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Growth is overrated when you are in FBP's position. When you are trading at book value, growth is a necessity to create value for shareholders.
I don't think they would need to raise $350MM. Since it is wine time, I am not going to look up how much capital they have but I bet they have enough that a combined entity would have very good ratios. Last I checked their total risk based capita ratio was like 25%. But they might raise another $200MM or so. But if they can do it near the stock price which is near TBV, it would be non-dilutive so would matter.
If they combined, it might be OFG CEO at the top but I don't think it means that they fire FBP management. Aurelio is well enough respected in PR for running the bank. Probably not a good CEO, raising capital etc but fine for running operations. I don't think it is a complicated merger. OFG is not much into banking anyway even with the small EUBK addition. The bank would still be FBP. They would probably merger EUBK and maybe OFG's bank into Firstbank and have the OFG Holding company own all of it. That would make it easier in some from the purchase accounting perspective, I believe.
Growth is overrated. OFG would absolutely have to raise capital to buy FBP, even if they issued stock to existing FBP holders and Treasury. Likely they would have to raise $350mm or so.
It could be diff than PE or not, really facts and circumstances dependent. They would not let a single location US based bank that had the money just bop in and buy FBP unless mgmt had experience with larger institutions (well, unless they were desperate). PE brings in mgmt when needed.
I can't see it structured as FBP buying OFG (although they might rename the combined company as FBP to take advantage of their brand, if FBP still has a positive image after costing many PR residents money and disrupting their businesses). Why would OFG raise the capital to be put out to pasture? If OFG raises the money, I would bet OFG people would be in charge.
It wouldn't be any different than PE swallowing FBP with $350MM of capital. They might structure it as FBP acquiring OFG. They don't need to be big. They just need to have spare capital. The question is really just whether they have enough capital to spare. They might but they might also want to raise more and they probably can. I think OFG is an interesting way to play FBP. They will certainly have the opportunity to buy them I think if they want to. If not, they are not over-priced anyway if not exactly a bargain. Buying FBP would be their best opportunity to grow TBV.
im, i looked at the ofg presentation. They were very direct about a second wave of consolidation.
Their document did not say FDIC assisted, and we can rationalize all day why an FDIC action does not make sense, but we don't know what we don't know. Folks rationalized a lot about Westernbank, too.
Your thoughts? Do you think OFG could swallow FBP? That means in a year they go from virtually not a bank, to one with $16-$17bn of loans. Seems a bit much to me, but I don't know OFG.