POPULAR, INC. - FORM 8-K - EX-99.1 - October 19, 2012

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8-K - FORM 8-K - POPULAR, INC.d426807d8k.htm
Financial Results
Financial Results
Third Quarter 2012
Third Quarter 2012
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, 2011 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 September 30, 2012 is based on preliminary unaudited data
and is subject to change.
1

Highlights Q3 2012
2
Capital
Earnings
•
Net income totaled $47 million
•
Net interest margin of 4.37%; BPPR margin of 5.11%
•
Reaffirming 2012 net income guidance range of $210 million to $225
million
•
Non performing loans held for sale declined by $70 million from Q2;
down $151 million YoY
•
Non performing assets declined by $57 million from Q2; down $256
million YoY
•
Net charge offs declined for the fourth consecutive quarter to $96
million; lowest since Q1 2008
•
Strong capital ratios: Common Equity Tier One ratio at 12.72%
•
Well positioned to exceed current and proposed Basel III capital
requirements
•
Tangible Book Value/Share at September 30, 2012: $32.15
Credit             
(excluding covered loans)

Key Areas of Shareholder Focus
•
Reducing non-performing loans
Total NPLs held in portfolio down $187 million YTD
Mortgage:
–
Approximately 200 modifications per month in Puerto Rico mortgage portfolio,
of which more than 75% percent are performing a year after
Commercial & Construction:
–
NPL HFS declined to $106 million from $472 million Q4 2010 
–
Total NPL reduction of $260 million YTD
–
Continue to actively pursue loan sales that make economic sense
•
TARP repayment framework
No contractual maturity and no US Treasury “call”
Rate reset is not a consideration
–
December 2013 reset will have no material cost impact on earnings, as the
effective
interest
expense
is
approximately
9%
of
the
par
value
of
$935
million
We will repay at appropriate time with least possible dilution
–
Could be series of partial payments, lump-sum or a secondary market
transaction by the US Treasury
3
Credit
TARP

Fundamental Strengths
4
Puerto Rico
Franchise
Strong Capital
Base
Additional
Sources of
Value
EVERTEC: Book value of $62 million on 49% ownership; Adjusted EBITDA  
of $79.4 million for the first 6 months of 2012
BHD: Book value of $73 million on 20% ownership; approximately $100 
million of net income in 2011
Covered loan portfolio: Westernbank transaction is treated as runoff 
portfolio with no value ascribed to more than 100,000 new customer 
relationships

Financial
Results
(Unaudited)
5
In thousands, except per share amount
Q3 2012
Q2 2012
Variance
Net interest income
$343,426
$341,200
$2,226
Service fees & other oper. income
114,840
119,576
(4,736)
Gain (loss)  on sale of investments, loans & trading
7,576
(28,427)
36,003
Total revenues before FDIC income
465,842
432,349
33,493
FDIC loss-share (expense) income
(6,707)
2,575
(9,282)
Gross revenues
459,135
434,924
24,211
Provision for loan losses
(excluding covered loans)
83,589
81,743
1,846
Provision for loan losses
(covered WB loans)
22,619
37,456
(14,837)
Net revenues
352,927
315,725
37,202
Personnel costs
111,550
116,336
(4,786)
Other operating expenses
178,805
211,543
(32,738)
Total operating expenses
290,355
327,879
(37,524)
Income (loss) before tax
62,572
(12,154)
74,726
Income tax expense (benefit)
15,384
(77,893)
93,277
Net income
$47,188
$65,739
($18,551)
EPS
$0.45
$0.63
($0.18)
NIM
4.37%
4.33%
0.04%
Tangible book value per share (quarter end)
$32.15
$31.74
$0.41
Market price (quarter end)
$17.45
$16.61
$0.84

Capital
6
•
Ended Q3 at 12.72% CET1 with $1.8 billion excess capital over well capitalized threshold
•
Proposed
Basel
III
regulations
will
reduce
the
rate
of
growth
of
our
excess
regulatory
capital,
but
a
dynamic
simulation shows it should remain above the current excess level
•
Simulation assumptions: net income: $200 million annually in 2013-2015; no change in assets or NPLs; no
dividends; capital rules implemented as proposed in NPRs
16.8%
0.0%
5.0%
10.0%
15.0%
20.0%
Q3 2012
Q2 2013
Q1 2014
Q4 2014
Q3 2015
Projected Tier 1
Tier 1
Well Capitalized
12.7%
0.0%
5.0%
10.0%
15.0%
20.0%
Q3 2012
Q2 2013
Q1 2014
Q4 2014
Q3 2015
Projected Common Equity  Tier 1
Common Equity Tier 1
Well Capitalized
18.1%
0.0%
5.0%
10.0%
15.0%
20.0%
Q3 2012
Q2 2013
Q1 2014
Q4 2014
Q3 2015
Projected Total Capital
Total
Well Capitalized
$0
$1,000
$2,000
$3,000
$4,000
Q3 2012
Q2 2013
Q1 2014
Q4 2014
Q3 2015
Projected Excess Capital Over "Well
Capitalized"
Common Equity Tier 1
Tier 1
Total
Q3 2012 Excess

7
Consolidated Credit Summary (Excluding Covered Loans)
Continued improvement in key credit quality
metrics:
•
Non performing loans held for sale
declined by $70 million from Q2; down
$151 million YoY
•
Non performing assets declined by $57
million from Q2; down $256 million YoY
Non-Performing Loans ($M)
OREO and NPL HFS ($M)
*
The legacy portfolio is comprised of commercial loans, construction loans and lease
financings related to certain lending products exited by the Corporation as part of
restructuring efforts carried out in prior years at the BPNA reportable segment.
Loans ($ M)
Q3 12
Q2 12
Q3 12 v Q2
12
Q3 11
Q3 12 v Q3
11
Commercial
$9,629
$9,603
$26
$9,989
(360)
$        
Construction
258
250
9
253
5
Legacy *
466
510
(44)
723
(257)
Leases
538
538
0
553
(15)
Consumer 
3,840
3,866
(25)
3,689
151
Mortgage
6,022
5,900
122
5,467
556
Loans HFS
337
365
(27)
369
(32)
Total Loans
$21,091
$21,030
$61
$21,043
$48
$-
$500
$1,000
$1,500
$2,000
$2,500
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Commercial
Construction
Leases
Consumer
Mortgage
-
34%
$168
$161
$157
$162
$176
$172
$194
$227
$252
$672
$465
$400
$260
$262
$232
$179
$109
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
OREO
NPL HFS
-57%
($792M)
($472M)

Commercial & Construction NPL Inflows  ($M)
Credit Quality Overview (Excluding Covered Loans)
•
NCOs declined for the fourth consecutive
quarter to $96 million
•
NCO ratio under 2% for the second
consecutive quarter
•
Total commercial and construction NPL inflows
increased by $33 million driven by four
relationships
8
ALLL ($M) and ALLL-to-NCO Ratio
NCO  ($M) and NCO-to-HTM Loan  Ratio
NPL legacy portfolio and inflow included within construction and
commercial loan portfolio
$109
$136
$61
$79
$77
$77
$48
$45
$42
$149
$174
$133
$116
$223
$101
$93
$65
$101
$-
$50
$100
$150
$200
$250
$300
$350
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
US Inflows
PR Inflows
-
45%
($115M)
$139
$133
$135
$126
$108
$98
$96
2.74%
2.59%
2.64%
2.45%
2.13%
1.93%
1.87%
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
NCO
NCO%
$727
$690
$693
$690
$665
$649
$636
130%
129%
128%
137%
154%
165%
166%
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
ALLL
ALLL/NCO

Credit Quality Overview (Excluding Covered Loans)
9
Provision increased slightly to $84
million
PR provision increased by $3.3
million driven by higher net
charge-offs in the commercial
loan portfolio
US provision decreased by $1.4
million
Provision ($M) and Provision-to-NCO Ratio
ALLL-to-Loans and ALLL-to-NPL Ratios
3.4%
3.4%
3.2%
3.1%
3.1%
40%
40%
40%
41%
41%
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
ALLL/Loans
ALLL/NPLs
$151
$124
$83
$82
$84
111%
98%
76%
83%
87%
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
PLL
PLL/NCO
Provision to net charge-off ratio
increased slightly to 87% driven
by a slight increase in the US
ALLL/Loans and ALLL/NPL ratios
remained relatively flat
PR remained flat at 98.4%

Taking actions to leverage strengths and drive value
10
•
Premier Puerto Rico franchise
•
Capital ratios well in excess of regulatory
requirements
•
Additional sources of value
•
Continue to reduce non-performing assets
•
Continue efficiency efforts
•
Repay TARP at appropriate time with least
possible dilution
•
Grow assets when justified by risk profile and
returns
Actions to
Drive Value
Strengths

Appendix
Appendix

12
P.R. Economic Overview
•
11.5% increase of real gross domestic investment in FY
2010-11 marks largest increase in more than a decade
•
Housing Stimulus: $235 million (extended through
12/31/12)
•
Public/Private Partnerships (PPPs): $2.6B Airport, $1.4
billion toll roads, $878 million schools
•
Unemployment rate for August 13.5%; lowest level since
January 2009
Average total employment is up 1.6%; 10
th
consecutive month of YoY growth
•
Hotel registration of non-residents registered highest
occupancy rates in the last few years
GDP –
Composition by sector
Recent Trends
•
Official forecast calls for first positive GNP growth since 2005. Forecast is +0.9% (fiscal 2012) and  +1.1% (fiscal
2013)
•
In
the
last
several
quarters,
indicators
such
as
retail
and
auto
sales,
home
sales,
cement
sales
and
sales
&
use
tax, among others show stabilization
Source: Government Development Bank of PR bgfpr.com, PR Finance
Housing Authority,  PR commissioner of  Financial Institutions
2011 GDP-
$98.8B
PR Labor Market
2012 Monthly average
up until August
46.4%
13.3%
12.5%
8.6%
8.0%
6.0%
2.9%
1.7%
0.6%
Manufacturing
Finance, insurance and real
estate
Services
Government
Trade
Tourism
Transportation and other
public utilities
Construction and Mining
Agriculture
500,000
500,000
700,000
700,000
900,000
900,000
1,100,000
1,100,000
1,300,000
1,300,000
1,500,000
1,500,000
-
5.00
5.00
10.00
10.00
15.00
15.00
20.00
20.00
2002
2002
2004
2004
2006
2006
2008
2008
2010
2010
2012
2012
Employment PR
Labor Force
PR U Rate
US U Rate

Who We Are –
Popular, Inc. 
Franchise
•
Financial services company
•
Headquartered in San Juan, Puerto Rico
•
$37 billion in assets (top 50 bank holding
company in the U.S.)
•
$24 billion in total loans
•
$26 billion in total deposits
•
279
branches
serving
customers
in
Puerto
Rico,
New
York,
California,
Florida,
Illinois,
U.S.
Virgin
Islands,
and
New
Jersey
•
NASDAQ ticker symbol: BPOP
•
Market Cap: $1.8 billion
Source: Company filings, SNL Financial
Note: Financial data as of September 30, 2012
1
As of September 30, 2012
Summary Corporate Structure
Assets = $36.5 bn
Popular
Mortgage,
Inc.
Popular Auto,
Inc.
Banco Popular
de Puerto Rico
Popular
Securities, Inc.
Assets = $28.0bn
Assets = $8.6 bn
Banco Popular
North America
Puerto Rico operations
Selected
equity
investments
(first
two
under
“corporate”
segment
and
third
under
PR):
Popular
Insurance, Inc.
Popular North
America, Inc.
U.S. banking operations
Transaction processing,
business processes outsourcing
48.5% stake
Adjusted EBITDA  of $79.4
million for the first 6 months of
2012
Dominican
Republic bank
19.99% stake
2011 approximate
income $100
million
PRLP 2011 Holdings
Construction and
commercial loans
vehicle
24.9% stake
13
1

P.R. Franchise Value Built Over 119 Years
Category
Market Position as of
Q2 2012
Market Share
as of  Q2 2012
Top Competitor
Institution/Group
Share
Total Deposits (Net of Brokered)
1
38%
Santander
11%
Total Loans
1
35%
FirstBank
16%
Commercial & Construction Loans
1
40%
FirstBank
21%
Credit Cards
1
45%
MBNA
15%
Mortgage Loan Production
1
33%
Scotiabank
13%
Personal Loans
1
35%
FirstBank
5%
Auto Loans/Leases
3
16%
Reliable
26%
Assets Under Management
3
13%
UBS
47%
•
Indisputable, sustained market leadership
Market
Share
Trend
(2002 –
2012)
14
Source:  Puerto Rico Office of the Commissioner of Financial Institutions & 10K reports
with a 12% market share (49.78% in personal loans; market share 50%).
1
1
1
0%
10%
20%
30%
40%
50%
Total Deposits (Net of Brokered)
Total Loans
Source:  Puerto Rico Office of the Commissioner
of Financial Institutions
Credit Unions:  A total of 115  credit unions were in business as of June 30, 2012, guaranteed by the (COSSEC). Total loans $4.3 billion

PR  & US Business
15
1
Excludes covered loans
$ in millions (Unaudited)
Q3 12
Q2 12
Variance
Q3 12
Q2 12
Variance
Net Interest Income
$300
$298
$2
$70
$70
($0)
Non Interest Income
114
85
29
11
15
(4)
Gross Revenues
414
383
31
81
85
(4)
Provision (non-covered)
69
66
3
14
15
(1)
Provision (covered WB)
23
38
(15)
-
-
-
Provision for loan losses
92
104
(12)
14
15
(1)
Expenses
232
267
(35)
57
58
(1)
Tax Expense
17
(74)
91
1
1
0
Net Income
$73
$86
($13)
$9
$11
($2)
NPLs  (HTM) ¹
$1,284
$1,276
$8
$266
$286
($20)
NPLs  (HTM + HFS) ¹
1,387
1,453
(66)
272
288
(16)
Loan loss reserve ¹
445
447
(2)
191
202
(11)
Assets
$27,683
$27,721
($38)
$8,573
$8,644
($71)
Loans  (HTM)
18,948
18,932
16
5,710
5,750
(40)
Loans  (HTM + HFS)
19,277
19,293
(16)
5,718
5,754
(36)
Deposits
20,351
21,304
(953)
6,029
6,175
(146)
NIM
5.11%
5.07%
0.04%
3.55%
3.57%
(0.02%)
PR
US

16
Consolidated Credit Summary (Excluding  Covered Loans)
$ in millions
Q3 12
Q2 12
%
Q3 11
%
Loans Held to Maturity (HTM)
$20,754
$20,666
$88
0.4%
$20,674
$80
0.4%
Performing HFS
228
186
42
22.6%
109
119
109.2%
NPL HFS
109
179
(70)
-39.1%
260
(151)
-58.1%
Total Non Covered Loans
21,091
21,031
$60
0.3%
21,043
$48
0.2%
Non-performing loans (NPLs)
$1,551
$1,563
($12)
-0.8%
$1,732
($182)
-10.5%
Commercial
$772
$768
$4
0.5%
$834
($62)
-7.4%
Construction
$50
$68
($18)
-26.5%
$123
($73)
-59.3%
Legacy
$49
$55
($6)
-10.5%
$104
($55)
-52.9%
Mortgage
$632
$633
($1)
-0.1%
$618
$14
2.3%
Consumer
$48
$40
$8
20.9%
$53
($5)
-9.4%
NPLs HTM to loans HTM
7.47%
7.56%
-0.1%
-1.1%
8.38%
-0.90%
-10.8%
Net charge-offs (NCOs)
$96
$98
($2)
-2.0%
$135
($39)
-29.0%
Commercial
$47
$40
$7
17.5%
$76
($29)
-37.9%
Construction
($1)
$1
($2)
NM
$1
($2)
NM
Legacy
$4
$5
($1)
-20.0%
$9
($5)
-55.0%
Mortgage
$16
$18
($2)
-11.1%
$14
$2
14.3%
Consumer
$30
$34
($4)
-11.8%
$37
($7)
-18.9%
NCOs to average loans HTM
1.87%
1.93%
-0.1%
-3.1%
2.64%
-0.8%
-29.2%
Provision for loan losses (PLL)
$84
$82
$2
2.3%
$151
($67)
-44.5%
PLL to total loans HTM
1.61%
1.58%
0.0%
1.9%
2.92%
-1.3%
-44.9%
PLL to NCOs
0.87x
0.83x
0.04x
4.4%
1.11x
-0.24x
-21.9%
Allowance for loan losses (ALL)
$636
$649
($12)
-1.9%
$693
($57)
-8.2%
ALL to loans
(excl. LHFS)
3.07%
3.14%
-0.1%
-2.2%
3.35%
-0.3%
-8.4%
ALL to NPLs HTM
41.04%
41.50%
-0.5%
-1.1%
39.99%
1.1%
2.6%
Q3 12 vs Q2 12
Q3 12 vs Q3 11

Credit Ratings Update
•
Our senior unsecured ratings have been gradually improving since
2010:
Moody’s:
Ba1
Negative Watch
S&P:
B+
Stable Outlook
Fitch:
B+
Positive Outlook
•
July 2011: S&P raised our senior unsecured rating by one notch to B+
•
December 2011: S&P raised its ratings on BPPR to BB from BB-
and changed
outlook to stable given revised bank criteria to Regional banks
•
January 2012:  Fitch raised BPOPs outlook to positive
•
April 2012: Moody’s placing most of the PR banks under review with the
possibility of downgrades, due to the state of the Puerto Rico economy
•
As the P.R. economy stabilizes and our credit metrics improve, we should see
upward pressure on the ratings
17

Financial Results
Financial Results
Third Quarter 2012
Third Quarter 2012