BankingFinancial District

Popular reports $65.7M in 2Q net income

Banco Popular’s parent company, Popular Inc. reported quarterly results Wednesday. (Credit: © Mauricio Pascual)

Popular Inc. reported Wednesday net income of $65.7 million for the second quarter ended June 30, 2012, compared with $48.4 million in net income during the prior trimester ended March 31. The current results represent a 41 percent drop in comparison to the profit of $110.7 million on record for the second quarter in 2011.

The most recent results were fueled by a tax benefit of $72.9 million related to the tax treatment of the loans acquired in the Westernbank FDIC-assisted transaction, a slight improvement in credit quality, a $120 million reduction in its non-performing loans and a $131 million cash dividend it received from its investment in Evertec.

“Two consistently positive trends stand out in this quarter’s results. First, our net interest margin and our revenue-generating capacity remain strong,” said Popular Inc. CEO Richar Carrión. “Second, credit metrics keep improving. The decrease of $120 million in non-performing loans marks our largest quarterly decline in this credit cycle. Despite various headwinds we are continuing our progress.”

Those  “headwinds” are lower-than-expected loan originations due to weak market demand, higher collection costs and current negative accretion from the covered loan portfolio, as Carrión said during a call with investors earlier in the day.

The recent quarter’s numbers were impacted by $34.7 million in negative valuation adjustments on commercial and construction loans held-for-sale and a $25 million loss related to the early termination of $350 million in outstanding repurchase agreements maturing in 2014.

Operating expenses were also up in comparison to the first quarter of 2012 by $31.7 million to $327.8 million, the total was slightly offset by a $5 million savings Popular recorded as a result of the employee voluntary retirement window it opened last year.

Popular predicted Wednesday it now expects to earn between $210 million and $225 million for 2012, slightly edging out the earlier forecast of $185 million to $200 million in earnings.

To review the bank’s most recent quarterly report, click here.

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Business reporter with 25 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other areas of the economy.

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