 FINANCIAL RESULTS
Q1 2014
Exhibit 99.1 |
 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,
2013
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,
2014
is
based
on
preliminary
unaudited
data
and
is
subject
to
change. |
 Q1 2014
Highlights 2
•
Consolidated
NPLs
remained
relatively
flat
at
2.9%
vs.
2.8%
QoQ
•
NCOs
of
0.80%
compared
to
0.66%
last
quarter
•
NPL
inflows
impacted
by
$52
million
PR
commercial
loan
added
to
non-accrual
•
Reported
net
income
of
$86
million
•
Strong
margins:
Popular,
Inc.
4.70%,
BPPR
5.49%
Credit
Capital
Earnings
•
$250
million
dividend
approved from
BPNA
to
BHC
•
$100
million
contribution
to
BPPR |
 California
20
1,183
1,132
Illinois
12
521
761
Central Florida
9
115
239
Branches
Loans ($MM)
Deposits ($MM)
BPNA Transactions
3
•
Sale of all branches, deposits and substantially all loans in California, Illinois
and Central Florida regions
Strategic focus going forward on NY metro and South Florida regions
•
Simplifying operations through back office consolidation from Rosemont, IL to San
Juan, PR and New York, creating additional efficiencies
•
Looking
at
all
components
of
BPNA
balance
sheet
to
manage
credit
and
capital
Lower
risk
profile
and
smaller
balance
sheet
to
yield
additional
capital
•
Aggregate mark of loans of approximately $21.3 million (-1.17)% and deposit
premium of approximately $46.3 million (+2.17)%, resulting in a net premium
of approximately $25.0 million (+1.17%)
$
$ |
 TARP
& Capital 4
•
Submitted an application to repay TARP in full; subject to regulatory
approval •
Robust capital, Tier1 Common Equity ratio of 15.1%, $2.4 billion
in excess of
5% CCAR target
•
BHC cash approximately $680 million after the effect of the BPNA
dividend
Common Tier 1 Capital
5.0%
15.1%
13.3%
Tier 1 Capital
6.0%
19.4%
15.3%
Total Capital
10.0%
20.6%
16.6%
Leverage
5.0%
13.1%
10.4%
Minimum Well
Capitalized Ratio
Q1 2014
Ratio
Pro-forma
Q1 2014 Exc. Tarp |
 Q1
2014 Q4 2013
See appendix for Non-GAAP to GAAP reconciliation
Non GAAP
In thousands
Adjusted
Net interest income
$372,967
$376,342
($3,375)
Non Interest Income
130,771
135,996
(5,225)
Total revenues before FDIC loss share impact
503,738
512,338
(8,600)
FDIC loss-share income (expense)
(24,206)
(37,164)
12,958
Gross revenues
479,532
475,174
4,358
Provision for loan losses (excluding covered loans)
47,358
47,729
(371)
Provision for loan losses (covered loans)
25,714
8,907
16,807
Total provision for loan losses
73,072
56,636
16,436
Net revenues
406,460
418,538
(12,078)
Personnel costs
113,154
114,360
(1,206)
Other real estate owned (OREO) expenses
6,187
10,558
(4,371)
Other operating expenses
177,446
197,785
(20,339)
Total operating expenses
296,787
322,703
(25,916)
Income before tax
109,673
95,835
13,838
Income tax expense
23,264
21,217
2,047
Net income
$86,409
$74,618
$11,791
Adjusted
Variance
Financial Summary (unaudited)
5 |
 Capital
6
**Excess
capital
over
“well
capitalized”
Basel
I
threshold
*Averages
for
30
bank
holding
Companies
with
$50
billion
or
more
of
total
consolidated
assets,
consisting
of
19
firms
included
in
Comprehensive
Capital
Analysis
and
Review
(CCAR)
and
11
firms
included
in
Capital
Plan
Review
(CapPR).
Source
SNL
Financial
&
FactSet.
**
**
Capital Ratio %
Excess capital in $, billions
$2.4
$3.1
$2.5
Tier 1 Common
Tier 1 Capital
Total Capital
15.1
19.4
20.6
11.1
10.8
12.0
14.7
8.8
Tier 1 Common
Tier 1 Capital
Total Capital
Tangible Common
Equity
BPOP Q1 2014
CCAR & CapPR Q4 2013 *
Tier
1
Common
Equity
capital
ratio
of
15.1%
exceeds
current
CCAR
5%
target
by
We expect to remain “well-capitalized”
under Basel III rules issued by the Federal
$2.4
billion
Reserve |
 Non
Performing Assets •
NPLs increased by $37 million, or 6%, QoQ as a
result of:
$52 million single commercial credit from BPPR
$23 million mortgage NPL increase in BPPR
•
Partially offset by:
$48 million
decline in BPNA NPLs, mostly commercial as a result of loan
sales Non-Performing Loans ($MM)
7
Metrics exclude covered loans
Non-Performing Assets ($MM)
Overall Stable; Impacted by Single Commercial Credit Relationship
•
NPAs, including covered loans, increased by
$24 million, or 3%, QoQ
•
OREOs decreased by $8 million, or 3%, mainly
driven by higher disposition of foreclosed
properties from the covered portfolio |
 Total NPL Inflows ($MM)
NPL Inflows
•
Total
NPL
inflows
increased
by
$64
million,
or
45%
QoQ
BPPR
commercial
inflows
include
the
impact
of
a
single
$52
million
credit
relationship,
which
continues
to
be
current
BPNA
commercial
increase
of
$9
million
includes
a
$10
million
loan
which
was
also
sold
during
the
quarter
•
Mortgage
NPL
inflows
improved
by
$7
million,
or
7%
QoQ,
down
to
$93
million
Mortgage NPL Inflows ($MM)
Commercial, Construction & Legacy NPL Inflows ($MM)
8
Excludes consumer loans
Metrics exclude covered loans
Q1 2014 inflows impacted by Single Commercial Credit Relationship
|
 Stable
Asset Quality •
NCOs increased by $8 million QoQ
Impact of $9 million recovery in Q4 2013 from the
sale of previously charged-off PR credit cards and
personal loans
NCO ratio of 0.80% compared to 0.66% in Q4 2013
•
Provision flat at $47 million in Q1 2014 vs. $48 million
in Q4 2013
Provision to NCO of 110%, compared to 135% in Q4
2013
•
ALLL to loans stable at 2.51% vs. 2.49% on Q4 2013
•
ALLL to NPL coverage ratio at 85% in Q1 2014 vs.
90% in Q4 2013
Q1 2014 NPLs impacted by the addition of the single
$52 million commercial credit relationship
ALLL ($MM), ALLL-to-NCO and ALLL-to-NPL Ratios
NCO ($MM) and NCO-to-Loan Ratio
9
Metrics exclude covered loans
Provision ($MM) and Provision-to-NCO Ratio |
 PR
Public Sector Exposure •
Loans to the Government of Puerto Rico and Public Corporations are either
collateralized loans or obligations that have a specific source of income or
revenues identified for their repayment
10
•
Loans
to
various
municipalities
backed
by
unlimited
taxing
power
or
real
and
personal property taxes collected within such municipalities
•
Includes $277 million residential mortgage loans to individual borrowers with a
government guarantee
•
$48 million in PR pass-through housing bonds backed by FNMA, GNMA or
residential loan CMOs
•
$38
million
of
industrial
development
notes
payable
primarily
by
non
government tenants
•
Our current direct exposure to the PR government, instrumentalities and
municipalities is $1.1 billion, of which approximately $944 million is
outstanding, flat to last quarter •
Of the amount outstanding, $781 million consists of loans and $163 million are
securities PR Government
$520 million
outstanding
Municipalities
$424 million
outstanding
•
Additional $363 million in indirect exposure of loans or instruments that are
payable by non- governmental entities and have a government guarantee to
cover any shortfall in collateral in the event of borrower default
Indirect
Exposure
$363 million
outstanding |
 Driving
Shareholder Value 11
Capital
Earnings
Additional
Value
•
Robust capital with excess Tier 1 Common Equity of $2.4 billion and
significantly
improved
asset
quality
move
us
closer
to
TARP
exit
in
the
most shareholder-friendly fashion
•
BPNA transactions are the first steps toward a more active capital
management process
•
Unique franchise in PR provides strong, stable revenue-
generating capacity
•
Popular’s credit metrics continue near historical low levels
•
EVTC ownership, BHD stake and restructured US operations
|
 APPENDIX
APPENDIX |
 Who We
Are – Popular, Inc.
Franchise
•
Financial services company
•
Headquartered in San Juan, Puerto Rico
•
$37 billion in assets (top 40 bank holding company in
the U.S.)
•
$25 billion in total loans
•
$27 billion in total deposits
•
270 branches serving customers in Puerto Rico,
New York, California, Florida, Illinois, U.S. Virgin
Islands, and New Jersey
•
NASDAQ ticker symbol: BPOP
•
Market Cap: $3.21 billion
1
1
As of March 31, 2014
*Doing business as Popular Community Bank.
Summary Corporate Structure
Assets = $36.7 bn
Popular Auto,
Inc.
Banco Popular
de Puerto
Rico
Popular
Securities, Inc.
Assets = $27 .7 bn
Assets = $8.8bn
Banco Popular
North America*
Puerto Rico operations
Selected equity investments
(first two under “corporate”
segment and third and fourth under PR):
Popular
Insurance, Inc.
Popular North
America, Inc.
U.S. banking operations
Transaction processing,
business processes
outsourcing
14.9% stake
Adjusted EBITDA of $177.7
million for the year ended
December 31, 2013
PRLP
2011
Holdings
Construction and
commercial loans vehicle
24.9% stake
PR Asset Portfolio 2013-1
International, LLC
Construction, commercial
loans and OREOs
vehicle
24.9% stake
13
Dominican
Republic bank
15.79% stake
2013
approximate net
income $111
million |
 Total Deposits (Net of Brokered)
1
39%
Total Loans
1
36%
Commercial & Construction Loans
1
39%
Credit Cards
1
52%
Mortgage Loan Production
1
32%
Personal Loans
1
30%
Auto Loans/Leases
3
17%
Assets Under Management
3
14%
Category
Market
Position as of
Q4 2013
Market Share
as of Q4 2013
Market Leadership in Puerto Rico
Popular’s Market Share Trend
Puerto Rico Market Share by Category
14
Source: Puerto Rico Office of the Commissioner of Financial Institutions & 10K
reports; Mortgage origination data is not publicly available; Figures
presented for BPPR and competitors were provided internally; Personal Loans:
As a group, Credit Unions represent the largest competitor with 52% market
share (115 Credit Unions were in business as of December 31, 2013 guaranteed by
COSSEC) |
 PR
& US Business 15
1
Excludes covered loans |
 [1] Covered loans represent loans acquired in the Westernbank FDIC-assisted
transaction that are covered under FDIC loss sharing agreements. 16
GAAP Reconciliation Q4 2013 |
 17
Consolidated Credit Summary (Excluding Covered Loans)
1
Excluding provision for loan losses and net write-downs related to the asset
sale $ in millions
Q1 14
Q4 13
Q3 13
Q2 13
Q1 13
Loans Held in Portfolio (HIP)
$21,612
$21,612
$21,427
$21,522
$21,634
Performing HFS
94
109
123
180
183
NPL HFS
1
1
2
11
18
Total Non Covered Loans
21,707
21,722
21,552
21,713
21,835
Non - performing loans (NPLs)
$635
$598
$618
$614
$1,051
Commercial
$310
$282
$320
$328
$321
Construction
$22
$24
$29
$45
$51
Legacy
$12
$15
$24
$28
$36
Mortgage
$252
$233
$203
$172
$601
Consumer
$39
$44
$42
$41
$42
NPLs HIP to loans HIP
2.94%
2.77%
2.88%
2.85%
4.86%
Net charge - offs (NCOs)
$43
$35
$58
$79
$81
Commercial
$12
$16
$21
$41
$32
Construction
($2)
($2)
($5)
($2)
$0
Legacy
($5)
($5)
$2
($1)
$2
Mortgage
$9
$8
$13
$16
$20
Consumer
$28
$18
$27
$26
$27
Write - downs bulk sale
$0
$0
$0
$200
$163
NCOs to average loans HIP
0.80%
0.66%
1.08%
1.47%
1
1.55%
1
Provision for loan losses (PLL)
$47
$48
$55
$55
1
$58
1
PLL to average loans HIP
0.88%
0.89%
1.03%
1.02%
1
1.10%
1
PLL to NCOs
1.10x
1.35x
0.95x
0.69x
1
0.71x
1
Allowance for loan losses (ALL)
$543
$538
$526
$529
$584
ALL to loans HIP
2.51%
2.49%
2.46%
2.46%
2.70%
ALL to NPLs HIP
85.40%
90.05%
85.19%
86.14%
55.54% |
 De-risked Loan Portfolios
•
PR
has
derisked
its
commercial
loan
portfolio
by
reducing
its
exposure
in
asset
classes
with
historically
high
loss
content
Commercial
portfolio,
including
construction,
has
decreased
from
55%
of
total
loans
held-in-portfolio
to
41%
Construction
portfolio
is
down
by
88%
since
Q4
2007
SME
(2)
lending
is
down
by
55%
from
Q4
2007
•
Collateralized
exposure
now
represents
a
larger
portion
of
consumer
loan
portfolio
•
Unsecured
loans
credit
quality
has
improved
as
overall
FICO
scores
have
increased
Loan Composition (Held-in Portfolio)
18
(1) NCOs distribution represents the percentage allocation of NCOs from
Q1 2008 through Q1 2014 per each loan category (2) Small and Medium
Enterprise Legacy portfolio is comprised of certain commercial, construction
and lease financings lending products exited by the US. NCOs
$ in millions
Distribution
(1)
CRE SME (2)
$2,938
33%
$1,539
23%
($1,399)
-48%
23%
C&I SME (2)
2,287
25%
828
13%
(1,459)
-64%
28%
C&I Corp
1,592
18%
2,050
31%
458
29%
6%
Construction
1,231
14%
142
2%
(1,089)
-88%
37%
CRE Corp
892
10%
1,954
30%
1,062
119%
4%
Multifamily
64
1%
73
1%
9
14%
2%
Total
$9,004
$6,585
($2,419)
-27%
100%
Q4 2007
Variance
Q1 2014
$ in millions
Q4 2007
Q1 2014
Q4 2007
Q1 2014
Q4 2007
Q1 2014
Variance
Commercial
$7,774
$6,443
$4,515
$3,572
$12,288
$10,015
($2,273)
Consumer
3,552
3,406
1,698
600
5,249
4,006
(1,243)
Mortgage
2,933
5,425
3,139
1,245
6,071
6,670
599
Construction
1,231
142
237
35
1,468
177
(1,291)
Leases
814
547
-
-
814
547
(267)
Legacy
-
2,130
197
2,130
197
(1,933)
Total
$16,304
$15,963
$11,718
$5,649
$28,021
$21,612
($6,409)
Puerto Rico
US
Total
PR Commercial & Construction Distribution |
 Popular, Inc. Credit Ratings
•
Our senior unsecured ratings have been gradually improving since
2010:
•
Moody’s:
B1
Watch (Revised February 2014)
•
Fitch:
BB-
Stable Outlook (Reaffirmed December 2013)
•
S&P:
B+
Stable Outlook (Revised December 2011)
•
February 2014: Moody's placed BPOP on review for downgrade
•
October 2013: Moody’s revised outlook to negative
•
January 2013: Fitch raised to BB-
from B+; outlook revised to stable
•
December 2012: Moody’s downgraded BPOP to B1; stable outlook assigned
•
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 BPOP’s 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+
19 |
 FINANCIAL RESULTS
Q1 2014 |