6. Popular, Inc.
of Hato Rey, Puerto Rico, closed at $13.90 Friday, returning 47% year-to-date, following a 56% decline during 2011.
The shares trade for 0.6 times tangible book value, and for 8.7 times the consensus 2013 EPS estimate of $2.35. The consensus 2014 EPS estimate is $2.77.
The company owes $935 million in TARP money.
Popular had $36.5 in total assets as of Sept. 30. The company reported third-quarter net income applicable to common stock of $46.3 million, or 45 cents a share, declining from $64.8 million, or 63 cents a share, in the second quarter, but increasing from $26.6 million, or 26 cents a share in the third quarter of 2011.
The second-quarter results reflected a $72.9 million income tax benefit related to the company's purchase of the failed Westernbank Puerto Rico from the FDIC in April 2010, as well as "unfavorable adjustments in the quarterly valuation of loans held-for-sale of $27.3 million."
The year-over-year earnings improvement mainly reflected a decline in the provision for loan losses not covered by the FDIC loss-sharing agreement to $83.6 million in the third quarter, from $150.7 million, a year earlier. This improvement was partially offset by a decline in third-quarter net interest income to $343.4 million from $369.3 million a year earlier, as loan balances declined and the net interest margin narrowed to 4.37% in the third quarter from 4.45% in the third quarter of 2011.
Popular provided earnings guidance, for a profit ranging from 50 cents to 65 cents a share in the fourth quarter.
KBW analyst Derek Hewitt rates Popular "Outperform," with a $24 price target, saying on Oct. 22 after the company reported its third-quarter results that the company's capital levels were "looking good," with a tangible common equity ratio of 9.3%, but that "TARP redemption not a near-term event."
Hewitt said that Popular's credit trends were "mostly positive," with nonperforming assets "relatively flat" at $1.8 billion as of Sept. 30, or 8.58% of total assets, reflecting the long-term recession in Puerto Rico
The analyst estimates that the company will earn $2.50 a share in 2013.
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