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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 9, 1999
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POPULAR, INC.
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(Exact name of registrant as specified in its charter)
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COMMONWEALTH OF PUERTO RICO NO.0-13818 NO. 66-0416582
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(State or other jurisdiction of incorporation) (Commission (IRS Employer
File Number) Identification No.)
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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 9, 1999, Popular, Inc. (the "Corporation") announced by way of a
news release, its operational results for the quarter ended March 31, 1999. A
copy of the Corporation's release, dated April 9, 1999, 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 9, 1999, announcing the Corporation and
subsidiaries earnings for the quarter ended March 31, 1999.
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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.
Popular, Inc.
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(Registrant)
Date: April 13, 1999 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
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Exhibit Number Description
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99(a) News release, dated April 9, 1999
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EXHIBIT 99(a)
[POPULAR Inc. LOGO]
For additional information contact:
Mr. Jorge A. Junquera
Senior Executive Vice President
Telephone (787) 754-1685
Or visit our web site at http://www. popularinc.com
April 9, 1999 News Release
POPULAR, INC. EARNINGS FOR THE QUARTER ENDED MARCH 31, 1999
Popular, Inc. (the Corporation) net income for the first quarter of 1999
was $63.7 million as compared with $54.8 million reported for the same quarter
of 1998, an increase of $8.9 million or 16.2%. Earnings per common share (EPS)
for the quarter were $0.45, based on 135,709,287 average shares outstanding, or
15.4% higher than $0.39 for the quarter ended March 31, 1998, based on
135,435,096 average shares outstanding. Net earnings for the last quarter of
1998 were $62.5 million, or $0.44 per share, based on 135,637,327 average shares
then outstanding.
The Corporation's return on assets (ROA) and return on common equity (ROE)
for the first quarter of 1999 were 1.14% and 16.03%, respectively. For the same
period of 1998, the Corporation reported ROA and ROE of 1.14% and 15.36%,
respectively. For the last quarter of 1998, these ratios were 1.13% and 15.84%.
The rise in the Corporation's net income for the first quarter of 1999,
when compared with the same period a year ago, was driven by an increase of
$23.5 million in net interest income and $19.1 million in other revenues,
partially offset by rises of $29.5 million in operating expenses, $2.2 million
in the provision for loan losses and $2.5 million in income taxes.
Net interest income, the principal source of earnings of the Corporation,
grew to $236.2 million, primarily as a result of an increase of $1.7 billion in
the average volume of loans. The average balance of the commercial and mortgage
loan portfolios rose $1.2 billion and $446 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 ended March 31, 1999, was
4.39%.
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2-POPULAR, INC. 1999 FIRST QUARTER RESULTS
compared with 4.66% for the first quarter of 1998. The reduction in the net
interest yield resulted from a decrease of 40 basis points in the average yield
on earning assets, particularly in the investment portfolio, partially offset by
a decrease in the cost of funds, mostly as a result of a lower interest rate
scenario. For the last quarter of 1998, the net interest yield was 4.44%
The increase in the provision for loan losses resulted from a rise in the
Corporation's loan portfolio and an increase in non-performing assets. Net
charge-offs for the quarter ended March 31, 1999, were $25.9 million or 0.78% of
average loans compared with $27.5 million or 0.96% for the first quarter of
1998, and $30.6 million or 0.96% for the fourth quarter of 1998.
Total non-interest income, excluding securities and trading transactions,
grew $20.5 million or 30.8%, from $66.4 million for the first quarter of 1998 to
$86.9 million for the same period in 1999. This growth was attributed to an
increase of $11.7 million in other service fees, $5.8 million in other operating
income and $2.9 million in service charges on deposit accounts. The increase in
other service fees is attributed to a rise of $4.1 million in credit card fees
and discounts due to the growth in credit card net sales and a higher number of
credit card active accounts. Also, check cashing fees increased $2.1 million and
debit card fees rose $1.3 million, reflecting the increasing trend of new
merchants, point of sale (POS) terminals and transactions. In addition, fees
related to the sale and administration of investment products rose $1.7 million,
mostly as a result of the issuance of a mutual fund during the first quarter of
1999, by the Corporation's broker/dealer subsidiary. The increase in other
income mainly resulted from a loan securitization of $125 million at Equity One,
which resulted in a pretax gain of $3.2 million, and higher gains on sales of
mortgage loans. Service charges on deposit accounts increased due to a higher
activity on commercial and retail accounts and a higher volume of deposits.
The Corporation recognized a net gain of $0.5 million on the sale of
securities for the first quarter of 1999, compared with $0.9 million in the same
quarter last year. Also, during the first three months of 1999, the Corporation
realized a net loss on trading transactions of $0.3 million compared with a net
gain of $0.7 million in the same quarter last year.
Personnel costs increased $12.6 million as compared with the first quarter
of 1998, of which $10.9 million was reflected in the salary expense category.
The increase in salaries is mostly related to the growth of the Corporation
through acquisitions performed in the U.S. mainland and the
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3-POPULAR, INC. 1999 FIRST QUARTER RESULTS
Dominican Republic during the third and fourth quarters of 1998, and the
expansion of its operations. Pension and other benefits increased $1.1 million
compared with the first quarter of 1998.
Other operating expenses increased $16.9 million, reaching $105.9 million
for the first quarter of 1999. The rise in other operating expenses was
primarily in business promotion, equipment, net occupancy and professional
fees. Business promotion rose $2.8 million mostly as a result of the
institutional campaign in the continental U.S. and the promotional efforts
related to the credit card program in the U.S. Also, there were expenses
related to a new television and newspaper campaign at Popular Mortgage in
Puerto Rico, after the merger of the mortgage origination department of BPPR
during 1998. Equipment expenses grew $2.7 million mostly due to the investment
needed to support the growth of the Corporation's business activity and
geographical expansion, including costs related to the expansion of the
electronic payment system and new technology. In addition, there were higher
expenses related to Year 2000 equipment and software upgrades. Net occupancy
expenses increased $2.7 million mostly as a result of the Corporation's growth
and expansion. The increase in professional fees of $2.4 million mainly
resulted from higher legal and consulting fees for business expansion and costs
incurred in relation to the Corporation's action plan to address the Year 2000
issue.
The Corporation's total assets at March 31, 1999, amounted to $23.2
billion, compared with $20.0 billion at March 31, 1998. A significant portion
of the growth relates to the acquisitions made after March 31, 1998, in
California, Illinois, and the Dominican Republic. Total assets at December 31,
1998, were $23.2 billion. At March 31, 1999, total loans amounted to $13.5
billion compared with $11.5 billion a year ago and $13.1 billion at December
31, 1998. Commercial loans reflected the largest growth, increasing $1.3
billion from the amount recorded at March 31, 1998.
The allowance for loan losses amounted to $277 million as of March 31,
1999, or 2.06% of loans, compared with $218 million or 1.89% at the same date
in 1998. At December 31, 1998, the allowance for loan losses totaled $267
million or 2.04% of loans. The allowance as a percentage of non-performing
assets was 92.8% at March 31, 1999, compared with 102.0% at the end of the
first quarter of 1998 and 90.3% at December 31, 1998.
Non-performing assets were $298 million or 2.22% of ending loans at March
31, 1999,
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4-POPULAR, INC. 1999 FIRST QUARTER RESULTS
compared with $213 million or 1.85% at the end of the first quarter of 1998 and
$296 million or 2.26% at December 31, 1998. The increase of $85 million from
March 31, 1998 is mainly due to the $33 million in non-performing assets of the
subsidiary bank in the Dominican Republic and higher non-performing commercial,
mortgage and consumer loans resulting from the growth in these portfolios and
the increase in bankruptcy filings.
Total deposits rose to $13.6 billion at March 31, 1999, compared with
$12.0 billion at March 31, 1998. At December 31, 1998, total deposits amounted
to $13.7 billion.
Borrowed funds increased to $7.4 billion at March 31, 1999, compared with
$6.1 billion at the same date a year earlier. At December 31, 1998, borrowed
funds totaled $7.3 billion. Borrowed funds were used to finance loan growth and
arbitrage activities.
At March 31, 1999, stockholders' equity was $1.70 billion, compared with
$1.55 billion at the same date last year. Stockholders' equity was $1.71
billion at December 31, 1998.
The market value of the Corporation's common stock at March 31, 1999, was
$30.88 per share, compared with $29.35 at March 31, 1998, and $34.00 at
December 31, 1998. The Corporation's market capitalization at March 31, 1999
was $4.2 billion, compared with $4.0 billion at March 31, 1998, and $4.6
billion at December 31, 1998. At March 31, 1999, the Corporation's common stock
had a book value per share of $11.82.
Popular Inc. is a bank holding company offering a full range of services
through banking offices in Puerto Rico, the U.S. and British Virgin Islands,
New York, Illinois, New Jersey, Florida, California, Texas and the Dominican
Republic. The Corporation is also engaged in mortgage and consumer finance,
lease financing, investment banking and broker/dealer activities, retail
financial services and ATM processing services through its non-banking
subsidiaries in Puerto Rico, the United States and Costa Rica.
The Corporation's common and preferred stocks are traded on the National
Association of Securities Dealers Automated Quotation (NASDAQ) National Market
System under the symbols BPOP and BPOPP, respectively.
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POPULAR, INC.
Financial Summary
(In thousands, except per share data)
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Quarter Ended
March 31 First
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1999-1998 Fourth
Percent Quarter
1999 1998 Variance 1998
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Summary of Operations
Interest income................................ $444,195 $396,368 12.07% $441,649
Interest expense............................... 207,956 183,664 13.23 210,774
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Net interest income............................ 236,239 212,704 11.06 230,875
Provision for loan losses...................... 35,771 33,565 6.57 35.457
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Net interest income after provision for loan
losses....................................... 200,468 179,139 11.91 195,418
Other operating income......................... 86,889 66,415 30.83 74,556
Gain on sale of securities..................... 450 867 465
Trading account profit (loss).................. (282) 669 1,167
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Total other income............................. 87,057 67,951 28.12 76,188
Salaries and benefits.......................... 89,715 77,711 15.45 82,530
Profit sharing................................. 6,320 5,683 11.21 4,502
Amortization of intangibles.................... 7,620 6,784 7,337
Other operating expenses....................... 98,236 82,202 19.51 99,942
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Total operating expenses....................... 201,891 172,380 17.12 194,311
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Income before income tax and minority
interest..................................... 85,634 74,710 14.62 77,295
Income tax..................................... 22,402 19,915 12.49 15,111
Net earnings (losses) of minority interest..... (432) (328)
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Net income..................................... $63,664 $54,795 16.19 $62,512
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Net income applicable to common stock.......... $61,576 $52,708 16.82 $60,423
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Earnings per common share:(1)
Net income................................... $0.45 $0.39 15.38 $0.44
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Average common shares outstanding(1)........... 135,709,287 135,435,096 135,637,327
Common shares outstanding at end of period(1).. 135,709,287 135,435,096 135,637,327
Selected Average Balances
Total assets................................... $22,695,779 $19,485,912 16.47 $21,939,146
Loans.......................................... 13,211,405 11,466,638 15.22 12,699,077
Earning assets................................. 21,542,123 18,340,991 17.45 20,697,007
Deposits....................................... 13,578,244 11,805,324 15.02 12,985,897
Interest-bearing liabilities................... 17,607,155 15,182,597 15.97 17,071,186
Stockholders' equity........................... 1,659,015 1,492,184 11.18 1,613,063
Selected Financial Data at Period-End
Total assets................................... $23,174,075 $20,018,220 15.76 $23,160,357
Loans.......................................... 13,458,542 11,543,169 16.59 13,078,795
Earning assets................................. 21,626,831 18,748,873 15.35 21,591,950
Deposits....................................... 13,576,672 12,005,800 13.08 13,672,214
Interest-bearing liabilities................... 18,058,535 15,619,792 15.61 17,793,647
Stockholders' equity........................... 1,704,482 1,546,238 10.23 1,709,113
Performance Ratios
Net interest yield*............................ 4.39% 4.66% 4.44%
Return on assets............................... 1.14 1.14 1.13
Return on common equity........................ 16.03 15.36 15.84
Credit Quality Data
Nonperforming assets........................... $298,480 $213,366 39.89 $295,876
Net loans charged-off.......................... 25,904 27,508 -5.83 30,554
Allowance for loan losses...................... 277,116 217,708 27.29 267,249
Non performing assets to total assets.......... 1.29% 1.07% 1.28%
Allowance for losses to loans.................. 2.06 1.89 2.04
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* Not on a taxable equivalent basis
(1) Restated to reflect the stock split in the form of a dividend of one share
for each share outstanding effective on July 1, 1998.
