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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Popular Inc | NASDAQ:BPOP | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-1.23 | -1.43% | 84.99 | 83.32 | 86.35 | 86.38 | 84.89 | 85.85 | 289,728 | 21:04:37 |
Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP) reported a net income of $62.6 million and adjusted net income of $90.5 million for the quarter ended September 30, 2014, compared to net loss of $511.3 million and adjusted net income of $86.2 million for the quarter ended June 30, 2014.
Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: "In the third quarter Popular reached important milestones, such as the repayment of TARP and continued the restructuring of our U.S. operations, completing the sale of our Illinois and Central Florida operations. These accomplishments come in concert with another period of stable results and credit quality, reflecting our ability to operate successfully even under challenging conditions".
Earnings Highlights (Unaudited) Quarters ended Nine months ended (Dollars in thousands, except per share information) 30-Sep-14 30-Jun-14 30-Sep-13 30-Sep-14 30-Sep-13 Net interest income (expense) $ 326,421 $ (59,381 ) $ 331,012 $ 618,211 $ 990,067 Provision for loan losses – non-covered loans 68,166 50,074 48,715 172,362 486,783 Provision for loan losses – covered loans [1] 12,463 11,604 17,433 49,781 60,489 Net interest income (expense) after provision for loan losses 245,792 (121,059 ) 264,864 396,068 442,795 FDIC loss share expense (4,864 ) (55,261 ) (14,866 ) (84,331 ) (44,887 ) Other non-interest income 129,194 118,050 301,575 367,482 650,624 Operating expenses 310,640 275,439 308,292 863,678 917,381 Income (loss) from continuing operations before income tax 59,482 (333,709 ) 243,281 (184,459 ) 131,151 Income tax expense (benefit) 26,667 (4,124 ) 17,768 45,807 (276,489 ) Income (loss) from continuing operations $ 32,815 $ (329,585 ) $ 225,513 $ (230,266 ) $ 407,640 Income (loss) from discontinued operations, net of tax $ 29,758 $ (181,729 ) $ 3,622 $ (132,066 ) $ 28,656 Net income (loss) $ 62,573 $ (511,314 ) $ 229,135 $ (362,332 ) $ 436,296 Net income (loss) applicable to common stock $ 61,643 $ (512,245 ) $ 228,204 $ (365,124 ) $ 433,504 Net income (loss) per common share from continuing operations - Basic $ 0.31 $ (3.21 ) $ 2.18 $ (2.27 ) $ 3.94 Net income (loss) per common share from continuing operations - Diluted $ 0.31 $ (3.21 ) $ 2.18 $ (2.27 ) $ 3.93 Net income (loss) per common share from discontinued operations - Basic $ 0.29 $ (1.77 ) $ 0.04 $ (1.28 ) $ 0.28 Net income (loss) per common share from discontinued operations - Diluted $ 0.29 $ (1.77 ) $ 0.04 $ (1.28 ) $ 0.28 [1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.
Significant events
On July 23, 2014, the Corporation also completed the repurchase of the outstanding warrant initially issued to the U.S. Treasury under the TARP Capital Purchase Program in 2008. The warrant represented the right to purchase 2,093,284 shares of the Corporation’s common stock at an exercise price of $67 per share with an original term of 10 years. The Corporation and the U.S. Treasury agreed upon a repurchase price of $3.0 million for the warrant. With the completion of this transaction, the Corporation completed its exit from the TARP Capital Purchase Program.
In connection with the repayment of TARP on July 2, 2014, the Corporation accelerated the related amortization of the discount and deferred costs amounting to $414.1 million, which is reflected as part of interest expense in the consolidated statement of operations, during the second quarter of 2014.
The Corporation continues its strategy of centralizing certain back office operations in Puerto Rico and New York. The Corporation incurred $8.3 million in restructuring charges during the third quarter of 2014. Over the course of the fourth quarter of 2014 and early in 2015, an additional $41 million in restructuring charges are expected to be incurred, comprised of $22 million in severance and retention payments and $19 million in operational set-up costs and lease cancelations. Upon the completion of the regional sales and the centralization of operations in the first half of 2015, annual operating expenses are expected to decrease by approximately $40 million, after the reorganization is complete. This decrease in expenses is expected to offset the reduction in revenues that will result from the sale of the regional operations.
In connection with the restructuring of its U.S. mainland operations, the Corporation is also taking steps to restructure its balance sheet and funding strategies. As part of the strategy, during the third quarter of 2014, the Corporation sold approximately $94.2 million in securities available for sale and refinanced approximately $638 million in long term structured repos in the U.S. with a yield of 4.41% and replaced them with lower cost short-term repos of a similar amount. The fees associated with the refinancing of these repos were $39.7 million, of which $20.7 million were recorded as interest expense during the third quarter of 2014, with remainder to be recorded during the fourth quarter of 2014.
The Corporation also sold or entered into agreements to sell certain of its legacy and classified loans in the U.S. for an aggregate of approximately $220.7 million which resulted in a net loss of approximately $12.0 million in the quarter, which is reflected in the provision for loan losses.
The decision to sell three of its U.S. regional operations resulted in the discontinuance of each of these respective operations. As required by US GAAP, current and prior periods presented in the consolidated statement of operations as well as financial information covering income and expense amounts presented in this earnings release has been retrospectively adjusted for the impact of the discontinued operations for comparative purposes. The consolidated statement of financial condition and related financial information for prior periods included in this earnings release do not reflect the reclassification of BPNA’s assets and liabilities to discontinued operations. Refer to Table P for a detail of the net loss, assets and liabilities from the discontinued operations. Also, refer to Table Q for details of the restructuring charges incurred during the quarter ended September 30, 2014.
The following table reflects the results of operations for the third quarter of 2014, with adjustments to exclude the impact of significant events.
Quarter ended (Unaudited) 30-Sep-14 (In thousands) Actual Results (US GAAP) BPNA Reorganization [2] Income Tax Adjustments [3] Indemnification Asset Adjustment [4] Adjusted Results (Non-GAAP) Net interest income $ 326,421 $ (20,663 ) $ - $ - $ 347,084 Provision for loan losses – non-covered loans 68,166 11,950 - - 56,216 Provision for loan losses – covered loans [1] 12,463 - - - 12,463 Net interest income (expense) after provision for loan losses 245,792 (32,613 ) - - 278,405 FDIC loss share expense (4,864 ) - - 15,046 (19,910 ) Other non-interest income 129,194 - - - 129,194 Restructuring costs 8,290 8,290 - - - Other operating expenses 302,350 - - - 302,350 Income (loss) from continuing operations before income tax 59,482 (40,903 ) - 15,046 85,339 Income tax expense 26,667 - 20,048 3,009 3,610 Income (loss) from continuing operations $ 32,815 $ (40,903 ) $ (20,048 ) $ 12,037 $ 81,729 Income (loss) from discontinued operations, net of tax $ 29,758 $ 20,949 $ - $ - $ 8,809 Net income (loss) $ 62,573 $ (19,954 ) $ (20,048 ) $ 12,037 $ 90,538 [1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements. [2] Includes losses on bulk sales and reclassifications to loans held-for-sale of classified and legacy loans for an aggregated net loss $12.0 million, loss on the refinancing of structured repos for $20.7 million recorded as interest expense, restructuring cost of $8.3 million and the net gain of $25.8 million on the sale of the Central Florida and Illinois regional operations, which was offset by costs directly associated with the unwinding of the regions subject to the sales for $4.8 million. [3] As disclosed last quarter, on July 1, 2014, the Government of Puerto Rico approved an amendment to the Internal Revenue Code, which, among other things, changed the income tax rate for capital gains from 15% to 20%. As a result, the Corporation recognized an income tax expense of $20.0 million, mainly related to the deferred tax liability associated with the portfolio acquired from Westernbank. [4] The FDIC indemnity asset amortization included a positive adjustment of $15.0 million to reverse the impact of accelerated amortization expense recorded in prior periods. Refer to Non-Interest section for further details.
Quarter ended (Unaudited) 30-Jun-14 (In thousands)
Actual Results(US GAAP)
TARP repaymentdiscountamortization andIncome Taxadjustments [2]
BPNAReorganization [3]
Adjusted Results(Non-GAAP)
Net interest (expense) income $ (59,381 ) $ (414,068 ) $ - $ 354,687 Provision for loan losses – non-covered loans 50,074 - - 50,074 Provision for loan losses – covered loans [1] 11,604 - - 11,604 Net interest (expense) income after provision for loan losses (121,059 ) (414,068 ) - 293,009 FDIC loss share expense (55,261 ) - - (55,261 ) Other non-interest income 118,050 - - 118,050 Restructuring costs 4,574 - 4,574 - Other operating expenses 270,865 - - 270,865 (Loss) income from continuing operations before income tax (333,709 ) (414,068 ) (4,574 ) 84,933 Income tax (benefit) expense (4,124 ) (14,524 ) - 10,400 (Loss) income from continuing operations $ (329,585 ) $ (399,544 ) $ (4,574 ) $ 74,533 (Loss) income from discontinued operations, net of tax $ (181,729 ) $ - $ (193,363 ) $ 11,634 Net (loss) income $ (511,314 ) $ (399,544 ) $ (197,937 ) $ 86,167 [1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements. [2] Income tax adjustments include a benefit of approximately $23.4 million related to a Closing Agreement with the PR Department of Treasury, completed during the second quarter of 2014 and the negative impact of the deferred tax asset valuation allowance of approximately $8.9 million recorded at the Holding Company, due to the difference in the tax treatment of the interest expense related to the TARP funds and the newly issued $450 million senior notes. Refer to Income taxes section for further details. [3] Adjustments included within Loss from discontinued operations include approximately $186.5 million of goodwill impairment charge and $6.9 million in transaction costs, which include severance payment expenses, legal and other professional services, incurred in connection with the agreements to sell the U.S. regional operations. Refer to Table P for a detail of the net loss from discontinued operations. Adjustments within operating expenses are related to restructuring charges incurred in connection with the reorganization of PCB. Refer to Table Q for a detail of restructuring charges. Quarters ended (Unaudited) Adjusted Results Non-GAAP (In thousands) 30-Sep-14 30-Jun-14 Variance Net interest income $ 347,084 $ 354,687 $ (7,603 ) Provision for loan losses – non-covered loans 56,216 50,074 6,142 Provision for loan losses – covered loans [1] 12,463 11,604 859 Net interest income after provision for loan losses 278,405 293,009 (14,604 ) FDIC loss share expense (19,910 ) (55,261 ) 35,351 Other non-interest income 129,194 118,050 11,144 Restructuring costs - - - Other operating expenses 302,350 270,865 31,485 Income from continuing operations before income tax 85,339 84,933 406 Income tax expense 3,610 10,400 (6,790 ) Income from continuing operations $ 81,729 $ 74,533 $ 7,196 Income from discontinued operations, net of tax 8,809 11,634 $ (2,825 ) Net income (loss) $ 90,538 $ 86,167 $ 4,371 [1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.
Net interest income
For the quarter ended September 30, 2014, the Corporation had a net interest income of $326.4 million and an adjusted net interest income of $347.1 million, excluding the impact of the $20.7 million expense related to the refinancing of structured repos, compared to a net interest expense of $59.4 million for the previous quarter. Excluding the impact of the accelerated amortization of the discount and deferred costs of $414.1 million associated with the TARP trust preferred securities, net interest income was $354.7 million, for the second quarter of 2014. Net interest margin was 4.36% for the third quarter of 2014, compared to (0.77%) for the previous quarter. Adjusted net interest margin was 4.64%, compared to 4.68% for the second quarter of 2014. The main drivers of the adjusted decrease in the net interest income of $7.6 million, or four basis points, were:
BPPR’s net interest margin was 5.25%, a decrease of twenty five basis points from the previous quarter. Net interest income amounted to $315.7 million for the quarter ended September 30, 2014, compared with $334.0 million for the previous quarter. The decrease in the net interest income was mainly due to the above mentioned decrease in interest income from covered loans and lower volume of commercial loans.
BPNA earned $26.4 million in net interest income for the quarter ended September 30, 2014. Excluding the impact of the repos refinancing, the net interest income was $47.1 million, compared with $48.7 million in the previous quarter. Net interest margin was 1.82% for the quarter. The adjusted net interest margin for the quarter was 3.23%, compared to 3.25% in the previous quarter. The decrease in net interest income was mostly the result of a lower volume of mortgage loans due to portfolio amortization and lower yield on commercial loans.
Non-interest income
Non-interest income was $124.3 million for the third quarter of 2014, an increase of $61.5 million when compared with the second quarter. The FDIC indemnity asset amortization for the third quarter of 2014 included a benefit of approximately $15.0 million to reverse the impact of accelerated amortization expense recorded in prior periods. This amount will be recognized as expense over the remaining portion of the Loss Sharing Agreement that expires in the quarter ending June 30, 2015. Excluding this impact, non-interest income increased by $46.5 million compared to the second quarter of 2014, driven primarily by the following items:
These positive variances were partially offset by:
Refer to Table B for further details.
Financial Impact of FDIC-Assisted Transaction (Unaudited) Quarters ended Nine months ended (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 30-Sep-14 30-Sep-13Income Statement
Interest income on covered loans $ 68,251 $ 82,975 $ 71,631 $ 232,324 $ 213,952 Total FDIC loss share expense (4,864 ) (55,261 ) (14,866 ) (84,331 ) (44,887 ) Other non-interest income - - 109 - 593 Provision for loan losses 12,463 11,604 17,433 49,781 60,489 Total revenues less provision for loan losses $ 50,924 $ 16,110 $ 39,441 $ 98,212 $ 109,169Balance Sheet
Loans covered under loss-sharing agreements with FDIC $ 2,654,263 $ 2,736,102 $ 3,076,009 FDIC loss share asset 681,106 751,553 1,324,711 FDIC true-up payment obligation 126,473 127,551 124,092
See additional details on accounting for FDIC-Assisted transaction in Table O.
Operating expenses
Operating expenses increased by $35.2 million when compared with the second quarter of 2014. Excluding the impact of the significant events related to the BPNA reorganization, operating expenses increased by $31.5 million compared to the second quarter of 2014, driven primarily by:
These increases were partially offset by:
Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, amounted to $25.8 million for the third quarter of 2014, compared with $10.1 million for the second quarter of 2014. The increase was principally due to higher losses on sales of OREO’s and higher write-downs on mortgage and commercial properties at BPPR, discussed above.
Full-time equivalent employees (“FTEs”), including discontinued operations, were 7,848 as of September 30, 2014, compared with 8,032 as of June 30, 2014, and 8,094 as of September 30, 2013.
For a breakdown of operating expenses by category refer to table B.
Income taxes
Income tax expense amounted to $26.7 million for the third quarter of 2014, compared to a benefit of $4.1 million for the previous quarter.
On July 1, 2014, the Government of Puerto Rico approved an amendment to the Internal Revenue Code, which, among other things, changed the income tax rate for capital gains from 15% to 20%. As a result, the Corporation recognized an income tax expense of approximately $20.0 million during the third quarter of 2014, mainly related to the deferred tax liability associated with the portfolio acquired from Westernbank. On an adjusted basis, the income tax provision amounted to $3.6 million, compared to $10.4 million for the previous quarter.
During the third quarter of 2014, the Corporation recorded a favorable adjustment of approximately $6.1 million in connection with filing its tax returns for the year 2013. Also, the Corporation reversed approximately $3.6 million of reserves for uncertain tax positions due to the expiration of the statute of limitations in the Puerto Rico operations. Excluding these adjustments, the adjusted income tax expense would have been $13.3 million, for an effective tax rate of approximately 16% on the adjusted pre-tax income.
Credit Quality
The following table presents non-performing assets information:
Non-Performing Assets (Unaudited) (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 Total non-performing loans held-in-portfolio, excluding covered loans $ 621,945 $ 639,735 $ 617,573 Non-performing loans held-for-sale 19,728 4,426 2,099 Other real estate owned (“OREO”), excluding covered OREO 135,256 139,420 135,502 Total non-performing assets, excluding covered assets 776,929 783,581 755,174 Covered loans and OREO 166,533 171,955 190,554 Total non-performing assets $ 943,462 $ 955,536 $ 945,728 Net charge-offs for the quarter (excluding covered loans) $ 40,469 $ 46,201 $ 57,892 Ratios (excluding covered loans): Non-covered loans held-in-portfolio (1) $ 19,359,216 $ 19,635,224 $ 21,427,183 Non-performing loans held-in-portfolio to loans held-in-portfolio (1) 3.21 % 3.26 % 2.88 % Allowance for loan losses to loans held-in-portfolio 2.69 2.68 2.46 Allowance for loan losses to non-performing loans, excluding loans held-for-sale 83.88 82.26 85.19 [1] During the quarter ended June 30, 2014 approximately $1.8 billion in loans held-in-portfolio were reclassified to the discontinued operations, of which $9.5 million were in non-performing status as of June 30, 2014 and $48 thousand were in non-performing status as of September 30, 2014. Refer to Table H for additional information.Provision for Loan Losses (Unaudited) Quarters ended Nine months ended (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 30-Sep-14 30-Sep-13 Provision (reversal) for loan losses - non-covered loans: BPPR $ 61,868 $ 74,860 $ 50,475 $ 190,643 $ 485,228 BPNA 6,298 (24,786 ) (1,760 ) (18,281 ) 1,555 Total provision for loan losses - non-covered loans 68,166 50,074 48,715 172,362 486,783 Provision for loan losses - covered loans 12,463 11,604 17,433 49,781 60,489 Total provision for loan losses $ 80,629 $ 61,678 $ 66,148 $ 222,143 $ 547,272
Credit Quality
The Corporation’s asset quality generally continued to improve during the third quarter of 2014, as evidenced by declines in both non-performing loans (“NPLs”) and net charge-offs (“NCOs”). The BPNA segment continued to reflect strong credit quality led by the improved risk profile of its loan portfolios, further strengthened by the divesture and reclassification to discontinued operations of its regional operations in California, Illinois and Central Florida as well as certain legacy and classified assets. In the BPPR segment, stable trends continued during the quarter, but the Corporation continues to monitor potential risks associated with Puerto Rico’s economic and fiscal conditions.
The following presents credit quality performance for the third quarter of 2014 for the Corporation’s non-covered portfolios. Unless otherwise noted, all credit metrics for the third quarter of 2014 are from continuing operations.
44,678
[1]
Total non-performing loans held-in-portfolio, excluding covered loans 592,229 573,806 441,253 Allowance / non-covered loans held-in-portfolio 3.09 % 2.94 % 2.55 % Quarters ended BPNA 30-Sep-14 30-Jun-14 30-Sep-13 Provision for loan losses (reversal of provision) - Continuing operations $ 6,298 $ (24,786 ) $ (1,760 ) Provision for loan losses (reversal of provision) - Discontinued operations - - 6,515 Net charge-offs (recoveries) - Continuing operations 1,787 2,866 7,183 Net charge-offs (recoveries) - Discontinued operations - - 6,031 Total non-performing loans held-in-portfolio 29,716 65,929 176,320 Allowance / non-covered loans held-in-portfolio 0.91 % 1.59 % 2.20 %BPPR Segment
BPNA Segment
Total assets decreased by $2.5 billion from the second quarter of 2014, driven by:
These decreases were partially offset by:
Total liabilities decreased by $2.5 billion from the second quarter of 2014, driven by:
Stockholders’ equity increased by $37.9 million from the second quarter of 2014, mainly as a result of the net income for the quarter of $62.6 million, partially offset by an increase of $19.8 million in net unrealized loss on investment securities available-for-sale. Refer to Table G for capital ratios.
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 and the impact of proposed capital standards on our capital ratios; (v) the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our businesses, business practices and cost of operations; (vi) regulatory approvals that may be necessary to undertake certain actions or consummate strategic transactions such as acquisitions and dispositions; (vii) 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; (viii) the performance of the stock and bond markets; (ix) competition in the financial services industry; (x) additional Federal Deposit Insurance Corporation assessments; and (xi) possible legislative, tax or regulatory changes. 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, 2013, 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 among the top 50 U.S. banks by assets. 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, 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 Wednesday, October 22, 2014 at 10:30 a.m. Eastern Standard 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 1-866-235-1201 or 1-412-902-4127.
A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Thursday, October 30, 2014. The replay dial in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10052964.
Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table A - Selected Ratios and Other Information Table B - Consolidated Statement of Operations Table C - Consolidated Statement of Financial Condition Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE Table F - Mortgage Banking Activities and Other Service Fees Table G - Loans and Deposits Table H - Non-Performing Assets Table I - Activity in Non-Performing Loans Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS Table N - Reconciliation to GAAP Financial Measures Table O - Financial Information - Westernbank Covered Loans Table P - Financial Information from Discontinued Operations Table Q - Restructuring Charges
POPULAR, INC. Financial Supplement to Third Quarter 2014 Earnings Release Table A - Selected Ratios and Other Information (Unaudited) Quarters ended Nine months ended 30-Sep-14 30-Jun-14 30-Sep-13 30-Sep-14 30-Sep-13 Basic EPS from continuing operations $ 0.31 $ (3.21 ) $ 2.18 $ (2.27 ) $ 3.94 Basic EPS from discontinued operations $ 0.29 $ (1.77 ) $ 0.04 $ (1.28 ) $ 0.28 Total Basic EPS $ 0.60 $ (4.98 ) $ 2.22 $ (3.55 ) $ 4.22 Diluted EPS from continuing operations $ 0.31 $ (3.21 ) $ 2.18 $ (2.27 ) $ 3.93 Diluted EPS from discontinued operations $ 0.29 $ (1.77 ) $ 0.04 $ (1.28 ) $ 0.28 Total Diluted EPS $ 0.60 $ (4.98 ) $ 2.22 $ (3.55 ) $ 4.21 Average common shares outstanding 102,953,328 102,781,438 102,714,262 102,845,402 102,666,570 Average common shares outstanding - assuming dilution 103,152,916 102,781,438 103,017,443 102,845,402 103,014,674 Common shares outstanding at end of period 103,448,206 103,472,979 103,327,146 103,448,206 103,327,146 Market value per common share $ 29.44 $ 34.18 $ 26.25 $ 29.44 $ 26.25 Market capitalization - (In millions) $ 3,046 $ 3,537 $ 2,712 $ 3,046 $ 2,712 Return on average assets 0.71 % (5.66 )% 2.51 % (1.35 )% 1.60 % Return on average common equity 5.75 % (43.04 )% 21.64 % (10.68 )% 14.38 % Net interest margin [2] 4.64 % 4.68 % 4.46 % 4.67 % 4.44 % Common equity per share $ 41.07 $ 40.69 $ 42.04 $ 41.07 $ 42.04 Tangible common book value per common share (non-GAAP) [1] $ 36.24 $ 35.84 $ 35.32 $ 36.24 $ 35.32 Tangible common equity to tangible assets (non-GAAP) [1] 11.16 % 10.28 % 10.32 % 11.16 % 10.32 % Tier 1 risk-based capital [3] 16.93 % 19.23 % 18.54 % 16.93 % 18.54 % Total risk-based capital [3] 18.20 % 20.69 % 19.82 % 18.20 % 19.82 % Tier 1 leverage [3] 11.14 % 13.07 % 12.26 % 11.14 % 12.26 % Tier 1 common equity to risk-weighted assets (non-GAAP) [1] [3] 14.79 % 13.51 % 14.20 % 14.79 % 14.20 % [1] Refer to Table N for Non-GAAP reconciliations. [2] Not on a taxable equivalent basis. For the quarter ended September 30, 2014, excludes the impact of the $20.7 million fees related to repos refinancing. For the quarter ended June 30, 2014, excludes the impact of the $414.1 million TARP discount amortization. US GAAP Net interest margin was 4.36% for the third quarter, compared to (0.77)% for the previous quarter. Refer to Tables D & E for reconciliation. [3] Capital ratios for the current quarter are estimated.
POPULAR, INC. Financial Supplement to Third Quarter 2014 Earnings Release Table B - Consolidated Statement of Operations (Unaudited) Quarters ended Variance Quarter ended Variance Nine months ended (In thousands, except per share information) 30-Sep-14 30-Jun-14
Q3 2014vs.Q2 2014
30-Sep-13Q3 2014vs.Q3 2013
30-Sep-14 30-Sep-13 Interest income: Loans $ 362,592 $ 380,986 $ (18,394 ) $ 366,267 $ (3,675 ) $ 1,121,180 $ 1,097,081 Money market investments 1,007 1,131 (124 ) 848 159 3,111 2,632 Investment securities 33,154 33,989 (835 ) 33,561 (407 ) 102,270 107,490 Trading account securities 4,446 5,344 (898 ) 5,242 (796 ) 15,047 16,212 Total interest income 401,199 421,450 (20,251 ) 405,918 (4,719 ) 1,241,608 1,223,415 Interest expense: Deposits 26,533 26,223 310 29,115 (2,582 ) 79,614 96,176 Short-term borrowings 28,955 8,892 20,063 9,563 19,392 46,887 29,111 Long-term debt 19,290 445,716 (426,426 ) 36,228 (16,938 ) 496,896 108,061 Total interest expense 74,778 480,831 (406,053 ) 74,906 (128 ) 623,397 233,348 Net interest income (expense) 326,421 (59,381 ) 385,802 331,012 (4,591 ) 618,211 990,067 Provision for loan losses - non-covered loans 68,166 50,074 18,092 48,715 19,451 172,362 486,783 Provision for loan losses - covered loans 12,463 11,604 859 17,433 (4,970 ) 49,781 60,489 Net interest income (expense) after provision for loan losses 245,792 (121,059 ) 366,851 264,864 (19,072 ) 396,068 442,795 Service charges on deposit accounts 40,585 39,237 1,348 40,517 68 119,181 123,056 Other service fees 54,839 56,468 (1,629 ) 57,041 (2,202 ) 164,125 169,264 Mortgage banking activities 14,402 3,788 10,614 18,892 (4,490 ) 21,868 57,270 Net (loss) gain and valuation adjustments on investment securities (1,763 ) - (1,763 ) - (1,763 ) (1,763 ) 5,856 Trading account profit (loss) 740 1,055 (315 ) (6,607 ) 7,347 3,772 (11,936 ) Net gain (loss) on sale of loans, including valuation adjustments on loans held-for-sale 15,593 9,659 5,934 2,374 13,219 29,645 (56,054 ) Adjustments (expense) to indemnity reserves on loans sold (9,480 ) (7,454 ) (2,026 ) (2,387 ) (7,093 ) (27,281 ) (30,162 ) FDIC loss share (expense) income (4,864 ) (55,261 ) 50,397 (14,866 ) 10,002 (84,331 ) (44,887 ) Other operating income 14,278 15,297 (1,019 ) 191,745 (177,467 ) 57,935 393,330 Total non-interest income 124,330 62,789 61,541 286,709 (162,379 ) 283,151 605,737 Operating expenses: Personnel costs Salaries 71,166 69,149 2,017 70,474 692 209,353 206,681 Commissions, incentives and other bonuses 14,738 12,862 1,876 14,060 678 40,699 43,537 Pension, postretirement and medical insurance 9,282 7,532 1,750 13,744 (4,462 ) 25,515 41,968 Other personnel costs, including payroll taxes 9,356 9,557 (201 ) 10,074 (718 ) 32,376 30,106 Total personnel costs 104,542 99,100 5,442 108,352 (3,810 ) 307,943 322,292 Net occupancy expenses 21,203 20,267 936 21,386 (183 ) 62,830 62,937 Equipment expenses 12,370 12,044 326 11,387 983 35,826 34,492 Other taxes 15,369 13,543 1,826 17,680 (2,311 ) 42,575 44,433 Professional fees 67,649 67,024 625 69,237 (1,588 ) 201,672 203,989 Communications 6,455 6,425 30 6,290 165 19,565 19,236 Business promotion 13,062 16,038 (2,976 ) 14,809 (1,747 ) 40,486 42,751 FDIC deposit insurance 9,511 10,480 (969 ) 15,143 (5,632 ) 30,969 42,056 Loss on early extinguishment of debt - - - 3,388 (3,388 ) - 3,388 Other real estate owned (OREO) expenses 19,745 3,410 16,335 16,632 3,113 29,595 70,156 Credit and debit card processing, volume, interchange and other expenses 5,659 5,640 19 4,816 843 16,495 14,617 Other operating expenses 24,759 14,869 9,890 17,182 7,577 56,781 51,065 Amortization of intangibles 2,026 2,025 1 1,990 36 6,077 5,969 Restructuring costs 8,290 4,574 3,716 - 8,290 12,864 - Total operating expenses 310,640 275,439 35,201 308,292 2,348 863,678 917,381 Income (loss) from continuing operations before income tax 59,482 (333,709 ) 393,191 243,281 (183,799 ) (184,459 ) 131,151 Income tax expense (benefit) 26,667 (4,124 ) 30,791 17,768 8,899 45,807 (276,489 ) Income (loss) from continuing operations 32,815 (329,585 ) 362,400 225,513 (192,698 ) (230,266 ) 407,640 Income (loss) from discontinued operations, net of tax 29,758 (181,729 ) 211,487 3,622 26,136 (132,066 ) 28,656 Net income (loss) $ 62,573 $ (511,314 ) $ 573,887 $ 229,135 $ (166,562 ) $ (362,332 ) $ 436,296 Net income (loss) applicable to common stock $ 61,643 $ (512,245 ) $ 573,888 $ 228,204 $ (166,561 ) $ (365,124 ) $ 433,504 Net income (loss) per common share - basic: Net income (loss) from continuing operations $ 0.31 $ (3.21 ) $ 3.52 $ 2.18 $ (1.87 ) $ (2.27 ) $ 3.94 Net income (loss) from discontinued operations $ 0.29 $ (1.77 ) $ 2.06 $ 0.04 $ 0.25 $ (1.28 ) $ 0.28 Net income (loss) per common share - basic $ 0.60 $ (4.98 ) $ 5.58 $ 2.22 $ (1.62 ) $ (3.55 ) $ 4.22 Net income (loss) per common share - diluted: Net income (loss) from continuing operations $ 0.31 $ (3.21 ) $ 3.52 $ 2.18 $ (1.87 ) $ (2.27 ) $ 3.93 Net income (loss) from discontinued operations $ 0.29 $ (1.77 ) $ 2.06 $ 0.04 $ 0.25 $ (1.28 ) $ 0.28 Net income (loss) per common share - diluted $ 0.60 $ (4.98 ) $ 5.58 $ 2.22 $ (1.62 ) $ (3.55 ) $ 4.21Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table C - Consolidated Statement of Financial Condition (Unaudited) Variance Q3 2014 vs. (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 Q2 2014 Assets: Cash and due from banks $ 321,914 $ 362,572 $ 368,590 $ (40,658 ) Money market investments 1,053,121 1,666,944 961,788 (613,823 ) Trading account securities, at fair value 145,343 345,823 338,848 (200,480 ) Investment securities available-for-sale, at fair value 5,727,766 5,653,992 5,136,618 73,774 Investment securities held-to-maturity, at amortized cost 112,893 114,280 140,355 (1,387 ) Other investment securities, at lower of cost or realizable value 161,168 168,125 198,864 (6,957 ) Loans held-for-sale, at lower of cost or fair value 178,008 97,010 124,532 80,998 Loans held-in-portfolio: Loans not covered under loss sharing agreements with the FDIC 19,450,677 19,726,234 21,520,054 (275,557 ) Loans covered under loss sharing agreements with the FDIC 2,654,263 2,736,102 3,076,009 (81,839 ) Less: Unearned income 91,461 91,010 92,871 451 Allowance for loan losses 611,375 624,911 642,928 (13,536 ) Total loans held-in-portfolio, net 21,402,104 21,746,415 23,860,264 (344,311 ) FDIC loss share asset 681,106 751,553 1,324,711 (70,447 ) Premises and equipment, net 497,111 492,382 519,623 4,729 Other real estate not covered under loss sharing agreements with the FDIC 135,256 139,420 135,502 (4,164 ) Other real estate covered under loss sharing agreements with the FDIC 151,382 155,805 159,968 (4,423 ) Accrued income receivable 116,746 119,520 122,881 (2,774 ) Mortgage servicing assets, at fair value 152,282 151,951 161,445 331 Other assets 1,634,819 2,292,360 1,803,478 (657,541 ) Goodwill 461,246 461,246 647,757 - Other intangible assets 37,777 40,122 46,892 (2,345 ) Assets from discontinued operations 1,129,053 1,828,382 - (699,329 ) Total assets $ 34,099,095 $ 36,587,902 $ 36,052,116 $ (2,488,807 ) Liabilities and Stockholders’ Equity: Liabilities: Deposits: Non-interest bearing $ 5,521,415 $ 5,666,685 $ 5,762,554 $ (145,270 ) Interest bearing 18,944,690 19,234,467 20,632,500 (289,777 ) Total deposits 24,466,105 24,901,152 26,395,054 (435,047 ) Federal funds purchased and assets sold under agreements to repurchase 1,650,712 2,074,676 1,793,208 (423,964 ) Other short-term borrowings 1,200 31,200 826,200 (30,000 ) Notes payable 1,723,573 2,360,089 1,544,696 (636,516 ) Other liabilities 852,351 880,602 1,099,073 (28,251 ) Liabilities from discontinued operations 1,106,762 2,079,742 - (972,980 ) Total liabilities 29,800,703 32,327,461 31,658,231 (2,526,758 ) Stockholders’ equity: Preferred stock 50,160 50,160 50,160 - Common stock 1,036 1,035 1,034 1 Surplus 4,171,890 4,173,616 4,155,244 (1,726 ) Retained earnings 229,306 167,663 445,330 61,643 Treasury stock (3,933 ) (1,742 ) (877 ) (2,191 ) Accumulated other comprehensive loss (150,067 ) (130,291 ) (257,006 ) (19,776 ) Total stockholders’ equity 4,298,392 4,260,441 4,393,885 37,951 Total liabilities and stockholders’ equity $ 34,099,095 $ 36,587,902 $ 36,052,116 $ (2,488,807 )
Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER (Unaudited) Quarter ended Quarter ended Quarter ended Variance Variance 30-Sep-14 30-Jun-14 30-Sep-13 Q3 2014 vs. Q2 2014 Q3 2014 vs. Q3 2013 ($ 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 $ 7,501 $ 38.6 2.06 % $ 7,839 $ 40.4 2.07 % $ 6,813 $ 39.7 2.32 % ($338 ) ($1.8 ) (0.01 ) % $ 688 ($1.1 ) (0.26 ) % Loans not covered under loss sharing agreements with the FDIC: Commercial 8,239 99.6 4.80 8,446 102.2 4.86 8,332 102.6 4.88 (207 ) (2.6 ) (0.06 ) (93 ) (3.0 ) (0.08 ) Construction 201 2.5 4.86 175 2.4 5.55 313 3.7 4.68 26 0.1 (0.69 ) (112 ) (1.2 ) 0.18 Mortgage 6,646 84.0 5.05 6,691 85.3 5.10 6,633 81.7 4.93 (45 ) (1.3 ) (0.05 ) 13 2.3 0.12 Consumer 3,905 98.4 10.00 3,894 97.9 10.08 3,776 95.7 10.06 11 0.5 (0.08 ) 129 2.7 (0.06 ) Lease financing 545 9.8 7.20 546 10.2 7.43 537 10.9 8.08 (1 ) (0.4 ) (0.23 ) 8 (1.1 ) (0.88 ) Total loans not covered under loss sharing agreements with the FDIC 19,536 294.3 5.99 19,752 298.0 6.05 19,591 294.6 5.98 (216 ) (3.7 ) (0.06 ) (55 ) (0.3 ) 0.01 Loans covered under loss sharing agreements with the FDIC 2,727 68.3 9.95 2,811 83.0 11.83 3,119 71.6 9.13 (84 ) (14.7 ) (1.88 ) (392 ) (3.3 ) 0.82 Total loans 22,263 362.6 6.48 22,563 381.0 6.77 22,710 366.2 6.41 (300 ) (18.4 ) (0.29 ) (447 ) (3.6 ) 0.07 Total interest earning assets 29,764 $ 401.2 5.36 % 30,402 $ 421.4 5.56 % 29,523 $ 405.9 5.47 % (638 ) ($20.2 ) (0.20 ) % 241 ($4.7 ) (0.11 ) % Allowance for loan losses (629 ) (627 ) (603 ) (2 ) (26 ) Other non-interest earning assets 4,416 4,598 5,275 (182 ) (859 ) Assets from discontinued operations 1,473 1,863 1,979 (390 ) (506 ) Total average assets $ 35,024 $ 36,236 $ 36,174 $ (1,212 ) $ (1,150 ) Liabilities and Stockholders' Equity: Interest bearing deposits: NOW and money market $ 4,876 $ 3.9 0.32 % $ 4,897 $ 3.8 0.32 % $ 4,671 $ 3.4 0.29 % $ (21 ) $ 0.1 - % $ 205 $ 0.5 0.03 % Savings 6,740 3.7 0.22 6,713 3.6 0.22 6,615 3.5 0.21 27 0.1 - 125 0.2 0.01 Time deposits 7,569 18.9 0.99 7,709 18.8 0.98 7,701 22.2 1.14 (140 ) 0.1 0.01 (132 ) (3.3 ) (0.15 ) Total interest bearing deposits 19,185 26.5 0.55 19,319 26.2 0.54 18,987 29.1 0.61 (134 ) 0.3 0.01 198 (2.6 ) (0.06 ) Borrowings[1] 3,591 27.6 3.06 3,614 40.5 4.49 4,403 45.8 4.15 (23 ) (12.9 ) (1.43 ) (812 ) (18.2 ) (1.09 ) Total interest bearing liabilities 22,776 54.1 0.94 22,933 66.7 1.17 23,390 74.9 1.28 (157 ) (12.6 ) (0.23 ) (614 ) (20.8 ) (0.34 ) Net interest spread 4.42 % 4.39 % 4.19 % 0.03 % 0.23 % Non-interest bearing deposits 5,464 5,451 5,386 13 78 Other liabilities 860 915 963 (55 ) (103 ) Liabilities from discontinued operations 1,618 2,113 2,200 (495 ) (582 ) Stockholders' equity 4,306 4,824 4,235 (518 ) 71 Total average liabilities and stockholders' equity $ 35,024 $ 36,236 $ 36,174 $ (1,212 ) $ (1,150 ) Adjusted net interest income / margin non-taxable equivalent basis $ 347.1 4.64 % $ 354.7 4.68 % $ 331.0 4.46 % ($7.6 ) (0.04 ) % $ 16.1 0.18 % Impact of fees related to repos refinancing $ 20.7 Accelerated amortization TARP discount and related deferred costs - $ 414.1 Net interest income (expense)/margin non-taxable equivalent basis $ 326.4 4.36 % ($59.4 ) (0.77 ) % (1) Borrowing expense for the third quarter, including the fees related to repos refinancing, was 5.34%, while borrowing expense including the impact of the accelerated TARP amortization in the second quarter was 50.31%.
Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE (Unaudited) Nine months ended Nine months ended 30-Sep-14 30-Sep-13 Variance Average Income / Yield / Average Income / Yield / Average Income / Yield / ($ amounts in millions; yields not on a taxable equivalent basis) balance Expense Rate balance Expense Rate balance Expense Rate Assets: Interest earning assets: Money market, trading and investment securities $ 7,635 $ 120.4 2.10 % $ 6,908 $ 126.3 2.44 % $ 727 ($5.9 ) (0.34 ) % Loans not covered under loss sharing agreements with the FDIC: Commercial 8,390 302.6 4.82 8,260 298.5 4.83 130 4.1 (0.01 ) Construction 187 9.7 6.93 330 10.7 4.34 (143 ) (1.0 ) 2.59 Mortgage 6,676 256.2 5.12 6,688 256.2 5.11 (12 ) - 0.01 Consumer 3,854 290.1 10.07 3,741 284.6 10.17 113 5.5 (0.10 ) Lease financing 545 30.3 7.40 541 33.1 8.16 4 (2.8 ) (0.76 ) Total loans not covered under loss sharing agreements with the FDIC 19,652 888.9 6.04 19,560 883.1 6.03 92 5.8 0.01 Loans covered under loss sharing agreements with the FDIC 2,823 232.3 11.00 3,299 214.0 8.67 (476 ) 18.3 2.33 Total loans 22,475 1,121.2 6.66 22,859 1,097.1 6.41 (384 ) 24.1 0.25 Total interest earning assets 30,110 $ 1,241.6 5.51 % 29,767 $ 1,223.4 5.49 % 343 $ 18.2 0.02 % Allowance for loan losses (624 ) (613 ) (11 ) Other non-interest earning assets 4,566 5,186 (620 ) Assets from discontinued operations 1,762 2,005 (243 ) Total average assets $ 35,814 $ 36,345 ($531 ) Liabilities and Stockholders' Equity: Interest bearing deposits: NOW and money market $ 4,837 $ 11.5 0.32 % $ 4,668 $ 12.0 0.34 % $ 169 ($0.5 ) (0.02 ) % Savings 6,715 10.9 0.22 6,559 11.7 0.24 156 (0.8 ) (0.02 ) Time deposits 7,605 57.2 1.01 8,013 72.5 1.21 (408 ) (15.3 ) (0.20 ) Total interest bearing deposits 19,157 79.6 0.56 19,240 96.2 0.67 (83 ) (16.6 ) (0.11 ) Borrowings [1] 3,690 109.0 3.94 4,459 137.1 4.10 (769 ) (28.1 ) (0.16 ) Total interest bearing liabilities 22,847 188.6 1.10 23,699 233.3 1.31 (852 ) (44.7 ) (0.21 ) Net interest spread 4.41 % 4.18 % 0.23 % Non-interest bearing deposits 5,499 5,339 160 Other liabilities 889 1,012 (123 ) Liabilities from discontinued operations 1,957 2,214 (257 ) Stockholders' equity 4,622 4,081 541 Total average liabilities and stockholders' equity $ 35,814 $ 36,345 ($531 ) Adjusted net interest income / margin non-taxable equivalent basis $ 1,053.0 4.67 % $ 990.1 4.44 % $ 62.9 0.23 % Impact of fees related to repos refinancing $ 20.7 Accelerated amortization of TARP discount and related deferred costs 414.1 Net interest income/margin non-taxable equivalent basis $ 618.2 2.75 % (1) Borrowing expense including the fees related to repos refinancing and the impact of the accelerated TARP amortization was 19.65%.
Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table F - Mortgage Banking Activities and Other Service Fees (Unaudited) Mortgage Banking Activities Variance Quarters ended Q3 2014 vs. Q3 2014 vs. Nine months ended Variance (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 Q2 2014 Q3 2013 30-Sep-14 30-Sep-13 2014 vs. 2013 Mortgage servicing fees, net of fair value adjustments: Mortgage servicing fees $ 11,091 $ 10,558 $ 11,543 $ 533 $ (452 ) $ 32,397 $ 34,099 $ (1,702 ) Mortgage servicing rights fair value adjustments (2,588 ) (7,740 ) 3,879 5,152 (6,467 ) (18,424 ) (6,862 ) (11,562 ) Total mortgage servicing fees, net of fair value adjustments 8,503 2,818 15,422 5,685 (6,919 ) 13,973 27,237 (13,264 ) Net gain on sale of loans, including valuation on loans held-for-sale 7,466 8,189 3,559 (723 ) 3,907 22,831 16,968 5,863 Trading account (loss) profit: Unrealized gains (losses) on outstanding derivative positions 13 22 (865 ) (9 ) 878 (725 ) (265 ) (460 ) Realized (losses) gains on closed derivative positions (1,580 ) (7,241 ) 776 5,661 (2,356 ) (14,211 ) 13,330 (27,541 ) Total trading account (loss) profit (1,567 ) (7,219 ) (89 ) 5,652 (1,478 ) (14,936 ) 13,065 (28,001 ) Total mortgage banking activities $ 14,402 $ 3,788 $ 18,892 $ 10,614 $ (4,490 ) $ 21,868 $ 57,270 $ (35,402 ) Other Service Fees Variance Quarters ended Q3 2014 vs. Q3 2014 vs. Nine months ended Variance (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 Q2 2014 Q3 2013 30-Sep-14 30-Sep-13 2014 vs. 2013 Other service fees: Debit card fees $ 10,673 $ 11,000 $ 10,667 $ (327 ) $ 6 $ 32,217 $ 31,127 $ 1,090 Insurance fees 12,322 12,406 12,409 (84 ) (87 ) 36,447 35,566 881 Credit card fees 17,078 16,985 16,734 93 344 50,146 48,553 1,593 Sale and administration of investment products 6,605 7,456 8,981 (851 ) (2,376 ) 20,518 27,941 (7,423 ) Trust fees 4,711 4,566 4,148 145 563 13,740 12,760 980 Other fees 3,450 4,055 4,102 (605 ) (652 ) 11,057 13,317 (2,260 ) Total other service fees $ 54,839 $ 56,468 $ 57,041 $ (1,629 ) $ (2,202 ) $ 164,125 $ 169,264 $ (5,139 )
Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table G - Loans and Deposits (Unaudited) Loans - Ending Balances Variance (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13
Q3 2014 vs.Q2 2014
Q3 2014 vs.Q3 2013
Loans not covered under FDIC loss sharing agreements: Commercial $ 8,058,714 $ 8,155,547 $ 9,845,477 $ (96,833 ) $ (1,786,763 ) Construction 211,850 179,059 293,220 32,791 (81,370 ) Legacy [1] 91,015 162,941 235,645 (71,926 ) (144,630 ) Lease financing 550,514 546,868 539,290 3,646 11,224 Mortgage 6,555,337 6,664,448 6,613,133 (109,111 ) (57,796 ) Consumer 3,891,786 3,926,361 3,900,418 (34,575 ) (8,632 ) Total non-covered loans held-in-portfolio $ 19,359,216 $ 19,635,224 $ 21,427,183 $ (276,008 ) $ (2,067,967 ) Loans covered under FDIC loss sharing agreements 2,654,263 2,736,102 3,076,009 (81,839 ) (421,746 ) Total loans held-in-portfolio $ 22,013,479 $ 22,371,326 $ 24,503,192 $ (357,847 ) $ (2,489,713 ) Loans held-for-sale: Commercial $ 33,658 $ 2,895 $ - $ 30,763 $ 33,658 Construction - 949 - (949 ) - Legacy [1] 31,823 - 1,680 31,823 30,143 Mortgage 106,832 93,166 122,852 13,666 (16,020 ) Consumer 5,695 - - 5,695 5,695 Total loans held-for-sale $ 178,008 $ 97,010 $ 124,532 $ 80,998 $ 53,476 Total loans $ 22,191,487 $ 22,468,336 $ 24,627,724 $ (276,849 ) $ (2,436,237 ) [1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment. Note: Loans from discontinued operations as of September 30,2014 and June 30, 2014 are presented as part of “Assets from discontinued operations” in the Consolidated Statement of Financial Condition. Deposits - Ending Balances Variance (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13Q3 2014 vs.Q2 2014
Q3 2014 vs.Q3 2013
Demand deposits [1] $ 6,326,220 $ 6,412,632 $ 6,410,458 $ (86,412 ) $ (84,238 ) Savings, NOW and money market deposits (non-brokered) 10,251,602 10,276,715 11,335,441 (25,113 ) (1,083,839 ) Savings, NOW and money market deposits (brokered) 386,573 543,032 552,053 (156,459 ) (165,480 ) Time deposits (non-brokered) 5,636,443 5,790,324 6,181,676 (153,881 ) (545,233 ) Time deposits (brokered CDs) 1,865,267 1,878,449 1,915,426 (13,182 ) (50,159 ) Total deposits $ 24,466,105 $ 24,901,152 $ 26,395,054 $ (435,047 ) $ (1,928,949 ) [1] Includes interest and non-interest demand bearing deposits. Note: Deposits from discontinued operations as of September 30, 2014 and June 30, 2014 are presented as part of “Liabilities from discontinued operations” in the Consolidated Statement of Financial Condition.Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table H - Non-Performing Assets (Unaudited) Variance (Dollars in thousands) 30-Sep-14
As a % ofloans HIP bycategory
30-Jun-14As a % ofloans HIP bycategory
30-Sep-13As a % ofloans HIP bycategory
Q3 2014 vs.Q2 2014
Q3 2014 vs.Q3 2013
Non-accrual loans: Commercial $ 252,331 3.1 % $ 278,133 3.4 % $ 316,040 3.2 % $ (25,802 ) $ (63,709 ) Construction 19,148 9.0 21,456 12.0 28,782 9.8 (2,308 ) (9,634 ) Legacy [1] 5,648 6.2 8,323 5.1 24,206 10.3 (2,675 ) (18,558 ) Lease financing 3,168 0.6 2,873 0.5 3,716 0.7 295 (548 ) Mortgage 295,125 4.5 286,320 4.3 203,208 3.1 8,805 91,917 Consumer 46,525 1.2 42,630 1.1 41,621 1.1 3,895 4,904Total non-performing loans held-in- portfolio, excluding covered loans [2]
621,945 3.2 % 639,735 3.3 % 617,573 2.9 % (17,790 ) 4,372 Non-performing loans held-for-sale [3] 19,728 4,426 2,099 15,302 17,629Other real estate owned (“OREO”), excluding covered OREO
135,256 139,420 135,502 (4,164 ) (246 )Total non-performing assets, excluding covered assets
776,929 783,581 755,174 (6,652 ) 21,755 Covered loans and OREO 166,533 171,955 190,554 (5,422 ) (24,021 ) Total non-performing assets $ 943,462 $ 955,536 $ 945,728 $ (12,074 ) $ (2,266 ) Accruing loans past due 90 days or more [4] $ 426,459 $ 420,251 $ 414,189 $ 6,208 $ 12,270 Ratios excluding covered loans:Non-performing loans held-in-portfolio to loans held-in-portfolio
3.21 % 3.26 % 2.88 %Allowance for loan losses to loans held-in-portfolio
2.69 2.68 2.46Allowance for loan losses to non-performing loans, excluding loans held-for-sale
83.88 82.26 85.19 Ratios including covered loans: Non-performing assets to total assets 2.77 % 2.61 % 2.62 %Non-performing loans held-in-portfolio to loans held-in-portfolio
2.89 2.93 2.64Allowance for loan losses to loans held-in-portfolio
2.78 2.79 2.62Allowance for loan losses to non-performing loans, excluding loans held-for-sale
95.96 95.28 99.53 [1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment. [2] Total non-performing loans held-in-portfolio, excluding covered loans, excludes $48 thousand and $9.5 million, respectively, in discontinued operations as of September 30, 2014 and June 30, 2014. [3] Non-performing loans held-for-sale as of September 30, 2014 consisted of $14.7 million in mortgage loans, $427 thousand in commercial loans and $4.6 million in consumer loans and $10 thousand in legacy loans (June 30, 2014 - $582 thousand in mortgage loans, $3 million in commercial loans and $1 million in construction loans; September 30, 2013 - $1.7 million in legacy loans and $0.4 million in mortgage loans). [4] 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 $125 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of September 30, 2014 (June 30, 2014 - $124 million; September 30, 2013 - $113 million).Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table I - Activity in Non-Performing Loans (Unaudited) Commercial loans held-in-portfolio: Quarter ended Quarter ended 30-Sep-14 30-Jun-14 (In thousands) BPPR BPNA Popular, Inc. BPPR BPNA Popular, Inc. Beginning balance NPLs $
253,552
$ 24,581 $278,133
$ 245,931 $ 60,998 $ 306,929 Plus: New non-performing loans 23,410 4,541 27,951 30,068 7,726 37,794 Advances on existing non-performing loans - - - - 951 951 Less: Non-performing loans transferred to OREO (2,706 ) - (2,706 ) (4,103 ) - (4,103 ) Non-performing loans charged-off (10,085 ) (3,103 ) (13,188 ) (14,377 ) (5,470 ) (19,847 ) Loans returned to accrual status / loan collections(19,746
) (2,649 )(22,395
) (3,967 ) (15,475 ) (19,442 ) Loans transferred to held-for-sale - (22,967 ) (22,967 ) - (16,130 ) (16,130 )Non-performing loans transferred from (to) discontinued operations
- 7,503 7,503 - (8,019 ) (8,019 ) Ending balance NPLs $ 244,425 $ 7,906 $ 252,331 $ 253,552 $ 24,581 $ 278,133 Construction loans held-in-portfolio: Quarter ended Quarter ended 30-Sep-14 30-Jun-14 (In thousands) BPPR BPNA Popular, Inc. BPPR BPNA Popular, Inc. Beginning balance NPLs $ 21,456 $ - $ 21,456 $ 22,464 $ - $ 22,464 Plus: New non-performing loans - - - 952 - 952 Less: Non-performing loans charged-off (985 ) - (985 ) (42 ) - (42 ) Loans returned to accrual status / loan collections (1,323 ) - (1,323 ) (1,918 ) - (1,918 ) Ending balance NPLs $ 19,148 $ - $ 19,148 $ 21,456 $ - $ 21,456Mortgage loans held-in-portfolio: Quarter ended Quarter ended 30-Sep-14 30-Jun-14 (In thousands) BPPR BPNA Popular, Inc. BPPR BPNA Popular, Inc. Beginning balance NPLs $
262,356
$23,964
$286,320
$ 229,801 $ 22,220 $ 252,021 Plus: New non-performing loans 95,207 2,802 98,009 105,113 4,677 109,790 Less: Non-performing loans transferred to OREO (3,062 ) (870 ) (3,932 ) (2,845 ) (661 ) (3,506 ) Non-performing loans charged-off (11,309 ) (395 ) (11,704 ) (8,266 ) (649 ) (8,915 ) Loans returned to accrual status / loan collections(53,003
)(686
)(53,689
) (61,447 ) (1,623 ) (63,070 ) Loans transferred to held-for-sale - (13,123 ) (13,123 ) - - - Reclassification to consumer loans (6,756 ) - (6,756 ) - - - Ending balance NPLs $ 283,433 $ 11,692 $ 295,125 $ 262,356 $ 23,964 $ 286,320 Legacy loans held-in-portfolio: Quarter ended Quarter ended 30-Sep-14 30-Jun-14 (In thousands) BPPR BPNA Popular, Inc. BPPR BPNA Popular, Inc. Beginning balance NPLs $ - $ 8,323 $ 8,323 $ - $ 11,608 $ 11,608 Plus: New non-performing loans - 1,852 1,852 - 2,201 2,201 Advances on existing non-performing loans - 149 149 - 49 49 Less: Non-performing loans transferred to OREO - (189 ) (189 ) - - - Non-performing loans charged-off - (2,109 ) (2,109 ) - (816 ) (816 ) Loans returned to accrual status / loan collections - (975 ) (975 ) - (2,227 ) (2,227 ) Loans transferred to held-for-sale - (2,529 ) (2,529 ) - (1,272 ) (1,272 )Non-performing loans transferred from (to) discontinued operations
- 1,126 1,126 - (1,220 ) (1,220 ) Ending balance NPLs $ - $ 5,648 $ 5,648 $ - $ 8,323 $ 8,323 Total non-performing loans held-in-portfolio (excluding consumer loans): Quarter ended Quarter ended 30-Sep-14 30-Jun-14 (In thousands) BPPR BPNA Popular, Inc. BPPR BPNA Popular, Inc. Beginning balance NPLs $537,364
$56,868
$594,232
$ 498,196 $ 94,826 $ 593,022 Plus: New non-performing loans 118,617 9,195 127,812 136,133 14,604 150,737 Advances on existing non-performing loans - 149 149 - 1,000 1,000 Less: Non-performing loans transferred to OREO (5,768 ) (1,059 ) (6,827 ) (6,948 ) (661 ) (7,609 ) Non-performing loans charged-off (22,379 ) (5,607 ) (27,986 ) (22,685 ) (6,935 ) (29,620 ) Loans returned to accrual status / loan collections(74,072
)(4,310
)(78,382
) (67,332 ) (19,325 ) (86,657 ) Loans transferred to held-for-sale - (38,619 ) (38,619 ) - (17,402 ) (17,402 )Non-performing loans transferred from (to) discontinued operations
- 8,629 8,629 - (9,239 ) (9,239 ) Reclassification to consumer loans (6,756 ) - (6,756 ) - - - Ending balance NPLs $ 547,006 $ 25,246 $ 572,252 $ 537,364 $ 56,868 $ 594,232Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios (Unaudited) Quarter ended Quarter ended Quarter ended 30-Sep-14 30-Jun-14 30-Sep-13 (Dollars in thousands)
Non-coveredloans
Coveredloans
TotalNon-coveredloans
Coveredloans
TotalNon-coveredloans
Coveredloans
Total Balance at beginning of period $ 526,246 $ 98,665 $ 624,911 $ 542,575 $ 97,773 $ 640,348 $ 528,762 $ 106,457 $ 635,219 Provision for loan losses - Continuing operations 68,166 12,463 80,629 50,074 11,604 61,678 48,715 17,433 66,148 Provision for loan losses - Discontinued operations - - - - - - 6,515 - 6,515 594,412 111,128 705,540 592,649 109,377 702,026 583,992 123,890 707,882 Net loans charged-off (recovered): BPPR Commercial 1,011 16,590 17,601 9,309 5,438 14,747 16,145 2,533 18,678 Construction (1,237 ) 4,066 2,829 (615 ) 3,700 3,085 (4,906 ) 2,893 (2,013 ) Lease financing 1,410 (1 ) 1,409 1,144 1 1,145 470 - 470 Mortgage 13,330 1,809 15,139 9,926 2,251 12,177 11,393 1,579 12,972 Consumer 24,168 (1,024 ) 23,144 23,571 (678 ) 22,893 21,576 57 21,633 Total BPPR 38,682 21,440 60,122 43,335 10,712 54,047 44,678 7,062 51,740 BPNA Commercial (893 ) - (893 ) 910 - 910 (484 ) - (484 ) Construction (59 ) - (59 ) - - - - - - Legacy [1] 221 - 221 (1,205 ) - (1,205 ) 2,319 - 2,319 Mortgage 26 - 26 393 - 393 1,335 - 1,335 Consumer 2,492 - 2,492 2,768 - 2,768 4,013 - 4,013 Discontinued operations - - - - - - 6,031 - 6,031 Total BPNA 1,787 - 1,787 2,866 - 2,866 13,214 - 13,214 Total loans charged-off (recovered) - Popular, Inc. 40,469 21,440 61,909 46,201 10,712 56,913 57,892 7,062 64,954 Net write-downs (32,256 ) - (32,256 ) - - - - - - Net write-downs related to loans transferred to discontinued operations - - - (20,202 ) - (20,202 ) - - - Balance at end of period $ 521,687 $ 89,688 $ 611,375 $ 526,246 $ 98,665 $ 624,911 $ 526,100 $ 116,828 $ 642,928 POPULAR, INC. Annualized net charge-offs to average loans held-in-portfolio 0.83 % 1.12 % 0.94 % 1.01 % 1.08 % 1.06 % Provision for loan losses to net charge-offs [2] 1.39 x 1.11 x 1.08 x 1.08 x 0.95 x 1.12 x BPPR Annualized net charge-offs to average loans held-in-portfolio 0.98 % 1.30 % 1.09 % 1.16 % 1.15 % 1.11 % Provision for loan losses to net charge-offs [2]1.60
x1.24
x 1.73 x 1.60 x 1.13 x 1.31 x BPNA Annualized net charge-offs (recoveries) to average loans held-in-portfolio 0.19 % 0.30 % 0.91 % Provision for loan losses to net charge-offs N.M. N.M. 0.36 x [1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.[2] Excluding provision for loan losses and net write-down related to the BPNA legacy and classified asset sales during the quarter ended September 30, 2014.
N.M. - Not meaningful.Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED (Unaudited) 30-Sep-14 (Dollars in thousands) Commercial Construction Legacy [3] Mortgage
Leasefinancing
Consumer Total [2] Specific ALLL $ 64,750 $ 133 $ - $ 38,207 $ 698 $ 28,166 $ 131,954 Impaired loans [1] $ 373,501 $ 18,894 $ 2,311 $ 431,806 $ 2,709 $ 116,830 $ 946,051 Specific ALLL to impaired loans [1] 17.34 % 0.70 % - % 8.85 % 25.77 % 24.11 % 13.95 % General ALLL $ 151,681 $ 6,375 $ 4,001 $ 83,314 $ 6,673 $ 137,689 $ 389,733 Loans held-in-portfolio, excluding impaired loans [1] $ 7,685,213 $ 192,956 $ 88,704 $ 6,123,531 $ 547,805 $ 3,774,956 $ 18,413,165 General ALLL to loans held-in-portfolio, excluding impaired loans [1] 1.97 % 3.30 % 4.51 % 1.36 % 1.22 % 3.65 % 2.12 % Total ALLL $ 216,431 $ 6,508 $ 4,001 $ 121,521 $ 7,371 $ 165,855 $ 521,687 Total non-covered loans held-in-portfolio [1] $ 8,058,714 $ 211,850 $ 91,015 $ 6,555,337 $ 550,514 $ 3,891,786 $ 19,359,216 ALLL to loans held-in-portfolio [1] 2.69 % 3.07 % 4.40 % 1.85 %1.34
% 4.26 % 2.69 % [1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. [2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of September 30, 2014 the general allowance on the covered loans amounted to $89.7 million, while the specific reserve amounted to $4 thousand. [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. 30-Jun-14 (Dollars in thousands) Commercial Construction Legacy [3] MortgageLeasefinancing
Consumer Total [2] Specific ALLL $ 36,597 $ 883 $ - $ 53,815 $ 688 $ 29,043 $ 121,026 Impaired loans [1] $ 317,746 $ 21,094 $ 2,536 $ 466,243 $ 2,653 $ 122,106 $ 932,378 Specific ALLL to impaired loans [1] 11.52 % 4.19 % - % 11.54 % 25.93 % 23.79 % 12.98 % General ALLL $ 165,912 $ 4,459 $ 9,343 $ 84,113 $ 5,271 $ 136,122 $ 405,220 Loans held-in-portfolio, excluding impaired loans [1] $ 7,837,801 $ 157,965 $ 160,405 $ 6,198,205 $ 544,215 $ 3,804,255 $ 18,702,846 General ALLL to loans held-in-portfolio, excluding impaired loans [1] 2.12 % 2.82 % 5.82 % 1.36 % 0.97 % 3.58 % 2.17 % Total ALLL $ 202,509 $ 5,342 $ 9,343 $ 137,928 $ 5,959 $ 165,165 $ 526,246 Total non-covered loans held-in-portfolio [1] $ 8,155,547 $ 179,059 $ 162,941 $ 6,664,448 $ 546,868 $ 3,926,361 $ 19,635,224 ALLL to loans held-in-portfolio [1] 2.48 % 2.98 % 5.73 % 2.07 % 1.09 % 4.21 % 2.68 % [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, 2014 the general allowance on the covered loans amounted to $98.7 million, while the specific reserve amounted to $8 thousand. [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 $ 28,153 $ (750 ) $ - $ (15,608 ) $ 10 $ (877 ) $ 10,928 Impaired loans $ 55,755 $ (2,200 ) $ (225 ) $ (34,437 ) $ 56 $ (5,276 ) $ 13,673 General ALLL $ (14,231 ) $ 1,916 $ (5,342 ) $ (799 ) $ 1,402 $ 1,567 $ (15,487 ) Loans held-in-portfolio, excluding impaired loans $ (152,588 ) $ 34,991 $ (71,701 ) $ (74,674 ) $ 3,590 $ (29,299 ) $ (289,681 ) Total ALLL $ 13,922 $ 1,166 $ (5,342 ) $ (16,407 ) $ 1,412 $ 690 $ (4,559 ) Total non-covered loans held-in-portfolio $ (96,833 ) $ 32,791 $ (71,926 ) $ (109,111 ) $ 3,646 $ (34,575 ) $ (276,008 )Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS (Unaudited) 30-Sep-14 Puerto Rico (In thousands) Commercial Construction Mortgage Lease financing Consumer Total Allowance for credit losses: Specific ALLL non-covered loans $ 64,750 $ 133 $ 37,491 $ 698 $ 27,723 $ 130,795 General ALLL non-covered loans 140,906 5,534 81,728 6,673 123,816 358,657 ALLL - non-covered loans 205,656 5,667 119,219 7,371 151,539 489,452 Specific ALLL covered loans 4 - - - - 4 General ALLL covered loans 36,411 7,193 42,524 - 3,556 89,684 ALLL - covered loans 36,415 7,193 42,524 - 3,556 89,688 Total ALLL $ 242,071 $ 12,860 $ 161,743 $ 7,371 $ 155,095 $ 579,140 Loans held-in-portfolio: Impaired non-covered loans $ 373,049 $ 18,894 $ 424,336 $ 2,709 $ 114,850 $ 933,838 Non-covered loans held-in-portfolio, excluding impaired loans 5,896,673 129,889 5,028,786 547,805 3,286,492 14,889,645 Non-covered loans held-in-portfolio 6,269,722 148,783 5,453,122 550,514 3,401,342 15,823,483 Impaired covered loans 2,765 2,419 - - - 5,184 Covered loans held-in-portfolio, excluding impaired loans 1,693,886 72,049 846,472 - 36,672 2,649,079 Covered loans held-in-portfolio 1,696,651 74,468 846,472 - 36,672 2,654,263 Total loans held-in-portfolio $ 7,966,373 $ 223,251 $ 6,299,594 $ 550,514 $ 3,438,014 $ 18,477,746
30-Jun-14 Puerto Rico (In thousands) Commercial Construction Mortgage Lease financing Consumer Total Allowance for credit losses: Specific ALLL non-covered loans $ 36,597 $ 883 $ 39,341 $ 688 $ 28,458 $ 105,967 General ALLL non-covered loans 147,638 4,308 81,058 5,271 122,024 360,299 ALLL - non-covered loans 184,235 5,191 120,399 5,959 150,482 466,266 Specific ALLL covered loans 8 - - - - 8 General ALLL covered loans 46,685 8,996 38,941 - 4,035 98,657 ALLL - covered loans 46,693 8,996 38,941 - 4,035 98,665 Total ALLL $ 230,928 $ 14,187 $ 159,340 $ 5,959 $ 154,517 $ 564,931 Loans held-in-portfolio: Impaired non-covered loans $ 307,762 $ 21,094 $ 414,636 $ 2,653 $ 119,604 $ 865,749 Non-covered loans held-in-portfolio, excluding impaired loans 5,991,218 114,589 5,043,936 544,215 3,296,245 14,990,203 Non-covered loans held-in-portfolio 6,298,980 135,683 5,458,572 546,868 3,415,849 15,855,952 Impaired covered loans 2,823 2,419 - - - 5,242 Covered loans held-in-portfolio, excluding impaired loans 1,743,144 80,344 867,075 - 40,297 2,730,860 Covered loans held-in-portfolio 1,745,967 82,763 867,075 - 40,297 2,736,102 Total loans held-in-portfolio $ 8,044,947 $ 218,446 $ 6,325,647 $ 546,868 $ 3,456,146 $ 18,592,054 Variance (In thousands) Commercial Construction Mortgage Lease financing Consumer Total Allowance for credit losses: Specific ALLL non-covered loans $ 28,153 $ (750 ) $ (1,850 ) $ 10 $ (735 ) $ 24,828 General ALLL non-covered loans (6,732 ) 1,226 670 1,402 1,792 (1,642 ) ALLL - non-covered loans 21,421 476 (1,180 ) 1,412 1,057 23,186 Specific ALLL covered loans (4 ) - - - - (4 ) General ALLL covered loans (10,274 ) (1,803 ) 3,583 - (479 ) (8,973 ) ALLL - covered loans (10,278 ) (1,803 ) 3,583 - (479 ) (8,977 ) Total ALLL $ 11,143 $ (1,327 ) $ 2,403 $ 1,412 $ 578 $ 14,209 Loans held-in-portfolio: Impaired non-covered loans $ 65,287 $ (2,200 ) $ 9,700 $ 56 $ (4,754 ) $ 68,089 Non-covered loans held-in-portfolio, excluding impaired loans (94,545 ) 15,300 (15,150 ) 3,590 (9,753 ) (100,558 ) Non-covered loans held-in-portfolio (29,258 ) 13,100 (5,450 ) 3,646 (14,507 ) (32,469 ) Impaired covered loans (58 ) - - - - (58 ) Covered loans held-in-portfolio, excluding impaired loans (49,258 ) (8,295 ) (20,603 ) - (3,625 ) (81,781 ) Covered loans held-in-portfolio (49,316 ) (8,295 ) (20,603 ) - (3,625 ) (81,839 ) Total loans held-in-portfolio $ (78,574 ) $ 4,805 $ (26,053 ) $ 3,646 $ (18,132 ) $ (114,308 )
Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS (Unaudited) 30-Sep-14 U.S. Mainland (In thousands) Commercial Construction Legacy Mortgage Consumer Total Allowance for credit losses: Specific ALLL $ - $ - $ - $ 716 $ 443 $ 1,159 General ALLL 10,775 841 4,001 1,586 13,873 31,076 Total ALLL $ 10,775 $ 841 $ 4,001 $ 2,302 $ 14,316 $ 32,235 Loans held-in-portfolio: Impaired loans $ 452 $ - $ 2,311 $ 7,470 $ 1,980 $ 12,213 Loans held-in-portfolio, excluding impaired loans 1,788,540 63,067 88,704 1,094,745 488,464 3,523,520 Total loans held-in-portfolio $ 1,788,992 $ 63,067 $ 91,015 $ 1,102,215 $ 490,444 $ 3,535,733 30-Jun-14 U.S. Mainland (In thousands) Commercial Construction Legacy Mortgage Consumer Total Allowance for credit losses: Specific ALLL $ - $ - $ - $ 14,474 $ 585 $ 15,059 General ALLL 18,274 151 9,343 3,055 14,098 44,921 Total ALLL $ 18,274 $ 151 $ 9,343 $ 17,529 $ 14,683 $ 59,980 Loans held-in-portfolio: Impaired loans $ 9,984 $ - $ 2,536 $ 51,607 $ 2,502 $ 66,629 Loans held-in-portfolio, excluding impaired loans 1,846,583 43,376 160,405 1,154,269 508,010 3,712,643 Total loans held-in-portfolio $ 1,856,567 $ 43,376 $ 162,941 $ 1,205,876 $ 510,512 $ 3,779,272 Variance (In thousands) Commercial Construction Legacy Mortgage Consumer Total Allowance for credit losses: Specific ALLL $ - $ - $ - $ (13,758 ) $ (142 ) $ (13,900 ) General ALLL (7,499 ) 690 (5,342 ) (1,469 ) (225 ) (13,845 ) Total ALLL $ (7,499 ) $ 690 $ (5,342 ) $ (15,227 ) $ (367 ) $ (27,745 ) Loans held-in-portfolio: Impaired loans $ (9,532 ) $ - $ (225 ) $ (44,137 ) $ (522 ) $ (54,416 ) Loans held-in-portfolio, excluding impaired loans (58,043 ) 19,691 (71,701 ) (59,524 ) (19,546 ) (189,123 ) Total loans held-in-portfolio $ (67,575 ) $ 19,691 $ (71,926 ) $ (103,661 ) $ (20,068 ) $ (243,539 )
Popular, Inc. Financial Supplement to Third Quarter 2014 Earnings Release Table N - Reconciliation to GAAP Financial Measures (Unaudited) (In thousands, except share or per share information) 30-Sep-14 30-Jun-14 30-Sep-13 Total stockholders’ equity $ 4,298,392 $ 4,260,441 $ 4,393,885 Less: Preferred stock (50,160 ) (50,160 ) (50,160 ) Less: Goodwill (461,246 ) (461,246 ) (647,757 ) Less: Other intangibles (37,777 ) (40,122 ) (46,892 ) Total tangible common equity $ 3,749,209 $ 3,708,913 $ 3,649,076 Total assets $ 34,099,095 $ 36,587,902 $ 36,052,116 Less: Goodwill (461,246 ) (461,246 ) (647,757 ) Less: Other intangibles (37,777 ) (40,122 ) (46,892 ) Total tangible assets $ 33,600,072 $ 36,086,534 $ 35,357,467 Tangible common equity to tangible assets 11.16 % 10.28 % 10.32 % Common shares outstanding at end of period 103,448,206 103,472,979 103,327,146 Tangible book value per common share $ 36.24 $ 35.84 $ 35.32 (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 Common stockholders’ equity $ 4,248,232 $ 4,210,281 $ 4,343,725 Less: Unrealized losses (gains) on available-for-sale securities, net of tax[1] 16,787 (4,071 ) 5,514 Less: Disallowed deferred tax assets[2] (618,141 ) (636,081 ) (643,716 ) Less: Disallowed goodwill and other intangible assets, net of deferred tax liability (444,759 ) (447,182 ) (646,464 ) Less: Aggregate adjusted carrying value of all non-financial equity investments (1,462 ) (1,381 ) (1,398 ) Add: Adjustment of pension and postretirement benefit plans and unrealized gains (losses) on cash flow hedges, net of tax[3] 102,279 103,263 216,274 Total Tier 1 common equity $ 3,302,936 $ 3,224,829 $ 3,273,935 Tier 1 common equity to risk-weighted assets 14.79 % 13.51 % 14.20 % [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 $147 million of the Corporation’s $758 million of net deferred tax assets included as “Other assets” in the consolidated statement of financial condition at September 30, 2014 (June 30, 2014 - $159 million and $789 million, respectively; September 30, 2013 - $160 million and $844 million, respectively), were included without limitation in regulatory capital pursuant to the risk-based capital guidelines, while approximately $618 million of such assets at September 30, 2014 (June 30, 2014 - $636 million; September 30, 2013 - $644 million) exceeded the limitation imposed by these guidelines and, as “disallowed deferred tax assets”, were deducted in arriving at Tier 1 capital. The remaining $(7) million of the Corporation’s other net deferred tax assets at September 30, 2014 (June 30, 2014 - $(6) million; September 30, 2013 - $40 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 liabilities 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 Third Quarter 2014 Earnings Release Table O - Financial Information - Westernbank Covered Loans (Unaudited) Revenues Quarters ended (In thousands) 30-Sep-14 30-Jun-14 Variance Interest income on covered loans $ 68,251 $ 82,975 $ (14,724 ) FDIC loss share expense: Amortization of indemnification asset (42,524 ) (72,095 ) 29,571 Reversal of accelerated amortization in prior periods 15,046 - 15,046 80% mirror accounting on credit impairment losses [1] 9,863 10,372 (509 ) 80% mirror accounting on reimbursable expenses 15,545 11,085 4,460
80% mirror accounting on recoveries on covered assets, including rental income on OREOs, subject to reimbursement to the FDIC
(2,633 ) (3,557 ) 924 Change in true-up payment obligation 1,078 (1,206 ) 2,284 Other (1,239 ) 140 (1,379 ) Total FDIC loss share expense (4,864 ) (55,261 ) 50,397 Total revenues 63,387 27,714 35,673 Provision for loan losses 12,463 11,604 859 Total revenues less provision for loan losses $ 50,924 $ 16,110 $ 34,814 [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. Non-personnel operating expenses Quarters ended (In thousands) 30-Sep-14 30-Jun-14 Variance Professional fees $ 5,164 $ 4,726 $ 438 OREO expenses 11,661 5,249 6,412 Other operating expenses 3,160 2,868 292 Total operating expenses $ 19,985 $ 12,843 $ 7,142 Expense reimbursements from the FDIC may be recorded with a time lag, since these are claimed upon the event of loss or charge-off of the loans which may occur in a subsequent period. Quarterly average assets Quarters ended (In millions) 30-Sep-14 30-Jun-14 Variance Covered loans $ 2,727 $ 2,811 $ (84 ) FDIC loss share asset 687 792 (105 )Activity in the carrying amount and accretable yield of covered loans accounted for under ASC 310-30 Quarters ended 30-Sep-14 30-Jun-14 (In thousands) Accretable yield Carrying amount of loans Accretable yield Carrying amount of loans Beginning balance $ 1,280,758 $ 2,610,664 $ 1,218,212 $ 2,733,122 Accretion (66,017 ) 66,017 (79,863 ) 79,863 Changes in expected cash flows 97,780 - 142,409 - Collections / charge-offs - (148,248 ) - (202,321 ) Ending balance 1,312,521 2,528,433 1,280,758 2,610,664 Allowance for loan losses - ASC 310-30 covered loans - (85,640 ) - (90,892 ) Ending balance, net of allowance for loan losses $ 1,312,521 $ 2,442,793 $ 1,280,758 $ 2,519,772 Activity in the carrying amount of the FDIC indemnity asset Quarters ended (In thousands) 30-Sep-14 30-Jun-14 Balance at beginning of period $ 751,553 $ 833,721 Amortization (42,524 ) (72,095 ) Reversal of accelerated amortization in prior periods 15,046 - Credit impairment losses to be covered under loss sharing agreements 9,863 10,372 Reimbursable expenses to be covered under loss sharing agreements 15,545 11,085 Net payments to (from) FDIC under loss sharing agreements (73,106 ) (31,530 ) Other adjustments attributable to FDIC loss sharing agreements 4,729 - Balance at end of period $ 681,106 $ 751,553 Activity in the remaining FDIC loss share asset amortization Quarters ended (In thousands) 30-Sep-14 30-Jun-14 Balance at beginning of period $ 105,939 $ 71,634 Amortization (42,524 ) (72,095 ) Impact of lower projected losses 3,147 106,400 Balance at end of period $ 66,562 $ 105,939
POPULAR, INC. Financial Supplement to Third Quarter 2014 Earnings Release Table P - Financial Information from Discontinued Operations (Unaudited) Assets and Liabilities from Discontinued Operations (In thousands) 30-Sep-14 30-Jun-14 Variance Cash $ 9,500 $ 18,923 $ (9,423 ) Loans held-for-sale 1,099,673 1,783,998 (684,325 ) Premises and equipment, net 8,596 17,553 (8,957 ) Other assets 11,284 7,908 3,376 Total assets $ 1,129,053 $ 1,828,382 $ (699,329 ) Deposits $ 1,089,046 $ 2,058,309 $ (969,263 ) Short-term borrowings - 2,998 (2,998 ) Other liabilities 17,716 18,435 (719 ) Total liabilities $ 1,106,762 $ 2,079,742 $ (972,980 ) Net assets (liabilities) $ 22,291 $ (251,360 ) $ 273,651 Components of Net Income (Loss) from Discontinued Operations Quarters ended Nine months ended (In thousands) 30-Sep-14 30-Jun-14 30-Sep-13 30-Sep-14 30-Sep-13 Net interest income $ 16,022 $ 19,092 $ 23,195 $ 56,911 $ 66,172 Provision (reversal) for loan losses - - 6,515 (6,764 ) (1,345 ) Gain on sale of regions 25,775 - - 25,775 - Other non-interest income 6,567 9,388 5,250 26,488 13,642 Personnel costs 11,941 12,117 8,487 32,910 25,215 Net occupancy expenses (1,305 ) 2,845 3,325 5,871 9,355 Professional fees 4,916 5,903 2,802 13,612 8,511 Goodwill impairment charge - 186,511 - 186,511 - Other operating expenses 3,054 2,833 3,694 9,100 9,422 Net income (loss) from discontinued operations $ 29,758 $ (181,729 ) $ 3,622 $ (132,066 ) $ 28,656
POPULAR, INC. Financial Supplement to Third Quarter 2014 Earnings Release Table Q - Restructuring Charges (Unaudited) Restructuring Charges Quarters ended (In thousands) 30-Sep-14 30-Jun-14 Variance Personnel costs $ 6,194 $ 3,630 $ 2,564 Net occupancy expenses 152 271 (119 ) Equipment expenses 141 190 (49 ) Professional fees 1,431 448 983 Communications 14 - 14 Other operating expenses 358 35 323 Total restructuring costs $ 8,290 $ 4,574 $ 3,716
Popular, Inc.Investor Relations:Brett Scheiner, 212-417-6721Investor Relations OfficerorMedia Relations:Teruca Rullán, 787-281-5170Mobile: 917-679-3596Senior Vice President, Corporate Communications
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