Popular, Inc. Announces Second Quarter Financial Results

 
 

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


  • Net income of $89.0 million and adjusted net income of $90.6 million for the second quarter of 2016
  • Net interest margin of 4.33% or 4.31% on an adjusted basis in Q2 2016, compared to 4.43% in Q1 2016
  • Credit Quality (excluding covered loans):
    • Non-performing loans held-in-portfolio (NPLs) decreased by $21.8 million from Q1 2016; NPLs to loans ratio at 2.6% vs. 2.7% Q1 2016;
    • Net charge-offs (NCOs) decreased by $7.0 million quarter-over-quarter; NCOs at 0.63% of average loans held-in-portfolio vs. 0.76% in Q1 2016;
    • Allowance for loan losses of $518.1 million vs. $508.4 million in Q1 2016; Allowance for loan losses to loans held-in-portfolio at 2.30% vs. 2.26% in Q1 2016;
    • Allowance for loan losses to NPLs at 89.7% vs. 84.8% in Q1 2016.
  • Common Equity Tier 1 ratio of 16.29% and Tangible Book Value per Share of $44.62 at June 30, 2016

Category:

Tuesday, July 26, 2016 8:00 am EDT

Dateline:

SAN JUAN, Puerto Rico

Public Company Information:

NASDAQ:
BPOP
PR7331741061

SAN JUAN, Puerto Rico--(BUSINESS WIRE)--Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP) reported net income of $89.0 million for the quarter ended June 30, 2016, compared to net income of $85.0 million for the quarter ended March 31, 2016.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: “We are pleased to report another solid quarter with strong net income, revenue and credit metrics. Also our U.S. operation delivered significant loan growth while maintaining strong credit quality. We are hopeful that recent legislative actions by the U.S. Congress will be a catalyst in revitalizing Puerto Rico's economy.”

Significant Events

The Corporation’s results for the second quarter of 2016 include the sale of commercial and construction loans with a carrying value of approximately $100 million and OREO with a carrying value of $9 million acquired in 2010 from the FDIC as receiver for Westernbank ("WB"). The sale resulted in a net benefit of approximately $8 million from the sale of the loans and a loss of $5.1 million from the sale of OREO. The Corporation incurred $1.8 million in fees for professional services directly associated with this transaction. Refer to additional details on the Adjusted Results Non-GAAP section on this earnings release.

On May 26, 2016, EVERTEC, Inc., in which the Corporation owns a 15.74% interest, filed its Annual Report on Form 10-K for the year ended December 31, 2015, which included restated audited results for the years ended December 31, 2014 and 2013, correcting certain material errors involved with the accounting for tax positions taken by EVERTEC in the 2010 tax year and other miscellaneous accounting adjustments. The Corporation’s proportionate share of the cumulative impact of EVERTEC's restatement and other corrective adjustments to its financial statements was approximately $2.2 million and is reflected as part of other non-interest income.

                       
Earnings Highlights
 
(Unaudited)     Quarters ended Six months ended
(Dollars in thousands, except per share information)     30-Jun-16   31-Mar-16   30-Jun-15 30-Jun-16   30-Jun-15
Net interest income $360,551 $352,412 $362,553 $712,963 $705,748
Provision for loan losses 39,668 47,940 60,468 87,608 90,179
Provision (reversal) for loan losses - covered loans [1]     804   (3,105)   15,766 (2,301)   26,090
Net interest income after provision for loan losses 320,079 307,577 286,319 627,656 589,479
FDIC loss-share (expense) income (12,576) (3,146) 19,075 (15,722) 23,214
Other non-interest income 123,079 114,776 121,684 237,855 232,780
Operating expenses     309,149   301,943   363,174 611,092   675,515
Income from continuing operations before income tax 121,433 117,264 63,904 238,697 169,958
Income tax expense (benefit)     32,446   32,265   (533,533) 64,711   (500,964)
Income from continuing operations     88,987   84,999   597,437 173,986   670,922
Income from discontinued operations, net of tax     -   -   15 -   1,356
Net income     $88,987   $84,999   $597,452 $173,986   $672,278
Net income applicable to common stock     $88,056   $84,068   $596,521 $172,124   $670,417
Net income per common share from continuing operations - Basic     $0.85   $0.81   $5.80 $1.67   $6.51
Net income per common share from continuing operations - Diluted     $0.85   $0.81   $5.79 $1.67   $6.49
Net income per common share from discontinued operations - Basic     $-   $-   $- $-   $0.01
Net income per common share from discontinued operations - Diluted     $-   $-   $- $-   $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 performance of the Corporation on an “adjusted basis” and excludes the impact of certain transactions on the results of its operations. Management believes that the “adjusted basis” provides meaningful information about the underlying performance of the Corporation’s ongoing operations. The “adjusted basis” is a non-GAAP financial measure.

The following tables reflect the results of operations for the second quarter of 2016 compared to the first quarter of 2016 results, with adjustments to exclude the impact of certain events during the second quarter of 2016. No adjustments are reflected for the first quarter of 2016 results.

Reconciliation to GAAP Financial Measures

   
      Quarter ended
(Unaudited) 30-Jun-16
(In thousands)    

Actual Results

(U.S. GAAP)

 

Impact of

EVERTEC's

Restatement [2]

 

Bulk Sale of WB

loans and OREO [3]

 

Adjusted

Results

(Non-GAAP)

Net interest income $360,551   $-   $2,057   $358,494
Provision for loan losses – non-covered loans 39,668 - (5,445) 45,113
Provision for loan losses – covered loans [1]     804   -   -   804
Net interest income after provision for loan losses 320,079 - 7,502 312,577
Mortgage banking activities 16,227 - - 16,227
FDIC loss-share (expense) income (12,576) - 291 (12,867)
Other non-interest income     106,852   (2,173)   -   109,025
Total non-interest income     110,503   (2,173)   291   112,385
Personnel costs 116,708 - - 116,708
Net occupancy expenses 21,714 - - 21,714
Equipment expenses 15,261 - - 15,261
Professional fees 80,625 - 1,812 78,813
Communications 6,012 - - 6,012
Business promotion 13,705 - - 13,705
Other real estate owned (OREO) expenses 12,980 - 5,090 7,890
Amortization of intangibles 3,097 - - 3,097
Other operating expenses     39,047   -   -   39,047
Total operating expenses     309,149   -   6,902   302,247
Income before income tax 121,433 (2,173) 891 122,715
Income tax expense     32,446   -   347   32,099
Net income     $88,987   $(2,173)   $544   $90,616
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.
 
[2] Represents Popular Inc's. proportionate share of the cumulative impact of EVERTEC's restatement and other corrective adjustments to its financial statements, as disclosed in EVERTEC's 2015 Annual Report on Form 10K.
 
[3] Represent the impact of the bulk sale of Westernbank loans and OREO.
 

   
      Quarters ended
(Unaudited)

Adjusted Results

Non-GAAP

   
(In thousands)     30-Jun-16   31-Mar-16   Variance
Net interest income $358,494 $352,412 $6,082
Provision for loan losses – non-covered loans 45,113 47,940 (2,827)
Provision for loan losses – covered loans [1]     804   (3,105)   3,909
Net interest income after provision for loan losses 312,577 307,577 5,000
Mortgage banking activities 16,227 10,551 5,676
FDIC loss-share expense (12,867) (3,146) (9,721)
Other non-interest income     109,025   104,225   4,800
Total non-interest income     112,385   111,630   755
Personnel costs 116,708 127,091 (10,383)
Net occupancy expenses 21,714 20,430 1,284
Equipment expenses 15,261 14,548 713
Professional fees 78,813 75,459 3,354
Communications 6,012 6,320 (308)
Business promotion 13,705 11,110 2,595
Other real estate owned (OREO) expenses 7,890 9,141 (1,251)
Amortization of intangibles 3,097 3,114 (17)
Other operating expenses     39,047   34,730   4,317
Total operating expenses     302,247   301,943   304
Income before income tax 122,715 117,264 5,451
Income tax expense     32,099   32,265   (166)
Net income     $90,616   $84,999   $5,617
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.
 

Net interest income

Net interest income for the quarter ended June 30, 2016 was $360.6 million, compared to $352.4 million for the previous quarter. Net interest margin was 4.33% for the quarter compared to 4.43% for the previous quarter.

On an adjusted basis, the net interest income for the second quarter of 2016 was $358.5 million and the net interest margin was 4.31%. Refer to the Adjusted Results – Non-GAAP section for additional information on the adjusted net interest income for the quarter ended June 30, 2016.

The increase in net interest income was mainly related to:

  • Higher income from investment securities by $1.7 million, due mainly to higher volumes of money market investments and mortgage-backed securities, partially offset by lower yields on acquired investments;
  • Higher income from consumer loans by $1.4 million due to higher volume of personal loans related to acquired loans mainly in the BPNA segment, partially offset by lower income from credit cards due mainly to the lower volume of the portfolio; and
  • Higher income from the WB loan portfolio by $4.9 million, which reflects the impact of the bulk sale transaction. Excluding this transaction, the income from the WB loans increased by $2.8 million, or 77 basis points due to higher yields as a result of the quarterly recast process and the successful resolution of certain loans not related to the bulk sale.

These positive variances were partially offset by:

  • Lower income from mortgage loans by $0.8 million mainly from lower volumes at both P.R. and U.S. due to slower origination activity.

BPPR’s net interest income amounted to $310.4 million for the quarter ended June 30, 2016, or $308.3 million on an adjusted basis, compared to $305.4 million for the previous quarter. The increase of $2.9 million in adjusted net interest income was mainly due to higher income on investment securities, higher income from Westernbank loans and lower funding costs from the lower volume of borrowings and brokered CDs. These positive variances were partially offset by lower yields from commercial loans mainly due to lower loan fees and a decrease in interest income on commercial real estate loans. Net interest margin declined to 4.71%, or 4.67% on an adjusted basis, from 4.87% in the previous quarter mainly driven by lower yields on investment securities and commercial loans, as explained above. Earning assets in P.R. yielded 5.04% down from 5.27% in the previous quarter related to the above mentioned higher overnight investment balances, while the cost of interest bearing liabilities was 0.53%, compared to 0.57% in the previous quarter, mainly from lower cost of time deposits.

BPNA’s net interest income was $65.5 million, compared to $62.3 million for the previous quarter. The increase of $3.2 million in the net interest income is mainly driven by strong growth of the commercial portfolio and consumer loans acquired and the higher volume of the investment portfolio. Lower income from mortgage loans and higher interest expense on deposits to fund the loan growth partially offset the positive variances. Net interest margin was 3.80% compared to 3.70% for the previous quarter. The increase of 10 basis points was mainly driven by the change in the composition of earning assets. U.S. earning assets yielded 4.47%, compared to 4.36% in the previous quarter, while the cost of interest bearing liabilities remained relatively flat at 0.87%, from 0.85% in the previous quarter.

Non-interest income

Non-interest income was $110.5 million for the second quarter of 2016, a decrease of $1.1 million when compared to the first quarter of 2016. The decrease in non-interest income was driven primarily by the following:

  • Unfavorable variance in adjustments to indemnity reserves by $1.6 million due to an increase of $2.5 million in the reserve related to the residential mortgage loans bulk sale completed during 2013, partially offset by a lower provision for loans previously sold with credit recourse;
  • Higher FDIC loss-share expense by $9.4 million due to an unfavorable change in the true-up payment obligation of $7.2 million due to the fair value adjustment of this liability mainly as a result of the improvement in Popular’s credit spreads and higher recoveries on assets to be shared with the FDIC in the recovery period by $3.3 million, partially offset by a benefit of $0.3 million related to the bulk sale of Westernbank loans; and
  • Lower other operating income by $2.7 million principally due to the unfavorable adjustment of $2.2 million resulting from the EVERTEC restatement detailed in the Adjusted Results Non-GAAP section above.

These decreases were partially offset by:

  • Higher other service fees by $3.6 million mainly in the BPPR segment due to an increase in insurance fees related to renewals and business production, higher credit card merchant fees, investment management fees, and trust fees related to trustee and retirement plan services. Refer to Table F for a breakdown of other service fees;
  • Higher income from mortgage banking activities by $5.7 million due to a favorable variance in fair value adjustments of mortgage servicing rights by $4.1 million and higher net gain on sale of loans by $1.4 million mostly due to higher volume from mortgage securitization transactions at BPPR;
  • Higher net gain on investment securities by $1.6 million related to the redemption of an investment at the Corporate segment; and
  • Higher trading account profit by $1.3 million principally resulting from favorable fair value adjustments of P.R. municipal bonds.

Excluding the impact of the transactions detailed in the Adjusted Results Non-GAAP tables above, non-interest income increased by $0.8 million when compared to the first quarter of 2016.

Refer to Table B for further details.

               
Financial Impact of the 2010 FDIC-Assisted Transaction
     
(Unaudited)     Quarters ended Six months ended
(In thousands)     30-Jun-16     31-Mar-16     30-Jun-15 30-Jun-16     30-Jun-15
 

Income Statement

Interest income on WB loans $49,794 $44,904 $55,335 $94,698 $112,766
Total FDIC loss-share (expense) income (12,576) (3,146) 19,075 (15,722) 23,214
Provision (reversal) for loan losses- WB loans     (7,282)     (356)     15,766     (7,638)     26,090
Total revenues less provision (reversal) for loan losses     $44,500     $42,114     $58,644     $86,614     $109,890
 

Balance Sheet

WB loans $1,932,062 $2,071,191 $2,284,955
FDIC loss-share asset 214,029 219,448 392,947
FDIC true-up payment obligation     127,876     120,188     121,469            

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

 

Operating expenses

Operating expenses amounted to $309.1 million for the second quarter of 2016, an increase of $7.2 million when compared to the first quarter of 2016. The increase in operating expenses was driven primarily by:

  • Higher professional fees by $5.2 million mainly at BPPR due to higher legal fees and, the impact of the bulk sale of Westernbank loans and OREO which increased professional fees by $1.8 million;
  • Higher business promotion by $2.6 million mostly due to higher seasonal advertising expense and credit card reward program expense;
  • Higher OREO expenses by $3.8 million mainly due to the loss on the bulk sale of Westernbank OREO amounting to $5.1 million, partially offset by lower write-downs; and
  • Higher other operating expense by $5.5 million mainly due to higher sundry losses at BPPR and BPNA.

These increases were partially offset by:

  • Lower personnel cost by $10.4 million mainly due to the grant of employee restricted stock and performance shares awarded during the first quarter of 2016, lower salaries and incentive compensation and lower unemployment and social security tax.

Excluding the impact of the transactions detailed in the Adjusted Results Non-GAAP tables above, operating expenses increased by $0.3 million compared to the first quarter of 2016.

Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, amounted to $18.0 million for the second quarter of 2016, compared to $13.6 million for the first quarter of 2016. The increase was principally due to a loss on the bulk sale of Westernbank OREO at BPPR amounting to $5.1 million. Excluding the impact of the sale, the decrease of $0.7 million was mainly due to lower commercial, construction and mortgage OREO write-downs at BPPR.

Full-time equivalent employees were 7,826 as of June 30, 2016, compared to 7,812 as of March 31, 2016.

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

Income taxes

For the quarter ended June 30, 2016, the Corporation recorded an income tax expense of $32.4 million, compared to $32.3 million for the previous quarter. On an adjusted basis, the income tax expense for the second quarter of 2016 was $32.1 million.

The effective income tax rate for the second quarter of 2016 was 27%, or 26% on an adjusted basis, compared to 28% for the previous quarter. The effective tax rate is impacted by the composition and source of the taxable income.

Credit Quality

The Corporation continued to experience stable credit trends despite the economic conditions in Puerto Rico. The shift in the risk profile of the credit portfolios over the last few years has better positioned the Corporation to operate in the Island’s complex environment. The Corporation continues to closely monitor changes in credit quality trends and is focused on taking measures to minimize risks. The U.S. operation continued to reflect positive results with strong growth and solid credit quality metrics.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $8.6 million quarter-over-quarter, mainly driven by lower inflows in the BPNA segment, as the prior quarter included the addition of a $10.5 million commercial relationship that was paid-off during the second quarter of 2016.
  • Non-performing loans held-in-portfolio decreased by $21.8 million from the first quarter of 2016, mainly driven by lower commercial NPLs in the BPPR and BPNA segments of $10.1 million and $12.0 million, respectively. This reduction was mainly prompted by repayment activity, most significantly by the abovementioned $10.5 million relationship at BPNA which was paid-off during the quarter. At June 30, 2016, NPLs to total loans held-in-portfolio was 2.6% compared to 2.7% in the prior quarter.
  • Net charge-offs decreased by $7.0 million during the second quarter of 2016, excluding the recoveries of $5.4 million resulting from the bulk sale of WB loans. The ratio of net charge-offs to average non-covered loans held-in-portfolio decreased to 0.63% on an annualized basis from 0.76% in the first quarter of 2016. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan losses increased by $9.7 million from the first quarter 2016 to $518.1 million. The general and specific reserves related to non-covered loans totaled $395.3 million and $122.8 million, respectively, at quarter-end, compared with $384.4 million and $124.0 million, respectively, as of March 31, 2016. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.30% in the second quarter of 2016, compared to 2.26% from the previous quarter.
  • The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 89.7%, compared to 84.8% in the previous quarter.
  • The provision for loan losses for the second quarter of 2016 amounted to $39.7 million, decreasing by $8.3 million from the previous quarter. Excluding the recoveries related to the bulk sale of Westernbank loans, the adjusted provision for loan losses for the second quarter of 2016 was $45.1 million, a decline of $2.8 million from the previous quarter. The provision to net charge-offs ratio was 127.4%, compared to 112.9% in the first quarter of 2016.
       
Non-Performing Assets
(Unaudited)              
(In thousands)     30-Jun-16   31-Mar-16   30-Jun-15
Total non-performing loans held-in-portfolio, excluding covered loans $577,739 $599,526 $575,997
Non-performing loans held-for-sale 39,544 42,743 50,875
Other real estate owned (“OREO”), excluding covered OREO     177,025   165,960   142,255
Total non-performing assets, excluding covered assets 794,308 808,229 769,127
Covered loans and OREO     41,466   39,916   37,367
Total non-performing assets     $835,774   $848,145   $806,494
Net charge-offs for the quarter (excluding covered loans)     $35,401   $42,448   $46,442
 
 
Ratios (excluding covered loans):              
Non-covered loans held-in-portfolio $22,540,661 $22,507,737 $22,435,145
Non-performing loans held-in-portfolio to loans held-in-portfolio 2.56% 2.66% 2.57%
Allowance for loan losses to loans held-in-portfolio 2.30 2.26 2.29
Allowance for loan losses to non-performing loans, excluding loans held-for-sale     89.68   84.80   89.02
 
Refer to Table H for additional information.
 

Provision for Loan Losses          
 
(Unaudited)     Quarters ended Six months ended
(In thousands)     30-Jun-16   31-Mar-16   30-Jun-15 30-Jun-16 30-Jun-15
Provision (reversal) for loan losses:
BPPR $38,351 $43,871 $60,529 $82,222 $92,442
BPNA     1,317   4,069   (61) 5,386 (2,263)
Total provision for loan losses- non-covered loans     $39,668   $47,940   $60,468   $87,608 $90,179
Provision (reversal) for loan losses - covered loans     804   (3,105)   15,766 (2,301) 26,090
Total provision for loan losses     $40,472   $44,835   $76,234 $85,307 $116,269
       
Credit Quality by Segment
 
(Unaudited)
(In thousands)   Quarters ended
BPPR     30-Jun-16   31-Mar-16   30-Jun-15
Provision for loan losses $38,351 $43,871 $60,529
Net charge-offs 36,222 40,647 45,146
Total non-performing loans held-in-portfolio, excluding covered loans 550,632 561,612 541,767
Allowance / non-covered loans held-in-portfolio     2.77%   2.70%   2.69%
 
    Quarters ended
BPNA     30-Jun-16   31-Mar-16   30-Jun-15
Provision (reversal) for loan losses $1,317 $4,069 $(61)
Net charge-offs (recoveries) (821) 1,801 1,296
Total non-performing loans held-in-portfolio 27,107 37,914 34,230
Allowance / non-covered loans held-in-portfolio     0.72%   0.71%   0.66%
 

     
Financial Condition Highlights
 
(Unaudited)        
(In thousands)   30-Jun-16   31-Mar-16   30-Jun-15
Money market, trading and investment securities $10,368,794 $8,901,814 $9,248,978
Loans not covered under loss-sharing agreements with the FDIC 22,540,661 22,507,737 22,435,145
Loans covered under loss-sharing agreements with the FDIC 607,170 625,130 689,650
Total assets 37,606,148 36,147,009 36,741,250
Deposits 28,737,856 27,526,593 27,750,694
Borrowings 2,428,752 2,349,992 3,017,609
Liabilities from discontinued operations 1,815 1,815 1,754
Total liabilities 32,246,317 30,896,709 31,791,597
Stockholders’ equity   5,359,831   5,250,300   4,949,653
 

Total assets increased by $1.5 billion from the first quarter of 2016 driven by:

  • An increase of $0.9 billion in money market investments mainly at BPPR due to an increase in cash balances from deposits;
  • 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, partially offset by sales and principal pay-downs; and
  • A net increase of $32.9 million in non-covered loans held-in-portfolio mainly at BPNA by $231.3 million driven by growth in the commercial loan portfolio, partially offset by a decrease of $198.4 million at BPPR due to the bulk sale of WB loans with a carrying value of approximately $100 million and to lower originations of residential mortgages.

Total liabilities increased by $1.3 billion from the first quarter of 2016, principally driven by:

  • An increase of $1.2 billion in deposits mainly due to increases in government deposit accounts, NOW accounts, and non-brokered time deposits at BPPR. Refer to Table G for additional information on deposits.

Stockholders’ equity increased by approximately $109.5 million from the first quarter of 2016, mainly as a result of net income for the quarter of $89.0 million and a favorable variance of $35.0 million in unrealized gains on securities available-for-sale, partially offset by payments of dividends of $15.6 million on common stock and $0.9 million in dividends on preferred stock.

Common equity tier-1 ratio (“CET1”) and tangible book value per share were 16.29% and $44.62, respectively at June 30, 2016 compared to 15.79% and $43.55 at March 31, 2016. Refer to Table A for capital ratios.

Forward-Looking Statements

The information contained in this news release 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. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2015, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 and our other filings with the Securities and Exchange Commission for a discussion of factors that may cause the Corporation's actual results to differ materially from any future results expressed or implied by such forward-looking statements. 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.

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, July 26, 2016 at 11:00 a.m. Eastern Daylight 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, August 26, 2016. The replay dial in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10088193.

 
Popular, Inc.
Financial Supplement to Second 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
 

 
POPULAR, INC.
Financial Supplement to Second Quarter 2016 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
           
               
Quarters ended Six months ended
      30-Jun-16   31-Mar-16   30-Jun-15   30-Jun-16   30-Jun-15
Basic EPS from continuing operations $0.85 $0.81 $5.80 $1.67 $6.51
 
Basic EPS from discontinued operations $- $- $- $- $0.01
 
Total Basic EPS $0.85 $0.81 $5.80 $1.67 $6.52
 
Diluted EPS from continuing operations $0.85 $0.81 $5.79 $1.67 $6.49
 
Diluted EPS from discontinued operations $- $- $- $- $0.01
 
Total Diluted EPS $0.85 $0.81 $5.79 $1.67 $6.50
 
Average common shares outstanding 103,245,717 103,188,815 102,859,591 103,217,266 102,899,537
 
Average common shares outstanding - assuming dilution 103,343,486 103,269,813 103,102,718 103,297,707 103,113,280
 
Common shares outstanding at end of period 103,703,041 103,670,005 103,503,014 103,703,041 103,503,014
 
Market value per common share $29.30 $28.61 $28.86 $29.30 $28.86
 
Market capitalization - (In millions) $3,038 $2,966 $2,987 $3,038 $2,987
 
Return on average assets 0.96% 0.95% 6.74% 0.96% 3.91%
. .
Return on average common equity 6.80% 6.58% 54.93% 6.69% 31.34%
 
Net interest margin [1] 4.31% 4.43% 4.54% 4.37% 4.56%
 
Common equity per share $51.20 $50.16 $47.34 $51.20 $47.34
 
Tangible common book value per common share (non-GAAP) $44.62 $43.55 $41.73 $44.62 $41.73
 
Tangible common equity to tangible assets (non-GAAP) 12.53% 12.73% 11.94% 12.53% 11.94%
 
Tier 1 capital 16.29% 15.79% 15.93% 16.29% 15.93%
 
Total capital 19.29% 18.78% 18.50% 19.29% 18.50%
 
Tier 1 leverage 11.29% 11.46% 11.59% 11.29% 11.59%
 
Common Equity Tier 1 capital     16.29%   15.79%   15.93%   16.29%   15.93%
 
[1] Not on a taxable equivalent basis. For the quarter ended June 30, 2016 excludes the impact of the WB loans bulk sale. Refer to Table D for reconciliation.

 
POPULAR, INC.
Financial Supplement to Second Quarter 2016 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
      Quarters ended   Variance   Quarter ended   Variance   Six months ended
(In thousands, except per share information)     30-Jun-16   31-Mar-16  

Q2 2016

vs. Q1 2016

  30-Jun-15  

Q2 2016

vs. Q2 2015

  30-Jun-16   30-Jun-15
Interest income:    
Loans $369,721 $363,197 $6,524 $374,133 $(4,412) $732,918 $729,764
Money market investments 3,889 2,863 1,026 1,845 2,044 6,752 3,291
Investment securities 36,725 36,271 454 31,297 5,428 72,996 61,598
  Trading account securities     1,875   1,689   186   3,026   (1,151)   3,564   5,722
  Total interest income     412,210   404,020   8,190   410,301   1,909   816,230   800,375
Interest expense:
Deposits 30,599 29,874 725 26,258 4,341 60,473 52,122
Short-term borrowings 2,058 1,861 197 1,863 195 3,919 3,597
  Long-term debt     19,002   19,873   (871)   19,627   (625)   38,875   38,908
  Total interest expense     51,659   51,608   51   47,748   3,911   103,267   94,627
Net interest income 360,551 352,412 8,139 362,553 (2,002) 712,963 705,748
Provision for loan losses - non-covered loans 39,668 47,940 (8,272) 60,468 (20,800) 87,608 90,179
Provision (reversal) for loan losses - covered loans     804   (3,105)   3,909   15,766   (14,962)   (2,301)   26,090
Net interest income after provision for loan losses     320,079   307,577   12,502   286,319   33,760   627,656   589,479
Service charges on deposit accounts 40,296 39,862 434 40,138 158 80,158 79,155
Other service fees 56,945 53,382 3,563 59,421 (2,476) 110,327 113,047
Mortgage banking activities 16,227 10,551 5,676 21,325 (5,098) 26,778 34,177
Net gain and valuation adjustments on investment securities 1,583 - 1,583 5 1,578 1,583 5
Other-than-temporary impairment losses on investment securities (209) - (209) (14,445) 14,236 (209) (14,445)
Trading account profit (loss) 1,117 (162) 1,279 (3,108) 4,225 955 (2,694)
Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale - (304) 304 681 (681) (304) 602
Adjustments (expense) to indemnity reserves on loans sold (5,746) (4,098) (1,648) 419 (6,165) (9,844) (4,107)
FDIC loss-share (expense) income (12,576) (3,146) (9,430) 19,075 (31,651) (15,722) 23,214
Other operating income     12,866   15,545   (2,679)   17,248   (4,382)   28,411   27,040
  Total non-interest income     110,503   111,630   (1,127)   140,759   (30,256)   222,133   255,994
Operating expenses:
Personnel costs
Salaries 75,792 77,298 (1,506) 76,453 (661) 153,090 148,847
Commissions, incentives and other bonuses 16,982 20,769 (3,787) 24,214 (7,232) 37,751 42,672
Pension, postretirement and medical insurance 12,279 13,111 (832) 9,075 3,204 25,390 21,088
  Other personnel costs, including payroll taxes     11,655   15,913   (4,258)   11,235   420   27,568   24,828
Total personnel costs 116,708 127,091 (10,383) 120,977 (4,269) 243,799 237,435
Net occupancy expenses 21,714 20,430 1,284 23,286 (1,572) 42,144 44,995
Equipment expenses 15,261 14,548 713 15,925 (664) 29,809 29,336
Other taxes 10,170 10,195 (25) 11,113 (943) 20,365 19,687
Professional fees 80,625 75,459 5,166 78,449 2,176 156,084 153,977
Communications 6,012 6,320 (308) 6,153 (141) 12,332 12,329
Business promotion 13,705 11,110 2,595 13,776 (71) 24,815 24,589
FDIC deposit insurance 5,362 7,370 (2,008) 8,542 (3,180) 12,732 14,940
Other real estate owned (OREO) expenses 12,980 9,141 3,839 44,816 (31,836) 22,121 67,885
Credit and debit card processing, volume, interchange and other expenses 6,617 5,722 895 5,762 855 12,339 10,583
Other operating expenses 16,898 11,443 5,455 25,320 (8,422) 28,341 37,847
Amortization of intangibles 3,097 3,114 (17) 2,881 216 6,211 4,985
Restructuring costs     -   -   -   6,174   (6,174)   -   16,927
  Total operating expenses     309,149   301,943   7,206   363,174   (54,025)   611,092   675,515
Income from continuing operations before income tax 121,433 117,264 4,169 63,904 57,529 238,697 169,958
Income tax expense (benefit)     32,446   32,265   181   (533,533)   565,979   64,711   (500,964)
Income from continuing operations 88,987 84,999 3,988 597,437 (508,450) 173,986 670,922
Income from discontinued operations, net of tax     -   -   -   15   (15)   -   1,356
Net income     $88,987   $84,999   $3,988   $597,452   $(508,465)   $173,986   $672,278
Net income applicable to common stock     $88,056   $84,068   $3,988   $596,521   $(508,465)   $172,124   $670,417
Net income per common share - basic:
Net income from continuing operations $0.85 $0.81 $0.04 $5.80 $(4.95) $1.67 $6.51
  Net income from discontinued operations     -   -   -   -   -   -   0.01
  Net income per common share - basic     $0.85   $0.81   $0.04   $5.80   $(4.95)   $1.67   $6.52
Net income per common share - diluted:
Net income from continuing operations $0.85 $0.81 $0.04 $5.79 $(4.94) $1.67 $6.49
  Net income from discontinued operations     -   -   -   -   -   -   0.01
  Net income per common share - diluted     $0.85   $0.81   $0.04   $5.79   $(4.94)   $1.67   $6.50
Dividends Declared per Common Share     $0.15   $0.15   $-   $-   $0.15   $0.30   $-

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
              Variance
Q2 2016 vs.
(In thousands)     30-Jun-16   31-Mar-16   30-Jun-15   Q1 2016
Assets:
Cash and due from banks $365,308 $409,623 $557,248 $(44,315)
Money market investments 2,785,500 1,917,460 3,254,939 868,040
Trading account securities, at fair value 72,530 71,284 141,595 1,246
Investment securities available-for-sale, at fair value 7,242,676 6,649,830 5,585,078 592,846
Investment securities held-to-maturity, at amortized cost 99,525 99,216 101,861 309
Other investment securities, at lower of cost or realizable value 168,563 164,024 165,505 4,539
Loans held-for-sale, at lower of cost or fair value 122,338 125,315 202,287 (2,977)
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC 22,655,877 22,618,488 22,535,008 37,389
Loans covered under loss-sharing agreements with the FDIC 607,170 625,130 689,650 (17,960)
Less: Unearned income 115,216 110,751 99,863 4,465
    Allowance for loan losses     548,720   538,472   550,813   10,248
    Total loans held-in-portfolio, net     22,599,111   22,594,395   22,573,982   4,716
FDIC loss-share asset 214,029 219,448 392,947 (5,419)
Premises and equipment, net 535,865 527,493 497,078 8,372
Other real estate not covered under loss-sharing agreements with the FDIC 177,025 165,960 142,255 11,065
Other real estate covered under loss-sharing agreements with the FDIC 37,984 36,397 33,504 1,587
Accrued income receivable 120,979 120,308 130,281 671
Mortgage servicing assets, at fair value 203,577 205,051 206,357 (1,474)
Other assets 2,179,060 2,156,030 2,176,044 23,030
Goodwill 631,095 631,095 505,435 -
Other intangible assets     50,983   54,080   74,854   (3,097)
Total assets     $37,606,148   $36,147,009   $36,741,250   $1,459,139
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing $6,531,108 $6,384,093 $6,305,986 $147,015
    Interest bearing     22,206,748   21,142,500   21,444,708   1,064,248
    Total deposits     28,737,856   27,526,593   27,750,694   1,211,263
Federal funds purchased and assets sold under agreements to repurchase 821,604 760,154 1,121,244 61,450
Other short-term borrowings 31,200 6,370 101,200 24,830
Notes payable 1,575,948 1,583,468 1,795,165 (7,520)
Other liabilities 1,077,894 1,018,309 1,021,540 59,585
Liabilities from discontinued operations     1,815   1,815   1,754   -
Total liabilities     32,246,317   30,896,709   31,791,597   1,349,608
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,039 1,039 1,037 -
Surplus 4,232,835 4,231,233 4,199,165 1,602
Retained earnings 1,228,979 1,156,476 924,134 72,503
Treasury stock (7,570) (6,858) (5,812) (712)
Accumulated other comprehensive loss     (145,612)   (181,750)   (219,031)   36,138
    Total stockholders’ equity     5,359,831   5,250,300   4,949,653   109,531
Total liabilities and stockholders’ equity     $37,606,148   $36,147,009   $36,741,250   $1,459,139

   
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
                       
Quarter ended Quarter ended Quarter ended Variance Variance
30-Jun-16 31-Mar-16 30-Jun-15 Q2 2016 vs. Q1 2016 Q2 2016 vs. Q2 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 $10,286   $42.5   1.65 % $8,951   $40.8   1.83 % $8,575   $36.2   1.69 % $1,335   $1.7   (0.18) % $1,711   $6.3   (0.04) %
 
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,150 110.9 4.88 8,957 110.6 4.97 8,776 108.0 4.93 193 0.3 (0.09) 374 2.9 (0.05)
Construction 723 9.7 5.43 704 9.3 5.30 682 10.2 6.02 19 0.4 0.13 41 (0.5) (0.59)
Mortgage 6,743 88.9 5.27 6,830 89.7 5.25 7,175 93.4 5.21 (87) (0.8) 0.02 (432) (4.5) 0.06
Consumer 3,865 99.4 10.34 3,807 98.0 10.35 3,823 97.1 10.19 58 1.4 (0.01) 42 2.3 0.15
Lease financing 651   11.0   6.73 630   10.7   6.78 583   10.1   6.93 21   0.3   (0.05) 68   0.9   (0.20)
Total loans (excluding WB loans) 21,132 319.9 6.08 20,928 318.3 6.11 21,039 318.8 6.07 204 1.6 (0.03) 93 1.1 0.01
WB loans[1] 2,013   47.7   9.53 2,058   44.9   8.76 2,350   55.3   9.44 (45)   2.8   0.77 (337)   (7.6)   0.09
Total loans 23,145   367.6   6.38 22,986   363.2   6.34 23,389   374.1   6.41 159   4.4   0.04 (244)   (6.5)   (0.03)
Total interest earning assets 33,431   $410.1   4.93 % 31,937   $404.0   5.08 % 31,964   $410.3   5.14 % 1,494   $6.1   (0.15) % 1,467   ($0.2)   (0.21) %
Allowance for loan losses (539) (536) (599) (3) 60
Other non-interest earning assets 4,479 4,491 4,212 (12) 267
Total average assets $37,371 $35,892 $35,577 $1,479 $1,794
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $7,023 $6.6 0.38 % $5,712 $5.6 0.39 % $5,507 $4.9 0.36 % $1,311 $1.0 (0.01) % $1,516 $1.7 0.02 %
Savings 7,487 4.4 0.24 7,275 4.3 0.23 7,040 4.1 0.23 212 0.1 0.01 447 0.3 0.01
Time deposits 7,866   19.6   1.00 8,058   20.0   1.00 8,530   17.2   0.81 (192)   (0.4)   - (664)   2.4   0.19
Total interest bearing deposits 22,376 30.6 0.55 21,045 29.9 0.57 21,077 26.2 0.50 1,331 0.7 (0.02) 1,299 4.4 0.05
Borrowings 2,307   21.0   3.67 2,441   21.7   3.58 2,855   21.5   3.01 (134)   (0.7)   0.09 (548)   (0.5)   0.66
Total interest bearing liabilities 24,683   51.6   0.84 23,486   51.6   0.88 23,932   47.7   0.80 1,197   -   (0.04) 751   3.9   0.04
Net interest spread 4.09 % 4.20 % 4.34 % (0.11) % (0.25) %
Non-interest bearing deposits 6,481 6,293 6,247 188 234
Other liabilities 943 920 991 23 (48)
Liabilities from discontinued operations 2 2 2 - -
Stockholders' equity 5,262 5,191 4,405 71 857
Total average liabilities and stockholders' equity $37,371 $35,892 $35,577 $1,479 $1,794
 
Adjusted net interest income / margin non-taxable equivalent basis $358.5   4.31 % $352.4   4.43 % $362.6   4.54 % $6.1   (0.12) % ($4.1)   (0.23) %
Impact of WB loan and OREO bulk sale 2.1 - - 2.1 2.1
Net interest income / margin non-taxable equivalent basis $360.6   4.33 % $352.4   4.43 % $362.6   4.54 % $8.2   (0.10) % ($2.0)   (0.21) %
 
[1] Including the impact of the WB loans bulk sale, the yield for WB loans would have been 9.94%.
 

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
                       
Six months ended Six months ended
30-Jun-16 30-Jun-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 $9,619   $83.3   1.73 % $8,173   $70.6   1.73 % $1,446   $12.7   - %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,054 221.6 4.92 8,581 208.8 4.91 473 12.8 0.01
Construction 713 19.0 5.37 559 16.3 5.89 154 2.7 (0.52)
Mortgage 6,786 178.6 5.26 6,955 179.3 5.15 (169) (0.7) 0.11
Consumer 3,836 197.4 10.35 3,834 192.5 10.13 2 4.9 0.22
Lease financing 641   21.6   6.75 576   20.0   6.97 65   1.6   (0.22)
Total loans (excluding WB loans) 21,030 638.2 6.09 20,505 616.9 6.05 525 21.3 0.04
WB loans[1] 2,035   92.7   9.14 2,445   112.8   9.29 (410)   (20.1)   (0.15)
Total loans 23,065   730.9   6.36 22,950   729.7   6.40 115   1.2   (0.04)
Total interest earning assets 32,684   $814.2   5.00 % 31,123   $800.3   5.17 % 1,561   $13.9   (0.17) %
Allowance for loan losses (538) (604) 66
Other non-interest earning assets 4,484 4,177 307
Total average assets $36,630 $34,696 $1,934
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $6,367 $12.2 0.39 % $5,246 $9.1 0.35 % $1,121 $3.1 0.04 %
Savings 7,381 8.7 0.24 6,966 8.0 0.23 415 0.7 0.01
Time deposits 7,962   39.6   1.00 8,141   35.0   0.87 (179)   4.6   0.13
Total interest bearing deposits 21,710 60.5 0.56 20,353 52.1 0.52 1,357 8.4 0.04
Borrowings 2,374   42.8   3.61 2,866   42.5   2.97 (492)   0.3   0.64
Total interest bearing liabilities 24,084   103.3   0.86 23,219   94.6   0.82 865   8.7   0.04
Net interest spread 4.14 % 4.35 % (0.21) %
Non-interest bearing deposits 6,387 6,106 281
Other liabilities 930 1,006 (76)
Liabilities from discontinued operations 2 2 -
Stockholders' equity 5,227 4,363 864
Total average liabilities and stockholders' equity $36,630 $34,696 $1,934
 
Adjusted net interest income / margin non-taxable equivalent basis $710.9   4.37 % $705.7   4.56 % $5.2   (0.19) %
Impact of WB loan and OREO bulk sale 2.1 - 2.1
Net interest income / margin non-taxable equivalent basis $713.0   4.38 % $705.7   4.56 % $7.3   (0.18) %
 
[1] Including the impact of the WB loans bulk sale, the yield for WB loans would have been 9.34%.

                 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
 
Mortgage Banking Activities Variance
Quarters ended Q2 2016 vs. Q2 2016 vs. Six months ended Variance
(In thousands)     30-Jun-16   31-Mar-16   30-Jun-15   Q1 2016   Q2 2015   30-Jun-16   30-Jun-15   2016 vs. 2015
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $14,675 $14,802 $14,689 $(127) $(14) $29,477 $26,937 $2,540
  Mortgage servicing rights fair value adjustments     (4,340)   (8,477)   (1,917)   4,137   (2,423)   (12,817)   (6,846)   (5,971)
Total mortgage servicing fees, net of fair value adjustments     10,335   6,325   12,772   4,010   (2,437)   16,660   20,091   (3,431)
Net gain on sale of loans, including valuation on loans held-for-sale     8,474   7,110   8,022   1,364   452   15,584   15,302   282
Trading account (loss) profit:
Unrealized (losses) gains on outstanding derivative positions (59) (80) 42 21 (101) (139) 59 (198)
  Realized (losses) gains on closed derivative positions     (2,523)   (2,804)   489   281   (3,012)   (5,327)   (1,275)   (4,052)
Total trading account (loss) profit     (2,582)   (2,884)   531   302   (3,113)   (5,466)   (1,216)   (4,250)
Total mortgage banking activities     $16,227   $10,551   $21,325   $5,676   $(5,098)   $26,778   $34,177   $(7,399)
 
                   
Other Service Fees Variance
Quarters ended Q2 2016 vs. Q2 2016 vs. Six months ended Variance
(In thousands)     30-Jun-16   31-Mar-16   30-Jun-15   Q1 2016   Q2 2015   30-Jun-16   30-Jun-15   2016 vs. 2015
Other service fees:
Debit card fees $11,382 $11,287 $11,995 $95 $(613) $22,669 $23,120 $(451)
Insurance fees 13,885 12,850 13,606 1,035 279 26,735 25,647 1,088
Credit card fees 17,700 16,858 17,611 842 89 34,558 33,760 798
Sale and administration of investment products 5,417 4,839 6,601 578 (1,184) 10,256 12,531 (2,275)
Trust fees 4,827 4,235 4,914 592 (87) 9,063 9,516 (453)
  Other fees     3,734   3,313   4,694   421   (960)   7,046   8,473   (1,427)
Total other service fees     $56,945   $53,382   $59,421   $3,563   $(2,476)   $110,327   $113,047   $(2,720)
 

           
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table G - Loans and Deposits
(Unaudited)
 
Loans - Ending Balances
Variance
(In thousands)     30-Jun-16   31-Mar-16   30-Jun-15   Q2 2016 vs. Q1 2016   Q2 2016 vs. Q2 2015
Loans not covered under FDIC loss-sharing agreements:
Commercial $10,359,815 $10,228,389 $10,004,716 $131,426 $355,099
Construction 717,332 734,858 696,010 (17,526) 21,322
Legacy [1] 49,709 61,044 72,502 (11,335) (22,793)
Lease financing 664,094 643,142 592,816 20,952 71,278
Mortgage 6,864,118 6,979,201 7,225,823 (115,083) (361,705)
Consumer     3,885,593   3,861,103   3,843,278   24,490   42,315
Total non-covered loans held-in-portfolio $22,540,661 $22,507,737 $22,435,145 $32,924 $105,516
Loans covered under FDIC loss-sharing agreements     607,170   625,130   689,650   (17,960)   (82,480)
Total loans held-in-portfolio     $23,147,831   $23,132,867   $23,124,795   $14,964   $23,036
Loans held-for-sale:
Commercial $39,544 $42,771 $48,969 $(3,227) $(9,425)
Construction - 2 1,681 (2) (1,681)
Mortgage     82,794   82,542   151,637   252   (68,843)
Total loans held-for-sale     $122,338   $125,315   $202,287   $(2,977)   $(79,949)
Total loans     $23,270,169   $23,258,182   $23,327,082   $11,987   $(56,913)
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.
 
         
Deposits - Ending Balances
Variance
(In thousands)     30-Jun-16   31-Mar-16   30-Jun-15   Q2 2016 vs. Q1 2016   Q2 2016 vs.Q2 2015
Demand deposits [1] $8,106,291 $7,324,982 $7,262,176 $781,309   $844,115
Savings, NOW and money market deposits (non-brokered) 12,289,793 11,940,103 11,177,288 349,690 1,112,505
Savings, NOW and money market deposits (brokered) 387,026 383,745 468,973 3,281 (81,947)
Time deposits (non-brokered) 7,570,673 7,348,132 7,367,256 222,541 203,417
Time deposits (brokered CDs)     384,073   529,631   1,475,001   (145,558)   (1,090,928)
Total deposits     $28,737,856   $27,526,593   $27,750,694   $1,211,263   $987,162
[1] Includes interest and non-interest bearing demand deposits.                

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
              Variance
(Dollars in thousands)     30-Jun-16  

As a % of

loans HIP by

category

  31-Mar-16  

As a % of

loans HIP by

category

    30-Jun-15  

As a % of

loans HIP by

category

    Q2 2016 vs. Q1 2016   Q2 2016 vs. Q2 2015
Non-accrual loans:  
Commercial $175,615 1.7 % $197,631 1.9 % $190,294 1.9 % $(22,016) $(14,679)
Construction 2,523 0.4 3,941 0.5 5,427 0.8 (1,418) (2,904)
Legacy [1] 3,839 7.7 4,046 6.6 4,686 6.5 (207) (847)
Lease financing 3,019 0.5 3,419 0.5 2,328 0.4 (400) 691
Mortgage 338,048 4.9 334,907 4.8 330,821 4.6 3,141 7,227
Consumer     54,695   1.4   55,582   1.4   42,441   1.1   (887)   12,254

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

577,739 2.6 % 599,526 2.7 % 575,997 2.6 % (21,787) 1,742
Non-performing loans held-for-sale [2] 39,544 42,743 50,875 (3,199) (11,331)

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

    177,025       165,960         142,255         11,065   34,770

Total non-performing assets, excluding covered assets

794,308 808,229 769,127 (13,921) 25,181
Covered loans and OREO     41,466       39,916         37,367         1,550   4,099
Total non-performing assets     $835,774       $848,145         $806,494         $(12,371)   $29,280
Accruing loans past due 90 days or more [3]     $413,319       $426,437         $435,775         $(13,118)   $(22,456)
Ratios excluding covered loans:

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

2.56 % 2.66 % 2.57 %

Allowance for loan losses to loans held-in-portfolio

2.30 2.26 2.29
Allowance for loan losses to

non-performing loans, excluding loans held-for-sale

    89.68       84.80         89.02              
Ratios including covered loans:
Non-performing assets to total assets 2.22 % 2.35 % 2.20 %

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

2.51 2.61 2.51

Allowance for loan losses to loans held-in-portfolio

2.37 2.33 2.38

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

    94.41       89.29         94.99              
[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 June 30, 2016 consisted of $40 million in commercial loans (March 31, 2016 - $42.7 million in commercial loans and $2 thousand in construction loans; June 30, 2015 - $49 million in commercial loans, $2 million in construction loans and $225 thousand in mortgage loans.)
 
[3] It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. These balances include $149 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of June 30, 2016 (March 31, 2016 - $161 million; June 30, 2015 - $133 million). Furthermore, the Corporation has approximately $63 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 (March 31, 2016 - $68 million; June 30, 2015 - $72 million).
 

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
               
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
30-Jun-16   31-Mar-16
(In thousands)     BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $182,639 $14,992 $197,631 $177,902 $3,914 $181,816
Plus:
New non-performing loans 26,029 2,254 28,283 21,657 15,064 36,721
Advances on existing non-performing loans - 8 8 - 1 1
Less:
Non-performing loans transferred to OREO (1,815) - (1,815) (1,103) - (1,103)
Non-performing loans charged-off (15,219) (254) (15,473) (4,949) (381) (5,330)
Loans returned to accrual status / loan collections     (19,050)   (13,969)   (33,019)   (10,868)   (3,606)   (14,474)
Ending balance NPLs     $172,584   $3,031   $175,615   $182,639   $14,992   $197,631
 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
30-Jun-16   31-Mar-16
(In thousands)     BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $3,270 $671 $3,941 $3,550 $- $3,550
Plus:
New non-performing loans 186 - 186 207 671 878
Less:
Non-performing loans transferred to OREO - - - (304) - (304)
Non-performing loans charged-off (8) - (8) (110) - (110)
Loans returned to accrual status / loan collections     (1,025)   (571)   (1,596)   (73)   -   (73)
Ending balance NPLs     $2,423   $100   $2,523   $3,270   $671   $3,941
 
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
30-Jun-16   31-Mar-16
(In thousands)     BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $322,838 $12,069 $334,907 $337,933 $13,538 $351,471
Plus:
New non-performing loans 79,688 6,532 86,220 78,679 6,920 85,599
Less:
Non-performing loans transferred to OREO (12,521) (445) (12,966) (9,226) - (9,226)
Non-performing loans charged-off (10,648) (130) (10,778) (10,889) (276) (11,165)
Loans returned to accrual status / loan collections     (55,699)   (3,636)   (59,335)   (73,659)   (8,113)   (81,772)
Ending balance NPLs     $323,658   $14,390   $338,048   $322,838   $12,069   $334,907
               
Legacy loans held-in-portfolio:
 
Quarter ended Quarter ended
30-Jun-16 31-Mar-16
(In thousands)     BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $- $4,046 $4,046 $- $3,649 $3,649
Plus:
New non-performing loans - 552 552 - 604 604
Advances on existing non-performing loans - - - - 2 2
Less:
Non-performing loans charged-off - (54) (54) - - -
Loans returned to accrual status / loan collections     -   (705)   (705)   -   (209)   (209)
Ending balance NPLs     $-   $3,839   $3,839   $-   $4,046   $4,046
 
Total non-performing loans held-in-portfolio (excluding consumer and covered loans):
Quarter ended Quarter ended
30-Jun-16   31-Mar-16
(In thousands)     BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $508,747 $31,778 $540,525 $519,385 $21,101 $540,486
Plus:
New non-performing loans 105,903 9,338 115,241 100,543 23,259 123,802
Advances on existing non-performing loans - 8 8 - 3 3
Less:
Non-performing loans transferred to OREO (14,336) (445) (14,781) (10,633) - (10,633)
Non-performing loans charged-off (25,875) (438) (26,313) (15,948) (657) (16,605)
Loans returned to accrual status / loan collections     (75,774)   (18,881)   (94,655)   (84,600)   (11,928)   (96,528)
Ending balance NPLs     $498,665   $21,360   $520,025   $508,747   $31,778   $540,525
 

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
         
 
Quarter ended Quarter ended Quarter ended
      30-Jun-16   31-Mar-16   30-Jun-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 $508,427 $30,045 $538,472 $502,935 $34,176 $537,111 $516,224 $72,473 $588,697
Provision (reversal of provision) for loan losses     39,668   804   40,472   47,940   (3,105)   44,835   60,468   15,766   76,234  
      548,095   30,849   578,944   550,875   31,071   581,946   576,692   88,239   664,931  
Net loans charged-off (recovered):
BPPR
Commercial 5,647 - 5,647 2,704 - 2,704 17,059 19,833 36,892
Construction (3,226) - (3,226) 311 - 311 1,721 14,615 16,336
Lease financing 434 - 434 1,638 - 1,638 973 - 973
Mortgage 13,464 699 14,163 14,696 996 15,692 10,739 178 10,917
Consumer     19,903   (431)   19,472   21,298   30   21,328   14,654   679   15,333
Total BPPR     36,222   268   36,490   40,647   1,026   41,673   45,146   35,305   80,451
 
BPNA
Commercial (1,265) - (1,265) 205 - 205 (879) - (879)
Legacy [1] (893) - (893) (247) - (247) 30 - 30
Mortgage 16 - 16 230 - 230 176 - 176
Consumer     1,321   -   1,321   1,613   -   1,613   1,969   -   1,969  
Total BPNA     (821)   -   (821)   1,801   -   1,801   1,296   -   1,296  
Total loans charged-off - Popular, Inc.     35,401   268   35,669   42,448   1,026   43,474   46,442   35,305   81,747  
Balance transferred from covered to non-covered loans     -   -   -   -   -   -   13,037   (13,037)   -  
Net (write-downs) recoveries [2]     5,445   -   5,445   -   -   -   (30,548)   (1,823)   (32,371)  
Balance at end of period     $518,139   $30,581   $548,720   $508,427   $30,045   $538,472   $512,739   $38,074   $550,813  
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 0.63 % 0.62 % 0.76 % 0.76 % 0.89 % 1.41 %
Provision for loan losses to net charge-offs [3] 1.27 x 1.29 x 1.13 x 1.03 x 1.28 x 0.92 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 0.83 % 0.81 % 0.93 % 0.92 % 1.10 % 1.71 %
Provision for loan losses to net charge-offs [3] 1.21 x 1.22 x 1.08 x 0.98 x 1.32 x 0.94 x
 
BPNA
Annualized net charge-offs (recoveries) to average loans held-in-portfolio (0.06) % 0.15 % 0.12 %
Provision for loan losses to net charge-offs (recoveries)             (1.60)           2.26           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-downs) recoveries related to loans sold or reclassified to held-for-sale.
N.M. - Not meaningful.
 

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
   
                                   
30-Jun-16
(Dollars in thousands)       Commercial   Construction   Legacy [2]   Mortgage   Lease financing   Consumer   Total[3]
Specific ALLL $53,350 $116 $- $43,909 $548 $24,898 $122,821
Impaired loans [1] $335,881 $1,036 $- $484,725 $2,110 $111,610 $935,362
Specific ALLL to impaired loans     [1] 15.88 % 11.20 % - % 9.06 % 25.97 % 22.31 % 13.13 %
General ALLL $156,331 $10,949 $1,852 $97,577 $9,546 $119,063 $395,318
Loans held-in-portfolio, excluding impaired loans [1] $10,023,934 $716,296 $49,709 $6,379,393 $661,984 $3,773,983 $21,605,299
General ALLL to loans held-in-portfolio, excluding impaired loans     [1] 1.56 % 1.53 % 3.73 % 1.53 % 1.44 % 3.15 % 1.83 %
Total ALLL $209,681 $11,065 $1,852 $141,486 $10,094 $143,961 $518,139
Total non-covered loans held-in-portfolio [1] $10,359,815 $717,332 $49,709 $6,864,118 $664,094 $3,885,593 $22,540,661
ALLL to loans held-in-portfolio     [1] 2.02 % 1.54 % 3.73 % 2.06 % 1.52 % 3.70 % 2.30 %
[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 June 30, 2016 the general allowance on the covered loans amounted to $30.6 million.
                                   
31-Mar-16
(Dollars in thousands)       Commercial   Construction   Legacy [2]   Mortgage   Lease financing   Consumer   Total[3]
Specific ALLL $55,098 $172 $- $43,252 $608 $24,907 $124,037
Impaired loans [1] $338,980 $2,020 $- $479,092 $2,391 $112,167 $934,650
Specific ALLL to impaired loans     [1] 16.25 % 8.51 % - % 9.03 % 25.43 % 22.21 % 13.27 %
General ALLL $152,079 $8,804 $2,484 $86,347 $10,427 $124,249 $384,390
Loans held-in-portfolio, excluding impaired loans [1] $9,889,409 $732,838 $61,044 $6,500,109 $640,751 $3,748,936 $21,573,087
General ALLL to loans held-in-portfolio, excluding impaired loans     [1] 1.54 % 1.20 % 4.07 % 1.33 % 1.63 % 3.31 % 1.78 %
Total ALLL $207,177 $8,976 $2,484 $129,599 $11,035 $149,156 $508,427
Total non-covered loans held-in-portfolio [1] $10,228,389 $734,858 $61,044 $6,979,201 $643,142 $3,861,103 $22,507,737
ALLL to loans held-in-portfolio     [1] 2.03 % 1.22 % 4.07 % 1.86 % 1.72 % 3.86 % 2.26 %
[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 March 31, 2016 the general allowance on the covered loans amounted to $30.0 million.
                                   
Variance
(Dollars in thousands)       Commercial   Construction   Legacy   Mortgage   Lease financing   Consumer   Total  
Specific ALLL $(1,748) $(56) $- $657 $(60) $(9) $(1,216)
Impaired loans       $(3,099)   $(984)   $-   $5,633   $(281)   $(557)   $712  
General ALLL $4,252 $2,145 $(632) $11,230 $(881) $(5,186) $10,928
Loans held-in-portfolio, excluding impaired loans       $134,525   $(16,542)   $(11,335)   $(120,716)   $21,233   $25,047   $32,212  
Total ALLL $2,504 $2,089 $(632) $11,887 $(941) $(5,195) $9,712
Total non-covered loans held-in-portfolio       $131,426   $(17,526)   $(11,335)   $(115,083)   $20,952   $24,490   $32,924  
 

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
               
30-Jun-16
Puerto Rico
(In thousands)     Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $53,350 $116 $42,106 $548 $24,167 $120,287
  General ALLL non-covered loans     146,477   3,489   94,618   9,546   106,304   360,434
ALLL - non-covered loans     199,827   3,605   136,724   10,094   130,471   480,721
Specific ALLL covered loans - - - - - -
  General ALLL covered loans     -   -   29,951   -   630   30,581
ALLL - covered loans     -   -   29,951   -   630   30,581
Total ALLL     $199,827   $3,605   $166,675   $10,094   $131,101   $511,302
Loans held-in-portfolio:
Impaired non-covered loans $335,881 $1,036 $476,161 $2,110 $109,130 $924,318
  Non-covered loans held-in-portfolio, excluding impaired loans     6,881,171   102,606   5,544,401   661,984   3,212,552   16,402,714
Non-covered loans held-in-portfolio     7,217,052   103,642   6,020,562   664,094   3,321,682   17,327,032
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans     -   -   589,256   -   17,914   607,170
Covered loans held-in-portfolio     -   -   589,256   -   17,914   607,170
Total loans held-in-portfolio     $7,217,052   $103,642   $6,609,818   $664,094   $3,339,596   $17,934,202
 
 
31-Mar-16
Puerto Rico
(In thousands)     Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $55,098 $172 $41,660 $608 $24,326 $121,864
  General ALLL non-covered loans     142,492   4,065   82,840   10,427   111,459   351,283
ALLL - non-covered loans     197,590   4,237   124,500   11,035   135,785   473,147
Specific ALLL covered loans - - - - - -
  General ALLL covered loans     -   -   29,822   -   223   30,045
ALLL - covered loans     -   -   29,822   -   223   30,045
Total ALLL     $197,590   $4,237   $154,322   $11,035   $136,008   $503,192
Loans held-in-portfolio:
Impaired non-covered loans $338,980 $2,020 $471,183 $2,391 $109,920 $924,494
  Non-covered loans held-in-portfolio, excluding impaired loans     7,029,311   103,124   5,628,576   640,751   3,199,171   16,600,933
Non-covered loans held-in-portfolio     7,368,291   105,144   6,099,759   643,142   3,309,091   17,525,427
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans     -   -   606,711   -   18,419   625,130
Covered loans held-in-portfolio     -   -   606,711   -   18,419   625,130
Total loans held-in-portfolio     $7,368,291   $105,144   $6,706,470   $643,142   $3,327,510   $18,150,557
 
                             
Variance
(In thousands)     Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $(1,748) $(56) $446 $(60) $(159) $(1,577)
  General ALLL non-covered loans     3,985   (576)   11,778   (881)   (5,155)   9,151
ALLL - non-covered loans     2,237   (632)   12,224   (941)   (5,314)   7,574
Specific ALLL covered loans - - - - - -
  General ALLL covered loans     -   -   129   -   407   536
ALLL - covered loans     -   -   129   -   407   536
Total ALLL     $2,237   $(632)   $12,353   $(941)   $(4,907)   $8,110
Loans held-in-portfolio:
Impaired non-covered loans $(3,099) $(984) $4,978 $(281) $(790) $(176)
  Non-covered loans held-in-portfolio, excluding impaired loans     (148,140)   (518)   (84,175)   21,233   13,381   (198,219)
Non-covered loans held-in-portfolio     (151,239)   (1,502)   (79,197)   20,952   12,591   (198,395)
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans     -   -   (17,455)   -   (505)   (17,960)
Covered loans held-in-portfolio     -   -   (17,455)   -   (505)   (17,960)
Total loans held-in-portfolio     $(151,239)   $(1,502)   $(96,652)   $20,952   $12,086   $(216,355)
 

 
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
(Unaudited)
               
30-Jun-16
U.S. Mainland
(In thousands)     Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $1,803 $731 $2,534
  General ALLL     9,854   7,460   1,852   2,959   12,759   34,884
Total ALLL     $9,854   $7,460   $1,852   $4,762   $13,490   $37,418
Loans held-in-portfolio:
Impaired loans $- $- $- $8,564 $2,480 $11,044
  Loans held-in-portfolio, excluding impaired loans     3,142,763   613,690   49,709   834,992   561,431   5,202,585
Total loans held-in-portfolio     $3,142,763   $613,690   $49,709   $843,556   $563,911   $5,213,629
 
 
31-Mar-16
U.S. Mainland
(In thousands)     Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $1,592 $581 $2,173
  General ALLL     9,587   4,739   2,484   3,507   12,790   33,107
Total ALLL     $9,587   $4,739   $2,484   $5,099   $13,371   $35,280
Loans held-in-portfolio:
Impaired loans $- $- $- $7,909 $2,247 $10,156
  Loans held-in-portfolio, excluding impaired loans     2,860,098   629,714   61,044   871,533   549,765   4,972,154
Total loans held-in-portfolio     $2,860,098   $629,714   $61,044   $879,442   $552,012   $4,982,310
 
                             
Variance
(In thousands)     Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $211 $150 $361
  General ALLL     267   2,721   (632)   (548)   (31)   1,777
Total ALLL     $267   $2,721   $(632)   $(337)   $119   $2,138
Loans held-in-portfolio:
Impaired loans $- $- $- $655 $233 $888
  Loans held-in-portfolio, excluding impaired loans     282,665   (16,024)   (11,335)   (36,541)   11,666   230,431
Total loans held-in-portfolio     $282,665   $(16,024)   $(11,335)   $(35,886)   $11,899   $231,319

   
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
 
 
(In thousands, except share or per share information)     30-Jun-16   31-Mar-16   30-Jun-15  
Total stockholders’ equity $5,359,831 $5,250,300 $4,949,653
Less: Preferred stock (50,160) (50,160) (50,160)
Less: Goodwill (631,095) (631,095) (505,435)
Less: Other intangibles     (50,983)   (54,080)   (74,854)  
Total tangible common equity     $4,627,593   $4,514,965   $4,319,204  
Total assets $37,606,148 $36,147,009 $36,741,250
Less: Goodwill (631,095) (631,095) (505,435)
Less: Other intangibles     (50,983)   (54,080)   (74,854)  
Total tangible assets     $36,924,070   $35,461,834   $36,160,961  
Tangible common equity to tangible assets 12.53 % 12.73 % 11.94 %
Common shares outstanding at end of period 103,703,041 103,670,005 103,503,014
Tangible book value per common share     $44.62   $43.55   $41.73  
 

       
Popular, Inc.
Financial Supplement to Second Quarter 2016 Earnings Release
Table O - Financial Information - Westernbank Loans
(Unaudited)
 
 
Revenues
Quarters ended
(In thousands)     30-Jun-16   31-Mar-16   Variance
Interest income on WB loans     $49,794   $44,904   $4,890
FDIC loss-share expense:
Amortization of indemnification asset (4,036) (4,042) 6
80% mirror accounting on credit impairment losses (reversal) [1] 475 (2,093) 2,568
80% mirror accounting on reimbursable expenses 2,235 3,950 (1,715)

80% mirror accounting on recoveries on covered assets, including rental income on OREOs, subject to reimbursement to the FDIC

(3,956) (645) (3,311)
Change in true-up payment obligation (7,688) (443) (7,245)
Other     394   127   267
  Total FDIC loss-share expense     (12,576)   (3,146)   (9,430)
Total revenues     37,218   41,758   (4,540)
Provision (reversal) for loan losses- WB loans     (7,282)   (356)   (6,926)
Total revenues less provision (reversal) for loan losses     $44,500   $42,114   $2,386

[1]

Reductions in expected cash flows for ASC 310-30 loans, which may impact the provision for loan losses, may consider reductions in both principal and interest cash flow expectations. The amount covered under the FDIC loss-sharing agreements for interest not collected from borrowers is limited under the agreements (approximately 90 days); accordingly, these amounts are not subject fully to the 80% mirror accounting.
 
 
Non-personnel operating expenses
Quarters ended [2]
(In thousands)     [1] 30-Jun-16   31-Mar-16   Variance
Professional fees $5,991 $3,316 $2,675
OREO expenses 6,389 2,205 4,184
Other operating expenses     1,924   1,971   (47)
Total operating expenses     $14,304   $7,492   $6,812

[1]

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

[2]

Expense reimbursements from the FDIC may be recorded with a time lag, since these are claimed upon the event of loss or charge-off of the loans which may occur in a subsequent period.
 
 
Quarterly average assets
Quarters ended
(In millions)     30-Jun-16   31-Mar-16   Variance
Loans $2,013 $2,058 $(45)
FDIC loss-share asset     211   233   (22)

           
Activity in the carrying amount and accretable yield of loans accounted for under ASC 310-30
 
Quarters ended
        30-Jun-16   31-Mar-16
(In thousands)     Accretable yield   Carrying amount of loans   Accretable yield   Carrying amount of loans
Beginning balance $1,128,808 $1,935,441 $1,112,458 $1,974,501
Accretion (48,476) 48,476 (43,533) 43,533
Changes in expected cash flows (8,652) - 59,883 -
Collections / loan sales / charge-offs [2]     -   (183,974)   -   (82,593)
Ending balance 1,071,680 1,799,943 1,128,808 1,935,441
  Allowance for loan losses - ASC 310-30 loans     -   (66,995)   -   (62,967)
Ending balance, net of allowance for loan losses     $1,071,680   $1,732,948   $1,128,808   $1,872,474
 
[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 $597 million as of June 30, 2016 and $615 million as of March 31, 2016.

[2] For the quarter ended June 30, 2016, includes the impact of the bulk sale of loans with a carrying value of approximately $99 million.

 
 
 
 
Activity in the carrying amount of the FDIC indemnity asset
 
Quarters ended
(In thousands)         30-Jun-16       31-Mar-16
Balance at beginning of period $219,448 $310,221
Amortization (4,036) (4,042)
Credit impairment losses (reversal) to be covered under loss-sharing agreements 475 (2,093)
Reimbursable expenses to be covered under loss-sharing agreements 2,235 3,950
Recoveries on covered assets (4,093) -
Net payments from FDIC under loss-sharing agreements         -       (88,588)
Balance at end of period         $214,029       $219,448
 
 
Activity in the remaining FDIC loss-share asset amortization
 
Quarters ended
(In thousands)         30-Jun-16       31-Mar-16
Balance at beginning of period $25,205 $26,100
Amortization (4,036) (4,042)
Impact of lower projected losses         2,022       3,147
Balance at end of period         $23,191       $25,205

Contact:

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

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