30 loans, which may impact the provision for loan losses, may
consider reductions in both principal and interest cash flow
expectations. The amount covered under the FDIC loss-sharing
agreement for interest not collected from borrowers is limited
under the agreement (approximately 90 days); accordingly, these
amounts are not subject fully to the 80% mirror accounting.
Non-personnel operating expenses Quarters
ended [1][2] (In thousands) 31-Dec-16 30-Sep-16
Variance Professional fees $6,936 $4,501 $2,435 OREO
expenses 2,766 2,702 64 Other operating expenses 1,619
1,738 (119) Total operating expenses $11,321
$8,941 $2,380 [1]
Includes expenses related to loans
subject, and not subject, to the FDIC loss-sharing agreements.
[2] Expense reimbursements from the FDIC may be recorded with a
time lag, since these are claimed upon the event of loss or
charge-off of the loans which may occur in a subsequent period.
Quarterly average assets Quarters ended (In
millions) 31-Dec-16 30-Sep-16 Variance Loans
$1,845 $1,881 $(36) FDIC loss-share asset 126 192
(66)
Activity in the carrying amount and
accretable yield of loans accounted for under ASC 310-30
Quarters ended 31-Dec-16
30-Sep-16 (In thousands) Accretable yield
Carrying amount
of loans
Accretable yield
Carrying amount
of loans
Beginning balance $1,038,692 $1,767,539 $1,071,680
$1,799,943 Accretion (38,149) 38,149 (39,590) 39,590 Changes in
expected cash flows 9,544 - 6,602 - Collections / loan sales /
charge-offs - (67,359) - (71,994)
Ending balance [1] 1,010,087 1,738,329 1,038,692 1,767,539
Allowance for loan losses - ASC 310-30 loans -
(68,877) - (69,571) Ending balance, net of allowance
for loan losses $1,010,087 $1,669,452
$1,038,692 $1,697,968 [1] The carrying amount of
loans acquired from Westernbank and accounted for under ASC 310-30
which remain subject to the loss-sharing agreement with the FDIC
amounted to approximately $563 million as of December 31, 2016 and
$578 million as of September 30, 2016.
Activity in the carrying amount of the FDIC indemnity asset
Quarters ended (In thousands) 31-Dec-16
30-Sep-16 Balance at beginning of period
$152,467 $214,029 Amortization (864) (1,259) Credit impairment
losses (reversal) to be covered under loss-sharing agreements 720
659 Reimbursable expenses to be covered under loss-sharing
agreements 1,395 853 Net payments from FDIC under loss-sharing
agreements (3,111) (6,819) Arbitration award expense (81,273)
(54,924) Other adjustments attributable to FDIC loss-sharing
agreements - (72) Balance
at end of period $69,334
$152,467
Activity in the remaining FDIC loss-share
asset amortization Quarters ended (In thousands)
31-Dec-16 30-Sep-16 Balance at
beginning of period $7,305 $23,191 Amortization (864) (1,259)
Impact of change in projected losses (1,629)
(14,627) Balance at end of period
$4,812 $7,305
Popular,
Inc. Financial Supplement to Fourth Quarter 2016 Earnings
Release Table P - Adjusted Net Income for the Years Ended
December 31, 2016 and 2015 (Non-GAAP) (Unaudited)
31-Dec-16 (In thousands) Pre-tax
Income tax
effect
Impact on net
income
U.S. GAAP Net income
$216,691 Non-GAAP Adjustments:
Impact of EVERTEC Restatement [1] 2,173 - 2,173 Bulk Sale of WB
loans and OREO [2] (891)
347[4]
(544) FDIC arbitration award[3] 171,757
(41,108)[4]
130,649 Goodwill impairment charge[5] 3,801 - 3,801 Other FDIC -
LSA adjustments[6] 8,806
(2,380)[4]
6,426 Income from discontinued operations[7] (2,015)
880 (1,135)
Adjusted net income
(Non-GAAP)
$358,061
[1]Represents Popular Inc.'s proportionate
share of the cumulative impact of EVERTEC restatement and other
corrective adjustments to its financial statements, as disclosed in
EVERTEC's 2015 Annual Report on Form 10K. Due to the preferential
tax rate on the income from EVERTEC, the tax effect of this
transaction was insignificant to the Corporation.
[2]Represents the impact of the bulk sale of Westernbank loans and
OREO. [3]Represents the arbitration decision denying BPPR's request
for reimbursement in certain shared loss claims.
[4]Gains and losses related to assets
acquired from Westernbank as part of the FDIC assisted transaction
are subject to the capital gains tax rate of 20%. Other items
related to the FDIC loss-sharing agreements are subject to the
statutory tax rate of 39%.
[5]Represents goodwill impairment charge in the Corporation’s
securities subsidiary. The securities subsidiary is a limited
liability company with a partnership election. Accordingly, its
earnings flow through Popular, Inc., holding company, for income
tax purposes. Since Popular, Inc. has a full valuation allowance on
its deferred tax assets, this results in an effective tax rate of
0%.
[6]Additional adjustments, including prior
period recoveries, related to restructured commercial loans to
reduce the indemnification asset to its expected realizable
value.
[7]Represents income from discontinued operations associated with
the BPNA reorganization.
31-Dec-15 (In thousands) Pre-tax
Income tax
effect
Impact on net
income
U.S. GAAP Net income
$895,344 Non-GAAP Adjustments: BPNA
Reorganization[1] 17,065 - 17,065 Doral Transaction[2] 25,576
(7,690) 17,886 OTTI[3] 14,445 (2,486) 11,959 Reversal DTA - PNA[4]
- (589,030) (589,030) Loss on Bulk Sale of Covered OREOs[5] 4,391
(1,712) 2,679 Adjustment to FDIC Indemnification Asset[6] 10,887
(2,177) 8,710 MSR's Acquired[7] (4,378) 1,707 (2,671) Impairment of
Loans Under Proposed Portfolio Sale[8] 15,190 (5,924) 9,266 Bulk
Sale[9] 5,852 (2,282) 3,570
Adjusted Net income (Non-GAAP)
$374,778 [1]Represents
restructuring charges associated with the reorganization of BPNA.
The impact of the partial reversal of the valuation allowance of
the deferred tax asset at BPNA corresponding to the income for the
year 2015 was reflected in the effective tax rate, effectively
reducing the income tax expense by the benefit of such reversal.
[2]Includes approximately $0.8 million of fees charged for loan
servicing cost to the FDIC, $2.1 million of fees charged for
services provided to the alliance co-bidders, personnel costs
related to former Doral Bank employees retained on a temporary
basis and incentive compensation for an aggregate of $7.1 million,
building rent expense of Doral Bank’s administrative offices for
$4.1 million, professional fees and business promotion expenses
directly associated with the Doral Bank Transaction and systems
conversion for $16.0 million and other expenses, including
equipment, business promotions and communications, of $1.3 million.
Includes items corresponding to BPPR, which were taxed at 39% and
items corresponding to BPNA, which had an effective tax rate of 0%
due to the impact of the partial reversal of the valuation
allowance, mentioned above. [3]Represents an other than temporary
impairment (“OTTI”) recorded on Puerto Rico government investment
securities available- for- sale. These securities had an amortized
cost of approximately $41.1 million and a market value of $26.6
million. Based on the fiscal and economic situation in Puerto Rico,
together with the government’s announcements regarding its ability
to pay its debt, the Corporation determined that the unrealized
loss, a portion of which had been in an unrealized loss for a
period exceeding twelve months, was other than temporary. The tax
effect of this impairment is reflected at the capital gains rate of
20%, except for entities which had a full valuation allowance on
its deferred tax asset. [4]Represents the partial reversal of the
valuation allowance of a portion of the deferred tax asset
amounting to approximately $1.2 billion, at the U.S. operations.
[5]Represents the loss on a bulk sale of covered OREOs completed in
the second quarter and the related mirror accounting of the 80%
reimbursable from the FDIC. [6]The quarter’s negative amortization
of the FDIC’s Indemnification Asset included a $10.9 million
expense related to losses incurred by the corporation that were not
claimed to the FDIC before the expiration of the loss-share portion
of the agreement on June 30, 2015, and that are not subject to the
ongoing arbitrations. Gains and losses related to assets acquired
from Westernbank as part of the FDIC assisted transaction are
subject to the capital gains tax rate of 20%. [7]Represents the
fair value of mortgage servicing rights acquired for a portfolio
previously serviced by Doral Bank, for which the Corporation acted
as a backup servicer, under a pre-existing contract. [8]Represents
impairment based on the estimated fair value of loans acquired from
Westernbank, that the Corporation has the intent to sell and are
subject to the ongoing arbitration with the FDIC. [9]Represents the
impact of a bulk sale of loans at the BPPR segment, which had a
book value of approximately $34.4 million.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170124005427/en/
Popular, Inc.Investor Relations:Brett Scheiner,
212-417-6721Investor Relations OfficerBScheiner@BPOP.comorMedia
Relations:Teruca Rullán, 787-281-5170 or Mobile:
917-679-3596Senior Vice President, Corporate Communications
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