Magazine article American Banker

Popular Restates but Says Its Issue Isn't like Others

Magazine article American Banker

Popular Restates but Says Its Issue Isn't like Others

Article excerpt

Popular Inc. restated cash flows for the first three quarters of last year, though it was quick to say that the problem was not related to accounting issues affecting some other companies in Puerto Rico.

The $48.6 billion-asset San Juan company said the restatement was necessary because it had misclassified mortgages bought and sold by its Popular Financial Holdings Inc. of Marlton, N.J.

Though the company restated consolidated cash flows, the cash on hand at the end of each quarter did not change, according to the annual report Popular filed Wednesday with the Securities and Exchange Commission.

"If this were a personal statement, it would have been an error in classifying disbursements for dry-cleaning as disbursements for laundry," chief financial officer Jorge Junquera said in an interview. "It was that kind of mistake. ... It has no effect on capital, income, or earnings per share."

He said that Popular realized it would have to restate its cash flows after SEC officials gave guidance on accounting while the company was compiling its annual report.

The unit wrongly classified cash in originating and buying mortgages that it intended to sell.

Five other Puerto Rican banking companies are dealing with problems in their accounting for income from both loans and mortgage interest-only strip transactions with one another.

"Individuals read the word 'restatement,' and they might get the wrong impression," Mr. Junquera said.

Popular reviewed all its transactions with Puerto Rican companies that have announced potential restatements and found that it correctly accounted for all of them, he said.

On March 7, Santander BanCorp of San Juan restated its net income for 2000 through the third quarter of last year, and it said it was still reviewing its accounting of dealings on the island. …

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