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| 8-K - FORM 8-K - POPULAR, INC. | d287559d8k.htm |
 Financial
Results Financial Results
Fourth Quarter 2011
Fourth Quarter 2011
Exhibit 99.1 |
 Forward Looking
Statements The information contained in this presentation includes 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
involve
risks
and
uncertainties
that
may
cause
the
Company's
actual
results
to
differ
materially
from
any
future
results
expressed or implied by such forward-looking statements. Factors that may 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. Other than to the extent required by applicable law, the Company undertakes no obligation to
publicly update or revise any forward-looking statement. Please refer to our Annual Report
on Form 10-K for the year ended December 31, 2010 and other SEC reports for a
discussion of those factors that could impact our future results. The financial
information included in this presentation for the quarter ended December 31, 2011 is based on
preliminary unaudited data and is subject to change.
1 |
 2011
Highlights •
Net Income for the year amounted to $151 million
•
Net income of $3 million in Q4; fourth consecutive profitable quarter
–
Provision for non-covered loans fell $26.8 million to $123.9 million on
linked-quarter basis
–
PR commercial/construction NPL inflows declined 52% in Q4; credit review of the
portfolio was completed
–
Net charge offs of non-covered loans in Q4 were down 7% to $126 million
•
Ended the year with strong capital and well positioned for improved results in 2012
2
Strong NIM of 4.34%
Provision for loan losses down 43% from prior year
Results include a one-time expense of $15.6 million due to employee retirement
window
Improved credit quality trends |
 Financial
Results 3
¹
Unaudited
Q4 2011
Q3 2011
Variance
Net interest income
$344,780
$369,311
($24,531)
Service fees & other oper. income
113,848
106,696
7,152
Gain on sale of investments, loans & trading profits
18,064
21,055
(2,991)
FDIC loss-share income (expense)
17,447
(5,361)
22,808
Gross revenues
2,438
Provision for loan losses
(excluding covered loans)
(123,908)
(150,703)
26,795
Provision for loan losses (covered WB loans)
(55,900)
(25,573)
(30,327)
Total provision BPOP
(179,808)
(176,276)
(3,532)
Net revenues
314,331
315,425
(1,094)
Personnel costs
124,547
111,724
12,823
Other operating expenses
186,546
170,631
15,915
Total operating expenses
311,093
282,355
28,738
Income before Tax
3,238
33,070
(29,832)
Income Tax
(263)
(5,537)
5,274
Net income
$2,975
$27,533
($24,558)
Financial Ratios
EPS
$0.00
$0.03
($0.03)
NIM
4.30%
4.45%
-0.15%
$ in thousands (except per share data)
1
1
494,139
491,701 |
 Q4 vs. Q3 2011
Adjusted Variances (in millions) 4
($In millions)
Q4 vs. Q3 variance as reported
(30)
$
Adjustments
Gain on sale of securites Q3
8
Gain on sale of securites Q4
3
Variance
5
Retirement window Q4
16
Adjusted negative variance
(9)
$
Covered loans
(17)
$
Mortgage loans
(8)
(25)
FDIC loss share increase:
Accretion of indemnification asset
2
ASC 310-20 and provision-mirror acct.
21
23
Other Income:
Serv charges & other fees
(3)
Gain on sale & indemnity reserves
2
Other operating income
10
9
43
Covered loans
(30)
US
(16)
(3)
Other Expenses
(13)
Detailed variances
(9)
$
Provision:
Provision BPPR - non-covered
Lower net interest income:
Explanation
Variance in pre-tax income |
 10.94%
14.52%
15.79%
7.99%
12.10%
15.97%
17.25%
8.62%
Tier 1 Common
Tier 1 Capital
Total Capital
Tangible Common Equity
Capital Ratios
5
1
See the earnings press release for reconciliation of Common Stockholders
Equity (GAAP) to Tier 1 Common Equity (Non-GAAP).
2
Minimum Regulatory Requirements for Well Capitalized
Q3
2011
Q2
2011
Q3
2010
1
•
There is no specific plan at this time for TARP repayment nor any obligation to accelerate a
total or partial payment
•
Any repayment of TARP will be done in a manner that protects shareholder value and will be
subject to regulatory approval
•
As of year end, the unamortized TARP discount amounted to $466 million
•
Including the discount amortization, the effective cost of TARP capital in Q4 was 16% of the
accreting book value, or 7.8% of the par amount of $935 million
•
Interest expense for 2011: $72.5 million
coupon $46.8 million
discount amortization $25.7 million
•
Strong capital ratios
Q4
2010
Q4
2011
Q4
2010
Q4
2011
Q4
2011
Q4
2010
5%
2
6%
2
10%
2
Q4
2011
Q4
2010 |
 6
Consolidated Credit Summary
•
NPAs
have decreased since Q4 10 principally driven by the sale of non-performing loans
•
NCOs
slightly declined in the fourth quarter, although experiencing
variability within the portfolios
•
Provision for loan losses
for 2011 was down 43% vs 2010
•
Allowance & allowance to loans
coverage ratio remained relatively flat
Excluding covered loans
$ in millions
Q4 11
Q3 11
Q4 11 vs
Q3 11
Q4 10
Q4 11 vs
Q4 10
Loans Held to Maturity (HTM)
$20,602
$20,674
-0.35%
$20,728
-0.61%
Loans Held for Sale
363
369
-1.63%
894
-59.40%
Total Non Covered Loans
$20,965
$21,043
-0.37%
$21,622
-3.04%
Non-performing assets (inc OREO)
$2,173
$2,158
0.70%
$2,405
-9.65%
NPLs HTM to loans HTM
8.44%
8.38%
0.06%
7.58%
0.86%
Net charge-offs
$126
$135
-6.67%
$478
-73.64%
Net charge-offs to average loans HTM
2.46%
2.64%
-0.18%
8.82%
-6.36%
Provision for loan losses
$124
$151
-17.88%
$354
-64.97%
Provision to total loans HTM
2.41%
2.92%
-0.51%
6.83%
-4.42%
Provision for loan losses to net charge-offs
0.98x
1.11x
-0.13x
0.74x
0.24x
Allowance for loan losses
$690
$693
-0.43%
$793
-12.99%
Allowance for loan losses to loans (excl. LHFS)
3.35%
3.35%
0.00%
3.83%
-0.48%
Allowance for loan losses to NPLs HTM
39.73%
39.99%
-0.26%
50.46%
-10.73% |
 Non-Performing Loans-
Popular, Inc.
Commercial & Construction NPL Inflows
Credit Quality Overview-
•
NPLs increased by $6 million in Q4 driven by higher PR
mortgage offset by reductions in construction. The
increase in Q3 was $107 million.
•
NCO ratio for Q4 was 2.46% ($126 million) vs. 2.64%
($135 million) in Q3, driven by PR C&I and consumer
portfolio
•
Inflow of NPLs in the PR commercial & construction
portfolios are lower ($111 million) given completion of
the credit review
•
For the year total NPL inflows for the commercial &
construction portfolios are down 22%
7
Excludes Covered Loans & LHFS
In 000’s
Net Charge Offs-Popular, Inc.
1
1
Excludes net charge-offs of $210 million in commercial and construction loans as
a result of charging-off collateral dependent loans more promptly in Q4
10. 0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2Q10
3Q10
4Q10
1Q 11
2Q 11
3Q 11
4Q 11
Commercial
Construction
Consumer
Mortgage
$119
$161
$149
$174
$133
$116
$212
$101
$147
$104
$109
$136
$57
$79
$77
$77
$0
$50
$100
$150
$200
$250
$300
$350
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
Commercial & Construction
Inflows
PR Inflows
US Inflows |
 2011
Highlights •
First year of operational profitability
since 2006
Further expanded strong margin
Reduced credit cost by 43% from
2010
Strengthened capital position
Executed on asset acquisitions
•
Improved credit profile
Completed NPL asset sales in PR
and US
Registered improvement in
credit trends in PR
Experienced substantial
improvement in US
Summary & Outlook
8
2012 Strategy
•
Further improve credit risk profile
•
Add low-risk assets
•
Expand efficiency efforts
•
Continue improvement at BPNA
Well positioned to improve results in 2012
•
2012 target range net income of $185
million to $200 million
Driven primarily by a reduction in
the provision expense |
 Appendix
Appendix |
 2005/2006
Aggressive diversification
consisting of Puerto Rico, the
U.S. and the Caribbean;
revenue diversification
through EVERTEC
Focused on growing U.S.
banking and mortgage
businesses (PFH & ELOAN )
2007/2008
Reorganized U.S. operation
to exit high-risk businesses
Shut down U.S. consumer
finance businesses (PFH &
ELOAN) & Texas region
Acquisition of P.R. Citibank
retail business
2009/2010
Focused on ensuring capital
and BHC liquidity adequacy
and participating in the P.R.
banking consolidation
Raised common equity,
completed EVERTEC sale &
Westernbank transaction
2005
2006
2007
2008
2009
2010
Net Income (Loss)
$541M
$358M
($64M)
($1,244M)
($574M)
$137M
Tier 1 Common
7.98%
7.73%
7.08%
3.19%
6.39%
10.95%
NPL/Loans
1 .77%
2.24%
2.75%
4.67%
9.60%
7.58% ¹
FTEs
13,210
12,508
12,303
10,587
9,407
8,277
Where We Are Coming From
10
Strategy
Financials
2011/2012
•
Focused on:
Puerto Rico
Credit risk profile
improvement
Efficiency
Asset acquisition
United States
•Repositioning
as community bank
•Continued
attention to asset quality and
efficiency
¹
Excludes covered loans
48,624
47,404
44,411
38,883
34,736
38,815
38,830
39,108
38,275
37,348
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
-
10,000
20,000
30,000
40,000
50,000
60,000
2005
2006
2007
2008
2009
2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Assets
Market Cap
Tangible Capital
•
•
•
•
•
•
• |
  P.R. &
US Business 11
$ in millions (Unaudited)
Q4 11
Q3 11
Variance
Q4 11
Q3 11
Variance
Net Interest Income
$299
$321
($22)
$73
$73
($0)
Non Interest Income
136
118
18
21
18
3
Gross Revenues
435
439
(4)
94
91
3
Provision (non-covered)
(88)
(131)
43
(36)
(20)
(16)
Provision (covered WB)
(56)
(26)
(30)
-
-
-
Provision for loan losses
(144)
(157)
13
(36)
(20)
(16)
Expenses
(253)
(221)
(32)
(60)
(61)
1
Tax (Expense) Benefit
(4)
(7)
3
(1)
(1)
(0)
Net Income (Loss)
$34
$54
($20)
($3)
$9
($12)
NPLs (HTM) ¹
$1,371
$1,337
$34
$367
$395
($28)
NPLs (HTM + HFS) ¹
1,620
1,597
23
380
395
(15)
Loan loss reserve
578
524
54
237
249
(12)
Assets
$28,423
$29,202
($779)
$8,581
$8,720
($139)
Loans (HTM)
19,159
19,210
(51)
5,762
5,946
(184)
Loans (HTM + HFS)
19,507
19,575
(68)
5,778
5,949
(171)
Deposits
21,850
21,727
123
6,168
6,292
(124)
NIM
4.97%
5.15%
-0.18%
3.68%
3.62%
0.06%
PR
US
1
Excludes covered loans |
 Financial
Results Financial Results
Fourth Quarter 2011
Fourth Quarter 2011 |