<PAGE> 1
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): October 7, 1996
BANPONCE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO NO. 0-13818 NO. 66-0416582
- ---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (787) 765-9800
-----------------
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events
On October 7, 1996, BanPonce Corporation (the "Corporation") announced by
way of a news release, its operational results for the quarter and nine-month
period ended September 30, 1996. A copy of the Corporation's release, dated
October 7, 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 October 7, 1996, announcing the Corporation and
subsidiaries earnings for the quarter and nine-month period ended September 30,
1996.
<PAGE> 3
Exhibit Index
Exhibit Number Description
-------------- -----------
99(a) News release, dated October 7, 1996
<PAGE> 4
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: October 9, 1996 By: /S/ Amilcar L. Jordan, Esq.
-----------------------------------
Name : Amilcar L. Jordan, Esq.
Title : Senior Vice President and
Comptroller
<PAGE> 1
BANPONCE (letterhead) BANPONCE CORPORATION
CORPORATION
For additional information contact:
Jorge A. Junquera
Senior Executive Vice President
(787) 754-1685
October 7, 1996
News Release
BANPONCE CORPORATION AND SUBSIDIARIES (THE CORPORATION)
EARNINGS FOR THE QUARTER AND NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996
BanPonce Corporation reported net income of $46.3 million for the third
quarter of 1996, compared with $38.3 million reported for the same quarter of
1995, an increase of $8.0 million or 20.8%. Earnings per common share (EPS) for
the quarter were $0.67, based on 66,048,673 average shares outstanding,
compared with $0.55, based on 65,844,636 average shares outstanding for the
quarter ended September 30, 1995, after adjusting for the stock split in the
form of a dividend of one share for each share outstanding effective on July 1,
1996. Net earnings for the first and second quarter of 1996 were $45.1 million
and $46.1 million, respectively, or $0.65 and $0.67 per common share, based on
65,949,872 and 66,001,180 average shares outstanding.
Return on assets (ROA) and return on common equity (ROE) for the third
quarter of 1996 were 1.10% and 15.94%, respectively. For the same period of
1995, the Corporation reported ROA and ROE of 1.03% and 14.55%, respectively.
For the second quarter of 1996 these ratios were 1.16% and 16.56%.
For the first nine months of 1996, the Corporation's net earnings amounted
to $137.5 million, compared with $106.1 million for the same period in 1995.
EPS for the first nine months of 1996 were $1.99, compared with $1.52 for the
same period of 1995. ROA and ROE for the first nine months of 1996 were 1.14%
and 16.29%, respectively. For the same period of 1995 these ratios were 1.03%
and 14.00%.
On April 26, 1996, the Board of Directors authorized a two-for-one common
stock split effected in the form of a dividend, which doubled the total
outstanding shares at the time. The new shares were distributed on July 1,
1996, to shareholders of record as of June 14, 1996. All per share data included
herein has been adjusted to reflect the stock split.
<PAGE> 2
2 - BANPONCE CORPORATION 1996 THIRD QUARTER RESULTS
The Corporation's results of operations for the quarter ended September
30, 1996, reflected an increase of $23.8 million in net interest income and an
increase of $4.6 million in other revenues when compared with the same quarter
of 1995. These improvements were partially offset by an increase of $15.9
million in operating expenses, $3.4 million in the provision for loan losses
and $1.1 million in income taxes.
The rise in net interest income for the quarter resulted mainly from an
increase of $2.0 billion in the average volume of earning assets. Investment
securities, trading and money market investments accounted for $1.0 billion of
that increase, while average loans accounted for the remaining $ 1.0 billion
increase. Most loan categories showed increases. The increase in the volume of
earning assets was funded through a higher amount of deposits and borrowings.
The net interest margin (NIM) for the quarter ended September 30, 1996, was
4.40%, compared with 4.33% for the third quarter of 1995. For the first and
second quarter of 1996 the NIM was 4.48% and 4.52%, respectively. For the first
nine months of 1996 the NIM was 4.47%, compared with 4.46% for the same period
of 1995.
The growth in the Corporation's loan portfolio and an increase in net
charge-offs were the major reasons for the increase in the provision for loan
losses. Net charge-offs for the quarter ended September 30, 1996, were $18.8
million or 0.80% of average loans compared with $13.3 million or 0.64% for the
third quarter of 1995, and $18.1 million or 0.80% for the second quarter of
1996. As a percentage of average loans, net charge-offs were 0.76% and 0.54%
for the nine-month periods ended on September 30, 1996 and 1995, respectively.
Non-performing assets were $153 million or 1.60% of ending loans at September
30, 1996, compared with $156 million or 1.84% at the end of the third quarter
of 1995 and $152 million or 1.64% at June 30, 1996.
Other service fees and service charges on deposit accounts rose $2.6
million and $1.4 million, respectively, partially offset by a reduction of $1.9
million in other operating income. Banco Popular accounted for $2.1 million of
the increase in other service fees. This rise was mainly reflected in fees
related to transactions at point-of-sale (POS) terminals, credit and debit card
fees and commissions earned on the sale and administration of investment
products. Service charges on deposit accounts increased $1.2 million at Banco
Popular mainly due to a higher activity on
<PAGE> 3
3 - BANPONCE CORPORATION 1996 THIRD QUARTER RESULTS
commercial accounts and higher volume of deposits. The reduction in other
operating income was primarily a result of write-downs recorded on impaired
assets and a reduction in the gain on sale of mortgage loans, partially offset
by higher daily rental income realized by the Corporation's leasing
subsidiaries. During this quarter, the Corporation realized $4.9 million in
gains on sale of securities. A significant portion of those gains was realized
on the sale of equity securities by one of the Corporation's subsidiaries.
Personnel costs increased $5.7 million as compared with the third quarter
of 1995. Most of the increase was reflected in salaries and benefits expenses
due mainly to annual merit increases, greater use of incentive pay for
increased sales efforts and the Corporation's business expansion. Other
operating expenses increased $10.2 million, mostly in professional fees,
business promotion, equipment expenses and communications. These increases were
principally 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 in accordance with the Corporation's ongoing
strategic initiatives. Also increasing other operating expenses in this quarter
was a $1.15 million expense recorded by Banco Popular, FSB, as a result of a
one-time assessment to capitalize the Savings Association Insurance Fund
(SAIF).
The Corporation's total assets at September 30, 1996, amounted to $16.8
billion, compared with $14.9 billion at September 30, 1995. Banco Popular
accounted for $865 million of that growth, while BP Capital and Equity One
increased $454 million and $202 million, respectively. Total assets at June 30,
1996, were $16.4 billion. At September 30, 1996, total loans amounted to $9.6
billion, compared with $8.5 billion a year ago and $9.3 billion at June 30,
1996. Commercial loans reflected the major growth, particularly at Banco
Popular.
The allowance for loan losses amounted to $182.4 million as of September
30, 1996, or 1.90% of loans, compared with $164.4 million or 1.94% at the same
date in 1995. At June 30, 1996, the allowance for loan losses totaled $178.3
million or 1.92% of loans. The allowance as a percentage of non-performing
assets was 118.9% at September 30, 1996, compared with 105.5% at the end of
the third quarter of 1995 and 117.0% at June 30, 1996.
<PAGE> 4
4 - BANPONCE CORPORATION 1996 THIRD QUARTER RESULTS
Total deposits were $10.6 billion at September 30, 1996, compared with
$9.7 billion at September 30, 1995, and $10.6 billion at the end of the second
quarter of 1996. Banco Popular accounted for $768 million of the increase in
deposits.
At September 30, 1996, stockholders' equity totaled $1.22 billion,
compared with $1.10 billion at the same date last year. Stockholders' equity
was $1.19 billion at June 30, 1996. The market value of the Corporation's
common stock at September 30, 1996, was $27.00 per share, compared with $19.38
at September 30, 1995, and $22.50 at June 30, 1996. The Corporation's market
capitalization at September 30, 1996, was $1.8 billion, compared with $1.3
billion at September 30, 1995, and $1.5 billion at June 30, 1996. At September
30, 1996, the Corporation's common stock had a book value per share of $16.96.
Acquisitions continue to be an integral component of the Corporation's
diversification strategy, focusing its expansion plans on the mainland and in
the Caribbean. On September 30, 1996, the Corporation acquired all the common
stock of Comban Corp, which is the bank holding company of Commerce National
Bank, based in City of Commerce, California. This acquisition brings to the
Corporation $75 million in assets and $63 million in deposits at September 30,
1996, and three branches in California, where Banco Popular already operates a
branch. The new branches are located in City of Commerce, Montebello and
Downey.
In September 26, the Corporation signed a letter of intent to acquire CBC
Bancorp and its two state banking subsidiaries. CBC Bancorp is the parent
company of Capitol Bank & Trust in Chicago and Capitol Bank of Westmont. CBC
Bancorp, with assets of $315 million and deposits of $280 million at June 30,
1996, operates three branches in Chicago and Westmont, Illinois. Through this
acquisition the Corporation will increase its existing franchise in the Chicago
market to approximately $750 million in assets, $650 million in deposits and
eight branches.
In August, the U.S. Congress approved legislation that increased the
federal minimum wage and repealed Section 936 of the U.S. Internal Revenue
Code. In general terms, Section 936 provided U.S. companies (936 Corporations)
operating on the island with a tax credit against the federal tax liability on
income derived from business operations and investment income in Puerto Rico.
The bill approved repealed the Qualified Possession Source Investment Income
("QPSII") for taxable
<PAGE> 5
5 - BANPONCE CORPORATION 1996 THIRD QUARTER RESULTS
years beginning after June 30, 1996, while the income and the wage credit will
be phased out in 10 years. The tax-exempt status of passive investments in
Puerto Rico held by 936 Corporations has created a local funds market whose
cost is usually below that of the U.S. mainland or the Eurodollar market. The
Corporation anticipates a substantial reduction in the volume of 936 funds,
although as of this writing there have been no significant changes in the local
market. Most of these funds will be replaced with conventional funds, which may
cause the cost of funds to slightly increase and the net interest income to
decrease during the fourth quarter of 1996. The anticipated negative impact in
the net interest income is expected to be partially offset by a decrease in the
cost of complying with various investment requirements imposed by local
regulations to all recipients of 936 funds. At September 30, 1996 the
Corporation maintained $3.2 billion in 936 funds, representing 20.6% of its
liabilities.
On September 30, 1996, President Clinton signed into law, as part of the
Omnibus Budget Reconciliation Act, the "Deposit Insurance Funds Act of 1996"
(the Act). The Act provides for the capitalization of the Savings Association
Insurance Fund (SAIF) to its designated reserve ratio of 1.25% of insured
deposits in thrift institutions. In doing so, the Act gives the FDIC the legal
authority to impose a special one-time assessment on all SAIF insured
institutions. As previously mentioned and as a result of the above, Banco
Popular, FSB, an indirect subsidiary of the Corporation, recognized a $1.15
million expense related to this one-time assessment at the end of this quarter.
* * *
<PAGE> 6
BANPONCE CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
<TABLE>
<CAPTION>
Third FOR THE NINE MONTHS ENDED
1996 1995 Quarter SEPTEMBER 30
----------------------------------- 1996-1995 -----------------------------------
THIRD Second Third Percent Percent
QUARTER Quarter Quarter Variance 1996 1995 Variance
----------------------------------- --------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income $327,097 $309,975 $288,459 13.39% $939,999 $807,495 16.41%
Interest expense 154,861 141,767 140,044 10.58 437,095 379,433 15.20
----------------------------------- --------- -----------------------------------
Net interest income 172,236 188,206 148,415 16.05 502,904 428,062 17.48
Provision for loan losses 22,436 21,672 18,987 18.17 65,381 43,331 50.89
----------------------------------- --------- -----------------------------------
Net interest income after provision
for loan losses 149,800 146,536 129,428 15.74 437,523 384,731 13.72
Other operating income 46,704 50,718 44,588 4.75 147,747 122,101 21.00
Gain (loss) on sale of securities 4,911 (20) 1,950 5,620 2,062
Trading account profit (loss) (216) (1,383) 293 (661) 593
----------------------------------- --------- -----------------------------------
Total other income $ 51,399 49,315 46,831 9.75 152,706 124,766 22.40
Salaries and benefits 62,304 61,766 57,928 7.56 185,803 172,822 7.51
Profit sharing 5,789 5,685 4,435 30.53 17,544 14,268 22.96
Other operating expenses 67,360 64,393 57,233 17.69 194,649 175,545 10.88
----------------------------------- --------- -----------------------------------
Total operating expenses 135,453 131,844 119,596 13.26 397,996 362,635 9.75
----------------------------------- --------- -----------------------------------
Income before income tax 65,746 64,007 56,663 16.03 192,233 146,852 30.90
Income tax 19,473 17,952 18,356 6.09 54,763 40,743 34.41
----------------------------------- --------- -----------------------------------
Net income $ 46,273 $ 46,055 $ 38,307 20.80 $137,470 $106,109 29.56
=================================== ========= ===================================
Net income applicable to common stock $ 44,185 $ 43,967 $ 36,220 21.99 $131,208 $ 99,847 31.41
=================================== ========= ===================================
Earnings per common share:
Net income* $ 0.67 $ 0.67 $ 0.55 21.62 $ 1.99 $ 1.52 30.99
======== ======== ======== ===== ======== ======== =====
Average common shares outstanding* 66,048,673 66,001,180 65,844,636 66,000,086 65,789,0l4
Common shares outstanding at end
of period* 66,048,673 66,00l,180 65,844,636 66,048,673 65,844,636
</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.
<PAGE> 7
BANPONCE CORPORATION
Financial Summary
(in thousands)
<TABLE>
<CAPTION>
Third For the nine months ended
1996 1995 Quarter September 30
-------------------------------------- 1996-1995 -----------------------------------
Third Second Third Percent Percent
Quarter Quarter Quarter Variance 1996 1995 Variance
-------------------------------------- --------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED AVERAGE BALANCES
Total assets $16,796,305 $15,988,100 $14,708,550 14.19 $16,116,236 $13,759,405 17.13
Loans 9,386,931 9,033,179 8,360,391 12.28 9,057,462 8,106,514 11.73
Earning assets 15,769,431 15,020,119 13,787,514 14.37 15,142,449 12,896,331 17.42
Interest-bearing liabilities 13,285,087 12,464,300 11,596,367 14.56 12,655,292 10,679,496 18.50
Stockholders' equity 1,202,292 1,167,856 1,087,119 10.59 1,175,776 1,053,384 11.62
PEFORMANCE RATIOS
Net interest yield* 4.40% 4.52% 4.33% 4.47% 4.46%
Return on assets 1.10 1.16 1.03 1.14 1.03
Return on common equity 15.94 16.56 14.55 16.29 14.00
CREDIT QUALITY DATA
Nonperforming assets $ 153,400 $ 152,401 $ 155,915 -1.61 $ 153,400 $ 155,915 -1.61
Net loans charged-off 18,796 18,066 13,291 41.42 51,804 32,699 58.43
Allowance for loan losses 182,372 178,330 164,430 10.91 182,372 164,430 10.91
Nonperforming assets to
total assets 0.92% 0.93% 1.04% 0.92% 1.04%
Allowance for losses to loans 1.90 1.92 1.94 1.90 1.94
SELECTED FINANCIAL DATA AT
PERIOD-END
Total assets ............... $16,755,598 $16,442,137 $14,934,595 $16,755,598 $14,934,595 12.19
Loans ...................... 9,589,289 9,279,332 8,486,900 8,589,289 8,486,900 12.99
Earning assets ............. 15,666,005 15,333,607 13,967,927 15,666,005 13,967,927 12.16
Interest-bearing liabilities 13,158,716 12,833,828 11,745,871 13,158,716 11,745,871 12.03
Stockholder's equity ....... 1,220,105 1,187,138 1,102,047 1,220,105 1,102,047 10.71
</TABLE>
* Not on a taxable equivalent basis
