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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 10, 2000
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POPULAR, INC.
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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 of incorporation) (Commission (IRS Employer
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 10, 2000, Popular, Inc. (the "Corporation") announced in a
news release its operational results for the quarter ended March 31, 2000. A
copy of the Corporation's release, dated April 10, 2000, 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 April 10, 2000, announcing the Corporation's
consolidated earnings for the quarter ended March 31, 2000.
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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 11, 2000 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 10, 2000
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EXHIBIT 99(a)
[LOGO] POPULAR, INC.
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 10, 2000 News Release
POPULAR, INC. EARNINGS FOR THE QUARTER ENDED MARCH 31, 2000
Popular, Inc.'s (the Corporation) net income for the first quarter of
2000 amounted to $64.2 million or $0.46 earnings per common share (EPS)
compared with $63.7 million or $0.45 per common share reported for the same
quarter of 1999. Net earnings for the last quarter of 1999 were $65.7 million
or $0.47 per share.
The Corporation's return on assets (ROA) and return on common equity
(ROE) for the first quarter of 2000 were 1.01% and 14.57%, respectively,
compared with 1.14% and 16.03% for the same period in 1999. For the last
quarter of 1999, these ratios were 1.05% and 15.06%.
The Corporation's net income for the first quarter of 2000, when
compared with the same period a year ago, reflected higher net interest income
and other revenues by $6.0 million and $28.7 million, respectively. Operating
expenses rose $24.6 million while the provision for loan losses increased $14.2
million.
Net interest income, the principal source of earnings of the
Corporation, grew to $242.2 million, primarily as a result of an increase of
$1.8 billion in the average volume of loans and $673 million in average
investments and trading securities when compared with the quarter ended March
31, 1999. The average balance of the commercial, mortgage and credit card
portfolios rose $825 million, $786 million and $202 million, respectively. The
increase in the volume of earning assets was funded mainly through a higher
average volume of borrowings. The average balance of borrowings and deposits
rose $2.0 billion and $569 million, respectively, from the average balance
during the first quarter of 1999. The net interest yield for the quarter ended
March 31, 2000, was
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2 - POPULAR, INC. 2000 FIRST QUARTER RESULTS
4.08% compared with 4.45% for the first quarter of 1999. The reduction in the
net interest yield resulted from an increase of 50 basis points in the average
cost of interest bearing liabilities, mostly as a result of a higher interest
rate scenario and the higher proportion of short-term borrowings, partially
offset by an increase of 12 basis points in the average yield on earning
assets, mainly in the loan portfolio. For the last quarter of 1999 the net
interest yield was 4.16%.
The increase in the provision for loan losses resulted from a rise in
the Corporation's loan portfolio, increases in non-performing assets and net
charge-offs. This increase was considered necessary to maintain the adequacy of
the allowance for loan losses and to provide for a limited number of commercial
loans whose credit quality deteriorated significantly during the quarter. Net
charge-offs for the quarter ended March 31, 2000, were $48.6 million or 1.29%
of average loans compared with $25.9 million or 0.78% for the first quarter of
1999, and $36.1 million or 0.99% for the fourth quarter of 1999. The increase
experienced since March 31, 1999 was principally in the consumer and lease
financing portfolios, and is mostly related to higher delinquency levels in
both the U.S. and Puerto Rico. Commercial loans net charge-offs also increased.
Total non-interest income, excluding securities and trading
transactions, grew $14.7 million or 17.0%, from $86.9 million for the first
quarter of 1999 to $101.6 million for the same period in 2000. This growth was
fueled by increases of $9.5 million in other service fees, $3.3 million in
other operating income and $2.0 million in service charges on deposit accounts.
The increase in other service fees is mostly attributed to processing fees
generated by GM Group, acquired in July 1999, and to higher credit card fees as
a result of the growth of the credit card business. Also, contributing to the
growth were higher check cashing fees, basically driven by the expansion of the
Corporation's retail financial subsidiary in the United States. In addition,
external payment fees reflected growth mainly due to higher transaction volume
and revisions to fee rates. The increase in other income mostly resulted from
fees generated by the Corporation's investment in Telecomunicaciones de Puerto
Rico, Inc. and other revenues derived by GM Group. Service charges on deposit
accounts increased due to a higher activity on commercial and retail accounts
and a higher volume of deposits.
Gain on sale of securities for the quarter ended March 31, 2000
amounted to $13.3 million compared with $0.5 million for the same period in
1999. During this quarter, the Corporation exercised its conversion right and
exchanged its investment in preferred stock of a financial
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3 - POPULAR, INC. 2000 FIRST QUARTER RESULTS
corporation in Puerto Pico for common stock of the same entity, resulting in a
$13.4 million gain. Also, during the first three months of 2000, the
Corporation realized gains on trading transactions of $0.8 million compared
with losses of $0.3 million for the same quarter last year.
Operating expenses amounted to $226.5 million for the first quarter of
2000 compared with $201.9 million for the same period in 1999, for an increase
of $24.6 million or 12.2%. Personnel expenses rose $7.2 million driven by a
rise of $8.4 million in salary expense, reflecting the acquisition of GM Group,
annual merit increases and continued business expansion. Partially offsetting
the increase in salaries was a decrease of $2.2 million in profit sharing
expense at the Corporation's banking subsidiaries.
All other operating expenses, excluding salaries and benefits,
increased $17.4 million as business promotion expenses rose $3.1 million
reflecting the new institutional campaign launched during the last quarter of
2000 and additional advertising efforts pertaining to the mortgage banking
business in Banco Popular North America. Equipment expenses also increased $2.7
million primarily attributed to the aforementioned acquisition of GM Group and
higher expenses related to the depreciation of new equipment acquired
throughout 1999 as part of the Y2k plan. In addition, professional services
rose $2.4 million due to consulting services needed to support the growth of
the Corporation's business activity coupled with the legal and consulting
expenses incurred in connection with enhancing and improving Banco Popular de
Puerto Rico's anti-money laundering policies and procedures as agreed with the
Federal Reserve Bank of New York on March 9, 2000. Furthermore, other operating
expenses grew primarily due to higher sundry losses, traveling and
miscellaneous expenses.
Income tax expense for the quarter ended March 31, 2000 amounted to
$18.8 million for a reduction of $3.6 million from the $22.4 million recognized
in the same period in 1999. This reduction is due to a lower income before tax
combined with higher income subject to a capital gains tax rate.
The Corporation's total assets at March 31, 2000, amounted to $25.3
billion, compared with $23.2 billion at March 31, 1999. Total assets at
December 31, 1999 were $25.5 billion. At March 31, 2000, total loans amounted
to $15.2 billion compared with $13.5 billion a year ago and $14.9 billion at
December 31, 1999. Commercial and mortgage loans, which accounted for the
largest
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4 - POPULAR, INC. 2000 FIRST QUARTER RESULTS
increases in the portfolio, rose $873.9 million and $579.1 million,
respectively, from March 31, 1999. These same portfolios rose $226.4 million
and $45.8 million, respectively, when compared with December 31, 1999.
The allowance for loan losses amounted to $293.4 million as of March
31, 2000, or 1.93% of loans, compared with $277 million or 2.06% at the same
date in 1999. At December 31, 1999, the allowance for loan losses totaled $292
million or 1.96% of loans. The allowance as a percentage of non-performing
assets was 81.2% at March 31, 2000, compared with 92.8% at the end of the first
quarter of 1999 and 89.5% at December 31, 1999.
Non-performing assets were $361 million or 2.38% of ending loans at
March 31, 2000, compared with $299 million or 2.22% at the end of the first
quarter of 1999 and $326 million or 2.19% at December 31, 1999. The increase of
$35.1 million from December 31, 1999 was mostly reflected in non-performing
commercial loans, which increased by $31 million from the end of 1999. This
rise corresponded principally to the classification on non-accrual of a limited
number of commercial loan relationships in Puerto Rico and the United States.
Other increases resulted from the growth in the portfolios and the increase in
delinquencies. The Corporation's policy is to place commercial loans on
non-accrual status when payments of principal or interest are delinquent 60
days. The industry practice for most U.S. banks is to place commercial loans in
non-accrual status when payments of principal or interests are delinquent 90
days. Lease financing, conventional mortgage and close-end consumer loans are
placed on non-accrual status when payments are delinquent 90 days.
Total deposits rose to $14.3 billion at March 31, 2000, compared with
$13.6 billion at March 31, 1999. At December 31, 1999, total deposits amounted
to $14.2 billion.
Borrowed funds increased to $8.8 billion at March 31, 2000, compared
with $7.4 billion at the same date a year earlier. At December 31, 1999,
borrowed funds totaled $9.2 billion. Borrowed funds were used to finance loan
growth and arbitrage activities.
At March 31, 2000, stockholders' equity was $1.68 billion, compared
with $1.70 billion at the same date last year. Stockholders' equity was $1.66
billion at December 31, 1999. The allowance for unrealized losses on securities
available for sale amounted to $160.6 million as of March 31, 2000 compared
with an unrealized gain of $27.3 million as of March 31, 1999.
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5 - POPULAR, INC. 2000 FIRST QUARTER RESULTS
The market value of the Corporation's common stock at March 31, 2000,
was $22.19 per share, compared with $30.88 at March 31, 1999, and $27.94 at
December 31, 1999. The Corporation's market capitalization at March 31, 2000
was $3.0 billion, compared with $4.2 billion at March 31, 1999, and $3.8
billion at December 31, 1999. At March 31, 2000, the Corporation's common stock
had a book value per share of $11.66.
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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<CAPTION>
QUARTER ENDED
MARCH 31 FIRST
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2000-1999 FOURTH
PERCENT QUARTER
2000 1999 VARIANCE 1999
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SUMMARY OF OPERATIONS
Interest income .................................. $ 505,801 $ 444,195 13.87% $ 485,542
Interest expense ................................. 263,561 207,956 26.74 245,686
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Net interest income .............................. 242,240 236,239 2.54 239,856
Provision for loan losses ........................ 50,013 35,771 39.81 39,466
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Net interest income after provision
for loan losses ................................ 192,227 200,468 -4.11 200,390
Other operating income ........................... 101,645 86,889 16.98 102,068
Gain (loss) on sale of securities ................ 13,264 450 (137)
Trading account profit (loss) .................... 817 (282) (21)
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Total other income ............................... 115,726 87,057 32.93 101,910
Salaries and benefits ............................ 99,092 89,716 10.45 90,638
Profit sharing ................................... 4,131 6,320 (34.64) 5,993
Amortization of intangibles ...................... 8,592 7,620 12.76 8,469
Other operating expenses ......................... 114,689 98,235 16.75 110,570
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Total operating expenses ......................... 226,504 201,891 12.19 215,670
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Income before income tax and minority interest ... 81,449 85,634 -4.89 86,630
Income tax ....................................... 18,756 22,402 -16.28 21,497
Net losses of minority interest .................. 1,496 432 246.30 574
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Net income ....................................... $ 64,189 $ 63,664 0.82 $ 65,707
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Net income applicable to common stock ............ $ 62,102 $ 61,577 0.85 $ 63,618
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Earnings per common share:
Net income ....................................... $ 0.46 $ 0.45 2.22 $ 0.47
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Average Common shares outstanding ................ 135,749,213 135,709,287 135,764,373
Common shares outstanding at end of period ....... 135,747,610 135,709,287 135,654,292
SELECTED AVERAGE BALANCES
Total assets ..................................... $ 25,466,481 $ 22,695,779 12.21 $ 24,733,330
Loans ............................................ 15,027,521 13,201,405 13.83 14,573,443
Earning assets ................................... 23,756,508 21,257,585 11.76 23,059,778
Deposits ......................................... 14,147,519 13,578,244 4.19 13,964,695
Interest-bearing liabilities ..................... 20,091,089 17,622,155 14.01 19,387,914
Stockholders' equity ............................. 1,815,021 1,657,898 9.48 1,775,856
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets ..................................... $ 25,302,025 $ 23,174,075 9.18 $ 25,460,539
Loans ............................................ 15,200,931 13,458,245 12.95 14,907,754
Earning assets ................................... 23,602,803 21,626,534 9.14 23,754,620
Deposits ......................................... 14,337,861 13,576,672 5.61 14,173,715
Interest-bearing liabilities ..................... 20,173,181 18,058,536 11.71 20,043,234
Stockholders' equity ............................. 1,682,293 1,704,482 (1.30) 1,660,986
PERFORMANCE RATIOS
Net interest yield* ............................... 4.08% 4.45% 4.16%
Return on assets ................................. 1.01 1.14 1.05
Return on common equity .......................... 14.57 16.03 15.06
CREDIT QUALITY DATA
Nonperforming assets ............................. $ 361,247 $ 298,589 20.98 $ 326,113
Net loans charged-off ............................ 48,581 25,904 87.54 36,101
Allowance for loan losses ........................ 293,442 277,116 5.89 292,010
Non performing assets to total assets ............ 1.43% 1.29% 1.28%
Allowance for losses to loans .................... 1.93 2.06 1.96
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*Not on a taxable equivalent basis
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