Popular, Inc. · NASDAQ:BPOP
Popular — Q3 2018 Earnings Presentation
19 slides from Popular's earnings presentation, Oct 24, 2018
Slide 1: Investor Presentation Third Quarter 2018
Exhibit 99.1 Investor Presentation Third Quarter 2018
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 ReformActof 1995,includingwithout limitation thoseaboutPopular’sbusiness,financialcondition,resultsof operations, plans, objective
Slide 3: Q3 2018 Highlights
Q3 2018 Highlights • Net income of $140.6 million Earnings • Strong margins: Popular, Inc. 4.07%, BPPR 4.35% Credit • NPLs decreased by $11 million QoQ; ratio at 2.4% Metrics • NCO ratio increased to 1.00% from 0.95% in the previous quarter • Robust capital; Common Equity Tier 1 Capital ratio of 16.
Slide 4: Reliable Transaction Overview
Reliable Transaction Overview Portfolio • Acquired$1.6billionin retailautoloansand$341million in commercial loans at a 4.5% discount • Average loan rate for the quarter of 7.3% and effective yield of 12%, Yield including discount amortization • Original estimate of $36 million in net income for the
Slide 5: Financial Summary (GAAP)
Financial Summary (GAAP) 1 (Unaudited) ($ in thousands) Q3 2018 Q2 2018 Variance Net interest income $ 451,469 $ 414,136 $ 37,333 Service charges on deposits 38,147 37,102 1,045 Other service fees 64,316 62,876 1,440 Mortgage banking activities 11,269 10,071 1,198 Adjustments (expense) to indemnity
Slide 6: GAAP Reconciliation
GAAP Reconciliation (Unaudited) ($ in thousands) Q2 2018 Income tax Impact on Pre-tax effect net income U.S. GAAP Net income $ 279,783 1 Non-GAAP Adjustments : Termination of FDIC Shared-Loss Agreements $(94,633) $45,059 (49,574) Tax Closing Agreement - (108,946) (108,946) Adjusted net income (Non-G
Slide 7: Capital
Capital • Robust capital levels; Common Equity Tier 1 of 16.2% • Tangible book value per share of $44.62 compared to $44.78 in Q2 2018 • Entered into a $125 million accelerated share repurchase transaction • Redeemed $53 million of Trust Preferred Securities Popular, Inc. (%) 20.4 18.8 17.5 17.5 16.
Slide 8: P.R. Public Sector Exposure
P.R. Public Sector Exposure The Corporation has no direct exposure to debt of the P.R. central government or its public corporations. Our direct exposure to P.R. municipalities is $458 million, decreasing by $23 million QoQ, due to principal repayments. Municipalities Outstanding P.R. government exp
Slide 9: Non-Performing Assets
Non-Performing Assets Highlights Non-Performing Assets $2,489 ($ in millions) • NPAsdecreasedby $19 million QoQ $2,365 • $2,402 NPLsdecreasedby $11million QoQ $2,002 6.9% 6.4% 6.3% P.R.NPLsat $581million, or 2.9%of loans, 5.5% down by $9 million, mainlydrivenby: $1,293 - lower mortgage NPLs of $24 m
Slide 10: NPL Inflows
NPL Inflows Highlights • Total NPLinflows down by $108million QoQ Total NPL Inflows P.R.mortgageinflows down $59 million, significantly ($ in millions) lower than pre-hurricane levels, reflective of lower earlydelinquenciespost-moratorium 185 P.R.commercialinflows downby $31 million, drivenby 158 th
Slide 11: Additional Credit Metrics
Additional Credit Metrics Highlights • Net charge-offs(NCOs)increasedby $6 million, driven by NCOs and NCO-to-Loan Ratio higher P.R. mortgage and consumer NCOsof $10 million and $9 ($ in millions) million, respectively, mostly due to post-moratorium effects, offset by 8 lower commercial NCOsof $14 m
Slide 12: Driving Shareholder Value
Driving Shareholder Value • Franchise in P.R. uniquely positioned to take advantage of Earnings improving economic trends • Acquisition of Reliable’s auto finance business • Robust capital with Common Equity Tier 1 Capital of 16.2% Capital • Tangible book value per share of $44.62 • Executed capital
Slide 13: Appendix
Investor Presentation Third Quarter 2018 Appendix
Slide 14: Corporate Structure – Popular, Inc.
Corporate Structure P – opular, Inc. Franchise Summary Corporate Structure Industry Financial services Assets = $48 billion Headquarters San Juan, Puerto Rico Assets $48 billion (among top 50 BHCs in the U.S.) Banco Popular Popular Popular’s Insurance Popular North Holding Companies de Puerto Rico S
Slide 15: De-Risked Loan Portfolios
De-Risked Loan Portfolios ($ in millions) Loan Composition (Held-in Portfolio) Highlights P.R. U.S. Total $ in millions Q4 2007 Q3 2018 Q4 2007 Q3 2018 Q4 2007 Q3 2018 Variance • The Corporation has de-riskedits loan portfolios Commercial $7,774 $7,407 $4,515 $4,586 $12,288 $11,994 ($295) by reducin
Slide 16: Business Segments (GAAP)
Business Segments (GAAP) (Unaudited) BPPR Popular U.S. ($ in millions) Financial Results Q3 2018 Q2 2018 Variance Q3 2018 Q2 2018 Variance Net interest income $ 389 $ 353 $ 36 $ 76 $ 76 $ - Non-interest income 136 220 (84) 6 5 1 Gross revenues 525 573 (48) 82 81 1 Provision for loan losses 52 44 8 3
Slide 17: Consolidated Credit Summary
Consolidated Credit Summary 1 $ in millions Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Loans Held in Portfolio (HIP) $26,512 $24,609 $24,088 $24,293 $23,173 Performing HFS $52 $74 $78 $132 $69 NPL HFS $0 $0 $0 $0 $0 Total Non Covered Loans $ 26,564 $ 24,682 $ 24,166 $ 24,425 $ 23,242 Non-performing loans (NPLs)
Slide 18: Popular, Inc. Credit Ratings
Popular, Inc. Credit Ratings Our senior unsecured ratings have remained stable Moody’s B2 Stable Outlook Fitch BB- Stable Outlook S&P BB- Negative Outlook 2015 2016 2017 2018 March Moody’s placed February BPOP on review July Moody’s October for possible On 7/10 S&P April changes May upgrade due to a
Slide 19: Investor Presentation Third Quarter 2018
Investor Presentation Third Quarter 2018