Popular, Inc. Announces Fourth Quarter Financial Results

 
 

Contact a member of Banco
Popular de Puerto Rico's
Media Relations Team.


  • Net income of $137.4 million and adjusted net income of $98.3 million for the fourth quarter
  • Net income of $895.3 million and adjusted net income of $374.8 million for the year ended December 31, 2015
  • Net interest margin for the quarter of 4.42% and adjusted net interest margin of 4.39%, flat when compared to Q3 2015
  • Credit Quality (excluding covered loans):
    • Non-performing loans held-in-portfolio (NPLs) decreased by $33.1 million from Q3 2015; NPLs to loans ratio at 2.7% vs. 2.8% in Q3 2015;
    • Net charge-offs (NCOs) were 1.48% of average loans held-in-portfolio vs. 0.83% in Q3 2015; NCOs increased by $36.6 million quarter over quarter;
    • Allowance for loan losses of $502.9 million vs. $536.0 million in Q3 2015; Allowance for loan losses to loans held-in-portfolio at 2.25% vs. 2.38% in Q3 2015;
    • Allowance for loan losses to NPLs at 83.6% vs. 84.4% in Q3 2015.
  • Common Equity Tier 1 ratio of 16.21% and Tangible Book Value per Share of $42.18 at December 31, 2015
Tuesday, January 26, 2016 8:00 am EST

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 $137.4 million and adjusted net income of $98.3 million for the quarter ended December 31, 2015, compared to net income of $85.6 million and an adjusted net income of $93.4 million for the quarter ended September 30, 2015.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: “In 2015 we achieved several key milestones such as the Doral transactions and the completion of the restructuring of our U.S. operations. At the same time, we consistently delivered strong financial results despite the continued weakness of the Puerto Rico economy. The reinstatement of the quarterly dividend on our common stock demonstrates our confidence in our capital position and our revenue generation capacity going forward."

                       
Earnings Highlights
 
(Unaudited)     Quarters ended Years ended
(Dollars in thousands, except per share information)     31-Dec-15     30-Sep-15     31-Dec-14 31-Dec-15     31-Dec-14
Net interest income $352,500 $350,735 $326,861 $1,408,983 $945,072
Provision for loan losses 57,711 69,568 51,637 217,458 223,999

Provision (reversal) for loan losses - covered loans [1]

    820       (2,890 )     (3,646 ) 24,020       46,135  
Net interest income after provision for loan losses 293,969 284,057 278,870 1,167,505 674,938
FDIC loss-share income (expense) (4,359 ) 1,207 (18,693 ) 20,062 (103,024 )
Other non-interest income 136,797 129,902 122,057 499,479 489,539
Operating expenses     305,808       306,897       330,006   1,288,221       1,193,684  
Income (loss) from continuing operations before income tax 120,599 108,269 52,228 398,825 (132,231 )
Income tax expense (benefit)     (16,827 )     22,620       12,472   (495,172 )     58,279  
Income (loss) from continuing operations     137,426       85,649       39,756   893,997       (190,510 )
(Loss) income from discontinued operations, net of tax     -       (9 )     9,086   1,347       (122,980 )
Net income (loss)     $137,426       $85,640       $48,842   $895,344       $(313,490 )
Net income (loss) applicable to common stock     $136,495       $84,709       $47,911   $891,621       $(317,213 )
Net income (loss) per common share from continuing operations - Basic     $1.32       $0.82       $0.38   $8.65       $(1.88 )
Net income (loss) per common share from continuing operations - Diluted     $1.32       $0.82       $0.37   $8.64       $(1.88 )
Net income (loss) per common share from discontinued operations - Basic     $-       $-       $0.09   $0.01       $(1.20 )
Net income (loss) per common share from discontinued operations - Diluted     $-       $-       $0.09   $0.01       $(1.20 )
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.
 

Doral Bank Transaction

During the fourth quarter of 2015, retrospective adjustments were made to the estimated fair values of the assets acquired and liabilities assumed from the FDIC as receiver for Doral Bank, during the first quarter of 2015 (the “Doral Bank Transaction”), to reflect new information obtained during the measurement period that existed as of the acquisition date, as defined by U.S. GAAP. This process led to a lower fair value of the assets acquired and to a corresponding increase in goodwill.

Refer to the following table for details of the above mentioned retrospective adjustments.

           
February 27, 2015 February 27, 2015
As recasted[a] As previously
(In thousands)               reported[b]       Change
Assets:
Loans $ 1,518,574 $ 1,665,756 $ (147,182 )
Goodwill 163,097 41,633 121,464
Core deposit intangible 12,810 23,572 (10,762 )
Receivable from the FDIC 480,137 [c] 441,721 38,416
Other assets       626,177       626,177       -  
Total assets     $ 2,800,795     $ 2,798,859     $ 1,936  
 
Liabilities:
Deposits $ 2,203,391 $ 2,201,455 $ 1,936
Advances from the Federal Home Loan Bank 547,187 547,187 -
Other liabilities       50,217       50,217       -  

Total liabilities

    $ 2,800,795     $ 2,798,859     $ 1,936  
 

[a] Amounts reported include retrospective adjustments during the measurement period, in accordance with U.S. GAAP, related to the Doral Bank Transaction.

 
[b] Amounts are presented as previously reported in the Form 10-Q as of September 30, 2015.
 
[c] Balances recasted include a reclassification of approximately $38.4 million of loans that were subsequently determined to be excluded from the Doral Bank Transaction and repurchased by the FDIC, to the Receivable from the FDIC.
 

The decline in the fair value of the loans is mainly attributed to higher estimated credit losses on the portfolio of taxi medallion loans acquired by BPNA, which had an unpaid principal balance of $248.6 million and a revised fair value of $154.9 million. This remeasurement resulted in a negative adjustment of approximately $76.9 million to this portfolio. The main factors that influenced the revised estimated credit losses included borrower concentration in the portfolio, review of collateral values and borrowers’ payment capacity after a more thorough due diligence process.

Adjusted results – Non GAAP

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

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

Actual Results
(U.S. GAAP)

 

BPNA
Reorganization [2]

 

Doral Transaction
Remeasurement
[3]

 

Bulk Loan Sale
[4]

   

Impairment of
Loans Under
Proposed
Portfolio Sale
[5]

 

Reversal of DTA
– U.S.
Operations
[6]

       

Adjusted
Results
(Non-GAAP)

Net interest income $352,500   $-   $1,952   $-     $-   $-       $350,548
Provision for loan losses – non-covered loans 57,711 - - 5,852 5,064 - 46,795
Provision (reversal) for loan losses – covered loans [1]     820     -     -     -       -     -         820  
Net interest income after provision for loan losses 293,969 - 1,952 (5,852 ) (5,064 ) - 302,933
Mortgage banking activities 23,430 - 833 - - - 22,597
FDIC loss-share (expense) income (4,359 ) - - - - (4,359 )
Other non-interest income     113,367     -     -     -       -     -         113,367  
Total non-interest income     132,438     -     833     -       -     -         131,605  
Personnel costs 119,221 - - - - - 119,221
Net occupancy expenses 20,616 - - - - - 20,616
Equipment expenses 16,035 - - - - - 16,035
Professional fees 77,854 - - - - - 77,854
Communications 6,759 - - - - - 6,759
Business promotion 15,162 - - - - - 15,162
Other real estate owned (OREO) expenses 9,997 - - - -

-

9,997
Amortization of intangibles 2,522 - (628 ) - -

-

3,150
Restructuring costs 1,004 1,004 - - - - -
Other operating expenses     36,638     -     -     -       -     -         36,638  
Total operating expenses     305,808     1,004     (628 )   -       -     -         305,432  
Income before income tax 120,599 (1,004 ) 3,413 (5,852 ) (5,064 ) - 129,106
Income tax (benefit) expense     (16,827 )   -     731     (2,282 )     (1,975 )   (44,103 )       30,802  
Net income     $137,426     $(1,004 )   $2,682     $(3,570 )     $(3,089 )   $44,103         $98,304  
 
[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] Represents the impact of the fair value adjustments, identified during the remeasurement period as defined by U.S. GAAP, related to the Doral Bank Transaction. The remeasurement adjustments impacted the fair value of the loan portfolio, deposit premium and the core deposit intangible, all of which were recorded against goodwill. During the fourth quarter of 2015, the related amortization of the loan discounts, deposit premium and the core deposit intangible were adjusted to reflect the balance as if the revised estimates of fair value were applied as of the Doral Bank Transaction date.

 
[4] Represents the impact of a bulk sale of loans at the BPPR segment, which had a book value of approximately $34.4 million.
 

[5] Represents additional impairment based on the estimated fair value of loans in the Westernbank transaction, that the Corporation has the intent to sell and are subject to the ongoing arbitration with the FDIC.

 

[6] Represents the partial reversal of the valuation allowance of a portion of the deferred tax asset at the U.S. operations. Refer to additional details on the Income Taxes section of this earnings release.

 

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

Actual Results
(U.S. GAAP)

 

BPNA
Reorganization [2]

 

Doral
Transaction
[3]

 

MSRs
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

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
Amortization of intangibles 3,512 - - - - 3,512
Restructuring costs 481 481 - - - -
Other operating expenses     42,802     -     -     -   -     42,802  
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 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  
Income 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 Bank 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 in the Westernbank transaction, that the Corporation has the intent to sell and are subject to the ongoing arbitration with the FDIC.

 

   
      Quarters ended
(Unaudited) Adjusted Results Non-GAAP    
(In thousands)     31-Dec-15     30-Sep-15     Variance
Net interest income $350,548     $350,735 $(187 )
Provision for loan losses – non-covered loans 46,795 59,442 (12,647 )
Provision (reversal) for loan losses – covered loans [1]     820       (2,890 )     3,710  
Net interest income after provision for loan losses 302,933 294,183 8,750
Mortgage banking activities 22,597 18,973 3,624
FDIC loss-share income (expense) (4,359 ) 1,207 (5,566 )
Other non-interest income     113,367       105,717       7,650  
Total non-interest income     131,605       125,897       5,708  
Personnel costs 119,221 120,057 (836 )
Net occupancy expenses 20,616 20,126 490
Equipment expenses 16,035 14,739 1,296
Professional fees 77,854 73,555 4,299
Communications 6,759 6,058 701
Business promotion 15,162 12,225 2,937
Other real estate owned (OREO) expenses 9,997 7,686 2,311
Amortization of intangibles 3,150 3,512 (362 )
Other operating expenses     36,638       42,802       (6,164 )
Total operating expenses     305,432       300,760       4,672  
Income from continuing operations before income tax 129,106 119,320 9,786
Income tax expense     30,802       25,912       4,890  
Income from continuing operations     $98,304       $93,408       $4,896  
Net income     $98,304       $93,408       $4,896  
[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 December 31 2015, the Corporation had net interest income of $352.5 million, compared to net interest income of $350.7 million for the previous quarter. The adjusted net interest income was $350.6 million, flat compared to the previous quarter. The net interest margin was 4.42% for the quarter. The adjusted net interest margin was 4.39%, also flat when compared to the previous quarter. Refer to the Adjusted Results – Non GAAP section for additional information on the adjusted net interest income.

The decrease of $0.1 million in the adjusted net interest income is mainly related to:

  • Lower income from commercial loans by $2.2 million, or 19 basis points, mainly due to lower yields at BPPR and BPNA impacted by payoffs of public sector loans in BPPR and higher loan originations at lower rates in the U.S.
  • Lower income from construction loans by $1.0 million, or 42 basis points, mainly at BPPR driven by past due interest recoveries recorded during the third quarter

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

  • Higher income from mortgage loans by $1.8 million due to the reversal during the third quarter of 2015 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, partially offset by lower average volume of mortgages at both BPPR and BPNA
  • Higher income from consumer loans by $0.4 million, mainly due to higher volume at BPNA as a result of its consumer loans acquisition strategy
  • Higher income from the leasing portfolio by $0.6 million mainly due to higher volume at the BPPR segment
  • Lower borrowing costs by $0.3 million due mainly to lower volume of repurchase agreements at the BPPR segment

BPPR’s net interest income amounted to $305.1 million for the quarter ended December 31, 2015. The adjusted net interest income was $304.3 million, a decrease of $0.5 million when compared to the previous quarter. The impact of lower income from commercial and construction loans was offset by higher income from mortgage loans and lower borrowing costs, as discussed above, and lower expense on equity indexed IRA accounts. Net interest margin was 4.82%. The adjusted net interest margin was 4.80%, an increase of 5 basis points compared to 4.75% for the previous quarter, mainly due to lower borrowing costs.

BPNA’s net interest income was $62.9 million. The adjusted net interest income was of $61.7 million, compared with $62.4 million for the previous quarter. The decrease of $0.7 million in the net interest income is mainly driven by lower yields in the commercial portfolio and lower volumes of mortgage loans, as discussed above, which was partially offset by higher income from consumer loans by $1.4 million. Also, higher interest expense on deposits by $1.3 million, mainly for higher volume of non-brokered client related time deposits, contributed to the decrease in net interest income. Net interest margin was 3.86%. The adjusted net interest margin was of 3.79% compared to 3.91% for the previous quarter, a decrease of 12 basis points, mainly due to lower yields from commercial loans and higher cost of interest bearing deposits.

Non-interest income

Non-interest income was $132.4 million for the fourth quarter of 2015, an increase of $1.3 million when compared with the third quarter of 2015. Excluding the impact of the transactions detailed in the Adjusted Results Non-GAAP tables above, non-interest income increased by $5.7 million when compared to the third quarter of 2015, driven primarily by the following:

  • Higher other service fees by $10.8 million mostly due to higher annual contingent insurance commission revenues, including approximately $3.7 million from the portfolio acquired from the Doral insurance agency. Refer to Table F for a breakdown of other service fees.
  • Higher mortgage banking activities by $3.6 million mainly due to lower losses on related derivatives. Refer to Table F for a breakdown of mortgage banking activities.

These increases were partially offset by:

  • Unfavorable variance in adjustments to indemnity reserves by $2.8 million mostly due to higher provision for loans previously sold with credit recourse.
  • Unfavorable variance in the FDIC loss-share income (expense) by $5.6 million mostly due to higher recoveries on assets to be shared with the FDIC under the recovery period by $6.0 million and lower mirror accounting on reimbursable expenses, partially offset by a positive variance in the fair value of the true-up payment obligation.

Refer to Table B for further details.

               
Financial Impact of the 2010 FDIC-Assisted Transaction
     
(Unaudited)     Quarters ended Years ended
(In thousands)     31-Dec-15     30-Sep-15     31-Dec-14 31-Dec-15     31-Dec-14
 

Income Statement

Interest income on WB loans $47,870 $47,982 $61,285 $208,779 $293,610
Total FDIC loss-share (expense) income (4,359 ) 1,207 (18,693 ) 20,062 (103,024 )
Provision for loan losses     7,817       20,206     (3,646 ) 54,113     46,135  
Total revenues less provision for loan losses     $35,694       $28,983     $46,238   $174,728     $144,451  
 

Balance Sheet

Loans covered under loss-sharing agreements with FDIC $646,115 $665,428 $2,542,662
FDIC loss-share asset 310,221 311,946 542,454
FDIC true-up payment obligation     119,745       122,527     129,304              

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

 

Operating expenses

Operating expenses of $305.8 million for the quarter decreased by $1.1 million when compared with the third quarter of 2015. Excluding the impact of the transactions detailed in the Adjusted Results Non-GAAP tables above, operating expenses increased by $4.7 million compared to the third quarter of 2015, driven primarily by:

  • Higher professional fees expense by $4.3 million mainly due to higher application processing and hosting expenses and the result of the recently enacted business-to-business sales tax in Puerto Rico.
  • Higher business promotion expenses by $3.0 million mainly at BPPR due to higher advertising expense and higher customer affinities program expense.
  • Higher OREO expenses by $2.3 million mainly due to higher commercial and construction write-downs at both BPPR and BPNA and higher mortgage write-downs at BPPR.
  • Higher equipment expense by $1.3 million mainly due to software and maintenance expenses at BPPR.

These increases were partially offset by:

  • Lower other operating expenses by $3.8 million mainly due to lower sundry losses from mortgage servicing at BPPR.
  • Lower FDIC deposit insurance by $1.9 million due to improvements in the risk profile of the Corporation.

Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, amounted to $14.4 million for the fourth quarter of 2015, compared with $12.7 million for the third quarter of 2015. The increase was principally due to higher OREO write-downs, as mentioned above.

Full-time equivalent employees were 7,810 as of December 31, 2015, compared with 7,840 as of September 30, 2015, and 7,752 as of December 31, 2014.

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

Income taxes

For the quarter ended December 31, 2015, the Corporation recorded an income tax benefit of $16.8 million, compared to an income tax expense of $22.6 million for the previous quarter. During the fourth quarter of 2015, the Corporation recorded a partial reversal of the valuation allowance on its deferred tax assets from the U.S. operations for approximately $44.1 million. This adjustment was incremental to the partial reversal of $544.9 million recorded during the second quarter of 2015 and was mainly related to a change in the estimate of the realizability of state and city deferred tax assets, as new information was considered after having completed the U.S. reorganization and the sources of income of the business acquired in connection with the Doral Bank Transaction. On an adjusted basis, the income tax expense for the fourth quarter of 2015 was $30.8 million, compared to $25.9 million for the previous quarter.

The effective income tax rate for the fourth quarter of 2015, on an adjusted basis, was 24%, compared to 22% for the previous quarter. The effective tax rate is impacted by the composition and source of the taxable income. In 2016, after taking effect for the partial deferred tax asset valuation reversal, 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 fourth quarter of 2015 would have been 30%.

Credit Quality

Overall, the Corporation continued to exhibit a stable credit performance in a challenging operating environment given the continuing weakness in the Puerto Rico economy. During the fourth quarter of 2015, credit metrics were impacted by a few specific large borrowers and the bulk sale of commercial loans amounting to $34.4 million. The Corporation continues to closely monitor the performance of its portfolios and is focused in taking measures to minimize risks.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $86.7 million quarter over quarter, mainly driven by lower commercial inflows of $72.4 million and reduction of $8.6 million in NPL inflows at BPPR. The decrease in commercial inflows was impacted by the addition of a small number of large commercial loans in the BPPR segment in the third quarter of 2015, most significantly a $49.2 million credit relationship.
  • Non-performing loans held-in-portfolio decreased by $33.1 million during the fourth quarter of 2015, mainly driven by lower commercial NPLs of $57.6 million, offset by higher consumer and mortgage NPLs of $17.0 million and $8.1 million, respectively. The commercial NPLs decrease was mainly driven by $31.1 million in charge-offs related to BPPR loans that were specifically reserved in prior periods, combined with the sale of loans with book value of $34.4 million, of which approximately $21.3 million were non-accruing. The aggregate write-down on the commercial loans bulk sale during the quarter was $7.9 million, of which $2.1 million was previously reserved. The consumer NPLs increase was related to one particular loan collateralized by Puerto Rico securities. At December 31, 2015, NPLs represented 2.7% of total loans held-in-portfolio, compared to 2.8% in September 30, 2015.
  • Excluding the $7.9 million write-down related to the bulk sale of commercial loans, net charge-offs increased by $36.6 million from the third quarter of 2015, mostly driven by higher commercial NCOs of $33.7 million in BPPR. Commercial NCOs were impacted by $31.1 million in charge-offs related to five relationships for which reserves were recorded in prior periods. The ratio of net charge-off to average non-covered loans held-in-portfolio increased to 1.48% on an annualized basis from 0.83% in the third quarter of 2015. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan losses decreased by $33.1 million from the third quarter of 2015 to $502.9 million, primarily driven by the above mentioned charge-offs of commercial loans fully reserved in prior periods. The general and specific reserves related to non-covered loans totaled $384.8 million and $118.1 million, respectively, at quarter-end, compared with $379.2 million and $156.8 million, respectively, as of September 30, 2015. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.25% in the fourth quarter of 2015, compared to 2.38% in the previous quarter.
  • The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 83.6%, compared to 84.4% in the previous quarter.
  • The provision for loan losses for the fourth quarter amounted to $57.7 million, decreasing by $11.9 million, as the previous quarter included $10.1 million impairment related to Westernbank loans the Corporation has the intent to sell. Excluding the $5.8 million provision impact related to the commercial loans sold and $5.1 million additional impairment on the Westernbank loans, the provision for the fourth quarter amounted to $46.8 million, compared to $59.5 million in the third quarter. The provision for the quarter decreased by $12.7 million as the third quarter considered incremental reserves related to certain large relationships. The provision to net charge-off ratio decreased to 69.6%, or 56.5% on an adjusted basis, from 150.2%, or 128.4% on an adjusted basis, in the third quarter of 2015. The decrease in the ratio was mostly due to the aforementioned $31.1 million in charge-offs of previously reserved commercial loans. Excluding this impact from the total net charge-off base, the provision for the fourth quarter represented 90.3% of net charge-offs.

           
Non-Performing Assets
(Unaudited)                  
(In thousands)     31-Dec-15     30-Sep-15     31-Dec-14
Total non-performing loans held-in-portfolio, excluding covered loans $601,799 $634,902 $630,483
Non-performing loans held-for-sale 45,169 47,681 18,899
Other real estate owned (“OREO”), excluding covered OREO     155,231       155,826       135,500  
Total non-performing assets, excluding covered assets 802,199 838,409 784,882
Covered loans and OREO     40,571       39,888       148,099  
Total non-performing assets     $842,770       $878,297       $932,981  
Net charge-offs for the quarter (excluding covered loans)     $82,870       $46,302       $50,187  
 
 
Ratios (excluding covered loans):                  
Non-covered loans held-in-portfolio $22,346,115 $22,498,066 $19,404,451
Non-performing loans held-in-portfolio to loans held-in-portfolio 2.69 % 2.82 % 3.25 %
Allowance for loan losses to loans held-in-portfolio 2.25 2.38 2.68
Allowance for loan losses to non-performing loans, excluding loans held-for-sale     83.57       84.42       82.43  
 
Refer to Table H for additional information.
 
                   
Provision for Loan Losses
 
(Unaudited)     Quarters ended Years ended
(In thousands)     31-Dec-15     30-Sep-15     31-Dec-14 31-Dec-15     31-Dec-14
Provision (reversal) for loan losses:
BPPR $55,635 $68,755 $52,206 $216,832 $242,849
BPNA     2,076     813       (569 ) 626     (18,850 )
Total provision for loan losses     $57,711     $69,568       $51,637   $217,458     $223,999  
Provision (reversal) for loan losses - covered loans     820     (2,890 )     (3,646 ) 24,020     46,135  
Total provision for loan losses     $58,531     $66,678       $47,991   $241,478     $270,134  
 

   
Credit Quality by Segment
(Unaudited)        
(In thousands)  

 

Quarters ended

BPPR     31-Dec-15     30-Sep-15     31-Dec-14
Provision for loan losses $55,635 $68,755 $52,206
Net charge-offs 82,011 47,245 52,523
Total non-performing loans held-in-portfolio, excluding covered loans 574,834 609,469 611,383
Allowance / non-covered loans held-in-portfolio     2.67 %     2.83 %     3.07 %
 
   

 

Quarters ended

BPNA     31-Dec-15     30-Sep-15     31-Dec-14
Provision (reversal) for loan losses $2,076 $813 $(569 )
Net charge-offs (recoveries) 859 (943 ) (2,336 )
Total non-performing loans held-in-portfolio 26,965 25,433 19,100
Allowance / non-covered loans held-in-portfolio     0.69 %     0.68 %     0.88 %
 
           
Financial Condition Highlights
   
(Unaudited)
(In thousands)     31-Dec-15     30-Sep-15     31-Dec-14
Money market, trading and investment securities $8,587,894 $8,321,397 $7,541,148
Loans not covered under loss-sharing agreements with the FDIC 22,346,115 22,498,066 19,404,451
Loans covered under loss-sharing agreements with the FDIC 646,115 665,428 2,542,662
Total assets 35,769,534 35,530,794 33,096,695
Deposits 27,209,723 26,713,206 24,807,535
Borrowings 2,433,654 2,761,476 3,004,685
Liabilities from discontinued operations 1,815 1,800 5,064
Total liabilities 30,664,210 30,481,158 28,829,313
Stockholders’ equity     5,105,324     5,049,636     4,267,382
 

Total assets increased by $238.7 million from the third quarter of 2015 driven by:

  • An increase of $562.1 million in investment securities available-for-sale mainly at BPPR mostly due to purchases of mortgage-backed agency pools and U.S. Treasury securities

This increase was partially offset by:

  • A decrease of $228.5 million in money market investments principally due to a decrease in excess cash balance held with the Federal Reserve of $218.9 million at BPPR.
  • A decrease of approximately $48.0 million in non-covered loans held-in-portfolio, excluding the impact of the Doral Bank Transaction remeasurement adjustments, mainly due to a decrease of mortgage loans principally at BPPR resulting from reduced origination activity, partially offset by an increase in commercial loan originations in the U.S.

Total liabilities increased by $183.0 million from the third quarter of 2015, driven by:

  • An increase of $496.5 million in deposits principally in non-brokered time deposits at BPPR and BPNA and in checking accounts of both commercial and retail customers at BPPR, partially offset by a decline in brokered certificates of deposit mainly at BPPR. Refer to Table G for additional information on deposits.

This increase was partially offset by:

  • A decrease of $323.6 million in federal funds purchased and assets sold under agreements to repurchase mainly due to a net decrease in repurchase agreements principally at BPPR.

Stockholders’ equity increased by approximately $55.7 million from the third quarter of 2015, mainly as a result of net income for the quarter of $137.4 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 $0.9 million, and an increase in accumulated other comprehensive loss of $67.1 million, principally due to higher unrealized losses on securities available-for-sale by $52.4 million and $16.0 million related to the adjustment of pension and postretirement benefit plans, net of tax.

Common equity tier-1 ratio and tangible book value per share were 16.21% and $42.18, respectively, at December 31, 2015 compared to 16.21% and $42.71 at September 30, 2015. The re-measurement of goodwill on the Doral Bank Transaction reduced tangible book value per share by $1.06. Refer to Table A for capital ratios.

Refer to Table C for the Statements of Financial Condition.

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, June 30, 2015 and September 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 Tuesday, January 26, 2016 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 Friday, February 26, 2016. The replay dial in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10077993.

 
Popular, Inc.
Financial Supplement to Fourth 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
 
Table Q - Adjusted Consolidated Statement of Operations for the Years Ended December 31, 2015 and 2014 (Non-GAAP)
 

 
POPULAR, INC.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
           
               
Quarters ended Years ended
      31-Dec-15   30-Sep-15   31-Dec-14   31-Dec-15   31-Dec-14
Basic EPS from continuing operations $1.32 $0.82 $0.38 $8.65 $(1.88 )
Basic EPS from discontinued operations $- $- $0.09 $0.01 $(1.20 )
Total Basic EPS $1.32 $0.82 $0.47 $8.66 $(3.08 )
Diluted EPS from continuing operations $1.32 $0.82 $0.37 $8.64 $(1.88 )
Diluted EPS from discontinued operations $- $- $0.09 $0.01 $(1.20 )
Total Diluted EPS $1.32 $0.82 $0.46 $8.65 $(3.08 )
Average common shares outstanding 103,098,249 102,969,214 102,859,416 102,967,186 102,848,792
Average common shares outstanding - assuming dilution 103,259,503 103,150,482 103,166,349 103,124,309 102,848,792
Common shares outstanding at end of period 103,618,976 103,556,285 103,476,847 103,618,976 103,476,847
 
Market value per common share $28.34 $30.23 $34.05 $28.34 $34.05
 
Market capitalization - (In millions) $2,937 $3,131 $3,523 $2,937 $3,523
 
Return on average assets 1.53 % 0.95 % 0.58 % 2.54 % (0.89 )%
.
Return on average common equity 10.77 % 6.79 % 4.41 % 19.16 % (7.04 )%
 
Net interest margin [1] 4.39 % 4.39 % 4.70 % 4.48 % 4.67 %
 
Common equity per share $48.79 $48.28 $40.76 $48.79 $40.76
 
Tangible common book value per common share (non-GAAP) $42.18 $42.71 $35.89 $42.18 $35.89
 
Tangible common equity to tangible assets (non-GAAP) 12.46 % 12.65 % 11.39 % 12.46 % 11.39 %
 
Tier 1 capital [2]

16.21

% 16.21 % 18.13 %

16.21

% 18.13 %
 
Total capital [2]

18.78

% 18.78 % 19.41 %

18.78

% 19.41 %
 
Tier 1 leverage [2] 11.82 % 11.75 % 11.94 % 11.82 % 11.94 %
 
Common equity to Tier 1 capital [2]    

16.21

%   16.21 %   15.89 %  

16.21

%   15.89 %
 

[1] Not on a taxable equivalent basis. For the quarter ended December 31, 2015 excludes the impact of $1.9 million of Doral fair value remeasurement adjustment. U.S. GAAP net interest margin was 4.42% for the fourth quarter, compared with 4.39% for the previous quarter. For the quarter ended December 31, 2014 excludes the impact of $18.6 million fees related to repos refinancing at BPNA. U.S. GAAP net interest margin was 4.45% for the fourth quarter of 2014. For the year ended December 31, 2014, excludes the impact of $39.2 million and $414.1 million, respectively, related to repos refinancing at BPNA and the accelerated amortization of the TARP discount. The U.S. GAAP net interest margin was 3.16% for the year ended December 31, 2014. Refer to Tables D & E for reconciliation.

 
[2] Ratios for the quarters ending December 31, 2015 and September 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 Fourth Quarter 2015 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
      Quarters ended   Variance   Quarter ended   Variance   Years ended
(In thousands, except per share information)     31-Dec-15   30-Sep-15  

Q4 2015
vs. Q3 2015

  31-Dec-14  

Q4 2015
vs. Q4 2014

  31-Dec-15   31-Dec-14
Interest income:    
Loans $364,484 $364,458 $26 $357,570 $6,914 $1,458,706 $1,478,750
Money market investments 1,949 2,003 (54 ) 1,113 836 7,243 4,224
Investment securities 32,795 31,671 1,124 30,361 2,434 126,064 132,631
  Trading account securities     2,129     3,150     (1,021 )   2,891     (762 )   11,001     17,938  
  Total interest income     401,357     401,282     75     391,935     9,422     1,603,014     1,633,543  
Interest expense:
Deposits 27,054 28,357 (1,303 ) 25,473 1,581 107,533 105,087
Short-term borrowings 1,693 2,222 (529 ) 20,489 (18,796 ) 7,512 67,376
  Long-term debt     20,110     19,968     142     19,112     998     78,986     516,008  
  Total interest expense     48,857     50,547     (1,690 )   65,074     (16,217 )   194,031     688,471  
Net interest income 352,500 350,735 1,765 326,861 25,639 1,408,983 945,072
Provision for loan losses - non-covered loans 57,711 69,568 (11,857 ) 51,637 6,074 217,458 223,999
Provision (reversal) for loan losses - covered loans     820     (2,890 )   3,710     (3,646 )   4,466     24,020     46,135  
Net interest income after provision for loan losses     293,969     284,057     9,912     278,870     15,099     1,167,505     674,938  
Service charges on deposit accounts 39,993 40,960 (967 ) 39,456 537 160,108 158,637
Other service fees 66,928 56,115 10,813 61,140 5,788 236,090 225,265
Mortgage banking activities 23,430 24,195 (765 ) 8,747 14,683 81,802 30,615
Net gain (loss) and valuation adjustments on investment securities - 136 (136 ) 893 (893 ) 141 (870 )
Other-than-temporary impairment losses on investment securities - - - - - (14,445 ) -
Trading account (loss) profit (1,631 ) (398 ) (1,233 ) 586 (2,217 ) (4,723 ) 4,358
Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale (60 ) - (60 ) 10,946 (11,006 ) 542 40,591
Adjustments (expense) to indemnity reserves on loans sold (8,647 ) (5,874 ) (2,773 ) (13,348 ) 4,701 (18,628 ) (40,629 )
FDIC loss-share (expense) income (4,359 ) 1,207 (5,566 ) (18,693 ) 14,334 20,062 (103,024 )
Other operating income     16,784     14,768     2,016     13,637     3,147     58,592     71,572  
  Total non-interest income     132,438     131,109     1,329     103,364     29,074     519,541     386,515  
Operating expenses:
Personnel costs
Salaries 77,578 78,193 (615 ) 71,899 5,679 304,618 281,252
Commissions, incentives and other bonuses 18,015 18,618 (603 ) 18,439 (424 ) 79,305 59,138
Pension, postretirement and medical insurance 10,393 12,578 (2,185 ) 6,901 3,492 44,059 32,416
  Other personnel costs, including payroll taxes     13,235     11,474     1,761     13,497     (262 )   49,537     45,873  
Total personnel costs 119,221 120,863 (1,642 ) 110,736 8,485 477,519 418,679
Net occupancy expenses 20,616 21,277 (661 ) 23,877 (3,261 ) 86,888 86,707
Equipment expenses 16,035 14,739 1,296 13,091 2,944 60,110 48,917
Other taxes 10,159 9,951 208 14,343 (4,184 ) 39,797 56,918
Professional fees 77,854 77,154 700 80,383 (2,529 ) 308,985 282,055
Communications 6,759 6,058 701 6,119 640 25,146 25,684
Business promotion 15,162 12,325 2,837 13,530 1,632 52,076 54,016
FDIC deposit insurance 5,386 7,300 (1,914 ) 9,338 (3,952 ) 27,626 40,307
Loss on early extinguishment of debt - - - 532 (532 ) - 532
Other real estate owned (OREO) expenses 9,997 7,686 2,311 20,016 (10,019 ) 85,568 49,611
Credit and debit card processing, volume, interchange and other expenses 5,822 6,449 (627 ) 5,093 729 22,854 21,588
Other operating expenses 15,271 19,102 (3,831 ) 17,004 (1,733 ) 72,221 73,785
Amortization of intangibles 2,522 3,512 (990 ) 2,083 439 11,019 8,160
Restructuring costs     1,004     481     523     13,861     (12,857 )   18,412     26,725  
  Total operating expenses     305,808     306,897     (1,089 )   330,006     (24,198 )   1,288,221     1,193,684  
Income (loss) from continuing operations before income tax 120,599 108,269 12,330 52,228 68,371 398,825 (132,231 )
Income tax (benefit) expense     (16,827 )   22,620     (39,447 )   12,472     (29,299 )   (495,172 )   58,279  
Income (loss) from continuing operations 137,426 85,649 51,777 39,756 97,670 893,997 (190,510 )
(Loss) income from discontinued operations, net of tax     -     (9 )   9     9,086     (9,086 )   1,347     (122,980 )
Net income (loss)     $137,426     $85,640     $51,786     $48,842     $88,584     $895,344     $(313,490 )
Net income (loss) applicable to common stock     $136,495     $84,709     $51,786     $47,911     $88,584     $891,621     $(317,213 )
Net income (loss) per common share - basic:
Net income (loss) from continuing operations $1.32 $0.82 $0.50 $0.38 $0.94 $8.65 $(1.88 )
  Net income (loss) from discontinued operations     -     -     -     0.09     (0.09 )   0.01     (1.20 )
  Net income (loss) per common share - basic     $1.32     $0.82     $0.50     $0.47     $0.85     $8.66     $(3.08 )
Net income (loss) per common share - diluted:
Net income (loss) from continuing operations $1.32 $0.82 $0.50 $0.37 $0.95 $8.64 $(1.88 )
  Net income (loss) from discontinued operations     -     -     -     0.09     (0.09 )   0.01     (1.20 )
  Net income (loss) per common share - diluted     $1.32     $0.82     $0.50     $0.46     $0.86     $8.65     $(3.08 )
Dividends Declared per Common Share     $0.15     $0.15     $-     $-     $0.15    

$0.30

    $-  
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
              Variance
Q4 2015 vs.
(In thousands)     31-Dec-15   30-Sep-15   31-Dec-14   Q3 2015
Assets:
Cash and due from banks $363,674 $320,555 $381,095 $43,119
Money market investments 2,180,092 2,408,571 1,822,386 (228,479 )
Trading account securities, at fair value 71,659 137,943 138,527 (66,284 )
Investment securities available-for-sale, at fair value 6,062,992 5,500,931 5,315,159 562,061
Investment securities held-to-maturity, at amortized cost 100,903 100,295 103,170 608
Other investment securities, at lower of cost or realizable value 172,248 173,657 161,906 (1,409 )
Loans held-for-sale, at lower of cost or fair value 137,000 171,019 106,104 (34,019 )
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC 22,453,813 22,601,271 19,498,286 (147,458 )
Loans covered under loss-sharing agreements with the FDIC 646,115 665,428 2,542,662 (19,313 )
Less: Unearned income 107,698 103,205 93,835 4,493
   

Allowance for loan losses

    537,111     570,514     601,792     (33,403 )
    Total loans held-in-portfolio, net     22,455,119     22,592,980     21,345,321     (137,861 )
FDIC loss-share asset 310,221 311,946 542,454 (1,725 )
Premises and equipment, net 502,611 495,103 494,581 7,508
Other real estate not covered under loss-sharing agreements with the FDIC 155,231 155,826 135,500 (595 )
Other real estate covered under loss-sharing agreements with the FDIC 36,685 35,701 130,266 984
Accrued income receivable 124,234 118,044 121,818 6,190
Mortgage servicing assets, at fair value 211,405 210,851 148,694 554
Other assets 2,200,963 2,221,054 1,646,443 (20,091 )
Goodwill 626,388 504,925 465,676 121,463
Other intangible assets     58,109     71,393     37,595     (13,284 )
Total assets     $35,769,534     $35,530,794     $33,096,695     $238,740  
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing $6,401,515 $6,070,719 $5,783,748 $330,796
    Interest bearing     20,808,208     20,642,487     19,023,787     165,721  
    Total deposits     27,209,723     26,713,206     24,807,535     496,517  
Federal funds purchased and assets sold under agreements to repurchase 762,145 1,085,765 1,271,657 (323,620 )
Other short-term borrowings 1,200 1,200 21,200 -
Notes payable 1,670,309 1,674,511 1,711,828 (4,202 )
Other liabilities 1,019,018 1,004,676 1,012,029 14,342
Liabilities from discontinued operations     1,815     1,800     5,064     15  
Total liabilities     30,664,210     30,481,158     28,829,313     183,052  
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,038 1,037 1,036 1
Surplus 4,229,156 4,200,805 4,196,458 28,351
Retained earnings 1,087,957 993,309 253,717 94,648
Treasury stock (6,101 ) (5,869 ) (4,117 ) (232 )
Accumulated other comprehensive loss     (256,886 )   (189,806 )   (229,872 )   (67,080 )
    Total stockholders’ equity     5,105,324     5,049,636     4,267,382     55,688  
Total liabilities and stockholders’ equity     $35,769,534     $35,530,794     $33,096,695     $238,740  
 

 
Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
                                 
Quarter ended Quarter ended Quarter ended Variance Variance
31-Dec-15 30-Sep-15 31-Dec-14 Q4 2015 vs. Q3 2015 Q4 2015 vs. Q4 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 $8,602     $36.9   1.71 % $8,667     $36.8   1.70 % $7,220     $34.4   1.90 % ($65 )   $0.1     0.01   % $1,382     $2.5     (0.19 ) %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 8,936 107.4 4.77 8,769 109.6 4.96 8,219 101.9 4.92 167 (2.2 ) (0.19 ) 717 5.5 (0.15 )
Construction 662 9.8 5.88 681 10.8 6.30 233 3.8 6.41 (19 ) (1.0 ) (0.42 ) 429 6.0 (0.53 )
Mortgage 6,947 90.6 5.22 7,072 88.8 5.02 6,538 84.1 5.15 (125 ) 1.8 0.20 409 6.5 0.07
Consumer 3,819 97.6 10.13 3,811 97.2 10.12 3,884 96.6 9.86 8 0.4 0.01 (65 ) 1.0 0.27
Lease financing 611     10.6   6.97 594     10.0   6.75 555     9.9   7.11 17     0.6     0.22   56     0.7     (0.14 )
Total loans (excluding WB loans) 20,975 316.0 5.99 20,927 316.4 6.02 19,429 296.3 6.07 48 (0.4 ) (0.03 ) 1,546 19.7 (0.08 )
WB loans 2,156     47.9   8.82 2,221     48.0   8.59 2,615     61.3   9.31 (65 )   (0.1 )   0.23   (459 )   (13.4 )   (0.49 )
Total loans 23,131     363.9   6.26 23,148     364.4   6.26 22,044     357.6   6.45 (17 )   (0.5 )   -   1,087     6.3     (0.19 )
Total interest earning assets 31,733     $400.8   5.02 % 31,815     $401.2   5.02 % 29,264     $392.0   5.33 % (82 )   ($0.4 )   -   % 2,469     $8.8     (0.31 ) %
Allowance for loan losses (573 ) (559 ) (618 ) (14 ) 45
Other non-interest earning assets 4,416 4,584 4,171 (168 ) 245
Assets from discontinued operations -   -   491   -   (491 )
Total average assets $35,576   $35,840   $33,308   $(264 ) $2,268  
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $5,547 $5.1 0.36 % $5,742 $4.9 0.34 % $4,788 $4.0 0.33 % $(195 ) $0.2 0.02 % $759 $1.1 0.03 %
Savings 7,119 4.1 0.23 7,055 4.1 0.23 6,788 3.8 0.22 64 - - 331 0.3 0.01
Time deposits 8,192     19.2   0.93 8,158     19.4   0.94 7,409     17.7   0.95 34     (0.2 )   (0.01 ) 783     1.5     (0.02 )
Total interest bearing deposits 20,858 28.4 0.54 20,955 28.4 0.54 18,985 25.5 0.53 (97 ) - - 1,873 2.9 0.01
Borrowings[1] 2,439     21.8   3.57 2,861     22.1   3.09 2,992     21.0   2.80 (422 )   (0.3 )   0.48   (553 )   0.8     0.77  
Total interest bearing liabilities 23,297     50.2   0.86 23,816     50.5   0.84 21,977     46.5   0.84 (519 )   (0.3 )   0.02   1,320     3.7     0.02  
Net interest spread 4.16 % 4.18 % 4.49 % (0.02 ) % (0.33 ) %
Non-interest bearing deposits 6,246 6,144 5,636 102 610
Other liabilities 953 876 849 77 104
Liabilities from discontinued operations 2 2 486 - (484 )
Stockholders' equity 5,078   5,002   4,360   76   718  
Total average liabilities and stockholders' equity $35,576   $35,840   $33,308   $(264 ) $2,268  
 
Adjusted net interest income / margin non-taxable equivalent basis $350.6   4.39 % $350.7   4.39 % $345.5   4.70 % ($0.1 )   -   % $5.1     (0.31 ) %
Doral fair value remeasurement adjustment 1.9 - - 1.9 1.9
Impact of fees related to repos refinancing - - 18.6 - (18.6 )
Net interest income / margin non-taxable equivalent basis $352.5   4.42 % $350.7   4.39 % $326.9   4.45 % $1.8     0.03   % $25.6     (0.03 ) %
 
(1) Borrowing expense for the fourth quarter of 2014, including the fees related to repos financing, was 5.27%.
 

 
Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
                     
Year ended Year ended
31-Dec-15 31-Dec-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 $8,406     $144.3   1.72 % $7,530     $154.8   2.06 % $876     ($10.5 )   (0.34 ) %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 8,705 424.8 4.88 8,347 404.4 4.85 358 20.4 0.03
Construction 616 36.7 5.96 199 13.5 6.78 417 23.2 (0.82 )
Mortgage 6,978 360.4 5.16 6,641 340.4 5.12 337 20.0 0.04
Consumer 3,824 387.2 10.13 3,861 386.7 10.01 (37 ) 0.5 0.12
Lease financing 589     40.8   6.91 548     40.1   7.33 41     0.7     (0.42 )
Total loans (excluding WB loans) 20,712 1,249.9 6.03 19,596 1,185.1 6.05 1,116 64.8 (0.02 )
WB loans 2,333     208.8   8.95 2,771     293.6   10.60 (438 )   (84.8 )   (1.65 )
Total loans 23,045     1,458.7   6.33 22,367     1,478.7   6.61 678     (20.0 )   (0.28 )
Total interest earning assets 31,451     $1,603.0   5.10 % 29,897     $1,633.5   5.46 % 1,554     ($30.5 )   (0.36 ) %
Allowance for loan losses (585 ) (623 ) 38
Other non-interest earning assets 4,320 4,466 (146 )
Assets from discontinued operations -   1,442   (1,442 )
Total average assets $35,186   $35,182   $4  
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $5,447 $19.0 0.35 % $4,824 $15.5 0.32 % $623 $3.5 0.03 %
Savings 7,027 16.2 0.23 6,733 14.7 0.22 294 1.5 0.01
Time deposits 8,158     72.3   0.89 7,556     74.9   0.99 602     (2.6 )   (0.10 )
Total interest bearing deposits 20,632 107.5 0.52 19,113 105.1 0.55 1,519 2.4 (0.03 )
Borrowings [1] 2,757     86.5   3.14 3,514     130.0   3.70 (757 )   (43.5 )   (0.56 )
Total interest bearing liabilities 23,389     194.0   0.83 22,627     235.1   1.04 762     (41.1 )   (0.21 )
Net interest spread 4.27 % 4.42 % (0.15 ) %
Non-interest bearing deposits 6,147 5,534 613
Other liabilities 944 879 65
Liabilities from discontinued operations 2 1,586 (1,584 )
Stockholders' equity 4,704   4,556   148  
Total average liabilities and stockholders' equity $35,186   $35,182   $4  
 
Adjusted net interest income / margin non-taxable equivalent basis $1,409.0   4.48 % $1,398.4   4.67 % $10.6     (0.19 ) %
Impact of fees related to repos refinancing - 39.2 (39.2 )
Accelerated amortization TARP discount and related deferred costs - 414.1 (414.1 )
Net interest income / margin non-taxable equivalent basis $1,409.0   4.48 % $945.1   3.16 % $463.9     1.32   %
 
(1) Borrowing expense for 2014 including the fees related to repo refinancing and the impact of the accelerated TARP amortization was 16.60%.
 

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

Q4 2015 vs.

Q4 2015 vs.

Years ended Variance
(In thousands)   31-Dec-15   30-Sep-15   31-Dec-14   Q3 2015   Q4 2014   31-Dec-15   31-Dec-14  

2015 vs. 2014

Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $15,504 $17,020 $9,364 $(1,516 ) $6,140 $59,461 $41,761 $17,700
  Mortgage servicing rights fair value adjustments   (2,096 )   1,038     (6,259 )   (3,134 )   4,163     (7,904 )   (24,683 )   16,779  
Total mortgage servicing fees, net of fair value adjustments   13,408     18,058     3,105     (4,650 )   10,303     51,557     17,078     34,479  
Net gain on sale of loans, including valuation on loans held-for-sale   10,337     9,698     8,382     639     1,955     35,336     31,213     4,123  
Trading account loss:
Unrealized gains (losses) on outstanding derivative positions 27 (69 ) (1 ) 96 28 17 (726 ) 743
  Realized (losses) gains on closed derivative positions   (342 )   (3,492 )   (2,739 )   3,150     2,397     (5,108 )   (16,950 )   11,842  
Total trading account loss   (315 )   (3,561 )   (2,740 )   3,246     2,425     (5,091 )   (17,676 )   12,585  
Total mortgage banking activities   $23,430     $24,195     $8,747     $(765 )   $14,683     $81,802     $30,615     $51,187  
 
Other Service Fees Variance
Quarters ended

Q4 2015 vs.

Q4 2015 vs.

Years ended Variance
(In thousands)   31-Dec-15   30-Sep-15   31-Dec-14   Q3 2015   Q4 2014   31-Dec-15   31-Dec-14  

2015 vs. 2014

Other service fees:
Debit card fees $11,768 $11,288 $10,929 $480 $839 $46,176 $43,146 $3,030
Insurance fees 23,813 14,517 17,711 9,296 6,102 63,976 54,158 9,818
Credit card fees 17,528 16,879 17,493 649 35 68,166 67,639 527
Sale and administration of investment products 5,578 5,737 7,193 (159 ) (1,615 ) 23,846 27,711 (3,865 )
Trust fees 4,947 4,403 4,469 544 478 18,866 18,209 657
  Other fees   3,294     3,291     3,345     3     (51 )   15,060     14,402     658  
Total other service fees   $66,928     $56,115     $61,140     $10,813     $5,788     $236,090     $225,265     $10,825  
 

         
Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table G - Loans and Deposits
(Unaudited)
 
Loans - Ending Balances
Variance
(In thousands)   31-Dec-15   30-Sep-15   31-Dec-14  

Q4 2015 vs.
Q3 2015

 

Q4 2015 vs.
Q4 2014

Loans not covered under FDIC loss-sharing agreements:
Commercial $10,099,163 $10,130,424 $8,134,267 $(31,261 ) $1,964,896
Construction 681,106 692,492 251,820 (11,386 ) 429,286
Legacy [1] 64,436 67,974 80,818 (3,538 ) (16,382 )
Lease financing 627,650 606,927 564,389 20,723 63,261
Mortgage 7,036,081 7,165,479 6,502,886 (129,398 ) 533,195
Consumer   3,837,679   3,834,770   3,870,271   2,909     (32,592 )
Total non-covered loans held-in-portfolio $22,346,115 $22,498,066 $19,404,451 $(151,951 ) $2,941,664
Loans covered under FDIC loss-sharing agreements   646,115   665,428   2,542,662   (19,313 )   (1,896,547 )
Total loans held-in-portfolio   $22,992,230   $23,163,494   $21,947,113   $(171,264 )   $1,045,117  
Loans held-for-sale:
Commercial $45,074 $47,447 $309 $(2,373 ) $44,765
Construction 95 10 - 85 95
Legacy [1] - - 319 - (319 )
Mortgage 91,831 123,562 100,166 (31,731 ) (8,335 )
Consumer   -   -   5,310   -     (5,310 )
Total loans held-for-sale   $137,000   $171,019   $106,104   $(34,019 )   $30,896  
Total loans   $23,129,230   $23,334,513   $22,053,217   $(205,283 )   $1,076,013  
[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-Dec-15   30-Sep-15   31-Dec-14  

Q4 2015 vs.
Q3 2015

 

Q4 2015 vs.
Q4 2014

Demand deposits [1] $7,221,238 $7,027,672 $6,606,060 $193,566 $615,178
Savings, NOW and money market deposits (non-brokered) 11,440,693 11,178,357 10,320,782 262,336 1,119,911
Savings, NOW and money market deposits (brokered) 382,424 405,903 406,248 (23,479 ) (23,824 )
Time deposits (non-brokered) 7,274,157 6,870,816 5,960,401 403,341 1,313,756
Time deposits (brokered CDs)   891,211   1,230,458   1,514,044   (339,247 )   (622,833 )
Total deposits   $27,209,723   $26,713,206   $24,807,535   $496,517     $2,402,188  
[1] Includes interest and non-interest bearing demand deposits.
 

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

As a % of
loans HIP by
category

    30-Sep-15  

As a % of
loans HIP by
category

    31-Dec-14  

As a % of
loans HIP by
category

   

Q4 2015 vs.
Q3 2015

 

Q4 2015 vs.
Q4 2014

Non-accrual loans:  
Commercial $181,816 1.8 % $239,397 2.4 % $260,225 3.2 % $(57,581 ) $(78,409 )
Construction 3,550 0.5 3,605 0.5 13,812 5.5 (55 ) (10,262 )
Legacy [1] 3,649 5.7 4,059 6.0 1,545 1.9 (410 ) 2,104
Lease financing 3,009 0.5 3,091 0.5 3,102 0.5 (82 ) (93 )
Mortgage 351,471 5.0 343,410 4.8 304,913 4.7 8,061 46,558
Consumer   58,304     1.5     41,340   1.1     46,886   1.2     16,964     11,418  

Total non-performing loans held-in-portfolio, excluding covered loans

601,799 2.7 % 634,902 2.8 % 630,483 3.3 % (33,103 ) (28,684 )
Non-performing loans held-for-sale [2] 45,169 47,681 18,899 (2,512 ) 26,270

Other real estate owned (“OREO”), excluding covered OREO

  155,231           155,826         135,500         (595 )   19,731  

Total non-performing assets, excluding covered assets

802,199 838,409 784,882 (36,210 ) 17,317
Covered loans and OREO   40,571           39,888         148,099         683     (107,528 )
Total non-performing assets   $842,770           $878,297         $932,981         $(35,527 )   $(90,211 )
Accruing loans past due 90 days or more [3]   $446,419           $443,497         $447,990         $2,922     $(1,571 )
Ratios excluding covered loans:

Non-performing loans held-in-portfolio to loans held-in-portfolio

2.69

%

 

2.82

%

 

3.25

%

 

Allowance for loan losses to loans held-in-portfolio

2.25 2.38 2.68

Allowance for loan losses to non-performing loans, excluding loans held-for-sale

  83.57           84.42         82.43              
Ratios including covered loans:
Non-performing assets to total assets 2.36

%

 

2.47

%

 

2.82

%

 

Non-performing loans held-in-portfolio to loans held-in-portfolio

2.63 2.76 2.95

Allowance for loan losses to loans held-in-portfolio

2.34 2.46 2.74

Allowance for loan losses to non-performing loans, excluding loans held-for-sale

  88.68           89.27         92.82              
 
[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 December 31, 2015 consisted of $45 million in commercial loans and $95 thousand in construction loan (September 30, 2015 - $47 million in commercial loans, $10 thousand in construction loan and $224 thousand in mortgage loans; December 31, 2014 - $14.0 million in mortgage loans, $309 thousand in commercial loans and $4.5 million in consumer 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 $164 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2015 (September 30, 2015 - $159 million; December 31, 2014 - $125 million). Furthermore, the Corporation has approximately $70 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 (September 30, 2015 - $71 million; December 31, 2014 - $66 million).
 

 
Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
             
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-15 30-Sep-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $235,895 $3,502 $239,397 $179,399 $10,895 $190,294
Plus:
New non-performing loans 17,771 3,339 21,110 91,393 2,125 93,518
Advances on existing non-performing loans - - - - 6 6
Less:
Non-performing loans transferred to OREO (852 ) - (852 ) (853 ) - (853 )
Non-performing loans charged-off (44,423 ) (232 ) (44,655 ) (13,999 ) (229 ) (14,228 )
Loans returned to accrual status / loan collections (9,144 ) (2,222 ) (11,366 ) (20,045 ) (1,525 ) (21,570 )
Loans transferred to held-for-sale - (473 ) (473 ) - - -
Non-performing loans sold (21,345 ) - (21,345 ) - - -
  Other transfers out of non-performing   -     -     -     -     (7,770 )   (7,770 )
Ending balance NPLs   $177,902     $3,914     $181,816     $235,895     $3,502     $239,397  
 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-15   30-Sep-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $3,605 $- $3,605 $4,756 $671 $5,427
Plus:
New non-performing loans 30 1,106 1,136 - 7,745 7,745
Less:
Non-performing loans charged-off (47 ) - (47 ) (91 ) - (91 )
  Loans returned to accrual status / loan collections   (38 )   (1,106 )   (1,144 )   (1,060 )   (8,416 )   (9,476 )
Ending balance NPLs   $3,550     $-     $3,550     $3,605     $-     $3,605  
 
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-15   30-Sep-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $331,022 $12,388 $343,410 $318,773 $12,048 $330,821
Plus:
New non-performing loans 85,208 7,208 92,416 93,768 5,816 99,584
Less:
Non-performing loans transferred to OREO (8,860 ) (452 ) (9,312 ) (8,450 ) - (8,450 )
Non-performing loans charged-off (9,142 ) (300 ) (9,442 ) (15,212 ) (517 ) (15,729 )
  Loans returned to accrual status / loan collections   (60,295 )   (5,306 )   (65,601 )   (57,857 )   (4,959 )   (62,816 )
Ending balance NPLs   $337,933     $13,538     $351,471     $331,022     $12,388     $343,410  
 
Legacy loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-15   30-Sep-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $- $4,059 $4,059 $- $4,686 $4,686
Plus:
New non-performing loans - 247 247 - 649 649
Advances on existing non-performing loans - 9 9 - 89 89
Less:
Non-performing loans charged-off - (151 ) (151 ) - (721 ) (721 )
  Loans returned to accrual status / loan collections   -     (515 )   (515 )   -     (644 )   (644 )
Ending balance NPLs   $-     $3,649     $3,649     $-     $4,059     $4,059  
 
Total non-performing loans held-in-portfolio (excluding consumer and covered loans):
Quarter ended Quarter ended
31-Dec-15   30-Sep-15
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $570,522 $19,949 $590,471 $502,928 $28,300 $531,228
Plus:
New non-performing loans 103,009 11,900 114,909 185,161 16,335 201,496
Advances on existing non-performing loans - 9 9 - 95 95
Less:
Non-performing loans transferred to OREO (9,712 ) (452 ) (10,164 ) (9,303 ) - (9,303 )
Non-performing loans charged-off (53,612 ) (683 ) (54,295 ) (29,302 ) (1,467 ) (30,769 )
Loans returned to accrual status / loan collections (69,477 ) (9,149 ) (78,626 ) (78,962 ) (15,544 ) (94,506 )
Loans transferred to held-for-sale - (473 ) (473 ) - - -
Non-performing loans sold (21,345 ) - (21,345 ) - - -
  Other transfers out of non-performing   -     -     -     -     (7,770 )   (7,770 )
Ending balance NPLs   $519,385     $21,101     $540,486     $570,522     $19,949     $590,471  
 

 
Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
                 
 
Quarter ended Quarter ended Quarter ended
    31-Dec-15     30-Sep-15     31-Dec-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 $536,005 $34,509 $570,514 $512,739 $38,074 $550,813 $521,687 $89,688 $611,375
Provision for loan losses - Continuing operations   57,711       820     58,531       69,568       (2,890 )   66,678       51,637       (3,646 )   47,991    
    593,716       35,329     629,045       582,307       35,184     617,491       573,324       86,042     659,366    
Net loans charged-off (recovered):
BPPR
Commercial 42,857 - 42,857 9,172 - 9,172 13,890 3,230 17,120
Construction 2,966 - 2,966 (2,648 ) - (2,648 ) (279 ) (1,172 ) (1,451 )
Lease financing 667 - 667 894 - 894 751 - 751
Mortgage 14,255 1,168 15,423 15,524 601 16,125 12,228 2,725 14,953
Consumer   21,266       (15 )   21,251       24,303       74     24,377       25,933       (814 )   25,119    
Total BPPR   82,011       1,153     83,164       47,245       675     47,920       52,523       3,969     56,492    
 
BPNA
Commercial (525 ) - (525 ) (1,959 ) - (1,959 ) (900 ) - (900 )
Construction - - - - - - (2 ) - (2 )
Legacy [1] (359 ) - (359 ) (603 ) - (603 ) (3,877 ) - (3,877 )
Mortgage 162 - 162 787 - 787 (93 ) - (93 )
Consumer   1,581       -     1,581       832       -     832       2,536       -     2,536    
Total BPNA   859       -     859       (943 )     -     (943 )     (2,336 )     -     (2,336 )  
Total loans charged-off - Popular, Inc.   82,870       1,153     84,023       46,302       675     46,977       50,187       3,969     54,156    
Net (write-downs) recoveries [2]   (7,911 )     -     (7,911 )     -       -     -       (3,418 )     -     (3,418 )  
Balance at end of period   $502,935       $34,176     $537,111       $536,005       $34,509     $570,514       $519,719       $82,073     $601,792    
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 1.48 % 1.46 % 0.83 % 0.82 % 1.04 % 0.99 %
Provision for loan losses to net charge-offs [3] 0.70 x 0.70 x 1.50 x 1.42 x 0.99 x 0.85 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.86 % 1.82 % 1.07 % 1.04 % 1.33 % 1.22 %
Provision for loan losses to net charge-offs [3] 0.68 x 0.68 x 1.46 x 1.37 x 0.99 x 0.86 x
 
BPNA
Annualized net charge-offs (recoveries) to average loans held-in-portfolio 0.07 % (0.08 ) % (0.27 ) %
Provision for loan losses to net charge-offs             2.42                 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] Net write-downs are related to loans sold or reclassified to held-for-sale.
 
[3] Excluding provision for loan losses and net write-down related to loans sold or reclassified to held-for-sale.
N.M. - Not meaningful.
 

   
Year ended Year ended
(Dollars in thousands)   31-Dec-15     31-Dec-14  
   

Non-covered
loans

   

Covered
loans

  Total    

Non-covered
loans

   

Covered
loans

  Total  
Balance at beginning of period $519,719   $82,073   $601,792 $538,463   $102,092   $640,555
Provision for loan losses - Continuing operations 217,458 24,020 241,478 223,999 46,135 270,134
Provision (reversal of provision) for loan losses - Discontinued operations   -       -     -       (6,764 )     -     (6,764 )  
    737,177       106,093     843,270       755,698       148,227     903,925    
Net loans charged-off (recovered):
BPPR
Commercial 73,890 31,432 105,322 39,382 32,906 72,288
Construction (886 ) 20,386 19,500 (3,509 ) 27,686 24,177
Lease financing 3,303 - 3,303 3,961 - 3,961
Mortgage 50,991 5,228 56,219 44,000 8,442 52,442
Consumer   83,876       11     83,887       96,655       (2,880 )   93,775    
Total BPPR   211,174       57,057     268,231       180,489       66,154     246,643    
 
BPNA
Commercial (3,842 ) - (3,842 ) 1,105 - 1,105
Construction - - - (237 ) - (237 )
Legacy [1] (2,760 ) - (2,760 ) (9,070 ) - (9,070 )
Mortgage 1,279 - 1,279 1,196 - 1,196
Consumer 5,649 - 5,649 12,165 - 12,165
Discontinued operations   -       -     -       (5,545 )     -     (5,545 )  
Total BPNA   326       -     326       (386 )     -     (386 )  
Total loans charged-off (recovered) - Popular, Inc.   211,500       57,057     268,557       180,103       66,154     246,257    
Balance transferred from covered to non-covered loans   13,037       (13,037 )   -       -       -     -    
Net write-downs [3]   (35,779 )     (1,823 )   (37,602 )     (35,674 )     -     (35,674 )  
Net write-downs related to loans transferred to discontinued operations   -       -     -       (20,202 )     -     (20,202 )  
Balance at end of period   $502,935       $34,176     $537,111       $519,719       $82,073     $601,792    
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 0.98 % 1.17 % 0.90 % 1.08 %
Provision for loan losses to net charge-offs [2] 1.03 x 0.90 x 1.17 x 1.04 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.24 % 1.45 % 1.14 % 1.33 %
Provision for loan losses to net charge-offs [2] 1.03 x 0.90 x 1.38 x 1.20 x
 
BPNA
Annualized net charge-offs to average loans held-in-portfolio 0.01 % (0.01 ) %
Provision (reversal) for loan losses to net charge-offs             1.92   x             102.57   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 years ended December 31, 2015 and December 31, 2014.
 
[3] Net write-downs for the years ended December 31, 2015 and 2014 are related to loans sold or reclassified to held-for-sale.
 

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

Lease
financing

    Consumer    

Total [2]

Specific ALLL $49,243 $264 $- $44,029 $573 $23,963 $118,072
Impaired loans [1] $337,133 $2,481 $- $471,932 $2,404 $111,836 $925,786
Specific ALLL to impaired loans   [1]   14.61   %   10.64   %   -   %   9.33   %   23.84   %   21.43   %   12.75   %
General ALLL $147,590 $8,605 $2,687 $89,283 $10,420 $126,278 $384,863
Loans held-in-portfolio, excluding impaired loans [1] $9,762,030 $678,625 $64,436 $6,564,149 $625,246 $3,725,843 $21,420,329
General ALLL to loans held-in-portfolio, excluding impaired loans   [1]   1.51   %   1.27   %   4.17   %   1.36   %   1.67   %   3.39   %   1.80   %
Total ALLL $196,833 $8,869 $2,687 $133,312 $10,993 $150,241 $502,935
Total non-covered loans held-in-portfolio [1] $10,099,163 $681,106 $64,436 $7,036,081 $627,650 $3,837,679 $22,346,115
ALLL to loans held-in-portfolio   [1]   1.95   %   1.30   %   4.17   %   1.89   %   1.75   %   3.91   %   2.25   %
 
[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, 2015 the general allowance on the covered loans amounted to $34.2 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-Sep-15
(Dollars in thousands)       Commercial     Construction     Legacy [3]     Mortgage    

Lease
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.
 
Variance
(Dollars in thousands)       Commercial     Construction     Legacy     Mortgage    

Lease
financing

    Consumer     Total  
Specific ALLL $(34,372 ) $(94 ) $- $(3,516 ) $(61 ) $(733 ) $(38,776 )
Impaired loans       $(53,933 )     $(55 )     $(1,188 )     $9,126       $(241 )     $(2,029 )     $(48,320 )  
General ALLL $744 $(5,788 ) $(118 ) $2,328 $1,963 $6,577 $5,706
Loans held-in-portfolio, excluding impaired loans       $22,672       $(11,331 )     $(2,350 )     $(138,524 )     $20,964       $4,938       $(103,631 )  
Total ALLL $(33,628 ) $(5,882 ) $(118 ) $(1,188 ) $1,902 $5,844 $(33,070 )
Total non-covered loans held-in-portfolio       $(31,261 )     $(11,386 )     $(3,538 )     $(129,398 )     $20,723       $2,909       $(151,951 )  
 

 
Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
             
31-Dec-15
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage  

Lease financing

  Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $49,243 $264 $42,965 $573 $23,478 $116,523
  General ALLL non-covered loans   137,682     4,693     85,362     10,420     115,243     353,400  
ALLL - non-covered loans   186,925     4,957     128,327     10,993     138,721     469,923  
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -     -     33,967     -     209     34,176  
ALLL - covered loans   -     -     33,967     -     209     34,176  
Total ALLL   $186,925     $4,957     $162,294     $10,993     $138,930     $504,099  
Loans held-in-portfolio:
Impaired non-covered loans $337,133 $2,481 $465,117 $2,404 $109,660 $916,795
  Non-covered loans held-in-portfolio, excluding impaired loans   7,031,086     98,467     5,662,374     625,246     3,236,642     16,653,815  
Non-covered loans held-in-portfolio   7,368,219     100,948     6,127,491     627,650     3,346,302     17,570,610  
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -     -     627,102     -     19,013     646,115  
Covered loans held-in-portfolio   -     -     627,102     -     19,013     646,115  
Total loans held-in-portfolio   $7,368,219     $100,948     $6,754,593     $627,650     $3,365,315     $18,216,725  
 
 
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  
 
 

 

Variance
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $(34,372 ) $(94 ) $(3,991 ) $(61 ) $(743 ) $(39,261 )
  General ALLL non-covered loans   330     (6,530 )   2,253     1,963     6,958     4,974  
ALLL - non-covered loans   (34,042 )   (6,624 )   (1,738 )   1,902     6,215     (34,287 )
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -     -     (367 )   -     34     (333 )
ALLL - covered loans   -     -     (367 )   -     34     (333 )
Total ALLL   $(34,042 )   $(6,624 )   $(2,105 )   $1,902     $6,249     $(34,620 )
Loans held-in-portfolio:
Impaired non-covered loans $(53,933 ) $(55 ) $7,486 $(241 ) $(2,023 ) $(48,766 )
  Non-covered loans held-in-portfolio, excluding impaired loans   (99,592 )   (7,675 )   (100,390 )   20,964     (12,571 )   (199,264 )
Non-covered loans held-in-portfolio   (153,525 )   (7,730 )   (92,904 )   20,723     (14,594 )   (248,030 )
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -     -     (18,561 )   -     (752 )   (19,313 )
Covered loans held-in-portfolio   -     -     (18,561 )   -     (752 )   (19,313 )
Total loans held-in-portfolio   $(153,525 )   $(7,730 )   $(111,465 )   $20,723     $(15,346 )   $(267,343 )
 

 
Popular, Inc.
Financial Supplement to Fourth Quarter 2015 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
(Unaudited)
             
31-Dec-15
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $1,064 $485 $1,549
  General ALLL   9,908   3,912     2,687     3,921     11,035     31,463
Total ALLL   $9,908   $3,912     $2,687     $4,985     $11,520     $33,012
Loans held-in-portfolio:
Impaired loans $- $- $- $6,815 $2,176 $8,991
  Loans held-in-portfolio, excluding impaired loans   2,730,944   580,158     64,436     901,775     489,201     4,766,514
Total loans held-in-portfolio   $2,730,944   $580,158     $64,436     $908,590     $491,377     $4,775,505
 
 
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 $- $-