Popular, Inc. · NASDAQ:BPOP
Popular — Q3 2020 Earnings Presentation
25 slides from Popular's earnings presentation, Oct 28, 2020
Slide 1: Investor Presentation Third Quarter 2020
Investor Presentation Third 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 Employment4 Nonfarm employment (March 2020): 0.6% higher than March 2019 Economy Cement Sales6 6% lower than Q2 2019 YTD: 16% below 2019 Puerto Rico BPPR 1 Source: Moody’s Analytics- April 2, 2020, June 23, 2020 and September 2020; 2 Source: El Nuevo Dia, En Marcha el Ac
Slide 4: COVID-19 Response: Highlights
COVID-19 Response: Highlights Customer Engagement (P.R.) Additional Initiatives 86% of total number of loans originated or $328 million are below $50,000 qualifying them for the simplified loan forgiveness process Deployed online platform for customers to request loan forgiveness We expect that the
Slide 5: Q3 2020 Highlights
NPLs decreased $26 million; ratio at 2.5% NCO ratio decreased to 0.24% ACL to loans held-in-portfolio of 3.15% Credit Metrics Net income of $168 million Net interest margin: Popular, Inc. 3.06%, BPPR 3.13% Provision for credit losses of $19 million Earnings Robust capital; Common Equity Tier 1 Capit
Slide 6: Popular Bank Branch Network Realignment
New York Metro: close 11 branches, maintain 27 branches South Florida: continue operating 11 branches Branches Popular Bank Branch Network Realignment Pre-tax charge of approximately $25 million; $23 million in Q4 2020 Reduce operating costs: annual savings estimated to be $13 million Expected payba
Slide 7: Financial Summary
Financial Summary (Unaudited) a2 2020 (Sin thousands) Q3 2020 Net interest income $ 461,021 $ 450,881 $10,140 Service charges on deposits 36,849 30,163 6,686 Other senvice fees 69,879 52,084 17,795 Mortgage banking activities (9,526) 3,777 | (13,303) Adjustments (expense) to indemnity reserves on lo
Slide 8: Mortgage Repurchase Transactions
Delinquencies and deferrals increased the population of serviced loans eligible for repurchase Minimize future servicing advances and sundry losses Deploy liquidity to increase interest income; expected blended yield of the portfolio of approximately 3.50% Estimated payback period of approximately s
Slide 9: Net Interest Margin Dynamics
Net Interest Margin Dynamics Q3 2020 FTE1 net interest margin at 3.37% Decrease in net interest margin is primarily due to the change in asset mix FTE loan yield decreased 8 basis points to 6.16% QoQ Total deposit cost decreased 7 basis points QoQ; U.S. decreased 20 basis points to 0.81% and P.R. de
Slide 10: Capital
Capital 1Pro-forma capital and ratios are estimated as of September 30, 2020 and do not include nine quarters of accumulated PPNR, as in previously published stress tests Differences due to rounding Robust capital levels; Common Equity Tier 1 of 15.9% Leverage ratio impacted by the high proportion o
Slide 11: COVID-19 Sensitive Segments
COVID-19 Sensitive Segments 1 Health Care Facilities Non-Essential Retail Construction Hotels Non-Food Wholesale Commercial Real Estate (Non-Retail) Restaurant and Food Services P.R.: Mostly shopping centers (63%) and auto retail (28%). A significant portion of shopping centers owned by long term, f
Slide 12: COVID-19 Response: Customer Relief Program
COVID-19 Response: Customer Relief Program In response to the pandemic, implemented several financial relief programs such as payment deferrals, suspensions of foreclosures and other collection activity. Payment deferrals were available to all eligible consumer and mortgage customers. In Puerto Rico
Slide 13: Non-Performing Assets
Non-Performing Assets ($ in millions) Non-Performing Assets NPAs decreased by $42 million QoQ NPLs decreased by $26 million QoQ P.R. NPLs at $694 million, or 3.2% of loans, down by $33 million, driven by: Lower mortgage NPLs by $27 million Lower consumer NPLs by $14 million Lower commercial NPLs by
Slide 14: NPL Inflows
NPL Inflows Total NPL Inflows ($ 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 $6 million QoQ P.R
Slide 15: Additional Credit Metrics: NCOs and Provision
NCOs and NCO-to-Loan Ratio ($ 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 decreased by $48 million, mostly related to lower P.R. consumer NCOs
Slide 16: Allowance for Credit Losses – Q3 2020 Movement
Economic Scenario: The Q3 2020 ACL used a probability weighted approach that combined Moody’s September S1 (optimistic), Baseline, and S3 (pessimistic) scenarios. The baseline scenario is assigned the highest probability followed by the S3 scenario, which accounts for most of the ACL increase. The Q
Slide 17: Driving Value
17 Driving Value Recent Actions Continued to deploy liquidity: Completed $808 million bulk mortgage repurchase transactions Reallocation of investment portfolio, increasing proportion of agency mortgage backed securities Popular Bank’s branch network realignment Franchise Additional Value Investment
Slide 18: Third Quarter 2020 Appendix
Investor Presentation Third Quarter 2020 Appendix
Slide 19: Franchise Summary
Franchise Summary Corporate Structure Assets = $55 billion Assets = $10 billion Puerto Rico Operations United States Operations Assets = $66 billion Corporate Structure – Popular, Inc. Information as of September 30, 2020 ¹ Doing business as Popular Selected equity investments EVERTEC and Banco BHD
Slide 20: Municipalities
Municipalities Obligations of municipalities are backed by real and personal property taxes, municipal excise taxes, and/or a percentage of the sales and use tax. Indirect exposure includes loans or securities that are payable by non-governmental entities, but which carry a government guarantee to c
Slide 21: De-Risked Loan Portfolios
De-Risked Loan Portfolios 1 Small and Medium Enterprise 2 NCOs distribution represents the percentage allocation of net charge-offs from Q1 2008 through Q3 2020 per each loan category, excluding net charge-offs from previously covered loans up to Q2 2015 3 See detail on page 22 The Corporation has d
Slide 22: FICO Mix of Consumer Originations
FICO Mix of Consumer Originations Prior periods for personal loans and credit cards were conformed to exclude zero FICO
Slide 23: Business Segments
Business Segments Differences due to rounding (Unaudited) ($ in millions) Financial Results Q3 2020 Q2 2020 Variance Q3 2020 Q2 2020 Variance Net interest income 395 $ 387 $ 8 $ 77 $ 74 $ 3 $ Non-interest income 108 96 12 7 6 1 Gross revenues 503 483 20 84 80 4 Provision for credit losses – loan por
Slide 24: 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 25: Third Quarter 2020
Investor Presentation Third Quarter 2020