First BanCorp., the bank holding company for FirstBank Puerto Rico, announced Tuesday it has entered into a definitive agreement to sell a portfolio comprised of mostly non-performing and classified commercial loans and real estate owned totaling $199.8 million of unpaid principal balance, or $150.1 million of book value, for $87.6 million in cash or 43.8 percent of the unpaid principal balance of the assets.
This transaction is expected to close in early June 2015.
This transaction will result in a pretax loss, net of reserves, of approximately $47.2 million,” said First BanCorp. President Aurelio Alemán-Bermudez.
At the completion of the transaction, FirstBank will reduce its classified assets and nonperforming assets by approximately $149.1 million and $94.7 million, respectively, the bank said.
The resulting March 31, 2015 pro form non-performing asset to total asset ratio will decline from 5.74 percent to 5.02 percent.
“This transaction accelerates improvement in our risk profile and will contribute to future reductions in our expense base,” he said.
“We view this as a positive step as we continue addressing credit quality in a challenged economic environment,” said Alemán.