Popular, Inc. · NASDAQ:BPOP
Popular — Q4 2020 Earnings Presentation
26 slides from Popular's earnings presentation, Jan 28, 2021
Slide 1: Investor Presentation Fourth Quarter 2020
Investor Presentation Fourth 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 Nonfarm employment2 884.9 thousand 0.6% higher than March 2019 Economy Cement Sales4 6% lower than Q2 2019 1 Source: Moody’s Analytics- January 2021 update; 2 Source: U.S. Bureau of Labor Statistics (Household Survey, Seasonally Adjusted); 3 Source: United Automobile Imp
Slide 4: COVID-19 Response: Highlights
COVID-19 Response: Highlights Customer Engagement (P.R.) Additional Initiatives 95% of total number of loans originated or $544 million are below $150,000 qualifying for the simplified loan forgiveness process We expect that the forgiveness process will be substantially completed during first half o
Slide 5: 2020 Highlights
CECL implementation: day-one impact of $315 million in the ACL and increase of $278 in NPLs ACL to loans held-in-portfolio of 3.05% NPL ratio at 2.5% from 1.9% in 2019 NCO ratio decreased to 0.66% from 0.96% the previous year Credit Net income of $507 million Net interest margin: Popular, Inc. 3.29%
Slide 6: Q4 2020 Highlights
NPLs increased $3 million QoQ; ratio flat at 2.5% NCO ratio increased to 0.58% from 0.24% the previous quarter ACL to loans held-in-portfolio of 3.05% compared to 3.15% in Q3 2020 Credit Metrics Net income of $176 million Net interest margin: Popular, Inc. 3.04%, BPPR 3.07% Provision for credit loss
Slide 7: Financial Summary
Financial Summary (Unaudited) ($ in thousands) Q4 2020 Q3 2020 | vane | Net interest income 471,616 | $ 461,021 | $10,595 Service charges on deposits 39,152 36,849 2,303 Other service fees 71,156 69,879 1,277 Mortgage banking activities 9,730 (9,526), 19,256 Other non-interest income 24,809 31,565,
Slide 8: Net Interest Margin Dynamics
Net Interest Margin Dynamics Q4 2020 FTE1 net interest margin at 3.35% Money market and investment securities to earning assets ratio flat at 53% FTE loan yield decreased 16 basis points to 6.00% QoQ driven by mortgage loan repurchase Total deposit cost decreased 4 basis points QoQ; U.S. decreased 1
Slide 9: Capital
Capital Robust capital levels; Common Equity Tier 1 of 16.3% Leverage ratio impacted by the high proportion of zero-risk weighted assets on the balance sheet Tangible book value per share of $63.07 compared to $61.69 in Q3 2020 Targeting announcement of 2021 capital actions in April 2021 Regulatory
Slide 10: COVID-19 Response: Customer Relief Program
COVID-19 Response: Customer Relief Program Implemented several financial relief programs such as payment deferrals, suspensions of foreclosures and other collection activity. Payment deferrals were available to all eligible consumer and mortgage customers As of December 31, 2020, we had provided fin
Slide 11: COVID-19 Sensitive Segments
COVID-19 Sensitive Segments 11 Health Care Facilities Non-Essential Retail Construction Hotels Non-Food Wholesale Commercial Real Estate (Non-Retail) Restaurant and Food Services P.R.: Mostly shopping centers (60%) and auto retail (31%). A significant portion of shopping centers owned by long term,
Slide 12: Non-Performing Assets
Non-Performing Assets ($ in millions) Non-Performing Assets NPAs decreased by $15 million QoQ NPLs increased by $3 million QoQ P.R. NPLs at $700 million, or 3.3% of loans, up by $7 million, driven by: Higher mortgage NPLs by $44 million due to the delinquency progression after the expiration of the
Slide 13: NPL Inflows
NPL Inflows Total NPL Inflows ($ 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 $2 million QoQ P.R
Slide 14: NCOs and Provision Credit Metrics
NCOs and NCO-to-Loan Ratio ($ 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 1 Total provision for the quarter was $21.2 million composed of: $10.8 million provision for loan lo
Slide 15: Allowance for Credit Losses – Q4 2020 Movement
Economic Scenario: The Q4 2020 ACL used a probability weighted approach that combined Moody’s S1 (optimistic), Baseline, and S3 (pessimistic) scenarios. The baseline scenario is assigned the highest probability followed by the S3 scenario. This quarter’s scenarios presented a more optimistic view of
Slide 16: Driving Value
Driving Value 2020 Capital Actions Returned $500 million to shareholders through Accelerated Share Repurchase program Increased quarterly common stock dividend to $0.40 per share Redeemed $28 million of 8.25% Series B Preferred Stock Franchise Additional Value Investments in Evertec and Banco BHD Le
Slide 17: Appendix
Investor Presentation Fourth Quarter 2020 Appendix
Slide 18: Franchise Summary
Franchise Summary Corporate Structure Assets = $55 billion Assets = $10 billion Puerto Rico Operations United States Operations Assets = $66 billion Corporate Structure – Popular, Inc. Information as of December 31, 2020 ¹ Doing business as Popular Selected equity investments EVERTEC and Banco BHD L
Slide 19: Municipalities
Municipalities Obligations of municipalities are backed by real and personal property taxes, municipal excise taxes, and/or a percentage of the sales and use tax. Indirect exposure includes loans or securities that are payable by non-governmental entities, but which carry a government guarantee to c
Slide 20: 2020 Financial Summary
2020 Financial Summary (Unaudited) ($ in thousands) YTD 2020 YTD 2019 Net interest income 1,856,613 1,891,694 | $ (35,081) Service charges on deposits 147,823 160,933 (13,110) Other sevice fees 257,892 285,206 | (27,314) Mortgage banking activities 10,401 32,093 (21,692) Other non-interest income 96
Slide 21: 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 Q4 2020 per each loan category, excluding net charge-offs from previously covered loans up to Q2 2015 3 See detail on page 22 The Corporation has d
Slide 22: FICO Mix of Consumer Originations
FICO Mix of Consumer Originations Prior periods for personal loans and credit cards were conformed to exclude zero FICO
Slide 23: Business Segments
Business Segments Differences due to rounding
Slide 24: 2020 Business Segments
2020 Business Segments Differences due to rounding
Slide 25: 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 26: Fourth Quarter 2020
Investor Presentation Fourth Quarter 2020