October 16, 2008
Board of Directors
Village Palos Verdes Homeowners Association
C/O Joanne Peña, CCAM, PCAM
Horizon Management Company
21535 Hawthorne Blvd. Suite 530
Torrance, CA 90503
Dear Board of Directors:
In view of the current economic turmoil, we wanted to take this opportunity to assure you that Banco Popular North America has taken the necessary steps in order to maintain its strong financial position.
BPNA is a subsidiary of Popular, Inc. (NASDAQ: BPOP), which was founded in 1893, with a 115 year old history of serving our communities. Popular’s $400 million preferred stock issue in the second quarter strengthened its position by producing excess capital over all regulatory “well capitalized” thresholds.
Our Bank, headquartered in Chicago, Illinois, is one of the leading community banks in the U.S. with more than 140 branches in the states of California, Florida, Illinois, New Jersey, New York and Texas. As you know, the national housing crisis and its impact on profitability have affected many financial institutions. We were not exempt from the impact this crisis had upon earnings; however, we remain profitable and are improving our performance as we move forward. With our parent company, Popular, Inc., we have taken significant steps to fully diversify holdings and mitigate current volatility that might impact the Bank. In this regard, we have increased our reserves to a level we believe will protect us from loan losses while maintaining strong liquidity and solid capital ratios. Also, in August of 2008, Popular, Inc. announced the sale of loan and servicing assets of its U.S. mortgage subsidiary Popular Financial Holdings, or PFH. This transaction provided approximately $194 million in cash. With this, Popular has more than $1.8 billion of liquidity available, including $650 million of available cash and investments. We are in an improved position as a result of these actions and will continue to scrutinize our businesses with an eye toward profitability, sustainability, and fit to our core banking activities. It is important to note that under Federal Reserve Bank (FRB) guidelines BPNA is considered well capitalized.
We now have 13 branches within Miami-Dade, Broward and Palm Beach counties. As you may know, our division, Popular Association Banking, started with Kislak National Bank, where we created a national platform to serve the community association industry. With an active lending platform in 17 states, our association total loan portfolio as of August 31, 2008 totaled $521 million. Our current team has worked together since the
inception of the program about 15 years ago. During this timeframe we have made loans in excess of $1.3 billion to associations which assisted more than 4,000 associations and countless residents with their financial needs
As an added service, specifically for our association clients, we participate in the Certificate of Deposit Account Registry ServiceSM (CDARS®) -- which places deposits of more than $100,000 divided into smaller CDs -- in FDIC insured financial institutions. This permits amounts up to $50 million per association customer to be covered by FDIC insurance. CDARS can be a valuable tool for managing the association’s cash reserves by working with just one bank; reducing administrative burdens, and assisting the association’s compliance with investment policy mandates while avoiding footnoting uninsured deposits in its financial statements.
We also offer a daily cash investment service that automatically sweeps excess funds from the association’s checking account into a repurchase agreement. After all transactions are posted at the end of each business day, all collected funds over a pre-established target balance are automatically transferred into an overnight repurchase agreement. The funds are automatically redeemed and transferred back to the checking accounts. Again, specifically for our association clients we offer repurchase agreements collateralized by GNMA securities which is a mortgage-backed security that carries the full faith and credit of the US Government.
Being leaders of providing these services in the community association marketplace, we are confident in our abilities to grant both loan and deposit products that are beneficial to associations. Our service level and knowledge of this industry are unsurpassed by any other financial institution. We are truly relationship bankers and our service does not cease at the closing of any one transaction. Our division only manages community association business and our service level, knowledge of the industry, and reputation are the cornerstones of our success. We firmly believe that we can serve this industry better than anyone else!
We appreciate your business and trust this information helps bolster your confidence in moving forward with us.
Sincerely yours,
Molly Hime
Senior Vice President, Division Executive
Community Association Headquarters 7900 Miami Lakes Drive West, Miami Lakes, FL 33016
Tel: (800) 233-7164 ext. 431143 • Fax: (305) 821-7284 HYPERLINK "http://www.associationbankers.com" www.associationbankers.com / Member FDIC
A Division of Banco Popular North America
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888 Disneyland Drive Fifth Floor, Anaheim CA 92802 714-864-5171 Voice 714-864-5107 Fax