Popular is popular, and not just in Puerto Rico. Founded in 1893, Popular is the holding company for Banco Popular de Puerto Rico (BPPR), the largest bank on the island, with approximately 200 branches. In addition to offering commercial and retail banking, BPPR owns subsidiaries that specialize in vehicle financing and leasing (Popular Auto), insurance (Popular Insurance), financial advisory and brokerage services (Popular Securities), and mortgages (Popular Mortgage). Popular also owns Banco Popular North America (BPNA), which targets the US Hispanic population from about 100 branches in California, Florida, Illinois, New Jersey, and New York.
Popular's net income in 2011 was $151.3 million, a significant improvement over the nearly $1.6 billion it lost amidst the economic recession and deteriorating credit markets of 2008 and 2009. BPPR itself netted $231 million, another marked improvement over the previous year's earnings of $47 million. The bank was able to shrink its provision for loan losses by $436 million, which helped contribute to the positive results. BPNA had its first profitable year since the downturn, netting $30 million. Popular's revenues, though, have been up and down over the past few years, and shrunk some 22% to $2.5 billion in 2011.
As a result of the company's losses, Popular exited some lines of business, such as its small consumer loan unit Popular Finance and the assets of the US-based Popular Equipment Finance. Indeed, most of the company's reductions were made in the US. Popular cut some 40% of its workforce there, decreased its branch network from nearly 140 to about 100, and exited Texas. It also sold some $1.2 million in loans and servicing assets of its US mortgage subsidiary Popular Financial Holdings to affiliates of Goldman Sachs. That deal provided Popular with more than $700 million in additional liquidity, and Popular has continued to seek other sale opportunities.
BPNA's online mortgage, home equity, and auto lender E-LOAN, which Popular had high hopes for, suffered the most during the downturn. In response, E-LOAN shut down its subprime lending business and sold off the operations of its Equity One consumer finance division to an affiliate of AIG; E-LOAN continues to market deposit accounts for BPNA. The moves helped the company raise needed capital to prevent being placed in FDIC-administered receivership in a time when regulators aggressively sought to shut down weak banks.
To broaden its target audience beyond the Hispanic community, Popular rebranded itself in the US, switching its name from "Banco Popular" to "Popular Community Bank". The change, which was initially begun in pilot markets in 2010, was completed officially in 2012 when the company changed its name in New York City.
While Popular narrowed the scope of its US mainland operations, it also began looking to grow and focus on core retail banking services at home. In 2010 Popular cemented its position as Puerto Rico's top bank when it acquired W Holding's Westernbank in an FDIC-assisted transaction. The deal added nearly $12 billion in assets and 50 branches to Popular's network in Puerto Rico.
To raise further funds, Popular sold a majority stake in financial transaction processing and consulting services subsidiary EVERTEC to Apollo Global Management for some $900 million in 2010. Popular retained 49% of EVERTEC, which processes more than 1 billion transactions each year in the US, Latin America, and the Caribbean. The unit is eyeing expansion in Central America, especially Mexico. – less
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