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.
