First BanCorp Announces Decision in Lehman Related Claim
SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- First BanCorp (the "Corporation") (NYS: FBP) , the bank holding company for FirstBank Puerto Rico ("FirstBank" or "the Bank"), today filed a Form 8-K that disclosed that the United States Bankruptcy Court for the Southern District of New York has denied the Bank's Motion for Summary Judgment filed in connection with its claim to recover certain assets posted as collateral with Lehman Brothers, Inc. ("Lehman").
This matter relates to the claim that the Bank filed against Barclays Capital ("Barclays") in the Bank's attempt to recover the securities (or the cash equivalence thereof) that were posted as collateral in connection with certain interest hedge agreements executed with a Lehman affiliate. Since the second quarter of 2009, the Corporation classified the pledged securities as a non-performing asset with a book value of $64.5 million. Because of the bankruptcy court's May 10, 2013 decision, the Corporation has determined that it is probable that the asset has been impaired and will recognize a non-cash charge associated with the impairment of approximately $64.5 million, plus $2.1 million in accrued interest, during the second quarter of 2013 to write-off the carrying value of the pledged securities. The Bank intends to appeal the court's decision denying its Motion for Summary Judgment.
In addition to this lawsuit, the Corporation continues to pursue its claim filed in the bankruptcy court in January 2009 in the proceedings under the Securities Investor Protection Act ("SIPA") with regard to Lehman. The Corporation's claim was filed on the basis that under SIPA the Corporation was a "customer" that "entrusted" the pledged securities to Lehman for safe keeping, and, accordingly, should be afforded protection thereunder. The Corporation's claim has not yet been resolved by the court.
"Over the past three years we have been diligently working with counsel in this litigation and have been reporting the status of the litigation in our corporate filings. Based on Friday's court decision, we have determined to take the full impairment charge. We will continue our efforts through the legal process to recover the value of the assets that we strongly believe belong to the Corporation. Despite the impact of this charge in the second quarter, our capital ratios will remain strong," said First BanCorp.'s President and CEO Aurelio Aleman.
About First BanCorp
First BanCorp. is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida, and of FirstBank Insurance Agency. First BanCorp. and FirstBank Puerto Rico operate within U.S. banking laws and regulations. The Corporation operates a total of 153 branches, stand-alone offices, and in-branch service centers throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a small loan company; FirstBank Puerto Rico Securities, a broker-dealer subsidiary; First Management of Puerto Rico; and FirstMortgage, Inc., a mortgage origination company. In the U.S. Virgin Islands, FirstBank operates First Express, a small loan company. First BanCorp's shares of common stock trade on the New York Stock Exchange under the symbol FBP. Additional information about First BanCorp. may be found at www.firstbankpr.com.
John B. Pelling III, 305-577-6000 Ext. 162
Investor Relations Officer
KEYWORDS: United States North America Caribbean Florida Puerto Rico
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