- Annual Report of Employee Stock Plans (11-K)
June 29 2011 - 10:11AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 11-K
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þ
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2010
Or
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o
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TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ______ to ______
Commission file number 001-34084
POPULAR,
INC. U.S.A. 401(K) SAVINGS AND INVESTMENT PLAN
(Full title of the Plan and address of the Plan, if different from that of the issuer named below)
POPULAR, INC
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209 MUÑOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
(Name of issuer of the securities held pursuant to the plan and the address of principal executive
office)
Popular, Inc. U.S.A. 401(k)
Savings & Investment Plan
Financial Statements and
Supplemental Schedule
December 31, 2010 and 2009
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Index
December 31, 2010 and 2009
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Page(s)
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1
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Financial Statements
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2
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3
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4-14
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Supplemental Schedule:*
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15
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*
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Other supplementary schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted as not
applicable or not required.
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Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
In our opinion, the accompanying statements of net assets available for benefits and the related
statements of changes in net assets available for benefits present fairly, in all material
respects, the net assets available for benefits of Popular, Inc. U.S.A. 401(k) Savings & Investment
Plan (the Plan) at December 31, 2010 and 2009, and the changes in net assets available for
benefits for the year ended December 31, 2010 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the responsibility of the
Plans management. Our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplemental schedule of assets held at end of year is presented for the
purpose of additional analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labors Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental
schedule is the responsibility of the Plans management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
PricewaterhouseCoopers LLP
New York, NY
June 27, 2011
1
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Statements of Net Assets Available for Benefits
December 31, 2010 and 2009
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December 31,
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2010
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2009
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Assets
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Investments, at fair value (see Note 5)
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$
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79,171,112
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$
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71,191,567
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Receivables:
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Participants contributions
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989
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Notes Receivable from participants
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2,093,771
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2,014,550
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Total receivables
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2,093,771
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2,015,539
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Total assets
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81,264,883
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73,207,106
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Liabilities
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Refundable excess contribution
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4,211
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33,458
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Total liabilities
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4,211
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33,458
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Net assets available for benefits at fair value
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81,260,672
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73,173,648
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Adjustment from fair value to contract value for
fully benefit-responsive investment contracts
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892,955
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878,377
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Net assets available for benefits
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$
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82,153,627
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$
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74,052,025
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See accompanying notes to the financial statements.
2
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Statements of Net Assets Available for Benefits
Year Ended December 31, 2010
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Additions (deductions) to net assets attributed to:
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Investments income
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Net appreciation in fair value of investments (See Note 5)
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$
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8,339,684
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Dividends
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332,387
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Interest income, investments
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510,678
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Total investment income
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9,182,749
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Interest
income on notes receivable from participants
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107,891
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Total income on investments and notes receivable from participants
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9,290,640
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Contributions:
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Participant
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4,004,800
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Rollovers from external sources
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456,689
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Transfers in other plans
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4,793,217
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Total contributions
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9,254,706
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Total additions attributed to investments, notes and contributions
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18,545,346
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Deductions from net assets attributed to:
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Benefits paid to participants
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10,283,543
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Refundable contribution
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4,211
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Administrative expenses
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155,990
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Total deductions
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10,443,744
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Net increase in Net Assets
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8,101,602
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Net assets available for plan benefits:
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Beginning of year
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$
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74,052,025
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End of year
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$
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82,153,627
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See accompanying notes to the financial statements
3
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
1.
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Description of the Plan
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The following brief description of the Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
(the Plan) provides only general information. Popular, Inc. (the Corporation) is the
Plan Sponsor. Participants should refer to the Plan document for a more complete
description of the Plans provisions. The Plan is effective as of March 1, 1997.
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General
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The Plan is a defined contribution plan covering any United States (excluding Puerto Rico),
United States Virgin Islands and British Virgin Islands employee of the Plan Sponsor who have
completed 30 days of service. The Plan covers employees of the Plan Sponsor and Adopting
Employers consisting of the following entities and their subsidiaries: Banco Popular North
America (BPNA) and Banco Popular de Puerto Rico. The Principal Financial Group (PFG) is
the record keeper for the Plan and Principal Trust Company, a subsidiary of PFG, is the
trustee.
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Effective January 1, 2010, the Plan added the following definition to the Definition Section
of Article I: BPNA Pension Plan Account Contributions means the lump sum amount received by
an Active Participant from the Popular, Inc. USA Retirement Plan as a result of the
termination of such plan that is transferred to this Plan, other than as a Rollover
Contribution. The Plan will accept the elective transfer of a Participants lump sum
distribution from the Popular, Inc. USA Retirement Plan that would otherwise be includible in
the Participants gross income. Such a transfer shall be allocated to the Participant
Account. The portion of the Participants Account resulting from BPNA Pension Plan Account
Contribution is 100% vested and nonforfeitable at all times.
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Effective October 1, 2010, the employees of EVERTEC Group ceased participation in the Plan
due to the sale of the Unit. The distribution options were made available to these employees
as if they were terminated.
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Effective December 2010, the Plan added the following definition to the Definition Section of
Article I: Qualified Matching Contributions means Matching Contributions that are 100% vested
when made to the Plan and that are distributable only in accordance with the distribution
provisions (other than hardships) applicable to Elective Deferral Contributions. Qualified
Nonelective Contributions also means contributions made by the Employer (other than Elective
Deferral Contributions and Qualified Matching Contributions) that are 100% vested when made
to the Plan and that are distributable only in accordance with the distribution provisions
(other than for hardships) applicable to Elective Deferral Contributions. Contributions made
by an Adopting Employer shall be treated as Contributions made by the Employer. Forfeitures
arising from these Contributions shall be used for the benefit for all Participants.
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Effective December 22, 2010, the Plan adopted an amendment to comply with The Heroes Earning
Assistance and Relief Tax Act of 2008.
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The Plan is subject to the provisions of ERISA.
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Eligibility and vesting
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Full time employees are eligible to participate in the Plan on the first day of the month,
following 30 days of service. Part time employees are eligible to participate in the Plan on
January 1 or July 1 after one year of service. Newly hired employees are automatically
enrolled in the Plan and are
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4
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
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subject to have 4% of eligible compensation contributed to the Plan on a before-tax
basis unless they make a different contribution election or elect not to make a contribution.
Participants are immediately vested in their voluntary contributions and earnings thereon.
Vesting in the Employers matching and discretionary contribution portion of their account
plan plus actual earnings thereon is based on years of credited service. A participant
begins to vest in the Plan according to the following table:
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Years of credit service
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Vesting percentage
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Less than 1
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0
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%
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1
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20
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%
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2
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40
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%
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3
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60
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%
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4
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80
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5 or more
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100
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%
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Participant accounts
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Each participants account is credited with
the participants contributions and allocations of the Employers contributions and Plan
earnings. Allocations are based on participant earnings or account balances, as defined.
The benefit to which a participant is entitled is the benefit that can be provided from the
participants vested account. The Plan currently offers 17 investment options for
participants that include mutual funds and separate pooled accounts in addition to common
stock in Popular, Inc.
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Contributions
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Each year, employees may contribute a percentage of their annual compensation up to a maximum
of $16,500 based on IRS limitations, as defined in the Plan. Participants direct the
investment of Plan contributions into various investment options offered by the Plan.
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The Plan Sponsor contributes a matching percentage for each elective deferral contribution
made by an employee up to 4% of annual compensation.
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Effective March 2009, the Corporations matching contribution to the Plan was suspended. The
employees were able to continue to make contributions to the Plan and receive the tax
benefit, but the Corporation did not make its customary matching contribution.
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Participants who are at least age 50 as of the last day of the Plan year and make the maximum
Employee Contributions permitted by the Plan shall be entitled to make additional
contributions (Catch-Up Contributions) on a before-tax basis up to a maximum of $5,500.
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Notes receivable from participants
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Participants may borrow against their fund accounts a minimum of $1,000 up to a maximum of
the lesser of $50,000 or 50% of the vested portion of the participants equity in the Plan.
Loan transactions are treated as a transfer to (from) the investment fund from (to) notes
receivable from participants. Loan terms range from one to five years or longer if used to
acquire a principal residence. Loans are collateralized by the balance in the participants
account and bear interest at a rate commensurate with local prevailing rates as determined by
the Plan administrator. Interest
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5
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
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rates ranged from 4.25% to 11%. Principal and interest are paid ratably through
bi-weekly payroll deductions.
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Distributions
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Distributions may occur for termination, retirement, disability, or death. The Plan provides
that benefits be distributed in one single sum.
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Plan termination
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Although it has not expressed any intent to do so, the sponsor may terminate the Plan for any
reason at any time, in which event there shall be no employer duty to make contributions. In
the event of termination, all participants become fully vested and have a nonforfeitable
right to their full account balance.
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2.
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Summary of Significant Accounting Policies
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Basis of presentation
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The accompanying financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. A description of the more
significant accounting policies follows.
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Valuation of investments
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Plan investments are stated at fair value. Shares of registered investment companies are
valued at quoted market prices which represent the net asset value of shares held by the Plan
at year-end. Popular, Inc. Common Stock is valued at its quoted market price. Non-registered
pooled separate accounts managed by Principal Life Insurance Company (PLIC) are valued
daily based on the market value of the underlying assets in each separate account. The Plans
interest in the single group annuity contract is valued based on information reported by the
issuing insurance company.
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Fair Value Measurements
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Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC)
820,
Fair
Value Measurements and Disclosures,
provide the framework for measuring fair value. ASC 820
established three levels of inputs that may be used to measure fair
value.
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The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (level 1 measurements) and the lowest priority to
unobservable inputs (level 3
measurements). The three levels of the fair value hierarchy under ASC 820 are described as
follows:
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Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets
or liabilities in active markets.
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Level 2 Inputs to the valuation methodology include:
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Quoted prices for similar assets or liabilities in active markets;
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Quoted prices for identical or similar assets or liabilities
in inactive markets;
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Inputs other than quoted prices that are observable for the asset or liability;
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Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
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Inputs that are derived principally from or corroborated by observable
market data by correlation or other means;
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If the asset or liability has a specified (contractual) term, the level
2 input must be observable for substantially the full term of the asset or
liability.
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Level 3 Inputs to the valuation methodology are unobservable and significant to the fair
value measurements.
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The asset or liabilitys fair value measurement level within the fair value hierarchy is
based on the lowest level of any input that is significant to the fair value measurement.
Valuation techniques used need to maximize the use of observable inputs and minimize the use
of unobservable inputs.
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Following is a description of the valuation methodologies used for assets measured at fair
value:
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Mutual Funds:
Valued at quoted market prices which represent the net asset value of shares
held by the Plan at year-end.
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Pooled Separate Accounts:
Valued daily based on the market value of the underlying assets in
each separate account.
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Common Stock:
Common stocks are valued at the closing price reported in the active market in
which the individual securities are traded.
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Single Group Annuity:
Valued at fair value based on information reported by the issuer.
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The preceding methods described may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future fair values. Furthermore,
although the Plan believes its valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a different fair value measurement at
the reporting date.
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The following tables set forth by level, within the fair value hierarchy, the Plans assets
at fair value as of December 31, 2010 and 2009.
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7
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
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Assets at Fair Value as of December 31, 2010
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Level 1
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Level 2
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Level 3
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Total
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Mutual Funds
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Large U.S. Equity
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$
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8,544,818
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$
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8,544,818
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Small/Mid U.S. Equity
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8,518,116
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8,518,116
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Fixed Income
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8,851,827
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8,851,827
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Total mutual funds
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25,914,761
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25,914,761
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Pooled Separate Accounts
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Large U.S. Equity
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5,471,082
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5,471,082
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Small/Mid U.S. Equity
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1,572,020
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1,572,020
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Fixed Income
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823,879
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823,879
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Balanced/Asset Allocation
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16,656,960
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16,656,960
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International Equity
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4,640,399
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4,640,399
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Total Pooled Separate Accounts
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28,340,461
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823,879
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29,164,340
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Common Stock
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7,125,853
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7,125,853
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Annuity contract with
insurance company
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16,966,158
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16,966,158
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Total assets at fair value
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$
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33,040,614
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$
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28,340,461
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$
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17,790,037
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$
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79,171,112
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Assets at Fair Value as of December 31, 2009
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Level 1
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Level 2
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Level 3
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Total
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Mutual Funds
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Large U.S. Equity
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$
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8,142,155
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$
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8,142,155
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Small/Mid U.S. Equity
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6,459,862
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6,459,862
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Fixed Income
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7,501,780
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7,501,780
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|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
22,103,797
|
|
|
|
|
|
|
|
|
|
|
|
22,103,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pooled Separate Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large U.S. Equity
|
|
|
|
|
|
|
5,241,701
|
|
|
|
|
|
|
|
5,241,701
|
|
Small/Mid U.S. Equity
|
|
|
|
|
|
|
1,185,940
|
|
|
|
|
|
|
|
1,185,940
|
|
Fixed Income
|
|
|
|
|
|
|
|
|
|
|
1,944,881
|
|
|
|
1,944,881
|
|
Balanced/Asset Allocation
|
|
|
|
|
|
|
14,800,214
|
|
|
|
|
|
|
|
14,800,214
|
|
International Equity
|
|
|
|
|
|
|
4,493,046
|
|
|
|
|
|
|
|
4,493,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pooled Separate Accounts
|
|
|
|
|
|
|
25,720,901
|
|
|
|
1,944,881
|
|
|
|
27,665,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
4,732,825
|
|
|
|
|
|
|
|
|
|
|
|
4,732,825
|
|
Annuity contract with
insurance company
|
|
|
|
|
|
|
|
|
|
|
16,689,163
|
|
|
|
16,689,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
26,836,622
|
|
|
$
|
25,720,901
|
|
|
$
|
18,634,044
|
|
|
$
|
71,191,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
|
|
Level 3 Gains and Losses
|
|
|
|
The following table sets forth a summary of changes in the fair value of the Plans level 3
assets for the year ended December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
Level 3 Assets
|
|
|
|
Year Ended December 31, 2010
|
|
|
|
Annuity Contracts
|
|
|
Separate Account
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of year
|
|
$
|
16,689,163
|
|
|
$
|
1,944,881
|
|
Realized gains/(losses)
|
|
|
|
|
|
$
|
(731,517
|
)
|
Unrealized gains/(losses)
relating to instruments still
held at the reporting date
|
|
|
(14,578
|
)
|
|
|
894,217
|
|
Interest Credited
|
|
|
510,678
|
|
|
|
|
|
Purchases, sales, issuance
and settlements (net)
|
|
|
(219,105
|
)
|
|
|
(1,283,702
|
)
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
16,966,158
|
|
|
$
|
823,879
|
|
|
|
|
|
|
|
|
|
|
Gains and losses (realized and unrealized) included in changes in net assets for the
period above are reported in net appreciation in fair value of investments in the Statement
of Changes in Net Assets Available for Benefits. The participant loans were removed as a
level 3 investment and reclassified as notes receivable from participants due to the new
accounting update, ASU2010-25 issued by the Financial Accounting Standards Board in September
2010.
|
|
|
|
Investment income
|
|
|
|
Purchases and sales of securities are recorded on a trade-date basis. The net appreciation
(depreciation) in the fair value of investments is a combination of net realized gains
(losses) and the unrealized appreciation (depreciation) in the market value of investments
remaining in the Plan in 2010. The weighted average cost basis is used when computing
realized gain (loss). Dividends are recorded on the ex-dividend date.
|
|
|
|
Administrative expenses
|
|
|
|
Legal and other administrative expenses except for loan fees are paid by the Plan Sponsor
and, accordingly, have not been reflected in the Plans financial statements. Fees imposed
to administer loans are used to reduce the participants accounts.
|
|
|
|
Payment of benefits
|
|
|
|
Benefits are recorded when paid.
|
|
|
|
Forfeited accounts
|
|
|
|
Forfeitures of non-vested accounts that result because of terminations or withdrawals are
usually used to reduce contributions otherwise due from the Plan Sponsor. However, since
employer contributions were suspended on March 20, 2009, forfeitures were used to reduce Plan
expenses. At December 31, 2010, forfeited non-vested accounts totaled $462,571and were
included in the Plans assets. At December 31, 2009, forfeited non-vested accounts totaled
$326,517. During 2010, forfeitures were used to pay Plan expenses of $39,000. During 2009,
forfeitures were used to
|
9
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
|
|
restore those employees account affected by a partial Plan termination in the amount of
$1,104,969 and to pay Plan expenses of $21,411.
|
|
|
|
Refundable contributions
|
|
|
|
Refundable contributions totaled $4,211at December 31, 2010. These excess contributions
arose as a result of failing non-discrimination tests which are prepared in accordance with
the Internal Revenue Service Regulations. During 2011, the refundable contributions were
returned to the affected employees. Refundable contributions totaled $33,458 at December 31,
2009.
|
|
|
|
Use of estimates
|
|
|
|
The preparation of financial statements in conformity with generally accepted accounting
principles requires the Plan administrator to make estimates and assumptions that affect the
reported amounts of assets, liabilities and changes therein, and disclosure of contingent
assets and liabilities. Actual results could differ from these estimates.
|
|
|
|
Risks and uncertainties
|
|
|
|
The Plan provides for various investment options in any combination of stocks, fixed income
securities, mutual funds and other investment securities. Investment securities are exposed
to various risks, such as interest rate, market and credit risk. Due to the level of risk
associated with certain investment securities, it is at least reasonably possible that
changes in the value of investment securities will occur in the near term and that such
changes could materially affect
participant account balances and the amounts reported in the statement of net assets
available for benefits.
|
|
3.
|
|
Recent Accounting Pronouncements
|
|
|
|
For the year ending December 31, 2010, the Plan adopted the FASBs update to general standards
on accounting for disclosures of events that occur after the balance sheet date but before the
financial statements are issued or are available to be issued. The adoption of this guidance
did not materially impact the Plans financial statements. See Note 10, Subsequent Events,
for further discussion of subsequent events.
|
|
|
|
In January 2010, the FASB issued ASU 2010-06,
Improving Disclosures about Fair Value
Measurements.
ASU 2010-06 amended ASC 820-10
Fair Value Measurements and Disclosures
to
increase transparency in financial reporting. The amendments require that benefit plans
disclose the amounts of significant transfers in and out of Level 1 and Level 2 fair value
measurements and describe the reasons for the transfers. The adoption of this amendment did
not materially impact the Plans financial statements as there were no transfers in or out of
Level 1 and Level 2 fair value measurements. In addition, the standard added requirements for
separate disclosures about the activity relating to Level 3 fair value measurements effective
for the Plan on January 1, 2011.
|
|
|
|
In September 2010, the FASB issued ASU 2010-25,
Reporting Loans to Participants by Defined
Contribution Pension Plans.
ASU 2010-25 amended ASC 962
Plan Accounting-Defined Contribution
Pension Plans
to clarify how loans to participants should be classified and measured. The
amendments require that participant loans be classified as notes receivable from participants,
which are segregated from plan investments and measured at their unpaid principal balance plus
any accrued but unpaid interest. Adoption of this amendment resulted in segregating
participant loans from plan investments on the Statements of Net Assets Available for Benefits
and classifying them separately as notes receivable from participants. Interest income on
participant loans was
|
10
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
|
|
segregated from investment income on the Statement of Changes in Net Assets Available for
Benefits.
|
|
|
|
In May 2011, the FASB issued ASU 2011-04 Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRS. ASU 2011-04 is intended to improve the
comparability of fair value measurements presented and disclosed in financial statements
prepared in accordance with U.S. GAAP and IFRS. The amendments are of two types: (i) those
that clarify the Boards intent about the application of existing fair value measurement and
disclosure requirements and (ii) those that change a particular principle or requirement for
measuring fair value or for disclosing information about fair value measurements. The update
is effective for annual periods beginning after December 15, 2011. Plan management does not
believe the adoption of this update will have a material impact on
the Plans financial
statements.
|
|
4.
|
|
Investment Contract with Insurance Company
|
|
|
|
Investment contracts held by a defined-contribution plan are required to be reported at fair
value. However, contract value is the relevant measurement attribute for that portion of the
net assets available for benefits of a defined-contribution plan attributed to fully
benefit-responsive investment contracts because contract value is the amount participants
would receive if they were to initiate permitted transactions under the terms of the plan.
The Plan invests in a single group annuity contract with a fixed rate of interest. The
Statement of Net Assets Available for Benefits presents the fair value of the investment in
the annuity contract as well as the adjustment of the fully benefit-responsive investment in
the annuity contract from fair value to contract value. The Statement of Changes in Net
Assets Available for Benefits is prepared on a contract value basis.
|
|
|
|
The Plan offered the Principal Fixed Income Option for 401a Plans (PFIO) as a stable value
investment option to plan participants. PFIO is a benefit-responsive group annuity contract
issued by Principal Life Insurance Company (PLIC). The methodology for calculating the
interest crediting rate is defined in the contract under the term Composite Crediting Rate.
The Composite Crediting Rate is determined by solving for the rate that, when used to accrue
interest from the first day of such Deposit Period to the end of such Deposit Period,
including expected Net Cash Flows, will result in a value equal to the sum of (a), (b), and
(c) below, rounded to the nearest 5 basis points:
|
|
(a)
|
|
The aggregate of the values of each Guaranteed Interest Fund for which the
Deposit Period have closed. This value will be determined by accumulating the value
immediately prior to the first day of the Deposit Period for which the Composite
Crediting Rate is determined, with interest at the effective annual Guaranteed Interest
Rate for each such Guaranteed Interest Fund for the Deposit Period.
|
|
|
(b)
|
|
The expected value of any Guaranteed Interest Fund for which the Deposit Period
has not closed. This value will be determined based on expected Net Cash Flow
accumulated with interest at the effective annual Guaranteed Interest Rate for the
Guaranteed Interest Fund for the Deposit Period.
|
|
|
(c)
|
|
The expected value of any Guaranteed Interest Fund for the Deposit Period the
Composite Crediting Rate is being determined. This value will be determined based on
expected Net Cash
|
11
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
|
|
|
flow accumulated with interest at the effective annual Guaranteed
Interest Rate for the Guaranteed Interest Fund for the Deposit Period.
|
|
|
Under the terms of the existing contract, the crediting rate is currently reset on a
semiannual basis. There was no minimum crediting rate. Changes in future interest crediting
rates will not affect the amount reported on the statement of net assets available for
benefits representing the adjustment for the portion of net assets attributable to fully
benefit-responsive investment contracts from fair value to contract value.
|
|
|
|
The PFIO is a single group annuity contract with a fixed rate of interest. It is not a
portfolio of contracts whose yields are based on changes in fair value of underlying assets
as would be found in a Stable Value fund. As a result, the average yield earned by the Plan
is the yield earned (i.e. interest credited) on the group annuity contract. The interest rate
history for the contract is as follows:
|
|
|
|
|
|
|
|
|
|
Time Period
|
|
Rate 2009
|
|
|
Rate 2010
|
|
|
|
|
|
|
|
|
|
|
January 1- June 30
|
|
|
3.50
|
%
|
|
|
3.10
|
%
|
|
|
|
|
|
|
|
|
|
July 1 - December 31
|
|
|
3.15
|
%
|
|
|
2.90
|
%
|
|
|
By definition, the PFIO group annuity contract is an insurance contract. As a result, the
Plan may transact according to the terms defined in the contract at any time. Deposits
received prior to 3:00 P.M. Central Time on a business day are accepted and credited to the
relevant Guaranteed Interest Fund. Interest is credited to the Guaranteed Interest Fund on a
daily basis from the date deposits are accepted until paid, transferred or applied in full.
Fees may be paid in one of the following three ways:
|
|
|
|
By being netted from the effective annual interest rate;
|
|
|
|
|
By being paid separately by the Plan sponsors; or
|
|
|
|
|
By being deducted from the Guaranteed Interest Fund.
|
|
|
Benefit Payments are deducted from the value of the Guaranteed Interest Fund, to the extent
that the Composite Value is sufficient to make such payments. Payments and transfers are made
in full within 3 business days after the date payment or transfer has been requested. In the
event that market conditions are such that it is determined that they will not allow for the
orderly transfer or sale of financial instruments, up to an additional 30 days may be
required to make such payments or transfers.
|
|
|
|
If the Plan sponsor wishes to terminate the Plans
interest, the value of the Plans interest
will be paid out twelve months after the record keeper receives notification. In lieu of the
twelve (12) month delay, the record keeper may request immediate payment of the amounts
requested subject to a 5% surrender fee. In addition, the Plans contract shall be
terminated on the date when both no current deposit arrangements have been made between the
record keeper and Plan Sponsor and there are no Guaranteed Interest Funds with a value
greater than zero.
|
12
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
5.
|
|
Investments Held
|
|
|
|
Investments held by the Plan are summarized below. Those investments that represent 5
percent or more of the Plans net assets at the end of the year are noted with an asterisk
(*).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
|
Shares/Unit
|
|
|
Fair Value
|
|
|
Shares/Unit
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIMCO Total Return ADM Fund
|
|
|
815,837
|
|
|
$
|
8,851,827
|
*
|
|
|
694,609
|
|
|
$
|
7,501,780
|
*
|
Fidelity Adv Small CAP Fund
|
|
|
102,997
|
|
|
|
2,510,040
|
|
|
|
94,326
|
|
|
|
2,018,576
|
|
Capital R and M AM FDS Growth Fund
|
|
|
139,142
|
|
|
|
4,171,480
|
*
|
|
|
147,786
|
|
|
|
3,979,864
|
|
MFS Value R2 Fund
|
|
|
193,169
|
|
|
|
4,373,338
|
*
|
|
|
201,857
|
|
|
|
4,162,291
|
*
|
Columbia Mid Cap Value R Fund
|
|
|
174,191
|
|
|
|
2,341,122
|
|
|
|
140,367
|
|
|
|
1,553,865
|
|
Munder MidCap Core Growth R Fund
|
|
|
133,005
|
|
|
|
3,666,954
|
|
|
|
130,712
|
|
|
|
2,887,421
|
|
Principal Lifetime 2010 SEP Account
|
|
|
125,825
|
|
|
|
1,864,302
|
|
|
|
139,070
|
|
|
|
1,819,289
|
|
Principal Lifetime 2020 SEP Account
|
|
|
461,354
|
|
|
|
7,072,489
|
*
|
|
|
461,341
|
|
|
|
6,192,559
|
*
|
Principal Lifetime 2030 SEP Account
|
|
|
173,138
|
|
|
|
2,633,505
|
|
|
|
160,352
|
|
|
|
2,123,307
|
|
Principal Lifetime 2040 SEP Account
|
|
|
120,855
|
|
|
|
1,796,833
|
|
|
|
115,434
|
|
|
|
1,489,897
|
|
Principal Lifetime 2050 SEP Account
|
|
|
192,788
|
|
|
|
2,819,020
|
|
|
|
217,055
|
|
|
|
2,751,342
|
|
Principal Lifetime STR INC SEP Account
|
|
|
33,009
|
|
|
|
470,811
|
|
|
|
32,853
|
|
|
|
423,820
|
|
Principal Small Company Value SEP Account
|
|
|
41,297
|
|
|
|
1,572,020
|
|
|
|
37,857
|
|
|
|
1,185,940
|
|
Principal Large Cap Stock Index SEP Account
|
|
|
102,391
|
|
|
|
5,471,082
|
*
|
|
|
112,647
|
|
|
|
5,241,701
|
*
|
Principal Diversified International SEP Account
|
|
|
88,465
|
|
|
|
4,640,399
|
*
|
|
|
97,318
|
|
|
|
4,493,046
|
*
|
Principal US Property SEP Account
|
|
|
1,881
|
|
|
|
823,879
|
|
|
|
5,126
|
|
|
|
1,944,881
|
|
Principal Fixed Income 401(A)/(K)
|
|
|
1,157,840
|
|
|
|
16,966,158
|
*
|
|
|
1,173,095
|
|
|
|
16,689,163
|
*
|
Popular, Inc. Common Stock
|
|
|
2,269,380
|
|
|
|
7,125,853
|
*
|
|
|
2,094,170
|
|
|
|
4,732,825
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,171,112
|
|
|
|
|
|
|
|
71,191,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2010, the Plans investments (including gains and losses on investments bought
and sold, as well as held during the year) appreciated in value by $8,339,684 as follows:
|
|
|
|
|
|
Mutual funds and pooled separate accounts
|
|
$
|
6,467,504
|
|
Common stock
|
|
|
1,872,180
|
|
|
|
|
|
|
|
$
|
8,339,684
|
|
|
|
|
|
|
|
The net appreciation in fair value of investments includes the adjustment from fair
value to contract value for fully benefit-responsive investment contract of $892,955.
|
|
6.
|
|
Income Taxes
|
|
|
|
The Popular, Inc. U.S.A. 401(k) Savings & Investment Plan received a favorable determination
letter from the Internal Revenue Service, dated January 31, 2008, indicating that it
qualified under Section 401(a) of the Internal Revenue Code (IRC). Although the Plan has
been amended since receiving the determination letter, the Plan administrator believes that
the Plan is designed and is currently being operated in compliance with the applicable
requirements of the IRC.
|
|
|
|
Accounting principles generally accepted in the United States of America require Plan
management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if
the Plan has
|
13
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2010 and 2009
|
|
taken an uncertain position that more likely than not would not be sustained upon
examination by federal, state and/or local taxing authorities. The Plan administrator has
analyzed the tax positions by the Plan, and has concluded that as of December 31, 2010, there
are no uncertain positions taken or expected to be taken that would require recognition of a
liability (or asset) or disclosure in the financial statements. The Plan is subject to
routine audits by taxing jurisdictions; however, there
are currently no audits for any tax periods in progress. The Plan administrator believes it
is subject to income tax examinations for 3 years including 2010.
|
|
7.
|
|
Related Party Transactions
|
|
|
|
Certain Plan investments are shares of mutual funds and pooled separate accounts managed by
Principal Investments. Principal Investments is the trustee of the Plan and, therefore,
these transactions qualify as party-in-interest transactions. The Plan also invested in
common stock and cash of its sponsor, Popular, Inc. In addition, the Plan Sponsor pays
certain costs on behalf of the Plan. Fees paid by the Plan Sponsor for administrative
services amounted to $39,000 for the year ended December 31, 2010.
|
|
8.
|
|
Plan Transfers In
|
|
|
|
The Popular, Inc. U.S.A. Retirement Plan was liquidated in May 2010. Employees had an option
to rollover their distributions to the Popular, Inc. U.S.A. 401(k) Savings & Investment Plan.
In total, the Plan received $4.9 million from the Retirement Plan liquidation as a result
of employees that selected this option. The total amount was recorded in the rollovers and
transfer-in balance on the Statement of changes in net assets.
|
|
9.
|
|
Subsequent Events
|
|
|
|
Management has evaluated the events and transactions that have occurred through June 29,
2011, the date which the financial statements were filed with the Securities and Exchange
Commission, and noted no items requiring adjustment of the financial statements or additional
disclosures.
|
14
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
|
|
|
December 31, 2010
|
|
Exhibit I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c ) Description of
|
|
|
|
|
|
|
(e) Current
|
|
(a) (b) Identity of Issue
|
|
investment
|
|
|
(d) cost **
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIMCO Total Return ADM Fund
|
|
mutual fund
|
|
|
|
|
|
$
|
8,851,827
|
|
Fidelity Adv Small CAP Fund
|
|
mutual fund
|
|
|
|
|
|
|
2,510,040
|
|
Capital R and M AM FDS Growth Fund
|
|
mutual fund
|
|
|
|
|
|
|
4,171,480
|
|
MFS Value R2 Fund
|
|
mutual fund
|
|
|
|
|
|
|
4,373,338
|
|
Columbis Mid Cap Value R Fund
|
|
mutual fund
|
|
|
|
|
|
|
2,341,122
|
|
Munder MidCap Core Growth R Fund
|
|
mutual fund
|
|
|
|
|
|
|
3,666,954
|
|
* Principal Lifetime 2010 SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
1,864,302
|
|
* Principal Lifetime 2020 SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
7,072,489
|
|
* Principal Lifetime 2030 SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
2,633,505
|
|
* Principal Lifetime 2040 SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
1,796,833
|
|
* Principal Lifetime 2050 SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
2,819,020
|
|
* Principal Lifetime STR INC SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
470,811
|
|
* Principal Small Cap Value SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
1,572,020
|
|
* Principal Large Cap Stock Index SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
5,471,082
|
|
* Principal Diversified International SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
4,640,399
|
|
* Principal US Property SEP Account
|
|
pooled separate account
|
|
|
|
|
|
|
823,879
|
|
* Principal Fixed Income 401(A)/(K)
|
|
insurance contract
|
|
|
|
|
|
|
16,966,158
|
|
* Popular Inc. Common Stock
|
|
common stock
|
|
|
|
|
|
|
7,125,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
79,171,112
|
|
* Notes Receivable from participants
|
|
interest rate range from 4.25% to 11%
maturity date range from 7/11 to 11/40
|
|
|
2,093,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
81,264,883
|
|
|
|
|
*
|
|
Party in interest to the Plan.
|
|
**
|
|
Cost information is not required for participant directed funds.
|
15
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the persons who administer
the employee benefit plan have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
|
|
|
|
POPULAR, INC. U.S.A. 401(K) SAVINGS &
INVESTMENT PLAN
(Registrant)
|
|
Date: June 29, 2011
|
By:
|
/s/ Eduardo J. Negrón
|
|
|
|
Eduardo J. Negrón
|
|
|
|
Authorized Representative
|
|
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