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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
- --- THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED,
EFFECTIVE OCTOBER 7, 1996]
For the Fiscal Year Ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
- --- THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File No. 0-13818
BANPONCE CORPORATION
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Incorporated in the Commonwealth of Puerto Rico
IRS Employer Identification No. 66-0416582
Principal Executive Offices:
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209 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Telephone Number: (787) 765-9800
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock ($6.00 par value)
8.35% Non-Cumulative Monthly Income Preferred Stock,
1994 Series A (Liquidation Preference $25.00 Per Share)
Series A Participating Cumulative Preferred Stock Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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As of February 28, 1997 the Corporation had 66,121,855 shares of common stock
outstanding. The aggregate market value of the common stock held by
non-affiliates of the Corporation was $2,380,387,000 based upon the reported
closing price of $36.00 on the NASDAQ National Market System on that date.
DOCUMENTS INCORPORATED BY REFERENCE
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(1) Portions of the Corporation's Annual Report to Shareholders for the
fiscal year ended December 31, 1996 are incorporated herein by reference in
response to Item 1 of Part I.
(2) Portions of the Corporation's Proxy Statement relating to the 1997
Annual Meeting of Stockholders of the Corporation are incorporated herein by
reference to Items 10 through 13 of Part III.
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TABLE OF CONTENTS
Page
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PART I
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Item 1 Business.................................................... 3
Item 2 Properties.................................................. 10
Item 3 Legal Proceedings........................................... 11
Item 4 Submission of Matters to a Vote of Security Holders......... 11
PART II
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Item 5 Market for Registrant's Common Stock and Related
Stockholder Matters....................................... 11
Item 6 Selected Financial Data..................................... 12
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 12
Item 8 Financial Statements and Supplementary Data................. 13
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 13
PART III
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Item 10 Directors and Executive Officers of the Registrant.......... 13
Item 11 Executive Compensation...................................... 13
Item 12 Security Ownership of Certain Beneficial Owners
and Management............................................ 13
Item 13 Certain Relationships and Related Transactions.............. 13
PART IV
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Item 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K....................................... 14
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PART I
ITEM 1. BUSINESS
BANPONCE CORPORATION (the "Corporation") is a diversified, publicly
owned bank holding company, incorporated under the General Corporation Law of
Puerto Rico in November 1984. It provides a wide variety of financial services
through its principal subsidiaries: Banco Popular de Puerto Rico ("Banco
Popular" or the "Bank"), BP Capital Markets, Inc. ("BP Capital") and Popular
International Bank, Inc. ("PIB"). The Corporation is subject to the provisions
of the U.S. Bank Holding Company Act of 1956 (the "BHC Act") and, accordingly,
subject to the supervision and regulation of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). Banco Popular, the
Corporation's principal banking subsidiary, was incorporated over 100 years ago
in 1893 and is Puerto Rico's largest bank with total assets of $14.0 billion,
deposits of $10.1 billion and stockholder's equity of $1.0 billion at December
31, 1996. The Bank accounted for 84% of the total consolidated assets of the
Corporation at December 31, 1996. The Bank is a full-service commercial bank,
and Puerto Rico's largest banking institution with a delivery system of 178
branches and 327 automated teller machines on the island. The Bank also has the
largest trust operation in Puerto Rico and is the largest servicer of mortgage
loans for investors. In addition, it operates the largest Hispanic bank branch
network in the mainland United States with 29 branches in New York and an agency
in Chicago. As of December 31, 1996, these branches had a total of approximately
$1.5 billion in deposits. The Bank also operates seven branches in the U.S.
Virgin Islands and one branch in the British Virgin Islands. The Bank is a
member of the Federal Reserve System and is also subject to the supervision of
the Office of the Commissioner of Financial Institutions of the Commonwealth of
Puerto Rico and the Superintendent of Banks of the State of New York. Banco
Popular's deposits are insured by the Federal Deposit Insurance Corporation (the
"FDIC"). In addition, Banco Popular has three subsidiaries, Popular Leasing &
Rental, Inc., Puerto Rico's largest vehicle leasing and daily rental company,
Popular Consumer Services, Inc., a small-loan and secondary mortgage company
with 35 offices in Puerto Rico operating under the name of Best Finance, and
Popular Mortgage, Inc., a mortgage loan company with four offices in Puerto Rico
operating under the name of Puerto Rico Home Mortgage. BP Capital Markets, Inc.
is a direct subsidiary of the Corporation engaged in the business of securities
broker-dealer in Puerto Rico, with institutional brokerage, financial advisory,
and investment and security brokerage operations.
PIB, incorporated under the Puerto Rico International Banking Center
Act ("IBC Act"), owns all issued and outstanding stock of BanPonce Financial
Corp ("Financial"), a Delaware corporation. PIB is principally engaged in
providing managerial services to its subsidiaries. Financial is the direct owner
of all the issued and outstanding shares of Pioneer Bancorp, Inc., a corporation
organized under the laws of Delaware and headquartered in Chicago, Illinois, and
a registered bank holding company under the BHC Act of 1956, which through its
wholly-owned subsidiary River Associates, Bancorp, Inc., a Delaware corporation,
owns and operates Banco Popular, Illinois (formerly Pioneer Bank & Trust
Company) a bank organized under the laws of the State of Illinois with five
branches in that state. The deposits of Banco Popular, Illinois are insured by
the FDIC. As of December 31, 1996 the assets of Banco Popular, Illinois were
$467.4 million and its deposits were $375.3 million.
Financial is also the direct owner of all the common stock of Banco
Popular, FSB, a federal savings bank which acquired from the Resolution Trust
Corporation ("RTC") certain assets and all of the deposits of four New Jersey
branches of the former Carteret Federal Savings Bank, a federal savings bank
under Resolution Trust Corporation conservatorship. The deposits of Banco
Popular, FSB are insured by the FDIC and it is subject to the supervision of the
Office of Thrift Supervision. As a result of the ownership of Banco Popular,
FSB, the Corporation has become a registered savings and loan holding company
under the Home Owners' Loan Act.
Banco Popular, FSB owns Equity One, Inc., a Delaware corporation
(formerly Spring Financial Services, Inc.) ("Equity One"). Equity One is a
diversified consumer finance company engaged in the business of granting
personal and mortgage loans and providing dealer financing through 102 offices
in 28 states with total assets of $1.1 billion as of December 31, 1996. Equity
One had initially been acquired by Financial on September 30, 1991, prior to
which time Financial had no significant business operations.
On September 30, 1996, Financial acquired all of the common stock of
CombanCorp, a corporation organized under the laws of California and
headquartered in Los Angeles, and a registered bank holding company under the
BHC Act. CombanCorp owns Banco Popular, National Association (California)
("Banco Popular, N.A. (California)"), a national bank with four branches in
California. The deposits of Banco Popular, N.A. (California) are also insured by
the FDIC and it is subject to the supervision of the Office of the Comptroller
of the Currency. As of December 31, 1996, it had assets of $139.5 million and
deposits of $100.9 million.
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The Corporation is a legal entity separate and distinct from its
subsidiaries. There are various legal limitations governing the extent to which
the Corporation's banking and savings bank subsidiaries may extend credit, pay
dividends or otherwise supply funds to, or engage in transactions with, the
Corporation or certain of its other subsidiaries. The rights of the Corporation
to participate in any distribution of assets of any subsidiary upon its
liquidation or reorganization or otherwise, are subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be a creditor of that subsidiary and its claims are recognized. Claims on
the Corporation's subsidiaries by creditors other than the Corporation may
include long-term debt and substantial obligations with respect to deposit
liabilities, federal funds purchased, securities sold under agreements to
repurchase and commercial paper, as well as various other liabilities.
The Corporation's business is described on pages 10 through 29 of the
Business Review Section of the Annual Report to Shareholders for the year ended
December 31, 1996, information which is incorporated herein by reference.
REGULATION AND SUPERVISION
GENERAL
The Corporation is a bank holding company subject to the supervision
and regulation of the Federal Reserve Board under the BHC Act. As a bank holding
company, the Corporation's activities and those of its banking and non-banking
subsidiaries are limited to the business of banking and activities closely
related to banking, and the Corporation may not directly or indirectly acquire
the ownership or control of more than 5% of any class of voting shares or
substantially all of the assets of any company, in the United States including a
bank, without the prior approval of the Federal Reserve Board. In addition, bank
holding companies are generally prohibited under the BHC Act from engaging in
non-banking activities, subject to certain exceptions.
Banco Popular is considered a foreign bank for purposes of the
International Banking Act of 1978 (the "IBA"). Under the IBA Banco Popular is
not permitted to operate a branch or agency that is located outside of its "home
state", except that a national bank with the same home state is permitted to do
so as described under "Interstate Banking and Other Recent Legislation" below.
Puerto Rico is not considered a state for purposes of these geographic
limitations. Banco Popular has designated the state of New York as its home
state. In addition, some states have laws prohibiting or restricting foreign
banks from acquiring banks located in such states and treat Puerto Rico's banks
and bank holding companies as foreign banks for such purposes.
Banco Popular, Banco Popular, Illinois, Banco Popular, N.A.
(California) and Banco Popular, FSB are subject to supervision and examination
by applicable federal and state banking agencies including, in the case of Banco
Popular, the Federal Reserve Board and the Office of the Commissioner of
Financial Institutions of Puerto Rico, in the case of Banco Popular, Illinois,
the FDIC and the Illinois Commissioner of Banks and Trust Companies, in the case
of Banco Popular, N.A. (California), the Office of the Comptroller of the
Currency (the "OCC") and in the case of Banco Popular, FSB, the Office of Thrift
Supervision (the "OTS") and the FDIC. Banco Popular, Banco Popular, Illinois,
Banco Popular, N.A. (California) and Banco Popular, FSB are subject to
requirements and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
thereon, and limitations on the types of other investments that may be made and
the types of services that may be offered. Various consumer laws and regulations
also affect the operations of Banco Popular, Banco Popular, Illinois, Banco
Popular, N.A. (California) and Banco Popular, FSB. In addition to the impact of
regulations, commercial banks are affected significantly by the actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability in order to influence the economy.
F D I C I A
Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") the federal banking regulators must take prompt corrective action in
respect of depository institutions that do not meet minimum capital
requirements. FDICIA and regulations thereunder established five capital tiers:
"well capitalized", "adequately capitalized," "undercapitalized", "significantly
undercapitalized", and "critically undercapitalized". A depository institution
is deemed well capitalized if it maintains a leverage ratio of at least 5%, a
risk-based Tier 1 capital ratio of at least 6% and a risk-based total capital
ratio of at least 10% and is not subject to any written agreement or directive
to meet a specific capital level. A depository institution is deemed adequately
capitalized if it is not well capitalized but maintains a leverage ratio of at
least 4% (or at least 3% if given the highest regulatory rating and not
experiencing or anticipating significant growth), a risk-based Tier 1 capital
ratio of at least 4% and a risk-based total capital ratio of at least 8%. A
depository institution is deemed undercapitalized if it fails to meet the
standards for adequately capitalized institutions (unless it is deemed
significantly or critically undercapitalized). An institution is deemed
significantly undercapitalized if it has a leverage ratio of
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less than 3%, a risk-based Tier 1 capital ratio of less than 3% or a risk-based
total capital ratio of less than 6%. An institution is deemed critically
undercapitalized if it has tangible equity equal to 2% or less of total assets.
A depository institution may be deemed to be in a capitalization category that
is lower than is indicated by its actual capital position if it receives a less
than satisfactory examination rating in any one of four categories.
At December 31, 1996, Banco Popular, Banco Popular, Illinois, and Banco
Popular, FSB were well capitalized. At the same date Banco Popular, N.A.
(California) was adequately capitalized. At the end of February 1997, after
receiving an additional capital contribution of one million from Financial,
Banco Popular, N.A. (California) was well capitalized.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
restrictions on borrowing from the Federal Reserve System. In addition,
undercapitalized depository institutions are subject to growth limitations and
are required to submit capital restoration plans. A depository institution's
holding company must guarantee the capital plan, up to an amount equal to the
lesser of five percent of the depository institution's assets at the time it
becomes undercapitalized or the amount of the capital deficiency when the
institution fails to comply with the plan. The federal banking agencies may not
accept a capital plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator.
HOLDING COMPANY STRUCTURE
Banco Popular, Banco Popular, Illinois, Banco Popular, N.A.
(California) and Banco Popular, FSB are subject to restrictions under federal
law that limit the transfer of funds between them and the Corporation,
Financial, PIB and the Corporation's other non-banking subsidiaries, whether in
the form of loans, other extensions of credit, investments or asset purchases.
Such transfers by Banco Popular, Banco Popular, Illinois, Banco Popular, N.A.
(California) or Banco Popular, FSB, respectively, to the Corporation,
Financial, or PIB, as the case may be, or to any one non-banking subsidiary,
are limited in amount to 10% of the transferring institution's capital stock
and surplus and, with respect to the Corporation and all of its non-banking
subsidiaries, to an aggregate of 20% of the transferring institution's capital
stock and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts.
Under the Federal Reserve Board policy, a bank holding company such as
the Corporation, is expected to act as a source of financial strength to each of
its subsidiary banks and to commit resources to support each subsidiary bank.
This support may be required at times when, absent such policy, the bank holding
company might not otherwise provide such support. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a subsidiary bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment. In
addition, any capital loans by a bank holding company to any of its subsidiary
banks must be subordinated in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. Banco Popular, Banco Popular, Illinois,
Banco Popular, N.A. (California) and Banco Popular, FSB are currently the only
depository institution subsidiaries of the Corporation.
Because the Corporation, PIB and Financial are holding companies, their
right to participate in the assets of any subsidiary upon the latter's
liquidation or reorganization will be subject to the prior claims of the
subsidiary's creditors (including depositors in the case of depository
institution subsidiaries) except to the extent that the Corporation, PIB or
Financial, as the case may be, may itself be a creditor with recognized claims
against the subsidiary.
Under the Federal Deposit Insurance Act (FDIA), a depository
institution (which definition includes both banks and savings associations), the
deposits of which are insured by the FDIC, can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC in connection
with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default". "Default"
is defined generally as the appointment of a conservator or a receiver and "in
danger of default" is defined generally as the existence of
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certain conditions indicating that a default is likely to occur in the absence
of regulatory assistance. Banco Popular, Banco Popular, Illinois, Banco Popular,
N.A. (California) and Banco Popular, FSB are all currently FDIC-insured
depository institutions. In some circumstances (depending upon the amount of the
loss or anticipated loss suffered by the FDIC), cross-guarantee liability may
result in the ultimate failure or insolvency of one or more insured depository
institutions in a holding company structure. Any obligation or liability owned
by a subsidiary bank to its parent company is subordinated to the subsidiary
bank's cross-guarantee liability with respect to commonly controlled insured
depository institutions.
DIVIDEND RESTRICTIONS
The principal regular source of cash flow for the Corporation is
dividends from Banco Popular. Various statutory provisions limit the amount of
dividends Banco Popular can pay to the Corporation without regulatory approval.
As a member bank subject to the regulations of the Federal Reserve Board, Banco
Popular must obtain the approval of the Federal Reserve Board for any dividend
if the total of all dividends declared by the member bank in any calendar year
would exceed the total of its net profits, as defined by the Federal Reserve
Board, for that year, combined with its retained net profits for the preceding
two years. In addition, a member bank may not pay a dividend in an amount
greater than its undivided profits then on hand after deducting its losses and
bad debts. For this purpose, bad debts are generally defined to include the
principal amount of loans that are in arrears with respect to interest by six
months or more unless such loans are fully secured and in the process of
collection. Moreover, for purposes of this limitation, a member bank is not
permitted to add the balance in its allowance for loan losses account to its
undivided profits then on hand. However, it may net the sum of its bad debts as
so defined against the balance in its allowance for loan losses account and
deduct from undivided profits only bad debts as so defined in excess of that
account. At December 31, 1996, Banco Popular could have declared a dividend of
approximately $197.1 million without the approval of the Federal Reserve Board.
Illinois law contains similar limitations on the amount of dividends that Banco
Popular, Illinois can pay and the National Bank Act contains similar
limitations, on the amount of dividends Banco Popular, N.A. (California) can
pay. In addition, OTS regulations limit the amount of capital distributions
(whether by dividend or otherwise) that any savings association may make without
prior OTS approval, based upon the savings association's regulatory capital
levels. These limitations are applicable to Banco Popular, FSB. Also, in
connection with the acquisition by Banco Popular, FSB, from the RTC of four New
Jersey branches of the former Carteret Federal Savings Bank, the RTC provided
Banco Popular, FSB and Financial an interim financial assistance. The assistance
consisted of a 5-year term loan for $19.5 million, payable in the year 2000 in a
single lump sum installment and accruing interest, payable quarterly, at a
floating rate of 12.5 basis points over the rate payable on the 13-week U.S.
Treasury Bill. The loan is secured with the issued and outstanding shares of
common stock of Banco Popular, FSB. Pursuant to the term of such financing,
Banco Popular, FSB may not, among other things, declare or pay any dividends on
its outstanding capital stock (unless such dividends are used exclusively for
payment of principal of or interest on such promissory note) or make any
distributions of its assets until payment in full of such promissory note.
The payment of dividends by Banco Popular, Banco Popular, Illinois,
Banco Popular, N.A. (California) or Banco Popular, FSB may also be affected by
other regulatory requirements and policies, such as the maintenance of adequate
capital. If, in the opinion of the applicable regulatory authority, a depository
institution under its jurisdiction is engaged in, or is about to engage in, an
unsafe or unsound practice (that, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such depository institution cease
and desist from such practice. The Federal Reserve Board has issued a policy
statement that provides that insured banks and bank holding companies should
generally pay dividends only out of current operating earnings. In addition, all
insured depository institutions are subject to the capital-based limitations
required by the FDICIA. See "FDICIA".
See "Puerto Rico Regulation" for a description of certain restrictions
on Banco Popular's ability to pay dividends under Puerto Rico law.
FDIC INSURANCE ASSESSMENTS
Banco Popular, Banco Popular, Illinois, Banco Popular, N.A.
(California) and Banco Popular, FSB are subject to FDIC deposit insurance
assessments.
Pursuant to FDICIA, the FDIC has adopted a risk-based assessment
system, under which the assessment rate for an insured
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depository institution varies according to the level of risk incurred in its
activities. An institution's risk category is based partly upon whether the
institution is well capitalized, adequately capitalized or less than adequately
capitalized. Each insured depository institution is also assigned to one of the
following "supervisory subgroups": "A", "B" or "C". Group "A" institutions are
financially sound institutions with only a few minor weaknesses; Group "B"
institutions are institutions that demonstrate weaknesses that, if not
corrected, could result in significant deterioration; and Group "C" institutions
are institutions for which there is a substantial probability that the FDIC will
suffer a loss in connection with the institution unless effective action is
taken to correct the areas of weakness.
The FDIC reduced the insurance premiums it charges on bank deposits
insured by the Bank Insurance Fund ("BIF") to the statutory minimum of $2,000.00
for "well capitalized" banks, effective January 1, 1996. On September 30, 1996,
the Deposit Insurance Funds Act of 1996 ("DIFA") was enacted and signed into
law. DIFA repealed the statutory minimum premium and, currently, premiums
related to deposits assessed by both the BIF and the Savings Association
Insurance Fund ("SAIF") are to be assessed at a rate between 0 cents and 27
cents per $100.00 of deposits. DIFA also provides for a special one-time
assessment imposed on deposits insured by the SAIF to recapitalize the SAIF to
bring it up to statutory required levels. The Corporation accrued for the
one-time assessment in the third quarter of 1996.
DIFA also separates, effective January 1, 1997, the Financing
Corporation ("FICO") assessment to service the interest on its bond obligations
from the BIF and SAIF assessments. The amount assessed on individual
institutions by the FICO will be in addition to the amount, if any, paid for
deposit insurance according to the FDIC's risk-related assessment rate
schedules. FICO assessment rates for the first semiannual period of 1997 were
set at 1.30 basis points annually for BIF-assessable deposits and 6.48 basis
points annually for SAIF-assessable deposits. (These rates may be adjusted
quarterly to reflect changes in assessment bases for the BIF and the SAIF. By
law, the FICO rate on BIF-assessable deposits must be one-fifth the rate on
SAIF-assessable deposits until the insurance funds are merged or until January
1, 2000, whichever occurs first.) As of December 31, 1996, the Corporation had a
BIF deposit assessment base of approximately $10.1 billion and a SAIF deposit
assessment base of approximately $207 million.
BROKERED DEPOSITS
FDIC regulations adopted under FDICIA govern the receipt of brokered
deposits. Under these regulations, a bank cannot accept, roll over or renew
brokered deposits (which term is defined also to include any deposit with an
interest rate more than 75 basis points above prevailing rates) unless (i) it is
well capitalized or (ii) it is adequately capitalized and receives a waiver from
the FDIC. A bank that is adequately capitalized may not pay an interest rate on
any deposits in excess of 75 basis points over certain prevailing market rates
specified by regulation. There are no such restrictions on a bank that is well
capitalized. The Corporation does not believe the brokered deposits regulation
has had or will have a material effect on the funding or liquidity of Banco
Popular, Banco Popular, Illinois, Banco Popular, N.A. (California) or Banco
Popular, FSB.
CAPITAL ADEQUACY
Information about the capital composition of the Corporation as of
December 31, 1996 and for the four previous years is presented in Table I
"Capital Adequacy Data", on page F-16 in the "Management Discussion and Analysis
of Financial Condition and Results of Operations" (MD&A) and is incorporated
herein by reference.
The Federal Reserve Board has adopted risk-based capital guidelines for
bank holding companies. Under the guidelines the minimum ratio of qualifying
total capital to risk-weighted assets (including certain off-balance sheet
items, such as standby letters of credit) is 8%. At least half of the total
capital is to be comprised of common equity, retained earnings, minority
interest in unconsolidated subsidiaries, non-cumulative perpetual preferred
stock and a limited amount of cumulative perpetual preferred stock, less
goodwill, other disallowed intangibles and the disallowed portion of deferred
tax assets ("Tier 1 Capital"). The remainder may consist of a limited amount of
subordinated debt, other preferred stock, certain other instruments and a
limited amount of loan and lease loss reserves ("Tier 2 Capital").
The Federal Reserve Board has adopted regulations with respect to
risk-based and leverage capital ratios that require most intangibles, including
core deposit intangibles, to be deducted from Tier 1 Capital. The regulations,
however, permit the inclusion of a limited amount of intangibles related to
originated and purchased mortgage servicing rights, purchased credit card
relationships and include a "grandfather" provision permitting the continued
inclusion of certain existing intangibles.
In addition, the Federal Reserve Board has established minimum leverage
ratio (Tier 1 Capital to quarterly average assets)
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guidelines for bank holding companies and member banks. These guidelines provide
for a minimum leverage ratio of 3% for bank holding companies and member banks
that meet certain specified criteria, including that they have the highest
regulatory rating. All other bank holding companies and member banks are
required to maintain a leverage ratio of 3% plus an additional cushion of at
least 100 to 200 basis points. The guidelines also provide that banking
organizations experiencing internal growth or making acquisitions are expected
to maintain strong capital positions substantially above the minimum supervisory
levels, without significant reliance on intangible assets. Furthermore, the
guidelines indicate that the Federal Reserve Board will continue to consider a
"tangible Tier 1 leverage ratio" and other indicia of capital strength in
evaluating proposals for expansion or new activities. The tangible Tier 1
leverage ratio is the ratio of a banking organization's Tier 1 Capital less all
intangibles, to quarterly average assets less all intangibles. The Federal
Reserve Board has not advised the Corporation of any specific minimum leverage
ratio applicable to it.
Banco Popular is subject to the risk-based and leverage capital
requirements adopted by the Federal Reserve Board. As of December 31, 1996,
Banco Popular had a tier 1 capital ratio of 11.31%, a total capital ratio of
12.57% and a leverage ratio of 6.65%.
Banco Popular, Illinois, Banco Popular, N.A. (California) and Banco
Popular, FSB are subject to similar capital requirements adopted by the FDIC,
the OCC and the OTS, respectively.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "FDICIA".
The Federal Reserve Board established a limitation on the amount of
certain deferred tax assets that may be included in Tier 1 capital for
risk-based and leverage capital purposes. Under this rules deferred tax assets
that can only be realized if an institution earns taxable income in the future
and are limited for regulatory capital purposes to the amount that the
institution expects to realize within one year of the quarter-end report date
based on its projection of taxable income or 10 percent of Tier 1 capital,
whichever is less. In addition, the Federal Reserve Board has decided to exclude
from regulatory capital the amount of net unrealized gains and losses on
securities available-for-sale, except the net unrealized losses of equity
securities with readily determinable fair values.
Bank regulators have from time to time indicated their desire to raise
capital requirements applicable to banking organizations beyond current levels.
However, management is unable to predict whether and when higher capital
requirements would be imposed and, if so, at what levels and on what terms.
Interstate Banking and Other Recent Legislation
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
permits bank holding companies, with Federal Reserve approval, to acquire banks
located in states other than the holding company's home state without regard to
whether the transaction is prohibited under state law. In addition, commencing
June 1, 1997, national and state banks with different home states will be
permitted to merge across state lines, with approval of the appropriate federal
banking agency, unless the home state of a participating bank passes legislation
prior to May 31, 1997 expressly prohibiting interstate mergers. States may "opt
in" to permit insterstate branching by merger prior to June 1, 1997, and to
permit de novo insterstate branching. Once a bank has established branches in a
state through an interstate merger transaction, the bank may establish and
acquire additional branches at any location in the state where any bank involved
in the interstate merger transaction could have established or acquired branches
under applicable federal or state law. A bank that has established a branch in a
state through de novo branching may establish and acquire additional branches in
such state in the same manner and to the same extent as a bank having a branch
in such state as a result of an interstate merger. If a state opts out of
interstate branching within the specified time period, no bank in any other
state may establish a branch in the state which has opted out, whether through
an acquisition or de novo. A foreign bank, like Banco Popular, may branch
interstate by merger or de novo to the same extent as domestic banks in the
foreign bank's home state, which, in the case of Banco Popular, is New York.
Various other legislation, inluding proposals to overhaul the bank
regulatory system, expand bank and bank holding company powers and limit the
investments that a depository institution may make with insured funds, is from
time to time introduced in Congress. It is impossible to predict whether or in
what form these proposals may be adopted in the future, and, if adopted, what
their effect will be on the Corporation or its subsidiaries.
8
9
Puerto Rico Regulation
General
As a commercial bank organized under the laws of the Commonwealth of
Puerto Rico (the "Commonwealth"), Banco Popular is subject to the supervision,
examination and regulation of the Office of the Commissioner of Financial
Institutions of the Commonwealth (the "Office of the Commissioner"), pursuant to
the Puerto Rico Banking Act of 1933, as amended (the "Banking Law").
Section 27 of the Banking Law requires that at least ten percent (10%)
of the yearly net income of Banco Popular be credited annually to a reserve
fund. This apportionment shall be done every year until the reserve fund shall
be equal to ten percent (10%) of the total deposits or the total paid-in
capital, whichever is greater. At the end of its most recent fiscal year, Banco
Popular had a fund established in compliance with these requirements.
Section 27 of the Banking Law also provides that when the expenditures
of a bank are greater than the receipts, the excess of the former over the
latter shall be charged against the undistributed profits of the bank, and the
balance, if any, shall be charged against the reserve fund, as a reduction
thereof. If there is no reserve fund sufficient to cover such balance in whole
or in part, the outstanding amount shall be charged against the capital account
and no dividend shall be declared until said capital has been restored to its
original amount and the reserve fund to 20% of the original capital.
Section 16 of the Banking Law requires every bank to maintain a legal
reserve which shall not be less than 20% of its demand liabilities, except
government deposits (federal, state and municipal) which are secured by actual
collateral. However, if a bank becomes a member of the Federal Reserve System,
the 20% legal reserve shall not be effective and the reserve requirements
demanded by the Federal Reserve System shall be applicable. Pursuant to an order
of the Board of Governors dated November 24, 1982, Banco Popular has been
exempted from such reserve requirements with respect to deposits payable in
Puerto Rico but is subject to Puerto Rico regulatory reserve requirements.
Section 17 of the Banking Law permits Banco Popular to make loans to
any one person, firm, partnership or corporation, up to an aggregate amount of
fifteen percent (15%) of the paid-in capital and reserve fund of the Bank. As of
December 31, 1996, the legal lending limit for the Bank under this provision was
approximately $90 million. If such loans are secured by collateral worth at
least twenty-five percent (25%) more than the amount of the loan, the aggregate
maximum amount may reach one third of the paid-in capital of the Bank, plus its
reserve fund. There are no restrictions under Section 17 on the amount of loans
that are wholly secured by bonds, securities and other evidence of indebtedness
of the Government of the United States or the Commonwealth, or by current debt
bonds, not in default, of municipalities or instrumentalities of the
Commonwealth.
Section 14 of the Banking Law authorizes Banco Popular to conduct
certain financial and related activities directly or through subsidiaries,
including lease financing of personal property, operating small loans companies
and mortgage loans activities. Banco Popular engages in these activities through
its wholly-owned subsidiaries, Popular Leasing & Rental, Inc., Popular Consumer
Services, Inc. and Popular Mortgage, Inc., respectively, which are organized and
operate solely in Puerto Rico.
The Finance Board, which is a part of the Office of the Commissioner,
but also includes as its members the Secretary of the Treasury, the Secretary of
Commerce, the Secretary of Consumer Affairs, the President of the Planning
Board, and the President of the Government Development Bank for Puerto Rico, has
the authority to regulate the maximum interest rates and finance charges that
may be charged on loans to individuals and unincorporated businesses in the
Commonwealth. The current regulations of the Finance Board provide that the
applicable interest rate on loans to individuals and unincorporated businesses
(including real estate development loans but excluding certain other personal
and commercial loans secured by mortgages on real estate properties) is to be
determined by free competition. The Finance Board also has authority to regulate
the maximum finance charges on retail installment sales contracts, which are
currently set at 21%, and for credit card purchases, which are currently set at
26%. There is no maximum rate set for installment sales contracts involving
motor vehicles, commercial, agricultural and industrial equipment, commercial
electric appliances and insurance premiums.
IBC Act
Under the IBC Act, without the prior approval of the Office of the
Commissioner, PIB may not amend its articles of incorporation or issue
additional shares of capital stock or other securities convertible into
additional shares of capital stock unless such shares
9
10
are issued directly to the shareholders of PIB previously identified in the
application to organize the international banking entity, in which case
notification to the Office of the Commissioner must be given within ten business
days following the date of the issue. Pursuant to the IBC Act, without the prior
approval of the Office of the Commissioner, PIB may not initiate the sale,
encumbrance, assignment, merger or other transfer of shares if by such
transaction a person or persons acting in concert could acquire direct or
indirect control of 10% or more of any class of the Company's stock. Such
authorization must be requested at least 30 days prior to the transaction.
PIB must submit to the Office of the Commissioner a report of its
condition and results of operation on a monthly basis and its annual audited
financial statement as of the end of its fiscal year. Under the IBC Act, PIB may
not deal with "domestic persons" as such term is defined in the IBC Act. Also,
it may only engage in those activities authorized in the IBC Act, the
regulations adopted thereunder and its license.
The IBC Act empowers the Office of the Commissioner to revoke or
suspend, after a hearing, the license of an international banking entity if,
among other things, it fails to comply with the IBC Act, regulations issued by
the Office of the Commissioner or the terms of its license or if the Office of
the Commissioner finds that the business of the international banking entity is
conducted in a manner not consistent with the public interest.
Employees
At December 31, 1996, the Corporation employed 7,996 persons. None of
its employees are represented by a collective bargaining group.
ITEM 2. PROPERTIES
As of December 31, 1996, Banco Popular owned (and wholly or partially
occupied) approximately 68 branch premises and other facilities throughout the
Commonwealth and branches premises in New York. In addition, as of such date,
Banco Popular leased properties for branch operations in approximately 113
locations in Puerto Rico, 16 locations in New York, 7 locations in the U.S.
Virgin Islands and one location in the British Virgin Islands. The Corporation's
management believes that each of its facilities is well-maintained and suitable
for its purpose. The principal properties owned by Banco Popular for banking
operations and other services are described below:
Popular Center, the metropolitan area headquarters building, located at
209 Munoz Rivera Avenue, Hato Rey, Puerto Rico, a 20 story office building.
Approximately 60% of the office space is leased to outside tenants.
Cupey Center Complex, two buildings of three and two stories,
respectively, located at Cupey, Rio Piedras, Puerto Rico. The computer center,
operational and support services, and a recreational center for employees are
some of the main activities conducted at these facilities. The facilities are
fully occupied by Banco Popular's personnel.
Stop 22 - Santurce building, a twelve story structure located in
Santurce, Puerto Rico. A branch, the accounting department, the human resources
division and the auditing department are the main activities conducted at this
facility.
San Juan building, a twelve story structure located at Old San Juan,
Puerto Rico. Banco Popular occupies 50% of the basement, the entire ground
floor, the mezzanine and the 10th floor. The rest of the building is rented to
outside tenants.
Mortgage Loan Center, a seven story building and a four story building,
located at 153 and 167 Ponce de Leon Avenue, Hato Rey, Puerto Rico,
respectively, are fully occupied by the mortgage loans and mortgage servicing
departments.
New York building, a nine story structure with two underground levels
located at 7 West 51st. Street, New York City, where approximately 92% of the
office space is used for banking operations. The remaining space is rented or
available for rent to outside tenants.
At December 31, 1996 the Corporation owned a 23 story office structure
located at 268 Munoz Rivera Avenue, Hato Rey, Puerto Rico. Banco Popular
occupies approximately 15% of the rented space and the rest of the building is
rented to outside tenants. At the same date, Banco Popular, N.A. (California)
owned a nine story structure located at 354 South Spring Street, Los Angeles,
10
11
California in which office space is mostly rented to outside tenants. A full
service branch of Banco Popular, N.A. (California) operates in this facility.
ITEM 3. LEGAL PROCEEDINGS
The Corporation and its subsidiaries are defendants in various lawsuits
arising in the ordinary course of business. Management believes, based on the
opinion of legal counsel, that the aggregate liabilities, if any, arising from
such actions would not have a material adverse effect on the financial position
of the Corporation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Corporation's common stock (the "Common Stock") is traded on the
National Association of Securities Dealers Automated Quotation (NASDAQ) National
Market System under the symbol BPOP. Information concerning the range of high
and low sales prices for the Corporation's common shares for each quarterly
period during 1996 and the previous four years, as well as cash dividends
declared is contained under Table J, "Common Stock Performance", on page F-17
and under the caption "Stockholders' Equity" on page F-15 in the MD&A, and is
incorporated herein by reference.
Information concerning legal or regulatory restrictions on the payment
of dividends by the Corporation and Banco Popular is contained under the caption
"Regulation and Supervision" in Item 1 herein.
On April 26, 1996, the Corporation's Board of Directors authorized a
stock split of one share for each share outstandings effected in the form of a
dividend, on July 1, 1996. As a result of the split 33,000,590 shares were
issued, and $198 million were transferred from retained earnings to common
stock.
As of February 28, 1997, the Corporation had 5,628 stockholders of
record of its Common Stock, not including beneficial owners whose shares are
held in record names of brokers or other nominees. The last sales price for the
Corporation's Common Stock on such date, as quoted on the NASDAQ was $36.00 per
share.
The Corporation currently has outstanding $125 million subordinated
notes due December 15, 2005 with interest payable semi-annually at 6.75%. These
notes are unsecured subordinated obligations which are subordinated in right of
payment in full to all present and future senior indebtedness of the
Corporation. These notes do not provide for any sinking fund.
The Puerto Rico Income Tax Act of 1954, as amended, generally imposes a
withholding tax on the amount of any dividends paid by corporations to
individuals, whether residents of Puerto Rico or not, trusts, estates and
special partnerships at a special 10% withholding tax rate. If the recipient is
a foreign corporation or partnership not engaged in trade or business within
Puerto Rico the rate of withholding is 10%.
Prior to the first dividend distribution for the taxable year,
individuals who are residents of Puerto Rico may elect to be taxed on the
dividends at the regular rates, in which case the special 10% tax will not be
withheld from such year's distributions.
United States citizens who are non-residents of Puerto Rico will not be
subject to Puerto Rico tax on dividends if said individual's gross income from
sources within Puerto Rico during the taxable year does not exceed $1,300 if
single, or $3,000 if married, and form AS 2732 of the Puerto Rico Treasury
Department "Withholding Tax Exemption Certificate for the Purpose of Section
1147", is filed with the withholding agent.
U.S. income tax law permits a credit against U.S. income tax liability,
subject to certain limitations, for certain foreign income taxes paid or deemed
paid with respect to such dividends.
11
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ITEM 6. SELECTED FINANCIAL DATA
The information required by this item appears in Table B, "Selected
Financial Data" on pages F-4 and F-5 and the text under the caption "Earnings
Analysis", on page F-7 in the MD&A, and is incorporated herein by reference.
The Corporation's ratio of earnings to fixed charges on a consolidated
basis for each of the last five years is as follows:
Year ended December 31,
-----------------------
Ratio of Earnings to Fixed Charges:
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Excluding Interest on Deposits 2.0 2.0 2.6 3.0 2.9
Including Interest on Deposits 1.4 1.4 1.5 1.5 1.3
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends:
Excluding Interest on Deposits 2.0 2.0 2.5 3.0 2.9
Including Interest on Deposits 1.4 1.4 1.5 1.5 1.3
For purposes of computing these consolidated ratios, earnings represent
income before income taxes, plus fixed charges. Fixed charges represent all
interest expense (ratios are presented both excluding and including interest on
deposits), the portion of net rental expense which is deemed representative of
the interest factor and the amortization of debt issuance expense.
The Corporation's long-term senior debt and preferred stock on a
consolidated basis for each of the last five years ended December 31, is as
follows:
Year ended December 31,
-----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands)
Long-term obligations $1,111,713 $ 885,428 $ 489,524 $ 283,855 $ 120,062
Non-Cumulative preferred
stock of the Corporation 100,000 100,000 100,000 -0- -0-
Cumulative perpetual
preferred stock of
Banco Popular -0- -0- -0- 11,000 11,000
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item appears on page F-2 through F-34
under the caption "MD&A" and is incorporated herein by reference.
Table L, "Maturity Distribution of Earning Assets", on page F-20 in the
MD&A, has been prepared on the basis of contractual maturities. The Corporation
does not have a policy with respect to rolling over maturing loans, but rolls
over loans only on a case-by-case basis after review of such loans in accordance
with the Corporation's lending criteria.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item appears on pages F-35 through
F-75, and on page F-32 under the caption "Statistical Summary - Quarterly
Financial Data", in the MD&A and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the captions "Shares Beneficially Owned
by Directors, Nominees and Executive Officers of the Corporation", "Beneficial
Ownership Reporting Compliance", "Board of Directors and Committees" including
the "Nominees for Election as Directors" and "Executive Officers" of the
Corporation's definitive proxy statement filed with the Securities and Exchange
Commission on or about March 20, 1997 (the "Proxy Statement"), is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Executive Compensation Program", and
under the caption "BanPonce Corporation Performance Graph" of the Proxy
Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the captions "Principal Stockholders", and under
"Shares Beneficially Owned by Directors, Nominees and Officers of the
Corporation" of the Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Family Relationships" and "Other
relationships and transactions" of the Proxy Statement, is incorporated herein
by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. The following documents are part of this report and appear on the
pages indicated.
(1) Financial Statements:
Report of Independent Auditors............................................... F-35
Consolidated Statements of Condition as of December 31, 1996
and 1995................................................................... F-36
Consolidated Statements of Income for each of the years in
the three-year period ended December 31, 1996.............................. F-37
Consolidated Statements of Cash Flows for each of the years
in the three-year period ended December 31, 1996........................... F-38
Consolidated Statements of Changes in Stockholders' Equity
for each of the years in the three-year period ended
December 31, 1996.......................................................... F-39
Notes to Consolidated Financial Statements................................... F-40
(2) Financial Statement Schedules: No schedules are presented
because the information is not applicable or is included in
the Consolidated Financial Statements described in A.1 above
or in the notes thereto.
(3) Exhibits
The exhibits listed on the Exhibits Index on page 17 of this
report are filed herewith or are incorporated herein by
reference.
B. The Corporation filed one report on Form 8-K during the quarter ended
December 31, 1996.
Dated: October 9, 1996
Items reported: Item 5 - Other Event
Item 7 - Financial Statements, Pro Forma Financial
Information and Exhibits
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BANPONCE CORPORATION
(Registrant)
By: S\RICHARD L. CARRION
--------------------
Richard L. Carrion
Chairman of the Board, President
and Chief Executive Officer
Dated: 02-13-97 (Principal Executive Officer)
----------
By: S\JORGE A. JUNQUERA
-------------------
Jorge A. Junquera
Senior Executive Vice President
Dated: 02-13-97 (Principal Financial Officer)
----------
By: S\AMILCAR L. JORDAN
-------------------
Amilcar L. Jordan
Senior Vice President
Dated: 02-13-97 (Principal Accounting Officer)
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
S\RICHARD L. CARRION Chairman of the Board,
- -------------------- President and Chief
Richard L. Carrion Executive Officer 02-13-97
--------
S\ALFONSO F. BALLESTER Vice Chairman of
- ---------------------- the Board 02-13-97
Alfonso F. Ballester --------
S\ANTONIO LUIS FERRE Vice Chairman of
- -------------------- the Board 02-13-97
Antonio Luis Ferre --------
S\JUAN J. BERMUDEZ
- ------------------
Juan J. Bermudez Director 02-13-97
--------
S\FRANCISCO J. CARRERAS
- -----------------------
Francisco J. Carreras Director 02-13-97
--------
S\DAVID H. CHAFEY, JR.
- ----------------------
David H. Chafey, Jr. Director 02-13-97
--------
S\LUIS E. DUBON, JR.
- --------------------
Luis E. Dubon, Jr. Director 02-13-97
--------
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16
S\HECTOR R. GONZALEZ
- --------------------
Hector R. Gonzalez Director 02-13-97
--------
S\JORGE A. JUNQUERA
- -------------------
Jorge A. Junquera Director 02-13-97
--------
S\MANUEL MORALES, JR.
- ---------------------
Manuel Morales, Jr. Director 02-13-97
--------
S\ALBERTO M. PARACCHINI
- -----------------------
Alberto M. Paracchini Director 02-13-97
--------
- -----------------------
Francisco Perez, Jr. Director --------
S\FRANCISCO M. REXACH, JR.
- --------------------------
Francisco M. Rexach, Jr. Director 02-13-97
--------
- --------------------------
Jose E. Rossi Director --------
S\FELIX J. SERRALLES, JR.
- -------------------------
Felix J. Serralles, Jr. Director 02-13-97
--------
S\EMILIO JOSE VENEGAS
- ---------------------
Emilio Jose Venegas Director 02-13-97
--------
S\JULIO E. VIZCARRONDO, JR.
- ---------------------------
Julio E. Vizcarrondo, Jr. Director 02-13-97
--------
16
17
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION FOOTNOTE
- --------------------------------------------------------------------------------------
3.1 Restated certificate of Incorporation and By-Laws of BanPonce
Corporation (1)
4.1 Form of certificate for common stock (1a)
4.2 Certificates of Resolution of the Board of Directors of
BanPonce Corporation dated August 11, 1988 creating a series
of Preferred Stock of the Corporation designated as Series A
Participating Cumulative Preferred Stock Purchase rights and
the designation and amount of such series, the voting power
preferences, and relative, participating, optional, or other
special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof. Rights
Agreement dated as of August 11, 1988 by and between BanPonce
Corporation and Manufacturers Hanover Trust Company regarding
the issuance of certain Rights to the Corporation's
shareholders. (2)
4.3 Amendment to Rights Agreement dated as of December 11, 1990. (3)
4.4 Indenture, dated as of October 1, 1991, among BanPonce
Financial Corp, BanPonce Corporation and Citibank, N.A.
relating to the debt securities of BanPonce Financial Corp
guaranteed by BanPonce Corporation. (2a)
4.5 Form of medium-term fixed rate note of BanPonce Financial Corp
guaranteed by BanPonce Corporation. (2b)
4.6 Form of medium-term floating rate note of BanPonce Financial
Corp guaranteed by BanPonce Corporation. (2c)
4.7 Form of Certificate of 8.35% non-cumulative monthly Income
Preferred Stock, 1994 Series A (Liquidation Preference $25.00
per share). (4)
4.8 Form S-3 filed in connection with the issuance of debt
securities and preferred stock of BanPonce Corporation,
Popular International Bank, Inc. and BanPonce Financial Corp
and guaranteed by BanPonce Corporation in the aggregate amount
of $1,000,000,000. (5)
4.9 Subordinated indenture of BanPonce Corporation, dated November
30, 1995, between BanPonce Corporation and the First National
Bank of Chicago, as trustee, and related to 6 3/4%
subordinated notes due December 15, 2005 in the aggregate
amount of $125,000,000. (6)
4.10 Form of subordinated note of BanPonce Corporation. (7)
4.11 Indenture, dated as of February 15, 1995, between BanPonce
Corporation and the First National Bank of Chicago, as
trustee. (15)
4.12 Form of medium-term fixed rate note of BanPonce Corporation (16)
4.13 Form of medium-term floating rate note of BanPonce Corporation (17)
10.2 Form 8-A Filing filed in connection with the Series A
Participating Cumulative Preferred Stock Purchase Rights. (8)
10.3 Senior Note Agreement dated as of January 15, 1992, between
BanPonce Corporation and New York Life Insurance Company
regarding the issuance by BanPonce Corporation of $30,000,000
Senior Notes due January 15, 1997. (9)
10.8 Management Incentive Plan for certain Division Supervisors
approved in January, 1987. (10)
10.8.1 BanPonce Corporation Senior Executive Long-Term Incentive Plan
dated October 6, 1994. (11)
10.9 Stock Deferment Plan for outside directors effective on August
15, 1996.
10.10 Revolving loan agreement executed by and between Vehicle
Equipment Leasing and BanPonce Corporation as of January 15,
1992 in the aggregate principal amount of $30,000,000. (12)
10.11 $85,785,000 Banco Popular de Puerto Rico 1992 Grantor Trust 1
Mortgage Pass - Through Certificates, Class A, offering
memorandum dated June 25, 1992. Underwriting Agreement by and
between Merrill Lynch, Pierce, Fenner & Smith, Incorporated
acting through its Puerto Rico branch office and Lehman
Brothers Puerto Rico, Inc. and Banco Popular de Puerto Rico
dated June 25, 1992; Insurance Agreement by and between
Municipal Bond Investors Assurance Corporation as Insurer,
Banco Popular de Puerto Rico as Settlor, Banco Popular de
Puerto Rico as Servicer, Banco Central as Collateral Agent and
Banco Central as Trustee dated June 25, 1992. (13)
10.12.2 Revolving Credit and competitive advance facility and credit
agreement by and between BanPonce Corporation and BanPonce
Financial Corp and Chemical Bank, as agent bank, for borrowing
up to the principal amount of $500,000,000 dated as of
November 3, 1995. (14)
10.13 Banco Popular de Puerto Rico Bank's Note Program up to the
aggregate amount of $600,000,000 executed on September 24,
1996
10.14 BanPonce Financial Corp, 6 3/4% Medium Term Notes, Series C,
due August 9, 2001 in the aggregate principal amount of
$75,000,000.
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12.0 Computation of Ratio of Earnings to Fixed Charges
13.1 Registrants Annual Report to Shareholders for the year ended
December 31, 1996
21.1 Schedule of Subsidiaries
23.1 Consent of Independent Auditors
27.0 Financial Data Schedule (for SEC use only)
99.1 Registrant's Proxy Statement for the April 25, 1997 Annual
Meeting of Stockholders
- ------------------------------
(1) Incorporated by reference to Exhibit 4.1 of Registration
Statement No.33-39028.
(1a) Incorporated by reference to exhibit 4.1 of the Corporation's
Annual Report on Form 10-K for the year ended December 31,
1990 (the "1990 Form 10-K").
(2) Incorporated by reference to Exhibit 4.3 of Registration
Statement No. 33-39028.
(2a) Incorporated by reference to Exhibit 4(c) to Registration
Statement No. 33-41686 and to Exhibit 4(a) on Form 8-K filed
on February 28, 1995.
(2b) Incorporated by reference to Exhibit 2 on Form 8-K filed on
October 8, 1991.
(2c) Incorporated by reference to Exhibit 3 on Form 8-K filed on
October 8, 1991.
(3) Incorporated by reference to Exhibit 4.4 of Registration
Statement No. 33-39028.
(4) Incorporated by reference to Exhibit 4.7 of the 1994 Form
10-K.
(5) Incorporated by reference to Registration Statement No.
33-61601.
(6) Incorporated by reference to Exhibit 4(e) on Form 8-K filed on
December 13, 1995.
(7) Incorporated by reference to Exhibit 4(p) on Form 8-K filed on
December 13, 1995.
(8) Incorporated by reference to Exhibit number 10.2 of
Registration Statement No. 33-00497.
(9) Incorporated by reference to Exhibit 10.6 of the 1991 Form
10-K.
(10) Incorporated by reference to Exhibit 10.13 of the 1991 Form
10-K.
(11) Incorporated by reference to Exhibit 10.8.1 of the 1994 Form
10-K.
(12) Incorporated by reference to Exhibit 10.19 of the 1991 Form
10-K.
(13) Incorporated by reference to Exhibit 10.14 of the 1992 Form
10-K.
(14) Incorporated by reference to Exhibit 10.12.2 of the 1994 Form
10-K.
(15) Incorporated by reference to Exhibit 4(c) on Form 8-K filed on
April 13, 1995.
(16) Incorporated by reference to Exhibit 4(a) on Form 8-K filed on
April 13, 1995.
(17) Incorporated by reference to Exhibit 4(b) on Form 8-K filed on
April 13, 1995.