Popular, Inc. Announces Third Quarter 2019 Financial Results

  • Net income of $165.3 million in Q3 2019, compared to net income of $171.1 million in Q2 2019.
  • Net interest margin of 4.00% in Q3 2019, compared to 4.11% in Q2 2019.
  • Credit Quality:
  • Non-performing loans held-in-portfolio (“NPLs”) decreased by $6.6 million from Q2 2019; NPLs to loans ratio remained at 2.1% from Q2 2019;
  • Net charge-offs (“NCOs”) increased by $20.7 million from Q2 2019; NCOs at 1.01% of average loans held-in-portfolio vs. 0.71% in Q2 2019;
  • Allowance for loan losses to loans held-in-portfolio at 1.90% vs. 2.01% in Q2 2019; and
  • Allowance for loan losses to NPLs at 91.9% vs. 96.3% in Q2 2019.
  • Common Equity Tier 1 ratio of 17.46%, Common Equity per Share of $60.57 and Tangible Book Value per Share of $53.41 at September 30, 2019.

SAN JUAN, Puerto Rico--()--Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported net income of $165.3 million for the quarter ended September 30, 2019, compared to net income of $171.1 million for the quarter ended June 30, 2019.

Ignacio Alvarez, President and Chief Executive Officer, said: “The third quarter was another solid one as we continued to build on the strong performance of the first half of the year. While results reflect higher operating expenses due to investments in key areas such as technology, compliance and our people, we maintained our net interest income stable despite the interest rate environment, increased our non-interest income and benefited from a lower provision expense.  We added 12,000 new clients and increased consumer loan balances in Puerto Rico and grew our commercial and mortgage portfolios in the United States.”

Earnings Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

Quarters ended

 

Nine months ended

(Dollars in thousands, except per share information)

30-Sep-19

30-Jun-19

30-Sep-18

 

30-Sep-19

30-Sep-18

Net interest income

$476,991

$476,316

$451,469

 

$1,424,270

$1,258,652

Provision for loan losses

36,539

40,191

54,387

 

118,555

183,774

Provision for loan losses - covered loans [1]

-

-

-

 

-

1,730

Net interest income after provision for loan losses

440,452

436,125

397,082

 

1,305,715

1,073,148

FDIC loss-share income

-

-

-

 

-

94,725

Other non-interest income

142,712

138,326

151,021

 

417,468

404,602

Operating expenses

376,475

363,015

365,437

 

1,086,910

1,025,107

Income before income tax

206,689

211,436

182,666

 

636,273

547,368

Income tax expense

41,370

40,330

42,018

 

131,923

35,613

Net income

$165,319

$171,106

$140,648

 

$504,350

$511,755

Net income applicable to common stock

$164,389

$170,175

$139,718

 

$501,558

$508,963

Net income per common share - basic

$1.71

$1.77

$1.38

 

$5.17

$5.01

Net income per common share - diluted

$1.70

$1.76

$1.38

 

$5.16

$5.00

[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that were covered under the terminated FDIC Shared-Loss Agreements.

Net interest income

Net interest income for the quarter ended September 30, 2019 was $477.0 million, compared to $476.3 million for the previous quarter. Net interest margin was 4.00% for the quarter, compared to 4.11% for the previous quarter.

The increase of $0.7 million in net interest income is mainly the result of $5.4 million from higher volume of earning assets and a $3.8 million positive impact of one more day in the third quarter. This increase was partially offset by $8.5 million due to lower yields mainly from the impact of the 25 basis point decreases in the Fed Funds rate that occurred at the end of July and in mid-September 2019.

Significant variances were:

  • Higher income from money market, trading and investments by $1.9 million due to higher volume, mostly driven by an increase in public sector deposits at Banco Popular de Puerto Rico (“BPPR”); and
  • Higher income from the consumer loan portfolio by $1.7 million, due to higher loan volume in the BPPR segment driven primarily by an increase in auto loans and leases and consumer loans originated through BPPR’s E-loan channel.

Partially offset by:

  • Lower interest income from the commercial loan portfolio by $2.7 million, principally due to lower market rates in the adjustable rate portfolio, the impact of the payoff of a large loan on the purchased credit impaired portfolio and originations in the U.S. in a lower interest rate environment; and
  • Higher interest expense on deposits resulting from higher average balances mainly in the P.R. public sector and digital deposit channel in Popular Bank (“ Popular U.S.” or “ PB”) and the impact of one more day in the quarter of $0.9 million. Cost of interest-bearing deposits decreased 4 basis points driven mainly by the decrease in cost of public sector deposits in P.R. offset in part by an increase in the cost of digital channel deposits in Popular U.S.

BPPR’s net interest income amounted to $412.2 million for the quarter ended September 30, 2019, compared to $411.5 million for the previous quarter. Net interest margin for the third quarter of 2019 was 4.26%, a decrease of 11 basis points when compared to a net interest margin of 4.37% for the previous quarter. The decrease in net interest margin was mainly due to higher average volume of investment securities, which carry a lower yield, and a decrease in the yield of the money market portfolio and of the commercial loan portfolio as a result of lower market rates. Also impacting net interest margin was the payoff of a large commercial loan included in the purchased credit impaired portfolio, as mentioned above, and a lower discount amortization of the loan portfolio acquired from Wells Fargo in 2018 (the “Reliable Transaction”), partially offset by a lower cost of deposits. BPPR’s earning assets yielded 4.83%, compared to 4.98% in the previous quarter, while the cost of interest-bearing deposits was 0.77%, or 6 basis points lower than the 0.83% reported in the previous quarter. Total cost of deposits for the quarter was 0.61%, compared to 0.64% reported in the second quarter of 2019. The impact of one more day in the quarter represented approximately $3.1 million in additional net interest income at BPPR.

Net interest income for Popular U.S. was $74.4 million for the quarter ended September 30, 2019, compared to $74.6 million during the previous quarter. The decrease of $0.2 million in net interest income was primarily due to higher cost of deposits, as explained above, partially offset by higher volume of commercial and mortgage loans. Net interest margin for the quarter decreased 14 basis points to 3.29%, compared to 3.43% for the previous quarter. Earning assets yielded 4.60%, compared to 4.71% in the previous quarter, while the cost of interest-bearing deposits was 1.63%, compared to 1.59% reported for the previous quarter. Total cost of deposits for the quarter was 1.40% compared to 1.37% reported in the second quarter of 2019. The impact of one more day in the quarter represented approximately $0.6 million in additional net interest income at PB.

Non-interest income

Non-interest income increased by $4.4 million to $142.7 million for the quarter ended September 30, 2019, compared to $138.3 million for the quarter ended June 30, 2019. The increase in non-interest income was primarily driven by:

  • Higher service charges on deposit accounts by $1.4 million, mainly at BPPR, due to higher fees on transactional cash management services; and
  • higher income from mortgage banking activities by $12.3 million, mainly due to the unfavorable adjustment on mortgage servicing rights (“MSRs”) of $17.2 million recorded during the previous quarter driven by higher estimated prepayment and lower earnings rate due to lower interest rates, compared to an unfavorable adjustment of $4.8 million this quarter.

These variances were partially offset by:

  • Lower other service fees by $2.7 million, mainly in insurance fees, due to $3.5 million in contingency insurance commissions received during the second quarter of 2019, partially offset by higher credit card fees;
  • unfavorable variance in adjustments to indemnity reserves on previously sold loans of $5.3 million due to the release of a $4.4 million reserve taken in connection with a 2013 transaction settled during the second quarter of 2019; and
  • lower other operating income by $0.8 million, principally due to lower gains on sales of daily rental units by $0.7 million and lower recoveries of previously charged-off loans from the portfolio acquired as part of the Reliable Transaction by $0.6 million, partially offset by higher net earnings from the portfolio of investments under the equity method by $0.4 million.

Refer to Table B for further details.

Operating expenses

Operating expenses for the third quarter of 2019 totaled $376.5 million, an increase of $13.5 million when compared to the second quarter of 2019. The increase in operating expenses was driven primarily by:

  • Higher personnel cost by $6.2 million due to higher salaries by $3.9 million as a result of annual merit increases during the quarter and a higher headcount, and an increase of $3.2 million related to annual incentives, including the Corporation’s Profit-Sharing Plan, tied to the Corporation’s financial performance. Through the three quarters ended September 30, 2019, the Corporation has accumulated a total of $19.4 million in anticipated profit-sharing expenses;
  • higher professional fees by $3.3 million, mainly due to higher advisory expenses by $4.8 million related to Corporate initiatives and higher programming, processing and other technology services by $2.1 million, partially offset by lower legal fees by $2.0 million; and
  • higher other operating expenses by $6.0 million due to higher operational losses, including legal contingency reserves by $4.1 million and a $2.6 million loss related to an undeveloped corporate site which was placed for sale.

These increases were partially offset by:

  • Lower FDIC deposit insurance by $2.4 million, mainly due to the small bank assessment credit received at Popular Bank.

Full-time equivalent employees were 8,457 as of September 30, 2019, compared to 8,372 as of June 30, 2019.

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

Income taxes

For the quarter ended September 30, 2019, the Corporation recorded an income tax expense of $41.4 million, compared to $40.3 million for the previous quarter. During the third quarter of 2019, the Corporation recorded a tax benefit of $4.3 million related to revisions to the amount of exempt income for the current year. During the second quarter of 2019, the Corporation recorded a tax benefit of approximately $6.3 million related to adjustments pertaining to tax periods for which the statute of limitations had expired. The effective tax rate (“ETR”) for the third quarter of 2019 was 20%. Excluding the exempt income adjustment discussed above, the ETR for the quarter would have been 22%.

In the fourth quarter of 2019, in connection with the filing and true up of the Corporation’s 2018 Puerto Rico tax return, the Corporation will also amend its tax returns for the years 2015-2017, which will include a revision of the amount of exempt interest income resulting in a positive tax adjustment within a range of $15 million to $20 million.

The ETR of the Corporation is impacted by the composition and source of its taxable income. For the year 2019, the Corporation expects its consolidated effective tax rate to be within a range of 20% to 22%.

Credit Quality

NPLs for the BPPR segment for the third quarter of 2019, remained relatively flat from the second quarter of 2019. However, charge offs for the BPPR segment increased mainly as a result of previously reserved commercial loans and revisions to the auto loans charge-off policy. Credit quality metrics of our U.S. operation remained favorable. The Corporation continues to be attentive to the performance of its portfolios and related credit metrics. The following presents credit quality results for the third quarter of 2019.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $39.6 million quarter-over-quarter, primarily related to troubled debt restructured commercial real estate loans at BPPR.
  • Total non-performing loans held-in-portfolio decreased by $6.6 million from the second quarter of 2019. The BPPR segment NPLs remained essentially flat reflecting lower mortgage and consumer NPLs of $13.0 million and $4.3 million, respectively, offset by higher commercial NPLs of $17.2 million. The PB segment NPLs decreased by $4.9 million mostly due to charge-offs. At September 30, 2019, the ratio of NPLs to total loans held-in-portfolio remained at 2.1% from the second quarter of 2019.
  • Net charge-offs increased by $20.7 million from the second quarter of 2019, primarily driven by higher BPPR commercial and consumer NCOs of $10.4 million and $9.4 million, respectively. The commercial NCOs increase was mainly driven by the abovementioned previously reserved restructured commercial real estate loans, for which impaired amounts were charged-off during the quarter. The increase in consumer NCOs was mainly related to revisions and alignment in the auto loans charge-off policy. The Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was 1.01%, compared to 0.71% in the second quarter of 2019. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan and lease losses (“ALLL”) decreased by $31.3 million from the second quarter of 2019 to $512.4 million. The BPPR segment ALLL decreased by $25.4 million, principally driven by lower reserves for the commercial portfolio prompted by charge-offs taken during the quarter on previously reserved loans, a $8.2 million reserve release from a $40 million loan relationship, in the ASC 310-30 portfolio, sold during the quarter, and continued improvements in the loss trends of the mortgage portfolio. These decreases were offset in part by higher reserves for auto loans mainly related to the growth of the portfolio. PB’s ALLL decreased by $5.9 million, principally due to lower reserves for the U.S. taxi medallion portfolio.
  • The general and specific reserves totaled $416.5 million and $95.8 million, respectively, at quarter-end, compared with $443.6 million and $100.0 million, respectively, as of June 30, 2019. The ratio of the allowance for loan losses to loans held-in-portfolio was 1.90% in the third quarter of 2019, compared to 2.01% in the previous quarter. The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 91.9% compared to 96.3% in the previous quarter.
  • The provision for loan losses for the third quarter of 2019 decreased by $3.7 million from the prior quarter as a result of positive adjustments in certain qualitative reserves, the release from the loan relationship sold during the quarter, and lower loss trends in the mortgage portfolio. The provision to net charge-offs ratio was 53.9% in the third quarter of 2019, compared to 85.2% in the previous quarter.

     

Non-Performing Assets

 

 

 

 

 

(Unaudited)

 

 

 

 

 

(In thousands)

30-Sep-19

 

30-Jun-19

 

30-Sep-18

Total non-performing loans held-in-portfolio

$557,792

 

$564,358

 

$632,488

Other real estate owned (“OREO”)

117,928

 

118,851

 

133,780

Total non-performing assets

$675,720

 

$683,209

 

$766,268

Net charge-offs for the quarter

$67,840

 

$47,153

 

$63,687

 

 

 

 

 

 

 

Ratios:

 

 

 

 

 

Loans held-in-portfolio

$27,007,975

 

$27,005,745

 

$26,512,168

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

2.07%

 

2.09%

 

2.39%

Allowance for loan losses to loans held-in-portfolio

1.90

 

2.01

 

2.39

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

91.86

 

96.33

 

100.19

Refer to Table H for additional information.

 

 

 

 

 

Provision for Loan Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

Quarters ended

 

Nine months ended

(In thousands)

 

30-Sep-19

 

30-Jun-19

 

30-Sep-18

 

30-Sep-19

30-Sep-18

Provision for loan losses:

 

 

 

 

 

 

 

 

 

BPPR

 

$34,479

 

$28,975

 

$51,877

 

$94,908

$153,000

Popular U.S.

 

2,060

 

11,216

 

2,510

 

23,647

30,774

Total provision for loan losses - non-covered loans

 

$36,539

 

$40,191

 

$54,387

 

$118,555

$183,774

Provision for loan losses - covered loans

 

-

 

-

 

-

 

-

1,730

Total provision for loan losses

 

$36,539

 

$40,191

 

$54,387

 

$118,555

$185,504

Credit Quality by Segment

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

(In thousands)

 

Quarters ended

BPPR

 

30-Sep-19

 

30-Jun-19

 

30-Sep-18

 

Provision for loan losses

 

$34,479

 

$28,975

 

$51,877

 

Net charge-offs

 

59,900

 

37,167

 

58,846

 

Total non-performing loans held-in-portfolio

520,773

 

522,525

 

580,803

 

Allowance / loans held-in-portfolio

2.26%

 

2.38%

 

2.83%

 

 

 

 

 

 

 

 

 

 

 

Quarters ended

Popular U.S.

 

30-Sep-19

 

30-Jun-19

 

30-Sep-18

 

Provision for loan losses

 

$2,060

 

$11,216

 

$2,510

 

Net charge-offs

 

7,940

 

9,986

 

4,841

 

Total non-performing loans held-in-portfolio

 

37,019

 

41,833

 

51,685

 

Allowance / loans held-in-portfolio

0.87%

 

0.97%

 

1.10%

 

Preliminary impact estimate of the adoption of the current expected credit loss model (“CECL”)

The Corporation has continued its evaluation and implementation efforts with respect to CECL, in accordance with Accounting Standards Update (“ASU”) 2016-13, which will be effective on January 1, 2020. The ultimate impact on the Corporation of the adoption of CECL will depend on the composition of the Corporation’s portfolios as well as the economic conditions and forecast at the time of adoption.

Based on its preliminary analysis and the information currently available, utilizing loan balances and macroeconomic scenarios as of June 30, 2019, the Corporation expects that its allowance for loan and lease losses would increase by a range from $360 million to $400 million, or 85% to 95%, excluding purchased credit impaired loans. This increase is driven by the Puerto Rico mortgage, auto and credit cards loans portfolio. This increase would be reflected as a decrease to the opening balance of retained earnings, net of income taxes. Based on the Corporation’s preliminary estimates, assuming adoption at September 30, 2019, the day one impact of the adoption of CECL would result in a reduction in Tangible Book Value of approximately $3, or 5%.

The Corporation expects to continue to be well capitalized under the Basel III regulatory framework after the adoption of this standard. The Corporation will avail itself of the option to phase in over a period of three years the day one effects on regulatory capital from the adoption of CECL. Considering the phase in period provided by the regulatory framework, the estimated decrease to the Common Equity Tier One and Total Capital ratios would be of approximately 30 bps.

These estimates are preliminary and are subject to further work and analysis by the Corporation as part of its implementation efforts, including the consideration of qualitative factors, which may impact reserves, the review of significant assumptions and the model validation process.

 

Financial Condition Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

(In thousands)

30-Sep-19

 

30-Jun-19

 

30-Sep-18

Cash and money market investments

$5,670,645

 

$3,563,819

 

$5,010,010

Investment securities

16,773,578

 

17,038,098

 

13,344,548

Loans

27,007,975

 

27,005,745

 

26,512,168

Total assets

52,480,415

 

50,617,221

 

47,919,428

Deposits

44,166,195

 

42,059,837

 

39,648,827

Borrowings

1,379,767

 

1,604,670

 

2,046,003

Total liabilities

46,571,967

 

44,897,387

 

42,675,079

Stockholders’ equity

5,908,448

 

5,719,834

 

5,244,349

Total assets increased by $1.9 billion from the second quarter of 2019, driven by:

  • An increase of $2.1 billion in cash and money market investments, mainly due to an increase in Puerto Rico public sector deposits;

Partially offset by:

  • A decrease of $0.3 billion in debt securities available-for-sale, mainly due to maturities and paydowns of mortgage-backed securities.

Total liabilities increased by $1.7 billion from the second quarter of 2019, mainly due to:

  • An increase of $2.1 billion in deposits, mainly in Puerto Rico public sector deposits at BPPR;

Partially offset by:

  • A decrease of $0.2 billion in other short-term borrowings due to maturities of Federal Home Loan Bank advances at PB; and
  • A decrease of $0.2 billion in other liabilities due to purchases of securities transactions that settled during the quarter.

Stockholders’ equity increased by approximately $188.6 million from the second quarter of 2019, principally due to net income for the quarter of $165.3 million and higher unrealized gains on debt securities available-for-sale by $51.0 million, net of declared dividends of $29.0 million on common stock and $0.9 million in dividends on preferred stock.

Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 17.46%, $60.57 and $53.41, respectively, at September 30, 2019, compared to 16.80%, $58.63 and $51.44 at June 30, 2019. Refer to Table A for capital ratios.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s business, financial condition, results of operations, plans, objectives and future performance. These statements are not guarantees of future performance, are based on management’s current expectations and, by their nature, involve risks, uncertainties, estimates and assumptions. Potential factors, some of which are beyond the Corporation’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect of competitive and economic factors, and our reaction to those factors, the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital market conditions, capital adequacy and liquidity, the effect of legal and regulatory proceedings and new accounting standards on the Corporation’s financial condition and results of operations. All statements contained herein that are not clearly historical in nature, are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions, and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, are generally intended to identify forward-looking statements.

More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2018, our Form 10-Q for the quarters ended March 31, 2019, June 30, 2019, and in our Form 10-Q for the quarter ended September 30, 2019 to be filed with the Securities and Exchange Commission. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.

About Popular, Inc.

Popular, Inc. is the leading financial institution in Puerto Rico, by both assets and deposits, and ranks among the top 50 U.S. bank holding companies by assets. Founded in 1893, Banco Popular de Puerto Rico, Popular’s principal subsidiary, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. Popular also offers auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the mainland United States, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.

Conference Call

Popular will hold a conference call to discuss its financial results today Wednesday, October 23, 2019 at 11:00 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 the 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 Saturday, November 23, 2019. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10135336.

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

Popular, Inc.

Financial Supplement to Third Quarter 2019 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 - POPULAR U.S. OPERATIONS

 

Table N - Reconciliation to GAAP Financial Measures

POPULAR, INC.

Financial Supplement to Third Quarter 2019 Earnings Release

Table A - Selected Ratios and Other Information

(Unaudited)

 

 

 

 

 

Quarters ended

Nine months ended

 

30-Sep-19

30-Jun-19

30-Sep-18

30-Sep-19

30-Sep-18

Basic EPS

$1.71

$1.77

$1.38

$5.17

$5.01

Diluted EPS

$1.70

$1.76

$1.38

$5.16

$5.00

Average common shares outstanding

96,357,117

96,305,118

101,067,300

97,073,177

101,549,711

Average common shares outstanding - assuming dilution

96,478,327

96,457,448

101,249,154

97,212,396

101,731,930

Common shares outstanding at end of period

96,714,664

96,703,351

100,336,341

96,714,664

100,336,341

Market value per common share

$54.08

$54.24

$51.25

$54.08

$51.25

Market capitalization - (In millions)

$5,230

$5,245

$5,142

$5,230

$5,142

Return on average assets

1.29%

1.38%

1.17%

1.35%

1.48%

Return on average common equity

11.44%

12.31%

10.10%

11.96%

12.72%

Net interest margin

4.00%

4.11%

4.07%

4.10%

3.92%

Common equity per share

$60.57

$58.63

$51.77

$60.57

$51.77

Tangible common book value per common share (non-GAAP) [1]

$53.41

$51.44

$44.62

$53.41

$44.62

Tangible common equity to tangible assets (non-GAAP) [1]

9.97%

9.96%

9.49%

9.97%

9.49%

Tier 1 capital

17.46%

16.80%

16.19%

17.46%

16.19%

Total capital

20.05%

19.39%

18.82%

20.05%

18.82%

Tier 1 leverage

9.87%

9.75%

9.60%

9.87%

9.60%

Common Equity Tier 1 capital

17.46%

16.80%

16.19%

17.46%

16.19%

[1] Refer to Table N for reconciliation to GAAP financial measures.

POPULAR, INC.

Financial Supplement to Third Quarter 2019 Earnings Release

Table B - Consolidated Statement of Operations

(Unaudited)

 

 

Quarters ended

Variance

Quarter ended

Variance

Nine months ended

 

 

 

 

Q3 2019

 

Q3 2019

 

 

(In thousands, except per share information)

30-Sep-19

30-Jun-19

vs. Q2 2019

30-Sep-18

vs. Q3 2018

30-Sep-19

30-Sep-18

Interest income:

 

 

 

 

 

 

 

 

Loans

$453,315

$454,204

$(889)

$430,637

$22,678

$1,355,232

$1,190,498

 

Money market investments

19,119

22,534

(3,415)

27,581

(8,462)

70,873

86,258

 

Investment securities

99,542

94,241

5,301

70,147

29,395

274,819

185,537

 

Total interest income

571,976

570,979

997

528,365

43,611

1,700,924

1,462,293

Interest expense:

 

 

 

 

 

 

 

 

Deposits

78,760

78,449

311

55,134

23,626

228,035

139,050

 

Short-term borrowings

1,572

1,656

(84)

1,622

(50)

4,828

5,387

 

Long-term debt

14,653

14,558

95

20,140

(5,487)

43,791

59,204

 

Total interest expense

94,985

94,663

322

76,896

18,089

276,654

203,641

Net interest income

476,991

476,316

675

451,469

25,522

1,424,270

1,258,652

Provision for loan losses - non-covered loans

36,539

40,191

(3,652)

54,387

(17,848)

118,555

183,774

Provision for loan losses - covered loans

-

-

-

-

-

-

1,730

Net interest income after provision for loan losses

440,452

436,125

4,327

397,082

43,370

1,305,715

1,073,148

Service charges on deposit accounts

40,969

39,617

1,352

38,147

2,822

119,277

111,704

Other service fees

71,309

74,031

(2,722)

64,316

6,993

209,647

187,794

Mortgage banking activities

10,492

(1,773)

12,265

11,269

(777)

18,645

33,408

Net loss on sale of debt securities

(20)

-

(20)

-

(20)

(20)

-

Net gain (loss), including impairment, on equity securities

213

528

(315)

370

(157)

2,174

(42)

Net profit (loss) on trading account debt securities

295

422

(127)

(122)

417

977

(299)

Adjustments (expense) to indemnity reserves on loans sold

(3,411)

1,840

(5,251)

(3,029)

(382)

(1,664)

(6,482)

FDIC loss-share income

-

-

-

-

-

-

94,725

Other operating income

22,865

23,661

(796)

40,070

(17,205)

68,432

78,519

 

Total non-interest income

142,712

138,326

4,386

151,021

(8,309)

417,468

499,327

Operating expenses:

 

 

 

 

 

 

 

Personnel costs

 

 

 

 

 

 

 

 

Salaries

90,016

86,161

3,855

83,535

6,481

260,627

239,940

 

Commissions, incentives and other bonuses

22,360

22,636

(276)

25,365

(3,005)

70,757

66,685

 

Pension, postretirement and medical insurance

10,356

10,406

(50)

8,670

1,686

30,523

27,962

 

Other personnel costs, including payroll taxes

24,950

22,296

2,654

22,187

2,763

70,391

55,354

 

Total personnel costs

147,682

141,499

6,183

139,757

7,925

432,298

389,941

Net occupancy expenses

24,595

23,299

1,296

18,602

5,993

71,431

63,829

Equipment expenses

21,596

21,323

273

18,303

3,293

62,624

53,284

Other taxes

14,028

12,577

1,451

11,923

2,105

38,267

33,701

Professional fees

 

 

 

 

 

 

 

 

Collections, appraisals and other credit related fees

4,131

4,741

(610)

3,371

760

12,596

10,657

 

Programming, processing and other technology services

63,092

61,033

2,059

55,187

7,905

184,303

161,039

 

Legal fees, excluding collections

2,415

4,446

(2,031)

4,284

(1,869)

10,350

14,954

 

Other professional fees

28,923

25,028

3,895

21,018

7,905

74,026

74,098

 

Total professional fees

98,561

95,248

3,313

83,860

14,701

281,275

260,748

Communications

5,881

5,955

(74)

6,054

(173)

17,685

17,342

Business promotion

18,365

19,119

(754)

15,478

2,887

52,158

44,265

FDIC deposit insurance

2,923

5,278

(2,355)

8,610

(5,687)

13,007

22,534

Other real estate owned (OREO) (recovery) expense

(185)

1,237

(1,422)

7,950

(8,135)

3,729

21,028

Credit and debit card processing, volume, interchange

 

 

 

 

 

 

 

 

and other expenses

9,450

9,900

(450)

8,946

504

27,573

23,189

Other operating expenses

 

 

 

 

 

 

 

 

Operational losses

8,832

4,778

4,054

7,770

1,062

18,498

26,695

 

All other

22,348

20,431

1,917

35,860

(13,512)

61,283

61,578

 

Total other operating expenses

31,180

25,209

5,971

43,630

(12,450)

79,781

88,273

Amortization of intangibles

2,399

2,371

28

2,324

75

7,082

6,973

 

Total operating expenses

376,475

363,015

13,460

365,437

11,038

1,086,910

1,025,107

Income before income tax

206,689

211,436

(4,747)

182,666

24,023

636,273

547,368

Income tax expense

41,370

40,330

1,040

42,018

(648)

131,923

35,613

Net income

$165,319

$171,106

$(5,787)

$140,648

$24,671

$504,350

$511,755

Net income applicable to common stock

$164,389

$170,175

$(5,786)

$139,718

$24,671

$501,558

$508,963

Net income per common share - basic

$1.71

$1.77

$(0.06)

$1.38

$0.33

$5.17

$5.01

Net income per common share - diluted

$1.70

$1.76

$(0.06)

$1.38

$0.32

$5.16

$5.00

Dividends Declared per Common Share

$0.30

$0.30

$-

$0.25

$0.05

$0.90

$0.75

 

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table C - Consolidated Statement of Financial Condition

(Unaudited)

 

 

 

 

 

 

Variance

 

 

 

 

 

 

Q3 2019 vs.

(In thousands)

30-Sep-19

30-Jun-19

30-Sep-18

Q2 2019

Assets:

 

 

 

 

Cash and due from banks

$502,060

$391,703

$400,949

$110,357

Money market investments

5,168,585

3,172,116

4,609,061

1,996,469

Trading account debt securities, at fair value

36,303

35,623

37,731

680

Debt securities available-for-sale, at fair value

16,479,110

16,734,722

13,047,617

(255,612)

Debt securities held-to-maturity, at amortized cost

97,707

99,599

101,238

(1,892)

Equity securities

160,458

168,154

157,962

(7,696)

Loans held-for-sale, at lower of cost or fair value

56,370

54,028

51,742

2,342

Loans held-in-portfolio

27,181,241

27,171,467

26,661,951

9,774

 

 

Less: Unearned income

173,266

165,722

149,783

7,544

 

 

Allowance for loan losses

512,365

543,666

633,718

(31,301)

 

 

Total loans held-in-portfolio, net

26,495,610

26,462,079

25,878,450

33,531

Premises and equipment, net

547,063

554,614

557,104

(7,551)

Other real estate

117,928

118,851

133,780

(923)

Accrued income receivable

164,778

170,886

163,443

(6,108)

Mortgage servicing assets, at fair value

150,652

153,021

162,779

(2,369)

Other assets

1,811,190

1,806,825

1,900,850

4,365

Goodwill

671,122

671,122

687,536

-

Other intangible assets

21,479

23,878

29,186

(2,399)

Total assets

$52,480,415

$50,617,221

$47,919,428

$1,863,194

Liabilities and Stockholders’ Equity:

 

 

 

 

Liabilities:

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Non-interest bearing

$8,771,970

$8,955,304

$8,803,752

$(183,334)

 

 

Interest bearing

35,394,225

33,104,533

30,845,075

2,289,692

 

 

Total deposits

44,166,195

42,059,837

39,648,827

2,106,358

Assets sold under agreements to repurchase

213,097

233,091

300,116

(19,994)

Other short-term borrowings

-

160,000

1,200

(160,000)

Notes payable

1,166,670

1,211,579

1,744,687

(44,909)

Other liabilities

1,026,005

1,232,880

980,249

(206,875)

Total liabilities

46,571,967

44,897,387

42,675,079

1,674,580

Stockholders’ equity:

 

 

 

 

Preferred stock

50,160

50,160

50,160

-

Common stock

1,044

1,044

1,043

-

Surplus

4,317,556

4,316,225

4,281,515

1,331

Retained earnings

2,071,198

1,935,826

1,629,692

135,372

Treasury stock

(392,630)

(392,208)

(183,872)

(422)

Accumulated other comprehensive loss, net of tax

(138,880)

(191,213)

(534,189)

52,333

 

 

Total stockholders’ equity

5,908,448

5,719,834

5,244,349

188,614

Total liabilities and stockholders’ equity

$52,480,415

$50,617,221

$47,919,428

$1,863,194

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters ended

 

Variance

 

 

 

 

30-Sep-19

 

30-Jun-19

 

30-Sep-18

 

Q3 2019 vs. Q2 2019

 

Q3 2019 vs. Q3 2018

 

($ 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

$20,617

$118.7

2.29

%

$19,664

$116.8

2.38

%

$18,547

$97.7

2.10

%

$953

$1.9

(0.09)

%

$2,070

$21.0

0.19

%

 

Loans not covered under loss sharing agreements with the FDIC:

 

 

Commercial

12,167

179.0

5.84

 

12,156

181.7

5.99

 

11,814

176.7

5.94

 

11

(2.7)

(0.15)

 

353

2.3

(0.10)

 

 

 

Construction

809

13.3

6.50

 

806

13.5

6.74

 

932

15.2

6.45

 

3

(0.2)

(0.24)

 

(123)

(1.9)

0.05

 

 

 

Mortgage

7,127

91.2

5.12

 

7,113

91.2

5.13

 

7,142

90.3

5.06

 

14

-

(0.01)

 

(15)

0.9

0.06

 

 

 

Consumer

2,918

86.5

11.76

 

2,864

85.3

11.95

 

3,869

115.0

11.79

 

54

1.2

(0.19)

 

(951)

(28.5)

(0.03)

 

 

 

Auto

2,867

68.2

9.44

 

2,822

67.7

9.62

 

949

20.2

8.55

 

45

0.5

(0.18)

 

1,918

48.0

0.89

 

 

 

Lease financing

1,004

15.1

6.03

 

972

14.8

6.07

 

885

13.3

5.99

 

32

0.3

(0.04)

 

119

1.8

0.04

 

 

Total loans

26,892

453.3

6.70

 

26,733

454.2

6.81

 

25,591

430.7

6.69

 

159

(0.9)

(0.11)

 

1,301

22.6

0.01

 

 

Total interest earning assets

$47,509

$572.0

4.79

%

$46,397

$571.0

4.93

%

$44,138

$528.4

4.76

%

$1,112

1.0

(0.14)

%

$3,371

$43.6

0.03

%

 

 

Allowance for loan losses

(532)

 

 

 

(553)

 

 

 

(639)

 

 

 

21

 

 

 

107

 

 

 

 

 

Other non-interest earning assets

3,964

 

 

 

3,931

 

 

 

3,992

 

 

 

33

 

 

 

(28)

 

 

 

 

Total average assets

$50,941

 

 

 

$49,775

 

 

 

$47,491

 

 

 

$1,166

 

 

 

$3,450

 

 

 

Liabilities and Stockholders' Equity:

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market

$15,958

$37.7

0.94

%

$14,953

$39.3

1.05

%

$13,201

$23.0

0.69

%

$1,005

$(1.6)

(0.11)

%

$2,757

$14.7

0.25

%

 

 

Savings

10,241

11.8

0.46

 

10,067

10.5

0.42

 

9,797

9.0

0.37

 

174

1.3

0.04

 

444

2.8

0.09

 

 

 

Time deposits

7,829

29.3

1.48

 

7,827

28.7

1.47

 

7,419

23.1

1.24

 

2

0.6

0.01

 

410

6.2

0.24

 

 

 

Total interest-bearing deposits

34,028

78.8

0.92

 

32,847

78.5

0.96

 

30,417

55.1

0.72

 

1,181

0.3

(0.04)

 

3,611

23.7

0.20

 

 

Borrowings

1,440

16.2

4.51

 

1,448

16.2

4.50

 

1,861

21.8

4.68

 

(8)

-

0.01

 

(421)

(5.6)

(0.17)

 

 

 

Total interest-bearing liabilities

35,468

95.0

1.06

 

34,295

94.7

1.11

 

32,278

76.9

0.95

 

1,173

0.3

(0.05)

 

3,190

18.1

0.11

 

 

 

Net interest spread

 

 

3.73

%

 

 

3.82

%

 

 

3.81

%

 

 

(0.09)

%

 

 

(0.08)

%

 

Non-interest bearing deposits

8,794

 

 

 

8,868

 

 

 

8,860

 

 

 

(74)

 

 

 

(66)

 

 

 

 

Other liabilities

926

 

 

 

1,016

 

 

 

816

 

 

 

(90)

 

 

 

110

 

 

 

 

Stockholders' equity

5,753

 

 

 

5,596

 

 

 

5,537

 

 

 

157

 

 

 

216

 

 

 

 

 

Total average liabilities and stockholders' equity

$50,941

 

 

 

$49,775

 

 

 

$47,491

 

 

 

$1,166

 

 

 

$3,450

 

 

 

Net interest income / margin non-taxable equivalent basis

$477.0

4.00

%

 

$476.3

4.11

%

 

$451.5

4.07

%

 

$0.7

(0.11)

%

 

$25.5

(0.07)

%

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE

(Unaudited)

 

 

 

Nine months ended

 

 

 

 

 

 

 

 

30-Sep-19

 

30-Sep-18

 

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

$19,691

$345.7

2.35

%

$18,191

$271.8

2.00

%

$1,500

$73.9

0.35

%

 

Loans not covered under loss-sharing agreements with the FDIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

12,137

538.9

5.94

 

11,607

504.2

5.81

 

530

34.7

0.13

 

 

 

Construction

807

40.4

6.69

 

919

43.1

6.27

 

(112)

(2.7)

0.42

 

 

 

Mortgage

7,125

273.6

5.12

 

7,109

270.3

5.07

 

16

3.3

0.05

 

 

 

Consumer

2,865

254.6

11.88

 

2,857

244.3

11.43

 

8

10.3

0.45

 

 

 

Auto

2,807

203.5

9.69

 

1,290

90.3

9.37

 

1,517

113.2

0.32

 

 

 

Lease financing

973

44.2

6.06

 

852

38.3

5.99

 

121

5.9

0.07

 

 

Total loans

26,714

1,355.2

6.78

 

24,634

1,190.5

6.46

 

2,080

164.7

0.32

 

 

Total interest earning assets

$46,405

$1,700.9

4.90

%

$42,825

$1,462.3

4.56

%

$3,580

$238.6

0.34

%

 

 

Allowance for loan losses

(553)

 

 

 

(640)

 

 

 

87

 

 

 

 

 

Other non-interest earning assets

3,944

 

 

 

4,024

 

 

 

(80)

 

 

 

 

Total average assets

$49,796

 

 

 

$46,209

 

 

 

$3,587

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market

$14,994

$110.7

0.99

%

$12,298

$50.2

0.55

%

$2,696

$60.5

0.44

%

 

 

Savings

10,053

32.2

0.43

 

9,341

22.0

0.31

 

712

10.2

0.12

 

 

 

Time deposits

7,778

85.1

1.46

 

7,621

66.8

1.17

 

157

18.3

0.29

 

 

 

Total interest-bearing deposits

32,825

228.0

0.93

 

29,260

139.0

0.64

 

3,565

89.0

0.29

 

 

Borrowings

1,452

48.6

4.47

 

1,954

64.6

4.42

 

(502)

(16.0)

0.05

 

 

 

Total interest-bearing liabilities

34,277

276.6

1.08

 

31,214

203.6

0.87

 

3,063

73.0

0.21

 

 

 

Net interest spread

 

 

3.82

%

 

 

3.69

%

 

 

0.13

%

 

Non-interest bearing deposits

8,871

 

 

 

8,755

 

 

 

116

 

 

 

 

Other liabilities

993

 

 

 

842

 

 

 

151

 

 

 

 

Stockholders' equity

5,655

 

 

 

5,398

 

 

 

257

 

 

 

 

 

Total average liabilities and stockholders' equity

$49,796

 

 

 

$46,209

 

 

 

$3,587

 

 

 

Net interest income / margin non-taxable equivalent basis

 

$1,424.3

4.10

%

 

$1,258.7

3.92

%

 

$165.6

0.18

%

Popular, Inc.

 

 

 

 

 

 

 

 

 

Financial Supplement to Third Quarter 2019 Earnings Release

 

 

 

 

Table F - Mortgage Banking Activities and Other Service Fees

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Banking Activities

 

 

 

 

 

 

 

 

 

 

 

Quarters ended

Variance

Nine months ended

Variance

(In thousands)

 

30-Sep-19

30-Jun-19

30-Sep-18

Q3 2019

vs.Q2 2019

Q3 2019

vs.Q3 2018

30-Sep-19

30-Sep-18

2019 vs.

2018

Mortgage servicing fees, net of fair value adjustments:

 

 

 

 

 

 

 

 

 

 

Mortgage servicing fees

 

$11,797

$11,916

$12,324

$(119)

$(527)

$35,400

$37,205

$(1,805)

 

Mortgage servicing rights fair value adjustments

 

(4,842)

(17,186)

(4,194)

12,344

(648)

(25,853)

(13,123)

(12,730)

Total mortgage servicing fees, net of fair value adjustments

 

6,955

(5,270)

8,130

12,225

(1,175)

9,547

24,082

(14,535)

Net gain on sale of loans, including valuation on loans held-for-sale

 

5,421

5,215

3,014

206

2,407

14,653

6,531

8,122

Trading account profit (loss):

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on outstanding derivative positions

 

227

(227)

45

454

182

-

(131)

131

 

Realized (losses) gains on closed derivative positions

 

(2,111)

(1,491)

80

(620)

(2,191)

(5,555)

2,926

(8,481)

Total trading account (loss) profit

 

(1,884)

(1,718)

125

(166)

(2,009)

(5,555)

2,795

(8,350)

Total mortgage banking activities

 

$10,492

$(1,773)

$11,269

$12,265

$(777)

$18,645

$33,408

$(14,763)

 

 

 

 

 

 

 

 

 

 

 

Other Service Fees

 

 

 

 

 

 

 

 

 

 

 

Quarters ended

Variance

Nine months ended

Variance

(In thousands)

 

30-Sep-19

30-Jun-19

30-Sep-18

Q3 2019

vs.Q2 2019

Q3 2019

vs.Q3 2018

30-Sep-19

30-Sep-18

2019 vs.

2018

Other service fees:

 

 

 

 

 

 

 

 

 

 

Debit card fees

 

$11,719

$12,034

$10,984

$(315)

$735

$34,923

$34,306

$617

 

Insurance fees

 

14,608

17,253

14,042

(2,645)

566

44,652

39,668

4,984

 

Credit card fees

 

25,625

24,794

21,525

831

4,100

72,705

65,866

6,839

 

Sale and administration of investment products

 

5,714

5,732

5,696

(18)

18

16,705

16,071

634

 

Trust fees

 

5,193

5,522

4,967

(329)

226

15,431

15,203

228

 

Other fees

 

8,450

8,696

7,102

(246)

1,348

25,231

16,680

8,551

Total other service fees

 

$71,309

$74,031

$64,316

$(2,722)

$6,993

$209,647

$187,794

$21,853

Popular, Inc.

 

 

 

 

 

Financial Supplement to Third Quarter 2019 Earnings Release

Table G - Loans and Deposits

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Loans - Ending Balances

 

 

 

 

 

 

 

 

 

Variance

(In thousands)

30-Sep-19

30-Jun-19

30-Sep-18

Q3 2019 vs.Q2

2019

Q3 2019 vs.Q3

2018

Loans held-in-portfolio:

 

 

 

 

Commercial

$12,208,449

$12,216,603

$11,993,707

$(8,154)

$214,742

Construction

754,056

825,419

943,365

(71,363)

(189,309)

Legacy [1]

23,192

23,893

27,566

(701)

(4,374)

Lease financing

1,022,484

991,546

903,540

30,938

118,944

Mortgage

7,168,619

7,198,959

7,304,170

(30,340)

(135,551)

Auto

2,847,758

2,796,403

2,468,610

51,355

379,148

Consumer

2,983,417

2,952,922

2,871,210

30,495

112,207

Total loans held-in-portfolio

$27,007,975

$27,005,745

$26,512,168

$2,230

$495,807

Loans held-for-sale:

 

 

 

 

 

Mortgage

56,370

54,028

51,742

2,342

4,628

Total loans held-for-sale

$56,370

$54,028

$51,742

$2,342

$4,628

Total loans

$27,064,345

$27,059,773

$26,563,910

$4,572

$500,435

[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 Popular U.S. segment.

Deposits - Ending Balances

 

 

 

 

 

 

 

 

Variance

(In thousands)

30-Sep-19

30-Jun-19

30-Sep-18

Q3 2019 vs. Q2

2019

Q3 2019 vs.Q3

2018

Demand deposits [1]

$19,191,657

$17,750,676

$16,120,156

$1,440,981

$3,071,501

Savings, NOW and money market deposits (non-brokered)

16,778,332

16,011,646

15,714,275

766,686

1,064,057

Savings, NOW and money market deposits (brokered)

400,049

384,251

402,116

15,798

(2,067)

Time deposits (non-brokered)

7,614,393

7,816,939

7,280,854

(202,546)

333,539

Time deposits (brokered CDs)

181,764

96,325

131,426

85,439

50,338

Total deposits

$44,166,195

$42,059,837

$39,648,827

$2,106,358

$4,517,368

[1] Includes interest and non-interest bearing demand deposits.

 

 

 

 

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table H - Non-Performing Assets

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Variance

(Dollars in thousands)

30-Sep-19

As a % of

loans HIP by

category

 

30-Jun-19

As a % of

loans HIP by

category

 

30-Sep-18

As a % of

loans HIP by

category

 

Q3 2019 vs.

Q2 2019

Q3 2019 vs.

Q3 2018

Non-accrual loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial

$169,697

1.4

%

$155,348

1.3

%

$172,685

1.4

%

$14,349

$(2,988)

Construction

10,334

1.4

 

13,848

1.7

 

19,695

2.1

 

(3,514)

(9,361)

Legacy [1]

2,318

10.0

 

2,469

10.3

 

3,403

12.3

 

(151)

(1,085)

Lease financing

2,733

0.3

 

2,830

0.3

 

3,009

0.3

 

(97)

(276)

Mortgage

305,542

4.3

 

318,396

4.4

 

361,085

4.9

 

(12,854)

(55,543)

Auto

22,954

0.8

 

28,085

1.0

 

22,097

0.9

 

(5,131)

857

Consumer

44,214

1.5

 

43,382

1.5

 

50,514

1.8

 

832

(6,300)

Total non-performing loans held-in-portfolio

557,792

2.1

%

564,358

2.1

%

632,488

2.4

%

(6,566)

(74,696)

Other real estate owned (“OREO”)

117,928

 

 

118,851

 

 

133,780

 

 

(923)

(15,852)

Total non-performing assets [2]

$675,720

 

 

$683,209

 

 

$766,268

 

 

$(7,489)

$(90,548)

Accruing loans past due 90 days or more [3] [4]

$476,814

 

 

$494,488

 

 

$753,074

 

 

$(17,674)

$(276,260)

Ratios:

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets to total assets

1.29

%

 

1.35

%

 

1.60

%

 

 

 

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

-in-portfolio

2.07

 

 

2.09

 

 

2.39

 

 

 

 

Allowance for loan losses to loans held-in-portfolio

1.90

 

 

2.01

 

 

2.39

 

 

 

 

Allowance for loan losses to non-performing loans,

excluding loans held-for-sale

91.86

 

 

96.33

 

 

100.19

 

 

 

 

[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 Popular U.S. segment.

[2] There were no non-performing loans held-for-sale as of September 30, 2019, June 30, 2019 and September 30, 2018.

[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 include loans rebooked, which were previously pooled into GNMA securities amounting to $99 million (June 30, 2019 - $96 million; September 30, 2018 - $195 million). Under the GNMA program, issuers such as BPPR have the option but not the obligation to repurchase loans that are 90 days or more past due. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements of BPPR with an offsetting liability. These balances include $241 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of September 30, 2019 (June 30, 2019 - $262 million; September 30, 2018 - $238 million). Furthermore, the Corporation has approximately $65 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation's policy to exclude these balances from non-performing assets (June 30, 2019 - $66 million; September 30, 2018 - $53 million).

[4] The carrying value of loans accounted for under ASC Subtopic 310-30 that are contractually 90 days or more past due was $189 million at September 30, 2019 (June 30, 2019 - $248 million; September 30, 2018 - $304 million). This amount is excluded from the above table as the loans’ accretable yield interest recognition is independent from the underlying contractual loan delinquency status.

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table I - Activity in Non-Performing Loans

(Unaudited)

 

 

 

 

 

 

 

 

Commercial loans held-in-portfolio:

 

 

Quarter ended

Quarter ended

 

 

30-Sep-19

30-Jun-19

(In thousands)

BPPR

Popular U.S.

Popular, Inc.

BPPR

Popular U.S.

Popular, Inc.

Beginning balance NPLs

$149,139

$6,209

$155,348

$166,293

$2,861

$169,154

Plus:

 

 

 

 

 

 

 

New non-performing loans

43,650

734

44,384

2,209

4,362

6,571

Less:

 

 

 

 

 

 

 

Non-performing loans transferred to OREO

(972)

-

(972)

(1,749)

-

(1,749)

 

Non-performing loans charged-off

(2,005)

(1,302)

(3,307)

(2,931)

(680)

(3,611)

 

Loans returned to accrual status / loan collections

(23,446)

(2,310)

(25,756)

(14,683)

(334)

(15,017)

Ending balance NPLs

$166,366

$3,331

$169,697

$149,139

$6,209

$155,348

 

 

 

 

 

 

 

 

Construction loans held-in-portfolio:

 

 

Quarter ended

Quarter ended

 

 

30-Sep-19

30-Jun-19

(In thousands)

BPPR

Popular U.S.

Popular, Inc.

BPPR

Popular U.S.

Popular, Inc.

Beginning balance NPLs

$1,788

$12,060

$13,848

$1,788

$12,060

$13,848

Plus:

 

 

 

 

 

 

 

Advances on existing non-performing loans

-

215

215

-

-

-

Less:

 

 

 

 

 

 

 

Non-performing loans charged-off

-

(2,215)

(2,215)

-

-

-

 

Loans returned to accrual status / loan collections

(1,514)

-

(1,514)

-

-

-

Ending balance NPLs

$274

$10,060

$10,334

$1,788

$12,060

$13,848

 

 

 

 

 

 

 

 

Mortgage loans held-in-portfolio:

 

 

Quarter ended

Quarter ended

 

 

30-Sep-19

30-Jun-19

(In thousands)

BPPR

Popular U.S.

Popular, Inc.

BPPR

Popular U.S.

Popular, Inc.

Beginning balance NPLs

$309,046

$9,350

$318,396

$317,850

$9,808

$327,658

Plus:

 

 

 

 

 

 

 

New non-performing loans

50,260

3,306

53,566

50,205

1,828

52,033

 

Advances on existing non-performing loans

-

37

37

-

10

10

Less:

 

 

 

 

 

 

 

Non-performing loans transferred to OREO

(6,741)

(197)

(6,938)

(6,905)

(169)

(7,074)

 

Non-performing loans charged-off

(8,733)

-

(8,733)

(6,362)

(342)

(6,704)

 

Loans returned to accrual status / loan collections

(47,807)

(2,979)

(50,786)

(45,742)

(1,785)

(47,527)

Ending balance NPLs

$296,025

$9,517

$305,542

$309,046

$9,350

$318,396

 

 

 

 

 

 

 

 

Total non-performing loans held-in-portfolio (excluding consumer):

 

 

Quarter ended

Quarter ended

 

 

30-Sep-19

30-Jun-19

(In thousands)

BPPR

Popular U.S.

Popular, Inc.

BPPR

Popular U.S.

Popular, Inc.

Beginning balance NPLs

$459,973

$30,088

$490,061

$485,931

$27,312

$513,243

Plus:

 

 

 

 

 

 

 

New non-performing loans

93,910

4,040

97,950

52,414

6,190

58,604

 

Advances on existing non-performing loans

-

290

290

-

11

11

Less:

 

 

 

 

 

 

 

Non-performing loans transferred to OREO

(7,713)

(197)

(7,910)

(8,654)

(169)

(8,823)

 

Non-performing loans charged-off

(10,738)

(3,514)

(14,252)

(9,293)

(1,022)

(10,315)

 

Loans returned to accrual status / loan collections

(72,767)

(5,481)

(78,248)

(60,425)

(2,234)

(62,659)

Ending balance NPLs [1]

$462,665

$25,226

$487,891

$459,973

$30,088

$490,061

[1] Includes $2.3 million of NPLs related to the legacy portfolio as of September 30, 2019 (June 30, 2019 - $2.5 million).

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter

ended

 

Quarter

ended

 

Quarter

ended

 

 

30-Sep-19

 

30-Jun-19

 

30-Sep-18

 

(Dollars in thousands)

Total

 

Total

 

Total

 

Balance at beginning of period

$543,666

 

$550,628

 

$643,018

 

Provision for loan losses

36,539

 

40,191

 

54,387

 

 

580,205

 

590,819

 

697,405

 

Net loans charged-off (recovered):

 

 

 

 

 

 

BPPR

 

 

 

 

 

 

Commercial

10,632

 

184

 

2,369

 

Construction

(2,986)

 

(54)

 

(125)

 

Lease financing

3,453

 

1,630

 

1,557

 

Mortgage

12,689

 

8,713

 

21,962

 

Consumer

36,112

 

26,694

 

33,083

 

Total BPPR

59,900

 

37,167

 

58,846

 

Popular U.S.

 

 

 

 

 

 

Commercial

3,633

 

5,791

 

1,741

 

Construction

2,215

 

-

 

-

 

Legacy [1]

(297)

 

(277)

 

(685)

 

Mortgage

(18)

 

230

 

(3)

 

Consumer

2,407

 

4,242

 

3,788

 

Total Popular U.S.

7,940

 

9,986

 

4,841

 

Total loans charged-off - Popular, Inc.

67,840

 

47,153

 

63,687

 

Balance at end of period

$512,365

 

$543,666

 

$633,718

 

POPULAR, INC.

 

 

 

 

 

 

Annualized net charge-offs to average loans held-in-portfolio

1.01

%

0.71

%

1.00

%

Provision for loan losses to net charge-offs

53.86

%

85.24

%

85.40

%

BPPR

 

 

 

 

 

 

Annualized net charge-offs to average loans held-in-portfolio

1.21

%

0.75

%

1.24

%

Provision for loan losses to net charge-offs

57.56

%

77.96

%

88.16

%

Popular U.S.

 

 

 

 

 

 

Annualized net charge-offs to average loans held-in-portfolio

0.45

%

0.59

%

0.29

%

Provision for loan losses to net charge-offs

25.94

%

112.32

%

51.85

%

[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 Popular U.S. segment.

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30-Sep-19

(Dollars in thousands)

 

Commercial

 

Construction

 

Legacy [1]

 

Mortgage

 

Lease

financing

 

Consumer

 

Total

 

Specific ALLL

 

$30,130

 

$57

 

$-

 

$42,868

 

$71

 

$22,720

 

$95,846

 

Impaired loans

 

$409,221

 

$10,334

 

$-

 

$533,317

 

$624

 

$105,117

 

$1,058,613

 

Specific ALLL to impaired loans

 

7.36

%

0.55

%

-

%

8.04

%

11.38

%

21.61

%

9.05

%

General ALLL

 

$160,591

 

$8,507

 

$791

 

$83,759

 

$7,122

 

$155,749

 

$416,519

 

Loans held-in-portfolio, excluding impaired loans

 

$11,799,228

 

$743,722

 

$23,192

 

$6,635,302

 

$1,021,860

 

$5,726,058

 

$25,949,362

 

General ALLL to loans held-in-portfolio, excluding impaired loans

 

1.36

%

1.14

%

3.41

%

1.26

%

0.70

%

2.72

%

1.61

%

Total ALLL

 

$190,721

 

$8,564

 

$791

 

$126,627

 

$7,193

 

$178,469

 

$512,365

 

Total loans held-in-portfolio

 

$12,208,449

 

$754,056

 

$23,192

 

$7,168,619

 

$1,022,484

 

$5,831,175

 

$27,007,975

 

ALLL to loans held-in-portfolio

 

1.56

%

1.14

%

3.41

%

1.77

%

0.70

%

3.06

%

1.90

%

[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 Popular U.S. reportable segment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30-Jun-19

(Dollars in thousands)

 

Commercial

 

Construction

 

Legacy [1]

 

Mortgage

 

Lease

financing

 

Consumer

 

Total

 

Specific ALLL

 

$31,698

 

$90

 

$-

 

$43,550

 

$234

 

$24,455

 

$100,027

 

Impaired loans

 

$390,271

 

$13,848

 

$-

 

$530,650

 

$865

 

$108,851

 

$1,044,485

 

Specific ALLL to impaired loans

 

8.12

%

0.65

%

-

%

8.21

%

27.05

%

22.47

%

9.58

%

General ALLL

 

$193,831

 

$9,793

 

$774

 

$88,966

 

$6,673

 

$143,602

 

$443,639

 

Loans held-in-portfolio, excluding impaired loans

 

$11,826,332

 

$811,571

 

$23,893

 

$6,668,309

 

$990,681

 

$5,640,474

 

$25,961,260

 

General ALLL to loans held-in-portfolio, excluding impaired loans

 

1.64

%

1.21

%

3.24

%

1.33

%

0.67

%

2.55

%

1.71

%

Total ALLL

 

$225,529

 

$9,883

 

$774

 

$132,516

 

$6,907

 

$168,057

 

$543,666

 

Total loans held-in-portfolio

 

$12,216,603

 

$825,419

 

$23,893

 

$7,198,959

 

$991,546

 

$5,749,325

 

$27,005,745

 

ALLL to loans held-in-portfolio

 

1.85

%

1.20

%

3.24

%

1.84

%

0.70

%

2.92

%

2.01

%

[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 Popular U.S. reportable segment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance

(Dollars in thousands)

 

Commercial

 

Construction

 

Legacy

 

Mortgage

 

Lease

financing

 

Consumer

 

Total

 

Specific ALLL

 

$(1,568)

 

$(33)

 

$-

 

$(682)

 

$(163)

 

$(1,735)

 

$(4,181)

 

Impaired loans

 

$18,950

 

$(3,514)

 

$-

 

$2,667

 

$(241)

 

$(3,734)

 

$14,128

 

General ALLL

 

$(33,240)

 

$(1,286)

 

$17

 

$(5,207)

 

$449

 

$12,147

 

$(27,120)

 

Loans held-in-portfolio, excluding impaired loans

 

$(27,104)

 

$(67,849)

 

$(701)

 

$(33,007)

 

$31,179

 

$85,584

 

$(11,898)

 

Total ALLL

 

$(34,808)

 

$(1,319)

 

$17

 

$(5,889)

 

$286

 

$10,412

 

$(31,301)

 

Total loans held-in-portfolio

 

$(8,154)

 

$(71,363)

 

$(701)

 

$(30,340)

 

$30,938

 

$81,850

 

$2,230

 

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

30-Sep-19

Puerto Rico

(In thousands)

Commercial

Construction

Mortgage

Lease financing

Consumer

Total

Allowance for credit losses:

 

 

 

 

 

 

 

Specific ALLL

$30,130

$57

$40,483

$71

$21,009

$91,750

 

General ALLL

131,429

1,009

81,252

7,122

138,208

359,020

Total ALLL

$161,559

$1,066

$121,735

$7,193

$159,217

$450,770

Loans held-in-portfolio:

 

 

 

 

 

 

 

Impaired loans

$407,124

$274

$523,876

$624

$95,356

$1,027,254

 

Loans held-in-portfolio, excluding impaired loans

6,761,529

123,798

5,711,700

1,021,860

5,286,441

18,905,328

Total loans held-in-portfolio

$7,168,653

$124,072

$6,235,576

$1,022,484

$5,381,797

$19,932,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30-Jun-19

Puerto Rico

(In thousands)

Commercial

Construction

Mortgage

Lease financing

Consumer

Total

Allowance for credit losses:

 

 

 

 

 

 

 

Specific ALLL

$31,698

$90

$41,158

$234

$22,592

$95,772

 

General ALLL

158,529

2,906

86,772

6,673

125,539

380,419

Total ALLL

$190,227

$2,996

$127,930

$6,907

$148,131

$476,191

Loans held-in-portfolio:

 

 

 

 

 

 

 

Impaired

$386,310

$1,788

$521,257

$865

$98,901

$1,009,121

 

Loans held-in-portfolio, excluding impaired loans

6,953,539

107,170

5,781,701

990,681

5,199,449

19,032,540

Total loans held-in-portfolio

$7,339,849

$108,958

$6,302,958

$991,546

$5,298,350

$20,041,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance

(In thousands)

Commercial

Construction

Mortgage

Lease financing

Consumer

Total

Allowance for credit losses:

 

 

 

 

 

 

 

Specific ALLL

$(1,568)

$(33)

$(675)

$(163)

$(1,583)

$(4,022)

 

General ALLL

(27,100)

(1,897)

(5,520)

449

12,669

(21,399)

Total ALLL

$(28,668)

$(1,930)

$(6,195)

$286

$11,086

$(25,421)

Loans held-in-portfolio:

 

 

 

 

 

 

 

Impaired

$20,814

$(1,514)

$2,619

$(241)

$(3,545)

$18,133

 

Loans held-in-portfolio, excluding impaired loans

(192,010)

16,628

(70,001)

31,179

86,992

(127,212)

Total loans held-in-portfolio

$(171,196)

$15,114

$(67,382)

$30,938

$83,447

$(109,079)

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - POPULAR U.S. OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

30-Sep-19

Popular U.S.

(In thousands)

Commercial

Construction

Legacy

Mortgage

Consumer

Total

Allowance for credit losses:

 

 

 

 

 

 

 

Specific ALLL

$-

$-

$-

$2,385

$1,711

$4,096

 

General ALLL

29,162

7,498

791

2,507

17,541

57,499

Total ALLL

$29,162

$7,498

$791

$4,892

$19,252

$61,595

Loans held-in-portfolio:

 

 

 

 

 

 

 

Impaired loans

$2,097

$10,060

$-

$9,441

$9,761

$31,359

 

Loans held-in-portfolio, excluding impaired loans

5,037,699

619,924

23,192

923,602

439,617

7,044,034

Total loans held-in-portfolio

$5,039,796

$629,984

$23,192

$933,043

$449,378

$7,075,393

 

 

 

 

 

 

 

 

 

30-Jun-19

Popular U.S.

(In thousands)

Commercial

Construction

Legacy

Mortgage

Consumer

Total

Allowance for credit losses:

 

 

 

 

 

 

 

Specific ALLL

$-

$-

$-

$2,392

$1,863

$4,255

 

General ALLL

35,302

6,887

774

2,194

18,063

63,220

Total ALLL

$35,302

$6,887

$774

$4,586

$19,926

$67,475

Loans held-in-portfolio:

 

 

 

 

 

 

 

Impaired loans

$3,961

$12,060

$-

$9,393

$9,950

$35,364

 

Loans held-in-portfolio, excluding impaired loans

4,872,793

704,401

23,893

886,608

441,025

6,928,720

Total loans held-in-portfolio

$4,876,754

$716,461

$23,893

$896,001

$450,975

$6,964,084

 

 

 

 

 

 

 

 

 

Variance

(In thousands)

Commercial

Construction

Legacy

Mortgage

Consumer

Total

Allowance for credit losses:

 

 

 

 

 

 

 

Specific ALLL

$-

$-

$-

$(7)

$(152)

$(159)

 

General ALLL

(6,140)

611

17

313

(522)

(5,721)

Total ALLL

$(6,140)

$611

$17

$306

$(674)

$(5,880)

Loans held-in-portfolio:

 

 

 

 

 

 

 

Impaired loans

$(1,864)

$(2,000)

$-

$48

$(189)

$(4,005)

 

Loans held-in-portfolio, excluding impaired loans

164,906

(84,477)

(701)

36,994

(1,408)

115,314

Total loans held-in-portfolio

$163,042

$(86,477)

$(701)

$37,042

$(1,597)

$111,309

Popular, Inc.

 

 

 

 

 

 

Financial Supplement to Third Quarter 2019 Earnings Release

Table N - Reconciliation to GAAP Financial Measures

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands, except share or per share information)

30-Sep-19

 

30-Jun-19

 

30-Sep-18

 

Total stockholders’ equity

$5,908,448

 

$5,719,834

 

$5,244,349

 

Less: Preferred stock

(50,160)

 

(50,160)

 

(50,160)

 

Less: Goodwill

(671,122)

 

(671,122)

 

(687,536)

 

Less: Other intangibles

(21,479)

 

(23,878)

 

(29,186)

 

Total tangible common equity

$5,165,687

 

$4,974,674

 

$4,477,467

 

Total assets

$52,480,415

 

$50,617,221

 

$47,919,428

 

Less: Goodwill

(671,122)

 

(671,122)

 

(687,536)

 

Less: Other intangibles

(21,479)

 

(23,878)

 

(29,186)

 

Total tangible assets

$51,787,814

 

$49,922,221

 

$47,202,706

 

Tangible common equity to tangible assets

9.97

%

9.96

%

9.49

%

Common shares outstanding at end of period

96,714,664

 

96,703,351

 

100,336,341

 

Tangible book value per common share

$53.41

 

$51.44

 

$44.62

 

 

Contacts

Popular, Inc.
Investor Relations:
Paul Cardillo, 212-417-6721
Senior Vice President, Investor Relations Officer
or
Media Relations:
Teruca Rullán, 787-281-5170 or 917-679-3596 (mobile)
Senior Vice President, Corporate Communications

Contacts

Popular, Inc.
Investor Relations:
Paul Cardillo, 212-417-6721
Senior Vice President, Investor Relations Officer
or
Media Relations:
Teruca Rullán, 787-281-5170 or 917-679-3596 (mobile)
Senior Vice President, Corporate Communications