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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 11, 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 (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 11, 2000, Popular, Inc. (the "Corporation") announced in a news
release its operational results for the quarter and year ended December 31,
1999. A copy of the Corporation's release, dated January 11, 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 January 11, 2000, announcing the Corporation's
consolidated earnings for the quarter and year ended December 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: January 12, 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
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
99(a) News release, dated January 11, 2000
</TABLE>
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Exhibit 99(a)
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
January 11, 2000 News Release
POPULAR, INC. EARNINGS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 1999
Popular, Inc. (the Corporation) reported net income of $257.6 million for
the year ended December 31, 1999, an increase of $25.2 million or 10.9% over
the net income of $232.4 million obtained in 1998. Earnings per common share
(EPS) for the year were $1.84, based on 135,585,654 average shares outstanding,
compared with $1.65 for 1998, based on 135,532,086 average shares outstanding.
The net income for 1999 represented a return on assets (ROA) of 1.08% and a
return on common equity (ROE) of 15.45%. In 1998, the Corporation reported ROA
and ROE of 1.14% and 15.41%, respectively.
Net earnings for the last quarter of 1999 reached $65.7 million or $0.47
per common share, based on 135,764,452 average shares outstanding, compared with
$62.5 million or $0.44 per common share for the same quarter of 1998, based on
135,637,327 average shares outstanding. Net earnings for the third quarter of
1999, totaled $64.2 million or $0.46 per common share, based on 135,379,215
average shares outstanding. The results for the fourth quarter of 1999
represented a ROA of 1.05% and a ROE of 15.06%, compared with 1.13% and 15.84%,
respectively, for the same period in 1998. For the third quarter of 1999 these
ratios were 1.06% and 15.23%.
The Corporation's results of operations for the quarter ended December 31,
1999, reflected an increase of $9.0 million in net interest income and an
increase of $25.7 million in other revenues when compared with the quarter
ended on December 31, 1998. These positive variances were partially offset by
increases of $21.4 million in operating expenses, $6.4 million in income taxes
and $4.0 million in the provision for loan losses.
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2-POPULAR, INC. 1999 FOURTH QUARTER AND YEAR-END RESULTS
When compared with 1998, the earnings performance for the year just ended,
reflects a growth of $80.7 million in net interest income, along with an
improvement of $81.7 million in non-interest revenues, tempered by increases of
$117.1 million in operating expenses, $11.7 million in the provision for loan
losses and $10.4 million in income taxes.
The rise in net interest income resulted mainly from the growth of $3.0
billion in the average volume of earning assets driven primarily by a $2.0
billion increase in the average loan portfolio, particularly commercial and
mortgage loans, together with an increase of $1.0 billion in investment and
money market securities. The yield on earning assets for 1999 was 8.32%,
compared with 8.57% in 1998. The average cost of interest-bearing liabilities
decreased 5 basis points. The net interest yield for the year ended December 31,
1999, was 4.29%, compared with 4.53% for 1998. The net interest yield for the
last quarter of 1999 was 4.17%, compared with 4.23% for the quarter ended
September 30, 1999.
The provision for loan losses rose to $148.9 million for the year ended
December 31, 1999, compared with $137.2 million a year earlier. The increase in
the provision, which is in line with the rises in the loan portfolio,
non-performing loans and net charge-offs, was considered necessary to maintain
the adequacy of the allowance for loan losses to absorb inherent losses in the
portfolio. Net charge-offs for the year ended December 31, 1999, were $124.8
million or 0.90% of average loans, compared with $112.9 million or 0.95% of
average loans for 1998.
Total non-interest income, including securities and trading gains, amounted
to $372.9 million for 1999, compared with $291.2 million a year earlier,
resulting in an increase of 28.0%. This increase was fueled by a rise of $53.2
million in other service fees, $27.6 million in other operating income and $14.4
million in service charges on deposit accounts. The rise in other service fees
is primarily attributable to higher credit card fees and debit card fees
principally as a result of the growth of the credit card business, both in
Puerto Rico and the U.S., and the growing volume of point-of-sale (POS)
terminals and transactions. An increase in the fees earned by the Corporation's
check cashing subsidiary in the U.S. mainland and fees earned by GM Group,
acquired in July 1999, also contributed to this rise. In addition, fees related
to the sale and administration of investment products reflected growth, driven
by the performance of the retail brokerage division of Popular Securities, which
included the issuance of the Puerto Rico Investors Tax-Free Fund VI and the
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3-POPULAR, INC. 1999 FOURTH QUARTER AND YEAR-END RESULTS
Puerto Rico Flexible Allocation Fund. Furthermore, other operating income rose
as a result of fees generated by the Corporation's joint venture in Puerto
Rico's telephone company, increases in gains on sale of SBA and mortgage loans,
and fees earned by GM Group. Service charges on deposit accounts reflected a
higher volume of deposits in Puerto Rico, the increase in the volume of
transactions with commercial accounts and the impact of the acquisitions of
banking businesses in California, Illinois and the Dominican Republic during the
latter part of 1998.
Gains on sale of investment securities available-for-sale in 1999 amounted
to $0.6 million, compared with $8.9 million for 1998. Most of the gains in 1998
were realized on the sale of equity securities by the Corporation's holding
company. The Corporation had trading losses of $1.6 million in 1999 compared
with trading profits of $3.7 million the year before.
Operating expenses for 1999 reached $837.5 million, compared with $720.4
million in 1998. This increase was largely reflected in the personnel costs
category, which grew $49.3 million, principally resulting from increased
employment levels due to acquired operations and growth, and annual merit
increases. The Corporation's expansion included the aforementioned banking
businesses and the acquisitions of GM Group and Levitt Mortgage during the third
quarter of 1999. Other operating expenses rose $67.8 million, reaching $450.8
million for 1999, compared with $383.0 million in 1998. The rise in other
operating expenses was primarily in equipment, net occupancy expenses and
professional fees. The increase in equipment and net occupancy expenses
principally reflected the costs related to new technology and system
enhancements and the Corporation's growth and expansion. The rise in
professional fees reflected consulting and technical support fees for business
expansion and expenses corresponding to the operations acquired during the
latter part of 1998 and during 1999. Most other expense categories showed
increases, reflecting also the impact of the operations acquired, including
higher business promotion expenses mainly due to a new institutional 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 December 31, 1999, amounted to $25.4
billion, compared with $23.2 billion at December 31, 1998, and $24.3 billion at
September 30, 1999. Most of the
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4-POPULAR, INC. 1999 FOURTH QUARTER AND YEAR-END RESULTS
growth relates to the Corporation's continued business expansion in Puerto Rico
and the continental U.S.
Total loans amounted to $14.9 billion at December 31, 1999, compared with
$13.1 billion a year earlier. Commercial loans reflected the largest growth,
followed by mortgage loans.
The allowance for loan losses amounted to $292 million as of December 31,
1999, or 1.96% of loans, and 89.5% of non-performing assets, compared with $267
million or 2.04% and 90.3%, respectively, at the same date in 1998. At
September 30, 1999, the allowance for loan losses amounted to $288 million or
2.05% of loans and 86.6% of non-performing assets.
Non-performing assets were $326 million or 2.19% of loans at December 31,
1999, compared with $296 million or 2.26%, at the same date in 1998 and $333
million or 2.36% at September 30, 1999. The increase of $30 million from
December 31, 1998, was mostly reflected in non-performing commercial and
consumer loans resulting from a large increase in non-performing commercial
loans at Banco Fiduciario in the Dominican Republic, the growth in these
portfolios and the high level of bankruptcy filings. 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 were $14.2 billion at December 31, 1999, compared with
$13.7 billion at December 31, 1998. Most of our growth was realized in time and
demand deposits, which increased $434 million and $108 million, respectively.
Borrowed funds increased to $9.1 billion at December 31, 1999, compared
with $7.3 billion at the same date a year earlier. At September 30, 1999,
borrowed funds totaled $8.4 billion. Borrowed funds were used primarily to
finance growth and arbitrage activities.
At December 31, 1999, stockholders' equity was $1.66 billion, compared
with $1.71 billion at December 31, 1998. Stockholders' equity was $1.68 billion
at September 30, 1999. The unrealized losses on securities available-for-sale,
net of deferred taxes, amounted to $139 million at December 31, 1999, compared
with net unrealized gains of $76 million a year ago.
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5-POPULAR, INC. 1999 FOURTH QUARTER AND YEAR-END RESULTS
The market value of the Corporation's common stock at December 31, 1999 was
$27.94 per share, compared with $34.00 at December 31, 1998. The Corporation's
market capitalization at December 31, 1999 was $3.8 billion, compared with $4.6
billion at December 31, 1998. At December 31, 1999, the Corporation's common
stock had a book value per share of $11.51.
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.
The Corporation is pleased to report that, as expected, the transition to
the Year 2000 occurred without experiencing any significant problems in its
computer systems and other date-sensitive operating equipment, and business is
proceeding as usual throughout all its subsidiaries. The ATM network and POS
terminals, as well as all branches, continued operating normally after the
commencement of the Year 2000. The Corporation will continue to monitor other
critical dates in the future to fulfill this corporate-wide effort that actively
began in 1997.
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POPULAR, INC.
FINANCIAL SUMMARY
(In thousands, except per share data)
<TABLE>
<CAPTION>
Quarter ended Fourth
December 31 Quarter
-------------------------- 1999-1998 Third
Percent Quarter
1999 1998 Variance 1999
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<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income...................................... $ 485,542 $ 441,649 9.94% $ 468,532
Interest expense..................................... 245,685 210,774 16.56 229,740
------------ ------------ ----- ------------
Net interest income.................................. 239,857 230,875 3.89 238,792
Provision for loan losses............................ 39,466 35,457 11.31 37,080
------------ ------------ ----- ------------
Net interest income after provision for loan losses.. 200,391 195,418 2.54 201,712
Other operating income............................... 102,067 74,556 36.90 97,682
Gain (loss) on sale of securities.................... (137) 465 39
Trading account profit (loss)........................ (21) 1,167 (698)
------------ ------------ ----- ------------
Total other income................................... 101,909 76,188 33.76 97,023
Salaries and benefits................................ 90,638 82,530 9.82 93,905
Profit sharing....................................... 5,993 4,502 33.12 5,485
Amortization of intangibles.......................... 8,469 7,337 15.43 8,113
Other operating expenses............................. 110,570 99,942 10.63 107,201
------------ ------------ ----- ------------
Total operating expenses............................. 215,670 194,311 10.99 214,704
------------ ------------ ----- ------------
Income before income tax and minority interest....... 86,630 77,295 12.08 84,031
Income tax........................................... 21,497 15,111 42.26 20,887
Net losses of minority interest...................... 574 328 75.00 1,066
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Net income........................................... $ 65,707 $ 62,512 5.11 $ 64,210
============ ============ ===== ============
Net income applicable to common stock................ $ 63,620 $ 60,423 5.29 $ 62,123
============ ============ ===== ============
Earnings per common share:
Net income......................................... $ 0.47 $ 0.44 6.82 $ 0.46
------------ ------------ ----- ------------
Average common shares outstanding.................... 135,764,452 135,637,327 135,379,215
Common shares outstanding at end of period........... 135,665,098 135,637,327 135,700,258
SELECTED AVERAGE BALANCES
Total assets......................................... $ 24,759,614 $ 21,939,146 12.86 $ 24,115,321
Loans................................................ 14,581,917 12,699,077 14.83 14,141,607
Earning assets....................................... 23,079,899 20,761,782 11.17 22,556,498
Deposits............................................. 13,989,808 13,034,759 7.33 13,801,854
Interest-bearing liabilities......................... 19,372,120 17,120,044 13.15 18,859,218
Stockholders' equity................................. 1,775,856 1,613,063 10.09 1,717,865
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets......................................... $ 25,447,645 $ 23,160,357 9.88 $ 24,275,583
Loans................................................ 14,907,754 13,078,795 13.98 14,097,081
Earning assets....................................... 23,742,620 21,591,950 9.96 22,522,258
Deposits............................................. 14,173,715 13,672,214 3.67 13,770,048
Interest-bearing liabilities......................... 20,011,234 17,793,647 12.46 19,162,322
Stockholders' equity................................. 1,660,986 1,709,113 (2.82) 1,677,322
PERFORMANCE RATIOS
Net interest yield* ................................. 4.17% 4.44% 4.23%
Return on assets..................................... 1.05 1.13 1.06
Return on common equity.............................. 15.06 15.84 15.23
CREDIT QUALITY DATA
Nonperforming assets................................. $ 326,113 $ 295,876 10.22 $ 333,169
Net loans charged-off................................ 36,101 30,554 18.15 31,613
Allowance for loan losses............................ 292,010 267,249 9.27 288,382
Non performing assets to total assets................ 1.28% 1.28% 1.37%
Allowance for losses to loans........................ 1.96 2.04 2.05
</TABLE>
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POPULAR, INC.
FINANCIAL SUMMARY
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the period ended
December 31
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PERCENT
1999 1998 VARIANCE
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<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income ................................... $ 1,851,670 $ 1,651,703 12.11%
Interest expense................................... 897,932 778,691 15.31
------------ ------------ ------
Net interest income................................ 953,738 873,012 9.25
Provision for loan losses.......................... 148,948 137,213 8.55
------------ ------------ ------
Net interest income after provision
for loan losses.................................. 804,790 735,799 9.38
Other operating income............................. 373,860 278,660 34.16
Gain on sale of securities......................... 638 8,933
Trading account profit (loss) ..................... (1,582) 3,653
------------ ------------ ------
Total other income................................. 372,916 291,246 28.04
Salaries and benefits.............................. 362,815 315,333 15.06
Profit sharing ................................... 23,881 22,067 8.22
Amortization of intangibles........................ 31,788 27,860 14.10
Other operating expenses........................... 418,998 355,094 18.00
------------ ------------ ------
Total operating expenses .......................... 837,482 720,354 16.26
------------ ------------ ------
Income before income tax and minority interest..... 340,224 306,691 10.93
Income tax......................................... 85,120 74,671 13.99
Net losses of minority interest.................... 2,454 328
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Net income......................................... $ 257,558 $ 232,348 10.85
============ ============ ======
Net income applicable to common stock.............. $ 249,208 $ 223,998 11.25
============ ============ ======
Earning per common share:
Net income........................................ $ 1.84 $ 1.65 11.52
------------ ------------ ------
Average common shares outstanding.................. 135,585,654 135,532,086
Common shares outstanding at end of period ........ 135,665,098 135,637,327
SELECTED AVERAGE BALANCES
Total assets....................................... $ 23,812,997 $ 20,432,382 16.55
Loans.............................................. 13,910,905 11,930,621 16.60
Earning assets..................................... 22,257,510 19,261,949 15.55
Deposits........................................... 13,797,668 12,270,101 12.45
Interest-bearing liabilities....................... 18,563,114 15,927,246 16.55
Stockholders' equity............................... 1,712,792 1,553,258 10.27
SELECTED FINANCIAL DATA AT PERIOD-END
Total assets....................................... $ 25,447,645 $ 23,160,357 9.88
Loans.............................................. 14,907,754 13,078,795 13.98
Earning assets..................................... 23,742,620 21,591,950 9.96
Deposits........................................... 14,173,715 13,672,214 3.67
Interest-bearing liabilities....................... 20,011,234 17,793,647 12.46
Stockholders' equity............................... 1,660,986 1,709,113 (2.82)
PERFORMANCE RATIOS
Net interest yield*................................ 4.29% 4.53%
Return on assets................................... 1.08 1.14
Return on common equity............................ 15.45 15.41
CREDIT QUALITY DATA
Nonperforming assets .............................. $ 326,113 $ 295,876 10.22
Net loans charged-off.............................. 124,775 112,911 10.51
Allowance for loan losses.......................... 292,010 267,249 9.27
Non performing assets to total assets.............. 1.28% 1.28%
Allowance for losses to loans...................... 1.96 2.04
</TABLE>
*Not on a taxable equivalent basis
7
