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Press release from Business Wire

Popular, Inc. Reports Net Income of $65.7 million for the Quarter ended June 30, 2012

<ul> <li class='bwlistitemmargb'> <b>Net interest margin of 4.33% for Q2 2012 vs. 4.27% for Q1 2012</b> </li> <li class='bwlistitemmargb'> <b>Improvement in credit quality (excluding covered loans) continues:</b> <ul> <li class='bwlistitemmargb'> <b>Net charge-offs fell to $98.0 million for Q2 2012 vs. $108.1 million for Q1 2012; declining for the third consecutive quarter and at the lowest level since Q1 2008</b> </li> <li class='bwlistitemmargb'> <b>Non-performing loans held-in-portfolio declined by $120 million, down 7% from Q1 2012 and 33% from Q3 2010 peak; lowest level since Q1 2009</b> </li> <li class='bwlistitemmargb'> <b>Inflows of commercial, construction, and legacy non-performing loans held-in-portfolio declined by $31 million, or 22%, from Q1 2012; down for the third consecutive quarter</b> </li> </ul> </li> <li class='bwlistitemmargb'> <b>Unfavorable adjustments in the quarterly valuation of loans held-for-sale of $27.3 million in Q2 2012</b> </li> <li class='bwlistitemmargb'> <b>FDIC loss share income of $2.6 million in Q2 2012 vs. expense of $15.3 million in Q1 2012; mostly due to 80% mirror accounting on $19.2 million of higher provision for loan losses on covered loans for Q2 2012 vs. Q1 2012 and to the covered reimbursable expenses related mostly to construction loans</b> </li> <li class='bwlistitemmargb'> <b>Expense of $25.0 million recognized in Q2 2012 as a result of the early cancellation of certain short-term borrowings</b> </li> <li class='bwlistitemmargb'> <b>Tax benefit of $72.9 million was recognized related to the tax treatment of the loans acquired in the Westernbank FDIC-assisted transaction</b> </li> </ul>

Wednesday, July 18, 2012

Popular, Inc. Reports Net Income of $65.7 million for the Quarter ended June 30, 201208:13 EDT Wednesday, July 18, 2012 SAN JUAN, Puerto Rico (Business Wire) -- Popular, Inc. (“the Corporation” or “Popular”) (NASDAQ:BPOP) reported net income of $65.7 million for the quarter ended June 30, 2012, compared with net income of $48.4 million for the quarter ended March 31, 2012. Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: “Two consistently positive trends stand out in this quarter's results. First, our net interest margin and our revenue-generating capacity remain strong. Second, credit metrics keep improving. The decrease of $120 million in non-performing loans marks our largest quarterly decline in this credit cycle. Despite various headwinds we are continuing our progress.” Refer to the accompanying “Financial Supplement to Second Quarter 2012 Earnings Release” for detailed financial information and key performance ratios. Table B provides a breakdown of main categories in the income statement. Earnings Highlights – Second Quarter 2012 compared with First Quarter 2012     Quarter ended     (Dollars in thousands except per share information)   June 30, 2012   March 31, 2012   $ Variance Net interest income   $341,200   $337,582   $ 3,618 Provision for loan losses – non-covered loans 81,743 82,514 (771 ) Provision for loan losses – covered loans [1]   37,456     18,209       19,247   Net interest income after provision for loan losses 222,001 236,859 (14,858 ) FDIC loss share income (expense) 2,575 (15,255 ) 17,830 Other non-interest income 91,149 139,163 (48,014 ) Operating expenses   327,879     296,167       31,712   (Loss) income before income tax (12,154 ) 64,600 (76,754 ) Income tax (benefit) expense   (77,893 )   16,192       (94,085 ) Net income   $65,739     $48,408     $ 17,331   Net income applicable to common stock   $64,809     $47,477     $ 17,332   Net income per common share - basic and diluted [2]   $0.63     $ 0.46     $ 0.17   [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. Main events for the quarter ended June 30, 2012 The results for the second quarter of 2012 reflect a tax benefit of $72.9 million related to the tax treatment of the loans acquired in the Westernbank FDIC-assisted transaction (the “Acquired Loans”). In June 2012, the Puerto Rico Department of the Treasury (the “P.R. Treasury”) and the Corporation entered into a Closing Agreement (the “Closing Agreement”) to clarify that those Acquired Loans are a capital asset and any gain resulting from such loans will be taxed at the capital gain tax rate of 15% instead of the ordinary income tax rate of 30%, thus reducing the deferred tax liability on the estimated gain and recognizing an income tax benefit for accounting purposes during the quarter. As part of the Closing Agreement, the Corporation prepaid to the P.R. Treasury the estimated tax of $72.9 million related to these estimated capital gains. The effective tax rate for the Corporation's Puerto Rico banking operations for 2012 is estimated at 20%. During the second quarter of 2012, negative valuation adjustments on commercial and construction loans held-for-sale of approximately $34.7 million were recognized by Banco Popular de Puerto Rico (“BPPR”). The quarterly valuation analyses of the outstanding loans held-for-sale, which considered the impact of recent appraisals and market indicators, resulted in an unfavorable adjustment of $27.3 million for the current quarter. Also, there were $7.4 million in additional unfavorable valuation adjustments, mostly from the reclassification of certain loans from loans held-for-sale to other real estate. As of June 30, 2012, commercial and construction loans held-for-sale in the BPPR reportable segment amounted to $177 million. During the quarter ended June 30, 2012, the Corporation recognized a loss on the early extinguishment of debt of $25.0 million related to the early termination of $350 million in outstanding repurchase agreements (“repos”) with contractual maturities between March 2014 and May 2014, with an average cost of 4.36%. The Corporation anticipates replacing these repos with short-term borrowings at current market rates. In early May 2012, the Corporation received a $131 million cash dividend from its investment in EVERTEC's parent company. As a result of the dividend, the Corporation's equity investment balance in the entity was reduced by the amount of the dividend and stands at $62 million as of quarter-end. The Corporation's participation interest in the entity was 48.5% as of quarter-end. During the quarter ended June 30, 2012, approximately $273 million in performing mortgage loans were acquired by Banco Popular North America (“BPNA”) and $225 million in performing consumer loans by BPPR. The Company announced that it now expects to earn between $210 million and $225 million for 2012. This is a higher nominal range than the $185 million to $200 million range previously disclosed. However, after excluding the three unusual events of the quarter (i.e., the tax benefit, the expense on the early extinguishment of high-cost repos and the negative valuation adjustments on loans held for sale) the range is $10 million less than previously disclosed. Net interest income The net interest margin was 4.33% for the second quarter of 2012, compared with 4.27% for the first quarter of 2012. The increase in net interest income of $3.6 million for the second quarter of 2012, compared with the first quarter of 2012, was principally due to a higher yield on the covered loan portfolio and a lower average balance and cost of interest-bearing deposits, partially offset by a lower yield on investment securities and a reduction in the yield of non-covered loans. Refer to Table D for detailed information on average financial condition balances and an analysis of yield / rates by main categories. The increase in interest income on loans was mostly due to an increase in the interest derived from covered loans by $4.3 million, or 69 basis points. This increase was primarily attributable to a commercial single loan pool accounted for under ASC 310-30 that was paid off in the second quarter of 2012 and its remaining discount was accreted into interest income. Additionally, there was an increase of $2.3 million in interest income in the non-covered mortgage loan portfolio, which was mainly associated with higher volumes driven by loan purchases by BPNA during the second quarter of 2012. The decrease in interest income on non-covered construction loans of $3.1 million was principally related to the Corporation's U.S. mainland operations' full recovery of certain large loan relationships during the first quarter of 2012 that had been in non-accrual. The decrease in interest income on consumer loans of $1.5 million was mainly related to the credit cards portfolio due to a combination of lower average balances and lower blended rates. The Corporation's interest expense on deposits decreased by $3.2 million, or 5 basis points, reflecting the continuing progress in repricing the Corporation's deposit base and a decrease in the average balance of deposits, mainly in retail certificates of deposit and brokered certificates of deposit. Additionally, the interest expense on short-term borrowings, including repos, declined $0.5 million, as the Corporation used available liquid funds to repay short-term debt. The BPPR reportable segment recorded $298.5 million in net interest income for the quarter ended June 30, 2012, compared with $290.1 million for the quarter ended March 31, 2012. The net interest margin was 5.07% for the second quarter of 2012, compared with 4.90% for the first quarter of the current year. The increase in net interest income was principally due to higher interest income from the covered loan portfolio by $4.3 million as previously explained, coupled with the reduction in the interest expense on deposits due to lower volumes and a reduction in the average cost from 0.87% for the first quarter of 2012 to 0.81% for the second quarter of 2012. The BPNA reportable segment recorded $69.6 million in net interest income for the quarter ended June 30, 2012, compared with $74.1 million for the quarter ended March 31, 2012. The net interest margin was 3.55% for the second quarter of 2012, compared with 3.78% for the first quarter of the current year. The decrease in net interest income was principally related to the commercial and construction loan portfolios' lower volumes and to the previously mentioned interest recovery related to certain large loan relationships collected during the first quarter, partially offset by higher mortgage loan volume related to purchases during the second quarter of 2012. Provision for loan losses The provision for loan losses for the quarter ended June 30, 2012 amounted to $119.2 million, an increase of $18.5 million when compared with the first quarter of 2012, mainly related to the covered loan portfolio. The ratio of total allowance for loan losses to loans held-in-portfolio stood at 3.10% as of June 30, 2012, compared with 3.25% as of March 31, 2012. The provision for loan losses for the non-covered loan portfolio amounted to $81.7 million, relatively unchanged from the first quarter of 2012. The current quarter provision for loan losses reflected lower net charge-offs and reductions in the allowance for loan losses, mainly from the commercial, legacy and consumer loan portfolios as a result of continued improvement in credit trends. These improvements were in part offset by higher loss trends in the residential mortgage loan portfolio in the BPPR reportable segment coupled with a lower reserve release, compared to the first quarter of 2012, as the first quarter included a net benefit of $24.8 million from the enhancements to the Corporation's allowance for loan losses methodology. The increase in the residential mortgage loan loss trends was principally related to the implementation of a revised charge-off policy during the first quarter of 2012. The provision for loan losses on the covered loan portfolio, which increased by $19.2 million, was primarily driven by loans accounted for pursuant to ASC 310-30. The provision for loan losses for loans accounted under ASC 310-30 amounted to $28.2 million for the quarter ended June 30, 2012, compared with $11.4 million for the first quarter of 2012. The increase of $16.8 million in the provision for loan losses on these loans was prompted by credit losses in excess of those originally estimated at the acquisition date, related to certain commercial and construction loan pools. The provision for loan losses related to loans accounted under ASC 310-20 amounted to $9.2 million for the quarter ended June 30, 2012, compared with $6.8 million for the first quarter of 2012. Net charge-offs on these covered loans accounted for under ASC 310-20 amounted to $29.6 million, an increase of $25.3 million from the first quarter of 2012. This increase in net charge-offs was mainly related to the receipt of discounted pay-offs from two particular relationships, for which impaired amounts were reserved in prior periods. Non-interest income Non-interest income for the quarter ended June 30, 2012 decreased by $30.2 million compared with the quarter ended March 31, 2012. The principal unfavorable variances were in the following categories of the income statement included in Exhibit B: Net loss on sale of loans, including unfavorable valuation adjustments on loans held-for-sale, totaled $15.4 million for the second quarter of 2012, compared with a net gain of $15.5 million for the first quarter of 2012. The negative variance of $30.9 million, compared with the first quarter, was principally due to valuation adjustments on loans held-for-sale from the quarterly valuation analysis of $27.3 million. Higher trading account losses by $5.1 million primarily due to higher realized losses on derivatives in the mortgage banking business, that are economically offset by higher gains on securitization transactions, but which benefits are recorded in the net gain (loss) on sale of loans category. Other service fees decreased by $4.0 million, mostly due to a quarter-over-quarter unfavorable variance in mortgage servicing fees of $6.6 million, primarily from higher unfavorable valuation adjustments, partially offset by an increase in credit card fees of $1.7 million mainly as a result of higher interchange fees from increased customer purchasing activity. Refer to Table F in the Financial Supplement for a breakdown of other service fees. The category of other operating income in Table B shows a decrease of $5.7 million mostly due to lower income from investments accounted for under the equity method principally driven by a quarter-over-quarter negative variance of $7.7 million from the equity pick-up from PRLP 2011 Holdings, LLC, which holds the commercial and construction loans sold by BPPR during 2011, of which BPPR retained a 24.9% equity participation. Partially offsetting this unfavorable variance was a gain of $2.5 million from the sale of the wholesale indirect general agency property and casualty business of Popular Insurance during the second quarter of 2012. The above unfavorable variances in non-interest income were partially offset by FDIC loss share income of $2.6 million recognized in the second quarter of 2012, compared with FDIC loss share expense of $15.3 million for the first quarter of 2012. This variance was principally associated with the increase of $19.2 million in the provision for loan losses on covered loans and with the recognition of $10.7 million mirror offset of reimbursable loan-related expenses from the FDIC under the loss sharing agreements, partially offset by higher amortization of the loss share asset mainly due to a reduction in expected losses and as a result of the pay-off of a single loan pool during the quarter. Refer to Table O for financial information on the covered loans and the composition of the FDIC loss share income (expense). Operating expenses Operating expenses increased by $31.7 million for the second quarter of 2012 compared with the first quarter of 2012. Refer to Table B which provides a breakdown of operating expenses by main categories. The principal favorable variances were as follows: Higher loss on early extinguishment of debt by $25.0 million primarily related to the previously mentioned cancellation of certain high-cost repos by BPPR. Higher business promotion expenses by $4.1 million mostly from credit card reward programs and other retail product promotional campaigns in Puerto Rico and from BPNA's New York Region's rebranding efforts concentrated in the second quarter. Higher professional fees by $4.0 million, mainly from appraisal services, credit collection efforts through attorneys and consulting fees, including services related to strategic projects to achieve efficiencies, such as the redesigning of credit lending and administration processes. The category of other operating expenses in Table B shows an increase of $18.8 million, which was mainly driven by the following factors: lower credits to the provision for unfunded credit commitments by $4.4 million in the second quarter of 2012, compared with the first quarter of 2012, mainly due to decreases in the funding rate and a lower magnitude of improvements in the potential loss expectations than in the previous quarter; and to costs associated with the collection efforts of the covered loan portfolio. Under the loss share agreements, 80% of certain expenses are reimbursable by the FDIC and although the related expenses are reflected in this category, the 80% offset to these expenses is recorded in the income statement category of FDIC loss share income (expense) in non-interest income, as previously indicated. These unfavorable variances were partially offset by a decrease in the category of other real estate owned costs by $11.8 million and in personnel costs by $5.2 million. The variance in the category of other real estate owned costs, which considers gains (losses) on sale of properties and fair value write-downs from valuation assessments, was principally due to higher gains on the sale of commercial and construction real estate properties by $10.6 million, including sales by BPPR and BPNA. Personnel costs decreased by $5.2 million, as shown in Table B, principally due to a decrease in the category of salaries by $1.0 million; pension, postretirement and medical insurance costs by $2.3 million; and in other personnel costs by $3.5 million. These favorable variances were partially offset by an increase in commissions, incentives and other bonuses of $1.6 million, mostly from an increase in fees from the sale and administration of investment products from the retail business at Popular Securities. The decrease in the salaries category was mainly related to a reduction in base salaries for full-time equivalent employees (FTEs). Pension, postretirement and medical insurance costs were lower in the current quarter mainly due to a reduction in medical and life insurance costs. The decrease in other personnel costs was principally due to the recognition in the first quarter of 2012 of severance accruals related to a voluntary employee exit program as part of the Corporation's efficiency efforts and to lower payroll taxes. FTEs were 8,093 as of June 30, 2012, compared with 8,329 as of December 31, 2011 and 8,074 as of March 31, 2012. Income taxes Income tax benefit amounted to $77.9 million for the quarter ended June 30, 2012, compared with an income tax expense of $16.2 million for the first quarter of 2012. The positive variance in income tax was principally related to the previously mentioned tax benefit of $72.9 million from the Closing Agreement with the P.R. Treasury and to lower taxable income in the Corporation's Puerto Rico operations for the second quarter of 2012. Credit Quality Most credit quality metrics continued to demonstrate positive trends driven by actions taken by the Corporation to address problem loans and mitigate the overall credit risk. Net charge-offs, excluding covered loans, for the quarter ended June 30, 2012 decreased by $10.1 million, when compared with the quarter ended March 31, 2012. Annualized net charge-offs to average non-covered loans held-in-portfolio decreased 20 basis points, from 2.13% for the quarter ended March 31, 2012 to 1.93% for the quarter ended June 30, 2012. The reduction was principally due to lower net charge-offs from the commercial loan portfolio in the BPPR and BPNA reportable segments by $14.7 million. Refer to Table J for further information on the Corporation's net charge-offs and related ratios. Non-performing loans held-in-portfolio, excluding covered loans, decreased by $120 million from March 31, 2012 to June 30, 2012. The decrease was mostly attributed to reductions from the commercial, legacy and mortgage loan portfolios. As of June 30, 2012, non-performing commercial loans held-in-portfolio in the BPPR and BPNA reportable segments decreased by $30 million and $22 million, respectively, when compared with March 31, 2012. Non-performing legacy loans decreased by $24 million when compared with the prior quarter. Non-performing mortgage loans held-in-portfolio as of June 30, 2012 amounted to $633 million, a decrease of $34 million compared with March 31, 2012. The decrease was driven by non-performing loans from the residential mortgage loan portfolio of the BPPR reportable segment, prompted by higher levels of troubled debt restructured (“TDRs”) loans returning to accrual status, and a slowdown in the inflows of non-performing loans. Refer to Table I for the activity in non-performing loans, excluding covered loans and loans held-for-sale. The allowance for loan losses to loans held-in-portfolio ratio, excluding covered loans, stood at 3.14% as of June 30, 2012 compared with 3.25% as of March 31, 2012. The general and specific reserves related to non-covered loans amounted to $561 million and $88 million, respectively, as of June 30, 2012, compared with $589 million and $76 million, respectively, as of March 31, 2012. The decrease in the general reserve component was mainly driven by lower loss trends in the commercial, legacy and consumer loan portfolios, primarily reflecting the improvements in the credit environment. Nonetheless, the residential mortgage loan portfolio of the BPPR reportable segment required higher allowance levels mainly due to higher specific reserves for loans restructured under the Corporation's loss mitigation program. Refer to Tables H through M for detailed credit quality information, including the activity in the allowance for loan losses. Refer to the section below for explanations on the main variances. BPPR Reportable Segment The provision for loan losses for non-covered loans of the BPPR reportable segment totaled $66.4 million, or 98.55% of net charge-offs, for the second quarter of 2012, relatively unchanged when compared with $67.8 million for the first quarter of 2012. The provision for loan losses for the quarter ended June 30, 2012 reflected lower net-charge offs and reductions in the allowance for loans losses for the commercial and consumer loan portfolios, when compared with the first quarter of 2012. These favorable variances were in part offset by higher loss trends for the residential mortgage portfolio and a lower reserve release, compared to the first quarter of 2012, as the first quarter included a net benefit of $7.1 million from the enhancements to the Corporation's allowance for loan losses methodology. Net charge-offs related to non-covered loans amounted to $67.4 million, or 1.85% of annualized net charge-offs to average non-covered loans held-in-portfolio for the quarter ended June 30, 2012, compared to $73.7 million or 2.01%, respectively, for the quarter ended March 31, 2012. This decrease was principally driven by lower net charge-offs from the commercial loan portfolio of $9.0 million attributed to lower levels of problem loans. This favorable variance in net charge-offs was partly offset by an increase of $2.6 million from the residential mortgage loan portfolio, primarily due to the revised charge-off policy implemented during the first quarter of 2012. Non-performing loans held-in-portfolio of the BPPR reportable segment, excluding covered loans, decreased by $68 million as of June 30, 2012, when compared with March 31, 2012. The decrease in non-performing loans at the BPPR reportable segment was mainly driven by a reduction in the commercial and mortgage loan portfolios by $30 million and $33 million, respectively. The reduction in the commercial non-performing loans was mainly associated with problem loan resolutions and a decline in the inflows to non-performing status. The decrease in the non-performing residential mortgage loans was mainly due to higher levels of TDRs returning to accrual status, after complying with six months of satisfactory payment. At June 30, 2012, the allowance for loan losses for non-covered loans of the BPPR reportable segment totaled $447 million or 2.99% of non-covered loans held–in-portfolio, essentially at the same level as the first quarter of 2012. The allowance for loan losses reflected a decrease in the general reserve component, mainly due to lower loss trends in the commercial and consumer loan portfolios. This improvement was offset by higher reserve requirements for the residential mortgage loan portfolio due to a higher net charge-off trend, coupled with higher specific reserves for loans restructured under loss mitigation programs. Refer to Table L for information on the allowance for loan losses of the Corporation's Puerto Rico operations. BPNA Reportable Segment The provision for loan losses for the BPNA reportable segment amounted to $15.3 million, or 50.08% of net charge-offs, for the second quarter of 2012, compared with $14.7 million or 42.74% of net charge-offs for the first quarter of 2012. The provision for loan losses remained relatively flat, as the effect of lower net charge offs for the second quarter of 2012 was offset by a lower reserve release, compared with the first quarter of 2012, as the first quarter included the positive impact of $17.7 million of the enhancements to the Corporation's allowance for loan losses methodology. Net charge-offs for the quarter ended June 30, 2012 decreased by $3.9 million, when compared with the quarter ended March 31, 2012. Annualized net charge-offs to average loans held-in-portfolio decreased 28 basis points, from 2.43% for the quarter ended March 31, 2012 to 2.15% for the quarter ended June 30, 2012. As previously mentioned, the decrease in net charge-offs was mainly observed in the commercial loan portfolio, prompted by higher recoveries during the quarter and by the continued credit stabilization at the BPNA reportable segment. Non-performing loans held-in-portfolio at the BPNA reportable segment amounted to $287 million as of June 30, 2012, a decrease of $52 million compared with March 31, 2012. The decrease was mainly driven by reductions in the commercial and legacy loan portfolios of $22 million and $24 million, respectively. This decrease in non-performing loans was the result of problem loan resolutions, loan sales, a reduction in the inflows of non-performing loans, and charge-offs. At June 30, 2012, the allowance for loan losses for the BPNA reportable segment totaled $202 million or 3.51% of loans held-in-portfolio, compared with $217 million or 3.87% of loans held- in-portfolio at March 31, 2012. The decline in the allowance for loan losses was primarily driven by a reduction of $15 million in the general reserve component, when compared to March 31, 2012 mainly due to lower loss trends, as the U.S. mainland continues to reflect improved credit performance. Refer to Table M for information on the allowance for loan losses of the BPNA reportable segment. Financial Condition Highlights – June 30, 2012 compared to March 31, 2012 Total assets amounted to $36.6 billion as of June 30, 2012, compared with $37.0 billion as of March 31, 2012. Refer to Table C for a detailed presentation of the Corporation's Consolidated Statements of Condition. Total loans held-in-portfolio amounted to $24.7 billion as of June 30, 2012 and March 31, 2012. Refer to Table G for a breakdown by loan categories. The decrease of $265 million in non-covered commercial loans held-in-portfolio from March 31, 2012 to June 30, 2012 was mostly associated with the cancellation and repayment of certain commercial lines of credit in Puerto Rico and charge-offs during the current quarter. The decrease in the commercial loan portfolio was offset in part by an increase in mortgage loans held-in-portfolio principally due to (i) mortgage loan purchases at BPNA during the second quarter of 2012 of approximately $273 million (unpaid principal balance), and (ii) loans purchased and originated at the Corporation's Puerto Rico operations. The increase in consumer loans held-in-portfolio of $231 million from March 31, 2012 to June 30, 2012 was mainly due to a purchase of consumer loans by BPPR for approximately $225 million (unpaid principal balance). The decline in total covered loans of $205 million was principally due to collections and to charge-offs in the second quarter of 2012 of $58.5 million. Deposits amounted to $27.4 billion as of June 30, 2012, compared with $27.2 billion as of March 31, 2012. Table G presents a breakdown of deposits by major categories. The increase in demand deposits from March 31, 2012 to June 30, 2012 of $366 million was principally related to public funds. The decrease in non-brokered time deposits of $237 million was primarily from retail certificates of deposit. Total brokered deposits amounted to $3.1 billion as of June 30, 2012, compared with $2.9 billion as of March 31, 2012. The Corporation's borrowings amounted to $3.6 billion as of June 30, 2012, compared with $4.7 billion as of March 31, 2012. The decrease in borrowings was principally in repos by approximately $0.7 billion mostly associated with the previously mentioned early extinguishment of debt and use of available funds to repay short-term debt. Stockholders' equity was $4.0 billion as of June 30, 2012 and March 31, 2012. Refer to Table A for capital ratios and Table N for Non-GAAP reconciliations. Forward-Looking Statements The information included in this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in forward-looking statements. Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) the fiscal and monetary policies of the federal government and its agencies; (iv) changes in federal bank regulatory and supervisory policies, including required levels of capital; (v) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate markets in Puerto Rico and the other markets in which borrowers are located; (vi) the performance of the stock and bond markets; (vii) competition in the financial services industry; (viii) possible legislative, tax or regulatory changes; (ix) the impact of the Dodd-Frank Act on our businesses, business practice and cost of operations; and (x) additional Federal Deposit Insurance Corporation assessments. For a discussion of such factors and certain risks and uncertainties to which the Corporation is subject, see the Corporation's Annual Report on Form 10-K for the year ended December 31, 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 37th by assets among U.S. banks. In the United States, Popular has established a community-banking franchise providing a broad range of financial services and products with branches in New York, New Jersey, Illinois, Florida and California. An electronic version of this press release can be found at the Corporation's website, www.popular.com. Popular will hold a conference call to discuss the financial results on Wednesday, July 18, 2012 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 866-804-6926 or 857-350-1672. The conference code is 45836565. A replay of the webcast will be archived in Popular's website during the respective period. A telephone replay will be available from 5 p.m. on Wednesday, July 18, 2012 at 888-286-8010 or 617-801-6888. The replay passcode is 95455273. Popular, Inc.Financial Supplement to Second 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 - BANCO POPULAR DE PUERTO RICO   Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - BANCO POPULAR NORTH AMERICA   Table N - Reconciliation to GAAP Financial Measures   Table O - Financial Information - Westernbank Covered Loans   POPULAR, INC.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable A - Selected Ratios and Other Information(Unaudited)                           Quarter ended   Quarter ended   Quarter ended   Six months ended   Six months ended June 30, March 31, June 30, June 30, June 30,       2012       2012       2011       2012       2011   Net income per common share: Basic and diluted [1] $ 0.63 $ 0.46 $ 1.07 $ 1.10 $ 1.16   Average common shares outstanding [1] 102,295,113 102,341,805 102,122,591 102,318,459 102,138,020 Average common shares outstanding - assuming dilution [1] 102,410,618 102,494,500 102,189,614 102,479,530 102,254,320 Common shares outstanding at end of period [1] 102,824,323 102,711,707 102,397,790 102,824,323 102,397,790   Market value per common share [1] $ 16.61 $ 20.50 $ 27.60 $ 16.61 $ 27.60   Market Capitalization --- (In millions) $ 1,708 $ 2,106 $ 2,826 $ 1,708 $ 2,826   Return on average assets 0.73 % 0.53 % 1.14 % 0.63 % 0.63 %   Return on average common equity 6.94 % 5.16 % 12.02 % 6.05 % 6.66 %   Net interest margin [2] 4.33 % 4.27 % 4.48 % 4.30 % 4.32 %   Common equity per share [1] $ 38.62 $ 38.14 $ 38.22 $ 38.62 $ 38.22   Tangible common book value per common share (non-GAAP) [1] $ 31.74 $ 31.23 $ 31.37 $ 31.74 $ 31.37   Tangible common equity to tangible assets (non-GAAP) 9.09 % 8.83 % 8.36 % 9.09 % 8.36 %   Tier 1 risk-based capital [3] 16.31 % 16.51 % 15.21 % 16.31 % 15.21 %   Total risk-based capital [3] 17.59 % 17.79 % 16.49 % 17.59 % 16.49 %   Tier 1 leverage [3] 11.09 % 11.10 % 10.16 % 11.09 % 10.16 %   Tier 1 common equity to risk-weighted assets (non-GAAP) [3] 12.29 % 12.53 % 11.52 % 12.29 % 11.52 %     [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 estimates.   POPULAR, INC.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable B - Consolidated Statement of Operations(Unaudited)       Quarter ended   Quarter ended   Variance   Quarter ended   Variance   Six months ended   Six months ended (In thousands, except per share information) June 30, March 31, Q2 2012 vs. June 30, Q2 2012 vs. June 30, June 30,   2012   2012   Q1 2012   2011   Q2 2011   2012   2011 Interest income: Loans $ 389,342 $ 387,942 $ 1,400 $ 442,460 $ (53,118 ) $ 777,284 $ 865,835 Money market investments 964 948 16 926 38 1,912 1,873 Investment securities 43,813 45,070 (1,257 ) 53,723 (9,910 ) 88,883 106,098   Trading account securities     5,963       5,891       72       9,790       (3,827 )     11,854       18,544     Total interest income     440,082       439,851       231       506,899       (66,817 )     879,933       992,350 Interest expense: Deposits 48,514 51,679 (3,165 ) 70,672 (22,158 ) 100,193 147,551 Short-term borrowings 13,044 13,583 (539 ) 13,719 (675 ) 26,627 27,734   Long-term debt     37,324       37,007       317       47,966       (10,642 )     74,331       99,164     Total interest expense     98,882       102,269       (3,387 )     132,357       (33,475 )     201,151       274,449 Net interest income 341,200 337,582 3,618 374,542 (33,342 ) 678,782 717,901 Provision for loan losses - non-covered loans 81,743 82,514 (771 ) 95,712 (13,969 ) 164,257 155,474 Provision for loan losses - covered loans     37,456       18,209       19,247       48,605       (11,149 )     55,665       64,162 Net interest income after provision for loan losses     222,001       236,859       (14,858 )     230,225       (8,224 )     458,860       498,265 Service charges on deposit accounts 46,130 46,589 (459 ) 46,802 (672 ) 92,719 92,432 Other service fees 62,027 66,039 (4,012 ) 58,307 3,720 128,066 116,959 Net loss on sale and valuation adjustments of investment securities (349 ) - (349 ) (90 ) (259 ) (349 ) (90 ) Trading account (loss) profit (7,283 ) (2,143 ) (5,140 ) 874 (8,157 ) (9,426 ) 375 Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale (15,397 ) 15,471 (30,868 ) (12,782 ) (2,615 ) 74 (5,538 ) Adjustments (expense) to indemnity reserves on loans sold (5,398 ) (3,875 ) (1,523 ) (9,454 ) 4,056 (9,273 ) (19,302 ) FDIC loss share income (expense) 2,575 (15,255 ) 17,830 38,670 (36,095 ) (12,680 ) 54,705 Fair value change in equity appreciation instrument - - - 578 (578 ) - 8,323 Other operating income     11,419       17,082       (5,663 )     1,255       10,164       28,501       40,664     Total non-interest income     93,724       123,908       (30,184 )     124,160       (30,436 )     217,632       288,528 Operating expenses: Personnel costs Salaries 75,881 76,899 (1,018 ) 76,698 (817 ) 152,780 150,489 Commissions, incentives and other bonuses 14,359 12,726 1,633 11,995 2,364 27,085 21,918 Pension, postretirement and medical insurance 16,114 18,425 (2,311 ) 12,810 3,304 34,539 24,795   Other personnel costs, including payroll taxes     9,982       13,441       (3,459 )     9,456       526       23,423       19,897 Total personnel costs 116,336 121,491 (5,155 ) 110,959 5,377 237,827 217,099 Net occupancy expenses 24,963 24,162 801 25,957 (994 ) 49,125 50,543 Equipment 10,900 11,341 (441 ) 10,761 139 22,241 22,797 Other taxes 12,074 13,438 (1,364 ) 14,623 (2,549 ) 25,512 26,595 Professional fees 52,127 48,105 4,022 49,479 2,648 100,232 96,167 Communications 6,645 7,131 (486 ) 7,188 (543 ) 13,776 14,398 Business promotion 16,980 12,850 4,130 11,332 5,648 29,830 21,192 FDIC deposit insurance 22,907 24,926 (2,019 ) 27,682 (4,775 ) 47,833 45,355 Loss on early extinguishment of debt 25,072 69 25,003 289 24,783 25,141 8,528 Other real estate owned (OREO) 2,380 14,165 (11,785 ) 6,440 (4,060 ) 16,545 8,651 Credit and debit card processing, volume, interchange and other 4,960 4,681 279 4,206 754 9,641 8,150 Other operating expenses 30,004 11,215 18,789 10,629 19,375 41,219 32,864 Amortization of intangibles     2,531       2,593       (62 )     2,255       276       5,124       4,510     Total operating expenses     327,879       296,167       31,712       281,800       46,079       624,046       556,849 (Loss) income before income tax (12,154 ) 64,600 (76,754 ) 72,585 (84,739 ) 52,446 229,944 Income tax (benefit) expense     (77,893 )     16,192       (94,085 )     (38,100 )     (39,793 )     (61,701 )     109,127 Net income   $ 65,739     $ 48,408     $ 17,331     $ 110,685     $ (44,946 )   $ 114,147     $ 120,817 Net income applicable to common stock   $ 64,809     $ 47,477     $ 17,332     $ 109,754     $ (44,945 )   $ 112,286     $ 118,956 Net income per common share - basic [1]   $ 0.63     $ 0.46     $ 0.17     $ 1.07     $ (0.44 )   $ 1.10     $ 1.16 Net income per common share - diluted [1]   $ 0.63     $ 0.46     $ 0.17     $ 1.07     $ (0.44 )   $ 1.10     $ 1.16 [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 Second Quarter 2012 Earnings ReleaseTable C - Consolidated Statement of Financial Condition(Unaudited)             Variance June 30, March 31, June 30, Q2 2012 vs. (In thousands)     2012       2012       2011     Q1 2012 Assets: Cash and due from banks $ 515,338 $ 472,806 $ 587,965 $ 42,532 Money market investments 949,828 1,304,263 1,383,892 (354,435 ) Trading account securities, at fair value 417,469 404,293 785,842 13,176 Investment securities available-for-sale, at fair value 5,076,797 5,138,616 5,389,491 (61,819 ) Investment securities held-to-maturity, at amortized cost 124,646 124,372 129,910 274 Other investment securities, at lower of cost or realizable value 174,287 195,708 174,560 (21,421 ) Loans held-for-sale, at lower of cost or fair value 364,537 361,596 509,046 2,941 Loans held-in-portfolio: Loans not covered under loss sharing agreements with the FDIC 20,665,809 20,478,674 20,657,694 187,135 Loans covered under loss sharing agreements with the FDIC 4,016,330 4,221,788 4,616,575 (205,458 )     Less: Allowance for loan losses     (766,030 )     (803,264 )     (746,847 )     37,234       Total loans held-in-portfolio, net     23,916,109       23,897,198       24,527,422       18,911   FDIC loss share asset 1,631,594 1,880,357 2,445,256 (248,763 ) Premises and equipment, net 527,027 533,545 537,870 (6,518 ) Other real estate not covered under loss sharing agreements with the FDIC 226,629 193,768 162,419 32,861 Other real estate covered under loss sharing agreements with the FDIC 125,093 110,559 74,803 14,534 Accrued income receivable 122,320 126,568 141,980 (4,248 ) Mortgage servicing assets, at fair value 155,711 156,331 162,619 (620 ) Other assets 1,577,794 1,439,532 1,393,843 138,262 Goodwill 647,757 647,911 647,318 (154 ) Other intangible assets     59,243       61,798       54,186       (2,555 ) Total assets   $ 36,612,179     $ 37,049,221     $ 39,108,422     $ (437,042 ) Liabilities and Stockholders' Equity: Liabilities: Deposits: Non-interest bearing $ 5,578,487 $ 5,366,420 $ 5,364,004 $ 212,067     Interest bearing     21,836,293       21,831,316       22,596,425       4,977       Total deposits     27,414,780       27,197,736       27,960,429       217,044   Federal funds purchased and assets sold under agreements to repurchase 1,426,636 2,113,557 2,570,322 (686,921 ) Other short-term borrowings 316,200 751,200 151,302 (435,000 ) Notes payable 1,877,583 1,843,754 3,423,286 33,829 Other liabilities     1,555,743       1,175,903       1,039,015       379,840   Total liabilities     32,590,942       33,082,150       35,144,354       (491,208 ) Stockholders' equity: Preferred stock 50,160 50,160 50,160 - Common stock 1,028 10,276 10,242 (9,248 ) Surplus 4,127,216 4,116,710 4,097,909 10,506 Accumulated deficit (100,440 ) (165,249 ) (228,372 ) 64,809 Treasury stock (144 ) (1,041 ) (642 ) 897 Accumulated other comprehensive loss (income)     (56,583 )     (43,785 )     34,771       (12,798 )     Total stockholders' equity     4,021,237       3,967,071       3,964,068       54,166   Total liabilities and stockholders' equity   $ 36,612,179     $ 37,049,221     $ 39,108,422     $ (437,042 )   Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER(Unaudited)         Quarter ended   Quarter ended   Quarter ended   Variance   Variance ($ amounts in millions; yields not on a taxable equivalent basis) June 30, 2012 March 31, 2012 June 30, 2011 Q2 2012 vs Q1 2012 Q2 2012 vs Q2 2011 Average   Income /   Yield / Average   Income /   Yield / Average   Income /   Yield / Average   Income /   Yield / Average   Income /   Yield / balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate Assets: Interest earning assets: Money market, trading and investment securities $ 6,819     $ 50.7   2.98 % $ 6,761     $ 52.0   3.07 % $ 7,617     $ 64.4   3.39 % $ 58       ($1.3 )   (0.09 ) %   ($798 )   ($13.7 )   (0.41 ) % Loans not covered under loss sharing agreements with the FDIC: Commercial 10,237 126.2 4.96 10,444 126.5 4.87 11,023 137.2 4.99 (207 ) (0.3 ) 0.09 (786 ) (11.0 ) (0.03 ) Construction 495 3.4 2.78 523 6.5 5.03 804 2.7 1.34 (28 ) (3.1 ) (2.25 ) (309 ) 0.7 1.44 Mortgage 5,713 77.8 5.44 5,464 75.5 5.53 5,124 81.5 6.36 249 2.3 (0.09 ) 589 (3.7 ) (0.92 ) Consumer 3,640 91.1 10.07 3,661 92.6 10.17 3,610 92.3 10.26 (21 ) (1.5 ) (0.10 ) 30 (1.2 ) (0.19 ) Lease financing   546       11.8   8.65   555       12.0   8.67   583       12.9   8.85   (9 )     (0.2 )   (0.02 )   (37 )   (1.1 )   (0.20 ) Total loans not covered under loss sharing agreements with the FDIC 20,631 310.3 6.04 20,647 313.1 6.09 21,144 326.6 6.19 (16 ) (2.8 ) (0.05 ) (513 ) (16.3 ) (0.15 ) Loans covered under loss sharing agreements with the FDIC   4,129       79.1   7.69   4,292       74.8   7.00   4,686       115.9   9.91   (163 )     4.3     0.69     (557 )   (36.8 )   (2.22 ) Total loans   24,760       389.4   6.31   24,939       387.9   6.25   25,830       442.5   6.87   (179 )     1.5     0.06     (1,070 )   (53.1 )   (0.56 ) Total interest earning assets   31,579     $ 440.1   5.59 %   31,700     $ 439.9   5.57 %   33,447     $ 506.9   6.07 %   (121 )   $ 0.2     0.02   %   (1,868 )   ($66.8 )   (0.48 ) % Allowance for loan losses (777 ) (802 ) (713 ) 25 (64 ) Other non-interest earning assets   5,415     5,658     6,047     (243 )   (632 ) Total average assets $ 36,217   $ 36,556   $ 38,781     ($339 )   ($2,564 )   Liabilities and Stockholders' Equity: Interest bearing deposits: NOW and money market $ 5,555 $ 6.2 0.45 % $ 5,246 $ 6.1 0.47 % $ 5,353 $ 8.4 0.63 % $ 309 $ 0.1 (0.02 ) % $ 202 ($2.2 ) (0.18 ) % Savings 6,562 6.2 0.38 6,507 6.3 0.39 6,257 10.0 0.64 55 (0.1 ) (0.01 ) 305 (3.8 ) (0.26 ) Time deposits   9,752       36.1   1.49   10,291       39.3   1.54   10,990       52.3   1.91   (539 )     (3.2 )   (0.05 )   (1,238 )   (16.2 )   (0.42 ) Total interest bearing deposits 21,869 48.5 0.89 22,044 51.7 0.94 22,600 70.7 1.25 (175 ) (3.2 ) (0.05 ) (731 ) (22.2 ) (0.36 ) Borrowings   4,165       50.4   4.85   4,365       50.6   4.65   6,486       61.7   3.81   (200 )     (0.2 )   0.20     (2,321 )   (11.3 )   1.04   Total interest bearing liabilities   26,034       98.9   1.52   26,409       102.3   1.55   29,086       132.4   1.82   (375 )     (3.4 )   (0.03 )   (3,052 )   (33.5 )   (0.30 ) Net interest spread 4.07 % 4.02 % 4.25 % 0.05   % (0.18 ) % Non-interest bearing deposits 5,309 5,213 5,044 96 265 Other liabilities 1,067 1,181 939 (114 ) 128 Stockholders' equity   3,807     3,753     3,712     54     95   Total average liabilities and stockholders' equity $ 36,217   $ 36,556   $ 38,781     ($339 )   ($2,564 )   Net interest income / margin non-taxable equivalent basis $ 341.2   4.33 % $ 337.6   4.27 % $ 374.5   4.48 % $ 3.6     0.06   % ($33.3 )   (0.15 ) %     Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE(Unaudited)     Six months ended   Six months ended       ($ amounts in millions; yields not on a taxable equivalent basis) June 30, 2012 June 30, 2011 Variance Average   Income /   Yield / Average   Income /   Yield / Average Income / Yield /   balance   Expense   Rate   balance   Expense   Rate   balance   Expense   Rate Assets: Interest earning assets: Money market, trading and investment securities $ 6,790     $ 102.6   3.03 % $ 7,543     $ 126.5   3.36 %   ($753 )   ($23.9 )   (0.33 ) % Loans not covered under loss sharing agreements with the FDIC:   Commercial 10,341 252.7 4.91 11,139 276.3 5.00 (798 ) (23.6 ) (0.09 ) Construction 508 10.0 3.94 834 6.0 1.45 (326 ) 4.0 2.49 Mortgage 5,589 153.2 5.48 4,939 152.8 6.19 650 0.4 (0.71 ) Consumer 3,651 183.7 10.12 3,639 186.1 10.31 12 (2.4 ) (0.19 ) Lease financing   550       23.8   8.66   587       26.2   8.93   (37 )   (2.4 )   (0.27 ) Total loans not covered under loss sharing agreements with the FDIC 20,639 623.4 6.07 21,138 647.4 6.16 (499 ) (24.0 ) (0.09 ) Loans covered under loss sharing agreements with the FDIC   4,210       153.9   7.34   4,750       218.5   9.26   (540 )   (64.6 )   (1.92 ) Total loans   24,849       777.3   6.28   25,888       865.9   6.73   (1,039 )   (88.6 )   (0.45 ) Total interest earning assets   31,639     $ 879.9   5.58 %   33,431     $ 992.4   5.97 %   (1,792 )   ($112.5 )   (0.39 ) % Allowance for loan losses (789 ) (742 ) (47 ) Other non-interest earning assets   5,536     6,086     (550 ) Total average assets $ 36,386   $ 38,775     ($2,389 )   Liabilities and Stockholders' Equity: Interest bearing deposits: NOW and money market $ 5,400 $ 12.3 0.46 % $ 5,166 $ 17.3 0.67 % $ 234 ($5.0 ) (0.21 ) % Savings 6,535 12.4 0.38 6,249 22.6 0.73 286 (10.2 ) (0.35 ) Time deposits   10,022       75.5   1.51   11,063       107.7   1.96   (1,041 )   (32.2 )   (0.45 ) Total interest bearing deposits 21,957 100.2 0.92 22,478 147.6 1.32 (521 ) (47.4 ) (0.40 ) Borrowings   4,265       100.9   4.74   6,615       126.9   3.85   (2,350 )   (26.0 )   0.89   Total interest bearing liabilities   26,222       201.1   1.54   29,093       274.5   1.90   (2,871 )   (73.4 )   (0.36 ) Net interest spread 4.04 % 4.07 % (0.03 ) % Non-interest bearing deposits 5,261 4,985 276 Other liabilities 1,123 1,042 81 Stockholders' equity   3,780     3,655     125   Total average liabilities and stockholders' equity $ 36,386   $ 38,775     ($2,389 )   Net interest income / margin non-taxable equivalent basis $ 678.8   4.30 % $ 717.9   4.32 % ($39.1 )   (0.02 ) %     Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable F - Other Service Fees(Unaudited)     Quarters ended     Variance   Variance June 30,   March 31, June 30, Q2 2012 vs. Q2 2012 vs. (In thousands) 2012   2012   2011   Q1 2012   Q2 2011 Other service fees: Debit card fees $ 9,411 $ 9,165 $ 13,795 $ 246 $ (4,384 ) Insurance fees 12,063 12,390 12,208 (327 ) (145 ) Credit card fees 14,268 12,559 11,792 1,709 2,476 Sale and administration of investment products 9,645 8,889 7,657 756 1,988 Mortgage servicing fees, net of fair value adjustments 6,335 12,931 2,269 (6,596 ) 4,066 Trust fees 4,069 4,081 4,110 (12 ) (41 ) Processing fees 1,639 1,774 1,740 (135 ) (101 )   Other fees   4,597     4,250     4,736       347       (139 ) Total other service fees $ 62,027   $ 66,039   $ 58,307     $ (4,012 )   $ 3,720     Six months ended Variance June 30, June 30, 2012 vs. (In thousands) 2012   2011   2011         Other service fees: Debit card fees $ 18,576 $ 26,720 $ (8,144 ) Insurance fees 24,453 24,134 319 Credit card fees 26,827 22,368 4,459 Sale and administration of investment products 18,534 14,787 3,747 Mortgage servicing fees, net of fair value adjustments 19,266 8,529 10,737 Trust fees 8,150 7,605 545 Processing fees 3,413 3,437 (24 )   Other fees   8,847     9,379     (532 )         Total other service fees $ 128,066   $ 116,959   $ 11,107               Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable G - Loans and Deposits(Unaudited)   Loans - Ending Balances       Variance (in thousands)   June 30, 2012   March 31, 2012   June 30, 2011   Q2 2012 vs. Q12012   Q2 2012 vs. Q22011 Loans not covered under FDIC loss sharing agreements:   Commercial $ 9,602,815 $ 9,868,242 $ 10,072,883 $ (265,427 ) $ (470,068 ) Construction 249,743 236,579 267,902 13,164 (18,159 ) Legacy [1] 509,829 603,874 811,074 (94,045 ) (301,245 ) Lease financing 537,917 543,314 564,289 (5,397 ) (26,372 ) Mortgage 5,899,973 5,591,745 5,347,512 308,228 552,461 Consumer     3,865,532     3,634,920     3,594,034     230,612       271,498   Total non-covered loans held-in-portfolio 20,665,809 $ 20,478,674 $ 20,657,694 $ 187,135 $ 8,115 Loans covered under FDIC loss sharing agreements     4,016,330     4,221,788     4,616,575     (205,458 )     (600,245 ) Total loans held-in-portfolio   $ 24,682,139   $ 24,700,462   $ 25,274,269   $ (18,323 )   $ (592,130 ) Loans held-for-sale: Commercial 18,072 $ 24,879 $ 57,998 $ (6,807 ) $ (39,926 ) Construction 160,102 206,246 340,687 (46,144 ) (180,585 ) Legacy [1] 425 1,115 - (690 ) 425 Mortgage     185,938     129,356     110,361     56,582       75,577   Total loans held-for-sale     364,537     361,596     509,046     2,941       (144,509 ) Total loans   $ 25,046,676   $ 25,062,058   $ 25,783,315   $ (15,382 )   $ (736,639 ) [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)   June 30, 2012   March 31, 2012   June 30, 2011   Q2 2012 vs. Q12012   Q2 2012 vs. Q22011 Demand deposits [1] $ 6,379,289 $ 6,013,009 $ 6,285,171 $ 366,280 $ 94,118 Savings, NOW and money market deposits (non-brokered) 11,031,476 11,048,140 10,724,099 (16,664 ) 307,377 Savings, NOW and money market deposits (brokered) 433,694 212,996 50,000 220,698 383,694 Time deposits (non-brokered) 6,950,063 7,186,826 8,179,689 (236,763 ) (1,229,626 ) Time deposits (brokered CDs)     2,620,258     2,736,765     2,721,470     (116,507 )     (101,212 ) Total deposits   $ 27,414,780   $ 27,197,736   $ 27,960,429   $ 217,044     $ (545,649 ) [1] Includes interest and non-interest bearing deposits.               Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable H - Non-Performing Assets(Unaudited) Variance (Dollars in thousands)   June 30, 2012   As a percentage of loans HIP by category     March 31, 2012   As a percentage of loans HIP by category     June 30, 2011     As a percentage of loans HIP by category     Q2 2012 vs. Q1 2012   Q2 2012 vs. Q2 2011 Non-accrual loans: Commercial $ 767,201 8.0 % $ 818,678 8.3 % $ 739,772 7.3 % $ (51,477 ) $ 27,429 Construction 67,538 27.0 69,470 29.4 118,823 44.4 (1,932 ) (51,285 ) Legacy [1] 54,730 10.7 79,077 13.1 124,479 15.3 (24,347 ) (69,749 ) Lease financing 5,046 0.9 5,673 1.0 4,205 0.7 (627 ) 841 Mortgage 632,899 10.7 667,217 11.9 587,987 11.0 (34,318 ) 44,912 Consumer     34,665   0.9       41,688   1.1       49,424     1.4       (7,023 )     (14,759 ) Total non-performing loans held-in-portfolio, excluding covered loans 1,562,079 7.6 % 1,681,803 8.2 % 1,624,690 7.9 % (119,724 ) (62,611 ) Non-performing loans held-for-sale [2] 178,652 232,293 399,869 (53,641 ) (221,217 ) Other real estate owned (“OREO”), excluding covered OREO     226,629           193,768           162,419             32,861       64,210   Total non-performing assets, excluding covered assets 1,967,360 2,107,864 2,186,978 (140,504 ) (219,618 ) Covered loans and OREO     209,793           203,254           89,782             6,539       120,011   Total non-performing assets   $ 2,177,153         $ 2,311,118         $ 2,276,760           $ (133,965 )   $ (99,607 ) Accruing loans past due 90 days or more [3]   $ 322,893         $ 328,757         $ 325,980           $ (5,864 )   $ (3,087 ) Ratios excluding covered loans: Non-performing loans held-in-portfolio to loans held-in-portfolio 7.56 %   8.21 % 7.86 % Allowance for loan losses to loans held-in-portfolio 3.14 3.25 3.34 Allowance for loan losses to non-performing loans, excluding held-for-sale       41.52           39.53           42.45                 Ratios including covered loans: Non-performing loans held-in-portfolio to loans held-in-portfolio 6.67 %   7.18 % 6.49 % Allowance for loan losses to loans held-in-portfolio 3.10 3.25 2.95 Allowance for loan losses to non-performing loans, excluding held-for-sale     46.52           45.27           45.55                 [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 June 30, 2012 consisted of $160 million in construction loans, $18 million in commercial loans and $53 thousand in mortgage loans (March 31, 2012 - $206 million, $26 million and $53 thousand, respectively; June 30, 2011 - $341 million, $58 million, and $1 million, respectively). [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 $48 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of June 30, 2012.               Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable I - Activity in Non-Performing Loans(Unaudited)   Commercial loans held-in-portfolio:                         Quarter ended June 30, 2012 Quarter ended March 31, 2012 (In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc. Beginning Balance NPLs $ 620,916 $ 197,762 $ 818,678 $ 631,171 $ 198,921 $ 830,092 Plus: New non-performing loans 63,963 31,317 95,280 86,446 30,608 117,054 Advances on existing non-performing loans - 145 145 - 227 227 Loans transferred from held-for-sale - 4,933 4,933 - - - Less: Non-performing loans transferred to OREO (10,043 ) (16,633 ) (26,676 ) (5,481 ) (10,434 ) (15,915 ) Non-performing loans charged-off (36,698 ) (15,385 ) (52,083 ) (37,924 ) (15,121 ) (53,045 ) Loans returned to accrual status / loan collections (47,085 ) (25,224 ) (72,309 ) (53,296 ) (6,439 ) (59,735 )   Loans transferred to held-for-sale     -       (767 )     (767 )     -       -       -   Ending balance NPLs   $ 591,053     $ 176,148     $ 767,201     $ 620,916     $ 197,762     $ 818,678         Construction loans held-in-portfolio:                         Quarter ended June 30, 2012 Quarter ended March 31, 2012 (In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc. Beginning Balance NPLs $ 56,247 $ 13,223 $ 69,470 $ 53,859 $ 42,427 $ 96,286 Plus: New non-performing loans 833 - 833 6,372 - 6,372 Advances on existing non-performing loans 145 204 349 - 125 125 Less: Non-performing loans charged-off (1,000 ) - (1,000 ) (371 ) (1,380 ) (1,751 ) Loans returned to accrual status / loan collections (691 ) (1,423 ) (2,114 ) (3,613 ) (17,617 ) (21,230 )   Loans transferred to held-for-sale     -       -       -       -       (10,332 )     (10,332 ) Ending balance NPLs   $ 55,534     $ 12,004     $ 67,538     $ 56,247     $ 13,223     $ 69,470         Mortgage loans held-in-portfolio:                         Quarter ended June 30, 2012 Quarter ended March 31, 2012 (In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc. Beginning Balance NPLs $ 633,517 $ 33,700 $ 667,217 $ 649,279 $ 37,223 $ 686,502 Plus: New non-performing loans 177,849 6,476 184,325 186,510 6,256 192,766 Less: Non-performing loans transferred to OREO (19,423 ) (3,107 ) (22,530 ) (21,573 ) (1,064 ) (22,637 ) Non-performing loans charged-off (20,575 ) (2,128 ) (22,703 ) (20,427 ) (3,496 ) (23,923 )   Loans returned to accrual status / loan collections     (171,286 )     (2,124 )     (173,410 )     (160,272 )     (5,219 )     (165,491 ) Ending balance NPLs   $ 600,082     $ 32,817     $ 632,899     $ 633,517     $ 33,700     $ 667,217         Legacy loans held-in-portfolio:                         Quarter ended June 30, 2012 Quarter ended March 31, 2012 (In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc. Beginning Balance NPLs $ - $ 79,077 $ 79,077 $ - $ 75,660 $ 75,660 Plus: New non-performing loans - 8,355 8,355 - 17,373 17,373 Advances on existing non-performing loans - 1 1 - 16 16 Less: Non-performing loans transferred to OREO - (65 ) (65 ) - (3,370 ) (3,370 ) Non-performing loans charged-off - (8,271 ) (8,271 ) - (8,489 ) (8,489 ) Loans returned to accrual status / loan collections - (9,797 ) (9,797 ) - (1,441 ) (1,441 )   Loans transferred to held-for-sale     -       (14,570 )     (14,570 )     -       (672 )     (672 ) Ending balance NPLs   $ -     $ 54,730     $ 54,730     $ -     $ 79,077     $ 79,077                       Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable J - Allowance for Credit Losses, Net Charge-offs and Related Ratios(Unaudited)   Quarter ended Quarter ended Quarter ended June 30, March 31, June 30, (Dollars in thousands)   2012   2012   2012   2012   2012   2012   2011   2011   2011 Allowance for loan losses:   Non-covered loans   Covered loans   Total   Non-covered loans   Covered loans   Total   Non-covered loans   Covered loans   Total Balance at beginning of period $ 664,768 $ 138,496 $ 803,264 $ 690,363 $ 124,945 $ 815,308 $ 727,346 $ 9,159 $ 736,505 Provision for loan losses     81,743       37,456     119,199       82,514       18,209     100,723       95,712       48,605     144,317         746,511       175,952     922,463       772,877       143,154     916,031       823,058       57,764     880,822   Net loans charged-off (recovered): BPPR Commercial 28,564 34,652 63,216 37,518 4,102 41,620 49,923 263 50,186 Construction 985 15,187 16,172 (371 ) 264 (107 ) (5,944 ) - (5,944 ) Lease financing 8 - 8 154 - 154 632 - 632 Mortgage 14,810 4,085 18,895 12,226 203 12,429 7,151 - 7,151 Consumer     23,055       4,533     27,588       24,131       89     24,220       27,363       332     27,695   Total BPPR     67,422       58,457     125,879       73,658       4,658     78,316       79,125       595     79,720     BPNA Commercial 11,132 11,132 16,865 16,865 18,854 18,854 Construction (4 ) (4 ) 166 166 491 491 Lease financing - - - - - - Legacy [1] 5,459 5,459 3,558 3,558 17,373 17,373 Mortgage 3,371 3,371 5,228 5,228 4,030 4,030 Consumer     10,596           10,596       8,634           8,634       13,507           13,507   Total BPNA     30,554           30,554       34,451           34,451       54,255           54,255   Total loans charged-off (recovered) - Popular, Inc.     97,976       58,457     156,433       108,109       4,658     112,767       133,380       595     133,975   Net write-downs (recoveries) related to loans transferred to loans held-for-sale     -       -     -       -       -     -       -       -     -   Balance at end of period   $ 648,535     $ 117,495   $ 766,030     $ 664,768     $ 138,496   $ 803,264     $ 689,678     $ 57,169   $ 746,847     POPULAR, INC. Annualized net charge-offs to average loans held-in-portfolio 1.93 %   2.56 %   2.13 %   1.83 %   2.59 %   2.12 % Provision for loan losses to net charge-offs 0.83 x   0.76 x   0.76 x   0.89 x   0.72 x   1.08 x   BPPR Annualized net charge-offs to average loans held-in-portfolio 1.85 %   2.69 %   2.01 %   1.65 %   2.21 %   1.68 % Provision for loan losses to net charge-offs 0.99 x   0.83 x   0.92 x   1.10 x   0.89 x   1.50 x   BPNA Annualized net charge-offs to average loans held-in-portfolio 2.15 %   2.43 %   3.45 % Provision for loan losses to net charge-offs             0.50 x             0.43 x             0.46 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 reportable segment.                 Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED(Unaudited)                                                 June 30, 2012 (Dollars in thousands)     Commercial     Construction   Legacy [3]     Mortgage     Lease financing     Consumer     Total [2] Specific ALLL $ 6,830 $ 434 $ 99 $ 59,723 $ 766 $ 19,656 $ 87,508 Impaired loans [1] $ 495,032 $ 61,007 $ 29,289 $ 510,659 $ 5,528 $ 133,857 $ 1,235,372 Specific ALLL to impaired loans [1]     1.38 %     0.71 %     0.34 %     11.70 %     13.86 %     14.68 %     7.08 % General ALLL $ 289,934 $ 8,708 $ 43,912 $ 90,099 $ 2,191 $ 126,183 $ 561,027 Loans held-in-portfolio, excluding impaired loans [1] $ 9,107,783 $ 188,736 $ 480,540 $ 5,389,314 $ 532,389 $ 3,731,675 $ 19,430,437 General ALLL to loans held-in-portfolio, excluding impaired loans [1]     3.18 %     4.61 %     9.14 %     1.67 %     0.41 %     3.38 %     2.89 % Total ALLL $ 296,764 $ 9,142 $ 44,011 $ 149,822 $ 2,957 $ 145,839 $ 648,535 Total non-covered loans held-in-portfolio [1] $ 9,602,815 $ 249,743 $ 509,829 $ 5,899,973 $ 537,917 $ 3,865,532 $ 20,665,809 ALLL to loans held-in-portfolio [1]     3.09 %     3.66 %     8.63 %     2.54 %     0.55 %     3.77 %     3.14 % [1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. [2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of June 30, 2012, the general allowance on the covered loans amounted to $103 million, while the specific reserve amounted to $14 million. [3] 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.                                               March 31, 2012 (Dollars in thousands)     Commercial     Construction   Legacy     Mortgage     Lease financing     Consumer     Total [2] Specific ALLL $ 12,998 $ 1,013 $ 765 $ 40,946 $ 1,344 $ 18,990 $ 76,056 Impaired loans [1] $ 552,152 $ 64,149 $ 47,731 $ 450,754 $ 5,412 $ 138,200 $ 1,258,398 Specific ALLL to impaired loans [1]     2.35 %     1.58 %     1.60 %     9.08 %     24.83 %     13.74 %     6.04 % General ALLL $ 300,581 $ 8,120 $ 53,960 $ 84,533 $ 3,623 $ 137,895 $ 588,712 Loans held-in-portfolio, excluding impaired loans [1] $ 9,316,090 $ 172,430 $ 556,143 $ 5,140,991 $ 537,902 $ 3,496,720 $ 19,220,276 General ALLL to loans held-in-portfolio, excluding impaired loans [1]     3.23 %     4.71 %     9.70 %     1.64 %     0.67 %     3.94 %     3.06 % Total ALLL $ 313,579 $ 9,133 $ 54,725 $ 125,479 $ 4,967 $ 156,885 $ 664,768 Total non-covered loans held-in-portfolio [1] $ 9,868,242 $ 236,579 $ 603,874 $ 5,591,745 $ 543,314 $ 3,634,920 $ 20,478,674 ALLL to loans held-in-portfolio [1]     3.18 %     3.86 %     9.06 %     2.24 %     0.91 %     4.32 %     3.25 % [1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. [2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of March 31, 2012, the general allowance on the covered loans amounted to $106 million, while the specific reserve amounted to $32 million.                                                                                             Variance June 30, 2012 versus March 31, 2012 (Dollars in thousands)     Commercial     Construction   Legacy     Mortgage     Lease financing     Consumer     Total   Specific ALLL $ (6,168) $ (579) $ (666) $ 18,777 $ (578) $ 666 $ 11,452 Impaired loans $ (57,120) $ (3,142) $ (18,442) $ 59,905 $ 116 $ (4,343) $ (23,026)                                               General ALLL $ (10,647) $ 588 $ (10,048) $ 5,566 $ (1,432) $ (11,712) $ (27,685) Loans held-in-portfolio, excluding impaired loans $ (208,307) $ 16,306 $ (75,603) $ 248,323 $ (5,513) $ 234,955 $ 210,161                                               Total ALLL $ (16,815) $ 9 $ (10,714) $ 24,343 $ (2,010) $ (11,046) $ (16,233) Total non-covered loans held-in-portfolio $ (265,427) $ 13,164 $ (94,045) $ 308,228 $ (5,397) $ 230,612 $ 187,135               Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - BANCO POPULAR DE PUERTO RICO(Unaudited)   As of June 30, 2012 Banco Popular de Puerto Rico (In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total Allowance for credit losses: Specific ALLL non-covered loans $ 5,497 $ 434 $ 44,708 $ 766 $ 19,564 $ 70,969   General ALLL non-covered loans     198,349       7,030       75,631       2,191       92,387       375,588   ALLL - non-covered loans     203,846       7,464       120,339       2,957       111,951       446,557   Specific ALLL covered loans 14,278 - - - - 14,278   General ALLL covered loans     61,314       23,628       11,617       -       6,658       103,217   ALLL - covered loans     75,592       23,628       11,617       -       6,658       117,495   Total ALLL   $ 279,438     $ 31,092     $ 131,956     $ 2,957     $ 118,609     $ 564,052   Loans held-in-portfolio: Impaired non-covered loans $ 378,660 $ 49,003 $ 457,359 $ 5,528 $ 131,495 $ 1,022,045   Non-covered loans held-in-portfolio, excluding impaired loans     5,784,620       152,761       4,356,862       532,389       3,067,554       13,894,186   Non-covered loans held-in-portfolio     6,163,280       201,764       4,814,221       537,917       3,199,049       14,916,231   Impaired covered loans 76,695 - - - - 76,695   Covered loans held-in-portfolio, excluding impaired loans     2,254,481       469,765       1,116,476       -       98,913       3,939,635   Covered loans held-in-portfolio     2,331,176       469,765       1,116,476       -       98,913       4,016,330   Total loans held-in-portfolio   $ 8,494,456     $ 671,529     $ 5,930,697     $ 537,917     $ 3,297,962     $ 18,932,561       As of March 31, 2012 Banco Popular de Puerto Rico (In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total Allowance for credit losses: Specific ALLL non-covered loans $ 11,115 $ 1,013 $ 27,096 $ 1,344 $ 18,887 $ 59,455   General ALLL non-covered loans     210,214       5,658       69,411       3,623       99,175       388,081   ALLL - non-covered loans     221,329       6,671       96,507       4,967       118,062       447,536   Specific ALLL covered loans 32,489 - - - - 32,489   General ALLL covered loans     57,581       29,727       10,517       -       8,182       106,007   ALLL - covered loans     90,070       29,727       10,517       -       8,182       138,496   Total ALLL   $ 311,399     $ 36,398     $ 107,024     $ 4,967     $ 126,244     $ 586,032   Loans held-in-portfolio: Impaired non-covered loans $ 402,097 $ 51,023 $ 396,854 $ 5,412 $ 135,745 $ 991,131   Non-covered loans held-in-portfolio, excluding impaired loans     6,027,572       124,745       4,363,491       537,902       2,815,758       13,869,468   Non-covered loans held-in-portfolio     6,429,669       175,768       4,760,345       543,314       2,951,503       14,860,599   Impaired covered loans 85,855 - - - - 85,855   Covered loans held-in-portfolio, excluding impaired loans     2,345,846       532,433       1,150,996       -       106,658       4,135,933   Covered loans held-in-portfolio     2,431,701       532,433       1,150,996       -       106,658       4,221,788   Total loans held-in-portfolio   $ 8,861,370     $ 708,201     $ 5,911,341     $ 543,314     $ 3,058,161     $ 19,082,387                                 Variance June 30, 2012 versus March 31, 2012 (In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total Allowance for credit losses: Specific ALLL non-covered loans $ (5,618 ) $ (579 ) $ 17,612 $ (578 ) $ 677 $ 11,514   General ALLL non-covered loans     (11,865 )     1,372       6,220       (1,432 )     (6,788 )     (12,493 ) ALLL - non-covered loans     (17,483 )     793       23,832       (2,010 )     (6,111 )     (979 ) Specific ALLL covered loans (18,211 ) - - - - (18,211 )   General ALLL covered loans     3,733       (6,099 )     1,100       -       (1,524 )     (2,790 ) ALLL - covered loans     (14,478 )     (6,099 )     1,100       -       (1,524 )     (21,001 ) Total ALLL   $ (31,961 )   $ (5,306 )   $ 24,932     $ (2,010 )   $ (7,635 )   $ (21,980 ) Loans held-in-portfolio: Impaired non-covered loans $ (23,437 ) $ (2,020 ) $ 60,505 $ 116 $ (4,250 ) $ 30,914   Non-covered loans held-in-portfolio, excluding impaired loans     (242,952 )     28,016       (6,629 )     (5,513 )     251,796       24,718   Non-covered loans held-in-portfolio     (266,389 )     25,996       53,876       (5,397 )     247,546       55,632   Impaired covered loans (9,160 ) - - - - (9,160 )   Covered loans held-in-portfolio, excluding impaired loans     (91,365 )     (62,668 )     (34,520 )     -       (7,745 )     (196,298 ) Covered loans held-in-portfolio     (100,525 )     (62,668 )     (34,520 )     -       (7,745 )     (205,458 ) Total loans held-in-portfolio   $ (366,914 )   $ (36,672 )   $ 19,356     $ (5,397 )   $ 239,801     $ (149,826 )               Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - BANCO POPULAR NORTH AMERICA(Unaudited)     As of June 30, 2012 Banco Popular North America (In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total Allowance for credit losses: Specific ALLL $ 1,333 $ - $ 99 $ 15,015 $ 92 $ 16,539   General ALLL     91,585       1,678       43,912       14,468       33,796       185,439   Total ALLL   $ 92,918     $ 1,678     $ 44,011     $ 29,483     $ 33,888     $ 201,978   Loans held-in-portfolio: Impaired loans $ 116,372 $ 12,004 $ 29,289 $ 53,300 $ 2,362 $ 213,327   Loans held-in-portfolio, excluding impaired loans     3,323,163       35,975       480,540       1,032,452       664,121       5,536,251   Total loans held-in-portfolio   $ 3,439,535     $ 47,979     $ 509,829     $ 1,085,752     $ 666,483     $ 5,749,578       As of March 31, 2012 Banco Popular North America (In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total Allowance for credit losses: Specific ALLL $ 1,883 $ - $ 765 $ 13,850 $ 103 $ 16,601   General ALLL     90,367       2,462       53,960       15,122       38,720       200,631   Total ALLL   $ 92,250     $ 2,462     $ 54,725     $ 28,972     $ 38,823     $ 217,232   Loans held-in-portfolio: Impaired loans $ 150,055 $ 13,126 $ 47,731 $ 53,900 $ 2,455 $ 267,267   Loans held-in-portfolio, excluding impaired loans     3,288,518       47,685       556,143       777,500       680,962       5,350,808   Total loans held-in-portfolio   $ 3,438,573     $ 60,811     $ 603,874     $ 831,400     $ 683,417     $ 5,618,075                                   Variance June 30, 2012 versus March 31, 2012 (In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total Allowance for credit losses: Specific ALLL $ (550 ) $ - $ (666 ) $ 1,165 $ (11 ) $ (62 )   General ALLL     1,218       (784 )     (10,048 )     (654 )     (4,924 )     (15,192 ) Total ALLL   $ 668     $ (784 )   $ (10,714 )   $ 511     $ (4,935 )   $ (15,254 ) Loans held-in-portfolio: Impaired loans $ (33,683 ) $ (1,122 ) $ (18,442 ) $ (600 ) $ (93 ) $ (53,940 )   Loans held-in-portfolio, excluding impaired loans     34,645       (11,710 )     (75,603 )     254,952       (16,841 )     185,443   Total loans held-in-portfolio   $ 962     $ (12,832 )   $ (94,045 )   $ 254,352     $ (16,934 )   $ 131,503         Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable N - Reconciliation to GAAP Financial Measures(Unaudited)     (In thousands, except share or per share information)   June 30, 2012   March 31, 2012   June 30, 2011 Total stockholders' equity $ 4,021,237 $ 3,967,071 $ 3,964,068 Less: Preferred stock (50,160) (50,160) (50,160) Less: Goodwill (647,757) (647,911) (647,318) Less: Other intangibles     (59,243)       (61,798)       (54,186)   Total tangible common equity   $ 3,264,077     $ 3,207,202     $ 3,212,404   Total assets $ 36,612,179 $ 37,049,221 $ 39,108,422 Less: Goodwill (647,757) (647,911) (647,318) Less: Other intangibles     (59,243)       (61,798)       (54,186)   Total tangible assets   $ 35,905,179     $ 36,339,512     $ 38,406,918   Tangible common equity to tangible assets 9.09 % 8.83 % 8.36 % Common shares outstanding at end of period [1] 102,824,323 102,711,707 102,397,790 Tangible book value per common share [1]   $ 31.74     $ 31.23     $ 31.37   [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.     (In thousands)   June 30, 2012   March 31, 2012   June 30, 2011 Common stockholders' equity $ 3,971,077 $ 3,916,911 $ 3,913,908 Less: Unrealized gains on available-for-sale securities, net of tax [1] (181,207) (196,878) (188,171) Less: Disallowed deferred tax assets [2] (392,960) (257,440) (271,139) Less: Intangible assets: Goodwill (647,757) (647,911) (647,318) Other disallowed intangibles (22,241) (26,149) (22,596) Less: Aggregate adjusted carrying value of all non-financial equity investments (1,256) (1,175) (1,540) Add: Pension liability adjustment, net of tax and accumulated net gains (losses) on cash flow hedges [3]   208,015       211,747       125,605   Total Tier 1 common equity   $ 2,933,671     $ 2,999,105     $ 2,908,749     [1] In accordance with regulatory risk-based capital guidelines, Tier 1 capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale equity securities with readily determinable fair values. In arriving at Tier 1 capital, institutions are required to deduct net unrealized losses on available-for-sale equity securities with readily determinable fair values, net of tax.   [2] Approximately $151 million of the Corporation's $573 million of net deferred tax assets at June 30, 2012 (March 31, 2012 - $138 million and $424 million, respectively; June 30, 2011 - $96 million and $362 million, respectively), were included without limitation in regulatory capital pursuant to the risk-based capital guidelines, while approximately $393million of such assets at June 30, 2012 (March 31, 2012 - $257 million; June 30, 2011 - $271 million) exceeded the limitation imposed by these guidelines and, as “disallowed deferred tax assets”, were deducted in arriving at Tier 1 capital. The remaining $29 million of the Corporation's other net deferred tax assets at June 30, 2012 (March 31, 2012 - $29 million; June 30, 2011 - $5 million) represented primarily the following items (a) the deferred tax effects of unrealized gains and losses on available-for-sale debt securities, which are permitted to be excluded prior to deriving the amount of net deferred tax assets subject to limitation under the guidelines; (b) the deferred tax asset corresponding to the pension liability adjustment recorded as part of accumulated other comprehensive income; and (c) the deferred tax liability associated with goodwill and other intangibles.   [3] The Federal Reserve Bank has granted interim capital relief for the impact of pension liability adjustment.         Popular, Inc.Financial Supplement to Second Quarter 2012 Earnings ReleaseTable O - Financial Information - Westernbank Covered Loans(Unaudited)     Revenues: Quarter ended (In thousands)   June 30, 2012   March 31, 2012   Variance Interest income on covered loans   $ 79,094     $ 74,764     $ 4,330   FDIC loss share income (expense): Amortization of indemnification asset (37,413 ) (29,375 ) (8,038 ) 80% mirror accounting on credit impairment losses [1] 29,426 13,422 16,004 80% mirror accounting on discount accretion on unfunded commitments (248 ) (248 ) - 80% mirror accounting on reimbursable expenses 10,663 1,805 8,858 Other     147       (859 )     1,006     Total FDIC loss share income (expense)     2,575       (15,255 )     17,830   Other non-interest income     310       310       -   Total revenues     81,979       59,819       22,160   Provision for loan losses     37,456       18,209       19,247   Total revenues less provision for loan losses   $ 44,523     $ 41,610     $ 2,913   [1] Reductions in expected cash flows for ASC 310-30 loans, which may impact the provision for loan losses, may consider reductions in both principal and interest cash flow expectations. The amount covered under the FDIC loss sharing agreements for interest not collected from borrowers is limited under the agreements (approximately 90 days); accordingly, these amounts are not subject fully to the 80% mirror accounting.   Quarterly average assets: Quarter ended (In millions)   June 30, 2012   March 31, 2012   Variance Covered loans $ 4,129 $ 4,292 $ (163 ) FDIC loss share asset     1,700       1,903       (203 )       Activity in the carrying amount and accretable yield of covered loans accounted for under ASC 310-30:                     Quarter ended Quarter ended       June 30, 2012   March 31, 2012 (In thousands)   Accretable yield   Carrying amount of loans   Accretable yield   Carrying amount of loans Beginning balance $ 1,542,519 $ 3,894,905 $ 1,470,259 $ 4,036,471 Accretion (73,988 ) 73,988 (69,337 ) 69,337 Changes in expected cash flows 106,319 141,597 Collections / charge-offs         (253,381 )         (210,903 ) Ending balance 1,574,850 3,715,512 1,542,519 3,894,905   Allowance for loan losses - ASC 310-30 covered loans       (93,971 )         (94,559 ) Ending balance, net of allowance for loan losses   $ 1,574,850     $ 3,621,541     $ 1,542,519     $ 3,800,346         Activity in the carrying amount of the FDIC indemnity asset:                     Quarter ended Quarter ended (In thousands)       June 30, 2012     March 31, 2012 Balance at beginning of period $ 1,880,357 $ 1,915,128 Amortization (37,413 ) (29,375 ) Credit impairment losses to be covered under loss sharing agreements 29,426 13,422 Decrease due to reciprocal accounting on the discount accretion on unfunded commitments (248 ) (248 ) Payments received from FDIC under loss sharing agreements (241,911 ) (20,896 ) Other adjustments attributable to FDIC loss sharing agreements       1,383           2,326   Balance at end of period       $ 1,631,594         $ 1,880,357     Activity in the remaining FDIC loss share asset amortization:               Quarter ended Quarter ended (In thousands)       June 30, 2012     March 31, 2012 Balance at beginning of period $ 106,781 $ 117,916 Amortization (37,413 ) (29,375 ) Impact of lower projected losses         51,940           18,240   Balance at end of period       $ 121,308         $ 106,781     Popular, Inc.Investor Relations:Jorge A. Junquera, 787-754-1685Chief Financial Officer, Senior Executive Vice PresidentorMedia Relations:Teruca Rullán, 787-281-5170 or 917-679-3596/mobileSenior Vice President, Corporate Communications