EXHIBIT 99.1
[POPULAR, INC. LOGO]
CONTACT:
INVESTOR RELATIONS:
JORGE A. JUNQUERA
Chief Financial Officer
Senior Executive Vice President
787-754-1685
MEDIA RELATIONS:
TERUCA RULLAN
Senior Vice President
Global Communications
787-281-5170 or 917-679-3596/mobile
NEWS
FOR IMMEDIATE RELEASE:
POPULAR, INC. REPORTS EARNINGS FOR THE QUARTER AND NINE MONTHS
ENDED SEPTEMBER 30, 2004
SAN JUAN, PUERTO RICO WEDNESDAY, OCTOBER 13, 2004 - Popular, Inc.'s (the
Corporation) (NASDAQ: BPOP, BPOPO) net income for the quarter ended September
30, 2004 totaled $115.4 million, compared with $130.9 million in the third
quarter of 2003. The results for the third quarter of 2003 included $39.1
million in gain on sale of securities, mainly marketable equity securities.
Also, included in 2003 results was a $12.1 million prepayment penalty on the
early cancellation of certain long-term borrowings. Earnings per common share
(EPS), basic and diluted, for the third quarter of 2004 were $0.42 per common
share, compared with $0.48 per common share reported for the same quarter a year
earlier. All references to the numbers of common shares and per share amounts
have been restated to reflect the two-for-one stock split in the form of a stock
dividend effective on July 8, 2004. The Corporation's return on assets (ROA) and
return on common equity (ROE) for the third quarter of 2004 were 1.13% and
16.22%, respectively, compared with 1.47% and 20.85% in the same quarter in the
previous year. This press release should be read in conjunction with the
accompanying tables which are an integral part of this analysis.
For the nine months ended September 30, 2004, the Corporation's net income
reached $361.7 million, compared with $364.6 million for the same period in
2003. EPS, basic and diluted, for the
2 - POPULAR, INC. 2004 THIRD QUARTER RESULTS
nine months ended September 30, 2004 and 2003 were $1.32 and $1.35,
respectively. ROA and ROE for the first nine months of 2004 were 1.25% and
17.63%, respectively, compared with 1.42% and 20.35%, respectively, for the same
period in 2003.
The Corporation's net income for the quarter ended September 30, 2004,
when compared with the same quarter in the previous year, reflected higher net
interest income by $18.9 million and a lower provision for loan losses by $2.1
million. These favorable variances were partially offset by a decrease in
non-interest income of $27.0 million and an increase in operating expenses of
$10.6 million.
"The results of various strategic initiatives undertaken over the past few
years continue to strengthen our core earnings," said Richard L. Carrion,
President and Chief Executive Officer of Popular, Inc.
The increase in net interest income resulted mostly from a $5.1 billion
increase in average earning assets for the quarter ended September 30, 2004
compared with the same period in the previous year, mostly associated with
increases of $2.7 billion in mortgage loans, $1.2 billion in commercial loans
and $0.6 billion in consumer loans. The average yield on earning assets declined
23 basis points, resulting from a number of factors which included the
origination and purchase of earning assets with lower rates, prepayments of
higher rate mortgage related products and consumer loans promotional campaigns.
The increase in the volume of earning assets was funded mainly through a higher
average volume of borrowings and interest-bearing deposits, which rose $3.2
billion and $1.4 billion, respectively. The average cost of interest bearing
liabilities increased 9 basis points. Also, non-interest bearing sources of
funds, including demand deposits and other funds, raised $0.5 billion. The net
interest yield for the quarter ended September 30, 2004, was 3.61% compared with
3.94% for the third quarter of 2003. For the second quarter of 2004 the net
interest yield was 3.74%.
The provision for loan losses totaled $46.6 million, or 110% of net
charge-offs, for the third quarter of 2004, compared with $48.7 million or 98%,
respectively, for the same period in 2003. Net charge-offs for the quarter ended
September 30, 2004, were $42.5 million or 0.66% of average loans, compared with
$49.5 million or 0.94% for the third quarter of 2003. The decline in net
charge-offs as compared with the third quarter of 2003 is mainly due to lower
commercial net charge-offs, net of
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3 - POPULAR, INC. 2004 THIRD QUARTER RESULTS
construction loans net charge-offs, which declined by $7.1 million.
The decrease in non-interest income for the quarter ended September 30,
2004 compared with the same quarter in the previous year was mostly associated
with the aforementioned gain on the sale of securities during the third quarter
of 2003. Partially offsetting this decrease were higher trading account profits
and other operating income.
The increase in operating expenses for the quarter ended September 30,
2004, compared with the same period in 2003, resulted mostly from higher
personnel costs due to higher salaries, incentives, performance bonuses and
other compensation. Full-time equivalent employees were 12,002 at September 30,
2004, an increase of 609 employees from September 30, 2003, including the recent
acquisition. The increases were partially offset by lower pension costs
associated in part with improvements in the fair value of plan assets. Other
categories with the largest increases compared with the third quarter of the
previous year included professional fees, business promotion, net occupancy and
equipment expenses, which resulted in part from continuing investments in
systems technology and costs to support business initiatives and expansion.
Offsetting these increases was a decline in other operating expenses mostly
associated with the prepayment penalty paid in 2003 on the early cancellation of
debt previously mentioned.
At September 30, 2004 the Corporation's total assets amounted to $42.9
billion, compared with $35.8 billion at September 30, 2003 and $39.6 billion at
June 30, 2004. On August 31, 2004, the Corporation completed the acquisition of
Quaker City Bancorp with total assets of approximately $2.1 billion at that
date.
Total loans amounted to $27.5 billion at September 30, 2004, compared with
$21.7 billion on the same date in the previous year and $24.7 billion at June
30, 2004. The increase in loans from September 30, 2003 was driven primarily by
good results in mortgage, commercial and consumer lending, and by the
acquisition of Quaker City which contributed approximately $1.6 billion in loans
at September 30, 2004, mainly commercial and mortgage loans. Mortgage loans
accounted for the largest increase in the portfolio, rising $2.8 billion, or
31%, since September 30, 2003 and $1.1 billion, or 10%, from June 30, 2004.
Also, commercial, including construction loans, rose $2.1
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4 - POPULAR, INC. 2004 THIRD QUARTER RESULTS
billion, or 26%, compared with September 30, 2003, and $1.5 billion, or 17%,
compared with June 30, 2004. Consumer loans increased $737 million, or 23%, from
September 30, 2003 and $264 million, or 7%, from June 30, 2004. Investment and
trading securities totaled $12.0 billion at September 30, 2004, compared with
$11.2 billion at September 30, 2003, and $11.6 billion at June 30, 2004.
The allowance for loan losses totaled $446 million at September 30, 2004,
or 1.62% of loans, compared with $399 million, or 1.84%, at the same date in
2003, and $426 million, or 1.73%, at June 30, 2004. The ratio of allowance for
loan losses to loans continued to reflect improvement in credit quality trends
and a shift in the loan portfolio mix to include a greater proportion of real
estate secured loans. Non-performing assets were $623 million, or 2.26% of
ending loans at September 30, 2004, compared with $628 million, or 2.89%, at the
end of the third quarter of 2003, and $602 million, or 2.44%, at June 30, 2004.
The allowance as a percentage of non-performing loans was 79.01% at September
30, 2004, compared with 69.43% at the end of the third quarter of 2003 and
77.69% at June 30, 2004. 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 or more rather than 60 days or more. Had the Corporation
continued reporting commercial and construction loans in non-performing status
under the previous policy, non-performing assets would have amounted to $663
million at September 30, 2004, or 2.41% of ending loans. The allowance as a
percentage of non-performing loans would have amounted to 73.82%.
Non-performing mortgage loans totaled $387 million or 62% of total
non-performing assets and 3% of total mortgage loans at September 30, 2004,
compared with $318 million or 51% of total non-performing assets and 3% of total
mortgage loans at September 30, 2003. At June 30, 2004, non-performing mortgage
loans totaled $359 million or 60% of total non-performing assets and 3% of total
mortgage loans. Mortgage loans net charge-offs as a percentage of the average
mortgage loan portfolio was 0.30% in the third quarter of 2004, compared with
0.47% in the third quarter of 2003 and 0.29% in the second quarter of 2004. On
the other hand, commercial and construction non-performing loans reflected a
decline of $80 million, when compared with September 30, 2003.
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5 - POPULAR, INC. 2004 THIRD QUARTER RESULTS
Approximately $40 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. When compared with
June 30, 2004, commercial and construction non-performing loans declined $13
million.
Deposits totaled $20.5 billion at September 30, 2004, compared with $17.7
billion at September 30, 2003, an increase of 16%. Quaker City contributed with
approximately $1.2 billion in deposits at September 30, 2004. Total deposits at
June 30, 2004 were $19.2 billion. The growth since September 30, 2003 was mostly
reflected in savings and time deposits, which rose $1.1 billion and $1.3
billion, respectively. Demand deposits increased $520 million compared with
September 30, 2003. The increase in deposits was also associated with marketing
campaigns and sales efforts. Borrowed funds reached $18.7 billion at September
30, 2004, from $14.8 billion on the same date of the previous year. At June 30,
2004, borrowed funds totaled $16.9 billion. The increase in borrowings since
September 30, 2003 was mostly comprised of secured borrowings arising in
securitization transactions and debt issuances in the form of medium-term notes.
Stockholders' equity was $3.0 billion at September 30, 2004, compared with $2.8
billion at September 30, 2003 and June 30, 2004.
The market value of the Corporation's common stock at September 30, 2004,
was $26.30 per common share, compared with $19.90 at September 30, 2003, and
$21.39 at June 30, 2004. The Corporation's market capitalization at September
30, 2004 was $7.0 billion, compared with $5.3 billion at September 30, 2003 and
$5.7 billion at June 30, 2004. At September 30, 2004, the Corporation's common
stock had a book value per share of $10.60, compared with $9.66 and $9.76 at
September 30, 2003 and June 30, 2004, respectively.
* * *
On August 17, 2004, Popular, Inc. and Kislak Financial Corporation
announced that they reached a definitive agreement where Popular, Inc. will
acquire the operations of Kislak National Bank, a Miami, Florida-based
commercial bank. The acquisition, subject to regulatory approval, is expected to
close during the first quarter of 2005. Kislak operates eight full services bank
facilities in the metropolitan Miami-Dade, Broward and Palm Beach counties and
has approximately $1.0 billion
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6 - POPULAR, INC. 2004 THIRD QUARTER RESULTS
in total assets. Kislak National Bank is one of the nation's largest lenders to
homeowner's associations.
Recently, the Corporation issued $250 million in trust preferred
securities as a funding source for the aforementioned acquisition of Quaker
City. Furthermore, during the third quarter of 2004, the Corporation sold
approximately $637 million in asset-backed securities supported by mortgage
loans, under the name Equity One ABS, Inc. In recent weeks, a similar
securitization deal was completed for $705 million, under the name Popular ABS,
Inc., which prospectively will be the only name used by Popular, Inc. for sales
of asset-backed securities supported by mortgage loans held by Equity One.
* * *
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.
* * *
Popular, Inc. is a full service financial services provider with
operations in Puerto Rico, the United States, the Caribbean and Latin America.
As the leading financial institution in Puerto Rico, the Corporation offers
retail and commercial banking services through its banking subsidiary, Banco
Popular, as well as investment banking, auto and equipment leasing and
financing, mortgage loans, consumer lending, insurance and information
processing through specialized subsidiaries. In the United States, the
Corporation has established the largest Hispanic financial services franchise,
providing complete financial solutions to all the communities it serves. The
Corporation continues to
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7 - POPULAR, INC. 2004 THIRD QUARTER RESULTS
use its expertise in technology and electronic banking as a competitive
advantage in its Caribbean and Latin America expansion, and is exporting its 111
years of experience through the region. Popular, Inc. has always been committed
to meeting the needs of retail and business clients through innovation, and to
fostering growth in the communities it serves.
An electronic version of this release can be found at the Corporation website,
www.popularinc.com.
- Tables Follow -
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POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
Third
Quarter ended Quarter
September 30, 2004 - 2003 Second
--------------------------- Percent Quarter
2004 2003 Variance 2004
------------ ------------ ----------- ------------
SUMMARY OF OPERATIONS
Interest income $ 563,767 $ 509,399 10.67% $ 532,270
Interest expense 215,575 180,100 19.70 191,567
------------ ------------ ------ ------------
Net interest income 348,192 329,299 5.74 340,703
Provision for loan losses 46,614 48,668 (4.22) 41,349
------------ ------------ ------ ------------
Net interest income after provision for loan
losses 301,578 280,631 7.46 299,354
Other income 143,753 137,043 4.90 157,952
Gain on sale of investment securities 39,109 402
Trading account gain (loss) 803 (4,599) 615
------------ ------------ ------ ------------
Total other income 144,556 171,553 (15.74) 158,969
Salaries and benefits 137,569 128,379 7.16 135,921
Profit sharing 5,083 3,834 32.58 5,639
Amortization of intangibles 1,984 1,978 0.30 1,800
Other operating expenses 153,237 153,065 0.11 148,300
------------ ------------ ------ ------------
Total operating expenses 297,873 287,256 3.70 291,660
----------- ----------- ------ -----------
Income before income tax and minority interest 148,261 164,928 (10.11) 166,663
Income tax 32,880 33,818 (2.77) 38,864
Net gain of minority interest (184)
------------ ------------ ------ ------------
Net income $ 115,381 $ 130,926 (11.87) $ 127,799
============ ============ ====== ============
Net income applicable to common stock $ 112,402 $ 127,947 (12.15) $ 124,821
============ ============ ====== ============
Earnings per common share (basic and diluted) $ 0.42 $ 0.48 $ 0.47
============ ============ ============
Dividends declared per common share $ 0.16 $ 0.13 $ 0.16
============ ============ ============
Average common shares outstanding 266,414,016 265,599,470 266,178,304
Common shares outstanding at end of period 266,345,324 265,552,470 266,114,566
SELECTED AVERAGE BALANCES
Total assets ...................................... $ 40,783,407 $ 35,425,560 15.12 $ 38,660,017
Loans ............................................. 25,751,941 21,113,732 21.97 23,920,811
Earning assets .................................... 38,551,188 33,484,969 15.13 36,474,726
Deposits .......................................... 19,587,893 17,824,112 9.90 19,041,123
Interest-bearing liabilities ...................... 33,281,456 28,694,178 15.99 31,217,219
Stockholders' equity .............................. 2,943,636 2,630,816 11.89 2,859,664
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets ...................................... $ 42,855,594 $ 35,777,187 19.78 $ 39,556,239
Loans ............................................. 27,517,299 21,707,755 26.76 24,690,040
Earning assets .................................... 40,337,785 33,679,695 19.77 37,190,532
Deposits .......................................... 20,483,218 17,655,992 16.01 19,227,576
Interest-bearing liabilities ...................... 35,067,658 28,871,925 21.46 32,004,854
Stockholders' equity .............................. 3,010,495 2,751,006 9.43 2,783,720
PERFORMANCE RATIOS
Net interest yield * .............................. 3.61% 3.94% 3.74%
Return on assets .................................. 1.13 1.47 1.33
Return on common equity ........................... 16.22 20.85 18.79
CREDIT QUALITY DATA
Non-performing assets ** .......................... $ 623,085 $ 628,301 (0.83) $ 601,668
Net loans charged-off ............................. 42,482 49,490 (14.16) 35,578
Allowance for loan losses ......................... 445,845 398,578 11.86 425,949
Non-performing assets to total assets ** .......... 1.45% 1.76% 1.52%
Allowance for losses to loans ..................... 1.62 1.84 1.73
* Not on a taxable equivalent basis
** Non-performing assets for 2004 are stated based on the newly adopted
non-accruing policy for commercial and construction loans. Non-performing assets
for 2003 were not restated. At September 30, 2004, non-performing assets which
are comparable with prior periods non-accruing policy, would have amounted to
$663 million, or 1.55% of total assets.
Notes: Certain reclassifications have been made to prior periods to conform with
this quarter.
All common stock data has been adjusted to reflect the two-for-one stock
split effected in the form of a dividend on July 8, 2004.
8
POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
For the period ended
September 30,
--------------------------------- Percent
2004 2003 Variance
------------- ------------- --------
SUMMARY OF OPERATIONS
Interest income $ 1,614,779 $ 1,524,340 5.93%
Interest expense 595,170 566,240 5.11
------------- ------------- --------
Net interest income 1,019,609 958,100 6.42
Provision for loan losses 132,641 146,202 (9.28)
------------- ------------- --------
Net interest income after provision for loan
losses 886,968 811,898 9.25
Other income 436,074 423,373 3.00
Gain on sale of investment securities 13,435 70,398
Trading account loss (748) (9,779)
------------- ------------- --------
Total other income 448,761 483,992 (7.28)
Salaries and benefits 408,372 379,333 7.66
Profit sharing 16,404 14,997 9.38
Amortization of intangibles 5,586 6,033 (7.41)
Other operating expenses 438,909 429,813 2.12
------------- ------------- --------
Total operating expenses 869,271 830,176 4.71
------------- ------------- --------
Income before income tax and minority interest 466,458 465,714 0.16
Income tax 104,774 100,667 4.08
Net gain of minority interest (425)
------------- ------------- --------
Net income $ 361,684 $ 364,622 (0.81)
============= ============= ========
Net income applicable to common stock $ 352,749 $ 357,681 (1.38)
============= ============= ========
Earnings per common share (basic and diluted) $ 1.32 $ 1.35
============= =============
Dividends declared per common share $ 0.46 $ 0.37
============= =============
Average common shares outstanding 266,197,350 265,369,490
Common shares outstanding at end of period 266,345,324 265,552,470
SELECTED AVERAGE BALANCES
Total assets..................................... $ 38,793,708 $ 34,290,003 13.13
Loans............................................ 24,222,902 20,264,238 19.54
Earning assets................................... 36,626,461 32,430,515 12.94
Deposits......................................... 18,960,531 17,724,580 6.97
Interest-bearing liabilities..................... 31,470,346 27,817,659 13.13
Stockholders' equity............................. 2,860,175 2,492,582 14.75
PERFORMANCE RATIOS
Net interest yield *............................. 3.71% 3.94%
Return on assets................................. 1.25 1.42
Return on common equity.......................... 17.63 20.35
CREDIT QUALITY DATA
Non-performing assets **......................... $ 623,085 $ 628,301 (0.83)
Net loans charged-off............................ 118,079 126,008 (6.29)
Allowance for loan losses........................ 445,845 398,578 11.86
Non-performing assets to total assets **......... 1.45% 1.76%
Allowance for losses to loans.................... 1.62 1.84
* Not on a taxable equivalent basis
** Non-performing assets for the period ended September 30, 2004 are stated
based on the newly adopted non-accruing policy for commercial and construction
loans. Non-performing assets for 2003 were not restated. At September 30, 2004,
non-performing assets which are comparable with prior periods non-accruing
policy, would have amounted to $663 million, or 1.55% of total assets.
Notes: Certain reclassifications have been made to prior periods to conform with
this period.
All common stock data has been adjusted to reflect the two-for-one stock
split effected in the form of a dividend on July 8, 2004.
9