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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 30, 2010
POPULAR, INC.
(Exact name of registrant as specified in its charter)
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| Commonwealth of Puerto Rico
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001-34084
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66-0667416 |
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| (State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification Number) |
209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918
(Address of principal executive offices)
(787) 765-9800
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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| Item 1.01. |
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Entry into a Material Definitive Agreement. |
On April 30, 2010, Banco Popular de Puerto Rico (“Banco Popular”), a subsidiary of Popular,
Inc. (the “Corporation”), acquired certain assets and assumed certain deposit liabilities of
Westernbank Puerto Rico, a Puerto Rico chartered non-member bank headquartered in Mayaguez, Puerto
Rico (“Westernbank”), from the Federal Deposit Insurance Corporation (the “FDIC”), as receiver for
Westernbank (the “Acquisition”), pursuant to the terms of the Purchase and Assumption Agreement —
Whole Bank; All Deposits, dated April 30, 2010, among Banco Popular and the FDIC, as receiver
(the “Agreement”). A copy of the Agreement is attached hereto as Exhibit 2.1 and is incorporated
by reference herein.
Banco Popular acquired
approximately $9.2 billion in assets and assumed approximately $2.5
billion in deposit liabilities. As
part of the transaction, Banco Popular issued a five-year $5,758,084,000 note to the FDIC bearing
an annual interest rate of 2.50%. The note is secured by all loans and foreclosed real estate acquired by Banco Popular from the FDIC that are subject to the shared-loss
agreements and certain related assets. A copy of the note is attached as Exhibit 4.1 and is incorporated by
reference herein.
Banco Popular also acquired Westernbank Insurance Corp., a wholly owned subsidiary of the
former Westernbank and a general insurance agent placing property, casualty, life, and disability
insurance, primarily to mortgage customers of the former Westernbank. No other subsidiaries or
other assets were acquired or liabilities assumed from the former Westernbank or its parent entity,
W Holding Company Inc. The deposits were acquired without a premium and the assets were acquired
at a discount of 12.0% to the former Westernbank’s historic book value. The terms of the Agreement
provide for the FDIC to indemnify Banco Popular against claims with respect to liabilities and
assets of the former Westernbank or any of its affiliates, not assumed or otherwise purchased by
Banco Popular and with respect to certain other claims by third parties.
In addition, as part of the consideration for the transaction, the FDIC received a
cash-settled value appreciation instrument (the “Value Appreciation Instrument”) in which Banco
Popular agreed to make a cash payment to the holder thereof equal to the product of (a) 50 million
and (b) the amount by which the average volume weighted price of the Corporation’s common stock
over the two NASDAQ trading days immediately prior to the date on which the Value Appreciation
Instrument is exercised exceeds $3.43 (the Corporation’s 20-day trailing average common stock price
on April 27). The Value Appreciation Instrument is exercisable by the holder thereof, in whole or
in part, from and including May 7, 2010 to May 7, 2011. A copy of the Value Appreciation
Instrument is attached hereto as Exhibit 4.2 and is incorporated by reference herein.
All of the former Westernbank’s 46 branches and offices throughout Puerto Rico have
reopened as branches and offices of Banco Popular. The physical branch locations and
leases were not immediately acquired by Banco Popular in the Acquisition. Banco Popular has an
option, exercisable until July 29, 2010, to acquire, at fair market value, any bank premises that
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were owned by, or any leases relating to bank premises held by, the former Westernbank
(including ATM locations). Banco Popular is currently reviewing the bank premises and related
leases of the former Westernbank. In addition, Banco Popular has an option, exercisable until May
30, 2010, to elect to assume or reject any contracts that provided for the rendering of services by
or to the former Westernbank.
Loss Sharing Arrangements
In connection with the Acquisition, Banco Popular entered into loss sharing agreements with
the FDIC with respect to approximately $8.8 billion of loans, including single family residential
mortgage loans and commercial loans (referred to collectively as “Covered Assets”).
Pursuant to the terms of the loss sharing agreements, the FDIC’s obligation to reimburse Banco
Popular for losses with respect to Covered Assets begins with the first dollar of loss incurred.
The FDIC will reimburse Banco Popular for 80% of losses with respect to Covered Assets, and Banco
Popular will reimburse the FDIC for 80% of recoveries with respect to losses for which the FDIC
paid Banco Popular 80% reimbursement under the loss sharing agreements. The loss sharing agreement
applicable to single-family residential mortgage loans provides for FDIC loss and recoveries
sharing for ten years. The loss sharing agreement applicable to commercial loans provides for FDIC
loss sharing for five years and Banco Popular reimbursement to the FDIC for eight years, in each
case, on the same terms and conditions as described above. In particular, for each single family
shared-loss loan in default or for which a default is reasonably foreseeable, Banco Popular is
required to undertake reasonable and customary loss mitigation efforts, in accordance with any of
the following programs selected by Banco Popular in its sole discretion; the FDIC Mortgage Loan
Modification Program, the United States Treasury’s Home Affordable Modification Program Guidelines
or any other modification program approved by the United States Treasury Department, the FDIC, the
Board of Governors of the Federal Reserve System or any other governmental agency.
The foregoing summary of the Agreement is not complete and is qualified in its entirety by
reference to the full text of the Agreement and certain exhibits attached thereto, a copy of which
is attached hereto as Exhibit 2.1 and incorporated by reference herein.
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| Item 2.01. |
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Completion of Acquisition or Disposition of Assets. |
The information set forth under Item 1.01 “Entry into a Material Definitive Agreement” is
incorporated by reference into this Item 2.01.
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| Item 2.03. |
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 “Entry into a Material Definitive Agreement” is
incorporated by reference into this Item 2.03.
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| Item 3.03. |
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Material Modification to Rights of Security Holders. |
At the Annual Meeting of the shareholders held on May 4, 2010 (the “Annual Meeting”),
shareholders of the Corporation approved an amendment (the “Amendment”) to the Corporation’s
Restated Certificate of Incorporation. The Amendment increased the authorized number of shares of
common stock, par value $0.01 per share, from 700,000,000 to 1,700,000,000. The shareholders of
the Corporation did not approve a proposed elimination of the provision, pursuant to which the
amount of authorized capital stock of any class or classes of the Corporation may be increased or
decreased by the affirmative vote of the holders of a majority of stock of the Corporation entitled
to vote.
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| Item 5.03. |
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Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
The Amendment, descriptions of which are set forth in Item 3.03 “Material Modification to
Rights of Security Holders” and which is incorporated by reference into this Item 5.03, is attached
as Exhibit 3.1.
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| Item 5.07. |
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Submission of Matters to a Vote of Security Holders. |
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The Annual Meeting was held on May 4, 2010. |
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| (b) |
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The matters considered and voted on by the Corporation’s shareholders at the Annual Meeting
and the results of the vote of the shareholders were as follows: |
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| Proposal 1. |
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Three directors were elected, each for a three-year term, by the votes indicated. |
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Broker |
| Nominee |
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For |
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Against |
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Abstain |
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Non-votes |
Michael T. Masin
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317,880,310 |
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32,269,871 |
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30,641,090 |
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189,394,907 |
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Manuel Morales Jr.
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232,359,961 |
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129,120,959 |
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19,310,351 |
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189,394,907 |
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Jose R. Vizcarrondo
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229,306,021 |
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132,207,695 |
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19,277,555 |
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189,394,907 |
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Two directors were elected, each for a two-year term, by the votes indicated.
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Broker |
| Nominee |
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For |
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Against |
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Abstain |
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Non-votes |
Alejandro M. Ballester
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325,471,843 |
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23,470,119 |
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31,849,309 |
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189,394,907 |
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Carlos A. Unanue
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326,012,296 |
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24,343,844 |
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30,435,131 |
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189,394,907 |
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The following matter was not approved because the votes cast for the proposal
represented less than two-thirds of the outstanding shares of common stock of the Corporation:
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| Proposal 2. |
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To amend Article Fifth of the Restated Certificate of Incorporation to eliminate the
provision, pursuant to which the amount of authorized capital stock of any class or classes of
the Corporation may be increased or decreased by affirmative vote of the holders of a majority
of stock of the Corporation entitled to vote. |
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| For |
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Against |
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Abstain |
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Broker Non-votes |
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| 380,059,329
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173,179,135
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16,947,714
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0 |
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The following matters were approved by the votes indicated: |
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| Proposal 3. |
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To amend Article Fifth of the Restated Certificate of
Incorporation of the Corporation to increase the authorized
number of shares of common stock, par value, $0.01 per share,
from 700,000,000 to 1,700,000,000. |
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| For |
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Against |
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Abstain |
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Broker Non-votes |
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| 488,962,148
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73,682,888
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7,541,142
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0 |
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| Proposal 4. |
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To provide an advisory vote related to the Corporation’s executive compensation program. |
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| For |
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Against |
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Abstain |
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Broker Non-votes |
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| 516,075,251
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29,909,239
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24,201,688
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0 |
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| Proposal 5. |
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To ratify the selection of PricewaterhouseCoopers LLP as the independent registered
public accounting firm of the Corporation for 2010. |
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| For |
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Against |
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Abstain |
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Broker Non-votes |
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| 538,716,533
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14,334,348
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17,135,297
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0 |
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| Proposal 6. |
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To approve the adjournment or postponement of the Annual Meeting, if necessary or
appropriate, to solicit additional proxies, in the event there are not sufficient votes at the
time of the Annual Meeting to approve the proposals set forth in Proposal 2 or Proposal 3. |
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| For |
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Against |
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Abstain |
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Broker Non-votes |
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| 224,274,932
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140,797,990
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15,718,349
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189,394,907 |
Item 9.01. Financial Statements and Exhibits.
| (a) |
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Financial Statements of the Businesses Acquired |
To the extent that financial statements are required by this Item, such financial statements will
be filed by an amendment of this Current Report no later than
July 16, 2010.
| (b) |
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Pro Forma Financial Information |
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To the
extent that pro forma financial information is required by this Item,
such information will
be filed by an amendment of this Current Report no later than
July 16, 2010.
(d) Exhibits.
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| Exhibit No. |
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Description |
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2.1
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Purchase and Assumption Agreement; Whole Bank; All Deposits,
among the Federal Deposit Insurance Corporation, receiver of
Westernbank, Mayaguez Puerto Rico, the Federal Deposit Insurance
Corporation and Banco Popular de Puerto Rico, dated as of April
30, 2010. The Purchase and Assumption Agreement includes as
Exhibit 4.15A the Single Family Shared Loss Agreement and as
Exhibit 4.15B the Commercial Shared- Loss Agreement. |
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3.1
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Certificate of Amendment of Restated Certificate of Incorporation. |
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4.1
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Purchase Money Note, issued on April 30, 2010. |
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4.2
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Value Appreciation Instrument, issued on April 30, 2010. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Popular, Inc.
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By: |
/s/ Ileana Gonzalez |
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Ileana Gonzalez |
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Senior Vice President and Comptroller |
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Date: May 6, 2010
EXHIBIT INDEX
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| Exhibit No. |
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Description |
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2.1
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Purchase and Assumption Agreement; Whole Bank; All Deposits,
among the Federal Deposit Insurance Corporation, receiver of
Westernbank, Mayaguez Puerto Rico, the Federal Deposit Insurance
Corporation and Banco Popular de Puerto Rico, dated as of April
30, 2010. The Purchase and Assumption Agreement includes as
Exhibit 4.15A the Single Family Shared Loss Agreement and as
Exhibit 4.15B the Commercial Shared- Loss Agreement. |
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3.1
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Certificate of Amendment of Restated Certificate of Incorporation. |
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4.1
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Purchase Money Note, issued on April 30, 2010. |
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4.2
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Value Appreciation Instrument, issued on April 30, 2010. |