Mr. Arthur Montilla

Managing Partner, Neil Montilla, Inc.

GLG News by Mr. Arthur Montilla, Managing Partner

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

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Puerto Rico Into Recession

May 23, 2006

Analysis of:Halt in Economic Development (in Spanish) | www.endi.com

The implications of the recent government shut down compounded by the credit ratings down grade on Puerto Rico debt could be severe on the banking sector.

Analyst warnings on Puerto Rico economy & banking sector

April 18, 2006

Analysis of:Alerta Cohen Bros. & Company de la degradación crediticia | www.endi.com

Puerto Rico has a deficit situation in its current budget and has indicated the central government will be unable to meet payrolls in May and June, unless there is an end to the deadlock over approving the plan presented to the legislature by the Governor.

At the same time several of PR’s banks have had to postpone or restate earnings reports over improper accounting for mortgage pools sold between them. There is speculation that several banks (publicly traded) may be acquired by others.

April 12, 2006

Analysis of:Inminente el colapso en los servicios | www.endi.com

Puerto Rico's economy is facing serious challenges. With 30% of the Islands labor force, the government deficit is not only indicative but an integral part of the problem.

The lack of an agreement to balance the budget as well as the economies needed to do so, will have repercussions that will be felt across the entire spectrum from suppliers of goods and services to government agencies to retailers of consumer goods.

Puerto Rico Political Primer and its Effect on Resolving the Deficit Issue

April 11, 2006

Analysis of:Various | www.endi.com

Puerto Rican banks have been an attractive play for the last 4 years, in some cases gaining 300%+ in the 3 years from January of 2002 through December of 2004 and then loosing 80% in 2005.

The bank stocks, and the PR economy in general were buoyed by the sharp increase in housing values and the refinance fever over the last 3 years.

Not only have we seen a slow down (similar to a brick wall) but the central government is in the midst of a budget deficit which is causing PR debt ratings to be lowered to junk. Politics rather than judgement seems to rule.

Puerto Rican Banks delay SEC filings

April 7, 2006

Analysis of:More Bank Delays | www.adendi.com

Puerto Rican banks saw their share prices raise by as much as 300% in three years thru 2004 and then fall by over 80% last year.

Several banks have not yet been able to release their 2005 financial statements
Three have received Cease & Desist orders from the Fed, the FDIC and local authorities
Several top banking executives have resigned or taken “early retirement”

As the clouds clear, there will probably be a round of consolidation among banks doing business in Puerto Rico. Several large US and International banks not currently in the PR market have indicated interes

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