UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-34084

POPULAR, INC.

 

(Exact name of registrant as specified in its charter)

Puerto Rico		66-0667416
(State or other jurisdiction of		(IRS Employer Identification Number)
incorporation or organization)
Popular Center Building
209 Muñoz Rivera Avenue, Hato Rey
San Juan, Puerto Rico		00918
(Address of principal executive offices)		(Zip code)

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     þ Yes          o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

     o Yes          o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer, large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

     o Yes          þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock $0.01 par value 639,539,900 shares outstanding as of May 5, 2010.

 

 

POPULAR, INC.
INDEX

		Page
Part I — Financial Information
Item 1. Financial Statements
Unaudited Consolidated Statements of Condition as of March 31, 2010, December 31, 2009 and March 31, 2009			4
Unaudited Consolidated Statements of Operations for the quarters ended March 31, 2010 and 2009			5
Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the quarters ended March 31, 2010 and 2009			6
Unaudited Consolidated Statements of Comprehensive (Loss) Income for the quarters ended March 31, 2010 and 2009			7
Unaudited Consolidated Statements of Cash Flows for the quarters ended March 31, 2010 and 2009			8
Notes to Unaudited Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			78
Item 3. Quantitative and Qualitative Disclosures about Market Risk			117
Item 4. Controls and Procedures			123
Part II — Other Information
Item 1. Legal Proceedings			123
Item 1A. Risk Factors			125
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			127
Item 6. Exhibits			128
Signatures			129
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Forward-Looking Information

The information included in this Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to Popular, Inc’s (the “Corporation”) financial condition, results of operations, plans, objectives, future performance and business, including, but not limited to, statements with respect to the adequacy of the allowance for loan losses, market risk and the impact of interest rate changes, capital markets conditions, capital adequacy and liquidity, and the effect of legal proceedings and new accounting standards on the Corporation’s financial condition and results of operations. All statements contained herein that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may,” or similar expressions are generally intended to identify forward-looking statements.

These statements are not guarantees of future performance and involve certain risks, uncertainties, estimates and assumptions by management that are difficult to predict.

Various factors, some of which are beyond Popular’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Factors that might cause such a difference include, but are not limited to:

	•		the rate of growth in the economy and employment levels, as well as general business and economic conditions;
	•		difficulties in combining the operations of acquired entities, including in connection with our acquisition of certain assets and assumption of certain liabilities of Westernbank Puerto Rico from the FDIC;
	•		changes in interest rates, as well as the magnitude of such changes;
	•		the fiscal and monetary policies of the federal government and its agencies;
	•		changes in federal bank regulatory and supervisory policies, including required levels of capital;
	•		regulatory approvals that may be necessary to undertake certain actions or consummate strategic transactions such as acquisitions and dispositions;
	•		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;
	•		the performance of the stock and bond markets;
	•		competition in the financial services industry;
	•		additional Federal Deposit Insurance Corporation (“FDIC”) assessments; and
	•		possible legislative, tax or regulatory changes.

Investors should refer to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2009 as well as “Part II, Item 1A” of this Form 10-Q for a discussion of such factors and certain risks and uncertainties to which the Corporation is subject.

Moreover, the outcome of legal proceedings, as discussed in “Part II, Item I. Legal Proceedings,” is inherently uncertain and depends on judicial interpretations of law and the findings of regulators, judges and juries.

All forward-looking statements included in this document are based upon information available to the Corporation as of the date of this document, and other than as required by law, including the requirements of applicable securities laws, we assume no obligation to update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

ITEM 1. FINANCIAL STATEMENTS

POPULAR, INC.
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)

(In thousands, except share information)		March 31, 2010				December 31, 2009				March 31, 2009
ASSETS
Cash and due from banks		$	592,175			$	677,330			$	703,483
Money market investments:
Federal funds sold			—				159,807				175,403
Securities purchased under agreements to resell			304,109				293,125				319,702
Time deposits with other banks			700,644				549,865				930,366
Total money market investments			1,004,753				1,002,797				1,425,471
Trading account securities, at fair value:
Pledged securities with creditors’ right to repledge			346,819				415,653				533,665
Other trading securities			33,330				46,783				162,982
Investment securities available-for-sale, at fair value:
Pledged securities with creditors’ right to repledge			2,193,615				2,330,441				2,455,629
Other investment securities available-for-sale			4,342,131				4,364,273				4,508,609
Investment securities held-to-maturity, at amortized cost (fair value at March 31, 2010 — $207,850; December 31, 2009 - $213,146; March 31, 2009 — $314,580)			209,596				212,962				318,894
Other investment securities, at lower of cost or realizable value (realizable value at March 31, 2010 - $158,375; December 31, 2009 - $165,497; March 31, 2009 - $268,278)			156,864				164,149				222,013
Loans held-for-sale measured at lower of cost or fair value			106,412				90,796				308,206
Loans held-in-portfolio			23,189,598				23,827,263				25,355,753
Less — Unearned income			111,299				114,150				117,767
Allowance for loan losses			1,277,036				1,261,204				1,057,125
Total loans held-in-portfolio, net			21,801,263				22,451,909				24,180,861
Premises and equipment, net			579,451				584,853				624,212
Other real estate			134,887				125,483				95,773
Accrued income receivable			131,243				126,080				142,114
Servicing assets (at fair value on March 31, 2010 - $173,359; December 31, 2009 - $169,747; March 31, 2009 - $177,295)			175,776				172,505				181,095
Other assets (See Note 9)			1,378,011				1,322,159				1,177,078
Goodwill			604,349				604,349				606,440
Other intangible assets			41,762				43,803				50,867
Assets from discontinued operations			—				—				12,036
Total assets		$	33,832,437			$	34,736,325			$	37,709,428
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing		$	4,476,255			$	4,495,301			$	4,372,366
Interest bearing			20,884,057				21,429,593				22,777,401
Total deposits			25,360,312				25,924,894				27,149,767
Assets sold under agreements to repurchase			2,491,506				2,632,790				2,881,997
Other short-term borrowings			23,263				7,326				29,453
Notes payable			2,529,092				2,648,632				3,399,063
Other liabilities			941,063				983,866				1,104,813
Liabilities from discontinued operations			—				—				12,421
Total liabilities			31,345,236				32,197,508				34,577,514
Commitments and contingencies (See Note 15)
Stockholders’ equity:
Preferred stock, 30,000,000 shares authorized; 2,006,391 shares issued and outstanding at March 31, 2010 and December 31, 2009 (March 31, 2009 — 24,410,000) (aggregate liquidation preference value at March 31, 2010 and December 31, 2009 - $50,160 (March 31, 2009 - $1,521,875)			50,160				50,160				1,485,287
Common stock, $0.01 par value per share at March 31, 2010 and December 31, 2009 (March 31, 2009 - $6 par value); 700,000,000 shares authorized at March 31, 2010 and December 31, 2009 (March 31, 2009 — 470,000,000); 639,544,895 shares issued at March 31, 2010 and December 31, 2009 (March 31, 2009 — 282,034,819) and 639,539,900 outstanding at March 31, 2010 (December 31, 2009 — 639,540,105; March 31, 2009 - 282,034,819)			6,395				6,395				1,692,209
Surplus			2,804,238				2,804,238				496,455
Accumulated deficit			(377,807	)			(292,752	)			(451,355	)
Treasury stock — at cost, 4,995 shares as of March 31, 2010 (December 31, 2009 — 4,790 shares)			(16	)			(15	)			—
Accumulated other comprehensive income (loss), net of tax of ($29,809) (December 31, 2009 — ($33,964); March 31, 2009 — ($61,563))			4,231				(29,209	)			(90,682	)
Total stockholders’ equity			2,487,201				2,538,817				3,131,914
Total liabilities and stockholders’ equity		$	33,832,437			$	34,736,325			$	37,709,428

The accompanying notes are an integral part of these unaudited consolidated financial statements.

POPULAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

		Quarter ended
		March 31,
(In thousands, except per share information)		2010				2009
INTEREST INCOME:
Loans		$	354,649			$	401,768
Money market investments			1,042				3,133
Investment securities			64,926				73,483
Trading account securities			6,578				10,808
Total interest income			427,195				489,192
INTEREST EXPENSE:
Deposits			92,974				148,039
Short-term borrowings			15,259				20,703
Long-term debt			50,045				47,964
Total interest expense			158,278				216,706
Net interest income			268,917				272,486
Provision for loan losses			240,200				372,529
Net interest income after provision for loan losses			28,717				(100,043	)
Service charges on deposit accounts			50,578				53,741
Other service fees (See Note 20)			101,320				98,533
Net gain on sale and valuation adjustments of investment securities			81				176,146
Trading account (loss) profit			(223	)			6,823
Loss on sale of loans, including adjustments to indemnity reserves, and valuation adjustments on loans held-for-sale			(12,222	)			(13,813	)
Other operating income			18,332				13,301
			186,583				234,688
OPERATING EXPENSES:
Personnel costs:
Salaries			95,873				105,323
Pension and other benefits			25,059				39,968
Total personnel costs			120,932				145,291
Net occupancy expenses			28,876				26,441
Equipment expenses			23,453				26,104
Other taxes			12,304				13,176
Professional fees			27,049				24,901
Communications			10,772				11,827
Business promotion			8,295				7,910
Printing and supplies			2,369				2,790
FDIC deposit insurance			15,318				9,117
Other operating expenses			29,496				34,234
Amortization of intangibles			2,049				2,406
Total operating expenses			280,913				304,197
Loss from continuing operations before income tax			(94,330	)			(69,509	)
Income tax benefit			(9,275	)			(26,933	)
Loss from continuing operations			(85,055	)			(42,576	)
Loss from discontinued operations, net of income tax			—				(9,946	)
NET LOSS			($85,055	)			($52,522	)
NET LOSS APPLICABLE TO COMMON STOCK			($85,055	)			($77,200	)
NET LOSS PER COMMON SHARE — BASIC AND DILUTED:
Net loss from continuing operations			($0.13	)			($0.24	)
Net loss from discontinued operations			—				(0.03	)
Net loss per common share			($0.13	)			($0.27	)
DIVIDENDS DECLARED PER COMMON SHARE			—			$	0.02

The accompanying notes are an integral part of these unaudited consolidated financial statements.

POPULAR, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)

		Quarter ended March 31,
(In thousands)		2010				2009
Preferred stock:
Balance at beginning of year		$	50,160			$	1,483,525
Accretion of Series C preferred stock discount			—				1,762
Balance at end of period			50,160				1,485,287
Common stock:
Balance at beginning of year			6,395				1,773,792
Treasury stock retired			—				(81,583	)
Balance at end of period			6,395				1,692,209
Surplus:
Balance at beginning of year			2,804,238				621,879
Stock options expense on unexercised options, net of forfeitures			—				132
Treasury stock retired			—				(125,556	)
Balance at end of period			2,804,238				496,455
Accumulated deficit:
Balance at beginning of year			(292,752	)			(374,488	)
Net loss			(85,055	)			(52,522	)
Cash dividends declared on common stock			—				(5,641	)
Cash dividends declared on preferred stock			—				(16,942	)
Accretion of Series C preferred stock discount			—				(1,762	)
Balance at end of period			(377,807	)			(451,355	)
Accumulated other comprehensive income (loss):
Balance at beginning of year			(29,209	)			(28,829	)
Other comprehensive income (loss), net of tax			33,440				(61,853	)
Balance at end of period			4,231				(90,682	)
Treasury stock — at cost:
Balance at beginning of year			(15	)			(207,515	)
Purchase of common stock			(1	)			(1	)
Reissuance of common stock			—				377
Treasury stock retired			—				207,139
Balance at end of period			(16	)			—
Total stockholders’ equity		$	2,487,201			$	3,131,914

Disclosure of changes in number of shares:

		March 31,				December 31,				March 31,
		2010				2009				2009
Preferred Stock:
Balance at beginning of year			2,006,391				24,410,000				24,410,000
Preferred stock — Series A and B exchanged for common stock			—				(21,468,609	)			—
Preferred stock — Series C exchanged for trust preferred securities			—				(935,000	)			—
Balance at end of period			2,006,391				2,006,391				24,410,000
Common Stock — Issued:
Balance at beginning of year			639,544,895				295,632,080				295,632,080
Treasury stock retired			—				(13,597,261	)			(13,597,261	)
Shares issued in exchange of Series A and B preferred stock and early extinguishment of debt (exchange of trust preferred securities for common stock)			—				357,510,076				—
Balance at end of period			639,544,895				639,544,895				282,034,819
Treasury stock			(4,995	)			(4,790	)			—
Common Stock — outstanding			639,539,900				639,540,105				282,034,819

The accompanying notes are an integral part of these unaudited consolidated financial statements.

POPULAR, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)

		Quarter ended
		March 31,
(In thousands)		2010				2009
Net loss			($85,055	)			($52,522	)
Other comprehensive income (loss) before tax:
Foreign currency translation adjustment			954				120
Adjustment of pension and postretirement benefit plans			1,750				61,240
Unrealized holding gains on securities available-for-sale arising during the period			36,111				15,313
Reclassification adjustment for losses (gains) included in net loss			10				(176,146	)
Unrealized net losses on cash flow hedges			(31	)			(1,586	)
Reclassification adjustment for (gains) losses included in net loss			(1,199	)			2,414
Other comprehensive income (loss) before tax:			37,595				(98,645	)
Income tax (expense) benefit			(4,155	)			36,792
Total other comprehensive income (loss), net of tax			33,440				(61,853	)
Comprehensive loss, net of tax			($51,615	)			($114,375	)

Tax effects allocated to each component of other comprehensive income (loss):

		Quarter ended
		March 31,
(In thousands)		2010				2009
Underfunding of pension and postretirement benefit plans			($883	)			($22,783	)
Unrealized holding gains on securities available-for-sale arising during the period			(3,748	)			(2,757	)
Reclassification adjustment for losses (gains) included in net loss			(4	)			62,462
Unrealized net losses on cash flows hedges			12				618
Reclassification adjustment for (gains) losses included in net loss			468				(748	)
Income tax (expense) benefit			($4,155	)		$	36,792

Disclosure of accumulated other comprehensive income (loss):

		March 31,				December 31,				March 31,
(In thousands)		2010				2009				2009
Foreign currency translation adjustment			($39,722	)			($40,676	)			($38,948	)
Underfunding of pension and postretirement benefit plans			(126,036	)			(127,786	)			(198,969	)
Tax effect			47,683				48,566				76,858
Underfunding of pension and postretirement benefit plans, net of tax			(78,353	)			(79,220	)			(122,111	)
Unrealized holding gains on securities available-for-sale			140,211				104,090				89,141
Tax effect			(17,886	)			(14,134	)			(15,913	)
Unrealized holding gains on securities available-for-sale, net of tax			122,325				89,956				73,228
Unrealized (losses) gains on cash flows hedges			(31	)			1,199				(3,469	)
Tax effect			12				(468	)			618
Unrealized (losses) gains on cash flows hedges, net of tax			(19	)			731				(2,851	)
Accumulated other comprehensive income (loss)		$	4,231				($29,209	)			($90,682	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

POPULAR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		Quarter ended
		March 31,
(In thousands)		2010				2009
Cash flows from operating activities:
Net loss			($85,055	)			($52,522	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of premises and equipment			15,391				17,049
Provision for loan losses			240,200				372,529
Amortization of intangibles			2,049				2,406
Amortization and fair value adjustments of servicing assets			470				5,257
Amortization of discount on junior subordinated debentures			5,084				—
Net gain on sale and valuation adjustments of investment securities			(81	)			(176,146	)
Gains from changes in fair value related to instruments measured at fair value pursuant to the fair value option			—				(816	)
Net gain on disposition of premises and equipment			(1,645	)			(76	)
Net loss on sale of loan, including adjustments to indemnity reserves and valuation adjustments on loans held-for-sale			12,222				13,073
Net amortization of premiums and accretion of discounts on investments			6,099				4,288
Net amortization of premiums and deferred loan origination fees and costs			1,783				763
Earnings from investments under the equity method			(7,716	)			(3,493	)
Stock options expense			—				132
Deferred income taxes, net of valuation			(20,168	)			(50,497	)
Net disbursements on loans held-for-sale			(166,868	)			(317,338	)
Acquisitions of loans held-for-sale			(59,436	)			(113,360	)
Proceeds from sale of loans held-for-sale			21,654				26,901
Net decrease in trading securities			221,975				212,367
Net (increase) decrease in accrued income receivable			(5,163	)			14,039
Net decrease in other assets			5,592				52,769
Net decrease in interest payable			(16,357	)			(13,936	)
Net increase in postretirement benefit obligation			1,097				868
Net (decrease) increase in other liabilities			(5,983	)			46,550
Total adjustments			250,199				93,329
Net cash provided by operating activities			165,144				40,807
Cash flows from investing activities:
Net increase in money market investments			(1,979	)			(630,817	)
Purchases of investment securities:
Available-for-sale			(208,004	)			(2,939,134	)
Held-to-maturity			(31,844	)			(25,770	)
Other			(8,191	)			(17,701	)
Proceeds from calls, paydowns, maturities and redemptions of investment securities:
Available-for-sale			373,676				363,863
Held-to-maturity			35,229				1,669
Other			15,476				13,355
Proceeds from sale of investment securities available-for-sale			—				3,546,944
Net repayments on loans			398,734				349,877
Proceeds from sale of loans			6,398				278,481
Acquisition of loan portfolios			(39,611	)			(4,883	)
Mortgage servicing rights purchased			(182	)			(327	)
Acquisition of premises and equipment			(15,049	)			(23,186	)
Proceeds from sale of premises and equipment			6,707				2,807
Proceeds from sale of foreclosed assets			32,905				34,915
Net cash provided by investing activities			564,265				950,093
Cash flows from financing activities:
Net decrease in deposits			(564,592	)			(396,730	)
Net decrease in assets sold under agreements to repurchase			(141,284	)			(669,611	)
Net increase in other short-term borrowings			15,937				24,519
Payments of notes payable			(124,624	)			(47,938	)
Proceeds from issuance of notes payable			—				60,238
Dividends paid			—				(42,881	)
Treasury stock acquired			(1	)			(1	)
Net cash used in financing activities			(814,564	)			(1,072,404	)
Net decrease in cash and due from banks			(85,155	)			(81,504	)
Cash and due from banks at beginning of period			677,330				784,987
Cash and due from banks at end of period		$	592,175			$	703,483

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Note: The Consolidated Statement of Cash Flows for the quarter ended March 31, 2009 includes the cash flows from operating, investing and financing activities associated with discontinued operations.

Notes to Unaudited Consolidated Financial Statements

Note 1 — Nature of Operations and Basis of Presentation

Note 2 — Adoption of New Accounting Standards and Issued But Not Yet Effective Accounting Standards

Note 3 — Discontinued Operations

Note 4 — Restrictions on Cash and Due from Banks and Certain Securities

Note 5 — Pledged Assets

Note 6 — Investment Securities Available-For-Sale

Note 7 — Investment Securities Held-to-Maturity

Note 8 — Transfers of Financial Assets and Mortgage Servicing Rights

Note 9 — Other Assets

Note 10 — Goodwill and Other Intangible Assets

Note 11 — Derivative Instruments and Hedging Activities

Note 12 — Borrowings

Note 13 — Trust Preferred Securities

Note 14 — Stockholders’ Equity

Note 15 — Commitments, Contingencies and Guarantees

Note 16 — Non-consolidated Variable Interest Entities

Note 17 — Fair Value Measurement

Note 18 — Fair Value of Financial Instruments

Note 19 — Net Loss per Common Share

Note 20 — Other Service Fees

Note 21 — Pension and Postretirement Benefits

Note 22 — Stock-Based Compensation

Note 23 — Income Taxes

Note 24 — Supplemental Disclosure on the Consolidated Statements of Cash Flows

Note 25 — Segment Reporting

Note 26 — Subsequent Events

Note 27 — Condensed Consolidating Financial Information of Guarantor and Issuers of Registered Guaranteed Securities

Notes to Unaudited Consolidated Financial Statements

Note 1 — Nature of Operations and Basis of Presentation

Popular, Inc. (the “Corporation” or “Popular”) is a diversified, publicly owned financial holding company subject to the supervision and regulation of the Board of Governors of the Federal Reserve System. The Corporation has operations in Puerto Rico, the United States, the Caribbean and Latin America. In Puerto Rico, the Corporation provides retail and commercial banking services through its principal banking subsidiary, Banco Popular de Puerto Rico (“BPPR”), as well as auto and equipment leasing and financing, mortgage loans, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the United States, the Corporation operates Banco Popular North America (“BPNA”), including its wholly-owned subsidiary E-LOAN. BPNA is a community bank providing a broad range of financial services and products to the communities it serves. BPNA operates branches in New York, California, Illinois, New Jersey and Florida. E-LOAN markets deposit accounts under its name for the benefit of BPNA. The Corporation, through its subsidiary EVERTEC, provides transaction processing services throughout the Caribbean and Latin America, as well as internally servicing many of its subsidiaries’ system infrastructures and transactional processing businesses. On April 30, 2010, BPPR acquired certain assets and assumed certain liabilities of Puerto Rico-based Westernbank Puerto Rico (“Westernbank”) from the Federal Deposit Insurance Corporation (the “FDIC”) in an assisted transaction (herein, the “FDIC-assisted transaction”). Refer to Note 26 to these consolidated financial statements for additional information on this FDIC-assisted transaction. The financial impact of this acquisition is not recognized in the Corporation’s consolidated financial statements as of March 31, 2010.

The consolidated financial statements include the accounts of Popular, Inc. and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated interim financial statements have been prepared without audit. The statement of condition data as of December 31, 2009 was derived from audited financial statements. The unaudited interim financial statements are, in the opinion of management, a fair statement of the results for the periods reported and include all necessary adjustments, all of a normal recurring nature, for a fair statement of such results.

Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from the unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements of the Corporation for the year ended December 31, 2009, included in the Corporation’s Form 10-K filed on March 1, 2010 (the “2009 Annual Report”). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

Note 2 — Adoption of New Accounting Standards and Issued But Not Yet Effective Accounting Standards

FASB Accounting Standards Update 2009-16, Transfers and Servicing (Accounting Standards Codification (“ASC”) Topic 860) — Accounting for Transfer of Financial Assets (“ASU 2009-16”)

ASU 2009-16 amends previous guidance relating to transfers of financial assets and eliminates the concept of a qualifying special purpose entity, removes the exception for guaranteed mortgage securitizations when a transferor had not surrendered control over the transferred financial assets, changes the requirements for derecognizing financial assets, and includes additional disclosures requiring more information about transfers of financial assets in which entities have continuing exposure to the risks related to the transferred financial assets. Among the most significant amendments and additions to this guidance are changes to the conditions for sales of a financial asset which objective is to determine whether a transferor and its consolidated affiliates included in the financial statements have surrendered control over transferred financial assets or third-party beneficial interests; and the addition of the meaning of the term participating interest which represents a proportionate (pro rata) ownership interest in an entire financial asset. The requirements for sale accounting must be applied only to a financial asset in its entirety, a pool of financial assets in its entirety, or participating interests as defined in ASC Subparagraph 860-10-40-6A. This guidance must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and

annual reporting periods thereafter. Earlier application was prohibited. The recognition and measurement provisions should be applied to transfers that occur on or after the effective date. On and after the effective date, existing qualifying special-purpose entities should be evaluated for consolidation by reporting entities in accordance with the applicable consolidation guidance in the Codification. The Corporation adopted this new authoritative accounting guidance effective January 1, 2010. The Corporation evaluated transfers of financial assets executed during the quarter ended March 31, 2010 pursuant to the new accounting guidance, principally consisting of guaranteed mortgage securitizations (Government National Mortgage Association (“GNMA”) and Federal National Mortgage Association (“FNMA”) mortgage-backed securities), and determined that the adoption of ASU 2009-16 did not have a significant impact on the Corporation’s results of operations or financial position for such period.

A securitization of a financial asset, a participating interest in a financial asset, or a pool of financial assets in which the Corporation (and its consolidated affiliates) (a) surrenders control over the assets transferred and (b) receives cash or other proceeds is accounted for as a sale. Control is considered to be surrendered only if all three of the following conditions are met: (1) the assets have been legally isolated; (2) the transferee has the ability to pledge or exchange the assets; and (3) the transferor otherwise no longer maintains effective control over the assets. When the Corporation transfers financial assets and the transfer fails any one of the above criteria, the Corporation is prevented from derecognizing the transferred financial assets and the transaction is accounted for as a secured borrowing.

The Corporation recognizes and initially measures at fair value a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in either of the following situations: (1) a transfer of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset that meets the requirements for sale accounting, or (2) an acquisition or assumption of a servicing obligation of financial assets that do not pertain to the Corporation or its consolidated subsidiaries. Upon adoption of ASU 2009-16, the Corporation does not recognize either a servicing asset or a servicing liability if it transfers or securitizes financial assets in a transaction that does not meet the requirements for sale accounting and is accounted for as a secured borrowing.

Refer to Note 8 to the consolidated financial statements for disclosures on transfers of financial assets and servicing assets retained as part of guaranteed mortgage securitizations.

FASB Accounting Standards Update 2009-17, Consolidations (ASC Topic 810) — Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (“ASU 2009-17”) and FASB Accounting Standards Update 2010-10, Consolidation (ASC Topic 810): Amendments for Certain Investment Funds (“ASU 2010-10”)

ASU 2009-17 amends the guidance applicable to variable interest entities (“VIE”) and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. This guidance replaces a quantitative-based risks and rewards calculation for determining which entity, if any, has both (a) a controlling financial interest in a variable interest entity with an approach focused on identifying which entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. This guidance requires reconsideration of whether an entity is a variable interest entity when any changes in facts or circumstances occur such that the holders of the equity investment at risk, as a group, lose the power to direct the activities of the entity that most significantly impact the entity’s economic performance. It also requires ongoing assessments of whether a variable interest holder is the primary beneficiary of a variable interest entity. The amendments to the consolidated guidance affect all entities that were within the scope of the original guidance, as well as qualifying special-purpose entities (“QSPEs”) that were previously excluded from the guidance. ASU 2009-17 requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. The Corporation adopted this new authoritative accounting guidance effective January 1, 2010. The new accounting guidance on variable interest entities did not have an effect on the Corporation’s consolidated statement of condition or results of operations upon adoption.

The principal variable interest entities evaluated by the Corporation during the quarter ended March 31, 2010 included: (1) GNMA and FNMA guaranteed mortgage securitizations and for which management has concluded that the Corporation is not the primary beneficiary (refer to Note 16 to the consolidated financial statements) and (2) the trust preferred securities for which management believes that the Corporation does not possess a significant variable interest on the trusts (refer to Note 13 to the consolidated financial statements).

Additionally, the Corporation has variable interests in certain investments that have the attributes of investment companies, as well as limited partnership investments in venture capital companies. However, in January 2010, the FASB issued ASU 2010-10, Consolidation (ASC Topic 810), Amendment for Certain Investment Funds, which deferred the effective date of the provisions of ASU 2009-17 for a reporting entity’s interest in an entity that has all the attributes of an investment company; or for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies. The deferral allows asset managers that have no obligation to fund potentially significant losses of an investment entity to continue to apply the previous accounting guidance to investment entities that have the attributes of entities subject to ASC Topic 946 (the “Investment Company Guide”). The FASB also decided to defer the application of ASU 2009-17 for money market funds subject to Rule 2a-7 of the Investment Company Act of 1940. Asset managers would continue to apply the applicable existing guidance to those entities that qualify for the deferral. ASU 2010-10 did not defer the disclosure requirements in ASU 2009-17.

The Corporation was not required to consolidate existing variable interest entities for which it has a variable interest as of March 31, 2010. Refer to Note 16 to the consolidated financial statements for required disclosures associated with the guaranteed mortgage securitizations in which the Corporation holds a variable interest.

FASB Accounting Standards Update 2010-06, Fair Value Measurements and Disclosures (ASC Topic 820) - Improving Disclosures about Fair Value Measurements (“ASU 2010-06”)

ASU 2010-06, issued in January 2010, revises two disclosure requirements concerning fair value measurements and clarifies two others. It requires separate presentation of significant transfers into and out of Levels 1 and 2 of the fair value hierarchy and disclosure of the reasons for such transfers. It will also require the presentation of purchases, sales, issuances and settlements within Level 3 on a gross basis rather than a net basis. The amendments also clarify that disclosures should be disaggregated by class of asset or liability and that disclosures about inputs and valuation techniques should be provided for both recurring and non-recurring fair value measurements. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll-forward of activity in Level 3 fair value measurements, which are effective for interim and annual reporting periods beginning after December 15, 2010. This guidance

impacts disclosures only and will not have an effect on the Corporation’s consolidated statements of condition or results of operations. The Corporation’s disclosures about fair value measurements are presented in Note 17 to the consolidated financial statements.

FASB Accounting Standards Update 2010-11, Derivatives and Hedging (ASC Topic 815): Scope Exception Related to Embedded Credit Derivatives (“ASU 2010-11”)

ASU 2010-11 clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. The credit derivative that qualifies for the exemption is related only to the subordination of one financial instrument to another. As a result, entities that have contracts containing an embedded credit derivative feature in a form other than such subordination may need to separately account for the embedded credit derivative feature. The amendments in ASU 2010-11 are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after March 5, 2010. The Corporation does not expect that the adoption of this standard will have a significant effect, if any, on its consolidated financial statements.

FASB Accounting Standards Update 2010-18,Receivables (Accounting Standards Codification (“ASC”) Topic 310) — Effect of a Loan Modification When the Loan is Part of a Pool That is Accounted for as a Single Asset (“ASU 2010-18”)

The amendments in ASU 2010-18, issued in April 2010, affect any entity that acquires loans subject to ASC Subtopic 310-30, that accounts for some or all of those loans within pools, and that subsequently modifies one or more of those loans after acquisition. ASC Subtopic 310-30 provides guidance on accounting for acquired loans that have evidence of credit deterioration upon acquisition. As a result of the amendments in ASU 2010-18, modifications of loans that are accounted for within a pool under ASC Subtopic 310-30 do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled debt restructuring. An entity will continue to be required to consider whether the pool of assets in which the loan is included is impaired if expected cash flows for the pool change. The amendments in ASU 2010-18 do not affect the accounting for loans under the scope of Subtopic 310-30 that are not accounted for within pools. Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within ASC Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The amendments in ASU 2010-18 are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted. Upon initial adoption of the guidance in ASU 2010-18, an entity may make a onetime election to terminate accounting for loans as a pool under Subtopic 310-30. This election may be applied on a pool-by-pool basis and does not preclude an entity from applying pool accounting to subsequent acquisitions of loans with credit deterioration. The Corporation is currently evaluating the impact that the adoption of ASU 2010-18 may have in its consolidated financial statements.

Note 3 — Discontinued Operations

In 2008, the Corporation discontinued the operations of Popular Financial Holdings (“PFH”) by selling assets and closing service branches and other units. The loss from discontinued operations for the quarter ended March 31, 2009 was $9.9 million, net of taxes. This loss was primarily related to salary and other expenses incurred in providing loan portfolio servicing to affiliated companies and other costs for full-time equivalent employees (“FTEs”) that were retained for a transition period.

Note 4 — Restrictions on Cash and Due from Banks and Certain Securities

The Corporation’s subsidiary banks are required by federal and state regulatory agencies to maintain average reserve balances with the Federal Reserve Bank or other banks. Those required average reserve balances were $753 million as of March 31, 2010 (December 31, 2009 — $721 million; March 31, 2009 — $694 million). Cash and due from banks as well as other short-term, highly-liquid securities are used to cover the required average reserve balances.

As required by the Puerto Rico International Banking Center Regulatory Act, as of March 31, 2010, December 31, 2009, and March 31, 2009, the Corporation maintained separately for its two international banking entities (“IBEs”), $0.6 million in time deposits, equally divided for the two IBEs, which were considered restricted assets.

As part of a line of credit facility with a financial institution, as of March 31, 2010, the Corporation maintained restricted cash of $1 million (December 31, 2009 and March 31, 2009 — $2 million) as collateral for the line of credit. The cash is being held in certificates of deposits which mature in less than 90 days. The line of credit is used to support letters of credit.

As of March 31, 2010, the Corporation maintained restricted cash of $4 million (December 31, 2009 - $3 million) to support a letter of credit. The cash is being held in an interest-bearing money market account.

As of March 31, 2010, the Corporation had restricted cash of $0.8 million (December 31, 2009 — $1 million; March 31, 2009 — $2 million) to support a letter of credit related to a service settlement agreement that expires in June 2010.

Note 5 — Pledged Assets

Certain securities and loans were pledged principally to secure public and trust deposits, assets sold under agreements to repurchase, other borrowings and credit facilities available, derivative positions and loan servicing agreements.

The classification and carrying amount of the Corporation’s pledged assets, in which the secured parties are not permitted to sell or repledge the collateral, were as follows:

		March 31,				December 31,				March 31,
(In thousands)		2010				2009				2009
Investment securities available-for-sale, at fair value		$	1,873,545			$	1,923,338			$	1,975,253
Investment securities held-to-maturity, at amortized cost			125,770				125,769				225,770
Loans held-for-sale measured at lower of cost or fair value			2,507				2,254				41,231
Loans held-in-portfolio			8,374,460				8,993,967				7,837,478
Total pledged securities and loans		$	10,376,282			$	11,045,328			$	10,079,732

Pledged securities and loans in which the creditor has the right by custom or contract to repledge are presented separately in the consolidated statements of condition.

Investment securities available-for-sale and held-to-maturity totaling $1.5 billion as of March 31, 2010 serve as collateral to secure public funds.

The Corporation’s banking subsidiaries have the ability to borrow funds from the Federal Home Loan Bank of New York (“FHLB) and from the Federal Reserve Bank of New York (“Fed”). As of March 31, 2010, the banking subsidiaries had short-term and long-term credit facilities authorized with the FHLB aggregating $1.9 billion. Refer to Note 12 to the consolidated financial statements for borrowings outstanding under these credit facilities. As of March 31, 2010, the credit facilities authorized with the FHLB were collateralized by $3.2 billion in loans held-in-portfolio and investment securities available-for-sale. Also, the Corporation’s banking subsidiaries had a borrowing capacity at the Fed discount window of $3.4 billion, which remained unused as of such date. The amount available under this credit facility is dependent upon the balance of loans and securities pledged as collateral. As of March 31, 2010, the credit facilities with the Fed were collateralized by $5.2 billion in loans held-in-portfolio. These pledged assets are included in the above table and were not reclassified and separately reported in the consolidated statement of condition as of March 31, 2010.

Note 6 — Investment Securities Available-For-Sale

The amortized cost, gross unrealized gains and losses, fair value and weighted average yield of investment securities available-for-sale as of March 31, 2010, December 31, 2009 and March 31, 2009 were as follows:

		AS OF MARCH 31, 2010
						Gross				Gross								Weighted
		Amortized				Unrealized				Unrealized				Fair				Average
(In thousands)		Cost				Gains				Losses				Value				Yield
U.S. Treasury securities
After 1 to 5 years		$	56,767				—			$	81			$	56,686				1.53	%
After 5 to 10 years			29,193			$	1,349				—				30,542				3.80
Total U.S. Treasury securities			85,960				1,349				81				87,228				2.30
Obligations of U.S. Government sponsored entities
Within 1 year			338,331				5,017				—				343,348				3.67
After 1 to 5 years			1,247,333				59,077				385				1,306,025				3.65
After 5 to 10 years			27,812				473				—				28,285				4.96
After 10 years			26,886				718				—				27,604				5.68
Total obligations of U.S. Government sponsored entities			1,640,362				65,285				385				1,705,262				3.71
Obligations of Puerto Rico, States and political subdivisions
Within 1 year			5				—				—				5				3.77
After 1 to 5 years			22,166				54				2				22,218				4.08
After 5 to 10 years			50,909				254				2,589				48,574				5.08
After 10 years			7,840				111				—				7,951				5.27
Total obligations of Puerto Rico, States and political subdivisions			80,920				419				2,591				78,748				4.82
Collateralized mortgage obligations — federal agencies
After 1 to 5 years			5,232				171				—				5,403				4.59
After 5 to 10 years			111,222				1,894				114				113,002				2.71
After 10 years			1,335,392				25,982				2,248				1,359,126				2.96
Total collateralized mortgage obligations — federal agencies			1,451,846				28,047				2,362				1,477,531				2.95
Collateralized mortgage obligations — private label
After 5 to 10 years			18,757				19				573				18,203				2.07
After 10 years			98,289				187				7,330				91,146				2.48
Total collateralized mortgage obligations — private label			117,046				206				7,903				109,349				2.41
Mortgage-backed securities — agencies
Within 1 year			25,679				356				—				26,035				3.46
After 1 to 5 years			22,885				624				1				23,508				3.97
After 5 to 10 years			194,798				10,822				8				205,612				4.81
After 10 years			2,767,080				49,182				2,905				2,813,357				4.36
Total mortgage-backed securities — agencies			3,010,442				60,984				2,914				3,068,512				4.38
Equity securities			8,959				580				423				9,116				3.28
Total investment securities available-for-sale		$	6,395,535			$	156,870			$	16,659			$	6,535,746				3.82	%

		AS OF DECEMBER 31, 2009
						Gross				Gross								Weighted
		Amortized				Unrealized				Unrealized				Fair				Average
(In thousands)		Cost				Gains				Losses				Value				Yield
U.S. Treasury securities
After 5 to 10 years		$	29,359			$	1,093				—			$	30,452				3.80	%
Obligations of U.S. Government sponsored entities
Within 1 year			349,424				7,491				—				356,915				3.67
After 1 to 5 years			1,177,318				58,151				—				1,235,469				3.79
After 5 to 10 years			27,812				680				—				28,492				4.96
After 10 years			26,884				176				—				27,060				5.68
Total obligations of U.S. Government sponsored entities			1,581,438				66,498				—				1,647,936				3.82
Obligations of Puerto Rico, States and political subdivisions
After 1 to 5 years			22,311				7			$	15				22,303				6.92
After 5 to 10 years			50,910				249				632				50,527				5.08
After 10 years			7,840				—				61				7,779				5.26
Total obligations of Puerto Rico, States and political subdivisions			81,061				256				708				80,609				5.60
Collateralized mortgage obligations — federal agencies
Within 1 year			41				—				—				41				3.78
After 1 to 5 years			4,875				120				—				4,995				4.44
After 5 to 10 years			125,397				2,105				404				127,098				2.85
After 10 years			1,454,833				19,060				5,837				1,468,056				3.03
Total collateralized mortgage obligations — federal agencies			1,585,146				21,285				6,241				1,600,190				3.02
Collateralized mortgage obligations — private label
After 5 to 10 years			20,885				—				653				20,232				2.00
After 10 years			105,669				109				8,452				97,326				2.59
Total collateralized mortgage obligations — private label			126,554				109				9,105				117,558				2.50
Mortgage-backed securities — agencies
Within 1 year			26,878				512				—				27,390				3.61
After 1 to 5 years			30,117				823				—				30,940				3.94
After 5 to 10 years			205,480				8,781				—				214,261				4.80
After 10 years			2,915,689				32,102				10,203				2,937,588				4.40
Total mortgage-backed securities — agencies			3,178,164				42,218				10,203				3,210,179				4.42
Equity securities			8,902				233				1,345				7,790				3.65
Total investment securities available-for-sale		$	6,590,624			$	131,692			$	27,602			$	6,694,714				3.91	%

		AS OF MARCH 31, 2009
						Gross				Gross								Weighted
		Amortized				Unrealized				Unrealized				Fair				Average
(In thousands)		Cost				Gains				Losses				Value				Yield
U.S. Treasury securities
After 5 to 10 years		$	29,859			$	2,561				—			$	32,420				3.80	%
Obligations of U.S. Government sponsored entities
Within 1 year			123,546				2,083				—				125,629				4.40
After 1 to 5 years			1,400,585				74,190				—				1,474,775				3.97
After 5 to 10 years			27,811				1,170				—				28,981				5.02
After 10 years			26,879				598				—				27,477				5.67
Total obligations of U.S. Government sponsored entities			1,578,821				78,041				—				1,656,862				4.05
Obligations of Puerto Rico, States and political subdivisions
Within 1 year			4,500				50				—				4,550				6.10
After 1 to 5 years			2,169				—			$	10				2,159				4.95
After 5 to 10 years			67,894				316				4,965				63,245				4.78
After 10 years			29,443				41				193				29,291				5.21
Total obligations of Puerto Rico, States and political subdivisions			104,006				407				5,168				99,245				4.96
Collateralized mortgage obligations — federal agencies
Within 1 year			378				—				—				378				5.50
After 1 to 5 years			4,881				37				21				4,897				5.62
After 5 to 10 years			159,733				1,396				897				160,232				3.17
After 10 years			1,454,426				18,221				14,326				1,458,321				3.15
Total collateralized mortgage obligations — federal agencies			1,619,418				19,654				15,244				1,623,828				3.16
Collateralized mortgage obligations — private label
Within 1 year			335				—				3				332				5.25
After 5 to 10 years			29,433				—				2,396				27,037				2.41
After 10 years			143,437				—				32,614				110,823				3.61
Total collateralized mortgage obligations — private label			173,205				—				35,013				138,192				3.41
Mortgage-backed securities — agencies
Within 1 year			14,087				106				—				14,193				3.73
After 1 to 5 years			83,775				1,638				3				85,410				3.84
After 5 to 10 years			93,042				3,628				62				96,608				5.05
After 10 years			2,931,499				43,825				820				2,974,504				4.56
Total mortgage-backed securities — agencies			3,122,403				49,197				885				3,170,715				4.55
Equity securities			13,053				34				3,772				9,315				2.37
Others
After 1 to 5 years			191,972				744				278				192,438				1.74
After 5 to 10 years			42,360				—				1,137				41,223				5.06
Total others			234,332				744				1,415				233,661				2.34
Total investment securities available-for-sale		$	6,875,097			$	150,638			$	61,497			$	6,964,238				4.00	%

The following table shows the Corporation’s amortized cost, gross unrealized losses and fair value of investment securities available-for-sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2010, December 31, 2009 and March 31, 2009.

		AS OF MARCH 31, 2010
		Less than 12 months
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
U.S. Treasury securities		$	56,767			$	81			$	56,686
Obligations of U.S. government sponsored entities			105,107				385				104,722
Obligations of Puerto Rico, States and political subdivisions			10,231				2				10,229
Collateralized mortgage obligations — federal agencies			181,432				1,474				179,958
Collateralized mortgage obligations — private label			215				11				204
Mortgage-backed securities — agencies			634,182				2,855				631,327
Equity securities			3,357				65				3,292
Total		$	991,291			$	4,873			$	986,418

		12 months or more
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
Obligations of Puerto Rico, States and political subdivisions		$	44,009			$	2,589			$	41,420
Collateralized mortgage obligations — federal agencies			177,953				888				177,065
Collateralized mortgage obligations — private label			99,266				7,892				91,374
Mortgage-backed securities — agencies			3,250				59				3,191
Equity securities			4,302				358				3,944
Total		$	328,780			$	11,786			$	316,994

		Total
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
U.S. Treasury securities		$	56,767			$	81			$	56,686
Obligations of U.S. government sponsored entities			105,107				385				104,722
Obligations of Puerto Rico, States and political subdivisions			54,240				2,591				51,649
Collateralized mortgage obligations — federal agencies			359,385				2,362				357,023
Collateralized mortgage obligations — private label			99,481				7,903				91,578
Mortgage-backed securities — agencies			637,432				2,914				634,518
Equity securities			7,659				423				7,236
Total investment securities available-for-sale in unrealized loss position		$	1,320,071			$	16,659			$	1,303,412

		AS OF DECEMBER 31, 2009
		Less than 12 months
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
Obligations of Puerto Rico, States and political subdivisions		$	2,395			$	8			$	2,387
Collateralized mortgage obligations — federal agencies			302,584				3,667				298,917
Collateralized mortgage obligations — private label			6,734				18				6,716
Mortgage-backed securities — agencies			915,158				10,130				905,028
Equity securities			3,328				981				2,347
Total		$	1,230,199			$	14,804			$	1,215,395

		12 months or more
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
Obligations of Puerto Rico, States and political subdivisions		$	64,129			$	700			$	63,429
Collateralized mortgage obligations — federal agencies			361,788				2,574				359,214
Collateralized mortgage obligations — private label			106,991				9,087				97,904
Mortgage-backed securities — agencies			3,639				73				3,566
Equity securities			4,262				364				3,898
Total		$	540,809			$	12,798			$	528,011

		Total
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
Obligations of Puerto Rico, States and political subdivisions		$	66,524			$	708			$	65,816
Collateralized mortgage obligations — federal agencies			664,372				6,241				658,131
Collateralized mortgage obligations — private label			113,725				9,105				104,620
Mortgage-backed securities — agencies			918,797				10,203				908,594
Equity securities			7,590				1,345				6,245
Total investment securities available-for-sale in unrealized loss position		$	1,771,008			$	27,602			$	1,743,406

		AS OF MARCH 31, 2009
		Less than 12 months
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
Obligations of Puerto Rico, States and political subdivisions		$	42,415			$	324			$	42,091
Collateralized mortgage obligations — federal agencies			263,287				4,968				258,319
Collateralized mortgage obligations — private label			9,080				1,542				7,538
Mortgage-backed securities — agencies			36,601				280				36,321
Equity securities			7,907				3,713				4,194
Others			53,287				1,415				51,872
Total		$	412,577			$	12,242			$	400,335

		12 months or more
						Gross
		Amortized				Unrealized				Fair
(In thousands)		Cost				Losses				Value
Obligations of Puerto Rico, States and political subdivisions		$	44,143			$	4,844			$	39,299
Collateralized mortgage obligations — federal agencies			467,706				10,276				457,430
Collateralized mortgage obligations — private label			163,810				33,471				130,339
Mortgage-backed securities — agencies			82,371				605				81,766
Equity securities			1,808				59				1,749
Total		$	759,838			$	49,255			$	710,583