Popular, Inc. Announces First Quarter Financial Results

 
 

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Popular de Puerto Rico's
Media Relations Team.


  • Reports net income of $74.8 million for the quarter and adjusted net income of $90.3 million
  • Net interest margin of 4.57% in Q1 2015 vs. adjusted net interest margin of 4.70% in Q4 2014
  • On February 27, 2015, completed acquisition of certain assets and assumption of all deposits (other than certain brokered deposits) from the FDIC as receiver for Doral Bank
  • Credit Quality (excluding covered loans):
    • Non-performing loans held-in-portfolio (NPLs) increased by $34.5 million from Q4 2014; Quarter over Quarter increase includes $16.6 million attributable to loans previously serviced by Doral and $11.3 million in acquired loans that became NPLs; NPLs to loans ratio at 3.2% vs. 3.3% in Q4 2014;
    • Net charge-offs (NCOs) were 0.72% of average loans held-in-portfolio vs. 1.04% in Q4 2014; NCOs decreased by $14.3 million quarter over quarter;
    • Allowance for loan losses of $516.2 million vs. $519.7 million in Q4 2014; Allowance for loan losses to loans held-in-portfolio at 2.46% vs. 2.68% in Q4 2014.
  • Common Equity Tier 1 ratio of 15.82% and Tangible Book Value per Share of $36.33 at March 31, 2015

Category:

Monday, April 27, 2015 8:00 am EDT

Dateline:

SAN JUAN, Puerto Rico

Public Company Information:

NASDAQ:
BPOP
PR7331741061

SAN JUAN, Puerto Rico--(BUSINESS WIRE)--Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP) reported net income of $74.8 million and adjusted net income of $90.3 million for the quarter ended March 31, 2015, compared to net income of $48.9 million and an adjusted net income of $76.8 million for the quarter ended December 31, 2014.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: "We are pleased to report that we started the year on solid footing, with strong results and stable credit metrics, notwithstanding the difficult macroeconomic environment in our principal market, Puerto Rico. We are especially encouraged by the trends we are seeing at Popular Community Bank, which experienced organic commercial loan growth of 6% in the quarter. The acquisition of approximately $2.3 billion of Doral Bank’s assets further boosts our position, as it strengthens our Puerto Rico franchise and provides additional momentum to our U.S. operations."

Earnings Highlights      
 
(Unaudited)   Quarters ended
(Dollars in thousands, except per share information)   31-Mar-15   31-Dec-14   31-Mar-14
Net interest income $ 343,195 $ 326,861 $ 351,171
Provision for loan losses – non-covered loans 29,711 51,637 54,122
Provision (reversal of provision) for loan losses – covered loans [1]     10,324     (3,646 )     25,714  
Net interest income after provision for loan losses 303,160 278,870 271,335
FDIC loss share income (expense) 4,139 (18,693 ) (24,206 )
Other non-interest income 111,096 122,057 120,238
Operating expenses     312,342     330,006       277,599  
Income from continuing operations before income tax 106,053 52,228 89,768
Income tax expense     32,568     12,472       23,264  
Income from continuing operations 73,485 39,756 66,504
Income from discontinued operations, net of tax     1,341     9,086       19,905  
Net income   $ 74,826   $ 48,842     $ 86,409  
Net income applicable to common stock   $ 73,895   $ 47,911     $ 85,478  
Net income per common share from continuing operations - Basic   $ 0.71   $ 0.38     $ 0.64  
Net income per common share from continuing operations - Diluted   $ 0.71   $ 0.37     $ 0.64  
Net income per common share from discontinued operations - Basic   $ 0.01   $ 0.09     $ 0.19  
Net income per common share from discontinued operations - Diluted   $ 0.01   $ 0.09     $ 0.19  
 

[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.

 

Significant events

On February 27, 2015, the Corporation’s Puerto Rico banking subsidiary, Banco Popular de Puerto Rico (“BPPR”), in an alliance with co-bidders, including the Corporation’s U.S. mainland banking subsidiary, Banco Popular North America, doing business as Popular Community Bank (“PCB”), acquired certain assets and all deposits (other than certain brokered deposits) of Doral Bank (“Doral”) from the Federal Deposit Insurance Corporation (FDIC), as receiver (the "Doral Acquisition").

Under the FDIC’s bidding format, BPPR was the lead bidder and party to the purchase and assumption agreement with the FDIC covering all assets and deposits acquired by it and its alliance co-bidders. BPPR entered into back to back purchase and assumption agreements with the alliance co-bidders for the transferred assets and deposits. The other co-bidders which formed part of the alliance led by BPPR were First Bank Puerto Rico, Centennial Bank and a vehicle formed by J.C. Flowers III L.P. BPPR has entered into transition service agreements with each of the alliance co-bidders.

After taking into account the transfers to the unaffiliated alliance co-bidders, BPPR and PCB assumed deposits amounting to approximately $2.2 billion and acquired commercial and residential loans amounting to approximately $1.7 billion, substantially all of which were in performing status. Additionally, the acquisition included approximately $0.6 billion in investment securities, cash and other assets. There is no loss-sharing arrangement with the FDIC on the acquired assets.

On February 27, 2015, the FDIC, as receiver for Doral Bank, accepted BPPR's bid for the purchase of the mortgage servicing rights on three pools of residential mortgage loans of approximately $5.0 billion in unpaid principal balance, for a purchase price currently estimated at $48.6 million. The transfers of the mortgage servicing rights are subject to a number of specified closing conditions, including the consent of each of Ginnie Mae, Fannie Mae and Freddie Mac in a form acceptable to BPPR, and other customary closing conditions. On April 23, 2015, BPPR closed the acquisition of approximately $2.7 billion in Ginnie Mae mortgage servicing rights. BPPR is in negotiations for the transfers of the Fannie Mae and Freddie Mac mortgage servicing rights which are expected to be completed during the second quarter of 2015.

As a result of the Doral Acquisition, the Corporation recorded goodwill of approximately $43 million and a core deposit intangible asset of approximately $24 million. Refer to the statement of condition section of this earnings release for a detail of the assets and liabilities of the business acquired from Doral Bank, as part of the FDIC assisted transaction, as of March 31, 2015.

    Quarter ended
(Unaudited)   31-Mar-15
(In thousands)  

Actual Results

(US GAAP)

 

BPNA

Reorganization [2]

  Doral Acquisition [3]

Adjusted

Results

(Non-GAAP)

Net interest income $ 343,195   $ -   $ - $ 343,195
Provision for loan losses – non-covered loans 29,711 - - 29,711
Provision (reversal of provision) for loan losses – covered loans [1]     10,324       -       -       10,324  
Net interest income (expense) after provision for loan losses 303,160 - - 303,160
Net loss on sale of loans, including valuation adjustments on loans held-for-sale (79 ) - - (79 )
FDIC loss share income 4,139 - - 4,139
Other non-interest income 111,175 - 1,121 110,054
Personnel costs 116,458 - 2,432 114,026
Net occupancy expenses 21,709 643 21,066
Professional fees 75,528 - 6,997 68,531
Restructuring costs 10,753 10,753 - -
Other operating expenses     87,894       -       -       87,894  
Income from continuing operations before income tax 106,053 (10,753 ) (8,951 ) 125,757
Income tax expense     32,568       -       (2,896 )     35,464  
Income from continuing operations   $ 73,485     $ (10,753 )   $ (6,055 )   $ 90,293  
Income from discontinued operations, net of tax   $ 1,341     $ 1,341     $ -     $ -  
Net income   $ 74,826     $ (9,412 )   $ (6,055 )   $ 90,293  
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.
[2] Represents restructuring charges associated with the reorganization of BPNA.
[3] Includes $1.1 million on fees charged for services provided to the alliance co-bidders, including loan servicing and other interim services, personnel costs related to Doral employees retained on a temporary basis and non-recurring incentive compensation for an aggregate of $2.4 million, building rent expense of Doral’s administrative offices for $0.6 million and professional and legal fees directly associated with the Doral acquisition for $7.0 million.

    Quarter ended
(Unaudited)   31-Dec-14
(In thousands)  

Actual Results

(US GAAP)

 

BPNA

Reorganization [2]

 

Other

Adjustments

 

Adjusted

Results

(Non-GAAP)

Net interest income $ 326,861   $ (18,591 )   $ -   $ 345,452
Provision for loan losses – non-covered loans 51,637 878 - 50,759
Reversal of provision for loan losses – covered loans [1]     (3,646 )     -       -       (3,646 )
Net interest income after provision for loan losses 278,870 (19,469 ) - 298,339
Net gain on sale of loans, including valuation adjustments on loans held-for-sale 10,946 1,684 - 9,262
FDIC loss share expense (18,693 ) - - (18,693 )
Other non-interest income 111,111 - - 111,111
Personnel costs 110,736 - 2,974[3] 107,762
Net occupancy expenses 23,877 - 1,895[4] 21,982
Professional fees 80,383 - - 80,383
Loss on early extinguishment of debt 532 532 - -
Restructuring costs 13,861 13,861 - -
Other operating expenses     100,617       -       -       100,617  
Income from continuing operations before income tax 52,228 (32,178 ) (4,869 ) 89,275
Income tax expense     12,472       -       -       12,472  
Income from continuing operations   $ 39,756     $ (32,178 )   $ (4,869 )   $ 76,803  
Income from discontinued operations, net of tax   $ 9,086     $ 9,086     $ -     $ -  
Net income   $ 48,842     $ (23,092 )   $ (4,869 )   $ 76,803  
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.
[2] Includes loss on the refinancing of structured repos for $18.6 million recorded as interest expense, impact on provision for loan losses related to NPL sales of $878 thousand, gain on bulk sales of NPLs of $1.7 million and restructuring cost of $13.9 million.
[3] Represents the impact of the compensation package granted upon separation of an officer of the Corporation equal to approximately $3.0 million.
[4] Represents the net loss on the early cancellation of a lease at BPNA of $1.9 million.

 
    Quarters ended
(Unaudited) Adjusted Results Non-GAAP  
(In thousands)   31-Mar-15   31-Dec-14   Variance
Net interest income $ 343,195   $ 345,452 $ (2,257 )
Provision for loan losses – non-covered loans 29,711 50,759 (21,048 )
Provision (reversal of provision) for loan losses – covered loans [1]     10,324       (3,646 )     13,970  
Net interest income after provision for loan losses 303,160 298,339 4,821
Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale (79 ) 9,262 (9,341 )
FDIC loss share income (expense) 4,139 (18,693 ) 22,832
Other non-interest income 110,054 111,111 (1,057 )
Personnel costs 114,026 107,762 6,264
Net occupancy expenses 21,066 21,982 (916 )
Professional fees 68,531 80,383 (11,852 )
Other operating expenses     87,894       100,617       (12,723 )
Income from continuing operations before income tax 125,757 89,275 36,482
Income tax expense     35,464       12,472       22,992  
Income from continuing operations   $ 90,293     $ 76,803     $ 13,490  
Net income   $ 90,293     $ 76,803     $ 13,490  
[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 March 31, 2015, the Corporation had a net interest income of $343.2 million, compared to an adjusted net interest income of $345.5 million for the fourth quarter of 2014, which excludes the impact of the $18.6 million expense related to the refinancing of structured repos at PCB. The net interest margin was 4.57%, a decrease of 13 basis points from the adjusted previous quarter’s net interest margin. The impact of having two less days in the quarter ended March 31, 2015 resulted in a reduction of approximately $4.9 million in net interest income when compared to the previous quarter.

    The decrease of $2.3 million in the adjusted net interest income is mainly related to:
    • A decrease in income from commercial loans of $1.0 million, or 4 basis points, due to the impact of fewer days in the quarter and lower interest collected on resolution of non-performing loans at BPNA, partially offset by higher volume and yields from Doral Bank.
    • A decrease of $3.9 million, or 17 basis points, on income from covered loans due to a lower volume of loans as part of the normal portfolio run-off and lower yields, reflecting the impact of the quarterly recast process. Refer to Table O for a schedule of the accretable yield for covered loans accounted for under ASC 310-30.

      These negative variances in net interest income were offset in part by:
    • Higher interest income from construction loans by $2.3 million due to higher volume related to loans acquired from Doral Bank in the US.
    • An increase in income from mortgage loans of $1.8 million mostly due to higher volumes in Puerto Rico related to the Doral Acquisition
  • The Doral Acquisition on February 27, 2015 added approximately $9.8 million in net interest income for the first quarter of 2015. This was comprised mainly of interest income of $11.0 million from loans and investments with an average yield of 6.50% and interest expense of $1.3 million from deposits with an average yield of 0.91%.

BPPR’s net interest margin for the quarter was 5.00%, a decrease of 15 basis points from the previous quarter. Net interest income amounted to $306.6 million for the quarter ended March 31, 2015 compared with $311.2 million for the previous quarter. The decrease in the net interest income was mainly due to the above mentioned decrease in interest income from covered and commercial loans mostly due to fewer days in the quarter, partially offset by higher interest income from mortgage loan portfolios, net of related funding. The contribution from the Doral Acquisition to BPPR’s net interest income was approximately $5.1 million. Cost of interest bearing deposits in Puerto Rico were flat at 53 basis points, even after the impact of Doral’s acquired deposits.

BPNA’s net interest margin was 3.82%, compared to 2.40% for the previous quarter, mainly driven by the previously mentioned repo refinancing during the fourth quarter of 2014. Excluding the impact of the repos refinancing, net interest margin was flat when compared to the previous quarter. BPNA’s loan portfolio increased by approximately $76 million, excluding the impact of the Doral Acquisition, mainly driven by commercial loans which grew by approximately $107.4 million, or 6%. The net interest income was $52.1 million, compared with $49.8 million for the fourth quarter of 2014, excluding the impact of the previously mentioned repos refinancing. The contribution from the Doral Aquisition to BPNA’s net interest income was $4.7 million.

Non-interest income

Non-interest income was $115.2 million for the first quarter of 2015, an increase of $11.9 million when compared with the fourth quarter of 2014. Excluding the $1.1 million in other income related to servicing the Doral Acquisition's co-bidders assets during this quarter and the $1.7 million impact of the gain on bulk sales of NPLs during the fourth quarter of 2014 as part of the BPNA reorganization, non-interest income increased by $12.4 million when compared to the fourth quarter of 2014, driven primarily by the following:

  • Favorable variance in the FDIC loss-share expense by $22.8 million driven by a positive variance in the mirror accounting on credit impairment losses by $11.5 million, a positive variance in the fair value of the true-up payment obligation by $7.0 million, and higher mirror accounting on reimbursable expenses by $2.8 million. See additional details about covered portfolio and FDIC indemnity asset in Table O.
  • Favorable variance in adjustments to indemnity reserves by $8.8 million due to lower provision on loans previously sold with recouse and the reversal of $3.2 million in the indemnity reserve related to the bulk sale of non-performing assets completed during the first quarter of 2013.
  • Higher mortgage banking activities income by $4.1 million mainly due to higher mortgage servicing fees by $2.9 million and a favorable variance in the valuation adjustment on mortgage servicing rights of $1.3 million at the BPPR segment. Refer to Table F for additional details on mortgage banking activities.

These positive variances were partially offset by:

  • Unfavorable variance in net gain/(loss) on sale of loans, including valuation adjustments on loans held-for-sale by $9.3 million mostly at BPNA due to individual commercial NPLs sales during the fourth quarter of 2014, as part of workout activities.
  • Lower other service fees by $7.5 million mostly at the BPPR segment due to lower contingent insurance commission revenues, which were realized during the fourth quarter of 2014, lower credit card fees and lower fees from the sale and administration of investment products due to lower transaction volumes in the first quarter of 2015. Refer to Table F for a breakdown of other service fees.
  • Negative variance in other operating income by $5.0 million mainly due to lower aggregated net earnings from investments accounted under the equity method.

Refer to Table B for further details.

Financial Impact of FDIC-Assisted Transaction    
 
(Unaudited)   Quarters ended
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14
 

Income Statement

Interest income on covered loans $ 57,431 $ 61,285 $ 81,098
Total FDIC loss share income (expense) 4,139 (18,693 ) (24,206 )
Provision for loan losses     10,324     (3,646 )     25,714  
Total revenues less provision for loan losses   $ 51,246   $ 46,238     $ 31,178  
 

Balance Sheet

Loans covered under loss-sharing agreements with FDIC $ 2,456,552 $ 2,542,662 $ 2,870,054
FDIC loss share asset 409,844 542,454 833,721
FDIC true-up payment obligation     125,140     129,304       126,345  

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

Operating expenses

Operating expenses decreased by $17.7 million when compared with the fourth quarter of 2014. Excluding the impact of the significant events detailed in the Adjusted Results (Non-GAAP) tables above, operating expenses decreased by $19.2 million compared to the fourth quarter of 2014, driven primarily by:

  • Lower professional fees by $11.9 million, mainly due to legal fees incurred in connection with the FDIC arbitration proceedings and other corporate matters during the previous quarter.
  • Lower other operating taxes by $5.8 million, mainly due to elimination of the Puerto Rico gross tax and lower municipal license tax, partially offset by an increase of personal property tax.
  • Lower other operating expenses by $4.5 million, mainly due to lower sundry losses and legal reserves.
  • Lower FDIC deposit insurance by $2.9 million, mainly driven by improvements in the asset quality and earnings trends.
  • Lower business promotion by $2.7 million, mainly as a result of lower seasonal advertising expense at BPPR.
  • Lower net occupancy expense by $0.9 million, mainly at BPNA as a result of lower rent expense.

These decreases were partially offset by:

  • Higher personnel cost by $6.3 million, mainly at BPPR due to pension and postretirement expense related to adjustments to the mortality table and discount rate used for actuarial assumptions; higher incentives and salaries and higher social security and unemployment expenses as a portion of these taxes had reached their limit for the fourth quarter of 2014.
  • Higher other real estate owned expenses by $3.1 million, mainly at BPPR due to higher property taxes and higher write-downs.

Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, amounted to $29.0 million for the first quarter of 2015, compared with $27.2 million for the fourth quarter of 2014. The increase was principally due to higher OREO expenses from the covered portfolio at BPPR.

Full-time equivalent employees (“FTEs”), including discontinued operations, were 8,203 as of March 31, 2015, compared with 7,752 as of December 31, 2014, and 8,053 as of March 31, 2014. The increase is due to the Doral Acquisition.

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

Income taxes

Income tax expense amounted to $32.6 million for first quarter of 2015, or $35.5 million on an adjusted basis, compared to $12.5 million for the previous quarter. The effective income tax rate for the first quarter of 2015, on an adjusted basis, was 28%, compared to 14% for the fourth quarter of 2014. The increase in the effective tax rate was driven by the composition and source of taxable income for the quarter. Refer to earnings highlights section above for a description of adjusted results.

While the current impact on taxable income of the U.S. reorganization and the integration of the Doral Acquisition continue to support a full valuation of the deferred tax asset at the U.S. mainland operations, the incremental earnings expected to be generated after stabilization would be considered additional positive evidence in our analysis that could result in the eventual realization of a portion of this asset.

Credit Quality

The following table presents information on non-performing assets:

Non-Performing Assets      
(Unaudited)            
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14
Total non-performing loans held-in-portfolio, excluding covered loans $ 664,953 $ 630,483 $ 635,334
Non-performing loans held-for-sale 8,404 18,899 789
Other real estate owned (“OREO”), excluding covered OREO     128,170       135,500       136,965  
Total non-performing assets, excluding covered assets 801,527 784,882 773,088
Covered loans and OREO     133,211       148,099       182,659  
Total non-performing assets   $ 934,738     $ 932,981     $ 955,747  
Net charge-offs for the quarter (excluding covered loans)   $ 35,886     $ 50,187     $ 43,246  
 
 
Ratios (excluding covered loans):            
Non-covered loans held-in-portfolio (1) $ 21,012,930 $ 19,404,451 $ 21,611,777
Non-performing loans held-in-portfolio to loans held-in-portfolio (1) 3.16 % 3.25 % 2.94 %
Allowance for loan losses to loans held-in-portfolio 2.46 2.68 2.51
Allowance for loan losses to non-performing loans, excluding loans held-for-sale     77.63       82.43       85.40  
 
Refer to Table H for additional information.
 
Provision for Loan Losses
 
(Unaudited)   Quarters ended
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14
Provision (reversal) for loan losses - non-covered loans:
BPPR $ 31,913 $ 52,206 $ 53,915
BPNA     (2,202 )     (569 )     207  
Total provision for loan losses - non-covered loans     29,711       51,637       54,122  
Provision (reversal) for loan losses - covered loans     10,324       (3,646 )     25,714  
Total provision for loan losses   $ 40,035     $ 47,991     $ 79,836  
 

Credit Quality

The Corporation maintained stable credit quality during the first quarter of 2015, in spite of the challenging economic conditions that persist in Puerto Rico, reflecting of the improved risk profile of the loan portfolios and the result of strategic initiatives executed by the Corporation over the past several years. These results were impacted by the addition of certain non-performing loans due to the failure and related loan acquisition of Doral Bank. The US region continued to exhibit strong asset quality during the quarter, with low levels of delinquencies and charge-offs.

The credit quality performance for the first quarter of 2015 for the Corporation’s non-covered portfolios, including $1.6 billion as of March 31, 2015, of loans acquired in the Doral Acquisition was as follows:

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $64.5 million, as the fourth quarter of 2014 included the addition of the previously disclosed $75.0 million public sector borrower. Excluding this impact from the prior quarter, NPLs inflows increased by $10.6 million, mainly due to mortgage inflows related to the addition to NPL status of $16.6 million of loans previously serviced by Doral Bank under a servicing agreement that required Doral to advance principal and interest payments irrespective of borrower delinquencies.
  • Non-performing loans held-in-portfolio increased by $34.5 million during the quarter ended March 31, 2015, of which $27.9 million were attributable to Doral Bank’s failure and acquisition. BPPR mortgage NPLs includes the aforementioned $16.6 million of loans previously serviced by Doral, and the BPNA segment includes $7.4 million of acquired commercial loans placed in NPL status following the acquisition. At March 31, 2015, NPLs represented 3.2% of total loans held-in-portfolio, compared to 3.3% in December 31, 2014. The decrease was due mainly to the impact of the Doral portfolio on the total loan base.
  • Net charge-offs, excluding write-downs/(recoveries), totaled $35.9 million, or an annualized 0.72% of average non-covered loans held-in-portfolio in the first quarter of 2015, compared to $50.2 million, or 1.04%, in the fourth quarter of 2014. The decrease of $14.3 million was primarily driven by a decline of $15.8 million in the BPPR segment, mainly lower commercial NCOs. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan losses remained essentially flat decreasing by $3.5 million from the fourth quarter of 2014, mainly driven by the BPPR commercial portfolio. The general and specific reserves related to non-covered loans totaled $377.2 million and $139.0 million, respectively, at quarter-end, compared with $379.6 million and $140.1 million, respectively, as of December 31, 2014. The ratio of the allowance for loan losses to loans held-in-portfolio decreased to 2.46% in the first quarter of 2015, compared to 2.68% in the previous quarter, mostly due to impact of the Doral portfolio on the total loan base. Excluding Doral Bank portfolio, allowance to loans ratio was 2.66%.
  • The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 77.6%, compared to 82.4% in the previous quarter. Excluding the impact of Doral related NPLs, ALLL to NPLs ratio remained relatively flat at 81.0%.
  • The provision for loan losses for the first quarter of 2015 amounted to $29.7 million, a decline of $21.9 million from the previous quarter stemming from lower NCO activity in the BPPR segment, as mentioned above. The provision for the first quarter of 2015 represented 82.8% of net charge-offs.
Credit Quality by Segment      
(Unaudited)
(In thousands) Quarters ended
BPPR   31-Mar-15   31-Dec-14   31-Mar-14
Provision for loan losses $ 31,913 $ 52,206 $ 53,915
Net charge-offs 36,772 52,523 45,950
Total non-performing loans held-in-portfolio, excluding covered loans 638,017 611,383 532,223
Allowance / non-covered loans held-in-portfolio     2.92 %     3.07 %     2.72 %
 
  Quarters ended
BPNA   31-Mar-15   31-Dec-14   31-Mar-14
Provision for loan losses (reversal of provision) - Continuing operations $ (2,202 ) $ (569 ) $ 207
Provision for loan losses (reversal of provision) - Discontinued operations - - (6,764 )
Net charge-offs (recoveries) - Continuing operations (886 ) (2,336 ) 2,841
Net charge-offs (recoveries) - Discontinued operations - - (5,545 )
Total non-performing loans held-in-portfolio 26,936 19,100 103,111
Allowance / non-covered loans held-in-portfolio     0.72 %     0.88 %     1.91 %
 

BPPR Segment

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $70.1 million from the fourth quarter of 2014, mostly driven by lower commercial inflows of $85.3 million, primarily associated with the addition of a $75.0 million public sector borrower in the prior quarter. This decrease was in part offset by an increase in the mortgage NPL inflows of $15.4 million from the previous quarter, mainly driven by the addition of $16.6 million of loans previously serviced by Doral, as mentioned above and $2.1 million of acquired loans. Excluding this impact, mortgage NPL inflows decreased by $3.3 million.
  • Total non-performing loans held-in-portfolio increased by $26.6 million from the fourth quarter of 2014, mainly driven by higher mortgage NPLs of $24.5 million. Mortgage NPLs include the above mentioned $16.6 million impact of loans previously serviced by Doral. At March 31, 2015, NPLs to total loans held-in-portfolio was unchanged at 3.8%, compared to the fourth quarter of 2014.
  • Net charge-offs were $36.8 million, decreasing by $15.8 million from the fourth quarter of 2014, reflecting lower NCOs in all portfolios, including commercial, construction and consumer NCOs by $9.1 million, $2.6 million and $2.3 million, respectively. The ratio of net charge-offs to average loans held-in-portfolio decreased to 0.92% on an annualized basis from 1.33% in the previous quarter.
  • The allowance for loan losses was $484.3 million, a decrease of $4.9 million from the fourth quarter of 2014. The allowance for loan losses was 2.9% of loans held-in-portfolio, compared to 3.1% in the previous quarter. The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 75.9%, compared to 80.0% in the previous quarter. Excluding the impact of Doral related NPLs, ALLL to NPLs ratio remained relatively flat at 78.4%.
  • The provision for loan losses for the first quarter of 2015 amounted to $31.9 million, decreasing by $20.3 million from the previous quarter, predominantly driven by the aforementioned decline in NCO activity. The provision for the first quarter represented 86.8% of net charge-offs.

BPNA Segment

  • Total NPLs held-in-portfolio increased by $7.8 million of which $7.4 million were related to commercial loans acquired in the Doral Acquisition. NPL to total loans held-in-portfolio was 0.61%, compared to 0.55% in the fourth quarter of 2014. Excluding Doral loans that were placed in NPL status following the acquisition, NPL to loans ratio was 0.54%.
  • Net charge-offs, excluding write-downs related to loans transfered to held for sale amounted to recoveries of $0.9 million, compared to recoveries of $2.3 million in the fourth quarter of 2014. The ratio of net charge-offs to average loans held-in-portfolio was a recovery of 9 basis points on an annualized basis, compared to a recovery of 27 basis points in the previous quarter.
  • The allowance for loan losses increased slightly to $31.9 million from $30.6 million in the previous quarter, mainly due to loan growth. The allowance for loan losses as a percentage of loans held-in-portfolio decreased to 0.72% from 0.88% in the previous quarter. The ratio of allowance for loan losses to NPLs held-in-portfolio stood at 118.6%, compared to 160.1% in the previous quarter. The decrease in allowance coverage ratios was mainly related to the impact of the Doral portfolio. Excluding Doral, the previously referred ratios stood at 0.90% and 167.1%, respectively.
  • The provision for loan losses in the first quarter of 2015 amounted to a provision release of $2.2 million, primarily due to a $2.7 million recovery from bulk loan sales.
Financial Condition Highlights      
 
(Unaudited)    
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14
Money market, trading and investment securities $ 8,254,845 $ 7,541,148 $ 8,056,145
Loans not covered under loss sharing agreements with the FDIC 21,012,930 19,404,451 21,611,777
Loans covered under loss sharing agreements with the FDIC 2,456,552 2,542,662 2,870,054
Total assets 35,624,840 33,096,695 36,744,162
Deposits 27,273,689 24,807,535 27,265,651
Borrowings 2,891,156 3,004,685 3,715,821
Liabilities from discontinued operations 1,930 5,064 -
Total liabilities 31,247,720 28,829,313 31,998,415
Stockholders’ equity     4,377,120     4,267,382     4,745,747
 

Impact of Assets and Liabilities Acquired from Doral Bank at March 31, 2015
(Unaudited)  
   
(In thousands)   31-Mar-15 (1)
 
Cash and due from banks $ 111,492
Investment securities available-for-sale 170,340
Loans held-for-sale 24,483
Loans held-in-portfolio 1,641,930
Premises and equipment, net 2,559
Other real estate 1,007
Accrued income receivable 9,017
Other assets 183,114
Goodwill 42,634
Other intangible assets     23,376
Total assets   $ 2,209,952
 
Deposits $ 2,026,835
Other liabilities     72,538
Total liabilities   $ 2,099,373
         
Net assets   $ 110,579
(1) These balances are preliminary and are subject to customary purchase accounting adjustments.
 

Excluding approximately $2.2 billion in assets acquired from Doral Bank, total assets increased by $318 million from the fourth quarter of 2014, driven by:

  • An increase of $485 million in money market investments due mostly to increases in liquidity at BPPR of $256 million and BPNA of $229 million.
  • An increase of $63 million in investment securities available-for-sale mainly due to a $125 million increase at BPPR mostly from MBS and government securities, which were partially offset by a decrease of $62 million at BPNA due to sales of agency securities and CMOs.

    These increases were partially offset by:
  • A decrease of $133 million in the FDIC loss share asset mainly due to amortization, collections from the FDIC and recoveries on covered assets subject to reimbursement to the FDIC. Refer to Table O for the activity in the carrying amount of the FDIC indemnity asset
  • A decrease of $86 million in loans covered under loss sharing agreements with the FDIC due to the normal run-off of the portfolio.

Excluding approximately $2.1 billion in liabilities acquired from Doral, total liabilities increased by $319 million from the fourth quarter of 2014, driven by:

  • An increase of $439 million in deposits from both BPPR and BPNA. Refer to Table G for additional information on deposits.

    offset by:
  • A decrease of $139 million in federal funds purchased and assets sold under agreements to repurchase, largely at BPNA by $215 million, which was partially offset by an increase at BPPR of $76 million.

Stockholders’ equity increased by $110 million from the fourth quarter of 2014, mainly as a result of net income for the quarter of $75 million, and a decrease in accumulated other comprehensive loss of $35 million.

Common equity tier-1 ratio and tangible book value per share were 15.82% and $36.33, respectively, at March 31, 2015 compared to 15.89% and $35.89 at December 31, 2014. Refer to Table A for capital ratios.

Forward-Looking Statements

The information included in this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in forward-looking statements. Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) the fiscal and monetary policies of the federal government and its agencies; (iv) changes in federal bank regulatory and supervisory policies, including required levels of capital and the impact of proposed capital standards on our capital ratios; (v) the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our businesses, business practices and cost of operations; (vi) regulatory approvals that may be necessary to undertake certain actions or consummate strategic transactions such as acquisitions and dispositions; (vii) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate markets in Puerto Rico and the other markets in which borrowers are located; (viii) the performance of the stock and bond markets; (ix) competition in the financial services industry; (x) additional Federal Deposit Insurance Corporation assessments; (xi) possible legislative, tax or regulatory changes; and (xii) risks related to the Doral Acquisition, including (a) our ability to maintain customer relationships, including managing any potential customer confusion caused by the alliance structure, (b) risks associated with the limited amount of diligence able to be conducted by a buyer in an FDIC transaction and (c) difficulties in converting or integrating the Doral branches or difficulties in providing transition support to alliance co-bidders. For a discussion of such factors and certain risks and uncertainties to which the Corporation is subject, see the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014, as well as its filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, the Corporation assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

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 Monday, April 27, 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 Tuesday, May 5, 2015. The replay dial in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10062799.

Popular, Inc.

Financial Supplement to First 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 - Intentionally Left Blank (Consolidated Average Balances and Yield / Rate Analysis - YTD)
 
Table F - Mortgage Banking Activities & 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 Covered Loans
 
Table P - Restructuring Charges
 
 

POPULAR, INC.
Financial Supplement to First Quarter 2015 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
     
     
Quarters ended
    31-Mar-15   31-Dec-14   31-Mar-14
Basic EPS from continuing operations $ 0.71 $ 0.38 $ 0.64
Basic EPS from discontinued operations $ 0.01 $ 0.09 $ 0.19
Total Basic EPS $ 0.72 $ 0.47 $ 0.83
Diluted EPS from continuing operations $ 0.71 $ 0.37 $ 0.64
Diluted EPS from discontinued operations $ 0.01 $ 0.09 $ 0.19
Total Diluted EPS $ 0.72 $ 0.46 $ 0.83
Average common shares outstanding 102,939,928 102,859,416 102,799,752
Average common shares outstanding - assuming dilution 103,136,309 103,166,349 103,198,102
Common shares outstanding at end of period 103,486,927 103,476,847 103,455,535
 
Market value per common share $34.39 $34.05 $30.99
 
Market capitalization - (In millions) $3,559 $3,523 $3,206
 
Return on average assets 0.90% 0.58% 0.97%
.
Return on average common equity 7.02% 4.41% 7.39%
 

Net interest margin [1]

4.57% 4.70% 4.70%
 
Common equity per share $41.81 $40.76 $45.39
 

Tangible common book value per common share (non-GAAP)

$36.33 $35.89 $38.71
 

Tangible common equity to tangible assets (non-GAAP)

10.72% 11.39% 11.11%
 

Tier 1 capital [2]

16.19%

18.13% 19.35%

 

Total capital [2]

18.79%

19.41% 20.62%
 

Tier 1 leverage [2]

11.84%

11.94% 13.07%
 

Common equity Tier 1 capital [2] [3]

 

15.82%

  15.89%   15.07%

[1] Not on a taxable equivalent basis. For the quarter ended December 31, 2014, excludes the impact of $18.6 million fees, related to repos refinancing. US GAAP Net interest margin was 4.45% for the fourth quarter. Refer to Tables D for reconciliation.

[2] Ratios for the quarter ending March 31, 2015 were calculated based on Basel III Rules, while ratios for the previous periods were calculated based on the then applicable Basel I rules.

[3] Capital ratios for the current quarter are preliminary.
 

POPULAR, INC.
Financial Supplement to First Quarter 2015 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
  Quarters ended   Variance   Quarter ended   Variance
(In thousands, except per share information)   31-Mar-15   31-Dec-14  

Q1 2015

vs. Q4 2014

  31-Mar-14  

Q1 2015

vs. Q1 2014

Interest income:  
Loans $ 355,631 $ 357,570 $ (1,939 ) $ 377,602 $ (21,971 )
Money market investments 1,446 1,113 333 973 473
Investment securities 30,301 30,361 (60 ) 35,127 (4,826 )
Trading account securities     2,696       2,891       (195 )     5,257       (2,561 )
Total interest income     390,074       391,935       (1,861 )     418,959       (28,885 )
Interest expense:
Deposits 25,864 25,473 391 26,858 (994 )
Short-term borrowings 1,734 20,489 (18,755 ) 9,040 (7,306 )
Long-term debt     19,281       19,112       169       31,890       (12,609 )
Total interest expense     46,879       65,074       (18,195 )     67,788       (20,909 )
Net interest income 343,195 326,861 16,334 351,171 (7,976 )
Provision for loan losses - non-covered loans 29,711 51,637 (21,926 ) 54,122 (24,411 )
Provision (recovery of provision) for loan losses - covered loans     10,324       (3,646 )     13,970       25,714       (15,390 )
Net interest income after provision for loan losses     303,160       278,870       24,290       271,335       31,825  
Service charges on deposit accounts 39,017 39,456 (439 ) 39,359 (342 )
Other service fees 53,626 61,140 (7,514 ) 52,818 808
Mortgage banking activities 12,852 8,747 4,105 3,678 9,174
Net gain (loss) and valuation adjustments on investment securities - 893 (893 ) - -
Trading account profit (loss) 414 586 (172 ) 1,977 (1,563 )
Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale (79 ) 10,946 (11,025 ) 4,393 (4,472 )
Adjustments (expense) to indemnity reserves on loans sold (4,526 ) (13,348 ) 8,822 (10,347 ) 5,821
FDIC loss share income (expense) 4,139 (18,693 ) 22,832 (24,206 ) 28,345
Other operating income     9,792       13,637       (3,845 )     28,360       (18,568 )
Total non-interest income     115,235       103,364       11,871       96,032       19,203  
Operating expenses:
Personnel costs
Salaries 72,394 71,899 495 69,038 3,356
Commissions, incentives and other bonuses 18,458 18,439 19 13,099 5,359
Pension, postretirement and medical insurance 12,013 6,901 5,112 8,701 3,312
Other personnel costs, including payroll taxes     13,593       13,497       96       13,463       130  
Total personnel costs 116,458 110,736 5,722 104,301 12,157
Net occupancy expenses 21,709 23,877 (2,168 ) 21,360 349
Equipment expenses 13,411 13,091 320 11,412 1,999
Other taxes 8,574 14,343 (5,769 ) 13,663 (5,089 )
Professional fees 75,528 80,383 (4,855 ) 66,999 8,529
Communications 6,176 6,119 57 6,685 (509 )
Business promotion 10,813 13,530 (2,717 ) 11,386 (573 )
FDIC deposit insurance 6,398 9,338 (2,940 ) 10,978 (4,580 )
Loss on early extinguishment of debt - 532 (532 ) - -
Other real estate owned (OREO) expenses 23,069 20,016 3,053 6,440 16,629
Credit and debit card processing, volume, interchange and other expenses 4,821 5,093 (272 ) 5,196 (375 )
Other operating expenses 12,528 17,004 (4,476 ) 17,153 (4,625 )
Amortization of intangibles 2,104 2,083 21 2,026 78
Restructuring costs     10,753       13,861       (3,108 )     -       10,753  
Total operating expenses     312,342       330,006       (17,664 )     277,599       34,743  
Income from continuing operations before income tax 106,053 52,228 53,825 89,768 16,285
Income tax expense     32,568       12,472       20,096       23,264       9,304  
Income from continuing operations 73,485 39,756 33,729 66,504 6,981
Income from discontinued operations, net of tax     1,341       9,086       (7,745 )     19,905       (18,564 )
Net income   $ 74,826     $ 48,842     $ 25,984     $ 86,409     $ (11,583 )
Net income applicable to common stock   $ 73,895     $ 47,911     $ 25,984     $ 85,478     $ (11,583 )
Net income per common share - basic:
Net income from continuing operations $ 0.71 $ 0.38 $ 0.33 $ 0.64 $ 0.07
Net income from discontinued operations   $ 0.01     $ 0.09     $ (0.08 )   $ 0.19     $ (0.18 )
Net income per common share - basic   $ 0.72     $ 0.47     $ 0.25     $ 0.83     $ (0.11 )
Net income per common share - diluted:
Net income from continuing operations $ 0.71 $ 0.37 $ 0.34 $ 0.64 $ 0.07
Net income from discontinued operations   $ 0.01     $ 0.09     $ (0.08 )   $ 0.19     $ (0.18 )
Net income per common share - diluted   $ 0.72     $ 0.46     $ 0.26     $ 0.83     $ (0.11 )
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
            Variance
Q1 2015 vs.
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14   Q4 2014
Assets:
Cash and due from banks $ 495,776 $ 381,095 $ 387,917 $ 114,681
Money market investments 2,307,215 1,822,386 1,622,433 484,829
Trading account securities, at fair value 134,294 138,527 359,247 (4,233 )
Investment securities available-for-sale, at fair value 5,548,703 5,315,159 5,768,890 233,544
Investment securities held-to-maturity, at amortized cost 101,595 103,170 139,019 (1,575 )
Other investment securities, at lower of cost or realizable value 163,038 161,906 166,556 1,132
Loans held-for-sale, at lower of cost or fair value 160,602 106,104 94,877 54,498
Loans held-in-portfolio:
Loans not covered under loss sharing agreements with the FDIC 21,110,147 19,498,286 21,703,050 1,611,861
Loans covered under loss sharing agreements with the FDIC 2,456,552 2,542,662 2,870,054 (86,110 )
Less: Unearned income 97,217 93,835 91,273 3,382
    Allowance for loan losses     588,697       601,792       640,348       (13,095 )
    Total loans held-in-portfolio, net     22,880,785       21,345,321       23,841,483       1,535,464  
FDIC loss share asset 409,844 542,454 833,721 (132,610 )
Premises and equipment, net 492,291 494,581 513,855 (2,290 )
Other real estate not covered under loss sharing agreements with the FDIC 128,170 135,500 136,965 (7,330 )
Other real estate covered under loss sharing agreements with the FDIC 113,557 130,266 158,747 (16,709 )
Accrued income receivable 129,639 121,818 125,895 7,821
Mortgage servicing assets, at fair value 149,024 148,694 156,529 330
Other assets 1,842,934 1,646,443 1,747,646 196,491
Goodwill 508,310 465,676 647,757 42,634
Other intangible assets     59,063       37,595       42,625       21,468  
Total assets   $ 35,624,840     $ 33,096,695     $ 36,744,162     $ 2,528,145  
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing $ 6,285,202 $ 5,783,748 $ 6,326,596 $ 501,454
    Interest bearing     20,988,487       19,023,787       20,939,055       1,964,700  
    Total deposits     27,273,689       24,807,535       27,265,651       2,466,154  
Federal funds purchased and assets sold under agreements to repurchase 1,132,643 1,271,657 2,208,213 (139,014 )
Other short-term borrowings 1,200 21,200 1,200 (20,000 )
Notes payable 1,757,313 1,711,828 1,506,408 45,485
Other liabilities 1,080,945 1,012,029 1,016,943 68,916
Liabilities from discontinued operations     1,930       5,064       -       (3,134 )
Total liabilities     31,247,720       28,829,313       31,998,415       2,418,407  
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,037 1,036 1,035 1
Surplus 4,197,932 4,196,458 4,171,817 1,474
Retained earnings 327,613 253,717 679,908 73,896
Treasury stock (5,222 ) (4,117 ) (898 ) (1,105 )
Accumulated other comprehensive loss     (194,400 )     (229,872 )     (156,275 )     35,472  
    Total stockholders’ equity     4,377,120       4,267,382       4,745,747       109,738  
Total liabilities and stockholders’ equity   $ 35,624,840     $ 33,096,695     $ 36,744,162     $ 2,528,145  
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
                                 
  Quarter ended Quarter ended Quarter ended Variance Variance
31-Mar-15 31-Dec-14 31-Mar-14 Q1 2015 vs. Q4 2014 Q1 2015 vs. Q1 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 $ 7,767     $ 34.4   1.78 % $ 7,220     $ 34.4   1.90 % $ 7,566     $ 41.4   2.19 % $ 547     $ 0.0     (0.12 )% $ 201       ($7.0 )   (0.41 ) %
 
Loans not covered under loss sharing agreements with the FDIC:
Commercial 8,383 100.9 4.88 8,219 101.9 4.92 8,487 100.7 4.81 164 (1.0 ) (0.04 ) (104 ) 0.2 0.07
Construction 435 6.1 5.67 233 3.8 6.41 186 4.8 10.54 202 2.3 (0.74 ) 249 1.3 (4.87 )
Mortgage 6,733 85.9 5.10 6,538 84.1 5.15 6,691 86.9 5.20 195 1.8 (0.05 ) 42 (1.0 ) (0.10 )
Consumer 3,845 95.4 10.07 3,884 96.6 9.86 3,761 93.8 10.12 (39 ) (1.2 ) 0.21 84 1.6 (0.05 )
Lease financing   569       10.0   7.01     555       9.9   7.11     544       10.3   7.57     14       0.1     (0.10 )   25       (0.3 )   (0.56 )
Total loans not covered under loss sharing agreements with the FDIC 19,965 298.3 6.03 19,429 296.3 6.07 19,669 296.5 6.09 536 2.0 (0.04 ) 296 1.8 (0.06 )
Loans covered under loss sharing agreements with the FDIC   2,540       57.4   9.14     2,615       61.3   9.31     2,934       81.1   11.18     (75 )     (3.9 )   (0.17 )   (394 )     (23.7 )   (2.04 )
Total loans   22,505       355.7   6.38     22,044       357.6   6.45     22,603       377.6   6.75     461       (1.9 )   (0.07 )   (98 )     (21.9 )   (0.37 )
Total interest earning assets   30,272     $ 390.1   5.20 %   29,264     $ 392.0   5.33 %   30,169     $ 419.0   5.61 %   1,008       ($1.9 )   (0.13 )%   103       ($28.9 )   (0.41 ) %
Allowance for loan losses (609 ) (618 ) (617 ) 9 8
Other non-interest earning assets 4,143 4,171 4,689 (28 ) (546 )
Assets from discontinued operations   -     491     1,955     (491 )   (1,955 )
Total average assets $ 33,806   $ 33,308   $ 36,196   $ 498   $ (2,390 )
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $ 4,983 $ 4.2 0.34 % $ 4,788 $ 4.0 0.33 % $ 4,736 $ 3.8 0.32 % $ 195 $ 0.2 0.01 % $ 247 $ 0.4 0.02 %
Savings 6,892 3.9 0.23 6,788 3.8 0.22 6,691 3.6 0.22 104 0.1 0.01 201 0.3 0.01
Time deposits   7,747       17.8   0.93     7,409       17.7   0.95     7,538       19.5   1.05     338       0.1     (0.02 )   209       (1.7 )   (0.12 )
Total interest bearing deposits 19,622 25.9 0.53 18,985 25.5 0.53 18,965 26.9 0.57 637 0.4 - 657 (1.0 ) (0.04 )
Borrowings[1]   2,877       21.0   2.93     2,992       21.0   2.80     3,868       40.9   4.25     (115 )     -     0.13     (991 )     (19.9 )   (1.32 )
Total interest bearing liabilities   22,499       46.9   0.84     21,977       46.5   0.84     22,833       67.8   1.20     522       0.4     -     (334 )     (20.9 )   (0.36 )
Net interest spread 4.36 % 4.49 % 4.41 % (0.13 )% (0.05 ) %
Non-interest bearing deposits 5,963 5,636 5,584 327 379
Other liabilities 1,021 849 894 172 127
Liabilities from discontinued operations 3 486 2,146 (483 ) (2,143 )
Stockholders' equity   4,320     4,360     4,739     (40 )   (419 )
Total average liabilities and stockholders' equity $ 33,806   $ 33,308   $ 36,196   $ 498   $ (2,390 )
 
Adjusted net interest income / margin non-taxable equivalent basis $ 343.2   4.57 % $ 345.5   4.70 % $ 351.2   4.70 %   ($2.3 )   (0.13 )%   ($8.0 )   (0.13 ) %
Impact of fees related to repos refinancing $ 18.6
Net interest income (expense)/margin non-taxable equivalent basis $ 343.2   4.57 % $ 326.9   4.45 % $ 351.2   4.70 %
 
(1) Borrowing cost for the fourth quarter of 2014, including the fees related to repo restructuring, was 5.27%.
 

Popular, Inc.

Financial Supplement to First Quarter 2015 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE

[THIS PAGE INTENTIONALLY LEFT BLANK]

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
 
Mortgage Banking Activities         Variance
  Quarters ended Q1 2015 vs.   Q1 2015 vs.
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14   Q4 2014   Q1 2014
Mortgage servicing fees, net of fair value adjustments:
  Mortgage servicing fees $ 12,248 $ 9,364 $ 10,748 $ 2,884 $ 1,500
  Mortgage servicing rights fair value adjustments     (4,929 )     (6,259 )     (8,096 )     1,330       3,167  
Total mortgage servicing fees, net of fair value adjustments     7,319       3,105       2,652       4,214       4,667  
Net gain on sale of loans, including valuation on loans held-for-sale     7,280       8,382       7,176       (1,102 )     104  
Trading account (loss) profit:
Unrealized gains (losses) on outstanding derivative positions 17 (1 ) (760 ) 18 777
  Realized (losses) on closed derivative positions     (1,764 )     (2,739 )     (5,390 )     975       3,626  
Total trading account (loss)     (1,747 )     (2,740 )     (6,150 )     993       4,403  
Total mortgage banking activities   $ 12,852     $ 8,747     $ 3,678     $ 4,105     $ 9,174  
 
Other Service Fees   Variance
Quarters ended Q1 2015 vs. Q1 2015 vs.
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14   Q4 2014   Q1 2014
Other service fees:
Debit card fees $ 11,125 $ 10,929 $ 10,544 $ 196 $ 581
Insurance fees 12,041 17,711 11,719 (5,670 ) 322
Credit card fees 16,149 17,493 16,083 (1,344 ) 66
Sale and administration of investment products 5,930 7,193 6,457 (1,263 ) (527 )
Trust fees 4,602 4,469 4,463 133 139
  Other fees     3,779       3,345       3,552       434       227  
Total other service fees   $ 53,626     $ 61,140     $ 52,818     $ (7,514 )   $ 808  
 

Popular, Inc.          
Financial Supplement to First Quarter 2015 Earnings Release
Table G - Loans and Deposits
(Unaudited)
 
Loans - Ending Balances
Variance
(In thousands)   31-Mar-15   31-Dec-14   31-Mar-14  

Q1 2015

vs. Q4 2014

 

Q1 2015

vs. Q1 2014

Loans not covered under FDIC loss sharing agreements:
Commercial $ 8,653,561 $ 8,134,267 $ 10,014,721 $ 519,294 $ (1,361,160 )
Construction 690,728 251,820 176,766 438,908 513,962
Legacy [1] 77,675 80,818 197,164 (3,143 ) (119,489 )
Lease financing 581,119 564,389 546,880 16,730 34,239
Mortgage 7,189,227 6,502,886 6,669,376 686,341 519,851
Consumer     3,820,620     3,870,271     4,006,870     (49,651 )     (186,250 )
Total non-covered loans held-in-portfolio $ 21,012,930 $ 19,404,451 $ 21,611,777 $ 1,608,479 $ (598,847 )
Loans covered under FDIC loss sharing agreements     2,456,552     2,542,662     2,870,054     (86,110 )     (413,502 )
Total loans held-in-portfolio   $ 23,469,482   $ 21,947,113   $ 24,481,831   $ 1,522,369     $ (1,012,349 )
Loans held-for-sale:
Commercial $ 8,240 $ 309 $ - $ 7,931 $ 8,240
Legacy [1] - 319 - (319 ) -
Mortgage 152,362 100,166 94,877 52,196 57,485
Consumer     -     5,310     -     (5,310 )     -  
Total loans held-for-sale   $ 160,602   $ 106,104   $ 94,877   $ 54,498     $ 65,725  
Total loans   $ 23,630,084   $ 22,053,217   $ 24,576,708   $ 1,576,867     $ (946,624 )
[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)   31-Mar-15   31-Dec-14   31-Mar-14  

Q1 2015

vs. Q4 2014

 

Q1 2015

vs. Q1 2014

Demand deposits [1] $ 7,163,635 $ 6,606,060 $ 7,020,844 $ 557,575 $ 142,791
Savings, NOW and money market deposits (non-brokered) 10,932,870 10,320,782 11,420,642 612,088 (487,772 )
Savings, NOW and money market deposits (brokered) 409,113 406,248 581,562 2,865 (172,449 )
Time deposits (non-brokered) 7,243,414 5,960,401 6,474,430 1,283,013 768,984
Time deposits (brokered CDs)     1,524,657     1,514,044     1,768,173     10,613       (243,516 )
Total deposits   $ 27,273,689   $ 24,807,535   $ 27,265,651   $ 2,466,154     $ 8,038  
[1] Includes interest and non-interest bearing demand deposits.                
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
              Variance
(Dollars in thousands)   31-Mar-15  

As a % of

loans HIP by

category

    31-Dec-14  

As a % of

loans HIP by

category

    31-Mar-14  

As a % of

loans HIP by

category

   

Q1 2015

vs. Q4 2014

 

Q1 2015

vs. Q1 2014

Non-accrual loans:  
Commercial $ 274,438 3.2 % $ 260,225 3.2 % $ 306,929 3.1 % $ 14,213 $ (32,491 )
Construction 13,214 1.9 13,812 5.5 22,464 12.7 (598 ) (9,250 )
Legacy [1] 2,288 2.9 1,545 1.9 11,608 5.9 743 (9,320 )
Lease financing 2,506 0.4 3,102 0.5 3,050 0.6 (596 ) (544 )
Mortgage 328,615 4.6 304,913 4.7 252,021 3.8 23,702 76,594
Consumer     43,892   1.1       46,886   1.2       39,262   1.0       (2,994 )     4,630  
Total non-performing loans held-in-
portfolio, excluding covered loans 664,953 3.2 % 630,483 3.3 % 635,334 2.9 % 34,470 29,619
Non-performing loans held-for-sale [2] 8,404 18,899 789 (10,495 ) 7,615
Other real estate owned (“OREO”),
excluding covered OREO     128,170           135,500           136,965           (7,330 )     (8,795 )
Total non-performing assets,
excluding covered assets 801,527 784,882 773,088 16,645 28,439
Covered loans and OREO     133,211           148,099           182,659           (14,888 )     (49,448 )
Total non-performing assets   $ 934,738         $ 932,981         $ 955,747         $ 1,757     $ (21,009 )
Accruing loans past due 90 days or more [3]   $ 454,681         $ 447,990         $ 409,460         $ 6,691     $ 45,221  
Ratios excluding covered loans:
Non-performing loans held-in-portfolio
to loans held-in-portfolio 3.16 % 3.25 % 2.94 %
Allowance for loan losses to loans
held-in-portfolio 2.46 2.68 2.51
Allowance for loan losses to
non-performing loans, excluding loans
held-for-sale     77.63           82.43           85.40              
Ratios including covered loans:
Non-performing assets to total assets 2.62 % 2.82 % 2.60 %
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.92 2.95 2.69
Allowance for loan losses to loans
held-in-portfolio 2.51 2.74 2.62
Allowance for loan losses to non-performing
loans, excluding loans held-for-sale     85.99           92.82           97.13              
[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 March 31, 2015 consisted of $225 thousand in mortgage loans and $8.2 million in commercial loans (December 31, 2014 - $14.0 million in mortgage loans, $309 thousand in commercial loans and $4.5 million in consumer loans; March 31, 2014 - $789 thousand in mortgage 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 $134 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of March 31, 2015 (December 31, 2014 - $125 million; March 31, 2014 - $117 million). Furthermore, the Corporation has approximately $69 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 (December 31, 2014 - $66 million; March 31, 2014 - $52 million).
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
             
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
31-Mar-15   31-Dec-14
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 257,910 $ 2,315 $ 260,225 $ 244,425 $ 7,906 $ 252,331
Plus:
New non-performing loans[1] 27,426 8,030 35,456 112,769 1,245 114,014
Less:
Non-performing loans transferred to OREO (1,069 ) - (1,069 ) (2,072 ) - (2,072 )
Non-performing loans charged-off (8,375 ) (426 ) (8,801 ) (17,492 ) (1,298 ) (18,790 )
Loans returned to accrual status / loan collections (11,261 ) (112 ) (11,373 ) (79,720 ) (2,895 ) (82,615 )
Loans transferred to held-for-sale - - - - (3,025 ) (3,025 )
  Non-performing loans transferred from (to) discontinued operations     -       -       -       -       382       382  
Ending balance NPLs   $ 264,631     $ 9,807     $ 274,438     $ 257,910     $ 2,315     $ 260,225  

[1] New non-performing loans includes $1.2 million at BPPR and $7.4 million at BPNA from Doral Acquisition.

 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
31-Mar-15   31-Dec-14
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 13,812 $ - $ 13,812 $ 19,148 $ - $ 19,148
Plus:
New non-performing loans 456 - 456 573 - 573
Less:
Non-performing loans charged-off - - - (244 ) - (244 )
Loans returned to accrual status / loan collections     (1,054 )     -       (1,054 )     (5,665 )     -       (5,665 )
Ending balance NPLs   $ 13,214     $ -     $ 13,214     $ 13,812     $ -     $ 13,812  
 

             
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
31-Mar-15   31-Dec-14
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 295,629 $ 9,284 $ 304,913 $ 283,433 $ 11,692 $ 295,125
Plus:
New non-performing loans[1] 107,385 6,232 113,617 91,977 8,159 100,136
Less:
Non-performing loans transferred to OREO (4,845 ) - (4,845 ) (1,051 ) - (1,051 )
Non-performing loans charged-off (8,158 ) (123 ) (8,281 ) (8,951 ) (96 ) (9,047 )
Loans returned to accrual status / loan collections (69,857 ) (8,970 ) (78,827 ) (69,779 ) (4,309 ) (74,088 )
Loans transferred to held-for-sale     -       2,038       2,038       -       (6,162 )     (6,162 )
Ending balance NPLs   $ 320,154     $ 8,461     $ 328,615     $ 295,629     $ 9,284     $ 304,913  

[1] New non-performing loans includes $16.6 million of loans previously serviced by Doral.

 
Legacy loans held-in-portfolio:
Quarter ended Quarter ended
31-Mar-15   31-Dec-14
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ - $ 1,545 $ 1,545 $ - $ 5,648 $ 5,648
Plus:
New non-performing loans - 1,000 1,000 - 213 213
Advances on existing non-performing loans - 33 33 - 97 97
Less:
Non-performing loans charged-off - (141 ) (141 ) - (744 ) (744 )
Loans returned to accrual status / loan collections - (149 ) (149 ) - (2,791 ) (2,791 )
Loans transferred to held-for-sale     -       -       -       -       (878 )     (878 )
Ending balance NPLs   $ -     $ 2,288     $ 2,288     $ -     $ 1,545     $ 1,545  
 
Total non-performing loans held-in-portfolio (excluding consumer loans):
Quarter ended Quarter ended
31-Mar-15   31-Dec-14
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $ 567,351 $ 13,144 $ 580,495 $ 547,006 $ 25,246 $ 572,252
Plus:
New non-performing loans 135,267 15,262 150,529 205,319 9,617 214,936
Advances on existing non-performing loans - 33 33 - 97 97
Less:
Non-performing loans transferred to OREO (5,914 ) - (5,914 ) (3,123 ) - (3,123 )
Non-performing loans charged-off (16,533 ) (690 ) (17,223 ) (26,687 ) (2,138 ) (28,825 )
Loans returned to accrual status / loan collections (82,172 ) (9,231 ) (91,403 ) (155,164 ) (9,995 ) (165,159 )
Loans transferred to held-for-sale - 2,038 2,038 - (10,065 ) (10,065 )
Non-performing loans transferred from (to) discontinued operations     -       -       -       -       382       382  
Ending balance NPLs   $ 597,999     $ 20,556     $ 618,555     $ 567,351     $ 13,144     $ 580,495  
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
  Quarter ended Quarter ended Quarter ended
    31-Mar-15   31-Dec-14   31-Mar-14  
(Dollars in thousands)   Non-covered loans   Covered loans   Total   Non-covered loans   Covered loans   Total   Non-covered loans   Covered loans   Total  
Balance at beginning of period $ 519,719 $ 82,073   $ 601,792 $ 521,687 $ 89,688   $ 611,375 $ 538,463 $ 102,092   $ 640,555
Provision for loan losses - Continuing operations 29,711 10,324 40,035 51,637 (3,646 ) 47,991 54,122 25,714 79,836
Provision (reversal of provision) for loan losses - Discontinued operations     -       -       -       -       -       -       (6,764 )     -       (6,764 )  
      549,430       92,397       641,827       573,324       86,042       659,366       585,821       127,806       713,627    
Net loans charged-off (recovered):
BPPR
Commercial 4,802 11,599 16,401 13,890 3,230 17,120 15,173 7,648 22,821
Construction (2,925 ) 5,771 2,846 (279 ) (1,172 ) (1,451 ) (1,378 ) 21,092 19,714
Lease financing 769 - 769 751 (6 ) 745 656 - 656
Mortgage 10,473 3,281 13,754 12,228 2,725 14,953 8,516 1,656 10,172
Consumer     23,653       (727 )     22,926       25,933       (808 )     25,125       22,983       (363 )     22,620  
Total BPPR     36,772       19,924       56,696       52,523       3,969       56,492       45,950       30,033       75,983  
 
BPNA
Commercial (479 ) - (479 ) (900 ) - (900 ) 1,987 - 1,987
Construction - - - (2 ) - (2 ) (176 ) - (176 )
Legacy [1] (1,828 ) - (1,828 ) (3,877 ) - (3,877 ) (4,209 ) - (4,209 )
Mortgage 154 - 154 (93 ) - (93 ) 870 - 870
Consumer 1,267 - 1,267 2,536 - 2,536 4,369 - 4,369
Discontinued operations     -       -       -       -       -       -       (5,545 )     -       (5,545 )  
Total BPNA     (886 )     -       (886 )     (2,336 )     -       (2,336 )     (2,704 )     -       (2,704 )  
Total loans charged-off (recovered) - Popular, Inc.     35,886       19,924       55,810       50,187       3,969       54,156       43,246       30,033       73,279    
Net recoveries (write-downs) [3]     2,680       -       2,680       (3,418 )     -       (3,418 )     -       -       -    
Balance at end of period   $ 516,224     $ 72,473     $ 588,697     $ 519,719     $ 82,073     $ 601,792     $ 542,575     $ 97,773     $ 640,348    
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 0.72 % 1.00 % 1.04 % 0.99 % 0.80 % 1.20 %
Provision for loan losses to net charge-offs [2] 0.83 x 0.72 x 0.99 x 0.85 x 1.10 x 1.00 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 0.92 % 1.22 % 1.33 % 1.22 % 1.16 % 1.62 %
Provision for loan losses to net charge-offs [2] 0.87 x 0.74 x 0.99 x 0.86 x 1.17 x 1.05 x
 
BPNA
Annualized net charge-offs (recoveries) to average loans held-in-portfolio (0.09 ) % (0.27 ) % (0.19 ) %
Provision for loan losses to net charge-offs           N.M.           N.M.           N.M. x
[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] Excluding provision for loan losses and net write-down related to loans sold or reclassified to held-for-sale during the quarter ended December 31, 2014.

[3] Net write-downs for the quarter ended March 31, 2015 and December 31, 2014 are related to loans sold or reclassified to held-for-sale.

N.M. - Not meaningful.
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
 
                               
31-Mar-15
(Dollars in thousands)   Commercial   Construction   Legacy [3]   Mortgage  

Lease

financing

  Consumer   Total [2]
Specific ALLL $ 69,946 $ 158 $ - $ 42,570 $ 687 $ 25,604 $ 138,965
Impaired loans [1] $ 417,377 $ 9,838 $ - $ 450,612 $ 2,924 $ 116,464 $ 997,215
Specific ALLL to impaired loans [1] 16.76 % 1.61 % - % 9.45 % 23.50 % 21.98 % 13.94 %
General ALLL $ 135,946 $ 3,286 $ 2,962 $ 86,271 $ 6,521 $ 142,273 $ 377,259
Loans held-in-portfolio, excluding impaired loans [1] $ 8,236,184 $ 680,890 $ 77,675 $ 6,738,615 $ 578,195 $ 3,704,156 $ 20,015,715
General ALLL to loans held-in-portfolio, excluding impaired loans [1] 1.65 % 0.48 % 3.81 % 1.28 % 1.13 % 3.84 % 1.88 %
Total ALLL $ 205,892 $ 3,444 $ 2,962 $ 128,841 $ 7,208 $ 167,877 $ 516,224
Total non-covered loans held-in-portfolio [1] $ 8,653,561 $ 690,728 $ 77,675 $ 7,189,227 $ 581,119 $ 3,820,620 $ 21,012,930
ALLL to loans held-in-portfolio [1] 2.38 % 0.50 % 3.81 % 1.79 % 1.24 % 4.39 % 2.46 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of March 31, 2015 the general allowance on the covered loans amounted to $71.0 million, while the specific reserve amounted to $1.5 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.
                               
31-Dec-14
(Dollars in thousands)   Commercial   Construction   Legacy [3]   Mortgage  

Lease

financing

  Consumer   Total [2]
Specific ALLL $ 64,736 $ 363 $ - $ 46,111 $ 770 $ 28,161 $ 140,141
Impaired loans [1] $ 357,161 $ 13,268 $ - $ 435,824 $ 3,023 $ 117,732 $ 927,008
Specific ALLL to impaired loans [1] 18.13 % 2.74 % - % 10.58 % 25.47 % 23.92 % 15.12 %
General ALLL $ 146,501 $ 6,307 $ 2,944 $ 77,211 $ 6,361 $ 140,254 $ 379,578
Loans held-in-portfolio, excluding impaired loans [1] $ 7,777,106 $ 238,552 $ 80,818 $ 6,067,062 $ 561,366 $ 3,752,539 $ 18,477,443
General ALLL to loans held-in-portfolio, excluding impaired loans [1] 1.88 % 2.64 % 3.64 % 1.27 % 1.13 % 3.74 % 2.05 %
Total ALLL $ 211,237 $ 6,670 $ 2,944 $ 123,322 $ 7,131 $ 168,415 $ 519,719
Total non-covered loans held-in-portfolio [1] $ 8,134,267 $ 251,820 $ 80,818 $ 6,502,886 $ 564,389 $ 3,870,271 $ 19,404,451
ALLL to loans held-in-portfolio [1] 2.60 % 2.65 % 3.64 % 1.90 % 1.26 % 4.35 % 2.68 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of December 31, 2014 the general allowance on the covered loans amounted to $82.1 million, while the specific reserve amounted to $5 thousand.
[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 $ 5,210 $ (205) $ - $ (3,541) $ (83) $ (2,557) $ (1,176)
Impaired loans   $ 60,216   $ (3,430)   $ -   $ 14,788   $ (99)   $ (1,268)   $ 70,207  
General ALLL $ (10,555) $ (3,021) $ 18 $ 9,060 $ 160 $ 2,019 $ (2,319)
Loans held-in-portfolio, excluding impaired loans   $ 459,078   $ 442,338   $ (3,143)   $ 671,553   $ 16,829   $ (48,383)   $ 1,538,272  
Total ALLL $ (5,345) $ (3,226) $ 18 $ 5,519 $ 77 $ (538) $ (3,495)
Total non-covered loans held-in-portfolio   $ 519,294   $ 438,908   $ (3,143)   $ 686,341   $ 16,730   $ (49,651)   $ 1,608,479  
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
             
31-Mar-15
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 69,946 $ 158 $ 42,229 $ 687 $ 25,223 $ 138,243
  General ALLL non-covered loans     125,520       1,437       84,350       6,521       128,205       346,033  
ALLL - non-covered loans     195,466       1,595       126,579       7,208       153,428       484,276  
Specific ALLL covered loans 1,473 - - - - 1,473
  General ALLL covered loans     19,794       7,707       40,469       -       3,030       71,000  
ALLL - covered loans     21,267       7,707       40,469       -       3,030       72,473  
Total ALLL   $ 216,733     $ 9,302     $ 167,048     $ 7,208     $ 156,458     $ 556,749  
Loans held-in-portfolio:
Impaired non-covered loans $ 417,377 $ 9,838 $ 445,506 $ 2,924 $ 114,416 $ 990,061
  Non-covered loans held-in-portfolio, excluding impaired loans     5,984,132       88,868       5,725,741       578,195       3,237,790       15,614,726  
Non-covered loans held-in-portfolio     6,401,509       98,706       6,171,247       581,119       3,352,206       16,604,787  
Impaired covered loans 8,394 2,336 - - - 10,730
  Covered loans held-in-portfolio, excluding impaired loans     1,562,753       55,489       795,477       -       32,103       2,445,822  
Covered loans held-in-portfolio     1,571,147       57,825       795,477       -       32,103       2,456,552  
Total loans held-in-portfolio   $ 7,972,656     $ 156,531     $ 6,966,724     $ 581,119     $ 3,384,309     $ 19,061,339  
 
31-Dec-14
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 64,736 $ 363 $ 45,838 $ 770 $ 27,796 $ 139,503
  General ALLL non-covered loans     136,853       5,120       75,022       6,361       126,276       349,632  
ALLL - non-covered loans     201,589       5,483       120,860       7,131       154,072       489,135  
Specific ALLL covered loans 5 - - - - 5
  General ALLL covered loans     30,866       7,202       40,948       -       3,052       82,068  
ALLL - covered loans     30,871       7,202       40,948       -       3,052       82,073  
Total ALLL   $ 232,460     $ 12,685     $ 161,808     $ 7,131     $ 157,124     $ 571,208  
Loans held-in-portfolio:
Impaired non-covered loans $ 356,911 $ 13,268 $ 431,569 $ 3,023 $ 115,759 $ 920,530
  Non-covered loans held-in-portfolio, excluding impaired loans     6,017,892       146,116       5,018,932       561,366       3,273,278       15,017,584  
Non-covered loans held-in-portfolio     6,374,803       159,384       5,450,501       564,389       3,389,037       15,938,114  
Impaired covered loans 4,487 2,419 - - - 6,906
  Covered loans held-in-portfolio, excluding impaired loans     1,610,294       67,917       822,986       -       34,559       2,535,756  
Covered loans held-in-portfolio     1,614,781       70,336       822,986       -       34,559       2,542,662  
Total loans held-in-portfolio   $ 7,989,584     $ 229,720     $ 6,273,487     $ 564,389     $ 3,423,596     $ 18,480,776  
 
                           
Variance
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $ 5,210 $ (205 ) $ (3,609 ) $ (83 ) $ (2,573 ) $ (1,260 )
  General ALLL non-covered loans     (11,333 )     (3,683 )     9,328       160       1,929       (3,599 )
ALLL - non-covered loans     (6,123 )     (3,888 )     5,719       77       (644 )     (4,859 )
Specific ALLL covered loans 1,468 - - - - 1,468
  General ALLL covered loans     (11,072 )     505       (479 )     -       (22 )     (11,068 )
ALLL - covered loans     (9,604 )     505       (479 )     -       (22 )     (9,600 )
Total ALLL   $ (15,727 )   $ (3,383 )   $ 5,240     $ 77     $ (666 )   $ (14,459 )
Loans held-in-portfolio:
Impaired non-covered loans $ 60,466 $ (3,430 ) $ 13,937 $ (99 ) $ (1,343 ) $ 69,531
  Non-covered loans held-in-portfolio, excluding impaired loans     (33,760 )     (57,248 )     706,809       16,829       (35,488 )     597,142  
Non-covered loans held-in-portfolio     26,706       (60,678 )     720,746       16,730       (36,831 )     666,673  
Impaired covered loans 3,907 (83 ) - - - 3,824
  Covered loans held-in-portfolio, excluding impaired loans     (47,541 )     (12,428 )     (27,509 )     -       (2,456 )     (89,934 )
Covered loans held-in-portfolio     (43,634 )     (12,511 )     (27,509 )     -       (2,456 )     (86,110 )
Total loans held-in-portfolio   $ (16,928 )   $ (73,189 )   $ 693,237     $ 16,730     $ (39,287 )   $ 580,563  
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
(Unaudited)
             
31-Mar-15
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $ - $ - $ - $ 341 $ 381 $ 722
  General ALLL     10,426       1,849     2,962       1,921       14,068       31,226
Total ALLL   $ 10,426     $ 1,849   $ 2,962     $ 2,262     $ 14,449     $ 31,948
Loans held-in-portfolio:
Impaired loans $ - $ - $ - $ 5,106 $ 2,048 $ 7,154
  Loans held-in-portfolio, excluding impaired loans     2,252,052       592,022     77,675       1,012,874       466,366       4,400,989
Total loans held-in-portfolio   $ 2,252,052     $ 592,022   $ 77,675     $ 1,017,980     $ 468,414     $ 4,408,143
 
 
31-Dec-14
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $ - $ - $ - $ 273 $ 365 $ 638
  General ALLL     9,648       1,187     2,944       2,189       13,978       29,946
Total ALLL   $ 9,648     $ 1,187   $ 2,944     $ 2,462     $ 14,343     $ 30,584
Loans held-in-portfolio:
Impaired loans $ 250 $ - $ - $ 4,255 $ 1,973 $ 6,478
  Loans held-in-portfolio, excluding impaired loans     1,759,214       92,436     80,818       1,048,130       479,261       3,459,859
Total loans held-in-portfolio   $ 1,759,464     $ 92,436   $ 80,818     $ 1,052,385     $ 481,234     $ 3,466,337
 
                           
Variance
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $ - $ - $ - $ 68 $ 16 $ 84
  General ALLL     778       662     18       (268 )     90       1,280
Total ALLL   $ 778     $ 662   $ 18     $ (200 )   $ 106     $ 1,364
Loans held-in-portfolio:
Impaired loans $ (250 ) $ - $ - $ 851 $ 75 $ 676
  Loans held-in-portfolio, excluding impaired loans     492,838       499,586     (3,143 )     (35,256 )     (12,895 )     941,130
Total loans held-in-portfolio   $ 492,588     $ 499,586   $ (3,143 )   $ (34,405 )   $ (12,820 )   $ 941,806
 

Popular, Inc.  
Financial Supplement to First Quarter 2015 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
 
 
(In thousands, except share or per share information)   31-Mar-15   31-Dec-14   31-Mar-14  
Total stockholders’ equity $ 4,377,120 $ 4,267,382 $ 4,745,747
Less: Preferred stock (50,160 ) (50,160 ) (50,160 )
Less: Goodwill (508,310 ) (465,676 ) (647,757 )
Less: Other intangibles     (59,063 )     (37,595 )     (42,625 )  
Total tangible common equity   $ 3,759,587     $ 3,713,951     $ 4,005,205    
Total assets $ 35,624,840 $ 33,096,695 $ 36,744,162
Less: Goodwill (508,310 ) (465,676 ) (647,757 )
Less: Other intangibles     (59,063 )     (37,595 )     (42,625 )  
Total tangible assets   $ 35,057,467     $ 32,593,424     $ 36,053,780    
Tangible common equity to tangible assets 10.72 % 11.39 % 11.11 %
Common shares outstanding at end of period 103,486,927 103,476,847 103,455,535
Tangible book value per common share   $ 36.33     $ 35.89     $ 38.71    
 

Popular, Inc.
Financial Supplement to First Quarter 2015 Earnings Release
Table O - Financial Information - Westernbank Covered Loans
(Unaudited)
 
 
Revenues
Quarters ended
(In thousands) 31-Mar-15 31-Dec-14 Variance
Interest income on covered loans $ 57,431   $ 61,285   $ (3,854 )
FDIC loss share income (expense):
Amortization of indemnification asset (27,316 ) (28,948 ) 1,632
80% mirror accounting on credit impairment losses [1] 8,246 (3,287 ) 11,533
80% mirror accounting on reimbursable expenses 21,545 18,742 2,803
80% mirror accounting on recoveries on covered assets, including rental income on OREOs,
subject to reimbursement to the FDIC (2,619 ) (2,542 ) (77 )
Change in true-up payment obligation 4,164 (2,831 ) 6,995
Other   119     173     (54 )
  Total FDIC loss share income (expense)   4,139     (18,693 )   22,832  
Total revenues   61,570     42,592     18,978  
Provision for loan losses   10,324     (3,646 )   13,970  
Total revenues less provision for loan losses $ 51,246   $ 46,238   $ 5,008  
[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.
 
 
Non-personnel operating expenses
Quarters ended
(In thousands) 31-Mar-15 31-Dec-14 Variance
Professional fees $ 3,225 $ 7,167 $ (3,942 )
OREO expenses 13,823 13,116 707
Other operating expenses   2,461     2,668     (207 )
Total operating expenses $ 19,509   $ 22,951   $ (3,442 )
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) 31-Mar-15 31-Dec-14 Variance
Covered loans $ 2,540 $ 2,615 $ (75 )
FDIC loss share asset   429     616     (187 )
 

Activity in the carrying amount and accretable yield of covered loans accounted for under ASC 310-30
       
Quarters ended
      31-Mar-15   31-Dec-14
(In thousands)   Accretable yield  

Carrying amount

of loans

  Accretable yield  

Carrying amount

of loans

Beginning balance $ 1,271,337   $ 2,444,172 $ 1,312,521 $ 2,528,433
Accretion (55,697 ) 55,697 (59,474 ) 59,474
Changes in expected cash flows 43,308 - 18,290 -
Collections / charge-offs     -       (132,773 )     -       (143,735 )
Ending balance 1,258,948 2,367,096 1,271,337 2,444,172
  Allowance for loan losses - ASC 310-30 covered loans     -       (68,386 )     -       (78,846 )
Ending balance, net of allowance for loan losses   $ 1,258,948     $ 2,298,710     $ 1,271,337     $ 2,365,326  
 
 
Activity in the carrying amount of the FDIC indemnity asset
 
Quarters ended
(In thousands)       31-Mar-15       31-Dec-14
Balance at beginning of period $ 542,454 $ 636,331
Amortization (27,316 ) (28,948 )
Credit impairment losses to be covered under loss sharing agreements 8,246 (3,287 )
Reimbursable expenses to be covered under loss sharing agreements 21,545 18,742
Net payments from FDIC under loss sharing agreements (132,265 ) (77,697 )
Other adjustments attributable to FDIC loss sharing agreements         (2,820 )         (2,687 )
Balance at end of period         409,844           542,454  
 
 
Activity in the remaining FDIC loss share asset amortization
 
Quarters ended
(In thousands)       31-Mar-15       31-Dec-14
Balance at beginning of period $ 53,095 $ 66,562
Amortization (27,316 ) (28,948 )
Impact of lower projected losses         12,908           15,481  
Balance at end of period       $ 38,687         $ 53,095  
 

POPULAR, INC.  
Financial Supplement to First Quarter 2015 Earnings Release
Table P - Restructuring Charges
(Unaudited)
   
Restructuring Charges
Quarters ended
(In thousands)       31-Mar-15     31-Dec-14     Variance
Personnel costs $ 9,366 $ 7,692 $ 1,674
Net occupancy expenses 386 3,482 (3,096)
Equipment expenses 158 126 32
Professional fees 466 1,254 (788)
Other operating expenses       377     1,307     (930)
Total restructuring costs $ 10,753   $ 13,861   $ (3,108)
 

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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