PCB says the transaction will strengthen its mainland U.S. presence by concentrating on New York and South Florida. With a more clearly defined geographical footprint and leaner operation, the new PCB will be better able to focus on its core competencies, providing a full range of financial services and products to its commercial and retail banking customers.
In 2011, Popular rebranded its branches to "Popular Community Bank" in California and Florida in order to counter the perception that the bank was for Hispanics only.
Popular will sell 41 branches, approximately $1.8 billion in related loan portfolios, and approximately $2.1 billion in deposits, to three different buyers. The transactions will result in net premium of approximately $25 million and an estimated noncash Goodwill write-down of approximately $160 million.
In Central Florida, PCB will sell 9 branches with loans of approximately $115 million and deposits of approximately $239 million to Harbor Community Bank, a bank of approximately $629 million in total assets.
In Illinois, PCB will sell 12 branches with loans totaling approximately $521 million and deposits of approximately $761 million to First Midwest Bank, a bank with approximately $8.3 billion in total assets.
In California, PCB will sell 20 branches with loans totaling approximately $1.2 billion and approximately $1.1 billion in deposits to Banc of California, a bank with approximately $3.6 billion in total assets.
The reorganization will have an estimated cost of approximately $53 million, consisting of severance and retention payments, operational set-up costs, and lease cancelations. Annual operating expenses are expected to be prospectively reduced by an estimated $45 million.
The transactions, which are subject to regulatory approval and other closing conditions, are expected to close before the end of the year.
“Popular remains deeply committed to serving mainland U.S. customers by building on PCB’s success in New York and South Florida. We believe there are significant opportunities for the growth of our franchise in these markets as the banking sector and overall economy continues in its recovery. Focusing our efforts on these markets will ultimately enable us to better serve and grow our customer base, while strengthening the capital position of both PCB and Popular," said Mr. Richard L. Carrión, Chairman of the Board, President and Chief Executive Officer.
Leaner, More Focused Bank
The new PCB will have 49 branches in the New York/New Jersey and South Florida regions. As a more focused bank operating in two regions on the east coast, PCB will continue to offer a broad array of financial services for businesses and consumers, from lending, cash management, and other services to our commercial clients, to a full offering of consumer finance and transactional products including mobile banking and mobile check deposit.
Centralized Back Office Operation
As part of the restructuring plan, PCB will reduce back-office expenses by closing its Rosemont, IL and Orlando, FL operations centers and transferring most of the support functions to Puerto Rico and New York. Of the 550 positions in the two current operations locations, 100 will be relocated to other offices in the U.S. and 200 will be moved to Puerto Rico for a net saving of approximately 250 positions. This transition is expected to be completed by the 1st quarter of 2015.
RBC Capital Markets, LLC acted as financial advisor to Popular. Sullivan & Cromwell LLP, New York, NY, acted as legal counsel.
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