8-K

UNITED STATES
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): November 3, 2008

POPULAR, INC.

(Exact name of registrant as specified in its charter)

COMMONWEALTH OF PUERTO RICO	000-13818	66-0667416
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification Number)

209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO	00918
(Address of principal executive offices)	(Zip code)

(787) 765-9800

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

EX-99.2

Item 2.01 Completion of acquisition or disposition of assets

On November 3, 2008, Popular, Inc. (“the Corporation”) completed the previously announced sale of approximately $1.2 billion in loan and servicing assets of its U.S. mortgage subsidiary Popular Financial Holdings, Inc. (“PFH”) to Goldman Sachs Mortgage Company, Goldman, Sachs & Co., and Litton Loan Servicing, LP for a gross purchase price of approximately $730 million in cash. The sale resulted in a reduction of approximately $900M in loans and mortgage servicing assets that are mainly accounted at fair value, providing Popular with more than $700 million in additional liquidity and significantly reducing Popular’s U.S. subprime assets. The proceeds from the PFH asset sales will be used for repayment of the Corporation’s medium-term notes due in 2009 as well as other debt maturities. The sale was completed under the terms of an Asset Purchase Agreement (“the Purchase Agreement”), dated August 29, 2008.

A copy of the press release announcing the completion of the transaction is being filed as Exhibit 99.1 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

(b) Pro Forma Financial Information

The Corporation’s unaudited pro forma financial information is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

(d) Exhibits

99.1	Press release dated November 3, 2008
99.2	Unaudited pro forma financial information of the Corporation.

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: November 7, 2008	By:	/s/ Ileana Gonzalez
		Ileana Gonzalez
		Senior Vice President and Comptroller

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated November 3, 2008
99.2	Unaudited pro forma financial information of the Corporation.

EX-99.1

Exhibit 99.1

Contact:

Investor Relations:

Jorge A. Junquera
Chief Financial Officer
Senior Executive Vice President
787-754-1685

Media Relations:

Teruca Rullán
Senior Vice President
Corporate Communications
787-281-5170 or 917-679-3596/mobile

News
For Immediate Release:

Popular Completes Sale of Loan and Servicing Assets of U.S. Mortgage Subsidiary, Popular Financial Holdings, to Goldman Sachs

Transaction Significantly Reduces Popular’s U.S. Subprime Market Exposure and Increases Liquidity

San Juan, Puerto Rico, November 3, 2008 – Popular, Inc. (“Popular”) (NASDAQ: BPOP, BPOPO, BPOPP) (Popular) announced today that it has completed the sale of the loan and servicing assets of its U.S. mortgage subsidiary Popular Financial Holdings, Inc. to various Goldman Sachs affiliates. The sale would result in a reduction of approximately $900M in loans and mortgage servicing assets that are mainly accounted at fair value, providing Popular with more than $700 million in additional liquidity and significantly reducing Popular’s U.S. subprime assets.

“The closing of this transaction is a major step forward in our efforts to build capital and liquidity, and create a leaner and more efficient business.  We continue to focus on reducing the size of our footprint in the mainland U.S. to a level better suited to present economic conditions while taking steps to improve profitability across our business,” said Richard L. Carrión, Chairman, President and CEO of Popular.

Popular recently announced a number of aggressive steps to restructure its U.S. banking operations, including a greater integration with corporate operations in Puerto Rico, the consolidation or sale of underperforming branches, and the closing, sale or downsizing of lending businesses that do not generate deposits or fee income. Popular is also undertaking expense reduction initiatives and evaluating product lines that do not deliver adequate returns on equity.

* * *

     Popular, Inc. is a full service financial services provider based in Puerto Rico with operations in Puerto Rico, the United States, the Caribbean and Latin America. As the leading financial institution in

Puerto Rico, with over 300 branches and offices, the Corporation offers retail and commercial banking services through its principal banking subsidiary, Banco Popular de Puerto Rico, as well as auto and equipment leasing and financing, mortgage loans, consumer lending, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the United States, the Corporation operates Banco Popular North America (“BPNA”), including its wholly-owned subsidiary E-LOAN. BPNA is a community bank providing a broad range of financial services and products to the communities it serves. BPNA operates branches in New York, California, Illinois, New Jersey, Florida and Texas. E-LOAN provides an online platform to raise deposits for BPNA. The Corporation, through its transaction processing company, EVERTEC, continues to use its expertise in technology as a competitive advantage in its expansion throughout the United States, the Caribbean and Latin America, as well as internally servicing many of its subsidiaries’ system infrastructures and transactional processing businesses. The Corporation is exporting its 115 years of experience through these regions while continuing its commitment to meeting the needs of retail and business clients through innovation, and to fostering growth in the communities it serves.

EX-99.2

Exhibit 99.2

Unaudited Pro Forma Consolidated Financial Statements

On November 3, 2008, Popular, Inc. (“the Corporation”) completed the sale of approximately $1.2 billion in the loan and servicing assets of its U.S. mortgage subsidiary Popular Financial Holdings, Inc. (“PFH”) to Goldman Sachs Mortgage Company, Goldman, Sachs & Co., and Litton Loan Servicing, LP for the gross purchase price of approximately $730 million in cash. The sale would result in a reduction of approximately $900M in loans and mortgage servicing assets that are mainly accounted at fair value, providing Popular with more than $700 million in additional liquidity and significantly reducing Popular’s U.S. subprime assets. The proceeds from the PFH asset sales will be used for repayment of the Corporation’s medium-term notes due in 2009 as well as other debt maturities.

The accompanying unaudited pro forma consolidated financial statements present financial information to give effect of the sale of PFH assets to Goldman Sachs affiliates. The unaudited pro forma consolidated statement of income present the consolidated results of continuing operations of the Corporation, assuming the sale occurred as of January 1, 2005. The unaudited pro forma consolidated statement of condition as of June 30, 2008 presents the consolidated financial position of the Corporation, assuming the sale occurred on that date. The unaudited financial information is subject to the assumptions and adjustments in the notes accompanying the unaudited pro forma consolidated financial statements.

The unaudited pro forma consolidated financial statements include specific assumptions and adjustments related to the sale of PFH assets. The adjustments are based upon presently available information and assumptions that management believes are reasonable under the circumstances as of the date of this filing. However, actual adjustments may differ materially from the information presented. The unaudited pro forma consolidated financial statements, including notes thereto, should be read in conjunction with the historical consolidated financial statements of the Corporation included in its Annual Report on Form 10-K for the year ended December 31, 2007 and the unaudited consolidated financial statements filed in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.

The unaudited pro forma consolidated financial information presented is for informational purpose only. It is not intended to represent or be indicative of the consolidated financial results of operations or financial position that would have occurred has the sale been completed as of the dates presented nor is it intended to be indicative of future results of operations or financial position. Specifically, the Corporation believes that the pro forma results of operations are of limited value in projecting future results because they do not include the net loss associated with the November 3, 2008 sale of PFH assets.

Popular, Inc.

Pro forma Consolidated Statement of Income

Adjusted for Discontinued Operations of PFH

(in thousands, except share information)

(unaudited)

	For the six months ended June 30, 2008
				Discontinued			Pro forma
	As reported on			operations			adjustments			Pro forma
	June 30, 2008			(1)			(2)			results
INTEREST INCOME:
Loans	$	1,058,535		$	(94,503	)				$	964,032
Investment securities		177,533			(674	)					176,859
Other interest income		45,030			(8,821	)					36,209
		1,281,098			(103,998	)					1,177,100
INTEREST EXPENSE:
Deposits		362,985									362,985
Short-term borrowings		107,647			(7,056	)					100,591
Long- term debt		115,392			(67,925	)	$	27,924			75,391
		586,024			(74,981	)		27,924			538,967
Net interest income		695,074			(29,017	)		(27,924	)		638,133
Provision for loan losses		358,862			(8,461	)					350,401
Net interest income after provision		336,212			(20,556	)		(27,924	)		287,732
Service charge on deposit accounts		102,886									102,886
Other service fees		215,546			(4,199	)					211,347
Net gain on sale and valuation adjustments of investment securities		75,703			2,858						78,561
Gain on sale of loans and valuation adjustments on loans held-for sale		67,292			(48,117	)					19,175
Other operating income		40,120			48,460						88,580
		837,759			(21,554	)		(27,924	)		788,281
OPERATING EXPENSES:
Personnel costs
Salaries		262,132			(20,117	)					242,015
Pension, profit sharing and other benefits		74,932			(5,661	)					69,271
		337,064			(25,778	)					311,286
Net occupancy expense		61,354			(6,646	)					54,708
Equipment expenses		62,722			(4,716	)					58,006
Professional fees		68,252			(11,067	)					57,185
Communications		28,448			(2,885	)					25,563
Business promotion		35,467			(619	)					34,848
Other operating expenses		126,941			(14,902	)					112,039
		720,248			(66,613	)					653,635
Income before tax		117,511			45,059			(27,924	)		134,646
Income tax (benefit) expense		(10,029	)		14,187			(9,773	)		(5,615	)
NET INCOME	$	127,540		$	30,872		$	(18,151	)	$	140,261
NET INCOME APPLICABLE TO COMMON STOCK	$	118,559								$	131,278
BASIC EARNINGS PER COMMON SHARE (“EPS”)	$	0.42								$	0.47
DILUTED EPS	$	0.42								$	0.47
AVERAGE COMMON SHARES OUTSTANDING — BASIC		280,514,164									280,514,164
AVERAGE COMMON SHARES OUTSTANDING — ASSUMING DILUTION		280,514,164									280,514,164

See Notes to Pro Forma Consolidated Financial Statements        

Popular, Inc.

Pro forma Consolidated Statement of Income

Adjusted for Discontinued Operations of PFH

(in thousands, except share information)

(unaudited)

	For the year ended December 31, 2007
				Discontinued			Pro forma			Pro forma
	As reported			operations (1)			adjustments (2)			results
INTEREST INCOME:
Loans	$	2,615,314		$	(568,877	)				$	2,046,437
Investment securities		445,769			(4,160	)					441,609
Other interest income		67,088			(2,899	)					64,189
		3,128,171			(575,936	)					2,552,235
INTEREST EXPENSE:
Deposits		765,793									765,793
Short-term borrowings		448,172			(23,641	)					424,531
Long-term debt		464,816			(408,563	)	$	53,684			109,937
		1,678,781			(432,204	)		53,684			1,300,261
Net interest income		1,449,390			(143,732	)		(53,684	)		1,251,974
Provision for loan losses		562,650			(221,431	)					341,219
Net interest income after provision		886,740			77,699			(53,684	)		910,755
Service charge on deposit accounts		196,072									196,072
Other service fees		363,257			2,354						365,611
Other operating income		134,987			177,025						312,012
		1,581,056			257,078			(53,684	)		1,784,450
OPERATING EXPENSES:
Personnel costs
Salaries		519,523			(34,345	)					485,178
Pension, profit sharing and other benefits		148,666			(13,084	)					135,582
		668,189			(47,429	)					620,760
Net occupancy expense		123,621			(14,277	)					109,344
Equipment expenses		127,472			(10,390	)					117,082
Professional fees		149,854			(30,331	)					119,523
Communications		66,877			(8,785	)					58,092
Business promotion		115,388			(5,479	)					109,909
Other operating expenses		241,400			(42,399	)					199,001
Goodwill and trademark impairment losses		211,750									211,750
		1,704,551			(159,090	)					1,545,461
(Loss) Income before tax		(123,495	)		416,168			(53,684	)		238,989
Income tax (benefit) expense		(59,002	)		149,167			(18,789	)		71,376
NET (LOSS) INCOME	$	(64,493	)	$	267,001		$	(34,895	)	$	167,613
NET (LOSS) INCOME APPLICABLE TO COMMON STOCK	$	(76,406	)							$	155,700
	= =
BASIC (LOSS) INCOME PER COMMON SHARE (“EPS”)	$	(0.27	)							$	0.56
	= =
DILUTED EPS	$	(0.27	)							$	0.56
	= =
AVERAGE COMMON SHARES OUTSTANDING — BASIC		279,494,150									279,494,150
AVERAGE COMMON SHARES OUTSTANDING — ASSUMING DILUTION		279,494,150									279,494,150

See Notes to Pro Forma Consolidated Financial Statements        

Popular, Inc.

Pro forma Consolidated Statement of Income

Adjusted for Discontinued Operations of PFH

(in thousands, except share information)

(unaudited)

	For the year ended December 31, 2006
			Discontinued			Pro forma			Pro forma
	As reported		operations (1)			adjustments (2)			results
INTEREST INCOME:
Loans	$	2,486,453	$	(598,133	)				$	1,888,320
Investment securities		516,237		(7,658	)					508,579
Other interest income		61,751		(3,411	)					58,340
		3,064,441		(609,202	)					2,455,239
INTEREST EXPENSE:
Deposits		580,094								580,094
Short-term borrowings		518,960		(30,349	)					488,611
Long-term debt		537,477		(405,674	)	$	55,435			187,238
		1,636,531		(436,023	)		55,435			1,255,943
Net interest income		1,427,910		(173,179	)		(55,435	)		1,199,296
Provision for loan losses		287,760		(100,204	)					187,556
Net interest income after provision		1,140,150		(72,975	)		(55,435	)		1,011,740
Service charge on deposit accounts		190,079								190,079
Other service fees		320,875		(3,016	)					317,859
Other operating income		298,531		(35,961	)					262,570
		1,949,635		(111,952	)		(55,435	)		1,782,248
OPERATING EXPENSES:
Personnel costs
Salaries		517,178		(58,201	)					458,977
Pension, profit sharing and other benefits		151,493		(18,495	)					132,998
		668,671		(76,696	)					591,975
Net occupancy expense		116,742		(17,143	)					99,599
Equipment expenses		135,877		(15,432	)					120,445
Professional fees		141,534		(24,032	)					117,502
Communications		68,283		(11,351	)					56,932
Business promotion		129,965		(11,282	)					118,683
Other operating expenses		209,762		(50,907	)					158,855
Goodwill and trademark impairment losses		14,239								14,239
		1,485,073		(206,843	)					1,278,230
Income before tax		464,562		94,891			(55,435	)		504,018
Income tax (benefit) expense		106,886		32,808			(19,402	)		120,292
NET INCOME	$	357,676	$	62,083		$	(36,033	)	$	383,726
NET INCOME APPLICABLE TO COMMON STOCK	$	345,763							$	371,812
	= =
BASIC EARNINGS PER COMMON SHARE (“EPS”)	$	1.24							$	1.34
DILUTED EPS	$	1.24							$	1.33
	= =
AVERAGE COMMON SHARES OUTSTANDING — BASIC		278,468,552								278,468,552
AVERAGE COMMON SHARES OUTSTANDING — ASSUMING DILUTION		278,703,924								278,703,924

See Notes to Pro Forma Consolidated Financial Statements        

Popular, Inc.

Pro forma Consolidated Statement of Income

Adjusted for Discontinued Operations of PFH

(in thousands, except share information)

(unaudited)

	For the year ended December 31, 2005
			Discontinued			Pro forma			Pro forma
	As reported		operations (1)			adjustments (2)			results
INTEREST INCOME:
Loans	$	2,116,299	$	(578,959	)				$	1,537,340
Investment securities		488,814		(4,960	)					483,854
Other interest income		60,746		0						60,746
		2,665,859		(583,919	)					2,081,940
INTEREST EXPENSE:
Deposits		430,813								430,813
Short-term borrowings		349,203		(32,013	)					317,190
Long-term debt		461,636		(350,564	)	$	56,157			167,229
		1,241,652		(382,577	)		56,157			915,232
Net interest income		1,424,207		(201,342	)		(56,157	)		1,166,708
Provision for loan losses		195,272		(73,287	)					121,985
Net interest income after provision		1,228,935		(128,055	)		(56,157	)		1,044,723
Service charge on deposit accounts		181,749								181,749
Other service fees		331,501		(13,168	)					318,333
Other operating income		272,025		(39,495	)					232,530
		2,014,210		(180,718	)		(56,157	)		1,777,335
OPERATING EXPENSES:
Personnel costs
Salaries		474,636		(57,576	)					417,060
Pension, profit sharing and other benefits		148,053		(18,527	)					129,526
		622,689		(76,103	)					546,586
Net occupancy expense		108,386		(11,457	)					96,929
Equipment expenses		124,276		(12,109	)					112,167
Professional fees		119,281		(21,266	)					98,015
Communications		63,395		(10,490	)					52,905
Business promotion		100,434		(8,261	)					92,173
Other operating expenses		189,739		(24,346	)					165,393
		1,328,200		(164,032	)					1,164,168
Income before tax and cumulative effect of accounting change		686,010		(16,686	)		(56,157	)		613,167
Income tax (benefit) expense		148,915		(6,205	)		(19,655	)		123,055
Income before cumulative effect of accounting change		537,095		(10,481	)		(36,502	)		490,112
Cumulative effect of accounting change		3,607								3,607
NET INCOME	$	540,702	$	(10,481	)	$	(36,502	)	$	493,719
NET INCOME APPLICABLE TO COMMON STOCK	$	528,789							$	481,805
BASIC EARNINGS PER COMMON SHARE (“EPS”) BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE	$	1.97							$	1.79
DILUTED EPS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE	$	1.96							$	1.79
BASIC EPS AFTER CUMULATIVE EFFECT OF ACCOUNTING
CHANGE	$	1.98							$	1.80
DILUTED EPS AFTER CUMULATIVE EFFECT OF ACCOUNTING CHANGE	$	1.97							$	1.80
AVERAGE COMMON SHARES OUTSTANDING — BASIC		267,334,606								267,334,606
AVERAGE COMMON SHARES OUTSTANDING — ASSUMING DILUTION		267,839,018								267,839,018

See Notes to Pro Forma Consolidated Financial Statements        

Popular, Inc.

Pro forma Consolidated Statement of Condition

Adjusted for Discontinued Operations of PFH

(in thousands)

(unaudited)

	As reported on		Discontinued			Pro forma			Pro forma
	June 30, 2008		operations (1)			adjustments (3)			results
Assets
Investment securities available-for-sale	$	7,702,327	$	(2,590	)				$	7,699,737
Loans, net of unearned income *		27,631,678		(924,437	)					26,707,241
Less : Allowance for loan losses		652,730		(7,372	)					645,358
		26,978,948		(917,065	)					26,061,883
Other assets		6,304,270		(383,448	)					5,920,822
Intangible assets		693,049								693,049
	$	41,678,594	$	(1,303,103	)				$	40,375,491
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Non-interest bearing	$	4,482,287							$	4,482,287
Interest bearing		22,633,441								22,633,441
		27,115,728								27,115,728
Federal funds purchased and securities sold under agreements to repurchase		4,738,677								4,738,677
Other short-term borrowings		1,337,210								1,337,210
Notes Payables **		3,924,372	$	(173,725	)	$	(730,560	)		3,020,087
Other liabilities		856,613					25,932			882,545
		37,972,600		(173,725	)		(704,628	)		37,094,247
Stockholders’ equity		3,705,994					(424,750	)		3,281,244
	$	41,678,594	$	(173,725	)	$	(1,129,378	)	$	40,375,491

See Notes to Pro Forma Consolidated Financial Statements

*	includes loans held-for-sale and loans measured at fair value pursuant to SFAS No. 159
**	includes notes payable measured at fair value pursuant to SFAS No. 159

Notes to the Unaudited Pro Forma Financial Statements

The unaudited pro forma consolidated financial statements give effect to the sale of PFH assets. The unaudited pro forma consolidated statements of income are presented as if the sale occurred as of January 1, 2005. The anticipated nonrecurring loss on the sale is not reflected in the pro forma consolidated statement of income. The impact of the debt retained by the Corporation is included in the unaudited pro forma consolidated statements of income for the six months ended June 30, 2008 and the years ended December 31, 2007, 2006 and 2005. The unaudited pro forma consolidated statement of condition is presented as if the sale occurred on June 30, 2008, and is based on the historical consolidated statement of condition as of that date. Nonrecurring items including the loss on sale, discontinuance costs and recourse liability recorded as a result of the sale are reflected in the pro forma consolidated statement of condition.

1)	The Discontinued Operations columns in the unaudited pro forma consolidated financial statements represent the historical financial results of the PFH segment.
2)	The Pro Forma Adjustments columns in the unaudited pro forma consolidated income statements represent interest expense from the debt retained by the Corporation.
3)	The Pro Forma Adjustments column in the unaudited pro forma consolidated statement of condition includes the following adjustments; (a) the estimated after tax loss of approximately $398.8 million, which includes a valuation allowance for the deferred tax asset of $88.8 million. This estimate is based on the historical information as of June 30, 2008. Actual adjustments may differ from the information presented.; (b) the accrual of $14.1 million in discontinuance costs. Discontinuance costs include employee- related expenses of approximately $4 million, lease terminations of approximately $4 million and other cost of approximately $6.1 million (principally consisting of software, equipment and other asset impairments and contract cancellations); and (c) the recognition of $11.8 million recourse liability In addition, the Pro-forma Adjustment column reflects the repayment of the Corporation’s medium-term notes due in 2009 as well as other debt maturities with the proceeds from the sale of PFH assets.