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): October 19, 2011

POPULAR, INC.

(Exact name of registrant as specified in its charter)

Puerto Rico	001-34084	66-0667416
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification Number)
209 Munoz Rivera Avenue Hato Rey,
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:

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

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

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

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

Item 7.01. Regulation FD Disclosure

Popular, Inc. is furnishing information regarding its conference call to discuss its financial results for the quarter and nine months ended September 30, 2011. A copy of the presentation to be used by Popular, Inc. on the conference call is attached hereto as Exhibit 99.1.

Popular, Inc. does not intend for this Item 7.01 or Exhibit 99.1 to be treated as “filed” under the Securities Exchange Act of 1934, as amended, or incorporated by reference into its filings under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits

The following exhibit shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.

Exhibit 99.1-Popular, Inc. Conference Call Presentation – Third Quarter 2011 Financial Results

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: October 19, 2011	By:	/s/ Ileana Gonzalez
	Ileana Gonzalez Senior Vice President and Comptroller

EX-99.1

Financial Results

Financial Results

Third Quarter 2011

Third Quarter 2011

Exhibit 99.1

Forward Looking Statements

Statements contained in this presentation that are not based on current or historical fact

are forward-looking in nature. Such forward-looking statements are based on current

plans, estimates and expectations and are made pursuant to the Private Securities

Litigation Reform Act of 1995. Forward-looking statements are based on known and

unknown risks, assumptions, uncertainties and other factors. The

Company's actual results,

performance, or achievements may differ materially from any future results, performance,

or achievements expressed or implied by such forward-looking statements. The Company

undertakes no obligation to publicly update or revise any forward-looking statement. The

financial information included in this presentation for the quarter ended September 30,

2011 is based on preliminary unaudited data and is subject to change. Please refer to our

Annual Report on Form 10-K and other SEC reports for a discussion of those factors that

could impact our future results.

1

Q3 2011 Highlights

•

Net income of $27.5 million; or $0.03 per share

Results include a gain on sale of securities of $8.1 million, a net benefit on the sale of PR loans

of $5 million ($17.4 million gain on sale less $12.7 million provision related to reclassification

of LHFS).

•

Top line revenue continues strong at $492 million in Q3.  The stability of our top line revenue

through the credit cycle reflects the strength of our franchise

•

Credit costs increased in the quarter driven principally by the PR commercial portfolio

Charge offs in Q3 rose 1.3% to $135 million with increases concentrated in P.R. C&I

•

A sale of $128 million (net book value) of PR construction and commercial loans was completed

No adjustment to the valuation of the $259 million remaining book balance of LHFS

Total NPAs have been reduced due to the aforementioned PR loan sale

2

Puerto Rico Economic Update

•

Fiscal situation under control

•

Housing incentives extended to December

2012

Banco Popular origination volume  YTD as

of September 30

th

was $1 billion (up 20%

vs 2010)

•

Second public-private partnership (P3) bidding

for the Munoz Marin International Airport  in

process

•

Key tourism projects:  Sheraton Convention

Center, St. Regis Bahia Resort, Dorado Beach

Ritz Reserve and 11 additional projects

•

The recent declines in oil prices should be

helpful given our dependence on oil; alternate

energy projects are underway

3

Sources: PR Labor Department, US Labor Bureau, PR Government

Development Bank, Consultec and PR Commerce and Export Agency

Retail Sales

2,800,000

2,850,000

2,900,000

2,950,000

3,000,000

12-Month Moving Average, in $ billions

-8%

-6%

-4%

-2%

0%

2%

4%

6%

500,000

700,000

900,000

1,100,000

1,300,000

Total Jobs (Monthly Avg) ( L )

Monthly change ( R )

* 2011 Monthly average up until August

Labor Force

Financial Results

4

¹

Unaudited

Q3 2011

Q2 2011

Variance

Net Interest Income

$369,311

$374,542

($5,231)

Service fees & Other Oper. Income

106,696

106,942

(246)

Gain on Sale of Investments, Loans & Trading Profits

21,055

(21,452)

42,507

FDIC Loss-Share (expense) income

(5,361)

38,670

(44,031)

Gross Revenues

491,701

498,702

(7,001)

Provision for loan losses

(excluding covered loans)

(150,703)

(95,712)

(54,991)

Provision for loan losses (covered WB loans)

(25,573)

(48,605)

23,032

Total Provision BPOP

(176,276)

(144,317)

(31,959)

Net Revenues

315,425

354,385

(38,960)

Operating Expenses

(282,355)

(281,800)

(555)

Income before Tax (Expense) Benefit

33,070

72,585

(39,515)

Income Tax (Expense) Benefit

(5,537)

38,100

(43,637)

Net income

$27,533

$110,685

($83,152)

Financial Ratios

EPS

$0.03

$0.11

($0.08)

NIM

4.45%

4.48%

-0.03%

$ in thousands (except per share data) 

1

1

Q3 vs Q2 2011 Adjusted Variances (in millions)

5

Q3 Income before tax

33

$          

Less:

Net benefit on sale of loans

(5)

Gain on sale of securites

(8)

EVERTEC retirement window costs

5

Q3 adjusted income before tax

25

Q2 Income before tax

73

Negative variance Q3 vs Q2

(48)

$         

(60)

13

(47)

$

Lower provision:

Covered loans

23

US

5

28

FDIC loss share decrease:

Accretion of indemnification asset

(29)

ASC 310-20 discount accretion-

Mirror Accounting

4

Provision for loan losses -

Mirror Accounting

(18)

Other

(1)

(44)

Covered loans

(10)

Other earning assets

(5)

Deposit

5

FDIC Note

6

Other interest bearing liabilities

(1)

(5)

Other:

Q2 mark down on advances & fair value

15

Other operating income

6

Expenses

(1)

20

Detailed variances

(48)

$

Higher provision BPPR:

Provision BPPR

Provision related to PR loan sale

Lower net interest income due to volume and yield:

Explanation

Variance in pre-tax income

P.R. Business

•

Q3 net income includes a $13 million net

benefit on securities and loan sales

•

Provision expense for non-covered loans

increased by $60 million ($47 million in

addition to $13 million related to the sale of

commercial and construction loans)

•

Provision expense includes $26 million

related to Westernbank; which is offset 80%

by loss-share agreement

•

Sale of $128 million of construction and

commercial loans was completed

•

Smaller transactions have been executed

at prices ranging between 50%-70%.

•

LFHS balance remaining is $259 million (of

portfolio reclassified in Q4 2010)

•

Deposit costs in Q3 declined by 9 basis

points to 1.10% as compared to Q2

•

$5.5 billion in time deposits mature during

the next 12 months

6

1

Excludes covered loans

$ in millions (Unaudited)

Q3 11

Q2 11

Variance

Net Interest Income

$321

$325

($4)

Non Interest Income

118

114

4

Gross Revenues

439

439

0

Provision (BPPR)

(131)

(71)

(60)

Provision (covered WB)

(26)

(49)

23

Provision for loan losses

(157)

(120)

(37)

Expenses

(221)

(217)

(4)

Tax (Expense) Benefit

(7)

38

(45)

Net Income

$54

$140

($86)

NPLs  (HTM) ¹

$1,337

$1,210

$127

NPLs  (HTM + HFS) ¹

1,597

1,610

(13)

Loan loss reserve

524

472

52

Assets

$29,105

$29,790

($685)

Loans  (HTM)

19,210

19,062

148

Loans  (HTM + HFS)

19,575

19,569

6

Deposits

21,727

21,568

159

NIM

5.15%

5.19%

-0.04%

U.S. Business

•

Net income of $9 million in Q3 driven by

lower provision

NPLs for the quarter down by $20

million or 5%; driven by construction

loans

Cost of funds reduction of 8 bps to

1.38%

•

Expenses decreased slightly by $4 million

•

Loan balances continued to decrease but

net interest income remained  relatively 

stable

•

Rebranding initiative was rolled out in

August to the California and Florida regions; 

the customer reaction in these regions has

been positive

7

$ in millions (Unaudited)

Q3 11

Q2 11

Variance

Net Interest Income

$73

$75

($2)

Non Interest Income

18

19

(1)

Gross Revenues

91

94

(3)

Provision for loan losses

(20)

(25)

5

Expenses

(61)

(65)

4

Taxes Expense

(1)

(1)

0

Net Income

$9

$3

$6

NPLs  (HTM)

$395

$415

($20)

NPLs  (HTM + HFS)

395

415

(20)

Loan loss reserve

249

275

(26)

Assets

$8,720

$8,895

($175)

Loans  (HTM)

5,946

6,181

(235)

Loans  (HTM + HFS)

5,949

6,184

(235)

Deposits

6,292

6,485

(193)

NIM

3.62%

3.64%

-0.02%

Loan Portfolio Detail

8

•

Our loan book is well diversified

•

There are no significant concentrations

•

Top 20 non-covered relationships are

only 4% of total loans

•

Low average loan size; commercial $476K and

mortgage $129K

•

Early stage delinquencies have declined  since

December 2009

•

No exposure to Europe

30 –

89 days Past Due Total Loans, excluding covered loans

5.0%

4.9%

4.3%

4.2%

3.5%

3.9%

3.4%

3.2%

Dec 09

Mar 10

June 10

Sep 10

Dec 10

Mar 11

June 11

Sep 11

$ in 000s

PR

US

Total

% of

Total

Loans Held to Maturity:

Construction

163,915

$           

194,146

$           

358,061

$           

1.4%

C&I

2,800,724

1,050,648

3,851,372

15.3%

CRE-

Owner Occupied

2,285,456

894,633

3,180,089

12.6%

CRE-

Non-Owner Occupied

1,327,309

2,230,149

3,557,458

14.1%

Consumer

3,517,620

742,784

4,260,404

16.9%

Mortgage

4,633,339

833,163

5,466,502

21.8%

Total Non-Covered

14,728,363

5,945,523

20,673,886

82.1%

Covered

Loan-

WB

4,512,423

-

4,512,423

17.9%

Total

19,240,786

$     

5,945,523

$       

25,186,309

$    

100.0%

Loan Portfolio -

Q3 2011

Non-Performing Loans-

Popular, Inc.

Commercial & Construction NPL Inflows

Credit Quality Overview-

•

Inflow of NPLs in the PR commercial portfolio reflect

less reliance on actual payment history and more

reliance on documented ability to continue to pay

according to the original terms

Approximately 50% of these inflows are current in

their payments

•

NCO ratio for Q3 was 2.64% ($135M) vs. 2.59%

($133M) in Q2, driven by PR C&I while consumer NCOs

declined

•

ALLL remained relatively flat in Q3

9

Excludes Covered Loans & LHFS

In 000’s

PR NCOs (%)

Q3

Q2

Mortgage

0.68

0.69

Commercial

3.69

3.05

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2Q10

3Q10

4Q10

1Q 11

2Q 11

3Q 11

Commercial

Construction

Consumer

Mortgage

161

149

174

133

116

212

104

109

136

57

79

77

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

$-

$50

$100

$150

$200

$250

$300

$350

Commercial & Construction

Inflows

PR Inflows

US Inflows

Capital Ratios

•

Strong capital position relative to current and Basel III guidelines as well as  peers

10

1

See the earnings press release for  reconciliation of  Common Stockholders Equity  (GAAP) to Tier 1 Common

Equity (Non-GAAP).

2

Minimum Regulatory Requirements for Well Capitalize

12.02

15.82

17.09

8.67

11.53

15.22

16.50

8.38

11.56

15.03

16.32

8.41

0

3

6

9

12

15

18

%

Tier 1 Common 1

1

Tier 1 Capital

Total Capital

Tangible Common Equity

Q3

2010

Q2

2011

Q3

2011

Q3 

2010

Q2

2011

Q3 

2011

Q2

2011

Q3

2010

Q3

2011

Q3

2011

Q2

2011

Q3 

2010

5%

2

6%

2

10%

2

Thoughts On Our Stock Valuation

11

•

On September 30, 2011 BPOP closed  at $1.50, representing a

market cap of $1.5 billion

•

YTD, the price has declined 47% vs. 19% for the NASDAQ

Bank Index and  28% for the KBW Bank Index

•

We believe that the market is underestimating the value of

Popular’s business

•

What are the drivers of BPOP’s value?

•

A high and steady stream of pre-provision net revenues,

supported by the leading financial services franchise in

P.R. (founded in 1893, with a 42% share of non-brokered

deposits in P.R.)

•

U.S. business which has returned to profitability, with a

fully-reserved DTA of $1.3 billion 

•

A 49% ownership in EVERTEC, a leading processing,

merchant acquisition and IT consulting business

•

Enhanced potential NIM expansion in a normalized rate

environment

from

the

expected

“stickiness”

of

our

P.R.

deposit costs

•

Potential for enhanced profitability which is highly

levered upon the normalization of credit in P.R.

Price / Tangible Book Value

Price Multiple of Pre-provision Net Revenues

Stock Price  /  PPNR

-

Stock price data as of 9-30-2011.

-

PPNR based on last 12 months; as of 9-30 for BPOP and 6-30 for others.

-

Top 50 excludes banks with $100B or > in assets. 

-

PPNR

=

(net

int

income

+

non-int

income

–

expenses)

-

TBV as of 9-30 for BPOP and 6-30 for others; as of 9-30 remaining

discount related to 2009 TARP exchange was $473 million.

12

Popular Is Well Positioned for the Future

Capital

Ability to pursue organic growth opportunities and asset acquisitions 

Diversified balance sheet and strong capital

Other sources of potential value such as our 49% EVERTEC investment and the U.S. DTA

Earnings

Generation

Diversification of revenue sources

Strong, stable revenue stream throughout the cycle

Ongoing business rationalization and reductions in core noninterest expenses

Our profitability should benefit substantially as NPLs and credit costs in P.R. normalize

Deposit

Franchise

Best and most valuable deposit franchise in Puerto Rico

Strong

core

deposit

composition

should

benefit

margin

when

rates

normalize

Limited use of wholesale funding

Loan

Portfolio

Addressing credit exposures through early-stage monitoring, modifications and workouts

Enhancing risk management processes

De-risking balance sheet through NPL sales and U.S. restructuring

Appendix

Appendix

48,624

47,404

44,411

38,883

34,736

38,723

38,736

39,013

38,179

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

-

10,000

20,000

30,000

40,000

50,000

60,000

2005

2006

2007

2008

2009

2010

Q1 2011

Q2 2011

Q3 2011

Assets

Market Cap

Tangible Capital

$

Where We Are Coming From…

14

2005/2006

•

Aggressive diversification

consisting of Puerto Rico,

the U.S. and the Caribbean;

nearly 1/3 of revenue is

generated within the U.S.

•

Focused on growing US

banking and mortgage

businesses  (PFH & ELOAN )

•

Net Income  

$541M / $358M

•Tier 1 C   7.98% / 7.73%

•NPLs 1 .77% /  2.24%

•FTEs   13.2K /  12.5K

2007/2008

•

Reorganized US operation

to exit high-risk businesses

•Shut down US consumer

finance businesses (PFH & E-

Loan) & Texas region

•

Acquisition of PR Citibank

retail business

•

Net Loss

($64M) / ($1,244M)

Tier 1 C   7.08% / 3.19%

•NPLs   2.75% / 4.67%

•FTEs  12.3K / 10.6K

2009/2010

•

Focused  on ensuring

capital and BHC liquidity 

adequacy and participating

in the P.R. banking

consolidation

•

Raised common equity,

EVERTEC sale & WB asset

acquisition

•

Net (Loss) / Income

($574M) / $137M

•Tier 1 C   6.39% /10.95%

•NPLs  9.60% / 7.58%¹

•FTEs 9.4K/ 8.3K

2011

•

Now focused on:

managing

through the P.R.    

credit  cycle

enhancing BPNA

profitability

earning asset

generation

reducing NPLs

efficiencies

$

1

Excludes covered loans

•

•

•

•

•

$ in millions

Q3 11

Q2 11

Q3 11 vs  

Q2 11

YTD 11

Loans Held to Maturity (HTM)

$20,674

$20,658

0.08%

$20,674

Loans Held for Sale

369

509

-27.50%

369

Covered Loans

4,512

4,616

-2.25%

4,512

Total Loans

$25,555

$25,783

-0.88%

$25,555

Non-performing assets (inc OREO)

$2,167

$2,187

-0.91%

$2,167

NPLs HTM to loans HTM

8.38%

7.86%

0.52%

8.38%

Net charge-offs

$135

$133

1.50%

$408

Net charge-offs to average loans

2.64%

2.59%

0.05%

2.65%

Provision for loan losses

$151

$96

57.29%

$306

Provision to total loans HTM

0.73%

0.46%

0.27%

0.76%

Provision for loan losses to net charge-offs

111.50%

71.76%

39.74%

75.04%

Allowance for loan losses

$693

$690

0.43%

$693

Allowance for loan losses to loans (excl. LHFS)

3.35%

3.34%

0.01%

3.35%

Allowance for loan losses to NPLs HTM

39.99%

42.45%

-2.46%

39.99%

Significant Events

NPLs ex LHFS                                                            

$1,732

$1,624

NCOs ex FAS 114   (Q4'2010)                                            

$135

$133

Provision  for loan losses ex LHFS  (Q4' 2010)

$151

$96

15

Credit

Summary -

Popular,

Inc.

Consolidated

Credit summary excludes covered assets

$319

$435

$767

$769

$855

$852

$844

$818

$239

$224

$198

$188

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

$778

$756

$717

$683

$642

$580

$523

$416

$332

$290

$232

$194

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

$1,435

$1,400

$1,317

$1,199

$1,082

$1,039

$973

$884

$168

$149

$162

$164

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Construction Portfolio

16

•

Much smaller exposure in construction loans

•

Construction balances have decreased $1,583 

•

At 9-30-2011, non-covered HTM construction loans

had declined to 2% of total loans compared to 8% at

12-31-2008 (peak)

•

Construction non-performing loans totaled $188

million at 09-30-2011, a decrease of $664 million or

78% from 03-31-2010 (peak)

•

Of the $358 million in loans, $164 million is PR

Total HTM non-covered

Construction NPL Loans ($ in MM)

Total HTM non-covered

PR Construction Loans ($ in MM)

Total HTM US

Construction Loans ($ in MM)

million or 82% since 4

Q 2007

th

0.16

0.29

0.14

0.72

0.36

0.47

0.75

0.63

0.86

0.85

0.69

0.68

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Mortgage Portfolio

17

•

Exposure concentrated in PR

•

Low average loan size ($129M)

•

Adequate loan-to-value (78%)

•

At 9/30/2011, non-covered US non-

conventional mortgage exposure had declined

to $496 million, a decrease of $725 million from

12/31/2008

•

Most of the exposure in Texas

•

Insignificant exposures to California, Florida or

Nevada

Total HTM non-covered US

non-conventional Mortgage Loans ($ in MM)

PR non-covered Mortgage Loans

net charge-offs (%)

PR Total HTM non-covered

Mortgage Loans ($ in B)

$1,221

$1,179

$1,140

$1,095

$1,053

$1,015

$968

$936

$513

$509

$503

$496

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

$2.8

$2.9

$2.9

$3.0

$3.1

$3.2

$3.3

$3.4

$3.6

$4.0

$4.5

$4.6

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Purchase

in PR

at attractive yields

and good quality

Commercial Portfolio

18

$ in 000s

PR

US

Total

% of

Total

C&I

2,800,724

$        

1,050,648

$        

3,851,372

$        

36.4%

CRE- Owner Occupied

2,285,456

894,633

3,180,089

30.0%

CRE- Non-Owner Occupied

1,327,309

2,230,149

3,557,458

33.6%

Total Non-Covered

6,413,489

$        

4,175,430

$        

10,588,919

$      

100.0%

Loan Portfolio - Q3 2011

$ in 000s

PR

US

Total

% of

Total

Owner Occupied

2,285,456

$  

894,633

$      

3,180,089

$   

47.20%

Retail

574,072

318,210

892,282

13.24%

Office

285,167

327,395

612,562

9.09%

Industrial

90,890

213,398

304,288

4.52%

Residential

-

42,397

42,397

0.63%

Mixed Used

-

166,403

166,403

2.47%

Multifamily

64,681

899,111

963,792

14.30%

Other

312,499

263,235

575,734

8.55%

Total Commercial Real Estate

3,612,765

$  

3,124,782

$  

6,737,547

$   

100.00%

HTM Non-Covered  CRE Portfolio

•

Diversified loan portfolio across two

regions

•

PR 61%

•

US 39%

•

Diversified CRE portfolio:

•

Almost 50% owner occupied

•

No significant concentration -

Top 20

non-covered relationships are only

8% of total loans

•

Average loan size of $2.0MM

•

Diversified C&I Portfolio

•

No significant concentration

•

Average loan size of $381k

Financial Results

Financial Results

Third Quarter 2011

Third Quarter 2011