Attached files
| file | filename |
|---|---|
| 8-K - 8-K - POPULAR, INC. | d764133d8k.htm |
 Exhibit 99.1 |
 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, 2013 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
June
30,
2014
is
based
on
preliminary unaudited data and is subject to change.
Forward Looking Statements
1 |
 NPLs increased by $4 million QoQ; ratio at 3.3%
NPL inflows excluding consumer loans down $54 million QoQ
NCOs
of
0.94%
compared
to
0.80%
last
quarter;
increase
of
$3
million
Reported
adjusted
net
income
of
$86
million
1
Strong
margins:
Popular,
Inc.
4.68%
2
adjusted;
BPPR 5.50%
Credit
(excluding
covered loans)
Capital
Earnings
Completed TARP repayment on July 2, 2014
2
1
GAAP Net Loss of $511 million. See appendix for a non GAAP to GAAP
reconciliation 2
Excludes
impact
of
$414
million
TARP
discount
amortization.
GAAP
Net
Income
Interest
Margin
of
(0.77%).
See
appendix
for
a
non
GAAP
to
GAAP
reconciliation |
 TARP
& Capital-Update 3
Minimum Well
Capitalized Ratio
Q2 2014 Ratio
Pro-forma
Q2 2014 Exc. Tarp
3
Received approval for full TARP repayment without additional equity
Financed TARP repayment with existing holding company liquidity and the
proceeds from senior note offering
$450 million 5 year 7% senior unsecured
Hold Co. liquidity approximately $175 million post TARP; debt service coverage in
excess of 2 years with no maturities until 2019
Robust capital; Pro-forma Tier1 Common Equity ratio of 13.8%
Common
Tier
1
Capital
*
Tier 1 Capital
Total Capital
Leverage
5.0%
6.0%
10.0%
5.0%
13.5%
19.4%
20.7%
13.2%
13.8%
15.8%
17.1%
10.5%
*Actual and pro-forma Common Tier 1 Capital includes $414 million of
accelerated discount amortization related to the subsequent $935 million TARP repayment
|
 BPNA
Restructuring-Update •
California, Illinois and Central Florida transactions are on pace to close by YE
2014 Strategic focus going forward on NY metro and South Florida
regions Non cash goodwill write-down in Q2 of $187 million
•
US operational restructuring initiative progress also on track with expected
completion during Q1 2015
•
Continue to look at all remaining components of BPNA balance sheet for
opportunities to manage credit exposures and capital
Lower
risk
profile
and
smaller
balance
sheet
to
yield
additional
capital
4 |
 Financial Summary (unaudited)
5
See appendix for a non GAAP to GAAP reconciliation
Q2 2014
Q1 2014
Non GAAP
GAAP
In thousands
Adjusted
As
Reported
Net interest income
$354,687
$351,171
$3,516
Non Interest Income
118,050
120,238
(2,188)
Total revenues before FDIC loss share impact
472,737
471,409
1,328
FDIC loss-share income (expense)
(55,261)
(24,206)
(31,055)
Gross revenues
417,476
447,203
(29,727)
Provision for loan losses (excluding covered loans)
50,074
54,122
(4,048)
Provision for loan losses (covered loans)
11,604
25,714
(14,110)
Total provision for loan losses
61,678
79,836
(18,158)
Net revenues
355,798
367,367
(11,569)
Personnel costs
99,100
104,301
(5,201)
Other real estate owned (OREO) expenses
3,410
6,440
(3,030)
Other operating expenses
168,355
166,858
1,497
Total operating expenses
270,865
277,599
(6,734)
Income from continuing operations before tax
84,933
89,768
(4,835)
Income tax expense
10,400
23,264
(12,864)
Net Income from continuing operations
74,533
66,504
8,029
Income from discontinued operations, net of tax
11,634
19,905
(8,271)
Net income
$86,167
$86,409
($242)
Adjusted
Variance |
 Capital
**Excess
capital
over
“well
capitalized”
Basel
I
threshold
*Averages
for
30
bank
holding
Companies
with
$50
billion
or
more
of
total
consolidated
assets,
consisting
of
19
firms
included
in
Comprehensive
Capital
Analysis
and
Review
(CCAR) and 11 firms included in Capital Plan Review (CapPR). Source SNL Financial
& FactSet.
Tier
1
Common
Equity
capital
ratio
of
13.5%
1
exceeds
current
CCAR
5%
target
by $2.0 billion
We
expect
to
remain
“well-capitalized”
under
Basel
III
rules
issued
by
the
Federal
Reserve
Capital Ratio %
Excess capital in $, billions
6
1
Pro-froma Tier 1 Common Equity capital ratio excluding TARP is 13.8%
13.5
19.4
20.7
10.3
10.9
12.1
14.8
8.7
Tier 1 Common
Tier 1 Capital
Total Capital
Tangible Common
Equity
BPOP Q2 2014
CCAR & CapPR Q1 2014 *
$2.0
$3.2
$2.6
Tier 1 Common
Tier
1
Capital
**
Total
Capital
** |
 Non
Performing Assets •
NPLs HIP increased slightly by $4 million QoQ
•
NPAs, including covered loans, remained
flat at $956 million, QoQ
Overall stable led by strong credit quality in the US operations
7
*Q2 2014 NPL’s and NPL/total loans ratio excludes discontinued operations
Non-Performing Assets ($MM)
Non-Performing Loans ($MM)
Covered NPLs decreased $8 million, reflective
of continued resolution efforts
NPL HFS increased $4 million QoQ
OREOs flat at $295 million vs. $296 million in
Q1 2014
$41
million
increase
in
PR,
mostly
mortgage
NPLs
$37
million
decline
in
US
operations
-
$28 million decline in commercial NPLs, driven by sales
and credit improvements
-
$10 million decline related to discontinued operations
932
971
1,142
852
866
1,026
1,101
1,293
1,500
2,084
2,245
2,402
2,448
2,539
2,623
2,489
2,314
2,277
2,254
2,365
2,311
2,178
2,120
2,002
1,419
992
944
956
956
2.1%
2.4%
1.9%
2.1%
2.5%
2.7%
3.3%
4.0%
5.7%
6.3%
6.9%
7.2%
6.0%
6.4%
6.4%
6.0%
5.8%
5.9%
6.3%
6.2%
5.9%
5.8%
5.5%
3.8%
2.7%
2.6%
2.6%
2.6%
2.6%
598
858
1,008
771
781
923
1,028
1,203
1,404
1,978
2,116
2,276
2,313
2,330
2,344
1,572
1,614
1,625
1,732
1,738
1,682
1,563
1,550
1,425
1,051
614
618
635
640
2.7%
3.1%
2.8%
2.9%
3.5%
3.9%
4.7%
5.6%
8.0%
8.7%
9.6%
10.0%
10.4%
10.6%
7.6%
7.9%
7.9%
8.4%
8.4%
8.2%
7.6%
7.5%
6.8%
4.9%
2.9%
2.9%
2.8%
2.9%
3.3%
Metrics exclude covered loans |
 Total NPL Inflows ($MM)
NPL Inflows
•
Total NPL inflows down by $54 million, or 26%
QoQ
•
PR mortgage NPL inflows increased by $16
million QoQ
Mortgage NPL Inflows ($MM)
Commercial,
Construction
&
Legacy
NPL
Inflows
($MM)
Excludes consumer loans
Metrics exclude covered loans
8
PR commercial inflows down $63 million;
Q1 2014 included $52 million impact of a
single credit relationship that continues
current
US commercial inflows down $8 million
79
77
76
48
45
42
26
22
22
22
10
19
11
119
222
101
93
65
100
43
48
59
42
32
94
31 |
 NCO
($MM) and NCO-to-Loan Ratio Metrics exclude covered loans
Provision ($MM) and Provision-to-NCO Ratio
9
690
693
690
665
649
636
622
584
529
526
538
543
526
129%
285%
42%
82%
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
ALLL
ALLL/NCO
ALLL/NPL
133
135
126
108
98
96
101
81
79
58
35
43
46
163
200
2.59%
0.94%
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
NCO
NPL Sale Charge-offs
NCO%
NPL Sale NCO%
96
151
124
83
82
84
86
58
55
55
48
47
50
149
169
72%
108%
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
PLL
NPL Sale PLL
PLL/NCO
NCOs increased slightly by $3 million QoQ
Q1 2014 included the effect of net recoveries in the US;
NCOs continue to track favorably
NCO ratio of 0.94% vs. 0.80% in Q1 2014; results
impacted by reclassification of the discontinued operations
Provision increased slightly by $3 million; $50 million in Q2
2014 vs. $47 million in Q1 2014
Provision to NCO of 108%, compared to 110% in Q1 2014
ALLL decreased by $16 million QoQ; ALLL to loans at
2.68% vs. 2.51% in Q1 2014
$28 million release
in the US
$20 million decrease related to the transfer to LHFS in the discontinued
operations
$32 million increase in PR
ALLL to NPL coverage ratio stable at 82% in Q2 2014 vs.
85% in Q1 2014
Asset Quality
ALLL ($MM), ALLL-to-NCO and ALLL-to-NPL Ratios NPL
Sale PLL/NCO |
 PR
Public Sector Exposure •
Loans to the Government of Puerto
Rico and Public Corporations are
either collateralized loans or
obligations that have a specific
source of income or revenues
identified for their repayment
10
•
Loans to various municipalities
backed by unlimited taxing power
or real and personal property taxes
collected within such municipalities
•
Our current direct exposure to the PR government, instrumentalities and
municipalities is $833 million, of which approximately $709 million is
outstanding, down $235 million QoQ PR Central Government &
Public Corporations
Municipalities
•
Indirect exposure of loans or
instruments that are payable by non-
governmental entities and have a
government guarantee to cover any
shortfall in collateral in the event of
borrower default. Majority are single-
family mortgage related.
Indirect Exposure
(In millions)
Loans
Securities
Total
Central Government
-
76
76
Public Corporations
PRASA
100
1
101
PREPA
75
-
75
PRHTA
-
-
-
OTHER
21
-
21
Total Central Govt & Public Corp.
196
77
273
as % of Tier 1 Capital
6%
Municipalities
374
62
436
Direct Government Exposure
570
139
709
Indirect Exposure
312
48
360 |
 Driving
Shareholder Value 11
Capital
Earnings
Additional
Value
•
Robust capital with Tier 1 Common Equity of 13.5%
•
TARP repayment and BPNA transactions move us toward a more
active capital management process
•
Unique franchise in PR provides strong, stable revenue-
generating capacity
•
Continued stability in Popular’s credit metrics
•
EVTC ownership, BHD stake and restructured US operations
11 |
 APPENDIX
APPENDIX |
 Who We
Are – Popular, Inc.
Franchise
Franchise
•
Financial services company
•
Headquartered in San Juan, Puerto Rico
•
$37 billion in assets (top 40 bank holding
company in the U.S.)
•
$23 billion in total loans
•
$25 billion in total deposits
•
270 branches serving customers in Puerto
Rico, New York, California, Florida, Illinois,
U.S. Virgin Islands, and New Jersey
•
NASDAQ ticker symbol: BPOP
•
Market
Cap:
$3.54
billion
1
As of June 30, 2014
*Doing business as Popular Community Bank.
Summary
Summary
Corporate
Structure
Assets = $36.6 bn
Popular Auto,
Inc.
Banco Popular
de Puerto Rico
Popular
Securities, Inc.
Assets = $27 .6 bn
Assets = $8.3bn
Banco Popular
North America*
Puerto Rico operations
Selected equity investments
(first two under “corporate”
segment and third and fourth under PR):
Popular
Insurance, Inc.
Popular North
America, Inc.
U.S. banking operations
Transaction processing,
business processes
outsourcing
14.8% stake
Adjusted EBITDA of $181.2
million for the twelve months
ended March 31, 2014
Dominican
Republic bank
15.82% stake
2013
approximate net
income $111
million
PRLP 2011 Holdings
Construction and
commercial loans vehicle
24.9% stake
PR Asset Portfolio 2013-1
International, LLC
Construction, commercial
loans and OREOs vehicle
24.9% stake
13
1 |
 Market
Leadership in Puerto Rico Popular’s Market Share Trend
Puerto Rico Market Share by Category
14
Total Deposits (Net of Brokered)
1
39%
Total Loans
1
36%
Commercial & Construction Loans
1
39%
Credit Cards
1
52%
Mortgage Loan Production
1
31%
Personal Loans
1
31%
Auto Loans/Leases
3
17%
Assets Under Management
3
15%
Category
Market
Position as of
Q1 2014
Market Share
as of Q1 2014
Source: Puerto Rico Office of the Commissioner of Financial Institutions & 10K
reports; Mortgage origination data is not publicly available; Figures
presented for BPPR and competitors were provided internally; Personal Loans:
As a group, Credit Unions represent the largest competitor with 52% market
share (115 Credit Unions were in business as of March 30, 2014 guaranteed by
COSSEC) |
 PR
& US Business 15
1
Excludes covered loans
2
Excludes discontinued operations as of June 30, 2014
$ in millions (unaudited)
Q2 2014
Q1 2014
Variance
Q2 2014
Q1 2014
Variance
Net Interest Income
$334
$328
$6
$49
$51
($2)
Non Interest Income
38
68
(30)
18
11
7
Gross Revenues
372
396
(24)
67
62
5
Provision (non-covered)
74
54
20
(25)
-
(25)
Provision (covered)
12
26
(14)
-
-
-
Provision for loan losses
86
80
6
(25)
-
(25)
Operating expenses
223
221
2
40
40
-
Income tax
(8)
30
(38)
1
1
-
Net Income from continuing
operations
71
65
6
51
21
30
(Loss) Income from discontinued
operations, net of tax
-
-
-
(182)
20
(202)
Net Income (loss)
$71
$65
$6
($131)
$41
($172)
NPLs (HIP) ¹
$574
$532
$42
$66
$103
($37)
NPLs (HIP + HFS) ¹
574
533
$41
70
103
(33)
Loan loss reserve ¹
466
435
$31
60
108
(48)
Assets
2
$27,647
$27,734
($87)
$8,299
$8,793
($494)
Loans (HIP) 2
18,590
18,831
(241)
3,779
5,649
(1,870)
Loans (HIP + HFS)
2
18,683
18,924
(241)
3,784
5,651
(1,867)
Deposits
2
21,144
21,245
(101)
3,819
6,067
(2,248)
NIM
5.50%
5.49%
0.01%
3.25%
3.41%
-0.16%
PR
US |
 1
Covered
loans
represent
loans
acquired
in
the
Westernbank
FDIC-assisted
transaction
that
are
covered
under
FDIC
loss
sharing
agreements.
2
Total
Basic
and
diluted
EPS,
including
discontinued
operations
was
$(4.98)
3 Excludes impact of $414 million TARP discount amortization. GAAP Net Income
Interest Margin of (0.77%). 16
GAAP Reconciliation Q2 2014
(Unaudited)
US GAAP
Non GAAP
(In thousands)
Actual
Tarp discount
amortization and
Income Tax
adjustments
Goodwill
impairment and
restructuring
charges
Adjusted
Net interest (expense) income
$ (59,381)
$
(414,068) $ 354,687
Provision
for
loan
losses
–
non-covered
loans
50,074
-
-
50,074
Provision
for
loan
losses
–
covered
loans
1
11,604
-
-
11,604
Net interest (expense) income after provision for loan losses
(121,059)
(414,068)
-
293,009
FDIC loss share income (expense)
(55,261)
-
-
(55,261)
Other non-interest income
118,050
-
-
118,050
Operating expenses
275,439
-
4,574
270,865
(Loss) income from continuing operations before income tax
(333,709)
(414,068)
(4,574)
84,933
Income tax (benefit) expense
(4,124)
(14,524)
10,400
(Loss) income from continuing operations
$ (329,585)
$
(399,544)
$
(4,574) $ 74,533
(Loss) income from discontinued operations, net of tax
$ (181,729)
$
-
$ (193,363)
$ 11,634
Net (loss) income
$ (511,314)
$
(399,544) $ (197,937)
$ 86,167
EPS from continuing operations-Basic
(3.21)
$
2
EPS from continuing operations-Diluted
(3.21)
$
2
NIM, adjusted
4.68%
3
Tangible book value per share (quarter end)
35.84
$
Market price (quarter end)
34.18
$
-
$ |
 Consolidated Credit Summary (Excluding Covered Loans)
1
Excluding provision for loan losses and net write-downs related to the asset
sale $ in millions
Q2 13
Loans Held in Portfolio (HIP)
$19,635
$21,612
$21,612
$21,427
$21,522
Performing HFS
93
94
109
123
180
NPL HFS
4
1
1
2
11
Total Non Covered Loans
19,732
21,707
21,722
21,552
21,713
Non-performing loans (NPLs)
$640
$635
$598
$618
$614
Commercial
$281
$310
$282
$320
$328
Construction
$22
$22
$24
$29
$45
Legacy
$8
$12
$15
$24
$28
Mortgage
$286
$252
$233
$203
$172
Consumer
$43
$39
$44
$42
$41
NPLs HIP to loans HIP
3.26%
2.94%
2.77%
2.88%
2.85%
Net charge-offs (NCOs)
$46
$43
$35
$58
$79
Commercial
$12
$12
$16
$21
$41
Construction
($1)
($2)
($2)
($5)
($2)
Legacy
($1)
($5)
($5)
$2
($1)
Mortgage
$10
$9
$8
$13
$16
Consumer
$26
$28
$18
$27
$26
Write-downs bulk sale
$0
$0
$0
$0
$200
Write-downs discontinued operations
$20
NCOs to average loans HIP
0.94%
0.80%
0.66%
1.08%
1.47%
1
Provision for loan losses (PLL)
$50
$47
$48
$55
$55
1
PLL to average loans HIP
1.02%
0.88%
0.89%
1.03%
1.02%
1
PLL to NCOs
1.08x
1.10x
1.35x
0.95x
0.69x
1
Allowance for loan losses (ALL)
$526
$543
$538
$526
$529
ALL to loans HIP
2.68%
2.51%
2.49%
2.46%
2.46%
ALL to NPLs HIP
82.26%
85.40%
90.05%
85.19%
86.14%
Q2 14
Q1 14
Q4 13
Q3 13
17 |
 De-risked Loan Portfolios
•
PR has derisked its commercial loan
portfolio by reducing its exposure in asset
classes with historically high loss content
Commercial portfolio, including
construction, has decreased from 55%
of total loans held-in-portfolio to 41%
Construction portfolio is down by 89%
since Q4 2007
SME1 lending is down by 55% from
Q4 2007
•
Collateralized exposure now represents a
larger portion of consumer loan portfolio
•
Unsecured loans credit quality has
improved as overall FICO scores have
increased
Loan Composition (Held-in Portfolio)
1
Small and Medium Enterprise
2
NCOs
distribution
represents
the
percentage
allocation
of
NCOs
from
Q1
2008
through
Q2
2014
per
each
loan
category
Legacy portfolio is comprised of certain commercial, construction and lease financings lending
products exited by the US. PR Commercial & Construction
Distribution 18
$ in millions
Q4 2007
Q2 2014
Q4 2007
Q2 2014
Q4 2007
Q2 2014
Variance
Commercial
$7,774
$6,299
$4,515
$1,857
$12,288
$8,156
($4,133)
Consumer
3,552
3,416
1,698
510
5,249
3,926
(1,323)
Mortgage
2,933
5,458
3,139
1,206
6,071
6,664
593
Construction
1,231
136
237
43
1,468
179
(1,289)
Leases
814
547
-
-
814
547
(267)
Legacy
-
-
2,130
163
2,130
163
(1,967)
Total
$16,304
$15,856
$11,718
$3,779
$28,021
$19,635
($8,386)
Puerto Rico
US
Total
NCOs
($mm)
(%)
($mm)
(%)
($mm)
(%)
Distribution
CRE SME
$2,938
33%
$1,541
24%
($1,397)
-48%
23%
C&I SME
1
2,287
25%
827
13%
(1,460)
-64%
28%
C&I Corp
1,592
18%
1,915
30%
323
20%
6%
Construction
1,231
14%
136
2%
(1,095)
-89%
37%
CRE Corp
892
10%
1,955
30%
1,063
119%
4%
Multifamily
64
1%
62
1%
(2)
-3%
2%
Total
$9,004
$6,436
($2,568)
-29%
100%
Q4 2007
Q2 2014
Variance
1
2 |
 Popular, Inc. Credit Ratings
•
Our senior unsecured ratings have remained stable:
•
Moody’s:
B2
Negative (Revised May 2014)
•
Fitch:
BB-
Stable Outlook (Reaffirmed December 2013)
•
S&P:
B+
Stable Outlook
•
May 2014: Moody’s downgraded BPOP to B2; outlook revised to negative
•
February 2014: Moody's placed BPOP on review for downgrade
•
October 2013: Moody’s revised outlook to negative
•
January
2013:
Fitch
raised
to
BB-
from
B+;
outlook
revised
to
stable
•
December 2012: Moody’s downgraded BPOP to B1; stable outlook assigned
•
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
•
January 2012: Fitch raised BPOP’s outlook to positive
•
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
19
19 |
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