Este informe no está disponible en español.
The evolution of Popular Inc.
Popular Inc. CEO talks about the voyage from small family business to international powerhouse
By GEORGIANNE OCASIO TEISSONNIERE
April 14, 2005
It is said a picture is worth a thousand words; well, in the case of Popular Inc., parent company of Banco Popular, it is the numbers that are doing all the talking, and CEO Richard Carrión is more than happy about it. "I like to do more and talk less," he says. Judging by the companys results presented in the 2004 Annual Report, Carrión can afford not to say a word.
As of Dec. 31, 2004, Popular Inc. had $44 billion in assets. Net income for the year totaled $489.9 million, 4% higher than the $470.9 million reported in 2003. This represents a return on assets of 1.23% and a return on common equity of 17.6%. Earnings per common share (EPS), basic and diluted, for 2004 were $1.79 compared with $1.74 in 2003. In April of last year, there was an 18.5% increase in the quarterly cash dividend, from 13.5 cents to 16 cents per common share.
Populars stock increased 28.6% in 2004 and was identified by American Banker as the best performing stock in the large cap bank group. For Carrión, this was one of the years most noteworthy accomplishments. Another distinction for the company last year was being named among Forbes magazines 100 best companies to work for. "It is an honor because it is part of our values; our people are important to us. Everyone should feel they are accomplishing their own goals in the organization. If you have good people and help them develop, they will give good service, which makes customers happy and investors even happier," explained Carrión.
However, after recognizing some of Popular Inc.s strong points, the CEO was quick to point out the company still has a long way to go. "My father always said, as long as you think you are green, you continue to grow. When you think you are ripe, you begin to get rotten. There are still many areas where we can grow and improve," he said.
That growth and improvement is part of the evolution theme of the 2004 Annual Report. Evolve, compete, create, build, discover, inspirethose were the words selected to best represent the essence of each of the divisions of Popular Inc. The company organization operates in a circle model, which Carrión explains allows for more flexibility and cooperation than the typical rectangular structure.
The company divisions are Banco Popular Puerto Rico; Banco Popular North America; Evertec, an electronic processing company created in April 2004 that also serves out of house clients; and Popular Financial Holdings, which serves retail customers, mortgage brokers, bankers, and investors.
One of the most noteworthy accomplishments of the Banco Popular Puerto Rico division was the relaunch of its credit card business, which multiplied the number of new accounts by four compared with the previous year. There was more focus on small and midsize businesses, an effort that is expected to yield further results in 2005.
Deposits reached $13.8 billion, and the loan portfolio grew by 18%, reaching $13 billion.
Popular Mortgage originated $1.6 billion in mortgage loans, while Popular Securities has more than $4.2 billion under management. One of the things Carrión wishes to accomplish in Puerto Rico is to convince customers of taking more advantage of electronic payment systems. "We have been big believers in that. We want to give the client more options to do all their transactions online, such as check their account status and pay all their bills," he explained, adding, "We understand we can save the government millions of dollars by eliminating checks and changing payroll to direct deposit. We are trying to do the same with the water processing and electric companies." Carrión, however, points out the measures have met tough opposition from the labor unions.
For Banco Popular North America, 2004 was a great year. In part through the implementation of a Customer Acquisition Program, which consists of an intense mailing campaign to all households in proximity to each branch, the division managed to increase net income by 54%. Part of the strategies on the U.S. mainland also include a community-banking concept, meaning the bank doesnt concentrate specifically on serving Hispanics. Actually, close to half of the clients in the division are non-Hispanic.
Another significant accomplishment for the division was the acquisition of two banks, Quaker City Bancorp in California and Kislak National Bank in South Florida. Both companies added close to $3 billion in assets to the division.
With marked presence in 30 states of the U.S., in the Caribbean, and Central America, it is evident the reach of the Popular brand has no limits. Recently, Banco Popular became the bank of the New York Mets major league baseball team, which the company expects will bring more exposure and brand power. However, for Carrión, the deal seems to represent more of an emotional milestone than a financial one.
"On Monday, I am going to New York, and the Mets are opening their season in Shea Stadium. On the board, it will say Banco Popular. The ATMs will say ATH Banco Popular and Powered by Evertec. Along the third-base line, it will say Banco Popular, and a Banco Popular client will be playing center field. At one point in his life, my grandfather went hungry in New York City. My father was a lover of the city and the Mets. I think they will both be very proud and very happy," said Carrión after a paused reflection.
Besides the companys family roots, a feeling of humanity seems to encompass the financial institution, evidenced by the more than $3.7 million in donations and sponsorships the different divisions gave to a wide variety of community-based projects. The company also holds frequent events designed to help foster financial education in the communities.
Be it through a heart of gold or a touch of gold, the company managed to reach new heights in 2004, as evidenced by a chart displaying 25 years of historical data for the company. This chart is Carrions favorite part of the report. "I would include more years, but they dont let me," he complains.
The chart seems to leave no room for doubts about the accomplishments and the potential of Popular Inc. after its 111 years of existence and definitely proves Carrións point that numbers speak for themselves.
This Caribbean Business article appears courtesy of Casiano Communications.