OFG Bancorp Reports Sale of PREPA Position
September 20 2016 - 4:05PM
Business Wire
OFG Bancorp (NYSE:OFG) announced today that its subsidiary
Oriental Bank’s outstanding participation in a line of credit to
the Puerto Rico Electric Power Authority (PREPA) has been sold,
thereby significantly reducing its direct exposure to Puerto Rico
government related credits. Gross proceeds from the sale were $124
million, slightly lower than the adjusted book balance, net of
reserves.
José Rafael Fernández, President, Chief Executive Officer, and
Vice Chairman of the Board commented:
“While we expect an eventual, positive resolution to PREPA’s
restructuring efforts, we are capitalizing on this opportunity to
exit our $200 million fuel line position in a smooth manner. This
loan has been a distraction overshadowing our other business
successes far too long. Notwithstanding the sale, we expect the
third quarter results to be similar to the prior period.
“Our strong capital ratios should improve even more since PREPA
carried a risk weight of 150%. Additionally, we are sharply
reducing OFG’s direct exposure to PR government credits by 45% to
$222 million using June 30, 2016 ledger balances. Almost all of our
remaining PR government exposure is to the five largest,
financially sound municipalities.
“Accordingly, we consider the PREPA sale to be prudent given the
continuous uncertainty in our operating environment.”
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, 2015, 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 52nd 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 48 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/20160920006807/en/
For OFG BancorpPuerto Rico:Alexandra López,
787-522-6970allopez@orientalbank.comorUS:Steven Anreder,
212-532-3232sanreder@ofgbancorp.comorGary Fishman,
212-532-3232gfishman@ofgbancorp.com
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