Overbanked Puerto Rican Market in Need of Consolidation
October 07 2011 - 8:16AM
Marketwired
Banks like Popular Inc. and First Bancorp have been hurt by the
weak Puerto Rican market, low interest rates and the presence of
too many banks in the region. Some smaller banks in Puerto Rico
have begun to look to merge or consolidate in order to survive
amongst the larger banks in the over banked region. The Paragon
Report examines the outlook for the Regional Banking sector and
provides research reports on Popular Inc. (NASDAQ: BPOP) and First
Bancorp (NYSE: FBP). Access to the full company reports can be
found at:
www.paragonreport.com/BPOP
www.paragonreport.com/FBP
After years of strong growth, for the past two decades Puerto
Rico's economy has declined as countries in the Caribbean and Latin
America have lured away manufacturing and tourists. The US
territory depends heavily on income from the federal government.
Last year the government pumped more than $15 billion into Puerto
Rico's economy. Even with the cash infusion, when Fortuno took
office in 2009, Puerto Rico had accumulated a $3 billion deficit.
To deal with the budget, Fortuno cut government spending by almost
one-fifth and slashed more than 20,000 government jobs.
The Paragon Report provide investors with an excellent first
step in their due diligence by providing daily trading ideas, and
consolidating the public information available on them. For more
investment research on Regional Banks with us free at
www.paragonreport.com and get exclusive access to our numerous
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Popular, Inc is a diversified, publicly owned bank holding
company. The Company operates in two markets: Puerto Rico and
Mainland United States. In Puerto Rico market the Company provides
retail and commercial banking services through its principal
banking subsidiary, Banco Popular de Puerto Rico (BPPR), as well as
auto and equipment leasing and financing, mortgage loans,
investment banking, broker-dealer and insurance services through
specialized subsidiaries. The Bank swung to a profit of $110.7
million (11 cents per diluted share) in the second quarter.
Popular, Inc. had a net loss of $44.5 million or a loss 29 cents
per share in the year earlier quarter.
A report from Reuters over the summer said that First Bancorp
and Doral Financial, the No.2 and No.3 banking groups by assets in
Puerto Rico, may be pushed into combining their operations to
survive profitably in the Caribbean U.S. island territory's
overbanked market. Combined, Firstbank and Doral would have $22.6
billion in total assets and more than $16 billion in deposits,
according to data from the Federal Deposit Insurance Corp (FDIC).
Popular has $29 billion in assets and $20.75 billion in
deposits.
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