SAN JUAN, Puerto Rico, Jan. 22 /PRNewswire-FirstCall/ -- Popular,
Inc. ("the Corporation") (NASDAQ:BPOPNASDAQ:BPOPONASDAQ:BPOPP)
reported a net loss of $702.9 million for the quarter ended
December 31, 2008, compared with a net loss of $294.1 million in
the same quarter of 2007 and a net loss of $668.5 million for the
quarter ended September 30, 2008. For the year ended December 31,
2008, the net loss reported amounted to $1.2 billion, compared to a
net loss of $64.5 million in the same period of the previous year.
As announced during the third quarter of 2008, the Corporation
discontinued the operations of its U.S.-based subsidiary Popular
Financial Holdings ("PFH"). The table that follows segregates the
financial results for the quarter and year ended December 31, 2008
and 2007 between continuing and discontinued operations. (Dollars
in millions, Quarter ended Year ended except per share Dec. 31 Dec.
31 Dec. 31 Dec. 31 information) 2008 2007 2008 2007 (Loss) income
from continuing operations, net of tax ($627.7) ($150.5) ($680.5)
$202.5 Loss from discontinued operations, net of tax (75.2) (143.6)
(563.4) (267.0) Net loss ($702.9) ($294.1) ($1,243.9) ($64.5) Basic
and diluted (losses) earnings per share: (Loss) income from
continuing operations ($2.28) ($0.55) ($2.55) $0.68 Loss from
discontinued operations (0.27) (0.51) (2.00) (0.95) Total ($2.55)
($1.06) ($4.55) ($0.27) "Our disappointing results reflect
deteriorating economic conditions both in the U.S. mainland and
Puerto Rico, which resulted in substantial loss for the fourth
quarter principally caused by a significant increase in the
allowance for loan losses and the valuation allowance equal to 100%
of the deferred tax asset related to our U.S. mainland operations,"
indicated Richard L. Carrion, Chairman of the Board and Chief
Executive Officer of Popular, Inc. "The provision for loan losses
increased particularly in the construction sector in Puerto Rico
and in the U.S. mainland and the mortgage related loans in our U.S.
mainland portfolios. Notwithstanding these charges, our Puerto Rico
operation produced over $200 million in profits. The $935 million
TARP funds provided us with solid regulatory capital ratios, which
will permit us to manage through what we expect to be another
extremely challenging year." Carrion added: "The integration of the
U.S. mainland franchise and our Puerto Rico operation is underway
to provide a more nimble organization focused on core banking and
achieving the necessary operational synergies." The following
principal items impacted the Corporation's continuing operations
financial results for the quarter ended December 31, 2008, when
compared to the same quarter in the previous year: -- higher
provision for loan losses by $267.1 million as a result of higher
credit losses and increased specific reserves for impaired loans;
-- valuation allowance on the Corporation's deferred tax assets
related to the U.S. operations of $462.8 million recorded during
the fourth quarter of 2008; and -- lower goodwill and trademark
impairment losses by $199.3 million due to $211.8 million in
impairment losses related to E-LOAN's goodwill and trademark
recognized in the fourth quarter of 2007, compared to losses of
$12.5 million in the fourth quarter of 2008, consisting principally
of $10.9 million in losses related to E-LOAN's trademark. The
trademark impairment losses recorded in 2008 resulted from E-LOAN
ceasing to operate as a direct lender in the fourth quarter of
2008. The Corporation's net loss for the quarter and year ended
December 31, 2008 was broken down as follows: Quarter ended
December 31, 2008 Total Dis- BPPR BPNA EVERTEC Corp- contin-
contin- report- report- report- orate uing ued (Dollars in able
able able and opera- opera- Popular, millions) segment segment
segment Other tions tions Inc. (Loss) income before tax ($5.7)
($268.2) $15.3 ($60.0) ($318.6) ($58.3) ($376.9) Income tax
(benefit) expense(a) (18.1) 81.3 5.4 240.5 309.1 16.9 326.0 Net
income (loss) $12.4 ($349.5) $9.9 ($300.5) ($627.7) ($75.2)
($702.9) (a) Income tax for the quarter ended December 31, 2008
includes the effect of the recording of a valuation allowance on
deferred tax assets of the U.S. operations during the fourth
quarter of 2008 as follows: Discontinued operations - $37.8 million
and Continuing operations - $462.8 million. The latter amount
consists principally of BPNA - $200.1 million and Corporate and
Other - $262.8 million. Year ended December 31, 2008 Total Dis-
BPPR BPNA EVERTEC Corp- contin- contin- report- report- report-
orate uing ued (Dollars in able able able and opera- opera-
Popular, millions) segment segment segment Other tions tions Inc.
Income (loss) before tax $260.5 ($410.2) $63.1 ($132.4) ($219.0)
($548.5) ($767.5) Income tax expense(a) 21.4 114.6 19.5 306.0 461.5
14.9 476.4 Net income (loss) $239.1 ($524.8) $43.6 ($438.4)
($680.5) ($563.4) ($1,243.9) (a) Income tax for the year ended
December 31, 2008 includes the effect of the recording of a
valuation allowance on deferred tax assets of the U.S. operations
as follows: Discontinued operations - $209.0 million and Continuing
operations - $652.0 million. The latter amount consists principally
of BPNA - $294.5 million and Corporate and Other - $357.4 million
and EVERTEC (USA) - $0.1 million. -- Net income for the Banco
Popular de Puerto Rico ("BPPR") reportable segment for the quarter
ended December 31, 2008 amounted to $12.4 million, compared to
$80.2 million in the same quarter of the previous year. The
financial results were principally impacted by an increase in the
provision for loan losses of $112.7 million primarily related to
the commercial and construction loan portfolios. During the fourth
quarter of 2008, several commercial and construction loans in the
BPPR reportable segment reported further deterioration due to
current economic conditions requiring their classification as
impaired loans under SFAS No. 114 or an increase in their specific
reserves. As of December 31, 2008, there were $639 million of SFAS
No. 114 impaired loans in the BPPR reportable segment with a
related specific allowance for loan losses of $137 million. During
this fourth quarter, the Corporation recorded $101 million in
provision for loan losses for loans classified as impaired under
SFAS No. 114 in the BPPR reportable segment, of which $79 million
pertained to residential construction loans. BPPR's reportable
segment net interest income for the fourth quarter of 2008 declined
$13.8 million, compared to the same quarter in the previous year.
This decrease was principally related to lower volume of investment
securities and to lower yields in the loan and investment
portfolios, partially offset by lower cost of funds. Despite the
impact of the unprecedented market conditions and historical
reductions in interest rates by the Federal Reserve ("FED"), the
BPPR reportable segment maintained a healthy net interest margin
that approximated 3.89% for the quarter ended December 31, 2008,
compared to 3.91% in the same quarter of the previous year.
Non-interest income increased for the quarter by $10.4 million, or
8%, principally in other service fees and service charges on
deposits accounts. Operating expenses in this reportable segment
decreased by $3.4 million when comparing quarterly periods. This
decline was partly the result of successful control management
efforts and reduced compensation tied to financial performance. --
Banco Popular North America ("BPNA") reportable segment reported
net losses of $349.5 million for the quarter ended December 31,
2008, compared to net losses of $218.3 million in the fourth
quarter of 2007. The quarterly financial results were principally
impacted by an increase in the provision for loan losses of $156.4
million. The increase in the provision for loan losses considered
higher loan net charge-offs, specific reserves for commercial,
construction and mortgage loans, as well as the impact of the
deterioration in the U.S. residential housing market that has also
affected home equity lines of credit and second lien mortgage loans
which are behaving as unsecured loans due to devaluation in real
estate. This reportable segment also recognized a valuation
allowance on deferred tax assets of $200.1 million during the
fourth quarter of 2008. These unfavorable variances were in part
offset by the reduction in impairment losses on intangible assets
of E-LOAN which was previously described. During the quarter ended
December 31, 2008, the BPNA reportable segment recorded
approximately $33.8 million in charges such as severance costs,
lease cancellations, and write-downs of intangibles and long-lived
assets that were associated to the restructuring plans of its
banking operations and E-LOAN. As indicated in the Form 10-Q filed
on November 10, 2008, in October 2008, the Corporation's Board of
Directors approved a restructuring plan for BPNA with the objective
of reducing the size of its banking operations in the U.S. mainland
to a level suited to present economic conditions, improve
profitability in the short term, increase liquidity and lower
credit costs and, over time, achieve a greater integration with
corporate functions in Puerto Rico. Also, the Board of Directors
approved a plan for E-LOAN to cease operating as a direct lender
effective in the fourth quarter of 2008. Refer to the Corporation's
Form 10-Q for the quarter ended September 30, 2008 for further
information. The integration of both banking subsidiaries, BPPR and
BPNA, under one management continues to be implemented, as part of
the previously announced restructuring plan for the U.S.
operations. The business divisions of retail banking and commercial
banking, in addition to administrative and operational personnel,
at Banco Popular North America, are now reporting to management in
Puerto Rico. -- Losses of $75.2 million, net of tax, related to the
discontinued operations of Popular Financial Holdings ("PFH") in
the U.S. mainland for the fourth quarter of 2008. The net losses
for the quarter ended December 31, 2008 corresponding to the
discontinued operations included $37.8 million in valuation
allowances on the Corporation's deferred tax assets. Also, the net
loss included non-interest losses of $24.3 million for the quarter
ended December 31, 2008 consisting of additional write-downs in
loans accounted at fair value as of year end and the final impact
of the sale of assets to Goldman Sachs announced in the third
quarter of 2008 and that closed in November 2008. Operating
expenses for the discontinued operations amounted to $34.1 million
for the fourth quarter of 2008, which primarily included charges
related to the final settlement on the sale to Goldman Sachs,
personnel costs and other restructuring charges related to the
discontinuance of the operations. As of December 31, 2008, PFH
holds only $13 million in assets, of which $7 million are loans
measured at fair value. Net Loss from Continuing Operations -
Fourth Quarter 2008 compared to Fourth Quarter 2007: This press
release should be read in conjunction with the accompanying
Financial Summary (Exhibit A), which is an integral part of this
report. The Corporation retrospectively adjusted certain
information to exclude results from discontinued operations from
prior periods presented in this press release for comparability
purposes. The discussions that follow pertain to Popular, Inc.'s
continuing operations, unless otherwise indicated. Net Interest
Income Net interest income for the fourth quarter of 2008 was
$288.9 million, compared with $337.3 million for the fourth quarter
of 2007. The decrease was due to a decline of $1.3 billion in
average earning assets, together with a reduction of 40 basis
points in the net interest margin. The following table summarizes
the principal changes in average earning assets and funding sources
and their corresponding yields and costs for the quarter ended
December 31, 2008, compared with the same quarter in 2007. The
analysis only includes the results of the continuing operations,
and as indicated earlier, the results for the previous year had
been retrospectively adjusted to exclude the discontinued
operations for comparative purposes. Average balances Average
Yields / Costs 4th 4th Dollar % 4th 4th (Dollars in Quarter Quarter
Vari- Vari- Quarter Quarter billions) 2008 2007 ance ance 2008 2007
Variance Money market, trading and investment securities $9.4 $10.9
($1.5) (14%) 4.03% 4.63% (0.60%) Loans: Commercial* 16.0 15.3 0.7 5
5.69 7.43 (1.74) Mortgage 4.6 4.9 (0.3) (6) 6.88 7.26 (0.38)
Consumer 4.7 4.8 (0.1) (2) 9.92 10.43 (0.51) Lease financing 1.1
1.2 (0.1) (8) 8.11 7.92 0.19 Total loans 26.4 26.2 0.2 1 6.75 7.97
(1.22) Total earning assets $35.8 $37.1 ($1.3) (4%) 6.04% 6.99%
(0.95%) Interest bearing deposits $24.0 $23.2 $0.8 3% 2.85% 3.64%
(0.79%) Borrowings 7.0 8.2 (1.2) (15) 4.64 4.89 (0.25) Total
interest bearing liabilities 31.0 31.4 (0.4) (1) 3.25 3.97 (0.72)
Non-interest bearing sources of funds 4.8 5.7 (0.9) (16) Total
funds $35.8 $37.1 ($1.3) (4%) 2.81% 3.36% (0.55%) Net interest
spread 2.79% 3.02% (0.23%) Net interest yield 3.23% 3.63% (0.40%) *
Includes commercial construction loans The decline in average
earning assets was due mostly to the runoff of investment
securities as part of a strategy of delevering the balance sheet.
The reduction in the average balance of investment securities was
used to repay short-term borrowings, including repurchase
agreements. In the loan portfolio, an increase in average
commercial loans outstanding was offset in part by declines in
mortgage and auto loans. The decline in the net interest yield was
driven by a reduction in the yield of earning assets. This was
caused primarily by the decline in the yield of commercial loans,
which have a significant amount of floating rate loans whose yield
decreased as the Fed cut the funds rate in 2008. The Fed lowered
the federal funds target rate between 400 and 425 basis points from
December 31, 2007 to December 31, 2008. Also contributing to the
reduction in the yield of commercial loans is the substantial
increase in non-performing loans as described later in this press
release. The Corporation's average cost of funds decreased driven
by a reduction in the cost of deposits and short-term borrowings.
Offsetting partially the decline in the cost of deposits and
short-term borrowings was an increase in the cost of long-term
borrowings. During 2008, certain medium-term notes matured which
had been issued in previous years at relatively low rates were some
replaced with more expensive term funds whose cost reflects the
current distressed conditions of the credit markets. Also
contributing to the reduction in the net interest yield was the net
loss for the year which reduced available funds obtained through
capital. Provision for Loan Losses and Credit Quality The provision
for loan losses in the continuing operations totaled $388.8
million, or 174% of net charge-offs, for the quarter ended December
31, 2008, compared with $121.7 million or 157%, respectively, for
the same quarter in 2007, and $252.2 million, or 148%,
respectively, for the quarter ended September 30, 2008. The
provision for loan losses for the quarter ended December 31, 2008,
when compared with the same quarter in 2007, reflects higher net
charge-offs by $146.2 million, mainly in construction loans by
$63.0 million, consumer loans by $28.8 million, commercial loans by
$37.0 million, and mortgage loans by $15.1 million. Provision and
net charge-off information for prior periods was retrospectively
adjusted to exclude discontinued operations for comparative
purposes. The higher level of provision for the quarter ended
December 31, 2008 was mainly attributable to the continuing
deterioration in the commercial and construction loan portfolios
due to current economic conditions in Puerto Rico and the U.S.
mainland. Credit deterioration trends in the Corporation's
commercial loan portfolio are reflected across all industry
sectors. The allowance for loan losses for commercial and
construction credits has increased, particularly the specific
reserves for loans considered impaired. Also, deteriorating
economic conditions in the U.S. mainland housing market have
impacted the mortgage industry delinquency rates. The Corporation
has recorded a higher provision for loan losses in the fourth
quarter of 2008 to cover for inherent losses in the mortgage
portfolio of the Corporation's U.S. mainland operations as a result
of higher delinquencies and net charge-offs, and consideration of
troubled debt restructurings in the mortgage portfolio, principally
from the non-conventional business of Banco Popular North America.
Furthermore, consumer loans net charge-offs rose principally due to
higher losses on home equity lines of credit and second lien
mortgage loans of the Corporation's U.S. mainland operations, which
are categorized by the Corporation as consumer loans. The
deterioration in the delinquency profile and the declines in
property values have negatively impacted charge-offs. Exhibit A
provides credit quality data, including certain key credit quality
metrics. The allowance for loan losses represented 3.43% of loans
held-in-portfolio at December 31, 2008, compared with 2.76% at
September 30, 2008 and 1.96% at December 31, 2007. As of December
31, 2008, there were $898 million of SFAS No. 114 impaired loans in
the Corporation's continuing operations with a related specific
allowance for loan losses of $195 million, compared with impaired
loans of $291 million and a specific allowance of $53 million as of
December 31, 2007, excluding PFH. During the quarter ended December
31, 2008, the Corporation recorded $150 million in provision for
loan losses for loans classified as impaired under SFAS No. 114. As
of September 30, 2008, there were $753 million of SFAS No. 114
impaired loans in the Corporation's continuing operations with a
related specific allowance for loan losses of $131 million.
Non-performing assets of the continuing operations totaled $1.3
billion at December 31, 2008. This represented an increase of $192
million since September 30, 2008 primarily related to increases in
construction loans by $84 million, mortgage loans by $57 million,
commercial loans by $24 million, consumer loans by $10 million and
other real estate by $17 million. Non- performing assets from
continuing operations increased by $672 million from December 31,
2007 to the same date in 2008. The increases were mostly reflected
in commercial loans by $207 million, construction loans by $230
million, mortgage loans by $168 million, consumer loans by $26
million and other real estate by $40 million. Non-interest Income
Non-interest income from continuing operations totaled $141.5
million for the quarter ended December 31, 2008, compared with
$190.6 million for the same quarter in 2007. The unfavorable
variance in non-interest income was principally as a result of an
increase in lower of cost or fair value adjustments in loans
reclassified to held-for-sale, primarily related to a lease
portfolio from the U.S. mainland operations, lower gains on the
sale of SBA commercial loans due to lower volume sold, and higher
impairments on investments accounted under the equity method.
Operating Expenses Operating expenses for the continuing operations
totaled $360.2 million for the quarter ended December 31, 2008, a
decrease of $211.9 million, or 37%, compared with $572.1 million
for the same quarter of 2007. As indicated earlier in this press
release, E-LOAN and BPNA commenced to carry out further
restructuring of its operations during the fourth quarter of 2008.
For the quarter ended December 31, 2008, operating expenses for the
continuing operations included approximately $33.8 million in costs
associated to the restructuring plans in place at the subsidiaries,
including impairments on E-LOAN's trademark and other long-lived
assets, compared to approximately $231.9 million in 2007, which
also included impairment losses associated to E- LOAN's goodwill.
Isolating the impact of these restructuring related costs,
operating expenses totaled $326.4 million for the quarter ended
December 31, 2008, compared to $340.2 million for the quarter ended
December 31, 2007. The decrease was principally due to lower
business promotion expenses and personnel costs, including the
impact of the downsizing of E-LOAN's operations in early 2008 as
well as lower compensation tied to financial performance. Income
Taxes Income tax expense from continuing operations amounted to
$309.1 million for the quarter ended December 31, 2008, compared
with an income tax benefit of $15.4 million for the same quarter of
2007. As previously indicated, the variance was primarily due to
the establishment of a full valuation allowance on the deferred tax
assets of the U.S. mainland operations, as well as the impact of
higher operating losses. The Corporation's net deferred tax assets
(prior to deducting the valuation allowance) amounted to $1.2
billion as of December 31, 2008, of which $848 million pertains to
the U.S. mainland operations. As of December 31, 2008, the
Corporation recorded a total valuation allowance of $861 million on
the deferred tax assets of the Corporation's U.S. operations. This
full valuation allowance was recorded in consideration of the
requirements of SFAS No. 109 "Accounting for Income Taxes" ("SFAS
No. 109") which states that a deferred tax asset should be reduced
by a valuation allowance if based on the weight of all available
evidence, it is more likely than not (a likelihood of more than
50%) that some portion or all of the deferred tax asset will not be
realized. The determination of whether a deferred tax asset is
realizable is based on weighting all available evidence, including
both positive and negative evidence. SFAS No. 109 provides that the
realization of deferred tax assets, including carryforwards and
deductible temporary differences, depends upon the existence of
sufficient taxable income of the same character during the
carryback or carryforward period. SFAS No. 109 requires the
consideration of all sources of taxable income available to realize
the deferred tax asset, including the future reversal of existing
temporary differences, future taxable income exclusive of reversing
temporary differences and carryforwards, taxable income in
carryback years and tax planning strategies. The Corporation's U.S.
mainland operations are in a cumulative loss position for the
three-year period ended December 31, 2008. For purposes of
assessing the realizability of the deferred tax assets in the U.S.
mainland, this cumulative taxable loss position, along with the
evaluation of all sources of taxable income available to realize
the deferred tax asset, as discussed above, is considered
significant negative evidence and has caused management to conclude
that the Corporation will not be able to fully realize the deferred
tax assets in the future, considering solely the criteria of SFAS
No. 109. Management will reassess the realizability of the deferred
tax assets based on the criteria of SFAS No. 109 each reporting
period. If future events differ from management's year-end 2008
assessment, a partial reversal of the valuation allowance may be
required in future years. An important consideration, although not
sufficient positive evidence to overcome the negative evidence
under SFAS No. 109, is that the net operating loss carryforwards of
the Corporation's U.S. operations have an expiration term of 20
years. To the extent that the financial results of the U.S.
operations improve and the deferred tax asset becomes realizable,
the Corporation will be able to reduce the valuation allowance
through earnings. Balance Sheet Comments: The accompanying Exhibit
A provides information on principal categories of the Corporation's
balance sheet at December 31, 2008, September 30, 2008, and
December 31, 2007 and the following sections provide more detailed
information. Investment securities The Corporation's portfolio of
investment securities available-for-sale and held-to-maturity
totaled $8.2 billion at December 31, 2008, compared with $8.3
billion at September 30, 2008 and $9.0 billion at December 31,
2007. The Corporation holds investment securities primarily for
liquidity, yield enhancement and interest rate risk management. The
portfolio primarily includes very liquid, high quality debt
securities. The decline in the Corporation's available-for-sale and
held-to-maturity investment portfolios from December 31, 2007 to
the same date in 2008 was mainly associated with the maturities of
securities. Loans A breakdown of the Corporation's total loan
portfolio at period-end, which represents the principal category of
earning assets, follows: Dec. 31, Sept. 30, Vari- Dec. 31, Vari-
(In billions) 2008 2008 ance 2007 ance Commercial $13.7 $13.9
($0.2) $13.5 $0.2 Construction 2.2 2.1 0.1 1.9 0.3 Mortgage 4.6 4.7
(0.1) 5.0 (0.4) Consumer 4.7 4.8 (0.1) 5.0 (0.3) Lease financing
1.1 1.1 - 1.2 (0.1) Sub-total 26.3 26.6 (0.3) 26.6 (0.3) PFH
discontinued operations - 0.6 (0.6) 3.3 (3.3) Total $26.3 $27.2
($0.9) $29.9 ($3.6) Deposits A breakdown of the Corporation's
deposits at period-end follows: Dec. 31, Sept. 30, Vari- Dec. 31,
Vari- (In billions) 2008 2008 ance 2007 ance Demand* $4.9 $4.7 $0.2
$5.1 ($0.2) Savings 9.6 9.9 (0.3) 9.8 (0.2) Time 13.1 13.3 (0.2)
13.4 (0.3) Total deposits $27.6 $27.9 ($0.3) $28.3 ($0.7) *
Includes non-interest and interest bearing demand deposits Brokered
certificates of deposit, which are included as part of time
deposits, amounted to $3.0 billion at December 31, 2008 and $3.1
billion at September 30, 2008 and December 31, 2007. Borrowings and
capital The accompanying Exhibit A also provides information on
borrowings and stockholders' equity at December 31, 2008 and 2007,
and September 30, 2008. Stockholders' equity totaled $3.3 billion
at December 31, 2008, compared with $3.0 billion at September 30,
2008, and $3.6 billion at December 31, 2007. The increase in
stockholders' equity from September 30, 2008 to December 31, 2008
was due to the $935 million investment in preferred stock of
Popular by the United States Department of the Treasury
("Treasury") under Treasury's TARP Capital Purchase Program. The
transaction closed on December 5, 2008. Also, the increase in
stockholders' equity reflects unrealized gains on securities
available-for-sale of $174 million, net of tax, as of December 31,
2008, compared to unrealized losses of $22 million as of September
30, 2008. These favorable variances were partially offset by the
net loss of $702.9 million recorded during the fourth quarter of
2008. The reduction in stockholders' equity from the end of 2007 to
December 31, 2008 is principally the result of the net loss of $1.2
billion recorded during the period, dividends paid during the year
and the $262 million negative after-tax adjustment to beginning
retained earnings due to the transitional adjustment for electing
the fair value option, partially offset by the $400 million
preferred stock offering in May 2008 and the $935 million of
preferred stock issued under the TARP. Below is a summary of the
Corporation's estimated regulatory capital ratios as of December
31, 2008. December 31, September 30, Minimum 2008 2008 required
Tier I risk-based capital 10.47% 9.09% 4.00% Total risk-based
capital 11.74% 10.35% 8.00% Tier I leverage 8.20% 7.17% 3.00% -
4.00% Other matters: The Corporation continues, along with its
subsidiaries Banco Popular of Puerto Rico and Banco Popular North
America, to participate in the Federal Deposit Insurance
Corporation's ("FDIC") Temporary Liquidity Guarantee Program
("TLG"), which provides full insurance coverage for non-interest
bearing transaction accounts, regardless of the dollar amount, and
guarantees newly issued senior unsecured debt. The program is
designed to strengthen confidence and encourage liquidity in the
banking system. Through the TLG Program, the FDIC will provide
unlimited deposit insurance coverage for all non-interest bearing
transaction accounts through December 31, 2009. This includes
traditional non-interest bearing checking accounts, certain types
of attorney trust accounts and negotiable order of withdrawal
accounts ("NOW accounts") with interest rates no higher than 0.50
percent. In addition, Popular also has the option under the TLG
Program to issue senior unsecured debt fully guaranteed by the FDIC
on or before June 30, 2009 with a maturity of June 30, 2012 or
sooner. Forward-Looking Statements: The information included in
this press release may contain certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's current
expectations and involve certain risks and uncertainties that may
cause actual results to differ materially from those expressed in
forward- looking statements. Factors such as changes in interest
rate environment, as well as general changes in business market and
economic conditions may cause actual results to differ from those
contemplated by such forward-looking statements. For a discussion
of such risks and uncertainties, see the Corporation's Annual
Report on Form 10-K for the year ended December 31, 2007 as well as
its filings with the U.S. Securities and Exchange Commission. The
Corporation assumes no obligation to update any forward-looking
statements to reflect occurrences or unanticipated events or
circumstances after the date of such statements. * * * Popular,
Inc. is a full service financial services provider based in Puerto
Rico with operations in Puerto Rico, the United States, the
Caribbean and Latin America. As the leading financial institution
in Puerto Rico, with over 300 branches and offices, the Corporation
offers retail and commercial banking services through its principal
banking subsidiary, Banco Popular de Puerto Rico, as well as auto
and equipment leasing and financing, mortgage loans, consumer
lending, investment banking, broker-dealer and insurance services
through specialized subsidiaries. In the United States, the
Corporation operates Banco Popular North America ("BPNA"),
including its wholly-owned subsidiary E-LOAN. BPNA is a community
bank providing a broad range of financial services and products to
the communities it serves. BPNA operates branches in New York,
California, Illinois, New Jersey, and Florida. E-LOAN markets
deposit accounts under its name for the benefit of BPNA and offers
loan customers the option of being referred to a trusted consumer
lending partner for loan products. The Corporation, through its
transaction processing company, EVERTEC, continues to use its
expertise in technology as a competitive advantage in its expansion
throughout the United States, the Caribbean and Latin America, as
well as internally servicing many of its subsidiaries' system
infrastructures and transactional processing businesses. The
Corporation is exporting its 115 years of experience through these
regions while continuing its commitment to meeting the needs of
retail and business clients through innovation, and to fostering
growth in the communities it serves. * * * An electronic version of
this press release can be found at the Corporation's website,
http://www.popular.com/. * * * Exhibit A follows * * * EXHIBIT A
POPULAR, INC. Financial Summary (Unaudited) 4th Quarter Quarter 4th
Quarter Quarter 2008 vs ended 2008 vs ended 3rd Quarter Dec. 31,
2007 Sept. 30, 2008 2008 2007 $ Variance 2008 $ Variance Summary of
Operations -- (In thousands, except share information) Interest
income $541,542 $651,407 ($109,865) $555,481 ($13,939) Interest
expense 252,676 314,091 (61,415) 231,199 21,477 Net interest income
288,866 337,316 (48,450) 324,282 (35,416) Provision for loan losses
388,823 121,742 267,081 252,160 136,663 Net interest income after
provision for loan losses (99,957) 215,574 (315,531) 72,122
(172,079) Net gain (loss) on sale and valuation adjustments of
investment securities 286 (11,973) 12,259 (9,132) 9,418 Trading
account profit 5,098 7,432 (2,334) 6,669 (1,571) (Loss) gain on
sale of loans and valuation adjustments on loans held-for-sale
(19,678) 19,822 (39,500) 6,522 (26,200) Other non-interest income
155,791 175,336 (19,545) 183,869 (28,078) Total non-interest income
141,497 190,617 (49,120) 187,928 (46,431) Personnel costs 148,950
162,986 (14,036) 148,230 720 Goodwill and trademark impairment
losses 12,480 211,750 (199,270) - 12,480 Other operating expenses
198,750 197,354 1,396 174,685 24,065 Total operating expenses
360,180 572,090 (211,910) 322,915 37,265 Loss from continuing
operations before income tax (318,640) (165,899) (152,741) (62,865)
(255,775) Income tax expense (benefit) 309,067 (15,434) 324,501
148,308 160,759 Loss from continuing operations, net of income tax
(627,707) (150,465) (477,242) (211,173) (416,534) Loss from
discontinued operations, net of income tax (75,193) (143,628)
68,435 (457,370) 382,177 Net loss ($702,900) ($294,093) ($408,807)
($668,543) ($34,357) Net loss applicable to common stock ($717,987)
($297,071) ($420,916) ($679,772) ($38,215) Losses per common share:
Basic and diluted losses per common share from continuing
operations ($2.28) ($0.55) ($0.79) Basic and diluted losses per
common share from discontinued operations ($0.27) ($0.51) ($1.63)
Basic and diluted losses per common share - Total ($2.55) ($1.06)
($2.42) Dividends declared per common share $0.08 $0.16 $0.08
Average common shares outstanding 281,786,725 279,905,592
281,489,469 Average common shares outstanding - assuming dilution
281,786,725 279,905,592 281,489,469 Common shares outstanding at
end of period 282,004,713 280,029,215 281,708,260 Market value per
common share $5.16 $10.60 $8.29 Book value per common share $6.33
$12.12 $8.59 Market Capitalization -- (In millions) $1,455 $2,968
$2,335 Selected Average Balances -- (In millions) Total assets
$39,531 $46,918 ($7,387) $40,634 ($1,103) Stockholders' equity
3,114 3,834 (720) 3,471 (357) Selected Financial Data at Period-End
-- (In millions) Total assets $38,883 $44,411 ($5,528) $40,390
($1,507) Loans(1) 26,276 29,911 (3,635) 27,207 (931) Earning
assets(1) 36,154 40,902 (4,748) 36,483 (329) Deposits 27,550 28,334
(784) 27,911 (361) Borrowings(1) 6,943 11,561 (4,618) 8,646 (1,703)
Interest bearing liabilities(1) 30,200 35,384 (5,184) 32,492
(2,292) Stockholders' equity 3,268 3,582 (314) 3,007 261
Performance Ratios Net interest yield from continuing operations(2)
3.23% 3.63% 3.62% Return on assets (7.07) (2.49) (6.55) Return on
common equity (123.03) (32.32) (93.32) Credit Quality Data --
(Dollars in millions) Net loans charged-off, excluding write-downs
on loans transferred to held-for-sale(3) $223.7 $77.5 $146.2 $170.5
$53.2 Allowance for loan losses 883 549 334 726 157 Non-performing
loans from continuing operations(4) 1,203 571 632 1,028 175
Non-performing loans from discontinued operations(5) 11 200 (189)
75 (64) Non-performing loans - total 1,214 771 443 1,103 111
Non-performing loans to loans held-in- portfolio(6)(7) 4.67% 2.75%
3.90% Allowance for loan losses to non- performing loans(6) 73.40
71.21 70.64 Allowance for loan losses to loans held-in-portfolio(7)
3.43 1.96 2.76 (1) Includes assets/liabilities from discontinued
operations as follows: December 31, 2008 - $7 million in loans and
earning assets; September 30, 2008 - $626 million in loans, $630
million in earning assets, and $166 million in borrowings and
interest bearing liabilities. (2) Not on a taxable equivalent
basis. Periods prior to December 31, 2008 were retrospectively
adjusted to conform to the December 31, 2008 presentation. (3)
Excludes net charge-offs from discontinued operations. Periods
prior to December 31, 2008 were retrospectively adjusted to conform
to the December 31, 2008 presentation. (4) Periods prior to
December 31, 2008 exclude discontinued operations on a pro-forma
basis for comparative purposes. (5) Periods prior to December 31,
2008 include discontinued operations on a pro-forma basis for
comparative purposes. (6) Non-performing loans ("NPL") exclude NPL
accounted pursuant to the fair value option of SFAS No. 159. Also,
for the periods ended December 31, 2008 and September 30, 2008, NPL
exclude NPL from discontinued operations. (7) Loans
held-in-portfolio exclude loans held-for-sale and loans accounted
pursuant to the fair value option of SFAS No. 159. Loans from
discontinued operations are considered held-for-sale as of December
31, 2008 and September 30, 2008. Notes: Certain reclassifications
have been made to prior periods to conform with this quarter.
EXHIBIT A (CONTINUED) POPULAR, INC. Financial Summary (Unaudited)
For the year ended December 31, 2008 2007 $ Variance Summary of
Operations -- (In thousands, except share information) Interest
income $2,274,123 $2,552,235 ($278,112) Interest expense 994,919
1,246,577 (251,658) Net interest income 1,279,204 1,305,658
(26,454) Provision for loan losses 991,384 341,219 650,165 Net
interest income after provision for loan losses 287,820 964,439
(676,619) Net gain on sale and valuation adjustments of investment
securities 69,716 100,869 (31,153) Trading account profit 43,645
37,197 6,448 Gain on sale of loans and valuation adjustments on
loans held-for-sale 6,018 60,046 (54,028) Other non-interest income
710,595 675,583 35,012 Total non-interest income 829,974 873,695
(43,721) Personnel costs 608,465 620,760 (12,295) Goodwill and
trademark impairment losses 12,480 211,750 (199,270) Other
operating expenses 715,783 712,952 2,831 Total operating expenses
1,336,728 1,545,462 (208,734) (Loss) income from continuing
operations before income tax (218,934) 292,672 (511,606) Income tax
expense 461,534 90,164 371,370 (Loss) income from continuing
operations, net of income tax (680,468) 202,508 (882,976) Loss from
discontinued operations, net of income tax (563,435) (267,001)
(296,434) Net loss ($1,243,903) ($64,493) ($1,179,410) Net loss
applicable to common stock ($1,279,200) ($76,406) ($1,202,794)
(Losses) earnings per common share: Basic and diluted (losses)
earnings per common share from continuing operations ($2.55) $0.68
Basic and diluted losses per common share from discontinued
operations ($2.00) ($0.95) Basic and diluted losses per common
share - Total ($4.55) ($0.27) Dividends declared per common share
$0.48 $0.64 Average common shares outstanding 281,079,201
279,494,150 Average common shares outstanding - assuming dilution
281,079,201 279,552,502 Common shares outstanding at end of period
282,004,713 280,029,215 Market value per common share $5.16 $10.60
Book value per common share $6.33 $12.12 Market Capitalization --
(In millions) $1,455 $2,968 Selected Average Balances -- (In
millions) Total assets $40,924 $47,105 ($6,181) Stockholders'
equity 3,358 3,861 (503) Performance Ratios Net interest yield from
continuing operations(1) 3.55% 3.59% Return on assets (3.04) (0.14)
Return on common equity (44.47) (2.08) Credit Quality Data --
(Dollars in millions) Net loans charged-off, excluding write-downs
on loans transferred to held-for-sale(2) $600.0 $250.6 $349.4
Allowance for loan losses 883 549 334 Non-performing loans from
continuing operations(3) 1,203 571 632 Non-performing loans from
discontinued operations(4) 11 200 (189) Non-performing loans -
total 1,214 771 443 Non-performing loans to loans held-
in-portfolio(5)(6) 4.67% 2.75% Allowance for loan losses to non-
performing loans(5) 73.40 71.21 Allowance for loan losses to loans
held-in-portfolio(6) 3.43 1.96 (1) Not on a taxable equivalent
basis. Periods prior to December 31, 2008 were retrospectively
adjusted to conform to the December 31, 2008 presentation. (2)
Excludes net charge-offs from discontinued operations. Periods
prior to December 31, 2008 were retrospectively adjusted to conform
to the December 31, 2008 presentation. (3) Periods prior to
December 31, 2008 exclude discontinued operations on a pro-forma
basis for comparative purposes. (4) Periods prior to December 31,
2008 include discontinued operations on a pro-forma basis for
comparative purposes. (5) Non-performing loans ("NPL") exclude NPL
accounted pursuant to the fair value option of SFAS No. 159. Also,
for the period ended December 31, 2008, NPL exclude NPL from
discontinued operations. (6) Loans held-in-portfolio exclude loans
held-for-sale and loans accounted pursuant to the fair value option
of SFAS No. 159. Loans from discontinued operations are considered
held-for-sale as of December 31, 2008. Notes: Certain
reclassifications have been made to prior periods to conform with
this period. DATASOURCE: Popular, Inc. CONTACT: Investor Relations,
Jorge A. Junquera, Chief Financial Officer and Senior Executive
Vice President, +1-787-754-1685, or Media Relations, Teruca Rullan,
Senior Vice President, Corporate Communications, +1-787-281- 5170,
or mobile, +1-917-679-3596 Web site: http://www.popularinc.com/
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