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10 Cheapest Bank Stocks to Forward Earnings (Update 3)

3. Oriental Financial Group

OFG Chart OFG data by YCharts

Shares of Oriental Financial Group (OFG) of San Juan, Puerto Rico, closed at $16.20 Friday, returning 22% this year, following a 13% return during 2012. The shares trade for 1.2 times their reported March 31 tangible book value of $13.72, and for 7.9 times the consensus 2014 EPS estimate of 2.05. The consensus 2013 EPS estimate is $1.55.

With a quarterly payout of 6 cents, the shares have a dividend yield of 1.48%.

The company had $8.7 billion in total assets as of March 31 and reported first-quarter net income available to common shareholders of $17.7 million, or 37 cents a share, improving from a net loss of $23.3 million, or 53 cents a share, in the fourth quarter, and earnings to common shareholders of $9.5 million, or 23 cents a share, in the first quarter of 2012.

During the fourth quarter, Oriental Financial Group purchased the Puerto Rico banking operations of Banco Bilbao Vizcaya Argentaria SA (BBVA) for $500 million, with the funding coming from a combination of preferred and common stock offerings. The deal brought on roughly $4.8 billion in assets and $3.5 billion in deposits. Oriental's fourth-quarter results included $22.9 million in losses from balance sheet moves as part of the company's deleveraging plan and $5.0 million in merger related expenses.

As a result of the acquisition and deleveraging moves over the past year, Oriental Financial Group's net interest income increased to $92.6 million in the first quarter from $42.9 million in the first quarter of 2012, while its net interest margin expanded to 4.65% from 2.60% a year earlier.

On a tax-adjusted basis, the first-quarter net interest margin was a remarkable 5.03%, compared to 3.88% a year earlier.

Oriental's first-quarter ROA was 0.95% and its return on average common equity was 10.14%.

Jefferies analyst Emlen Harmon rates Oriental Financial Group a "buy," with a $20 price target, and said in a note to clients on April 30 that first-quarter results "were encouraging, with the company ahead of pace to deliver on guided $1.40 GAAP EPS in '13, and loan growth demonstrating the bank's ability to grow core earnings power."

Harmon estimates the company will earn $1.50 a share this year, with earnings growing to $1.85 a share in 2014.

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

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