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): June 13, 2012

POPULAR, INC.

(Exact name of registrant as specified in its charter)

COMMONWEALTH OF 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, 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

The executive officers of Popular, Inc. intend to use the materials filed herewith, in whole or in part, in one or more meetings with investors and analysts. A copy of the investor presentation 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 - Investor Presentation

SIGNATURES

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.
Date: June 13, 2012	By:	/s/ Jorge J. García
		Jorge J. García
		Senior Vice President and Corporate Comptroller

EX-99.1

Financial Results

Financial Results

2012 Morgan Stanley Financial Services

2012 Morgan Stanley Financial Services

June 13, 2012

June 13, 2012

Exhibit 99.1

Forward Looking Statements

The information contained in this presentation includes forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations

and

involve

risks

and

uncertainties

that

may

cause

the

Company's

actual

results

to

differ

materially

from

any

future

results

expressed or implied by such forward-looking statements. Factors that may cause such a difference include, but are not

limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions;

(ii)

changes

in

interest

rates,

as

well

as

the

magnitude

of

such

changes;

(iii)

the

fiscal

and

monetary

policies

of

the

federal

government and its agencies; (iv) changes in federal bank regulatory and supervisory policies, including required levels of

capital; (v) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate markets in

Puerto Rico and the other markets in which borrowers are located; (vi) the performance of the stock and bond markets; (vii)

competition in the financial services industry; (viii) possible legislative, tax or regulatory changes; (ix) the impact of the Dodd-

Frank Act on our businesses, business practice and cost of operations; and (x) additional Federal Deposit Insurance

Corporation assessments. Other than to the extent required by applicable law,  the Company undertakes no obligation to

publicly update or revise any forward-looking statement. Please refer to our Annual Report on Form 10-K for the year ended

December 31, 2011 and other SEC reports for a discussion of those factors that could impact our future results. The financial

information included in this presentation for the quarter ended March 31, 2012 is based on preliminary unaudited data and is

subject to change.

1

Q1 2012 Highlights

•

Net income for the quarter amounted to $48.4 million; our fifth consecutive profitable

quarter

•

Continued improvement in credit quality trends in non-covered portfolio

NPLs declined by $56 million

NPL inflows (commercial and construction) declined by 21%

Net charge-offs decreased by $18 million

•

Provision for non-covered loans declined by $41.4 million

•

Newly created Commercial Credit Administration Group consolidates several divisions

performing commercial credit management and administrative functions

•

Maintained strong revenue generation, robust margins and further

strengthened

capital ratios

2

Financial Results

3

¹

Unaudited

²

EPS amounted to $0.46 in Q1 2012 and $0.02 in Q4 2011 after the 1-for-10 reverse stock

split effected on May 29, 2012.  

2

$ in thousands (except per share data)

Q1 2012

1

Q4 2011

1

Variance

Net interest income

$337,582

$344,780

($7,198)

Service fees & other oper. income

129,710

113,848

15,862

Gain on sale of investments, loans & trading profits

9,453

18,064

(8,611)

Total revenues before FDIC (expense) income

476,745

476,692

53

FDIC loss-share (expense) income

(15,255)

17,447

(32,702)

Gross revenues

461,490

494,139

(32,649)

Provision

for

loan

losses-non covered loans

82,514

123,908

(41,394)

Provision

for

loan

losses-covered loans

18,209

55,900

(37,691)

Total provision for loan losses

100,723

179,808

(79,085)

Net revenues

360,767

314,331

46,436

Personnel costs

121,491

124,547

(3,056)

Other operating expenses

174,676

186,546

(11,870)

Total operating expenses

296,167

311,093

(14,926)

Income before Tax

64,600

3,238

61,362

Income Tax

16,192

263

15,929

Net income

$48,408

$2,975

$45,433

Financial Ratios

EPS

$0.05

$0.00

$0.05

NIM

4.27%

4.30%

-0.03%

4

¹

Unaudited

Significant Quarterly Variances

(1)

Net interest income

($7,198)

Service fees & other

oper. income

15,862

FDIC loss-share income

(expense)

(32,702)

Provision for loan losses-

non covered loans

(41,394)

Provision for loan losses-

covered loans

(37,691)

Personnel costs

(3,056)

Other operating expenses

(11,870)

Due to lower provisioning requirements

Driven by lower pension costs and salaries, mostly due to the

retirement window but partially offset by payroll taxes,

incentives and other benefits

Driven by lower business promotion ($6.4 million)  and a benefit

from lower provision for unfunded credit commitments

($9.5 million), partially offset by higher OREO expenses

($4.3 million)

$25.2 million principally due to 80% mirror accounting from the

decrease in provision for loan losses of covered loans

$13.6 million from the covered portfolio related to certain pools

of mortgage loans with lower interest accretion in Q1 (extended

average life estimates) offset by lower interest expense on

deposits and repayment of FDIC note ($6.3 million)

$9.5 million  higher other income mainly due to valuation in

investments accounted for under the equity method and

$5.9 million in other service fees (MSR valuation $11.5 million)

$17.9 million lower net charge offs and $25.3 million  attributed

to the revision of the ALLL methodology for commercial and

construction (US $17.8 million & PR $7.5 million)

Capital Ratios

5

•

Strong capital ratios above CCAR banks and peers

(1) (4)

Peers include:  CMA, HBAN, ZION, FNFG, PBCT, SNV, FHN, BOKF, ASBC & FBP

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

Minimum Regulatory Requirements for Well Capitalized

Peer  & CCAR ratios are as of December 31, 2011

1

2

3

4

Tier 1 Common

Tier 1 Capital

Total Capital

Tangible Common Equity

2

5%

6%

10

12.53

16.51

17.79

8.83

11.18

13.76

16.24

9.15

10.65

12.98

15.70

7.01

Popular Q1 2012

Peers Average

CCAR Average

3

3

3

•

Total Loans

remained relatively flat

•

NPLs decreased

for the second consecutive

quarter driven primarily by lower levels in all

portfolios

•

US construction      $32 million

•

PR commercial      $10 million

•

PR mortgage      $16 million

•

NCOs  declined

due to positive variances in

commercial and construction, offset in part

by increases in mortgage

•

Reduction in NCO ratio from 2.46% in

Q4 2011 to 2.13% in  Q1 2012

•

Provision for loan losses

in Q1 2012 was

down

33% compared to the Q4 2011

•

Allowance to loans & allowance

coverage

ratio remained relatively

flat

6

Consolidated Credit Summary (Excluding  Covered Loans)

$ in millions

Q1 12

Q4 11

Q1 12 vs   

  Q4 11

Q1 11

Q1 12 vs   

Q1 11

Loans Held to Maturity (HTM)

$20,479

$20,602

-0.60%

$20,677

-0.96%

Loans Held for Sale

362

363

-0.28%

570

-36.49%

Total Non Covered Loans

20,841

20,965

0.60%

21,247

-1.91%

Non-performing loans (NPLs)

$1,682

$1,738

-3.21%

$1,614

4.21%

Commercial

$819

$830

-1.33%

$700

17.00%

Construction

$70

$96

-27.08%

$127

-44.88%

Legacy

$79

$76

3.95%

$150

-47.33%

Mortgage

$667

$687

-2.91%

$578

15.40%

Consumer

$47

$49

-4.08%

$59

-20.34%

NPLs HTM to loans HTM

8.21%

8.44%

-0.23%

7.80%

0.41%

Net charge-offs (NCOs)

108

126

-14.29%

139

-22.30%

Commercial

$54

$71

-23.94%

$56

-3.57%

Construction

$0

$5

-100.00%

$9

-100.00%

Legacy

$4

$6

-33.33%

$20

-80.00%

Mortgage

$17

$9

88.89%

$8

112.50%

Consumer

$33

$35

-5.71%

$46

-28.26%

NCOs to average loans HTM

2.13%

2.46%

-0.33%

2.74%

-0.61%

Provision for loan losses (PLL)

83

124

-33.06%

60

38.33%

PLL to total loans HTM

1.62%

2.41%

-0.79%

1.16%

0.46%

PLL to NCOs

0.76x

0.98x

-0.22x

0.43x

0.33x

Allowance for loan losses (ALL)

665

690

-3.62%

727

-8.53%

ALL to loans (excl. LHFS)

3.25%

3.35%

-0.10%

3.52%

-0.27%

ALL to NPLs HTM

39.53%

39.73%

-0.20%

45.07%

-5.54%

Commercial & Construction NPL Inflows

Credit Quality Overview -

•

Total commercial and construction NPL

inflows

decreased

by

$37

million

or

21%

driven

by

decreases

in

both

PR

and

the

US

In PR, commercial and construction NPL inflows

decreased by $8 million or 8%

In the US, commercial and construction NPL

inflows decreased by $29 million or 38%

7

Selected Portfolios

Total

PR

Mortgage

Exposure

–

Owned

+

Recourse

•

Total  PR mortgage exposure includes both:

On-balance sheet mortgage loans

Loans sold with recourse

•

Portfolio key statistics:

Recourse

balance

is

down

$1.1

billion

or

26%

since 4Q 2009

90+

days

past

due

percentage

delinquency

has

decreased by 14%

from its peak in Q3 2010

$

$

$119

$161

$149

$174

$133

$116

$223

$101

$93

$147

$104

$109

$136

$61

$79

$77

$77

$48

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

PR Inflows

US Inflows

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

11.3%

11.4%

11.8%

12.0%

12.7%

12.9%

13.2%

12.2%

11.8%

11.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Recourse Portfolio

Owned Portfolio

Contributed 90+%DPD

Methodology

ASC 450

General

Reserve-

ASC

450

(FAS

5)

+

Specific

Reserve-

ASC

310

(FAS

114)

=

Total

ALLL

Changes

Implemented

•

Revised to a more granular segmentation based on credit-risk characteristics

Enhances homogeneity of portfolios

•

Changed trend factor to 12 months for commercial and construction portfolios

Improves the methodology’s ability to calibrate the impact of current loss trends

•

Implementation resulted in a net reduction of approximately $25 million in ALLL balance

(mostly in the US)

Allowance for Loan and Lease Losses (ALLL)

•

Base loss -

36-month average net charge-offs for commercial/construction portfolios and

18-month average net charge-offs for consumer/mortgage portfolios

•

Trend

factor-

Replaces

base-loss

period

with

6-month

average

net

charge-off

when

it

is

higher than base loss (up to determined cap)

•

Environmental

factor

-

Captures

certain

credit

/

economic

trends

and

factors

not

considered in the base losses

8

•

General

reserve

-

Based

on

historical

losses

adjusted

for

a

recent

trend

factor

+ 

•

Specific reserve

-

Attributed

to

loans

deemed

impaired

(mostly

commercial

loans

environmental factor

over $1mm)

Coverage Ratio

1

Allowance to Loan Losses / Non-performing Loans

2

Allowance to Loan Losses + Lifetime Charge-offs / Non-performing Loans

3

Includes Legacy loans

The coverage ratio of 39.5% does not take into account the high

percentage of individually analyzed loans and lifetime charge-offs

Total NPLs

$1,682

Individually Analyzed

$849

Collectively Analyzed

$833

$ in millions

9

Coverage Ratio (CR)

1

:

3%

Adjusted Coverage Ratio (ACR)

2

:

33%

Coverage Ratio (CR)

1

:

76%

Adjusted Coverage Ratio (ACR)

2

:

104%

Mort.

Comm.

Const.

3

Cons.

Mort.

Comm.

3

Const.

3

Cons.

NPLs

$239

$510

$90

$9

$428

$358

$9

$39

Lifetime NCOs

$4

$166

$80

$0

$84

$130

$18

$0

Reserve

$16

$11

$1

$1

$109

$349

$17

$161

CR

7%

2%

1%

15%

26%

97%

198%

414%

ACR

8%

35%

90%

15%

45%

133%

410%

414%

3

Summary & Outlook

10

2012 Strategy

•

Further improve credit risk profile

•

Add low-risk assets

•

Continue efficiency efforts

•

Continue improvement at BPNA

•

Build on strong revenues and robust capital position

Appendix

Appendix

P.R.  & US Business

12

1

Excludes covered loans

$ in millions (Unaudited)

Q1 12

Q4 11

Variance

Q1 12

Q4 11

Variance

Net Interest Income

$290

$299

($9)

$74

$73

$1

Non Interest Income

114

136

(22)

16

21

(5)

Gross Revenues

404

435

(31)

90

94

(4)

Provision (non-covered)

68

88

(20)

15

36

(21)

Provision (covered WB)

18

56

(38)

-

-

-

Provision for loan losses

86

144

(58)

15

36

(21)

Expenses

234

253

(19)

65

60

5

Tax Expense

17

4

13

1

1

(0)

Net Income (Loss)

$67

$34

$33

$9

($3)

$12

NPLs  (HTM) ¹

$1,343

$1,371

($28)

$338

$366

($28)

NPLs  (HTM + HFS) ¹

1,570

1,620

(50)

344

379

(35)

Loan loss reserve

586

578

8

217

237

(20)

Assets

$28,027

$28,423

($396)

$8,665

$8,581

$84

Loans  (HTM)

19,053

19,159

(106)

5,618

5,762

(144)

Loans  (HTM + HFS)

19,406

19,507

(101)

5,626

5,778

(152)

Deposits

21,040

21,850

(810)

6,247

6,168

79

NIM

4.90%

4.97%

-0.07%

3.78%

3.68%

0.10%

PR

US

Credit Ratings Update

•

Our senior unsecured ratings have been gradually improving since

2010:

Moody’s:

Ba1

Negative Outlook

S&P:

B+

Stable Outlook

Fitch:

B+

Positive Outlook

•

April 2012: Moody’s placing most of the PR banks under review with the

possibility of downgrades, due to the state of the Puerto Rico economy

•

January 2012:  Fitch raised BPOPs outlook to positive

•

December

2011:

S&P

raised

its

ratings

on

BPPR

to

BB

from

BB

-

and

changed

outlook to stable given revised bank criteria to Regional banks

•

July 2011: S&P raised our senior unsecured rating by one notch to B+

•

As the P.R. economy stabilizes and our credit metrics improve, we should see

upward pressure on the ratings

13

Financial Results

Financial Results

First Quarter 2012

First Quarter 2012