Popular Inc. reported net income of $83.9 million for the quarter ended Dec. 31, 2012, nearly twice the $47.2 million in net income reported for the prior quarter ended Sept. 30, 2012.
“Our fourth quarter results reflect the strength of our core businesses and market positions, significant further declines in non-performing loans and increases in our already strong capital ratios,” said Richard Carrión, Popular Inc CEO.
“In 2013, we remain focused on driving value through further progress on all these fronts and continuing to increase our strategic and financial flexibility,” he said.
Among the quarter’s most significant highlights were a $24.2 million cash dividend Popular received from its investment in Evertec’s parent company and a pre-tax income influx of approximately $31.6 million related to its proportionate share of a tax benefit from a tax grant received by Evertec from the Puerto Rico government. The financial institution’s equity investment balance in Evertec stood at $73.9 million as of year-end, with a 48.5 percent stake.
Meanwhile, net interest margin for the fourth quarter of 2012 increased 4 basis points to 4.41 percent when compared with the third quarter of 2012. Net interest income reached $350.4 million, an increase of $7 million from the third quarter.
When broken down, the report shows that Banco Popular de Puerto Rico’s net interest margin increased 7 basis points from 5.11 percent in the third quarter to 5.18 percent in the fourth quarter.
Net interest income amounted to $309.1 million for the quarter ended Dec. 31, 2012, compared with $300.9 million for the previous quarter. The improvement was mainly the result of higher interest income from covered loans and a lower cost of borrowings as mentioned above, bank officials said.
Meanwhile, Banco Popular North America earned $68.5 million in net interest income for the quarter ended Dec. 31, 2012 compared with $69.6 million in the previous quarter. The decrease in the net interest margin of 6 basis points to 3.51 percent was mainly “caused by a decrease in the yield of commercial and mortgage loans and of investment securities due to prepayments, partially offset by a 12 basis point reduction in the cost of interest-bearing deposits.”
Popular Inc.’s provision for loan losses for the fourth quarter of 2012 amounted to $82.8 million, a decrease of $23.4 million versus the previous quarter, mainly driven by lower provision for the covered loan portfolio.
Changes at the helm
Coupled with the quarterly report, Popular Inc. also announced a reshuffling at its top management ranks, appointing Carlos J. Vázquez, currently President of Popular Community Bank, a chief financial officer, effective March 15. Vázquez will succeed Jorge Junquera, who will assume the new role of vice chairman and special assistant to the CEO. Meanwhile, Manuel Chinea will assume the role of Chief Operating Officer of Popular Community Bank.
“Carlos’ diverse experience and knowledge of the various operations of Popular make him a perfect candidate to assume the role of CFO,” Carrión said of the executive that has 15 years of senior management experience under his belt.
In his new role, Junquera will, among other things, assist in business development initiatives and help oversee the Company’s portfolio investments. He will also represent the Company on various boards of directors of entities in which the Company has an ownership interest.
“After working for Popular for [more than] 40 years, 16 of which I served as CFO, I look forward to this transition by assuming a role in which I can focus on business development initiatives rather than on day-to-day management responsibilities,” Junquera said.
Rounding out the trio is Chinea, who has more than 23 years of service at Popular. Some of his previous responsibilities were Retail Banking Operations, Marketing, Product Development Care Center, Popular Investments, and Consumer Loan Units, among others.
“Manuel knows our U.S. operations well and I am confident that he will greatly benefit our institution,” said Carrión. Chinea will commence in his new role Jan. 28.