Popular Inc. reports $168.4M in 3Q20 net income; Closing 11 NY branches
Popular Inc. reported net income of $168.4 million for the quarter ended Sept. 30, 2020, up from net income of $127.6 million for the quarter ended June 30, 2020, but flat when compared to the $164.3 million reported during the third quarter in 2019.
“We generated $168.4 million in earnings in the third quarter, reflecting the economic rebound fueled by the unprecedented level of federal stimulus,” said Popular Inc. CEO Ignacio Álvarez.
“While the economic scenario remains uncertain, the strong results reflect our diversified sources of revenue and prudent risk management. Deposits continued to grow, and loan demand remains low as customers are cautious and conserving cash,” he said.
The corporation’s total assets increased by $3.1 billion during the quarter to $65.9 billion, primarily due to an increase in deposits of $2.2 billion, of which $2 billion were from commercial and retail clients and $0.8 billion were from the public sector in Puerto Rico, driven in part by federal and Puerto Rico government assistance programs related to the pandemic.
During a call with members of Puerto Rico’s business news press corps, Álvarez said had it not been for the influx of funds, the blow dealt by the COVID-19 would have caused far more “suffering among the people.”
“The economy went into a depression, but people had cash available, which reflected in our deposits. However, it remains to be seen whether another relief package will come down from the federal government next year, and for how much,” he said.
With regards to the upcoming elections and whoever eventually becomes governor of Puerto Rico, Álvarez said that person will have a “historic opportunity with the amount of federal relief we’re getting from Hurricane María and the stimulus package that will come and it’s important that we use that money to create a better future than to spend it on short-term consumption.”
Popular’s third quarter results reflect the benefit of increased economic activity resulting from the reopening after strict lockdown measures were implemented for several months starting in March, to curb the spread of the COVID-19 virus, the related improvement in the macroeconomic environment, as well as the impact of the various government stimulus programs launched in response to the pandemic.
Popular Inc. coupled its third quarter results with the announcement that it will be closing 11 branches across its New York Metro footprint, a decision made after it conducted a detailed review and analysis of its current network, including its usage, proximity to additional Popular Bank branches, the needs of customers and accessibility to supplemental services.
The branch closures, which are expected to be completed by Jan. 29, 2021, are projected to reduce annual operating expenses by approximately $13 million.
“This realignment in our New York Metro market is consistent with our small business and retail services model in South Florida,” Álvarez said. “We’re confident that this repositioning will improve the performance of Popular Bank as we continue to meet the growing and diverse needs of our customers, employees and communities throughout our markets.”
Total expenses associated with the branch closures are anticipated to be approximately $24.5 million, of which $23.1 million are expected to be recognized in the fourth quarter of 2020.
The expenses include a pre-tax charge of approximately $2.4 million in costs associated with severance and related benefit costs for the 83 impacted employees.
Popular Bank will maintain a presence in most of its current communities, with 27 branches located throughout New York in Brooklyn, Bronx, Manhattan, and Queens, as well as in northern New Jersey.