Banco Popular de Puerto Rico officials announced Monday the completion of the previously announced sale of a portfolio of non-performing residential mortgage loans with a book value and unpaid principal balance of approximately $438 million and $511 million, respectively.
The all-cash transaction will reduce Popular’s non-performing residential mortgage loans by approximately 73 percent and total non-performing loans by approximately 42 percent.
Popular’s non-performing loan ratio as of March 31, 2013 decreases from 4.86 percent to 2.89 percent, the bank said.
The loans subject to the transaction are part of Popular’s non-covered portfolio in Puerto Rico and are not subject to the loss sharing agreements with the Federal Deposit Insurance Co.
The purchase price for the loans was approximately $244 million, or 47.75 percent of the unpaid principal balance of the loans.
The transaction is expected to result in an after-tax loss of approximately $127 million, which is being recognized in the second quarter of 2013, the bank said.
“The sale marks another important step to strengthen our credit-performance ratios and reduce our credit-related expenses,” said Popular Inc. Chairman and CEO Richard Carrión.
“Over the last year we have significantly improved our credit risk profile; the corporation will now be able to focus a greater part of its resources on improving profitability,” he said.
Banco Popular did not retain any beneficial interest in the pool of mortgage loans sold and no seller financing was provided in connection with the transaction.