SAN JUAN, Puerto Rico (


) -- Beleaguered Shareholders of


(FBP) - Get Report

had good news yesterday, when the holding company announced that the U.S. Treasury Department had lowered a required common equity raise to $350 million from $500 million.

Shares closed at 27 cents, up 8% on the day. Based on the 70-cent consensus target price as of November 30 among analysts polled by Thomson Reuters, FirstBanCorp was included among


10 High Volume Bank Stocks with Upside

. FirstBanCorp's competitor

Popular, Inc.

(BPOP) - Get Report

, which has the largest deposit market share in Puerto Rico according to the

Federal Deposit Insurance Corp.

, was also included in that list.

Once it completes the required capital raise, the Treasury has agreed to exchange its $400 million preferred shares that the company issued in return for bailout funds received through the Troubled Assets Relief Program, or TARP, in January 2009.

The Treasury also lowered the discount on the liquidation of its preferred shares to 25% from 35%, but since the initial conversion price agreed upon was 72.52 cents a share with FirstBanCorp issuing 438.7 shares, the newly issued common shares would be worth $318.2 million, for a discount of $81.8 million and a significant gain which will boost FirstBanCorp's capital ratios.

While FirstBanCorp has deferred its last five quarterly dividends on the TARP preferred shares, the dividends have continued to accrue. The exchange of the TARP shares will save the company about $5 million in dividends per quarter.

FirstBanCorp amended its registration statement lowering its coming stock offering to gross proceeds of $350 million, with SNL Financial reporting that with overallotment, the offering might be as high as $402.5 million, per the proposed maximum aggregate offering amount.


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Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.