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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): April 7, 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 April 7, 1997, BanPonce Corporation (the "Corporation") announced
by way of a news release, its operational results for the quarter ended March
31, 1997. A copy of the Corporation's release, dated April 7, 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 April 7, 1997, announcing the Corporation
and subsidiaries earnings for the quarter ended March 31, 1997.
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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: April 7, 1997 By: /S/ Amilcar L. Jordan
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Name: Amilcar L. Jordan, Esq.
Title: Senior Vice President and Comptroller
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Exhibit Index
Exhibit Number Description
99(a) News release, dated April 7, 1997
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EXHIBIT 99(a)
[LETTERHEAD] BANPONCE CORPORATION
For additional information contact:
Mr. Jorge A. Junquera
Senior Executive Vice President
Telephone (787) 754-1685
April 7, 1997 News Release
BANPONCE CORPORATION AND SUBSIDIARIES (THE CORPORATION)
EARNINGS FOR THE QUARTER ENDED MARCH 31, 1997
The Corporation's net income for the first quarter of 1997 was $49.5
million as compared with $45.1 million reported for the same quarter of 1996,
an increase of $4.4 million or 9.7%. Earnings per common share (EPS) for the
quarter were $0.72, based on 66,121,855 average shares outstanding, or 9.9%
higher than $0.65 for the quarter ended March 31, 1996, based on 65,949,872
average shares outstanding. Net earnings for the last quarter of 1996 were
$47.7 million, or $0.69 per share, based on 66,088,506 average shares then
outstanding. All per share data included herein has been adjusted to reflect the
stock split effected in the form of a dividend of one share for each share
outstanding on July 1, 1996.
The Corporation's return on assets (ROA) and return on common equity
(ROE) for the first quarter of 1997 were 1.19% and 16.32%, respectively. For
the same period of 1996, the Corporation reported ROA and ROE of 1.17% and
16.39%, respectively. For the last quarter of 1996 these ratios were 1.13% and
15.76%.
The rise in the Corporation's net income for the first quarter of 1997
was driven by an increase of $18.2 million in net interest income and $5.1
million in other revenues, tempered by a reduction of $2.9 million on gains on
sale of securities and trading transactions, a rise of $11.4 million in
operating expenses and increases of $2.4 million and $2.2 million in the
provision for loan losses and income taxes, respectively.
Net interest income grew to $180.6 million, primarily as a result of
an increase of $1.0 billion in the average volume of loans. The average balance
of the commercial and consumer loan portfolios rose $538 million and $315
million, respectively. The increase in the volume of earning assets was funded
through a higher volume of deposits and borrowings. The net interest yield for
the quarter
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2 - BANPONCE CORPORATION 1997 FIRST QUARTER RESULTS
ended March 31, 1997, was 4.58% compared with 4.45% for the first quarter of
1996. The improvement in the net interest yield was driven by a rise of 19
basis points in the average yield on loans, particularly in the commercial,
consumer and leasing portfolios. The increase in the average yield on earning
assets was partially offset by a rise of 7 basis points in the cost of funding
these assets. For the last quarter of 1996 the net interest yield was 4.51%.
The increase in the provision for loan losses was the result of a rise
in the Corporation's loan portfolio and increases in net charge-offs and
non-performing assets. Net charge-offs for the quarter ended March 31, 1997
were $17.9 million or 0.73% of average loans compared with $14.9 million or
0.68% for the first quarter of 1996, and $20.3 million or 0.84% for the fourth
quarter of 1996. Non-performing assets were $174 million or 1.76% of ending
loans at March 31, 1997, compared with $151 million or 1.70%, at the end of the
first quarter of 1996 and $155 million or 1.58%, at December 31, 1996. The rise
in non-performing assets from December 31, 1996, was primarily attributed to an
increase of $9.1 million in non-performing commercial and construction loans at
Banco Popular de Puerto Rico (BPPR).
Other operating revenues, excluding securities and trading
transactions, grew $5.1 million or 10.2%, from $50.3 million for the first
quarter of 1996 to $55.4 million for the same period in 1997. The growth in
other operating revenues was attributed to an increase of $4.8 million in other
service fees and $0.7 million in service charges on deposit accounts. The
increase in other service fees was principally attained at BPPR where debit
card fees rose $1.5 million, reflecting the growing volume of point-of-sale
(POS) terminals and transactions. Also at BPPR, credit card fees and discounts
rose $1.2 million, as credit card net sales rose 29.0% and the number of credit
card active accounts grew 15.7%. In addition, fees related to the sale and
administration of investment products and credit life insurance fees rose $0.6
million and $0.5 million, respectively. Furthermore, service charges on deposit
accounts increased $0.3 million at Banco Popular due to a higher activity on
commercial accounts, while the operations of Banco Popular N.A. (California),
acquired on September 30, 1996, contributed approximately $0.3 million in
service charges for this quarter.
The Corporation recognized a net loss of $1.7 million in the sale of
securities for the first quarter of 1997, principally reflected in BPPR as a
result of the sale of U.S. Treasury securities. These securities were sold as
part of an asset/liability strategy to reinvest the proceeds in higher-
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3 - BANPONCE CORPORATION 1997 FIRST QUARTER RESULTS
yielding investments. Included with this asset/liability strategy was a sale of
internally generated FNMA securities resulting in a realized gain of $2.5
million.
Personnel costs increased $3.7 million as compared with the first
quarter of 1996, of which $3.6 million was reflected in the salary expense
category as a result of annual merit increases and greater use of incentive pay
to compensate productivity and sales efforts. Pension and other benefits
decreased $0.3 million, principally as a result of an expense of $1.2 million
recorded at BPPR during the first quarter of 1996, for staff uniforms in order
to emphasize its corporate image at all branches. Banco Popular N.A.
(California) accounted for $0.7 million of the increase in personnel expenses.
Other operating expenses rose $7.7 million, mostly in professional
fees, business promotion, printing and supplies, communication and equipment
expenses. Professional fees rose $2.5 million, reflecting expenditures for
purchased software associated with systems enhancements and for consulting
services related to the Corporation's strategic initiatives. Business promotion
and printing and supplies rose $1.3 million as part of the ongoing campaign to
promote the use of electronic services at Banco Popular and the launching of
new products and services. Equipment and communication expenses grew $1.8
million due to the investment needed to support the continuing growth of the
Corporation's business activity and geographical expansion, including costs
related to the expansion of the electronic payment system and new technology.
Banco Popular N.A. (California) accounted for $0.7 million in other operating
expenses during this quarter.
The Corporation's total assets at March 31, 1997, amounted to $17.4
billion, compared with $15.8 billion at March 31, 1996. Most of the growth
relates to BPPR, which increased $1.3 billion in total assets. Total assets at
December 31, 1996, were $16.8 billion. At March 31, 1997, total loans amounted
to $9.9 billion compared with $8.9 billion a year ago and $9.8 billion at
December 31, 1996. Commercial loans at BPPR reflected the largest growth,
increasing $407 million from the amount recorded at March 31, 1996.
The allowance for loan losses amounted to $191 million as of March 31,
1997, or 1.94% of loans, compared with $175 million or 1.97% at the same date
in 1996. At December 31, 1996, the allowance for loan losses totaled $186
million or 1.90% of loans. The allowance as a percentage of non-performing
assets was 110.0% at March 31, 1997, compared with 116.0% at the end of the
first quarter of 1996 and 119.9% at December 31, 1996.
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4 - BANPONCE CORPORATION 1997 FIRST QUARTER RESULTS
Total deposits rose to $10.5 billion at March 31, 1997, compared with
$10.2 billion at March 31, 1996 and $10.8 billion at December 31, 1996. The
reduction from December 31, 1996, results primarily from the decrease of $236
million in 936 deposits, due to the repeal of Section 936 of the Internal
Revenue Code in August 1996. Total 936 funds, including deposits and borrowings
were $1.9 billion at March 31, 1997, compared with $2.2 billion at December 31,
1996.
At March 31, 1997, stockholders' equity was $1.29 billion, compared
with $1.16 billion at the same date last year. Stockholders' equity was $1.26
billion at December 31, 1996. The allowance for unrealized holding losses on
securities available-for-sale, net of deferred taxes, amounted to $9.7 million
at March 31, 1997, compared with $19,000 a year ago. At the end of 1996, the
allowance for unrealized holding gains on securities available-for-sale, net of
taxes, amounted to $1.7 million.
On February 5, 1997, the Corporation sold to institutional investors
$150 million of capital securities. BanPonce Trust I, a statutory business
trust owned by BanPonce Financial Corp., issued $150 million of Capital
Securities Series A at 8.327%, fully guaranteed by BanPonce Financial Corp. and
BanPonce Corporation. The proceeds were upstreamed to BanPonce Financial as
junior subordinated debt under the same terms and conditions. Cumulative
preferred securities having the characteristics of the Series A Capital
Securities, qualify as Tier I capital for bank holding companies. Such Tier I
capital treatment provides the Corporation with a more cost-effective means of
obtaining capital for regulatory purposes. During the first quarter of 1997,
the Corporation recognized an additional interest expense of $0.9 million,
pertaining to these capital securities.
The market value of the Corporation's common stock at March 31, 1997
was $35.50 per share, compared with $23.13 at March 31, 1996, and $33.75 at
December 31, 1996. The Corporation's market capitalization at March 31, 1997
was $2.3 billion, compared with $1.5 billion at March 31, 1996, and $2.2
billion at December 31, 1996. At March 31, 1997, the Corporation's common stock
had a book value per share of $17.96.
The market value of the Corporation's preferred stock at March 31,
1997 was $26.75 per share compared with $27.25 at March 31, 1996, and $26.25 at
December 31, 1996.
On March 24, 1997, BPPR launched its innovative "PC Bank" in Puerto
Rico. This new product, which is available 24 hours a day, allows customers to
obtain balances of their deposit accounts, credit cards and loans through their
personal computer from the privacy of their home or
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5 - BANPONCE CORPORATION 1997 FIRST QUARTER RESULTS
office. In addition, clients are able to verify their most recent transactions
since their last statement of account, perform a series of payments and
transfers within the accounts and communicate with the bank through electronic
mail (e-mail).
On March 28, 1997, the Federal regulatory agencies approved the
previously announced acquisition of Seminole National Bank in Sanford, Florida.
Seminole National Bank operates three branches in Sanford and Orlando with
assets of approximately $26 million and deposits of $22 million. The
transaction is expected to be completed by April 30, 1997.
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BANPONCE CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
<TABLE>
<CAPTION>
Quarter ended
March 31 First
------------------------------- Quarter ------------
1997-1996 Fourth
Percent Quarter
1997 1996 Variance 1996
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<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income $ 334,266 $ 302,927 10.35% $ 332,854
Interest expense 153,621 140,467 9.36 154,445
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Net interest income 180,645 162,460 11.19 178,409
Provision for loan losses 23,687 21,273 11.35 23,458
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Net interest income after provision
for loan losses 156,958 141,187 11.17 154,951
Other operating income 55,481 50,325 10.25 54,522
Gain (loss) on sale of securities (1,660) 729 (2,525)
Trading account profit (loss) 433 938 769
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Total other income 54,254 51,992 4.35 52,766
Salaries and benefits 65,044 61,733 5.36 64,752
Profit sharing 6,440 6,070 6.10 5,148
Other operating expenses 70,641 62,896 12.31 74,023
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Total operating expenses 142,125 130,699 8.74 143,923
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Income before income tax 69,087 62,480 10.57 63,794
Income tax 19,548 17,338 12.75 16,114
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Net income 49,539 45,142 9.74 47,680
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Net income applicable to common stock $ 47,452 $ 43,055 10.21 $ 45,593
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Earnings per common share:
Net income* $ 0.72 $ 0.65 9.93 $ 0.69
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Average common shares outstanding* 66,121,855 65,949,872 66,088,506
Common shares outstanding at end of period* 66,121,855 65,949,872 66,088,506
</TABLE>
* Restated to reflect the stock split in the form of a dividend of one share for
each share outstanding effective on July 1, 1996.
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BANPONCE CORPORATION
FINANCIAL SUMMARY
(In thousands)
<TABLE>
<CAPTION>
Quarter ended First
March 31 Quarter -----------
-------------------------------- 1997-1996 Fourth
Percent Quarter
1997 1996 Variance 1996
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<S> <C> <C> <C> <C>
SELECTED AVERAGE BALANCES
Total assets $16,916,854 $15,556,830 8.74 $16,851,600
Loans 9,777,772 8,748,657 11.76 9,668,133
Earning assets 15,847,403 14,630,906 8.31 15,794,335
Interest-bearing liabilities 13,147,072 12,209,571 7.68 13,145,397
Stockholders' equity 1,279,599 1,156,888 10.61 1,250,311
PERFORMANCE RATIOS
Net interest yield* 4.58% 4.45% 4.51%
Return on assets 1.19 1.17 1.13
Return on common equity 16.32 16.39 15.76
CREDIT QUALITY DATA
Nonperforming assets $ 173,979 $ 150,621 15.51 $ 154,792
Net loans charged-off 17,899 14,942 19.79 20,256
Allowance for loans losses 191,360 174,724 9.52 185,574
Non performing assets to total assets 1.00% 0.95% 0.92%
Allowance for losses to loans 1.94 1.97 1.90
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets .......................... $17,407,292 $15,805,083 10.14 $16,764,103
Loans ................................. 9,889,254 8,850,078 11.74 9,779,028
Earning assets ........................ 16,341,827 14,801,284 10.41 15,484,454
Interest-bearing liabilities .......... 13,565,152 12,434,422 9.09 12,853,755
Stockholders' equity .................. 1,287,779 1,159,570 11.06 1,262,532
</TABLE>
* Not on a taxable equivalent basis
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