Popular, Inc. Reports Net Income of $83.9 million for the Fourth Quarter and $245.3 million for the Year Ended December 31,
Popular, Inc. Reports Net Income of $83.9 million for the Fourth Quarter and
$245.3 million for the Year Ended December 31, 2012
* Significant progress in credit quality (excluding covered loans):
* Non-performing loans held-in-portfolio declined by $125.4 million or
8% from Q3 2012, and down 39% from Q3 2010 peak; lowest level since
Q2 2009;
* Inflows of commercial, construction and legacy non-performing loans
held-in-portfolio for Q4 2012 down by $72.9 million, or 51%, from Q3
2012, and down $401.9 million, or 47%, year over year;
* Non-performing assets decreased by $384.4 million, or 18%, year over
year;
* Net charge-offs of $100.9 million for Q4 2012, vs. $95.8 million for
Q3 2012, and $126.0 million for Q4 2011;
* Net charge-offs declined $131.3 million, or 25%, year over year.
* Net interest margin increased to 4.41% in Q4 2012
* Average balance of non-covered loans grew by $361.1 million in Q4 2012,
reflecting strong mortgage and commercial originations in Puerto Rico and
purchases of high-quality U.S. mortgages
* Common Equity Tier 1 ratio of 13.18% and Tangible Book Value per Share of
$32.55 at December 31, 2012; capital exceeds well-capitalized threshold by
$1.9 billion
Business Wire
SAN JUAN, Puerto Rico -- January 24, 2013
Popular, Inc. (“the Corporation” or “Popular”) (NASDAQ:BPOP) reported net
income of $83.9 million for the quarter ended December 31, 2012, compared with
net income of $47.2 million for the quarter ended September 30, 2012.
Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer,
said: “Our fourth quarter results reflect the strength of our core businesses
and market positions, significant further declines in non-performing loans and
increases in our already strong capital ratios. In 2013, we remain focused on
driving value through further progress on all these fronts and continuing to
increase our strategic and financial flexibility.”
Significant events for the quarter ended December 31, 2012
* During the month of December 2012, the Corporation received a $24.2
million cash dividend from its investment in EVERTEC’s parent company.
Also, the Corporation recorded pre-tax income of approximately $31.6
million related to its proportionate share of a tax benefit from a tax
grant received by EVERTEC from the Puerto Rico Government. The
Corporation’s equity investment balance in the entity stands at $73.9
million as of year-end. The Corporation’s participation interest in the
entity was 48.5% as of December 31, 2012.
Earnings
Highlights
Quarters ended Years ended
(Dollars in
thousands,
except per 31-Dec-12 30-Sep-12 31-Dec-11 31-Dec-12 31-Dec-11
share
information)
Net interest $ 350,411 $ 343,426 $ 344,780 $ $
income 1,372,619 1,431,992
Provision for
loan losses – 86,256 83,589 123,908 334,102 430,085
non-covered
loans
Provision for
loan losses – (3,445) 22,619 55,900 74,839 145,635
covered loans
[1]
Net interest
income after 267,600 237,218 164,972 963,678 856,272
provision for
loan losses
FDIC loss
share (36,824) (6,707) 17,447 (56,211) 66,791
(expense)
income
Other
non-interest 169,825 122,416 131,912 522,553 493,486
income
Operating 296,747 290,355 311,093 1,211,148 1,150,297
expenses
Income before 103,854 62,572 3,238 218,872 266,252
income tax
Income tax
expense 19,914 15,384 263 (26,403) 114,927
(benefit)
Net income $ 83,940 $ 47,188 $ 2,975 $ 245,275 $ 151,325
Net income
applicable to $ 83,009 $ 46,257 $ 2,044 $ 241,552 $ 147,602
common stock
Net income per
common share - $ 0.81 $ 0.45 $ 0.02 $ 2.35 $ 1.44
basic and
diluted [2]
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted
transaction that are covered under FDIC loss sharing agreements.
[2] Per share data has been adjusted to retroactively reflect the 1-for-10
reverse stock split effected on May 29, 2012.
Financial Impact of FDIC-Assisted Transaction
Quarters ended Years ended
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11 31-Dec-12 31-Dec-11
Income
Statement
Interest income
on covered $ 76,998 $ 70,584 $ 88,424 $ 301,441 $ 412,678
loans
Total FDIC loss
share (expense) (36,824) (6,707) 17,447 (56,211) 66,791
income
Other
non-interest 281 310 1,092 1,211 12,810
income
Provision for (3,445) 22,619 55,900 74,839 145,635
loan losses
Total revenues
less provision $ 43,900 $ 41,568 $ 51,063 $ 171,602 $ 346,644
for loan losses
Balance Sheet
Loans covered
under $ $ $
loss-sharing 3,755,972 3,903,867 4,348,703
agreements with
FDIC
FDIC loss share 1,399,098 1,559,057 1,915,128
asset
FDIC true-up
payment 111,519 103,189 98,340
obligation
See additional details on accounting for FDIC-Assisted transaction in Table O.
Net interest income
Net interest margin for the fourth quarter of 2012 increased 4 basis points to
4.41% when compared with the third quarter of 2012. Net interest income
reached $350.4 million, an increase of $7.0 million from the third quarter.
The main drivers of the improvement in net interest margin are:
* Increase of $6.4 million in interest income on the covered loan portfolio.
The higher yield of the covered loan portfolio was mainly the result of a
substantial reduction in expected losses and the resolution of certain
commercial loans in excess of their book value.
* Decrease of approximately $2.1 million, or 3 basis points, in interest
expense on deposits, reflecting continuing progress in repricing the
deposit base and a decrease in the average balance of deposits, mainly in
brokered and non-brokered certificates of deposit.
* Decrease of approximately $1.8 million, or 24 basis points in interest
expense on notes payable, driven by replacing long-term FHLB advances with
brokered certificates of deposit and repurchase agreements at a lower
cost.
* Banco Popular de Puerto Rico’s (BPPR) net interest margin increased 7
basis points from 5.11% in the third quarter to 5.18% in the fourth
quarter. Net interest income amounted to $309.1 million for the quarter
ended December 31, 2012, compared with $300.9 million for the previous
quarter. The improvement was mainly the result of higher interest income
from covered loans and a lower cost of borrowings as mentioned above.
* Banco Popular North America (BPNA) earned $68.5 million in net interest
income for the quarter ended December 31, 2012 compared with $69.6 million
in the previous quarter. The decrease in the net interest margin of 6
basis points to 3.51% was mainly caused by a decrease in the yield of
commercial and mortgage loans and of investment securities due to
prepayments, partially offset by a 12 basis point reduction in the cost of
interest-bearing deposits.
Provision for Loan Losses
Quarters ended Years ended
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11 31-Dec-12 31-Dec-11
Provision for
loan losses -
non-covered loans
BPPR $ 78,092 $ 69,738 $ 88,128 $ 282,061 $ 341,596
BPNA 8,164 13,851 35,780 52,041 88,489
Total provision
for loan losses- 86,256 83,589 123,908 334,102 430,085
non-covered loans
Provision
(reversal) for (3,445 ) 22,619 55,900 74,839 145,635
loan losses -
covered loans
Total provision $ 82,811 $ 106,208 $ 179,808 $ 408,941 $ 575,720
for loan losses
The provision for loan losses for the fourth quarter of 2012 amounted to $82.8
million, a decrease of $23.4 million versus the previous quarter, mainly
driven by lower provision for the covered loan portfolio.
* The provision for loan losses for the non-covered loan portfolio increased
by $2.7 million from third quarter 2012.
* The provision for loan losses for non-covered loans at BPPR increased
by $8.4 million from the third quarter of 2012, primarily reflecting
higher net charge-offs in the commercial loan portfolio mainly
related to one particular relationship.
* The provision for loan losses at BPNA operations decreased by $5.7
million from the third quarter of 2012, primarily due to continued
improvements in credit trends.
* The provision for loan losses on the covered loan portfolio decreased by
$26.1 million from the third quarter 2012, driven primarily by loans
accounted for pursuant to ASC 310-30.
* The provision for loan losses for loans accounted under ASC 310-30
was $1.6 million for the fourth quarter of 2012, compared with $17.9
million for the previous quarter. The $16.3 million decrease was
mostly due to certain commercial and construction loan pools, which
reflected lower expected loss estimates for the fourth quarter of
2012. Overall expected losses on the covered portfolio continue to be
lower than originally estimated.
* The provision for loan losses on covered loans accounted under ASC
310-20 declined by $9.8 million from the previous quarter, primarily
driven by a reduction in the specific reserve of a particular
commercial loan relationship.
Non-interest income
Non-interest income increased by $17.3 million versus the third quarter,
driven primarily by the following items:
* A $37.9 million increase in other operating income principally due to
$31.6 million of income recorded from the Corporation’s interest in
EVERTEC during the fourth quarter related to its proportionate share of a
tax benefit from a tax grant received by EVERTEC from the Puerto Rico
Government.
* An $11.7 million increase in net gain on sale of loans as a result of
higher gains on securitization transactions at BPPR and sales of U.S.
commercial loans held-for-sale.
* Reduction of $5.5 million in adjustments to the indemnity reserves on
loans sold, mainly as a result of improvements in delinquency trends of
mortgage loans serviced subject to credit recourse as well as a declining
portfolio and lower provision in the representations and warranties
reserve in the U.S. mainland. The Corporation stopped selling loans
subject to credit recourse in 2009.
These increases were partially offset by:
* An increase of $3.7 million in trading account losses mainly driven by
lower gain on sale of trading securities. During the third quarter the
Corporation sold approximately $140.7 million in trading mortgage-backed
securities which resulted in a gain on sale of approximately $3.4 million,
net of hedging costs. Also, during the fourth quarter there were higher
unrealized losses on trading mortgage-backed securities due to higher
prepayment rates and higher realized and unrealized losses of local
municipal bonds due to rating downgrades of municipal agencies in Puerto
Rico.
* An increase of $30.1 million in FDIC loss-share expense, principally
caused by higher amortization of the loss-share asset due to lower
expected losses, a release of allowance for loan and lease losses during
the fourth quarter and higher unfavorable fair value adjustments of $5.3
million in the true-up payment obligation. See additional details about
covered portfolio and FDIC indemnity asset in Table O.
Refer to table B for further details.
Operating expenses
Operating expenses increased by $6.4 million versus the third quarter, driven
primarily by the following items:
* An increase of $4.8 million in personnel costs, driven mainly by sales
incentives, retail commissions, training expenses and other compensation
costs.
* An increase of $2.5 million in net occupancy expenses related to higher
expenses at BPNA for property maintenance and repair and rent and higher
real property taxes in the Puerto Rico and U.S. operations.
* An increase of $4.8 million in professional fees mainly due to appraisal
and programming costs, processing fees, and other technology costs related
to services from EVERTEC.
* An increase of $1.9 million in business promotion expenses tied to
year-end institutional campaigns in Puerto Rico and higher expenses in
customer affinity programs.
* An increase of $9.0 million in other operating expenses due mainly to
higher costs associated with the Westernbank covered loan portfolio, of
which 80% are reimbursable by the FDIC, and higher provision for
operational losses in the Puerto Rico and US operations. These costs were
partially offset by a lower provision for unused commitments at BPPR.
These increases were partially offset by:
* Lower FDIC deposit insurance expenses of $10.5 million, driven mainly by
revisions in the deposit insurance premium calculation and efficiencies
achieved from the internal reorganization of Popular Mortgage into BPPR.
* A $4.8 million decrease in other real estate owned (OREO) expenses, driven
mainly by higher gains on sales of commercial properties at both BPPR and
BPNA. This decrease was partially offset by an increase in fair value
adjustments for commercial properties in BPPR.
Non-personnel credit-related costs, which include collections, appraisals,
credit related fees, and OREO expenses, amounted to $14.1 million for the
fourth quarter of 2012, compared with $18.1 million for the third quarter of
2012. The decrease was principally due to higher gains on sales of commercial
OREOs at both BPPR and BPNA, partially offset by an increase in unfavorable
fair value adjustments for commercial properties at BPPR.
Full-time equivalent employees (“FTEs”) were 8,072 as of December 31, 2012,
compared with 8,074 as of September 30, 2012 and 8,329 as of December 31,
2011. The decline in FTEs is largely due to the retirement window for
qualifying employees that was announced in October 2011 and implemented during
the first quarter of 2012. When compared with the fourth quarter of 2011,
salary expenses are down $2.2 million, or approximately $8.8 million on an
annualized basis.
For a breakdown of operating expenses by category refer to table B.
Income taxes
Income tax expense amounted to $19.9 million for the quarter ended December
31, 2012, compared with an income tax expense of $15.4 million for the third
quarter of 2012.
Credit Quality:
Non-Performing Assets
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11
Total non-performing loans
held-in-portfolio, excluding $ 1,425,133 $ 1,550,500 $ 1,737,850
covered loans
Non-performing loans 96,320 108,886 262,302
held-for-sale
Other real estate owned
(“OREO”), excluding covered 266,844 252,024 172,497
OREO
Total non-performing assets, 1,788,297 1,911,410 2,172,649
excluding covered assets
Covered loans and OREO 213,469 208,235 192,771
Total non-performing assets $ 2,001,766 $ 2,119,645 $ 2,365,420
Net charge-offs for the
quarter (excluding covered $ 100,854 $ 95,791 $ 126,045
loans)
Ratios (excluding covered
loans):
Non-performing loans
held-in-portfolio to loans 6.79 % 7.47 % 8.44 %
held-in-portfolio
Allowance for loan losses to 2.96 3.07 3.35
loans held-in-portfolio
Allowance for loan losses to
non-performing loans, 43.62 41.04 39.73
excluding loans held-for-sale
Credit quality continues to improve as the Company addresses its
non-performing loan balances and manages asset exposures.
* Non-performing loans (NPL) held-in-portfolio declined by $125.4 million,
or 8%, from the third quarter of 2012 and were 39% lower than peak levels
in the third quarter of 2010. The reduction in NPLs was principally
attributed to a decrease of $90.0 million in Puerto Rico commercial NPLs.
* Inflows of commercial, construction and legacy non-performing loans
held-in-portfolio decreased by $72.9 million, or 51%, from the third
quarter as underlying credit performance continues to improve due to
successful efforts in managing early delinquency and greater economic
stability.
* OREO, excluding covered OREO, increased by $14.8 million from the third
quarter, as a result of continuing efforts to aggressively resolve
non-performing loans.
* Net charge-offs for the fourth quarter were $100.9 million, compared with
$95.8 million for the previous quarter. The increase was principally
driven by higher commercial and mortgage net charge-offs of $4.5 million
and $4.9 million at BPPR, respectively, offset in part by lower losses in
BPNA loan portfolios. Refer to Table J for further information on net
charge-offs and related ratios.
* The ratio of allowance for loan losses to loans held-in-portfolio,
excluding covered loans, stood at 2.96% as of December 31, 2012, compared
with 3.07% as of September 30, 2012. The general and specific reserves
related to non-covered loans totaled $510.6 million and $111.1 million at
quarter-end, compared with $528.9 million and $107.4 million,
respectively, as of September 30, 2012. The decrease in the allowance for
loan losses is driven by the improvement in credit quality and stability
in net charge-offs.
Credit Quality by Segment
(In thousands) Quarters ended
BPPR 31-Dec-12 30-Sep-12 31-Dec-11
Provision for loan losses $ 78,092 $ 69,738 $ 88,128
Net charge-offs 78,050 71,041 78,309
Total non-performing loans
held-in-portfolio,
excluding covered loans 1,191,982 1,284,026 1,371,242
Allowance/ non-covered loans 2.92 % 2.96 % 3.06 %
held-in-portfolio
Quarters ended
BPNA 31-Dec-12 30-Sep-12 31-Dec-11
Provision for loan losses $ 8,164 $ 13,851 $ 35,780
Net charge-offs 22,804 24,750 47,736
Total non-performing loans
held-in-portfolio,
excluding covered loans 233,151 266,474 366,608
Allowance/ non-covered loans 3.07 % 3.35 % 4.11 %
held-in-portfolio
BPPR Segment
* The provision for loan losses for the non-covered loan portfolio increased
by $8.4 million from the third quarter 2012, mainly due to higher net
charge-offs in the commercial loan portfolio.
* Net charge-offs, excluding covered loans, increased by $7.0 million from
the third quarter 2012, principally due to increases in commercial loans
net charge-offs of $4.5 million, mainly due to one particular
relationship, and $4.9 million increase in mortgage loans net charge-offs.
* Total non-performing loans held in portfolio, excluding covered loans,
decreased by $92.0 million from the third quarter 2012. This decrease was
mainly driven by a decline in commercial NPLs of $90.0 million. Continued
aggressive collection and loss-mitigation efforts have led to lower
inflows of non-performing loans and higher volume of loans returning to
accrual status after assessing borrower’s willingness and capacity of debt
repayment.
* Inflows of commercial non-performing loans held-in-portfolio decreased
by $55.3 million, or 58%, from the third quarter reflecting stronger
underlying credit performance.
* The allowance for loan losses for non-covered loans held-in-portfolio
remained unchanged at $445.3 million from the third quarter of 2012. The
allowance for loan losses as a percentage of non-covered loans held in
portfolio decreased to 2.92% from 2.96% in third quarter 2012.
BPNA Segment
* The provision for loan losses in the third quarter of 2012 decreased by
$5.7 million. The allowance for loan losses as a percentage of loans held
in portfolio decreased to 3.07% from 3.35% in the third quarter 2012.
Sustained improvements in credit quality trends drove the reduction in
both the provision and the allowance.
* Net charge-offs decreased by $1.9 million from the third quarter of 2012,
mainly driven by reductions from the commercial loan portfolio. The
annualized net charge-offs to average loans held-in-portfolio was 1.60% in
the fourth quarter of 2012, down from 1.74% in the previous quarter.
* Total non-performing loans held in portfolio decreased by $33.3 million
from the third quarter of 2012, mainly related to overall improvements in
credit performance across most loan portfolios.
* Inflows of commercial, construction, and legacy non-performing loans
held-in-portfolio decreased by $16.0 million, or 38%, from the third
quarter of 2012.
Financial Condition Highlights
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11
Total assets $ 36,507,535 $ 36,503,366 $ 37,348,432
Total loans held-in-portfolio 24,008,557 23,896,548 24,135,991
(net)
Deposits 27,000,613 26,319,499 27,942,127
Borrowings 4,430,673 5,017,141 4,293,669
Stockholders’ equity 4,110,000 4,068,984 3,918,753
Total assets increased by approximately $4.2 million from September 30, 2012
driven by:
* A $121.9 million increase in cash and money market accounts due mainly to
excess balances held with the Federal Reserve Bank.
* An $87.6 million increase in trading securities, mainly due to
mortgage-backed securities.
* A $229.3 million increase in non-covered loans held in portfolio mostly
due to:
* mortgage loan growth of $56.1 million during the fourth quarter of
2012, with the BPPR segment originating approximately $446.0 million
in residential mortgage loans, the highest levels since 2005; and
* growth in commercial loans of $229.6 million,
* partially offset by a decrease in legacy loans of $81.6 million.
* Other real estate owned (covered and non-covered) increased by
approximately $28.4 million, due mainly to the continuing efforts to
aggressively resolve non-performing loans.
These increases were partially offset by:
* Decrease in other assets of $155.4 million driven by receivables from
securities sold, not yet delivered. During the third quarter of 2012, a
sale of approximately $140.7 million in trading securities was executed
but not settled at the end of the quarter.
* Federal Home Loan Bank stock decreased by $28.1 million driven by lower
balances of advances with the FHLB of NY.
* The Loss-Sharing-Agreement (LSA) indemnification asset was reduced by
$160.0 million during the quarter, driven by collections from the FDIC,
while reduced estimated losses on the covered portfolio drove higher
amortization of the indemnification asset.
* The covered loan portfolio balance decreased by approximately $147.9
million.
Total liabilities decreased by $36.8 million from September 2012, driven by:
* Decreases in notes payable and other borrowings of $586.5 million,
resulting from decreases in FHLB of NY advances. These advances were
replaced with brokered CDs and repurchase agreements.
* Other liabilities decreased by $131.5 million, mainly due to a decrease of
$66 million in liabilities for unsettled purchases of trading securities
and a decrease of approximately $20.5 million in the pension plan
liability, reflecting a contribution of $58.0 million, net of an actuarial
valuation adjustment.
The decrease was partially offset by:
* A $681.1 million increase in deposits, particularly brokered CDs and
retail deposits. Table G presents a breakdown of deposits by major
categories.
Stockholders’ equity increased by $41.0 million from September 30, 2012,
mainly as a result of the net income for the quarter, partially offset by a
decrease in unrealized gains on securities available-for-sale and an increase
in the underfunding of the pension plan liability. Refer to Table A for
capital ratios and Table N for Non-GAAP reconciliations.
Refer to Table C for the Statements of Condition.
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, 2011, 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,
doing business as Popular Community Bank, 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 will hold a conference call to discuss the financial results today
Thursday, January 24, 2013 at 10:30 a.m. Eastern time. The call will be
broadcast live over the Internet and can be accessed through the investor
relations section of the Corporation’s website: www.popular.com.
Listeners are recommended to go to the website at least 15 minutes prior to
the call to download and install any necessary audio software. The call may
also be accessed through a dial-in telephone number 866-700-6293 or
617-213-8835. The conference code is 31838169.
A replay of the webcast will be archived in Popular’s website during the
respective period. A telephone replay will be available from 12:30 p.m. on
Thursday, January 24, 2013 to 11:59 p.m. on Thursday, January 31, 2013, at
888-286-8010 or 617-801-6888. The replay passcode is 79338243.
Popular will hold an Investor Day on Friday, March 1 at Popular Center in San
Juan, Puerto Rico. You can find the link to the webcast in the
investor-relations section of our website. For further information, please
contact us via email at investor-relations@bppr.com.
Popular, Inc.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table A - Selected Ratios and Other Information
Table B - Consolidated Statement of Operations
Table C - Consolidated Statement of Financial Condition
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
Table E - Consolidated Average Balances and Yield / Rate Analysis -
YEAR-TO-DATE
Table F - Other Service Fees
Table G - Loans and Deposits
Table H - Non-Performing Assets
Table I - Activity in Non-Performing Loans
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
Table K - Allowance for Loan Losses - Breakdown of General and Specific
Reserves - CONSOLIDATED
Table L - Allowance for Loan Losses - Breakdown of General and Specific
Reserves - PUERTO RICO OPERATIONS
Table M - Allowance for Loan Losses - Breakdown of General and Specific
Reserves - U.S. MAINLAND OPERATIONS
Table N - Reconciliation to GAAP Financial Measures
Table O - Financial Information - Westernbank Covered Loans
POPULAR, INC.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
Quarters ended Years ended
31-Dec-12 30-Sep-12 31-Dec-11 31-Dec-12 31-Dec-11
Net income per
common share:
Basic and $ 0.81 $ 0.45 $ 0.02 $ 2.35 $ 1.44
diluted [1]
Average common
shares 102,628,274 102,451,410 102,274,180 102,429,755 102,179,393
outstanding
[1]
Average common
shares
outstanding - 102,801,581 102,484,960 102,274,180 102,653,610 102,289,496
assuming
dilution [1]
Common shares
outstanding at 103,169,806 103,097,143 102,590,457 103,169,806 102,590,457
end of period
[1]
Market value
per common $ 20.79 $ 17.45 $ 13.90 $ 20.79 $ 13.90
share [1]
Market
Capitalization $ 2,145 $ 1,799 $ 1,426 $ 2,145 $ 1,426
--- (In
millions)
Return on 0.92 % 0.52 % 0.03 % 0.68 % 0.40 %
average assets
Return on
average common 8.50 % 4.81 % 0.21 % 6.37 % 4.01 %
equity
Net interest 4.41 % 4.37 % 4.30 % 4.35 % 4.34 %
margin [2]
Common equity $ 39.35 $ 38.98 $ 37.71 $ 39.35 $ 37.71
per share [1]
Tangible
common book
value per $ 32.55 $ 32.15 $ 30.77 $ 32.55 $ 30.77
common share
(non-GAAP) [1]
Tangible
common equity
to tangible 9.38 % 9.26 % 8.62 % 9.38 % 8.62 %
assets
(non-GAAP)
Tier 1
risk-based 17.35 % 16.81 % 15.97 % 17.35 % 15.97 %
capital [3]
Total
risk-based 18.63 % 18.09 % 17.25 % 18.63 % 17.25 %
capital [3]
Tier 1 11.52 % 11.40 % 10.90 % 11.52 % 10.90 %
leverage [3]
Tier 1 common
equity to
risk-weighted 13.18 % 12.72 % 12.10 % 13.18 % 12.10 %
assets
(non-GAAP) [3]
[1] All share and per share data has been adjusted to retroactively reflect the 1-for-10 reverse stock
split effected on May 29, 2012.
[2] Not on a taxable equivalent basis.
[3] Capital ratios for the current quarter are estimated.
POPULAR, INC.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
Variance Quarter Variance
Quarters ended Q4 2012 ended Q4 2012 Years ended
(In thousands,
except per share 31-Dec-12 30-Sep-12 vs.Q3 2012 31-Dec-11 vs.Q4 2011 31-Dec-12 31-Dec-11
information)
Interest income:
Loans $ 393,732 $ 387,381 $ 6,351 $ 399,523 $ (5,791 ) $ 1,558,397 $ 1,694,357
Money market 929 862 67 837 92 3,703 3,596
investments
Investment 37,953 39,945 (1,992 ) 46,758 (8,805 ) 166,781 203,941
securities
Trading
account 5,155 5,815 (660 ) 6,275 (1,120 ) 22,824 35,607
securities
Total interest 437,769 434,003 3,766 453,393 (15,624 ) 1,751,705 1,937,501
income
Interest
expense:
Deposits 40,896 43,000 (2,104 ) 56,068 (15,172 ) 184,089 269,487
Short-term 10,302 9,876 426 13,780 (3,478 ) 46,805 55,258
borrowings
Long-term debt 36,160 37,701 (1,541 ) 38,765 (2,605 ) 148,192 180,764
Total interest 87,358 90,577 (3,219 ) 108,613 (21,255 ) 379,086 505,509
expense
Net interest 350,411 343,426 6,985 344,780 5,631 1,372,619 1,431,992
income
Provision for
loan losses - 86,256 83,589 2,667 123,908 (37,652 ) 334,102 430,085
non-covered
loans
Provision for
loan losses - (3,445 ) 22,619 (26,064 ) 55,900 (59,345 ) 74,839 145,635
covered loans
Net interest
income after 267,600 237,218 30,382 164,972 102,628 963,678 856,272
provision for
loan losses
Service charges
on deposit 44,449 45,858 (1,409 ) 46,162 (1,713 ) 183,026 184,940
accounts
Other service 63,695 64,784 (1,089 ) 60,097 3,598 256,545 239,720
fees
Net (loss) gain
on sale and
valuation (1,422 ) 64 (1,486 ) 2,800 (4,222 ) (1,707 ) 10,844
adjustments of
investment
securities
Trading account (5,990 ) (2,266 ) (3,724 ) 2,610 (8,600 ) (17,682 ) 5,897
(loss) profit
Net gain on sale
of loans,
including
valuation 30,196 18,495 11,701 16,135 14,061 48,765 30,891
adjustments on
loans
held-for-sale
Adjustments
(expense) to
indemnity (3,208 ) (8,717 ) 5,509 (3,481 ) 273 (21,198 ) (33,068 )
reserves on
loans sold
FDIC loss share (36,824 ) (6,707 ) (30,117 ) 17,447 (54,271 ) (56,211 ) 66,791
(expense) income
Fair value
change in equity - - - - - - 8,323
appreciation
instrument
Other operating 42,105 4,198 37,907 7,589 34,516 74,804 45,939
income
Total
non-interest 133,001 115,709 17,292 149,359 (16,358 ) 466,342 560,277
income
Operating
expenses:
Personnel costs
Salaries 74,846 74,339 507 77,074 (2,228 ) 301,965 305,018
Commissions,
incentives and 14,817 12,800 2,017 10,873 3,944 54,702 44,421
other bonuses
Pension,
postretirement 16,453 15,984 469 26,039 (9,586 ) 66,976 62,219
and medical
insurance
Other
personnel
costs, 10,209 8,427 1,782 10,561 (352 ) 42,059 41,712
including
payroll taxes
Total
personnel 116,325 111,550 4,775 124,547 (8,222 ) 465,702 453,370
costs
Net occupancy 26,918 24,409 2,509 25,891 1,027 100,452 102,319
expenses
Equipment 11,602 11,447 155 10,526 1,076 45,290 43,840
expenses
Other taxes 11,942 12,666 (724 ) 12,899 (957 ) 50,120 51,885
Professional 58,246 53,412 4,834 50,019 8,227 211,890 194,942
fees
Communications 6,558 6,500 58 5,917 641 26,834 27,115
Business 16,822 14,924 1,898 19,225 (2,403 ) 61,576 55,067
promotion
FDIC deposit 13,691 24,173 (10,482 ) 25,088 (11,397 ) 85,697 93,728
insurance
Loss on early
extinguishment 12 43 (31 ) 56 (44 ) 25,196 8,693
of debt
Other real
estate owned 1,079 5,896 (4,817 ) 9,893 (8,814 ) 23,520 21,778
(OREO) expenses
Credit and debit
card processing,
volume, 4,646 5,442 (796 ) 3,974 672 19,729 17,539
interchange and
other
Other operating 26,439 17,412 9,027 20,377 6,062 85,070 70,367
expenses
Amortization of 2,467 2,481 (14 ) 2,681 (214 ) 10,072 9,654
intangibles
Total
operating 296,747 290,355 6,392 311,093 (14,346 ) 1,211,148 1,150,297
expenses
Income before 103,854 62,572 41,282 3,238 100,616 218,872 266,252
income tax
Income tax
expense 19,914 15,384 4,530 263 19,651 (26,403 ) 114,927
(benefit)
Net income $ 83,940 $ 47,188 $ 36,752 $ 2,975 $ 80,965 $ 245,275 $ 151,325
Net income
applicable to $ 83,009 $ 46,257 $ 36,752 $ 2,044 $ 80,965 $ 241,552 $ 147,602
common stock
Net income per
common share - $ 0.81 $ 0.45 $ 0.36 $ 0.02 $ 0.79 $ 2.35 $ 1.44
basic [1]
Net income per
common share - $ 0.81 $ 0.45 $ 0.36 $ 0.02 $ 0.79 $ 2.35 $ 1.44
diluted [1]
[1] Per share data has been adjusted to retroactively reflect the 1-for-10 reverse stock split effected on May 29,
2012.
Popular, Inc.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
Variance
Q4 2012 vs.
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11 Q3 2012
Assets:
Cash and due from $ 530,363 $ 477,342 $ 535,282 $ 53,021
banks
Money market 994,580 925,663 1,376,174 68,917
investments
Trading account
securities, at fair 314,525 226,918 436,331 87,607
value
Investment securities
available-for-sale, at 5,084,201 5,120,301 5,009,823 (36,100 )
fair value
Investment securities
held-to-maturity, at 142,817 122,072 125,383 20,745
amortized cost
Other investment
securities, at lower 185,443 213,389 179,880 (27,946 )
of cost or realizable
value
Loans held-for-sale,
at lower of cost or 354,468 337,049 363,093 17,419
fair value
Loans
held-in-portfolio:
Loans not covered
under loss sharing 21,080,005 20,851,108 20,703,192 228,897
agreements with
the FDIC
Loans covered
under loss sharing 3,755,972 3,903,867 4,348,703 (147,895 )
agreements with
the FDIC
Less: Unearned 96,813 97,255 100,596 (442 )
income
Allowance for loan 730,607 761,172 815,308 (30,565 )
losses
Total loans
held-in-portfolio, 24,008,557 23,896,548 24,135,991 112,009
net
FDIC loss share asset 1,399,098 1,559,057 1,915,128 (159,959 )
Premises and 535,793 525,733 538,486 10,060
equipment, net
Other real estate not
covered under loss 266,844 252,024 172,497 14,820
sharing agreements
with the FDIC
Other real estate
covered under loss 139,058 125,514 109,135 13,544
sharing agreements
with the FDIC
Accrued income 125,728 133,943 125,209 (8,215 )
receivable
Mortgage servicing 154,430 158,367 151,323 (3,937 )
assets, at fair value
Other assets 1,569,578 1,724,927 1,462,393 (155,349 )
Goodwill 647,757 647,757 648,350 -
Other intangible 54,295 56,762 63,954 (2,467 )
assets
Total assets $ 36,507,535 $ 36,503,366 $ 37,348,432 $ 4,169
Liabilities and
Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest $ 5,794,629 $ 5,404,470 $ 5,655,474 $ 390,159
bearing
Interest bearing 21,205,984 20,915,029 22,286,653 290,955
Total deposits 27,000,613 26,319,499 27,942,127 681,114
Assets sold under
agreements to 2,016,752 1,944,564 2,141,097 72,188
repurchase
Other short-term 636,200 1,206,200 296,200 (570,000 )
borrowings
Notes payable 1,777,721 1,866,377 1,856,372 (88,656 )
Other liabilities 966,249 1,097,742 1,193,883 (131,493 )
Total liabilities 32,397,535 32,434,382 33,429,679 (36,847 )
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,032 1,031 1,026 1
Surplus 4,150,294 4,131,681 4,123,898 18,613
Retained earnings 11,826 (54,183 ) (212,726 ) 66,009
(accumulated deficit)
Treasury stock (444 ) (270 ) (1,057 ) (174 )
Accumulated other (102,868 ) (59,435 ) (42,548 ) (43,433 )
comprehensive loss
Total
stockholders’ 4,110,000 4,068,984 3,918,753 41,016
equity
Total liabilities and $ 36,507,535 $ 36,503,366 $ 37,348,432 $ 4,169
stockholders’ equity
Popular, Inc.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
Quarter ended Quarter ended Quarter ended Variance Variance
31-Dec-12 30-Sep-12 31-Dec-11 Q4 2012 vs. Q3 2012 Q4 2012 vs. Q4 2011
($ amounts in
millions; yields Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
not on a taxable balance Expense Rate balance Expense Rate balance Expense Rate balance Expense Rate balance Expense Rate
equivalent basis)
Assets:
Interest earning
assets:
Money market,
trading and $6,693 $44.1 2.63 % $6,625 $46.6 2.81 % $6,635 $53.9 3.24 % $68 ($2.5 ) (0.18 ) % $58 ($9.8 ) (0.61 ) %
investment
securities
Loans not
covered under
loss sharing
agreements with
the FDIC:
Commercial 10,200 123.5 4.82 10,024 123.2 4.89 10,596 131.4 4.92 176 0.3 (0.07 ) (396 ) (7.9 ) (0.10 )
Construction 386 3.3 3.44 435 3.3 3.02 564 2.3 1.59 (49 ) - 0.42 (178 ) 1.0 1.85
Mortgage 6,169 81.0 5.25 5,915 80.7 5.46 5,402 70.5 5.22 254 0.3 (0.21 ) 767 10.5 0.03
Consumer 3,835 97.5 10.11 3,855 97.9 10.10 3,680 95.0 10.25 (20 ) (0.4 ) 0.01 155 2.5 (0.14 )
Lease 540 11.4 8.48 540 11.7 8.67 562 11.9 8.44 - (0.3 ) (0.19 ) (22 ) (0.5 ) 0.04
financing
Total loans
not covered
under loss 21,130 316.7 5.97 20,769 316.8 6.08 20,804 311.1 5.95 361 (0.1 ) (0.11 ) 326 5.6 0.02
sharing
agreements
with the FDIC
Loans covered
under loss
sharing 3,832 77.0 8.01 3,952 70.6 7.12 4,401 88.4 7.99 (120 ) 6.4 0.89 (569 ) (11.4 ) 0.02
agreements with
the FDIC
Total loans 24,962 393.7 6.28 24,721 387.4 6.24 25,205 399.5 6.30 241 6.3 0.04 (243 ) (5.8 ) (0.02 )
Total interest 31,655 $437.8 5.51 % 31,346 $434.0 5.52 % 31,840 $453.4 5.66 % 309 $3.8 (0.01 ) % (185 ) ($15.6 ) (0.15 ) %
earning assets
Allowance for (754 ) (757 ) (751 ) 3 (3 )
loan losses
Other
non-interest 5,400 5,396 5,655 4 (255 )
earning
assets
Total average $36,301 $35,985 $36,744 $316 ($443 )
assets
Liabilities and
Stockholders'
Equity:
Interest
bearing
deposits:
NOW and money $5,707 $6.1 0.43 % $5,709 $6.2 0.43 % $5,199 $6.4 0.49 % ($2 ) ($0.1 ) - % $508 ($0.3 ) (0.06 ) %
market
Savings 6,654 4.8 0.29 6,561 4.5 0.27 6,475 6.4 0.39 93 0.3 0.02 179 (1.6 ) (0.10 )
Time deposits 8,650 30.0 1.38 9,003 32.3 1.43 10,685 43.3 1.61 (353 ) (2.3 ) (0.05 ) (2,035 ) (13.3 ) (0.23 )
Total
interest 21,011 40.9 0.77 21,273 43.0 0.80 22,359 56.1 0.99 (262 ) (2.1 ) (0.03 ) (1,348 ) (15.2 ) (0.22 )
bearing
deposits
Borrowings 4,704 46.5 3.94 4,426 47.6 4.29 4,507 52.5 4.65 278 (1.1 ) (0.35 ) 197 (6.0 ) (0.71 )
Total
interest 25,715 87.4 1.35 25,699 90.6 1.40 26,866 108.6 1.61 16 (3.2 ) (0.05 ) (1,151 ) (21.2 ) (0.26 )
bearing
liabilities
Net interest 4.16 % 4.12 % 4.05 % 0.04 % 0.11 %
spread
Non-interest
bearing 5,583 5,319 5,165 264 418
deposits
Other 1,067 1,090 895 (23 ) 172
liabilities
Stockholders' 3,936 3,877 3,818 59 118
equity
Total average
liabilities
and $36,301 $35,985 $36,744 $316 ($443 )
stockholders'
equity
Net interest income / margin $350.4 4.41 % $343.4 4.37 % $344.8 4.30 % $7.0 0.04 % $5.6 0.11 %
non-taxable equivalent basis
Popular, Inc.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
Year ended Year ended
31-Dec-12 31-Dec-11 Variance
Average Income / Yield/ Average Income/ Yield/ Average Income/ Yield/
($ amounts in
millions; yields balance Expense Rate balance Expense Rate balance Expense Rate
not on a taxable
equivalent basis)
Assets:
Interest earning
assets:
Money market,
trading and $ 6,724 $ 193.3 2.87 % $ 7,314 $ 243.1 3.32 % ($590 ) ($49.8 ) (0.45 ) %
investment
securities
Loans not
covered under
loss sharing
agreements with
the FDIC:
Commercial 10,226 499.4 4.88 10,889 541.9 4.98 (663 ) (42.5 ) (0.10 )
Construction 459 16.6 3.61 731 10.8 1.48 (272 ) 5.8 2.13
Mortgage 5,817 314.9 5.41 5,153 302.0 5.86 664 12.9 (0.45 )
Consumer 3,748 379.1 10.11 3,654 376.2 10.30 94 2.9 (0.19 )
Lease 545 47.0 8.62 577 50.8 8.81 (32 ) (3.8 ) (0.19 )
financing
Total loans
not covered
under loss 20,795 1,257.0 6.04 21,004 1,281.7 6.10 (209 ) (24.7 ) (0.06 )
sharing
agreements
with the FDIC
Loans covered
under loss
sharing 4,051 301.4 7.44 4,613 412.7 8.95 (562 ) (111.3 ) (1.51 )
agreements with
the FDIC
Total loans 24,846 1,558.4 6.27 25,617 1,694.4 6.61 (771 ) (136.0 ) (0.34 )
Total interest 31,570 $ 1,751.7 5.55 % 32,931 $ 1,937.5 5.88 % (1,361 ) ($185.8 ) (0.33 ) %
earning assets
Allowance for (772 ) (746 ) (26 )
loan losses
Other
non-interest 5,466 5,881 (415 )
earning
assets
Total average $ 36,264 $ 38,066 ($1,802 )
assets
Liabilities and
Stockholders'
Equity:
Interest
bearing
deposits:
NOW and money $ 5,555 $ 24.6 0.44 % $ 5,204 $ 31.0 0.60 % $ 351 ($6.4 ) (0.16 ) %
market
Savings 6,571 21.7 0.33 6,321 37.5 0.59 250 (15.8 ) (0.26 )
Time deposits 9,421 137.8 1.46 10,920 201.0 1.84 (1,499 ) (63.2 ) (0.38 )
Total
interest 21,547 184.1 0.85 22,445 269.5 1.20 (898 ) (85.4 ) (0.35 )
bearing
deposits
Borrowings 4,416 195.0 4.42 5,847 236.0 4.04 (1,431 ) (41.0 ) 0.38
Total
interest 25,963 379.1 1.46 28,292 505.5 1.79 (2,329 ) (126.4 ) (0.33 )
bearing
liabilities
Net interest 4.09 % 4.09 % - %
spread
Non-interest
bearing 5,357 5,058 299
deposits
Other 1,100 983 117
liabilities
Stockholders' 3,844 3,733 111
equity
Total average
liabilities
and $ 36,264 $ 38,066 ($1,802 )
stockholders'
equity
Net interest
income / margin $ 1,372.6 4.35 % $ 1,432.0 4.34 % ($59.4 ) 0.01 %
non-taxable
equivalent basis
Popular, Inc.
Financial Supplement to
Fourth Quarter 2012 Earnings
Release
Table F - Other
Service Fees
(Unaudited)
Variance Variance
Quarters ended Q4 2012 Q4 2012
vs. vs.
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11 Q3 2012 Q4 2011
Other service
fees:
Debit card $ 9,439 $ 8,772 $ 9,664 $ 667 $ (225 )
fees
Insurance fees 17,050 12,322 16,471 4,728 579
Credit card 16,148 14,576 12,943 1,572 3,205
fees
Sale and
administration 9,721 9,511 9,686 210 35
of investment
products
Mortgage
servicing
fees, net of 1,647 9,857 1,449 (8,210 ) 198
fair value
adjustments
Trust fees 4,226 3,977 3,722 249 504
Processing 1,511 1,406 1,718 105 (207 )
fees
Other fees 3,953 4,363 4,444 (410 ) (491 )
Total other $ 63,695 $ 64,784 $ 60,097 $ (1,089 ) $ 3,598
service fees
Variance
Years ended 2012 vs.
(In thousands) 31-Dec-12 31-Dec-11 2011
Other service
fees:
Debit card $ 36,787 $ 49,459 $ (12,672 )
fees
Insurance fees 53,825 54,390 (565 )
Credit card 57,551 49,049 8,502
fees
Sale and
administration 37,766 34,388 3,378
of investment
products
Mortgage
servicing
fees, net of 30,770 12,098 18,672
fair value
adjustments
Trust fees 16,353 15,333 1,020
Processing 6,330 6,839 (509 )
fees
Other fees 17,163 18,164 (1,001 )
Total other $ 256,545 $ 239,720 $ 16,825
service fees
Popular, Inc.
Financial
Supplement to
Fourth Quarter
2012 Earnings
Release
Table G - Loans
and Deposits
(Unaudited)
Loans - Ending
Balances
Variance
Q4 2012 vs. Q4 2012 vs. Q4
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11 Q3
2011
2012
Loans not covered
under FDIC loss
sharing
agreements:
Commercial $ 9,858,202 $ 9,628,631 $ 9,973,327 $ 229,571 $ (115,125 )
Construction 252,857 258,453 239,939 (5,596 ) 12,918
Legacy [1] 384,217 465,848 648,409 (81,631 ) (264,192 )
Lease financing 540,523 538,014 548,706 2,509 (8,183 )
Mortgage 6,078,507 6,022,422 5,518,460 56,085 560,047
Consumer 3,868,886 3,840,485 3,673,755 28,401 195,131
Total non-covered
loans $ 20,983,192 $ 20,753,853 $ 20,602,596 $ 229,339 $ 380,596
held-in-portfolio
Loans covered
under FDIC loss 3,755,972 3,903,867 4,348,703 (147,895 ) (592,731 )
sharing
agreements
Total loans $ 24,739,164 $ 24,657,720 $ 24,951,299 $ 81,444 $ (212,135 )
held-in-portfolio
Loans
held-for-sale:
Commercial $ 16,047 $ 17,696 $ 25,730 $ (1,649 ) $ (9,683 )
Construction 78,140 88,030 236,045 (9,890 ) (157,905 )
Legacy [1] 2,080 3,107 468 (1,027 ) 1,612
Mortgage 258,201 228,216 100,850 29,985 157,351
Total loans 354,468 337,049 363,093 17,419 (8,625 )
held-for-sale
Total loans $ 25,093,632 $ 24,994,769 $ 25,314,392 $ 98,863 $ (220,760 )
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease
financings related to certain lending products exited by the Corporation as part of
restructuring efforts carried out in prior years at the BPNA reportable segment.
Deposits - Ending
Balances
Variance
(In thousands) 31-Dec-12 30-Sep-12 31-Dec-11 Q4 2012 vs. Q4 2012 vs. Q4
Q3 2012 2011
Demand deposits $ 6,442,739 $ 6,091,400 $ 6,256,530 $ 351,339 $ 186,209
[1]
Savings, NOW and
money market 11,190,335 11,046,595 10,762,869 143,740 427,466
deposits
(non-brokered)
Savings, NOW and
money market 456,830 455,309 212,688 1,521 244,142
deposits
(brokered)
Time deposits 6,541,660 6,614,153 7,552,434 (72,493 ) (1,010,774 )
(non-brokered)
Time deposits 2,369,049 2,112,042 3,157,606 257,007 (788,557 )
(brokered CDs)
Total deposits $ 27,000,613 $ 26,319,499 $ 27,942,127 $ 681,114 $ (941,514 )
[1] Includes interest and non-interest demand bearing deposits.
Popular, Inc.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
Variance
As a As a As a
percentage percentage percentage Q4 2012 vs.
(Dollars in Q4 2012 vs. Q4
thousands) 31-Dec-12 of loans 30-Sep-12 of loans 31-Dec-11 of loans Q3 2012
HIP by HIP by HIP by 2011
category category category
Non-accrual
loans:
Commercial $ 665,289 6.7 % $ 772,217 8.0 % $ 830,092 8.3 % $ (106,928 ) $ (164,803 )
Construction 43,350 17.1 49,933 19.3 96,286 40.1 (6,583 ) (52,936 )
Legacy [1] 40,741 10.6 48,735 10.5 75,660 11.7 (7,994 ) (34,919 )
Lease financing 4,865 0.9 4,837 0.9 5,642 1.0 28 (777 )
Mortgage 630,130 10.4 632,052 10.5 686,502 12.4 (1,922 ) (56,372 )
Consumer 40,758 1.1 42,726 1.1 43,668 1.2 (1,968 ) (2,910 )
Total
non-performing
loans held-in-
portfolio,
excluding covered 1,425,133 6.8 % 1,550,500 7.5 % 1,737,850 8.4 % (125,367 ) (312,717 )
loans
Non-performing
loans 96,320 108,886 262,302 (12,566 ) (165,982 )
held-for-sale [2]
Other real estate
owned (“OREO”),
excluding covered 266,844 252,024 172,497 14,820 94,347
OREO
Total
non-performing
assets,
excluding covered 1,788,297 1,911,410 2,172,649 (123,113 ) (384,352 )
assets
Covered loans and 213,469 208,235 192,771 5,234 20,698
OREO
Total
non-performing $ 2,001,766 $ 2,119,645 $ 2,365,420 $ (117,879 ) $ (363,654 )
assets
Accruing loans
past due 90 days $ 388,712 $ 379,051 $ 316,614 $ 9,661 $ 72,098
or more [3]
Ratios excluding
covered loans:
Non-performing
loans
held-in-portfolio
to loans 6.79 % 7.47 % 8.44 %
held-in-portfolio
Allowance for
loan losses to
loans
held-in-portfolio 2.96 3.07 3.35
Allowance for
loan losses to
non-performing
loans, excluding
held-for-sale 43.62 41.04 39.73
Ratios including
covered loans:
Non-performing
loans
held-in-portfolio
to loans 6.06 % 6.63 % 7.30 %
held-in-portfolio
Allowance for
loan losses to
loans
held-in-portfolio 2.95 3.09 3.27
Allowance for
loan losses to
non-performing 48.72 46.61 44.76
loans, excluding
held-for-sale
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending
products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA reportable segment.
[2] Non-performing loans held-for-sale as of December 31, 2012 consisted of $78 million in construction loans, $16 million in
commercial loans, $2 million in legacy loans and $53 thousand in mortgage loans (September 30, 2012 - $88 million in construction
loans, $18 million in commercial loans, $3 million in legacy loans and $53 thousand in mortgage loans; December 31, 2011 - $236
million in construction loans, $26 million in commercial loans, $468 thousand in legacy loans and $59 thousand in mortgage loans).
[3] 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 $86 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as
of December 31, 2012.
<t*Story too large*
Popular, Inc.
Financial Supplement to Fourth Quarter 2012 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-12 30-Sep-12
(In thousands) BPPR BPNA Popular, BPPR BPNA Popular,
Inc. Inc.
Beginning $ 612,781 $ 159,436 $ 772,217 $ 591,792 $ 176,148 $ 767,940
balance NPLs
Plus:
New
non-performing 40,585 16,601 57,186 95,836 32,395 128,231
loans
Advances on
existing - 163 163 - 525 525
non-performing
loans
Other - - - 1,139 - 1,139
Less:
Non-performing
loans (14,694 ) (6,580 ) (21,274 ) (4,217 ) (10,558 ) (14,775 )
transferred to
OREO
Non-performing
loans (45,682 ) (11,745 ) (57,427 ) (43,711 ) (9,261 ) (52,972 )
charged-off
Loans returned
to accrual (66,957 ) (13,645 ) (80,602 ) (28,058 ) (25,561 ) (53,619 )
status / loan
collections
Loans
transferred to - (1,674 ) (1,674 ) - (4,252 ) (4,252 )
held-for-sale
[TRUNCATED]
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