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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): October 8, 1999
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POPULAR, INC.
(Exact name of registrant as specified in its charter)
COMMON WEALTH OF PUERTO RICO NO. 0-13818 NO. 66-0416582
- ---------------------------- ----------- --------------
(State or other jurisdiction (Commission IRS Employer
of incorporation) File Number Identification No.)
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
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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 October 8, 1999, Popular, Inc. (the "Corporation") announced in a news
release its operational results for the quarter and nine-month period ended
September 30, 1999. A copy of the Corporation's release, dated October 8, 1999,
is attached hereto as Exhibit 99(a) and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99(a) News release, dated October 8, 1999, announcing the Corporation's
consolidated earnings for the quarter and nine-month period ended September 30,
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.
------------------------
(Registrant)
Date: October 11, 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
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
99(a) News release, dated October 8, 1999
</TABLE>
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[POPULAR, INC. LOGO]
For additional information contact:
Mr. Jorge A. Junquera
Senior Executive Vice President
Or visit our web site at http://www.popularinc.com
Telephone (787) 754-1685
October 8, 1999 NEWS RELEASE
POPULAR, INC. EARNINGS FOR THE QUARTER AND NINE-MONTH PERIOD ENDED SEPTEMBER
30, 1999
Popular, Inc. (the Corporation) reported net income of $64.2 million for
the third quarter of 1999, compared with $57.6 million reported for the same
quarter of 1998, an increase of $6.6 million or 11.5%. Earnings per common
share (EPS) for the quarter were $0.46, based on 135,379,215 average shares
outstanding, compared with $0.41, based on 135,555,652 average shares
outstanding for the quarter ended September 30, 1998, an increase of 12.2%. Net
earnings for the first and second quarter of 1999 were $63.7 million and $64.0
million, respectively, or $0.45 and $0.46 per common share, based on
135,709,287 and 135,491,324 average shares outstanding, respectively.
Return on assets (ROA) and return on common equity (ROE) for the third
quarter of 1999 were 1.06% and 15.23%, respectively. For the same period of
1998, the Corporation reported ROA and ROE of 1.12% and 14.94%, respectively.
For the second quarter of 1999 these ratios were 1.08% and 15.53%.
For the first nine months of 1999, the Corporation's net earnings amounted
to $191.9 million, compared with $169.8 million for the same period in 1998.
EPS for the first nine months of 1999 were $1.37, compared with $1.21 for the
same period of 1998. ROA and ROE for the first nine months of 1999 amounted to
1.09% and 15.59%, respectively. For the same period of 1998, these ratios were
1.14% and 15.26%.
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2-POPULAR, INC. 1999 THIRD QUARTER RESULTS
The Corporation's results of operations for the quarter ended September
30, 1999, reflected increases of $23.8 million in net interest income and $22.8
million in other revenues when compared with the same quarter of 1998. These
improvements were partially offset by increases of $36.1 million in operating
expenses, $2.4 million in the provision for loan losses and $2.5 million in
income tax.
The net interest income for the third quarter of 1999 increased 11.0% when
compared with the same period of 1998. The growth in net interest income over
the third quarter of 1998 was principally due to an increase of $3.4 billion in
average earning assets, partially offset by a lower net interest margin. The
net interest margin for the quarter ended on September 30, 1999, was 4.23%,
compared with 4.45% for the third quarter of 1998. For the first and second
quarter of 1999 the net interest margin was 4.39% and 4.24%, respectively. The
decrease in net interest margin since the first and second quarter mostly
results from a higher cost of funds. For the first nine months of 1999, the net
interest margin was 4.29% compared with 4.56% for the same period of 1998.
The provision for loan losses totaled $37.1 million for the third quarter
of 1999, an increase of 7.0% when compared with the same quarter of 1998. The
increase in the provision for loan losses was primarily due to the growth in
the loan portfolio and non-performing assets. Net charge-offs for the quarter
ended September 30, 1999, were $31.6 million or 0.89% of average loans compared
with $27.7 million or 0.93% for the third quarter of 1998, and $31.2 million or
0.91% for the second quarter of 1999. For the nine-month periods ended
September 30, 1999 and 1998, net charge-offs totaled $88.7 million and $82.4
million, respectively, representing 0.86% and 0.94% of average loans.
Non-interest income, excluding securities and trading transactions, rose
$28.5 million over the third quarter of 1998, to $97.7 million, as a result of
an increase of $15.8 million in other service fees, $9.1 million in other
income and $3.6 million in service charges on deposit accounts. Other service
fees amounted to $44.4 million for the three-month period ended September 30,
1999, compared with $28.6 million for the same period a year earlier. The
increase was due to rises in credit card fees and debit card fees principally as
a result of the sustained growth in the volume of transactions at point-of-sale
(POS) terminals. Furthermore, a rise in the fees earned by the
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3-POPULAR, INC. 1999 THIRD QUARTER RESULTS
Corporation's check cashing subsidiary in the U.S. mainland and fees earned by
GM Group, acquired in July 1999, contributed to this increase. Other income
increased mostly as a result of a sale of $195 million in loans securitized at
Equity One, which resulted in a pretax gain of $4.7 million. Also, the rise
resulted from fees generated from the Corporation's joint venture in Puerto
Rico's local telephone company and to revenues generated by the recently
acquired subsidiary GM Group. The increase in service charges on deposit
accounts was mostly due to a higher volume of deposits and higher activity on
commercial accounts.
The Corporation showed a decrease of $4.5 million in gains on sale of
securities as a result of gains realized in the quarter ended September 30,
1998, on the sale of equity securities by the Corporation's holding company.
Personnel costs increased $15.1 million as compared with the third quarter
of 1998. This rise resulted from increased employment levels due to the
Corporation's continued growth and expansion and annual merit increases. The
Corporation's expansion included the acquisitions made in California, Illinois
and the Dominican Republic during the latter part of 1998, and the acquisition
of GM Group and Levitt Mortgage during this quarter. Other operating expenses
increased $21.0 million, mostly in equipment, net occupancy expenses,
professional fees and business promotion expenses. The rise in equipment and net
occupancy expenses reflected the costs related to new technology and systems
enhancements, and the Corporation's growth and expansion. The increase in
professional fees reflected expenditures associated with consulting and
technical support fees related to the expansion of the U.S. operations and
expenses corresponding to the operations acquired during the latter part of 1998
and 1999. The rise in business promotion is mainly due to a new institutional
advertising campaign launched in Puerto Rico for Banco Popular and to marketing
efforts to expand the mortgage banking business in Puerto Rico and the retail
banking business in the Dominican Republic.
The Corporation's total assets at September 30, 1999, amounted to $24.3
billion, compared with $21.3 billion at September 30, 1998. Most of the increase
was reflected in loans. Total assets at June 30, 1999, were $23.7 billion.
Total loans reached $14.1 billion at September 30, 1999, or $1.7 billion
higher than the level
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4-POPULAR, INC. 1999 THIRD QUARTER RESULTS
of $12.4 billion at September 30, 1998, and $210 million over the level of $13.9
billion at June 30, 1999. Commercial and mortgage loans accounted for the
largest growth increasing $1.0 billion and $555 million, respectively, as
compared with September 30, 1998.
The allowance for loan losses amounted to $288 million as of September 30,
1999, or 2.05% of loans, compared with $245 million or 1.98% at the same date in
1998. At June 30, 1999, the allowance for loan losses totaled $283 million or
2.03% of loans. The allowance as a percentage of non-performing assets was 86.6%
at September 30, 1999, compared with 87.2% at the end of the third quarter of
1998 and 93.3% at June 30, 1999.
Non-performing assets were $333 million or 2.36% of loans at September 30,
1999, compared with $282 million or 2.28%, at the end of the third quarter of
1998, and $303 million or 2.18% at June 30, 1999. The increase of $30 million
from June 30, 1999 was mostly reflected in non-performing commercial loans
resulting from the placement in non-accrual status of two large commercial
relationships in the Dominican Republic. The Corporation's policy is to place
commercial loans on non-accrual status when payments of principal or interest
are delinquent 60 days, which is a more conservative practice than most U.S.
banks that place commercial loans in non-accrual status when payments of
principal or interest are delinquent 90 days. Lease financing, conventional
mortgage and closed-end consumer loans are placed on non-accrual status when
payments are delinquent 90 days.
Total deposits were $13.8 billion at September 30, 1999, compared with $12.5
billion at September 30, 1998, and $13.9 billion at the end of the second
quarter of 1999. The decrease in deposits since June 30, 1999 relates to funds
held in trust as paying agent on several bond issues, subsequently disbursed at
the beginning of the third quarter.
Borrowed funds amounted to $8.4 billion at September 30, 1999, compared with
$6.6 billion at the same date a year earlier and $7.7 billion at June 30, 1999.
At September 30, 1999, stockholders' equity totaled $1.68 billion, compared
with $1.70 billion at the same date last year. These figures include unrealized
losses on securities available-for-sale, net of deferred taxes, of $83 million
as of September 30, 1999, compared with unrealized gains of $107 million as of
the same date last year. Stockholders' equity was $1.65 billion at June 30,
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5-POPULAR, INC. 1999 THIRD QUARTER RESULTS
1999.
The market value of the Corporation's common stock at September 30, 1999,
was $27.75 per share, compared with $28.38 at September 30, 1998, and $30.31 at
June 30, 1999. The Corporation's market capitalization at September 30, 1999
and 1998, was $3.8 billion compared with $4.1 billion at June 30, 1999. At
September 30, 1999, the Corporation's common stock had a book value per share
of $11.62.
The Corporation's common and preferred stocks are traded on the National
Association of Securities Dealers Automated Quotation (NASDAQ) National System
under the symbols BPOP and BPOPP, respectively.
***
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POPULAR, INC.
Financial Summary
(In thousands, except per share data)
<TABLE>
<CAPTION>
Quarter ended
September 30 Third
----------------------------- Quarter ----------------
1999-1998 Second
Percent Quarter
1999 1998 Variance 1999
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<S> <C> <C> <C> <C>
Summary of Operations
Interest income $468,532 $410,821 14.05% $453,401
Interest expense 229,740 195,780 17.35 214,550
--------------------------------------------------------------------
Net interest income 238,792 215,041 11.04 238,851
Provision for loan losses 37,080 34,667 6.96 36,631
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Net interest income after provision
for loan losses 201,712 180,374 11.83 202,220
Other operating income 97,681 69,162 41.24 87,222
Gain on sale of securities 39 4,553 286
Trading account profit (loss) (697) 506 (582)
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Total other income 97,023 74,221 30.72 86,926
Salaries and benefits 93,905 78,700 19.32 88,555
Profit sharing 5,485 5,618 (2.37) 6,084
Amortization of intangibles 8,113 6,890 17.75 7,586
Other operating expenses 107,201 87,410 22.64 102,992
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Total operating expenses 214,704 178,618 20.20 205,217
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Income before income tax and minority
interest 84,031 75,977 10.60 83,929
Income tax 20,887 18,397 13.53 20,334
Net losses of minority interest 1,066 382
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Net income $ 64,210 $ 57,580 11.51 $ 63,977
====================================================================
Net income applicable to common stock $ 62,123 $ 55,493 11.95 $ 61,890
====================================================================
Earnings per common share:
Net income $ 0.46 $ 0.41 12.20 $ 0.46
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Average common shares outstanding 135,379,215 135,555,652 135,491,324
Common shares outstanding at end
of period 135,700,258 135,555,652 134,698,572
Selected Average Balances
Total assets .......................... $24,115,321 $20,343,840 18.54 $23,655,275
Loans ................................. 14,141,607 11,928,198 18.56 13,691,097
Earning assets ........................ 22,587,935 19,214,550 17.56 22,525,626
Deposits .............................. 13,801,854 12,082,144 14.23 13,816,195
Interest-bearing liabilities .......... 18,859,361 15,946,221 18.27 18,391,158
Stockholders' equity .................. 1,717,865 1,573,202 9.20 1,698,197
Selected Financial Data at Period-End
Total assets .......................... $24,275,583 $21,273,593 14.11 $23,665,621
Loans ................................. 14,097,080 12,362,527 14.03 13,887,392
Earning assets ........................ 22,522,259 19,920,544 13.06 22,119,957
Deposits .............................. 13,770,048 12,547,778 9.74 13,902,387
Interest-bearing liabilities .......... 19,162,899 16,472,478 16.33 18,304,859
Stockholders' equity .................. 1,677,322 1,696,891 (1.15) 1,650,682
Performance Ratios
Net interest yield * .................. 4.23% 4.45% 4.24%
Return on assets ...................... 1.06 1.12 1.08
Return on common equity ............... 15.23 14.94 15.53
Credit Quality Data
Nonperforming assets .................. $333,169 $281,508 18.35 $303,025
Net loans charged-off ................. 31,676 27,662 14.51 31,157
Allowance for loan losses ............. 288,382 245,382 17.52 282,590
Non performing assets to total assets . 1.37% 1.32% 1.28%
Allowance for losses to loans ......... 2.05 1.98 2.03
* Not on a taxable equivalent basis
</TABLE>
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POPULAR, INC.
Financial Summary
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the nine month ended
September 30
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Percent
1999 1998 Variance
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<S> <C> <C> <C>
Summary of Operations
Interest income $ 1,366,127 $ 1,210,054 12.90%
Interest expense 652,246 567,917 14.85
----------------------------------------------
Net interest income 713,881 642,137 11.17
Provision for loan losses 109,482 101,756 7.59
----------------------------------------------
Net interest income after provision
for loan losses 604,399 540,381 11.85
Other operating income 271,792 204,103 33.16
Gain on sale of securities 775 8,469
Trading account profit (loss) (1,561) 2,486
---------------------------------------------
Total other income 271,006 215,058 26.02
Salaries and benefits 272,176 232,804 16.91
Profit sharing 17,888 17,565 1.84
Amortization of intangibles 23,319 20,523 13.62
Other operating expenses 308,429 255,151 20.88
----------------------------------------------
Total operating expenses 621,812 526,043 18.21
----------------------------------------------
Income before income tax and minority interest 253,593 229,396 10.55
Income tax 63,623 59,560 6.82
Net losses of minority interest 1,881
----------------------------------------------
Net income $ 191,851 $ 169,836 12.96
----------------------------------------------
Net income applicable to common stock $ 185,589 $ 163,574 13.46
----------------------------------------------
Earnings per common share:
Net income $ 1.37 $ 1.21 13.22
------------ --------- -------
Average common shares outstanding 135,525,400 135,496,620
Common shares outstanding at end of period 135,700,258 135,555,652
Selected Average Balances
Total assets....................................... $ 23,493,991 19,924,608 17.91
Loans.............................................. 13,684,777 11,671,654 17.25
Earning assets..................................... 22,222,392 18,778,338 18.34
Deposits........................................... 13,732,917 12,028,881 14.17
Interest-bearing liabilities....................... 18,290,478 15,541,742 17.69
Stockholder's equity............................... 1,691,540 1,533,104 10.33
Selected Financial Data at Period-End
Total assets....................................... $ 24,275,583 $ 21,273,593 14.11
Loans.............................................. 14,097,080 12,362,527 14.03
Earning assets..................................... 22,522,259 19,920,544 13.06
Deposits........................................... 13,770,048 12,547,778 9.74
Interest-bearing liabilities....................... 19,162,899 16,472,478 16.33
Stockholders' equity............................... 1,677,322 1,696,891 (1.15)
Performance Ratios
Net interest yield*................................ 4.29% 4.54%
Return assets...................................... 1.09 1.14
Return on common equity............................ 15.59 15.26
Credit Quality Data $ 333,169 $ 281,508
Nonperforming assets............................... 88,737 82,357
Allowance for loan losses.......................... 288,382 245,382
Non performing assets to total assets.............. 1.37% 1.32%
Allowance for losses to loans...................... 2.05 1.98
*Not on a taxable equivalent basis
</TABLE>
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