-----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, KeKateno2ESzGJiy6xHEPpv5ACnYz284R5a6sZQsV2ItnWsJBu/8J0iD+tVviIqt yPYRH/mY1FsPJh2pU5SMrg== 0000950144-98-004364.txt : 19980410 0000950144-98-004364.hdr.sgml : 19980410 ACCESSION NUMBER: 0000950144-98-004364 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980407 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980409 SROS: NASD 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: SEC FILE NUMBER: 000-13818 FILM NUMBER: 98590699 BUSINESS ADDRESS: STREET 1: 209 MUNOZ RIVERA AVE STREET 2: POPULAR CENTER BUILDING CITY: HATO REY STATE: PR ZIP: 00918 BUSINESS PHONE: 8097659800 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 POPULAR, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 7, 1998 ------------- 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) 2 Item 5. Other Events On April 7, 1998, Popular, Inc. (the "Corporation") announced by way of a news release, its operational results for the quarter ended March 31, 1998. A copy of the Corporation's release, dated April 7, 1998, is attached hereto as Exhibit 99(a) and is hereby incorporated by reference. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits 99(a) News release, dated April 7, 1998, announcing the Corporation and subsidiaries earnings for the quarter ended March 31, 1998. 3 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: April 8, 1998 By: /s/ Amilcar L. Jordan ------------- -------------------------------------------- Name: Amilcar L. Jordan, Esq. Title: Senior Vice President and Comptroller 4 Exhibit Index Exhibit Number Description 99(a) News release, dated April 7, 1998 EX-99.(A) 2 PRESS RELEASE 1 EXHIBIT 99(a) [LETTERHEAD] For additional information contact: Mr. Jorge A. Junquera Senior Executive Vice President Telephone (787) 754-1685 April 7, 1998 News Release POPULAR, INC. EARNINGS FOR THE QUARTER ENDED MARCH 31, 1998 Popular, Inc. (the Corporation) net income for the first quarter of 1998 was $54.8 million as compared with $49.5 million reported for the same quarter of 1997, an increase of $5.3 million or 10.6%. Earning per common share (EPS) for the quarter were $0.78, based on 67,717,548 average shares outstanding, or 8.5% higher than $0.72 for the quarter ended March 31, 1997, based on 66,121,855 average shares outstanding. Net earnings for the last quarter of 1997 were $55.3 million, or $0.78 per share, based on 67,682,704 average shares then outstanding. The Corporation's return on assets (ROA) and return on common equity (ROE) for the first quarter of 1998 were 1.14% and 15.36%, respectively. For the same period of 1997, the Corporation reported ROA and ROE of 1.19% and 16.32%, respectively. For the last quarter of 1997, these ratios were 1.11% and 15.56%. The rise in the Corporation's net income for the first quarter of 1998, when compared with the same period a year ago, was driven by an increase of $32.1 million in net interest income and $13.7 million in other revenues, partially offset by a rise of $30.3 million in operating expenses and increases of $9.9 million and $0.3 million in the provision for loan losses and income taxes, respectively. Net interest income, the principle source of earnings for the Corporation, grew to $212.7 million, primarily as a result of an increase of $1.7 billion in the average volume of loans. The average balance of the commercial and consumer loan portfolios rose $946 million and $392 million, respectively. The increase in the volume of earnings assets was funded through a higher volume of deposits and borrowings. The net interest yield for the quarter ended March 31, 1998, was 4.66% compared with 4.57% for the first quarter of 1997. The improvement in the net interest yield was driven by a rise of 21 basis points in the average yield on earning assets, particularly in commercial 2 2- POPULAR, INC. 1998 FIRST QUARTER RESULTS loans and the investment portfolio. The increase in the average yield on earnings assets was partially offset by a rise of 13 basis points in the cost of funding these assets. For the last quarter of 1997, the net interest yield was 4.48%. The increase in the provision for loan losses resulted from a rise in the Corporation's loan portfolio and increases in net charge-offs and non-performing assets. Net charge-offs for the quarter ended March 31, 1998, were $27.5 million or 0.96% of average loans compared with $17.9 million or 0.73% for the first quarter of 1997, and $25.5 million or 0.91% for the fourth quarter of 1997. The increase in net charge-offs from the first quarter of 1997, was principally reflected in the consumer loan portfolio, mostly as a result of the increased level of personal bankruptcies. Non-performing assets were $217 million or 1.88% of ending loans at March 31, 1998, compared with $174 million or 1.76% at the end of the first quarter of 1997, and $212 million or 1.87% at December 31, 1997. Total non-interest income, excluding securities and trading transactions, grew $10.9 million or 19.7%, from $55.5 million for the first quarter of 1997 to $66.4 million for the same period in 1998. The growth in other operating revenues was attributed to an increase of $4.0 million in other service fees and $3.5 million in service charges on deposit accounts. The increase in other service fees was realized in credit cards fees and discounts, rising $1.5 million, due to the growth in credit card net sales and a higher number of credit card active accounts. Also, debit card fees rose $0.7 million, reflecting the addition of new merchants, point of sale (POS) terminals and growth in transactions. In addition, fees related to the sale and administration of investment products rose $1.2 million driven by the performance of a new retail division created in May 1997 by Popular Securities, the Corporation's broker/dealer subsidiary. Service charges on deposit accounts increased due to a higher activity on commercial and retail accounts and a higher volume of deposits. Furthermore, there was an increase of $3.4 million in other operating income mainly resulting from a non-recurring income as the corporation recovered most of its investment in stock of Citizens Bank of Jamaica, written down during the first quarter of 1997. The Corporation recognized a net gain of $0.9 million on the sale of securities for the first quarter of 1998, compared with a net loss of $1.7 million in the same quarter last year. Also, during the first three months of 1998, the Corporation realized a net profit on trading transactions of $0.7 3 3-POPULAR, INC. 1998 FIRST QUARTER RESULTS million compared with $0.4 million in the same quarter last year. Personnel costs increased $11.9 million as compared with the first quarter of 1997, of which $10.9 million was reflected in the salary expense category. The acquisitions made after March 31, 1997, of Roig Commercial Bank in Puerto Rico, Seminole National Bank in Florida, National Bancorp, Inc. and CBC Bancorp in Illinois and Houston Bancorporation in Texas accounted for more than $5.0 million of the increase in salary expense. Pension and other benefits increased $1.7 million reflecting the impact of the increase in salaries and higher health insurance expenses. Other operating expenses increased $18.4 million, reaching $89.0 million for the first quarter of 1998. This increase was reflected in most expense categories, mainly as a result of the Corporation's acquisitions and continued growth. Equipment expenses grew $3.2 million mostly due to the investment needed to support the growth of the Corporation's business activity and geographical expansion, including costs related to the expansion of the electronic payment system and new technology. Professional fees increased $3.0 million, including expenses related to the business expansion in the U.S. and costs incurred in relation to the Corporation's action plan to address the Year 2000 issue. Net occupancy expenses increased $2.6 million mostly as a result of the Corporation's growth and expansion and the sale, during the fourth quarter of 1997, of an income-producing property. Business promotion rose $2.3 million as part of the institutional campaign launched in the continental U.S. to emphasize Banco Popular's image as a Hispanic bank and the promotional efforts related to the credit card program in the U.S. The amortization of intangibles also reflected an increase of $2.3 million related to the premium paid on the operations acquired after March 31, 1997. The Corporation's total assets at March 31, 1998, amounted to $20.0 billion, compared with $17.4 billion at March 31, 1997. Most of the growth relates to the acquisitions in Puerto Rico, Florida, Illinois and Texas. At their respective acquisition dates, these operations had $1.4 billion in total assets. Total assets at December 31, 1997, were $19.3 billion. At March 31, 1998, total loans amounted to $11.5 billion compared with $9.9 billion a year ago and $11.4 billion at December 31, 1997. Commercial loans reflected the largest growth, increasing $947 million from the amount recorded at March 31, 1997. The allowance for loan losses amounted to $218 million as of March 31, 1998, or 1.89% of 4 4-POPULAR, INC. 1998 FIRST QUARTER RESULTS loans, compared with $191 million or 1.94% at the same date in 1997. At December 31, 1997, the allowance for loan losses totaled $212 million or 1.86% of loans. The allowance as a percentage of non-performing assets was 100.2% at March 31, 1998, compared with 110.0% at the end of the first quarter of 1997 and 99.6% at December 31, 1997. Total deposits rose to $12.0 billion at March 31, 1998, compared with $10.5 billion at March 31, 1997, notwithstanding the reduction of $152 million in 936 deposits at Banco Popular de Puerto Rico. The acquisitions completed after the first quarter of 1997 contributed $1.1 billion in deposits at acquisition dates. At December 31, 1997 total deposits amounted to $11.7 billion. At the end of the first quarter of 1998, the Corporation had deposits of $8.6 billion in Puerto Rico, $2.9 billion in the United States and $509 million in the U.S. and British Virgin Islands. Borrowed funds increased to $6.1 billion at March 31, 1998, compared with $5.3 billion at the same date a year earlier. At December 31, 1997 borrowed funds totaled $5.7 billion. Borrowed funds were used to finance loan growth and arbitrage activities. At March 31, 1998, stockholders' equity was $1.55 billion, compared with $1.29 billion at the same date last year. Stockholders' equity was $1.50 billion at December 31, 1997. Unrealized holding gains on securities available-for-sale, net of deferred taxes, amounted to $37.1 million at March 31, 1998, compared with an unrealized loss of $9.9 million a year ago. At the end of 1997, unrealized holding gains on securities available-for-sale, net of taxes, amounted to $33.3 million. The market value of the Corporation's common stock at March 31, 1998, was $58.69 per share, compared with $35.50 at March 31, 1997, and $49.50 at December 31, 1997. The Corporation's market capitalization at March 31, 1998 was $4.0 billion, compared with $2.3 billion at March 31, 1997, and $3.4 billion at December 31, 1997. At March 31, 1998, the Corporation's common stock had a book value per share of $21.36. During the quarter ended on March 31, 1998, the Corporation did not repurchase shares of common stock under its repurchase program. Continuing with the strategic expansion plan in the United States, the Corporation opened two new banking branches during the first quarter of 1998. Banco Popular, N.A. (Florida) opened one branch in Orlando, while Banco Popular, N.A. (California) acquired one branch in Wilmington, Los Angeles. The addition of these two new branches brings the total of branches to seven in Florida and seven in California, for a total of 65 banking branches in the continental United States at March 5 5- POPULAR, INC. 1998 FIRST QUARTER RESULTS 31, 1998. In addition, during this quarter, Equity One opened three new offices reaching a total of 120 offices in 30 states. Popular, Inc. recently announced an agreement to become the principal shareholder of Banco Gerencial & Fiduciario Dominicano, S.A. This bank is among the four largest banks in the Dominican Republic with $389 million in assets and over $31 million in equity. It operates 23 branches throughout the country and 35 automated teller machines that will soon be connected to the network of "ATH Dominicana" of which the Corporation is a founding partner. Also, on April 2, 1998, the Corporation received regulatory approval to begin operations of a new subsidiary that will provide check cashing and other financial services in the U.S. mainland, mainly aimed toward the unbanked sector of the population. This new subsidiary will operate under the name of Popular Cash Express and will be offering such services as check cashing, money transfers to other countries, money order sales and processing of payments. The Corporation is planning to open various Popular Cash Express offices in the U.S. mainland during 1998. *** 6 POPULAR, INC. FINANCIAL SUMMARY (In thousands, except per share data)
Quarter ended First March 31 Quarter -------------------------- 1998-1997 Fourth Percent Quarter 1998 1997 Variance 1997 -------------------------- --------- ----------- SUMMARY OF OPERATIONS Interest income $ 386,368 $ 334,265 18.58% $ 404,619 Interest expense 183,664 153,621 19.56 194,919 -------------------------- ------ ----------- Net interest income 212,704 180,644 17.75 209,700 Provisions for loan losses 33,565 23,687 41.70 31,657 -------------------------- ------ ----------- Net interest income after provision for loan losses 179,139 156,957 14.13 178,043 Other operating income 66,414 55,482 19.70 66,960 Gain (loss) on sale of securities 867 (1,660) 2,122 Trading account profit 669 433 54.50 1,724 -------------------------- ------ ----------- Total other income 67,950 54,255 25.24 70,806 Salaries and benefits 77,711 65,045 19.47 75,140 Profit sharing 5,683 6,440 (11.75) 6,292 Other operating expenses 88,985 70,640 25.97 93,976 -------------------------- ------ ----------- Total operating expenses 172,379 142,125 21.29 175,408 -------------------------- ------ ----------- Income before income tax 74,710 69,087 8.14 73,441 Income tax 19,915 19,548 1.88 18,119 -------------------------- ------ ----------- Net income $ 54,795 $ 49,539 10.61 $ 55,322 ========================== ====== =========== Net income applicable to common stock $ 52,708 $ 47,452 11.08 $ 53,234 ========================== ====== =========== Earnings per common share: Net income* $ 0.78 $ 0.72 8.46 $ 0.78 Average common shares outstanding 67,717,548 66,121,855 67,682,704 Common shares outstanding at end of period 67,717,548 66,121,855 67,682,704
6 7 POPULAR, INC. FINANCIAL SUMMARY (In thousands)
Quarter ended First March 31 Quarter -------------------------- 1998-1997 Fourth Percent Quarter 1998 1997 Variance 1997 ----------- ----------- --------- ----------- SELECTED AVERAGE BALANCES Total assets $19,485,912 $16,916,854 15.19 $19,745,399 Loans 11,466,638 9,777,772 17.27 11,196,123 Earning assets 18,340,992 15,855,669 15.67 18,697,852 Interest-bearing liabilities 15,032,597 13,147,072 14.34 15,716,913 Stockholders' equity 1,492,184 1,279,553 16.62 1,457,037 PERFORMANCE RATIOS Net interest yield* 4.66% 4.57% 4.48% Return on assets 1.14 1.19 1.11 Return on common equity 15.36 16.32 15.56 CREDIT QUALITY DATA Nonperforming assets $ 217,301 $ 173,979 24.90 $ 212,460 Net loans charged-off 27,508 17,901 53.67 25,489 Allowance for loan losses 217,708 191,360 13.77 211,651 Non performing assets to total assets 1.09% 1.00% 1.10% Allowance for losses to loans 1.89 1.94 1.86 SELECTED FINANCIAL DATA AT PERIOD-END Total assets....................... $20,018,220 $17,401,458 15.04 $19,300,507 Loans.............................. 11,543,169 9,889,254 16.72 11,376,607 Earning assets..................... 18,748,873 16,336,734 14.77 18,060,998 Interest-bearing liabilities....... 15,619,791 13,560,511 15.19 14,892,210 Stockholders' equity............... 1,546,238 1,287,515 20.09 1,503,092
* Not on a taxable equivalent basis 7 -----END PRIVACY-ENHANCED MESSAGE-----