Popular Inc.’s 3Q net income drops 72% year-over-year

Written by  //  October 23, 2014  //  Banking, Financial District  //  No comments

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Popular's net income took a hit during the most recent quarter. (Credit: © Mauricio Pascual)

Popular’s net income took a hit during the most recent quarter. (Credit: © Mauricio Pascual)

Popular Inc. reported Wednesday net income of $62.6 million for the third quarter ended Sept. 30, which represents a 72 percent drop when compared to the $229.1 million reported for the same year-ago period.

The banking company also reported adjusted net income of $90.5 million for the most recent quarter. For the quarter ended June 30, Popular Inc. reported a net loss of $511.3 million and adjusted net income of $86.2 million.

“In the third quarter Popular reached important milestones, such as the repayment of TARP and continued the restructuring of our U.S. operations, completing the sale of our Illinois and Central Florida operations,” said Popular Inc. Chairman Richard Carrión.

“These accomplishments come in concert with another period of stable results and credit quality, reflecting our ability to operate successfully even under challenging conditions,” he said.

During the quarter, Popular Inc. completed the repayment of the $935 million it owed the U.S. Treasury, borrowed through the Troubled Asset Relief Program. To do so, the bank funded a capital repurchase through a combination of available cash and approximately $400 million from the proceeds of the issuance of its $450 million aggregate principal amount of 7 percent Senior Notes due on 2019 issued on July 1, 2014.

During the third quarter of 2014, the bank also completed two of the previously announced sales of its regional operations in the U.S. The sales of its Central Florida and Illinois operations resulted in a net gain of $1.2 million and $24.6 million, respectively. The sale of the California region should be completed before the end of the year.

As part of its strategy to centralize certain back office operations in Puerto Rico and New York, it incurred $8.3 million in restructuring charges during the third quarter of 2014. Over the course of the fourth quarter of 2014 and early in 2015, it expects to write-up an additional $41 million in restructuring charges.

In connection with the restructuring of its U.S. mainland operations, Popular is also taking steps to restructure its balance sheet and funding strategies, which called for selling approximately $94.2 million in securities available for sale and refinancing approximately $638 million in long term structured repos in the U.S. during the quarter ended Sept. 30.

The fees associated with the refinancing of these repos were $39.7 million, of which $20.7 million were recorded as interest expense during the third quarter of 2014, with remainder to be recorded during the fourth quarter of 2014.

The Corporation also sold or entered into agreements to sell certain of its legacy and classified loans in the U.S. for an aggregate of approximately $220.7 million, which resulted in a net loss of approximately $12 million in the quarter.

For the bank’s full third quarter report, click here.

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