Popular, Inc. (“the Corporation” or “Popular”) (NASDAQ: BPOP)
reported net income of $27.5 million for the quarter ended
September 30, 2011, compared with net income of $110.7 million for
the quarter ended June 30, 2011, and net income of $494.1 million
for the quarter ended September 30, 2010. The results for the
second quarter of 2011 included a tax benefit of approximately
$59.6 million related to the timing of loan charge-offs for tax
purposes, while the results for the third quarter of 2010 included
a $640.8 million gain recognized in connection with the sale of 51%
interest in EVERTEC.
Mr. Richard L. Carrión, Chairman of the Board and Chief
Executive Officer, said, “With our third consecutive profitable
quarter, we continue to make progress as we drive Popular on a path
to greater profitability. In Puerto Rico, where we have a uniquely
valuable franchise, the credit environment remains uneven. While we
have seen improvement in some of our portfolios, we increased our
provisions for the commercial portfolio. In the U.S., we exceeded
our expectations with another quarter of steady net interest income
and lower funding costs in the midst of improving credit
conditions.”
Mr. Carrión added, “Our unique market position is reflected in
our ability to produce stable top line revenue throughout the
credit cycle. We are continuing to de-risk our balance sheet and
reduce our expense base, among other measures, to position Popular
for improved performance in 2012. We remain focused on reducing our
elevated credit costs, which is the key to unlocking the enormous
value potential of this organization.”
Sale of Construction and Commercial
Real Estate Loans
On September 29, 2011, Banco Popular de Puerto Rico (“BPPR”),
the Corporation’s principal banking subsidiary, completed the sale
of construction and commercial real estate loans with an unpaid
principal balance and net book value of approximately
$358 million and $128 million, respectively. The majority
of the loans sold were in non-performing status at the transaction
date. The purchaser was a newly created joint venture (the “Joint
Venture”), which is majority owned by a limited liability company
created by Goldman Sachs & Co., Caribbean Property Group LLC
and East Rock Capital LLC.
During the third quarter of 2011, the Corporation recognized a
positive impact to revenues of approximately $4.7 million before
tax as a result of the sale. This included approximately $17.4
million classified as gain on sale of loans, partially offset by
$12.7 million of provision for loan losses related to write-downs
taken on certain loans that were reclassified from
held-in-portfolio to held-for-sale during the third quarter of
2011.
As consideration for the sale of the loans, BPPR received
approximately $48 million in cash, a note for approximately
$86 million as seller financing and a 24.9% equity interest in
the new Joint Venture. BPPR extended a $68.5 million advance
facility to the Joint Venture to cover unfunded commitments and
other costs to complete the construction projects and a $20 million
working capital line of credit to fund certain expenses of the
Joint Venture.
Earnings Highlights – Third Quarter
2011 compared to Second Quarter 2011
Quarter ended
$ Variance (Dollars in thousands)
September 30,2011
June 30,2011
Q3 vs. Q22011
September 30,2010
Net interest income $369,311 $374,542 ($5,231) $356,778 Provision
for loan losses – non-covered loans 150,703 95,712 54,991 215,013
Provision for loan losses – covered loans [1] 25,573
48,605 (23,032) - Net interest income after provision
for loan losses 193,035 230,225 (37,190) 141,765 Non-interest
income 122,390 124,160 (1,770) 825,894 Operating expenses
282,355 281,800 555 371,541 Income before
income tax 33,070 72,585 (39,515) 596,118 Income tax expense
(benefit) 5,537 (38,100) 43,637 102,032
Net income $27,533 $110,685 ($83,152)
$494,086 Net income applicable to common stock $26,602
$109,754 ($83,152) $494,086 Net income per
common share - basic and diluted $0.03 $0.11
($0.08) $0.48 [1] Covered loans represent loans acquired in
the Westernabank FDIC-assisted transaction that are covered under
FDIC loss sharing agreements.
Refer to the accompanying “Financial Supplement to Third Quarter
2011 Earnings Release” for detailed financial information and key
performance ratios.
Net interest income
- The decrease in net interest income of
$5.2 million for the third quarter of 2011 was mainly a combination
of lower volume and yields on loans and investment securities,
partially offset by lower levels and funding costs of deposits and
borrowings. The net interest margin decreased from 4.48% for the
second quarter of 2011 to 4.45% for the third quarter of 2011.
Refer to Tables D and E for detailed information on average
financial condition balances and an analysis of yield / rates by
main categories.
- The principal variance in interest
income on loans was a reduction in the interest from covered loans
by $10.1 million. During the second quarter of this year the
Corporation received full payment for one of the pools accounted
for pursuant to ASC 310-30. This payment was not expected as part
of the pool’s original cash flow estimate. As a result, the
reassessment of cash flows performed in the second quarter yielded
a one-time benefit of approximately $10.9 million as the remaining
unamortized discount was recognized into earnings. Other factors
contributing to this variance include a lower discount accretion on
covered loans (revolving facilities) accounted for pursuant to ASC
Subtopic 310-20 by $5.6 million, partially offset by the effect of
the reassessment of expected cash flows for those loans accounted
for pursuant to ASC 310-30.
- The cost on deposits declined by 9
basis points. This decrease was achieved in BPPR due to continued
progress in lowering deposit costs, and in Banco Popular North
America (“BPNA”), facilitated by a lower rate environment and the
shrinking of BPNA’s balance sheet.
- The decrease in interest expense on
borrowings of $5.1 million was principally related to a reduction
in interest expense associated with the note issued to the FDIC as
part of the Westernbank-assisted transaction by approximately $5.8
million. The reduction was due to lower levels as the FDIC note
balance averaged $1.1 billion for the third quarter of 2011,
compared with $1.9 billion for the second quarter of 2011.
Provision for loan losses
- The increase in the provision for loan
losses of $32.0 million was the result of an increase in the
provision for non-covered loans by $55.0 million, partially offset
by a decrease in the provision for loan losses on the covered loans
by $23.0 million. The increase related to non-covered loans was
principally associated with the BPPR reportable segment’s
commercial and residential mortgage loan portfolios since weak
economic conditions in Puerto Rico continue to adversely impact
these portfolios. In addition, $12.7 million of the increase was
associated with write-downs on commercial loans transferred from
the held-in-portfolio to the held-for-sale category during the
third quarter of 2011. These loans were part of the sale executed
in September 2011. The decrease in the provision for loan losses on
the covered loan portfolio was impacted by the reassessment of
expected credit deterioration considered in the quarterly recasting
of cash flows, which had a greater impact in the second quarter as
it relates to covered loans accounted for under ASC 310-30.
Non-interest income
- FDIC loss share expense amounting to
$5.4 million was recognized in the third quarter of 2011, compared
with FDIC loss share income of $38.7 million for the second quarter
of 2011. The unfavorable variance in these quarterly results was
mainly due to:
- A reduction of $28.8 million in the
quarterly accretion of the FDIC loss share indemnification asset.
The decrease resulted from the evaluation of expected cash flows of
the loan portfolio completed in June and updated in September that
resulted in reduced losses expected to be collected from the FDIC.
This reduction in losses also results in an improvement in interest
income due to an increase in the accretable yield on the covered
loans. The impact in interest income is taken throughout the life
of the loans whereas the life of the indemnification asset is
shorter given the timeframe of the FDIC loss sharing
agreements.
- A decrease of $18.4 million related to
a reduction in the 80% mirror accounting of the provision for loan
losses. As indicated previously, the provision for loan losses on
the covered loans amounted to $25.6 million in the third quarter of
2011, compared with $48.6 million in the second quarter of
2011.
- Partially offset by a reduction of $4.5
million in the 80% mirror accounting of loans accounted under ASC
Subtopic 310-20 due to lower discount accretion on covered
loans.
- Net gain on sale of loans, including
valuation adjustments on loans held-for-sale, amounted to $20.3
million for the third quarter of 2011, compared with a net loss of
$12.8 million for the second quarter of 2011. The gain for the
quarter was primarily related to the non-performing construction
and commercial loan sale transaction. As indicated previously, the
gain on sale of approximately $17.4 million on this transaction was
partially offset by the $12.7 million provision for loan losses
recorded on certain loans reclassified to held-for-sale during the
third quarter. The net loss for the quarter ended June 30, 2011 was
influenced by unfavorable fair value adjustments related to
disbursements made to customers on the unfunded commitments of
construction and commercial loans held-for-sale.
- Gains on the sale of investment
securities available-for-sale amounting to $8.1 million were
recognized during the third quarter of 2011, principally from the
sale of approximately $234 million in FHLB notes. With this sale,
the Corporation monetized part of the unrealized gain in its
investment portfolio and will use the proceeds to prepay part of
the FDIC note without prepayment penalty, thereby generating
favorable economics.
- Other service fees increased by $4.4
million mostly due to greater fees derived from the sale and
administration of investment products, particularly commissions on
the sale of a bond issuance, and insurance fees. Also, there were
increases in credit card fees related to interchange income due to
higher transaction volume and higher fees related to the recently
acquired Citibank’s Puerto Rico American Airlines Advantage credit
card portfolio. Refer to Table F in the Financial Supplement for a
breakdown of other service fees.
Operating expenses
- Operating expenses in total remained
stable. Business promotion expense reflected an increase of $3.3
million, principally due to earned points related to the new credit
card program offered since August 2011 and advertising expenses.
There were other increases in operating expenses including an
unfavorable variance in the category of reserves for unfunded
credit commitments. These unfavorable variances were partially
offset by decreases in other real estate expenses, FDIC deposit
insurance expense and other taxes. Refer to Table B which provides
a breakdown of operating expenses by main categories.
Income taxes
- The variance in income tax was
principally the result of the impact of the private ruling and
closing agreement entered into by the Corporation with the Puerto
Rico Department of the Treasury during the second quarter of 2011,
which resulted in a tax benefit for the Corporation of $59.6
million during that quarter. The tax benefit related to the timing
of loan charge-offs for tax purposes.
Credit Quality
- Excluding covered loans, the allowance
for loan losses to loans held-in-portfolio ratio stood at 3.35% at
September 30, 2011, almost unchanged when compared to 3.34% at June
30, 2011. The general and specific reserves amounted to $634
million and $58 million, respectively, as of September 30, 2011,
compared with $670 million and $20 million, respectively, as of
June 30, 2011. The reduction in the general component of the
allowance for loan losses on the non-covered loans for the quarter
ended September 30, 2011 was mostly attributable to improved credit
performance and lower volume of commercial loans in the BPNA
reportable segment. Commercial loans held-in-portfolio, excluding
covered loans, declined by $147 million from June 30, 2011 to
September 30, 2011, principally at the BPNA reportable segment. The
increase in the specific reserve was principally associated to
higher reserve requirements on the mortgage and commercial loan
portfolios of the BPPR reportable segment. Refer to Tables H
through M for detailed credit quality information, including the
activity in the allowance for loan losses.
- Non-performing loans, excluding loans
held-for-sale and covered loans, increased $107 million, or 7%,
from June 30, 2011 to September 30, 2011. Refer to Table I for the
activity in non-performing commercial and construction loans,
excluding covered loans and loans held-for-sale.
- Net charge-offs for the quarter ended
September 30, 2011 increased by $3.5 million, compared with the
second quarter of 2011. Excluding covered loans, net charge-offs
for the third quarter of 2011 increased by $1.8 million, compared
with the quarter ended June 30, 2011.
BPPR Reportable Segment
- Excluding the impact of the provision for loan losses for the
covered loan portfolio, the provision for loan losses for
non-covered loans of the BPPR reportable segment totaled $131.1
million for the third quarter of 2011, an increase of $60.4
million, from $70.7 million for the second quarter of 2011. The
increase was principally driven by higher net charge-offs,
delinquencies and loan modifications of the commercial and
residential mortgage loans portfolios at the BPPR reportable
segment, in addition to the negative impact of approximately $12.7
million in the provision for loan losses related to commercial
loans transferred from the held-in-portfolio to held-for-sale
category during the third quarter of 2011.
- Annualized net charge-offs to average non-covered loans
held-in-portfolio ratio for the BPPR reportable segment increased
27 basis points, from 2.22% for the quarter ended June 30, 2011 to
2.49% for the quarter ended September 30, 2011. The increase was
principally driven by net charge-offs of the commercial loan
portfolio, prompted by impaired commercial loans accounted for as
collateral dependent loans.
- Non-performing loans of the BPPR reportable segment, excluding
loans held-for-sale and covered loans, increased from $1.2 billion
at June 30, 2011 to $1.3 billion at September 30, 2011, mainly due
to the commercial, construction and residential mortgage loan
portfolios. The weak economic conditions in Puerto Rico continue to
adversely impact these portfolios.
- Refer to Table L for information on the allowance for loan
losses of the Corporation’s Puerto Rico operations. The increase in
the allowance for loan losses as of September 30, 2011 reflects an
increase in the loss trend in the commercial loan portfolio, and
higher specific reserve requirements mainly in the commercial and
mortgage loan portfolios. The latter was driven by a higher level
of mortgage loans restructured under loss mitigation programs.
BPNA Reportable Segment
- The provision for loan losses for the
BPNA reportable segment amounted to $19.6 million or 43.2% of net
charge-offs for the third quarter of 2011, compared with $25.0
million or 46.1% of net charge-offs for the second quarter of 2011.
The decrease in the provision for loan losses was principally
driven by improvements in credit performance and lower loan
balances, primarily in the commercial loan portfolio.
- Annualized net charge-offs to average
loans held-in-portfolio ratio for the BPNA reportable segment
declined 45 basis points, from 3.45% for the quarter ended June 30,
2011 to 3.00% for the quarter ended September 30, 2011. Net
charge-offs of the commercial and construction loan portfolios
continue to reflect a decreasing trend in the Corporation’s U.S.
Mainland operations.
- Non-performing loans held-in-portfolio
of the BPNA reportable segment amounted to $395 million as of
September 30, 2011 compared with $415 million as of June 30, 2011.
Non-performing commercial, construction and consumer loans at the
BPNA reportable segment reflected a decreasing trend, as the
Corporation’s U.S. Mainland operations have continued to reflect
certain signs of stabilization. Non-performing mortgage loans
increased by $5 million from June 30, 2011 in part due to loans
restructured under loss mitigation programs.
- Refer to Table M for information on the
allowance for loan losses of the BPNA reportable segment. The
decline in the allowance for loan losses as of September 30, 2011
reflects declining losses in the commercial loan portfolio,
partially offset by an increase in the specific reserve for
mortgage loans restructured under loss mitigation programs.
Financial Condition Highlights –
September 30, 2011 compared to June 30, 2011
- Total assets amounted to $38.2 billion
as of September 30, 2011, compared with $39.0 billion as of June
30, 2011. Refer to Table C for a detailed presentation of the
Corporation’s Consolidated Statements of Condition.
- Total investment securities, including
trading securities and other investment securities, totaled $5.8
billion as of September 30, 2011, compared with $6.5 billion as of
June 30, 2011. Investment securities available-for-sale declined
$163 million due to the previously mentioned sale of FHLB notes.
Trading securities declined as well by $513 million, principally
due to the sale of mortgage-backed securities. The FHLB notes and
mortgage-backed securities’ trades executed in late September
settled in October 2011, thus for accounting purposes such
securities were classified as trade receivables in the “other
assets” caption in the consolidated statement of condition as of
September 30, 2011. The sale of mortgage-backed securities was made
to take advantage of favorable market conditions for the securities
held in the trading portfolio and the proceeds were subsequently
used to repay short-term debt.
- Total loans held-in-portfolio declined
$88 million from June 30, 2011 to September 30, 2011. Refer to
Table G for a breakdown by loan categories. Commercial and
construction non-covered loans held-in-portfolio decreased $183
million from June 30, 2011 to September 30, 2011, which consisted
of a decline of $196 million at the BPNA reportable segment,
partially offset by an increase of $13 million in the BPPR
reportable segment. The decline in the commercial loan portfolio
was offset by mortgage loan activity in Puerto Rico as well as the
impact of the credit card portfolio acquired from Citibank in early
August 2011.
- Loans held-for-sale declined $140
million from June 30, 2011 to September 30, 2011, principally due
to the sale of the commercial and construction loan portfolio.
- The FDIC loss share asset amounted to
$1.8 billion as of September 30, 2011, compared with $2.4 billion
as of June 30, 2011. The decline was principally due to claims
receivables outstanding as of June 30, 2011 of approximately $545
million which were collected from the FDIC in July 2011.
- Deposits totaled $28.0 billion as of
September 30, 2011 and June 30, 2011. Table G presents a breakdown
of deposits by major categories.
- The Corporation’s borrowings amounted
to $5.3 billion as of September 30, 2011, compared with $6.1
billion as of June 30, 2011. The decrease in borrowings was mostly
related to a reduction in principal of $803 million on the note
issued to the FDIC. This note has a carrying amount of $714 million
as of September 30, 2011. This decrease was due to the impact of
payments of principal from loan and claim collections as well as
prepayments during the quarter.
- Stockholders’ equity remained stable at
$4.0 billion as of September 30, 2011. Refer to Table A for capital
ratios and Table N for Non-GAAP reconciliations. The Corporation
continues to be well-capitalized. Capital ratios as of September
30, 2011 improved compared with June 30, 2011 due to a reduction on
assets, higher net deferred tax asset included without limitation
in regulatory capital and internal capital generation.
Forward-Looking
Statements
The information included in this news release contains 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 that might cause such a difference include, but are not
limited to (i) the rate of growth in the economy and employment
levels, as well as general business and economic conditions; (ii)
changes in interest rates, as well as the magnitude of such
changes; (iii) the fiscal and monetary policies of the federal
government and its agencies; (iv) changes in federal bank
regulatory and supervisory policies, including required levels of
capital; (v) 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; (vi) the
performance of the stock and bond markets; (vii) competition in the
financial services industry; (viii) possible legislative, tax or
regulatory changes; (ix) the impact of the Dodd-Frank Act on our
businesses, business practice and cost of operations; and (x)
additional Federal Deposit Insurance Corporation assessments. For a
discussion of such factors and certain risks and uncertainties to
which the Corporation is subject, see the Corporation’s Annual
Report on Form 10-K for the year ended December 31, 2010, as well
as its filings with the U.S. Securities and Exchange Commission.
Other than to the extent required by applicable law, including the
requirements of applicable securities laws, 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.
Founded in 1893, Popular, Inc. is the leading banking
institution by both assets and deposits in Puerto Rico and ranks
36th by assets among U.S. banks. In the United States, Popular has
established a community-banking franchise providing a broad range
of financial services and products with branches in New York, New
Jersey, Illinois, Florida and California.
An electronic version of this press release can be found at the
Corporation’s website, www.popular.com.
Popular, Inc. Financial Supplement to Third
Quarter 2011 Earnings Release Table A - Selected Ratios
and Other Information Table B - Consolidated Statement of
Operations Table C - Consolidated Statement of Condition
Table D - Consolidated Average Balances and Yield / Rate
Analysis - QUARTER Table E - Consolidated Average Balances
and Yield / Rate Analysis - YEAR-TO-DATE Table F - Breakdown
of Other Service Fees Table G - Loans and Deposits
Table H - Non-Performing Assets Table I - Activity in
Non-performing Loans Table J - Allowance for Credit Losses,
Net Charge-offs and Related Ratios Table K - Allowance for
Loan Losses - Breakdown of general and specific reserves -
CONSOLIDATED Table L - Allowance for Loan Losses - Breakdown
of general and specific reserves - PUERTO RICO OPERATIONS
Table M - Allowance for Loan Losses - Breakdown of general and
specific reserves - U.S. MAINLAND OPERATIONS Table N -
Reconciliation to GAAP Financial Measures Table O -
Financial Information - Westernbank Covered Loans
POPULAR, INC. Financial
Supplement to Third Quarter 2011 Earnings Release Table A -
Selected Ratios and Other Information (Unaudited)
Quarter ended Quarter ended Quarter ended Nine
months ended September 30, June 30, September 30, September 30,
September 30, 2011 2011 2010
2011 2010 Net income (loss) per common share: Basic and
diluted $ 0.03 $ 0.11 $ 0.48 $ 0.14 $ 0.21 Average common
shares outstanding 1,021,660,038 1,021,225,911 1,021,374,014
1,021,474,504 839,196,564 Average common shares outstanding -
assuming dilution 1,021,660,038 1,021,896,141 1,021,374,014
1,022,517,199 839,509,525 Common shares outstanding at end of
period 1,024,475,398 1,023,977,895 1,022,686,418 1,024,475,398
1,022,686,418 Market value per common share $ 1.50 $ 2.76 $
2.90 $ 1.50 $ 2.90 Market Capitalization --- (In millions) $
1,537 $ 2,826 $ 2,966 $ 1,537 $ 2,966 Return on average
assets 0.29 % 1.15 % 4.88 % 0.52 % 1.28 % Return on average
common equity 2.81 % 12.02 % 56.94 % 5.33 % 16.77 % Net
interest margin [1] 4.45 % 4.48 % 4.03 % 4.36 % 3.69 %
Common equity per share $ 3.87 $ 3.82 $ 3.98 $ 3.87 $ 3.98
Tangible common book value per common share (non-GAAP) $ 3.17 $
3.14 $ 3.29 $ 3.17 $ 3.29 Tangible common equity to tangible
assets (non-GAAP) 8.67 % 8.38 % 8.41 % 8.67 % 8.41 % Tier 1
risk-based capital [2] 15.82 % 15.22 % 15.03 % 15.82 % 15.03 %
Total risk-based capital [2] 17.09 % 16.50 % 16.32 % 17.09 %
16.32 % Tier 1 leverage [2] 10.59 % 10.19 % 10.10 % 10.59 %
10.10 % Tier 1 common equity to risk-weighted assets
(non-GAAP) [2] 12.02 % 11.53 % 11.56 % 12.02 % 11.56 %
[1] Not on a taxable equivalent basis. [2] Capital ratios
for the current quarter are estimated.
POPULAR, INC. Financial Supplement
to Third Quarter 2011 Earnings Release Table B -
Consolidated Statement of Operations (Unaudited)
Quarter ended Quarter ended Variance Quarter ended Nine
months ended Nine months ended
(In thousands, except
September 30, June 30, Q3 2011 vs. September 30, September 30,
September 30,
per share information)
2011 2011 Q2 2011 2010 2011
2010 Interest income: Loans $ 428,999 $ 442,460 $ (13,461 )
$ 455,631 $ 1,294,834 $ 1,231,290 Money market investments 886 926
(40 ) 1,391 2,759 4,326 Investment securities 51,085 53,723 (2,638
) 57,277 157,183 185,118 Trading account securities
10,788 9,790 998
7,136 29,332
20,313 Total interest income 491,758
506,899 (15,141 )
521,435 1,484,108
1,441,047 Interest expense: Deposits 65,868 70,672 (4,804 )
86,330 213,419 269,919 Short-term borrowings 13,744 13,719 25
14,945 41,478 45,756 Long-term debt 42,835
47,966 (5,131 )
63,382 141,999 185,082
Total interest expense 122,447
132,357 (9,910 ) 164,657
396,896 500,757
Net interest income 369,311 374,542 (5,231 ) 356,778 1,087,212
940,290 Provision for loan losses 176,276
144,317 31,959
215,013 395,912
657,471 Net interest income after provision for loan losses
193,035 230,225
(37,190 ) 141,765 691,300
282,819 Service charges on deposit
accounts 46,346 46,802 (456 ) 48,608 138,778 149,865 Other service
fees 62,664 58,307 4,357 100,822 179,623 305,867 Net gain (loss) on
sale and valuation adjustments of investment securities 8,134 (90 )
8,224 3,732 8,044 4,210 Trading account profit 2,912 874 2,038
5,860 3,287 8,101
Net gain (loss) on sale of loans,
including valuation adjustments on loans held-for-sale
20,294 (12,782 ) 33,076 4,250 14,756 14,396 Adjustments (expense)
to indemnity reserves on loans sold (10,285 ) (9,454 ) (831 )
(5,823 ) (29,587 ) (37,502 ) FDIC loss share (expense) income
(5,361 ) 38,670 (44,031 ) (7,668 ) 49,344 (22,705 ) Fair value
change in equity appreciation instrument - 578 (578 ) 10,641 8,323
35,035 Gain on sale of processing and technology business - - -
640,802 - 640,802 Other operating income (2,314 )
1,255 (3,569 )
24,670 38,350 84,518
Total non-interest income 122,390
124,160 (1,770 )
825,894 410,918 1,182,587
Operating expenses: Personnel costs Salaries 77,455
76,698 757 93,791 227,944 274,933 Commissions, incentives and other
bonuses 11,630 11,995 (365 ) 21,302 33,548 41,670 Pension,
postretirement and medical insurance 11,385 12,810 (1,425 ) 14,711
36,181 46,456 Other personnel costs, including payroll taxes
11,254 9,456 1,798
11,401 31,150
37,110 Total personnel costs 111,724 110,959
765 141,205 328,823 400,169 Net occupancy expenses 25,885 25,957
(72 ) 28,425 76,428 86,359 Equipment 10,517 10,761 (244 ) 25,432
33,314 74,231 Other taxes 12,391 14,623 (2,232 ) 13,872 38,986
38,635 Professional fees 48,756 49,479 (723 ) 48,224 144,923
109,498 Communications 6,800 7,188 (388 ) 9,514 21,198 31,628
Business promotion 14,650 11,332 3,318 11,260 35,842 29,759 FDIC
deposit insurance 23,285 27,682 (4,397 ) 17,183 68,640 49,894 Loss
on early extinguishment of debt 109 289 (180 ) 25,448 8,637 26,426
Other real estate owned (OREO) 3,234 6,440 (3,206 ) 6,997 11,885
26,322 Credit and debit card processing, volume, interchange and
other 5,416 4,206 1,210 14,846 13,565 38,747 Other operating
expenses 17,125 10,629 6,496 26,724 49,990 62,287 Amortization of
intangibles 2,463 2,255
208 2,411
6,973 6,915 Total operating expenses
282,355 281,800
555 371,541
839,204 980,870 Income before income
tax 33,070 72,585 (39,515 ) 596,118 263,014 484,536 Income tax
expense (benefit) 5,537 (38,100
) 43,637 102,032
114,664 119,994
Net
income $ 27,533 $ 110,685 $
(83,152 ) $ 494,086 $ 148,350 $
364,542
Net income applicable to common stock
$ 26,602 $ 109,754 $ (83,152 ) $
494,086 $ 145,558 $ 172,875
Net income per common share - basic $ 0.03
$ 0.11 $ (0.08 ) $ 0.48 $
0.14 $ 0.21
Net income per common share -
diluted $ 0.03 $ 0.11 $
(0.08 ) $ 0.48 $ 0.14 $ 0.21
Popular, Inc.
Financial Supplement to Third Quarter 2011 Earnings Release
Table C - Consolidated Statement of Condition
(Unaudited) $ Variance September 30, June 30,
September 30, Q3 2011 vs. (In thousands) 2011 2011
2010 Q2 2011 Assets: Cash and due from banks $
567,141 $ 587,965 $ 580,811 $ (20,824 ) Money market investments
1,269,139 1,383,892 2,023,949 (114,753 ) Trading account
securities, at fair value 272,939 785,842 483,192 (512,903 )
Investment securities available-for-sale, at fair value 5,226,529
5,389,491 5,741,483 (162,962 ) Investment securities
held-to-maturity, at amortized cost 128,546 129,910 214,152 (1,364
) Other investment securities, at lower of cost or realizable value
173,569 174,560 158,309 (991 ) Loans held-for-sale, at lower of
cost or fair value 368,777
509,046 115,088 (140,269
) Loans held-in-portfolio: Loans not covered under loss sharing
agreements with the FDIC 20,673,886 20,657,694 22,141,427 16,192
Loans covered under loss sharing agreements with the FDIC 4,512,423
4,616,575 4,953,195 (104,152 ) Less - Allowance for loan losses
(772,921 ) (746,847 )
(1,243,994 ) (26,074 ) Total loans held-in-portfolio,
net 24,413,388 24,527,422
25,850,628 (114,034 ) FDIC loss
share asset 1,798,339 2,350,176 2,324,978 (551,837 ) Premises and
equipment, net 536,529 537,870 531,849 (1,341 ) Other real estate
not covered under loss sharing agreements with the FDIC 175,785
162,419 168,823 13,366 Other real estate covered under loss sharing
agreements with the FDIC 75,339 74,803 56,368 536 Accrued income
receivable 134,263 141,980 160,167 (7,717 ) Mortgage servicing
assets, at fair value 157,226 162,619 165,947 (5,393 ) Other assets
2,168,529 1,393,843 1,443,158 774,686 Goodwill 648,353 647,318
645,944 1,035 Other intangible assets 64,212
54,186 60,438
10,026 Total assets $ 38,178,603
$ 39,013,342 $ 40,725,284 $ (834,739 )
Liabilities and Stockholders’ Equity: Liabilities: Deposits:
Non-interest bearing $ 5,527,450 $ 5,364,004 $ 5,371,439 $ 163,446
Interest bearing 22,425,890
22,596,425 22,368,605
(170,535 ) Total deposits 27,953,340
27,960,429 27,740,044
(7,089 ) Federal funds purchased and assets sold under
agreements to repurchase 2,601,606 2,570,322 2,358,139 31,284 Other
short-term borrowings 166,200 151,302 191,342 14,898 Notes payable
2,550,745 3,423,286 5,145,152 (872,541 ) Other liabilities
894,111 943,935
1,170,476 (49,824 ) Total liabilities
34,166,002 35,049,274
36,605,153 (883,272 ) Stockholders’
equity: Preferred stock 50,160 50,160 50,160 - Common stock 10,249
10,242 10,229 7 Surplus 4,099,379 4,097,909 4,094,302 1,470
Accumulated deficit (201,770 ) (228,372 ) (119,877 ) 26,602
Treasury stock (992 ) (642 ) (545 ) (350 ) Accumulated other
comprehensive income 55,575
34,771 85,862 20,804
Total stockholders’ equity 4,012,601
3,964,068 4,120,131
48,533 Total liabilities and stockholders’
equity $ 38,178,603 $ 39,013,342
$ 40,725,284 $ (834,739 )
Popular, Inc. Financial Supplement
to Third Quarter 2011 Earnings Release Table D -
Consolidated Average Balances and Yield / Rate Analysis -
QUARTER (Unaudited)
Quarter Quarter ended Quarter ended Quarter
ended Variance Variance
($ amounts in millions;
September 30, 2011 June 30, 2011 September 30, 2010 Q3 2011 vs Q2
2011 Q3 2011 vs Q3 2010
yields not on a taxable
Average Income / Yield / Average Income / Yield / Average Income /
Yield / Average Income / Yield / Average Income / Yield /
equivalent basis)
balance Expense Rate balance Expense
Rate balance Expense Rate balance
Expense Rate balance Expense Rate Assets:
Interest earning assets: Money market, trading and investment
securities $ 7,540 $ 62.8 3.32 % $ 7,617
$ 64.4 3.39 % $ 8,199 $ 65.8
3.21 % ($77 ) ($1.6 ) (0.07 ) % ($659 )
($3.0 ) 0.11 % Loans not covered under
loss sharing agreements with the FDIC: Commercial 10,690 134.1 4.98
11,023 137.2 4.99 11,554 150.9 5.18 (333 ) (3.1 ) (0.01 ) (864 )
(16.8 ) (0.20 ) Construction 698 2.5 1.45 804 2.7 1.34 1,401 6.2
1.75 (106 ) (0.2 ) 0.11 (703 ) (3.7 ) (0.30 ) Mortgage 5,326 78.7
5.91 5,124 81.5 6.36 4,627 68.8 5.94 202 (2.8 ) (0.45 ) 699 9.9
(0.03 ) Consumer 3,656 95.1 10.32 3,610 92.3 10.26 3,814 100.4
10.45 46 2.8 0.06 (158 ) (5.3 ) (0.13 ) Lease financing 572
12.8 8.93 583
12.9 8.85 618
13.5 8.74 (11 ) (0.1 ) 0.08
(46 ) (0.7 ) 0.19
Total loans not covered under loss sharing agreements with
the FDIC 20,942 323.2 6.14 21,144 326.6 6.19 22,014 339.8 6.14 (202
) (3.4 ) (0.05 ) (1,072 ) (16.6 )
-
Loans covered under loss sharing agreements with the FDIC
4,557 105.8 9.23 4,686
115.9 9.91 5,027
115.8 9.15 (129 ) (10.1 )
(0.68 ) (470 ) (10.0 ) 0.08
Total loans 25,499 429.0
6.69 25,830 442.5
6.87 27,041 455.6 6.70
(331 ) (13.5 ) (0.18 ) (1,542 )
(26.6 ) (0.01 ) Total interest earning
assets 33,039 $ 491.8 5.92 %
33,447 $ 506.9 6.07 % 35,240
$ 521.4 5.89 % (408 ) ($15.1 ) (0.15 )
% (2,201 ) ($29.6 ) 0.03 %
Allowance for loan losses (749 ) (713 ) (1,255 ) (36 ) 506 Other
non-interest earning assets 5,609 5,953
6,200 (344 ) (591 ) Total average assets $
37,899 $ 38,687 $ 40,185 ($788 )
($2,286 ) Liabilities and Stockholders' equity: Interest
bearing deposits: NOW and money market $ 5,284 $ 7.3 0.55 % $ 5,353
$ 8.4 0.63 % $ 4,986 $ 10.0 0.80 % ($69 ) ($1.1 ) (0.08 ) % $ 298
($2.7 ) (0.25 ) % Savings 6,307 8.6 0.54 6,257 10.0 0.64 6,139 14.3
0.92 50 (1.4 ) (0.10 ) 168 (5.7 ) (0.38 ) Time deposits
10,876 50.0 1.82 10,990
52.3 1.91 11,077
62.0 2.22 (114 ) (2.3 )
(0.09 ) (201 ) (12.0 ) (0.40 )
Total interest bearing deposits 22,467 65.9 1.16 22,600 70.7
1.25 22,202 86.3 1.54 (133 ) (4.8 ) (0.09 ) 265 (20.4 ) (0.38 )
Borrowings 5,675 56.6 3.98
6,486 61.7 3.81
8,728 78.3 3.58 (811 )
(5.1 ) 0.17 (3,053 )
(21.7 ) 0.40 Total interest bearing
liabilities 28,142 122.5 1.73
29,086 132.4 1.82
30,930 164.6 2.12 (944 )
(9.9 ) (0.09 ) (2,788 )
(42.1 ) (0.39 ) Net interest spread 4.19 % 4.25 %
3.77 % (0.06 ) % 0.42 % Non-interest bearing deposits 5,095
5,044 4,908 51 187 Other liabilities 861 845 854 16 7 Stockholders'
equity 3,801 3,712 3,493
89 308 Total average liabilities and
stockholders' equity $ 37,899 $ 38,687 $ 40,185
($788 ) ($2,286 ) Net interest income / margin
non-taxable equivalent basis $ 369.3 4.45 % $ 374.5
4.48 % $ 356.8 4.03 % ($5.2 ) (0.03 ) % $ 12.5
0.42 %
Popular, Inc. Financial
Supplement to Third Quarter 2011 Earnings Release Table E -
Consolidated Average Balances and Yield / Rate Analysis -
YEAR-TO-DATE (Unaudited)
Year-to-date Nine months ended Nine months
ended Variance
($ amounts in millions;
September 30, 2011 September 30, 2010 YTD 2011 vs. 2010
yields not on a taxable
Average Income / Yield / Average Income / Yield / Average Income /
Yield /
equivalent basis)
balance Expense Rate balance Expense
Rate balance Expense Rate Assets: Interest
earning assets: Money market, trading and investment securities $
7,542 $ 189.3 3.35 % $ 8,561 $
209.7 3.27 % ($1,019 ) ($20.4 )
0.08 % Loans not covered under loss sharing agreements with
the FDIC: Commercial 10,987 410.5 4.99 12,009 466.8 5.20 (1,022 )
(56.3 ) (0.21 ) Construction 788 8.5 1.45 1,542 23.3 2.02 (754 )
(14.8 ) (0.57 ) Mortgage 5,070 231.5 6.09 4,588 204.4 5.94 482 27.1
0.15 Consumer 3,645 281.1 10.31 3,898 302.7 10.39 (253 ) (21.6 )
(0.08 ) Lease financing 582 39.0
8.93 638 41.7 8.71
(56 ) (2.7 ) 0.22 Total
loans not covered under loss sharing agreements with the FDIC
21,072 970.6 6.15 22,675 1,038.9 6.12 (1,603 ) (68.3 ) 0.03 Loans
covered under loss sharing agreements with the FDIC 4,685
324.2 9.25 2,823
192.4 9.11 1,862
131.8 0.14 Total loans
25,757 1,294.8 6.72
25,498 1,231.3 6.45 259
63.5 0.27 Total
interest earning assets 33,299 $ 1,484.1
5.95 % 34,059 $ 1,441.0 5.65 %
(760 ) $ 43.1 0.30 % Allowance
for loan losses (744 ) (1,253 ) 509 Other non-interest earning
assets 5,863 5,170 693
Total average assets $ 38,418 $ 37,976 $ 442
Liabilities and Stockholders' equity: Interest bearing
deposits: NOW and money market $ 5,206 $ 24.6 0.63 % $ 4,998 $ 30.6
0.82 % $ 208 ($6.0 ) (0.19 ) % Savings 6,269 31.1 0.66 5,881 40.3
0.92 388 (9.2 ) (0.26 ) Time deposits 10,999
157.7 1.92 10,967
199.0 2.43 32 (41.3 )
(0.51 ) Total interest bearing deposits 22,474 213.4
1.27 21,846 269.9 1.65 628 (56.5 ) (0.38 ) Borrowings 6,299
183.5 3.89 7,523
230.8 4.09 (1,224 )
(47.3 ) (0.20 ) Total interest bearing
liabilities 28,773 396.9 1.84
29,369 500.7 2.28
(596 ) (103.8 ) (0.44 )
Net interest spread
4.11 % 3.37 % 0.74 % Non-interest bearing deposits 5,022
4,638 384 Other liabilities 919 920 (1 ) Stockholders' equity
3,704 3,049 655 Total
average liabilities and stockholders' equity $ 38,418 $
37,976 $ 442 Net interest income / margin
non-taxable equivalent basis $ 1,087.2 4.36 % $ 940.3
3.69 % $ 146.9 0.67 %
Popular, Inc. Financial Supplement
to Third Quarter 2011 Earnings Release Table F - Breakdown
of Other Service Fees (Unaudited) Quarters
ended Variance Variance September 30, June 30, September 30, 3Q
2011 vs. Q3 2011 vs. (In thousands) 2011 2011
2010 2Q 2011 Q3 2010 Other service fees: Debit card
fees $ 13,075 $ 13,795 $ 27,711 $ (720 ) $ (14,636 ) Insurance fees
13,785 12,208 11,855 1,577 1,930 Credit card fees and discounts
13,738 11,792 24,382 1,946 (10,644 ) Sale and administration of
investment products 9,915 7,657 11,379 2,258 (1,464 ) Mortgage
servicing fees, net of fair value adjustments 2,120 2,269 1,306
(149 ) 814 Trust fees 4,006 4,110 3,534 (104 ) 472 Processing fees
1,684 1,740 15,258 (56 ) (13,574 ) Other fees 4,341
4,736 5,397 (395 )
(1,056 ) Total other service fees $ 62,664
$ 58,307 $ 100,822 $ 4,357
$ (38,158 ) Nine months ended September 30,
September 30, Variance (In thousands) 2011 2010
2011 vs. 2010
Other service fees: Debit card fees $ 39,795 $ 83,480
$ (43,685 ) Insurance fees 37,919 34,929 2,990 Credit card fees and
discounts 36,106 73,692 (37,586 ) Sale and administration of
investment products 24,702 28,791 (4,089 ) Mortgage servicing fees,
net of fair value adjustments 10,649 15,487 (4,838 ) Trust fees
11,611 10,168 1,443 Processing fees 5,121 43,390 (38,269 ) Other
fees 13,720 15,930 (2,210
) Total
other service fees $ 179,623 $ 305,867 $
(126,244 )
Popular, Inc. Financial Supplement to Third
Quarter 2011 Earnings Release Table G - Loans and
Deposits (Unaudited)
Loans - Ending Balances Variance (in thousands)
September 30,2011
June 30,2011
September 30,2010
Q3 2011 vs.Q2 2011
Q3 2011 vs.Q3 2010
Loans not covered under FDIC loss sharing agreements: Commercial $
10,588,919 $ 10,736,333 $ 11,719,127 $ (147,414 ) $ (1,130,208 )
Construction 358,060 393,759 1,299,929 (35,699 ) (941,869 ) Lease
financing 571,068 586,056 613,560 (14,988 ) (42,492 ) Mortgage
5,466,503 5,347,512 4,750,068 118,991 716,435 Consumer
3,689,336 3,594,034 3,758,743
95,302 (69,407 ) Total
non-covered loans held-in-portfolio $ 20,673,886 $ 20,657,694 $
22,141,427 $ 16,192 $ (1,467,541 ) Loans covered under FDIC loss
sharing agreements 4,512,423 4,616,575
4,953,195 (104,152 )
(440,772 ) Total loans held-in-portfolio $ 25,186,309
$ 25,274,269 $ 27,094,622 $ (87,960 )
(1,908,313 ) Loans held-for-sale: Commercial $ 24,191 $ 57,998 $
5,409 $ (33,807 ) $ 18,782 Construction 234,336 340,687 540
(106,351 ) 233,796 Mortgage 110,250
110,361 109,139 (111 )
1,111 Total loans held-for-sale 368,777
509,046 115,088 (140,269 )
253,689 Total loans $ 25,555,086
$ 25,783,315 $ 27,209,710 $ (228,229 ) $
(1,654,624 )
Deposits - Ending Balances
Variance (In thousands)
September 30,2011
June 30,2011
September 30,2010
Q3 2011 vs.Q2 2011
Q3 2011 vs.Q3 2010
Demand deposits [1] $ 6,149,514 $ 6,285,171 $ 6,023,732 $ (135,657
) $ 125,782 Savings, NOW and money market deposits (non-brokered)
10,787,782 10,724,099 10,328,457 63,683 459,325 Savings, NOW and
money market deposits (brokered) 100,002 50,000 - 50,002 100,002
Time deposits (non-brokered) 8,005,247 8,179,689 8,873,350 (174,442
) (868,103 ) Time deposits (brokered CDs) 2,910,795
2,721,470 2,514,505
189,325 396,290 Total deposits $
27,953,340 $ 27,960,429 $ 27,740,044 $ (7,089
) $ 213,296 [1] Includes interest and non-interest
bearing deposits.
Popular, Inc. Financial
Supplement to Third Quarter 2011 Earnings Release Table H -
Non-Performing Assets (Unaudited)
Variance (Dollars in thousands)
September 30,2011
As a percentage of loans HIP by category
June 30,2011
As a percentage of loans HIP by category
September 30,2010
As a percentage of loans HIP by category
Q3 2011 vs.Q2 2011
Q3 2011 vs.Q3 2010
Commercial $ 872,581 8.2 % $ 784,587 7.3 % $ 784,304 6.7 % $ 87,994
$ 88,277 Construction 187,914 52.5 198,235 50.3 818,186 62.9
(10,321 ) (630,272 ) Lease financing 4,194 0.7 4,457 0.8 6,478 1.1
(263 ) (2,284 ) Mortgage
617,723
11.3
587,987
11.0 669,175 14.1
29,736
(51,452
) Consumer 49,259 1.3
49,424 1.4 65,906
1.8 (165 ) (16,647 )
Total non-performing loans
held-in-portfolio, excluding covered loans
1,731,671
8.4 %
1,624,690
7.9 % 2,344,049 10.6 %
106,981
(612,378
) Non-performing loans held-for-sale [1] 259,776 399,869 - (140,093
) 259,776
Other real estate owned (“OREO”),
excluding covered OREO
175,785
162,419 168,823
13,366
6,962
Total non-performing assets, excluding
covered assets
2,167,232
2,186,978
2,512,872
(19,746
)
(345,640
) Covered loans and OREO 86,301
89,782
110,047
(3,481
) (23,746 ) Total non-performing assets $
2,253,533
$
2,276,760
$ 2,622,919
$
(23,227
) $
(369,386
)
Ratios excluding covered loans:
Non-performing loans held-in-portfolio to
loans held-in-portfolio
8.38
%
7.86 % 10.59 %
Allowance for loan losses to loans
held-in-portfolio
3.35 3.34 5.62
Allowance for loan losses to
non-performing loans, excluding held-for-sale
39.99 42.45
53.07
Ratios including covered loans:
Non-performing loans held-in-portfolio to
loans held-in-portfolio
6.92
%
6.49
% 8.85 %
Allowance for loan losses to loans
held-in-portfolio
3.07 2.95 4.59 Allowance for loan losses to non-performing loans,
excluding held-for-sale 44.35
45.55
51.88
[1] Non-performing loans held-for-sale as of September 30,
2011 consisted of $234 million in construction loans, $24 million
in commercial loans and $1 million in mortgage loans.
Popular, Inc. Financial Supplement to Third
Quarter 2011 Earnings Release Table I - Activity in
Non-performing Loans (Unaudited)
Commercial loans held-in-portfolio: Quarter ended Quarter
ended Quarter ended September 30, 2011 September 30, 2011 September
30, 2011 (In thousands) BPPR BPNA Popular,
Inc. Beginning Balance NPLs - June 30, 2011 $ 557,421 $ 227,166 $
784,587 Plus: New non-performing loans 197,365 68,810 266,175
Advances on existing non-performing loans 10,037 226 10,263 Less:
Non-performing loans transferred to OREO (2,171 ) (4,604 ) (6,775 )
Non-performing loans charged-off (58,510 ) (36,055 ) (94,565 )
Loans returned to accrual status / loan collections
(51,205 ) (35,899 ) (87,104 ) Ending
balance NPLs - September 30, 2011 $ 652,937 $
219,644 $ 872,581
Construction loans held-in-portfolio: Quarter ended Quarter
ended Quarter ended September 30, 2011 September 30, 2011 September
30, 2011 (In thousands) BPPR BPNA Popular,
Inc. Beginning Balance NPLs - June 30, 2011 $ 58,691 $ 139,544 $
198,235 Plus: New non-performing loans 14,324 7,829 22,153 Advances
on existing non-performing loans 48 101 149 Less: Non-performing
loans transferred to OREO - (2,824 ) (2,824 ) Non-performing loans
charged-off (563 ) (8,554 ) (9,117 ) Loans returned to accrual
status / loan collections (7,529 )
(13,153 ) (20,682 ) Ending balance NPLs - September
30, 2011 $ 64,971 $ 122,943 $
187,914
Commercial loans
held-in-portfolio: Quarter ended Quarter ended Quarter ended
June 30, 2011 June 30, 2011 June 30, 2011 (In thousands)
BPPR BPNA Popular, Inc. Beginning Balance NPLs -
March 31, 2011 $ 526,930 $ 225,408 $ 752,338 Plus: New
non-performing loans 111,545 75,263 186,808 Advances on existing
non-performing loans - - - Less: Non-performing loans transferred
to OREO (2,403 ) (6,958 ) (9,361 ) Non-performing loans charged-off
(41,532 ) (32,005 ) (73,537 ) Loans returned to accrual status /
loan collections (37,119 ) (34,542 )
(71,661 ) Ending balance NPLs - June 30, 2011
$ 557,421 $ 227,166 $ 784,587
Construction loans held-in-portfolio: Quarter
ended Quarter ended Quarter ended June 30, 2011 June 30, 2011 June
30, 2011 (In thousands) BPPR BPNA Popular,
Inc. Beginning Balance NPLs - March 31, 2011 $ 57,176 $ 166,983 $
224,159 Plus: New non-performing loans 4,779 3,499 8,278 Advances
on existing non-performing loans 3,157 - 3,157 Less: Non-performing
loans transferred to OREO (3,780 ) (45 ) (3,825 ) Non-performing
loans charged-off (275 ) (6,441 ) (6,716 ) Loans returned to
accrual status / loan collections (2,366 )
(24,452 ) (26,818 ) Ending balance NPLs - June
30, 2011 $ 58,691 $ 139,544 $
198,235
Popular, Inc. Financial Supplement to Third Quarter 2011
Earnings Release Table J - Allowance for Credit Losses, Net
Charge-offs and Related Ratios (Unaudited)
Quarter ended Quarter ended Quarter ended September 30, June 30,
September 30, (Dollars in thousands) 2011 2011
2011 2011 2011 2011 2010
Non-covered loans Covered loans Total
Non-covered loans Covered loans Total Total
[1] Balance at beginning of period $ 689,678 $ 57,169 $ 746,847 $
727,346 $ 9,159 $ 736,505 $ 1,277,016 Provision for loan losses
150,703 25,573
176,276 95,712
48,605 144,317 215,013
840,381
82,742 923,123 823,058
57,764 880,822
1,492,029 Net loans charged-off (recovered):
Commercial BPPR 58,509 1,278 59,787 49,923 263 50,186 57,248
Commercial BPNA 22,892 - 22,892 32,005 - 32,005 43,047 Construction
BPPR (81 ) (1,500 ) (1,581 ) (5,944 ) - (5,944 ) 54,567
Construction BPNA 3,664 - 3,664 4,588 - 4,588 15,879 Lease
financing BPPR 401 - 401 632 - 632 990 Lease financing BPNA 25 - 25
125 - 125 989 Mortgage BPPR 7,560 65 7,625 7,151 - 7,151 5,102
Mortgage BPNA 6,086 - 6,086 4,030 - 4,030 17,388 Consumer BPPR
23,278 2,478 25,756 27,363 332 27,695 34,058 Consumer BPNA
12,841 -
12,841 13,507 -
13,507 18,767
135,175 2,321
137,496 133,380
595 133,975 248,035
Write-down related to loans transferred to loans held-for-sale
12,706 -
12,706 - -
- - Balance at end of period
$ 692,500 $ 80,421 $
772,921 $ 689,678 $ 57,169 $
746,847 $ 1,243,994 Ratios: Annualized net
charge-offs to average loans held-in-portfolio 2.64
%
2.20
%
2.59
%
2.12
%
3.68 % Provision for loan losses to net charge-offs
1.11
x
1.28
x
0.72
x
1.08
x
0.87 x
[1] There was no allowance for loan losses
on covered loans as of September 30, 2010. The ratio of annualized
net charge-offs to average loans held-in-portfolio, excluding
covered loans, was 4.52% for the quarter ended September 30,
2010.
Nine months ended Nine months ended September 30,
September 30, (Dollars in thousands) 2011 2011
2011 2010 Non-covered loans
Covered loans Total Total [1] Balance at beginning of
period $ 793,225 $ - $ 793,225 $ 1,261,204 Provision for loan
losses 306,177 89,735
395,912 657,471
1,099,402
89,735 1,189,137
1,918,675 Net loans charged-off (recovered):
Commercial BPPR 146,960 3,248 150,208 121,785 Commercial BPNA
88,195 - 88,195 128,765 Construction BPPR 1,996 2,845 4,841 112,701
Construction BPNA 13,399 - 13,399 62,739 Lease financing BPPR 2,211
- 2,211 5,363 Lease financing BPNA 203 - 203 3,641 Mortgage BPPR
22,388 65 22,453 14,543 Mortgage BPNA 10,686 - 10,686 61,471
Consumer BPPR 79,055 3,156 82,211 100,026 Consumer BPNA
42,910 -
42,910 63,647
408,003 9,314
417,317 674,681 Recovery
related to loans transferred to loans held-for-sale
(1,101 )
-
(1,101 ) - Balance
at end of period $ 692,500 $ 80,421
$ 772,921 $ 1,243,994
Ratios: Annualized net charge-offs to average loans
held-in-portfolio 2.65
%
2.21
%
3.54
%
Provision for loan losses to net charge-offs 0.75
x
0.95
x
0.97
x
[1] There was no allowance for loan losses
on covered loans as of September 30, 2010. The ratio of annualized
net charge-offs to average loans held-in-portfolio, excluding
covered loans, was 3.98% for the nine months ended September 30,
2010.
Popular,
Inc. Financial Supplement to Third Quarter 2011 Earnings
Release Table K - Allowance for Loan Losses - Breakdown of
general and specific reserves - CONSOLIDATED (Unaudited)
September 30, 2011 (Dollars in thousands) Commercial
Construction Lease Financing Mortgage
Consumer Total
[2]
Specific ALLL $ 21,240 $ 1,335 $ 46 $ 28,192 $ 7,665 $ 58,478
Impaired loans [1] $ 519,827 $ 180,694 $ 6,568 $ 313,951 $ 147,053
$ 1,168,093 Specific ALLL to impaired loans [1] 4.09
%
0.74
%
0.70
%
8.98
%
5.21
%
5.01
%
General ALLL $ 383,907 $ 13,900 $ 4,703 $ 67,689 $ 163,823 $
634,022 Loans held-in-portfolio, excluding impaired loans [1] $
10,069,092 $ 177,366 $ 564,500 $ 5,152,552 $ 3,542,283 $ 19,505,793
General ALLL to loans held-in-portfolio, excluding impaired loans
[1] 3.81
%
7.84
%
0.83
%
1.31
%
4.62
%
3.25
%
Total ALLL $ 405,147 $ 15,235 $ 4,749 $ 95,881 $ 171,488 $ 692,500
Total non-covered loans held-in-portfolio [1] $ 10,588,919 $
358,060 $ 571,068 $ 5,466,503 $ 3,689,336 $ 20,673,886 ALLL to
loans held-in-portfolio [1] 3.83
%
4.25
%
0.83
%
1.75
%
4.65
%
3.35
%
[1] Excludes covered loans acquired on the
Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the
Westernbank FDIC-assisted transaction. As of September 30, 2011,
the general allowance on the covered loans amounted to $79 million
while the specific reserve amounted to $1 million.
June
30, 2011 (Dollars in thousands) Commercial
Construction Lease Financing Mortgage Consumer
Total
[2]
Specific ALLL $ 7,755 $ 386 $ - $ 11,665 $ - $ 19,806 Impaired
loans [1] $ 486,007 $ 199,919 $ - $ 205,753 $ - $ 891,679 Specific
ALLL to impaired loans [1] 1.60
%
0.19
%
-
%
5.67
%
-
%
2.22
%
General ALLL $ 404,010 $ 19,399 $ 5,770 $ 66,307 $ 174,386 $
669,872 Loans held-in-portfolio, excluding impaired loans [1] $
10,250,326 $ 193,840 $ 586,056 $ 5,141,759 $ 3,594,034 $ 19,766,015
General ALLL to loans held-in-portfolio, excluding impaired loans
[1] 3.94
%
10.01
%
0.98
%
1.29
%
4.85
%
3.39
%
Total ALLL $ 411,765 $ 19,785 $ 5,770 $ 77,972 $ 174,386 $ 689,678
Total non-covered loans held-in-portfolio [1] $ 10,736,333 $
393,759 $ 586,056 $ 5,347,512 $ 3,594,034 $ 20,657,694 ALLL to
loans held-in-portfolio [1] 3.84
%
5.02
%
0.98
%
1.46
%
4.85
%
3.34
%
[1] Excludes covered loans acquired on the
Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the
Westernbank FDIC-assisted transaction. As of June 30, 2011, the
general allowance on the covered loans amounted to $56 million
while the specific reserve amounted to $1 million.
Variance September 30, 2011 versus June 30, 2011 (Dollars in
thousands) Commercial Construction
Lease Financing Mortgage Consumer Total
Specific ALLL $ 13,485 $ 949 $ 46 $ 16,527 $ 7,665 $ 38,672
Impaired loans $ 33,820 $ (19,225 ) $ 6,568 $ 108,198 $ 147,053 $
276,414
General ALLL $ (20,103 ) $ (5,499 ) $ (1,067 ) $ 1,382 $ (10,563 )
$ (35,850 ) Loans held-in-portfolio, excluding impaired loans $
(181,234 ) $ (16,474 ) $ (21,556 ) $ 10,793 $ (51,751 ) $ (260,222
)
Total ALLL
$ (6,618 ) $ (4,550 ) $ (1,021 ) $ 17,909 $ (2,898 ) $ 2,822 Total
non-covered loans held-in-portfolio $ (147,414 ) $ (35,699 ) $
(14,988 ) $ 118,991 $ 95,302 $ 16,192
September 30, 2010 (Dollars in
thousands) Commercial Construction
Lease Financing Mortgage Consumer Total
[2]
Specific ALLL $ 107,318 $ 182,134 $ - $ 62,039 $ - $ 351,491
Impaired loans [1] $ 621,557 $ 794,716 $ - $ 309,840 $ - $
1,726,113 Specific ALLL to impaired loans [1] 17.27 %
22.92 % -
%
20.02 % -
%
20.36 % General ALLL $ 405,053 $ 125,454 $ 14,302 $
112,641 $ 235,053 $ 892,503 Loans held-in-portfolio, excluding
impaired loans [1] $ 11,097,570 $ 505,213 $ 613,560 $ 4,440,228 $
3,758,743 $ 20,415,314 General ALLL to loans held-in-portfolio,
excluding impaired loans [1] 3.65 %
24.83 % 2.33 % 2.54 %
6.25 % 4.37 % Total ALLL $ 512,371 $ 307,588 $ 14,302
$ 174,680 $ 235,053 $ 1,243,994 Total non-covered loans
held-in-portfolio [1] $ 11,719,127 $ 1,299,929 $ 613,560 $
4,750,068 $ 3,758,743 $ 22,141,427 ALLL to loans held-in-portfolio
[1] 4.37 % 23.66 % 2.33 %
3.68 % 6.25 % 5.62 %
[1] Excludes covered loans acquired on the
Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the
Westernbank FDIC-assisted transaction. As of September 30, 2010,
there was no allowance on these covered loans.
Popular, Inc. Financial Supplement to Third
Quarter 2011 Earnings Release Table L - Allowance for Loan
Losses - Breakdown of general and specific reserves - PUERTO RICO
OPERATIONS (Unaudited)
As of September 30, 2011 Puerto Rico (In
thousands) Commercial Construction Mortgage
Lease financing Consumer Total
Allowance
for credit losses: Specific ALLL non-covered loans $ 20,941 $
569 $ 16,682 $ 46 $ 7,546 $ 45,784 General ALLL non-covered loans
224,807 4,438
48,747 3,858
115,954 397,804 ALLL - non-covered
loans 245,748 5,007
65,429 3,904
123,500 443,588 Specific ALLL
covered loans 1,634 - - - - 1,634 General ALLL covered loans
61,840 9,926 2,296
- 4,725
78,787 ALLL - covered loans 63,474
9,926 2,296
- 4,725 80,421
Total ALLL $ 309,222 $ 14,933
$ 67,725 $ 3,904 $ 128,225
$ 524,009
Loans held-in-portfolio:
Impaired non-covered loans $ 378,180 $ 61,750 $ 282,402 $ 6,568 $
142,438 $ 871,338 Non covered loans held-in-portfolio, excluding
impaired loans 6,035,309 102,164
4,350,938 546,557
2,822,057 13,857,025
Non-covered loans held-in-portfolio 6,413,489
163,914 4,633,340
553,125 2,964,495
14,728,363 Impaired covered loans 2,675 - - - - 2,675
Covered loans held-in-portfolio, excluding impaired loans
2,571,401 599,990
1,217,434 - 120,923
4,509,748 Covered loans
held-in-portfolio 2,574,076
599,990 1,217,434 -
120,923 4,512,423
Total loans held-in-portfolio $ 8,987,565 $
763,904 $ 5,850,774 $ 553,125
$ 3,085,418 $ 19,240,786
As of June 30, 2011 Puerto Rico (In thousands) Commercial
Construction Mortgage Lease financing
Consumer Total
Allowance for credit losses: Specific
ALLL non-covered loans $ 7,704 $ 116 $ 8,226 $ - $ - $ 16,046
General ALLL non-covered loans 219,429
6,957 46,914 5,045
120,512 398,857
ALLL - non-covered loans 227,133
7,073 55,140 5,045
120,512 414,903 Specific
ALLL covered loans 1,000 - - - - 1,000 General ALLL covered loans
46,829 9,291
35 - 14
56,169 ALLL - covered loans
47,829 9,291 35
- 14 57,169
Total ALLL $ 274,962 $ 16,364
$ 55,175 $ 5,045 $ 120,526
$ 472,072
Loans held-in-portfolio:
Impaired non-covered loans $ 346,893 $ 65,885 $ 195,650 $ - $ - $
608,428 Non covered loans held-in-portfolio, excluding impaired
loans 6,056,048 96,156
4,305,288 564,289
2,846,428 13,868,209 Non-covered
loans held-in-portfolio 6,402,941
162,041 4,500,938
564,289 2,846,428
14,476,637 Impaired covered loans 3,626 - - - - 3,626
Covered loans held-in-portfolio, excluding impaired loans
2,592,139 645,160
1,238,228 - 137,422
4,612,949 Covered loans
held-in-portfolio 2,595,765
645,160 1,238,228 -
137,422 4,616,575
Total loans held-in-portfolio $ 8,998,706 $
807,201 $ 5,739,166 $ 564,289
$ 2,983,850 $ 19,093,212
Variance September 30,
2011 versus June 30, 2011 (In thousands) Commercial
Construction Mortgage Lease financing Consumer
Total
Allowance for credit losses: Specific ALLL
non-covered loans $ 13,237 $ 453 $ 8,456 $ 46 $ 7,546 $ 29,738
General ALLL non-covered loans 5,378
(2,519 ) 1,833 (1,187 )
(4,558 ) (1,053 ) ALLL - non-covered
loans 18,615 (2,066 )
10,289 (1,141 ) 2,988
28,685 Specific ALLL covered loans 634
- - - - 634 General ALLL covered loans 15,011
635 2,261 -
4,711 22,618 ALLL
- covered loans 15,645 635
2,261 -
4,711 23,252 Total ALLL
$
34,260
$
(1,431 )
$
12,550
$
(1,141 )
$
7,699
$
51,937
Loans held-in-portfolio: Impaired non-covered
loans $ 31,287 $ (4,135 ) $ 86,752 $ 6,568 $ 142,438 $ 262,910 Non
covered loans held-in-portfolio, excluding impaired loans
(20,739 ) 6,008 45,650
(17,732 ) (24,371 )
(11,184 ) Non-covered loans held-in-portfolio
10,548 1,873 132,402
(11,164 ) 118,067
251,726 Impaired covered loans (951 ) - - - - (951 )
Covered loans held-in-portfolio, excluding impaired loans
(20,738 ) (45,170 ) (20,794 )
- (16,499 )
(103,201 ) Covered loans held-in-portfolio (21,689 )
(45,170 ) (20,794 ) -
(16,499 ) (104,152 ) Total loans
held-in-portfolio $ (11,141 ) $ (43,297 ) $
111,608 $ (11,164 ) $ 101,568 $
147,574
Popular, Inc. Financial Supplement to Third Quarter 2011
Earnings Release Table M - Allowance for Loan Losses -
Breakdown of general and specific reserves - U.S. MAINLAND
OPERATIONS (Unaudited) As of September 30,
2011 U.S. Mainland (In thousands) Commercial
Construction Mortgage Lease financing Consumer
Total
Allowance for credit losses: Specific ALLL $
299 $ 766 $ 11,510 $ - $ 119 $ 12,694 General ALLL
159,100 9,462 18,942
845 47,869
236,218 Total ALLL 159,399
10,228 30,452
845 47,988 248,912
Loans held-in-portfolio: Impaired loans 141,647
118,944 31,549 - 4,615 296,755 Loans held-in-portfolio, excluding
impaired loans 4,033,783 75,202
801,614 17,943
720,226 5,648,768 Total
loans held-in-portfolio $ 4,175,430 $ 194,146
$ 833,163 $ 17,943 $
724,841 $ 5,945,523 As of June
30, 2011 U.S. Mainland (In thousands) Commercial
Construction Mortgage Lease financing Consumer
Total
Allowance for credit losses: Specific ALLL $ 51
$ 270 $ 3,439 $ - $ - $ 3,760 General ALLL 184,581
12,442 19,393
725 53,874
271,015 Total ALLL 184,632
12,712 22,832 725
53,874 274,775
Loans held-in-portfolio: Impaired loans 139,114 134,034
10,103 - - 283,251 Loans held-in-portfolio, excluding impaired
loans 4,194,278 97,684
836,471 21,767
747,606 5,897,806 Total loans
held-in-portfolio $ 4,333,392 $ 231,718
$ 846,574 $ 21,767 $ 747,606
$ 6,181,057
Variance September 30, 2011 versus June 30,
2011 (In thousands) Commercial Construction
Mortgage Lease financing Consumer Total
Allowance for credit losses: Specific ALLL $ 248 $ 496 $
8,071 $ - $ 119 $ 8,934 General ALLL (25,481 )
(2,980 ) (451 ) 120
(6,005 ) (34,797 ) Total ALLL
(25,233 ) (2,484 ) 7,620
120 (5,886 )
(25,863 )
Loans held-in-portfolio: Impaired loans 2,533
(15,090 ) 21,446 - 4,615 13,504 Loans held-in-portfolio, excluding
impaired loans (160,495 ) (22,482 )
(34,857 ) (3,824 )
(27,380 ) (249,038 ) Total loans held-in-portfolio
$ (157,962 ) $ (37,572 ) $ (13,411 ) $
(3,824 ) $ (22,765 ) $ (235,534 )
Popular, Inc. Financial Supplement to Third
Quarter 2011 Earnings Release Table N - Reconciliation to
GAAP Financial Measures (Unaudited) (In
thousands, except share or per share information) September
30, 2011 June 30, 2011 September 30, 2010 Total
stockholders’ equity $ 4,012,601 $ 3,964,068 $ 4,120,131 Less:
Preferred stock (50,160 ) (50,160 ) (50,160 ) Less: Goodwill
(648,353 ) (647,318 ) (645,944 ) Less: Other intangibles
(64,212 ) (54,186 ) (60,438 )
Total tangible common equity $ 3,249,876 $
3,212,404 $ 3,363,589 Total assets $
38,178,603 $ 39,013,342 $ 40,725,284 Less: Goodwill (648,353 )
(647,318 ) (645,944 ) Less: Other intangibles (64,212
) (54,186 ) (60,438 ) Total tangible
assets $ 37,466,038 $ 38,311,838
$ 40,018,902 Tangible common equity to tangible assets 8.67
%
8.38
%
8.41
%
Common shares outstanding at end of period 1,024,475,398
1,023,977,895 1,022,686,418 Tangible book value per common share
$ 3.17 $
3.14
$ 3.29 (In thousands)
September 30, 2011 June 30, 2011 September 30, 2010
Common stockholders’ equity $ 3,962,441 $ 3,913,908 $ 4,069,971
Less: Unrealized gains on available-for-sale securities, net of tax
[1] (209,120 ) (188,171 ) (195,564 ) Less: Disallowed deferred tax
assets [2] (222,601 ) (271,139 ) (220,683 ) Less: Intangible
assets: Goodwill (648,353 ) (647,318 ) (645,944 ) Other disallowed
intangibles (31,272 ) (22,596 ) (30,045 ) Less: Aggregate adjusted
carrying value of all non-financial equity investments (1,525 )
(1,540 ) (1,590 )
Add: Pension liability adjustment, net of
tax and accumulated net gains (losses) on cash flow hedges
[3] 125,004 125,605
74,301 Total Tier 1 common equity $ 2,974,574
$ 2,908,749 $ 3,050,446
[1] In accordance with regulatory risk-based capital guidelines,
Tier 1 capital excludes net unrealized gains (losses) on
available-for-sale debt securities and net unrealized gains on
available-for-sale equity securities with readily determinable fair
values. In arriving at Tier 1 capital, institutions are required to
deduct net unrealized losses on available-for-sale equity
securities with readily determinable fair values, net of tax.
[2] Approximately $126 million of the Corporation’s $342
million of net deferred tax assets at September 30, 2011 (June 30,
2011 - $96 million and $362 million, respectively; September 30,
2010 - $134 million and $330 million, respectively), were included
without limitation in regulatory capital pursuant to the risk-based
capital guidelines, while approximately $223 million of such assets
at September 30, 2011 (June 30, 2011 - $271 million; September 30,
2010 - $221 million) exceeded the limitation imposed by these
guidelines and, as “disallowed deferred tax assets”, were deducted
in arriving at Tier 1 capital. The remaining $7 million of the
Corporation’s other net deferred tax assets at September 30, 2011
(June 30, 2011 - $5 million; September 30, 2010 - $25 million)
represented primarily the following items (a) the deferred tax
effects of unrealized gains and losses on available-for-sale debt
securities, which are permitted to be excluded prior to deriving
the amount of net deferred tax assets subject to limitation under
the guidelines; (b) the deferred tax asset corresponding to the
pension liability adjustment recorded as part of accumulated other
comprehensive income; and (c) the deferred tax liability associated
with goodwill and other intangibles. [3] The Federal Reserve
Bank has granted interim capital relief for the impact of pension
liability adjustment.
Popular, Inc. Financial Supplement to Third Quarter 2011
Earnings Release Table O - Financial Information -
Westernbank Covered Loans (Unaudited)
Quarter ended (In thousands) September 30, 2011 June
30, 2011 Variance
Interest income:
Interest income on covered loans, except
for discount accretion on ASC 310-20 covered loans
$ 102,308 $ 106,762 $ (4,454 ) Discount accretion on ASC 310-20
covered loans 3,501 9,135
(5,634 ) Total interest income 105,809
115,897 (10,088 )
FDIC
loss share (expense) income: (Amortization) accretion of
indemnification asset (22,167 ) 6,661 (28,828 ) 80% mirror
accounting on discount accretion on ASC 310-20 loans (2,801 )
(7,308 ) 4,507 80% mirror accounting on provision for loan losses
20,458 38,884 (18,426 ) Other (851 )
433 (1,284 ) Total FDIC loss share (expense)
income (5,361 ) 38,670
(44,031 ) Fair value change in equity appreciation
instrument - 578 (578 ) Other non-interest income (6
) 1,012 (1,018 ) Total revenues
100,442 156,157
(55,715 ) Provision for loan losses
25,573
48,605
(23,032
) Total revenues less provision for loan losses $
74,869
$ 107,552 $
(32,683
)
Quarterly average assets:
Quarter ended (In millions) September 30, 2011 June 30, 2011
Variance Covered loans $ 4,557 $ 4,686 $ (129 ) FDIC loss
share asset 1,896 2,327 (431 ) Note issued to the FDIC 1,057 1,859
(802 )
Activity in the carrying amount and
accretable yield of covered loans accounted for under ASC
310-30
Quarter Quarter September 30, 2011 June 30,
2011 (In thousands) Accretable yield Carrying amount
of loans Accretable yield Carrying amount of loans
Beginning balance $ 1,616,919 $
4,265,065
$ 1,258,176 $
4,423,496
Accretion (96,418 ) 96,418 (100,185 ) 100,185 Change in expected
cash flows (23,936 ) 458,928 Collections
(243,678
)
(258,616
) Ending balance 1,496,565 4,117,805 1,616,919 4,265,065 Allowance
for loan losses - ASC 310-30 covered loans
(62,446 )
(48,257 ) Ending balance, net of allowance for loan losses
$ 1,496,565 $ 4,055,359 $
1,616,919 $ 4,216,808
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