Popular Inc (BPOP)

History and Background

Popular, Inc., formerly known as Banco Popular de Puerto Rico, was founded in 1893. It began as a small savings bank in San Juan, Puerto Rico, and has grown into one of the largest financial institutions in the Caribbean and the United States. It has evolved through various economic cycles and expanded its services to include retail banking, commercial banking, and investment services.

Core Business Areas

• Banco Popular de Puerto Rico: Offers a full range of financial services to retail, commercial, and government customers in Puerto Rico and the U.S. Virgin Islands. Includes deposit accounts, loans, credit cards, and online banking.
• Popular Bank: Provides retail and commercial banking services in the United States, primarily in New York, New Jersey, and Florida. Offers similar products as Banco Popular de Puerto Rico, but tailored for the U.S. market.
• EVERTEC: While formerly part of Popular, Inc. is now a separate entity. EVERTEC is a transaction processing business providing payment processing solutions for various clients.

Leadership and Structure

Popular Inc. is led by Ignacio Alvarez as President and CEO. The organizational structure includes various executive vice presidents overseeing different business segments, such as retail banking, commercial banking, and risk management. The board of directors provides oversight and strategic guidance.

Key Offerings

• Personal Banking Accounts: Includes checking, savings, money market accounts, and CDs. Market share varies by region. In Puerto Rico, Banco Popular has a significant market share. Competitors include FirstBank Puerto Rico, Oriental Bank. Data on account numbers and revenue isn't publicly available.
• Mortgage Loans: Offers residential mortgage loans. Market share data is fragmented and varies by region. Competitors include major national banks like Wells Fargo, JP Morgan Chase in the US and in PR: Scotiabank, FirstBank, and Oriental Bank. Revenue details are not broken out publicly.
• Commercial Loans: Provides loans to businesses for various purposes, including real estate, equipment, and working capital. Competitors include Banco Santander, Citi. Exact revenue contribution for this product is not public.
• Credit Cards: Offers a range of credit card products. Competitors include American Express, Capital One, and other major card issuers. Data on number of users or revenue from this product is not broken out publicly.

Industry Overview

The banking industry is currently characterized by rising interest rates, increased regulatory scrutiny, and growing competition from fintech companies. Consolidation is occurring as banks seek to achieve economies of scale.

Positioning

Popular Inc. is a leading financial institution in Puerto Rico and has a growing presence in the mainland U.S. Its competitive advantages include its strong brand recognition, extensive branch network in Puerto Rico, and diverse product offerings.

Total Addressable Market (TAM)

The total addressable market for banking services in the regions where Popular operates (Puerto Rico and parts of the US) is estimated at over $100 billion. Popular Inc. is well-positioned to capture a significant share of this market through its existing customer base and expansion strategies.

Key Competitors

• First BanCorp (FBP)
• Oriental Bank (OFG)
• Banco Santander (SAN)

Competitive Landscape

Popular Inc. has a strong competitive position in Puerto Rico due to its established brand and extensive branch network. Its competitive advantages include its local market knowledge and customer relationships. However, it faces competition from larger, national banks and fintech companies.

Reliant Bancorp, Inc.

• Year: 2023
• Acquisition Price (USD millions): 135
• Strategic Rationale: Expansion into attractive Southeast markets. Enhances Popularu2019s commercial banking capabilities and customer base in the Nashville, TN area.

Historical Growth: Popular Inc. has experienced steady growth in recent years, driven by expansion in the U.S. and increased lending activity.

Future Projections: Analysts project continued growth for Popular Inc. in the coming years, driven by its strategic initiatives and favorable economic conditions. Revenue growth of 5-7% annually is expected.

Recent Initiatives: Recent strategic initiatives include expanding its digital banking services, acquiring smaller banks in the U.S., and increasing its focus on commercial lending.

Popular Inc. is a well-established financial institution with a strong presence in Puerto Rico. Its solid financial performance and strategic initiatives support continued growth. However, it must manage risks associated with the Puerto Rican economy and increased competition. The Reliant Bank acquisition positions them well in the US Southeast.

Data Sources:

• Popular, Inc. Investor Relations
• SEC Filings
• MarketWatch
• Yahoo Finance
• Company Reports

Disclaimers:

This analysis is for informational purposes only and should not be considered investment advice. Market data and analyst estimates are subject to change. Past performance is not indicative of future results.