There are two facts that you keep overlooking:
1. When the Evertec partnership deal is booked this quarter, they will ALREADY have boosted capital by $1.6 billion ($1 billion from the April capital raise + $600 million capital gain from Evertec).
2. The CEO clearly stated in both a press release as well as in the conference call that these steps concluded their capital plans.
Btw, over half of the TrUPS are not subject to the five-year phase out because those issued to Treasury in the TARP exchange are exempt from the phase-out.
We'll see about that. I am not sure they have enough capital to pay back TARP and TRUPS. My guess is that they attempt to convert the TRUPS to common shares. That could be dilutive given where they are trading, below book value. They may also convert the TARP to common equity like FBP just did.
You keep talking about their capital, so here is part of my post of the other day:
"Remember that they had a very successful capital raise of $1.15 billion in April and that they will gain an additional $600 million this quarter from the Evertec partnership deal. I wouldn't be surprised if that $1.6 billion of new capital and liquidity goes to redemption of the TARP and most of the TrUPS."
In their recent Q2 conference call, the CEO repeated that these steps concluded their capital plans.
They won't pay out any dividends until they are sure they have enough capital. They still have a lot of capital raising to do over the next few years to pay off TARP and TRUPSs. They also need to pay the pref dividends for a year before paying the common div.
I'm slightly more optimistic than that since provisioning should continue to decrease from here on with the comfortable reserves they have built up over the past two years. So that we could possibly see dividend restoration by 2012 if 2011 is the start of renewed profitability on a sustained basis.
Certainly, while management and the Board have not talked publicly about dividend restoration, you can pretty much assume it has to be their unspoken goal. I see the recent events/steps as leading to that goal. There is a large investor segment on the island that depends on BPOP's dividends to supplement their income, and you can be sure the Board is aware of that fact. Even the island's Tax Dept. needs to overcome the reduction of dividend tax collection of the last couple of years.
That is good news. I think that is the first buy in the PR banking sector in a long time. BPOP looks a pretty good value at this price. Don't own any yet but could buy some soon. Though, I do have some reservations. They still need to raise capital to pay off TARP, and replace the TRUPs over the next two years. I also never like to see holding company debt especially when they are being downgraded.
Not only good news, but VERY good news. Remember that they had a very successful capital raise of $1.15 billion in April and that they will gain an additional $600 million this quarter from the Evertec partnership deal. I wouldn't be surprised if that $1.6 billion of new capital and liquidity goes to redemption of the TARP and most of the TrUPS.
Once TARP is redeemed and we begin to see the first shoots of renewed profitability, the restoration of dividends should become a real possibility.