OFG Bancorp Sells Remaining Commercial NPAs as FDIC Loss Share Agreement Ends
September 29 2015 - 4:49PM
Business Wire
OFG Bancorp (NYSE:OFG) today announced that its Oriental Bank
subsidiary, as expected, has entered into a definitive agreement to
sell the remaining covered non-performing commercial loans and real
estate owned arising from the 2010 FDIC-assisted acquisition of
Eurobank.
The loan portfolio totals $197.1 million of unpaid principal
balance (UPB), or $100.0 million of reporting balance. The sale
price is $36.3 million in cash, or 18.44% of UPB. As previously
disclosed, the FDIC has agreed to cover the first $20.0 million of
losses as part of its loss share agreement with OFG.
Also, as part of this transaction, Oriental Bank is selling
certain non-performing commercial loans and real estate from the
2012 BBVA PR acquisition. These loans total $38.1 million in UPB,
or $9.9 million in reporting balance. The sale price is $5.2
million in cash, or 13.57% of UPB. In addition, certain real estate
owned with a book value of $9.2 million is being sold for $1.7
million in cash.
The aggregate pre-tax loss from all of the above sales is $40.9
million. After applying the FDIC coverage, the pre-tax loss is
$20.9 million.
“This transaction is in line with our strategy of reducing the
bank's credit exposure in light of profound fiscal challenges and
uncertainties regarding the economic prospects of Puerto Rico,”
said José Rafael Fernández, President, Chief Executive Officer, and
Vice Chairman of the Board.
“Our track record shows such timely, prudent decisions have
ensured OFG's growth and its commitment to maximize shareholder
value. At this point, the chance of any significant recovery on
these loans is low. Rather than assume any additional expense or
risk in the future, it makes more sense to sell them now. From an
operating viewpoint, the third quarter is progressing as
planned.”
Forward Looking Statements
The information included in this document contains certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management’s current expectations and involve certain
risks and uncertainties that may cause actual results to differ
materially from those expressed in the forward-looking
statements.
Factors that might cause such a difference include, but are not
limited to (i) the rate of growth in the economy and employment
levels, as well as general business and economic conditions; (ii)
changes in interest rates, as well as the magnitude of such
changes; (iii) a credit default by the government of Puerto Rico;
(iv) the fiscal and monetary policies of the federal government and
its agencies; (v) changes in federal bank regulatory and
supervisory policies, including required levels of capital; (vi)
the relative strength or weakness of the consumer and commercial
credit sectors and of the real estate market in Puerto Rico; (vii)
the performance of the stock and bond markets; (viii) competition
in the financial services industry; and (ix) possible legislative,
tax or regulatory changes.
For a discussion of such factors and certain risks and
uncertainties to which OFG is subject, see OFG’s annual report on
Form 10-K for the year ended December 31, 2014, as well as its
other filings with the U.S. Securities and Exchange Commission.
Other than to the extent required by applicable law, including the
requirements of applicable securities laws, OFG assumes no
obligation to update any forward-looking statements to reflect
occurrences or unanticipated events or circumstances after the date
of such statements.
About OFG Bancorp
Now in its 51st year in business, OFG Bancorp is a diversified
financial holding company that operates under U.S. and Puerto Rico
banking laws and regulations. Its three principal subsidiaries,
Oriental Bank, Oriental Financial Services and Oriental Insurance,
provide a full range of commercial, consumer and mortgage banking
services, as well as financial planning, trust, insurance,
investment brokerage and investment banking services, primarily in
Puerto Rico, through 51 financial centers. Investor information can
be found at www.ofgbancorp.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20150929006902/en/
Puerto Rico:OFG BancorpAlexandra López,
787-522-6970allopez@orientalbank.comUS:Steven Anreder,
212-532-3232sanreder@ofgbancorp.comorGary Fishman,
212-532-3232gfishman@ofgbancorp.com
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