SAN JUAN, Puerto Rico, July 16 /PRNewswire-FirstCall/ -- Popular,
Inc. ("the Corporation") (NASDAQ:BPOPNASDAQ:BPOPONASDAQ:BPOPP)
reported a net loss of $183.2 million for the quarter ended June
30, 2009, compared with a net loss of $52.5 million for the quarter
ended March 31, 2009, and net income of $24.3 million for the
quarter ended June 30, 2008. For the six months ended June 30,
2009, the Corporation's net loss totaled $235.7 million, compared
to net income of $127.5 million for the same period in 2008. Refer
to the accompanying Exhibit A - Financial Summary for "per common
share" information and key performance ratios. Also, refer to
Exhibit B for credit quality information and to Exhibit C for
summarized income statement information by reportable segment for
the quarters ended June 30, 2009, June 30, 2008 and March 31, 2009.
As indicated in previous filings, in 2008, the Corporation
discontinued the operations of its U.S. mainland-based subsidiary
Popular Financial Holdings ("PFH"), and thus the results of PFH are
presented as part of "Loss from discontinued operations, net of
income tax" in Exhibit A. "Second quarter results reflect the
continued deterioration of economic and housing market conditions
particularly in Puerto Rico due to the protracted 4-year recession
that has resulted in an unusually weak residential construction
market. In response to this extraordinarily difficult environment,
we have concentrated our efforts to improve credit quality aided by
the strengthening of our collection groups to enhance detection,
workouts and recovery," said Richard L. Carrion, Chairman of the
Board and Chief Executive Officer of Popular, Inc. Carrion
continued, "Although the Corporation and its subsidiaries are well
capitalized, on June 8th, we announced a plan to exchange trust
preferred securities and preferred stock for common stock in order
to increase our Tier 1 common equity to better position us in even
more adverse economic and credit conditions." The Corporation's
continuing operations reported a net loss of $176.6 million for the
quarter ended June 30, 2009, compared with a net loss of $42.6
million for the quarter ended March 31, 2009, and net income of
$59.2 million for the quarter ended June 30, 2008. For the six
months ended June 30, 2009, the Corporation's net loss from
continuing operations totaled $219.2 million, compared to net
income of $158.4 million for the same period in 2008. The principal
items impacting the continuing operations' financial results for
the quarter ended June 30, 2009, when compared to the quarter ended
March 31, 2009, were as follows: -- Non-interest income was lower
by $108.9 million when compared to the quarter ended March 31,
2009, principally as a result of lower gains on the sale of
investment securities. During the second quarter of 2009, the
Corporation realized gains on the sale of equity securities of
$52.3 million, compared to gains of $182.7 million in the first
quarter of 2009 associated with the sale of $3.4 billion of
investment securities. This unfavorable variance was partially
offset by a $10.0 million increase in trading account profit in the
second quarter of 2009. -- Total operating expenses were $26.4
million higher in the quarter ended June 30, 2009, compared with
the first quarter of 2009. The increase was principally related to
higher FDIC insurance assessments on deposits, which considered the
impact of a special assessment of approximately $16.7 million. --
Income tax expense of $5.4 million in the second quarter of 2009,
compared to income tax benefit of $26.9 million in the first
quarter of 2009. The increase in taxes was principally related to a
$28.4 million refund received from the U.S. Internal Revenue
Service during the first quarter of 2009. -- Net interest income
increased by $10.6 million, principally due to a higher net
interest yield resulting mostly from lower funding costs on
deposits. -- The provision for loan losses for the second quarter
of 2009 decreased by $23.1 million when compared with the quarter
ended March 31, 2009. The lower total provision was the result of a
$53.4 million decrease in the provision related to the U.S.
mainland portfolios and a $30.3 million increase in the provision
related to Puerto Rico operations. The allowance for loan losses
increased from March 31, 2009 to June 30, 2009 by $89 million. The
allowance for loan losses to loans held-in-portfolio was 4.66% at
June 30, 2009, compared to 4.19% at March 31, 2009. Refer to
Exhibit B for credit quality information. Net Loss from Continuing
Operations: This press release should be read in conjunction with
the accompanying Exhibits A, B and C which are an integral part of
this report. The Corporation has retrospectively adjusted certain
information to exclude results from discontinued operations from
prior periods presented in this press release for comparability
purposes. The discussions that follow pertain to Popular, Inc.'s
continuing operations, unless otherwise indicated. Net Interest
Income Net interest income for the second quarter of 2009 was
$283.1 million, compared with $272.5 million for the first quarter
of 2009 and $330.3 million for the same quarter of 2008. The
following table summarizes the principal changes in average earning
assets and funding sources and their corresponding yields and costs
for the quarter ended June 30, 2009, compared with the quarter
ended March 31, 2009 and the quarter ended June 30, 2008. The
analysis only includes the results of the continuing operations.
The results for the previous year have been retrospectively
adjusted to exclude the discontinued operations for comparative
purposes. Average balances Average Yields / Costs ----------------
---------------------- 2nd 1st 2nd 2nd 1st 2nd Quarter Quarter
Quarter Quarter Quarter Quarter (Dollars in billions) 2009 2009
2008 2009 2009 2008 ------------------------- Money market, trading
and investment securities $9.6 $9.8 $9.3 3.72% 3.60% 4.26%
------------------------- ---- ---- ---- ---- ---- ---- Loans:
Commercial * 15.4 15.8 15.7 4.87 4.96 5.96 Mortgage 4.5 4.5 4.8
6.30 6.70 7.09 Consumer 4.4 4.6 4.9 9.91 9.97 10.30 Lease financing
0.7 0.9 1.1 8.30 8.45 8.07 --------------- --- --- --- ---- ----
---- Total loans 25.0 25.8 26.5 6.12 6.28 7.06 ----------- ----
---- ---- ---- ---- ---- Total earning assets $34.6 $35.6 $35.8
5.45% 5.54% 6.33% ==================== ===== ===== ===== ==== ====
==== Interest bearing deposits $22.7 $23.2 $22.9 2.27% 2.58% 2.96%
Borrowings 5.9 6.8 7.5 4.02 4.11 3.57 ---------- --- --- --- ----
---- ---- Total interest bearing liabilities 28.6 30.0 30.4 2.63
2.93 3.11 ------------------- ---- ---- ---- ---- ---- ----
Non-interest bearing sources of funds 6.0 5.6 5.4
-------------------- --- --- --- Total funds $34.6 $35.6 $35.8
2.18% 2.47% 2.64% =========== ===== ===== ===== ==== ==== ==== Net
interest spread 2.82% 2.61% 3.22% =================== ==== ====
==== Net interest yield 3.27% 3.07% 3.69% ================== ====
==== ==== * Includes commercial construction loans The increase in
net interest income for the second quarter of 2009, compared with
the first quarter of 2009 was principally due to an improvement of
20 basis points in the net interest yield, mainly driven by a
decrease in the Corporation's average cost of deposits and
short-term borrowings, primarily due to management actions to lower
the rates paid on certain deposits and the maturity of high cost
certificates of deposit and renewal under a lower interest rate
environment. This favorable impact to net interest income was
partially offset by a lower yield on earning assets, principally
mortgage, commercial and personal loans, which was influenced in
part by an increase in non-performing commercial and construction
loans. The reduction in average earning assets for the quarter
ended June 30, 2009, compared with the quarter ended March 31, 2009
was principally associated with a decline in the loan portfolio in
part due to the slowdown of loan origination activity in the Puerto
Rico operations and the sale of most of the lease financing
portfolio of the Corporation's U.S. mainland operations, as well as
higher volume of loans charged off. Also, contributing to the
decrease in earning assets was the exiting or downsizing of certain
loan origination units at Banco Popular North America ("BPNA"),
such as non-conventional mortgages, equipment lease financing and
multi-family lending. On the funding side, the decrease was mostly
related to the deleveraging of the Corporation's balance sheet
through the reduction in borrowings and a decrease in average
interest bearing deposits, principally certificates of deposit and
brokered certificates of deposit. The decline in borrowings was
principally due to the maturity of unsecured senior debt and lower
average balances of short-term borrowings. The decrease in net
interest income for the second quarter of 2009, compared with the
same quarter in 2008, was primarily due to lower average balances
of interest-earning assets, principally loans, for reasons similar
to those described above. The Corporation's borrowings also
decreased, driven by the reduction in earning assets they fund.
Contributing to the reduction in net interest income was the
decrease by the Federal Reserve ("Fed") of the federal funds target
rate from 2.00% in June 30, 2008 to between 0% and 0.25% at June
30, 2009. This reduction in short-term market rates impacted the
yield of several of the Corporation's earning assets during that
period, including the yield on commercial and construction loans
with floating or adjustable rates and floating rate collateralized
mortgage obligations, as well as the yield of newly originated
loans in a declining interest rate environment. On the positive
side, the decrease in rates contributed to the decrease in the cost
of interest-bearing deposits and short-term borrowings. Other
factors impacting negatively the Corporation's net interest income
for the quarter ended June 30, 2009 when compared with the same
quarter in 2008 were the increase in non-performing loans with
their related reversal of interest, and the exiting of several loan
origination activities in the U.S. mainland operations. Provision
for Loan Losses and Credit The main factor driving the
Corporation's net losses in the first two quarters of 2009 has been
the increasing credit costs from several segments of the loan
portfolio. Persistent adverse changes in the economy and negative
trends in employment levels and property values in the markets in
which the Corporation operates have continued to negatively affect
the Corporation's provision for loan losses in the second quarter
of 2009. The provision for loan losses totaled $349.4 million or
134% of net charge-offs for the quarter ended June 30, 2009,
compared with $372.5 million or 188% of net charge-offs for the
quarter ended March 31, 2009, and $189.2 million or 167% of net
charge-offs for the second quarter of 2008. The provision for loan
losses for the quarter ended June 30, 2009, when compared with the
first quarter of 2009, reflects higher net charge-offs of loans in
portfolios that are part of the continuing operations by $62
million, mostly in the Banco Popular de Puerto Rico reportable
segment. This increase in net charge-offs was mainly in
construction loans ($32 million, principally attributed to one
particular credit in the Banco Popular de Puerto Rico reportable
segment), commercial loans ($29 million) and consumer loans ($9
million), partially offset by decreases in net charge-offs for
mortgage loans ($7 million) and leases ($1 million). The decline in
the provision for loan losses in the second quarter of 2009 when
compared with the first quarter of 2009 was attributable to the
U.S. mainland portfolios, which in the previous quarter required
higher general reserves and higher specific reserves for loans
considered impaired under SFAS No. 114. The reduction in the
provision for loan losses in the U.S. mainland portfolio during the
second quarter was partially offset by an increase in the provision
for the Banco Popular de Puerto Rico loan portfolios mainly driven
by higher specific reserves for impaired loans, in particular
construction credits. The rise in construction and commercial loans
net charge-offs in the second quarter of 2009 did not cause a
direct increase in the provision for loan losses in the quarter
because $94 million of these loans had specific reserves pursuant
to SFAS No. 114, which were established in prior quarters when the
loans were originally classified as impaired loans. The increase in
the provision for loan losses for the quarter ended June 30, 2009
compared to the same quarter in 2008 was the result of higher
general reserve requirements for commercial loans, construction
loans, U.S. mainland non-conventional residential mortgages and
home equity lines of credit, combined with specific reserves
recorded for loans considered impaired under SFAS No. 114. Net
charge-offs from the continuing operations for the quarter ended
June 30, 2009, when compared with the second quarter in 2008,
increased by $147 million, mainly in construction loans ($71
million), consumer loans ($32 million, mainly U.S. mainland home
equity lines of credit), commercial loans ($30 million) and
mortgage loans ($15 million). The allowance for loan losses
increased from March 31, 2009 to June 30, 2009 by $89 million.
Exhibits A and B provide credit quality data, including certain key
credit quality metrics. The allowance for loan losses represented
4.66% of loans held-in-portfolio at June 30, 2009, compared with
4.19% at March 31, 2009 and 2.47% at June 30, 2008. The increase
from March 31, 2009 to June 30, 2009 was mainly attributable to
reserves for construction loans due to the continued deterioration
of the economic and housing market conditions in Puerto Rico, and
also in the U.S. mainland. Credit deterioration trends have been
reflected across all industry sectors, but have been most
noticeable in the residential construction market as a result of
unprecedented reductions in absorption levels. The most significant
reserves for impaired loans during the second quarter of 2009
pertain to particular construction borrowers. Also, the Corporation
recorded higher reserves to cover inherent losses in the home
equity lines of credit portfolios of the U.S. mainland operations.
The persistent declines in residential real estate values, combined
with the reduced ability of certain homeowners to refinance or
repay their residential real estate obligations, have resulted in
higher delinquencies and losses in these U.S. portfolios. As
previously explained, during the first quarter of 2009, the U.S.
portfolios experienced a more significant impact in the provision
for loan losses due to higher general reserve requirements and
specific reserves recorded pursuant to SFAS No. 114. Hence, a
reduction in provision was reported in the second quarter of 2009
compared to the first quarter of 2009. As of June 30, 2009, there
were $1.4 billion of impaired loans with a related specific
allowance for loan losses pursuant to SFAS No. 114 of $313 million,
compared with impaired loans of $1.1 billion and a specific
allowance of $279 million as of March 31, 2009. As of June 30,
2008, there were $648 million of SFAS No. 114 impaired loans with a
related specific allowance for loan losses of $123 million.
Non-performing assets attributable to continuing operations totaled
$2.1 billion at June 30, 2009, compared to $1.5 billion at March
31, 2009 and $954 million at June 30, 2008. The increase in
non-performing assets from March 31, 2009 to June 30, 2009 was
primarily related to increases in construction loans ($332 million,
principally in the Puerto Rico portfolio), commercial loans ($161
million) and mortgage loans ($89 million). The construction loans
in non-performing status are primarily residential real estate
construction loans which have been adversely impacted by general
market conditions, decreases in property values and oversupply in
certain areas. Several of these construction non-performing credits
in Puerto Rico were judgmentally considered impaired for SFAS No.
114 purposes in previous quarters and specific reserves were
recorded in prior periods, as deemed necessary. Commercial
non-performing loans increased both in Puerto Rico and the U.S.
mainland. The higher level of non-performing residential mortgage
loans was principally attributed to BPNA's non-conventional
mortgage business and Puerto Rico's residential mortgage portfolio.
Although Puerto Rico's mortgage portfolio reported higher
non-performing loans, the net charge-off experience during 2009 has
remained at a low level. Non-performing assets from continuing
operations increased by $1.1 billion from June 30, 2008 to the same
date in 2009. The increases were reflected in construction loans
($556 million), commercial loans ($299 million) and mortgage loans
($226 million). The existing adverse economic conditions are
expected to persist through 2009, thus it is likely that the
Corporation will continue to experience heightened credit losses,
additional significant provisions for loan losses, an increased
allowance for loan losses and higher levels of non-performing
assets. Non-interest Income Non-interest income from continuing
operations totaled $225.8 million for the quarter ended June 30,
2009, compared with $334.7 million for the quarter ended March 31,
2009 and $235.8 million for the quarter ended June 30, 2008. As
previously explained, the variance in non-interest income for the
quarter ended June 30, 2009 compared with the quarter ended March
31, 2009 was principally due to smaller net gains on the sale and
valuation adjustments of investment securities by $122.4 million.
During the second quarter of 2009, the Corporation realized gains
on the sale of equity securities of $52.3 million, compared to
gains of $182.7 million in the first quarter of 2009 associated to
the sale of $3.4 billion of investment securities. This variance
was partially offset by higher trading account profits of $10.0
million primarily associated with the Corporation's Puerto Rico
mortgage banking operations. The decrease in non-interest income
from continuing operations for the quarter ended June 30, 2009
compared with the same quarter in 2008 was principally due to
losses on the sale and valuation adjustments on loans held-for-sale
for the quarter ended June 30, 2009 of $13.5 million, compared to
gains of $4.9 million for the quarter ended June 30, 2008. The loss
in 2009 was primarily the result of increased levels of reserves
for loans sold by the Corporation's U.S. subsidiaries given an
upward trend in repurchase requests and loss severities. Other
non-interest income declined by $15.3 million mostly as a result of
a reduction in investment banking fees due to lower volume of
government debt offerings underwritten, higher losses on derivative
instruments and lower gains on the sale of real estate properties,
among other factors. These unfavorable variances were partially
offset by higher net gains on the sale and valuation adjustments of
investment securities of $25.4 million. The gains on sale of
securities for the quarter ended June 30, 2009 included the
previously mentioned sale of equity securities, while the results
of the quarter ended June 30, 2008 were mostly impacted by gains on
the sale of U.S. agency securities. Operating Expenses Operating
expenses from continuing operations totaled $330.6 million for the
quarter ended June 30, 2009, an increase of $26.4 million, compared
with $304.2 million for the first quarter of 2009. Operating
expenses from continuing operations for the quarter ended June 30,
2008 totaled $330.3 million. The increase in operating expenses for
the quarter ended June 30, 2009 when compared with the first
quarter of 2009 was principally due to higher FDIC insurance costs,
which considered the $16.7 million FDIC special assessment in the
second quarter of 2009. The increase in other operating expenses
was partially offset by a $9.1 million decrease in personnel costs,
mainly related to pension, 401(k) savings plan and medical
insurance costs. Operating expenses for the quarter ended June 30,
2009 remained at levels close to those recognized during the same
quarter of the previous year. Increases in FDIC assessments were
partially offset by lower personnel costs and business promotion
expenses that resulted from the downsizing of the U.S. operations
and cost control initiatives, among the principal reasons. Income
Taxes Income tax expense from continuing operations amounted to
$5.4 million for the quarter ended June 30, 2009, compared with an
income tax benefit of $26.9 million for the quarter ended March 31,
2009 and income tax benefit of $12.6 million for the quarter ended
June 30, 2008. The unfavorable variance in income taxes for the
quarter ended June 30, 2009 compared with the quarter ended March
31, 2009 was primarily due to the reversal in the first quarter of
2009 of $28.4 million of the deferred tax asset valuation allowance
of the U. S. operations as a result of a tax refund received from
the U.S. Internal Revenue Service. The reimbursement pertained to
carryback losses of 2005 and 2006. Also, during the first quarter
of 2009 a tax benefit was recognized due to the increase in the
deferred tax asset as a result of the temporary increase in the
statutory tax rate applicable to the Corporation's Puerto Rico
operations. The variance in income tax from continuing operations
for the second quarter of 2009 when compared to the same quarter in
2008 was primarily due to the fact that in the second quarter of
2008 the Corporation was recording a tax benefit on the
Corporation's U.S. operations. Commencing in the second half of
2008, the Corporation began to record a valuation allowance on the
deferred tax assets of the Corporation's U.S. operations, thus
there were no tax benefits recognized in 2009 in the U.S.
operations. Balance Sheet Comments: The accompanying Exhibit A
provides information on principal categories of the Corporation's
balance sheet at June 30, 2009, March 31, 2009 and June 30, 2008,
and the following sections provide more detailed information.
Investment securities The Corporation's portfolio of investment
securities available-for-sale and held-to-maturity totaled $7.6
billion at June 30, 2009, compared with $7.3 billion at March 31,
2009. The Corporation holds investment securities primarily for
liquidity, yield enhancement and interest rate risk management. The
portfolio primarily includes very liquid, high quality securities.
The increase in the Corporation's investment securities between
March 31, 2009 and June 30, 2009 was mainly associated with
investments in GNMA mortgage-backed securities, U.S. agency notes
and collateralized mortgage obligations, as a result of the
re-investment of the proceeds from the sale of securities in the
first quarter of 2009. Loans A breakdown of the Corporation's total
loan portfolio at period-end, which represents the principal
category of earning assets, follows: (In billions) June 30, 2009
March 31, 2009 Variance June 30, 2008 Variance -------------
------------- -------------- -------- ------------- --------
Commercial $13.1 $13.4 ($0.3) $13.7 ($0.6) Construction 2.0 2.2
(0.2) 2.1 (0.1) Mortgage 4.7 4.7 (0.0) 4.7 (0.0) Consumer 4.3 4.5
(0.2) 4.8 (0.5) Lease financing 0.7 0.8 (0.1) 1.1 (0.4)
--------------- --- --- ---- --- ---- Sub-total 24.8 25.6 (0.8)
26.4 (1.6) PFH discontinued operations - - - 1.2 (1.2)
---------------- - - - --- ---- Total $24.8 $25.6 ($0.8) $27.6
$(2.8) ===== ===== ===== ===== ===== ===== The reduction in
commercial and construction loans between March 31, 2009 and June
30, 2009 was principally due to the increased level of charge-offs,
which was described earlier in the Provision for Loans Losses and
Credit Quality section. Net charge-offs in the commercial and
construction loan portfolios amounted to $146 million on a combined
basis for the quarter ended June 30, 2009. The decrease in the
commercial loan portfolio was also associated with a reduction in
loan origination activity in the Puerto Rico operations, as well as
the Corporation's decision to exit or downsize certain business
lines at BPNA. The decline in the consumer loan portfolio from the
end of the first quarter of 2009 to June 30, 2009 was mainly
related to run-off of existing portfolios originated by Popular
Finance, E-LOAN or exited lines of businesses at the BPNA
operations, as well as the reduction caused by the consumer loans
net charge-offs of $85 million recorded during the second quarter
of 2009. Also, there was a decrease in auto loans at the
Corporation's Puerto Rico operations. Deposits A breakdown of the
Corporation's deposits at period-end follows: (In billions) June
30, 2009 March 31, 2009 Variance June 30,2008 Variance
------------- ------------- -------------- -------- ------------
-------- Demand * $5.1 $4.9 $0.2 $5.1 $0.0 Savings 9.6 9.7 (0.1)
9.9 (0.3) Time 12.2 12.5 (0.3) 12.1 0.1 ---- ---- ---- ---- ----
--- Total deposits $26.9 $27.1 ($0.2) $27.1 ($0.2) ==============
===== ===== ===== ===== ===== * Includes non-interest and interest
bearing demand deposits
-----------------------------------------------------------
Brokered certificates of deposit, which are included as time
deposits, amounted to $2.7 billion at June 30, 2009 and March 31,
2009. The reduction in time deposits occurred principally in the
Corporation's U.S. mainland operations in part due to deleveraging
strategies, including the closure and consolidation of branches, as
well as a gradual reduction in the pricing of deposits, including
internet deposits. The increase in demand deposits was principally
experienced in the Corporation's Puerto Rico banking operations and
included public funds and deposits in trust. Borrowings and capital
The accompanying Exhibit A also provides information on borrowings
and stockholders' equity at June 30, 2009, March 31, 2009 and June
30, 2008. The Corporation's borrowings amounted to $5.6 billion at
June 30, 2009, compared with $6.3 billion at March 31, 2009. The
reduction in borrowings was principally in long-term debt,
primarily as a result of the payment during the second quarter of
2009 of $753 million in unsecured senior debt of Popular North
America, which had been used to fund the Corporation's U.S.
operations. The credit ratings of the Corporation's debt
obligations are a relevant factor for certain types of borrowings
at the holding company level because they impact the ability to
borrow, the cost at which the Corporation can raise financing and
the depth of access to funding sources. In April and June 2009, the
major rating agencies downgraded the Corporation's credit ratings,
triggered in part by the announcement of suspension of dividends on
the Corporation's common stock and Series A and B preferred stock.
The Corporation has $350 million in senior debt issued by the bank
holding companies with interest that adjusts in the event of senior
debt rating downgrades. As a result of the most recent rating
downgrades in the second quarter of 2009, the cost of this senior
debt increased prospectively by 225 basis points, which represents
an increase in the annual interest expense on the particular debt
of approximately $7.9 million. No other outstanding borrowings have
rate or maturity triggers associated with credit ratings. The
Corporation's banking subsidiaries do not use borrowings that are
rated by the major rating agencies, as they are funded primarily
with deposits and secured borrowings. Stockholders' equity totaled
$2.9 billion at June 30, 2009, compared with $3.1 billion at March
31, 2009. The decrease in stockholders' equity from March 31, 2009
to June 30, 2009 reflects an increase in the Corporation's
accumulated deficit of $207.8 million principally due to the net
loss of $183.2 million recorded during the quarter as well as
dividends declared on the Corporation's preferred stock amounting
to $22.9 million for the quarter ended June 30, 2009. Below is a
summary of the Corporation's regulatory capital ratios as of June
30, 2009 and March 31, 2009. June 30, 2009 March 31, 2009 Minimum
required ------------- -------------- ---------------- Tier 1
risk-based capital 10.73% 11.16% 4.00% Total risk-based capital
12.02% 12.44% 8.00% Tier 1 leverage 8.26% 8.54% 3.00% - 4.00%
Regulatory capital requirements for banking institutions are based
on Tier 1 and Total capital, which include both common stock and
certain qualifying preferred stock. Nonetheless, as overall
economic conditions in general and credit quality in particular
have continued to worsen, there has been an increasing regulatory
and market focus on Tier 1 common equity and Tier 1 common equity
to risk-weighted assets ratio of banking institutions. Although the
Corporation is well capitalized based on a ratio of Tier 1 capital
to risk-weighted assets of approximately 10.73% as of June 30,
2009, management believes that an improvement in the composition of
the Corporation's regulatory capital, including Tier 1 common
equity, will better position the Corporation in a more adverse
economic and credit scenario. As a result, the Corporation is
conducting the Exchange Offer described below and has structured
the Exchange Offer to increase the Corporation's Tier 1 common
equity by up to approximately $1.1 billion based on the High
Participation Scenario (as described in the prospectus for the
Exchange Offer referred to below). Recent losses have continued to
reduce the Corporation's Tier 1 common equity. The Corporation's
Tier 1 common/risk-weighted assets ratio was 2.45% as of June 30,
2009 (3.13% as of March 31, 2009). See "Reconciliation of Non-GAAP
Financial Measure" section below for a reconciliation of Tier 1
common to common stockholders' equity and a discussion of our use
of this non-GAAP financial measure in this press release. Update on
Exchange Offer and Dividends on Preferred Stock and Distributions
on Trust Preferred Securities: On June 29, 2009, the Corporation
commenced an offer to issue up to 390 million shares of its common
stock in exchange for its Series A preferred stock and Series B
preferred stock and for the trust preferred securities referred to
in the prospectus for the exchange offer referred to below (the
"Exchange Offer"). In connection with the Exchange Offer, for each
share of Series A preferred stock, share of Series B preferred
stock or trust preferred security accepted in accordance with the
terms of the Exchange Offer, the Corporation is offering to issue a
number of shares of its common stock equal to the Exchange Value,
set forth in the prospectus for the Exchange Offer, divided by the
"Relevant Price". The "Relevant Price" will be equal to the greater
of (1) the average Volume Weighted Average Price, or "VWAP", of a
share of the Corporation's common stock during the five-trading day
period ending on the second business day immediately preceding the
expiration date of the Exchange Offer (which we currently expect to
be July 24, 2009, unless the Exchange Offer is extended),
determined as described in the prospectus for the Exchange Offer or
(2) the "Minimum Share Price" of $2.50 per share of the
Corporation's common stock. The expiration date for the Exchange
Offer is July 28, 2009, unless the Corporation extends the Exchange
Offer or terminates it early. The closing sale price of the
Corporation's common stock on the Nasdaq Stock Market on July 15,
2009, the trading day prior to this press release, was $1.41 per
share, which is substantially less than the Minimum Share Price.
The Exchange Offer terms provide that in the event that the average
VWAP is less than the Minimum Share Price, the number of shares of
the Corporation's common stock that participants in the Exchange
Offer will receive will be calculated on the basis of the Minimum
Share Price rather than the average VWAP. In that case,
participants in the Exchange Offer would receive shares of the
Corporation's common stock with a value less (and possibly
significantly less) than the value of the shares of common stock
such participants would receive in the absence of the Minimum Share
Price limitation. If participation in the Exchange Offer is low
because of the application of the Minimum Share Price, the Exchange
Offer will not increase the amount of the Corporation's Tier 1
common equity as much as it would have been increased if
participation had been high. As stated in the prospectus, this
could result in the Corporation taking a number of further actions
to preserve or increase Tier 1 common equity. One highly probable
action is a suspension of distributions on the trust preferred
securities that, once suspended, are unlikely to be resumed for a
number of years. For further discussion of these and other matters
related to the Corporation, its capital needs and the Exchange
Offer, we refer you to the prospectus and other documents the
Corporation has filed with the SEC related to the Exchange Offer,
including the "Risk Factors" section in the prospectus and the risk
factors captioned "Even if we complete the Exchange Offer, without
a high level of participation, we will not realize the intended
goal of substantially increasing Tier 1 common equity" on page 40
and "If the Exchange Offer is successful, there may no longer be a
trading market for the shares of Preferred Stock or Trust Preferred
Securities and the price for shares of Preferred Stock or Trust
Preferred Securities may be depressed" on page 42. The Corporation
has filed a registration statement (including a prospectus and
related Exchange Offer materials) with the Securities and Exchange
Commission (the "SEC") for the Exchange Offer. Before you decide
whether to tender into the Exchange Offer, you should read the
prospectus in that registration statement and other documents the
Corporation has filed with the SEC for more complete information
about the Corporation and the Exchange Offer. You may obtain these
documents for free by visiting EDGAR on the SEC Web site at
http://www.sec.gov/. Alternatively, the Corporation will arrange to
send you the prospectus if you request it by contacting Corporate
Communications, at (787) 765-9800. The complete terms and
conditions of the Exchange Offer are set forth in the prospectus
and the related letters of transmittal, copies of which will be
available at http://www.popularinc.com/exchangeoffer and from
Global Bondholder Services Corporation, the information agent, at
(866) 540-1500 or, for bankers and brokers, at (212) 430-3774. This
press release is not an offer to sell or purchase or an offer to
exchange or a solicitation of acceptance of an offer to sell or
purchase or offer to exchange, which may be made only pursuant to
the terms of the preliminary prospectus and related letter of
transmittal, as applicable. Reconciliation of Non-GAAP Financial
Measure: The table below presents a reconciliation of Tier 1 common
equity (also referred to as Tier 1 common) to common stockholders'
equity. Ratios calculated based upon Tier 1 common equity have
become a focus of regulators and investors, and management believes
ratios based on Tier 1 common equity assist investors in analyzing
our capital position. In connection with the Supervisory Capital
Assessment Program ("SCAP"), the Federal Reserve began
supplementing its assessment of the capital adequacy of a bank
holding company based on a variation of Tier 1 capital, known as
Tier 1 common equity. Because Tier 1 common equity is not formally
defined by GAAP or, unlike Tier 1 capital, codified in the federal
banking regulations, this measure is considered to be a non-GAAP
financial measure. Non-GAAP financial measures have inherent
limitations, are not required to be uniformly applied and are not
audited. To mitigate these limitations, we have procedures in place
to calculate these measures using the appropriate GAAP or
regulatory components. Although these non-GAAP financial measures
are frequently used by stakeholders in the evaluation of a company,
they have limitations as analytical tools, and should not be
considered in isolation, or as a substitute for analyses of results
as reported under GAAP. The following table provides a
reconciliation of common stockholders' equity (GAAP) to Tier 1
common equity (non-GAAP): June 30, March 31, (In thousands) 2009
2009 ------------- ---- ---- Common stockholders' equity $1,412,701
$1,646,627 Less: Unrealized gains on available for sale securities,
net of tax (1) (48,296) (76,966) Less: Disallowed deferred tax
assets (2) (167,223) (154,590) Less: Intangible assets: Goodwill
(607,164) (606,440) Other disallowed intangibles (25,797) (29,768)
Less: Aggregate adjusted carrying value of all non-financial equity
investments (2,147) (2,343) Add: Pension liability adjustment, net
of tax and accumulated net losses on cash flow hedges (3) 120,256
124,962 ----------------------------------------- ------- -------
Total Tier 1 common equity $682,330 $901,482
-------------------------- -------- -------- (1) 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 accordance
with regulatory risk-based capital guidelines. 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 $193
million of our $390 million of net deferred tax assets at June 30,
2009 (March 31, 2009 - $181 million of our $363 million of net
deferred tax assets), were included without limitation in
regulatory capital pursuant to the risk-based capital guidelines,
while approximately $167 million of such assets at June 30, 2009
(March 31, 2009 - $155 million) exceeded the limitation imposed by
these guidelines and, as "disallowed deferred tax assets," were
deducted in arriving at Tier 1 capital. Approximately $30 million
of our other net deferred tax assets at June 30, 2009 (March 31,
2009 - $27 million) represented primarily 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. (3) The Federal Reserve Bank has granted interim
capital relief for the impact of SFAS No. 158. Forward-Looking
Statements: The information included in this press release may
contain certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and
involve certain risks and uncertainties that may cause actual
results to differ materially from those expressed in
forward-looking statements. Factors that might cause such a
difference include, but are not limited to (i) the rate of
declining 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; and (ix)
difficulties in combining the operations of acquired entities. 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, 2008 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. *** Popular, Inc. is a full service financial
services provider based in Puerto Rico with operations in Puerto
Rico, the United States, the Caribbean and Latin America. As the
leading financial institution in Puerto Rico, the Corporation
offers retail and commercial banking services through its principal
banking subsidiary, Banco Popular de Puerto Rico, as well as auto
and equipment leasing and financing, mortgage loans, investment
banking, broker-dealer and insurance services through specialized
subsidiaries. In the United States, the Corporation operates Banco
Popular North America ("BPNA"), including its wholly-owned
subsidiary E-LOAN. BPNA is a community bank providing a broad range
of financial services and products to the communities it serves.
BPNA operates branches in New York, California, Illinois, New
Jersey and Florida. E-LOAN markets deposit accounts under its name
for the benefit of BPNA and offers loan customers the option of
being referred to a trusted consumer lending partner. The
Corporation, through its subsidiary EVERTEC, provides transaction
processing services throughout the Caribbean and Latin America, as
well as internally services many of its subsidiaries' system
infrastructures and transactional processing businesses. The
Corporation is exporting its 115 years of experience through these
regions while continuing its commitment to meet the needs of
clients through innovation and to foster growth in the communities
it serves. An electronic version of this press release can be found
at the Corporation's website, http://www.popular.com/. *** Exhibits
A, B and C follow EXHIBIT A POPULAR, INC. Financial Summary
(Unaudited) -----------------------------------------------------
Quarter 2nd Quarter Quarter ended 2nd Quarter ended 2009 vs 1st
June 30, 2009 vs 2008 March 31, Quarter 2009 2009 2008 $ Variance
2009 $ Variance ---- ---- ---------- ---- ---------- Summary of
Operations --- (In thousands, except share information) Interest
income $471,046 $565,258 ($94,212) $489,192 ($18,146) Interest
expense 187,986 234,961 (46,975) 216,706 (28,720) ------- -------
------- ------- ------- Net interest income 283,060 330,297
(47,237) 272,486 10,574 Provision for loan losses 349,444 189,165
160,279 372,529 (23,085) ------- ------- ------- ------- -------
Net interest income after provision for loan losses (66,384)
141,132 (207,516) (100,043) 33,659 Net gain on sale and valuation
adjustments of investment securities 53,705 28,334 25,371 176,146
(122,441) Trading account profit 16,839 18,541 (1,702) 6,823 10,016
(Loss) gain on sale of loans and valuation adjustments on loans
held-for-sale (13,453) 4,907 (18,360) (13,813) 360 Other
non-interest income 168,748 184,016 (15,268) 165,575 3,173 -------
------- ------- ------- ----- Total non-interest income 225,839
235,798 (9,959) 334,731 (108,892) Personnel costs 136,206 155,317
(19,111) 145,291 (9,085) Other operating expenses 194,439 175,021
19,418 158,906 35,533 ------- ------- ------ ------- ------ Total
operating expenses 330,645 330,338 307 304,197 26,448 -------
------- --- ------- ------ (Loss) income from continuing operations
before income tax (171,190) 46,592 (217,782) (69,509) (101,681)
Income tax expense (benefit) 5,393 (12,581) 17,974 (26,933) 32,326
----- ------- ------ ------- ------ (Loss) income from continuing
operations, net of income tax (176,583) 59,173 (235,756) (42,576)
(134,007) Loss from discontinued operations, net of income tax
(6,599) (34,923) 28,324 (9,946) 3,347 ------ ------- ------ ------
----- Net (loss) income ($183,182) $24,250 ($207,432) ($52,522)
($130,660) ========= ======= ========= ======== ========= Net
(loss) income applicable to common stock ($207,810) $18,247
($226,057) ($77,200) ($130,610) ========= ======= =========
======== ========= (Losses) earnings per common share: Basic and
diluted (losses) earnings per common share from continuing
operations ($0.71) $0.19 ($0.24) ====== ===== ====== Basic and
diluted losses per common share from discontinued operations
($0.03) ($0.13) ($0.03) ====== ====== ====== Basic and diluted
(losses) earnings per common share - Total ($0.74) $0.06 ($0.27)
====== ===== ====== Dividends declared per common share - $0.16
$0.02 --- ===== ===== Average common shares outstanding 281,888,394
280,773,513 281,834,434 Average common shares outstanding -
assuming dilution 281,888,394 280,773,513 281,834,434 Common shares
outstanding at end of period 282,031,548 280,983,132 282,034,819
Market value per common share $2.20 $6.59 $2.16 Book value per
common share $5.01 $11.10 $5.84 Market Capitalization --- (In
millions) $620 $1,852 $609 Selected Average Balances --- (In
millions) Total assets $37,048 $40,845 ($3,797) $38,437 ($1,389)
Stockholders' equity 3,002 3,519 (517) 3,113 (111) Selected
Financial Data at Period-End --- (In millions) Total assets $36,499
$41,679 ($5,180) $37,709 ($1,210) Loans (1) 24,850 27,632 (2,782)
25,553 (703) Earning assets (1) 34,070 37,205 (3,135) 35,180
(1,110) Deposits 26,913 27,116 (203) 27,150 (237) Borrowings 5,587
10,000 (4,413) 6,311 (724) Interest bearing liabilities 28,092
32,634 (4,542) 29,088 (996) Stockholders' equity 2,900 3,706 (806)
3,132 (232) Performance Ratios Net interest yield from continuing
operations (2) 3.27% 3.69% 3.07% Return on assets (1.98) 0.24
(0.55) Return on common equity (53.48) 2.08 (19.13) Credit Quality
Data --- (Dollars in millions) Net loans charged-off, excluding
write-downs on loans transferred to held-for-sale (3) $260.3 $113.1
$147.2 $198.2 $62.1 Allowance for loan losses 1,146 653 493 1,057
89 Non-performing loans from continuing operations 1,978 883 1,095
1,404 574 Non-performing loans from discontinued operations 1 151
(150) 3 (2) Non-performing loans - total 1,979 1,034 945 1,407 572
Non-performing loans to loans held-in- portfolio (4)(5) 8.04% 3.49%
5.56% Allowance for loan losses to non-performing loans (4) 57.94
70.69 75.30 Allowance for loan losses to loans held-in- portfolio
(5) 4.66 2.47 4.19 (1) Includes assets/liabilities from
discontinued operations as follows: June 30, 2009 - $1 million in
loans and earning assets; March 31, 2009 - $7 million in loans and
earning assets. (2) Not on a taxable equivalent basis. (3) Excludes
net charge-offs from discontinued operations. (4) Non-performing
loans ("NPL") exclude NPL accounted pursuant to the fair value
option of SFAS No. 159. Also, for the periods ended June 30, 2009
and March 31, 2009, NPL exclude NPL from discontinued operations.
(5) Loans held-in-portfolio exclude loans held-for-sale and loans
accounted pursuant to the fair value option of SFAS No. 159. Loans
from discontinued operations are considered held-for-sale as of
June 30, 2009 and March 31, 2009. Notes: Certain reclassifications
have been made to prior periods to conform with this quarter
presentation. EXHIBIT A (CONTINUED) POPULAR, INC. Financial Summary
(Unaudited) ------------------------ For the six months ended June
30, 2009 2008 $ Variance ---- ---- ---------- Summary of Operations
--- (In thousands, except share information) Interest income
$960,238 $1,177,100 ($216,862) Interest expense 404,692 511,044
(106,352) ------- ------- -------- Net interest income 555,546
666,056 (110,510) Provision for loan losses 721,973 350,401 371,572
------- ------- ------- Net interest income after provision for
loan losses (166,427) 315,655 (482,082) Net gain on sale and
valuation adjustments of investment securities 229,851 78,562
151,289 Trading account profit 23,662 31,878 (8,216) (Loss) gain on
sale of loans and valuation adjustments on loans held-for-sale
(27,266) 19,174 (46,440) Other non-interest income 334,323 370,935
(36,612) ------- ------- ------- Total non-interest income 560,570
500,549 60,021 Personnel costs 281,497 311,285 (29,788) Other
operating expenses 353,345 342,348 10,997 ------- ------- ------
Total operating expenses 634,842 653,633 (18,791) ------- -------
------- (Loss) income from continuing operations before income tax
(240,699) 162,571 (403,270) Income tax (benefit) expense (21,540)
4,159 (25,699) ------- ----- ------- (Loss) income from continuing
operations, net of income tax (219,159) 158,412 (377,571) Loss from
discontinued operations, net of income tax (16,545) (30,872) 14,327
------- ------- ------ Net (loss) income ($235,704) $127,540
($363,244) ========= ======== ========= Net (loss) income
applicable to common stock ($285,010) $118,559 ($403,569) =========
======== ========= (Losses) earnings per common share: Basic and
diluted (losses) earnings per common share from continuing
operations ($0.95) $0.52 ====== ===== Basic and diluted losses per
common share from discontinued operations ($0.06) ($0.10) ======
====== Basic and diluted (losses) earnings per common share - Total
($1.01) $0.42 ====== ===== Dividends declared per common share
$0.02 $0.32 ===== ===== Average common shares outstanding
281,861,563 280,514,164 Average common shares outstanding -
assuming dilution 281,861,563 280,514,164 Common shares outstanding
at end of period 282,031,548 280,983,132 Market value per common
share $2.20 $6.59 Book value per common share $5.01 $11.10 Market
Capitalization --- (In millions) $620 $1,852 Selected Average
Balances --- (In millions) Total assets $37,739 $41,775 ($4,036)
Stockholders' equity 3,057 3,425 (368) Performance Ratios Net
interest yield from continuing operations (1) 3.17% 3.68% Return on
assets (1.26) 0.61 Return on common equity (35.08) 7.11 Credit
Quality Data --- (Dollars in millions) Net loans charged-off,
excluding write-downs on loans transferred to held- for-sale (2)
$458.5 $205.7 $252.8 Allowance for loan losses 1,146 653 493
Non-performing loans from continuing operations 1,978 883 1,095
Non-performing loans from discontinued operations 1 151 (150)
Non-performing loans - total 1,979 1,034 945 Non-performing loans
to loans held-in-portfolio (3)(4) 8.04% 3.49% Allowance for loan
losses to non-performing loans (3) 57.94 70.69 Allowance for loan
losses to loans held-in-portfolio (4) 4.66 2.47 (1) Not on a
taxable equivalent basis. (2) Excludes net charge-offs from
discontinued operations. (3) Non-performing loans ("NPL") exclude
NPL accounted pursuant to the fair value option of SFAS No. 159.
Also, for the period ended June 30, 2009, NPL exclude NPL from
discontinued operations. (4) Loans held-in-portfolio exclude loans
held-for-sale and loans accounted pursuant to the fair value option
of SFAS No. 159. Loans from discontinued operations are considered
held-for-sale as of June 30, 2009. Notes: Certain reclassifications
have been made to prior periods to conform with this quarter
presentation. EXHIBIT B POPULAR, INC. Credit Quality Information
(Unaudited)
-------------------------------------------------------- For the
six For the six Quarter Quarter Quarter months months ended ended
ended ended ended June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
-------------------------------------------------------- Net loans
charged-off, excluding write-downs on loans transferred to
held-for-sale --- (In millions) Commercial $69.9 $41.3 $40.4 $111.2
$68.7 Construction 76.5 44.8 5.2 121.3 5.2 Mortgage 24.7 31.1 9.6
55.8 18.7 Consumer 85.1 76.0 53.4 161.1 103.7 Lease financing 4.1
5.0 4.5 9.1 9.4 --- --- --- --- --- Total $260.3 $198.2 $113.1
$458.5 $205.7 ====== ====== ====== ====== ======
-------------------------------------------------------- For the
six For the six Quarter Quarter Quarter months months ended ended
ended ended ended June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
-------------------------------------------------------- Annualized
Net Charge-Offs to Average Loans Held-in-Portfolio Commercial 2.11%
1.22% 1.18% 1.66% 1.01% Construction 14.46 8.16 1.02 11.25 0.52
Mortgage 2.27 2.83 0.85 2.55 0.82 Consumer 7.73 6.63 4.41 7.17 4.24
Lease financing 2.25 2.73 1.65 2.49 1.72 ---- ---- ---- ---- ----
Total 4.19% 3.12% 1.73% 3.65% 1.57% ==== ==== ==== ==== ====
-----------------------------------------------------
Non-performing As a % As a % Loans from Continuing of loans of
loans Operations --- held-in- held-in- (In millions) June 30, 2009
portfolio March 31, 2009 portfolio
-------------------------------------------------------- Commercial
$686 5.2% $525 3.9% Construction 767 37.7 435 20.2 Mortgage 442 9.9
353 7.8 Consumer 71 1.7 78 1.7 Lease financing 12 1.6 13 1.8 -- ---
-- --- Total $1,978 8.0% $1,404 5.6% ====== === ====== === June 30,
2009 March 31, 2009
---------------------------------------------------------- SFAS No.
114 SFAS No. 114 Impaired Loans Allowance for Allowance for (SFAS
No. 114) --- Recorded loan losses Recorded loan losses (In
millions) Investment (ALLL) Investment (ALLL) ----------
-------------- ---------- ------------- Impaired loans with ALLL
required $1,034.4 $313.1 $903.1 $279.2 Impaired loans with no ALLL
required 410.5 - 238.6 - ----- - ----- - Total impaired loans (SFAS
No. 114) $1,444.9 $313.1 $1,141.7 $279.2 ======== ====== ========
====== EXHIBIT C POPULAR, INC. Financial Summary - Segment
Reporting (Unaudited) Quarter ended June 30, 2009
--------------------------------------------- Total Intersegment
Reportable BPPR BPNA EVERTEC Eliminations Segments ---- ----
------- ------------ -------- Summary of Operations --- (In
millions) Net interest income (expense) $216.9 $80.8 ($0.2) -
$297.5 Provision for loan losses 181.6 167.8 - - 349.4 ----- -----
- - ----- Net interest income (expense) after provision for loan
losses 35.3 (87.0) (0.2) - (51.9) Net gain on sale and valuation
adjustments of investment securities 44.9 - 7.9 - 52.8 Trading
account profit 16.8 - - - 16.8 Gain (loss) on sale of loans and
valuation adjustments on loans held-for-sale 0.5 (14.0) - - (13.5)
Other non-interest income (service charges on deposits, other
service fees and other) 123.1 19.8 62.6 ($36.9) 168.6 ----- ----
---- ------ ----- Total non-interest income 185.3 5.8 70.5 (36.9)
224.7 Personnel costs 75.6 30.9 20.8 (0.2) 127.1 Other operating
expenses 135.8 61.3 24.4 (36.5) 185.0 ----- ---- ---- ----- -----
Total operating expenses 211.4 92.2 45.2 (36.7) 312.1 ----- ----
---- ----- ----- Income (loss) from continuing operations before
income tax 9.2 (173.4) 25.1 (0.2) (139.3) Income tax expense
(benefit) 2.4 0.8 7.0 (0.1) 10.1 --- --- --- ---- ---- Income
(loss) from continuing operations, net of income tax 6.8 (174.2)
18.1 (0.1) (149.4) Loss from discontinued operations, net of income
tax - - - - - ---- ------- ----- ----- ------- Net income (loss)
$6.8 ($174.2) $18.1 ($0.1) ($149.4) ==== ======= ===== =====
======= Quarter ended June 30, 2009 ---------------------------
Eliminations and Discontinued Corporate Operations Popular, Inc.
--------- ---------------- ------------- Summary of Operations ---
(In millions) Net interest income (expense) ($14.7) $0.3 $283.1
Provision for loan losses - - 349.4 - - ----- Net interest income
(expense) after provision for loan losses (14.7) 0.3 (66.3) Net
gain on sale and valuation adjustments of investment securities 0.9
- 53.7 Trading account profit - - 16.8 Gain (loss) on sale of loans
and valuation adjustments on loans held-for-sale - - (13.5) Other
non-interest income (service charges on deposits, other service
fees and other) 2.1 (1.9) 168.8 --- ---- ----- Total non-interest
income 3.0 (1.9) 225.8 Personnel costs 9.1 - 136.2 Other operating
expenses 10.9 (1.4) 194.5 ---- ---- ----- Total operating expenses
20.0 (1.4) 330.7 ---- ---- ----- Income (loss) from continuing
operations before income tax (31.7) (0.2) (171.2) Income tax
expense (benefit) (4.6) (0.1) 5.4 ---- ---- --- Income (loss) from
continuing operations, net of income tax (27.1) (0.1) (176.6) Loss
from discontinued operations, net of income tax - (6.6) (6.6) ----
---- ---- Net income (loss) ($27.1) ($6.7) ($183.2) ====== =====
======= EXHIBIT C (CONTINUED) POPULAR, INC. Financial Summary -
Segment Reporting (Unaudited) Quarter ended June 30, 2008
----------------------------------------------- Total Intersegment
Reportable BPPR BPNA EVERTEC Eliminations Segments ---- ----
------- ------------ -------- Summary of Operations --- (In
millions) Net interest income (expense) $243.2 $92.4 ($0.2) -
$335.4 Provision for loan losses 107.8 81.4 - - 189.2 ----- ---- -
- ----- Net interest income (expense) after provision for loan
losses 135.4 11.0 (0.2) - 146.2 Net gain on sale and valuation
adjustments of investment securities 28.3 - - - 28.3 Trading
account profit 18.6 - - - 18.6 Gain on sale of loans and valuation
adjustments on loans held-for-sale 0.4 4.5 - - 4.9 Other
non-interest income (loss) (service charges on deposits, other
service fees and other) 137.8 24.7 65.8 ($37.9) 190.4 ----- ----
---- ------ ----- Total non-interest income (loss) 185.1 29.2 65.8
(37.9) 242.2 Personnel costs 81.3 45.5 23.0 (0.7) 149.1 Other
operating expenses 127.2 53.8 24.8 (36.6) 169.2 ----- ---- ----
----- ----- Total operating expenses 208.5 99.3 47.8 (37.3) 318.3
----- ---- ---- ----- ----- Income (loss) from continuing
operations before income tax 112.0 (59.1) 17.8 (0.6) 70.1 Income
tax expense (benefit) 19.5 (24.8) 4.3 (0.2) (1.2) ---- ----- ---
---- ---- Income (loss) from continuing operations, net of income
tax 92.5 (34.3) 13.5 (0.4) 71.3 Loss from discontinued operations,
net of income tax - - - - - - - - - - Net income (loss) $92.5
($34.3) $13.5 ($0.4) $71.3 ===== ====== ===== ===== ===== Quarter
ended June 30, 2008 --------------------------- Eliminations and
Discontinued Corporate Operations Popular, Inc. ---------
---------------- ------------- Summary of Operations --- (In
millions) Net interest income (expense) ($5.4) $0.3 $330.3
Provision for loan losses - - 189.2 --- --- ----- Net interest
income (expense) after provision for loan losses (5.4) 0.3 141.1
Net gain on sale and valuation adjustments of investment securities
- - 28.3 Trading account profit - - 18.6 Gain on sale of loans and
valuation adjustments on loans held-for-sale (1.3) 1.3 4.9 Other
non-interest income (loss) (service charges on deposits, other
service fees and other) 1.0 (7.4) 184.0 ---- ---- ----- Total
non-interest income (loss) (0.3) (6.1) 235.8 Personnel costs 8.0
(1.8) 155.3 Other operating expenses 7.6 (1.8) 175.0 --- ---- -----
Total operating expenses 15.6 (3.6) 330.3 ---- ---- ----- Income
(loss) from continuing operations before income tax (21.3) (2.2)
46.6 Income tax expense (benefit) (12.0) 0.6 (12.6) ----- --- -----
Income (loss) from continuing operations, net of income tax (9.3)
(2.8) 59.2 Loss from discontinued operations, net of income tax -
(34.9) (34.9) - ----- ----- Net income (loss) ($9.3) ($37.7) $24.3
===== ====== ===== EXHIBIT C (CONTINUED) POPULAR, INC. Financial
Summary - Segment Reporting (Unaudited) Quarter ended March 31,
2009 ---------------------------------------- Total Intersegment
Reportable BPPR BPNA EVERTEC Eliminations Segments ---- ----
------- ------------ -------- Summary of Operations --- (In
millions) Net interest income (expense) $216.2 $76.5 ($0.2) -
$292.5 Provision for loan losses 151.3 221.2 - - 372.5 ----- -----
- - ----- Net interest income (expense) after provision for loan
losses 64.9 (144.7) (0.2) - (80.0) Net gain (loss) on sale and
valuation adjustments of investment securities 182.7 - - - 182.7
Trading account profit 6.8 - - - 6.8 Gain (loss) on sale of loans
and valuation adjustments on loans held-for-sale 6.7 (20.5) - -
(13.8) Other non-interest income (service charges on deposits,
other service fees and other) 114.5 24.3 61.5 ($36.3) 164.0 -----
---- ---- ------ ----- Total non-interest income (loss) 310.7 3.8
61.5 (36.3) 339.7 Personnel costs 77.3 37.4 22.2 (0.3) 136.6 Other
operating expenses 121.6 44.2 24.1 (36.0) 153.9 ----- ---- ----
----- ----- Total operating expenses 198.9 81.6 46.3 (36.3) 290.5
----- ---- ---- ----- ----- Income (loss) from continuing
operations before income tax 176.7 (222.5) 15.0 - (30.8) Income tax
(benefit) expense (3.1) (9.0) 5.1 - (7.0) ---- ---- --- - ----
Income (loss) from continuing operations, net of income tax 179.8
(213.5) 9.9 - (23.8) Loss from discontinued operations, net of
income tax - - - - - --- --- --- --- --- Net income (loss) $179.8
($213.5) $9.9 - ($23.8) ====== ======= ==== === ====== Quarter
ended March 31, 2009 ---------------------------- Eliminations and
Discontinued Corporate Operations Popular, Inc. ---------
---------------- ------------- Summary of Operations --- (In
millions) Net interest income (expense) ($20.2) $0.2 $272.5
Provision for loan losses - - 372.5 - - ----- Net interest income
(expense) after provision for loan losses (20.2) 0.2 (100.0) Net
gain (loss) on sale and valuation adjustments of investment
securities (6.6) - 176.1 Trading account profit - - 6.8 Gain (loss)
on sale of loans and valuation adjustments on loans held-for-sale -
- (13.8) Other non-interest income (service charges on deposits,
other service fees and other) 3.0 (1.4) 165.6 --- --- ----- Total
non-interest income (loss) (3.6) (1.4) 334.7 Personnel costs 8.7 -
145.3 Other operating expenses 6.9 (1.9) 158.9 --- --- ----- Total
operating expenses 15.6 (1.9) 304.2 ---- --- ----- Income (loss)
from continuing operations before income tax (39.4) 0.7 (69.5)
Income tax (benefit) expense (20.2) 0.3 (26.9) ----- --- -----
Income (loss) from continuing operations, net of income tax (19.2)
0.4 (42.6) Loss from discontinued operations, net of income tax -
(9.9) (9.9) - ---- ---- Net income (loss) ($19.2) ($9.5) ($52.5)
====== ====== ====== DATASOURCE: Popular, Inc. CONTACT: Investor
Relations: Jorge A. Junquera, Chief Financial Officer, Senior
Executive Vice President, +1-787-754-1685; or Media Relations:
Teruca Rullan, Senior Vice President, Corporate Communications,
+1-787-281-5170, +1-917-679-3596 (mobile), both of Popular, Inc.
Web Site: http://www.popular.com/
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