Form 8-K
POPULAR INC false 0000763901 0000763901 2020-07-23 2020-07-23 0000763901 us-gaap:CommonStockMember 2020-07-23 2020-07-23 0000763901 bpop:M6.70CumulativeMonthlyIncomeTrustPreferredSecuritiesMember 2020-07-23 2020-07-23 0000763901 bpop:M6.125CumulativeMonthlyIncomeTrustPreferredSecuritiesMember 2020-07-23 2020-07-23

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 23, 2020

 

 

POPULAR, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Puerto Rico   001-34084   66-0667416

(State or other jurisdiction of

incorporation or organization)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

 

209 Muñoz Rivera Avenue

Hato Rey, Puerto Rico

  00918
(Address of principal executive offices)   (Zip code)

(787) 765-9800

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Stock ($0.01 par value)    BPOP    The NASDAQ Stock Market
6.70% Cumulative Monthly Income Trust Preferred Securities    BPOPN    The NASDAQ Stock Market
6.125% Cumulative Monthly Income Trust Preferred Securities    BPOPM    The NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

On July 23, 2020, Popular, Inc. (the “Corporation”) issued a press release announcing its unaudited financial results for the quarter ended June 30, 2020, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished pursuant to this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any of the Corporation’s filings under the Securities Act of 1933, as amended, unless otherwise expressly stated in such filing.

 

Item 7.01.

Regulation FD Disclosure.

The Corporation is furnishing information regarding its conference call to discuss its financial results for the quarter ended June 30, 2020. A copy of the presentation to be used by the Corporation on the conference call is attached hereto as Exhibit 99.2.

The information furnished pursuant to this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any of the Corporation’s filings under the Securities Act of 1933, as amended, unless otherwise expressly stated in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.

 

99.1    Press Release dated July 23, 2020 – Second Quarter 2020 Financial Results.
99.2    Popular, Inc. Conference Call Presentation – Second Quarter 2020 Financial Results.
101    Pursuant to Rule 406 of Regulation S-T, the cover page is formatted in Inline XBRL (Inline eXtensible Business Reporting Language).
104    Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

POPULAR, INC.

(Registrant)

Date: July 23, 2020     By:  

/s/ Jorge J. García

      Jorge J. García
      Senior Vice President and Corporate Comptroller
EX-99.1

Exhibit 99.1

LOGO

Popular, Inc. Announces Second Quarter 2020 Financial Results

 

   

Net income of $127.6 million in Q2 2020, compared to net income of $34.3 million in Q1 2020.

 

   

Net interest margin of 3.25% in Q2 2020, compared to 3.94% in Q1 2020; Net interest margin on a taxable equivalent basis of 3.56% in Q2 2020, compared to 4.34% in Q1 2020.

 

   

Credit Quality:

 

   

Non-performing loans held-in-portfolio (“NPLs”) decreased by $8.5 million from Q1 2020; NPLs to loans ratio at 2.6% vs. 2.8% in Q1 2020;

 

   

Net charge-offs (“NCOs”) increased by $2.4 million from Q1 2020; NCOs at 0.92% of average loans held-in-portfolio vs. 0.91% in Q1 2020;

 

   

Allowance for credit losses (“ACL”) to loans held-in-portfolio at 3.16% vs. 3.32% in Q1 2020; and

 

   

ACL to NPLs at 120.8% vs. 119.7% in Q1 2020.

 

   

Common Equity Tier 1 ratio of 15.70%, Common Equity per Share of $68.40 and Tangible Book Value per Share of $60.13 at June 30, 2020.

SAN JUAN, Puerto Rico — (BUSINESS WIRE) — Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported net income of $127.6 million for the quarter ended June 30, 2020, compared to net income of $34.3 million for the quarter ended March 31, 2020.

Ignacio Alvarez, President and Chief Executive Officer, said: “We reported net income of $127.6 million for the quarter, notwithstanding the challenging economic environment resulting from the coronavirus pandemic and the historically low interest rate scenario. After 126 years in the banking business, we know success requires that we act quickly and decisively, putting people first. I want to express my gratitude to our employees for their commitment to serve our customers and their creativity and ability to adapt to a rapidly changing situation. We continue to support the communities we serve during these difficult times by providing payment deferrals to more than 120,000 customers and have also provided assistance to health care professionals and non-profit organizations as they battle the pandemic. I would also like to thank our customers for their continued trust and for adapting to this new reality. They have accelerated their adoption of digital channels, helping us reach an important milestone – more than one million active users in our digital banking platform.

We are aware that there remains much uncertainty as to the future of the economy. Economic performance will continue to be tied to developments on the health front, which are very difficult to predict. If the health situation deteriorates, leading to a new round of restrictions on businesses, this will obviously hamper the economic recovery. The strength of our balance sheet, levels of capital and liquidity place us in a strong position to continue to serve our clients and weather the challenges that may lie ahead.”


Significant Events

Financial Highlights

For the second quarter of 2020 the Corporation recorded a net income of $127.6 million, compared to a net income of $34.3 million for the previous quarter. The results for both periods were significantly impacted by the COVID-19 pandemic, which has affected the markets in which we operate and our results of operations, as explained below.

The Corporation’s total assets increased by $10.0 billion during the quarter to $62.8 billion, primarily due to an increase in deposits of $9.0 billion, of which $4.2 billion were from the public sector, driven by Federal and Puerto Rico Government assistance programs related to the pandemic. Most of this increased liquidity was deployed in overnight Fed Funds or in short-term U.S. Treasury securities and to originate $1.4 billion in Small Business Administration (“SBA”) loans under the Payment Protection Program (“PPP”). These are all lower yielding assets. This change in the composition of our earning assets, coupled with the effect of the declines in market interest rates, resulted in a compression of the Corporation’s net interest margin which declined 69 basis points during the quarter to 3.25%. Net interest income for the quarter ended June 30, 2020 was $450.9 million compared to $473.1 million in the previous quarter, a decrease of $22.2 million.

Coronavirus (COVID-19) Pandemic

The Corporation’s results for the second quarter of 2020 reflect the impact of the continued business disruption caused by the pandemic, the relief measures implemented by the Corporation and by the federal, state and local governments in response thereto. Certain of the measures imposed by the governments of Puerto Rico, the United States mainland and United States Virgin Islands, including lockdowns, business closures, mandatory curfews and limits to public activities, were relaxed late in the second quarter of 2020 to allow for the gradual reopening of the economy. Nevertheless, economic activity was negatively impacted by the pandemic throughout the quarter, which in turn impacted our financial results. The recent regional resurgence in the spread of the virus has also led to the reinstitution of certain restrictive health and safety measures. For example, in July 16, 2020, as a result of the resurgence of COVID-19 cases on the Island, the Government of Puerto Rico scaled back measures to reopen the economy, including by further restricting non-essential business establishments and public activities.

As previously disclosed, the Corporation implemented several financial relief programs in response to the pandemic, including payment moratoriums, suspensions of foreclosures and other collection activity, as well as waivers of certain fees and service charges, such as late-payment charges and ATM transaction fees. In the case of Puerto Rico, the moratoriums for all consumer products are mandated by local law. As of June 30, 2020, the Corporation had granted a loan payment moratorium to 116,226 eligible retail customers with an aggregate book value of $3.9 billion, and to 5,003 eligible commercial clients with an aggregate book value of $4.1 billion as detailed below. Covid-related moratoriums began in March of 2020 and are set to expire between July 1, 2020 and September 30, 2020, depending on the loan product and deferral agreements with the borrowers. Other clients benefitted from moratoriums since mid-January 2020 as a result of various areas of Puerto Rico being declared disaster areas as a result of the January earthquakes.

 

Loan portfolio affected by Covid-related moratoriums

   Loan
count
     Book Value
(In thousands)
     Percentage
by
portfolio
 

Mortgage

     16,595      $ 2,108,825        28.0

Auto loans

     47,975        907,651        31.3

Lease financing

     10,600        431,285        39.3

Credit cards

     19,256        107,644        11.0

Other consumer loans

     21,800        313,014        16.6

Commercial

     5,003        4,116,697        28.0
  

 

 

    

 

 

    

 

 

 

Total

     121,229      $ 7,985,116        27.5
  

 

 

    

 

 

    

 

 

 

The delinquency status of loans subject to the Corporation’s payment moratorium programs remains unaltered during the payment deferral period and the Corporation continues to accrue interest income during such term.

As of June 30, 2020, the Corporation had secured funding approval for over 28,000 loans totaling approximately $1.4 billion under the Small Business Administration’s (“SBA”) Payroll Protection Program (“PPP”). Approximately $1.2 billion of such loans were granted in Puerto Rico, $215 million in the mainland United States and $29 million in the U.S. Virgin Islands. The average size of loans extended under the PPP was approximately $45,000 in Puerto Rico and the U.S. Virgin Islands and $152,000 in the mainland United States. The Corporation will


continue to extend PPP loans while the program remains open and is now working on the second part of the process, loan forgiveness, which is expected to be completed predominantly through digital channels.

During the second quarter, the Corporation’s revenue streams were also impacted by reduced consumer transaction activity, the waiver of certain late fees and service charges, including ATM transaction fees, as well as the temporary suspension of auto loans and leases as well as mortgage originations and related securitization and loan sale activities. Collectively, these revenue captions experienced a decrease of approximately $21.9 million when compared to the previous quarter and of approximately $27.2 million when compared to the same quarter of the previous year, reflecting the impact of the COVID-19 pandemic. As of July 2020, the corporation reinstated most of the fees waived as a result of the pandemic as well as its normal collection efforts. The speed at which earnings from those activities return to pre-pandemic levels remain highly uncertain and depend on client activity and the economic recovery.

Mortgage loan origination activity resumed during the month of May. Origination volumes and related mortgage loan securitization activity reflect the impact of the lockdown for a portion of the second quarter of 2020, although the origination volumes for the month of June reflect an increase to a level that is comparable to the same period of the previous year.

The extent to which the pandemic further impacts our business, results of operations and financial condition (including our regulatory capital, liquidity ratios and realizability of deferred tax assets), as well as the operations of our clients, customers, service providers and suppliers, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response thereto.

Common Stock Repurchase Plan

On May 27, 2020, the Corporation completed its previously announced $500 million accelerated share repurchase transaction (“ASR”) for 2020 with respect to its common stock. On March 19, 2020 (the “early termination date”), the dealer counterparty to the ASR exercised its right under the ASR agreement to terminate the transaction because the trading price of the Corporation’s common stock fell below a specified level due to the effects of the COVID-19 pandemic on the global markets. As a result of such early termination, the final settlement of the ASR, which was originally expected to occur during the fourth quarter of 2020, occurred during the second quarter of 2020.

Under the ASR, the Corporation prepaid $500 million and received from the dealer counterparty an initial delivery of 7,055,919 shares of common stock on February 3, 2020. As part of the final settlement of the ASR, the Corporation received an additional 4,763,216 shares of common stock after the early termination date. In total the Corporation repurchased 11,819,135 shares at an average price per share of $42.3043 under the ASR. The Corporation accounted for the ASR as a treasury stock transaction. This transaction increased by $2.20 the Corporation’s tangible book value per share.

Goodwill Impairment Evaluation

As disclosed in the Form 10-Q for the quarter ended March 31, 2020, the Corporation deemed the effects of the current and projected interest rate environment and the continued effects of the pandemic on the valuation of the Corporation and its subsidiaries, as an interim triggering event for the evaluation of goodwill. During the second quarter, management has continued to monitor changes in circumstances to determine if these changes would more likely than not result in an impairment of goodwill. The Corporation expects to complete its evaluation prior to the filing of its Form 10-Q for the quarter ended June 30, 2020 with the Securities and Exchange Commission. An impairment of goodwill would result in a non-cash expense, net of tax impact. A charge to earnings related to a goodwill impairment would not impact regulatory capital calculations.


Earnings Highlights

 

(Unaudited)

   Quarters ended      Six months ended  

(Dollars in thousands, except per share information)

   30-Jun-20     31-Mar-20      30-Jun-19      30-Jun-20      30-Jun-19  

Net interest income

   $ 450,881     $ 473,095      $ 476,316      $ 923,976      $ 947,279  

Provision for credit losses - loan portfolios

     63,104       188,995        40,191        252,099        82,016  

Provision (reversal) for credit losses - investment securities

     (655     736        —          81        —    
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for credit losses

     388,432       283,364        436,125        671,796        865,263  

Other non-interest income

     112,055       126,643        138,326        238,698        274,756  

Operating expenses

     348,231       372,608        363,015        720,839        710,435  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Income before income tax

     152,256       37,399        211,436        189,655        429,584  

Income tax expense

     24,628       3,097        40,330        27,725        90,553  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 127,628     $ 34,302      $ 171,106      $ 161,930      $ 339,031  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income applicable to common stock

   $ 127,275     $ 33,602      $ 170,175      $ 160,877      $ 337,169  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share -basic

   $ 1.49     $ 0.37      $ 1.77      $ 1.83      $ 3.46  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share - diluted

   $ 1.49     $ 0.37      $ 1.76      $ 1.83      $ 3.45  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income on a taxable equivalent basis – Non-GAAP financial measure

Net interest income, on a taxable equivalent basis, is presented with its different components in Table D for the quarter and six month period ended June 30, 2020 and comparable periods, segregated by major categories of interest earning assets and interest-bearing liabilities.

Interest earning assets include investment securities and loans that are exempt from income tax, principally in Puerto Rico. The main sources of tax-exempt interest income are certain investments in obligations of the U.S. Government, its agencies and sponsored entities, and certain obligations of the Commonwealth of Puerto Rico and/or its agencies and municipalities and assets held by the Corporation’s international banking entities. To facilitate the comparison of all interest related to these assets, the interest income has been converted to a taxable equivalent basis, using the applicable statutory income tax rates for each period. Net interest income on a taxable equivalent basis is a non-GAAP financial measure. Management believes that this presentation provides meaningful information since it facilitates the comparison of revenues arising from taxable and tax-exempt sources.

Non-GAAP financial measures used by the Corporation may not be comparable to similarly named Non-GAAP financial measures used by other companies.


Net interest income

Net interest income for the quarter ended June 30, 2020 was $450.9 million compared to $473.1 million in the previous quarter, a decrease of $22.2 million. Net interest income, on a taxable equivalent basis, for the second quarter of 2020 was $493.0 million, a decrease of $28.4 million when compared to $521.4 million in the first quarter of 2020.

The net interest margin decreased by 69 basis points to 3.25% in the second quarter of 2020, compared to 3.94% in the previous quarter. The lower margin for the quarter is mainly as a result of three major factors: the decrease of 150 basis points in the Federal Funds Rate in mid-March, the increase in average deposits by $7.3 billion which were redeployed mostly at overnight Fed Funds, short-term U.S. Treasury securities and $1.4 billion ($913 million in average balance) in loans under the SBA PPP. These assets, although accretive to net interest income, are low yielding assets and compressed the net interest margin. The redeployment in relatively short tenured assets respond to the uncertainty of the tenure of the deposit growth. On a taxable equivalent basis, net interest margin was 3.56 % compared to 4.34% in the first quarter of 2020, a decrease of 78 basis points. The main variances in net interest income on a taxable equivalent basis were:

 

   

Lower income from money market, trading and investment securities by $24.2 million of which $46.7 million came from lower yields by 99 basis points related to the above-mentioned decrease in the Federal funds rate, partially offset by an increase in interest income of $22.4 million caused by the increase in average volume of $6.6 billion; and

 

   

lower interest income from loans by $23.8 million mainly driven by the decrease in yields of 55 basis points, partially offset by an increase in volume of $875 million. As mentioned above the loans issued under the SBA PPP carry a low yield of approximately 2.85%, including the amortization of fees received under the program. The decrease in yield is also impacted by the waived fees on past due loans associated to the moratoriums granted in order to mitigate the financial impact of the pandemic.

Partially offset by:

 

   

Lower interest expense on deposits by $19.3 million due to lower interest cost by 29 basis points resulting from the decrease in market rates, mostly on Puerto Rico Government and U.S. deposits, partially offset by higher average balance of interest-bearing deposits of $5.3 billion. This increase is related to inflow of deposits from the relief and assistance programs provided by the P.R. and Federal governments in response to the pandemic. Payment moratoriums and the closure of economic activity may have also contributed to this outcome. Non-interest-bearing deposits increased $2.0 billion in average quarter over quarter.

The net interest income for the Banco Popular de Puerto Rico (“BPPR”) segment amounted to $387.2 million for the quarter ended June 30, 2020, compared to $409.6 million in the previous quarter. The net interest margin for the second quarter of 2020 was 3.39%, a decrease of 83 basis points when compared to 4.22% for the previous quarter. The decrease in net interest margin was impacted by lower loan fees resulting from waivers granted due to the COVID-19 pandemic, the decrease in interest rates and a higher average balance of deposits by $6.8 billion which are mostly invested in overnight Fed Funds or in short-term U.S. Treasury securities. The issuance of PPP loans in BPPR amounted to $1.2 billion or $770 million in average loan balances during the second quarter. The cost of interest-bearing deposits was 0.28%, half of the cost reported in the first quarter of 0.56%, mostly driven by a lower cost of Puerto Rico Government deposits. Total cost of deposits for the quarter was 0.22%, compared to 0.44% reported in the first quarter of 2020, a decrease of 22 basis points.

Net interest income for Popular Bank (“Popular U.S.” or “PB”) was $73.7 million, for the quarter ended June 30, 2020, compared to $72.7 million during the previous quarter. The increase of $1.0 million in net interest income was primarily due to lower deposit costs by 26 basis points, partially offset by lower yields on debt securities, both driven by the decrease in market rates. Commercial and mortgage loan yields also decreased due to lower service fees related to waivers granted due to the pandemic, lower origination rates and the origination of PPP loans of approximately $207 million or $146 million in average loan balance during the second quarter. Net interest margin for the quarter was 3.07%, a decrease of 14 basis points when compared to 3.21% reported in the first quarter of 2020. Earning assets yielded 4.02%, compared to 4.37% in the previous quarter. The cost of interest-bearing deposits was 1.18%, compared to 1.44% in the previous quarter. Total cost of deposits for the quarter was 1.01%, compared to 1.25% reported in the first quarter.


Non-interest income

Non-interest income decreased by $14.6 million to $112.0 million for the quarter ended June 30, 2020, compared to $126.6 million for the quarter ended March 31, 2020. The decrease in non-interest income was primarily driven by:

 

   

Lower service charges on deposit accounts by $11.5 million, mainly in the BPPR segment, due to lower transactions resulting from business disruptions and the waiver of fees related to the pandemic;

 

   

lower other services by $12.7 million, mainly in the BPPR segment, due to lower debit and credit card fees by $8.6 million due to lower transactional volumes resulting from business disruptions related to the pandemic, which also resulted in the elimination of service charges and late fees, lower insurance fees by $1.7 million, and lower commission income by $1.4 million principally in the broker-dealer subsidiary; and

 

   

lower income from mortgage banking activities by $2.6 million mainly due to lower mortgage servicing fees by $1.9 million and higher unfavorable fair value adjustments on mortgage servicing rights (“MSRs”) by $2.4 million mainly due to a decrease in float earnings and a reduction in late fee revenues resulting from the moratoriums and fee waivers granted as a result of the pandemic relief efforts, partially offset by higher gains on securitization transactions and whole loan sales by $1.5 million;

Partially offset by:

 

   

an increase in net unrealized gain on equity securities of $5.2 million mainly related to employee deferred compensation plans that have an offsetting expense on personnel related expenses;

 

   

a favorable variance in adjustments to indemnity reserves on previously sold loans of $3.6 million mainly due to a lower provision related to loans previously sold with credit recourse; and

 

   

higher other operating income by $2.6 million mostly due to a gain of $5.6 million recognized as a result of the sale and partial leaseback of the corporate office building that houses our auto lending subsidiary, partially offset by lower daily rental revenues by $1.2 million.

Refer to Table B for further details.


Operating expenses

Operating expenses for the second quarter of 2020 totaled $348.2 million, a decrease of $24.4 million from the first quarter of 2020. The decrease in operating expenses was driven primarily by:

 

   

Lower personnel cost by $7.7 million due to lower commission, incentive and other bonuses by $9.2 million, mainly related to a special incentive to front-line employees during the COVID-19 pandemic amounting to $3.4 million which was granted during the first quarter of 2020, lower stock based compensation expense by $3.8 million due to awards granted in the first quarter and lower employment taxes by $2.4 million; partially offset by higher employee deferred compensation plans expense by $4.8 million, resulting from the unrealized gains in equity securities reflected by the Corporation, as administrator of these plan;

 

   

lower professional fees by $8.5 million due to lower processing and technology services by $3.4 million, mainly as a result of lower number of transactions, lower advisory expenses by $2.3 million, lower legal fees by $1.1 million and lower audit and tax services by $0.7 million;

 

   

lower business promotion by $1.9 million due to lower advertising expense;

 

   

lower OREO expenses by $2.8 million due to the temporary suspension of foreclosure activity as part of the pandemic relief measures; and

 

   

lower other operating expenses by $1.5 million mainly due to lower mortgage loans servicing operational losses and lower legal contingency reserves.

Full-time equivalent employees were 8,525 as of June 30, 2020, compared to 8,551 as of March 31, 2020.

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

Income taxes

For the quarter ended June 30, 2020, the Corporation recorded an income tax expense of $24.6 million, compared to $3.1 million for the previous quarter. The increase in income tax expense was mainly attributed to higher income before tax during the second quarter of 2020. The effective tax rate (“ETR”) for the second quarter of 2020 was of 16%, compared to 8% in the previous quarter.

The ETR of the Corporation is impacted by the composition and source of its taxable income. For the remainder of 2020, the Corporation currently expects its consolidated ETR to be within the 14% to 17% range.


Credit Quality

The Corporation exhibited stable credit quality metrics in the second quarter of 2020 as Popular continued to provide financial relief to customers impacted by the pandemic. The effect of the pandemic and the full extent of its economic disruption remains uncertain. Management believes that the improvement over the last few years in the risk profile of the Corporation’s loan portfolios better positions Popular to operate successfully under the ongoing challenging environment. Management will continue to carefully monitor the exposure of the portfolios to COVID-19 pandemic related risks, changes in the economic outlook of the regions in which we operate and how delinquencies and NCOs evolve after the period of payment deferrals lapses during the third quarter of 2020.

The following presents credit quality results for the second quarter of 2020:

 

   

At June 30, 2020, total non-performing loans held-in-portfolio decreased by $8.5 million from March 31, 2020. BPPR’s NPLs decreased by $9.1 million, driven by lower mortgage and consumer (mostly auto loans), by $7.2 million and $5.3 million, respectively. Popular Bank’s NPLs remained flat quarter-over-quarter. During the first quarter of 2020, as a result of the implementation of CECL for purchased credit deteriorated (“PCD”) loans, the NPLs increased by $278 million. At June 30, 2020, the ratio of NPLs to total loans held-in-portfolio was 2.6% compared to 2.8% in the first quarter of 2020.

 

   

Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $21.0 million quarter-over-quarter. In Puerto Rico, commercial inflows increased by $9.2 million when compared to the first quarter of 2020, driven by a single $6.7 million loan relationship, while the mortgage inflows increased by $6.6 million. The PB inflows increased by $5.2 million from the previous quarter, mainly driven by higher mortgage inflows of $3.4 million during the period.

 

   

NCOs increased by $2.4 million from the first quarter of 2020, primarily driven by higher BPPR mortgage NCOs by $2.0 million. The Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was 0.92%, compared to 0.91% in the first quarter of 2020. Refer to Table M for further information on net charge-offs and related ratios.

 

   

For the first quarter of 2020’s ACL computation, the Corporation utilized the March 27 Moody’s Analytics’ S3 Downside Scenario. That scenario assumed a double-dip recession. The U.S. stimulus plan enabled GDP growth in the third quarter of 2020, but the economy declined again in Q4 and it was not until Q2 2021 that a sustained recovery began. Under that scenario, unemployment peaked in the second quarter of 2020 with rates of 13.0% and 13.5% and economic activity declined by 25.3% and 18.3% in the U.S. and P.R., respectively. The recovery period began in the second quarter of 2021 and third quarter of 2021 for the U.S. and P.R., respectively. For the second quarter’s ACL computation, the Corporation utilized Moody’s Analytics’ June Baseline scenario. This scenario assumes that a significant pickup in economic activity will occur in the third quarter of 2020 driven by federal assistance programs, followed by a period of tepid growth. Under this scenario, during the second quarter of 2020, the unemployment peaked with rates of 14.0% and 14.4% and economic activity declined by 33.4% and 24.6% in the U.S. and P.R., respectively. A sustained, albeit gradual, recovery begins in the fourth quarter of 2020 for the U.S. and P.R.

 

   

At June 30, 2020, the allowance for credit losses remained essentially flat, decreasing slightly by $1.3 million from the first quarter of 2020 to $918.4 million. The ACL reflects the current economic outlook, as well as downgrades in the internal credit rating of parts of the commercial portfolio, related to the impact of the COVID-19 pandemic. Incremental reserves in the prior quarter related to the pandemic amounted to $134 million. The ratio of the allowance for credit losses to loans held-in-portfolio was 3.16% in the second quarter of 2020, compared to 3.32% in the previous quarter. The ratio of the allowance for credit losses to NPLs held-in-portfolio stood at 120.8%, compared to 119.7% in the previous quarter.

 

   

The provision for credit losses for the second quarter of 2020 decreased by $125.9 million from the prior quarter. The provision for the BPPR and PB segments decreased by $52.6 million and $73.3 million, respectively, as the provision for the first quarter of 2020 included incremental reserves related to the COVID-19 pandemic impact. The provision to net charge-offs ratio was 97.2% in the second quarter of 2020, compared to 302.3% in the previous quarter.


Non-Performing Assets    

 

(Unaudited)

                  

(In thousands)

   30-Jun-20     31-Mar-20     30-Jun-19  

Total non-performing loans held-in-portfolio

   $ 760,204     $ 768,675     $ 564,358  

Non-performing loans held-for-sale

     6,778       10,679       —    

Other real estate owned (“OREO”)

     113,940       123,922       118,851  
  

 

 

   

 

 

   

 

 

 

Total non-performing assets

   $ 880,922     $ 903,276     $ 683,209  
  

 

 

   

 

 

   

 

 

 

Net charge-offs for the quarter

   $ 64,953     $ 62,523     $ 47,153  
  

 

 

   

 

 

   

 

 

 

Ratios:

                  

Loans held-in-portfolio

   $ 29,070,553     $ 27,662,272     $ 27,005,745  

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

     2.62     2.78     2.09

Allowance for credit losses to loans held-in-portfolio

     3.16       3.32       2.01  

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

     120.81       119.65       96.33  
  

 

 

   

 

 

   

 

 

 

Refer to Table K for additional information.

Provision for Credit Losses - Loan Portfolios

 

(Unaudited)

   Quarters ended      Six months ended  

(In thousands)

   30-Jun-20      31-Mar-20      30-Jun-19      30-Jun-20      30-Jun-19  

Provision for credit losses:

              

BPPR

   $ 60,423      $ 113,004      $ 28,975      $ 173,427      $ 60,429  

Popular U.S.

     2,681        75,991        11,216        78,672        21,587  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total provision for credit losses

   $ 63,104      $ 188,995      $ 40,191      $ 252,099      $ 82,016  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Credit Quality by Segment    

 

(Unaudited)                   

(In thousands)

   Quarters ended  

BPPR

   30-Jun-20     31-Mar-20     30-Jun-19  

Provision for credit losses - loan portfolios

   $ 60,423     $ 113,004     $ 28,975  

Net charge-offs

     62,143       59,517       37,167  

Total non-performing loans held-in-portfolio

     726,603       735,683       522,525  

Allowance / loans held-in-portfolio

     3.53     3.74     2.38
  

 

 

   

 

 

   

 

 

 
     Quarters ended  

Popular U.S.

   30-Jun-20     31-Mar-20     30-Jun-19  

Provision for credit losses - loan portfolios

   $ 2,681     $ 75,991     $ 11,216  

Net charge-offs

     2,810       3,006       9,986  

Total non-performing loans held-in-portfolio

     33,601       32,992       41,833  

Allowance / loans held-in-portfolio

     2.13     2.19     0.97
  

 

 

   

 

 

   

 

 

 


Financial Condition Highlights    

 

(Unaudited)

      

(In thousands)

   30-Jun-20      31-Mar-20      30-Jun-19  

Cash and money market investments

   $ 10,060,358      $ 6,387,267      $ 3,563,819  

Investment securities

     21,058,918        16,114,167        17,038,098  

Loans

     29,070,553        27,662,272        27,005,745  

Total assets

     62,845,352        52,803,639        50,617,221  

Deposits

     53,844,300        44,797,176        42,059,837  

Borrowings

     1,339,339        1,336,897        1,604,670  

Total liabilities

     57,065,187        47,134,034        44,897,387  

Stockholders’ equity

     5,780,165        5,669,605        5,719,834  
  

 

 

    

 

 

    

 

 

 

Total assets increased by $10.0 billion from the first quarter of 2020, driven by:

 

   

An increase of $3.7 billion in cash and money market investments, mainly due to an increase in deposits, partially offset by purchases of available-for-sale debt securities;

 

   

An increase of $5.0 billion in debt securities available-for-sale mainly due to purchases of U.S. Treasury securities and mortgage-backed securities; and

 

   

An increase of $1.4 billion in loans held-in-portfolio mainly due to growth of commercial loans due to originations of PPP loans at both BPPR and PB and an increase of $411 million in mortgage loans due to an increase in the rebooking of GNMA loans subject to the repurchase option due to an increase in delinquency resulting from the moratorium. Loans in our serviced GNMA portfolio benefit from payment forbearance programs but continue to reflect the contractual delinquency until the borrower repays deferred payments or completes a payment deferral modification or other borrower assistance alternative.

Total liabilities increased by $9.9 billion from the first quarter of 2020, mainly due to:

 

   

An increase of $9.0 billion in deposits, mainly from an increase at BPPR of public sector deposits by $4.2 billion and retail and commercial demand and savings accounts by $5.0 billion; and

 

   

An increase of $0.9 billion in other liabilities due to an increase in the liability for GNMA loans sold with a repurchase option of $0.4 billion, and $0.4 billion in unsettled purchases of debt securities.

Stockholders’ equity increased by approximately $110.6 million from the first quarter of 2020, principally due to net income for the quarter of $127.6 million and higher unrealized gains on debt securities available-for-sale by $15.2 million, partially offset by declared dividends of $33.7 million on common stock (paid on July 1, 2020) and $0.3 million in dividends on preferred stock reflecting the reduction due to the redemption of the Series B Preferred Stock during the first quarter of 2020.

Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 15.70%, $68.40 and $60.13, respectively, at June 30, 2020, compared to 15.79%, $64.08 and $56.17 at March 31, 2020. The regulatory capital ratios for the second quarter of 2020 reflect the impact of the new capital simplification rules, effective on April 1, 2020, which resulted in a reduction to CET1 of 48 bps. These rules alleviate the limitations to the amount of mortgage servicing assets and certain deferred tax assets allowed as CET1 and increased the risk weight for the portion of the deferred tax assets included as a component of CET1 from 100% to 250% among other provisions. 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 (including as a result of any participation in and execution of government programs related to the COVID-19 pandemic), new accounting standards on the Corporation’s financial condition and results of operations, the scope and duration of the COVID-19 pandemic, actions taken by governmental authorities in response thereto, and the direct and indirect impact of the pandemic on Popular, our customers, service providers and third parties. 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, 2019, our Form 10Q for the quarter ended March 31, 2020, and in our Form 10Q for the quarter ended June 30, 2020 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. (NASDAQ: BPOP) 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 in Puerto Rico 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 Thursday, July 23, 2020 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 Sunday, August 23, 2020. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10145761.

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


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

Table A - Selected Ratios and Other Information

Table B - Consolidated Statement of Operations

Table C - Consolidated Statement of Financial Condition

Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER

Table E - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - YEAR-TO-DATE

Table F - Mortgage Banking Activities and Other Service Fees

Table G - Loans and Deposits

Table H - Loan Delinquency - PUERTO RICO OPERATIONS

Table I - Loan Delinquency - POPULAR U.S. OPERATIONS

Table J - Loan Delinquency - CONSOLIDATED

Table K - Non-Performing Assets

Table L - Activity in Non-Performing Loans

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

Table N - Allowance for Credit Losses - Loan Portfolios - CONSOLIDATED

Table O - Allowance for Credit Losses - Loan Portfolios - PUERTO RICO OPERATIONS

Table P - Allowance for Credit Losses - Loan Portfolios - POPULAR U.S. OPERATIONS

Table Q - Reconciliation to GAAP Financial Measures


POPULAR, INC.

Financial Supplement to Second Quarter 2020 Earnings Release

Table A - Selected Ratios and Other Information

(Unaudited)

 

     Quarters ended     Six months ended  
     30-Jun-20     31-Mar-20     30-Jun-19     30-Jun-20     30-Jun-19  

Basic EPS

   $ 1.49     $ 0.37     $ 1.77     $ 1.83     $ 3.46  

Diluted EPS

   $ 1.49     $ 0.37     $ 1.76     $ 1.83     $ 3.45  

Average common shares outstanding

     85,135,522       90,788,557       96,305,118       87,962,040       97,437,141  

Average common shares outstanding - assuming dilution

     85,161,661       90,892,961       96,457,448       88,039,712       97,591,989  

Common shares outstanding at end of period

     84,184,927       88,125,974       96,703,351       84,184,927       96,703,351  

Market value per common share

   $ 37.17     $ 35.00     $ 54.24     $ 37.17     $ 54.24  

Market capitalization - (In millions)

   $ 3,129     $ 3,084     $ 5,245     $ 3,129     $ 5,245  

Return on average assets

     0.87     0.27     1.38     0.59     1.39

Return on average common equity

     9.74     2.50     12.31     6.06     12.24

Net interest margin (non-taxable equivalent basis)

     3.25     3.94     4.11     3.58     4.16

Net interest margin (taxable equivalent basis) -non-GAAP

     3.56     4.34     4.50     3.93     4.53

Common equity per share

   $ 68.40     $ 64.08     $ 58.63     $ 68.40     $ 58.63  

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

   $ 60.13     $ 56.17     $ 51.44     $ 60.13     $ 51.44  

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

     8.15     9.50     9.96     8.15     9.96

Return on average tangible common equity [1]

     11.23     2.87     14.07     6.97     14.00

Tier 1 capital

     15.77     15.79     16.80     15.77     16.80

Total capital

     18.27     18.36     19.39     18.27     19.39

Tier 1 leverage

     8.13     8.94     9.75     8.13     9.75

Common Equity Tier 1 capital

     15.70     15.79     16.80     15.70     16.80
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

[1]

Refer to Table Q for reconciliation to GAAP financial measures.


POPULAR, INC.

Financial Supplement to Second Quarter 2020 Earnings Release

Table B - Consolidated Statement of Operations

(Unaudited)

 

    

Quarters ended

    Variance     Quarter ended     Variance     Six months ended  

(In thousands, except per share information)

   30-Jun-20     31-Mar-20     Q2 2020
vs. Q1 2020
    30-Jun-19     Q2 2020
vs. Q2 2019
    30-Jun-20     30-Jun-19  
Interest income:               

Loans

   $ 429,670     $ 450,446     $ (20,776   $ 454,204     $ (24,534   $ 880,116     $ 901,917  

Money market investments

     2,015       12,000       (9,985     22,534       (20,519     14,015       51,754  

Investment securities

     76,884       87,912       (11,028     94,241       (17,357     164,796       175,277  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

     508,569       550,358       (41,789     570,979       (62,410     1,058,927       1,128,948  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Interest expense:               

Deposits

     42,780       62,101       (19,321     78,449       (35,669     104,881       149,275  

Short-term borrowings

     645       1,048       (403     1,656       (1,011     1,693       3,256  

Long-term debt

     14,263       14,114       149       14,558       (295     28,377       29,138  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     57,688       77,263       (19,575     94,663       (36,975     134,951       181,669  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     450,881       473,095       (22,214     476,316       (25,435     923,976       947,279  

Provision for credit losses - loan portfolios

     63,104       188,995       (125,891     40,191       22,913       252,099       82,016  

Provision (reversal) for credit losses - investment securities

     (655     736       (1,391     —         (655     81       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for credit losses

     388,432       283,364       105,068       436,125       (47,693     671,796       865,263  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Service charges on deposit accounts

     30,163       41,659       (11,496     39,617       (9,454     71,822       78,308  

Other service fees

     52,084       64,773       (12,689     74,031       (21,947     116,857       138,338  

Mortgage banking activities

     3,777       6,420       (2,643     (1,773     5,550       10,197       8,153  

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

     2,447       (2,728     5,175       528       1,919       (281     1,961  

Net profit on trading account debt securities

     82       491       (409     422       (340     573       682  

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

     2,222       957       1,265       —         2,222       3,179       —    

Adjustments (expense) to indemnity reserves on loans sold

     (1,160     (4,793     3,633       1,840       (3,000     (5,953     1,747  

Other operating income

     22,440       19,864       2,576       23,661       (1,221     42,304       45,567  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest income

     112,055       126,643       (14,588     138,326       (26,271     238,698       274,756  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Operating expenses:               

Personnel costs

              

Salaries

     93,969       92,256       1,713       86,161       7,808       186,225       170,611  

Commissions, incentives and other bonuses

     16,076       25,258       (9,182     22,636       (6,560     41,334       48,397  

Pension, postretirement and medical insurance

     11,392       9,638       1,754       10,406       986       21,030       20,167  

Other personnel costs, including payroll taxes

     17,729       19,679       (1,950     22,296       (4,567     37,408       45,441  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total personnel costs

     139,166       146,831       (7,665     141,499       (2,333     285,997       284,616  

Net occupancy expenses

     25,487       25,158       329       23,299       2,188       50,645       46,836  

Equipment expenses

     20,844       21,605       (761     21,323       (479     42,449       41,028  

Other taxes

     13,323       13,681       (358     12,577       746       27,004       24,239  
Professional fees               

Collections, appraisals and other credit related fees

     2,897       3,881       (984     4,741       (1,844     6,778       8,465  

Programming, processing and other technology services

     59,387       62,819       (3,432     61,033       (1,646     122,206       121,211  

Legal fees, excluding collections

     2,184       2,986       (802     4,446       (2,262     5,170       7,935  

Other professional fees

     28,079       31,385       (3,306     25,028       3,051       59,464       45,103  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total professional fees

     92,547       101,071       (8,524     95,248       (2,701     193,618       182,714  

Communications

     5,574       5,954       (380     5,955       (381     11,528       11,804  

Business promotion

     12,281       14,197       (1,916     19,119       (6,838     26,478       33,793  

FDIC deposit insurance

     5,340       5,080       260       5,278       62       10,420       10,084  


Other real estate owned (OREO) expense

     (344      2,479        (2,823      1,237        (1,581      2,135        3,914  

Credit and debit card processing, volume, interchange and other expenses

     9,873        10,282        (409      9,900        (27      20,155        18,123  

Other operating expenses

                    

Operational losses

     4,128        8,374        (4,246      4,778        (650      12,502        9,666  

All other

     18,217        15,423        2,794        20,431        (2,214      33,640        38,935  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total other operating expenses

     22,345        23,797        (1,452      25,209        (2,864      46,142        48,601  

Amortization of intangibles

     1,795        2,473        (678      2,371        (576      4,268        4,683  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     348,231        372,608        (24,377      363,015        (14,784      720,839        710,435  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income tax

     152,256        37,399        114,857        211,436        (59,180      189,655        429,584  

Income tax expense

     24,628        3,097        21,531        40,330        (15,702      27,725        90,553  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 127,628      $ 34,302      $ 93,326      $ 171,106      $ (43,478    $ 161,930      $ 339,031  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income applicable to common stock

   $ 127,275      $ 33,602      $ 93,673      $ 170,175      $ (42,900    $ 160,877      $ 337,169  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share - basic

   $ 1.49      $ 0.37      $ 1.12      $ 1.77      $ (0.28    $ 1.83      $ 3.46  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share - diluted

   $ 1.49      $ 0.37      $ 1.12      $ 1.76      $ (0.27    $ 1.83      $ 3.45  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Dividends Declared per Common Share

   $ 0.40      $ 0.40      $ —        $ 0.30      $ 0.10      $ 0.80      $ 0.60  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

Table C - Consolidated Statement of Financial Condition

(Unaudited)

 

(In thousands)

   30-Jun-20     31-Mar-20     30-Jun-19     Variance
Q2 2020 vs.
Q1 2020
 

Assets:

        

Cash and due from banks

   $ 435,080     $ 445,551     $ 391,703     $ (10,471

Money market investments

     9,625,278       5,941,716       3,172,116       3,683,562  

Trading account debt securities, at fair value

     33,560       42,545       35,623       (8,985

Debt securities available-for-sale, at fair value

     20,763,453       15,813,301       16,734,722       4,950,152  

Debt securities held-to-maturity, at amortized cost

     95,429       95,263       99,599       166  

Less: Allowance for credit losses

     12,735       13,390       —         (655
  

 

 

   

 

 

   

 

 

   

 

 

 

Total debt securities held-to-maturity, net

     82,694       81,873       99,599       821  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities

     166,476       163,058       168,154       3,418  

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

     68,725       87,855       54,028       (19,130

Loans held-in-portfolio

     29,250,076       27,847,840       27,171,467       1,402,236  

Less: Unearned income

     179,523       185,568       165,722       (6,045

Allowance for credit losses

     918,434       919,716       543,666       (1,282
  

 

 

   

 

 

   

 

 

   

 

 

 

Total loans held-in-portfolio, net

     28,152,119       26,742,556       26,462,079       1,409,563  
  

 

 

   

 

 

   

 

 

   

 

 

 

Premises and equipment, net

     513,680       552,007       554,614       (38,327

Other real estate

     113,940       123,922       118,851       (9,982

Accrued income receivable

     220,126       176,078       170,886       44,048  

Mortgage servicing assets, at fair value

     141,144       147,311       153,021       (6,167

Other assets

     1,833,444       1,788,437       1,806,825       45,007  

Goodwill

     671,122       671,122       671,122       —    

Other intangible assets

     24,511       26,307       23,878       (1,796
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 62,845,352     $ 52,803,639     $ 50,617,221     $ 10,041,713  
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity:

        

Liabilities:

        

Deposits:

        

Non-interest bearing

   $ 12,520,510     $ 9,396,449     $ 8,955,304     $ 3,124,061  

Interest bearing

     41,323,790       35,400,727       33,104,533       5,923,063  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     53,844,300       44,797,176       42,059,837       9,047,124  
  

 

 

   

 

 

   

 

 

   

 

 

 

Assets sold under agreements to repurchase

     153,065       178,766       233,091       (25,701

Other short-term borrowings

     —         100,000       160,000       (100,000

Notes payable

     1,186,274       1,058,131       1,211,579       128,143  

Other liabilities

     1,881,548       999,961       1,232,880       881,587  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     57,065,187       47,134,034       44,897,387       9,931,153  
  

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

        

Preferred stock

     22,143       22,143       50,160       —    

Common stock

     1,044       1,044       1,044       —    

Surplus

     4,520,333       4,366,300       4,316,225       154,033  

Retained earnings

     2,033,782       1,940,170       1,935,826       93,612  

Treasury stock

     (1,016,486     (870,675     (392,208     (145,811

Accumulated other comprehensive income (loss), net of tax

     219,349       210,623       (191,213     8,726  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     5,780,165       5,669,605       5,719,834       110,560  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 62,845,352     $ 52,803,639     $ 50,617,221     $ 10,041,713  
  

 

 

   

 

 

   

 

 

   

 

 

 


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER

(Unaudited)

 

    Quarters ended     Variance  
    30-Jun-20     31-Mar-20     30-Jun-19     Q2 2020 vs. Q1 2020     Q2 2020 vs. Q2 2019  

($ 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

  $ 27,356     $ 111.5       1.64   $ 20,744     $ 135.7       2.63   $ 19,664     $ 153.7       3.13   $ 6,612     ($ 24.2     (0.99 )%    $ 7,692     ($ 42.2     (1.49 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans:

 

Commercial

    13,350       168.8       5.09       12,342       183.2       5.97       12,156       186.0       6.14       1,008       (14.4     (0.88     1,194       (17.2     (1.05

Construction

    935       13.2       5.69       861       13.2       6.16       806       13.5       6.74       74       —         (0.47     129       (0.3     (1.05

Mortgage

    7,038       92.2       5.24       7,028       93.2       5.30       7,113       95.2       5.36       10       (1.0     (0.06     (75     (3.0     (0.12

Consumer

    2,918       82.9       11.43       3,110       89.4       11.56       2,864       85.3       11.95       (192     (6.5     (0.13     54       (2.4     (0.52

Auto

    2,957       66.0       8.98       2,992       67.7       9.10       2,822       67.7       9.62       (35     (1.7     (0.12     135       (1.7     (0.65

Lease financing

    1,082       16.1       5.97       1,072       16.3       6.07       972       14.8       6.07       10       (0.2     (0.10     110       1.3       (0.10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

    28,280       439.2       6.24       27,405       463.0       6.79       26,733       462.5       6.94       875       (23.8     (0.55     1,547       (23.3     (0.70
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest earning assets

  $ 55,636     $ 550.7       3.98   $ 48,149     $ 598.7       4.99   $ 46,397     $ 616.2       5.32   $ 7,487       (48.0     (1.01 )%    $ 9,239     $ (65.5     (1.34 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses - loan portfolio

    (926         (808         (553         (118         (373    

Allowance for credit losses - investment securities

    (13         (13         —             —             (13    

Other non-interest earning assets

    4,100           4,026           3,931           74           169      
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

     

Total average assets

  $ 58,797         $ 51,354         $ 49,775         $ 7,443         $ 9,022      
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

     
Liabilities and Stockholders’ Equity:

 

Interest bearing deposits:

                             

NOW and money market

  $ 19,392     $ 11.6       0.24   $ 16,229     $ 25.3       0.63   $ 14,953     $ 39.3       1.05   $ 3,163     $ (13.7     (0.39 )%    $ 4,439     $ (27.7     (0.81 )% 

Savings

    11,856       10.2       0.35       10,724       11.7       0.44       10,067       10.5       0.42       1,132       (1.5     (0.09     1,789       (0.3     (0.07

Time deposits

    8,730       21.0       0.97       7,691       25.1       1.31       7,827       28.7       1.47       1,039       (4.1     (0.34     903       (7.7     (0.50
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing deposits

    39,978       42.8       0.43       34,644       62.1       0.72       32,847       78.5       0.96       5,334       (19.3     (0.29     7,131       (35.7     (0.53

Borrowings

    1,336       14.9       4.48       1,327       15.2       4.59       1,448       16.2       4.50       9       (0.3     (0.11     (112     (1.3     (0.02
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

    41,314       57.7       0.56       35,971       77.3       0.86       34,295       94.7       1.11       5,343       (19.6     (0.30     7,019       (37.0     (0.55
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest spread

        3.42         4.13         4.21         (0.71 )%          (0.79 )% 
     

 

 

       

 

 

       

 

 

       

 

 

       

 

 

 

Non-interest bearing deposits

    11,006           9,005           8,868           2,001           2,138      

Other liabilities

    1,203           897           1,016           306           187      

Stockholders’ equity

    5,274           5,481           5,596           (207         (322    
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

     

Total average liabilities and stockholders’ equity

  $ 58,797         $ 51,354         $ 49,775         $ 7,443         $ 9,022      
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

     

Net interest income / margin on a taxable equivalent basis (Non-GAAP)

    $ 493.0       3.56     $ 521.4       4.34     $ 521.5       4.50     ($ 28.4     (0.78 )%      ($ 28.5     (0.94 )% 

Taxable equivalent adjustment

      42.1           48.3           45.2           (6.2         (3.1  
   

 

 

       

 

 

       

 

 

       

 

 

       

 

 

   

Net interest income / margin non-taxable equivalent basis (GAAP)

    $ 450.9       3.25     $ 473.1       3.94     $ 476.3       4.11     ($ 22.2     (0.69 )%      ($ 25.4     (0.86 )% 
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

 


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

Table E - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - YEAR-TO-DATE

(Unaudited)

 

    Six months ended                    
    30-Jun-20     30-Jun-19     Variance  

($ 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
 
Assets:                  
Interest earning assets:                  

Money market, trading and investment securities

  $ 24,050     $ 247.2       2.06   $ 19,221     $ 295.0       3.09   $ 4,829     ($ 47.8     (1.03 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

                 

Commercial

    12,846       352.0       5.51       12,110       368.7       6.14       736       (16.7     (0.63

Construction

    898       26.4       5.91       806       27.2       6.79       92       (0.8     (0.88

Mortgage

    7,033       185.4       5.27       7,124       190.4       5.35       (91     (5.0     (0.08

Consumer

    3,014       172.2       11.49       2,839       168.1       11.94       175       4.1       (0.45

Auto

    2,975       133.8       9.04       2,776       135.3       9.83       199       (1.5     (0.79

Lease financing

    1,077       32.4       6.02       958       29.1       6.07       119       3.3       (0.05
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

    27,843       902.2       6.51       26,613       918.8       6.95       1,230       (16.6     (0.44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest earning assets

  $ 51,893     $ 1,149.4       4.45   $ 45,834     $ 1,213.8       5.33   $ 6,059     ($ 64.4     (0.88 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses - loan portfolio

    (867         (564         (303    

Allowance for credit losses - investment securities

    (13         —             (13    

Other non-interest earning assets

    4,064           3,934           130      
 

 

 

       

 

 

       

 

 

     

Total average assets

  $ 55,077         $ 49,204         $ 5,873      
 

 

 

       

 

 

       

 

 

     
Liabilities and Stockholders’ Equity:                  

Interest bearing deposits:

                 

NOW and money market

  $ 17,811     $ 36.8       0.42   $ 14,504     $ 73.0       1.02   $ 3,307     ($ 36.2     (0.60 )% 

Savings

    11,290       21.9       0.39       9,958       20.4       0.41       1,332       1.5       (0.02

Time deposits

    8,211       46.1       1.13       7,752       55.9       1.45       459       (9.8     (0.32
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing deposits

    37,312       104.8       0.57       32,214       149.3       0.93       5,098       (44.5     (0.36

Borrowings

    1,331       30.1       4.53       1,458       32.4       4.46       (127     (2.3     0.07  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

    38,643       134.9       0.70       33,672       181.7       1.09       4,971       (46.8     (0.39
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest spread

        3.75         4.24         (0.49 )% 
     

 

 

       

 

 

       

 

 

 

Non-interest bearing deposits

    10,004           8,910           1,094      

Other liabilities

    1,052           1,017           35      

Stockholders’ equity

    5,378           5,605           (227    
 

 

 

       

 

 

       

 

 

     

Total average liabilities and stockholders’ equity

  $ 55,077         $ 49,204         $ 5,873      
 

 

 

       

 

 

       

 

 

     

Net interest income / margin on a taxable equivalent basis (Non-GAAP)

    $ 1,014.5       3.93     $ 1,032.1       4.53     ($ 17.6     (0.60 )% 

Taxable equivalent adjustment

      90.5           84.8           5.7    
 

 

 

       

 

 

       

 

 

   

Net interest income / margin non-taxable equivalent basis (GAAP)

    $ 924.0       3.58     $ 947.3       4.16     ($ 23.3     (0.58 )% 
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

 


Popular, Inc.    

Financial Supplement to Second Quarter 2020 Earnings Release    

Table F - Mortgage Banking Activities and Other Service Fees    

(Unaudited)    

Mortgage Banking Activities

 

     Quarters ended     Variance     Six months ended     Variance  

(In thousands)

   30-Jun-20     31-Mar-20     30-Jun-19     Q2 2020
vs.Q1 2020
    Q2 2020
vs.Q2 2019
    30-Jun-20     30-Jun-19     2020 vs.
2019
 
Mortgage servicing fees, net of fair value adjustments:                 

Mortgage servicing fees

   $ 9,058     $ 10,968     $ 11,916     $ (1,910   $ (2,858   $ 20,026     $ 23,603     $ (3,577

Mortgage servicing rights fair value adjustments

     (7,640     (5,229     (17,186     (2,411     9,546       (12,869     (21,011     8,142  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total mortgage servicing fees, net of fair value adjustments

     1,418       5,739       (5,270     (4,321     6,688       7,157       2,592       4,565  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     5,487       3,986       5,215       1,501       272       9,473       9,232       241  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Trading account loss:                 

Unrealized gains (losses) on outstanding derivative positions

     1,695       (1,695     (227     3,390       1,922       —         (227     227  

Realized losses on closed derivative positions

     (4,823     (1,610     (1,491     (3,213     (3,332     (6,433     (3,444     (2,989
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total trading account loss

     (3,128     (3,305     (1,718     177       (1,410     (6,433     (3,671     (2,762
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total mortgage banking activities

   $ 3,777     $ 6,420     $ (1,773   $ (2,643   $ 5,550     $ 10,197     $ 8,153     $ 2,044  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Service Fees

 

     Quarters ended      Variance     Six months ended      Variance  

(In thousands)

   30-Jun-20      31-Mar-20      30-Jun-19      Q2 2020
vs.Q1 2020
    Q2 2020
vs.Q2 2019
    30-Jun-20      30-Jun-19      2020 vs.
2019
 

Other service fees:

                     

Debit card fees

   $ 7,082      $ 10,237      $ 12,034      $ (3,155   $ (4,952   $ 17,319      $ 23,204      $ (5,885

Insurance fees

     11,301        12,969        17,253        (1,668     (5,952     24,270        30,044        (5,774

Credit card fees

     17,762        23,186        24,794        (5,424     (7,032     40,948        47,080        (6,132

Sale and administration of investment products

     4,910        6,263        5,732        (1,353     (822     11,173        10,991        182  

Trust fees

     5,546        5,260        5,522        286       24       10,806        10,238        568  

Other fees

     5,483        6,858        8,696        (1,375     (3,213     12,341        16,781        (4,440
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total other service fees

   $ 52,084      $ 64,773      $ 74,031      $ (12,689   $ (21,947   $ 116,857      $ 138,338      $ (21,481
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 


Popular, Inc.    

Financial Supplement to Second Quarter 2020 Earnings Release

Table G - Loans and Deposits    

(Unaudited)    

Loans - Ending Balances    

 

                          Variance  

(In thousands)

   30-Jun-20      31-Mar-20      30-Jun-19      Q2 2020 vs.Q1
2020
    Q2 2020 vs.Q2
2019
 
Loans held-in-portfolio:

 

          

Commercial

   $ 13,735,082      $ 12,498,969      $ 12,216,603      $ 1,236,113     $ 1,518,479  

Construction

     928,507        902,380        825,419        26,127       103,088  

Legacy [1]

     17,000        20,435        23,893        (3,435     (6,893

Lease financing

     1,098,188        1,088,542        991,546        9,646       106,642  

Mortgage

     7,521,795        7,094,757        7,198,959        427,038       322,836  

Auto

     2,904,324        2,954,150        2,796,403        (49,826     107,921  

Consumer

     2,865,657        3,103,039        2,952,922        (237,382     (87,265
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans held-in-portfolio

   $ 29,070,553      $ 27,662,272      $ 27,005,745      $ 1,408,281     $ 2,064,808  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Loans held-for-sale:              

Commercial

   $ 6,778      $ 10,679      $ —        $ (3,901   $ 6,778  

Mortgage

     61,947        77,176        54,028        (15,229     7,919  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans held-for-sale

   $ 68,725      $ 87,855      $ 54,028      $ (19,130   $ 14,697  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans

   $ 29,139,278      $ 27,750,127      $ 27,059,773      $ 1,389,151     $ 2,079,505  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

[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-Jun-20     

 

     31-Mar-20      30-Jun-19      Q2 2020 vs. Q1
2020
    Q2 2020 vs. Q2
2019
 

Demand deposits [1]

   $ 22,731,726         $ 17,023,170      $ 17,750,676      $ 5,708,556     $ 4,981,050  

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

     22,457,951           18,786,042        16,011,646        3,671,909       6,446,305  

Savings, NOW and money market deposits (brokered)

     522,929           460,140        384,251        62,789       138,678  

Time deposits (non-brokered)

     7,919,265           8,404,525        7,816,939        (485,260     102,326  

Time deposits (brokered CDs)

     212,429           123,299        96,325        89,130       116,104  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

   $ 53,844,300         $ 44,797,176      $ 42,059,837      $ 9,047,124     $ 11,784,463  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

[1]

Includes interest and non-interest bearing demand deposits.    


Popular, Inc.    

Financial Supplement to Second Quarter 2020 Earnings Release    

Table H - Loan Delinquency - Puerto Rico Operations    

(Unaudited)    

 

30-Jun-20

 

Puerto Rico

 
    Past due                 Past due 90 days or more  
    30-59     60-89     90 days     Total                 Non-accrual     Accruing  

(In thousands)

  days     days     or more     past due     Current     Loans HIP     loans     loans  

Commercial multi-family

  $ 1,641     $ 2,524     $ 1,368     $ 5,533     $ 142,630     $ 148,163     $ 1,368     $ —    

Commercial real estate:

                 

Non-owner occupied

    24,091       4,120       108,671       136,882       1,940,018       2,076,900       108,671       —    

Owner occupied

    19,439       5,471       101,112       126,022       1,554,153       1,680,175       101,112       —    

Commercial and industrial

    5,422       15,404       43,892       64,718       4,382,221       4,446,939       42,739       1,153  

Construction

    —         —         —         —         176,612       176,612       —         —    

Mortgage

    279,498       123,158       1,256,359       1,659,015       4,751,803       6,410,818       397,262       859,097  

Leasing

    11,386       10,355       4,751       26,492       1,071,696       1,098,188       4,751       —    

Consumer:

                 

Credit cards

    9,128       15,424       17,849       42,401       934,981       977,382       —         17,849  

Home equity lines of credit

    14       262       6       282       4,284       4,566       —         6  

Personal

    20,485       13,730       34,834       69,049       1,300,646       1,369,695       34,834       —    

Auto

    64,977       29,813       22,111       116,901       2,787,423       2,904,324       22,111       —    

Other

    700       344       14,426       15,470       114,971       130,441       13,755       671  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Total   $ 436,781     $ 220,605     $ 1,605,379     $ 2,262,765     $ 19,161,438     $ 21,424,203     $ 726,603     $ 878,776  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

31-Mar-20

 

Puerto Rico

 
    Past due                 Past due 90 days or more  
    30-59     60-89     90 days     Total                 Non-accrual     Accruing  

(In thousands)

  days     days     or more     past due     Current     Loans HIP     loans     loans  

Commercial multi-family

  $ 8,382     $ 359     $ 1,379     $ 10,120     $ 137,145     $ 147,265     $ 1,379     $ —    

Commercial real estate:

                 

Non-owner occupied

    4,632       4,382       109,054       118,068       1,968,831       2,086,899       109,054       —    

Owner occupied

    11,649       4,276       101,887       117,812       1,460,599       1,578,411       101,887       —    

Commercial and industrial

    17,112       3,608       39,280       60,000       3,458,407       3,518,407       38,784       496  

Construction

    4,411       —         —         4,411       159,979       164,390       —         —    

Mortgage

    339,648       141,841       854,105       1,335,594       4,680,414       6,016,008       404,465       449,640  

Leasing

    18,301       5,938       4,076       28,315       1,060,227       1,088,542       4,076       —    

Consumer:

                 

Credit cards

    14,062       9,297       20,588       43,947       1,020,740       1,064,687       —         20,588  

Home equity lines of credit

    49       51       93       193       4,736       4,929       —         93  

Personal

    23,697       13,078       36,125       72,900       1,390,326       1,463,226       36,064       61  

Auto

    110,408       38,018       26,431       174,857       2,779,293       2,954,150       26,431       —    

Other

    622       293       13,966       14,881       122,086       136,967       13,543       423  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 552,973     $ 221,141     $ 1,206,984     $ 1,981,098     $ 18,242,783     $ 20,223,881     $ 735,683     $ 471,301  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Variance

 
    Past due                 Past due 90 days or more  
    30-59     60-89     90 days     Total                 Non-accrual     Accruing  

(In thousands)

  days     days     or more     past due     Current     Loans HIP     loans     loans  

Commercial multi-family

  $ (6,741   $ 2,165     $ (11   $ (4,587   $ 5,485     $ 898     $ (11   $ —    

Commercial real estate:

                 

Non-owner occupied

    19,459       (262     (383     18,814       (28,813     (9,999     (383     —    

Owner occupied

    7,790       1,195       (775     8,210       93,554       101,764       (775     —    

Commercial and industrial

    (11,690     11,796       4,612       4,718       923,814       928,532       3,955       657  

Construction

    (4,411     —         —         (4,411     16,633       12,222       —         —    

Mortgage

    (60,150     (18,683     402,254       323,421       71,389       394,810       (7,203     409,457  [1] 

Leasing

    (6,915     4,417       675       (1,823     11,469       9,646       675       —    

Consumer:

                 

Credit cards

    (4,934     6,127       (2,739     (1,546     (85,759     (87,305     —         (2,739

Home equity lines of credit

    (35     211       (87     89       (452     (363     —         (87

Personal

    (3,212     652       (1,291     (3,851     (89,680     (93,531     (1,230     (61

Auto

    (45,431     (8,205     (4,320     (57,956     8,130       (49,826     (4,320     —    

Other

    78       51       460       589       (7,115     (6,526     212       248  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ (116,192   $ (536   $ 398,395     $ 281,667     $ 918,655     $ 1,200,322     $ (9,080   $ 407,475  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

[1]

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. While the borrowers for our serviced GNMA portfolio benefited from the moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium.


Popular, Inc.    

Financial Supplement to Second Quarter 2020 Earnings Release    

Table I - Loan Delinquency - Popular U.S. Operations    

(Unaudited)    

 

June 30, 2020

 

Popular U.S.

 
    Past due                 Past due 90 days or more  
    30-59     60-89     90 days     Total                 Non-accrual     Accruing  

(In thousands)

  days     days     or more     past due     Current     Loans HIP     loans     loans  

Commercial multi-family

  $ —       $ 366     $ 2,097     $ 2,463     $ 1,637,996     $ 1,640,459     $ 2,097     $ —    

Commercial real estate:

                 

Non-owner occupied

    1,692       5,136       397       7,225       1,945,365       1,952,590       397       —    

Owner occupied

    1,010       —         352       1,362       345,412       346,774       352       —    

Commercial and industrial

    4,441       6,061       4,392       14,894       1,428,188       1,443,082       4,392       —    

Construction

    23,209       9,600       —         32,809       719,086       751,895       —         —    

Mortgage

    2,532       4,477       14,144       21,153       1,089,824       1,110,977       14,144       —    

Legacy

    29       83       2,001       2,113       14,887       17,000       2,001       —    

Consumer:

                 

Credit cards

    —         —         —         —         26       26       —         —    

Home equity lines of credit

    1,715       655       8,242       10,612       100,095       110,707       8,242       —    

Personal

    1,638       1,524       1,976       5,138       266,330       271,468       1,976       —    

Other

    —         —         —         —         1,372       1,372       —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Total   $ 36,266     $ 27,902     $ 33,601     $ 97,769     $ 7,548,581     $ 7,646,350     $ 33,601     $ —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

March 31, 2020

 

Popular U.S.

 
    Past due                 Past due 90 days or more  
    30-59     60-89     90 days     Total                 Non-accrual     Accruing  

(In thousands)

  days     days     or more     past due     Current     Loans HIP     loans     loans  

Commercial multi-family

  $ 974     $ —       $ 2,097     $ 3,071     $ 1,627,274     $ 1,630,345     $ 2,097     $ —    

Commercial real estate:

                 

Non-owner occupied

    25,944       —         269       26,213       1,950,611       1,976,824       269       —    

Owner occupied

    3,910       —         245       4,155       338,805       342,960       245       —    

Commercial and industrial

    1,067       3,546       4,793       9,406       1,208,452       1,217,858       4,793       —    

Construction

    —         —         —         —         737,990       737,990       —         —    

Mortgage

    25,639       391       12,176       38,206       1,040,543       1,078,749       12,176       —    

Legacy

    37       41       1,980       2,058       18,377       20,435       1,980       —    

Consumer:

                 

Credit cards

    —         —         —         —         36       36       —         —    

Home equity lines of credit

    1,438       72       9,322       10,832       106,579       117,411       9,322       —    

Personal

    2,687       1,632       2,110       6,429       308,559       314,988       2,110       —    

Other

    21       —         —         21       774       795       —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 61,717     $ 5,682     $ 32,992     $ 100,391     $ 7,338,000     $ 7,438,391     $ 32,992     $ —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Variance

 
     Past due                 Past due 90 days or more  

(In thousands)

   30-59
days
    60-89
days
    90 days
or more
    Total past
due
    Current     Loans HIP     Non-accrual
loans
    Accruing
loans
 

Commercial multi-family

   $ (974   $ 366     $ —       $ (608   $ 10,722     $ 10,114     $ —       $ —    

Commercial real estate:

                

Non-owner occupied

     (24,252     5,136       128       (18,988     (5,246     (24,234     128       —    

Owner occupied

     (2,900     —         107       (2,793     6,607       3,814       107       —    

Commercial and industrial

     3,374       2,515       (401     5,488       219,736       225,224       (401     —    

Construction

     23,209       9,600       —         32,809       (18,904     13,905       —         —    

Mortgage

     (23,107     4,086       1,968       (17,053     49,281       32,228       1,968       —    

Legacy

     (8     42       21       55       (3,490     (3,435     21       —    

Consumer:

                

Credit cards

     —         —         —         —         (10     (10     —         —    

Home equity lines of credit

     277       583       (1,080     (220     (6,484     (6,704     (1,080     —    

Personal

     (1,049     (108     (134     (1,291     (42,229     (43,520     (134     —    

Auto

     —         —         —         —         —         —         —         —    

Other

     (21     —         —         (21     598       577       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ (25,451   $ 22,220     $ 609     $ (2,622   $ 210,581     $ 207,959     $ 609     $ —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Popular, Inc.    

Financial Supplement to Second Quarter 2020 Earnings Release    

Table J - Loan Delinquency - Consolidated    

(Unaudited)    

 

30-Jun-20

 

Popular, Inc.

 
     Past due                   Past due 90 days or more  

(In thousands)

   30-59
days
     60-89
days
     90 days
or more
     Total
past due
     Current      Loans HIP     Non-accrual
loans
     Accruing
loans
 

Commercial multi-family

   $ 1,641      $ 2,890      $ 3,465      $ 7,996      $ 1,780,626      $ 1,788,622     $ 3,465      $ —    

Commercial real estate:

                      

Non-owner occupied

     25,783        9,256        109,068        144,107        3,885,383        4,029,490       109,068        —    

Owner occupied

     20,449        5,471        101,464        127,384        1,899,565        2,026,949       101,464        —    

Commercial and industrial

     9,863        21,465        48,284        79,612        5,810,409        5,890,021       47,131        1,153  

Construction

     23,209        9,600        —          32,809        895,698        928,507       —          —    

Mortgage

     282,030        127,635        1,270,503        1,680,168        5,841,627        7,521,795       411,406        859,097  

Leasing

     11,386        10,355        4,751        26,492        1,071,696        1,098,188       4,751        —    

Legacy

     29        83        2,001        2,113        14,887        17,000       2,001        —    

Consumer:

                      

Credit cards

     9,128        15,424        17,849        42,401        935,007        977,408       —          17,849  

Home equity lines of credit

     1,729        917        8,248        10,894        104,379        115,273       8,242        6  

Personal

     22,123        15,254        36,810        74,187        1,566,976        1,641,163       36,810        —    

Auto

     64,977        29,813        22,111        116,901        2,787,423        2,904,324       22,111        —    

Other

     700        344        14,426        15,470        116,343        131,813       13,755        671  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 473,047      $ 248,507      $ 1,638,980      $ 2,360,534      $ 26,710,019      $ 29,070,553     $ 760,204      $ 878,776  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

31-Mar-20

 

Popular, Inc.

 
     Past due                   Past due 90 days or more  

(In thousands)

   30-59
days
     60-89
days
     90 days
or more
     Total
past due
     Current      Loans HIP     Non-accrual
loans
     Accruing
loans
 

Commercial multi-family

   $ 9,356      $ 359      $ 3,476      $ 13,191      $ 1,764,419      $ 1,777,610     $ 3,476      $ —    

Commercial real estate:

                      

Non-owner occupied

     30,576        4,382        109,323        144,281        3,919,442        4,063,723       109,323        —    

Owner occupied

     15,559        4,276        102,132        121,967        1,799,404        1,921,371       102,132        —    

Commercial and industrial

     18,179        7,154        44,073        69,406        4,666,859        4,736,265       43,577        496  

Construction

     4,411        —          —          4,411        897,969        902,380       —          —    

Mortgage

     365,287        142,232        866,281        1,373,800        5,720,957        7,094,757       416,641        449,640  

Leasing

     18,301        5,938        4,076        28,315        1,060,227        1,088,542       4,076        —    

Legacy

     37        41        1,980        2,058        18,377        20,435       1,980        —    

Consumer:

                      

Credit cards

     14,062        9,297        20,588        43,947        1,020,776        1,064,723       —          20,588  

Home equity lines of credit

     1,487        123        9,415        11,025        111,315        122,340       9,322        93  

Personal

     26,384        14,710        38,235        79,329        1,698,885        1,778,214       38,174        61  

Auto

     110,408        38,018        26,431        174,857        2,779,293        2,954,150       26,431        —    

Other

     643        293        13,966        14,902        122,860        137,762       13,543        423  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 614,690      $ 226,823      $ 1,239,976      $ 2,081,489      $ 25,580,783      $ 27,662,272     $ 768,675      $ 471,301  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 


Variance

 
     Past due                  Past due 90 days or more  

(In thousands)

   30-59 days     60-89 days     90 days or
more
    Total past
due
    Current     Loans HIP      Non-accrual
loans
    Accruing
loans
 

Commercial multi-family

   $ (7,715   $ 2,531     $ (11   $ (5,195   $ 16,207     $ 11,012      $ (11   $ —    

Commercial real estate:

                 

Non-owner occupied

     (4,793     4,874       (255     (174     (34,059     (34,233      (255     —    

Owner occupied

     4,890       1,195       (668     5,417       100,161       105,578        (668     —    

Commercial and industrial

     (8,316     14,311       4,211       10,206       1,143,550       1,153,756        3,554       657  

Construction

     18,798       9,600       —         28,398       (2,271     26,127        —         —    

Mortgage

     (83,257     (14,597     404,222       306,368       120,670       427,038        (5,235     409,457  [1] 

Leasing

     (6,915     4,417       675       (1,823     11,469       9,646        675       —    

Legacy

     (8     42       21       55       (3,490     (3,435      21       —    

Consumer:

                 

Credit cards

     (4,934     6,127       (2,739     (1,546     (85,769     (87,315      —         (2,739

Home equity lines of credit

     242       794       (1,167     (131     (6,936     (7,067      (1,080     (87

Personal

     (4,261     544       (1,425     (5,142     (131,909     (137,051      (1,364     (61

Auto

     (45,431     (8,205     (4,320     (57,956     8,130       (49,826      (4,320     —    

Other

     57       51       460       568       (6,517     (5,949      212       248  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ (141,643   $ 21,684     $ 399,004     $ 279,045     $ 1,129,236     $ 1,408,281      $ (8,471   $ 407,475  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

[1]

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. While the borrowers for our serviced GNMA portfolio benefited from the moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium.


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

Table K - Non-Performing Assets

(Unaudited)

 

                                         Variance  

(Dollars in thousands)

   30-Jun-20     As a % of
loans HIP by
category
    31-Mar-20     As a % of
loans HIP by
category
    30-Jun-19     As a % of
loans HIP by
category
    Q2 2020 vs.
Q1 2020
    Q2 2020 vs.
Q2 2019
 

Non-accrual loans:

                

Commercial [1]

   $ 261,128       1.9   $ 258,508       2.1   $ 155,348       1.3   $ 2,620     $ 105,780  

Construction

     —         —         —         —         13,848       1.7       —         (13,848

Legacy [2]

     2,001       11.8       1,980       9.7       2,469       10.3       21       (468

Lease financing

     4,751       0.4       4,076       0.4       2,830       0.3       675       1,921  

Mortgage [1]

     411,406       5.5       416,641       5.9       318,396       4.4       (5,235     93,010  

Auto

     22,111       0.8       26,431       0.9       28,085       1.0       (4,320     (5,974

Consumer [1]

     58,807       2.1       61,039       2.0       43,382       1.5       (2,232     15,425  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-performing loans held-in-portfolio

     760,204       2.6     768,675       2.8     564,358       2.1     (8,471     195,846  

Non-performing loans held-for-sale [3]

     6,778         10,679         —           (3,901     6,778  

Other real estate owned (“OREO”)

     113,940         123,922         118,851         (9,982     (4,911
  

 

 

     

 

 

     

 

 

     

 

 

   

 

 

 

Total non-performing assets

   $ 880,922       $ 903,276       $ 683,209       $ (22,354   $ 197,713  
  

 

 

     

 

 

     

 

 

     

 

 

   

 

 

 

Accruing loans past due 90 days or more [4] [5]

   $ 878,776       $ 471,301       $ 494,488       $ 407,475     $ 384,288  
  

 

 

     

 

 

     

 

 

     

 

 

   

 

 

 

Ratios:

                

Non-performing assets to total assets

     1.40       1.71       1.35      

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

     2.62         2.78         2.09        

Allowance for credit losses to loans held-in-portfolio

     3.16         3.32         2.01        

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

     120.81         119.65         96.33        

 

[1]

The increase in non-accrual loans during the first quarter of 2020 includes the initial impact of $278 million related to the adoption of CECL on the portfolio of previously purchased credit deteriorated loans. This included mortgage loans for $133 million, commercial loans for $131 million and $14 million in consumer loans.

[2]

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.

[3]

There were $7 million in non-performing commercial loans held-for-sale as of June 30, 2020, $11 million for the quarter ended March 31, 2020 and none for the quarter ended June 30, 2019.

[4]

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 $522 million (March 31, 2020 - $111 million; June 30, 2019 - $96 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. While the borrowers for our serviced GNMA portfolio benefited from the moratorium, the delinquency status of these loans continued to be reported to GNMA without considering the moratorium. These balances include $234 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of June 30, 2020 (March 31, 2020 - $222 million; June 30, 2019 - $262 million). Furthermore, the Corporation has approximately $62 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 (March 31, 2020 - $62 million; June 30, 2019 - $66 million).

[5]

The carrying value of loans accounted for under ASC Subtopic 310-30 that are contractually 90 days or more past due was $248 million at June 30, 2019. 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 Second Quarter 2020 Earnings Release

Table L - Activity in Non-Performing Loans

(Unaudited)

 

Commercial loans held-in-portfolio:

 
     Quarter ended     Quarter ended  
     30-Jun-20     31-Mar-20  

(In thousands)

   BPPR     Popular U.S.     Popular, Inc.     BPPR     Popular U.S.     Popular, Inc.  

Beginning balance NPLs

   $ 251,104     $ 7,404     $ 258,508     $ 147,255     $ 3,505     $ 150,760  

Transition of PCI to PCD loans under CECL

     —         —         —         112,517       18,547       131,064  

Plus:

            

New non-performing loans

     14,187       1,986       16,173       4,954       166       5,120  

Advances on existing non-performing loans

     —         100       100       —         95       95  
Less:             

Non-performing loans transferred to OREO

     —         —         —         (2,202     —         (2,202

Non-performing loans charged-off

     (1,402     (368     (1,770     (2,146     (554     (2,700

Loans returned to accrual status / loan collections

     (9,999     (1,884     (11,883     (9,274     (3,676     (12,950

Loans transferred to held-for-sale

     —         —         —         —         (10,679     (10,679
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance NPLs

   $ 253,890     $ 7,238     $ 261,128     $ 251,104     $ 7,404     $ 258,508  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Construction loans held-in-portfolio:

 
     Quarter ended     Quarter ended  
     30-Jun-20     31-Mar-20  

(In thousands)

   BPPR     Popular U.S.     Popular, Inc.     BPPR     Popular U.S.     Popular, Inc.  

Beginning balance NPLs

   $ —       $ —       $ —       $ 119     $ 26     $ 145  

Less:

            

Loans returned to accrual status / loan collections

     —         —         —         (119     (26     (145
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance NPLs

   $ —       $ —       $ —       $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage loans held-in-portfolio:

 
     Quarter ended     Quarter ended  
     30-Jun-20     31-Mar-20  

(In thousands)

   BPPR     Popular U.S.     Popular, Inc.     BPPR     Popular U.S.     Popular, Inc.  

Beginning balance NPLs

   $ 404,465     $ 12,176     $ 416,641     $ 283,708     $ 11,091     $ 294,799  

Transition of PCI to PCD loans under CECL

     —         —         —         133,186       —         133,186  

Plus:

            

New non-performing loans

     82,560       7,440       90,000       75,966       4,007       79,973  

Advances on existing non-performing loans

     —         11       11       —         52       52  

Less:

            

Non-performing loans transferred to OREO

     (48     —         (48     (8,188     —         (8,188

Non-performing loans charged-off

     (7,847     (7     (7,854     (4,747     —         (4,747

Loans returned to accrual status / loan collections

     (81,868     (5,476     (87,344     (75,460     (2,974     (78,434
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance NPLs

   $ 397,262     $ 14,144     $ 411,406     $ 404,465     $ 12,176     $ 416,641  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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

 
     Quarter ended     Quarter ended  
     30-Jun-20     31-Mar-20  

(In thousands)

   BPPR     Popular U.S.     Popular, Inc.     BPPR     Popular U.S.     Popular, Inc.  

Beginning balance NPLs

   $ 655,569     $ 21,560     $ 677,129     $ 431,082     $ 16,621     $ 447,703  

Transition of PCI to PCD loans under CECL

     —         —         —         245,703       18,547       264,250  

Plus:

            

New non-performing loans

     96,747       9,426       106,173       80,920       4,173       85,093  

Advances on existing non-performing loans

     —         137       137       —         171       171  

Less:

            

Non-performing loans transferred to OREO

     (48     —         (48     (10,390     —         (10,390

Non-performing loans charged-off

     (9,249     (375     (9,624     (6,893     (554     (7,447

Loans returned to accrual status / loan collections

     (91,867     (7,365     (99,232     (84,853     (6,719     (91,572

Loans transferred to held-for-sale

     —         —         —         —         (10,679     (10,679
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance NPLs [1]

   $ 651,152     $ 23,383     $ 674,535     $ 655,569     $ 21,560     $ 677,129  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

[1]

Includes $2.0 million of NPLs related to the legacy portfolio as of June 30, 2020 (March 31, 2020 - $2.0 million).


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

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

(Unaudited)

 

     Quarter
ended
30-Jun-20
    Quarter
ended
31-Mar-20
    Quarter
ended
30-Jun-19
 

(Dollars in thousands)

   Total     Total     Total  

Balance at beginning of period

   $ 919,716     $ 477,708     $ 550,628  

Impact of adopting CECL

     —         315,107       —    

Provision for credit losses

     63,104       188,995       40,191  

Initial allowance for credit losses - PCD Loans

     567       429       —    
  

 

 

   

 

 

   

 

 

 
     983,387       982,239       590,819  
  

 

 

   

 

 

   

 

 

 

Net loans charged-off:

      

BPPR

      

Commercial

     1,097       580       184  

Construction

     (195     (19     (54

Lease financing

     3,390       3,307       1,630  

Mortgage

     7,554       5,538       8,713  

Consumer

     50,297       50,111       26,694  
  

 

 

   

 

 

   

 

 

 

Total BPPR

     62,143       59,517       37,167  
  

 

 

   

 

 

   

 

 

 
Popular U.S.       

Commercial

     (897     100       5,791  

Construction

     —         (155     —    

Legacy [1]

     113       (101     (277

Mortgage

     (19     (1     230  

Consumer

     3,613       3,163       4,242  
  

 

 

   

 

 

   

 

 

 

Total Popular U.S.

     2,810       3,006       9,986  
  

 

 

   

 

 

   

 

 

 

Total loans charged-off - Popular, Inc.

     64,953       62,523       47,153  
  

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 918,434     $ 919,716     $ 543,666  
  

 

 

   

 

 

   

 

 

 

POPULAR, INC.

      

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

     0.92     0.91     0.71

Provision for credit losses to net charge-offs

     97.15     302.28     85.24

BPPR

      

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

     1.20     1.18     0.75

Provision for credit losses to net charge-offs

     97.23     189.87     77.96

Popular U.S.

      

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

     0.15     0.17     0.59

Provision for credit losses to net charge-offs

     95.41     2527.98     112.32
  

 

 

   

 

 

   

 

 

 

 

[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 Second Quarter 2020 Earnings Release

Table N - Allowance for Credit Losses “ACL”- Loan Portfolios - CONSOLIDATED

(Unaudited)

 

30-Jun-20

 

(Dollars in thousands)

   Commercial     Construction     Legacy [1]     Mortgage     Lease
financing
    Consumer     Total  

Total ACL

   $ 314,956     $ 6,417     $ 2,052     $ 222,237     $ 13,093     $ 359,679     $ 918,434  

Total loans held-in-portfolio

   $ 13,735,082     $ 928,507     $ 17,000     $ 7,521,795     $ 1,098,188     $ 5,769,981     $ 29,070,553  

ACL to loans held-in-portfolio

     2.29     0.69     12.07     2.95     1.19     6.23     3.16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

    

[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.

 

 

    

31-Mar-20

 

(Dollars in thousands)

   Commercial     Construction     Legacy [1]     Mortgage     Lease
financing
    Consumer     Total  

Total ACL

   $ 305,048     $ 2,591     $ 2,026     $ 227,087     $ 12,589     $ 370,375     $ 919,716  

Total loans held-in-portfolio

   $ 12,498,969     $ 902,380     $ 20,435     $ 7,094,757     $ 1,088,542     $ 6,057,189     $ 27,662,272  

ACL to loans held-in-portfolio

     2.44     0.29     9.91     3.20     1.16     6.11     3.32
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

    

[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  

Total ACL

   $ 9,908     $ 3,826     $ 26     $ (4,850   $ 504     $ (10,696   $ (1,282

Total loans held-in-portfolio

   $ 1,236,113     $ 26,127     $ (3,435   $ 427,038     $ 9,646     $ (287,208   $ 1,408,281  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

Table O - Allowance for Credit Losses - Loan Portfolios - PUERTO RICO OPERATIONS

(Unaudited)

 

30-Jun-20

 

Puerto Rico

 

(In thousands)

   Commercial     Construction     Mortgage     Lease
financing
    Consumer     Total  

Allowance for credit losses:

   $ 214,927     $ 354     $ 199,250     $ 13,093     $ 328,158     $ 755,782  

Loans held-in-portfolio:

     8,352,177       176,612       6,410,818       1,098,188       5,386,408       21,424,203  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

ACL to loans held-in-portfolio:

     2.57     0.20     3.11     1.19     6.09     3.53
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

31-Mar-20

 

Puerto Rico

 

(In thousands)

   Commercial     Construction     Mortgage     Lease
financing
    Consumer     Total  

Allowance for credit losses:

   $ 207,850     $ 419     $ 202,800     $ 12,589     $ 333,277     $ 756,935  

Loans held-in-portfolio:

     7,330,982       164,390       6,016,008       1,088,542       5,623,959       20,223,881  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

ACL to loans held-in-portfolio:

     2.84     0.25     3.37     1.16     5.93     3.74
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variance

 

(In thousands)

   Commercial     Construction     Mortgage     Lease
financing
    Consumer     Total  

Allowance for credit losses:

   $ 7,077     $ (65   $ (3,550   $ 504     $ (5,119   $ (1,153

Loans held-in-portfolio:

     1,021,195       12,222       394,810       9,646       (237,551     1,200,322  


Popular, Inc.

Financial Supplement to Second Quarter 2020 Earnings Release

Table P - Allowance for Credit Losses - Loan Portfolios - POPULAR U.S. OPERATIONS

(Unaudited)

 

30-Jun-20

 

Popular U.S.

 

(In thousands)

   Commercial     Construction     Legacy     Mortgage     Consumer     Total  

Allowance for credit losses:

   $ 100,029     $ 6,063     $ 2,052     $ 22,987     $ 31,521     $ 162,652  

Loans held-in-portfolio:

     5,382,905       751,895       17,000       1,110,977       383,573       7,646,350  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

ACL to loans held-in-portfolio:

     1.86     0.81     12.07     2.07     8.22     2.13
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

31-Mar-20

 

Popular U.S.

 

(In thousands)

   Commercial     Construction     Legacy     Mortgage     Consumer     Total  

Allowance for credit losses:

   $ 97,198     $ 2,172     $ 2,026     $ 24,287     $ 37,098     $ 162,781  

Loans held-in-portfolio:

     5,167,987       737,990       20,435       1,078,749       433,230       7,438,391  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

ACL to loans held-in-portfolio:

     1.88     0.29     9.91     2.25     8.56     2.19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variance

 

(In thousands)

   Commercial     Construction     Legacy     Mortgage     Consumer     Total  

Allowance for credit losses:

   $ 2,831     $ 3,891     $ 26     $ (1,300   $ (5,577   $ (129

Loans held-in-portfolio:

     214,918       13,905       (3,435     32,228       (49,657     207,959  


Popular, Inc.    

Financial Supplement to Second Quarter 2020 Earnings Release

Table Q - Reconciliation to GAAP Financial Measures

(Unaudited)    

 

(In thousands, except share or per share information)

   30-Jun-20     31-Mar-20     30-Jun-19  

Total stockholders’ equity

   $ 5,780,165     $ 5,669,605     $ 5,719,834  

Less: Preferred stock

     (22,143     (22,143     (50,160

Less: Goodwill

     (671,122     (671,122     (671,122

Less: Other intangibles

     (24,511     (26,307     (23,878
  

 

 

   

 

 

   

 

 

 

Total tangible common equity

   $ 5,062,389     $ 4,950,033     $ 4,974,674  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 62,845,352     $ 52,803,639     $ 50,617,221  

Less: Goodwill

     (671,122     (671,122     (671,122

Less: Other intangibles

     (24,511     (26,307     (23,878
  

 

 

   

 

 

   

 

 

 

Total tangible assets

   $ 62,149,719     $ 52,106,210     $ 49,922,221  
  

 

 

   

 

 

   

 

 

 

Tangible common equity to tangible assets

     8.15     9.50     9.96

Common shares outstanding at end of period

     84,184,927       88,125,974       96,703,351  

Tangible book value per common share

   $ 60.13     $ 56.17     $ 51.44  
     Quarterly average  

Total stockholders’ equity [1]

   $ 5,274,071     $ 5,481,179     $ 5,595,762  

Less: Preferred Stock

     (22,143     (38,768     (50,160

Less: Goodwill

     (671,121     (671,121     (671,121

Less: Other intangibles

     (25,497     (27,826     (24,715
  

 

 

   

 

 

   

 

 

 

Total tangible equity

   $ 4,555,310     $ 4,743,464     $ 4,849,766  

Return on average tangible common equity

     11.23     2.87     14.07

 

[1]

Average balances exclude unrealized gains or losses on debt securities available-for-sale.

CONTACT:

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

EX-99.2

Slide 1

Investor Presentation Second Quarter 2020 Exhibit 99.2


Slide 2

Cautionary Note Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, are based on the current expectations of Popular, Inc.’s (the “Corporation”) management 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. Such factors include, but are not limited to, the scope and duration of the COVID-19 pandemic, actions taken by governmental authorities in response thereto, and the direct and indirect impact of the pandemic on the Corporation, our customers, service providers and third parties. 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, 2019, our Form 10-Q for the quarter ended March 31, 2020 and our Form 10-Q for the quarter ended June 30, 2020 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 which speak as of their respective dates.


Slide 3

Puerto Rico – Key Indicators Employment Initial unemployment claims:3 Weekly average: 6K Peak: 45K (last week of March) Nonfarm employment (March 2020): 0.6% higher than March 20194 Economy Cement Sales6 6% lower than Q2 2019 June 2020: 42% higher than June 2019 Puerto Rico BPPR 1. Source: Moody’s Analytics- April 2, 2020 and June 23, 2020; 2. Source: El Nuevo Dia, En Marcha el Acceso de Fondos, April 20, 2020; 3. Source: U.S. Department of Labor (State Weekly Claims for Unemployment Insurance Data Not Seasonally Adjusted); 4. Source: U.S. Bureau of Labor Statistics (Household Survey, Seasonally Adjusted); 5. Source: United Automobile Importers Group (based on units); 6. Source: Puerto Rico Economic Development Bank. Initial unemployment claims: 3 Weekly average: 21K Peak: 67K (1st week of April) Nonfarm employment (June 2020): 9% lower than June 2019; 5% higher than April 20204 Q2 2020 Q1 2020 As of March 15, 45% of economy open1 Estimated 2020 GDP Impact: $6.3 billion1 Stimulus:2 Federal: $5.5 - $5.9 billion P.R. government: $787 million 27% lower than Q1 2019 28% lower than Q1 2019 49% lower than Q2 2019 June 2020: 5% higher than June 2019 New Auto Sales5 Debit and Credit Card Sales ($) 5% lower than Q2 2019 7% higher than Q1 2020 June 2020: 43% higher than June 2019 2% lower than Q1 2019 Gradually reopened economy with most restrictions lifted by June1* Revised estimated 2020 GDP Impact: $21.2 billion1 Stimulus:1 Federal: $13.8 billion P.R. government: $787 million * On July 16, 2020, as a result of the resurgence of COVID-19 cases on the island, the Government of Puerto Rico scaled back measures to reopen the economy, further restricting non-essential business establishments and public activities.


Slide 4

COVID-19 Response: Highlights Customer Engagement Additional Initiatives Funded over $1.4 billion in loans, representing: 28,000 small and medium sized businesses 278,000 employees Majority of loans went to small businesses: 73% were for less than $25,000 Processed 69% of all loans approved by SBA in P.R.2 Operating 90% of total branches- 144 in Puerto Rico, 10 in the Virgin Islands, 38 in the New York Metro and in 9 South Florida Waived penalties on early CD withdrawal and other banking fees Broad payment relief for consumer and commercial customers Extended health care coverage to part-time employees Return to work testing program to safely transition back on-premise Secured $315K in FHLBNY grants to support nonprofits and small businesses Paycheck Protection Program (PPP) 1.86 million customers as of June 2020 (increased by 52,000 since March 2020) 13% growth in active online users1 since March 2020 Captured 72% of deposits in Q2 2020 through digital channels 1. Customers who have logged on to Popular’s web and/or mobile platform in the past 30 days. 2. Based on the SBA’s Paycheck Protection Program Report through June 30, 2020.


Slide 5

NPLs decreased $9 million; ratio at 2.6% NCO ratio stable at 0.92% Credit Metrics Net income of $128 million Net interest margin: Popular, Inc. 3.25%, BPPR 3.39% Provision for credit losses of $62 million Earnings Robust capital; Common Equity Tier 1 Capital ratio of 15.7% Tangible book value per share of $60.13 compared to $56.17 in Q1 2020 Capital Q2 2020 Highlights Completed $500 million Accelerated Share Repurchase (ASR); repurchased 11.8 million shares at an average price of $42.30 Issued $1.4 billion in PPP loans to small and middle sized businesses (SMEs) Puerto Rico customers grew by 52,000 from Q1 2020 BPPR’s digital platform (Mi Banco) surpassed one million active users Quarter Events


Slide 6

Financial Summary 6


Slide 7

Net Interest Margin Dynamics Q2 2020 FTE1 net interest margin at 3.56% FTE loan yield decreased 55 basis points to 6.24% QoQ Loan portfolio increased $1.4 billion in Q2 2020, mainly PPP Total deposit cost decreased 23 basis points QoQ to 34 basis points Low deposit betas in P.R. Loan Yield, Deposit Cost and NIM (FTE) Total Loans and Deposits ($ in billions) 2 Money Market and Investment Securities ($ in billions) 2 ¹ FTE stands for fully taxable-equivalent basis. Represents a non-GAAP financial measure. See the Corporation’s earnings press release, Form 10Q and Form 10k filed with the Securities and Exchange Commission for the applicable periods, for a GAAP to non-GAAP reconciliation 2 Balances are at end of period Differences due to rounding $21.0


Slide 1

8 Capital Note: Estimated for the current period Differences due to rounding Robust capital levels; Common Equity Tier 1 of 15.7% Capital simplification rule, effective April 1, 2020, reduced CET1 by 48 basis points Tangible book value per share of $60.13 compared to $56.17 in Q1 2020 2020 capital actions: Completed $500 million Accelerated Share Repurchase (ASR); repurchased 11.8 million shares at an average price of $42.30 Redeemed $28 million of 8.25% Series B Preferred Stock Increased quarterly common stock dividend to $0.40 per share Popular regulatory capital does not include: Disallowed portion of ACL of $190 million Unrealized gain on Evertec equity stake of approximately $253 million Estimated Capital Ratios Under Current Regulatory Rules Capital Ratios ($ in millions) 6/30/2020 Pro-Forma (DFAST 2017 NCO% ) Allowance for Credit Losses $918 $1,777 % of Total Loans 3.16% 6.11% CET1 15.7% 14.5% Excess Capital Over Well Capitalized $2,755 $2,402 % of DFAST 2017 NCO's 51.7%


Slide 9

De-Risked Loan Portfolios 1 Small and Medium Enterprise 2 NCOs distribution represents the percentage allocation of net charge-offs from Q1 2008 through Q2 2020 per each loan category, excluding net charge-offs from previously covered loans up to Q2 2015 3 See detail on page 20 of the appendix The Corporation has de-risked its loan portfolios by reducing its exposure to asset classes with historically high loss content In the U.S.: Limited consumer and mortgage subprime exposure. Ceased subprime lending in 2008 Construction exposure mainly in New York Metro The P.R. commercial portfolio reductions include: Commercial portfolio, including construction, has decreased from 55% of total loans held-in-portfolio to 36% Construction portfolio is down by 86% since Q4 2007 SME1 portfolio is down by 60% from Q4 2007 Collateralized exposure, auto and mortgage, now represents a larger portion of consumer loan portfolio Unsecured loan credit quality has improved as overall FICO scores have increased3 Differences due to rounding


Slide 1

COVID-19 Sensitive Segments 0 Health Care Facilities Non-Essential Retail Construction Hotels Non-Food Wholesale Commercial Real Estate (Non-Retail) Restaurant and Food Services P.R.: Mostly shopping centers (61%) and auto retail (31%). A significant portion of shopping centers owned by long term, financially strong principals. U.S.: Strip malls and community centers P.R.: Mainly comprised of hospitals U.S.: ~72% of the portfolio comprised of skilled nursing homes; diversified across operators Supported by federal funds since the onset of COVID P.R.: Only 2% of the commercial portfolio; selective project sponsors and top tier developers U.S.: 97% concentrated in NY Metro P.R.: Mainly business focus, not resort destination. 76% of the hotel exposure sponsored by flag hotels. Strong rebound in June due to local demand U.S.: Limited exposure P.R.: Mostly quick service restaurants (61%) and full-service restaurants (27%). Strong quick service restaurant sales; 89% never closed during lockdown U.S.: Limited exposure P.R.: 61% are non-owner occupied loans, mainly office space with stable occupancies and collection rates, based on recent borrower surveys U.S.: 66% comprised of multifamily loans in NY and SFL with average collection rate above 80%   P.R.: Diverse segment U.S.: Limited exposure Highlight 1 Considers loans held-in-portfolio for the commercial, construction and legacy portfolios in BPPR and Popular Bank (excluding PPP loans) 2 As percentage of outstanding of sensitive segment (excluding PPP loans) Outstanding 1 % of Outstanding P.R. / U.S. Undrawn Deferrals2 $1.5B $1.1B 11.6% $535M $1.1B $361M 77% $1.7B $368M $359M $273M $3.9B 12.5% 8.3% 2.8% 2.7% 2.0% $1.2B $318M $178M $930M $351M $16M $347M $12M $227M $45M $1.7B $2.2B $166M 20% $627M 6% $32M 78% $36M 66% $111M 33% $141M 33% Downgrades2 23% 9% 6% 72% 52% 6% 16% PPP Loans P.R. / U.S. $190M $72M $79M $5M $59M $7M $30M $0.3M $122M $10M $58M $13M $6M $4M 29.3%


Slide 1

COVID-19 Response: Customer Relief Program 1 In response to the pandemic, implemented several financial relief programs such as payment deferrals, suspensions of foreclosures and other collection activity. Payment deferrals were available to all eligible consumer and mortgage customers. In Puerto Rico these measures follow specific statutory requirements Since March 16th, provided financial assistance to approximately 116,2001 accounts, representing $3.9 billion or 27% of total loans held-in-portfolio Approximately, 37% of those accounts with payment deferral continued to make at least one payment during the relief period Compared to the peak, weekly requests have declined by over 97% 1 Excludes third-party mortgage portfolio serviced for others 2 As percentage of loans-held-in portfolio Accounts Granted Assistance Deferrals ($B) % of Balances2 % of Accounts %< 90 Days Past Due at Time of Deferral Request % Payment Activity Residential Mortgages $2.1 28% 25% 97% 36% Auto Lending $0.9 31% 28% 100% 39% Lease Financing $0.4 39% 36% 100% 26% Other Consumer Loans $0.3 17% 12% 99% 57% Credit Cards $0.1 11% 6% 100% 35%


Slide 12

Non-Performing Assets ($ in millions) Non-Performing Assets NPAs decreased by $22 million QoQ NPLs decreased by $9 million QoQ P.R. NPLs at $727 million, or 3.4% of loans, down by $9 million, driven by: Lower mortgage NPLs by $7 million Lower consumer NPLs by $5 million U.S. NPLs at $34 million, or 0.4% of loans, flat QoQ Q1 20 increase in non-accrual loans includes the CECL initial impact of purchased credit impaired loans of $278 million: Mortgage: $133 million Commercial: $131 million Consumer: $14 million OREOs down by $10 million due to the suspension of foreclosure activity in response to the pandemic Non-performing loans held for sale decreased by $4 million driven by taxi medallion loans Differences due to rounding Non-Performing Loans ($ in millions)


Slide 13

NPL Inflows Total NPL Inflows ($ in millions) Mortgage NPL Inflows ($ in millions) Commercial, Construction and Legacy NPL Inflows ($ in millions) Beginning in Q2 2018 figures include loans previously classified as covered Differences due to rounding Total NPL inflows increased by $21 million QoQ P.R. commercial inflows increased by $9 million QoQ, impacted by a single $7 million loan P.R. mortgage inflows increased by $7 million QoQ U.S. inflows increased by $5 million QoQ


Slide 14

NCOs and NCO-to-Loan Ratio ($ in millions) Provision and Provision-to-NCO Ratio ($ in millions) Beginning in Q2 2018 figures include loans previously classified as covered Differences due to rounding Additional Credit Metrics NCOs remained stable QoQ, up slightly by $2 million. NCO ratio at 0.92% vs. 0.91% in Q1 2020 ACL remained stable from Q1 2020. The ACL reflects the current economic outlook, as well as downgrades in the commercial portfolio, related to impact of the COVID-19 pandemic.  Incremental reserves in the prior quarter related to the pandemic amounted to $134 million ACL-to-Loans ratio at 3.16% vs. 3.32% in Q1 2020 ACL-to-NPLs at 121% vs. 120% in Q1 2020 Provision for credit losses of the loan portfolios at $63 million for Q2 2020, down by $126 million ACL, ACL-to-NCO and ACL-to-NPLs Ratios ($ in millions)


Slide 15

Economic Scenario: The Q1 2020 ACL utilized Moody’s Analytics March 27, 2020 S3 Scenario. This economic scenario assumed a double dip recession starting in Q2 2020. For Q2, we utilized Moody’s June Baseline Scenario, which assumes a U-type recovery after initial surge in Q3 2020 Change in Volumes: Mainly due to lower consumer loan balances, in both P.R. and U.S., by approximately $287million QoQ Portfolio Changes: Includes net impact of replenishment of NCOs, increases in qualitative reserves and changes in credit quality. The increases in qualitative reserves mainly impacted the commercial loans portfolio Allowance for Credit Losses – Q2 2020 Movement Balance Reserve Balance Reserve Balance ACL/Loan ($ in millions) 1/1/2020 Build 3/31/2020 Build 6/30/2020 6/30/2020 Commercial 241.4 $ 68.2 $ 309.7 $ 13.8 $ 323.4 $ 2.20% Mortgage 217.6 9.5 227.1 (4.8) 222.2 2.95% Leases 10.1 2.5 12.6 0.5 13.1 1.19% Consumer: Credit Cards 62.3 3.6 66.0 (7.2) 58.8 6.02% Personal Loans 129.1 28.6 157.8 (7.2) 150.6 8.57% Auto 118.6 13.5 132.1 5.1 137.2 4.72% Other 13.7 0.8 14.6 (1.4) 13.1 9.95% Total Consumer 323.8 46.6 370.4 (10.7) 359.7 6.23% Total ACL 792.8 $ 126.9 $ 919.7 $ (1.3) $ 918.4 $ 3.16% Economic Activity Unemployment Rates (UR) Projections at: Peak Peak-to- Recession Projections at: Average Average U.S. Scenario Description Decline trough ends in: U.S. Peak UR 2020 UR 2021 1Q20 Double Dip Recession (25.3%) (10.1%) 2Q21 1Q20 13.0% 8.7% 9.8% 2Q20 Slow Recovery (33.4%) (10.8%) 3Q20 2Q20 14.0% 9.1% 9.3% P.R. P.R. 1Q20 Double Dip Recession (18.3%) (6.9%) 3Q21 1Q20 13.5% 11.4% 11.7% 2Q20 Slow Recovery (24.6%) (9.2%) 3Q20 2Q20 14.4% 11.7% 11.5%


Slide 16

Driving Shareholder Value Capital 2020 Capital Actions Completed $500 million Accelerated Share Repurchase (ASR) Redeemed $28 million of 8.25% Series B Preferred Stock Increased quarterly common stock dividend to $0.40 per share Franchise Additional Value Investments in Evertec and Banco BHD León Puerto Rico Leading market position in Puerto Rico Focus on customer service supported by broad branch network Differentiated digital offering for retail and commercial customers Diversified fee income driven by unmatched product breadth and depth Strong risk-adjusted margins driven by de-risked and well-diversified loan portfolio Substantial excess liquidity with low deposit beta   United States Mainland banking operation provides geographic diversification Branch footprint in key New York and South Florida MSAs National niche banking focus in condo association and healthcare Evolving income streams, led by private wealth management and mortgage origination


Slide 17

Investor Presentation Second Quarter 2020 Appendix


Slide 18

Franchise Summary Corporate Structure Assets = $52 billion Assets = $11 billion Puerto Rico Operations United States Operations Assets = $63 billion Corporate Structure – Popular, Inc. Information as of June 30, 2020 ¹ Doing business as Popular Selected equity investments EVERTEC and Banco BHD León under Corporate segment and joint ventures under BPPR segment Transaction processing, business processes outsourcing 16.22% stake Adjusted EBITDA of $56 million for the quarter ended March 31, 2020 Dominican Republic bank 15.84% stake 2019 net income of $172 million PRLP 2011 Holdings, LLC Construction and commercial loans vehicle 24.90% stake PR Asset Portfolio 2013-1 International, LLC Construction, commercial loans and OREOs vehicle 24.90% stake Industry Financial services Headquarters San Juan, Puerto Rico Assets $63 billion (among top 50 BHCs in the U.S.) Loans $29 billion Deposits $54 billion Banking branches 164 in Puerto Rico, 50 in the U.S. (39 in New York and New Jersey and 11 in Florida) and 10 in the Virgin Islands NASDAQ ticker symbol BPOP Market Cap $3 billion Banco Popular de Puerto Rico Popular’s Insurance Subsidaries Popular North America, Inc. Popular Securities LLC Holding Companies (Including Equity Investments) Popular Bank 1 Popular Auto, LLC


Slide 19

Municipalities Obligations of municipalities are backed by real and personal property taxes, municipal excise taxes, and/or a percentage of the sales and use tax. Indirect exposure includes loans or securities that are payable by non-governmental entities, but which carry a government guarantee to cover any shortfall in collateral in the event of borrower default. Majority are single-family mortgage related. Indirect Exposure The Corporation does not own any loans issued by the P.R. central government or its public corporations. Our direct exposure to P.R. municipalities was $429 million, flat QoQ. P.R. Public Sector Exposure Activity Since June 30, 2020 On July 1, 2020 we received $58 million in principal payments, reducing the direct exposure to municipalities to $371 million


Slide 1

20 FICO Mix of Consumer Originations


Slide 21

Business Segments Differences due to rounding


Slide 22

Popular, Inc. Credit Ratings Our senior unsecured ratings have remained stable Moody’s B1 Stable Outlook Fitch BB Stable Outlook S&P BB- Stable Outlook February Moody’s changes outlook to stable from negative April S&P upgrades to BB- from B+ revised outlook to stable 2017 February S&P placed BPOP on credit watch negative due to the general economic environment in Puerto Rico 2015 May Moody’s, as part of a recalibration of their bank rating model, upgraded BPOP from B2 to B1 with a stable outlook July On 7/10 S&P affirmed BPOP’s rating while maintaining a negative outlook March Moody’s placed BPOP on review for possible upgrade due to a change in their bank rating methodology September Moody’s downgraded BPOP to B2; outlook negative 2016 April S&P revised outlook to positive October Fitch and S&P change outlook to negative from stable 2018 May Fitch revised outlook to stable 2019 April Moody's upgrades to B1 from B2 S&P revised outlook to positive May Fitch upgrades to BB from BB- 2020 March S&P lowers outlook to stable


Slide 23

Investor Presentation Second Quarter 2020

v3.20.2
Document and Entity Information
Jul. 23, 2020
Document And Entity Information [Line Items]  
Entity Registrant Name POPULAR INC
Amendment Flag false
Entity Central Index Key 0000763901
Document Type 8-K
Document Period End Date Jul. 23, 2020
Entity Incorporation State Country Code PR
Entity File Number 001-34084
Entity Tax Identification Number 66-0667416
Entity Address, Address Line One 209 Muñoz Rivera Avenue
Entity Address, City or Town Hato Rey
Entity Address, Country PR
Entity Address, Postal Zip Code 00918
City Area Code (787)
Local Phone Number 765-9800
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Common Stock [Member]  
Document And Entity Information [Line Items]  
Security 12b Title Common Stock ($0.01 par value)
Trading Symbol BPOP
Security Exchange Name NASDAQ
M 6.70 Cumulative Monthly Income Trust Preferred Securities [Member]  
Document And Entity Information [Line Items]  
Security 12b Title 6.70% Cumulative Monthly Income Trust Preferred Securities
Trading Symbol BPOPN
Security Exchange Name NASDAQ
M 6.125 Cumulative Monthly Income Trust Preferred Securities [Member]  
Document And Entity Information [Line Items]  
Security 12b Title 6.125% Cumulative Monthly Income Trust Preferred Securities
Trading Symbol BPOPM
Security Exchange Name NASDAQ