First BanCorp. to Acquire Banco Santander Puerto Rico
October 21 2019 - 4:17PM
Business Wire
First BanCorp. (the “Company”) (NYSE: FBP), the bank holding
company of FirstBank Puerto Rico (“FirstBank”), announced today the
signing of a stock purchase agreement for FirstBank to acquire
Banco Santander Puerto Rico (“BSPR”) for a $63 million premium to
BSPR’s core tangible common equity in an all cash transaction. The
transaction is subject to receipt of all necessary regulatory
approvals.
As of June 30, 2019, BSPR had $6.2 billion of assets, $3.1
billion of loans and $5.0 billion of deposits. On a pro forma basis
based on June 30, 2019 data, including purchase accounting
adjustments, after the transaction FirstBank will have
approximately $17.6 billion in assets, a $12.0 billion loan
portfolio, and $14.2 billion of deposits.
Aurelio Alemán, President and Chief Executive Officer of First
BanCorp., commented: “We are very excited to announce this
transformational transaction for our Company. After completing
comprehensive due diligence, we have signed an agreement to acquire
Banco Santander Puerto Rico. This acquisition will significantly
improve our scale and competitiveness in Puerto Rico, while
enhancing our funding and risk profile. The transaction is
financially compelling and generates 35% accretion to fully
phased-in 2020 consensus earnings per share (EPS) with a tangible
book value per share earnback period of 2.6 years.”
“While continuing to grow and invest in our franchise, we have
been preparing for a strategic transaction of this magnitude. The
Banco Santander Puerto Rico team expands our talent bench in
retail, commercial and business banking. First BanCorp will become
a stronger competitor in Puerto Rico with the scale and breadth to
better serve retail and commercial customers, and increase our
financial investments in innovation and talent development. We are
greatly appreciative of expanding our client base and we will work
hard to continue enhancing our portfolio of products, services and
channels to meet their needs and exceed their expectations.”
“Our combined institution will be well-positioned to continue
growth initiatives and further support the economic recovery and
redevelopment in Puerto Rico,” added Alemán.
Transaction Highlights
The transaction is structured as an acquisition of the BSPR’s
holding company, immediately followed by the merger of BSPR and its
holding company into FirstBank. The transaction represents an
efficient deployment of capital with a compelling financial impact
for the Company:
- 100% cash transaction
- $425 million base purchase price, or 117.5% of BSPR’s core
tangible common equity, comprised of a $63 million premium on $362
million of core tangible common equity as of June 30, 2019; plus
$638 million of BSPR’s excess capital as of June 30, 2019 paid at
par; purchase price is subject to adjustment based on BSPR’s
balance sheet as of the closing date
- The transaction is expected to be 35% accretive to 2020
consensus EPS of $0.81 (assuming fully phased-in BSPR earnings,
cost savings and transaction adjustments)
- Tangible book value per share is expected to be diluted by
approximately 7% at close, with an expected earnback period of
approximately 2.6 years based on the crossover method
- Transaction is expected to deliver an internal rate of return
of approximately 20%
- Pre-tax annual cost savings of $48 million expected to be fully
achieved in 2021, representing approximately 35% of BSPR’s
non-interest expenses over the last-twelve-months, excluding OREO
expense
- One-time restructuring charges of approximately $76 million
expected to be phased-in 50% at close with the remainder to be
incurred in 2021
- FirstBank will not assume any of BSPR’s non-performing assets
(“NPAs”) under the agreement. Pro forma NPA/Asset Ratio of
approximately 2.2% as of June 30, 2019
- Enhanced funding and liquidity profile, with a pro forma
loan-to-deposit ratio of 84%
- All pro forma capital ratios at closing expected to remain
significantly above the “well capitalized” threshold, with a
closing pro forma Total Risk-Based Capital Ratio of 18.0%, a
closing pro forma Tier 1 Capital Ratio of 15.6%, a closing pro
forma Common Equity Tier 1 Ratio of 15.3% and a closing pro forma
Tier 1 Leverage Ratio of 11.2%
Timing and Approvals
The transaction has been unanimously approved by the Company’s
and FirstBank’s Board of Directors. The transaction is subject to
the satisfaction of customary closing conditions, including receipt
of all required regulatory approvals, and is expected to close in
the middle of 2020.
Advisors
Goldman Sachs & Co. LLC served as financial advisor and
Skadden, Arps, Slate, Meagher & Flom LLP served as legal
counsel to the Company. Moelis & Company LLC and Simpson
Thacher & Bartlett LLP advised the Board of Directors of the
Company.
Accompanying Presentation and Conference Call Details
First BanCorp’s senior management will host a conference call
and live webcast on Tuesday, October 22, 2019, immediately
following the 10:00 a.m. (Eastern Time) earnings call and webcast.
The presentation will be made available on the Corporation’s
website, www.1firstbank.com. The call may be accessed via a live
Internet webcast through the investor relations section of the
Corporation’s web site: www.1firstbank.com or through a dial-in
telephone number at (877) 506-6537 or (412) 380–2001 for
international callers. The Corporation recommends that listeners go
to the web site at least 15 minutes prior to the call to download
and install any necessary software. Following the webcast
presentation, a question and answer session will be made available
to research analysts and institutional investors. A replay of the
webcast will be archived in the investor relations section of First
BanCorp’s web site, www.1firstbank.com, until October 22, 2020. A
telephone replay will be available one hour after the end of the
conference call through November 22, 2019 at (877) 344-7529 or
(412) 317-0088 for international callers. The replay access code is
10135120.
About First BanCorp.
First BanCorp. is the parent corporation of FirstBank Puerto
Rico, a state-chartered commercial bank with operations in Puerto
Rico, the U.S. and British Virgin Islands and Florida, and of
FirstBank Insurance Agency, LLC. Among the subsidiaries of
FirstBank Puerto Rico are First Federal Finance Limited Liability
Company and First Express, Inc., both small loan companies. First
BanCorp’s shares of common stock trade on the New York Stock
Exchange under the symbol “FBP.”
Safe Harbor
This press release may contain “forward-looking statements”
concerning the Company. The words or phrases “expect,”
“anticipate,” “intend,” “look forward,” “should,” “would,”
“believes” and similar expressions are meant to identify
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are subject to the
safe harbor created by such sections. Such forward-looking
statements include, but are not limited to, statements regarding
the Company’s ability to declare dividends on the Company’s
Preferred Stock in any future periods. Such statements are subject
to known and unknown risks, uncertainties and contingencies that
may cause actual results to differ materially from the
expectations, intentions, beliefs, plans, estimates or predictions
of the future expressed or implied by such forward-looking
statements. These risks, uncertainties and contingencies include,
but are not limited to the factors described in the Company’s
Annual Report on Form 10-K, in its Quarterly Reports on Form 10-Q
and in other filings with the SEC. The Company 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, except as required by the federal securities laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20191021005811/en/
First BanCorp. John B. Pelling III Investor Relations
Officer 787-729-8003 john.pelling@firstbankpr.com
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