-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G9/xIfornwNOxVIH6aZJZUBCe8Jfqqv6ZYDX9/5vFz1NcRJG8JyY2A6Ej2m7tB9e vIPE9Gxh54JPLK0bsHB3yg== 0000950144-03-000515.txt : 20030117 0000950144-03-000515.hdr.sgml : 20030117 20030117164751 ACCESSION NUMBER: 0000950144-03-000515 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030116 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POPULAR INC CENTRAL INDEX KEY: 0000763901 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 660416582 STATE OF INCORPORATION: PR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13818 FILM NUMBER: 03518187 BUSINESS ADDRESS: STREET 1: 209 MUNOZ RIVERA AVE STREET 2: POPULAR CENTER BUILDING CITY: HATO REY STATE: PR ZIP: 00918 BUSINESS PHONE: 7877659800 MAIL ADDRESS: STREET 1: P.O. BOX 362708 CITY: SAN JUAN STATE: PR ZIP: 00936-2708 FORMER COMPANY: FORMER CONFORMED NAME: BANPONCE CORP DATE OF NAME CHANGE: 19920703 8-K 1 g80247e8vk.txt POPULAR, INC. 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 16, 2003 ------------------------------------------------ ---------------- POPULAR, INC. ------------------------------------------------ (Exact name of registrant as specified in its charter) COMMONWEALTH 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 -------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (787) 765-9800 -------------- ------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events On January 16, 2003, Popular, Inc.(the "Corporation") announced in a news release its operational results for the quarter and year-ended December 31,2002. A copy of the Corporation's release, dated January 16, 2003, 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 16, 2003, announcing the Corporation's consolidated earnings for the quarter and year-ended December 31, 2002. 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: January 17, 2003 By: S/Amilcar L. Jordan ----------------------------------------- Name: Amilcar L. Jordan, Esq. Title: Senior Vice President and Comptroller EXHIBIT INDEX
Exhibit Number Description - -------------- ----------- 99(a) News release, dated January, 16, 2003
EX-99.1(A) 3 g80247exv99w1xay.txt POPULAR, INC. EXHIBIT 99(a) [POPULAR, INC. LOGO] For additional information contact: Jorge A. Junquera Olga Mayoral Wilson, APR Chief Financial Officer Senior Vice President and Manager Senior Executive Vice President Public Relations and Communications Telephone (787)754-1685 Telephone: (787)764-2004 Or visit our web site at http://www.popularinc.com January 16, 2003 NEWS RELEASE POPULAR, INC. REPORTS EARNINGS FOR THE QUARTER AND YEAR-ENDED DECEMBER 31, 2002 Popular, Inc. (the Corporation) (NASDAQ: BPOP) reported net income of $351.9 million for the year ended December 31, 2002, an increase of $47.4 million or 16%, from $304.5 million in 2001. Earnings per common share (EPS), basic and diluted, for the year were $2.61, compared with $2.17 in 2001, an increase of 20%. The net income for 2002 represented a return on assets (ROA) of 1.11% and a return on common equity (ROE) of 16.29%. In 2001, the Corporation reported ROA and ROE of 1.09% and 14.84%, respectively. The Corporation's financial performance for the year ended December 31, 2002, when compared with the same period in 2001, reflected a growth of $103.3 million in net interest income, along with an improvement of $54.3 million in non-interest income, excluding securities, trading and derivative transactions, partly offset by increases of $102.8 million in operating expenses, $12.0 million in income taxes and higher losses on sale of securities by $3.4 million. The provision for loan losses decreased by $7.6 million. Also, during 2002 there were $20.1 million in derivative losses, compared with losses of $20.2 million in 2001. These losses resulted mostly from the reduction in the fair value of the interest rate swaps entered into by the Corporation, as a result of further declines in interest rates. Operating expenses for 2002 include an expense of $21.6 million related to the resolution of an investigation relating principally to the circumstances surrounding certain money laundering activities of a former customer of Banco Popular de Puerto Rico (BPPR), including BPPR's reporting and compliance efforts, as well as certain other customers, as further described later on in this press release. 2-POPULAR, INC. 2002 FOURTH QUARTER AND YEAR-END RESULTS Net income for the fourth quarter of 2002 was $80.8 million, or $0.61 per common share, basic and diluted, compared with $75.6 million or $0.54 per common share for the same quarter of 2001. The results for the fourth quarter of 2002 resulted in an ROA of 0.96% and an ROE of 14.64%, compared with 1.03% and 14.08%, respectively, for the same period in 2001. The Corporation's results of operations for the quarter ended December 31, 2002, compared with the same quarter of 2001, reflected an improvement of $21.0 million in net interest income and $11.3 million in non-interest income, excluding securities, trading and derivative transactions. Derivative gains amounted to $2.0 million, compared with losses of $13.1 million in the fourth quarter of 2001. Operating expenses increased $42.5 million, while the provision for loan losses decreased $8.4 million when compared with the same quarter in 2001. Income taxes increased $7.9 million. Operating expenses for the quarter ended December 31, 2002 included the $21.6 million expense previously mentioned. Net interest income for the year ended December 31, 2002 rose 10%, compared with that of 2001. Average earning assets for the year 2002 increased by $3.8 billion, compared with the previous year, driven by a $1.7 billion rise in the average loan portfolio, mainly in mortgage loans, and a $2.1 billion increase in the investment, money market and trading portfolio, mainly in U.S. agency securities and mortgage-backed obligations. A mix of funding sources supported the increase in the volume of earning assets. Interest-bearing deposits grew in average by $1.2 billion, while borrowings rose by $2.4 billion. The Corporation's net interest margin decreased to 3.91% for 2002, from 4.07% in 2001. The Corporation's yield on earning assets decreased by 123 basis points, mainly due to the repricing of the investment portfolio runoff in a declining rate environment as well as higher level of arbitrage activities in which the Corporation earns a lower yield and spread, and the impact of the declines in the interest rate scenario on commercial loans with floating rates and on the investment portfolio. Meanwhile, the cost of interest-bearing liabilities dropped 131 basis points compared with the previous year, due in part to a decline in the cost of borrowed funds and reductions in deposit rates. The net interest yield for the last quarter of 2002 was 3.81%, compared with 3.93% for the quarter ended September 30, 2002 and 4.11% for the fourth quarter of 2001. The provision for loan losses decreased to $205.6 million for the year ended December 31, 2002, from $213.2 million a year earlier, a decrease of $7.6 million. Net charge-offs for the year ended December 31, 2002, were $172 million or 0.92% of average loans, compared with $169 3-POPULAR, INC. 2002 FOURTH QUARTER AND YEAR-END RESULTS million or 0.99% of average loans in 2001. The provision represented 120% of net charge-offs for 2002, compared with 126% for the same period in 2001. The decline in the provision for loan losses is influenced by the fact that the growth in the Corporation's loan portfolio has been mostly in mortgage loans, which historically represent a lower risk portfolio, as well as a decline in the net charge-offs to average loans ratio. Net charge-offs for the quarter ended December 31, 2002, were $32 million or 0.66% of average loans, compared with $44 million, or 0.93%, for the third quarter of 2002, and $49 million, or 1.10%, for the fourth quarter of 2001. The decrease in net charge-offs in the fourth quarter of 2002, compared with the same quarter in the previous year, was mainly in commercial and construction loans. Non-interest income, excluding securities, trading and derivative transactions, amounted to $547.9 million for 2002, compared with $493.6 million a year earlier, an increase of $54.3 million or 11%. Service charges on deposit accounts and other service fees rose $26.7 million, while other operating income, including gains on sales of loans, increased $27.6 million. The growth in service charges and fee income was partly attributed to higher commercial account charges. The increase also relates to higher debit and credit card fees, insurance commissions and check cashing fees. Other operating income rose mainly due to higher gains on sales of loans, underwriting fees, and gains of $3.1 million and $0.6 million realized in the sale of Banco Popular North America's trust operations in Chicago, Illinois and the sale of 15 branches of Popular Finance during 2002, respectively, among other factors. Operating expenses for 2002 reached $1,029.0 million, compared with $926.2 million in 2001, an increase of $102.8 million or 11%. Personnel costs, the largest category of operating expenses, rose $63.6 million or 15%, compared with 2001, mostly as a result of higher salaries, incentives, profit sharing and pension and post-retirement costs. In 2002, the Corporation opted to expense the stock options granted, which accounted for approximately $1.0 million in operating expenses. The increase in other operating expense categories was mostly experienced in professional fees and business promotion. Also, the results for the fourth quarter of 2002 include the $21.6 million expense previously mentioned. Partially offsetting the rise in operating expenses was a decrease in the amortization of intangibles of $18.3 million, mainly goodwill, due to the adoption of SFAS No. 142 "Goodwill and Other Intangible Assets." The Corporation's total assets at December 31, 2002, reached $33.7 billion, an increase of 4-POPULAR, INC. 2002 FOURTH QUARTER AND YEAR-END RESULTS $2.9 billion or 9%, compared with $30.7 billion a year earlier. Total assets at September 30, 2002, were $32.8 billion. Earning assets reached $31.9 billion at December 31, 2002, compared with $29.1 billion at December 31, 2001, and $31.2 billion at September 30, 2002. Total loans amounted to $19.6 billion at December 31, 2002, compared with $18.2 billion a year earlier and $19.3 billion at September 30, 2002. The allowance for loan losses as of December 31, 2002, amounted to $373 million or 1.90% of loans, compared with $337 million or 1.85% a year earlier. As of September 30, 2002, the allowance for loan losses totaled $354 million or 1.84% of loans. At December 31, 2002, the allowance for loan losses as a percentage of non-performing loans was 74.58%, compared with 78.88% at December 31, 2001, and 71.84% at September 30, 2002. The reduction in the ratio of the allowance to non-performing loans reflects the changing composition of the loan portfolio, as most of its growth was realized in mortgage loans, which historically has represented a lower risk portfolio with minimal losses. Mortgage loans comprised 69% of the total loan growth since December 31, 2001, and 38% of the total loan portfolio at December 31, 2002. Non-performing assets were $539 million or 2.75% of loans at December 31, 2002, compared with $458 million or 2.52% at the same date last year and $527 million or 2.74% at September 30, 2002. Non-performing mortgage loans amounted to $279 million or 52% of non-performing assets at December 31, 2002, and $177 million or 39% at December 31, 2001, an increase of $102 million or 58%. Commercial and construction non-performing loans decreased by $29 million since December 31, 2001. 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 interest are delinquent 90 days. Assuming the standard industry practice of placing commercial loans on non-accrual status when payments of principal or interest are past due 90 days or more, and excluding the closed-end consumer loans from non-accruing, the Corporation's non-performing assets as of December 31, 2002 would have been $478 million, or 2.44% of loans, compared with $389 million, or 2.14%, at December 31, 2001. Total deposits were $17.6 billion at December 31, 2002, compared with $16.4 billion at December 31, 2001, an increase of $1.2 billion or 8%. Interest-bearing deposits increased $1.2 billion or 9%, mostly in savings and time deposits. Total deposits were $17.1 billion at September 30, 2002. 5-POPULAR, INC. 2002 FOURTH QUARTER AND YEAR-END RESULTS Borrowed funds, including subordinated notes and capital securities, amounted to $13.0 billion at December 31, 2002, compared with $11.6 billion at the same date the previous year. At September 30, 2002, borrowed funds totaled $12.8 billion. Borrowed funds were used primarily to finance loan growth and investment portfolio opportunities. At December 31, 2002, stockholders' equity was $2.4 billion, compared with $2.3 billion at December 31, 2001 and September 30, 2002. The increase in equity since December 31, 2001 resulted from earnings retention and favorable changes in the market value of securities available-for-sale. These unrealized gains on securities, net of deferred taxes, amounted to $200 million at December 31, 2002, compared with net unrealized gains of $82 million a year ago. The growth in stockholders' equity was partially offset by the redemption of $100 million of the Corporation's preferred stock and the repurchase of 4.3 million shares of common stock for $139 million during 2002. The market value of the Corporation's common stock at December 31, 2002, was $33.80 per share, compared with $29.08 at December 31, 2001. The Corporation's market capitalization at December 31, 2002, was $4.5 billion, compared with $4.0 billion at December 31, 2001. At December 31, 2002, the Corporation's common stock had a book value per share of $18.14. The Corporation's common stock is traded on the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System under the symbol BPOP. * * * On January 16, 2003 the U.S. District Court for the District of Puerto Rico approved a Deferred Prosecution agreement (the Agreement) among BPPR, the U.S. Department of Justice, the Board of Governors of the Federal Reserve System, and the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN). The Agreement concludes an investigation relating principally to the circumstances surrounding the activities of a former customer of BPPR, including BPPR's reporting and compliance efforts, as well as certain other customers. The former customer has plead guilty to money laundering, including in connection with transactions made through an account at BPPR. No current or former BPPR officer, director or employee has been charged with a crime or accused of benefiting financially from the transactions described in the Agreement. Under the Deferred Prosecution Agreement, BPPR agreed to the filing of a one-count 6-POPULAR, INC. 2002 FOURTH QUARTER AND YEAR-END RESULTS information charging it with failure to file suspicious activity reports in a timely and complete manner. The Agreement provides for BPPR to forfeit $21.6 million to the United States, and resolves all claims the United States, FinCEN or the Federal Reserve may have against BPPR arising from the matters that were subject to investigation. This settlement also terminates the Written Agreement BPPR signed with the Federal Reserve Bank of New York on March 9, 2000, which required enhancements to BPPR's anti-money laundering and Bank Secrecy Act program. The Federal Reserve found BPPR to be fully compliant with the Written Agreement on November 26, 2001. Finally, the Deferred Prosecution Agreement provides that the court will dismiss the information and the Deferred Prosecution Agreement will expire 12 months following the settlement, provided that BPPR complies with its obligations under the Agreement. * * * POPULAR, INC. Financial Summary (In thousands, except per share data)
Quarter ended December 31 Fourth -------------------------------- Quarter ------------- 2002 - 2001 Third Percent Quarter 2002 2001 Variance 2002 -------------------------------- ----------- ------------- Summary of Operations Interest income $ 513,869 $ 505,022 1.75% $ 508,110 Interest expense 210,588 222,692 (5.44) 211,155 ------------- ------------- ------- ------------- Net interest income 303,281 282,330 7.42 296,955 Provision for loan losses 50,049 58,495 (14.44) 50,992 ------------- ------------- ------- ------------- Net interest income after provision for loan losses 253,232 223,835 13.13 245,963 Other income 140,100 128,813 8.76 136,755 Gain (loss) on derivatives 2,018 (13,109) (115.39) (21,759) (Loss) gain on sale of securities (668) 640 (204.38) 1,251 Trading account (loss) profit (662) (1,930) (65.70) 1,247 ------------- ------------- ------- ------------- Total other income 140,788 114,414 23.05 117,494 Salaries and benefits 116,062 102,746 12.96 117,867 Profit sharing 6,281 3,150 99.40 5,646 Amortization of intangibles 2,067 6,843 (69.79) 1,938 Other operating expenses 157,916 127,116 24.23 128,406 ------------- ------------- ------- ------------- Total operating expenses 282,326 239,855 17.71 253,857 ------------- ------------- ------- ------------- Income before income tax and minority interest 111,694 98,394 13.52 109,600 Income tax 30,783 22,840 34.78 23,730 Net (gain) loss of minority interest (82) (1) (116) ------------- ------------- ------- ------------- Net income $ 80,829 $ 75,553 6.98 $ 85,754 ============= ============= ======= ============= Net income applicable to common stock $ 80,829 $ 73,464 10.03 $ 85,754 ============= ============= ======= ============= Earnings per common share (basic and diluted) $ 0.61 $ 0.54 $ 0.65 ------------- ------------- ------------- Dividends declared per common share $ 0.20 $ 0.20 $ 0.20 ------------- ------------- ------------- Average common shares outstanding 132,455,106 136,371,606 132,350,192 Common shares outstanding at end of period 132,439,047 136,362,364 132,334,258 Selected Average Balances Total assets ..................................... $ 33,561,982 $ 29,033,895 15.60 $ 31,863,126 Loans ............................................ 19,358,320 17,772,457 8.92 19,043,736 Earning assets ................................... 31,850,245 27,492,426 15.85 30,249,337 Deposits ......................................... 17,355,009 16,351,443 6.14 16,962,342 Interest-bearing liabilities ..................... 27,518,006 23,232,092 18.45 26,054,195 Stockholders' equity ............................. 2,189,851 2,169,191 0.95 2,122,005 Selected Financial Data at Period-End Total assets ..................................... $ 33,663,102 $ 30,744,676 9.49 $ 32,843,126 Loans ............................................ 19,582,119 18,168,551 7.78 19,263,508 Earning assets ................................... 31,899,765 29,139,288 9.47 31,188,022 Deposits ......................................... 17,614,740 16,370,042 7.60 17,057,856 Interest-bearing liabilities ..................... 27,203,321 24,676,422 10.24 26,616,406 Stockholders' equity ............................. 2,402,502 2,272,818 5.71 2,319,012 Performance Ratios Net interest yield * ............................. 3.81% 4.11% 3.93% Return on assets ................................. 0.96 1.03 1.07 Return on common equity .......................... 14.64 14.08 16.03 Credit Quality Data Non-performing assets ............................ $ 539,255 $ 458,298 17.66 $ 526,892 Net loans charged-off ............................ 31,905 48,905 (34.76) 44,369 Allowance for loan losses ........................ 372,797 336,632 10.74 354,282 Non-performing assets to total assets ............ 1.60% 1.49% 1.60% Allowance for losses to loans .................... 1.90 1.85 1.84
* Not on a taxable equivalent basis Note: Certain reclassifications have been made to prior periods to conform with this quarter. 7 POPULAR, INC. Financial Summary (In thousands, except per share data)
For the period ended December 31, --------------------------------- Percent 2002 2001 Variance --------------------------------- -------- Summary of Operations Interest income $ 2,023,797 $ 2,095,862 (3.44)% Interest expense 843,468 1,018,877 (17.22) ------------- ------------- ------ Net interest income 1,180,329 1,076,985 9.60 Provision for loan losses 205,570 213,250 (3.60) ------------- ------------- ------ Net interest income after provision for loan losses 974,759 863,735 12.85 Other income 547,909 493,571 11.01 Loss on derivatives (20,085) (20,228) (0.71) (Loss) gain on sale of securities (3,342) 27 Trading account (loss) profit (804) (1,781) (54.86) ------------- ------------- ------ Total other income 523,678 471,588 11.05 Salaries and benefits 466,506 408,891 14.09 Profit sharing 22,235 16,251 36.82 Amortization of intangibles 9,104 27,438 (66.82) Other operating expenses 531,157 473,629 12.15 ------------- ------------- ------ Total operating expenses 1,029,002 926,209 11.10 ------------- ------------- ------ Income before income tax, minority interest and cumulative effect of accounting change 469,435 409,114 14.74 Income tax 117,255 105,280 11.37 Net (gain) loss of minority interest (248) 18 ------------- ------------- ------ Income before cumulative effect of accounting change 351,932 303,852 15.82 Cumulative effect of accounting change, net of tax 686 (100.00) ------------- ------------- ------ Net income $ 351,932 $ 304,538 15.56 ============= ============= ====== Net income applicable to common stock $ 349,422 $ 296,188 17.97 ============= ============= ====== Earnings per common share (basic and diluted) $ 2.61 $ 2.17 ------------- ------------- Dividends declared $ 0.80 $ 0.76 ------------- ------------- Average common shares outstanding 133,915,082 136,238,288 Common shares outstanding at end of period 132,439,047 136,362,364 Selected Average Balances Total assets .............................................. $ 31,822,390 $ 27,957,107 13.83 Loans...................................................... 18,729,220 17,045,257 9.88 Earning assets ............................................ 30,194,914 26,414,204 14.31 Deposits .................................................. 16,984,646 15,575,791 9.05 Interest-bearing liabilities .............................. 25,947,966 22,324,244 16.23 Stockholders' equity ...................................... 2,150,387 2,096,534 2.57 Performance Ratios Net interest yield *....................................... 3.91% 4.07% Return on assets .......................................... 1.11 1.09 Return on common equity ................................... 16.29 14.84 Credit Quality Data Non-performing assets ..................................... $ 539,255 $ 458,298 17.66 Net loans charged-off ..................................... 171,732 168,946 1.65 Allowance for loan losses ................................. 372,797 336,632 10.74 Non-performing assets to total assets ..................... 1.60% 1.49% Allowance for losses to loans ............................. 1.90 1.85
* Not on a taxable equivalent basis Note: Certain reclassifications have been made to prior periods to conform with this period. 8 -----END PRIVACY-ENHANCED MESSAGE-----