FirstBank’s integration of Banco Santander to be completed next year
First BanCorp CEO: Customers from both financial institutions can use ATMs free of charge
SAN JUAN – First BanCorp, the holding company for FirstBank Puerto Rico, announced Tuesday the completion of its previously announced acquisition of Santander BanCorp and its wholly-owned subsidiary Banco Santander Puerto Rico, both of which will be merged into FirstBank.
First BanCorp President and Chief Executive Officer Aurelio Alemán said that the integration of Banco Santander into the island’s second largest Puerto Rico-based bank should be completed by early next year. He said FirstBank and Banco Santander customers can now use both FirstBank and Banco Santander ATMs free of charge.
“The completion of this transaction marks a significant milestone in our journey. This transaction significantly improves our scale, talent strength and competitiveness in retail, commercial and business banking,” Alemán said in a press release, in which he acknowledged the “hard work and dedication of both teams who have worked diligently on integration planning and execution throughout the operational disruption caused by the [Covid-19] pandemic.”
“We welcome the Banco Santander employees and customers and look forward to exceeding their expectations with an expanded branch network and service channels and enhanced technological offerings,” the executive added.
Last October, First BanCorp announced the signing of a stock purchase agreement for the acquisition of Banco Santander’s retail and commercial banking franchise in Puerto Rico for about $1.1 billion in cash. On July 28, the transaction received the requisite regulatory approvals from the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and the Puerto Rico Financial Institutions Commissioner’s Office.
The transaction solidifies FirstBank’s second place position among Puerto Rico-based banks, after Banco Popular de Puerto Rico and above Oriental Bank, which last year completed its $550 million acquisition of the local assets of Canada-based Scotiabank.
To acquire Santander BanCorp and Banco Santander, First BanCorp paid in cash a base purchase price of approximately $394.8 million for 117.5 percent of Banco Santander’s core tangible common equity, comprising a $58.8 million premium on $336 million of core tangible common equity, plus $882.8 million for Santander’s BanCorp excess capital (paid at par), which represents the estimated closing payment pursuant to the terms of the purchase agreement, according to the press release.
With the acquisition, FirstBank expects to have approximately $18.8 billion in assets, a $12 billion loan portfolio, $15.4 billion of deposits, and approximately 650,000 customers. In addition, FirstBank expects to have 450 ATMs, 73 branches, and more than 3,500 employees. As of July 31, Banco Santander had approximately $5.5 billion in assets, $2.7 billion in loans and $4.2 billion in deposits, the bank said.
Alemán stressed that the Banco Santander integration will be carried out “gradually” to minimize the impact on both FirstBank and Santander customers, noting that this process should be completed during the second quarter of 2021. In the meantime, the executive said, FirstBank and Banco Santander customers prior to the merger will continue to conduct their banking business through their existing relationship branches and corresponding bank platforms.
“Over the next few months, we will be working on integrating the branch systems so that we can serve customers of both banks in all branches,” he said.
The First BanCorp CEO said the acquisition “significantly” expands FirstBank’s presence in San Juan, Bayamón, Caguas and Guaynabo, as well as in the western and southern regions of the island.
Moreover, upon the completion of the system integration process, customers will have access to more than 100 ATMs with remote-deposit capacity, Alemán said.
FirstBank also has branches in the U.S. and British Virgin Islands and Florida. FirstBank Puerto Rico subsidiaries include First Federal Finance Limited Liability Co. and First Express Inc., both small loan companies. The financial institution also owns FirstBank Insurance Agency LLC.
“We expect that the combined strength of our franchises will expand our earnings power and capital ratios, which already exceed the well-capitalized regulatory guidelines,” the bank executive said. “This is a new chapter for First BanCorp and we are delighted to make evident to our shareholders, customers and employees what we are capable of accomplishing together.”
In New York Stock Exchange trading Tuesday, First BanCorp (NYSE: FBP) shares closed 1.57% higher, at $5.82.