Popular Signs Letter of Intent to Sell Non-Performing Assets; Reclassifies Approximately $1 Billion of Loans as Held-for-Sale...
January 31 2011 - 7:00AM
Business Wire
Popular, Inc. (Nasdaq: BPOP) (the “Corporation”) announced that
Banco Popular de Puerto Rico, its principal banking subsidiary,
signed a non-binding letter of intent to sell approximately $500
million (book value) of construction and commercial real estate
loans, approximately 75% of which are non-performing, to a newly
created joint venture that will be majority owned by an unrelated
third party for a purchase price equal to 47% of their unpaid
principal balance as of December 31, 2010.
The loans are part of a portfolio of approximately $610 million
(book value) of construction, commercial real estate and land loans
that were reclassified as loans held-for-sale as of December 31,
2010. The unpaid principal balance of the loans does not reflect
any charge-offs previously taken by the Corporation, which are
reflected in their book value. In addition, on December 31, 2010,
the Corporation’s U.S. banking subsidiary, Banco Popular North
America, reclassified approximately $395 million (book value) of
U.S. non-conforming residential mortgage loans as loans
available-for-sale and is pursuing potential loan sales
alternatives. The reclassification of the U.S. and Puerto Rico
portfolios will negatively impact pre-tax, fourth-quarter earnings
by approximately $190 million.
As part of the Puerto Rico transaction, Banco Popular de Puerto
Rico will make a 24.9% equity investment in the venture. Banco
Popular will also provide financing to the venture for the
acquisition of the loans in an amount equal to 50% of the purchase
price and certain closing costs. In addition, Banco Popular will
provide financing to the venture to cover unfunded commitments
related to certain construction projects (subject to customary
conditions of construction draws) and to fund certain operating
expenses of the venture. The transaction, which is subject to the
completion of due diligence and the execution of definitive
documentation, as well as customary closing conditions, is expected
to close during the first quarter of 2011.
“These transactions will result in a substantial reduction of
our non-performing assets,” said Richard L. Carrión, Chairman of
the Board and Chief Executive Officer of Popular, Inc. Mr. Carrión
added, “This is another important step towards resolving our legacy
issues and positioning the Corporation for the future.”
Founded in 1893, Popular, Inc. is the leading banking
institution by both assets and deposits in Puerto Rico and ranks
35th by assets among U.S. bank holding companies. In the United
States, Popular has established a community-banking franchise
providing a broad range of financial services and products with
branches in New York, New Jersey, Illinois, Florida and
California.
Forward-Looking Statements
Certain statements in this news release are “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 are subject to uncertainty and changes in
circumstances. Actual results may differ materially from those
included in these statements due to a variety of factors. More
information about these factors is contained in the Corporation’s
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, the Corporation assumes
no obligation to update any forward-looking statements to reflect
occurrences or unanticipated events or circumstances after the date
of such statements.
Popular (NASDAQ:BPOP)
Historical Stock Chart
From May 2024 to Jun 2024
Popular (NASDAQ:BPOP)
Historical Stock Chart
From Jun 2023 to Jun 2024