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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 9, 1996
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BANPONCE CORPORATION
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(Exact name of registrant as specified in its charter)
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COMMONWEALTH OF PUERTO RICO NO. 0-13818 NO. 66-0416582
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(State or other jurisdiction of incorporation) (Commission (IRS Employer
File Number) Identification No.)
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (809) 765-9800
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(Former name or former address, if changed since last report)
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ITEM 5. Other Events
On January 9, 1996, BanPonce Corporation (the "Corporation") announced
by way of a news release, its operational results for the year ended December
31, 1995. A copy of the Corporation's release, dated January 9, 1996, is
attached hereto as Exhibit 99(a) and is hereby incorporated by reference.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99(a) News release, dated January 9, 1996, announcing the Corporation
and subsidiaries earnings for the year ended December 31, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BANPONCE CORPORATION
(Registrant)
Date: January 9, 1996
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By: /s/ Amilcar L. Jordan, Esq.
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Name : Amilcar L. Jordan, Esq.
Title : Senior Vice President and Comptroller
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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99(a) News release, dated January 9, 1996
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EXHIBIT 99(a)
(BANPONCE LETTERHEAD)
For additional information:
Jorge A. Junquera
Senior Executive Vice President
Telephone (809) 754-1685
January 9, 1996
News Release
BanPonce Corporation and subsidiaries earnings
for the year ended December 31, 1995
BanPonce Corporation (the Corporation) today announced net income of $146.4
million for the year ended December 31, 1995, an increase of $21.6 million or
17.3% over the net income of $124.7 million reported in 1994. Earnings per
common share (EPS) for the year were $4.19, based on 32,908,150 average shares
outstanding compared with $3.67 for 1994, based on 32,798,243 average shares
outstanding.
The Corporation's return on assets (ROA) and return on common equity (ROE) for
1995 were 1.04% and 14.22%, respectively. In 1994, the Corporation reported
ROA and ROE of 1.02% and 13.80%, respectively.
Net earnings for the last quarter of 1995 reached $40.3 million or $1.15 per
common share, based on 32,948,636 average shares outstanding. For the last
quarter of 1994 net earnings totaled $32.6 million or $0.93 per common share,
based on 32,838,128 average shares outstanding. ROA and ROE for the fourth
quarter of 1995 were 1.05% and 14.82%, respectively, compared with 1.03% and
13.54% for the same period of 1994.
The increase in the Corporation's net earnings as compared with the prior year
was due to an increase of $48.7 million in net interest income and an increase
of $32.1 million in other revenues. These improvements were partially offset
by increases of $39.1 million in operating expenses, $10.8 million in the
provision for loan losses and $9.7 million in income taxes.
The increase in net interest income resulted mainly from the growth of $1.8
billion in the average volume of earning assets. The increase in the volume of
earning assets was funded through a higher amount of deposits and borrowings.
The net interest yield for the year ended December 31, 1995, was 4.41%,
compared with 4.70% for 1994.
The increase in the provision for loan losses was mainly due to the increase
in the Corporation's loan portfolio and the rise in net charge-offs. Net
charge-offs for the year ended December 31, 1995, were $50.0 million or 0.61%
of average loans, compared with $36.9 million or 0.52% of average loans for
1994.
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2 - BANPONCE CORPORATION YEAR-END RESULTS
Other service fees and service charges on deposit accounts increased $12.5
million and $6.9 million, respectively, while other operating income rose $6.0
million. The increase in other service fees was mainly attained at Banco Popular
de Puerto Rico. The key factors for the rise in this revenue category were
increases in mortgage servicing fees, credit card fees, fees related to the sale
and administration of investment products, credit life insurance fees and fees
collected on the growing volume of transactions at point-of-sale (POS) terminals
and other electronic transactions. Service charges on deposits increased $5.8
million at Banco Popular largely attributed to a broader variety of services
offered to the commercial accounts together with revisions made to the fee
structure and higher fees collected on returned checks. The increase in other
operating income was mainly due to higher gains on sale of mortgage loans
realized by Equity One and the contribution of the new subsidiary Puerto Rico
Home Mortgage together with the income on investment banking and underwriting
services provided by BP Capital Markets. In addition, the other operating
revenues of the Corporation's leasing subsidiaries also increased due to higher
gains on sales of daily rental units and a higher daily rental income.
The gains on sale of investment securities available-for-sale for 1995 amounted
to $5.4 million, as compared with $0.2 million for 1994. Trading transactions
contributed with $1.8 million to the Corporation's earnings in the current year
compared with $0.2 million last year.
Personnel costs increased $23.3 million compared with 1994, of which $4.7
million represents expenses of the Corporation's new subsidiaries, Banco
Popular, FSB, Puerto Rico Home Mortgage and BP Capital Markets. The rise in
personnel costs is also related to normal annual merit increases, business
expansion and an increase in medical plan costs and in the pension and
postretirement benefits expenses. In addition, the implementation of a
voluntary early retirement plan at the beginning of 1995 for employees meeting
certain eligibility requirements, represented a cost of $4.6 million to the
Corporation during the first two quarters of 1995. Other operating expenses
increased $15.8 million compared with the prior year. The increase in other
operating expenses was mostly in equipment, net occupancy, communications and
supplies expenses. These increases are mostly attributed to the growth and
expansion of the Corporation's business activities and the costs related to
the expansion of the electronic payment system, the growth in the network of
POS terminals and the development of new products and services. In addition,
Banco Popular increased its reserve for sundry losses to cover losses incurred
in the U.S. Virgin Islands as a result of hurricane Marilyn. The operations
acquired during 1995--Banco Popular, FSB, Puerto Rico Home Mortgage and BP
Capital Markets--were responsible for $7.3 million of the increase in other
operating expenses. Partially offsetting these increases was a decrease of
$9.3 million due to the reduction in the FDIC assessment rate during the third
quarter of 1995 retroactive to June 1, 1995, when the Bank Insurance Fund
(BIF) reached the statutory level. The increase in income tax results from a
higher pre-tax income.
The Corporation's total assets at December 31, 1995, amounted to $15.7 billion,
compared with $12.8 billion at December 31, 1994. Most of the growth relates to
Banco Popular de Puerto Rico, which increased $1.2 billion in total assets, and
BP Capital Markets, which had $1 billion in total assets at December 31, 1995.
In addition, Banco Popular, FSB and Puerto Rico Home Mortgage had total assets
of $273 million and $108 million, respectively, at the end of 1995. Total loans
amounted to $8.7 billion at December 31, 1995, compared with $7.8 billion a
year ago. Commercial loans
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3 - BANPONCE CORPORATION YEAR-END RESULTS
reflected the largest growth, followed by mortgage loans, which also rose,
particularly at Banco Popular, Equity One and Puerto Rico Home Mortgage.
In November, the Financial Accounting Standards Board (FASB) issued a Special
Report, "A Guide to Implementation of Statement 115 on Accounting for Certain
Investment in Debt and Equity Securities". In conjunction with the issuance
of this Special Report the FASB provided for a one-time "window" to
reclassify securities from the held-to-maturity portfolio, to
available-for-sale or trading before January 1, 1996, without calling into
question the intent to hold other debt securities to maturity in the future. As
a result of this window, the Corporation transferred $1.3 billion from the
securities held-to-maturity account to the available-for-sale account.
The allowance for loan losses amounted to $168.4 million as of December 31,
1995, or 1.94% of loans, compared with $153.8 million or 1.98% at the same
date in 1994. Non-performing assets at December 31, 1995, were $156.5 million
or 1.80% of loans, compared with $107.6 million or 1.38% at the end of 1994.
Total deposits were $9.9 billion at December 31, 1995, compared with $9.0
billion at December 31, 1994. Most of the increase was attained at Banco
Popular, where total deposits increased $637.7 million. Also contributing to
this increase were $183 million in deposits of Banco Popular, FSB, a new
subsidiary of the Corporation operating in New Jersey, which acquired from the
Resolution Trust Corporation four branches in January 1995 and opened two new
branches in August.
On December 7, 1995, the Corporation issued $125 million in subordinated debt
due on December 15, 2005, with an interest rate of 6.75%. The proceeds of this
issuance will be used for the Corporation's business expansion.
At December 31, 1995, stockholders' equity was $1.1 billion, compared with
$1.0 billion at December 31, 1994. The allowance for unrealized holding gains
on securities available-for-sale net of deferred taxes, as required by SFAS
115, amounted to $15.9 million at December 31, 1995, compared with an
allowance for unrealized losses, net of taxes, of $19.4 million a year ago.
The market value of the Corporation's common stock at December 31, 1995, was
$38.75, compared with $28.125 at December 31, 1994. At December 31, 1995, the
Corporation's common stock had a book value per share of $31.60. At the same
date, the Corporation's market capitalization was $1.3 billion.
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BANPONCE CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
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Fourth YEAR ENDED
1995 1994 Quarter DECEMBER 31
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Fourth Third Fourth Percent Percent
Quarter Quarter Quarter Variance 1995 1994 Variance
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SUMMARY OF OPERATIONS
Interest income $ 298,312 $ 288,459 $ 239,034 24.80% $1,105,807 $ 887,140 24.65%
Interest expense 142,191 140,044 101,583 39.98 521,624 351,633 48.34
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Net interest income 156,121 148,415 137,451 13.58 584,183 535,507 9.09
Provision for loan losses 21,227 18,987 12.544 69.22 64,558 53.788 20.02
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Net interest income after provision
for loan losses 134,894 129,428 124,907 8.00 519,625 481,719 7.87
Other operating income 44,155 44,588 37,904 16.49 166,256 140,853 18.04
Gain on sale of securities 3,306 1,950 157 5,368 224 2,296,43
Trading account profit (loss) 1,192 293 (96) 1,785 227 686.34
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Total other income 48,653 46,831 37,965 28.15 173,409 141,304 22.72
Salaries and benefits 57,250 57,928 52,474 9.10 230,072 206,542 11.39
Profit sharing 4,735 4,435 3,212 47.42 19,003 19,205 (1.05)
Other operating expenses 62,284 57,233 58,580 6.32 237,829 222,099 7.08
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Total operating expenses 124,269 119,596 114,266 8.75 486,904 447,846 8.72
Income before income tax and dividends on
preferred stock of Banco Popular 59,278 56,663 48,606 21.96 206,130 175,177 17.67
Income tax 19,026 18,356 15,980 19.06 59,769 50,043 19.44
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40,252 38,307 32,626 23.37 146,361 125,134 16.96
Dividends on preferred stock of
Banco Popular 385 (100.00)
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Net income $ 40,252 $ 38,307 $ 32,626 23.37 $ 146,361 $ 124,749 17.32
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Net income applicable to common stock $ 38,164 $ 36,220 $ 30.538 24.97 $ 138,011 $ 120,504 14.53
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Earnings per common share:
Net income $1.15 $1.10 $0.93 23.48 $4.19 $3.67 14.15
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Average common shares outstanding 32,948,636 32,922,318 32,838,128 32,908,150 32,798,243
Common shares outstanding at end of period 32,948,836 32,922,318 32,838,128 32,948,636 32,838,128
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BANPONCE CORPORATION
Financial Summary
(in thousands)
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1995 1994 THIRD YEAR ENDED
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1995-1994 ---------------------------------------
FOURTH THIRD FOURTH PERCENT PERCENT
QUARTER QUARTER QUARTER VARIANCE 1995 1994 VARIANCE
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SELECTED AVERAGE BALANCES
Total assets $15,181,981 $14,708,551 $12,585,555 20.63 $14,117,972 $12,225,530 15.48
Loans 8,547,855 8,360,391 7,644,862 11.81 8,217,756 7,107,746 15.62
Earning assets 14,276,055 13,787,514 11,749,025 21.51 13,244,097 11,389,680 16.28
Interest-bearing liabilities 11,907,511 11,596,367 9,571,345 24.41 10,989,023 9,330,088 17.78
Stockholders' equity 1,121,147 1,087,119 994,186 12.77 1,070,464 924,869 15.74
PERFORMANCE RATIOS
Net interest yield* 4.37% 4.31% 4.68% 4.41% 4.70%
Return on assets 1.05 1.03 1.03 1.04 1.02
Return on common equity 14.82 14.55 13.54 14.22 13.80
CREDIT QUALITY DATA
Nonperforming assets $156,480 $155,915 $107,635 45.38 $156,480 $107,635 45.38
Net loans charged-off 17,264 13,291 8,175 111.18 49,963 36,900 35.40
Allowance for loan losses 168,393 164,430 153,798 9.49 168,393 153,798 9.49
Nonperforming assets to total assets 1.00% 1.04% 0.84% 1.00% 0.84%
Allowance for losses to loans 1.94 1.94 1.98 1.94 1.98
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets $14,934,595 $15,673,766 $12,778,358 22.66
Loans 8,486,899 8,678,234 7,781,329 11.53
Earning assets 13,967,926 14,668,574 11,843,806 23.85
Interest-bearing liabilities 11,745,871 12,236,978 9,612,955 27.30
Stockholders' equity 1,102,047 1,141,326 1,002,423 13.86
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* Not on a taxable equivalent basis
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