SAN JUAN, Puerto Rico, July 14 /PRNewswire-FirstCall/ --
Popular,Inc. 's (Nasdaq: BPOP BPOPO) (the Corporation) net
income for the quarter ended June 30, 2004 totaled $127.8
million, compared with $134.6 million in the second quarter
of 2003. The results for the second quarter of 2003 included
$29.9 million in gain on sale of securities, mainly marketable
equity securities, compared with $402 thousand in the same
quarter of 2004. Earnings per common share (EPS), basic and
diluted, for the second quarter of 2004, after adjusting for
the stock split in the form of a dividend of one share for each
share outstanding effective on July 8, 2004, were $0.47 per
common share, compared with $0.50 per common share reported for
the same quarter a year earlier. Net income for the quarter ended
March 31, 2004 was $118.5 million, or $0.43 per common share, and
included $13.0 million in gain on sale of securities. The
Corporation's return on assets (ROA) and return on common equity
(ROE) for the second quarter of 2004 were 1.33% and 18.79%,
respectively, compared with 1.58% and 22.63%, respectively, for
the same period in 2003, and 1.29% and 17.95%, respectively, for
the first quarter of 2004.
For the six months ended June 30, 2004, the Corporation's net
income reached $246.3 million, compared with $233.7 million for
the same period in 2003. EPS, basic and diluted, for the six
months ended June 30, 2004 and 2003 and after adjusting for the
aforementioned stock split were $0.90 and $0.87, respectively.
ROA and ROE for the first six months of 2004 were 1.31% and 18.37%,
respectively, compared with 1.40% and 20.09%, respectively, for the
same period in 2003.
On May 12, 2004, the Board of Directors authorized a two-for-one
common stock split in the form of a stock dividend. The new shares
were distributed on July 8, 2004 to shareholders of record as of
June 18, 2004. All per share data included herein has been adjusted
to reflect the stock split.
The Corporation's net income for the second quarter of 2004 reflected
the following variances when compared to the same quarter last year:
* higher net interest income by $11.0 million
* lower provision for loan losses by $8.0 million
* decrease of $10.7 million in non-interest income due to a gain on
the sale of securities during the second quarter of 2003 by $29.9
million, partially offset by a gain on sale of property of $10.9
million in the second quarter of 2004
* higher operating expenses by $12.4 million.
"Of significant importance is the 18% increase in ending loans from
June 30, 2003. Such increase, particularly commercial and consumer
loans which grew by $1.1 billion, were the result of favorable
customer response to aggressive marketing efforts," said Richard L.
Carrion, President and Chief Executive Officer of Popular, Inc.
The increase in net interest income resulted mostly from a $4.1
billion increase in average earning assets for the quarter ended
June 30, 2004 compared with the same period in the previous year,
mostly associated with increases of $2.5 billion in mortgage loans,
$0.7 billion in commercial loans and $0.3 billion in consumer loans.
The average yield on earning assets declined 48 basis points,
resulting from a number of factors which included the origination
and purchase of earning assets with lower rates, prepayments of
higher rate mortgage related products, repricing of adjustable and
floating rate commercial loans and consumer loan promotional
campaigns. The increase in the volume of earning assets was funded
mainly through a higher average volume of borrowings and interest-
bearing deposits, which rose $2.7 billion and $0.9 billion,
respectively. The average cost of interest bearing liabilities
decreased 16 basis points. Also, non-interest bearing sources of
funds, including demand deposits and other funds, rose $0.5 billion.
The net interest yield for the quarter ended June 30, 2004, was 3.74%
compared with 4.08% for the second quarter of 2003. For the first
quarter of 2004 the net interest yield was 3.80%.
The provision for loan losses totaled $41.3 million, or 116% of net
charge-offs, for the second quarter of 2004, compared with $49.3
million or 130%, respectively, for the same period in 2003. Net
charge-offs for the quarter ended June 30, 2004, were $35.6 million
or 0.59% of average loans, compared with $38.1 million or 0.76% for
the second quarter of 2003. The decline in net charge-offs as
compared with the second quarter of 2003 is mainly due to lower
lease financing net charge-offs, which declined by $1.6 million.
Also, commercial loans net charge-offs, including construction
loans, declined by $1.1 million. The decrease in the net charge-off
ratio to average loans was reflected in all loan categories.
The decrease in non-interest income for the quarter ended June 30,
2004 compared with the same quarter last year, was mostly associated
with the aforementioned gain on the sale of securities during the
second quarter of 2003. Partially offsetting this decrease were
higher service fees, including insurance fees, debit card fees and
credit card fees and discounts. Other operating income rose in part
due to the sale of a real estate property by Banco Popular during
the second quarter of 2004, which contributed with $10.9 million
in gains. This rise was partially reduced by lower dividend income
from the Corporation's ownership participation in Telecomunicaciones
de Puerto Rico, Inc.
Operating expenses for the quarter ended June 30, 2004 increased 4%,
compared with the same period in 2003. Personnel costs increased by
$11.8 million, or 9%, mostly due to higher salaries, incentives,
performance bonuses, stock options, and other compensation. The
increases were partially offset by lower pension costs associated
in part with improvements in the fair value of plan assets.
Categories with the largest increases compared with the second
quarter of the previous year included professional fees, net
occupancy and equipment expenses. Offsetting these increases was
a decline in other operating expenses mostly associated with lower
sundry losses. The results of the second quarter of 2003 included
non-recurrent losses resulting from unauthorized credit card
transactions. The decrease in sundry losses was partly compensated
by an increase in other real estate expenses, insurance costs and
credit card interchange expenses.
At June 30, 2004 the Corporation's total assets amounted to $39.6
billion, compared with $36.1 billion at June 30, 2003 and $38.1
billion at March 31, 2004. Total loans amounted to $24.7 billion
at June 30, 2004, compared with $20.9 billion on the same date in
the previous year and $23.7 billion at March 31, 2004. Mortgage
loans accounted for the largest increase in the portfolio, rising
$2.6 billion, or 31%, since June 30, 2003 and $395 million, or 4%,
from March 31, 2004. Also, commercial and construction loans rose
$641 million, or 8%, and $275 million, or 3%, compared with June 30,
2003 and March 31, 2004, respectively, while consumer loans increased
$503 million, or 16%, and $258 million, or 8%, from each respective
period. Investment and trading securities totaled $11.6 billion at
June 30, 2004, compared with $12.3 billion at June 30, 2003, and
$11.4 billion at March 31, 2004.
The allowance for loan losses totaled $426 million at June 30, 2004,
or 1.73% of loans, compared with $398 million, or 1.90%, at the same
date in 2003, and $417 million, or 1.76%, at March 31, 2004. The
ratio of allowance for loan losses to loans continued to reflect
improvement in credit quality trends and a continued shift in the
loan portfolio mix to include a greater proportion of residential
mortgages. Non-performing assets were $602 million, or 2.44% of
ending loans at June 30, 2004, compared with $617 million, or 2.96%,
at the end of the second quarter of 2003, and $609 million, or 2.57%,
at March 31, 2004. The allowance as a percentage of non-performing
loans was 77.69% at June 30, 2004, compared with 69.83% at the end of
the second quarter of 2003 and 75.27% at March 31, 2004. Effective
for the quarter ended March 31, 2004, the Corporation adopted the
standard industry practice of placing commercial and construction
loans in non-accrual status when payments of principal or interest
are delinquent 90 days or more rather than 60 days or more. Had the
Corporation continued reporting commercial and construction loans in
non-performing status when delinquent 60 days or more, non-performing
assets would have amounted to $635 million at June 30, 2004, or 2.57%
of ending loans. The allowance as a percentage of non-performing
loans would have amounted to 73.18%.
Non-performing mortgage loans totaled $359 million or 60% of total
non- performing assets and 3% of total mortgage loans at
June 30, 2004, compared with $323 million or 52% of total non-
performing assets and 4% of total mortgage loans at June 30, 2003.
Mortgage loans net charge-offs as a percentage of the average
mortgage loan portfolio was 0.29% in the second quarter of 2004,
compared with 0.38% in the second quarter of 2003. Other real estate
assets reached $53 million at June 30, 2004, or 9% of non-performing
assets, compared with $48 million, or 8%, at June 30, 2003. On the
other hand, commercial, including construction, and lease financing
non-performing loans reflected declines of $54 million and $5
million, respectively, when compared with June 30, 2003.
Approximately $34 million of the decline in commercial and
construction non-performing loans was due to the aforementioned
change in the Corporation's policy for non-accrual commercial and
construction loans.
Deposits totaled $19.2 billion at June 30, 2004, compared with $18.3
billion at June 30, 2003, an increase of 5%. Total deposits at March
31, 2004 were $18.6 billion. The growth since June 30, 2003 was
mostly reflected in savings and time deposits, which rose $542
million and $499 million, respectively. Demand deposits declined
$89 million compared with June 30, 2003. Borrowed funds reached
$16.9 billion at June 30, 2004, from $14.4 billion on the same
date of the previous year. At March 31, 2004, borrowed funds
totaled $15.9 billion. The increase in borrowings since June 30,
2003, mostly comprised of secured borrowings arising in
securitization transactions, was mainly used to fund loan growth.
Stockholders' equity was $2,784 million at June 30, 2004, compared
with $2,813 million at June 30, 2003 and $2,950 million at March 31,
2004. Stockholders' equity at June 30, 2004 declined when compared
with the same date in the previous year mainly due to lower
accumulated other comprehensive income of $369 million, mostly
associated with unrealized losses on the securities available-for-
sale portfolio caused by rising long-term rates. When compared with
March 31, 2004, accumulated other comprehensive income decreased by
$254 million, also associated with unrealized losses on the
securities available-for-sale portfolio.
The market value of the Corporation's common stock at June 30, 2004,
was $21.39 per common share, compared with $19.27 at June 30, 2003,
and $21.55 at March 31, 2004. The Corporation's market capitalization
at June 30, 2004 was $5.7 billion, compared with $5.1 billion at June
30, 2003 and $5.7 billion at March 31, 2004. At June 30, 2004, the
Corporation's common stock had a book value per share of $9.76.
During the second quarter of 2004, Equity One, the Corporation's
mortgage and consumer lending subsidiary in the U.S. Mainland, sold
approximately $700 million in asset-backed securities, supported by
home equity loans. Also, in recent weeks, Popular North America,
Inc. , a subsidiary of Popular, Inc. , sold $400 million in fixed-
rate five-year medium-term notes. The funds raised will be used
primarily to repay outstanding short-term borrowings and the
remainder will be used to partially fund the acquisition of Quaker
City Bancorp in California, expected to be completed during the third
quarter of 2004.
The information included in this press release may contain certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based
on management's current expectations and involve certain risks and
uncertainties that may cause actual results to differ materially from
those expressed in forward- looking statements. Factors such as
changes in interest rate environment as well as general changes in
business and economic conditions may cause actual results to differ
from those contemplated by such forward-looking statements. For a
discussion of such risks and uncertainties, see the Corporation's
Annual Report on Form 10-K for the most recently ended fiscal year
as well as its filings with the U.S. Securities and Exchange
Commission. The Corporation assumes no obligation to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
Popular, Inc. is a complete financial services provider with
operations in Puerto Rico, the United States, the Caribbean and Latin
America. As the leading financial institution in Puerto Rico, the
Corporation offers full retail and commercial banking services
through its main subsidiary, Banco Popular, as well as investment
banking, auto and equipment leasing and financing, mortgage loans,
consumer lending, insurance and information processing through
specialized subsidiaries. In the United States, the Corporation has
established the largest Hispanic financial services franchise,
providing complete financial solutions to all the communities it
serves. The Corporation continues to use its expertise in technology
and electronic banking as a competitive advantage in its Caribbean
and Latin America expansion, and is exporting its 110 years of
experience to the region. Popular, Inc. has always been committed to
meeting the needs of retail and business clients through innovation,
and to fostering growth in the communities it serves.
POPULAR, INC.
Financial Summary
(In thousands, except per share data)
For the period ended
June 30,
Percent
2004 2003 Variance
Summary of Operations
Interest income $1,051,012 $1,014,940 3.55%
Interest expense 379,595 386,139 (1.69)
Net interest income 671,417 628,801 6.78
Provision for loan losses 86,027 97,534 (11.80)
Net interest income after provision
for loan losses 585,390 531,267 10.19
Other income 292,321 286,330 2.09
Gain on sale of investment securities 13,435 31,289
Trading account loss (1,551) (5,180)
Total other income 304,205 312,439 (2.64)
Salaries and benefits 270,803 250,954 7.91
Profit sharing 11,321 11,163 1.42
Amortization of intangibles 3,602 4,055 (11.17)
Other operating expenses 285,672 276,748 3.22
Total operating expenses 571,398 542,920 5.25
Income before income tax and minority
interest 318,197 300,786 5.79
Income tax 71,894 66,849 7.55
Net gain of minority interest (241)
Net income $246,303 $233,696 5.39
Net income applicable to common stock $240,347 $229,734 4.62
Earnings per common share (basic and
diluted) $0.90 $0.87
Dividends declared per common share $0.30 $0.24
Average common shares outstanding 266,087,827 265,252,594
Common shares outstanding at end of
period 266,114,566 265,306,756
Selected Average Balances
Total assets $37,787,926 $33,712,699 12.09
Loans 23,449,982 19,832,452 18.24
Earning assets 35,653,523 31,894,436 11.79
Deposits 18,643,402 17,669,845 5.51
Interest-bearing liabilities 30,554,840 27,372,136 11.63
Stockholders' equity 2,817,985 2,422,320 16.33
Performance Ratios
Net interest yield * 3.77% 3.94%
Return on assets 1.31 1.40
Return on common equity 18.37 20.09
Credit Quality Data
Non-performing assets ** $601,668 $617,146 (2.51)
Net loans charged-off 75,597 76,518 (1.20)
Allowance for loan losses 425,949 397,503 7.16
Non-performing assets to total assets** 1.52% 1.71%
Allowance for losses to loans 1.73 1.90
* Not on a taxable equivalent basis.
** Non-performing assets for the period ended June 30, 2004 are
stated based on the newly adopted non-accruing policy for commercial
and construction loans. Non-performing assets for prior periods were
not restated. At June 30, 2004, non-performing assets which are
comparable with prior periods non- accruing policy, would have
amounted to $635 million, or 1.61% of total assets.
Notes: Certain reclassifications have been made to prior periods to
conform with this period.
All common stock data has been adjusted to reflect the two-for-one
stock split effected in the form of a dividend on July 8, 2004.
For additional information contact:
Investors: Media:
Jorge A. Junquera Olga Mayoral Wilson, APR
Chief Financial Officer Senior Vice President and Manager
Senior Executive Vice President Public Relations and Communications
Telephone (787) 754-1685 Telephone: (787) 764-2004
Or visit our web site at www.popularinc.com