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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 8, 1997
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BANPONCE CORPORATION
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(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO NO. 0-13818 NO. 66-0416582
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number Identification No.)
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (787) 765-9800
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On January 8, 1997, BanPonce Corporation (the "Corporation") announced
by way of a news release, its operational results for the year ended December
31, 1996. A copy of the Corporation's release, dated January 8, 1997, is
attached hereto as Exhibit 99(a) and is hereby incorporated by reference.
Item 7. Financial statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits
99(a) News release, dated January 8, 1997, announcing the Corporation
and subsidiaries earnings for the year ended December 31, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BANPONCE CORPORATION
(Registrant)
Date: January 9, 1997 By: /S/ Amilcar L. Jordan, Esq.
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Name: Amilcar L. Jordan, Esq.
Title: Senior Vice President and Comptroller
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Exhibit Index
Exhibit Number Description
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99(a) News release, dated January 8, 1997
<PAGE> 1
EXHIBIT 99(a)
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[LOGO] BANPONCE BANPONCE CORPORATION
CORPORATION PO Box 362708
San Juan, Puerto Rico 00936-2708
Telephone (809) 765-9800
For additional information contact:
Mr. Jorge A. Junquera
Senior Executive Vice President
(787) 754-1685
January 8, 1997 News Release
BANPONCE CORPORATION AND SUBSIDIARIES (THE CORPORATION)
EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1996
BanPonce Corporation reported net income of $185.2 million for the
year ended December 31, 1996, an increase of $38.8 million or 26.5% from the
net income of $146.4 million obtained in 1995. Earnings per common share (EPS)
for the year were $2.68, based on 66,022,312 average shares outstanding,
compared with $2.10 for 1995, based on 65,816,300 average shares outstanding,
after adjusting for the stock split in the form of a dividend of one share for
each share outstanding effected on July 1, 1996. The net income for 1996
represented a return on assets (ROA) of 1.14% and return on common equity (ROE)
of 16.15%, an improvement from the previous year's 1.04% and 14.22%,
respectively.
Net earnings for the last quarter of 1996 reached $47.7 million or
$0.69 per common share, based on 66,088,506 average shares outstanding,
compared with $46.3 million or $0.67 per common share for the third quarter of
1996, based on 66,048,673 average shares outstanding. Net earnings for the last
quarter of 1995, totaled $40.3 million or $0.58 per common share, based on
65,897,272 average shares outstanding. The results for the last quarter of 1996
represented an ROA of 1.13% and ROE of 15.76%, compared with 1.05% and 14.82%,
respectively, for the same period in 1995, and 1.10% and 15.94% for the third
quarter of 1996.
The Corporation's results of operations for the quarter ended December
31, 1996, reflected an increase of $6.2 million in net interest income, a
decrease in income taxes of $3.3 million, and an increase of $1.4 million in
other revenues, when compared with the quarter ended on September 30, 1996.
These improvements were partially offset by an increase in operating expenses
of $8.5 million and a provision for loan losses higher by $1.0 million.
The earnings performance for 1996, when compared with 1995, reflects a
growth of $97.1 million in net interest income along with an improvement of
$32.2 million in non-interest revenues,
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2 - BANPONCE CORPORATION 1996 YEAR-END RESULTS
tempered by a rise of $55.1 million in operating expenses, $24.3 million in the
provision for loan losses and $11.1 million in income taxes.
The rise in net interest income resulted mainly from the growth of
$2.1 billion in the average volume of earning assets driven primarily by a $1.1
billion increase in money market investments and investment securities together
with an increase of $457 million and $259 million in commercial and mortgage
loans, respectively. The net interest yield for the year ended December 31,
1996, was 4.49% compared with 4.44% for 1995. The net interest yield for the
last quarter of 1996, was 4.54% compared with 4.40% for the quarter ended
September 30, 1996. As anticipated, the repeal of Section 936 of the U.S.
Internal Revenue Code in August 1996, caused a reduction in the volume of 936
funds during the latter part of 1996, although at a lower pace than originally
expected. Most of the funds withdrawn were replaced with conventional funds
carrying a higher cost, moving the cost of funds slightly upward during the
fourth quarter of 1996.
The provision for loan losses rose to $88.8 million for the year ended
1996, compared with $64.5 million a year earlier. The increase in the
provision, which is in line with the rises in the loan portfolio and net
charge-offs, demonstrates management's commitment to maintain the adequacy of
the allowance for loan losses to absorb potential write-offs in the portfolio.
Net charge-offs for the year ended December 31, 1996, were $72.1 million or
0.78% of average loans, compared with $50.0 million or 0.61% of average loans
for 1995. The increase in net charge-offs was mostly reflected in the consumer
and leasing portfolios.
Total non-interest income, including securities and trading gains,
amounted to $205.5 million for 1996, compared with $173.3 million a year
earlier, resulting in an increase of $32.2 million or 18.6%. This increase was
fueled by a rise of $15.5 million in other operating income and $13.3 million
in other service fees. The Corporation's leasing subsidiaries accounted for a
large portion of the increase in other operating income principally as a result
of higher revenues related to the daily rental business. Also, there was an
increase in gains on sale of mortgage loans mostly at Equity One and Puerto
Rico Home Mortgage, and higher income from investment banking services provided
by BP Capital Markets. The rise in other service fees is primarily attributable
to a higher volume of electronic services provided by Banco Popular de Puerto
Rico (BPPR), including rent of point-of-sale terminals, debit card fees,
merchant transaction fees and ATM interchange income. Also,
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3 - BANPONCE CORPORATION 1996 YEAR-END RESULTS
investment product fees, mainly resulting from the sale and administration of
mutual funds, rose $2.4 million. Service charges on deposit accounts increased
$7.2 million, largely reflecting a higher volume of deposits, a broader variety
of services offered to commercial accounts at BPPR, together with revisions
made to the fee structure.
The gains on sale of investment securities available-for-sale for 1996
amounted to $3.1 million, compared with $5.4 million for 1995. Trading profits
totaled $0.1 million in 1996 compared with $1.8 million the year before.
Operating expenses for 1996 reached $541.9 million, compared with
$486.8 million in 1995. This increase was largely reflected in the personnel
costs category, which grew $24.2 million principally as a result of the
Corporation's expansion and incentive pay to compensate sales efforts. Pension
costs and other fringe benefits also increased, reflecting a rise in medical
plan costs and in pension and postretirement benefit expenses. In addition, an
expense of $1.2 million was incurred by BPPR for staff uniforms in order to
emphasize its corporate image at all branches. Profit sharing expense rose $3.7
million, as a result of higher eligible salaries and stronger profitability
ratios.
Other operating expenses rose $30.9 million to $268.7 million for
1996, compared with $237.8 million in 1995. The rise in other operating
expenses was primarily in equipment expenses, professional fees, business
promotion, occupancy and communication expenses. These increases are directly
related to the growth and expansion of the Corporation's business activities,
development of new products and services, and the costs associated with the
continued enhancement of existing products, technological capabilities and
delivery channels. Also increasing other operating expenses this year was a
$1.2 million expense recorded by Banco Popular, FSB, as a result of a one-time
assessment to capitalize the Savings Association Insurance Fund (SAIF).
Partially offsetting these increases, was a reduction in the FDIC assessment of
$10.3 million, as a result of a decrease in the assessment rate during the
third quarter of 1995, when the Bank Insurance Fund (BIF) reached its statutory
level. The increase in income tax mostly results from a higher pre-tax income.
The Corporation's total assets at December 31, 1996, amounted to $16.7
billion, compared with $15.7 billion at December 31, 1995. Most of the growth
in total assets pertains to BPPR and
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4 - BANPONCE CORPORATION 1996 YEAR-END RESULTS
Equity One, which rose $789 million and $224 million, respectively. Total loans
amounted to $9.8 billion at December 31, 1996, compared with $8.7 billion a
year ago. Commercial loans reflected the largest growth, followed by consumer
loans.
The allowance for loan losses amounted to $185.6 million as of
December 31, 1996, or 1.90% of loans and 123.92% of non-performing assets,
compared with $168.4 million or 1.94% and 108.62% at the same date in 1995.
Non-performing assets at December 31, 1996, were $149.8 million or 1.53% of
loans, compared with $155.0 million or 1.79% at the end of 1995.
Total deposits were $10.8 billion at December 31, 1996, compared with
$9.9 billion at December 31, 1995. A significant portion of the increase was
attained at BPPR, where total deposits increased $732 million. At December 31,
1996, the Corporation maintained $2.2 billion in 936 funds or 14.4% of its
liabilities, compared with $3.2 billion or 20.6% at the end of the previous
quarter.
At December 31, 1996, stockholders' equity was $1.26 billion, compared
with $1.14 billion at December 31, 1995. The allowance for unrealized holding
gains on securities available-for-sale net of deferred taxes, amounted to $1.7
million at December 31, 1996, compared with $16.2 million a year ago.
The market value of the Corporation's common stock at December 31,
1996, was $33.75, compared with $19.38 at December 31, 1995. At December 31,
1996, the Corporation's common stock had a book value per share of $17.59. At
the same date, the Corporation's market capitalization was $2.2 billion.
The Corporation continues expanding its geographic scope with the
signing of four definitive purchase agreements during the last quarter of 1996.
In December 1996, the Corporation announced the acquisition of Seminole
National Bank in Sanford, Florida. Seminole National Bank, with assets of
approximately $26 million and deposits of $22 million, operates three branches
in Sanford and Orlando. This acquisition, which is expected to be completed
during the first quarter of 1997, constitutes an important step toward the
Corporation's geographical diversification, as it opens the door to a new
market with a large Hispanic population.
Also, in September 1996, the Corporation signed an agreement to
acquire National Bancorp, the holding company of American Midwest Bank & Trust
in Chicago, Illinois. American Midwest Bank, with assets of $175 million and
deposits of $146 million at November 1996, operates two
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5 - BANPONCE CORPORATION 1996 YEAR-END RESULTS
branches in Melrose Park. In addition, as previously announced, the Corporation
signed a definitive agreement to acquire CBC Bancorp and its two banking
subsidiaries, Capitol Bank & Trust in Chicago and Capitol Bank of Westmont.
Through these acquisitions the Corporation will increase its existing franchise
in the Chicago market to approximately $960 million in assets, $800 million in
deposits and 10 branches.
Furthermore, on December 30, 1996, the Corporation announced an
agreement for the acquisition of Roig Commercial Bank. Roig Commercial Bank
operates 25 branches, mainly located in the eastern part of Puerto Rico, with
assets of approximately $900 million and deposits of $650 million. All of these
transactions are now awaiting the approval of regulatory agencies.
Earlier in 1996, the Corporation acquired all the common stock of
CombanCorp, the bank holding company of Commerce National Bank, located in
California. This banking operation, which added to the Corporation three
branches, $75 million in assets and $63 million in deposits, later acquired the
only branch BPPR operated in Los Angeles at the time.
Other geographic expansions during 1996, include the first
international investment made in March 1996, with the purchase of 20% of the
common stock of Jamaica's fourth largest financial institution, CitizensBank,
and other investments in Costa Rica and the Dominican Republic to establish ATM
networks in those countries.
In the last quarter of 1996, as part of a strategy to emphasize
BanPonce's strong Hispanic ties, the Corporation's subsidiary banks operating
in California and Illinois, previously known as Commerce National Bank and
Pioneer Bank & Trust Company, respectively, changed their names to Banco
Popular, N.A. (California) and Banco Popular, Illinois.
* * *
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BANPONCE CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fourth FOR THE YEAR ENDED
1996 1995 Quarter DECEMBER 31
----------------------------------- 1996-1995 -----------------------------------
FOURTH Third Fourth Percent Percent
QUARTER Quarter Quarter Variance 1996 1995 Variance
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<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income $ 332,854 $ 327,097 $ 298,311 11.58% $1,272,853 $1,105,807 15.11%
Interest expense 154,445 154,861 142,191 8.62 591,540 521,624 13.40
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Net interest income 178,409 172,236 156,120 14.28 681,313 584,183 16.63
Provision for loan losses 23,458 22,436 21,227 10.51 88,839 64,558 37.61
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Net interest income after provision
for loan losses 154,951 149,800 134,893 14.87 592,474 519,625 14.02
Other operating income 54,522 46,704 44,083 23.68 202,269 166,185 21.71
Gain (loss) on sale of securities (2,525) 4,911 3,306 3,095 5,368
Trading account profit (loss) 769 (216) 1,193 108 1,785
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Total other income 52,766 51,399 48,582 8.61 205,472 173,338 18.54
Salaries and benefits 64,752 62,304 57,250 13.10 250,555 230,072 8.90
Profit sharing 5,148 5,789 4,735 8.72 22,692 19,003 19.41
Other operating expenses 74,023 67,360 62,212 18.99 268,672 237,758 13.00
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Total operating expenses 143,923 135,453 124,197 15.88 541,919 486,833 11.32
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Income before income tax 63,794 65,746 59,278 7.62 256,027 206,130 24.21
Income tax 16,114 19,473 19,026 (15.31) 70,877 59,769 18.58
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Net income $ 47,680 $ 46,273 $ 40,252 18.45 $ 185,150 $ 146,361 26.50
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Net income applicable to common stock $ 45,593 $ 44,186 $ 38,164 19.47 $ 176,800 $ 138,011 28.11
================================================================================
Earnings per common share:
Net income * $ 0.69 $ 0.67 $ 0.58 19.12 $ 2.68 $ 2.10 27.71
================================================================================
Average common shares outstanding * 66,088,506 66,048,673 65,897,272 66,022,312 65,816,300
Common shares outstanding at end of period * 66,088,506 66,048,673 65,897,272 66,088,506 65,897,272
</TABLE>
* Restated to reflect the stock split in the form of a dividend of one share
for each share outstanding effected on July 1, 1996.
1
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BANPONCE CORPORATION
FINANCIAL SUMMARY
(In thousands)
<TABLE>
<CAPTION>
Fourth FOR THE YEAR ENDED
1996 1995 Quarter DECEMBER 31
----------------------------------- 1996-1995 -----------------------------------
FOURTH Third Fourth Percent Percent
QUARTER Quarter Quarter Variance 1996 1995 Variance
----------------------------------- --------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED AVERAGE BALANCES
Total assets $16,851,602 $16,796,305 $15,182,816 10.99 $16,301,082 $14,118,183 15.46
Loans 9,668,133 9,386,931 8,548,163 13.10 9,210,964 8,217,834 12.09
Earning assets 15,794,335 15,769,433 14,276,343 10.63 15,306,311 13,244,170 15.57
Interest-bearing liabilities 13,145,397 13,285,087 11,917,612 10.30 12,778,488 10,991,569 16.26
Stockholders' equity 1,250,309 1,202,292 1,121,219 11.51 1,194,511 1,070,482 11.59
PERFORMANCE RATIOS
Net interest yield * 4.54% 4.40% 4.40% 4.49% 4.44%
Return on assets 1.13 1.10 1.05 1.14 1.04
Return on common equity 15.76 15.94 14.82 16.15 14.22
CREDIT QUALITY DATA
Nonperforming assets $ 149,752 $ 153,400 $ 155,031 (3.41) $ 149,752 $ 155,031 (3.41)
Net loans charged-off 20,256 18,796 17,264 17.33 72,060 49,963 44.23
Allowance for loan losses 185,574 182,372 168,393 10.20 185,574 168,393 10.20
Nonperforming assets to total assets 0.90% 0.92% 0.99% 0.90% 0.99%
Allowance for losses to loans 1.90 1.90 1.94 1.90 1.94
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets $16,711,570 $16,755,578 $15,675,451 $16,711,570 $15,675,451 6.61
Loans 9,779,029 9,589,288 8,677,484 9,779,029 8,677,484 12.69
Earning assets 15,429,454 15,666,003 14,668,195 15,429,454 14,668,195 5.19
Interest-bearing liabilities 12,798,755 13,158,716 12,246,017 12,798,755 12,246,017 4.51
Stockholders' equity 1,262,532 1,220,105 1,141,697 1,262,532 1,141,697 10.58
</TABLE>
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