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10 Cheapest Bank Stocks for 2013

9. Oriental Financial Group


Shares of Oriental Financial Group (OFG) of San Juan, Puerto Rico, closed at $13.15 Friday, returning 11% year-to-date, after pulling back 1% during 2011.

The shares trade for 0.9 times tangible book value, and for 8.9 times the consensus 2013 EPS estimate of $1.48. The consensus 2014 EPS estimate is $1.75.

Based on a quarterly payout of six cents, the shares have a dividend yield of 1.83%.

Oriental Financial had $6.1 billion in total assets as of Sept. 30, having greatly expanded its share of the Puerto Rico market through its purchase of the failed Eurobank from the Federal Deposit Insurance Corp. in April 2010.

The company on Dec. 18 completed its acquisition of the Puerto Rico operations of Banco Bilbao Vizcaya Argentaria, SA (BBVA) for $500 million in cash, bringing on roughly $5 billion in additional assets, as well as $3.7 billion in loans.

After the BBVA deal was approved, KBW analyst Derek Hewitt on Dec. 10 said in a report that his firm was "excited about this accretive transaction which will allow OFG to fully deploy its excess capital, become one of the leading commercial banks on the island, and should generate a more stable revenue stream from higher multiple commercial banking activities."

With loans making up just 26% of Oriental's total assets as of Sept. 30, Hewitt said that the BBVA deal would "transform OFG's earning asset mix from that of an agency-REIT to a commercial bank."

The analyst rates Oriental Financial Group "Outperform," with a $15 price target, and wrote that "investors have not fully incorporated the expected earnings accretion from this deal; therefore, the shares remain attractively priced" at just over roughly at Hewitt's pro forma Dec. 31 tangible book value estimate of $12.79.

OFG Chart OFG data by YCharts

Interested in more on Oriental Financial Group? See TheStreet Ratings' report card for this stock.

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