- Net income of $96.2 million for the
second quarter of 2017
- Net interest margin of 4.02% in Q2
2017, compared to 4.08% in Q1 2017
- Credit Quality (excluding covered
loans):
- Non-performing loans
held-in-portfolio (NPLs) decreased by $28.5 million from Q1 2017;
NPLs to loans ratio stable at 2.4% vs. 2.5% in Q1 2017;
- Net charge-offs (NCOs) increased by
$21.9 million; NCOs at 1.01% of average loans held-in-portfolio vs.
0.63% in Q1 2017;
- Allowance for loan losses of $509.2
million vs. $516.7 million in Q1 2017; Allowance for loan losses to
loans held-in-portfolio at 2.22% vs. 2.27% in Q1 2017;
- Allowance for loan losses to NPLs at
93.1% vs. 89.8% in Q1 2017.
- Common Equity Tier 1 ratio of
16.69%, Common Equity per Share of $51.26 and Tangible Book Value
per Share of $44.71 at June 30, 2017
Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP)
reported a net income of $96.2 million for the quarter ended June
30, 2017, compared to a net income of $92.9 million for the quarter
ended March 31, 2017.
Mr. Ignacio Alvarez, President and Chief Executive Officer,
said: “I am fortunate to step into my new role as CEO at a time
when Popular is on a solid footing, as evidenced by our results for
the second quarter. Top line revenues were strong, credit quality
remained stable and we achieved loan growth in both the United
States and Puerto Rico. While we will continue to operate in a
challenging environment in the near term, the team is energized and
focused. We have more financial and human capital than at any time
in our history and are well positioned for the future.”
Earnings Highlights
(Unaudited) Quarters ended Six months
ended (Dollars in thousands, except per share information)
30-Jun-17 31-Mar-17 30-Jun-16 30-Jun-17
30-Jun-16 Net interest income $374,479 $362,098
$360,551 $736,577 $712,963 Provision for loan losses
49,965 42,057 39,668 92,022 87,608
Provision (reversal) for loan losses - covered loans [1]
2,514 (1,359) 804 1,155 (2,301) Net interest
income after provision for loan losses 322,000
321,400 320,079 643,400 627,656 FDIC loss-share
expense (475) (8,257) (12,576) (8,732)
(15,722) Other non-interest income 117,268 124,126
123,079 241,394 237,855 Other operating expenses
306,835 311,318 309,149 618,153 611,092
Income before income tax 131,958 125,951
121,433 257,909 238,697 Income tax expense 35,732
33,006 32,446 68,738 64,711 Net income
$96,226 $92,945 $88,987 $189,171 $173,986 Net
income applicable to common stock $95,295 $92,014
$88,056 $187,309 $172,124 Net income per common share
- Basic $0.94 $0.89 $0.85 $1.83 $1.67
Net income per common share - Diluted $0.94 $0.89
$0.85 $1.83 $1.67 [1] Covered loans represent loans
acquired in the Westernbank FDIC-assisted transaction that are
covered under an FDIC loss-sharing agreement.
Net interest income
Net interest income for the quarter ended June 30, 2017 was
$374.5 million, compared to $362.1 million for the previous
quarter. The impact of having one more day in the quarter had a
positive effect in the net interest income of $2.6 million. Net
interest margin was 4.02% for the quarter compared to 4.08% for the
previous quarter.
The increase of $12.4 million in net interest income was mainly
related to the following:
Positive variances:
- Higher income from money market
investments by $4.5 million due to both an increase in volume of
funds available to invest, related mostly to a higher balance of
Puerto Rico government deposits, and to the recent increases in
rates by the U.S. Federal Reserve. The average rate of the money
market investments portfolio for the quarter was 1.06%, compared to
0.81% in the first quarter of 2017;
- Higher interest income from investment
securities by $3.7 million mainly due to higher volumes,
particularly on U.S. Treasuries and mortgage-backed securities
related to recent purchases;
- Higher income from commercial loans by
$3.4 million, or 3 basis points, driven by loan growth in the U.S.
and higher yields at Banco Popular de Puerto Rico (“BPPR”) due in
part to one additional day in the quarter and the impact on the
variable rate portfolio from the above-mentioned increases in
rates; and
- Higher income from the consumer loans
portfolio by $2.0 million, or 12 basis points, due to higher yields
mostly from the credit cards portfolio.
Negative variances:
- Lower income from mortgage loans by
$1.1 million due to lower average balances, mainly in P.R.;
and
- Higher interest expense from deposits
by $0.3 million due to higher volume mostly from Puerto Rico
government deposits, as mentioned above, and the negative impact of
one more day in the quarter, partially offset by lower cost by 3
basis points, due to deposit mix.
BPPR’s net interest income amounted to $319.7 million for the
quarter ended June 30, 2017, compared to $310.2 million for the
previous quarter. The increase of $9.5 million in net interest
income was mainly due to higher income from money market and
investment securities resulting from higher volumes and yields, as
previously stated. Also, the results for the quarter reflected a
higher yield from commercial and consumer loans, as discussed
above, resulting mostly from the increase in market rates, which
was partially offset by lower income from mortgage loans. The net
interest margin for the second quarter was 4.36%, a decline of 10
basis points when compared to 4.46% for the previous quarter. The
decrease in net interest margin results from the composition of
earning assets, which has shifted towards lower yielding assets
resulting from higher balances in Fed Funds, mainly as a result of
higher balances of Puerto Rico government deposits. P.R. earning
assets yielded 4.69%, compared to 4.81% in the previous quarter,
while the cost of interest bearing liabilities was 0.46%, compared
to 0.50% in the previous quarter.
Banco Popular North America’s (“BPNA”)’s net interest income was
$69.7 million, compared to $67.1 million in the previous quarter,
mainly due to higher income resulting mostly from higher volume of
commercial loans and investment securities and the positive impact
of one more day in the quarter, partially offset by slightly higher
deposit costs. Net interest margin increased 2 basis points to
3.54%, compared to 3.52% for the previous quarter, driven by higher
yields on interest earning assets. U.S. earning assets yielded
4.30%, compared to 4.28% in the previous quarter, while the cost of
interest bearing liabilities was 0.99%, relatively flat when
compared to 0.98% in the previous quarter.
Non-interest income
Non-interest income amounted to $116.8 million for the quarter
ended June 30, 2017, compared to $115.9 million for the previous
quarter. The favorable variance of $0.9 million in non-interest
income was primarily driven by:
- Higher other service fees by $3.0
million due to higher credit card interchange income resulting from
higher transaction volumes at BPPR, higher commissions at the
broker-dealer subsidiary and higher insurance revenues; and
- Lower FDIC loss-share expense by $7.8
million due to higher income on mirror accounting on reimbursable
credit impairment losses; lower fair value adjustments to the
true-up payment obligation, that are mainly impacted by changes in
the discount rate; and the indemnity asset accretion.
These positive variances were partially offset by an
other-than-temporary impairment charge of $8.3 million on senior
Puerto Rico Sales Tax Financing Corporation (“COFINA”) bonds
classified as available-for-sale. On May 5, 2017 the federally
appointed Puerto Rico Management and Oversight Board filed a Title
III bankruptcy petition for COFINA. After the COFINA inclusion
under Title III, the U.S. District Court escrowed payments due to
COFINA bondholders with the COFINA trustee pending resolution of
certain legal disputes, which resulted in the first missed interest
payment on the COFINA bonds during June 2017. As such, the
Corporation determined the entire unrealized loss on these
securities to be other-than-temporary.
Refer to Table B for further details.
Financial Impact of the 2010 FDIC-Assisted Transaction
(Unaudited) Quarters ended (In
thousands) 30-Jun-17 31-Mar-17 30-Jun-16
Income
Statement
Interest income on WB loans $37,900 $38,182 $49,794 Total FDIC
loss-share expense (475) (8,257) (12,576) Reversal of provision for
loan losses- WB loans [1] (417) (499) (7,282)
Total revenues less reversal of provision for loan losses
$37,842 $30,424 $44,500
Balance
Sheet
WB loans $1,737,448 $1,808,057 $1,932,062 FDIC loss-share asset
52,583 58,793 214,029 FDIC true-up payment obligation
163,668 160,543 127,876 [1] Includes the elimination
of an incremental $6.0 million provision for loan losses related to
the inter-company transfer of a loan between BPPR and Popular,
Inc., its bank holding company, the impact of which is eliminated
in the consolidated results of the Corporation in accordance with
U.S. GAAP.
See additional details on accounting for the 2010 FDIC-Assisted
transaction in Table O.
Operating expenses
Operating expenses amounted to $306.8 million for the second
quarter of 2017, a decrease of $4.5 million when compared to the
first quarter of 2017. The decrease in operating expenses was
driven primarily by:
- Lower personnel cost by $6.8 million
mainly due to lower incentive compensation, performance shares and
other compensation expense, including payroll taxes; and
- Lower other operating expenses by $9.1
million as a result of a write-down of $7.6 million recognized
during the first quarter of 2017 related to capitalized software
costs for a project that was discontinued by the Corporation.
These decreases were partially offset by:
- Higher net occupancy expenses by $1.5
million mainly due to higher repair and maintenance expense at
BPPR;
- Higher professional fees by $3.7
million due to higher programming, processing and other technology
services;
- Higher business promotion by $1.8
million mostly due to higher customer reward program expense at
BPPR; and
- Higher OREO expense by $3.9 million as
a result of higher write–downs on valuation of mortgage properties,
partially offset by higher gain on sales at BPPR.
Non-personnel credit-related costs, which include collections,
appraisals, credit related fees and OREO expenses, amounted to
$20.4 million for the second quarter of 2017, compared to $16.6
million for the first quarter of 2017. The increase was principally
due to higher write-downs on OREO at BPPR.
Full-time equivalent employees were 7,789 as of June 30, 2017,
compared to 7,820 as of March 31, 2017.
For a breakdown of operating expenses by category refer to table
B.
Income taxes
For the quarter ended June 30, 2017, the Corporation recorded an
income tax expense of $35.7 million, compared to $33.0 million for
the previous quarter. The increase in the income tax expense is
mainly attributed to higher taxable income at BPNA.
The effective income tax rate for the second quarter of 2017 was
27%, compared to 26% for previous quarter. The effective tax rate
is impacted by the composition and source of the taxable
income.
Credit Quality
The Corporation continued to reflect stable credit quality
metrics when compared to the first quarter of 2017. The BPPR
segment experienced a decline in inflows to non-performing loans
and NPLs balances, while net charge-offs increased
quarter-over-quarter. The U.S. operation continued to reflect
positive results with strong loan growth and favorable credit
quality metrics. The Corporation remains attentive to changes in
credit quality trends given the continued challenges in the
economic environment in Puerto Rico.
- Inflows of NPLs held-in-portfolio,
excluding consumer loans, decreased by $20.4 million
quarter-over-quarter, mainly driven by lower inflows in the BPPR
commercial portfolio by $19.8 million, as the prior quarter was
impacted by a single $24.5 million relationship.
- Total non-performing loans
held-in-portfolio decreased by $28.5 million from the first quarter
of 2017, driven by lower BPPR mortgage and commercial NPLs of $12.8
million and $12.6 million, respectively, mostly due to NCO
activity, as explained below. At June 30, 2017, NPLs to total loans
held-in-portfolio remained stable at 2.4% from 2.5% in the first
quarter of 2017.
- Net charge-offs increased by $21.9
million from the first quarter of 2017. This increase was mainly
driven by a $12.3 million charge-off taken on a previously reserved
single P.R. commercial relationship, and an increase in the P.R.
mortgage NCOs, due to the $6.4 million impact associated with a
residential project acquired from Doral that suffered significant
structural damages. The Corporation’s ratio of annualized net
charge-offs to average non-covered loans held-in-portfolio was at
1.01%, compared to 0.63% in the first quarter of 2017. Refer to
Table J for further information on net charge-offs and related
ratios.
- The allowance for loan losses decreased
by $7.5 million from the first quarter of 2017 to $509.2 million.
The BPPR segment ALLL decreased by $12.1 million, primarily
attributed to the above mentioned $12.3 million charge-off of a
previously reserved relationship. The BPNA segment ALLL increased
by $4.6 million driven by reserves for the taxi medallion
portfolio. The general and specific reserves related to non-covered
loans totaled $393.9 million and $115.3 million, respectively, at
quarter-end, compared with $398.6 million and $118.1 million,
respectively, as of March 31, 2017. The ratio of the allowance for
loan losses to loans held-in-portfolio was 2.22% in the second
quarter of 2017, compared to 2.27% from the previous quarter.
- The ratio of the allowance for loan
losses to NPLs held-in-portfolio increased to 93.1%, compared to
89.8% in the previous quarter.
- The provision for loan losses for
non-covered loans for the second quarter of 2017 increased by $7.9
million quarter-over-quarter to $50.0 million. The provision for
the BPPR segment increased by $10.7 million, mainly related to
higher specific reserves for the mortgage portfolio, while the
decrease in the BPNA segment was due to higher impairments on the
taxi medallion portfolio recorded during the first quarter of 2017.
The provision to net charge-offs ratio was 86.92% in the second
quarter of 2017, compared to 118.03% in the previous quarter.
Non-Performing Assets (Unaudited)
(In thousands)
30-Jun-17 31-Mar-17 30-Jun-16 Total non-performing
loans held-in-portfolio, excluding covered loans $547,129 $575,613
$577,739 Non-performing loans held-for-sale - - 39,544 Other real
estate owned (“OREO”), excluding covered OREO 181,096
185,836 177,025 Total non-performing assets, excluding
covered assets 728,225 761,449 794,308 Covered
loans and OREO 29,376 33,866 41,466 Total
non-performing assets $757,601 $795,315
$835,774 Net charge-offs for the quarter (excluding covered loans)
$57,484 $35,633 $35,401 Ratios
(excluding covered loans):
Non-covered loans held-in-portfolio $22,918,271 $22,734,721
$22,540,661 Non-performing loans held-in-portfolio to loans
held-in-portfolio 2.39% 2.53% 2.56% Allowance for loan losses to
loans held-in-portfolio 2.22 2.27 2.30 Allowance for loan losses to
non-performing loans, excluding loans held-for-sale 93.07
89.77 89.68 Refer to Table H for additional
information.
Provision for Loan Losses
(Unaudited) Quarters ended Six
months ended (In thousands) 30-Jun-17 31-Mar-17
30-Jun-16 30-Jun-17 30-Jun-16 Provision for loan
losses: BPPR [1] $42,173 $31,478 $38,351 $73,651 $82,222 BPNA
7,792 10,579 1,317 18,371 5,386 Total
provision for loan losses - non-covered loans $49,965
$42,057 $39,668 $92,022 $87,608 Provision (reversal)
for loan losses - covered loans 2,514 (1,359)
804 1,155 (2,301) Total provision for loan losses
$52,479 $40,698 $40,472 $93,177 $85,307 [1]
Includes the elimination of an incremental $6.0 million provision
for loan losses related to the inter-company transfer of a loan
between BPPR and Popular, Inc., its bank holding company, the
impact of which is eliminated in the consolidated results of the
Corporation in accordance with U.S. GAAP.
Credit Quality by
Segment (Unaudited) (In thousands) Quarters ended
BPPR 30-Jun-17 31-Mar-17 30-Jun-16
Provision for loan losses [1] $42,173 $31,478
$38,351 Net charge-offs [1] 54,255 32,945 36,222 Total
non-performing loans held-in-portfolio, excluding covered loans
517,382 548,385 550,632 Allowance / non-covered loans
held-in-portfolio 2.66% 2.75% 2.77% [1]
Includes the elimination of an incremental $6.0 million provision
for loan losses and corresponding charge-off related to the
inter-company transfer of a loan between BPPR and Popular, Inc.,
its bank holding company, the impact of which is eliminated in the
consolidated results of the Corporation in accordance with U.S.
GAAP.
Quarters ended
BPNA 30-Jun-17
31-Mar-17 30-Jun-16 Provision for loan losses
$7,792 $10,579
$1,317 Net charge-offs (recoveries) 3,229 2,688 (821) Total
non-performing loans held-in-portfolio 29,747 27,228 27,107
Allowance / non-covered loans held-in-portfolio 0.94%
0.87% 0.72%
Financial
Condition Highlights (Unaudited) (In thousands)
30-Jun-17 31-Mar-17
30-Jun-16 Cash and money market investments
$4,625,318 $3,993,572
$3,150,808 Trading and investment securities
9,726,158 9,511,124 7,583,294 Loans not covered under loss-sharing
agreements with the FDIC 22,918,271 22,734,721 22,540,661 Loans
covered under loss-sharing agreements with the FDIC 536,341 551,980
607,170 Total assets 41,242,669 40,259,282 37,606,148 Deposits
33,122,033 32,212,579 28,737,856 Borrowings 1,968,419 1,993,886
2,428,752 Liabilities from discontinued operations - - 1,815 Total
liabilities 35,964,624 35,069,069 32,246,317 Stockholders’ equity
5,278,045 5,190,213
5,359,831
Total assets increased by $1.0 billion from the first quarter of
2017, driven by:
- An increase of $0.6 billion in money
market investments, mainly at BPPR, due to higher liquidity driven
by increase in deposits balances;
- An increase of $0.2 billion in
investment securities available-for-sale mainly due to purchases of
mortgage-backed agency pools at BPPR and BPNA; and
- A net increase of $0.2 billion in
non-covered loans held-in-portfolio, mainly driven by growth of
commercial loans at BPPR and BPNA.
Total liabilities increased by $0.9 billion from the first
quarter of 2017, principally driven by an increase of $0.9 billion
in deposits mainly due to an increase in demand deposits from the
Puerto Rico public sector at BPPR. Refer to Table G for additional
information on deposits.
Stockholders’ equity increased by approximately $87.8 million
from the first quarter of 2017, mainly as a result of net income
for the quarter of $96.2 million, offset by declared dividends of
$25.5 million on common stock and $0.9 million in dividends on
preferred stock, and lower unrealized losses on available-for-sale
securities by $15.3 million partially due to the reclassification
to earnings of the entire unrealized loss of the COFINA bonds which
was deemed to be other-than-temporary.
Common equity tier-1 ratio (“CET1”), common equity per share and
tangible book value per share were 16.69%, $51.26 and $44.71,
respectively at June 30, 2017, compared to 16.34%, $50.41 and
$43.84 at March 31, 2017. Refer to Table A for capital ratios.
Cautionary Note Regarding
Forward-Looking Statements
The information contained in this press release contains
“forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These forward-looking
statements may relate to Popular, Inc’s (the “Corporation”, “we”,
“us”, “our”) financial condition, results of operations, plans,
objectives, future performance and business, including, but not
limited to, statements with respect to the adequacy of the
allowance for loan losses, delinquency trends, market risk and the
impact of interest rate changes, capital market conditions, capital
adequacy and liquidity, the anticipated impacts of our acquisition
of certain assets and deposits and the effect of legal proceedings
and new accounting standards on the Corporation’s financial
condition and results of operations. All statements contained
herein that are not clearly historical in nature are
forward-looking, and the words “anticipate”, “believe”,
“continues”, “expect”, “estimate”, “intend”, “project” and similar
expressions and future or conditional verbs such as “will”,
“would”, “should”, “could”, “might”, “can”, “may” or similar
expressions are generally intended to identify forward-looking
statements.
Forward-looking statements are not guarantees of future
performance are based on management’s current expectations and, by
their nature, involve certain risks, uncertainties, estimates and
assumptions by management that are difficult to predict. Various
factors, some of which are beyond the Corporation’s control, could
cause actual results to differ materially from those expressed in,
or implied by, such forward-looking statements. Please refer to our
Annual Report on Form 10-K for the year ended December 31, 2016,
the Quarterly Report on Form 10-Q for the quarter ended March 31,
2017, and our other filings with the Securities and Exchange
Commission for a discussion of some of the risks and important
factors that could cause such differences and otherwise affect the
Corporation’s future results and financial condition. Those filings
are available on the Corporation’s website (www.popular.com) and on
the Securities and Exchange Commission website (www.SEC.gov). The
Corporation does not undertake to update or revise any
forward-looking statement to reflect occurrences or unanticipated
events or circumstances that may arise 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
among the top 50 U.S. banks by assets. Popular provides retail,
mortgage and commercial banking services through its principal
banking subsidiary, Banco Popular de Puerto Rico, as well as auto
and equipment leasing and financing, investment banking,
broker-dealer and insurance services through specialized
subsidiaries. In the United States, Popular has established a
community-banking franchise providing a broad range of financial
services and products with branches in New York, New Jersey and
Florida under the name of Popular Community Bank.
Conference Call
Popular will hold a conference call to discuss its financial
results today Wednesday, July 26, 2017 at 11:00 a.m. Eastern Time.
The call will be open to the public and 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 1-866-235-1201 or 1-412-902-4127. [There is no
charge to access the call.]
A replay of the webcast will be archived in Popular’s website. A
telephone replay will be available one hour after the end of the
conference call through Friday, August 25, 2017. The replay dial-in
is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is
10109994.
An electronic version of this press release can be found at the
Corporation’s website: www.popular.com.
Popular, Inc. Financial Supplement to Second Quarter 2017
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 - Mortgage
Banking Activities and 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 Loans
POPULAR,
INC. Financial Supplement to Second Quarter 2017 Earnings
Release Table A - Selected Ratios and Other Information
(Unaudited)
Quarters ended Six months ended
30-Jun-17 31-Mar-17
30-Jun-16 30-Jun-17 30-Jun-16 Basic EPS
$0.94 $0.89 $0.85 $1.83 $1.67 Diluted EPS $0.94 $0.89 $0.85
$1.83 $1.67 Average common shares outstanding 101,601,552
102,932,989 103,245,717 102,263,593 103,217,266 Average
common shares outstanding - assuming dilution 101,708,703
103,113,895 103,343,486 102,387,246 103,297,707 Common
shares outstanding at end of period 101,986,758 101,956,740
103,703,041 101,986,758 103,703,041 Market value per common
share $41.71 $40.73 $29.30 $41.71 $29.30 Market
capitalization - (In millions) $4,254 $4,153 $3,038 $4,254 $3,038
Return on average assets 0.94% 0.95% 0.96% 0.95% 0.96% . .
Return on average common equity 7.24% 7.13% 6.80% 7.19% 6.69%
Net interest margin 4.02% 4.08% 4.31% 4.05% 4.38%
Common equity per share $51.26 $50.41 $51.20 $51.26 $51.20
Tangible common book value per common share (non-GAAP) $44.71
$43.84 $44.62 $44.71 $44.62 Tangible common equity to
tangible assets (non-GAAP) 11.24% 11.29% 12.53% 11.24% 12.53%
Tier 1 capital 16.69% 16.34% 16.29% 16.69% 16.29%
Total capital 19.67% 19.34% 19.29% 19.67% 19.29% Tier 1
leverage 10.48% 10.61% 11.29% 10.48% 11.29% Common Equity
Tier 1 capital 16.69% 16.34%
16.29% 16.69% 16.29%
POPULAR, INC. Financial Supplement to Second
Quarter 2017 Earnings Release Table B - Consolidated
Statement of Operations (Unaudited)
Quarters ended Variance
Quarter ended Variance
Six months ended (In thousands, except per share
information) 30-Jun-17 31-Mar-17
Q2 2017
vs. Q1 2017
30-Jun-16
Q2 2017
vs. Q2 2016
30-Jun-17 30-Jun-16
Interest income: Loans
$367,669 $363,136 $4,533 $369,721 $(2,052) $730,805 $732,918 Money
market investments 11,131 6,573 4,558 3,889 7,242 17,704 6,752
Investment securities 48,537 44,886 3,651 36,725 11,812 93,423
72,996 Trading account securities 1,396
1,400 (4) 1,875
(479) 2,796
3,564 Total interest income 428,733
415,995 12,738
412,210 16,523
844,728 816,230 Interest expense: Deposits
34,092 33,757 335 30,599 3,493 67,849 60,473 Short-term borrowings
1,115 1,095 20 2,058 (943) 2,210 3,919 Long-term debt
19,047 19,045 2
19,002 45
38,092 38,875 Total interest expense
54,254 53,897 357
51,659 2,595
108,151 103,267 Net interest
income 374,479 362,098 12,381 360,551 13,928 736,577 712,963
Provision for loan losses - non-covered loans 49,965 42,057 7,908
39,668 10,297 92,022 87,608 Provision (reversal) for loan losses -
covered loans 2,514 (1,359)
3,873 804
1,710 1,155 (2,301) Net
interest income after provision for loan losses 322,000
321,400 600
320,079 1,921
643,400 627,656 Service charges on deposit
accounts 41,073 39,536 1,537 40,296 777 80,609 80,158 Other service
fees 59,168 56,175 2,993 56,945 2,223 115,343 110,327 Mortgage
banking activities 10,741 11,369 (628) 16,227 (5,486) 22,110 26,778
Net gain and valuation adjustments on investment securities 19 162
(143) 1,583 (1,564) 181 1,583 Other-than-temporary impairment
losses on investment securities (8,299) - (8,299) (209) (8,090)
(8,299) (209) Trading account (loss) profit (655) (278) (377) 1,117
(1,772) (933) 955 Net loss on sale of loans, including valuation
adjustments on loans held-for-sale - - - - - - (304) Adjustments
(expense) to indemnity reserves on loans sold (2,930) (1,966) (964)
(5,746) 2,816 (4,896) (9,844) FDIC loss-share expense (475) (8,257)
7,782 (12,576) 12,101 (8,732) (15,722) Other operating income
18,151 19,128
(977) 12,866 5,285
37,279 28,411 Total
non-interest income 116,793 115,869
924 110,503
6,290 232,662
222,133 Operating expenses: Personnel costs Salaries 77,703 78,376
(673) 75,792 1,911 156,079 153,090 Commissions, incentives and
other bonuses 18,295 20,078 (1,783) 16,982 1,313 38,373 37,751
Pension, postretirement and medical insurance 12,590 11,244 1,346
12,279 311 23,834 25,390 Other personnel costs, including
payroll taxes 10,227 15,909
(5,682) 11,655
(1,428) 26,136
27,568 Total personnel costs 118,815 125,607 (6,792) 116,708 2,107
244,422 243,799 Net occupancy expenses 22,265 20,776 1,489 21,714
551 43,041 42,144 Equipment expenses 16,250 15,970 280 15,261 989
32,220 29,809 Other taxes 10,740 10,969 (229) 10,170 570 21,709
20,365 Professional fees Collections, appraisals and other credit
related fees 3,779 3,823 (44) 4,974 (1,195) 7,602 9,474
Programming, processing and other technology services 51,569 48,091
3,478 50,232 1,337 99,660 100,096 Legal fees, excluding collections
2,314 3,296 (982) 10,009 (7,695) 5,610 16,263 Other
professional fees 15,272 14,040
1,232 15,410
(138) 29,312
30,251 Total professional fees 72,934 69,250 3,684 80,625 (7,691)
142,184 156,084 Communications 5,899 5,949 (50) 6,012 (113) 11,848
12,332 Business promotion 13,366 11,576 1,790 13,705 (339) 24,942
24,815 FDIC deposit insurance 6,172 6,493 (321) 5,362 810 12,665
12,732 Other real estate owned (OREO) expenses 16,670 12,818 3,852
12,980 3,690 29,488 22,121 Credit and debit card processing,
volume, interchange and other expenses 6,441 5,532 909 6,617 (176)
11,973 12,339 Other operating expenses Operational losses 7,215
7,536 (321) 7,146 69 14,751 9,807 All other 7,724
16,497 (8,773)
9,752 (2,028)
24,221 18,534 Total other operating
expenses 14,939 24,033 (9,094) 16,898 (1,959) 38,972 28,341
Amortization of intangibles 2,344 2,345
(1) 3,097
(753) 4,689 6,211
Total operating expenses 306,835
311,318 (4,483) 309,149
(2,314) 618,153
611,092 Income before income tax 131,958 125,951
6,007 121,433 10,525 257,909 238,697 Income tax expense
35,732 33,006 2,726
32,446 3,286
68,738 64,711
Net income
$96,226 $92,945
$3,281 $88,987 $7,239
$189,171 $173,986
Net
income applicable to common stock $95,295
$92,014 $3,281
$88,056 $7,239 $187,309
$172,124
Net income per common share -
basic $0.94 $0.89
$0.05 $0.85 $0.09
$1.83 $1.67
Net income
per common share - diluted $0.94
$0.89 $0.05 $0.85
$0.09 $1.83
$1.67
Dividends Declared per Common Share $0.25
$0.25 $-
$0.15 $0.10 $0.50
$0.30
Popular, Inc. Financial
Supplement to Second Quarter 2017 Earnings Release Table C -
Consolidated Statement of Financial Condition
(Unaudited)
Variance Q2 2017
vs. (In thousands) 30-Jun-17
31-Mar-17 30-Jun-16
Q1 2017 Assets: Cash and due from banks $405,688 $340,225
$365,308 $65,463 Money market investments 4,219,630 3,653,347
2,785,500 566,283 Trading account securities, at fair value 50,293
50,985 72,530 (692) Investment securities available-for-sale, at
fair value 9,409,402 9,197,527 7,242,676 211,875 Investment
securities held-to-maturity, at amortized cost 96,286 96,326 99,525
(40) Other investment securities, at lower of cost or realizable
value 170,177 166,286 168,563 3,891 Loans held-for-sale, at lower
of cost or fair value 69,797 85,309 122,338 (15,512) Loans
held-in-portfolio: Loans not covered under loss-sharing agreements
with the FDIC 23,046,078 22,858,556 22,655,877 187,522 Loans
covered under loss-sharing agreements with the FDIC 536,341 551,980
607,170 (15,639) Less: Unearned income 127,807 123,835 115,216
3,972 Allowance for loan losses
540,014 544,496 548,720
(4,482) Total loans
held-in-portfolio, net 22,914,598
22,742,205 22,599,111
172,393 FDIC loss-share asset 52,583 58,793 214,029
(6,210) Premises and equipment, net 546,986 548,995 535,865 (2,009)
Other real estate not covered under loss-sharing agreements with
the FDIC 181,096 185,836 177,025 (4,740) Other real estate covered
under loss-sharing agreements with the FDIC 25,350 29,926 37,984
(4,576) Accrued income receivable 136,104 128,018 120,979 8,086
Mortgage servicing assets, at fair value 188,728 193,698 203,577
(4,970) Other assets 2,108,296 2,111,806 2,179,060 (3,510) Goodwill
627,294 627,294 631,095 - Other intangible assets
40,361 42,706
50,983 (2,345) Total assets
$41,242,669 $40,259,282
$37,606,148 $983,387 Liabilities and
Stockholders’ Equity: Liabilities: Deposits: Non-interest bearing
$7,481,732 $7,262,328 $6,531,108 $219,404 Interest
bearing 25,640,301
24,950,251 22,206,748
690,050 Total deposits
33,122,033 32,212,579
28,737,856 909,454 Federal funds purchased and
assets sold under agreements to repurchase 406,385 434,714 821,604
(28,329) Other short-term borrowings 1,200 1,200 31,200 - Notes
payable 1,560,834 1,557,972 1,575,948 2,862 Other liabilities
874,172 862,604 1,077,894 11,568 Liabilities from discontinued
operations - -
1,815 - Total liabilities
35,964,624 35,069,069
32,246,317 895,555 Stockholders’
equity: Preferred stock 50,160 50,160 50,160 - Common stock 1,041
1,041 1,039 - Surplus 4,263,370 4,261,346 4,232,835 2,024 Retained
earnings 1,356,504 1,286,706 1,228,979 69,798 Treasury stock
(90,087) (89,128) (7,570) (959) Accumulated other comprehensive
loss (302,943) (319,912)
(145,612) 16,969
Total stockholders’ equity 5,278,045
5,190,213 5,359,831
87,832 Total liabilities and stockholders’
equity $41,242,669
$40,259,282 $37,606,148
$983,387
Popular, Inc. Financial Supplement to
Second Quarter 2017 Earnings Release Table D - Consolidated
Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited) Quarter ended
Quarter ended Quarter ended Variance
Variance 30-Jun-17 31-Mar-17 30-Jun-16 Q2 2017 vs. Q1
2017 Q2 2017 vs. Q2 2016
($ amounts in millions; yields
not on a taxable equivalent basis)
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Average balance
Income /
Expense
Yield /
Rate
Assets:
Interest earning assets: Money market, trading
and investment securities $14,018 $61.1
1.74 % $12,423 $52.9 1.71 % $10,286
$42.5 1.65 % $1,595 $8.2
0.03
%
$3,732 $18.6 0.09 % Loans not
covered under loss-sharing agreements with the FDIC:
Commercial 9,815 122.2 5.00 9,704 118.8 4.97 9,150 110.9 4.88 111
3.4 0.03 665 11.3 0.12 Construction 812 11.2 5.54 821 10.9 5.41 723
9.7 5.43 (9) 0.3 0.13 89 1.5 0.11 Mortgage 6,518 87.3 5.36 6,606
88.4 5.35 6,743 88.9 5.27 (88) (1.1) 0.01 (225) (1.6) 0.09 Consumer
3,698 97.2 10.55 3,704 95.2 10.43 3,865 99.4 10.34 (6) 2.0 0.12
(167) (2.2) 0.21 Lease financing 727 11.8
6.48 708 11.6 6.54 651
11.0 6.73 19 0.2
(0.06) 76 0.8 (0.25) Total loans
(excluding WB loans) 21,570 329.8 6.13 21,543 324.9 6.09 21,132
319.9 6.08 27 4.9 0.04 438 9.9 0.05 WB loans 1,740
37.9 8.73 1,810 38.2 8.53
2,013 49.8 9.94 (70)
(0.3) 0.20 (273) (11.9)
(1.21) Total loans 23,309 367.7 6.32
23,353 363.1 6.28 23,145
369.7 6.41 (44) 4.6 0.04
164 (2.0) (0.09) Total interest earning
assets $37,327 $428.7 4.60 % $35,776
$416.0 4.69
%
$33,431 $412.2 4.95 % $1,551
$12.7 (0.09)
%
$3,896 $16.5 (0.35) % Allowance for
loan losses (537) (542) (539) 5 2 Other non-interest earning assets
4,282 4,312 4,479 (30) (197) Total average assets $41,071 $39,546
$37,371 $1,525 $3,700 Liabilities and Stockholders' Equity:
Interest bearing deposits: NOW and money market $9,941 $8.9 0.36 %
$8,516 $8.6 0.41
%
$7,023 $6.6 0.38 % $1,425 $0.3 (0.05)
%
$2,918 $2.3 (0.02) % Savings 8,134 5.0 0.24 8,041 4.9 0.25 7,487
4.4 0.24 93 0.1 (0.01) 647 0.6 - Time deposits 7,661
20.2 1.06 7,756 20.3 1.06
7,866 19.6 1.00 (95)
(0.1) - (205) 0.6 0.06
Total interest bearing deposits 25,736 34.1 0.53 24,313 33.8 0.56
22,376 30.6 0.55 1,423 0.3 (0.03) 3,360 3.5 (0.02) Borrowings 1,936
20.2 4.18 2,025 20.1
4.00 2,307 21.0 3.67 (89)
0.1 0.18 (371) (0.8)
0.51 Total interest bearing liabilities 27,672
54.3 0.79 26,338 53.9
0.83 24,683 51.6 0.84 1,334
0.4 (0.04) 2,989 2.7
(0.05) Net interest spread 3.81 % 3.86
%
4.11 % (0.05)
%
(0.30) % Non-interest bearing deposits 7,204 7,027 6,481 177 723
Other liabilities 869 896 943 (27) (74) Liabilities from
discontinued operations - - 2 - (2) Stockholders' equity 5,326
5,285 5,262 41 64 Total average liabilities and stockholders'
equity $41,071 $39,546 $37,371 $1,525 $3,700
Net interest income / margin non-
taxable equivalent basis
$374.5 4.02 % $362.1 4.08
%
$360.6 4.33 % $12.4 (0.06)
%
$13.9 (0.31) %
Popular, Inc.
Financial Supplement to Second Quarter 2017 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate
Analysis - YEAR-TO-DATE (Unaudited)
Six months ended Six months ended
30-Jun-17 30-Jun-16 Variance Average
Income / Yield / Average Income / Yield /
Average Income / Yield / ($ amounts in millions; yields not on a
taxable equivalent basis) balance Expense Rate
balance Expense Rate balance Expense
Rate Assets: Interest earning assets: Money market, trading and
investment securities $13,225 $113.9 1.73 % $9,619
$83.3 1.73 % $3,606 $30.6 - % Loans not
covered under loss-sharing agreements with the FDIC: Commercial
9,760 241.1 4.98 9,054 221.6 4.92 706 19.5 0.06 Construction 816
22.2 5.47 713 19.0 5.37 103 3.2 0.10 Mortgage 6,562 175.7 5.35
6,786 178.6 5.26 (224) (2.9) 0.09 Consumer 3,701 192.5 10.49 3,836
197.4 10.35 (135) (4.9) 0.14 Lease financing 718 23.4
6.51 641 21.6 6.75 77 1.8 (0.24) Total
loans (excluding WB loans) 21,556 654.7 6.11 21,030 638.2 6.09 526
16.5 0.02 WB loans 1,775 76.1 8.63 2,035 94.8
9.34 (260) (18.7) (0.71) Total loans 23,331
730.8 6.30 23,065 733.0 6.38 266
(2.2) (0.08) Total interest earning assets $36,555
$844.7 4.65 % $32,684 $816.3 5.01 % $3,871
$28.4 (0.36) % Allowance for loan losses (539) (538)
(1) Other non-interest earning assets 4,297 4,484 (187) Total
average assets $40,313 $36,630 $3,683 Liabilities and
Stockholders' Equity: Interest bearing deposits: NOW and money
market $9,232 $17.4 0.38 % $6,367 $12.2 0.39 % $2,865 $5.2 (0.01) %
Savings 8,088 9.9 0.25 7,381 8.7 0.24 707 1.2 0.01 Time deposits
7,708 40.6 1.06 7,962 39.6 1.00 (254)
1.0 0.06 Total interest bearing deposits 25,028 67.8
0.55 21,710 60.5 0.56 3,318 7.3 (0.01) Borrowings 1,980 40.3
4.08 2,374 42.8 3.61 (394) (2.5)
0.47 Total interest bearing liabilities 27,008 108.2
0.81 24,084 103.3 0.86 2,924 4.9 (0.05)
Net interest spread 3.84 % 4.15 % (0.31) % Non-interest bearing
deposits 7,116 6,387 729 Other liabilities 883 930 (47) Liabilities
from discontinued operations - 2 (2) Stockholders' equity 5,306
5,227 79 Total average liabilities and stockholders' equity $40,313
$36,630 $3,683 Net interest income / margin non-taxable
equivalent basis $736.6 4.05 % $713.0 4.38 % $23.6
(0.33) %
Financial Supplement to Second Quarter 2017 Earnings Release
Table F - Mortgage Banking
Activities and Other Service Fees (Unaudited)
Mortgage Banking
Activities Variance Quarters ended
Q2 2017
vs.
Q2 2017
vs.
Six months ended Variance (In thousands)
30-Jun-17 31-Mar-17 30-Jun-16 Q1 2017
Q2 2016 30-Jun-17 30-Jun-16
2017 vs.
2016
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $13,021 $13,452 $14,675 $(431) $(1,654)
$26,473 $29,477 $(3,004) Mortgage servicing rights fair
value adjustments (8,046) (5,954)
(4,340) (2,092) (3,706) (14,000)
(12,817) (1,183) Total mortgage servicing fees, net of fair
value adjustments 4,975 7,498 10,335
(2,523) (5,360) 12,473 16,660
(4,187) Net gain on sale of loans, including valuation on loans
held-for-sale 7,250 5,381 8,474
1,869 (1,224) 12,631 15,584 (2,953)
Trading account loss: Unrealized gains (losses) on outstanding
derivative positions 83 (40) (59) 123 142 43 (139) 182
Realized losses on closed derivative positions
(1,567) (1,470) (2,523) (97) 956
(3,037) (5,327) 2,290 Total trading account loss
(1,484) (1,510) (2,582) 26
1,098 (2,994) (5,466) 2,472 Total
mortgage banking activities $10,741 $11,369
$16,227 $(628) $(5,486) $22,110
$26,778 $(4,668)
Other Service Fees
Variance Quarters
ended
Q2 2017
vs.
Q2 2017
vs.
Six months ended Variance (In thousands) 30-Jun-17
31-Mar-17 30-Jun-16 Q1 2017 Q2 2016
30-Jun-17 30-Jun-16 2017 vs. 2016 Other
service fees: Debit card fees $11,576 $11,543 $11,382 $33
$194 $23,119 $22,669 $450 Insurance fees 13,529 12,805 13,885 724
(356) 26,334 26,735 (401) Credit card fees 19,305 18,276 17,700
1,029 1,605 37,581 34,558 3,023 Sale and administration of
investment products 5,799 5,082 5,417 717 382 10,881 10,256 625
Trust fees 4,903 4,955 4,827 (52) 76 9,858 9,063 795 Other
fees 4,056 3,514 3,734 542 322
7,570 7,046 524 Total other service fees
$59,168 $56,175 $56,945 $2,993
$2,223 $115,343 $110,327 $5,016
Popular, Inc.
Financial Supplement to Second Quarter 2017 Earnings Release
Table G - Loans and Deposits (Unaudited)
Loans - Ending Balances Variance (In thousands)
30-Jun-17 31-Mar-17 30-Jun-16
Q2 2017 vs.
Q1 2017
Q2 2017 vs.
Q2 2016
Loans not covered under FDIC loss-sharing agreements: Commercial
$11,047,359 $10,811,700 $10,359,815 $235,659 $687,544 Construction
784,389 831,305 717,332 (46,916) 67,057 Legacy [1] 39,067 40,688
49,709 (1,621) (10,642) Lease financing 743,603 719,643 664,094
23,960 79,509 Mortgage 6,552,796 6,627,987 6,864,118 (75,191)
(311,322) Consumer 3,751,057 3,703,398
3,885,593 47,659 (134,536) Total non-covered loans
held-in-portfolio $22,918,271 $22,734,721 $22,540,661 $183,550
$377,610 Loans covered under FDIC loss-sharing agreements
536,341 551,980 607,170 (15,639)
(70,829) Total loans held-in-portfolio $23,454,612
$23,286,701 $23,147,831 $167,911 $306,781
Loans held-for-sale: Commercial $- $- $39,544 $- $(39,544) Mortgage
69,797 85,309 82,794 (15,512)
(12,997) Total loans held-for-sale $69,797 $85,309
$122,338 $(15,512) $(52,541) Total loans
$23,524,409 $23,372,010 $23,270,169
$152,399 $254,240 [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
segment.
Deposits - Ending Balances Variance (In
thousands) 30-Jun-17 31-Mar-17 30-Jun-16
Q2 2017 vs. Q1 2017 Q2 2017 vs.Q2 2016 Demand
deposits [1] $11,194,860 $10,136,435 $8,106,291 $1,058,425
$3,088,569 Savings, NOW and money market deposits (non-brokered)
13,946,680 13,939,838 12,289,793 6,842 1,656,887 Savings, NOW and
money market deposits (brokered) 424,303 423,339 387,026 964 37,277
Time deposits (non-brokered) 7,361,587 7,508,726 7,570,673
(147,139) (209,086) Time deposits (brokered CDs) 194,603
204,241 384,073 (9,638) (189,470) Total
deposits $33,122,033 $32,212,579 $28,737,856
$909,454 $4,384,177 [1] Includes interest and
non-interest bearing demand deposits.
Popular, Inc.
Financial Supplement to Second Quarter 2017 Earnings Release
Table H - Non-Performing Assets (Unaudited)
Variance (Dollars in
thousands) 30-Jun-17
As a % of
loans HIP by
category
31-Mar-17
As a % of
loans HIP by
category
30-Jun-16
As a % of
loans HIP by
category
Q2 2017 vs.
Q1 2017
Q2 2017 vs.
Q2 2016
Non-accrual loans: Commercial $166,864 1.5 % $179,241 1.7 %
$175,615 1.7 % $(12,377) $(8,751) Construction - - - - 2,523 0.4 -
(2,523) Legacy [1] 3,360 8.6 3,335 8.2 3,839 7.7 25 (479) Lease
financing 2,065 0.3 2,444 0.3 3,019 0.5 (379) (954) Mortgage
318,922 4.9 331,339 5.0 338,048 4.9 (12,417) (19,126) Consumer
55,918 1.5 59,254 1.6
54,695 1.4 (3,336) 1,223 Total
non-performing loans held-in- portfolio, excluding covered loans
547,129 2.4 % 575,613 2.5 % 577,739 2.6 % (28,484) (30,610)
Non-performing loans held-for-sale [2] - - 39,544 - (39,544) Other
real estate owned (“OREO”), excluding covered OREO 181,096
185,836
177,025 (4,740) 4,071 Total
non-performing assets, excluding covered assets 728,225 761,449
794,308 (33,224) (66,083) Covered loans and OREO 29,376
33,866
41,466 (4,490) (12,090) Total
non-performing assets $757,601
$795,315 $835,774
$(37,714) $(78,173) Accruing loans past due 90 days
or more [3] $391,569 $408,346
$413,319
$(16,777) $(21,750)
Ratios excluding covered loans:
Non-performing loans held-in-portfolio to loans held-in-portfolio
2.39 % 2.53 % 2.56 % Allowance for loan losses to loans
held-in-portfolio 2.22 2.27 2.30 Allowance for loan losses to
non-performing loans, excluding loans held-for-sale 93.07
89.77 89.68
Ratios
including covered loans: Non-performing assets to total assets
1.84 % 1.98 % 2.22 % Non-performing loans held-in-portfolio to
loans held-in-portfolio 2.35 2.49 2.51 Allowance for loan losses to
loans held-in-portfolio 2.30 2.34 2.37 Allowance for loan losses to
non-performing loans, excluding loans held-for-sale 97.98
93.95 94.41
[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 segment. [2] There were no non-performing
loans held-for-sale as of June 30, 2017 and March 31, 2017 (June
30, 2016 - $40 million in commercial 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 non-performing since the
principal repayment is insured. These balances include $160 million
of residential mortgage loans insured by FHA or guaranteed by the
VA that are no longer accruing interest as of June 30, 2017 (March
31, 2017 - $173 million; June 30, 2016 - $149 million).
Furthermore, the Corporation has approximately $56.6 million in
reverse mortgage loans which are guaranteed by FHA, but which are
currently not accruing interest. Due to the guaranteed nature of
the loans, it is the Corporation's policy to exclude these balances
from non-performing assets (March 31, 2017 - $58.6 million; June
30, 2016 - $62.8 million).
Popular, Inc. Financial
Supplement to Second Quarter 2017 Earnings Release Table I -
Activity in Non-Performing Loans (Unaudited)
Commercial loans
held-in-portfolio: Quarter ended Quarter ended 30-Jun-17
31-Mar-17 (In thousands) BPPR BPNA Popular,
Inc. BPPR BPNA Popular, Inc. Beginning balance
NPLs $175,477 $3,764 $179,241 $159,655 $3,693 $163,348 Plus: New
non-performing loans 13,809 1,027 14,836 33,600 1,355 34,955
Advances on existing non-performing loans - 4 4 - - - Less:
Non-performing loans transferred to OREO (2,442) - (2,442) (3,510)
- (3,510) Non-performing loans charged-off (19,184) (22) (19,206)
(5,153) (46) (5,199) Loans returned to accrual status / loan
collections (4,797) (772) (5,569)
(9,115) (1,238) (10,353) Ending balance NPLs
$162,863 $4,001 $166,864 $175,477
$3,764 $179,241
Mortgage loans
held-in-portfolio: Quarter ended Quarter ended 30-Jun-17
31-Mar-17 (In thousands) BPPR BPNA Popular,
Inc. BPPR BPNA Popular, Inc. Beginning balance
NPLs $319,450 $11,889 $331,339 $318,194 $11,713 $329,907 Plus: New
non-performing loans 81,582 4,990 86,572 82,149 4,753 86,902 Less:
Non-performing loans transferred to OREO (12,229) - (12,229)
(11,256) (46) (11,302) Non-performing loans charged-off (14,123)
(580) (14,703) (9,428) (69) (9,497) Loans returned to accrual
status / loan collections (68,038) (4,019)
(72,057) (60,209) (4,462) (64,671) Ending
balance NPLs $306,642 $12,280 $318,922
$319,450 $11,889 $331,339
Legacy loans
held-in-portfolio: Quarter ended Quarter ended 30-Jun-17
31-Mar-17 (In thousands) BPPR BPNA Popular,
Inc. BPPR BPNA Popular, Inc. Beginning balance
NPLs $- $3,335 $3,335 $- $3,337 $3,337 Plus: New non-performing
loans - 114 114 - - - Advances on existing non-performing loans - 8
8 - 47 47 Less: Non-performing loans charged-off - (11) (11) - (2)
(2) Loans returned to accrual status / loan collections -
(86) (86) - (47) (47) Ending
balance NPLs $- $3,360 $3,360 $-
$3,335 $3,335
Total non-performing loans held-in-portfolio
(excluding consumer and covered loans): Quarter ended Quarter
ended 30-Jun-17 31-Mar-17 (In thousands) BPPR BPNA
Popular, Inc. BPPR BPNA Popular, Inc.
Beginning balance NPLs $494,927 $18,988 $513,915 $477,849 $18,743
$496,592 Plus: New non-performing loans 95,391 6,131 101,522
115,749 6,108 121,857 Advances on existing non-performing loans -
12 12 - 47 47 Less: Non-performing loans transferred to OREO
(14,671) - (14,671) (14,766) (46) (14,812) Non-performing loans
charged-off (33,307) (613) (33,920) (14,581) (117) (14,698) Loans
returned to accrual status / loan collections (72,835)
(4,877) (77,712) (69,324) (5,747)
(75,071) Ending balance NPLs $469,505 $19,641
$489,146 $494,927 $18,988 $513,915
Popular, Inc. Financial Supplement to Second
Quarter 2017 Earnings Release Table J - Allowance for Credit
Losses, Net Charge-offs and Related Ratios (Unaudited)
Quarter ended Quarter ended
Quarter ended 30-Jun-17 31-Mar-17
30-Jun-16 (Dollars in thousands)
Non-covered
loans
Covered
loans
Total
Non-covered
loans
Covered
loans
Total
Non-covered
loans
Covered
loans
Total Balance at beginning of period $516,725 $27,771
$544,496 $510,301 $30,350 $540,651 $508,427 $30,045 $538,472
Provision (reversal) for loan losses 49,965 2,514
52,479 42,057 (1,359) 40,698
39,668 804 40,472 566,690
30,285 596,975 552,358 28,991 581,349
548,095 30,849 578,944 Net loans
charged-off (recovered): BPPR Commercial [4] 11,745 - 11,745 2,638
- 2,638 5,647 - 5,647 Construction (2,370) - (2,370) (144) - (144)
(3,226) - (3,226) Lease financing 1,438 - 1,438 813 - 813 434 - 434
Mortgage 20,753 (538) 20,215 13,555 1,128 14,683 13,464 699 14,163
Consumer 22,689 15 22,704 16,083
92 16,175 19,903 (431) 19,472 Total
BPPR 54,255 (523) 53,732 32,945
1,220 34,165 36,222 268 36,490
BPNA Commercial (643) - (643) (463) - (463) (1,265) - (1,265)
Legacy [1] (298) - (298) (488) - (488) (893) - (893) Mortgage 462 -
462 (104) - (104) 16 - 16 Consumer 3,708 -
3,708 3,743 - 3,743 1,321 -
1,321 Total BPNA 3,229 - 3,229
2,688 - 2,688 (821) -
(821) Total loans charged-off - Popular, Inc. 57,484
(523) 56,961 35,633 1,220 36,853
35,401 268 35,669 Net recoveries [2]
- - - - - - 5,445
- 5,445 Balance at end of period
$509,206 $30,808 $540,014 $516,725
$27,771 $544,496 $518,139 $30,581
$548,720 POPULAR, INC. Annualized net charge-offs to
average loans held-in-portfolio 1.01 % 0.98 % 0.63 % 0.63 % 0.63 %
0.62 % Provision for loan losses to net charge-offs [3] 0.87 x 0.92
x 1.18 x 1.10 x 1.27 x 1.29 x BPPR Annualized net
charge-offs to average loans held-in-portfolio 1.28 % 1.23 % 0.77 %
0.78 % 0.83 % 0.81 % Provision for loan losses to net charge-offs
[3] 0.78 x 0.83 x 0.96 x 0.88 x 1.21 x 1.22 x BPNA
Annualized net charge-offs (recoveries) to average loans
held-in-portfolio 0.22 % 0.19 % (0.06) % Provision for loan losses
to net charge-offs (recoveries)
2.41 x 3.94 x
(1.60) x [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 segment. [2] Net
recoveries are related to loans sold or reclassified to
held-for-sale. [3] Excluding provision for loan losses and net
recoveries related to loans sold. [4] Includes the elimination of
an incremental $6.0 million charge-off related to the inter-company
transfer of a loan between BPPR and Popular, Inc., its bank holding
company, the impact of which is eliminated in the consolidated
results of the Corporation in accordance with U.S. GAAP.
Popular, Inc. Financial Supplement to Second Quarter 2017
Earnings Release Table K - Allowance for Loan Losses -
Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
30-Jun-17 (Dollars
in thousands) Commercial
Construction Legacy [2] Mortgage
Lease financing Consumer Total
[3] Specific ALLL $41,982 $- $- $50,148 $487 $22,693 $115,310
Impaired loans [1] $333,936 $- $- $514,140 $1,668 $107,027 $956,771
Specific ALLL to impaired loans [1] 12.57 % -
% - % 9.75 % 29.20 % 21.20 %
12.05 % General ALLL $160,526 $8,001 $993 $101,840 $7,516 $115,020
$393,896 Loans held-in-portfolio, excluding impaired loans [1]
$10,713,423 $784,389 $39,067 $6,038,656 $741,935 $3,644,030
$21,961,500 General ALLL to loans held-in-portfolio, excluding
impaired loans [1] 1.50 % 1.02 % 2.54 %
1.69 % 1.01 % 3.16 % 1.79 % Total ALLL
$202,508 $8,001 $993 $151,988 $8,003 $137,713 $509,206 Total
non-covered loans held-in-portfolio [1] $11,047,359 $784,389
$39,067 $6,552,796 $743,603 $3,751,057 $22,918,271 ALLL to loans
held-in-portfolio [1] 1.83 % 1.02 %
2.54 % 2.32 % 1.08 % 3.67 % 2.22 % [1]
Excludes covered loans acquired on the Westernbank FDIC-assisted
transaction. [2] 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.
[3] Excludes covered loans acquired on the Westernbank
FDIC-assisted transaction. As of June 30, 2017 the general
allowance on the covered loans amounted to $30.8 million.
31-Mar-17 (Dollars in thousands)
Commercial Construction
Legacy [2] Mortgage Lease
financing Consumer Total [3] Specific
ALLL $51,276 $- $- $43,264 $522 $23,010 $118,072 Impaired loans [1]
$348,823 $- $- $510,568 $1,803 $109,016 $970,210 Specific ALLL to
impaired loans [1] 14.70 % - % - %
8.47 % 28.95 % 21.11 % 12.17 % General
ALLL $157,408 $9,997 $1,166 $105,955 $7,375 $116,752 $398,653 Loans
held-in-portfolio, excluding impaired loans [1] $10,462,877
$831,305 $40,688 $6,117,419 $717,840 $3,594,382 $21,764,511 General
ALLL to loans held-in-portfolio, excluding impaired loans
[1] 1.50 % 1.20 % 2.87 % 1.73 %
1.03 % 3.25 % 1.83 % Total ALLL $208,684 $9,997
$1,166 $149,219 $7,897 $139,762 $516,725 Total non-covered loans
held-in-portfolio [1] $10,811,700 $831,305 $40,688 $6,627,987
$719,643 $3,703,398 $22,734,721 ALLL to loans held-in-portfolio
[1] 1.93 % 1.20 % 2.87 % 2.25 %
1.10 % 3.77 % 2.27 % [1] Excludes covered
loans acquired on the Westernbank FDIC-assisted transaction. [2]
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. [3] Excludes
covered loans acquired on the Westernbank FDIC-assisted
transaction. As of March 31, 2017 the general allowance on the
covered loans amounted to $27.8 million.
Variance (Dollars in thousands)
Commercial Construction Legacy
Mortgage Lease financing
Consumer Total Specific ALLL $(9,294) $- $-
$6,884 $(35) $(317) $(2,762) Impaired loans
$(14,887) $- $- $3,572
$(135) $(1,989) $(13,439)
General ALLL $3,118 $(1,996) $(173) $(4,115) $141 $(1,732)
$(4,757) Loans held-in-portfolio, excluding impaired loans
$250,546 $(46,916)
$(1,621) $(78,763) $24,095
$49,648 $196,989 Total ALLL $(6,176)
$(1,996) $(173) $2,769 $106 $(2,049) $(7,519) Total non-covered
loans held-in-portfolio $235,659
$(46,916) $(1,621) $(75,191)
$23,960 $47,659 $183,550
Popular, Inc. Financial Supplement to Second
Quarter 2017 Earnings Release Table L - Allowance for Loan
Losses - Breakdown of General and Specific Reserves - PUERTO RICO
OPERATIONS (Unaudited) 30-Jun-17 Puerto Rico (In
thousands) Commercial Construction Mortgage
Lease financing Consumer Total
Allowance
for credit losses:
Specific ALLL non-covered loans $41,982 $- $47,954 $487
$21,999 $112,422 General ALLL non-covered loans
132,207 1,473 99,912 7,516 100,905
342,013 ALLL - non-covered loans 174,189 1,473
147,866 8,003 122,904 454,435 Specific
ALLL covered loans - - - - - - General ALLL covered loans
- - 30,284 - 524 30,808
ALLL - covered loans - - 30,284 -
524 30,808 Total ALLL $174,189 $1,473
$178,150 $8,003 $123,428 $485,243
Loans held-in-portfolio: Impaired non-covered loans $333,936
$- $505,244 $1,668 $103,798 $944,646 Non-covered loans
held-in-portfolio, excluding impaired loans 6,822,150
96,904 5,313,039 741,935 3,157,991
16,132,019 Non-covered loans held-in-portfolio 7,156,086
96,904 5,818,283 743,603 3,261,789
17,076,665 Impaired covered loans - - - - - - Covered
loans held-in-portfolio, excluding impaired loans - -
521,066 - 15,275 536,341 Covered loans
held-in-portfolio - - 521,066 -
15,275 536,341 Total loans held-in-portfolio
$7,156,086 $96,904 $6,339,349 $743,603
$3,277,064 $17,613,006 31-Mar-17 Puerto Rico
(In thousands) Commercial Construction
Mortgage Lease financing Consumer Total
Allowance for credit losses: Specific ALLL non-covered loans
$51,276 $- $41,067 $522 $22,331 $115,196 General ALLL
non-covered loans 136,355 1,961 103,870
7,375 101,760 351,321 ALLL - non-covered loans
187,631 1,961 144,937 7,897 124,091
466,517 Specific ALLL covered loans - - - - - -
General ALLL covered loans - - 27,341 -
430 27,771 ALLL - covered loans - -
27,341 - 430 27,771 Total ALLL
$187,631 $1,961 $172,278 $7,897
$124,521 $494,288
Loans held-in-portfolio: Impaired
non-covered loans $348,823 $- $501,647 $1,803 $106,236 $958,509
Non-covered loans held-in-portfolio, excluding impaired
loans 6,715,507 95,459 5,368,071
717,840 3,120,843 16,017,720 Non-covered loans
held-in-portfolio 7,064,330 95,459 5,869,718
719,643 3,227,079 16,976,229 Impaired covered
loans - - - - - - Covered loans held-in-portfolio, excluding
impaired loans - - 536,287 -
15,693 551,980 Covered loans held-in-portfolio -
- 536,287 - 15,693 551,980 Total
loans held-in-portfolio $7,064,330 $95,459
$6,406,005 $719,643 $3,242,772 $17,528,209
Variance (In thousands)
Commercial Construction Mortgage Lease
financing Consumer Total
Allowance for credit
losses: Specific ALLL non-covered loans $(9,294) $- $6,887
$(35) $(332) $(2,774) General ALLL non-covered loans
(4,148) (488) (3,958) 141 (855)
(9,308) ALLL - non-covered loans (13,442) (488)
2,929 106 (1,187) (12,082) Specific
ALLL covered loans - - - - - - General ALLL covered loans
- - 2,943 - 94 3,037 ALLL
- covered loans - - 2,943 - 94
3,037 Total ALLL $(13,442) $(488)
$5,872 $106 $(1,093) $(9,045)
Loans
held-in-portfolio: Impaired non-covered loans $(14,887) $-
$3,597 $(135) $(2,438) $(13,863) Non-covered loans
held-in-portfolio, excluding impaired loans 106,643
1,445 (55,032) 24,095 37,148 114,299
Non-covered loans held-in-portfolio 91,756 1,445
(51,435) 23,960 34,710 100,436 Impaired
covered loans - - - - - - Covered loans held-in-portfolio,
excluding impaired loans - - (15,221) -
(418) (15,639) Covered loans held-in-portfolio
- - (15,221) - (418) (15,639)
Total loans held-in-portfolio $91,756 $1,445
$(66,656) $23,960 $34,292 $84,797
Popular, Inc. Financial Supplement to Second Quarter 2017
Earnings Release Table M - Allowance for Loan Losses -
Breakdown of General and Specific Reserves - U.S. MAINLAND
OPERATIONS (Unaudited) 30-Jun-17 U.S. Mainland
(In thousands) Commercial Construction Legacy
Mortgage Consumer Total
Allowance for
credit losses:
Specific ALLL $- $- $- $2,194 $694 $2,888 General ALLL
28,319 6,528 993 1,928 14,115
51,883 Total ALLL $28,319 $6,528 $993
$4,122 $14,809 $54,771
Loans
held-in-portfolio: Impaired loans $- $- $- $8,896 $3,229
$12,125 Loans held-in-portfolio, excluding impaired loans
3,891,273 687,485 39,067 725,617
486,039 5,829,481 Total loans held-in-portfolio
$3,891,273 $687,485 $39,067 $734,513
$489,268 $5,841,606 31-Mar-17 U.S. Mainland
(In thousands) Commercial Construction Legacy
Mortgage Consumer Total
Allowance for
credit losses: Specific ALLL $- $- $- $2,197 $679 $2,876
General ALLL 21,053 8,036 1,166 2,085
14,992 47,332 Total ALLL $21,053 $8,036
$1,166 $4,282 $15,671 $50,208
Loans
held-in-portfolio: Impaired loans $- $- $- $8,921 $2,780
$11,701 Loans held-in-portfolio, excluding impaired loans
3,747,370 735,846 40,688 749,348
473,539 5,746,791 Total loans held-in-portfolio
$3,747,370 $735,846 $40,688 $758,269
$476,319 $5,758,492
Variance (In thousands) Commercial
Construction Legacy Mortgage Consumer
Total
Allowance for credit losses: Specific ALLL $- $- $-
$(3) $15 $12 General ALLL 7,266 (1,508)
(173) (157) (877) 4,551 Total ALLL
$7,266 $(1,508) $(173) $(160) $(862)
$4,563
Loans held-in-portfolio: Impaired loans $- $-
$- $(25) $449 $424 Loans held-in-portfolio, excluding
impaired loans 143,903 (48,361) (1,621)
(23,731) 12,500 82,690 Total loans held-in-portfolio
$143,903 $(48,361) $(1,621) $(23,756)
$12,949 $83,114
Popular, Inc.
Financial Supplement to Second Quarter 2017 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited) (In thousands, except share or per
share information) 30-Jun-17 31-Mar-17
30-Jun-16 Total stockholders’ equity $5,278,045 $5,190,213
$5,359,831 Less: Preferred stock (50,160) (50,160)
(50,160) $5,227,885 $5,140,053 $5,309,671 Common shares
outstanding at end of period 101,986,758 101,956,740 103,703,041
Common equity per share $51.26 $50.41 $51.20
Total stockholders’ equity $5,278,045 $5,190,213 $5,359,831
Less: Preferred stock (50,160) (50,160) (50,160) Less: Goodwill
(627,294) (627,294) (631,095) Less: Other intangibles
(40,361) (42,706) (50,983) Total tangible
common equity $4,560,230 $4,470,053 $4,627,593
Total assets $41,242,669 $40,259,282 $37,606,148 Less:
Goodwill (627,294) (627,294) (631,095) Less: Other intangibles
(40,361) (42,706) (50,983) Total
tangible assets $40,575,014 $39,589,282
$36,924,070 Tangible common equity to tangible assets 11.24
% 11.29 % 12.53 % Common shares outstanding at end of period
101,986,758 101,956,740 103,703,041 Tangible book value per common
share $44.71 $43.84 $44.62
Popular, Inc. Financial Supplement
to Second Quarter 2017 Earnings Release Table O - Financial
Information - Westernbank Loans (Unaudited)
Revenues (Expenses) Quarters ended (In thousands)
30-Jun-17 31-Mar-17 Variance Interest income
on WB loans $37,900 $38,182 $(282) FDIC
loss-share expense: Accretion (amortization) of indemnification
asset 147 (776) 923 80% mirror accounting on credit impairment
losses [1] 2,126 148 1,978 80% mirror accounting on reimbursable
expenses 723 921 (198) 80% mirror accounting on recoveries on
covered assets, including rental income on OREOs, subject to
reimbursement to the FDIC (400) 4,833 (5,233) Change in true-up
payment obligation (3,125) (7,385) 4,260 Other 54
(5,998) 6,052 Total FDIC loss-share expense
(475) (8,257) 7,782 Total income 37,425
29,925 7,500 Reversal of provision for loan losses- WB loans
[2] (417) (499) 82 Total income less reversal
of provision for loan losses $37,842 $30,424
$7,418 [1] Reductions in expected cash flows for ASC 310-30 loans,
which may impact the provision for loan losses, may consider
reductions in both principal and interest cash flow expectations.
The amount covered under the FDIC loss-sharing agreement for
interest not collected from borrowers is limited under the
agreement (approximately 90 days); accordingly, these amounts are
not subject fully to the 80% mirror accounting. [2] Includes the
elimination of an incremental $6.0 million provision for loan
losses related to the inter-company transfer of a loan between BPPR
and Popular, Inc., its bank holding company, the impact of which is
eliminated in the consolidated results of the Corporation in
accordance with U.S. GAAP.
Non-personnel operating
expenses Quarters ended [1][2] (In thousands) 30-Jun-17
31-Mar-17 Variance Professional fees $735 $(2,635)
$3,370 OREO expenses 3,166 3,033 133 Other operating expenses
1,685 1,615 70 Total operating expenses
$5,586 $2,013 $3,573 [1] Includes expenses related to
loans subject, and not subject, to the FDIC loss-sharing
agreements. [2] Expense reimbursements from the FDIC may be
recorded with a time lag, since these are claimed upon the event of
loss or charge-off of the loans which may occur in a subsequent
period.
Quarterly average assets Quarters
ended (In millions) 30-Jun-17 31-Mar-17
Variance Loans $1,740 $1,810 $(70) FDIC loss-share asset 54
44 10
Activity in the carrying amount and
accretable yield of loans accounted for under ASC 310-30
Quarters ended 30-Jun-17
31-Mar-17 (In thousands) Accretable yield
Carrying amount
of loans
Accretable yield
Carrying amount
of loans
Beginning balance $981,206 $1,688,900 $1,010,087 $1,738,329
Accretion (amortization) (36,488) 36,488 (36,892) 36,892 Changes in
expected cash flows (2,050) - 8,011 - Collections / loan sales /
charge-offs - (107,601) - (86,321)
Ending balance[1] 942,668 1,617,787 981,206 1,688,900
Allowance for loan losses - ASC 310-30 loans -
(65,674) - (66,544) Ending balance, net of allowance
for loan losses $942,668 $1,552,114 $981,206
$1,622,356 [1] The carrying amount of loans acquired
from Westernbank and accounted for under ASC 310-30 which remain
subject to the loss-sharing agreement with the FDIC amounted to
approximately $526 million as of June 30, 2017 and $542 million as
of March 31, 2017.
Activity in the carrying
amount of the FDIC indemnity asset Quarters ended (In
thousands) 30-Jun-17
31-Mar-17 Balance at beginning of period $64,077 $69,334 Accretion
(amortization) 147 (776) Credit impairment losses to be covered
under loss-sharing agreements 2,126 148 Reimbursable expenses to be
covered under loss-sharing agreements 723 921 Net payments from
FDIC under loss-sharing agreements (14,003) - Other adjustments
attributable to FDIC loss-sharing agreements -
(5,550) Balance at end of period
53,070 64,077 Balance due to the FDIC
for recoveries on covered assets (487)
(5,284) Net balance of indemnity asset and amounts
due from the FDIC $52,583
$58,793
Activity in the remaining FDIC loss-share
asset accretion (amortization) Quarters ended (In
thousands) 30-Jun-17
31-Mar-17 Balance at beginning of period [1] $3,929 $4,812
Accretion (amortization) [2] 147 (776) Impact of change in
projected losses (4,801)
(107) Balance at end of period $(725)
$3,929 [1] Positive balance represents negative
discount (debit to assets), while a negative balance represents a
discount (credit to assets). [2] Amortization results in a negative
impact to non-interest income, while accretion results in a
positive impact to non-interest income, particularly FDIC
loss-share expense.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726005036/en/
Popular, Inc.Investor Relations:Brett Scheiner,
212-417-6721Investor Relations OfficerBScheiner@BPOP.comorMedia
Relations:Teruca Rullán, 787-281-5170Mobile: 917-679-3596Senior
Vice President, Corporate Communications
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