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Popular, Inc. Reports Net Income Of $65.7 Million For The Quarter Ended June 30, 2012

Stocks in this article: BPOP

FTEs were 8,093 as of June 30, 2012, compared with 8,329 as of December 31, 2011 and 8,074 as of March 31, 2012.

Income taxes

Income tax benefit amounted to $77.9 million for the quarter ended June 30, 2012, compared with an income tax expense of $16.2 million for the first quarter of 2012. The positive variance in income tax was principally related to the previously mentioned tax benefit of $72.9 million from the Closing Agreement with the P.R. Treasury and to lower taxable income in the Corporation’s Puerto Rico operations for the second quarter of 2012.

Credit Quality

Most credit quality metrics continued to demonstrate positive trends driven by actions taken by the Corporation to address problem loans and mitigate the overall credit risk.

  • Net charge-offs, excluding covered loans, for the quarter ended June 30, 2012 decreased by $10.1 million, when compared with the quarter ended March 31, 2012. Annualized net charge-offs to average non-covered loans held-in-portfolio decreased 20 basis points, from 2.13% for the quarter ended March 31, 2012 to 1.93% for the quarter ended June 30, 2012. The reduction was principally due to lower net charge-offs from the commercial loan portfolio in the BPPR and BPNA reportable segments by $14.7 million. Refer to Table J for further information on the Corporation’s net charge-offs and related ratios.
  • Non-performing loans held-in-portfolio, excluding covered loans, decreased by $120 million from March 31, 2012 to June 30, 2012. The decrease was mostly attributed to reductions from the commercial, legacy and mortgage loan portfolios. As of June 30, 2012, non-performing commercial loans held-in-portfolio in the BPPR and BPNA reportable segments decreased by $30 million and $22 million, respectively, when compared with March 31, 2012. Non-performing legacy loans decreased by $24 million when compared with the prior quarter. Non-performing mortgage loans held-in-portfolio as of June 30, 2012 amounted to $633 million, a decrease of $34 million compared with March 31, 2012. The decrease was driven by non-performing loans from the residential mortgage loan portfolio of the BPPR reportable segment, prompted by higher levels of troubled debt restructured (“TDRs”) loans returning to accrual status, and a slowdown in the inflows of non-performing loans. Refer to Table I for the activity in non-performing loans, excluding covered loans and loans held-for-sale.
  • The allowance for loan losses to loans held-in-portfolio ratio, excluding covered loans, stood at 3.14% as of June 30, 2012 compared with 3.25% as of March 31, 2012. The general and specific reserves related to non-covered loans amounted to $561 million and $88 million, respectively, as of June 30, 2012, compared with $589 million and $76 million, respectively, as of March 31, 2012. The decrease in the general reserve component was mainly driven by lower loss trends in the commercial, legacy and consumer loan portfolios, primarily reflecting the improvements in the credit environment. Nonetheless, the residential mortgage loan portfolio of the BPPR reportable segment required higher allowance levels mainly due to higher specific reserves for loans restructured under the Corporation’s loss mitigation program. Refer to Tables H through M for detailed credit quality information, including the activity in the allowance for loan losses.

Refer to the section below for explanations on the main variances.

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