Not all banks are created equal.
Oriental Financial Group Inc.
) recently raised its dividend by 20% due to an improving outlook
for its Puerto Rico-based business. This Zacks #1 Rank (strong buy)
also has attractive valuations with a forward P/E of just 8.4.
Oriental Financial Group is a diversified financial holding company
headquartered in San Juan, Puerto Rico. It operates under U.S. and
Puerto Rico banking laws and regulations. The bank provides a range
of mortgage, commercial and consumer banking services from its 30
financial centers in Puerto Rico.
It also handles financial planning, trust, insurance, investment
brokerage and investment banking services.
Dividend Raised Again
Oriental Financial Group bucked the trend of some of its fellow
banks during the Great Recession. While it cut its quarterly
dividend from 14 cents in 2008 to 4 cents in 2009 at the height of
the crisis, it never got rid of the dividend completely.
Since the worst of it in 2009, the company has slowly been raising
it again with an increase to 5 cents in 2011. On Nov 30, Oriental
Financial Group announced it was raising the dividend by another
penny to 6 cents per share. That is an increase of 20% over 2011.
The dividend is currently yielding 1.8%.
OFG Beat By 25% in the Third Quarter
On Oct 25, Oriental Financial Group reported its third quarter
results and beat by 7 cents per share. Earnings per share were 35
cents compared to the consensus of 28 cents. This was the second
consecutive earnings beat. It was a big improvement over the year
ago quarter which saw a loss of 75 cents.
The bank saw continued growth in the commercial lending business
and in lower-cost retail deposits. Total loan production, year to
date, climbed 6.6% to $288.7 million with commercial production
One bright spot was the wealth management business where revenue
rose 9.3% to $11.3 million due to increased brokerage and trust
business. Mortgage banking activities were also up 7.7% in the
There was also better than anticipated credit performance in the
quarter which resulted in increased interest income on covered
Double Digit Earnings Growth Expected in 2012
The analysts have gotten a little jittery about 2011 in the last
month. 2 estimates have actually fallen in that time, pushing the
Zacks Consensus down by 4 cents to $1.19 per share.
However, given that the bank lost 49 cents a share in 2010, that
would still be earnings growth of 343%.
The story is looking up in 2012. The 2012 Zacks Consensus Estimate
has risen 2 cents to $1.44 in the last 60 days. That is continued
earnings growth of 21%.
OFG Is a Value Stock
During the Great Recession, shares of Oriental Financial were
slammed to new multi-year lows. They rebounded sharply in 2009 but
in 2010 and 2011, they haven't gone anywhere.
But there's still value in the shares.
In addition to a P/E under 10, the company also has a price-to-book
ratio of only 0.8. A P/B under 3.0 usually indicates a company has
Oriental Financial Group is one of those regional banks that
escaped the worst of the financial Armageddon. It has now returned
to double digit earnings growth and investors are rewarded with a
dividend yielding 1.8%.
Tracey Ryniec is the Value Stock Strategist for
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her on twitter at
ORIENTAL FINL (
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