10-Q 1 d389076d10q.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q

 

 

 

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2017

Commission File Number: 001-34084

 

 

POPULAR, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Puerto Rico   66-0667416

(State or other jurisdiction of

Incorporation or organization)

 

(IRS Employer

Identification Number)

Popular Center Building

209 Muñoz Rivera Avenue

Hato Rey, Puerto Rico

  00918
(Address of principal executive offices)   (Zip code)

(787) 765-9800

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☐  (Do not check if a smaller reporting company)    Smaller reporting company  
Emerging growth company       

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes  ☒  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $0.01 par value, 101,986,341 shares outstanding as of May 5, 2017.

 

 

 


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POPULAR, INC.

INDEX

 

     Page  

Part I – Financial Information

  

Item 1. Financial Statements

  

Unaudited Consolidated Statements of Financial Condition at March  31, 2017 and December 31, 2016

     3  

Unaudited Consolidated Statements of Operations for the quarters ended March 31, 2017 and 2016

     4  

Unaudited Consolidated Statements of Comprehensive Income for the quarters ended March 31, 2017 and 2016

     5  

Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the quarters ended March 31, 2017 and 2016

     6  

Unaudited Consolidated Statements of Cash Flows for the quarters ended March 31, 2017 and 2016

     7  

Notes to Unaudited Consolidated Financial Statements

     8  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     107  

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     152  

Item 4. Controls and Procedures

     152  

Part II – Other Information

  

Item 1. Legal Proceedings

     152  

Item 1A. Risk Factors

     153  

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     153  

Item 3. Defaults upon Senior Securities

     153  

Item 4. Mine Safety Disclosures

     153  

Item 5. Other Information

     153  

Item 6. Exhibits

     154  

Signatures

     155  

 

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Forward-Looking Information

The information included in this Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to Popular, Inc.’s (the “Corporation,” “Popular,” “we,” “us,” “our”) financial condition, results of operations, plans, objectives, future performance and business, including, but not limited to, statements with respect to the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital markets conditions, capital adequacy and liquidity, and the effect of legal proceedings and new accounting standards on the Corporation’s financial condition and results of operations. 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.

These statements are not guarantees of future performance and involve certain risks, uncertainties, estimates and assumptions by management that are difficult to predict.

Various factors, some of which are beyond Popular’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Factors that might cause such a difference include, but are not limited to:

 

    the rate of growth in the economy and employment levels, as well as general business and economic conditions in the geographic areas we serve;

 

    the impact of the current fiscal and economic crisis of the Commonwealth of Puerto Rico (the “Commonwealth” or “Puerto Rico”) and the measures taken and to be taken by the Puerto Rico Government and the Federally-appointed oversight board on the economy, our customers and our business;

 

    the impact of the pending debt restructuring proceedings under Title III of the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”) and of other actions taken or to be taken to address Puerto Rico’s fiscal crisis on the value of our portfolio of Puerto Rico government securities and loans to governmental entities, and the possibility that these actions may result in credit losses that are higher than currently expected;

 

    changes in interest rates and market liquidity, which may reduce interest margins, impact funding sources and affect our ability to originate and distribute financial products in the primary and secondary markets;

 

    the fiscal and monetary policies of the federal government and its agencies;

 

    changes in federal bank regulatory and supervisory policies, including required levels of capital and the impact of proposed capital standards on our capital ratios;

 

    the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) on our businesses, business practices and cost of operations;

 

    regulatory approvals that may be necessary to undertake certain actions or consummate strategic transactions such as acquisitions and dispositions;

 

    the relative strength or weakness of the consumer and commercial credit sectors and of the real estate markets in Puerto Rico and the other markets in which borrowers are located;

 

    the performance of the stock and bond markets;

 

    competition in the financial services industry;

 

    additional Federal Deposit Insurance Corporation (“FDIC”) assessments;

 

    possible legislative, tax or regulatory changes; and

 

    a failure in or breach of our operational or security systems or infrastructure or those of EVERTEC, Inc., our provider of core financial transaction processing and information technology services, as a result of cyberattacks, including e-fraud, denial-of-services and computer intrusion, that might result in loss or breach of customer data, disruption of services, reputational damage or additional costs to Popular.

 

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Other possible events or factors that could cause results or performance to differ materially from those expressed in these forward-looking statements include the following:

 

    negative economic conditions that adversely affect housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of non-performing assets, charge-offs and provision expense;

 

    changes in market rates and prices which may adversely impact the value of financial assets and liabilities;

 

    liabilities resulting from litigation and regulatory investigations;

 

    changes in accounting standards, rules and interpretations;

 

    our ability to grow our core businesses;

 

    decisions to downsize, sell or close units or otherwise change our business mix; and

 

    management’s ability to identify and manage these and other risks.

Moreover, the outcome of legal proceedings, as discussed in “Part II, Item I. Legal Proceedings,” is inherently uncertain and depends on judicial interpretations of law and the findings of regulators, judges and juries. Investors should refer to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2016 as well as “Part II, Item 1A” of this Form 10-Q for a discussion of such factors and certain risks and uncertainties to which the Corporation is subject.

All forward-looking statements included in this Form 10-Q are based upon information available to Popular as of the date of this Form 10-Q, and other than as required by law, including the requirements of applicable securities laws, we assume no obligation to update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

 

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POPULAR, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 

     March 31,     December 31,  

(In thousands, except share information)

   2017     2016  

Assets:

    

Cash and due from banks

   $ 340,225     $ 362,394  
  

 

 

   

 

 

 

Money market investments:

    

Securities purchased under agreements to resell

     —         23,637  

Time deposits with other banks

     3,653,347       2,866,580  
  

 

 

   

 

 

 

Total money market investments

     3,653,347       2,890,217  
  

 

 

   

 

 

 

Trading account securities, at fair value:

    

Pledged securities with creditors’ right to repledge

     1,811       11,486  

Other trading securities

     49,174       48,319  

Investment securities available-for-sale, at fair value:

    

Pledged securities with creditors’ right to repledge

     452,568       491,843  

Other investment securities available-for-sale

     8,744,959       7,717,963  

Investment securities held-to-maturity, at amortized cost (fair value 2017 - $73,628; 2016 - $75,576)

     96,326       98,101  

Other investment securities, at lower of cost or realizable value (realizable value 2017 - $169,617; 2016 - $170,890)

     166,286       167,818  

Loans held-for-sale, at lower of cost or fair value

     85,309       88,821  
  

 

 

   

 

 

 

Loans held-in-portfolio:

    

Loans not covered under loss-sharing agreements with the FDIC

     22,858,556       22,895,172  

Loans covered under loss-sharing agreements with the FDIC

     551,980       572,878  

Less – Unearned income

     123,835       121,425  

   Allowance for loan losses

     544,496       540,651  
  

 

 

   

 

 

 

Total loans held-in-portfolio, net

     22,742,205       22,805,974  
  

 

 

   

 

 

 

FDIC loss-share asset

     58,793       69,334  

Premises and equipment, net

     548,995       543,981  

Other real estate not covered under loss-sharing agreements with the FDIC

     185,836       180,445  

Other real estate covered under loss-sharing agreements with the FDIC

     29,926       32,128  

Accrued income receivable

     128,018       138,042  

Mortgage servicing assets, at fair value

     193,698       196,889  

Other assets

     2,111,806       2,145,510  

Goodwill

     627,294       627,294  

Other intangible assets

     42,706       45,050  
  

 

 

   

 

 

 

Total assets

   $ 40,259,282     $ 38,661,609  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Liabilities:

    

Deposits:

    

Non-interest bearing

   $ 7,262,328     $ 6,980,443  

Interest bearing

     24,950,251       23,515,781  
  

 

 

   

 

 

 

Total deposits

     32,212,579       30,496,224  
  

 

 

   

 

 

 

Assets sold under agreements to repurchase

     434,714       479,425  

Other short-term borrowings

     1,200       1,200  

Notes payable

     1,557,972       1,574,852  

Other liabilities

     862,604       911,951  
  

 

 

   

 

 

 

Total liabilities

     35,069,069       33,463,652  
  

 

 

   

 

 

 

Commitments and contingencies (Refer to Note 21)

    

Stockholders’ equity:

    

Preferred stock, 30,000,000 shares authorized; 2,006,391shares issued and outstanding

     50,160       50,160  

Common stock, $0.01 par value; 170,000,000 shares authorized; 104,101,618 shares issued (2016 - 104,058,684) and 101,956,740 shares outstanding (2016 - 103,790,932)

     1,041       1,040  

Surplus

     4,261,346       4,255,022  

Retained earnings

     1,286,706       1,220,307  

Treasury stock - at cost, 2,144,878 shares (2016 - 267,752)

     (89,128     (8,286

Accumulated other comprehensive loss, net of tax

     (319,912     (320,286
  

 

 

   

 

 

 

Total stockholders’ equity

     5,190,213       5,197,957  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 40,259,282     $ 38,661,609  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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POPULAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

     Quarters ended March 31,  

(In thousands, except per share information)

   2017     2016  

Interest income:

    

Loans

   $ 363,136     $ 363,197  

Money market investments

     6,573       2,863  

Investment securities

     44,886       36,271  

Trading account securities

     1,400       1,689  
  

 

 

   

 

 

 

Total interest income

     415,995       404,020  
  

 

 

   

 

 

 

Interest expense:

    

Deposits

     33,757       29,874  

Short-term borrowings

     1,095       1,861  

Long-term debt

     19,045       19,873  
  

 

 

   

 

 

 

Total interest expense

     53,897       51,608  
  

 

 

   

 

 

 

Net interest income

     362,098       352,412  

Provision for loan losses - non-covered loans

     42,057       47,940  

Provision (reversal) for loan losses - covered loans

     (1,359     (3,105
  

 

 

   

 

 

 

Net interest income after provision for loan losses

     321,400       307,577  
  

 

 

   

 

 

 

Service charges on deposit accounts

     39,536       39,862  

Other service fees (Refer to Note 27)

     56,175       53,382  

Mortgage banking activities (Refer to Note 10)

     11,369       10,551  

Net gain on sale and valuation adjustments of investment securities

     162       —    

Trading account loss

     (278     (162

Net loss on sale of loans, including valuation adjustments on loans held-for-sale

     —         (304

Adjustments (expense) to indemnity reserves on loans sold

     (1,966     (4,098

FDIC loss share expense (Refer to Note 28)

     (8,257     (3,146

Other operating income

     19,128       15,545  
  

 

 

   

 

 

 

Total non-interest income

     115,869       111,630  
  

 

 

   

 

 

 

Operating expenses:

    

Personnel costs

     125,607       127,091  

Net occupancy expenses

     20,776       20,430  

Equipment expenses

     15,970       14,548  

Other taxes

     10,969       10,195  

Professional fees

     69,250       75,459  

Communications

     5,949       6,320  

Business promotion

     11,576       11,110  

FDIC deposit insurance

     6,493       7,370  

Other real estate owned (OREO) expenses

     12,818       9,141  

Other operating expenses

     29,565       17,165  

Amortization of intangibles

     2,345       3,114  
  

 

 

   

 

 

 

Total operating expenses

     311,318       301,943  
  

 

 

   

 

 

 

Income from continuing operations before income tax

     125,951       117,264  

Income tax expense

     33,006       32,265  
  

 

 

   

 

 

 

Net Income

   $ 92,945     $ 84,999  
  

 

 

   

 

 

 

Net Income Applicable to Common Stock

   $ 92,014     $ 84,068  
  

 

 

   

 

 

 

Net Income per Common Share – Basic

   $ 0.89     $ 0.81  
  

 

 

   

 

 

 

Net Income per Common Share – Diluted

   $ 0.89     $ 0.81  
  

 

 

   

 

 

 

Dividends Declared per Common Share

   $ 0.25     $ 0.15  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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POPULAR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

     Quarters ended March 31,  

(In thousands)

   2017     2016  

Net income

   $ 92,945     $ 84,999  
  

 

 

   

 

 

 

Other comprehensive income before tax:

    

Foreign currency translation adjustment

     139       (705

Amortization of net losses on pension and postretirement benefit plans

     5,607       5,486  

Amortization of prior service credit of pension and postretirement benefit plans

     (950     (950

Unrealized holding (losses) gains on investments arising during the period

     (2,907     76,236  

Reclassification adjustment for gains included in net income

     (162     —    

Unrealized net losses on cash flow hedges

     (637     (2,000

Reclassification adjustment for net losses included in net income

     855       1,545  
  

 

 

   

 

 

 

Other comprehensive income before tax

     1,945       79,612  

Income tax expense

     (1,571     (4,476
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     374       75,136  
  

 

 

   

 

 

 

Comprehensive income, net of tax

   $ 93,319     $ 160,135  
  

 

 

   

 

 

 

 

Tax effect allocated to each component of other comprehensive income:

 

 

     Quarters ended March 31,  

(In thousands)

   2017     2016  

Amortization of net losses on pension and postretirement benefit plans

   $ (2,186   $ (2,140

Amortization of prior service credit of pension and postretirement benefit plans

     370       370  

Unrealized holding (losses) gains on investments arising during the period

     298       (2,885

Reclassification adjustment for gains included in net income

     32       —    

Unrealized net losses on cash flow hedges

     248       781  

Reclassification adjustment for net losses included in net income

     (333     (602
  

 

 

   

 

 

 

Income tax expense

   $ (1,571   $ (4,476
  

 

 

   

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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POPULAR, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

 

                                     Accumulated        
                                     other        
     Common      Preferred            Retained     Treasury     comprehensive        

(In thousands)

   stock      stock      Surplus     earnings     stock     loss     Total  

Balance at December 31, 2015

   $ 1,038      $ 50,160      $ 4,229,156     $ 1,087,957     $ (6,101   $ (256,886   $ 5,105,324  

Net income

             84,999           84,999  

Issuance of stock

     1           2,108             2,109  

Tax windfall benefit on vesting of restricted stock

           (31           (31

Dividends declared:

                

Common stock

             (15,549         (15,549

Preferred stock

             (931         (931

Common stock purchases

               (764       (764

Common stock reissuance

               7         7  

Other comprehensive income, net of tax

                 75,136       75,136  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2016

   $ 1,039      $ 50,160      $ 4,231,233     $ 1,156,476     $ (6,858   $ (181,750   $ 5,250,300  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2016

   $ 1,040      $ 50,160      $ 4,255,022     $ 1,220,307     $ (8,286   $ (320,286   $ 5,197,957  

Net income

             92,945           92,945  

Issuance of stock

     1           1,806             1,807  

Dividends declared:

                

Common stock

             (25,615         (25,615

Preferred stock

             (931         (931

Common stock purchases

           4,518         (80,842       (76,324

Other comprehensive income, net of tax

                 374       374  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2017

   $ 1,041      $ 50,160      $ 4,261,346     $ 1,286,706     $ (89,128   $ (319,912   $ 5,190,213  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                     March 31,     March 31,  

Disclosure of changes in number of shares:

                                   2017     2016  

Preferred Stock:

                

Balance at beginning and end of period

                 2,006,391       2,006,391  
              

 

 

   

 

 

 

Common Stock – Issued:

                

Balance at beginning of period

                 104,058,684       103,816,185  

Issuance of stock

                 42,934       79,457  
              

 

 

   

 

 

 

Balance at end of the period

                 104,101,618       103,895,642  

Treasury stock

                 (2,144,878     (225,637
              

 

 

   

 

 

 

Common Stock – Outstanding

                 101,956,740       103,670,005  
              

 

 

   

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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POPULAR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

     Quarter ended March 31,  
(In thousands)    2017     2016  

Cash flows from operating activities:

    

Net income

   $ 92,945     $ 84,999  
  

 

 

   

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

    

Provision for loan losses

     40,698       44,835  

Amortization of intangibles

     2,345       3,114  

Depreciation and amortization of premises and equipment

     11,799       11,707  

Net accretion of discounts and amortization of premiums and deferred fees

     (6,463     (11,158

Fair value adjustments on mortgage servicing rights

     5,954       8,477  

FDIC loss share expense

     8,257       3,146  

Adjustments (expense) to indemnify reserves on loans sold

     1,966       4,098  

Earnings from investments under the equity method

     (10,879     (7,089

Deferred income tax expense

     25,060       23,218  

Loss (gain) on:

    

Disposition of premises and equipment and other productive assets

     6,466       (1,946

Sale and valuation adjustments of investment securities

     (162      

Sale of loans, including valuation adjustments on loans held-for-sale and mortgage banking activities

     (5,381     (7,101

Sale of foreclosed assets, including write-downs

     4,512       2,802  

Acquisitions of loans held-for-sale

     (73,043     (66,451

Proceeds from sale of loans held-for-sale

     29,364       22,253  

Net originations on loans held-for-sale

     (123,336     (110,528

Net decrease (increase) in:

    

Trading securities

     177,153       176,598  

Accrued income receivable

     10,024       3,926  

Other assets

     13,161       20,996  

Net (decrease) increase in:

    

Interest payable

     (11,281     (12,261

Pension and other postretirement benefits obligation

     331       1,536  

Other liabilities

     (13,654     (17,010
  

 

 

   

 

 

 

Total adjustments

     92,891       93,162  
  

 

 

   

 

 

 

Net cash provided by operating activities

     185,836       178,161  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Net (increase) decrease in money market investments

     (763,130     262,632  

Purchases of investment securities:

    

Available-for-sale

     (1,216,880     (742,859

Other

     (225     (59,786

Proceeds from calls, paydowns, maturities and redemptions of investment securities:

    

Available-for-sale

     222,677       239,399  

Held-to-maturity

     2,184       2,108  

Other

           41,664  

Proceeds from sale of investment securities:

    

Available-for-sale

     381        

Other

     1,757       26,346  

Net repayments on loans

     99,306       13,335  

Proceeds from sale of loans

           1,128  

Acquisition of loan portfolios

     (109,098     (212,798

Net payments (to) from FDIC under loss sharing agreements

     (23,574     88,588  

Return of capital from equity method investments

     3,862       206  

Acquisition of premises and equipment

     (18,646     (38,819

Proceeds from sale of:

    

Premises and equipment and other productive assets

     3,011       5,092  

Foreclosed assets

     27,547       14,513  
  

 

 

   

 

 

 

Net cash used in by investing activities

     (1,770,828     (359,251
  

 

 

   

 

 

 

Cash flows from financing activities:

 

Net increase (decrease) in:

    

Deposits

     1,715,958       318,550  

Federal funds purchased and assets sold under agreements to repurchase

     (44,711     (1,991

Other short-term borrowings

           5,170  

Payments of notes payable

     (17,408     (108,452

Proceeds from issuance of notes payable

           28,883  

Proceeds from issuance of common stock

     1,806       2,109  

Dividends paid

     (16,499     (16,473

Net payments for repurchase of common stock

     (75,604     (77

Payments related to tax withholding for shared-based compensation

     (719     (680
  

 

 

   

 

 

 

Net cash provided by financing activities

     1,562,823       227,039  
  

 

 

   

 

 

 

Net (decrease) increase in cash and due from banks

     (22,169     45,949  

Cash and due from banks at beginning of period

     362,394       363,674  
  

 

 

   

 

 

 

Cash and due from banks at the end of the period

   $ 340,225     $ 409,623  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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Table of Contents

Notes to Consolidated Financial

Statements (Unaudited)

 

Note 1

 

-

 

Nature of operations

     9  

Note 2

 

-

 

Basis of presentation and summary of significant accounting policies

     10  

Note 3

 

-

 

New accounting pronouncements

     11  

Note 4

 

-

 

Restrictions on cash and due from banks and certain securities

     13  

Note 5

 

-

 

Investment securities available-for-sale

     14  

Note 6

 

-

 

Investment securities held-to-maturity

     18  

Note 7

 

-

 

Loans

     20  

Note 8

 

-

 

Allowance for loan losses

     28  

Note 9

 

-

 

FDIC loss share asset and true-up payment obligation

     42  

Note 10

 

-

 

Mortgage banking activities

     44  

Note 11

 

-

 

Transfers of financial assets and mortgage servicing assets

     45  

Note 12

 

-

 

Other real estate owned

     48  

Note 13

 

-

 

Other assets

     49  

Note 14

 

-

 

Goodwill and other intangible assets

     50  

Note 15

 

-

 

Deposits

     52  

Note 16

 

-

 

Borrowings

     53  

Note 17

 

-

 

Offsetting of financial assets and liabilities

     55  

Note 18

 

-

 

Stockholders’ equity

     57  

Note 19

 

-

 

Other comprehensive loss

     58  

Note 20

 

-

 

Guarantees

     60  

Note 21

 

-

 

Commitments and contingencies

     62  

Note 22

 

-

 

Non-consolidated variable interest entities

     70  

Note 23

 

-

 

Related party transactions

     73  

Note 24

 

-

 

Fair value measurement

     76  

Note 25

 

-

 

Fair value of financial instruments

     82  

Note 26

 

-

 

Net income per common share

     86  

Note 27

 

-

 

Other service fees

     87  

Note 28

 

-

 

FDIC loss share (expense) income

     88  

Note 29

 

-

 

Pension and postretirement benefits

     89  

Note 30

 

-

 

Stock-based compensation

     90  

Note 31

 

-

 

Income taxes

     92  

Note 32

 

-

 

Supplemental disclosure on the consolidated statements of cash flows

     95  

Note 33

 

-

 

Segment reporting

     96  

Note 34

 

-

 

Condensed consolidating financial information of guarantor and issuers of registered guaranteed securities

     100  

 

8


Table of Contents

Note 1 – Nature of operations

Popular, Inc. (the “Corporation”) is a diversified, publicly-owned financial holding company subject to the supervision and regulation of the Board of Governors of the Federal Reserve System. The Corporation has operations in Puerto Rico, the United States and the Caribbean. In Puerto Rico, the Corporation provides retail, mortgage, and commercial banking services through its principal banking subsidiary, Banco Popular de Puerto Rico (“BPPR”), as well as investment banking, broker-dealer, auto and equipment leasing and financing, and insurance services through specialized subsidiaries. In the U.S. mainland, the Corporation operates Banco Popular North America (“BPNA”). BPNA focuses efforts and resources on the core community banking business. BPNA operates branches in New York, New Jersey and South Florida under the name of Popular Community Bank.

 

9


Table of Contents

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated interim financial statements have been prepared without audit. The consolidated statement of financial condition data at December 31, 2016 was derived from audited financial statements. The unaudited interim financial statements are, in the opinion of management, a fair statement of the results for the periods reported and include all necessary adjustments, all of a normal recurring nature, for a fair statement of such results.

Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from the unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements should be read in conjunction with the audited Consolidated Financial Statements of the Corporation for the year ended December 31, 2016, included in the Corporation’s 2016 Form 10-K. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

10


Table of Contents

Note 3 – New accounting pronouncements

Recently Adopted Accounting Standards Updates

FASB Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

The FASB issued ASU 2016-09 in March 2016, which simplifies multiple aspects of the accounting for share-based payment transactions, including the recognition of excess tax benefits and deficiencies as an income tax benefit or expense in the income statement and classification in the statement of cash flows as an operating activity, allowing entities to elect as an accounting policy to account for forfeitures when they occur, permitting entities to withhold up to the maximum individual statutory rate without classifying the awards as a liability, and requiring that the cash paid to satisfy the statutory income tax withholding obligation be classified as a financing activity.

The amendments to this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. As a result of the adoption of this accounting pronouncement during the first quarter of 2017, the Corporation recognized excess tax benefits and shortfalls as income tax benefit or expense in the income statement and revised the presentation of its statements of cash flows, all of which had an immaterial impact to the financial statements taken as a whole.

Additionally, adoption of the following standards effective during the first quarter of 2017 did not have a significant impact on its Consolidated Financial Statements:

 

    FASB Accounting Standards Update (“ASU”) 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control

 

    FASB Accounting Standards Update (“ASU”) 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting

 

    FASB Accounting Standards Update (“ASU”) 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments

 

    FASB Accounting Standards Update (“ASU”) 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships

Recently Issued Accounting Standards Updates

FASB Accounting Standards Update (“ASU”) 2017-08, Receivables– Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities

The FASB issued ASU 2017-08 in March 2017, which amends the amortization period for certain callable debt securities held at a premium by shortening such period to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.

The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The amendments in this Update should be applied on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.

The Corporation does not anticipate that the adoption of this accounting pronouncement will have a material effect on its consolidated statements of financial condition and results of operations since the premium of purchased callable debt securities is not significant.

FASB Accounting Standards Update (“ASU”) 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

The FASB issued ASU 2017-07 in March 2017, which requires that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization.

 

11


Table of Contents

The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The amendments in this Update should be applied retrospectively for the presentation of the service cost component and other components of net benefit cost and prospectively for the capitalization of the service cost component.

The Corporation is currently evaluating the impact that the adoption of this guidance will have on its consolidated statements of financial condition and results of operations.

For recently issued Accounting Standards Updates not yet effective, refer to Note 3 to the Consolidated Financial Statements included in the 2016 Form 10-K.

 

12


Table of Contents

Note 4 - Restrictions on cash and due from banks and certain securities

The Corporation’s banking subsidiaries, BPPR and BPNA, are required by federal and state regulatory agencies to maintain average reserve balances with the Federal Reserve Bank of New York (the “Fed”) or other banks. Those required average reserve balances amounted to $ 1.2 billion at March 31, 2017 (December 31, 2016 - $ 1.2 billion). Cash and due from banks, as well as other highly liquid securities, are used to cover the required average reserve balances.

At March 31, 2017, the Corporation held $45 million in restricted assets in the form of funds deposited in money market accounts, trading account securities and investment securities available for sale (December 31, 2016 - $31 million). The amounts held in trading account securities and investment securities available for sale consist primarily of restricted assets held for the Corporation’s non-qualified retirement plans and fund deposits guaranteeing possible liens or encumbrances over the title of insured properties.

 

13


Table of Contents

Note 5 – Investment securities available-for-sale

The following tables present the amortized cost, gross unrealized gains and losses, approximate fair value, weighted average yield and contractual maturities of investment securities available-for-sale at March 31, 2017 and December 31, 2016.

 

     At March 31, 2017  

(In thousands)

   Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
     Fair
value
     Weighted
average
yield
 

U.S. Treasury securities

              

Within 1 year

   $ 944,180      $ 408      $ 242      $ 944,346        0.98

After 1 to 5 years

     2,007,013        1,039        9,278        1,998,774        1.24  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total U.S. Treasury securities

     2,951,193        1,447        9,520        2,943,120        1.16  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Obligations of U.S. Government sponsored entities

              

Within 1 year

     125,028        39        46        125,021        0.97  

After 1 to 5 years

     588,119        724        1,785        587,058        1.40  

After 5 to 10 years

     200        3        —          203        5.64  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total obligations of U.S. Government sponsored entities

     713,347        766        1,831        712,282        1.32  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Obligations of Puerto Rico, States and political subdivisions

              

After 1 to 5 years

     6,480        —          127        6,353        2.78  

After 5 to 10 years

     5,000        —          1,967        3,033        3.80  

After 10 years

     17,625        —          6,102        11,523        7.09  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total obligations of Puerto Rico, States and political subdivisions

     29,105        —          8,196        20,909        5.56  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Collateralized mortgage obligations - federal agencies

              

Within 1 year

     48        —          —          48        4.00  

After 1 to 5 years

     18,086        349        50        18,385        2.87  

After 5 to 10 years

     35,328        354        59        35,623        2.67  

After 10 years

     1,111,730        5,130        24,030        1,092,830        1.99  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total collateralized mortgage obligations - federal agencies

     1,165,192        5,833        24,139        1,146,886        2.02  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Mortgage-backed securities

              

Within 1 year

     49        —          —          49        4.73  

After 1 to 5 years

     18,205        441        77        18,569        3.80  

After 5 to 10 years

     333,619        3,071        2,324        334,366        2.23  

After 10 years

     4,049,014        27,557        66,499        4,010,072        2.48  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total mortgage-backed securities

     4,400,887        31,069        68,900        4,363,056        2.46  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Equity securities (without contractual maturity)

     1,026        833        —          1,859        8.13  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other

              

Within 1 year

     8,445        9        —          8,454        1.86  

After 5 to 10 years

     935        26        —          961        3.62  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total other

     9,380        35        —          9,415        2.04  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities available-for-sale[1]

   $ 9,270,130      $ 39,983      $ 112,586      $ 9,197,527        1.91
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Includes $4.9 billion pledged to secure public and trust deposits, assets sold under agreements to repurchase, credit facilities and loan servicing agreements that the secured parties are not permitted to sell or repledge the collateral, of which $4.2 billion serve as collateral for public funds.

 

14


Table of Contents
     At December 31, 2016  

(In thousands)

   Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
     Fair
value
     Weighted
average
yield
 

U.S. Treasury securities

              

Within 1 year

   $ 844,002      $ 1,254      $ 28      $ 845,228        1.00

After 1 to 5 years

     1,300,729        214        9,551        1,291,392        1.11  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total U.S. Treasury securities

     2,144,731        1,468        9,579        2,136,620        1.06  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Obligations of U.S. Government sponsored entities

              

Within 1 year

     100,050        102        —          100,152        0.98  

After 1 to 5 years

     613,293        710        2,505        611,498        1.38  

After 5 to 10 years

     200        —          —          200        5.64  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total obligations of U.S. Government sponsored entities

     713,543        812        2,505        711,850        1.32  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Obligations of Puerto Rico, States and political subdivisions

              

After 1 to 5 years

     6,419        —          161        6,258        2.89  

After 5 to 10 years

     5,000        —          1,550        3,450        3.80  

After 10 years

     17,605        —          4,542        13,063        7.09  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total obligations of Puerto Rico, States and political subdivisions

     29,024        —          6,253        22,771        5.60  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Collateralized mortgage obligations - federal agencies

              

Within 1 year

     13        —          —          13        1.23  

After 1 to 5 years

     18,524        429        28        18,925        2.89  

After 5 to 10 years

     39,178        428        61        39,545        2.68  

After 10 years

     1,180,686        6,313        23,956        1,163,043        1.99  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total collateralized mortgage obligations - federal agencies

     1,238,401        7,170        24,045        1,221,526        2.02  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Mortgage-backed securities

              

Within 1 year

     55        1        —          56        4.76  

After 1 to 5 years

     19,960        537        43        20,454        3.86  

After 5 to 10 years

     317,185        3,701        1,721        319,165        2.29  

After 10 years

     3,805,675        28,772        68,790        3,765,657        2.47  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total mortgage-backed securities

     4,142,875        33,011        70,554        4,105,332        2.46  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Equity securities (without contractual maturity)

     1,246        876        —          2,122        7.94  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other

              

Within 1 year

     8,539        11        —          8,550        1.78  

After 5 to 10 years

     1,004        31        —          1,035        3.62  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total other

     9,543        42        —          9,585        1.97  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities available-for-sale[1]

   $ 8,279,363      $ 43,379      $ 112,936      $ 8,209,806        1.94
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Includes $4.1 billion pledged to secure public and trust deposits, assets sold under agreements to repurchase, credit facilities and loan servicing agreements that the secured parties are not permitted to sell or repledge the collateral, of which $3.4 billion serve as collateral for public funds.

The weighted average yield on investment securities available-for-sale is based on amortized cost; therefore, it does not give effect to changes in fair value.

Securities not due on a single contractual maturity date, such as mortgage-backed securities and collateralized mortgage obligations, are classified in the period of final contractual maturity. The expected maturities of collateralized mortgage obligations, mortgage-backed securities and certain other securities may differ from their contractual maturities because they may be subject to prepayments or may be called by the issuer.

During the quarter ended March 31, 2017, the Corporation sold equity securities with a realized gain of $162 thousand. The proceeds from these sales were $381 thousand. There were no securities sold during the quarter ended March 31, 2016.

The following tables present the Corporation’s fair value and gross unrealized losses of investment securities available-for-sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2017 and December 31, 2016.

 

15


Table of Contents
     At March 31, 2017  
     Less than 12 months      12 months or more      Total  

(In thousands)

   Fair
value
     Gross
unrealized
losses
     Fair
value
     Gross
unrealized
losses
     Fair
value
     Gross
unrealized
losses
 

U.S. Treasury securities

   $ 1,711,899      $ 9,520      $ —        $ —        $ 1,711,899      $ 9,520  

Obligations of U.S. Government sponsored entities

     405,934        1,797        2,945        34        408,879        1,831  

Obligations of Puerto Rico, States and political subdivisions

     6,353        127        14,556        8,069        20,909        8,196  

Collateralized mortgage obligations - federal agencies

     471,245        8,778        325,069        15,361        796,314        24,139  

Mortgage-backed securities

     3,601,972        68,519        14,453        381        3,616,425        68,900  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities available-for-sale in an unrealized loss position

   $ 6,197,403      $ 88,741      $ 357,023      $ 23,845      $ 6,554,426      $ 112,586  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     At December 31, 2016  
     Less than 12 months      12 months or more      Total  

(In thousands)

   Fair
value
     Gross
unrealized
losses
     Fair value      Gross
unrealized
losses
     Fair value      Gross
unrealized
losses
 

U.S. Treasury securities

   $ 1,162,110      $ 9,579      $ —        $ —        $ 1,162,110      $ 9,579  

Obligations of U.S. Government sponsored entities

     430,273        2,426        3,126        79        433,399        2,505  

Obligations of Puerto Rico, States and political subdivisions

     6,258        161        16,512        6,092        22,770        6,253  

Collateralized mortgage obligations - federal agencies

     505,503        8,112        339,236        15,933        844,739        24,045  

Mortgage-backed securities

     3,537,606        70,173        15,113        381        3,552,719        70,554  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities available-for-sale in an unrealized loss position

   $ 5,641,750      $ 90,451      $ 373,987      $ 22,485      $ 6,015,737      $ 112,936  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of March 31, 2017, the available-for-sale investment portfolio reflects gross unrealized losses of approximately $113 million, driven by Mortgage backed securities and Collateralized mortgage obligations.

Management evaluates investment securities for other-than-temporary (“OTTI”) declines in fair value on a quarterly basis. Once a decline in value is determined to be other-than-temporary, the value of a debt security is reduced and a corresponding charge to earnings is recognized for anticipated credit losses. Also, for equity securities that are considered other-than-temporarily impaired, the excess of the security’s carrying value over its fair value at the evaluation date is accounted for as a loss in the results of operations. The OTTI analysis requires management to consider various factors, which include, but are not limited to: (1) the length of time and the extent to which fair value has been less than the amortized cost basis, (2) the financial condition of the issuer or issuers, (3) actual collateral attributes, (4) the payment structure of the debt security and the likelihood of the issuer being able to make payments, (5) any rating changes by a rating agency, (6) adverse conditions specifically related to the security, industry, or a geographic area, and (7) management’s intent to sell the debt security or whether it is more likely than not that the Corporation would be required to sell the debt security before a forecasted recovery occurs.

The portfolio of “Obligations of Puerto Rico, States and Political subdivisions” include senior obligations from the Puerto Rico Sales Tax Financing Corporation (“COFINA”) with a fair value of $15 million (December 31, 2016 - $17 million) that had an unrealized loss of $8 million, included in accumulated other comprehensive income, at March 31, 2017 (December 31, 2016 - $6 million). As further discussed in Note 21, on May 3, 2017, the Oversight Board established pursuant to the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”) filed a petition in the Federal Court for the District of Puerto Rico to utilize the restructuring authority provided by Title III of PROMESA for the Commonwealth; on May 5, 2017, the Oversight Board sought relief under Title III with respect to COFINA. Act No. 26-2017 of 2017, signed on April 29, 2017, also allows the Commonwealth to use COFINA revenues for operational expenses, subject to certain conditions and restrictions. Although to date, COFINA has made all debt service payments and has certain moneys in reserve to make certain additional debt service payments in the ordinary course, the Corporation, in light of these developments, will re-evaluate during the second quarter of 2017 whether the decline in value of these investments is other-than-temporary, which would result in the recognition of a charge to earnings related to credit losses with respect to such COFINA senior obligations. Further negative evidence impacting the liquidity and sources of repayment of the obligations of Puerto Rico and its political subdivisions, or any further actions taken by the Commonwealth or the Oversight Board that affect our holdings of obligations of the Commonwealth or its instrumentalities, could result in additional charges to earnings to recognize estimated credit losses determined to be other-than-temporary.

At March 31, 2017, the Corporation did not have the intent to sell debt securities in an unrealized loss position and it was not more likely than not that the Corporation would have to sell the investments securities prior to recovery of their amortized cost basis.

 

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Table of Contents

The following table states the name of issuers, and the aggregate amortized cost and fair value of the securities of such issuer (includes available-for-sale and held-to-maturity securities), in which the aggregate amortized cost of such securities exceeds 10% of stockholders’ equity. This information excludes securities backed by the full faith and credit of the U.S. Government. Investments in obligations issued by a state of the U.S. and its political subdivisions and agencies, which are payable and secured by the same source of revenue or taxing authority, other than the U.S. Government, are considered securities of a single issuer.

 

     March 31, 2017      December 31, 2016  

(In thousands)

   Amortized cost      Fair value      Amortized cost      Fair value  

FNMA

   $ 3,435,528      $ 3,392,789      $ 3,255,844      $ 3,211,443  

Freddie Mac

     1,391,110        1,371,949        1,381,197        1,361,933  

 

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Table of Contents

Note 6 – Investment securities held-to-maturity

The following tables present the amortized cost, gross unrealized gains and losses, approximate fair value, weighted average yield and contractual maturities of investment securities held-to-maturity at March 31, 2017 and December 31, 2016.

 

     At March 31, 2017  

(In thousands)

   Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
     Fair
value
     Weighted
average
yield
 

Obligations of Puerto Rico, States and political subdivisions

              

Within 1 year

   $ 3,235      $ —        $ 1,375      $ 1,860        5.95

After 1 to 5 years

     15,200        —          6,627        8,573        6.03  

After 5 to 10 years

     17,485        —          7,689        9,796        6.24  

After 10 years

     58,333        1,387        8,360        51,360        1.80  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total obligations of Puerto Rico, States and political subdivisions

     94,253        1,387        24,051        71,589        3.45  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Collateralized mortgage obligations - federal agencies

              

After 5 to 10 years

     73        4        —          77        5.45  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total collateralized mortgage obligations - federal agencies

     73        4        —          77        5.45  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other

              

Within 1 year

     1,250        —          25        1,225        1.62  

After 1 to 5 years

     750        —          13        737        2.75  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total other

     2,000        —          38        1,962        2.04  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities held-to-maturity[1]

   $ 96,326      $ 1,391      $ 24,089      $ 73,628        3.42
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Includes $94.3 million pledged to secure public and trust deposits that the secured parties are not permitted to sell or repledge the collateral.

 

     At December 31, 2016  
            Gross      Gross             Weighted  

(In thousands)

   Amortized
cost
     unrealized
gains
     unrealized
losses
     Fair
value
     average
yield
 

Obligations of Puerto Rico, States and political subdivisions

              

Within 1 year

   $ 3,105      $ —        $ 1,240      $ 1,865        5.90

After 1 to 5 years

     14,540        —          5,957        8,583        6.02  

After 5 to 10 years

     18,635        —          7,766        10,869        6.20  

After 10 years

     59,747        1,368        8,892        52,223        1.91  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total obligations of Puerto Rico, States and political subdivisions

     96,027        1,368        23,855        73,540        3.49  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Collateralized mortgage obligations - federal agencies

              

After 5 to 10 years

     74        4        —          78        5.45  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total collateralized mortgage obligations - federal agencies

     74        4        —          78        5.45  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other

              

Within 1 year

     1,000        —          3        997        1.65  

After 1 to 5 years

     1,000        —          39        961        2.44  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total other

     2,000        —          42        1,958        2.05  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities held-to-maturity[1]

   $ 98,101      $ 1,372      $ 23,897      $ 75,576        3.46
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Includes $53.1 million pledged to secure public and trust deposits that the secured parties are not permitted to sell or repledge the collateral.

Securities not due on a single contractual maturity date, such as collateralized mortgage obligations, are classified in the period of final contractual maturity. The expected maturities of collateralized mortgage obligations and certain other securities may differ from their contractual maturities because they may be subject to prepayments or may be called by the issuer.

The following tables present the Corporation’s fair value and gross unrealized losses of investment securities held-to-maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2017 and December 31, 2016.

 

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Table of Contents
     At March 31, 2017  
     Less than 12 months      12 months or more      Total  

(In thousands)

   Fair
value
     Gross
unrealized
losses
     Fair
value
     Gross
unrealized
losses
     Fair
value
     Gross
unrealized
losses
 

Obligations of Puerto Rico, States and political subdivisions

   $ 31,526      $ 1,764      $ 28,703      $ 22,287      $ 60,229      $ 24,051  

Other

     737        13        1,225        25        1,962        38  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities held-to-maturity in an unrealized loss position

   $ 32,263      $ 1,777      $ 29,928      $ 22,312      $ 62,191      $ 24,089  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     At December 31, 2016  
     Less than 12 months      12 months or more      Total  

(In thousands)

   Fair
value
     Gross
unrealized
losses
     Fair
value
     Gross
unrealized
losses
     Fair
value
     Gross
unrealized
losses
 

Obligations of Puerto Rico, States and political subdivisions

   $ 31,294      $ 1,702      $ 30,947      $ 22,153      $ 62,241      $ 23,855  

Other

     491        9        1,217        33        1,708        42  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment securities held-to-maturity in an unrealized loss position

   $ 31,785      $ 1,711      $ 32,164      $ 22,186      $ 63,949      $ 23,897  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As indicated in Note 5 to these Consolidated Financial Statements, management evaluates investment securities for OTTI declines in fair value on a quarterly basis.

The “Obligations of Puerto Rico, States and political subdivisions” classified as held-to-maturity at March 31, 2017 are primarily associated with securities issued by municipalities of Puerto Rico and are generally not rated by a credit rating agency. This includes $51 million of general and special obligation bonds issued by three municipalities of Puerto Rico, which are payable primarily from, and have a lien on, certain property taxes imposed by the issuing municipality. In the case of general obligations, they also benefit from a pledge of the full faith, credit and unlimited taxing power of the issuing municipality and issuing municipalities are required by law to levy property taxes in an amount sufficient for the payment of debt service on such general obligations bonds.

The portfolio also includes approximately $43 million in securities for which the underlying source of payment is not the central government, but in which a government instrumentality provides a guarantee in the event of default.

The Corporation performs periodic credit quality reviews on these issuers. Based on the quarterly analysis performed, management concluded that no individual debt security was other-than-temporarily impaired at March 31, 2017. Further deterioration of the fiscal crisis of the Government of Puerto Rico could further affect the value of these securities, resulting in losses to the Corporation. The Corporation does not have the intent to sell securities held-to-maturity and it is more likely than not that the Corporation will not have to sell these investment securities prior to recovery of their amortized cost basis.

Refer to Note 21 for additional information on the Corporation’s exposure to the Puerto Rico Government.

 

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Table of Contents

Note 7 – Loans

Loans acquired in the Westernbank FDIC-assisted transaction, except for lines of credit with revolving privileges, are accounted for by the Corporation in accordance with ASC Subtopic 310-30. Under ASC Subtopic 310-30, the acquired loans were aggregated into pools based on similar characteristics. Each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. The loans which are accounted for under ASC Subtopic 310-30 by the Corporation are not considered non-performing and will continue to have an accretable yield as long as there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The Corporation measures additional losses for this portfolio when it is probable the Corporation will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. Lines of credit with revolving privileges that were acquired as part of the Westernbank FDIC-assisted transaction are accounted for under the guidance of ASC Subtopic 310-20, which requires that any differences between the contractually required loan payment receivable in excess of the Corporation’s initial investment in the loans be accreted into interest income. Loans accounted for under ASC Subtopic 310-20 are placed in non-accrual status when past due in accordance with the Corporation’s non-accruing policy and any accretion of discount is discontinued.

The risks on loans acquired in the FDIC-assisted transaction are significantly different from the risks on loans not covered under the FDIC loss sharing agreements because of the loss protection provided by the FDIC. Accordingly, the Corporation presents loans subject to the loss sharing agreements as “covered loans” in the information below and loans that are not subject to the FDIC loss sharing agreements as “non-covered loans.” The FDIC loss sharing agreements expired on June 30, 2015 for commercial (including construction) and consumer loans, and expires on June 30, 2020 for single-family residential mortgage loans, as explained in Note 9.

For a summary of the accounting policies related to loans, interest recognition and allowance for loan losses refer to the summary of significant accounting policies included in Note 2 of the 2016 Form10K.

During the quarter ended March 31, 2017, the Corporation recorded purchases (including repurchases) of mortgage loans amounting to $136 million, consumer loans of $42 million and leasing loans of $2 million. During the quarter ended March 31, 2016, the Corporation recorded purchases of mortgage loans amounting to $122 million, consumer loans of $106 million and commercial loans of $51 million.

The Corporation performed whole-loan sales involving approximately $28 million of residential mortgage loans during the quarter ended March 31, 2017 (March 31, 2016 - $21 million). Also, during the quarter ended March 31, 2017, the Corporation securitized approximately $147 million of mortgage loans into Government National Mortgage Association (“GNMA”) mortgage-backed securities and $28 million of mortgage loans into Federal National Mortgage Association (“FNMA”) mortgage-backed securities, compared to $134 million and $36 million, respectively, during the quarter ended March 31, 2016.

Non-covered loans

The following table presents the composition of non-covered loans held-in-portfolio (“HIP”), net of unearned income, by past due status at March 31, 2017 and December 31, 2016, including loans previously covered by the commercial FDIC loss sharing agreements.

 

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Table of Contents

March 31, 2017

 

Puerto Rico

 
     Past due             Non-covered  

(In thousands)

   30-59
days
     60-89
days
     90 days
or more
     Total
past due
     Current      loans HIP
Puerto Rico
 

Commercial multi-family

   $ 1,727      $ —        $ 578      $ 2,305      $ 144,547      $ 146,852  

Commercial real estate non-owner occupied

     97,018        1,487        34,932        133,437        2,380,158        2,513,595  

Commercial real estate owner occupied

     13,055        1,768        115,260        130,083        1,608,195        1,738,278  

Commercial and industrial

     7,127        1,286        46,968        55,381        2,610,224        2,665,605  

Construction

     —          —          1,668        1,668        93,791        95,459  

Mortgage

     293,694        146,474        777,260        1,217,428        4,652,290        5,869,718  

Leasing

     8,141        1,052        2,444        11,637        708,006        719,643  

Consumer:

                 

Credit cards

     12,330        7,835        19,330        39,495        1,038,989        1,078,484  

Home equity lines of credit

     492        —          572        1,064        7,085        8,149  

Personal

     13,131        7,382        19,460        39,973        1,103,362        1,143,335  

Auto

     30,214        6,228        12,685        49,127        779,832        828,959  

Other

     729        611        19,480        20,820        147,332        168,152  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 477,658      $ 174,123      $ 1,050,637      $ 1,702,418      $ 15,273,811      $ 16,976,229  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

March 31, 2017

 

U.S. mainland

 
     Past due                

(In thousands)

   30-59 days      60-89 days      90 days
or more
     Total
past due
     Current      Loans HIP
U.S. mainland
 

Commercial multi-family

   $ 26      $ —        $ 199      $ 225      $ 1,108,347      $ 1,108,572  

Commercial real estate non-owner occupied

     1,030        —          1,629        2,659        1,445,550        1,448,209  

Commercial real estate owner occupied

     2,451        —          762        3,213        239,642        242,855  

Commercial and industrial

     5,426        1        101,756        107,183        840,551        947,734  

Construction

     100        —          —          100        735,746        735,846  

Mortgage

     13,873        3,458        11,889        29,220        729,049        758,269  

Legacy

     660        267        3,335        4,262        36,426        40,688  

Consumer:

                 

Credit cards

     6        1        35        42        115        157  

Home equity lines of credit

     2,085        453        5,801        8,339        228,306        236,645  

Personal

     2,311        1,424        2,404        6,139        233,188        239,327  

Auto

     —          —          —          —          7        7  

Other

     —          4        —          4        179        183  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 27,968      $ 5,608      $ 127,810      $ 161,386      $ 5,597,106      $ 5,758,492  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

March 31, 2017

 

Popular, Inc.

 
     Past due             Non-covered  

(In thousands)

   30-59
days
     60-89
days
     90 days
or more
     Total
past due
     Current      loans HIP
Popular, Inc.[1] [2]
 

Commercial multi-family

   $ 1,753      $ —        $ 777      $ 2,530      $ 1,252,894      $ 1,255,424  

Commercial real estate non-owner occupied

     98,048        1,487        36,561        136,096        3,825,708        3,961,804  

Commercial real estate owner occupied

     15,506        1,768        116,022        133,296        1,847,837        1,981,133  

Commercial and industrial

     12,553        1,287        148,724        162,564        3,450,775        3,613,339  

Construction

     100        —          1,668        1,768        829,537        831,305  

Mortgage

     307,567        149,932        789,149        1,246,648        5,381,339        6,627,987  

Leasing

     8,141        1,052        2,444        11,637        708,006        719,643  

Legacy[3]

     660        267        3,335        4,262        36,426        40,688  

Consumer:

                 

Credit cards

     12,336        7,836        19,365        39,537        1,039,104        1,078,641  

Home equity lines of credit

     2,577        453        6,373        9,403        235,391        244,794  

Personal

     15,442        8,806        21,864        46,112        1,336,550        1,382,662  

Auto

     30,214        6,228        12,685        49,127        779,839        828,966  

Other

     729        615        19,480        20,824        147,511        168,335  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 505,626      $ 179,731      $ 1,178,447      $ 1,863,804      $ 20,870,917      $ 22,734,721  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Non-covered loans held-in-portfolio are net of $124 million in unearned income and exclude $85 million in loans held-for-sale.
[2] Includes $7.3 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $4.5 billion were pledged at the Federal Home Loan Bank(“FHLB”) as collateral for borrowings, $2.3 billion at the Federal Reserve Bank (“FRB”) for discount window borrowings and $0.5 billion serve as collateral for public funds.
[3] 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.

 

December 31, 2016

 

Puerto Rico

 
     Past due             Non-covered  

(In thousands)

   30-59
days
     60-89
days
     90 days
or more
     Total
past due
     Current      loans HIP
Puerto Rico
 

Commercial multi-family

   $ 232      $ —        $ 664      $ 896      $ 173,644      $ 174,540  

Commercial real estate non-owner occupied

     98,604        4,785        51,435        154,824        2,409,461        2,564,285  

Commercial real estate owner occupied

     12,967        5,014        112,997        130,978        1,660,497        1,791,475  

Commercial and industrial

     19,156        2,638        32,147        53,941        2,617,976        2,671,917  

Construction

     —          —          1,668        1,668        83,890        85,558  

Mortgage

     289,635        136,558        801,251        1,227,444        4,689,056        5,916,500  

Leasing

     6,619        1,356        3,062        11,037        691,856        702,893  

Consumer:

                 

Credit cards

     11,646        8,752        18,725        39,123        1,061,484        1,100,607  

Home equity lines of credit

     —          65        185        250        8,101        8,351  

Personal

     12,148        7,918        20,686        40,752        1,109,425        1,150,177  

Auto

     32,441        7,217        12,320        51,978        774,614        826,592  

Other

     1,259        294        19,311        20,864        154,665        175,529  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 484,707      $ 174,597      $ 1,074,451      $ 1,733,755      $ 15,434,669      $ 17,168,424  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

December 31, 2016

 

U.S. mainland

 
     Past due                

(In thousands)

   30-59 days      60-89 days      90 days
or more
     Total
past due
     Current      Loans HIP
U.S. mainland
 

Commercial multi-family

   $ 5,952      $ —        $ 206      $ 6,158      $ 1,058,138      $ 1,064,296  

Commercial real estate non-owner occupied

     1,992        379        1,195        3,566        1,353,750        1,357,316  

Commercial real estate owner occupied

     2,116        540        472        3,128        240,617        243,745  

Commercial and industrial

     960        610        101,257        102,827        828,106        930,933  

Construction

     —          —          —          —          690,742        690,742  

Mortgage

     15,974        5,272        11,713        32,959        746,902        779,861  

Legacy

     833        346        3,337        4,516        40,777        45,293  

Consumer:

                 

Credit cards

     8        28        30        66        92        158  

Home equity lines of credit

     2,908        1,055        4,762        8,725        243,450        252,175  

Personal

     2,547        1,675        1,864        6,086        234,521        240,607  

Auto

     —          —          —          —          9        9  

Other

     —          —          8        8        180        188  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 33,290      $ 9,905      $ 124,844      $ 168,039      $ 5,437,284      $ 5,605,323  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2016

 

Popular, Inc.

 
     Past due             Non-covered  

(In thousands)

   30-59
days
     60-89
days
     90 days
or more
     Total
past due
     Current      loans HIP
Popular, Inc.[1] [2]
 

Commercial multi-family

   $ 6,184      $ —        $ 870      $ 7,054      $ 1,231,782      $ 1,238,836  

Commercial real estate non-owner occupied

     100,596        5,164        52,630        158,390        3,763,211        3,921,601  

Commercial real estate owner occupied

     15,083        5,554        113,469        134,106        1,901,114        2,035,220  

Commercial and industrial

     20,116        3,248        133,404        156,768        3,446,082        3,602,850  

Construction

     —          —          1,668        1,668        774,632        776,300  

Mortgage

     305,609        141,830        812,964        1,260,403        5,435,958        6,696,361  

Leasing

     6,619        1,356        3,062        11,037        691,856        702,893  

Legacy[3]

     833        346        3,337        4,516        40,777        45,293  

Consumer:

                 

Credit cards

     11,654        8,780        18,755        39,189        1,061,576        1,100,765  

Home equity lines of credit

     2,908        1,120        4,947        8,975        251,551        260,526  

Personal

     14,695        9,593        22,550        46,838        1,343,946        1,390,784  

Auto

     32,441        7,217        12,320        51,978        774,623        826,601  

Other

     1,259        294        19,319        20,872        154,845        175,717  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 517,997      $ 184,502      $ 1,199,295      $ 1,901,794      $ 20,871,953      $ 22,773,747  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Non-covered loans held-in-portfolio are net of $121 million in unearned income and exclude $89 million in loans held-for-sale.
[2] Includes $7.3 billion pledged to secure credit facilities and public funds that the secured parties are not permitted to sell or repledge the collateral, of which $4.5 billion were pledged at the FHLB as collateral for borrowings, $2.3 billion at the FRB for discount window borrowings and $0.5 billion serve as collateral for public funds.
[3] 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.

The following tables present non-covered loans held-in-portfolio by loan class that are in non-performing status or are accruing interest but are past due 90 days or more at March 31, 2017 and December 31, 2016. Accruing loans past due 90 days or more consist primarily of credit cards, Federal Housing Administration (“FHA”) / U.S. Department of Veterans Affairs (“VA”) and other insured mortgage loans, and delinquent mortgage loans which are included in the Corporation’s financial statements pursuant to GNMA’s buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option.

 

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Table of Contents

At March 31, 2017

 
     Puerto Rico      U.S. mainland      Popular, Inc.  
            Accruing loans             Accruing loans             Accruing loans  
     Non-accrual      past-due 90      Non-accrual      past-due 90      Non-accrual      past-due 90  

(In thousands)

   loans      days or more [1]      loans      days or more [1]      loans      days or more [1]  

Commercial multi-family

   $ 578      $ —        $ 199      $ —        $ 777      $ —    

Commercial real estate non-owner occupied

     23,259        —          1,629        —          24,888        —    

Commercial real estate owner occupied

     104,950        —          762        —          105,712        —    

Commercial and industrial

     46,690        278        1,174        —          47,864        278  

Mortgage[3]

     319,450        387,641        11,889        —          331,339        387,641  

Leasing

     2,444        —          —          —          2,444        —    

Legacy

     —          —          3,335        —          3,335        —    

Consumer:

                 

Credit cards

     —          19,330        35        —          35        19,330  

Home equity lines of credit

     —          572        5,801        —          5,801        572  

Personal

     19,365        9        2,404        —          21,769        9  

Auto

     12,685        —          —          —          12,685        —    

Other

     18,964        516        —          —          18,964        516  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total[2]

   $ 548,385      $ 408,346      $ 27,228      $ —        $ 575,613      $ 408,346  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Non-covered loans of $194 million accounted for under ASC Subtopic 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
[2] For purposes of this table non-performing loans exclude non-performing loans held-for-sale.
[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. These balances include $173 million of residential mortgage loans in Puerto Rico insured by FHA or guaranteed by the VA that are no longer accruing interest as of March 31, 2017. Furthermore, the Corporation has approximately $59 million in reverse mortgage loans in Puerto Rico 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.

 

At December 31, 2016

 
     Puerto Rico      U.S. mainland      Popular, Inc.  
            Accruing loans             Accruing loans             Accruing loans  
     Non-accrual      past-due 90      Non-accrual      past-due 90      Non-accrual      past-due 90  

(In thousands)

   loans      days or more [1]      loans      days or more [1]      loans      days or more [1]  

Commercial multi-family

   $ 664      $ —        $ 206      $ —        $ 870      $ —    

Commercial real estate non-owner occupied

     24,611        —          1,195        —          25,806        —    

Commercial real estate owner occupied

     102,771        —          472        —          103,243        —    

Commercial and industrial

     31,609        538        1,820        —          33,429        538  

Mortgage[3]

     318,194        406,583        11,713        —          329,907        406,583  

Leasing

     3,062        —          —          —          3,062        —    

Legacy

     —          —          3,337        —          3,337        —    

Consumer:

                 

Credit cards

     —          18,725        30        —          30        18,725  

Home equity lines of credit

     —          185        4,762        —          4,762        185  

Personal

     20,553        34        1,864        —          22,417        34  

Auto

     12,320        —          —          —          12,320        —    

Other

     18,724        587        8        —          18,732        587  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total[2]

   $ 532,508      $ 426,652      $ 25,407      $ —        $ 557,915      $ 426,652  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Non-covered loans by $215 million accounted for under ASC Subtopic 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
[2] For purposes of this table non-performing loans exclude non-performing loans held-for-sale.
[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. These balances include $181 million of residential mortgage loans in Puerto Rico insured by FHA or guaranteed by the VA that are no longer accruing interest as of December 31, 2016. Furthermore, the Corporation has approximately $68 million in reverse mortgage loans in Puerto Rico 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.

 

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Table of Contents

Covered loans

The following tables present the composition of loans by past due status at March 31, 2017 and December 31, 2016 for covered loans held-in-portfolio. The information considers covered loans accounted for under ASC Subtopic 310-20 and ASC Subtopic 310-30.

 

March 31, 2017

 
     Past due                
     30-59      60-89      90 days      Total             Covered  

(In thousands)

   days      days      or more      past due      Current      loans HIP [1]  

Mortgage

   $ 33,374      $ 2,897      $ 63,073      $ 99,344      $ 436,943      $ 536,287  

Consumer

     1,164        —          732        1,896        13,797        15,693  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total covered loans

   $ 34,538      $ 2,897      $ 63,805      $ 101,240      $ 450,740      $ 551,980  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Includes $325 million pledged to secure credit facilities at the FHLB which are not permitted to sell or repledge the collateral.

 

December 31, 2016

 
     Past due                
     30-59      60-89      90 days      Total             Covered  

(In thousands)

   days      days      or more      past due      Current      loans HIP [1]  

Mortgage

   $ 25,506      $ 12,904      $ 69,856      $ 108,266      $ 448,304      $ 556,570  

Consumer

     751        245        1,074        2,070        14,238        16,308  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total covered loans

   $ 26,257      $ 13,149      $ 70,930      $ 110,336      $ 462,542      $ 572,878  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Includes $337 million pledged to secure credit facilities at the FHLB which are not permitted to sell or repledge the collateral.

The following table presents covered loans in non-performing status and accruing loans past-due 90 days or more by loan class at March 31, 2017 and December 31, 2016.

 

     March 31, 2017      December 31, 2016  
     Non-accrual      Accruing loans past      Non-accrual      Accruing loans past  

(In thousands)

   loans      due 90 days or more      loans      due 90 days or more  

Mortgage

   $ 3,798      $ —        $ 3,794      $ —    

Consumer

     142        —          121        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total[1]

   $ 3,940      $ —        $ 3,915      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

[1] Covered loans accounted for under ASC Subtopic 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses.

The Corporation accounts for lines of credit with revolving privileges under the accounting guidance of ASC Subtopic 310-20, which requires that any differences between the contractually required loans payment receivable in excess of the initial investment in the loans be accreted into interest income over the life of the loans, if the loan is accruing interest. Covered loans accounted for under ASC Subtopic 310-20 amounted to $10 million at March 31, 2017 (December 31, 2016 - $10 million).

Loans acquired with deteriorated credit quality accounted for under ASC 310-30

The following provides information of loans acquired with evidence of credit deterioration as of the acquisition date, accounted for under the guidance of ASC 310-30.

Loans acquired from Westernbank as part of an FDIC-assisted transaction

The carrying amount of the Westernbank loans consisted of loans determined to be impaired at the time of acquisition, which are accounted for in accordance with ASC Subtopic 310-30 (“credit impaired loans”), and loans that were considered to be performing at the acquisition date, accounted for by analogy to ASC Subtopic 310-30 (“non-credit impaired loans”), as detailed in the following table.

 

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Table of Contents
     March 31, 2017     December 31, 2016  
     Carrying amount     Carrying amount  

(In thousands)

   Non-credit
impaired loans
    Credit impaired
loans
    Total     Non-credit
impaired loans
    Credit impaired
loans
    Total  

Commercial real estate

   $ 957,360     $ 14,031     $ 971,391     $ 985,181     $ 14,440     $ 999,621  

Commercial and industrial

     100,759       —         100,759       103,476       —         103,476  

Construction

     —         1,668       1,668       —         1,668       1,668  

Mortgage

     571,594       23,990       595,584       587,949       25,781       613,730  

Consumer

     18,615       883       19,498       18,775       1,059       19,834  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Carrying amount [1]

     1,648,328       40,572       1,688,900       1,695,381       42,948       1,738,329  

Allowance for loan losses

     (59,283     (7,261     (66,544     (61,855     (7,022     (68,877
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Carrying amount, net of allowance

   $ 1,589,045     $ 33,311     $ 1,622,356     $ 1,633,526     $ 35,926     $ 1,669,452  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

[1] The carrying amount of loans acquired from Westernbank and accounted for under ASC 310-30 which remains subject to the loss sharing agreement with the FDIC amounted to approximately $542 million as of March 31, 2017 and $563 million as of December 31, 2016.

The outstanding principal balance of Westernbank loans accounted pursuant to ASC Subtopic 310-30, amounted to $2.1 billion at March 31, 2017 (December 31, 2016 - $2.1 billion). At March 31, 2017, none of the acquired loans from the Westernbank FDIC-assisted transaction accounted for under ASC Subtopic 310-30 were considered non-performing loans. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, was recognized on all acquired loans.

Changes in the carrying amount and the accretable yield for the Westernbank loans accounted pursuant to the ASC Subtopic 310-30, for the quarters ended March 31, 2017 and 2016, were as follows:

 

     Activity in the accretable yield  
     Westernbank loans ASC 310-30  
     For the quarters ended  
     March 31, 2017     March 31, 2016  

(In thousands)

   Non-credit
impaired loans
    Credit
impaired loans
    Total     Non-credit
impaired loans
    Credit
impaired loans
    Total  

Beginning balance

   $ 1,001,908     $ 8,179     $ 1,010,087     $ 1,105,732     $ 6,726     $ 1,112,458  

Accretion

     (36,016     (876     (36,892     (42,000     (1,533     (43,533

Change in expected cash flows

     7,789       222       8,011       54,544       5,339       59,883  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 973,681     $ 7,525     $ 981,206     $ 1,118,276     $ 10,532     $ 1,128,808  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents
     Carrying amount of Westernbank loans accounted for pursuant to ASC 310-30  
     For the quarters ended  
     March 31, 2017     March 31, 2016  

(In thousands)

   Non-credit
impaired loans
    Credit
impaired loans
    Total     Non-credit
impaired loans
    Credit
impaired loans
    Total  

Beginning balance

   $ 1,695,381     $ 42,948     $ 1,738,329     $ 1,898,146     $ 76,355     $ 1,974,501  

Accretion

     36,016       876       36,892       42,000       1,533       43,533  

Collections / loan sales / charge-offs

     (83,069     (3,252     (86,321     (74,206     (8,387     (82,593
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance[1]

   $ 1,648,328     $ 40,572     $ 1,688,900     $ 1,865,940     $ 69,501     $ 1,935,441  

Allowance for loan losses ASC 310-30 Westernbank loans

     (59,283     (7,261     (66,544     (58,703     (4,264     (62,967
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance, net of ALLL

   $ 1,589,045     $ 33,311     $ 1,622,356     $ 1,807,237     $ 65,237     $ 1,872,474  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

[1] The carrying amount of loans acquired from Westernbank and accounted for under ASC 310-30 which remain subject to the loss sharing agreement with the FDIC amounted to approximately $ 542 million as of March 31, 2017 (March 31, 2016-$615 million).

Other loans acquired with deteriorated credit quality

The outstanding principal balance of other acquired loans accounted pursuant to ASC Subtopic 310-30, amounted to $689 million at March 31, 2017 (December 31, 2016 - $700 million). At March 31, 2017, none of the other acquired loans accounted under ASC Subtopic 310-30 were considered non-performing loans. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, was recognized on all acquired loans.

Changes in the carrying amount and the accretable yield for the other acquired loans accounted pursuant to the ASC Subtopic 310-30, for the quarters ended March 31, 2017 and 2016 were as follows:

 

Activity in the accretable yield - Other acquired loans ASC 310-30

 
     For the quarters ended  

(In thousands)

   March 31, 2017      March 31, 2016  

Beginning balance

   $ 278,896      $ 221,128  

Additions

     3,254        4,340  

Accretion

     (8,836      (8,555

Change in expected cash flows

     36,464        50,855  
  

 

 

    

 

 

 

Ending balance

   $ 309,778      $ 267,768  
  

 

 

    

 

 

 

 

Carrying amount of other acquired loans accounted for pursuant to ASC 310-30

 
     For the quarters ended  

(In thousands)

   March 31, 2017      March 31, 2016  

Beginning balance

   $ 562,695      $ 564,050  

Purchase accounting adjustments related to the Doral Bank Transaction (Refer to Note14)

     —          (4,707

Additions

     5,581        10,051  

Accretion

     8,836        8,555  

Collections and charge-offs

     (20,388      (15,226
  

 

 

    

 

 

 

Ending balance

   $ 556,724      $ 562,723  

Allowance for loan losses ASC 310-30 non-covered loans

     (28,909      (15,258
  

 

 

    

 

 

 

Ending balance, net of allowance for loan losses

   $ 527,815      $ 547,465  
  

 

 

    

 

 

 

 

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Table of Contents

Note 8 – Allowance for loan losses

The Corporation follows a systematic methodology to establish and evaluate the adequacy of the allowance for loan losses to provide for inherent losses in the loan portfolio. This methodology includes the consideration of factors such as current economic conditions, portfolio risk characteristics, prior loss experience and results of periodic credit reviews of individual loans. The provision for loan losses charged to current operations is based on this methodology. Loan losses are charged and recoveries are credited to the allowance for loan losses.

The Corporation’s assessment of the allowance for loan losses is determined in accordance with the guidance of loss contingencies in ASC Subtopic 450-20 and loan impairment guidance in ASC Section 310-10-35. Also, the Corporation determines the allowance for loan losses on purchased impaired loans and purchased loans accounted for under ASC Subtopic 310-30, by evaluating decreases in expected cash flows after the acquisition date.

The accounting guidance provides for the recognition of a loss allowance for groups of homogeneous loans. The determination for general reserves of the allowance for loan losses includes the following principal factors:

 

    Base net loss rates, which are based on the moving average of annualized net loss rates computed over a 5-year historical loss period for the commercial and construction loan portfolios, and an 18-month period for the consumer and mortgage loan portfolios. The base net loss rates are applied by loan type and by legal entity.

 

    Recent loss trend adjustment, which replaces the base loss rate with a 12-month average loss rate, when these trends are higher than the respective base loss rates. The objective of this adjustment is to allow for a more recent loss trend to be captured and reflected in the ALLL estimation process.

For the period ended March 31, 2017, 55% (March 31, 2016 - 44%) of the ALLL for non-covered BPPR segment loan portfolios utilized the recent loss trend adjustment instead of the base loss. The effect of replacing the base loss with the recent loss trend adjustment was mainly concentrated in the mortgage, other consumer and commercial real estate owner occupied portfolios for 2017 and in the mortgage, commercial multi-family and commercial and industrial loan portfolios for 2016.

For the period ended March 31, 2017, 0.35% (March 31, 2016 - 2%) of our BPNA segment loan portfolios utilized the recent loss trend adjustment instead of the base loss. The effect of replacing the base loss with the recent loss trend adjustment was concentrated in the commercial multifamily loan and legacy portfolios for 2017 and in the consumer loan portfolio for 2016.

 

    Environmental factors, which include credit and macroeconomic indicators such as unemployment rate, economic activity index and delinquency rates, adopted to account for current market conditions that are likely to cause estimated credit losses to differ from historical losses. The Corporation reflects the effect of these environmental factors on each loan group as an adjustment that, as appropriate, increases the historical loss rate applied to each group. Environmental factors provide updated perspective on credit and economic conditions. Regression analysis is used to select these indicators and quantify the effect on the general reserve of the allowance for loan losses.

The following tables present the changes in the allowance for loan losses, loan ending balances and whether such loans and the allowance pertain to loans individually or collectively evaluated for impairment for the quarters ended March 31, 2017 and 2016.

 

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Table of Contents

For the quarter ended March 31, 2017

 

Puerto Rico - Non-covered loans

 

(In thousands)

   Commercial     Construction     Mortgage     Leasing     Consumer     Total  

Allowance for credit losses:

            

Beginning balance

   $ 189,686     $ 1,353     $ 143,320     $ 7,662     $ 125,963     $ 467,984  

Provision

     583       464       15,172       1,048       14,211       31,478  

Charge-offs

     (11,071     (3,587     (14,983     (1,341     (21,812     (52,794

Recoveries

     8,433       3,731       1,428       528       5,729       19,849  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 187,631     $ 1,961     $ 144,937     $ 7,897     $ 124,091     $ 466,517  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specific ALLL

   $ 51,276     $ —       $ 41,067     $ 522     $ 22,331     $ 115,196  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General ALLL

   $ 136,355     $ 1,961     $ 103,870     $ 7,375     $ 101,760     $ 351,321  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-in-portfolio:

            

Impaired non-covered loans

   $ 348,823     $ —       $ 501,647     $ 1,803     $ 106,236     $ 958,509  

Non-covered loans held-in-portfolio excluding impaired loans

     6,715,507       95,459       5,368,071       717,840       3,120,843       16,017,720  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-covered loans held-in-portfolio

   $ 7,064,330     $ 95,459     $ 5,869,718     $ 719,643     $ 3,227,079     $ 16,976,229  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the quarter ended March 31, 2017

 

Puerto Rico - Covered loans

 

(In thousands)

   Commercial     Construction     Mortgage     Leasing     Consumer     Total  

Allowance for credit losses:

            

Beginning balance

   $ —       $ —       $ 30,159     $ —       $ 191     $ 30,350  

Provision (reversal of provision)

     —         —         (1,690     —         331       (1,359

Charge-offs

     —         —         (1,231     —         (93     (1,324

Recoveries

     —         —         103       —         1       104  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ —       $ —       $ 27,341     $ —       $ 430     $ 27,771  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specific ALLL

   $ —       $ —       $ —       $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General ALLL

   $ —       $ —       $ 27,341     $ —       $ 430     $ 27,771  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-in-portfolio:

            

Impaired covered loans

   $ —       $ —       $ —       $ —       $ —       $ —    

Covered loans held-in-portfolio excluding impaired loans

     —         —         536,287       —         15,693       551,980  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total covered loans held-in-portfolio

   $ —       $ —       $ 536,287     $ —       $ 15,693     $ 551,980  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the quarter ended March 31, 2017

 

U.S. Mainland

 

(In thousands)

   Commercial     Construction     Mortgage     Legacy     Consumer     Total  

Allowance for credit losses:

            

Beginning balance

   $ 12,968     $ 8,172     $ 4,614     $ 1,343     $ 15,220     $ 42,317  

Provision (reversal of provision)

     7,622       (136     (436     (665     4,194       10,579  

Charge-offs

     (70     —         (106     (41     (4,733     (4,950

Recoveries

     533       —         210       529       990       2,262  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 21,053     $ 8,036     $ 4,282     $ 1,166     $ 15,671     $ 50,208  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specific ALLL

   $ —       $ —       $ 2,197     $ —       $ 679     $ 2,876  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General ALLL

   $ 21,053     $ 8,036     $ 2,085     $ 1,166     $ 14,992     $ 47,332  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-in-portfolio:

            

Impaired loans

   $ —       $ —       $ 8,921     $ —       $ 2,780     $ 11,701  

Loans held-in-portfolio excluding impaired loans

     3,747,370       735,846       749,348       40,688       473,539       5,746,791  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans held-in-portfolio

   $ 3,747,370     $ 735,846     $ 758,269     $ 40,688     $ 476,319     $ 5,758,492  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

29


Table of Contents

For the quarter ended March 31, 2017

 

Popular, Inc.

 

(In thousands)

   Commercial     Construction     Mortgage     Legacy     Leasing     Consumer     Total  

Allowance for credit losses:

              

Beginning balance

   $ 202,654     $ 9,525     $ 178,093     $ 1,343     $ 7,662     $ 141,374     $ 540,651  

Provision (reversal of provision)

     8,205       328       13,046       (665     1,048       18,736       40,698  

Charge-offs

     (11,141     (3,587     (16,320     (41     (1,341     (26,638     (59,068

Recoveries

     8,966       3,731       1,741       529       528       6,720       22,215  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 208,684     $ 9,997     $ 176,560     $ 1,166     $ 7,897     $ 140,192     $ 544,496  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specific ALLL

   $ 51,276     $ —       $ 43,264     $ —       $ 522     $ 23,010     $ 118,072  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General ALLL

   $ 157,408     $ 9,997     $ 133,296     $ 1,166     $ 7,375     $ 117,182     $ 426,424  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-in-portfolio:

              

Impaired loans

   $ 348,823     $ —       $ 510,568     $ —       $ 1,803     $ 109,016     $ 970,210  

Loans held-in-portfolio excluding impaired loans

     10,462,877       831,305       6,653,706       40,688       717,840       3,610,075       22,316,491  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans held-in-portfolio

   $ 10,811,700     $ 831,305     $ 7,164,274     $ 40,688     $ 719,643     $ 3,719,091     $ 23,286,701  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

For the quarter ended March 31, 2016

 

Puerto Rico - Non-covered loans

 

(In thousands)

   Commercial     Construction     Mortgage     Leasing     Consumer     Total  

Allowance for credit losses:

            

Beginning balance

   $ 186,925     $ 4,957     $ 128,327     $ 10,993     $ 138,721     $ 469,923  

Provision (reversal of provision)

     13,369       (409     10,869       1,680       18,362       43,871  

Charge-offs

     (8,968     (544     (15,972     (2,127     (27,379     (54,990

Recoveries

     6,264       233       1,276       489       6,081       14,343  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 197,590     $ 4,237     $ 124,500     $ 11,035     $ 135,785     $ 473,147  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specific ALLL

   $ 55,098     $ 172     $ 41,660     $ 608     $ 24,326     $ 121,864  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General ALLL

   $ 142,492     $ 4,065     $ 82,840     $ 10,427     $ 111,459     $ 351,283  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-in-portfolio:

            

Impaired non-covered loans

   $ 338,980     $ 2,020     $ 471,183     $ 2,391     $ 109,920     $ 924,494  

Non-covered loans held-in-portfolio excluding impaired loans

     7,029,311       103,124       5,628,576       640,751       3,199,171       16,600,933  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-covered loans held-in-portfolio

   $ 7,368,291     $ 105,144     $ 6,099,759     $ 643,142     $ 3,309,091     $ 17,525,427  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the quarter ended March 31, 2016

 

Puerto Rico - Covered Loans

 

(In thousands)

   Commercial     Construction     Mortgage     Leasing     Consumer     Total  

Allowance for credit losses:

            

Beginning balance

   $ —       $ —       $ 33,967     $ —       $ 209     $ 34,176  

Provision (reversal of provision)

     —         —         (3,149     —         44       (3,105

Charge-offs

     —         —         (1,221     —         (33     (1,254

Recoveries

     —         —         225       —         3       228  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ —       $ —       $ 29,822     $ —       $ 223     $ 30,045  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specific ALLL

   $ —       $ —       $ —       $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General ALLL

   $ —       $ —       $ 29,822     $ —       $ 223     $ 30,045  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-in-portfolio:

            

Impaired covered loans

   $ —       $ —       $ —       $ —       $ —       $ —    

Covered loans held-in-portfolio excluding impaired loans

     —         —         606,711       —         18,419       625,130  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total covered loans held-in-portfolio

   $ —       $ —       $ 606,711     $ —       $ 18,419     $ 625,130  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

30


Table of Contents

For the quarter ended March 31, 2016

 

U.S. Mainland

 

(In thousands)

   Commercial     Construction      Mortgage     Legacy     Consumer     Total  

Allowance for credit losses:

             

Beginning balance

   $ 9,908     $ 3,912      $ 4,985     $ 2,687     $ 11,520     $ 33,012  

Provision (reversal of provision)

     (116     827        344       (450     3,464       4,069  

Charge-offs

     (495     —          (441     (109     (2,648     (3,693

Recoveries

     290       —          211       356       1,035       1,892  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 9,587     $ 4,739      $ 5,099     $ 2,484     $ 13,371     $ 35,280  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Specific ALLL

   $ —       $ —        $ 1,592     $ —       $ 581     $ 2,173  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

General ALLL

   $ 9,587     $ 4,739      $ 3,507     $ 2,484     $ 12,790     $ 33,107  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-in-portfolio:

             

Impaired loans

   $ —       $ —        $ 7,909     $ —       $ 2,247     $ 10,156  

Loans held-in-portfolio excluding impaired loans

     2,860,098       629,714        871,533       61,044       549,765       4,972,154  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total loans held-in-portfolio

   $ 2,860,098     $ 629,714      $ 879,442     $ 61,044     $ 552,012     $ 4,982,310  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

For the quarter ended March 31, 2016

 

Popular, Inc.

 

(In thousands)

   Commercial     Construction     Mortgage     Legacy     Leasing     Consumer     Total  

Allowance for credit losses:

              

Beginning balance

   $ 196,833     $ 8,869     $ 167,279     $ 2,687     $ 10,993     $ 150,450     $ 537,111  

Provision (reversal of provision)

     13,253       418       8,064       (450     1,680       21,870       44,835  

Charge-offs

     (9,463     (544     (17,634     (109     (2,127     (30,060     (59,937

Recoveries

     6,554