Shares of Banco Popular (BPOP) are down 16% year-to-date.
A leading player in Puerto-Rico, Popular has been deeply affected by the real estate meltdown in that economy.Total commercial real estate loans stood at $10.67 billion or 232% of its capital. Nonperforming commercial real estate loans made up 26% of its capital. The bank has a Tier 1 Common Equity ratio of 11.58%. In May, the bank said it ended talks to sell a $500 million portfolio of troubled property loans, disappointing investors who were hoping that Popular would be able to offload non-performers. The bank has said it would seek new buyers. Michael Diana at Cantor said he did not view the development as material. "Indeed, it appears, based on the language in the announcement, that Popular could have consummated this sale, were it willing/desperate enough to accept a low-ball offer. By refusing to do so, Popular seems to be demonstrating confidence in the Puerto Rico economy, that is, confidence that it will be able to work out these loans at a value no less than the level where they are marked." Cantor has a hold rating on the stock. Five analysts rate the stock a buy or outperform, while two have a hold rating on the stock. --Written by Shanthi Bharatwaj in New York
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