Slide 1: Investor Presentation As of June 30, 2009
Investor Presentation As of June 30, 2009
Slide 2: Forward Looking Statements
1 Forward Looking Statements Statements contained in this Presentation that are not based on current or historical fact are forward-looking in nature. Such forward-looking statements are based on current plans, estimates and expectations and are made pursuant to the Private Securities Litigation Ref
Slide 3: Second Quarter Results
2 Second Quarter Results 1 On a taxable equivalent basis.
Slide 4: Q2 Significant Events
3 Q2 Significant Events The problem: The main factor driving the Corporation's net losses in 2009 has been increasing credit costs from several segments of the loan portfolio. Persistent adverse changes in the economy and negative trends in employment levels and property values in the markets in whi
Slide 5: P.R. Business
4 P.R. Business The challenging P.R. economy, now in its fourth year of recession, is pressuring credit quality and profitability at the segment. Deteriorating credit quality trends in the commercial and construction loan portfolios have led to an increase in credit costs. The loan loss provision in
Slide 6: U.S. Business
5 U.S. Business The U.S. business has been significantly impacted by increased credit costs, reflecting a weaker U.S. economy and its exposure to the housing sector. Changes in market conditions have led to a number of restructuring efforts to refocus the business: Consolidate or sell underperformin
Slide 7: Processing Strategy-EVERTEC
6 6 6 Processing Strategy-EVERTEC Leveraging existing product offering and processing infrastructure to service other financial institutions and enter new markets Continuous improvement of quality levels Enhance competitiveness of ATH Network Invest significantly in new technology developments: Inve
Slide 8: Briefing - P.R. Economy
7 Briefing - P.R. Economy Bottom line: weak economy expected for 2009-2010 Indicators to watch: Impact of 2010 fiscal budget Housing sector Oil prices Fiscal Update: Proposed budget for FY2010 cuts spending by $1.8B based on multiyear fiscal plan Government officials expect U.S. stimulus funds to to
Slide 9: Credit Quality Indicators
8 Credit Quality Indicators * Includes discontinued business * * * * *
Slide 10: Credit Quality Highlights Q2 2009
9 NPL increase in last quarter affected our ALLL/NPL ratio Credit Quality Highlights Q2 2009 Loan portfolio shows a decreasing trend mostly in commercial, construction and mortgages, prompted by the economic slowdown, stricter underwriting standards, charge-offs and US exposure reduction. Net Charge
Slide 11: Commercial Portfolio
10 Commercial Portfolio 4-year recessionary environment and increased costs continue to impact the financial condition of PR-based businesses, as reflected in: Rise in net charge-offs of $27 million from Q1 09 Rise in NPLs of $105 million from Q1 09 Increase in bankruptcies of 22% over the same peri
Slide 12: Construction Portfolio
11 Construction Portfolio The challenging PR economy has significantly impacted the residential construction sector. Rise in Net Charge-offs of $24 million from Q1 09 Rise in NPLs of $330 million from Q1 09 BPPR absorption rates have declined. Faster economic recovery than in Puerto Rico expected. E
Slide 13: Consumer Portfolio
12 Consumer Portfolio PR portfolio mainly comprised of personal unsecured loans and credit cards. 59% unsecured products, including credit cards 35% auto loan and leases 6% secured loans Consumers facing rising unemployment, increased cost- of-living expenses and stagnant salaries. Bankruptcies have
Slide 14: Mortgage Portfolio
13 SR-008 charge-offs Mortgage Portfolio Mortgage loan portfolio is primarily fixed rate, residential, owner-occupied. PR net charge-offs remain very low at 0.14% at Q2 09. The recently approved Fiscal Emergency Law, known as Law 7, established an additional tax on nonexempt real-estate property, fo
Slide 15: Liquidity
14 Liquidity Banking subsidiary liquidity is strong: No short-term unsecured borrowings as of Q2 09. There were $5.7 billion in strong sources of liquidity available: Fed Discount Window: $2.5 billion Unpledged securities: $1.9 billion Money market investments: $342 million FHLB availability: $887 m
Slide 16: Deferred Tax Assets & Goodwill
15 Deferred Tax Assets & Goodwill Remaining net DTAs at Popular as of 6-30 amounted to $390.5 million, all related to the P.R. business. A valuation allowance of $501 million was recognized in Q4 08, to completely write down the U.S. DTA Goodwill on the books as of 6-30 was $607 million, with $404MM
Slide 17: Capital Management
16 Capital Management Capital has remained at adequate levels throughout the financial crisis. Quarter-end capital ratios continue to exceed "well-capitalized" levels, although they are not at the levels we have historically maintained. The exchange offer was completed on August 25th, which increase
Slide 18: Credit Ratings Update
17 Credit Ratings Update Moody's (June 9, 2009) Outlook: Negative Senior Unsecured Debt: Ba1 Subordinated Debt: Ba2 Preferred Stock: Ca Standard & Poor's (June 10, 2009) Outlook: Negative LT Foreign Issuer Credit: BB- LT Local Issuer Credit: BB- Preferred Stock: B- Fitch (June 8, 2009) Outlook: Nega
Slide 19: Closing Thoughts
18 Closing Thoughts The exchange offer, completed on August 25th, increased Tier 1 common equity by $1.4B. The Corporation now has a Tier 1 common ratio over the 4% level preferred by regulators. Liquidity at the BHCs is adequate. The U.S business is undergoing structural changes to improve its core