Market Overview

Popular, Inc. Announces Fourth Quarter Financial Results

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  • Net loss of $102.2 million for the fourth quarter of 2017,
    reflecting a non-cash income tax expense of $168.4 million, related to
    the impact of the Federal Tax Cut and Jobs Act on the Corporation's
    U.S. deferred tax asset
  • Fourth quarter adjusted net income of $66.2 million
  • Net income of $107.7 million and adjusted net income of $276.0
    million for the year 2017
  • Net interest margin of 3.90% in Q4 2017, compared to 3.96% in Q3
    2017
  • Credit Quality (excluding "covered" loans):
    • Non-performing loans held-in-portfolio ("NPLs") decreased by
      $35.0 million from Q3 2017; NPLs to loans ratio at 2.3% vs. 2.5%
      in Q3 2017;
    • Net charge-offs ("NCOs") increased by $40.7 million; NCOs at
      1.61% of average loans held-in-portfolio vs. 0.92% in Q3 2017. The
      fourth quarter results include $31.6 million related to the U.S.
      taxi medallion portfolio;
    • Provision expense of $70.0 million vs. $157.7 million in Q3
      2017;
    • Allowance for loan losses of $590.2 million vs. $613.9 million
      in Q3 2017; allowance for loan losses to loans held-in-portfolio
      at 2.43% vs. 2.65% in Q3 2017; and
    • Allowance for loan losses to NPLs at 107.1% vs. 104.8% in Q3
      2017.
  • Common Equity Tier 1 ratio of 16.30%, Common Equity per Share of
    $49.51 and Tangible Book Value per Share of $43.02 at December 31, 2017

Popular, Inc. (the "Corporation," "Popular," "we," "us," "our")
(NASDAQ:BPOP) reported a net loss of $102.2 million for the quarter
ended December 31, 2017, compared to a net income of $20.7 million for
the quarter ended September 30, 2017, reflecting a non-cash income tax
expense of $168.4 million during the quarter, due to the impact of the
Federal Tax Cut and Jobs Act in the Corporation's U.S. deferred tax
asset.

Ignacio Alvarez, President and Chief Executive Officer, said: "While our
fourth quarter and year end results reflected the impact of a
significant non-cash charge to earnings due to the recently enacted
federal tax reform, this charge had no impact on regulatory capital. The
fourth quarter results were also impacted by the effects of hurricanes
Maria and Irma. However, notwithstanding this impact, we saw growth in
our net interest income on a year over year basis. I am also pleased to
report that our operations have substantially recovered from the impact
of the storms with 164 of our branches in P.R. and the U.S. Virgin
Islands fully operational. We are also beginning to see increased loan
demand in our consumer loans portfolios, specially in auto loans. We
remained pleased with our U.S. operations which experienced a 16% growth
in commercial loans during 2017."

Significant Events

Hurricanes Irma and Maria

During the fourth quarter of 2017, the Corporation continued normalizing
its operations after the impact of Hurricanes Irma and Maria (the
"hurricanes") that made landfall in September 2017. The government's
restoration of the electric and telecommunication services in the areas
in which our branch network operates was the most critical factor
leading the Corporation to operate under improved conditions.
Restoration of the island's electric infrastructure and the
telecommunications network, as well as the speed of such restoration,
remain the most critical challenges for Puerto Rico's recovery from the
hurricanes. Power generation is currently at approximately 85% of normal
electricity production, up from 30% at the end of October, now reaching
67% of all customers.

The Corporation continued to assess the impact of the hurricanes on its
buildings and operations, including the impact on its customers,
potential credit losses and reduced revenue streams as a result of the
business disruptions, as further detailed below. Additionally, relief
efforts by the Corporation and our employees continued throughout the
quarter, including the loan payment moratorium provided to consumer and
commercial borrowers.

As of January 12, 2018, 164 of Banco Popular de Puerto Rico's ("BPPR")
bank branches are open and 558 ATMs are operating. Popular is working on
a plan to reopen its remaining closed retail locations as soon as
possible. In the month of December 2017, our client debit and credit
card purchase activity exceeded the December 2016 activity,
demonstrating significant improvement in economic activity on the island
and progress towards normalized levels.

Impact on Earnings Related to Hurricanes

The following summarizes the estimated impact on the Corporation's
earnings for the third and fourth quarter of 2017 as a result of the
impact caused by Hurricanes Irma and Maria, net of estimated insurance
receivables of $1.1 million.

Quarter ended Quarter ended Year ended
(In thousands) September 30, 2017 December 31, 2017 December 31, 2017
Provision for loan losses[1] $ 69,887 $ (2,272) $ 67,615
Provision for indemnity reserves on loans sold $ - $ 3,436 $ 3,436
Operating expenses:
    Personnel costs $ 58 $ 1,783 $ 1,841
Net occupancy expenses 468 2,437 2,905
Equipment expenses - 531 531
Business promotion
Donations 1,123 125 1,248
    Other sponsorship and promotions expenses   203   2,169   2,372
    Total business promotion   1,326   2,294   3,620
Professional fees - 167 167
Communications - 33 33
OREO expenses 2,685 208 2,893
Other expenses
Write-down of premises and equipment 3,932 (306) 3,626
    Other operating expense   1,033   332   1,365
    Total other expenses   4,965   26   4,991
  Total operating expenses $ 9,502 $ 7,479 $ 16,981
Total pre-tax hurricane expenses and provision for loan and losses $ 79,389 $ 8,643 $ 88,032
[1] Includes $2.3 million and $3.5 million in provision for covered
loans for the quarters ended December 31, 2017 and September 30,
2017, respectively.

Provision for Loan Losses

As of the end of the fourth quarter of 2017, the Corporation maintained
a reserve for loan losses of $117.6 million, for non-covered loans,
based on management's best estimate of the impact of the hurricanes on
the Corporation's loan portfolios. This represents a downward adjustment
of $4.6 million from the amounts initially estimated at the end of the
third quarter of 2017. Also, during the fourth quarter the Corporation
increased its estimate of losses associated with the hurricanes for the
covered portfolio by $10.2 million resulting in an incremental provision
expense of $2.3 million during the quarter. The Corporation may make
further adjustments to these estimates as more information becomes
available. Refer to additional information on the Credit Quality section
of this earnings release.

Indemnity reserve

The Corporation services a portfolio of loans amounting to $1.5 billion
at December 31, 2017 which were previously sold by the Corporation with
credit recourse. The Corporation has estimated additional losses
associated with the potential repurchase liability of loans subject to
credit recourse as a result of the hurricanes. For the fourth quarter of
2017, the provision for indemnity reserves of $11.1 million included
$3.4 million to account for these estimated losses. At December 31, 2017
the reserve for loans subject to credit recourse amounted to $58.8
million.

Operating Expenses

As detailed in the table above the results for the third and fourth
quarters of 2017 include expenses related to structural damages caused
by the hurricanes to the Corporation's branches, buildings and
repossessed properties. At the end of the fourth quarter, the
Corporation has recorded year to date expenses related to structural
damages of $6.5 million, net of the related insurance receivable of $1.1
million, a downward adjustment of $0.3 million and $6.4 million,
respectively, from the initial estimates at the end of the third
quarter. The results also include other operating expenses for costs
such as donations, debris removal, fuel for backup generators, satellite
telecommunication, personnel support and other ancillary costs
associated with hurricane recovery efforts.

Revenue Reduction

In addition to the previously mentioned incremental provision and direct
operating expenses, results for the third and fourth quarters of 2017
were impacted by the hurricanes in the form of a reduction in revenue
resulting from reduced merchant transaction activity, the waiver of
certain late fees and service charges to businesses and consumers in
hurricane-affected areas, as well as the economic and operational
disruption on the Corporation's mortgage origination, servicing and loss
mitigation activities. For the fourth quarter of 2017, the Corporation
estimates that these revenue captions resulted in a decrease in income
of approximately $20 million when compared to pre-hurricane levels,
taking into account the earnings for the comparative quarter of the
previous year, among other measures, primarily driven by the disruption
in our operations. This compares to approximately $11 million impact
during the third quarter.

While significant progress has been made in economic and transactional
activity since September, the continued impact on transactional and
collection based revenues will depend on the speed at which electricity,
telecommunications and general merchant services can be restored across
the region.

Refer to the Interest Income, Non-Interest Income and Expense sections
of this earnings release for further information.

Tax Cut and Jobs Act

On December 22, 2017, the Tax Cut and Jobs Act (the "Act") was signed
into law by President Trump. The Act, among other things, reduced the
maximum corporate tax rate from 35% to 21% in the U.S. As a result,
during the fourth quarter of 2017 the Corporation recorded an income tax
expense of $168.4 million, related to the write-down of the deferred tax
asset ("DTA") from its U.S. operations.

The Act contains other provisions, effective on January 1, 2018, which
may impact the Corporation's tax calculations and related income tax
expense in future years. Management will continue to evaluate the impact
of the Act and may make further adjustments as a result of additional
analysis and additional guidance issued on the legislation.

Earnings Highlights                      
 
(Unaudited)   Quarters ended Years ended
(Dollars in thousands, except per share information)   31-Dec-17   30-Sep-17   31-Dec-16 31-Dec-17   31-Dec-16
Net interest income $387,216 $378,171 $355,405 $1,501,964 $1,422,055
Provision for loan losses 70,001 157,659 40,924 319,682 171,126
Provision (reversal) for loan losses - covered loans [1]   1,487   3,100   441 5,742   (1,110)
Net interest income after provision for loan losses 315,728 217,412 314,040 1,176,540 1,252,039
FDIC loss-share income (expense) 2,614 (3,948) (130,334) (10,066) (207,779)
Other non-interest income 83,517 104,322 130,159 429,233 505,715
Goodwill impairment charge - - - - 3,801
Other operating expenses   321,955   317,088   320,871 1,257,196   1,251,834
Income (loss) from continuing operations before income tax 79,904 698 (7,006) 338,511   294,340
Income tax expense (benefit)   182,058   (19,966)   (1,766) 230,830   78,784
(Loss) income from continuing operations   (102,154)   20,664   (5,240) 107,681   215,556
Income from discontinued operations, net of tax   -   -   1,135 -   1,135
Net (loss) income   $(102,154)   $20,664   $(4,105) $107,681   $216,691
Net (loss) income applicable to common stock   $(103,085)   $19,734   $(5,036) $103,958   $212,968
Net (loss) income per common share - Basic   $(1.01)   $0.19   $(0.06) $1.02   $2.05
Net (loss) income per common share - Diluted   $(1.01)   $0.19   $(0.06) $1.02   $2.05
Net income per common share from discontinued operations - Basic   $-   $-   $0.01 $-   $0.01
Net income per common share from discontinued operations - Diluted   $-   $-   $0.01 $-   $0.01
[1] Covered loans represent loans acquired in the Westernbank
FDIC-assisted transaction that are covered under an FDIC
loss-sharing agreement.

Adjusted results – Non-GAAP

The Corporation prepared its Consolidated Financial Statement using
accounting principles generally accepted in the U.S. ("U.S. GAAP" or the
"reported basis"). In addition to analyzing the Corporation's results on
a reported basis, management monitors the "Adjusted net income" of the
Corporation and excludes the impact of certain transactions on the
results of its operations. Management believes that the "Adjusted net
income" provides meaningful information to investors about the
underlying performance of the Corporation's ongoing operations. The
"Adjusted net income" is a non-GAAP financial measure.

No adjustments are reflected for the third quarter of 2017.

(Unaudited)            
(In thousands)   31-Dec-17
    Income tax  

Impact on net

    Pre-tax   effect  

loss

U.S. GAAP Net loss $(102,154)
Non-GAAP Adjustments:
Impact of the Tax Cut and Jobs Act[1]   -   168,358   168,358
Adjusted net income (Non-GAAP)           $66,204

[1]On December 22, 2017, the Tax Cut and Jobs Act ("the Act")
was signed into law by the President of the United States. The Act,
among other things, reduced the maximum federal Corporate tax rate from
35% to 21%. The adjustment reduced the DTA related to the Corporation's
U.S. operations as a result of a lower realizable benefit at the lower
tax rate.

Net interest income

Net interest income for the quarter ended December 31, 2017 was $387.2
million, compared to $378.2 million for the previous quarter. Net
interest margin was 3.90% for the quarter compared to 3.96% for the
previous quarter.

The increase of $9.0 million in net interest income was mainly related
to the following:

Positive variances:

  • Higher income from money market investments by $2.7 million due to
    both a higher average volume of funds available to invest related to a
    higher balance of deposits mainly from the Puerto Rico government
    deposits and higher yield by 5 basis points due to the increase in
    rates at the end of 2017;
  • higher income from investment securities due to higher volume related
    to U.S. Treasury securities acquired during the fourth quarter and
    higher yield on those securities. The increase in the portfolio yield
    of 2 basis points accounts for $1.4 million additional income for the
    quarter while the increase in volume represents an increase of $1.8
    million;
  • higher income from commercial loans by $1.7 million due to higher
    volume predominantly related to the loan growth in the U.S.;
  • higher income from the consumer loans portfolio by $3.5 million or 39
    basis points mainly driven by a higher yield from the credit card
    portfolio; and
  • lower cost of interest bearing deposits by 2 basis points, or $0.1
    million, mainly NOW and money market deposits, partially offset by
    higher volumes from government, retail and commercial clients.

Negative variances:

  • Lower income from mortgage loans by $1.8 million, or 12 basis points
    mostly due to the waiver of late payment fees to clients.

BPPR's net interest income amounted to $328.8 million for the quarter
ended December 31, 2017, compared to $321.1 million for the previous
quarter. The increase of $7.7 million in net interest income was mainly
due to higher income from money market investments resulting from higher
volumes and yields, as previously stated. Also, a higher volume and
yield of investment securities driven by recent U.S. Treasury purchases
contributed to the increase. Higher volume of loans also contributed to
the increase in interest income, mainly higher yield from the credit
card portfolio, partially offset by lower income from mortgage loans
driven by the waiver of late payment fees related to the hurricanes. The
net interest margin for the fourth quarter was 4.21%, a decline of 7
basis points when compared to 4.28% for the previous quarter. The
decrease in net interest margin results mainly from the composition of
earning assets, which has shifted towards lower yielding assets
resulting from higher balances in Fed Funds, mainly due to higher
balances of Puerto Rico government deposits and the acquisition of
investment securities. BPPR's earning assets yielded 4.54%, compared to
4.63% in the previous quarter, while the cost of interest bearing
liabilities was 0.47%, or two basis points lower than the 0.49% in the
previous quarter.

Banco Popular North America's ("BPNA") net interest income was $72.7
million, compared to $71.5 million in the previous quarter, mainly due
to higher volume of commercial and construction loans, partially offset
by the related funding costs. Net interest margin decreased 4 basis
points to 3.46%, compared to 3.50% for the previous quarter mostly due
to higher cost of funds. U.S. earning assets yielded 4.28% compared to
4.29% in the previous quarter, while the cost of interest bearing
liabilities was 1.06% compared to 1.03% in the previous quarter.

Non-interest income

Non-interest income amounted to $86.1 million for the quarter ended
December 31, 2017, compared to $100.4 million for the previous quarter.
The results for the quarter reflect a reduction in various revenue
streams, mostly as a result of the impact of the hurricanes. The
unfavorable variance of $14.2 million in non-interest income was
primarily driven by:

  • Lower service charge on deposits accounts by $5.4 million due to lower
    transactional cash management billings primarily due to the effects of
    Hurricane Maria;
  • lower other service fees by $5.0 million mainly credit cards fees due
    to the waiver of late payment fees and debit card fees at BPPR as part
    of the hurricane relief efforts, largely impacted by lower interchange
    income resulting from lower transaction volumes due to the impact of
    the hurricanes;
  • lower income on mortgage banking activities by $7.1 million in part
    due to $2.2 million in lower mortgage servicing fees, which are
    recognized as loan payments are collected, due to lower mortgage
    payments from the moratoriums offered as part of the hurricanes relief
    efforts; higher unfavorable fair value adjustments on mortgage
    servicing rights by $2.0 million; and lower net gain on sale of loans
    mostly due to lower volume from securitization transactions; and
  • unfavorable variance in adjustments to indemnity reserves of $4.7
    million due to an increase in the reserves for credit recourse and
    representation and warranties; including $3.4 million in incremental
    reserves estimated due to the hurricanes impact.

These negative variances were partially offset by:

  • Favorable variance on the FDIC loss-share expense by $6.6 million due
    to a change in the related true-up payment obligation as a result of
    an increase in the discount rate; and
  • higher other operating income by $1.5 million mainly due to higher
    earnings from investments under the equity method.

Refer to Table B for further details.

Financial Impact of the 2010 FDIC-Assisted Transaction          
 
(Unaudited)   Quarters ended Years ended
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16 31-Dec-17   31-Dec-16
 

Income Statement

Interest income on WB loans $36,011 $35,939 $39,642 $148,033 $175,207
Total FDIC loss-share income (expense) 2,614 (3,948) (130,334) (10,066) (207,779)
Provision (reversal) for loan losses- WB loans   2,501   14,751   (2,292) 16,336   (3,318)
Total revenues (expenses) less provision (reversal) for loan losses   $36,124   $17,240   $(88,400) $121,631   $(29,254)
 

Balance Sheet

WB loans $1,706,140 $1,705,531 $1,861,106
FDIC loss-share asset 45,192 48,470 69,334
FDIC true-up payment obligation   164,858   166,876   153,158        

See additional details on accounting for the 2010 FDIC-Assisted
transaction in Table O.

Operating expenses

Operating expenses amounted to $322.0 million for the fourth quarter of
2017, an increase of $4.9 million when compared to the third quarter of
2017. The increase in operating expenses was driven primarily by:

  • Higher net occupancy expense by $1.6 million mostly due to higher
    repair and maintenance expenses at BPPR related to the hurricanes;
  • higher professional fees by $8.8 million mainly associated with the
    impact of consulting and advisory engagements that carried over from
    Q3 into Q4 due to the hurricane related disruptions in the third
    quarter;
  • higher business promotion expense by $3.1 million mainly due to higher
    advertising and promotion expense related to disaster relief
    activities and communications in response to the hurricanes; and
  • higher FDIC deposit insurance by $1.2 million, mainly due to increased
    asset base.

These increases were partially offset by:

  • Lower OREO expenses by $4.4 million due to the write-down of $2.7
    million recorded during the third quarter related to the impact of the
    hurricanes on commercial, construction and mortgage properties at
    BPPR; and
  • lower other operating expenses by $5.2 million as a result of $3.9
    million of write-down of premises and equipment related to the
    hurricanes, recorded during the third quarter, lower printing and
    supplies and lower sundry losses.

Non-personnel credit-related costs, which include collections,
appraisals, credit related fees and OREO expenses, amounted to $10.6
million for the fourth quarter of 2017, compared to $15.3 million for
the third quarter of 2017. The decrease was principally due to lower
write-downs on OREO at BPPR.

Full-time equivalent employees were 7,784 as of December 31, 2017,
compared to 7,787 as of September 30, 2017.

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

Income taxes

For the quarter ended December 31, 2017, the Corporation recorded an
income tax expense of $182.1 million, compared to a benefit of $20.0
million for the previous quarter. As discussed above, the results for
the fourth quarter include an income tax expense of $168.4 million from
the write down of the DTA of the Corporation's U.S. operations, as a
result of the Act, which reduced the maximum federal corporate tax rate
from 35% to 21%. The Act contains other provisions, effective on January
1, 2018, which may impact the Corporation's tax calculations and related
income tax expense in future years. Management will continue to evaluate
the impact of the Act and may make further adjustments as a result of
additional analysis and additional guidance issued on the legislation.
At December 31, 2017, the Corporation had a deferred tax asset amounting
to $1.1 billion, net of a valuation allowance of $0.4 billion. The DTA
related to the U.S. operations was $0.3 billion, net of a valuation
allowance of $0.4 billion.

The income tax benefit for the third quarter reflected the impact of the
losses related to the hurricanes, which resulted in a reduction of
taxable income and the related effective tax rate in our Puerto Rico
operations.

The effective tax rate of the Corporation is impacted by the composition
and source of its taxable income. For 2018, the Corporation expects its
consolidated effective tax rate to range from 21% to 24%.

Credit Quality

The Corporation continues to monitor asset quality measures given the
impact of Hurricanes Irma and Maria on the loan portfolios and the
moratorium granted to certain consumer and commercial borrowers, which
have led to lower inflows to non-performing loans and NPL balances. The
U.S. operation continued to reflect strong growth and favorable credit
quality metrics, once the impact of the U.S. taxi medallion portfolio
acquired from the FDIC in the assisted sale of Doral Bank is excluded.
The Corporation will continue to monitor changes in credit quality
trends given the continued challenges in Puerto Rico, heightened by
Hurricane María. The following presents asset quality results for the
fourth quarter of 2017:

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased
    by $81.4 million quarter-over-quarter, mainly driven by lower inflows
    in the P.R. mortgage portfolio of $95.7 million, prompted by the
    payment plan implemented post Hurricane Maria.
  • Total non-performing loans held-in-portfolio decreased by $35.0
    million from the third quarter of 2017, driven by lower P.R. mortgage
    NPLs of $31.3 million, primarily driven by payments and charge-offs,
    as inflows were minimal due to the payment moratorium post Hurricane
    María. At December 31, 2017, the ratio of NPLs to total loans
    held-in-portfolio stood at 2.3% compared to 2.5% in the third quarter
    of 2017.
  • Net charge-offs increased by $40.7 million from the third quarter of
    2017, driven by: (i) higher U.S. commercial NCOs by $26.7 million
    mainly related to the U.S. taxi medallion portfolio (ii) higher P.R.
    commercial NCOs of $8.9 million related to two previously reserved
    relationships, and (iii) higher P.R. mortgage NCOs of $6.5 million
    impacted by the temporary suspension of collection and foreclosure
    activities after the hurricanes. The Corporation's ratio of annualized
    net charge-offs to average non-covered loans held-in-portfolio was at
    1.61%, compared to 0.92% in the third quarter of 2017. Refer to Table
    J for further information on net charge-offs and related ratios.
  • The allowance for loan losses decreased by $23.7 million from the
    third quarter of 2017 to $590.2 million. The P.R. segment ALLL
    decreased by $6.1 million, mostly driven by a $6.5 million decrease as
    a result of the annual ALLL review and recalibration. The
    environmental factors reserve associated with the impact of Hurricane
    Maria on the loan portfolios decreased by $4.6 million to $117.6
    million, compared to $122.2 million in the previous quarter.
    Management will continue to carefully assess and review the exposure
    of the portfolios to hurricane-related factors, economic trends, and
    their effect on credit quality as additional information becomes
    available. The U.S. segment ALLL decreased by $17.5 million, driven by
    $31.6 million U.S. taxi medallion related charge-offs.
  • The general and specific reserves related to non-covered loans totaled
    $481.1 million and $109.1 million, respectively, at quarter-end,
    compared with $498.7 million and $115.2 million, respectively, as of
    September 30, 2017. The ratio of the allowance for loan losses to
    loans held-in-portfolio was 2.43% in the fourth quarter of 2017,
    compared to 2.65% from the previous quarter.
  • The ratio of the allowance for loan losses to NPLs held-in-portfolio
    increased to 107.1%, compared to 104.8% in the previous quarter.
  • The provision for loan losses for non-covered loans for the fourth
    quarter of 2017 decreased by $87.7 million quarter-over-quarter, as
    the prior quarter included $66.4 million related to the impact of
    Hurricane Maria on the P.R. loan portfolios. Excluding this impact,
    the provision for the P.R. segment increased by $4.3 million, while
    the U.S. provision decreased by $25.5 million. The U.S. decrease was
    attributed to higher impairments for the U.S. taxi medallion purchased
    credit impaired loans that resulted in a provision expense of $37.0
    million and $10.2 million in the third and fourth quarters,
    respectively. The provision to net charge-offs ratio was 74.7% in the
    fourth quarter of 2017, compared to 297.4% in the previous quarter.

Non-Performing Assets      
(Unaudited)            
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16
Total non-performing loans held-in-portfolio, excluding covered loans $550,957 $585,928 $557,915
Other real estate owned ("OREO"), excluding covered OREO   169,260   176,728   180,445
Total non-performing assets, excluding covered assets   720,217   762,656   738,360
Covered loans and OREO   22,948   24,951   36,044
Total non-performing assets   $743,165   $787,607   $774,404
Net charge-offs for the quarter (excluding covered loans)   $93,675   $53,009   $56,216
 
 
Ratios (excluding covered loans):            
Non-covered loans held-in-portfolio $24,292,794 $23,173,450 $22,773,747
Non-performing loans held-in-portfolio to loans held-in-portfolio 2.27% 2.53% 2.45%
Allowance for loan losses to loans held-in-portfolio 2.43 2.65 2.24
Allowance for loan losses to non-performing loans, excluding loans
held-for-sale
  107.12   104.77   91.47
 
Refer to Table H for additional information.
Provision for Loan Losses        
 
(Unaudited)   Quarters ended   Years ended
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16   31-Dec-17 31-Dec-16
Provision for loan losses:
BPPR [1] $52,972 $115,115 $37,357 $241,738 $155,860
BPNA   17,029   42,544   3,567   77,944 15,266
Total provision for loan losses - non-covered loans   $70,001   $157,659   $40,924   $319,682 $171,126
Provision (reversal) for loan losses - covered loans   1,487   3,100   441   5,742 (1,110)
Total provision for loan losses   $71,488   $160,759   $41,365   $325,424 $170,016
[1] For the year ended December 31, 2017, includes the elimination
of an incremental $6.0 million provision for loan losses related to
the inter-company transfer of a loan between BPPR and Popular, Inc.,
its bank holding company, the impact of which is eliminated in the
consolidated results of the Corporation in accordance with U.S. GAAP.

Credit Quality by Segment      
(Unaudited)
(In thousands) Quarters ended
BPPR   31-Dec-17   30-Sep-17   31-Dec-16
Provision for loan losses $52,972 $115,115 $37,357
Net charge-offs 59,118 45,301 53,416
Total non-performing loans held-in-portfolio, excluding covered loans 511,440 548,666 532,508
Allowance / non-covered loans held-in-portfolio   2.87%   3.06%   2.73%
 
 
  Quarters ended
BPNA   31-Dec-17   30-Sep-17   31-Dec-16
Provision for loan losses $17,029 $42,544 $3,567
Net charge-offs 34,557 7,708 2,800
Total non-performing loans held-in-portfolio 39,517 37,262 25,407
Allowance / non-covered loans held-in-portfolio   1.16%   1.48%   0.75%
Financial Condition Highlights      
 
(Unaudited)        
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16
Cash and money market investments $5,657,976 $6,005,649 $3,252,611
Trading and investment securities 10,482,971 9,374,355 8,535,530
Loans not covered under loss-sharing agreements with the FDIC 24,292,794 23,173,450 22,773,747
Loans covered under loss-sharing agreements with the FDIC 517,274 524,854 572,878
Total assets 44,277,337 42,601,267 38,661,609
Deposits 35,453,508 34,248,936 30,496,224
Borrowings 2,023,485 2,147,064 2,055,477
Total liabilities 39,173,432 37,315,836 33,463,652
Stockholders' equity   5,103,905   5,285,431   5,197,957

Total assets increased by $1.7 billion from the third quarter of 2017,
driven by:

  • An increase of $1.1 billion in investment securities
    available-for-sale mainly due to purchases of U.S. Treasury securities
    at BPPR; and
  • A net increase of $1.1 billion in non-covered loans held-in-portfolio,
    due to an increase of $0.8 billion in mortgage loans at BPPR due to
    the rebooking of loans previously pooled into GNMA securities. Under
    the GNMA program, issuers such as BPPR have the option but not the
    obligation to repurchase loans that are 90 days or more past due. For
    accounting purposes, these loans subject to the repurchase option are
    required to be reflected on the financial statements of the Bank with
    an offsetting liability. While the borrowers for our serviced GNMA
    portfolio benefited from the loan payment moratorium, the delinquency
    status of these loans continued to be reported to GNMA without
    considering the moratorium. Additionally, growth in commercial loans
    at BPPR and BPNA by $0.3 billion contributed to the increase.

These positive variances were partially offset by:

  • A decrease of $0.3 billion in cash and money market investments at
    BPPR and BPNA due in part to the deployment of liquidity into
    investment securities as mentioned above; and
  • A decrease of $0.3 billion in other assets primarily in accounts
    receivable related to maturities of U.S. Treasury securities that were
    settled during the quarter and a decrease in the DTA, mainly at BPNA
    due to the write-down taken as a result of the impact of the Act
    (refer to additional information on the Income Taxes section of this
    earnings release).

Total liabilities increased by $1.9 billion from the third quarter of
2017, principally driven by:

  • An increase of $1.2 billion in deposits mainly due to an increase in
    demand deposits and savings deposits at BPPR. Refer to Table G for
    additional information on deposits; and
  • An increase of $0.8 billion in other liabilities at BPPR due to an
    increase in the liability for GNMA loans sold with a repurchase option
    due to an increase in delinquency resulting from the moratorium, as
    noted above.

These positive variances were partially offset by:

  • A decrease of $0.1 billion in other short-term borrowings at BPNA.

Stockholders' equity decreased by approximately $0.2 billion from the
third quarter of 2017, mainly as a result of net loss for the quarter of
$102.2 million, declared dividends of $25.5 million on common stock,
$0.9 million in dividends on preferred stock, and higher unrealized
losses on securities available-for-sale by $55.7 million.

Common equity tier-1 ratio ("CET1"), common equity per share and
tangible book value per share were 16.30%, $49.51 and $43.02,
respectively at December 31, 2017, compared to 16.63%, $51.31 and $44.79
at September 30, 2017. Refer to Table A for capital ratios.

Refer to Table C for the Statements of Financial Condition.

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 proceedings and new accounting standards on the
Corporation's financial condition and results of operations, and the
impact of Hurricanes Irma and Maria on us. 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, 2016, the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017,
June 30, 2017 and September 30, 2017, and in our Annual Report on Form
10-K for the year ended December 31, 2017 to be filed with the SEC.
Those 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.

Founded in 1893, Popular, Inc. is the leading banking institution by
both assets and deposits in Puerto Rico and ranks among the top 50 U.S.
banks by assets. Popular provides retail, mortgage and commercial
banking services through its principal banking subsidiary, Banco Popular
de Puerto Rico, as well as auto and equipment leasing and financing,
investment banking, broker-dealer and insurance services through
specialized subsidiaries. In the United States, Popular has established
a community-banking franchise providing a broad range of financial
services and products with branches in New York, New Jersey and Florida
under the name of Popular Community Bank.

Conference Call

Popular will hold a conference call to discuss its financial results
today Tuesday, January 23, 2018 at 10:00 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 a 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 Friday, February 23, 2018. The replay dial-in
is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10115688.

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

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
 
Table A - Selected Ratios and Other Information
 
Table B - Consolidated Statement of Operations
 
Table C - Consolidated Statement of Financial Condition
 
Table D - Consolidated Average Balances and Yield / Rate Analysis -
QUARTER
 
Table E - Consolidated Average Balances and Yield / Rate Analysis -
YEAR-TO-DATE
 
Table F - Mortgage Banking Activities and Other Service Fees
 
Table G - Loans and Deposits
 
Table H - Non-Performing Assets
 
Table I - Activity in Non-Performing Loans
 
Table J - Allowance for Credit Losses, Net Charge-offs and Related
Ratios
 
Table K - Allowance for Loan Losses - Breakdown of General and
Specific Reserves - CONSOLIDATED
 
Table L - Allowance for Loan Losses - Breakdown of General and
Specific Reserves - PUERTO RICO OPERATIONS
 
Table M - Allowance for Loan Losses - Breakdown of General and
Specific Reserves - U.S. MAINLAND OPERATIONS
 
Table N - Reconciliation to GAAP Financial Measures
 
Table O - Financial Information - Westernbank Loans
 
Table P - Adjusted Net Income for the Years Ended December 31, 2017
and 2016 (Non-GAAP)

POPULAR, INC.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
         
             
Quarters ended Years ended
    31-Dec-17   30-Sep-17   31-Dec-16   31-Dec-17   31-Dec-16
Basic EPS from continuing operations $(1.01) $0.19 $(0.06) $1.02 $2.05
Basic EPS from discontinued operations $- $- $0.01 $- $0.01
Basic EPS $(1.01) $0.19 $(0.05) $1.02 $2.06
Diluted EPS from continuing operations $(1.01) $0.19 $(0.06) $1.02 $2.05
Diluted EPS from discontinued operations $- $- $0.01 $- $0.01
Diluted EPS $(1.01) $0.19 $(0.05) $1.02 $2.06
Average common shares outstanding 101,695,868 101,652,352 103,368,820 101,966,429 103,275,264
Average common shares outstanding - assuming dilution 101,695,868 101,763,872 103,368,820 102,045,336 103,377,283
Common shares outstanding at end of period 102,068,981 102,026,417 103,790,932 102,068,981 103,790,932
 
Market value per common share $35.49 $35.94 $43.82 $35.49 $43.82
 
Market capitalization - (In millions) $3,622 $3,667 $4,548 $3,622 $4,548
 
Return on average assets (0.94%) 0.20% (0.04%) 0.26% 0.58%
. .
Return on average common equity (7.67%) 1.47% (0.38%) 1.96% 4.07%
 
Net interest margin 3.90% 3.96% 4.02% 3.99% 4.22%
 
Common equity per share $49.51 $51.31 $49.60 $49.51 $49.60
 
Tangible common book value per common share (non-GAAP) [1] $43.02 $44.79 $43.12 $43.02 $43.12
 
Tangible common equity to tangible assets (non-GAAP) [1] 10.07% 10.90% 11.78% 10.07% 11.78%
 
Tier 1 capital 16.30% 16.63% 16.48% 16.30% 16.48%
 
Total capital 19.22% 19.62% 19.48% 19.22% 19.48%
 
Tier 1 leverage 10.02% 10.29% 10.91% 10.02% 10.91%
 
Common Equity Tier 1 capital   16.30%   16.63%   16.48%   16.30%   16.48%
[1] Refer to Table N for reconciliation to GAAP financial measures.

POPULAR, INC.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
    Quarters ended   Variance   Quarter ended   Variance   Years ended
 

Q4 2017

Q4 2017

 
(In thousands, except per share information)   31-Dec-17   30-Sep-17  

vs. Q3 2017

  31-Dec-16  

vs. Q4 2016

  31-Dec-17   31-Dec-16
Interest income:
Loans $375,981 $371,979 $4,002 $363,252 $12,729 $1,478,765 $1,459,720
Money market investments 18,262 15,529 2,733 5,108 13,154 51,495 16,428
Investment securities 50,498 47,276 3,222 41,283 9,215 191,197 152,011
  Trading account securities   592   1,099   (507)   1,401   (809)   4,487   6,414
  Total interest income   445,333   435,883   9,450   411,044   34,289   1,725,944   1,634,573
Interest expense:
Deposits 36,957 37,058 (101) 34,742 2,215 141,864 127,577
Short-term borrowings 1,990 1,524 466 1,761 229 5,724 7,812
  Long-term debt   19,170   19,130   40   19,136   34   76,392   77,129
  Total interest expense   58,117   57,712   405   55,639   2,478   223,980   212,518
Net interest income 387,216 378,171 9,045 355,405 31,811 1,501,964 1,422,055
Provision for loan losses - non-covered loans 70,001 157,659 (87,658) 40,924 29,077 319,682 171,126
Provision (reversal) for loan losses - covered loans   1,487   3,100   (1,613)   441   1,046   5,742   (1,110)
Net interest income after provision for loan losses   315,728   217,412   98,316   314,040   1,688   1,176,540   1,252,039
Service charges on deposit accounts 33,827 39,273 (5,446) 39,902 (6,075) 153,709 160,836
Other service fees 48,443 53,481 (5,038) 65,274 (16,831) 217,267 234,770
Mortgage banking activities (1,853) 5,239 (7,092) 14,488 (16,341) 25,496 56,538
Net gain and valuation adjustments on investment securities 50 103 (53) 30 20 334 1,962
Other-than-temporary impairment losses on investment securities - - - - - (8,299) (209)
Trading account (loss) profit (137) 253 (390) (1,627) 1,490 (817) (785)
Net (loss) gain on sale of loans, including valuation adjustments on
loans held-for-sale
- (420) 420 - - (420) 8,245
Adjustments (expense) to indemnity reserves on loans sold (11,075) (6,406) (4,669) (3,051) (8,024) (22,377) (17,285)
FDIC loss-share income (expense) 2,614 (3,948) 6,562 (130,334) 132,948 (10,066) (207,779)
Other operating income   14,262   12,799   1,463   15,143   (881)   64,340   61,643
  Total non-interest income (expense)   86,131   100,374   (14,243)   (175)   86,306   419,167   297,936
Operating expenses:
Personnel costs
Salaries 78,339 78,976 (637) 77,275 1,064 313,394 308,135
Commissions, incentives and other bonuses 14,847 16,879 (2,032) 17,405 (2,558) 70,099 73,684
Pension, postretirement and medical insurance 12,164 11,535 629 12,481 (317) 47,533 51,284
  Other personnel costs, including payroll taxes   14,822   12,246   2,576   15,292   (470)   53,204   54,373
Total personnel costs 120,172 119,636 536 122,453 (2,281) 484,230 487,476
Net occupancy expenses 23,899 22,254 1,645 21,883 2,016 89,194 85,653
Equipment expenses 16,465 16,457 8 16,494 (29) 65,142 62,225
Other taxes 10,815 10,858 (43) 10,615 200 43,382 42,304
Professional fees
Collections, appraisals and other credit related fees 3,254 3,559 (305) 1,128 2,126 14,415 14,607
Programming, processing and other technology services 50,496 49,717 779 53,196 (2,700) 199,873 205,466
Legal fees, excluding collections 3,225 2,928 297 14,702 (11,477) 11,763 42,393
  Other professional fees   22,557   14,568   7,989   16,667   5,890   66,437   60,577
Total professional fees 79,532 70,772 8,760 85,693 (6,161) 292,488 323,043
Communications 5,224 5,394 (170) 5,780 (556) 22,466 23,897
Business promotion 18,287 15,216 3,071 15,473 2,814 58,445 53,014
FDIC deposit insurance 7,456 6,271 1,185 5,926 1,530 26,392 24,512
Other real estate owned (OREO) expenses 7,328 11,724 (4,396) 13,703 (6,375) 48,540 47,119
Credit and debit card processing, volume, interchange and other
expenses
6,853 7,375 (522) 4,817 2,036 26,201 20,796
Other operating expenses
Operational losses 11,639 13,222 (1,583) 6,579 5,060 39,612 35,995
  All other   11,941   15,564   (3,623)   8,619   3,322   51,726   33,656
Total other operating expenses 23,580 28,786 (5,206) 15,198 8,382 91,338 69,651
Amortization of intangibles 2,344 2,345 (1) 2,836 (492) 9,378 12,144
Goodwill impairment charge   -   -   -   -   -   -   3,801
  Total operating expenses   321,955   317,088   4,867   320,871   1,084   1,257,196   1,255,635
Income (loss) from continuing operations before income tax 79,904 698 79,206 (7,006) 86,910 338,511 294,340
Income tax expense (benefit)   182,058   (19,966)   202,024   (1,766)   183,824   230,830   78,784
(Loss) income from continuing operations   (102,154)   20,664   (122,818)   (5,240)   (96,914)   107,681   215,556
Income from discontinued operations, net of tax   -   -   -   1,135   (1,135)   -   1,135
Net (loss) income   $(102,154)   $20,664   $(122,818)   $(4,105)   $(98,049)   $107,681   $216,691
Net (loss) income applicable to common stock   $(103,085)   $19,734   $(122,819)   $(5,036)   $(98,049)   $103,958   $212,968
Net (loss) income per common share - basic:
Net (loss) income from continuing operations $(1.01) $0.19 $(1.20) $(0.06) $(0.95) $1.02 $2.05
  Net income from discontinued operations   -   -   -   0.01   (0.01)   -   0.01
Net (loss) income per common share - basic   $(1.01)   $0.19   $(1.20)   $(0.05)   $(0.96)   $1.02   $2.06
Net (loss) income per common share - diluted:
Net (loss) income from continuing operations $(1.01) $0.19 $(1.20) $(0.06) $(0.95) $1.02 $2.05
  Net income from discontinued operations   -   -   -   0.01   (0.01)   -   0.01
Net (loss) income per common share - diluted   $(1.01)   $0.19   $(1.20)   $(0.05)   $(0.96)   $1.02   $2.06
Dividends Declared per Common Share   $0.25   $0.25   $-   $0.15   $0.10   $1.00   $0.60

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table C - Consolidated Statement of Financial Condition
(Unaudited)
            Variance
Q4 2017 vs.
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16   Q3 2017
Assets:
Cash and due from banks $402,857 $517,437 $362,394 $(114,580)
Money market investments 5,255,119 5,488,212 2,890,217 (233,093)
Trading account securities, at fair value 43,187 45,951 59,805 (2,764)
Investment securities available-for-sale, at fair value 10,178,738 9,061,001 8,209,806 1,117,737
Investment securities held-to-maturity, at amortized cost 93,821 93,438 98,101 383
Other investment securities, at lower of cost or realizable value 167,225 173,965 167,818 (6,740)
Loans held-for-sale, at lower of cost or fair value 132,395 68,864 88,821 63,531
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC 24,423,427 23,302,047 22,895,172 1,121,380
Loans covered under loss-sharing agreements with the FDIC 517,274 524,854 572,878 (7,580)
Less: Unearned income 130,633 128,597 121,425 2,036
    Allowance for loan losses   623,426   646,913   540,651   (23,487)
    Total loans held-in-portfolio, net   24,186,642   23,051,391   22,805,974   1,135,251
FDIC loss-share asset 45,192 48,470 69,334 (3,278)
Premises and equipment, net 547,142 532,532 543,981 14,610
Other real estate not covered under loss-sharing agreements with the
FDIC
169,260 176,728 180,445 (7,468)
Other real estate covered under loss-sharing agreements with the FDIC 19,595 21,545 32,128 (1,950)
Accrued income receivable 213,844 146,339 138,042 67,505
Mortgage servicing assets, at fair value 168,031 180,157 196,889 (12,126)
Other assets 1,991,323 2,329,927 2,145,510 (338,604)
Goodwill 627,294 627,294 627,294 -
Other intangible assets   35,672   38,016   45,050   (2,344)
Total assets   $44,277,337   $42,601,267   $38,661,609   $1,676,070
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing $8,490,945 $7,449,857 $6,980,443 $1,041,088
    Interest bearing   26,962,563   26,799,079   23,515,781   163,484
    Total deposits   35,453,508   34,248,936   30,496,224   1,204,572
Assets sold under agreements to repurchase 390,921 374,405 479,425 16,516
Other short-term borrowings 96,208 240,598 1,200 (144,390)
Notes payable 1,536,356 1,532,061 1,574,852 4,295
Other liabilities   1,696,439   919,836   911,951   776,603
Total liabilities   39,173,432   37,315,836   33,463,652   1,857,596
Stockholders' equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,042 1,042 1,040 -
Surplus 4,298,503 4,265,053 4,255,022 33,450
Retained earnings 1,194,994 1,350,730 1,220,307 (155,736)
Treasury stock (90,142) (90,222) (8,286) 80
Accumulated other comprehensive loss, net of tax   (350,652)   (291,332)   (320,286)   (59,320)
    Total stockholders' equity   5,103,905   5,285,431   5,197,957   (181,526)
Total liabilities and stockholders' equity   $44,277,337   $42,601,267   $38,661,609   $1,676,070

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis
- QUARTER
(Unaudited)
                         
Quarter ended Quarter ended Quarter ended Variance Variance
31-Dec-17 30-Sep-17 31-Dec-16 Q4 2017 vs. Q3 2017 Q4 2017 vs. Q4 2016
($ amounts in
millions; yields not
on a taxable Average Income / Yield / Average Income / Yield / Average Income / Yield / Average Income / Yield / Average Income / Yield /
equivalent basis)   balance   Expense   Rate   balance   Expense   Rate   balance   Expense   Rate   balance   Expense   Rate   balance   Expense   Rate  
Assets:
Interest earning assets:
Money market, trading and investment securities $15,666   $69.3   1.76 % $14,483   $63.9   1.76 % $12,185   $47.8   1.57 % $1,183   $5.4   - % $3,481   $21.5   0.19 %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 10,291 130.0 5.01 10,065 128.3 5.06 9,435 116.5 4.91 226 1.7 (0.05) 856 13.5 0.10
Construction 859 12.6 5.82 826 12.0 5.77 737 9.9 5.36 33 0.6 0.05 122 2.7 0.46
Mortgage 6,460 83.0 5.14 6,444 84.8 5.26 6,598 88.5 5.37 16 (1.8) (0.12) (138) (5.5) (0.23)
Consumer 3,772 102.6 10.79 3,782 99.1 10.40 3,774 97.3 10.26 (10) 3.5 0.39 (2) 5.3 0.53
Lease financing 781   11.8   6.04   750   11.9   6.37   688   11.4   6.64   31   (0.1)   (0.33)   93   0.4   (0.60)  
Total loans (excluding WB loans) 22,163 340.0 6.10 21,867 336.1 6.11 21,232 323.6 6.07 296 3.9 (0.01) 931 16.4 0.03
WB loans 1,667   36.0   8.59   1,681   35.9   8.50   1,845   39.6   8.56   (14)   0.1   0.09   (178)   (3.6)   0.03  
Total loans 23,830   376.0   6.27   23,548   372.0   6.28   23,077   363.2   6.27   282   4.0   (0.01)   753   12.8   -  
Total interest earning assets $39,496   $445.3   4.49 % $38,031   $435.9   4.56 % $35,262   $411.0   4.65 % $1,465   $9.4   (0.07) % $4,234   $34.3   (0.16) %
Allowance for loan losses (644) (566) (562) (78) (82)
Other non-interest earning assets 4,400 4,238 4,386 162 14
Total average assets $43,252 $41,703 $39,086 $1,549 $4,166
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $11,023 $10.1 0.36 % $10,465 $10.3 0.39 % $8,007 $8.3 0.41 % $558 ($0.2) (0.03) % $3,016 $1.8 (0.05) %
Savings 8,457 5.3 0.25 8,260 5.0 0.24 7,796 4.7 0.24 197 0.3 0.01 661 0.6 0.01
Time deposits 7,545   21.6   1.13   7,543   21.8   1.14   7,858   21.7   1.10   2   (0.2)   (0.01)   (313)   (0.1)   0.03  
Total interest-bearing deposits 27,025 37.0 0.54 26,268 37.1 0.56 23,661 34.7 0.58 757 (0.1) (0.02) 3,364 2.3 (0.04)
Borrowings 2,060   21.1   4.11   1,982   20.6   4.17   2,212   20.9   3.78   78   0.5   (0.06)   (152)   0.2   0.33  
Total interest-bearing liabilities 29,085   58.1   0.80   28,250   57.7   0.81   25,873   55.6   0.86   835   0.4   (0.01)   3,212   2.5   (0.06)  
Net interest spread 3.69 % 3.75 % 3.79 % (0.06) % (0.10) %
Non-interest bearing deposits 7,880 7,235 6,976 645 904
Other liabilities 908 832 901 76 7
Liabilities from discontinued operations - - 2 - (2)
Stockholders' equity 5,379 5,386 5,334 (7) 45
Total average liabilities and stockholders' equity $43,252 $41,703 $39,086 $1,549 $4,166
 
Net interest income / margin non-taxable equivalent basis $387.2   3.90 % $378.2   3.96 % $355.4   4.02 % $9.0   (0.06) % $31.8   (0.12) %

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis
- YEAR-TO-DATE
(Unaudited)
                   
Year ended Year ended
31-Dec-17 31-Dec-16 Variance
Average Income / Yield / Average Income / Yield / Average Income / Yield /
($ amounts in millions; yields not on a taxable equivalent basis)   balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate
Assets:
Interest earning assets:
Money market, trading and investment securities $14,157   $247.2   1.75 % $10,651   $174.9   1.64 % $3,506   $72.3   0.11 %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,971 499.4 5.01 9,203 451.8 4.91 768 47.6 0.10
Construction 829 46.8 5.64 726 39.0 5.38 103 7.8 0.26
Mortgage 6,506 343.3 5.28 6,702 355.4 5.30 (196) (12.1) (0.02)
Consumer 3,739 394.1 10.54 3,823 394.0 10.31 (84) 0.1 0.23
Lease financing 742   47.1   6.35 660   44.3   6.71 82   2.8   (0.36)
Total loans (excluding WB loans) 21,787 1,330.7 6.11 21,114 1,284.5 6.08 673 46.2 0.03
WB loans 1,724   148.0   8.59 1,949   175.2   8.99 (225)   (27.2)   (0.40)
Total loans 23,511   1,478.7   6.29 23,063   1,459.7   6.33 448   19.0   (0.04)
Total interest earning assets $37,668   $1,725.9   4.58 % $33,714   $1,634.6   4.85 % $3,954   $91.3   (0.27) %
Allowance for loan losses (572) (548) (24)
Other non-interest earning assets 4,308 4,448 (140)
Total average assets $41,404 $37,614 $3,790
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $10,116 $37.5 0.37 % $7,020 $27.6 0.39 % $3,096 $9.9 (0.02) %
Savings 8,103 20.2 0.25 7,528 18.0 0.24 575 2.2 0.01
Time deposits 7,625   84.1   1.10 7,910   82.0   1.04 (285)   2.1   0.06
Total interest-bearing deposits 25,844 141.8 0.55 22,458 127.6 0.57 3,386 14.2 (0.02)
Borrowings 2,001   82.1   4.10 2,339   84.9   3.63 (338)   (2.8)   0.47
Total interest-bearing liabilities 27,845   223.9   0.80 24,797   212.5   0.86 3,048   11.4   (0.06)
Net interest spread 3.78 % 3.99 % (0.21) %
Non-interest bearing deposits 7,338 6,608 730
Other liabilities 876 928 (52)
Liabilities from discontinued operations - 2 (2)
Stockholders' equity 5,345 5,279 66
Total average liabilities and stockholders' equity $41,404 $37,614 $3,790
 
Net interest income / margin non-taxable equivalent basis $1,502.0   3.99 % $1,422.1   4.22 % $79.9   (0.23) %

               
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
 
Mortgage Banking Activities
Quarters ended Variance Years ended Variance
Q4 2017 Q4 2017 2017 vs.
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16  

vs. Q3 2017

 

vs. Q4 2016

  31-Dec-17   31-Dec-16   2016
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $9,815 $12,012 $14,211 $(2,197) $(4,396) $48,300 $58,208 $(9,908)
  Mortgage servicing rights fair value adjustments   (12,257)   (10,262)   (6,457)   (1,995)   (5,800)   (36,519)   (25,336)   (11,183)
Total mortgage servicing fees, net of fair value adjustments   (2,442)   1,750   7,754   (4,192)   (10,196)   11,781   32,872   (21,091)
Net gain on sale of loans, including valuation on loans held-for-sale   213   4,244   2,535   (4,031)   (2,322)   17,088   26,976   (9,888)
Trading account profit (loss):
Unrealized gains (losses) on outstanding derivative positions 288 (147) 43 435 245 184 (1) 185
  Realized gains (losses) on closed derivative positions   88   (608)   4,156   696   (4,068)   (3,557)   (3,309)   (248)
Total trading account profit (loss)   376   (755)   4,199   1,131   (3,823)   (3,373)   (3,310)   (63)
Total mortgage banking activities   $(1,853)   $5,239   $14,488   $(7,092)   $(16,341)   $25,496   $56,538   $(31,042)
       
 
Other Service Fees
Quarters ended Variance Years ended Variance
Q4 2017 Q4 2017 2017 vs.
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16  

vs. Q3 2017

 

vs. Q4 2016

  31-Dec-17   31-Dec-16   2016
Other service fees:
Debit card fees $9,243 $10,359 $12,088 $(1,116) $(2,845) $42,721 $46,241 $(3,520)
Insurance fees 11,538 13,076 20,804 (1,538) (9,266) 50,948 63,482 (12,534)
Credit card fees 13,304 16,699 18,324 (3,395) (5,020) 67,584 70,526 (2,942)
Sale and administration of investment products 5,581 5,496 5,652 85 (71) 21,958 21,450 508
Trust fees 5,297 4,817 4,782 480 515 19,972 18,811 1,161
Other fees   3,480   3,034   3,624   446   (144)   14,084   14,260   (176)
Total other service fees   $48,443   $53,481   $65,274   $(5,038)   $(16,831)   $217,267   $234,770   $(17,503)

Popular, Inc.          
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table G - Loans and Deposits
(Unaudited)
 
Loans - Ending Balances
Variance
Q4 2017 vs. Q4 2017 vs.
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16   Q3 2017   Q4 2016
Loans not covered under FDIC loss-sharing agreements:
Commercial $11,488,861 $11,227,095 $10,798,507 $261,766 $690,354
Construction 880,029 823,325 776,300 56,704 103,729
Legacy [1] 32,980 37,508 45,293 (4,528) (12,313)
Lease financing 809,990 754,881 702,893 55,109 107,097
Mortgage 7,270,407 6,529,235 6,696,361 741,172 574,046
Consumer   3,810,527   3,801,406   3,754,393   9,121   56,134
Total non-covered loans held-in-portfolio $24,292,794 $23,173,450 $22,773,747 $1,119,344 $1,519,047
Loans covered under FDIC loss-sharing agreements   517,274   524,854   572,878   (7,580)   (55,604)
Total loans held-in-portfolio   $24,810,068   $23,698,304   $23,346,625   $1,111,764   $1,463,443
Loans held-for-sale:
Mortgage   132,395   68,864   88,821   63,531   43,574
Total loans held-for-sale   $132,395   $68,864   $88,821   $63,531   $43,574
Total loans   $24,942,463   $23,767,168   $23,435,446   $1,175,295   $1,507,017
[1] The legacy portfolio is comprised of commercial loans,
construction loans and lease financings related to certain lending
products exited by the Corporation as part of restructuring efforts
carried out in prior years at the BPNA segment.

Deposits - Ending Balances

Variance
Q4 2017 vs. Q3 Q4 2017 vs.Q4
(In thousands)   31-Dec-17   30-Sep-17   31-Dec-16   2017   2016
Demand deposits [1] $12,460,081 $11,576,048 $9,053,897 $884,033 $3,406,184
Savings, NOW and money market deposits (non-brokered) 15,054,242 14,638,191 13,327,298 416,051 1,726,944
Savings, NOW and money market deposits (brokered) 424,307 422,174 405,487 2,133 18,820
Time deposits (non-brokered) 7,411,140 7,446,922 7,486,717 (35,782) (75,577)
Time deposits (brokered CDs)   103,738   165,601   222,825   (61,863)   (119,087)
Total deposits   $35,453,508   $34,248,936   $30,496,224   $1,204,572   $4,957,284
[1] Includes interest and non-interest bearing demand deposits.                

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
  Variance
As a % of As a % of As a % of  
loans HIP by loans HIP by loans HIP by Q4 2017 vs. Q4 2017 vs.
(Dollars in thousands)   31-Dec-17 category   30-Sep-17 category   31-Dec-16 category   Q3 2017   Q4 2016
Non-accrual loans:
Commercial $165,065 1.4 % $165,352 1.5 % $163,348 1.5 % $(287) $1,717
Construction - - 99 - - - (99) -
Legacy [1] 3,039 9.2 3,268 8.7 3,337 7.4 (229) (298)
Lease financing 2,974 0.4 2,684 0.4 3,062 0.4 290 (88)
Mortgage 321,549 4.4 352,315 5.4 329,907 4.9 (30,766) (8,358)
Consumer   58,330 1.5   62,210 1.6   58,261 1.6   (3,880)   69
Total non-performing loans held-in-
portfolio, excluding covered loans 550,957 2.3 % 585,928 2.5 % 557,915 2.5 % (34,971) (6,958)
Other real estate owned ("OREO"),
excluding covered OREO   169,260     176,728     180,445     (7,468)   (11,185)
Total non-performing assets,
excluding covered assets 720,217 762,656 738,360 (42,439) (18,143)
Covered loans and OREO   22,948     24,951     36,044     (2,003)   (13,096)
Total non-performing assets   $743,165     $787,607     $774,404     $(44,442)   $(31,239)
Accruing loans past due 90 days or more [3]   $1,225,149     $465,127     $426,652     $760,022   $798,497
Ratios excluding covered loans:
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.27 % 2.53 % 2.45 %
Allowance for loan losses to loans
held-in-portfolio 2.43 2.65 2.24
Allowance for loan losses to
non-performing loans, excluding loans
held-for-sale   107.12     104.77     91.47          
Ratios including covered loans:
Non-performing assets to total assets 1.68 % 1.85 % 2.00 %
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.23 2.49 2.41
Allowance for loan losses to loans
held-in-portfolio 2.51 2.73 2.32
Allowance for loan losses to non-performing
loans, excluding loans held-for-sale   112.47     109.77     96.23          
[1] The legacy portfolio is comprised of commercial loans,
construction loans and lease financings related to certain lending
products exited by the Corporation as part of restructuring efforts
carried out in prior years at the BPNA segment.
[2] There were no non-performing loans held-for-sale as of December
31, 2017, September 30, 2017 and December 31, 2016.
[3] It is the Corporation's policy to report delinquent residential
mortgage loans insured by FHA or guaranteed by the VA as accruing
loans past due 90 days or more as opposed to non-performing since
the principal repayment is insured. The balance of these loans
increased by $760 million due mainly to the rebooking of loans
previously pooled into GNMA securities. Under the GNMA program,
issuers such as BPPR have the option but not the obligation to
repurchase loans that are 90 days or more past due. For accounting
purposes, these loans subject to the repurchase option are required
to be reflected on the financial statements of the Bank with an
offsetting liability. While the borrowers for our serviced GNMA
portfolio benefited from the loan payment moratorium, the
delinquency status of these loans continued to be reported to GNMA
without considering the moratorium. These balances include $178
million of residential mortgage loans insured by FHA or guaranteed
by the VA that are no longer accruing interest as of December 31,
2017 (September 30, 2017 - $157 million; December 31, 2016 - $181
million). Furthermore, the Corporation has approximately $58 million
in reverse mortgage loans which are guaranteed by FHA, but which are
currently not accruing interest. Due to the guaranteed nature of the
loans, it is the Corporation's policy to exclude these balances from
non-performing assets (September 30, 2017 - $57 million; December
30, 2016 - $68 million).

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
             
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-17   30-Sep-17
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $160,043 $5,309 $165,352 $162,863 $4,001 $166,864
Plus:
New non-performing loans 22,975 1,662 24,637 8,085 4,027 12,112
Less:
Non-performing loans transferred to OREO (254) - (254) (76) - (76)
Non-performing loans charged-off (9,456) - (9,456) (3,587) (49) (3,636)
Loans returned to accrual status / loan collections   (12,082)   (3,132)   (15,214)   (7,242)   (2,670)   (9,912)
Ending balance NPLs   $161,226   $3,839   $165,065   $160,043   $5,309   $165,352
 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-17   30-Sep-17
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $99 $- $99 $- $- $-
Plus:
New non-performing loans - - - 99 - 99
Loans returned to accrual status / loan collections   (99)   -   (99)   -   -   -
Ending balance NPLs   $-   $-   $-   $99   $-   $99
 
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-17   30-Sep-17
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $337,967 $14,348 $352,315 $306,642 $12,280 $318,922
Plus:
New non-performing loans 1,583 6,622 8,205 97,314 5,349 102,663
Advances on existing non-performing loans - 662 662 - - -
Less:
Non-performing loans transferred to OREO (1,085) - (1,085) (9,408) - (9,408)
Non-performing loans charged-off (18,101) (60) (18,161) (10,864) (66) (10,930)
Loans returned to accrual status / loan collections   (13,667)   (6,720)   (20,387)   (45,717)   (3,215)   (48,932)
Ending balance NPLs   $306,697   $14,852   $321,549   $337,967   $14,348   $352,315

             
Legacy loans held-in-portfolio:
Quarter ended Quarter ended
31-Dec-17   30-Sep-17
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $- $3,268 $3,268 $- $3,360 $3,360
Plus:
Advances on existing non-performing loans - - - - 64 64
Less:
Non-performing loans charged-off - - - - (14) (14)
Loans returned to accrual status / loan collections   -   (229)   (229)   -   (142)   (142)
Ending balance NPLs   $-   $3,039   $3,039   $-   $3,268   $3,268
 
Total non-performing loans held-in-portfolio (excluding consumer
and covered loans):
Quarter ended Quarter ended
31-Dec-17   30-Sep-17
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $498,109 $22,925 $521,034 $469,505 $19,641 $489,146
Plus:
New non-performing loans 24,558 8,284 32,842 105,498 9,376 114,874
Advances on existing non-performing loans - 662 662 - 64 64
Less:
Non-performing loans transferred to OREO (1,339) - (1,339) (9,484) - (9,484)
Non-performing loans charged-off (27,557) (60) (27,617) (14,451) (129) (14,580)
Loans returned to accrual status / loan collections   (25,848)   (10,081)   (35,929)   (52,959)   (6,027)   (58,986)
Ending balance NPLs   $467,923   $21,730   $489,653   $498,109   $22,925   $521,034

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and
Related Ratios
(Unaudited)
       
 
Quarter ended Quarter ended Quarter ended
    31-Dec-17   30-Sep-17   31-Dec-16  

 

Non-covered Covered Non-covered Covered

Non-covered

Covered
(Dollars in thousands)   loans   loans   Total   loans   loans   Total   loans   loans   Total  
Balance at beginning of period $613,856 $33,057 $646,913 $509,206 $30,808 $540,014 $525,593 $30,262 $555,855
Provision (reversal) for loan losses   70,001   1,487   71,488   157,659   3,100   160,759   40,924   441   41,365  
    683,857   34,544   718,401   666,865   33,908   700,773   566,517   30,703   597,220  
Net loans charged-off (recovered):
BPPR
Commercial 8,450 - 8,450 (438) - (438) 9,205 - 9,205
Construction (59) - (59) (50) - (50) 8 - 8
Lease financing 3,024 - 3,024 1,495 - 1,495 1,000 - 1,000
Mortgage 23,565 1,315 24,880 17,071 831 17,902 20,919 360 21,279
Consumer   24,138   (15)   24,123   27,223   20   27,243   22,284   (7)   22,277
Total BPPR   59,118   1,300   60,418   45,301   851   46,152   53,416   353   53,769
 
BPNA
Commercial 30,981 - 30,981 4,282 - 4,282 (1,080) - (1,080)
Construction (7) - (7) - - - - - -
Legacy [1] (647) - (647) (297) - (297) (253) - (253)
Mortgage 56 - 56 (174) - (174) (255) - (255)
Consumer   4,174   -   4,174   3,897   -   3,897   4,388   -   4,388  
Total BPNA   34,557   -   34,557   7,708   -   7,708   2,800   -   2,800  
Total loans charged-off - Popular, Inc.   93,675   1,300   94,975   53,009   851   53,860   56,216   353   56,569  
Balance at end of period   $590,182   $33,244   $623,426   $613,856   $33,057   $646,913   $510,301   $30,350   $540,651  
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 1.61 % 1.60 % 0.92 % 0.92 % 1.00 % 0.98 %
Provision for loan losses to net charge-offs 0.75 x 0.75 x 2.97 x 2.98 x 0.73 x 0.73 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.38 % 1.37 % 1.07 % 1.05 % 1.25 % 1.22 %
Provision for loan losses to net charge-offs 0.90 x 0.90 x 2.54 x 2.56 x 0.70 x 0.70 x
 
BPNA
Annualized net charge-offs (recoveries) to average loans
held-in-portfolio
2.26 % 0.52 % 0.21 %
Provision for loan losses to net charge-offs (recoveries)           0.49 x         5.52 x         1.27 x
[1] The legacy portfolio is comprised of commercial loans,
construction loans and lease financings related to certain lending
products exited by the Corporation as part of restructuring efforts
carried out in prior years at the BPNA segment.

  Year ended Year ended
(Dollars in thousands)   31-Dec-17   31-Dec-16  
Non-covered Covered   Non-covered Covered  
    loans   loans   Total   loans   loans   Total  
Balance at beginning of period $510,301 $30,350 $540,651 $502,935 $34,176 $537,111
Provision (reversal of provision) for loan losses   319,682   5,742   325,424   171,126   (1,110)   170,016  
    829,983   36,092   866,075   674,061   33,066   707,127  
Net loans charged-off (recovered):
BPPR
Commercial [4] 22,395 - 22,395 20,755 - 20,755
Construction (2,623) - (2,623) (2,021) - (2,021)
Lease financing 6,770 - 6,770 3,888 - 3,888
Mortgage 74,944 2,736 77,680 64,316 2,716 67,032
Consumer   90,133   112   90,245   76,306   -   76,306  
Total BPPR   191,619   2,848   194,467   163,244   2,716   165,960  
 
BPNA
Commercial 34,157 - 34,157 (3,313) - (3,313)
Construction (7) - (7) - - -
Legacy [1] (1,730) - (1,730) (1,913) - (1,913)
Mortgage 240 - 240 1,933 - 1,933
Consumer   15,522   -   15,522   9,254   -   9,254  
Total BPNA   48,182   -   48,182   5,961   -   5,961  
Total loans charged-off - Popular, Inc.   239,801   2,848   242,649   169,205   2,716   171,921  
Net recoveries [2]   -   -   -   5,445   -   5,445  
Balance at end of period   $590,182   $33,244   $623,426   $510,301   $30,350   $540,651  
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 1.05 % 1.03 % 0.76 % 0.75 %
Provision for loan losses to net charge-offs [3] 1.33 x 1.34 x 1.01 x 0.99

x

 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 1.13 % 1.11 % 0.95 % 0.93 %
Provision for loan losses to net charge-offs [3] 1.26 x 1.27 x 0.95 x 0.93 x
 
BPNA
Annualized net charge-offs to average loans held-in-portfolio 0.82 % 0.12 %
Provision for loan losses to net charge-offs           1.62 x         2.56 x
[1] The legacy portfolio is comprised of commercial loans,
construction loans and lease financings related to certain lending
products exited by the Corporation as part of restructuring efforts
carried out in prior years at the BPNA segment.
[2] Net recoveries for the year ended December 31, 2016 are related
to loans sold or reclassified to held-for-sale.
[3] Excluding provision for loan losses and net write-down related
to loans sold or reclassified to held-for-sale during the years
ended December 31, 2016.
[4] For the year ended December 31, 2017, includes the elimination
of an incremental $6.0 million charge-off related to the
inter-company transfer of a loan between BPPR and Popular, Inc., its
bank honding company, the impact of which is eliminated in the
consolidated results of the Corporation in accordance with U.S. GAAP.
 

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and
Specific Reserves - CONSOLIDATED
(Unaudited)
   
                                   
31-Dec-17
Lease
(Dollars in thousands)       Commercial   Construction   Legacy [2]   Mortgage   financing   Consumer   Total [3]
Specific ALLL $36,982 $- $- $48,832 $475 $22,802 $109,091
Impaired loans [1] $323,455 $- $- $518,275 $1,456 $104,237 $947,423
Specific ALLL to impaired loans   [1]   11.43 % - % - % 9.42 % 32.62 % 21.88 % 11.51 %
General ALLL $178,683 $8,362 $798 $114,790 $11,516 $166,942 $481,091
Loans held-in-portfolio, excluding impaired loans [1] $11,165,406 $880,029 $32,980 $6,752,132 $808,534 $3,706,290 $23,345,371
General ALLL to loans held-in-portfolio, excluding impaired loans   [1]   1.60 % 0.95 % 2.42 % 1.70 % 1.42 % 4.50 % 2.06 %
Total ALLL $215,665 $8,362 $798 $163,622 $11,991 $189,744 $590,182
Total non-covered loans held-in-portfolio [1] $11,488,861 $880,029 $32,980 $7,270,407 $809,990 $3,810,527 $24,292,794
ALLL to loans held-in-portfolio   [1]   1.88 % 0.95 % 2.42 % 2.25 % 1.48 % 4.98 % 2.43 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted
transaction.
[2] The legacy portfolio is comprised of commercial loans,
construction loans and lease financings related to certain lending
products exited by the Corporation as part of restructuring efforts
carried out in prior years at the BPNA reportable segment.
[3] Excludes covered loans acquired on the Westernbank FDIC-assisted
transaction. As of December 31, 2017, the general allowance on the
covered loans amounted to $33.2 million.
                                   
30-Sep-17
Lease
(Dollars in thousands)       Commercial   Construction   Legacy [2]   Mortgage   financing   Consumer   Total [3]
Specific ALLL $40,863 $- $- $51,421 $450 $22,457 $115,191
Impaired loans [1] $328,704 $- $- $519,228 $1,468 $105,387 $954,787
Specific ALLL to impaired loans   [1]   12.43 % - % - % 9.90 % 30.65 % 21.31 % 12.06 %
General ALLL $228,106 $8,822 $872 $122,469 $9,982 $128,414 $498,665
Loans held-in-portfolio, excluding impaired loans [1] $10,898,391 $823,325 $37,508 $6,010,007 $753,413 $3,696,019 $22,218,663
General ALLL to loans held-in-portfolio, excluding impaired loans   [1]   2.09 % 1.07 % 2.32 % 2.04 % 1.32 % 3.47 % 2.24 %
Total ALLL $268,969 $8,822 $872 $173,890 $10,432 $150,871 $613,856
Total non-covered loans held-in-portfolio [1] $11,227,095 $823,325 $37,508 $6,529,235 $754,881 $3,801,406 $23,173,450
ALLL to loans held-in-portfolio   [1]   2.40 % 1.07 % 2.32 % 2.66 % 1.38 % 3.97 % 2.65 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted
transaction.
[2] The legacy portfolio is comprised of commercial loans,
construction loans and lease financings related to certain lending
products exited by the Corporation as part of restructuring efforts
carried out in prior years at the BPNA reportable segment.
[3] Excludes covered loans acquired on the Westernbank FDIC-assisted
transaction. As of September 30, 2017, the general allowance on the
covered loans amounted to $33.1 million.
                                   
Variance
Lease
(Dollars in thousands)       Commercial   Construction   Legacy   Mortgage   financing   Consumer   Total  
Specific ALLL $(3,881) $- $- $(2,589) $25 $345 $(6,100)
Impaired loans       $(5,249)   $-   $-   $(953)   $(12)   $(1,150)   $(7,364)  
General ALLL $(49,423) $(460) $(74) $(7,679) $1,534 $38,528 $(17,574)
Loans held-in-portfolio, excluding impaired loans       $267,015   $56,704   $(4,528)   $742,125   $55,121   $10,271   $1,126,708  
Total ALLL $(53,304) $(460) $(74) $(10,268) $1,559 $38,873 $(23,674)
Total non-covered loans held-in-portfolio       $261,766   $56,704   $(4,528)   $741,172   $55,109   $9,121   $1,119,344  

Popular, Inc.
Financial Supplement to Fourth Quarter 2017 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and
Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
             
31-Dec-17
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $36,982 $- $46,354 $475 $21,849 $105,660
  General ALLL non-covered loans   134,549   1,286   112,727   11,516   152,366   412,444
ALLL - non-covered loans   171,531   1,286   159,081   11,991   174,215   518,104
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   32,521   -   723   33,244
ALLL - covered loans   -   -   32,521   -   723   33,244
Total ALLL   $171,531   $1,286   $191,602   $11,991   $174,938   $551,348
Loans held-in-portfolio:
Impaired non-covered loans $323,455 $- $509,033 $1,456 $99,180 $933,124
  Non-covered loans held-in-portfolio, excluding impaired loans   6,942,444   95,369   6,067,746   808,534   3,230,841   17,144,934
Non-covered loans held-in-portfolio   7,265,899   95,369   6,576,779   809,990   3,330,021   18,078,058
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   502,929   -   14,345   517,274
Covered loans held-in-portfolio   -   -   502,929   -   14,345   517,274
Total loans held-in-portfolio   $7,265,899   $95,369   $7,079,708   $809,990   $3,344,366   $18,595,332
 
 
30-Sep-17
Puerto Rico
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $40,863 $- $49,129 $450 $21,730 $112,172
  General ALLL non-covered loans   164,823   1,699   120,504   9,982   115,069   412,077
ALLL - non-covered loans   205,686   1,699   169,633   10,432   136,799   524,249
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   31,991   -   1,066   33,057
ALLL - covered loans   -   -   31,991   -   1,066   33,057
Total ALLL   $205,686   $1,699   $201,624   $10,432   $137,865   $557,306
Loans held-in-portfolio:
Impaired non-covered loans $328,704 $- $510,134 $1,468 $101,948 $942,254
  Non-covered loans held-in-portfolio, excluding impaired loans   6,840,907   87,705   5,305,371   753,413   3,188,422   16,175,818
Non-covered loans held-in-portfolio   7,169,611   87,705   5,815,505   754,881   3,290,370   17,118,072
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   510,211   -   14,643   524,854
Covered loans held-in-portfolio   -   -   510,211   -   14,643   524,854
Total loans held-in-portfolio   $7,169,611   $87,705   $6,325,716   $754,881   $3,305,013   $17,642,926
 
                           
Variance
(In thousands)   Commercial   Construction   Mortgage   Lease financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $(3,881) $- $(2,775) $25 $119 $(6,512)
  General ALLL non-covered loans   (30,274)   (413)   (7,777)   1,534   37,297   367
ALLL - non-covered loans   (34,155)   (413)   (10,552)   1,559   37,416   (6,145)
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   530   -   (343)   187
ALLL - covered loans   -   -   530   -   (343)   187
Total ALLL   $(34,155)   $(413)   $(10,022)   $1,559   $37,073   $(5,958)
Loans held-in-portfolio:
Impaired non-covered loans $(5,249) $- $(1,101) $(12) $(2,768) $(9,130)
  Non-covered loans held-in-portfolio, excluding impaired loans   101,537   7,664   762,375   55,121   42,419   969,116
Non-covered loans held-in-portfolio   96,288   7,664   761,274   55,109   39,651   959,986
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   (7,282)   -   (298)   (7,580)
Covered loans held-in-portfolio   -   -   (7,282)   -   (298)