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10 Bank Stock Value Picks

4. Popular, Inc.
Shares of Popular, Inc. (BPOP), of Hato Rey, Puerto Rico, closed at $15.58 Friday, returning 12% year-to-date, following a 56% decline during 2011.

The shares trade for half their reported June 30 tangible book value of $31.74, and for 6.5 times the consensus 2013 EPS estimate of $2.40. The consensus 2012 EPS estimate is $2.03.

The company owes $935 million in TARP money.

Popular reported second-quarter net income applicable to common stock of $64.8 million, increasing from $47.5 million in the first quarter, but declining from $109.8 million during the second quarter of 2011.

The main item driving the sequential improvement and year-over-year decline in earnings was Federal Deposit Insurance Corporation loss-share coverage of assets acquired from the failed Westernbank Puerto Rico in April 2010. Popular booked $2.3 million in loss-share income on During the first quarter, compared to loss-sharing expenses of $15.3 million in the previous quarter, and loss-share income of $38.7 million a year earlier.

Morgan Stanley analyst Ken Zerbe rates Popular "Overweight," saying the company has "made meaningful progress in addressing its sizable credit issues by aggressively building reserves, shrinking its US business, and raising capital (T1C is now 12.3%)."

"While commercial and residential credit in Puerto Rico remain weak, Popular has returned to profitability, has the dominant franchise in Puerto Rico, and an attractive valuation that more than reflects potential credit concerns."

BPOP Chart BPOP data by YCharts

Interested in more on Popular, Inc.? See TheStreet Ratings' report card for this stock.

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