EXHIBIT 19
[POPULAR LOGO]
MARCH 31, 2002
POPULAR, INC.
FIRST QUARTER
REPORT
Letter to Shareholders
During the quarter ended March 31, 2002, Popular, Inc. continued to deliver
sound earnings growth. In the first quarter of 2002, the Corporation's net
income reached $89.0 million, an increase of $14.8 million, or 20%, compared
with $74.2 million in the first quarter of 2001. Basic and diluted earnings per
common share were $0.63 for the first quarter, an increase of 19% over the $0.53
reported in the same quarter of 2001. Earnings performance for the first quarter
of 2002 resulted in a return on average assets (ROA) of 1.19% and a return on
common equity (ROE) of 16.83%, compared with 1.09% and 15.25%, respectively, for
the same period in 2001.
Net interest income for the quarter ended March 31, 2002, rose to
$285.0 million, representing an 11% improvement over the $255.7 million reported
in the first quarter of 2001. The Corporation's net interest margin for the
quarter, on a taxable equivalent basis, was 4.29%, compared with 4.21% a year
earlier. The provision for loan losses for this quarter amounted to $54.5
million, compared with $50.0 million for the same quarter in 2001. Operating
income, excluding derivatives, securities and trading transactions, increased to
$135.3 million for the first quarter of 2002, 17% higher than the $115.7 million
reported in the same quarter last year, driven mostly by higher service charges
on deposit accounts and higher gains on sales of loans. During this quarter the
Corporation realized losses on sale of securities and trading transactions of
$5.0 million, compared with a gain of $0.5 million for the same period in 2001.
The loss resulted mostly from investment opportunities undertaken in this
quarter, reinvesting the funds in securities with a higher yield. Operating
expenses amounted to $242.2 million for the first quarter of 2002, increasing
$21.7 million, or 10% compared with $220.5 million for the same period in 2001,
of which $15.4 million was in personnel costs, mostly associated with merit
increases, incentives, higher headcount and higher pension and other benefits.
Total assets reached $30.3 billion at March 31, 2002, an increase of $3
billion over the $27.3 billion at March 31, 2001. Total loans rose to $18.3
billion, up 11% from the $16.5 million in the same period of 2001. This rise is
mostly due to the growth of the mortgage loan portfolio, which increased by $1.7
billion or 33%. Deposits totaled $16.5 billion at March 31, 2002, increasing
$1.4 billion, or 9%, from $15.1 billion at the same date a year earlier.
Stockholders' equity at March 31, 2002 amounted to $2.2 billion, compared with
$2.1 billion at the same date in 2001. The rise in stockholders' equity was
partly reduced by the redemption of $100 million in preferred stock in January
2002 and to a decrease in the unrealized gains on securities available-for-sale.
The Corporation's stock market value was $29.22 at March 31, 2002,
compared with $29.45 at the same date last year. At the end of the first quarter
of 2002, the Corporation had a market capitalization of $4.0 billion. Book value
per share of common stock increased 8% to $16.01, compared with its value on
March 31, 2001, of $14.86.
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As part of the Corporation's Internet banking initiative, during the first
quarter of 2002 Banco Popular upgraded and enhanced its web page in the
Internet, www.bancopopular.com, converting it to a friendlier version and
providing a greater array of online services. This delivery channel allows our
banking customers to verify account balances, make payments, apply for credit
and other consumer services, among other features. Another innovative online
banking service added to Banco Popular's website is electronic bill presentment,
which provides the bank's credit card customers access to their billing
statements and allows them to issue the payments online. In the near future,
customers will also be able to receive their billing statements online from
other merchants as well.
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Based on our effort to bring services to more customers in more communities,
Banco Popular acquired three branches of Banco Bilbao Vizcaya Argentaria in
Puerto Rico with deposits approximating $40 million, strengthening our presence
in the central region of Puerto Rico.
During this quarter, Popular, Inc. also established an insurance
subsidiary in the United States, Popular Insurance Agency, U.S.A. Through this
initiative, we will be able to offer our customers insurance products and
services through our national network of branches and offices in the United
States.
Continuing with the initiative of offering financial services to all
communities on the mainland United States, while capitalizing on its strength
with the Hispanic market, Banco Popular North America announced the opening of
its first pilot hybrid check cashing / retail bank branch. This effort is
directed to provide customers in the unbanked segment, with the convenience and
benefits of the regular bank products, while conventional retail bank customers
will benefit from the expanded customer service hours. The first hybrid branch
will be introduced in Panorama City, California. In a similar effort, Equity
One, the Corporation's consumer and mortgage lending subsidiary in the United
States, is heading a strategy to reach the Hispanic community, which
traditionally has consisted of renters rather than home buyers, and help
increase the home ownership rate. Equity One aims to reach first the Hispanic
community of the Pennsylvania, New Jersey and Delaware
tristate region, and to gradually expand to other areas of the continental
United States.
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Humberto Martin, Executive Vice President of the Corporation and head of Banco
Popular's Operations Group, retired effective March 31, 2002, after 32 years of
service. We are sincerely grateful for his genuine commitment, leadership and
consistent dedication to our Corporation. We are also pleased to inform that
Felix M. Villamil, who was a Retail Banking Regional Manager and former General
Auditor of the Corporation, was designated to assume the leadership role.
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We are committed to provide our customers with innovative solutions to help them
achieve their financial goals and plans for the future. We will continue to
expand our franchise and broaden our businesses, remaining well positioned to
better serve our clients by responding quickly to changing market opportunities,
thus creating superior returns for you, our shareholders.
/s/ Richard L. Carrion
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RICHARD L. CARRION
CHAIRMAN
PRESIDENT
CHIEF EXECUTIVE OFFICER
Popular, Inc.
FINANCIAL HIGHLIGHTS
At March 31, Average for the quarter
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BALANCE SHEET HIGHLIGHTS 2002 2001 Change 2002 2001 Change
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(In thousands)
Money market investments $ 719,588 $ 970,299 $ (250,711) $ 927,038 $ 959,452 $ (32,414)
Investment and trading securities 9,902,595 8,211,330 1,691,265 9,871,684 8,993,341 878,343
Loans 18,256,924 16,509,477 1,747,447 18,058,011 16,215,424 1,842,587
Total assets 30,317,366 27,312,158 3,005,208 30,417,589 27,714,226 2,703,363
Deposits 16,524,154 15,093,179 1,430,975 16,526,180 14,831,555 1,694,625
Borrowings 11,083,110 9,629,177 1,453,933 11,283,963 10,409,114 874,849
Stockholders' equity 2,184,827 2,122,974 61,853 2,154,243 2,018,788 135,455
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First quarter
-----------------------------------
OPERATING HIGHLIGHTS 2002 2001 Change
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(In thousands, except per share information)
Net interest income $ 285,015 $ 255,717 $ 29,298
Provision for loan losses 54,454 50,034 4,420
Fees and other income 130,808 115,521 15,287
Other expenses, net of minority interest 272,325 247,658 24,667
Cumulative effect of accounting change -- 686 (686)
Net income $ 89,044 $ 74,232 $ 14,812
Net income applicable to common stock $ 86,534 $ 72,145 $ 14,389
Earnings per common share $ 0.63 $ 0.53 $ 0.10
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First quarter
------------------
SELECTED STATISTICAL INFORMATION 2002 2001
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COMMON STOCK DATA
Market price
High $ 29.94 $ 29.45
Low 27.50 25.25
End 29.22 29.45
Book value at period end 16.01 14.86
Dividends declared 0.20 0.16
Dividend payout ratio 30.81% 30.16%
Price/earnings ratio 12.87x 14.44x
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PROFITABILITY RATIOS
Return on assets 1.19% 1.09%
Return on common equity 16.83 15.25
Net interest spread (taxable equivalent) 3.79 3.40
Net interest yield (taxable equivalent) 4.29 4.21
Effective tax rate 25.29 26.97
Overhead ratio 39.07 41.06
Efficiency ratio 57.61 59.38
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CAPITALIZATION RATIOS
Equity to assets 7.08% 7.28%
Tangible equity to assets 6.29 6.34
Equity to loans 11.93 12.45
Internal capital generation 11.35 9.98
Tier I capital to risk-adjusted assets 10.20 10.63
Total capital to risk-adjusted assets 11.99 12.59
Leverage ratio 6.34 6.59
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CREDIT QUALITY RATIOS
Allowance for losses to loans 1.87% 1.85%
Allowance to non-performing assets 69.24 83.01
Allowance to non-performing loans 74.45 89.76
Non-performing assets to loans 2.70 2.23
Non-performing assets to total assets 1.63 1.35
Net charge-offs to average loans 1.10 0.89
Provision to net charge-offs 1.10x 1.38x
Net charge-offs earnings coverage 3.50 4.17
ADDITIONAL INFORMATION
BOARD OF DIRECTORS
Richard L. Carrion, Chairman
Antonio Luis Ferre, Vice Chairman **
Juan A. Albors Hernandez *
Jose A. Bechara Bravo *
Juan J. Bermudez
Francisco J. Carreras
Jose B. Carrion Jr.
David H. Chafey Jr.
Maria Luisa Ferre *
Hector R. Gonzalez
Jorge A. Junquera **
Guillermo L. Martinez *
Manuel Morales Jr.
Alberto M. Paracchini
Francisco M. Rexach Jr.
J. Adalberto Roig Jr. *
Felix J. Serralles Jr.
Jon E. Slater *
Julio E. Vizcarrondo Jr.
Samuel T. Cespedes, Secretary
* Director of Banco Popular de Puerto Rico only
** Director of Popular, Inc. only
EXECUTIVE OFFICERS
Richard L. Carrion, Chairman of the Board,
President and Chief Executive Officer
David H. Chafey Jr., Senior Executive Vice President
Jorge A. Junquera, Senior Executive Vice President
Maria Isabel P. de Burckhart, Executive Vice President
Roberto R. Herencia, Executive Vice President
Larry B. Kesler, Executive Vice President
Tere Loubriel, Executive Vice President
Emilio E. Pinero, Executive Vice President
Brunilda Santos de Alvarez, Executive Vice President
Carlos J. Vazquez, Executive Vice President
Felix M. Villamil, Executive Vice President
SHAREHOLDERS' INFORMATION
Shareholders' Assistance: Shareholders requiring a change of address, records
or information about lost certificates, dividend checks or dividend
reinvestment should contact:
Banco Popular de Puerto Rico
Popular Center Building - 4th Floor
Trust Division (725)
209 Munoz Rivera Ave.
Hato Rey, Puerto Rico 00918
Publications: For printed material (annual and quarterly reports, 10-K and
10-Q reports), contact Mr. Amilcar L. Jordan at the Comptroller's Division at
(787) 765-9800 ext. 6101, or visit our web site at http://www.popularinc.com.
Dividend Reinvestment Plan: The Corporation has a dividend reinvestment plan
that provides the shareholder a simple, convenient and cost-effective way to
acquire Popular, Inc. common stock.
- Dividends can be automatically reinvested in additional shares at 95% of the
Average Market Price.
- Participants may make optional cash payments of at least $25 and not more
than $10,000 per calendar month for investment in additional shares.
- No brokerage commissions are charged on purchases under this plan.
- Participant's funds will be fully invested, because the plan permits
fractions of shares to be credited to a participant's account.
If you would like more information on this plan, please contact our Trust
Division at (787) 756-3908 or (787) 765-9800 exts. 5637, 5525 and 5897.
Popular, Inc.
CONSOLIDATED STATEMENTS OF CONDITION
Quarter ended
March 31,
-------------------------------
In thousands 2002 2001
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ASSETS
Cash and due from banks $ 383,927 $ 639,808
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Money market investments:
Federal funds sold and securities purchased under agreements to resell 716,123 961,126
Time deposits with other banks 3,056 8,397
Bankers' acceptances 409 776
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719,588 970,299
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Investment securities available-for-sale, at market value 9,401,158 7,681,290
Investment securities held-to-maturity, at amortized cost 202,022 312,170
Trading account securities, at market value 299,415 217,870
Loans held-for-sale, at lower of cost or market 900,461 834,242
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Loans 17,676,000 16,007,197
Less - Unearned income 319,537 331,962
Allowance for loan losses 341,744 305,295
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17,014,719 15,369,940
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Premises and equipment 404,842 403,263
Other real estate 34,550 27,638
Accrued income receivable 191,118 202,088
Other assets 504,931 378,742
Intangible assets 260,635 274,808
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$ 30,317,366 $ 27,312,158
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest bearing $ 3,100,625 $ 3,001,269
Interest bearing 13,423,529 12,091,910
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16,524,154 15,093,179
Federal funds purchased and securities sold under agreements to repurchase 4,564,815 4,053,012
Other short-term borrowings 2,252,679 3,067,197
Notes payable 3,996,616 2,233,968
Other liabilities 524,350 465,917
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27,862,614 24,913,273
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Subordinated notes 125,000 125,000
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Preferred beneficial interest in Popular North America's junior subordinated
deferrable interest debentures guaranteed by the Corporation 144,000 150,000
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Minority interest in consolidated subsidiaries 925 911
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STOCKHOLDERS' EQUITY:
Preferred stock -- 100,000
Common stock 833,121 830,934
Surplus 270,766 262,748
Retained earnings 1,116,963 915,394
Treasury stock, at cost (66,363) (66,136)
Accumulated other comprehensive income, net of tax 30,340 80,034
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2,184,827 2,122,974
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$ 30,317,366 $ 27,312,158
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POPULAR, INC.
CONSOLIDATED STATEMENTS OF INCOME
Quarter ended
March 31,
-------------------------
Dollars in thousands, except per share information 2002 2001
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INTEREST INCOME:
Loans $ 372,221 $ 393,565
Money market investments 7,785 15,306
Investment securities 111,911 138,059
Trading account securities 3,502 3,521
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495,419 550,451
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INTEREST EXPENSE:
Deposits 112,931 132,777
Short-term borrowings 44,443 119,118
Long-term debt 53,030 42,839
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210,404 294,734
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Net interest income 285,015 255,717
Provision for loan losses 54,454 50,034
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Net interest income after provision for loan losses 230,561 205,683
Service charges on deposit accounts 38,973 34,658
Other service fees 61,687 58,694
(Loss) gain on sale of securities (4,010) 290
Trading account (loss) profit (1,030) 188
Derivatives gains (losses) 511 (631)
Other operating income 34,677 22,322
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361,369 321,204
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OPERATING EXPENSES:
Personnel costs:
Salaries 88,561 77,778
Profit sharing 4,940 5,097
Pension and other benefits 26,801 22,019
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120,302 104,894
Net occupancy expenses 19,030 17,195
Equipment expenses 24,765 24,127
Other taxes 9,549 8,810
Professional fees 17,507 15,939
Communications 13,273 11,887
Business promotion 13,367 10,545
Printing and supplies 4,509 4,319
Other operating expenses 17,321 15,931
Amortization of intangibles 2,543 6,876
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242,166 220,523
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Income before income tax, minority interest
and cumulative effect of accounting change 119,203 100,681
Income tax 30,148 27,151
Net (earnings) losses of minority interest (11) 16
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Income before cumulative effect of accounting change 89,044 73,546
Cumulative effect of accounting change, net of tax -- 686
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NET INCOME $ 89,044 $ 74,232
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NET INCOME APPLICABLE TO COMMON STOCK $ 86,534 $ 72,145
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EARNINGS PER COMMON SHARE (BASIC AND DILUTED) (BEFORE AND AFTER
CUMULATIVE EFFECT OF ACCOUNTING CHANGE) $ 0.63 $ 0.53
==================================================================================================================
SUBSIDIARIES
CENTRAL OFFICE
Popular Center
209 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
Telephone: (787) 765-9800
BANCO POPULAR DE PUERTO RICO
Puerto Rico Office
Popular Center
209 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
Telephone: (787) 765-9800
Virgin Islands Office
193 Estate Altona & Welgunst
St. Thomas, Virgin Islands 00802
Telephone: (340) 693-2777
BANCO POPULAR NORTH AMERICA
4000 West North Avenue
Chicago, Illinois 60639
Telephone: (773) 772-8600
BANCO POPULAR, NATIONAL ASSOCIATION
8523 Commodity Circle
Suite 100
Orlando, Florida 32819
Telephone: (407) 370-7800
ATH COSTA RICA / CreST, S.A.
Tournon Neighborhood, accross to
newspaper La Republica,
ATH Building
San Jose, Costa Rica
Telephone: (011) 506-257-9011
GM GROUP, INC.
1590 Ponce de Leon Avenue
San Juan, Puerto Rico 00926
Telephone: (787) 751-4343
EQUITY ONE, INC.
Marlton Crossing Office Park
400 Lippincott Drive
Marlton, New Jersey 08053
Telephone: (856) 396-2600
POPULAR MORTGAGE, INC.
268 Ponce de Leon Avenue
San Juan, Puerto Rico 00918
Telephone: (787) 753-0245
LEVITT MORTGAGE
Galeria San Patricio
B-5 Tabonuco Street
Suite 207
Guaynabo, Puerto Rico 00968
Telephone: (787) 749-8787
POPULAR AUTO, INC.
M-1046 Federico Costa Street
Tres Monjitas Industrial
Development
San Juan, Puerto Rico 00903
Telephone: (787) 751-4848
POPULAR LEASING, USA
16296 Westwood
Business Parkdrive
Ellisville, Missouri 63021
Telephone: (609) 273-1119
POPULAR FINANCE, INC.
10 Salud Street
El Senorial Condominium
Suite 613
Ponce, Puerto Rico 00731
Telephone: (787) 844-2860
POPULAR CASH EXPRESS, INC.
6200 North Hiawatha
Suite 200
Chicago, Illinois 60646
Telephone: (773) 205-8300
POPULAR SECURITIES, INC.
Popular Center
209 Munoz Rivera Avenue
Suite 1020
San Juan, Puerto Rico 00918
Telephone: (787) 766-4200
POPULAR INSURANCE, INC.
9 Pedro Marquez Street
Culebra, Puerto Rico 00735
Telephone: (787) 742-0255
POPULAR INSURANCE AGENCY, USA
1010 W Lake Street
Suite 509
Oak Park, Illinois 60301
Telephone: (773) 394-7680