Popular (BPOP) 8-K Regulation FD Disclosure

FINANCIAL RESULTS 

Q1 2014

Exhibit 99.1

1

Forward

Looking

Statements

The

information

contained

in

this

presentation

includes

forward-looking

statements

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995.

These

forward-looking

statements

are

based

on

management’s

current

expectations

and

involve

risks

and

uncertainties

that

may

cause

the

Company's

actual

results

to

differ

materially

from

any

future

results

expressed

or

implied

by

such

forward-looking

statements.

Factors

that

may

cause

such

a

difference

include,

but

are

not

limited

to

(i)

the

rate

of

growth

in

the

economy

and

employment

levels,

as

well

as

general

business

and

economic

conditions;

(ii)

changes

in

interest

rates,

as

well

as

the

magnitude

of

such

changes;

(iii)

the

fiscal

and

monetary

policies

of

the

federal

government

and

its

agencies;

(iv)

changes

in

federal

bank

regulatory

and

supervisory

policies,

including

required

levels

of

capital;

(v)

the

relative

strength

or

weakness

of

the

consumer

and

commercial

credit

sectors

and

of

the

real

estate

markets

in

Puerto

Rico

and

the

other

markets

in

which

borrowers

are

located;

(vi)

the

performance

of

the

stock

and

bond

markets;

(vii)

competition

in

the

financial

services

industry;

(viii)

possible

legislative,

tax

or

regulatory

changes;

(ix)

the

impact

of

the

Dodd-Frank

Act

on

our

businesses,

business

practice

and

cost

of

operations;

and

(x)

additional

Federal

Deposit

Insurance

Corporation

assessments.

Other

than

to

the

extent

required

by

applicable

law,

the

Company

undertakes

no

obligation

to

publicly

update

or

revise

any

forward-looking

statement.

Please

refer

to

our

Annual

Report

on

Form

10-K

for

the

year

ended

December

31,

2013

and

other

SEC

reports

for

a

discussion

of

those

factors

that

could

impact

our

future

results.

The

financial

information

included

in

this

presentation

for

the

quarter

ended

March

31,

2014

is

based

on

preliminary

unaudited

data

and

is

subject

to

change.

Q1 2014 Highlights

2

•

Consolidated

NPLs

remained

relatively

flat

at

2.9%

vs.

2.8%

QoQ

•

NCOs

of

0.80%

compared

to

0.66%

last

quarter

•

NPL

inflows

impacted

by

$52

million

PR

commercial

loan

added

to

non-accrual

•

Reported

net

income

of

$86

million

•

Strong

margins:

Popular,

Inc.

4.70%,

BPPR

5.49%

Credit

Capital

Earnings

•

$250

million

dividend

approved from

BPNA

to

BHC

•

$100

million

contribution

to

BPPR

California

20

1,183

1,132

Illinois

12

521

761

Central Florida

9

115

239

Branches

Loans ($MM)

Deposits ($MM)

BPNA Transactions

3

•

Sale of all branches, deposits and substantially all loans in California, Illinois and

Central Florida regions

Strategic focus going forward on NY metro and South Florida regions

•

Simplifying operations through back office consolidation from Rosemont, IL to San

Juan, PR and New York, creating additional efficiencies

•

Looking

at

all

components

of

BPNA

balance

sheet

to

manage

credit

and

capital

Lower

risk

profile

and

smaller

balance

sheet

to

yield

additional

capital

•

Aggregate mark of loans of approximately $21.3 million (-1.17)% and deposit

premium of approximately $46.3 million (+2.17)%, resulting in a net premium of

approximately $25.0 million (+1.17%)

$

$

TARP & Capital

4

•

Submitted an application to repay TARP in full; subject to regulatory approval

•

Robust capital, Tier1 Common Equity ratio of 15.1%, $2.4 billion

in excess of

5% CCAR target

•

BHC cash approximately $680 million after the effect of the BPNA

dividend

Common Tier 1 Capital

5.0%

15.1%

13.3%

Tier 1 Capital

6.0%

19.4%

15.3%

Total Capital

10.0%

20.6%

16.6%

Leverage

5.0%

13.1%

10.4%

Minimum Well

Capitalized Ratio

Q1 2014

Ratio

Pro-forma

Q1 2014 Exc. Tarp

Q1 2014

Q4 2013

See appendix for Non-GAAP to GAAP reconciliation

Non GAAP

In thousands

Adjusted

Net interest income

$372,967

$376,342

($3,375)

Non Interest Income

130,771

135,996

(5,225)

Total revenues before FDIC loss share impact

503,738

512,338

(8,600)

FDIC loss-share income (expense)

(24,206)

(37,164)

12,958

Gross revenues

479,532

475,174

4,358

Provision for loan losses (excluding covered loans)

47,358

47,729

(371)

Provision for loan losses (covered loans)

25,714

8,907

16,807

Total provision for loan losses

73,072

56,636

16,436

Net revenues

406,460

418,538

(12,078)

Personnel costs

113,154

114,360

(1,206)

Other real estate owned (OREO) expenses

6,187

10,558

(4,371)

Other operating expenses

177,446

197,785

(20,339)

Total operating expenses

296,787

322,703

(25,916)

Income before tax

109,673

95,835

13,838

Income tax expense

23,264

21,217

2,047

Net  income

$86,409

$74,618

$11,791

Adjusted 

Variance

Financial Summary (unaudited)

5

Capital

6

**Excess

capital

over

“well

capitalized”

Basel

I

threshold

*Averages

for

30

bank

holding

Companies

with

$50

billion

or

more

of

total

consolidated

assets,

consisting

of

19

firms

included

in

Comprehensive

Capital

Analysis

and

Review

(CCAR)

and

11

firms

included

in

Capital

Plan

Review

(CapPR).

Source

SNL

Financial

&

FactSet.

**

**

Capital Ratio %

Excess capital in $, billions

$2.4

$3.1

$2.5

Tier 1 Common

Tier 1 Capital

Total Capital

15.1

19.4

20.6

11.1

10.8

12.0

14.7

8.8

Tier 1 Common

Tier 1 Capital

Total Capital

Tangible Common

Equity

BPOP Q1 2014

CCAR & CapPR Q4 2013 *

Tier

1

Common

Equity

capital

ratio

of

15.1%

exceeds

current

CCAR

5%

target

by

We expect to remain “well-capitalized”

under Basel III rules issued by the Federal

$2.4

billion

Reserve

Non Performing Assets

•

NPLs increased by $37 million, or 6%, QoQ as a

result of:

$52 million single commercial credit from BPPR

$23 million mortgage NPL increase in BPPR

•

Partially offset by:

$48 million decline in BPNA NPLs, mostly

commercial as a result of loan sales

Non-Performing Loans ($MM)

7

Metrics exclude covered loans

Non-Performing Assets ($MM)

Overall Stable;  Impacted by Single Commercial Credit Relationship

•

NPAs, including covered loans,  increased by

$24 million, or 3%, QoQ

•

OREOs decreased by $8 million, or 3%, mainly

driven by higher disposition of foreclosed

properties from the covered portfolio

Total NPL Inflows  ($MM)

NPL Inflows

•

Total

NPL

inflows

increased

by

$64

million,

or

45%

QoQ

BPPR

commercial

inflows

include

the

impact

of

a

single

$52

million

credit

relationship,

which

continues

to

be

current

BPNA

commercial

increase

of

$9

million

includes

a

$10

million

loan

which

was

also

sold

during

the

quarter

•

Mortgage

NPL

inflows

improved

by

$7

million,

or

7%

QoQ,

down

to

$93

million

Mortgage NPL Inflows ($MM)

Commercial, Construction & Legacy NPL Inflows  ($MM)

8

Excludes consumer loans

Metrics exclude covered loans

Q1 2014 inflows impacted by Single Commercial Credit Relationship

Stable Asset Quality

•

NCOs increased by $8 million QoQ

Impact of $9 million recovery in Q4 2013 from the

sale of previously charged-off PR credit cards and

personal loans

NCO ratio of 0.80% compared to 0.66% in Q4 2013

•

Provision flat at $47 million in Q1 2014 vs. $48 million

in Q4 2013

Provision to NCO of 110%, compared to 135% in Q4

2013

•

ALLL to loans stable at 2.51% vs. 2.49% on Q4 2013

•

ALLL to NPL coverage ratio at 85% in Q1 2014 vs.

90% in Q4 2013

Q1 2014 NPLs impacted by the addition of the single

$52 million commercial credit relationship

ALLL ($MM), ALLL-to-NCO and ALLL-to-NPL Ratios

NCO ($MM) and NCO-to-Loan Ratio

9

Metrics exclude covered loans

Provision ($MM) and Provision-to-NCO Ratio

PR Public Sector Exposure

•

Loans to the Government of Puerto Rico and Public Corporations are either

collateralized loans or obligations that have a specific source of income or

revenues identified for their repayment

10

•

Loans

to

various

municipalities

backed

by

unlimited

taxing

power

or

real

and

personal property taxes collected within such municipalities

•

Includes $277 million residential mortgage loans to individual borrowers with a

government guarantee

•

$48 million in PR pass-through housing bonds backed by FNMA, GNMA or

residential loan CMOs

•

$38

million

of

industrial

development

notes

payable

primarily

by

non

government tenants

•

Our current direct exposure to the PR government, instrumentalities and municipalities is $1.1 billion, of

which approximately $944 million is outstanding, flat to last quarter

•

Of the amount outstanding, $781 million consists of loans and $163 million are securities

PR Government

$520 million

outstanding

Municipalities

$424 million

outstanding

•

Additional $363 million in indirect exposure of loans or instruments that are payable by non-

governmental entities and have a government guarantee to cover any shortfall in collateral in the event

of borrower default

Indirect

Exposure

$363 million

outstanding

Driving Shareholder Value

11

Capital

Earnings

Additional

Value

•

Robust capital with excess Tier 1 Common Equity of $2.4 billion and

significantly

improved

asset

quality

move

us

closer

to

TARP

exit

in

the

most shareholder-friendly fashion

•

BPNA transactions are the first steps toward a more active capital

management  process

•

Unique franchise in PR provides strong, stable revenue-

generating capacity

•

Popular’s credit metrics continue near historical low levels

•

EVTC ownership, BHD stake and restructured US operations

APPENDIX

APPENDIX

Who We Are –

Popular, Inc. 

Franchise

•

Financial services company

•

Headquartered in San Juan, Puerto Rico

•

$37 billion in assets (top 40 bank holding company in

the U.S.)

•

$25 billion in total loans

•

$27 billion in total deposits

•

270 branches serving customers in Puerto Rico,

New York, California, Florida, Illinois, U.S. Virgin

Islands, and New Jersey

•

NASDAQ ticker symbol: BPOP

•

Market Cap: $3.21 billion

1

1

As of March 31, 2014

*Doing business as Popular Community Bank.

Summary Corporate Structure

Assets = $36.7 bn

Popular Auto,

Inc.

Banco Popular

de Puerto

Rico

Popular

Securities, Inc.

Assets = $27 .7 bn

Assets = $8.8bn

Banco Popular

North America*

Puerto Rico operations

Selected equity investments

(first two under “corporate”

segment and third and fourth under PR):

Popular

Insurance, Inc.

Popular North

America, Inc.

U.S. banking operations

Transaction processing,

business processes

outsourcing

14.9% stake

Adjusted EBITDA  of $177.7

million for the year ended

December 31, 2013

PRLP

2011

Holdings

Construction and

commercial loans vehicle

24.9% stake

PR Asset Portfolio 2013-1

International, LLC

Construction, commercial

loans and OREOs

vehicle

24.9% stake

13

Dominican

Republic bank

15.79% stake

2013

approximate net

income $111

million

Total Deposits (Net of Brokered)

1

39%

Total Loans

1

36%

Commercial & Construction Loans

1

39%

Credit Cards

1

52%

Mortgage Loan Production

1

32%

Personal Loans

1

30%

Auto Loans/Leases

3

17%

Assets Under Management

3

14%

Category

Market

Position as of

Q4 2013

Market Share

as of Q4 2013

Market Leadership in Puerto Rico

Popular’s Market Share Trend

Puerto Rico Market Share by Category

14

Source: Puerto Rico Office of the Commissioner of Financial Institutions & 10K reports; Mortgage

origination data is not publicly available; Figures presented for BPPR and competitors were provided

internally; Personal Loans: As a group, Credit Unions represent the largest competitor with 52% market

share (115 Credit Unions were in business as of December 31, 2013 guaranteed by COSSEC)

PR & US Business

15

1

Excludes covered loans

[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.

16

GAAP Reconciliation Q4 2013

17

Consolidated Credit Summary (Excluding  Covered Loans)

1

Excluding provision for loan losses and net write-downs related to the asset sale

$ in millions

Q1 14

Q4 13

Q3 13

Q2 13

Q1 13

Loans Held in Portfolio (HIP)

$21,612

$21,612

$21,427

$21,522

$21,634

Performing HFS

94

109

123

180

183

NPL HFS

1

1

2

11

18

Total Non Covered Loans

21,707

21,722

21,552

21,713

21,835

Non - performing loans (NPLs)

$635

$598

$618

$614

$1,051

Commercial

$310

$282

$320

$328

$321

Construction

$22

$24

$29

$45

$51

Legacy

$12

$15

$24

$28

$36

Mortgage

$252

$233

$203

$172

$601

Consumer

$39

$44

$42

$41

$42

NPLs HIP to loans HIP

2.94%

2.77%

2.88%

2.85%

4.86%

Net charge - offs (NCOs)

$43

$35

$58

$79

$81

Commercial

$12

$16

$21

$41

$32

Construction

($2)

($2)

($5)

($2)

$0

Legacy

($5)

($5)

$2

($1)

$2

Mortgage

$9

$8

$13

$16

$20

Consumer

$28

$18

$27

$26

$27

Write - downs bulk sale

$0

$0

$0

$200

$163

NCOs to average loans HIP

0.80%

0.66%

1.08%

1.47%

1

1.55%

1

Provision for loan losses (PLL)

$47

$48

$55

$55

1

$58

1

PLL to average loans HIP

0.88%

0.89%

1.03%

1.02%

1

1.10%

1

PLL to NCOs

1.10x

1.35x

0.95x

0.69x

1

0.71x

1

Allowance for loan losses (ALL)

$543

$538

$526

$529

$584

ALL to loans HIP

2.51%

2.49%

2.46%

2.46%

2.70%

ALL to NPLs HIP

85.40%

90.05%

85.19%

86.14%

55.54%

De-risked Loan Portfolios

•

PR

has

derisked

its

commercial

loan

portfolio

by

reducing

its

exposure

in

asset

classes

with

historically

high

loss

content

Commercial

portfolio,

including

construction,

has

decreased

from

55%

of

total

loans

held-in-portfolio

to

41%

Construction

portfolio

is

down

by

88%

since

Q4

2007

SME

(2)

lending

is

down

by

55%

from

Q4

2007

•

Collateralized

exposure

now

represents

a

larger

portion

of

consumer

loan

portfolio

•

Unsecured

loans

credit

quality

has

improved

as

overall

FICO

scores

have

increased

Loan Composition (Held-in Portfolio)

18

(1) NCOs distribution represents the percentage allocation of  NCOs  from Q1 2008 through Q1 2014 per each loan category

(2) Small and Medium Enterprise

Legacy portfolio is comprised of certain commercial, construction and lease financings lending products  exited by the US.

NCOs

$ in millions

Distribution

(1)

CRE SME (2)

$2,938

33%

$1,539

23%

($1,399)

-48%

23%

C&I SME (2)

2,287

25%

828

13%

(1,459)

-64%

28%

C&I Corp

1,592

18%

2,050

31%

458

29%

6%

Construction

1,231

14%

142

2%

(1,089)

-88%

37%

CRE Corp

892

10%

1,954

30%

1,062

119%

4%

Multifamily

64

1%

73

1%

9

14%

2%

Total

$9,004

$6,585

($2,419)

-27%

100%

Q4 2007

Variance

Q1 2014

$ in millions

Q4 2007

Q1 2014

Q4 2007

Q1 2014

Q4 2007

Q1 2014

Variance

Commercial

$7,774

$6,443

$4,515

$3,572

$12,288

$10,015

($2,273)

Consumer

3,552

3,406

1,698

600

5,249

4,006

(1,243)

Mortgage

2,933

5,425

3,139

1,245

6,071

6,670

599

Construction

1,231

142

237

35

1,468

177

(1,291)

Leases

814

547

-

-

814

547

(267)

Legacy

-

2,130

197

2,130

197

(1,933)

Total

$16,304

$15,963

$11,718

$5,649

$28,021

$21,612

($6,409)

Puerto Rico

US

Total

PR Commercial & Construction  Distribution

Popular, Inc. Credit Ratings

•

Our senior unsecured ratings have been gradually improving since

2010:

•

Moody’s:

B1

Watch (Revised February 2014)

•

Fitch:

BB-

Stable Outlook (Reaffirmed December 2013)

•

S&P:

B+

Stable Outlook  (Revised December 2011)

•

February 2014: Moody's placed BPOP on review for downgrade

•

October 2013: Moody’s revised outlook to negative

•

January 2013: Fitch raised to BB-

from B+; outlook revised to stable

•

December 2012: Moody’s downgraded BPOP to B1; stable outlook assigned

•

April 2012: Moody’s placing most of the PR banks under review with the possibility

of

downgrades, due to the state of the Puerto Rico economy

•

January 2012:  Fitch raised BPOP’s outlook to positive

•

December 2011: S&P raised its ratings on BPPR to BB from BB-

and changed

outlook to stable given revised bank criteria to regional banks

•

July 2011: S&P raised our senior unsecured rating by one notch to B+

19

FINANCIAL RESULTS 

Q1 2014