BANPONCE CORP, PRER14A, 1997-03-13

BANPONCE CORP
PRER14A, 1997-03-13
STATE COMMERCIAL BANKS

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BANPONCE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2
BANPONCE CORPORATION
P.O. BOX 362708
SAN JUAN, PUERTO RICO 00936-2708

---------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, APRIL 25, 1997

---------------

To the Stockholders of BanPonce Corporation:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BanPonce
Corporation (the "Meeting") for the year 1997 will be held at 10:00 a.m. on
Friday, April 25, 1997, on the third floor of the Centro Europa Building, in
Santurce, Puerto Rico, to consider and act upon the following matters:

(1) To elect three (3) directors of BanPonce Corporation (the Corporation)
for a three-year term;

(2) To amend Article First of the Restated Articles of Incorporation to
change the name of the Corporation to Popular, Inc;

(3) To amend Article Fifth of the Restated Articles of Incorporation to
increase the authorized numbers of shares of common stock, par value $6, from
90,000,000 to 180,000,000; and

(4) To transact any and all other business as may be properly brought before
the Meeting or any adjournments thereof. Management at present knows of no
other business to be brought before the Meeting.

Stockholders of record at the close of business on March 7, 1997, are
entitled to notice of and vote at the Meeting.

You are cordially invited to attend the Annual Meeting. Whether you plan to
attend or not, please sign and return the enclosed proxy so that the
Corporation may be assured of the presence of a Quorum at the Meeting. A
postage-paid envelope addressed to the Corporation is enclosed for your
convenience.

San Juan, Puerto Rico, March 20, 1997.

By Order of the Board of Directors

SAMUEL T. CESPEDES
Secretary
<PAGE> 3
BANPONCE CORPORATION
P.O. BOX 362708
SAN JUAN, PUERTO RICO 00936-2708

---------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, APRIL 25, 1997

---------------

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of BanPonce Corporation (the "Corporation") of Proxies to be
voted at the Annual Meeting of Stockholders (the "Meeting") to be held at 10:00
a.m. on Friday, April 25, 1997, on the third floor of the Centro Europa
Building, in Santurce, Puerto Rico, and any adjustments thereof. Enclosed with
this Proxy Statement is the Annual Report, including Form 10-K and the
financial statements for the year ended December 31, 1996, duly certified by
Price Waterhouse as independent public accountants. This Proxy Statement, the
enclosed Annual Report and Form 10-K, the Notice of Annual Meeting of
Stockholders and the form of the proxy are being sent to stockholders on or
about March 20, 1997.

Properly executed proxies received by the Secretary of the Corporation will
be voted at the Meeting in accordance with the instructions that appear therein
and for the purposes indicated on the Notice of the Meeting. The Board of
Directors does not intend to present any business at the Meeting other than
those included in the Notice of Meeting. The Board of Directors at this time
knows of no other matters that may come before the Meeting. However, if any
new matters requiring the vote of stockholders properly come before the
Meeting, proxies may be voted with respect thereto in accordance with the best
judgement of Proxyholders, under the discretionary power granted by
stockholders to their proxies in connection with general matters.

SOLICITATION OF PROXIES

In addition to solicitation by mail, management may participate in the
SOLICITATION of Proxies by telephone, personal interviews or otherwise. The
Board of Directors has engaged the firm of Georgeson & Company Inc. to aid in
the solicitation of Proxies. The cost of solicitation will be borne by the
Corporation and is estimated at $6,500.

REVOCABILITY OF PROXY

Any stockholder giving a proxy has the power to revoke it before the proxy
is exercised. The grantor may revoke the proxy by claiming at the Meeting the
right to vote by himself the shares of stocks registered in his name or by
notice of revocation in writing to the President or Secretary of BanPonce
Corporation, P.O. Box 362708, San Juan, Puerto Rico 00936-2708, delivered
before the proxy is exercised.

VOTING SECURITIES

The only outstanding voting securities of the Corporation are its shares of
common stock, each share of which entitles the holder thereof to one vote.
Only common stockholders of record at the close of business on March 7, 1997
(the "Record Date"), will be entitled to vote at the Meeting and any
adjournments thereof. On the Record Date there were 66,121,855 shares of
common stock of the Corporation outstanding. The shares covered by any
such proxy that are properly executed and received by management before
10:00 a.m. on the day of the Meeting will be voted.

The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock of the Corporation is necessary to
constitute a quorum at the Meeting. Votes cast by proxy or in person at the
Meeting will be counted by the people appointed by the Corporation as members
of the vote-counting committee for the Meeting. For purposes of determining
quorum, the members of the vote-counting committee will treat abstentions and
broker non-votes as shares that are present and entitled to vote. A broker
non-vote results when a broker or nominee has expressly indicated in the proxy
that it does not have discretionary authority to vote on a particular matter.
Broker non-votes will not be considered as present and entitled to vote with
respect to that particular matter. As to the election of Directors, the proxy
card being provided by the Board of Directors enables a stockholder to vote for
the election of the nominees proposed by the Board, or to withhold authority to
vote for one or more of the nominees being proposed.

<PAGE> 4

Directors will be elected by a majority of the votes cast. Therefore,
abstentions and broker non-votes will not have an effect on the election of
directors of the Corporation. As to the proposals to amend the Restated
Articles of Incorporation, abstentions and broker non-votes will have the same
effect as a vote against the proposals to amend the Restated Articles of
Incorporation to change the name of the Corporation and to increase the number
of authorized shares of the Corporation.

PRINCIPAL STOCKHOLDERS

Following is the information, to the extent known by the people on whose
behalf this solicitation is made, with respect to any person (including any
"group" as that term is used in Section 13(d)(3) of the Securities and Exchange
Act of 1934, as amended) who is known to the Corporation to be the beneficial
owner of more than 5 percent of the Corporation's voting securities.

AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS(2)
- -------------- ------------------------------------ --------- --------
<S> <C> <C> <C>

Common............ Banco Popular de Puerto Rico (the "Bank")
As Trustee for Banco Popular de Puerto Rico
Retirement Plan 2,836,430

The Bank as Trustee for the Profit Sharing
Plan for the Employees of Banco Popular
de Puerto Rico 2,660,696
---------
5,497,126 (3) 8.3136

Common............ State Farm Mutual Automobile Insurance
Company 3,670,062 (4) 5.5505
</TABLE>

- ------------------

(1) As of February 28, 1997.
(2) Based on 66,121,855 shares of common stock outstanding.
(3) The Bank, as Trustee, administers both Plans through their Administrative
Committees, with sole voting and investment power.
(4) On January 3, 1997, State Farm Mutual Automobile Insurance Company
("State Farm") and affiliated entities filed a joint statement on Schedule
13-G with the Securities and Exchange Commission reflecting its holdings
as of December 31, 1996. According to said statement, State Farm and its
affiliates might be deemed to constitute a "group" within the meaning of
Section 13(d)(3) of the Securities and Exchange Act of 1934. State Farm
and its affiliates could also be deemed to be the beneficial owners of
3,670,062 shares of BanPonce Corporation. However, State Farm and each
such affiliate disclaim beneficial ownership as to all shares as to which
each such person has no right to receive the proceeds of sale of the
shares, and also disclaim that they constitute a "group".

2
<PAGE> 5
SHARES BENEFICIALLY OWNED BY DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS OF THE CORPORATION

Following is the information, as of February 28, 1997, as to equity
securities of the Corporation beneficially owned by all current directors,
nominees, the most highly compensated Executive Officers of the Corporation who
are not directors and the total owned by directors, nominees and all Executive
Officers of the Corporation as a group:

COMMON STOCK

<TABLE>
<CAPTION>
Name Title of Amount and Nature Percent of
- ---- class of Beneficial Ownership class(1)
----- ----------------------- --------
<S> <C> <C> <C>
Alfonso F. Ballester ....................... Common 689,104(3) 1.0422
Juan J. Bermudez ........................... Common 138,122(4) .2089
Francisco J. Carreras ...................... Common 5,474 .0083
Richard L. Carrion ......................... Common 511,698(5) .7739
David H. Chafey, Jr. ....................... Common 31,628 .0478
Luis E. Dubon, Jr. ......................... Common 885,594(6) 1.3393
Antonio Luis Ferre ......................... Common 1,424,340(7) 2.1541
Hector R. Gonzalez ......................... Common 262,263(8) .3966
Jorge A. Junquera .......................... Common 18,909(9) .0286
Manuel Morales, Jr. ........................ Common 348,982(10) .5278
Alberto M. Paracchini ...................... Common 55,812(11) .0844
Francisco Perez, Jr. ....................... Common 483 .0007
Francisco M. Rexach, Jr. ................... Common 60,521(12) .0915
Jose E. Rossi .............................. Common 44,756(13) .0677
Felix J. Serralles, Jr. .................... Common 179,830(14) .2720
Emilio Jose Venegas ........................ Common 163,868(15) .2478
Julio E. Vizcarrondo, Jr. .................. Common 556,939(16) .8423
Maria Isabel P. de Burckhart ............... Common 23,443(17) .0355
Roberto R. Herencia ........................ Common 36(18) .0001
Larry B. Kesler ............................ Common 17,816 .0269
Humberto Martin ............................ Common 29,490 .0446
Emilio E. Pinero ........................... Common 13,229 .0200
Carlos Rom, Jr. ............................ Common 5,800(19) .0088
All Directors and Executive Officers
of the Corporation as a group ............ Common 5,468,137 8.2698
</TABLE>

PREFERRED STOCK

<TABLE>
<CAPTION>
Name Title of Amount and Nature Percent of
- ---- class of Beneficial Ownership class(1)
----- ----------------------- --------
<S> <C> <C> <C>
Luis E. Dubon, Jr. ......................... Preferred 7,375(20) .1844
Alberto M. Paracchini ...................... Preferred 7,000 .1750
All Directors and Executive Officers
of the Corporation as a group ............ Preferred 14,375 .3594
</TABLE>

- ----------
(1) Based on 66,121,855 shares of common stock outstanding.
(2) Based on 4,000,000 shares of preferred stock outstanding.
(3) Mr. Ballester owns 687,104 shares and has indirect investment power
over 2,000 shares owned by his wife. Excludes 600,964 shares owned by
his sister, Mrs. Griselda Ballester, as to all of which shares Mr.
Ballester disclaims indirect voting power.

<PAGE> 6
(4) Excludes 5,839 shares owned by his wife, as to which Mr. Bermudez
disclaims indirect voting power.
(5) Mr. Carrion owns 137,193 shares and also has indirect investment power
over 11,961 shares owned by his children. Junior Investment Corporation
owns 2,080,000 shares of the Corporation. Mr. Carrion owns 17.43% of
the shares of said corporation.
(6) Mr. Dubon owns 91,266 shares and has a power of attorney over 57,608
shares owned by his wife, Mrs. Myrta A. Dubon, over 35,829 shares held
in trust for his children and 700,891 shares owned by various
corporations and members of his family in which Mr. Dubon has direct or
indirect ownership.
(7) Mr. Ferre has indirect investment and voting power and claims
beneficial ownership of 1,424,340 shares of the Corporation. Mr. Ferre
owns 384 shares and has indirect investment and voting power over
249,600 shares owned by Alfra Investment Corp. and 200 shares owned by
his wife. Mr. Ferre owns 87.18% of Ferre Investment Fund, Inc., which
owns 455,800 shares of the Corporation. Mr. Ferre also owns 67.25% of
the shares of El Dia, Inc., and has indirect voting power over Alfra
Investment Corp., which owns 19.94% of El Dia, Inc., which owns in turn
718,356 shares of the Corporation.
(8) Mr. Gonzalez owns 253,587 shares and has voting and investment power
over 8,676 shares of the Corporation owned by TPC Financial Services,
Inc. of which he is President and Chief Executive Officer.
(9) Mr. Junquera owns 18,694 shares and has indirect investment power over
215 shares owned by his daughter.
(10) Mr. Morales owns 158,928 shares and has voting power over 190,054
shares owned by his parents, as their attorney-in-fact.
(11) Excludes 632 shares owned by his wife, as to which Mr. Paracchini
disclaims beneficial ownership.
(12) Mr. Rexach owns 35,521 shares and has voting power over 20,000 shares
owned by his mother, as her attorney-in-fact, and over 5,000 shares
held by Capital Assets, Inc. as President and shareholder.
(13) Mr. Rossi owns 17,537 shares and has indirect investment power over
27,219 shares owned by his daugthers.
(14) Mr. Serralles Nevares owns 113,376 shares, and has indirect voting
power over 5,146 shares owned by his wife. Mr. Serralles owns 100% of
the shares of each of Capitanejo, Inc. and Fao Investment, Inc., which
own 58,510 and 2,798 shares, respectively, of the Corporation.
(15) Mr. Venegas owns 15,384 shares, and also has indirect investment power
over 15,000 shares owned by his wife. Mr. Venegas also has indirect
voting and investment power over the 30,000 shares of the Corporation
owned by Venegas Construction Corporation, of which he is stockholder
and secretary, over the 103,484 shares of the Corporation owned by
Sanson Corporation, of which he is President and stockholder.

(16) Mr. Vizcarrondo owns 99,440 shares and has indirect voting power over
89,131 shares owned by his wife. Mr. Vizcarrondo's wife owns 17.71% of
the shares of Junior Investment Corporation, which owns 2,080,000
shares of the Corporation. Mr. Vizcarrondo has indirect voting and
investment power over 300 shares held in trust by Vicar Enterprises,
Inc. for the benefit of his children, for which he disclaims
beneficial ownership. Mr. Vizcarrondo also disclaims beneficial
ownership over 62,523 shares owned by DMI Pension Trust, where he
serves as trustee and member of the investment committee. Excluded
also are 11,452 shares owned by Mr. Vizcarrondo as trustee of the
Suarez Toro Trust, which owns said shares of the Corporation, of
which he disclaims beneficial ownership.

(17) Mrs. Burckhart owns 22,020 shares and has indirect voting power over
800 shares held by her husband and over 623 shares held by her husband
as custodian for her daughters.
(18) Mr. Herencia acquired 5,141 additional shares on March 3, 1997.

(19) Mr. Rom owns 5,497 shares and has indirect voting power over 69 shares
owned by his wife and 234 shares held by him as custodian for various
members of his family. Mr. Rom acquired 4,476 additional shares on
March 5, 1997.

(20) Mr. Dubon owns 1,000 preferred shares, and has indirect beneficial
ownership over 5,875 preferred shares held in trust by Mr. Luis E.
Dubon, Jr. for several people. Mr. Dubon also has indirect ownership
over 500 preferred shares owned by Fundacion Gogui, Inc.

4
<PAGE> 7

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based on a review of Forms 3, 4 and 5 and amendments thereto furnished
to the Corporation with respect to its 1996 fiscal year, pursuant to Section
16(a) of the Securiries Exchange Act of 1934, the following people, subject to
Section 16(a), failed to file on a timely basis:

<TABLE>
<CAPTION>
Name Number of late reports Number of transactions
- ---- ---------------------- ----------------------
<S> <C> <C>
Juan J. Bermudez 1 2
Francisco J. Carreras 1 2
Antonio Luis Ferre 1 4
Franklin A. Mathias 2 2
Manuel Morales, Jr. 1 2
Francisco M. Rexach, Jr. 2 2
Jose E. Rossi 1 3
Felix J. Serralles, Jr. 1 1
Emilio Jose Venegas 1 5
Julio E. Vizcarrondo, Jr. 2 2
Maria Isabel P. de Burckhart 1 1
</TABLE>

The Corporation has no knowledge of any additional failure to file a
required Form.

BOARD OF DIRECTORS AND COMMITTEES
PROPOSAL 1: ELECTION OF DIRECTORS

The Certificate of Incorporation and the By-laws of the Corporation
establish a classified Board of Directors pursuant to which the Board of
Directors is divided into three classes as nearly equal in number as possible,
with each class having at least three members and with the term of office of one
class expiring each year. Each director serves for a term ending on the date of
the third annual meeting of stockholders following the annual meeting at which
such director was elected.

At the Meeting, three (3) directors assigned to "Class 1" are to be
elected until the 2000 Annual Meeting of Stockholders or until their respective
successors shall have been elected and qualified. The directors nominated for
election are: Salustiano Alvarez Mendez, Alfonso F. Ballester and Jorge A.
Junquera. All of the above will serve for three (3) years until the 2000 Annual
Meeting of Stockholders or until their respective successors shall have been
elected and qualified. The remaining 12 directors of the Corporation will serve
as directors, as follows: until the 1998 Annual Meeting of Stockholders of the
Corporation, in the case of those five directors assigned to "Class 2", and
until the 1999 Annual Meeting of Stockholders, in the case of those seven
directors assigned to "Class 3", or in each case until their successors are duly
elected and qualified.

The policy of the Board of Directors, as set forth in a resolution
adopted on January 8, 1991, provides that no person shall be nominated for
election or reelection as director of the Board if at the date of the Annual
Meeting of Stockholders or during the term to be served such person attains
seventy two (72) years of age. Messrs. Emilio Jose Venegas and Jose Rossi would
attain seventy two (72) years of age during the term to be served. In accordance
with Board policy, Messrs. Venegas and Rossi will not be nominated for
reelection as directors. Mr. Francisco Perez, Jr. declined to be renominated for
reelection. Mr. Perez's decision is not due to disagreement with the Corporation
or with any matter relating to the Corporation's operations.

5
<PAGE> 8
The people named as proxies in the accompanying Form of Proxy have
advised the Corporation that, unless otherwise instructed, they intend to vote
at the meeting the shares covered by the proxies FOR the election of the three
nominees named before, and that if any one or more of such nominees should
become unavailable for election they intend to vote such shares FOR the election
of such substitute nominees as the Board of Directors may propose. The
Corporation has no knowledge that any nominee will become unavailable for
election.

Information relating to principal occupation and business experience
during the past five (5) years (including position held with the Corporation or
the Bank), age and the period during which each director has served is set forth
below.

BOARD OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
(TERMS EXPIRING IN 2000)
CLASS 1 DIRECTORS

<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
---- --- ------------------------------------- -----
<S> <C> <C> <C>
Salustiano Alvarez Mendez...67 President and Director of Mendez & Company, Nominee
Inc., food and liquor importers and distributors.
Director of International Shipping Agency, Inc.,
shipping agents. Director of Menaco Corp.,
Guaynabo Realty S. E. and A. & D. Associates, Inc.
and Bamco Products Corp until 1995. Director of
Banco de Ponce from 1981 to 1990 and of the Bank
from 1991 to April 1997.

Alfonso F. Ballester.......67 Vice Chairman of the Board of the 1990
Corporation and the Bank. President of
Ballester Hermanos, Inc. (Wholesale of
provisions and liquors). Director of Popular
International Bank, Inc., BanPonce Financial
Corp, Equity One, Inc., and Popular Leasing
& Rental, Inc. Director of the Bank since
1975.

Jorge A. Junquera..........48 Supervisor of the Financial Management 1990
Group, the U.S. Operations and the Caribbean
and Latin America Expansion Group since
January 1996. Supervisor of the Bank's
Retail Banking Group until December 1995.
Senior Executive Vice President since
October 1995. Executive Vice President of
the Bank since 1980. President and Director
of Popular International Bank, Inc. and
BanPonce Financial Corp since January 1996.
Director of Equity One, Inc., Popular
Consumer Services, Inc., Popular Mortgage
Inc., Pioneer Bancorp, Inc., Banco Popular,
Illinois, CombanCorp, Banco Popular, N.A.
(California), Citizens Bank Limited,
Jamaica, and Popular Leasing & Rental, Inc.
Chairman of the Board of BP Capital Markets,
Inc. since January 1996, and of Puerto Rico
Tourism Company and Hotel Development Co.
since 1993. Director of YMCA since 1988.
Director of the Bank since 1990.
</TABLE>

6
<PAGE> 9

OTHER DIRECTORS
CLASS 2 DIRECTORS
(TERMS EXPIRING IN 1998)

<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
---- --- ------------------------------------- -----
<S> <C> <C> <C>
Juan J. Bermudez...........59 Electrical Engineer. Partner of Bermudez and 1990
Longo, S.E., Decemcor, S.E., Unisouth, S.E.,
Unicenter, S.E., Unicourts, S.E., Unieast,
S.E., Unigardens, S.E., Uninorth, S.E.,
Baldwin Development, S.E., Paseo Sereno,
S.E. and PCME Commercial, S.E. Principal
Stockholder and Director of BL Management,
Corp., Paseomar Corp., PCME Development,
Inc. Principal stockholder of G.S.P. Corp.
and Unimanagement Corp. Director of the Bank
since 1985.

Francisco J. Carreras......64 Former professor of the University of Puerto 1990
Rico. Member of the Board of Trustees of
Fundacion Banco Popular, Inc. Executive
Director of Fundacion Angel Ramos, Inc.
Director of the Bank since 1979.

Richard L. Carrion.........44 Chairman, President and Chief Executive 1990
Officer ("CEO") of the Corporation, of the
Bank and Banco Popular, FSB. Chairman of
Popular International Bank, Inc. and
BanPonce Financial Corp. Chairman of the
Board of Trustees of Fundacion Banco
Popular, Inc. Director of Equity One, Inc.,
Popular Consumer Services, Inc., Popular
Leasing & Rental, Inc., Pioneer Bancorp,
Inc., Popular Mortgage, Inc., CombanCorp and
BP Capital Markets, Inc. Member of the Board
of Trustees of the American Management
Association. Member of Puerto Rico's
Commission for the 2004 Olympiad. Member of
the International Olympic Committee. Member
of the Board of Directors and Compensation
Committee of Pueblo Xtra International, Inc.
until March 31, 1995. Chairman and President
of Puerto Rico Investors Tax-Free Funds,
Inc. I, II, III, IV and of Puerto Rico
Tax-Free Target Maturity Fund, Inc. Member
of the Board of Directors of the Company for
the Development of the Cantera Peninsula and
the Board of Trustees of the Puerto Rico
Committee for Economic Development. Director
of NYNEX Corporation (registered public
company). Director of the Bank since 1982.

Luis E. Dubon, Jr..........62 Attorney-at-Law and Investor. Partner of the 1984
law firm Dubon & Dubon. Director and
stockholder of D Group Capital Corporation,
D Group Corporation, Delta Maintenance
Services Inc. Director and partner of D
Group Equity Holding Associates, S. en C.
por A., S.E., D Group Commercial Equities
Associates S. en C. por A., S.E. Director of
American Investment Corp., Fundacion Gogui,
Inc., Carite Resorts Associates, S.en C. por
A., S.E., Carite Resorts GP, Inc., Carolina
Developers Associates, S.en C. por A., S.E.,
Contorno Developers Associates, S. en C. por
A., S.E., Contorno Developers GP, Inc., D
Group Commercial Equities GP, Inc., D Group
Equities Management Services, Inc., D Group
Equity Holding GP, Inc., D Group Realty
Services, Inc., Delta Engineering Services,
Inc., Delta Parking System Corporation,
Dubon Corporation, Executive Habitats, Inc.,
Galeria del Condado Associates, S.en C. por
A., S.E.,
</TABLE>

7
<PAGE> 10

<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
---- --- ------------------------------------- -----
<S> <C> <C> <C>
Galeria del Condado GP, Inc., Imporexco,
Inc., Lujoma Corporation, Marina Developers
(Carolina) GP, Inc., Mercantil Caguax
Associates, S. en C. por A., S.E., Mercantil
Caguax GP, Inc., Mercantil Mayaguez
Associates, S. en C. por A., S.E., Mercantil
Mayaguez GP, Inc., Mercantil Pinero
Associates, S. en C. por A., S.E., Mercantil
Pinero GP, Inc., Mercantil San Patricio
Associates, S. en C. por A., S.E., Mercantil
San Patricio GP, Inc., Metro Center
Associates, S. en C. por A., S.E., Metro
Center GP Corporation, Plaza Bellas Artes
GP, Inc., Plaza Bellas Artes Associates Uno
S. en C. por A., S.E., Plaza Bellas Artes
Associates Dos S. en C. por A., S.E., Plaza
Bellas Artes Associates Tres S. en C. por
A., S.E., Plaza Bellas Artes Associates IV,
S. en C. por A., S.E., Plaza del Condado
Associates, S. en C. por A., S.E., Plaza del
Condado GP, Inc., Portilla Corporation,
Puerta del Condado Associates, S. en C. por
A., S.E., Puerta del Condado GP Inc., Resort
Equities Developers GP, Inc., San Jose
Building Associates, S. en C. por A., S.E.,
San Jose Building GP, Inc., Title &
Corporate Services Corporation and San Jose
Development, Inc. Director of Banco de Ponce
from 1973 to 1990. Director of the Bank
since 1990.

Hector R. Gonzalez.........63 President and Chief Executive Officer of TPC 1984
Communications of PR, Inc. owner and
operator of cable television systems.
President and Chief Executive Officer of TPC
Financial Services, Inc., TPC Cable Media,
TelePonce Cable TV and Telecell Systems.
Director of Damas Foundation, Inc. Director
of Popular Consumer Services, Inc. and
Popular Mortgage, Inc. Director of Banco de
Ponce from 1973 to 1990. Director of the
Bank since 1995.

Manuel Morales, Jr.........51 President of Selarom Capital Group, Inc. 1990
President of Parkview Realty, Inc. President
of the Atrium Office Center, Inc. Honorary
General Consul of Japan in San Juan. Trustee
of Sacred Heart University and Caribbean
Environmental Development Institute. Member
of the Board of Directors of Better Business
Bureau. Member of the Board of Trustees of
Fundacion Banco Popular, Inc. Director of
the Bank since 1978.

Francisco M. Rexach, Jr....59 President of Ready Mix Concrete, Inc. 1990
President of Capital Assets, Inc. since
November 1995. Director of Popular Leasing &
Rental, Inc. Director of the Bank since
1984.

Julio E. Vizcarrondo, Jr...62 Civil Engineer. President/Partner and Chief 1990
Executive Officer of Desarrollos
Metropolitanos, S.E., VMV Enterprises Corp.,
Resort Builders, S.E., Metropolitan
Builders, S.E., Institutional Builders,
S.E., corporations engaged in the
development and construction of residential,
commercial, industrial and institutional
projects in Puerto Rico. Director of the
Bank since 1984.
</TABLE>

8
<PAGE> 11

CLASS 3 DIRECTORS
(TERMS EXPIRING IN 1999)

<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
---- --- ------------------------------------- -----
<S> <C> <C> <C>
Juan J. Bermudez...........59 Electrical Engineer. Partner of Bermudez and 1990
Longo, S.E., Decemcor, S.E., Unisouth, S.E.,
Unicenter, S.E., Unicourts, S.E., Unieast,
S.E., Unigardens, S.E., Uninorth, S.E.,
Baldwin Development, S.E., Paseo Sereno,
S.E. and PCME Commercial, S.E. Principal
Stockholder and Director of BL Management,
Corp., Paseomar Corp., PCME Development,
Inc. Principal stockholder of G.S.P. Corp.
and Unimanagement Corp. Director of the Bank
since 1985.

David H. Chafey, Jr........43 Supervisor of Bank's Retail Banking Group 1996
since January 1996. Supervisor of the
Financial Management Group and U.S.
Operations until December 1995. Senior
Executive Vice President since October 1995.
Executive Vice President of the Bank since
January 1990. Chairman of BP Capital
Markets, Inc. until January 1996. Executive
Vice President and Director of Popular
International Bank, Inc. and BanPonce
Financial Corp. President of Popular
International Bank, Inc. and BanPonce
Financial Corp until December 1995. Director
of Equity One, Inc., Popular Consumer
Services, Inc., Popular Leasing & Rental,
Inc., BP Capital Markets, Inc., Pioneer
Bancorp, Inc. and Banco Popular, FSB.
Chairman of the Puerto Rico Telephone
Authority since 1993. Executive Vice
President of Puerto Rico Investors Tax-Free
Fund, Inc. I, II, III, IV and Puerto Rico
Tax-Free Target Maturity Fund, Inc. Director
of the Bank since 1994.

Antonio Luis Ferre.........63 Vice Chairman of the Board of the Corporation 1984
and the Bank. Chairman of the Board of
Puerto Rican Cement Co., Inc. (registered
public company), manufacturers of cement and
allied products. President and Editor of El
Dia, Inc., a newspaper publishing company.
Director of Metropolitan Life Insurance
Company (registered company under the
Investment Company Act of 1940). Member of
the Director's Committee of Metropolitan
Life Insurance Company since January 1,
1996. Director of Pueblo Xtra International,
Inc. until March 1995. Director of Pueblo
Xtra Supermarkets. Director of Banco de
Ponce from 1959 to 1990. Director of the
Bank since 1990.

Alberto M. Paracchini......64 Former Chairman of the Board of the 1984
Corporation and the Bank. Former Chairman of
BanPonce Financial Corp, Equity One, Inc.,
Popular Consumer Services, Inc. and Popular
Leasing & Rental, Inc. Member of the Board
of Trustees of Fundacion Banco Popular, Inc.
Chairman of the Board of Trustees, Sacred
Heart University in San Juan, Puerto Rico.
Director of Puerto Rican Cement Co., Inc.
(registered public company). Director of HDA
Management Corp. since 1993. Director of
Equus Management Co. and Managing General
Partner of Equus Gaming Co., L.P. (listed on
the American Stock Exchange). Director of
Venture Capital Fund, Inc. Executive Officer
of the Corporation from 1984 to April 1993.
Director of Banco de Ponce from 1959 to
1990. Director of the Bank since 1990.

Felix J. Serralles, Jr.....62 President and Chief Executive Officer of 1984
Empresas Serralles, Inc. and of its
subsidiary Destileria Serralles, Inc.,
manufacturers and distributors of distilled
spirits, and of its affiliate Mercedita
Leasing, Inc. Director of Banco de Ponce
from 1966 to 1990. Director of the Bank
since 1990.
</TABLE>

9
<PAGE> 12
STANDING COMMITTEES

The Board of Directors of the Corporation met on a monthly basis during
1996. All directors, except Antonio Luis Ferre, Alberto M. Paracchini and Felix
J. Serralles, Jr. attended 75% or more of the meetings of the Board of Directors
and the committees of the Board of Directors on which such directors served.

The Corporation's Board of Directors has a standing Audit and Executive
Committee. The Board of Directors of the Bank, the principal subsidiary of the
Corporation, has a standing Human Resources and Compensation Committee that may
review compensation matters for the Corporation. There is no standing Nominating
Committee but the Executive Committee charter provides that said Executive
Committee may exercise the power to nominate directors. However, in the past the
Executive Committee has not exercised such function and nominations have been
made by the Board of Directors. Information regarding the Audit and Human
Resources Committees follows:

AUDIT COMMITTEE

The functions of the Audit Committee include reviewing the accounting
principles and practices employed by the Corporation, and compliance with
applicable laws and regulations. The Committee meets with the Corporation's
independent external auditors to review their audit procedures, the report on
their examination of the Corporation's financial statements, and their comments
on the system of internal controls. Also, the Committee oversees the internal
audit function and reviews the reports prepared by the Auditing Division on
their examinations of the operating and business units and for any other special
examinations that may be required. The Committee held four meetings during the
fiscal year ended December 31, 1996.

The Committee members during 1996 were: Francisco J. Carreras, Luis E.
Dubon, Jr., Hector R. Gonzalez, Manuel Morales, Jr. and Emilio Jose Venegas.
None of the members of the committee are officers or employees of the
Corporation or any of its subsidiaries.

HUMAN RESOURCES AND COMPENSATION COMMITTEE

The functions of the Human Resources and Compensation Committee include
reviewing the compensation and benefits of management and employees, reviewing
the policies related to the performance and compensation of management and
employees, and reviewing the long-range planning for executive development and
succession. The Committee held one meeting during the fiscal year ended December
31, 1996.

The Committee members during 1996 were: Salustiano Alvarez Mendez,
Esteban D. Bird, Hector R. Gonzalez, Francisco M. Rexach, Jr. and Julio E.
Vizcarrondo, Jr. None of the members of the Committee are officers or employees
of the Corporation or any of its subsidiaries.

COMPENSATION OF DIRECTORS

Directors who are not employees of the Corporation and its subsidiaries
were entitled to be reimbursed for certain expenses up to $12,000 annually.
Effective August 15, 1996, the Board of Directors of the Corporation established
a Stock Deferment Plan, pursuant to which each outside director of the
Corporation will be given the option to defer all or a portion of the $12,000
annual retainer. The deferred portion, plus an additional amount of $0.25 for
each dollar so deferred, is being applied toward the purchase in the open market
of shares of the Corporation's common stock on behalf of the director, with the
certificates representing such shares to be retained by the Corporation until
the director's membership in every Board terminates. In addition, each director
shall have the right to vote and to receive any dividends payable on the shares
held for said director under the Plan, but no such shares shall be sold,
transferred, assigned, pledged or in any other way encumbered by the director
until the certificates representing such shares are delivered to the director.
In the event that a director is removed for cause from office by appropriate
corporate action or under authority of law, said director (1) shall be obligated
to sell to the Corporation all of the shares acquired with the deferred retainer
amount at a price equal to the lower of (a) the actual cost of the purchase of
said shares and (b) the market price of said shares on the date the director was
discharged, and (2) shall forfeit to the Corporation all of the shares purchased
with any additional contribution.

10
<PAGE> 13

In addition, directors receive $750 for attending each Board of
Directors' meeting, $1,000 for attending each Executive Committee's meeting and
$500 for attending each of the other committee meetings. Directors who are
employees do not receive fees for attending Board of Directors or committee
meetings.

EXECUTIVE OFFICERS

The following table sets forth the names of the executive officers (the
"Executive Officers") of the Corporation including their age, business
experience during the past five (5) years and the period during which each such
person has served as an Executive Officer of the Corporation or the Bank.

<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
OF THE
PRINCIPAL OCCUPATION AND BUSINESS CORPORATION
NAME TITLE AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
---- ----- --- ------------------------------------- -----
<S> <C> <C> <C> <C>
Richard L. Carrion ........Chairman, President 44 See under "Board of Directors" 1990
and CEO

Jorge A. Junquera .........Senior Executive 48 See under "Board of Directors" 1990
Vice President

David H. Chafey, Jr. ......Senior Executive 43 See under "Board of Directors" 1990
Vice President

Maria Isabel P.
de Burckhart ...........Executive 47 Supervisor of the Administration Group. 1990
Vice President Executive Vice President of the Bank since
January 1990. Executive Vice President of
BanPonce Financial Corp. Member of the Board
of Trustees of Fundacion Banco Popular, Inc.
Member of the Board of Directors of
Fundacion Ana G. Mendez since 1992. Member
of the Board of Directors of Puerto Rico
Community Foundation since 1993. Member of
the Board of Directors of Puerto Rico
Convention Bureau since 1993.

Roberto R. Herencia .......Executive 37 Head of the Corporation's U.S. business 1997
Vice President expansion. Executive Vice President since
January 1997. Director of BanPonce Financial
Corp, Banco Popular, FSB, Equity One, Inc.,
Pioneer Bancorp, Inc., Banco Popular,
Illinois, Banco Popular, N.A. (California)
and CombanCorp. Senior Vice President from
December 1991 to December 1996. Vice
President and U.S. Senior Credit Officer
from April to December 1991.

Larry B. Kesler ...........Executive 59 Supervisor of the Retail Credit and the 1990
Vice President Virgin Islands Region. Executive Vice
President of the Bank since January, 1990.
Executive Vice President of BanPonce
Financial Corp. Chairman of the Boards of
Directors of Equity One, Inc., Popular
Consumer Services, Inc. and Popular
Mortgage, Inc.
</TABLE>

11
<PAGE> 14

<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
OF THE
PRINCIPAL OCCUPATION AND BUSINESS CORPORATION
NAME TITLE AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
---- ----- --- ------------------------------------- -----
<S> <C> <C> <C> <C>
Humberto Martin ...........Executive 51 Supervisor of the Operations Group. 1986
Vice President Executive Vice President of the Bank since
November 1986. Executive Vice President of
BanPonce Financial Corp.

Emilio E. Pinero ..........Executive 48 Supervisor of the Commercial Banking Group. 1990
Vice President Executive Vice President of the Bank since
January 1990. Chairman of the Board of
Popular Leasing & Rental, Inc. since April
1995. Director of Popular Mortgage, Inc.
since January 1995. Member of the Board of
Directors of Robert Morris Associates since
1995. Member of the Board of Trustees of
Fundacion Felisa Rincon de Gautier and
Fundacion Sor Isolina Ferre, since 1995.
Member of the Board of Trustees of Inter
American University of Puerto Rico since
1994. Executive Vice President of BanPonce
Financial Corp.

Carlos Rom, Jr. ...........Executive 40 Head of the Corporation's Caribbean and Latin 1997
Vice President America business expansion. Executive Vice
President since January 1997. Director of
Citizens Bank Limited, Jamaica since March
1996, and of ATH Dominicana, Inc. since
December 1995. President of the Board of
Directors of ATH Costa Rica since June 25,
1996. Chairman of the Board of Directors
of ATH Costa Rica since June 25, 1996.
Senior Vice President from September 1995
to December 1996.

Samuel T. Cespedes ........Secretary of the 60 Attorney-at-Law. Proprietary partner of the 1991
Board of Directors law firm McConnell, Valdes. Secretary of the
Board of Directors of the Bank since 1991.
Secretary of the Board of Directors of
BanPonce Financial Corp, Equity One, Inc.,
Popular Leasing & Rental, Inc. and Popular
Consumer Services, Inc.
</TABLE>

FAMILY RELATIONSHIPS

Mr. Richard L. Carrion, Chairman of the Board, President and CEO of the
Corporation and the Bank, is brother-in-law of Mr. Julio E. Vizcarrondo, Jr.,
Director. Mr. Alfonso F. Ballester, Director, is brother-in-law of Mr. Hector R.
Gonzalez, Director.

OTHER RELATIONSHIPS AND TRANSACTIONS

During 1996 the Bank engaged the legal services of the law firm of Dubon & Dubon
of which director Luis E. Dubon, Jr. is a partner, and of McConnell, Valdes of
which Mr. Samuel T. Cespedes, Secretary of the Boards of Direc-

12
<PAGE> 15

tors of the Corporation and the Bank, is a partner. The amount of fees paid to
Dubon & Dubon by the Corporation and its subsidiaries during 1996 fiscal year
was $248,045. The amount of fees paid to McConnell, Valdes did not exceed 5% of
the law firm's revenues for its last full fiscal year.

The Bank has had loan transactions with the Corporation's directors and
officers, and with their associates, and proposes to continue such transactions
in the ordinary course of its business, on substantially the same terms as those
prevailing for comparable loan transactions with other people and subject to the
provisions of the Banking Act of the Commonwealth of Puerto Rico and the
applicable federal laws and regulations. The extensions of credit have not
involved nor presently involve more than normal risks of collectibility or other
unfavorable features.

EXECUTIVE COMPENSATION PROGRAM
REPORT OF THE BANK'S HUMAN RESOURCES AND COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION

OVERVIEW

The Bank's Human Resources and Compensation Committee ("The Human
Resources Committee") consists of five non-employee directors. The Committee
endeavors to keep abreast of competitive compensation practices in regard to
salaries, incentives compensation and supplemental programs, that will retain
top-quality executive officers who will enhance shareholder value through
sustained growth.

The Human Resources Committee evaluates and recommends to the Board of
Directors the Corporation's compensation policy for the Chairman, President and
CEO, and Executive Officers. The Human Resources Committee considers among other
factors, competitive pay practices for developing a stronger relationship
between executive compensation and the Bank's long-term performance. It is kept
appraised of such competitive pay practices by an independent consultant who
conducts a periodical analysis of executive compensation of a peer group of
financial institutions similar in size, scope and business orientation ( the
"Peer Group"). On an annual basis the banking peer group used by the Committee
for comparison purposes is reviewed in light of industry developments, and
significant mergers/acquisitions, to ensure that it is consistent with the
Corporation's size and focus. The Peer Group currently consists of eleven
regional banking organizations with a retail banking emphasis. The Peer Group
used for this purpose has no intentional relation to the companies included in
the S&P 500 Index or the S&P Bank Composite Index against which the
Corporation's shareholder return is compared in the Corporation's performance
graph included on page 20.

The Executive Compensation Program for principal officers of the
Corporation's subsidiaries is set according to the industry and geographical
area in which they operate, and is approved by the Board of Directors of each
entity.

CHAIRMAN OF THE BOARD, PRESIDENT AND CEO, MR. RICHARD L. CARRION

Effective March 1996, Mr. Carrion's base salary was increased to
$500,000 in order to align base compensation to Peer Group's levels, more
specifically, to the corresponding performance quartile within the Peer Group.
Commencing in 1996 and prospectively thereafter, the Corporation's Executive
Committee requires Mr. Carrion to submit to the Committee a plan setting forth
both quantitative and intangible goals applicable to each year. Evaluations will
be made considering the goals set forth in the yearly plan.

The Executive Committee evaluates Mr. Carrion's performance by taking
into consideration the growth of the organization, implementation of a
diversification strategy, achievement of financial goals, improvements to the
product and service delivery system and development of human resources. The
weight and significance accorded to these factors is subjective in nature and
the weight assigned to each factor in determining compensation adjustments
cannot be quantified.

Mr. Carrion participates in an annual incentive program designed to
enhance achievement of short-term financial goals and to increase shareholder
value. The first incentive component could represent 15% of base salary if net
income target is met, and if the net income target is exceeded it could reach
25%. Although the threshold continues to be 100% of target, the Human Resources
Committee may recommend a discretionary bonus if results obtained are at least
95%

13
<PAGE> 16
of the pre-established financial target. The second component, designed to
enhance an increase in shareholder value, could range from 5% to 30% of base
salary, depending on the return on equity (ROE) obtained. Additionally, the
bonus award may be increased by 25% when shareholder return exceeds 20% annually
on a consecutive three-year period. Total shareholder return is calculated by
taking into account the compounded annual yield of the stock, considering the
market appreciation, dividends paid and dividend reinvestment. The maximum total
incentive bonus that may be awarded could be 68.75% of basic salary if all
components of the bonus program are achieved.

In 1996, all pre-established financial goals were exceeded and a bonus
of 68.75% was awarded. Net income after tax for the Corporation was 12% over
budget, ROE achieved was 15 basis points over the predetermined target of
16%, and total shareholder return surpassed 20% annually for the three-year
period ended December 31, 1996.

EXECUTIVE OFFICERS

The group of Executive Officers is composed of two Senior Executive
Vice Presidents and six Executive Vice Presidents, all of whom participate in
the Profit Sharing, Annual Incentive and Long-Term Incentive Plans. The
President and CEO recommends to the Board of Directors of the Bank, for their
approval, the salary increases and the bonuses to be awarded to the Executive
Officers pursuant to the incentive plans.

The salary increase program allows discretionary salary increases based
on individual performance to be twice than that based on team increases. It
provides the CEO the opportunity to recognize changes in individual
responsibilities and performance levels.

Each Executive Officer participates in the Annual Incentive Plan. In
1996 the pre-determined financial targets were achieved and a bonus of 68.75%
was awarded to six of them. Since, two of them were recently promoted to
Executive Vice Presidents in 1997, their incentive bonus for 1996 was equivalent
to that of a Senior Vice President as their previous positions. Their 1996 bonus
ranged from 36% to 37.5% of their base salary.

HUMAN RESOURCES AND COMPENSATION COMMITTEE

Salustiano Alvarez Mendez Francisco M. Rexach, Jr.
Esteban D. Bird Julio E. Vizcarrondo, Jr.
Hector R. Gonzalez

EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid by the
Corporation or its subsidiaries to the nine highest paid Executive Officers of
the Corporation and the principal officers of the Corporation's or the Bank's
subsidiaries for 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION> Long-Term
iscal Annual Compensation All other Incentive Plan
Year Salary(a) Bonus(b) Other(c) Compensation(d) Payouts(e) Total
---- --------- -------- -------- --------------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Richard L Carrion .................. 1996 $475,000 $399,889 -0- $ 56,558 55,535 $986,982
Chairman, 1995 350,000 75,107 -0- 36,744 461,851
President and CEO 1994 330,000 39,712 -0- 37,556 407,268

Jorge A Junquera ................... 1996 291,351 240,468 -0- 35,305 36,449 603,573
Senior Executive Vice President 1995 245,042 53,096 -0- 25,690 323,828
of the Corporation 1994 227,222 26,927 -0- 25,859 280,008

David H Chafey, Jr ................. 1996 290,451 240,357 -0- 35,196 35,660 601,664
Senior Executive Vice President 1995 239,713 51,897 -0- 25,680 317,290
of the Corporation 1994 222,118 26,287 -0- 25,278 273,683
</TABLE>

14
<PAGE> 17

<TABLE>
<CAPTION>
Long-Term
Fiscal Annual Compensation All other Incentive Plan
Year Salary(a) Bonus(b) Other(c) Compensation(d) Payments(e) Total
---- --------- -------- -------- --------------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Larry B Kesler ............................. 1996 207,488 168,163 -0- 25,143 29,023 429,817
Executive Vice President of the Corporation 1995 195,168 42,238 -0- 20,909 258,315
1994 180,975 21,396 -0- 20,596 222,967

Maria Isabel P de Burckhart ................ 1996 201,285 162,919 -0- 24,391 28,377 416,972
Executive Vice President of the Corporation 1995 190,848 41,309 -0- 20,446 252,603
1994 177,100 20,938 -0- 20,155 218,193

Humberto Martin ............................. 1996 198,391 161,198 -0- 24,039 27,337 410,965
Executive Vice President of the Corporation 1995 183,695 39,732 -0- 19,679 243,106
1994 170,337 20,114 -0- 19,385 209,836

Emilio E Pinero ............................ 1996 188,677 152,579 -0- 22,863 26,835 390,954
Executive Vice President of the Corporation 1995 180,337 39,118 -0- 18,733 238,188
1994 167,471 20,159 -0- 19,059 206,689

Roberto R Herencia(f) ...................... 1996 180,000 88,366 -0- 21,782 290,148
Executive Vice President of the Corporation

Carlos Rom, Jr (f) .......................... 1996 155,100 74,562 -0- 18,794 248,456
Executive Vice President of the Corporation

Thomas J Fitzpatrick ....................... 1996 275,000 156,000 -0- 72,288 503,288
President of Equity One, Inc (a wholly-owned 1995 260,000 690,048 153,700 54,934 1,158,682
subsidiary of Banco Popular, FSB) 1994 236,250 150,000 -0- 15,708 401,958

Michael Polanski ............................ 1996 152,000 176,962 -0- 3,032 331,994
President of Pioneer Bancorp, Inc 1995 144,610 53,625 -0- 10,123 208,358
(a wholly-owned subsidiary of BanPonce 1994 145,000 10,109 -0- 7,000 162,109
Financial Corp )

Churchill Carey(f) .......................... 1996 150,000 6,000 -0- 3,750 159,750
President of Popular Mortgage, Inc 1995 112,500 2,885 -0- 3,375 118,760
(a wholly-owned subsidiary of the Bank)

Kenneth McGrath(f) .......................... 1996 150,000 188,200 -0- 65,750 403,950
President of BP Capital Markets, Inc 1995 100,000 128,940 -0- 8,750 237,690
(a wholly-owned subsidiary of
the Corporation)

Andres F Morrell ........................... 1996 132,000 45,100 -0- 3,750 180,850
President of Popular Leasing & Rental, 1995 130,998 5,300 -0- 12,638 148,936
Inc (a wholly-owned subsidiary of the 1994 120,116 25,680 -0- -0- 145,796
Bank)

Edgardo Novoa ............................... 1996 128,858 39,692 -0- 3,742 172,292
President of Popular Consumer Services, Inc 1995 118,000 22,736 -0- 1,975 142,711
(a wholly-owned subsidiary of the Bank) 1994 110,000 19,460 -0- -0- 129,460

Richard F Demerjian(f) ..................... 1996 37,876 -0- -0- -0- 37,876
President and CEO of CombanCorp
(a wholly-owned subsidiary of BanPonce
Financial Corp)
</TABLE>

- ----------

(a) Salaries before deductions.
(b) For the Bank's Senior Management Committee (SMC) bonus amount includes
Christmas bonus, the bonus awarded under the Annual Management
Incentive Compensation Plan and the cash portion payable under the
Profit Sharing Plan of the Bank, which is described on page 18. For
Messrs. Morrell, Novoa and McGrath amount includes Christmas and
performance bonus. For Mr. Fitzpatrick amount includes performance
bonus. For Mr. Polanski, the bonus includes the second and last payment
of a bonus established on his employment agreement signed at the time
of the acquisition of Pioneer Bancorp, Inc.
(c) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such benefits does not exceed the
lesser of $50,000 or 10% of total amount of annual salary and bonus of
any named

15
<PAGE> 18

individual. In the case of Mr. Fitzpatrick includes amounts payable to
compensate him for certain taxes payable by him with respect to the
bonus received in 1995 under his employment agreement.
(d) For the Bank's SMC amount includes deferred portion awarded under the
Profit Sharing Plan of the Bank, amounts accrued under the Benefit
Restoration Plan, the amount from the Profit Sharing deferred and
allocated to Stock Plan and Bank's matching contributions to Stock
Plan, which are described on pages 18 and 19. For Messrs. Morrell,
Novoa and Carey amount includes the employer matching contributions on
tax-qualified plans under Section 1165(e) of Puerto Rico Internal
Revenue Code of 1994. For Mr. McGrath, amount includes contribution to
1165(e) plans, Profit Sharing Deferred portion into this plan and a
deferred portion of the performance bonus. For Mr. Thomas J.
Fitzpatrick, these amounts represent the contribution of Equity One,
Inc. pursuant to Section 401(k) of the Internal Revenue Code and
deferred compensation under Supplementary Executive Retirement Plan.
For Mr. Michael Polanski these amounts represent the contribution of
Pioneer Bancorp., Inc. pursuant to Section 401(k) of the Internal
Revenue Code and Profit Sharing Plan's deferred portion.
(e) For the Plan Year ended December 31, 1996, the three year average
ROE target was not achieved, nor the Peer Group three year average
median ROE was exceeded. However, since BanPonce's average ROE
represented an improvement of 57.08% over the base year ROE compared
to the Peer's median ROE, the Human Resources and Compensation
Committee approved a discretionary bonus of 25% of the total stock
awarded at the beginning of the Plan Year, including dividends and
adjusted for the stock split. On March 12, 1997, 5,889 common shares
were purchased in the open market at the price of $35.875. All
Executive Officers selected to defer the incentive payment, except
Mrs. Maria Isabel P. de Burckhart, Mr. Humberto Martin and Mr. Larry
Kesler.
(f) Information presented for 1996, 1995 and 1994, except for Messrs.
Churchill Carey and Kenneth McGrath, who were appointed President of
Popular Mortgage, Inc. and BP Capital Markets, Inc., respectively,
during 1995, for Mr. Demerjian, who was appointed President and CEO of
CombanCorp during 1996, and for Messrs. Roberto R. Herencia and Carlos
Rom Jr., who were appointed Executive Officers in 1997. No disclosure
is required with respect to these officers.

LONG-TERM INCENTIVE PLAN

The Board of Directors approved in 1994 a three-year incentive plan to
encourage long-term corporate performance and objectives.

A set percentage of base salary is used in determining the initial
amount of the Incentive Payment at the beginning of each Plan Year. On March
12, 1997, the Committee approved the fourth Plan Year and amended such plan by
increasing the percentage of base salary used in the calculation of the stock
average to 50%, from 25% as originally stated. The target used is based on
average ROE. The incentive payment shall be made in common stock of the
Corporation. All common stock to be awarded under this program will be purchased
in the open market.

The amount of the shares payout is determined by multiplying the
participant's target shares by a factor determined based on his level of
attainment expressed as a percentage. This Long-Term Incentive Plan defines the
incentive payment as follows: 75% based on the attainment of a pre-established
three-year average ROE objective for the performance period and 25% based on the
achievement of an average ROE greater than the Peer Group's three-year average
median ROE.

In 1996, 1995 and 1994 awards of performance shares under the Long-Term
Incentive Plan were established to the Executive Officers as set forth below:

LONG-TERM INCENTIVE AWARDS

ESTIMATED FUTURE PAYOUTS
NON-STOCK-PRICE BASED PLANS
---------------------------
NUMBER PERFORMANCE NUMBER OF SHARES(A)
OF PERIOD -------------------
NAME YEAR SHARES(A) UNTIL PAYOUT THRESHOLD TARGET MAXIMUM
---- ---- --------- ------------ --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Carrion ..... 1997 7,695.60 1/1/97-12/31/99 -- 7,695.60 15,391.20
1996 6,317.28 1/1/96-12/31/98 -- 6,317.28 12,634.56
1995 5,985.98 1/1/95-12/31/97 -- 5,985.98 11,971.96
1994 5,630.98 1/1/94-12/31/96 -- 5,630.98 11,261.96
Jorge A. Junquera ...... 1997 5,540.85 1/1/97-12/31/99 -- 5,540.85 11,081.70
1996 3,790.37 1/1/96-12/31/98 -- 3,790.37 7,580.74
1995 4,243.29 1/1/95-12/31/97 -- 4,243.29 8,486.58
1994 3,695.96 1/1/94-12/31/96 -- 3,695.96 7,391.92
David H. Chafey, Jr..... 1997 5,540.85 1/1/97-12/31/99 -- 5,540.85 11,081.70
1996 3,790.37 1/1/96-12/31/98 -- 3,790.37 7,580.74
1995 4,151.00 1/1/95-12/31/97 -- 4,151.00 8,302.00
1994 3,615.58 1/1/94-12/31/96 -- 3,615.58 7,231.16
</TABLE>

16
<PAGE> 19

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NON-STOCK-PRICE BASED PLANS
---------------------------
NUMBER PERFORMANCE NUMBER OF SHARES(A)
OF PERIOD -------------------
NAME YEAR SHARES(A) UNTIL PAYOUT THRESHOLD TARGET MAXIMUM
---- ---- --------- ------------ --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Larry B. Kesler ........ 1997 3,707.52 1/1/97-12/31/99 -- 3,707.82 7,415.04
1996 2,646.49 1/1/96-12/31/98 -- 2,646.49 5,292.98
1995 3,379.65 1/1/95-12/31/97 -- 3,379.65 6,759.30
1994 2,943.72 1/1/94-12/31/96 -- 2,943.72 5,887.44

Maria Isabel P ......... 1997 3,497.58 1/1/97-12/31/99 -- 3,497.58 6,995.16
de Burckhart 1996 2,563.50 1/1/96-12/31/98 -- 2,563.50 5,127.00
1995 3,304.84 1/1/95-12/31/97 -- 3,304.84 6,609.68
1994 2,878.56 1/1/94-12/31/96 -- 2,878.56 5,757.12

Humberto Martin ........ 1997 3,555.38 1/1/97-12/31/99 -- 3,555.38 7,110.76
1996 2,537.92 1/1/96-12/31/98 -- 2,537.92 5,075.84
1995 3,180.96 1/1/95-12/31/97 -- 3,180.96 6,361.92
1994 2,770.66 1/1/94-12/31/96 -- 2,770.66 5,541.32

Emilio E. Pinero ....... 1997 3,215.00 1/1/97-12/31/99 -- 3,215.00 6,430.00
1996 2,399.23 1/1/96-12/31/98 -- 2,399.23 4,798.46
1995 3,122.82 1/1/95-12/31/97 -- 3,122.82 6,245.64
1994 2,720.02 1/1/94-12/31/96 -- 2,720.02 5,440.04
</TABLE>

(a) the number of shares for 1995 and 1994 were adjusted to reflect a
stock split of one share for each share outstanding effected in a form of a
dividend, on July 1, 1996.

The share awards shown above are payable at the end of each three-year
performance period if objectives are attained. Dividends that would be payable
on the shares of stock, if they were held by the Executive Officers, will be
credited and become part of the Incentive Payment. At the option of the
participant, a portion equal to the estimated tax due with respect to the
incentive payments of the awards may be paid in cash.

If the Corporation's target is met or exceeded, the share payments
corresponding to the Corporation's and Peer Group's goals are increased
separately by a leverage factor that cannot exceed two times the target share
amounts.

Even if the ROE for the Corporation does not equal or exceed the Peer
three-year average median ROE, the Human Resources and Compensation Committee,
at its own discretion, may recommend the distribution of 25% of the targeted
bonus if the results attained for the Plan Year average represent an improvement
of no less than 25% over the base year.

For the Plan Year ended December 31, 1996, the three year average ROE target was
not achieved, nor the Peer Group three year average median ROE was exceeded.
However, since BanPonce's average ROE represented an improvement of 57.08% over
the base year ROE compared to the Peer's median ROE, the Human Resources and
Compensation Committee approved a discretionary bonus of 25% of the total stock
awarded at the beginning of the plan year, including dividends and adjusted for
the stock split. On March 12, 1997, 5,889 common shares were purchased in the
open market at the price of $35.875. All Executive Officers selected to defer
the incentive payment, except Mrs. Maria Isabel P. de Burckhart, Mr. Humberto
Martin and Mr. Larry Kesler. This alternative is an amendment to the original
Plan that was approved by the Board of Directors in December 1996.

OTHER INCENTIVE COMPENSATION PLANS

The Bank has an Annual Management Incentive Plan for different
management levels. Under this Plan, incentive bonuses are based on individual
performance as well as the Corporation or Bank's performance, measured by net
income and ROE. The weight assigned to the Corporation or the Bank's performance
objectives varies according to management level, but the weight of individual
performance applies equally to all managers participating.

17
<PAGE> 20

The Bank also has an Excellence in Performance Program in which all
employees participate. This program rewards employees for extraordinary personal
contributions that are non-recurring in nature, typically not recognizable
through merit or promotional salary action, and clearly recognized as such by
management and peers alike.

Additionally, the Bank has several functional incentive programs that
reward employee productivity in specific areas.

PROFIT SHARING PLAN OF THE BANK

All officers and regular monthly salaried employees of the Bank as of
January 1, 1976, or hired after that date, are active participants in the Bank's
Profit Sharing Plan, as of the first day of the calendar month following
completion of one year of service.

Under this plan the Bank's annual contribution is determined by the
Board of Directors based on the profits of the Bank for the year. The amount
allocated to each officer or employee is based on his or her earned salary for
the year. The total amount contributed for the year 1996 was $23,495,571, of
which 50% was contributed to the Deferred Compensation Plan, 10% to the Stock
Plan and the remainder was paid in cash.

BENEFIT RESTORATION PLAN OF THE BANK

Effective January 1, 1994, the Internal Revenue Service (IRS) set a
limit of $150,000 as the amount of compensation that may be considered in
calculating future retirement payments from qualified pension plans. This
tax law applies to the Bank's Retirement, Profit Sharing and Stock Plan.

The Board of Directors has approved a "Benefit Restoration Plan" for
those officers whose annual compensation is higher than the established limit.
This non-qualified plan will provide those benefits that cannot be accrued under
the Bank's Retirement and Profit Sharing Plan, which are qualified plans.
Benefits under the Benefit Restoration Plan shall be equal to the account
balance that would be provided under the Profit Sharing Plan and equal to the
benefits that would have been accrued under the Retirement Plan. The Plan is
unfunded.

RETIREMENT PLAN OF THE BANK

The Bank has a non-contributory, defined benefit Retirement Plan
covering substantially all regular monthly employees. Monthly salaried employees
are eligible to participate in the Plan following the completion of one year of
service and 21 years of age. Pension costs are funded in accordance with the
minimum funding standards under the Employee Retirement Income Security Act
("ERISA").

The basis for the Retirement Plan formula is Total Compensation, which
includes, Christmas Bonus, incentives, overtime, differentials, Profit Sharing
cash bonuses and any other compensation received by the employees. Benefits are
paid on the basis of a straight life annuity plus supplemental death benefits
and are not reduced for Social Security or other payments received by
participants.

Normal retirement age at the Bank is a combination of years of age and
completed years of service totalling 75. Meanwhile, early retirement is at 55
years of age with 10 years of service. Employees with 30 years of service or
more are provided with a retirement benefit of 40% of Total Compensation.
Benefits are reduced only if the employee retires before age 55. Benefits are
subject to the U.S. Internal Revenue Code limits on compensation and benefits.

18
<PAGE> 21

The following table sets forth the estimated annual benefits that would
become payable under the Retirement Plan and the Benefit Restoration Plan based
upon certain assumptions as to total compensation levels and years of service.
The amounts payable in this table are not necessarily representative of amounts
that may actually become payable under the plans. The amounts represent the
benefits upon retirement on December 31, 1996, of a participant at age 65.

<TABLE>
<CAPTION>
Total
Compensation Estimated Annual Benefits / Years of Service
----------------------------------------------------------------------------
15 20 25 30 35
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$1,000,000 $183,000 $256,000 $328,000 $400,000 $400,000
900,000 165,000 230,000 295,000 360,000 360,000
800,000 146,000 204,000 262,000 320,000 320,000
700,000 128,000 179,000 230,000 280,000 280,000
600,000 110,000 153,000 197,000 240,000 240,000
500,000 92,000 128,000 164,000 200,000 200,000
400,000 73,000 102,000 131,000 160,000 160,000
300,000 55,000 77,000 98,000 120,000 120,000
</TABLE>

The 1996 total compensation and estimated years of service at age 65
for the five highest paid key policy-making Executive Officers are as follows:

<TABLE>
<CAPTION>
1996 ESTIMATED YEARS
TOTAL OF SERVICE AT
COMPENSATION AGE 65
------------ ------
<S> <C> <C>
Richard L. Carrion ................... $987,000 41.5
Jorge A. Junquera .................... 604,000 42.3
David H. Chafey, Jr .................. 602,000 38.5
Larry B. Kesler ...................... 430,000 16.5
Maria Isabel P. de Burckhart ......... 417,000 35.3
</TABLE>

STOCK PLAN OF THE BANK

The Bank has adopted two Stock Plans, one covering employees of the
Bank in Puerto Rico and another covering employees of the Bank in the U.S., and
the British and U.S. Virgin Islands. All regular monthly salaried employees are
eligible to participate in the Stock Plans following the completion of
three-months of service.

The Bank may contribute a discretionary amount based on the profits of
the Bank for the year, which is allocated to each officer or employee based on
his or her basic salary for the year, as determined by the Board of Directors.
The Stock Plans also allow employees to voluntarily elect to defer a
predetermined percentage not to exceed 10% of their pre-tax base compensation
(after tax in the British Virgin Islands) up to a maximum amount as determined
by the applicable tax laws. The Bank will match 50% of the amount contributed by
a participant up to a maximum of 2% of the participant's annual base salary.

All contributions to the Stock Plans are invested in shares of common
stock of the Corporation, which are purchased in the open market.

19
<PAGE> 22

BANPONCE CORPORATION
PERFORMANCE GRAPH

The following Performance Graph compares the cumulative total
shareholder return during the measurement period with the cumulative total
return, assuming reinvestment of dividends, of the S & P 500 Index and the S & P
Bank Composite Index. The cumulative total shareholder return was obtained by
dividing (i) the cumulative amount of dividends per share, assuming dividend
reinvestment, since the measurement date, December 31, 1991 plus (ii) the change
in the per share price since the measurement date, by the share price at the
measurement date.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
TOTAL RETURN AS OF DECEMBER 31
(DECEMBER 31, 1991 = 100)

BanPonce Corporation
--------------------
TOTAL SHAREHOLDER RETURNS
-------------------------
(DIVIDENDS REINVESTED)

INDEXED RETURNS
Base Years Ending
Period
Company/Index Dec91 Dec92 Dec93 Dec94 Dec95 Dec96
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BANPONCE CORP 100 161.95 171.15 160.36 228.06 407.92
BANKS COMPOSITE 100 131.87 145.37 137.92 219.78 311.09
S&P 500 INDEX 100 107.62 118.46 120.03 165.13 203.05
</TABLE>

INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors intends to retain the services of Price
Waterhouse as the independent auditors of the Corporation for the year 1997.
This international firm of public accountants has served as independent auditors
of the Bank since 1971 and of the Corporation since May 1991, when it was
appointed by the Board of Directors.

Representatives of Price Waterhouse will attend the Stockholders
Meeting and will be available to answer any questions that may arise; they will
also have the opportunity to make a statement if they so desire.

20
<PAGE> 23

RESTATED ARTICLES OF INCORPORATION
PROPOSAL 2: AMENDMENT TO ARTICLE FIRST OF
RESTATED ARTICLES OF INCORPORATION

The Board of Directors recommends the amendment of Article First of the
Corporation's Restated Articles of Incorporation in the manner shown in Annex I
hereto. The proposed amendment to Article First would change the name of the
Corporation from BanPonce Corporation to Popular, Inc.

The Board of Directors believes that the change of the Corporation's
name is necessary to provide a cohesive identity throughout the organization in
light of the geographic and business diversification strategies being currently
pursued. The proposed name would capitalize on the strength and tradition of the
Corporation's principal subsidiary Banco Popular, Puerto Rico's premier banking
institution. At the same time, it recognizes that the Corporation is a diverse,
multifaceted organization encompassing a broad range of financial services
including: mortgage banking, lease financing, consumer finance, investment
banking, and processing services operating in various geographic markets.

The resolution attached to this Proxy Statement as Annex I will be
submitted for adoption at the Annual Meeting. The affirmative vote of two thirds
(2/3) of the outstanding shares of the Corporation's Common Stock, par value
$6, is necessary for the adoption of the amendment to Article First. Proxies
will be voted in favor of the resolutions unless otherwise instructed by the
stockholders. Abstentions and shares not voted by brokers and other entities
holding shares on behalf of the beneficial owners will have the same effect as
votes cast against the Amendment. The Board has declared the desirability of
its adoption and recommends a vote FOR the resolutions.

RESTATED ARTICLES OF INCORPORATION
PROPOSAL 3: AMENDMENT TO ARTICLE FIFTH OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION

The Board of Directors recommends the amendment of Article Fifth of the
Corporation's Restated Articles of Incorporation in the manner shown in Annex II
hereto. The proposed Amendment to Article Fifth would change the number of
authorized shares of the Corporation's Common Stock, par value $6, from ninety
million (90,000,000) to one hundred and eighty million (180,000,000) shares.
These changes would be effective upon the date of filing the Amendment to the
Restated Articles with the Department of State in the Commonwealth of Puerto
Rico.

The Board of Directors believes that it is in the best interest of the
Corporation and its stockholders that the Corporation has sufficient number of
authorized but unissued shares available for possible use in future acquisition
and expansion opportunities that may arise, for general corporate needs such as
future stock dividends or stock splits, and for other proper purposes within the
limitations of the law, as determined by the Board of Directors. The Corporation
has no current plans to use its authorized but unissued shares of Common Stock,
par value $6, for any particular purpose, acquisition except for issuance of
shares pursuant to the acquisiition of Roig Commercial Bank in Puerto Rico and
National Bancorp, Inc., the parent company, of American Midwest in Illinois.
The Corporation currently has sufficient common stock to issue for the
acquisition of both of these entities without the approval of the proposed
amendment to increase its outstanding shares of common stock. Such shares would
be available for issuance without further action by the shareholders, except as
otherwise limited by applicable law.

If additional shares of Common Stock are issued by the Corporation, it
may potentially have an anti-takeover effect by making it more difficult to
obtain shareholders' approval of various actions, such as a merger. Also, the
issuance of additional shares of Common Stock may have a dilutive effect on
earnings per share and equity, and may have a dilutive effect on the voting
power of existing shareholders if the preferential rights provided in Article
Sixth are not applicable. The terms of any Common Stock issuance will be
determined by the Corporation's Board of Directors, will depend upon the reason
for the issuance and largely on market conditions and other factors existing at
the time. The increase in authorized shares of Common Stock has not been
proposed in connection with any anti-takeover related purpose and the Board of
Directors and management have no knowledge of any current efforts by anyone to
obtain control of the Corporation or to effect large accumulations of the
Corporation's Common Stock.

21
<PAGE> 24

The resolution attached to this proxy as Annex II will be submitted for
adoption at the Annual Stockholders meeting. The affirmative vote of a majority
of the holders of shares of Common Stock, par value $6, of the Corporation is
necessary to adopt the proposed amendment in accordance with the terms of
Article Fifth of the Restated Articles of Incorporation. Proxies will be voted
for the resolutions unless otherwise instructed by the stockholders.
Abstentions and shares not voted by brokers and other entities holding shares
on behalf of beneficial owners will have the same effect as votes cast against
the proposed Amendment. The Board of Directors has declared the desirability of
the adoption of this amendment and recommends a vote FOR the resolutions.

INCORPORATION BY REFERENCE

The Form 10K, audited financial statements, certain supplemental
financial information and Management Discussion and Analysis of Financial
Condition and Results of Operations included in the Corporation's Annual
Report to Stockholders for the year ended December 31, 1996, which accompany
this Proxy and is hereby incorporated by reference herein. In addition, all
documents filed by the Corporation pursuant to Section 13(a) of the Securities
Exchange Act of 1934 subsequent to the date of this Proxy Statement and prior
to the Annual Meeting shall be deemed to be incorporated by reference herein.

PROPOSALS OF SECURITY HOLDERS TO BE PRESENTED AT THE 1998
ANNUAL MEETING OF STOCKHOLDERS

Stockholders' proposals intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Corporate Secretary, at its
principal executive offices, Popular Center Building, San Juan, Puerto Rico,
00918, not later than November 25, 1997 for inclusion in the Corporation's Proxy
Statement and Form of Proxy relating to the 1998 Annual Meeting of Stockholders.

OTHER MATTERS

Management does not know of any other matters to be brought before the
Meeting other than those described previously. Proxies in the accompanying form
will confer discretionary authority to Management with respect to any such other
matters presented at the meeting.

To avoid delays in ballot taking and counting, and in order to assure
that your Proxy is voted in accordance with your wishes, compliance with the
following instructions is respectfully requested: upon signing a Proxy as
attorney, executor, administrator, trustee, guardian, authorized officer of a
corporation, or on behalf of a minor, please give full title. If shares are in
the name of more than one recordholder, all should sign.

Whether or not you plan to attend the Meeting, it is very important
that your shares be represented and voted in the Meeting. Accordingly, you are
urged to properly complete, sign, date and return your Proxy Card.

San Juan, Puerto Rico, March 20, 1997

RICHARD L. CARRION SAMUEL T. CESPEDES
Chairman, President Secretary
and Chief Executive Officer

22
<PAGE> 25

ANNEX I

PROPOSED AMENDMENT TO ARTICLE FIRST
OF RESTATED ARTICLES OF INCORPORATION

RESOLVED, that Article First of the Restated Articles of Incorporation
of BanPonce Corporation be, and it hereby is, amended in its entirety to read as
follows:

"FIRST: The name of the Corporation is Popular, Inc."

RESOLVED, FURTHER, that the proper officers of the Corporation be, and
hereby are, authorized and directed to take all actions, execute all
instruments, and make all payments that are necessary or desirable, at their
discretion, to make effective the foregoing amendment to the Restated Articles
of Incorporation of the Corporation, including without limitation, filing a
certificate of such amendment with the Secretary of State of the Commonwealth of
Puerto Rico.

ANNEX II

PROPOSED AMENDMENT TO ARTICLE FIFTH
OF RESTATED ARTICLES OF INCORPORATION

RESOLVED, that Article Fifth of the Restated Articles of Incorporation
of the Corporation be, and it hereby is, amended in its entirety to read as
follows:

"FIFTH: The minimum amount of capital with which the Corporation shall
commence business shall be $1,000.

The total number of shares of all classes of capital stock that the
Corporation shall have authority to issue, upon resolutions approved by the
Board of Directors from time to time, is one hundred ninety million shares
(190,000,000), of which one hundred eighty million shares (180,000,000) shall be
shares of Common Stock of the par value of $6, per shares (hereinafter called
"Common Stock"), and ten million (10,000,000) shall be shares of Preferred
Stock without par value (hereinafter called "Preferred Stock").

The amount of the authorized capital stock of any class or classes of
stock may be increased or decreased by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote.

The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of the Preferred Stock
shall be as follows:

(1) The Board of Directors is expressly authorized at
any time, and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series, and with such voting powers, full or
limited but not to exceed one vote per share, or without voting powers, and with
such designations, preferences, and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
shall be expressed in the resolution or resolutions providing for the issue
thereof adopted by the Board of Directors and as are not otherwise expressed in
this Certificate of Incorporation or any amendment thereto, including (but
without limiting the generality of the foregoing) the following:

(a) the designation of such series;

(b) the purchase price that the Corporation shall
receive for each share of such series;

(c) the dividend rate of such series, the conditions
and dates upon which such dividends shall be payable, the preference or relation
that such dividends shall bear to the dividends payable on any other class or
classes or on any other series of any class or classes of capital stock of the
Corporation, and whether such dividends shall be cumulative or non-cumulative;

23
<PAGE> 26

(d) whether the shares of such series shall be
subject to redemption by the Corporation, and, if made subject to such
redemption, the times, prices and other terms and conditions of such redemption;

(e) the terms and amounts of any sinking fund
provided for the purchase or redemption of the shares of such series;

(f) whether the shares of such series shall be
convertible into or exchangeable for shares of any other class of classes or of
any other series of any class or classes of capital stock of the Corporation,
and, if provision be made for conversion or exchange, the times, prices, rates,
adjustments and other terms and conditions of such conversion or exchange;

(g) the extent, if any, to which the holders of the
shares of such series shall be entitled to vote as a class or otherwise with
respect to the election of directors or otherwise;

(h) the restrictions and conditions, if any, upon the
reissue of any additional Preferred Stock ranking on a parity with or prior to
such shares as to dividends or upon dissolution;

(i) the rights of the holders of the shares of such
series upon the dissolution of, or upon the distribution of assets of, the
Corporation, which rights may be different in the case of a voluntary
dissolution than in the case of an involuntary dissolution.

(2) Except as otherwise required by law and except for such voting powers with
respect to the election of directors or other matters as may be stated in the
resolutions of the Board of Directors creating any series of Preferred Stock,
the holders of any such series shall have no voting power whatsoever.

RESOLVED FURTHER, that the proper officers of the Corporation be, and
hereby are, authorized and directed to take all actions, execute all
instruments, and make all payments that are necessary or desirable, at their
discretion, to make effective the foregoing amendment to the Restated Articles
of Incorporation of the Corporation, including without limitation on filing a
certificate of such amendment with the Secretary of State of the Commonwealth of
Puerto Rico."

24
<PAGE> 27
APPENDIX

<TABLE>
<CAPTION>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
<S> <C>
[BANPONCE CORPORATION LOGO] The undersigned hereby appoints Richard L. Carrion, Jorge A. Junquera and David
H. Chafey Jr. as Proxies, each with the power to appoint his substitute, and
P.O. Box 362708 authorizes them to represent and to vote as designated below all the shares of
San Juan, Puerto Rico 00936-2708 common stock of BanPonce Corporation held on record by the undersigned on March
7, 1997, at the Annual Meeting of Shareholders to be held at the Centro Europa
Building, 3rd Floor, San Juan, Puerto Rico, on April 25, 1997, at 10:00 a.m. or
at any adjournments thereof, as follows:

1. ELECTION OF DIRECTORS - Nominees:

SALUSTIANO ALVAREZ MENDEZ ALFONSO F. BALLESTER JORGE A. JUNQUERA
[ ] VOTE GRANTED FOR all nominees [ ] VOTE WITHHELD FOR all nominees

[ ] Vote granted, except for the following nominee(s) (insert in the space provided below the names of those nominees
for whom you do not wish to vote)

2. TO AMEND ARTICLE FIRST of the Restated Articles of Incorporation to change the name of the Corporation to Popular, Inc.

[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] VOTE WITHHELD

3. TO AMEND ARTICLE FIFTH of the Restated Articles of Incorporation to increase the authorized number of shares of common
stock, par value $6, from 90,000,000 to 180,000,000.

[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] VOTE WITHHELD

4. AT THEIR DISCRETION, the Proxies are authorized to vote upon such other business as may properly come before the Meeting.
This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED "FOR" ITEM 1, 2 and 3. Please refer to instructions below.

-----------------------------------------
Signature

-------------------
DATE

(VEA AL DORSO TEXTO EN ESPANOL)

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
No Postage is required if mailed in the United States, Puerto Rico or the U.S. Virgin Islands.
- ------------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -

INSTRUCTIONS:
- -------------------------------
Please sign exactly as your name appears above. When shares are held by joint
ANNUAL MEETING tenants or by tenants in common, each holder should sign. When signing as
OF attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, the president or other authorized officer should sign
[BANPONCE CORPORATION LOGO] under the full corporate name and the position of such authorized officer should
appear below the signature. If a partnership, please sign in partnership name by
- ------------------------------- authorized person.

Friday, April 25, 1997 [GRAPHIC OMITTED]
10:00 a.m.
Centro Europa Building
San Juan, Puerto Rico
</TABLE>

<PAGE> 28

APODERAMIENTO ESTE APODERAMIENTO SE SOLICITA A NOMBRE DE LA JUNTA DE DIRECTORES.

[BANPONCE CORPORATION LOGO] El que suscribe por la presente designa a Richard L. Carrion, Jorge A. Junquera
y a David H. Chafey, Jr. como Apoderados, cada uno con plenas facultades de
P.O. Box 362708 sustitucion y autoriza a cualquiera de ellos a representar y votar todas las
San Juan, Puerto Rico 00936-2708 acciones comunes de BanPonce Corporation registradas a nombre del que suscribe
en los libros de la Corporacion al 7 de marzo de 1997 en la Reunion Ordinaria de
Accionistas a celebrarse en el Edificio Centro Europa, Tercer Piso, San Juan,
Puerto Rico, el 25 de abril de 1997 a las 10:00 a.m., o en cualquier
continuacion de esa reunion, como sigue:

1. ELECCION DE DIRECTORES - Candidatos:

SALUSTIANO ALVAREZ MENDEZ ALFONSO F. BALLESTER JORGE A. JUNQUERA

[ ] VOTO A FAVOR de todos los candidatos [ ] AUTORIDAD NO CONCEDIDA para votar por todos los candidatos

[ ] VOTO A FAVOR, excepto por los siguientes candidatos (escriba en el espacio provisto abajo los nombres de los
candidatos a favor de quienes usted no quiere votar)

2. PARA ENMENDAR EL ARTICULO PRIMERO de los Articulos de Incorporacion Enmendados, para cambiar el nombre de BanPonce
Corporation a Popular, Inc.

[ ] VOTO A FAVOR [ ] VOTO EN CONTRA [ ] ME ABSTENGO DE VOTAR [ ] AUTORIDAD NO CONCEDIDA para votar

3. PARA ENMENDAR EL ARTICULO QUINTO de los Articulos de Incorporacion Enmendados para aumentar el numero de acciones autorizadas
con un valor par de $6, de 90,000,000 a 180,000,000.

[ ] VOTO A FAVOR [ ] VOTO EN CONTRA [ ]ME ABSTENGO DE VOTAR [ ]AUTORIDAD NO CONCEDIDA para votar

4. LOS APODERADOS QUEDAN AUTORIZADOS a votar, a su discrecion, sobre cualquier otro asunto que pueda propiamente traerse ante la
Reunion. ESTE APODERAMIENTO DEBIDAMENTE FORMALIZADO SE EJERCITARA DE ACUERDO CON LA SELECCION QUE HAGA EL ACCIONISTA QUE
SUSCRIBE. SI NO SE HACE SELECCION ALGUNA, ESTE APODERAMIENTO SE VOTARA "A FAVOR" DEL ASUNTO 1, 2 Y 3. Favor de referirse a la
parte inferior para instrucciones.

-----------------------------------------
Firma

---------------------------
FECHA

(ENGLISH VERSION ON REVERSE SIDE)

FAVOR DE FIRMAR, FECHAR Y DEVOLVER ESTA TARJETA DE APODERAMIENTO PRONTAMENTE EN EL SOBRE INCLUIDO. No se requiere franqueo si se
envia por correo en los Estados Unidos, Puerto Rico o las Islas Virgenes Estadounidenses.
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DOBLE Y DESPRENDA AQUI

Instrucciones:
-----------------------------
Favor de firmar exactamente como aparece su nombre arriba. Todos los duenos
Reunion Anual mancomunados deben firmar. Cuando firme como apoderado, albacea, administrador,
de fiduciario o custodio, favor de hacer constar claramente en la condicion que
firma. Si se trata de una corporacion, debera firmar el presidente u otro
(BANPONCE CORPORATION LOGO) oficial debidamente autorizado bajo el nombre completo de la corporacion y el
puesto de dicho oficial debera aparecer debajo de su firma. Si se trata de una
----------------------------- sociedad, debera firmar una persona debidamente autorizada a nombre de la
sociedad.
Viernes, 25 de abril de 1997
10:00 a.m.
Edificio Centro Europa [GRAPHIC OMMITTED]
San Juan, Puerto Rico
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