Popular, Inc. · NASDAQ:BPOP
Popular — Q2 2020 Earnings Presentation
23 slides from Popular's earnings presentation, Jul 23, 2020
Slide 1: Investor Presentation Second Quarter 2020
Investor Presentation Second Quarter 2020 Exhibit 99.2
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, are based on the current expectations of Popular, I
Slide 3: Puerto Rico – Key Indicators
Puerto Rico – Key Indicators Employment Initial unemployment claims:3 Weekly average: 6K Peak: 45K (last week of March) Nonfarm employment (March 2020): 0.6% higher than March 20194 Economy Cement Sales6 6% lower than Q2 2019 June 2020: 42% higher than June 2019 Puerto Rico BPPR 1. Source: Moody’s A
Slide 4: COVID-19 Response: Highlights
COVID-19 Response: Highlights Customer Engagement Additional Initiatives Funded over $1.4 billion in loans, representing: 28,000 small and medium sized businesses 278,000 employees Majority of loans went to small businesses: 73% were for less than $25,000 Processed 69% of all loans approved by SBA i
Slide 5: Q2 2020 Highlights
NPLs decreased $9 million; ratio at 2.6% NCO ratio stable at 0.92% Credit Metrics Net income of $128 million Net interest margin: Popular, Inc. 3.25%, BPPR 3.39% Provision for credit losses of $62 million Earnings Robust capital; Common Equity Tier 1 Capital ratio of 15.7% Tangible book value per sh
Slide 6: Financial Summary
Financial Summary (Unaudited) ($ in thousands) Q2 2020 Qi 2020 | Variance Net interest income $ 450,881 $ 473,095 $ (22,214) Service charges on deposits 30,163 41,659 (11,496) Other service fees 52,084 64,773 (12,689) Mortgage banking activities 3,777 6420 (2,643) Adjustments (expense) to indemnity
Slide 7: Net Interest Margin Dynamics
Net Interest Margin Dynamics Q2 2020 FTE1 net interest margin at 3.56% FTE loan yield decreased 55 basis points to 6.24% QoQ Loan portfolio increased $1.4 billion in Q2 2020, mainly PPP Total deposit cost decreased 23 basis points QoQ to 34 basis points Low deposit betas in P.R. Loan Yield, Deposit
Slide 8: Capital
8 Capital Note: Estimated for the current period Differences due to rounding Robust capital levels; Common Equity Tier 1 of 15.7% Capital simplification rule, effective April 1, 2020, reduced CET1 by 48 basis points Tangible book value per share of $60.13 compared to $56.17 in Q1 2020 2020 capital a
Slide 9: De-Risked Loan Portfolios
De-Risked Loan Portfolios 1 Small and Medium Enterprise 2 NCOs distribution represents the percentage allocation of net charge-offs from Q1 2008 through Q2 2020 per each loan category, excluding net charge-offs from previously covered loans up to Q2 2015 3 See detail on page 20 of the appendix The C
Slide 10: COVID-19 Sensitive Segments
COVID-19 Sensitive Segments 0 Health Care Facilities Non-Essential Retail Construction Hotels Non-Food Wholesale Commercial Real Estate (Non-Retail) Restaurant and Food Services P.R.: Mostly shopping centers (61%) and auto retail (31%). A significant portion of shopping centers owned by long term, f
Slide 11: COVID-19 Response: Customer Relief Program
COVID-19 Response: Customer Relief Program 1 In response to the pandemic, implemented several financial relief programs such as payment deferrals, suspensions of foreclosures and other collection activity. Payment deferrals were available to all eligible consumer and mortgage customers. In Puerto Ri
Slide 12: Non-Performing Assets
Non-Performing Assets ($ in millions) Non-Performing Assets NPAs decreased by $22 million QoQ NPLs decreased by $9 million QoQ P.R. NPLs at $727 million, or 3.4% of loans, down by $9 million, driven by: Lower mortgage NPLs by $7 million Lower consumer NPLs by $5 million U.S. NPLs at $34 million, or
Slide 13: NPL Inflows
NPL Inflows Total NPL Inflows ($ in millions) Mortgage NPL Inflows ($ in millions) Commercial, Construction and Legacy NPL Inflows ($ in millions) Beginning in Q2 2018 figures include loans previously classified as covered Differences due to rounding Total NPL inflows increased by $21 million QoQ P.
Slide 14: Additional Credit Metrics
NCOs and NCO-to-Loan Ratio ($ in millions) Provision and Provision-to-NCO Ratio ($ in millions) Beginning in Q2 2018 figures include loans previously classified as covered Differences due to rounding Additional Credit Metrics NCOs remained stable QoQ, up slightly by $2 million. NCO ratio at 0.92% vs
Slide 15: Allowance for Credit Losses – Q2 2020 Movement
Economic Scenario: The Q1 2020 ACL utilized Moody’s Analytics March 27, 2020 S3 Scenario. This economic scenario assumed a double dip recession starting in Q2 2020. For Q2, we utilized Moody’s June Baseline Scenario, which assumes a U-type recovery after initial surge in Q3 2020 Change in Volumes: M
Slide 16: Driving Shareholder Value
Driving Shareholder Value Capital 2020 Capital Actions Completed $500 million Accelerated Share Repurchase (ASR) Redeemed $28 million of 8.25% Series B Preferred Stock Increased quarterly common stock dividend to $0.40 per share Franchise Additional Value Investments in Evertec and Banco BHD León Pu
Slide 17: Second Quarter 2020 Appendix
Investor Presentation Second Quarter 2020 Appendix
Slide 18: Franchise Summary
Franchise Summary Corporate Structure Assets = $52 billion Assets = $11 billion Puerto Rico Operations United States Operations Assets = $63 billion Corporate Structure – Popular, Inc. Information as of June 30, 2020 ¹ Doing business as Popular Selected equity investments EVERTEC and Banco BHD León
Slide 19: Municipalities
Municipalities Obligations of municipalities are backed by real and personal property taxes, municipal excise taxes, and/or a percentage of the sales and use tax. Indirect exposure includes loans or securities that are payable by non-governmental entities, but which carry a government guarantee to c
Slide 20: FICO Mix of Consumer Originations
20 FICO Mix of Consumer Originations
Slide 21: Business Segments
Business Segments Differences due to rounding
Slide 22: Popular, Inc. Credit Ratings
Popular, Inc. Credit Ratings Our senior unsecured ratings have remained stable Moody’s B1 Stable Outlook Fitch BB Stable Outlook S&P BB- Stable Outlook February Moody’s changes outlook to stable from negative April S&P upgrades to BB- from B+ revised outlook to stable 2017 February S&P placed BPOP o
Slide 23: Second Quarter 2020
Investor Presentation Second Quarter 2020