1
EXHIBIT 99(A)
[POPULAR, INC. LOGO]
For additional information contact:
Mr. Jorge A. Junquera
Senior Executive Vice President
Or visit our web site at http://www.popularinc.com
Telephone (787) 754-1685
July 12, 2000
News Release
POPULAR, INC. EARNINGS FOR THE QUARTER AND SIX-MONTH PERIOD ENDED JUNE
30, 2000
Popular, Inc. (the Corporation) reported net income of $65.1 million or
$0.46 earnings per common share (EPS) for the second quarter of 2000, compared
with $64.0 million or $0.46 for the same period in 1999. Net earnings for the
first quarter of 2000 were $64.2 million, or $0.46 per common share.
The Corporation's return on assets (ROA) and return on common equity
(ROE) for the second quarter of 2000 were 1.01% and 14.43%, respectively,
compared with 1.08% and 15.53% for the same period in 1999 and 1.01% and 14.57%
for the first quarter of 2000.
For the first six months of 2000, the Corporation's net earnings
reached $129.3 million, compared with $127.6 million for the same period in
1999. EPS for the first six months of 2000 and 1999 were $0.92 and $0.91,
respectively. ROA and ROE for the first six months of 2000 were 1.01% and
14.50%, respectively. For the same period of 1999, these ratios were 1.11% and
15.78%.
The Corporation's results of operations for the quarter ended June 30,
2000, when compared with the same quarter of 1999, reflected an increase of $7.1
million in net interest income together with an increase of $22.4 million in
other revenues. These improvements were partially offset by rises of $12.1
million in the provision for loan losses and $14.2 million in operating
expenses.
The growth in net interest income over the second quarter of 1999 was
primarily due to an increase of $2.2 billion in average earning assets driven
principally by a $2.0 billion increase in the loan portfolio. The increase in
the volume of earning assets was funded mainly through a higher average volume
of borrowings and interest-bearing deposits. The net interest yield for the
quarter ended June 30, 2000, was 4.03%, compared with 4.33% for the second
quarter of 1999. The reduction in the net interest yield resulted from an
increase of 72 basis points in the average cost of interest bearing
2
2 - POPULAR, INC. 2000 SECOND QUARTER RESULTS
liabilities, mostly as a result of a higher interest rate scenario and a higher
proportion of short-term borrowings, partially offset by an increase of 37 basis
points in the average yield on earning assets, mainly in the investment
portfolio. For the first quarter of 2000 the net interest yield was 4.08%. For
the first six months of 2000, the net interest yield was 4.06%, compared with
4.39% for the same period of 1999.
The provision for loan losses for the second quarter of 2000 amounted
to $48.7 million compared with $36.6 million for the second quarter of 1999. The
increase resulted from the growth in the loan portfolio, non-performing assets
and net charge-offs. Net charge-offs for the quarter ended June 30, 2000, were
$38.1 million or 0.97% of average loans compared with $31.2 million or 0.91% for
the second quarter of 1999, and $48.6 million or 1.29% for the first quarter of
2000. The increase in net charge-offs when compared to the second quarter of
1999 was primarily reflected in the consumer, commercial and lease financing
portfolios. Non-performing assets were $379 million or 2.40% of loans at June
30, 2000, compared with $303 million or 2.18% at June 30, 1999 and $361 million
or 2.38% at March 31, 2000. The rise in non-performing assets from June 30, 1999
was mostly reflected in non-performing commercial loans and leases. The increase
in non-performing commercial loans was principally due to the classification as
non-accrual of a limited number of commercial loan relationships whose credit
quality has deteriorated. Most of the increase in non-performing loans since the
first quarter of 2000 is due to the inclusion of $13 million in leases in our
U.S. operations that became delinquent due to an external fraud scheme that was
exposed during this quarter. This balance is expected to be recovered from the
insurance companies, which have already confirmed coverage.
Non-interest income, excluding securities and trading gains, grew $21.0
million or 24.1%, reaching $108.2 million for the second quarter of 2000,
compared with $87.2 million for the same period in 1999. These revenues totaled
$101.6 million in the first quarter of this year. The growth in non-interest
income was led by an increase of $15.7 million in other service fees, $4.2
million in other operating income and $1.1 million in service charges on deposit
accounts. The increase in other service fees is mostly attributed to processing
fees generated by GM Group, acquired in July 1999, and to the growth of the
Corporation's retail financial services businesses. Also, credit card fees rose
principally due to late payment and cash advance fees implemented during March
in Puerto Rico upon the enactment of a new regulation authorizing these changes,
and to the growth of our credit card operations in the United States. Moreover,
there was a rise in debit card fees mainly as a result of the growing
3
3 - POPULAR, INC. 2000 SECOND QUARTER RESULTS
volume of point-of-sale terminals and transactions. The increase in other
operating income is mainly attributed to other revenues derived by GM Group,
corresponding mainly to technology and system engineering services. Service
charges on deposit accounts increased due to higher activity on commercial
accounts.
Operating expenses for the second quarter of 2000 increased $14.2
million or 6.9%, reaching $219.4 million for the second quarter of 2000. This
increase was mostly reflected in personnel, equipment, net occupancy and
communication expenses. The rise in personnel costs resulted from increased
employment levels, mainly related to the aforementioned acquisition of GM Group
and business expansion in the U.S. This increase was partially offset by a lower
medical plan expense due to revisions made to the plan effective April 1, 2000,
and to lower pension and post-retirement benefit expenses. The rise in equipment
expenses was also attributed to GM Group and to higher depreciation expenses of
new equipment acquired throughout 1999 as part of the Y2K plan. The increase in
net occupancy and communication expenses resulted mostly from the Corporation's
business and geographic expansion. Furthermore, other operating expenses grew
primarily due to higher sundry losses, travelling and miscellaneous expenses,
and to costs associated to the operations of GM Group. When compared to the
first quarter of 2000, the Corporation experienced a decrease of $7.1 million or
3.1% in operating expenses.
The Corporation's total assets at June 30, 2000, amounted to $26.5
billion, compared with $23.7 billion at June 30, 1999. Total assets at March 31,
2000, were $25.3 billion. The Corporation's earning assets reached $24.7 billion
at June 30, 2000, compared with $22.1 billion and $23.6 billion at June 30, 1999
and March 31, 2000, respectively.
Total loans were $15.8 billion at June 30, 2000 or $1.9 billion more
than the level at June 30, 1999 and $574 million over March 31, 2000. Commercial
and mortgage loans accounted for the largest growth since June 30, 1999,
increasing $817 million and $783 million, respectively. These same portfolios
rose $109 million and $389 million, respectively, when compared with March 31,
2000.
The allowance for loan losses at June 30, 2000, amounted to $306
million or 1.94% of loans compared with $283 million or 2.03% at June 30, 1999,
and $293 million or 1.93% at March 31, 2000. At June 30, 2000, the allowance for
loan losses as a percentage of non-performing assets was 80.6% compared with
93.3% at June 30, 1999 and 81.2% at March 31, 2000.
Total deposits grew to $14.5 billion at June 30, 2000, from $13.9
billion at June 30, 1999. Time
4
4 - POPULAR, INC. 2000 SECOND QUARTER RESULTS
deposits grew $798 million mainly as a result of the higher interest rate
scenario. At March 31, 2000, total deposits amounted to $14.3 billion.
Borrowed funds, including subordinated notes and capital securities,
amounted to $9.8 billion at June 30, 2000 compared with $7.7 billion at June 30,
1999, and $8.8 billion at March 31, 2000.
At June 30, 2000, stockholders' equity totaled $1.74 billion compared
with $1.65 billion at the same date last year. These figures include unrealized
losses on securities available-for-sale, net of deferred taxes, of $149.8
million as of June 30, 2000, compared with unrealized losses of $38.9 million as
of the same date last year. Stockholders' equity was $1.68 billion at March 31,
2000.
The market value of the Corporation's common stock at June 30, 2000,
was $19.06 per share, compared with $30.31 at June 30, 1999 and $22.19 at March
31, 2000. The Corporation's market capitalization at June 30, 2000, was $2.6
billion, compared with $4.1 billion at June 30, 1999, and $3.0 billion at March
31, 2000. At June 30, 2000, the Corporation's common stock had a book value per
share of $12.05.
At the beginning of July, the Corporation completed the acquisition of
Aurora National Bank, a subsidiary of GreatBanc, Inc., operating two branches in
Illinois, with $111 million in deposits and $81 million in loans as of May 31,
2000. In addition, two de novo branches were opened in New Jersey and Florida,
for a total of 95 branches in our continental U.S. banking network. Also, the
Corporation formalized its entrance into the insurance business through the
creation of Banco Popular, National Association, a legal entity registered in
Florida, and its wholly-owned subsidiary Popular Insurance, Inc., an insurance
agency licensed under the laws of Puerto Rico.
The Corporation's common and preferred stocks are traded on the
National Association of Securities Dealers Automated Quotation (NASDAQ) National
Market System under the symbols BPOP and BPOPP, respectively.
* * *
5
POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
Quarter ended
June 30 Second
------------------------------------ Quarter
2000 - 1999 First
Percent Quarter
2000 1999 Variance 2000
--------------------------------------------------------------------------
SUMMARY OF OPERATIONS
Interest income $ 524,774 $ 453,401 15.74% $ 505,801
Interest expense 278,858 214,550 29.97 263,561
--------------------------------------------------------------------------
Net interest income 245,916 238,851 2.96 242,240
Provision for loan losses 48,719 36,631 33.00 50,013
--------------------------------------------------------------------------
Net interest income after provision
for loan losses 197,197 202,220 (2.48) 192,227
Other operating income 108,263 87,222 24.12 101,645
Gain on sale of securities 329 286 15.03 13,264
Trading account profit (loss) 693 (582) 817
--------------------------------------------------------------------------
Total other income 109,285 86,926 25.72 115,726
Salaries and benefits 92,642 88,555 4.62 99,092
Profit sharing 5,568 6,084 (8.48) 4,132
Amortization of intangibles 8,537 7,586 12.54 8,592
Other operating expenses 112,625 102,992 9.35 114,688
--------------------------------------------------------------------------
Total operating expenses 219,372 205,217 6.90 226,504
--------------------------------------------------------------------------
Income before income tax and minority
interest 87,110 83,929 3.79 81,449
Income tax 21,684 20,334 6.64 18,756
Net (earnings) losses of minority interest (303) 382 1,496
--------------------------------------------------------------------------
Net income $ 65,123 $ 63,977 1.79 $ 64,189
==========================================================================
Net income applicable to common stock $ 63,036 $ 61,890 1.85 $ 62,102
==========================================================================
Earnings per common share:
Net income $ 0.46 $ 0.46 $ 0.46
------------- ------------- ------------
Average common shares outstanding 135,878,677 135,491,324 135,763,765
Common shares outstanding at end of
period 135,865,104 134,698,572 135,747,610
SELECTED AVERAGE BALANCES
Total assets .............................. $ 25,972,365 $ 23,655,275 9.80 $ 25,466,481
Loans ..................................... 15,681,239 13,681,097 14.62 15,027,521
Earning assets ............................ 24,337,038 22,092,040 10.16 23,756,508
Deposits .................................. 14,421,873 13,816,195 4.38 14,147,519
Interest-bearing liabilities .............. 20,574,383 18,406,158 11.78 20,091,089
Stockholders' equity ...................... 1,857,501 1,698,197 9.38 1,815,021
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets .............................. $ 26,451,246 $ 23,665,621 11.77 $ 25,302,025
Loans ..................................... 15,774,604 13,887,392 13.59 15,200,931
Earning assets ............................ 24,677,648 22,119,957 11.56 23,602,803
Deposits .................................. 14,460,454 13,902,387 4.01 14,337,861
Interest-bearing liabilities .............. 21,197,604 18,304,859 15.80 20,173,181
Stockholders' equity ...................... 1,736,890 1,650,682 5.22 1,682,293
PERFORMANCE RATIOS
Net interest yield * ...................... 4.03% 4.33% 4.08%
Return on assets .......................... 1.01 1.08 1.01
Return on common equity ................... 14.43 15.53 14.57
CREDIT QUALITY DATA
Non-performing assets ..................... $ 379,034 $ 303,025 25.08 $ 361,247
Net loans charged-off ..................... 38,116 31,157 22.34 48,581
Allowance for loan losses ................. 305,526 282,590 8.12 293,442
Non-performing assets to total assets ..... 1.43% 1.28% 1.43%
Allowance for losses to loans ............. 1.94 2.03 1.93
* Not on a taxable equivalent basis
5
6
POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
For the period ended
June 30
--------------------------------------------
Percent
2000 1999 Variance
--------------------------------------------
SUMMARY OF OPERATIONS
Interest income $ 1,030,575 $ 897,596 14.82%
Interest expense 542,419 422,507 28.38
--------------------------------------------
Net interest income 488,156 475,089 2.75
Provision for loan losses 98,732 72,402 36.37
--------------------------------------------
Net interest income after provision
for loan losses 389,424 402,687 -3.29
Other operating income 209,908 174,111 20.56
Gain on sale of securities 13,593 736
Trading account profit (loss) 1,510 (863)
--------------------------------------------
Total other income 225,011 173,984 29.33
Salaries and benefits 191,734 178,271 7.55
Profit sharing 9,700 12,403 (21.79)
Amortization of intangibles 17,129 15,206 12.65
Other operating expenses 227,313 201,228 12.96
--------------------------------------------
Total operating expenses 445,876 407,108 9.52
--------------------------------------------
Income before income tax and minority
interest 168,559 169,563 -0.59
Income tax 40,440 42,736 -5.37
Net losses of minority interest 1,193 814
--------------------------------------------
Net income $ 129,312 $ 127,641 1.31
============================================
Net income applicable to common stock $ 125,138 $ 123,466 1.35
============================================
Earnings per common share:
Net income $ 0.92 $ 0.91 1.10
============================================
Average common shares outstanding 135,821,221 135,599,703
Common shares outstanding at end
of period 135,865,104 134,698,572
SELECTED AVERAGE BALANCES
Total assets ............................ $ 25,719,423 $ 23,178,177 10.96
Loans ................................... 15,354,380 13,442,576 14.22
Earning assets .......................... 24,046,773 21,677,529 10.93
Deposits ................................ 14,284,696 13,697,877 4.28
Interest-bearing liabilities ............ 20,332,736 18,016,322 12.86
Stockholders' equity .................... 1,836,261 1,678,159 9.42
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets ............................ $ 26,451,246 $ 23,665,621 11.77
Loans ................................... 15,774,604 13,887,392 13.59
Earning assets .......................... 24,677,648 22,119,957 11.56
Deposits ................................ 14,460,454 13,902,387 4.01
Interest-bearing liabilities ............ 21,197,604 18,304,859 15.80
Stockholders' equity .................... 1,736,890 1,650,682 5.22
PERFORMANCE RATIOS
Net interest yield * .................... 4.06% 4.39%
Return on assets ........................ 1.01 1.11
Return on common equity ................. 14.50 15.78
CREDIT QUALITY DATA
Non-performing assets ................... $ 379,034 $ 303,025 25.08
Net loans charged-off ................... 86,697 57,061 51.94
Allowance for loan losses ............... 305,526 282,590 8.12
Non-performing assets to total assets ... 1.43% 1.28%
Allowance for losses to loans ........... 1.94 2.03
* Not on a taxable equivalent basis
6