The deal will place Oriental as the second largest bank in Puerto Rico in terms of branches and core deposit funding, and the third largest in terms of assets, the acquirer said.
According to the bank, $84m of 8.75% non-cumulative convertible perpetual preferred stock has been raised in a private placement with institutional investor to fund the deal with its own excess capital.
Oriental president, chief executive officer and vice chairman of the board José Rafael Fernández said the transaction will lead to create a bank that is strongly capitalized, locally controlled and totally focused on serving the needs of Puerto Rico businesses and consumers.
"At the same time, by acquiring BBVA Puerto Rico, we will achieve our long time goal of transforming Oriental into a bank with a bigger branch network, a larger and more diversified loan portfolio, greater core deposit funding, expanded customer base, and a smaller investment securities portfolio," Fernández added.
"For Oriental, we believe this transaction offers the best way to efficiently use our excess capital to enhance our financial performance, franchise and shareholder value. By replacing securities and borrowings with loans and deposits, it creates a unique opportunity to transform our balance sheet and significantly improve earnings predictability."
As of 31 March 2012, BBVA PR owned nearly $5.2bn in assets, $3.7bn in loans, $3.3bn in deposits, 36 branches, and approximately 950 employees, which will be consolidated with Oriental’s $6.5bn in assets, $1.7bn in loans, $2.3bn in deposits, 28 branches and nearly 720 employees.
