Note 32 – Condensed consolidating financial information of guarantor and issuers of registered guaranteed securities

The following condensed consolidating financial information presents the financial position of Popular, Inc. Holding Company (“PIHC”) (parent only), Popular International Bank, Inc. (“PIBI”), Popular North America, Inc. (“PNA”) and all other subsidiaries of the Corporation at June 30, 2011, December 31, 2010 and June 30, 2010, and the results of their operations and cash flows for periods ended June 30, 2011 and 2010.

PIBI is an operating subsidiary of PIHC and is the holding company of its wholly-owned subsidiaries: Popular Insurance V.I., Inc; Tarjetas y Transacciones en Red Tranred, C.A.; and PNA. Prior to the internal reorganization and sale of the ownership interest in EVERTEC, ATH Costa Rica S.A., and T.I.I. Smart Solutions Inc. were also wholly-owned subsidiaries of PIBI.

PNA is an operating subsidiary of PIBI and is the holding company of its wholly-owned subsidiaries: Equity One, Inc.; and Banco Popular North America (“BPNA”), including its wholly-owned subsidiaries Popular Equipment Finance, Inc., Popular Insurance Agency, U.S.A., and E-LOAN, Inc.

PIHC fully and unconditionally guarantees all registered debt securities issued by PNA.

A source of income for PIHC consists of dividends from BPPR. Under the existing federal banking regulations, the prior approval of the Federal Reserve System is required for any dividend from BPPR or BPNA to the PIHC if the total of all dividends declared by each entity during the calendar year would exceed the total of its net income for that year, as defined by the Federal Reserve Board, combined with its retained net income for the preceding two years, less any required transfers to surplus or to a fund for the retirement of any preferred stock. Under this test, at June 30, 2011, BPPR could have declared a dividend of approximately $197 million (June 30, 2010 - $96 million; December 31, 2010 - $78 million). However, as disclosed in Note 31, on July 25, 2011, PIHC and BPPR entered into a Memorandum of Understanding with the Federal Reserve Bank of New York and the Office of the Commissioner of Financial Institutions of Puerto Rico that requires the prior approval of these entities prior to the payment of any dividends by BPPR to PIHC. BPNA could not declare any dividends without the approval of the Federal Reserve Board.

Condensed Consolidated Statement of Condition (Unaudited)


	At June 30, 2011
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
ASSETS
Cash and due from banks	$	4,781		$	1,426		$	273		$	588,171		$	(6,686	)	$	587,965
Money market investments		64			12,778			262			1,383,750			(12,962	)		1,383,892
Trading account securities, at fair value		—			—			—			785,842			—			785,842
Investment securities available-for-sale, at fair value		37,362			3,660			—			5,366,431			(17,962	)		5,389,491
Investment securities held-to-maturity, at amortized cost		197,362			1,000			—			116,548			(185,000	)		129,910
Other investment securities, at lower of cost or realizable value		10,850			1			4,492			159,217			—			174,560
Investment in subsidiaries		4,020,454			1,152,668			1,614,772			—			(6,787,894	)		—
Loans held-for-sale, at lower of cost or fair value		—			—			—			509,046			—			509,046

Loans held-in-portfolio:
Loans not covered under loss sharing agreements with the FDIC		291,393			—			—			20,730,222		($	260,269	)		20,761,346
Loans covered under loss sharing agreements with the FDIC		—			—			—			4,616,575			—			4,616,575
Less - Unearned income		—			—			—			103,652			—			103,652
Allowance for loan losses		8			—			—			746,839			—			746,847

Total loans held-in-portfolio, net		291,385			—			—			24,496,306			(260,269	)		24,527,422

FDIC loss share asset		—			—			—			2,350,176			—			2,350,176
Premises and equipment, net		2,741			—			120			535,009			—			537,870
Other real estate not covered under loss sharing agreements with the FDIC		—			—			—			162,419			—			162,419
Other real estate covered under loss sharing agreements with the FDIC		—			—			—			74,803			—			74,803
Accrued income receivable		1,258			8			112			140,633			(31	)		141,980
Mortgage servicing assets, at fair value		—			—			—			162,619			—			162,619
Other assets		225,728			71,395			15,290			1,100,723			(19,293	)		1,393,843
Goodwill		—			—			—			647,318			—			647,318
Other intangible assets		554			—			—			53,632			—			54,186

Total assets	$	4,792,539		$	1,242,936		$	1,635,321		$	38,632,643		$	(7,290,097	)	$	39,013,342

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	—		$	—		$	—		$	5,386,528		$	(22,524	)	$	5,364,004
Interest bearing		—			—			—			22,609,540			(13,115	)		22,596,425

Total deposits		—			—			—			27,996,068			(35,639	)		27,960,429

Federal funds purchased and assets sold under agreements to repurchase		—			—			—			2,570,322			—			2,570,322
Other short-term borrowings		—			—			13,400			372,102			(234,200	)		151,302
Notes payable		747,817			—			427,243			2,248,226			—			3,423,286
Subordinated notes		—			—			—			185,000			(185,000	)		—
Other liabilities		80,654			5,346			42,803			861,724			(46,592	)		943,935

Total liabilities		828,471			5,346			483,446			34,233,442			(501,431	)		35,049,274

Stockholders’ equity:
Preferred stock		50,160			—			—			—			—			50,160
Common stock		10,242			4,066			2			51,564			(55,632	)		10,242
Surplus		4,089,382			4,092,743			4,103,208			5,857,287			(14,044,711	)		4,097,909
Accumulated deficit		(219,845	)		(2,874,741	)		(2,994,502	)		(1,570,058	)		7,430,774			(228,372	)
Treasury stock, at cost		(642	)		—			—			—			—			(642	)
Accumulated other comprehensive income, net of tax		34,771			15,522			43,167			60,408			(119,097	)		34,771

Total stockholders’ equity		3,964,068			1,237,590			1,151,875			4,399,201			(6,788,666	)		3,964,068

Total liabilities and stockholders’ equity	$	4,792,539		$	1,242,936		$	1,635,321		$	38,632,643		$	(7,290,097	)	$	39,013,342

Condensed Consolidated Statement of Condition (Unaudited)


	At December 31, 2010
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
ASSETS
Cash and due from banks	$	1,638		$	618		$	1,576		$	451,723		$	(3,182	)	$	452,373
Money market investments		1			7,512			261			979,232			(7,711	)		979,295
Trading account securities, at fair value		—			—			—			546,713			—			546,713
Investment securities available-for-sale, at fair value		35,263			3,863			—			5,216,013			(18,287	)		5,236,852
Investment securities held-to-maturity, at amortized cost		210,872			1,000			—			95,482			(185,000	)		122,354
Other investment securities, at lower of cost or realizable value		10,850			1			4,492			148,170			—			163,513
Investment in subsidiaries		3,836,258			1,096,907			1,578,986			—			(6,512,151	)		—
Loans held-for-sale, at lower of cost or fair value		—			—			—			893,938			—			893,938

Loans held-in-portfolio:
Loans not covered under loss sharing agreements with the FDIC		476,082			1,285			—			20,798,876			(441,967	)		20,834,276
Loans covered under loss sharing agreements with the FDIC		—			—			—			4,836,882			—			4,836,882
Less - Unearned income		—			—			—			106,241			—			106,241
Allowance for loan losses		60			—			—			793,165			—			793,225

Total loans held-in-portfolio, net		476,022			1,285			—			24,736,352			(441,967	)		24,771,692

FDIC loss share asset		—			—			—			2,318,183			—			2,318,183
Premises and equipment, net		2,830			—			122			542,501			—			545,453
Other real estate not covered under loss sharing agreements with the FDIC		—			—			—			161,496			—			161,496
Other real estate covered under loss sharing agreements with the FDIC		—			—			—			57,565			—			57,565
Accrued income receivable		1,510			33			111			149,101			(97	)		150,658
Mortgage servicing assets, at fair value		—			—			—			166,907			—			166,907
Other assets		246,209			86,116			15,105			1,127,870			(25,413	)		1,449,887
Goodwill		—			—			—			647,387			—			647,387
Other intangible assets		554			—			—			58,142			—			58,696

Total assets	$	4,822,007		$	1,197,335		$	1,600,653		$	38,296,775		$	(7,193,808	)	$	38,722,962

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	—		$	—		$	—		$	4,961,417		$	(22,096	)	$	4,939,321
Interest bearing		—			—			—			21,830,669			(7,790	)		21,822,879

Total deposits		—			—			—			26,792,086			(29,886	)		26,762,200

Federal funds purchased and assets sold under agreements to repurchase		—			—			—			2,412,550			—			2,412,550
Other short-term borrowings		—			—			32,500			743,922			(412,200	)		364,222
Notes payable		835,793			—			430,121			2,905,554			(1,285	)		4,170,183
Subordinated notes		—			—			—			185,000			(185,000	)		—
Other liabilities		185,683			3,921			47,169			1,028,614			(52,111	)		1,213,276

Total liabilities		1,021,476			3,921			509,790			34,067,726			(680,482	)		34,922,431

Stockholders’ equity:
Preferred stock		50,160			—			—			—			—			50,160
Common stock		10,229			4,066			2			51,633			(55,701	)		10,229
Surplus		4,085,478			4,158,157			4,066,208			5,862,091			(14,077,929	)		4,094,005
Accumulated deficit		(338,801	)		(2,958,347	)		(3,000,682	)		(1,714,659	)		7,665,161			(347,328	)
Treasury stock, at cost		(574	)		—			—			—			—			(574	)
Accumulated other comprehensive (loss) income, net of tax		(5,961	)		(10,462	)		25,335			29,984			(44,857	)		(5,961	)

Total stockholders’ equity		3,800,531			1,193,414			1,090,863			4,229,049			(6,513,326	)		3,800,531

Total liabilities and stockholders’ equity	$	4,822,007		$	1,197,335		$	1,600,653		$	38,296,775		$	(7,193,808	)	$	38,722,962

Condensed Consolidated Statement of Condition (Unaudited)


	At June 30, 2010
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
ASSETS
Cash and due from banks	$	825		$	295		$	735		$	744,990		$	(2,076	)	$	744,769
Money market investments		51			5,903			299			2,444,104			(6,148	)		2,444,209
Trading account securities, at fair value		—			—			—			401,543			—			401,543
Investment securities available-for-sale, at fair value		—			3,373			—			6,479,276			(1,462	)		6,481,187
Investment securities held-to-maturity, at amortized cost		395,797			1,000			—			182,619			(370,000	)		209,416
Other investment securities, at lower of cost or realizable value		10,850			1			4,492			137,219			—			152,562
Investment in subsidiaries		3,820,737			812,321			1,269,857			—			(5,902,915	)		—
Loans held-for-sale, at lower of cost or fair value		—			—			—			101,251			—			101,251

Loans held-in-portfolio:
Loans not covered under loss sharing agreements with the FDIC		366,632			—			—			22,568,799			(360,700	)		22,574,731
Loans covered under loss sharing agreements with the FDIC		—			—			—			5,055,750			—			5,055,750
Less - Unearned income		—			—			—			109,911			—			109,911
Allowance for loan losses		60			—			—			1,276,956			—			1,277,016

Total loans held-in-portfolio, net		366,572			—			—			26,237,682			(360,700	)		26,243,554

FDIC loss share asset		—			—			—			2,330,406			—			2,330,406
Premises and equipment, net		3,166			—			123			570,652			—			573,941
Other real estate not covered under loss sharing agreements with the FDIC		—			—			—			142,372			—			142,372
Other real estate covered under loss sharing agreements with the FDIC		—			—			—			55,176			—			55,176
Accrued income receivable		131			5			111			151,039			(41	)		151,245
Mortgage servicing assets, at fair value		—			—			—			171,994			—			171,994
Other assets		44,262			77,812			17,984			1,287,668			(38,422	)		1,389,304
Goodwill		—			—			—			691,190			—			691,190
Other intangible assets		554			—			—			63,166			—			63,720

Total assets	$	4,642,945		$	900,710		$	1,293,601		$	42,192,347		$	(6,681,764	)	$	42,347,839

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	—		$	—		$	—		$	4,795,414		$	(2,076	)	$	4,793,338
Interest bearing		—			—			—			22,326,383			(6,148	)		22,320,235

Total deposits		—			—			—			27,121,797			(8,224	)		27,113,573

Federal funds purchased and assets sold under agreements to repurchase		—			—			—			2,307,194			—			2,307,194
Other short-term borrowings		1,500			—			20,000			340,463			(360,700	)		1,263
Notes payable		999,698			—			429,983			6,808,596			—			8,238,277
Subordinated notes		—			—			—			370,000			(370,000	)		—
Other liabilities		26,960			1,838			43,955			1,040,194			(40,202	)		1,072,745

Total liabilities		1,028,158			1,838			493,938			37,988,244			(779,126	)		38,733,052

Stockholders’ equity:
Preferred stock		50,160			—			—			—			—			50,160
Common stock		10,229			3,961			2			53,351			(57,314	)		10,229
Surplus		4,085,901			3,666,984			3,566,208			5,485,877			(12,710,541	)		4,094,429
Accumulated deficit		(605,435	)		(2,764,377	)		(2,797,501	)		(1,445,380	)		6,998,730			(613,963	)
Treasury stock, at cost		(518	)		—			—			—			—			(518	)
Accumulated other comprehensive income (loss), net of tax		74,450			(7,696	)		30,954			110,255			(133,513	)		74,450

Total stockholders’ equity		3,614,787			898,872			799,663			4,204,103			(5,902,638	)		3,614,787

Total liabilities and stockholders’ equity	$	4,642,945		$	900,710		$	1,293,601		$	42,192,347		$	(6,681,764	)	$	42,347,839

Condensed Statement of Operations (Unaudited)


	Quarter ended June 30, 2011
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
INTEREST INCOME:
Loans	$	2,038		$	—		$	—		$	441,940		$	(1,518	)	$	442,460
Money market investments		5			31			2			954			(66	)		926
Investment securities		4,031			15			80			52,817			(3,220	)		53,723
Trading account securities		—			—			—			9,790			—			9,790

Total interest income		6,074			46			82			505,501			(4,804	)		506,899

INTEREST EXPENSE:
Deposits		—			—			—			70,758			(86	)		70,672
Short-term borrowings		28			—			242			14,554			(1,105	)		13,719
Long-term debt		22,784			—			7,687			20,419			(2,924	)		47,966

Total interest expense		22,812			—			7,929			105,731			(4,115	)		132,357

Net interest (expense) income		(16,738	)		46			(7,847	)		399,770			(689	)		374,542
Provision for loan losses		—			—			—			144,317			—			144,317

Net interest (expense) income after provision for loan losses		(16,738	)		46			(7,847	)		255,453			(689	)		230,225

Service charges on deposit accounts		—			—			—			46,802			—			46,802
Other service fees		—			—			—			62,993			(4,686	)		58,307
Net loss on sale and valuation adjustments of investment securities		—			—			—			(90	)		—			(90	)
Trading account profit		—			—			—			874			—			874
Net loss on sale of loans, including valuation adjustments on loans held-for-sale		—			—			—			(12,782	)		—			(12,782	)
Adjustments (expense) to indemnity reserves on loans sold		—			—			—			(9,454	)		—			(9,454	)
FDIC loss share income		—			—			—			38,670			—			38,670
Fair value change in equity appreciation instrument		—			—			—			578			—			578
Other operating income (loss)		2,169			5,304			(308	)		6,812			(12,722	)		1,255

Total non-interest income (loss)		2,169			5,304			(308	)		134,403			(17,408	)		124,160

OPERATING EXPENSES:
Personnel costs		7,006			89			—			103,864			—			110,959
Net occupancy expenses		898			9			—			24,169			881			25,957
Equipment expenses		808			1			—			9,952			—			10,761
Other taxes		332			—			—			14,291			—			14,623
Professional fees		3,846			92			4			63,778			(18,241	)		49,479
Communications		112			—			4			7,072			—			7,188
Business promotion		385			—			—			10,947			—			11,332
FDIC deposit insurance		—			—			—			27,682			—			27,682
Loss on early extinguishment of debt		—			—			—			289			—			289
Other real estate owned (OREO) expenses		—			—			—			6,440			—			6,440
Other operating expenses		(14,036	)		100			111			29,256			(596	)		14,835
Amortization of intangibles		—			—			—			2,255			—			2,255

Total operating expenses		(649	)		291			119			299,995			(17,956	)		281,800

(Loss) income before income tax and equity in earnings (losses) of subsidiaries		(13,920	)		5,059			(8,274	)		89,861			(141	)		72,585
Income tax expense (benefit)		1,111			1,000			—			(40,208	)		(3	)		(38,100	)

(Loss) income before equity in earnings (losses) of subsidiaries		(15,031	)		4,059			(8,274	)		130,069			(138	)		110,685
Equity in undistributed earnings (losses) of subsidiaries		125,716			(8,946	)		(955	)		—			(115,815	)		—

NET INCOME (LOSS)	$	110,685		$	(4,887	)	$	(9,229	)	$	130,069		$	(115,953	)	$	110,685

Condensed Statement of Operations

(Unaudited)


	Six months ended June 30, 2011
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.		PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
INTEREST INCOME:
Loans	$	5,058		$	16	$	—		$	864,666		$	(3,905	)	$	865,835
Money market investments		5			47		3			1,923			(105	)		1,873
Investment securities		8,161			22		161			104,196			(6,442	)		106,098
Trading account securities		—			—		—			18,544			—			18,544

Total interest income		13,224			85		164			989,329			(10,452	)		992,350

INTEREST EXPENSE:
Deposits		—			—		—			147,798			(247	)		147,551
Short-term borrowings		50			—		556			30,110			(2,982	)		27,734
Long-term debt		48,332			—		15,287			41,397			(5,852	)		99,164

Total interest expense		48,382			—		15,843			219,305			(9,081	)		274,449

Net interest (expense) income		(35,158	)		85		(15,679	)		770,024			(1,371	)		717,901
Provision for loan losses		—			—		—			219,636			—			219,636

Net interest (expense) income after provision for loan losses		(35,158	)		85		(15,679	)		550,388			(1,371	)		498,265

Service charges on deposit accounts		—			—		—			92,432			—			92,432
Other service fees		—			—		—			125,033			(8,074	)		116,959
Net loss on sale and valuation adjustments of investment securities		—			—		—			(90	)		—			(90	)
Trading account profit		—			—		—			375			—			375
Net loss on sale of loans, including valuation adjustments on loans held-for-sale		—			—		—			(5,538	)		—			(5,538	)
Adjustments (expense) to indemnity reserves on loans sold		—			—		—			(19,302	)		—			(19,302	)
FDIC loss share income		—			—		—			54,705			—			54,705
Fair value change in equity appreciation instrument		—			—		—			8,323			—			8,323
Other operating income		20,354			25,248		1,388			19,687			(26,013	)		40,664

Total non-interest income		20,354			25,248		1,388			275,625			(34,087	)		288,528

OPERATING EXPENSES:
Personnel costs		13,862			173		—			203,064			—			217,099
Net occupancy expenses		1,704			17		1			47,055			1,766			50,543
Equipment expenses		1,580			3		—			21,214			—			22,797
Other taxes		662			—		—			25,933			—			26,595
Professional fees		6,672			117		6			126,202			(36,830	)		96,167
Communications		234			5		9			14,150			—			14,398
Business promotion		808			—		—			20,384			—			21,192
FDIC deposit insurance		—			—		—			45,355			—			45,355
Loss on early extinguishment of debt		8,000			—		—			528			—			8,528
Other real estate owned (OREO) expenses		—			—		—			8,651			—			8,651
Other operating expenses		(25,517	)		8,568		221			58,839			(1,097	)		41,014
Amortization of intangibles		—			—		—			4,510			—			4,510

Total operating expenses		8,005			8,883		237			575,885			(36,161	)		556,849

(Loss) income before income tax and equity in earnings of subsidiaries		(22,809	)		16,450		(14,528	)		250,128			703			229,944


Income tax expense (benefit)		3,137			4,462		(264	)		101,491		301			109,127

(Loss) income before equity in earnings of subsidiaries		(25,946	)		11,988		(14,264	)		148,637		402			120,817
Equity in undistributed earnings of subsidiaries		146,763			7,719		20,444			—		(174,926	)		—

NET INCOME	$	120,817		$	19,707	$	6,180		$	148,637	$	(174,524	)	$	120,817

Condensed Statement of Operations

(Unaudited)


	Quarter ended June 30, 2010
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
INTEREST INCOME:
Loans	$	2,141		$	—		$	—		$	420,789		$	(1,920	)	$	421,010
Money market investments		50			10			1			1,893			(61	)		1,893
Investment securities		6,274			8			80			62,401			(5,848	)		62,915
Trading account securities		—			—			—			6,599			—			6,599

Total interest income		8,465			18			81			491,682			(7,829	)		492,417

INTEREST EXPENSE:
Deposits		—			—			—			90,625			(10	)		90,615
Short-term borrowings		10			—			91			17,423			(1,972	)		15,552
Long-term debt		29,511			—			7,650			40,504			(6,010	)		71,655

Total interest expense		29,521			—			7,741			148,552			(7,992	)		177,822

Net interest (expense) income		(21,056	)		18			(7,660	)		343,130			163			314,595
Provision for loan losses		—			—			—			202,258			—			202,258

Net interest (expense) income after provision for loan losses		(21,056	)		18			(7,660	)		140,872			163			112,337

Service charges on deposit accounts		—			—			—			50,679			—			50,679
Other service fees		—			—			—			105,770			(2,045	)		103,725
Net gain on sale and valuation adjustments of investment securities		—			—			—			397			—			397
Trading account profit		—			—			—			2,464			—			2,464
Net gain on sale of loans, including valuation adjustments on loans held-for-sale		—			—			—			5,078			—			5,078
Adjustments (expense) to indemnity reserves on loans sold		—			—			—			(14,389	)		—			(14,389	)
FDIC loss share expense		—			—			—			(15,037	)		—			(15,037	)
Fair value change in equity appreciation instrument		—			—			—			24,394			—			24,394
Other operating (loss) income		(693	)		4,997			(248	)		38,534			(1,074	)		41,516

Total non-interest (loss) income		(693	)		4,997			(248	)		197,890			(3,119	)		198,827

OPERATING EXPENSES:
Personnel costs		6,346			120			—			131,876			(310	)		138,032
Net occupancy expenses		757			11			—			28,290			—			29,058
Equipment expenses		740			—			—			24,606			—			25,346
Other taxes		457			—			—			12,002			—			12,459
Professional fees		3,583			3			3			31,259			(623	)		34,225
Communications		112			5			5			11,220			—			11,342
Business promotion		269			—			—			9,935			—			10,204
FDIC deposit insurance		—			—			—			17,393			—			17,393
Loss on early extinguishment of debt		—			—			—			430			—			430
Other real estate owned (OREO) expenses		19			—			—			14,603			—			14,622
Other operating expenses		(12,151	)		(99	)		108			45,420			(428	)		32,850
Amortization of intangibles		—			—			—			2,455			—			2,455

Total operating expenses		132			40			116			329,489			(1,361	)		328,416

(Loss) income before income tax and equity in losses of subsidiaries		(21,881	)		4,975			(8,024	)		9,273			(1,595	)		(17,252	)
Income tax (benefit) expense		(1,616	)		1,791			—			27,095			(33	)		27,237

(Loss) income before equity in losses of subsidiaries		(20,265	)		3,184			(8,024	)		(17,822	)		(1,562	)		(44,489	)
Equity in undistributed losses of subsidiaries		(24,224	)		(66,736	)		(59,613	)		—			150,573			—

NET LOSS	$	(44,489	)	$	(63,552	)	$	(67,637	)	$	(17,822	)	$	149,011		$	(44,489	)

Condensed Statement of Operations

(Unaudited)


	Six months ended June 30, 2010
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
INTEREST AND DIVIDEND INCOME:
Dividend income from subsidiaries	$	87,400		$	7,500		$	—		$	—		$	(94,900	)	$	—
Loans		3,084			—			—			775,297			(2,722	)		775,659
Money market investments		50			222			1			2,935			(273	)		2,935
Investment securities		13,440			17			161			126,913			(12,690	)		127,841
Trading account securities		—			—			—			13,177			—			13,177

Total interest and dividend income		103,974			7,739			162			918,322			(110,585	)		919,612

INTEREST EXPENSE:
Deposits		—			—			—			183,811			(222	)		183,589
Short-term borrowings		38			—			122			33,409			(2,758	)		30,811
Long-term debt		59,746			—			15,325			59,659			(13,030	)		121,700

Total interest expense		59,784			—			15,447			276,879			(16,010	)		336,100

Net interest income (expense)		44,190			7,739			(15,285	)		641,443			(94,575	)		583,512
Provision for loan losses		—			—			—			442,458			—			442,458

Net interest income (expense) after provision for loan losses		44,190			7,739			(15,285	)		198,985			(94,575	)		141,054

Service charges on deposit accounts		—			—			—			101,257			—			101,257
Other service fees		—			—			—			207,648			(2,603	)		205,045
Net gain on sale and valuation adjustments of investment securities		—			—			—			478			—			478
Trading account profit		—			—			—			2,241			—			2,241
Net gain on sale of loans, including valuation adjustments on loans held-for-sale		—			—			—			10,146			—			10,146
Adjustments (expense) to indemnity reserves on loans sold		—			—			—			(31,679	)		—			(31,679	)
FDIC loss share expense		—			—			—			(15,037	)		—			(15,037	)
Fair value change in equity appreciation instrument		—			—			—			24,394			—			24,394
Other operating income (loss)		1,216			11,561			(1,474	)		49,767			(1,222	)		59,848

Total non-interest income (loss)		1,216			11,561			(1,474	)		349,215			(3,825	)		356,693

OPERATING EXPENSES:
Personnel costs		12,533			219			—			246,611			(399	)		258,964
Net occupancy expenses		1,407			18			1			56,508			—			57,934
Equipment expenses		1,440			—			—			47,359			—			48,799
Other taxes		824			—			—			23,939			—			24,763
Professional fees		6,952			7			6			55,549			(1,240	)		61,274
Communications		233			11			5			21,865			—			22,114
Business promotion		442			—			—			18,057			—			18,499
FDIC deposit insurance		—			—			—			32,711			—			32,711
Loss on early extinguishment of debt		—			—			—			978			—			978
Other real estate owned (OREO) expenses		19			—			—			19,306			—			19,325
Other operating expenses		(23,067	)		(199	)		216			83,464			(950	)		59,464
Amortization of intangibles		—			—			—			4,504			—			4,504

Total operating expenses		783			56			228			610,851			(2,589	)		609,329

Income (loss) before income tax and equity in losses of subsidiaries		44,623			19,244			(16,987	)		(62,651	)		(95,811	)		(111,582	)
Income tax (benefit) expense		(1,639	)		1,801			—			17,618			182			17,962

Income (loss) before equity in losses of subsidiaries		46,262			17,443			(16,987	)		(80,269	)		(95,993	)		(129,544	)
Equity in undistributed losses of subsidiaries		(175,806	)		(176,118	)		(152,994	)		—			504,918			—

NET LOSS	$	(129,544	)	$	(158,675	)	$	(169,981	)	$	(80,269	)	$	408,925		$	(129,544	)

Condensed Consolidating Statement of Cash Flows (Unaudited)


	For the six months ended June 30, 2011
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
Cash flows from operating activities:
Net income	$	120,817		$	19,707		$	6,180		$	148,637		$	(174,524	)	$	120,817

Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Equity in undistributed earnings of subsidiaries		(146,763	)		(7,719	)		(20,444	)		—			174,926			—
Depreciation and amortization of premises and equipment		395			—			2			23,053			—			23,450
Provision for loan losses		—			—			—			219,636			—			219,636
Amortization of intangibles		—			—			—			4,510			—			4,510
Impairment losses on net assets to be disposed of		—			8,743			—			—			—			8,743
Fair value adjustments of mortgage servicing rights		—			—			—			16,249			—			16,249
Net amortization of premiums and deferred fees
(accretion of discounts)		12,015			—			122			(76,310	)		(325	)		(64,498	)
Net loss on sale and valuation adjustment of investment securities		—			—			—			90			—			90
Fair value change in equity appreciation instrument		—			—			—			(8,323	)		—			(8,323	)
FDIC loss share income		—			—			—			(54,705	)		—			(54,705	)
FDIC deposit insurance expense		—			—			—			45,355			—			45,355
Net gain on disposition of premises and equipment		(1	)		—			—			(1,991	)		—			(1,992	)
Net loss on sale of loans, including valuation adjustments on loans held for sale		—			—			—			5,538			—			5,538
Adjustments (expense) to indemnity reserves on loans sold		—			—			—			19,302			—			19,302
(Earnings) losses from investments under the equity method		(12,619	)		(11,788	)		(1,388	)		—			26,013			218
Gain on sale of equity method investment		(5,493	)		(11,414	)		—			—			—			(16,907	)
Net disbursements on loans held-for-sale		—			—			—			(417,220	)		—			(417,220	)
Acquisitions of loans held-for-sale		—			—			—			(173,549	)		—			(173,549	)
Proceeds from sale of loans held-for-sale		—			—			—			65,667			—			65,667
Net decrease in trading securities		—			—			—			319,024			—			319,024
Net decrease (increase) in accrued income receivable		252			(9	)		—			8,499			(66	)		8,676
Net (increase) decrease in other assets		(2,003	)		6,743			1,201			7,103			(30,009	)		(16,965	)
Net (decrease) increase in interest payable		(3,467	)		—			459			1,993			66			(949	)
Deferred income taxes		4,198			1,356			—			15,900			301			21,755
Net decrease in pension and other postretirement benefit obligations		—			—			—			(123,084	)		—			(123,084	)
Net decrease in other liabilities		(54,791	)		(3,416	)		(2,334	)		(7,871	)		3,029			(65,383	)

Total adjustments		(208,277	)		(17,504	)		(22,382	)		(111,134	)		173,935			(185,362	)

Net cash (used in) provided by operating activities		(87,460	)		2,203			(16,202	)		37,503			(589	)		(64,545	)

Cash flows from investing activities:
Net increase in money market investments		(62	)		(5,267	)		(1	)		(404,519	)		5,251			(404,598	)
Purchases of investment securities:
Available-for-sale		—			—			—			(856,543	)		—			(856,543	)
Held-to-maturity		(37,093	)		—			—			(27,265	)		—			(64,358	)
Other		—			—			—			(69,504	)		—			(69,504	)
Proceeds from calls, paydowns, maturities and redemptions of investment securities:
Available-for-sale		—			—			—			707,567			—			707,567
Held-to-maturity		50,613			—			—			1,460			—			52,073
Other		—			—			—			56,162			—			56,162
Proceeds from sale of investment securities available for sale		—			—			—			19,143			—			19,143
Proceeds from sale of other investment securities		—			—			—			2,294			—			2,294
Net repayments on loans		184,638			193			—			775,188			(180,413	)		779,606
Proceeds from sale of loans		—			—			—			225,698			—			225,698
Acquisition of loan portfolios		—			—			—			(744,390	)		—			(744,390	)
Net proceeds from sale of equity method investments		(10,690	)		42,193			—			—			—			31,503
Capital contribution to subsidiary		—			(37,000	)		—			—			37,000			—
Mortgage servicing rights purchased		—			—			—			(860	)		—			(860	)
Acquisition of premises and equipment		(316	)		—			—			(25,232	)		—			(25,548	)
Proceeds from sale of premises and equipment		11			—			—			9,836			—			9,847
Proceeds from sale of foreclosed assets		—			—			—			94,759			—			94,759

Net cash provided by (used in) investing activities		187,101			119			(1	)		(236,206	)		(138,162	)		(187,149	)


Cash flows from financing activities:
Net increase in deposits		—			—			—			1,204,005			(5,753	)		1,198,252
Net increase in federal funds purchased and assets sold under agreements to repurchase		—			—			—			157,772			—			157,772
Net decrease in other short-term borrowings		—			—			(19,100	)		(371,820	)		178,000			(212,920	)
Payments of notes payable		(100,000	)		—			(3,000	)		(1,074,306	)		—			(1,177,306	)
Proceeds from issuance of notes payable		—			—			—			419,500			—			419,500
Dividends paid		(1,861	)		—			—			—			—			(1,861	)
Proceeds from issuance of common stock		3,917			—			—			—			—			3,917
Treasury stock acquired		(68	)		—			—			—			—			(68	)
Return of capital		1,514			(1,514	)		—			—			—			—
Capital contribution from parent		—			—			37,000			—			(37,000	)		—

Net cash (used in) provided by financing activities		(96,498	)		(1,514	)		14,900			335,151			135,247			387,286

Net increase (decrease) in cash and due from banks		3,143			808			(1,303	)		136,448			(3,504	)		135,592
Cash and due from banks at beginning of period		1,638			618			1,576			451,723			(3,182	)		452,373

Cash and due from banks at end of period	$	4,781		$	1,426		$	273		$	588,171		$	(6,686	)	$	587,965

Condensed Consolidating Statement of Cash Flows (Unaudited)


	For the six months ended June 30, 2010
(In thousands)	Popular, Inc. Holding Co.			PIBI Holding Co.			PNA Holding Co.			All other subsidiaries and eliminations			Elimination entries			Popular, Inc. Consolidated
Cash flows from operating activities:
Net loss	$	(129,544	)	$	(158,675	)	$	(169,981	)	$	(80,269	)	$	408,925		$	(129,544	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Equity in undistributed losses of subsidiaries		175,806			176,118			152,994			—			(504,918	)		—
Depreciation and amortization of premises and equipment		389			—			2			30,368			—			30,759
Provision for loan losses		—			—			—			442,458			—			442,458
Amortization of intangibles		—			—			—			4,504			—			4,504
Fair value adjustments of mortgage servicing rights		—			—			—			9,577			—			9,577
Net amortization of premiums and deferred fees (accretion of discounts)		10,216			—			138			(62,148	)		(325	)		(52,119	)
Net gain on sale and valuation adjustment of investment securities		—			—			—			(478	)		—			(478	)
Fair value change of equity appreciation instrument		—			—			—			(24,394	)		—			(24,394	)
FDIC loss share expense		—			—			—			15,037			—			15,037
FDIC deposit insurance expense		—			—			—			32,711			—			32,711
Net loss (gain) on disposition of premises and equipment		23			—			—			(2,094	)		—			(2,071	)
Net gain on sale of loans, including valuation adjustments on loans held for sale		—			—			—			(10,146	)		—			(10,146	)
Adjustments (expense) to indemnity reserves on loans sold		—			—			—			31,679			—			31,679
(Earnings) losses from investments under the equity method		(1,216	)		(11,561	)		1,474			(2,355	)		(855	)		(14,513	)
Net disbursements on loans held-for-sale		—			—			—			(312,489	)		—			(312,489	)
Acquisitions of loans held-for-sale		—			—			—			(133,798	)		—			(133,798	)
Proceeds from sale of loans held-for-sale		—			—			—			35,867			—			35,867
Net decrease in trading securities		—			—			—			396,940			—			396,940
Net (increase) decrease in accrued income receivable		(11	)		122			21			10,712			(115	)		10,729
Net (increase) decrease in other assets		(8,995	)		5,602			1,703			9,487			(9,143	)		(1,346	)
Net increase (decrease) in interest payable		522			—			(54	)		(18,149	)		115			(17,566	)
Deferred income taxes		(222	)		—			—			(8,462	)		181			(8,503	)
Net increase in pension and other postretirement benefit obligations		—			—			—			1,627			—			1,627
Net (decrease) increase in other liabilities		(7,234	)		1,798			(1,539	)		(14,729	)		9,676			(12,028	)

Total adjustments		169,278			172,079			154,739			431,725			(505,384	)		422,437

Net cash provided by (used in) operating activities		39,734			13,404			(15,242	)		351,456			(96,459	)		292,893

Cash flows from investing activities:
Net decrease (increase) in money market investments		—			50,241			(61	)		(1,344,605	)		(50,189	)		(1,344,614	)
Purchases of investment securities:
Available-for-sale		—			—			—			(542,506	)		—			(542,506	)
Held-to-maturity		(26,927	)		—			—			(10,204	)		—			(37,131	)
Other		—			—			—			(13,076	)		—			(13,076	)
Proceeds from calls, paydowns, maturities and redemptions of investment securities:
Available-for-sale		—			—			—			818,380			—			818,380
Held-to-maturity		86,928			250			—			13,538			(60,000	)		40,716
Other		—			—			—			83,272			—			83,272
Proceeds from sale of investment securities available for sale		—			—			—			19,484			—			19,484
Net repayments on loans		(257,000	)		—			—			1,047,971			233,875			1,024,846
Proceeds from sale of loans		—			—			—			10,878			—			10,878
Acquisition of loan portfolios		—			—			—			(87,471	)		—			(87,471	)
Capital contribution to subsidiary		(845,000	)		(245,000	)		(245,000	)		—			1,335,000			—
Cash received from acquisitions		—			—			—			261,311			—			261,311
Mortgage servicing rights purchased		—			—			—			(364	)		—			(364	)
Acquisition of premises and equipment		(826	)		—			—			(26,335	)		—			(27,161	)
Proceeds from sale of premises and equipment		156			—			—			9,470			—			9,626
Proceeds from sale of foreclosed assets		74			—			—			68,984			—			69,058

Net cash (used in) provided by investing activities		(1,042,595	)		(194,509	)		(245,061	)		308,727			1,458,686			285,248


Cash flows from financing activities:
Net decrease in deposits		—			—			—			(1,252,761	)		50,542			(1,202,219	)
Net decrease in federal funds purchased and assets sold under agreements to repurchase		—			—			—			(325,596	)		—			(325,596	)
Net (decrease) increase in other short-term borrowings		(22,725	)		—			19,300			233,237			(235,875	)		(6,063	)
Payments of notes payable		(75,000	)		—			(4,000	)		(172,780	)		62,000			(189,780	)
Proceeds from issuance of notes payable		—			—			—			111,101			—			111,101
Dividends paid to parent company		—			(63,900	)		—			(31,000	)		94,900			—
Net proceeds from issuance of depository shares		1,100,740			—			—			—			1,618			1,102,358
Treasury stock acquired		(503	)		—			—			—			—			(503	)
Capital contribution from parent		—			245,000			245,000			845,000			(1,335,000	)		—

Net cash provided by (used in) by financing activities		1,002,512			181,100			260,300			(592,799	)		(1,361,815	)		(510,702	)

Net (decrease) increase in cash and due from banks		(349	)		(5	)		(3	)		67,384			412			67,439
Cash and due from banks at beginning of period		1,174			300			738			677,606			(2,488	)		677,330

Cash and due from banks at end of period	$	825		$	295		$	735		$	744,990		$	(2,076	)	$	744,769