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10 Most Profitable Banks Trading Below Book Value

9. Popular, Inc.
Shares of Popular, Inc. (OFG) of Hato Rey, Puerto Rico, closed at $14.27 Monday, returning 29% year-to-date, after dropping 56% last year.

The shares trade for just under half their June 30 tangible book value, and for six times the consensus 2013 earnings EPS of $2.40. The consensus 2012 EPS estimate is $2.06.

For the 12-month period ended June 30, Popular's ROA was 0.39%, while the company's ROE was 3.65%.

The company owes $935 million in bailout funds received in December 2008 through the Troubled Assets Relief Program, or TARP.

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 factor in 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 reported $2.3 million in loss-share income for 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.

The company's provision for loan losses on loan balances not covered by loss-sharing agreements declined to $81.7 million in the second quarter, from $82.5 million in the first quarter, and $95.7 million in the second quarter of 2011.

Morgan Stanley analyst Ken Zerbe rates Popular "Overweight," and said in July that the company's "core EPS of $0.32 was surprisingly close to our expectations of $0.33 (although reported results, as usual, were rather messy)," and said that a key point for the second quarter was "better credit experience, including lower [nonperforming assets] NPAs and a provision [for loan losses] expense that was much less than expected."

Zerbe said that "credit is the one issue that really matters for BPOP."

BPOP Chart BPOP data by YCharts

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