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EXHIBIT 99(a)
[POPULAR, INC. LETTERHEAD]
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
October 10, 2001 News Release
POPULAR, INC. REPORTS EARNINGS FOR THE QUARTER AND NINE-MONTH
PERIOD ENDED SEPTEMBER 30, 2001
Popular, Inc.'s (the Corporation) (NASDAQ: BPOP, BPOPP) net income for
the third quarter of 2001 was $77.2 million, compared with $71.3 million for the
same quarter of 2000, an increase of $5.9 million or 8.3%. Earnings per common
share (EPS) for the quarter ended September 30, 2001, were $0.55, compared with
$0.51 for the same period in 2000, representing an increase of 7.8%. Net
earnings for the first and second quarter of 2001 were $74.2 million and $77.5
million, or $0.53 and $0.55 per common share, respectively.
The Corporation's return on assets (ROA) and return on common equity
(ROE) for the third quarter of 2001 were 1.10% and 14.71%, respectively,
compared with 1.04% and 15.24% for the same period in 2000 and 1.14% and 15.36%
for the second quarter of 2001.
For the first nine months of 2001, the Corporation's net earnings
reached $229 million, compared with $200.6 million for the same period in
2000. EPS for the first nine-months of 2001 and 2000 were $1.63 and $1.43,
respectively. ROA and ROE for the first nine-months of 2001 were 1.11% and
15.10%, respectively. For the same period of 2000, these ratios were 1.02% and
14.75%, respectively.
The results of operations for the quarter and nine-months ended
September 30, 2001,
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2-POPULAR, INC. 2001 THIRD QUARTER RESULTS
included pre-tax derivative losses of $8.1 million and $7.1 million,
respectively, based upon the provisions of SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities." Excluding such effect, net
income and EPS for the quarter and nine months ended September 30, 2001, would
have been approximately $83 million or $0.59 per common share, and $234 million
or $1.67 per common share, respectively.
The Corporation reflected an increase of $24.6 million in net interest
income for the quarter ended September 30, 2001, compared with the same quarter
the prior year. This improvement was partially tempered by a decline of $2.7
million in other revenues, together with rises of $5.6 million in the provision
for loan losses and $10.1 million in operating expenses.
The net interest income for the third quarter of 2001 rose 9.9% when
compared with the same period of 2000. This increase was mostly attributed to
lower cost of funds, partially offset by a lower yield on earning assets. The
reduction in cost of funds resulted from the lower interest scenario and a
higher proportion of deposits to total liabilities. The net interest margin of
the Corporation increased to 4.16% for the third quarter of 2001, from 3.90% in
the same quarter of 2000 and 4.14% in the second quarter of 2001. The yield on
earning assets for the third quarter of 2001 was 7.83% compared with 8.76% in
the same quarter of 2000. Most of the decrease in yield was experienced in the
loan portfolio, where the lower rate scenario has resulted in a decline of 114
basis points in yields. The cost of interest-bearing liabilities dropped by 134
basis points when compared with the same quarter the prior year.
The provision for loan losses for the third quarter of 2001 amounted to
$55.3 million compared with $49.7 million for the third quarter of 2000. This
increase was principally driven by a rise in non-performing loans, resulting in
part from the deteriorating economic conditions. Net charge-offs for the quarter
ended September 30, 2001, were $42.2 million or 0.97% of average loans, compared
with $42.5 million or 1.04% for the third quarter of 2000, and $41.7 million or
0.99% for the second quarter of 2001. For the nine-month periods ended September
30, 2001 and 2000, net charge-offs totaled $120.0 million and $129.2 million,
respectively, representing 0.95% and 1.10% of average loans.
Non-interest income, excluding securities, trading and derivative
transactions, amounted to $123.5 million for the third quarter of 2001, compared
with $119.6 million for the same period in
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3-POPULAR, INC. 2001 THIRD QUARTER RESULTS
2000 and $122.3 million in the second quarter of this year.
Service charges on deposit accounts and other service fees increased
$7.1 million or 7.9%, when compared with the third quarter of 2000. The rise was
mostly attributed to higher activity on commercial deposit accounts, increases
in insurance commissions, processing and investment banking fees, as well as
revenues derived from ATM and point-of-sale terminals and transactions,
partially offset by lower credit card fees on the U.S. mainland. Other operating
income decreased $3.3 million or 11.1% compared with the third quarter of 2000,
mainly due to last year's pre-tax gain on the sale of the Corporation's U.S.
credit card operations, which amounted to $8.5 million in the quarter. This
decline was partially tempered by higher gains on the sale of mortgage loans and
higher income derived from the Corporation's investment in Telecomunicaciones de
Puerto Rico, Inc. (TELPRI).
Losses on derivatives amounted to $8.1 million for the quarter just
ended. These losses result from adjustments to the market value of the interest
rate swaps entered into by the Corporation, which was negatively impacted by
further declines in interest rates during the quarter. In the second quarter of
2001 the Corporation had recognized a derivative gain of $1.7 million as a
result of the change in the fair value of the derivative instruments.
Operating expenses amounted to $230.4 million for the third quarter of
2001, representing an increase of $10.1 million or 4.6%, compared with the same
period in 2000. Personnel costs increased $7.2 million as compared with the
third quarter of 2000, resulting mostly from higher salaries, commissions,
pension and health insurance costs. Other operating expenses, excluding
personnel costs, increased $2.9 million or 2.4%, mostly in business promotion
and professional fees. Partially offsetting the rise in operating expenses were
decreases in profit sharing expenses, amortization of intangibles due to the
full amortization in late 2000 of the core deposits recorded on the merger with
BanPonce Corporation in 1990, and equipment expenses mostly associated with
former subsidiary Banco Fiduciario. When compared to the second quarter of 2001,
the Corporation experienced a decrease of $1.8 million or 0.8% in operating
expenses, mostly in sundry losses.
The Corporation's total assets at September 30, 2001, amounted to $28.5
billion, compared with $27.2 billion at September 30, 2000, and $27.9 billion at
June 30, 2001. The Corporation's earning assets reached $26.9 billion at
September 30, 2001, compared with $25.6 billion and $26.2
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4-POPULAR, INC. 2001 THIRD QUARTER RESULTS
billion at September 30, 2000, and June 30, 2001, respectively.
Total loans were $17.6 billion at September 30, 2001 or $1.4 billion
more than the level at September 30, 2000, and $440 million over June 30, 2001.
Mortgage loans accounted for the largest growth, increasing $1.3 billion since
September 30, 2000, and $432 million since June 30, 2001.
The allowance for loan losses at September 30, 2001, amounted to $327
million or 1.85% of loans compared with $295 million or 1.82% at September 30,
2000. At June 30, 2001, the allowance for loan losses totaled $313 million or
1.82% of loans. Non-performing assets were $440 million or 2.49% of ending loans
at September 30, 2001, compared with $344 million or 2.12% at the same date last
year and $383 million or 2.23% at June 30, 2001. Non-performing mortgage loans
amounted to $148 million or 34% of non-performing assets as of September 30,
2001. At September 30, 2001, the allowance for loan losses as a percentage of
non-performing assets was 74.27% compared with 85.85% at September 30, 2000, and
81.90% at June 30, 2001. The increase in non-performing assets since September
30, 2000, and June 30, 2001, was mostly reflected in mortgage loans, which grew
by $55 million and $30 million, respectively. Excluding non-performing mortgage
loans, the allowance for loan losses to non-performing loans was 124.66% as of
September 30, 2001, compared with 128.73% and 133.34% as of September 30, 2000,
and June 30, 2001, respectively. Commercial non-performing loans also increased
by $46 million and $26 million as of the same respective dates, principally due
to the current economic slowdown in the economy. 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 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 places on non-accrual status if payments are
delinquent 90 days.
In the third quarter of 2001, Banco Popular North America experienced
an increase in non-performing loans in most of the industry sectors represented
in its commercial loan portfolio, including the New York City taxicab medallion
portfolio, of which $8 million was in non-performing status at the end of the
quarter. The Corporation expects to provide the taxicab medallion owners, in
coordination with the New York City Economic Development Corporation and the
U.S. Small Business Administration, a disaster relief loan program, which will
provide cash
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5-POPULAR, INC. 2001 THIRD QUARTER RESULTS
flow relief to the affected taxicab medallion owners. As a result, the
Corporation does not expect any significant loss in this portfolio.
Total deposits grew to $16.0 billion at September 30, 2001, from $14.6
billion at September 30, 2000, a rise of $1.4 billion or 10%. This increase was
mostly reflected in time deposits, which grew by $1.0 billion to $6.7 billion.
At June 30, 2001, total deposits amounted to $15.6 billion.
Borrowed funds, including subordinated notes and capital securities,
amounted to $9.7 billion at September 30, 2001 compared with $10.4 billion at
September 30, 2000, and $9.6 billion at June 30, 2001. At September 30, 2001,
stockholders' equity totaled $2.3 billion, compared with $1.8 billion at the
same date last year. Stockholders' equity was $2.2 billion as of June 30, 2001.
The market value of the Corporation's common stock at September 30,
2001, was $31.20 per share, compared with $27.06 at September 30, 2000, and
$32.94 at June 30, 2001. The Corporation's market capitalization at September
30, 2001, was $4.3 billion, compared with $3.7 billion at September 30, 2000. At
September 30, 2001, the Corporation's common stock had a book value per share of
$16.14.
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.
***
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POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
Quarter ended
September 30 Third
------------------------------- Quarter -------------
2001 - 2000 Second
Percent Quarter
2001 2000 Variance 2001
--------------------------------------------------------------
SUMMARY OF OPERATIONS
Interest income $ 516,982 $ 561,174 -7.87% $ 523,407
Interest expense 243,562 312,318 (22.01) 257,889
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Net interest income 273,420 248,856 9.87 265,518
Provision for loan losses 55,259 49,666 11.26 49,462
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Net interest income after provision
for loan losses 218,161 199,190 9.52 216,056
Other operating income 123,473 119,632 3.21 122,318
(Loss) gain on derivatives (8,140) 1,652
Gain (loss) on sale of securities 1,249 147 (2,152)
Trading account profit (loss) 777 259 (816)
--------------------------------------------------------------
Total other income 117,359 120,038 (2.23) 121,002
Salaries and benefits 103,622 95,182 8.87 102,725
Profit sharing 3,986 5,197 (23.30) 4,018
Amortization of intangibles 6,858 8,829 (22.32) 6,860
Other operating expenses 115,893 111,008 4.40 118,577
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Total operating expenses 230,359 220,216 4.61 232,180
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Income before income tax, minority interest and
cumulative effect of ACCOUNTING changes 105,161 99,012 6.21 104,878
Income tax 27,952 27,662 1.05 27,337
Net loss (gain) of minority interest 7 (58) (112.07) (4)
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Income before cumulative effect of accounting changes 77,216 71,292 8.31 77,537
Cumulative effect of accounting changes, net of tax
--------------------------------------------------------------
Net income $ 77,216 $ 71,292 8.31 $ 77,537
==============================================================
Net income applicable to common stock $ 75,129 $ 69,205 8.56 $ 75,450
==============================================================
Earnings per common share (basic and diluted) $ 0.55 $ 0.51 $ 0.55
============= ============= =============
Dividends declared per common share $ 0.20 $ 0.16 $ 0.20
============= ============= =============
Average common shares outstanding 136,277,345 135,971,955 136,189,956
Common shares outstanding at end of period 136,268,102 135,893,857 136,180,713
SELECTED AVERAGE BALANCES
Total assets $ 27,879,429 $ 27,271,400 2.23 $ 27,185,464
Loans 17,397,831 16,309,112 6.68 16,774,330
Earning assets 26,321,267 25,553,248 3.01 25,659,527
Deposits 15,803,439 14,769,823 7.00 15,321,682
Interest-bearing liabilities 22,205,034 21,820,924 1.76 21,630,527
Stockholders' equity 2,125,937 1,906,610 11.50 2,070,246
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets $ 28,530,426 $ 27,230,263 4.77 $ 27,850,634
Loans 17,632,274 16,237,687 8.59 17,192,246
Earning assets 26,941,948 25,637,474 5.09 26,247,258
Deposits 16,000,236 14,557,878 9.91 15,569,785
Interest-bearing liabilities 22,702,337 22,003,023 3.18 22,064,818
Stockholders' equity 2,299,456 1,835,734 25.26 2,166,652
PERFORMANCE RATIOS
Net interest yield * 4.16% 3.90% 4.14%
Return on assets 1.10 1.04 1.14
Return on common equity 14.71 15.24 15.36
CREDIT QUALITY DATA
Non-performing assets $ 439,759 343,836 27.90 $ 382,563
Net loans charged-off 42,225 42,547 (0.76) 41,686
Allowance for loan losses 326,630 295,177 10.66 313,337
Non-performing assets to total assets 1.54% 1.26% 1.37%
Allowance for losses to loans 1.85 1.82 1.82
* Not on a taxable equivalent basis
Note: Certain reclassifications have been made to prior periods to conform
with this quarter and nine-month period presentation.
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POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
For the nine-months ended
September 30
------------------------------
Percent
2001 2000 Variance
-------------------------------------------
SUMMARY OF OPERATIONS
Interest income $ 1,590,840 $ 1,591,749 -0.06%
Interest expense 796,185 854,737 (6.85)
------------------------------------------
Net interest income 794,655 737,012 7.82
Provision for loan losses 154,755 148,398 4.28
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Net interest income after provision
for loan losses 639,900 588,614 8.71
Other operating income 360,255 329,693 9.27
Loss on derivatives (7,119)
(Loss) gain on sale of securities (613) 13,740 (104.46)
Trading account profit 149 1,617 (90.79)
------------------------------------------
Total other income 352,672 345,050 2.21
Salaries and benefits 306,144 286,917 6.70
Profit sharing 13,101 14,897 (12.06)
Amortization of intangibles 20,594 25,958 (20.66)
Other operating expenses 342,014 338,321 1.09
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Total operating expenses 681,853 666,093 2.37
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Income before income tax, minority interest and
cumulative effect of accounting changes 310,719 267,571 16.13
Income tax 82,440 68,103 21.05
Net loss of minority interest 19 1,136 (98.33)
------------------------------------------
Income before cumulative effect of accounting changes 228,298 200,604 13.81
Cumulative effect of accounting changes, net of tax 686
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Net income $ 228,984 $ 200,604 14.15
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Net income applicable to common stock $ 222,722 $ 194,342 14.60
==========================================
Earnings per common share (basic and diluted) $ 1.63 $ 1.43
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Dividends declared $ 0.56 $ 0.48
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Average common shares outstanding 136,193,385 135,871,832
Common shares outstanding at end of period 136,268,102 135,893,857
SELECTED AVERAGE BALANCES
Total assets $ 27,594,261 $ 26,240,525 5.16
Loans 16,800,193 15,674,947 7.18
Earning assets 26,050,847 24,552,596 6.10
Deposits 15,316,240 14,447,585 6.01
Interest-bearing liabilities 22,020,143 20,832,100 5.70
Stockholders' equity 2,072,049 1,859,882 11.41
PERFORMANCE RATIOS
Net interest yield * 4.06% 4.00%
Return on assets 1.11 1.02
Return on common equity 15.10 14.75
CREDIT QUALITY DATA
Non-performing assets $ 439,759 343,836 27.90
Net loans charged-off 120,041 129,244 (7.12)
Allowance for loan losses 326,630 295,177 10.66
Non-performing assets to total assets 1.54% 1.26%
Allowance for losses to loans 1.85 1.82
* Not on a taxable equivalent basis
Note: Certain reclassifications have been made to prior periods to conform with
this quarter and nine-month period presentation.
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