SAN JUAN, Puerto Rico--(BUSINESS WIRE)--
OFG Bancorp (NYSE:OFG) today announced that its Oriental Bank subsidiary
(“Oriental”) will place its $200 million participation in a fuel
purchase line of credit with the Puerto Rico Electric Power Authority
(PREPA) on non-accrual status and will take a $24.0 million provision.
Oriental is forced to take the provision because PREPA, despite its
increasing ability to meet contractual obligations with creditors, has
signaled an unwillingness do so.
The provision will impact OFG’s earnings per share net of tax by $0.35
for the first quarter ended March 31, 2015. It will impact tangible book
value per common share by the same amount, not considering 1Q15
earnings. TBV per common share was $15.25 at December 31, 2014. OFG
plans to report 1Q15 results on Friday, April 24, 2015.
José Rafael Fernández, President and CEO of OFG and Oriental, said, “Our
credit analysis, based principally on data provided by PREPA and its
advisors, shows the utility has the financial capability to pay its
creditors. However, in the recent negotiation for extending the more
than 8-month forbearance period previously granted by its creditors,
PREPA clearly demonstrated a reluctance to commit to do so, despite the
utility’s improved cash flows.”
Notwithstanding the provision, Mr. Fernández said OFG and Oriental’s
regulatory capital ratios remain significantly above requirements for a
well-capitalized institution. Oriental’s $200 million PREPA exposure was
acquired through the late 2012 purchase of BBVA’s Puerto Rico
operations, and is part of a syndicated $550 million fuel purchase line
of credit.
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 53 financial centers. Investor information can be
found at www.ofgbancorp.com.
Puerto Rico:
OFG Bancorp
Alexandra López, 787-522-6970
allopez@orientalbank.com
or
US:
Anreder
& Company
Steven Anreder, 212-532-3232
steven.anreder@anreder.com
or
Gary
Fishman, 212-532-3232
gary.fishman@anreder.com
Source: OFG Bancorp