Popular, Inc. Assumes Deposits, Acquires Assets of Westernbank Puerto Rico from Federal Deposit Insurance CorporationFont size: A
Popular, Inc. (NASDAQ:BPOP) announced today that its banking subsidiary, Banco Popular de Puerto Rico, has acquired assets and assumed all retail deposit liabilities of Westernbank Puerto Rico from the Federal Deposit Insurance Corporation ("the FDIC").
Popular will receive approximately $9 billion in assets and approximately $2.5 billion in non-brokered deposit liabilities from the FDIC. Popular will enter into a loss-sharing agreement with the FDIC on acquired loans. Banco Popular will also issue a five-year note to the FDIC reflecting the difference between the purchase price for the assets and the amount of deposits assumed. The note will pay interest at an annual rate of 2.5 percent. In addition, the FDIC will receive a value appreciation instrument, which grants the FDIC a one-year right to receive a cash payment equal to 50 million multiplied by the difference between the stock price at the time of exercise of the value appreciation instrument and $3.43, which was Popular's 20-day trailing average stock price on April 27. The FDIC may exercise this right at any time, in whole or in part, during the one year period.
"Today's events are difficult yet necessary to reestablish a healthy banking sector in Puerto Rico, which is essential for an economic recovery to take place on the island," said Richard L. Carrion, Chairman and Chief Executive Officer of Popular, Inc. "We have a long-term commitment to our main market, Puerto Rico, which we have serviced for 116 years, and to our clients, employees and shareholders, whom we are grateful for their support."
Customers of both banks should continue to bank as they normally do at their existing branches. Depositors of Westernbank who have ATM debit cards or checking accounts can continue to access their money by using their cards or writing checks.
"Our top priorities are to assure Westernbank customers that their deposits are safe, secure and readily accessible and to deliver them excellent service," said David H. Chafey, Jr., President and Chief Operating Officer of Popular, Inc. "We look forward to building strong relationships with the uncompromising dedication of all of our people and the best possible financial services."
Morgan Stanley acted as financial advisor to Popular and Sullivan & Cromwell LLP acted as legal counsel.
Founded in 1893, Popular, Inc. is the leading banking institution by both assets and deposits in Puerto Rico and ranks 38th by assets among U.S. banks. 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. Popular provides offers processing technology services through its subsidiary EVERTEC, which processes approximately 1.1 billion transactions annually in the Caribbean and Latin America.