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EXHIBIT 99 (a)
[POPULAR, INC. LOGO]
For additional information contact:
Mr. Jorge A. Junquera
Senior Executive Vice President
Telephone (787) 754-1685
Or visit our web site at http://www.popularinc.com
April 10, 2001 News Release
POPULAR, INC. ANNOUNCES EARNINGS FOR THE QUARTER ENDED MARCH 31, 2001
Popular, Inc.'s (the Corporation) net income for the first quarter
of 2001 was $74.2 million as compared with $64.2 million reported for the same
quarter of 2000, an increase of $10.0 million or 15.7%. Earnings per common
share (EPS) for the quarter were $0.53, or 15.2% higher than $0.46 for the
quarter ended March 31, 2000. Net earnings for the last quarter of 2000 were
$75.5 million, or $0.54 per share.
The Corporation's return on assets (ROA) and return on common equity
(ROE) for the first quarter of 2001 were 1.09% and 15.25%, respectively,
compared with 1.01% and 14.57% for the same period in 2000. For the last quarter
of 2000, these ratios were 1.09% and 15.72%.
The Corporation's net income for the first quarter of 2001, when
compared with the same period a year ago, reflected higher net interest income
by $13.5 million and lower operating expenses by $6.5 million. Non-interest
income, excluding gain on sale of securities and trading account profits, rose
$12.7 million. These favorable variances were partially offset by decreases in
the gain on sale of securities and trading account profits of $13.5 million and
an increase in income tax of $8.4 million.
The increase in net interest income of $13.5 million or 5.6% over the
first quarter of 2000 was the effect of a favorable variance of $15.3 million
due to a higher volume of average earning assets and a negative variance of $1.8
million due to a lower net interest margin. The increase in average earning
assets of $2.4 billion was driven principally by a $1.2 billion increase in the
average loan portfolio, mainly mortgage and commercial loans and a $1.1 billion
increase in average investment securities, mostly from U.S. Government agencies.
The increase in the volume of earning
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2- POPULAR, INC. 2001 FIRST QUARTER RESULTS
assets was funded mainly through higher average volume of short-term borrowings
and interest-bearing deposits, which rose $1.4 billion and $760 million,
respectively. The net interest yield for the quarter ended March 31, 2001, was
3.90% compared with 4.08% for the first quarter of 2000. The reduction in the
net interest yield resulted from an increase of 11 basis points in the average
cost of interest-bearing liabilities, mostly long-term debt and time deposits.
Also, the average yield on loans declined 26 basis points. This decline was due
to lower credit card income resulting from the sale of the U.S. credit card
portfolio in 2000, a higher proportion of mortgages in the total loan portfolio,
and the impact of the declining interest rate scenario at the beginning of 2001
in commercial loans with floating rates. The decline in the net interest yield
was partially tempered by a rise of 42 basis points in the yield on investment
securities, resulting from the maturity of investment securities during 2000
whose proceeds were reinvested at higher rates and additional arbitrage
activities undertaken since the first quarter of 2000. For the last quarter of
2000 the net interest yield was 3.79%. The improvement in the net interest
margin since the last quarter of 2000 stems from a reduction of 22 basis points
in the cost of funding earning assets, as opposed to an 11 basis points
reduction in their yield. The declining interest rate scenario in the first
quarter of 2001 had a positive impact in the Corporation's net interest income
due to its slightly negative gap and its net interest yield has begun to reflect
an upward trend for the first time since the end of 1998.
The provision for loan losses totaled $50.0 million for the first
quarters of 2001 and 2000. Net charge-offs for the quarter ended March 31, 2001,
were $36.1 million or 0.89% of average loans compared with $48.6 million or
1.29% for the first quarter of 2000.
Total non-interest income, excluding securities and trading
transactions, grew 12.5%, from $101.6 million for the first quarter of 2000 to
$114.3 million for the same period in 2001. This growth was fueled by increases
of $10.8 million in other service fees and $4.4 million in service charges on
deposit accounts, partially tempered by a $2.5 million decrease in other
operating income. The increase in other service fees is mostly attributed to
processing fees generated by GM Group and to debit card fees mainly as a result
of the growing volume of point-of-sale terminals and transactions. Also,
contributing to the growth were higher check cashing fees, basically driven by
the expansion of the Corporation's retail financial subsidiary in the United
States, and insurance commission income derived from Popular Insurance. The
latter began operations in July 1, 2000.
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Service charges on deposit accounts increased mostly due to higher commercial
account activity and the implementation during 2000 of new fees in deposit
accounts, including charges for electronic transaction overdrafts, accounts
without activity, and others. Also, the increase relates to some fees, including
external payments, which were previously accounted for as other service fees and
beginning in 2001 are charged through account analysis for certain commercial
accounts.
The decrease in other income resulted mostly from lower revenues from
the Corporation's leasing subsidiary and to income no longer derived as a result
of the sale of Banco Fiduciario (BF) in the latter part of 2000. Also, included
in other income was a pretax loss of $631 thousand on the fair market value of
derivatives pursuant to SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities", which was adopted during the quarter.
During the first three months of 2001, the Corporation realized gains
on sale of securities and trading transactions of $0.6 million, compared with
$14.1 million for the same period in 2000. During the first quarter of 2000, the
Corporation exercised its conversion right and exchanged its investment in
preferred stock of a financial corporation in Puerto Rico for common stock of
the same entity, resulting in a $13.4 million pretax gain.
Operating expenses amounted to $220.0 million for the first quarter of
2001 compared with $226.5 million for the same period in 2000, for a decrease of
$6.5 million or 2.9%. Personnel costs increased $1.7 million driven by a rise of
$2.5 million in pension, profit sharing and other benefits. Partially offsetting
the rise was a decrease of $0.8 million in salaries, impacted by lower headcount
resulting from the sale of BF and the U.S. credit card operations, and to
retired employees at Banco Popular. The latter was partly offset by annual merit
increases and the impact of continued expansion in other business areas.
All other operating expenses, excluding personnel costs, decreased $8.2
million or 6.7% when compared with the first quarter of 2000. This decline was
mostly reflected in business promotion, other operating expenses, professional
fees and amortization of intangibles. Business promotion declined mostly due to
the fact that the Corporation is no longer incurring advertising efforts to
market the U.S. credit cards, as these operations were sold in the second half
of 2000. Other operating expenses declined mostly due to the sale of BF and
lower sundry losses. Moreover, professional fees declined due to lower legal and
consulting services, computer service fees, data
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processing and other professional services. The decrease in the amortization of
intangibles relates to the core deposits intangible recorded on the merger with
BanPonce Corporation in 1990, which was fully amortized at the end of 2000.
On January 1, 2001, the Corporation adopted SFAS No. 133 "Accounting
for Derivative Instruments and Hedging Activities," which requires the
recognition of derivatives as either assets or liabilities in the statement of
condition measured at fair value. At the adoption, the Corporation recognized
$686 thousand (net of tax) in income as a cumulative effect of accounting
changes.
The Corporation's total assets at March 31, 2001, amounted to $27.3
billion, compared with $25.3 billion at March 31, 2000. Total assets at December
31, 2000, were $28.1 billion. At March 31, 2001, total loans amounted to $16.5
billion compared with $15.2 billion a year ago and $16.1 billion at December 31,
2000. Mortgage and commercial loans, which accounted for the largest increases
in the portfolio, rose $1.1 billion and $238 million, respectively, from March
31, 2000. These same portfolios rose $394 million and $96 million, respectively,
when compared with December 31, 2000. The decrease in assets from December 31,
2000 was mostly experienced in investment securities, which totaled $8.0 billion
as of March 31, 2001, compared with $9.1 billion at the end of 2000. This
decline is partly due to lower arbitrage activity as of the end of the quarter
resulting from management's objective of reducing the reliance on borrowings.
Investment securities were $7.3 billion as of March 31, 2000.
The allowance for loan losses amounted to $305 million as of March 31,
2001, or 1.85% of loans, compared with $293 million or 1.93% at the same date in
2000. At December 31, 2000, the allowance for loan losses totaled $291 million
or 1.81% of loans. Non-performing assets were $368 million or 2.23% of ending
loans at March 31, 2001, compared with $361 million or 2.38% at the end of the
first quarter of 2000 and $347 million or 2.16% at December 31, 2000. The
increase of $21 million from December 31, 2000 was mostly reflected in
non-performing commercial loans, which increased by $19 million from the end of
2000. The increase resulted from the growth in the portfolio. The allowance as a
percentage of non-performing assets was 83.01% at March 31, 2001, compared with
81.23% at the end of the first quarter of 2000 and 83.82% at December 31, 2000.
The Corporation's policy is to place commercial loans on non-accrual status when
payments of principal or interest are delinquent 60 days. The industry practice
for most U.S. banks is to place
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commercial loans in non-accrual status when payments of principal or interests
are delinquent 90 days. Financing leases, conventional mortgage and close-end
consumer loans are placed on non-accrual status if payments are delinquent 90
days.
Total deposits rose to $15.1 billion at March 31, 2001 compared with
$14.3 billion at March 31, 2000, and $14.8 billion at December 31, 2000.
Borrowed funds increased to $9.6 billion at March 31, 2001, compared with $8.8
billion at the same date a year earlier. At December 31, 2000, borrowed funds
totaled $10.8 billion.
At March 31, 2001, stockholders' equity was $2.1 billion, compared with
$1.7 billion at the same date last year. Stockholders' equity was $2.0 billion
at December 31, 2000. The allowance for unrealized gains, net of taxes, on
securities available-for-sale amounted to $82 million as of March 31, 2001,
compared with unrealized losses of $161 million as of March 31, 2000 and
unrealized gains of $4 million as of December 31, 2000.
The market value of the Corporation's common stock at March 31, 2001,
was $29.45 per share, compared with $22.19 at March 31, 2000, and $26.31 at
December 31, 2000. The Corporation's market capitalization at March 31, 2001 was
$4.0 billion, compared with $3.0 billion at March 31, 2000, and $3.6 billion at
December 31, 2000. At March 31, 2001, the Corporation's common stock had a book
value per share of $14.87.
The Corporation's common and preferred stock are traded on the National
Association of Securities Dealers Automated Quotation (NASDAQ) National Market
System under the symbols BPOP and BPOPP, respectively.
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POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
Quarter ended
March 31 First
-------------------------------- Quarter ---------------
2001 - 2000 Fourth
Percent Quarter
2001 2000 Variance 2000
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SUMMARY OF OPERATIONS
Interest income $ 550,451 $ 505,801 8.83% $ 558,408
Interest expense 294,734 263,561 11.83 312,659
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Net interest income 255,717 242,240 5.56 245,749
Provision for loan losses 50,034 50,013 0.04 46,242
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Net interest income after provision
for loan losses 205,683 192,227 7.00 199,507
Other operating income 114,368 101,645 12.52 121,130
Gain on sale of securities 290 13,264 (2,539)
Trading account profit 309 817 770
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Total other income 114,967 115,726 (0.66) 119,361
Salaries and benefits 99,797 99,092 0.71 88,346
Profit sharing 5,097 4,132 23.35 4,016
Amortization of intangibles 6,876 8,592 (19.97) 8,600
Other operating expenses 108,199 114,688 (5.66) 109,729
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Total operating expenses 219,969 226,504 (2.89) 210,691
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Income before income tax, minority interest and
cumulative effect of accounting changes 100,681 81,449 23.61 108,177
Income tax 27,151 18,756 44.76 32,695
Net losses of minority interest 16 1,496 (98.93) 17
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Income before cumulative effect of accounting changes 73,546 64,189 14.58 75,499
Cumulative effect of accounting changes, net of tax 686 0
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Net income $ 74,232 $ 64,189 15.65 $ 75,499
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Net income applicable to common stock $ 72,145 $ 62,102 16.17 $ 73,410
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Earnings per common share:
Net income $ 0.53 $ 0.46 $ 0.54
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Average common shares outstanding 136,110,438 135,763,765 136,013,633
Common shares outstanding at end of period 136,101,195 135,747,610 135,998,617
SELECTED AVERAGE BALANCES
Total assets ................................... $ 27,707,352 $ 25,466,481 8.80 $ 27,598,700
Loans .......................................... 16,204,326 15,027,521 7.83 16,222,867
Earning assets ................................. 26,151,332 23,756,508 10.08 25,952,546
Deposits ....................................... 14,831,644 14,147,519 4.84 14,706,237
Interest-bearing liabilities ................... 22,227,630 20,099,522 10.59 22,107,939
Stockholders' equity ........................... 2,018,788 1,815,021 11.23 1,957,918
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets ................................... $ 27,312,724 $ 25,302,025 7.95 $ 28,057,051
Loans .......................................... 16,509,477 15,200,931 8.61 16,057,085
Earning assets ................................. 25,691,107 23,602,803 8.85 26,339,431
Deposits ....................................... 15,093,740 14,337,861 5.27 14,804,907
Interest-bearing liabilities ................... 21,721,087 20,173,181 7.67 22,480,261
Stockholders' equity ........................... 2,122,974 1,682,293 26.20 1,993,644
PERFORMANCE RATIOS
Net interest yield* ............................ 3.90% 4.08% 3.79%
Return on assets ............................... 1.09 1.01 1.09
Return on common equity ........................ 15.25 14.57 15.72
CREDIT QUALITY DATA
Non-performing assets .......................... $ 367,761 $ 361,247 1.80 $ 346,747
Net loans charged-off .......................... 36,130 48,581 (25.63) 50,884
Allowance for loan losses ...................... 305,295 293,442 4.04 290,653
Non-performing assets to total assets .......... 1.35% 1.43% 1.24%
Allowance for losses to loans .................. 1.85 1.93 1.81
* Not on a taxable equivalent basis
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