OFG Bancorp signed a definitive agreement with Scotiabank for OFG’s subsidiary, Oriental Bank, to acquire Scotiabank’s Puerto Rico operation for $550 million in cash and Scotiabank’s U.S. Virgin Island branch operation for a $10 million deposit premium.
Scotiabank’s Puerto Rico and USVI operations will be merged into Oriental Bank and its related businesses. The acquisition is subject to customary regulatory approvals.
Acquisition highlights include:
“The acquisition provides the combined companies with greater prospects for growth, profitability and employee engagement,” said José Rafael Fernández, president, CEO and vice chairman of the Board of OFG and Oriental Bank. “It is also an excellent opportunity to deploy OFG’s excess capital to accelerate the implementation of our differentiation strategy, enhance financial performance, and increase shareholder value. We are combining two excellent banks to create a strongly capitalized, market leading institution focused on the needs of consumers and businesses in Puerto Rico and the US Virgin Islands. The acquisition is also well timed. Rebuilding activities have given a much-needed impetus, turning the Puerto Rico economy positive. Ultimately, the transaction reaffirms our faith in Puerto Rico’s future, and our commitment to play an instrumental role in it.
Ganesh Kumar, Oriental’s senior executive vice president and chief operating officer, will lead the integration team. Following its 2012 acquisition, Kumar supervised the successful incorporation of BBVA PR’s $3.7 billion in loans and $3.3 billion in deposits.
Upon consummation of the acquisition, Oriental Bank will significantly increase the number of clients served as well as its core deposit funding. The resulting loan portfolio will be approximately a third each in commercial loans, residential mortgages, and consumer loans and leases.
As of March 31, 2019, Scotiabank’s Puerto Rico and USVI operations had $2.5 billion in net loans, $3.2 billion in deposits, 21 branches, 225 ATMs, and approximately 1,000 employees. This adds to OFG’s $4.4 billion in net loans, $4.9 billion in deposits, 37 branches, 206 ATMs and Interactive Teller Machines, and 1,394 employees.
The transaction is expected to be highly positive for OFG. Based on current estimates, the acquisition is expected to be approximately 40% accretive to earnings per share in 2020 on a pro forma basis.
Now in its 55th year in business, OFG Bancorp is a diversified financial holding company that operates three principal subsidiaries: Oriental Bank, Oriental Financial Services and Oriental Insurance.
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