7. Oriental Financial Group
Shares of Oriental Financial Group (OFG) of San Juan, Puerto Rico, closed at $11.04 Monday, down 8% year-to-date, following a 1% decline during 2011.
The shares trade for 0.7 times tangible book value, and for seven times the consensus 2013 EPS estimate of $1.65. The consensus 2012 EPS estimate is 84 cents.
Based on a quarterly payout of six cents, the shares have a dividend yield of 2.17%.
For the 12-month period ended June 30, Oriental's ROA was 0.47%, while its ROE was 4.41%.The company on June 28 announced a deal to purchase the Puerto Rico banking operations of Banco Bilbao Vizcaya Argentaria, SA (BBVA) for "$500 million in cash, approximately a 3% premium to tangible book value." Oriental also announced that it had raised $84 million through a private offering of noncumulative convertible perpetual preferred shares with a coupon of 8.75%, with a strike price of $11.77, "as a first step in raising an estimated $150 million in Tier 1 capital." The company said it would pay for the remainder of the BBVA Puerto Rico purchase with "its own excess capital." Oriental said it would acquire "total assets amounting to $5.0 billion, including $3.7 billion in gross loans, and $3.4 billion in deposits," and that it expected to close the deal by the end of the year. The company on Sept. 13 filed for a $36 million public offering of common shares. KBW analyst Derek Hewett rates Oriental Financial Group "Outperform," with a $15 price target, and estimates the company will earn 84 cents a share for all of 2012, followed by EPS of $1.65 in 2013. Hewett in July called the BBVA Puerto Rico acquisition a "transformational deal that allows OFG the opportunity to remix its balance sheet at a reasonable cost." The analyst expects the deal "to be highly accretive to EPS and we believe over time, OFG will shed its current discount valuation relative to U.S. mainland bank peers." OFG data by YCharts
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