Exhibit 99.1
Popular, Inc. Announces Third Quarter 2018 Financial Results
- Net income of $140.6 million for the third quarter of 2018, compared to a net income of $279.8 million and an adjusted net income of $121.3 million for Q2 2018
- Net interest margin of 4.07% in Q3 2018, compared to 3.81% in Q2 2018
- Credit Quality:
- Non-performing loans held-in-portfolio (“NPLs”) decreased by $10.7 million from Q2 2018; NPLs to loans ratio at 2.4% vs. 2.6% in Q2 2018;
- Net charge-offs (“NCOs”) increased by $6.1 million; NCOs at 1.00% of average loans held-in-portfolio vs. 0.95% in Q2 2018;
- Provision expense of $54.4 million vs. $60.1 million in Q2 2018;
- Allowance for loan losses of $633.7 million vs. $643.0 million in Q2 2018;
- Allowance for loan losses to loans held-in-portfolio at 2.39% vs. 2.61% in Q2 2018; and
- Allowance for loan losses to NPLs flat at 100.2%.
- Common Equity Tier 1 ratio of 16.20%, Common Equity per Share of $51.77 and Tangible Book Value per Share of $44.62 at September 30, 2018
SAN JUAN, Puerto Rico--(BUSINESS WIRE)--October 24, 2018--Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported a net income of $140.6 million for the third quarter ended September 30, 2018, compared to a net income of $279.8 million and an adjusted net income of $121.3 million for the second quarter ended June 30, 2018.
Ignacio Alvarez, President and Chief Executive Officer, said: “We delivered solid results for the quarter, as we continued to build on the positive momentum created during the first half of the year. We achieved strong top line revenue once again, with net interest income growing by $37 million. These results include the positive contribution of the Reliable acquisition which closed on August 1. Our credit metrics in Puerto Rico are trending favorably, reflecting the steady recovery of the Puerto Rico economy following the impact of Hurricanes Irma and Maria in September of 2017. We are also pleased with the growth of our commercial loan portfolio in our mainland U.S. operation and the execution of several capital actions during the quarter.”
Significant Events
Acquisition of Wells Fargo’s Auto Finance Business in Puerto Rico
On August 1, 2018, Popular Auto, LLC (“Popular Auto”), Banco Popular de Puerto Rico’s auto finance subsidiary, completed the acquisition of certain assets and the assumption of certain liabilities related to Wells Fargo & Company’s (“Wells Fargo”) auto finance business in Puerto Rico (“Reliable”).
Popular Auto acquired approximately $1.6 billion in retail auto loans and $341 million in primarily auto-related commercial loans. Reliable will continue operating as a Division of Popular Auto in parallel with Popular Auto’s existing operations for a period after closing to provide continuity of service to Reliable customers while allowing Popular to assess best practices before completing the integration of the two operations. Substantially all Reliable employees received and accepted offers of employment from Popular Auto.
Wells Fargo retained approximately $398 million in retail auto loans as part of the transaction and has entered into a loan servicing agreement with Popular Auto with respect to such loans.
During the quarter ended September 30, 2018, the Reliable acquisition contributed approximately $11.7 million to net income for the quarter, composed of net interest income of $30.7 million, $5.1 million of operating income, including servicing fees from the retained Wells Fargo portfolio, and expenses of $8.6 million, including $3.8 million of transaction related expenses.
Common Stock Repurchase Plan
During the quarter ended September 30, 2018, the Corporation entered into a $125 million accelerated share repurchase transaction (“ASR”) and, in connection therewith, received an initial delivery of 2,000,000 shares (the “Initial Shares”), which was accounted for as a treasury stock transaction. As a result of the receipt of the Initial Shares, the Corporation recognized in shareholders’ equity approximately $102 million in treasury stock and $23 million as a reduction of capital surplus. During the fourth quarter of 2018, the Corporation expects to further adjust its treasury stock and capital surplus accounts to reflect the delivery or receipt of cash or shares upon the termination of the ASR agreement, which will depend on the average price of the Corporation’s shares during the term of the ASR.
Redemption of Trust Preferred Securities
On September 7, 2018, Popular North America, Inc. (“PNA”), a wholly-owned subsidiary of the Corporation, completed the redemption of all outstanding 8.327% Capital Securities, Series A (liquidation amount $1,000 per security and $52,865,000 in the aggregate) issued by BanPonce Trust I, a Delaware statutory trust established by PNA. The redemption price of each security was equal to 100% of the liquidation amount of the securities plus accumulated and unpaid distributions up to and excluding the redemption date.
Issuance of Senior Notes
On September 11, 2018, the Corporation issued $300 million aggregate principal amount of 6.125% Senior Notes due 2023 (the “Notes”) in an underwritten public offering pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission. The Corporation used the net proceeds of the offering and available cash to redeem on October 15, 2018 (the “Redemption Date”) $450 million aggregate principal amount of its outstanding 7.00% Senior Notes due 2019 (the “2019 Notes”).
The redemption price of each security was equal to the sum of the present values of the remaining scheduled payments of principal and interest on the 2019 Notes redeemed that would have been due after the Redemption Date and on or prior to June 1, 2019 (exclusive of any interest accrued to the Redemption Date), discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, plus in each case unpaid interest, if any, accrued to, but not including the Redemption Date. As such, during the fourth quarter of 2018, the Corporation expects to recognize approximately $13 million in expenses associated with the accelerated amortization of debt issuance costs and the redemption price of these securities.
| Earnings Highlights | |||||||||||||||
| (Unaudited) | Quarters ended | Nine months ended | |||||||||||||
| (Dollars in thousands, except per share information) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | 30-Sep-18 | 30-Sep-17 | ||||||||||
| Net interest income | $451,469 | $414,136 | $378,171 | $1,258,652 | $1,114,748 | ||||||||||
| Provision for loan losses | 54,387 | 60,054 | 157,659 | 183,774 | 249,681 | ||||||||||
| Provision for loan losses - covered loans [1] | - | - | 3,100 | 1,730 | 4,255 | ||||||||||
| Net interest income after provision for loan losses | 397,082 | 354,082 | 217,412 | 1,073,148 | 860,812 | ||||||||||
| FDIC loss-share income (expense) | - | 102,752 | (3,948) | 94,725 | (12,680) | ||||||||||
| Other non-interest income | 151,021 | 132,057 | 104,322 | 404,602 | 345,716 | ||||||||||
| Operating expenses | 365,437 | 337,668 | 317,088 | 1,025,107 | 935,241 | ||||||||||
| Income before income tax | 182,666 | 251,223 | 698 | 547,368 | 258,607 | ||||||||||
| Income tax expense (benefit) | 42,018 | (28,560) | (19,966) | 35,613 | 48,772 | ||||||||||
| Net income | $140,648 | $279,783 | $20,664 | $511,755 | $209,835 | ||||||||||
| Net income applicable to common stock | $139,718 | $278,852 | $19,734 | $508,963 | $207,043 | ||||||||||
| Net income per common share - Basic | $1.38 | $2.74 | $0.19 | $5.01 | $2.03 | ||||||||||
| Net income per common share - Diluted | $1.38 | $2.73 | $0.19 | $5.00 | $2.03 | ||||||||||
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that were covered under the FDIC Shared-Loss Agreements, terminated on May 22, 2018. | |||||||||||||||
Adjusted results – Non-GAAP
The Corporation prepared its Consolidated Financial Statement using accounting principles generally accepted in the U.S. (“U.S. GAAP” or the “reported basis”). In addition to analyzing the Corporation’s results on the reported basis, management monitors the “Adjusted net income” of the Corporation and excludes the impact of certain transactions on the results of its operations. Management believes that “Adjusted net income” provides meaningful information to investors about the underlying performance of the Corporation’s ongoing operations. “Adjusted net income” is a non-GAAP financial measure.
No adjustments are reflected for the third quarter of 2018. The table below describes adjustments to net income for the quarter ended June 30, 2018.
| (Unaudited) | |||||||
| Quarter ended | |||||||
| (In thousands) | 30-Jun-18 | ||||||
| Income tax | Impact on net | ||||||
| Pre-tax | effect | income | |||||
| U.S. GAAP Net income | $279,783 | ||||||
| Non-GAAP Adjustments: | |||||||
| Termination of FDIC Shared-Loss Agreements[1] | $(94,633 | ) | $45,059 | (49,574 | ) | ||
| Tax Closing Agreement[2] | - | (108,946 | ) | (108,946 | ) | ||
| Adjusted net income (Non-GAAP) | $121,263 | ||||||
| [1]On May 22, 2018, BPPR entered into a Termination Agreement with the FDIC to terminate all Shared-Loss Agreements in connection with the acquisition of certain assets and assumption of certain liabilities of Westernbank Puerto Rico in 2010. As a result, BPPR recognized a pre-tax gain of $94.6 million, net of the related professional and advisory fees of $8.1 million associated with the Termination Agreement. | |||||||
| [2]Represents the impact of the Termination Agreement on income taxes. In June 2012, the Corporation entered into a Tax Closing Agreement with the Puerto Rico Department of the Treasury to clarify the tax treatment related to the loans acquired in the FDIC Transaction in accordance with the provisions of the Puerto Rico Tax Code. Based on the provisions of this Tax Closing Agreement, the Corporation recognized a net income tax benefit of $108.9 million during the second quarter of 2018. | |||||||
Net interest income
Net interest income for the quarter ended September 30, 2018 was $451.5 million, compared to $414.1 million for the previous quarter. Net interest margin was 4.07% for the quarter, compared to 3.81% for the previous quarter. As a result of the May 2018 termination of the loss share agreements (the “FDIC Shared-Loss Agreements”) entered into with the Federal Deposit Insurance Corporation in connection with the acquisition of certain assets and assumption of certain liabilities of Westernbank, the presentation of net interest income has been adjusted since the second quarter of 2018 to present the income from the loans acquired from Westernbank (the “WB Loans”) in their respective loan segments. Previously, the Corporation presented the income associated with the WB Loans aggregated into a single line in its analysis of average balances and yields (Tables D and E). The presentation for prior periods has been adjusted accordingly, for comparative purposes.
The increase of $37.4 million in net interest income is mainly the result of the following:
Positive variances:
- Higher income from money market, trading and investments by $3.1 million due to higher yields by 13 basis points as a result of investments at higher yields during the quarter, including the impact of the increase in the Fed Funds rate by 25 basis points in mid-June 2018;
- Higher income from the consumer loans portfolio by $33 million, or 37 basis points, mainly driven by income from the portfolio acquired from Reliable of $30.1 million, which includes $9.3 million related to the amortization of the fair value discount recognized in connection with the transaction;
- Higher income from the commercial loans portfolio by $10.7 million, or 17 basis points, mainly driven by income from the portfolio acquired from Reliable of $7.0 million, which includes $4.1 million related to the amortization of the fair value discount recognized in connection with the transaction. Also, portfolio growth at Popular Bank (“Popular U.S.”) and the positive impact of higher market rates in the adjustable rate portfolio continue to contribute to the increase in interest income; and
- The impact of one additional day in the third quarter contributed to the increase in net interest income by $3.2 million.
Negative variance:
- Higher cost of interest-bearing deposits by $9.9 million, or 11 basis points, due mainly to higher average balances in NOW and money market and savings accounts, impacted primarily by public sector deposits at BPPR and higher cost of the U.S. deposits, mainly from Popular U.S. online platform.
BPPR’s net interest income amounted to $388.5 million for the quarter ended September 30, 2018, compared to $352.7 million in the previous quarter. The increase of $35.8 million in net interest income was mainly due to the income from the loan portfolio acquired from Reliable and higher income from money market, trading and investment securities resulting from higher yields, as previously stated. These positive results were partially offset by higher interest expense on deposits, mainly from public sector deposits. The net interest margin for the third quarter of 2018 was 4.35%, an increase of 28 basis points when compared to 4.07% for the previous quarter. The increase in net interest margin was due to the composition of earning assets, which during the third quarter were deployed to purchase the loan portfolio acquired from Reliable, which resulted in an average yield of 12%, including the fair value discount amortization. BPPR’s earning assets yielded 4.81%, compared to 4.43% in the previous quarter, while the cost of interest bearing deposits was 0.62%, or 13 basis points higher than the 0.49% reported in the previous quarter. The total cost of deposits, including non-interest demand deposits for the quarter was 0.47%.
Net interest income for Popular U.S. was $76.2 million, for the quarter ended September 30, 2018, compared to $75.5 million during the previous quarter. The increase of $0.7 million in net interest income was mainly due to higher volume and yields on commercial and construction loans, partially offset by the related funding costs. Net interest margin for the quarter increased 3 basis points to 3.50%, compared to 3.47% for the previous quarter. The increase in net interest margin was mostly due to higher proportion of earning assets in loans, which carry a higher yield as compared to money market deposits and investments, partially offset by higher cost of deposits mostly raised through the Popular U.S.’s online deposit platform. Popular U.S.’s earning assets yielded 4.54%, compared to 4.44% in the previous quarter, while the cost of interest bearing deposits was 1.26%, compared to 1.17% in the previous quarter.
Non-interest income
Non-interest income amounted to $151.0 million for the quarter ended September 30, 2018, including $9.5 million of insurance recoveries related to Hurricane Maria, compared to $234.8 million for the previous quarter. The decrease of $83.8 million was mainly due to the gain of $102.8 million recorded during the second quarter as a result of the termination of the FDIC Shared-Loss Agreements. Excluding the unfavorable variance due to the FDIC transaction, non-interest income increased by $19.0 million primarily driven by:
- Higher service charges on deposit accounts by $1.0 million, mainly at BPPR, due to higher fees on transactional cash management services;
- higher other service fees by $1.4 million due to higher asset management fees and higher insurance commission revenues, partially offset by lower credit card late fees due to the reversal of income related to loans charged off during the quarter, as well as improved delinquencies, and lower debit card fees due to lower transactional volumes;
- higher income on mortgage banking activities by $1.2 million mainly due to higher gains on securitization transactions by $0.5 million, lower runoff of the mortgage servicing rights portfolio by $0.4 million, and higher realized gains on closed derivatives positions by $0.3 million; and
- higher other operating income by $17.8 million resulting from the previously mentioned insurance recoveries of $9.5 million and higher modification fees received for the successful completion of loss mitigation alternatives related to hurricane relief measures by $5.7 million.
These positive variances were partially offset by:
- Unfavorable variance in adjustments to indemnity reserves of $2.5 million related to loans previously sold with credit recourse at BPPR.
Refer to Table B for further details.
Operating expenses
Operating expenses of $365.4 million for the third quarter of 2018, including the write-down of $19.6 million charge related to the capitalized software costs of a technology project discontinued by the Corporation. Other variances which contributed to the increase of $27.8 million when compared with the second quarter of 2018 were the following:
- Higher personnel costs by $15.4 million, including $3.9 million related to the Reliable acquisition, due to higher salaries of $5.5 million as result of higher headcount and salary increases; and higher commissions, incentives and other bonuses of $5.4 million. The remaining increase in personnel costs is mainly related to annual incentives tied to the Corporation’s improved performance.
- Expenses related to the Reliable acquisition, other than personnel costs, which amounted to $4.7 million for the third quarter of 2018.
Partially offset by:
- Lower professional fees by $10.0 million mainly due to professional and advisory expenses associated with the termination of the FDIC Shared-Loss Agreements of $8.1 million during the second quarter of 2018.
Full-time equivalent employees were 8,363 as of September 30, 2018, compared to 7,958 as of June 30, 2018. The increase in FTEs was mainly related to the integration of 352 Reliable employees.
For a breakdown of operating expenses by category refer to table B.
Income taxes
For the quarter ended September 30, 2018, the Corporation recorded an income tax expense of $42.0 million, compared to an income tax benefit of $28.6 million for the previous quarter. The results for the second quarter include a pre-tax gain of $94.6 million resulting from the previously mentioned termination of the FDIC Shared-Loss Agreements and the related income tax expense of $45.0 million. The results also include an income tax benefit of $108.9 million related to the Tax Closing Agreement entered into in connection with the FDIC assisted acquisition of Westernbank. Excluding the combined impact of these items, the income tax expense for the second quarter was $35.3 million, an effective tax rate of 23%. The effective tax rate for the third quarter of 2018 was of 23%.
The effective tax rate of the Corporation is impacted by the composition and source of its taxable income. For the fourth quarter of 2018, the Corporation expects its consolidated effective tax rate to be approximately 22%.
Credit Quality
The third quarter results reflect improvements in credit quality, with most of the credit metrics improving or trending back to pre-hurricane levels. The Corporation continues to closely monitor its loan portfolios and related credit metrics given remaining challenges in the Puerto Rico’s fiscal and economic outlook. The results of our U.S. operation also reflect strong growth and favorable credit quality metrics, except for the U.S. taxi medallion portfolio acquired from the FDIC in the assisted sale of Doral Bank, which continues to reflect the pressure on medallion collateral values, particularly in the New York City metro area.
The following presents asset quality results for the third quarter of 2018. These results include the impact of the Reliable acquisition completed in August 1, 2018.
- Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $107.6 million quarter-over-quarter, mainly driven by lower inflows in the P.R. mortgage and commercial portfolios of $59.4 million and $30.5 million, respectively. P.R. mortgage inflows for the quarter were significantly lower than pre-hurricane levels, reflective of lower early delinquencies post-moratorium. The decrease in the P.R. commercial portfolio was driven by the impact of two large customers with an aggregate amount of $45.5 million in the previous quarter.
- Total non-performing loans held-in-portfolio decreased by $10.7 million from the second quarter of 2018, mainly driven by lower P.R. mortgage NPLs of $24.5 million, primarily due to lower inflows for the quarter. This decrease was partially offset by higher P.R. consumer and commercial NPLs of $8.4 million and $8.5 million, respectively. The P.R. consumer NPLs increase was related to the Reliable acquisition, while the commercial NPLs increase was mostly driven by a relationship of $16.3 million. At September 30, 2018, the ratio of NPLs to total loans held-in-portfolio was 2.4%, compared to 2.6% in the second quarter of 2018.
- Net charge-offs increased by $6.1 million from the second quarter of 2018. P.R. mortgage and consumer NCOs increases of $10.4 million and $9.0 million, respectively, were mostly due to post-moratorium effects, which were accounted for in the hurricane-related reserve. This increase was in part offset by lower commercial NCOs by $14.0 million, of which $8.6 million were related to taxi medallion charge-offs. The Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was at 1.00%, compared to 0.95% in the second quarter of 2018. Refer to Table J for further information on net charge-offs and related ratios.
- The allowance for loan losses decreased by $9.3 million from the second quarter of 2018 to $633.7 million. The P.R. segment ALLL decreased by $7.0 million, principally driven by downward adjustments of $23.1 million to the hurricane-related reserve, as portfolios have performed better than the assumptions used to create this reserve in the third quarter of last year, coupled with a decrease of $5.9 million related to the annual ALLL review and recalibration completed during this quarter. In addition to the ALLL models’ recalibration, management revised certain loss estimates prompting an increase in the reserves for the purchased credit impaired loans accounted for under ASC 310-30 and the U.S. consumer portfolio of $20.5 million and $6.9 million, respectively. The U.S. segment ALLL decreased by $2.3 million when compared to the previous quarter. The impact of the annual ALLL review was immaterial for the U.S. segment.
- The general and specific reserves totaled $503.2 million and $130.5 million, respectively, at quarter-end, compared with $523.7 million and $119.3 million, respectively, as of June 30, 2018. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.39% in the third quarter of 2018, compared to 2.61% from the previous quarter. The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 100.2%.
- The provision for loan losses for the third quarter of 2018 decreased by $5.7 million. The U.S. provision decreased by $13.1 million due to higher incremental reserves for the U.S. taxi medallion portfolio in the previous quarter, in part offset by a higher P.R. provision of $7.5 million. The provision to net charge-offs ratio was 85.4% in the third quarter of 2018, compared to 104.2% in the previous quarter.
| Non-Performing Assets | ||||||||||
| (Unaudited) | ||||||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | |||||||
| Total non-performing loans held-in-portfolio, excluding covered loans | $632,488 | $643,199 | $585,928 | |||||||
| Other real estate owned (“OREO”), excluding covered OREO | 133,780 | 142,063 | 176,728 | |||||||
| Total non-performing assets, excluding covered assets | 766,268 | 785,262 | 762,656 | |||||||
| Covered loans and OREO | - | - | 24,951 | |||||||
| Total non-performing assets | $766,268 | $785,262 | $787,607 | |||||||
| Net charge-offs for the quarter (excluding covered loans) | $63,687 | $57,614 | $53,009 | |||||||
| Ratios (excluding covered loans): | ||||||||||
| Non-covered loans held-in-portfolio | $26,512,168 | $24,608,516 | $23,173,450 | |||||||
| Non-performing loans held-in-portfolio to loans held-in-portfolio | 2.39% | 2.61% | 2.53% | |||||||
| Allowance for loan losses to loans held-in-portfolio | 2.39 | 2.61 | 2.65 | |||||||
| Allowance for loan losses to non-performing loans, excluding loans held-for-sale | 100.19 | 99.97 | 104.77 | |||||||
| Refer to Table H for additional information. | ||||||||||
| Provision for Loan Losses | |||||||||
| (Unaudited) | Quarters ended | Nine months ended | |||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | 30-Sep-18 | 30-Sep-17 | ||||
| Provision for loan losses: | |||||||||
| BPPR | $51,878 | $44,405 | $115,115 | $153,001 | $188,766 | ||||
| Popular U.S. | 2,509 | 15,649 | 42,544 | 30,773 | 60,915 | ||||
| Total provision for loan losses - non-covered loans | $54,387 | $60,054 | $157,659 | $183,774 | $249,681 | ||||
| Provision for loan losses - covered loans | - | - | 3,100 | 1,730 | 4,255 | ||||
| Total provision for loan losses | $54,387 | $60,054 | $160,759 | $185,504 | $253,936 | ||||
| Credit Quality by Segment | ||||||
| (Unaudited) | ||||||
| (In thousands) | Quarters ended | |||||
| BPPR | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | |||
| Provision for loan losses | $51,878 | $44,405 | $115,115 | |||
| Net charge-offs | 58,846 | 44,465 | 45,301 | |||
| Total non-performing loans held-in-portfolio, excluding covered loans | 580,803 | 589,838 | 548,666 | |||
| Allowance / non-covered loans held-in-portfolio | 2.83% | 3.14% | 3.06% | |||
| Quarters ended | ||||||
| Popular U.S. | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | |||
| Provision for loan losses | $2,509 | $15,649 | $42,544 | |||
| Net charge-offs | 4,841 | 13,149 | 7,708 | |||
| Total non-performing loans held-in-portfolio | 51,685 | 53,361 | 37,262 | |||
| Allowance / non-covered loans held-in-portfolio | 1.10% | 1.16% | 1.48% | |||
| Financial Condition Highlights | ||||||||
| (Unaudited) | ||||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | |||||
| Cash and money market investments | $5,010,010 | $9,029,010 | $6,005,649 | |||||
| Investment securities | 13,344,548 | 10,847,601 | 9,374,355 | |||||
| Loans not covered under loss-sharing agreements with the FDIC | 26,512,168 | 24,608,516 | 23,173,450 | |||||
| Loans covered under loss-sharing agreements with the FDIC | - | - | 524,854 | |||||
| Total assets | 47,919,428 | 47,535,177 | 42,601,267 | |||||
| Deposits | 39,648,827 | 39,377,561 | 34,248,936 | |||||
| Borrowings | 2,046,003 | 1,869,774 | 2,147,064 | |||||
| Total liabilities | 42,675,079 | 42,245,516 | 37,315,836 | |||||
| Stockholders’ equity | 5,244,349 | 5,289,661 | 5,285,431 | |||||
Total assets increased by $0.4 billion from the second quarter of 2018, driven by:
- An increase of $2.5 billion in debt securities available-for-sale mainly due to purchases of U.S. Treasury securities at BPPR; and
- an increase of $1.9 billion in loans held-in-portfolio principally related to the retail auto loan and commercial loan portfolio acquired from Reliable;
Partially offset by:
- A decrease of $4.0 billion in cash and money market investments at BPPR, due to the cash consideration of approximately $1.8 billion paid in connection with the acquisition of Reliable and the previously mentioned purchases of U.S. Treasury securities.
Total liabilities increased by $0.4 billion from the second quarter of 2018, mainly due to:
- An increase of $0.3 billion in deposits mainly due to an increase in interest-bearing public demand deposits of $0.9 billion at BPPR; partially offset by a decrease in non-interest bearing private demand deposits of $0.6 billion. Refer to Table G for additional information on deposits; and
- An increase of $0.2 billion in notes payable due to the issuance of $300 million in senior notes, partially offset by the repayment of $55 million of junior subordinated debentures in connection with the redemption of the capital securities issued by BanPonce Trust I, as previously mentioned. The proceeds from the issuance of $300 million in senior notes were used, together with available cash, to redeem on October 15, 2018 $450 million aggregate principal amount of outstanding 7.00% Senior Notes due 2019.
Stockholders’ equity decreased by approximately $45.3 million from the second quarter of 2018, principally due to the recognition of $102.0 million in treasury stock and $23.0 million as a reduction to capital surplus as part of the $125 million accelerated share repurchase transaction; declared dividends of $25.1 million on common stock and $0.9 million in dividends on preferred stock; and higher unrealized losses on debt securities available-for-sale by $39.8 million; partially offset by net income for the quarter of $140.6 million.
Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 16.20%, $51.77 and $44.62, respectively, at September 30, 2018, compared to 17.47%, $51.22 and $44.78 at June 30, 2018. Refer to Table A for capital ratios.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s business, financial condition, results of operations, plans, objectives, and future performance. These statements are not guarantees of future performance, are based on management’s current expectations and, by their nature, involve risks, uncertainties, estimates and assumptions. Potential factors, some of which are beyond the Corporation’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect of competitive and economic factors, and our reaction to those factors, the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital market conditions, capital adequacy and liquidity, the effect of legal proceedings and new accounting standards on the Corporation’s financial condition and results of operations, the impact of Hurricanes Irma and Maria on us, our ability to successfully integrate the auto finance business acquired from Wells Fargo & Company, as well as the unexpected costs, including, without limitation, costs due to exposure to any unrecorded liabilities or issues not identified during due diligence investigation of the business or that are not subject to indemnification or reimbursement, and risks that the business may suffer as a result of the transaction, including due to adverse effects on relationships with customers, employees and service providers. All statements contained herein that are not clearly historical in nature, are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions, and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, are generally intended to identify forward-looking statements.
More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018, and our Form 10-Q for the quarter ended September 30, 2018 to be filed with the SEC. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.
About Popular, Inc.
Popular, Inc. is the leading financial institution in Puerto Rico, by both assets and deposits, and ranks among the top 50 U.S. bank holding companies by assets. Founded in 1893, Banco Popular de Puerto Rico, Popular’s principal subsidiary, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. Popular also offers auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the mainland United States, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.
Conference Call
Popular will hold a conference call to discuss its financial results today Wednesday, October 24, 2018 at 11:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet, and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.
Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through a dial-in telephone number 1-866-235-1201 or 1-412-902-4127. There is no charge to access the call.
A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Friday, November 23, 2018. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10123793.
An electronic version of this press release can be found at the Corporation’s website: www.popular.com.
| Popular, Inc. |
| Financial Supplement to Third Quarter 2018 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 - POPULAR U.S. OPERATIONS |
| Table N - Reconciliation to GAAP Financial Measures |
| POPULAR, INC. | ||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | ||||||||||
| Table A - Selected Ratios and Other Information | ||||||||||
| (Unaudited) | ||||||||||
| Quarters ended | Nine months ended | |||||||||
| 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | 30-Sep-18 | 30-Sep-17 | ||||||
| Basic EPS | $1.38 | $2.74 | $0.19 | $5.01 | $2.03 | |||||
| Diluted EPS | $1.38 | $2.73 | $0.19 | $5.00 | $2.03 | |||||
| Average common shares outstanding | 101,067,300 | 101,892,402 | 101,652,352 | 101,549,711 | 102,057,607 | |||||
| Average common shares outstanding - assuming dilution | 101,249,154 | 102,031,955 | 101,763,872 | 101,731,930 | 102,185,544 | |||||
| Common shares outstanding at end of period | 100,336,341 | 102,296,440 | 102,026,417 | 100,336,341 | 102,026,417 | |||||
| Market value per common share | $51.25 | $45.21 | $35.94 | $51.25 | $35.94 | |||||
| Market capitalization - (In millions) | $5,142 | $4,625 | $3,667 | $5,142 | $3,667 | |||||
| Return on average assets | 1.17% | 2.40% | 0.20% | 1.48% | 0.69% | |||||
| . | . | |||||||||
| Return on average common equity | 10.10% | 20.84% | 1.47% | 12.72% | 5.24% | |||||
| Net interest margin | 4.07% | 3.81% | 3.96% | 3.92% | 4.02% | |||||
| Common equity per share | $51.77 | $51.22 | $51.31 | $51.77 | $51.31 | |||||
| Tangible common book value per common share (non-GAAP) [1] | $44.62 | $44.78 | $44.79 | $44.62 | $44.79 | |||||
| Tangible common equity to tangible assets (non-GAAP) [1] | 9.49% | 9.77% | 10.90% | 9.49% | 10.90% | |||||
| Tier 1 capital | 16.20% | 17.47% | 16.63% | 16.20% | 16.63% | |||||
| Total capital | 18.84% | 20.41% | 19.62% | 18.84% | 19.62% | |||||
| Tier 1 leverage | 9.60% | 9.82% | 10.29% | 9.60% | 10.29% | |||||
| Common Equity Tier 1 capital | 16.20% | 17.47% | 16.63% | 16.20% | 16.63% | |||||
| [1] Refer to Table N for reconciliation to GAAP financial measures. | ||||||||||
| POPULAR, INC. | |||||||||||||||
| Financial Supplement to Third Quarter 2018 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-18 | 30-Jun-18 | Q3 2018 | 30-Sep-17 | Q3 2018 | 30-Sep-18 | 30-Sep-17 | ||||||||
| Interest income: | |||||||||||||||
| Loans | $430,637 | $386,277 | $44,360 | $371,979 | $58,658 | $1,190,498 | $1,102,784 | ||||||||
| Money market investments | 27,581 | 36,392 | (8,811) | 15,529 | 12,052 | 86,258 | 33,233 | ||||||||
| Investment securities | 70,147 | 58,181 | 11,966 | 48,375 | 21,772 | 185,537 | 144,594 | ||||||||
| Total interest income | 528,365 | 480,850 | 47,515 | 435,883 | 92,482 | 1,462,293 | 1,280,611 | ||||||||
| Interest expense: | |||||||||||||||
| Deposits | 55,134 | 45,228 | 9,906 | 37,058 | 18,076 | 139,050 | 104,907 | ||||||||
| Short-term borrowings | 1,622 | 1,752 | (130) | 1,524 | 98 | 5,387 | 3,734 | ||||||||
| Long-term debt | 20,140 | 19,734 | 406 | 19,130 | 1,010 | 59,204 | 57,222 | ||||||||
| Total interest expense | 76,896 | 66,714 | 10,182 | 57,712 | 19,184 | 203,641 | 165,863 | ||||||||
| Net interest income | 451,469 | 414,136 | 37,333 | 378,171 | 73,298 | 1,258,652 | 1,114,748 | ||||||||
| Provision for loan losses - non-covered loans | 54,387 | 60,054 | (5,667) | 157,659 | (103,272) | 183,774 | 249,681 | ||||||||
| Provision for loan losses - covered loans | - | - | - | 3,100 | (3,100) | 1,730 | 4,255 | ||||||||
| Net interest income after provision for loan losses | 397,082 | 354,082 | 43,000 | 217,412 | 179,670 | 1,073,148 | 860,812 | ||||||||
| Service charges on deposit accounts | 38,147 | 37,102 | 1,045 | 39,273 | (1,126) | 111,704 | 119,882 | ||||||||
| Other service fees | 64,316 | 62,876 | 1,440 | 53,481 | 10,835 | 187,794 | 168,824 | ||||||||
| Mortgage banking activities | 11,269 | 10,071 | 1,198 | 5,239 | 6,030 | 33,408 | 27,349 | ||||||||
| Net gain on sale of debt securities | - | - | - | 83 | (83) | - | 83 | ||||||||
| Other-than-temporary impairment losses on debt securities | - | - | - | - | - | - | (8,299) | ||||||||
| Net gain (loss), including impairment, on equity securities | 370 | 234 | 136 | 20 | 350 | (42) | 201 | ||||||||
| Net (loss) profit on trading account debt securities | (122) | 21 | (143) | 253 | (375) | (299) | (680) | ||||||||
| Net loss on sale of loans, including valuation adjustments on loans held-for-sale | - | - | - | (420) | 420 | - | (420) | ||||||||
| Adjustments (expense) to indemnity reserves on loans sold | (3,029) | (527) | (2,502) | (6,406) | 3,377 | (6,482) | (11,302) | ||||||||
| FDIC loss-share income (expense) | - | 102,752 | (102,752) | (3,948) | 3,948 | 94,725 | (12,680) | ||||||||
| Other operating income | 40,070 | 22,280 | 17,790 | 12,799 | 27,271 | 78,519 | 50,078 | ||||||||
| Total non-interest income | 151,021 | 234,809 | (83,788) | 100,374 | 50,647 | 499,327 | 333,036 | ||||||||
| Operating expenses: | |||||||||||||||
| Personnel costs | |||||||||||||||
| Salaries | 83,535 | 78,008 | 5,527 | 78,976 | 4,559 | 239,940 | 235,055 | ||||||||
| Commissions, incentives and other bonuses | 25,365 | 20,004 | 5,361 | 16,879 | 8,486 | 66,685 | 55,252 | ||||||||
| Pension, postretirement and medical insurance | 8,670 | 9,363 | (693) | 9,668 | (998) | 27,962 | 29,768 | ||||||||
| Other personnel costs, including payroll taxes | 22,187 | 16,957 | 5,230 | 12,246 | 9,941 | 55,354 | 38,382 | ||||||||
| Total personnel costs | 139,757 | 124,332 | 15,425 | 117,769 | 21,988 | 389,941 | 358,457 | ||||||||
| Net occupancy expenses | 18,602 | 22,425 | (3,823) | 22,254 | (3,652) | 63,829 | 65,295 | ||||||||
| Equipment expenses | 18,303 | 17,775 | 528 | 16,457 | 1,846 | 53,284 | 48,677 | ||||||||
| Other taxes | 11,923 | 10,876 | 1,047 | 10,858 | 1,065 | 33,701 | 32,567 | ||||||||
| Professional fees | |||||||||||||||
| Collections, appraisals and other credit related fees | 3,371 | 4,228 | (857) | 3,559 | (188) | 10,657 | 11,161 | ||||||||
| Programming, processing and other technology services | 55,187 | 54,547 | 640 | 49,717 | 5,470 | 161,039 | 149,377 | ||||||||
| Legal fees, excluding collections | 4,284 | 4,907 | (623) | 2,928 | 1,356 | 14,954 | 8,538 | ||||||||
| Other professional fees | 21,018 | 30,221 | (9,203) | 14,568 | 6,450 | 74,098 | 43,880 | ||||||||
| Total professional fees | 83,860 | 93,903 | (10,043) | 70,772 | 13,088 | 260,748 | 212,956 | ||||||||
| Communications | 6,054 | 5,382 | 672 | 5,394 | 660 | 17,342 | 17,242 | ||||||||
| Business promotion | 15,478 | 16,778 | (1,300) | 15,216 | 262 | 44,265 | 40,158 | ||||||||
| FDIC deposit insurance | 8,610 | 7,004 | 1,606 | 6,271 | 2,339 | 22,534 | 18,936 | ||||||||
| Other real estate owned (OREO) expenses | 7,950 | 6,947 | 1,003 | 11,724 | (3,774) | 21,028 | 41,212 | ||||||||
| Credit and debit card processing, volume, interchange and other expenses | 8,946 | 9,635 | (689) | 7,375 | 1,571 | 23,189 | 19,348 | ||||||||
| Other operating expenses | |||||||||||||||
| Operational losses | 7,770 | 9,001 | (1,231) | 13,222 | (5,452) | 26,695 | 27,973 | ||||||||
| All other | 35,860 | 11,286 | 24,574 | 17,431 | 18,429 | 61,578 | 45,386 | ||||||||
| Total other operating expenses | 43,630 | 20,287 | 23,343 | 30,653 | 12,977 | 88,273 | 73,359 | ||||||||
| Amortization of intangibles | 2,324 | 2,324 | - | 2,345 | (21) | 6,973 | 7,034 | ||||||||
| Total operating expenses | 365,437 | 337,668 | 27,769 | 317,088 | 48,349 | 1,025,107 | 935,241 | ||||||||
| Income before income tax | 182,666 | 251,223 | (68,557) | 698 | 181,968 | 547,368 | 258,607 | ||||||||
| Income tax expense (benefit) | 42,018 | (28,560) | 70,578 | (19,966) | 61,984 | 35,613 | 48,772 | ||||||||
| Net income | $140,648 | $279,783 | $(139,135) | $20,664 | $119,984 | $511,755 | $209,835 | ||||||||
| Net income applicable to common stock | $139,718 | $278,852 | $(139,134) | $19,734 | $119,984 | $508,963 | $207,043 | ||||||||
| Net income per common share - basic | $1.38 | $2.74 | $(1.36) | $0.19 | $1.19 | $5.01 | $2.03 | ||||||||
| Net income per common share - diluted | $1.38 | $2.73 | $(1.35) | $0.19 | $1.19 | $5.00 | $2.03 | ||||||||
| Dividends Declared per Common Share | $0.25 | $0.25 | $- | $0.25 | $- | $0.75 | $0.75 | ||||||||
| Popular, Inc. | ||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | ||||||||||
| Table C - Consolidated Statement of Financial Condition | ||||||||||
| (Unaudited) | ||||||||||
| Variance | ||||||||||
| Q3 2018 vs. | ||||||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | Q2 2018 | ||||||
| Assets: | ||||||||||
| Cash and due from banks | $400,949 | $400,568 | $517,437 | $381 | ||||||
| Money market investments | 4,609,061 | 8,628,442 | 5,488,212 | (4,019,381) | ||||||
| Trading account debt securities, at fair value | 37,731 | 41,637 | 37,307 | (3,906) | ||||||
| Debt securities available-for-sale, at fair value | 13,047,617 | 10,542,010 | 9,059,116 | 2,505,607 | ||||||
| Debt securities held-to-maturity, at amortized cost | 101,238 | 104,937 | 106,636 | (3,699) | ||||||
| Equity securities | 157,962 | 159,017 | 171,296 | (1,055) | ||||||
| Loans held-for-sale, at lower of cost or fair value | 51,742 | 73,859 | 68,864 | (22,117) | ||||||
| Loans held-in-portfolio: | ||||||||||
| Loans not covered under loss-sharing agreements with the FDIC | 26,661,951 | 24,752,700 | 23,302,047 | 1,909,251 | ||||||
| Loans covered under loss-sharing agreements with the FDIC | - | - | 524,854 | - | ||||||
| Less: Unearned income | 149,783 | 144,184 | 128,597 | 5,599 | ||||||
| Allowance for loan losses | 633,718 | 643,018 | 646,913 | (9,300) | ||||||
| Total loans held-in-portfolio, net | 25,878,450 | 23,965,498 | 23,051,391 | 1,912,952 | ||||||
| FDIC loss-share asset | - | - | 48,470 | - | ||||||
| Premises and equipment, net | 557,104 | 548,432 | 532,532 | 8,672 | ||||||
| Other real estate not covered under loss-sharing agreements with the FDIC | 133,780 | 142,063 | 176,728 | (8,283) | ||||||
| Other real estate covered under loss-sharing agreements with the FDIC | - | - | 21,545 | - | ||||||
| Accrued income receivable | 163,443 | 165,592 | 146,339 | (2,149) | ||||||
| Mortgage servicing assets, at fair value | 162,779 | 164,025 | 180,157 | (1,246) | ||||||
| Other assets | 1,900,850 | 1,940,780 | 2,329,927 | (39,930) | ||||||
| Goodwill | 687,536 | 627,294 | 627,294 | 60,242 | ||||||
| Other intangible assets | 29,186 | 31,023 | 38,016 | (1,837) | ||||||
| Total assets | $47,919,428 | $47,535,177 | $42,601,267 | $384,251 | ||||||
| Liabilities and Stockholders’ Equity: | ||||||||||
| Liabilities: | ||||||||||
| Deposits: | ||||||||||
| Non-interest bearing | $8,803,752 | $9,392,263 | $7,449,857 | $(588,511) | ||||||
| Interest bearing | 30,845,075 | 29,985,298 | 26,799,079 | 859,777 | ||||||
| Total deposits | 39,648,827 | 39,377,561 | 34,248,936 | 271,266 | ||||||
| Assets sold under agreements to repurchase | 300,116 | 306,911 | 374,405 | (6,795) | ||||||
| Other short-term borrowings | 1,200 | 1,200 | 240,598 | - | ||||||
| Notes payable | 1,744,687 | 1,561,663 | 1,532,061 | 183,024 | ||||||
| Other liabilities | 980,249 | 998,181 | 919,836 | (17,932) | ||||||
| Total liabilities | 42,675,079 | 42,245,516 | 37,315,836 | 429,563 | ||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock | 50,160 | 50,160 | 50,160 | - | ||||||
| Common stock | 1,043 | 1,043 | 1,042 | - | ||||||
| Surplus | 4,281,515 | 4,302,946 | 4,265,053 | (21,431) | ||||||
| Retained earnings | 1,629,692 | 1,515,058 | 1,350,730 | 114,634 | ||||||
| Treasury stock | (183,872) | (82,754) | (90,222) | (101,118) | ||||||
| Accumulated other comprehensive loss, net of tax | (534,189) | (496,792) | (291,332) | (37,397) | ||||||
| Total stockholders’ equity | 5,244,349 | 5,289,661 | 5,285,431 | (45,312) | ||||||
| Total liabilities and stockholders’ equity | $47,919,428 | $47,535,177 | $42,601,267 | $384,251 | ||||||
| Popular, Inc. | |||||||||||||||||||||||||||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||||||||||||||||||||||||||
| Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER | |||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||
| Quarter ended | Quarter ended | Quarter ended | Variance | Variance | |||||||||||||||||||||||||||||||||
| 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | Q3 2018 vs. Q2 2018 | Q3 2018 vs. Q3 2017 | |||||||||||||||||||||||||||||||||
| ($ amounts in millions; yields not on a taxable equivalent basis) | Average | Income / | Yield / | Average | Income / | Yield / | Average | Income / | Yield / | Average | Income / | Yield / | Average | Income / | Yield / | ||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||||
| Money market, trading and investment securities | $18,547 | $97.7 | 2.10 | % | $19,257 | $94.6 | 1.97 | % | $14,483 | $63.9 | 1.76 | % | ($710) | $3.1 | 0.13 | % | $4,064 | $33.8 | 0.34 | % | |||||||||||||||||
| Loans not covered under loss-sharing agreements with the FDIC: | |||||||||||||||||||||||||||||||||||||
| Commercial | 11,814 | 176.7 | 5.94 | 11,537 | 166.0 | 5.77 | 11,131 | 155.4 | 5.54 | 277 | 10.7 | 0.17 | 683 | 21.3 | 0.40 | ||||||||||||||||||||||
| Construction | 932 | 15.2 | 6.45 | 918 | 14.3 | 6.28 | 826 | 12.0 | 5.76 | 14 | 0.9 | 0.17 | 106 | 3.2 | 0.69 | ||||||||||||||||||||||
| Mortgage | 7,142 | 90.3 | 5.06 | 7,109 | 91.0 | 5.12 | 7,035 | 91.3 | 5.19 | 33 | (0.7) | (0.06) | 107 | (1.0) | (0.13) | ||||||||||||||||||||||
| Consumer | 4,818 | 135.2 | 11.14 | 3,805 | 102.2 | 10.77 | 3,806 | 101.4 | 10.57 | 1,013 | 33.0 | 0.37 | 1,012 | 33.8 | 0.57 | ||||||||||||||||||||||
| Lease financing | 885 | 13.3 | 5.99 | 850 | 12.7 | 5.99 | 750 | 11.9 | 6.37 | 35 | 0.6 | - | 135 | 1.4 | (0.38) | ||||||||||||||||||||||
| Total loans | 25,591 | 430.7 | 6.69 | 24,219 | 386.2 | 6.39 | 23,548 | 372.0 | 6.28 | 1,372 | 44.5 | 0.30 | 2,043 | 58.7 | 0.41 | ||||||||||||||||||||||
| Total interest earning assets | $44,138 | $528.4 | 4.76 | % | $43,476 | $480.8 | 4.43 | % | $38,031 | $435.9 | 4.56 | % | $662 | $47.6 | 0.33 | % | $6,107 | $92.5 | 0.20 | % | |||||||||||||||||
| Allowance for loan losses | (639) | (645) | (566) | 6 | (73) | ||||||||||||||||||||||||||||||||
| Other non-interest earning assets | 3,992 | 4,019 | 4,238 | (27) | (246) | ||||||||||||||||||||||||||||||||
| Total average assets | $47,491 | $46,850 | $41,703 | $641 | $5,788 | ||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||||||||||||||||||||||
| NOW and money market | $13,201 | $23.0 | 0.69 | % | $12,476 | $15.7 | 0.51 | % | $10,465 | $10.3 | 0.39 | % | $725 | $7.3 | 0.18 | % | $2,736 | $12.7 | 0.30 | % | |||||||||||||||||
| Savings | 9,797 | 9.0 | 0.37 | 9,472 | 7.8 | 0.33 | 8,260 | 5.0 | 0.24 | 325 | 1.2 | 0.04 | 1,537 | 4.0 | 0.13 | ||||||||||||||||||||||
| Time deposits | 7,419 | 23.1 | 1.24 | 7,749 | 21.7 | 1.12 | 7,543 | 21.8 | 1.14 | (330) | 1.4 | 0.12 | (124) | 1.3 | 0.10 | ||||||||||||||||||||||
| Total interest-bearing deposits | 30,417 | 55.1 | 0.72 | 29,697 | 45.2 | 0.61 | 26,268 | 37.1 | 0.56 | 720 | 9.9 | 0.11 | 4,149 | 18.0 | 0.16 | ||||||||||||||||||||||
| Borrowings | 1,861 | 21.8 | 4.68 | 1,962 | 21.5 | 4.39 | 1,982 | 20.6 | 4.17 | (101) | 0.3 | 0.29 | (121) | 1.2 | 0.51 | ||||||||||||||||||||||
| Total interest-bearing liabilities | 32,278 | 76.9 | 0.95 | 31,659 | 66.7 | 0.85 | 28,250 | 57.7 | 0.81 | 619 | 10.2 | 0.10 | 4,028 | 19.2 | 0.14 | ||||||||||||||||||||||
| Net interest spread | 3.81 | % | 3.58 | % | 3.75 | % | 0.23 | % | 0.06 | % | |||||||||||||||||||||||||||
| Non-interest bearing deposits | 8,860 | 8,966 | 7,235 | (106) | 1,625 | ||||||||||||||||||||||||||||||||
| Other liabilities | 816 | 811 | 832 | 5 | (16) | ||||||||||||||||||||||||||||||||
| Stockholders' equity | 5,537 | 5,414 | 5,386 | 123 | 151 | ||||||||||||||||||||||||||||||||
| Total average liabilities and stockholders' equity | $47,491 | $46,850 | $41,703 | $641 | $5,788 | ||||||||||||||||||||||||||||||||
| Net interest income / margin non-taxable equivalent basis | $451.5 | 4.07 | % | $414.1 | 3.81 | % | $378.2 | 3.96 | % | $37.4 | 0.26 | % | $73.3 | 0.11 | % | ||||||||||||||||||||||
| Popular, Inc. | |||||||||||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||||||||||
| Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Nine months ended | Nine months ended | ||||||||||||||||||||
| 30-Sep-18 | 30-Sep-17 | Variance | |||||||||||||||||||
| Average | Income / | Yield / | Average | Income / | Yield / | Average | Income / | Yield / | |||||||||||||
| ($ 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 | $18,191 | $271.8 | 2.00 | % | $13,649 | $177.8 | 1.74 | % | $4,542 | $94.0 | 0.26 | % | |||||||||
| Loans not covered under loss-sharing agreements with the FDIC: | |||||||||||||||||||||
| Commercial | 11,607 | 504.2 | 5.81 | 10,967 | 454.0 | 5.53 | 640 | 50.2 | 0.28 | ||||||||||||
| Construction | 919 | 43.1 | 6.27 | 820 | 34.0 | 5.55 | 99 | 9.1 | 0.72 | ||||||||||||
| Mortgage | 7,109 | 270.3 | 5.07 | 7,133 | 280.6 | 5.25 | (24) | (10.3) | (0.18) | ||||||||||||
| Consumer | 4,147 | 334.6 | 10.79 | 3,754 | 298.9 | 10.65 | 393 | 35.7 | 0.14 | ||||||||||||
| Lease financing | 852 | 38.3 | 5.99 | 729 | 35.3 | 6.46 | 123 | 3.0 | (0.47) | ||||||||||||
| Total loans | 24,634 | 1,190.5 | 6.46 | 23,403 | 1,102.8 | 6.29 | 1,231 | 87.7 | 0.17 | ||||||||||||
| Total interest earning assets | $42,825 | $1,462.3 | 4.56 | % | $37,052 | $1,280.6 | 4.62 | % | $5,773 | $181.7 | (0.06) | % | |||||||||
| Allowance for loan losses | (640) | (548) | (92) | ||||||||||||||||||
| Other non-interest earning assets | 4,024 | 4,277 | (253) | ||||||||||||||||||
| Total average assets | $46,209 | $40,781 | $5,428 | ||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||||||
| NOW and money market | $12,298 | $50.2 | 0.55 | % | $9,809 | $27.9 | 0.38 | % | $2,489 | $22.3 | 0.17 | % | |||||||||
| Savings | 9,341 | 22.0 | 0.31 | 7,984 | 14.9 | 0.25 | 1,357 | 7.1 | 0.06 | ||||||||||||
| Time deposits | 7,621 | 66.8 | 1.17 | 7,653 | 62.1 | 1.08 | (32) | 4.7 | 0.09 | ||||||||||||
| Total interest-bearing deposits | 29,260 | 139.0 | 0.64 | 25,446 | 104.9 | 0.55 | 3,814 | 34.1 | 0.09 | ||||||||||||
| Borrowings | 1,954 | 64.6 | 4.42 | 1,981 | 61.0 | 4.11 | (27) | 3.6 | 0.31 | ||||||||||||
| Total interest-bearing liabilities | 31,214 | 203.6 | 0.87 | 27,427 | 165.9 | 0.81 | 3,787 | 37.7 | 0.06 | ||||||||||||
| Net interest spread | 3.69 | % | 3.81 | % | (0.12) | % | |||||||||||||||
| Non-interest bearing deposits | 8,755 | 7,156 | 1,599 | ||||||||||||||||||
| Other liabilities | 842 | 865 | (23) | ||||||||||||||||||
| Stockholders' equity | 5,398 | 5,333 | 65 | ||||||||||||||||||
| Total average liabilities and stockholders' equity | $46,209 | $40,781 | $5,428 | ||||||||||||||||||
| Net interest income / margin non-taxable equivalent basis | $1,258.7 | 3.92 | % | $1,114.7 | 4.02 | % | $144.0 | (0.10) | % | ||||||||||||
| Popular, Inc. | |||||||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||||||
| Table F - Mortgage Banking Activities and Other Service Fees | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Mortgage Banking Activities | |||||||||||||||||
| Quarters ended | Variance | Nine months ended | Variance | ||||||||||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | Q3 2018 | Q3 2018 | 30-Sep-18 | 30-Sep-17 | 2018 | |||||||||
| Mortgage servicing fees, net of fair value adjustments: | |||||||||||||||||
| Mortgage servicing fees | $12,324 | $12,425 | $12,012 | $(101) | $312 | $37,205 | $38,485 | $(1,280) | |||||||||
| Mortgage servicing rights fair value adjustments | (4,194) | (4,622) | (10,262) | 428 | 6,068 | (13,123) | (24,262) | 11,139 | |||||||||
| Total mortgage servicing fees, net of fair value adjustments | 8,130 | 7,803 | 1,750 | 327 | 6,380 | 24,082 | 14,223 | 9,859 | |||||||||
| Net gain on sale of loans, including valuation on loans held-for-sale | 3,014 | 2,460 | 4,244 | 554 | (1,230) | 6,531 | 16,875 | (10,344) | |||||||||
| Trading account profit (loss): | |||||||||||||||||
| Unrealized gains (losses) on outstanding derivative positions | 45 | 45 | (147) | - | 192 | (131) | (104) | (27) | |||||||||
| Realized gains (losses) on closed derivative positions | 80 | (237) | (608) | 317 | 688 | 2,926 | (3,645) | 6,571 | |||||||||
| Total trading account profit (loss) | 125 | (192) | (755) | 317 | 880 | 2,795 | (3,749) | 6,544 | |||||||||
| Total mortgage banking activities | $11,269 | $10,071 | $5,239 | $1,198 | $6,030 | $33,408 | $27,349 | $6,059 | |||||||||
| Other Service Fees | |||||||||||||||||
| Quarters ended | Variance | Nine months ended | Variance | ||||||||||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | Q3 2018 | Q3 2018 | 30-Sep-18 | 30-Sep-17 | 2018 vs. | |||||||||
| Other service fees: | |||||||||||||||||
| Debit card fees | $10,984 | $11,684 | $10,359 | $(700) | $625 | $34,306 | $33,478 | $828 | |||||||||
| Insurance fees | 14,042 | 13,027 | 13,076 | 1,015 | 966 | 39,668 | 39,410 | 258 | |||||||||
| Credit card fees | 21,525 | 22,658 | 16,699 | (1,133) | 4,826 | 65,866 | 54,280 | 11,586 | |||||||||
| Sale and administration of investment products | 5,696 | 5,020 | 5,496 | 676 | 200 | 16,071 | 16,377 | (306) | |||||||||
| Trust fees | 4,967 | 5,139 | 4,817 | (172) | 150 | 15,203 | 14,675 | 528 | |||||||||
| Other fees | 7,102 | 5,348 | 3,034 | 1,754 | 4,068 | 16,680 | 10,604 | 6,076 | |||||||||
| Total other service fees | $64,316 | $62,876 | $53,481 | $1,440 | $10,835 | $187,794 | $168,824 | $18,970 | |||||||||
| Popular, Inc. | ||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | ||||||||||
| Table G - Loans and Deposits | ||||||||||
| (Unaudited) | ||||||||||
| Loans - Ending Balances | ||||||||||
| Variance | ||||||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | Q3 2018 vs. | Q3 2018 vs. | |||||
| Loans not covered under FDIC loss-sharing agreements: | ||||||||||
| Commercial | $11,993,707 | $11,589,993 | $11,227,095 | $403,714 | $766,612 | |||||
| Construction | 943,365 | 899,323 | 823,325 | 44,042 | 120,040 | |||||
| Legacy [1] | 27,566 | 29,250 | 37,508 | (1,684) | (9,942) | |||||
| Lease financing | 903,540 | 872,098 | 754,881 | 31,442 | 148,659 | |||||
| Mortgage | 7,304,170 | 7,376,711 | 6,529,235 | (72,541) | 774,935 | |||||
| Consumer | 5,339,820 | 3,841,141 | 3,801,406 | 1,498,679 | 1,538,414 | |||||
| Total non-covered loans held-in-portfolio | $26,512,168 | $24,608,516 | $23,173,450 | $1,903,652 | $3,338,718 | |||||
| Loans covered under FDIC loss-sharing agreements | - | - | 524,854 | - | (524,854) | |||||
| Total loans held-in-portfolio | $26,512,168 | $24,608,516 | $23,698,304 | $1,903,652 | $2,813,864 | |||||
| Loans held-for-sale: | ||||||||||
| Mortgage | 51,742 | 73,859 | 68,864 | (22,117) | (17,122) | |||||
| Total loans held-for-sale | $51,742 | $73,859 | $68,864 | $(22,117) | $(17,122) | |||||
| Total loans | $26,563,910 | $24,682,375 | $23,767,168 | $1,881,535 | $2,796,742 | |||||
| [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 Popular U.S. segment. | ||||||||||
| Deposits - Ending Balances | ||||||||||
| Variance | ||||||||||
| (In thousands) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | Q3 2018 vs. Q2 | Q3 2018 vs. Q3 | |||||
| Demand deposits [1] | $16,120,156 | $15,813,188 | $11,576,048 | $306,968 | $4,544,108 | |||||
| Savings, NOW and money market deposits (non-brokered) | 15,714,275 | 15,751,376 | 14,638,191 | (37,101) | 1,076,084 | |||||
| Savings, NOW and money market deposits (brokered) | 402,116 | 389,912 | 422,174 | 12,204 | (20,058) | |||||
| Time deposits (non-brokered) | 7,280,854 | 7,284,697 | 7,446,922 | (3,843) | (166,068) | |||||
| Time deposits (brokered CDs) | 131,426 | 138,388 | 165,601 | (6,962) | (34,175) | |||||
| Total deposits | $39,648,827 | $39,377,561 | $34,248,936 | $271,266 | $5,399,891 | |||||
| [1] Includes interest and non-interest bearing demand deposits. | ||||||||||
| Popular, Inc. | |||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||
| Table H - Non-Performing Assets | |||||||||||
| (Unaudited) | |||||||||||
| Variance | |||||||||||
| (Dollars in thousands) | 30-Sep-18 | As a % of | 30-Jun-18 | As a % of | 30-Sep-17 | As a % of | Q3 2018 vs. | Q3 2018 vs. | |||
| Non-accrual loans: | |||||||||||
| Commercial | $172,685 | 1.4 | % | $164,949 | 1.4 | % | $165,352 | 1.5 | % | $7,736 | $7,333 |
| Construction | 19,695 | 2.1 | 20,460 | 2.3 | 99 | - | (765) | 19,596 | |||
| Legacy [1] | 3,403 | 12.3 | 3,663 | 12.5 | 3,268 | 8.7 | (260) | 135 | |||
| Lease financing | 3,009 | 0.3 | 3,696 | 0.4 | 2,684 | 0.4 | (687) | 325 | |||
| Mortgage | 361,085 | 4.9 | 384,655 | 5.2 | 352,315 | 5.4 | (23,570) | 8,770 | |||
| Consumer | 72,611 | 1.4 | 65,776 | 1.7 | 62,210 | 1.6 | 6,835 | 10,401 | |||
| Total non-performing loans held-in- | |||||||||||
| portfolio, excluding covered loans | 632,488 | 2.4 | % | 643,199 | 2.6 | % | 585,928 | 2.5 | % | (10,711) | 46,560 |
| Other real estate owned (“OREO”), | |||||||||||
| excluding covered OREO | 133,780 | 142,063 | 176,728 | (8,283) | (42,948) | ||||||
| Total non-performing assets, | |||||||||||
| excluding covered assets | 766,268 | 785,262 | 762,656 | (18,994) | 3,612 | ||||||
| Covered loans and OREO | - | - | 24,951 | - | (24,951) | ||||||
| Total non-performing assets [2] | $766,268 | $785,262 | $787,607 | $(18,994) | $(21,339) | ||||||
| Accruing loans past due 90 days or more [3] [4] | $753,074 | $901,473 | $465,127 | $(148,399) | $287,947 | ||||||
| Ratios excluding covered loans: | |||||||||||
| Non-performing loans held-in-portfolio | |||||||||||
| to loans held-in-portfolio | 2.39 | % | 2.61 | % | 2.53 | % | |||||
| Allowance for loan losses to loans | |||||||||||
| held-in-portfolio | 2.39 | 2.61 | 2.65 | ||||||||
| Allowance for loan losses to | |||||||||||
| non-performing loans, excluding loans | |||||||||||
| held-for-sale | 100.19 | 99.97 | 104.77 | ||||||||
| Ratios including covered loans: | |||||||||||
| Non-performing assets to total assets | 1.60 | % | 1.65 | % | 1.85 | % | |||||
| Non-performing loans held-in-portfolio | |||||||||||
| to loans held-in-portfolio | 2.39 | 2.61 | 2.49 | ||||||||
| Allowance for loan losses to loans | |||||||||||
| held-in-portfolio | 2.39 | 2.61 | 2.73 | ||||||||
| Allowance for loan losses to non-performing | |||||||||||
| loans, excluding loans held-for-sale | 100.19 | 99.97 | 109.77 | ||||||||
| [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 Popular U.S. segment. | |||||||||||
| [2] There were no non-performing loans held-for-sale as of September 30, 2018, June 30, 2018 and September 30, 2017. | |||||||||||
| [3] It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. These include loans rebooked, which were previously pooled into GNMA securities amounting to $195 million (June 30, 2018 - $298 million; September 30, 2017 - $92 million). Under the GNMA program, issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements of BPPR with an offsetting liability. While the borrowers for our serviced GNMA portfolio benefited from the loan payment moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium. These balances include $238 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of September 30, 2018 (June 30, 2018 - $216 million; September 30, 2017 - $157 million). Furthermore, the Corporation has approximately $53 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation's policy to exclude these balances from non-performing assets (June 30, 2018 - $66 million; September 30, 2017 - $57 million). | |||||||||||
| [4] The carrying value of loans accounted for under ASC Subtopic 310-30 that are contractually 90 days or more past due was $304 million at September 30, 2018 (June 30, 2018 - $265 million; September 30, 2017 - $251 million). This amount is excluded from the above table as the loans’ accretable yield interest recognition is independent from the underlying contractual loan delinquency status. | |||||||||||
| Popular, Inc. | |||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||
| Table I - Activity in Non-Performing Loans | |||||||||||||
| (Unaudited) | |||||||||||||
| Commercial loans held-in-portfolio: | |||||||||||||
| Quarter ended | Quarter ended | ||||||||||||
| 30-Sep-18 | 30-Jun-18 | ||||||||||||
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | |||||||
| Beginning balance NPLs | $162,781 | $2,168 | $164,949 | $157,132 | $1,147 | $158,279 | |||||||
| Plus: | |||||||||||||
| New non-performing loans | 23,894 | 1,663 | 25,557 | 53,794 | 1,294 | 55,088 | |||||||
| Advances on existing non-performing loans | - | - | - | 647 | - | 647 | |||||||
| Less: | |||||||||||||
| Non-performing loans transferred to OREO | (1,480) | - | (1,480) | (1,831) | - | (1,831) | |||||||
| Non-performing loans charged-off | (5,179) | (3) | (5,182) | (9,758) | - | (9,758) | |||||||
| Loans returned to accrual status / loan collections | (8,745) | (2,414) | (11,159) | (37,203) | (273) | (37,476) | |||||||
| Ending balance NPLs | $171,271 | $1,414 | $172,685 | $162,781 | $2,168 | $164,949 | |||||||
| Construction loans held-in-portfolio: | |||||||||||||
| Quarter ended | Quarter ended | ||||||||||||
| 30-Sep-18 | 30-Jun-18 | ||||||||||||
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | |||||||
| Beginning balance NPLs | $2,559 | $17,901 | $20,460 | $4,293 | $- | $4,293 | |||||||
| Plus: | |||||||||||||
| New non-performing loans | - | - | - | - | 17,901 | 17,901 | |||||||
| Less: | |||||||||||||
| Loans returned to accrual status / loan collections | (730) | (35) | (765) | (1,734) | - | (1,734) | |||||||
| Ending balance NPLs | $1,829 | $17,866 | $19,695 | $2,559 | $17,901 | $20,460 | |||||||
| Mortgage loans held-in-portfolio: | |||||||||||||
| Quarter ended | Quarter ended | ||||||||||||
| 30-Sep-18 | 30-Jun-18 | ||||||||||||
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | |||||||
| Beginning balance NPLs | $373,257 | $11,398 | $384,655 | $357,967 | $11,647 | $369,614 | |||||||
| Plus: | |||||||||||||
| New non-performing loans | 44,453 | 4,406 | 48,859 | 103,844 | 3,658 | 107,502 | |||||||
| Advances on existing non-performing loans | - | 52 | 52 | - | - | - | |||||||
| Reclassification from covered loans | - | - | - | 3,413 | - | 3,413 | |||||||
| Less: | |||||||||||||
| Non-performing loans transferred to OREO | (4,688) | (183) | (4,871) | (1,095) | - | (1,095) | |||||||
| Non-performing loans charged-off | (18,590) | (14) | (18,604) | (8,635) | (49) | (8,684) | |||||||
| Loans returned to accrual status / loan collections | (45,653) | (3,353) | (49,006) | (82,237) | (3,858) | (86,095) | |||||||
| Ending balance NPLs | $348,779 | $12,306 | $361,085 | $373,257 | $11,398 | $384,655 | |||||||
| Total non-performing loans held-in-portfolio (excluding consumer): | |||||||||||||
| Quarter ended | Quarter ended | ||||||||||||
| 30-Sep-18 | 30-Jun-18 | ||||||||||||
| (In thousands) | BPPR | Popular U.S. | Popular, Inc. | BPPR | Popular U.S. | Popular, Inc. | |||||||
| Beginning balance NPLs | $538,597 | $35,130 | $573,727 | $519,392 | $15,931 | $535,323 | |||||||
| Plus: | |||||||||||||
| New non-performing loans | 68,347 | 6,069 | 74,416 | 157,638 | 23,797 | 181,435 | |||||||
| Advances on existing non-performing loans | - | 58 | 58 | 647 | 2 | 649 | |||||||
| Reclassification from covered loans | - | - | - | 3,413 | - | 3,413 | |||||||
| Less: | |||||||||||||
| Non-performing loans transferred to OREO | (6,168) | (183) | (6,351) | (2,926) | - | (2,926) | |||||||
| Non-performing loans charged-off | (23,769) | (17) | (23,786) | (18,393) | (49) | (18,442) | |||||||
| Loans returned to accrual status / loan collections | (55,128) | (6,068) | (61,196) | (121,174) | (4,551) | (125,725) | |||||||
Ending balance NPLs (1) | $521,879 | $34,989 | $556,868 | $538,597 | $35,130 | $573,727 | |||||||
(1) Includes $3.4 million of NPLS related to the legacy portfolio as of September 30, 2018 (June 30, 2018 - $3.7 million). | |||||||||||||
| Popular, Inc. | |||||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||||
| Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Quarter ended | Quarter ended | Quarter ended | |||||||||||||
| 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | |||||||||||||
| (Dollars in thousands) | Total | Non-covered | Covered | Total | Non-covered | Covered | Total | ||||||||
| Balance at beginning of period | $643,018 | $606,968 | $33,610 | $640,578 | $509,206 | $30,808 | $540,014 | ||||||||
| Provision for loan losses | 54,387 | 60,054 | - | 60,054 | 157,659 | 3,100 | 160,759 | ||||||||
| 697,405 | 667,022 | 33,610 | 700,632 | 666,865 | 33,908 | 700,773 | |||||||||
| Net loans charged-off (recovered): | |||||||||||||||
| BPPR | |||||||||||||||
| Commercial | 2,369 | 7,960 | - | 7,960 | (438) | - | (438) | ||||||||
| Construction | (125) | (301) | - | (301) | (50) | - | (50) | ||||||||
| Lease financing | 1,557 | 1,157 | - | 1,157 | 1,495 | - | 1,495 | ||||||||
| Mortgage | 21,962 | 11,575 | - | 11,575 | 17,071 | 831 | 17,902 | ||||||||
| Consumer | 33,083 | 24,074 | - | 24,074 | 27,223 | 20 | 27,243 | ||||||||
| Total BPPR | 58,846 | 44,465 | - | 44,465 | 45,301 | 851 | 46,152 | ||||||||
| Popular U.S. | |||||||||||||||
| Commercial | 1,741 | 10,132 | - | 10,132 | 4,282 | - | 4,282 | ||||||||
| Legacy [1] | (685) | (277) | - | (277) | (297) | - | (297) | ||||||||
| Mortgage | (3) | 18 | - | 18 | (174) | - | (174) | ||||||||
| Consumer | 3,788 | 3,276 | - | 3,276 | 3,897 | - | 3,897 | ||||||||
| Total Popular U.S. | 4,841 | 13,149 | - | 13,149 | 7,708 | - | 7,708 | ||||||||
| Total loans charged-off - Popular, Inc. | 63,687 | 57,614 | - | 57,614 | 53,009 | 851 | 53,860 | ||||||||
| Allowance transferred from covered to non-covered loans | - | 33,610 | (33,610) | - | - | - | - | ||||||||
| Balance at end of period | $633,718 | $643,018 | $- | $643,018 | $613,856 | $33,057 | $646,913 | ||||||||
| POPULAR, INC. | |||||||||||||||
| Annualized net charge-offs to average loans held-in-portfolio | 1.00 | % | 0.95 | % | 0.95 | % | 0.92 | % | 0.92 | % | |||||
| Provision for loan losses to net charge-offs | 0.85 | x | 1.04 | x | 1.04 | x | 2.97 | x | 2.98 | x | |||||
| BPPR | |||||||||||||||
| Annualized net charge-offs to average loans held-in-portfolio | 1.24 | % | 1.01 | % | 1.01 | % | 1.07 | % | 1.05 | % | |||||
| Provision for loan losses to net charge-offs | 0.88 | x | 1.00 | x | 1.00 | x | 2.54 | x | 2.56 | x | |||||
| Popular U.S. | |||||||||||||||
| Annualized net charge-offs to average loans held-in-portfolio | 0.29 | % | 0.81 | % | 0.52 | % | |||||||||
| Provision for loan losses to net charge-offs | 0.52 | x | 1.19 | x | 5.52 | 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 Popular U.S. segment. | |||||||||||||||
| Popular, Inc. | |||||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||||
| Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED | |||||||||||||||
| (Unaudited) | |||||||||||||||
| 30-Sep-18 | |||||||||||||||
| (Dollars in thousands) | Commercial | Construction | Legacy [1] | Mortgage | Lease | Consumer | Total | ||||||||
| Specific ALLL | $52,250 | $5,530 | $- | $46,205 | $297 | $26,255 | $130,537 | ||||||||
| Impaired loans | $356,007 | $19,695 | $- | $517,083 | $931 | $114,572 | $1,008,288 | ||||||||
| Specific ALLL to impaired loans | 14.68 | % | 28.08 | % | - | % | 8.94 | % | 31.90 | % | 22.92 | % | 12.95 | % | |
| General ALLL | $192,290 | $9,590 | $377 | $128,382 | $12,009 | $160,533 | $503,181 | ||||||||
| Loans held-in-portfolio, excluding impaired loans | $11,637,700 | $923,670 | $27,566 | $6,787,087 | $902,609 | $5,225,248 | $25,503,880 | ||||||||
| General ALLL to loans held-in-portfolio, excluding impaired loans | 1.65 | % | 1.04 | % | 1.37 | % | 1.89 | % | 1.33 | % | 3.07 | % | 1.97 | % | |
| Total ALLL | $244,540 | $15,120 | $377 | $174,587 | $12,306 | $186,788 | $633,718 | ||||||||
| Total loans held-in-portfolio | $11,993,707 | $943,365 | $27,566 | $7,304,170 | $903,540 | $5,339,820 | $26,512,168 | ||||||||
| ALLL to loans held-in-portfolio | 2.04 | % | 1.60 | % | 1.37 | % | 2.39 | % | 1.36 | % | 3.50 | % | 2.39 | % | |
| [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 Popular U.S. reportable segment. | |||||||||||||||
| 30-Jun-18 | |||||||||||||||
| (Dollars in thousands) | Commercial | Construction | Legacy [1] | Mortgage | Lease | Consumer | Total | ||||||||
| Specific ALLL | $46,626 | $- | $- | $47,515 | $362 | $24,836 | $119,339 | ||||||||
| Impaired loans | $359,447 | $20,460 | $- | $517,308 | $1,130 | $112,485 | $1,010,830 | ||||||||
| Specific ALLL to impaired loans | 12.97 | % | - | % | - | % | 9.19 | % | 32.04 | % | 22.08 | % | 11.81 | % | |
| General ALLL | $195,220 | $7,702 | $700 | $138,951 | $13,923 | $167,183 | $523,679 | ||||||||
| Loans held-in-portfolio, excluding impaired loans | $11,230,546 | $878,863 | $29,250 | $6,859,403 | $870,968 | $3,728,656 | $23,597,686 | ||||||||
| General ALLL to loans held-in-portfolio, excluding impaired loans | 1.74 | % | 0.88 | % | 2.39 | % | 2.03 | % | 1.60 | % | 4.48 | % | 2.22 | % | |
| Total ALLL | $241,846 | $7,702 | $700 | $186,466 | $14,285 | $192,019 | $643,018 | ||||||||
| Total loans held-in-portfolio | $11,589,993 | $899,323 | $29,250 | $7,376,711 | $872,098 | $3,841,141 | $24,608,516 | ||||||||
| ALLL to loans held-in-portfolio | 2.09 | % | 0.86 | % | 2.39 | % | 2.53 | % | 1.64 | % | 5.00 | % | 2.61 | % | |
| [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 Popular U.S. reportable segment. | |||||||||||||||
| Variance | |||||||||||||||
| (Dollars in thousands) | Commercial | Construction | Legacy | Mortgage | Lease | Consumer | Total | ||||||||
| Specific ALLL | $5,624 | $5,530 | $- | $(1,310) | $(65) | $1,419 | $11,198 | ||||||||
| Impaired loans | $(3,440) | $(765) | $- | $(225) | $(199) | $2,087 | $(2,542) | ||||||||
| General ALLL | $(2,930) | $1,888 | $(323) | $(10,569) | $(1,914) | $(6,650) | $(20,498) | ||||||||
| Loans held-in-portfolio, excluding impaired loans | $407,154 | $44,807 | $(1,684) | $(72,316) | $31,641 | $1,496,592 | $1,906,194 | ||||||||
| Total ALLL | $2,694 | $7,418 | $(323) | $(11,879) | $(1,979) | $(5,231) | $(9,300) | ||||||||
| Total loans held-in-portfolio | $403,714 | $44,042 | $(1,684) | $(72,541) | $31,442 | $1,498,679 | $1,903,652 | ||||||||
| Popular, Inc. | |||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||
| Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS | |||||||||||||
| (Unaudited) | |||||||||||||
| 30-Sep-18 | |||||||||||||
| Puerto Rico | |||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Lease financing | Consumer | Total | |||||||
| Allowance for credit losses: | |||||||||||||
| Specific ALLL | $52,250 | $- | $43,841 | $297 | $24,906 | $121,294 | |||||||
| General ALLL | 157,855 | 878 | 126,445 | 12,009 | 141,695 | 438,882 | |||||||
| Total ALLL | $210,105 | $878 | $170,286 | $12,306 | $166,601 | $560,176 | |||||||
| Loans held-in-portfolio: | |||||||||||||
| Impaired loans | $356,007 | $1,829 | $508,258 | $931 | $107,184 | $974,209 | |||||||
| Loans held-in-portfolio, excluding impaired loans | 7,051,469 | 75,964 | 6,023,018 | 902,609 | 4,796,084 | 18,849,144 | |||||||
| Total loans held-in-portfolio | $7,407,476 | $77,793 | $6,531,276 | $903,540 | $4,903,268 | $19,823,353 | |||||||
| 30-Jun-18 | |||||||||||||
| Puerto Rico | |||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Lease financing | Consumer | Total | |||||||
| Allowance for credit losses: | |||||||||||||
| Specific ALLL | $46,626 | $- | $45,039 | $362 | $23,553 | $115,580 | |||||||
| General ALLL | 144,300 | 765 | 137,064 | 13,923 | 155,513 | 451,565 | |||||||
| Total ALLL | $190,926 | $765 | $182,103 | $14,285 | $179,066 | $567,145 | |||||||
| Loans held-in-portfolio: | |||||||||||||
| Impaired | $359,447 | $2,559 | $507,580 | $1,130 | $105,922 | $976,638 | |||||||
| Loans held-in-portfolio, excluding impaired loans | 6,688,151 | 94,616 | 6,135,546 | 870,968 | 3,281,198 | 17,070,479 | |||||||
| Total loans held-in-portfolio | $7,047,598 | $97,175 | $6,643,126 | $872,098 | $3,387,120 | $18,047,117 | |||||||
| Variance | |||||||||||||
| (In thousands) | Commercial | Construction | Mortgage | Lease financing | Consumer | Total | |||||||
| Allowance for credit losses: | |||||||||||||
| Specific ALLL | $5,624 | $- | $(1,198) | $(65) | $1,353 | $5,714 | |||||||
| General ALLL | 13,555 | 113 | (10,619) | (1,914) | (13,818) | (12,683) | |||||||
| Total ALLL | $19,179 | $113 | $(11,817) | $(1,979) | $(12,465) | $(6,969) | |||||||
| Loans held-in-portfolio: | |||||||||||||
| Impaired | $(3,440) | $(730) | $678 | $(199) | $1,262 | $(2,429) | |||||||
| Loans held-in-portfolio, excluding impaired loans | 363,318 | (18,652) | (112,528) | 31,641 | 1,514,886 | 1,778,665 | |||||||
| Total loans held-in-portfolio | $359,878 | $(19,382) | $(111,850) | $31,442 | $1,516,148 | $1,776,236 | |||||||
| Popular, Inc. | |||||||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | |||||||||||||
| Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - POPULAR U.S. OPERATIONS | |||||||||||||
| (Unaudited) | |||||||||||||
| 30-Sep-18 | |||||||||||||
| Popular U.S. | |||||||||||||
| (In thousands) | Commercial | Construction | Legacy | Mortgage | Consumer | Total | |||||||
| Allowance for credit losses: | |||||||||||||
| Specific ALLL | $- | $5,530 | $- | $2,364 | $1,349 | $9,243 | |||||||
| General ALLL | 34,435 | 8,712 | 377 | 1,937 | 18,838 | 64,299 | |||||||
| Total ALLL | $34,435 | $14,242 | $377 | $4,301 | $20,187 | $73,542 | |||||||
| Loans held-in-portfolio: | |||||||||||||
| Impaired loans | $- | $17,866 | $- | $8,825 | $7,388 | $34,079 | |||||||
| Loans held-in-portfolio, excluding impaired loans | 4,586,231 | 847,706 | 27,566 | 764,069 | 429,164 | 6,654,736 | |||||||
| Total loans held-in-portfolio | $4,586,231 | $865,572 | $27,566 | $772,894 | $436,552 | $6,688,815 | |||||||
| 30-Jun-18 | |||||||||||||
| Popular U.S. | |||||||||||||
| (In thousands) | Commercial | Construction | Legacy | Mortgage | Consumer | Total | |||||||
| Allowance for credit losses: | |||||||||||||
| Specific ALLL | $- | $- | $- | $2,476 | $1,283 | $3,759 | |||||||
| General ALLL | 50,920 | 6,937 | 700 | 1,887 | 11,670 | 72,114 | |||||||
| Total ALLL | $50,920 | $6,937 | $700 | $4,363 | $12,953 | $75,873 | |||||||
| Loans held-in-portfolio: | |||||||||||||
| Impaired loans | $- | $17,901 | $- | $9,728 | $6,563 | $34,192 | |||||||
| Loans held-in-portfolio, excluding impaired loans | 4,542,395 | 784,247 | 29,250 | 723,857 | 447,458 | 6,527,207 | |||||||
| Total loans held-in-portfolio | $4,542,395 | $802,148 | $29,250 | $733,585 | $454,021 | $6,561,399 | |||||||
| Variance | |||||||||||||
| (In thousands) | Commercial | Construction | Legacy | Mortgage | Consumer | Total | |||||||
| Allowance for credit losses: | |||||||||||||
| Specific ALLL | $- | $5,530 | $- | $(112) | $66 | $5,484 | |||||||
| General ALLL | (16,485) | 1,775 | (323) | 50 | 7,168 | (7,815) | |||||||
| Total ALLL | $(16,485) | $7,305 | $(323) | $(62) | $7,234 | $(2,331) | |||||||
| Loans held-in-portfolio: | |||||||||||||
| Impaired loans | $- | $(35) | $- | $(903) | $825 | $(113) | |||||||
| Loans held-in-portfolio, excluding impaired loans | 43,836 | 63,459 | (1,684) | 40,212 | (18,294) | 127,529 | |||||||
| Total loans held-in-portfolio | $43,836 | $63,424 | $(1,684) | $39,309 | $(17,469) | $127,416 | |||||||
| Popular, Inc. | ||||||||
| Financial Supplement to Third Quarter 2018 Earnings Release | ||||||||
| Table N - Reconciliation to GAAP Financial Measures | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share or per share information) | 30-Sep-18 | 30-Jun-18 | 30-Sep-17 | |||||
| Total stockholders’ equity | $5,244,349 | $5,289,661 | $5,285,431 | |||||
| Less: Preferred stock | (50,160) | (50,160) | (50,160) | |||||
| Less: Goodwill | (687,536) | (627,294) | (627,294) | |||||
| Less: Other intangibles | (29,186) | (31,023) | (38,016) | |||||
| Total tangible common equity | $4,477,467 | $4,581,184 | $4,569,961 | |||||
| Total assets | $47,919,428 | $47,535,177 | $42,601,267 | |||||
| Less: Goodwill | (687,536) | (627,294) | (627,294) | |||||
| Less: Other intangibles | (29,186) | (31,023) | (38,016) | |||||
| Total tangible assets | $47,202,706 | $46,876,860 | $41,935,957 | |||||
| Tangible common equity to tangible assets | 9.49 | % | 9.77 | % | 10.90 | % | ||
| Common shares outstanding at end of period | 100,336,341 | 102,296,440 | 102,026,417 | |||||
| Tangible book value per common share | $44.62 | $44.78 | $44.79 | |||||
CONTACT:
Popular, Inc.
Media Relations:
Teruca Rullán, 787-281-5170
Mobile: 917-679-3596
Senior Vice President, Corporate Communications