- Filing of certain prospectuses and communications in connection with business combination transactions (425)
July 21 2009 - 5:04PM
Edgar (US Regulatory)
Filed
by Popular, Inc. Pursuant to Rule 425 Under the Securities Act of
1933
Subject Company: Popular, Inc.
Commission File No.: 000-13818
2Q 2009 Results
& Strategic Update
July 21, 2009
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Forward Looking Statements
This presentation contains forward looking statements. The following factors among
others could cause the results of the exchange offer to differ materially: the rate of
declining growth in the economy and employment levels, as well as general business
and economic conditions; changes in interest rates, as well as the magnitude of such
changes; the fiscal and monetary policies of the federal government and its
agencies; changes in federal bank regulatory and supervisory policies, including
required levels of capital; the relative strength or weakness of the consumer and
commercial credit sectors and of the real estate markets in Puerto Rico and the
other markets in which borrowers are located; the performance of the stock and
bond markets; competition in the financial services industry; possible legislative, tax
or regulatory changes; and difficulties in combining the operations of acquired
entities.
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Financial Results
2Q 2009 v. 1Q 2009
Variances
Key
Points
Higher provision by $76mm at BPNA, $74mm at BPPR and
$10mm at E-LOAN
+
-
Lower non-interest income due to lower volume and yield of
loans related to; slower lending activity, increase in non
performing loans and exit of several lines of business in the
U.S., partially offset by lower cost of borrowed money and
interest bearing deposits
Higher gain on sale of securities due to $52mm gains on sale
compared to $28mm gain on sale of securities
-
Lower gain on sale of securities due to
$183mm gain on sale of investment securities
in 1Q v. $52mm gain on sale in 2Q
-
-
Higher operating expenses mainly FDIC
($27mm)
2Q 2009 v. 2Q 2008
Net loss of $183.2 million v.
net loss of $52.5 million
Net loss of $183.2 million v.
net income of $24.3 million
Higher taxes due to income tax refund
received in Q1 2009 (IRS)
-
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Financial Results By Segment
Comments:
BPNA Q2 09 results were driven primarily by a loan loss provision of $168mm, compared
with a provision of $221.2mm in Q1 and a provision of $81.4mm in Q2 2008
PFH is a discontinued operation
BPPR Q1 results include gain on sale of securities of $183mm; and Q2 results include
$52mm gain
|
Credit Update - General Trends
In millions 2Q 2009 1Q 2009 2Q 2008
Provision for loan losses $349.4 $372.5 $189.2
Net Charge Offs $260.3 $198.2 $113.1
Non-Performing Loans $1,978 $1,404 $883
Allowance for Loan Losses $1,146 $1,057 $653
1,404
1,978
Q1 09 Q2 09
Commercial 525 686
Construction 435 767
Mortgage 353 442
Consumer & Leases 91 83
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Integration: U.S. and Puerto Rico operations are now under
one management team
Popular Inc.
EVERTEC
BPPR
PNA
Pop. Mortgage
Pop. Securities
Pop. Insurance
Pop. Auto
EVERTEC LA
Contado
BPNA
PFH
E-LOAN
Individual
Credit,
Retail (US)
People
EVERTEC
Risk
Management
Commercial
Banking
Admin
Financial and
Insurance
Services
Retail (PR),
Operations
Popular Inc.
... to one management team focused
on achieving synergies and
efficiencies through integration
From three separated businesses*...
*Most support units reporting within each business.
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Actions to mitigate credit costs
Headcount reductions in continuing operations from 10,991 FTEs as of March 31, 2008 to
10,080 as of March 31, 2009
Reduction between 5% to 10% in base salary of executive officers and certain other officers of
the Corporation
Freeze of the retirement plan of Banco Popular de Puerto Rico
Suspended matching contributions on U.S. and P.R. contributory savings plans
Reduction in number of branches both in P.R. and the U.S.
Shutting down, selling or downsizing lending businesses in U.S. that do not generate deposits or fee income
Focused on branch-based banking and relationship lending within consolidated branch footprint
Loss-mitigation measures implemented
Substantially increased
resources at commercial
& construction divisions
for credit management
Revised credit
standards, adjusted
underwriting criteria
and reduced risk
exposures
Enhanced
collection tools
and strategies to
mitigate losses
focusing on early
detection
Modified $110 million
in non-conventional
mortgages (as of Q1
2009)
Consolidated
P.R. consumer-
finance
operations into
retail business
|
Actions to reduce costs
Headcount reductions in continuing operations from 10,991 FTEs as of March 31, 2008 to
10,080 as of March 31, 2009
Reduction between 5% to 10% in base salary of executive officers and certain other officers of
the Corporation
Freeze of the retirement plan of Banco Popular de Puerto Rico
Suspended matching contributions on U.S. and P.R. contributory savings plans
Reduction in number of branches both in P.R. and the U.S.
Cost-saving measures in place
Headcount reductions
in continuing operations
from 10,991 FTEs as of
March 31, 2008 to 10,080
as of March 31, 2009
Reduction between
5% to 10% in base
salary of executive
officers and certain
other officers
Freeze of the
retirement plan
of Banco Popular
de Puerto Rico
Suspended matching
contributions on U.S.
and P.R. contributory
savings plans
Reduction in
number of
branches both
in P.R. and U.S.
|
Capital Update
Minimum "Well Capitalized"
Popular Inc. as of 6/30/2009
Guideline
The exchange offer is designed to change the components of our capital, although it
will not increase total capital...
|
Per Share Tangible Book Value Vs. Stock Price
Historical TBV Per Share Vs. Stock Price
After trading at a
premium to TBV per share,
the stock has more
recently been trading at a
discount
As of June 30th, TBV per
share was $2.68, as
compared to a market
price of $2.20
|
US Restructuring: Focus on core community banking, exiting
most non-traditional businesses
All restructuring efforts at BPNA expected to generate approx. $50
million in recurrent annual cost savings.
FTES at BPNA down 455 from 2,147 at Q1 2008 to 1,692 at Q1 2009
FTEs at E-LOAN down 221 from 342 at Q1 2009 to 121 at Q1 2009
Consolidation of U.S. bank footprint, concentrating resources among
high-performing branches
U.S. branch network entails reduction of approx. 40 branches
Focus on core or branch-based banking businesses that generate
deposits and fee income
Exited wholesale subprime mortgage origination business
Assets held by discontinued operations as of Q1 2009 consisted of $7 million
in loans measured at fair value with an unpaid principal balance of $58
million
Sold $2.8Bn in subprime loans and service-related assets
Exited consumer finance business, origination of non-conventional
mortgages, equipment leasing, business loan to professionals,
multifamily lending, mixed-used commercial loans and credit cards
Existing portfolios of exited businesses in runoff mode
Ceased all lending originations at E-LOAN
Recognized full goodwill and intangibles assets write-off
Developed deposit platform with $1.5Bn in balances; all operational and
support functions being transferred to BPNA and EVERTEC
From 158 branches as of 12/06 to 2 branches as of 12/08
From 930 FTEs as of 12/07 to 99 as of 3/31/09
From 771 FTEs as of 10/08 to 121 as of 3/09
From 2,147 FTEs as of 3/08 to 1,692 as of 3/09
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Leveraging existing product offering and processing infrastructure to service other financial institutions and
enter new markets
Continuous improvement of quality levels
Enhance competitiveness of ATH network
Invest significantly in new technology developments
Offices in 8 countries, servicing customers in 16 countries
1,766 FTEs
Over 1.1 billion transactions processed
5,096 ATMs and 95,617 POS throughout Puerto Rico, United
States and Latin America
$262.5 million in revenues(1)
21.2% ROE
(1) Includes $7.7MM gain on VISA shares
Financials
EVERTEC
Develop EVERTEC as a full service 3rd party processing provider with a strong presence in the
Caribbean and Latin America
Processing Strategy
Main Initiatives
Source: Popular Inc Annual Report 2008; data as of December 31, 2008
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Banking Operations
Non-Banking Operations
Leading financial institution in the Caribbean with 179 Branches in Puerto Rico, 8 in the Virgin Islands and 62
non-banking offices throughout P.R. and Virgin Islands
Approximately 1.4 million clients
6,244 full time equivalent employees (FTEs)
605 ATM and 27,162 POS throughout PR & VI
$25.9Bn Total Assets
$16.0Bn Total Loans (22.66% market share1)
$18.4Bn Total Deposits (37.32% market share1)
2 Offices
7 Offices
9 Offices
Source: Popular Inc Annual Report 2008; data as of December 31, 2008
12 Offices
32 Mortgage Centers
Banco Popular de Puerto Rico
2
2 Consolidated with Banco Popular retail banking operations in 2008
Market share data based on regulatory reports from the Commissioner of Financial Institutions of Puerto Rico. Total deposits net of
brokered deposits
1
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Notice
Popular, Inc. has filed a registration statement (including a preliminary prospectus
and related exchange offer materials) with the SEC for the exchange offer to which
this communication relates. This registration statement has not yet become
effective. The preliminary prospectus and related exchange offer materials are
being sent to holders of the Preferred Stock and the Trust Preferred Securities. You
may obtain these documents for free by visiting EDGAR on the SEC's Web site at
www.sec.gov. The complete terms and conditions of the exchange offer are set forth
in the preliminary prospectus and the related letters of transmittal, copies of which
will be available at www.popularinc.com/exchangeoffer and from Global Bondholder
Services Corporation, the information agent, at (866) 540-1500.
This presentation is not an offer to sell or purchase or an offer to exchange or a
solicitation of acceptance of an offer to sell or purchase or offer to exchange, which
may be made only pursuant to the terms of the preliminary prospectus and related
letter of transmittal, as applicable.
|
2Q 2009 Results
& Strategic Update
July 21, 2009
|
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