Popular, Inc. (BPOP) Reports Net Income of $48.4 million for the Quarter ended March 31, 2012

Popular, Inc. (“the Corporation” or “Popular”) (NASDAQ: BPOP) reported net income of $48.4 million for the quarter ended March 31, 2012, compared with net income of $3.0 million for the quarter ended December 31, 2011, and net income of $10.1 million for the quarter ended March 31, 2011.

Refer to the accompanying “Financial Supplement to First Quarter 2012 Earnings Release” for detailed financial information and key performance ratios.

Mr. Richard L. Carrión, Chairman of the Board and Chief Executive Officer, said: “Our results for the first quarter were in line with our expectations. We continue to see an improvement in credit quality metrics and revenue generation was again solid. Given these trends and our current efforts in various areas, we are reaffirming the earnings guidance we provided in the beginning of the year.”

Earnings Highlights – First Quarter 2012 compared to Fourth Quarter 2011

			Quarter ended
(Dollars in thousands except per share information)			March 31,2012				December 31,2011			$ Variance
Net interest income			$337,582				$	344,780			($7,198	)
Provision for loan losses – non-covered loans			82,514					123,908			(41,394	)
Provision for loan losses – covered loans [1]			18,209					55,900			(37,691	)
Net interest income after provision for loan losses			236,859					164,972			71,887
FDIC loss share (expense) income			(15,255		)			17,447			(32,702	)
Non-interest income			139,163					131,912			7,251
Operating expenses			296,167					311,093			(14,926	)
Income before income tax			64,600					3,238			61,362
Income tax expense			16,192					263			15,929
Net income			$48,408				$	2,975		$	45,433
Net income applicable to common stock			$47,477				$	2,044		$	45,433
Net income per common share – basic and diluted			$ 0.05				$	0.00		$	0.05
[1] Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that are covered under FDIC loss sharing agreements.

Net interest income

• The net interest margin was 4.27% for the first quarter of 2012, compared with 4.30% for the fourth quarter of 2011. The decrease in net interest income of $7.2 million for the first quarter of 2012, compared with the fourth quarter of 2011, was principally due to a reduction in the yield of the covered loan portfolio, partially offset by further reduction in the cost of deposits and borrowings. Refer to Table D for detailed information on average financial condition balances and an analysis of yield / rates by main categories.
• The principal variance in interest income on loans was a reduction in the interest derived from covered loans by $13.6 million, or 99 basis points. This reduction was primarily attributed to revisions in the average life of certain pools, which causes the accretable yield to be recognized over an extended period, reducing the interest income for the first quarter of 2012 compared with the last quarter in 2011. Additionally, the reduction in interest income was associated with collections in excess of the carrying value of a commercial one-loan pool in the fourth quarter of 2011, which resulted in additional income in that quarter of approximately $5.8 million.
• The decrease in interest income on non-covered commercial loans of $4.9 million was principally due to lower rates in newly originated loans and renewal activity, coupled with a lower average loan volume of $152 million, principally at the U.S. mainland operations.
• Partially offsetting these unfavorable variances in interest income was an increase in the yield on construction loans by 344 basis points or $4.2 million, principally related to the Corporation’s U.S. Mainland operations’ full recovery of certain large loan relationships that had been in non-accrual. Additionally, there was a positive variance in interest income on mortgage loans by $5.0 million, mostly influenced by the partial reversal during the fourth quarter of 2011 of the interest receivable on delinquent residential mortgage loans insured by FHA or guaranteed by the VA that were over 18-months past due.
• The Corporation’s interest expense on interest bearing deposits decreased by $4.4 million, or 5 basis points, reflecting the continuing progress in repricing the Corporation’s deposit base. Additionally, the interest expense on borrowings declined $1.9 million, principally due to lower average balances mainly associated with the payoff in the fourth quarter of 2011 of the note that was issued to the FDIC as part of the Westernbank FDIC-assisted transaction.

Provision for loan losses

• The provision for loan losses for the quarter ended March 31, 2012 amounted to $100.7 million, a decrease of $79.1 million compared with the fourth quarter of 2011. During the first quarter of 2012, the Corporation revised its estimation process for establishing and evaluating the adequacy of its allowance for loan losses. The provision for loan losses for the quarter includes a $25.3 million net benefit of such revision. Refer to the Credit Quality section for a summary of the changes and the impact on the Corporation’s allowance for loan losses. The total allowance for loan losses to loans held-in-portfolio ratio stood at 3.25% as of March 31, 2012 compared with 3.27% as of December 31, 2011.
• The provision for loan losses for the non-covered portfolio decreased by $41.4 million, of which $20.3 million was related to the Banco Popular de Puerto Rico (“BPPR”) reportable segment and $21.1 million to the Banco Popular North America (“BPNA”) reportable segment. In the BPPR reportable segment, the reduction in provision for loan losses was primarily driven by lower losses in the commercial and construction loan portfolios. In the BPNA reportable segment, the decrease in the provision for loan losses was driven by the combination of lower losses and the effect of the enhancement to the allowance for loan losses methodology.
• The provision for loan losses on the covered portfolio decreased by $37.7 million primarily due to lower level of impairments on loans accounted for pursuant to ASC 310-20 and ASC 310-30. The provision for loan losses related to loans accounted for pursuant to ASC 310-20 amounted to $6.8 million for the first quarter of 2012, compared with $34.7 million for the quarter ended December 31, 2011, a decrease of $27.9 million. During the fourth quarter of 2011, there were two particular credit relationships accounted for pursuant to ASC 310-20 which required specific reserves of $28.2 million. For the quarter ended March 31, 2012, there was only one newly impaired credit relationship with an outstanding principal balance of $13.2 million and a specific reserve requirement of $9.8 million. The provision for loan losses for loans accounted under ASC 310-30, amounted to $11.4 million for the first quarter of 2012, compared with $21.2 million for the quarter ended December 31, 2011. The decrease of $9.8 million in the provision for loan losses on these loans was prompted by an improvement in actual and expected cash flows.

Non-interest income

Non-interest income for the quarter ended March 31, 2012 decreased by $25.5 million compared with the quarter ended December 31, 2011. The principal unfavorable variances were as follows:

• FDIC loss share expense of $15.3 million was recognized in the first quarter of 2012, compared with FDIC loss share income of $17.4 million for the fourth quarter of 2011. This variance was principally associated with $37.7 million of lower provision for loan losses on covered loans recorded during the first quarter of 2012. Refer to Table N for financial information on the covered loans and the composition of the FDIC loss share (expense) income.
• Trading account losses amounted to $2.1 million for the first quarter of 2012, compared with trading account profits of $2.6 million in the fourth quarter of 2011.

The above unfavorable variances in non-interest income were partially offset by the following categories:

• The category of other operating income in Table B shows an increase of $9.5 million mostly due to higher income from investments accounted for under the equity method (approximately $9.0 million), principally driven by $6.7 million from the equity investment in PRLP 2011 Holdings, LLC, which holds the commercial and construction loans sold by BPPR during 2011, of which BPPR holds a 24.9% equity participation.
• Other service fees increased by $5.9 million, mostly due to a quarter-over-quarter favorable variance in valuation adjustments on mortgage servicing rights of $11.5 million, partially offset by lower insurance fees by $4.1 million since the fourth quarter of 2011 included the recognition of an annual contingent insurance commission related to the dwelling and flood insurance businesses. Refer to Table E in the Financial Supplement for a breakdown of other service fees.

Operating expenses

Operating expenses decreased by $14.9 million for the first quarter of 2012 compared with the fourth quarter of 2011. Refer to Table B which provides a breakdown of operating expenses by main categories. The principal favorable variances were as follows:

• Business promotion expense decreased by $6.4 million, mainly due to higher marketing efforts during the fourth quarter of 2011 related to credit cards, client relationship campaigns during the holidays and costs associated with the continued BPNA rebranding initiative.
• The provision for losses on unfunded credit commitments, which is included in the category of other operating expenses in Table B, resulted in a positive variance of $9.5 million in the first quarter of 2012 compared with the fourth quarter of 2011, mainly due to a combination of lower expected disbursements and loss rate.
• Personnel costs decreased by $3.1 million as shown in Table B, principally due to a decrease in the category of pension, postretirement and medical insurance costs of $7.6 million, partially offset by an increase in commissions, incentives and other bonuses of $1.9 million and in other personnel costs, including payroll taxes, of $2.9 million. The latter variance includes approximately $1.4 million in severance accruals related to a voluntary employee exit program as part of the Corporation’s efficiency efforts.

The slight variance in the salaries category in Table B consists of a reduction of $2.0 million in base salaries for full-time equivalent employees (FTEs), primarily related to the reduction in headcount associated with the voluntary retirement program effective on February 1, 2012, offset by increases in vacation expense, seasonal salaries and other compensation benefits. FTEs were 8,074 as of March 31, 2012, compared with 8,329 as of December 31, 2011.

Pension, postretirement and medical insurance costs were $7.6 million lower in the current quarter as pension costs decreased $12.1 million due to the effect of the $15.6 million cost of the voluntary retirement program recognized in the fourth quarter of 2011, partially offset by the impact of a decrease in the assumed discount rate of the remaining pension benefit obligation. The decrease in pension costs was partially offset by an increase in medical insurance costs of $4.6 million reflecting claims activity and revised premiums.

These favorable variances were partially offset by an increase in the category of other real estate owned costs by $4.3 million, principally due to downward adjustments to collateral values of residential mortgage properties in the BPPR reportable segment.

Income taxes

Income tax expense amounted to $16.2 million for the quarter ended March 31, 2012, compared with $263 thousand for the fourth quarter of 2011. The increase in income tax expense was mainly due to higher taxable income in the Corporation’s Puerto Rico operations.

Credit Quality

• The allowance for loan losses to loans held-in-portfolio ratio, excluding covered loans, stood at 3.25% as of March 31, 2012 compared with 3.35% as of December 31, 2011. During the first quarter of 2012, in order to better reflect current market conditions, the Corporation revised the estimation process for evaluating the adequacy of its allowance for loan losses for the Corporation’s commercial and construction loan portfolios by (i) establishing a more granular stratification of the commercial and construction loan portfolios focusing on certain risk characteristics and (ii) increasing the look-back period for assessing the trends applicable to the determination of net charge-offs from 6 months to 12 months (recognizing that a longer period is more appropriate when assessing those trends, consistent with the Corporation’s recent experience). The net charge-off trend factor is an adjustment to the base loss rate to account for inherent imprecision in reserve estimates due to recent loss trends. The trend factor replaces the base-loss period when it is higher than base loss up to a determined cap. As part of the process, the Corporation also reassessed environmental factors reserves applied to the commercial loan portfolio at the BPPR reportable segment. Environmental factors account for current market conditions that are likely to cause estimated credit losses to differ from historical loss experience. These environmental factors increase or decrease the historical loss rate applied to each loan segment. The net effect of these changes amounted to a $25.3 million reduction in the Corporation’s allowance for loan losses, resulting from a reduction of $40.4 million due to the enhancements to the allowance for loan losses methodology, offset in part by a $15.1 million increase in environmental factor reserves due to the Corporation’s decision to monitor recent trends in its commercial loan portfolio at the BPPR reportable segment that although improving, continue to warrant additional scrutiny. The general and specific reserves related to non-covered loans amounted to $589 million and $76 million, respectively, as of March 31, 2012, compared with $631 million and $59 million, respectively, as of December 31, 2011. Refer to Tables G through L for detailed credit quality information, including the activity in the allowance for loan losses.
• Non-performing loans, excluding loans held-for-sale and covered loans, decreased by $56 million from December 31, 2011 to March 31, 2012, driven principally by the commercial, construction and mortgage loan portfolios, resulting from the steps taken by the Corporation to reduce the overall credit risks of its loan portfolios. Non-performing construction loans decreased by $27 million, driven by the BPNA reportable segment which decreased by $29 million when compared with December 31, 2011. Non-performing commercial loans decreased by $11 million, when compared with December 31, 2011, driven by the BPPR reportable segment which decreased by $10 million, as one commercial loan with an outstanding principal balance of $20.1 million classified as a troubled-debt restructuring (“TDR”) in 2011 was returned to accrual status. Non-performing loans from the Corporation’s residential mortgage loan portfolio as of March 31, 2012 amounted to $667 million, a decrease of $19 million compared with December 31, 2011. The decrease was principally driven by non-performing loans from the residential mortgage loan portfolio of the BPPR reportable segment, prompted by (i) a reduction of loan repurchases under credit recourse arrangements, (ii) a higher level of residential mortgage TDRs returned to accrual status, and (iii) higher charge-offs. Nevertheless, the residential mortgage loan portfolio of the BPPR reportable segment continues to be impacted by the economic conditions in Puerto Rico. Refer to Table H for the activity in non-performing commercial, construction and mortgage loans, excluding covered loans and loans held-for-sale.
• Annualized net charge-offs to average non-covered loans held-in-portfolio decreased 33 basis points, from 2.46% for the quarter ended December 31, 2011 to 2.13% for the quarter ended March 31, 2012. Excluding covered loans, net charge-offs for the first quarter of 2012 declined by $17.9 million, compared with the quarter ended December 31, 2011. The reduction was driven principally by lower net charge-offs from the commercial and construction loan portfolios for the quarter ended March 31, 2012, which decreased by $17.1 million and $5.1 million, respectively, when compared with the quarter ended December 31, 2011. Net charge-offs from the BPPR and BPNA reportable segments’ commercial loan portfolios decreased by $10.9 million and $6.2 million respectively, from $48.4 million and $23.1 million, respectively, for the quarter ended December 31, 2011 to $37.5 million and $16.9 million, respectively, for the first quarter of 2012.

These favorable variances were offset in part by an increase in net charge-offs of $8.7 million in the residential mortgage loan portfolio mostly due to revisions to the charge-off policy in the BPPR reportable segment. During the first quarter of 2012, the Corporation revised its charge-off policy for the residential mortgage loan portfolio by including historical losses on recent other real estate owned (“OREO”) sales to determine the net realizable value to assess charge-offs once a loan becomes 180 days past due; previously, this was only done once the loan was foreclosed. As a result of the implementation of this new practice, net charge-offs from the residential mortgage loan portfolio at the BPPR reportable segment increased by $5.0 million during the quarter ended March 31, 2012. This increase was the main driver of a higher ratio of annualized net charge-offs to average non-covered mortgage loans held-in-portfolio at the BPPR reportable segment, which increased by 61 basis points, from 0.46% for the quarter ended December 31, 2011 to 1.07% for the quarter ended March 31, 2012.

Net charge-offs on the covered loan portfolio decreased by $6.7 million, driven principally by one particular credit relationship that was charged-off during the fourth quarter of 2011. Refer to Table I for further information on the Corporation’s net charge-offs and related ratios.

Refer to the section below for explanations on the main variances.

BPPR Reportable Segment

• The provision for loan losses for non-covered loans of the BPPR reportable segment totaled $67.8 million or 92.0% of net charge-offs, for the first quarter of 2012, compared with $88.1 million or 112.5% of net charge-offs, for the fourth quarter of 2011. The decrease in the provision for loan losses was mainly driven by lower levels of commercial and construction net-charge offs by $15.1 million, when compared with the quarter ended December 31, 2011. These improvements were partially offset by higher reserve requirements for the consumer and residential mortgage loan portfolios due to higher net charge-offs and specific reserve requirements for loans restructured under loss mitigation programs. The reduction also includes a $7.5 million impact related to the net effect of revisions made to the general reserve estimation process for the commercial and construction loan portfolios.

• Annualized net charge-offs to average non-covered loans held-in-portfolio ratio for the BPPR reportable segment decreased 13 basis points, from 2.14% for the quarter ended December 31, 2011 to 2.01% for the quarter ended March 31, 2012. The decrease was driven by lower net charge-offs from the commercial and construction loan portfolios, prompted by the steps taken by the Corporation to reduce the overall credit risks of these loans portfolio; therefore, reducing the level of problem loans remaining at the reportable segment. Net charge-offs from the residential mortgage loan portfolio of the BPPR reportable segment increased by $7.0 million, from $5.2 million for the quarter ended December 31, 2011 to $12.2 million for the first quarter of 2012, primarily due to the aforementioned enhancement to the charge-off policy.
• Non-performing loans of the BPPR reportable segment, excluding loans held-for-sale and covered loans, decreased by $28 million as of March 31, 2012, when compared with December 31, 2011. The decrease in non-performing commercial loans at the BPPR reportable segment was mainly driven by one commercial loan relationship with an outstanding principal balance of $20.1 million as of March 31, 2012, which was restructured and placed in non-accrual status during the third quarter of 2011. This commercial loan relationship was returned to accrual status during the first quarter of 2012, as explained previously. Non-performing residential mortgage loans of the BPPR reportable segment decreased by $16 million, mainly due to (i) a reduction of loan repurchases under credit recourse arrangements, (ii) a higher level of residential mortgage TDRs returned to accrual status, and (iii) higher charge-offs. Non-performing consumer loans of the BPPR reportable segment decreased to $27 million as of March 31 2012, from $31 million as of December 31, 2011, a decrease of $4 million. This portfolio continues to show stabilization in terms of credit quality.
• Refer to Table K for information on the allowance for loan losses of the Corporation’s Puerto Rico operations. The decrease in the allowance for loan losses from December 31, 2011 to March 31, 2012, excluding the impact related to the revisions made to the general reserve estimation process for the commercial and construction loan portfolios, reflects a lower general reserve component for the commercial loan portfolio mostly driven by a lower loss trend. This decrease was partially offset by an increase in the general reserve for the residential mortgage loan portfolio, coupled with higher specific reserves for residential mortgage loans restructured under loss mitigation programs.

BPNA Reportable Segment

• The provision for loan losses for the BPNA reportable segment amounted to $14.7 million, or 42.7% of net charge-offs, for the first quarter of 2012, compared with $35.8 million or 75.0% of net charge-offs for the fourth quarter of 2011. This reduction includes a $17.8 million impact related to the revisions made to the general reserve estimation process for the commercial and construction loan portfolios. Excluding this impact, the decrease in the provision for loan losses in the BPNA reportable segment was mainly due to lower net charge-offs during the first quarter of 2012 compared with the fourth quarter of 2011, principally from the commercial and consumer loan portfolios.
• Annualized net charge-offs to average loans held-in-portfolio ratio for the BPNA reportable segment decreased 84 basis points, from 3.27% for the quarter ended December 31, 2011 to 2.43% for the first quarter of 2012. As explained above, the decrease in net charge-offs was mainly observed in the commercial and consumer loan portfolios. These decreases were prompted by the continued credit stabilization at the BPNA reportable segment.
• Non-performing loans held-in-portfolio at the BPNA reportable segment amounted to $338 million as of March 31, 2012, a decrease of $28 million compared with December 31, 2011. The decrease was mainly driven by a reduction of $29 million in non-performing construction loans, driven by the resolution of three large construction loans, unit sales on several projects and minimal inflows of new construction non-performing loans.
• Refer to Table L for information on the allowance for loan losses of the BPNA reportable segment. The decline in the allowance for loan losses from December 31, 2011 to March 31, 2012 reflects an overall decrease in the general reserve component, partially offset by a slight increase in the specific reserve for the commercial loans portfolio. The decline in the general reserve component included the aforementioned impact related to the revisions made to the general reserve estimation process for the commercial and construction loan portfolios.

Financial Condition Highlights – March 31, 2012 compared to December 31, 2011

• Total assets amounted to $37.0 billion as of March 31, 2012, compared with $37.3 billion as of December 31, 2011. Refer to Table C for a detailed presentation of the Corporation’s Consolidated Statements of Condition.

• Total investment securities, including trading securities and other investment securities, amounted to $5.9 billion as of March 31, 2012, compared with $5.8 billion as of December 31, 2011.
• Total loans held-in-portfolio amounted to $24.7 billion as of March 31, 2012, compared with $25.0 billion as of December 31, 2011. Refer to Table F for a breakdown by loan categories. The decrease of $129 million in non-covered commercial loans held-in-portfolio from December 31, 2011 to March 31, 2012 was mostly associated with the Corporation’s U.S. mainland operations mainly due to pay-downs and charge-offs exceeding current year originations. The increase in mortgage loans held-in-portfolio was principally due to (i) loan repurchases under recourse credit agreements, (ii) loans purchased and originated at the Corporation’s Puerto Rico operations, and (iii) mortgage loan purchases at BPNA during the first quarter of 2012 of approximately $21 million. The decline in total covered loans of $127 million was principally due to collections.
• Deposits amounted to $27.2 billion as of March 31, 2011, compared with $27.9 billion as of December 31, 2011. Table F presents a breakdown of deposits by major categories. The decrease in demand deposits from December 31, 2011 to March 31, 2012 of $244 million was principally related to lower balance of deposits in trust by $561 million, partially offset by an increase in commercial accounts. The deposits in trust outstanding as of December 31, 2011 were of a short-term nature and were mostly associated with certain Puerto Rico government bond issuances. The decrease in time deposits was primarily at BPPR. These decreases were partially offset by an increase in savings, NOW and money market deposits, both from the retail and commercial sectors.
• The Corporation’s borrowings amounted to $4.7 billion as of March 31, 2012, compared with $4.3 billion as of December 31, 2011. The increase in borrowings was principally in short-term debt by approximately $455 million mostly associated with FHLB advances.

• Stockholders’ equity was $4.0 billion as of March 31, 2012, compared with $3.9 billion as of December 31, 2011. The increase was principally related to earnings retention. Refer to Table A for capital ratios and Table M for Non-GAAP reconciliations.

Forward-Looking Statements

The information included in this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in forward-looking statements. Factors that might cause such a difference include, but are not limited to (i) the rate of growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) the fiscal and monetary policies of the federal government and its agencies; (iv) changes in federal bank regulatory and supervisory policies, including required levels of capital; (v) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate markets in Puerto Rico and the other markets in which borrowers are located; (vi) the performance of the stock and bond markets; (vii) competition in the financial services industry; (viii) possible legislative, tax or regulatory changes; (ix) the impact of the Dodd-Frank Act on our businesses, business practice and cost of operations; and (x) additional Federal Deposit Insurance Corporation assessments. For a discussion of such factors and certain risks and uncertainties to which the Corporation is subject, see the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2011, as well as its filings with the U.S. Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, the Corporation assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances 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 37th by assets among U.S. banks. 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, Illinois, Florida and California.

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

Financial Supplement follows

Popular, Inc.

Financial Supplement to First Quarter 2012 Earnings Release

Table A – Selected Ratios and Other Information

Table B – Consolidated Statement of Operations

Table C – Consolidated Statement of Condition

Table D – Consolidated Average Balances and Yield / Rate Analysis – QUARTER

Table E – Other Service Fees

Table F – Loans and Deposits

Table G – Non-Performing Assets

Table H – Activity in Non-performing Loans

Table I – Allowance for Credit Losses, Net Charge-offs and Related Ratios

Table J – Allowance for Loan Losses – Breakdown of general and specific reserves – CONSOLIDATED

Table K – Allowance for Loan Losses – Breakdown of general and specific reserves – PUERTO RICO OPERATIONS

Table L – Allowance for Loan Losses – Breakdown of general and specific reserves – U.S. MAINLAND OPERATIONS

Table M – Reconciliation to GAAP Financial Measures

Table N – Financial Information – Westernbank Covered Loans

POPULAR, INC.
Financial Supplement to First Quarter 2012 Earnings Release
Table A – Selected Ratios and Other Information
(Unaudited)
		Quarter ended				Quarter ended				Quarter ended
		March 31,				December 31,				March 31,
		2012				2011				2011
Net income per common share:
Basic and diluted		$	0.05			$	0.00			$	0.01
Average common shares outstanding			1,023,418,052				1,022,741,800				1,021,536,201
Average common shares outstanding – assuming dilution			1,024,945,000				1,022,741,800				1,022,339,095
Common shares outstanding at end of period			1,027,117,068				1,025,904,567				1,023,416,118
Market value per common share		$	2.05			$	1.39			$	2.92
Market Capitalization — (In millions)		$	2,106			$	1,426			$	2,988
Return on average assets			0.53	%			0.03	%			0.11	%
Return on average common equity			5.16	%			0.21	%			1.05	%
Net interest margin [1]			4.27	%			4.30	%			4.15	%
Common equity per share		$	3.81			$	3.77			$	3.67
Tangible common book value per common share (non-GAAP)		$	3.12			$	3.08			$	2.98
Tangible common equity to tangible assets (non-GAAP)			8.83	%			8.62	%			8.00	%
Tier 1 risk-based capital [2]			16.51	%			15.97	%			15.23	%
Total risk-based capital [2]			17.79	%			17.25	%			16.50	%
Tier 1 leverage [2]			11.10	%			10.90	%			10.15	%
Tier 1 common equity to risk-weighted assets (non-GAAP) [2]			12.53	%			12.10	%			11.56	%
[1] Not on a taxable equivalent basis.
[2] Capital ratios for the current quarter are estimated.

POPULAR, INC.
Financial Supplement to First Quarter 2012 Earnings Release
Table B – Consolidated Statement of Operations
(Unaudited)
				Quarter ended				Quarter ended				Variance				Quarter ended				Variance
				March 31,				December 31,				Q1 2012 vs.				March 31,				Q1 2012 vs.
(In thousands, except per share information)				2012				2011				Q4 2011				2011				Q1 2011
Interest income:
	Loans			$	387,942			$	399,523			$	(11,581	)		$	423,375			$	(35,433	)
	Money market investments				948				837				111				947				1
	Investment securities				45,070				46,758				(1,688	)			52,375				(7,305	)
	Trading account securities				5,891				6,275				(384	)			8,754				(2,863	)
		Total interest income			439,851				453,393				(13,542	)			485,451				(45,600	)
Interest expense:
	Deposits				51,679				56,068				(4,389	)			76,879				(25,200	)
	Short-term borrowings				13,583				13,780				(197	)			14,015				(432	)
	Long-term debt				37,007				38,765				(1,758	)			51,198				(14,191	)
		Total interest expense			102,269				108,613				(6,344	)			142,092				(39,823	)
Net interest income					337,582				344,780				(7,198	)			343,359				(5,777	)
Provision for loan losses – non-covered loans					82,514				123,908				(41,394	)			59,762				22,752
Provision for loan losses – covered loans					18,209				55,900				(37,691	)			15,557				2,652
Net interest income after provision for loan losses					236,859				164,972				71,887				268,040				(31,181	)
Service charges on deposit accounts					46,589				46,162				427				45,630				959
Other service fees					66,039				60,097				5,942				58,652				7,387
Net gain on sale and valuation adjustments of investment securities					–				2,800				(2,800	)			–				–
Trading account (loss) profit					(2,143	)			2,610				(4,753	)			(499	)			(1,644	)
Net gain on sale of loans, including valuation adjustments on loans held-for-sale					15,471				16,135				(664	)			7,244				8,227
Adjustments (expense) to indemnity reserves on loans sold					(3,875	)			(3,481	)			(394	)			(9,848	)			5,973
FDIC loss share (expense) income					(15,255	)			17,447				(32,702	)			16,035				(31,290	)
Fair value change in equity appreciation instrument					–				–				–				7,745				(7,745	)
Other operating income					17,082				7,589				9,493				39,409				(22,327	)
		Total non-interest income			123,908				149,359				(25,451	)			164,368				(40,460	)
Operating expenses:
Personnel costs
	Salaries				76,899				77,074				(175	)			73,791				3,108
	Commissions, incentives and other bonuses				12,726				10,873				1,853				9,924				2,802
	Pension, postretirement and medical insurance				18,425				26,039				(7,614	)			11,985				6,440
	Other personnel costs, including payroll taxes				13,441				10,561				2,880				10,440				3,001
		Total personnel costs			121,491				124,547				(3,056	)			106,140				15,351
Net occupancy expenses					24,162				25,891				(1,729	)			24,586				(424	)
Equipment					11,341				10,526				815				12,036				(695	)
Other taxes					13,438				12,899				539				11,972				1,466
Professional fees					48,105				50,019				(1,914	)			46,688				1,417
Communications					7,131				5,917				1,214				7,210				(79	)
Business promotion					12,850				19,225				(6,375	)			9,860				2,990
FDIC deposit insurance					24,926				25,088				(162	)			17,673				7,253
Loss on early extinguishment of debt					69				56				13				8,239				(8,170	)
Other real estate owned (OREO)					14,165				9,893				4,272				2,211				11,954
Credit and debit card processing, volume, interchange and other					4,681				3,974				707				3,944				737
Other operating expenses					11,215				20,377				(9,162	)			22,235				(11,020	)
Amortization of intangibles					2,593				2,681				(88	)			2,255				338
		Total operating expenses			296,167				311,093				(14,926	)			275,049				21,118
Income before income tax					64,600				3,238				61,362				157,359				(92,759	)
Income tax expense					16,192				263				15,929				147,227				(131,035	)
Net income				$	48,408			$	2,975			$	45,433			$	10,132			$	38,276
Net income applicable to common stock				$	47,477			$	2,044			$	45,433			$	9,202			$	38,275
Net income per common share – basic				$	0.05			$	–			$	0.05			$	0.01			$	0.04
Net income per common share – diluted				$	0.05			$	–			$	0.05			$	0.01			$	0.04

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table C – Consolidated Statement of Condition
(Unaudited)
																Variance
				March 31,				December 31,				March 31,				Q1 2012 vs.
(In thousands)				2012				2011				2011				Q4 2011
Assets:
Cash and due from banks				$	472,806			$	535,282			$	464,555			$	(62,476	)
Money market investments					1,304,263				1,376,174				961,565				(71,911	)
Trading account securities, at fair value					404,293				436,331				634,799				(32,038	)
Investment securities available-for-sale, at fair value					5,138,616				5,009,823				5,686,341				128,793
Investment securities held-to-maturity, at amortized cost					124,372				125,383				142,106				(1,011	)
Other investment securities, at lower of cost or realizable value					195,708				179,880				174,930				15,828
Loans held-for-sale, at lower of cost or fair value					361,596				363,093				569,678				(1,497	)
Loans held-in-portfolio:
		Loans not covered under loss sharing agreements with the FDIC			20,478,674				20,602,596				20,676,789				(123,922	)
		Loans covered under loss sharing agreements with the FDIC			4,221,788				4,348,703				4,729,550				(126,915	)
		Less: Allowance for loan losses			(803,264	)			(815,308	)			(736,505	)			12,044
		Total loans held-in-portfolio, net			23,897,198				24,135,991				24,669,834				(238,793	)
FDIC loss share asset					1,880,357				1,915,128				2,426,305				(34,771	)
Premises and equipment, net					533,545				538,486				543,577				(4,941	)
Other real estate not covered under loss sharing agreements with the FDIC					193,768				172,497				156,888				21,271
Other real estate covered under loss sharing agreements with the FDIC					110,559				109,135				65,562				1,424
Accrued income receivable					126,568				125,209				147,670				1,359
Mortgage servicing assets, at fair value					156,331				151,323				167,416				5,008
Other assets					1,439,532				1,462,393				1,314,739				(22,861	)
Goodwill					647,911				648,350				647,387				(439	)
Other intangible assets					61,798				63,954				56,441				(2,156	)
Total assets				$	37,049,221			$	37,348,432			$	38,829,793			$	(299,211	)
Liabilities and Stockholders’ Equity:
Liabilities:
	Deposits:
		Non-interest bearing		$	5,366,420			$	5,655,474			$	4,913,009			$	(289,054	)
		Interest bearing			21,831,316				22,286,653				22,283,665				(455,337	)
		Total deposits			27,197,736				27,942,127				27,196,674				(744,391	)
Federal funds purchased and assets sold under agreements to repurchase					2,113,557				2,141,097				2,642,800				(27,540	)
Other short-term borrowings					751,200				296,200				290,302				455,000
Notes payable					1,843,754				1,856,372				3,794,655				(12,618	)
Other liabilities					1,175,903				1,193,883				1,100,456				(17,980	)
Total liabilities					33,082,150				33,429,679				35,024,887				(347,529	)
Stockholders’ equity:
Preferred stock					50,160				50,160				50,160				–
Common stock					10,276				10,263				10,236				13
Surplus					4,116,710				4,114,661				4,096,245				2,049
Accumulated deficit					(165,249	)			(212,726	)			(338,126	)			47,477
Treasury stock					(1,041	)			(1,057	)			(607	)			16
Accumulated other comprehensive loss					(43,785	)			(42,548	)			(13,002	)			(1,237	)
		Total stockholders’ equity			3,967,071				3,918,753				3,804,906				48,318
Total liabilities and stockholders’ equity				$	37,049,221			$	37,348,432			$	38,829,793			$	(299,211	)

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table D – Consolidated Average Balances and Yield / Rate Analysis – QUARTER
(Unaudited)
Quarter					Quarter ended										Quarter ended										Quarter ended										Variance											Variance
					March 31, 2012										December 31, 2011										March 31, 2011										Q1 2012 vs Q4 2011											Q1 2012 vs Q1 2011
($ amounts in millions; yields not on a taxable equivalent basis)					Average balance				Income / Expense			Yield / Rate			Average balance				Income / Expense			Yield / Rate			Average balance				Income / Expense			Yield / Rate			Average balance				Income / Expense			Yield / Rate				Average balance				Income / Expense			Yield / Rate
Assets:
Interest earning assets:
	Money market, trading and investment securities				$	6,761			$	52.0		3.07	%		$	6,635			$	53.9		3.24	%		$	7,470			$	62.1		3.33	%		$	126			($1.9	)		(0.17	)	%			($709	)		($10.1	)		(0.26	)	%
	Loans not covered under loss sharing agreements with the FDIC:
		Commercial				10,444				126.5		4.87				10,596				131.4		4.92				11,254				139.1		5.01				(152	)		(4.9	)		(0.05	)				(810	)		(12.6	)		(0.14	)
		Construction				523				6.5		5.03				564				2.3		1.59				863				3.3		1.56				(41	)		4.2			3.44					(340	)		3.2			3.47
		Mortgage				5,464				75.5		5.53				5,402				70.5		5.22				4,753				71.4		6.01				62			5.0			0.31					711			4.1			(0.48	)
		Consumer				3,661				92.6		10.17				3,680				95.0		10.25				3,668				93.7		10.36				(19	)		(2.4	)		(0.08	)				(7	)		(1.1	)		(0.19	)
		Lease financing				555				12.0		8.67				562				11.9		8.44				592				13.3		9.01				(7	)		0.1			0.23					(37	)		(1.3	)		(0.34	)
		Total loans not covered under loss sharing agreements with the FDIC				20,647				313.1		6.09				20,804				311.1		5.95				21,130				320.8		6.14				(157	)		2.0			0.14					(483	)		(7.7	)		(0.05	)
	Loans covered under loss sharing agreements with the FDIC					4,292				74.8		7.00				4,401				88.4		7.99				4,815				102.6		8.61				(109	)		(13.6	)		(0.99	)				(523	)		(27.8	)		(1.61	)
	Total loans					24,939				387.9		6.25				25,205				399.5		6.30				25,945				423.4		6.59				(266	)		(11.6	)		(0.05	)				(1,006	)		(35.5	)		(0.34	)
	Total interest earning assets					31,700			$	439.9		5.57	%			31,840			$	453.4		5.66	%			33,415			$	485.5		5.87	%			(140	)		($13.5	)		(0.09	)	%			(1,715	)		($45.6	)		(0.30	)	%
		Allowance for loan losses				(802	)									(751	)									(771	)									(51	)										(31	)
		Other non-interest earning assets				5,658										5,655										6,126										3											(468	)
	Total average assets				$	36,556									$	36,744									$	38,770										($188	)										($2,214	)
Liabilities and Stockholders’ Equity:
	Interest bearing deposits:
		NOW and money market			$	5,246			$	6.1		0.47	%		$	5,199			$	6.4		0.49	%		$	4,977			$	8.9		0.73	%		$	47			($0.3	)		(0.02	)	%		$	269			($2.8	)		(0.26	)	%
		Savings				6,507				6.3		0.39				6,475				6.4		0.39				6,242				12.6		0.82				32			(0.1	)		0.00					265			(6.3	)		(0.43	)
		Time deposits				10,291				39.3		1.54				10,685				43.3		1.61				11,135				55.4		2.02				(394	)		(4.0	)		(0.07	)				(844	)		(16.1	)		(0.48	)
		Total interest bearing deposits				22,044				51.7		0.94				22,359				56.1		0.99				22,354				76.9		1.39				(315	)		(4.4	)		(0.05	)				(310	)		(25.2	)		(0.45	)
	Borrowings					4,365				50.6		4.65				4,507				52.5		4.65				6,746				65.2		3.88				(142	)		(1.9	)		0.00					(2,381	)		(14.6	)		0.77
		Total interest bearing liabilities				26,409				102.3		1.55				26,866				108.6		1.61				29,100				142.1		1.97				(457	)		(6.3	)		(0.06	)				(2,691	)		(39.8	)		(0.42	)
			Net interest spread									4.02	%									4.05	%									3.90	%									(0.03	)	%									0.12		%
	Non-interest bearing deposits					5,213										5,165										4,926										48											287
	Other liabilities					1,181										895										1,147										286											34
	Stockholders’ equity					3,753										3,818										3,597										(65	)										156
		Total average liabilities and stockholders’ equity			$	36,556									$	36,744									$	38,770										($188	)										($2,214	)
Net interest income / margin non-taxable equivalent basis									$	337.6		4.27	%						$	344.8		4.30	%						$	343.4		4.15	%						($7.2	)		(0.03	)	%						($5.8	)		0.12		%

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table E – Other Service Fees
(Unaudited)
			Quarters ended									Variance				Variance
			March 31,			December 31,			March 31,			Q1 2012 vs.				Q1 2012 vs.
(In thousands)			2012			2011			2011			Q4 2011				Q1 2011
Other service fees:
	Debit card fees		$	9,832		$	9,664		$	12,925		$	168			$	(3,093	)
	Insurance fees			12,390			16,471			11,926			(4,081	)			464
	Credit card fees and discounts			11,892			12,943			10,576			(1,051	)			1,316
	Sale and administration of investment products			8,889			9,686			7,130			(797	)			1,759
	Mortgage servicing fees, net of fair value adjustments			12,931			1,449			6,260			11,482				6,671
	Trust fees			4,081			3,722			3,495			359				586
	Processing fees			1,774			1,718			1,697			56				77
	Other fees			4,250			4,444			4,643			(194	)			(393	)
Total other service fees			$	66,039		$	60,097		$	58,652		$	5,942			$	7,387

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table F – Loans and Deposits
(Unaudited)
Loans – Ending Balances
											Variance
(in thousands)		March 31, 2012			December 31, 2011			March 31, 2011			Q1 2012 vs. Q4 2011				Q1 2012 vs. Q1 2011
Loans not covered under FDIC loss sharing agreements:
Commercial		$	10,405,896		$	10,534,886		$	11,124,330		$	(128,990	)		$	(718,434	)
Construction			290,448			311,628			439,399			(21,180	)			(148,951	)
Lease financing			555,665			563,867			592,092			(8,202	)			(36,427	)
Mortgage			5,591,745			5,518,460			4,895,682			73,285				696,063
Consumer			3,634,920			3,673,755			3,625,286			(38,835	)			9,634
Total non-covered loans held-in-portfolio		$	20,478,674		$	20,602,596		$	20,676,789		$	(123,922	)		$	(198,115	)
Loans covered under FDIC loss sharing agreements			4,221,788			4,348,703			4,729,550			(126,915	)			(507,762	)
Total loans held-in-portfolio		$	24,700,462		$	24,951,299		$	25,406,339		$	(250,837	)		$	(705,877	)
Loans held-for-sale:
Commercial		$	25,994		$	26,198		$	61,276		$	(204	)		$	(35,282	)
Construction			206,246			236,045			392,113			(29,799	)			(185,867	)
Mortgage			129,356			100,850			116,289			28,506				13,067
Total loans held-for-sale			361,596			363,093			569,678			(1,497	)			(208,082	)
Total loans		$	25,062,058		$	25,314,392		$	25,976,017		$	(252,334	)		$	(913,959	)
Deposits – Ending Balances
											Variance
(In thousands)		March 31, 2012			December 31, 2011			March 31, 2011			Q1 2012 vs. Q4 2011				Q1 2012 vs. Q1 2011
Demand deposits [1]		$	6,013,009		$	6,256,530		$	5,496,313		$	(243,521	)		$	516,696
Savings, NOW and money market deposits (non-brokered)			11,048,140			10,762,869			10,633,029			285,271				415,111
Savings, NOW and money market deposits (brokered)			212,996			212,688			50,000			308				162,996
Time deposits (non-brokered)			7,186,826			7,552,434			8,565,437			(365,608	)			(1,378,611	)
Time deposits (brokered CDs)			2,736,765			3,157,606			2,451,895			(420,841	)			284,870
Total deposits		$	27,197,736		$	27,942,127		$	27,196,674		$	(744,391	)		$	1,062
[1] Includes interest and non-interest bearing deposits.

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table G – Non-Performing Assets
(Unaudited)
																							Variance
(Dollars in thousands)		March 31, 2012				As a percentage of loans HIP by category			December 31, 2011				As a percentage of loans HIP by category			March 31, 2011				As a percentage of loans HIP by category			Q1 2012 vs. Q4 2011				Q1 2012 vs. Q1 2011
Non-accrual loans:
Commercial		$	818,678			8.3	%		$	830,092			8.3	%		$	699,993			6.7	%		$	(11,414	)		$	118,685
Construction			69,470			29.4				96,286			40.1				126,549			43.7				(26,816	)			(57,079	)
Legacy [1]			79,077			13.1				75,660			11.7				150,117			16.7				3,417				(71,040	)
Lease financing			5,673			1.0				5,642			1.0				5,151			0.9				31				522
Mortgage			667,217			11.9				686,502			12.4				578,106			11.8				(19,285	)			89,111
Consumer			41,688			1.1				43,668			1.2				53,896			1.5				(1,980	)			(12,208	)
Total non-performing loans held-in- portfolio, excluding covered loans			1,681,803			8.2	%			1,737,850			8.4	%			1,613,812			7.8	%			(56,047	)			67,991
Non-performing loans held-for-sale [2]			232,293							262,302							464,577							(30,009	)			(232,284	)
Other real estate owned (“OREO”), excluding covered OREO			193,768							172,497							156,888							21,271				36,880
Total non-performing assets, excluding covered assets			2,107,864							2,172,649							2,235,277							(64,785	)			(127,413	)
Covered loans and OREO			203,254							192,771							79,075							10,483				124,179
Total non-performing assets		$	2,311,118						$	2,365,420						$	2,314,352						$	(54,302	)		$	(3,234	)
Accruing loans past due 90 days or more [3]		$	328,757						$	316,614						$	332,384						$	12,143			$	(3,627	)
Ratios excluding covered loans:
Non-performing loans held-in-portfolio to loans held-in-portfolio			8.21	%						8.44	%						7.80	%
Allowance for loan losses to loans held-in-portfolio			3.25							3.35							3.52
Allowance for loan losses to non-performing loans, excluding held-for-sale			39.53							39.73							45.07
Ratios including covered loans:
Non-performing loans held-in-portfolio to loans held-in-portfolio			7.18	%						7.30	%						6.41	%
Allowance for loan losses to loans held-in-portfolio			3.25							3.27							2.90
Allowance for loan losses to non-performing loans, excluding held-for-sale			45.27							44.76							45.26
[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 reportable segment.
[2] Non-performing loans held-for-sale as of March 31, 2012 consisted of $206 million in construction loans, $26 million in commercial loans and $53 thousand in mortgage loans (December 31, 2011 – $236 million, $26 million and $59 thousand, respectively; March 31, 2011 – $392 million, $62 million, and $11 million, respectively).
[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 nonperforming since the principal repayment is insured. These balances include $58 million of residential mortgage loans insured by FHA or guaranteed by the VA that are no longer accruing interest as of March 31, 2012.

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table H – Activity in Non-performing Loans
(Unaudited)
Commercial loans held-in-portfolio:
			Quarter ended March 31, 2012						Quarter ended December 31, 2011
(In thousands)			BPPR		BPNA		Popular, Inc.		BPPR		BPNA		Popular, Inc.
Beginning Balance NPLs			$ 631,171		$ 198,921		$ 830,092		$ 652,937		$ 180,629		$ 833,566
Plus:
	New non-performing loans		86,446		30,608		117,054		93,403		64,082		157,485
	Advances on existing non-performing loans		–		227		227		–		21		21
Less:
	Non-performing loans transferred to OREO		(5,481)		(10,434)		(15,915)		(4,685)		(2,138)		(6,823)
	Non-performing loans charged-off		(37,924)		(15,121)		(53,045)		(50,281)		(24,019)		(74,300)
	Loans returned to accrual status / loan collections		(53,296)		(6,439)		(59,735)		(60,203)		(14,647)		(74,850)
	Loans transferred to held-for-sale		–		–		–		–		(5,007)		(5,007)
Ending balance NPLs			$ 620,916		$ 197,762		$ 818,678		$ 631,171		$ 198,921		$ 830,092
Construction loans held-in-portfolio:
			Quarter ended March 31, 2012						Quarter ended December 31, 2011
(In thousands)			BPPR		BPNA		Popular, Inc.		BPPR		BPNA		Popular, Inc.
Beginning Balance NPLs			$ 53,859		$ 42,427		$ 96,286		$ 64,971		$ 59,635		$ 124,606
Plus:
	New non-performing loans		6,372		–		6,372		7,385		–		7,385
	Advances on existing non-performing loans		–		125		125		–		34		34
Less:
	Non-performing loans charged-off		(371)		(1,380)		(1,751)		(3,689)		(1,118)		(4,807)
	Loans returned to accrual status / loan collections		(3,613)		(17,617)		(21,230)		(14,808)		(8,580)		(23,388)
	Loans transferred to held-for-sale		–		(10,332)		(10,332)		–		(7,544)		(7,544)
Ending balance NPLs			$ 56,247		$ 13,223		$ 69,470		$ 53,859		$ 42,427		$ 96,286
Mortgage loans held-in-portfolio:
			Quarter ended March 31, 2012						Quarter ended December 31, 2011
(In thousands)			BPPR		BPNA		Popular, Inc.		BPPR		BPNA		Popular, Inc.
Beginning Balance NPLs			$ 649,279		$ 37,223		$ 686,502		$ 580,563		$ 37,160		$ 617,723
Plus:
	New non-performing loans		186,510		6,256		192,766		232,004		8,421		240,425
Less:
	Non-performing loans transferred to OREO		(21,573)		(1,064)		(22,637)		(12,771)		(1,157)		(13,928)
	Non-performing loans charged-off		(20,427)		(3,496)		(23,923)		(12,076)		(2,456)		(14,532)
	Loans returned to accrual status / loan collections		(160,272)		(5,219)		(165,491)		(138,441)		(4,745)		(143,186)
Ending balance NPLs			$ 633,517		$ 33,700		$ 667,217		$ 649,279		$ 37,223		$ 686,502
Legacy loans held-in-portfolio:
					Quarter ended						Quarter ended
(In thousands)					March 31, 2012						December 31, 2011
Beginning Balance NPLs							$ 75,660						$ 102,551
Plus:
	New non-performing loans						17,373						12,544
	Advances on existing non-performing loans						16						13
Less:
	Non-performing loans transferred to OREO						(3,370)						(14,390)
	Non-performing loans charged-off						(8,489)						(13,417)
	Loans returned to accrual status / loan collections						(1,441)						(11,173)
	Loans transferred to held-for-sale						(672)						(468)
Ending balance NPLs							$ 79,077						$ 75,660

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table I – Allowance for Credit Losses, Net Charge-offs and Related Ratios
(Unaudited)
		Quarter ended											Quarter ended											Quarter ended
		March 31,											December 31,											March 31,
(Dollars in thousands)		2012				2012			2012				2011				2011			2011				2011				2011			2011
		Non-covered loans				Covered loans			Total				Non-covered loans				Covered loans			Total				Non-covered loans				Covered loans			Total
Balance at beginning of period		$	690,363			$	124,945		$	815,308			$	692,500			$	80,421		$	772,921			$	793,225			$	–		$	793,225
Provision for loan losses			82,514				18,209			100,723				123,908				55,900			179,808				59,762				15,557			75,319
			772,877				143,154			916,031				816,408				136,321			952,729				852,987				15,557			868,544
Net loans charged-off (recovered):
BPPR
Commercial			37,518				4,102			41,620				48,428				10,526			58,954				38,528				1,707			40,235
Construction			(371	)			264			(107	)			3,820				8			3,828				8,021				4,345			12,366
Lease financing			154				–			154				1,233				–			1,233				1,179				–			1,179
Mortgage			12,226				203			12,429				5,236				746			5,982				7,677				–			7,677
Consumer			24,131				89			24,220				19,592				96			19,688				28,414				346			28,760
Total BPPR			73,658				4,658			78,316				78,309				11,376			89,685				83,819				6,398			90,217
BPNA
Commercial			16,865							16,865				23,104							23,104				17,484							17,484
Construction			166							166				1,102							1,102				764							764
Legacy [1]			3,558							3,558				5,821							5,821				20,249							20,249
Mortgage			5,228							5,228				3,501							3,501				570							570
Consumer			8,634							8,634				14,208							14,208				16,562							16,562
Total BPNA			34,451							34,451				47,736							47,736				55,629							55,629
Net write-downs (recoveries) related to loans transferred to loans held-for-sale			–				–			–				–				–			–				(13,807	)			–			(13,807	)
Balance at end of period		$	664,768			$	138,496		$	803,264			$	690,363			$	124,945		$	815,308			$	727,346			$	9,159		$	736,505
POPULAR, INC.
Annualized net charge-offs to average loans held-in-portfolio			2.13	%						1.83	%			2.46	%						2.21	%			2.74	%						2.31	%
Provision for loan losses to net charge-offs			0.76	x						0.89	x			0.98	x						1.31	x			0.43	x						0.52	x
BPPR
Annualized net charge-offs to average loans held-in-portfolio			2.01	%						1.65	%			2.14	%						1.88	%			2.42	%						1.93	%
Provision for loan losses to net charge-offs			0.92	x						1.10	x			1.13	x						1.61	x			0.62	x						0.75	x
BPNA
Annualized net charge-offs to average loans held-in-portfolio										2.43	%										3.27	%										3.39	%
Provision for loan losses to net charge-offs										0.43	x										0.75	x										0.14	x
[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 reportable segment.

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table J – Allowance for Loan Losses – Breakdown of general and specific reserves – CONSOLIDATED
(Unaudited)
March 31, 2012
(Dollars in thousands)				Commercial				Construction				Legacy [3]				Mortgage				Lease financing				Consumer				Total		[2]
Specific ALLL				$	12,998			$	1,013			$	765			$	40,946			$	1,344			$	18,990			$	76,056
Impaired loans		[1]		$	552,152			$	64,149			$	47,731			$	450,754			$	5,412			$	138,200			$	1,258,398
Specific ALLL to impaired loans		[1]			2.35	%			1.58	%			1.60	%			9.08	%			24.83	%			13.74	%			6.04	%
General ALLL				$	300,581			$	8,120			$	53,960			$	84,533			$	3,623			$	137,895			$	588,712
Loans held-in-portfolio, excluding impaired loans		[1]		$	9,316,090			$	172,430			$	556,143			$	5,140,991			$	537,902			$	3,496,720			$	19,220,276
General ALLL to loans held-in-portfolio, excluding impaired loans		[1]			3.23	%			4.71	%			9.70	%			1.64	%			0.67	%			3.94	%			3.06	%
Total ALLL				$	313,579			$	9,133			$	54,725			$	125,479			$	4,967			$	156,885			$	664,768
Total non-covered loans held-in-portfolio		[1]		$	9,868,242			$	236,579			$	603,874			$	5,591,745			$	543,314			$	3,634,920			$	20,478,674
ALLL to loans held-in-portfolio		[1]			3.18	%			3.86	%			9.06	%			2.24	%			0.91	%			4.32	%			3.25	%
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of March 31, 2012, the general allowance on the covered loans amounted to $116 million, while the specific reserve amounted to $23 million.
[3] 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.
December 31, 2011
(Dollars in thousands)				Commercial				Construction				Legacy				Mortgage				Lease financing				Consumer				Total		[2]
Specific ALLL				$	11,738			$	289			$	57			$	29,063			$	793			$	17,046			$	58,986
Impaired loans		[1]		$	556,329			$	91,710			$	48,890			$	382,880			$	6,104			$	140,108			$	1,226,021
Specific ALLL to impaired loans		[1]			2.11	%			0.32	%			0.12	%			7.59	%			12.99	%			12.17	%			4.81	%
General ALLL				$	357,694			$	8,192			$	46,171			$	73,198			$	3,858			$	142,264			$	631,377
Loans held-in-portfolio, excluding impaired loans		[1]		$	9,416,998			$	148,229			$	599,519			$	5,135,580			$	542,602			$	3,533,647			$	19,376,575
General ALLL to loans held-in-portfolio, excluding impaired loans		[1]			3.80	%			5.53	%			7.70	%			1.43	%			0.71	%			4.03	%			3.26	%
Total ALLL				$	369,432			$	8,481			$	46,228			$	102,261			$	4,651			$	159,310			$	690,363
Total non-covered loans held-in-portfolio		[1]		$	9,973,327			$	239,939			$	648,409			$	5,518,460			$	548,706			$	3,673,755			$	20,602,596
ALLL to loans held-in-portfolio		[1]			3.70	%			3.53	%			7.13	%			1.85	%			0.85	%			4.34	%			3.35	%
[1] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank FDIC-assisted transaction. As of December 31, 2011, the general allowance on the covered loans amounted to $98 million, while the specific reserve amounted to $27 million.
Variance March 31, 2012 versus December 31, 2011
(Dollars in thousands)				Commercial				Construction				Legacy				Mortgage				Lease financing				Consumer				Total
Specific ALLL				$	1,260			$	724			$	708			$	11,883			$	551			$	1,944			$	17,070
Impaired loans				$	(4,177)			$	(27,561)			$	(1,159)			$	67,874			$	(692)			$	(1,908)			$	32,377
General ALLL				$	(57,113)			$	(72)			$	7,789			$	11,335			$	(235)			$	(4,369)			$	(42,665)
Loans held-in-portfolio, excluding impaired loans				$	(100,908)			$	24,201			$	(43,376)			$	5,411			$	(4,700)			$	(36,927)			$	(156,299)
Total ALLL				$	(55,853)			$	652			$	8,497			$	23,218			$	316			$	(2,425)			$	(25,595)
Total non-covered loans held-in-portfolio				$	(105,085)			$	(3,360)			$	(44,535)			$	73,285			$	(5,392)			$	(38,835)			$	(123,922)

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table K – Allowance for Loan Losses – Breakdown of general and specific reserves – PUERTO RICO OPERATIONS
(Unaudited)
As of March 31, 2012
Puerto Rico
(In thousands)			Commercial				Construction				Mortgage				Lease financing				Consumer				Total
Allowance for credit losses:
	Specific ALLL non-covered loans		$	11,115			$	1,013			$	27,096			$	1,344			$	18,887			$	59,455
	General ALLL non-covered loans			210,214				5,658				69,411				3,623				99,175				388,081
ALLL – non-covered loans				221,329				6,671				96,507				4,967				118,062				447,536
	Specific ALLL covered loans			22,719				–				–				–				–				22,719
	General ALLL covered loans			67,351				29,727				10,517				–				8,182				115,777
ALLL – covered loans				90,070				29,727				10,517				–				8,182				138,496
Total ALLL			$	311,399			$	36,398			$	107,024			$	4,967			$	126,244			$	586,032
Loans held-in-portfolio:
	Impaired non-covered loans		$	402,097			$	51,023			$	396,854			$	5,412			$	135,745			$	991,131
	Non-covered loans held-in-portfolio, excluding impaired loans			6,027,572				124,745				4,363,491				537,902				2,815,758				13,869,468
Non-covered loans held-in-portfolio				6,429,669				175,768				4,760,345				543,314				2,951,503				14,860,599
	Impaired covered loans			72,605				–				–				–				–				72,605
	Covered loans held-in-portfolio, excluding impaired loans			2,359,096				532,433				1,150,996				–				106,658				4,149,183
Covered loans held-in-portfolio				2,431,701				532,433				1,150,996				–				106,658				4,221,788
Total loans held-in-portfolio			$	8,861,370			$	708,201			$	5,911,341			$	543,314			$	3,058,161			$	19,082,387
As of December 31, 2011
Puerto Rico
(In thousands)			Commercial				Construction				Mortgage				Lease financing				Consumer				Total
Allowance for credit losses:
	Specific ALLL non-covered loans		$	10,407			$	289			$	14,944			$	793			$	16,915			$	43,348
	General ALLL non-covered loans			245,046				5,561				57,378				3,858				98,211				410,054
ALLL – non-covered loans				255,453				5,850				72,322				4,651				115,126				453,402
	Specific ALLL covered loans			27,086				–				–				–				–				27,086
	General ALLL covered loans			67,386				20,435				5,310				–				4,728				97,859
ALLL – covered loans				94,472				20,435				5,310				–				4,728				124,945
Total ALLL			$	349,925			$	26,285			$	77,632			$	4,651			$	119,854			$	578,347
Loans held-in-portfolio:
	Impaired non-covered loans		$	403,089			$	49,747			$	333,346			$	6,104			$	137,582			$	929,868
	Non-covered loans held-in-portfolio, excluding impaired loans			6,067,493				111,194				4,356,137				542,602				2,832,845				13,910,271
Non-covered loans held-in-portfolio				6,470,582				160,941				4,689,483				548,706				2,970,427				14,840,139
	Impaired covered loans			76,798				–				–				–				–				76,798
	Covered loans held-in-portfolio, excluding impaired loans			2,435,944				546,826				1,172,954				–				116,181				4,271,905
Covered loans held-in-portfolio				2,512,742				546,826				1,172,954				–				116,181				4,348,703
Total loans held-in-portfolio			$	8,983,324			$	707,767			$	5,862,437			$	548,706			$	3,086,608			$	19,188,842
Variance March 31, 2012 versus December 31, 2011
(In thousands)			Commercial				Construction				Mortgage				Lease financing				Consumer				Total
Allowance for credit losses:
	Specific ALLL non-covered loans		$	708			$	724			$	12,152			$	551			$	1,972			$	16,107
	General ALLL non-covered loans			(34,832	)			97				12,033				(235	)			964				(21,973	)
ALLL – non-covered loans				(34,124	)			821				24,185				316				2,936				(5,866	)
	Specific ALLL covered loans			(4,367	)			–				–				–				–				(4,367	)
	General ALLL covered loans			(35	)			9,292				5,207				–				3,454				17,918
ALLL – covered loans				(4,402	)			9,292				5,207				–				3,454				13,551
Total ALLL			$	(38,526	)		$	10,113			$	29,392			$	316			$	6,390			$	7,685
Loans held-in-portfolio:
	Impaired non-covered loans		$	(992	)		$	1,276			$	63,508			$	(692	)		$	(1,837	)		$	61,263
	Non-covered loans held-in-portfolio, excluding impaired loans			(39,921	)			13,551				7,354				(4,700	)			(17,087	)			(40,803	)
Non-covered loans held-in-portfolio				(40,913	)			14,827				70,862				(5,392	)			(18,924	)			20,460
	Impaired covered loans			(4,193	)			–				–				–				–				(4,193	)
	Covered loans held-in-portfolio, excluding impaired loans			(76,848	)			(14,393	)			(21,958	)			–				(9,523	)			(122,722	)
Covered loans held-in-portfolio				(81,041	)			(14,393	)			(21,958	)			–				(9,523	)			(126,915	)
Total loans held-in-portfolio			$	(121,954	)		$	434			$	48,904			$	(5,392	)		$	(28,447	)		$	(106,455	)

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table L – Allowance for Loan Losses – Breakdown of general and specific reserves – U.S. MAINLAND OPERATIONS
(Unaudited)
As of March 31, 2012
U.S. Mainland
(In thousands)				Commercial				Construction				Legacy				Mortgage				Consumer				Total
Allowance for credit losses:
	Specific ALLL			$	1,883			$	–			$	765			$	13,850			$	103			$	16,601
	General ALLL				90,367				2,462				53,960				15,122				38,720				200,631
Total ALLL				$	92,250			$	2,462			$	54,725			$	28,972			$	38,823			$	217,232
Loans held-in-portfolio:
	Impaired loans			$	150,055			$	13,126			$	47,731			$	53,900			$	2,455			$	267,267
	Loans held-in-portfolio, excluding impaired loans				3,288,518				47,685				556,143				777,500				680,962				5,350,808
Total loans held-in-portfolio				$	3,438,573			$	60,811			$	603,874			$	831,400			$	683,417			$	5,618,075
As of December 31, 2011
U.S. Mainland
(In thousands)				Commercial				Construction				Legacy				Mortgage				Consumer				Total
Allowance for credit losses:
	Specific ALLL			$	1,331			$	–			$	57			$	14,119			$	131			$	15,638
	General ALLL				112,648				2,631				46,171				15,820				44,053				221,323
Total ALLL				$	113,979			$	2,631			$	46,228			$	29,939			$	44,184			$	236,961
Loans held-in-portfolio:
	Impaired loans			$	153,240			$	41,963			$	48,890			$	49,534			$	2,526			$	296,153
	Loans held-in-portfolio, excluding impaired loans				3,349,505				37,035				599,519				779,443				700,802				5,466,304
Total loans held-in-portfolio				$	3,502,745			$	78,998			$	648,409			$	828,977			$	703,328			$	5,762,457
Variance March 31, 2012 versus December 31, 2011
(In thousands)				Commercial				Construction				Legacy				Mortgage				Consumer				Total
Allowance for credit losses:
	Specific ALLL			$	552			$	–			$	708			$	(269	)		$	(28	)		$	963
	General ALLL				(22,281	)			(169	)			7,789				(698	)			(5,333	)			(20,692	)
Total ALLL				$	(21,729	)		$	(169	)		$	8,497			$	(967	)		$	(5,361	)		$	(19,729	)
Loans held-in-portfolio:
	Impaired loans			$	(3,185	)		$	(28,837	)		$	(1,159	)		$	4,366			$	(71	)		$	(28,886	)
	Loans held-in-portfolio, excluding impaired loans				(60,987	)			10,650				(43,376	)			(1,943	)			(19,840	)			(115,496	)
Total loans held-in-portfolio				$	(64,172	)		$	(18,187	)		$	(44,535	)		$	2,423			$	(19,911	)		$	(144,382	)

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table M – Reconciliation to GAAP Financial Measures
(Unaudited)
(In thousands, except share or per share information)		March 31, 2012					December 31, 2011					March 31, 2011
Total stockholders’ equity		$	3,967,071				$	3,918,753				$	3,804,906
Less: Preferred stock			(50,160	)				(50,160	)				(50,160	)
Less: Goodwill			(647,911	)				(648,350	)				(647,387	)
Less: Other intangibles			(61,798	)				(63,954	)				(56,441	)
Total tangible common equity		$	3,207,202				$	3,156,289				$	3,050,918
Total assets		$	37,049,221				$	37,348,432				$	38,829,793
Less: Goodwill			(647,911	)				(648,350	)				(647,387	)
Less: Other intangibles			(61,798	)				(63,954	)				(56,441	)
Total tangible assets		$	36,339,512				$	36,636,128				$	38,125,965
Tangible common equity to tangible assets			8.83	%				8.62	%				8.00	%
Common shares outstanding at end of period			1,027,117,068					1,025,904,567					1,023,416,118
Tangible book value per common share		$	3.12				$	3.08				$	2.98
(In thousands)		March 31, 2012					December 31, 2011					March 31, 2011
Common stockholders’ equity		$	3,916,911				$	3,868,593				$	3,754,746
Less: Unrealized gains on available-for-sale securities, net of tax	[1]		(196,878	)				(203,078	)				(141,747	)
Less: Disallowed deferred tax assets	[2]		(257,440	)				(249,325	)				(143,137	)
Less: Intangible assets:
Goodwill			(647,911	)				(648,350	)				(647,387	)
Other disallowed intangibles			(26,149	)				(29,655	)				(25,649	)
Less: Aggregate adjusted carrying value of all non-financial equity investments			(1,175	)				(1,189	)				(1,612	)
Add: Pension liability adjustment, net of tax and accumulated net gains (losses) on cash flow hedges	[3]		211,747					216,798					128,091
Total Tier 1 common equity		$	2,999,105				$	2,953,794				$	2,923,305
[1] In accordance with regulatory risk-based capital guidelines, Tier 1 capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale equity securities with readily determinable fair values. In arriving at Tier 1 capital, institutions are required to deduct net unrealized losses on available-for-sale equity securities with readily determinable fair values, net of tax.
[2] Approximately $138 million of the Corporation’s $424 million of net deferred tax assets at March 31, 2012 (March 31, 2011 – $106 million and $250 million, respectively; December 31, 2011 – $150 million and $430 million, respectively), were included without limitation in regulatory capital pursuant to the risk-based capital guidelines, while approximately $257 million of such assets at March 31, 2012 (March 31, 2011 – $143 million; December 31, 2011 – $249 million) exceeded the limitation imposed by these guidelines and, as “disallowed deferred tax assets”, were deducted in arriving at Tier 1 capital. The remaining $29 million of the Corporation’s other net deferred tax assets at March 31, 2012 (March 31, 2011 – $1 million; December 31, 2011 – $31 million) represented primarily the following items (a) the deferred tax effects of unrealized gains and losses on available-for-sale debt securities, which are permitted to be excluded prior to deriving the amount of net deferred tax assets subject to limitation under the guidelines; (b) the deferred tax asset corresponding to the pension liability adjustment recorded as part of accumulated other comprehensive income; and (c) the deferred tax liability associated with goodwill and other intangibles.
[3] The Federal Reserve Bank has granted interim capital relief for the impact of pension liability adjustment.

Popular, Inc.
Financial Supplement to First Quarter 2012 Earnings Release
Table N – Financial Information – Westernbank Covered Loans
(Unaudited)
			Quarter ended
(In thousands)			March 31, 2012				December 31, 2011				Variance
Interest income:
Interest income on covered loans			$	74,764			$	88,424			$	(13,660	)
FDIC loss share (expense) income:
(Amortization) accretion of indemnification asset				(29,375	)			(24,217	)			(5,158	)
80% mirror accounting on provision for loan losses for reductions in expected cash flows that are reimbursable by the FDIC [1]				13,422				38,670				(25,248	)
80% mirror accounting on discount accretion on loans and unfunded commitments accounted for under ASC 310-20				(248	)			(302	)			54
Other				946				3,296				(2,350	)
	Total FDIC loss share (expense) income			(15,255	)			17,447				(32,702	)
Other non-interest income				310				1,092				(782	)
Total revenues				59,819				106,963				(47,144	)
Provision for loan losses				18,209				55,900				(37,691	)
Total revenues less provision for loan losses			$	41,610			$	51,063			$	(9,453	)
[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.
Quarterly average assets:			Quarter ended
(In millions)			March 31, 2012				December 31, 2011				Variance
Covered loans			$	4,292			$	4,401			$	(109	)
FDIC loss share asset				1,903				1,893				10
Note issued to the FDIC				–				344				(344	)
Activity in the carrying amount and accretable yield of covered loans accounted for under ASC 310-30
			Quarter								Quarter
			March 31, 2012								December 31, 2011
(In thousands)			Accretable yield				Carrying amount of loans				Accretable yield				Carrying amount of loans
Beginning balance			$	1,470,259			$	3,952,994			$	1,496,565			$	4,076,913
Accretion				(69,337	)			69,337				(82,866	)			82,866
Changes in expected cash flows				141,597								56,560
Collections								(127,426	)							(123,308	)
Ending balance				1,542,519				3,894,905				1,470,259				4,036,471
	Allowance for loan losses – ASC 310-30 covered loans							(94,559	)							(83,477	)
Ending balance, net of allowance for loan losses			$	1,542,519			$	3,800,346			$	1,470,259			$	3,952,994