The stocks for the three public banks based in Puerto Rico — OFG Bancorp, First BanCorp. and Popular Inc. — have been on a recovery journey this year. Through Aug. 31, they were the industry's top performers, returning between 43% and 74%.
They had substantially underperformed the banking index in 2017 as Puerto Rico grappled with Hurricanes Maria and Irma, as well as a debt restructuring program.
The year-to-date stock price appreciation has catapulted the price to adjusted tangible book value ratios for the three Puerto Rican banks. Popular began trading above the industry median in January, while First BanCorp. is pulling closer to the median.
In each case, the price to adjusted tangible book value for the banks is significantly higher than their basic price/tangible book. Popular has the biggest gap between the two ratios, at 103 percentage points. Part of that gap is because of loans 90 days delinquent but still accruing interest, which jumped to $1.23 billion at Dec. 31, 2017, from $465.1 million in the preceding quarter. At June 30, the 90+ loan category was $901.5 million.
All three Puerto Rican banks have been growing their balance sheets and reported double-digit year-over-year growth in normalized EPS in the second quarter. Popular and First BanCorp. also had higher normalized revenue compared to the year-ago quarter.
In Popular's July 23 earnings call, President and CEO Ignacio Alvarez said, "Similar to last quarter, consumer loan origination was approximately 96% of our second quarter 2017 prehurricane level. The trends are encouraging with credit demand in some sectors, like auto and personal loan, continuing to grow at a faster recovery compared to others, such as mortgage."
U.S. bank stocks continued to post positive returns in August. The industry's median total return for the month was 1.2%, matching the market-cap weighted SNL U.S. Bank and Thrift Index. At Aug. 31, U.S. banks and thrifts traded at a median of 203.1% of adjusted tangible book value.
Johnstown, Pa.-based AmeriServ Financial Inc. remained the least expensive bank based on price to adjusted tangible book value. At Aug. 31, it was the only company with a ratio below 100%.
Madison, Wis.-based First Business Financial Services Inc. and Fairfield, N.J.-based Kearny Financial Corp. entered the list during the month, replacing McLean, Va.-based Capital One Financial Corp. and Yorktown Heights, N.Y.-based PCSB Financial Corp.
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