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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): July 9, 1996
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BANPONCE CORPORATION
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(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO NO. 0-13818 NO. 66-0416582
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (787) 765-9800
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On July 9, 1996, BanPonce Corporation (the "Corporation") announced by
way of a news release, its operational results for the quarter and six-month
period ended June 30, 1996. A copy of the Corporation's release, dated July 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
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(c) Exhibits
99(a) News release, dated July 9, 1996, announcing the Corporation and
subsidiaries earnings for the quarter and six-month period ended June 30, 1996.
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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: July 9, 1996 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
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<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
99(a) News release, dated July 9, 1996
</TABLE>
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[BANPONCE LOGO] BANPONCE CORPORATION
PO Box 362708
San Juan, Puerto Rico 00936-2708
For additional information contact: Telephone (809) 765-9800
Mr. Jorge A. Junquera
Senior Executive Vice President
Telephone (787) 754-1685
July 9, 1996 News Release
BANPONCE CORPORATION AND SUBSIDIARIES (THE CORPORATION)
EARNINGS FOR THE QUARTER AND SIX-MONTH PERIOD ENDED JUNE 30, 1996
The Corporation's net income for the second quarter of 1996 was $46.1 million,
compared with $34.1 million reported for the same quarter of 1995, an increase
of $12 million or 35.2%. Earnings per common share (EPS) for the quarter,
after adjusting for the stock split in the form of a dividend of one share for
each share outstanding effective on July 1, 1996, were $0.67, based on
66,001,180 average shares outstanding, compared with $0.49, based on 65,787,936
average shares outstanding for the quarter ended June 30, 1995. Net earnings
for the first quarter of 1996 were $45.1 million, or $0.65 per common share,
based on 65,949,872 average shares outstanding.
Return on assets (ROA) and return on common equity (ROE) for the second quarter
of 1996 were 1.16% and 16.57%, respectively. For the same period of 1995, the
Corporation reported ROA and ROE of 1.00% and 13.47%, respectively. For the
first quarter of 1996 these ratios were 1.17% and 16.39%.
For the first six months of 1996, the Corporation's net earnings reached $91.2
million, compared with $67.8 million for the same period in 1995. EPS for the
first six months of 1996 were $1.32, compared with $0.97 for the same period of
1995. ROA and ROE for the first six months of 1996 were 1.16% and 16.48%,
respectively. For the same period of 1995 these ratios were 1.03% and 13.71%.
On April 26, 1996, the Board of Directors authorized a two-for-one common stock
split effected in the form of a dividend, bringing total outstanding shares to
66,001,180. The new shares were distributed on July 1, 1996, to shareholders
of record as of June 14, 1996. As mentioned above, all per share data included
herein has been adjusted to reflect the stock split. In conjunction with the
split, the Corporation's Board of Directors also approved an increase in the
quarterly cash dividend for the third quarter of 1996, to $0.18 per common
share. This represents an increase of 20 percent over the $0.15 per share paid
in previous quarters.
Of the $12 million increase in net income over the same quarter last year, $4.6
million were attained at Banco Popular, the Corporation's largest subsidiary,
and $3.2 million at the holding company. The U.S. subsidiaries of the
Corporation contributed $2.5 million to the increase, while the other
subsidiaries of the group contributed the remaining $1.7 million of the
increase in net income.
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2-BANPONCE CORPORATION 1996 SECOND QUARTER RESULTS
The Corporation's results of operations for the quarter ended June 30, 1996,
reflected an increase of $26.1 million in net interest income and an increase
of $8.9 million in other revenues when compared with the same quarter of 1995.
These improvements were partially offset by a rise of $9 million in the
provision for loan losses, $7.1 million in operating expenses and $6.9 million
in income taxes.
The rise in net interest income for the quarter resulted mainly from an
increase of $2.2 billion in the average volume of earning assets, principally
in investment, money market and trading securities. Average loans also
increased, particularly in the commercial and mortgage portfolios. The
increase in the volume of earning assets was funded through a higher amount of
deposits and borrowings. The net interest yield for the quarter ended June 30,
1996, was 4.52%, compared with 4.47% for the second quarter of 1995. For the
first quarter of 1996 the net interest yield was 4.48%. For the first six
months of 1996 the net interest yield was 4.50%, compared with 4.53% for the
same period of 1995.
The increase in the provision for loan losses is the result of a rise in the
Corporation's loan portfolio and an increase in net charge offs. Net charge
offs for the quarter ended June 30, 1996, were $18.1 million or 0.80% of
average loans compared with $11.4 million or 0.56% for the second quarter of
1995, and $14.9 million or 0.68% for the first quarter of 1996. As a
percentage of average loans, net charge offs were 0.74% and 0.49% for the
six-month period ended on June 30, 1996 and 1995, respectively. Non-performing
assets were $152 million or 1.64% of ending loans at June 30, 1996, compared
with $148 million or 1.81%, at the end of the second quarter of 1995 and $151
million, or 1.70%, at March 31, 1996.
Other operating income increased $5.1 million, while other service fees and
service charges on deposit accounts rose $3.8 million and $1.8 million,
respectively. The increase in other operating income was mainly due to higher
gains on sale of mortgage loans realized by Equity One, combined with an
increase in daily rental income and higher gains realized on the sale of daily
rental units by the Corporation's leasing subsidiaries. Also contributing to
the growth in this revenue category were higher gains on sale of mortgage loans
realized by Puerto Rico Home Mortgage and higher income from investment banking
services provided by BP Capital Markets. These two subsidiaries were acquired
during the second quarter of 1995.
Banco Popular accounted for most of the $3.8 million increase in other service
fees. The items that contributed the most to this increase were credit and
debit card fees, fees related to the sale and administration of investment
products, fees related to transactions at point-of-sale (POS) terminals, which
continue its growing pace, and credit life insurance fees. Service charges on
deposit accounts increased $1.7 million at Banco Popular mainly due to a higher
activity on commercial accounts, higher volume of deposits and a higher volume
of charges related to returned items.
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3-BANPONCE CORPORATION 1996 SECOND QUARTER RESULTS
The Corporation experienced losses of $1.4 million in its trading portfolio,
most of which were recorded at Puerto Rico Home Mortgage on its mortgage-backed
securities.
Personnel costs increased $3.1 million as compared with the second quarter of
1995. Most of the increase was reflected in salaries and benefit expenses due
mainly to annual merit increases, business expansion and increased medical plan
costs. Other operating expenses increased $4 million, mostly in equipment
expenses, professional fees and business promotion. These increases were mostly
attributed to the growth in the Corporation's business activity, including the
costs related to the expansion of the electronic payment system, the growth in
the network of POS terminals and the development and promotion of new products
and services. Partially offsetting these increases was a reduction in the FDIC
assessment of $5 million, caused by a decrease in the assessment rate during the
third quarter of 1995, when the Bank Insurance Fund (BIF) reached its statutory
level.
The Corporation's total assets at June 30, 1996, amounted to $16.4 billion,
compared with $14.6 billion at June 30, 1995. Banco Popular accounted for $1.1
billion of that growth, while BP Capital and Equity One increased $352 million
and $216 million, respectively. Total assets at March 31, 1996, were $15.8
billion. At June 30, 1996, total loans amounted to $9.3 billion, compared with
$8.2 billion a year ago and $8.9 billion at March 31, 1996. Commercial loans
reflected the major growth, particularly at Banco Popular.
The allowance for loan losses amounted to $178.3 million as of June 30, 1996, or
1.92% of loans, compared with $158.7 million or 1.94% at the same date in 1995.
At March 31, 1996, the allowance for loan losses totaled $174.7 million or 1.97%
of loans. The allowance as a percentage of nonperforming assets was 117.3% at
June 30, 1996, compared with 107.1% at the end of the second quarter of 1995 and
116.0% at March 31, 1996.
Total deposits were $10.6 billion at June 30, 1996, compared with $9.6 billion
at June 30, 1995, and $10.2 billion at the end of the first quarter of 1996.
Most of the increase took place at Banco Popular, where total deposits increased
$963 million.
At June 30, 1996, stockholders equity totaled $1.19 billion, compared with
$1.07 billion at the same date last year. Stockholders' equity was $1.16
billion at March 31, 1996.
The market value of the Corporation's common stock at June 30, 1996, was $22.50
per share, compared with $17.75 at June 30, 1995, and $23.13 at March 31, 1996.
The Corporation's market capitalization at June 30, 1996, was $1.5 billion,
compared with $1.2 billion at June 30, 1995, and $1.5 billion at March 31, 1996.
At June 30, 1996, the Corporation's common stock had a book value per share of
$16.47.
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4-BANPONCE CORPORATION 1996 SECOND QUARTER RESULTS
The market value of the Corporation's preferred stock at June 30, 1996, was
$26.50 per share compared with $27.00 at June 30, 1995, and $27.25 at March 31,
1996.
Continuing with the Corporation's strategic expansion plans, on April 26, 1996,
the Corporation announced the signing of a purchase agreement to acquire all of
the common stock of Comban Corp. Comban Corp is the bank holding company of
Commerce National Bank based in City of Commerce, California. Commerce National
Bank, with assets of approximately $71 million and deposits of $64 million at
May 31, 1996, operates three branches in California located in City of
Commerce, Montebello and Downey. This transaction is now waiting the approval
of the regulatory agencies. In addition, during this quarter Pioneer Bank, a
commercial bank operating in Chicago, opened its fifth full service branch. The
new branch is located in Humboldt Park.
As this is being written, the U.S. Congress is debating an increase to the
minimum wage. Tied to this legislation is a provision that will affect the
future of Section 936 of the U.S. Internal Revenue Code. The bill approved by
the U.S. House of Representatives would repeal the Qualified Possession Source
Investment Income ("QPSII") retroactively to January 1, 1996. The U.S. Senate
version contemplates the repeal of QPSII effective July 1, 1996. Under both
versions the tax credit available to companies operating under this section on
the island would be phased-out gradually. If finally enacted into law, the
repeal of QPSII would result in an increase in the Corporation's cost of funds,
since these funds would be replaced by conventional funds. At June 30, 1996,
the Corporation had $2.9 billion in 936 funds representing 19.15% of its
liabilities.
* * *
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BANPONCE CORPORATION
Financial Summary
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the six months ended
1996 1995 Second June 30
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1996-1995
Second First Second Percent Percent
Quarter Quarter Quarter Variance 1996 1995 Variance
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Summary of Operations
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $309,975 $302,927 $268,818 15.31% $612,902 $519,037 18.08%
Interest expense 141,767 140,467 126,698 11.89 282,234 239,389 17.90
-------- -------- -------- ----- -------- -------- -----
Net interest income 168,208 162,460 142,120 18.36 330,668 279,648 18.24
Provision for loan losses 21,672 21,273 12,646 71.37 42,945 24,344 76.41
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Net interest income after provision
for loan losses 146,536 141,187 129,474 13.18 287,723 255,304 12.70
Other operting income 50,720 50,325 39,956 26.94 101,045 77,513 30.36
Gain (loss) on sale of securities (20) 729 66 709 112
Trading account profit (loss) (1,383) 938 350 (445) 300
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Total other income 49,317 51,992 40,372 22.16 101,309 77,925 30.01
Salaries and benefits 61,766 61,733 57,803 6.86 123,499 114,894 7.49
Profit sharing 5,685 6,070 6,506 (12.62) 11,755 9,833 19.55
Other operating expenses 64,395 62,896 60,413 6.59 127,291 118,313 7.59
-------- -------- -------- ----- -------- -------- -----
Total operating expenses 131,846 130,699 124,722 5.71 262,545 243,040 8.03
-------- -------- -------- ----- -------- -------- -----
Income before income tax 64,007 62,480 45,124 41.85 126,487 90,189 40.25
Income tax 17,952 17,338 11,063 62.27 35,290 22,387 57.64
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Net income $ 46,055 $ 45,142 $ 34,061 35.21 $ 91,197 $ 67,802 34.50
======== ======== ======== ===== ======== ======== =====
Net income applicable to common stock $ 43,968 $ 43,055 $ 31,973 37.52 $ 87,022 $ 63,627 36.77
======== ======== ======== ===== ======== ======== =====
Earnings per common share:
Net Income* $ 0.67 $ 0.65 $ 0.49 37.07 $ 1.32 $ 0.97 36.32
-------- -------- -------- ----- -------- -------- -----
Average common shares outstanding* 66,001,180 65,949,872 65,787,936 65,975,526 65,760,742
Common shares outstanding at end of period* 66,001,180 65,949,872 65,787,936 66,001,180 65,787,936
</TABLE>
*Restated to reflect the stock split in the form of a dividend of one share for
each share outstanding effective on July 1, 1996.
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BANPONCE CORPORATION
FINANCIAL SUMMARY
(In thousands)
<TABLE>
<CAPTION>
Second FOR THE SIX MONTHS ENDED
1996 1995 Quarter JUNE 30,
---------------------------------------- 1996-1995 ------------------------------------
SECOND First Second Percent Percent
QUARTER Quarter Quarter Variance 1996 1995 Variance
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<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED AVERAGE BALANCES
Total assets $15,988,100 $15,556,830 $13,616,347 17.42 $15,772,465 $13,276,966 18.80
Loans 9,033,179 8,748,657 8,089,952 11.66 8,890,918 7,977,472 11.45
Earning assets 15,020,118 14,630,906 12,814,604 17.21 14,825,512 12,443,354 19.14
Interest-bearing liabilities 12,464,297 12,209,571 10,552,081 18.12 12,336,934 10,213,462 20.79
Stockholders' equity 1,167,856 1,156,888 1,052,106 11.00 1,162,372 1,036,237 12.17
PERFORMANCE RATIOS
Net interest yield* 4.52% 4.48% 4.47% 4.50% 4.53%
Return on assets 1.16 1.17 1.00 1.16 1.03
Return on common equity 16.57 16.39 13.47 16.48 13.71
CREDIT QUALITY DATA
Nonperforming assets $ 152,079 $ 150,621 $ 148,223 2.60 $ 152,079 $ 148,223 2.60
Net loans charged-off 18,066 14,942 11,379 58.77 33,008 19,408 70.07
Allowance for loan losses 178,330 174,724 158,734 12.35 178,330 158,734 12.35
Nonperforming assets to total assets 0.92% 0.95% 1.02% 0.92% 1.02%
Allowance for losses to loans 1.92 1.97 1.94 1.92 1.94
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets $16,442,137 $15,805,083 $16,442,137 $14,573,302 12.82
Loans................................ 9,279,333 8,850,078 9,279,333 8,200,328 13.16
Earning assets....................... 15,334,290 14,801,284 15,334,290 13,601,079 12.74
Interest-bearing liabilities......... 12,833,828 12,434,422 12,833,828 11,430,070 12.28
Stockholders' equity................. 1,187,138 1,159,570 1,187,138 1,073,170 10.62
</TABLE>
*Not on a taxable equivalent basis
2
