Popular, Inc. Announces Fourth Quarter Financial Results

 
 

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


  • Net loss of $4.1 million and Adjusted net income of $88.5 million for the fourth quarter of 2016
  • Net income of $216.7 million and Adjusted net income of $358.1 million for the year 2016
  • Net interest margin of 4.02% in Q4 2016, compared to 4.12% in Q3 2016
  • Credit Quality (excluding covered loans):
    • Non-performing loans held-in-portfolio (NPLs) decreased by $21.4 million from Q3 2016; NPLs to loans ratio stable at 2.5% vs. 2.6% in Q3 2016;
    • Net charge-offs (NCOs) increased by $21.1 million; NCOs at 1.00% of average loans held-in-portfolio vs. 0.63% in Q3 2016;
    • Allowance for loan losses of $510.3 million vs. $525.6 million in Q3 2016; Allowance for loan losses to loans held-in-portfolio at 2.24% vs. 2.33% in Q3 2016;
    • Allowance for loan losses to NPLs at 91.5% vs. 90.7% in Q3 2016.
  • Common Equity Tier 1 ratio of 16.47%, Book Value per Common Share of $50.08 and Tangible Book Value per Share of $43.12 at December 31, 2016
Tuesday, January 24, 2017 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 a net loss of $4.1 million for the quarter ended December 31, 2016, compared to net income of $46.8 million for the quarter ended September 30, 2016. The results for the fourth quarter of 2016 reflect an after-tax charge amounting to $87 million, related to the unfavorable award under the portfolio sales arbitration with the FDIC, as receiver.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: “Despite the impact of the adverse FDIC arbitrations, during 2016 we demonstrated the strength of our franchise by generating strong revenues and improving credit quality. We also continued to achieve strong loan growth in our U.S. business. As we announced today, we are pleased that the progress made during 2016 allowed us to increase our quarterly common stock dividend from $0.15 to $0.25 and establish a $75 million common stock repurchase program.”

Significant Events

As previously announced, BPPR has filed statements of claim requesting that a review board determine certain matters relating to the loss-share claims under its commercial loss share agreement with the FDIC, as receiver for Westernbank (the "FDIC"),including with respect to the FDIC’s refusal to concur in certain of BPPR’s portfolio sales under the commercial loss share agreement, for which BPPR was seeking damages in the amount of $88.5 million plus interest. On December 12, 2016, the review board in the arbitration described above issued an award denying BPPR’s claim. As a result, for the quarter ending December 31, 2016, the Corporation recognized a pre-tax charge of $116.8 million in connection with unreimbursed losses considered in the arbitration, the related adjustment to the true-up obligation owed to the FDIC at the end of the loss-share agreements in 2020 and recoveries previously incorporated in the net damages claimed in the arbitration.

Earnings Highlights                      
 
(Unaudited)   Quarters ended       Years ended
(Dollars in thousands, except per share information)   31-Dec-16   30-Sep-16   31-Dec-15 31-Dec-16   31-Dec-15
Net interest income $355,405 $353,687 $352,500 $1,422,055 $1,408,983
Provision for loan losses 40,924 42,594 57,711 171,126 217,458
Provision (reversal) for loan losses - covered loans [1]   441   750   820 (1,110)   24,020
Net interest income after provision for loan losses 314,040 310,343 293,969 1,252,039 1,167,505
FDIC loss-share (expense) income (130,334) (61,723) (4,359) (207,779) 20,062
Other non-interest income 130,159 137,701 136,797 505,715 499,479
Goodwill impairment charge - 3,801 - 3,801 -
Other operating expenses   320,871   319,871   305,808 1,251,834   1,288,221
(Loss) income from continuing operations before income tax (7,006) 62,649 120,599 294,340 398,825
Income tax (benefit) expense   (1,766)   15,839   (16,827) 78,784   (495,172)
(Loss) income from continuing operations   (5,240)   46,810   137,426 215,556   893,997
Income from discontinued operations, net of tax   1,135   -   - 1,135   1,347
Net (loss) income   $(4,105)   $46,810   $137,426 $216,691   $895,344
Net (loss) income applicable to common stock   $(5,036)   $45,880   $136,495 $212,968   $891,621
Net (loss) income per common share from continuing operations - Basic   $(0.06)   $0.44   $1.32 $2.05   $8.65
Net (loss) income per common share from continuing operations - Diluted   $(0.06)   $0.44   $1.32 $2.05   $8.64
Net income per common share from discontinued operations - Basic   $0.01   $-   $- $0.01   $0.01
Net income per common share from discontinued operations - Diluted   $0.01   $-   $- $0.01   $0.01
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.
 

Adjusted results – Non-GAAP

The Corporation prepared its Consolidated Financial Statement using accounting principles generally accepted in the U.S. (“U.S. GAAP” or the “reported basis”). In addition to analyzing the Corporation’s results on a reported basis, management monitors the “Adjusted net income” of the Corporation and excludes the impact of certain transactions on the results of its operations. Management believes that the “Adjusted net income” provides meaningful information about the underlying performance of the Corporation’s ongoing operations. The “Adjusted net income” is a non-GAAP financial measure.

The following tables reflect the results of operations for the fourth and third quarters of 2016, with adjustments to exclude the impact of certain events during the fourth and third quarters of 2016, to arrive at the adjusted net income.

Adjusted Net Income - Reconciliation to GAAP Financial Measures

(Unaudited)            
(In thousands)   31-Dec-16
    Pre-tax  

Income tax

effect

 

Impact on net

income

U.S. GAAP Net loss

    $(4,105)
Non-GAAP Adjustments:
FDIC arbitration award[1] 116,833

(30,123)

[3]

86,710
Other FDIC - LSA adjustments[2] 9,874

(2,797)

[3]

7,077
Income from discontinued operations[4]   (2,015)   880   (1,135)
Adjusted net income (Non-GAAP)           $88,547
[1]Represents the arbitration decision denying BPPR's request for reimbursement in certain shared loss claims.

[2]Additional adjustments, including prior period recoveries, related to restructured commercial loans to reduce the indemnification asset to its expected realizable value.

[3]Gains and losses related to assets acquired from Westernbank as part of the FDIC assisted transaction are subject to the capital gains tax rate of 20%. Other items related to the FDIC loss-sharing agreements are subject to the statutory tax rate of 39%.

[4]Represents income from discontinued operations associated with the BPNA reorganization.

 
(Unaudited)            
(In thousands)   30-Sep-16
    Pre-tax  

Income tax

effect

 

Impact on net

income

U.S. GAAP Net income

      $46,810
Non-GAAP Adjustments:
FDIC arbitration award[1] 54,924 (10,985) 43,939
Goodwill impairment charge[2]   3,801   -   3,801

Adjusted Net income (Non-GAAP)

          $94,550
[1]Represents the arbitration decision denying BPPR's request for reimbursement in certain shared loss claims. Gains and losses related to assets acquired from Westernbank as part of the FDIC assisted transaction are subject to the capital gains tax rate of 20%.

[2]Represents goodwill impairment charge in the Corporation’s securities subsidiary. The securities subsidiary is a limited liability company with a partnership election. Accordingly, its earnings flow through Popular, Inc., holding company, for income tax purposes. Since Popular, Inc. has a full valuation allowance on its deferred tax assets, this results in an effective tax rate of 0%.

 

Net interest income

Net interest income for the quarter ended December 31, 2016 was $355.4 million, compared to $353.7 million for the previous quarter. Net interest margin was 4.02% for the quarter compared to 4.12% for the previous quarter.

The increase in net interest income was mainly related to:

  • Higher income from money market, trading and investment securities by $4.1 million due mainly to higher average balance of mortgage backed and U.S. Treasury securities; and
  • Higher income from commercial loans by $2.7 million, or 3 basis points, driven by loan growth in the U.S. and higher yields at BPPR due to the impact on the variable rate portfolio of the increase in market rates in the recent months.

These positive variances were partially offset by:

  • Lower income from consumer loans by $2.0 million, or 1 basis point, driven by lower average balances at both BPPR and BPNA due to high yield loan portfolio run-offs;
  • Lower income from the Westernbank (“WB”) loan portfolio by $1.3 million, or 9 basis points, due to normal run-off and as a result of the quarterly recast process; and
  • Higher interest expense on deposits by $2.4 million, or 1 basis point, mainly related to higher deposits costs in the U.S. to fund loan growth and an unfavorable adjustment on equity linked deposits at BPPR. Average balance of deposits increased by 4% related to increases in government deposits in P.R. and retail deposits in the U.S.

BPPR’s net interest income amounted to $305.4 million for the quarter ended December 31, 2016, compared to $303.7 million for the previous quarter. The increase of $1.7 million in net interest income was mainly due to higher income from investment securities and higher yield from commercial loans, partially offset by lower income from WB loans, consumer loans and an unfavorable adjustment on equity linked deposits, as mentioned above. The net interest margin for the fourth quarter was 4.39%, a decline of 10 basis points when compared to 4.49% for the previous quarter. The change in the mix of earning assets as higher yielding assets mature, particularly WB and consumer loans, and the investment portfolio and cash at the Fed increases, resulted in a negative impact to the net interest margin.

BPNA’s net interest income was $65.3 million, flat when compared with the previous quarter. Higher income from investment securities and commercial loans, were offset by lower income from consumer loans and higher costs of deposits. Net interest margin decreased 14 basis points to 3.47% compared to 3.61% for the previous quarter driven by a higher cost of deposits to fund loan growth. U.S. earning assets yielded 4.21%, compared to 4.32% in the previous quarter, while the cost of interest bearing liabilities was 0.96%, compared to 0.94% in the previous quarter. The change in the mix of earning assets driven by investments in securities and commercial loans at lower rates as well as higher funding costs had a negative impact on the net interest margin.

Non-interest (loss) income

The unfavorable variance in non-interest (loss) income of $76.2 million, when compared to the third quarter of 2016, was primarily driven by:

  • Higher FDIC loss-share expense by $68.6 million primarily due to a $116.8 million charge related to the portfolio sales arbitration decision denying BPPR's claims under the commercial loss sharing agreement and $9.9 million in additional adjustments related to restructured commercial loans. The results for the third quarter included a $54.9 million charge related to a restructured loan adverse arbitration award;
  • Unfavorable variance in net gain on sale of loans of $8.5 million as a result of the gain on the sale of a non-accrual public sector loan during the third quarter; and
  • Lower other operating income by $2.9 million mainly due to lower earnings from investments under the equity method by $2.7 million.

These negative variances were partially offset by:

  • Higher other service fees by $6.1 million due to higher insurance commission revenues related to contingent commissions typically received during the fourth quarter. Refer to Table F for a breakdown of other service fees.

Refer to Table B for further details.

Financial Impact of the 2010 FDIC-Assisted Transaction        
   
(Unaudited)   Quarters ended Years ended
(In thousands)   31-Dec-16   30-Sep-16   31-Dec-15 31-Dec-16   31-Dec-15
 

Income Statement

Interest income on WB loans $39,642 $40,867 $47,870 $175,207 $208,779
Total FDIC loss-share (expense) income (130,334) (61,723) (4,359) (207,779) 20,062
Provision (reversal) for loan losses- WB loans   (2,292)   6,612   7,817 (3,318)   54,113
Total (expenses) revenues less provision (reversal) for loan losses   $(88,400)   $(27,468)   $35,694 $(29,254)   $174,728
 

Balance Sheet

WB loans $1,861,106 $1,896,099 $2,113,440
FDIC loss-share asset 69,334 152,467 310,221
FDIC true-up payment obligation   153,158   134,487   119,745        
 

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

Operating expenses

Operating expenses amounted to $320.9 million for the fourth quarter of 2016, a decrease of $2.8 million when compared to the third quarter of 2016. The decrease in operating expenses was driven primarily by:

  • Lower other operating expense by $10.9 million mainly due to lower operational losses at BPPR and BPNA as a result of higher reserves for legal matters, curtailment losses on insured mortgage claims in our mortgage servicing business and a higher incidence of credit card fraud losses during the third quarter; and
  • A goodwill impairment charge of $3.8 million at the securities subsidiary during the third quarter of 2016, recorded as part of the Corporation’s annual goodwill impairment analysis.

These decreases were partially offset by:

  • Higher personnel cost by $1.2 million mainly due to higher training and development, severance and employee benefit cost, partially offset by lower salaries and commissions;
  • Higher professional fees by $4.4 million mainly due to higher legal fees and other professional fees related to the FDIC arbitration proceedings, partially offset by lower collections, appraisals and other credit related fees;
  • Higher business promotion by $2.7 million due to seasonally higher advertising expense at BPPR;
  • Higher OREO expenses by $2.4 million mainly due to higher losses and write-downs on mortgage OREO at BPPR; and
  • Higher credit and debit card processing, volume, interchange and other expenses by $1.2 million due to earned volume credits during the third quarter.

Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, amounted to $14.8 million for the fourth quarter of 2016, compared to $15.3 million for the third quarter of 2016. The decrease was principally due to lower collections expense at BPPR.

Full-time equivalent employees were 7,828 as of December 31, 2016, compared to 7,866 as of September 30, 2016.

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

Income taxes

For the quarter ended December 31, 2016, the Corporation recorded an income tax benefit of $1.8 million from its continued operations, compared to an income tax expense of $15.8 million for the previous quarter. The decline in the income tax expense is mainly driven by the operating loss at BPPR for the fourth quarter, compared to the taxable income for the previous quarter. In the third quarter BPPR recognized a $4.4 million benefit related to the reversal of uncertain tax positions reserves associated with expired statutory provisions.

The effective income tax rate for the fourth quarter was 25%, remaining flat from the previous quarter. The effective tax rate is impacted by the composition and source of the taxable income.

Credit Quality

Credit quality trends continued stable when compared to the third quarter of 2016. The Puerto Rico region experienced a decrease of NPLs, a decrease of inflows to NPLs, and higher charge-offs. The U.S. operation continued to reflect positive results with strong growth and favorable credit quality metrics. The Corporation continues to be attentive to changes in credit quality trends given challenging economic conditions in Puerto Rico.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $9.5 million quarter-over-quarter, mainly driven by lower mortgage inflows of $12.9 million.
  • Non-performing loans held-in-portfolio decreased by $21.4 million from the third quarter of 2016, driven by lower mortgage and commercial NPLs of $15.9 million and $7.2 million, respectively. At December 31, 2016, NPLs to total loans held-in-portfolio ratio was 2.5%, compared to 2.6% in the third quarter of 2016.
  • Net charge-offs increased by $21.1 million from the third quarter of 2016. Excluding $7.1 million recovery related to the sale of previously charged-off credit cards and personal loans in the third quarter of 2016, net charge-offs increased by $14.0 million quarter over quarter. This increase was mainly driven by higher commercial and mortgage NCOs in the BPPR segment by $6.0 million and $5.7 million, respectively. Commercial NCOs included a $5.9 million charge-off taken on a single borrower previously reserved. The Corporation’s ratio of annualized net charge-offs to average non-covered loans held-in-portfolio stood at 1.00%, compared to 0.63% in the third quarter of 2016. The $7.1 million recovery from consumer loans reduced the NCO ratio by 13 bps in the previous quarter. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan losses decreased by $15.3 million from the third quarter 2016 to $510.3 million. The general and specific reserves related to non-covered loans totaled $398.9 million and $111.4 million, respectively, at quarter-end, compared with $396.5 million and $129.1 million, respectively, as of September 30, 2016. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.24% in the fourth quarter of 2016, compared to 2.33% from the previous quarter.
  • The ratio of the allowance for loan losses to NPLs held-in-portfolio increased slightly to 91.5%, compared to 90.7% in the previous quarter.
  • The provision for loan losses for the fourth quarter of 2016 remained flat amounting to $40.9 million. The third quarter of 2016 included $7.1 million recovery impact from the sale of the above mentioned consumer loans. The provision to net charge-offs ratio was 72.8% in the fourth quarter of 2016, compared to 121.2% in the previous quarter.
Non-Performing Assets      
(Unaudited)            
(In thousands)   31-Dec-16   30-Sep-16   31-Dec-15
Total non-performing loans held-in-portfolio, excluding covered loans $557,915 $579,325 $601,799
Non-performing loans held-for-sale - - 45,169
Other real estate owned (“OREO”), excluding covered OREO   180,445   184,828   155,231
Total non-performing assets, excluding covered assets 738,360 764,153 802,199
Covered loans and OREO   36,044   41,211   40,571
Total non-performing assets   $774,404   $805,364   $842,770
Net charge-offs for the quarter (excluding covered loans)   $56,216   $35,140   $82,870
 
 
Ratios (excluding covered loans):            
Non-covered loans held-in-portfolio $22,773,747 $22,595,972 $22,346,115
Non-performing loans held-in-portfolio to loans held-in-portfolio 2.45% 2.56% 2.69%
Allowance for loan losses to loans held-in-portfolio 2.24 2.33 2.25
Allowance for loan losses to non-performing loans, excluding loans held-for-sale   91.47   90.73   83.57
 
Refer to Table H for additional information.

Provision for Loan Losses          
 
(Unaudited)   Quarters ended Years ended
(In thousands)   31-Dec-16   30-Sep-16   31-Dec-15   31-Dec-16   31-Dec-15
Provision for loan losses:
BPPR $37,357 $36,281 $55,635 $155,860 $216,832
BPNA   3,567   6,313   2,076   15,266   626
Total provision for loan losses - non-covered loans   $40,924   $42,594   $57,711   $171,126 $217,458
Provision (reversal) for loan losses - covered loans   441   750   820 (1,110) 24,020
Total provision for loan losses   $41,365   $43,344   $58,531   $170,016   $241,478
 
Credit Quality by Segment      
(Unaudited)
(In thousands) Quarters ended
BPPR   31-Dec-16   30-Sep-16   31-Dec-15
Provision for loan losses $37,357 $36,281 $55,635
Net charge-offs 53,416 32,959 82,011
Total non-performing loans held-in-portfolio, excluding covered loans 532,508 551,238 574,834
Allowance / non-covered loans held-in-portfolio   2.73%   2.80%   2.67%
 
  Quarters ended
BPNA   31-Dec-16   30-Sep-16   31-Dec-15
Provision for loan losses $3,567 $6,313 $2,076
Net charge-offs 2,800 2,181 859
Total non-performing loans held-in-portfolio 25,407 28,087 26,965
Allowance / non-covered loans held-in-portfolio   0.75%   0.78%   0.69%
 
Financial Condition Highlights    
 
(Unaudited)          
(In thousands)     31-Dec-16       30-Sep-16       31-Dec-15
Cash and money market investments $3,252,611       $4,314,040       $2,543,766
Trading and investment securities 8,535,530 7,968,004 6,407,802
Loans not covered under loss-sharing agreements with the FDIC 22,773,747 22,595,972 22,346,115
Loans covered under loss-sharing agreements with the FDIC 572,878 588,211 646,115
Total assets 38,661,609 39,054,296 35,761,733
Deposits 30,496,224 30,327,045 27,209,723
Borrowings 2,055,477 2,364,984 2,425,853
Liabilities from discontinued operations - 1,815 1,815
Total liabilities 33,463,652 33,673,901 30,656,409
Stockholders’ equity     5,197,957       5,380,395       5,105,324
 

Total assets decreased by $0.4 billion from the third quarter of 2016 driven by:

  • A decrease of $1.1 billion in money market investments mainly at BPPR due to the deployment of liquidity into longer termed investment securities; and
  • A decrease of $83.1 million in the FDIC loss-share asset due mainly to the $81.3 million write-down related to the review board’s denial of BPPR’s claim in connection with arbitration proceedings with the FDIC during the fourth quarter of 2016. Refer to Table O for further details.

These negative variances were partially offset by:

  • An increase of $0.6 billion in investment securities available-for-sale mainly at BPPR due to purchases of U.S Treasury securities and mortgage-backed agency pools; and
  • A net increase of $0.2 billion in non-covered loans held-in-portfolio mainly driven by growth in the commercial portfolio at BPNA by $0.3 billion, partially offset by lower balances of consumer, residential mortgage, and commercial loans at BPPR by $0.1 billion.

Total liabilities decreased by $0.2 billion from the third quarter of 2016, principally driven by:

  • A decrease of $0.3 billion in federal funds purchased and assets sold under agreements to repurchase mainly due to a net decrease in repurchase agreements principally at BPPR; and
  • A decrease of $68.1 million in other liabilities primarily due to a reduction in the liability for GNMA loans with a repurchase option due to higher repurchase activity during the fourth quarter, partially offset by the impact on the true-up payment obligation related to the adverse portfolio sales arbitration award and other commercial loss share agreement adjustments and the pre-tax adjustment of pension and postretirement benefit plans.

These negative variances were partially offset by:

  • An increase of $0.2 billion in deposits mainly due to increases in savings and money market deposits at BPNA, partially offset by decreases in deposits from the Puerto Rico public sector at BPPR. Refer to Table G for additional information on deposits.

Stockholders’ equity decreased by approximately $182.4 million from the third quarter of 2016, mainly as a result of a net loss for the quarter of $4.1 million, declared dividends of $15.6 million on common stock and $0.9 million in dividends on preferred stock, higher net unrealized losses on securities available-for-sale by $152.6 million, and a $11.4 million after-tax adjustment of pension and postretirement benefit plans.

Common equity tier-1 ratio (“CET1”), book value per share and tangible book value per share were 16.47%, $50.08 and $43.12, respectively at December 31, 2016 compared to 16.64%, $51.85 and $44.86 at September 30, 2016. Refer to Table A for capital ratios.

Refer to Table C for the Statements of Financial Condition.

Cautionary Note Regarding Forward-Looking Statements

The information contained in this press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only management’s beliefs regarding future events and current expectations, many of which, by their nature, are inherently uncertain and outside of the control of the Corporation. It is possible that the Corporation’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated or implied in these forward-looking statements. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2015, the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016, and our other filings with the Securities and Exchange Commission for a discussion of some of the risks and important factors that could affect the Corporation’s future results and financial condition. Those filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.SEC.gov). The Corporation does not undertake to update or revise any forward-looking statement to reflect events or circumstances that may arise 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. Popular provides retail, mortgage and commercial banking services through its principal banking subsidiary, Banco Popular de Puerto Rico, as well as auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. 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 under the name of Popular Community Bank.

Conference Call

Popular will hold a conference call to discuss its financial results today Tuesday, January 24, 2017 at 10:00 a.m. Eastern Time. The call will be open to the public and broadcasted 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. [There is no charge to access the call]

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 24, 2017. The replay dial in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10098325.

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

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 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 - Adjusted Net Income for the Years Ended December 31, 2016 and 2015 (Non-GAAP)
 

POPULAR, INC.    
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
                             
                         
Quarters ended Years ended
        31-Dec-16       30-Sep-16       31-Dec-15       31-Dec-16       31-Dec-15
Basic EPS from continuing operations $(0.06) $0.44 $1.32 $2.05 $8.65
 
Basic EPS from discontinued operations $0.01 $- $- $0.01 $0.01
 
Total Basic EPS $(0.05) $0.44 $1.32 $2.06 $8.66
 
Diluted EPS from continuing operations $(0.06) $0.44 $1.32 $2.05 $8.64
 
Diluted EPS from discontinued operations $0.01 $- $- $0.01 $0.01
 
Total Diluted EPS $(0.05) $0.44 $1.32 $2.06 $8.65
 
Average common shares outstanding 103,368,820 103,296,443 103,098,249 103,275,264 102,967,186
 
Average common shares outstanding - assuming dilution 103,368,820 103,465,385 103,259,503 103,377,283 103,124,309
 
Common shares outstanding at end of period 103,790,932 103,762,596 103,618,976 103,790,932 103,618,976
 
Market value per common share $43.82 $38.22 $28.34 $43.82 $28.34
 
Market capitalization - (In millions) $4,548 $3,966 $2,937 $4,548 $2,937
 
Return on average assets (0.04%) 0.49% 1.53% 0.58% 2.54%
. .
Return on average common equity (0.38%) 3.46% 10.77% 4.07% 19.16%
 
Net interest margin 4.02% 4.12% 4.42% 4.22% 4.48%
 
Common equity per share $49.60 $51.37 $48.79 $49.60 $48.79
 
Book value per share $50.08 $51.85 $49.27 $50.08 $49.27
 
Tangible common book value per common share (non-GAAP) $43.12 $44.86 $42.18 $43.12 $42.18
 
Tangible common equity to tangible assets (non-GAAP) 11.78% 12.13% 12.46% 11.78% 12.46%
 
Tier 1 capital

16.47%

16.64% 16.21%

16.47%

16.21%
 
Total capital

19.46%

19.65% 18.78%

19.46%

18.78%
 
Tier 1 leverage

10.91%

11.21% 11.82%

10.91%

11.82%
 
Common Equity Tier 1 capital      

16.47%

      16.64%       16.21%      

16.47%

      16.21%
 

POPULAR, INC.
Financial Supplement to Fourth Quarter 2016 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-16   30-Sep-16  

Q4 2016

vs. Q3 2016

  31-Dec-15  

Q4 2016

vs. Q4 2015

  31-Dec-16   31-Dec-15
Interest income:    
Loans $363,252 $363,550 $(298) $364,484 $(1,232) $1,459,720 $1,458,706
Money market investments 5,108 4,568 540 1,949 3,159 16,428 7,243
Investment securities 41,283 37,732 3,551 32,795 8,488 152,011 126,064
  Trading account securities   1,401   1,449   (48)   2,129   (728)   6,414   11,001
  Total interest income   411,044   407,299   3,745   401,357   9,687   1,634,573   1,603,014
Interest expense:
Deposits 34,742 32,362 2,380 27,054 7,688 127,577 107,533
Short-term borrowings 1,761 2,132 (371) 1,693 68 7,812 7,512
  Long-term debt   19,136   19,118   18   20,110   (974)   77,129   78,986
  Total interest expense   55,639   53,612   2,027   48,857   6,782   212,518   194,031
Net interest income 355,405 353,687 1,718 352,500 2,905 1,422,055 1,408,983
Provision for loan losses - non-covered loans 40,924 42,594 (1,670) 57,711 (16,787) 171,126 217,458
Provision (reversal) for loan losses - covered loans   441   750   (309)   820   (379)   (1,110)   24,020
Net interest income after provision for loan losses   314,040   310,343   3,697   293,969   20,071   1,252,039   1,167,505
Service charges on deposit accounts 39,902 40,776 (874) 39,993 (91) 160,836 160,108
Other service fees 65,274 59,169 6,105 66,928 (1,654) 234,770 236,090
Mortgage banking activities 14,488 15,272 (784) 23,430 (8,942) 56,538 81,802
Net gain and valuation adjustments on investment securities 30 349 (319) - 30 1,962 141
Other-than-temporary impairment losses on investment securities - - - - - (209) (14,445)
Trading account loss (1,627) (113) (1,514) (1,631) 4 (785) (4,723)
Net gain (loss) on sale of loans, including valuation adjustments on loans held-for-sale - 8,549 (8,549) (60) 60 8,245 542
Adjustments (expense) to indemnity reserves on loans sold (3,051) (4,390) 1,339 (8,647) 5,596 (17,285) (18,628)
FDIC loss-share (expense) income (130,334) (61,723) (68,611) (4,359) (125,975) (207,779) 20,062
Other operating income   15,143   18,089   (2,946)   16,784   (1,641)   61,643   58,592
  Total non-interest (expense) income   (175)   75,978   (76,153)   132,438   (132,613)   297,936   519,541
Operating expenses:
Personnel costs
Salaries 77,275 77,770 (495) 77,578 (303) 308,135 304,618
Commissions, incentives and other bonuses 17,405 18,528 (1,123) 18,015 (610) 73,684 79,305
Pension, postretirement and medical insurance 12,481 13,413 (932) 10,393 2,088 51,284 44,059
  Other personnel costs, including payroll taxes   15,292   11,513   3,779   13,235   2,057   54,373   49,537
Total personnel costs 122,453 121,224 1,229 119,221 3,232 487,476 477,519
Net occupancy expenses 21,883 21,626 257 20,616 1,267 85,653 86,888
Equipment expenses 16,494 15,922 572 16,035 459 62,225 60,110
Other taxes 10,615 11,324 (709) 10,159 456 42,304 39,797
Professional fees
Collections, appraisals and other credit related fees 1,128 4,005 (2,877) 4,438 (3,310) 14,607 23,098
Programming, processing and other technology services 53,196 52,174 1,022 48,195 5,001 205,466 191,895
Legal fees, excluding collections 14,702 11,428 3,274 6,721 7,981 42,393 26,122
  Other professional fees   16,667   13,659   3,008   18,500   (1,833)   60,577   67,870
Total professional fees 85,693 81,266 4,427 77,854 7,839 323,043 308,985
Communications 5,780 5,785 (5) 6,759 (979) 23,897 25,146
Business promotion 15,473 12,726 2,747 15,162 311 53,014 52,076
FDIC deposit insurance 5,926 5,854 72 5,386 540 24,512 27,626
Other real estate owned (OREO) expenses 13,703 11,295 2,408 9,997 3,706 47,119 85,568
Credit and debit card processing, volume, interchange and other expenses 4,817 3,640 1,177 5,822 (1,005) 20,796 22,854
Other operating expenses
Operational losses 6,579 19,609 (13,030) 5,091 1,488 35,995 20,663
  All other   8,619   6,503   2,116   10,180   (1,561)   33,656   51,558
Total other operating expenses 15,198 26,112 (10,914) 15,271 (73) 69,651 72,221
Amortization of intangibles 2,836 3,097 (261) 2,522 314 12,144 11,019
Goodwill impairment charge - 3,801 (3,801) - - 3,801 -
Restructuring costs   -   -   -   1,004   (1,004)   -   18,412
  Total operating expenses   320,871   323,672   (2,801)   305,808   15,063   1,255,635   1,288,221
(Loss) income from continuing operations before income tax (7,006) 62,649 (69,655) 120,599 (127,605) 294,340 398,825
Income tax (benefit) expense   (1,766)   15,839   (17,605)   (16,827)   15,061   78,784   (495,172)
(Loss) income from continuing operations (5,240) 46,810 (52,050) 137,426 (142,666) 215,556 893,997
Income from discontinued operations, net of tax   1,135   -   1,135   -   1,135   1,135   1,347
Net (loss) income   $(4,105)   $46,810   $(50,915)   $137,426   $(141,531)   $216,691   $895,344
Net (loss) income applicable to common stock   $(5,036)   $45,880   $(50,916)   $136,495   $(141,531)   $212,968   $891,621
Net (loss) income per common share - basic:
Net (loss) income from continuing operations $(0.06) $0.44 $(0.50) $1.32 $(1.38) $2.05 $8.65
  Net income from discontinued operations   0.01   -   0.01   -   0.01   0.01   0.01
  Net (loss) income per common share - basic   $(0.05)   $0.44   $(0.49)   $1.32   $(1.37)   $2.06   $8.66
Net (loss) income per common share - diluted:
Net (loss) income from continuing operations $(0.06) $0.44 $(0.50) $1.32 $(1.38) $2.05 $8.64
  Net income from discontinued operations   0.01   -   0.01   -   0.01   0.01   0.01
  Net (loss) income per common share - diluted   $(0.05)   $0.44   $(0.49)   $1.32   $(1.37)   $2.06   $8.65
Dividends Declared per Common Share   $0.15   $0.15   $-   $0.15   $-   $0.60   $0.30
 
Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
            Variance
Q4 2016 vs.
(In thousands)   31-Dec-16   30-Sep-16   31-Dec-15   Q3 2016
Assets:
Cash and due from banks $362,394 $350,545 $363,674 $11,849
Money market investments 2,890,217 3,963,495 2,180,092 (1,073,278)
Trading account securities, at fair value 59,805 72,584 71,659 (12,779)
Investment securities available-for-sale, at fair value 8,209,806 7,628,656 6,062,992 581,150
Investment securities held-to-maturity, at amortized cost 98,101 97,973 100,903 128
Other investment securities, at lower of cost or realizable value 167,818 168,791 172,248 (973)
Loans held-for-sale, at lower of cost or fair value 88,821 72,076 137,000 16,745
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC 22,895,172 22,714,358 22,453,813 180,814
Loans covered under loss-sharing agreements with the FDIC 572,878 588,211 646,115 (15,333)
Less: Unearned income 121,425 118,386 107,698 3,039
    Allowance for loan losses   540,651   555,855   537,111   (15,204)
    Total loans held-in-portfolio, net   22,805,974   22,628,328   22,455,119   177,646
FDIC loss-share asset 69,334 152,467 310,221 (83,133)
Premises and equipment, net 543,981 537,975 502,611 6,006
Other real estate not covered under loss-sharing agreements with the FDIC 180,445 184,828 155,231 (4,383)
Other real estate covered under loss-sharing agreements with the FDIC 32,128 37,414 36,685 (5,286)
Accrued income receivable 138,042 119,691 124,234 18,351
Mortgage servicing assets, at fair value 196,889 200,354 211,405 (3,465)
Other assets 2,145,510 2,163,939 2,193,162 (18,429)
Goodwill 627,294 627,294 626,388 -
Other intangible assets   45,050   47,886   58,109   (2,836)
Total assets   $38,661,609   $39,054,296   $35,761,733   $(392,687)
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing $6,980,443 $6,950,287 $6,401,515 $30,156
    Interest bearing   23,515,781   23,376,758   20,808,208   139,023
    Total deposits   30,496,224   30,327,045   27,209,723   169,179
Federal funds purchased and assets sold under agreements to repurchase 479,425 765,251 762,145 (285,826)
Other short-term borrowings 1,200 1,200 1,200 -
Notes payable 1,574,852 1,598,533 1,662,508 (23,681)
Other liabilities 911,951 980,057 1,019,018 (68,106)
Liabilities from discontinued operations   -   1,815   1,815   (1,815)
Total liabilities   33,463,652   33,673,901   30,656,409   (210,249)
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,040 1,040 1,038 -
Surplus 4,255,022 4,234,842 4,229,156 20,180
Retained earnings 1,220,307 1,259,295 1,087,957 (38,988)
Treasury stock (8,286) (7,647) (6,101) (639)
Accumulated other comprehensive loss   (320,286)   (157,295)   (256,886)   (162,991)
    Total stockholders’ equity   5,197,957   5,380,395   5,105,324   (182,438)
Total liabilities and stockholders’ equity   $38,661,609   $39,054,296   $35,761,733   $(392,687)
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
                                     
Quarter ended Quarter ended Quarter ended Variance Variance
 
31-Dec-16 30-Sep-16 31-Dec-15 Q4 2016 vs. Q3 2016 Q4 2016 vs. Q4 2015
 
($ 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 $12,185   $47.8  

1.57

%

$11,159   $43.7   1.57 % $8,602   $36.9   1.71 % $1,026   $4.1   - % $3,583   $10.9   (0.14) %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,435 116.5 4.91 9,269 113.8 4.88 8,936 106.1 4.71 166 2.7 0.03 499 10.4 0.20
Construction 737 9.9 5.36 739 10.1 5.44 662 9.8 5.88 (2) (0.2) (0.08) 75 0.1 (0.52)
Mortgage 6,598 88.5 5.37 6,637 88.3 5.32 6,947 92.5 5.33 (39) 0.2 0.05 (349) (4.0) 0.04
Consumer 3,774 97.3 10.26 3,847 99.3 10.27 3,819 97.6 10.13 (73) (2.0) (0.01) (45) (0.3) 0.13
Lease financing 688   11.4   6.64 669   11.2   6.72 611   10.6   6.97 19   0.2   (0.08) 77   0.8   (0.33)
Total loans (excluding WB loans) 21,232 323.6 6.07 21,161 322.7 6.08 20,975 316.6 6.00 71 0.9 (0.01) 257 7.0 0.07
WB loans 1,845   39.6   8.56 1,881   40.9   8.65 2,156   47.9   8.82 (36)   (1.3)   (0.09) (311)   (8.3)   (0.26)
Total loans 23,077   363.2   6.27 23,042   363.6   6.29 23,131   364.5   6.27 35   (0.4)   (0.02) (54)   (1.3)   -
Total interest earning assets 35,262   $411.0   4.65 % 34,201   $407.3   4.75 % 31,733   $401.4   5.03 % 1,061   $3.7   (0.10) % 3,529   $9.6   (0.38) %
Allowance for loan losses (562) (553) (573) (9) 11
Other non-interest earning assets 4,386 4,443 4,416 (57) (30)
Total average assets $39,086 $38,091 $35,576 $995 $3,510
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $8,007 $8.3 0.41 % $7,326 $7.0 0.38 % $5,547 $5.1 0.36 % $681 $1.3 0.03 % $2,460 $3.2 0.05 %
Savings 7,796 4.7 0.24 7,550 4.6 0.24 7,119 4.1 0.23 246 0.1 - 677 0.6 0.01
Time deposits 7,858   21.7   1.10 7,859   20.7   1.05 8,192   17.9   0.87 (1)   1.0   0.05 (334)   3.8   0.23
Total interest bearing deposits 23,661 34.7 0.58 22,735 32.3 0.57 20,858 27.1 0.51 926 2.4 0.01 2,803 7.6 0.07
Borrowings 2,212   20.9   3.78 2,398   21.3   3.55 2,439   21.8   3.57 (186)   (0.4)   0.23 (227)   (0.9)   0.21
Total interest bearing liabilities 25,873   55.6   0.86 25,133   53.6   0.85 23,297   48.9   0.83 740   2.0   0.01 2,576   6.7   0.03
Net interest spread 3.79 % 3.90 % 4.20 % (0.11) % (0.41) %
Non-interest bearing deposits 6,976 6,676 6,246 300 730
Other liabilities 901 955 953 (54) (52)
Liabilities from discontinued operations 2 2 2 - -
Stockholders' equity 5,334 5,325 5,078 9 256
Total average liabilities and stockholders' equity $39,086 $38,091 $35,576 $995 $3,510
 
Net interest income / margin non-taxable equivalent basis $355.4   4.02 % $353.7   4.12 % $352.5   4.42 % $1.7   (0.10) % $2.9   (0.40) %
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
   
  Year ended     Year ended        
31-Dec-16 31-Dec-15 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 $10,651   $174.9   1.64 % $8,406   $144.3   1.72 % $2,245   $30.6   (0.08)

%

Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,203 451.8 4.91 8,705 424.6 4.88 498 27.2 0.03
Construction 726 39.0 5.38 616 36.9 6.00 110 2.1 (0.62)
Mortgage 6,702 355.4 5.30 6,978 360.4 5.16 (276) (5.0) 0.14
Consumer 3,823 394.0 10.31 3,824 387.2 10.13 (1) 6.8 0.18
Lease financing 660   44.3   6.71 589   40.8   6.91 71   3.5   (0.20)
Total loans (excluding WB loans) 21,114 1,284.5 6.08 20,712 1,249.9 6.03 402 34.6 0.05
WB loans 1,949   175.2   8.99 2,333   208.8   8.95 (384)   (33.6)   0.04
Total loans 23,063   1,459.7   6.33 23,045   1,458.7   6.33 18   1.0   -
Total interest earning assets 33,714   $1,634.6   4.85 % 31,451   $1,603.0   5.10 % 2,263   $31.6   (0.25)

%

Allowance for loan losses (548) (585) 37
Other non-interest earning assets 4,448 4,320 128
Total average assets $37,614 $35,186 $2,428
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $7,020 $27.6 0.39 % $5,447 $19.0 0.35 % $1,573 $8.6 0.04

%

Savings 7,528 18.0 0.24 7,027 16.2 0.23 501 1.8 0.01
Time deposits 7,910   82.0   1.04 8,158   72.3   0.89 (248)   9.7   0.15
Total interest bearing deposits 22,458 127.6 0.57 20,632 107.5 0.52 1,826 20.1 0.05
Borrowings 2,339   84.9   3.63 2,757   86.5   3.14 (418)   (1.6)   0.49
Total interest bearing liabilities 24,797   212.5   0.86 23,389   194.0   0.83 1,408   18.5   0.03
Net interest spread 3.99 % 4.27 % (0.28)

%

Non-interest bearing deposits 6,608 6,147 461
Other liabilities 928 944 (16)
Liabilities from discontinued operations 2 2 -
Stockholders' equity 5,279 4,704 575
Total average liabilities and stockholders' equity $37,614 $35,186 $2,428
 
Net interest income / margin non-taxable equivalent basis $1,422.1   4.22 % $1,409.0   4.48 % $13.1   (0.26)

%

 

Popular, Inc.                
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
 
Mortgage Banking Activities Variance
Quarters ended Q4 2016 vs. Q4 2016 vs. Year ended Variance
 
(In thousands)   31-Dec-16   30-Sep-16   31-Dec-15   Q3 2016   Q4 2015   31-Dec-16   31-Dec-15   2016 vs. 2015
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $14,211 $14,520 $15,504 $(309) $(1,293) $58,208 $59,461 $(1,253)
  Mortgage servicing rights fair value adjustments   (6,457)   (6,062)   (2,096)   (395)   (4,361)   (25,336)   (7,904)   (17,432)
Total mortgage servicing fees, net of fair value adjustments   7,754   8,458   13,408   (704)   (5,654)   32,872   51,557   (18,685)
Net gain on sale of loans, including valuation on loans held-for-sale   2,535   8,857   10,337   (6,322)   (7,802)   26,976   35,336   (8,360)
Trading account profit (loss):
Unrealized gains (losses) on outstanding derivative positions 43 95 27 (52) 16 (1) 17 (18)
  Realized gains (losses) on closed derivative positions   4,156   (2,138)   (342)   6,294   4,498   (3,309)   (5,108)   1,799
Total trading account profit (loss)   4,199   (2,043)   (315)   6,242   4,514   (3,310)   (5,091)   1,781
Total mortgage banking activities   $14,488   $15,272   $23,430   $(784)   $(8,942)   $56,538   $81,802   $(25,264)
 
                 
Other Service Fees Variance
Quarters ended Q4 2016 vs. Q4 2016 vs. Years ended Variance
 
(In thousands)   31-Dec-16   30-Sep-16   31-Dec-15   Q3 2016   Q4 2015   31-Dec-16   31-Dec-15   2016 vs. 2015
Other service fees:
Debit card fees $12,088 $11,483 $11,768 $605 $320 $46,241 $46,176 $65
Insurance fees 20,804 15,943 23,813 4,861 (3,009) 63,482 63,976 (494)
Credit card fees 18,324 17,644 17,528 680 796 70,526 68,166 2,360
Sale and administration of investment products 5,652 5,542 5,578 110 74 21,450 23,846 (2,396)
Trust fees 4,782 4,968 4,947 (186) (165) 18,811 18,866 (55)
  Other fees   3,624   3,589   3,294   35   330   14,260   15,060   (800)
Total other service fees   $65,274   $59,169   $66,928   $6,105   $(1,654)   $234,770   $236,090   $(1,320)
 

Popular, Inc.          
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table G - Loans and Deposits
(Unaudited)
 
Loans - Ending Balances
Variance
(In thousands)   31-Dec-16   30-Sep-16   31-Dec-15  

Q4 2016 vs.

Q3 2016

 

Q4 2016 vs.

Q4 2015

Loans not covered under FDIC loss-sharing agreements:
Commercial $10,798,507 $10,537,191 $10,099,163 $261,316 $699,344
Construction 776,300 731,352 681,106 44,948 95,194
Legacy [1] 45,293 47,914 64,436 (2,621) (19,143)
Lease financing 702,893 682,810 627,650 20,083 75,243
Mortgage 6,696,361 6,774,497 7,036,081 (78,136) (339,720)
Consumer   3,754,393   3,822,208   3,837,679   (67,815)   (83,286)
Total non-covered loans held-in-portfolio $22,773,747 $22,595,972 $22,346,115 $177,775 $427,632
Loans covered under FDIC loss-sharing agreements   572,878   588,211   646,115   (15,333)   (73,237)
Total loans held-in-portfolio   $23,346,625   $23,184,183   $22,992,230   $162,442   $354,395
Loans held-for-sale:
Commercial $- $- $45,074 $- $(45,074)
Construction - - 95 - (95)
Mortgage   88,821   72,076   91,831   16,745   (3,010)
Total loans held-for-sale   $88,821   $72,076   $137,000   $16,745   $(48,179)
Total loans   $23,435,446   $23,256,259   $23,129,230   $179,187   $306,216
[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-16   30-Sep-16   31-Dec-15   Q4 2016 vs. Q3 2016   Q4 2016 vs.Q4 2015
Demand deposits [1] $9,053,897 $9,161,839 $7,221,238 $(107,942) $1,832,659
Savings, NOW and money market deposits (non-brokered) 13,327,298 12,872,072 11,440,693 455,226 1,886,605
Savings, NOW and money market deposits (brokered) 405,487 391,128 382,424 14,359 23,063
Time deposits (non-brokered) 7,486,717 7,619,232 7,274,157 (132,515) 212,560
Time deposits (brokered CDs)   222,825   282,774   891,211   (59,949)   (668,386)
Total deposits   $30,496,224   $30,327,045   $27,209,723   $169,179   $3,286,501
[1] Includes interest and non-interest bearing demand deposits.                
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
                Variance
(Dollars in thousands)   31-Dec-16  

As a % of

loans HIP by

category

      30-Sep-16

As a % of

loans HIP by

category

    31-Dec-15  

As a % of

loans HIP by

category

     

Q4 2016 vs.

Q3 2016

 

Q4 2016 vs.

Q4 2015

Non-accrual loans:  
Commercial $163,348 1.5 % $170,571 1.6 % $181,816 1.8 % $(7,223) $(18,468)
Construction - - - - 3,550 0.5 - (3,550)
Legacy [1] 3,337 7.4 3,450 7.2 3,649 5.7 (113) (312)
Lease financing 3,062 0.4 2,878 0.4 3,009 0.5 184 53
Mortgage 329,907 4.9 345,776 5.1 351,471 5.0 (15,869) (21,564)
Consumer   58,261   1.6       56,650 1.5     58,304   1.5       1,611   (43)
Total non-performing loans held-in-
portfolio, excluding covered loans 557,915 2.5 % 579,325 2.6 % 601,799 2.7 % (21,410) (43,884)
Non-performing loans held-for-sale [2] - - 45,169 - (45,169)
Other real estate owned (“OREO”),
excluding covered OREO   180,445           184,828       155,231           (4,383)   25,214
Total non-performing assets,
excluding covered assets 738,360 764,153 802,199 (25,793) (63,839)
Covered loans and OREO   36,044           41,211       40,571           (5,167)   (4,527)
Total non-performing assets   $774,404           $805,364       $842,770           $(30,960)   $(68,366)
Accruing loans past due 90 days or more [3]   $426,652           $418,652       $446,725           $8,000   $(20,073)
Ratios excluding covered loans:
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.45 % 2.56 % 2.69 %
Allowance for loan losses to loans
held-in-portfolio 2.24 2.33 2.25
Allowance for loan losses to
non-performing loans, excluding loans
held-for-sale   91.47           90.73       83.57                
Ratios including covered loans:
Non-performing assets to total assets 2.00 % 2.06 % 2.36 %
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.41 2.52 2.63
Allowance for loan losses to loans
held-in-portfolio 2.32 2.40 2.34
Allowance for loan losses to non-performing
loans, excluding loans held-for-sale   96.23           95.32       88.68                
[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] There were no non-performing loans held-for-sale as of December 31, 2016 (September 30, 2016 - there were no non-performing loans held-for-sale; December 31, 2015 - $45 million in commercial loans and $95 thousand in construction 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 $181 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2016 (September 30, 2016 - $174 million; December 31, 2015 - $164 million). Furthermore, the Corporation has approximately $68 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, 2016 - $72 million; December 31, 2015 - $70 million).
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
             
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-16 30-Sep-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $167,047 $3,524 $170,571 $172,584 $3,031 $175,615
Plus:
New non-performing loans 17,409 1,615 19,024 12,520 1,609 14,129
Advances on existing non-performing loans - 5 5 - 164 164
Reclassification from construction loans to commercial loans - - - 2,436 - 2,436
Less:
Non-performing loans transferred to OREO (1,559) - (1,559) (2,223) - (2,223)
Non-performing loans charged-off (12,925) (35) (12,960) (7,918) (141) (8,059)
Loans returned to accrual status / loan collections   (10,317)   (1,416)   (11,733)   (10,352)   (1,139)   (11,491)
Ending balance NPLs   $159,655   $3,693   $163,348   $167,047   $3,524   $170,571
 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-16 30-Sep-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $- $- $- $2,423 $100 $2,523
Plus:
New non-performing loans - - - 1,150 - 1,150
Less:
Non-performing loans charged-off - - - (985) - (985)
Loans returned to accrual status / loan collections - - - (152) (100) (252)
Reclassification from construction loans to commercial loans   -   -   -   (2,436)   -   (2,436)
Ending balance NPLs   $-   $-   $-   $-   $-   $-
 
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-16 30-Sep-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $331,346 $14,430 $345,776 $323,658 $14,390 $338,048
Plus:
New non-performing loans 76,278 4,835 81,113 87,340 6,715 94,055
Less:
Non-performing loans transferred to OREO (7,791) (315) (8,106) (14,398) (384) (14,782)
Non-performing loans charged-off (16,404) 240 (16,164) (9,481) (1,994) (11,475)
Loans returned to accrual status / loan collections   (65,235)   (7,477)   (72,712)   (55,773)   (4,297)   (60,070)
Ending balance NPLs   $318,194   $11,713   $329,907   $331,346   $14,430   $345,776
 
             
Legacy loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-16   30-Sep-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $- $3,450 $3,450 $- $3,839 $3,839
Plus:
New non-performing loans - 17 17 - 45 45
Advances on existing non-performing loans - 7 7 - 135 135
Less:
Non-performing loans transferred to OREO - - - - (44) (44)
Non-performing loans charged-off - (89) (89) - (146) (146)
Loans returned to accrual status / loan collections   -   (48)   (48)   -   (379)   (379)
Ending balance NPLs   $-   $3,337   $3,337   $-   $3,450   $3,450
 
Total non-performing loans held-in-portfolio (excluding consumer and covered loans):
Quarter ended Quarter ended
31-Dec-16   30-Sep-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $498,393 $21,404 $519,797 $498,665 $21,360 $520,025
Plus:
New non-performing loans 93,687 6,467 100,154 101,010 8,369 109,379
Advances on existing non-performing loans - 12 12 - 299 299
Reclassification from construction loans to commercial loans - - - 2,436 - 2,436
Less:
Non-performing loans transferred to OREO (9,350) (315) (9,665) (16,621) (428) (17,049)
Non-performing loans charged-off (29,329) 116 (29,213) (18,384) (2,281) (20,665)
Loans returned to accrual status / loan collections (75,552) (8,941) (84,493) (66,277) (5,915) (72,192)
Reclassification from construction loans to commercial loans   -   -   -   (2,436)   -   (2,436)
Ending balance NPLs   $477,849   $18,743   $496,592   $498,393   $21,404   $519,797
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
                                         
 
Quarter ended Quarter ended Quarter ended
    31-Dec-16       30-Sep-16       31-Dec-15  
(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 $525,593 $30,262 $555,855 $518,139 $30,581 $548,720 $536,005 $34,509 $570,514
Provision for loan losses   40,924       441       41,365       42,594       750       43,344       57,711       820       58,531    
    566,517       30,703       597,220       560,733       31,331       592,064       593,716       35,329       629,045    
Net loans charged-off (recovered):
BPPR
Commercial 9,205 - 9,205 3,199 - 3,199 42,857 - 42,857
Construction 8 - 8 886 - 886 2,966 - 2,966
Lease financing 1,000 - 1,000 816 - 816 667 - 667
Mortgage 20,919 360 21,279 15,237 661 15,898 14,255 1,168 15,423
Consumer   22,284       (7)       22,277       12,821       408       13,229       21,266       (15)       21,251
Total BPPR   53,416       353       53,769       32,959       1,069       34,028       82,011       1,153       83,164
 
BPNA
Commercial (1,080) - (1,080) (1,173) - (1,173) (525) - (525)
Legacy [1] (253) - (253) (520) - (520) (359) - (359)
Mortgage (255) - (255) 1,942 - 1,942 162 - 162
Consumer   4,388       -       4,388       1,932       -       1,932       1,581       -       1,581    
Total BPNA   2,800       -       2,800       2,181       -       2,181       859       -       859  
Total loans charged-off - Popular, Inc.   56,216       353       56,569       35,140       1,069       36,209       82,870       1,153       84,023    
Net write-downs [2]   -       -       -       -       -       -       (7,911)       -       (7,911)    
Balance at end of period   $510,301       $30,350       $540,651       $525,593       $30,262       $555,855       $502,935       $34,176       $537,111    
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 1.00 % 0.98 % 0.63 % 0.63 % 1.48 % 1.46 %
Provision for loan losses to net charge-offs [3] 0.73 x 0.73 x 1.21 x 1.20 x 0.70 x 0.70 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.25 % 1.22 % 0.77 % 0.77 % 1.86 % 1.82 %
Provision for loan losses to net charge-offs [3] 0.70 x 0.70 x 1.10 x 1.09 x 0.68 x 0.68 x
 
BPNA
Annualized net charge-offs to average loans held-in-portfolio 0.21 % 0.17 % 0.07 %
Provision for loan losses to net charge-offs                   1.27   x                   2.89   x                   2.42   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] Net write-downs are related to loans sold or reclassified to held-for-sale.
[3] Excluding provision for loan losses and net (write-downs) recoveries related to loans sold or reclassified to held-for-sale.
 
 
Year ended Year ended
(Dollars in thousands)   31-Dec-16       31-Dec-15    
   

Non-covered

loans

     

Covered

loans

      Total      

Non-covered

loans

     

Covered

loans

      Total    
Balance at beginning of period $502,935 $34,176 $537,111 $519,719 $82,073 $601,792
Provision (reversal of provision) for loan losses   171,126       (1,110)       170,016       217,458       24,020       241,478    
    674,061       33,066       707,127       737,177       106,093       843,270    
Net loans charged-off (recovered):
BPPR
Commercial 20,755 - 20,755 73,890 31,432 105,322
Construction (2,021) - (2,021) (886) 20,386 19,500
Lease financing 3,888 - 3,888 3,303 - 3,303
Mortgage 64,316 2,716 67,032 50,991 5,228 56,219
Consumer   76,306       -       76,306       83,876       11       83,887    
Total BPPR   163,244       2,716       165,960       211,174       57,057       268,231    
 
BPNA
Commercial (3,313) - (3,313) (3,842) - (3,842)
Legacy [1] (1,913) - (1,913) (2,760) - (2,760)
Mortgage 1,933 - 1,933 1,279 - 1,279
Consumer   9,254       -       9,254       5,649       -       5,649    
Total BPNA   5,961       -       5,961       326       -       326    
Total loans charged-off - Popular, Inc.   169,205       2,716       171,921       211,500       57,057       268,557    
Balance transferred from covered to non-covered loans   -       -       -       13,037       (13,037)       -    
Net (write-downs) recoveries [2]   5,445       -       5,445       (35,779)       (1,823)       (37,602)    
Balance at end of period   $510,301       $30,350       $540,651       $502,935       $34,176       $537,111    
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 0.76 % 0.75 % 0.98 % 1.17 %
Provision for loan losses to net charge-offs [3] 1.01 x 0.99 x 1.03 x 0.90 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 0.95 % 0.93 % 1.24 % 1.45 %
Provision for loan losses to net charge-offs [3] 0.95 x 0.93 x 1.03 x 0.90 x
 
BPNA
Annualized net charge-offs to average loans held-in-portfolio 0.12 % 0.01 %
Provision for loan losses to net charge-offs                   2.56   x                   1.92   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] Net (write-downs) recoveries for the years ended December 31, 2016 and 2015 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 during the years ended December 31, 2016 and December 31, 2015.
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
                             
                                                             
31-Dec-16
(Dollars in thousands)       Commercial       Construction       Legacy [2]       Mortgage       Lease financing       Consumer       Total[3]
Specific ALLL $42,375 $- $- $44,610 $535 $23,857 $111,377
Impaired loans [1] $338,422 $- $- $506,364 $1,817 $109,454 $956,057
Specific ALLL to impaired loans   [1]   12.52   %   -   %   -   %   8.81   %   29.44   %   21.80   %   11.65   %
General ALLL $160,279 $9,525 $1,343 $103,324 $7,127 $117,326 $398,924
Loans held-in-portfolio, excluding impaired loans [1] $10,460,085 $776,300 $45,293 $6,189,997 $701,076 $3,644,939 $21,817,690
General ALLL to loans held-in-portfolio, excluding impaired loans   [1]   1.53   %   1.23   %   2.97   %   1.67   %   1.02   %   3.22   %   1.83   %
Total ALLL $202,654 $9,525 $1,343 $147,934 $7,662 $141,183 $510,301
Total non-covered loans held-in-portfolio [1] $10,798,507 $776,300 $45,293 $6,696,361 $702,893 $3,754,393 $22,773,747
ALLL to loans held-in-portfolio   [1]   1.88   %   1.23   %   2.97   %   2.21   %   1.09   %   3.76   %   2.24   %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] 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.
[3] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of December 31, 2016 the general allowance on the covered loans amounted to $30.4 million.
                                                             
30-Sep-16
(Dollars in thousands)       Commercial       Construction       Legacy [2]       Mortgage       Lease financing       Consumer       Total[3]
Specific ALLL $58,527 $- $- $45,557 $540 $24,433 $129,057
Impaired loans [1] $328,868 $- $- $496,868 $1,899 $110,929 $938,564
Specific ALLL to impaired loans   [1]   17.80   %   -   %   -   %   9.17   %   28.44   %   22.03   %   13.75   %
General ALLL $165,639 $9,942 $1,682 $93,971 $7,375 $117,927 $396,536
Loans held-in-portfolio, excluding impaired loans [1] $10,208,312 $731,352 $47,914 $6,277,639 $680,911 $3,711,280 $21,657,408
General ALLL to loans held-in-portfolio, excluding impaired loans   [1]   1.62   %   1.36   %   3.51   %   1.50   %   1.08   %   3.18   %   1.83   %
Total ALLL $224,166 $9,942 $1,682 $139,528 $7,915 $142,360 $525,593
Total non-covered loans held-in-portfolio [1] $10,537,180 $731,352 $47,914 $6,774,507 $682,810 $3,822,209 $22,595,972
ALLL to loans held-in-portfolio   [1]   2.13   %   1.36   %   3.51   %   2.06   %   1.16   %   3.72   %   2.33   %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] 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.
[3] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of September 30, 2016 the general allowance on the covered loans amounted to $30.3 million.
                                                             
Variance
(Dollars in thousands)       Commercial       Construction       Legacy       Mortgage       Lease financing       Consumer       Total    
Specific ALLL $(16,152) $- $- $(947) $(5) $(576) $(17,680)
Impaired loans       $9,554       $-       $-       $9,496       $(82)       $(1,475)       $17,493    
General ALLL $(5,360) $(417) $(339) $9,353 $(248) $(601) $2,388
Loans held-in-portfolio, excluding impaired loans       $251,773       $44,948       $(2,621)       $(87,642)       $20,165       $(66,341)       $160,282    
Total ALLL $(21,512) $(417) $(339) $8,406 $(253) $(1,177) $(15,292)
Total non-covered loans held-in-portfolio       $261,327       $44,948       $(2,621)       $(78,146)       $20,083       $(67,816)       $177,775    

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
 
31-Dec-16
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:            
  Specific ALLL non-covered loans $42,375 $- $42,428 $535 $23,185 $108,523
  General ALLL non-covered loans   147,311   1,353   100,892   7,127   102,778   359,461
ALLL - non-covered loans   189,686   1,353   143,320   7,662   125,963   467,984
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   30,159   -   191   30,350
ALLL - covered loans   -   -   30,159   -   191   30,350
Total ALLL   $189,686   $1,353   $173,479   $7,662   $126,154   $498,334
Loans held-in-portfolio:
Impaired non-covered loans $338,422 $- $497,488 $1,817 $106,615 $944,342
  Non-covered loans held-in-portfolio, excluding impaired loans   6,863,795   85,558   5,419,012   701,076   3,154,641   16,224,082
Non-covered loans held-in-portfolio   7,202,217   85,558   5,916,500   702,893   3,261,256   17,168,424
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   556,570   -   16,308   572,878
Covered loans held-in-portfolio   -   -   556,570   -   16,308   572,878
Total loans held-in-portfolio   $7,202,217   $85,558   $6,473,070   $702,893   $3,277,564   $17,741,302
 
 
30-Sep-16
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $58,527 $- $43,567 $540 $23,708 $126,342
  General ALLL non-covered loans   151,847   2,114   91,761   7,375   104,604   357,701
ALLL - non-covered loans   210,374   2,114   135,328   7,915   128,312   484,043
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   30,135   -   127   30,262
ALLL - covered loans   -   -   30,135   -   127   30,262
Total ALLL   $210,374   $2,114   $165,463   $7,915   $128,439   $514,305
Loans held-in-portfolio:
Impaired non-covered loans $328,868 $- $487,972 $1,899 $108,341 $927,080
  Non-covered loans held-in-portfolio, excluding impaired loans   6,925,290   81,054   5,476,876   680,911   3,185,490   16,349,621
Non-covered loans held-in-portfolio   7,254,158   81,054   5,964,848   682,810   3,293,831   17,276,701
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   571,349   -   16,862   588,211
Covered loans held-in-portfolio   -   -   571,349   -   16,862   588,211

Total loans held-in-portfolio

  $7,254,158   $81,054   $6,536,197   $682,810   $3,310,693   $17,864,912
 

                           
Variance
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:            
  Specific ALLL non-covered loans $(16,152) $- $(1,139) $(5) $(523) $(17,819)
  General ALLL non-covered loans   (4,536)   (761)   9,131   (248)   (1,826)   1,760
ALLL - non-covered loans   (20,688)   (761)   7,992   (253)   (2,349)   (16,059)
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   24   -   64   88
ALLL - covered loans   -   -   24   -   64   88
Total ALLL   $(20,688)   $(761)   $8,016   $(253)   $(2,285)   $(15,971)
Loans held-in-portfolio:
Impaired non-covered loans $9,554 $- $9,516 $(82) $(1,726) $17,262
  Non-covered loans held-in-portfolio, excluding impaired loans   (61,495)   4,504   (57,864)   20,165   (30,849)   (125,539)
Non-covered loans held-in-portfolio   (51,941)   4,504   (48,348)   20,083   (32,575)   (108,277)
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   (14,779)   -   (554)   (15,333)
Covered loans held-in-portfolio   -   -   (14,779)   -   (554)   (15,333)
Total loans held-in-portfolio   $(51,941)   $4,504   $(63,127)   $20,083   $(33,129)   $(123,610)
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
(Unaudited)
 
31-Dec-16
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:            
  Specific ALLL $- $- $- $2,182 $672 $2,854
  General ALLL   12,968   8,172   1,343   2,432   14,548   39,463
Total ALLL   $12,968   $8,172   $1,343   $4,614   $15,220   $42,317
Loans held-in-portfolio:
Impaired loans $- $- $- $8,876 $2,839 $11,715
  Loans held-in-portfolio, excluding impaired loans   3,596,290   690,742   45,293   770,985   490,298   5,593,608
Total loans held-in-portfolio   $3,596,290   $690,742   $45,293   $779,861   $493,137   $5,605,323
 
 
30-Sep-16
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $1,990 $725 $2,715
  General ALLL   13,792   7,828   1,682   2,210   13,323   38,835
Total ALLL   $13,792   $7,828   $1,682   $4,200   $14,048   $41,550
Loans held-in-portfolio:
Impaired loans $- $- $- $8,896 $2,588 $11,484
  Loans held-in-portfolio, excluding impaired loans   3,283,022   650,298   47,914   800,763   525,790   5,307,787
Total loans held-in-portfolio   $3,283,022   $650,298   $47,914   $809,659   $528,378   $5,319,271
 
                           
Variance
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $192 $(53) $139
  General ALLL   (824)   344   (339)   222   1,225   628
Total ALLL   $(824)   $344   $(339)   $414   $1,172   $767
Loans held-in-portfolio:
Impaired loans $- $- $- $(20) $251 $231
  Loans held-in-portfolio, excluding impaired loans   313,268   40,444   (2,621)   (29,778)   (35,492)   285,821
Total loans held-in-portfolio   $313,268   $40,444   $(2,621)   $(29,798)   $(35,241)   $286,052
 

Popular, Inc.            
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
 
 
(In thousands, except share or per share information)   31-Dec-16       30-Sep-16       31-Dec-15    
Total stockholders’ equity $5,197,957 $5,380,395 $5,105,324
Common shares outstanding at end of period 103,790,932 103,762,596 103,618,976
Book value per common share   $50.08       $51.85       $49.27
 
Total stockholders’ equity $5,197,957 $5,380,395 $5,105,324
Less: Preferred stock (50,160) (50,160) (50,160)
Less: Goodwill (627,294) (627,294) (626,388)
Less: Other intangibles   (45,050)       (47,886)       (58,109)    
Total tangible common equity   $4,475,453       $4,655,055       $4,370,667    
Total assets $38,661,609 $39,054,296 $35,761,733
Less: Goodwill (627,294) (627,294) (626,388)
Less: Other intangibles   (45,050)       (47,886)       (58,109)    
Total tangible assets   $37,989,265       $38,379,116       $35,077,236    
Tangible common equity to tangible assets 11.78 % 12.13 % 12.46 %
Common shares outstanding at end of period 103,790,932 103,762,596 103,618,976
Tangible book value per common share   $43.12       $44.86       $42.18    
 

Popular, Inc.      
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table O - Financial Information - Westernbank Loans
(Unaudited)
 
 
Revenues (Expenses)
Quarters ended
(In thousands)   31-Dec-16   30-Sep-16   Variance
Interest income on WB loans   $39,642   $40,867   $(1,225)
FDIC loss-share expense:
Amortization of indemnification asset (864) (1,259) 395
80% mirror accounting on credit impairment losses (reversal) [1] 720 659 61
80% mirror accounting on reimbursable expenses 1,395 853 542
80% mirror accounting on recoveries on covered assets, including rental income on OREOs,
subject to reimbursement to the FDIC (26,215) (522) (25,693)
Change in true-up payment obligation (18,671) (6,611) (12,060)
Arbitration award expense (81,273) (54,924) (26,349)
Other   (5,426)   81   (5,507)
  Total FDIC loss-share expense   (130,334)   (61,723)   (68,611)
Total expense   (90,692)   (20,856)   (69,836)
Provision (reversal) for loan losses- WB loans   (2,292)   6,612   (8,904)
Total expense less provision (reversal) for loan losses   $(88,400)   $(27,468)   $(60,932)
[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 agreement for interest not collected from borrowers is limited under the agreement (approximately 90 days); accordingly, these amounts are not subject fully to the 80% mirror accounting.

 
 
Non-personnel operating expenses
Quarters ended [1][2]
(In thousands)   31-Dec-16   30-Sep-16   Variance
Professional fees $6,936 $4,501 $2,435
OREO expenses 2,766 2,702 64
Other operating expenses   1,619   1,738   (119)
Total operating expenses   $11,321   $8,941   $2,380
[1]

Includes expenses related to loans subject, and not subject, to the FDIC loss-sharing agreements.

[2] Expense reimbursements from the FDIC may be recorded with a time lag, since these are claimed upon the event of loss or charge-off of the loans which may occur in a subsequent period.
 
 
Quarterly average assets
Quarters ended
(In millions)   31-Dec-16   30-Sep-16   Variance
Loans $1,845 $1,881 $(36)
FDIC loss-share asset   126   192   (66)
 

Activity in the carrying amount and accretable yield of loans accounted for under ASC 310-30  
     
Quarters ended
      31-Dec-16   30-Sep-16
(In thousands)   Accretable yield  

Carrying amount

of loans

  Accretable yield  

Carrying amount

of loans

Beginning balance $1,038,692   $1,767,539 $1,071,680 $1,799,943
Accretion (38,149) 38,149 (39,590) 39,590
Changes in expected cash flows 9,544 - 6,602 -
Collections / loan sales / charge-offs   -   (67,359)   -   (71,994)
Ending balance [1] 1,010,087 1,738,329 1,038,692 1,767,539
  Allowance for loan losses - ASC 310-30 loans   -   (68,877)   -   (69,571)
Ending balance, net of allowance for loan losses   $1,010,087   $1,669,452   $1,038,692   $1,697,968
 
[1] The carrying amount of loans acquired from Westernbank and accounted for under ASC 310-30 which remain subject to the loss-sharing agreement with the FDIC amounted to approximately $563 million as of December 31, 2016 and $578 million as of September 30, 2016.
 
 
 
 
Activity in the carrying amount of the FDIC indemnity asset
 
Quarters ended
(In thousands)       31-Dec-16       30-Sep-16
Balance at beginning of period $152,467 $214,029
Amortization (864) (1,259)
Credit impairment losses (reversal) to be covered under loss-sharing agreements 720 659
Reimbursable expenses to be covered under loss-sharing agreements 1,395 853
Net payments from FDIC under loss-sharing agreements (3,111) (6,819)
Arbitration award expense (81,273) (54,924)
Other adjustments attributable to FDIC loss-sharing agreements       -       (72)
Balance at end of period       $69,334       $152,467
 
 
Activity in the remaining FDIC loss-share asset amortization
 
Quarters ended
(In thousands)       31-Dec-16       30-Sep-16
Balance at beginning of period $7,305 $23,191
Amortization (864) (1,259)
Impact of change in projected losses       (1,629)       (14,627)
Balance at end of period       $4,812       $7,305

Popular, Inc.
Financial Supplement to Fourth Quarter 2016 Earnings Release
Table P - Adjusted Net Income for the Years Ended December 31, 2016 and 2015 (Non-GAAP)
(Unaudited)
 
    31-Dec-16
(In thousands)   Pre-tax  

Income tax

effect

     

Impact on net

income

U.S. GAAP Net income

          $216,691
Non-GAAP Adjustments:
Impact of EVERTEC Restatement [1] 2,173 - 2,173
Bulk Sale of WB loans and OREO [2] (891)

347[4]

 

(544)
FDIC arbitration award[3] 171,757

(41,108)[4]

 

130,649
Goodwill impairment charge[5] 3,801 - 3,801
Other FDIC - LSA adjustments[6] 8,806

(2,380)[4]

 

6,426
Income from discontinued operations[7]   (2,015)   880       (1,135)
Adjusted net income (Non-GAAP)               $358,061

[1]Represents Popular Inc.'s proportionate share of the cumulative impact of EVERTEC restatement and other corrective adjustments to its financial statements, as disclosed in EVERTEC's 2015 Annual Report on Form 10K. Due to the preferential tax rate on the income from EVERTEC, the tax effect of this transaction was insignificant to the Corporation.

[2]Represents the impact of the bulk sale of Westernbank loans and OREO.
[3]Represents the arbitration decision denying BPPR's request for reimbursement in certain shared loss claims.

[4]Gains and losses related to assets acquired from Westernbank as part of the FDIC assisted transaction are subject to the capital gains tax rate of 20%. Other items related to the FDIC loss-sharing agreements are subject to the statutory tax rate of 39%.

[5]Represents goodwill impairment charge in the Corporation’s securities subsidiary. The securities subsidiary is a limited liability company with a partnership election. Accordingly, its earnings flow through Popular, Inc., holding company, for income tax purposes. Since Popular, Inc. has a full valuation allowance on its deferred tax assets, this results in an effective tax rate of 0%.

[6]Additional adjustments, including prior period recoveries, related to restructured commercial loans to reduce the indemnification asset to its expected realizable value.

[7]Represents income from discontinued operations associated with the BPNA reorganization.
 

 

  31-Dec-15
(In thousands)   Pre-tax  

Income tax

effect

   

Impact on net

income

U.S. GAAP Net income

        $895,344
Non-GAAP Adjustments:
BPNA Reorganization[1] 17,065 - 17,065
Doral Transaction[2] 25,576 (7,690) 17,886
OTTI[3] 14,445 (2,486) 11,959
Reversal DTA - PNA[4] - (589,030) (589,030)
Loss on Bulk Sale of Covered OREOs[5] 4,391 (1,712) 2,679
Adjustment to FDIC Indemnification Asset[6] 10,887 (2,177) 8,710
MSR's Acquired[7] (4,378) 1,707 (2,671)
Impairment of Loans Under Proposed Portfolio Sale[8] 15,190 (5,924) 9,266
Bulk Sale[9]   5,852   (2,282)     3,570

Adjusted Net income (Non-GAAP)

            $374,778
[1]Represents restructuring charges associated with the reorganization of BPNA. The impact of the partial reversal of the valuation allowance of the deferred tax asset at BPNA corresponding to the income for the year 2015 was reflected in the effective tax rate, effectively reducing the income tax expense by the benefit of such reversal.
[2]Includes approximately $0.8 million of fees charged for loan servicing cost to the FDIC, $2.1 million of fees charged for services provided to the alliance co-bidders, personnel costs related to former Doral Bank employees retained on a temporary basis and incentive compensation for an aggregate of $7.1 million, building rent expense of Doral Bank’s administrative offices for $4.1 million, professional fees and business promotion expenses directly associated with the Doral Bank Transaction and systems conversion for $16.0 million and other expenses, including equipment, business promotions and communications, of $1.3 million. Includes items corresponding to BPPR, which were taxed at 39% and items corresponding to BPNA, which had an effective tax rate of 0% due to the impact of the partial reversal of the valuation allowance, mentioned above.
[3]Represents an other than temporary impairment (“OTTI”) recorded on Puerto Rico government investment securities available- for- sale. These securities had an amortized cost of approximately $41.1 million and a market value of $26.6 million. Based on the fiscal and economic situation in Puerto Rico, together with the government’s announcements regarding its ability to pay its debt, the Corporation determined that the unrealized loss, a portion of which had been in an unrealized loss for a period exceeding twelve months, was other than temporary. The tax effect of this impairment is reflected at the capital gains rate of 20%, except for entities which had a full valuation allowance on its deferred tax asset.
[4]Represents the partial reversal of the valuation allowance of a portion of the deferred tax asset amounting to approximately $1.2 billion, at the U.S. operations.
[5]Represents the loss on a bulk sale of covered OREOs completed in the second quarter and the related mirror accounting of the 80% reimbursable from the FDIC.
[6]The quarter’s negative amortization of the FDIC’s Indemnification Asset included a $10.9 million expense related to losses incurred by the corporation that were not claimed to the FDIC before the expiration of the loss-share portion of the agreement on June 30, 2015, and that are not subject to the ongoing arbitrations. Gains and losses related to assets acquired from Westernbank as part of the FDIC assisted transaction are subject to the capital gains tax rate of 20%.
[7]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.
[8]Represents impairment based on the estimated fair value of loans acquired from Westernbank, that the Corporation has the intent to sell and are subject to the ongoing arbitration with the FDIC.
[9]Represents the impact of a bulk sale of loans at the BPPR segment, which had a book value of approximately $34.4 million.

Contact:

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

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