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Trust preferred securities | 9 Months Ended
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Sep. 30, 2018
Disclosure Text Block |
Trust Preferred Securities | Note 18 – Trust preferred securities Statutory trusts established by the Corporation (BanPonce Trust I, Popular Capital Trust I, Popular North America Capital Trust I and Popular Capital Trust II) had issued trust preferred securities (also referred to as “capital securities”) to the public. The proceeds from such issuances, together with the proce eds of the related issuances of common securities of the trusts (the “common securities”), were used by the trusts to purchase junior subordinated deferrable interest debentures (the “junior subordinated debentures”) issued by the Corporation. The sole as sets of the trusts consisted of the junior subordinated debentures of the Corporation and the related accrued interest receivable. These trusts are not consolidated by the Corporation pursuant to accounting principles generally accepted in the United State s of America. The junior subordinated debentures are included by the Corporation as notes payable in the Consolidated Statements of Financial Condition, while the common securities issued by the issuer trusts are included as other investment securities. Th e common securities of each trust are wholly-owned, or indirectly wholly-owned, by the Corporation. During the quarter ended September 30, 2018, Popular North America, Inc. (“PNA”), a wholly-owned subsidiary of the Corporation, redeemed all outstanding capital securities issued by BanPonce Trust I (the “Trust”), a s tatutory trust established by PNA, with an aggreg ate book value of $53 million, along with the common securities issued by the Trust, which resulted in the concurrent extinguishment of the related junior subordinated debentures amounting to $55 million, as discussed in Note 17. The following tables present financial data pertaining to the different trusts at September 30, 2018 and December 31, 2017.
(Dollars in thousands) | As of September 30, 2018
|  |  |  |  |  |  | Popular |  |  |  |  |
|  |  | Popular |  | North America |  |  | Popular |
Issuer | Capital Trust I |  | Capital Trust I |  | Capital Trust Il |
Capital securities |  | $ | 181,063 |  |  | $ | 91,651 |  |  | $ | 101,023 |
Distribution rate |  |  | 6.700 | % |  |  | 6.564 | % |  |  | 6.125 | %
Common securities |  | $ | 5,601 |  |  | $ | 2,835 |  |  | $ | 3,125 |
Junior subordinated debentures |  |  |  |  |  |  |  |  |  |  |  |
| aggregate liquidation amount |  | $ | 186,664 |  |  | $ | 94,486 |  |  | $ | 104,148 |
Stated maturity date |  | November |  |  | September |  |  | December |
|  |  | 2033 |  |  | 2034 |  |  | 2034 |
Reference notes |  |  | [2],[4],[5] |  |  |  | [1],[3],[5] |  |  |  | [2],[4],[5] |
[1] Statutory business trust that is wholly-owned by PNA and indirectly wholly-owned by the Corporation. [2] Statutory business trust that is wholly-owned by the Corporation. [3] The obligations of PNA under the junior subordinated debentures and its guarantees of the capital securities under the trust are fully and unconditionally guaranteed on a subordinated basis by the Corporation to the extent set forth in the applicable guarantee agreement. [4] These capital securities are fully a nd unconditionally guaranteed on a subordinated basis by the Corporation to the extent set forth in the applicable guarantee agreement. [5] The Corporation has the right, subject to any required prior approval from the Federal Reserve, to redeem after certain dates or upon the occurrence of certain events mentioned below, the junior subordinated debentures at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of redemption. The maturity of the junior subordinated debentures may be shortened at the option of the Corporation prior to their stated maturity dates (i) on or after the stated optional redemption dates stipulated in the agreements, in whole at any time or in part from time to time, or (ii) in whole, but not in part, at any time within 90 days following the occurrence and during the continuation of a tax event, an investment company event or a capital treatment event as set forth in the indentures relating to the capital securities, in each case subject to regulatory approval.
(Dollars in thousands) |  | As of December 31, 2017
|  |  |  |  |  |  |  |  |  | Popular |  |  |  |  |
|  | BanPonce |  |  | Popular |  | North America |  |  | Popular |
Issuer | Trust I |  | Capital Trust I |  | Capital Trust I |  | Capital Trust Il |
Capital securities | $ | 52,865 |  |  | $ | 181,063 |  |  | $ | 91,651 |  |  | $ | 101,023 |
Distribution rate |  | 8.327 | % |  |  | 6.700 | % |  |  | 6.564 | % |  |  | 6.125 | %
Common securities | $ | 1,637 |  |  | $ | 5,601 |  |  | $ | 2,835 |  |  | $ | 3,125 |
Junior subordinated debentures |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| aggregate liquidation amount | $ | 54,502 |  |  | $ | 186,664 |  |  | $ | 94,486 |  |  | $ | 104,148 |
Stated maturity date | February |  |  | November |  |  | September |  |  | December |
|  | 2027 |  |  | 2033 |  |  | 2034 |  |  | 2034 |
Reference notes |  | [1],[3],[6] |  |  |  | [2],[4],[5] |  |  |  | [1],[3],[5] |  |  |  | [2],[4],[5] |
[1] Statutory business trust that is wholly-owned by PNA and indirectly wholly-owned by the Corporation. [2] Statutory business trust that is wholly-owned by the Corporation. [3] The obligations of PNA under the junior subordinated debentures and its guarantees of the capital securities under the trust are fully and unconditionally guaranteed on a subordinated basis by the Corporation to the extent set forth in the applicable guarantee agreement. [4] These capital securities are full y and unconditionally guaranteed on a subordinated basis by the Corporation to the extent set forth in the applicable guarantee agreement. [5] The Corporation has the right, subject to any required prior approval from the Federal Reserve, to redeem after c ertain dates or upon the occurrence of certain events mentioned below, the junior subordinated debentures at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of redemption. The maturity of the junior su bordinated debentures may be shortened at the option of the Corporation prior to their stated maturity dates (i) on or after the stated optional redemption dates stipulated in the agreements, in whole at any time or in part from time to time, or (ii) in wh ole, but not in part, at any time within 90 days following the occurrence and during the continuation of a tax event, an investment company event or a capital treatment event as set forth in the indentures relating to the capital securities, in each case s ubject to regulatory approval. [6] Same as [5] above, except that the investment company event does not apply for early redemption. At September 30, 2018, the Corporation had $374 million in trust preferred securities outstanding which do not qualify for Tier 1 capital treatment, but instead quali fy for Tier 2 capital treatment, compared to $427 million at December 31, 2017, as a result of the previously mentioned redemption by PNA.

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- Definition The entire disclosure for information about preferred securities that embody an unconditional obligation requiring the issuer to redeem the securities by transferring the assets at a specified or determinable date (or dates) or upon an event that is certain to occur, that are issued by a consolidated trust to outside investors where the trust uses the proceeds of the issuance of those securities to purchase, from the financial institution that established the trust, an equivalent amount of junior subordinated debentures or other loans having stated maturities. + References No definition available. + Details
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