UPDATE 2-Popular may consolidate US operations

* To continue to restructure U.S. ops

* Expects U.S. ops to break even in “next couple of years”

* Will implement initiatives to broaden retail base.

By Jochelle Mendonca

BANGALORE, Nov 30 (BestGrowthStock) – Popular Inc (BPOP.O: ), the
largest Puerto Rican lender, said it was exploring strategic
alternatives to make its U.S. operations profitable, including
selling out of some regions on the mainland.

“We are probably too small to be covering the entire land,
so it probably makes sense to concentrate our footprint into a
smaller region and then, may be make an acquisition there,”
Chief Financial Officer Jorge Junquera said at an investor
conference.

Popular’s U.S. segment, which is spread across New York,
New Jersey, California, Florida and Illinois, has been posting
losses due to legacy assets tied to the mortgage and commercial
sector.

Keefe Bruyette and Woods analyst Bain Slack said Popular
could concentrate its footprint by tying up with smaller banks
that might not be able to stand on their own

“If they sold out of the U.S., they’d lose the deferred
tax asset (DTA). The best way to capitalize on the $1 billion
DTA is to potentially sell part of the operation and do an
acquisition,” Slack told Reuters.

Popular has about $1 billion in deferred tax assets (DTA),
or expected cash flow from future tax benefits, tied to the
U.S. business and profitability in that segment would lower the
company’s tax expenses, making a complete sale of the U.S.
business unlikely.

Junquera said Popular would continue to restructure its
U.S. operations till it achieved profitability and that he
expects the U.S. region to break even in the “next couple of
years”.

Popular, the parent of Banco Popular, has been trying to
expand from a Hispanic bank to a broad-based community bank.

In July, it changed the name of the bank from Banco Popular
to Popular Community Bank to appeal to other demographic
groups.

The company’s shares, which have risen 7 percent since
October when it reported its first profit in two years, were
trading flat at $2.89 Tuesday afternoon on Nasdaq.
(Reporting by Jochelle Mendonca in Bangalore; Editing by Vyas
Mohan)

UPDATE 2-Popular may consolidate US operations