Popular, Inc. Announces Third Quarter Financial Results

 
 



  • Reports net income of $85.6 million for the quarter
  • Adjusted net income of $93.4 million, compared to an adjusted net income of $90.1 million for the previous quarter
  • Net interest margin of 4.39% in Q3 2015 vs. 4.54% in Q2 2015
  • Credit Quality (excluding covered loans):
    • Non-performing loans held-in-portfolio (NPLs) increased by $58.9 million from Q2 2015; NPLs to loans ratio at 2.8% vs. 2.6% in Q2 2015;
    • Net charge-offs (NCOs) were 0.83% of average loans held-in-portfolio vs. 0.89% in Q2 2015; NCOs amounted to $46.3 million, relatively flat quarter over quarter;
    • Allowance for loan losses of $536.0 million vs. $512.7 million in Q2 2015; Allowance for loan losses to loans held-in-portfolio at 2.38% vs. 2.29% in Q2 2015;
    • Allowance for loan losses to NPLs at 84.4% vs. 89.0% in Q2 2015.
  • Common Equity Tier 1 ratio of 16.18% and Tangible Book Value per Share of $42.71 at September 30, 2015
Viernes, Octubre 23, 2015 8:00 am EDT

Dateline:

SAN JUAN, Puerto Rico

Public Company Information:

NASDAQ:
BPOP
PR7331741061
"We are pleased to report that the Corporation was once again able to produce strong results for the quarter, notwithstanding the increasingly challenging fiscal and economic situation in Puerto Rico. Additionally, the reinstatement of a quarterly cash dividend was an important milestone achieved this quarter."

SAN JUAN, Puerto Rico--(BUSINESS WIRE)--Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP) reported net income of $85.6 million and adjusted net income of $93.4 million for the quarter ended September 30, 2015, compared to net income of $597.5 million and an adjusted net income of $90.1 million for the quarter ended June 30, 2015.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: "We are pleased to report that the Corporation was once again able to produce strong results for the quarter, notwithstanding the increasingly challenging fiscal and economic situation in Puerto Rico. Additionally, the reinstatement of a quarterly cash dividend was an important milestone achieved this quarter."

Significant Events

During the quarter ended September 30, 2015, the Corporation:

  • Reinstated the quarterly cash dividend on its outstanding common stock. A cash dividend of $0.15 per share was paid on October 7, 2015 to shareholders of record at the close of business on September 29, 2015. This represents a quarterly payout of approximately $15.5 million.
  • Acquired mortgage servicing rights for a portfolio previously serviced by Doral Bank, with approximately $873 million in unpaid principal balance, in connection with a pre-existing backup servicing agreement. As a result, the fair value of the Corporation’s mortgage servicing rights reflected an increase of approximately $4.4 million during the quarter. The Corporation also purchased the servicing advances related to this portfolio from the FDIC, as receiver of Doral Bank, for a price of $46.6 million.
  • Completed the information systems conversion and integration related to the assets and liabilities acquired in the Doral Bank FDIC-assisted transaction (the “Doral Transaction”). The costs associated with this conversion amounted to approximately $3.7 million for the quarter.

Earnings Highlights                    
 
(Unaudited)   Quarters ended Nine months ended
(Dollars in thousands, except per share information)   30-Sep-15   30-Jun-15 30-Sep-14 30-Sep-15   30-Sep-14
Net interest income $350,735 $362,553 $326,421 $1,056,483 $618,211
Provision for loan losses 69,568 60,468 68,166 159,747 172,362
Provision (reversal) for loan losses - covered loans   (2,890)   15,766 12,463 23,200   49,781
Net interest income after provision for loan losses 284,057 286,319 245,792 873,536 396,068
FDIC loss-share income (expense) 1,207 19,075 (4,864) 24,421 (84,331)
Other non-interest income 129,902 121,684 129,194 362,682 367,482
Operating expenses   306,897   363,174   310,640 982,412   863,678
Income (loss) from continuing operations before income tax 108,269 63,904 59,482 278,227 (184,459)
Income tax expense (benefit)   22,620   (533,533)   26,667 (478,344)   45,807
Income (loss) from continuing operations   85,649   597,437   32,815 756,571   (230,266)
(Loss) income from discontinued operations, net of tax   (9)   15   29,758 1,347   (132,066)
Net income (loss)   $85,640   $597,452   $62,573 $757,918   $(362,332)
Net income (loss) applicable to common stock   $84,709   $596,521   $61,643 $755,126   $(365,124)
Net income (loss) per common share from continuing operations - Basic   $0.82   $5.80   $0.31 $7.33   $(2.27)
Net income (loss) per common share from continuing operations - Diluted   $0.82   $5.79   $0.31 $7.31   $(2.27)
Net income (loss) per common share from discontinued operations - Basic   $-   $-   $0.29 $0.01 $(1.28)
Net income (loss) per common share from discontinued operations - Diluted   $-   $-   $0.29 $0.01   $(1.28)
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.

The following tables reflect the results of operations for the third and second quarters of 2015, with adjustments to exclude the impact of certain events.

    Quarter ended
(Unaudited)   30-Sep-15
(In thousands)  

Actual Results
(US GAAP)

BPNA
Reorganization [2]

Doral
Transaction
[3]

MSR’s
Acquired [4]

Impairment of
Loans Under
Proposed
Portfolio Sale
[5]

Adjusted
Results
(Non-GAAP)

Net interest income   $350,735 $- $- $- $- $350,735
Provision for loan losses – non-covered loans 69,568 - - - 10,126 59,442
Provision (reversal) for loan losses – covered loans [1]   (2,890) - - - - (2,890)
Net interest income after provision for loan losses 284,057 - - - (10,126) 294,183
Mortgage banking activities 24,195 - 844 4,378 - 18,973
FDIC loss- share income 1,207 - - - - 1,207
Other non-interest income   105,707 - (10) - - 105,717
Total non-interest income   131,109 - 834 4,378 - 125,897
Personnel costs 120,863 - 806 - - 120,057
Net occupancy expenses 21,277 - 1,151 - - 20,126
Equipment expenses 14,739 - - - - 14,739
Professional fees 77,154 - 3,599 - - 73,555
Communications 6,058 - - - - 6,058
Business promotion 12,325 - 100 - - 12,225
Other real estate owned (OREO) expenses 7,686 - - - - 7,686
Restructuring costs 481 481 - - - -
Other operating expenses   46,314 - - - - 46,314
Total operating expenses   306,897 481 5,656 - - 300,760
Income from continuing operations before income tax 108,269 (481) (4,822) 4,378 (10,126) 119,320
Income tax (benefit) expense   22,620 - (1,050) 1,707 (3,949) 25,912
Income from continuing operations   $85,649 $(481) $(3,772) $2,671 $(6,177) $93,408
Loss from discontinued operations, net of tax   $(9) $(9) $- $- $- $-
Net income   $85,640 $(490) $(3,772) $2,671 $(6,177) $93,408
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.
[2] Represents restructuring charges associated with the reorganization of BPNA.
[3] Includes approximately $0.8 million of fees charged for loan servicing cost to the FDIC, personnel costs related to former Doral Bank employees retained on a temporary basis and incentive compensation for an aggregate of $0.8 million, building rent expense of Doral Bank’s administrative offices for $1.2 million and professional fees and business promotion expenses directly associated with the Doral Transaction and systems conversion for $3.7 million.
[4] Represents the fair value of mortgage servicing rights acquired for a portfolio previously serviced by Doral Bank, for which the Corporation acted as a backup servicer, under a pre-existing contract.
[5] Represents impairment based on the estimated fair value of loans acquired from Westernbank, that the Corporation has the intent to sell and are subject to the ongoing arbitration with the FDIC.

    Quarter ended
(Unaudited)   30-Jun-15
(In thousands)  

Actual Results
(US GAAP)

 

BPNA
Reorganization [2]

 

Doral
Transaction
[3]

  OTTI [4]  

Reversal DTA -
BPNA [5]

 

Loss on Bulk
Sale of
Covered
OREOs [6]

 

Adjustment to
FDIC
Indemnification
Asset [7]

 

Adjusted
Results
(Non-GAAP)

Net interest income $362,553   $-   $-   $-   $-   $-   $-   $362,553
Provision for loan losses 60,468 - - - - - - 60,468
Provision for loan losses – covered loans [1]   15,766   -   -   -   -   -   -   15,766
Net interest income after provision for loan losses 286,319 - - - - - - 286,319
Mortgage banking activities 21,325 - - - - - - 21,325
Other-than-temporary impairment losses on investment securities (14,445) - - (14,445) - - - -
FDIC loss-share income 19,075 - - - - 17,566 (10,887) 12,396
Other non-interest income   114,804   -   961   -   -   -   -   113,843
Total non-interest income   140,759   -   961   (14,445)   -   17,566   (10,887)   147,564
Personnel costs 120,977 - 3,865 - - - - 117,112
Net occupancy expenses 23,286 - 2,309 - - - - 20,977
Equipment expenses 15,925 - 725 - - - - 15,200
Professional fees 78,449 - 4,885 - - - - 73,564
Communications 6,153 - 70 - - - - 6,083
Business promotion 13,776 - 401 - - - - 13,375
Other real estate owned (OREO) expenses 44,816 - - - - 21,957 - 22,859
Restructuring costs 6,174 6,174 - - - - - -
Other operating expenses   53,618   -   509   -   -   -   -   53,109
Total operating expenses   363,174   6,174   12,764   -   -   21,957   -   322,279
Income from continuing operations before income tax 63,904 (6,174) (11,803) (14,445) - (4,391) (10,887) 111,604
Income tax expense   (533,533)   -   (3,744)   (2,486)   (544,927)   (1,712)   (2,177)   21,513
Income from continuing operations   $597,437   $(6,174)   $(8,059)   $(11,959)   $544,927   $(2,679)   $(8,710)   $90,091
Income from discontinued operations, net of tax   $15   $15   $-   $-   $-   $-   $-   $-
Net income   $597,452   $(6,159)   $(8,059)   $(11,959)   $544,927   $(2,679)   $(8,710)   $90,091
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.
[2] Represents restructuring charges associated with the reorganization of BPNA.
[3] Includes approximately $1.0 million of fees charged for services provided to the alliance co-bidders, including loan servicing and other interim services, personnel costs related to former Doral Bank employees retained on a temporary basis and incentive compensation for an aggregate of $3.9 million, building rent expense of Doral Bank’s administrative offices for $2.3 million, professional fees and business promotion expenses directly associated with the Doral Transaction and systems conversion for $5.3 million and other expenses, including equipment, business promotions and communications, of $1.3 million.
[4] Represents an other than temporary impairment (“OTTI”) recorded on Puerto Rico government investment securities available- for- sale. These securities had an amortized cost of approximately $41.1 million and a market value of $26.6 million. Based on the fiscal and economic situation in Puerto Rico, together with the government’s recent announcements regarding its ability to pay its debt, the Corporation determined that the unrealized loss, a portion of which had been in an unrealized loss for a period exceeding twelve months, was other than temporary.
[5] Represents the partial reversal of the valuation allowance of a portion of the deferred tax asset amounting to approximately $1.2 billion, at the U.S. operations. Refer to additional details on the Income Taxes section of this earnings release.
[6] Represents the loss on a bulk sale of covered OREOs completed in the second quarter and the related mirror accounting of the 80% reimbursable from the FDIC.
[7] The quarter’s negative amortization of the FDIC’s indemnification asset included a $10.9 million expense related to losses incurred by the Corporation that were not claimed to the FDIC before the expiration of the loss-share portion of the agreement on June 30, 2015, and that are not subject to the ongoing arbitrations.

  Quarters ended
(Unaudited) Adjusted Results Non-GAAP
(In thousands) 30-Sep-15 30-Jun-15 Variance
Net interest income $350,735 $362,553 $(11,818)
Provision for loan losses – non-covered loans 59,442 60,468 (1,026)
Provision (reversal) for loan losses – covered loans [1] (2,890) 15,766 (18,656)
Net interest income after provision for loan losses 294,183 286,319 7,864
Mortgage banking activities 18,973 21,325 (2,352)
FDIC loss-share income (expense) 1,207 12,396 (11,189)
Other non-interest income 105,717 113,843 (8,126)
Total non-interest income 125,897 147,564 (21,667)
Personnel costs 120,057 117,112 2,945
Net occupancy expenses 20,126 20,977 (851)
Equipment expenses 14,739 15,200 (461)
Professional fees 73,555 73,564 (9)
Communications 6,058 6,083 (25)
Business promotion 12,225 13,375 (1,150)
Other real estate owned (OREO) expenses 7,686 22,859 (15,173)
Other operating expenses 46,314 53,109 (6,795)
Total operating expenses 300,760 322,279 (21,519)
Income from continuing operations before income tax 119,320 111,604 7,716
Income tax expense 25,912 21,513 4,399
Income from continuing operations $93,408 $90,091 $3,317
Net income $93,408 $90,091 $3,317
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss-sharing agreements.

Net interest income

  • For the quarter ended September 30 2015, the Corporation had net interest income of $350.7 million, compared to net interest income of $362.6 million for the previous quarter. Net interest margin was 4.39%, lower by 15 basis points when compared to the previous quarter’s net interest margin of 4.54%.

The decrease of $11.9 million in the net interest income is mainly related to:

  • Lower income from loans acquired in the Westernbank FDIC-assisted transaction (“WB Loans”) by $7.3 million due mainly to lower volume, as the portfolio continues its normal run-off, as well as lower yields. Refer to Table O for a schedule of the accretable yield for WB Loans accounted for under ASC 310-30.
  • Lower income from mortgage loans by $4.6 million due to the reversal of $3.8 million of income from FHA-guaranteed loans at BPPR as part of the Corporation’s review of its interest income accrual policy for this portfolio.
  • Higher expense on deposits by $2.2 million mainly due to higher cost on equity indexed IRA accounts and lower purchase accounting yield adjustment on time deposits acquired in the Doral Transaction.

These negative variances in net interest income were offset in part by:

  • Higher income from commercial loans by $1.6 million due to higher volume of loans at BPNA.
  • The impact of one additional day for the quarter ended September 30, 2015, which resulted in an increase of $2.6 million.

BPPR’s net interest income amounted to $303.8 million for the quarter ended September 30, 2015 compared with $316.1 million for the previous quarter. The decrease in net interest income was mainly due to lower income from WB Loans as part of the portfolio run-off and lower income from mortgage loans due to the adjustment to income from FHA loans, as mentioned above, as well as lower volume of commercial loans. Net interest margin for the quarter was 4.75%, a decrease of 17 basis points from the previous quarter. Cost of interest bearing deposits in Puerto Rico was relatively flat at 52 basis points.

BPNA’s net interest income was $62.4 million, compared with $61.9 million for the previous quarter. The increase in the net interest income is mainly driven by commercial loan origination, partially offset by higher cost of time deposits. Net interest margin was 3.91%, compared to 4.03% for the previous quarter, a decrease of 12 basis points mostly due to higher cost of time deposits from lower amortization impact of deposit premium from the Doral Transaction.

Non-interest income

Non-interest income was $131.1 million for the third quarter of 2015, a decrease of $9.7 million when compared with the second quarter of 2015. Excluding the impact of the significant events detailed in the Adjusted Results (Non-GAAP) tables above, non-interest income decreased by $21.7 million when compared to the second quarter of 2015, driven primarily by the following:

  • Unfavorable variance in the FDIC loss-share income by $11.2 million due mainly to lower mirror accounting on reimbursable expenses, partially offset by lower amortization of the indemnification asset in the quarter.
  • Unfavorable variance in adjustments to indemnity reserves by $6.3 million is mostly due to higher provision for representations and warranties and credit recourse reserves for loans previously sold and the reversal during the second quarter of $1.8 million of the reserve established during the quarter ended March 31, 2013 for certain specific representation and warranties made in connection with BPPR’s bulk sale of commercial and construction loans, and commercial single family real estate owned.
  • Lower income from mortgage banking activities by $2.4 million mainly due to higher realized losses on closed derivatives positions, partially offset by higher gain on sale of loans.

Refer to Table B for further details.

Financial Impact of the 2010 FDIC-Assisted Transaction        
 
(Unaudited)   Quarters ended Nine months ended
(In thousands)   30-Sep-15   30-Jun-15   30-Sep-14 30-Sep-15   30-Sep-14
 

Income Statement

Interest income on WB loans $47,982 $55,335 $68,251 $160,909 $232,324
Total FDIC loss-share income (expense) 1,207 19,075 (4,864) 24,421 (84,331)
Provision for loan losses[1]   20,206   15,766   12,463 46,296   49,781
Total revenues less provision for loan losses   $28,983   $58,644   $50,924 $139,034   $98,212
 

Balance Sheet

Loans covered under loss-sharing agreements with FDIC $665,428 $689,650 $2,654,263
FDIC loss-share asset 311,946 392,947 681,106
FDIC true-up payment obligation   122,527   121,469   126,473        
[1] For the quarter ended September 30, 2015, the Corporation recorded a reserve release of $2.9 million for the covered loans portfolio.

See additional details on accounting for the 2010 FDIC-Assisted transaction in Table O.

Operating expenses

Operating expenses decreased by $56.3 million when compared with the second quarter of 2015. Excluding the impact of the significant events detailed in the Adjusted Results (Non-GAAP) tables above, operating expenses decreased by $21.5 million compared to the second quarter of 2015, driven primarily by:

  • Lower other real estate owned expense by $15.2 million mainly at BPPR as a result of lower write-downs on commercial, construction and mortgage properties and lower losses on sales when compared to the second quarter.
  • Lower other operating expenses by $6.8 million mainly due to property tax payments during the second quarter at BPPR by $6.0 million, most of which was related to loss-sharing expense reimbursable by the FDIC; lower provision for unused commitments by $3.9 million; partially offset by an increase in the reserve for mortgage servicing claims of $5.3 million.
  • Lower business promotion by $1.2 million mainly due to lower customer affinity program expense at BPPR.

These decreases were partially offset by:

  • Higher personnel cost by $2.9 million mainly due to a decrease in the reserve for employee medical expense at BPPR during the second quarter.

Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, amounted to $12.7 million for the third quarter of 2015, compared with $52.5 million for the second quarter of 2015. The decrease was principally due to write-downs of $22.0 million related to the bulk sale of OREO completed during the second quarter. Excluding the impact of the bulk sale, non-personnel credit related costs declined by $17.8 million mainly due to lower OREO expenses.

Full-time equivalent employees, including discontinued operations, were 7,840 as of September 30, 2015, compared with 7,980 as of June 30, 2015, and 7,848 as of September 30, 2014.

For a breakdown of operating expenses by category refer to table B.

Income taxes

For the quarter ended September 30, 2015, the Corporation recorded an income tax expense of $22.6 million, compared to an income tax benefit of $533.5 million for the previous quarter. During the quarter ended June 30, 2015, the Corporation recorded a partial reversal of the valuation allowance on its deferred tax assets from the U.S. operations for approximately $544.9 million. On an adjusted basis, the income tax expense for the third quarter of 2015 was $25.9 million, compared to $21.5 million for the previous quarter.

The effective income tax rate for the third quarter of 2015, on an adjusted basis, was 22%, compared to 19% for the previous quarter. The impact of the reversal of the valuation allowance for the 2015 fiscal year is reflected in the effective tax rate of this year, with income tax expense being reduced by the benefit of the reversal each quarter of 2015.

The effective tax rate is impacted by the composition and source of the taxable income. In 2016, the Corporation expects that the effective tax rate for the U.S. operations will be approximately 44%. Adjusting to an effective tax rate of 44% for the U.S. operations, and assuming the same earnings composition of this quarter, the adjusted effective income tax rate for the Corporation’s consolidated results for the third quarter of 2015 would have been 29%.

Credit Quality

Despite challenging economic and fiscal conditions that persist in Puerto Rico, overall asset quality for non-covered loans remained stable in the third quarter of 2015, with moderate quarter-to-quarter volatility in certain credit metrics mostly associated with a small number of large commercial loans.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $81.6 million from the second quarter of 2015, mainly driven by a small number of large commercial loans in the BPPR segment, including a single $49.2 million credit relationship.
  • Non-performing loans held-in-portfolio increased by $58.9 million during the quarter ended September 30, 2015, mainly driven by higher commercial and mortgage NPLs of $49.1 million and $12.6 million, respectively. At September 30, 2015, NPLs represented 2.8% of total loans held-in-portfolio, compared to 2.6% in June 30, 2015.
  • Net charge-offs amounted to $46.3 million, relatively flat when compared to the second quarter of 2015. The prior quarter included a $5.0 million recovery from the sale of a portfolio of previously charged-off credit cards and auto loans. Excluding this impact in the prior quarter, net charge-offs decreased by $5.1 million, mostly driven by lower commercial NCOs in BPPR. The ratio of net charge-offs to average non-covered loans held-in-portfolio decreased to 0.83% on an annualized basis from 0.89% in the second quarter of 2015. The NCO ratio decline was due to the impact of loans reclassified from the covered portfolio in the prior quarter in the average loan base. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan losses increased by $23.3 million from the second quarter of 2015 to $536.0 million, primarily as a result of higher reserves for commercial loans. The general and specific reserves related to non-covered loans totaled $379.2 million and $156.8 million, respectively, at quarter-end, compared with $373.7 million and $139.0 million, respectively, as of June 30, 2015. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.38% in the third quarter of 2015, compared to 2.29% in the previous quarter.
  • The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 84.4%, compared to 89.0% in the previous quarter.
  • The provision for loan losses for the third quarter amounted to $69.6 million, increasing by $9.1 million from the previous quarter. Excluding the impact of the $10.1 million impairment on the WB loans that the Corporation has the intent to sell, the provision for the third quarter amounted to $59.5 million, relatively flat to the previous quarter. The provision for the third quarter of 2015 represented 150.2% of net charge-offs, or 128.4% on an adjusted basis, compared to 130.2% in the second quarter of 2015.

Non-Performing Assets    
(Unaudited)          
(In thousands) 30-Sep-15   30-Jun-15   30-Sep-14
Total non-performing loans held-in-portfolio, excluding covered loans $634,902 $575,997 $621,945
Non-performing loans held-for-sale 47,681 50,875 19,728
Other real estate owned (“OREO”), excluding covered OREO 155,826   142,255   135,256
Total non-performing assets, excluding covered assets 838,409 769,127 776,929
Covered loans and OREO 39,888   37,367   166,533
Total non-performing assets $878,297   $806,494   $943,462
Net charge-offs for the quarter (excluding covered loans) $46,302   $46,442   $40,469
 
 
Ratios (excluding covered loans):          
Non-covered loans held-in-portfolio $22,498,066 $22,435,145 $19,359,216
Non-performing loans held-in-portfolio to loans held-in-portfolio 2.82% 2.57% 3.21%
Allowance for loan losses to loans held-in-portfolio 2.38 2.29 2.69
Allowance for loan losses to non-performing loans, excluding loans held-for-sale 84.42   89.02   83.88
 
Refer to Table H for additional information.
Provision for Loan Losses        
 
(Unaudited)   Quarters ended Nine months ended
(In thousands)   30-Sep-15   30-Jun-15   30-Sep-14 30-Sep-15 30-Sep-14
Provision (reversal) for loan losses:
BPPR $68,755 $60,529 $61,868 $161,197 $190,643
BPNA   813   (61)   6,298 (1,450) (18,281)
Total provision for loan losses   $69,568   $60,468   $68,166   $159,747 $172,362
Provision (reversal) for loan losses - covered loans   (2,890)   15,766   12,463 23,200 49,781
Total provision for loan losses   $66,678   $76,234   $80,629 $182,947 $222,143
Credit Quality by Segment    
(Unaudited)
(In thousands)

 

Quarters ended

BPPR   30-Sep-15   30-Jun-15   30-Sep-14
Provision for loan losses $68,755 $60,529 $61,868
Net charge-offs 47,245 45,146 38,682
Total non-performing loans held-in-portfolio, excluding covered loans 609,469 541,767 592,229
Allowance / non-covered loans held-in-portfolio 2.83%   2.69%   3.09%
 
 

 

Quarters ended

BPNA   30-Sep-15   30-Jun-15   30-Sep-14
Provision (reversal) for loan losses $813 $(61) $6,298
Net charge-offs (recoveries) (943) 1,296 1,787
Total non-performing loans held-in-portfolio 25,433 34,230 29,716
Allowance / non-covered loans held-in-portfolio 0.68%   0.66%   0.91%

Financial Condition Highlights      
 
(Unaudited)        
(In thousands)   30-Sep-15   30-Jun-15   30-Sep-14
Money market, trading and investment securities $8,321,397 $9,248,978 $7,200,291
Loans not covered under loss-sharing agreements with the FDIC 22,498,066 22,435,145 19,359,216
Loans covered under loss-sharing agreements with the FDIC 665,428 689,650 2,654,263
Assets from discontinued operations - - 1,129,053
Total assets 35,530,794 36,750,113 34,099,095
Deposits 26,713,206 27,750,694 24,466,105
Borrowings 2,761,476 3,026,472 3,375,485
Liabilities from discontinued operations 1,800 1,754 1,106,762
Total liabilities 30,481,158 31,800,460 29,800,703
Stockholders’ equity   5,049,636   4,949,653   4,298,392

Total assets decreased by $1.2 billion from the second quarter of 2015 driven by:

  • A decrease of $1.1 billion in cash and money market investments mainly at BPPR aligned with the decline in deposits and repayment of borrowings during the quarter.
  • A net decrease of $84.1 million in investment securities available-for-sale mainly at BPNA due to a reduction in US agencies by $58.3 million mostly due to maturities and calls and principal pay-downs of agency securities by $46.4 million, partially offset by an increase of $21.4 million of US Treasury securities at BPNA.
  • A decrease of $81.0 million in the indemnification asset mainly due to net payments received from the FDIC.

These decreases were partially offset by:

  • An increase of $66.3 million in non-covered loans held-in-portfolio due mainly to the origination of commercial loans in the US.

Total liabilities decreased by $1.3 billion from the second quarter of 2015, driven by:

  • A decrease of $1.0 billion in deposits reflecting a reduction of $496.4 million in time deposits, mainly due to the use by the Puerto Rico Government of funds held in trust by BPPR at June 30, 2015 for the payment of Puerto Rico General Obligation bonds in July 2015. Brokered certificates of deposit and demand deposits declined by $244.5 million and $234.5 million, respectively, mainly at BPPR. Average deposits declined by $225.4 million when compared with the previous quarter. Refer to Table G for additional information on deposits.
  • A decrease of $229.5 million in borrowings mainly due to the maturity of a $300.0 million long-term FHLB advance at BPPR, partially offset by an increase of $70.5 million in FHLB advances at BPNA.

Stockholders’ equity increased by approximately $100.0 million from the second quarter of 2015, mainly as a result of an increase of $69.2 million in retained earnings due to net income for the quarter of $85.6 million, net of a reduction of $15.5 million related to the quarterly cash dividend of $0.15 per share declared on the outstanding common stock and preferred dividends of $0.93 million, and an increase in accumulated other comprehensive income of $29.2 million, principally due to higher unrealized gains on securities available-for-sale.

Common equity tier-1 ratio and tangible book value per share were 16.18% and $42.71, respectively, at September 30, 2015 compared to 15.93% and $41.73 at June 30, 2015. Refer to Table A for capital ratios.

Forward-Looking Statements

The information contained in this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that may cause the Corporation's actual results to differ materially from any future results expressed or implied by such forward-looking statements. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2014, the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015 and our other filings with the SEC for a discussion of those factors that could impact our future results. Other than to the extent required by applicable law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances after the date of such statements.

Founded in 1893, Popular, Inc. is the leading banking institution by both assets and deposits in Puerto Rico and ranks among the top 50 U.S. banks by assets. In the United States, Popular has established a community-banking franchise providing a broad range of financial services and products with branches in New York, New Jersey and Florida.

An electronic version of this press release can be found at the Corporation’s website: www.popular.com.

Popular will hold a conference call to discuss the financial results today Friday, October 23, 2015 at 10:00 a.m. Eastern Standard Time. The call will be broadcast live over the Internet and can be accessed through the investor relations section of the Corporation’s website: www.popular.com.

Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through a dial-in telephone number 1-866-235-1201 or 1-412-902-4127.

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Monday, November 23, 2015. The replay dial in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10073041.

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
 
Table A - Selected Ratios and Other Information
 
Table B - Consolidated Statement of Operations
 
Table C - Consolidated Statement of Financial Condition
 
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
 
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
 
Table F - Mortgage Banking Activities and Other Service Fees
 
Table G - Loans and Deposits
 
Table H - Non-Performing Assets
 
Table I - Activity in Non-Performing Loans
 
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
 
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
 
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
 
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
 
Table N - Reconciliation to GAAP Financial Measures
 
Table O - Financial Information - Westernbank Loans
 
Table P - Restructuring Charges

POPULAR, INC.
Financial Supplement to Third Quarter 2015 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
         
             
Quarters ended Nine months ended
    30-Sep-15   30-Jun-15   30-Sep-14   30-Sep-15   30-Sep-14
Basic EPS from continuing operations $0.82 $5.80 $0.31 $7.33 $(2.27)
Basic EPS from discontinued operations $- $- $0.29 $0.01 $(1.28)
Total Basic EPS $0.82 $5.80 $0.60 $7.34 $(3.55)
Diluted EPS from continuing operations $0.82 $5.79 $0.31 $7.31 $(2.27)
Diluted EPS from discontinued operations $- $- $0.29 $0.01 $(1.28)
Total Diluted EPS $0.82 $5.79 $0.60 $7.32 $(3.55)
Average common shares outstanding 102,969,214 102,859,591 102,953,328 102,923,018 102,845,402
Average common shares outstanding - assuming dilution 103,150,482 103,102,718 103,152,916 103,137,762 102,845,402
Common shares outstanding at end of period 103,556,285 103,503,014 103,448,206 103,556,285 103,448,206
 
Market value per common share $30.23 $28.86 $29.44 $30.23 $29.44
 
Market capitalization - (In millions) $3,131 $2,987 $3,046 $3,131 $3,046
 
Return on average assets 0.95% 6.74% 0.71% 2.89% (1.35)%
.
Return on average common equity 6.79% 54.93% 5.75% 22.29% (10.68)%
 
Net interest margin [1] 4.39% 4.54% 4.64% 4.50% 4.67%
 
Common equity per share $48.28 $47.34 $41.07 $48.28 $41.07
 
Tangible common book value per common share (non-GAAP) $42.71 $41.73 $36.24 $42.71 $36.24
 
Tangible common equity to tangible assets (non-GAAP) 12.65% 11.94% 11.16% 12.65% 11.16%
 
Tier 1 capital [2] 16.18% 15.93% 16.86% 16.18% 16.86%
 
Total capital [2] 18.74% 18.50% 18.14% 18.74% 18.14%
 
Tier 1 leverage [2] 11.75% 11.59% 11.14% 11.75% 11.14%
 
Common equity to Tier 1 capital [2]   16.18%   15.93%   14.74%   16.18%   14.74%
 
[1] Not on a taxable equivalent basis.
[2] Ratios for the quarters ending September 30, 2015 and June 30, 2015 were calculated based on Basel III Rules, while ratios for the previous periods were calculated based on the then applicable Basel I rules. Capital ratios for the current quarter are preliminary.

POPULAR, INC.
Financial Supplement to Third Quarter 2015 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
    Quarters ended   Variance   Quarter ended   Variance   Nine months ended
   
(In thousands, except per share information)   30-Sep-15   30-Jun-15  

Q3 2015
vs. Q2 2015

  30-Sep-14  

Q3 2015
vs. Q3 2014

  30-Sep-15   30-Sep-14
Interest income:
Loans $364,458 $374,133 $(9,675) $362,592 $1,866 $1,094,222 $1,121,180
Money market investments 2,003 1,845 158 1,007 996 5,294 3,111
Investment securities 31,671 31,297 374 33,154 (1,483) 93,269 102,270
  Trading account securities   3,150   3,026   124   4,446   (1,296)   8,872   15,047
  Total interest income   401,282   410,301   (9,019)   401,199   83   1,201,657   1,241,608
Interest expense:
Deposits 28,357 26,258 2,099 26,533 1,824 80,479 79,614
Short-term borrowings 2,222 1,863 359 28,955 (26,733) 5,819 46,887
  Long-term debt   19,968   19,627   341   19,290   678   58,876   496,896
  Total interest expense   50,547   47,748   2,799   74,778   (24,231)   145,174   623,397
Net interest income 350,735 362,553 (11,818) 326,421 24,314 1,056,483 618,211
Provision for loan losses - non-covered loans 69,568 60,468 9,100 68,166 1,402 159,747 172,362
Provision (reversal) for loan losses - covered loans   (2,890)   15,766   (18,656)   12,463   (15,353)   23,200   49,781
Net interest income after provision for loan losses   284,057   286,319   (2,262)   245,792   38,265   873,536   396,068
Service charges on deposit accounts 40,960 40,138 822 40,585 375 120,115 119,181
Other service fees 56,115 59,421 (3,306) 54,839 1,276 169,162 164,125
Mortgage banking activities 24,195 21,325 2,870 14,402 9,793 58,372 21,868
Net gain (loss) and valuation adjustments on investment securities 136 5 131 (1,763) 1,899 141 (1,763)
Other-than-temporary impairment losses on investment securities - (14,445) 14,445 - - (14,445) -
Trading account (loss) profit (398) (3,108) 2,710 740 (1,138) (3,092) 3,772
Net gain on sale of loans, including valuation adjustments on loans held-for-sale - 681 (681) 15,593 (15,593) 602 29,645
Adjustments (expense) to indemnity reserves on loans sold (5,874) 419 (6,293) (9,480) 3,606 (9,981) (27,281)
FDIC loss-share income (expense) 1,207 19,075 (17,868) (4,864) 6,071 24,421 (84,331)
Other operating income   14,768   17,248   (2,480)   14,278   490   41,808   57,935
  Total non-interest income   131,109   140,759   (9,650)   124,330   6,779   387,103   283,151
Operating expenses:
Personnel costs
Salaries 78,193 76,453 1,740 71,166 7,027 227,040 209,353
Commissions, incentives and other bonuses 18,618 24,214 (5,596) 14,738 3,880 61,290 40,699
Pension, postretirement and medical insurance 12,578 9,075 3,503 9,282 3,296 33,666 25,515
  Other personnel costs, including payroll taxes   11,474   11,235   239   9,356   2,118   36,302   32,376
Total personnel costs 120,863 120,977 (114) 104,542 16,321 358,298 307,943
Net occupancy expenses 21,277 23,286 (2,009) 21,203 74 66,272 62,830
Equipment expenses 14,739 15,925 (1,186) 12,370 2,369 44,075 35,826
Other taxes 9,951 11,113 (1,162) 15,369 (5,418) 29,638 42,575
Professional fees 77,154 78,449 (1,295) 67,649 9,505 231,131 201,672
Communications 6,058 6,153 (95) 6,455 (397) 18,387 19,565
Business promotion 12,325 13,776 (1,451) 13,062 (737) 36,914 40,486
FDIC deposit insurance 7,300 8,542 (1,242) 9,511 (2,211) 22,240 30,969
Other real estate owned (OREO) expenses 7,686 44,816 (37,130) 19,745 (12,059) 75,571 29,595
Credit and debit card processing, volume, interchange and other expenses 6,449 5,762 687 5,659 790 17,032 16,495
Other operating expenses 19,102 25,320 (6,218) 24,759 (5,657) 56,949 56,781
Amortization of intangibles 3,512 2,881 631 2,026 1,486 8,497 6,077
Restructuring costs   481   6,174   (5,693)   8,290   (7,809)   17,408   12,864
  Total operating expenses   306,897   363,174   (56,277)   310,640   (3,743)   982,412   863,678
Income (loss) from continuing operations before income tax 108,269 63,904 44,365 59,482 48,787 278,227 (184,459)
Income tax expense (benefit)   22,620   (533,533)   556,153   26,667   (4,047)   (478,344)   45,807
Income (loss) from continuing operations 85,649 597,437 (511,788) 32,815 52,834 756,571 (230,266)
(Loss) income from discontinued operations, net of tax   (9)   15   (24)   29,758   (29,767)   1,347   (132,066)
Net income (loss)   $85,640   $597,452   $(511,812)   $62,573   $23,067   $757,918   $(362,332)
Net income (loss) applicable to common stock   $84,709   $596,521   $(511,812)   $61,643   $23,066   $755,126   $(365,124)
Net income (loss) per common share - basic:
Net income (loss) from continuing operations $0.82 $5.80 $(4.98) $0.31 $0.51 $7.33 $(2.27)
  Net income (loss) from discontinued operations   -   -   -   0.29   (0.29)   0.01   (1.28)
  Net income (loss) per common share - basic   $0.82   $5.80   $(4.98)   $0.60   $0.22   $7.34   $(3.55)
Net income (loss) per common share - diluted:
Net income (loss) from continuing operations $0.82 $5.79 $(4.97) $0.31 $0.51 $7.31 $(2.27)
  Net income (loss) from discontinued operations   -   -   -   0.29   (0.29)   0.01   (1.28)
  Net income (loss) per common share - diluted   $0.82   $5.79   $(4.97)   $0.60   $0.22   $7.32   $(3.55)
Dividends Declared per Common Share   $0.15   $-   $0.15   $-   $0.15   $0.15   $-

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
            Variance
Q3 2015 vs.
(In thousands)   30-Sep-15   30-Jun-15   30-Sep-14   Q2 2015
Assets:
Cash and due from banks $320,555 $557,248 $321,914 $(236,693)
Money market investments 2,408,571 3,254,939 1,053,121 (846,368)
Trading account securities, at fair value 137,943 141,595 145,343 (3,652)
Investment securities available-for-sale, at fair value 5,500,931 5,585,078 5,727,766 (84,147)
Investment securities held-to-maturity, at amortized cost 100,295 101,861 112,893 (1,566)
Other investment securities, at lower of cost or realizable value 173,657 165,505 161,168 8,152
Loans held-for-sale, at lower of cost or fair value 171,019 202,287 178,008 (31,268)
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC 22,601,271 22,535,008 19,450,677 66,263
Loans covered under loss-sharing agreements with the FDIC 665,428 689,650 2,654,263 (24,222)
Less: Unearned income 103,205 99,863 91,461 3,342
    Allowance for loan losses   570,514   550,813   611,375   19,701
    Total loans held-in-portfolio, net   22,592,980   22,573,982   21,402,104   18,998
FDIC loss-share asset 311,946 392,947 681,106 (81,001)
Premises and equipment, net 495,103 497,078 497,111 (1,975)
Other real estate not covered under loss-sharing agreements with the FDIC 155,826 142,255 135,256 13,571
Other real estate covered under loss-sharing agreements with the FDIC 35,701 33,504 151,382 2,197
Accrued income receivable 118,044 130,281 116,746 (12,237)
Mortgage servicing assets, at fair value 210,851 206,357 152,282 4,494
Other assets 2,221,054 2,184,907 1,634,819 36,147
Goodwill 504,925 505,435 461,246 (510)
Other intangible assets 71,393 74,854 37,777 (3,461)
Assets from discontinued operations   -   -   1,129,053   -
Total assets   $35,530,794   $36,750,113   $34,099,095   $(1,219,319)
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing $6,070,719 $6,305,986 $5,521,415 $(235,267)
    Interest bearing   20,642,487   21,444,708   18,944,690   (802,221)
    Total deposits   26,713,206   27,750,694   24,466,105   (1,037,488)
Federal funds purchased and assets sold under agreements to repurchase 1,085,765 1,121,244 1,650,712 (35,479)
Other short-term borrowings 1,200 101,200 1,200 (100,000)
Notes payable 1,674,511 1,804,028 1,723,573 (129,517)
Other liabilities 1,004,676 1,021,540 852,351 (16,864)
Liabilities from discontinued operations   1,800   1,754   1,106,762   46
Total liabilities   30,481,158   31,800,460   29,800,703   (1,319,302)
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,037 1,037 1,036 -
Surplus 4,200,805 4,199,165 4,171,890 1,640
Retained earnings 993,309 924,134 229,306 69,175
Treasury stock (5,869) (5,812) (3,933) (57)
Accumulated other comprehensive loss   (189,806)   (219,031)   (150,067)   29,225
    Total stockholders’ equity   5,049,636   4,949,653   4,298,392   99,983
Total liabilities and stockholders’ equity   $35,530,794   $36,750,113   $34,099,095   $(1,219,319)

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
      Quarter ended   Quarter ended   Quarter ended   Variance   Variance
30-Sep-15 30-Jun-15 30-Sep-14 Q3 2015 vs. Q2 2015 Q3 2015 vs. Q3 2014

($ amounts in millions; yields
not on a taxable equivalent
basis)

 

Average
balance

 

Income /
Expense

 

Yield /
Rate

   

Average
balance

 

Income /
Expense

 

Yield /
Rate

   

Average
balance

 

Income /
Expense

 

Yield /
Rate

   

Average
balance

 

Income /
Expense

 

Yield /
Rate

   

Average
balance

 

Income /
Expense

 

Yield /
Rate

 
Assets:                    
Interest earning assets:
Money market, trading and investment securities $8,667   $36.8   1.70 %   $8,575   $36.2   1.69 %   $7,501   $38.6   2.06 %   $92   $0.6   0.01 %   $1,166   ($1.8)   (0.36) %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 8,769 109.6 4.96 8,776 108.0 4.93 8,239 99.6 4.80 (7) 1.6 0.03 530 10.0 0.16
Construction 681 10.8 6.30 682 10.2 6.02 201 2.5 4.86 (1) 0.6 0.28 480 8.3 1.44
Mortgage 7,072 88.8 5.02 7,175 93.4 5.21 6,646 84.0 5.05 (103) (4.6) (0.19) 426 4.8 (0.03)
Consumer 3,811 97.2 10.12 3,823 97.1 10.19 3,905 98.4 10.00 (12) 0.1 (0.07) (94) (1.2) 0.12
Lease financing 594   10.0   6.75     583   10.1   6.93     545   9.8   7.20     11   (0.1)   (0.18)     49   0.2   (0.45)
Total loans (excluding WB loans) 20,927 316.4 6.02 21,039 318.8 6.07 19,536 294.3 5.99 (112) (2.4) (0.05) 1,391 22.1 0.03
WB loans 2,221   48.0   8.59     2,350   55.3   9.44     2,727   68.3   9.95     (129)   (7.3)   (0.85)     (506)   (20.3)   (1.36)
Total loans 23,148   364.4   6.26     23,389   374.1   6.41     22,263   362.6   6.48     (241)   (9.7)   (0.15)     885   1.8   (0.22)
Total interest earning assets 31,815   $401.2   5.02 %   31,964   $410.3   5.14 %   29,764   $401.2   5.36 %   (149)   ($9.1)   (0.12) %   2,051   -   (0.34) %
Allowance for loan losses (559) (599) (629) 40 70
Other non-interest earning assets 4,584 4,212 4,416 372 168
Assets from discontinued operations - - 1,473 - (1,473)
Total average assets $35,840 $35,577 $35,024 $263 $816
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $5,742 $4.9 0.34 % $5,507 $4.9 0.36 % $4,876 $3.9 0.32 % $235 $- (0.02) % $866 $1.0 0.02 %
Savings 7,055 4.1 0.23 7,040 4.1 0.23 6,740 3.7 0.22 15 - - 315 0.4 0.01
Time deposits 8,158   19.4   0.94     8,530   17.2   0.81     7,569   18.9   0.99     (372)   2.2   0.13     589   0.5   (0.05)
Total interest bearing deposits 20,955 28.4 0.54 21,077 26.2 0.50 19,185 26.5 0.55 (122) 2.2 0.04 1,770 1.9 (0.01)
Borrowings[1] 2,861   22.1   3.09     2,855   21.5   3.01     3,591   27.6   3.06     6   0.6   0.08     (730)   (5.5)   0.03
Total interest bearing liabilities 23,816   50.5   0.84     23,932   47.7   0.80     22,776   54.1   0.94     (116)   2.8   0.04     1,040   (3.6)   (0.10)
Net interest spread 4.18 % 4.34 % 4.42 % (0.16) % (0.24) %
Non-interest bearing deposits 6,144 6,247 5,464 (103) 680
Other liabilities 876 991 860 (115) 16
Liabilities from discontinued operations 2 2 1,618 - (1,616)
Stockholders' equity 5,002 4,405 4,306 597 696
Total average liabilities and stockholders' equity $35,840 $35,577 $35,024 $263 $816
 
Adjusted net interest income / margin non-taxable equivalent basis $350.7   4.39 % $362.6   4.54 % $347.1   4.64 % ($11.9)   (0.15) % $3.6   (0.25) %
Impact of fees related to repos refinancing - - 20.7 - (20.7)
Net interest income / margin non-taxable equivalent basis $350.7   4.39 % $362.6   4.54 % $326.4   4.36 % ($11.9)   (0.15) % $24.3   0.03 %
(1) Borrowing expense for the third quarter of 2014, including the fees related to repos refinancing, was 5.34%.

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
                     
Nine months ended Nine months ended
30-Sep-15 30-Sep-14 Variance
Average Income / Yield / Average Income / Yield / Average Income / Yield /
($ amounts in millions; yields not on a taxable equivalent basis)   balance   Expense   Rate     balance   Expense   Rate     balance   Expense   Rate
Assets:
Interest earning assets:
Money market, trading and investment securities $8,340   $107.4   1.72 %   $7,635   $120.4   2.10 %   $705   ($13.0)   (0.38)

%

Loans not covered under loss-sharing agreements with the FDIC:
Commercial 8,627 318.5 4.93 8,390 302.6 4.82 237 15.9 0.11
Construction 600 27.1 6.05 187 9.7 6.93 413 17.4 (0.88)
Mortgage 6,989 267.9 5.11 6,676 256.2 5.12 313 11.7 (0.01)
Consumer 3,826 289.8 10.13 3,854 290.1 10.07 (28) (0.3) 0.06
Lease financing 582   30.1   6.89     545   30.3   7.40     37   (0.2)   (0.51)
Total loans (excluding WB loans) 20,624 933.4 6.05 19,652 888.9 6.04 972 44.5 0.01
WB loans 2,392   160.9   8.99     2,823   232.3   11.00     (431)   (71.4)   (2.01)
Total loans 23,016   1,094.3   6.35     22,475   1,121.2   6.66     541   (26.9)   (0.31)
Total interest earning assets 31,356   $1,201.7   5.12 %   30,110   $1,241.6   5.51 %   1,246   ($39.9)   (0.39)

%

Allowance for loan losses (589) (624) 35
Other non-interest earning assets 4,288 4,566 (278)
Assets from discontinued operations - 1,762 (1,762)
Total average assets $35,055 $35,814 ($759)
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $5,413 $14.0 0.35 % $4,837 $11.5 0.32 % $576 $2.5 0.03

%

Savings 6,996 12.1 0.23 6,715 10.9 0.22 281 1.2 0.01
Time deposits 8,146   54.4   0.89     7,605   57.2   1.01     541   (2.8)   (0.12)
Total interest bearing deposits 20,555 80.5 0.52 19,157 79.6 0.56 1,398 0.9 (0.04)
Borrowings [1] 2,865   64.7   3.01     3,690   109.0   3.94     (825)   (44.3)   (0.93)
Total interest bearing liabilities 23,420   145.2   0.83     22,847   188.6   1.10     573   (43.4)   (0.27)
Net interest spread 4.29 % 4.41 % (0.12)

%

Non-interest bearing deposits 6,113 5,499 614
Other liabilities 942 889 53
Liabilities from discontinued operations 2 1,957 (1,955)
Stockholders' equity 4,578 4,622 (44)
Total average liabilities and stockholders' equity $35,055 $35,814 ($759)
 
Adjusted net interest income / margin non-taxable equivalent basis $1,056.5   4.50 % $1,053.0   4.67 % $3.5   (0.17)

%

Impact of fees related to repos refinancing - 20.7 (20.7)
Accelerated amortization of TARP discount and related deferred costs - 414.1 (414.1)
Net interest income/margin non-taxable equivalent basis $1,056.5   4.50 % $618.2   2.75 % $438.3   1.75

%

(1) Borrowing expense for 2014 including the fees related to repos refinancing and the impact of the accelerated TARP amortization was 19.65%.

Popular, Inc.                
Financial Supplement to Third Quarter 2015 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
 
Mortgage Banking Activities Variance
Quarters ended

Q3 2015
vs.

Q3 2015
vs.

Nine months ended Variance
(In thousands)   30-Sep-15   30-Jun-15   30-Sep-14   Q2 2015   Q3 2014   30-Sep-15   30-Sep-14  

2015 vs.
2014

Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $17,020 $14,689 $11,091 $2,331 $5,929 $43,957 $32,397 $11,560
  Mortgage servicing rights fair value adjustments   1,038   (1,917)   (2,588)   2,955   3,626   (5,808)   (18,424)   12,616
Total mortgage servicing fees, net of fair value adjustments   18,058   12,772   8,503   5,286   9,555   38,149   13,973   24,176
Net gain on sale of loans, including valuation on loans held-for-sale   9,698   8,022   7,466   1,676   2,232   24,999   22,831   2,168
Trading account (loss) profit:
Unrealized (losses) gains on outstanding derivative positions (69) 42 13 (111) (82) (10) (725) 715
  Realized (losses) gains on closed derivative positions   (3,492)   489   (1,580)   (3,981)   (1,912)   (4,766)   (14,211)   9,445
Total trading account (loss) profit   (3,561)   531   (1,567)   (4,092)   (1,994)   (4,776)   (14,936)   10,160
Total mortgage banking activities   $24,195   $21,325   $14,402   $2,870   $9,793   $58,372   $21,868   $36,504
   
Other Service Fees Variance
Quarters ended Q3 2015 vs. Q3 2015 vs. Nine months ended Variance
(In thousands)   30-Sep-15 30-Jun-15 30-Sep-14 Q2 2015 Q3 2014 30-Sep-15 30-Sep-14 2015 vs. 2014
Other service fees:
Debit card fees $11,288 $11,995 $10,673 $(707) $615 $34,408 $32,217 $2,191
Insurance fees 14,517 13,606 12,322 911 2,195 40,163 36,447 3,716
Credit card fees 16,879 17,611 17,078 (732) (199) 50,639 50,146 493
Sale and administration of investment products 5,737 6,601 6,605 (864) (868) 18,269 20,518 (2,249)
Trust fees 4,403 4,914 4,711 (511) (308) 13,919 13,740 179
  Other fees   3,291 4,694 3,450 (1,403) (159) 11,764 11,057 707
Total other service fees   $56,115 $59,421 $54,839 $(3,306) $1,276 $169,162 $164,125 $5,037

Popular, Inc.          
Financial Supplement to Third Quarter 2015 Earnings Release
Table G - Loans and Deposits
(Unaudited)
 
Loans - Ending Balances
Variance
(In thousands)   30-Sep-15   30-Jun-15   30-Sep-14  

Q3 2015 vs.
Q2 2015

 

Q3 2015 vs.
Q3 2014

Loans not covered under FDIC loss-sharing agreements:
Commercial $10,130,424 $10,004,716 $8,058,714 $125,708 $2,071,710
Construction 692,492 696,010 211,850 (3,518) 480,642
Legacy [1] 67,974 72,502 91,015 (4,528) (23,041)
Lease financing 606,927 592,816 550,514 14,111 56,413
Mortgage 7,165,479 7,225,823 6,555,337 (60,344) 610,142
Consumer   3,834,770   3,843,278   3,891,786   (8,508)   (57,016)
Total non-covered loans held-in-portfolio $22,498,066 $22,435,145 $19,359,216 $62,921 $3,138,850
Loans covered under FDIC loss-sharing agreements   665,428   689,650   2,654,263   (24,222)   (1,988,835)
Total loans held-in-portfolio   $23,163,494   $23,124,795   $22,013,479   $38,699   $1,150,015
Loans held-for-sale:
Commercial $47,447 $48,969 $38,072 $(1,522) $9,375
Construction 10 1,681 - (1,671) 10
Legacy [1] - - 27,409 - (27,409)
Mortgage 123,562 151,637 106,832 (28,075) 16,730
Consumer   -   -   5,695   -   (5,695)
Total loans held-for-sale   $171,019   $202,287   $178,008   $(31,268)   $(6,989)
Total loans   $23,334,513   $23,327,082   $22,191,487   $7,431   $1,143,026
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.
Deposits - Ending Balances
Variance
(In thousands)   30-Sep-15   30-Jun-15   30-Sep-14  

Q3 2015 vs.
Q2 2015

 

 

Q3 2015 vs.
Q3 2014

 

Demand deposits [1] $7,027,672 $7,262,176 $6,326,220 $(234,504) $701,452
Savings, NOW and money market deposits (non-brokered) 11,178,357 11,177,288 10,251,602 1,069 926,755
Savings, NOW and money market deposits (brokered) 405,903 468,973 386,573 (63,070) 19,330
Time deposits (non-brokered) 6,870,816 7,367,256 5,636,443 (496,440) 1,234,373
Time deposits (brokered CDs)   1,230,458   1,475,001   1,865,267   (244,543)   (634,809)
Total deposits   $26,713,206   $27,750,694   $24,466,105   $(1,037,488)   $2,247,101
[1] Includes interest and non-interest bearing demand deposits.                

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
              Variance
(Dollars in thousands)   30-Sep-15  

As a % of
loans HIP by
category

    30-Jun-15  

As a % of
loans HIP by
category

    30-Sep-14  

As a % of
loans HIP by
category

   

Q3 2015 vs.
Q2 2015

 

Q3 2015 vs.
Q3 2014

Non-accrual loans:  
Commercial $239,397 2.4 % $190,294 1.9 % $252,331 3.1 % $49,103 $(12,934)
Construction 3,605 0.5 5,427 0.8 19,148 9.0 (1,822) (15,543)
Legacy [1] 4,059 6.0 4,686 6.5 5,648 6.2 (627) (1,589)
Lease financing 3,091 0.5 2,328 0.4 3,168 0.6 763 (77)
Mortgage 343,410 4.8 330,821 4.6 295,125 4.5 12,589 48,285
Consumer   41,340   1.1     42,441   1.1     46,525   1.2     (1,101)   (5,185)
Total non-performing loans held-in-
portfolio, excluding covered loans 634,902 2.8 % 575,997 2.6 % 621,945 3.2 % 58,905 12,957
Non-performing loans held-for-sale [2] 47,681 50,875 19,728 (3,194) 27,953
Other real estate owned (“OREO”),
excluding covered OREO   155,826         142,255         135,256         13,571   20,570
Total non-performing assets,
excluding covered assets 838,409 769,127 776,929 69,282 61,480
Covered loans and OREO   39,888         37,367         166,533         2,521   (126,645)
Total non-performing assets   $878,297         $806,494         $943,462         $71,803   $(65,165)
Accruing loans past due 90 days or more [3]   $443,497         $435,775         $426,549         $7,722   $16,948
Ratios excluding covered loans:
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.82 % 2.57 % 3.21 %
Allowance for loan losses to loans
held-in-portfolio 2.38 2.29 2.69
Allowance for loan losses to
non-performing loans, excluding loans
held-for-sale   84.42         89.02         83.88              
Ratios including covered loans:
Non-performing assets to total assets 2.47 % 2.19 % 2.77 %
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.76 2.51 2.89
Allowance for loan losses to loans
held-in-portfolio 2.46 2.38 2.78
Allowance for loan losses to non-performing
loans, excluding loans held-for-sale   89.27         94.99         95.96              
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.
[2] Non-performing loans held-for-sale as of September 30, 2015 consisted of $47 million in commercial loans, $10 thousand in construction loan and $224 thousand in mortgage loans (June 30, 2015 - $49 million in commercial loans, $2 million in construction loan and $225 thousand in mortgage loans; September 30, 2014 - $14.7 million in mortgage loans, $427 thousand in commercial loans, $4.6 million in consumer loans and $10 thousand in legacy loans).
[3] It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. These balances include $159 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of September 30, 2015 (June 30, 2015 - $133 million; September 30, 2014 - $125 million). Furthermore, the Corporation has approximately $71 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation's policy to exclude these balances from non-performing assets (June 30, 2015 - $72 million; September 30, 2014 - $64 million).

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
             
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-15   30-Jun-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $179,399 $10,895 $190,294 $264,631 $9,807 $274,438
Plus:
New non-performing loans 91,393 2,125 93,518 17,092 1,386 18,478
Advances on existing non-performing loans - 6 6 - 383 383
Reclass from covered loans - - - 7,395 - 7,395
Less:
Non-performing loans transferred to OREO (853) - (853) (3,568) - (3,568)
Non-performing loans charged-off (13,999) (229) (14,228) (51,804) (399) (52,203)
Loans returned to accrual status / loan collections (20,045) (1,525) (21,570) (9,351) (282) (9,633)
Loans transferred to held-for-sale - - - (44,996) - (44,996)
  Other transfers out of non-performing   -   (7,770)   (7,770)   -   -   -
Ending balance NPLs   $235,895   $3,502   $239,397   $179,399   $10,895   $190,294
 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-15   30-Jun-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $4,756 $671 $5,427 $13,214 $- $13,214
Plus:
New non-performing loans - 7,745 7,745 - 671 671
Reclass from covered loans - - - 112 - 112
Less:
Non-performing loans transferred to OREO - - - (2,194) - (2,194)
Non-performing loans charged-off (91) - (91) - - -
Loans returned to accrual status / loan collections   (1,060)   (8,416)   (9,476)   (6,376)   -   (6,376)
Ending balance NPLs   $3,605   $-   $3,605   $4,756   $671   $5,427
             
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-15   30-Jun-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $318,773 $12,048 $330,821 $320,154 $8,461 $328,615
Plus:
New non-performing loans 93,768 5,816 99,584 85,555 11,857 97,412
Reclass from covered loans - - - 568 - 568
Less:
Non-performing loans transferred to OREO (8,450) - (8,450) (6,103) (314) (6,417)
Non-performing loans charged-off (15,212) (517) (15,729) (7,998) (319) (8,317)
Loans returned to accrual status / loan collections   (57,857)   (4,959)   (62,816)   (73,403)   (7,637)   (81,040)
Ending balance NPLs   $331,022   $12,388   $343,410   $318,773   $12,048   $330,821
 
Legacy loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-15   30-Jun-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $- $4,686 $4,686 $- $2,288 $2,288
Plus:
New non-performing loans - 649 649 - 3,077 3,077
Advances on existing non-performing loans - 89 89 - 14 14
Less:
Non-performing loans charged-off - (721) (721) - (433) (433)
Loans returned to accrual status / loan collections   -   (644)   (644)   -   (260)   (260)
Ending balance NPLs   $-   $4,059   $4,059   $-   $4,686   $4,686
 
Total non-performing loans held-in-portfolio (excluding consumer loans):
Quarter ended Quarter ended
30-Sep-15   30-Jun-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $502,928 $28,300 $531,228 $597,999 $20,556 $618,555
Plus:
New non-performing loans 185,161 16,335 201,496 102,647 16,991 119,638
Advances on existing non-performing loans - 95 95 - 397 397
Reclass from covered loans - - - 8,075 - 8,075
Less:
Non-performing loans transferred to OREO (9,303) - (9,303) (11,865) (314) (12,179)
Non-performing loans charged-off (29,302) (1,467) (30,769) (59,802) (1,151) (60,953)
Loans returned to accrual status / loan collections (78,962) (15,544) (94,506) (89,130) (8,179) (97,309)
Loans transferred to held-for-sale - - - (44,996) - (44,996)
Other transfers out of non-performing   -   (7,770)   (7,770)   -   -   -
Ending balance NPLs   $570,522   $19,949   $590,471   $502,928   $28,300   $531,228

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
                       
 
Quarter ended Quarter ended Quarter ended
    30-Sep-15     30-Jun-15     30-Sep-14  
Non-covered Covered Non-covered Covered Non-covered Covered
(Dollars in thousands)   loans     loans     Total     loans     loans     Total     loans     loans     Total  
Balance at beginning of period $512,739 $38,074 $550,813 $516,224 $72,473 $588,697 $526,246 $98,665 $624,911  
Provision for loan losses - Continuing operations   69,568     (2,890)     66,678     60,468     15,766     76,234     68,166     12,463     80,629  
    582,307     35,184     617,491     576,692     88,239     664,931     594,412     111,128     705,540  
Net loans charged-off (recovered):
BPPR
Commercial 9,172 - 9,172 17,059 19,833 36,892 1,011 16,590 17,601
Construction (2,648) - (2,648) 1,721 14,615 16,336 (1,237) 4,066 2,829
Lease financing 894 - 894 973 - 973 1,410 (1) 1,409
Mortgage 15,524 601 16,125 10,739 178 10,917 13,330 1,809 15,139
Consumer   24,303     74     24,377     14,654     679     15,333     24,168     (1,024)     23,144  
Total BPPR   47,245     675     47,920     45,146     35,305     80,451     38,682     21,440     60,122  
 
BPNA
Commercial (1,959) - (1,959) (879) - (879) (893) - (893)
Construction - - - - - - (59) - (59)
Legacy [1] (603) - (603) 30 - 30 221 - 221
Mortgage 787 - 787 176 - 176 26 - 26
Consumer   832     -     832     1,969     -     1,969     2,492     -     2,492  
Total BPNA   (943)     -     (943)     1,296     -     1,296     1,787     -     1,787  
Total loans charged-off - Popular, Inc.   46,302     675     46,977     46,442     35,305     81,747     40,469     21,440     61,909  
Balance transferred from covered to non-covered loans [2]   -     -     -     13,037     (13,037)     -     -     -     -  
Net (write-downs) recoveries [3]   -     -     -     (30,548)     (1,823)     (32,371)     (32,256)     -     (32,256)  
Balance at end of period   $536,005     $34,509     $570,514     $512,739     $38,074     $550,813     $521,687     $89,688     $611,375  
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 0.83 % 0.82 % 0.89 % 1.41 % 0.83 % 1.12 %
Provision for loan losses to net charge-offs [4] 1.50 x 1.42 x 1.28 x 0.92 x 1.39 x 1.11 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.07 % 1.04 % 1.10 % 1.71 % 0.98 % 1.30 %
Provision for loan losses to net charge-offs [4] 1.46 x 1.37 x 1.32 x 0.94 x 1.60 x 1.24 x
 
BPNA
Annualized net charge-offs (recoveries) to average loans held-in-portfolio (0.08) % 0.12 % 0.19 %
Provision for loan losses to net charge-offs               N.M.                 N.M.                 N.M.  
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.
[2] Represents the transfer of covered to non-covered loans at June 30, 2015.
[3] Net write-downs are related to loans sold or reclassified to held-for-sale.
[4] Excluding provision for loan losses and net write-down related to loans sold or reclassified to held-for-sale.
N.M. - Not meaningful.

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
               
                                               
30-Sep-15
Lease
(Dollars in thousands)       Commercial     Construction     Legacy [3]     Mortgage     financing     Consumer     Total [2]
Specific ALLL $83,615 $358 $- $47,545 $634 $24,696 $156,848
Impaired loans [1] $391,066 $2,536 $1,188 $462,806 $2,645 $113,865 $974,106
Specific ALLL to impaired loans   [1]   21.38 %   14.12 %   - %   10.27 %   23.97 %   21.69 %   16.10 %
General ALLL $146,846 $14,393 $2,805 $86,955 $8,457 $119,701 $379,157
Loans held-in-portfolio, excluding impaired loans [1] $9,739,358 $689,956 $66,786 $6,702,673 $604,282 $3,720,905 $21,523,960
General ALLL to loans held-in-portfolio, excluding impaired loans   [1]   1.51 %   2.09 %   4.20 %   1.30 %   1.40 %   3.22 %   1.76 %
Total ALLL $230,461 $14,751 $2,805 $134,500 $9,091 $144,397 $536,005
Total non-covered loans held-in-portfolio [1] $10,130,424 $692,492 $67,974 $7,165,479 $606,927 $3,834,770 $22,498,066
ALLL to loans held-in-portfolio   [1]   2.27 %   2.13 %   4.13 %   1.88 %   1.50 %   3.77 %   2.38 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of September 30, 2015 the general allowance on the covered loans amounted to $34.5 million.
[3] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA reportable segment.
                                               
30-Jun-15
Lease
(Dollars in thousands)       Commercial     Construction     Legacy [3]     Mortgage     financing     Consumer     Total [2]
Specific ALLL $68,456 $725 $34 $44,162 $607 $25,027 $139,011
Impaired loans [1] $337,577 $3,627 $1,357 $455,834 $2,554 $114,877 $915,826
Specific ALLL to impaired loans   [1]   20.28 %   19.99 %   2.51 %   9.69 %   23.77 %   21.79 %   15.18 %
General ALLL $147,264 $8,262 $3,281 $85,785 $8,553 $120,583 $373,728
Loans held-in-portfolio, excluding impaired loans [1] $9,667,139 $692,383 $71,145 $6,769,989 $590,262 $3,728,401 $21,519,319
General ALLL to loans held-in-portfolio, excluding impaired loans   [1]   1.52 %   1.19 %   4.61 %   1.27 %   1.45 %   3.23 %   1.74 %
Total ALLL $215,720 $8,987 $3,315 $129,947 $9,160 $145,610 $512,739
Total non-covered loans held-in-portfolio [1] $10,004,716 $696,010 $72,502 $7,225,823 $592,816 $3,843,278 $22,435,145
ALLL to loans held-in-portfolio   [1]   2.16 %   1.29 %   4.57 %   1.80 %   1.55 %   3.79 %   2.29 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of June 30, 2015 the general allowance on the covered loans amounted to $38.1 million.
[3] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA reportable segment.
                             
Variance
(Dollars in thousands)   Commercial   Construction   Legacy   Mortgage   Lease financing   Consumer   Total
Specific ALLL   $15,159   $(367)   $(34)   $3,383   $27   $(331)   $17,837
Impaired loans   $53,489   $(1,091)   $(169)   $6,972   $91   $(1,012)   $58,280
General ALLL $(418) $6,131 $(476) $1,170 $(96) $(882) $5,429
Loans held-in-portfolio, excluding impaired loans   $72,219   $(2,427)   $(4,359)   $(67,316)   $14,020   $(7,496)   $4,641
Total ALLL $14,741 $5,764 $(510) $4,553 $(69) $(1,213) $23,266
Total non-covered loans held-in-portfolio   $125,708   $(3,518)   $(4,528)   $(60,344)   $14,111   $(8,508)   $62,921

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
             
30-Sep-15
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $83,615 $358 $46,956 $634 $24,221 $155,784
  General ALLL non-covered loans   137,352   11,223   83,109   8,457   108,285   348,426
ALLL - non-covered loans   220,967   11,581   130,065   9,091   132,506   504,210
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   34,334   -   175   34,509
ALLL - covered loans   -   -   34,334   -   175   34,509
Total ALLL   $220,967   $11,581   $164,399   $9,091   $132,681   $538,719
Loans held-in-portfolio:
Impaired non-covered loans $391,066 $2,536 $457,631 $2,645 $111,683 $965,561
  Non-covered loans held-in-portfolio, excluding impaired loans   7,130,678   106,142   5,762,764   604,282   3,249,213   16,853,079
Non-covered loans held-in-portfolio   7,521,744   108,678   6,220,395   606,927   3,360,896   17,818,640
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   645,663   -   19,765   665,428
Covered loans held-in-portfolio   -   -   645,663   -   19,765   665,428
Total loans held-in-portfolio   $7,521,744   $108,678   $6,866,058   $606,927   $3,380,661   $18,484,068
 
 
30-Jun-15
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $68,456 $725 $43,749 $607 $24,615 $138,152
  General ALLL non-covered loans   138,639   5,833   82,428   8,553   109,095   344,548
ALLL - non-covered loans   207,095   6,558   126,177   9,160   133,710   482,700
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   37,815   -   259   38,074
ALLL - covered loans   -   -   37,815   -   259   38,074
Total ALLL   $207,095   $6,558   $163,992   $9,160   $133,969   $520,774
Loans held-in-portfolio:
Impaired non-covered loans $337,577 $3,627 $450,789 $2,554 $112,733 $907,280
  Non-covered loans held-in-portfolio, excluding impaired loans   7,231,433   109,819   5,793,594   590,262   3,282,292   17,007,400
Non-covered loans held-in-portfolio   7,569,010   113,446   6,244,383   592,816   3,395,025   17,914,680
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   3   -   671,074   -   18,573   689,650
Covered loans held-in-portfolio   3   -   671,074   -   18,573   689,650
Total loans held-in-portfolio   $7,569,013   $113,446   $6,915,457   $592,816   $3,413,598   $18,604,330
               
Variance
(In thousands) Commercial Construction Mortgage Lease financing Consumer Total
Allowance for credit losses:
  Specific ALLL non-covered loans $15,159 $(367) $3,207 $27 $(394) $17,632
  General ALLL non-covered loans (1,287) 5,390 681 (96) (810) 3,878
ALLL - non-covered loans 13,872 5,023 3,888 (69) (1,204) 21,510
  General ALLL covered loans - - (3,481) - (84) (3,565)
ALLL - covered loans - - (3,481) - (84) (3,565)
Total ALLL $13,872 $5,023 $407 $(69) $(1,288) $17,945
Loans held-in-portfolio:
Impaired non-covered loans $53,489 $(1,091) $6,842 $91 $(1,050) $58,281
  Non-covered loans held-in-portfolio, excluding impaired loans (100,755) (3,677) (30,830) 14,020 (33,079) (154,321)
Non-covered loans held-in-portfolio (47,266) (4,768) (23,988) 14,111 (34,129) (96,040)
  Covered loans held-in-portfolio, excluding impaired loans (3) - (25,411) - 1,192 (24,222)
Covered loans held-in-portfolio (3) - (25,411) - 1,192 (24,222)
Total loans held-in-portfolio $(47,269) $(4,768) $(49,399) $14,111 $(32,937) $(120,262)

Popular, Inc.
Financial Supplement to Third Quarter 2015 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
(Unaudited)
             
30-Sep-15
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $589 $475 $1,064
  General ALLL   9,494   3,170   2,805   3,846   11,416   30,731
Total ALLL   $9,494   $3,170   $2,805   $4,435   $11,891   $31,795
Loans held-in-portfolio:
Impaired loans $- $- $1,188 $5,175 $2,182 $8,545
  Loans held-in-portfolio, excluding impaired loans   2,608,680   583,814   66,786   939,909   471,692   4,670,881
Total loans held-in-portfolio   $2,608,680   $583,814   $67,974   $945,084   $473,874   $4,679,426
 
 
30-Jun-15
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $34 $413 $412 $859
  General ALLL   8,625   2,429   3,281   3,357   11,488   29,180
Total ALLL   $8,625   $2,429   $3,315   $3,770   $11,900   $30,039
Loans held-in-portfolio:
Impaired loans $- $- $1,357 $5,045 $2,144 $8,546
  Loans held-in-portfolio, excluding impaired loans   2,435,706   582,564   71,145   976,395   446,109   4,511,919
Total loans held-in-portfolio   $2,435,706   $582,564   $72,502   $981,440   $448,253   $4,520,465
 
                           
Variance
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $(34) $176 $63 $205
  General ALLL   869   741   (476)   489   (72)   1,551
Total ALLL   $869   $741   $(510)   $665   $(9)   $1,756
Loans held-in-portfolio:
Impaired loans $- $- $(169) $130 $38 $(1)
  Loans held-in-portfolio, excluding impaired loans   172,974   1,250   (4,359)   (36,486)   25,583   158,962
Total loans held-in-portfolio   $172,974   $1,250   $(4,528)   $(36,356)   $25,621   $158,961

Popular, Inc.        
Financial Supplement to Third Quarter 2015 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
 
 
(In thousands, except share or per share information)   30-Sep-15     30-Jun-15     30-Sep-14    
Total stockholders’ equity $5,049,636 $4,949,653 $4,298,392
Less: Preferred stock (50,160) (50,160) (50,160)
Less: Goodwill (504,925) (505,435) (461,246)
Less: Other intangibles   (71,393)     (74,854)     (37,777)    
Total tangible common equity   $4,423,158     $4,319,204     $3,749,209    
Total assets $35,530,794 $36,750,113 $34,099,095
Less: Goodwill (504,925) (505,435) (461,246)
Less: Other intangibles   (71,393)     (74,854)     (37,777)    
Total tangible assets   $34,954,476     $36,169,824     $33,600,072    
Tangible common equity to tangible assets 12.65 % 11.94 % 11.16 %
Common shares outstanding at end of period 103,556,285 103,503,014 103,448,206
Tangible book value per common share   $42.71     $41.73     $36.24    

Popular, Inc.      
Financial Supplement to Third Quarter 2015 Earnings Release
Table O - Financial Information - Westernbank Loans
(Unaudited)
 
 
Revenues
Quarters ended
(In thousands)   30-Sep-15   30-Jun-15   Variance
Interest income on WB loans   $47,982   $55,335   $(7,353)
FDIC loss-share income (expense):
Amortization of indemnification asset (3,931) (31,065) 27,134
80% mirror accounting on credit impairment losses (reversal) [1] (183) 7,647 (7,830)
80% mirror accounting on reimbursable expenses 6,276 42,730 (36,454)
80% mirror accounting on recoveries on covered assets, including rental income on OREOs,
subject to reimbursement to the FDIC - (5,203) 5,203
Change in true-up payment obligation (1,058) 3,672 (4,730)
Other   103   1,294   (1,191)
  Total FDIC loss-share income (expense)   1,207   19,075   (17,868)
Total revenues   49,189   74,410   (25,221)
Provision for loan losses[2]   20,206   15,766   4,440
Total revenues less provision for loan losses   $28,983   $58,644   $(29,661)
[1] Reductions in expected cash flows for ASC 310-30 loans, which may impact the provision for loan losses, may consider reductions in both principal and interest cash flow expectations. The amount covered under the FDIC loss-sharing agreements for interest not collected from borrowers is limited under the agreements (approximately 90 days); accordingly, these amounts are not subject fully to the 80% mirror accounting.
[2] For the quarter ended September 30, 2015, the Corporation recorded a reserve release of $2.9 million for the covered loans portfolio.
 
 
Non-personnel operating expenses
Quarters ended [2]
(In thousands)   [1] 30-Sep-15   30-Jun-15   Variance
Professional fees $4,606 $5,701 $(1,095)
OREO expenses 2,033 34,262 (32,229)
Other operating expenses   3,842   10,125   (6,283)
Total operating expenses   $10,481   $50,088   $(39,607)
[1] Includes expenses related to loans subject to the FDIC loss-sharing agreement and loans not subject to the FDIC loss-sharing agreement.
[2] Expense reimbursements from the FDIC may be recorded with a time lag, since these are claimed upon the event of loss or charge-off of the loans which may occur in a subsequent period.
 
 
Quarterly average assets
Quarters ended
(In millions)   30-Sep-15   30-Jun-15   Variance
Loans $2,221 $2,350 $(129)
FDIC loss-share asset   330   391   (61)

         
Activity in the carrying amount and accretable yield of loans accounted for under ASC 310-30
 
Quarters ended
      30-Sep-15   30-Jun-15
(In thousands)   Accretable yield  

Carrying amount
of loans

  Accretable yield  

Carrying amount
of loans

Beginning balance $1,245,924 $2,137,078 $1,258,948 $2,367,096
Accretion (46,693) 46,693 (53,994) 53,994
Changes in expected cash flows (53,782) - 40,970 -
Collections / charge-offs   -   (107,759)   -   (284,012)
Ending balance 1,145,449 2,076,012 1,245,924 2,137,078
  Allowance for loan losses - ASC 310-30 loans   -   (64,583)   -   (47,049)
Ending balance, net of allowance for loan losses   $1,145,449   $2,011,429   $1,245,924   $2,090,029
 
The carrying amount of loans acquired from Westernbank and accounted for under ASC 310-30 which remain subject to the loss-sharing agreement with the FDIC amounted to approximately $655 million as of September 30, 2015.
 
 
 
 
Activity in the carrying amount of the FDIC indemnity asset
 
Quarters ended
(In thousands)       30-Sep-15       30-Jun-15
Balance at beginning of period $392,947 $409,844
Amortization (3,931) (31,065)
Credit impairment losses (reversal) to be covered under loss-sharing agreements (183) 7,647
Reimbursable expenses to be covered under loss-sharing agreements 6,276 42,730
Net payments from FDIC under loss-sharing agreements (80,993) (32,158)
Other adjustments attributable to FDIC loss-sharing agreements       (2,170)       (4,051)
Balance at end of period       $311,946       $392,947
 
 
Activity in the remaining FDIC loss-share asset amortization
 
Quarters ended
(In thousands)       30-Sep-15       30-Jun-15
Balance at beginning of period $28,493 $38,687
Amortization (3,931) (31,065)
Impact of lower projected losses       2,805       20,871
Balance at end of period       $27,367       $28,493

POPULAR, INC.  
Financial Supplement to Third Quarter 2015 Earnings Release
Table P - Restructuring Charges
(Unaudited)
   
Restructuring Charges
Quarters ended
(In thousands)     30-Sep-15     30-Jun-15     Variance
 
Personnel costs $

496

$

2,866

$

(2,370)

Net occupancy expenses 208 2,660 (2,452)
Equipment expenses 15 66 (51)
Professional fees (406) 315 (721)
Other operating expenses     168     267     (99)
Total restructuring costs   $ 481   $ 6,174   $ (5,693)

Contact:

Popular, Inc.
Investor Relations:
Brett Scheiner, 212-417-6721
Investor Relations Officer
or
Media Relations:
Teruca Rullán, 787-281-5170
Mobile: 917-679-3596
Senior Vice President, Corporate Communications

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