Popular (BPOP) 8-K Other events

EXHIBIT 99.1

Popular, Inc.

Letter to Shareholders

Popular, Inc.’s net income reached $118.5 million for the first quarter of 2004, an increase of 20%, compared with $99.1 million in the first quarter of 2003. Earnings per common share, basic and diluted, were $0.87 for the quarter ended March 31, 2004, up 18% from $0.74 per common share reported in the same period of 2003. First quarter financial performance resulted in a return on average assets (ROA) and a return on average common equity (ROE) of 1.29% and 17.95%, respectively, compared with 1.21% and 17.39%, respectively, for the first quarter of 2003.

     The Corporation’s net income for the first quarter of 2004, when compared with the same period a year ago, reflected higher net interest income by $31.6 million, or 11%. Popular’s net interest margin, on a taxable equivalent basis, reached 4.12% for the first quarter of 2004, compared with 4.17% in the same period of the previous year. The provision for loan losses decreased by $3.5 million. The results for the first quarter of 2004 included $13.0 million in gains on sale of securities, mostly marketable equity securities, an increase of $11.6 million over the same quarter in the previous year. This favorable variance was partially offset by lower gains on the sale of loans by $10.3 million, mainly in mortgage loans. The Corporation’s operating expenses were $279.7 million in the first quarter of 2004, compared with $263.6 million in the quarter ended March 31, 2003, an increase of $16.1 million, or 6%.

     The Corporation’s total assets reached $38.1 billion at March 31, 2004, compared with $33.7 billion at March 31, 2003, a 13% growth. Loans totaled $23.7 billion at March 31, 2004, compared with $19.9 billion at the same date in the previous year, an increase of $3.8 billion, or 19%, mainly in the mortgage and commercial loan categories. Deposits totaled $18.6 billion at March 31, 2004, compared with $17.6 billion at March 31, 2003, an increase of $1.0 billion, or 5%, distributed among all deposit categories. Stockholders’ equity reached $2.9 billion at March 31, 2004, compared with $2.7 billion at the end of the first quarter of 2003. The increase was mostly associated with earnings retention, partially offset by lower unrealized gains on the securities available-for-sale portfolio.

     Popular, Inc.’s common stock market value was $43.10 per share at March 31, 2004, compared with $33.99 at March 31, 2003. The Corporation had a market capitalization of $5.7 billion at March 31, 2004, compared with $4.5 billion at March 31, 2003.

     Popular’s expansion program gained momentum during the quarter. In March 2004, the Corporation and Quaker City Bancorp, Inc. (NASDAQ: QCBC) jointly announced the signing of a definitive merger agreement pursuant to which Popular, Inc. will acquire all of the common stock of Quaker City Bancorp. The acquisition, subject to regulatory approval, the approval of Quaker City Bancorp’s stockholders, and other customary closing conditions, is expected to be completed in the third calendar quarter of this year. Quaker City Bancorp is a savings and loan holding company for Quaker City Bank, based in Whittier, California. Quaker City Bank operates 27 retail full-service branches in Southern California. At December 31, 2003, Quaker City reported total assets of $1.8 billion and total deposits of $1.1 billion. This transaction reinforces the Corporation’s commitment to serving the needs of individuals and small businesses in the United States and greatly expands the Corporation’s presence in the California region.

     Furthermore, during the quarter, Popular acquired an additional equity stake in Consorcio de Tarjetas Dominicanas in the Dominican Republic, the leading payment network in that country. This initiative contributes to Popular’s growth in the processing business in the Caribbean region. In addition, Popular increased its equity stake in Banco Hipotecario Dominicano in the Dominican Republic from 17.2% to 20%.

     In line with one of the Corporation’s strategic objectives to provide added value by offering integrated technological solutions and financial transaction processing, on April 1, 2004, we announced the creation of a new company, EVERTEC. This new company will be the result of a merger between GM Group, our electronic and processing arm, with the operational and programming services of Banco Popular de Puerto Rico (BPPR). This initiative will allow us to strengthen our services through substantial growth in the processing area and the development of new technological services in Puerto Rico, the Caribbean, Central America and the United States. Also, the initiative will maximize the efficiency of our companies’ infrastructure to avoid the duplication of processes. Félix M. Villamil, Executive Vice President of Popular, Inc., will guide the new group in this challenging endeavor as President of EVERTEC.

     After a successful career of more than 25 years at Popular, Mabel Burckhart, Executive Vice President in charge of Administration, will retire. Mabel made a significant impact at Popular. Her ability to help identify the Bank’s new leadership is her greatest legacy. Every woman in a leadership position in Popular and Puerto Rico walks through the path that she blazed. We are grateful for her insight and leadership throughout the years.

     Andrés Morrell, President of Popular Auto, will retire after 15 years of service with Popular, Inc. and over three decades in the auto leasing and financing industry. We are grateful for his great contributions to the Corporation. Elí Sepúlveda will serve as the new President of Popular Auto. Elí has over 17 years of experience in BPPR and has a remarkable career in commercial and individual credit lending.

     The Board of Directors of Popular Inc. appointed Ramón Lloveras, formerly Chief Operating Officer of Popular Insurance, as the new President of this company. Angela Weyne, the former President and a key player in the establishment of Popular Insurance, will remain as a consultant.

     On April 3, 2004, we announced major organizational changes in the Corporation. David H. Chafey Jr. has been appointed President of BPPR. There is no doubt in my mind that David is more than ready to take on this task. He is a great leader, and will be a great President.

     Also, as part of the reorganization, we announced the creation of a Corporate Leadership Circle, which will consist of David H. Chafey Jr., President of BPPR; Roberto R. Herencia, President of Banco Popular North America; Bill Williams, President of Equity One; Félix M. Villamil, President of EVERTEC; Jorge A. Junquera, Chief Financial Officer; Brunilda Santos de Álvarez, Chief Legal Counsel; Tere Loubriel, in charge of the function now known as People, Communications and Strategic Planning; Amílcar Jordán, leading the Risk Management function; and myself, Chief Executive Officer of Popular, Inc.

     The Board of Directors of BPPR appointed Emilio E. Piñero, in charge of BPPR’s Commercial Area, and Carlos J. Vázquez, in charge of Retail Credit, as Senior Executive Vice Presidents.

     We will continue to attract, hire and develop excellent employees since our people are an integral part for our success. I am confident that our highly experienced and competent team of executive officers, supported by our over 11,000 employees, will strive for long-term performance excellence and will continue to work diligently in implementing sound strategies to ensure success.

Richard L. Carrión
Chairman of the Board
President
Chief Executive Officer

Popular, Inc.

Financial Highlights

	At March 31,							Average for the quarter
Balance Sheet Highlights	2004		2003		Change			2004		2003		Change
(In thousands)
Money market investments	$	899,750	$	1,008,460	$	(108,710	)	$	755,883	$	972,373	$	(216,490	)
Investment and trading securities		11,363,780		10,893,212		470,568			11,097,282		10,909,397		187,885
Loans		23,700,334		19,861,882		3,838,452			22,979,153		19,537,968		3,441,185
Total assets		38,101,986		33,695,291		4,406,695			36,915,835		33,158,518		3,757,317
Deposits		18,602,940		17,637,847		965,093			18,245,681		17,526,977		718,704
Borrowings		15,899,907		12,774,265		3,125,642			15,315,317		12,797,395		2,517,922
Stockholders’ equity		2,949,756		2,672,596		277,160			2,776,307		2,314,620		461,687

	First quarter
Operating Highlights	2004		2003		Change
(In thousands, except per share information)
Net interest income	$	330,714	$	299,106	$	31,608
Provision for loan losses		44,678		48,209		(3,531	)
Fees and other income		145,236		142,815		2,421
Other expenses, net of minority interest		312,768		294,623		18,145
Net income	$	118,504	$	99,089	$	19,415
Net income applicable to common stock	$	115,526	$	98,140	$	17,386
Earnings per common share	$	0.87	$	0.74	$	0.13

	First quarter
Selected Statistical Information	2004			2003
Common Stock Data
Market price
High	$	48.10		$	34.97
Low		43.00			31.95
End		43.10			33.99
Book value at period end		20.78			18.75
Dividends declared		0.27			0.20
Dividend payout ratio		31.06	%		27.45	%
Price/earnings ratio		11.97x			12.50x
Profitability Ratios
Return on assets		1.29	%		1.21	%
Return on common equity		17.95			17.39
Net interest spread (taxable equivalent)		3.76			3.74
Net interest yield (taxable equivalent)		4.12			4.17
Effective tax rate		21.80			23.76
Overhead ratio		40.67			40.40
Efficiency ratio		60.15			59.72
Capitalization Ratios
Equity to assets		7.52	%		6.98	%
Tangible equity to assets		6.97			6.37
Equity to loans		12.08			11.85
Internal capital generation		11.47			12.09
Tier I capital to risk-adjusted assets		12.51			10.96
Total capital to risk-adjusted assets		13.99			12.67
Leverage ratio		7.98			7.02
Credit Quality Ratios
Allowance for losses to loans		1.76	%		1.93	%
Allowance to non-performing assets		68.45			64.25
Allowance to non-performing loans		75.27			69.58
Non-performing assets to loans		2.57			3.01
Non-performing assets to total assets		1.60			1.77
Net charge-offs to average loans		0.70			0.79
Provision to net charge-offs		1.12x			1.25x
Net charge-offs earnings coverage		4.90			4.64

Popular, Inc.

Consolidated Statements of Condition

	March 31,
In thousands	2004			2003
Assets
Cash and due from banks	$	737,599		$	689,090
Money market investments:
Federal funds sold and securities purchased under agreements to resell		896,671			1,004,353
Time deposits with other banks		3,057			4,056
Bankers’ acceptances		22			51
		899,750			1,008,460
Investment securities available-for-sale, at market value		10,186,374			9,928,071
Investment securities held-to-maturity, at amortized cost		260,103			179,737
Other investment securities, at cost		242,281			204,403
Trading account securities, at market value		675,022			581,001
Loans held-for-sale, at lower of cost or market		345,414			317,041
Loans		23,631,218			19,819,521
Less — Unearned income		276,298			274,680
Allowance for loan losses		417,143			383,517
		22,937,777			19,161,324
Premises and equipment		493,613			471,777
Other real estate		55,224			45,759
Accrued income receivable		212,351			202,491
Other assets		838,717			689,449
Goodwill		192,174			184,068
Other intangible assets		25,587			32,620
	$	38,101,986		$	33,695,291
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	3,866,999		$	3,453,971
Interest bearing		14,735,941			14,183,876
		18,602,940			17,637,847
Federal funds purchased and assets sold under agreements to repurchase		5,683,001			6,642,379
Other short-term borrowings		2,697,294			1,296,394
Notes payable		7,394,612			4,566,492
Subordinated notes		125,000			125,000
Preferred beneficial interest in Popular North America’s junior subordinated deferrable interest debentures guaranteed by the Corporation		—			144,000
Other liabilities		649,278			609,343
		35,152,125			31,021,455
Minority interest in consolidated subsidiaries		105			1,240
Stockholders’ equity:
Preferred stock		186,875			186,875
Common stock		838,064			835,528
Surplus		318,342			277,649
Retained earnings		1,681,467			1,372,061
Treasury stock, at cost		(206,437	)		(205,527	)
Accumulated other comprehensive income, net of tax		131,445			206,010
		2,949,756			2,672,596
	$	38,101,986		$	33,695,291

Popular, Inc.

Consolidated Statements of Income

	Quarter ended
	March 31,
Dollars in thousands, except per share information	2004			2003
INTEREST INCOME:
Loans	$	408,496		$	377,933
Money market investments		5,813			7,363
Investment securities		95,032			109,801
Trading account securities		9,401			8,185
		518,742			503,282
INTEREST EXPENSE:
Deposits		78,115			94,037
Short-term borrowings		32,162			40,789
Long-term debt		77,751			69,350
		188,028			204,176
Net interest income		330,714			299,106
Provision for loan losses		44,678			48,209
Net interest income after provision for loan losses		286,036			250,897
Service charges on deposit accounts		41,082			39,839
Other service fees		69,554			69,353
Gain on sale of securities		13,033			1,414
Trading account loss		(2,166	)		(937	)
Gain on sale of loans		6,268			16,589
Other operating income		17,465			16,557
		431,272			393,712
OPERATING EXPENSES:
Personnel costs:
Salaries		101,564			96,036
Profit sharing		5,682			6,245
Pension and other benefits		33,318			30,068
		140,564			132,349
Net occupancy expenses		21,045			20,460
Equipment expenses		27,180			26,350
Other taxes		9,492			9,552
Professional fees		20,086			18,776
Communications		15,433			14,697
Business promotion		16,391			15,970
Printing and supplies		4,571			4,743
Other operating expenses		23,174			18,718
Amortization of intangibles		1,802			2,027
		279,738			263,642
Income before income tax and minority interest		151,534			130,070
Income tax		33,030			30,903
Net gain of minority interest		—			(78	)
NET INCOME	$	118,504		$	99,089
NET INCOME APPLICABLE TO COMMON STOCK	$	115,526		$	98,140
EARNINGS PER COMMON SHARE (BASIC AND DILUTED)	$	0.87		$	0.74

Additional Information

Board of Directors

Richard L. Carrión, Chairman

Antonio Luis Ferré, Vice Chairman **

Juan A. Albors Hernández *

José A. Bechara Bravo *

Juan J. Bermúdez

Francisco J. Carreras *

José B. Carrión Jr.

David H. Chafey Jr.

María Luisa Ferré *

Héctor R. González

Jorge A. Junquera

Guillermo L. Martínez *

Manuel Morales Jr.

Alberto M. Paracchini *

Francisco M. Rexach Jr.

Frederic V. Salerno **

Félix J. Serrallés Nevares Jr.

Jon E. Slater *

Julio E. Vizcarrondo Jr.

Samuel T. Céspedes, Secretary

* Director of Banco Popular de Puerto Rico only

** Director of Popular, Inc. only

Corporate Leadership Circle

Richard L. Carrión, Chairman of the Board, President and Chief Executive Officer

David H. Chafey Jr., Senior Executive Vice President and President of Banco Popular de Puerto Rico

Jorge A. Junquera, Senior Executive Vice President and Chief Financial Officer

Roberto R. Herencia, Executive Vice President and President of Banco Popular North America

Amílcar L. Jordán, Executive Vice President, Risk Management

Tere Loubriel, Executive Vice President, People, Communications and Strategic Planning

Brunilda Santos de Álvarez, Executive Vice President and Chief Legal Counsel

Félix M. Villamil, Executive Vice President and President of EVERTEC, INC.

C.E. (Bill) Williams, Executive Vice President and President of Equity One, Inc.

Shareholders’ Information

Shareholders’ Assistance: Shareholders requiring a change of address, records or information about lost certificates, dividend checks or dividend reinvestment should contact:

Banco Popular de Puerto Rico

Popular Center Building — 11th Floor, Office 1111

Trust Division (724)

209 Muñoz Rivera Ave.

Hato Rey, Puerto Rico 00918

Publications: For printed material (annual reports, 10-K and 10-Q reports), contact Ms. Ileana González at the Comptroller’s Division at (787) 765-9800 ext. 6101, or visit our web site atwww.popularinc.com.

Dividend Reinvestment Plan: The Corporation has a dividend reinvestment plan that provides the shareholder a simple, convenient and cost-effective way to acquire Popular, Inc. common stock.

• Dividends can be automatically reinvested in additional shares at 95% of the Average Market Price.

• Participants may make optional cash payments of at least $25 and not more than $10,000 per calendar month for investment in additional shares.

• No brokerage commissions are charged on purchases under the plan.

• Participant’s funds will be fully invested, because the plan permits fractions of shares to be credited to a participant’s account.

For more information on this plan, contact our Trust Division at (787) 764-1893 or (787) 765-9800 exts. 5637, 5525, 6108 and 6112.

Subsidiaries

Central Office

Popular Center

209 Muñoz Rivera Avenue

San Juan, Puerto Rico 00918

Telephone: (787) 765-9800

Banco Popular de Puerto Rico

Puerto Rico Office

Popular Center

209 Muñoz Rivera Avenue

San Juan, Puerto Rico 00918

Telephone: (787) 765-9800

Virgin Islands Office

193 Estate Altona & Welgunst

St. Thomas, Virgin Islands 00802

Telephone: (340) 693-2777

Banco Popular North America

9600 West Bryn Mawr

Suite 400

Rosemont, Illinois 60018

Telephone: (847) 994-5800

Banco Popular, National Association

8523 Commodity Circle

Suite 100

Orlando, Florida 32819

Telephone: (407) 370-7800

ATH Costa Rica / CreST, S.A.

Tournón Neighborhood, accross to
     newspaper La República,

ATH Building

San José, Costa Rica

Telephone: (011) 506-211-4500

EVERTEC, INC.

1590 Ponce de León Avenue

GM Group Plaza Bldg., Suite 400

San Juan, Puerto Rico 00926

Telephone: (787) 751-4343

Equity One, Inc.

301 Lippincott Drive

Marlton, New Jersey 08053

Telephone: (856) 396-2600

Levitt Mortgage

Galería San Patricio

B-5 Tabonuco Street

Suite 207

Guaynabo, Puerto Rico 00968

Telephone: (787) 749-8787

Popular Mortgage, Inc.

268 Ponce de León Avenue

San Juan, Puerto Rico 00918

Telephone: (787) 753-0245

Popular FS, LLC

301 Lippincott Drive

Marlton, New Jersey 08053

Telephone: (856) 396-2600

Popular Auto, Inc.

M-1061 Federico Costa Street

Tres Monjitas Industrial Development

San Juan, Puerto Rico 00918

Telephone: (787) 751-4848

Popular Leasing, USA

16280 Westwood

Business Park Drive

Ellisville, Missouri 63021

Telephone: (636) 391-0777

Popular Finance, Inc.

1326 Salud Street

Suite 613

Ponce, Puerto Rico 00716-1687

Telephone: (787) 844-2760

Popular Cash Express, Inc.

9600 West Bryn Mawr

First floor

Rosemont, Illinois 60018

Telephone: (847) 994-5973

Popular Securities, Inc.

Popular Center

209 Muñoz Rivera Avenue

Suite 1020

San Juan, Puerto Rico 00918

Telephone: (787) 766-4200

Popular Insurance, Inc.

9 Pedro Márquez Street

Culebra, Puerto Rico 00735

Telephone: (787) 742-0255

Popular Insurance Agency, USA

9600 West Bryn Mawr

First Floor

Rosemont, Illinois 60018

Telephone: (847) 994-6580

Popular Insurance, V.I., Inc.

193 Estate Altona & Welgunst

St. Thomas, Virgin Islands 00802

Telephone: (340) 693-2850

Popular Re, Inc.

MCV Building

Sixth Floor

270 Muñoz Rivera Avenue

San Juan, Puerto Rio 00918

Telephone: (787) 759-0080