Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP) reported net income of $46.8 million for the quarter ended September 30, 2016, compared to net income of $89.0 million for the quarter ended June 30, 2016.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: “The results for the third quarter reflect the strength of our franchise and disciplined approach to risk management. We achieved stable revenue and credit metrics notwithstanding the economic challenges in Puerto Rico and the low interest rate environment.”

Significant Events

As previously announced, on October 3, 2016 the review board issued a final arbitration award denying Banco Popular de Puerto Rico’s request for reimbursement of approximately $55 million in shared loss claims that were the subject of one of the disputes between Banco Popular de Puerto Rico (“BPPR”) and the Federal Deposit Insurance Corporation, as receiver, under the commercial loss share agreement entered into in connection with the Westernbank FDIC-assisted transaction. As a result, for the quarter ended September 30, 2016, Popular recognized a pre-tax charge of approximately $55 million and a corresponding reduction to its FDIC indemnification asset.

Earnings Highlights              
 
(Unaudited)   Quarters ended Nine months ended
(Dollars in thousands, except per share information)   30-Sep-16   30-Jun-16   30-Sep-15 30-Sep-16   30-Sep-15
Net interest income $353,687 $360,551 $350,735 $1,066,650 $1,056,483
Provision for loan losses 42,594 39,668 69,568 130,202 159,747
Provision (reversal) for loan losses - covered loans [1]   750   804   (2,890) (1,551) 23,200
Net interest income after provision for loan losses 310,343 320,079 284,057 937,999 873,536
FDIC loss-share (expense) income (61,723) (12,576) 1,207 (77,445) 24,421
Other non-interest income 137,701 123,079 129,902 375,556 362,682
Goodwill impairment charge 3,801 - - 3,801 -
Other operating expenses   319,871   309,149   306,897 930,963   982,412
Income from continuing operations before income tax 62,649 121,433 108,269 301,346 278,227
Income tax expense (benefit)   15,839   32,446   22,620 80,550   (478,344)
Income from continuing operations   46,810   88,987   85,649 220,796   756,571
(Loss) income from discontinued operations, net of tax   -   -   (9) -   1,347
Net income   $46,810   $88,987   $85,640 $220,796   $757,918
Net income applicable to common stock   $45,880   $88,056   $84,709 $218,004   $755,126
Net income per common share from continuing operations - Basic   $0.44   $0.85   $0.82 $2.11   $7.33
Net income per common share from continuing operations - Diluted   $0.44   $0.85   $0.82 $2.11   $7.31
Net income per common share from discontinued operations - Basic   $-   $-   $- $-   $0.01
Net income per common share from discontinued operations - Diluted   $-   $-   $- $-   $0.01
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under an FDIC loss-sharing agreement.

Adjusted results – Non-GAAP

The Corporation prepared its Consolidated Financial Statement using accounting principles generally accepted in the U.S. (“U.S. GAAP” or the “reported basis”). In addition to analyzing the Corporation’s results on a reported basis, management monitors the “Adjusted net income” of the Corporation and excludes the impact of certain transactions on the results of its operations. Management believes that the “Adjusted net income” provides meaningful information about the underlying performance of the Corporation’s ongoing operations. The “Adjusted net income” is a non-GAAP financial measure.

The following tables reflect the results of operations for the third and second quarters of 2016, with adjustments to exclude the impact of certain events during the third and second quarters of 2016, to arrive at the adjusted net income.

Adjusted Net Income - Reconciliation to GAAP Financial Measures

(Unaudited)            
(In thousands)   30-Sep-16
    Income tax   Impact on
    Pre-tax   effect   net income
U.S. GAAP Net Income $46,810
Non-GAAP Adjustments:
FDIC arbitration award[1] 54,924 (10,985) 43,939
Goodwill impairment charge[2]   3,801   -   3,801
Adjusted net income (Non-GAAP)           $94,550

[1]Represents the arbitration decision denying BPPR's request for reimbursement in certain shared loss claims. Gains and losses related to assets acquired from Westernbank as part of the FDIC assisted transaction are subject to the capital gains tax rate of 20%.

[2]Represents goodwill impairment charge in the Corporation’s securities subsidiary. The securities subsidiary is a limited liability company with a partnership election. Accordingly, its earnings flow through Popular, Inc., holding company, for income tax purposes. Since Popular, Inc. has a full valuation allowance on its deferred tax assets, this results in an effective tax rate of 0%.

(Unaudited)            
(In thousands)   30-Jun-16
    Income tax   Impact on
    Pre-tax   effect   net income
U.S. GAAP Net Income $88,987
Non-GAAP Adjustments:
Impact of EVERTEC Restatement [1] 2,173 - 2,173
Bulk Sale of WB loans and OREO [2]   (891)   347   (544)
Adjusted Net Income (Non-GAAP)           $90,616

[1]Represents Popular Inc.'s proportionate share of the cumulative impact of EVERTEC restatement and other corrective adjustments to its financial statements, as disclosed in EVERTEC's 2015 Annual Report on Form 10K. Due to the preferential tax rate on the income from EVERTEC, the tax effect of this transaction was estimated at approximately $38 thousand.

[2]Represents the impact of the bulk sale of Westernbank loans and OREO. Gains and losses related to assets acquired from Westernbank as part of the FDIC assited transaction are subject to the capital gains tax rate of 20%.

Net interest income

Net interest income for the quarter ended September 30, 2016 was $353.7 million, compared to $360.6 million for the previous quarter. Net interest margin was 4.12% for the quarter compared to 4.33% for the previous quarter. The impact of having one more day in the quarter contributed $2.6 million to the net interest income.

The decrease in net interest income was mainly related to:

  • Lower income from the WB loan portfolio by $8.9 million, or 129 basis points, which for the second quarter included the benefit of $2.1 million, or 41 basis points, from the bulk sale. The results were also impacted by lower yields as a result of the quarterly recast process, the successful resolution of certain loans in the second quarter and lower volume of loans, due to the normal portfolio run-off.
  • Higher cost of deposits by $1.7 million or 2 basis points mainly in the U.S. associated to increase in money market and time deposits to fund loan growth.

These negative variances were partially offset by:

  • Higher income from investment securities by $1.2 million mainly from higher levels of mortgage backed securities both at BPPR and the U.S.
  • Higher income from commercial loans by $2.9 million due to higher levels from the U.S. portfolio.

BPPR’s net interest income amounted to $303.7 million for the quarter ended September 30, 2016, compared to $310.4 million for the previous quarter. The decrease of $6.7 million in net interest income was mainly due to lower income from WB loans by $8.9 million as mentioned above, partially offset by higher income from mortgage backed securities and the $2.1 million impact of having one more day in the quarter. Net interest margin declined to 4.49% from 4.71% in the previous quarter mainly driven by lower yields from WB loans, as explained above, and higher volume of overnight investments driven by the increase in Government deposits. Earning assets in P.R. yielded 4.86%, down from 5.08% in the previous quarter, while the cost of interest bearing liabilities remained flat from the previous quarter at 0.53%.

BPNA’s net interest income was $65.3 million, compared to $65.5 million for the previous quarter. The decrease of $0.2 million in the net interest income is mainly driven by higher expense from deposits to fund loan growth and the purchase and reinvestment of investment securities in a lower rate environment. These negative variances were partially offset by higher income from commercial loans due to the growth of this portfolio. Net interest margin decreased 19 basis points to 3.61% compared to 3.80% for the previous quarter driven by the above mentioned variances. U.S. earning assets yielded 4.32%, compared to 4.47% in the previous quarter, while the cost of interest bearing liabilities was 0.94%, compared to 0.87% in the previous quarter.

Non-interest income

Non-interest income was $76.0 million for the third quarter of 2016, a decrease of $34.5 million when compared to the second quarter of 2016. The decrease in non-interest income was driven primarily by higher FDIC loss-share expense by $49.1 million as a result of a $54.9 million charge related to the FDIC arbitration award, partially offset by lower recoveries on assets to be shared with the FDIC in the recovery period.

This decrease was partially offset by:

  • Higher other service fees by $2.2 million due to higher life insurance commission revenues;
  • Higher net gain on sale of loans by $8.5 million as a result of the sale of a non-accrual public sector credit during the third quarter; and
  • Higher other operating income by $5.2 million mainly due to higher aggregated net earnings from investments under the equity method, principally due to the unfavorable adjustment of $2.2 million recorded during the second quarter as a result of the EVERTEC restatement.

Refer to Table B for further details.

Financial Impact of the 2010 FDIC-Assisted Transaction        
   
(Unaudited)   Quarters ended Nine months ended
(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15 30-Sep-16   30-Sep-15
 

Income Statement

Interest income on WB loans $40,867 $49,794 $47,982 $135,566 $160,909
Total FDIC loss-share (expense) income (61,723) (12,576) 1,207 (77,445) 24,421
Provision (reversal) for loan losses- WB loans   6,612   (7,282)   20,206 (1,026)   46,296
Total revenues less provision (reversal) for loan losses   $(27,468)   $44,500   $28,983 $59,147   $139,034
 

Balance Sheet

WB loans $1,896,099 $1,932,062 $2,223,731
FDIC loss-share asset 152,467 214,029 311,946
FDIC true-up payment obligation   134,487   127,876   122,527        

See additional details on accounting for the 2010 FDIC-Assisted transaction in Table O.

Operating expenses

Operating expenses amounted to $323.7 million for the third quarter of 2016, an increase of $14.5 million when compared to the second quarter of 2016. The increase in operating expenses was driven primarily by:

  • Higher personnel cost by $4.5 million mainly due to higher salaries from increased full time equivalent employees, an additional working day in the quarter and higher commission compensation in the insurance and wealth management subsidiaries;
  • Higher other taxes by $1.2 million mainly due to higher municipal license and sales tax;
  • Higher professional fees by $0.6 million mainly due to higher programming, processing and other technology services by $1.9 million and higher attorney fees by $1.4 million related to the FDIC arbitration proceedings, partially offset by lower credit related expenses and reduced other professional fees from the bulk sale of Westernbank loans and OREO during the second quarter;
  • Higher other operating expense by $9.2 million mainly due to higher operational losses at BPPR and BPNA including increased reserves for legal matters, curtailment losses on insured mortgage claims in our mortgage servicing business and higher incidence of credit card fraud losses; and
  • A goodwill impairment charge of $3.8 million at the securities subsidiary, recorded as part of the Corporation’s annual goodwill impairment analysis.

These increases were partially offset by:

  • Lower OREO expenses by $1.7 million mainly due to the loss on the bulk sale of Westernbank OREO during the second quarter, partially offset by higher mortgage OREO write-downs at BPPR; and
  • Lower credit and debit card processing, volume, interchange and other expenses by $3.0 million due mainly to earned volume credits.

Non-personnel credit-related costs, which include collections, appraisals, credit related fees, and OREO expenses, amounted to $15.3 million for the third quarter of 2016, compared to $18.0 million for the second quarter of 2016. The decrease was principally due to lower losses on sales of OREO at BPPR.

Full-time equivalent employees were 7,866 as of September 30, 2016, compared to 7,826 as of June 30, 2016.

For a breakdown of operating expenses by category refer to table B.

Income taxes

For the quarter ended September 30, 2016, the Corporation recorded an income tax expense of $15.8 million, compared to $32.4 million for the previous quarter. The decline in the income tax expense is mainly driven by lower taxable income at BPPR. Additionally, in the third quarter BPPR recognized a $4.4 million benefit related to reversal of uncertain tax positions reserves associated with expired statutory provisions.

The effective income tax rate for the third quarter of 2016 was 25%, compared to 27% for the previous quarter. The effective tax rate is impacted by the composition and source of the taxable income.

Credit Quality

The Corporation continued to experience stable credit trends despite challenging economic conditions in Puerto Rico. The shift in the composition and the risk profile of the credit portfolios over the last few years has better positioned the Corporation to operate in the Island’s environment. The Corporation continues to closely monitor changes in credit quality trends and is focused on taking measures to minimize risks. The U.S. operation continued to reflect positive results with strong growth and favorable credit quality metrics.

  • Inflows of NPLs held-in-portfolio, excluding consumer loans, decreased by $5.6 million quarter-over-quarter, mainly driven by lower commercial inflows of $13.5 million, offset by higher mortgage inflows of $7.7 million in the BPPR segment.
  • Non-performing loans held-in-portfolio increased slightly by $1.6 million from the second quarter of 2016, mainly driven by higher mortgage NPLs of $7.7 million, offset by lower commercial NPLs of $5.5 million in the BPPR segment. At September 30, 2016, NPLs to total loans held-in-portfolio remained flat at 2.6% quarter-over-quarter.
  • Net charge-offs remained flat at $35.1 million quarter over quarter. NCOs in the BPPR segment decreased by $3.3 million mainly driven by a decrease of $7.1 million in the consumer NCOs due to a $7.1 million recovery related to the sale of previously charged-off credit cards and personal loans. BPPR construction NCOs increased by $4.1 million, mostly related to higher recoveries in the previous quarter. NCOs in the BPNA segment increased by $3.0 million, mostly due to higher mortgage NCOs. The ratio of annualized net charge-offs to average non-covered loans held-in-portfolio was 0.63%, flat from the second quarter of 2016. The $7.1 million recovery from consumer loans reduced the NCO ratio by 13 bps. Refer to Table J for further information on net charge-offs and related ratios.
  • The allowance for loan losses increased by $7.5 million from the second quarter 2016 to $525.6 million, mostly driven by the $9.4 million reserve increase related to the annual recalibration of the environmental factors adjustment. The general and specific reserves related to non-covered loans totaled $396.5 million and $129.1 million, respectively, at quarter-end, compared with $395.3 million and $122.8 million, respectively, as of June 30, 2016. The ratio of the allowance for loan losses to loans held-in-portfolio was 2.33% in the third quarter of 2016, compared to 2.30% from the previous quarter.
  • The ratio of the allowance for loan losses to NPLs held-in-portfolio increased to 90.7%, compared to 89.7% in the previous quarter.
  • The provision for loan losses for the third quarter of 2016 amounted to $42.6 million, increasing by $2.9 million from the previous quarter. The provision to net charge-offs ratio was 121.2% in the third quarter 2016, compared to 127.4% in the previous quarter, excluding the recoveries related to the bulk sale of Westernbank loans.

Non-Performing Assets      
(Unaudited)            
(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15
Total non-performing loans held-in-portfolio, excluding covered loans $579,325 $577,739 $634,902
Non-performing loans held-for-sale - 39,544 47,681
Other real estate owned (“OREO”), excluding covered OREO   184,828   177,025   155,826
Total non-performing assets, excluding covered assets 764,153 794,308 838,409
Covered loans and OREO   41,211   41,466   39,888
Total non-performing assets   $805,364   $835,774   $878,297
Net charge-offs for the quarter (excluding covered loans)   $35,140   $35,401   $46,302
 
 
Ratios (excluding covered loans):            
Non-covered loans held-in-portfolio $22,595,972 $22,540,661 $22,498,066
Non-performing loans held-in-portfolio to loans held-in-portfolio 2.56% 2.56% 2.82%
Allowance for loan losses to loans held-in-portfolio 2.33 2.30 2.38
Allowance for loan losses to non-performing loans, excluding loans held-for-sale   90.73   89.68   84.42
 
Refer to Table H for additional information.
Provision for Loan Losses        
 
(Unaudited)   Quarters ended Nine months ended
(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15 30-Sep-16 30-Sep-15
Provision (reversal) for loan losses:
BPPR $36,281 $38,351 $68,755 $118,503 $161,197
BPNA   6,313   1,317   813 11,699 (1,450)
Total provision for loan losses- non-covered loans   $42,594   $39,668   $69,568   $130,202 $159,747
Provision (reversal) for loan losses - covered loans   750   804   (2,890) (1,551) 23,200
Total provision for loan losses   $43,344   $40,472   $66,678 $128,651 $182,947

Credit Quality by Segment      
(Unaudited)
(In thousands) Quarters ended
BPPR  

30-Sep-16

  30-Jun-16   30-Sep-15
Provision for loan losses $36,281 $38,351 $68,755
Net charge-offs 32,959 36,222 47,245
Total non-performing loans held-in-portfolio, excluding covered loans 551,238 550,632 609,469
Allowance / non-covered loans held-in-portfolio   2.80%   2.77%   2.83%
 
  Quarters ended
BPNA   30-Sep-16   30-Jun-16   30-Sep-15
Provision for loan losses $6,313 $1,317 $813
Net charge-offs (recoveries) 2,181 (821) (943)
Total non-performing loans held-in-portfolio 28,087 27,107 25,433
Allowance / non-covered loans held-in-portfolio   0.78%   0.72%   0.68%
Financial Condition Highlights      
 
(Unaudited)        
(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15
Money market, trading and investment securities $11,931,499 $10,368,794 $8,321,397
Loans not covered under loss-sharing agreements with the FDIC 22,595,972 22,540,661 22,498,066
Loans covered under loss-sharing agreements with the FDIC 588,211 607,170 665,428
Total assets 39,054,296 37,606,148 35,522,462
Deposits 30,327,045 28,737,856 26,713,206
Borrowings 2,364,984 2,428,752 2,753,144
Liabilities from discontinued operations 1,815 1,815 1,800
Total liabilities 33,673,901 32,246,317 30,472,826
Stockholders’ equity   5,380,395   5,359,831   5,049,636

Total assets increased by $1.4 billion from the second quarter of 2016 driven by:

  • An increase of $1.2 billion in money market investments mainly at BPPR due to an increase in cash balances from deposits;
  • An increase of $0.4 billion in investment securities available-for-sale mainly at BPNA due to purchases of mortgage-backed agency pools, partially offset by sales and principal pay-downs; and
  • A net increase of $58.5 million in non-covered loans held-in-portfolio mainly driven by growth in the commercial portfolio at BPNA by $138.4 million, partially offset by a decrease in mortgage loans portfolio at BPPR of $73.7 million impacted by lower originations of residential mortgages.

These positive variances were partially offset by a decrease of $61.6 million in the FDIC loss-share asset due mainly to the $54.9 million charge related to review board’s denial of BPPR’s claim in connection with arbitration proceedings with the FDIC.

Total liabilities increased by $1.4 billion from the first quarter of 2016, principally driven by:

  • An increase of $1.6 billion in deposits mainly due to increases in deposits from the Puerto Rico government, NOW accounts, and non-interest bearing demand deposits at BPPR. Refer to Table G for additional information on deposits.

Stockholders’ equity increased by approximately $20.6 million from the second quarter of 2016, mainly as a result of net income for the quarter of $46.8 million, partially offset by an unfavorable variance of $14.4 million in unrealized gains on securities available-for-sale, declared dividends of $15.6 million on common stock and $0.9 million in dividends on preferred stock.

Common equity tier-1 ratio (“CET1”), book value per share and tangible book value per share were 16.64%, $51.85 and $44.86, respectively at September 30, 2016 compared to 16.29%, $51.68 and $44.62 at June 30, 2016. Refer to Table A for capital ratios.

Forward-Looking Statements

The information contained in this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2015, the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016, and our other filings with the Securities and Exchange Commission for a discussion of factors that may cause the Corporation's actual results to differ materially from any future results expressed or implied by such forward-looking statements. Those filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.SEC.gov). The Corporation does not undertake to update or revise any forward-looking statement to reflect events or circumstances that may arise after the date of such statements.

Founded in 1893, Popular, Inc. is the leading banking institution by both assets and deposits in Puerto Rico and ranks among the top 50 U.S. banks by assets. Popular provides retail, mortgage and commercial banking services through its principal banking subsidiary, Banco Popular de Puerto Rico, as well as auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the United States, Popular has established a community-banking franchise providing a broad range of financial services and products with branches in New York, New Jersey and Florida under the name of Popular Community Bank.

An electronic version of this press release can be found at the Corporation’s website: www.popular.com.

Popular will hold a conference call to discuss the financial results today Tuesday, October 25, 2016 at 11:00 a.m. Eastern Time. The call will be broadcast live over the Internet and can be accessed through the investor relations section of the Corporation’s website: www.popular.com.

Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through a dial-in telephone number 1-866-235-1201 or 1-412-902-4127.

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Thursday, November 24, 2016. The replay dial in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10093046.

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
 
Table A - Selected Ratios and Other Information
 
Table B - Consolidated Statement of Operations
 
Table C - Consolidated Statement of Financial Condition
 
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
 
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
 
Table F - Mortgage Banking Activities and Other Service Fees
 
Table G - Loans and Deposits
 
Table H - Non-Performing Assets
 
Table I - Activity in Non-Performing Loans
 
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
 
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
 
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
 
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
 
Table N - Reconciliation to GAAP Financial Measures
 
Table O - Financial Information - Westernbank Loans

POPULAR, INC.
Financial Supplement to Third Quarter 2016 Earnings Release
Table A - Selected Ratios and Other Information
(Unaudited)
         
             
Quarters ended Nine months ended
    30-Sep-16   30-Jun-16   30-Sep-15   30-Sep-16   30-Sep-15
Basic EPS from continuing operations $0.44 $0.85 $0.82 $2.11 $7.33
Basic EPS from discontinued operations $- $- $- $- $0.01
Total Basic EPS $0.44 $0.85 $0.82 $2.11 $7.34
Diluted EPS from continuing operations $0.44 $0.85 $0.82 $2.11 $7.31
Diluted EPS from discontinued operations $- $- $- $- $0.01
Total Diluted EPS $0.44 $0.85 $0.82 $2.11 $7.32
Average common shares outstanding 103,296,443 103,245,717 102,969,214 103,243,851 102,923,018
Average common shares outstanding - assuming dilution 103,465,385 103,343,486 103,150,482 103,383,949 103,137,762
Common shares outstanding at end of period 103,762,596 103,703,041 103,556,285 103,762,596 103,556,285
 
Market value per common share $38.22 $29.30 $30.23 $38.22 $30.23
 
Market capitalization - (In millions) $3,966 $3,038 $3,131 $3,966 $3,131
 
Return on average assets 0.49% 0.96% 0.95% 0.79% 2.89%
. .
Return on average common equity 3.46% 6.80% 6.79% 5.59% 22.29%
 
Net interest margin 4.12% 4.33% 4.39% 4.29% 4.50%
 
Common equity per share $51.37 $51.20 $48.28 $51.37 $48.28
 
Book value per share $51.85 $51.68 $48.76 $51.85 $48.76
 
Tangible common book value per common share (non-GAAP) $44.86 $44.62 $42.71 $44.86 $42.71
 
Tangible common equity to tangible assets (non-GAAP) 12.13% 12.53% 12.66% 12.13% 12.66%
 
Tier 1 capital

16.64%

16.29% 16.21%

16.64%

16.21%
 
Total capital

19.65%

19.29% 18.78%

19.65%

18.78%
 
Tier 1 leverage

11.21%

11.29% 11.75%

11.21%

11.75%
 
Common Equity Tier 1 capital  

16.64%

  16.29%   16.21%  

16.64%

  16.21%

POPULAR, INC.
Financial Supplement to Third Quarter 2016 Earnings Release
Table B - Consolidated Statement of Operations
(Unaudited)
    Quarters ended   Variance   Quarter ended   Variance   Nine months ended
 

Q3 2016

Q3 2016

 
(In thousands, except per share information)   30-Sep-16   30-Jun-16  

vs. Q2 2016

  30-Sep-15  

vs. Q3 2015

  30-Sep-16   30-Sep-15
Interest income:
Loans $363,550 $369,721 $(6,171) $364,458 $(908) $1,096,468 $1,094,222
Money market investments 4,568 3,889 679 2,003 2,565 11,320 5,294
Investment securities 37,732 36,725 1,007 31,671 6,061 110,728 93,269
  Trading account securities   1,449   1,875   (426)   3,150   (1,701)   5,013   8,872
  Total interest income   407,299   412,210   (4,911)   401,282   6,017   1,223,529   1,201,657
Interest expense:
Deposits 32,362 30,599 1,763 28,357 4,005 92,835 80,479
Short-term borrowings 2,132 2,058 74 2,222 (90) 6,051 5,819
  Long-term debt   19,118   19,002   116   19,968   (850)   57,993   58,876
  Total interest expense   53,612   51,659   1,953   50,547   3,065   156,879   145,174
Net interest income 353,687 360,551 (6,864) 350,735 2,952 1,066,650 1,056,483
Provision for loan losses - non-covered loans 42,594 39,668 2,926 69,568 (26,974) 130,202 159,747
Provision (reversal) for loan losses - covered loans   750   804   (54)   (2,890)   3,640   (1,551)   23,200
Net interest income after provision for loan losses   310,343   320,079   (9,736)   284,057   26,286   937,999   873,536
Service charges on deposit accounts 40,776 40,296 480 40,960 (184) 120,934 120,115
Other service fees 59,169 56,945 2,224 56,115 3,054 169,496 169,162
Mortgage banking activities 15,272 16,227 (955) 24,195 (8,923) 42,050 58,372
Net gain and valuation adjustments on investment securities 349 1,583 (1,234) 136 213 1,932 141
Other-than-temporary impairment losses on investment securities - (209) 209 - - (209) (14,445)
Trading account (loss) profit (113) 1,117 (1,230) (398) 285 842 (3,092)
Net gain on sale of loans, including valuation adjustments on loans held-for-sale 8,549 - 8,549 - 8,549 8,245 602
Adjustments (expense) to indemnity reserves on loans sold (4,390) (5,746) 1,356 (5,874) 1,484 (14,234) (9,981)
FDIC loss-share (expense) income (61,723) (12,576) (49,147) 1,207 (62,930) (77,445) 24,421
Other operating income   18,089   12,866   5,223   14,768   3,321   46,500   41,808
  Total non-interest income   75,978   110,503   (34,525)   131,109   (55,131)   298,111   387,103
Operating expenses:
Personnel costs
Salaries 77,770 75,792 1,978 78,193 (423) 230,860 227,040
Commissions, incentives and other bonuses 18,528 16,982 1,546 18,618 (90) 56,279 61,290
Pension, postretirement and medical insurance 13,413 12,279 1,134 12,578 835 38,803 33,666
  Other personnel costs, including payroll taxes   11,513   11,655   (142)   11,474   39   39,081   36,302
Total personnel costs 121,224 116,708 4,516 120,863 361 365,023 358,298
Net occupancy expenses 21,626 21,714 (88) 21,277 349 63,770 66,272
Equipment expenses 15,922 15,261 661 14,739 1,183 45,731 44,075
Other taxes 11,324 10,170 1,154 9,951 1,373 31,689 29,638
Professional fees
Collections, appraisals and other credit related fees 4,005 4,974 (969) 5,049 (1,044) 13,479 18,660
Programming, processing and other technology services 52,174 50,232 1,942 49,134 3,040 152,270 143,700
Legal fees, excluding collections 11,428 10,009 1,419 6,624 4,804 27,691 19,401
  Other professional fees   13,659   15,410   (1,751)   16,347   (2,688)   43,910   49,370
Total professional fees 81,266 80,625 641 77,154 4,112 237,350 231,131
Communications 5,785 6,012 (227) 6,058 (273) 18,117 18,387
Business promotion 12,726 13,705 (979) 12,325 401 37,541 36,914
FDIC deposit insurance 5,854 5,362 492 7,300 (1,446) 18,586 22,240
Other real estate owned (OREO) expenses 11,295 12,980 (1,685) 7,686 3,609 33,416 75,571
Credit and debit card processing, volume, interchange and other expenses 3,640 6,617 (2,977) 6,449 (2,809) 15,979 17,032
Other operating expenses
Operational losses 19,609 7,146 12,463 9,648 9,961 29,416 15,572
  All other   6,503   9,752   (3,249)   9,454   (2,951)   25,037   41,377
Total other operating expenses 26,112 16,898 9,214 19,102 7,010 54,453 56,949
Amortization of intangibles 3,097 3,097 - 3,512 (415) 9,308 8,497
Goodwill impairment charge 3,801 - 3,801 - 3,801 3,801 -
Restructuring costs   -   -   -   481   (481)   -   17,408
  Total operating expenses   323,672   309,149   14,523   306,897   16,775   934,764   982,412
Income from continuing operations before income tax 62,649 121,433 (58,784) 108,269 (45,620) 301,346 278,227
Income tax expense (benefit)   15,839   32,446   (16,607)   22,620   (6,781)   80,550   (478,344)
Income from continuing operations 46,810 88,987 (42,177) 85,649 (38,839) 220,796 756,571
(Loss) income from discontinued operations, net of tax   -   -   -   (9)   9   -   1,347
Net income   $46,810   $88,987   $(42,177)   $85,640   $(38,830)   $220,796   $757,918
Net income applicable to common stock   $45,880   $88,056   $(42,176)   $84,709   $(38,829)   $218,004   $755,126
Net income per common share - basic:
Net income from continuing operations $0.44 $0.85 $(0.41) $0.82 $(0.38) $2.11 $7.33
  Net income from discontinued operations   -   -   -   -   -   -   0.01
  Net income per common share - basic   $0.44   $0.85   $(0.41)   $0.82   $(0.38)   $2.11   $7.34
Net income per common share - diluted:
Net income from continuing operations $0.44 $0.85 $(0.41) $0.82 $(0.38) $2.11 $7.31
  Net income from discontinued operations   -   -   -   -   -   -   0.01
  Net income per common share - diluted   $0.44   $0.85   $(0.41)   $0.82   $(0.38)   $2.11   $7.32
Dividends Declared per Common Share   $0.15   $0.15   $-   $0.15   $-   $0.45   $0.15

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table C - Consolidated Statement of Financial Condition
 
(Unaudited)
            Variance
Q3 2016 vs.
(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15   Q2 2016
Assets:
Cash and due from banks $350,545 $365,308 $320,555 $(14,763)
Money market investments 3,963,495 2,785,500 2,408,571 1,177,995
Trading account securities, at fair value 72,584 72,530 137,943 54
Investment securities available-for-sale, at fair value 7,628,656 7,242,676 5,500,931 385,980
Investment securities held-to-maturity, at amortized cost 97,973 99,525 100,295 (1,552)
Other investment securities, at lower of cost or realizable value 168,791 168,563 173,657 228
Loans held-for-sale, at lower of cost or fair value 72,076 122,338 171,019 (50,262)
Loans held-in-portfolio:
Loans not covered under loss-sharing agreements with the FDIC 22,714,358 22,655,877 22,601,271 58,481
Loans covered under loss-sharing agreements with the FDIC 588,211 607,170 665,428 (18,959)
Less: Unearned income 118,386 115,216 103,205 3,170
    Allowance for loan losses   555,855   548,720   570,514   7,135
    Total loans held-in-portfolio, net   22,628,328   22,599,111   22,592,980   29,217
FDIC loss-share asset 152,467 214,029 311,946 (61,562)
Premises and equipment, net 537,975 535,865 495,103 2,110
Other real estate not covered under loss-sharing agreements with the FDIC 184,828 177,025 155,826 7,803
Other real estate covered under loss-sharing agreements with the FDIC 37,414 37,984 35,701 (570)
Accrued income receivable 119,691 120,979 118,044 (1,288)
Mortgage servicing assets, at fair value 200,354 203,577 210,851 (3,223)
Other assets 2,163,939 2,179,060 2,212,722 (15,121)
Goodwill 627,294 631,095 504,925 (3,801)
Other intangible assets   47,886   50,983   71,393   (3,097)
Total assets   $39,054,296   $37,606,148   $35,522,462   $1,448,148
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing $6,950,287 $6,531,108 $6,070,719 $419,179
    Interest bearing   23,376,758   22,206,748   20,642,487   1,170,010
    Total deposits   30,327,045   28,737,856   26,713,206   1,589,189
Federal funds purchased and assets sold under agreements to repurchase 765,251 821,604 1,085,765 (56,353)
Other short-term borrowings 1,200 31,200 1,200 (30,000)
Notes payable 1,598,533 1,575,948 1,666,179 22,585
Other liabilities 980,057 1,077,894 1,004,676 (97,837)
Liabilities from discontinued operations   1,815   1,815   1,800   -
Total liabilities   33,673,901   32,246,317   30,472,826   1,427,584
Stockholders’ equity:
Preferred stock 50,160 50,160 50,160 -
Common stock 1,040 1,039 1,037 1
Surplus 4,234,842 4,232,835 4,200,805 2,007
Retained earnings 1,259,295 1,228,979 993,309 30,316
Treasury stock (7,647) (7,570) (5,869) (77)
Accumulated other comprehensive loss   (157,295)   (145,612)   (189,806)   (11,683)
    Total stockholders’ equity   5,380,395   5,359,831   5,049,636   20,564
Total liabilities and stockholders’ equity   $39,054,296   $37,606,148   $35,522,462   $1,448,148

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER
(Unaudited)
                         
Quarter ended Quarter ended Quarter ended Variance Variance
30-Sep-16 30-Jun-16 30-Sep-15 Q3 2016 vs. Q2 2016 Q3 2016 vs. Q3 2015
($ amounts in
millions; yields not

 

 

 

 

 

on a taxable Average Income /

Yield /

Average Income /

Yield /

Average Income /

Yield /

Average Income /

Yield /

Average Income /

Yield /

equivalent basis)   balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate  
Assets:
Interest earning assets:
Money market, trading and investment securities $11,159   $43.7   1.57 % $10,286   $42.5   1.65 % $8,667   $36.8   1.70 % $873   $1.2   (0.08) % $2,492   $6.9   (0.13) %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,269 113.8 4.88 9,150 110.9 4.88 8,769 109.6 4.96 119 2.9 - 500 4.2 (0.08)
Construction 739 10.1 5.44 723 9.7 5.43 681 10.8 6.30 16 0.4 0.01 58 (0.7) (0.86)
Mortgage 6,637 88.3 5.32 6,743 88.9 5.27 7,072 88.8 5.02 (106) (0.6) 0.05 (435) (0.5) 0.30
Consumer 3,847 99.3 10.27 3,865 99.4 10.34 3,811 97.2 10.12 (18) (0.1) (0.07) 36 2.1 0.15
Lease financing 669   11.2   6.72 651   11.0   6.73 594   10.0   6.75 18   0.2   (0.01) 75   1.2   (0.03)
Total loans (excluding WB loans) 21,161 322.7 6.08 21,132 319.9 6.08 20,927 316.4 6.02 29 2.8 - 234 6.3 0.06
WB loans 1,881   40.9   8.65 2,013   49.8   9.94 2,221   48.0   8.59   (132)   (8.9)   (1.29) (340)   (7.1)   0.06
Total loans 23,042   363.6   6.29 23,145   369.7   6.41 23,148   364.4   6.26   (103)   (6.1)   (0.12) (106)   (0.8)   0.03
Total interest earning assets 34,201   $407.3   4.75 % 33,431   $412.2   4.95 % 31,815   $401.2   5.02 % 770   ($4.9)   (0.20) % 2,386   $6.1   (0.27) %
Allowance for loan losses (553) (539) (559) (14) 6
Other non-interest earning assets 4,443 4,479 4,584 (36) (141)
Total average assets $38,091 $37,371 $35,840 $720 $2,251
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $7,326 $7.0 0.38 % $7,023 $6.6 0.38 % $5,742 $4.9 0.34 % $303 $0.4 - % $1,584 $2.1 0.04 %
Savings 7,550 4.6 0.24 7,487 4.4 0.24 7,055 4.1 0.23 63 0.2 - 495 0.5 0.01
Time deposits 7,859   20.7   1.05 7,866   19.6   1.00 8,158   19.4   0.94 (7)   1.1   0.05 (299)   1.3   0.11
Total interest bearing deposits 22,735 32.3 0.57 22,376 30.6 0.55 20,955 28.4 0.54 359 1.7 0.02 1,780 3.9 0.03
Borrowings 2,398   21.3   3.55 2,307   21.0   3.67 2,861   22.1   3.09 91   0.3   (0.12)

(463)

  (0.8)   0.46
Total interest bearing liabilities 25,133   53.6   0.85 24,683   51.6   0.84 23,816   50.5   0.84 450   2.0   0.01 1,317   3.1   0.01
Net interest spread 3.90 % 4.11 % 4.18 % (0.21) % (0.28) %
Non-interest bearing deposits 6,676 6,481 6,144 195 532
Other liabilities 955 943 876 12 79
Liabilities from discontinued operations 2 2 2 - -
Stockholders' equity 5,325 5,262 5,002 63 323
Total average liabilities and stockholders' equity $38,091 $37,371 $35,840 $720 $2,251
 
Net interest income / margin non-taxable equivalent basis $353.7   4.12 % $360.6   4.33 % $350.7   4.39 % ($6.9)   (0.21) % $3.0   (0.27) %

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited)
                 
Nine months ended Nine months ended
30-Sep-16 30-Sep-15 Variance
Average Income / Yield / Average Income / Yield / Average Income / Yield /
($ amounts in millions; yields not on a taxable equivalent basis)   balance   Expense   Rate balance   Expense   Rate balance   Expense   Rate
Assets:
Interest earning assets:
Money market, trading and investment securities $10,136   $127.0   1.67 % $8,340   $107.4   1.72 % $1,796   $19.6   (0.05) %
Loans not covered under loss-sharing agreements with the FDIC:
Commercial 9,126 335.3 4.91 8,627 318.5 4.93 499 16.8 (0.02)
Construction 722 29.1 5.39 600 27.1 6.05 122 2.0 (0.66)
Mortgage 6,736 266.9 5.28 6,989 267.9 5.11 (253) (1.0) 0.17
Consumer 3,839 296.7 10.32 3,826 289.8 10.13 13 6.9 0.19
Lease financing 650   32.9   6.74 582   30.1   6.89 68   2.8   (0.15)
Total loans (excluding WB loans) 21,073 960.9 6.09 20,624 933.4 6.05 449 27.5 0.04
WB loans 1,984   135.6   9.12 2,392   160.9   8.99 (408)   (25.3)   0.13
Total loans 23,057   1,096.5   6.35 23,016   1,094.3   6.35 41   2.2   -
Total interest earning assets 33,193   $1,223.5   4.92 % 31,356   $1,201.7   5.12 % 1,837   $21.8   (0.20) %
Allowance for loan losses (542) (589) 47
Other non-interest earning assets 4,469 4,288 181
Total average assets $37,120 $35,055 $2,065
 
Liabilities and Stockholders' Equity:
Interest bearing deposits:
NOW and money market $6,689 $19.2 0.38 % $5,413 $14.0 0.35 % $1,276 $5.2 0.03 %
Savings 7,438 13.3 0.24 6,996 12.1 0.23 442 1.2 0.01
Time deposits 7,928   60.3   1.02 8,146   54.4   0.89 (218)   5.9   0.13
Total interest bearing deposits 22,055 92.8 0.56 20,555 80.5 0.52 1,500 12.3 0.04
Borrowings 2,382   64.0   3.59 2,865   64.7   3.01 (483)   (0.7)   0.58
Total interest bearing liabilities 24,437   156.8   0.86 23,420   145.2   0.83 1,017   11.6   0.03
Net interest spread 4.06 % 4.29 % (0.23) %
Non-interest bearing deposits 6,484 6,113 371
Other liabilities 937 942 (5)
Liabilities from discontinued operations 2 2 -
Stockholders' equity 5,260 4,578 682
Total average liabilities and stockholders' equity $37,120 $35,055 $2,065
 
Net interest income / margin non-taxable equivalent basis $1,066.7   4.29 % $1,056.5   4.50 % $10.2   (0.21) %

Popular, Inc.                
Financial Supplement to Third Quarter 2016 Earnings Release
Table F - Mortgage Banking Activities and Other Service Fees
(Unaudited)
 
Mortgage Banking Activities Variance
Quarters ended Q3 2016 vs. Q3 2016 vs. Nine months ended Variance
(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15   Q2 2016   Q3 2015   30-Sep-16   30-Sep-15   2016 vs. 2015
Mortgage servicing fees, net of fair value adjustments:
Mortgage servicing fees $14,520 $14,675 $17,020 $(155) $(2,500) $43,997 $43,957 $40
  Mortgage servicing rights fair value adjustments   (6,062)   (4,340)   1,038   (1,722)   (7,100)   (18,879)   (5,808)   (13,071)
Total mortgage servicing fees, net of fair value adjustments   8,458   10,335   18,058   (1,877)   (9,600)   25,118   38,149   (13,031)
Net gain on sale of loans, including valuation on loans held-for-sale   8,857   8,474   9,698   383   (841)   24,441   24,999   (558)
Trading account (loss) profit:
Unrealized (losses) gains on outstanding derivative positions 95 (59) (69) 154 164 (44) (10) (34)
  Realized (losses) gains on closed derivative positions   (2,138)   (2,523)   (3,492)   385   1,354   (7,465)   (4,766)   (2,699)
Total trading account (loss) profit   (2,043)   (2,582)   (3,561)   539   1,518   (7,509)   (4,776)   (2,733)
Total mortgage banking activities   $15,272   $16,227   $24,195   $(955)   $(8,923)   $42,050   $58,372   $(16,322)

                 
Other Service Fees Variance
Quarters ended Q3 2016 vs. Q3 2016 vs. Nine months ended Variance
(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15   Q2 2016   Q3 2015   30-Sep-16   30-Sep-15   2016 vs. 2015
Other service fees:
Debit card fees $11,483 $11,382 $11,288 $101 $195 $34,153 $34,408 $(255)
Insurance fees 15,943 13,885 14,517 2,058 1,426 42,678 40,163 2,515
Credit card fees 17,644 17,700 16,879 (56) 765 52,202 50,639 1,563
Sale and administration of investment products 5,542 5,417 5,737 125 (195) 15,798 18,269 (2,471)
Trust fees 4,968 4,827 4,403 141 565 14,029 13,919 110
  Other fees   3,589   3,734   3,291   (145)   298   10,636   11,764   (1,128)
Total other service fees   $59,169   $56,945   $56,115   $2,224   $3,054   $169,496   $169,162   $334

Popular, Inc.          
Financial Supplement to Third Quarter 2016 Earnings Release
Table G - Loans and Deposits
(Unaudited)
 
Loans - Ending Balances
Variance
Q3 2016 vs.

Q3 2016 vs.

(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15   Q2 2016  

Q3 2015

Loans not covered under FDIC loss-sharing agreements:
Commercial $10,537,191 $10,359,815 $10,130,424 $177,376 $406,767
Construction 731,352 717,332 692,492 14,020 38,860
Legacy [1] 47,914 49,709 67,974 (1,795) (20,060)
Lease financing 682,810 664,094 606,927 18,716 75,883
Mortgage 6,774,497 6,864,118 7,165,479 (89,621) (390,982)
Consumer   3,822,208   3,885,593   3,834,770   (63,385)   (12,562)
Total non-covered loans held-in-portfolio $22,595,972 $22,540,661 $22,498,066 $55,311 $97,906
Loans covered under FDIC loss-sharing agreements   588,211   607,170   665,428   (18,959)   (77,217)
Total loans held-in-portfolio   $23,184,183   $23,147,831   $23,163,494   $36,352   $20,689
Loans held-for-sale:
Commercial $- $39,544 $47,447 $(39,544) $(47,447)
Construction - - 10 - (10)
Mortgage   72,076   82,794   123,562   (10,718)   (51,486)
Total loans held-for-sale   $72,076   $122,338   $171,019   $(50,262)   $(98,943)
Total loans   $23,256,259   $23,270,169   $23,334,513   $(13,910)   $(78,254)
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.
Deposits - Ending Balances
Variance
Q3 2016 vs.

Q3 2016 vs.

(In thousands)   30-Sep-16   30-Jun-16   30-Sep-15   Q2 2016  

Q3 2015

Demand deposits [1] $9,161,839 $8,106,291 $7,027,672 $1,055,548 $2,134,167
Savings, NOW and money market deposits (non-brokered) 12,872,072 12,289,793 11,178,357 582,279 1,693,715
Savings, NOW and money market deposits (brokered) 391,128 387,026 405,903 4,102 (14,775)
Time deposits (non-brokered) 7,619,232 7,570,673 6,870,816 48,559 748,416
Time deposits (brokered CDs)   282,774   384,073   1,230,458   (101,299)   (947,684)
Total deposits   $30,327,045   $28,737,856   $26,713,206   $1,589,189   $3,613,839
[1] Includes interest and non-interest bearing demand deposits.                

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table H - Non-Performing Assets
(Unaudited)
  Variance
As a % of As a % of As a % of  

loans HIP by

loans HIP by

loans HIP by

Q3 2016 vs.

Q3 2016 vs.

(Dollars in thousands)   30-Sep-16 category   30-Jun-16 category   30-Sep-15 category  

Q2 2016

 

Q3 2015

Non-accrual loans:
Commercial $170,571 1.6 % $175,615 1.7 % $239,397 2.4 % $(5,044) $(68,826)
Construction - - 2,523 0.4 3,605 0.5 (2,523) (3,605)
Legacy [1] 3,450 7.2 3,839 7.7 4,059 6.0 (389) (609)
Lease financing 2,878 0.4 3,019 0.5 3,091 0.5 (141) (213)
Mortgage 345,776 5.1 338,048 4.9 343,410 4.8 7,728 2,366
Consumer   56,650 1.5   54,695 1.4   41,340 1.1   1,955   15,310
Total non-performing loans held-in-
portfolio, excluding covered loans 579,325 2.6 % 577,739 2.6 % 634,902 2.8 % 1,586 (55,577)
Non-performing loans held-for-sale [2] - 39,544 47,681 (39,544) (47,681)
Other real estate owned (“OREO”),
excluding covered OREO   184,828     177,025     155,826     7,803   29,002
Total non-performing assets,
excluding covered assets 764,153 794,308 838,409 (30,155) (74,256)
Covered loans and OREO   41,211     41,466     39,888     (255)   1,323
Total non-performing assets   $805,364     $835,774     $878,297     $(30,410)   $(72,933)
Accruing loans past due 90 days or more [3]   $418,652     $413,319     $443,497     $5,333   $(24,845)
Ratios excluding covered loans:
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.56 % 2.56 % 2.82 %
Allowance for loan losses to loans
held-in-portfolio 2.33 2.30 2.38
Allowance for loan losses to
non-performing loans, excluding loans
held-for-sale   90.73     89.68     84.42          
Ratios including covered loans:
Non-performing assets to total assets 2.06 % 2.22 % 2.47 %
Non-performing loans held-in-portfolio
to loans held-in-portfolio 2.52 2.51 2.76
Allowance for loan losses to loans
held-in-portfolio 2.40 2.37 2.46
Allowance for loan losses to non-performing
loans, excluding loans held-for-sale   95.32     94.41     89.97          
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.
[2] There were no non-performing loans held-for-sale as of September 30, 2016 (June 30, 2016 - $40 million in commercial loans; September 30, 2015 - $47 million in commercial loans, $10 million in construction loans and $224 thousand in mortgage loans.)

[3] It is the Corporation’s policy to report delinquent residential mortgage loans insured by FHA or guaranteed by the VA as accruing loans past due 90 days or more as opposed to non-performing since the principal repayment is insured. These balances include $174 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of September 30, 2016 (June 30, 2016 - $149 million; September 30, 2015 - $159 million). Furthermore, the Corporation has approximately $72 million in reverse mortgage loans which are guaranteed by FHA, but which are currently not accruing interest. Due to the guaranteed nature of the loans, it is the Corporation's policy to exclude these balances from non-performing assets (June 30, 2016 - $63 million; September 30, 2015 - $71 million).

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table I - Activity in Non-Performing Loans
(Unaudited)
             
Commercial loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-16 30-Jun-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $172,584 $3,031 $175,615 $182,639 $14,992 $197,631
Plus:
New non-performing loans 12,520 1,609 14,129 26,029 2,254 28,283
Advances on existing non-performing loans - 164 164 - 8 8
Reclassification from construction loans to commercial loans 2,436 - 2,436 - - -
Less:
Non-performing loans transferred to OREO (2,223) - (2,223) (1,815) - (1,815)
Non-performing loans charged-off (7,918) (141) (8,059) (15,219) (254) (15,473)
Loans returned to accrual status / loan collections   (10,352)   (1,139)   (11,491)   (19,050)   (13,969)   (33,019)
Ending balance NPLs   $167,047   $3,524   $170,571   $172,584   $3,031   $175,615
 
Construction loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-16 30-Jun-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $2,423 $100 $2,523 $3,270 $671 $3,941
Plus:
New non-performing loans 1,150 - 1,150 186 - 186
Less:
Non-performing loans charged-off (985) - (985) (8) - (8)
Loans returned to accrual status / loan collections (152) (100) (252) (1,025) (571) (1,596)
Reclassification from construction loans to commercial loans   (2,436)   -   (2,436)   -   -   -
Ending balance NPLs   $-   $-   $-   $2,423   $100   $2,523
 
Mortgage loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-16 30-Jun-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $323,658 $14,390 $338,048 $322,838 $12,069 $334,907
Plus:
New non-performing loans 87,340 6,715 94,055 79,688 6,532 86,220
Less:
Non-performing loans transferred to OREO (14,398) (384) (14,782) (12,521) (445) (12,966)
Non-performing loans charged-off (9,481) (1,994) (11,475) (10,648) (130) (10,778)
Loans returned to accrual status / loan collections   (55,773)   (4,297)   (60,070)   (55,699)   (3,636)   (59,335)
Ending balance NPLs   $331,346   $14,430   $345,776   $323,658   $14,390   $338,048

             
Legacy loans held-in-portfolio:
Quarter ended Quarter ended
30-Sep-16   30-Jun-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $- $3,839 $3,839 $- $4,046 $4,046
Plus:
New non-performing loans - 45 45 - 552 552
Advances on existing non-performing loans - 135 135 - - -
Less:
Non-performing loans transferred to OREO - (44) (44) - - -
Non-performing loans charged-off - (146) (146) - (54) (54)
Loans returned to accrual status / loan collections   -   (379)   (379)   -   (705)   (705)
Ending balance NPLs   $-   $3,450   $3,450   $-   $3,839   $3,839
 
Total non-performing loans held-in-portfolio (excluding consumer and covered loans):
Quarter ended Quarter ended
30-Sep-16   30-Jun-16
(In thousands)   BPPR   BPNA   Popular, Inc.   BPPR   BPNA   Popular, Inc.
Beginning balance NPLs $498,665 $21,360 $520,025 $508,747 $31,778 $540,525
Plus:
New non-performing loans 101,010 8,369 109,379 105,903 9,338 115,241
Advances on existing non-performing loans - 299 299 - 8 8
Reclassification from construction loans to commercial loans 2,436 - 2,436 - - -
Less:
Non-performing loans transferred to OREO (16,621) (428) (17,049) (14,336) (445) (14,781)
Non-performing loans charged-off (18,384) (2,281) (20,665) (25,875) (438) (26,313)
Loans returned to accrual status / loan collections (66,277) (5,915) (72,192) (75,774) (18,881) (94,655)
Reclassification from construction loans to commercial loans   (2,436)   -   (2,436)   -   -   -
Ending balance NPLs   $498,393   $21,404   $519,797   $498,665   $21,360   $520,025

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
       
 
Quarter ended Quarter ended Quarter ended
    30-Sep-16   30-Jun-16   30-Sep-15  

Non-covered

Covered Non-covered Covered

Non-covered

Covered
(Dollars in thousands)   loans   loans   Total   loans   loans   Total   loans   loans   Total  
Balance at beginning of period $518,139 $30,581 $548,720 $508,427 $30,045 $538,472 $512,739 $38,074 $550,813
Provision (reversal of provision) for loan losses   42,594   750   43,344   39,668   804   40,472   69,568   (2,890)   66,678  
    560,733   31,331   592,064   548,095   30,849   578,944   582,307   35,184   617,491  
Net loans charged-off (recovered):
BPPR
Commercial 3,199 - 3,199 5,647 - 5,647 9,172 - 9,172
Construction 886 - 886 (3,226) - (3,226) (2,648) - (2,648)
Lease financing 816 - 816 434 - 434 894 - 894
Mortgage 15,237 661 15,898 13,464 699 14,163 15,524 601 16,125
Consumer   12,821   408   13,229   19,903   (431)   19,472   24,303   74   24,377
Total BPPR   32,959   1,069   34,028   36,222   268   36,490   47,245   675   47,920
 
BPNA
Commercial (1,173) - (1,173) (1,265) - (1,265) (1,959) - (1,959)
Legacy [1] (520) - (520) (893) - (893) (603) - (603)
Mortgage 1,942 - 1,942 16 - 16 787 - 787
Consumer   1,932   -   1,932   1,321   -   1,321   832   -   832  
Total BPNA   2,181   -   2,181   (821)   -   (821)   (943)   -   (943)  
Total loans charged-off - Popular, Inc.   35,140   1,069   36,209   35,401   268   35,669   46,302   675   46,977  
Net (write-downs) recoveries [2]   -   -   -   5,445   -   5,445   -   -   -  
Balance at end of period   $525,593   $30,262   $555,855   $518,139   $30,581   $548,720   $536,005   $34,509   $570,514  
 
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio 0.63 % 0.63 % 0.63 % 0.62 % 0.83 % 0.82 %
Provision for loan losses to net charge-offs [3] 1.21 x 1.20 x 1.27 x 1.29 x 1.50 x 1.42 x
 
BPPR
Annualized net charge-offs to average loans held-in-portfolio 0.77 % 0.77 % 0.83 % 0.81 % 1.07 % 1.04 %
Provision for loan losses to net charge-offs [3] 1.10 x 1.09 x 1.21 x 1.22 x 1.46 x 1.37 x
 
BPNA
Annualized net charge-offs (recoveries) to average loans held-in-portfolio 0.17 % (0.06) % (0.08) %
Provision for loan losses to net charge-offs (recoveries)         2.89           (1.60)           N.M.  
[1] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA segment.
[2] Net write-downs are related to loans sold or reclassified to held-for-sale.
[3] Excluding provision for loan losses and net (write-downs) recoveries related to loans sold or reclassified to held-for-sale.
N.M. - Not meaningful.

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED
(Unaudited)
 
                                 
30-Sep-16
Lease
(Dollars in thousands)     Commercial   Construction   Legacy [2]   Mortgage   financing   Consumer  

Total [3]

 

Specific ALLL $58,527 $- $- $45,557 $540 $24,433 $129,057
Impaired loans [1] $328,868 $- $- $496,868 $1,899 $110,929 $938,564
Specific ALLL to impaired loans   [1] 17.80 % - % - % 9.17 % 28.44 % 22.03 % 13.75 %
General ALLL $165,639 $9,942 $1,682 $93,971 $7,375 $117,927 $396,536
Loans held-in-portfolio, excluding impaired loans [1] $10,208,312 $731,352 $47,914 $6,277,639 $680,911 $3,711,280 $21,657,408
General ALLL to loans held-in-portfolio, excluding impaired loans   [1] 1.62 % 1.36 % 3.51 % 1.50 % 1.08 % 3.18 % 1.83 %
Total ALLL $224,166 $9,942 $1,682 $139,528 $7,915 $142,360 $525,593
Total non-covered loans held-in-portfolio [1] $10,537,180 $731,352 $47,914 $6,774,507 $682,810 $3,822,209 $22,595,972
ALLL to loans held-in-portfolio   [1] 2.13 % 1.36 % 3.51 % 2.06 % 1.16 % 3.72 % 2.33 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA reportable segment.
[3] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of September 30, 2016 the general allowance on the covered loans amounted to $30.3 million.
                                 
30-Jun-16
Lease
(Dollars in thousands)     Commercial   Construction   Legacy [2]   Mortgage   financing   Consumer  

Total [3]

 

Specific ALLL $53,350 $116 $- $43,909 $548 $24,898 $122,821
Impaired loans [1] $335,881 $1,036 $- $484,725 $2,110 $111,610 $935,362
Specific ALLL to impaired loans   [1] 15.88 % 11.20 % - % 9.06 % 25.97 % 22.31 % 13.13 %
General ALLL $156,331 $10,949 $1,852 $97,577 $9,546 $119,063 $395,318
Loans held-in-portfolio, excluding impaired loans [1] $10,023,934 $716,296 $49,709 $6,379,393 $661,984 $3,773,983 $21,605,299
General ALLL to loans held-in-portfolio, excluding impaired loans   [1] 1.56 % 1.53 % 3.73 % 1.53 % 1.44 % 3.15 % 1.83 %
Total ALLL $209,681 $11,065 $1,852 $141,486 $10,094 $143,961 $518,139
Total non-covered loans held-in-portfolio [1] $10,359,815 $717,332 $49,709 $6,864,118 $664,094 $3,885,593 $22,540,661
ALLL to loans held-in-portfolio   [1] 2.02 % 1.54 % 3.73 % 2.06 % 1.52 % 3.70 % 2.30 %
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] The legacy portfolio is comprised of commercial loans, construction loans and lease financings related to certain lending products exited by the Corporation as part of restructuring efforts carried out in prior years at the BPNA reportable segment.
[3] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of June 30, 2016 the general allowance on the covered loans amounted to $30.6 million.
                                 
Variance
Lease
(Dollars in thousands)     Commercial   Construction   Legacy   Mortgage   financing   Consumer   Total  
Specific ALLL $5,177 $(116) $- $1,648 $(8) $(465) $6,236
Impaired loans     $(7,013)   $(1,036)   $-   $12,143   $(211)   $(681)   $3,202  
General ALLL $9,308 $(1,007) $(170) $(3,606) $(2,171) $(1,136) $1,218
Loans held-in-portfolio, excluding impaired loans     $184,378   $15,056   $(1,795)   $(101,754)   $18,927   $(62,703)   $52,109  
Total ALLL $14,485 $(1,123) $(170) $(1,958) $(2,179) $(1,601) $7,454
Total non-covered loans held-in-portfolio     $177,365   $14,020   $(1,795)   $(89,611)   $18,716   $(63,384)   $55,311  

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
             
30-Sep-16
Puerto Rico
Lease
(In thousands)   Commercial   Construction   Mortgage   financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $58,527 $- $43,567 $540 $23,708 $126,342
  General ALLL non-covered loans   151,847   2,114   91,761   7,375   104,604   357,701
ALLL - non-covered loans   210,374   2,114   135,328   7,915   128,312   484,043
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   30,135   -   127   30,262
ALLL - covered loans   -   -   30,135   -   127   30,262
Total ALLL   $210,374   $2,114   $165,463   $7,915   $128,439   $514,305
Loans held-in-portfolio:
Impaired non-covered loans $328,868 $- $487,972 $1,899 $108,341 $927,080
  Non-covered loans held-in-portfolio, excluding impaired loans   6,925,290   81,054   5,476,876   680,911   3,185,490   16,349,621
Non-covered loans held-in-portfolio   7,254,158   81,054   5,964,848   682,810   3,293,831   17,276,701
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   571,349   -   16,862   588,211
Covered loans held-in-portfolio   -   -   571,349   -   16,862   588,211
Total loans held-in-portfolio   $7,254,158   $81,054   $6,536,197   $682,810   $3,310,693   $17,864,912
 
 
30-Jun-16
Puerto Rico
Lease
(In thousands)   Commercial   Construction   Mortgage   financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $53,350 $116 $42,106 $548 $24,167 $120,287
  General ALLL non-covered loans   146,477   3,489   94,618   9,546   106,304   360,434
ALLL - non-covered loans   199,827   3,605   136,724   10,094   130,471   480,721
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   29,951   -   630   30,581
ALLL - covered loans   -   -   29,951   -   630   30,581
Total ALLL   $199,827   $3,605   $166,675   $10,094   $131,101   $511,302
Loans held-in-portfolio:
Impaired non-covered loans $335,881 $1,036 $476,161 $2,110 $109,130 $924,318
  Non-covered loans held-in-portfolio, excluding impaired loans   6,881,171   102,606   5,544,401   661,984   3,212,552   16,402,714
Non-covered loans held-in-portfolio   7,217,052   103,642   6,020,562   664,094   3,321,682   17,327,032
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   589,256   -   17,914   607,170
Covered loans held-in-portfolio   -   -   589,256   -   17,914   607,170
Total loans held-in-portfolio   $7,217,052   $103,642   $6,609,818   $664,094   $3,339,596   $17,934,202
 
                           
Variance
Lease
(In thousands)   Commercial   Construction   Mortgage   financing   Consumer   Total
Allowance for credit losses:
Specific ALLL non-covered loans $5,177 $(116) $1,461 $(8) $(459) $6,055
  General ALLL non-covered loans   5,370   (1,375)   (2,857)   (2,171)   (1,700)   (2,733)
ALLL - non-covered loans   10,547   (1,491)   (1,396)   (2,179)   (2,159)   3,322
Specific ALLL covered loans - - - - - -
  General ALLL covered loans   -   -   184   -   (503)   (319)
ALLL - covered loans   -   -   184   -   (503)   (319)
Total ALLL   $10,547   $(1,491)   $(1,212)   $(2,179)   $(2,662)   $3,003
Loans held-in-portfolio:
Impaired non-covered loans $(7,013) $(1,036) $11,811 $(211) $(789) $2,762
  Non-covered loans held-in-portfolio, excluding impaired loans   44,119   (21,552)   (67,525)   18,927   (27,062)   (53,093)
Non-covered loans held-in-portfolio   37,106   (22,588)   (55,714)   18,716   (27,851)   (50,331)
Impaired covered loans - - - - - -
  Covered loans held-in-portfolio, excluding impaired loans   -   -   (17,907)   -   (1,052)   (18,959)
Covered loans held-in-portfolio   -   -   (17,907)   -   (1,052)   (18,959)
Total loans held-in-portfolio   $37,106   $(22,588)   $(73,621)   $18,716   $(28,903)   $(69,290)

Popular, Inc.
Financial Supplement to Third Quarter 2016 Earnings Release
Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - U.S. MAINLAND OPERATIONS
(Unaudited)
             
30-Sep-16
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $1,990 $725 $2,715
  General ALLL   13,792   7,828   1,682   2,210   13,323   38,835
Total ALLL   $13,792   $7,828   $1,682   $4,200   $14,048   $41,550
Loans held-in-portfolio:
Impaired loans $- $- $- $8,896 $2,588 $11,484
  Loans held-in-portfolio, excluding impaired loans   3,283,022   650,298   47,914   800,763   525,790   5,307,787
Total loans held-in-portfolio   $3,283,022   $650,298   $47,914   $809,659   $528,378   $5,319,271
 
 
30-Jun-16
U.S. Mainland
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $1,803 $731 $2,534
  General ALLL   9,854   7,460   1,852   2,959   12,759   34,884
Total ALLL   $9,854   $7,460   $1,852   $4,762   $13,490   $37,418
Loans held-in-portfolio:
Impaired loans $- $- $- $8,564 $2,480 $11,044
  Loans held-in-portfolio, excluding impaired loans   3,142,763   613,690   49,709   834,992   561,431   5,202,585
Total loans held-in-portfolio   $3,142,763   $613,690   $49,709   $843,556   $563,911   $5,213,629
 
                           
Variance
(In thousands)   Commercial   Construction   Legacy   Mortgage   Consumer   Total
Allowance for credit losses:
Specific ALLL $- $- $- $187 $(6) $181
  General ALLL   3,938   368   (170)   (749)   564   3,951
Total ALLL   $3,938   $368   $(170)   $(562)   $558   $4,132
Loans held-in-portfolio:
Impaired loans $- $- $- $332 $108 $440
  Loans held-in-portfolio, excluding impaired loans   140,259   36,608   (1,795)   (34,229)   (35,641)   105,202
Total loans held-in-portfolio   $140,259   $36,608   $(1,795)   $(33,897)   $(35,533)   $105,642

Popular, Inc.      
Financial Supplement to Third Quarter 2016 Earnings Release
Table N - Reconciliation to GAAP Financial Measures
(Unaudited)
 
 
(In thousands, except share or per share information)   30-Sep-16   30-Jun-16   30-Sep-15
Total stockholders’ equity $5,380,395 $5,359,831 $5,049,636
Common shares outstanding at end of period 103,762,596 103,703,041 103,556,285
Book value per common share   $51.85   $51.68   $48.76
 
Total stockholders’ equity $5,380,395 $5,359,831 $5,049,636
Less: Preferred stock (50,160) (50,160) (50,160)
Less: Goodwill (627,294) (631,095) (504,925)
Less: Other intangibles   (47,886)   (50,983)   (71,393)
Total tangible common equity   $4,655,055   $4,627,593   $4,423,158
Total assets $39,054,296 $37,606,148 $35,522,462
Less: Goodwill (627,294) (631,095) (504,925)
Less: Other intangibles   (47,886)   (50,983)   (71,393)
Total tangible assets   $38,379,116   $36,924,070   $34,946,144
Tangible common equity to tangible assets 12.13% 12.53% 12.66%
Common shares outstanding at end of period 103,762,596 103,703,041 103,556,285
Tangible book value per common share   $44.86   $44.62   $42.71

Popular, Inc.      
Financial Supplement to Third Quarter 2016 Earnings Release
Table O - Financial Information - Westernbank Loans
(Unaudited)
 
 
Revenues
Quarters ended
(In thousands)   30-Sep-16   30-Jun-16   Variance
Interest income on WB loans   $40,867   $49,794   $(8,927)
FDIC loss-share expense:
Amortization of indemnification asset (1,259) (4,036) 2,777
80% mirror accounting on credit impairment losses (reversal) [1] 659 475 184
80% mirror accounting on reimbursable expenses 853 2,235 (1,382)
80% mirror accounting on recoveries on covered assets, including rental income on OREOs,
subject to reimbursement to the FDIC (522) (3,956) 3,434
Change in true-up payment obligation (6,611) (7,688) 1,077
Arbitration award expense (54,924) - (54,924)
Other   81   394   (313)
  Total FDIC loss-share expense   (61,723)   (12,576)   (49,147)
Total revenues (expense)   (20,856)   37,218   (58,074)
Provision (reversal) for loan losses- WB loans   6,612   (7,282)   13,894
Total revenues (expense) less provision (reversal) for loan losses   $(27,468)   $44,500   $(71,968)
[1] Reductions in expected cash flows for ASC 310-30 loans, which may impact the provision for loan losses, may consider reductions in both principal and interest cash flow expectations. The amount covered under the FDIC loss-sharing agreements for interest not collected from borrowers is limited under the agreements (approximately 90 days); accordingly, these amounts are not subject fully to the 80% mirror accounting.
 
 
Non-personnel operating expenses
Quarters ended [2]
(In thousands)   [1] 30-Sep-16   30-Jun-16   Variance
Professional fees $4,501 $5,991 $(1,490)
OREO expenses 2,702 6,389 (3,687)
Other operating expenses   1,738   1,924   (186)
Total operating expenses   $8,941   $14,304   $(5,363)
[1] Includes expenses related to loans subject, and not subject, to the FDIC loss-sharing agreement.
[2] Expense reimbursements from the FDIC may be recorded with a time lag, since these are claimed upon the event of loss or charge-off of the loans which may occur in a subsequent period.
 
 
Quarterly average assets
Quarters ended
(In millions)   30-Sep-16   30-Jun-16   Variance
Loans $1,881 $2,013 $(132)
FDIC loss-share asset   192   211   (19)

         
Activity in the carrying amount and accretable yield of loans accounted for under ASC 310-30
 
Quarters ended
      30-Sep-16   30-Jun-16

Carrying amount

Carrying amount

(In thousands)  

Accretable yield

 

of loans

 

Accretable yield

 

of loans

Beginning balance $1,071,680 $1,799,943 $1,128,808 $1,935,441
Accretion (39,590) 39,590 (48,476) 48,476
Changes in expected cash flows 6,602 - (8,652) -
Collections / loan sales / charge-offs [2]   -   (71,994)   -   (183,974)
Ending balance 1,038,692 1,767,539 1,071,680 1,799,943
  Allowance for loan losses - ASC 310-30 loans   -   (69,571)   -   (66,995)
Ending balance, net of allowance for loan losses   $1,038,692   $1,697,968   $1,071,680   $1,732,948
 
[1] The carrying amount of loans acquired from Westernbank and accounted for under ASC 310-30 which remain subject to the loss-sharing agreement with the FDIC amounted to approximately $578 million as of September 30, 2016 and $597 million as of June 30, 2016.

[2] For the quarter ended June 30, 2016, includes the impact of the bulk sale of loans with a carrying value of approximately $99 million.

 
 
 
Activity in the carrying amount of the FDIC indemnity asset
 
Quarters ended
(In thousands)       30-Sep-16       30-Jun-16
Balance at beginning of period $214,029 $219,448
Amortization (1,259) (4,036)
Credit impairment losses (reversal) to be covered under loss-sharing agreements 659 475
Reimbursable expenses to be covered under loss-sharing agreements 853 2,235
Recoveries on covered assets - (4,093)
Net payments from FDIC under loss-sharing agreements (6,819) -
Arbitration award expense (54,924) -
Other adjustments attributable to FDIC loss-sharing agreements       (72)       -
Balance at end of period       $152,467       $214,029
 
 
Activity in the remaining FDIC loss-share asset amortization
 
Quarters ended
(In thousands)       30-Sep-16       30-Jun-16
Balance at beginning of period $23,191 $25,205
Amortization (1,259) (4,036)
Impact of change in projected losses       (14,627)       2,022
Balance at end of period       $7,305       $23,191