Popular Inc. cleared regulatory hurdles last week to purchase Wells Fargo’s auto finance business in Puerto Rico and plans to complete the transaction on August 1, according to a press release.
The sale was announced in February with a proposed cash purchase price of $1.7 billion, according to SEC filings. Popular is still negotiating the final terms of the purchase and will defer comments until after the transaction is completed, a spokeswoman told Auto Finance News.
Wells Fargo’s portfolio in the U.S. territory is expected to total $1.6 billion in auto loans given that the company transferred that amount of loans to hold for sale in the first quarter in reaction to the announcement, according to the bank’s earnings report.
The transaction will more than double Popular’s auto loan portfolio, which currently totals $886 million, according to the bank’s latest earnings report. The company managed to grow its portfolio nearly 7% year over year, despite the hardships Hurricane Maria inflicted on the island starting in September 2017.
However, delinquencies have climbed in Popular’s auto portfolio. Although overall auto delinquencies were relatively tame, increasing by 3.3% year over year to $50.7 million, there was also a more substantial spike in late-term delinquencies. For example, loans 60-to-89 days past due increased 66% year over year to $10.3 million.
Wells Fargo declined to comment.