EX-19 3 g75946ex19.txt QUARTERLY REPORT TO SHAREHOLDERS EXHIBIT 19 [POPULAR LOGO] MARCH 31, 2002 POPULAR, INC. FIRST QUARTER REPORT Letter to Shareholders During the quarter ended March 31, 2002, Popular, Inc. continued to deliver sound earnings growth. In the first quarter of 2002, the Corporation's net income reached $89.0 million, an increase of $14.8 million, or 20%, compared with $74.2 million in the first quarter of 2001. Basic and diluted earnings per common share were $0.63 for the first quarter, an increase of 19% over the $0.53 reported in the same quarter of 2001. Earnings performance for the first quarter of 2002 resulted in a return on average assets (ROA) of 1.19% and a return on common equity (ROE) of 16.83%, compared with 1.09% and 15.25%, respectively, for the same period in 2001. Net interest income for the quarter ended March 31, 2002, rose to $285.0 million, representing an 11% improvement over the $255.7 million reported in the first quarter of 2001. The Corporation's net interest margin for the quarter, on a taxable equivalent basis, was 4.29%, compared with 4.21% a year earlier. The provision for loan losses for this quarter amounted to $54.5 million, compared with $50.0 million for the same quarter in 2001. Operating income, excluding derivatives, securities and trading transactions, increased to $135.3 million for the first quarter of 2002, 17% higher than the $115.7 million reported in the same quarter last year, driven mostly by higher service charges on deposit accounts and higher gains on sales of loans. During this quarter the Corporation realized losses on sale of securities and trading transactions of $5.0 million, compared with a gain of $0.5 million for the same period in 2001. The loss resulted mostly from investment opportunities undertaken in this quarter, reinvesting the funds in securities with a higher yield. Operating expenses amounted to $242.2 million for the first quarter of 2002, increasing $21.7 million, or 10% compared with $220.5 million for the same period in 2001, of which $15.4 million was in personnel costs, mostly associated with merit increases, incentives, higher headcount and higher pension and other benefits. Total assets reached $30.3 billion at March 31, 2002, an increase of $3 billion over the $27.3 billion at March 31, 2001. Total loans rose to $18.3 billion, up 11% from the $16.5 million in the same period of 2001. This rise is mostly due to the growth of the mortgage loan portfolio, which increased by $1.7 billion or 33%. Deposits totaled $16.5 billion at March 31, 2002, increasing $1.4 billion, or 9%, from $15.1 billion at the same date a year earlier. Stockholders' equity at March 31, 2002 amounted to $2.2 billion, compared with $2.1 billion at the same date in 2001. The rise in stockholders' equity was partly reduced by the redemption of $100 million in preferred stock in January 2002 and to a decrease in the unrealized gains on securities available-for-sale. The Corporation's stock market value was $29.22 at March 31, 2002, compared with $29.45 at the same date last year. At the end of the first quarter of 2002, the Corporation had a market capitalization of $4.0 billion. Book value per share of common stock increased 8% to $16.01, compared with its value on March 31, 2001, of $14.86. -------------------------------------------------------------------------------- As part of the Corporation's Internet banking initiative, during the first quarter of 2002 Banco Popular upgraded and enhanced its web page in the Internet, www.bancopopular.com, converting it to a friendlier version and providing a greater array of online services. This delivery channel allows our banking customers to verify account balances, make payments, apply for credit and other consumer services, among other features. Another innovative online banking service added to Banco Popular's website is electronic bill presentment, which provides the bank's credit card customers access to their billing statements and allows them to issue the payments online. In the near future, customers will also be able to receive their billing statements online from other merchants as well. -------------------------------------------------------------------------------- Based on our effort to bring services to more customers in more communities, Banco Popular acquired three branches of Banco Bilbao Vizcaya Argentaria in Puerto Rico with deposits approximating $40 million, strengthening our presence in the central region of Puerto Rico. During this quarter, Popular, Inc. also established an insurance subsidiary in the United States, Popular Insurance Agency, U.S.A. Through this initiative, we will be able to offer our customers insurance products and services through our national network of branches and offices in the United States. Continuing with the initiative of offering financial services to all communities on the mainland United States, while capitalizing on its strength with the Hispanic market, Banco Popular North America announced the opening of its first pilot hybrid check cashing / retail bank branch. This effort is directed to provide customers in the unbanked segment, with the convenience and benefits of the regular bank products, while conventional retail bank customers will benefit from the expanded customer service hours. The first hybrid branch will be introduced in Panorama City, California. In a similar effort, Equity One, the Corporation's consumer and mortgage lending subsidiary in the United States, is heading a strategy to reach the Hispanic community, which traditionally has consisted of renters rather than home buyers, and help increase the home ownership rate. Equity One aims to reach first the Hispanic community of the Pennsylvania, New Jersey and Delaware tristate region, and to gradually expand to other areas of the continental United States. -------------------------------------------------------------------------------- Humberto Martin, Executive Vice President of the Corporation and head of Banco Popular's Operations Group, retired effective March 31, 2002, after 32 years of service. We are sincerely grateful for his genuine commitment, leadership and consistent dedication to our Corporation. We are also pleased to inform that Felix M. Villamil, who was a Retail Banking Regional Manager and former General Auditor of the Corporation, was designated to assume the leadership role. -------------------------------------------------------------------------------- We are committed to provide our customers with innovative solutions to help them achieve their financial goals and plans for the future. We will continue to expand our franchise and broaden our businesses, remaining well positioned to better serve our clients by responding quickly to changing market opportunities, thus creating superior returns for you, our shareholders. /s/ Richard L. Carrion ----------------------- RICHARD L. CARRION CHAIRMAN PRESIDENT CHIEF EXECUTIVE OFFICER Popular, Inc. FINANCIAL HIGHLIGHTS
At March 31, Average for the quarter ----------------------------------------- -------------------------------------------- BALANCE SHEET HIGHLIGHTS 2002 2001 Change 2002 2001 Change ------------------------------------------------------------------------------------------------------------------------------------ (In thousands) Money market investments $ 719,588 $ 970,299 $ (250,711) $ 927,038 $ 959,452 $ (32,414) Investment and trading securities 9,902,595 8,211,330 1,691,265 9,871,684 8,993,341 878,343 Loans 18,256,924 16,509,477 1,747,447 18,058,011 16,215,424 1,842,587 Total assets 30,317,366 27,312,158 3,005,208 30,417,589 27,714,226 2,703,363 Deposits 16,524,154 15,093,179 1,430,975 16,526,180 14,831,555 1,694,625 Borrowings 11,083,110 9,629,177 1,453,933 11,283,963 10,409,114 874,849 Stockholders' equity 2,184,827 2,122,974 61,853 2,154,243 2,018,788 135,455 ------------------------------------------------------------------------------------------------------------------------------------
First quarter ----------------------------------- OPERATING HIGHLIGHTS 2002 2001 Change ------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except per share information) Net interest income $ 285,015 $ 255,717 $ 29,298 Provision for loan losses 54,454 50,034 4,420 Fees and other income 130,808 115,521 15,287 Other expenses, net of minority interest 272,325 247,658 24,667 Cumulative effect of accounting change -- 686 (686) Net income $ 89,044 $ 74,232 $ 14,812 Net income applicable to common stock $ 86,534 $ 72,145 $ 14,389 Earnings per common share $ 0.63 $ 0.53 $ 0.10 ------------------------------------------------------------------------------------------------------------------------------------
First quarter ------------------ SELECTED STATISTICAL INFORMATION 2002 2001 ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK DATA Market price High $ 29.94 $ 29.45 Low 27.50 25.25 End 29.22 29.45 Book value at period end 16.01 14.86 Dividends declared 0.20 0.16 Dividend payout ratio 30.81% 30.16% Price/earnings ratio 12.87x 14.44x ------------------------------------------------------------------------------------------------------------------------------------ PROFITABILITY RATIOS Return on assets 1.19% 1.09% Return on common equity 16.83 15.25 Net interest spread (taxable equivalent) 3.79 3.40 Net interest yield (taxable equivalent) 4.29 4.21 Effective tax rate 25.29 26.97 Overhead ratio 39.07 41.06 Efficiency ratio 57.61 59.38 ------------------------------------------------------------------------------------------------------------------------------------ CAPITALIZATION RATIOS Equity to assets 7.08% 7.28% Tangible equity to assets 6.29 6.34 Equity to loans 11.93 12.45 Internal capital generation 11.35 9.98 Tier I capital to risk-adjusted assets 10.20 10.63 Total capital to risk-adjusted assets 11.99 12.59 Leverage ratio 6.34 6.59 ------------------------------------------------------------------------------------------------------------------------------------ CREDIT QUALITY RATIOS Allowance for losses to loans 1.87% 1.85% Allowance to non-performing assets 69.24 83.01 Allowance to non-performing loans 74.45 89.76 Non-performing assets to loans 2.70 2.23 Non-performing assets to total assets 1.63 1.35 Net charge-offs to average loans 1.10 0.89 Provision to net charge-offs 1.10x 1.38x Net charge-offs earnings coverage 3.50 4.17
ADDITIONAL INFORMATION BOARD OF DIRECTORS Richard L. Carrion, Chairman Antonio Luis Ferre, Vice Chairman ** Juan A. Albors Hernandez * Jose A. Bechara Bravo * Juan J. Bermudez Francisco J. Carreras Jose B. Carrion Jr. David H. Chafey Jr. Maria Luisa Ferre * Hector R. Gonzalez Jorge A. Junquera ** Guillermo L. Martinez * Manuel Morales Jr. Alberto M. Paracchini Francisco M. Rexach Jr. J. Adalberto Roig Jr. * Felix J. Serralles Jr. Jon E. Slater * Julio E. Vizcarrondo Jr. Samuel T. Cespedes, Secretary * Director of Banco Popular de Puerto Rico only ** Director of Popular, Inc. only EXECUTIVE OFFICERS Richard L. Carrion, Chairman of the Board, President and Chief Executive Officer David H. Chafey Jr., Senior Executive Vice President Jorge A. Junquera, Senior Executive Vice President Maria Isabel P. de Burckhart, Executive Vice President Roberto R. Herencia, Executive Vice President Larry B. Kesler, Executive Vice President Tere Loubriel, Executive Vice President Emilio E. Pinero, Executive Vice President Brunilda Santos de Alvarez, Executive Vice President Carlos J. Vazquez, Executive Vice President Felix M. Villamil, Executive Vice President SHAREHOLDERS' INFORMATION Shareholders' Assistance: Shareholders requiring a change of address, records or information about lost certificates, dividend checks or dividend reinvestment should contact: Banco Popular de Puerto Rico Popular Center Building - 4th Floor Trust Division (725) 209 Munoz Rivera Ave. Hato Rey, Puerto Rico 00918 Publications: For printed material (annual and quarterly reports, 10-K and 10-Q reports), contact Mr. Amilcar L. Jordan at the Comptroller's Division at (787) 765-9800 ext. 6101, or visit our web site at http://www.popularinc.com. Dividend Reinvestment Plan: The Corporation has a dividend reinvestment plan that provides the shareholder a simple, convenient and cost-effective way to acquire Popular, Inc. common stock. - Dividends can be automatically reinvested in additional shares at 95% of the Average Market Price. - Participants may make optional cash payments of at least $25 and not more than $10,000 per calendar month for investment in additional shares. - No brokerage commissions are charged on purchases under this plan. - Participant's funds will be fully invested, because the plan permits fractions of shares to be credited to a participant's account. If you would like more information on this plan, please contact our Trust Division at (787) 756-3908 or (787) 765-9800 exts. 5637, 5525 and 5897. Popular, Inc. CONSOLIDATED STATEMENTS OF CONDITION
Quarter ended March 31, ------------------------------- In thousands 2002 2001 ------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks $ 383,927 $ 639,808 ------------------------------------------------------------------------------------------------------------------------ Money market investments: Federal funds sold and securities purchased under agreements to resell 716,123 961,126 Time deposits with other banks 3,056 8,397 Bankers' acceptances 409 776 ------------------------------------------------------------------------------------------------------------------------ 719,588 970,299 ------------------------------------------------------------------------------------------------------------------------ Investment securities available-for-sale, at market value 9,401,158 7,681,290 Investment securities held-to-maturity, at amortized cost 202,022 312,170 Trading account securities, at market value 299,415 217,870 Loans held-for-sale, at lower of cost or market 900,461 834,242 ------------------------------------------------------------------------------------------------------------------------ Loans 17,676,000 16,007,197 Less - Unearned income 319,537 331,962 Allowance for loan losses 341,744 305,295 ------------------------------------------------------------------------------------------------------------------------ 17,014,719 15,369,940 ------------------------------------------------------------------------------------------------------------------------ Premises and equipment 404,842 403,263 Other real estate 34,550 27,638 Accrued income receivable 191,118 202,088 Other assets 504,931 378,742 Intangible assets 260,635 274,808 ------------------------------------------------------------------------------------------------------------------------ $ 30,317,366 $ 27,312,158 ======================================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Deposits: Non-interest bearing $ 3,100,625 $ 3,001,269 Interest bearing 13,423,529 12,091,910 ------------------------------------------------------------------------------------------------------------------------ 16,524,154 15,093,179 Federal funds purchased and securities sold under agreements to repurchase 4,564,815 4,053,012 Other short-term borrowings 2,252,679 3,067,197 Notes payable 3,996,616 2,233,968 Other liabilities 524,350 465,917 ------------------------------------------------------------------------------------------------------------------------ 27,862,614 24,913,273 ------------------------------------------------------------------------------------------------------------------------ Subordinated notes 125,000 125,000 ------------------------------------------------------------------------------------------------------------------------ Preferred beneficial interest in Popular North America's junior subordinated deferrable interest debentures guaranteed by the Corporation 144,000 150,000 ------------------------------------------------------------------------------------------------------------------------ Minority interest in consolidated subsidiaries 925 911 ------------------------------------------------------------------------------------------------------------------------ STOCKHOLDERS' EQUITY: Preferred stock -- 100,000 Common stock 833,121 830,934 Surplus 270,766 262,748 Retained earnings 1,116,963 915,394 Treasury stock, at cost (66,363) (66,136) Accumulated other comprehensive income, net of tax 30,340 80,034 ------------------------------------------------------------------------------------------------------------------------ 2,184,827 2,122,974 ------------------------------------------------------------------------------------------------------------------------ $ 30,317,366 $ 27,312,158 ========================================================================================================================
POPULAR, INC. CONSOLIDATED STATEMENTS OF INCOME
Quarter ended March 31, ------------------------- Dollars in thousands, except per share information 2002 2001 ------------------------------------------------------------------------------------------------------------------ INTEREST INCOME: Loans $ 372,221 $ 393,565 Money market investments 7,785 15,306 Investment securities 111,911 138,059 Trading account securities 3,502 3,521 ------------------------------------------------------------------------------------------------------------------ 495,419 550,451 ------------------------------------------------------------------------------------------------------------------ INTEREST EXPENSE: Deposits 112,931 132,777 Short-term borrowings 44,443 119,118 Long-term debt 53,030 42,839 ------------------------------------------------------------------------------------------------------------------ 210,404 294,734 ------------------------------------------------------------------------------------------------------------------ Net interest income 285,015 255,717 Provision for loan losses 54,454 50,034 ------------------------------------------------------------------------------------------------------------------ Net interest income after provision for loan losses 230,561 205,683 Service charges on deposit accounts 38,973 34,658 Other service fees 61,687 58,694 (Loss) gain on sale of securities (4,010) 290 Trading account (loss) profit (1,030) 188 Derivatives gains (losses) 511 (631) Other operating income 34,677 22,322 ------------------------------------------------------------------------------------------------------------------ 361,369 321,204 ------------------------------------------------------------------------------------------------------------------ OPERATING EXPENSES: Personnel costs: Salaries 88,561 77,778 Profit sharing 4,940 5,097 Pension and other benefits 26,801 22,019 ------------------------------------------------------------------------------------------------------------------ 120,302 104,894 Net occupancy expenses 19,030 17,195 Equipment expenses 24,765 24,127 Other taxes 9,549 8,810 Professional fees 17,507 15,939 Communications 13,273 11,887 Business promotion 13,367 10,545 Printing and supplies 4,509 4,319 Other operating expenses 17,321 15,931 Amortization of intangibles 2,543 6,876 ------------------------------------------------------------------------------------------------------------------ 242,166 220,523 ------------------------------------------------------------------------------------------------------------------ Income before income tax, minority interest and cumulative effect of accounting change 119,203 100,681 Income tax 30,148 27,151 Net (earnings) losses of minority interest (11) 16 ------------------------------------------------------------------------------------------------------------------ Income before cumulative effect of accounting change 89,044 73,546 Cumulative effect of accounting change, net of tax -- 686 ------------------------------------------------------------------------------------------------------------------ NET INCOME $ 89,044 $ 74,232 ================================================================================================================== NET INCOME APPLICABLE TO COMMON STOCK $ 86,534 $ 72,145 ================================================================================================================== EARNINGS PER COMMON SHARE (BASIC AND DILUTED) (BEFORE AND AFTER CUMULATIVE EFFECT OF ACCOUNTING CHANGE) $ 0.63 $ 0.53 ==================================================================================================================
SUBSIDIARIES CENTRAL OFFICE Popular Center 209 Munoz Rivera Avenue San Juan, Puerto Rico 00918 Telephone: (787) 765-9800 BANCO POPULAR DE PUERTO RICO Puerto Rico Office Popular Center 209 Munoz Rivera Avenue San Juan, Puerto Rico 00918 Telephone: (787) 765-9800 Virgin Islands Office 193 Estate Altona & Welgunst St. Thomas, Virgin Islands 00802 Telephone: (340) 693-2777 BANCO POPULAR NORTH AMERICA 4000 West North Avenue Chicago, Illinois 60639 Telephone: (773) 772-8600 BANCO POPULAR, NATIONAL ASSOCIATION 8523 Commodity Circle Suite 100 Orlando, Florida 32819 Telephone: (407) 370-7800 ATH COSTA RICA / CreST, S.A. Tournon Neighborhood, accross to newspaper La Republica, ATH Building San Jose, Costa Rica Telephone: (011) 506-257-9011 GM GROUP, INC. 1590 Ponce de Leon Avenue San Juan, Puerto Rico 00926 Telephone: (787) 751-4343 EQUITY ONE, INC. Marlton Crossing Office Park 400 Lippincott Drive Marlton, New Jersey 08053 Telephone: (856) 396-2600 POPULAR MORTGAGE, INC. 268 Ponce de Leon Avenue San Juan, Puerto Rico 00918 Telephone: (787) 753-0245 LEVITT MORTGAGE Galeria San Patricio B-5 Tabonuco Street Suite 207 Guaynabo, Puerto Rico 00968 Telephone: (787) 749-8787 POPULAR AUTO, INC. M-1046 Federico Costa Street Tres Monjitas Industrial Development San Juan, Puerto Rico 00903 Telephone: (787) 751-4848 POPULAR LEASING, USA 16296 Westwood Business Parkdrive Ellisville, Missouri 63021 Telephone: (609) 273-1119 POPULAR FINANCE, INC. 10 Salud Street El Senorial Condominium Suite 613 Ponce, Puerto Rico 00731 Telephone: (787) 844-2860 POPULAR CASH EXPRESS, INC. 6200 North Hiawatha Suite 200 Chicago, Illinois 60646 Telephone: (773) 205-8300 POPULAR SECURITIES, INC. Popular Center 209 Munoz Rivera Avenue Suite 1020 San Juan, Puerto Rico 00918 Telephone: (787) 766-4200 POPULAR INSURANCE, INC. 9 Pedro Marquez Street Culebra, Puerto Rico 00735 Telephone: (787) 742-0255 POPULAR INSURANCE AGENCY, USA 1010 W Lake Street Suite 509 Oak Park, Illinois 60301 Telephone: (773) 394-7680