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Press release from Business Wire

Popular, Inc. Announces First Quarter Financial Results

<ul> <li class='bwlistitemmargb'> <b>Reports net loss of $ 120.3 million for the quarter ended March 31, 2013, reflecting a $180.6 million after-tax loss on bulk asset sale and valuation adjustments</b> </li> <li class='bwlistitemmargb'> <b>Adjusted net income of $60.3 million, excluding the effect of asset sale and valuation adjustments</b> </li> <li class='bwlistitemmargb'> <b>Completed sale of assets with book value of $509.0 million, of which $500.6 million were in non-performing status</b> </li> </ul> <ul> <li class='bwlistitemmargb'> <b>Significant progress in credit quality (metrics exclude covered loans):</b> </li> </ul> <p> <b>Including the impact of the bulk sale:</b> </p> <ul class='bwmarginl2'> <li class='bwlistitemmargb'> <b>Non-performing assets declined by $565.2 million, or 32%, quarter over quarter;</b> </li> </ul> <ul class='bwmarginl2'> <li class='bwlistitemmargb'> <b>Non-performing loans held-in-portfolio declined by $374.5 million or 26% from Q4 2012, and decreased by 55% from Q3 2010 peak to reach lowest level since 2008;</b> </li> <li class='bwlistitemmargb'> <b>Inflows of non-performing loans held-in-portfolio, excluding consumer loans, declined by $60.3 million, or 25%, from Q4 2012;</b> </li> <li class='bwlistitemmargb'> <b>OREO decreased by $112.1 million, or 42%, quarter over quarter.</b> </li> </ul> <p> <b>Excluding the impact of the bulk sale:</b> </p> <ul class='bwmarginl2'> <li class='bwlistitemmargb'> <b>Non-performing assets declined by $64.6 million, or 4%, quarter over quarter;</b> </li> <li class='bwlistitemmargb'> <b>Non-performing loans held-in-portfolio declined by $41.8 million from Q4 2012;</b> </li> <li class='bwlistitemmargb'> <b>Net charge-offs decreased by $19.5 million from Q4 2012; NCO ratio decreased to 1.55%, reaching lowest level since 2008.</b> </li> </ul> <ul> <li class='bwlistitemmargb'> <b>Net interest margin of 4.39% in Q1 2013, vs. 4.41% in Q4 2012</b> </li> <li class='bwlistitemmargb'> <b>Common Equity Tier 1 ratio of 12.36% and Tangible Book Value per Share of $31.21 at March 31, 2013; capital exceeds well-capitalized threshold by $1.7 billion</b> </li> </ul>

Thursday, April 18, 2013

Popular, Inc. Announces First Quarter Financial Results

08:00 EDT Thursday, April 18, 2013

SAN JUAN, Puerto Rico (Business Wire) -- Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP) reported a net loss of $120.3 million for the quarter ended March 31, 2013, compared to net income of $83.9 million for the quarter ended December 31, 2012.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: “We delivered a good underlying performance in the quarter and two important transactions were completed in recent weeks. The non-performing asset sale, the successful IPO of EVERTEC and the continuing organic improvements in our credit quality build on our efforts to derisk our balance sheet, build capital and continue to drive value for our shareholders.”

Earnings Highlights
   
(Unaudited) Quarters ended
(Dollars in thousands, except per share information) 31-Mar-13   31-Dec-12   31-Mar-12
Net interest income $ 345,347 $ 350,411 $ 337,582
Provision for loan losses – non-covered loans 206,300 86,256 82,514
Provision for loan losses – covered loans [1]   17,556       (3,445 )     18,209  
Net interest income after provision for loan losses 121,491 267,600 236,859
FDIC loss share expense (26,266 ) (36,824 ) (15,255 )
Other non-interest income [2] 43,841 169,825 139,163
Operating expenses   316,250       296,747       296,167  
(Loss) income before income tax (177,184 ) 103,854 64,600
Income tax (benefit) expense   (56,877 )     19,914       16,192  
Net (loss) income $ (120,307 )   $ 83,940     $ 48,408  
Net (loss) income applicable to common stock $ (121,237 )   $ 83,009     $ 47,477  
Net (loss) income per common share - basic and diluted [3] $ (1.18 )   $ 0.81     $ 0.46  
 
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.
[2] Other non-interest income for the fourth quarter of 2012 includes $31.6 million related to the Corporation's proportionate share of a tax benefit from a tax grant received by EVERTEC from the Puerto Rico Government.
[3] Per share data has been adjusted to retroactively reflect the 1-for-10 reverse stock split effected on May 29, 2012.

Recent significant events

  • On April 12, 2013 EVERTEC, Inc. (“EVERTEC” or the “Company”) completed an initial public offering (“IPO”) of 25.3 million shares, raising approximately $505.3 million. In connection with the IPO, EVERTEC sold 6.3 million of newly issued common stock in the offering and Apollo Global Management LLC (“Apollo”) and Popular respectively sold 10.2 million and 8.8 million shares of the Company retaining a stake of 33.6% and 33.5%, respectively. If the underwriters exercise their overallotment option in full, Popular and Apollo would own 33.5% and 28.8% of the outstanding common stock of EVERTEC, respectively.

Following the IPO, EVERTEC is refinancing all of its outstanding debt. As part of this refinancing, Popular will receive payment in full for its portion of the EVERTEC debt held by it. As a result of these transactions, Popular will recognize an after tax gain of approximately $169.4 million during the second quarter of 2013, comprised of the following:

  • $130.4 million gain on the sale of its previously held EVERTEC common stock
  • $45.9 million gain on its investment in EVERTEC resulting from the issuance of the new common stock by EVERTEC
  • An estimated $4.2 million gain from the repayment of the debt
  • An estimated $5.7 million from the accelerated payment of contractual consulting fees
  • A loss of approximately $16.8 million from Popular's proportionate share of EVERTEC's debt prepayment penalty, consulting fees and other related costs

After the transaction, Popular's investment in EVERTEC will have a book value of $74.9 million. Total cash proceeds received by Popular from the sale of the shares and repayment of the debt will be $254.3 million.

  • On March 25, 2013, Banco Popular de Puerto Rico (“BPPR”) completed a sale of assets with a book value of $509.0 million, of which $500.6 million were in non-performing status, comprised of commercial and construction loans, and commercial and single-family real estate owned, with a combined unpaid principal balance on loans and appraised value of other real estate owned of approximately $987 million to a newly created joint venture. BPPR retained a 24.9% equity interest in the joint venture. BPPR provided seller financing for approximately $182.4 million to fund a portion of the purchase price and certain closing costs. In addition, BPPR provided financing of $65.0 million to cover cost-to-complete amounts and expenses of certain assets, as well as certain expenses of the purchasing entity. This transaction resulted in an after tax loss of $174.4 million.

The following table presents the results of operations for the quarter ended March 31, 2013, excluding the impact of the sale of non-performing assets and valuation adjustments.

  Quarters ended
(Unaudited) 31-Mar-13   31-Dec-12 (US GAAP)   Variance
(In thousands)

Actual Results
(US GAAP)

Impact of Sale of NPAs Adjusted Results (Non GAAP)    
Net interest income $ 345,347 $ - $ 345,347 $ 350,411 $ (5,064 )
Provision for loan losses – non-covered loans 206,300 148,823 57,477 86,256 (28,779 )
Provision for loan losses – covered loans [1]   17,556     -     17,556       (3,445 )     21,001  
Net interest income after provision for loan losses 121,491 (148,823 ) 270,314 267,600 2,714
FDIC loss share expense (26,266 ) - (26,266 ) (36,824 ) 10,558
Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale [2] (48,959 ) (61,387 ) 12,428 30,196 (17,768 )
Other non-interest income [3] 92,800 (10,700 ) 103,500 139,629 (36,129 )
OREO expense 46,741 37,046 9,695 1,079 8,616
Other operating expenses   269,509     5     269,504       295,668       (26,164 )
(Loss) income before income tax (177,184 ) (257,961 ) 80,777 103,854 (23,077 )
Income tax (benefit) expense   (56,877 )   (77,388 )   20,511       19,914       597  
Net (loss) income $ (120,307 ) $ (180,573 ) $ 60,266     $ 83,940     $ (23,674 )
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.
[2] Net (loss) gain on sale of loans, includes $8.8 million of negative valuation adjustments on loans held for sale which were transferred to held-in-portfolio subsequent to the sale.
[3] Other non-interest income for the fourth quarter of 2012 includes $31.6 million related to the Corporation's proportionate share of a tax benefit from a tax grant received by EVERTEC from the Puerto Rico Government.
Financial Impact of FDIC-Assisted Transaction    
(Unaudited)          
(In thousands) 31-Mar-13   31-Dec-12   31-Mar-12
 

Income Statement

Interest income on covered loans $ 72,184 $ 76,998 $ 74,764
Total FDIC loss share (expense) (26,266 ) (36,824 ) (15,255 )
Other non-interest income 242 281 310
Provision for loan losses   17,556       (3,445 )     18,209  
Total revenues less provision for loan losses $ 28,604     $ 43,900     $ 41,610  
 

Balance Sheet

Loans covered under loss-sharing agreements with FDIC $ 3,362,446 $ 3,755,972 $ 4,221,788
FDIC loss share asset 1,380,592 1,399,098 1,880,357
FDIC true-up payment obligation   118,294       111,519       99,962  

See additional details on accounting for FDIC-Assisted transaction in Table O.

Net interest income

Net interest margin for the first quarter of 2013 decreased 2 basis points to 4.39% when compared with the fourth quarter of 2012. Net interest income reached $345.3 million, a decrease of $5.0 million from the previous quarter. The main drivers of the decrease in net interest margin are:

  • Nearly all of the nominal decrease in net interest income was due to the impact of having two fewer days in the first quarter of 2013 than in the fourth quarter of 2012 and the proportion of loans with interest accrued on actual/actual basis.
  • Decrease of $3.5 million, or 2 basis points, in interest income on non-covered loans, primarily commercial loans in Puerto Rico, mainly due to fewer days.
  • Decrease of $4.8 million in interest income on the covered loan portfolio. During the fourth quarter of 2012, the covered portfolio reflected higher nominal income mainly from the resolution of certain commercial loans in excess of their book value during that quarter. The yield on the covered commercial loan portfolio for the first quarter of 2013 was 8.31%, or 30 basis points higher than the fourth quarter of 2012, mainly as a result of higher expected cash flows which are reflected in the accretable yield and recognized over the life of the loans.
  • Decrease of approximately $2.5 million, or 4 basis points, in interest expense on deposits, $0.9 million of which was due to fewer days in the first quarter of 2013 with the remaining improvement related to continuing progress in repricing the deposit base, which partially offset the decrease in interest income.
  • Banco Popular de Puerto Rico's (BPPR) net interest margin remained stable from the previous quarter at 5.18%. Net interest income amounted to $304.9 million for the quarter ended March 31, 2013, compared with $309.1 million for the previous quarter. The decrease was mainly related to the impact of fewer days on the commercial loans and the previously discussed effect of the covered loan portfolio. This decrease was partially offset by a 5 basis points reduction in the cost of interest-bearing deposits.
  • Banco Popular North America (BPNA), our U.S. banking subsidiary that does business as Popular Community Bank, earned $68.0 million in net interest income for the quarter ended March 31, 2013, compared with $68.5 million in the previous quarter. The decrease in the net interest margin of 3 basis points to 3.48% was mainly caused by a decrease in the yield of commercial, mortgage and consumer loans, and of investment securities. This decrease was partially offset by a 2 basis points reduction in the cost of interest-bearing deposits.
Provision for Loan Losses      
 
    Quarters ended
(In thousands)   31-Mar-13   31-Dec-12   31-Mar-12
Provision for loan losses - non-covered loans:
BPPR $ 204,289 $ 78,092 $ 67,788
BPNA     2,011     8,164       14,726
Total provision for loan losses - non-covered loans     206,300     86,256       82,514
Provision (reversal) for loan losses - covered loans     17,556     (3,445 )     18,209
Total provision for loan losses   $ 223,856   $ 82,811     $ 100,723

The provision for loan losses for the first quarter of 2013 amounted to $223.9 million, an increase of $141.0 million versus the previous quarter, mainly related to the $148.8 million impact of the bulk loan sale. Excluding the impact of the sale, the provision for the first quarter of 2013 was $75.1 million, declining by $7.7 million from the fourth quarter of 2012.

  • The provision for loan losses for the non-covered loan portfolio increased by $120.0 million from the fourth quarter of 2012, mainly due to the impact of the sale. Excluding the impact of the sale, the provision for the first quarter of 2013 was $57.5 million, decreasing by $28.8 million, reflecting improvements in credit quality, as underlying losses and NPLs continue to trend downwards at BPPR and BPNA.
  • The provision for loan losses for non-covered loans at BPPR decreased by $22.6 million from the fourth quarter of 2012, excluding the impact of the sale.
  • The provision for loan losses at BPNA decreased by $6.2 million from the fourth quarter of 2012.

  • The provision for loan losses on the covered loan portfolio increased by $21.0 million from the previous quarter.
  • The provision for loan losses for loans accounted under ASC 310-30 increased by $12.5 million from the fourth quarter of 2012, mostly due to certain commercial and construction loan pools, which reflected higher expected loss estimates for the first quarter of 2013. Overall expected losses on the covered portfolio continue to be lower than originally estimated.
  • The provision for loan losses on covered loans accounted under ASC 310-20 increased by $8.5 million from the previous quarter, driven by a provision reversal of $5.0 million in the fourth quarter of 2012, which was primarily due to a reduction in the specific reserve of a particular commercial loan relationship.

Non-interest income

Non-interest income decreased by $115.4 million compared with the fourth quarter of 2012, driven primarily by the following items:

  • A $79.2 million decrease in net gain on sale of loans. This decrease was principally driven by the loss of $61.4 million related to the bulk sale of non-performing commercial and construction loans, which includes unfavorable valuation adjustment on loans held-for-sale transferred to held-in-portfolio of approximately $8.8 million. Excluding the effect of the NPA sale, the gain on sale of loans declined by $17.8 million due to a securitization and higher loan sale activity recorded by BPPR's mortgage division in the fourth quarter of 2012.
  • An increase of $12.9 million in adjustments to the indemnity reserves on loans sold, mainly as a result of $10.7 million recorded in connection with the bulk sale of non-performing loans.
  • A $35.6 million decrease in other operating income, principally due to $31.6 million of income recorded during the fourth quarter of 2012 related to the Corporation's proportionate share of a tax benefit from a tax grant received by EVERTEC from the Puerto Rico Government.
  • A decrease of $4.9 million in other service fees, mainly related to contingent insurance commissions which are typically recognized during the fourth quarter.

These increases were partially offset by:

  • A decrease of $10.6 million in FDIC loss-share expense mainly due to higher mirror accounting on credit impairment losses. See additional details about covered portfolio and FDIC indemnity asset in Table O.

Refer to table B for further details.

Operating expenses

Operating expenses increased by $19.5 million versus the fourth quarter of 2012, driven primarily by:

  • An increase of $45.7 million in other real estate owned (OREO) expenses, due mainly to the loss of $37.0 million incurred as a result of the bulk sale of commercial and single-family real estate owned and higher gain on sales of commercial OREOs at both BPPR and BPNA, which offset OREO expenses during the fourth quarter of 2012.

This increase was partially offset by:

  • A decrease of $6.1 million in professional fees mainly due to lower attorney collection fees at BPPR and lower technology service fees.
  • Lower FDIC deposit insurance expenses of $4.4 million, driven mainly by an incremental assessment credit of $6.2 million recognized during the first quarter of 2013 as a result of revisions in the deposit-insurance premium calculation and efficiencies achieved from the internal reorganization of Popular Mortgage into BPPR during the fourth quarter of 2012.
  • A decrease of $9.3 million in other operating expenses due largely to lower provision for operational losses by $4.5 million, both in BPPR and BPNA, and lower other general operating expenses.

Excluding the impact of the bulk sale, operating expenses declined by $17.5 million.

Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, but excluding the impact of the transaction, amounted to $20.3 million for the first quarter of 2013, compared with $14.1 million for the fourth quarter of 2012. The increase was principally due to higher gain on sales of commercial OREOs at both BPPR and BPNA, which offset OREO expenses during the fourth quarter of 2012.

Full-time equivalent employees (“FTEs”) were 8,144 as of March 31, 2013, compared with 8,072 as of December 31, 2012, and 8,074 as of March 31, 2012. The increase of 72 FTEs from the fourth quarter of 2012, which includes some temporary personnel, is related to the addition of resources in the retail banking and individual credit divisions to supplement the demand in the mortgage business, as well as support for certain of the Corporation's initiatives.

For a breakdown of operating expenses by category refer to table B.

Income taxes

For the quarter ended March 31, 2013, the Corporation recorded an income tax benefit of $56.9 million, reflecting the net operating loss generated by the sale of non-performing assets, compared with an income tax expense of $19.9 million for the fourth quarter of 2012.

Credit Quality

The following table presents non-performing assets information and the effect that the bulk sale had on these balances.

Non-Performing Assets
(Unaudited)          
31-Mar-12 31-Dec-12 31-Mar-13
(In thousands)

Net inflows/
(outflows)

Sale of NPAs Total
Total non-performing loans held-in-portfolio, excluding covered loans[1] $ 1,681,803 $ 1,425,133 $ (41,773 ) $ (332,752 ) $ 1,050,608
Non-performing loans held-for-sale 232,293 96,320 (19,129 ) (59,449 ) 17,742
Other real estate owned (“OREO”), excluding covered OREO   193,768     266,844     (3,709 )   (108,436 )   154,699  
Total non-performing assets, excluding covered assets 2,107,864 1,788,297 (64,610 ) (500,637 ) 1,223,049
Covered loans and OREO   203,254     213,469     (16,752 )   -     196,717  
Total non-performing assets $ 2,311,118   $ 2,001,766   $ (81,362 ) $ (500,637 ) $ 1,419,766  
Net charge-offs for the quarter (excluding covered loans) $ 108,109   $ 100,854   $ (81,357 ) $ (163,143)[2] $ (244,500 )
[1] The bulk sale of assets included $8.4 million in performing loans.
[2] Net write-downs related to loans sold.
 
Ratios (excluding covered loans):
Non-performing loans held-in-portfolio to loans held-in-portfolio 8.21 % 6.79 % 4.86 %
Allowance for loan losses to loans held-in-portfolio 3.25 2.96 2.70
Allowance for loan losses to non-performing loans, excluding loans held-for-sale   39.53     43.62         55.54  

Credit quality continues to improve as a result of key strategies implemented to reduce non-performing loans, as well as stabilizing economic conditions and improvements in the underlying quality of the loan portfolios.

  • Non-performing loans (NPL) held-in-portfolio decreased by $374.5 million, or 26%, from the fourth quarter of 2012, and 55% from peak levels in the third quarter of 2010. This reduction reflects the impact of the sale of NPLs with book value of approximately $332.8 million. Excluding the impact of the bulk loan sale, NPLs decreased by $41.8 million.
  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $60.3 million, or 25%, from the previous quarter. This reduction was principally attributed to a decrease of $57.0 million in mortgage NPL inflows in Puerto Rico.

  • OREO, excluding covered OREO, decreased by $112.1 million from the fourth quarter of 2012, primarily as a result of the sale of $58.6 million and $49.9 million in commercial and single family OREO, respectively, during the quarter.
  • Net charge-offs for the first quarter were $244.5 million, or 4.66% of average non-covered loans held-in-portfolio on an annualized basis, compared with $100.9 million, or 1.94%, for the previous quarter. The bulk loan sale added $163.1 million in charge-offs at BPPR operations. Excluding the impact of the bulk loan sale, net charge-offs were $81.4 million or 1.55% of average non-covered loans-held-in portfolio, decreasing by $19.5 million from the fourth quarter of 2012. This decline was driven by improvements in the underlying credit performance. Refer to Table J for further information on net charge-offs and related ratios.
  • The ratio of the allowance for loan losses to loans held-in-portfolio, excluding covered loans, stood at 2.70% as of March 31, 2013, compared with 2.96% as of December 31, 2012. The general and specific reserves related to non-covered loans totaled $459.8 million and $123.7 million, respectively, at quarter-end, compared with $510.6 million and $111.1 million, respectively, as of December 31, 2012. The decrease in the allowance for loan losses was primarily due to continued improvements in credit quality trends.
Credit Quality by Segment
     
(In thousands) Quarters ended
BPPR   31-Mar-13   31-Dec-12   31-Mar-12
Provision for loan losses $ 204,289 $ 78,092 $ 67,788
Net charge-offs (excludes NPLs sale) 62,424 78,050 73,658
Total non-performing loans held-in-portfolio,
excluding covered loans 837,943 1,191,982 1,343,480

Allowance/non-covered loans held-in-portfolio

    2.66 %     2.92 %     3.01 %
 
  Quarters ended
BPNA   31-Mar-13   31-Dec-12   31-Mar-12
Provision for loan losses $ 2,011 $ 8,164 $ 14,726
Net charge-offs 18,933 22,804 34,451
Total non-performing loans held-in-portfolio,
excluding covered loans 212,665 233,151 338,323

Allowance/non-covered loans held-in-portfolio

    2.80 %     3.07 %     3.87 %

BPPR Segment

  • The provision for loan losses for the non-covered loan portfolio increased by $126.2 million from the fourth quarter of 2012, mainly due to the incremental provision of $148.8 million as a result of the bulk loan sale. Excluding the impact of the sale, the provision for loan losses declined by $22.6 million to $55.5 million for the first quarter of 2013, due to positive trends in credit quality.
  • Net charge-offs, excluding covered loans, increased by $147.5 million from the fourth quarter of 2012, principally related to incremental charge-offs of $163.1 million associated with the bulk loan sale. Excluding the impact of the sale, net charge-offs were $62.4 million or 1.64% of average non-covered loans-held-in portfolio on an annualized basis, decreasing by $15.6 million from the fourth quarter of 2012, primarily due to reductions in the commercial portfolio.
  • Total NPLs held-in-portfolio, excluding covered loans, decreased by $354.0 million, or 30%, from the fourth quarter of 2012. The decrease in NPLs reflects both the impact of the sale and the reduction of $23.4 million in mortgage NPLs.
  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $52.1 million, or 25%, from the previous quarter. This reduction was principally driven by a decline of $57.0 million in mortgage NPL inflows, as a result of collection efforts greater economic stability and a benefit from the treatment of $23.6 million in purchase of impaired loans under ASC 310-30 in the first quarter.
  • The allowance for loan losses for non-covered loans held-in-portfolio decreased by $21.3 million from the previous quarter. The allowance for loan losses as a percentage of non-covered loans held-in-portfolio decreased to 2.66% from 2.92% in the fourth quarter of 2012.
  • The allowance for loans losses to non-performing loans for non-covered loans held-in-portfolio increased to 50.60% from 37.36% in the previous quarter. The increase is mostly driven by the effect of the NPL sale.

BPNA Segment

  • The provision for loan losses in the first quarter of 2013 decreased by $6.2 million. The allowance for loan losses as a percentage of loans held-in-portfolio decreased to 2.80% from 3.07% in the fourth quarter of 2012. Sustained improvements in credit quality trends continue to drive the reductions in the provision and the allowance.
  • Net charge-offs decreased by $3.9 million from the fourth quarter of 2012, mainly driven by improvements across most portfolios. The net charge-offs to average loans held-in-portfolio was 1.33% on an annualized basis, down from 1.60% in the previous quarter.
  • Total non-performing loans held-in-portfolio decreased by $20.5 million from the fourth quarter of 2012, reflecting lower inflows to non-performing loans and loan resolutions. Total inflows of non-performing loans held-in-portfolio, excluding consumer loans, decreased by $8.2 million, or 24%, from the fourth quarter of 2012.
Financial Condition Highlights
(Unaudited)
       
(In thousands) 31-Mar-13   31-Dec-12   31-Mar-12
Total assets $ 36,942,714   $ 36,507,535   $ 37,049,221
Total loans held-in-portfolio (net) 24,312,823 24,008,557 23,897,198
Deposits 27,013,217 27,000,613 27,197,736
Borrowings 4,969,344 4,430,673 4,708,511
Stockholders' equity   3,971,143     4,110,000     3,967,071

Total assets increased by approximately $435.2 million from December 31, 2012 driven by:

  • A $61.6 million increase in cash and money market accounts due mainly to balances held with the Federal Reserve Bank
  • A $237.0 million increase in securities available-for-sale, mainly due to purchase of agency collateralized mortgage obligations and obligations from U.S. Government sponsored entities
  • A $650.6 million increase in non-covered loans held-in-portfolio mainly due to:
  • an increase of $795.4 million in mortgage loans during the first quarter of 2013. The increase was driven by the purchase of mortgage loans, with an unpaid principal balance $860.3 million in Puerto Rico. These opportunistic purchases are part of the Corporation's strategy to supplement origination volume and leverage the scale of our loan servicing platform; and
  • an increase in construction loans of $18.6 million, mainly as a result of loans reclassified from the held-for-sale category amounting to $14.1 million, which were offset in part by $3.5 million in non-performing loans sold; offset by;
  • a decrease in commercial loans of $107.8 million, mainly as a result of the bulk sale of non-performing assets, which reduced commercial loans by $337.6 million and loans charged-off or transferred to OREO of $49.5 million, offset by new loan originations, including the loan to the newly created joint venture which acquired the non-performing assets of $182.4 million; and
  • a decrease in legacy loans of $31.7 million, as this portfolio continues its normal run-off.
  • An increase in covered OREO of $33.3 million as the Corporation continues to resolve non-performing loans
  • An increase in other assets of $81.7 million mainly due to the deferred tax asset related to the loss on the sale of non performing assets

These increases were partially offset by:

  • A decrease in loans held-for-sale of $153.0 million as a result of the bulk sale of non-performing assets, which reduced construction and commercial loans held-for-sale by approximately $49.7 million and $9.7 million, respectively and the reclassification of the remaining balance of these loans to the held-for-investment portfolio and net outflows from secondary market transactions of the mortgage division

  • The Loss-Sharing-Agreement (LSA) indemnification asset was reduced by $18.5 million during the quarter, mainly due to the amortization of the indemnification asset, reflecting reduced estimated losses on the covered portfolio, offset by credit impairment losses to be covered under the loss sharing agreement
  • The covered loan portfolio balance decreased by approximately $393.5 million due to the resolution of a large relationship and the normal portfolio run-off
  • Other real estate owned (“OREO”) non-covered decreased by approximately $112.1 million, mainly as a result of the bulk sale of non-performing assets during the quarter, which reduced OREOs by $108.5 million.

Total liabilities increased by $574.0 million from December 31, 2012, driven by:

  • Increase in repurchase agreements of $248.9 million and other short-term borrowings of $315.0 million, mainly FHLB of NY advances, which were used in part to fund mortgage loan purchases and investment securities during the quarter.

Stockholders' equity decreased by $138.9 million from December 31, 2012, mainly as a result of the net loss for the quarter and a decrease of $24.0 million in unrealized gains on securities available-for-sale. Refer to Table A for capital ratios and Table N for Non-GAAP reconciliations. Refer to Table C for the Statements of Financial Condition.

Forward-Looking Statements

The information included in this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in forward-looking statements. Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) the fiscal and monetary policies of the federal government and its agencies; (iv) changes in federal bank regulatory and supervisory policies, including required levels of capital; (v) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate markets in Puerto Rico and the other markets in which borrowers are located; (vi) the performance of the stock and bond markets; (vii) competition in the financial services industry; (viii) possible legislative, tax or regulatory changes; (ix) the impact of the Dodd-Frank Act on our businesses, business practice and cost of operations; and (x) additional Federal Deposit Insurance Corporation assessments. For a discussion of such factors and certain risks and uncertainties to which the Corporation is subject, see the Corporation's Annual Report on Form 10-K for the year ended December 31, 2012, 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, doing business as Popular Community Bank, providing a broad range of financial services and products with branches in New York, New Jersey, Illinois, Florida and California.

An electronic version of this press release can be found at the Corporation's website: www.popular.com.

Popular will hold a conference call to discuss the financial results today Thursday, April 18, 2013 at 2:00 p.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 866-515-2909 or 617-399-5123. The conference code is 37994014.

A replay of the webcast will be archived in Popular's website during the respective period. A telephone replay will be available from 4:00 p.m. on Thursday, April 18, 2013 to 11:59 p.m. on Thursday, April 25, 2013, at 888-286-8010 or 617-801-6888. The replay passcode is 24810804.

Popular, Inc.
Financial Supplement to First Quarter 2013 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 - Intentionally Left Blank (Consolidated Average Balances and Yield / Rate Analysis - YTD)
 
Table F - Other Service Fees
 
Table G - Loans and Deposits
 
Table H - Non-Performing Assets
 
Table I - Activity in Non-Performing Loans
 
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
 
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
 
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
 
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
 
Table N - Reconciliation to GAAP Financial Measures
 
Table O - Financial Information - Westernbank Covered Loans

 
POPULAR, INC.
Financial Supplement to First Quarter 2013 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
     
     
Quarters ended
    31-Mar-13   31-Dec-12   31-Mar-12
Net (loss) income per common share:
Basic and diluted [1] ($1.18 ) $ 0.81 $ 0.46
 
Average common shares outstanding [1] 102,664,608 102,628,274 102,341,805
Average common shares outstanding - assuming dilution [1] 103,013,204 102,801,581 102,494,500
Common shares outstanding at end of period [1] 103,228,615 103,169,806 102,711,707
 
Market value per common share [1] $ 27.60 $ 20.79 $ 20.50
 
Market capitalization - (In millions) $ 2,849 $ 2,145 $ 2,106
 
Return on average assets (1.34 )% 0.92 % 0.53 %
 
Return on average common equity (12.58 )% 8.50 % 5.16 %
 
Net interest margin [2] 4.39 % 4.41 % 4.27 %
 
Common equity per share [1] $ 37.98 $ 39.35 $ 38.14
 
Tangible common book value per common share (non-GAAP) [1] $ 31.21 $ 32.55 $ 31.23
 
Tangible common equity to tangible assets (non-GAAP) 8.89 % 9.38 % 8.83 %
 
Tier 1 risk-based capital [3] 16.52 % 17.35 % 16.51 %
 
Total risk-based capital [3] 17.80 % 18.63 % 17.79 %
 
Tier 1 leverage [3] 11.07 % 11.52 % 11.10 %
 
Tier 1 common equity to risk-weighted assets (non-GAAP) [3]     12.36 %     13.18 %     12.53 %
[1] All share and per share data has been adjusted to retroactively reflect the 1-for-10 reverse stock split effected on May 29, 2012.
[2] Not on a taxable equivalent basis.
[3] Capital ratios for the current quarter are estimated.
 

 
POPULAR, INC.
Financial Supplement to First Quarter 2013 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
    Quarters ended   Variance   Quarter ended   Variance
(In thousands, except per share information)   31-Mar-13   31-Dec-12   Q1 2013 vs.Q4 2012   31-Mar-12   Q1 2013 vs.Q1 2012
Interest income:  
Loans $ 385,414 $ 393,732 $ (8,318 ) $ 387,942 $ (2,528 )
Money market investments 955 929 26 948 7
Investment securities 37,356 37,953 (597 ) 45,070 (7,714 )
  Trading account securities     5,514       5,155       359       5,891       (377 )
  Total interest income     429,239       437,769       (8,530 )     439,851       (10,612 )
Interest expense:
Deposits 38,343 40,896 (2,553 ) 51,679 (13,336 )
Short-term borrowings 9,782 10,302 (520 ) 13,583 (3,801 )
  Long-term debt     35,767       36,160       (393 )     37,007       (1,240 )
  Total interest expense     83,892       87,358       (3,466 )     102,269       (18,377 )
Net interest income 345,347 350,411 (5,064 ) 337,582 7,765
Provision for loan losses - non-covered loans 206,300 86,256 120,044 82,514 123,786
Provision for loan losses - covered loans     17,556       (3,445 )     21,001       18,209       (653 )
Net interest income after provision for loan losses     121,491       267,600       (146,109 )     236,859       (115,368 )
Service charges on deposit accounts 43,722 44,449 (727 ) 46,589 (2,867 )
Other service fees 58,803 63,695 (4,892 ) 66,039 (7,236 )
Net loss on sale and valuation adjustments of investment securities - (1,422 ) 1,422 - -
Trading account loss (75 ) (5,990 ) 5,915 (2,143 ) 2,068
Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale (48,959 ) 30,196 (79,155 ) 15,471 (64,430 )
Adjustments (expense) to indemnity reserves on loans sold (16,143 ) (3,208 ) (12,935 ) (3,875 ) (12,268 )
FDIC loss share expense (26,266 ) (36,824 ) 10,558 (15,255 ) (11,011 )
Other operating income     6,493       42,105       (35,612 )     17,082       (10,589 )
  Total non-interest income     17,575       133,001       (115,426 )     123,908       (106,333 )
Operating expenses:
Personnel costs
Salaries 73,345 74,846 (1,501 ) 76,899 (3,554 )
Commissions, incentives and other bonuses 15,475 14,817 658 12,726 2,749
Pension, postretirement and medical insurance 15,238 16,453 (1,215 ) 18,425 (3,187 )
  Other personnel costs, including payroll taxes     11,931       10,209       1,722       13,441       (1,510 )
Total personnel costs 115,989 116,325 (336 ) 121,491 (5,502 )
Net occupancy expenses 24,288 26,918 (2,630 ) 24,162 126
Equipment expenses 11,950 11,602 348 11,341 609
Other taxes 11,586 11,942 (356 ) 13,438 (1,852 )
Professional fees 52,135 58,246 (6,111 ) 48,105 4,030
Communications 6,832 6,558 274 7,131 (299 )
Business promotion 12,917 16,822 (3,905 ) 12,850 67
FDIC deposit insurance 9,280 13,691 (4,411 ) 24,926 (15,646 )
Loss on early extinguishment of debt - 12 (12 ) 69 (69 )
Other real estate owned (OREO) expenses 46,741 1,079 45,662 14,165 32,576
Credit and debit card processing, volume, interchange and other expenses 4,975 4,646 329 4,681 294
Other operating expenses 17,089 26,439 (9,350 ) 11,215 5,874
Amortization of intangibles     2,468       2,467       1       2,593       (125 )
  Total operating expenses     316,250       296,747       19,503       296,167       20,083  
(Loss) income before income tax (177,184 ) 103,854 (281,038 ) 64,600 (241,784 )
Income tax (benefit) expense     (56,877 )     19,914       (76,791 )     16,192       (73,069 )
Net (loss) income   $ (120,307 )   $ 83,940     $ (204,247 )   $ 48,408     $ (168,715 )
Net (loss) income applicable to common stock   $ (121,237 )   $ 83,009     $ (204,246 )   $ 47,477     $ (168,714 )
Net (loss) income per common share - basic [1]   $ (1.18 )   $ 0.81     $ (1.99 )   $ 0.46     $ (1.64 )
Net (loss) income per common share - diluted [1]   $ (1.18 )   $ 0.81     $ (1.99 )   $ 0.46     $ (1.64 )
[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 First Quarter 2013 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
            Variance
Q1 2013 vs.
(In thousands)   31-Mar-13   31-Dec-12   31-Mar-12   Q4 2012
Assets:
Cash and due from banks $ 242,290 $ 439,363 $ 472,806 $ (197,073 )
Money market investments 1,344,244 1,085,580 1,304,263 258,664
Trading account securities, at fair value 299,773 314,525 404,293 (14,752 )
Investment securities available-for-sale, at fair value 5,321,231 5,084,201 5,138,616 237,030
Investment securities held-to-maturity, at amortized cost 141,518 142,817 124,372 (1,299 )
Other investment securities, at lower of cost or realizable value 198,577 185,443 195,708 13,134
Loans held-for-sale, at lower of cost or fair value 201,495 354,468 361,596 (152,973 )
Loans held-in-portfolio:
Loans not covered under loss sharing agreements with the FDIC 21,729,882 21,080,005 20,577,995 649,877
Loans covered under loss sharing agreements with the FDIC 3,362,446 3,755,972 4,221,788 (393,526 )
Less: Unearned income 96,137 96,813 99,321 (676 )
    Allowance for loan losses     683,368       730,607       803,264       (47,239 )
    Total loans held-in-portfolio, net     24,312,823       24,008,557       23,897,198       304,266  
FDIC loss share asset 1,380,592 1,399,098 1,880,357 (18,506 )
Premises and equipment, net 532,785 535,793 533,545 (3,008 )
Other real estate not covered under loss sharing agreements with the FDIC 154,699 266,844 193,768 (112,145 )
Other real estate covered under loss sharing agreements with the FDIC 172,378 139,058 110,559 33,320
Accrued income receivable 135,542 125,728 126,568 9,814
Mortgage servicing assets, at fair value 153,949 154,430 156,331 (481 )
Other assets 1,651,234 1,569,578 1,439,532 81,656
Goodwill 647,757 647,757 647,911 -
Other intangible assets     51,827       54,295       61,798       (2,468 )
Total assets   $ 36,942,714     $ 36,507,535     $ 37,049,221     $ 435,179  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing $ 5,613,701 $ 5,794,629 $ 5,366,420 $ (180,928 )
    Interest bearing     21,399,516       21,205,984       21,831,316       193,532  
    Total deposits     27,013,217       27,000,613       27,197,736       12,604  
Assets sold under agreements to repurchase 2,265,675 2,016,752 2,113,557 248,923
Other short-term borrowings 951,200 636,200 751,200 315,000
Notes payable 1,752,469 1,777,721 1,843,754 (25,252 )
Other liabilities     989,010       966,249       1,175,903       22,761  
Total liabilities     32,971,571       32,397,535       33,082,150       574,036  
Stockholders' equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,033 1,032 1,028 1
Surplus 4,151,838 4,150,294 4,125,958 1,544
(Accumulated deficit) retained earnings (109,411 ) 11,826 (165,249 ) (121,237 )
Treasury stock (469 ) (444 ) (1,041 ) (25 )
Accumulated other comprehensive loss     (122,008 )     (102,868 )     (43,785 )     (19,140 )
    Total stockholders' equity     3,971,143       4,110,000       3,967,071       (138,857 )
Total liabilities and stockholders' equity   $ 36,942,714     $ 36,507,535     $ 37,049,221     $ 435,179  
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
                         
Quarter ended Quarter ended Quarter ended Variance Variance
31-Mar-13 31-Dec-12 31-Mar-12 Q1 2013 vs. Q4 2012 Q1 2013 vs. Q1 2012
($ 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 $ 6,971     $ 43.8   2.52 % $ 6,693     $ 44.1   2.63 % $ 6,761     $ 52.0   3.07 % $ 278     ($0.3 )   (0.11 ) % $ 210       ($8.2 )   (0.55 ) %
Loans not covered under loss sharing agreements with the FDIC:
Commercial 10,078 119.3 4.80 10,200 123.5 4.82 10,444 126.5 4.87 (122 ) (4.2 ) (0.02 ) (366 ) (7.2 ) (0.07 )
Construction 369 3.6 3.92 386 3.3 3.44 523 6.5 5.03 (17 ) 0.3 0.48 (154 ) (2.9 ) (1.11 )
Mortgage 6,410 83.2 5.19 6,169 81.0 5.25 5,464 75.5 5.53 241 2.2 (0.06 ) 946 7.7 (0.34 )
Consumer 3,853 95.8 10.08 3,835 97.5 10.11 3,661 92.6 10.17 18 (1.7 ) (0.03 ) 192 3.2 (0.09 )
Lease financing   543       11.3   8.36   540       11.4   8.48   555       12.0   8.67   3     (0.1 )   (0.12 )   (12 )     (0.7 )   (0.31 )
Total loans not covered under loss sharing agreements with the FDIC 21,253 313.2 5.95 21,130 316.7 5.97 20,647 313.1 6.09 123 (3.5 ) (0.02 ) 606 0.1 (0.14 )
Loans covered under loss sharing agreements with the FDIC   3,514       72.2   8.31   3,832       77.0   8.01   4,292       74.8   7.00   (318 )   (4.8 )   0.30     (778 )     (2.6 )   1.31  
Total loans   24,767       385.4   6.29   24,962       393.7   6.28   24,939       387.9   6.25   (195 )   (8.3 )   0.01     (172 )     (2.5 )   0.04  
Total interest earning assets   31,738     $ 429.2   5.46 %   31,655     $ 437.8   5.51 %   31,700     $ 439.9   5.57 %   83     ($8.6 )   (0.05 ) %   38       ($10.7 )   (0.11 ) %
Allowance for loan losses (659 ) (754 ) (802 ) 95 143
Other non-interest earning assets   5,283     5,400     5,658     (117 )   (375 )
Total average assets $ 36,362   $ 36,301   $ 36,556   $ 61     ($194 )
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $ 5,696 $ 5.8 0.41 % $ 5,707 $ 6.1 0.43 % $ 5,246 $ 6.1 0.47 % ($11 ) ($0.3 ) (0.02 ) % $ 450 ($0.3 ) (0.06 ) %
Savings 6,718 4.3 0.26 6,654 4.8 0.29 6,507 6.3 0.39 64 (0.5 ) (0.03 ) 211 (2.0 ) (0.13 )
Time deposits   8,832       28.2   1.30   8,650       30.0   1.38   10,291       39.3   1.54   182     (1.8 )   (0.08 )   (1,459 )     (11.1 )   (0.24 )
Total interest bearing deposits 21,246 38.3 0.73 21,011 40.9 0.77 22,044 51.7 0.94 235 (2.6 ) (0.04 ) (798 ) (13.4 ) (0.21 )
Borrowings   4,492       45.6   4.07   4,704       46.5   3.94   4,365       50.6   4.65   (212 )   (0.9 )   0.13     127       (5.0 )   (0.58 )
Total interest bearing liabilities   25,738       83.9   1.31   25,715       87.4   1.35   26,409       102.3   1.55   23     (3.5 )   (0.04 )   (671 )     (18.4 )   (0.24 )
Net interest spread 4.15 % 4.16 % 4.02 % (0.01 ) % 0.13   %
Non-interest bearing deposits 5,591 5,583 5,213 8 378
Other liabilities 1,074 1,067 1,181 7 (107 )
Stockholders' equity   3,959     3,936     3,753     23     206  
Total average liabilities and stockholders' equity $ 36,362   $ 36,301   $ 36,556   $ 61     ($194 )
 
Net interest income / margin non-taxable equivalent basis $ 345.3   4.39 % $ 350.4   4.41 % $ 337.6   4.27 % ($5.1 )   (0.02 ) % $ 7.7     0.12   %
 

Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
 
 
 
 
[THIS PAGE INTENTIONALLY LEFT BLANK]
 
 
 
 

         
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table F - Other Service Fees
(Unaudited)

 

Variance
Quarters ended Q1 2013 vs. Q1 2013 vs.
(In thousands)   31-Mar-13   31-Dec-12   31-Mar-12   Q4 2012   Q1 2012
Other service fees:
  Debit card fees $ 8,470 $ 9,439 $ 9,165 $ (969 ) $ (695 )
Insurance fees 12,073 17,050 12,390 (4,977 ) (317 )
Credit card fees 14,691 16,148 12,559 (1,457 ) 2,132
Sale and administration of investment products 8,717 9,721 8,889 (1,004 ) (172 )
Mortgage servicing fees, net of fair value adjustments 5,631 1,647 12,931 3,984 (7,300 )
Trust fees 4,458 4,226 4,081 232 377
Processing fees - 1,511 1,774 (1,511 ) (1,774 )
  Other fees     4,763     3,953     4,250     810       513  
Total other service fees   $ 58,803   $ 63,695   $ 66,039   $ (4,892 )   $ (7,236 )
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table G - Loans and Deposits
(Unaudited)
         
Loans - Ending Balances
Variance
(In thousands)   31-Mar-13   31-Dec-12   31-Mar-12   Q1 2013 vs. Q4 2012   Q1 2013 vs. Q1 2012
Loans not covered under FDIC loss sharing agreements:
Commercial $ 9,750,428 $ 9,858,202 $ 9,868,242 $ (107,774 ) $ (117,814 )
Construction 271,498 252,857 236,579 18,641 34,919
Legacy [1] 352,512 384,217 603,874 (31,705 ) (251,362 )
Lease financing 543,572 540,523 543,314 3,049 258
Mortgage 6,873,910 6,078,507 5,591,745 795,403 1,282,165
Consumer     3,841,825     3,868,886     3,634,920     (27,061 )     206,905  
Total non-covered loans held-in-portfolio $ 21,633,745 $ 20,983,192 $ 20,478,674 $ 650,553 $ 1,155,071
Loans covered under FDIC loss sharing agreements     3,362,446     3,755,972     4,221,788     (393,526 )     (859,342 )
Total loans held-in-portfolio   $ 24,996,191   $ 24,739,164   $ 24,700,462   $ 257,027     $ 295,729  
Loans held-for-sale:
Commercial $ - $ 16,047 $ 24,879 $ (16,047 ) $ (24,879 )
Construction - 78,140 206,246 (78,140 ) (206,246 )
Legacy [1] 1,681 2,080 1,115 (399 ) 566
Mortgage     199,814     258,201     129,356     (58,387 )     70,458  
Total loans held-for-sale     201,495     354,468     361,596     (152,973 )     (160,101 )
Total loans   $ 25,197,686   $ 25,093,632   $ 25,062,058   $ 104,054     $ 135,628  
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA reportable segment.
 
Deposits - Ending Balances
Variance
(In thousands)   31-Mar-13   31-Dec-12   31-Mar-12   Q1 2013 vs. Q4 2012   Q1 2013 vs. Q1 2012
Demand deposits [1] $ 6,265,796 $ 6,442,739 $ 6,013,009 $ (176,943 ) $ 252,787
Savings, NOW and money market deposits (non-brokered) 11,357,130 11,190,335 11,048,140 166,795 308,990
Savings, NOW and money market deposits (brokered) 498,833 456,830 212,996 42,003 285,837
Time deposits (non-brokered) 6,427,320 6,541,660 7,186,826 (114,340 ) (759,506 )
Time deposits (brokered CDs)     2,464,138     2,369,049     2,736,765     95,089       (272,627 )
Total deposits   $ 27,013,217   $ 27,000,613   $ 27,197,736   $ 12,604     $ (184,519 )
[1] Includes interest and non-interest demand bearing deposits.
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
              Variance
(Dollars in thousands)   31-Mar-13   As a % of loans HIP by category   31-Dec-12   As a % of loans HIP by category   31-Mar-12   As a % of loans HIP by category   Q1 2013 vs. Q4 2012   Q1 2013 vs. Q1 2012
Non-accrual loans:  
Commercial $ 320,787

3.3

%

 

$ 665,289

6.7

%

 

$ 818,678

8.3

%

 

$ (344,502 ) $ (497,891 )
Construction 50,920 18.8 43,350 17.1 69,470 29.4 7,570 (18,550 )
Legacy [1] 35,830 10.2 40,741 10.6 79,077 13.1 (4,911 ) (43,247 )
Lease financing 4,005 0.7 4,865 0.9 5,673 1.0 (860 ) (1,668 )
Mortgage 600,724 8.7 630,130 10.4 667,217 11.9 (29,406 ) (66,493 )
Consumer     38,342     1.0       40,758     1.1       41,688     1.1       (2,416 )     (3,346 )
Total non-performing loans held-in-
portfolio, excluding covered loans 1,050,608

4.9

%

 

1,425,133

6.8

%

 

1,681,803

8.2

%

 

(374,525 ) (631,195 )
Non-performing loans held-for-sale [2] 17,742 96,320 232,293 (78,578 ) (214,551 )

Other real estate owned (“OREO”), excluding covered OREO

    154,699           266,844           193,768           (112,145 )     (39,069 )
Total non-performing assets, excluding covered assets
1,223,049 1,788,297 2,107,864 (565,248 ) (884,815 )
Covered loans and OREO     196,717           213,469           203,254           (16,752 )     (6,537 )
Total non-performing assets   $ 1,419,766         $ 2,001,766         $ 2,311,118         $ (582,000 )   $ (891,352 )
Accruing loans past due 90 days or more [3]   $ 410,835         $ 388,712         $ 328,757         $ 22,123     $ 82,078  
Ratios excluding covered loans:
Non-performing loans held-in-portfolio to loans held-in-portfolio

4.86

%

 

6.79

%

 

8.21

%

 

Allowance for loan losses to loans held-in-portfolio
2.70 2.96 3.25

Allowance for loan losses to non-performing loans, excluding held-for-sale

    55.54           43.62           39.53              
Ratios including covered loans:
Non-performing assets to total assets

3.84

%

 

5.48

%

 

6.24

%

 

Non-performing loans held-in-portfolio to loans held-in-portfolio
4.30 6.06 7.18
Allowance for loan losses to loans held-in-portfolio
2.73 2.95 3.25

Allowance for loan losses to

non-performing loans, excluding held-for-sale

    63.57           48.72           45.27              
[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 March 31, 2013 consisted of $2 million in legacy loans and $16 million in mortgage loans (December 31, 2012- $78 million in construction loans, $16 million in commercial loans, $2 million in legacy loans and $53 thousand in mortgage loans; March 31, 2012 - $206 million in construction loans, $25 million in commercial loans, $1 million in legacy loans and $53 thousand in mortgage loans).
[3] It is the Corporation's policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90 days or more as opposed to nonperforming since the principal repayment is insured. These balances include $99 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of March 31, 2013.
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
             
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
31-Mar-13   31-Dec-12
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 522,733 $ 142,556 $ 665,289 $ 612,781 $ 159,436 $ 772,217
Plus:
New non-performing loans 47,735 15,111 62,846 40,585 16,601 57,186
Advances on existing non-performing loans - - - - 163 163
Loans transferred from held-for-sale 790 - 790 - - -
Less:
Non-performing loans transferred to OREO (9,198 ) (1,558 ) (10,756 ) (14,694 ) (6,580 ) (21,274 )
Non-performing loans charged-off (28,850 ) (9,881 ) (38,731 ) (45,682 ) (11,745 ) (57,427 )
Loans returned to accrual status / loan collections (17,134 ) (12,249 ) (29,383 ) (66,957 ) (13,645 ) (80,602 )
Loans transferred to held-for-sale - - - - (1,674 ) (1,674 )
Other - - - (3,300 ) - (3,300 )
  Non-performing loans sold[1]     (329,268 )     -       (329,268 )     -       -       -  
Ending balance NPLs   $ 186,808     $ 133,979     $ 320,787     $ 522,733     $ 142,556     $ 665,289  
[1] Includes write-downs of $161,297 of loans sold.
 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
31-Mar-13   31-Dec-12
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 37,390 $ 5,960 $ 43,350 $ 37,793 $ 12,140 $ 49,933
Plus:
New non-performing loans - - - 2,255 - 2,255
Loans transferred from held-for-sale 14,152 - 14,152 - - -
Other - - - 3,300 - 3,300
Less:
Non-performing loans transferred to OREO - - - - (3,605 ) (3,605 )
Non-performing loans charged-off (1,082 ) - (1,082 ) (839 ) (264 ) (1,103 )
Loans returned to accrual status / loan collections (1,940 ) (76 ) (2,016 ) (5,119 ) (2,311 ) (7,430 )
  Non-performing loans sold[1]     (3,484 )     -       (3,484 )     -       -       -  
Ending balance NPLs   $ 45,036     $ 5,884     $ 50,920     $ 37,390     $ 5,960     $ 43,350  
[1] Includes write-downs of $1,846 of loans sold.
 

Mortgage loans held-in-portfolio:
    Quarter ended   Quarter ended
31-Mar-13 31-Dec-12
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 596,106   $ 34,024   $ 630,130 $ 598,523   $ 33,529   $ 632,052
Plus:
New non-performing loans 109,816 4,507 114,323 166,768 8,104 174,872
Less:
Non-performing loans transferred to OREO (18,110 ) (747 ) (18,857 ) (21,693 ) (989 ) (22,682 )
Non-performing loans charged-off (14,608 ) (3,093 ) (17,701 ) (15,523 ) (2,936 ) (18,459 )
  Loans returned to accrual status / loan collections     (100,473 )     (6,698 )     (107,171 )     (131,969 )     (3,684 )     (135,653 )
Ending balance NPLs   $ 572,731     $ 27,993     $ 600,724     $ 596,106     $ 34,024     $ 630,130  
Legacy loans held-in-portfolio:
Quarter ended Quarter ended
31-Mar-13 31-Dec-12
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ - $ 40,741 $ 40,741 $ - $ 48,735 $ 48,735
Plus:
New non-performing loans - 6,388 6,388 - 9,337 9,337
Advances on existing non-performing loans - 4 4 - - -
Loans transferred to held-for-sale - 400 400 - - -
Less:
Non-performing loans transferred to OREO - - - - (50 ) (50 )
Non-performing loans charged-off - (5,315 ) (5,315 ) - (7,313 ) (7,313 )
Loans returned to accrual status / loan collections - (6,388 ) (6,388 ) - (7,099 ) (7,099 )
  Loans transferred to held-for-sale     -       -       -       -       (2,869 )     (2,869 )
Ending balance NPLs   $ -     $ 35,830     $ 35,830     $ -     $ 40,741     $ 40,741  
Total non-performing loans held-in-portfolio (excluding consumer loans):
Quarter ended Quarter ended
31-Mar-13 31-Dec-12
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 1,156,229 $ 223,281 $ 1,379,510 $ 1,249,097 $ 253,840 $ 1,502,937
Plus:
New non-performing loans 157,551 26,006 183,557 209,608 34,042 243,650
Advances on existing non-performing loans - 4 4 - 163 163
Loans transferred from held-for-sale 14,942 400 15,342 - - -
Other - - - 3,300 - 3,300
Less:
Non-performing loans transferred to OREO (27,308 ) (2,305 ) (29,613 ) (36,387 ) (11,224 ) (47,611 )
Non-performing loans charged-off (44,540 ) (18,289 ) (62,829 ) (62,044 ) (22,258 ) (84,302 )
Loans returned to accrual status / loan collections (119,547 ) (25,411 ) (144,958 ) (204,045 ) (26,739 ) (230,784 )
Loans transferred to held-for-sale - - - - (4,543 ) (4,543 )
Other - - - (3,300 ) - (3,300 )
  Non-performing loans sold[1]     (332,752 )     -       (332,752 )     -       -       -  
Ending balance NPLs   $ 804,575     $ 203,686     $ 1,008,261     $ 1,156,229     $ 223,281     $ 1,379,510  
[1] Includes write-downs of $163,143 of loans sold.
 

Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
                 
 
Quarter ended Quarter ended Quarter ended
(Dollars in thousands)   31-Mar-13   31-Dec-12   31-Mar-12
    Non-covered loans   Covered loans   Total   Non-covered loans   Covered loans   Total   Non-covered loans   Covered loans   Total
Balance at beginning of period $ 621,701 $ 108,906 $ 730,607 $ 636,299 $ 124,873 $ 761,172 $ 690,363 $ 124,945 $ 815,308
Provision for loan losses     206,300       17,556     223,856       86,256       (3,445 )     82,811       82,514       18,209     100,723  
      828,001       126,462     954,463       722,555       121,428       843,983       772,877       143,154     916,031  
Net loans charged-off (recovered):
BPPR
Commercial 24,311 10,535 34,846 41,540 492 42,032 37,518 4,102 41,620
Construction 355 9,445 9,800 (2,371 ) 7,561 5,190 (371 ) 264 (107 )
Lease financing 984 - 984 516 - 516 154 - 154
Mortgage 16,773 2,051 18,824 17,310 885 18,195 12,226 203 12,429
Consumer     20,001       4,564     24,565       21,055       3,584       24,639       24,131       89     24,220  
Total BPPR     62,424       26,595     89,019       78,050       12,522       90,572       73,658       4,658     78,316  
 
BPNA
Commercial 8,104 - 8,104 7,044 - 7,044 16,865 - 16,865
Construction - - - 239 - 239 166 - 166
Legacy [1] 1,886 - 1,886 3,369 - 3,369 3,558 - 3,558
Mortgage 2,790 - 2,790 3,023 - 3,023 5,228 - 5,228
Consumer     6,153       -     6,153       9,129       -       9,129       8,634       -     8,634  
Total BPNA     18,933       -     18,933       22,804       -       22,804       34,451       -     34,451  
Total loans charged-off (recovered) - Popular, Inc.     81,357       26,595     107,952       100,854       12,522       113,376       108,109       4,658     112,767  
Net write-downs related to loans sold     (163,143 )     -     (163,143 )     -       -       -       -       -     -  
Balance at end of period   $ 583,501     $ 99,867   $ 683,368     $ 621,701     $ 108,906     $ 730,607     $ 664,768     $ 138,496   $ 803,264  
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio

1.55

%

 

1.76

%

 

1.94

%

 

1.84

%

 

2.13

%

 

1.83

%

Provision for loan losses to net charge-offs [2]

0.71x

 

0.70x

 

0.86x

 

0.73x

 

0.76x

 

0.89x

 
BPPR
Annualized net charge-offs to average loans held-in-portfolio

1.64

%

 

1.90

%

 

2.07

%

 

1.91

%

 

2.01

%

 

1.65

%

Provision for loan losses to net charge-offs [2]

0.89x

 

0.82x

 

1.00x

 

0.82x

 

0.92x

 

1.10x

 
BPNA
Annualized net charge-offs to average loans held-in-portfolio

1.33

%

 

1.60

%

 

2.43

%

Provision for loan losses to net charge-offs          

0.11x

 

       

0.36x

 

       

0.43x

[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] Excluding provision for loan losses and net write-down related to the asset sale.
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
                                 
31-Mar-13
(Dollars in thousands)     Commercial   Construction   Legacy [3]   Mortgage   Lease financing   Consumer  

Total [2]

Specific ALLL   $ 21,776 $ 135 $ - $ 75,697 $ 1,662 $ 24,472 $ 123,742
Impaired loans [1] $ 301,939 $ 49,398 $ 15,031 $ 631,663 $ 4,358 $ 112,394 $ 1,114,783
Specific ALLL to impaired loans [1]     7.21 %   0.27 %   - %   11.98 %   38.14 %   21.77 %   11.10 %
General ALLL $ 207,094 $ 7,304 $ 30,777 $ 86,248 $ 2,233 $ 126,103 $ 459,759
Loans held-in-portfolio, excluding impaired loans [1] $ 9,448,489 $ 222,100 $ 337,481 $ 6,242,247 $ 539,214 $ 3,729,431 $ 20,518,962
General ALLL to loans held-in-portfolio, excluding impaired loans [1]     2.19 %   3.29 %   9.12 %   1.38 %   0.41 %   3.38 %   2.24 %
Total ALLL $ 228,870 $ 7,439 $ 30,777 $ 161,945 $ 3,895 $ 150,575 $ 583,501
Total non-covered loans held-in-portfolio [1] $ 9,750,428 $ 271,498 $ 352,512 $ 6,873,910 $ 543,572 $ 3,841,825 $ 21,633,745
ALLL to loans held-in-portfolio [1]     2.35 %   2.74 %   8.73 %   2.36 %   0.72 %   3.92 %   2.70 %
[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, 2013, the general allowance on the covered loans amounted to $98 million, while the specific reserve amounted to $1 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.
                                 
31-Dec-12
(Dollars in thousands)     Commercial   Construction   Legacy [3]   Mortgage   Lease financing   Consumer  

Total [2]

Specific ALLL $ 17,348 $ 120 $ - $ 74,667 $ 1,066 $ 17,886 $ 111,087
Impaired loans [1] $ 527,664 $ 41,809 $ 18,744 $ 611,230 $ 4,881 $ 133,377 $ 1,337,705
Specific ALLL to impaired loans [1]     3.29 %   0.29 %   - %   12.22 %   21.84 %   13.41 %   8.30 %
General ALLL $ 280,334 $ 7,309 $ 33,102 $ 74,708 $ 1,828 $ 113,333 $ 510,614
Loans held-in-portfolio, excluding impaired loans [1] $ 9,330,538 $ 211,048 $ 365,473 $ 5,467,277 $ 535,642 $ 3,735,509 $ 19,645,487
General ALLL to loans held-in-portfolio, excluding impaired loans [1]     3.00 %   3.46 %   9.06 %   1.37 %   0.34 %   3.03 %   2.60 %
Total ALLL $ 297,682 $ 7,429 $ 33,102 $ 149,375 $ 2,894 $ 131,219 $ 621,701
Total non-covered loans held-in-portfolio [1] $ 9,858,202 $ 252,857 $ 384,217 $ 6,078,507 $ 540,523 $ 3,868,886 $ 20,983,192
ALLL to loans held-in-portfolio [1]     3.02 %   2.94 %   8.62 %   2.46 %   0.54 %   3.39 %   2.96 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of December 31, 2012, the general allowance on the covered loans amounted to $100 million, while the specific reserve amounted to $9 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.
                                 
Variance
(Dollars in thousands)     Commercial   Construction   Legacy   Mortgage   Lease financing   Consumer   Total  
Specific ALLL $ 4,428 $ 15 $ - $ 1,030 $ 596 $ 6,586 $ 12,655
Impaired loans     $ (225,725)   $ 7,589   $ (3,713)   $ 20,433   $ (523)   $ (20,983)   $ (222,922)  
General ALLL $ (73,240) $ (5) $ (2,325) $ 11,540 $ 405 $ 12,770 $ (50,855)
Loans held-in-portfolio, excluding impaired loans     $ 117,951   $ 11,052   $ (27,992)   $ 774,970   $ 3,572   $ (6,078)   $ 873,475  
Total ALLL $ (68,812) $ 10 $ (2,325) $ 12,570 $ 1,001 $ 19,356 $ (38,200)
Total non-covered loans held-in-portfolio     $ (107,774)   $ 18,641   $ (31,705)   $ 795,403   $ 3,049   $ (27,061)   $ 650,553  
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
             
31-Mar-13
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 21,770 $ 135 $ 58,206 $ 1,662 $ 24,379 $ 106,152
  General ALLL non-covered loans     139,113       6,268       72,260       2,233       97,995       317,869  
ALLL - non-covered loans     160,883       6,403       130,466       3,895       122,374       424,021  
Specific ALLL covered loans 1,417 - - - - 1,417
  General ALLL covered loans     66,264       6,293       20,673       -       5,220       98,450  
ALLL - covered loans     67,681       6,293       20,673       -       5,220       99,867  
Total ALLL   $ 228,564     $ 12,696     $ 151,139     $ 3,895     $ 127,594     $ 523,888  
Loans held-in-portfolio:
Impaired non-covered loans $ 231,986 $ 43,514 $ 578,471 $ 4,358 $ 109,718 $ 968,047
  Non-covered loans held-in-portfolio, excluding impaired loans     5,968,604       197,773       5,158,122       539,214       3,113,816       14,977,529  
Non-covered loans held-in-portfolio     6,200,590       241,287       5,736,593       543,572       3,223,534       15,945,576  
Impaired covered loans 23,412 - - - - 23,412
  Covered loans held-in-portfolio, excluding impaired loans     1,921,397       306,550       1,045,564       -       65,523       3,339,034  
Covered loans held-in-portfolio     1,944,809       306,550       1,045,564       -       65,523       3,362,446  
Total loans held-in-portfolio   $ 8,145,399     $ 547,837     $ 6,782,157     $ 543,572     $ 3,289,057     $ 19,308,022  
 
 
31-Dec-12
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 17,323 $ 120 $ 58,572 $ 1,066 $ 17,779 $ 94,860
  General ALLL non-covered loans     200,292       5,742       60,455       1,828       82,120       350,437  
ALLL - non-covered loans     217,615       5,862       119,027       2,894       99,899       445,297  
Specific ALLL covered loans 8,505 - - - - 8,505
  General ALLL covered loans     63,555       9,946       20,914       -       5,986       100,401  
ALLL - covered loans     72,060       9,946       20,914       -       5,986       108,906  
Total ALLL   $ 289,675     $ 15,808     $ 139,941     $ 2,894     $ 105,885     $ 554,203  
Loans held-in-portfolio:
Impaired non-covered loans $ 447,779 $ 35,849 $ 557,137 $ 4,881 $ 130,663 $ 1,176,309
  Non-covered loans held-in-portfolio, excluding impaired loans     5,848,505       176,418       4,391,787       535,642       3,103,666       14,056,018  
Non-covered loans held-in-portfolio     6,296,284       212,267       4,948,924       540,523       3,234,329       15,232,327  
Impaired covered loans 109,241 - - - - 109,241
  Covered loans held-in-portfolio, excluding impaired loans     2,135,406       361,396       1,076,730       -       73,199       3,646,731  
Covered loans held-in-portfolio     2,244,647       361,396       1,076,730       -       73,199       3,755,972  
Total loans held-in-portfolio   $ 8,540,931     $ 573,663     $ 6,025,654     $ 540,523     $ 3,307,528     $ 18,988,299  
 
                           
Variance
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 4,447 $ 15 $ (366 ) $ 596 $ 6,600 $ 11,292
  General ALLL non-covered loans     (61,179 )     526       11,805       405       15,875       (32,568 )
ALLL - non-covered loans     (56,732 )     541       11,439       1,001       22,475       (21,276 )
Specific ALLL covered loans (7,088 ) - - - - (7,088 )
  General ALLL covered loans     2,709       (3,653 )     (241 )     -       (766 )     (1,951 )
ALLL - covered loans     (4,379 )     (3,653 )     (241 )     -       (766 )     (9,039 )
Total ALLL   $ (61,111 )   $ (3,112 )   $ 11,198     $ 1,001     $ 21,709     $ (30,315 )
Loans held-in-portfolio:
Impaired non-covered loans $ (215,793 ) $ 7,665 $ 21,334 $ (523 ) $ (20,945 ) $ (208,262 )
  Non-covered loans held-in-portfolio, excluding impaired loans     120,099       21,355       766,335       3,572       10,150       921,511  
Non-covered loans held-in-portfolio     (95,694 )     29,020       787,669       3,049       (10,795 )     713,249  
Impaired covered loans (85,829 ) - - - - (85,829 )
  Covered loans held-in-portfolio, excluding impaired loans     (214,009 )     (54,846 )     (31,166 )     -       (7,676 )     (307,697 )
Covered loans held-in-portfolio     (299,838 )     (54,846 )     (31,166 )     -       (7,676 )     (393,526 )
Total loans held-in-portfolio   $ (395,532 )   $ (25,826 )   $ 756,503     $ 3,049     $ (18,471 )   $ 319,723  
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
(Unaudited)
             
31-Mar-13
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $ 6 $ - $ - $ 17,491 $ 93 $ 17,590
  General ALLL     67,981       1,036       30,777       13,988       28,108       141,890  
Total ALLL   $ 67,987     $ 1,036     $ 30,777     $ 31,479     $ 28,201     $ 159,480  
Loans held-in-portfolio:
Impaired loans $ 69,953 $ 5,884 $ 15,031 $ 53,192 $ 2,676 $ 146,736
  Loans held-in-portfolio, excluding impaired loans     3,479,885       24,327       337,481       1,084,125       615,615       5,541,433  
Total loans held-in-portfolio   $ 3,549,838     $ 30,211     $ 352,512     $ 1,137,317     $ 618,291     $ 5,688,169  
 
 
31-Dec-12
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $ 25 $ - $ - $ 16,095 $ 107 $ 16,227
  General ALLL     80,042       1,567       33,102       14,253       31,213       160,177  
Total ALLL   $ 80,067     $ 1,567     $ 33,102     $ 30,348     $ 31,320     $ 176,404  
Loans held-in-portfolio:
Impaired loans $ 79,885 $ 5,960 $ 18,744 $ 54,093 $ 2,714 $ 161,396
  Loans held-in-portfolio, excluding impaired loans     3,482,033       34,630       365,473       1,075,490       631,843       5,589,469  
Total loans held-in-portfolio   $ 3,561,918     $ 40,590     $ 384,217     $ 1,129,583     $ 634,557     $ 5,750,865  
 
                           
Variance
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $ (19 ) $ - $ - $ 1,396 $ (14 ) $ 1,363
  General ALLL     (12,061 )     (531 )     (2,325 )     (265 )     (3,105 )     (18,287 )
Total ALLL   $ (12,080 )   $ (531 )   $ (2,325 )   $ 1,131     $ (3,119 )   $ (16,924 )
Loans held-in-portfolio:
Impaired loans $ (9,932 ) $ (76 ) $ (3,713 ) $ (901 ) $ (38 ) $ (14,660 )
  Loans held-in-portfolio, excluding impaired loans     (2,148 )     (10,303 )     (27,992 )     8,635       (16,228 )     (48,036 )
Total loans held-in-portfolio   $ (12,080 )   $ (10,379 )   $ (31,705 )   $ 7,734     $ (16,266 )   $ (62,696 )
 

 
Popular, Inc.
Financial Supplement to First Quarter 2013 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
 
 
(In thousands, except share or per share information) 31-Mar-13   31-Dec-12   31-Mar-12  
Total stockholders' equity $ 3,971,143 $ 4,110,000 $ 3,967,071
Less: Preferred stock (50,160) (50,160) (50,160)
Less: Goodwill (647,757) (647,757) (647,911)
Less: Other intangibles (51,827)   (54,295)   (61,798)  
Total tangible common equity $ 3,221,399   $ 3,357,788   $ 3,207,202  
Total assets $ 36,942,714 $ 36,507,535 $ 37,049,221
Less: Goodwill (647,757) (647,757) (647,911)
Less: Other intangibles (51,827)   (54,295)   (61,798)  
Total tangible assets $ 36,243,130   $ 35,805,483   $ 36,339,512  
Tangible common equity to tangible assets 8.89 % 9.38 % 8.83 %
Common shares outstanding at end of period [1] 103,228,615 103,169,806 102,711,707
Tangible book value per common share [1] $ 31.21   $ 32.55   $ 31.23  
[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) 31-Mar-13   31-Dec-12   31-Mar-12  
Common stockholders' equity $ 3,920,983 $ 4,059,840 $ 3,916,911
Less: Unrealized gains on available-for-sale securities, net of tax[1] (130,562) (154,568) (196,878)
Less: Disallowed deferred tax assets[2] (433,543) (385,060) (257,440)
Less: Intangible assets:
Goodwill (647,757) (647,757) (647,911)
Other disallowed intangibles (10,626) (14,444) (26,149)
Less: Aggregate adjusted carrying value of non-financial equity investments (1,331) (1,160) (1,175)
Add: Pension liability adjustment, net of tax and accumulated net gains
(losses) on cash flow hedges[3] 222,016   226,159   211,747  
Total Tier 1 common equity $ 2,919,180   $ 3,083,010   $ 2,999,105  
Tier 1 common equity to risk-weighted assets 12.36 % 13.18 % 12.53 %
[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 $135 million of the Corporation's $608 million of net deferred tax assets at March 31, 2013 (December 31, 2012 - $118 million and $541 million, respectively; March 31, 2012 - $138 million and $424 million, respectively), were included without limitation in regulatory capital pursuant to the risk-based capital guidelines, while approximately $434 million of such assets at March 31, 2013 (December 31, 2012 - $385 million; March 31, 2012 - $257 million) exceeded the limitation imposed by these guidelines and, as “disallowed deferred tax assets”, were deducted in arriving at Tier 1 capital. The remaining $39 million of the Corporation's other net deferred tax assets at March 31, 2013 (December 31, 2012 - $38 million; March 31, 2012 - $29 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 First Quarter 2013 Earnings Release
Table O - Financial Information - Westernbank Covered Loans
(Unaudited)
 
 

Revenues

Quarters ended
(In thousands) 31-Mar-13 31-Dec-12 Variance
Interest income on covered loans $ 72,184 $ 76,998 $ (4,814)
FDIC loss share expense:
Amortization of indemnification asset (40,204) (33,704) (6,500)
80% mirror accounting on credit impairment losses [1] 14,045 (2,756) 16,801
80% mirror accounting on discount accretion on unfunded commitments (193) (225) 32
80% mirror accounting on reimbursable expenses 7,783 10,152 (2,369)
Change in true-up payment obligation (6,775) (8,329) 1,554
Other (922) (1,962) 1,040
  Total FDIC loss share expense (26,266) (36,824) 10,558
Other non-interest income 242 281 (39)
Total revenues 46,160 40,455 5,705
Provision for loan losses 17,556 (3,445) 21,001
Total revenues less provision for loan losses $ 28,604 $ 43,900 $ (15,296)
[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

Quarters ended
(In millions) 31-Mar-13 31-Dec-12 Variance
Covered loans $ 3,513 $ 3,832 $ (319)
FDIC loss share asset 1,394 1,540 (146)
 
 

Activity in the carrying amount and accretable yield of covered loans accounted for under ASC 310-30

 
Quarters ended
    31-Mar-13 31-Dec-12
(In thousands) Accretable yield Carrying amount of loans Accretable yield Carrying amount of loans
Beginning balance $ 1,451,669 $ 3,491,759 $ 1,470,882 $ 3,627,209
Accretion (64,990) 64,990 (71,103) 71,103
Changes in expected cash flows (14,544) - 51,890 -
Collections / charge-offs - (399,086) - (206,553)
Ending balance 1,372,135 3,157,663 1,451,669 3,491,759
  Allowance for loan losses - ASC 310-30 covered loans - (91,573) - (95,407)
Ending balance, net of allowance for loan losses $ 1,372,135 $ 3,066,090 $ 1,451,669 $ 3,396,352
 
 

Activity in the carrying amount of the FDIC indemnity asset

 
Quarters ended
(In thousands)   31-Mar-13   31-Dec-12
Balance at beginning of period $ 1,399,098 $ 1,559,057
Amortization (40,204) (33,704)
Credit impairment losses to be covered under loss sharing agreements 14,045 (2,756)
Decrease due to reciprocal accounting on the discount accretion on unfunded commitments (193) (225)
Reimbursable expenses to be covered under loss sharing agreements 7,783 10,152
Net payments to (from) FDIC under loss sharing agreements 107 (134,277)
Other adjustments attributable to FDIC loss sharing agreements   (44)   851
Balance at end of period   $ 1,380,592   $ 1,399,098
 
 

Activity in the remaining FDIC loss share asset amortization

 
Quarters ended
(In thousands)   31-Mar-13   31-Dec-12
Balance at beginning of period $ 141,800 $ 96,424
Amortization (40,204) (33,704)
Impact of lower projected losses   27,086   79,080
Balance at end of period   $ 128,682   $ 141,800
 

Popular, Inc.
Investor Relations:
Carlos Vázquez, 787-756-3982
Chief Financial Officer, Senior Executive Vice President
or
Media Relations:
Teruca Rullán, 787-281-5170 or 917-679-3596/mobile
Senior Vice President, Corporate Communications

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