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[POPULAR, INC. LOGO] EXHIBIT 99.1
News Release
For additional information contact:
INVESTORS: MEDIA:
- ---------- ------
Jorge A. Junquera Olga Mayoral Wilson, APR
Chief Financial Officer Senior Vice President and Manager
Senior Executive Vice President Public Relations and Communications
Telephone (787) 754-1685 Telephone: (787) 764-2004
Or visit our web site at www.popularinc.com
POPULAR, INC. REPORTS EARNINGS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2003
San Juan, PR - January 16, 2004 - Popular, Inc.'s (the Corporation)
(NASDAQ: BPOP, BPOPO) net income for year ended December 31, 2003 reached $470.9
million, an increase of $119.0 million or 34%, from $351.9 million in 2002.
Earnings per common share (EPS), basic and diluted, for the year were $3.47,
compared with $2.61 in 2002, an increase of 33%. Net income for 2003 represented
a return on assets (ROA) of 1.36% and a return on common equity (ROE) of 19.30%.
In 2002, the Corporation reported ROA and ROE of 1.11% and 16.29%, respectively.
Net income for the quarter ended December 31, 2003 was $106.3 million,
or $0.78 per common share, basic and diluted, compared with $80.8 million or
$0.61, respectively, for the same quarter of 2002. The Corporation's ROA and ROE
for the fourth quarter of 2003 were 1.18% and 16.38%, respectively, compared
with 0.96% and 14.64%, respectively, for the same period in 2002.
The Corporation's results of operations for the quarter ended December
31, 2003, compared with the same quarter of 2002, reflected an improvement of
$23.0 million in net interest income and $1.6 million in non-interest income.
Operating expenses increased $0.6 million, while the provision for loan losses
decreased $0.3 million. Operating expenses for the quarter ended December 31,
2002 included the $21.6 million forfeiture discussed in prior releases and
regulatory filings.
The Corporation's net income for the year ended December 31, 2003, when
compared with the same period in the previous year, reflected higher net
interest income by $111.8 million and non-interest income by $94.8 million. The
provision for loan losses decreased by $9.6 million. These items were partially
offset by a rise in operating expenses of $84.1 million and an increase in
income tax of $13.1 million.
2-POPULAR, INC. 2003 FOURTH QUARTER AND YEAR-END RESULTS
The Corporation's net interest income rose 9%, from $1.2 billion in
2002 to $1.3 billion in 2003. Average earning assets increased $2.6 billion
during the year ended December 31, 2003, compared with December 31, 2002, driven
by a $2.0 billion increase in the average loan portfolio, mainly mortgage and
commercial loans, and a $0.6 billion increase in average money market, trading
and investment securities, mostly U.S. agency securities.
"We are pleased with the year-end results of the Corporation,
considering the context of historically low interest rates and relatively slow
economic growth. The increase in net interest income and the improvement in the
quality of our loan portfolio are particularly satisfactory," said Jorge A.
Junquera, Chief Financial Officer of Popular, Inc.
The average yield on earning assets declined 49 basis points, driven by
a number of factors including prepayments of higher rate mortgage related
products, repricing of adjustable and floating rate commercial loans and the
origination and purchase of earning assets in a lower rate environment. The
increase in the volume of earning assets was funded mainly through a higher
average volume of borrowings and interest-bearing deposits, which rose $1.7
billion and $0.5 billion, respectively. The average cost of interest-bearing
liabilities decreased 61 basis points, associated with the low interest rate
environment and the implementation of initiatives to reduce the cost of certain
interest-bearing liabilities. Also, non-interest bearing sources of funds,
including demand deposits and other funds, rose $0.4 billion. The net interest
yield for the years ended December 31, 2003 and 2002 was 3.95% and 3.91%,
respectively. The net interest yield for the last quarter of 2003 was 3.85%,
compared with 3.93% for the quarter ended September 30, 2003 and 3.81% for the
fourth quarter of 2002.
The provision for loan losses totaled $195.9 million, or 113% of net
charge-offs, for the year 2003, compared with $205.6 million or 120%,
respectively, in 2002. Net charge-offs for 2003 totaled $174 million or 0.84% of
average loans, compared with $172 million or 0.92% in 2002. The slight increase
in net charge-offs is mainly due to higher mortgage loans net charge-offs by $15
million, offset mainly by lower net charge-offs in the commercial, including
construction, consumer and lease financing portfolios by $6 million, $4 million
and $3 million, respectively. Net charge-offs for the quarter ended December 31,
2003, were $48 million or 0.87% of average loans, compared with $49 million, or
0.94%, for the third quarter of 2003, and $32 million, or 0.66%, for the fourth
quarter of
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3-POPULAR, INC. 2003 FOURTH QUARTER AND YEAR-END RESULTS
2002. The increase in net charge-offs in the fourth quarter of 2003, compared
with the same quarter in the previous year, was experienced in all loan
categories.
Non-interest income amounted to $618.5 million for the year ended
December 31, 2003, compared with $523.7 million for the year ended December 31,
2002, an increase of $94.8 million, or 18%. This increase was mostly associated
with higher gains in the sale of securities, mainly marketable equity
securities, which totaled $71.1 million for 2003, compared with losses of $3.3
million in 2002. In addition, results of operations for the year ended December
31, 2003, included pre-tax derivative losses of $7.5 million, compared with
pre-tax derivative losses of $20.1 million in 2002. These derivative losses
related mostly to the interest rate swaps that were canceled during the second
quarter of 2003. On a combined basis, service charges on deposit accounts and
other service fees rose $20.5 million, or 5%, compared with 2002. This increase
was mostly attributed to higher commercial account charges, insurance
commissions, processing, debit card, and check cashing fees, among others. Also,
there were higher gains on the sale of loans by $3.7 million, or 6%. These
favorable variances were partially offset by lower other operating income of
$7.0 million, associated in part with lower management fees from the
Corporation's ownership participation in Telecomunicaciones de Puerto Rico, Inc.
and gains realized in 2002 on the sale of the Corporation's trust operations in
the United States and some branches of Popular Finance. Furthermore, the
Corporation recorded $10.2 million in trading losses during the year ended
December 31, 2003, mostly related with mortgage-backed securities, whose market
value was negatively impacted by fluctuations in the long-term interest rate
scenario, compared with trading losses of $0.8 million during the year ended
December 31, 2002.
Operating expenses totaled $1.1 billion for the year ended December 31,
2003, compared with $1.0 billion for the year ended December 31, 2002, an
increase of $84.1 million, or 8%. Personnel costs increased by $37.7 million,
driven mostly by higher salaries, pension, incentive compensation and other
bonuses, and health insurance costs. All other operating expenses, excluding
personnel costs, increased $46.4 million, or 9%, compared with 2002. Categories
with the largest increases included business promotion, net occupancy,
equipment, communications and other operating expenses. Included in this latter
category was the $12.1 million charge on the early
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4-POPULAR, INC. 2003 FOURTH QUARTER AND YEAR-END RESULTS
cancellation of certain long-term borrowings during the third quarter of 2003
and higher sundry losses of approximately $19 million, which included losses
related with unauthorized credit card transactions conducted on credit cards
issued by Banco Popular de Puerto Rico, as previously reported in the second
quarter of 2003. Operating expenses for the year ended December 31, 2002
included the $21.6 million forfeiture related to the federal investigation, as
previously mentioned.
The Corporation's total assets at December 31, 2003 amounted to $36.4
billion, compared with $33.7 billion at December 31, 2002. At December 31, 2003,
total loans amounted to $22.6 billion, compared with $19.6 billion on the same
date in the previous year. Mortgage loans accounted for the largest growth in
the portfolio, rising $2.2 billion, or 30%, from the end of 2002. Commercial and
construction loans rose $442 million, or 5%, since December 31, 2002. Investment
and trading securities totaled $11.1 billion at December 31, 2003 and $11.2
billion at December 31, 2002.
The allowance for loan losses amounted to $409 million at December 31,
2003, or 1.81% of loans, compared with $373 million or 1.90% at the same date in
2002, and $399 million or 1.84% at September 30, 2003. Non-performing assets
were $611 million or 2.70% of ending loans at December 31, 2003, compared with
$539 million or 2.75% at the end of 2002, and $628 million or 2.89% at September
30, 2003. The allowance as a percentage of non-performing loans was 73.34% at
December 31, 2003 compared with 74.58% at the end of 2002 and 69.43% at
September 30, 2003.
Non-performing mortgage loans totaled $345 million or 56% of total
non-performing assets and 4% of total mortgage loans at December 31, 2003,
compared with $279 million or 52% of total non-performing assets and 4% of total
mortgage loans at December 31, 2002. This increase of $66 million, or 24%, in
non-performing mortgage loans was mostly driven by portfolio growth. Mortgage
loans net charge-offs as a percentage of the average mortgage loan portfolio
were 0.35% in 2003, compared with 0.20% in 2002. Also, other real estate assets
reached $54 million at December 31, 2003, or 9% of non-performing assets,
compared with $39 million, or 7% at December 31, 2002. This increase was
associated with higher foreclosures in the mortgage business. On the other hand,
commercial, including construction, consumer and lease financing non-performing
loans reflected declines of $2 million, $4 million and $3 million, respectively,
when compared with December 31, 2002. The decrease of $17 million in
non-performing assets from September 30, 2003 to December
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31, 2003 was mainly associated with commercial and construction non-performing
loans, which declined $45 million, while non-performing mortgage loans rose $27
million from the end of the third quarter of 2003.
Deposits totaled $18.1 billion at December 31, 2003, compared with
$17.6 billion at December 31, 2002, an increase of $0.5 billion or 3%. Demand
and savings deposits rose $357 million and $227 million, respectively, compared
with December 31, 2002, while time deposits declined by $103 million, mainly due
to a decline in brokered certificates of deposit of $218 million. Borrowed funds
increased $1.9 billion, reaching $14.9 billion at December 31, 2003, from $13.0
billion on the same date of the previous year. The increase in borrowings since
December 31, 2002 was mostly used to fund loan growth.
At December 31, 2003, stockholders' equity was $2.8 billion, compared
with $2.4 billion at the same date last year. The increase in stockholders'
equity since December 31, 2002 reflects the issuance of preferred stock during
2003 and earnings retention, partially offset by a decrease in accumulated other
comprehensive income of $178 million, mostly associated with lower unrealized
gains on the securities available-for-sale portfolio.
The market value of the Corporation's common stock at December 31,
2003, was $44.85 per common share, compared with $33.80 at December 31, 2002.
The Corporation's market capitalization at December 31, 2003 was $6.0 billion,
compared with $4.5 billion at December 31, 2002. At December 31, 2003, the
Corporation's common stock had a book value per share of $19.36.
During the fourth quarter of 2003, the Corporation filed a shelf
registration with the Securities and Exchange Commission, allowing Popular,
Inc., Popular North America, Inc. and Popular International Bank, Inc. to issue
medium-term notes, debt securities and preferred stock in an aggregate amount of
up to $2.5 billion. Also, during this quarter the Corporation issued $300
million in obligations for trust preferred securities at a rate of 6.70%. Until
further notice by the Federal Reserve Bank, the trust preferred securities will
continue to count as Tier 1 regulatory capital.
As part of strategic decisions, during the fourth quarter of 2003, the
Corporation sold Popular Cash Express' mobile units in California. Also, the
Corporation completed the acquisition of the remaining 15% minority interest in
Levitt Mortgage Corporation. Furthermore, in Puerto Rico,
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6-POPULAR, INC. 2003 FOURTH QUARTER AND YEAR-END RESULTS
Popular Finance acquired Mendoza Finance Co., Inc.'s small loan portfolio.
Continuing Popular, Inc.'s expansions efforts in Central America and supporting
its technology-oriented initiatives in that region and Puerto Rico, the
Corporation increased its participation in Consorcio de Tarjetas Dominicanas,
S.A. ("Contado"), a transaction processing business in the Dominican Republic,
and acquired Advanced Data Support, Inc. / One Solutions, an industry leader in
the health care transaction processing business in 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 BPOPO, respectively.
The information included in this press release may contain certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on management's
current expectations and involve certain risks and uncertainties that may cause
actual results to differ materially from those expressed in forward-looking
statements. Factors such as changes in interest rate environment as well as
general changes in business and economic conditions may cause actual results to
differ from those contemplated by such forward-looking statements. For a
discussion of such risks and uncertainties, see the Corporation's Annual Report
on Form 10-K for the most recently ended fiscal year as well as its filings with
the U.S. Securities and Exchange Commission. The Corporation assumes no
obligation to update any forward-looking statements to reflect occurrences or
unanticipated events or circumstances after the date of such statements.
* * *
6
POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
Quarter ended
December 31, Fourth
---------------------------------- Quarter -------------
2003 - 2002 Third
Percent Quarter
2003 2002 Variance 2003
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SUMMARY OF OPERATIONS
Interest income .................................. $ 509,898 $ 513,869 (0.77%) $ 509,399
Interest expense ................................. 183,658 210,588 (12.79) 180,382
------------- ------------- ----- -------------
Net interest income .............................. 326,240 303,281 7.57 329,017
Provision for loan losses ........................ 49,737 50,049 (0.62) 48,668
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Net interest income after provision
for loan losses ................................ 276,503 253,232 9.19 280,349
Other income ..................................... 141,757 140,100 1.18 137,043
Gain on derivatives .............................. 348 2,018 (82.76) 282
Gain (loss) on sale of securities ................ 696 (668) 39,109
Trading account loss ............................. (435) (662) (34.29) (4,599)
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Total other income ............................... 142,366 140,788 1.12 171,835
Salaries and benefits ............................ 126,464 116,062 8.96 128,379
Profit sharing ................................... 5,650 6,281 (10.05) 3,834
Amortization of intangibles ...................... 1,811 2,067 (12.39) 1,978
Other operating expenses ......................... 148,982 157,916 (5.66) 153,065
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Total operating expenses ......................... 282,907 282,326 0.21 287,256
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Income before income tax and minority interest ... 135,962 111,694 21.73 164,928
Income tax ....................................... 29,659 30,783 (3.65) 33,818
Net gain of minority interest .................... (10) (82) (87.80) (184)
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Net income ....................................... $ 106,293 $ 80,829 31.50 $ 130,926
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Net income applicable to common stock ............ $ 103,315 $ 80,829 27.82 $ 127,947
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Earnings per common share (basic and diluted) .... $ 0.78 $ 0.61 $ 0.96
============= ============= =============
Dividends declared per common share .............. $ 0.27 $ 0.20 $ 0.27
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Average common shares outstanding ................ 132,907,613 132,455,106 132,799,735
Common shares outstanding at end of period ....... 132,891,946 132,439,047 132,776,235
SELECTED AVERAGE BALANCES
Total assets ..................................... $ 35,815,601 $ 33,561,982 6.71 $ 35,425,560
Loans ............................................ 22,112,258 19,358,320 14.23 21,113,732
Earning assets ................................... 33,822,435 31,850,245 6.19 33,484,969
Deposits ......................................... 17,946,497 17,355,008 3.41 17,824,112
Interest-bearing liabilities ..................... 28,945,730 27,518,002 5.19 28,694,178
Stockholders' equity ............................. 2,700,991 2,189,848 23.34 2,630,816
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets ..................................... $ 36,438,063 $ 33,660,352 8.25 $ 35,777,187
Loans ............................................ 22,602,192 19,582,119 15.42 21,707,755
Earning assets ................................... 34,456,766 31,899,765 8.02 33,679,695
Deposits ......................................... 18,095,951 17,614,740 2.73 17,655,992
Interest-bearing liabilities ..................... 29,264,518 27,203,321 7.58 28,871,925
Stockholders' equity ............................. 2,759,435 2,410,879 14.46 2,751,006
PERFORMANCE RATIOS
Net interest yield * ............................. 3.85% 3.81% 3.93%
Return on assets ................................. 1.18 0.96 1.47
Return on common equity .......................... 16.38 14.64 20.85
CREDIT QUALITY DATA
Non-performing assets ............................ $ 610,924 $ 539,255 13.29 $ 628,301
Net loans charged-off ............................ 47,883 31,905 50.08 49,490
Allowance for loan losses ........................ 408,542 372,797 9.59 398,578
Non-performing assets to total assets ............ 1.68% 1.60% 1.76%
Allowance for losses to loans .................... 1.81 1.90 1.84
* Not on a taxable equivalent basis
Note: Certain reclassifications have been made to prior periods to conform with
this quarter.
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POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
For the period ended
December 31,
---------------------------------
Percent
2003 2002 Variance
------------- ------------- --------
SUMMARY OF OPERATIONS
Interest income ....................................... $ 2,034,238 $ 2,023,797 0.52%
Interest expense ...................................... 742,073 843,468 (12.02)
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Net interest income ................................... 1,292,165 1,180,329 9.47
Provision for loan losses ............................. 195,939 205,570 (4.69)
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Net interest income after provision
for loan losses ..................................... 1,096,226 974,759 12.46
Other income .......................................... 565,130 547,909 3.14
Loss on derivatives ................................... (7,477) (20,085) (62.77)
Gain (loss) on sale of securities ..................... 71,094 (3,342)
Trading account loss .................................. (10,214) (804)
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Total other income .................................... 618,533 523,678 18.11
Salaries and benefits ................................. 505,797 466,506 8.42
Profit sharing ........................................ 20,647 22,235 (7.14)
Amortization of intangibles ........................... 7,844 9,104 (13.84)
Other operating expenses .............................. 578,795 531,157 8.97
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Total operating expenses .............................. 1,113,083 1,029,002 8.17
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Income before income tax and minority interest ........ 601,676 469,435 28.17
Income tax ............................................ 130,326 117,255 11.15
Net gain of minority interest ......................... (435) (248) 75.40
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Net income ............................................ $ 470,915 $ 351,932 33.81
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Net income applicable to common stock ................. $ 460,996 $ 349,422 31.93
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Earnings per common share (basic and diluted) ......... $ 3.47 $ 2.61
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Dividends declared per common share ................... $ 1.01 $ 0.80
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Average common shares outstanding ..................... 132,740,920 133,915,082
Common shares outstanding at end of period ............ 132,891,946 132,439,047
SELECTED AVERAGE BALANCES
Total assets .......................................... $ 34,674,537 $ 31,822,390 8.96
Loans ................................................. 20,730,041 18,729,220 10.68
Earning assets ........................................ 32,781,355 30,194,914 8.57
Deposits .............................................. 17,757,227 16,984,646 4.55
Interest-bearing liabilities .......................... 28,101,979 25,947,964 8.30
Stockholders' equity .................................. 2,545,113 2,150,386 18.36
PERFORMANCE RATIOS
Net interest yield * .................................. 3.95% 3.91%
Return on assets ...................................... 1.36 1.11
Return on common equity ............................... 19.30 16.29
CREDIT QUALITY DATA
Non-performing assets ................................. $ 610,924 $ 539,255 13.29
Net loans charged-off ................................. 173,891 171,732 1.26
Allowance for loan losses ............................. 408,542 372,797 9.59
Non-performing assets to total assets ................. 1.68% 1.60%
Allowance for losses to loans ......................... 1.81 1.90
* Not on a taxable equivalent basis
Note: Certain reclassifications have been made to prior periods to conform with
this period.
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