Popular, Inc. (“the Corporation” or “Popular”) (NASDAQ: BPOP)
reported net income of $3.0 million for the quarter ended December
31, 2011, compared with net income of $27.5 million for the quarter
ended September 30, 2011, and a net loss of $227.1 million for the
quarter ended December 31, 2010.
The Corporation’s net income for the year ended December 31,
2011 amounted to $151.3 million, compared with $137.4 million in
2010.
Refer to the accompanying “Financial Supplement to Fourth
Quarter 2011 Earnings Release” for detailed financial information
and key performance ratios.
Mr. Richard L. Carrión, Chairman of the Board and Chief
Executive Officer, said, “The year 2011 was a turnaround year for
us. We were able to achieve operational profitability for the first
time since 2006 by maintaining strong margins, producing strong and
stable top line revenue, and continuing to reduce credit costs. We
believe we can build on these results and make further progress in
2012. Based on our current credit trends and our current economic
outlook for Puerto Rico and the U.S., we believe that we can
continue to reduce credit costs and achieve net income of between
$185 million and $200 million during 2012.”
Earnings Highlights – Fourth Quarter
2011 compared to Third Quarter 2011
Quarter ended $ Variance
Quarter ended (Dollars in thousands)
December 31,2011
September 30,2011
Q4 vs. Q32011
December 31,2010
Net interest income $344,780 $369,311 ($24,531 ) $ 354,575
Provision for loan losses – non-covered loans 123,908 150,703
(26,795 ) 354,409 Provision for loan losses – covered loans [1]
55,900 25,573 30,327 -
Net interest income after provision for loan losses 164,972
193,035 (28,063 ) 166 Non-interest income 149,359 122,390 26,969
105,606 Operating expenses 311,093 282,355
28,738 344,677 Income before income tax
3,238 33,070 (29,832 ) (238,905 ) Income tax expense (benefit)
263 5,537 (5,274 ) (11,764 ) Net
income (loss) $2,975 $27,533 ($24,558 )
($227,141 ) Net income (loss) applicable to common stock
$2,044 $26,602 ($24,558 )
($227,451 ) Net income (loss) per common share - basic and diluted
$ - $0.03 ($0.03 ) ($0.22 ) [1]
Covered loans represent loans acquired in the Westernbank
FDIC-assisted transaction that are covered under FDIC loss sharing
agreements.
Net interest income
- The net interest margin was 4.30% for
the fourth quarter of 2011, compared with 4.45% for the third
quarter of 2011. The decrease in net interest income of $24.5
million for the fourth quarter of 2011, compared with the third
quarter of 2011, was principally due to a reduction in loan yields,
mainly in mortgage loans and the covered loan portfolio, and to a
lower volume of investment and trading securities, partially offset
by a reduction in the cost of deposits and the volume of
borrowings. 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 derived from
covered loans by $17.4 million, or 124 basis points. This reduction
can be attributed primarily to increases in cash flows, assessed in
prior periods, for certain loan pools that have a shorter average
life than the remaining portfolio. The additional cash flows
generated a benefit that based on the pool’s cash flow expectations
mainly impacted the results for the second and third quarters of
2011.
- The decline in interest income derived
from mortgage loans was $8.2 million, or a reduction in yield of 69
basis points, which was mostly influenced by the partial reversal
of the interest receivable on delinquent residential mortgage loans
insured by FHA or guaranteed by the VA that are over 18-months past
due. The principal repayment on these loans is fully insured.
- The Corporation’s interest expense on
deposits decreased by $9.8 million, while their cost went down 17
basis points, reaching 0.99% for the fourth quarter of 2011 and
reflecting the continuing progress in repricing the Corporation’s
deposit base.
- Interest expense related to borrowings
also declined by $4.1 million mainly due to the full repayment of
the note payable to the FDIC, which was issued as part of the
Westernbank FDIC-assisted transaction.
Provision for loan losses
- The provision for loan losses for the
quarter ended December 31, 2011 increased by $3.5 million compared
with the third quarter of 2011. There was an increase of $30.3
million in the provision for loan losses on the covered loans,
partially offset by a decrease of $26.8 million in the provision
for loan losses on the non-covered loans. The increase in the
provision for loan losses on the covered loan portfolio was
impacted mainly by two particular credit relationships accounted
for pursuant to ASC 310-20 which required specific reserves of
$28.2 million during the fourth quarter, of which $10.9 million was
charged-off during the same quarter. The decrease related to
non-covered loans was due to lower provision for loan losses in the
Banco Popular de Puerto Rico (“BPPR”) reportable segment by $42.9
million, partially offset by an increase in the Banco Popular North
America (“BPNA”) reportable segment of $16.1 million. Refer to the
Credit Quality section for the main factors that influenced these
variances.
Non-interest income
- FDIC loss share income of $17.4 million
was recognized in the fourth quarter of 2011, compared with FDIC
loss share expense of $5.4 million for the third quarter of 2011.
Refer to Table O for financial information on the covered loans and
the composition of the FDIC loss share income. The increase in FDIC
loss share income was principally associated with the increase in
the provision for loan losses on covered loans.
- Adjustments to indemnity reserves on
loans sold or serviced impacted non-interest income with a net
unfavorable impact of $3.5 million (expense) during the fourth
quarter of 2011, compared with a net expense of $10.3 million for
the third quarter of 2011. The main drivers for the reduction of
$6.8 million in the expense was the net impact of (1) a reduction
of $4.4 million in the representation and warranty reserve
adjustment for the BPNA reportable segment since the Corporation
reached global settlements with two of the largest counterparties
and has seen reduced activity from the remaining parties; and (2) a
decrease of $5.8 million in the representation and warranties
reserve at the BPPR reportable segment as a result of refinement in
estimates based on historical claims and loss expectations,
partially offset by (3) an increase in the adjustment to the
reserve for residential mortgage loans serviced with recourse of
$3.4 million, which reflects lower expected prepayment rates on the
serviced portfolio.
- Other operating income increased by
$9.9 million mostly due to higher income from investments accounted
for under the equity method by approximately $4.3 million and gains
of $3.0 million on the sale of former bank premises in the Puerto
Rico operations, among the principal factors.
The above favorable variances in non-interest income were
partially offset by the following categories:
- Gains on the sale of investment
securities available-for-sale amounted to $2.8 million for the
fourth quarter of 2011, compared with $8.1 million for the third
quarter of 2011, driven by lower volume of securities sold.
- Net gain on sale of loans, including
valuation adjustments on loans held-for-sale, amounted to $16.1
million for the fourth quarter of 2011, compared with a net gain of
$20.3 million for the third quarter of 2011. The gains recognized
during the fourth quarter of 2011 were mainly from the
securitization of residential mortgage loans in Puerto Rico. The
results for the third quarter of 2011 included the gain on the sale
of commercial and construction loans, which contributed with a
favorable impact to non-interest income of $17.4 million during
that quarter.
- Other service fees decreased by $2.6
million, mostly due to lower debit fees associated in part with a
decrease in interchange fees due to the Durbin Amendment to the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
which was implemented in October 2011 and which limits
transactional fees. This reduction in other service fees was
partially offset by higher insurance fees in the fourth quarter of
2011, mostly as a result of an increase in contingent commissions
driven by business production for the year in the dwelling and
flood insurance businesses. Refer to Table F in the Financial
Supplement for a breakdown of other service fees.
Operating expenses
- Operating expenses increased by $28.7
million for the fourth quarter of 2011 compared with the third
quarter of 2011, principally due to the recognition in December
2011 of $15.6 million in pension costs related to employees that
were eligible and signed up for the retirement program. A total of
369 employees will retire effective January 31, 2012. Annual cost
savings from this reduction in headcount are estimated to be
approximately $15 million. Other categories of operating expenses
which had increases were business promotion expense by $4.6
million, mainly due to advertising campaigns related to credit
cards and client relationship marketing campaigns during the
holidays, as well as from marketing costs associated with the
continued BPNA rebranding initiative in Florida and California; and
other real estate expenses by $6.7 million, mainly from maintenance
costs related to repossessed construction projects. Refer to Table
B which provides a breakdown of operating expenses by main
categories.
Credit Quality
- Excluding covered loans, the allowance
for loan losses to loans held-in-portfolio ratio stood at 3.35% at
December 31, 2011, unchanged when compared with September 30, 2011.
The general and specific reserves amounted to $635 million and $56
million, respectively, as of December 31, 2011, compared with $634
million and $58 million, respectively, as of September 30, 2011.
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 $6 million from
September 30, 2011 to December 31, 2011, driven principally by an
increase in non-performing residential mortgage loans at the BPPR
reportable segment, mainly due to loans repurchased under recourse
arrangements, partially offset by a reduction in non-performing
construction loans held-in-portfolio at the BPPR and BPNA
reportable segments. The Corporation has reduced significantly its
construction loan portfolio; therefore, the level of problem loans
remaining at both reportable segments has declined, driven by the
resolution of existing exposures. Refer to Table I for the activity
in non-performing commercial and construction loans, excluding
covered loans and loans held-for-sale, for the fourth quarter of
2011.
- Excluding covered loans, net
charge-offs for the fourth quarter of 2011 declined by $9.1
million, compared with the quarter ended September 30, 2011. The
reduction was due to a decrease in net charge-offs in the BPPR
reportable segment by $11.4 million, mainly due to lower losses in
the BPPR commercial loan portfolio, partially offset by a slight
increase in the BPNA reportable segment of $2.2 million. There was
an increase of $9.1 million in the net charge-offs on the covered
loans, driven principally by one particular credit relationship
that was charged-off during the fourth quarter. Refer to Table J
for further information on the Corporation’s net charge-offs and
related ratios.
Refer to the section below for explanations on the main
variances.
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 $88.1
million for the fourth quarter of 2011, compared with $131.1
million for the third quarter of 2011. The decrease was
attributable to lower net charge-offs in the commercial, mortgage
and consumer loan portfolios, coupled with an improved outlook in
net charge-offs for the consumer loan portfolio due to better
macro-economic indicators. These improvements were partially offset
by higher reserve requirements for consumer loans restructured
under loss mitigation programs. In addition, $12.7 million of the
decrease 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 loan sale executed in September 2011.
- Annualized net charge-offs to average non-covered loans
held-in-portfolio ratio for the BPPR reportable segment decreased
35 basis points, from 2.49% for the quarter ended September 30,
2011 to 2.14% for the quarter ended December 31, 2011. The decrease
was driven by lower net charge-offs in the commercial, consumer and
mortgage loan portfolios.
- Non-performing loans of the BPPR reportable segment, excluding
loans held-for-sale and covered loans, amounted to $1.4 billion at
December 31, 2011, compared with $1.3 billion at September 30,
2011. Non-performing loans of the BPPR residential mortgage loan
portfolio increased by $69 million, mainly due to loan repurchases
under credit recourse arrangements. This increase was partially
offset by reductions in the non-performing commercial and
construction loans held-in-portfolio of $22 million and $11
million, respectively.
- 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 from September 30, 2011 to December
31, 2011 reflects a higher general reserve component for the
commercial and mortgage loan portfolios mostly driven by: (i)
higher loss trend mainly observed during the second half of the
year on the commercial loan portfolio and (ii) the deterioration in
the credit quality of the mortgage loan portfolio. These increases
were partially offset by a reduction in the general reserve for the
consumer loan portfolio primarily due to stable credit quality
performance, which was partially offset by higher specific reserve
requirements for consumer loans restructured under loss mitigation
programs.
BPNA Reportable Segment
- The provision for loan losses for the
BPNA reportable segment amounted to $35.8 million, or 75.0% of net
charge-offs, for the fourth quarter of 2011, compared with $19.6
million or 43.2% of net charge-offs for the third quarter of 2011.
The increase in the provision for loan losses in the BPNA
reportable segment was mainly due to lower release of reserves in
the fourth quarter of 2011 compared with the third quarter,
principally in the commercial loan portfolio.
- Annualized net charge-offs to average
loans held-in-portfolio ratio for the BPNA reportable segment
increased 27 basis points, from 3.00% for the quarter ended
September 30, 2011 to 3.27% for the quarter ended December 31,
2011. Net charge-offs present a slight increase mostly observed in
the commercial and consumer loan segments, partially offset by
lower levels in the mortgage loan portfolio. The increase in net
charge-offs in the commercial loan portfolio of $3.1 million was
the net effect of reduced commercial loan recoveries by $5.3
million and lower charge-offs of $2.2 million.
- Non-performing loans held-in-portfolio
of the BPNA reportable segment amounted to $367 million as of
December 31, 2011, compared with $395 million as of September 30,
2011. Non-performing construction loans declined $48 million, while
non-performing consumer loans declined $2 million. The reduction in
non-performing construction loans was mainly due to the resolution
of certain existing exposures. The non-performing consumer loan
portfolio continues to reflect a decreasing trend and signs of
stabilization in the U.S. operations. Non-performing commercial
loans increased by $22 million from September 30, 2011, driven
principally by one commercial loan relationship with an outstanding
balance of approximately $25 million as of December 31, 2011. This
particular commercial loan relationship was subject to a $2.3
million charge-off during the fourth quarter of 2011, and did not
require a valuation allowance as of year-end.
- 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 from September 30, 2011 to
December 31, 2011 reflects an overall decrease in the general
reserve component, partially offset by an increase in the specific
reserve for non-conventional mortgage loans restructured under loss
mitigation programs.
Financial Condition Highlights –
December 31, 2011 compared to September 30, 2011
- Total assets amounted to $37.3 billion
as of December 31, 2011, compared with $38.3 billion as of
September 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, amounted to
$5.8 billion as of December 31, 2011 and September 30, 2011.
- Total loans held-in-portfolio declined
$235 million from September 30, 2011 to December 31, 2011. Refer to
Table G for a breakdown by loan categories. The decline was mostly
in covered loans which declined by $164 million from September 30,
2011 to December 31, 2011, principally due to collections.
- Commercial and construction non-covered
loans held-in-portfolio decreased $101 million from September 30,
2011 to December 31, 2011, which consisted of a decline of $155
million in the BPNA reportable segment, partially offset by an
increase of $54 million in the Puerto Rico operations. The increase
in BPPR was mostly from the public and corporate sectors, while the
reduction in the BPNA reportable segment was principally due to
portfolio runoff of the discontinued lending business, loan
amortization and reclassification to other real estate exceeding
new and renewal originations. The decline in the consolidated
commercial and construction loan portfolio was offset by a greater
volume of mortgage loans held-in-portfolio in the Corporation’s
Puerto Rico operations, mainly due to loan repurchases under credit
recourse agreements.
- Deposits amounted to $27.9 billion as
of December 31, 2011, compared with $28.0 billion as of September
30, 2011. Table G presents a breakdown of deposits by major
categories.
- The Corporation’s borrowings amounted
to $4.3 billion as of December 31, 2011, compared with $5.3 billion
as of September 30, 2011. The decrease in borrowings was mostly
related to a reduction in principal of $714 million on the note
issued to the FDIC as it was fully repaid during the fourth
quarter.
- Stockholders’ equity was $3.9 billion
as of December 31, 2011, compared with $4.0 billion as of September
30, 2011. Refer to Table A for capital ratios and Table N for
Non-GAAP reconciliations.
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 Fourth Quarter 2011 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
Quarter ended Quarter ended
Quarter ended Year ended December 31, September 30, December 31,
December 31, December 31, 2011 2011
2010 2011 2010 Net income (loss) per common share:
Basic and diluted $0.00 $0.03 ($0.22 ) $0.14 ($0.06 )
Average common shares outstanding 1,022,741,800 1,021,660,038
1,021,527,855 1,021,793,932 885,154,040 Average common shares
outstanding - assuming dilution 1,022,741,800 1,021,660,038
1,021,527,855 1,022,894,962 885,154,040 Common shares outstanding
at end of period 1,025,904,567 1,024,475,398 1,022,727,802
1,025,904,567 1,022,727,802 Market value per common share
$1.39 $1.50 $3.14 $1.39 $3.14 Market Capitalization --- (In
millions) $1,426 $1,537 $3,211 $1,426 $3,211 Return on
average assets 0.03 % 0.29 % -2.29 % 0.40 % 0.36 % Return on
average common equity 0.21 % 2.81 % -23.51 % 4.01 % 4.37 %
Net interest margin [1] 4.30 % 4.45 % 4.10 % 4.34 % 3.79 %
Common equity per share $3.77 $3.87 $3.67 $3.77 $3.67
Tangible common book value per common share (non-GAAP) $3.08 $3.17
$2.98 $3.08 $2.98 Tangible common equity to tangible assets
(non-GAAP) 8.62 % 8.65 % 7.99 % 8.62 % 7.99 % Tier 1
risk-based capital [2]
15.97
% 15.79 % 14.52 %
15.97
% 14.52 % Total risk-based capital [2]
17.25
% 17.07 % 15.79 %
17.25
% 15.79 % Tier 1 leverage [2] 10.90 % 10.56 % 9.70 % 10.90 %
9.70 % Tier 1 common equity to risk-weighted assets
(non-GAAP) [2]
12.10
% 12.00 % 10.94 %
12.10
% 10.94 % [1] Not on a taxable equivalent basis. [2] Capital
ratios for the current quarter are estimated.
POPULAR, INC. Financial
Supplement to Fourth Quarter 2011 Earnings Release Table B -
Consolidated Statement of Operations (Unaudited) Quarter
ended Quarter ended Variance Quarter ended Year ended Year ended
December 31, September 30, Q4 2011 vs. December 31, December 31,
December 31, (In thousands, except per share information)
2011 2011 Q3 2011 2010 2011 2010
Interest income: Loans $ 399,523 $ 428,999 $ (29,476 ) $ 445,444 $
1,694,357 $ 1,676,734 Money market investments 837 886 (49 ) 1,058
3,596 5,384 Investment securities 46,758 51,085 (4,327 ) 53,092
203,941 238,210 Trading account securities 6,275
10,788 (4,513 )
7,605 35,607
27,918 Total interest income 453,393
491,758 (38,365 )
507,199 1,937,501
1,948,246 Interest expense: Deposits 56,068 65,868 (9,800 )
80,962 269,487 350,881 Short-term borrowings 13,780 13,744 36
14,522 55,258 60,278 Long-term debt 38,765
42,835 (4,070 )
57,140 180,764 242,222
Total interest expense 108,613
122,447 (13,834 ) 152,624
505,509 653,381
Net interest income 344,780 369,311 (24,531 ) 354,575 1,431,992
1,294,865 Provision for loan losses 179,808
176,276 3,532
354,409 575,720
1,011,880 Net interest income after provision for loan
losses 164,972 193,035
(28,063 ) 166
856,272 282,985 Service charges on
deposit accounts 46,162 46,346 (184 ) 45,938 184,940 195,803 Other
service fees 60,097 62,664 (2,567 ) 71,637 239,720 377,504 Net gain
(loss) on sale and valuation adjustments of investment securities
2,800 8,134 (5,334 ) (218 ) 10,844 3,992 Trading account profit
2,610 2,912 (302 ) 8,303 5,897 16,404 Net gain (loss) on sale of
loans, including valuation adjustments on loans held-for-sale
16,135 20,294 (4,159 ) 1,478 30,891 15,874 Adjustments (expense) to
indemnity reserves on loans sold (3,481 ) (10,285 ) 6,804 (34,511 )
(33,068 ) (72,013 )
FDIC loss share income (expense)
17,447 (5,361 ) 22,808 (3,046 ) 66,791 (25,751 ) Fair value change
in equity appreciation instrument - - - 7,520 8,323 42,555 Gain on
sale of processing and technology business - - - - - 640,802 Other
operating income 7,589 (2,314 )
9,903 8,505
45,939 93,023 Total non-interest income
149,359 122,390
26,969 105,606
560,277 1,288,193 Operating expenses:
Personnel costs Salaries 77,074 77,455 (381 ) 77,206 305,018
352,139 Commissions, incentives and other bonuses 10,873 11,630
(757 ) 12,167 44,421 53,837 Pension, postretirement and medical
insurance 26,039 11,385 14,654 14,838 62,219 61,294 Other personnel
costs, including payroll taxes 10,561
11,254 (693 ) 9,818
41,712 46,928
Total personnel costs 124,547 111,724 12,823 114,029 453,370
514,198 Net occupancy expenses 25,891 25,885 6 29,844 102,319
116,203 Equipment 10,526 10,517 9 11,620 43,840 85,851 Other taxes
12,899 12,391 508 11,973 51,885 50,608 Professional fees 50,019
48,756 1,263 56,607 194,942 166,105 Communications 5,917 6,800 (883
) 7,277 27,115 38,905 Business promotion 19,225 14,650 4,575 16,912
55,067 46,671 FDIC deposit insurance 25,088 23,285 1,803 17,750
93,728 67,644 Loss on early extinguishment of debt 56 109 (53 )
12,361 8,693 38,787 Other real estate owned (OREO) 9,893 3,234
6,659 20,467 21,778 46,789 Credit and debit card processing,
volume, interchange and other 3,974 5,416 (1,442 ) 3,865 17,539
42,613 Other operating expenses 20,377 17,125 3,252 39,714 70,367
102,000 Amortization of intangibles 2,681
2,463 218
2,258 9,654 9,173
Total operating expenses 311,093
282,355 28,738 344,677
1,150,297 1,325,547
Income before income tax 3,238 33,070 (29,832 ) (238,905 )
266,252 245,631 Income tax expense (benefit) 263
5,537 (5,274 )
(11,764 ) 114,927 108,230
Net income (loss)
$ 2,975 $ 27,533 $ (24,558 )
$ (227,141 ) $ 151,325 $ 137,401
Net income (loss) applicable to common
stock
$ 2,044 $ 26,602 $ (24,558 )
$ (227,451 ) $ 147,602 $ (54,576 )
Net income (loss) per common share -
basic
$ - $ 0.03 $ (0.03 ) $
(0.22 ) $ 0.14 $ (0.06 )
Net income (loss )per common share -
diluted
$ - $ 0.03 $ (0.03 ) $
(0.22 ) $ 0.14 $ (0.06 )
Popular, Inc. Financial Supplement to
Fourth Quarter 2011 Earnings Release Table C - Consolidated
Statement of Condition (Unaudited) Variance December 31,
September 30, December 31, Q4 2011 vs. (In thousands) 2011
2011 2010 Q3 2011 Assets: Cash and due from
banks $ 535,282 $ 567,141 $ 452,373 $ (31,859 ) Money market
investments 1,376,174 1,269,139 979,295 107,035 Trading account
securities, at fair value 436,331 272,939 546,713 163,392
Investment securities available-for-sale, at fair value 5,009,823
5,226,529 5,236,852 (216,706 ) Investment securities
held-to-maturity, at amortized cost 125,383 128,546 122,354 (3,163
) Other investment securities, at lower of cost or realizable value
179,880 173,569 163,513 6,311 Loans held-for-sale, at lower of cost
or fair value 363,093 368,777
893,938 (5,684 ) Loans
held-in-portfolio: Loans not covered under loss sharing agreements
with the FDIC 20,602,596 20,673,886 20,728,035 (71,290 ) Loans
covered under loss sharing agreements with the FDIC 4,348,703
4,512,423 4,836,882 (163,720 ) Less - Allowance for loan losses
(815,308 ) (772,921 )
(793,225 ) (42,387 ) Total loans held-in-portfolio,
net 24,135,991 24,413,388
24,771,692 (277,397 ) FDIC loss
share asset 1,915,128 1,895,059 2,410,219 20,069 Premises and
equipment, net 538,486 536,529 545,453 1,957 Other real estate not
covered under loss sharing agreements with the FDIC 172,497 166,285
161,496 6,212 Other real estate covered under loss sharing
agreements with the FDIC 109,135 84,839 57,565 24,296 Accrued
income receivable 125,209 134,263 150,658 (9,054 ) Mortgage
servicing assets, at fair value 151,323 157,226 166,907 (5,903 )
Other assets 1,462,393 2,168,529 1,449,887 (706,136 ) Goodwill
648,350 648,353 647,387 (3 ) Other intangible assets
63,954 64,212 58,696
(258 ) Total assets $ 37,348,432
$ 38,275,323 $ 38,814,998 $
(926,891 ) Liabilities and Stockholders’ Equity: Liabilities:
Deposits: Non-interest bearing $ 5,655,474 $ 5,527,450 $ 4,939,321
$ 128,024 Interest bearing 22,286,653
22,425,890 21,822,879
(139,237 ) Total deposits 27,942,127
27,953,340 26,762,200
(11,213 ) Federal funds purchased and assets sold
under agreements to repurchase 2,141,097 2,601,606 2,412,550
(460,509 ) Other short-term borrowings 296,200 166,200 364,222
130,000 Notes payable 1,856,372 2,550,745 4,170,183 (694,373 )
Other liabilities 1,193,883
990,831 1,305,312 203,052
Total liabilities 33,429,679
34,262,722 35,014,467
(833,043 ) Stockholders’ equity: Preferred stock 50,160
50,160 50,160 - Common stock 10,263 10,249 10,229 14 Surplus
4,101,661 4,099,379 4,094,005 2,282 Accumulated deficit (199,726 )
(201,770 ) (347,328 ) 2,044 Treasury stock (1,057 ) (992 ) (574 )
(65 )
Accumulated other comprehensive (loss)
income
(42,548 ) 55,575
(5,961 ) (98,123 ) Total stockholders’ equity
3,918,753 4,012,601
3,800,531 (93,848 ) Total liabilities
and stockholders’ equity $ 37,348,432 $
38,275,323 $ 38,814,998 $ (926,891 )
Popular,
Inc. Financial Supplement to Fourth Quarter 2011 Earnings
Release Table D - Consolidated Average Balances and Yield /
Rate Analysis - QUARTER (Unaudited)
Quarter
Quarter ended Quarter ended Quarter ended Variance Variance
December 31, 2011 September 30, 2011 December 31, 2010 Q4 2011 vs
Q3 2011 Q4 2011 vs Q4 2010 Average Income / Yield / Average Income
/ Yield / Average Income / Yield / Average Income / Yield / Average
Income / Yield / ($ amounts in millions; yields not on a taxable
equivalent basis) balance Expense Rate balance
Expense Rate balance Expense Rate
balance Expense Rate balance Expense
Rate Assets: Interest earning assets: Money market, trading and
investment securities $ 6,635 $ 53.9 3.24 % $
7,540 $ 62.8 3.32 % $ 7,654 $
61.8 3.22 % ($905 ) ($8.9 ) (0.08 ) %
($1,019 ) ($7.9 ) 0.02 % Loans not covered
under loss sharing agreements with the FDIC: Commercial 10,596
131.4 4.92 10,690 134.1 4.98 11,532 147.0 5.06 (94 ) (2.7 ) (0.06 )
(936 ) (15.6 ) (0.14 ) Construction 564 2.3 1.59 698 2.5 1.45 1,208
6.3 2.05 (134 ) (0.2 ) 0.14 (644 ) (4.0 ) (0.46 ) Mortgage 5,402
70.5 5.22 5,326 78.7 5.91 4,743 70.1 5.91 76 (8.2 ) (0.69 ) 659 0.4
(0.69 ) Consumer 3,680 95.0 10.25 3,656 95.1 10.32 3,726 97.9 10.43
24 (0.1 ) (0.07 ) (46 ) (2.9 ) (0.18 ) Lease financing 562
11.9 8.44 572
12.8 8.93 601 13.4
8.94 (10 ) (0.9 ) (0.49 ) (39 ) (1.5 )
(0.50 ) Total loans not covered under loss sharing
agreements with the FDIC 20,804 311.1 5.95 20,942 323.2 6.14 21,810
334.7 6.10 (138 ) (12.1 ) (0.19 ) (1,006 ) (23.6 ) (0.15 ) Loans
covered under loss sharing agreements with the FDIC 4,401
88.4 7.99 4,557
105.8 9.23 4,974 110.7
8.84 (156 ) (17.4 ) (1.24 ) (573 )
(22.3 ) (0.85 ) Total loans 25,205
399.5 6.30 25,499
429.0 6.69 26,784 445.4
6.61 (294 ) (29.5 ) (0.39 ) (1,579 )
(45.9 ) (0.31 ) Total interest earning assets 31,840
$ 453.4 5.66 % 33,039 $
491.8 5.92 % 34,438 $ 507.2 5.86
% (1,199 ) ($38.4 ) (0.26 ) % (2,598 )
($53.8 ) (0.20 ) % Allowance for loan losses (751 ) (749 )
(1,188 ) (2 ) 437 Other non-interest earning assets 5,655
5,704 6,177 (49 ) (522 )
Total average assets $ 36,744 $ 37,994 $ 39,427
($1,250 ) ($2,683 ) Liabilities and
Stockholders' Equity: Interest bearing deposits: NOW and money
market $ 5,199 $ 6.4 0.49 % $ 5,284 $ 7.3 0.55 % $ 4,933 $ 9.1 0.74
% ($85 ) ($0.9 ) (0.06 ) % $ 266 ($2.7 ) (0.25 ) % Savings 6,475
6.4 0.39 6,307 8.6 0.54 6,234 13.7 0.87 168 (2.2 ) (0.15 ) 241 (7.3
) (0.48 ) Time deposits 10,685 43.3
1.61 10,876 50.0 1.82
10,966 58.1 2.10 (191 )
(6.7 ) (0.21 ) (281 ) (14.8 ) (0.49 )
Total interest bearing deposits 22,359 56.1 0.99 22,467 65.9 1.16
22,133 80.9 1.45 (108 ) (9.8 ) (0.17 ) 226 (24.8 ) (0.46 )
Borrowings 4,507 52.5 4.65
5,675 56.6 3.98 7,224
71.7 3.96 (1,168 ) (4.1 )
0.67 (2,717 ) (19.2 ) 0.69 Total
interest bearing liabilities 26,866
108.6 1.61 28,142 122.5
1.73 29,357 152.6 2.07 (1,276 )
(13.9 ) (0.12 ) (2,491 ) (44.0 )
(0.46 ) Net interest spread 4.05 % 4.19 % 3.79 % (0.14 ) % 0.26
% Non-interest bearing deposits 5,165 5,095 5,011 70 154
Other liabilities 895 956 1,175 (61 ) (280 ) Stockholders' equity
3,818 3,801 3,884 17
(66 ) Total average liabilities and stockholders'
equity $ 36,744 $ 37,994 $ 39,427 ($1,250 )
($2,683 ) Net interest income / margin non-taxable
equivalent basis $ 344.8 4.30 % $ 369.3 4.45 % $
354.6 4.10 % ($24.5 ) (0.15 ) % ($9.8 ) 0.20
%
Popular, Inc. Financial Supplement to
Fourth Quarter 2011 Earnings Release Table E - Consolidated
Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
Year-to-date
Year ended Year ended Variance December 31, 2011 December 31, 2010
YTD 2011 vs. 2010 Average Income / Yield / Average Income / Yield /
Average Income / Yield / ($ amounts in millions; yields not on a
taxable equivalent basis) balance Expense Rate
balance Expense Rate balance Expense
Rate Assets: Interest earning assets: Money market, trading and
investment securities $ 7,314 $ 243.1 3.32 % $
8,332 $ 271.5 3.26 % ($1,018 )
($28.4 ) 0.06 % Loans not covered under loss
sharing agreements with the FDIC: Commercial 10,889 541.9 4.98
11,889 613.8 5.16 (1,000 ) (71.9 ) (0.18 ) Construction 731 10.8
1.48 1,458 29.5 2.03 (727 ) (18.7 ) (0.55 ) Mortgage 5,153 302.0
5.86 4,627 274.5 5.93 526 27.5 (0.07 ) Consumer 3,654 376.2 10.30
3,854 400.7 10.40 (200 ) (24.5 ) (0.10 ) Lease financing 577
50.8 8.81 629
55.1 8.77 (52 ) (4.3 )
0.04 Total loans not covered under loss sharing agreements
with the FDIC 21,004 1,281.7 6.10 22,457 1,373.6 6.12 (1,453 )
(91.9 ) (0.02 ) Loans covered under loss sharing agreements with
the FDIC 4,613 412.7 8.95
3,365 303.1 9.01 1,248
109.6 (0.06 ) Total loans 25,617
1,694.4 6.61 25,822
1,676.7 6.49 (205 ) 17.7
0.12 Total interest earning assets
32,931 $ 1,937.5 5.88 % 34,154
$ 1,948.2 5.70 % (1,223 ) ($10.7
) 0.18 % Allowance for loan losses (746 ) (1,236 )
490 Other non-interest earning assets 5,881
5,461 420 Total average assets $ 38,066
$ 38,379 ($313 ) Liabilities and Stockholders'
Equity: Interest bearing deposits: NOW and money market $ 5,204 $
31.0 0.60 % $ 4,981 $ 39.8 0.80 % $ 223 ($8.8 ) (0.20 ) % Savings
6,321 37.5 0.59 5,970 54.0 0.90 351 (16.5 ) (0.31 ) Time deposits
10,920 201.0 1.84 10,967
257.1 2.34 (47 )
(56.1 ) (0.50 ) Total interest bearing deposits 22,445 269.5
1.20 21,918 350.9 1.60 527 (81.4 ) (0.40 ) Borrowings 5,847
236.0 4.04 7,448
302.4 4.06 (1,601 ) (66.4 )
(0.02 ) Total interest bearing liabilities 28,292
505.5 1.79 29,366
653.3 2.22 (1,074 ) (147.8 )
(0.43 ) Net interest spread 4.09 % 3.48 % 0.61 %
Non-interest bearing deposits 5,058 4,732 326 Other liabilities 983
1,022 (39 ) Stockholders' equity 3,733 3,259
474 Total average liabilities and
stockholders' equity $ 38,066 $ 38,379 ($313 )
Net interest income / margin non-taxable equivalent basis $
1,432.0 4.34 % $ 1,294.9 3.79 % $ 137.1
0.55 %
Popular,
Inc. Financial Supplement to Fourth Quarter 2011 Earnings
Release Table F - Breakdown of Other Service Fees
(Unaudited)
Quarters ended
Variance Variance December 31, September 30, December 31, Q4 2011
vs. Q4 2011 vs. (In thousands) 2011 2011 2010
Q3 2011 Q4 2010 Other service fees: Debit card fees $
9,664 $ 13,075 $ 17,159 $ (3,411 ) $ (7,495 ) Insurance fees 16,471
13,785 14,839 2,686 1,632 Credit card fees and discounts 12,943
13,738 11,094 (795 ) 1,849 Sale and administration of investment
products 9,686 9,915 8,992 (229 ) 694 Mortgage servicing fees, net
of fair value adjustments 1,449 2,120 9,314 (671 ) (7,865 ) Trust
fees 3,722 4,006 4,049 (284 ) (327 ) Processing fees 1,718 1,684
1,665 34 53 Other fees 4,444 4,341
4,525 103
(81 ) Total other service fees $ 60,097 $ 62,664
$ 71,637 $ (2,567 ) $ (11,540 )
Year ended December 31, December 31, Variance (In thousands)
2011 2010 2011 vs. 2010
Other service fees: Debit card fees $ 49,459 $ 100,639 $ (51,180 )
Insurance fees 54,390 49,768 4,622 Credit card fees and discounts
49,049 84,786 (35,737 ) Sale and administration of investment
products 34,388 37,783 (3,395 ) Mortgage servicing fees, net of
fair value adjustments 12,098 24,801 (12,703 ) Trust fees 15,333
14,217 1,116 Processing fees 6,839 45,055 (38,216 ) Other fees
18,164 20,455 (2,291 )
Total other service fees $
239,720 $ 377,504 $ (137,784 )
Popular,
Inc. Financial Supplement to Fourth Quarter 2011 Earnings
Release Table G - Loans and Deposits (Unaudited)
Loans - Ending Balances Variance (in thousands)
December 31, 2011 September 30, 2011 December
31, 2010 Q4 2011 vs. Q3 2011 Q4 2011 vs. Q4 2010
Loans not covered under FDIC loss sharing agreements: Commercial $
10,534,886 $ 10,588,919 $ 11,393,485 $ (54,033 ) $ (858,599 )
Construction 311,628 358,060 500,851 (46,432 ) (189,223 ) Lease
financing 563,867 571,068 602,993 (7,201 ) (39,126 ) Mortgage
5,518,460 5,466,503 4,524,722 51,957 993,738 Consumer
3,673,755 3,689,336 3,705,984
(15,581 ) (32,229 ) Total non-covered loans
held-in-portfolio $ 20,602,596 $ 20,673,886 $ 20,728,035 $ (71,290
) $ (125,439 ) Loans covered under FDIC loss sharing agreements
4,348,703 4,512,423
4,836,882 (163,720 ) (488,179 ) Total
loans held-in-portfolio $ 24,951,299 $ 25,186,309
$ 25,564,917 $ (235,010 ) $ (613,618 ) Loans
held-for-sale: Commercial $ 26,198 $ 24,191 $ 60,528 $ 2,007 $
(34,330 ) Construction 236,045 234,336 412,744 1,709 (176,699 )
Mortgage 100,850 110,250
420,666 (9,400 ) (319,816 ) Total loans
held-for-sale 363,093 368,777
893,938 (5,684 ) (530,845 )
Total loans $ 25,314,392 $ 25,555,086 $
26,458,855 $ (240,694 ) $ (1,144,463 )
Deposits - Ending Balances Variance (In thousands)
December 31, 2011 September 30, 2011 December 31,
2010 Q4 2011 vs. Q3 2011 Q4 2011 vs. Q4 2010 Demand
deposits [1] $ 6,256,530 $ 6,149,514 $ 5,501,430 $ 107,016 $
755,100 Savings, NOW and money market deposits (non-brokered)
10,762,869 10,787,782 10,371,580 (24,913 ) 391,289 Savings, NOW and
money market deposits (brokered) 212,688 100,002 - 112,686 212,688
Time deposits (non-brokered) 7,552,434 8,005,247 8,594,759 (452,813
) (1,042,325 ) Time deposits (brokered CDs) 3,157,606
2,910,795 2,294,431
246,811 863,175 Total deposits $
27,942,127 $ 27,953,340 $ 26,762,200 $ (11,213
) $ 1,179,927 [1] Includes interest and non-interest
bearing deposits.
Popular, Inc. Financial Supplement to
Fourth Quarter 2011 Earnings Release Table H -
Non-Performing Assets (Unaudited) Variance (Dollars in
thousands) December 31, 2011
As a percentageof loans HIP bycategory
September 30, 2011
As a percentageof loans HIP bycategory
December 31, 2010
As a percentageof loans HIP bycategory
Q4 2011 vs.Q3 2011
Q4 2011 vs.Q4 2010
Commercial $ 872,873 8.3 % $ 872,581 8.2 % $ 725,027 6.4 % $ 292 $
147,846 Construction 128,999 41.4 187,914 52.5 238,554 47.6 (58,915
) (109,555 ) Lease financing 5,808 1.0 4,194 0.7 5,937 1.0 1,614
(129 ) Mortgage 686,502 12.4 617,723 11.3 542,033 12.0 68,779
144,469 Consumer 43,668 1.2
49,259 1.3 60,302
1.6 (5,591 )
(16,634 ) Total non-performing loans held-in- portfolio, excluding
covered loans 1,737,850 8.4 % 1,731,671 8.4 % 1,571,853 7.6 % 6,179
165,997 Non-performing loans held-for-sale [1] 262,302 259,776
671,757 2,526 (409,455 ) Other real estate owned (“OREO”),
excluding covered OREO 172,497
166,285
161,496 6,212
11,001 Total non-performing assets,
excluding covered assets 2,172,649 2,157,732 2,405,106 14,917
(232,457 ) Covered loans and OREO 192,771
95,801
83,539
96,970 109,232 Total
non-performing assets $ 2,365,420
$ 2,253,533 $
2,488,645 $ 111,887
$ (123,225 ) Accruing loans past due 90 days or more [2]
$ 316,614 $ 329,473
$ 338,359
$
(12,859
)
$
(21,745
)
Ratios excluding covered loans: Non-performing loans
held-in-portfolio to loans held-in-portfolio 8.44
%
8.38 % 7.58 % Allowance for loan losses to loans held-in-portfolio
3.35 3.35 3.83 Allowance for loan losses to non-performing loans,
excluding held-for-sale 39.73
39.99
50.46
Ratios including covered
loans: Non-performing loans held-in-portfolio to loans
held-in-portfolio 7.30
%
6.92 % 6.25 % Allowance for loan losses to loans held-in-portfolio
3.27 3.07 3.10 Allowance for loan losses to non-performing loans,
excluding held-for-sale 44.76
44.35
49.64
[1] Non-performing loans held-for-sale as
of December 31, 2011 consisted of $236 million in construction
loans, $26 million in commercial loans and none in mortgage loans
(September 30, 2011 - $235 million, $24 million and $1 million,
respectively; December 31, 2010 - $412 million, $61 million, and
$199 million, respectively).
[2] It is the Corporation’s policy to report delinquent
residential mortgage loans insured by FHA or guaranteed by the VA
as accruing loans past due 90 days or more as opposed to
nonperforming since the principal repayment is insured. These
balances include $51 million of residential mortgage loans insured
by FHA or guaranteed by the VA that are no longer accruing interest
as of December 31, 2011.
Popular,
Inc. Financial Supplement to Fourth Quarter 2011 Earnings
Release Table I - Activity in Non-performing Loans
(Unaudited) Commercial loans
held-in-portfolio:
Quarter ended Quarter ended Quarter
ended December 31, 2011 December 31, 2011 December 31, 2011 (In
thousands) BPPR BPNA Popular, Inc. Beginning
Balance NPLs - September 30, 2011 $ 652,937 $ 219,644 $ 872,581
Plus: New non-performing loans 93,404 76,627 170,031 Advances on
existing non-performing loans - 34 34 Less: Non-performing loans
transferred to OREO (4,685 ) (3,378 ) (8,063 ) Non-performing loans
charged-off (50,281 ) (33,350 ) (83,631 ) Loans returned to accrual
status / loan collections (60,204 ) (12,399 ) (72,603 ) Loans
transferred to held-for-sale -
(5,476 ) (5,476 ) Ending balance NPLs - December 31,
2011 $ 631,171 $ 241,702 $
872,873
Construction loans
held-in-portfolio:
Quarter ended Quarter ended Quarter
ended December 31, 2011 December 31, 2011 December 31, 2011 (In
thousands) BPPR BPNA Popular, Inc. Beginning
Balance NPLs - September 30, 2011 $ 64,971 $ 122,943 $ 187,914
Plus: New non-performing loans 7,385 - 7,385 Advances on existing
non-performing loans - 34 34 Less: Non-performing loans transferred
to OREO - (13,149 ) (13,149 ) Non-performing loans charged-off
(3,689 ) (7,905 ) (11,594 ) Loans returned to accrual status / loan
collections (14,808 ) (19,239 ) (34,047 ) Loans transferred to
held-for-sale - (7,544 )
(7,544 ) Ending balance NPLs - December 31, 2011 $
53,859 $ 75,140 $ 128,999
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
4,864 226 5,090 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 (22,165 ) (35,899 ) (58,064 ) Loans transferred to
held-for-sale (23,867 ) -
(23,867 ) 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 2,116
101 2,217 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 (9,597 )
(13,153 ) (22,750 ) Loans transferred to held-for-sale
-
-
-
Ending balance NPLs - September 30, 2011 $ 64,971
$ 122,943 $ 187,914
Popular,
Inc. Financial Supplement to Fourth Quarter 2011 Earnings
Release Table J - Allowance for Credit Losses, Net
Charge-offs and Related Ratios (Unaudited)
Quarter ended Quarter ended Quarter ended December 31, September
30, December 31, (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 $
692,500 $ 80,421 $ 772,921 $ 689,678 $ 57,169 $ 746,847 $ 1,243,994
Provision for loan losses 123,908
55,900 179,808
150,703 25,573 176,276
354,409 816,408
136,321 952,729
840,381 82,742 923,123
1,598,403 Net loans charged-off
(recovered): Commercial BPPR 48,428 10,526 58,954 58,509 1,278
59,787 109,348 Commercial BPNA 26,019 - 26,019 22,892 - 22,892
78,398 Construction BPPR 3,820 8 3,828 (81) (1,500) (1,581) 176,449
Construction BPNA 4,044 - 4,044 3,664 - 3,664 43,098 Lease
financing BPPR 1,233 - 1,233 401 - 401 1,097 Lease financing BPNA
(36) - (36) 25 - 25 326 Mortgage BPPR 5,236 746 5,982 7,560 65
7,625 7,169 Mortgage BPNA 3,501 - 3,501 6,086 - 6,086 11,596
Consumer BPPR 19,592 96 19,688 23,278 2,478 25,756 31,757 Consumer
BPNA 14,208 -
14,208 12,841 -
12,841 18,733
126,045 11,376
137,421 135,175
2,321 137,496 477,971 Net
write-downs (recoveries) related to loans transferred to loans
held-for-sale - -
- 12,706 -
12,706 327,207 Balance at end of
period $ 690,363 $ 124,945 $
815,308 $ 692,500 $ 80,421 $
772,921 $ 793,225 Ratios: Annualized net
charge-offs to average loans held-in-portfolio 2.46 % 2.21 % 2.64 %
2.20 % 7.17 % Provision for loan losses to net charge-offs
0.98 x 1.31 x
1.11 x 1.28 x 0.74
x [1] There was no allowance for loan losses on covered loans as of
December 31, 2010. The ratio of annualized net charge-offs to
average loans held-in-portfolio, excluding covered loans, was 8.82%
for the quarter ended December 31, 2010. Year ended
Year ended December 31, December 31, (Dollars in thousands)
2011 2011 2011 2010
Non-coveredloans
Coveredloans
Total Total [1] Balance at beginning of period $
793,225 $ - $ 793,225 $ 1,261,204 Provision for loan losses
430,085 145,635
575,720 1,011,880
1,223,310 145,635
1,368,945 2,273,084 Net loans
charged-off (recovered): Commercial BPPR 195,388 13,774 209,162
231,133 Commercial BPNA 114,214 - 114,214 207,163 Construction BPPR
5,816 2,853 8,669 289,150 Construction BPNA 17,443 - 17,443 105,837
Lease financing BPPR 3,444 - 3,444 6,459 Lease financing BPNA 167 -
167 3,968 Mortgage BPPR 27,624 811 28,435 21,712 Mortgage BPNA
14,187 - 14,187 73,067 Consumer BPPR 98,647 3,252 101,899 131,783
Consumer BPNA 57,118 -
57,118 82,380
534,048 20,690
554,738 1,152,652 Net
write-downs (recoveries) related to loans transferred to loans
held-for-sale (1,101) -
(1,101) 327,207 Balance
at end of period $ 690,363 $ 124,945
$ 815,308 $ 793,225 Ratios: Net
charge-offs to average loans held-in-portfolio 2.61 % 2.21 % 4.48 %
Provision for loan losses to net charge-offs 0.81 x
1.04 x 0.88 x [1]
There was no allowance for loan losses on covered loans as of
December 31, 2010. The ratio of annualized net charge-offs to
average loans held-in-portfolio, excluding covered loans, was 5.15%
for the year ended December 31, 2010.
Popular, Inc. Financial
Supplement to Fourth Quarter 2011 Earnings Release Table K -
Allowance for Loan Losses - Breakdown of general and specific
reserves - CONSOLIDATED (Unaudited)
December 31, 2011 (Dollars in thousands) Commercial
Construction
LeaseFinancing
Mortgage Consumer Total
[2] Specific ALLL $ 8,874 $ - $ 793 $ 29,063 $ 17,046 $ 55,776
Impaired loans [1] $
530,498
$ 120,580 $ 6,104 $ 382,880 $ 140,108 $
1,180,170
Specific ALLL to impaired loans [1] 1.67 %
- % 12.99 %
7.59 % 12.17 % 4.73
% General ALLL $ 401,414 $ 13,613 $ 4,098 $ 73,198 $ 142,264
$ 634,587 Loans held-in-portfolio, excluding impaired loans [1] $
10,004,388
$ 191,048 $ 557,763 $ 5,135,580 $ 3,533,647 $
19,422,426
General ALLL to loans held-in-portfolio, excluding impaired loans
[1] 4.01 % 7.13 %
0.73 % 1.43 % 4.03
% 3.27 % Total ALLL $ 410,288 $ 13,613
$ 4,891 $ 102,261 $ 159,310 $ 690,363 Total non-covered loans
held-in-portfolio [1] $ 10,534,886 $ 311,628 $ 563,867 $ 5,518,460
$ 3,673,755 $ 20,602,596 ALLL to loans held-in-portfolio [1]
3.89 % 4.37 % 0.87
% 1.85 % 4.34 %
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 December 31, 2011, the
general allowance on the covered loans amounted to $98 million,
while the specific reserve amounted to $27 million.
September 30, 2011 (Dollars in thousands)
Commercial Construction
LeaseFinancing
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.
Variance December 31, 2011 versus
September 30, 2011 (Dollars in thousands) Commercial
Construction
LeaseFinancing
Mortgage Consumer Total
Specific ALLL $ (12,366 ) $ (1,335 ) $ 747 $ 871 $ 9,381 $
(2,702 ) Impaired loans $
10,671
$ (60,114 ) $ (464 ) $ 68,929 $ (6,945 ) $
12,077
General ALLL $ 17,507 $ (287 ) $ (605 ) $ 5,509 $
(21,559 ) $ 565 Loans held-in-portfolio, excluding impaired loans $
(64,704
) $ 13,682 $ (6,737 ) $ (16,972 ) $ (8,636 ) $
(83,367
)
Total ALLL $ 5,141 $ (1,622 ) $ 142 $ 6,380 $ (12,178
) $ (2,137 ) Total non-covered loans held-in-portfolio $ (54,033 )
$ (46,432 ) $ (7,201 ) $ 51,957 $ (15,581 ) $ (71,290 )
December 31, 2010 (Dollars in
thousands) Commercial Construction
LeaseFinancing
Mortgage Consumer Total
[2] Specific ALLL $ 8,550 $ 216 $ - $ 5,004 $ - $ 13,770 Impaired
loans [1] $ 445,968 $ 231,322 $ - $ 121,209 $ - $ 798,499 Specific
ALLL to impaired loans [1] 1.92 %
0.09 % - % 4.13
% - % 1.72 %
General ALLL $ 453,841 $ 47,508 $ 13,153 $ 65,864 $ 199,089 $
779,455 Loans held-in-portfolio, excluding impaired loans [1] $
10,947,517 $ 269,529 $ 602,993 $ 4,403,513 $ 3,705,984 $ 19,929,536
General ALLL to loans held-in-portfolio, excluding impaired loans
[1] 4.15 % 17.63 %
2.18 % 1.50 % 5.37
% 3.91 % Total ALLL $ 462,391 $ 47,724
$ 13,153 $ 70,868 $ 199,089 $ 793,225 Total non-covered loans
held-in-portfolio [1] $ 11,393,485 $ 500,851 $ 602,993 $ 4,524,722
$ 3,705,984 $ 20,728,035 ALLL to loans held-in-portfolio [1]
4.06 % 9.53 % 2.18
% 1.57 % 5.37 %
3.83 % [1] Excludes covered loans acquired on
the Westernbank FDIC-assisted transaction. [2] Excludes covered
loans acquired on the Westernbank FDIC-assisted transaction. As of
December 31, 2010, there was no allowance on these covered loans.
Popular,
Inc. Financial Supplement to Fourth Quarter 2011 Earnings
Release Table L - Allowance for Loan Losses - Breakdown of
general and specific reserves - PUERTO RICO OPERATIONS
(Unaudited) As of December 31, 2011 Puerto Rico (In
thousands) Commercial Construction Mortgage
Leasefinancing
Consumer Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 7,486 $ - $ 14,944 $ 793 $ 16,915
$ 40,138 General ALLL non-covered loans
247,967 5,850 57,378
3,858 98,211
413,264 ALLL - non-covered loans
255,453 5,850 72,322
4,651 115,126
453,402 Specific ALLL covered loans 27,086 - -
- - 27,086 General ALLL covered loans 67,386
20,435 5,310
- 4,728
97,859 ALLL - covered loans 94,472
20,435 5,310
- 4,728 124,945
Total ALLL $ 349,925 $ 26,285
$ 77,632 $ 4,651 $ 119,854
$ 578,347
Loans held-in-portfolio:
Impaired non-covered loans $ 358,910 $ 48,075 $ 333,346 $ 6,104 $
137,582 $ 884,017 Non-covered loans held-in-portfolio,
excluding impaired loans 6,111,672
112,866 4,356,137
542,602 2,832,845
13,956,122 Non-covered loans held-in-portfolio
6,470,582 160,941
4,689,483 548,706
2,970,427 14,840,139 Impaired covered
loans 76,798 - - - - 76,798 Covered loans held-in-portfolio,
excluding impaired loans 2,435,944
546,826 1,172,954
- 116,181 4,271,905
Covered loans held-in-portfolio 2,512,742
546,826 1,172,954
- 116,181
4,348,703 Total loans held-in-portfolio $ 8,983,324
$ 707,767 $ 5,862,437 $
548,706 $ 3,086,608 $ 19,188,842
As of September 30, 2011 Puerto Rico (In thousands)
Commercial Construction Mortgage
Leasefinancing
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
Variance December 31, 2011 versus
September 30, 2011 (In thousands) Commercial
Construction Mortgage
Leasefinancing
Consumer Total
Allowance for credit losses:
Specific ALLL non-covered loans $ (13,455 ) $ (569 ) $ (1,738 ) $
747 $ 9,369 $ (5,646 ) General ALLL non-covered loans
23,160 1,412 8,631
- (17,743 )
15,460 ALLL - non-covered loans 9,705
843 6,893
747 (8,374 ) 9,814
Specific ALLL covered loans 25,452 - - - - 25,452 General
ALLL covered loans 5,546 10,509
3,014 -
3 19,072 ALLL - covered loans
30,998 10,509
3,014 - 3
44,524 Total ALLL $ 40,703
$ 11,352 $ 9,907 $ 747
$ (8,371 ) $ 54,338
Loans
held-in-portfolio: Impaired non-covered loans $ (19,270 ) $
(13,675 ) $ 50,944 $ (464 ) $ (4,856 ) $ 12,679 Non-covered
loans held-in-portfolio, excluding impaired loans
76,363 10,702 5,199
(3,955 ) 10,788
99,097 Non-covered loans held-in-portfolio
57,093 (2,973 ) 56,143
(4,419 ) 5,932
111,776 Impaired covered loans 74,123 - - - - 74,123
Covered loans held-in-portfolio, excluding impaired loans
(135,457 ) (53,164 )
(44,480 ) - (4,742 )
(237,843 ) Covered loans held-in-portfolio
(61,334 ) (53,164 ) (44,480 )
- (4,742 ) (163,720 )
Total loans held-in-portfolio $ (4,241 ) $ (56,137 )
$ 11,663 $ (4,419 ) $ 1,190
$ (51,944 ) As of December 31, 2010 Puerto
Rico (In thousands) Commercial Construction
Mortgage
Leasefinancing
Consumer Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 8,550 $ 216 $ 5,004 $ - $ - $
13,770 General ALLL non-covered loans 248,093
15,858 37,025
7,154 133,531
441,661 ALLL - non-covered loans
256,643 16,074 42,029
7,154 133,531
455,431 ALLL - covered loans -
- -
- - - Total ALLL
$ 256,643 $ 16,074 $ 42,029
$ 7,154 $ 133,531 $
455,431
Loans held-in-portfolio: Impaired non-covered
loans $ 310,582 $ 65,698 $ 121,209 $ - $ - $ 497,489
Non-covered loans held-in-portfolio, excluding impaired loans
6,406,434 102,658
3,528,491 572,787
2,897,835 13,508,205 Non-covered loans
held-in-portfolio 6,717,016
168,356 3,649,700 572,787
2,897,835 14,005,694
Impaired covered loans - - - - - - Covered loans
held-in-portfolio, excluding impaired loans 2,771,987
635,892 1,259,253
- 169,750
4,836,882 Covered loans held-in-portfolio
2,771,987 635,892
1,259,253 - 169,750
4,836,882 Total loans held-in-portfolio
$ 9,489,003 $ 804,248 $
4,908,953 $ 572,787 $ 3,067,585
$ 18,842,576
Popular, Inc. Financial Supplement to
Fourth Quarter 2011 Earnings Release Table M - Allowance for
Loan Losses - Breakdown of general and specific reserves - U.S.
MAINLAND OPERATIONS (Unaudited) As of December
31, 2011 U.S. Mainland (In thousands) Commercial
Construction Mortgage
Leasefinancing
Consumer Total
Allowance for credit losses:
Specific ALLL $ 1,388 $ - $ 14,119 $ - $ 131 $ 15,638
General ALLL 153,447 7,763
15,820 240
44,053 221,323 Total ALLL
154,835 7,763
29,939 240 44,184
236,961
Loans held-in-portfolio:
Impaired loans 171,588 72,505 49,534 - 2,526 296,153 Loans
held-in-portfolio, excluding impaired loans 3,892,716
78,182 779,443
15,161 700,802
5,466,304 Total loans held-in-portfolio $
4,064,304 $ 150,687 $ 828,977
$ 15,161 $ 703,328 $ 5,762,457
As of September 30, 2011 U.S. Mainland (In
thousands) Commercial Construction Mortgage
Leasefinancing
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
Variance December 31, 2011 versus
September 30, 2011 (In thousands) Commercial
Construction Mortgage
Leasefinancing
Consumer Total
Allowance for credit losses:
Specific ALLL $ 1,089 $ (766 ) $ 2,609 $ - $ 12 $ 2,944
General ALLL (5,653 ) (1,699 )
(3,122 ) (605 ) (3,816 )
(14,895 ) Total ALLL (4,564 )
(2,465 ) (513 ) (605 )
(3,804 ) (11,951 )
Loans held-in-portfolio:
Impaired loans 29,941 (46,439 ) 17,985 - (2,089 ) (602 )
Loans held-in-portfolio, excluding impaired loans
(141,067 ) 2,980 (22,171 )
(2,782 ) (19,424 )
(182,464 ) Total loans held-in-portfolio $ (111,126 )
$ (43,459 ) $ (4,186 ) $ (2,782 ) $ (21,513 )
$ (183,066 ) As of December 31, 2010 U.S.
Mainland (In thousands) Commercial Construction
Mortgage
Leasefinancing
Consumer Total
Allowance for credit losses:
Specific ALLL $ - $ - $ - $ - $ - $ - General ALLL
205,748 31,650
28,839 5,999 65,558
337,794 Total ALLL
205,748 31,650 28,839
5,999 65,558
337,794
Loans held-in-portfolio:
Impaired loans 135,386 165,624 - - - 301,010 Loans
held-in-portfolio, excluding impaired loans 4,541,083
166,871 875,022
30,206 808,149
6,421,331 Total loans held-in-portfolio $
4,676,469 $ 332,495 $ 875,022
$ 30,206 $ 808,149 $ 6,722,341
Popular, Inc.
Financial Supplement to Fourth Quarter 2011 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited) (In thousands, except share or per share
information) December 31, 2011
September 30, 2011 December 31, 2010 Total
stockholders’ equity $ 3,918,753 $ 4,012,601 $ 3,800,531 Less:
Preferred stock (50,160) (50,160) (50,160) Less: Goodwill (648,350)
(648,353) (647,387) Less: Other intangibles
(63,954) (64,212)
(58,696) Total tangible common equity $
3,156,289 $ 3,249,876 $ 3,044,288
Total assets $ 37,348,432 $ 38,275,323 $ 38,814,998 Less:
Goodwill (648,350) (648,353) (647,387) Less: Other intangibles
(63,954) (64,212)
(58,696) Total tangible assets $
36,636,128 $ 37,562,758 $ 38,108,915
Tangible common equity to tangible assets 8.62 % 8.65 % 7.99
% Common shares outstanding at end of period 1,025,904,567
1,024,475,398 1,022,727,802 Tangible book value per common share
$ 3.08 $ 3.17 $ 2.98
(In thousands) December
31, 2011 September 30, 2011 December
31, 2010 Common stockholders’ equity $ 3,868,593 $ 3,962,441
$ 3,750,371 Less: Unrealized gains on available-for-sale
securities, net of tax [1] (203,078) (209,120) (159,700) Less:
Disallowed deferred tax assets [2] (249,325) (222,601) (231,475)
Less: Intangible assets: Goodwill (648,350) (648,353) (647,387)
Other disallowed intangibles
(29,655)
(31,272) (26,749) Less: Aggregate adjusted carrying value of all
non-financial equity investments (1,189) (1,525) (1,538)
Add: Pension liability adjustment, net of
tax and accumulated net gains (losses) on cash flow hedges
[3] 216,798 125,004
129,511 Total Tier 1 common equity
$
2,953,794
$ 2,974,574 $ 2,813,033
[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 $150 million of the Corporation’s $430
million of net deferred tax assets at December 31, 2011 (September
30, 2011 - $126 million and $342 million, respectively; December
31, 2010 - $144 million and $388 million, respectively), were
included without limitation in regulatory capital pursuant to the
risk-based capital guidelines, while approximately $249 million of
such assets at December 31, 2011 (September 30, 2011 - $223
million; December 31, 2010 - $231 million) exceeded the limitation
imposed by these guidelines and, as “disallowed deferred tax
assets”, were deducted in arriving at Tier 1 capital. The remaining
$31 million of the Corporation’s other net deferred tax assets at
December 31, 2011 (September 30, 2011 - $7 million; December 31,
2010 - $13 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 Fourth Quarter 2011 Earnings Release
Table O - Financial Information - Westernbank Covered Loans
(Unaudited) Quarter ended (In thousands) December 31,
2011 September 30, 2011 Variance
Interest
income: Interest income on covered loans, except for discount
accretion on ASC 310-20 covered loans $ 88,424 $ 102,308 $ (13,884
) Discount accretion on ASC 310-20 covered loans -
3,501 (3,501 ) Total
interest income 88,424 105,809
(17,385 )
FDIC loss share (expense)
income: (Amortization) accretion of indemnification asset
(24,217 ) (21,072 ) (3,145 ) 80% mirror accounting on provision for
loan losses for reductions in expected cash flows that are
reimbursable by the FDIC [1] 38,670 20,458 18,212 80% mirror
accounting on discount accretion on loans and unfunded commitments
accounted for under ASC 310-20 (302 ) (2,916 ) 2,614 Other
3,296 (1,831 ) 5,127
Total FDIC loss share income (expense) 17,447
(5,361 ) 22,808 Other
non-interest income 1,092 -
1,092 Total revenues
106,963 100,448 6,515
Provision for loan losses 55,900
25,573 30,327 Total revenues
less provision for loan losses $ 51,063 $
74,875 $ (23,812 )
[1] Reductions in expected cash flows for
ASC 310-30 loans, which may impact the provision for loan losses,
may consider reductions in both principal and interest cash flow
expectations. The amount covered under the FDIC loss sharing
agreements for interest not collected from borrowers is limited
under the agreements (approximately 90 days); accordingly, these
amounts are not subject fully to the 80% mirror accounting.
Quarterly average
assets:
Quarter ended (In millions) December 31, 2011 September 30,
2011 Variance Covered loans $ 4,401 $ 4,557 $ (156 ) FDIC
loss share asset 1,893 1,991 (98 ) Note issued to the FDIC 344
1,057 (713 )
Activity in the
carrying amount and accretable yield of covered loans accounted for
under ASC 310-30
Quarter Quarter December 31, 2011 September 30, 2011
(In thousands) Accretable yield
Carrying amount ofloans
Accretable yield
Carrying amount ofloans
Beginning balance $ 1,496,565 $ 4,076,913 $ 1,616,919 $ 4,216,808
Accretion (82,866 ) 82,866 (96,418 ) 96,418 Changes in expected
cash flows 56,560 (23,936 ) Collections
(123,308 ) (173,867 ) Ending balance
1,470,259 4,036,471 1,496,565 4,139,359 Allowance for loan losses -
ASC 310-30 covered loans (83,477 )
(62,446 ) Ending balance, net of
allowance for loan losses $ 1,470,259 $
3,952,994 $ 1,496,565 $ 4,076,913
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