The clash between Gov. Ricardo Rosselló’s administration and the Financial Oversight and Management Board for Puerto Rico over the implementation of the federally appointed entity’s Fiscal plan could unleash a protracted court fight and generate uncertainty about flow of federal aid to the island, José Rafael Fernández, CEO of OFG predicted.
The local government’s decision to reject the implementation of the “difficult measures” in the Fiscal Plan approved late last week could give the U.S. Treasury a “little bit of leverage with federal funds.”
“We’re a little bit uncertain on how those funds are going to flow if there is a protracted fight among the two main players in the island, the government and the fiscal board,” Fernández said, upon disclosing the financial institution’s first quarter results.
Net income available to shareholders was $13.5 million, or $0.29 per fully diluted share. This was in line with 4Q17’s $13.6 million, or $0.30 per share, and exceeded the year ago quarter’s $11.7 million, or $0.26 per share, the bank stated. OFG is the parent company of Oriental bank in Puerto Rico.
Loan production of $309.4 million increased 22 percent from 4Q17 and 41.4 percent from the year ago quarter, according to the report.
Fernández predicted a protracted legal fight in U.S. Bankruptcy court, where it will ultimately be in the hands of the federal judge to decide so that we can in reality do the right thing from a fiscal perspective.”
While Puerto Rico “is far from being out of the woods,” Fernández said “we’re beginning to see some optimism building on Puerto Rico’s business leaders and entrepreneurs.”
While on the short-term the island is still waiting for insurance and federal money to really start flowing, on the long-term, Puerto Rico must develop a lasting solution for the Puerto Rico Electric Power Authority.
“Lower cost, reliable, resilient, independently regulated electric power is the single most important thing Puerto Rico needs to date. We also most permanently resolve the island’s fiscal problems,” he said.
“The fiscal plan approved by the Oversight Board provides that opportunity. It is time for the government to execute that plan without delays,” Fernández urged.
““While we remain cautious due to the uncertain economic environment on the island, we are confident positive momentum will prevail for both OFG and Puerto Rico. We will continue to sharpen our focus on our retail and commercial clients, improve our service levels, and provide faster and more agile ways to do banking,” he concluded.