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8-K - FORM 8-K - FIRST BANCORP /PR/ | g26118e8vk.htm |
EX-99.1 - EX-99.1 - FIRST BANCORP /PR/ | g26118exv99w1.htm |
Exhibit 99.2
News Release |
FIRST BANCORP ANNOUNCES LOAN SALE
SAN JUAN, Puerto Rico February 9, 2011 First BanCorp (the Corporation) [NYSE:FBP]
announced today that, pursuant to the non-binding letter of intent announced on December 7, 2010,
it has entered into a definitive agreement to sell a loan portfolio with an unpaid principal
balance of $516.7 million and a net book value of $438.5 million, before the charge-off taken to
properly record the loan pool as held for sale as of December 31, 2010. Such loan portfolio is 94%
adversely classified. The size of the loan pool reflects a downward adjustment of approximately
$185 million from the amount originally stated in the letter of intent. The loan portfolio is
composed of 74% construction loans, 19% commercial real estate loans and 7% commercial loans. The
buyer of the portfolio is a new joint venture company (the Joint Venture) organized under the
Laws of the Commonwealth of Puerto Rico majority owned by PRLP Ventures LLC, an investing company
to be created by Goldman, Sachs & Co. and Caribbean Property Group (CPG) upon closing of the
transaction.
With the loan sale the Corporation will reduce its classified assets and non-performing loans by
$410.3 million and $254.3 million, respectively. The transaction will decrease the Corporations
Puerto Rico non-performing construction and commercial real estate loans by 72% and 16%,
respectively, and its Puerto Rico classified residential constructions loans by 74%.
The purchase price of $275.9 million, or 53.4% of the unpaid principal balance of the portfolio as
of December 31, 2010, is being funded with $90 million from an initial cash capital contribution by
PRLP Ventures LLC, $138 million from an acquisition loan to be provided by FirstBank Puerto Rico
(FirstBank), the main banking subsidiary of First BanCorp, and $48 million associated with a 35%
equity interests in the Joint Venture to be retained by FirstBank. The transaction is subject to a
fully sequential pay structure in which: (a) the acquisition loan and other FirstBank sponsored
financing must be paid down before any cash flow is received by PLRP Ventures LLC or FirstBank and
(b) the equity interest retained by FirstBank will entitle FirstBank to receive cash flow after
PRLP Ventures LLCs investment has been returned and it has earned a portion of its expected
return. The Corporation will recognize an estimated pre-tax loss of $101.7 million, after taking
into consideration the specific reserves of $60.9 million already assigned to the $438.5 million
net book value.
FirstBank will extend an $80 million advance facility to the Joint Venture to fund unfunded
commitments and costs to complete projects under construction, and a $20 million working capital
line of credit to fund certain expenses of the Joint Venture. The Joint Venture will engage CPG
Island Servicing LLC, an affiliate of CPG, as servicer of the purchased loans. The servicer will
enter into a sub-servicing agreement with Archon Group, L.P.,
an affiliate of Goldman, Sachs & Co., under which it will provide certain sub-servicing functions
with respect to the purchased loans.
Aurelio Aleman, President and Chief Executive Officer of First BanCorp stated, The completion of
this transaction is an important step in the Corporations previously discussed strategic plan to
improve the quality and performance of our loan portfolio. This transaction reduces our
non-performing loan portfolio by 17%. We thank Goldman, Sachs & Co. and Caribbean Property Group
in joining and creating this new joint venture with First BanCorp.
About First BanCorp
First BanCorp is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial
bank with operations in Puerto Rico, the Virgin Islands and Florida, and of FirstBank Insurance
Agency. First BanCorp and FirstBank Puerto Rico all operate within U.S. banking laws and
regulations. The Corporation operates a total of 170 branches, stand-alone offices and in-branch
service centers throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the
subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a small loan company;
FirstBank Puerto Rico Securities, a broker-dealer subsidiary; First Management of Puerto Rico; and
FirstMortgage, Inc., a mortgage origination company. In the U.S. Virgin Islands, FirstBank operates
First Insurance VI, an insurance agency, and First Express, a small loan company. First BanCorps
common and publicly-held preferred shares trade on the New York Stock Exchange under the symbols
FBP, FBPPrA, FBPPrB, FBPPrC, FBPPrD and FBPPrE. Additional information about First BanCorp may be
found at www.firstbankpr.com.
Safe Harbor
This press release may contain forward-looking statements concerning the Corporations
future economic performance. The words or phrases expect, anticipate, look forward, should,
believes and similar expressions are meant to identify forward-looking statements within the
meaning of Section 27A of the Private Securities Litigation Reform Act of 1995, and are subject to
the safe harbor created by such section. The Corporation wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including, but not limited to, uncertainty about whether
the Corporation will be able to fully comply with the written agreement dated June 3, 2010 that the
Corporation entered into with the Federal Reserve Bank of New York (FED) and the order dated June
2, 2010 (the Order) that the Corporation and FirstBank Puerto Rico entered into with the FDIC and
the Office of the Commissioner of Financial Institutions of Puerto Rico that, among other things,
require the Corporation to attain certain capital levels and reduce its special mention,
classified, delinquent and non-accrual
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assets; uncertainty as to whether the Corporation will be able to issue $350 million of equity so
as to meet the remaining substantive condition necessary to compel the U.S. Treasury to convert
into common stock the shares of Series G Preferred Stock that the Corporation issued to the U.S.
Treasury; uncertainty as to whether the Corporation will be able to complete future capital-raising
efforts; uncertainty as to the availability of certain funding sources, such as retail brokered
CDs; the risk of not being able to fulfill the Corporations cash obligations or pay dividends to
its shareholders in the future due to its inability to receive approval from the FED to receive
dividends from FirstBank Puerto Rico; the risk of being subject to possible additional regulatory
actions; the strength or weakness of the real estate markets and of the consumer and commercial
credit sectors and their impact on the credit quality of the Corporations loans and other assets,
including the Corporations construction and commercial real estate loan portfolios, which have
contributed and may continue to contribute to, among other things, the increase in the levels of
non-performing assets, charge-offs and the provision expense and may subject the Corporation to
further risk from loan defaults and foreclosures; adverse changes in general economic conditions in
the United States and in Puerto Rico, including the interest rate scenario, market liquidity,
housing absorption rates, real estate prices and disruptions in the U.S. capital markets, which may
reduce interest margins, impact funding sources and affect demand for all of the Corporations
products and services and the value of the Corporations assets; the Corporations reliance on
brokered CDs and the Corporations ability to obtain, on a periodic basis, approval to issue
brokered CDs to fund operations and provide liquidity in accordance with the terms of the Order; an
adverse change in the Corporations ability to attract new clients and retain existing ones; a
decrease in demand for the Corporations products and services and lower revenues and earnings
because of the continued recession in Puerto Rico and the current fiscal problems and budget
deficit of the Puerto Rico government; a need to recognize additional impairments on financial
instruments or goodwill relating to acquisitions; uncertainty about regulatory and legislative
changes for financial services companies in Puerto Rico, the United States and the U.S. and British
Virgin Islands, which could affect the Corporations financial performance and could cause the
Corporations actual results for future periods to differ materially from prior results and
anticipated or projected results; uncertainty about the effectiveness of the various actions
undertaken to stimulate the United States economy and stabilize the United States financial
markets, and the impact such actions may have on the Corporations business, financial condition
and results of operations; changes in the fiscal and monetary policies and regulations of the
federal government, including those determined by the Federal Reserve System, the FDIC,
government-sponsored housing agencies and local regulators in Puerto Rico and the U.S. and British
Virgin Islands; the risk of possible failure or circumvention of controls and procedures and the
risk that the Corporations risk management policies may not be adequate; the risk that the FDIC
may further increase the deposit insurance premium and/or require special assessments to replenish
its insurance fund, causing an additional increase in the Corporations non-interest expense; risks
of not being able to generate sufficient income to realize the benefit of the deferred tax asset;
risks of not being able to recover the assets pledged to
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Lehman Brothers Special Financing, Inc.; changes in the Corporations expenses associated with
acquisitions and dispositions; the adverse effect of litigation; developments in technology; risks
associated with further downgrades in the credit ratings of the Corporations long-term senior
debt; general competitive factors and industry consolidation; and the possible future dilution to
holders of common stock resulting from additional issuances of common stock or securities
convertible into common stock. The Corporation does not undertake, and specifically disclaims any
obligation, to update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
###
First BanCorp
Alan Cohen
Senior Vice President
Marketing and Public Relations
alan.cohen@firstbankpr.com
(787) 729-8256
Alan Cohen
Senior Vice President
Marketing and Public Relations
alan.cohen@firstbankpr.com
(787) 729-8256
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