SAN JUAN, Puerto Rico--(BUSINESS WIRE)--
Popular, Inc. (“the Corporation” or “Popular”) (NASDAQ:BPOP) reported
net income of $65.7 million for the quarter ended June 30, 2012,
compared with net income of $48.4 million for the quarter ended March
Mr. Richard L. Carrión, Chairman of the Board and Chief Executive
Officer, said: “Two consistently positive trends stand out in this
quarter’s results. First, our net interest margin and our
revenue-generating capacity remain strong. Second, credit metrics keep
improving. The decrease of $120 million in non-performing loans marks
our largest quarterly decline in this credit cycle. Despite various
headwinds we are continuing our progress.”
Refer to the accompanying “Financial Supplement to Second Quarter 2012
Earnings Release” for detailed financial information and key performance
ratios. Table B provides a breakdown of main categories in the income
Earnings Highlights – Second Quarter 2012
compared with First Quarter 2012
 Per share data has been adjusted to retroactively reflect the
1-for-10 reverse stock split effected on May 29, 2012.
Main events for the quarter ended June 30, 2012
Net interest income
Provision for loan losses
Non-interest income for the quarter ended June 30, 2012 decreased by
$30.2 million compared with the quarter ended March 31, 2012. The
principal unfavorable variances were in the following categories of the
income statement included in Exhibit B:
Operating expenses increased by $31.7 million for the second quarter of
2012 compared with the first quarter of 2012. Refer to Table B which
provides a breakdown of operating expenses by main categories. The
principal favorable variances were as follows:
These unfavorable variances were partially offset by a decrease in the
category of other real estate owned costs by $11.8 million and in
personnel costs by $5.2 million.
The decrease in the salaries category was mainly related to a reduction
in base salaries for full-time equivalent employees (FTEs). Pension,
postretirement and medical insurance costs were lower in the current
quarter mainly due to a reduction in medical and life insurance costs.
The decrease in other personnel costs was principally due to the
recognition in the first quarter of 2012 of severance accruals related
to a voluntary employee exit program as part of the Corporation’s
efficiency efforts and to lower payroll taxes.
FTEs were 8,093 as of June 30, 2012, compared with 8,329 as of December
31, 2011 and 8,074 as of March 31, 2012.
Income tax benefit amounted to $77.9 million for the quarter ended June
30, 2012, compared with an income tax expense of $16.2 million for the
first quarter of 2012. The positive variance in income tax was
principally related to the previously mentioned tax benefit of $72.9
million from the Closing Agreement with the P.R. Treasury and to lower
taxable income in the Corporation’s Puerto Rico operations for the
second quarter of 2012.
Most credit quality metrics continued to demonstrate positive trends
driven by actions taken by the Corporation to address problem loans and
mitigate the overall credit risk.
Refer to the section below for explanations on the main variances.
BPPR Reportable Segment
BPNA Reportable Segment
Financial Condition Highlights – June 30, 2012
compared to March 31, 2012
The information included in this news release contains certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on
management’s current expectations and involve certain risks and
uncertainties that may cause actual results to differ materially from
those expressed in forward-looking statements. Factors that might cause
such a difference include, but are not limited to (i) the rate of growth
in the economy and employment levels, as well as general business and
economic conditions; (ii) changes in interest rates, as well as the
magnitude of such changes; (iii) the fiscal and monetary policies of the
federal government and its agencies; (iv) changes in federal bank
regulatory and supervisory policies, including required levels of
capital; (v) the relative strength or weakness of the consumer and
commercial credit sectors and of the real estate markets in Puerto Rico
and the other markets in which borrowers are located; (vi) the
performance of the stock and bond markets; (vii) competition in the
financial services industry; (viii) possible legislative, tax or
regulatory changes; (ix) the impact of the Dodd-Frank Act on our
businesses, business practice and cost of operations; and (x) additional
Federal Deposit Insurance Corporation assessments. For a discussion of
such factors and certain risks and uncertainties to which the
Corporation is subject, see the Corporation’s Annual Report on Form 10-K
for the year ended December 31, 2011, as well as its filings with the
U.S. Securities and Exchange Commission. Other than to the extent
required by applicable law, including the requirements of applicable
securities laws, the Corporation assumes no obligation to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
Founded in 1893, Popular, Inc. is the leading banking institution by
both assets and deposits in Puerto Rico and ranks 37th by assets among
U.S. banks. 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, Illinois,
Florida and California.
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 on
Wednesday, July 18, 2012 at 10:30 a.m. Eastern 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
866-804-6926 or 857-350-1672. The conference code is 45836565.
A replay of the webcast will be archived in Popular’s website during the
respective period. A telephone replay will be available from 5 p.m. on
Wednesday, July 18, 2012 at 888-286-8010 or 617-801-6888. The replay
passcode is 95455273.
Q2 2012 vs. Q12012
Q2 2012 vs. Q22011
Total non-performing loans held-in-portfolio, excluding covered
 Excludes covered loans acquired on the Westernbank
FDIC-assisted transaction. As of June 30, 2012, the general
allowance on the covered loans amounted to $103 million, while the
specific reserve amounted to $14 million.
 Excludes covered loans acquired on the Westernbank
FDIC-assisted transaction. As of March 31, 2012, the general
allowance on the covered loans amounted to $106 million, while the
specific reserve amounted to $32 million.
Add: Pension liability adjustment, net of tax and accumulated net
gains (losses) on cash flow hedges
 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.
Quarterly average assets:
Activity in the carrying amount and
accretable yield of covered loans accounted for under ASC 310-30:
Activity in the carrying amount of the
FDIC indemnity asset:
Activity in the remaining FDIC loss share
Popular, Inc.Investor Relations:Jorge A. Junquera, 787-754-1685Chief
Financial Officer, Senior Executive Vice PresidentorMedia
Relations:Teruca Rullán, 787-281-5170 or
917-679-3596/mobileSenior Vice President, Corporate Communications
Source: Popular, Inc.