EXHIBIT 99.1
[POPULAR, INC. LOGO]
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 ENDED MARCH 31, 2004
San Juan, PR - April 14, 2004 - Popular, Inc.'s (the Corporation)
(NASDAQ: BPOP, BPOPO) net income for the first quarter of 2004, reached $118.5
million, an increase of $19.4 million, or 20%, from $99.1 million in the first
quarter of 2003. Earnings per common share (EPS), basic and diluted, for the
quarter were $0.87, up 18% compared with $0.74 in the first quarter of 2003. The
Corporation's return on assets (ROA) and return on common equity (ROE) were
1.29% and 17.95%, respectively, compared with 1.21% and 17.39%, respectively,
for the same period in 2003.
"We are pleased to report a double digit percentage increase in our
quarterly earnings. Strong growth in residential mortgages and commercial loans
were the principal drivers for the increase of 11% in net interest income," said
Chief Financial Officer Jorge A. Junquera.
The improvement in the Corporation's net income for the first quarter
of 2004, compared with the same period in the previous year, reflected higher
net interest income by $31.6 million and non-interest income by $2.4 million,
while the provision for loan losses decreased by $3.5 million. These favorable
variances were partially offset by an increase in operating expenses of $16.1
million and higher income tax expense by $2.1 million.
Net interest income rose 11%, to $330.7 million in the first quarter of
2004, from $299.1 million in the same period of 2003. Average earning assets
increased $3.4 billion for the quarter ended March 31, 2004, compared with March
31, 2003, driven by an increase in the average loan portfolio, mainly in
mortgage and commercial loans. The average yield on earning assets declined 47
basis points, resulting from a number of factors which included prepayments of
higher rate mortgage related products, repricing of adjustable and floating rate
commercial loans and the origination and
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purchase of earning assets with lower rates in the current 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 $2.5
billion and $0.3 billion, respectively. The average cost of interest-bearing
liabilities decreased 53 basis points, associated with long-term debt issuances
at lower rates in the current rate environment and the results of certain
initiatives taken in 2003 to reduce the cost of certain interest-bearing
liabilities. Also, non-interest bearing sources of funds, including demand
deposits and other funds, rose $0.6 billion. The net interest yield for the
first quarter of 2004 was 3.80%, compared with 3.81% and 3.86%, for the quarters
ended March 31, 2003 and December 31, 2003, respectively.
The provision for loan losses totaled $44.7 million, or 112% of net
charge-offs, for the first quarter of 2004, compared with $48.2 million or 125%,
respectively, in the same period of 2003. Net charge-offs for the quarter ended
March 31, 2004 totaled $40.0 million or 0.70% of average loans, compared with
$38.4 million or 0.79% in the same quarter of 2003. The increase in net
charge-offs was mainly due to higher consumer and mortgage loans net charge-offs
by $2.6 million and $1.7 million, respectively, offset by lower net charge-offs
in the commercial, including construction, and lease financing portfolios by
$0.9 million and $1.8 million, respectively. The decline in the net charge-off
ratio to average loans was mostly related to lower net charge-offs in the
commercial and lease financing portfolios.
Non-interest income totaled $145.2 million for the quarter ended March
31, 2004, compared with $142.8 million for the quarter ended March 31, 2003, an
increase of $2.4 million, or 2%. This increase was mostly associated with higher
gains in the sale of securities, mainly marketable equity securities, which
totaled $13.0 million for the first quarter of 2004, compared with gains of $1.4
million in the same quarter of 2003. This favorable variance was partially
offset by lower gains on the sale of loans by $10.3 million, mainly in mortgage
loans.
The Corporation's operating expenses were $279.7 million in the first
quarter of 2004, compared with $263.6 million in the quarter ended March 31,
2003, an increase of $16.1 million, or 6%. Personnel costs increased by $8.2
million, driven mostly by higher salaries, pension and
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postretirement costs, including $2.4 million in retirement window costs and net
curtailment gains associated with the realignment of the Corporation's
processing and technology operations, as further described later on in this
press release. This realignment resulted in certain plan amendments and the
transfer of employees from Banco Popular de Puerto Rico (BPPR) to EVERTEC, the
processing subsidiary. All other operating expenses, excluding personnel costs,
increased $7.9 million, or 6%, compared with the first quarter of 2003.
Categories with the largest increases included professional fees and other
operating expenses, which included higher other real estate and insurance
expenses.
Popular, Inc.'s total assets at March 31, 2004, amounted to $38.1
billion, compared with $36.4 billion at December 31, 2003 and $33.7 billion at
March 31, 2003. At March 31, 2004, total loans reached $23.7 billion, compared
with $19.9 billion on the same date in the previous year. Mortgage loans
accounted for the largest increase in the portfolio, rising $2.7 billion, or
34%, from March 31, 2003. Commercial and construction loans rose $650 million,
or 8%, since the first quarter of 2003. At December 31, 2003, total loans
amounted to $22.6 billion. The increase of $1.1 billion in total loans since the
end of 2003 consisted principally of mortgage loans. Investment and trading
securities totaled $11.4 billion at March 31, 2004, compared with $10.9 billion
and $11.1 billion at March 31, 2003 and December 31, 2003, respectively.
The allowance for loan losses totaled $417 million at March 31, 2004,
or 1.76% of loans, compared with $384 million or 1.93% at the same date in 2003,
and $409 million, or 1.81%, at December 31, 2003. Non-performing assets were
$609 million, or 2.57% of ending loans, at March 31, 2004, compared with $597
million, or 3.01%, at the end of the first quarter of 2003, and $611 million or
2.70% at December 31, 2003. The allowance as a percentage of non-performing
loans was 75.27% at March 31, 2004, compared with 69.58% at the end of the first
quarter of 2003 and 73.34% at December 31, 2003. Effective for the quarter ended
March 31, 2004, the Corporation adopted the standard industry practice of
placing commercial and construction loans in non-accrual status when payments of
principal or interest are delinquent 90 days rather than 60 days. Had the
Corporation continued reporting commercial and construction loans in
non-performing status when delinquent 60 days, non-performing assets would have
amounted to $639 million at March 31, 2004, or 2.70% of ending loans. The
allowance as a percentage of non-performing loans would have amounted to
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4- POPULAR, INC. 2004 FIRST QUARTER RESULTS
71.43%. The estimated impact of the new adopted practice in the Corporation's
interest income for the quarter ended March 31, 2004 was approximately $0.3
million.
Non-performing mortgage loans totaled $368 million or 60% of total
non-performing assets and 4% of total mortgage loans at March 31, 2004, compared
with $303 million or 51% of total non-performing assets and 4% of total mortgage
loans at March 31, 2003. Mortgage loans net charge-offs as a percentage of the
average mortgage loan portfolio was 0.25% in the first quarter of 2004, compared
with 0.24% in the first quarter 2003. Other real estate assets reached $55
million at March 31, 2004, or 9% of non-performing assets, compared with $46
million, or 8% at March 31, 2003. 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 $57 million, $3 million and $2 million, respectively, when compared
with March 31, 2003. Approximately $30 million of the decline in commercial and
construction non-performing loans was due to the aforementioned change in the
Corporation's policy for non-accrual commercial and construction loans.
Deposits totaled $18.6 billion at March 31, 2004, compared with $17.6
billion at March 31, 2003, an increase of $1.0 billion, or 5%. At December 31,
2003, total deposits were $18.1 billion. Since March 31, 2003, demand, savings
and time deposits rose $413 million, $267 million and $285 million,
respectively. All deposit categories also reflected increases since the end of
2003. Borrowed funds increased $3.1 billion, reaching $15.9 billion at March 31,
2004, from $12.8 billion on the same date of the previous year. Borrowed funds
totaled $14.9 billion at December 31, 2003. The rise in borrowings since March
31, 2003, and December 31, 2003, was mostly used to fund the increase in loans,
and is mostly comprised of secured borrowings arising in securitization
transactions.
At March 31, 2004, stockholders' equity was $2.9 billion, compared with
$2.7 billion at the same date last year. The increase in stockholders' equity
since March 31, 2003, reflects earnings retention, partially offset by lower
accumulated other comprehensive income of $75 million, mostly associated with
lower unrealized gains on the securities available-for-sale portfolio.
Stockholders' equity totaled $2.8 billion at December 31, 2003.
The market value of the Corporation's common stock at March 31, 2004,
was $43.10 per
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common share, compared with $33.99 at March 31, 2003, and $44.85 at December 31,
2003. The Corporation's market capitalization at March 31, 2004, was $5.7
billion, compared with $4.5 billion at March 31, 2003, and $6.0 billion at
December 31, 2003. At March 31, 2004, the Corporation's common stock had a book
value per share of $20.78.
In line with Popular's strategic objectives, starting April 1, 2004,
the Corporation consolidated BPPR and GM Group's electronic transaction
processing business, operational systems and programming services, under the
name of EVERTEC. This initiative will allow the Corporation to strengthen its
services through the substantial growth in the processing area, provide third
parties with the services it actually offers exclusively to BPPR, and develop
new technological services. The Corporation will also be able to maximize the
efficiency of the subsidiaries' infrastructure to avoid the duplication of
processes.
During March 2004, the Corporation and Quaker City Bancorp, Inc.
(NASDAQ: QCBC) jointly announced the signing of a definitive merger agreement
pursuant to which Popular, Inc. will acquire all of the common stock of Quaker
City Bancorp. The acquisition, subject to regulatory approval, the approval of
Quaker City Bancorp's stockholders, and other customary closing conditions, is
expected to be completed in the third calendar quarter of this year. Quaker City
Bancorp is a savings and loan holding company, which owns Quaker City Bank,
based in Whittier, California. Quaker City Bank operates 27 retail full-service
branches in Southern California, including 16 inside Wal-Mart stores. At
December 31, 2003, Quaker City reported total assets of $1.8 billion and total
deposits of $1.1 billion. This transaction reinforces the Corporation's
commitment to serving the needs of individuals and small businesses in the
United States and greatly expands the Corporation's presence in the California
region.
On April 3, 2004, at a meeting held with Popular's leadership, Richard
L. Carrion, Popular, Inc.'s Chairman and Chief Executive Officer, announced the
new organizational model to be implemented at Popular: a Corporate Leadership
Circle, which changes the institution's traditional structure to a design that
adjusts to Popular's strategy. Carrion also announced certain appointments to
key leadership positions within this Leadership Circle.
The information included in this press release may contain certain
forward-looking
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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.
* * *
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POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
Quarter ended
March 31, First
----------------------------- Quarter
2004 - 2003 Fourth
Percent Quarter
2004 2003 Variance 2003
------------------------------------------------------------
SUMMARY OF OPERATIONS
Interest income $ 518,742 $ 503,282 3.07% $ 509,898
Interest expense 188,028 204,176 (7.91) 183,310
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Net interest income 330,714 299,106 10.57 326,588
Provision for loan losses 44,678 48,209 (7.32) 49,737
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Net interest income after provision
for loan losses 286,036 250,897 14.01 276,851
Other income 134,369 142,338 (5.60) 141,757
Gain on sale of securities 13,033 1,414 696
Trading account loss (2,166) (937) (435)
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Total other income 145,236 142,815 1.70 142,018
Salaries and benefits 134,882 126,104 6.96 126,464
Profit sharing 5,682 6,245 (9.02) 5,650
Amortization of intangibles 1,802 2,027 (11.10) 1,811
Other operating expenses 137,372 129,266 6.27 148,982
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Total operating expenses 279,738 263,642 6.11 282,907
------------------------------------------------------------
Income before income tax and minority interest 151,534 130,070 16.50 135,962
Income tax 33,030 30,903 6.88 29,659
Net gain of minority interest (78) (10)
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Net income $ 118,504 $ 99,089 19.59 $ 106,293
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Net income applicable to common stock $ 115,526 $ 98,140 17.72 $ 103,315
============================================================
Earnings per common share (basic and diluted) $ 0.87 $ 0.74 $ 0.78
============ ============ =============
Dividends declared per common share $ 0.27 $ 0.20 $ 0.27
============ ============ =============
Average common shares outstanding 132,998,675 132,576,589 132,907,613
Common shares outstanding at end of period 132,958,640 132,552,289 132,891,946
SELECTED AVERAGE BALANCES
Total assets............................................. $ 36,915,835 $ 33,158,518 11.33 $ 35,816,490
Loans.................................................... 22,979,153 19,537,968 17.61 22,112,258
Earning assets........................................... 34,832,319 31,419,738 10.86 33,822,435
Deposits................................................. 18,245,681 17,526,977 4.10 17,947,922
Interest-bearing liabilities............................. 29,892,460 27,059,335 10.47 28,933,133
Stockholders' equity..................................... 2,776,307 2,314,620 19.95 2,700,991
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets............................................. $ 38,101,986 $ 33,695,291 13.08 $ 36,434,715
Loans.................................................... 23,700,334 19,861,882 19.33 22,602,192
Earning assets........................................... 35,963,864 31,763,554 13.22 34,451,748
Deposits................................................. 18,602,940 17,637,847 5.47 18,097,828
Interest-bearing liabilities............................. 30,635,848 26,958,141 13.64 29,263,757
Stockholders' equity..................................... 2,949,756 2,672,596 10.37 2,754,417
PERFORMANCE RATIOS
Net interest yield *..................................... 3.80% 3.81% 3.86%
Return on assets......................................... 1.29 1.21 1.18
Return on common equity.................................. 17.95 17.39 16.38
CREDIT QUALITY DATA
Non-performing assets **................................. $ 609,449 $ 596,927 2.10 $ 610,924
Net loans charged-off.................................... 40,019 38,440 4.11 47,883
Allowance for loan losses................................ 417,143 383,517 8.77 408,542
Non-performing assets to total assets **................. 1.60% 1.77% 1.68%
Allowance for losses to loans............................ 1.76 1.93 1.81
* Not on a taxable equivalent basis
** Non-performing assets for the first quarter of 2004 are stated based on the
newly adopted non-accruing policy for commercial and construction loans.
Non-performing assets for prior periods were not restated. At March 31, 2004,
non-performing assets which are comparable with prior periods non-accruing
policy, would have amounted to $639 million, or 1.68% of total assets.
Note: Certain reclassifications have been made to prior periods to conform with
this quarter.
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