Popular, Inc. Reports Financial Results for the Quarter and Six-Months Ended June 30, 2008
Published In: Business, Puerto Rico 
Thursday, July 17, 2008 7:05 AM
< Archive for Sep 2010 >
SuMoTuWeThFrSa
   1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
SAN JUAN, Puerto Rico, July 17 /PRNewswire-FirstCall/ -- Popular, Inc.
("the Corporation") (Nasdaq: BPOP, BPOPO, BPOPP) reported net income for the
quarter ended June 30, 2008 of $24.3 million, compared with $75.0 million in
the same quarter of 2007. Basic and diluted earnings per common share (EPS)
for the quarter ended June 30, 2008 were $0.06, compared with $0.26 for the
quarter ended June 30, 2007. Net income for the second quarter of 2008
represented a return on assets (ROA) of 0.24% and a return on common equity
(ROE) of 2.08%, compared with 0.64% and 7.80%, respectively, in the same
quarter of 2007. This press release should be read in conjunction with the
accompanying Financial Summary (Exhibit A), which is an integral part of this
report.

For the six months ended June 30, 2008, the Corporation's net income
totaled $127.5 million, compared to $193.6 million for the same period in
2007. EPS for the six months ended June 30, 2008, basic and diluted, were
$0.42. Basic and diluted EPS for the six months ended June 30, 2007 were
$0.67. ROA and ROE for the first six months of 2008 were 0.61% and 7.11%,
respectively, compared with 0.83% and 10.32%, respectively, for the same
period in 2007.

"We continue to feel the pressure of the turmoil in the financial markets
and deteriorating economic conditions," indicated Richard L. Carrion, Chairman
of the Board and Chief Executive Officer of Popular, Inc. "We are fully
engaged in the process of evaluating various strategic alternatives to improve
the profitability of our operations in the United States. Some of these
alternatives may involve the sale of some of these operations. Our banking and
processing businesses in Puerto Rico continue to perform well despite a weak
economy. Banco Popular de Puerto Rico met our expectations for the first half
of the year with that segment reporting net income amounting to $191.3 million
even with significant increases in its provision for loan losses. In addition,
we remain strongly capitalized with over $1 billion of Tier I capital in
excess of the regulatory "well capitalized requirement."

Financial results for the quarter ended June 30, 2008 were principally
impacted by the following items (on a pre-tax basis compared to the second
quarter of 2007):

-- Lower net interest income by $33.5 million due to the sale and
reduction of various low margin assets.

-- Higher provision for loan losses for the second quarter of 2008, which
increased by $75.5 million as compared with the same period in 2007.

-- Net losses attributable to changes in the fair value of Popular
Financial Holdings' ("PFH") loans and bond certificates measured at fair value
pursuant to SFAS No. 159 amounted to $35.9 million for the quarter ended June
30, 2008.

-- Lower net gain on sale of loans and valuation adjustments on loans
held-for-sale by $29.7 million for the second quarter of 2008, with PFH and E-
LOAN showing a reduction of approximately $34 million.



The above were partially offset by:

-- Higher combined net gains on sale and valuation adjustments of
investment securities and trading account profits by $32.9 million, primarily
resulting from sales of agency securities and a higher volume of mortgage
loans pooled and sold as mortgage-backed securities in the secondary markets
in the Banco Popular de Puerto Rico reportable segment. Refer to "Balance
Sheet comments" for further information.

-- Higher other non-interest income by $22.9 million.

-- Lower operating expenses by $13.3 million.

-- Income tax benefit of $31.2 million for the second quarter of 2008,
compared with income tax expense of $23.6 million for the same quarter in
2007.



During the second quarter of 2008, the Corporation successfully completed
the public offering of $400 million of 8.25% Non-cumulative Monthly Income
Preferred Stock, Series B, which qualify in its entirety as "Tier I" capital
for risk-based capital ratios. The offering, which was oversubscribed, was
priced at $25 per share. The preferred stock issue was completely sold in
Puerto Rico. Net proceeds will be used for general corporate purposes,
including funding subsidiaries and increasing Popular's liquidity and capital.


Net interest income

Net interest income for the second quarter of 2008 was $337.9 million,
compared with $371.4 million for the second quarter of 2007. The reduction in
net interest income reflects the $6.7 billion reduction in the Corporation's
earnings assets as shown in the table below. The following table summarizes
the principal changes in average earning assets and funding sources and their
corresponding yields and costs for the quarter ended June 30, 2008, compared
with the same quarter in 2007:




Average balances Average Yields / Costs
2nd 2nd 2nd 2nd
Quarter Quarter Dollar % Quarter Quarter
2008 2007 Variance Variance 2008 2007 Variance
(Dollars in
billions)

Money market,
trading and
investment
securities $9.3 $11.1 ($1.8) (16%) 4.42% 4.65% (0.23%)
Loans:
Commercial* 15.9 14.9 1.0 7 5.97 7.71 (1.74)
Mortgage 5.7 11.3 (5.6) (50) 7.49 7.17 0.32
Consumer 5.1 5.3 (0.2) (4) 10.48 10.78 (0.30)
Lease
financing 1.1 1.2 (0.1) (8) 8.07 7.81 0.26
Total loans 27.8 32.7 (4.9) (15) 7.19 8.03 (0.84)
Total earning
assets $37.1 $43.8 ($6.7) (15%) 6.50% 7.17% (0.67%)

Interest
bearing
deposits $22.9 $20.9 $2.0 10% 2.96% 3.51% (0.55%)
Short-term
borrowings 5.6 9.3 (3.7) (40) 3.07 5.15 (2.08)
Long-term
borrowings 3.9 8.2 (4.3) (52) 5.30 5.41 (0.11)
Total interest
bearing
liabilities 32.4 38.4 (6.0) (16) 3.26 4.32 (1.06)
Non-interest
bearing
sources of
funds 4.7 5.4 (0.7) (13)
Total funds $37.1 $43.8 ($6.7) (15%) 2.84% 3.78% (0.94%)
Net interest
spread 3.24% 2.85% 0.39%
Net interest
yield 3.66% 3.39% 0.27%

* Includes commercial construction loans




The increase in the net interest yield was mainly the result of lower
funding costs on short-term borrowings and interest bearing deposits
influenced in part by the reductions in interest rates by the Federal Reserve
and to strategies undertaken by management to reduce low yielding assets.
These positive variances were partially offset by the repricing of the
floating rate loan portfolios as well as the origination activity in a lower
rate environment and by the decreases in the mortgage loan portfolio due to
the sale of assets as explained below. The Federal Reserve lowered the
federal funds target rate by 325 basis points from June 30, 2007 to June 30,
2008.

The reduction in average earning assets for the second quarter of 2008
when compared to the same quarter in 2007 was principally due to the sale of a
significant portion of PFH's mortgage and consumer loan portfolios in the
first quarter of 2008, the recharacterization transaction completed in
December 2007, as well as the shutdown of the loan origination activities at
that subsidiary and the reduction in E-LOAN volume due to the restructuring
plan commenced in the fourth quarter of 2007. Also affecting the volume of
earning assets was a decrease in auto loans due to loan portfolio sales by E-
LOAN and declining overall unit sales in the market, and maturities of
investment securities. These reductions were partially offset by a higher
volume of commercial, construction, credit cards and personal loans. The
increase in average interest bearing deposits was principally in brokered
certificates of deposit. Refer to "Balance Sheets comments" for a general
description of the main factor that drove the increase in brokered
certificates of deposits during the third quarter of 2007.

The net interest yield for the quarter ended June 30, 2008 remained stable
compared to the 3.66% reported in the quarter ended March 31, 2008.


Provision for loan losses and credit quality

The provision for loan losses totaled $190.6 million or 163% of net
charge-offs for the quarter ended June 30, 2008, compared with $115.2 million
or 125%, respectively, for the same quarter in 2007, and $168.2 million or
172%, respectively, for the quarter ended March 31, 2008. The provision for
loan losses for the quarter ended June 30, 2008, when compared with the same
quarter in 2007, reflects higher net charge-offs by $24.5 million, mainly in
commercial loans by $21.9 million, consumer loans by $7.6 million,
construction loans by $5.8 million and lease financing by $0.9 million,
partially offset by a reduction of $11.7 million in mortgage loans. The latter
was influenced in part by the reduced mortgage loan volume at PFH due to the
restructuring activities that took effect in 2007 and beginning of 2008, and
the recharacterization transaction. The higher level of provision for the
quarter ended June 30, 2008 reflects current economic conditions, including a
recessionary cycle in Puerto Rico, and deteriorating credit quality trends,
primarily in the Puerto Rico commercial and construction loan portfolio and in
the U.S. consumer loan portfolio.

The increase of $18.8 million in net charge-offs for the quarter ended
June 30, 2008, compared with the quarter ended March 31, 2008, resulted
primarily from higher net charge-offs in commercial loans by $10.9 million,
construction loans by $5.8 million and consumer loans by $1.9 million.

The following table presents annualized net charge-offs to average loans
by loan category.




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

2nd Quarter 1st Quarter 2nd Quarter
2008 2008 2007

Commercial 1.17% 0.86% 0.54%
Construction 1.13 - -
Lease financing 1.65 1.80 1.24
Mortgage 0.93 0.86 0.87
Consumer 4.49 4.25 3.61
Total portfolio 1.76% 1.48% 1.16%



Exhibit A provides credit quality data, including certain key credit
quality metrics. The allowance for loan losses represented 2.47% of loans
held-in-portfolio at June 30, 2008, compared with 2.18% at March 31, 2008 and
1.76% at June 30, 2007.

Non-performing assets, excluding non-performing assets measured at fair
value pursuant to SFAS No. 159, totaled $1,026 million at June 30, 2008, and
increased by $160 million since March 31, 2008 primarily related to commercial
loans by $60 million, construction loans by $45 million, mortgage loans by $31
million, consumer loans by $6 million, and other real estate by $18 million.
Total non-performing loans measured at fair value pursuant to SFAS No. 159
amounted to $110 million at June 30, 2008 and March 31, 2008.


Non-interest income

Non-interest income totaled $193.6 million for the quarter ended June 30,
2008, compared with $203.4 million for the same quarter in 2007. The principal
variances within non-interest income included:

-- Net losses attributable to changes in the fair value of Popular
Financial Holdings' loans and bond certificates accounted at fair value
pursuant to SFAS No. 159 amounted to $35.9 million for the quarter ended June
30, 2008, which includes losses of $31.0 million related to the loans and $4.9
million associated with the bond certificates.

-- Lower net gain on sale of loans and valuation adjustments on loans
held-for-sale by $29.7 million for the second quarter of 2008, with PFH and E-
LOAN contributing with a reduction of approximately $34 million, primarily due
to the downsizing of those operations since 2007. Also, during the quarter
ended June 30, 2008, PFH recorded losses of approximately $7.1 million related
to $12.3 million in loans repurchased under payment default indemnification
clauses, which terminated in April 2008. Furthermore, during the quarter ended
June 30, 2008, E-LOAN completed a sale of approximately $99 million in auto
loans that were originated prior to the restructuring at that subsidiary in
late 2007. E-LOAN recognized approximately $4.2 million in losses related to
that sale.



The above were partially offset by:

-- As indicated previously in this press release, there were higher
combined net gains on sale and valuation adjustments of investment securities
and trading account profits by $32.9 million. Refer to "Balance sheet
comments" for further information on the main transactions that contributed to
this favorable change.

-- Higher other non-interest income by $22.9 million, mostly driven by
increases in other service fees, primarily related to the debit, credit card
and mortgage servicing operations.



Operating expenses

Operating expenses totaled $347.7 million for the quarter ended June 30,
2008, a decrease of $13.3 million, or approximately 4%, compared with the same
quarter in 2007. The principal reductions were in the categories of
professional fees and business promotion, primarily related to the downsizing
of the PFH and E-LOAN's operations. Partially offsetting those favorable
variances was $10.1 million in reserves for unfunded loan commitments recorded
during the second quarter of 2008, primarily related to commercial and
consumer lines of credit. These reserves for unfunded exposures remain
separate and distinct from the allowance for loan losses.


Income taxes

Income tax benefit amounted to $31.2 million for the quarter ended June
30, 2008, compared with income tax expense of $23.6 million for the same
quarter of 2007. This variance increase was primarily due to the losses in the
Corporation's U.S. operations and higher capital gains subject to a
preferential tax rate in Puerto Rico.

The Corporation's net deferred tax assets as of June 30, 2008, amounted to
$808 million, compared with $525 million as of December 31, 2007. The increase
in net deferred tax asset as of June 30, 2008 consisted principally of timing
differences in the recognition of the provision for loan losses under GAAP and
actual net charge offs under the tax code, net operating losses carryforward
in the U.S. operations and the measurement of certain loans and bonds
certificates of PFH at fair value pursuant to SFAS No. 159.


Balance sheet comments

The accompanying Exhibit A provides information on principal categories of
the Corporation's balance sheet at June 30, 2008, March 31, 2008, and June 30,
2007 and the following sections provide more detailed information.

Investment securities

The Corporation's portfolio of investment securities available-for-sale
and held-to-maturity totaled $7.9 billion at June 30, 2008, compared with $8.0
billion at March 31, 2008 and $9.4 billion at June 30, 2007. The Corporation
holds investment securities primarily for liquidity, yield enhancement and
interest rate risk management. The portfolio primarily includes very liquid,
high quality debt securities. The decline in the Corporation's available-for-
sale and held-to-maturity investment portfolios from June 30, 2007 to the same
date in 2008 was mainly associated with the maturities of securities.

The Corporation sold $2.4 billion in U.S. agency securities during the
quarter ended June 30, 2008 to reduce its vulnerability to declining interest
rates. The proceeds were reinvested primarily in U.S. agency securities, and
to a lesser extent mortgage-backed securities, with a longer average duration.
This sale generated a capital gain of approximately $28.3 million in the
second quarter of 2008.

Before the completion of the transaction, the Corporation had an "asset
sensitive" position, whereby net interest income simulations suggested that a
decline in the general level of interest rates would be expected to exert
downward pressure on the Corporation's future net interest income. To mitigate
this risk, the Corporation extended the duration of the securities portfolio.
The degree of asset sensitivity on the balance sheet was thus reduced with
these transactions.


Loans

A breakdown of the Corporation's total loan portfolio at period-end, which
represents the principal category of earning assets, follows:




(In billions)
June 30, March 31, June 30,
2008 2008 Variance 2007 Variance

Commercial $13.8 $13.7 $0.1 $13.6 $0.2
Construction 2.1 2.0 0.1 1.6 0.5
Mortgage 5.6 6.0 (0.4) 11.0 (5.4)
Consumer 5.0 5.1 (0.1) 5.4 (0.4)
Lease financing 1.1 1.1 - 1.2 (0.1)
Total $27.6 $27.9 ($0.3) $32.8 ($5.2)



Approximately $232 million in residential mortgage loans originated in
Puerto Rico from BPPR's loan portfolio were securitized into agency mortgage-
backed securities ("MBS") and sold in the secondary markets during the second
quarter of 2008. The MBS sale generated a gross gain of approximately $8.8
million for the quarter ended June 30, 2008 and the sale proceeds were
reinvested in U.S. agency securities. The objective of the sale was to reduce
the Corporation's level of mortgage loans retained in portfolio and enhance
its return on risk-weighted capital.

The decline in mortgage and consumer loans from June 30, 2007 to June 30,
2008 was also influenced by the recharacterization transaction in December
2007, the sale of PFH's loans to American General in the first quarter of
2008, auto loan sales by E-LOAN and unrealized losses due to SFAS No. 159 fair
value adjustments on the loan portfolio measured at fair value, which
primarily impacted consumer and mortgage loans. All these factors contributed
to the decline in loans from June 30, 2007 to the same date in 2008, together
with the impact of the portfolio run off at PFH and the downsizing of E-LOAN.


Deposits
A breakdown of the Corporation's deposits at period-end follows:



(In billions)
June 30, March 31, June 30,
2008 2008 Variance 2007 Variance

Demand * $5.1 $4.8 $0.3 $5.0 $0.1
Savings 9.9 10.0 (0.1) 9.5 0.4
Time 12.1 12.2 (0.1) 10.9 1.2
Total
deposits $27.1 $27.0 $0.1 $25.4 $1.7

* Includes non-interest and interest bearing demand deposits



Brokered certificates of deposit amounted to $2.1 billion at June 30,
2008, $2.5 billion at March 31, 2008 and $0.6 billion at June 30, 2007. One of
the strategies followed by management in response to the unprecedented market
disruptions during the later part of 2007 was the utilization of brokered
certificates of deposit to replace a portion of the exposure to uncommitted
lines of credit. Management reduced partially the overall outstanding balance
of brokered certificates of deposit during the quarter ended June 30, 2008 and
financed the reduction with short-term borrowings. The Corporation will place
less reliance on this funding source as liquidity conditions permit.


Borrowings and capital

The accompanying Exhibit A also provides information on outstanding
borrowings and stockholders' equity at June 30, 2008 and 2007, and March 31,
2008.

Stockholders' equity totaled $3.7 billion at June 30, 2008, compared with
$3.5 billion at March 31, 2008, and $3.7 billion at June 30, 2007. The
increase in stockholders' equity from March 31, 2008 to June 30, 2008 of $234
million was principally due to the $400 million preferred stock offering,
which qualifies as "Tier I" capital. This favorable variance was partially
offset by the impact of an unrealized loss position in the valuation of the
available-for-sale securities portfolio, net of tax, of $21 million as of June
30, 2008, compared with an unrealized gain position, net of tax, of $114
million as of March 31, 2008. Also, the increase resulting from the preferred
stock offering was partially offset by a reduction in retained earnings as a
result of the dividends paid.

Regulatory capital ratios also improved during the quarter ended June 30,
2008 as a result of the $400 million preferred stock offering. Below is a
summary of the Corporation's estimated regulatory capital ratios and the
estimated amount maintained over regulatory "well capitalized" thresholds as
of June 30, 2008:



($ in billions) Minimum "Excess
June 30, March 31, to be "well over "well
2008 2008 capitalized" capitalized"
Tier I risk-based
capital 10.50% 9.55% 6.00% $1.5
Total risk-based
capital 11.75% 10.82% 10.00% 0.6
Tier I leverage 8.50% 7.43% 5.00% 1.4



Average tangible common equity increased to 6.20% as of June 30, 2008
compared to 5.82% as of March 31, 2008. Management believes that the
enhancement of the Corporation's capital will allow the Corporation to
successfully meet the challenges of the current business environment.


Forward-Looking statements

The information included in this press release may contain certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on management's
current expectations and involve certain risks and uncertainties that may
cause actual results to differ materially from those expressed in forward-
looking statements. Factors such as changes in interest rate environment, as
well as general changes in business market and economic conditions may cause
actual results to differ from those contemplated by such forward-looking
statements. For a discussion of such risks and uncertainties, see the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2007
as well as its filings with the U.S. Securities and Exchange Commission. The
Corporation assumes no obligation to update any forward-looking statements to
reflect occurrences or unanticipated events or circumstances after the date of
such statements.


Popular, Inc. is a full service financial services provider based in
Puerto Rico with operations in Puerto Rico, the United States, the Caribbean
and Latin America. As the leading financial institution in Puerto Rico, with
over 300 branches and offices, the Corporation offers retail and commercial
banking services through its principal banking subsidiary, Banco Popular de
Puerto Rico, as well as auto and equipment leasing and financing, mortgage
loans, consumer lending, investment banking, broker-dealer and insurance
services through specialized subsidiaries. In the United States, the
Corporation operates Banco Popular North America ("BPNA"), including its
wholly-owned subsidiary E-LOAN, and Popular Financial Holdings ("PFH"). BPNA
is a community bank providing a broad range of financial services and products
to the communities it serves. BPNA operates branches in New York, California,
Illinois, New Jersey, Florida and Texas. E-LOAN offers online consumer direct
lending and provides an online platform to raise deposits for BPNA. PFH
primarily continues to carry a maturing loan portfolio and operates a mortgage
loan servicing unit. The Corporation, through its transaction processing
company, EVERTEC, continues to use its expertise in technology as a
competitive advantage in its expansion throughout the United States, the
Caribbean and Latin America, as well as internally servicing many of its
subsidiaries' system infrastructures and transactional processing businesses.
The Corporation is exporting its 114 years of experience through these regions
while continuing its commitment to meeting the needs of retail and business
clients through innovation, and to fostering growth in the communities it
serves.


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


Exhibit A follows



EXHIBIT A

POPULAR, INC.
Financial Summary
(Unaudited)

2nd Quarter
Quarter 2008 vs
Quarter ended 2nd Quarter ended 1st Quarter
June 30, 2008 vs 2007 March 31, 2008
2008 2007 $ Variance 2008 $ Variance

Summary of Operations
-- (In thousands,
except share
information)

Interest income $600,155 $784,911 ($184,756) $680,943 ($80,788)
Interest expense 262,270 413,494 (151,224) 323,754 (61,484)

Net interest income 337,885 371,417 (33,532) 357,189 (19,304)
Provision for loan
losses 190,640 115,167 75,473 168,222 22,418

Net interest income
after provision for
loan losses 147,245 256,250 (109,005) 188,967 (41,722)

Net gain on sale and
valuation adjustments
of investment
securities 27,763 1,175 26,588 47,940 (20,177)
Trading account
profit 16,711 10,377 6,334 4,464 12,247
(Loss) gain on sale
of loans and
valuation adjustments
on loans
held-for-sale (1,453) 28,294 (29,747) 68,745 (70,198)
Losses from changes
in fair value related
to instruments
measured at fair
value pursuant to
SFAS No. 159 (35,922) - (35,922) (3,020) (32,902)
Other non-interest
income 186,473 163,529 22,944 189,846 (3,373)

Total non-interest
income 193,572 203,375 (9,803) 307,975 (114,403)

Personnel costs 161,885 164,288 (2,403) 175,179 (13,294)
Amortization of
intangibles 2,490 2,813 (323) 2,492 (2)
Other operating
expenses 183,358 193,952 (10,594) 194,844 (11,486)

Total operating
expenses 347,733 361,053 (13,320) 372,515 (24,782)

Net (loss) income
before income tax (6,916) 98,572 (105,488) 124,427 (131,343)
Income tax (benefit)
expense (31,166) 23,622 (54,788) 21,137 (52,303)

Net income $24,250 $74,950 ($50,700) $103,290 ($79,040)

Net income applicable
to common stock $18,247 $71,972 ($53,725) $100,312 ($82,065)

Basic and diluted
earnings per common
share $0.06 $0.26 $0.36

Dividends declared
per common share $0.16 $0.16 $0.16

Average common
shares
outstanding 280,773,513 279,355,701 280,254,814
Average common
shares
outstanding -
assuming
dilution 280,773,513 279,443,859 280,254,814
Common shares
outstanding
at end of
period 280,983,132 279,326,816 280,547,741

Market value per
common share $6.59 $16.07 $11.66
Book value per
common share $11.10 $12.57 $11.71

Market
Capitalization
-- (In millions) $1,852 $4,489 $3,271

Selected Average
Balances
-- (In millions)
Total assets $40,845 $47,140 ($6,295) $42,705 ($1,860)
Investment
securities
available-for
-sale and held
-to-maturity 7,696 9,812 (2,116) 8,392 (696)
Trading and other
investment
securities 1,036 817 219 1,063 (27)
Total loans 27,766 32,766 (5,000) 28,834 (1,068)
Earning assets 37,074 43,828 (6,754) 39,068 (1,994)
Deposits 26,994 24,924 2,070 27,557 (563)
Borrowings 9,487 17,563 (8,076) 10,948 (1,461)
Interest-bearing
liabilities 32,351 38,422 (6,071) 34,329 (1,978)
Stockholders' equity 3,519 3,886 (367) 3,332 187

Selected Financial
Data at Period-End
-- (In millions)
Total assets $41,679 $46,985 ($5,306) $41,822 ($143)
Investment
securities
available-for
-sale and held
-to-maturity 7,935 9,404 (1,469) 8,034 (99)
Trading and other
investment
securities 740 837 (97) 814 (74)
Total loans 27,632 32,752 (5,120) 27,931 (299)
Earning assets 37,205 43,568 (6,363) 37,681 (476)
Deposits 27,116 25,386 1,730 26,967 149
Borrowings 10,000 17,109 (7,109) 10,392 (392)
Interest-bearing
liabilities 32,634 38,214 (5,580) 33,105 (471)
Stockholders' equity 3,706 3,697 9 3,472 234

Performance Ratios
Net interest yield * 3.66% 3.39% 3.66%
Return on assets 0.24 0.64 0.97
Return on common
equity 2.08 7.80 12.83

Credit Quality Data
-- (Dollars in
millions)
Net loans
charged-off $116.6 $92.1 $24.5 $97.8 $18.8
Allowance for loan
losses $653 $565 $88 $579 $74
Non-performing
assets, excluding
loans measured at
fair value $1,026 $971 $55 $866 $160
Non-performing
loans measured at
fair value
(SFAS No. 159) $110 - $110 $110 $0
Non-performing
loans, excluding
loans measured at
fair value, to
loans held-in
-portfolio 3.49% 2.67% 2.94%
Non-performing
loans measured at
fair value to
loans measured at
fair value
(SFAS No. 159) 13.07 - 11.91
Allowance for loan
losses to
non-performing
loans held-in
-portfolio 70.69 65.81 74.21
Allowance for loan
losses to loans
held-in-portfolio 2.47 1.76 2.18

* Not on a taxable equivalent basis.
Notes: Certain reclassifications have been made to prior periods to
conform with this quarter.


EXHIBIT A (CONTINUED)

POPULAR, INC.
Financial Summary
(Unaudited)
For the six months ended
June 30,
2008 2007 $ Variance
Summary of Operations -- (In
thousands, except share information)

Interest income $1,281,098 $1,558,506 ($277,408)
Interest expense 586,024 832,107 (246,083)

Net interest income 695,074 726,399 (31,325)
Provision for loan losses 358,862 211,513 147,349

Net interest income after provision
for loan losses 336,212 514,886 (178,674)

Net gain on sale and valuation
adjustments of investment securities 75,703 82,946 (7,243)
Trading account profit (loss) 21,175 (3,787) 24,962
Gain on sale of loans and valuation
adjustments on loans held-for-sale 67,292 31,728 35,564
Losses from changes in fair value
related to instruments measured at
fair value pursuant to SFAS No. 159 (38,942) - (38,942)
Other non-interest income 376,319 344,664 31,655

Total non-interest income 501,547 455,551 45,996

Personnel costs 337,064 342,663 (5,599)
Amortization of intangibles 4,982 5,796 (814)
Other operating expenses 378,202 387,922 (9,720)

Total operating expenses 720,248 736,381 (16,133)

Net income before income tax 117,511 234,056 (116,545)
Income tax (benefit) expense (10,029) 40,459 (50,488)

Net income $127,540 $193,597 ($66,057)

Net income applicable to common stock $118,559 $187,641 ($69,082)

Basic and diluted earnings per common
share $0.42 $0.67

Dividends declared per common share $0.32 $0.32

Average common shares outstanding 280,514,164 279,218,147
Average common shares outstanding -
assuming dilution 280,514,164 279,335,818
Common shares outstanding at end of
period 280,983,132 279,326,816

Market value per common share $6.59 $16.07
Book value per common share $11.10 $12.57

Market Capitalization --
(In millions) $1,852 $4,489

Selected Average Balances --
(In millions)
Total assets $41,775 $47,225 ($5,450)
Investment securities available-for-
sale and held-to-maturity 8,044 9,933 (1,889)
Trading and other investment
securities 1,050 853 197
Total loans 28,300 32,712 (4,412)
Earning assets 38,071 43,902 (5,831)
Deposits 27,276 24,630 2,646
Borrowings 10,218 17,940 (7,722)
Interest-bearing liabilities 33,340 38,542 (5,202)
Stockholders' equity 3,425 3,854 (429)

Performance Ratios
Net interest yield * 3.66% 3.31%
Return on assets 0.61 0.83
Return on common equity 7.11 10.32

Credit Quality Data --
(Dollars in millions)
Net loans charged-off $214.4 $168.9 $45.5
Allowance for loan losses $653 $565 $88
Non-performing assets, excluding
loans measured at fair value $1,026 $971 $55
Non-performing loans measured at fair
value (SFAS No. 159) $110 - $110
Non-performing loans, excluding loans
measured at fair value, to loans
held-in-portfolio 3.49% 2.67%
Non-performing loans measured at fair
value to loans measured at fair
value (SFAS No. 159) 13.07 -
Allowance for loan losses to non-
performing loans held-in-portfolio 70.69 65.81
Allowance for loan losses to loans
held-in-portfolio 2.47 1.76

* Not on a taxable equivalent basis.
Notes: Certain reclassifications have been made to prior periods to
conform with this quarter.



SOURCE Popular, Inc.


 
Thursday, July 17, 2008 7:05 AM

Share Socially:
BlinkListBlinkList del.icio.usdel.icio.us DiggDigg FurlFurl ma.gnoliama.gnolia redditreddit SimpySimpy SpurlSpurl BlogMarksBlogMarks NewsvineNewsvine Share on Facebook Sphere: Related Content

Related Press Releases

Contact Us | Terms of Use | Trademarks | Privacy Statement
(c) 2008-2009 Press Related