Popular, Inc 8-K, filed Jul 23, 2020
Popular, Inc. (BPOP)
About this 8-K
Popular, Inc filed this 8-K on July 23, 2020.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
CURRENT REPORT
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| 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 | ||||||
Exhibit 99.1
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 |
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| 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 | % | ||||||||
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| Total |
121,229 | $ | 7,985,116 | 27.5 | % | |||||||
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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 | — | ||||||||||||||
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| 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 | |||||||||||||||
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| 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 | |||||||||||||||
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| Net income |
$ | 127,628 | $ | 34,302 | $ | 171,106 | $ | 161,930 | $ | 339,031 | ||||||||||
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| Net income applicable to common stock |
$ | 127,275 | $ | 33,602 | $ | 170,175 | $ | 160,877 | $ | 337,169 | ||||||||||
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| Net income per common share -basic |
$ | 1.49 | $ | 0.37 | $ | 1.77 | $ | 1.83 | $ | 3.46 | ||||||||||
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| Net income per common share - diluted |
$ | 1.49 | $ | 0.37 | $ | 1.76 | $ | 1.83 | $ | 3.45 | ||||||||||
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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 | |||||||||||||||||||
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|
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|
|
|||||||||||||||
| 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 | ||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 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 |
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 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| 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 | )% | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|||||||||||||||||||||||||||||||||||||||||
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
Investor Presentation Second Quarter 2020 Exhibit 99.2
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.
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.
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.
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
Financial Summary 6
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
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%
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
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%
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 $0.1 11% 6% 100% 35%
Non-Performing Assets ($ 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)
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 $5 million QoQ
NCOs and NCO-to-Loan Ratio ($ 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)
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%
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
Investor Presentation Second Quarter 2020 Appendix
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
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
20 FICO Mix of Consumer Originations
Business Segments Differences due to rounding
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
Investor Presentation Second Quarter 2020