Exhibit 99.1

 

                

Popular, Inc. Announces Second Quarter 2021 Financial Results

 

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Net income of $218.1 million in Q2 2021, compared to net income of $262.6 million in Q1 2021.

 

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Net interest margin of 2.91% in Q2 2021, compared to 3.07% in Q1 2021; net interest margin on a taxable equivalent basis of 3.22% in Q2 2021, compared to 3.39% in Q1 2021.

 

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Credit Quality:

 

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Non-performing loans held-in-portfolio (“NPLs”) decreased by $13.0 million from Q1 2021; NPLs to loans ratio at 2.4% flat from Q1 2021;

 

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Net charge-offs (“NCOs”) was a net recovery of $1.3 million, a favorable variance by $22.3 million from Q1 2021; NCOs at (0.02)% of average loans held-in-portfolio vs. 0.29% in Q1 2021;

 

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Allowance for credit losses (“ACL”) to loans held-in-portfolio at 2.70% vs. 2.75% in Q1 2021; and

 

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ACL to NPLs at 114.7% flat from Q1 2021.

 

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Common Equity Tier 1 ratio of 16.55%, Common Equity per Share of $71.82 and Tangible Book Value per Share of $63.24 at June 30, 2021.

SAN JUAN, Puerto Rico — (BUSINESS WIRE) — Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported net income of $218.1 million for the quarter ended June 30, 2021, compared to net income of $262.6 million for the quarter ended March 31, 2021.

Ignacio Alvarez, President and Chief Executive Officer, said: “We had another strong quarter with net income of $218 million. These results reflect improving macro-economic conditions and credit quality as well as our diversified sources of revenue. Consumer spending in P.R. has increased and it is reflected in higher revenues from credit and debit card spending. Deposit balances grew by $5.9 billion and excluding forgiveness of PPP loans, we saw a small increase in our period end loans, led by strong auto loan originations in P.R. During the quarter we also continued to return capital to our shareholders, increased our common stock dividend, while maintaining a CET1 ratio of 16.6% at quarter end. While we are extremely pleased with the results for the first half of the year, we remain attentive on how the evolving health situation may impact the economic recovery.

We also continued to support the communities we serve. During the quarter we released our annual Corporate Sustainability Report, which summarizes our program, takes into account widely accepted sustainability reporting standards and highlights our commitment, progress and achievements in our efforts to operate as a responsible, ethical and sustainable company.”

 

1

Significant Events

Financial Highlights

For the second quarter of 2021, the Corporation recorded net income of $218.1 million, compared to a net income of $262.6 million for the previous quarter. The second quarter’s results include a release of the allowance for credit losses of $17.0 million driven by improving credit quality and the improved macroeconomic outlook. Net Interest income was $487.8 million, an increase of $8.7 million compared to the previous quarter, mainly due to additional funds invested from the increase in deposits. The net interest margin decreased 16 basis points to 2.91%. Total assets grew by $5.8 billion from the previous quarter, reflecting an increase in deposits across various sectors, principally from the Puerto Rico public sector.

Capital Actions

On May 3, 2021, the Corporation announced that it had entered into an accelerated share repurchase agreement (the “ASR Agreement”) to repurchase an aggregate of $350 million of Popular’s common stock. Under the terms of the ASR Agreement, on May 4, 2021 the Corporation made an initial payment of $350 million and received an initial delivery of 3,785,831 shares of Popular’s Common Stock (the “Initial Shares”). The transaction was accounted for as a treasury stock transaction. Furthermore, as a result of the receipt of the Initial Shares, the Corporation recognized in shareholders’ equity approximately $280 million in treasury stock and $70 million as a reduction in capital surplus. Upon the final settlement of the ASR Agreement, the Corporation expects to further adjust its treasury stock and capital surplus accounts to reflect the final delivery or receipt of cash or shares, which will depend on the volume-weighted average price of the Corporation’s common stock during the term of the ASR Agreement, less a discount. The final settlement of the ASR Agreement is expected to occur no later than the third quarter of 2021.

On May 6, 2021, the Corporation’s Board of Directors approved a quarterly cash dividend of $0.45 per share, an increase from the previous $0.40 per share quarterly dividend, on its outstanding common stock. The dividend was paid on July 1, 2021 to shareholders of record at the close of business on May 26, 2021.

Earnings Highlights

 

(Unaudited)		Quarters ended												Six months ended
(Dollars in thousands, except per share information)		30-Jun-21				31-Mar-21				30-Jun-20				30-Jun-21				30-Jun-20
Net interest income		$	487,802			$	479,112			$	450,881			$	966,914			$	923,976
Provision for credit losses (benefit)			(17,015	)			(82,226	)			62,449				(99,241	)			252,180
Net interest income after provision for credit losses (benefit)			504,817				561,338				388,432				1,066,155				671,796
Other non-interest income			154,540				153,653				112,055				308,193				238,698
Operating expenses			368,185				375,528				348,231				743,713				720,839
Income before income tax			291,172				339,463				152,256				630,635				189,655
Income tax expense			73,093				76,831				24,628				149,924				27,725
Net income		$	218,079			$	262,632			$	127,628			$	480,711			$	161,930
Net income applicable to common stock		$	217,726			$	262,279			$	127,275			$	480,005			$	160,877
Net income per common share-basic		$	2.67			$	3.13			$	1.49			$	5.80			$	1.83
Net income per common share-diluted		$	2.66			$	3.12			$	1.49			$	5.79			$	1.83

 

2

Net interest income on a taxable equivalent basis – Non-GAAP financial measure

Net interest income, on a taxable equivalent basis, is presented with its different components in Table D and E for the quarter and six months ended June 30, 2021 and comparable periods. Net interest income on a taxable equivalent basis is a non-GAAP financial measure. Management believes that this presentation provides meaningful information since it facilitates the comparison of revenues arising from taxable and tax-exempt sources.

Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

Net interest income for the quarter ended June 30, 2021 was $487.8 million compared to $479.1 million in the previous quarter, an increase of $8.7 million. The total net impact on net interest income of one more day in the quarter when compared to the first quarter of 2021 is estimated at $3.7 million. Net interest income, on a taxable equivalent basis, for the second quarter of 2021 was $541.2 million, an increase of $11.4 million when compared to $529.8 million in the first quarter of 2021. On a taxable equivalent basis, the total net impact on net interest income of one more day in the quarter when compared to the first quarter of 2021 is estimated at $4.0 million.

Net interest margin decreased 16 basis points to 2.91% compared to 3.07% in the previous quarter. The decrease in the net interest margin is due to a higher proportion of money market and investment securities, which carry a low yield, resulting from a higher volume of deposits in the quarter, lower interest and fees related to loans issued under the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), partially offset by higher discount amortization on purchased credit deteriorated (“PCD”) loans repaid during the quarter and a lower cost of deposits. On a taxable equivalent basis, net interest margin for the second quarter of 2021 was 3.22 % compared to 3.39% in the first quarter of 2021, a decrease of 17 basis points. The main variances in net interest income on a taxable equivalent basis were:

 

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Higher interest income from money market investments, trading and investment securities by $9.7 million due to higher volume by $4.4 billion driven by deposit increases across all business lines, mainly government deposits. The taxable equivalent yield on these assets was 1.44%, compared to 1.52% the previous quarter; and

 

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Lower interest expense on deposits by $2.1 million resulting from lower deposit cost by 4 basis points driven by a higher volume of low yielding deposits, reduction of costs in several non-maturity deposit products and renewals of time deposits in a lower interest rate environment. These positive variances in deposit costs were partially offset by higher volume of interest-bearing deposits by $3.3 billion.

Partially offset by:

 

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Lower interest income from loans by $0.6 million mainly due to the following:

 

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Lower interest income from commercial loans by $2.1 million resulting from lower SBA PPP interest income and fees of $9.2 million, partially offset by higher interest income by $7.2 million from PCD loans due to the accelerated discount amortization from several repaid loans and interest for one more day in the quarter of $1.9 million; and

 

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Auto and lease financing increasing $124 million in average balances resulting an increase in interest income of $2.5 million.

The Corporation recognized interest income of $13.9 million related to loans issued under the SBA PPP program, compared to $23.1 million in the previous quarter. These loans carried a yield of approximately 4.45% in this quarter, including the amortization of fees received under the program, compared to 7.21% last quarter.

Net interest income for the Banco Popular de Puerto Rico (“BPPR”) segment amounted to $419.2 million for the quarter ended June 30, 2021, compared to $410.3 million in the previous quarter. Net interest margin for the second quarter of 2021 was 2.91%, a decrease of 19 basis points when compared to 3.10% for the previous quarter. As discussed above, the net interest margin was negatively impacted by a higher volume of money market and investment securities, lower fees from the cancellation and amortization of PPP loans of approximately $8.8 million, partially offset by a higher amortization of discount on PCD loans. The cost of interest-bearing deposits was 0.18%, down 3 basis points from the 0.21% reported in the previous quarter. Total cost of deposits for the quarter was 0.14%, compared to 0.16% reported in the first quarter of 2021.

 

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Net interest income for Popular Bank (“PB”) was $78.7 million for the quarter ended June 30, 2021, compared to $79.2 million during the previous quarter. Net interest margin for the quarter was 3.33% lower than the 3.35% the previous quarter. The cost of interest-bearing deposits was 0.60%, compared to 0.66% in the previous quarter, decreasing for the seventh consecutive quarter. Total cost of deposits for the quarter, including demand deposits, was 0.47%, compared to 0.54% reported in the first quarter of 2021.

Non-interest income

Non-interest income increased by $0.9 million to $154.6 million for the quarter ended June 30, 2021, compared to $153.7 million for the quarter ended March 31, 2021. The variance in non-interest income was primarily driven by:

 

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higher other service fees by $5.8 million, principally at the BPPR segment, due to higher credit card fees by $4.0 million, mainly in interchange income resulting from higher transactional volumes;

 

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an increase in net gain on equity securities of $1.1 million mainly related to employee deferred compensation plans that have an offsetting expense on personnel related expenses;

 

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a favorable variance in adjustments to indemnity reserves on previously sold loans of $2.4 million mainly due to a reserve release related to loans previously sold with credit recourse; and

 

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higher other operating income by $1.1 million mainly due to higher net earnings from the combined portfolio of investments under the equity method by $2.4 million, partially offset by a lower gain on sale of daily auto rental units by $1.4 million;

partially offset by:

 

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lower income from mortgage banking activities by $9.9 million mainly due to an unfavorable variance in fair value adjustments on mortgage servicing rights (“MSRs”) of $6.8 million due to the negative adjustment in the second quarter mainly related to a reduction in estimated cash flows related to portfolio amortization and higher losses on closed derivative positions by $3.4 million.

Refer to Table B for further details.

Operating expenses

Operating expenses for the second quarter of 2021 totaled $368.2 million, a decrease of $7.3 million from the first quarter of 2021. The variance in operating expenses was driven primarily by:

 

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lower personnel cost by $5.3 million due to $6.8 million of lower commission, incentives, and other bonuses, including lower performance shares and restricted stock expenses by $5.5 million, partially offset by higher pension, postretirement and medical insurance by $2.4 million due to higher premiums accruals;

 

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lower net occupancy expense by $1.5 million due lower rent and electricity expenses;

 

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lower credit and debit card processing, volume, interchange and other expenses by $1.5 million mainly due to transaction volume rebates and incentives; and

 

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lower other operating expenses by $4.1 million due to a release of $4.5 million of mortgage servicing reserves related to claims and foreclosed loans, higher gain on sale of assets by $1.8 million and lower subsequent write-down of foreclosed auto units by $1.2 million; partially offset by higher sundry losses by $3.0 million due to higher legal reserves.

Partially offset by:

 

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higher business promotion expenses by $4.0 million due higher customer reward program expense in our credit card business by $2.5 million and higher advertising expense by $0.8 million.

Full-time equivalent employees were 8,439 as of June 30, 2021, compared to 8,469 as of March 31, 2021.

For a breakdown of operating expenses by category refer to Table B.

 

4

Income taxes

For the quarter ended June 30, 2021, the Corporation recorded an income tax expense of $73.1 million, compared to $76.8 million for the previous quarter. The decrease in income tax expense was mainly attributable to lower income before tax during the second quarter of 2021, partially offset by higher effective income tax rate in the P.R. operations and an increase in the blended state income tax rate for the U.S. operations during the second quarter of 2021. The effective tax rate (“ETR”) for the second quarter of 2021 was 25%, compared to 23% for the previous quarter. The ETR of the Corporation is impacted by the composition and source of its taxable income. The increase in the ETR rate for the second quarter of 2021 was primarily attributed to higher income at the Puerto Rico marginal tax rate.

Credit Quality

During the second quarter of 2021, the Corporation continued to exhibit favorable credit quality and low credit costs, outperforming pre-pandemic trends. These improvements have been aided by the significant government stimulus and the rebound in the economy. We will continue to closely monitor COVID-19 related risks and the effects of the receding stimulus on macroeconomic conditions and on borrower performance. However, management believes that the improvement over the last few years in the risk profile of the Corporation’s loan portfolios positions Popular to operate successfully under the current environment.

The following presents credit quality results for the second quarter of 2021:

 

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At June 30, 2021, total non-performing loans held-in-portfolio decreased by $13.0 million from March 31, 2021. BPPR’s NPLs decreased by $9.2 million, driven by lower mortgage NPLs by $20.1 million, due to lower inflows for the quarter and lower consumer NPLs by $5.1 million, mostly driven by auto loans. This decrease was in part offset by higher commercial NPLs by $16.8 million mostly due to a single $32.4 million inflow, partially offset by the resolution of an $8.8 million relationship. PB’s NPLs decreased by $3.8 million, mostly related to a construction loan transferred to loans-held-for-sale. At June 30, 2021, the ratio of NPLs to total loans held-in-portfolio remained flat at 2.4% when compared to the first quarter of 2021.

 

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Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $11.2 million quarter-over-quarter. In BPPR, total inflows increased by $17.0 million, mostly driven by higher commercial inflows of $31.9 million related to the abovementioned $32.4 million relationship. This increase was partly offset by lower mortgage inflows of $15.0 million, mostly due to improvements in early delinquencies. The NPL inflows at PB decreased by $5.8 million during the quarter.

 

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NCOs decreased by $22.3 million from the first quarter of 2021 to net recoveries of $1.3 million. BPPR ‘s NCOs decreased by $21.0 million, primarily driven by lower commercial, mortgage and construction NCOs by $8.4 million, $7.4 million and $6.4 million, respectively. The decrease reflected in the commercial NCOs was mostly due to recoveries of $7.9 million related to the resolution of the abovementioned non-performing relationship. During the second quarter of 2021, the Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was (0.02)%, compared to 0.29% in the first quarter of 2021. Refer to Table M for further information on net charge-offs and related ratios.

 

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At June 30, 2021, the allowance for credit losses (“ACL”) decreased by $15.0 million from the first quarter of 2021 to $785.8 million. The ACL incorporated updated economic scenarios for the United States and Puerto Rico, which continued to show a positive outlook of the economy. In BPPR, the ACL decreased by $19.8 million, led by improvements in commercial and mortgage loans. The decrease in the allowance for commercial loans was mainly prompted by the release of a qualitative reserve for the hotel and hospitality portfolio due to the favorable economic environment and improvements in borrower performance. The reduction in the allowance for mortgage loans was led by a combination of improvements in economic scenarios and other assumptions used to estimate the reserve, as well as lower volumes. The allowance for the PB segment increased by $4.8 million. The ratio of the allowance for credit losses to loans held-in-portfolio was 2.70% in the second quarter of 2021, compared to 2.75% in the previous quarter. The ratio of the allowance for credit losses to NPLs held-in-portfolio stood at 114.7%, flat from the previous quarter.

 

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Given that any one economic outlook is inherently uncertain, the Corporation leverages multiple scenarios to estimate its ACL. The ACL is estimated by weighting the outputs of optimistic, baseline and pessimistic scenarios. Among the three scenarios used to estimate the ACL, the baseline is assigned the highest probability, followed by the pessimistic scenario given the uncertainties in the economic outlook and downside risk. The current baseline forecast continues to show a favorable economic scenario. The 2021 forecasted GDP growth is now at 6.8% for U.S. and 3.8% for P.R., compared to 4.9% and 3.4%, respectively,

 

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in the previous 2021 forecast. The forecasted U.S. unemployment rate average for 2021 is now 5.43%. This is an improvement over the previous estimate of 6.09%. In the case of P.R., the forecasted unemployment rate average for 2021 of 8.43% was slightly higher than the previous forecast of 7.98%. However, unemployment rate levels in P.R. are expected to continue declining through 2022. The P.R. forecasted average unemployment rate for 2022 of 7.25%, is lower than the previous forecast of 7.52%.

 

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The provision for credit losses for the loans portfolios for the second quarter of 2021 reflected a benefit of $17.5 million, compared to a benefit of $75.8 million in the previous quarter. The provision for the BPPR segment was a benefit of $22.5 million, an unfavorable variance of $17.5 million compared to the previous quarter, while the provision expense for the PB segment was $5.0 million, an unfavorable variance of $40.8 million from the previous quarter. In the prior quarter, improvements in the economic forecasts prompted substantial reductions in reserves.

 

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The provision for unfunded commitments for the second quarter of 2021 reflected an expense of $0.4 million, compared to a benefit of $6.2 million during the previous quarter. The provision for credit losses in our investment portfolio was an expense of $0.1 million, compared to a benefit of $0.2 million in the first quarter of 2021. The provision for unfunded loan commitments, provision for credit losses on our loan and lease portfolios and provision for credit losses on our investment portfolio are aggregated and presented in the provision for credit losses caption in our Statement of Operations.

Non-Performing Assets

 

(Unaudited)
(In thousands)		30-Jun-21				31-Mar-21				30-Jun-20
Non-performing loans held-in-portfolio		$	685,183			$	698,142			$	760,204
Non-performing loans held-for-sale			8,700				3,549				6,778
Other real estate owned (“OREO”)			73,272				72,060				113,940
Total non-performing assets		$	767,155			$	773,751			$	880,922
Net (recoveries) charge-offs for the quarter		$	(1,291	)		$	21,030			$	64,953
Ratios:
Loans held-in-portfolio		$	29,062,617			$	29,131,628			$	29,070,553
Non-performing loans held-in-portfolio to loans held-in-portfolio			2.36	%			2.40	%			2.62	%
Allowance for credit losses to loans held-in-portfolio			2.70				2.75				3.16
Allowance for credit losses to non-performing loans, excluding loans held-for-sale			114.68				114.70				120.81
Refer to Table K for additional information.

Provision for Credit Losses (Benefit) - Loan Portfolios

 

(Unaudited)		Quarters ended												Six months ended
(In thousands)		30-Jun-21				31-Mar-21				30-Jun-20				30-Jun-21				30-Jun-20
Provision for credit losses (benefit) - loan portfolios:
BPPR		$	(22,488	)		$	(39,976	)		$	60,423			$	(62,464	)		$	173,427
Popular U.S.			4,988				(35,803	)			2,681				(30,815	)			78,672
Total provision for credit losses (benefit) - loan portfolios		$	(17,500	)		$	(75,779	)		$	63,104			$	(93,279	)		$	252,099

 

6

Credit Quality by Segment

 

(Unaudited) (In thousands)		Quarters ended
BPPR		30-Jun-21				31-Mar-21				30-Jun-20
Provision for credit losses (benefit) - loan portfolios		$	(22,488	)		$	(39,976	)		$	60,423
Net charge-offs			(1,483	)			19,474				62,143
Total non-performing loans held-in-portfolio			656,789				665,978				726,603
Allowance / loans held-in-portfolio			3.13	%			3.20	%			3.53	%
		Quarters ended
Popular U.S.		30-Jun-21				31-Mar-21				30-Jun-20
Provision for credit losses (benefit) - loan portfolios		$	4,988			$	(35,803	)		$	2,681
Net charge-offs			192				1,556				2,810
Total non-performing loans held-in-portfolio			28,394				32,164				33,601
Allowance / loans held-in-portfolio			1.57	%			1.53	%			2.13	%

 

Financial Condition Highlights

 

(Unaudited)
(In thousands)		30-Jun-21				31-Mar-21				30-Jun-20
Cash and money market investments		$	18,333,650			$	12,064,592			$	10,060,358
Investment securities			22,647,401				23,076,488				21,058,918
Loans			29,062,617				29,131,628				29,070,553
Total assets			72,657,293				66,870,268				62,845,352
Deposits			64,641,776				58,742,801				53,844,300
Borrowings			1,267,545				1,311,064				1,339,339
Total liabilities			66,842,679				60,972,709				57,065,187
Stockholders’ equity			5,814,614				5,897,559				5,780,165

 

7

Total assets increased by $5.8 billion from the first quarter of 2021, driven by:

 

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an increase of $6.3 billion in cash and money market investments mainly due to an increase in deposits;

partially offset by:

 

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a decrease of $0.4 billion in debt securities available-for-sale, mainly due to paydowns of agency mortgage-backed securities, partially offset by an increase of $0.1 billion in net unrealized gains in the portfolio and purchases of U.S. treasury securities.

Total liabilities increased by $5.9 billion from the first quarter of 2021, mainly due to an increase of $5.9 billion in deposits due to higher Puerto Rico public sector deposits by $4.3 billion and higher retail and commercial demand deposits by $1.5 billion at BPPR.

Stockholders’ equity decreased by approximately $82.9 million from the first quarter of 2021, principally due to the impact of the $350.0 million accelerated share repurchase transaction, offset by higher accumulated unrealized gains on debt securities available-for-sale by $73.0 million and net income for the quarter of $218.1 million, less declared dividends of $36.3 million on common stock and $0.4 million in dividends on preferred stock.

Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 16.55%, $71.82 and $63.24, respectively, at June 30, 2021, compared to 17.08%, $69.63 and $61.42 at March 31, 2021. Refer to Table A for capital ratios.

 

8

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s business, financial condition, results of operations, plans, objectives and future performance. These statements are not guarantees of future performance, are based on management’s current expectations and, by their nature, involve risks, uncertainties, estimates and assumptions. Potential factors, some of which are beyond the Corporation’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include, without limitation, the effect of competitive and economic factors, and our reaction to those factors, the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital market conditions, capital adequacy and liquidity, the effect of legal and regulatory proceedings (including as a result of any participation in and execution of government programs related to the COVID-19 pandemic), new accounting standards on the Corporation’s financial condition and results of operations, the scope and duration of the COVID-19 pandemic (including the appearance of new strains of the virus), actions taken by governmental authorities in response thereto, and the direct and indirect impact of the pandemic on Popular, our customers, service providers and third parties. All statements contained herein that are not clearly historical in nature, are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions, and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, are generally intended to identify forward-looking statements.

More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2020, in our Form 10-Q for the quarter ended March 31, 2021 and in our Form 10-Q for the quarter ended June 30, 2021 to be filed with the Securities and Exchange Commission. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.

About Popular, Inc.

Popular, Inc. (NASDAQ: BPOP) is the leading financial institution in Puerto Rico, by both assets and deposits, and ranks among the top 50 U.S. bank holding companies by assets. Founded in 1893, Banco Popular de Puerto Rico, Popular’s principal subsidiary, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. Popular also offers in Puerto Rico auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the mainland United States, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.

Conference Call

Popular will hold a conference call to discuss its financial results today Thursday, July 22, 2021 at 11:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.

Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through the dial-in telephone number 1-866-235-1201 or 1-412-902-4127. There is no charge to access the call.

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Sunday, August 22, 2021. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10158030.

An electronic version of this press release can be found at the Corporation’s website: www.popular.com.

 

9

Popular, Inc.

Financial Supplement to Second Quarter 2021 Earnings Release

Table A - Selected Ratios and Other Information

Table B - Consolidated Statement of Operations

Table C - Consolidated Statement of Financial Condition

Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER

Table E - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - YEAR-TO-DATE

Table F - Mortgage Banking Activities and Other Service Fees

Table G - Loans and Deposits

Table H - Loan Delinquency - PUERTO RICO OPERATIONS

Table I - Loan Delinquency - POPULAR U.S. OPERATIONS

Table J - Loan Delinquency - CONSOLIDATED

Table K - Non-Performing Assets

Table L - Activity in Non-Performing Loans

Table M - Allowance for Credit Losses, Net Charge-offs and Related Ratios

Table N - Allowance for Credit Losses - Loan Portfolios - CONSOLIDATED

Table O - Allowance for Credit Losses - Loan Portfolios - PUERTO RICO OPERATIONS

Table P - Allowance for Credit Losses - Loan Portfolios - POPULAR U.S. OPERATIONS

Table Q - Reconciliation to GAAP Financial Measures

 

10

POPULAR, INC.

Financial Supplement to Second Quarter 2021 Earnings Release

Table A - Selected Ratios and Other Information

(Unaudited)

 

		Quarters ended												Six months ended
		30-Jun-21				31-Mar-21				30-Jun-20				30-Jun-21				30-Jun-20
Basic EPS		$	2.67			$	3.13			$	1.49			$	5.80			$	1.83
Diluted EPS		$	2.66			$	3.12			$	1.49			$	5.79			$	1.83
Average common shares outstanding			81,609,435				83,899,769				85,135,522				82,748,275				87,962,040
Average common shares outstanding - assuming dilution			81,772,789				84,051,935				85,161,661				82,888,378				88,039,712
Common shares outstanding at end of period			80,656,480				84,379,180				84,184,927				80,656,480				84,184,927
Market value per common share		$	75.05			$	70.32			$	37.17			$	75.05			$	37.17
Market capitalization - (In millions)		$	6,053			$	5,934			$	3,129			$	6,053			$	3,129
Return on average assets			1.24	%			1.61	%			0.87	%			1.42	%			0.59	%
Return on average common equity			15.43	%			18.76	%			9.74	%			17.08	%			6.06	%
Net interest margin (non-taxable equivalent basis)			2.91	%			3.07	%			3.25	%			2.99	%			3.58	%
Net interest margin (taxable equivalent basis) -non-GAAP			3.22	%			3.39	%			3.56	%			3.31	%			3.93	%
Common equity per share		$	71.82			$	69.63			$	68.40			$	71.82			$	68.40
Tangible common book value per common share (non-GAAP) [1]		$	63.24			$	61.42			$	60.13			$	63.24			$	60.13
Tangible common equity to tangible assets (non-GAAP) [1]			7.09	%			7.83	%			8.15	%			7.09	%			8.15	%
Return on average tangible common equity [1]			17.58	%			21.37	%			11.23	%			19.46	%			6.97	%
Tier 1 capital			16.62	%			17.15	%			15.78	%			16.62	%			15.78	%
Total capital			19.09	%			19.62	%			18.29	%			19.09	%			18.29	%
Tier 1 leverage			7.34	%			8.06	%			8.13	%			7.34	%			8.13	%
Common Equity Tier 1 capital			16.55	%			17.08	%			15.71	%			16.55	%			15.71	%
[1]   Refer to Table Q for reconciliation to GAAP financial measures.

 

11

POPULAR, INC.

Financial Supplement to Second Quarter 2021 Earnings Release

Table B - Consolidated Statement of Operations

(Unaudited)

 

		Quarters ended								Variance				Quarter ended				Variance				Six months ended
										Q2 2021								Q2 2021
(In thousands, except per share information)		30-Jun-21				31-Mar-21				vs. Q1 2021				30-Jun-20				vs. Q2 2020				30-Jun-21				30-Jun-20
Interest income:
Loans		$	433,781			$	434,649			$	(868	)		$	429,670			$	4,111			$	868,430			$	880,116
Money market investments			4,274				3,112				1,162				2,015				2,259				7,386				14,015
Investment securities			91,706				85,690				6,016				76,884				14,822				177,396				164,796
Total interest income			529,761				523,451				6,310				508,569				21,192				1,053,212				1,058,927
Interest expense:
Deposits			28,060				30,201				(2,141	)			42,780				(14,720	)			58,261				104,881
Short-term borrowings			62				143				(81	)			645				(583	)			205				1,693
Long-term debt			13,837				13,995				(158	)			14,263				(426	)			27,832				28,377
Total interest expense			41,959				44,339				(2,380	)			57,688				(15,729	)			86,298				134,951
Net interest income			487,802				479,112				8,690				450,881				36,921				966,914				923,976
Provision for credit losses (benefit)			(17,015	)			(82,226	)			65,211				62,449				(79,464	)			(99,241	)			252,180
Net interest income after provision for credit losses (benefit)			504,817				561,338				(56,521	)			388,432				116,385				1,066,155				671,796
Service charges on deposit accounts			40,153				39,620				533				30,163				9,990				79,773				71,822
Other service fees			76,382				70,628				5,754				52,084				24,298				147,010				116,857
Mortgage banking activities			7,448				17,343				(9,895	)			3,777				3,671				24,791				10,197
Net gain (loss), including impairment, on equity securities			1,565				421				1,144				2,447				(882	)			1,986				(281	)
Net (loss) profit on trading account debt securities			(47	)			(45	)			(2	)			82				(129	)			(92	)			573
Net (loss) gain on sale of loans, including valuation adjustments on loans held-for-sale			(73	)			—				(73	)			2,222				(2,295	)			(73	)			3,179
Adjustments (expense) to indemnity reserves on loans sold			1,668				(698	)			2,366				(1,160	)			2,828				970				(5,953	)
Other operating income			27,444				26,384				1,060				22,440				5,004				53,828				42,304
Total non-interest income			154,540				153,653				887				112,055				42,485				308,193				238,698
Operating expenses:
Personnel costs
Salaries			90,294				89,335				959				93,969				(3,675	)			179,629				186,225
Commissions, incentives and other bonuses			26,374				33,218				(6,844	)			16,076				10,298				59,592				41,334
Pension, postretirement and medical insurance			13,289				10,924				2,365				11,392				1,897				24,213				21,030
Other personnel costs, including payroll taxes			24,247				26,002				(1,755	)			17,729				6,518				50,249				37,408
Total personnel costs			154,204				159,479				(5,275	)			139,166				15,038				313,683				285,997
Net occupancy expenses			24,562				26,013				(1,451	)			25,487				(925	)			50,575				50,645
Equipment expenses			22,805				21,575				1,230				20,844				1,961				44,380				42,449
Other taxes			13,205				13,959				(754	)			13,323				(118	)			27,164				27,004
Professional fees
Collections, appraisals and other credit related fees			3,486				3,320				166				2,897				589				6,806				6,778
Programming, processing and other technology services			67,152				66,366				786				59,387				7,765				133,518				122,206
Legal fees, excluding collections			2,367				2,365				2				2,184				183				4,732				5,170
Other professional fees			28,148				27,897				251				28,079				69				56,045				59,464
Total professional fees			101,153				99,948				1,205				92,547				8,606				201,101				193,618
Communications			6,005				6,833				(828	)			5,574				431				12,838				11,528
Business promotion			16,511				12,521				3,990				12,281				4,230				29,032				26,478
FDIC deposit insurance			5,742				5,968				(226	)			5,340				402				11,710				10,420
Other real estate owned (OREO) (income) expenses			(4,299	)			(4,533	)			234				(344	)			(3,955	)			(8,832	)			2,135
Credit and debit card processing, volume, interchange and other expenses			10,917				12,454				(1,537	)			9,873				1,044				23,371				20,155
Other operating expenses
Operational losses			6,528				7,896				(1,368	)			4,128				2,400				14,424				12,502

 

12

All other			9,597				12,364				(2,767	)			18,217				(8,620	)			21,961				33,640
Total other operating expenses			16,125				20,260				(4,135	)			22,345				(6,220	)			36,385				46,142
Amortization of intangibles			1,255				1,051				204				1,795				(540	)			2,306				4,268
Total operating expenses			368,185				375,528				(7,343	)			348,231				19,954				743,713				720,839
Income before income tax			291,172				339,463				(48,291	)			152,256				138,916				630,635				189,655
Income tax expense			73,093				76,831				(3,738	)			24,628				48,465				149,924				27,725
Net income		$	218,079			$	262,632			$	(44,553	)		$	127,628			$	90,451			$	480,711			$	161,930
Net income applicable to common stock		$	217,726			$	262,279			$	(44,553	)		$	127,275			$	90,451			$	480,005			$	160,877
Net income per common share - basic		$	2.67			$	3.13			$	(0.46	)		$	1.49			$	1.18			$	5.80			$	1.83
Net income per common share - diluted		$	2.66			$	3.12			$	(0.46	)		$	1.49			$	1.17			$	5.79			$	1.83
Dividends Declared per Common Share		$	0.45			$	0.40			$	0.05			$	0.40			$	0.05			$	0.85			$	0.80

 

13

Popular, Inc.

Financial Supplement to Second Quarter 2021 Earnings Release

Table C - Consolidated Statement of Financial Condition

(Unaudited)

 

														Variance
														Q2 2021 vs.
(In thousands)		30-Jun-21				31-Mar-21				30-Jun-20				Q1 2021
Assets:
Cash and due from banks		$	530,849			$	495,915			$	435,080			$	34,934
Money market investments			17,802,801				11,568,677				9,625,278				6,234,124
Trading account debt securities, at fair value			35,931				36,504				33,560				(573	)
Debt securities available-for-sale, at fair value			22,335,167				22,771,609				20,763,453				(436,442	)
Debt securities held-to-maturity, at amortized cost			88,801				89,725				95,429				(924	)
Less: Allowance for credit losses			10,214				10,096				12,735				118
Total debt securities held-to-maturity, net			78,587				79,629				82,694				(1,042	)
Equity securities			187,502				178,650				166,476				8,852
Loans held-for-sale, at lower of cost or fair value			85,315				84,214				68,725				1,101
Loans held-in-portfolio			29,286,225				29,344,620				29,250,076				(58,395	)
Less: Unearned income			223,608				212,992				179,523				10,616
Allowance for credit losses			785,790				800,797				918,434				(15,007	)
Total loans held-in-portfolio, net			28,276,827				28,330,831				28,152,119				(54,004	)
Premises and equipment, net			486,443				508,023				513,680				(21,580	)
Other real estate			73,272				72,060				113,940				1,212
Accrued income receivable			203,419				215,993				220,126				(12,574	)
Mortgage servicing rights, at fair value			119,467				122,543				141,144				(3,076	)
Other assets			1,750,151				1,713,083				1,833,444				37,068
Goodwill			671,122				671,122				671,122				—
Other intangible assets			20,440				21,415				24,511				(975	)
Total assets		$	72,657,293			$	66,870,268			$	62,845,352			$	5,787,025
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing		$	14,920,887			$	14,263,548			$	12,520,510			$	657,339
Interest bearing			49,720,889				44,479,253				41,323,790				5,241,636
Total deposits			64,641,776				58,742,801				53,844,300				5,898,975
Assets sold under agreements to repurchase			90,925				86,834				153,065				4,091
Notes payable			1,176,620				1,224,230				1,186,274				(47,610	)
Other liabilities			933,358				918,844				1,881,548				14,514
Total liabilities			66,842,679				60,972,709				57,065,187				5,869,970
Stockholders’ equity:
Preferred stock			22,143				22,143				22,143				—
Common stock			1,045				1,045				1,044				—
Surplus			4,506,659				4,571,919				4,520,333				(65,260	)
Retained earnings			2,670,885				2,489,453				2,033,782				181,432
Treasury stock			(1,290,427	)			(1,012,263	)			(1,016,486	)			(278,164	)
Accumulated other comprehensive (loss) income, net of tax			(95,691	)			(174,738	)			219,349				79,047
Total stockholders’ equity			5,814,614				5,897,559				5,780,165				(82,945	)
Total liabilities and stockholders’ equity		$	72,657,293			$	66,870,268			$	62,845,352			$	5,787,025

 

14

Popular, Inc.

Financial Supplement to Second Quarter 2021 Earnings Release

Table D - Analysis of Levels and Yields on a Taxable Equivalent Basis (Non-GAAP) - QUARTER

(Unaudited)

 

		Quarters ended																																				Variance
		30-Jun-21												31-Mar-21												30-Jun-20												Q2 2021 vs. Q1 2021												Q2 2021 vs. Q2 2020
($ amounts in millions)		Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate
Assets:
Interest earning assets:
Money market, trading and investment securities		$	38,136			$	137.5				1.44	%		$	33,756			$	127.8				1.52	%		$	27,356			$	111.5				1.64	%		$	4,380			$	9.7				(0.08	)%		$	10,780			$	26.0				(0.20	)%
Loans:
Commercial			13,539				176.9				5.24				13,624				179.0				5.33				13,350				168.8				5.09				(85	)			(2.1	)			(0.09	)			189				8.1				0.15
Construction			858				11.6				5.43				911				11.9				5.30				935				13.2				5.69				(53	)			(0.3	)			0.13				(77	)			(1.6	)			(0.26	)
Mortgage			7,765				99.4				5.12				7,869				98.4				5.00				7,038				92.2				5.24				(104	)			1.0				0.12				727				7.2				(0.12	)
Consumer			2,431				68.7				11.34				2,513				70.4				11.36				2,918				82.9				11.43				(82	)			(1.7	)			(0.02	)			(487	)			(14.2	)			(0.09	)
Auto			3,280				70.1				8.58				3,203				68.2				8.63				2,957				66.0				8.98				77				1.9				(0.05	)			323				4.1				(0.40	)
Lease financing			1,262				19.0				6.01				1,215				18.4				6.04				1,082				16.1				5.97				47				0.6				(0.03	)			180				2.9				0.04
Total loans			29,135				445.7				6.13				29,335				446.3				6.15				28,280				439.2				6.24				(200	)			(0.6	)			(0.02	)			855				6.5				(0.11	)
Total interest earning assets		$	67,271			$	583.2				3.47	%		$	63,091			$	574.1				3.67	%		$	55,636			$	550.7				3.98	%		$	4,180			$	9.1				(0.20	)%		$	11,635			$	32.5				(0.51	)%
Allowance for credit losses - loan portfolio			(801	)											(890	)											(926	)											89												125
Allowance for credit losses - investment securities			(10	)											(10	)											(13	)											—												3
Other non-interest earning assets			3,906												3,895												4,100												11												(194	)
Total average assets		$	70,366											$	66,086											$	58,797											$	4,280											$	11,569
Liabilities and Stockholders’ Equity:
Interest bearing deposits:
NOW and money market		$	25,102			$	8.0				0.13	%		$	22,674			$	8.3				0.15	%		$	19,392			$	11.6				0.24	%		$	2,428			$	(0.3	)			(0.02	)%		$	5,710			$	(3.6	)			(0.11	)%
Savings			15,384				6.9				0.18				14,364				7.0				0.20				11,856				10.2				0.35				1,020				(0.1	)			(0.02	)			3,528				(3.3	)			(0.17	)
Time deposits			7,104				13.2				0.74				7,265				14.9				0.83				8,730				21.0				0.97				(161	)			(1.7	)			(0.09	)			(1,626	)			(7.8	)			(0.23	)
Total interest-bearing deposits			47,590				28.1				0.24				44,303				30.2				0.28				39,978				42.8				0.43				3,287				(2.1	)			(0.04	)			7,612				(14.7	)			(0.19	)
Borrowings			1,316				13.9				4.24				1,344				14.1				4.23				1,336				14.9				4.48				(28	)			(0.2	)			0.01				(20	)			(1.0	)			(0.24	)
Total interest-bearing liabilities			48,906				42.0				0.34				45,647				44.3				0.39				41,314				57.7				0.56				3,259				(2.3	)			(0.05	)			7,592				(15.7	)			(0.22	)
Net interest spread											3.13	%											3.28	%											3.42	%											(0.15	)%											(0.29	)%
Non-interest bearing deposits			14,920												13,394												11,006												1,526												3,914
Other liabilities			857												1,351												1,203												(494	)											(346	)
Stockholders’ equity			5,683												5,694												5,274												(11	)											409
Total average liabilities and stockholders’ equity		$	70,366											$	66,086											$	58,797											$	4,280											$	11,569
Net interest income / margin on a taxable equivalent basis (Non-GAAP)						$	541.2				3.22	%						$	529.8				3.39	%						$	493.0				3.56	%						$	11.4				(0.17	)%						$	48.2				(0.34	)%
Taxable equivalent adjustment							53.4												50.7												42.1												2.7												11.3
Net interest income / margin non-taxable equivalent basis (GAAP)						$	487.8				2.91	%						$	479.1				3.07	%						$	450.9				3.25	%						$	8.7				(0.16	)%						$	36.9				(0.34	)%

 

15